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750 Tasman Drive (Milpitas, CA) Lease Agreement - Peery/Arrillaga and Com21 Inc.

                                 LEASE AGREEMENT

        THIS LEASE, made this 10th day of May, 1996, between JOHN ARRILLAGA,
Trustee, or his Successor Trustee, UTA dated 7/20/77 (ARRILLAGA FAMILY TRUST) as
amended, and RICHARD T. PEERY, Trustee, or his Successor Trustee, UTA dated
7/20/77 (RICHARD T. PEERY SEPARATE PROPERTY TRUST) as amended, hereinafter
called Landlord, and COM21, INC., a Delaware corporation, hereinafter called
Tenant

                                   WITNESSETH

        Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord those certain premises (the 'Premises') outlined in red on Exhibit 'A',
attached hereto and incorporated herein by this reference thereto more
particularly described as follows


All of that certain 44,624+/- square foot, one-story building located at 750
Tasman Drive, Milpitas, California 95035. Said Premises is more particularly
shown within the area outlined in Red on Exhibit A attached hereto. The entire
parcel, of which the Premises is a part is shown within the area outlined in
Green on Exhibit A attached. The Premises shall be improved as shown on Exhibit
B to be attached hereto, and is leased an 'as-is' basis, in its present
condition, and in the configuration as shown in Red on Exhibit B to be attached
hereto.

As used herein the Complex shall mean and include all of the land outlined in
Green and described in Exhibit 'A' attached hereto, and all of the buildings,
improvements, fixtures and equipment now or hereafter situated on said land.

Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth and tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions hereinafter set forth and Tenant covenants as a
material part of the consideration for this Lease to perform and observe each
and all of said terms, covenants and conditions. This Lease is made upon the
conditions of such performance and observance


1. USE Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for the purposes of general
office, light manufacturing, research and development, and storage and other
uses necessary for Tenant to conduct Tenant's business, provided that such uses
shall be in accordance with all applicable governmental laws and ordinances and
for no other purpose. Tenant shall not do or permit to be done in or about the
Premises or the Complex nor bring or keep or permit to be brought or kept in or
about the Premises or the Complex anything which is prohibited by or will in any
way increase the existing rate of (or otherwise affect) fire or any insurance
covering the Complex or any part thereof,or any of its contents, or will cause a
cancellation of any insurance covering the Complex or any part thereof, or any
of its contents. Tenant shall not do or permit to be done anything in, on or
about the Premises or the Complex which will in any way obstruct or interfere
with the rights of other tenants or occupants of the Complex or injure or annoy
them, or use or allow the Premises to be used by for any improper, immoral,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises or the Complex. No sale by auction
shall be permitted on the Premises. Tenant shall not place nay loads upon the
floors, walls, or ceiling, which endanger the structure, or place any harmful
fluids or other materials in the drainage system of the building, or overloading
existing electrical or other mechanical systems. No waste materials or refuse
shall be dumped upon or permitted to remain upon any part of the Premises or
outside of the building in which the Premises are a part, except in trash
containers placed inside exterior enclosures designated by Landlord for that
purpose or inside of the building proper where designated by Landlord. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or permitted to remain
outside the Premises or on any portion of common area of the Complex. No
loudspeaker or other device, system or apparatus which can be heard outside the
Premises shall be used in or at the Premises without the prior written consent
of Landlord. Tenant shall not commit or suffer to be committed any






waste in or upon the Premises. Tenant shall indemnify, defend and hold Landlord
harmless against any loss, expense, damage, attorneys' fees, or liability
arising out of failure of Tenant to comply with any applicable law. Tenant shall
comply with any covenant, condition, or restriction (CC&R's) affecting the
Premises. The provisions of this paragraph are for the benefit of Landlord only
and shall not be construed to be for the benefit of any tenant or occupant of
the Complex.

2.      TERM*

        A. The term of this Lease shall be for a period of Eight (8) years
(unless sooner terminated as hereinafter provided) and, subject to Paragraphs
2(B) and 3, shall commence on the 1st day of August, 1996 and end on the 31st
day of July of 2004.

        B. Possession of the Premises shall be deemed tendered and the term of
this Lease shall commence when the first of the following occurs:

               (a) One day after of Certificate of Occupancy is granted by the
proper governmental agency, or if the governmental agency having jurisdiction
over the area in which the Premises are situated does not issue certificates of
occupancy, then the same number of days after certification by Landlord's
architect or contractor that Landlord's construction work has been completed; or

               (b) Upon the occupancy of the Premises by any of Tenant's
operating personnel; or

               (c) When the Tenant Improvements have been substantially
completed for Tenant's use and occupancy, in accordance and compliance with
Exhibit B of this Lease Agreement; or

               (d) As otherwise agreed in writing.


3. POSSESSION If Landlord, for any reason whatsoever, cannot deliver possession
of said premises to Tenant at the commencement of the said term, as hereinbefore
specified, this Lease shall not be void or voidable; no obligation of Tenant
shall be affected thereby; nor shall Landlord or Landlord's agents be liable to
Tenant for any loss or damage resulting therefrom; but in that event the
commencement and termination dates of the Lease, and all other dates affected
thereby shall be revised to conform to the date of Landlord's delivery of
possession, as specified in Paragraph 2(b), above. The above is, however,
subject to the provision that the period of delay, of delivery of the premises
shall not exceed 90 days from the commencement date herein (except those delays
caused by Acts of God, strikes, war, utilities, governmental bodies, weather,
unavailable materials, and delays beyond Landlord's control shall be excluded in
calculating such period) in which instance Tenant, at its option, may, by
written notice to Landlord, terminate this Lease.


4.      RENT

        A. Basic Rent. Tenant agrees to pay to Landlord at such place as
Landlord may designate without deduction, offset, prior notice or demand, and
Landlord agrees to accept the Basic Rent for the leased Premises the total sum
of SIX MILLION THREE HUNDRED SEVENTY SEVEN THOUSAND FORTY FOUR AND 80/100
($6,377,044.80) Dollars in lawful money of the United States of America, payable
as follows:

--------
* It is agreed in the event said Lease commences on a date other than the first
day of the month the term of the Lease will be extended to account for the
number of days in the partial month. The Basic Rent during the resulting partial
month will be pro-rated (for the number of days in the partial month) at the
Basic Rent scheduled for the projected commencement date as shown in Paragraph
43.






        See Paragraph 43 for Basic Rent Schedule

        B. Time for Payment. In the event that the term of this Lease commences
on a date other than the first day of a calendar month, on the date of
commencement of the term hereof Tenant shall pay to Landlord as rent for the
period from such date of commencement to the first day of the next succeeding
calendar month that proportion of the monthly rent hereunder which the number of
days between such date of commencement and the first day of the next succeeding
calendar month bears to thirty (30) days. In the event that the term of this
Lease for any reason ends on a date other than the last day of a calendar month,
on the first day of the last calendar month of the term hereof Tenant shall pay
to Landlord as rent for the period from said first day of said last calendar
month to and including the last day of the term hereof that proportion of the
monthly rent hereunder which the number of days between said first day of said
last calendar month and the last day of the term hereof bears to thirty (30).

        C. Late Charge. Notwithstanding any other provision of this Lease, if
Tenant is in default in the payment of rental as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a late charge for each rental payment in default ten (10)
days. Said late charge shall equal ten (10%) percent of each rental payment so
in default.

        D. Additional Rent. Beginning with the commencement date of the term of
this Lease, Tenant shall pay to Landlord in addition to the Basic Rent and as
Additional Rent the following:

               (a) Tenant's proportionate share of Taxes relating to the Complex
as set forth in Paragraph 12, and

               (b) Tenant's proportionate share of all insurance premiums
relating to the Complex, as set forth in Paragraph 15, and

               (c) Tenant's proportionate share of expenses for the operation,
management, maintenance and repair of the Building (including common areas of
the Building) and Common Areas of the Complex in which the Premises are located
as set forth in Paragraph 7, and

               (d) All charges, costs and expenses, which Tenant is required to
pay hereunder, together with all interest and penalties, costs and expenses,
including attorneys; fees and legal expenses, that may accrue thereto in the
event of Tenants failure to pay such amounts, nd all damages, reasonable costs
and expenses which Landlord may incur by reason of default of Tenant or failure
on Tenant's part to comply with the terms of this Lease. In the event of
nonpayment by Tenant of Additional Rent, Landlord shall have all the rights and
remedies with respect thereto as Landlord has for nonpayment of rent. The
Additional Rent due hereunder shall be paid to Landlord or Landlord's agent (i)
within five days for taxes and insurance and within thirty (30) days for all
other Additional Rent items after presentation of invoice from Landlord or
Landlord's agent setting forth such Additional Rent and/or (ii) at the option of
landlord, Tenant shall pay to Landlord monthly, in advance, Tenant's prorata
share os an amount estimated by Landlord to be Landlord's approximate average
monthly expenditure for such Additional Rent items, which estimated amount shall
be reconciled within 120 days of the end of each calendar year as compared to
Landlord's actual expenditure for said Additional Rent items, with Tenant paying
to Landlord, upon demand, any amount of actual expenses expended by Landlord n
excess of said estimated amount, or Landlord refunding to Tenant (providing
Tenant is not in default in the performance of any of the terms, covenants and
conditions of this Lease) any amount of estimated payments made by Tenant in
excess of Landlord's actual expenditures for said Additional Rent items. The
respective obligations of Landlord and Tenant under this paragraph shall survive
the expiration or other termination of the term of this Lease, wand if the term
hereof shall expire or shall otherwise terminate on a day other than the last
day of a calendar year, the actual Additional Rent incurred for the calendar
year in which the term hereof express or otherwise terminates hall be determine
and settles on the basis of the statement of actual Additional Rent for such
calendar year and shall be prorated in the proportion which the number of days
in such calendar year preceding such expiration or termination bears to 365.

        E. Fixed Management Fee. Beginning with the Commencement Date of the
Term of this Lease,






Tenant shall pay to landlord, in addition to the Basic Rent and Additional Rent,
a fixed monthly management fee equal to 1% of the Basic Rent due for each month
during the Lease Term ('Management Fee').

        F. Place of Payment of Rent and Additional Rent. All Basic Rent
hereunder and all payments hereunder for Additional Rent shall be paid to
Landlord at the office of Landlord at Peery/Arrillaga, File 1504, Box 60000, San
Francisco, CA 94160 or to such other person or to such other place as Landlord
may from time to time designate in writing.

        G. Security Deposit. Concurrently with Tenant's execution of this Lease,
Tenant shall deposit with Landlord the sum of One Hundred Fifty Thousand Seven
Hundred Twenty One and 60/100 ($151,721.60) Dollars. Said sum shall be held by
Landlord as a Security Deposit for the faithful performance by Tenant of all of
the terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the term hereof. If Tenant defaults with respect to any provision
of this Lease, including, but not limited to, the provisions relating to the
payment of rent and any of the monetary sums due herewith. Landlord may (but
shall not be require to) use, apply or retain [all] or any part of this Security
Deposit for the payment of any other amount which Landlord may spend by reason
of default or to compensate landlord for any other [ ] damage which Landlord may
suffer by reason of Tenant's default. If any portion of said Deposit is so used
or applied, Tenant shall, within ten (10) days after written [demand] therefor,
deposit cash with Landlord in the amount sufficient to restore the Security
Deposit to its original amount. Tenant's failure to do so shall be a material
breach of this Lease. Landlord shall not be required to keep this security
Deposit separate from its general funds, and Tenant shall not be entitled to
interest on such Deposit [ ] Tenant fully and faithfully performs every
provision of this Lease to be performed by it, the Security Deposit or any
balance thereof shall be returned to Tenant for (or at Landlord's option, to the
last assignee of Tenant's interest hereunder) at the expiration of the Lease
term and after Tenant has vacated the Premises. In the event of [termination] of
Landlord's interest in this Lease, Landlord shall transfer said deposit to
Landlord's successor in interest whereupon Tenant agrees to release Landlord
from [liability] for the return of such Deposit or the accounting therefor.

5. RULES AND REGULATIONS AND COMMON AREA Subject to the terms and conditions of
this Lease and such Rules and Regulations as Landlord may from time to time
prescribe, Tenant and Tenant's employees, invitees and customers, shall, in
common with other occupants of the Complex in which the Premises are located,
their respective employees, invitees and customers, and others entitled to the
use thereof, have the non-exclusive right to use the access roads, parking
areas, and facilities provided and designated by Landlord for the general use
and convenience of the occupants of the complex in which the Premises are
located, which areas and facilities are referred to herein as 'Common Area'.
This right shall terminate upon the termination of this Lease. Landlord reserves
the right from time to time to make changes in the shape, size, location, amount
and extent of Common Area. Landlord further reserves the right to promulgate
such reasonable rules and regulations relating to use of the Common Area, and
any part or parts thereof, as Landlord may deem appropriate for the best
interests of the occupants of the Complex. The Rules and Regulations shall be
binding upon Tenant upon delivery of a copy of them to Tenant, and Tenant shall
abide by them and cooperate in their observance. Such Rules and Regulations may
be amended by Landlord from time to time, with or without advance notice, and
all amendments shall be effective upon delivery of a copy to Tenant. Landlord
shall not be responsible to Tenant for the non-performance by any other tenant
or occupant of the Complex of any of said Rules and Regulations. Landlord shall
operate, manage and maintain the Common Area. The manner in which the Common
Area shall be maintained and the expenditures for such maintenance shall be at
the discretion of the Landlord.

[ ],860.80 Due upon Lease execution.
[ ],860.80 Promissory Note due August 1, 1997.

6. PARKING Tenant shall have the right to use with other tenants or occupants of
the Complex 177 parking spaces in the common parking areas of the Complex.
Tenant agrees, that Tenant, Tenant's employees, agents, representatives and/or
invitees shall no use parking spaces in excess of said 177 spaces allocated to
Tenant hereunder. Landlord shall have the right, at Landlord's sole discretion,
to specifically designate the location of Tenant's parking spaces within the
common parking areas of the Complex in the event of a dispute among the tenants
occupying the






building and/or Complex referred to herein, in which event Tenant agrees that
Tenant, Tenant's employees, agents, representatives and/or invitees shall not
use any parking spaces other than those parking spaces specifically designated
by Landlord for Tenant's use. Said parking spaces, if specifically designated by
Landlord to Tenant, may be relocated by Landlord at any time, and from time to
time. Landlord reserves the right, at Landlord's sole discretion , to rescind
any specific designation of parking spaces, thereby returning Tenant's parking
spaces to the common parking area. Landlord shall give Tenant written notice of
any change in Tenant's parking spaces. Tenant shall not, at any time, park or
permit to be parked, any trucks or vehicles adjacent to the loading areas so as
to interfere in any way with the use of such ares, nor shall Tenant at any time
park, or permit the parking of Tenant's trucks or other vehicles or the trucks
and vehicles of Tenant's suppliers or others, in any portion of the common
parking area not designated by Landlord for such use by Tenant. Tenant shall not
park nor permit to be parked, any inoperative vehicles or equipment on any
portion of the common parking area or other common areas of the Complex. Tenant
agrees to assume responsibility for compliance by its employees with the parking
provision contained herein. If Tenant or its employees park in other than such
designated parking areas, then Landlord may charge Tenant, as an additional
charge, and Tenant agrees to pay , ten ($10) Dollars per day for each day or
partial day each such vehicle is parked in any area other than that designated.
Tenant hereby authorizes Landlord at Tenant's sole expense to tow away from the
Complex any vehicle belonging to Tenant or Tenant's employees parked in
violation of these provisions, or to attach violation stickers or notices to
such vehicles. Tenant shall use the parking areas for vehicle parking only, and
shall not use the parking areas for storage.

7. EXPENSES OF OPERATION, MANAGEMENT, AND MAINTENANCE OF THE COMMON AREAS
OF THE COMPLEX As Additional Rent and in accordance with Paragraph 4D of this
Lease, Tenant shall pay to Landlord Tenant's proportionate share (calculated on
a square footage or other equitable basis as calculated by Landlord) of all
expenses of operation, maintenance and repair of the Common Areas of the Complex
including, but not limited to, license, permit, and inspection fees; security;
utility charges associated with exterior landscaping and lighting (including
water and sewer charges); all charges incurred in the maintenance of landscaped
areas, lakes, parking lots, sidewalks, driveways; maintenance, repair and
replacement of all fixtures and electrical, mechanical, and plumbing systems,
structural elements and exterior surfaces of the buildings; salaries and
employee benefits of personnel and payroll taxes applicable thereto; supplies,
materials, equipment and tools; the cost of capital expenditures which have the
effect of reducing operating expenses, provided, however that in the event
Landlord makes such capital improvements, Landlord may amortize its investment
in said improvements (together with interest at the rate of fifteen (15%)
percent per annum on the unamortized balance) as an operating expense in
accordance with standard accounting practices, provided, that such amortization
is not at a rate greater than the anticipated savings in the operating expenses.
        'Additional Rent' as used herein shall not include Landlord's debt
repayments; interest on charges; expenses directly or indirectly incurred by
Landlord for the benefit of any other tenant; cost for the installation of
partioning or any other tenant improvements; cost of attracting tenants;
depreciation; interest, or executive salaries.

8. ACCEPTANCE AND SURRENDER OF PREMISES By entry hereunder, Tenant accepts the
Premises as being in good and sanitary order, condition and repair and accepts
the building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such building or as to the use or occupancy which may be made thereof. Any
exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Lease term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (damage by Acts of God, fire, normal wear
and tear excepted), with all interior walls painted, or cleaned so that they
appear freshly painted, and repaired and replaced, if damaged; all floors
cleaned and waxed; all carpets cleaned and shampooed; the airconditioning and
heating equipment serviced by a reputable and licensed service firm and in good
operating condition (provided the maintenance of such equipment has been
Tenant's responsibility during the term of this Lease) together with all
alterations additions, and improvements which may have been made in, to, or on
the Premises (except movable trade fixtures installed at the expense of Tenant)
except that Tenant shall ascertain from Landlord within thirty (30) days before
the end of the term of this Lease whether Landlord desires to have the Premises
or any part or parts thereof restored to their condition and configuration was
when the Premises were delivered to Tenant and if Landlord shall so desire, then
Tenant shall restore said Premises or such part or parts thereof before the end
of this Lease at Tenant's sole cost and expense. Tenant, on or before the end of
the term or sooner termination of this Lease, shall remove all of Tenant's
personal property and trade fixtures from the






Premises, and all property not so removed on or before the end of the term or
sooner termination of this Lease shall be deemed abandoned by Tenant and title
to same shall thereupon pass to Landlord without compensation to Tenant.
Landlord may, upon termination of this Lease remove all moveable furniture and
equipment so abandoned by Tenant, at Tenant's sole cost, and repair any damage
caused by such removal at Tenant;s sole cost. If the Premises be not surrendered
at the end of the term or sooner termination of this Lease, Tenant shall
indemnify Landlord against loss or liability resulting from the delay by Tenant
in so surrendering the Premises including without limitation, any claims made by
any succeeding tenant founded on such delay. Nothing contained herein shall be
construed as an extension of the term hereof or as a consent of Landlord to any
holding over by Tenant. The voluntary or other surrender of this Lease or the
Premises by Tenant or a mutual cancellation of this Lease shall not work as a
merger and, at the option of Landlord, shall either terminate all or any
existing subleases or subtenancies or operate as an assignment to Landlord of
all or any such subleases or subtenancies.

9. ALTERATIONS AND ADDITIONS Tenant shall not make, or suffer to be made, any
alteration or addition to the Premises, or any part thereof, without the written
consent of Landlord first had and obtained by Tenant, but at the cost of Tenant,
and any addition to, or alteration of, the Premises, except moveable furniture
and trade fixtures, shall at once become a part of the Premises and belong to
Landlord. Landlord reserved the right to approve all contractors and mechanics
proposed by Tenant to airconditioning, floor to ceiling partioning, drapery,
carpeting, and floor installations made by Tenant, together with all property
that has become an integral part f the Premises, shall not be deemed trade
fixtures. Tenant agrees that it will not proceed to make such alternation or
additions, without having obtained consent from Landlord to do so, and until
five (5) days from the receipt of such consent, in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers
for payment for Tenant's improvements. Tenant will at all times permit such
notices to be posted and to remain posted until the completion of work. Tenant
shall, if required by Landlord, secure at Tenant's own cost and expense, a
completion and lien indemnity bond, satisfactory to Landlord, for such work.
Tenant further covenants and agrees that any mechanic's lien filed against the
Premises or against the Complex for work claimed to have been done for, or
materials claimed to have been furnished to Tenant, will be discharged by
Tenant, by bond or otherwise, within ten (10) days after the filing thereof, at
the cost and expense of Tenant. Any exceptions to the foregoing must be made in
writing and executed by both Landlord and Tenant.

10. TENANT MAINTENANCE Tenant shall, at its sole cost and expense, keep and
maintain the Premises (including appurtenances) and every part thereof,
excluding any damage caused by the negligence or willful misconduct of Landlord
or Landlord's agents, employees, invitees or licensees), in a high standard of
maintenance and repair, and in good and sanitary condition. Tenant maintenance
and repair responsibilities herein referred to include, but are not limited to
all windows, window frames, plate glass, glazing, truck doors, plumbing systems
(such as water and drain lines, sinks, toilets, faucets, drains, showers and
water fountains), electrical systems (such as panels, conduits, outlets,
lighting fixtures, lamps, bulbs, tubes, ballasts), heating and air-conditioning
systems (such as compressors, fans, air handlers, ducts, mixing boxes,
thermostats, time clocks, boilers, heaters, supply and return grills), store
fronts, roofs, downspout, all interior improvements within the premises
including but not limited to wall coverings, window coverings, carpet, floor
coverings, partitioning, ceiling, doors (both interior and exterior, including
closing mechanisms, latches, locks, skylights (if any), automatic fire
extinguishing systems, and elevators and all other interior improvements of any
nature whatsoever. Tenant agrees to provide carpet shields under all rolling
chairs or to otherwise be responsible for wear and tear of the carpet caused by
such rolling chairs if such wear and tear exceeds that caused by normal foot
traffic in surrounding areas. Areas of excessive wear shall be replaced at
Tenant's sole expense upon termination. Tenant hereby waives all rights under,
and benefits of, subsection 1 of Section 1932 and Section 1941 and 1942 of the
California Civil Code and under any similar law, statute or ordinance now or
hereafter in effect.

11. UTILITIES Tenant shall pay promptly, as the same become due, all charges for
water, gas, electricity, telephone, telex and other electronic communications
service, sewer service, waste pick-up and any other utilities, materials or
services furnished directly to or used by Tenant on or about the Premises during
the term of this Lease, including, without limitation, any temporary or
permanent utility surcharge or other exactions whether or not hereinafter
imposed.
        Landlord shall not be liable for and Tenant shall not be entitled to any
abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such failure is caused by accident,






breakage, repair, strikes, lockouts, or other labor disturbances or labor
disputes of any nature, or by any other cause, similar or dissimilar, beyond the
reasonable control of Landlord.

12.     TAXES

        A. As Additional Rent and in accordance with Paragraph 4D and this
Lease, Tenant shall pay to Landlord Tenant's proportionate share of all Real
Property Taxes, which prorata share shall be allocated to the leased Premises by
square footage or other equitable basis, as calculated by Landlord. The term
'Real Property Taxes', as used herein, shall mean (i) all taxes, assessments,
levies and other charges of any kind or nature whatsoever, general and special,
foreseen (including all installments of principal and interest required to pay
any general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership of the Complex)
now or hereafter imposed by any governmental or quasi governmental authority or
special district having the direct or indirect power to tax or levy assessments,
which are levied or assessed against, or with respect to the value occupancy or
use of, all or any portion of the Complex (as now constructed or as may at any
time hereafter be construed, altered, or otherwise changed) or Landlord's
interest therein, any improvements located within the Complex (regardless of
ownership); the fixtures, equipment and other property of Landlord, real or
personal, that are an integral part of and located in the Complex; or parking
areas, public utilities, or energy within the Complex; (ii) all charges, levies
or fees imposed by reason of environmental regulation or other governmental
control of the Complex and (iii) all costs and fees (including attorneys' fees)
incurred by Landlord in contesting any Real Property Tax and negotiating with
public authorities as to any Real Property Tax. If at any time during the term
of this Lease the taxation or assessment of the Complex prevailing as of the
commencement date of this Lease shall be altered so that in lieu of or in
addition to any Real Property Tax described above there shall be levied,
assessed or imposed (whether by reason of a change in the method of taxation or
assessment creation of a new tax or charge, or any other cause) an alternate or
additional tax or charge (i) on the value, use or occupancy of the Complex or
Landlord's interest therein or (ii) on or measured by the gross receipts, income
or rentals from the Complex, then any such tax or charge, however designated,
shall be included within the meaning of the term 'Real Property Taxes' for
purposes of this Lease. If any Real Property Tax is based upon property or rents
unrelated to the Complex, then only that part of such real Property tax that is
fairly allocable to the Complex shall be included within the meaning of the term
'Real Property Taxes'. Notwithstanding the foregoing, the term 'Real Property
Taxes' shall not include estate, inheritance gift or franchise taxes of Landlord
or the federal or state net income tax imposed on Landlord's income from all
sources.

        B. Taxes on Tenant's Property

               (a) Tenant shall be liable for and shall pay ten days before
delinquency, taxes levied against any personal property or trade fixtures placed
by Tenant in or about the Premises. If any such taxes on Tenant's personal
property or trade fixtures are levied against Landlord or Landlord's property or
if the assessed value of the Premises in increased by the inclusion therein of a
value placed upon such personal property or trade fixtures of Tenant and if
landlord, after written notice to Tenant, pays the taxes based on such increased
assessment, which Landlord shall have the right to do regardless of the validity
thereof, but only under proper protest if requested by Tenant, Tenant shall upon
demand, as the case may be, repay to Landlord the taxes so levied against
Landlord, or the proportion of such taxes resulting from such increase in the
assessment; provided that in any such event Tenant shall have the right, in the
name of Landlord and with Landlord's full cooperation to bring suit in any court
of competent jurisdiction to recover the amount of any such taxes so paid under
protest and any amount so recovered shall belong to Tenant.

               (b) if the Tenant improvements in the Premises, whether
installed, and/or paid for by Landlord or Tenant and whether or not affixed to
the real property so as to become a part thereof, are assessed for real property
tax purposes at a valuation higher than the valuation at which standard office
improvements in other space in the Complex are assessed, then the real property
taxes and assessments levied against Landlord or the Complex by reason of such
excess assessed valuation shall be deemed to be taxes levied against personal
property of Tenant and shall be governed by the provisions of 12Ba above. If the
records of the County Assessor are available and sufficiently detailed to serve
as a basis for determining whether said Tenant improvements are assessed at a
higher






valuation than standard office improvements in other space in the Complex, such
records shall be binding on both the Landlord and the Tenant. If the records of
the County Assessor are not available or sufficiently detailed to serve as a
basis for making said determination, the actual cost of construction shall be
used.

13. LIABILITY INSURANCE Tenant at Tenant's expense, agrees to keep in force
during the term of this Lease a policy of commercial general insurance with
combined single limit coverage of not less than Two Million Dollars ($2,000,000)
for injuries to or death of persons occurring in, on or about the Premises or
the Complex, and property damage insurance with limits of $550,000. The policy
or policies affecting such insurance, certificates of insurance of which shall
be furnished to Landlord shall name Landlord as an additional insureds, and
shall insure any liability of Landlord, contingent or otherwise, as respects
acts or omissions of Tenant, its agents, employees or invitees or otherwise by
any conduct or transactions of any of said persons in or about or concerning the
Premises, including any failure of Tenant to observe or perform any of its
obligations hereunder, shall be issued by an insurance company admitted to
transact business in the Sate of California, and shall provide that the
insurance effected thereby shall not be canceled, except upon thirty (30) days
prior written notice to Landlord. If during the term of this Lease, in the
considered opinion of Landlord's Lender, insurance advisor, or counsel, the
amount of insurance described in this paragraph 13 is not adequate. Tenant
agrees to increase and coverage to such reasonable amount as Landlord's lender,
insurance advisor, or counsel shall deem adequate.

14. TENANT'S PERSONAL PROPERTY INSURANCE AND WORKMAN'S COMPENSATION
INSURANCE Tenant shall maintain a policy or policies of fire and property damage
insurance in 'all risk' form with a sprinkler leakage endorsement insuring the
personal property, inventory, trade fixtures, and leasehold improvements within
the leased Premises for the full replacements value thereof. The proceeds from
any of such policies shall be used for the repair or replacement of such items
so insured.
        Tenant shall also maintain a policy or policies of workman's
compensation insurance and any other employee benefit insurance sufficient to
comply with all laws.

15. PROPERTY INSURANCE Landlord shall purchase and keep in force and as
Additional Rent and in accordance with Paragraph 4D of this Lease, Tenant shall
pay to Landlord (or Landlord's agent if so directed by Landlord) Tenant's
proportionate share (calculated on a square footage or other equitable basis as
calculated by Landlord) of the deductibles on insurance claims and the cost of
policy or policies of insurance covering loss or damage to the Premises and
Complex in the amount of the full replacement value thereof, providing
protection against those perils included within the classification of 'all
risks' insurance and flood and/or earthquake insurance, if available, plus a
policy of rental income insurance in the amount of one hundred (100%) percent of
twelve (12) months Basic Rent, plus sums paid as Additional Rent and any
deductibles related thereto. If such insurance cost is increased due to Tenant's
use of the Premises or the Complex, Tenant agrees to pay to Landlord the full
cost of such increase. Tenant shall have no interest in nor any right to the
proceeds of any insurance procured by Landlord for the Complex. Landlord and
Tenant do each hereby respectively release the other, to the extent of insurance
coverage of the releasing party, from any liability for loss or damage caused by
fire or any of the extended coverage casualties included in the releasing
party's insurance policies, irrespective of the cause of such fire or casualty;
provided, however, prohibited, the insured party affected shall promptly notify
the other party thereof.

16. INDEMNIFICATION Landlord shall not be liable to Tenant and Tenant hereby
waives all claims against Landlord for any injury to or death of any person or
damage to or destruction of property in or about eh Premises or the Complex by
or from any cause whatsoever, including, without limitation, gas, fire, oil,
electricity or leakage of any character from the roof, walls, basements or other
portion of the Premises or the Complex but excluding, however, the willful
misconduct or negligence of Landlord, its agents, servants, employees, invitees,
or contractors of which negligence Landlord has knowledge and reasonable time to
correct. Except as to injury to persons or damage to property the negligence of
Landlord, [its agents, servants, employees, invitees, or contractors to the
extent arising from the willful misconduct or] Tenant shall hold Landlord
harmless from and defend Landlord against any and all expenses, including
reasonable attorneys' fees, in connection therewith, arising out of any injury
to or death of any person or damage to or destruction of property occurring in,
on or about the Premises, or any part thereof, from any cause whatsoever.







17. COMPLIANCE Tenant, at its sole cost and expense, shall promptly comply with
all laws, statutes, ordinances and governmental rules, regulations or
requirements now or hereafter in effect; with the requirements of any board of
the underwriters or other similar body now or hereafter constituted, and with
any direction or occupancy certificate issued pursuant to law by any public
officer, provided, however, that no such failure shall be deemed a breach of the
provisions if Tenant immediately upon notification, commences to remedy or
rectify said failure. The judgement of any court of competent jurisdiction or
the admission of Tenant in any action against Tenant. Whether Landlord be a
party thereto or not, that Tenant has violated any such law, statute, ordinance
or governmental rule, regulation, requirement, direction or provision, shall be
conclusive of that fact as between Landlord and Tenant. The paragraph shall not
be interpreted as requiring Tenant to make structural changes or improvements,
except to the extent such changes or improvements are required as a result of
Tenant's use of the Premises. Tenant shall, at its sole cost and expense, comply
with any and all requirements pertaining to said Premises, of any insurance
organization or company, necessary for the maintenance of reasonable fire and
public liability insurance covering the Premises.

18. LIENS Tenant shall keep the Premises and the Complex free from any liens
arising out of any work performed, materials furnished or obligations incurred
by Tenant in the event that Tenant shall not, within ten (10) days following the
imposition of such lien, cause the same to be released of record, Landlord shall
have, in addition to all other remedies provided herein and by law, the right,
but no obligation, to cause the same to be released by such means as it shall
deem proper, including payment of the claim giving rise to such lien. All sums
paid by Landlord for such purpose, and all expenses incurred by it in connection
therewith, shall be payable to Landlord by Tenant on demand with interest at the
prime rate of interest as quoted by the Bank of America.

19. ASSIGNMENT AND SUBLETTING Tenant shall not assign, transfer, or hypothecate
the leasehold estate under this Lease, or any interest therein, and shall not
sublet the Premises, or any part thereof, or any right or privilege appurtenant
thereto, or suffer any other person or entity to occupy or use the Premises, or
any portion thereof, without, in each case, the prior written consent of
Landlord which consent will not be unreasonably withheld. As a condition for
granting this consent to any assignment, transfer or subletting, Landlord may
require that Tenant agrees to pay to Landlord, as additional rent 50% of all
rents or additional consideration received by Tenant from its assignees,
transferees, or subtenants in excess of the rent payable by Tenant to Landlord
hereunder. [...any reasonable leasing commissions paid by Tenant to third
parties not affiliated with Tenant.] Tenant shall by thirty (30) days written
notice advise Landlord of its intent to assign or transfer Tenant's interest in
the Lease or sublet the Premises or any portion thereof for any part of the term
hereof. Within thirty (30) days after receipt of said written notice, Landlord
may, in its sole discretion, elect to terminate this Lease as to the portion of
the Premises described in Tenant's notice on the date specified in Tenant's
notice by giving written notice of such election to terminate. If no such notice
to terminate is given to Tenant within said thirty (30) day period, Tenant may
proceed to locate an acceptable sublessee, assignee, or other transferee for
presentment to Landlord for Landlord's approval, all in accordance with the
terms, covenants, and conditions of this paragraph 19. If Tenant intends to
sublet the entire Premises and Landlord elects to terminate this Lease, this
Lease shall be terminated on the date specified in Tenant's notice. If, however,
this Lease shall terminate pursuant to the foregoing with respect to less than
all of the Premises, the rent, as defined and reserved hereinabove shall be
adjusted on a pro rata basis to the number of square feet retained by Tenant,
and this Lease as so amended shall continue in full force and effect. In the
event Tenant is allowed to assign, transfer or sublet the whole or any part, of
the Premises, with the prior written consent of Landlord, no assignee,
transferee or subtenant shall assign or transfer this Lease, either in whole or
in part, or sublet the whole or any part of the Premises, without also having
obtained the prior written consent of Landlord which consent shall not be
unreasonably withheld. A consent of Landlord to one assignment, transfer,
hypothecation, subletting, occupation or use by any other person. Any such
assignment transfer, hypothecation, subletting, occupation or use without such
consent shall be void and shall constitute a breach of this Lease by Tenant and
shall, at the option of Landlord exercised by written notice to Tenant,
terminate this Lease. The leasehold estate under this Lease shall not, nor shall
any interest therein, be assignable for any purpose by operation of law without
the written consent of Landlord which consent shall not be unreasonably
withheld. As a condition to its consent, Landlord may require Tenant to pay all
expenses in connection with the assignment, and Landlord may require Tenant's
assignee or transferee (or other assignees or transferees) to assume in writing
all of the obligations under this Lease and for Tenant to remain liable to
Landlord under the Lease. See Paragraph 50.






20. SUBORDINATION AND MORTGAGES In the event Landlord's title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the interest of
Landlord in the land and buildings in which the demised Premises are located, to
secure a loan from a lender (hereinafter referred to as 'Lender') to Landlord,
Tenant shall, at the request of Landlord or Lender, execute in writing an
agreement subordinating its rights under this Lease to the lien of such deed of
trust, or, if so requested, agreeing that the lien of Lender's deed of trust
shall be or remain subject and subordinate to the rights of Tenant under this
Lease [and provided Lender executes a reasonable nondisturbance agreement].
Notwithstanding any such subordination, Tenant's possession under this Lease
shall not be disturbed if Tenant is not in default and so long as tenant shall
pay all rent and observe and perform all of the provisions set forth in this
lease.

21. ENTRY BY LANDLORD Landlord reserves, and shall at all reasonable times after
at least 24 hours notice (except in emergencies) have, the right to enter the
Premises to inspect them; to perform any services to be provided by Landlord
hereunder; to submit the Premises to prospective purchasers, mortgagers or
tenants; to post notices of nonresponsibility; and to alter, improve or repair
the Premises and any portion of the Complex, all without abatement of rent; and
may erect scaffolding and other necessary structures in or through the Premises
where reasonably required by the character of the work to be performed;
provided, however that the business of Tenant shall be interfered with to the
least extent that is reasonably practical. For each of the foregoing purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the doors in an emergency in order to obtain entry to the Premises, and any
entry to the Premises obtained by Landlord by any of said means, or otherwise,
shall not under any circumstances be construed or deemed to be a forcible or
unlawful entry into or a detainer of the premises or an eviction, actual or
constructive, of Tenant from the Premises or any portion thereof. Landlord shall
also have the right at any time to change the arrangement or location of
entrances or passageways, doors and doorways, and corridors, elevators, stairs,
toilets or other public parts of the Complex and to change the name, number or
designation by which the Complex is commonly known, and none of the foregoing
shall be deemed an actual or constructive eviction of Tenant, or shall entitle
Tenant to any reduction of rent hereunder.

22. BANKRUPTCY AND DEFAULT The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
undertaken by Tenant, or the insolvency of Tenant, shall, at Landlord's option,
constitute a breach of this Lease by Tenant. If the trustee or receiver
appointed to serve during a bankruptcy liquidation, reorganization, insolvency
or similar action elects to reject Tenant's unexpired Lease, the trustee or
receiver shall notify Landlord in writing of its election within thirty (30)
days after an order for relief in a liquidation action or within thirty (30)
days after the commencement of any action.
        Within thirty (30) days after court approval of the assumption of this
Lease, the trustee or receiver shall cure (or provide adequate assurance to the
reasonable satisfaction of Landlord that the trustee or receiver shall cure) any
and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said Lease to the reasonable satisfaction of Landlord.
Adequate assurance of future performance, as used herein, includes, but shall
not be limited to: (i) assurance of source and payment of rent, and other
consideration due under this Lease; (ii) assurance that the assumption or
assignment of this Lease will not breach substantially any provision, such as
radius, location, use, or exclusivity provision, in any agreement relating to
the above described Premises.
        Nothing contained in this section shall affect the existing right of
Landlord to refuse to accept an assignment upon commencement of or in connection
with a bankruptcy, liquidation, reorganization or insolvency action or an
assignment of Tenant for the benefit of creditors or other similar act. Nothing
contained in this Lease shall be construed as giving or granting or creating an
equity in the demised Premises to Tenant. In no event shall the leasehold estate
under this Lease, or any interest therein, be assigned by Tenant under any
bankruptcy, insolvency or reorganization proceedings.
        The failure to perform or honor any covenant, condition or
representation made under this Lease shall constitute a default hereunder by
Tenant upon expiration of the appropriate grace period hereinafter provided.
Tenant shall have a period of five (5) days from the date of written notice from
Landlord within which to cure any default in the payment of rental or adjustment
thereto. Tenant shall have a period of thirty (30) days from the date of written
notice from Landlord within which to cure any other default under this Lease [].
Upon an uncured default of this Lease by Tenant Landlord shall have the
following rights and remedies in addition to any other rights or remedies
available to Landlord at law or in equity.







        (a) The rights and remedies provided for by California Civil Code
Section 1951.2, including but not limited to, recovery of the worth at the time
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss for the same period
that Tenant proves could be reasonably avoided, as computed pursuant to
subsection (b) of said Section 1951.2. Any proof by Tenant under subparagraphs
(2) and (3) of Section 1951.2 of the California Civil Code of the amount of
rental loss that could be reasonable avoided shall be made in the following
manner: Landlord and Tenant shall each select a licensed real estate broker in
the business of renting property of the same type and use as the Premises and in
the same geographic vicinity. Such two real estate brokers shall select a third
licensed real estate broker, and the three licensed real estate brokers so
selected shall determine the amount of the rental loss that could be reasonably
avoided from the balance of the term of this Lease after the time of award. The
decision of the majority of said licensed real estate brokers shall be final and
binding upon the parties hereto.

        (b) The rights and remedies provided by California Civil Code Section
which allows Landlord to continue the Lease in effect and to enforce all of its
rights and remedies under this Lease, including the right to recover rent as it
becomes due, for so long as Landlord does not terminate Tenant's right to
possession; acts of maintenance or preservation, efforts to relet the Premises,
or the appointment of a receiver upon Landlord's initiative to protect its
interest under this Lease shall not constitute a termination of Tenant's right
to possession.

        (c) The right to terminate this Lease by giving notice to Tenant in
accordance with applicable law.

        (d) [] The right and power to enter the Premises and remove therefrom
all persons and property, to store such property in a public warehouse or
elsewhere at the cost of and for the account of Tenant, and to sell such
property and apply such proceeds therefrom pursuant to applicable California
law. Landlord may from time to time sublet the Premises or any part thereof for
such term or terms (which may extend beyond the term of this Lease) and at such
rent and such other terms as Landlord in its sole discretion may deem advisable,
with the right to make alterations and repairs to the Premises. Upon each
subletting, (i) Tenant shall be immediately liable to pay Landlord, in addition
to indebtedness other than rent due hereunder, the cost of such subletting,
including, but not limited to, reasonable attorneys' fees, and any real estate
commission actually paid, and the cost of such alterations and repairs incurred
by Landlord and the amount, if any, by which the rent hereunder for the period
of such subletting (to the extent such period does not exceed the term hereof)
exceeds the amount to be paid as rent for the Premises for such period or (ii)
at the option of Landlord, rents received from such subletting shall be applied
first to payment of indebtedness other than rent due hereunder from Tenant to
Landlord; second, to the payment of any cost of such subletting and of such
alterations and repairs; third to payment of rent due and unpaid hereunder; and
the residue, if any, shall be held by Landlord and applied in payment of future
rent as the same becomes due hereunder. If Tenant has been credited with any
rent to be received by such subletting under option (i) and such rent shall not
be promptly paid to Landlord by the subtenant(s), or is such rentals received
from such subletting under option (ii) during any month be less than that to be
paid during that month by Tenant hereunder. Tenant shall pay any such deficiency
to Landlord. Such deficiency shall be calculated and paid monthly, provided,
however, that if the nature of Tenant's failure is such that more than thirty
(30) days is reasonably required to cure the same, Tenant shall not be in
default so long as Tenant commences performance within such thirty (30) day
period and thereafter prosecutes the same to completion. No taking possession of
the Premises by Landlord shall be construed as an election on its part to
terminate this Lease unless a written notice of such intention to Tenant.
Notwithstanding any such subletting without termination, Landlord may at any
time hereafter elect to terminate this Lease for such previous breach.

        (e) The right to have a receiver appointed for Tenant upon application
by Landlord, to take possession of the Premises and to apply any rental
collected from the Premises and to exercise all other rights and remedies
granted to Landlord pursuant to subparagraph d above (except that Tenant may
vacate so long as it pays rent, provides and on-site security guard during
normal business hours from Monday through Friday, and otherwise performs its
obligations hereunder.

23. ABANDONMENT Tenant shall not vacate or abandon the Premises at any time
during the term of this Lease and if Tenant shall abandon, vacate or surrender
said Premises, or be dispossessed by the process of law, or otherwise, any
personal property belonging to Tenant and left on the Premiss shall be deemed to
be abandoned, at the option of Landlord, except such property as may be
mortgaged to Landlord.






24. DESTRUCTION In the event the Premises are destroyed in whole or in part from
any cause, except for routine maintenance and repairs and incidental damage and
destruction caused from vandalism and accidents for which Tenant is responsible
for under Paragraph 10. Landlord, may at its option:

        (a) Rebuild or restore the Premises to their condition prior to the
        damage or destruction, or

        (b) Terminate this Lease. (providing that the Premises is damaged to the
        extent of 33 1/3% of the replacement cost).

If Landlord does not give Tenant notice in writing within thirty (30) days from
the destruction of the Premises of its election to either rebuild or restore the
Premises to their condition prior to the damage or destruction. Tenant shall be
entitled to a reduction in rent while such repair is being made in the
proportion that the area of the Premises rendered untenable by such damage bears
to the total area of the Premises. [...that the rebuilding or restoration will
exceed days or] If Landlord does not complete the rebuilding or restoration
within one hundred eighty (180) days following the date of destruction (such
period of time to be extended for delays caused by the fault or neglect of
Tenant or because of Acts of God, acts of public agencies, labor disputes,
strikes, fires, freight embargoes, rainy or stormy weather, inability to obtain
materials, supplies or fuels, acts of contractors or subcontractors, or delay of
the contractors or subcontractors due to such causes or other contingencies
beyond the control of Landlord), then Tenant shall have the right to terminate
this Lease by giving fifteen (15) days prior written notice to Landlord.
Notwithstanding anything herein to the contrary, Landlord's obligation to
rebuild or restore shall be limited to the building and interior improvements
constructed by Landlord as they existed as of the commencement date of the Lease
and shall not include restoration of Tenant's trade fixtures, equipment,
merchandise, or any improvements, alterations or additions made by Tenant to the
Premises, which Tenant shall forthwith replace or fully repair at Tenant's sole
cost and expense provided this Lease is not cancelled according to the
provisions above.
        Unless this Lease is terminated pursuant to the foregoing provisions,
this Lease shall remain in full force and effect. Tenant hereby expressly waives
the provisions of Section 1932, Subdivision 2, in Section 1933, Subdivision 4 of
the California Civil Code.
        In the event that the building in which the Premises are situated is
damaged or destroyed to the extent of not less than 33 1/3% of the replacement
cost thereof. Landlord may elect to terminate this Lease, whether the Premises
be injured or not.

25. EMINENT DOMAIN If all or any part of the Premises shall be taken by any
public authority under the power of eminent domain or conveyance in lieu
thereof, this Lease shall terminate as to any portion of the Premises so taken
or conveyed on the date when title vests in the condemnor, and Landlord shall be
entitled to any and all payment, income, rent, award, or any interest therein
whatsoever which may be paid or made in connection with such taking or
conveyance, and Tenant shall have no claim against Landlord or otherwise for the
value of any unexpired term of this Lease. Notwithstanding the foregoing
paragraph, any compensation specifically awarded Tenant for loss of business.
Tenant's personal property, moving cost or loss of goodwill, shall be and remain
the property of Tenant.

If (i) any action or proceeding is commenced for such taking of the Premises or
any part thereof, or if Landlord is advised in writing by any entity or body
having the right or power of condemnation of its intention to condemn the
premises or any portion thereof, or (ii) any of the foregoing events occur with
respect to the taking of any space in the Complex not leased hereby, or if any
such spaces so taken or conveyed in lieu of such taking and Landlord shall
decide to discontinue the use and operation of the Complex, or decide to
demolish, alter or rebuild the Complex, then, in any of such events Landlord
shall have the right to terminate this Lease by giving Tenant written notice
thereof within sixty (60) days of the date of receipt of said written advice, or
commencement of said action or proceeding, or taking conveyance, which
termination shall take place as the first to occur of the last day of the
calendar month next following the month in which such notice is given or the
date on which title to the Premises shall vest in the condemner.
        In the event of such a partial taking or conveyance of the Premises, if
the portion of the Premises taken or conveyed is so substantial that the Tenant
can no longer reasonably conduct its business, Tenant shall have the privilege
of terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intention so to do, and upon
giving of such notices this Lease shall terminate on the last day of the
calendar month next following the month in which such notice is given, upon
payment by Tenant of the






rent from the date of such taking or conveyance to the date of termination.
        If a portion of the Premises to be taken by condemnation or conveyance
in lieu thereof and neither Landlord nor Tenant shall terminate this Lease as
provided herein, this Lease shall continue in full force and effect as to the
part of the Premises not so taken or conveyed, and the rent herein shall be
apportioned as of the date of such taking or conveyance so that thereafter the
rent to be paid by Tenant shall be in the ratio that the area of the portion of
the Premises not so taken or conveyed bears to the total area of the Premises
prior to such taking.

26. SALE OR CONVEYANCE BY LANDLORD In the event of a sale or conveyance of the
Complex or any interest therein, by any owner of the reversion then
constituting, the transferor shall thereby be released from any further
liability upon any of the terms, covenants or conditions (express or implied)
contained in favor of Tenant, and in such event, insofar as such transfer is
concerned, Tenant agrees to look solely to the responsibility of the successor
in interest of such transferor in and to the Complex and this Lease. This Lease
shall not be affected by any such sale or conveyance, and Tenant agrees to
attorn to the successor in interest of such transferor.

27. ATTORNMENT TO LENDER OR THIRD PARTY In the event the interest of Landlord in
the land and buildings in which the leased Premises are located whether such
interest of Landlord is a fee title interest or a leasehold interest is
encumbered by deed of trust, and such interest is acquired by the lender or any
third party through judicial foreclosure or by exercise of a power of sale at
private trustee's foreclosure sale. Tenant hereby agrees to attorn to the
purchaser at any such foreclosure sale and to recognize such purchaser as the
Landlord under this Lease. In the event the lien of the deed of trust securing
the loan from a Lender to Landlord is prior and paramount [ ] the Lease, this
Lease shall nonetheless continue in full force and effect for the remainder of
the unexpired term hereof, at the same rental herein reserved and upon all the
other terms, conditions and covenants herein contained.

28. HOLDING OVER Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease. Any holding over after the expiration or other termination of the
term of this Lease, with the consent of Landlord, shall be construed to be a
tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable except that the month Basic Rent shall be increased to an
amount equal to one hundred fifty (150%) percent of monthly Basic Rent required
during the last month of the Lease term.

29. CERTIFICATE OF ESTOPPEL Tenant shall at any time upon not less than ten (10)
days' prior written notice to Landlord execute, acknowledge and deliver to
Landlord a statement in writing (i) certifying that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of such
modification and certifying this Lease, as so modified, is in full force and
effect) and the date to which the rent, and other charges are paid in advance,
if any, and (ii) acknowledging that there are to Tenant's knowledge, any uncured
defaults on the part of the Landlord hereunder, or specifying such defaults, if
any, are claimed. Any such statement may be exclusively relied upon by any
prospective purchaser or encumbrancer of the Premises. Tenant's failure to
deliver such statement within such time shall be conclusive upon Tenant that
this Lease is in full force and effect, without modification except as may be
represented by Landlord; that there are no uncured defaults in Landlord's
performance, and that not more than one month's rent has been paid in advance.

30. CONSTRUCTION CHANGES It is understood that the description of the Premises
and the location of ductwork, plumbing and other facilities therein are subject
to [] minor changes as Landlord or Landlord's architect determines to be
desirable in the course of construction of the Premises, and no such changes, or
any changes in [] for any other portions of the Complex shall affect this Lease
or entitle Tenant to any reduction of rent hereunder or result in any liability
of Landlord to Tenant. Landlord does not guarantee the accuracy of any drawings
supplied to Tenant and verification of the accuracy of such drawings rests with
Tenant.

31. RIGHT OF LANDLORD TO PERFORM All terms, covenants and conditions of this
Lease to be performed or observed by Tenant shall be performed or observed []
Tenant at Tenant's sole cost and expense and without any reduction of rent. If
Tenant shall fail to pay any sum of money, or other rent, required to be paid by
it hereunder [] fail to perform any other term or covenant hereunder on its part
to be performed, and such failure shall continue






for five (5) days after written notice thereof by Landlord, Landlord, without
waiving or releasing Tenant from any obligation of Tenant hereunder, may, but
shall not be obligated to, make any such payment or perform any such other term
or covenant on Tenant's part to be performed. All sums so paid by Landlord and
all necessary costs of such performance by Landlord together with interest
thereon at the rate of the prime rate of interest per annum as quoted by the
Bank of America from the date such payment or performance by Landlord, shall be
paid (and Tenant covenants to make such payment) to Landlord on demand by
Landlord, and Landlord shall have (in addition to any other right or remedy of
Landlord) the same rights and remedies in the event of nonpayment by Tenant as
in the case of failure by Tenant in the payment of rent hereunder

32.     ATTORNEYS' FEES

        A. In the event that either Landlord or Tenant should bring suit for the
possession of the Premises, for the recovery of any sum due under this Lease, or
because of the breach of any provision of this Lease, or for any other relief
against the other party hereunder, then all costs and expenses, including
reasonable attorneys' fees, incurred by the prevailing party therein shall be
paid by the other party, which obligations on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgement.

        B. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant's occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including a
reasonable attorneys' fee.

33. WAIVER The waiver by either party of the other party's failure to perform or
observe any term, covenant or condition herein contained to be performed or
observed by such waiving party shall not be deemed to be a waiver of such term,
covenant or condition or of any subsequent failure of the party failing to
perform or observe the same or any other such term, covenant or condition
therein contained, and no custom or practice which may develop between the
parties hereto during the term hereto during the term hereof shall be deemed a
waiver of, or in any way affect, the right of either party to insist upon
performance and observance by the other party in strict accordance with the
terms hereof.

34. NOTICES All notices, demands, requests, advices or designations which may be
or are required to be given by either party to the other hereunder shall be in
writing. All notices, demands, requests, advices or designations by Landlord to
Tenant shall be sufficiently given, made or delivered if personally served on
Tenant by leaving the same at the Premises or if sent by United States certified
or registered mail, postage prepaid, addressed to Tenant at the Premises. All
notices, demands, requests, advices, or designations by Tenant to Landlord shall
be sent by United States certified or registered mail, postage prepaid,
addressed to Landlord at its offices at Peery/Arrillaga, 2560 Mission College
Blvd., Suite 101, Santa Clara, CA 95054. Each notice, request, demand, advice or
designation referred to in this paragraph shall be deemed received on the date
of the personal service or mailing thereof in the manner herein provided, as the
case may be.

35. EXAMINATION OF LEASE Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or otherwise until its execution
and delivery by both Landlord and Tenant.

36. DEFAULT BY LANDLORD Landlord shall not be in default unless Landlord fails
to perform obligations required of Landlord within a reasonable time, but in no
event earlier than thirty (30) days after written notice by Tenant to Landlord
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have heretofore been furnished to Tenant in
writing, specifying wherein Landlord has failed to perform such obligations,
provided, however, that if the nature of Landlord's obligations is such that
more than thirty (30) days are required for performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.

37. CORPORATE AUTHORITY If Tenant is a corporation, (or a partnership) each
individual executing this Lease on behalf of said corporation (or partnership)
represents and warrants that he is duly authorized to execute and






deliver this Lease on behalf of said corporation (or partnership) in accordance
with the by-laws of said corporation (or partnership in accordance with the
partnership agreement) and that this lease is binding upon said corporation (or
partnership) in accordance with its terms. If Tenant is a corporation, Tenant
shall, within thirty (30) days after execution of this Lease, deliver to
Landlord a certified copy of the resolution of the Board of Directors of said
corporation authorizing or ratifying the execution of this Lease.

[Section 38 BASIC RENT ADJUSTMENT deleted]

39. LIMITATION OF LIABILITY In consideration of the benefits accruing hereunder,
Tenant and all successors and assigns covenant and agreed that, in the even of
any actual or alleged failure, breach or default hereunder by Landlord:

        (i) the sole and exclusive remedy shall be against Landlord and
Landlord's assets;
        (ii) no partner of Landlord shall be sued or named as a party in any
suit or action; (except as may be necessary to secure jurisdiction of the
partnership);
        (iii) no service of process shall be made against any partner of
Landlord (except as may be necessary to secure jurisdiction of the partnership);
        (iv) no partner of Landlord shall be required to answer or otherwise
please to any service of process;
        (v) no judgement will be taken against any partner of Landlord;
        (vi) any judgment taken against any partner of Landlord may be vacated
and set aside at any time without hearing;
        (vii) no writ of execution will ever be levied against the assets of any
partner of Landlord;
        (viii) these covenants and agreements are enforceable both by Landlord
and also by any partner of Landlord.
Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or common law.

40.     MISCELLANEOUS AND GENERAL PROVISIONS

        a. Tenant shall not, without the written consent of Landlord, use the
name of the building for any purpose other than as the address of the business
conducted by Tenant in the Premises.

        b. This Lease shall in all respects be governed by and construed in
accordance with the laws of the State of California. If any provision of this
Lease shall be invalid, unenforceable or ineffective for any reason whatsoever,
all other provisions hereof shall be and remain in full force and effect.

        c. The term 'Premises' includes the space leased hereby and any
improvements now or hereafter installed therein or attached thereto. The term
'Landlord' or any pronoun used in place thereof includes the plural as well as
the singular and the successors and assigns of Landlord. The term 'Tenant' or
any pronoun used in place thereof includes the plural as well as the singular
and individuals, firms, associations, partnerships and corporations, and their
and each of their respective heirs, executors, administrators, successors and
permitted assigns.
        The term 'person' includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations. Words used in
any gender include other genders. If there be more than one Tenant the
obligations of Tenant hereunder are joint and several. The paragraph headings of
this Lease are for convenience of reference only and shall have no effect upon
the construction or interpretation of any provision hereof.

        d. Time is of the essence of this Lease and of each and all of its
provisions.

        e. At the expiration or earlier termination of this Lease, Tenant shall
execute, acknowledge and deliver to Landlord, within ten (10) days after written
demand from Landlord to Tenant, any quitclaim deed or other document required by
any reputable title company, license to operate in the State of California, to
remove the cloud or encumbrance created by this Lease from the real property at
which Tenant's Premises are a part.

        f. This instrument along with any exhibits and attachments hereto
constitutes the entire agreement






between Landlord and Tenant relative to the Premises and this agreement and the
exhibits and attachments may be altered amended or revoked only by an instrument
in writing signed by both Landlord and Tenant. Landlord and Tenant agree hereby
that all prior or contemporaneous oral agreements between and among themselves
and their agents or representatives relative to the leasing of the Premises are
merged in or revoked by this agreement.

        g. Neither Landlord nor Tenant shall record this Lease or a short form
memorandum hereof without the written consent of the other.

        h. Tenant further agrees to execute any amendments, required by a lender
to enable Landlord to obtain financing, so long as Tenant's rights hereunder are
not substantially affected.

        i. Paragraphs 43 through 53 are added hereto and are included as a part
of this lease.

        j. Clauses, plats and riders, if any, signed by Landlord and Tenant and
endorsed on or affixed to this Lease are a part hereof.

        k. Tenant covenants and agrees that no diminution or shutting off of
light, air or view by any structure which may be hereafter erected (whether or
not by Landlord) shall in any way affect this Lease, entitle Tenant to any
reduction of rent hereunder or result in any liability of Landlord to Tenant.

41. BROKERS Tenant warrants that it had dealings with only the following real
estate brokers or agents in connection with the negotiation of this Lease: none
and that it knows of no other real estate broker or agent who is entitled to a
commission in connection with this Lease.

42. SIGNS No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or [painted] or affixed on or to any part of the outside of
the Premises or any exterior windows of the Premises without the written consent
of Landlord first had and obtained and Landlord shall have the right to remove
any such sign, placard, picture, advertisement, name or notice without notice to
and at the expense of Tenant. If Tenant is allowed to print or affix or in any
way place a sign in, on, or about the Premises, upon expiration or other sooner
termination of this Lease, Tenant at Tenant's sole cost and expense shall both
remove such sign and repair all damage in such a manner as to restore all
aspects of the appearance of the Premises to the condition prior to the
placement of said sign.

        All approved signs or lettering on outside doors shall be printed,
painted, affixed or inscribed at the expense of Tenant by a person approved of
by Landlord. Tenant shall not place anything or allow anything to be placed near
the glass of any window, door partition or wall which may appear unsightly from
outside the Premises.

        IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year last written below.

LANDLORD:                                   TENANT:

ARRILLAGA FAMILY TRUST              COM21, INC.
                                            a Delaware corporation

By: /s/ John Arrillaga              By:     /s/ David L. Robertson
   -------------------------------     -------------------------------
        John Arrillaga, Trustee

Dated:  5/22/96                     Title:  Vice President of Finance
     -----------------------------       -----------------------------

RICHARD T. PEERY
   SEPARATE PROPERTY TRUST          Print or Type Name  /s/ David L. Robertson
                                                      -------------------------

By: /s/ Richard T. Peery  5/23/96   Dated:   May 20, 1996
   ------------------------------         -------------------------------



        Richard T. Peery, Trustee






Paragraphs 43 to 53 to Lease Agreement Dated May 10, 1996. By and Between the
Arrillga Family Trust and the Richard T. Peery Separate Property Trust, as
Landlord, and Com21, Inc., a Delaware corporation, as Tenant for 44,624+/-
Square Feet of Space Located at 750 Tasman Drive, Milpitas, California.

43. BASIC RENT: In accordance with Paragraph 4A herein, the total aggregate sum
of SIX MILLION THREE HUNDRED SEVENTY SEVEN THOUSAND FORTY FOUR AND 80/100
DOLLARS ($6,377,044.80), shall be payable as follows:

        On August 1, 1996, the sum of FORTY SEVEN THOUSAND TWO HUNDRED FIFTY AND
NO/100 DOLLARS ($47,250.00) shall be due, and a like sum due on the first day of
each month thereafter, through and including July 1, 1997.

        On August 1, 1997, the sum of SIXTY TWO THOUSAND FOUR HUNDRED SEVENTY
THREE AND 60/100 DOLLARS ($62,473.60) shall be due, and a like sum due on the
first day of each month thereafter, through and including July 1, 1999.

        On August 1, 1999, the sum of SIXTY SIX THOUSAND NINE HUNDRED THIRTY SIX
AND NO/100 DOLLARS ($66,936.00) shall be due and a like sum due on the first day
of each month thereafter, through and including July 1, 2002.

        On August 1, 2001, the sum of SEVENTY ONE THOUSAND THREE HUNDRED NINETY
EIGHT AND 40/100 DOLLARS ($71, 398.40) shall be due, and a like sum due on the
first day of each month thereafter, through and including July 1, 2002.

        On August 1, 2002, the sum of SEVENTY THREE THOUSAND SIX HUNDRED TWENTY
NINE AND 60/100 DOLLARS ($73,629.60) shall be due, and a like sum due on the
first day of each month thereafter, through and including July 1, 2003.

        On August 1, 2003, the sum of SEVENTY FIVE THOUSAND EIGHT HUNDRED SIXTY
AND 80/100 DOLLARS ($75,860.80) shall be due, and a like sum due on the first
day of each month thereafter, through and including July 1, 2004; or until the
entire aggregate sum of SIX MILLION THREE HUNDRED SEVENTY SEVEN THOUSAND FORTH
FOUR AND 80/100 DOLLARS ($6,377,044.80) has been paid.

44. EARLY ENTRY: Tenant and its agents and contractors shall be permitted to
enter the Premises prior to the Commencement Date for the purpose of installing
at Tenant's sole cost and expense, Tenant's trade fixtures and equipment,
telephone equipment, security systems and cabling for computers. Such entry
shall be subject to all of the terms and conditions of this Lease, except that
Tenant shall not be required to pay any Rent on account thereof. Any entry or
installation work by Tenant and its agents in the Premises pursuant to this
Paragraph 44 shall (i) be undertaken at Tenant's sole risk, (ii) not interfere
with or delay Landlord's work in the Premises (if any), and (iii) not be deemed
occupancy or possession of the Premises for purposes of the Lease. Tenant shall
indemnify, defend, and hold Landlord harmless from any and all loss, damage,
liability, expense (including reasonable attorney's fees), claim or demand of
whatsoever character, direct or consequential, including, but not limited
thereby the generality of the






foregoing; injury to or death of persons and damage to or loss of property
arising out of the exercise by Tenant of any early entry right granted
hereunder. In the event Tenant's work in said Premises delays the completion of
the interior improvements to be provided by Landlord, if any, or in the event
Tenant has not completed construction of it's interior improvements by the
scheduled Commencement Date, it is agreed between the parties that this Lease
will commence on the schedule Commencement Date of August 1, 1996 regardless of
the construction status of said interior improvements completed or to be
completed by Tenant or Landlord. It is the intent of the parties hereto that the
commencement of Tenant's obligation to pay Rent under the Lease not be delayed
by any of such causes or by any other act of Tenant (except as expressly
provided herein) and, in the event it is so delayed. Tenant's obligation to pay
Rent under the Lease shall commence as of the date it would otherwise have
commenced absent delay caused by Tenant.

45. EARLY OCCUPANCY: In the event the Premises leased hereunder become available
for Tenant's use and occupancy prior to the scheduled Commencement Date hereof,
Tenant shall have the right to occupy the Premises as of the date Landlord so
completes said Premises for Tenant's use and occupancy. This Lease shall
commence and Tenant shall pay to Landlord, effective as of the date Premises are
delivered to Tenant, all Additional Rent expenses which are Tenant's
responsibility hereunder (however, Tenant shall not be responsible for paying
Base Rent during the early occupancy period), and Tenant shall be obligated to
perform, and be bound by, each and every term, covenant, and condition of this
Lease. In the event Tenant occupies the Premises prior to August 1, 1996, the
Term of this Lease will be extended to include the early occupancy period (i.e.
If Tenant occupies said space on July 1, 1996, the Lease Term will be extended
for one (1) month from an eight (8) year Term to an eight (8) year one (1) month
Term).

46. 'As-IS BASIS: Subject only Paragraphs 52 ('Maintenance of the Premises') and
53 ('Punch List'), and to Landlord making the improvements shown on Exhibit B to
be attached hereto, it is hereby agreed that the Premises leased hereunder is
leased strictly on an 'as-is' basis and in its present condition, and in the
configuration as shown on Exhibit B to be attached hereto, and by reference made
a part hereof. Except as specified in Paragraphs 52 ('Maintenance of the
Premises') and 53 ('Punch List'), it is specifically agreed between the parties
that after Landlord makes the interior improvements as shown on Exhibit B,
Landlord shall not be required to make, nor be responsible for any cost, in
connection with any repair, restoration, and/or improvement to the Premises in
order for this Lease to commence, or thereafter, throughout the Term of this
Lease. Landlord makes no warranty or representation of any kind or nature
whatsoever as to the condition or repair of the Premises, nor as to the use or
occupancy which may be made thereof.

47. CONSENT: Whenever the consent of one party to the other is required
hereunder, such consent shall not be unreasonably withheld.

48. CHOICE OF LAW; SEVERABILITY: This Lease shall in all respects be governed by
and construed in accordance with the laws of the State of California. If any
provisions of this Lease shall be invalid, unenforceable, or ineffective for any
reason whatsoever, all other provisions hereof shall be and remain in full force
and effect.

49. ASSESSMENT CREDITS: The demised property herein is subject to a special






assessment levied by the City of Milpitas in Improvement District No. 9. As part
of said special assessment proceedings, additional bonds were sold and
assessments levied to provide for construction contingencies and reserve funds.
Interest will be earned on such funds created for contingencies and on reserve
funds which will be credited for the benefit of said assessment district. To the
extent surpluses are created in said district through unused contingency funds,
interest earnings or reserve funds, such surpluses shall be deemed the property
of Landlord. Notwithstanding that such surpluses may be credited on assessments
otherwise due against the demised premises. Tenant shall pay to Landlord, as
additional rent, if and at the time of any such credit of surpluses, an amount
equal to all such surpluses so credited.

50. ASSIGNMENT AND SUBLETTING (CONTINUED): Any and all sublease agreement(s)
between Tenant and any and all subtenant(s) (which agreements must be consented
to by Landlord, pursuant to the requirements of this Lease) shall contain the
following language:

        If Landlord and Tenant jointly and voluntarily elect, for any reason
whatsoever, to terminate the Master Lease prior to the scheduled Master Lease
termination date, then this Sublease (if then still in effect) shall terminate
concurrently with the termination of the Master Lease. Subtenant expressly
acknowledges and agrees that (1) the voluntary termination of the master Lease
by Landlord and Tenant and the resulting termination of this Sublease shall not
give Subtenant any right or power to make any legal or equitable claim against
Landlord or Tenant, including without limitation any claim for interference with
contract or interference with prospective economic advantage, and (2) Subtenant
hereby waives any and all rights it may have under law or at equity to challenge
such an early termination of the Sublease, and unconditionally releases and
relieves Landlord and Tenant, and their officers, directors, employees and
agents, from any and all claims, demands, and/or causes of action whatsoever
(collectively, 'Claims'), whether such matters are known or unknown, latent or
apparent, suspected or unsuspected, foreseeable or unforeseeable, which
Subtenant may have arising out of or in connection with any such early
termination of this Sublease. Subtenant knowingly and intentionally waives any
and all protection which is or may be given by Section 1542 of the California
Civil Code which provides as follows: 'A general release does not extend to
claims which the creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have materially
affected his settlement with debtor.'

        The term of this Sublease is therefore subject to early termination.
Subtenant's initials here below evidence (a) Subtenant's consideration of an
agreement to this early termination provision, (b) Subtenant's acknowledgement
that, in determining the net benefits to be derived by Subtenant under the terms
of this Sublease, Subtenant has anticipated the potential for early termination,
and (c) Subtenant's agreement to the general waiver and release of Claims above.

               Initials:______________      Initials:____________
                          Subtenant                    Tenant


51. HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with respect to
the existence or use of 'Hazardous Materials' (as defined herein) on, in, under
or about the Premises and real property located beneath said Premises
(hereinafter collectively referred to as the






'Property') and the Complex.

As used herein, the term 'Hazardous Materials' shall mean any hazardous or toxic
substance, material or waste which is or becomes subject to or regulated by any
local governmental authority, the Sate of California, or the United States
Government. The term 'Hazardous Materials' includes, without limitation any
material or hazardous substance which is (i) listed under Article 9 or defined
as 'hazardous' or 'extremely hazardous' pursuant to Article 11 of Title 22 of
the California Administrative Code, Division 4, Chapter 30, (ii) listed or
defined as a 'hazardous waste' pursuant to the Federal Resource Conservation and
Recovery Act, Section 42 U.S.C. Section 6901 et. seq., (iii) listed or defined
as a 'hazardous substance' pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et. seq. (42 U.S.C.
Section 9601), (iv) petroleum or any derivative of petroleum, or (v) asbestos.

Subject to the terms of this Paragraph 51, Tenant shall have no obligation to
'clean up', reimburse, release, indemnify, or defend Landlord with respect to
any Hazardous Materials or wastes which Tenant (prior to and during the Term of
the Lease) did not store, dispose, or transport in, use, or cause to be on the
Property or which Tenant, its agents, employees, contractors, vendors, invitees,
visitors or its future subtenants and/or assignees (if any) (during the Term of
this Lease), did not store, dispose, or transport in, use or cause to be on the
Complex in violation of applicable law.

Tenant shall be 100 percent liable and responsible for: (i) any and all
'investigation and cleanup' of said Hazardous Materials contamination which
Tenant, its agents, employees, contractors, vendors, invitees, visitors or its
future subtenants and/or assignees (if any), or other parties on the Property,
does store, dispose, or transport in, use or cause to be on the Property, and
which Tenant, its agents, employees, contractors, vendors, invitees, visitors or
its future subtenants and/or assignees (if any) does store, dispose, or
transport in, use or cause to be on the Complex and (ii) any claims, including
third party claims, resulting from such Hazardous Materials contamination.
Tenant shall indemnify Landlord and hold Landlord harmless from any liabilities,
demands, costs, expenses and damages, including, without limitation, attorney
fees incurred as a result of any claims resulting from such Hazardous Materials
contamination.

Tenant also agrees not to use or dispose of any Hazardous Materials on the
Property or the Complex without first obtaining Landlord's written consent.
Tenant agrees to complete compliance with governmental regulations regarding the
use or removal or remediation of Hazardous Materials used, stored, disposed of,
transported or cause to be on the Property or the Complex as stated above, and
prior to the termination of said Lease Tenant agrees to follow the proper
closure procedures and will obtain a clearance from the local fire department
and/or the appropriate governing agency. If Tenant uses Hazardous Materials,
Tenant also agrees to install, at Tenant's expense, such Hazardous Materials
monitoring devices as Landlord deems reasonably necessary. It is agreed that the
Tenant's responsibilities related to Hazardous Materials will survive the
termination date of the Lease and that Landlord may obtain specific performance
of Tenant's responsibilities under this Paragraph 51.

52. MAINTENANCE OF THE PREMISES: In addition to, and notwithstanding anything to





the contrary in Paragraph 10, Landlord shall repair damage to the structural
shelf, foundation, and roof structure (but not the interior improvements, roof
membrane, or glazing) of the building leased hereunder at Landlord's cost and
expense provided Tenant has not caused such damage, in which event Tenant shall
be responsible for 100 percent of any such costs for repair or damage so caused
by the Tenant. Notwithstanding the foregoing, a crack in the foundation, or
exterior walls that does not endanger the structural integrity of the building,
or which is not life- threatening, shall not be considered material, nor shall
Landlord be responsible for repair of same.

53. PUNCH LIST: In addition to and notwithstanding anything to the contrary in
Paragraphs 8 ('Acceptance and Surrender of Premises') and 46 (As-Is Basis') of
this Lease, Tenant shall have thirty (30) days after the Commencement Date to
provide Landlord with a written 'punch list' pertaining to defects in the
Building, the roof membrane, the HVAC system, and in the interior improvements
constructed by Landlord for Tenant. As soon as reasonably possible thereafter,
Landlord, or one of Landlord's representatives (if so approved by Landlord), and
Tenant shall conduct a joint walk-through of the Premises (if Landlord so
requires), and inspect such Tenant Improvements, using their best efforts to
agree on the incomplete or defective construction related to the Tenant
Improvements installed by Landlord. After such inspection as been completed,
Landlord shall prepare, and both parties shall sign, a list of all 'punch list'
items which the parties reasonably agree are to be corrected by Landlord (but
which shall exclude any damage or defects caused by Tenant, its employees,
agents or parties Tenant has contracted with to work on the Premises). Landlord
shall have thirty (30) days thereafter (or longer if necessary, provided
Landlord is diligently pursuing the completion of the same) to complete, at
Landlord's expense, the 'punch list' items without the Commencement Date of the
Lease and Tenant's obligation to pay Rental thereunder being affected.
Notwithstanding the foregoing, a crack in the foundation, or exterior walls that
does not endanger the structural integrity of the building, or which is not
life-threatening, shall not be considered material, nor shall Landlord be
responsible for repair of same. This Paragraph shall be of no force and effect
if Tenant shall fail to give any such notice to Landlord within thirty (30) days
after the Commencement Date of this Lease.


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