Exhibit 10.29

 

STANDARD OFFICE LEASE

BY AND BETWEEN

KROEZE KONCEPTS, INC.,

a California corporation

AS LANDLORD,

AND

MEDICINE MADE EASY,

a California corporation AS TENANT

SUITE 170 and 180

HAMILTON CORPORATE CENTER

Located at 19300 South Hamilton Avenue, Gardena, California 90248

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STANDARD OFFICE LEASE

This Standard Office Lease (“Lease”) is made and entered into as of this 23rd
day of August, 2005, by and between KROEZE KONCEPTS, INC., a California
corporation (“Landlord”), and MEDICINE MADE EASY, a California corporation
(“Tenant”).

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
premises described as Suite Nos. 170 and 180 on the first floor, as designated
on the plan attached hereto and incorporated herein as Exhibit “A” (“Premises”),
which is part of the project (“Project”) now known as HAMILTON CORPORATE CENTER
whose address is 19300 South Hamilton Avenue, Gardena, California 90248, for the
Term and upon the terms and conditions hereinafter set forth, and Landlord and
Tenant hereby agree as follows:

ARTICLE 1

BASIC LEASE PROVISIONS

 

A.    Term:    5 years and 3 months    Commencement Date:    The “Substantial
Completion” (as defined in the Tenant Work Letter) of the Premises, which date
is estimated to be December 1, 2005.    Expiration Date:    The last day of the
63rd full calendar month following the Commencement Date. B.    Square Footage:
   7,280 rentable (6,442 usable) square feet. C.    Basic Rental:   

 

Lease Months   Monthly
Basic Rental   Monthly Basic Rental
Per Rentable Square Foot 1   $ 12,230.40   $ 1.68 2-4   $ 0.00   $ 0.00 5-14   $
12,230.40   $ 1.68 15-26   $ 12,594.40   $ 1.73 27-38   $ 12,958.40   $ 1.78
39-50   $ 13,322.40   $ 1.83 51-63   $ 13,686.40   $ 1.88

 

D.    Base Year:    2006 E.    Tenant’s Proportionate Share:    11.34% F.   
Security Deposit:    A security deposit of $12,230.40 shall be due and payable
by Tenant to Landlord upon Tenant’s execution of this Lease. G.    Permitted
Use:    General office use and sales of pharmaceuticals, and all related uses,
subject to the terms of Article 7. H.    Brokers:    Beitler Commercial Realty
Services (on behalf of Tenant) and Grubb & Ellis (on behalf of Landlord). I.   
Parking Spaces:    Tenant shall have the use of 29 unreserved parking spaces, at
no cost to Tenant, on the terms set forth in Article 23 hereof. J.    First
Month’s Rent:    The first full month’s rent of $12,230.40 shall be due and
payable by Tenant to Landlord upon the execution of this Lease.

 

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K.    Improvement Work    See the Tenant Work Letter (Exhibit E). L.    Signage
   Tenant shall be entitled to one (1) strip on the Building directory board and
building standard entry door signage identifying Tenant at Landlord’s sole cost
and expense. Any changes to Tenant’s directory board listing or door signage
shall be at Tenant’s sole cost and expense. M.    Guarantor    ALLION
HEALTHCARE, INC., a Delaware corporation

ARTICLE 2

TERM/PREMISES

2.1 Term/Premises. The Term of this Lease shall commence on the Commencement
Date as set forth in Article 1.A. of the Basic Lease Provisions and shall end on
the Expiration Date set forth in Article 1.A. of the Basic Lease Provisions. For
purposes of this Lease, the term “Lease Year” shall mean each consecutive twelve
(12) month period during the Lease Term, with the first Lease Year commencing on
the Commencement Date; however, (a) if the Commencement Date falls on a day
other than the first day of a calendar month, the first Lease Year shall end on
the last day of the eleventh (11th) month after the Commencement Date and the
second (2nd) and each succeeding Lease Year shall commence on the first day of
the next calendar month, and (b) the last Lease Year shall end on the Expiration
Date. Notwithstanding any term in this Lease to the contrary, in the event the
construction of the Premises as outlined in Tenant Work Letter is not
substantially completed on or before February 1, 2006 (such date to be extended
to the extent of any “Tenant Delay,” as defined in Section 4.2 of the Tenant
Work Letter), then in such event Tenant may, at its option, cancel this Lease
without any penalty or obligation to pay rent and the security deposit and first
months rent shall be returned in full to Tenant Said option to cancel is not
subject to any other notice, cure or force majeure provision provided for in
this Lease. Subject to Section 2.3, Landlord and Tenant hereby stipulate that
the Premises contains the number of square feet specified in Article 1.B. of the
Basic Lease Provisions. Landlord may deliver to Tenant a Commencement Letter in
a form substantially similar to that attached hereto as Exhibit “C”, which
Tenant shall execute and return to Landlord within five (5) days of receipt
thereof. Failure of Tenant to timely execute and deliver the Commencement Letter
shall constitute an acknowledgment by Tenant that the statements included in
such notice are true and correct, without exception.

2.2 Option to Extend the Term.

(i) Option Right. Landlord hereby grants the Tenant named in this Lease (the
“Original Tenant”) one (1) option (the “Option”) to extend the Lease Term for
the entire Premises for a period of five (5) years (the “Option Term”), which
option shall be exercisable only by written notice delivered by Tenant to
Landlord set forth below. The right contained in this Section 2.2 shall be
personal to the Original Tenant or an “Affiliate” (as defined in Article 15
below) only and may only be exercised by the Original Tenant or an Affiliate
(and not any other assignee, sublessee or other transferee of the Original
Tenant’s interest in this Lease) if the Original Tenant or an Affiliate occupies
at least fifty percent (50%) of the entire Premises as of the date of Tenant’s
Acceptance (as defined in Section 2.2(iii) below).

(ii) Option Rent. The rent payable by Tenant during the Option Term (“Option
Rent”) shall be equal to the “Market Rent” (defined below). “Market Rent” shall
mean the applicable monthly Basic Rental, including all escalations, Direct
Costs, additional rent and other charges at which tenants, as of the time of
Landlord’s “Option Rent Notice” (as defined below), are entering into leases for
non-sublease, non-encumbered, space comparable in size, location and quality to
the Premises in renewal transactions for a term comparable to the Option Term
which comparable space is located in the Project and in other office buildings
comparable in age, appearance and quality of construction to the Project in the
vicinity of the Project in the “190th Street Corridor,” taking into
consideration any applicable concessions including, without limitation, any free
rent and any improvement allowances, with reference to the value of the existing
improvements in the Premises to Tenant, as compared to the value of the existing
improvements in such comparable space, with such value to be based upon the age,
quality and layout of the improvements and the extent to which the same could be
utilized by Tenant with consideration given to the fact that the improvements
existing in the Premises are specifically suitable to Tenant.

(iii) Exercise of Options. The Options shall be exercised by Tenant only in the
following manner: (i) Tenant shall not be in uncured, material default on the
delivery date of the Interest Notice and Tenant’s Acceptance; (ii) Tenant shall
deliver written notice (“Interest Notice”) to Landlord not more than nine
(9) months nor less than six (6) months prior to the expiration of the Lease
Term (or the first Option Term, as applicable), stating that Tenant is
interested in exercising the Option, (iii) within thirty (30) days of Landlord’s
receipt of Tenant’s written notice, Landlord shall deliver notice (“Option Rent
Notice”) to Tenant setting forth the Option Rent; and (iv) if Tenant desires to
exercise such Option, Tenant shall provide Landlord written notice within five
(5) business days after receipt of the Option Rent Notice (“Tenant’s
Acceptance”) and upon,

 

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and concurrent with such exercise, Tenant may, at its option, object to the
Option Rent contained in the Option Rent Notice. Tenant’s failure to deliver the
Interest Notice or Tenant’s Acceptance on or before the dates specified above
shall be deemed to constitute Tenant’s election not to exercise the Option. If
Tenant timely and properly exercises its Option, the Lease Term (or the first
Option Term, as applicable) shall be extended for the Option Term upon all of
the terms and conditions set forth in this Lease, except that the Rent for the
applicable Option Term shall be as indicated hi the Option Rent Notice (or as
specified in subsection “iv” below if Tenant timely and appropriately objects to
the Market Rent in Tenant’s Acceptance).

(iv) Determination of Market Rent. If Tenant timely and appropriately objects to
the Market Rent in Tenant’s Acceptance, Landlord and Tenant shall attempt to
agree upon the Market Rent using their best good-faith efforts. If Landlord and
Tenant fail to reach agreement within twenty-one (21) days following Tenant’s
Acceptance (“Outside Agreement Date”), then each party shall make a separate
determination of the Market Rent which shall be submitted to each other and to
arbitration in accordance with the following items (1) through (7):

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

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

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

(4) The decision of the majority of the three arbitrators shall be binding upon
Landlord and Tenant.

(5) If either Landlord or Tenant fails to appoint an arbitrator within ten
(10) days after the applicable Outside Agreement Date, the arbitrator appointed
by one of them shall reach a decision, notify Landlord and Tenant thereof, and
such arbitrator’s decision shall be binding upon Landlord and Tenant.

(6) If the two arbitrators fail to agree upon and appoint a third arbitrator, or
both parties fail to appoint an arbitrator, then the appointment of the third
arbitrator or any arbitrator shall be dismissed and the matter to be decided
shall be forthwith submitted to arbitration under the provisions of the American
Arbitration Association, but subject to the instruction set forth in this item
(d).

(7) The cost of arbitration shall be paid by Landlord and Tenant equally.

2.3 Remeasurement Right. The usable area of the Premises shall be determined in
accordance with the standards set forth in ANSI Z65.1-1996, as promulgated by
the Building Owners and Managers Association (the “BOMA Standard”). The rentable
square footage of the Premises shall be equal to the product of (i) the usable
square footage of the Premises measured pursuant to the BOMA Standard, and
(ii) 1.13. Landlord and Tenant shall each have the right, upon notice (the
“Remeasurement Notice”) delivered to the other party within sixty (60) days
following the Commencement Date to remeasure the usable square footage of the
Premises in accordance with the BOMA Standard. In the event that such
remeasurement indicates that the usable square footage measurement set forth in
this Lease is in excess of or lower than the usable square footage number which
would have resulted had the BOMA Standard been properly utilized, any payments
due either party (or other rights between Landlord and Tenant) based upon the
amount of rentable and usable square feet contained in the Premises (including,
without limitation, the Basic Rental, Tenant’s Proportionate Share, and the
Security Deposit amount) shall be proportionally, retroactively and
prospectively reduced or increased, as appropriate, to reflect the actual number
of rentable and usable square feet as properly derived from the remeasured
useable square footage under the BOMA Standard. If either party disagrees with
the other party’s remeasurement and if a dispute occurs regarding the final
accuracy of the usable square footage measurement of the Premises in accordance
with the BOMA Standard, such dispute will be conclusively resolved by an
architect selected by Landlord and approved by Tenant, in Tenant’s reasonable
discretion. In the event that a Remeasurement Notice is not timely delivered in
accordance with the terms of this paragraph, the square footage of the Premises
shall not be subject to remeasurement, and the rentable and useable square
footage set forth in Article 1.B above shall be binding and conclusive.

2.4 Right of First Refusal. Tenant shall have a one-time right of first refusal
with respect to Suite 290 on the second floor of the Project (the “First Refusal
Space”) upon the terms and conditions set forth in this Section 2.4.

 

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(i) Method of Exercise. Landlord shall notify Tenant in writing (the “First
Refusal Notice”) in the event that Landlord receives a bona fide offer from a
third party for the potential lease of the First Refusal Space that Landlord
intends to accept. The First Refusal Notice shall contain the economic terms of
such prospective lease. For a period of five (5) business days following
Tenant’s receipt of the First Refusal Notice (the “Election Period”), Tenant
shall have the right to inform Landlord in writing (the “Acceptance Notice”)
that Tenant desires to lease the First Refusal Space on the economic terms set
forth in the First Refusal Notice and otherwise the same basic terms and
conditions as provided in this Lease; provided, however, that the term of
Tenant’s lease of the First Refusal Space shall be co-terminous with the Term of
Tenant’s lease of the Premises. If the term of Landlord’s prospective lease to
the third party is longer than the remaining Term of this Lease, Landlord shall
be entitled to equitably adjust the concessions to be given to Tenant in the
First Refusal Notice on a pro rata basis-based on the term differential. If
Tenant fails to deliver written notice to Landlord of Tenant’s election to lease
the First Refusal Space within such five (5) business day period, Landlord shall
be entitled to enter into a lease with such potential third party tenant or any
other tenant, at Landlord’s sole election. Notwithstanding anything to the
contrary herein, Tenant’s right of refusal as set forth in this Section 2.4
shall not be effective during the last two (2) years of the Term.

(ii) Delivery of the First Refusal Space. Provided that Tenant timely exercises
its option to lease the First Refusal Space, Landlord shall deliver the First
Refusal Space to Tenant on the commencement date set forth in the First Refusal
Notice (the “Delivery Date”). Notwithstanding the foregoing, Landlord shall have
no liability to Tenant for any damages resulting from any delay in delivering
possession of the First Refusal Space to Tenant on any particular delivery date
designated by Landlord or designated in this Lease, if such delay is caused by
the holding over of a previous tenant of the First Refusal Space, and further
provided that Landlord, at its expense, shall use reasonable efforts to secure
possession of the First Refusal Space from such previous tenant.

(iii) Improvement of First Refusal Space. Tenant agrees that Tenant shall accept
the First Refusal Space in its then existing “as is” condition, subject to any
improvement allowance specified in the First Refusal Notice.

(iv) Amendment to Lease. If Tenant timely exercises Tenant’s right to lease the
First Refusal Space as set forth herein, then within thirty (30) days after the
date of such exercise Landlord and Tenant shall use diligent efforts to execute
an amendment adding such First Refusal Space to this Lease upon the same terms
and conditions as the initial Premises, except as otherwise set forth in this
Section 2.4; provided that the execution of such amendment shall not be
necessary to effectuate the terms of this Section 2.4.

(v) Rights Personal. The rights contained in this Section 2.4 may only be
exercised by the Original Tenant (and not any assignee, sublessee or other
transferee of the Original Tenant’s interest in this Lease). Tenant shall not
have the right to lease First Refusal Space as provided in this Section 2.4 if,
as of the date of the attempted exercise of the first refusal right by Tenant,
or as of the scheduled date of delivery of such First Refusal Space to Tenant,
Tenant is in default under this Lease beyond the applicable notice and cure
period.

ARTICLE 3

RENTAL

(a) Basic Rental. Tenant agrees to pay to Landlord during the Term hereof the
initial monthly and annual sums as set forth in Article 1.C of the Basic Lease
Provisions, payable in advance on the first day of each calendar month, without
demand, setoff or deduction, and in the event this Lease commences or the date
of expiration of this Lease occurs other than on the first day or last day of a
calendar month, the rent for such month shall be prorated. Checks shall be made
payable to “Kroeze Koncepts, Inc.” and shall be sent to The Real Estate Group,
9920 So. La Cienege Blvd, Suite 905, Inglewood, CA 90301 (or to such other
person or at such other place as directed from time to tune by written notice to
Tenant from Landlord). Notwithstanding the foregoing, the first full month’s
rent shall be paid to Landlord in accordance with Article 1.J. of the Basic
Lease Provisions.

(b) Increase in Direct Costs. The term “Base Year” means the calendar year set
forth in Article 1.D. of the Basic Lease Provisions. If, in any calendar year
during the Term of this Lease, the “Direct Costs” (as hereinafter defined) paid
or incurred by Landlord shall be higher than the Direct Costs for the Base Year,
Tenant shall pay an additional sum for such and each subsequent calendar year
equal to the product of the amount set forth in Article 1.E. of the Basic Lease
Provisions multiplied by such increased amount of “Direct Costs.” In the event
this Lease shall terminate on any date other than the last day of a calendar
year, the additional sum payable hereunder by Tenant during the calendar year in
which this Lease terminates shall be prorated on the basis of the relationship
which the number of days which have elapsed from the commencement of said
calendar year to and including said date on which this Lease terminates bears to
three hundred sixty-five (365). Any-and all amounts due and payable by Tenant
pursuant to this Lease (other than Basic Rental) shall be deemed “Additional
Rent” and Landlord shall be entitled to exercise the same rights and remedies
upon default in these payments as Landlord is entitled to exercise with respect
to defaults in monthly Basic Rental payments.

 

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(c) Definitions. As used herein the term “Direct Costs” shall mean the sum of
the following:

(i) “Tax Costs”, which shall mean any and all real estate taxes and other
similar charges on real property or improvements, assessments, water and sewer
charges, and all other charges assessed, reassessed or levied upon the Project
and appurtenances thereto and the parking or other facilities thereof, or the
real property thereunder (collectively the “Real Property”) or attributable
thereto or on the rents, issues, profits or income received or derived therefrom
which are assessed, reassessed or levied by the United States, the State of
California or any local government authority or agency or any political
subdivision thereof, and shall include Landlord’s reasonable legal fees, costs
and disbursements incurred in connection with proceedings for reduction of Tax
Costs or any part thereof. In no event shall Tax Costs included in Direct Costs
for any year subsequent to the Base Year be less than the amount of Tax Costs
included in Direct Costs for the Base Year. In addition, when calculating Tax
Costs for the Base Year, special assessments shall only be deemed included in
Tax Costs for the Base Year to the extent that such special assessments are
included in Tax Costs for the applicable subsequent calendar year during the
Term. Notwithstanding anything to the contrary contained in this Lease, there
shall be excluded from Tax Costs (i) all excess profits taxes, franchise taxes,
gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes,
federal and state income taxes, and other taxes to the extent applicable to
Landlord’s general or net income (as opposed to rents, receipts or income
attributable to operations at the Project), and (ii) any items included as
Operating Costs. Furthermore, neither Tax Costs nor Operating Costs for the
first thirty-three (33) months of the Term shall include any increase in any and
all real estate taxes and other similar charges on real property or improvements
as the direct result of the reassessment, such as under Proposition 13, of the
Project following the sale or renovation of the Project occurring during the
first thirty-three (33) months of the Term.

(ii) “Operating Costs”, which shall mean all costs and expenses incurred by
Landlord in connection with the maintenance, operation, replacement, ownership
and repair of the Project, including, but not limited to, salaries, wages,
medical, and other taxes and benefits for all persons who perform duties
connected with the operation, maintenance and repair of the Project; a
reasonable allowance for depreciation of the cost of acquiring or the rental
expense of personal property used in the maintenance, operation and repair of
the Project; accountant’s fees, legal fees, real estate tax consulting fees,
personal property taxes on property used in the maintenance and operation of the
Project; fees, costs, expenses or dues payable pursuant to the terms of any
covenants, conditions or restrictions as amended from time to time (“CC&Rs”) or
owners’ association pertaining to the Project; capital expenditures incurred to
effect economies of operation of, or stability of services to, the Project and
capital expenditures required by government regulations, laws, or ordinances
including, but not limited to the American with Disabilities Act; costs incurred
(capital or otherwise) on a regular recurring basis every three (3) or more
years for certain maintenance projects (e.g., parking lot slurry coat or
replacement of lobby and elevator cab carpeting); the cost of all charges for
electricity, gas, water and other utilities furnished to the Project, including
any taxes thereon; charges for insurance for the Project carried by Landlord;
the cost of all building and cleaning supplies and materials; the cost of all
charges for cleaning, maintenance and service contracts and other services with
independent contractors and administration fees; a property management fee
(which fee may be imputed if Landlord has internalized management or otherwise
acts as its own property manager) and license, permit and inspection fees
relating to the Project. In the event, during any calendar year, the Project is
less than ninety-five percent (95%) occupied at all times, Operating Costs shall
be adjusted to reflect the Operating Costs of the Project as though ninety-five
percent (95%) were occupied at all times, and the increase or decrease in the
sums owed hereunder shall be based upon such Operating Costs as so adjusted. In
no event shall costs for any item of utilities included in Direct Costs for any
year subsequent to the Base Year be less than the amount included in Direct
Costs for the Base Year for such utility item. Notwithstanding anything to the
contrary set forth in this Article 3, when calculating Operating Costs for the
Base Year, Operating Costs shall exclude (a) market-wide labor-rate increases
due to extraordinary circumstances including, but not limited to, boycotts and
strikes, (b) utility rate increases due to extraordinary circumstances
including, but not limited to, conservation surcharges, boycotts, embargoes or
other shortages, and (c) amortization of any capital items including, but not
limited to, capital improvements, capital repairs and capital replacements
(including such amortized costs where the actual improvement, repair or
replacement was made in prior years).

(iii) Operating Costs shall exclude:

 

  1. Any costs associated with any other property of Landlord, not specifically
related to the operations of this Project;

 

  2. Any legal costs associated with disputes or lease violations by other
tenants in the Project;

 

  3. Landlord’s general or corporate overhead;

 

  4. Costs associated with any other tenant’s willful or negligent acts;

 

  5. Costs associated with Landlord’s, or Landlord’s employees’, agents’,
vendors’, contractors’ or materials or services providers’, or invitees’ willful
or negligent acts;

 

  6. Any costs associated with preexisting hazardous or medical materials, or
those brought onto the Project by a party other than Tenant or its agent;

 

  7. Costs resulting from the failure of the Project, as of the Commencement
Date, to comply with laws applicable to the Project as of the Commencement Date;

 

  8. Costs of repairing latent defects in the Project;

 

  9. Management fees in excess of those charged by the landlords of comparable
office buildings in the vicinity of the Project;

 

  10. With respect to any Operating Cost item that is a capital cost or a
capital expenditure,

 

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     Operating Costs for each year shall include an amount equal to the cost of
such item (including interest) amortized over the reasonable useful life of such
item (calculated on a straight-line basis), consistent with the practice of the
owners of other first class buildings in the Los Angeles area;

 

  11. Any real estate brokerage commissions, improvements allowances, or other
costs incurred in procuring tenants;

 

  12. Any amount reimbursed by, or reimbursable by, a tenant of the Project or
any insurance company or third party;

 

  13. Payments of principal and/or interest on mortgages or ground lease
payments (if any) or other debt or depreciation costs, except as specifically
allowed in this Lease (including without limitation pursuant to the terms of
subsection “10” above);

 

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

 

  15. The wages and benefits of any employee who does not devote substantially
all of his or her employed time to the Project unless such wages and benefits
are prorated to reflect time spent on operating and managing the Project
vis-à-vis time spent on matters unrelated to operating and managing the Project;

 

  16. All items and services for which Tenant or any other tenant in the Project
reimburses Landlord or which Landlord provides selectively to one or more
tenants (other than Tenant) without reimbursement;

 

  17. All interest and penalties incurred as a result of Landlord’s failure to
pay bills as the same become due;

 

  18. Charitable or political contributions or gifts provided to any entity
whatsoever, including without limitation to Tenant, other tenants, employees,
vendors, contractors, agents; or prospective tenants;

 

  19. Rent for space occupied as a Project management office to the extent such
space is larger than 2,000 rentable square feet;

 

  20. Costs of installing, maintaining and operating any specialty service
operated by Landlord including without limitation, any luncheon club or athletic
facility, or the repair thereof;

 

  21. Cost of work or replacements covered by warranties;

 

  22. Automobile or travel expenses for Landlord or its agents;

 

  23. Legal fees, space planners’ fees, real estate brokers’ leasing
commissions, improvement allowances, and advertising expenses incurred in
connection with the original, development or original leasing of the Project or
future leasing of the Project;

 

  24. Any bad debt loss, rent loss, or reserves for bad debts or rent loss;

 

  25. The expense of extraordinary services provided to other tenants in the
Project:

 

  26. Fines, penalties, and interest;

 

  27. Insurance deductible expenses for any and all claims made by Landlord;

 

  28. Any recalculation of or additional Operating Costs actually incurred more
than two (2) years prior to the year in which Landlord proposes that such costs
by included except for taxes or utility payments;

 

  29. Mass transit or such other public transportation pass-through assessment,
if any;

 

  30. Costs incurred due to Landlord’s failure to comply with laws;

 

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

 

  32. Expenses in connection with services or other benefits which are not
provided to Tenant or for which Tenant is charged directly but which are
provided to another tenant or occupant of the Project;

 

  33. Costs of alterations or improvements to the Premises or the premises of
other tenants;

 

  34. Overhead and profit increment paid to Landlord or to subsidiaries or
affiliates of Landlord for services in the Project to the extent the same
exceeds the costs of such services rendered by unaffiliated third parties on a
competitive basis;

 

  35. Rentals and other related expenses incurred in leasing air conditioning
systems, elevators or other equipment ordinarily considered to be of a capital
nature, except equipment not affixed to the Project which is used in providing
janitorial or similar services, to the extent such costs would exceed the costs
which would be permitted as amortized capital costs above if the equipment was
purchased instead of leased;

 

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  36. All items and services for which Tenant or any other tenant in the Project
reimburses Landlord or which Landlord provides selectively to one or more
tenants (other than Tenant) without reimbursement;

 

  37. Electric power costs for which any tenant directly contracts with the
local public service company; and

 

  38. Any commission paid to clerks, attendants or other persons in commercial
concessions operated by Landlord, provided that any compensation paid to any
concierge at the Project shall be includable as Operating Costs;

 

  39. Costs, other than those incurred in ordinary maintenance and repair, for
sculpture, paintings, fountains, or other objects of art; and

 

  40. Costs that would not be included in Operating Costs by the owners of other
first class buildings in the Los Angeles area.

It is understood that Operating Costs shall be reduced by all cash discounts,
trade discounts; or quantity discounts received by Landlord or Landlord’s
managing agent in the purchase of any goods, utilities, or services in
connection with the operation of the Project. Landlord shall make payments for
goods, utilities and services in a timely manner to obtain the maximum possible
discount. Landlord shall use its best efforts to effect an equitable proration
of bills for services rendered to the Project and to any other properly owned by
Landlord. If capital items which are customarily purchased by landlords of
first-class office buildings in the Los Angeles area are leased, rather than
purchased, by Landlord, the decision by Landlord to lease the item in question
shall not serve to increase Tenant’s Proportionate Share of Operating Costs
beyond that which would have applied had the item in question been purchased. If
Landlord either (i) elects to carry a new category of insurance following the
Base Year that is not carried during the Base Year (including, without
limitation, earthquake insurance); or (ii) elects to carry any Project system
maintenance contracts following the Base Year that are not carried during the
Base Year (in either case, a “New Cost Item”), then from and after the date upon
which Landlord commences paying for such New Cost Item and continuing throughout
the period during which Landlord maintains such New Cost Item, Operating Costs
for the Base Year shall be deemed to be increased by the amount of the cost
Landlord would have incurred had Landlord maintained such New Cost Item for the
same period of time during the Base Year as such New Cost Item is maintained by
Landlord during such subsequent calendar year.

(d) Determination of Payment.

(i) If for any calendar year ending or commencing within the Term, Tenant’s
Proportionate Share of Direct Costs for such calendar year exceeds Tenant’s
Proportionate Share of Direct Costs for the Base Year, then Tenant shall pay to
Landlord, in the manner set forth in Sections 3(d)(ii) and (iii), below, and as
additional rent, an amount equal to the excess (the “Excess”).

(ii) Landlord shall give Tenant a yearly expense estimate statement (the
“Estimate Statement”) which shall set forth Landlord’s reasonable estimate (the
“Estimate”) of what the total amount of Direct Costs for the then-current
calendar year shall be and the estimated Excess (the “Estimated Excess”) as
calculated by comparing Tenant’s Proportionate Share of Direct Costs for such
calendar year, which shall be based upon the Estimate, to Tenant’s Proportionate
Share of Direct Costs for the Base Year. The failure of Landlord to timely
furnish the Estimate Statement for any calendar year shall not preclude Landlord
from enforcing its rights to collect any Estimated Excess under this Article 3.
If pursuant to the Estimate Statement an Estimated Excess is calculated for the
then-current calendar year, Tenant shall pay, with its next installment of
Monthly Basic Rental due, a fraction of the Estimated Excess for the
then-current calendar year (reduced by any amounts paid pursuant to the last
sentence of this Section 3(d)(ii)). Such fraction shall have as its numerator
the number of months which have elapsed in such current calendar year to the
month of such payment, both months inclusive, and shall have twelve (12) as its
denominator. Until a new Estimate Statement is furnished, Tenant shall pay
monthly, with the Monthly Basic Rental installments, an amount equal to
one-twelfth (1/12) of the total Estimated Excess set forth in the previous
Estimate Statement delivered by Landlord to Tenant.

(iii) In addition, Landlord shall give to Tenant on or before the first day of
April following the end of each calendar year, a statement (the “Statement”)
which shall state the Direct Costs incurred or accrued for such preceding
calendar year, and which shall indicate the amount, if any, of the Excess. Upon
receipt of the Statement for each calendar year during the Term, if amounts paid
by Tenant as Estimated Excess are less than the actual Excess as specified on
the Statement, Tenant shall pay, with its next installment of Monthly Basic
Rental due, the full amount of the Excess for such calendar year, less the
amounts, if any, paid during such calendar year as Estimated Excess. If,
however, the Statement indicates that amounts paid by Tenant as Estimated Excess
are greater than the actual Excess as specified on the Statement, such
overpayment shall be credited against Tenant’s next installments of rent and
Estimated Excess. The failure of Landlord to timely furnish the Statement

 

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for any calendar year shall not prejudice Landlord from enforcing its rights
under this Article 3, provided Landlord delivers the Statement within a
reasonable period of time after April 1 of the year following the year to which
such Statement relates. Even though the Term has expired and Tenant has vacated
the Premises, when the final determination is made of Tenant’s Proportionate
Share of the Direct Costs for the calendar year in which this Lease terminates,
if an Excess is present, Tenant shall immediately pay to Landlord an amount as
calculated pursuant to the provisions of this Article 3(d) and if it is
determined that the amounts paid by Tenant as Estimated Excess for such final
year exceeded the actual Excess that should have been paid, Landlord shall
reimburse to Tenant such overpayment amount within thirty (30) days of the date
of the date on which such overpayment was determined. The provisions of this
Section 3(d)(iii) shall survive the expiration or earlier termination of the
Term. Provided that Tenant has paid the amount due under such Statement, Tenant
shall have a period of ninety (90) days following receipt of a Statement within
which to inspect at Landlord’s main office, during normal business hours,
Landlord’s books and records for purposes of auditing and confirming the
accuracy of the Statement, the costs reflected therein and the charges accessed
pursuant thereto.

(iv) If the Project is a part of a multi-building development, then (i) those
Direct Costs attributable to such development as a whole (and not attributable
solely to any individual building therein) shall be allocated by Landlord to the
Project and to the other buildings within such development on an equitable basis
and (ii) those Direct Costs attributable to the Building (and not attributable
to the entire Project) shall be allocated by Landlord to the Building.

ARTICLE 4

SECURITY DEPOSIT

Tenant shall deposit with Landlord the sum set forth in Article l.F. of the
Basic Lease Provisions as security for the full and faithful performance of
every provision of this Lease to be performed by Tenant. If Tenant breaches any
provision of this Lease, including but not limited to the payment of rent,
Landlord may use all or any part of this security deposit for the payment of any
rent or any other sums in default, or to compensate Landlord for any other loss
or damage which Landlord may suffer by reason of Tenant’s default. If any
portion of said deposit is so used or applied, Tenant shall, within ten
(10) days after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore the security deposit to its original amount. Tenant agrees
that Landlord shall not be required to keep the security deposit in trust,
segregate it or keep it separate from Landlord’s general funds but Landlord may
commingle the security deposit with its general funds and Tenant shall not be
entitled to interest on such deposit Within thirty (30) days after the
expiration of the Lease Term or termination of the Lease, and provided there
exists no material uncured default by Tenant hereunder, the security deposit or
any balance thereof shall be returned to Tenant (or, at Landlord’s option, to
Tenant’s assignee), provided that subsequent to the expiration of this Lease,
Landlord may retain from said security deposit any and all amounts permitted by
law or this Article 4. In the event any material uncured Tenant default exists
at the expiration or termination of this Lease, Landlord may retain only so much
of the security deposit as is necessary and legally permitted to apply to
Landlord’s damages, as provided below, and the remainder shall be promptly
returned to the Tenant. Tenant hereby waives the provisions of Section 1950.7 of
the California Civil Code and all other provisions of law, now or hereafter in
effect, which provide that Landlord may claim from a security deposit only those
sums reasonably necessary to remedy defaults in the payment of rent, to repair
damage caused by Tenant or to clean the Premises, it being agreed that Landlord
may, in addition, claim those sums specified in this Article 4 above and/or
those sums reasonably necessary to compensate Landlord for any other loss or
damage, foreseeable or unforeseeable, caused by the acts or omissions of Tenant
or any officer, employee, agent, contractor or invitee of Tenant.

ARTICLE 5

HOLDING OVER

Should Tenant, without Landlord’s written consent, hold over after termination
of this Lease, Tenant shall become a tenant from month to month, only upon each
and all of the terms herein provided as may be applicable to a month to month
tenancy and any such holding over shall not constitute an extension of this
Lease. During such holding over, Tenant shall pay in advance, monthly, Basic
Rental at one hundred twenty-five percent (125%) of the rate in effect for the
last month of the Term of this Lease for the first two months of such holding
over, and thereafter at one hundred fifty percent (150%) of the rate in effect
for the last month of the Term of this Lease, in addition to, and not in lieu
of, all other payments required to be made by Tenant hereunder including but not
limited to Tenant’s Proportionate Share of any increase in Direct Costs. Nothing
contained in this Article 5 shall be construed as consent by Landlord to any
holding over of the Premises by Tenant, and Landlord expressly reserves the
right to require Tenant to surrender possession of the Premises to Landlord as
provided in this Lease upon the expiration or earlier termination of tie Term.
If Tenant fails to surrender the Premises upon the expiration or termination of
this Lease, Tenant agrees to indemnify, defend and hold Landlord harmless from
all costs, loss, expense or liability, including without limitation, claims made
by any succeeding tenant and real estate brokers claims and attorney’s fees and
costs.

 

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ARTICLE 6

PERSONAL PROPERTY TAXES

Tenant shall pay, prior to delinquency, all taxes assessed against or levied
upon trade fixtures, furnishings, equipment and all other personal property of
Tenant located in the Premises. Tenant shall assume and pay to Landlord at the
time of paying Basic Rental any excise, sales, use, rent, occupancy, garage,
parking, gross receipts or other taxes (other than net income taxes) which may
be imposed on or on account of letting of the Premises or the payment of Basic
Rental or any other sums due or payable hereunder, and which Landlord may be
required to pay or collect under any law now in effect or hereafter enacted.
Tenant shall pay directly to the party or entity entitled thereto all business
license fees, gross receipts taxes and similar taxes and impositions which may
from time to time be assessed against or levied upon Tenant, as and when the
same become due and before delinquency. Notwithstanding anything to the contrary
contained herein, any sums payable by Tenant under this Article 6 shall not be
included in the computation of “Tax Costs.”

ARTICLE 7

USE

Tenant shall use and occupy the Premises only for the use set form in Article
1.G. of the Basic Lease Provisions and shall not use or occupy the Premises or
permit the same to be used or occupied for any other purpose without the prior
written consent of Landlord, which consent may be given or withheld in
Landlord’s sole and absolute discretion, and Tenant agrees that it will use the
Premises in such a manner so as not to unreasonably interfere with the rights of
other tenants in the Project. Tenant shall, at its sole cost and expense,
promptly comply with all laws, statutes, ordinances and governmental regulations
or requirements (including zoning requirements) now in force or which may
hereafter be in force relating to or affecting (i) the condition, use or
occupancy of the Premises or the Project excluding structural changes to the
Project not related to Tenant’s particular use of the Premises or otherwise
relating to, or requiring building wide work, which shall be Landlord’s
responsibility, and (ii) improvements installed or constructed in the Premises
by or for the benefit of Tenant. Tenant shall not do or permit to be done
anything which would invalidate or increase the cost of any fire and extended
coverage insurance policy covering the Project and/or the property located
therein and Tenant shall comply with all rules, orders, regulations and
requirements of any organization which sets out standards, requirements or
recommendations commonly referred to by major fire insurance underwriters.
Tenant shall promptly upon demand reimburse Landlord for any additional premium
charges for any such insurance policy assessed or increased by reason of
Tenant’s failure to comply with the provisions of this Article.

ARTICLE 8

CONDITION OF PREMISES

Tenant hereby agrees that, except as expressly provided in this Lease, the
Premises shall be taken “as is”, “with all faults”, “without any representations
or warranties”, and Tenant hereby agrees and warrants that it has investigated
and inspected the condition of the Premises and the suitability of same for
Tenant’s purposes. Tenant acknowledges that, except as expressly provided in
this Lease, neither Landlord nor any agent nor any employee of Landlord has made
any representations or warranty with respect to the Premises or the Project or
with respect to the suitability of either for the conduct of Tenant’s business
and Tenant expressly warrants and represents that Tenant has relied solely on
its own investigation and inspection of the Premises and the Project in its
decision to enter into this Lease and let the Premises in an “as is” condition.
Tenant has satisfied itself that its intended use is permitted under applicable
zoning requirements and other laws, and the effectiveness of this Lease shall
not be contingent upon Tenant’s receipt any permits or approvals regarding
Tenant’s use of the Premises. Tenant hereby waives subsection 1 of Section 1932
and Sections 1941 and 1942 of the Civil Code of California or any successor
provision of law. Tenant is leasing the Premises as it will be improved by
Landlord on a build to suit basis as addressed in the Tenant Work Letter.

Landlord reserves the right from time to time, but subject to payment by and/or
reimbursement from Tenant as otherwise provided herein: (i) to install, use,
maintain, repair, replace and relocate for service to the Premises and/or other
parts of the Project pipes, ducts, conduits, wires, appurtenant fixtures, and
mechanical systems, wherever located in the Premises or the Project, (ii) to
alter, close or relocate any facility in the Premises or the Common Areas or
otherwise conduct any of the above activities for the purpose of complying with
a general plan for fire/life safety for the Project and (iii) to comply with any
federal, state or local law, rule or order with respect thereto or the
regulation thereof not currently in effect. Landlord shall attempt to perform
any such work with the least inconvenience to Tenant as possible, but in no
event shall Tenant be permitted to withhold or reduce Basic Rental or other
charges due hereunder as a result of same, make any claim for constructive
eviction or otherwise make claim against Landlord for interruption or
interference with Tenant’s business and/or operations, except as set forth in
Section 20(f) below.

 

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ARTICLE 9

REPAIRS AND ALTERATIONS

Tenant shall keep the interior of the Premises in good condition and repair. All
damage or injury to the Premises or the Project resulting from the act or
negligence of Tenant, its employees, agents or visitors, guests, invitees or
licensees or by the use of the Premises shall be promptly repaired by Tenant, at
its sole cost and expense, to the satisfaction of Landlord; provided, however,
that for damage to the Project as a result of casualty or for any repairs that
may impact the mechanical, electrical, plumbing, heating, ventilation or
air-conditioning systems of the Project, Landlord shall have the right (but not
the obligation) to select the contractor and oversee all such repairs. Landlord
may make any repairs which are not promptly made by Tenant after Tenant’s
receipt of written notice and the reasonable opportunity of Tenant to make said
repair within five (5) business days from receipt of said written notice, and
charge Tenant for the cost thereof, which cost shall be paid by Tenant within
five (5) days from invoice from Landlord. Tenant shall be responsible for the
design and function of all non-standard improvements of the Premises, whether or
not installed by Landlord at Tenant’s request. Tenant waives all rights to make
repairs at the expense of Landlord, or to deduct the cost thereof from the rent.
Tenant shall make no alterations, changes or additions in or to the Premises
(collectively, “Alterations”) without Landlord’s prior written consent, which
consent may be withheld and/or conditioned in Landlord’s reasonable discretion.
Notwithstanding the foregoing, Tenant shall be permitted to make Alterations to
the Premises following five (5) days written notice to Landlord, but without
Landlord’s prior consent, to the extent that such Alterations (i) do not
adversely affect the systems and equipment of the Building, (ii) do not require
a permit, (iii) do not affect the structural aspects of the Building, and
(iv) cost less than $50,000. Tenant shall construct such Alterations in a good
and workmanlike manner, in conformance with all applicable federal, state,
county and municipal laws, rules and regulations, pursuant to a valid building
permit, and in conformance with Landlord’s construction rules and regulations.
Prior to the commencement of any Alterations, Tenant shall provide Landlord with
evidence that Tenant carries customary “Builder’s All Risk” insurance in an
amount reasonably approved by Landlord covering the construction of such
Alterations, it being understood that all such Alterations shall be insured by
Tenant pursuant to Article 14 of this Lease immediately upon completion thereof.
In addition, Landlord may, in its discretion, require Tenant to obtain a lien
and completion bond or some alternate form of security satisfactory to Landlord
in an amount sufficient to ensure the lien free completion of such Alterations
and naming Landlord as a co-obligee. If permitted Alterations are made, they
shall be made at Tenant’s sole cost and expense and shall be and become the
property of Landlord, except that Landlord may, by written notice to Tenant
given at least thirty (30) days prior to the end of the Term, require Tenant at
Tenant’s expense to remove any Alterations installed by Tenant, and to repair
any damages to the Premises caused by such removal. Any and all costs
attributable to or related to the applicable building codes of the city in which
the Project is located (or any other authority having jurisdiction over the
Project) arising from Tenants plans, specifications, improvements, alterations
or otherwise shall be paid by Tenant at its sole cost and expense. With regard
to repairs, Alterations or any other work arising from or related to this
Article 9, Landlord shall be entitled to receive an administrative/supervision
fee (which fee shall vary depending upon whether or not Tenant orders the work
directly from Landlord) sufficient to compensate Landlord for all overhead,
general conditions, fees and other costs and expenses arising from Landlord’s
involvement with such work. Notwithstanding the foregoing, however, the original
improvements to the Premises as contemplated by the Tenant Work Letter shall be
undertaken, completed and insured by Landlord and are not subject to the
preceding provisions in this Article 9.

Landlord shall maintain and keep in good repair the structural elements, HVAC,
electrical, plumbing (except in the interior of the Premises), elevators,
exterior walls and windows and the public and common areas of the Project and
Premises as the same may exist from time to time, except for damage or wear and
tear which is the result of negligence or willful misconduct of Tenant or
Tenant’s employees, contractors or agents.

ARTICLE 10

LIENS

Tenant shall keep the Premises and the Project free from any mechanics’ liens,
vendors’ liens or any other liens arising out of any work performed, materials
furnished or obligations incurred by Tenant. In the event that there shall be
recorded against the Premises or the Project or the property of which the
Premises is a part any claim or lien arising out of any such work performed,
materials furnished or obligations incurred by Tenant and such claim or lien
shall not be removed or discharged within ten (10) days of filing, Landlord
shall have the right but not the obligation to pay and discharge said lien
without regard to whether such lien shall be lawful or correct or to require
that Tenant deposit with Landlord in cash, lawful money of the United States,
one hundred fifty percent (150%) of the amount of such claim, which sum may be
retained by Landlord until such claim shall have been removed of record or until
judgment shall have been rendered on such claim and such judgment shall have
become final, at which time Landlord shall have the right to apply such deposit
in discharge of the judgment on said claim and any costs, including attorneys’
fees and costs incurred by Landlord, and shall remit the balance thereof to
Tenant.

 

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ARTICLE 11

PROJECT SERVICES

(a) Landlord agrees to furnish to the Premises, at a cost to be included in
Operating Costs, from 7:00 a.m. to 7:00 p.m. Mondays through Fridays and 9:00
a.m. to 1:00 p.m. on Saturdays, excepting national holidays, air conditioning
and heat all in such reasonable quantities as in the judgment of Landlord is
reasonably necessary for the comfortable occupancy of the Premises as
contemplated herein. In addition, Landlord shall provide electric current for
normal lighting and normal office machines, elevator service and water on the
same floor as the Premises for lavatory and drinking purposes in such reasonable
quantities as in the judgment of Landlord is reasonably necessary for general
office use. Janitorial and maintenance services shall be furnished five (5) days
per week, excepting local and national holidays. Tenant shall comply with all
rules and regulations which Landlord may reasonably establish for the proper
functioning and protection of the common area air conditioning, heating,
elevator, electrical intrabuilding network cable and plumbing systems. Landlord
shall not be liable for, and there shall be no rent abatement (except to the
extent set forth in Section 20(f) below) as a result of, any stoppage, reduction
or interruption of any such services. Except as specifically provided in this
Article 11, Tenant agrees to pay for all utilities and other services utilized
by Tenant and additional building services furnished to Tenant not otherwise
covered within the rental payments to be made by Tenant hereunder or uniformly
furnished to all tenants of the Project at the rate generally charged by
Landlord to tenants of the Project.

(b) Tenant will not, without the prior written consent of Landlord, use any
apparatus or device in the Premises which will in any way increase the amount of
electricity or water usually furnished or supplied for use of the Premises as
general office space; nor connect any apparatus, machine or device with water
pipes or electric current (except through existing electrical outlets in the
Premises), for the purpose of using electric current or water.

(c) If Tenant shall require electric current in excess of that which Landlord is
obligated to furnish under Article 11(a) above, Tenant shall first obtain the
written consent of Landlord, which Landlord may refuse in its sole and absolute
discretion, to the use thereof and Landlord may cause an electric current meter
or submeter to be installed in the Premises to measure the amount of such excess
electric current consumed by Tenant in the Premises. The cost of any such meter
and of installation, maintenance and repair thereof shall be paid for by Tenant
and Tenant agrees to pay to Landlord, promptly upon demand therefor by Landlord,
for all such excess electric current consumed by any such use as shown by said
meter at the rates charged for such service by the city in which the Project is
located or the local public utility, as the case may be, furnishing the same,
plus any additional expense incurred by Landlord in keeping account of the
electric current so consumed.

(d) If Tenant requires heating, ventilation and/or air conditioning during times
other than the times provided in Article 11(a) above, Tenant shall give Landlord
such advance notice as Landlord shall reasonably require and shall pay
Landlord’s standard charge for such after-hours use, which is currently $35.00
per hour and shall not exceed the lesser of (i) the amount charged by Landlord
to any other tenant in the Project; and (ii) Landlord’s actual cost of supplying
the same.

(e) Landlord may impose a reasonable charge for any utilities or services (other
than electric current and heating, ventilation and/or air conditioning which
shall be governed by Articles 11(c) and (d) above) utilized by Tenant in excess
of the amount or type that Landlord reasonably determines is typical for general
office use, provided that such charge may not exceed the lesser of (i) the
amount charged by Landlord to any other tenant in the Project; and
(ii) Landlord’s actual cost of supplying the same.

ARTICLE 12

RIGHTS OF LANDLORD

Landlord and its agents shall have the right to enter the Premises at all
reasonable times for the purpose of cleaning the Premises, examining or
inspecting the same, serving or posting and keeping posted thereon notices as
provided by law, or which Landlord deems necessary for the protection of
Landlord or the Property, showing the same to prospective tenants, lenders or
purchasers of the Project, in the case of an emergency, and for making such
alterations, repairs, improvements or additions to the Premises or to the
Project as Landlord may deem necessary or desirable. If Tenant shall not be
personally present to open and permit an entry into the Premises at any time
when such an entry by Landlord is necessary or permitted hereunder, Landlord may
enter by means of a master key or may enter forcibly, only in the case of an
emergency, without liability to Tenant and without affecting this Lease.
Notwithstanding the foregoing, however, except in the case of emergency,
Landlord shall give Tenant reasonable advance notice prior to any entry into the
Premises and shall otherwise cooperate, and cause Landlord’s agents and
employees to cooperate, with Tenant, to ensure that any entries into the
Premises are undertaken in a manner that conforms with applicable federal and
state laws relating to the control of pharmaceuticals and protection of private
patient information.

 

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ARTICLE 13

INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY

(a) Indemnity. Tenant shall indemnify, defend and hold Landlord harmless from
any and all claims arising from Tenant’s use of the Premises or the Project or
from the conduct of its business or from any activity, work or thing which may
be permitted or suffered by Tenant in or about the Premises or the Project,
except to the extent of claims arising from Landlord’s intentional misconduct or
gross negligence and shall further indemnify, defend and hold Landlord harmless
from and against any and all claims arising from any breach or default in the
performance of any obligation on Tenant’s part to be performed under this Lease
or arising from any negligence or willful misconduct of Tenant or any of its
agents, contractors, employees or invitees, patrons, customers or members in or
about the Project and from any and all costs, attorneys’ fees and costs,
expenses and liabilities incurred in the defense of any claim or any action or
proceeding brought thereon, including negotiations in connection therewith.
Tenant hereby assumes all risk of damage to property or injury to persons in or
about the Premises from any cause, except to the extent of claims arising from
Landlord’s intentional misconduct or gross negligence, and Tenant hereby waives
all claims in respect, thereof against Landlord, excepting to the extent the
damage is caused by the gross negligence or willful misconduct of Landlord.

(b) Exemption of Landlord from Liability. Landlord shall not be liable for
injury to Tenant’s business, or loss of income therefrom, or for damage that may
be sustained by the person, goods, wares, merchandise or property of Tenant, its
employees, invitees, customers, agents, or contractors, or any other person in,
on or about the Premises directly or indirectly caused by or resulting from
fire, steam, electricity, gas, water, or rain which may leak or flow from or
into any part of the Premises, theft, vandalism, or from the breakage, leakage,
obstruction or other defects of the pipes, sprinklers, wires, appliances,
plumbing, air conditioning, light fixtures, or mechanical or electrical systems
or from intrabuilding network cable, whether such damage or injury results from
conditions arising upon the Premises or upon other portions of the Project or
from other sources or places and regardless of whether the cause of such damage
or injury or the means or repairing the same is inaccessible to Tenant, except
to the extent that any such circumstances result from Landlord’s gross
negligence or intentional misconduct. Landlord shall not be liable to Tenant for
any damages arising from any act or neglect of any other tenant of the building.
However, the foregoing shall not diminish in any way Landlord’s repair
obligations hereunder, Landlord’s covenant of quiet enjoyment hereunder or
Tenant’s right to terminate in accordance with Article 16. Tenant acknowledges
that Landlord’s election to provide mechanical surveillance or to post security
personnel in the Project is solely within Landlord’s discretion; Landlord shall
have no liability in connection with the decision whether or not to provide such
services and Tenant hereby waives all claims based thereon.

ARTICLE 14

INSURANCE

(a) Tenant’s Insurance. Tenant, shall at all times during the Term of this
Lease, and at its own cost and expense, procure and continue in force the
following insurance coverage: (i) Commercial General Liability Insurance with a
combined single limit for bodily injury and property damages of not less than
Two Million Dollars ($2,000,000) per occurrence and Three Million Dollars
($3,000,000) in the annual aggregate, including products liability coverage if
applicable, covering the insuring provisions of this Lease and the performance
of Tenant of the indemnity and exemption of Landlord from liability agreements
set forth in Article 13 hereof; (ii) a policy of standard fire, extended
coverage and special extended coverage insurance (all risks), including a
vandalism and malicious mischief endorsement in an amount equal to the full
replacement value new without deduction for depreciation of all (A) Tenant
Improvements, Alterations, fixtures and other improvements in the Premises and
(B) trade fixtures, furniture, equipment and other personal property installed
by or at the expense of Tenant; (iii) Worker’s Compensation coverage as required
by law; and (iv) business interruption, loss of income and extra expense
insurance covering failure of Tenant’s telecommunications equipment and covering
all other perils, failures or interruptions.

(b) Form of Policies. The aforementioned minimum limits of policies and Tenant’s
procurement and maintenance thereof shall in no event limit the liability of
Tenant hereunder. The Commercial General Liability Insurance policy shall name
Landlord, Landlord’s property manager, Landlord’s lender(s), as additional
insureds with an appropriate endorsement to the policy(s), provided that it is
feasible for Tenant to cause its insurer to add all such additional named
insureds. All such insurance policies carried by Tenant shall be with companies
having a rating of not less than A-VIII in Best’s Insurance Guide. Tenant shall
famish to Landlord, from the insurance companies, or cause the insurance
companies to furnish, certificates of coverage. No such policy shall be
cancelable or subject to reduction of coverage or other, modification or
cancellation except after thirty (30) days prior written notice to Landlord by
the insurer, to the extent it is feasible to obtain agreement from Tenant’s
insurer to add such clause. All such policies shall be endorsed to agree that
Tenant’s policy is primary and that any insurance covered by Landlord is excess
and not contributing with any Tenant insurance requirement hereunder. Tenant
shall, at least

 

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twenty (20) days prior to the expiration of such policies, furnish Landlord with
renewals or binders. Tenant agrees that if Tenant does not take out and maintain
such insurance or furnish Landlord with renewals or binders, Landlord may (but
shall not be required to) procure said insurance on Tenant’s behalf and charge
Tenant the cost thereof, which amount shall be payable by Tenant upon demand
with interest (at the rate set forth in Section 20(e) below) from the date such
sums are extended.

(c) Waiver of Subrogation. Landlord and Tenant each agree to have their
respective insurers waive any rights of subrogation that such companies may have
against the other party. Notwithstanding any other provisions in this Lease to
the contrary, Tenant hereby waives any right that Tenant may have against
Landlord, and Landlord hereby waives any right that Landlord may have against
Tenant as a result of any loss, damage or liability, including without
limitation under any indemnification covenants herein, to the extent such loss,
damage or liability is insurable under any policies of insurance.

ARTICLE 15

ASSIGNMENT AND SUBLETTING

Tenant shall have no power to, either voluntarily, involuntarily, by operation
of law or otherwise, sell, assign, transfer or hypothecate this Lease, or sublet
the Premises or any part thereof, or permit the Premises or any part thereof to
be used or occupied by anyone other than Tenant or Tenant’s employees without
the prior written consent of Landlord which shall not be unreasonably withheld.
If Tenant is a corporation, unincorporated association, partnership or limited
liability company, the sale, assignment, transfer or hypothecation of any class
of stock or other ownership interest in such corporation, association,
partnership or limited liability company in excess of fifty percent (50%) in the
aggregate shall be deemed an assignment within the meaning and provisions of
this Article 15. Tenant may transfer its interest pursuant to this Lease only
upon the following express conditions, which conditions are agreed by Landlord
and Tenant to be reasonable:

(a) That the proposed transferee shall be subject to the prior written consent
of Landlord, which consent will not be unreasonably withheld but, without
limiting the generality of the foregoing, it shall be reasonable for Landlord to
deny such consent if:

(i) The use to be made of the Premises by the proposed transferee is (a) not
generally consistent with the character and nature of all other tenancies in the
Project, or (b) a use which conflicts with another tenant of the Project or any
other buildings which are in the same complex as the Project, or (c) a use which
would be prohibited by any other portion of this Lease (including but not
limited to any Rules and Regulations then in effect);

(ii) The financial responsibility of the proposed transferee is not reasonably
satisfactory to Landlord;

(iii) The proposed transferee is either a governmental agency or instrumentality
thereof, unless Landlord had previously entered into a direct lease with such
proposed transferee; or

(iv) Either the proposed transferee or any person or entity which directly or
indirectly controls, is controlled by or is under common control with the
proposed transferee (A) occupies space in the Project at the time of the request
for consent, or (B) is negotiating with Landlord or has negotiated with Landlord
during the three (3) month period immediately preceding the date of the proposed
transfer, to lease space in the Project.

(b) Whether or not Landlord consents to any such transfer, Tenant shall pay to
Landlord Landlord’s then standard processing fee and reasonable attorneys’ fees
and costs incurred in connection with the proposed transfer, not to exceed
$1,500;

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

(d) That an executed duplicate original of said assignment and assumption
agreement or other transfer on a form reasonably approved by Landlord, shall be
delivered to Landlord within ten (10) days after the execution thereof, and that
such transfer shall not be binding upon Landlord until the delivery thereof to
Landlord and the execution and delivery of Landlord’s consent thereto. Landlord
shall either consent to a requested “Transfer” (as defined below) or deny
consent with the reasonable reasons for doing so within thirty (30) days after
Tenant provides all information required under this Article 15. It shall be a
condition to Landlord’s consent to any subleasing, assignment or other transfer
of part or all of Tenant’s interest in the Premises (hereinafter referred to as
a “Transfer”) that (i) Tenant shall pay and continue to pay fifty percent
(50%) of any “Transfer Premium” (defined below), received by Tenant from the
transferee; (ii) any sublessee of part or all of Tenant’s interest in the
Premises shall agree that in the event Landlord gives such sublessee notice that
Tenant is in default under this Lease, such sublessee shall thereafter make all
sublease or other payments directly to Landlord, which will be received by
Landlord without

 

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any liability whether to honor the sublease or otherwise (except to credit such
payments against sums due under this Lease), and any sublessee shall agree to
attorn to Landlord or its successors and assigns at their request should this
Lease he terminated for any reason, except that in no event shall Landlord or
its successors or assigns be obligated to accept such attomment; (iii) any such
Transfer and consent shall be effected on forms supplied by Landlord and/or its
legal counsel; (iv) Landlord may require that Tenant not then be in default
hereunder in any respect; and (v) Tenant or the proposed subtenant or assignee
(collectively, “Transferee”) shall agree to pay Landlord, upon demand, as
additional rent, a sum equal to the additional costs, if any, incurred by
Landlord for maintenance and repair as a result of any change in the nature of
occupancy caused by such subletting or assignment. “Transfer Premium” shall mean
all rent and additional rent payable by a Transferee in connection with a
Transfer in excess of the rent and Additional Rent payable by Tenant under this
Lease during the term of the Transfer and if such Transfer is less than all of
the Premises, the Transfer Premium shall be calculated on a rentable square foot
basis. “Transfer Premium” shall also include, but not be limited to, key money,
bonus money or other cash consideration paid by a transferee to Tenant in
connection with such Transfer, and any payment in excess of fair market value
for assets, fixtures, inventory, equipment, or furniture transferred by Tenant
to the Transferee in connection with such Transfer. In calculating the Transfer
Premium, there shall first be deducted: reasonable brokerage fees, marketing
costs, tenant improvement costs incurred by Tenant to obtain an assignee or
sublessee, and legal costs reasonable incurred by Tenant. Any sale assignment,
hypothecation, transfer or subletting of this Lease which is not in compliance
with the provisions of this Article 15 shall be void and shall, at the option of
Landlord, terminate this Lease. In no event shall the consent by Landlord to an
assignment or subletting be construed as relieving Tenant, any assignee, or
sublessee from obtaining the express written consent of Landlord to any further
assignment or subletting, or as releasing Tenant from any liability or
obligation hereunder whether or not then accrued and Tenant shall continue to be
fully liable therefor. No collection or acceptance of rent by Landlord from any
person other than Tenant shall be deemed a waiver of any provision of this
Article 15 or the acceptance of any assignee or subtenant hereunder, or a
release of Tenant (or of any successor of Tenant or any subtenant).

Notwithstanding the foregoing, an assignment or subletting of all or a portion
of the Premises to an Affiliate (as that term is defined below) of Tenant, shall
not be deemed a Transfer under this Article 15, provided that Tenant notifies
Landlord of any such assignment or sublease and promptly supplies Landlord with
any documents or information requested by Landlord regarding such assignment or
sublease or such Affiliate, and further provided that such assignment or
sublease is not a subterfuge by Tenant to avoid its obligations under this
Lease. The term “Affiliate” shall mean any entity that is controlled by,
controls or is under common control with, Tenant. “Control”, as used in this
Article 15, shall mean the ownership, directly or indirectly, of greater than
fifty percent (50%) of the voting securities or other beneficial ownership
interests of, or possession of the right to vote, in the ordinary direction of
its affairs, of greater than fifty percent (50%) of the voting interest in, an
entity.

ARTICLE 16

DAMAGE OR DESTRUCTION

If the Project is damaged by fire or other insured casualty and the insurance
proceeds have been made available therefor by the holder or holders of any
mortgages or deeds of trust covering the Premises or the Project, the damage
shall be repaired by Landlord to the extent such insurance proceeds are
available therefor and provided such repairs can, in Landlord’s sole opinion, be
completed within one hundred eighty (180) days after the necessity for repairs
as a result of such damage becomes known to Landlord without the payment of
overtime or other premiums, and until such repairs are completed rent shall be
abated in proportion to the part of the Premises which is unusable by Tenant in
the conduct of its business (but there shall be no abatement of rent by reason
of any portion of the Premises being unusable for a period equal to one (1) day
or less). However, if the damage is due to the fault or neglect of Tenant, its
employees, agents, contractors, guests, invitees and the like, there shall be no
abatement of rent, unless and to the extent Landlord receives rental income
insurance proceeds. Upon the occurrence of any damage to the Premises, Tenant
shall assign to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Section 14(a)(ii)(A) above; provided, however,
that if the cost of repair of improvements within the Premises by Landlord
exceeds the amount of insurance proceeds received by Landlord from Tenant’s
insurance carrier, as so assigned by Tenant, such excess costs shall be paid by
Tenant to Landlord prior to Landlord’s repair of such damage. If repairs cannot,
in Landlord’s opinion, be completed within one hundred eighty (180) days after
the necessity for repairs as a result of such damage becomes known to Landlord
without the payment of overtime or other premiums, Landlord may, at its option,
either (i) make them in a reasonable time and in such event this Lease shall
continue in effect and the rent shall be abated, if at all, in the manner
provided in this Article 16, or (ii) elect not to effect such repairs and
instead terminate this Lease, by notifying Tenant in writing of such termination
within sixty (60) days after Landlord learns of the necessity for repairs as a
result of damage, such notice to include a termination date giving Tenant sixty
(60) days to vacate the Premises. In addition, Landlord may elect to terminate
this Lease if the Project shall be damaged by fire or other casualty or cause,
whether or not the Premises are affected, and the damage is not fully covered,
except for deductible amounts, by Landlord’s insurance policies. Finally, if the
Premises or the Project is damaged to any substantial extent during the last
twelve (12) months of the Term, then notwithstanding anything contained in this
Article 16 to the contrary, either Landlord or Tenant shall have the option to
terminate this Lease by giving written notice to the other party of the exercise
of such option within sixty (60) days after such party learns of the necessity
for repairs as the result of such damage. For purposes of the preceding
sentence, the circumstances under which the Project will be deemed to be damaged
to a substantial extent will include, without limitation any damage or
destruction which either (a) for a period sixty (60) days renders more than
twenty percent (20%) of the Premises unusable for Tenant’s business uses or
(b) for a period of sixty (60) days results in Tenant being unable to operate
its business in the Premises.

 

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A total destruction of the Project shall automatically terminate this Lease.
Except as provided in this Article 16, there shall be no abatement of rent and
no liability of Landlord by reason of any injury to or interference with
Tenant’s business or property arising from such damage or destruction or the
making of any repairs, alterations or improvements in or to any portion of the
Project or the Premises or in or to fixtures, appurtenances and equipment
therein. Tenant understands that Landlord will not carry insurance of any kind
on Tenant’s furniture, furnishings, trade fixtures or equipment, and that
Landlord shall not be obligated to repair any damage thereto or replace the
same, except to the extent of claims arising from Landlord’s intentional
misconduct or gross negligence (subject to the terms of Section 14(c) above).
Except for proceeds relating to Tenant’s furniture, furnishings, trade fixtures
and equipment, Tenant acknowledges that Tenant shall have no right to any
proceeds of insurance relating to property damage. With respect to any damage
which Landlord is obligated to repair or elects to repair, Tenant, as a material
inducement to Landlord entering into this Lease, irrevocably waives and releases
its rights under the provisions of Sections 1932 and 1933 of the California
Civil Code.

ARTICLE 17

SUBORDINATION

This Lease is subject and subordinate to all ground or underlying leases,
mortgages and deeds of trust which affect the property or the Project, including
all renewals, modifications, consolidations, replacements and extensions
thereof; provided, however, if the lessor under any such lease or the holder or
holders of any such mortgage or deed of trust shall advise Landlord that they
desire or require this Lease to be prior and superior thereto, upon written
request of Landlord to Tenant, Tenant agrees to promptly execute, acknowledge
and deliver any and all reasonable documents or instruments which Landlord or
such lessor, holder or holders deem necessary or desirable for purposes thereof.
Landlord shall have the right to cause this Lease to be and become and remain
subject and subordinate to any and all ground or underlying leases, mortgages or
deeds of trust which may hereafter be executed covering the Premises, the
Project or the property or any renewals, modifications, consolidations,
replacements or extensions thereof; provided, however, that Landlord obtains
from the lender or other party in question a written undertaking in favor of
Tenant, pursuant to a commercially customary Subordination and Non-Disturbance
Agreement (a “SNDA”), to the effect that such lender or other party will not
disturb Tenant’s right of possession under this Lease if Tenant is not then or
thereafter in breach of any covenant or provision of this Lease. Tenant agrees,
within ten (10) days after Landlord’s written request therefor, to execute,
acknowledge and deliver upon request any and all documents or instruments
requested by Landlord or necessary or proper to assure the subordination of this
Lease to any such mortgages, deed of trust, or leasehold estates, in the form of
a SNDA or other document which also confirms the mortgage or deed of trust
holder’s or other applicable party’s non-disturbance agreement. Tenant agrees
that in the event any proceedings are brought for the foreclosure of any
mortgage or deed of trust or any deed in lieu thereof, to attorn to the
purchaser or any successors thereto upon any such foreclosure sale or deed in
lieu thereof as so requested to do so by such purchaser and to recognize such
purchaser as the lessor under this Lease; Tenant shall, within five (5) days
after requested execute such further instruments or assurances as such purchaser
may reasonably deem necessary to evidence or confirm such attornment; provided
that as part of such attornment acknowledgement by Tenant, such Purchaser also
acknowledges Tenant’s rights hereunder. Tenant agrees to provide copies of any
notices of Landlord’s default under this Lease to any mortgagee or deed of trust
beneficiary whose address has been provided to Tenant and Tenant shall provide
such mortgagee or deed of trust beneficiary a commercially reasonable time after
receipt of such notice within which to cure any such default. Tenant waives the
provisions of any current or future statute, rule or law which may give or
purport to give Tenant any right or election to terminate or otherwise adversely
affect this Lease and the obligations of the Tenant hereunder in the event of
any foreclosure proceeding or sale.

ARTICLE 18

EMINENT DOMAIN

If the whole of the Premises or the Project or so much thereof as to render the
balance unusable by Tenant shall be taken under power of eminent domain, or is
sold, transferred or conveyed in lieu thereof, this Lease shall automatically
terminate as of the date of such condemnation, or as of the date possession is
taken by the condemning authority, at Landlord’s option. No award for any
partial or entire taking shall be apportioned, and Tenant hereby assigns to
Landlord any award which may be made in such taking or condemnation, together
with any and all rights of Tenant now or hereafter arising in or to the same or
any part thereof; provided, however, that nothing contained herein shall be
deemed to give Landlord any interest in or to require Tenant to assign to
Landlord any award made to Tenant for the taking of personal property and trade
fixtures belonging to Tenant and removable by Tenant at the expiration of the
Term hereof as provided hereunder or for the interruption of, or damage to,
Tenant’s business. In the event of a partial taking described in this Article
18, or a sale, transfer or conveyance in lieu thereof, which does not result in
a termination of this Lease, the rent shall be apportioned according to the
ratio that the part of the Premises remaining useable by Tenant bears to the
total area of the Premises. Tenant hereby waives any and all rights it might
otherwise have pursuant to Section 1265.130 of the California Code of Civil
Procedure.

 

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ARTICLE 19

DEFAULT

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

(a) Failure or refusal to pay Basic Rental, Additional Rent or any other amount
to be paid by Tenant to Landlord hereunder within three (3) calendar days after
notice that the same is due or payable hereunder; said three (3) day period
shall be in lieu of, and not in addition to, the notice requirements of
Section 1161 of the California Code of Civil Procedure or any similar or
successor law;

(b) Except as set forth in items (a) above and (c) through and including
(d) below, failure to perform or observe any other covenant or condition of this
Lease to be performed or observed within thirty (30) days following written
notice to Tenant of such failure or if greater than thirty (30) days are
reasonably required to cure such default if Tenant commences such cure within
such thirty (30) day period and diligently prosecutes such cure to completion.
Such thirty (30) day notice shall be in lieu of, and not in addition to, any
required under Section 1161 of the California Code of Civil Procedure or any
similar or successor law;

(c) Abandonment or vacating or failure to accept tender of possession of the
Premises or any significant portion thereof, without the payment of rent; or

(d) Tenant’s failure to observe or perform according to the provisions of
Articles 7, 17 or 25 within five (5) business days after notice from Landlord.

ARTICLE 20

REMEDIES

(a) Upon the occurrence of an Event of Default under this Lease as provided in
Article 19 hereof, Landlord may exercise all of its remedies as may be permitted
by law, including but not limited to the remedy provided by Section 1951.4 of
the California Civil Code, and including without limitation, terminating this
Lease, reentering the Premises and removing all persons and property therefrom,
which property may be stored by Landlord at a warehouse or elsewhere at the
risk, expense and for the account of Tenant. If Landlord elects to terminate
this Lease, Landlord shall be entitled to recover from Tenant, to the extent
legally permitted, the aggregate of all amounts permitted by law, including but
not limited to (i) the worth at the time of award of the amount of any unpaid
rent which had been earned at the time of such termination; plus (ii) the worth
at the time of award of the amount by which the unpaid rent which would have
been earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which the unpaid rent for
the balance of the Lease Term after the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided; plus (iv) any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or which
in the ordinary course of things would be likely to result therefrom,
specifically including but not limited to, brokerage commissions and advertising
expenses incurred, expenses of remodeling the Premises or any portion thereof
for a new tenant, whether for the same or a different use, and any special
concessions made to obtain a new tenant; and (v) at Landlord’s election, such
other amounts in addition to or in lieu of the foregoing as may be permitted
from time to time by applicable law. The term “rent” as used in this Article
20(a) shall be deemed to be and to mean all sums of every nature required to be
paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to
others. As used in items (i) and (ii), above, the “worth at the time of award”
shall be computed by allowing interest at the rate set forth in item (e), below,
but in no case greater than the maximum amount of such interest permitted by
law. As used in item (iii), above, the “worth at the time of award” shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).

(b) Nothing in this Article 20 shall be deemed to affect Landlord’s right to
indemnification for liability or liabilities arising prior to the termination of
this Lease for personal injuries or property damage under the indemnification
clause or clauses contained in this Lease.

 

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

(d) All rights, powers and remedies of Landlord hereunder and under any other
agreement now or hereafter in force between Landlord and Tenant shall be
cumulative and not alternative and shall be in addition to all rights, powers
and remedies given to Landlord by law, and the exercise of one or more rights or
remedies shall not impair Landlord’s right to exercise any other right or
remedy.

(e) Any amount due from Tenant to Landlord hereunder which is not paid when due
shall bear interest at the lower of ten percent (10%) per annum or the maximum
lawful rate of interest from the due date until paid, unless otherwise
specifically provided herein, but the payment of such interest shall not excuse
or cure any default by Tenant under this Lease. In addition to such interest:
(i) if Basic Rental is not paid within ten (10) days after the same is due, a
late charge equal to ten percent (10%) of the amount overdue or $100, whichever
is greater, shall be assessed and shall accrue for each calendar month or part
thereof until such rental, including the late charge, is paid in full, which
late charge Tenant hereby agrees is a reasonable estimate of the damages
Landlord shall suffer as a result of Tenant’s late payment and (ii) an
additional charge of $25 shall be assessed for any check given to Landlord by or
on behalf of Tenant which is not honored by the drawee thereof; which damages
include Landlord’s additional administrative and other costs associated with
such late payment and unsatisfied checks and the parties agree that it would be
impracticable or extremely difficult to fix Landlord’s actual damage in such
event. Such charges for interest and late payments and unsatisfied checks are
separate and cumulative and are in addition to and shall not diminish or
represent a substitute for any or all of Landlord’s rights or remedies under any
other provision of this Lease.

(f) In the event that Tenant is prevented from using, and does not use, the
Premises or any portion thereof, as a result of (i) any repair, construction
maintenance or alteration performed by Landlord, or which Landlord failed to
perform, after the Commencement Date and required by this Lease, which
substantially interferes with Tenant’s use of or ingress to or egress from the
Project or Premises; (ii) any failure to provide services, utilities or ingress
to and egress from the Project or Premises; (iii) the presence of hazardous
materials not brought on the Premises by Tenant (any such set of circumstances
as set forth in items (i) through (iii), above, to be known as an “Abatement
Event”), then Tenant shall give Landlord written notice of such Abatement Event,
and if such Abatement Event continues for five (5) consecutive business days
after Landlord’s receipt of any such notice, or occurs for ten
(10) non-consecutive business days in a twelve (12) month period (provided
Landlord is sent a notice of each of such Abatement Events) (in either of such
events, the “Eligibility Period”), then the Basic Rental, parking charges and
Tenant’s Proportionate Share of Direct Costs shall be abated or reduced, as the
case may be, after expiration of the Eligibility Period for such time that
Tenant continues to be so prevented from using, and does not use, the Premises,
or a portion thereof, in the proportion that the rentable area of the portion of
the Premises that Tenant is prevented from using, and does not use, bears to the
total rentable area of the Premises. If Landlord has not cured such Abatement
Event within sixty (60) days after receipt of notice from Tenant, Tenant shall
have the right to terminate this Lease by delivery of written notice to Landlord
until such time as Landlord has cured the Abatement Event.

ARTICLE 21

TRANSFER OF LANDLORD’S INTEREST

In the event of any transfer or termination of Landlord’s interest in the
Premises or the Project by sale, assignment, transfer, foreclosure, deed-in-lieu
of foreclosure or otherwise whether voluntary or involuntary, Landlord shall be
automatically relieved of any and all obligations and liabilities on the part of
Landlord from and after the date of such transfer or termination, including
furthermore without limitation, the obligation of Landlord under Article 4 and
California Civil Code 1950.7 above to return the security deposit, provided said
security deposit is transferred to said transferee and the transferee assumes
Landlord’s ongoing responsibility hereunder, including with respect to return of
the security deposit at the termination or expiration of the Lease. Tenant
agrees to attorn to the transferee upon any such transfer and to recognize such
transferee as the lessor under this Lease and Tenant shall, within five (5) days
after request, execute such further instruments or assurances as such transferee
may reasonably deem necessary to evidence or confirm such attornment.

 

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ARTICLE 22

BROKER

In connection with this Lease, Tenant warrants and represents that it has had
dealings only with firm(s) set forth in Article l.H. of the Basic Lease
Provisions and that it knows of no other person or entity who is or might be
entitled to a commission, finder’s fee or other like payment in connection
herewith and does hereby indemnify and agree to hold Landlord, its agents,
members, partners, representatives, officers, affiliates, shareholders,
employees, successors and assigns harmless from and against any and all loss,
liability and expenses that Landlord may incur should such warranty and
representation prove incorrect, inaccurate or false.

ARTICLE 23

PARKING

Tenant shall rent from Landlord, and Landlord shall provide to Tenant, at no
charge in addition to the other rental owing hereunder, commencing on the
Commencement Date, twenty-nine (29) unreserved parking spaces set forth in
Section 1(I) of the Basic Lease Provisions in the existing uncovered parking lot
at the Project. Two (2) of such parking spaces shall be located immediately
outside of and adjacent to the external entrance to the Premises in an exact
location to be mutually agreed upon by Landlord and Tenant (the “Reserved
Loading Area”), which Tenant needs as a critical aspect of its use of the
Premises, for loading and unloading supplies. Tenant’s continued right to use
the parking spaces is conditioned upon Tenant reasonably abiding by all
reasonable and customary rules and regulations which prescribed from time to
time for the orderly operation and use of the parking area where the parking
spaces are located, including any sticker or other identification system
established by Landlord, Tenant’s reasonable cooperation in seeing that Tenant’s
employees and visitors also comply with such rules and regulations. Landlord
specifically reserves the right to change the size, configuration, design,
layout and all other aspects of the Project parking area at any time and Tenant
acknowledges and agrees that Landlord may, without incurring any liability to
Tenant and without any abatement of rent under this Lease, from time to time,
close-off or restrict access to the Project parking area for purposes of
permitting or facilitating any such construction, alteration or improvements;
provided, however, that if any such construction, alteration or other project
materially interferes with the available access to parking, Landlord shall make
reasonable alternative parking arrangements during the course of such project.
Landlord may relocate any parking spaces rented by Tenant to another location in
the Project parking area. Landlord may delegate its responsibilities hereunder
to a parking operator or a lessee of the parking area in which case such parking
operator or lessee shall have all the rights of control attributed hereby to the
Landlord. The parking passes rented by Tenant pursuant to this Article 23 are
provided to Tenant solely for use by Tenant’s own personnel and such passes may
not be transferred, assigned, subleased or otherwise alienated by Tenant without
Landlord’s prior approval. Tenant may validate visitor parking by such method or
methods as the Landlord may establish, at the validation rate from time to time
generally applicable to visitor parking. Notwithstanding the foregoing, however,
Landlord shall not make any changes to the parking arrangements at the Project,
or otherwise to the Project, which results in Tenant’s loss of use of and access
to the Reserved Loading Area except to the extent required by law.

ARTICLE 24

WAIVER

No waiver by Landlord of any provision of this Lease shall be deemed to be a
waiver of any other provision hereof or of any subsequent breach by Tenant of
the same or any other provision. No provision of this Lease may be waived by
Landlord, except by an instrument in writing executed by Landlord. Landlord’s
consent to or approval of any act by Tenant requiring Landlord’s consent or
approval shall not be deemed to render unnecessary the obtaining of Landlord’s
consent to or approval of any subsequent act of Tenant, whether or not similar
to the act so consented to or approved. No act or thing done by Landlord or
Landlord’s agents during the Term of this Lease shall be deemed an acceptance of
a surrender of the Premises, and no agreement to accept such surrender shall be
valid unless in writing and signed by Landlord. The subsequent acceptance of
rent hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, other than
the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord’s knowledge of such preceding breach at the time of acceptance of such
rent. Any payment by Tenant or receipt by Landlord of an amount less than the
total amount then due hereunder shall be deemed to be in partial payment only
thereof and not a waiver of the balance due or an accord and satisfaction,
notwithstanding any statement or endorsement to the contrary on any check or any
other instrument delivered concurrently therewith or in reference thereto.
Accordingly, Landlord may accept any such amount and negotiate any such check
without prejudice to Landlord’s right to recover all balances due and owing and
to pursue its other rights against Tenant under this Lease, regardless of
whether Landlord makes any notation on such instrument of payment or otherwise
notifies Tenant that such acceptance or negotiation is without prejudice to
Landlord’s rights.

 

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ARTICLE 25

ESTOPPEL CERTIFICATE

Tenant shall, at any time and from time to time (but not more often than once
every twelve (12) months), upon not less than ten (10) business days’ prior
written notice from Landlord, execute, acknowledge and deliver to Landlord a
statement in writing certifying the following information, (but not limited to
the following information in the event further information is requested by
Landlord): (i) that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this
Lease, as modified, is in full force and effect); (ii) the dates to which the
rental and other charges are paid in advance, if any; (iii) the amount of
Tenant’s security deposit, if any; and (iv) acknowledging that there are not, to
Tenant’s knowledge, any uncured defaults on the part of Landlord hereunder, and
no events or conditions then in existence which, with the passage of time or
notice or both, would constitute a default on the part of Landlord hereunder, or
specifying such defaults, events or conditions, if any are claimed. It is
expressly understood and agreed that any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Real
Property. Tenant’s failure to deliver such statement within such time shall
constitute an admission by Tenant that all statements contained therein are true
and correct.

ARTICLE 26

LIABILITY OF LANDLORD

Notwithstanding anything in this Lease to the contrary, any remedy of Tenant for
the collection of a judgment (or other judicial process) requiring the payment
of money by Landlord in the event of any default by Landlord hereunder or any
claim, cause of action or obligation, contractual, statutory or otherwise by
Tenant against Landlord concerning, arising out of or relating to any matter
relating to this Lease and all of the covenants and conditions or any
obligations, contractual, statutory, or otherwise set forth herein, shall be
limited solely and exclusively to an amount which is equal to the lesser of
(i) the interest of Landlord in and to the Project, and (ii) the interest
Landlord would have in the Project if the Project were encumbered by third party
debt in an amount equal to eighty percent (80%) of the then current value of the
Project. No other property or assets of Landlord, or any member, officer,
director, shareholder, partner, trustee, agent, servant or employee of Landlord
(the “Representative”) shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant’s remedies under or with respect to
this Lease, Landlord’s obligations to Tenant, whether contractual, statutory or
otherwise, the relationship of Landlord and Tenant hereunder, or Tenant’s use or
occupancy of the Premises. Tenant further understands that any liability, duty
or obligation of Landlord to Tenant, shall automatically cease and terminate as
of the date that Landlord or any of Landlord’s Representatives no longer have
any right, title or interest in or to the Project. Notwithstanding anything to
the contrary in this Lease, Landlord shall not be liable under any circumstances
for injury or damage to, or interference with, Tenant’s business, including but
not limited to, loss of profits, loss of rents or other revenues, loss of
business opportunity, loss of goodwill or loss of use, in each case, however
occurring.

ARTICLE 27

INABILITY TO PERFORM

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

ARTICLE 28

HAZARDOUS WASTE

(a) Tenant shall not cause or permit any Hazardous Material (as defined in
Article 28(b) below) to be brought, kept or used in or about the Project by
Tenant, its agents, employees, contractors, or invitees, except for Hazardous
Materials customarily used, handled or stored in the operation of pharmacies and
general office uses, provided that any such Hazardous Materials are used,
handled and stored in accordance with all applicable laws. Tenant indemnifies
Landlord from and against any breach by Tenant of the obligations stated in the
preceding sentence, and agrees to defend and hold Landlord harmless from and
against any and all claims, judgments, damages, penalties, fines, costs,
liabilities, or losses (including, without limitation, diminution in value of
the Project, damages for the loss or restriction or use of rentable or usable
space or of any amenity of the Project, damages arising from any adverse impact
or marketing of space in the Project, and sums paid in settlement of claims,

 

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attorneys’ fees and costs, consultant fees, and expert fees) which arise during
or after the Term of this Lease as a result of such breach. This indemnification
of Landlord by Tenant includes, without limitation, costs incurred in connection
with any investigation of site conditions or any cleanup, remedial, removal, or
restoration work required by any federal, state, or local governmental agency or
political subdivision because of Hazardous Material present in the soil or
ground water on or under the Project.

(b) As used herein, the term “Hazardous Material” means any hazardous or toxic
substance, material, or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States Government.

(c) Landlord indemnifies Tenant and agrees to defend and hold Tenant harmless
from and against any and all claims, judgments, damages, penalties, fines,
costs, liabilities, or losses (including, without limitation, sums paid in
settlement of claims, attorneys’ fees and costs, consultant fees, and expert
fees) which arise as a result of Hazardous Materials that are located in, on or
under the Project as of the Commencement Date and were not brought onto the
Project by Tenant or its agents. This indemnification of Tenant by Landlord
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal, or
restoration work required by any federal, state, or local governmental agency or
political subdivision because of Hazardous Material present in the soil or
ground water on or under the Project as of the Commencement Date.

ARTICLE 29

SURRENDER OF PREMISES; REMOVAL OF PROPERTY

(a) The voluntary or other surrender of this Lease by Tenant to Landlord, or a
mutual termination hereof, shall not work a merger, and shall at the option of
Landlord, operate as an assignment to it of any or all subleases or subtenancies
affecting the Premises.

(b) Upon the expiration of the Term of this Lease, or upon any earlier
termination of this Lease, Tenant shall quit and surrender possession of the
Premises to Landlord in as good order and condition as the same are now and
hereafter may be improved by Landlord or Tenant, reasonable wear and tear and
repairs which are Landlord’s obligation excepted, and shall, without expense to
Landlord, remove or cause to be removed from the Premises all debris and
rubbish, telephone and data cabling and all articles of personal property
installed or placed in the Premises, and Tenant shall repair all damage to the
Premises resulting from the installation and removal of such items to be
removed.

(c) All fixtures and Alterations attached to or built into the Premises prior to
or during the Term, whether by Landlord or Tenant and whether at the expense of
Landlord or Tenant, or of both, shall be and remain part of the Premises and
shall not be removed by Tenant at the end of the Term unless otherwise expressly
provided for in this Lease or unless such removal is required by Landlord. Such
fixtures and Alterations shall include but not be limited to: all floor and
window coverings, built-in cabinetry, molding, doors, vaults (including vault
doors), plumbing systems, security systems, electrical systems, lighting
systems, silencing equipment, communication systems, and all fixtures and
outlets for the systems mentioned above.

ARTICLE 30

MISCELLANEOUS

(a) Severabilitv; Entire Agreement. Any provision of this Lease which shall
prove to be invalid, void, or illegal shall in no way affect, impair or
invalidate any other provision hereof and such other provisions shall remain in
full force and effect. This Lease and the Exhibits and any Addendum attached
hereto constitute the entire agreement between the parties hereto with respect
to the subject matter hereof, and no prior agreement or understanding pertaining
to any such matter shall be effective for any purpose. No provision of this
Lease may be amended or supplemented except by an agreement in writing signed by
the parties hereto or their successor in interest.

(b) Attorneys’ Fees; Waiver of Jury Trial.

(i) In any action to enforce the terms of this Lease, including any suit by
Landlord for the recovery of rent or possession of the Premises, the losing
party shall pay the successful party a reasonable sum for attorneys’ fees and
costs in such suit and such attorneys’ fees and costs shall be deemed to have
accrued prior to the commencement of such action and shall be paid whether or
not such action is prosecuted to judgment.

 

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(ii) Should Landlord, without fault on Landlord’s part, be made a party to any
litigation instituted by Tenant or by any third party against Tenant, or by or
against any person holding under or using the Premises by license of Tenant, or
for the foreclosure of any lien for labor or material furnished to or for Tenant
or any such other person or otherwise arising out of or resulting from any act
or transaction of Tenant or of any such other person, Tenant covenants to save
and hold Landlord harmless from any judgment rendered against Landlord or the
Premises or any part thereof and from all costs and expenses, including
reasonable attorneys’ fees and costs incurred by Landlord in connection with
such litigation.

(iii) EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
SEEKING SPECIFIC PERFORMANCE OF ANY PROVISION OF THIS LEASE, FOR DAMAGES FOR ANY
BREACH UNDER THIS LEASE, OR OTHERWISE FOR ENFORCEMENT OF ANY RIGHT OR REMEDY
HEREUNDER.

(c) Time of Essence. Each of Tenant’s covenants herein is a condition and time
is of the essence with respect to the performance of every provision of this
Lease.

(d) Headings; Joint and Several. The article headings contained in this Lease
are for convenience only and do not in any way limit or amplify any term or
provision hereof. The terms “Landlord” and “Tenant” as used herein shall include
the plural as well as the singular, the neuter shall include the masculine and
feminine genders and the obligations herein imposed upon Tenant shall be joint
and several as to each of the persons, firms or corporations of which Tenant may
be composed.

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

(f) NO OPTION. THE SUBMISSION OF THIS LEASE BY LANDLORD, ITS AGENT OR
REPRESENTATIVE FOR EXAMINATION OR EXECUTION BY TENANT DOES NOT CONSTITUTE AN
OPTION OR OFFER TO LEASE THE PREMISES UPON THE TERMS AND CONDITIONS CONTAINED
HEREIN OR A RESERVATION OF THE PREMISES IN FAVOR OF TENANT, IT BEING INTENDED
HEREBY THAT THIS LEASE SHALL ONLY BECOME EFFECTIVE UPON THE EXECUTION HEREOF BY
LANDLORD AND TENANT AND DELIVERY OF A FULLY EXECUTED LEASE TO TENANT.

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

(h) Rules and Regulations. Tenant shall observe faithfully and comply reasonably
with the Rules and Regulations attached to this Lease as Exhibit “B” and made a
part hereof and such other Rules and Regulations as Landlord may from time to
time reasonably adopt for the safety, care and cleanliness of the Project, the
facilities thereof, or the preservation of good order therein and are not
inconsistent with any of the provisions of this Lease. Landlord shall not be
liable to Tenant for violation of any such Rules and Regulations, or for the
breach of any covenant or condition in any lease by any other tenant in the
Project. However, notwithstanding the foregoing or any provision in any Rules or
Regulations as they may be modified from time to time, nothing herein or in any
such Rules or Regulations shall restrict (i) Tenant from formulating, storing
and handling pharmaceutical supplies at the Premises in compliance with
applicable laws; (ii) Tenant from installing any security features as are
legally required in connection with the storage and handling of pharmaceutical
supplies, provided that Tenant keeps Landlord informed of such measures; or
(iii) Tenant’s right to accept and send deliveries of pharmaceutical and other
supplies through the outside entrance to the Premises and to exclusively use the
Reserved Loading Area in support of such activities.

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

(j) Rent. All payments required to be made hereunder to Landlord shall be deemed
to be rent, whether or not described as such.

 

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(k) Successors and Assigns. Subject to the provisions of Article 15 hereof, all
of the covenants, conditions and provisions of this Lease shall be binding upon
and shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.

(l) Notices. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal service evidenced by a signed receipt or
sent by registered or certified mail, return receipt requested, or via overnight
courier, and shall be effective upon proof of delivery, addressed to Tenant at
the Premises with a copy to Allion Healthcare, Inc., 1660 Walt Whitman Road,
Suite 105, Melville, NY 11747, Attn: General Counsel, or to Landlord at the
management office for the Project, with a copy to Landlord, c/o 12603 E. 206th
Street, Lakewood, CA 90715, Attn: Steve Kroeze, with a copy to Advisors LLP,
11911 San Vicente Boulevard, Suite 265, Los Angeles, California 90049, Attn:
Jordan Fishman, Esq. Either party may by notice to the other specify a different
address for notice purposes except that, upon Tenant’s taking possession of the
Premises, the Premises shall constitute Tenant’s address for notice purposes. A
copy of all notices to be given to Landlord hereunder shall be concurrently
transmitted by Tenant to such party hereafter designated by notice from Landlord
to Tenant.

(m) Persistent Delinquencies. In the event that Tenant shall be delinquent by
more than fifteen (15) days in the payment of rent on three (3) separate
occasions in any twelve (12) month period, Landlord shall have the right to
terminate this Lease by thirty (30) days written notice given by Landlord to
Tenant within thirty (30) days of the last such delinquency.

(n) Right of Landlord to Perform. All covenants and agreements to be performed
by Tenant under any of the terms of this Lease shall be performed by Tenant at
Tenant’s sole cost and expense and without any abatement of rent. If Tenant
shall fail to pay any sum of money, other than rent, required to be paid by it
hereunder or shall fail to perform any other act on its part to be performed
hereunder, and such failure shall continue beyond any applicable cure period set
forth in this Lease, Landlord may, but shall not be obligated to, without
waiving or releasing Tenant from any obligations of Tenant, make any such
payment or perform any such other act on Tenant’s part to be made or performed
as is in this Lease provided. All sums so paid by Landlord and all reasonable
incidental costs, together with interest thereon at the rate of ten percent
(10%) per annum from the date of such payment by Landlord, shall be payable to
Landlord on demand and Tenant covenants to pay any such sums, and Landlord shall
have (in addition to any other right or remedy of Landlord) the same rights and
remedies in the event of the nonpayment thereof by Tenant as in the case of
default by Tenant in the payment of the rent.

(o) Access, Changes in Project, Facilities, Name.

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

(ii) Tenant shall permit Landlord to install, use and maintain pipes, ducts and
conduits within the walls, columns and ceilings of the Premises; provided that
in doing so Landlord not interfere with Tenant’s use and quiet possession of the
Premises and any access by Landlord to the Premises shall be in accordance with
the other provisions of this Lease.

(iii) Landlord reserves the right, without incurring any liability to Tenant
therefor, to make such changes in or to the Project and the fixtures and
equipment thereof, as well as in or to the street entrances, halls, passages,
elevators, stairways and other improvements thereof, as it may deem necessary or
desirable; provided, however that in no event shall Landlord restrict Tenant’s
continue use and access to the Reserved Loading Area and the Premises external
entry door, as addressed elsewhere in this Lease.

(iv) Landlord may adopt any name for the Project and Landlord reserves the right
to change the name or address of the Project at any time; provided that if
Landlord elects to do so it shall reimburse Tenant for the cost of changing its
letterhead, business cards and other materials reflecting such Project name.

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

 

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provisions of the partnership agreement granting the requisite authority to each
individual executing this Lease on behalf of said partnership, and (iii) if
Tenant is a limited liability company, a copy of the provisions of its operating
agreement granting the requisite authority to each individual executing this
Lease on behalf of said limited liability company. In the event Tenant fails to
comply with the requirements set forth in this subparagraph (p), then each
individual executing this Lease shall be personally liable for all of Tenant’s
obligations in this Lease.

(q) Intentionally deleted.

(r) Survival of Obligations. Any obligations of Tenant and Landlord occurring
prior to the expiration or earlier termination of this Lease shall survive such
expiration or earlier termination.

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

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

(u) Exhibits and Addendum. The Exhibits and Addendum, if applicable, attached
hereto are incorporated herein by this reference as if fully set forth herein.

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

(w) No Consequential Damages. Notwithstanding anything to the contrary in the
Lease, neither Tenant nor Landlord shall be liable under any circumstances for
injury or damage to, or interference with, the other party’s business, including
but not limited to, loss of profits, loss of rents or other revenues, loss of
business opportunity, loss of goodwill or loss of use, in each case, however
occurring.

[Signatures are on the following page.]

 

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

 

“LANDLORD”

     

KROEZE KONCEPTS, INC.,

a California corporation

  By:  

 

  Its:  

 

“TENANT”

     

MEDICINE MADE EASY

a California corporation

  By:  

/s/ Michael P. Moran

  Its:   President & CEO   By:  

/s/ Michael P. Moran

  Its:   President & CEO

 

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EXHIBIT “A”

PREMISES

EXHIBIT “A”

 

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EXHIBIT “B”

RULES AND REGULATIONS

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

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

3. The sidewalks, halls, passages, exits, entrances, elevators and stairways
shall not be obstructed by Tenant or used for any purpose other than for ingress
and egress from Tenant’s Premises. Under no circumstances is trash to be stored
in the corridors. Notice must be given to Landlord for any large deliveries.
Furniture, freight and other large or heavy articles, and all other deliveries
may be brought into the Project only at times and in the manner designated by
Landlord, and always at Tenant’s sole responsibility and risk. Landlord may
impose reasonable charges for use of freight elevators after or before normal
business hours. All damage done to the Project by moving or maintaining such
furniture, freight or articles shall be repaired by Landlord at Tenant’s
expense. Tenant shall not take or permit to be taken in or out of entrances or
passenger elevators of the Project, any item normally taken, or which Landlord
otherwise reasonably requires to be taken, in or out through service doors or on
freight elevators. Tenant shall move all supplies, furniture and equipment as
soon as received directly to the Premises, and shall move all waste that is at
any time being taken from the Premises directly to the areas designated for
disposal. 4. Toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used for any purpose other than for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown therein.

5. Tenant shall not overload the floor of the Premises or mark, drive nails,
screw or drill into the partitions, ceilings or floor or in any way deface the
Premises. Tenant shall not place typed, handwritten or computer generated signs
in the corridors or any other common areas. Should there be a need for signage
additional to the Project standard tenant placard, a written request shall be
made to Landlord to obtain approval prior to any installation. All costs for
said signage shall be Tenant’s responsibility.

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

7. Tenant shall not use or keep in the Premises or Project any kerosene,
gasoline or inflammable, explosive or combustible fluid or material, or use any
method of heating or air-conditioning other than that supplied by Landlord.

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

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

EXHIBIT “B”

 

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

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

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

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

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

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

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

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

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

19. All doors opening on to public corridors shall be kept closed, except when
being used for ingress and egress. Tenant shall cooperate and comply with any
reasonable safety or security programs, including fire drills and air raid
drills, and the appointment of “fire wardens” developed by Landlord for the
Project, or required by law. Before leaving the Premises unattended, Tenant
shall close and securely lock all doors or other means of entry to the Premises
and shut off all lights and water faucets in the Premises.

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

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

EXHIBIT “B”

 

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

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

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

25. All electrical ceiling fixtures hung in offices or spaces along the
perimeter of the Project must be fluorescent and/or of a quality, type, design
and bulb color approved by Landlord. Tenant shall not permit the consumption in
the Premises of more than 2 1/2 watts per net usable square foot in the Premises
in respect of office lighting nor shall Tenant permit the consumption in the
Premises of more than 1 1/2 watts per net usable square foot of space in the
Premises in respect of the power outlets therein, at any one time. In the event
that such limits are exceeded, Landlord shall have the right to require Tenant
to remove lighting fixtures and equipment and/or to charge Tenant for the cost
of the additional electricity consumed.

26. Parking.

(a) Project parking facility hours shall be 7:00 a.m. to 7:00 p.m., Monday
through Friday, and closed on weekends, state and federal holidays excepted, as
such hours may be revised from time to time by Landlord.

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

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

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

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

(f) Landlord shall have the right to institute a parking card system (or other
system) for controlling access to the Project parking facility. To the extent an
access control system in instituted, parking cards or any other device or form
of identification supplied by Landlord (or its operator), if any, shall remain
the property of Landlord (or its operator). Such parking identification device
must be displayed as requested and may not be mutilated in any manner. The
serial number of the parking identification device may not be obliterated.
Devices are not transferable or assignable and any device in the possession of
an unauthorized holder will be void. There will be a replacement charge to the
Tenant or person designated by Tenant of $25.00 for loss of any parking card, if
issued by Landlord. There shall be a security deposit of $25.00 due at issuance
for each card key issued to Tenant.

(g) To the extent an access control system in instituted, Tenant may validate
visitor parking by such method or methods as the Landlord may approve, at the
validation rate from time to tune generally applicable to visitor parking.

(h) Landlord (and its operator) may refuse to permit any person who violates the
within rules to park in the Project parking facility, and any violation of the
rules shall subject the automobile to removal from the Project parking facility
at the parker’s expense.

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

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

(k) To the extent an access control system in instituted, loss or theft of
parking identification devices from automobiles must be reported to the Project
parking facility manager immediately, and a lost or stolen report must be filed
by the parker at that time.

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

(m) To the extent an access control system in instituted, Landlord (and its
operator) reserves the right to refuse the issuance of monthly stickers or other
parking identification devices to any Tenant and/or its employees who refuse to
comply with the above Rules and Regulations and all City, State or Federal
ordinances, laws or agreements.

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

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

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

EXHIBIT “B”

 

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EXHIBIT “C”

NOTICE OF LEASE TERM DATES

AND TENANT’S PROPORTIONATE SHARE

 

TO:  

 

   DATE:  

 

 

 

      

 

     RE:   Lease dated                    , 20    ,
between                                       
                                        
                                                                             
(“Landlord”), and                                  (“Tenant”), concerning Suite
            , located at                                 .

Ladies and Gentlemen:

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

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

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

3. That in accordance with the Lease, Basic Rental commenced to accrue on
                                                                 .

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

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

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

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

 

AGREED AND ACCEPTED:

 

TENANT:

 

 

  ,

a

 

 

 

By:

 

 

    Its:  

 

 

EXHIBIT ONLY

***DO NOT SIGN — INITIAL ONLY***

EXHIBIT “C”

 

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EXHIBIT “D”

FORM OF RESOLUTION

CERTIFICATE OF SECRETARY

OF

ADOPTION OF RESOLUTION BY THE BOARD OF DIRECTORS

OF

                        , a                     

The undersigned hereby certifies that:

 

A. The undersigned is now and at all times herein mentioned has been duly
elected, qualified and acting Secretary of                             , a
                         corporation, duly organized and existing under the Laws
of the State of California and qualified and authorized to transact business in
the State of California.

 

B. The undersigned is in charge of maintaining the minute books and corporate
records of said corporation and the following is a full, true and correct copy
of a resolution duly adopted by the Board of Directors of said corporation at a
meeting thereof duly held on                      at which meeting a quorum of
said Board was at all times present and acting:

RESOLVED, that                                 , its
                                

is hereby authorized to execute Lease between KROEZE KONCEPTS, INC., a
California corporation, Landlord, and                             , a
                                 corporation, Tenant, for premises located at
19300 South Hamilton Avenue, Gardena, California 90248, together with documents
and instruments related to the same transaction upon such terms and conditions
as the undersigned may deem appropriate.

 

C. Said resolution has not been modified or rescinded and is at the date of this
Certificate in full force and effect.

IN WITNESS WHEREOF, the undersigned has executed this Certificate this      day
of                     , 200  .

 

By:

 

 

Its:

  Secretary

EXHIBIT ONLY

***DO NOT SIGN — INITIAL ONLY***

EXHIBIT “D”

 

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EXHIBIT “E”

TENANT WORK LETTER

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

SECTION 1

CONSTRUCTION DRAWINGS FOR THE PREMISES

Landlord shall construct the improvements in the Premises (the “Improvements”)
pursuant to that certain space plan (collectively, the “Plans”) to be prepared
by Landlord’s architect (the “Architect”). Unless specifically noted to the
contrary on the Plans, the Improvements shall be constructed using
Project-standard quantities, specifications and materials as reasonably
determined by Landlord (comparable to the materials and layout being used in the
construction of the improvements for the tenant in Suite 200) (“Project Standard
Improvements”). Landlord shall construct the Improvements in compliance with all
applicable laws and building codes. Based upon the Plans, Landlord shall cause
the Architect to prepare detailed plans and specifications for the Improvements
(“Working Drawings”). Landlord shall then forward the Working Drawings to Tenant
for Tenant’s approval. Tenant shall approve or reasonably disapprove any draft
of the Working Drawings within five (5) business days after Tenant’s receipt
thereof; provided, however, that (i) Tenant shall not be entitled to disapprove
any portion, component or aspect of the Working Drawings which are consistent
with the Plans unless Tenant agrees to pay for the additional cost resulting
from such change in the Plans as part of the Over-Allowance Amount pursuant to
Section 2 below, and (ii) any disapproval of the Working Drawings by Tenant
shall be accompanied by a detailed written explanation of the reasons for
Tenant’s disapproval. Failure of Tenant to reasonably disapprove any draft of
the Working Drawings within said five (5) business day period shall be deemed to
constitute Tenant’s approval thereof. The Working Drawings, as approved by
Landlord and Tenant, may be referred to herein as the “Approved Working
Drawings.” Tenant shall make no changes or modifications to the Plans or the
Approved Working Drawings without the prior written consent of Landlord, which
consent may be withheld in Landlord’s sole discretion if such change or
modification would directly or indirectly delay the “Substantial Completion,” as
that term is defined in Section 4.1 of this Tenant Work Letter, of the
Improvements in the Premises or increase the cost of designing or constructing
the Improvements. As part of the construction of the Improvements, Landlord
shall, at Landlord’s cost, install one five-ton HVAC unit (that is consistent
with the existing HVAC units at the Project) on the roof of the Project and
connect the same to the Premises. Tenant shall have the right to install one or
more supplemental HVAC units in the Premises, at Tenant’s cost, provided that
(a) Tenant shall not interfere with Landlord’s construction of the Improvements
in the Premises; (b) Tenant shall be required to obtain Landlord’s written
consent (which shall not be unreasonably withheld) prior to commencing such
installation; and (c) at Landlord’s election, Tenant shall be required to
install a separate electrical meter at Tenant’s cost and pay directly for the
electricity used by such supplemental HVAC units.

SECTION 2

OVER-ALLOWANCE AMOUNT

In the event (i) Tenant desires for any improvements that are not consistent
with Project Standard Improvements, or (ii) Tenant makes changes to the Plans or
the Approved Working Drawings for the Improvements after the same have been
approved, any additional costs which arise in connection therewith shall be
considered to be an “Over-Allowance Amount” The Over-Allowance Amount shall be
paid by Tenant to Landlord, as Additional Rent, within ten (10) days after
Tenant’s receipt of invoice therefor. The Over-Allowance Amount shall be
disbursed by Landlord prior to the disbursement of any portion of Landlord’s
contribution to the construction of the Improvements.

SECTION 3

RETENTION OF CONTRACTOR;

WARRANTIES AND GUARANTIES

Landlord hereby assigns to Tenant all warranties and guaranties by the
contractor who constructs the Improvements (the “Contractor”) relating to the
Improvements, and Tenant hereby waives all claims against Landlord relating to,
or arising out of the construction of, the Improvements, provided, however, that
Landlord will agree to work together with Tenant to diligently cause the
Contractor to correct any cases where the Improvements, as completed, depart
from the Plans and Approved Work Drawings or are otherwise defective and to
cause the Contractor, any subcontractor and any materials supplier, as
applicable, to honor its warranties.. The Contractor shall be designated and
retained by Landlord to construct the Improvements.

EXHIBIT “E”

 

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SECTION 4

COMPLETION OF THE IMPROVEMENTS

4.1 Substantial Completion. For purposes of this Lease, “Substantial Completion”
of the Improvements in the Premises shall mean (and the Premises shall be deemed
substantially complete) when: (i) the construction of the Improvements in the
Premises pursuant to the Approved Working Drawings is fully complete, in
accordance with the Plans and Approved Working Drawings, with the exception of
any punch list items ; (ii) Tenant’s access to the Premises includes direct
access through the outside door and Tenant has access to and use of the Reserved
Loading Areas; (iii) basic utilities and services are available to the Premises;
and (iv) the Premises have been inspected and approved by the appropriate
government authorities. Furthermore, notwithstanding the foregoing, Substantial
Completion of the Improvements shall not be deemed to be complete until and
unless Tenant and its contractors, subcontractors and agents have had reasonable
access to the Premises (subject to the reasonable rules of the Project)
sufficient to allow Tenant an opportunity to install its furniture, tenant
fixtures, work-stations, phones and other office equipment.

4.2 Delay of the Substantial Completion of the Premises. Except as provided in
this Section 4.2, the Commencement Date shall occur as set forth in the Lease.
If there shall be a delay or there are delays in the Substantial Completion of
the Improvements in the Premises as a result of the following (collectively,
“Tenant Delays”):

4.2.1 Tenant’s failure to timely approve any matter requiring Tenant’s approval;

4.2.2 A breach by Tenant of the terms of this Tenant Work Letter or the Lease;

4.2.3 Tenant’s request for changes in the Plans, Working Drawings or Approved
Working Drawings;

4.2.4 Tenant’s requirement for materials, components, finishes or improvements
which are not available in a commercially reasonable time given the anticipated
date of Substantial Completion of the Improvements in the Premises, or which are
different from, or not included in, Landlord’s standard improvement package
items for the Project; or

4.2.5 Any other acts or omissions of Tenant, or its agents, or employees;

then, notwithstanding anything to the contrary set forth in the Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of the Improvements in the Premises, the date of Substantial
Completion thereof shall be deemed to be the date that Substantial Completion
would have occurred if no Tenant Delay or Delays, as set forth above, had
occurred.

SECTION 5

MISCELLANEOUS

5.1 Tenant’s Representative. Tenant has designated Bob Fleckenstein as its sole
representative with respect to the matters set forth in this Tenant Work Letter,
who, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of the Tenant as required in this Tenant Work
Letter.

5.2 Landlord’s Representative. Landlord has designated Allen Wong as its sole
representative with respect to the matters set forth in this Tenant Work Letter,
who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter.

5.3 Time of the Essence in This Tenant Work Letter. Unless otherwise indicated,
all references herein to a “number of days” shall mean and refer to calendar
days.

5.4 Landlord shall clean the Premises at Landlord’s cost prior to and after
Tenant’s move into the Premises.

As part of the construction of the Improvements, Landlord shall remove the
existing white board from the conference room and reinstall the same on the new
conference room wall.

EXHIBIT “E”

 

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GUARANTY OF LEASE

1. Guaranty. ALLION HEALTHCARE, INC., a Delaware corporation (“Guarantor”), as a
material inducement to and in consideration of KROEZE KONCEPTS, INC., a
California corporation, as Landlord, entering into that certain Standard Office
Lease dated August 23, 2005 (the “Lease”), with MEDICINE MADE EASY, a California
corporation, as Tenant, concerning office space located at 19300 South Hamilton
Avenue, Gardena, California 90248, hereby unconditionally, irrevocably
guarantees and promises to and for the benefit of Landlord that Tenant shall
perform all of its covenants under the Lease, including but not limited to the
payment of rent and all other sums now or hereafter becoming due or payable
under the Lease.

2. Standard Provisions. A separate action may be brought or prosecuted against
Guarantor whether or not the action is brought or prosecuted against Tenant. If
Tenant defaults under the Lease, Landlord may proceed immediately against
Guarantor or Tenant, or both, or Landlord may enforce against Guarantor or
Tenant, or both, any rights that it has under the Lease or against Guarantor
pursuant to this Guaranty. If the Lease terminates, Landlord may enforce any
remaining rights thereunder against Guarantor without giving previous notice to
Tenant or Guarantor, and without making any demand on either of them. This
Guaranty shall not be affected by Landlord’s failure or delay to enforce any of
its rights hereunder or under the Lease. Guarantor hereby waives notice of or
the giving of its consent to any amendments which may hereafter be made to the
terms of the Lease, and this Guaranty shall guarantee the performance of the
Lease as amended, or as the same may be assigned from time to time. Guarantor
waives the right to require Landlord to (i) proceed against Tenant; (ii) proceed
against or exhaust any security that Landlord holds from Tenant, or (iii) pursue
any remedy in Landlord’s power. Until all of Tenant’s obligations to Landlord
have been discharged in full, Guarantor shall have no right of subrogation
against Tenant. Guarantor waives its right to enforce any remedies that Landlord
now has, or later may have, against Tenant until all obligations under this
Guaranty are satisfied. Guarantor waives any right to participate in any
security now or later held by Landlord. Guarantor waives all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance of this Guaranty, and
waives all notices of existence, creation, or incurring of new or additional
obligations from Tenant to Landlord. Without limiting the generality of the
preceding waivers, Guarantor hereby expressly waives any and all benefits under
California Civil Code Sections 2809, 2810, 2819, 2845, 2849 and 2850. In
addition, Guarantor agrees that Landlord (not Tenant) shall have the right to
designate the portion of Tenant’s obligations under the Lease that is satisfied
by a partial payment by Tenant. If Landlord disposes of its interest in the
Lease, “Landlord,” as used in this Guaranty, shall mean Landlord’s successors in
interest and assigns. If Landlord is required to enforce Guarantor’s obligations
by legal proceedings, Guarantor shall pay to Landlord all costs incurred,
including, without limitation, Landlord’s reasonable attorneys’ fees and all
costs and other expenses incurred in any collection or attempted collection or
in any negotiations relative to the obligations hereby guaranteed, or in
enforcing this Guaranty against the undersigned. This Guaranty will continue
unchanged by any bankruptcy, reorganization or insolvency of the Tenant or any
successor or assignee thereof or by any disaffirmance or abandonment by a
trustee of Tenant. Guarantor’s obligations under this Guaranty may not be
assigned and shall be binding upon Guarantor’s heirs and successors. This
Guaranty shall be governed by the laws of, and may be enforced in the courts of,
the State of California.

 

  Guarantor: Dated: August     , 2005.   ALLION HEALTHCARE, INC.,   a Delaware
corporation   By:  

/s/ Michael P. Moran

  Its:  

President & CEO

 

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GUARANTY OF LEASE

1. Guaranty. ALLION HEALTHCARE, INC., a Delaware corporation (“Guarantor”), as a
material inducement to and in consideration of KROEZE KONCEPTS, INC., a
California corporation, as Landlord, entering into that certain Standard Office
Lease dated August 23, 2005 (the “Lease”), with MEDICINE MADE EASY, a California
corporation, as Tenant, concerning office space located at 19300 South Hamilton
Avenue, Gardena, California 90248, hereby unconditionally, irrevocably
guarantees and promises to and for the benefit of Landlord that Tenant shall
perform all of its covenants under the Lease, including but not limited to the
payment of rent and all other sums now or hereafter becoming due or payable
under the Lease.

2, Standard Provisions. A separate action may be brought or prosecuted against
Guarantor whether or not the action is brought or prosecuted against Tenant. If
Tenant defaults under the Lease, Landlord may proceed immediately against
Guarantor or Tenant, or both, or Landlord may enforce against Guarantor or
Tenant, or both, any rights that it has under the Lease or against Guarantor
pursuant to this Guaranty. If the Lease terminates, Landlord may enforce any
remaining rights thereunder against Guarantor without giving previous notice to
Tenant or Guarantor, and without making any demand on either of them. This
Guaranty shall not be affected by Landlord’s failure or delay to enforce any of
its rights hereunder or under the Lease. Guarantor hereby waives notice of or
the giving of its consent to any amendments which may hereafter be made to the
terms of the Lease, and this Guaranty shall guarantee the performance of the
Lease as amended, or as the same may be assigned from time to time. Guarantor
waives the right to require Landlord to (i) proceed against Tenant; (ii) proceed
against or exhaust any security that Landlord holds from Tenant, or (iii) pursue
any remedy in Landlord’s power. Until all of Tenant’s obligations to Landlord
have been discharged in full, Guarantor shall have no right of subrogation
against Tenant. Guarantor waives its right to enforce any remedies that Landlord
now has, or later may have, against Tenant until all obligations under this
Guaranty are satisfied. Guarantor waives any right to participate in any
security now or later held by Landlord. Guarantor waives all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance of this Guaranty, and
waives all notices of existence, creation, or incurring of new or additional
obligations from Tenant to Landlord. Without limiting the generality of the
preceding waivers, Guarantor hereby expressly waives any and all benefits under
California Civil Code Sections 2809, 2810, 2819, 2845, 2849 and 2850. In
addition, Guarantor agrees that Landlord (not Tenant) shall have the right to
designate the portion of Tenant’s obligations under the Lease that is satisfied
by a partial payment by Tenant. If Landlord disposes of its interest in the
Lease, “Landlord,” as used in this Guaranty, shall mean Landlord’s successors in
interest and assigns. If Landlord is required to enforce Guarantor’s obligations
by legal proceedings, Guarantor shall pay to Landlord all costs incurred,
including, without limitation, Landlord’s reasonable attorneys’ fees and all
costs and other expenses incurred in any collection or attempted collection or
in any negotiations relative to the obligations hereby guaranteed, or in
enforcing this Guaranty against the undersigned. This Guaranty will continue
unchanged by any bankruptcy, reorganization or insolvency of the Tenant or any
successor or assignee thereof or by any disaffirmance or abandonment by a
trustee of Tenant. Guarantor’s obligations under this Guaranty may not be
assigned and shall be binding upon Guarantor’s heirs and successors. This
Guaranty shall be governed by the laws of, and may be enforced in the courts of,
the State of California.

 

  Guarantor: Dated: August     , 2005.   ALLION HEALTHCARE, INC.,   a Delaware
corporation   By:  

/s/ Michael P. Moran

  Its:   President & CEO

 

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