Exhibit 10.16
LEASE
BETWEEN
THE IRVINE COMPANY LLC
AND
SYNOVIS LIFE TECHNOLOGIES, INC.

 

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LEASE
     THIS LEASE is made as of 21st day of July, 2009, by and between THE IRVINE
COMPANY LLC, a Delaware limited liability company, hereafter called “Landlord,”
and SYNOVIS LIFE TECHNOLOGIES, INC., a Minnesota corporation, hereafter called
“Tenant.”
ARTICLE 1. BASIC LEASE PROVISIONS
     Each reference in this Lease to the “Basic Lease Provisions” shall mean and
refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.

1.   Tenant’s Trade Name: Synovis Life Technologies, Inc.   2.   Premises: The
Premises are more particularly described in Section 2.1 and consist of space
located in two (2) separate buildings, commonly known as:

4 Jenner Street, Suite 180, Irvine, California, comprised of 9,135 rentable
square feet (the “4 Jenner Premises”); and
6 Jenner Street, Suite 150, Irvine, California, comprised of 5,692 rentable
square feet (the “6 Jenner Premises”)

    Project Description: Jenner Business Park (as shown on Exhibit Y to this
Lease)   3.   Use of Premises: General office, manufacturing, warehouse and
laboratory for medical device company   4.   Commencement Date: September 1,
2009   5.   Expiration Date: August 31, 2012   6.   Basic Rent for the 4 Jenner
Premises:

          Months of Term   Monthly Rate Per   Monthly Basic Rent (rounded to the
or Period   Rentable Square Foot   nearest dollar)
1-12
  $1.25   $11,419.00 13-24   $1.30   $11,876.00 25-36   $1.35   $12,332.00

    Basic Rent for the 6 Jenner Premises:

          Months of Term   Monthly Rate Per   Monthly Basic Rent (rounded to the
or Period   Rentable Square Foot   nearest dollar) 1-12   $1.25   $7,115.00
13-24   $1.30   $7,400.00 25-36   $1.35   $7,684.00

7.   Expense Recovery Period: Every twelve month period during the Term (or
portion thereof during the first and last Lease years) ending June 30.   8.  
Floor Area of Premises: approximately 14,827 rentable square feet, comprised of
the following:

4 Jenner Premises — approximately 9,135 rentable square feet
6 Jenner Premises — approximately 5,692 rentable square feet

    Floor Area of Buildings:

4 Jenner Building — approximately 37,313 rentable square feet
6 Jenner Building — approximately 30,243 rentable square feet

9.   Security Deposit: $21,818.00   10.   Broker(s): Irvine Realty Company
(“Landlord’s Broker”) and None (“Tenant’s Broker”)   11.   Parking: 60
unreserved vehicle parking spaces in accordance with the provisions set forth in
Exhibit F to this Lease.

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12.   Address for Payments and Notices:

     
LANDLORD
  TENANT
 
   
Payment Address:
   
 
   
THE IRVINE COMPANY LLC
  SYNOVIS LIFE TECHNOLOGIES, INC.
Department #6438
  6 Jenner Street, Suite 150
Los Angeles, CA 90084-6438
  Irvine, CA 92618
Attn: Senior Vice President, Property Operations
          Irvine Office Properties
  Attn: General Manager
 
   
Notice Address:
  Notice Address:
 
   
THE IRVINE COMPANY LLC
  SYNOVIS LIFE TECHNOLOGIES, INC.
550 Newport Center Drive
  6 Jenner Street, Suite 150
Newport Beach, CA 92660
  Irvine, CA 92618
Attn: Senior Vice President, Property Operations
          Irvine Office Properties
  Attn: General Manager
 
   
with a copy of notices to:
  with a copy of notices to:
 
   
THE IRVINE COMPANY LLC
  SYNOVIS LIFE TECHNOLOGIES, INC.
550 Newport Center Drive
  2575 University Avenue W
Newport Beach, CA 92660
  St. Paul, MN 55114
Attn: Vice President Operations
          Irvine Office Properties, Technology Portfolio
  Attn: Chief Financial Officer

13.   Additional Provisions. The provisions of EXHIBIT G attached hereto are
hereby incorporated into and made a part of this Lease.

LIST OF LEASE EXHIBITS:

     
Exhibit A
  Description of Premises
Exhibit B
  Operating Expenses
Exhibit C
  Utilities and Services
Exhibit D
  Tenant’s Insurance
Exhibit E
  Rules and Regulations
Exhibit F
  Parking
Exhibit G
  Additional Provisions
Exhibit H
  Landlord’s Disclosures
Exhibit I
  [Intentionally Deleted]
Exhibit J
  Hazardous Material Survey Form
Exhibit X
  Work Letter
Exhibit Y
  Project Description

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ARTICLE 2. PREMISES
     2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases from
Landlord: (i) the premises shown on EXHIBIT A attached hereto (the “4 Jenner
Premises”), and (ii) the premises shown on EXHIBIT A attached hereto (the “6
Jenner Premises”). Collectively, the 4 Jenner Premises and the 6 Jenner Premises
are herein referred to as the “Premises”. The Premises contain approximately the
floor area set forth in Item 8 of the Basic Lease Provisions (the “Floor Area”).
The 4 Jenner Premises are located within a building located at 4 Jenner Street
(the “4 Jenner Building”), and the 6 Jenner Premises are located within a
building located at 6 Jenner Street (the “6 Jenner Building”). Collectively the
4 Jenner Building and the 6 Jenner Building are herein referred to as the
“Buildings”, and individually as a “Building”. The 4 Jenner Building and the 6
Jenner Building are a portion of the project shown in EXHIBIT Y and which is a
portion of the project described in Item 2 (the “Project”). Landlord and Tenant
stipulate and agree that the Floor Area of Premises set forth in Item 8 of the
Basic Lease Provisions is correct and shall not be subject to re-measurement
during the Term of this Lease. This Lease includes the phone and data cabling
and security systems (the “Cabling Equipment”) installed in the Premises as of
the Commencement Date of this Lease, which is leased to Tenant in an “as is”
condition, and which shall be maintained and repaired during the Term of this
Lease at Tenant’s sole cost and expense.
     2.2. ACCEPTANCE OF PREMISES. Tenant’s lease of the Premises shall be on an
“as is” basis without further alteration, addition or improvement to the
Premises whatsoever, except for those items to be completed by Landlord within
the 6 Jenner Premises defined in the Work Letter attached as EXHIBIT X hereto.
Tenant acknowledges that neither Landlord nor any representative of Landlord has
made any representation or warranty with respect to the Premises, the Building
or the Project or the suitability or fitness of either for any purpose, except
as set forth in this Lease, including without limitation, in Section 2 of
Exhibit G attached to this Lease. Tenant acknowledges that the flooring
materials which may be installed within portions of the Premises located on the
ground floor of the Building may be limited by the moisture content of the
Building slab and underlying soils. Subject to Landlord’s obligations expressly
provided in this Lease, the taking of possession or use of the Premises by
Tenant shall conclusively establish that the Premises and the Building were in
satisfactory condition and in conformity with the provisions of this Lease in
all respects.
ARTICLE 3. TERM
     3.1. GENERAL. The Term of this Lease (“Term”) shall commence (“Commencement
Date”) on the date set forth in Item 4 of the Basic Lease Provisions, and shall
expire on the date (the “Expiration Date”) set forth in Item 5 of the Basic
Lease Provisions.
     3.2. DELAY IN POSSESSION. If Landlord, for any reason whatsoever, cannot
deliver possession of the Premises to Tenant on or before the Commencement Date
set forth in Item 4 of the Basic Lease Provisions, this Lease shall not be void
or voidable nor shall Landlord be liable to Tenant for any resulting loss or
damage. However, Tenant shall not be liable for any rent until the Premises are
actually delivered to Tenant, except that if Landlord’s failure to deliver
possession of the Premises to Tenant is attributable to any action or inaction
by Tenant (a “Tenant Delay”), then the Premises shall be deemed ready for
occupancy, and Landlord shall be entitled to full performance by Tenant
(including the payment of rent), as of the date Landlord would have been able to
deliver the Premises to Tenant but for the Tenant’s Delay(s).
     Notwithstanding anything to the contrary contained in this Section 3.2, if
for any reason other than Tenant Delay(s), the actual Commencement Date has not
occurred by October 1, 2009 (the “Outside Date”), then Tenant may, by written
notice to Landlord given at any time thereafter but prior to the actual
occurrence of the Commencement Date, elect to terminate this Lease; provided,
however, that if the Commencement Date occurs within 10 business days after
delivery to Landlord of Tenant’s termination notice, this Lease shall continue
in full force and effect. If the Commencement Date has not occurred within 10
business days after the date of delivery of Tenant’s termination notice, then
this Lease shall terminate as of the 10th business day after delivery of the
termination notice, and Landlord shall promptly return to Tenant any prepaid
rent and/or Security Deposit delivered to Landlord.
ARTICLE 4. RENT AND OPERATING EXPENSES
     4.1. BASIC RENT. From and after the Commencement Date, Tenant shall pay to
Landlord without abatement, deduction or offset (except as otherwise expressly
provided in this Lease), a Basic Rent for the Premises in the total amount shown
(including subsequent adjustments, if any) in Item 6 of the Basic Lease
Provisions (the “Basic Rent”). If the Commencement Date is other than the first
day of a calendar month, any rental adjustment shown in Item 6 shall be deemed
to occur on the first day of the next calendar month following the specified
monthly anniversary of the Commencement Date. The Basic Rent shall be due and
payable in advance commencing on the Commencement Date and continuing thereafter
on the first day of each successive calendar

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month of the Term, and shall be prorated for any partial month. No demand,
notice or invoice shall be required. An installment in the amount of 1 full
month’s Basic Rent at the initial rate specified in Item 6 of the Basic Lease
Provisions and 1 month’s estimated Tenant’s Share of Operating Expenses shall be
delivered to Landlord concurrently with Tenant’s execution of this Lease and
shall be applied against the Basic Rent and Operating Expenses first due
hereunder; the next installment of Basic Rent shall be due on the first day of
the second calendar month of the Term, which installment shall, if applicable,
be appropriately prorated to reflect the amount prepaid for that calendar month.
     4.2. OPERATING EXPENSES. Tenant shall pay Tenant’s Share of Operating
Expenses in accordance with Exhibit B of this Lease.
     4.3. SECURITY DEPOSIT. Concurrently with Tenant’s delivery of this Lease,
Tenant shall deposit with Landlord the sum, stated in Item 9 of the Basic Lease
Provisions (the “Security Deposit”), to be held by Landlord as security for the
full and faithful performance of Tenant’s obligations under this Lease, to pay
any rental sums, including without limitation such additional rent as may be
owing under any provision hereof, and to maintain the Premises as required by
Sections 7.1 and 15.3, or any other provision of this Lease. Upon any breach of
the foregoing obligations by Tenant, which breach continues beyond the
applicable notice and cure period, Landlord may apply all or part of the
Security Deposit as full or partial compensation. If any portion of the Security
Deposit is so applied, Tenant shall within 5 days after written demand by
Landlord deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount. Landlord shall not be required to keep
this Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. In no event may Tenant utilize all
or any portion of the Security Deposit as a payment toward any rental sum due
under this Lease. Any unapplied balance of the Security Deposit shall be
returned to Tenant or, at Landlord’s option, to the last assignee of Tenant’s
interest in this Lease within 30 days following the termination of this Lease
and Tenant’s vacation of the Premises. Tenant hereby waives the provisions of
Section 1950.7 of the California Civil Code, or any similar or successor laws
now or hereafter in effect, in connection with Landlord’s application of the
Security Deposit to prospective rent that would have been payable by Tenant but
for the early termination due to Tenant’s Default (as defined herein).
ARTICLE 5. USES
     5.1. USE. Tenant shall use the Premises only for the purposes stated in
Item 3 of the Basic Lease Provisions and for no other use whatsoever. The uses
prohibited under this Lease shall include, without limitation, use of the
Premises or a portion thereof for (i) offices of any agency or bureau of the
United States or any state or political subdivision thereof; (ii) offices or
agencies of any foreign governmental or political subdivision thereof; or
(iii) schools, temporary employment agencies or other training facilities which
are not ancillary to corporate, executive or professional office use. Tenant
shall not do or permit anything to be done in or about the Premises which will
materially interfere with the rights or quiet enjoyment of other occupants of
the Building or the Project, or use or allow the Premises to be used for any
unlawful purpose, nor shall Tenant permit any nuisance or commit any waste in
the Premises or the Project. Tenant shall not perform any work or conduct any
business whatsoever in the Project other than inside the Premises. Subject to
the express provisions of this Lease to the contrary, Tenant shall comply at its
expense with all present and future laws, ordinances and requirements of all
governmental authorities that pertain specifically to Tenant or to its use of
the Premises, including without limitation all federal and state occupational
health and safety and handicap access requirements, whether or not Tenant’s
compliance will necessitate expenditures or interfere with its use and enjoyment
of the Premises.
     5.2. SIGNS. Tenant shall have the non-exclusive right to one (1) exterior
“building top” sign on the 4 Jenner Building for Tenant’s name and graphics in a
location designated by Landlord, subject to Landlord’s right of prior approval
that such exterior signage is in compliance with the Signage Criteria (defined
below), which approval shall not be unreasonably withheld or conditioned. Except
as provided in the foregoing and except for Landlord’s standard lobby directory
signage and standard suite signage identifying Tenant’s name and/or logo, Tenant
shall have no right to maintain signs in any location in, on or about the
Premises, the Building or the Project and shall not place or erect any signs
that are visible from the exterior of the Building. The size, design, graphics,
material, style, color and other physical aspects of any permitted sign shall be
subject to Landlord’s written determination, as reasonably determined by
Landlord prior to installation, that signage is in compliance with any
covenants, conditions or restrictions encumbering the Premises and Landlord’s
signage program for the Project, as in effect from time to time and approved by
the City in which the Premises are located (“Signage Criteria”). Prior to
placing or erecting any exterior signs, Tenant shall obtain and deliver to
Landlord a copy of any applicable municipal or other governmental permits and
approvals. Tenant shall be responsible for all costs of any permitted sign,
including, without limitation, the fabrication, installation, maintenance and
removal thereof and the cost of any permits therefor, except that Landlord shall

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pay for the initial installation costs only for the standard suite signage and
the lobby directory signage. If Tenant fails to maintain its sign in good
condition, or if Tenant fails to remove same upon termination of this Lease and
repair and restore any damage caused by the sign or its removal, Landlord may do
so at Tenant’s expense. Landlord shall have the right to temporarily remove any
signs in connection with any repairs or maintenance in or upon the Building, but
such removal shall be limited to the minimal amount of time reasonably necessary
to complete the same. The term “sign” as used in this Section shall include all
signs, designs, monuments, displays, advertising materials, logos, banners,
projected images, pennants, decals, pictures, notices, lettering, numerals or
graphics. Tenant’s exterior signage rights under this Section 5.2 belong solely
to Synovis Life Technologies, Inc., a Minnesota corporation, and in the case of
a Permitted Transfer only, to such subtenant or assignee under this Lease, and
any other attempted assignment or transfer of such rights shall be void and of
no force and effect.
     5.3 HAZARDOUS MATERIALS.
          (a) For purposes of this Lease, the term “Hazardous Materials” means
(i) any “hazardous material” as defined in Section 25501(o) of the California
Health and Safety Code, (ii) hydrocarbons, polychlorinated biphenyls or
asbestos, (iii) any toxic or hazardous materials, substances, wastes or
materials as defined pursuant to any other applicable state, federal or local
law or regulation, and (iv) any other substance or matter which may result in
liability to any person or entity as a result of such person’s possession, use,
storage, release or distribution of such substance or matter under any statutory
or common law theory.
          (b) Tenant shall not cause or permit any Hazardous Materials to be
brought upon, stored, used, generated, released or disposed of on, under, from
or about the Premises (including without limitation the soil and groundwater
thereunder) without the prior written consent of Landlord, which consent may be
given or withheld in Landlord’s sole and absolute discretion. Notwithstanding
the foregoing, Tenant shall have the right, without obtaining prior written
consent of Landlord, to utilize within the Premises a reasonable quantity of
standard office products that may contain Hazardous Materials (such as photocopy
toner, “White Out”, and the like), provided however, that (i) Tenant shall
maintain such products in their original retail packaging, shall follow all
instructions on such packaging with respect to the storage, use and disposal of
such products, and shall otherwise comply with all applicable laws with respect
to such products, and (ii) all of the other terms and provisions of this
Section 5.3 shall apply with respect to Tenant’s storage, use and disposal of
all such products. Landlord may place such reasonable conditions as Landlord
deems appropriate with respect to Tenant’s use, storage and/or disposal of any
Hazardous Materials requiring Landlord’s consent. Tenant understands that
Landlord may utilize a third party environmental consultant to assist in
determining conditions of approval in connection with the storage, generation,
release, disposal or use of those Hazardous Materials by Tenant on or about the
Premises requiring Landlord’s consent, and Tenant agrees that the reasonable
costs incurred by Landlord in connection therewith shall be reimbursed by Tenant
to Landlord as additional rent hereunder within thirty (30) days after demand.
In addition, Landlord may utilize a third party environmental consultant to
conduct periodic inspections of the storage, generation, use, release and/or
disposal of Hazardous Materials by Tenant on and from the Premises and, in the
event such inspections reveal that Tenant is in violation of its obligations
under this Section with respect to the storage, generation, release, disposal or
use of Hazardous Materials, Tenant shall bear the reasonable costs incurred by
Landlord in connection with such inspections.
          (c) Prior to the execution of this Lease, Tenant shall complete,
execute and deliver to Landlord a Hazardous Material Survey Form (the “Survey
Form”) in the form of Exhibit J attached hereto. The completed Survey Form shall
be deemed incorporated into this Lease for all purposes, and Landlord shall be
entitled to rely fully on the information contained therein. On each anniversary
of the Commencement Date until the expiration or sooner termination of this
Lease, Tenant shall disclose to Landlord in writing the names and amounts of all
Hazardous Materials which were stored, generated, used, released and/or disposed
of on, under or about the Premises for the twelve-month period prior thereto,
and which Tenant desires to store, generate, use, release and/or dispose of on,
under or about the Premises for the succeeding twelve-month period. In addition,
to the extent Tenant is permitted to utilize Hazardous Materials upon the
Premises, Tenant shall promptly provide Landlord with complete and legible
copies of all the following environmental documents relating thereto: reports
filed pursuant to any self-reporting requirements; permit applications, permits,
monitoring reports, emergency response or action plans, workplace exposure and
community exposure warnings or notices and all other reports, disclosures, plans
or documents (even those which may be characterized as confidential) relating to
water discharges, air pollution, waste generation or disposal, and underground
storage tanks for Hazardous Materials; orders, reports, notices, listings and
correspondence (even those which may be considered confidential) of or
concerning the release, investigation, compliance, cleanup, remedial and
corrective actions, and abatement of Hazardous Materials; and all complaints,

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pleadings and other legal documents filed by or against Tenant related to
Tenant’s storage, generation, use, release and/or disposal of Hazardous
Materials. Except to the extent required by law or legal process, Landlord shall
use its commercially reasonable efforts to keep any of the foregoing documents
and reports, which are not a matter of public information and which are
delivered by Tenant with a confidentiality requirement, confidential and shall
not disclose same to third parties other than its consultants, attorneys and
lenders.
          (d) Landlord and its agents shall have the right, but not the
obligation, to inspect, sample and/or monitor the Premises and/or the soil or
groundwater thereunder at any time to determine whether Tenant is complying with
the terms of this Section 5.3, and in connection therewith Tenant shall provide
Landlord with full access to all facilities, records and personnel related
thereto upon reasonable prior notice and with a Tenant escort, which Tenant
agrees to make reasonably available. If Tenant is not in compliance with any of
the provisions of this Section 5.3, or in the event of a release of any
Hazardous Material on, under, from or about the Premises caused or permitted by
Tenant, its agents, employees, contractors, licensees or invitees, Landlord and
its agents shall have the right, but not the obligation, without limitation upon
any of Landlord’s other rights and remedies under this Lease, to immediately
enter upon the Premises without notice and to discharge Tenant’s obligations
under this Section 5.3 at Tenant’s expense, including without limitation the
taking of emergency or long-term remedial action. Landlord and its agents shall
endeavor to minimize interference with Tenant’s business in connection
therewith, but shall not be liable for any such interference. In addition,
Landlord, at Tenant’s expense, shall have the right, but not the obligation, to
join and participate in any legal proceedings or actions initiated in connection
with any claims arising out of the storage, generation, use, release and/or
disposal by Tenant or its agents, employees, contractors, licensees or invitees
of Hazardous Materials on, under, from or about the Premises.
          (e) If the presence of any Hazardous Materials on, under, from or
about the Premises or the Project caused or permitted by Tenant or its agents,
employees, subtenants, contractors, licensees or invitees results in (i) injury
to any person, (ii) injury to or any contamination of the Premises or the
Project, or (iii) injury to or contamination of any real or personal property
wherever situated, Tenant, at its expense, shall promptly take all actions
necessary to return the Premises and the Project and any other affected real or
personal property owned by Landlord to the “Required Condition” (as hereinafter
defined), and to remedy or repair any such injury or contamination, including
without limitation, any cleanup, remediation, removal, disposal, neutralization
or other treatment of any such Hazardous Materials. Notwithstanding the
foregoing, Tenant shall not, without Landlord’s prior written consent shall not
be unreasonably withheld, conditioned or delayed, take any remedial action in
response to the presence of any Hazardous Materials on, under, from or about the
Premises or the Project or any other affected real or personal property owned by
Landlord or enter into any similar agreement, consent, decree or other
compromise with any governmental agency with respect to any Hazardous Materials
claims; provided however, Landlord’s prior written consent shall not be
necessary in the event that the presence of Hazardous Materials on, under, from
or about the Premises or the Project or any other affected real or personal
property owned by Landlord (i) imposes an immediate threat to the health, safety
or welfare of any individual and (ii) is of such a nature that an immediate
remedial response is necessary and it is not possible to obtain Landlord’s
consent before taking such action. As used herein, “Required Condition” shall
mean returning the Premises and the Project and any other directly affected real
or personal property owned by Landlord to a condition that is both (A) required
by applicable federal, state or local law, regulation or order, including
without limitation, performing any required cleanup, remediation, removal,
disposal, neutralization or other treatment of Hazardous Materials, and
(B) wherein Landlord’s marketability, use and leasing of the Premises and the
Project as commercial properties shall not be materially impaired. To the
fullest extent permitted by law, Tenant shall indemnify, hold harmless, protect
and defend (with attorneys reasonably acceptable to Landlord) Landlord and any
successors to all or any portion of Landlord’s interest in the Premises and the
Project and any other real or personal property owned by Landlord from and
against any and all liabilities, losses, damages, diminution in value,
judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses
(including without limitation attorneys’ fees, court costs and other
professional expenses), whether foreseeable or unforeseeable, arising directly
or indirectly out of the use, generation, storage, treatment, release, on- or
off-site disposal or transportation of Hazardous Materials on, into, from, under
or about the Premises, the Building or the Project and any other real or
personal property owned by Landlord caused or permitted by Tenant, its agents,
employees, subtenants, contractors, licensees or invitees. Such indemnity
obligation shall specifically include, without limitation, the cost of any
required or necessary repair, restoration, cleanup or detoxification of the
Premises, the Building and the Project and any other real or personal property
owned by Landlord, the preparation of any closure or other required plans,
whether such action is required or necessary during the Term or after the
expiration of this Lease and any loss of rental due to the inability to lease
the Premises or any portion of the Building or Project as a result of such
Hazardous Materials, the remediation thereof or any repair, restoration or
cleanup related thereto. If it is at any time discovered that Tenant or its
agents, employees, subtenants, contractors, licensees or invitees may have
caused or permitted the release of any Hazardous Materials on,

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under, from or about the Premises, the Building or the Project or any other real
or personal property owned by Landlord, Tenant shall, at Landlord’s request,
immediately prepare and submit to Landlord a comprehensive plan, subject to
Landlord’s approval, specifying the actions to be taken by Tenant to return the
Premises, the Building or the Project or any other real or personal property
owned by Landlord to the condition existing prior to the introduction of such
Hazardous Materials. Upon Landlord’s approval of such plan, Tenant shall, at its
expense, and without limitation of any rights and remedies of Landlord under
this Lease or at law or in equity, immediately implement such plan and proceed
to cleanup, remediate and/or remove all such Hazardous Materials in accordance
with all applicable laws and as required by such plan and this Lease. The
provisions of this Section 5.3(e) shall expressly survive the expiration or
sooner termination of this Lease.
          (f) Landlord hereby discloses to Tenant, and Tenant hereby
acknowledges, certain facts relating to Hazardous Materials at the Project known
by Landlord to exist as of the date of this Lease, as more particularly
described in Exhibit H attached hereto. Tenant shall have no liability or
responsibility with respect to the Hazardous Materials facts described in
Exhibit H, nor with respect to any Hazardous Materials which were not caused or
permitted by Tenant, its agents, employees, subtenants, contractors, licensees
or invitees. Notwithstanding the preceding two sentences, Tenant agrees to
notify its agents, employees, subtenants, contractors, licensees, and invitees
of any exposure or potential exposure to Hazardous Materials at the Premises
that Landlord brings to Tenant’s attention. Tenant hereby acknowledges that this
disclosure satisfies any obligation of Landlord to Tenant pursuant to California
Health & Safety Code Section 25359.7, or any amendment or substitute thereto or
any other disclosure obligations of Landlord.
ARTICLE 6. LANDLORD SERVICES
     6.1. UTILITIES AND SERVICES. Landlord and Tenant shall be responsible to
furnish those utilities and services to the Premises to the extent provided in
Exhibit C, subject to the conditions and payment obligations and standards set
forth in this Lease. Landlord shall not be liable for any failure to furnish any
services or utilities when the failure is the result of any accident or other
cause beyond Landlord’s reasonable control, nor shall Landlord be liable for
damages resulting from power surges or any breakdown in telecommunications
facilities or services. Landlord’s temporary inability to furnish any services
or utilities shall not entitle Tenant to any damages, relieve Tenant of the
obligation to pay rent or constitute a constructive or other eviction of Tenant,
except that Landlord shall diligently attempt to restore the service or utility
promptly. Notwithstanding the foregoing, if the Premises, or a material portion
of the Premises, are made untenantable for a period in excess of 5 consecutive
business days as a result of a service interruption that is reasonably within
the control of Landlord to correct and through no fault of Tenant and for
reasons other than as contemplated in Article 11, then Tenant, as its sole
remedy, shall be entitled to receive an abatement of rent payable hereunder
during the period beginning on the 6th consecutive business day of the service
interruption and ending on the day the service has been restored. Tenant shall
comply with all rules and regulations which Landlord may reasonably establish
for the provision of services and utilities, and shall cooperate with all
reasonable conservation practices established by Landlord. Landlord shall at all
reasonable times have free access to all electrical and mechanical installations
of Landlord.
     6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term, Landlord
shall operate and maintain all Common Areas within the Building and the Project
in good condition and repair and otherwise in a manner consistent with
comparable projects owned by Landlord in the vicinity of the Project. The term
“Common Areas” shall mean all areas within the Building and other buildings in
the Project which are not held for exclusive use by persons entitled to occupy
space, and all other appurtenant areas and improvements provided by Landlord for
the common use of Landlord and tenants and their respective employees and
invitees, including without limitation parking areas and structures, driveways,
sidewalks, landscaped and planted areas, hallways and interior stairwells not
located within the premises of any tenant, common electrical rooms, entrances
and lobbies, elevators, and restrooms not located within the premises of any
tenant.
     6.3. USE OF COMMON AREAS. The occupancy by Tenant of the Premises shall
include the use of the Common Areas in common with Landlord and with all others
for whose convenience and use the Common Areas may be provided by Landlord,
subject, however, to compliance with Rules and Regulations described in
Article 17 below. Landlord shall at all times during the Term have exclusive
control of the Common Areas, and may restrain or permit any use or occupancy,
except as otherwise provided in this Lease or in Landlord’s rules and
regulations; provided, however, that no such use or restraint shall materially
impair Tenant’s use and enjoyment of the same, or materially interfere with
Tenant’s access to the Premises or other rights granted in this Lease. Tenant
shall keep the Common Areas clear of any obstruction or unauthorized use related
to Tenant’s operations. Landlord may temporarily close any portion of the Common
Areas for repairs, remodeling and/or alterations, to prevent a public dedication
or the accrual of prescriptive rights, or for any other reasonable purpose;
provided that such closure

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shall be limited to the minimal amount of time reasonably necessary to complete
same. Landlord’s temporary closure of any portion of the Common Areas for such
purposes shall not deprive Tenant of reasonable access to the Premises.
     6.4. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the right to make
alterations or additions to the Building or the Project or to the attendant
fixtures, equipment and Common Areas, and such change shall not entitle Tenant
to any abatement of rent or other claim against Landlord. No such change shall
materially impair Tenant’s use and enjoyment of the Premises, nor materially
interfere with Tenant’s access to the Premises or the Common Areas.
ARTICLE 7. REPAIRS AND MAINTENANCE
     7.1. TENANT’S MAINTENANCE AND REPAIR. Subject to Articles 6, 7.2, 11 and
12, Tenant at its sole expense shall make all repairs necessary to keep the
Premises and all improvements and fixtures therein in good condition and repair,
excepting ordinary wear and tear. Notwithstanding Section 7.2 below, Tenant’s
maintenance obligation shall include without limitation all appliances, interior
glass, doors, door closures, hardware, fixtures, electrical, plumbing, fire
extinguisher equipment and other equipment installed in the Premises and all
Alterations constructed by Tenant pursuant to Section 7.3 below, together with
any supplemental HVAC equipment servicing only the Premises. All repairs and
other work performed by Tenant or its contractors shall be subject to the terms
of Sections 7.3 and 7.4 below. Alternatively, should Landlord or its management
agent agree to make a repair on behalf of Tenant and at Tenant’s request, Tenant
shall promptly reimburse Landlord as additional rent for all reasonable costs
incurred (including the standard supervision fee) within 30 days following
submission of an invoice.
     7.2. LANDLORD’S MAINTENANCE AND REPAIR. Subject to Section 7.2 and
Articles 6, 11 and 12, Landlord shall provide service, maintenance and repair
with respect to the heating, ventilating and air conditioning (“HVAC”) equipment
of the Building (exclusive of any supplemental HVAC equipment servicing only the
Premises) and shall maintain in good repair the Common Areas, roof, foundations,
footings, the exterior surfaces of the exterior walls of the Building (including
exterior glass), and the structural, electrical, mechanical and plumbing systems
of the Building (including elevators, if any, serving the Building). Landlord
shall have the right to employ or designate any reputable person or firm,
including any employee or agent of Landlord or any of Landlord’s affiliates or
divisions, to perform any service, repair or maintenance function. Landlord need
not make any other improvements or repairs except as specifically required under
this Lease, and nothing contained in this Section 7.2 shall limit Landlord’s
right to reimbursement from Tenant for maintenance, repair costs and replacement
costs as provided elsewhere in this Lease. Notwithstanding any provision of the
California Civil Code or any similar or successor laws to the contrary, Tenant
understands that it shall not make repairs at Landlord’s expense or by rental
offset. Except as provided in Section 11.1 and Article 12 below, there shall be
no abatement of rent and no liability of Landlord by reason of any injury to or
interference with Tenant’s business arising from the making of any repairs,
alterations or improvements to any portion of the Building, including repairs to
the Premises, nor shall any related activity by Landlord constitute an actual or
constructive eviction; provided, however, that in making repairs, alterations or
improvements, Landlord shall interfere as little as reasonably practicable with
the conduct of Tenant’s business in the Premises. Tenant hereby waives any and
all rights under and benefits of subsection 1 of Section 1932, and Sections 1941
and 1942 of the California Civil Code, or any similar or successor laws now or
hereafter in effect. Except to the extent expressly excluded from the definition
of Project Costs as set forth in Exhibit B, all costs of any maintenance,
repairs and replacements on the part of Landlord provided hereunder shall be
considered part of Project Costs.
     7.3. ALTERATIONS. Tenant shall make no alterations, additions, decorations,
or improvements (collectively referred to as “Alterations”) to the Premises
without the prior written consent of Landlord. Landlord’s consent shall not be
unreasonably withheld, conditioned or delayed, as long as the proposed
Alterations do not affect the structural, electrical or mechanical components or
systems of the Building, are not visible from the exterior of the Premises, do
not change the basic floor plan of the Premises, and utilize only Landlord’s
building standard materials (“Standard Improvements”). Landlord may impose, as a
condition to its consent, any requirements that Landlord in its reasonable
discretion may deem reasonable or desirable, including but not limited
reasonable requirements as to the manner, time, and contractor for performance
of the work. Without limiting the generality of the foregoing, Tenant shall use
Landlord’s designated mechanical and electrical contractors for all Alterations
work affecting the mechanical or electrical systems of the Building. Should
Tenant perform any Alterations work that would necessitate any ancillary
Building modification or other expenditure by Landlord, then Tenant shall
promptly fund the cost thereof to Landlord. Tenant shall obtain all required
permits for the Alterations and shall perform the work in compliance with all
applicable laws, regulations and ordinances with contractors reasonably
acceptable to Landlord, and except for cosmetic

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Alterations not requiring a permit, Landlord shall be entitled to a supervision
fee in the amount of 5% of the cost of the Alterations. In no event shall Tenant
prosecute any work that results in picketing or labor demonstrations in or about
the Building or Project. Any request for Landlord’s consent shall be made in
writing and shall contain architectural plans describing the work in detail
reasonably satisfactory to Landlord. Landlord may elect to cause its architect
to review Tenant’s architectural plans (except in the case of strictly cosmetic
Alterations), and the reasonable cost of that review shall be reimbursed by
Tenant. Should the Alterations proposed by Tenant and consented to by Landlord
change the floor plan of the Premises, then Tenant shall, at its expense,
furnish Landlord with as-built drawings and CAD disks compatible with Landlord’s
systems. Alterations shall be constructed in a good and workmanlike manner using
materials of a quality reasonably approved by Landlord, and Tenant shall ensure
that no Alteration materially impairs any Building system or Landlord’s ability
to perform its obligations hereunder. Unless Landlord otherwise agrees in
writing, all Alterations affixed to the Premises, including without limitation
all Tenant Improvements constructed pursuant to the Work Letter (except as
otherwise provided in the Work Letter), but excluding moveable trade fixtures
and furniture, shall become the property of Landlord and shall be surrendered
with the Premises at the end of the Term, except that Landlord may, by notice to
Tenant given at least 30 days prior to the Expiration Date, require Tenant to
remove by the Expiration Date, or sooner termination date of this Lease, all or
any Alterations (including without limitation all telephone and data cabling)
installed either by Tenant or by Landlord at Tenant’s request (collectively, the
“Required Removables”), and to replace any non-Standard Improvements with the
applicable Standard Improvements. Tenant, at the time it requests approval for a
proposed Alteration, may request in writing that Landlord advise Tenant whether
the Alteration or any portion thereof, is a Required Removable. Within 10 days
after receipt of Tenant’s request, Landlord shall advise Tenant in writing as to
which portions of the subject Alterations are Required Removables. In connection
with its removal of Required Removables, Tenant shall repair any damage to the
Premises arising from that removal and shall restore the affected area to its
pre-existing condition, reasonable wear and tear excepted.
     7.4. MECHANIC’S LIENS. Tenant shall keep the Premises free from any liens
arising out of any work performed, materials furnished, or obligations incurred
by or for Tenant. Upon request by Landlord, Tenant shall promptly cause any such
lien to be released by posting a bond in accordance with California Civil Code
Section 3143 or any successor statute. In the event that Tenant shall not,
within 30 days following the imposition of any lien, cause the lien to be
released of record by payment or posting of a proper bond, Landlord shall have,
in addition to all other available remedies, the right to cause the lien to be
released by any means it deems proper, including payment of or defense against
the claim giving rise to the lien. All expenses so incurred by Landlord,
including Landlord’s attorneys’ fees, shall be reimbursed by Tenant promptly
following Landlord’s demand, together with interest from the date of payment by
Landlord at the maximum rate permitted by law until paid. Tenant shall give
Landlord no less than 20 days’ prior notice in writing before commencing
construction of any kind on the Premises so that Landlord may post and maintain
notices of nonresponsibility on the Premises.
     7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times have the
right to enter the Premises to inspect them, to supply services in accordance
with this Lease, to make repairs and renovations as reasonably deemed necessary
by Landlord, and to submit the Premises to prospective or actual purchasers or
encumbrance holders (or, during the final twelve months of the Term or when an
uncured Default exists, to prospective tenants), all without being deemed to
have caused an eviction of Tenant and without abatement of rent except as
provided elsewhere in this Lease. Except in emergencies or to provide Building
services, Landlord shall provide Tenant with reasonable prior verbal notice of
such entry and shall use reasonable efforts to minimize any interference with
Tenant’s use of the Premises. In the event the Landlord requires entry into any
controlled environment within the Premises, Landlord will so notify Tenant and
take such precautions prior to entry as Tenant may reasonably request,
including, without limitation, accompaniment by a Tenant escort, which Tenant
agrees to provide.
ARTICLE 8. [INTENTIONALLY DELETED]
ARTICLE 9. ASSIGNMENT AND SUBLETTING
     9.1. RIGHTS OF PARTIES.
          (a) Except as otherwise specifically provided in this Article 9,
Tenant may not, either voluntarily or by operation of law, assign, sublet,
encumber, or otherwise transfer all or any part of Tenant’s interest in this
Lease, or permit the Premises to be occupied by anyone other than Tenant (each,
a “Transfer”), without Landlord’s prior written consent, which consent shall not
unreasonably be withheld or conditioned in accordance with the provisions of
Section 9.1(b). For purposes of this Lease, references to any subletting,
sublease or variation thereof shall be deemed to apply not only to a sublease
effected directly by Tenant, but also to a sub-subletting or an assignment of
subtenancy by a subtenant at any level. Except as otherwise specifically

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provided in this Article 9, no Transfer (whether voluntary, involuntary or by
operation of law) shall be valid or effective without Landlord’s prior written
consent and, at Landlord’s election, such a Transfer shall constitute a material
default of this Lease. Landlord shall not be deemed to have given its consent to
any Transfer by any other course of action, including its acceptance of any name
for listing in the Building directory.
          (b) Except as otherwise specifically provided in this Article 9, if
Tenant or any subtenant hereunder desires to transfer an interest in this Lease,
Tenant shall first notify Landlord in writing and shall request Landlord’s
consent thereto. Tenant shall also submit to Landlord in writing: (i) the name
and address of the proposed transferee; (ii) the nature of any proposed
subtenant’s or assignee’s business to be carried on in the Premises; (iii) the
terms and provisions of any proposed sublease or assignment (including without
limitation the rent and other economic provisions, term, improvement obligations
and commencement date); (iv) reasonable evidence that the proposed assignee or
subtenant will comply with the requirements of Exhibit D to this Lease; and
(v) any other information reasonably requested by Landlord and reasonably
related to the Transfer. Landlord shall not unreasonably withhold or condition
its consent, provided: (1) the use of the Premises will be consistent with the
provisions of this Lease and with Landlord’s commitment to other tenants of the
Building and Project; (2) the proposed subtenant or assignee demonstrates that
it is financially responsible by submission to Landlord of a balance sheet of
the proposed subtenant or assignee as of a date within 90 days of the request
for Landlord’s consent and current statements of income or profit and loss of
the proposed subtenant or assignee; (3) the proposed assignee or subtenant is
neither an existing tenant or occupant of the Building or Project with whom
Landlord has been actively negotiating to expand or relocate within the Building
or Project nor a prospective tenant with whom Landlord has been actively
negotiating to become a tenant at the Building or Project; and (4) the proposed
transferee is not an SDN (as defined below) and will not impose additional
burdens or security risks on Landlord. If Landlord consents to the proposed
Transfer, then the Transfer may be effected within 90 days after the date of the
consent upon the terms described in the information furnished to Landlord;
provided that any material change in the terms shall be subject to Landlord’s
consent as set forth in this Section 9.1(b). Landlord shall approve or
disapprove any requested Transfer within 15 business days following receipt of
Tenant’s written notice and the information set forth above. Except in
connection with a Permitted Transfer (as defined below), if Landlord approves
the Transfer Tenant shall pay a transfer fee of $1,000.00 to Landlord
concurrently with Tenant’s execution of a Transfer consent prepared by Landlord.
          (c) Notwithstanding the provisions of Subsection (b) above, and except
in connection with a “Permitted Transfer” (as defined below), in lieu of
consenting to a proposed assignment or subletting, Landlord may elect to
terminate this Lease in its entirety in the event of an assignment, or terminate
this Lease as to the portion of the Premises proposed to be subleased with a
proportionate abatement in the rent payable under this Lease, such termination
to be effective on the date that the proposed sublease or assignment would have
commenced. Landlord may thereafter, at its option, assign or re-let any space so
recaptured to any third party, including without limitation the proposed
transferee identified by Tenant.
          (d) Should any Transfer occur, Tenant shall, except in connection with
a Permitted Transfer, promptly pay or cause to be paid to Landlord, as
additional rent, 50% of any amounts paid by the assignee or subtenant, however
described and whether funded during or after the Lease Term, to the extent such
amounts are in excess of the sum of (i) the scheduled Basic Rent payable by
Tenant hereunder (or, in the event of a subletting of only a portion of the
Premises, the Basic Rent allocable to such portion as reasonably determined by
Landlord) and all other recurring rent amounts due from Tenant hereunder, and
(ii) the direct out-of-pocket costs, as evidenced by third party invoices
provided to Landlord, incurred by Tenant to effect the Transfer, which costs
shall be amortized over the remaining Term of this Lease or, if shorter, over
the term of the sublease.
          (e) The sale of all or substantially all of the assets of Tenant
(other than bulk sales in the ordinary course of business), the merger or
consolidation of Tenant, the sale of Tenant’s capital stock, or any other direct
or indirect change of control of Tenant, including, without limitation, change
of control of Tenant’s parent company or a merger by Tenant or its parent
company, shall be deemed a Transfer within the meaning and provisions of this
Article. Notwithstanding the foregoing, Tenant may assign this Lease to a
successor to Tenant by merger, consolidation or the purchase of substantially
all of Tenant’s assets, or assign this Lease or sublet all or a portion of the
Premises to an Affiliate (defined below), without the consent of Landlord but
subject to the provisions of Section 9.2, provided that all of the following
conditions are satisfied (a “Permitted Transfer”): (i) Tenant is not then in
Default hereunder; (ii) Tenant gives Landlord written notice at least 10 days
before such Permitted Transfer; and (iii)  the successor entity resulting from
any merger or consolidation of Tenant or the sale of all or substantially all of
the assets of Tenant, has a net worth (computed in accordance with generally
accepted accounting principles, except that intangible assets such as goodwill,
patents, copyrights, and trademarks shall be excluded in the calculation (“Net
Worth”)) at the time of the

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Permitted Transfer that is at least equal to the Net Worth of Tenant immediately
before the Permitted Transfer. Tenant’s notice to Landlord shall include
reasonable information and documentation evidencing the Permitted Transfer and
showing that each of the above conditions has been satisfied. If requested by
Landlord, Tenant’s successor shall sign and deliver to Landlord a commercially
reasonable form of assumption agreement. “Affiliate” shall mean an entity
controlled by, controlling or under common control with Tenant.
     9.2. EFFECT OF TRANSFER. No subletting or assignment, even with the consent
of Landlord, shall relieve Tenant, or any successor-in-interest to Tenant
hereunder, of its obligation to pay rent and to perform all its other
obligations under this Lease. Moreover, Tenant shall indemnify and hold Landlord
harmless, as provided in Section 10.3, for any act or omission by an assignee or
subtenant. Each assignee, other than Landlord, shall be deemed to assume all
obligations of Tenant under this Lease and shall be liable jointly and severally
with Tenant for the payment of all rent, and for the due performance of all of
Tenant’s obligations, under this Lease. Such joint and several liability shall
not be discharged or impaired by any subsequent modification or extension of
this Lease. No transfer shall be binding on Landlord unless any document
memorializing the transfer is delivered to Landlord, both the assignee/subtenant
and Tenant deliver to Landlord an executed consent to transfer instrument
prepared by Landlord and consistent with the requirements of this Article, and
the assignee/subtenant independently complies with all of the insurance
requirements of Tenant as set forth in Exhibit D and reasonable evidence thereof
is delivered to Landlord. The acceptance by Landlord of any payment due under
this Lease from any other person shall not be deemed to be a waiver by Landlord
of any provision of this Lease or to be a consent to any transfer. Consent by
Landlord to one or more transfers shall not operate as a waiver or estoppel to
the future enforcement by Landlord of its rights under this Lease. In addition
to the foregoing, no change in the status of Tenant or any party jointly and
severally liable with Tenant as aforesaid (e.g., by conversion to a limited
liability company or partnership) shall serve to abrogate the liability of any
person or entity for the obligations of Tenant, including any obligations that
may be incurred by Tenant after the status change by exercise of a pre-existing
right in this Lease.
     9.3. SUBLEASE REQUIREMENTS. Any sublease, license, concession or other
occupancy agreement entered into by Tenant shall be subordinate and subject to
the provisions of this Lease, and if this Lease is terminated during the term of
any such agreement, Landlord shall have the right to: (i) treat such agreement
as cancelled and repossess the subject space by any lawful means, or
(ii) require that such transferee attorn to and recognize Landlord as its
landlord (or licensor, as applicable) under such agreement. Landlord shall not,
by reason of such attornment or the collection of sublease rentals, be deemed
liable to the subtenant for the performance of any of Tenant’s obligations under
the sublease. If Tenant is in Default (hereinafter defined) of its monetary
obligations under this Lease, Landlord is irrevocably authorized to direct any
transferee under any such agreement to make all payments under such agreement
directly to Landlord (which Landlord shall apply towards Tenant’s obligations
under this Lease) until such monetary Default is cured. Tenant hereby
irrevocably authorizes and directs any transferee, upon receipt of a written
notice from Landlord stating that a monetary Default exists in the performance
of Tenant’s obligations under this Lease, to pay to Landlord all sums then and
thereafter due under the sublease. No collection or acceptance of rent by
Landlord from any transferee shall be deemed a waiver of any provision of
Article 9 of this Lease, an approval of any transferee, or a release of Tenant
from any obligation under this Lease, whenever accruing. In no event shall
Landlord’s enforcement of any provision of this Lease against any transferee be
deemed a waiver of Landlord’s right to enforce any term of this Lease against
Tenant or any other person.
ARTICLE 10. INSURANCE AND INDEMNITY
     10.1. TENANT’S INSURANCE. Tenant, at its sole cost and expense, shall
provide and maintain in effect the insurance described in Exhibit D.
Certificate(s) of that insurance must be delivered to Landlord prior to the
Commencement Date.
     10.2. LANDLORD’S INSURANCE. Landlord shall provide the following types of
insurance, with or without deductible and in amounts and coverages as may be
determined by Landlord in its discretion: property insurance, subject to
standard exclusions (such as, but not limited to, earthquake and flood
exclusions), covering the Building or Project. In addition, Landlord may, at its
election, obtain insurance coverages for such other risks as Landlord or its
Mortgagees may from time to time deem appropriate, including earthquake and
commercial general liability coverage. Landlord shall not be required to carry
insurance of any kind on any tenant improvements or Alterations in the Premises
installed by Tenant or its contractors or otherwise removable by Tenant
(collectively, “Tenant Installations”), or on any trade fixtures, furnishings,
equipment, interior plate glass, signs or items of personal property in the
Premises, and Landlord shall not be obligated to repair or replace any of the
foregoing items should damage occur. All proceeds of insurance maintained by
Landlord upon the Building and Project shall be the property of Landlord,
whether or not Landlord is obligated to or elects to make any repairs.

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     10.3. JOINT INDEMNITY.
          (a) To the fullest extent permitted by law, but subject to
Section 10.5 below, Tenant shall defend, indemnify and hold harmless Landlord,
its agents, lenders, and any and all affiliates of Landlord, from and against
any and all claims, liabilities, costs or expenses arising either before or
after the Commencement Date from Tenant’s use or occupancy of the Premises, the
Building or the Common Areas, or from the conduct of its business, or from any
activity, work, or thing done, permitted or suffered by Tenant or its agents,
employees, subtenants, vendors, contractors, invitees or licensees in or about
the Premises, the Building or the Common Areas, or from any Default in the
performance of any obligation on Tenant’s part to be performed under this Lease,
or from any act or negligence of Tenant or its agents, employees, subtenants,
vendors, contractors, invitees or licensees. Landlord may, at its option,
require Tenant to assume Landlord’s defense in any action covered by this
Section 10.3(a) through counsel reasonably satisfactory to Landlord.
Notwithstanding the foregoing, Tenant shall not be obligated to indemnify
Landlord against any liability or expense to the extent such liability or
expense: (i) is ultimately determined to have been caused by the sole negligence
or willful misconduct of Landlord, its agents, contractors or employees, or
(ii) is covered by Landlord’s indemnity obligations set forth in Section 10.3(b)
below.
          (b) To the fullest extent permitted by law, but subject to
Section 10.5 below, Landlord shall defend, indemnify and hold harmless Tenant,
its agents, lenders, and any and all affiliates of Tenant, from and against any
and all claims, liabilities, costs or expenses arising either before or after
the Commencement Date from any default by Landlord of its obligations under this
Lease or from the active negligence or willful misconduct of Landlord, its
employees, agents or contractors, in connection with the maintenance or repair
of the Common Areas of the Project. Tenant may, at its option, require Landlord
to assume Tenant’s defense in any action covered by this Section 10.3(b) through
counsel reasonably satisfactory to Tenant. Notwithstanding the foregoing,
Landlord shall not be obligated to indemnify Tenant against any liability or
expense to the extent such liability or expense: (i) is ultimately determined to
have been caused by the sole negligence or willful misconduct of Tenant, its
agents, employees, subtenants, vendors, contractors, invitees or licensees, or
(ii) is covered by Tenant’s indemnity obligations set forth in Section 10.3(a)
above.
     10.4. LANDLORD’S NONLIABILITY. Landlord shall not be liable to Tenant, its
employees, agents and invitees, and Tenant hereby waives all claims against
Landlord, its employees and agents for loss of or damage to any property, or any
injury to any person, resulting from any condition including, but not limited
to, acts or omissions (criminal or otherwise) of third parties and/or other
tenants of the Project, or their agents, employees or invitees, fire, explosion,
falling plaster, steam, gas, electricity, water or rain which may leak or flow
from or into any part of the Premises or from the breakage, leakage, obstruction
or other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, electrical works or other fixtures in the Building, whether the
damage or injury results from conditions arising in the Premises or in other
portions of the Building, except to the extent of the gross negligence or
willful misconduct of Lanldord, its agents or any and all affiliated of Landlord
in connection with the foregoing (but subject to Section 10.5 below). It is
understood that any such condition may require the temporary evacuation or
closure of all or a portion of the Building. Should Tenant elect to receive any
service from a concessionaire, licensee or third party tenant of Landlord,
Tenant shall not seek recourse against Landlord for any breach or liability of
that service provider. Notwithstanding anything to the contrary contained in
this Lease, in no event shall Landlord be liable for Tenant’s loss or
interruption of business or income (including without limitation, Tenant’s
consequential damages, lost profits or opportunity costs), or for interference
with light or other similar intangible interests. Tenant shall immediately
notify Landlord in case of fire or accident in the Premises, the Building or the
Project and of defects in any improvements or equipment.
     10.5. WAIVER OF SUBROGATION. Notwithstanding anything to the contrary
contained in this Lease, Landlord and Tenant each hereby waives all rights of
recovery against the other on account of loss and damage occasioned to the
property of such waiving party to the extent that the waiving party is entitled
to proceeds for such loss and damage under any property insurance policies
carried or otherwise required to be carried by this Lease; provided however,
that the foregoing waiver shall not apply to the extent of Tenant’s express
obligation to pay deductibles under any such policies and this Lease. By this
waiver it is the intent of the parties that neither Landlord nor Tenant shall be
liable to any insurance company (by way of subrogation or otherwise) insuring
the other party for any loss or damage insured against under any property
insurance policies, even though such loss or damage might be occasioned by the
negligence of such party, its agents, employees, contractors or invitees. The
foregoing waiver by Tenant shall also inure to the benefit of Landlord’s
management agent for the Building.

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ARTICLE 11. DAMAGE OR DESTRUCTION
     11.1. RESTORATION.
          (a) If the Building of which the Premises are a part is damaged as the
result of an event of casualty, then subject to the provisions below, Landlord
shall repair that damage as soon as reasonably possible unless Landlord
reasonably determines that: (i) the Premises have been materially damaged and
there is less than 1 year of the Term remaining on the date of the casualty;
(ii) any Mortgagee (defined in Section 13.1) requires that the insurance
proceeds be applied to the payment of the mortgage debt; or (iii) proceeds
necessary to pay the full cost of the repair are not available from Landlord’s
insurance, including without limitation earthquake insurance. Should Landlord
elect not to repair the damage for one of the preceding reasons, Landlord shall
so notify Tenant in the “Casualty Notice” (as defined below), and this Lease
shall terminate as of the date of delivery of that notice.
          (b) As soon as reasonably practicable following the casualty event but
not later than 60 days thereafter, Landlord shall notify Tenant in writing
(“Casualty Notice”) of Landlord’s election, if applicable, to terminate this
Lease. If this Lease is not so terminated, the Casualty Notice shall set forth
the anticipated period for repairing the casualty damage. If the anticipated
repair period exceeds 270 days and if the damage is so extensive as to
reasonably prevent Tenant’s substantial use and enjoyment of the Premises, then
either party may elect to terminate this Lease by written notice to the other
within 30 days following delivery of the Casualty Notice.
          (c) In the event that neither Landlord nor Tenant terminates this
Lease pursuant to Section 11.1(a) or (b), Landlord shall repair all material
damage to the Premises or the Building as soon as reasonably possible and this
Lease shall continue in effect for the remainder of the Term. Upon notice from
Landlord, Tenant shall assign or endorse over to Landlord (or to any party
designated by Landlord) all property insurance proceeds payable to Tenant under
Tenant’s insurance with respect to any Tenant Installations which Tenant shall
have elected to restore (in its discretion), provided if the estimated cost to
repair such Tenant Installations exceeds the amount of insurance proceeds
received by Landlord from Tenant’s insurance carrier, the excess cost of such
repairs shall be paid by Tenant to Landlord prior to Landlord’s commencement of
repairs. Within 15 days of demand, Tenant shall also pay Landlord for any
additional excess costs that are determined during the performance of the
repairs to such Tenant Installations.
          (d) From and after the date of the casualty event, the rental to be
paid under this Lease shall be abated in the same proportion that the Floor Area
of the Premises that is rendered unusable by the damage from time to time bears
to the total Floor Area of the Premises.
          (e) The provisions of this Section 11.1(e) shall not be deemed to
require Landlord to repair any Tenant Installations, fixtures and other items
that Tenant is obligated to insure pursuant to Exhibit D or under any other
provision of this Lease.
     11.2. LEASE GOVERNS. Tenant agrees that the provisions of this Lease,
including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.
ARTICLE 12. EMINENT DOMAIN
     Either party may terminate this Lease if any material part of the Premises
is taken or condemned for any public or quasi-public use under Law, by eminent
domain or private purchase in lieu thereof (a “Taking”). Landlord shall also
have the right to terminate this Lease if there is a Taking of any portion of
the Building or Project which would have a material adverse effect on Landlord’s
ability to profitably operate the remainder of the Building. The terminating
party shall provide written notice of termination to the other party within
45 days after it first receives notice of the Taking. The termination shall be
effective as of the effective date of any order granting possession to, or
vesting legal title in, the condemning authority. If this Lease is not
terminated, Basic Rent and Tenant’s Share of Operating Expenses shall be
appropriately adjusted to account for any reduction in the square footage of the
Building or Premises. All compensation awarded for a Taking shall be the
property of Landlord and the right to receive compensation or proceeds in
connection with a Taking are expressly waived by Tenant; provided, however,
Tenant may file a separate claim for Tenant’s personal property and Tenant’s
reasonable relocation expenses, provided the filing of the claim does not
diminish the amount of Landlord’s award. If only a part of the Premises is
subject to a Taking and this Lease is not terminated, Landlord, with reasonable
diligence, will restore the remaining portion of the Premises as nearly as
practicable to the condition immediately prior to the Taking. Tenant agrees that
the provisions of this Lease shall govern any Taking and shall accordingly
supersede any contrary statute or rule of law.

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ARTICLE 13. SUBORDINATION; ESTOPPEL CERTIFICATE
     13.1. SUBORDINATION. Tenant accepts this Lease subject and subordinate to
any mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or
subsequently arising upon the Premises, the Building or the Project, and to
renewals, modifications, refinancings and extensions thereof (collectively
referred to as a “Mortgage”). The party having the benefit of a Mortgage shall
be referred to as a “Mortgagee”. This clause shall be self-operative, but within
20 days after request from Landlord or a Mortgagee, Tenant shall execute a
commercially reasonable subordination and attornment agreement in favor of the
Mortgagee, provided such agreement provides a non-disturbance covenant
benefiting Tenant. Alternatively, a Mortgagee shall have the right at any time
to subordinate its Mortgage to this Lease. Upon request, Tenant, without charge,
shall attorn to any successor to Landlord’s interest in this Lease in the event
of a foreclosure of any mortgage. Tenant agrees that any purchaser at a
foreclosure sale or lender taking title under a deed in lieu of foreclosure
shall not be responsible for any act or omission of a prior landlord, shall not
be subject to any offsets or defenses Tenant may have against a prior landlord,
and shall not be liable for the return of the Security Deposit not actually
recovered by such purchaser nor bound by any rent paid in advance of the
calendar month in which the transfer of title occurred; provided that the
foregoing shall not release the applicable prior landlord from any liability for
those obligations. Tenant acknowledges that Landlord’s Mortgagees and their
successors-in-interest are intended third party beneficiaries of this
Section 13.1. Nothing contained in the foregoing provisions of this
Section 13.1, however, shall relieve any Mortgagee from responsibility for those
obligations of “Landlord” under this Lease which are to be performed subsequent
to such Mortgagee taking title to or possession of the Premises, provided that
Tenant shall give a “new” notice of default to such Mortgagee in connection with
any default of such obligations, and such Mortgagee shall be thereafter afforded
the benefit of the applicable “cure” rights pursuant to Section 14.5 of this
Lease.
     13.2. ESTOPPEL CERTIFICATE. Tenant shall, within 20 days after receipt of a
written request from Landlord, execute and deliver a commercially reasonable
estoppel certificate in favor of those parties as are reasonably requested by
Landlord (including a Mortgagee or a prospective purchaser of the Building or
the Project). Without limitation, such estoppel certificate may include a
certification as to the status of this Lease, the existence of any Defaults and
the amount of rent that is due and payable.
ARTICLE 14. DEFAULTS AND REMEDIES
     14.1. TENANT’S DEFAULTS. In addition to any other event of default set
forth in this Lease, the occurrence of any one or more of the following events
shall constitute a “Default” by Tenant:
          (a) The failure by Tenant to make any payment of rent required to be
made by Tenant, as and when due, where the failure continues for a period of 5
business days after written notice from Landlord to Tenant. For purposes of
these default and remedies provisions, the term “additional rent” shall be
deemed to include all amounts of any type whatsoever other than Basic Rent to be
paid by Tenant pursuant to the terms of this Lease.
          (b) The assignment, sublease, encumbrance or other Transfer of the
Lease by Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy, or other means, without the prior
written consent of Landlord unless otherwise authorized in Article 9 of this
Lease.
          (c) The discovery by Landlord that any financial statement provided by
Tenant, or by any affiliate, successor or guarantor of Tenant, was materially
false.
          (d) Except where a specific time period is otherwise set forth for
Tenant’s performance in this Lease (in which event the failure to perform by
Tenant within such time period shall be a Default), the failure or inability by
Tenant to observe or perform any of the covenants or provisions of this Lease to
be observed or performed by Tenant, other than as specified in any other
subsection of this Section 14.1(d),where the failure continues for a period of
30 days after written notice from Landlord to Tenant. However, if the nature of
the failure is such that more than 30 days are reasonably required for its cure,
then Tenant shall not be deemed to be in Default if Tenant commences the cure
within 30 days, and thereafter diligently pursues the cure to completion.
          (e) Tenant or any Guarantor becomes insolvent, makes a transfer in
fraud of creditors, makes an assignment for the benefit of creditors, admits in
writing its inability to pay its debts when due or forfeits or loses its right
to conduct business.

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          The notice periods provided herein are in lieu of, and not in addition
to, any notice periods provided by law, and Landlord shall not be required to
give any additional notice under California Code of Civil Procedure
Section 1161, or any successor statute, in order to be entitled to commence an
unlawful detainer proceeding.
     14.2. LANDLORD’S REMEDIES.
          (a) Upon the occurrence of any Default by Tenant, then in addition to
any other remedies available to Landlord, Landlord may exercise the following
remedies:
               (i) Landlord may terminate Tenant’s right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. Such
termination shall not affect any accrued obligations of Tenant under this Lease.
Upon termination, Landlord shall have the right to reenter the Premises and
remove all persons and property. Landlord shall also be entitled to recover from
Tenant:
                    (1) The worth at the time of award of the unpaid Rent which
had been earned at the time of termination;
                    (2) 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 loss that Tenant proves could have been
reasonably avoided;
                    (3) The worth at the time of award of the amount by which
the unpaid Rent for the balance of the Term after the time of award exceeds the
amount of such loss that Tenant proves could be reasonably avoided;
                    (4) 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 from Tenant’s default, including, but not limited to, the cost
of recovering possession of the Premises, commissions and other expenses of
reletting, including necessary repair, renovation, improvement and alteration of
the Premises for a new tenant, reasonable attorneys’ fees, and any other
reasonable costs; and
                    (5) At Landlord’s election, all other amounts in addition to
or in lieu of the foregoing as may be permitted by law. The term “Rent” as used
in this Lease shall be deemed to mean the Basic Rent and all other sums required
to be paid by Tenant to Landlord pursuant to the terms of this Lease, including
without limitation any sums that may be owing from Tenant pursuant to
Section 4.2 of this Lease. Any sum, other than Basic Rent, shall be computed on
the basis of the average monthly amount accruing during the 24 month period
immediately prior to Default, except that if it becomes necessary to compute
such rental before the 24 month period has occurred, then the computation shall
be on the basis of the average monthly amount during the shorter period. As used
in subparagraphs (1) and (2) above, the “worth at the time of award” shall be
computed by allowing interest at the rate of 10% per annum. As used in
subparagraph (3) above, the “worth at the time of award” shall be computed by
discounting the amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus 1%.
               (ii) Landlord may elect not to terminate Tenant’s right to
possession of the Premises, in which event Landlord may continue to enforce all
of its rights and remedies under this Lease, including the right to collect all
rent as it becomes due. Efforts by the Landlord to maintain, preserve or relet
the Premises, or the appointment of a receiver to protect the Landlord’s
interests under this Lease, shall not constitute a termination of the Tenant’s
right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy provided by this subsection (ii), Landlord shall not
unreasonably withhold its consent to an assignment or subletting of the Premises
subject to the reasonable standards for Landlord’s consent as are contained in
this Lease.
          (b) The various rights and remedies reserved to Landlord in this Lease
or otherwise shall be cumulative and, except as otherwise provided by California
law, Landlord may pursue any or all of its rights and remedies at the same time.
No delay or omission of Landlord to exercise any right or remedy shall be
construed as a waiver of the right or remedy or of any breach or Default by
Tenant. The acceptance by Landlord of rent shall not be a (i) waiver of any
preceding breach or Default by Tenant of any provision of this Lease, other than
the failure of Tenant to pay the particular rent accepted, regardless of
Landlord’s knowledge of the preceding breach or Default at the time of
acceptance of rent, or (ii) a waiver of Landlord’s right to exercise any remedy
available to Landlord by virtue of the breach or Default. The acceptance of any
payment from a debtor in possession, a trustee, a receiver or any other person
acting on behalf of Tenant or Tenant’s estate shall not waive or cure a Default
under Section 14.1. No payment by Tenant or receipt by Landlord of a lesser
amount than the rent required by this Lease shall be

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deemed to be other than a partial payment on account of the earliest due
stipulated rent, nor shall any endorsement or statement on any check or letter
be deemed an accord and satisfaction and Landlord shall accept the check or
payment without prejudice to Landlord’s right to recover the balance of the rent
or pursue any other remedy available to it. Tenant hereby waives any right of
redemption or relief from forfeiture under California Code of Civil Procedure
Section 1174 or 1179, or under any successor statute, in the event this Lease is
terminated by reason of any Default by Tenant. No act or thing done by Landlord
or Landlord’s agents during the Term shall be deemed an acceptance of a
surrender of the Premises, and no agreement to accept a surrender shall be valid
unless in writing and signed by Landlord. No employee of Landlord or of
Landlord’s agents shall have any power to accept the keys to the Premises prior
to the termination of this Lease, and the delivery of the keys to any employee
shall not operate as a termination of the Lease or a surrender of the Premises.
     14.3. LATE PAYMENTS.
          (a) Any Rent due under this Lease that is not paid to Landlord within
5 days of the date when due shall bear interest at the maximum rate permitted by
law from the date due until fully paid. The payment of interest shall not cure
any Default by Tenant under this Lease. In addition, Tenant acknowledges that
the late payment by Tenant to Landlord of rent will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impracticable to ascertain. Those costs may include, but
are not limited to, administrative, processing and accounting charges, and late
charges which may be imposed on Landlord by the terms of any ground lease,
mortgage or trust deed covering the Premises. Accordingly, if any rent due from
Tenant shall not be received by Landlord or Landlord’s designee within 5 days
after the date due, then Tenant shall pay to Landlord, in addition to the
interest provided above, a late charge for each delinquent payment equal to the
greater of (i) 5% of that delinquent payment or (ii) $100.00; provided that
Landlord shall waive the payment of said late charge for the initial delinquent
payment of Basic Rent or Operating Expenses by Tenant. Acceptance of a late
charge by Landlord shall not constitute a waiver of Tenant’s Default with
respect to the overdue amount, nor shall it prevent Landlord from exercising any
of its other rights and remedies.
          (b) Following each second consecutive installment of Basic Rent that
is not paid within 5 days following notice of nonpayment from Landlord, Landlord
shall have the option (i) to require that beginning with the first payment of
Basic Rent next due, Basic Rent shall no longer be paid in monthly installments
but shall be payable quarterly 3 months in advance and/or (ii) to require that
Tenant increase the amount, if any, of the Security Deposit by 100%. Should
Tenant deliver to Landlord, at any time during the Term, 2 or more insufficient
checks, the Landlord may require that all monies then and thereafter due from
Tenant be paid to Landlord by cashier’s check.
     14.4. RIGHT OF LANDLORD TO PERFORM. If Tenant is in Default of any of its
obligations under the Lease, Landlord shall have the right to perform such
obligations. Tenant shall reimburse Landlord for the cost of such performance
upon demand together with an administrative charge equal to 10% of the cost of
the work performed by Landlord.
     14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in default in
the performance of any obligation under this Lease unless and until it has
failed to perform the obligation within 30 days after written notice by Tenant
to Landlord specifying in reasonable detail the nature and extent of the
failure; provided, however, that if the nature of Landlord’s obligation is such
that more than 30 days are required for its performance, then Landlord shall not
be deemed to be in default if it commences performance within the 30 day period
and thereafter diligently pursues the cure to completion. Tenant hereby waives
any right to terminate or rescind this Lease as a result of any default by
Landlord hereunder or any breach by Landlord of any promise or inducement
relating hereto, and Tenant agrees that its remedies shall be limited to a suit
for actual damages and/or injunction and shall in no event include any
consequential damages, lost profits or opportunity costs. No payment of rent by
Tenant with knowledge of any Landlord default shall constitute a waiver of such
default.
     14.6. EXPENSES AND LEGAL FEES. Should either Landlord or Tenant bring any
action in connection with this Lease, the prevailing party shall be entitled to
recover as a part of the action its reasonable attorneys’ fees, and all other
reasonable costs. The prevailing party for the purpose of this paragraph shall
be determined by the trier of the facts.
     14.7. WAIVER OF JURY TRIAL/JUDICIAL REFERENCE.
          (a) LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS
HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHT TO TRIAL BY
JURY, AND EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL
SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,

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PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER
(AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR
AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY
CLAIM OF INJURY OR DAMAGE.
          (b) In the event that the jury waiver provisions of Section 14.7(a)
are not enforceable under California law, then the provisions of this
Section 14.7(b) shall apply. It is the desire and intention of the parties to
agree upon a mechanism and procedure under which controversies and disputes
arising out of this lease or related to the Premises will be resolved in a
prompt and expeditious manner. Accordingly, except with respect to actions for
unlawful or forcible detainer or with respect to the prejudgment remedy of
attachment, any action, proceeding or counterclaim brought by either party
hereto against the other (and/or against its officers, directors, employees,
agents or subsidiary or affiliated entities) on any matters whatsoever arising
out of or in any way connected with this Lease, Tenant’s use or occupancy of the
Premises and/or any claim of injury or damage, shall be heard and resolved by a
referee under the provisions of the California Code of Civil Procedure,
Sections 638 – 645.1, inclusive (as same may be amended, or any successor
statute(s) thereto) (the “Referee Sections”). Any fee to initiate the judicial
reference proceedings shall be paid by the party initiating such procedure;
provided however, that the costs and fees, including any initiation fee, of such
proceeding shall ultimately be borne in accordance with Section 14.6 above. The
venue of the proceedings shall be in the county in which the Premises are
located. Within 10 days of receipt by any party of a written request to resolve
any dispute or controversy pursuant to this Section 14.7(b), the parties shall
agree upon a single referee who shall try all issues, whether of fact or law,
and report a finding and judgment on such issues as required by the Referee
Sections. If the parties are unable to agree upon a referee within such 10 day
period, then any party may thereafter file a lawsuit in the county in which the
Premises are located for the purpose of appointment of a referee under
California Code of Civil Procedure Sections 639 and 640, as same may be amended
or any successor statute(s) thereto. If the referee is appointed by the court,
the referee shall be a neutral and impartial retired judge with substantial
experience in the relevant matters to be determined, from Jams/Endispute, Inc.,
the American Arbitration Association or similar mediation/arbitration entity.
The proposed referee may be challenged by any party for any of the grounds
listed in Section 641 of the California Code of Civil Procedure, as same may be
amended or any successor statute(s) thereto. The referee shall have the power to
decide all issues of fact and law and report his or her decision on such issues,
and to issue all recognized remedies available at law or in equity for any cause
of action that is before the referee, including an award of attorneys’ fees and
costs in accordance with California law. The referee shall not, however, have
the power to award punitive damages, nor any other damages which are not
permitted by the express provisions of this lease, and the parties hereby waive
any right to recover any such damages. The referee shall oversee discovery and
may enforce all discovery orders in the same manner as any trial court judge,
with rights to regulate discovery and to issue and enforce subpoenas, protective
orders and other limitations on discovery available under California law;
provided, however, that the referee shall limit discovery to that which is
essential to the effective prosecution or defense of the action, and in no event
shall discovery by either party include more than one non-expert witness
deposition unless both parties otherwise agree. The reference proceeding shall
be conducted in accordance with California law (including the rules of
evidence), and in all regards, the referee shall follow California law
applicable at the time of the reference proceeding. In accordance with
Section 644 of the California Code of Civil procedure, the decision of the
referee upon the whole issue must stand as the decision of the court, and upon
the filing of the statement of decision with the clerk of the court, or with the
judge if there is no clerk, judgment may be entered thereon in the same manner
as if the action had been tried by the court. The parties shall promptly and
diligently cooperate with one another and the referee, and shall perform such
acts as may be necessary to obtain a prompt and expeditious resolution of the
dispute or controversy in accordance with the terms of this Section 14.7(b). To
the extent that no pending lawsuit has been filed to obtain the appointment of a
referee, any party, after the issuance of the decision of the referee, may apply
to the court of the county in which the Premises are located for confirmation by
the court of the decision of the referee in the same manner as a petition for
confirmation of an arbitration award pursuant to Code of Civil Procedure
Section 1285 et seq. (as same may be amended or any successor statute(s)
thereto).
     14.8 SATISFACTION OF JUDGMENT. The obligations of Landlord do not
constitute the personal obligations of the individual partners, trustees,
directors, officers, members or shareholders of Landlord or its constituent
partners or members. Should Tenant recover a money judgment against Landlord,
such judgment shall be satisfied only from the interest of Landlord in the
Project and out of the rent or other income from such property receivable by
Landlord or out of consideration received by Landlord from the sale or other
disposition of all or any part of Landlord’s right, title or interest in the
Project, including proceeds from insurance or condemnation, and no action for
any deficiency may be sought or obtained by Tenant.

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ARTICLE 15. END OF TERM
     15.1. HOLDING OVER. If Tenant holds over for any period after the
Expiration Date (or earlier termination of the Term) without the prior written
consent of Landlord, such tenancy shall constitute a tenancy at sufferance only
and a Default by Tenant; such holding over with the prior written consent of
Landlord shall constitute a month-to-month tenancy commencing on the 1st day
following the termination of this Lease and terminating 30 days following
delivery of written notice of termination by either Landlord or Tenant to the
other. In either of such events, possession shall be subject to all of the terms
of this Lease, except that the monthly rental shall be 150% of the total monthly
rental for the month immediately preceding the date of termination, subject to
Landlord’s right to modify same upon 30 days notice to Tenant. The acceptance by
Landlord of monthly hold-over rental in a lesser amount shall not constitute a
waiver of Landlord’s right to recover the full amount due unless otherwise
agreed in writing by Landlord. If Tenant fails to surrender the Premises upon
the expiration of this Lease despite written demand to do so by Landlord, Tenant
shall indemnify and hold Landlord harmless from all loss or liability, including
without limitation, any claims made by any succeeding tenant relating to such
failure to surrender. The foregoing provisions of this Section 15.1 are in
addition to and do not affect Landlord’s right of re-entry or any other rights
of Landlord under this Lease or at law.
     15.2. MERGER ON TERMINATION. The voluntary or other surrender of this Lease
by Tenant, or a mutual termination of this Lease, shall terminate any or all
existing subleases unless Landlord, at its option, elects in writing to treat
the surrender or termination as an assignment to it of any or all subleases
affecting the Premises.
     15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the Expiration Date
or upon any earlier termination of this Lease, Tenant shall quit and surrender
possession of the Premises to Landlord in as good order, condition and repair as
when received or as hereafter may be improved by Landlord or Tenant, reasonable
wear and tear, repairs which are Landlord’s obligation and loss by casualty or
condemnation excepted, and shall remove or fund to Landlord the cost of removing
all wallpapering and voice and/or data transmission cabling installed by or for
Tenant, together with all personal property and debris, and shall perform all
work required under Section 7.3 of this Lease and/or the Work Letter (if any )
attached hereto, except for any items that Landlord may by written authorization
allow to remain. Tenant shall repair all damage to the Premises resulting from
the removal and restore the affected area to its pre-existing condition,
reasonable wear and tear excepted, provided that Landlord may instead elect to
repair any structural damage at Tenant’s expense. If Tenant shall fail to comply
with the provisions of this Section 15.3, Landlord may effect the removal and/or
make any repairs, and the cost to Landlord shall be additional rent payable by
Tenant upon demand. If requested by Landlord, Tenant shall execute, acknowledge
and deliver to Landlord an instrument in writing releasing and quitclaiming to
Landlord all right, title and interest of Tenant in the Premises. It is
understood that Tenant shall remove the Cabling Equipment installed in the
Premises as of the Commencement Date of this Lease upon the Expiration Date or
earlier termination of this Lease, and shall repair the Premises resulting from
such removal at its sole cost and expense.
ARTICLE 16. PAYMENTS AND NOTICES
     All sums payable by Tenant to Landlord shall be paid, without deduction or
offset, in lawful money of the United States to Landlord at its address set
forth in Item 12 of the Basic Lease Provisions, or at any other place as
Landlord may designate in writing. Unless this Lease expressly provides
otherwise, as for example in the payment of rent pursuant to Section 4.1, all
payments shall be due and payable within 5 days after demand. All payments
requiring proration shall be prorated on the basis of the number of days in the
pertinent calendar month or year, as applicable. Any notice, election, demand,
consent, approval or other communication to be given or other document to be
delivered by either party to the other may be delivered to the other party, at
the address set forth in Item 12 of the Basic Lease Provisions, by personal
service or electronic facsimile transmission, or by any courier or “overnight”
express mailing service. Either party may, by written notice to the other,
served in the manner provided in this Article, designate a different address.
The refusal to accept delivery of a notice, or the inability to deliver the
notice (whether due to a change of address for which notice was not duly given
or other good reason), shall be deemed delivery and receipt of the notice as of
the date of attempted delivery. If more than one person or entity is named as
Tenant under this Lease, service of any notice upon any one of them shall be
deemed as service upon all of them.
ARTICLE 17. RULES AND REGULATIONS
     Tenant agrees to comply with the Rules and Regulations attached as
Exhibit E, and any reasonable and nondiscriminatory amendments, modifications
and/or additions as may be adopted and published by written notice to tenants by
Landlord for the safety, care, security, good order, or cleanliness of the
Premises, Building, Project and/or Common Areas, provided that the same are
enforced in a non-discriminatory manner and provided that the same are not

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inconsistent with the terms of this Lease. Landlord shall not be liable to
Tenant for any violation of the Rules and Regulations or the breach of any
covenant or condition in any lease or any other act or conduct by any other
tenant, and the same shall not constitute a constructive eviction hereunder. One
or more waivers by Landlord of any breach of the Rules and Regulations by Tenant
or by any other tenant(s) shall not be a waiver of any subsequent breach of that
rule or any other. Tenant’s failure to keep and observe the Rules and
Regulations shall constitute a default under this Lease. In the case of any
conflict between the Rules and Regulations and this Lease, this Lease shall be
controlling.
ARTICLE 18. BROKER’S COMMISSION
     The parties recognize as the broker(s) who negotiated this Lease the
firm(s) whose name(s) is (are) stated in Item 10 of the Basic Lease Provisions,
and agree that Landlord shall be responsible for the payment of brokerage
commissions to those broker(s) unless otherwise provided in this Lease. It is
understood that Landlord’s Broker represents only Landlord in this transaction
and Tenant’s Broker (if any) represents only Tenant. Each party warrants that it
has had no dealings with any other real estate broker or agent in connection
with the negotiation of this Lease, and agrees to indemnify and hold the other
party harmless from any cost, expense or liability (including reasonable
attorneys’ fees) for any compensation, commissions or charges claimed by any
other real estate broker or agent employed or claiming to represent or to have
been employed by the indemnifying party in connection with the negotiation of
this Lease. The foregoing agreement shall survive the termination of this Lease.
ARTICLE 19. TRANSFER OF LANDLORD’S INTEREST
     In the event of any transfer of Landlord’s interest in the Premises, the
transferor shall be automatically relieved of all obligations on the part of
Landlord accruing under this Lease from and after the date of the transfer,
provided that Tenant is duly notified of the transfer. Any funds held by the
transferor in which Tenant has an interest, including without limitation, the
Security Deposit, shall be turned over, subject to that interest, to the
transferee. No Mortgagee to which this Lease is or may be subordinate shall be
responsible in connection with the Security Deposit unless the Mortgagee
actually receives the Security Deposit. It is intended that the covenants and
obligations contained in this Lease on the part of Landlord shall, subject to
the foregoing, be binding on Landlord, its successors and assigns, only during
and in respect to their respective successive periods of ownership.
ARTICLE 20. INTERPRETATION
     20.1. NUMBER. Whenever the context of this Lease requires, the words
“Landlord” and “Tenant” shall include the plural as well as the singular.
     20.2. HEADINGS. The captions and headings of the articles and sections of
this Lease are for convenience only, are not a part of this Lease and shall have
no effect upon its construction or interpretation.
     20.3. JOINT AND SEVERAL LIABILITY. If more than one person or entity is
named as Tenant, the obligations imposed upon each shall be joint and several
and the act of or notice from, or notice or refund to, or the signature of, any
one or more of them shall be binding on all of them with respect to the tenancy
of this Lease, including, but not limited to, any renewal, extension,
termination or modification of this Lease.
     20.4. SUCCESSORS. Subject to Sections 13.1 and 22.3 and to Articles 9 and
19 of this Lease, all rights and liabilities given to or imposed upon Landlord
and Tenant shall extend to and bind their respective heirs, executors,
administrators, successors and assigns. Nothing contained in this Section 20.4
is intended, or shall be construed, to grant to any person other than Landlord
and Tenant and their successors and assigns any rights or remedies under this
Lease.
     20.5. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.
     20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California. Should any
litigation be commenced between the parties in connection with this Lease, such
action shall be prosecuted in the applicable State Court of California in the
county in which the Building is located.
     20.7. SEVERABILITY. If any term or provision of this Lease, the deletion of
which would not adversely affect the receipt of any material benefit by either
party or the deletion of which is consented to by the party adversely affected,
shall be held invalid or unenforceable to any extent, the remainder of this
Lease shall not be affected and each term and provision of this Lease shall be
valid and enforceable to the fullest extent permitted by law.

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     20.8. WAIVER. One or more waivers by Landlord or Tenant of any breach of
any term, covenant or condition contained in this Lease shall not be a waiver of
any subsequent breach of the same or any other term, covenant or condition.
Consent to any act by one of the parties shall not be deemed to render
unnecessary the obtaining of that party’s consent to any subsequent act. No
breach of this Lease shall be deemed to have been waived unless the waiver is in
a writing signed by the waiving party.
     20.9. INABILITY TO PERFORM. In the event that either party shall be delayed
or hindered in or prevented from the performance of any work or in performing
any act required under this Lease by reason of any cause beyond the reasonable
control of that party, then the performance of the work or the doing of the act
shall be excused for the period of the delay and the time for performance shall
be extended for a period equivalent to the period of the delay. The provisions
of this Section 20.9 shall not operate to excuse Tenant from the prompt payment
of Rent.
     20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other attachments
cover in full each and every agreement of every kind between the parties
concerning the Premises, the Building, and the Project, and all preliminary
negotiations, oral agreements, understandings and/or practices, except those
contained in this Lease, are superseded and of no further effect. Tenant waives
its rights to rely on any representations or promises made by Landlord or others
which are not contained in this Lease. No verbal agreement or implied covenant
shall be held to modify the provisions of this Lease, any statute, law, or
custom to the contrary notwithstanding.
     20.11. QUIET ENJOYMENT. Upon the observance and performance of all the
covenants, terms and conditions on Tenant’s part to be observed and performed,
and subject to the other provisions of this Lease, Tenant shall have the right
of quiet enjoyment and use of the Premises for the Term without hindrance or
interruption by Landlord or any other person claiming by or through Landlord.
     20.12. SURVIVAL. All covenants of Landlord or Tenant which reasonably would
be intended to survive the expiration or sooner termination of this Lease,
including without limitation any warranty or indemnity hereunder, shall so
survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.
ARTICLE 21. EXECUTION AND RECORDING
     21.1. COUNTERPARTS. This Lease may be executed in one or more counterparts,
each of which shall constitute an original and all of which shall be one and the
same agreement.
     21.2. CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a corporation,
limited liability company or partnership, each individual executing this Lease
on behalf of the entity represents and warrants that he is duly authorized to
execute and deliver this Lease and that this Lease is binding upon the
corporation, limited liability company or partnership in accordance with its
terms. Tenant shall, at Landlord’s request, deliver a certified copy of its
organizational documents or an appropriate certificate authorizing or evidencing
the execution of this Lease.
     21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of this Lease
to Tenant shall be for examination purposes only, and shall not constitute an
offer to or option for Tenant to lease the Premises. Execution of this Lease by
Tenant and its return to Landlord shall not be binding upon Landlord,
notwithstanding any time interval, until Landlord has in fact executed and
delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.
     21.4. RECORDING. Tenant shall not record this Lease without the prior
written consent of Landlord. Tenant, upon the request of Landlord, shall execute
and acknowledge a commercially reasonable “short form” memorandum of this Lease
for recording purposes.
     21.5. AMENDMENTS. No amendment or mutual termination of this Lease shall be
effective unless in writing signed by authorized signatories of Tenant and
Landlord, or by their respective successors in interest. No actions, policies,
oral or informal arrangements, business dealings or other course of conduct by
or between the parties shall be deemed to modify this Lease in any respect.
     21.6. ATTACHMENTS. All exhibits, riders and addenda attached to this Lease
are hereby incorporated into and made a part of this Lease.
ARTICLE 22. MISCELLANEOUS
     22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges that the content of
this Lease and any related documents are confidential information. Except to the
extent

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disclosure is required by law, 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, provided, however, that Tenant may disclose the terms to
prospective subtenants or assignees under this Lease or pursuant to legal
requirement.
     22.2. TENANT’S FINANCIAL STATEMENTS. The application, financial statements
and tax returns, if any, submitted and certified to by Tenant as an accurate
representation of its financial condition have been prepared, certified and
submitted to Landlord as an inducement and consideration to Landlord to enter
into this Lease. The application and statements are represented and warranted by
Tenant to be correct and to accurately and fully reflect Tenant’s true financial
condition as of the date of execution of this Lease by Tenant. Tenant shall
during the Term furnish Landlord with current annual financial statements
accurately reflecting Tenant’s financial condition upon written request from
Landlord within 10 business days following Landlord’s request; provided,
however, that so long as Tenant is a publicly traded corporation on a nationally
recognized stock exchange, the foregoing obligation to deliver the statements
shall be waived.
     22.3. MORTGAGEE PROTECTION. No act or failure to act on the part of
Landlord which would otherwise entitle Tenant to be relieved of its obligations
hereunder or to terminate this Lease shall result in such a release or
termination unless (a) Tenant has given notice by registered or certified mail
to any Mortgagee of a Mortgage covering the Building whose address has been
furnished to Tenant and (b) such Mortgagee is afforded a reasonable opportunity
to cure the default by Landlord (which shall in no event be less than 60 days),
including, if necessary to effect the cure, time to obtain possession of the
Building by power of sale or judicial foreclosure provided that such foreclosure
remedy is diligently pursued. Tenant shall comply with any written directions by
any Mortgagee to pay Rent due hereunder directly to such Mortgagee without
determining whether a default exists under such Mortgagee’s Mortgage.
     22.4. SDN LIST. Tenant hereby represents and warrants that neither Tenant
nor any officer, director, employee, partner, member or other principal of
Tenant (collectively, “Tenant Parties”) is listed as a Specially Designated
National and Blocked Person (“SDN”) on the list of such persons and entities
issued by the U.S. Treasury Office of Foreign Assets Control (OFAC). In the
event Tenant or any Tenant Party is or becomes listed as an SDN, Tenant shall be
deemed in breach of this Lease and Landlord shall have the right to terminate
this Lease immediately upon written notice to Tenant.

          LANDLORD:   TENANT:
 
        THE IRVINE COMPANY LLC,   SYNOVIS LIFE TECHNOLOGIES, INC., a Delaware
limited liability company   a Minnesota corporation
 
       
By
  /s/ Steven M. Case   By /s/ Richard W. Kramp
 
  Steven M. Case    
 
  Senior Vice President, Leasing,
Office Properties   Printed Name Richard W. Kramp

Title President / CEO
 
       
By
  /s/ Tracy M. Perrelle   By /s/ Brett Reynolds
 
  Tracy M. Perrelle    
 
  Vice President, Operations,
Office Properties   Printed Name Brett Reynolds

Title Vice President of Finance and CFO

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(THE IRVINE COMPANY LOGO) [c55201c5520101.gif]
4 Jenner Street,
Suite 180
(MAP) [c55201c5520102.gif]
EXHIBIT A
1 of 2

 

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(THE IRVINE COMPANY LOGO) [c55201c5520101.gif]
6 Jenner Street,
Suite 150
(MAP) [c55201c5520103.gif]
EXHIBIT A
2 of 2

 

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EXHIBIT B
Operating Expenses
(Net)
     (a) From and after the Commencement Date, Tenant shall pay to Landlord, as
additional rent, Tenant’s Share of all Operating Expenses, as defined in Section
(f) below, incurred by Landlord in the operation of the Building and the
Project. The term “Tenant’s Share” means that portion of any Operating Expenses
determined by multiplying the cost of such item by a fraction, the numerator of
which is the Floor Area and the denominator of which is the total rentable
square footage, as reasonably determined from time to time by Landlord, of
(i) the Building, for expenses reasonably determined by Landlord to benefit or
relate substantially to the Building rather than the entire Project, and
(ii) all or some of the buildings in the Project, for expenses reasonably
determined by Landlord to benefit or relate substantially to all or some of the
buildings in the Project rather than any specific building. Landlord reserves
the right to allocate to the entire Project any Operating Expenses which may
benefit or substantially relate to a particular building within the Project in
order to maintain greater consistency of Operating Expenses among buildings
within the Project. In the event that Landlord reasonably determines that the
Premises or the Building incur a non-proportional benefit from any expense, or
is the non-proportional cause of any such expense, Landlord may reasonably
allocate a greater percentage of such Operating Expense to the Premises or the
Building. In the event that any management and/or overhead fee payable or
imposed by Landlord for the management of Tenant’s Premises is calculated as a
percentage of the rent payable by Tenant and other tenants of Landlord, then the
full amount of such management and/or overhead fee which is attributable to the
rent paid by Tenant shall be additional rent payable by Tenant, in full,
provided, however, that Landlord may elect to include such full amount as part
of Tenant’s Share of Operating Expenses.
     (b) Commencing prior to the start of the first full “Expense Recovery
Period” of the Lease (as defined in Item 7 of the Basic Lease Provisions), and
prior to the start of each full or partial Expense Recovery Period thereafter,
Landlord shall give Tenant a written estimate of the amount of Tenant’s Share of
Operating Expenses for the applicable Expense Recovery Period. Tenant shall pay
the estimated amounts to Landlord in equal monthly installments, in advance,
concurrently with payments of Basic Rent. If Landlord has not furnished its
written estimate for any Expense Recovery Period by the time set forth above,
Tenant shall continue to pay monthly the estimated Tenant’s Share of Operating
Expenses in effect during the prior Expense Recovery Period; provided that when
the new estimate is delivered to Tenant, Tenant shall, at the next monthly
payment date, pay any accrued estimated Tenant’s Share of Operating Expenses
based upon the new estimate. Landlord may from time to time change the Expense
Recovery Period to reflect a calendar year or a new fiscal year of Landlord, as
applicable, in which event Tenant’s Share of Operating Expenses shall be
equitably prorated for any partial year.
     (c) Within 180 days after the end of each Expense Recovery Period, Landlord
shall furnish to Tenant a statement (a “Reconciliation Statement”) showing in
reasonable detail the actual or prorated Tenant’s Share of Operating Expenses
incurred by Landlord during such Expense Recovery Period, and the parties shall
within 30 days thereafter make any payment or allowance necessary to adjust
Tenant’s estimated payments of Tenant’s Share of Operating Expenses, if any, to
the actual Tenant’s Share of Operating Expenses as shown by the Reconciliation
Statement. Any delay or failure by Landlord in delivering any Reconciliation
Statement shall not constitute a waiver of Landlord’s right to require Tenant to
pay Tenant’s Share of Operating Expenses pursuant hereto; provided that Landlord
shall not be entitled to collect any Operating Expenses from Tenant which were
not billed to Tenant within 3 years following the end of the Expense Recovery
Period during which such Operating Expenses were incurred. Any amount due Tenant
shall be credited against installments next coming due under this Exhibit B, and
any deficiency shall be paid by Tenant together with the next installment.
Should Tenant fail to object in writing to Landlord’s determination of Tenant’s
Share of Operating Expenses within 120 days following delivery of Landlord’s
Reconciliation Statement, Landlord’s determination of Tenant’s Share of
Operating Expenses for the applicable Expense Recovery Period shall be
conclusive and binding on Tenant for all purposes and any future claims by
Tenant to the contrary shall be barred.
     (d) Even though this Lease has terminated and the Tenant has vacated the
Premises, when the final determination is made of Tenant’s Share of Operating
Expenses for the Expense Recovery Period in which this Lease terminates, Tenant
shall within 30 days of written notice pay the entire increase over the
estimated Tenant’s Share of Operating Expenses already paid. Conversely, any
overpayment by Tenant shall be rebated by Landlord to Tenant not later than
30 days after such final determination. However, in lieu thereof, Landlord may
deliver a reasonable estimate of the anticipated reconciliation amount to Tenant
prior to the

1

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Expiration Date of the Term, in which event the appropriate party shall fund the
amount by the Expiration Date.
     (e) If, at any time during any Expense Recovery Period, any one or more of
the Operating Expenses are increased to a rate(s) or amount(s) in excess of the
rate(s) or amount(s) used in calculating the estimated Tenant’s Share of
Operating Expenses for the year, then the estimate of Tenant’s Share of
Operating Expenses may be increased by written notice from Landlord for the
month in which such rate(s) or amount(s) becomes effective and for all
succeeding months by an amount equal to the estimated amount of Tenant’s Share
of the increase. Landlord shall give Tenant written notice of the amount or
estimated amount of the increase, the month in which the increase will become
effective, Tenant’s Share thereof and the months for which the payments are due.
Tenant shall pay the increase to Landlord as part of the Tenant’s monthly
payments of estimated expenses as provided in paragraph (b) above, commencing
with the month in which effective.
     (f) The term “Operating Expenses” shall mean and include all Project Costs,
as defined in Section (g) below, and Property Taxes, as defined in Section
(h) below.
     (g) The term “Project Costs” shall mean all expenses of operation,
management, repair, replacement and maintenance of the Building and the Project,
including without limitation all appurtenant Common Areas (as defined in
Section 6.2 of the Lease), and shall include the following charges by way of
illustration but not limitation: water and sewer charges; insurance premiums,
deductibles, or reasonable premium equivalents or deductible equivalents should
Landlord elect to self insure any risk that Landlord is authorized to insure
hereunder; license, permit, and inspection fees; light; power; window washing;
trash pickup; janitorial services to any interior Common Areas; heating,
ventilating and air conditioning; supplies; materials; equipment; tools;
reasonable fees for consulting services; access control/security costs,
inclusive of the reasonable cost of improvements made to enhance access control
systems and procedures; establishment of reasonable reserves for replacements
and/or repairs; costs incurred in connection with compliance with any laws or
changes in laws applicable to the Building or the Project; the cost of any
capital improvements or replacements (other than tenant improvements for
specific tenants) to the extent of the amortized amount thereof over the useful
life of such capital improvements or replacements (or, if such capital
improvements or replacements are anticipated to achieve a cost savings as to the
Operating Expenses, any shorter estimated period of time over which the cost of
the capital improvements or replacements would be recovered from the estimated
cost savings) calculated at a market cost of funds, all as determined by
Landlord, for each year of useful life or shorter recovery period of such
capital expenditure whether such capital expenditure occurs during or prior to
the Term; costs associated with the maintenance of an air conditioning, heating
and ventilation service agreement, and maintenance of an intrabuilding network
cable service agreement for any intrabuilding network cable telecommunications
lines within the Project, and any other maintenance, repair and replacement
costs associated with such lines; capital costs associated with a requirement
related to demands on utilities by Project tenants, including without limitation
the cost to obtain additional phone connections; labor; reasonably allocated
wages and salaries, fringe benefits, and payroll taxes for administrative and
other personnel directly applicable to the Building and/or Project, including
both Landlord’s personnel and outside personnel; any expense incurred pursuant
to Sections 6.1, 6.2, 7.2, 10.2, and Exhibits C and F of the Lease; and
reasonable overhead and/or management fees for the professional operation of the
Project. It is understood and agreed that Project Costs may include competitive
charges for direct services (including, without limitation, management and/or
operations services) provided by any subsidiary, division or affiliate of
Landlord.
     (h) The term “Property Taxes” as used herein shall include any form of
federal, state, county or local government or municipal taxes, fees, charges or
other impositions of every kind (whether general, special, ordinary or
extraordinary) related to the ownership, leasing or operation of the Premises,
Building or Project, including without limitation, the following: (i) all real
estate taxes or personal property taxes levied against the Premises, the
Building or Project, as such property taxes may be reassessed from time to time;
and (ii) other taxes, charges and assessments which are levied with respect to
this Lease or to the Building and/or the Project, and any improvements, fixtures
and equipment and other property of Landlord located in the Building and/or the
Project, (iii) all assessments and fees for public improvements, services, and
facilities and impacts thereon, including without limitation arising out of any
Community Facilities Districts, “Mello Roos” districts, similar assessment
districts, and any traffic impact mitigation assessments or fees; (iv) any tax,
surcharge or assessment which shall be levied in addition to or in lieu of real
estate or personal property taxes, and (v) taxes based on the receipt of rent
(including gross receipts or sales taxes applicable to the receipt of rent), and
(vi) costs and expenses incurred in contesting the amount or validity of any
Property Tax by appropriate proceedings. Notwithstanding the foregoing, general
net income or franchise taxes imposed against Landlord shall be excluded.

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     (i) Notwithstanding anything to the contrary contained in this Exhibit B,
Operating Expenses shall not include Landlord’s costs of any of the following:
(1) leasing commissions and costs of marketing; (2) the cost of any alterations,
additions, changes or decorations that are made in order to prepare rentable
space for a particular tenant, whether new or continued, except any alterations,
additions, changes or decorations to Common Areas; (3) payments of principal and
interest on any mortgages, deeds of trust or other encumbrances upon the
Building; (4) the cost of any items for which Landlord is directly and actually
reimbursed by insurance proceeds, condemnation awards or by a tenant of the
Building (except by way of the reimbursement of Operating Expenses in clauses
similar to this Lease); (5) wages, salaries or other compensation paid to
executive employees of Landlord ranking above the level of property manager or
portfolio engineer; (6) costs associated with the operation of the business of
the entity which constitutes Landlord, which costs are not directly related to
maintaining, operating, managing, repairing or replacing the Common Areas or the
Building (by way of example, the formation of the entity, internal accounting
and legal matters, including but not limited to preparation of tax returns and
financial statements and gathering of data therefor), costs of defending any
lawsuits unrelated to maintaining, operating, managing, repairing or replacing
the Common Areas or the Building, and costs of selling, syndicating, financing,
mortgaging or hypothecating any of Landlord’s interest in the Building; (7) any
expense representing an amount paid for products or services (other than overall
property management) to a person or entity related to or affiliated with
Landlord to the extent such expense is in excess of the fair market value of
such services and products; (8) costs of remediation of Hazardous Materials
which are (i) in or on the Building as of the date of this Lease and which are
classified as Hazardous Materials as of the date of this Lease under laws in
effect as of the date of this Lease, or (ii) which are subsequently brought onto
the Building by Landlord or with the express consent of Landlord and which are
on the date of their introduction on to the Building classified as Hazardous
Materials under laws in effect as of the date of such introduction, excluding in
the case of both (i) and (ii) above, lawful use and disposition of reasonable
quantities of supplies used in the ordinary course of operation and maintenance
of like buildings; (9) franchise, documentary transfer, inheritance or capital
stock taxes or taxes imposed upon or measured by the income or profits of
Landlord; (10) any accrued and unfunded pension for any personnel; (11) any
rent, additional rent, imposition or other charge payable under any ground lease
(including any “sandwich” lease) or sublease to or assumed by Landlord;
(12) accounting fees, other than those incurred in connection with the operation
of the Project and the preparation of statements required pursuant to the
provisions of this Lease and similar provisions of other leases of space in the
Building; (13) costs and expenses (including court costs, attorneys’ fees and
disbursements) related to or arising under or in connection with disputes with
tenants, any lessor under a lease or any holder of a mortgage or disputes which
result in punitive damages being assessed against Landlord, or disputes relating
to claims of personal injury or property damage; (14) the cost of any work or
services performed or other expenses incurred in connection with installing,
operating and maintaining any observatory, broadcasting facility or any athletic
or recreational club; provided, however, that this exclusion shall not apply to
the cost of HVAC, cleaning, cafeteria or other services furnished to an area of
space leased to a tenant (other than Landlord or an affiliate of Landlord) and
used by such tenant for such purposes; (15) costs incurred to correct any breach
by Landlord of its obligations under this Lease; (16) late fees, penalties,
interest charges or similar costs incurred by Landlord; (17) unrecovered
expenses resulting directly from the gross negligence or willful misconduct of
Landlord, its agents, servants or employees; or (18) costs incurred due to
violation by Landlord of any laws, rules, regulations or ordinances applicable
to the Building.

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EXHIBIT C
UTILITIES AND SERVICES
     Tenant shall be responsible for and shall pay promptly, directly to the
appropriate supplier, all charges for electricity metered to the Premises,
telephone, telecommunications service, janitorial service, interior landscape
maintenance and all other utilities, materials and services furnished directly
to Tenant or the Premises or used by Tenant in, on or about the Premises during
the Term, together with any taxes thereon. Landlord represents and warrants that
it has granted the necessary easements to the various utility companies as
necessary for Tenant to use such services from the Premises. Landlord shall make
a reasonable determination of Tenant’s proportionate share of the cost of water,
gas, sewer, refuse pickup and any other utilities and services that are not
separately metered to the Premises and services, and Tenant shall pay such
amount to Landlord, as an item of additional rent, within 10 days after delivery
of Landlord’s statement or invoice therefor. Alternatively, Landlord may elect
to include such cost in the definition of Project Costs in which event Tenant
shall pay Tenant’s proportionate share of such costs in the manner set forth in
Section 4.2. Tenant shall also pay to Landlord as an item of additional rent,
within 10 days after delivery of Landlord’s statement or invoice therefor,
Landlord’s “standard charges” (as hereinafter defined, which shall be in
addition to the electricity charge paid to the utility provider) for “after
hours” usage by Tenant of each HVAC unit servicing the Premises. If the HVAC
unit(s) servicing the Premises also serve other leased premises in the Building,
“after hours” shall mean usage of said unit(s) before 6:00 A.M. or after 6:00
P.M. on Mondays through Fridays, before 9:00 A.M. or after 1:00 P.M. on
Saturdays, and all day on Sundays and nationally-recognized holidays, subject to
reasonable adjustment of said hours by Landlord. If the HVAC unit(s) serve only
the Premises, “after hours” shall mean more than 66 hours of usage during any
week during the Term. “After hours” usage shall be determined based upon the
operation of the applicable HVAC unit during each of the foregoing periods on a
“non-cumulative” basis (that is, without regard to Tenant’s usage or nonusage of
other unit(s) serving the Premises, or of the applicable unit during other
periods of the Term). As used herein, “standard charges” shall mean the
following charges for each hour of “after hours” use (in addition to the
applicable electricity charges paid to the utility provider) of the following
described HVAC units: (i) $1.00 per hour for 1-5 ton HVAC units, (ii) $5.00 per
hour for 6-10 ton HVAC units.
Notwithstanding the foregoing, the parties acknowledge and agree that
electricity and janitorial services to the 6 Jenner Premises are controlled by
Landlord and the cost thereof will be included in Operating Expenses.

1

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EXHIBIT D
TENANT’S INSURANCE
     The following requirements for Tenant’s insurance shall be in effect at the
Building, and Tenant shall also cause any subtenant to comply with the
requirements. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to these requirements. Tenant agrees to obtain and
present evidence to Landlord that it has fully complied with the insurance
requirements.
     1. Tenant shall, at its sole cost and expense, commencing on the date
Tenant is given access to the Premises for any purpose and during the entire
Term, procure, pay for and keep in full force and effect: (i) commercial general
liability insurance with respect to the Premises and the operations of or on
behalf of Tenant in, on or about the Premises, including but not limited to
coverage for personal injury, contractual liability, independent contractors,
broad form property damage, fire legal liability, products liability (if a
product is sold from the Premises), and liquor law liability (if alcoholic
beverages are sold, served or consumed within the Premises), which policy(ies)
shall be written on an “occurrence” basis and for not less than $2,000,000
combined single limit (with a $50,000 minimum limit on fire legal liability) per
occurrence for bodily injury, death, and property damage liability, or the
current limit of liability carried by Tenant, whichever is greater, and subject
to such increases in amounts as Landlord may determine from time to time;
(ii) workers’ compensation insurance coverage as required by law, together with
employers’ liability insurance coverage of at least $1,000,000; (iii) with
respect to improvements, alterations, and the like required or permitted to be
made by Tenant under this Lease, builder’s risk insurance, in an amount equal to
the replacement cost of the work; (iv) insurance against fire, vandalism,
malicious mischief and such other additional perils as may be included in a
standard “special form” policy, insuring all Tenant Installations, trade
fixtures, furnishings, equipment and items of personal property in the Premises,
in an amount equal to not less than 90% of their actual replacement cost (with
replacement cost endorsement), which policy shall also include business
interruption coverage in an amount sufficient to cover 1 year of loss.
Additionally, in the event Landlord consents to Tenant’s use, generation or
storage of Hazardous Materials on, under or about the Premises pursuant to
Section 5.3 of this Lease, Landlord shall have the continuing right to require
Tenant, at Tenant’s sole cost and expense (provided the same is available for
purchase upon commercially reasonable terms), to purchase insurance specified
and approved by Landlord, with coverage not less than Five Million Dollars
($5,000,000.00), insuring (a) any Hazardous Materials shall be removed from the
Premises, (b) the Premises shall be restored to a clean, healthy, safe and
sanitary condition, and (c) any liability of Tenant, Landlord and Landlord’s
officers, directors, shareholders, agents, employees and representatives,
arising from such Hazardous Materials. In no event shall the limits of any
policy be considered as limiting the liability of Tenant under this Lease.
     2. All policies of insurance required to be carried by Tenant pursuant to
this Exhibit D shall be written by responsible insurance companies authorized to
do business in the State of California and with a general policyholder rating of
not less than “A-” and financial rating of not less than “VIII” in the most
current Best’s Insurance Report. The deductible or other retained limit under
any policy carried by Tenant shall be commercially reasonable, and Tenant shall
be responsible for payment of such retained limit with full waiver of
subrogation in favor of Landlord. Any insurance required of Tenant may be
furnished by Tenant under any blanket policy carried by it or under a separate
policy. A certificate of insurance, certifying that the policy has been issued,
provides the coverage required by this Exhibit and contains the required
provisions, together with endorsements acceptable to Landlord evidencing the
waiver of subrogation and additional insured provisions required below, shall be
delivered to Landlord prior to the date Tenant is given the right of possession
of the Premises. Proper evidence of the renewal of any insurance coverage shall
also be delivered to Landlord not less than thirty (30) days prior to the
expiration of the coverage. In the event of a loss covered by any policy under
which Landlord is an additional insured, Landlord shall be entitled to review a
copy of such policy.
     3. Each policy evidencing insurance required to be carried by Tenant
pursuant to this Exhibit shall contain the following provisions and/or clauses
satisfactory to Landlord: (i) with respect to Tenant’s commercial general
liability insurance, a provision that the policy and the coverage provided shall
be primary and that any coverage carried by Landlord shall be excess of and
noncontributory with any policies carried by Tenant, together with a provision
including Landlord and any other parties in interest designated by Landlord as
additional insureds; (ii) except with respect to Tenant’s commercial general
liability insurance, a waiver by the insurer of any right to subrogation against
Landlord, its agents, employees, contractors and representatives which arises or
might arise by reason of any payment under the policy or by reason of any act or
omission of Landlord, its agents, employees, contractors or representatives; and
(iii) a provision that the insurer will not cancel the coverage provided by the
policy without first giving Landlord 30 days prior written notice. Tenant shall
also name Landlord as an additional insured on any excess or umbrella liability
insurance policy carried by Tenant.

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     4. In the event that Tenant fails to procure, maintain and/or pay for, at
the times and for the durations specified in this Exhibit D, any insurance
required by this Exhibit D, or fails to carry insurance required by any
governmental authority, and such failure continues for 30 days beyond notice and
demand for cure, Landlord may at its election procure that insurance and pay the
premiums, in which event Tenant shall repay Landlord all sums paid by Landlord,
together with interest at the maximum rate permitted by law and any related
costs or expenses incurred by Landlord, within 30 days following Landlord’s
written demand to Tenant.
NOTICE TO TENANT: IN ACCORDANCE WITH THE TERMS OF THIS LEASE, TENANT MUST
PROVIDE EVIDENCE OF THE REQUIRED INSURANCE TO LANDLORD’S MANAGEMENT AGENT PRIOR
TO BEING AFFORDED ACCESS TO THE PREMISES.

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EXHIBIT E
RULES AND REGULATIONS
          This Exhibit sets forth the rules and regulations governing Tenant’s
use of the Premises leased to Tenant pursuant to the terms, covenants and
conditions of the Lease to which this Exhibit is attached and therein made part
thereof. In the event of any conflict or inconsistency between this Exhibit and
the Lease, the Lease shall control.
     1. Tenant shall not place anything or allow anything to be placed near the
glass of any window, door, partition or wall, which may appear unsightly from
outside the Premises.
     2. The walls, walkways, sidewalks, entrance passages, elevators,
stairwells, courts and vestibules shall not be obstructed or used for any
purpose other than ingress and egress of pedestrian travel to and from the
Premises, and shall not be used for smoking, loitering or gathering, or to
display, store or place any merchandise, equipment or devices, or for any other
purpose. The walkways, sidewalks, entrance passageways, courts, vestibules and
roof are not for the use of the general public and Landlord shall in all cases
retain the right to control and prevent access thereto by all persons whose
presence in the judgment of the Landlord shall be prejudicial to the safety,
character, reputation and interests of the Building and its tenants, provided
that nothing herein contained shall be construed to prevent such access to
persons with whom Tenant normally deals in the ordinary course of Tenant’s
business unless such persons are engaged in illegal activities. Smoking is
permitted outside the building and within the Project only in areas designated
by Landlord. Neither Tenant nor its employees, agents, contractors, invitees or
licensees shall bring any firearm, whether loaded or unloaded, into the Project
at any time. No tenant or employee or invitee or agent of any tenant shall be
permitted upon the roof of the Building without prior written approval from
Landlord.
     3. No awnings or other projection shall be attached to the outside walls of
the Building. No security bars or gates, curtains, blinds, shades or screens
shall be attached to or hung in, or used in connection with, any window or door
of the Premises without the prior written consent of Landlord. Neither the
interior nor exterior of any windows shall be coated or otherwise sunscreened
without the express written consent of Landlord.
     4. Tenant shall not mark, nail, paint, drill into, or in any way deface any
part of the Premises or the Building except to affix standard pictures or other
wall hangings on the interior walls of the premises so long as they are not
visible from the exterior of the building. 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 in writing.
The expense of repairing any damage resulting from a violation of this rule or
removal of any floor covering shall be borne by Tenant.
     5. The toilet rooms, urinals, wash bowls and other plumbing apparatus shall
not be used for any purpose other than that for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown therein. Any pipes
or tubing used by Tenant to transmit water to an appliance or device in the
Premises must be made of copper or stainless steel, and in no event shall
plastic tubing be used for that purpose. The expense of any breakage, stoppage
or damage resulting from the violation of this rule shall be borne by the tenant
who, or whose employees or invitees, caused it.
     6. Landlord shall direct electricians as to the manner and location of any
future telephone wiring. No boring or cutting for wires will be allowed without
the prior consent of Landlord. The locations of the telephones, call boxes and
other office equipment affixed to the Premises shall be subject to the prior
written approval of Landlord.
     7. 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. No exterior storage shall be allowed at any time without the prior
written approval of Landlord. The Premises shall not be used for cooking or
washing clothes without the prior written consent of Landlord, or for lodging or
sleeping or for any immoral or illegal purposes.
     8. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of this or neighboring buildings
or premises or those having business with them, whether by the use of any
musical instrument, radio, phonograph, noise, or otherwise. Tenant shall not
use, keep or permit to be used, or kept, any foul or obnoxious gas or substance
in the Premises or permit or suffer the Premises to be used or occupied in any
manner offensive or objectionable to Landlord or other occupants of this or
neighboring buildings or premises by reason of any odors, fumes or gases.

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     9. No animals, except for seeing eye dogs, shall be permitted at any time
within the Premises.
     10. Tenant shall not use the name of the Building or the Project in
connection with or in promoting or advertising the business of Tenant, except as
Tenant’s address, without the written consent of Landlord. Landlord shall have
the right to prohibit any advertising by any Tenant which, in Landlord’s
reasonable opinion, tends to impair the reputation of the Project or its
desirability for its intended uses, and upon written notice from Landlord any
Tenant shall refrain from or discontinue such advertising.
     11. Canvassing, soliciting, peddling, parading, picketing, demonstrating or
otherwise engaging in any conduct that unreasonably impairs the value or use of
the Premises or the Project are prohibited and each Tenant shall cooperate to
prevent the same. Landlord shall have full and absolute authority to regulate or
prohibit the entrance to the Premises of any vendor, supplier, purveyor,
petitioner, proselytizer or other similar person if, in the good faith judgment
of Landlord, such person will be involved in general solicitation activities, or
the proselytizing, petitioning, or disturbance of other tenants or their
customers or invitees, or engaged or likely to engage in conduct which may in
Landlord’s opinion distract from the use of the Premises for its intended
purpose. Notwithstanding the foregoing, Landlord reserves the absolute right and
discretion to limit or prevent access to the Buildings by any food or beverage
vendor, whether or not invited by Tenant, and Landlord may condition such access
upon the vendor’s execution of an entry permit agreement which may contain
provisions for insurance coverage and/or the payment of a fee to Landlord.
     12. No equipment of any type shall be placed on the Premises which in
Landlord’s opinion exceeds the load limits of the floor or otherwise threatens
the soundness of the structure or improvements of the Building.
     13. Regular building hours of operation are from 6:00 AM to 6:00 PM Monday
through Friday and 9:00 AM to 1:00 PM on Saturday. No air conditioning unit or
other similar apparatus shall be installed or used by any Tenant without the
prior written consent of Landlord.
     14. The entire Premises, including vestibules, entrances, parking areas,
doors, fixtures, windows and plate glass, shall at all times be maintained in a
safe, neat and clean condition by Tenant. All trash, refuse and waste materials
shall be regularly removed from the Premises by Tenant and placed in the
containers at the locations designated by Landlord for refuse collection. All
cardboard boxes must be “broken down” prior to being placed in the trash
container. All styrofoam chips must be bagged or otherwise contained prior to
placement in the trash container, so as not to constitute a nuisance. Pallets
must be immediately disposed of by tenant and may not be disposed of in the
Landlord provided trash container or enclosures. Pallets may be neatly stacked
in an exterior location on a temporary basis (no longer than 5 days) so long as
Landlord has provided prior written approval. The burning of trash, refuse or
waste materials is prohibited.
     15. Tenant shall use at Tenant’s cost such pest extermination contractor as
Landlord may direct and at such intervals as Landlord may require.
     16. All keys for the Premises shall be provided to Tenant by Landlord and
Tenant shall return to Landlord any of such keys so provided upon the
termination of the Lease. Tenant shall not change locks or install other locks
on doors of the Premises, without the prior written consent of Landlord. In the
event of loss of any keys furnished by Landlord for Tenant, Tenant shall pay to
Landlord the costs thereof. Upon the termination of its tenancy, Tenant shall
deliver to Landlord all the keys to lobby(s), suite(s) and telephone &
electrical room(s) which have been furnished to Tenant or which Tenant shall
have had made.
     17. No person shall enter or remain within the Project while intoxicated or
under the influence of liquor or drugs. Landlord shall have the right to exclude
or expel from the Project any person who, in the absolute discretion of
Landlord, is under the influence of liquor or drugs.
     18. The moving of large or heavy objects shall occur only between those
hours as may be designated by, and only upon previous written notice to,
Landlord, and the persons employed to move those objects in or out of the
Building must be reasonably acceptable to Landlord. Without limiting the
generality of the foregoing, no freight, furniture or bulky matter of any
description shall be received into or moved out of the lobby of the Building or
carried in the elevator.
     19. Tenant shall not install equipment, such as but not limited to
electronic tabulating or computer equipment, requiring electrical or air
conditioning service in excess of that to be provided by Landlord under the
Lease without prior written consent of Landlord.

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     20. Landlord may from time to time grant other tenants of the Project
individual and temporary variances from these Rules, provided that any variance
does not have a material adverse effect on the use and enjoyment of the Premises
by Tenant.
     21. Landlord reserves the right to amend or supplement the foregoing Rules
and Regulations and to adopt and promulgate additional rules and regulations
applicable to the Premises. Notice of such rules and regulations and amendments
and supplements thereto, if any, shall be given to the Tenant.

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EXHIBIT F
PARKING
     Tenant shall be entitled to the number of vehicle parking spaces set forth
in Item 11 of the Basic Lease Provisions, which spaces shall be unreserved and
unassigned, on those portions of the Common Areas designated by Landlord for
parking, at no additional charge to Tenant. Tenant shall not use more parking
spaces than such number. All parking spaces shall be used only for parking of
vehicles no larger than full size passenger automobiles, sport utility vehicles
or pickup trucks. Tenant shall not permit or allow any vehicles that belong to
or are controlled by Tenant or Tenant’s employees, suppliers, shippers,
customers or invitees to be loaded, unloaded or parked in areas other than those
designated by Landlord for such activities. If Tenant permits or allows any of
the prohibited activities described above, then Landlord shall have the right,
without notice, in addition to such other rights and remedies that Landlord may
have, to remove or tow away the vehicle involved and charge the costs to Tenant.
Parking within the Common Areas shall be limited to striped parking stalls, and
no parking shall be permitted in any driveways, access ways or in any area which
would prohibit or impede the free flow of traffic within the Common Areas. There
shall be no parking of any vehicles for longer than a forty-eight (48) hour
period unless otherwise authorized by Landlord, and vehicles which have been
abandoned or parked in violation of the terms hereof may be towed away at the
owner’s expense. Nothing contained in this Lease shall be deemed to create
liability upon Landlord for any damage to motor vehicles of visitors or
employees, for any loss of property from within those motor vehicles, or for any
injury to Tenant, its visitors or employees, unless ultimately determined to be
caused by the sole active negligence or willful misconduct of Landlord. Landlord
shall have the right to establish, and from time to time amend, and to enforce
against all users all reasonable rules and regulations (including the
designation of areas for employee parking) that Landlord may deem necessary and
advisable for the proper and efficient operation and maintenance of parking
within the Common Areas. Landlord shall have the right to construct, maintain
and operate lighting facilities within the parking areas; to change the area,
level, location and arrangement of the parking areas and improvements therein;
to restrict parking by tenants, their officers, agents and employees to employee
parking areas; to enforce parking charges (by operation of meters or otherwise);
and to do and perform such other acts in and to the parking areas and
improvements therein as, in the use of good business judgment, Landlord shall
determine to be advisable. Any person using the parking area shall observe all
directional signs and arrows and any posted speed limits. In no event shall
Tenant interfere with the use and enjoyment of the parking area by other tenants
of the Project or their employees or invitees. Parking areas shall be used only
for parking vehicles. Washing, waxing, cleaning or servicing of vehicles, or the
storage of vehicles for longer than 48-hours, is prohibited unless otherwise
authorized by Landlord. Tenant shall be liable for any damage to the parking
areas caused by Tenant or Tenant’s employees, suppliers, shippers, customers or
invitees, including without limitation damage from excess oil leakage. Tenant
shall have no right to install any fixtures, equipment or personal property in
the parking areas.

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EXHIBIT G
ADDITIONAL PROVISIONS
The following additional provisions shall be binding on Landlord and Tenant:
     1. CONTINGENCY. Tenant understands and agrees that the effectiveness of
this Lease is contingent upon the mutual execution of a lease surrender and
termination agreement for the Premises between Landlord and Pegasus Biologics,
the current tenant in possession of the Premises. In the event this contingency
is not satisfied by August 31, 2009, Tenant may, at its option by written notice
to Landlord, terminate this Lease at any time thereafter but prior to the date
the contingency is actually satisfied.
     2. LANDLORD’S RESPONSIBILITIES. Landlord shall correct, repair and/or
replace any non-compliance of the Building and/or the Common Areas with all
building permits and codes in effect and applicable as of the execution of this
Lease, including without limitation, the provisions of Title III of the
Americans With Disabilities Act (“ADA”). Said costs of compliance shall be
Landlord’s sole cost and expense and shall not be part of Project Costs.
Landlord shall correct, repair or replace any non-compliance of the Building and
the Common Areas with any revisions or amendments to applicable building codes,
including the ADA, becoming effective after the execution of this Lease,
provided that the amortized cost of such repairs or replacements (amortized over
the useful life thereof) shall be included as Project Costs payable by Tenant.
All other ADA compliance issues which pertain to the Premises, including without
limitation, in connection with Tenant’s construction of any Alterations or other
improvements in the Premises and the operation of Tenant’s business and
employment practices in the Premises, shall be the responsibility of Tenant at
its sole cost and expense. The repairs, corrections or replacements required of
Landlord or of Tenant under the foregoing provisions of this Section 2 shall be
made promptly following notice of non-compliance from any applicable
governmental agency.

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EXHIBIT H
LANDLORD’S DISCLOSURES
SPECTRUM
     The capitalized terms used and not otherwise defined in this Exhibit shall
have the same definitions as set forth in the Lease. The provisions of this
Exhibit shall supersede any inconsistent or conflicting provisions of the Lease.
     1. Landlord has been informed that the El Toro Marine Corps Air Station
(MCAS) has been listed as a Federal Superfund site as a result of chemical
releases occurring over many years of occupancy. Various chemicals including jet
fuel, motor oil and solvents have been discharged in several areas throughout
the MCAS site. A regional study conducted by the Orange County Water District
has estimated that groundwaters beneath more than 2,900 acres have been impacted
by Trichloroethlene (TCE), an industrial solvent. There is a potential that this
substance may have migrated into the ground water underlying the Premises. The
U.S. Environmental Protection Agency, the Santa Ana Region Quality Control
Board, and the Orange County Health Care Agency are overseeing the
investigation/cleanup of this contamination. To the Landlord’s current actual
knowledge, the ground water in this area is used for irrigation purposes only,
and there is no practical impediment to the use or occupancy of the Premises due
to the El Toro discharges.

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EXHIBIT J
THE IRVINE COMPANY – INVESTMENT PROPERTIES GROUP
HAZARDOUS MATERIAL SURVEY FORM
     The purpose of this form is to obtain information regarding the use of
hazardous substances on Investment Properties Group (“IPG”) property.
Prospective tenants and contractors should answer the questions in light of
their proposed activities on the premises. Existing tenants and contractors
should answer the questions as they relate to ongoing activities on the premises
and should update any information previously submitted.
     If additional space is needed to answer the questions, you may attach
separate sheets of paper to this form. When completed, the form should be sent
to the following address:
THE IRVINE COMPANY MANAGEMENT OFFICE
111 Innovation Drive
Irvine, CA 92617
     Your cooperation in this matter is appreciated. If you have any questions,
please call your property manager at (949) 720-4400 for assistance.

         
1.
GENERAL INFORMATION.    
 
     
 
Name of Responding Company:   Synovis Life Technologies, Inc.
 
Check all that apply:   Tenant        þ                             Contractor o
 
    Prospective o                             Existing    o
 
        Mailing Address: 6 Jenner Street, Suite 150, Irvine, CA 92618   Contact
person & Title: Keith Myers   Telephone Number: 949-502-3240 ext 226
 
        Current TIC Tenant(s):  
 
Address of Lease Premises:      
 
Length of Lease or Contract Term:      
 
Prospective TIC Tenant(s):      
 
Address of Leased Premises: 6 Jenner, Suite 150, and 4 Jenner, Suite 180,
Irvine, CA  
 
Address of Current Operations:    

    Describe the proposed operations to take place on the property, including
principal products manufactured or services to be conducted. Existing tenants
and contractors should describe any proposed changes to ongoing operations.    
  The design, development, manufacture and distribution of medical devices.   2.
  HAZARDOUS MATERIALS. For the purposes of this Survey Form, the term “hazardous
material” means any raw material, product or agent considered hazardous under
any state or federal law. The term does not include wastes which are intended to
be discarded.

  2.1   Will any hazardous materials be used or stored on site?

Chemical Products                                     Yes þ No o
Biological Hazards/ Infectious Wastes      Yes o No þ
Radioactive Materials                                Yes o No þ
Petroleum Products                                    Yes o No þ

  2.2   List any hazardous materials to be used or stored, the quantities that
will be on-site at any given time, and the location and method of storage (e.g.,
bottles in storage closet on the premises).

              Location and Method     Hazardous Materials   of Storage  
Quantity
Isopropanol
  4 Jenner/Flammable Cabinet   <5 Gals
Hydrochloric Acid
  4 Jenner/Corrosive Cabinet   2 Gals
Potassium Chloride
  4 Jenner/Corrosive Cabinet   2 Gals

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  2.3   Is any underground storage of hazardous materials proposed or currently
conducted on the premises? Yes o No þ

      If yes, describe the materials to be stored, and the size and construction
of the tank. Attach copies of any permits obtained for the underground storage
of such substances.        
 
       
 
       
 

3.   HAZARDOUS WASTE. For the purposes of this Survey Form, the term “hazardous
waste” means any waste (including biological, infectious or radioactive waste)
considered hazardous under any state or federal law, and which is intended to be
discarded.

  3.1   List any hazardous waste generated or to be generated on the premises,
and indicate the quantity generated on a monthly basis.

              Location and Method     Hazardous Materials   of Storage  
Quantity                                                                        
       

  3.2   Describe the method(s) of disposal (including recycling) for each waste.
Indicate where and how often disposal will take place.

              Location and Method     Hazardous Materials   of Storage  
Disposal Method                                                                
               

  3.3   Is any treatment or processing of hazardous, infectious or radioactive
wastes currently conducted or proposed to be conducted on the premise? Yes o No
þ         If yes, please describe any existing or proposed treatment methods.  
     
 
       
 
       
 

  3.4   Attach copies of any hazardous waste permits or licenses issued to your
company with respect to its operations on the premises.

4.   SPILLS

  4.1   During the past year, have any spills or releases of hazardous materials
occurred on the premises? Yes o No þ              If so, please describe the
spill and attach the results of any testing conducted to determine the extent of
such spills.        
 
       
 
       
 
    4.2   Were any agencies notified in connection with such spills? Yes o No þ
             If so, attach copies of any spill reports or other correspondence
with regulatory agencies.

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  4.3   Were any clean-up actions undertaken in connection with the spills? Yes
o No þ              If so, briefly describe the actions taken. Attach copies of
any clearance letters obtained from any regulatory agencies involved and the
results of any final soil or groundwater sampling done upon completion of the
clean-up work.        
 
       
 
       
 

5.   WASTEWATER TREATMENT/DISCHARGE

  5.1   Do you discharge industrial wastewater to:         o storm drain?
         þ sewer?         o surface water?       o no industrial discharge    
5.2   Is your industrial wastewater treated before discharge? Yes o No þ        
     If yes, describe the type of treatment conducted.        
 
       
 
       
 
    5.3   Attach copies of any wastewater discharge permits issued to your
company with respect to its operations on the premises.

6.   AIR DISCHARGES.

  6.1   Do you have any air filtration systems or stacks that discharge into the
air? Yes o No þ     6.2   Do you operate any equipment that requires air
emissions permits? Yes o No þ     6.3   Attach copies of any air discharge
permits pertaining to these operations.

7.   HAZARDOUS MATERIALS DISCLOSURES.

  7.1   Does your company handle an aggregate of at least 500 pounds, 55 gallons
or 200 cubic feet of hazardous material at any given time? Yes o No þ     7.2  
Has your company prepared a Hazardous Materials Disclosure – Chemical Inventory
and Business Emergency Plan or similar disclosure document pursuant to state or
county requirements? Yes o No þ              If so, attach a copy.     7.3   Are
any of the chemicals used in your operations regulated under Proposition 65? NO
             If so, describe the procedures followed to comply with these
requirements.        
 
       
 
       
 
    7.4   Is your company subject to OSHA Hazard Communication Standard
Requirements? Yes o No þ              If so, describe the procedures followed to
comply with these requirements.        
 
       
 
       
 

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8.   ANIMAL TESTING.

  8.1   Does your company bring or intend to bring live animals onto the
premises for research or development purposes? Yes o No þ              If so,
describe the activity.        
 
       
 
       
 
    8.2   Does your company bring or intend to bring animal body parts or bodily
fluids onto the premises for research or development purposes? Yes þ No o      
       If so, describe the activity.         Food grade meat by-products are
used in the manufacture of medical devices and collagen products.

9.   ENFORCEMENT ACTIONS, COMPLAINTS.

  9.1   Has your company ever been subject to any agency enforcement actions,
administrative orders, lawsuits, or consent orders/decrees regarding
environmental compliance or health and safety? Yes o No þ              If so,
describe the actions and any continuing obligations imposed as a result of these
actions.        
 
       
 
       
 
    9.2   Has your company ever received any request for information, notice of
violation or demand letter, complaint, or inquiry regarding environmental
compliance or health and safety? Yes o No þ     9.3   Has an environmental audit
ever been conducted which concerned operations or activities on premises
occupied by you? Yes o No þ     9.4   If you answered “yes” to any questions in
this section, describe the environmental action or complaint and any continuing
compliance obligation imposed as a result of the same.        
 
       
 
       
 
       
 
       
 

     
 
  SYNOVIS LIFE TECHNOLOGIES, INC.
 
  A Minnesota corporation
 
   
 
  By: /s/ Richard W. Kramp
 
  Name: Richard W. Kramp
 
  Title: President / CEO
 
  Date: July 17, 2009

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EXHIBIT X
WORK LETTER
TENANT IMPROVEMENTS
     The tenant improvements work by Landlord shall consist of filling in the
cased opening between Suite 100 and Suite 150 in the 6 Jenner Premises (the
“Tenant Improvements”).

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(THE IRVINE COMPANY LOGO) [c55201c5520101.gif]
Jenner Business Park
(MAP) [c55201c5520104.gif]
EXHIBIT Y

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