EXHIBIT 10.25

BASIC LEASE INFORMATION

INDUSTRIAL NET

 

LEASE DATE:

(same as date in first paragraph of Lease)

   December 14, 2004

TENANT:

   KERBEROS PROXIMAL SOLUTIONS, INC., a Delaware corporation

TENANT’S NOTICE ADDRESS:

   At the Premises.

TENANT’S BILLING ADDRESS:

   At the Premises.

LANDLORD:

   EOP-INDUSTRIAL PORTFOLIO, L.L.C., a Delaware limited liability company

LANDLORD’S NOTICE ADDRESS:

  

EOP-INDUSTRIAL PORTFOLIO, L.L.C.

1740 Technology Drive

Suite 150

San Jose, California 95110

Attn: Property Manager—Cupertino Business Center

 

with a copy to:

 

Equity Office

One Market, Spear Tower, Suite 600

San Francisco, California 94105

Attn: Regional Counsel - San Jose Region

Project Description:

   That certain industrial project commonly known as “Cupertino Business Center”
which currently includes the buildings located at 10590 and 10600 North Tantau
Avenue, the parcel(s) of land on which such buildings are located, those
exterior areas of the Project which are not located within the Building or any
other building and which are provided and maintained for the use and benefit of
Landlord and tenants of the Building and/or the Project generally and the
employees, invitees and licensees of Landlord and such tenants (including,
without limitation, any artificial lakes, walkways, plaza, roads, driveways,
sidewalks, surface parking and landscapes), and, at Landlord’s option, the
parking facilities serving the Project, all of which are located in Cupertino,
California. Notwithstanding the foregoing, Landlord and Tenant agree that the
definition of the Project may change from time to time if Landlord elects to add
or remove buildings or parcels of land to or from the Project. In such event,
the definition of “Project” shall be deemed to be amended without any further
action of the parties herein to reflect such addition or deletion of the
building(s) or parcels of land to or from the Project.

 

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Building Description:

   That certain single story building located at 10600 North Tantau Avenue,
Cupertino, California.

Premises:

   Approximately 23,546 rentable square feet located at 10600 North Tantau
Avenue, Cupertino, California.

Permitted Use:

   General business office, sales, light manufacturing of medical devices, lab
and clean room, warehousing of medical devices

Parking Density:

   4 spaces per 1,000 rentable square feet of the Premises.

Scheduled Term Commencement Date:

   December 10, 2004

Scheduled Length of Term:

   37 Months and 21 Days

Scheduled Term Expiration Date:

   January 31, 2008

Rent:

  

Base Rent:

   See Paragraph 39.A. hereof

Estimated First Year Operating Expenses:

   $5,886.50 per month

Security Deposit:

   $31,787.10

Tenant’s Proportionate Share:

  

Of Building:

   100%

Of Project:

   36.3776%

Landlord’s Broker:

   Colliers International

Tenant’s Broker:

   PCG Investments

Guarantor:

   There are no guarantors as of the date of this Lease.

The foregoing Basic Lease Information is incorporated into and made a part of
this Lease. Each reference in this Lease to any of the Basic Lease Information
shall mean the respective information above and shall be construed to
incorporate all of the terms provided under the particular Lease paragraph
pertaining to such information. In the event of any conflict between the Basic
Lease Information and the Lease, the latter shall control.

 

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TABLE OF CONTENTS

 

          Page   

BASIC LEASE INFORMATION

   1   

TABLE OF CONTENTS

   i 1.   

PREMISES

   1 2.   

POSSESSION AND LEASE COMMENCEMENT

   1 3.   

TERM

   2 4.   

USE

   2 5.   

RULES AND REGULATIONS

   4 6.   

RENT

   4 7.   

OPERATING EXPENSES

   4 8.   

INSURANCE AND INDEMNIFICATION

   9 9.   

WAIVER OF SUBROGATION

   11 10.   

LANDLORD’S REPAIRS AND MAINTENANCE

   12 11.   

TENANT’S REPAIRS AND MAINTENANCE

   12 12.   

ALTERATIONS

   13 13.   

SIGNS

   14 14.   

INSPECTION/POSTING NOTICES

   14 15.   

SERVICES AND UTILITIES

   15 16.   

SUBORDINATION

   16 17.   

FINANCIAL STATEMENTS

   17 18.   

ESTOPPEL CERTIFICATE

   17 19.   

SECURITY DEPOSIT

   18 20.   

LIMITATION OF TENANT’S REMEDIES

   18 21.   

ASSIGNMENT AND SUBLETTING

   18 22.   

AUTHORITY

   21 23.   

CONDEMNATION

   21 24.   

CASUALTY DAMAGE

   22 25.   

HOLDING OVER

   24 26.   

DEFAULT

   24 27.   

LIENS

   27

 

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28.   

SUBSTITUTION [INTENTIONALLY OMITTED)

   27 29.   

TRANSFERS BY LANDLORD

   27 30.   

RIGHT OF LANDLORD TO PERFORM TENANT’S COVENANTS

   28 31.   

WAIVER

   28 32.   

NOTICES

   28 33.   

ATTORNEYS’ FEES

   29 34.   

SUCCESSORS AND ASSIGNS

   29 35.   

FORCE MAJEURE

   29 36.   

SURRENDER OF PREMISES

   29 37.   

HAZARDOUS MATERIALS

   30 38.   

MISCELLANEOUS

   32 39.   

ADDITIONAL PROVISIONS

   34 40.   

JURY TRIAL WAIVER

   36 SIGNATURES    37

 

Exhibits:   

Exhibit A

   Rules and Regulations   

Exhibit B

   Outline and Location of Premises   

Exhibit C

   Work Letter, if any   

Exhibit D

   Hazardous Materials Questionnaire   

Exhibit E

   Asbestos Notification   

Exhibit F

   Depiction of Storage Area

 

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LEASE

THIS LEASE is made as of the      day of             , 2003, by and between
EOP-INDUSTRIAL PORTFOLIO, L.L.C., a Delaware limited liability company
(hereinafter called “Landlord”), and KERBEROS PROXIMAL SOLUTIONS, INC., a
Delaware corporation (hereinafter called ‘Tenant”).

1. PREMISES

Landlord leases to Tenant and Tenant leases from Landlord, upon the terms and
conditions hereinafter set forth, those premises (the “Premises”) outlined on
Exhibit B and described in the Basic Lease Information. The Premises shall be
all or part of a building (the “Building”) and of a project (the “Project”),
which may consist of more than one building and additional facilities, as
described in the Basic Lease Information. Landlord and Tenant acknowledge that
physical changes may occur from time to time in the Premises, Building or
Project, and that the number of buildings and additional facilities which
constitute the Project may change from time to time, which may result in an
adjustment in Tenant’s Proportionate Share, as defined in the Basic Lease
Information, as provided in Paragraph 7.A.

2. POSSESSION AND LEASE COMMENCEMENT

A. Existing Improvements. If this Lease pertains to a Premises in which the
interior improvements have already been constructed (“Existing Improvements”),
the provisions of this Paragraph 2.A. shall apply and the term commencement date
(“Term Commencement Date”) shall be the earlier of the date on which: (1) Tenant
takes possession of some or all of the Premises; or (2) Landlord notifies Tenant
that Tenant may occupy the Premises. If for any reason Landlord cannot deliver
possession of the Premises to Tenant on the Scheduled Term Commencement Date,
Landlord shall not be subject to any liability therefor, nor shall Landlord be
in default hereunder nor shall such failure affect the validity of this Lease,
and Tenant agrees to accept possession of the Premises at such time as Landlord
is able to deliver the same, which date shall then be deemed the Term
Commencement Date. Notwithstanding anything to the contrary set forth herein, if
the Term Commencement Date has not occurred on or before December 31, 2004,
Tenant as its sole remedy, may terminate this Lease by giving Landlord written
notice of termination on or before the earlier to occur of (i) January 5, 2005
and (ii) the Term Commencement Date. Tenant shall not be liable for any Rent
(defined below) for any period prior to the Term Commencement Date. Tenant
acknowledges that Tenant has inspected and accepts the Premises in their present
condition, subject to Paragraph 2.B. below, broom clean, “as is,” and as
suitable for, the Permitted Use (as defined below), and for Tenant’s intended
operations in the Premises. Tenant agrees that the Premises and other
improvements are in good and satisfactory condition as of when possession was
taken. Tenant further acknowledges that no representations as to the condition
or repair of the Premises nor promises to alter, remodel or improve the Premises
have been made by Landlord or any agents of Landlord unless such are expressly
set forth in this Lease. Upon Landlord’s request, Tenant shall promptly execute
and return to Landlord a “Start-Up Letter” in which Tenant shall agree, among
other things, to acceptance of the Premises and to the determination of the Term
Commencement Date, in accordance with the terms of this Lease, but Tenant’s
failure or refusal to do so shall not negate Tenant’s acceptance of the Premises
or affect determination of the Term Commencement Date.

B. Base Building Systems in Good Working Order. Notwithstanding anything to the
contrary set forth herein, except to the extent caused by Tenant or any of the
Tenant’s Parties (defined in Paragraph 4.A.), the base Building electrical,
heating, ventilation and air conditioning, mechanical and plumbing systems shall

 

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be in good and working order as of the date Landlord delivers possession of the
Premises to Tenant. Following the Term Commencement Date, Tenant may inspect the
same and if the foregoing are not in good and working order as provided above,
Landlord shall be responsible for repairing or restoring same at its cost and
expense promptly, provided that Tenant has delivered written notice thereof to
Landlord not later than thirty (30) days following the Term Commencement Date.
Notwithstanding the foregoing, Tenant, and not Landlord, shall be responsible,
at its cost, for any repairs or the correction of any defects that arise out of
or in connection with the specific nature of Tenant’s business (other than for
general office use), the acts or omissions of Tenant, its agents, employees or
contractors, Tenant’s arrangement of any furniture, equipment or other property
in the Premises, any repairs, alterations, additions or improvements performed
by or on behalf of Tenant (except Alterations or improvements customarily
required for general office use), and any design or configuration of the
Premises created by or for Tenant which specifically results in the need for
such repair to the correction of such defect in the mechanical or electrical
systems in the Premises. Tenant further acknowledges that no representations as
to the condition or repair of the Premises nor promises to alter, remodel or
improve the Premises have been made by Landlord or any agents of Landlord unless
such are expressly set forth in this Lease.

3. TERM

The term of this Lease (the “Term”) shall commence on the Term Commencement Date
and continue in full force and effect for the number of months specified as the
Length of Term in the Basic Lease Information or until this Lease is terminated
as otherwise provided herein. If the Term Commencement Date is a date other than
the first day of the calendar month, the Term shall be the number of months of
the Length of Term in addition to the remainder of the calendar month following
the Term Commencement Date.

4. USE

A. General. Tenant shall use the Premises for the permitted use specified in the
Basic Lease Information (“Permitted Use”) and for no other use or purpose.
Tenant shall control Tenant’s trustees, directors, shareholders, partners,
lenders, members, managers, affiliates, employees, agents, customers, visitors,
invitees, licensees, contractors, assignees and subtenants (individually, a
“Tenant Party” and collectively, “Tenant’s Parties”) in such a manner that
Tenant and Tenant’s Parties cumulatively do not exceed the parking density
specified in the Basic Lease Information (the “Parking Density”) at any time. So
long as Tenant is occupying the Premises, Tenant and Tenant’s Parties shall have
the nonexclusive right to use, in common with other parties occupying the
Building or Project, the parking areas, driveways and other common areas of the
Building and Project, subject to the terms of this Lease and such rules and
regulations as Landlord may from time to time prescribe. Landlord reserves the
right, without notice or liability to Tenant, and without the same constituting
an actual or constructive eviction, to alter or modify the common areas from
time to time, including the location and configuration thereof, and the
amenities and facilities which Landlord may determine to provide from time to
time, on a commercially reasonable basis.

B. Limitations. Tenant shall not permit any odors, smoke, dust, gas, substances,
noise or vibrations to emanate from the Premises or from any portion of the
common areas as a result of Tenant’s or any Tenant’s Party’s use thereof, nor
take any action which would constitute a nuisance or would disturb, obstruct or
endanger any other tenants or occupants of the Building or Project or elsewhere,
or interfere with their use of their respective premises or common areas.
Storage outside the Premises of materials, vehicles or any other items is
prohibited, except as set forth in Paragraph 39.C. below. Tenant shall not use
or allow the Premises to be used for any immoral, improper or unlawful purpose,
nor shall Tenant cause or maintain or permit any nuisance in, on or about the
Premises. Tenant shall not commit or suffer the commission of any waste in, on

 

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or about the Premises. Tenant shall not allow any sale by auction upon the
Premises, or place any loads upon the floors, walls or ceilings which could
endanger the structure, or place any harmful substances in the drainage system
of the Building or Project. No waste, materials or refuse shall be dumped upon
or permitted to remain outside the Premises except in trash containers placed
inside exterior enclosures designated for that purpose by Landlord. Landlord
shall not be responsible to Tenant for the non-compliance by any other tenant or
occupant of the Building or Project with any of the above-referenced rules or
any other terms or provisions of such tenant’s or occupant’s lease or other
contract.

C. Tenant Compliance with Regulations. By entering the Premises, Tenant accepts
the Premises in the condition existing as of the date of such entry, subject to
Paragraph 2.B. above. Tenant shall at its sole cost and expense strictly comply
with all existing or future applicable municipal, state and federal and other
governmental statutes, rules, requirements, regulations, laws and ordinances,
including zoning ordinances and regulations, and covenants, easements and
restrictions of record (collectively, “Regulations”), regarding the operation of
Tenant’s business and the use, condition, configuration and occupancy of the
Premises, including without limitation, Regulations relating to the use,
storage, generation or disposal of Hazardous Materials (hereinafter defined).
Tenant shall at its sole cost and expense obtain any and all licenses or permits
necessary for Tenant’s use of the Premises. Tenant shall at its sole cost and
expense promptly comply with the requirements of any board of fire underwriters
or other similar body now or hereafter constituted. In addition, Tenant shall,
at its sole cost and expense, promptly comply with all Regulations that relate
to the structural portions of the Building, common areas, and the base Building
electrical, heating, ventilation and air conditioning, mechanical and plumbing
systems, but only to the extent triggered by Tenant’s use of the Premises, other
than for general office use, or Alterations or improvements in the Premises
(other than Alterations or improvements customarily required for general office
use) performed or requested by Tenant. Tenant shall not do or permit anything to
be done in, on, under or about the Project or bring or keep anything which will
in any way increase the rate of any insurance upon the Premises, Building or
Project or upon any contents therein or cause a cancellation of said insurance
or otherwise affect said insurance in any manner. Tenant shall indemnify, defend
(by counsel reasonably acceptable to Landlord), protect and hold Landlord
harmless from and against any loss, cost, expense, damage, attorneys’ fees or
liability arising out of the failure of Tenant to comply with any Regulation.
Tenant’s obligations pursuant to the foregoing indemnity shall survive the
expiration or earlier termination of this Lease. As of the date hereof, Landlord
has not received written notice from any governmental agencies that the Building
is in violation of Regulations.

D. Landlord Compliance with Regulations. Landlord shall, at Landlord’s expense
(except to the extent properly included in Operating Expenses), cause structural
elements of the Building, common areas, and the base Building electrical,
heating, ventilation and air conditioning, mechanical and plumbing systems and
the common areas to comply with all applicable Regulations to the extent that
(i) such compliance is necessary in order for Tenant to use the Premises for
general office use in a normal and customary manner and for Tenant’s employees
and visitors to have reasonably safe access to and from the Premises, or
(ii) Landlord’s failure to cause such compliance would impose liability upon
Tenant under applicable Regulations; provided, however, that Landlord shall not
be obligated to cause such compliance to the extent that any non-compliance
(i) is caused or triggered by any of the matters that are Tenant’s
responsibility under any provision of this Lease, including, without limitation,
Paragraph 4.C. above or Paragraph 12 below, or (ii) arises under any provision
of the Americans with Disabilities Act other than Title III thereof.
Notwithstanding the foregoing, Landlord shall have the right to contest any
alleged violation in good faith, including, without limitation, the right to
apply for and obtain a waiver or deferment of compliance, the right to assert
any and all defenses allowed by Regulation and the right to appeal any
decisions, judgments or rulings to the fullest extent permitted by Regulation.
Landlord, after the exhaustion of any and all rights to appeal or contest, will
make all repairs, additions, alterations or improvements necessary to comply
with the terms of any final order or judgment.

 

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5. RULES AND REGULATIONS

Tenant shall faithfully observe and comply with the building rules and
regulations attached hereto as Exhibit A and any other commercially reasonable
rules and regulations and any commercially reasonable modifications or additions
thereto which Landlord may from time to time prescribe in writing for the
purpose of maintaining the proper care, cleanliness, safety, traffic flow and
general order of the Premises or the Building or Project. Tenant shall cause
Tenant’s Parties to comply with such rules and regulations. Landlord shall not
be responsible to Tenant for the non-compliance by any other tenant or occupant
of the Building or Project with any of such rules and regulations, any other
tenant’s or occupant’s lease or any Regulations. The rules and regulations shall
be generally applicable, and generally applied in the same manner, to all
tenants of the Project.

6. RENT

A. Base Rent. Tenant shall pay to Landlord and Landlord shall receive, without
notice or demand throughout the Term, Base Rent as specified in the Basic Lease
Information, payable in monthly installments in advance on or before the first
day of each calendar month, in lawful money of the United States, without
deduction or offset whatsoever, which Base Rent and Additional Rent (as defined
below) shall be made payable to the entity, and sent to the address Landlord may
from time to time designate in writing. Rent (as defined below) for the first
full month of the Term shall be paid by Tenant upon Tenant’s execution of this
Lease. If the obligation for payment of Rent commences on a day other than the
first day of a month, then Base Rent shall be prorated and the prorated
installment shall be paid on the first day of the calendar month next succeeding
the Term Commencement Date. The Base Rent payable by Tenant hereunder is subject
to adjustment as provided elsewhere in this Lease, as applicable. As used
herein, the term “Base Rent” shall mean the Base Rent specified in the Basic
Lease Information as it may be so adjusted pursuant to the terms of this Lease.

B. Additional Rent. All monies other than Base Rent required to be paid by
Tenant hereunder, including, but not limited to, Tenant’s Proportionate Share of
Operating Expenses, as specified in Paragraph 7 of this Lease, charges to be
paid by Tenant under Paragraph 15, the interest and late charge described in
Paragraphs 26.D. and E., and any monies spent by Landlord pursuant to
Paragraph 30, shall be considered additional rent (“Additional Rent”). “Rent”
shall mean Base Rent and Additional Rent.

7. OPERATING EXPENSES

A. Operating Expenses. In addition to the Base Rent required to be paid
hereunder, Tenant shall pay as Additional Rent, Tenant’s Proportionate Share of
the Building and/or Project (as applicable), as defined in the Basic Lease
Information, of Operating Expenses (defined below) in the manner set forth
below. Tenant shall pay the applicable Tenant’s Proportionate Share of each such
Operating Expenses. Landlord and Tenant acknowledge that if the number of
buildings which constitute the Project increases or decreases, or if physical
changes are made to the Premises, Building or Project or the configuration of
any thereof, Landlord may at its discretion reasonably adjust Tenant’s
Proportionate Share of the Building or Project to reflect the change. Landlord’s
determination of Tenant’s Proportionate Share of the Building and of the Project
shall be conclusive so long as it is reasonably and consistently applied.
“Operating Expenses” shall mean all expenses and costs of every kind and nature
which Landlord shall pay or become obligated to pay, because of

 

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or in connection with the ownership, management, maintenance, repair,
preservation, replacement and operation of the Building or Project and its
supporting facilities and such additional facilities now and in subsequent years
as may be determined by Landlord to be necessary or desirable to the Building
and/or Project (as determined in a reasonable manner) other than those expenses
and costs which are specifically attributable to Tenant or which are expressly
made the financial responsibility of Landlord or specific tenants of the
Building or Project pursuant to this Lease. Operating Expenses shall include,
but are not limited to, the following:

(1) Taxes. All real property taxes and assessments, possessory interest taxes,
sales taxes, personal property taxes, business or license taxes or fees, gross
receipts taxes, service payments in lieu of such taxes or fees, annual or
periodic license or use fees, excises, transit charges, and other impositions,
general and special, ordinary and extraordinary, unforeseen as well as foreseen,
of any kind (including fees “in-lieu” of any such tax or assessment) which are
now or hereafter assessed, levied, charged, confirmed, or imposed by any public
authority upon the Building or Project, its operations or the Rent (or any
portion or component thereof), or any tax, assessment or fee imposed in
substitution, partially or totally, of any of the above. Operating Expenses
shall also include any taxes, assessments, reassessments, or other fees or
impositions with respect to the development, leasing, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, Building or
Project or any portion thereof, including, without limitation, by or for Tenant,
and all increases therein or reassessments thereof whether the increases or
reassessments result from increased rate and/or valuation (whether upon a
transfer of the Building or Project or any portion thereof or any interest
therein or for any other reason). Operating Expenses shall not include
inheritance, gift, or estate taxes imposed upon or assessed against the interest
of any person in the Project, or taxes computed upon the basis of the net income
of any owners of any interest in the Project or any capital levy, transfer, or
capital stock taxes. If it shall not be lawful for Tenant to reimburse Landlord
for all or any part of such taxes, the monthly rental payable to Landlord under
this Lease shall be revised to net Landlord the same net rental after imposition
of any such taxes by Landlord as would have been payable to Landlord prior to
the payment of any such taxes.

(2) Insurance. All insurance premiums and costs, including, but not limited to,
any deductible amounts, premiums and other costs of insurance incurred by
Landlord, including for the insurance coverage set forth in Paragraph 8.A.
herein.

(3) Common Area Maintenance.

(a) Repairs, replacements, capital improvements and general maintenance of, to
and for the Building and Project and public and common areas and facilities of
and comprising the Building and Project, including, but not limited to,
elevators, mechanical rooms, alarm systems, pest extermination, landscaped
areas, parking and service areas, driveways, sidewalks, truck staging areas,
rail spur areas, fire sprinkler systems, sanitary and storm sewer lines, utility
services, heating/ventilation/air conditioning systems, electrical, mechanical
or other systems, telephone equipment and wiring servicing, plumbing, lighting,
and any other items or areas which affect the operation or appearance of the
Building or Project, which determination shall be at Landlord’s discretion,
except for: those items to the extent paid for by the proceeds of insurance; and
those items attributable solely or jointly to specific tenants of the Building
or Project.

(b) Intentionally Omitted.

 

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(c) Payment under or for any easement, license, permit, operating agreement,
declaration, restrictive covenant or instrument relating to the Building or
Project.

(d) All expenses and rental related to services and costs of supplies, materials
and equipment used in operating, managing and maintaining the Premises, Building
and Project, the equipment therein and the adjacent sidewalks, driveways,
parking and service areas, including, without limitation, expenses related to
service agreements regarding security, fire and other alarm systems, to the
extent not addressed in Paragraph 11 hereof, window cleaning, elevator
maintenance, Building exterior maintenance, landscaping and expenses related to
the administration, management and operation of the Project, including without
limitation salaries, wages and benefits and management office rent; provided,
however, that if any employee performs services in connection with Project and
other buildings or projects, costs associated salaries, wages and benefits for
such employee shall be proportionately included in Operating Expenses based upon
the percentage such employee spends in connection with the operation,
maintenance and management of the Project

(e) The cost of supplying any services and utilities which benefit all or a
portion of the Premises, Building or Project to the extent not addressed in
Paragraph 15 hereof.

(f) Legal expenses and the cost of audits by certified public accountants;
provided, however, that legal expenses chargeable as Operating Expenses shall
not include the cost of negotiating leases, collecting rents, evicting tenants
nor shall it include costs incurred in legal proceedings with or against any
tenant or to enforce the provisions of any lease.

(g) A management and accounting cost recovery fee equal to three percent (3%) of
the applicable annual Base Rent payable to Landlord hereunder (the “Management
Fee”); provided, however, that notwithstanding anything to the contrary set
forth herein, for purposes of computing the Additional Rent payable by Tenant
pursuant to this Paragraph 7.A, Tenant’s Proportionate Share of the Management
Fee shall be equal to one hundred percent (100%) of such Management Fee.

Operating Expenses shall not include any of the following: (1) the cost of
providing tenant improvements or other specific costs incurred for the account
of, separately billed to and paid by specific tenants of the Building or
Project; (2) the initial construction cost of the Building or Project; (3) debt
service on any mortgage or deed of trust recorded with respect to the Project
other than pursuant to Paragraph 7.A.(3)(b) above or principal payments on other
non-operating debts of Landlord; (4) depreciation; (5) costs in connection with
leasing space in the Project, including brokerage commissions, lease
concessions, rental abatements and construction allowances granted to specific
tenants; (6) costs incurred in connection with the sale, financing or
refinancing of the Building or Project; (7) the cost or expense of any services
or benefits provided generally to other tenants of the Project and not provided
or available to Tenant; (8) all items (including repairs) and services for which
Tenant or other tenants pay directly to third parties or for which Tenant or
other tenants reimburse Landlord (other than through Operating Expenses);
(9) ground lease rental; (10) sums (other than management fees, it being agreed
that the management fees included in Operating Expenses are as described in
Paragraph 7.A.3(g) above) paid to subsidiaries or other affiliates of Landlord
for services on or to the Project, Building and/or Premises, but only to the
extent that the costs of such services exceed the competitive cost for such
services rendered by persons or entities of similar skill, competence and
experience; (11) Landlord’s charitable and political contributions; (12) all
costs of purchasing or leasing major sculptures, paintings or other major works
or objects of art (as opposed to decorations purchased or

 

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leased by Landlord for display in the common areas); (13) advertising and
promotional expenditures; (14) all costs associated with the operation of the
business of the entity which constitutes “Landlord” (as distinguished from the
costs of operating, maintaining, repairing and managing the Building or Project)
including but not limited to, Landlord’s or Landlord’s managing agent’s general
corporate overhead and general administrative expenses; (15) reserves not spent
by Landlord by the end of the calendar year for which Operating Expenses are
paid; (16) all bad debt loss, rent loss or reserves for bad debt or rent loss;
(17) any cost or expense related to removal, cleaning, abatement or remediation
of Hazardous Materials in or about the Building, common area or Project,
including without limitation, Hazardous Materials in the ground water or soil,
except to the extent such removal, cleaning, abatement or remediation is related
to the general repair and maintenance of the Building, common area or Project
(for example, disposal of toner, aerosol cans, paint and paint remover), but not
to exceed $1,500.00 per calendar year; (18) costs, fines or penalties incurred
due to violations by Landlord of any Regulation which was in effect (and as
enforced by applicable governmental or judicial authority) as of the Term
Commencement Date, except if the Building, common area or Project becomes out of
compliance due to normal wear and tear, the cost of bringing such portion of the
Building, common area or Project into compliance shall be included in Operating
Expenses unless otherwise excluded pursuant to the terms hereof; (19) costs
incurred by Landlord for the repair of damage to the Building or Project, to the
extent that Landlord is reimbursed for such costs by insurance proceeds,
contractor warranties, guarantees, judgments or other third party sources;
(20) fines, interest and penalties incurred due to the late payment of taxes or
other Operating Expenses; and (21) costs arising from the maintenance and
repairs of the roof and roof membrane. Further, Operating Expenses shall not
include any expenditure (including, without limitation, the rental or purchase
cost of any improvement, part, supply, tool, item of equipment, or repair) that
would be deemed a capital expenditure under generally accepted accounting
principles (“GAAP”), except any such expenditure that: (i) is incurred primarily
to reduce current or future operating expense costs or otherwise improve the
operating efficiency of the Building or Project (provided that such savings are
not primarily for the benefit of any particular tenant other than Tenant)
(“Cost-Saving Expenditure”); or (ii) is required to comply with any Regulations
that are enacted, or first interpreted by applicable governmental or judicial
authority to apply to the Building, common area or Project, after the date of
this Lease (“Code-Required Expenditures”). Any capital expenditure that is
deemed an Operating Expense pursuant to clause (i) of the preceding sentence
(and not pursuant to any other provision hereof) shall be amortized by Landlord
over such period as may be selected by Landlord provided that the annual
amortized portion of such expenditure shall not exceed the actual cost savings
generated by the item for which such expenditure was incurred. Any capital
expenditure that is deemed an Operating Expense pursuant to clause (ii) of the
preceding sentence shall be amortized by Landlord over the actual useful life of
the item for which such expenditure was incurred (as reasonably determined by
Landlord in accordance with GAAP); provided, however, that if such item
generates a cost savings, such expenditure may, at Landlord’s option, be
amortized over such shorter period, if any, as may be selected by Landlord
provided that the annual amortized portion of such expenditure shall not exceed
the actual cost savings realized. The amortized cost of any capital items may,
at Landlord option, include actual or imputed interest at the rate that Landlord
would reasonably be required to pay to finance the cost of the capital
improvement, not to exceed eight percent (8%).

The above enumeration of services and facilities shall not be deemed to impose
an obligation on Landlord to make available or provide such services or
facilities except to the extent if any that Landlord has specifically agreed
elsewhere in this Lease to make the same available or provide the same. Without
limiting the generality of the foregoing, Tenant acknowledges and agrees that it
shall be responsible for providing adequate security for its use of the
Premises, the Building and the Project and that Landlord shall have no
obligation or liability with respect thereto, except to the extent if any that
Landlord has specifically agreed elsewhere in this Lease to provide the same.

 

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B. Payment of Estimated Operating Expenses. “Estimated Operating Expenses” for
any particular year shall mean Landlord’s estimate of the Operating Expenses for
such fiscal year made with respect to such fiscal year as hereinafter provided.
Landlord shall have the right from time to time to revise its fiscal year and
interim accounting periods so long as the periods as so revised are reconciled
with prior periods in a reasonable manner. During the last month of each fiscal
year during the Term, or as soon thereafter as practicable, Landlord shall give
Tenant written notice of the Estimated Operating Expenses for the ensuing fiscal
year. Tenant shall pay Tenant’s Proportionate Share of the Estimated Operating
Expenses with installments of Base Rent for the fiscal year to which the
Estimated Operating Expenses applies in monthly installments on the first day of
each calendar month during such year, in advance. Such payment shall be
construed to be Additional Rent for all purposes hereunder. If at any time
during the course of the fiscal year, Landlord determines that Operating
Expenses are projected to vary from the then Estimated Operating Expenses by
more than five percent (5%), Landlord may, by written notice to Tenant, revise
the Estimated Operating Expenses for the balance of such fiscal year, and
Tenant’s monthly installments for the remainder of such year shall be adjusted
so that by the end of such fiscal year Tenant has paid to Landlord Tenant’s
Proportionate Share of the revised Estimated Operating Expenses for such year,
such revised installment amounts to be Additional Rent for all purposes
hereunder.

C. Computation of Operating Expense Adjustment. “Operating Expense Adjustment”
shall mean the difference between Estimated Operating Expenses and actual
Operating Expenses for any fiscal year determined as hereinafter provided.
Within one hundred twenty (120) days after the end of each fiscal year, or as
soon thereafter as practicable, Landlord shall deliver to Tenant a statement of
actual Operating Expenses for the fiscal year just ended, accompanied by a
computation of Operating Expense Adjustment. If such statement shows that
Tenant’s payment based upon Estimated Operating Expenses is less than Tenant’s
Proportionate Share of Operating Expenses, then Tenant shall pay to Landlord the
difference within twenty (20) days after receipt of such statement, such payment
to constitute Additional Rent for all purposes hereunder. If such statement
shows that Tenant’s payments of Estimated Operating Expenses exceed Tenant’s
Proportionate Share of Operating Expenses, then Landlord shall pay to Tenant the
difference within twenty (20) days after delivery of such statement to Tenant.
If this Lease has been terminated or the Term hereof has expired prior to the
date of such statement, then the Operating Expense Adjustment shall be paid by
the appropriate party within twenty (20) days after the date of delivery of the
statement. Should this Lease commence or terminate at any time other than the
first day of the fiscal year, Tenant’s Proportionate Share of the Operating
Expense Adjustment shall be prorated based on a month of 30 days and the number
of calendar months during such fiscal year that this Lease is in effect.
Notwithstanding anything to the contrary contained in Paragraph 7.A or 7.B,
Landlord’s failure to provide any notices or statements within the time periods
specified in those paragraphs shall in no way excuse Tenant from its obligation
to pay Tenant’s Proportionate Share of Operating Expenses.

D. Net Lease. This shall be a triple net Lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses, except as specifically
provided to the contrary in this Lease. The provisions for payment of Operating
Expenses and the Operating Expense Adjustment are intended to pass on to Tenant
and reimburse Landlord for all costs and expenses of the nature described in
Paragraph 7.A. (except as expressly otherwise excluded by this Lease) incurred
in connection with the ownership, management, maintenance, repair, preservation,
replacement and operation of the Building and/or Project and its supporting
facilities and such additional facilities now and in subsequent years as may be
determined by Landlord to be necessary or desirable to the Building and/or
Project.

E. Tenant Audit. If Tenant shall dispute the amount set forth in any statement
provided by Landlord under Paragraph 7.B. or 7.C. above, Tenant shall have the
right, not later than twenty (20) days following

 

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receipt of such statement and upon the condition that Tenant shall first deposit
with Landlord the full amount in dispute, to cause Landlord’s books and records
with respect to Operating Expenses for such fiscal year to be audited by
certified public accountants selected by Tenant and subject to Landlord’s
reasonable right of approval. The Operating Expense Adjustment shall be
appropriately adjusted on the basis of such audit. If such audit discloses a
liability for a refund in excess of ten percent (10%) of Tenant’s Proportionate
Share of the Operating Expenses previously reported, the cost of such audit
shall be borne by Landlord; otherwise the cost of such audit shall be paid by
Tenant. If Tenant shall not request an audit in accordance with the provisions
of this Paragraph 7.E. within twenty (20) days after receipt of Landlord’s
statement provided pursuant to Paragraph 7.B. or 7.C., such statement shall be
final and binding for all purposes hereof. Tenant acknowledges and agrees that
any information revealed in the above described audit may contain proprietary
and sensitive information and that significant damage could result to Landlord
if such information were disclosed to any party other than Tenant’s auditors.
Tenant shall not in any manner disclose, provide or make available any
information revealed by the audit to any person or entity without Landlord’s
prior written consent, which consent may be withheld by Landlord in its sole and
absolute discretion. The information disclosed by the audit will be used by
Tenant solely for the purpose of evaluating Landlord’s books and records in
connection with this Paragraph 7.E.

8. INSURANCE AND INDEMNIFICATION

A. Landlord’s Insurance. All insurance maintained by Landlord shall be for the
sole benefit of Landlord and under Landlord’s sole control.

(1) Property Insurance. Landlord agrees to maintain property insurance insuring
the Building against damage or destruction due to risk including fire,
vandalism, and malicious mischief in an amount not less than the replacement
cost thereof, in the form and with deductibles and endorsements as selected by
Landlord. At its election, Landlord may instead (but shall have no obligation
to) obtain “All Risk” coverage, and may also obtain earthquake, pollution,
and/or flood insurance in amounts selected by Landlord.

(2) Optional Insurance. Landlord, at Landlord’s option, may also (but shall have
no obligation to) carry (i) insurance against loss of rent, in an amount equal
to the amount of Base Rent and Additional Rent that Landlord could be required
to abate to all Building tenants in the event of condemnation or casualty damage
for a period of twelve (12) months; and (ii) liability insurance and such other
insurance as Landlord may deem prudent or advisable, including, without
limitation, liability insurance in such amounts and on such terms as Landlord
shall determine. Landlord shall not be obligated to insure, and shall have no
responsibility whatsoever for any damage to, any furniture, machinery, goods,
inventory or supplies, or other personal property or fixtures which Tenant may
keep or maintain in the Premises, or any leasehold improvements, additions or
alterations within the Premises.

B. Tenant’s Insurance. Tenant shall procure at Tenant’s sole cost and expense
and keep in effect from the date of this Lease and at all times until the end of
the Term the following:

(1) Property Insurance. Property/Business Interruption Insurance written on an
All Risk or Special Perils form, with coverage for broad form water damage
including earthquake sprinkler leakage, at replacement cost value and with a
replacement cost endorsement covering all of Tenant’s business and trade
fixtures, equipment, movable partitions, furniture, merchandise and other
personal property within the Premises (“Tenant’s Property”) and all
improvements, additions or alterations made by or for Tenant to the Premises.
Other than earthquake sprinkler leakage coverage, Tenant is not required to
carry earthquake insurance.

 

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(2) Liability Insurance. Commercial General Liability insurance covering bodily
injury and property damage liability occurring in or about the Premises or
arising out of the use and occupancy of the Premises and the Project, and any
part of either, and any areas adjacent thereto, and the business operated by
Tenant or by any other occupant of the Premises. Such insurance shall include
contractual liability coverage insuring all of Tenant’s indemnity obligations
under this Lease. Such coverage shall have a minimum combined single limit of
liability of at least Two Million Dollars ($2,000,000.00), and a minimum general
aggregate limit of Three Million Dollars ($3,000,000.00), with an “Additional
Insured – Managers or Lessors of Premises Endorsement” and the “Amendment of the
Pollution Exclusion Endorsement.” All such policies shall be written to apply to
all bodily injury (including death), property damage or loss, personal and
advertising injury and other covered loss, however occasioned, occurring during
the policy term, shall be endorsed to add Landlord (or its successors and
assignees), the managing agent for the Building (or any successor), EOP
Operating Limited Partnership, Equity Office Properties Trust and their
respective members, principals, beneficiaries, partners, officers, directors,
employees, and agents and other designees of Landlord and its successors as the
interest of designees shall appear, as an additional insured, and shall provide
that such coverage shall be “primary” and non-contributing with any insurance
maintained by Landlord, which shall be excess insurance only. Such coverage
shall also contain endorsements including employees as additional insureds if
not covered by Tenant’s Commercial General Liability Insurance. All such
insurance shall provide for the severability of interests of insureds; and shall
be written on an “occurrence” basis, which shall afford coverage for all claims
based on acts, omissions, injury and damage, which occurred or arose (or the
onset of which occurred or arose) in whole or in part during the policy period.

(3) Workers’ Compensation and Employers’ Liability Insurance. Workers’
Compensation Insurance as required by any Regulation, and Employers’ Liability
Insurance in amounts not less than One Million Dollars ($1,000,000) each
accident for bodily injury by accident; One Million Dollars ($1,000,000) policy
limit for bodily injury by disease; and One Million Dollars ($1,000,000) each
employee for bodily injury by disease.

(4) Commercial Auto Liability Insurance. Commercial auto liability insurance
with a combined limit of not less than One Million Dollars ($1,000,000.00) for
bodily injury and property damage for each accident. Such insurance shall cover
liability relating to any auto (including owned, hired and non-owned autos).

(5) Alterations Requirements. In the event Tenant shall desire to perform any
Alterations, Tenant shall deliver to Landlord, prior to commencing such
Alterations (i) evidence satisfactory to Landlord that Tenant carries “Builder’s
Risk” insurance covering construction of such Alterations in an amount and form
approved by Landlord, (ii) such other insurance as Landlord shall
nondiscriminatorily require, and (iii) a lien and completion bond or other
security in form and amount satisfactory to Landlord.

(6) General Insurance Requirements. All coverages described in this
Paragraph 8.B shall be endorsed to (i) provide Landlord with thirty (30) days’
notice of cancellation or change in terms; and (ii) waive all rights of
subrogation by the insurance carrier against Landlord. If at any time during the
Term the amount or coverage of insurance which Tenant is required to carry under
this Paragraph 8.B

 

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is, in Landlord’s reasonable judgment, materially less than the amount or type
of insurance coverage typically carried by owners or tenants of properties
located in the general area in which the Premises are located which are similar
to and operated for similar purposes as the Premises or if Tenant’s use of the
Premises should change with or without Landlord’s consent, Landlord shall have
the right to require Tenant to increase the amount or change the types of
insurance coverage required under this Paragraph 8.B. All insurance policies
required to be carried by Tenant under this Lease shall be written by companies
rated A X or better in “Best’s Insurance Guide” and authorized to do business in
the State of California. In any event deductible amounts under all insurance
policies required to be carried by Tenant under this Lease shall not exceed Five
Thousand Dollars ($5,000.00) per occurrence. Tenant shall deliver to Landlord on
or before the Term Commencement Date, and thereafter at least thirty (30) days
before the expiration dates of the expired policies, certified copies of
Tenant’s insurance policies, or a certificate evidencing the same issued by the
insurer thereunder; and, if Tenant shall fail to procure such insurance, or to
deliver such policies or certificates, Landlord may, at Landlord’s option and in
addition to Landlord’s other remedies in the event of a default by Tenant
hereunder, procure the same for the account of Tenant, and the cost thereof
shall be paid to Landlord as Additional Rent.

C. Indemnification. Except to the extent caused by the negligence or willful
misconduct of Landlord, Equity Office Properties Trust, a Maryland real estate
investment trust, EOP Operating Limited Partnership, a Delaware limited
partnership, and each of their respective trustees, directors, shareholders,
partners, lenders, members, managers, contractors, affiliates, employees,
mortgagees and agents (individually, a “Landlord Party” and collectively,
“Landlord Parties,” Tenant shall indemnify, defend and hold Landlord and the
Landlord Parties harmless against and from all liabilities, obligations,
damages, penalties, claims, actions, costs, charges and expenses, including,
without limitation, reasonable attorneys’ fees and other professional fees (if
and to the extent permitted by Regulations) (collectively referred to as
“Losses”), which may be imposed upon, incurred by or asserted against Landlord
or any Landlord Party by any third party and arising out of or in connection
with any damage or injury occurring in the Premises or any acts or omissions
(including violations of Regulations) of Tenant or any Tenant Party. Except to
the extent caused by the negligence or willful misconduct of Tenant or any
Tenant Party, Landlord shall indemnify, defend and hold Tenant and the Tenant
Parties harmless against and from all Losses which may be imposed upon, incurred
by or asserted against Tenant or any Tenant Party by any third party and arising
out of or in connection with the acts or omissions (including violations of
Regulations) of Landlord or any Landlord Party. Tenant hereby waives all claims
against and releases Landlord and the Landlord Parties from all claims for any
injury to or death of persons, damage to property or business loss in any manner
related to (a) Force Majeure, (b) acts of third parties, (c) the bursting or
leaking of any tank, water closet, drain or other pipe, (d) the inadequacy or
failure of any security or protective services, personnel or equipment, or
(e) any matter not within the reasonable control of Landlord. Notwithstanding
the foregoing, except as provided in Paragraph 9 to the contrary, Tenant shall
not be required to waive any claims against Landlord (other than for loss or
damage to Tenant’s business) where such loss or damage is due to the gross
negligence or willful misconduct of landlord or any Landlord Party.

9. WAIVER OF SUBROGATION

Landlord and Tenant each waive, and shall cause their respective insurance
carriers to waive, any claim, loss or cost it might have against the other for
any injury to or death of any person or persons, or damage to or theft,
destruction, loss, or loss of use of any property (a “Loss”), to the extent the
same is insured against (or is required to be insured against under the terms
hereof) under any property damage insurance policy covering the Building, the
Premises, Landlord’s or Tenant’s fixtures, personal property, leasehold
improvements, or business, regardless of whether the negligence of the other
party caused such Loss.

 

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10. LANDLORD’S REPAIRS AND MAINTENANCE

Landlord, at its sole cost and expenses, except to the extent properly included
in Operating Expenses, shall maintain in good repair, reasonable wear and tear
excepted, the structural soundness of the roof, roof membrane, foundations, and
exterior walls of the Building. The term “exterior walls” as used herein shall
not include windows, glass or plate glass, doors, dock bumpers or dock plates,
special store fronts or office entries. Any damage caused by or repairs
necessitated by any negligence or act of Tenant or Tenant’s Parties may be
repaired by Landlord at Landlord’s option and Tenant’s expense, to the extent
Landlord is not reimbursed by proceeds of the insurance required to be carried
by Landlord hereunder. Tenant shall immediately give Landlord written notice of
any defect or need of repairs in such components of the Building for which
Landlord is responsible, after which Landlord shall have a reasonable
opportunity and the right to enter the Premises at all reasonable times to
repair same. Landlord’s liability with respect to any defects, repairs, or
maintenance for which Landlord is responsible under any of the provisions of
this Lease shall be limited to the cost of such repairs or maintenance, and
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
repairs, alterations or improvements in or to any portion of the Premises, the
Building or the Project or to fixtures, appurtenances or equipment in the
Building, except as provided in Paragraph 24. Subject to Paragraph 2.B above, by
taking possession of the Premises, Tenant accepts them “as is,” as being in good
order, condition and repair and the condition in which Landlord is obligated to
deliver them and suitable for the Permitted Use and Tenant’s intended operations
in the Premises, whether or not any notice of acceptance is given.

11. TENANT’S REPAIRS AND MAINTENANCE

Subject to reasonable wear and tear, and damage by Casualty or condemnation,
Tenant shall at all times during the Term at Tenant’s expense maintain all parts
of the Premises and such portions of the Building as are within the exclusive
control of Tenant in a good, clean and secure condition and promptly make all
necessary repairs and replacements, as determined by Landlord, including but not
limited to, all windows, glass, doors, walls, including demising walls, and wall
finishes, floors and floor covering, heating, ventilating and air conditioning
systems, ceiling insulation, truck doors, hardware, dock bumpers, dock plates
and levelers, plumbing work and fixtures, downspouts, entries, skylights, smoke
hatches, roof vents, electrical and lighting systems, and fire sprinklers, with
materials and workmanship of the same character, kind and quality as the
original. Tenant shall at Tenant’s expense also perform regular removal of trash
and debris. If Tenant uses rail and if required by the railroad company, Tenant
agrees to sign a joint maintenance agreement governing the use of the rail spur,
if any. Tenant shall, at Tenant’s own expense, enter into a regularly scheduled
preventative maintenance/service contract with a maintenance contractor for
servicing all hot water, heating and air conditioning systems and equipment
within or serving the Premises. The maintenance contractor and the contract must
be approved by Landlord. The service contract must include all services
suggested by the equipment manufacturer within the operation/maintenance manual
and must become effective and a copy thereof delivered to Landlord within thirty
(30) days after the Term Commencement Date. In the event that Tenant does not
enter into such a service contract or allows such service contract to lapse,
Landlord may enter into such a service contract on Tenant’s behalf and charge
Tenant the cost thereof along with a reasonable amount for Landlord’s overhead.
In the event that Tenant does not make the repairs required hereunder, Landlord
may perform the work and charge Tenant the cost thereof along with a reasonable
amount for Landlord’s overhead. Notwithstanding anything to the contrary
contained herein, Tenant shall, at its expense, promptly repair any damage to
the Premises or the Building or Project resulting

 

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from or caused by any negligence or act of Tenant or Tenant’s Parties, to the
extent Landlord is not reimbursed by proceeds of the insurance required to be
carried by Landlord hereunder. Nothing herein shall expressly or by implication
render Tenant Landlord’s agent or contractor to effect any repairs or
maintenance required of Tenant under this Paragraph 11, as to all of which
Tenant shall be solely responsible.

12. ALTERATIONS

A. Tenant shall not make, or allow to be made, any alterations, physical
additions, improvements or partitions, including without limitation the
attachment of any fixtures or equipment, in, about or to the Premises
(“Alterations”) without obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld with respect to proposed Alterations
which: (1) comply with all applicable Regulations; (2) are, in Landlord’s
opinion, compatible with the Building or the Project and its mechanical,
plumbing, electrical, heating/ventilation/air conditioning systems, and will not
cause the Building or Project or such systems to be required to be modified to
comply with any Regulations (including, without limitation, the Americans With
Disabilities Act); and (3) will not interfere with the use and occupancy of any
other portion of the Building or Project by any other tenant or its invitees.
However, Landlord’s consent shall not be required for any Alteration that
satisfies all of the following criteria (a “Cosmetic Alteration”): (a) is of a
cosmetic nature such as painting, wallpapering, hanging pictures, and installing
carpeting; (b) is not visible for the exterior of the Building; (c) will not
affect the mechanical, plumbing, heating/ventilation/air conditioning systems;
and (d) does not require work to be performed inside the walls or above the
ceiling of the Premises. Further, any electrical work performed in accordance
with applicable Regulations shall be deemed a Cosmetic Alteration for the
purposes hereof. Prior to starting work on the Alterations, whether Cosmetic
Alterations or otherwise, Tenant shall furnish Landlord with plans (if necessary
for the issuance of any required permits for any Alterations or if reasonably
determined by Landlord for any non-Cosmetic Alterations due to the nature of the
work to be performed) for the proposed Alterations, construction means and
methods, all appropriate permits and licenses, any contractor or subcontractor
to be employed on the work of Alterations, and the time for performance of such
work, and may impose rules and regulations for contractors and subcontractors
performing such work. Tenant shall also supply to Landlord any documents and
information reasonably requested by Landlord in connection with Landlord’s
consideration of a request for approval hereunder. Tenant shall cause all
Alterations to be accomplished in a first-class, good and workmanlike manner,
and to comply with all applicable Regulations and Paragraph 27 hereof. Tenant
shall at Tenant’s sole expense, perform any additional work required under
applicable Regulations due to the Alterations hereunder. No review or consent by
Landlord of or to any proposed Alteration or additional work shall constitute a
waiver of Tenant’s obligations under this Paragraph 12. Tenant shall reimburse
Landlord for all sums paid by Landlord for third party examination of Tenant’s
plans for non-Cosmetic Alterations and shall pay Landlord an administration fee
of five percent (5%) of the cost of any non-Cosmetic Alterations as Additional
Rent hereunder. All such Alterations shall remain the property of Tenant until
the expiration or earlier termination of this Lease, at which time they shall be
and become the property of Landlord; provided, however, that Landlord may, at
Landlord’s option, require that Tenant, at Tenant’s expense, remove any or all
Alterations made by Tenant and restore the Premises by the expiration or earlier
termination of this Lease, to their condition existing prior to the construction
of any such Alterations. Tenant, at the time it requests approval for a proposed
Alteration, may request in writing that Landlord advise Tenant whether the
Alteration, or portion thereof, shall be required to be removed upon the
expiration or earlier termination of this Lease and Landlord shall so advise
Tenant. All such removals and restoration shall be accomplished in a first-class
and good and workmanlike manner so as not to cause any damage to the Premises or
Project whatsoever. If Tenant fails to remove such Alterations or Tenant’s trade
fixtures or furniture or other personal property, Landlord may keep and use them
or remove any of them and cause them to be stored or sold in accordance with
applicable law, at Tenant’s sole expense. In addition to and wholly apart from

 

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Tenant’s obligation to pay Tenant’s Proportionate Share of Operating Expenses,
Tenant shall be responsible for and shall pay prior to delinquency any taxes or
governmental service fees, possessory interest taxes, fees or charges in lieu of
any such taxes, capital levies, or other charges imposed upon, levied with
respect to or assessed against its fixtures or personal property, on the value
of Alterations within the Premises, and on Tenant’s interest pursuant to this
Lease, or any increase in any of the foregoing based on such Alterations. To the
extent that any such taxes are not separately assessed or billed to Tenant,
Tenant shall pay the amount thereof as invoiced to Tenant by Landlord.

B. In compliance with Paragraph 27 hereof, at least ten (10) business days
before beginning construction of any Alteration (defined in Paragraph 12.A.
above), Tenant shall give Landlord written notice of the expected commencement
date of that construction to permit Landlord to post and record a notice of
non-responsibility. Upon substantial completion of construction, if the law so
provides, Tenant shall cause a timely notice of completion to be recorded in the
office of the recorder of the county in which the Building is located.

13. SIGNS

Tenant shall not place, install, affix, paint or maintain any signs, notices,
graphics or banners whatsoever or any window decor which is visible in or from
public view or corridors, the common areas or the exterior of the Premises or
the Building, in or on any exterior window or window fronting upon any common
areas or service area or upon any truck doors or man doors without Landlord’s
prior written approval which Landlord shall have the right to withhold in its
absolute and sole discretion; provided that Tenant’s name shall be included in
any Building-standard door and directory signage, if any, in accordance with
Landlord’s Building signage program (except as provided in Paragraph 39.B.
below), including without limitation, payment by Tenant of any fee charged by
Landlord for maintaining such signage, which fee shall constitute Additional
Rent hereunder. Any installation of signs, notices, graphics or banners on or
about the Premises or Project approved by Landlord shall be subject to any
Regulations and to any other requirements imposed by Landlord. Tenant shall
remove all such signs or graphics by the expiration or any earlier termination
of this Lease. Such installations and removals shall be made in such manner as
to avoid injury to or defacement of the Premises, Building or Project and any
other improvements contained therein, and Tenant shall repair any injury or
defacement including without limitation discoloration caused by such
installation or removal,

14. INSPECTION/POSTING NOTICES

After reasonable notice, except in emergencies where no such notice shall be
required, Landlord and Landlord’s agents and representatives, shall have the
right to enter the Premises to inspect the same, to perform such work as may be
permitted or required hereunder, to make repairs, improvements or alterations to
the Premises, Building or Project or to other tenant spaces therein, to deal
with emergencies, to post such notices as may be permitted or required by law to
prevent the perfection of liens against Landlord’s interest in the Project or to
exhibit the Premises to prospective tenants, purchasers, encumbrancers or to
others, or for any other purpose as Landlord may deem necessary or desirable;
provided, however, that Landlord shall use reasonable efforts not to
unreasonably interfere with Tenant’s business operations. Tenant shall not be
entitled to any abatement of Rent by reason of the exercise of any such right of
entry. Tenant waives any claim for damages for any injury or inconvenience to or
interference with Tenant’s business, any loss of occupancy or quiet enjoyment of
the Premises, and any other loss occasioned thereby. Landlord shall at all times
have and retain a key with which to unlock all of the doors in, upon and about
the Premises, excluding Tenant’s vaults and safes or special security areas
(designated in advance), and Landlord shall have the right

 

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to use any and all means which Landlord may deem necessary or proper to open
said doors in an emergency, in order to obtain entry to any portion of the
Premises, and any entry to the Premises or portions thereof obtained by Landlord
by any of said means, or otherwise, shall not be construed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an eviction, actual or
constructive, of Tenant from the Premises or any portions thereof. At any time
within six (6) months prior to the expiration of the Term or following any
earlier termination of this Lease or agreement to terminate this Lease, Landlord
shall have the right to erect on the Premises, Building and/or Project a
suitable sign indicating that the Premises are available for lease.

15. SERVICES AND UTILITIES

A. Tenant shall (where practicable) contract for and pay directly when due, for
all water, gas, heat, air conditioning, light, power, telephone, sewer,
sprinkler charges, cleaning, waste disposal and other utilities and services
used on or from the Premises, together with any taxes, penalties, surcharges or
the like pertaining thereto, and maintenance charges for utilities and shall
furnish all electric light bulbs, ballasts and tubes. If any such services are
not separately billed or metered to Tenant, Tenant shall pay an equitable
proportion, as determined in good faith by Landlord, of all charges billed or
metered with other premises. All sums payable under this Paragraph 15 shall
constitute Additional Rent hereunder.

B. Subject to Paragraph 2.B. above, Tenant acknowledges that Tenant has
inspected and accepts the water, electricity, heat and air conditioning and
other utilities and services being supplied or furnished to the Premises as of
the date Tenant takes possession of the Premises, if any, as being sufficient in
their present condition, “as is,” for the Permitted Use, and for Tenant’s
intended operations in the Premises. Landlord shall have no obligation to
provide additional or after-hours electricity, heating or air conditioning, but
if Landlord elects to provide such services at Tenant’s request, Tenant shall
pay upon demand to Landlord a reasonable charge for such services as determined
by Landlord. Tenant agrees to keep and cause to be kept closed all window
covering when necessary because of the sun’s position, and Tenant also agrees at
all times to cooperate fully with Landlord and to abide by all of the
regulations and requirements which Landlord may prescribe for the proper
functioning and protection of electrical, heating, ventilating and air
conditioning systems. Wherever heat-generating machines, excess lighting or
equipment are used in the Premises which affect the temperature otherwise
maintained by the air conditioning system, Landlord reserves the right to
install supplementary air conditioning units in the Premises and the cost
thereof, including the cost of installation and the cost of operation and
maintenance thereof, shall be paid by Tenant to Landlord upon demand by
Landlord.

C. Tenant shall not without written consent of Landlord use any apparatus,
equipment or device in the Premises, including without limitation, computers,
electronic data processing machines, copying machines, and other machines, using
excess lighting or using electric current, water, or any other resource in
excess of or which will in any way increase the amount of electricity, water, or
any other resource being furnished or supplied for the use of the Premises for
reasonable and normal office use, in each case as of the date Tenant takes
possession of the Premises and as determined by Landlord, or which will require
additions or alterations to or interfere with the Building power distribution
systems; nor connect with electric current, except through existing electrical
outlets in the Premises or water pipes, any apparatus, equipment or device for
the purpose of using electrical current, water, or any other resource. If Tenant
shall require water or electric current or any other resource in excess of that
being furnished or supplied for the use of the Premises as of the date Tenant
takes possession of the Premises, if any, as determined by Landlord, Tenant
shall first procure the written consent of Landlord which Landlord may refuse,
to the use thereof, and Landlord may cause a special meter to be installed in
the Premises so as to measure the amount of water, electric current or other
resource consumed for any such other use. Tenant shall pay directly to Landlord
upon demand as an addition to and

 

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separate from payment of Operating Expenses the cost of all such additional
resources, energy, utility service and meters (and of installation, maintenance
and repair thereof and of any additional circuits or other equipment necessary
to furnish such additional resources, energy, utility or service). Landlord may
add to the separate or metered charge a recovery of additional expense incurred
in keeping account of the excess water, electric current or other resource so
consumed. Landlord shall in no case be liable for any damages directly or
indirectly resulting from nor shall the Rent or any monies owed Landlord under
this Lease herein reserved be abated by reason of: (l) the installation, use or
interruption of use of any equipment used in connection with the furnishing of
any such utilities or services, or any change in the character or means of
supplying or providing any such utilities or services or any supplier thereof;
(2) the failure to furnish or delay in furnishing any such utilities or services
when such failure or delay is caused by acts of God or the elements, labor
disturbances of any character, or otherwise, or because of any interruption of
service due to Tenant’s use of water, electric current or other resource in
excess of that being supplied or furnished for the use of the Premises as of the
date Tenant takes possession of the Premises; (3) the inadequacy, limitation,
curtailment, rationing or restriction on use of water, electricity, gas or any
other form of energy or any other service or utility whatsoever serving the
Premises or Project otherwise; or (4) the partial or total unavailability of any
such utilities or services to the Premises or the Building or the diminution in
the quality or quantity thereof, whether by Regulation or otherwise; or (5) any
interruption in Tenant’s business operations as a result of any such occurrence;
nor shall any such occurrence constitute an actual or constructive eviction of
Tenant or a breach of an implied warranty by Landlord. Landlord shall further
have no obligation to protect or preserve any apparatus, equipment or device
installed by Tenant in the Premises, including without limitation by providing
additional or after-hours heating or air conditioning. Landlord shall be
entitled to cooperate voluntarily and in a reasonable manner with the efforts of
national, state or local governmental agencies or utility suppliers in reducing
energy or other resource consumption. The obligation to make services available
hereunder shall be subject to the limitations of any such voluntary, reasonable
program. In addition, Landlord reserves the right to change the supplier or
provider of any such utility or service from time to time. Landlord may, but
shall not be obligated to, upon notice to Tenant, contract with or otherwise
obtain any electrical or other such service for or with respect to the Premises
or Tenant’s operations therein from any supplier or provider of any such
service. Tenant shall cooperate with Landlord and any supplier or provider of
such services designated by Landlord from time to time to facilitate the
delivery of such services to Tenant at the Premises and to the Building and
Project, including without limitation allowing Landlord and Landlord’s suppliers
or providers, and their respective agents and contractors, reasonable access to
the Premises for the purpose of installing, maintaining, repairing, replacing or
upgrading such service or any equipment or machinery associated therewith.

D. Notwithstanding anything to the contrary set forth herein, if the Premises,
or a material portion of the Premises, are made untenantable for a period in
excess of 7 consecutive Business Days as a result of a utility and/or service
failure that is reasonably within the control of Landlord to correct, then
Tenant, as its sole remedy, shall be entitled to receive an abatement of Rent
payable hereunder during the period beginning on the 8th consecutive Business
Day of the utility and/or service failure and ending on the day the service has
been restored. If the entire Premises have not been rendered untenantable by the
utility and/or service failure, the amount of abatement shall be equitably
prorated.

16. SUBORDINATION

Without the necessity of any additional document being executed by Tenant for
the purpose of effecting a subordination, this Lease shall be and is hereby
declared to be subject and subordinate at all times to: (a) all ground leases or
underlying leases which may now exist or hereafter be executed affecting the
Premises and/or the land upon which the Premises and Project are situated, or
both; and (b) any mortgage or

 

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deed of trust which may now exist or be placed upon the Building, the Project
and/or the land upon which the Premises or the Project are situated, or said
ground leases or underlying leases, or Landlord’s interest or estate in any of
said items which is specified as security. Notwithstanding the foregoing,
Landlord shall have the right to subordinate or cause to be subordinated any
such ground leases or underlying leases or any such liens to this Lease. If any
ground lease or underlying lease terminates for any reason or any mortgage or
deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for
any reason, Tenant shall, notwithstanding any subordination, attorn to and
become the Tenant of the successor in interest to Landlord provided that Tenant
shall not be disturbed in its possession under this Lease by such successor in
interest so long as Tenant is not in default under this Lease. Within ten
(10) days after request by Landlord, Tenant shall execute and deliver any
additional documents evidencing Tenant’s attornment or the subordination of this
Lease with respect to any such ground leases or underlying leases or any such
mortgage or deed of trust, in the form requested by Landlord or by any ground
landlord, mortgagee, or beneficiary under a deed of trust, subject to such
nondisturbance requirement. If requested in writing by Tenant, Landlord shall
use commercially reasonable efforts to obtain a subordination, nondisturbance
and attornment agreement for the benefit of Tenant reflecting the foregoing from
any ground landlord, mortgagee or beneficiary, at Tenant’s expense, subject to
such other terms and conditions as the ground landlord, mortgagee or beneficiary
may require.

17. FINANCIAL STATEMENTS

At the request of Landlord from time to time, Tenant shall provide to Landlord
Tenant’s and any guarantor’s current financial statements or other information
discussing financial worth of Tenant and any guarantor, which Landlord shall use
solely for purposes of this Lease and in connection with the ownership,
management, financing and disposition of the Project. Upon written request by
Tenant, Landlord shall enter into a commercially reasonable confidentiality
agreement covering any confidential information that is disclosed by Tenant and
Landlord shall use commercially reasonable efforts to cause any other party with
which Landlord shares such information to treat the information as confidential.

18. ESTOPPEL CERTIFICATE

Tenant agrees from time to time, within ten (10) days after request of Landlord,
to deliver to Landlord, or Landlord’s designee, an estoppel certificate stating
that this Lease is in full force and effect, that this Lease has not been
modified (or stating all modifications to this Lease), the date to which Rent
has been paid, the unexpired portion of this Lease, that there are no current
defaults by Landlord or Tenant under this Lease (or specifying any such
defaults), that the leasehold estate granted by this Lease is the sole interest
of Tenant in the Premises and/or the land at which the Premises are situated,
and such other matters pertaining to this Lease as may be reasonably requested
by Landlord or any mortgagee, beneficiary, purchaser or prospective purchaser of
the Building or Project or any interest therein. Failure by Tenant to execute
and deliver such certificate shall constitute an acceptance of the Premises and
acknowledgment by Tenant that the statements included are true and correct
without exception. Tenant agrees that if Tenant fails to execute and deliver
such certificate within such ten (10) day period, Landlord may execute and
deliver such certificate on Tenant’s behalf and that such certificate shall be
binding on Tenant. Landlord and Tenant intend that any statement delivered
pursuant to this Paragraph may be relied upon by any mortgagee, beneficiary,
purchaser or prospective purchaser of the Building or Project or any interest
therein. The parties agree that Tenant’s obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Landlord’s
execution of this Lease, and shall be an event of default (without any cure
period that might be provided under Paragraph 26.A(3) of this Lease) if Tenant
fails to fully comply or makes any material misstatement in any such
certificate.

 

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19. SECURITY DEPOSIT

A. Tenant agrees to deposit with Landlord upon execution of this Lease, a
security deposit as stated in the Basic Lease Information (the “Security
Deposit”), which sum shall be held and owned by Landlord, without obligation to
pay interest, as security for the performance of Tenant’s covenants and
obligations under this Lease. The Security Deposit is not an advance rental
deposit or a measure of damages incurred by Landlord in case of Tenant’s
default. Upon the occurrence of any event of default (beyond any applicable
grace or notice and cure period) by Tenant, Landlord may from time to time,
without prejudice to any other remedy provided herein or by law, use such fund
as a credit to the extent necessary to credit against any arrears of Rent or
other payments due to Landlord hereunder, and any other damage, injury, expense
or liability caused by such event of default, and Tenant shall pay to Landlord,
on demand, the amount so applied in order to restore the Security Deposit to its
original amount. Although the Security Deposit shall be deemed the property of
Landlord, any remaining balance of such deposit shall be returned by Landlord to
Tenant within forty-five (45) days of the later to occur of: (a) determination
of the final Rent due from Tenant; or (b) the later to occur of the Termination
Date or the date Tenant surrenders the Premises to Landlord in compliance with
the terms of this Lease. If Tenant is not in default at the termination of this
Lease, Landlord shall return any unapplied balance of the Security Deposit to
Tenant within forty-five (45) days after Tenant surrenders the Premises to
Landlord in accordance with this Lease. In addition to any other deductions
Landlord is entitled to make pursuant to the terms hereof, Landlord shall have
the right to make a good faith estimate of any unreconciled Operating Expenses
as of the Termination Date and to deduct any anticipated shortfall from the
Security Deposit. Landlord is hereby granted a security interest in the Security
Deposit in accordance with applicable provisions of the California Commercial
Code. Landlord may use and commingle the Security Deposit with other funds of
Landlord. Tenant hereby waives the provisions of Section 1950.7 of the
California Civil Code, and all other provisions of any Regulations, now or
hereinafter in force, which restricts the amount or types of claim that a
landlord may make upon a security deposit or imposes upon a landlord (or its
successors) any obligation with respect to the handling or return of security
deposits.

20. LIMITATION OF TENANT’S REMEDIES

The obligations and liability of Landlord to Tenant for any default by Landlord
under the terms of this Lease are not personal obligations of Landlord or of the
individual or other partners of Landlord or its or their partners, directors,
officers, or shareholders, and Tenant agrees to look solely to Landlord’s
interest in the Project for the recovery of any amount from Landlord, and shall
not look to other assets of Landlord nor seek recourse against the assets of the
individual or other partners of Landlord or its or their partners, directors,
officers or shareholders. Any lien obtained to enforce any such judgment and any
levy of execution thereon shall be subject and subordinate to any lien, mortgage
or deed of trust on the Project. Under no circumstances shall Tenant have the
right to offset against or recoup Rent or other payments due and to become due
to Landlord hereunder except as expressly provided in this Lease, which Rent and
other payments shall be absolutely due and payable hereunder in accordance with
the terms hereof. In no case shall Landlord be liable to Tenant for any lost
profits, damage to business, or any form of special, indirect or consequential
damage on account of any breach of this Lease or otherwise, notwithstanding
anything to the contrary contained in this Lease.

21. ASSIGNMENT AND SUBLETTING

 

A.(1)

General. This Lease has been negotiated to be and is granted as an accommodation
to Tenant. Accordingly, this Lease is personal to Tenant, and Tenant’s rights
granted hereunder do not include the right to assign this Lease or sublease the
Premises, or to receive any excess, either in

 

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installments or lump sum, over the Rent which is expressly reserved by Landlord
as hereinafter provided, except as otherwise expressly hereinafter provided.
Tenant shall not assign or pledge this Lease or sublet the Premises or any part
thereof, whether voluntarily or by operation of law, or permit the use or
occupancy of the Premises or any part thereof by anyone other than Tenant, or
suffer or permit any such assignment, pledge, subleasing or occupancy, without
Landlord’s prior written consent except as provided herein. If Tenant desires to
assign this Lease or sublet any or all of the Premises, Tenant shall give
Landlord written notice (the “Transfer Notice”) at least forty-five (45) days
prior to the anticipated effective date of the proposed assignment or sublease,
which shall contain all of the information reasonably requested by Landlord to
address Landlord’s decision criteria specified hereinafter. Landlord shall then
have a period of thirty (30) days following receipt of the Transfer Notice to
notify Tenant in writing that Landlord elects either: (i) to terminate this
Lease as to either the space so affected or the entire Premises as of the date
so requested by Tenant in the event of an assignment of this Lease or a sublease
of more than 66.67% of the Rentable Square Footage of the Premises; or (ii) to
consent to the proposed assignment or sublease, subject, however, to Landlord’s
prior written consent of the proposed assignee or subtenant and of any related
documents or agreements associated with the assignment or sublease. If Landlord
should fail to notify Tenant in writing of such election within said period,
Landlord shall be deemed to have waived option (i) above, but written consent by
Landlord of the proposed assignee or subtenant shall still be required. If
Landlord does not exercise option (i) above, Landlord’s consent to a proposed
assignment or sublease shall not be unreasonably withheld. Consent to any
assignment or subletting shall not constitute consent to any subsequent
transaction to which this Paragraph 21 applies.

(2) Conditions of Landlord’s Consent. Without limiting the other instances in
which it may be reasonable for Landlord to withhold Landlord’s consent to an
assignment or subletting, Landlord and Tenant acknowledge that it shall be
reasonable for Landlord to withhold Landlord’s consent in the following
instances: if the proposed assignee does not agree to be bound by and assume the
obligations of Tenant under this Lease in form and substance satisfactory to
Landlord; the use of the Premises by such proposed assignee or subtenant would
not be a Permitted Use or would violate any exclusivity or other arrangement
which Landlord has with any other tenant or occupant or any Regulation or would
increase the Occupancy Density or Parking Density of the Building or Project, or
would otherwise result in an undesirable tenant mix for the Project as
determined by Landlord; the proposed assignee or subtenant is not of sound
financial condition as determined by Landlord in Landlord’s sole discretion; the
proposed assignee or subtenant is a governmental agency; the proposed assignee
or subtenant does not have a good reputation as a tenant of property or a good
business reputation; the proposed assignee or subtenant is a person with whom
Landlord is negotiating to lease space in the Project or is a present tenant of
the Project; the assignment or subletting would entail any Alterations which
would lessen the value of the leasehold improvements in the Premises or use of
any Hazardous Materials or other noxious use or use which may disturb other
tenants of the Project; or Tenant is in default of any obligation of Tenant
under this Lease, or Tenant is in default under this Lease beyond any applicable
grace or notice and cure period. Notwithstanding the foregoing, Landlord will
not withhold its consent solely because the proposed subtenant or assignee is an
occupant of the Project if Landlord does not have space available for lease in
the Project which is comparable to the space Tenant desires to sublet or assign.
Landlord shall be deemed to have comparable space if it has, or will have, space
available in the Project that is approximately the same size as the space Tenant
desires to sublet or assign within 6 months of the proposed commencement of the
proposed sublease or assignment. Failure by or refusal of Landlord to consent to
a proposed assignee or subtenant shall not cause a termination of this Lease.
Upon a termination under Paragraph 21.A.(l)(i), Landlord may lease the Premises
to any party, including

 

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parties with whom Tenant has negotiated an assignment or sublease, without
incurring any liability to Tenant. At the option of Landlord, a surrender and
termination of this Lease shall operate as an assignment to Landlord of some or
all subleases or subtenancies. Landlord shall exercise this option by giving
notice of that assignment to such subtenants on or before the effective date of
the surrender and termination. In connection with each request for assignment or
subletting, Tenant shall pay to Landlord Landlord’s standard fee for approving
such requests, as well as all costs incurred by Landlord or any mortgagee or
ground lessor in approving each such request and effecting any such transfer,
including, without limitation, reasonable attorneys’ fees. Notwithstanding the
foregoing, provided that neither the Tenant nor the proposed transferee requests
any changes to this Lease or Landlord’s standard form of consent in connection
with the proposed transfer, such costs and expenses shall not exceed $750.00.

B. Bonus Rent. Tenant shall pay Landlord seventy-five percent (75%) of all rent
and other consideration which Tenant receives as a result of a sublease or
assignment that is in excess of Rent payable to Landlord for the portion of the
Premises and Lease Term covered by the assignment or sublease. Tenant shall pay
Landlord for Landlord’s share of the excess within 30 days after Tenant’s
receipt of the excess. Tenant may deduct from the excess, on a straight-line
basis over the term of the sublease or assignment, all reasonable and customary
expenses directly incurred by Tenant attributable to the assignment or sublease.

C. Corporation. If Tenant is a corporation, a transfer of corporate shares by
sale, assignment, bequest, inheritance, operation of law or other disposition
(including such a transfer to or by a receiver or trustee in federal or state
bankruptcy, insolvency or other proceedings) resulting in a change in the
present control of such corporation or any of its parent corporations by the
person or persons owning a majority of said corporate shares, shall constitute
an assignment for purposes of this Lease. Notwithstanding anything to the
contrary set forth herein, the infusion of additional equity capital in Tenant
or an initial public offering of equity securities of Tenant under the
Securities Act of 1933, as amended, which results in Tenant’s stock being traded
on a national securities exchange, including without limitation, the NYSE, the
NASDAQ Stock Market or the NASDAQ Small Cap Market System shall not constitute
an assignment subject to this Paragraph 21.

D. Unincorporated Entity. If Tenant is a partnership, joint venture,
unincorporated limited liability company or other unincorporated business form,
a transfer of the interest of persons, firms or entities responsible for
managerial control of Tenant by sale, assignment, bequest, inheritance,
operation of law or other disposition, so as to result in a change in the
present control of said entity and/or of the underlying beneficial interests of
said entity and/or a change in the identity of the persons responsible for the
general credit obligations of said entity shall constitute an assignment for all
purposes of this Lease.

E. Liability. No assignment or subletting by Tenant, permitted or otherwise,
shall relieve Tenant of any obligation under this Lease or any guarantor of this
Lease of any liability under its guaranty or alter the primary liability of the
Tenant named herein for the payment of Rent or for the performance of any other
obligations to be performed by Tenant, including obligations contained in
Paragraph 25 with respect to any assignee or subtenant. In the event that Tenant
is in default under the terms of this Lease (beyond any applicable grace or
notice and cure period), Landlord may collect rent or other amounts or any
portion thereof from any assignee, subtenant, or other occupant of the Premises,
permitted or otherwise, and apply the net rent collected to the Rent payable
hereunder, but no such collection shall be deemed to be a waiver of this
Paragraph 21, or the acceptance of the assignee, subtenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of the
obligations of Tenant under this Lease or any guarantor of this Lease of any
liability under its guaranty. Any assignment or subletting which conflicts with
the provisions hereof shall be void.

 

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F. Permitted Transfers. Notwithstanding anything to the contrary set forth
herein, Tenant may assign this Lease to a successor to Tenant by purchase,
merger, consolidation or reorganization (an “Ownership Change”) or assign this
Lease or sublet all or a portion of the Premises to an Affiliate without the
consent of Landlord, provided that all of the following conditions are satisfied
(a “Permitted Transfer”): (1) Tenant is not in default under this Lease beyond
any applicable cure period; (2) in the event of an Ownership Change, Tenant’s
successor shall own substantially all of the assets or stock of Tenant and have
a net worth which is at least equal to Tenant’s net worth as of the day prior to
the proposed Ownership Change; (3) the Permitted Use does not allow the Premises
to be used for retail purposes; and (4) Tenant shall give Landlord written
notice at least 15 business days prior to the effective date of the Permitted
Transfer. Tenant’s notice to Landlord shall include 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 a commercially reasonable form of assumption agreement.
“Affiliate” shall mean an entity controlled by, controlling or under common
control with Tenant.

22. AUTHORITY

Landlord represents and warrants that it has full right and authority to enter
into this Lease and to perform all of Landlord’s obligations hereunder and that
all persons signing this Lease on its behalf are authorized to do. Tenant and
the person or persons, if any, signing on behalf of Tenant, jointly and
severally represent and warrant that Tenant has full right and authority to
enter into this Lease, and to perform all of Tenant’s obligations hereunder, and
that all persons signing this Lease on its behalf are authorized to do so.

23. CONDEMNATION

A. Condemnation Retailing in Termination. If the whole or any substantial part
of the Premises should be taken or condemned for any public use under any
Regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with the Permitted
Use of the Premises, either party shall have the right to terminate this Lease
at its option. If any material portion of the Building or Project is taken or
condemned for any public use under any Regulation, or by right of eminent
domain, or by private purchase in lieu thereof, Landlord may terminate this
Lease at its option. In either of such events, the Rent shall be abated during
the unexpired portion of this Lease, effective when the physical taking of said
Premises shall have occurred.

B. Condemnation Not Resulting in Termination. If a portion of the Project of
which the Premises are a part should be taken or condemned for any public use
under any Regulation, or by right of eminent domain, or by private purchase in
lieu thereof, and the taking prevents or materially interferes with the
Permitted Use of the Premises, and this Lease is not terminated as provided in
Paragraph 23.A. above, the Rent payable hereunder during the unexpired portion
of this Lease shall be reduced, beginning on the date when the physical taking
shall have occurred, to such amount as may be fair and reasonable under all of
the circumstances, but only after giving Landlord credit for all sums received
or to be received by Tenant by the condemning authority. Notwithstanding
anything to the contrary contained in this Paragraph, if the temporary use or
occupancy of any part of the Premises shall be taken or appropriated under power
of eminent domain during the Term, this Lease shall be and remain unaffected by
such taking or appropriation and Tenant shall continue to pay in full all Rent
payable hereunder by Tenant during the Term; in the event of any such temporary
appropriation or taking, Tenant shall be entitled to receive that portion of any
award which represents compensation for the use of or occupancy of the Premises
during the Term.

 

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C. Award. Landlord shall be entitled to (and Tenant shall assign to Landlord)
any and all payment, income, rent, award or any interest therein whatsoever
which may be paid or made in connection with such taking or conveyance and
Tenant shall have no claim against Landlord or otherwise for any sums paid by
virtue of such proceedings, whether or not attributable to the value of any
unexpired portion of this Lease, except as expressly provided in this Lease.
Notwithstanding the foregoing, any compensation specifically and separately
awarded Tenant for Tenant’s personal property and moving costs, shall be and
remain the property of Tenant.

D. Waiver of CCP§1265.130. Each party waives the provisions of California Civil
Code Procedure Section 1265.130 allowing either party to petition the superior
court to terminate this Lease as a result of a partial taking.

24. CASUALTY DAMAGE

A. General. If the Premises or Building should be damaged or destroyed by fire,
tornado or other casualty (collectively a “Casualty”), Tenant shall give
immediate written notice thereof to Landlord. Within thirty (30) days after
Landlord’s receipt of such notice, Landlord shall provide Tenant with a written
estimate of the amount of time required using standard working methods to
materially restore the Premises and any common areas necessary to provide access
to the Premises (“Completion Estimate”). Landlord’s determination shall be
binding on Tenant.

B. Within 210 Days. If the Completion Estimate states that the material
restoration of the Premises and any common areas necessary to provide access to
the Premises can be completed within two hundred ten (210) days after the date
of Tenant’s notice to Landlord of such Casualty, this Lease shall not terminate.
Provided that insurance proceeds are received by Landlord to fully repair the
damage, Landlord shall proceed to rebuild and repair the Premises and the common
areas necessary to provide access to the Premises diligently and in the manner
determined by Landlord, except that Landlord shall not be required to rebuild,
repair or replace any part of any Alterations which may have been placed on or
about the Premises or paid for by Tenant. If the Premises are untenantable in
whole or in part following such damage, the Rent payable hereunder during the
period in which they are untenantable shall be abated proportionately during the
time and to the extent the Premises are unfit for occupancy.

C. Greater than 210 Days. If the Completion Estimate indicates that the Premises
or any common areas necessary to provide access to the Premises cannot be
materially restored within two hundred ten (210) days of the date of Tenant’s
notice to Landlord of such Casualty, then either party shall have the right to
terminate this Lease upon written notice to the other within ten (10) days after
receipt of the Completion Estimate. Tenant, however, shall not have the right to
terminate this Lease if the Casualty was caused by the negligence or intentional
misconduct of Tenant or any Tenant Party. In addition, Landlord, by notice to
Tenant within ninety (90) days after the date of the Casualty, shall have the
right to terminate this Lease if: (1) the Premises have been materially damaged
and there is less than one (1) year of this Lease Term remaining on the date of
the Casualty; (2) any Mortgagee requires that the insurance proceeds be applied
to the payment of the mortgage debt; or (3) a material uninsured loss to the
Building or Premises occurs. In addition to Landlord’s right to terminate as
provided herein, Tenant shall have the right to terminate this Lease if: (a) a
substantial portion of the Premises has been damaged by fire or other casualty
and such damage cannot reasonably be repaired within sixty (60) days after
receipt of the Completion Estimate; (b) there is less

 

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than one (1) year of this Lease Term remaining on the date of such Casualty;
(c) the casualty was not caused by the negligence or willful misconduct of
Tenant or its agents, employees or contractors; and (d) Tenant provides Landlord
with written notice of its intent to terminate within thirty (30) days after the
date of the Casualty.

D. Restoration Delays. Unless a Casualty was caused by the negligence or willful
misconduct of Tenant or any Tenant Party, if material restoration of the
Premises or any portion of the common area necessary to provide access to the
Premises is not completed by the later of (a) two hundred ten (210) days from
the date Tenant provided Landlord notice of the Casualty and (b) two (2) months
after the estimated restoration time set forth in the Completion Estimate (as so
determined, the “Restoration Date”), which period of time set forth in both
clauses (a) and (b) above shall be extended by any Reconstruction Delays
(defined below), then Tenant may terminate this Lease by written notice to
Landlord within fifteen (15) days after the expiration of such period, as the
same may be extended. Notwithstanding the foregoing, if Landlord determines in
good faith that it will be unable to cause the material restoration to be
completed on or before the Restoration Date, Landlord shall have the right to
immediately cease the performance of the restoration work and provide Tenant
with written notice (“Restoration Date Extension Notice”) of such inability,
which Restoration Date Extension Notice shall set forth the date on which
Landlord reasonably believes that the material restoration will occur. Upon
receipt of the Restoration Date Extension Notice, Tenant shall have the right to
terminate this Lease providing written notice of such termination to Landlord
within five (5) Business Days after the date of the Restoration Date Extension
Notice. If Tenant does not terminate this Lease within such five (5) Business
Day period, the Restoration Date shall automatically be amended to be the date
set forth in Landlord’s Restoration Date Extension Notice, which date shall be
extended by any Reconstruction Delays following the date of the Restoration Date
Extension Notice. For purposes of this Lease, the term “Reconstruction Delays”
shall mean: (i) any delays caused by Tenant; and (ii) any delays caused by
events of Force Majeure (excluding the original Casualty which triggered such
restoration).

E. Tenant’s Fault. Notwithstanding anything herein to the contrary, if the
Premises or any other portion of the Building are damaged by Casualty resulting
from the fault, negligence, or breach of this Lease by Tenant or any of Tenant’s
Parties, Tenant shall be liable to Landlord for the cost and expense of the
repair and restoration of the Building caused thereby to the extent such cost
and expense is not covered by proceeds of the insurance Landlord is required to
carry pursuant to this Lease.

F. Insurance Proceeds. Notwithstanding anything herein to the contrary, if the
Premises or Building are damaged or destroyed and are not folly covered by the
insurance proceeds received by Landlord or if the holder of any indebtedness
secured by a mortgage or deed of trust covering the Premises requires that the
insurance proceeds be applied to such indebtedness, then in either case Landlord
shall have the right to terminate this Lease by delivering written notice of
termination to Tenant within thirty (30) days after the date of notice to
Landlord that said damage or destruction is not fully covered by insurance or
such requirement is made by any such holder, as the case may be, whereupon this
Lease shall terminate.

G. Waiver. This Paragraph 24 shall be Tenant’s sole and exclusive remedy in the
event of damage or destruction to the Premises or the Building. As a material
inducement to Landlord entering into this Lease, Tenant hereby waives any rights
it may have under Sections 1932,1933(4), 1941 or 1942 of the Civil Code of
California with respect to any destruction of the Premises, Landlord’s
obligation for tenantability of the Premises and Tenant’s right to make repairs
and deduct the expenses of such repairs, or under any similar law, statute or
ordinance now or hereafter in effect.

 

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H. Tenant’s Personal Property. In the event of any damage or destruction of the
Premises or the Building, under no circumstances shall Landlord be required to
repair any injury or damage to, or make any repairs to or replacements of,
Tenant’s personal property.

25. HOLDING OVER

Unless Landlord expressly consents in writing to Tenant’s holding over, Tenant
shall be unlawfully and illegally in possession of the Premises, whether or not
Landlord accepts any rent from Tenant or any other person while Tenant remains
in possession of the Premises without Landlord’s written consent. If Tenant
shall retain possession of the Premises or any portion thereof without
Landlord’s consent following the expiration of this Lease or sooner termination
for any reason, then Tenant shall pay to Landlord for each day of such retention
one hundred fifty percent (150%) of the amount of daily rental as of the last
month prior to the date of expiration or earlier termination. Tenant shall also
indemnify, defend, protect and hold Landlord harmless from any loss, liability
or cost, including consequential and incidental damages and reasonable
attorneys’ fees, incurred by Landlord resulting from delay by Tenant in
surrendering the Premises, including, without limitation, any claims made by the
succeeding tenant founded on such delay. Acceptance of Rent by Landlord
following expiration or earlier termination of this Lease, or following demand
by Landlord for possession of the Premises, shall not constitute a renewal of
this Lease, and nothing contained in this Paragraph 25 shall waive Landlord’s
right of reentry or any other right.

Additionally, if upon expiration or earlier termination of this Lease, or
following demand by Landlord for possession of the Premises, Tenant has not
fulfilled its obligation with respect to repairs and cleanup of the Premises or
any other Tenant obligations as set forth in this Lease, then Landlord shall
have the right to perform any such obligations as it deems necessary at Tenant’s
sole cost and expense, and any time required by Landlord to complete such
obligations shall be considered a period of holding over and the terms of this
Paragraph 25 shall apply. The provisions of this Paragraph 25 shall survive any
expiration or earlier termination of this Lease.

26. DEFAULT

A. Events of Default. The occurrence of any of the following shall constitute an
event of default on the part of Tenant:

(1) Abandonment. Abandonment of the Premises for a continuous period in excess
of five (5) days. Tenant waives any right to notice Tenant may have under
Section 1951.3 of the Civil Code of the State of California, the terms of this
Paragraph 26.A. being deemed such notice to Tenant as required by said
Section 1951.3.

(2) Nonpayment of Rent. Failure to pay any installment of Rent or any other
amount due and payable hereunder upon the date when said payment is due and such
failure continues for five (5) days after written notice from Landlord to
Tenant, as to which time is of the essence.

(3) Other Obligations. Failure to perform any obligation, agreement or covenant
under this Lease other than those matters specified in subparagraphs (1) and
(2) of this Paragraph 26.A., and in Paragraphs 8, 16, 18 and 25, such failure
continuing for twenty (20) days after written notice of such failure, as to
which time is of the essence; provided that if Tenant’s failure to comply cannot
reasonably be cured within twenty (20) days, Tenant shall be allowed additional
time (not to exceed sixty (60) days) as is reasonably necessary to cure the
failure; so long as (a) Tenant commences to

 

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cure the failure within twenty (20) days, (b) Tenant’s diligently pursues a
course of action that will cure the failure and bring Tenant back into
compliance with this Lease. However, if Tenant’s failure to comply creates a
hazardous condition, the failure must be cured immediately upon notice to
Tenant. In addition if Landlord provides Tenant with notice of Tenant’s failure
to comply with any particular term, provision or covenant of this Lease on 3
occasions during any 12 month period, Tenant’s subsequent violation of such
term, provision or covenant shall, at Landlord’s option, be an incurable event
of default by Tenant.

(4) General Assignment. A general assignment by Tenant for the benefit of
creditors.

(5) Bankruptcy. The filing of any voluntary petition in bankruptcy by Tenant, or
the filing of an involuntary petition by Tenant’s creditors, which involuntary
petition remains undischarged for a period of thirty (30) days. If under
applicable law, the trustee in bankruptcy or Tenant has the right to affirm this
Lease and continue to perform the obligations of Tenant hereunder, such trustee
or Tenant shall, in such time period as may be permitted by the bankruptcy court
having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the
date of the affirmance of this Lease and provide to Landlord such adequate
assurances as may be necessary to ensure Landlord of the continued performance
of Tenant’s obligations under this Lease.

(6) Receivership. The employment of a receiver to take possession of
substantially all of Tenant’s assets or the Premises, if such appointment
remains undismissed or undischarged for a period of thirty (30) days after the
order therefor.

(7) Attachment The attachment, execution or other judicial seizure of all or
substantially all of Tenant’s assets or Tenant’s leasehold of the Premises, if
such attachment or other seizure remains undismissed or undischarged for a
period of thirty (30) days after the levy thereof.

(8) Insolvency. The admission by Tenant in writing of its inability to pay its
debts as they become due.

B. Remedies Upon Default.

(1) Termination. In the event of the occurrence of any event of default,
Landlord shall have the right to give a written termination notice to Tenant,
and on the date specified in such notice, Tenant’s right to possession shall
terminate, and this Lease shall terminate unless on or before such date all Rent
in arrears and all costs and expenses incurred by or on behalf of Landlord
hereunder shall have been paid by Tenant and all other events of default of this
Lease by Tenant at the time existing shall have been fully remedied to the
satisfaction of Landlord. At any time after such termination, Landlord may
recover possession of the Premises or any part thereof and expel and remove
therefrom Tenant and any other person occupying the same, including any
subtenant or subtenants notwithstanding Landlord’s consent to any sublease, by
any lawful means, and again repossess and enjoy the Premises without prejudice
to any of the remedies that Landlord may have under this Lease, or at law or
equity by any reason of Tenant’s default or of such termination. Landlord hereby
reserves the right, but shall not have the obligation, to recognize the
continued possession of any subtenant. The delivery or surrender to Landlord by
or on behalf of Tenant of keys, entry codes, or other means to bypass security
at the Premises shall not terminate this Lease.

 

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(2) Continuation After Default. Even though an event of default may have
occurred, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant’s right to possession under Paragraph 26,B.(1) hereof. Landlord
shall have the remedy described in California Civil Code Section 1951.4
(“Landlord may continue this Lease in effect after Tenant’s breach and
abandonment and recover Rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations”), or any successor
code section. Accordingly, if Landlord does not elect to terminate this Lease on
account of any event of default by Tenant, Landlord may enforce all of
Landlord’s rights and remedies under this Lease, including the right to recover
Rent as it becomes due. Acts of maintenance, preservation or efforts to lease
the Premises or the appointment of a receiver under application of Landlord to
protect Landlord’s interest under this Lease or other entry by Landlord upon the
Premises shall not constitute an election to terminate Tenant’s right to
possession.

C. Damages After Default. Should Landlord terminate this Lease pursuant to the
provisions of Paragraph 26.B.(1) hereof, Landlord shall have the rights and
remedies of a Landlord provided by Section 1951.2 of the Civil Code of the State
of California, or any successor code sections. Upon such termination, in
addition to any other rights and remedies to which Landlord may be entitled
under applicable law or at equity, Landlord shall be entitled to recover from
Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts
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 and other amounts that would have
been earned after the date of termination until the time of award exceeds the
amount of such Rent 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 and
other amounts for the balance of the Term after the time of award exceeds the
amount of such Rent loss that the Tenant proves could be reasonably avoided; and
(4) any other amount and court costs necessary to compensate Landlord for all
detriment proximately caused by Tenant’s failure to perform Tenant’s obligations
under this Lease or which, in the ordinary course of things, would be likely to
result therefrom. The “worth at the time of award” as used in (1) and (2) above
shall be computed at the Applicable Interest Rate (defined below). The “worth at
the time of award” as used in (3) above shall be computed by discounting such
amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco
at the time of award plus one percent (1%).

D. Late Charge. In addition to its other remedies, Landlord shall have the right
without notice or demand to add to the amount of any payment required to be made
by Tenant hereunder, and which is not paid and received by Landlord on or before
the fifth (5th day of each calendar month, an amount equal to five percent
(5%) of the delinquent amount, or $150.00, whichever amount is greater, for each
month or portion thereof that the delinquency remains outstanding to compensate
Landlord for the loss of the use of the amount not paid and the administrative
costs caused by the delinquency, the parties agreeing that Landlord’s damage by
virtue of such delinquencies would be extremely difficult and impracticable to
compute and the amount stated herein represents a reasonable estimate thereof.
Any waiver by Landlord of any late charges or failure to claim the same shall
not constitute a waiver of other late charges or any other remedies available to
Landlord.

E. Interest. Interest shall accrue on all sums not paid when due hereunder at
the lesser often percent (10%) per annum or the maximum interest rate allowed by
law (“Applicable Interest Rate”) from the due date until paid.

F. Remedies Cumulative. All of Landlord’s rights, privileges and elections or
remedies are cumulative and not alternative, to the extent permitted by law and
except as otherwise provided herein.

 

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G. Replacement of Statutory Notice Requirements. When this Lease requires
service of a notice, that notice shall replace rather than supplement any
equivalent or similar statutory notice, including any notice required by
California Code of Civil Procedure Section 1161 or any similar or successor
statute. When a statute requires service of a notice in a particular manner,
service of that notice (or a similar notice required by this Lease) in the
manner required by this Paragraph 26 shall replace and satisfy the statutory
service-of-notice procedures, including those required by California Code of
Civil Procedure Section 1162 or any similar or successor statute.

27. LIENS

Tenant shall at all times keep the Premises and the Project free from liens
arising out of or related to work or services performed, materials or supplies
furnished or obligations incurred by or on behalf of Tenant or in connection
with work made, suffered or done by or on behalf of Tenant in or on the Premises
or Project. If Tenant shall not, within ten (10) days of notice from Landlord,
cause any such lien to be released of record by payment or posting of a proper
bond, Landlord shall have, in addition to all other remedies provided herein and
by law, the right, but not the obligation, to cause the same to be released by
such means as Landlord shall deem proper, including payment of the claim giving
rise to such lien. All sums paid by Landlord on behalf of Tenant and all
expenses incurred by Landlord in connection therefor shall be payable to
Landlord by Tenant on demand with interest at the Applicable Interest Rate as
Additional Rent. Landlord shall have the right at all times to post and keep
posted on the Premises any notices permitted or required by law, or which
Landlord shall deem proper, for the protection of Landlord, the Premises, the
Project and any other party having an interest therein, from mechanics’ and
materialmen’s liens, and Tenant shall give Landlord not Jess than ten
(10) business days prior written notice of the commencement of any work in the
Premises or Project which could lawfully give rise to a claim for mechanics’ or
materialmen’s liens to permit Landlord to post and record a timely notice of
non-responsibility, as Landlord may elect to proceed or as the law may from time
to time provide, for which purpose, if Landlord shall so determine. Landlord may
enter the Premises. Tenant shall not remove any such notice posted by Landlord
without Landlord’s consent, and in any event not before completion of the work
which could lawfully give rise to a claim for mechanics’ or materialmen’s liens.

28. SUBSTITUTION [INTENTIONALLY OMITTED)

29. TRANSFERS BY LANDLORD

In the event of a sale or conveyance by Landlord of the Building or a
foreclosure by any creditor of Landlord, the same shall operate to release
Landlord from any liability upon any of the covenants or conditions, express or
implied, herein contained in favor of Tenant, to the extent required to be
performed after the passing of title to Landlord’s successor-in-interest. In
such event, Tenant agrees to look solely to the responsibility of the
successor-in-interest of Landlord under this Lease with respect to the
performance of the covenants and duties of “Landlord” to be performed after the
passing of title to Landlord’s successor-in-interest. This Lease shall not be
affected by any such sale and Tenant agrees to attorn to the purchaser or
assignee. Landlord’s successor(s)-in-interest shall not have liability to Tenant
with respect to the failure to perform any of the obligations of “Landlord,” to
the extent required to be performed prior to the date such
successor(s)-in-interest became the owner of the Building.

 

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30. RIGHT OF LANDLORD TO PERFORM TENANT’S COVENANTS

All covenants and agreements to be performed by Tenant under any of the terms of
this Lease shall be performed by Tenant at Tenant’s sole cost and expense and
without any abatement of Rent. If Tenant shall fail to pay any sum of money,
other than Base Rent, required to be paid by Tenant hereunder or shall fail to
perform any other act on Tenant’s part to be performed hereunder, including
Tenant’s obligations under Paragraph 11 hereof, and such failure shall continue
for fifteen (15) days after notice thereof by Landlord, in addition to the other
rights and remedies of Landlord, Landlord may make any such payment and perform
any such act on Tenant’s part. In the case of an emergency, no prior
notification by Landlord shall be required. Landlord may take such actions
without any obligation and without releasing Tenant from any of Tenant’s
obligations. All sums so paid by Landlord and all incidental costs incurred by
Landlord and interest thereon at the Applicable Interest Rate, from the date of
payment by Landlord, shall be paid to Landlord on demand as Additional Rent.

31. WAIVER

If either Landlord or Tenant waives the performance of any term, covenant or
condition contained in this Lease, such waiver shall not be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant or
condition contained herein, or constitute a course of dealing contrary to the
expressed terms of this Lease. The acceptance of Rent by Landlord shall not
constitute a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease, regardless of Landlord’s knowledge of such preceding
breach at the time Landlord accepted such Rent. Failure by Landlord to enforce
any of the terms, covenants or conditions of this Lease for any length of time
shall not be deemed to waive or decrease the right of Landlord to insist
thereafter upon strict performance by Tenant. Waiver by Landlord of any term,
covenant or condition contained in this Lease may only be made by a written
document signed by Landlord, based upon full knowledge of the circumstances.

32. NOTICES

Each provision of this Lease or of any applicable governmental laws, ordinances,
regulations and other requirements with reference to sending, mailing, or
delivery of any notice or the making of any payment by Landlord or Tenant to the
other shall be deemed to be complied with when and if the following steps are
taken:

A. Rent. All Rent and other payments required to be made by Tenant to Landlord
hereunder shall be payable to Landlord at such address as Landlord may specify
from time to time by written notice delivered in accordance herewith. Tenant’s
obligation to pay Rent and any other amounts to Landlord under the terms of this
Lease shall not be deemed satisfied until such Rent and other amounts have been
actually received by Landlord.

B. Other. All notices, demands, consents and approvals which may or are required
to be given by either party to the other hereunder shall be in writing and
either personally delivered, sent by commercial overnight courier, mailed,
certified or registered, postage prepaid or sent by facsimile with confirmed
receipt (and with an original sent by commercial overnight courier), and in each
case addressed to the party to be notified at the Notice Address for such party
as specified in the Basic Lease Information or to such other place as the party
to be notified may from time to time designate by at least fifteen (15) days
notice to the notifying party. Notices shall be deemed served upon receipt or
refusal to accept delivery. Tenant appoints as its agent to receive the service
of all default notices and notice of commencement of unlawful detainer
proceedings the person in charge of or apparently in charge of occupying the
Premises at the time, and, if there is no such person, then such service may be
made by attaching the same on the main entrance of the Premises.

 

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C. Required Notices. Tenant shall immediately provide Landlord a copy of any
written notice of a violation or a potential or alleged violation of any
Regulation received by Tenant that relates to the Premises or the Project, and
of any written notice that inquiry, investigation, enforcement or other action
that is instituted or threatened by any governmental or regulatory agency
against Tenant or any other occupant of the Premises, Building or Project, or
any claim that is instituted or threatened in writing by any third party that
relates to the Premises or the Project.

33. ATTORNEYS’ FEES

If Landlord places the enforcement of this Lease, or any part thereof, or the
collection of any Rent due, or to become due hereunder, or recovery of
possession of the Premises in the hands of an attorney, Tenant shall pay to
Landlord, upon demand, Landlord’s reasonable attorneys’ fees and court costs,
whether-incurred at trial, appeal or review. In any action which Landlord or
Tenant brings to enforce its respective rights hereunder, the unsuccessful party
shall pay all costs incurred by the prevailing party including reasonable
attorneys’ fees, to be fixed by the court, and said costs and attorneys’ fees
shall be a part of the judgment in said action.

34. SUCCESSORS AND ASSIGNS

This Lease shall be binding upon and inure to the benefit of Landlord, its
successors and assigns, and shall be binding upon and inure to the benefit of
Tenant, its successors, and to the extent assignment is approved by Landlord as
provided hereunder, Tenant’s assigns.

35. FORCE MAJEURE

If performance by a party of any portion of this Lease is made impossible by any
prevention, delay, or stoppage caused by strikes, lockouts, labor disputes, acts
of God, inability to obtain services, labor, or materials or reasonable
substitutes for those items, government actions, civil commotions, fire or other
casualty, or other causes beyond the reasonable control of the party obligated
to perform, performance by that party for a period equal to the period of that
prevention, delay, or stoppage is excused. Tenant’s obligation to pay Rent,
however, is not excused by this Paragraph 35.

36. SURRENDER OF PREMISES

Tenant shall, upon expiration or sooner termination of this Lease, surrender the
Premises to Landlord in the same condition as existed on the date Tenant
originally took possession thereof, including, but not limited to, all interior
walls cleaned, all holes in walls repaired, all carpets shampooed and cleaned,
all HVAC equipment in operating order and in good repair, and all floors
cleaned, waxed, and free of any Tenant-introduced marking or painting, all to
the reasonable satisfaction of Landlord, subject to normal wear and tear,
Casualty and condemnation. Tenant shall remove Tenant’s Property from the
Premises and all of its debris from the Project. At or before the time of
surrender, Tenant shall comply with the terms of Paragraph 12.A. hereof with
respect to Alterations to the Premises and all other matters addressed in such
Paragraph. If the Premises are not so surrendered at the expiration or sooner
termination of this Lease, the provisions of Paragraph 25 hereof shall apply.
All keys to the Premises or any part thereof shall be surrendered to Landlord
upon expiration or sooner termination of the Term.

 

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Tenant and Landlord shall meet for a joint inspection of the Premises
approximately thirty (30) days prior to Tenant’s vacating the Premises (but
nothing contained herein shall be construed as an extension of the Term or as a
consent by Landlord to any holding over by Tenant). In the event of Tenant’s
failure to participate in such joint inspection, Landlord’s inspection at or
after Tenant’s vacating the Premises shall conclusively be deemed correct for
purposes of determining Tenant’s responsibility for repairs and restoration. If
Tenant fails to remove any of Tenant’s Property within five (5) days after the
termination of this Lease or of Tenant’s right to possession, Landlord, at
Tenant’s sole cost and expense, shall be entitled (but not obligated) to remove
and store Tenant’s Property. Landlord shall not be responsible for the value,
preservation or safekeeping of Tenant’s Property. Tenant shall pay Landlord,
upon demand, the expenses and storage charges incurred for Tenant’s Property. In
addition, if Tenant fails to remove Tenant’s Property from the Premises or
storage, as the case may be, within thirty (30) days after written notice,
Landlord may deem all or any part of Tenant’s Property to be abandoned, and
title to Tenant’s Property shall be deemed to be immediately vested in Landlord.
Any delay caused by Tenant’s failure to carry out its obligations under this
Paragraph 36 beyond the term hereof, shall constitute unlawful and illegal
possession of Premises under Paragraph 25 hereof.

37. HAZARDOUS MATERIALS

A. General Restrictions. Tenant shall conduct its business and shall cause each
Tenant Party to act in such a manner as to (1) not release or permit the release
of any Hazardous Material in, under, on or about the Premises or Project, or
(2) not use, store, generate, treat, discharge, disperse, handle, manufacture,
transport or dispose of (collectively, “Handle”) any Hazardous Materials (other
than incidental amounts of customary cleaning and office supplies) in or about
the Premises or Project without the prior written consent of Landlord, which
consent shall not be unreasonably withheld as long as Tenant demonstrates and
documents to Landlord’s reasonable satisfaction (“Hazardous Materials Consent
Requirements”): (a) that such Hazardous Materials are necessary or useful to
Tenant’s business and will be used, kept, and stored in compliance with all
Regulations relating to such Hazardous Materials, but subject to the Permitted
Use under this Lease; and (b) that Tenant will give all required notices
concerning the presence in or on the Premises, the Building or the Project or
surrounding land or environment or the release of such Hazardous Materials from
the Premises, the Building or the Project or surrounding land or environment,
provided that Tenant may handle, store, use or dispose of products containing
small quantities of Hazardous Materials, which products are of a type
customarily found in offices and households (such as aerosol cans containing
insecticides, toner for copies, paints, paint remover, and the like), provided
further that Tenant shall handle, store, use and dispose of any such Hazardous
Materials in a safe and lawful manner and shall not allow any such Hazardous
Materials to contaminate the Premises, the Building or the Project or
surrounding land or environment. “Hazardous Material” means any hazardous,
explosive, radioactive or toxic substance, material or waste which is or becomes
regulated by any local, state or federal governmental authority or agency,
including, without limitation, any material or substance which is (i) defined or
listed as a “hazardous waste,” “extremely hazardous waste,” “restricted
hazardous waste,” “hazardous substance,” “hazardous material,” “pollutant” or
“contaminant” under any Regulation, (ii) petroleum or petroleum derivative,
(iii) a flammable explosive, (iv) a radioactive material or waste, (v) a
polychlorinated biphenyl, (vi) asbestos or asbestos containing material,
(vii) infectious waste, or (viii) a carcinogen. Tenant further agrees that
Tenant will not permit any substance suspected of causing cancer or reproductive
toxicity to come into contact with groundwater under the Premises. Any such
substance coming into contact with groundwater shall be considered a Hazardous
Material for purposes of this Paragraph.

B. Required Disclosures. Prior to Tenant (and at least five (5) days prior to
any assignee or any subtenant of Tenant) taking possession of any part of the
Premises, and on each anniversary of the Term Commencement Date (each such date
is hereinafter referred to as a “Disclosure Date”), until and including

 

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the first Disclosure Date occurring after the expiration or sooner termination
of this Lease, Tenant shall disclose to Landlord in writing the names and
amounts of all Hazardous Materials, or any combination thereof, which were
Handled on, in, under or about the Premises or Building for the twelve
(12) month period prior to such Disclosure Date, or which Tenant intends to
Handle on, under or about the Premises during the twelve (12) month period
following the Disclosure Date by executing and delivering to Landlord a
“Hazardous Materials Questionnaire”, in the form attached hereto as Exhibit D
(as updated and modified by Landlord, from time to time). Tenant’s disclosure
obligations under this Paragraph 37.B shall include a requirement that, to the
extent any information contained in a Hazardous Materials Questionnaire
previously delivered by Tenant shall become inaccurate in any material respect,
Tenant shall immediately deliver to Landlord a new updated Hazardous Materials
Questionnaire.

C. Additional Obligations. If any Hazardous Materials shall be released into the
environment comprising or surrounding the Project in connection with the acts,
omissions or operations of Tenant or any Tenant Party, Tenant shall at its sole
expense promptly prepare a remediation plan therefor consistent with applicable
Regulations and recommended industry practices (and approved by Landlord and all
governmental agencies having jurisdiction) to fully remediate such release, and
thereafter shall prosecute the remediation plan so approved to completion with
all reasonable diligence and to the satisfaction of Landlord and applicable
governmental agencies. If any Hazardous Materials are Handled in, under, on or
about the Premises by Tenant or any Tenant Party during the Term, or if Landlord
determines in good faith that any release of any Hazardous Material or violation
of Hazardous Materials Regulations may have occurred in, on, under or about the
Premises during the Term, Landlord may require Tenant to at Tenant’s sole
expense, (1) retain a qualified environmental consultant reasonably satisfactory
to Landlord to conduct a reasonable investigation (an “Environmental
Assessment”) of a nature and scope reasonably approved in writing in advance by
Landlord with respect to the existence of any Hazardous Materials in, on, under
or about the Premises and providing a review of all Hazardous Materials
activities of Tenant and the Tenant Parties, and (2) provide to Landlord a
reasonably detailed, written report, prepared in accordance with the
institutional real estate standards, of the Environmental Assessment.

D. Indemnity. Tenant shall indemnify, defend (by counsel reasonably acceptable
to Landlord), protect and hold Landlord and each other Landlord Party harmless
from and against any and all claims, liabilities, losses, costs, loss of rents,
liens, damages, injuries or expenses (including reasonable attorneys’ and
consultants’ fees and court costs), demands, causes of action, or judgments
directly or indirectly arising out of or related to the use, generation,
storage, release, or disposal of Hazardous Materials by Tenant or any of
Tenant’s Parties in, on, under or about the Premises, Building or Project,
surrounding land or environment, which indemnity shall include, without
limitation, damages for personal or bodily injury, property damage, damage to
the environment or natural resources occurring on or off the Premises, losses
attributable to diminution in value or adverse effects on marketability, the
cost of any investigation, monitoring, government oversight, repair, removal,
remediation, restoration, abatement, and disposal, and the preparation of any
closure or other required plans, whether such action is required or necessary
prior to or following the expiration or earlier termination of this Lease.
Neither the consent by Landlord to the use, generation, storage, release or
disposal of Hazardous Materials nor the strict compliance by Tenant with all
laws pertaining to Hazardous Materials shall excuse Tenant from Tenant’s
obligation of indemnification pursuant to this Paragraph 37.D. Tenant’s
obligations pursuant to the foregoing indemnity shall survive the expiration or
earlier termination of this Lease.

E. Landlord Representation. As of the date of this Lease, Landlord has not
received any written notice from any governmental authority that the Building or
Project is in violation of any Regulations relating to the use, storage,
generation, or disposal of Hazardous Materials. Further, to Landlord’s actual
knowledge, there

 

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are no Hazardous Materials at the Building other than small quantities of
Hazardous Materials (such as aerosol cans containing insecticides, toner for
copies, paints, paint remover and the like) to the extent customary and
necessary for the use of the Premises for general office purposes. For purposes
of this Paragraph, “Landlord’s actual knowledge” shall be deemed to mean and is
limited to the current actual knowledge of Matthew Murphy, (Landlord’s General
Manager responsible for the Building) as of the date of this Lease and not any
implied, imputed or constructive knowledge of said individual or of Landlord or
any parties related to or comprising Landlord and without any independent
investigation or inquiry having been made or any implied duty. It is understood
and agreed that such individual shall have no personal liability in any manner
whatsoever hereunder or otherwise related to the transactions contemplated
hereby.

38. MISCELLANEOUS

A. General. The term “Tenant” or any pronoun used in place thereof shall
indicate and include the masculine or feminine, the singular or plural number,
individuals, firms or corporations, and their respective successors, executors,
administrators and permitted assigns, according to the context hereof.

B. Time. Time is of the essence regarding this Lease and all of its provisions.

C. Choice of Law. This Lease shall in all respects be governed by the laws of
the State of California.

D. Entire Agreement. This Lease and the following exhibits and attachments
constitute the entire agreement between the parties and supersede all prior
agreements and understandings related to the Premises, including all lease
proposals, letters of intent and other documents: Exhibit A (Rules and
Regulations), Exhibit B (Outline and Location of Premises), Exhibit C (Lease
Improvement Agreement), Exhibit D (Hazardous Materials Questionnaire), Exhibit E
(Asbestos Notification), and Exhibit F (Depiction of Storage Area).

E. Modification. This Lease may not be modified except by a written instrument
signed by the parties hereto. Tenant accepts the area of the Premises as
specified in the Basic Lease Information as the approximate area of the Premises
for all purposes under this Lease, and acknowledges and agrees that no other
definition of the area (rentable, usable or otherwise) of the Premises shall
apply. Tenant shall in no event be entitled to a recalculation of the square
footage of the Premises, rentable, usable or otherwise, and no recalculation, if
made, irrespective of its purpose, shall reduce Tenant’s obligations under this
Lease in any manner, including without limitation the amount of Base Rent
payable by Tenant or Tenant’s Proportionate Share of the Building and of the
Project.

F. Severability. If, for any reason whatsoever, any of the provisions hereof
shall be unenforceable or ineffective, all of the other provisions shall be and
remain in full force and effect.

G. Recordation. Tenant shall not record this Lease or a short form memorandum
hereof.

H. Examination of Lease. Submission of this Lease to Tenant does not constitute
an option or offer to lease and this Lease is not effective otherwise until
execution and delivery by both Landlord and Tenant.

I. Accord and Satisfaction. No payment by Tenant of a lesser amount than the
total Rent due nor any endorsement on any check or letter accompanying any check
or payment of Rent shall be deemed an accord and satisfaction of full payment of
Rent, and Landlord may accept such payment without prejudice to Landlord’s right
to recover the balance of such Rent or to pursue other remedies. All offers by
or on behalf of Tenant of accord and satisfaction are hereby rejected in
advance.

 

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J. Easements. Landlord may grant easements on the Project and dedicate for
public use portions of the Project without Tenant’s consent; provided that no
such grant or dedication shall materially interfere with Tenant’s Permitted Use
of the Premises. Upon Landlord’s request, Tenant shall execute, acknowledge and
deliver to Landlord documents, instruments, maps and plats necessary to
effectuate Tenant’s covenants hereunder.

K. Drafting and Determination Presumption. The parties acknowledge that this
Lease has been agreed to by both the parties, that both Landlord and Tenant have
consulted with attorneys with respect to the terms of this Lease and that no
presumption shall be created against Landlord because Landlord drafted this
Lease. Except as otherwise specifically set forth in this Lease, with respect to
any consent, determination or estimation of Landlord required or allowed in this
Lease or requested of Landlord, Landlord’s consent, determination or estimation
shall be given or made solely by Landlord in Landlord’s good faith opinion,
whether or not objectively reasonable. If Landlord fails to respond to any
request for its consent within the time period, if any, specified in this Lease,
Landlord shall be deemed to have disapproved such request.

L. Exhibits. The Basic Lease Information, and the Exhibits, addenda and
attachments attached hereto are hereby incorporated herein by this reference and
made a part of this Lease as though fully set forth herein.

M. No Light, Air or View Easement. Any diminution or shutting off of light, air
or view by any structure which may be erected on lands adjacent to or in the
vicinity of the Building shall in no way affect this Lease or impose any
liability on Landlord.

N. No Third Party Benefit. This Lease is a contract between Landlord and Tenant
and nothing herein is intended to create any third party benefit.

O. Quiet Enjoyment. Upon payment by Tenant of the Rent, and upon the observance
and performance of all of the other covenants, terms and conditions on Tenant’s
part to be observed and performed, Tenant shall peaceably and quietly hold and
enjoy the Premises for the term hereby demised without hindrance or interruption
by Landlord or any other person or persons lawfully or equitably claiming by,
through or under Landlord, subject, nevertheless, to all of the other terms and
conditions of this Lease. Landlord shall not be liable for any hindrance,
interruption, interference or disturbance by other tenants or third persons, nor
shall Tenant be released from any obligations under this Lease because of such
hindrance, interruption, interference or disturbance.

P. Counterparts. This Lease may be executed in any number of counterparts, each
of which shall be deemed an original.

Q. Multiple Parties. If more than one person or entity is named herein as
Tenant, such multiple parties shall have joint and several responsibility to
comply with the terms of this Lease.

R. Prorations. Any Rent or other amounts payable to Landlord by Tenant hereunder
for any fractional month shall be prorated based on a month of 30 days. As used
herein, the term “fiscal year” shall mean the calendar year or such other fiscal
year as Landlord may deem appropriate.

S. Asbestos Notification. Tenant acknowledges that Tenant has reviewed the
asbestos notification attached as Exhibit E hereto pursuant to California Health
and Safety Code Sections 2S915 et. seq. (as amended from time to time, the
“Connelly Act”), disclosing the existence of asbestos in the Building. As part
of Tenant’s obligations under this Lease, Tenant agrees to comply with the
Connelly Act, including providing copies of Landlord’s asbestos notification
letter to all of Tenant’s “employees” and “owners”, as those terms are defined
in the Connelly Act.

 

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T. Broker. Tenant represents that it has dealt directly with and only with
Broker (as defined in the Basic Lease Information) as a broker in connection
with this Lease. Tenant shall indemnify and hold Landlord and the Landlord
Parties harmless from all claims of any other brokers claiming to have
represented Tenant in connection with this Lease. Landlord agrees to indemnify
and hold Tenant and the Tenant Parties harmless from all claims of any brokers
other than Broker claiming to have represented Landlord in connection with this
Lease. Equity Office Properties Management Corp. (“EOPMC”) is an affiliate of
Landlord and represents only the Landlord in this transaction. Any assistance
rendered by any agent or employee of EOPMC in connection with this Lease or any
subsequent amendment or modification hereto has been or will be made as an
accommodation to Tenant solely in furtherance of consummating the transaction on
behalf of Landlord, and not as agent for Tenant.

39. ADDITIONAL PROVISIONS

A. Base Rent. Tenant shall pay Base Rent pursuant to the following schedule:

 

Period

  

Annual Rate Per Square Foot

  

Monthly Base Rent

12/10/2004 – 2/9/2005  

   $  0.00    $         0.00

  2/10/2005 – 1/31/2006

   $12.00    $23,546.00

  2/01/2006 – 1/31/2007

   $12.60    $24,723.30

  2/01/2007 – 1/31/2008

   $13.20    $25,900.60

Landlord and Tenant acknowledge that the foregoing schedule is based on the
assumption that the Term Commencement Date is December 10, 2004. If the
Commencement Date is other than December 10, 2004, the schedule set forth above
with respect to the payment of any installment(s) of Base Rent for the Premises
shall be appropriately adjusted on a per diem basis to reflect the actual Term
Commencement Date. However, the effective date of any increases or decreases in
the Base Rent rate shall not be postponed as a result of an adjustment of the
Term Commencement Date as provided above.

B. Monument Signage.

(1) During the Term and provided that Tenant occupies at least 33.33% of the
Rentable Square Footage of the Premises, Tenant, at Tenant’s sole cost, but
subject to governmental approval, shall have the right to place its name on the
Building Monument Sign located directly in front of the Building (the “Monument
Sign”). The design, size and color of the signage with Tenant’s name to be
included on the Monument Sign, and the manner in which it is attached to the
Monument Sign, shall be subject to the reasonable approval of Landlord and all
applicable governmental authorities, and Landlord shall have the right to
require that all names on the Monument Sign be of the same size and style.
Tenant, at its cost, shall be responsible for the maintenance, repair or
replacement of the Monument Sign and Tenant’s signage on the Monument Sign,
which shall be maintained in a manner reasonably satisfactory to Landlord. In
the event that Landlord recaptures a portion of the Premises pursuant to
Paragraph 21 of this Lease, Landlord shall have the right to place a name on the
Monument Sign for any replacement tenants) leasing such recaptured space. In
such event, Tenant shall continue to maintain, repair and replace the Monument
Sign, but not such other tenant’s signage thereon.

 

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(2) Upon expiration or earlier termination of this Lease or Tenant’s right to
possession of the Premises, or if Tenant does not occupy at least 33.33% of the
Rentable Square Footage of the Premises, Landlord, at Tenant’s cost, payable as
Additional Rent within 30 days after demand therefor, shall have the right to
remove Tenant’s signage from the Monument Sign and restore the Monument Sign to
the condition it was in prior to installation of Tenant’s signage thereon,
ordinary wear and tear excepted.

(3) The rights provided in this Section 39.B. shall be non-transferable unless
otherwise agreed by Landlord in writing.

C. Fenced Storage Area.

(1) Landlord leases to Tenant and Tenant accepts the fenced storage area located
behind the Premises and depicted on Exhibit F attached hereto (the “Storage
Area”). For the term (the “Storage Term”) commencing on the Term Commencement
Date (such date sometimes being referred to in this Storage Area provision as
the “Storage Commencement Date”) and end on the Termination Date of this Lease
(such date sometime being referred to in the Storage Area provision as the
“Storage Expiration Date”), unless this Lease or Tenant’s right to possession of
the Premises thereunder terminates sooner, in which case, the Storage Expiration
Date shall be such earlier termination date.

(2) The Storage Area shall be used for the purpose of the storage of materials,
equipment, inventory or other non-perishable items normally used in Tenant’s
business, all in compliance with applicable Regulations. Tenant shall, at its
sole cost and expense, maintain, repair, replace (as necessary) the wood or
metal slats which screen the Storage Area, and the chain link fence enclosing
the Storage Area, with such replacement screening and/or fencing to be approved
by Landlord in its reasonable discretion. Tenant shall not store anything in the
Storage Area at a level higher than the top of the fence that encloses the
Storage Area, nor anything that is unsafe or otherwise may create a hazardous
conditions, or that may increase Landlord’s insurance rates, or cause a
cancellation or modification of Landlord’s insurance coverage. Without
limitation, Tenant shall not storage any flammable, combustible or explosive
fluid, chemical or substance, except with Landlord’s prior written approval.
Upon the expiration or earlier termination of Tenant’s rights to the Storage
Area, Tenant shall completely vacate and surrender the Storage Area to Landlord
in the condition in which it was delivered to Tenant, ordinary wear and tear
excepted, and empty of all stored items placed therein.

(3) All terms and provisions of this Lease shall be applicable to the Storage
Area, including, without limitation, Article 8 (Insurance and Indemnification),
except that Landlord shall not supply any services to the Storage Area and
Tenant shall not be entitled to any work allowances, rent credits, expansion
rights or renewal rights with respect to the Storage Area unless such
concessions or rights are specifically provided for herein with respect to the
Storage Area. Landlord shall not be liable for any theft or damage to any items
or materials stored in the Storage Area, it being understood that Tenant is
using the Storage Area at its own risk.

(4) Tenant agrees to accept the Storage Area in its condition and “as-built”
configuration existing on the earlier of the date Tenant lakes possession of the
Storage Area or the Storage Commencement Date.

 

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40. JURY TRIAL WAIVER

EACH PARTY HERETO (WHICH INCLUDES ANY ASSIGNEE, SUCCESSOR HEIR OR PERSONAL
REPRESENTATIVE OF A PARTY) SHALL NOT SEEK A JURY TRIAL, HEREBY WAIVES TRIAL BY
JURY, AND HEREBY FURTHER WAIVES ANY OBJECTION TO VENUE IN THE COUNTY IN WHICH
THE BUILDING IS LOCATED, AND AGREES AND CONSENTS TO PERSONAL JURISDICTION OF THE
COURTS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IN ANY ACTION OR
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER ON ANY
MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES,
OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY
STATUTE, EMERGENCY OR OTHERWISE, WHETHER ANY OF THE FOREGOING IS BASED ON THIS
LEASE OR ON TORT LAW. EACH PARTY REPRESENTS THAT IT HAS HAD THE OPPORTUNITY TO
CONSULT WITH LEGAL COUNSEL CONCERNING THE EFFECT OF THIS PARAGRAPH 40. THE
PROVISIONS OF THIS PARAGRAPH 40 SHALL SURVIVE THE EXPIRATION OR EARLIER
TERMINATION OF THIS LEASE.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day
and the year first above written.

 

LANDLORD

EOP-INDUSTRIAL PORTFOLIO, L.L.C.,

a Delaware limited liability company

By:   EOP Operating Limited Partnership,  

a Delaware limited partnership, its sole member

  By:   Equity Office Properties Trust,     a Maryland real estate trust, its  
  general partner     By:  

 

    Name:  

 

    Title:  

 

 

TENANT

KERBEROS PROXIMAL SOLUTIONS, INC.,

a Delaware corporation

By:  

 

Name:  

 

Title:  

 

 

By:  

 

Name:  

 

Title:  

 

 

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EXHIBIT A

Industrial Lease

Rules and Regulations

 

1. Driveways, sidewalks, halls, passages, exits, entrances, elevators,
escalators and stairways shall not be obstructed by tenants or used by tenants
for any purpose other than for ingress to and egress from their respective
premises. The driveways, sidewalks, halls, passages, exits, entrances, elevators
and stairways 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 Landlord, shall be prejudicial to the safety,
character, reputation and interests of the Building, the Project and its
tenants, provided that nothing herein contained shall be construed to prevent
such access to persons with whom any tenant normally deals in the ordinary
course of such tenant’s business unless such persons are engaged in illegal
activities. No tenant, and no employees or invitees of any tenant, shall go upon
the roof of any Building, except as authorized by Landlord.

 

2. No sign, placard, banner, picture, name, advertisement or notice, visible
from the exterior of the Premises or the Building or the common areas of the
Building shall be inscribed, painted, affixed, installed or otherwise displayed
by Tenant either on its Premises or any part of the Building or Project without
the prior written consent of Landlord in Landlord’s sole and absolute
discretion. Landlord shall have the right to remove any such sign, placard,
banner, picture, name, advertisement, or notice without notice to and at the
expense of Tenant, which were installed or displayed in violation of this rule.
If Landlord shall have given such consent to Tenant at any time, whether before
or after the execution of Tenant’s Lease, such consent shall in no way operate
as a waiver or release of any of the provisions hereof or of the Lease, and
shall be deemed to relate only to the particular sign, .placard, banner,
picture, name, advertisement or notice go consented to by Landlord and shall not
be construed as dispensing with the necessity of obtaining the specific written
consent of Landlord with respect to any other such sign, placard, banner,
picture, name, advertisement or notice,

All approved signs or lettering on doors and walls shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person or vendor approved by
Landlord and shall be removed by Tenant at the time of vacancy at Tenant’s
expense.

 

3. The directory of the Building or Project will be provided exclusively for the
display of the name and location of tenants only and Landlord reserves the right
to charge for the use thereof and to exclude any other names therefrom.

 

4. No curtains, draperies, blinds, shutters, shades, screens or other coverings,
awnings, hangings or decorations shall be attached to, hung or placed in, or
used in connection with, any window or door on the Premises without the prior
written consent of Landlord. In any event with the prior written consent of
Landlord, all such items shall be installed inboard of Landlord’s standard
window covering and shall in no way be visible from the exterior of the
Building. All electrical ceiling fixtures hung in offices or spaces along the
perimeter of the Building must be fluorescent or of a quality, type, design, and
bulb color approved by Landlord. No articles shall be placed or kept on the
window sills so as to be visible from the exterior of the Building. No articles
shall be placed against glass partitions or doors which Landlord considers
unsightly from outside Tenant’s Premises.

 

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5. Each tenant shall be responsible for all persons for whom it allows to enter
the Building or the Project and shall be liable to Landlord for all acts of such
persons.

Landlord and its agents shall not be liable for damages for any error concerning
the admission to, or exclusion from, the Building or the Project of any person.

During the continuance of any invasion, mob, riot, public excitement or other
circumstance rendering such action advisable in Landlord’s opinion, Landlord
reserves the right (but shall not be obligated) to prevent access to the
Building and the Project during the continuance of that event by any means it
considers appropriate for the safety of tenants and protection of the Building,
property in the Building and the Project

 

6. Tenant shall not alter any lock or access device or install a new or
additional lock or access device or bolt on any door of its Premises, without
the prior written consent of Landlord. If Landlord shall give its consent,
Tenant shall in each case furnish Landlord with a key for any such lock. Tenant,
upon the termination of its tenancy, shall deliver to Landlord the keys for all
doors which have been furnished to Tenant, and in the event of loss of any keys
so furnished, shall pay Landlord therefor.

 

7. The restrooms, toilets, urinals, wash bowls and other 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 into them. The expense
of any breakage, stoppage, or damage resulting from violation of this rule shall
be borne by the tenant who, or whose employees or invitees, shall have caused
the breakage, stoppage, or damage.

 

8. Tenant shall not use or keep in or on the Premises, the Building or the
Project any kerosene, gasoline, or inflammable or combustible fluid or material
except in strict accordance with the terms of the Lease.

 

9. Tenant shall not use, keep or permit to be used or kept in its Premises any
foul or noxious gas or substance. Tenant shall not allow the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be brought or kept in or about the Premises, the
Building, or the Project.

 

10. Except with the prior written consent of Landlord, Tenant shall not sell, or
permit the sale, at retail, of newspapers, magazines, periodicals, theater
tickets or any other goods or merchandise in or on the Premises, nor shall
Tenant carry on, or permit or allow any employee or other person to carry on,
the business of stenography, typewriting or any similar business in or from the
Premises for the service or accommodation of occupants of any other portion of
the Building, or the business of a public barber shop, beauty parlor, nor shall
the Premises be used for any illegal, improper, immoral or objectionable
purpose, or any business or activity other than that specifically provided for
in such Tenant’s Lease. Tenant shall not accept hairstyling, barbering,
shoeshine, nail, massage or similar services in the Premises or common areas
except as authorized by Landlord.

 

11. If Tenant requires telegraphic, telephonic, telecommunications, data
processing, burglar alarm or similar services, it shall first obtain, and comply
with, Landlord’s instructions in their installation. The cost of purchasing,
installation and maintenance of such services shall be borne solely by Tenant.

 

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12. Landlord will direct electricians as to where and how telephone, telegraph
and electrical wires are to be introduced or installed. No boring or cutting for
wires will be allowed without the prior written consent of Landlord. The
location of burglar alarms, telephones, call boxes and other office equipment
affixed to the Premises shall be subject to the prior written approval of
Landlord.

 

13. Tenant shall not install any radio or television antenna, satellite dish,
loudspeaker or any other device on the exterior walls or the roof of the
Building, without Landlord’s consent. Tenant shall not interfere with radio or
television broadcasting or reception from or in the Building, the Project or
elsewhere,

 

14. Tenant shall not mark, or drive nails, screws or drill into the partitions,
woodwork or drywall or in any way deface the Premises or any part thereof.
Tenant shall not lay linoleum, tile, carpet or any other floor covering so that
the same shall be affixed to the floor of its Premises in any manner except as
approved in writing by Landlord. The expense of repairing any damage resulting
from a violation of this rule or the removal of any floor covering shall be done
by the tenant by whom, or by whose contractors, employees or invitees, the
damage shall have been caused.

 

15. Tenant shall not place a load upon any floor of its Premises which exceeds
the load per square foot which such floor was designed to carry or which is
allowed by law.

Business machines and mechanical equipment belonging to Tenant which cause noise
or vibration that may be transmitted to the structure of the Building or to any
space therein to such a degree as to be objectionable to Landlord or to any
tenants in the Building shall be placed and maintained by Tenant, at Tenant’s
expense, on vibration eliminators or other devices sufficient to eliminate noise
or vibration. The persons employed to move such equipment in or out of the
Building must be acceptable to Landlord.

 

16. Each tenant shall store all its trash and garbage within the interior of the
Premises or as otherwise directed by Landlord from time to time. Tenant shall
not place in the trash boxes or receptacles any personal trash or any material
that may not or cannot be disposed of in the ordinary and customary manner of
removing and disposing of trash and garbage in the city, without violation of
any law or ordinance governing such disposal.

 

17. Canvassing, soliciting, distribution of handbills or any other written
material and peddling in the Building and the Project are prohibited and each
tenant shall cooperate to prevent the same. No tenant shall make room-to-room
solicitation of business from other tenants in the Building or the Project,
without the written consent of Landlord.

 

18. Landlord shall have the right, exercisable upon 30 days prior written notice
to Tenant, and without liability to any tenant, to change the name and address
of the Building and/or the Project.

 

19. Landlord reserves the right to exclude or expel from the Project any person
who, in Landlord’s judgment, is under the influence of alcohol or drugs or who
commits any act in violation of any of these Rules and Regulations.

 

20. Without the prior written consent of Landlord, Tenant shall not use the name
of the Building or the Project or any photograph or other likeness of the
Building or the Project in connection with, or in promoting or advertising,
Tenant’s business except that Tenant may include the Building’s or Project’s
name in Tenant’s address.

 

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21. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

 

22. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.

 

23. Landlord reserves the right to designate the use of the parking spaces on
the Project Tenant or Tenant’s guests shall park between designated parking
lines only, and shall not occupy two parking spaces with one car. No trucks,
truck tractors, trailers or fifth wheel are allowed to be parked anywhere at any
time within the Project other than in Tenant’s own truck dock well. Vehicles in
violation of the above shall be subject to tow-away, at vehicle owner’s expense.
Vehicles parked on the Project overnight without prior written consent of the
Landlord shall be deemed abandoned and shall be subject to tow-away at vehicle
owner’s expense. No tenant of the Building shall park in visitor or reserved
parking areas or loading areas. Any tenant found parking in such designated
visitor or reserved parking areas or loading areas or unauthorized areas shall
be subject to tow-away at vehicle owner’s expense. The parking areas shall not
be used to provide car wash, oil changes, detailing, automotive repair or other
services unless otherwise approved or furnished by Landlord. Tenant will from
time to time, upon the request of Landlord, supply Landlord with a list of
license plate numbers of vehicles owned or operated by its employees or agents.

 

24. No Tenant is allowed to unload, unpack, pack or in any way manipulate any
products, materials or goods in the common areas of the Project including the
parking and driveway areas of the Project. All products, goods and materials
must be manipulated, handled, kept, and stored within the Tenant’s Premises and
not in any exterior areas, including, but not limited to, exterior dock
platforms, against the exterior of the Building, parking areas and driveway
areas of the Project. Tenant also agrees to keep the exterior of the Premises
clean and free of nails, wood, pallets, packing materials, barrels and any other
debris produced from their operation. AH products, materials and goods are to
enter and exit the Premises by being loaded or unloaded through dock high doors
into trucks and or trailers, over dock high loading platforms into trucks and or
trailers or loaded or unloaded into trucks and or trailers within the Premises
through grade level door access.

 

25. Tenant shall be responsible for the observance of all of the foregoing Rules
and Regulations by Tenant’s employees, agents, clients, customers, invitees and
guests.

 

26. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify, alter or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of any premises in the Project.

 

27. Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other tenant or tenants, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all tenants of the Building.

 

A-4

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EXHIBIT B

OUTLINE AND LOCATION OF PREMISES

[Intentionally Omitted]

 

B-1

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EXHIBIT C

WORK LETTER

[Intentionally Omitted]

 

C-1

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EXHIBIT D

HAZARDOUS MATERIALS QUESTIONNAIRE

This questionnaire is designed to solicit information regarding Tenant’s
proposed use, generation, treatment, storage, transfer or disposal of hazardous
or toxic materials, substances or wastes. If this Questionnaire is attached to
or provided in connection with a lease, the reference herein to any such items
shall include all items defined as “Hazardous Materials,” “Hazardous
Substances,” “Hazardous Wastes,” “Toxic Materials,” “Toxic Substances, “Toxic
Wastes,” or such similar definitions contained in the lease. Please complete the
questionnaire and return it to Landlord for evaluation. If your use of materials
or substances, or generation of wastes is considered to be significant, further
information may be requested regarding your plans for hazardous and toxic
materials management. Your cooperation in this matter is appreciated. If you
have any questions, do not hesitate to call us for assistance.

 

1. PROPOSED TENANT

Name (Corporation, Individual, Corporate or Individual DBA, or Public Agency):
Kerberos Proximal Solutions, Inc.

Standard Industrial Classification Code (SIC): 3841 Surgical & Medical
Instruments & Apparatus

Street Address: 1400 Terra Bella Avenue, Suite E & K

City, State, Zip Code: Mountain View, CA 94043

Contact Person & Title: Michael Orth - Chief Operating Officer / Chief Financial
Officer

Telephone Number: (650) 254-1005 x322

Facsimile Number: (650) 254-1033

 

2. LOCATION AND ADDRESS OF PROPOSED LEASE

Street Address: 10600 Tantau Avenue

City, Stale, Zip Code: Cupertino, CA 95014

Bordering Streets: Pruneridge

Streets to which Premises has Access: Tantau & Pruneridge

 

3. DESCRIPTION OF PREMISES

Floor Area: 23.546 ft2

Number of Parking Spaces: 95 based on 4 spaces per 1000 ft

Date of Original Construction:                             

Past Uses of Premises: Office / R&D / Medical Device / Light Manufacturing

 

D-1

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Dates and Descriptions of Significant Additions, Alterations or Improvements:

 

 

 

Proposed Additions, Alterations or Improvements,
if any:                                      
                                                                        

 

4. DESCRIPTION OF PROPOSED PREMISES USE

Describe proposed use and operation of Premises including (i) services to be
performed, (ii) nature and types of manufacturing or assembly processes, if any,
and (iii) the materials or products to be stored at the Premises.

General business office. R&D and light manufacturing facility for medical
devices. The facility has a Controlled Environment Room (CER) where medical
devices will be manufactured, tested, and packaged.

Will the operation of your business at the Premises involve the use, generation,
treatment, storage, transfer or disposal of hazardous wastes or materials? Do
they now?    Yes  x    No.  ¨ If the answer is “yes,” or if your SIC code number
is between 2000 to 4000, please complete Section V.

 

5. PERMIT DISCLOSURE

Does or will the operation of any facet of your business at the Premises require
any permits, licenses or plan approvals from any of the following agencies?

 

U.S. Environmental Protection Agency

  Yes  ¨   No  x

City or County Sanitation District

  Yes  ¨   No  x

State Department of Health Services

  Yes  ¨   No  x

U.S. Nuclear Regulatory Commission

  Yes  ¨   No  x

Air Quality Management District

  Yes  ¨   No  x

City or County Fire Department

  Yes  ¨   No   x

Regional Water Quality Control Board

  Yes  ¨   No  x

Other Governmental Agencies (if yes,

  Yes  ¨   No  x

identify:                                                           )

If the answer to any of the above is “yes,” please indicate permit or license
numbers, issuing agency and expiration date or renewal date, if applicable.

 

 

 

If your answer to any of the above is “yes,” please complete Sections VI and
VII.

 

D-2

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6. HAZARDOUS MATERIALS DISCLOSURE

Will any hazardous or toxic materials or substances be stored on the
Premises?    Yes  x    No  ¨ If the answer is “yes,” please describe the
materials or substances to be stored, the quantities thereof and the proposed
method of storage of the same (i.e., drums, aboveground or underground storage
tanks, cylinders, other), and whether the material is a Solid (S), Liquid (L) or
Gas (G):

 

Material/Substance

  

Quantity to be
Stored on Premises

  

Storage Method

  

Amount to be
Stored on a
Monthly Basis

  

Maximum Period
of Premises
Storage

Isopropyl Alcohol

  

10 Gallons

  

Flammable Cabinets

  

Less than 10 gal

  

Ongoing

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

Attach additional sheets if necessary.

 

Is any modification of the Premises improvements required or planned to mitigate
the release of toxic or hazardous materials substance or wastes into the
environment?    Yes  ¨    No  x If the answer is “yes,” please describe the
proposed Premises modifications:

 

 

 

 

7. HAZARDOUS WASTE DISCLOSURE

Will any hazardous waste, including recyclable waste, be generated by the
operation of your business at the Premises?    Yes  ¨    No  x If the answer is
“yes,” please list the hazardous waste which is expected to be generated (or
potentially will be generated) at the Premises, its hazard class and
volume/frequency of generation on a monthly basis.

 

Waste Name

  

Hazard Class

  

Volume/Month

  

Maximum Period of

Premises Storage

 

  

 

  

 

  

 

 

  

 

  

 

  

 

Attach additional sheets if necessary.

If the answer is “yes,” please also indicate if any such wastes are to be stored
within the Premises and the proposed method of storage (i.e., drums, aboveground
or underground storage tanks, cylinders, other).

 

D-3

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Waste Name

  

Storage Method

    

 

  

 

  

 

  

 

  

 

  

 

  

Attach additional sheets if necessary.

If the answer is “yes,” please also describe the method(s) of disposal for each
waste. Indicate where disposal will take place including the methods, equipment
and companies to be used to transport the waste:

The company may come into possession of blood contaminated product returned from
customers. The company maintains procedures and policies for the handling of
this material and contracts disposal with a licensed biohazard disposal company.
No more than 5 pounds of material is expected in the building at any one time.

Is any treatment or processing of hazardous wastes to be conducted at the
Premises?    Yes   x    No   ¨ If the answer is “yes,” please describe proposed
treatment/processing methods:

In the event of contaminated product returns, the material is disinfected using
standard bleach type products prior to disposal by a licensed biohazard disposal
company.

Which agencies are responsible for monitoring and evaluating compliance with
respect to the storage and disposal of hazardous materials or wastes at or from
the Premises? (Please list all agencies):

The companies procedures are audited under its ISO certification and FDA
guidelines.

Have there been any agency enforcement actions regarding Tenant (or any
affiliate thereof), or any existing Tenant’s (or any affiliate’s) facilities, or
any past, pending or outstanding administrative orders or consent decrees with
respect to Tenant or any affiliate thereof?    Yes  ¨    No  x If the answer is
“yes,” have there been any continuing compliance obligations imposed on Tenant
or its affiliates as a result of the decrees or orders?    Yes  ¨    No  ¨ If
the answer is “yes,” please describe:

 

 

 

 

D-4

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Has Tenant or any of its affiliates been the recipient of requests for
information, notice and demand letters, cleanup and abatement orders, or cease
and desist orders or other administrative inquiries?

Yes  ¨    No  x If the answer is “yes,” please describe:

 

 

 

Are there any pending citizen lawsuits, or have any notices of violations been
provided to Tenant or its affiliates or with respect to any existing facilities
pursuant to the citizens suit provisions of any statute?

Yes  ¨    No  x If the answer is “yes,” please describe:

 

 

 

Have there been any previous lawsuits against the company regarding
environmental concerns?

Yes  ¨    No  x If the answer is “yes,” please describe how these lawsuits were
resolved.

 

 

 

 

Has an environmental audit ever been conducted at any of your company’s existing
facilities?

Yes  ¨    No  x If the answer is “yes,” please describe:

 

 

 

 

Does your company carry environmental impairment insurance?

Yes  ¨    No  x If the answer is “yes,” what is the name of the carrier and what
are the effective periods and monetary limits of such coverage?

 

 

 

 

8. EQUIPMENT LOCATED OR TO BE LOCATED AT THE PREMISES

Is (or will there be) any electrical transformer or other equipment containing
polychlorinated biphenyls located at the Premises? Yes  ¨    No  x If the answer
is “yes,” please specify the size, number and location (or proposed location):

 

 

 

 

D-5

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Is (or will there be) any tank for storage of a petroleum product located at the
Premises?

Yes  ¨    No  x If the answer is “yes,” please specify capacity and contents of
tank; permits, licenses and/or approvals received or to be received therefor and
any spill prevention control or conformance plan to be taken in connection
therewith:

 

 

 

 

9. ONGOING ACTIVITIES (APPLICABLE TO TENANTS IN POSSESSION)

Has any hazardous material, substance or waste spilled, leaked, discharged,
leached, escaped or otherwise been released into the environment at the
Premises? Yes  ¨    No  ¨ If the answer is “yes,” please describe including
(i) the date and duration of each such release, (ii) the material, substance or
waste released, (iii) the extent of the spread of such release into or onto the
air, soil and/or water, (iv) any action to clean up the release, (v) any reports
or notifications made of filed with any federal, state, or local agency, or any
quasi-governmental agency (please provide copies of such reports or
notifications) and (vi) describe any legal, administrative or other action taken
by any of the foregoing agencies or by any other person as a result of the
release:

 

Kerberos has no knowledge of any of the above prior to taking possession of the
Tantau facility.

 

 

This Hazardous Materials Questionnaire is certified as being true and accurate
and has been completed by the party whose signature appears below on behalf of
Tenant as of the date set forth below.

DATED: 12/8/04

 

Signature  

 

Print Name  

 

Title   Chief Operations Officer

 

D-6

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EXHIBIT E

ASBESTOS NOTIFICATION

This Exhibit (this “Work Letter”) is attached to and made a part of the Lease by
and between EOP-INDUSTRIAL PORTFOLIO, L.L.C. (hereinafter called “Landlord”),
and KERBEROS PROXIMAL SOLUTIONS, INC., a Delaware corporation- (hereinafter
called “Tenant”) for space in the Building located at 10600 North Tantau Avenue,
Cupertino, California.

Asbestos-containing materials (“ACMs”) were historically commonly used in the
construction of commercial buildings across the country. ACMs were commonly used
because of their beneficial qualities; ACMs are fire-resistant and provide good
noise and temperature insulation.

Some common types of ACMs include surfacing materials (such as spray-on
fireproofing, stucco, plaster and textured paint), flooring materials (such as
vinyl floor tile and vinyl floor sheeting) and their associated mastics, carpet
mastic, thermal system insulation (such as pipe or duct wrap, boiler wrap and
cooling tower insulation), roofing materials, drywall, drywall joint tape and
drywall joint compound, acoustic ceiling tiles, transite board, base cove and
associated mastic, caulking, window glazing and fire doors. These materials are
not required under law to be removed from any building (except prior to
demolition and certain renovation projects). Moreover, ACMs generally are not
thought to present a threat to human health unless they cause a release of
asbestos fibers into the air, which does not typically occur unless (1) the ACMs
are in a deteriorated condition, or (2) the ACMs have been significantly
disturbed (such as through abrasive cleaning, or maintenance or renovation
activities).

It is possible that some of the various types of ACMs noted above (or other
types) are present at various locations in the Building. Anyone who finds any
such materials in the Building should assume them to contain asbestos unless
those materials are properly tested and found to be otherwise. In addition,
under applicable law, certain of these materials are required to be presumed to
contain asbestos in the Building because the Building was built prior to 1981
(these materials are typically referred to as “Presumed Asbestos Containing
Materials” or “PACM”). PACM consists of thermal system insulation and surfacing
material found in buildings constructed prior to 1981, and asphalt or vinyl
flooring installed prior to 1981. If any thermal system insulation, asphalt or
vinyl flooring or surfacing materials are found to be present in the Building,
such materials must be considered PACM unless properly tested and found
otherwise. In addition, Landlord has identified the presence of certain ACMs in
the Building. For information about the specific types and locations of these
identified ACMs, please contact the Building manager. The Building Manager
maintains records of the Building’s asbestos information including any Building
asbestos surveys, sampling and abatement reports. This information is maintained
as part of Landlord’s asbestos Operations and Maintenance Plan (“O&M Plan”).

The O&M Plan is designed to minimize the potential of any harmful asbestos
exposure to any person in the Building. Because Landlord is not a physician,
scientist or industrial hygienist, Landlord has no special knowledge of the
health impact of exposure to asbestos. Therefore, Landlord hired an independent
environmental consulting firm to prepare the Building’s O&M Plan. The O&M Plan
includes a schedule of actions to be taken in order to (1) maintain any building
ACMs in good condition, and (2) to prevent any significant disturbance of such
ACMs. Appropriate Landlord personnel receive regular periodic training on how to
properly administer the O&M Plan.

 

E-1

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The O&M Plan describes the risks associated with asbestos exposure and how to
prevent such exposure. The O&M Plan describes those risks, in general, as
follows: asbestos is not a significant health concern unless asbestos fibers are
released and inhaled. If inhaled, asbestos fibers can accumulate in the lungs
and, as exposure increases, the risk of disease (such as asbestosis and cancer)
increases. However, measures taken to minimize exposure and consequently
minimize the accumulation of fibers, can reduce the risk of adverse health
effects.

The O&M Plan also describes a number of activities which should be avoided in
order to prevent a release of asbestos fibers. In particular, some of the
activities which may present a health risk (because those activities may cause
an airborne release of asbestos fibers) include moving, drilling, boring or
otherwise disturbing ACMs. Consequently, such activities should not be attempted
by any person not qualified to handle ACMs. In other words, the approval of
Building management must be obtained prior to engaging in any such activities.
Please contact the Building manager for more information in this regard. A copy
of the written O&M Plan for the Building is located in the Building Management
Office and, upon your request, will be made available to tenants for you to
review and copy during regular business hours.

Because of the presence of ACM in the Building, we are also providing the
following warning, which is commonly known as a California Proposition 65
warning:

WARNING: This building contains asbestos, a chemical known to the State of
California to cause cancer.

Please contact the Building manager with any questions regarding the contents of
this Exhibit E

 

E-2

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EXHIBIT F

DEPICTION OF STORAGE AREA

This Exhibit (this “Work Letter”) is attached to and made a part of the Lease by
and between EOP-INDUSTRIAL PORTFOLIO, L.L.C. (hereinafter called “Landlord”),
and KERBEROS PROXIMAL SOLUTIONS, INC, a Delaware corporation (hereinafter called
“Tenant”) for space in the Building located at 10600 North Tantau Avenue,
Cupertino, California,

 

F-1