Exhibit 10.1

OFFICE LEASE

This Office Lease (this “Lease”), dated as of the date set forth in Section 1.1,
is made by and between CA-10880 WILSHIRE LIMITED PARTNERSHIP, a Delaware limited
partnership (“Landlord”), and PUMA BIOTECHNOLOGY, INC., a Delaware corporation
(“Tenant”). The following exhibits are incorporated herein and made a part
hereof: Exhibit A (Outline of Premises); Exhibit B (Work Letter); Exhibit C
(Form of Confirmation Letter); Exhibit D (Rules and Regulations); Exhibit E
(Judicial Reference); Exhibit F (Additional Provisions); Exhibit G (Asbestos
Notification); Exhibit H (Outline and Location of Temporary Space); and Exhibit
I (Form of Letter of Credit).

 

1 BASIC LEASE INFORMATION

 

1.1

  Date:     October 4, 2011

1.2    

  Premises.       1.2.1   “Building”:   10880 Wilshire Boulevard, Los Angeles,
California, commonly known as 10880 Wilshire Boulevard.   1.2.2   “Premises”:  
Subject to Section 2.1.1, 13,254 rentable square feet of space located on the
21st floor of the Building and commonly known as Suite No. 2150, the outline and
location of which is set forth in Exhibit A. If the Premises includes any floor
in its entirety, all corridors and restroom facilities located on such floor
shall be considered part of the Premises.   1.2.3   “Property”:   The Building,
the parcel(s) of land upon which it is located, and any parking facilities and
other improvements serving the Building and the parcel(s) of land upon which
such parking facilities and other improvements are located.   1.2.4   “Project”:
  The Property or, any project containing the Property and any other land,
buildings or other improvements.

1.3    

  Term       1.3.1   Term:   The term of this Lease (the “Term”) shall commence
on the Commencement Date and end on the Expiration Date (or any earlier date on
which this Lease is terminated as provided herein).   1.3.2   “Commencement
Date”:   The earlier of (i) the first date on which Tenant conducts business in
the Premises (excluding the Temporary Space) pursuant to this Lease, or (ii) the
date on which the Premises is Ready for Occupancy (defined in Exhibit B), which
is anticipated to be November 1, 2011   1.3.3   “Expiration Date”:   The last
day of the 84th full calendar month commencing on or after the Commencement
Date.

1.4    

      “Base Rent”:  

 

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Period During Term    Annual Base Rent
Per Rentable
Square Foot      Monthly
Installment
of Base Rent  

Commencement Date through last day of 12th full calendar month of Term

   $ 40.20       $ 44,400.90   

13th through 24th full calendar month of Term

   $ 41.41       $ 45,737.35   

25th through 36th full calendar month of Term

   $ 42.65       $ 47,106.93   

37th through 48th full calendar month of Term

   $ 43.93       $ 48,520.69   

49th through 60th full calendar month of Term

   $ 45.25       $ 49,978.63   

61st through 72nd full calendar month of Term

   $ 46.60       $ 51,469.70   

73rd full calendar month of Term through Expiration Date

   $ 48.00       $ 53,016.00   

Base Rent Abatement. Notwithstanding anything in this Lease to the contrary, so
long as Tenant is not in Default (as defined in Section 19) under this Lease,
Tenant shall be entitled to an abatement of Base Rent in the amount of
$44,400.90 per month applicable to the second (2nd), third (3rd), fourth (4th),
fifth (5th), sixth (6th) and eleventh (11th) full calendar months of the Term.
The total amount of Base Rent abated in accordance with the foregoing shall
equal $266,405.40 (the “Abated Base Rent”). Only Base Rent shall be abated
pursuant to this Section, and all Additional Rent (as defined in Section 3
below) and other costs and charges specified in this Lease shall remain as due
and payable pursuant to the provisions of this Lease.

 

  1.5   “Base Year” for Expenses:         Calendar year 2012.     “Base Year”
for Taxes:         Calendar year 2012.   1.6   “Tenant’s Share”:   2.2542%
(based upon a total of 587,971 rentable square feet in the Building).   1.7  
“Permitted Use”:   General office use consistent with a first-class office
building; provided that in no event shall the Premises, or any portion of the
Premises, be used for the primary use of (i) retail sale of food and beverages,
or (ii) a retail commercial printing service.   1.8.   “Security Deposit”:   $0,
as more particularly described in Section 21.     Prepaid Base Rent:  
$44,400.90, as more particularly described in Section 3.     Letter of Credit:  
$1,000,000, as more particularly described in, and subject to reduction pursuant
to, Section 6 of Exhibit F.

 

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  1.9   Parking:  

Tenant shall have the right, but not the obligation, to lease up to 39
unreserved parking passes; provided, however, Tenant may convert up to three (3)
of such 39 unreserved passes into three (3) reserved parking passes in the
Parking Facility (as defined in Section 24). Prior to the Commencement Date,
Tenant shall notify Landlord in writing of the number of unreserved and reserved
parking passes which Tenant initially elects to lease during the Term.
Thereafter, Tenant may increase or decrease the number of reserved and
unreserved parking passes to be used by Tenant pursuant to this Section 1.9 upon
a minimum of 30 days prior written notice to Landlord, provided that it Tenant
fails to continuously lease any reserved passes, Tenant’s right to thereafter
lease such unleased reserved passes shall be subject to availability as
determined by Landlord in its reasonable discretion.

 

Tenant shall pay Landlord the current rate of $180.00 per unreserved parking
pass per month, plus applicable taxes, if any, and $275.00 per unreserved
parking pass per month, plus applicable taxes, if any. Such rates shall be
subject to increase from time to time to reflect the prevailing market rates
consistently charged in the Parking Facility.

 

In the event that Tenant expands the Premises, Tenant’s parking pass allocation
shall increase in proportion to the increase in Tenant’s rentable square footage
of the Premises.

 

Tenant may, from time to time request additional parking passes, and, subject to
availability as determined by Landlord in its reasonable discretion, Landlord
shall provide the same. Any such additional parking passes shall be provided and
used on a month-to-month basis (subject to termination by either party), and
otherwise on the foregoing terms and provisions, and at such prevailing monthly
parking charges as shall be established from time to time.

  1.10   Address of Tenant:  

Before the Commencement Date:

 

PUMA BIOTECHNOLOGY, INC.

10940 Wilshire Boulevard

Suite 600

Los Angeles, CA 90024

Attn.: Chief Executive Officer

 

From and after the Commencement Date: the Premises, Attn.: Chief Executive
Officer.

 

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  1.11   Address of Landlord:  

CA-10880 Wilshire Limited Partnership

c/o Equity Office

10880 Wilshire Boulevard

Suite 1010

Los Angeles, CA 90024

Attention: Property Manager

 

with copies to:

 

CA-10880 Wilshire Limited Partnership

c/o Equity Office

Two North Riverside Plaza

Suite 2100

Chicago, IL 60606

Attention: Managing Counsel

 

and

 

Equity Office

Two North Riverside Plaza

Suite 2100

Chicago, IL 60606

Attn: Lease Administration

  1.12   Broker(s):   Weiss/L.A. Realty Partners (“Tenant’s Broker”),
representing Tenant, and Team WW/L.A. Realty Partners (“Landlord’s Broker”),
representing Landlord.   1.13   Building HVAC Hours and Holidays:   “Building
HVAC Hours” means 8:00 a.m. to 6:00 p.m., Monday through Friday and 9:00 a.m. to
1:00 p.m. on Saturdays, excluding the day of observation of New Year’s Day,
Presidents Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
Christmas Day, and, at Landlord’s reasonable discretion, any other locally or
nationally recognized holiday that is observed by other buildings comparable to
and in the vicinity of the Building (collectively, “Holidays”).   1.14  
“Transfer Radius”:   NONE   1.15   “Tenant Improvements”:   Defined in Exhibit
B.         1.16   “Guarantor”:   As of the date hereof, there is no Guarantor.

 

2 PREMISES AND COMMON AREAS.

2.1 The Premises.

2.1.1 Subject to the terms hereof, Landlord hereby leases the Premises to Tenant
and Tenant hereby leases the Premises from Landlord. Landlord and Tenant
acknowledge that the rentable square footage of the Premises is as set forth in
Section 1.2.2 and the rentable square footage of the Building is as set forth in
Section 1.6. Landlord represents to Tenant that the rentable square footage of
the Premises and Building has been calculated pursuant to the Standard Method
for Measuring Floor Area in Office Building, ANSI Z65.1 – 1996 and its
accompanying guidelines (“BOMA”) and shall not be subject to remeasurement
during the initial Term. At any time Landlord may deliver to Tenant a notice
substantially in the form of Exhibit C, as a confirmation of the information set
forth therein. Tenant shall execute and return (or, by notice to Landlord,
reasonably object to) such notice within 10 days after receiving it, and if
Tenant fails to do so, Tenant shall be deemed to have executed and returned it
without exception.

2.1.2 Except as expressly provided herein, the Premises is accepted by Tenant in
its condition and configuration existing on the date hereof (or in such other
condition and configuration as any existing tenant of the Premises may cause to
exist in accordance with its lease), without any obligation of Landlord to
perform or pay for any alterations to the Premises, and without any
representation or warranty regarding the condition of the Premises, the Building
or the Project or their suitability for Tenant’s business. By taking possession
of the Premises pursuant to this Lease, Tenant

 

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acknowledges that the Premises and the Building are then in the condition and
configuration required hereunder. As of the date of this Lease, Landlord
represents that Base Building electrical, HVAC (i.e., heating, ventilation and
air conditioning) and plumbing systems are in good working order.

2.2 Common Areas. Tenant may use, in common with Landlord and other parties and
subject to the Rules and Regulations (defined in Exhibit D), any portions of the
Property that are designated from time to time by Landlord for such use (the
“Common Areas”).

3     RENT. Tenant shall pay all Base Rent and Additional Rent (defined below)
(collectively, “Rent”) to Landlord or Landlord’s agent, without prior notice or
demand or any setoff or deduction (except as otherwise expressly provided for in
this Lease), at the place Landlord may designate from time to time. As used
herein, “Additional Rent” means all amounts, other than Base Rent, that Tenant
is required to pay Landlord hereunder. Monthly payments of Base Rent and monthly
payments of Additional Rent for Expenses (defined in Section 4.2.2), Taxes
(defined in Section 4.2.3) and parking (collectively, “Monthly Rent”) shall be
paid in advance on or before the first day of each calendar month during the
Term; provided, however, that the installment of Base Rent for the first full
calendar month for which Base Rent is payable hereunder shall be paid upon
Tenant’s execution and delivery hereof. Except as otherwise provided herein, all
other items of Additional Rent shall be paid within 30 days after Landlord’s
request for payment. Rent for any partial calendar month shall be prorated based
on the actual number of days in such month. Without limiting Landlord’s other
rights or remedies, (a) if any installment of Rent is not received by Landlord
or its designee within five (5) business days after its due date, Tenant shall
pay Landlord a late charge equal to five percent (5%) of the overdue amount; and
(b) any Rent that is not paid within 10 days after its due date shall bear
interest, from its due date until paid, at the lesser of 10% per annum or the
highest rate permitted by Law (defined in Section 5). Tenant’s covenant to pay
Rent is independent of every other covenant herein.

 

4 EXPENSES AND TAXES.

4.1 General Terms. In addition to Base Rent, Tenant shall pay, in accordance
with Section 4.4, for each Expense Year (defined in Section 4.2.1), an amount
equal to the sum of (a) Tenant’s Share of any amount (the “Expense Excess”) by
which Expenses for such Expense Year exceed Expenses for the Base Year, plus
(b) Tenant’s Share of any amount (the “Tax Excess”) by which Taxes for such
Expense Year exceed Taxes for the Base Year. No decrease in Expenses or Taxes
for any Expense Year below the corresponding amount for the Base Year shall
entitle Tenant to any decrease in Base Rent or any credit against amounts due
hereunder. Tenant’s Share of the Expense Excess and Tenant’s Share of the Tax
Excess for any partial Expense Year shall be prorated based on the number of
days in such Expense Year.

4.2 Definitions. As used herein, the following terms have the following
meanings:

4.2.1 “Expense Year” means each calendar year (other than the Base Year and any
preceding calendar year) in which any portion of the Term occurs.

4.2.2 “Expenses” means all expenses, costs and amounts that Landlord pays or
accrues during the Base Year or any Expense Year because of or in connection
with the ownership, management, maintenance, security, repair, replacement,
restoration or operation of the Property. Landlord shall act in a reasonable
manner in incurring Expenses. Expenses shall include (i) the cost of supplying
all utilities, the cost of operating, repairing, maintaining and renovating the
utility, telephone, mechanical, sanitary, storm-drainage, and elevator systems,
and the cost of maintenance and service contracts in connection therewith;
(ii) the cost of licenses, certificates, permits and inspections, the cost of
contesting any Laws that may affect Expenses, and the costs of complying with
any governmentally-mandated transportation-management or similar program;
(iii) the cost of all insurance premiums and deductibles; (iv) the cost of
landscaping and relamping; (v) the cost of parking-area operation, repair,
restoration, and maintenance; (vi) a management fee in the amount (which is
hereby acknowledged to be reasonable) of three percent (3%) of gross annual
receipts from the Building (excluding the management fee), together with other
fees and costs, including consulting fees, legal fees and accounting fees, of
all contractors and consultants in connection with the management, operation,
maintenance and repair of the Property; (vii) payments under any
equipment-rental agreements and the fair rental value of any management office
space; (viii) wages, salaries and other compensation, expenses and benefits,
including taxes levied thereon, of all persons engaged in the operation,
maintenance and security of the Property, and costs of training, uniforms, and
employee enrichment for such persons; (ix) the costs of operation, repair,
maintenance and replacement of all systems and equipment (and components
thereof) of the Property; (x) the cost of janitorial, alarm, security and other
services, replacement of wall and floor coverings, ceiling tiles and fixtures in
Common Areas, maintenance and replacement of curbs and walkways, repair to roofs
and re-roofing; (xi) rental or acquisition costs of supplies, tools, equipment,
materials and personal property used in the maintenance, operation and repair of
the Property; (xii) the cost of capital improvements or any other items that are
(A) intended to effect economies in the operation or maintenance of the
Property, reduce current or future Expenses, (B) INTENTIONALLY OMITTED, or
(C) required under any Law; (xiii) the cost of tenant-relation programs
reasonably established by Landlord; and (xiv) payments under any existing or
future reciprocal easement agreement, transportation management agreement,
cost-sharing agreement or other covenant, condition, restriction or similar
instrument affecting the Property.

 

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Notwithstanding the foregoing, Expenses shall not include: (a) capital
expenditures not described in clauses (xi) or (xii) above (in addition, any
capital expenditure shall be included in Expenses only if paid or accrued after
the Base Year and shall be amortized (including actual or reasonably imputed
interest on the amortized cost) over such period of time as Landlord shall
reasonably determine, only the amortization applicable to a particular Expense
Year shall be included in Expenses for such Expense Year, and in no event shall
the amortization in any Expense Year of the costs incurred by Landlord for
capital improvements to effect economies in the operation or maintenance of the
Property or reduce current or future Expenses exceed the cost savings, as
reasonably estimated by Landlord, for such Expense Year as the result thereof;
(b) depreciation; (c) interest, principal, amortization, fees and charges
relating to indebtedness on the Building or Project, ground rent payments or
other non-operating debts of Landlord; (d) costs of repairs to the extent
Landlord is reimbursed by insurance or condemnation proceeds; (e) except as
provided in clause (xiii) above, costs of leasing space in the Building,
including brokerage commissions, lease concessions, rental abatements and
construction allowances granted to specific tenants; (f) costs of selling,
financing or refinancing the Building; (g) fines, penalties or interest
resulting from late payment of any Expenses; (h) organizational expenses of
creating or operating the entity that constitutes Landlord; (i) damages paid to
Tenant hereunder or to other tenants of the Building under their respective
leases; (j) costs relating to services and other items that exclusively benefit
particular tenants of the Building or Project other than Tenant and/or costs
relating to services provided to other tenants for which Landlord is entitled to
be reimbursed by such tenants as an additional or extra charge over and above
the rental payable by such tenants; (k) advertising and promotional expenses;
(l) costs arising from the negligence or willful misconduct of Landlord or its
agents, employees or contractors; (m) costs incurred as the result of the
presence of or to remediate or encapsulate any asbestos-containing materials or
any other hazardous materials or substances in or about the Building or the
Project, (n) costs and the overhead and profit increment paid to Landlord, to
affiliates or partners of Landlord, partners or affiliates of such partners, or
affiliates of Landlord for goods and/or services in the Building to the extent
the same exceeds the costs or the overhead and profit increment, as the case may
be, of such goods and/or services rendered by unaffiliated third parties on a
competitive basis in comparable buildings; (o)costs incurred in connection with
the original construction of the Building or Project or to remedy or repair
latent defects in the original design or construction of the Building; (p) costs
associated with the operation of the business of the partnership or entity which
constitutes the Landlord, as the same are distinguished from the costs of
operation of the Property, including partnership accounting and legal matters,
general corporate overhead and general administrative expenses, advertising and
promotional expenditures; (q) the wages and benefits of any employee above the
level of General Manager or any employee who does not devote substantially all
of his or her employed time to the Project, unless such wages and benefits of
employees are prorated to reflect time spent on operating and managing the
Project vis-à-vis time spent on matters unrelated to operating and managing the
Project; (r) rentals and other expenses incurred in leasing air conditioning
systems, elevators or other equipment ordinarily considered to be of a capital
nature if purchased, except equipment which is used in providing janitorial or
similar services and which is not affixed to the Building and equipment rented
to remedy or ameliorate an emergency condition; (s) costs to replace the roof or
repair or replace the foundation of the Building; (t) any bad debt loss, rent
loss or reserve for bad debts or rent losses; (u) except as provided herein with
respect to parking, any compensation and benefits paid to clerks, attendants or
other persons in commercial concessions operated by Landlord in the Building or
Project; (v) costs for which any other tenant of the Building or Project is
obligated to pay directly or to separately reimburse Landlord therefore;
(w) costs, other than those incurred for normal cleaning, maintenance or repair,
for sculptures, paintings or other objects of art; (x) costs arising from the
gross negligence or willful misconduct of Landlord or its agents, employees,
vendors or contractors, and Landlord’s costs, including but not limited to
attorneys’ fees, of performing any indemnity obligations to tenants under tenant
leases; (y) costs incurred by Landlord due to the violation by Landlord or any
tenant of the terms and conditions of any lease of space in the Building;
(z) costs arising from Landlord’s political or charitable contributions; and
(aa) any retroactive adjustment of Expenses for any Expense Year ending more
than two (2) years prior to the date of such retroactive adjustment.

If, during any portion of the Base Year or any Expense Year, the Building is not
at least 95% occupied (or a service provided by Landlord to tenants of the
Building generally is not provided by Landlord to a tenant that provides such
service itself, or any tenant of the Building is entitled to free rent, rent
abatement or the like), Expenses for such year shall be determined as if the
Building had been at least 95% occupied (and all services provided by Landlord
to tenants of the Building generally had been provided by Landlord to all
tenants, and no tenant of the Building had been entitled to free rent, rent
abatement or the like) during such portion of such year. If insurance, security
or utility costs for any Expense Year are less than insurance, security or
utility costs, respectively, for the Base Year, then, for purposes of
determining Expenses for such Expense Year, such costs for such Expense Year
shall be deemed to be increased so as to be equal to such corresponding costs
for the Base Year. Notwithstanding any contrary provision hereof, Expenses for
the Base Year shall exclude (a) any market-wide cost increases resulting from
extraordinary circumstances, including Force Majeure (defined in Section 25.2),
boycotts, strikes, conservation surcharges, embargoes or shortages, and (b) the
cost of any repair or replacement that Landlord reasonably expects will not
recur on an annual or more frequent basis.

4.2.3 “Taxes” means all federal, state, county or local governmental or
municipal taxes, fees, charges, assessments, levies, licenses or other
impositions, whether general, special, ordinary or

 

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extraordinary, that are paid or accrued during the Base Year or any Expense Year
(without regard to any different fiscal year used by such governmental or
municipal authority) because of or in connection with the ownership, leasing or
operation of the Property. Taxes shall include (a) real estate taxes;
(b) general and special assessments; (c) transit taxes; (d) leasehold taxes;
(e) personal property taxes imposed upon the fixtures, machinery, equipment,
apparatus, systems, appurtenances, furniture and other personal property used in
connection with the Property; (f) any tax on the rent, right to rent or other
income from any portion of the Property or as against the business of leasing
any portion of the Property; (g) any assessment, tax, fee, levy or charge
imposed by any governmental agency, or by any non-governmental entity pursuant
to any private cost-sharing agreement, in order to fund the provision or
enhancement of any fire-protection, street-, sidewalk- or road-maintenance,
refuse-removal or other service that is (or, before the enactment of
Proposition 13, was) normally provided by governmental agencies to property
owners or occupants without charge (other than through real property taxes); and
(h) any assessment, tax, fee, levy or charge allocable or measured by the area
of the Premises or by the Rent payable hereunder, including any business, gross
income, gross receipts, sales or excise tax with respect to the receipt of such
Rent. Any costs and expenses (including reasonable attorneys’ and consultants’
fees) incurred in attempting to protest, reduce or minimize Taxes shall be
included in Taxes for the year in which they are incurred. Notwithstanding any
contrary provision hereof, Taxes shall be determined without regard to any
“green building” credit and shall exclude (i) all excess profits taxes,
franchise taxes, gift taxes, capital stock taxes, inheritance and succession
taxes, estate taxes, federal and state income taxes, and other taxes to the
extent applicable to Landlord’s general or net income (as opposed to rents,
receipts or income attributable to operations at the Property), (ii) any
Expenses, (iii) any items required to be paid by Tenant under Section 4.5, and
(iv) tax penalties incurred as a result of Landlord’s failure to timely make
payments and/or to file any tax returns. All assessments for Taxes which are not
specifically charged to Tenant which can be paid by Landlord in installments
without the imposition of fees, penalties or interest, shall be paid by Landlord
in the maximum number of installments that are permitted by applicable Laws
without the imposition of fees, penalties or interest and not included Taxes
except in the Expense Year in which the assessment installment is actually paid;
provided, however, that if the prevailing practice in the comparable class A
buildings in Los Angeles is to pay such assessments on an earlier basis, and
Landlord pays on such earlier basis, such assessments shall be included in Taxes
as paid by Landlord.

4.3 Allocation. Landlord, in its reasonable discretion, may equitably allocate
Expenses among office, retail or other portions or occupants of the Property. If
Landlord incurs Expenses or Taxes for the Property together with another
property, Landlord shall equitably allocate such shared amounts between the
Property and such other property.

4.4 Calculation and Payment of Expense Excess and Tax Excess.

4.4.1 Statement of Actual Expenses and Taxes; Payment by Tenant. Landlord shall
endeavor to give to Tenant, after the end of each Expense Year, a statement (the
“Statement”) setting forth the actual Expenses, Taxes, Expense Excess and Tax
Excess for such Expense Year. If the amount paid by Tenant for such Expense Year
pursuant to Section 4.4.2 is less or more than the sum of Tenant’s Share of the
actual Expense Excess plus Tenant’s Share of the actual Tax Excess (as such
amounts are set forth in such Statement), Tenant shall pay Landlord the amount
of such underpayment, or receive a credit in the amount of such overpayment,
with or against the Rent then or next due hereunder; provided, however, that if
this Lease has expired or terminated and Tenant has vacated the Premises, Tenant
shall pay Landlord the amount of such underpayment, or Landlord shall pay Tenant
the amount of such overpayment (less any Rent due), within 30 days after
delivery of such Statement. Any failure of Landlord to timely deliver the
Statement for any Expense Year shall not diminish either party’s rights under
this Section 4.

4.4.2 Statement of Estimated Expenses and Taxes. Landlord shall endeavor to give
to Tenant, for each Expense Year, a statement (the “Estimate Statement”) setting
forth Landlord’s reasonable estimates of the Expenses, Taxes, Expense Excess
(the “Estimated Expense Excess”) and Tax Excess (the “Estimated Tax Excess”) for
such Expense Year. Upon receiving an Estimate Statement, Tenant shall pay, with
its next installment of Base Rent, an amount equal to the excess of (a) the
amount obtained by multiplying (i) the sum of Tenant’s Share of the Estimated
Expense Excess plus Tenant’s Share of the Estimated Tax Excess (as such amounts
are set forth in such Estimate Statement), by (ii) a fraction, the numerator of
which is the number of months that have elapsed in the applicable Expense Year
(including the month of such payment) and the denominator of which is 12, over
(b) any amount previously paid by Tenant for such Expense Year pursuant to this
Section 4.4.2. Until Landlord delivers a new Estimate Statement (which Landlord
may do at any time), Tenant shall pay monthly, with the monthly Base Rent
installments, an amount equal to one-twelfth (1/12) of the sum of Tenant’s Share
of the Estimated Expense Excess plus Tenant’s Share of the Estimated Tax Excess,
as such amounts are set forth in the previous Estimate Statement. Any failure of
Landlord to timely deliver any Estimate Statement shall not diminish Landlord’s
rights to receive payments and revise any previous Estimate Statement under this
Section 4.

4.4.3 Retroactive Adjustment of Taxes. Notwithstanding any contrary provision
hereof, if, after Landlord’s delivery of any Statement, an increase or decrease
in Taxes occurs for the applicable Expense Year or for the Base Year (whether by
reason of reassessment, error, or otherwise), Taxes for

 

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such Expense Year or the Base Year, as the case may be, and the Tax Excess for
such Expense Year shall be retroactively adjusted. If, as a result of such
adjustment, it is determined that Tenant has under- or overpaid Tenant’s Share
of such Tax Excess, Tenant shall pay Landlord the amount of such underpayment,
or receive a credit in the amount of such overpayment, with or against the Rent
then or next due hereunder; provided, however, that if this Lease has expired or
terminated and Tenant has vacated the Premises, Tenant shall pay Landlord the
amount of such underpayment, or Landlord shall pay Tenant the amount of such
overpayment (less any Rent due), within 30 days after such adjustment is made.

4.5 Charges for Which Tenant Is Directly Responsible. Tenant shall pay, 10 days
before delinquency, any taxes levied against Tenant’s equipment, furniture,
fixtures and other personal property located in or about the Premises. If any
such taxes are levied against Landlord or its property (or if the assessed value
of Landlord’s property is increased by the inclusion therein of a value placed
upon such equipment, furniture, fixtures or other personal property of Tenant),
Landlord may (upon prior notice to Tenant) pay such taxes (or such increased
assessment) regardless of their (or its) validity, in which event Tenant, upon
demand, shall repay to Landlord the amount so paid. If the Leasehold
Improvements (defined in Section 7.1) are assessed for real property tax
purposes at a valuation higher than the valuation at which tenant improvements
conforming to Landlord’s “building standard” in other space in the Building are
assessed, the Taxes levied against Landlord or the Property by reason of such
excess assessed valuation shall be deemed taxes levied against Tenant’s personal
property for purposes of this Section 4.5. Notwithstanding any contrary
provision hereof, Tenant shall pay, 10 days before delinquency, (i) any rent
tax, sales tax, service tax, transfer tax or value added tax, or any other tax
respecting the rent or services described herein or otherwise respecting this
transaction or this Lease; and (ii) any taxes assessed upon the possession,
leasing, operation, management, maintenance, alteration, repair, use or
occupancy by Tenant of any portion of the Property.

4.6 Books and Records. Within 180 days after receiving any Statement (the
“Review Notice Period”), Tenant may give Landlord notice (“Review Notice”)
stating that Tenant elects to review and/or audit Landlord’s calculation of the
Expense Excess and/or Tax Excess for the Expense Year to which such Statement
applies and identifying with reasonable specificity the records of Landlord
reasonably relating to such matters that Tenant desires to review and/or audit.
Within a reasonable time after receiving a timely Review Notice (and, at
Landlord’s option, an executed confidentiality agreement as described below),
Landlord shall deliver to Tenant, or make available for inspection at a location
reasonably designated by Landlord, copies of such records. Within 60 days after
such records are made available to Tenant (the “Objection Period”), Tenant may
deliver to Landlord notice (an “Objection Notice”) stating with reasonable
specificity any objections to the Statement, in which event Landlord and Tenant
shall work together in good faith to resolve Tenant’s objections. Tenant may not
deliver more than one Review Notice or more than one Objection Notice with
respect to any Expense Year. If Tenant fails to give Landlord a Review Notice
before the expiration of the Review Notice Period or fails to give Landlord an
Objection Notice before the expiration of the Objection Period, Tenant shall be
deemed to have approved the Statement. Notwithstanding any contrary provision
hereof, Landlord shall not be required to deliver or make available to Tenant
records relating to the Base Year, and Tenant may not object to Expenses or
Taxes for the Base Year, other than in connection with the first review and/or
audit for an Expense Year performed by Tenant pursuant to this Section 4.6. If
Tenant retains an agent to review Landlord’s records, the agent must be with a
CPA firm licensed to do business in the State of California and its fees shall
not be contingent, in whole or in part, upon the outcome of the review and/or
audit. Tenant shall be responsible for all costs of such review and/or audit;
provided, however, that if it is determined by Landlord and Tenant, or if it is
determined in any action or proceeding arising from a dispute hereunder, that
the sum of Expenses and Taxes for the Expense Year in question was overstated by
more than five percent (5%), Landlord, within 30 days after receiving paid
invoices therefor from Tenant, shall reimburse Tenant for the reasonable amounts
paid by Tenant to third parties in connection with such review and/or audit. The
records and any related information obtained from Landlord shall be treated as
confidential, and as applicable only to the Premises, by Tenant, its auditors,
consultants, and any other parties reviewing the same on behalf of Tenant
(collectively, “Tenant’s Auditors”). Before making any records available for
review, Landlord may require Tenant and Tenant’s Auditors to execute a
reasonable confidentiality agreement, in which event Tenant shall cause the same
to be executed and delivered to Landlord within 30 days after receiving it from
Landlord, and if Tenant fails to do so, the Objection Period shall be reduced by
one day for each day by which such execution and delivery follows the expiration
of such 30-day period. Notwithstanding any contrary provision hereof, Tenant may
not examine Landlord’s records or dispute any Statement if any Rent remains
unpaid past its due date. If, for any Expense Year, it is determined by Landlord
and Tenant, or if it is determined in any action or proceeding arising from a
dispute hereunder, that the sum of Tenant’s Share of the actual Expense Excess
plus Tenant’s Share of the actual Tax Excess is less or more than the amount
reported, Tenant shall receive a credit in the amount of its overpayment against
Rent then or next due hereunder, or pay Landlord the amount of its underpayment
with the Rent next due hereunder; provided, however, that if this Lease has
expired or terminated and Tenant has vacated the Premises, Landlord shall pay
Tenant the amount of its overpayment (less any Rent due), or Tenant shall pay
Landlord the amount of its underpayment, within 30 days after such
determination, provided further, that if Expenses and Taxes for any Expense Year
in question have been overstated by more than five percent (5%), then to the
overpayment credit to which Tenant is entitled pursuant to the foregoing, Tenant
shall be entitled to five

 

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percent (5%) simple interest on that portion of each monthly payment of
Additional Rent for Expenses and Taxes which represents an overpayment by Tenant
of Tenant’s Share of the actual Expense Excess and/or Tenant’s Share of the
actual Tax Excess for such period from the date paid by Tenant to and until such
overpayment together with all accrued and un-credited interest thereon is either
credited against the installments of Rent next coming due under this Lease, or
if at the expiration or sooner termination of this Lease, offset against any
amounts owed by Tenant to Landlord and the balance thereof paid to Tenant.

 

5 USE; COMPLIANCE WITH LAWS.

5.1. Tenant shall not (a) use the Premises for any purpose other than the
Permitted Use, or (b) do anything in or about the Premises that violates any of
the Rules and Regulations, damages the reputation of the Project, unreasonably
interferes with, injures or annoys other occupants of the Building, or
constitutes a nuisance. Tenant, at its expense, shall comply with all Laws
relating to (i) the operation of its business at the Project, (ii) the use,
condition, configuration or occupancy of the Premises, or (iii) any Building
systems exclusively serving the Premises; provided, however, that nothing in
this sentence shall be deemed to require Tenant to make any change to any Common
Area, the Building structure, or any Building system located outside of and not
exclusively serving the Premises. Tenant shall have no obligation to remove any
hazardous materials existing in the Premises, Building or Project as of the
Commencement Date. If, in order to comply with any such Law, Tenant must obtain
or deliver any permit, certificate or other document evidencing such compliance,
Tenant shall provide a copy of such document to Landlord promptly after
obtaining or delivering it. If a change to any Common Area, the Building
structure, or any Building system located outside of and not exclusively serving
the Premises becomes required under Law (or if any such requirement is enforced)
as a result of any Tenant-Insured Improvement (defined in Section 10.2.2), the
installation of any trade fixture, or any use of the Premises other than general
office use, Tenant, upon demand, shall (x) at Landlord’s option, either make
such change at Tenant’s cost or pay Landlord the actual and reasonable cost of
making such change, and (y) pay Landlord a coordination fee equal to five
percent (5%) of the cost of such change. As used herein, “Law” means any
existing or future law, ordinance, regulation or requirement of any governmental
authority having jurisdiction over the Project or the parties.

5.2 Landlord, at its expense (subject to Section 4), shall cause the Base
Building and the Common Areas to comply with all Laws (including the Americans
with Disabilities Act (“ADA”)) to the extent that (a) such compliance is
necessary 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 (b) Landlord’s failure to cause such
compliance would impose liability upon Tenant under Law; provided, however, that
Landlord shall not be required to cause such compliance to the extent
non-compliance (x) is triggered by any matter that is Tenant’s responsibility
under Section 5.1 or 7.3 or any other provision hereof, or (y) arises under any
provision of the ADA other than Title III thereof. Notwithstanding the
foregoing, Landlord may contest any alleged violation in good faith, including
by applying for and obtaining a waiver or deferment of compliance, asserting any
defense allowed by Law, and appealing any order or judgment to the extent
permitted by Law; provided, however, that after exhausting any rights to contest
or appeal, Landlord shall perform any work necessary to comply with any final
order or judgment. Notwithstanding the foregoing, Landlord shall not contest any
such alleged violation if, during the period of such contest: (i) Tenant would
not have the ability to use the Premises for general office use in a normal and
customary manner, or (ii) Tenant’s employees and visitors would not have
reasonably safe access to and from the Premises.

5.3 If any suspected asbestos-containing material or other hazardous material is
discovered in the Premises prior to or during the performance of any work to be
performed by Landlord or Tenant therein as provided in this Lease, Landlord, at
Landlord’s sole cost and expense, without deduction from Tenant’s improvement
allowance, shall retain a licensed and qualified environmental consultant to
inspect the suspected asbestos containing material or other hazardous material
and, as appropriate in accordance with legal requirements and the recommendation
of such consultant, shall remove, remediate, encapsulate, entomb or leave
undisturbed such asbestos-containing material or other hazardous material. All
such work shall be coordinated with Tenant in a manner to minimize any delay in
performance of any improvements to such space or the delay in the timely
delivery of the space in the required condition or, if Tenant is then in
occupancy of the Premises, in a manner to minimize any interruption of Tenant’s
use of or access to the Premises.

 

6 SERVICES.

6.1 Standard Services. Landlord shall provide the following services on all days
(unless otherwise stated below): (a) subject to limitations imposed by Law,
customary heating, ventilation and air conditioning (“HVAC”) in season during
Building HVAC Hours; (b) electricity supplied by the applicable public utility,
stubbed to the Premises; (c) water supplied by the applicable public utility
(i) for use in lavatories and any drinking facilities located in Common Areas
within the Building, and (ii) stubbed to the Building core for use in any
plumbing fixtures located in the Premises; (d) janitorial services to the
Premises, except on weekends and Holidays, in a manner that is reasonably
comparable to other comparable Class A office buildings of similar size and age
as the Building located in the same geographic market as the Building
(“Comparable Buildings”). Any janitorial services that are provided

 

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on normal business days shall be performed after 5:00 pm; (e) elevator service
(subject to scheduling by Landlord, and payment of Landlord’s standard usage
fee, for any freight service); (f) access to the Building for Tenant and its
employees, 24 hours per day/7 days per week, subject to the terms hereof and
such security or monitoring systems as Landlord may reasonably impose, including
sign-in procedures and/or presentation of identification cards; and (g) subject
to Section 10.1, security to control and monitor access to the Building,
consistent with office buildings in the vicinity of the Building of comparable
age, size and condition as the Building, which may be provided through a
security system involving one or more cameras, monitoring devices or guards,
sign-in or identification procedures or any comparable system.

6.2 Above-Standard Use. Landlord shall provide HVAC service outside Building
HVAC Hours if Tenant gives Landlord such prior notice and pays Landlord’s then
current per hour charge per zone as is in effect from time to time for the
Building and applicable to tenants of the Building in general. The rate charged
to Tenant and other tenants of the Building in general for such HVAC service
outside Building HVAC Hours shall always be approximately at Landlord’s cost
plus a reasonable rate of return to cover Landlord’s overhead and investment in
the HVAC system for the Building. Tenant shall not, without Landlord’s prior
consent, use equipment (other than normal office equipment, including computers
and servers) that may materially affect the temperature maintained by the air
conditioning system or consume above-Building-standard amounts of any water
furnished for the Premises by Landlord pursuant to Section 6.1. If Tenant’s
consumption of electricity or water exceeds the rate Landlord reasonably deems
to be standard for the Building, Tenant shall pay Landlord, upon billing, the
cost of such excess consumption, including any costs of installing, operating
and maintaining any equipment that is installed in order to supply or measure
such excess electricity or water. The connected electrical load of Tenant’s
incidental-use equipment shall not exceed the Building-standard electrical
design load, and Tenant’s electrical usage shall not exceed the capacity of the
feeders to the Project or the risers or wiring installation. For purposes
hereof, the “electrical standard” for the Building is: (i) a design load of 1.5
watts per square foot of net usable floor area for all building standard
overhead lighting located within the Premises which requires a voltage of
480/277 volts; and (ii) a connected load of 2.5 watts per square foot of net
usable area for all equipment located and operated within the Premises which
requires a voltage of 120/208 volts single phase or less, it being understood
that electricity required to operate the base building HVAC system is not
included within or deducted from such 2.5 watts per square foot described in
this subsection (ii). In the event that Tenant requires any services or
utilities (other than HVAC) in addition to those services provided by Landlord
to all tenants of the Building, Landlord’s charges to Tenant for providing such
services shall be equal to the actual costs incurred by Landlord in providing
such services with no additional charge for administrative costs of profit to
Landlord.

6.3 Interruption. Any failure to furnish, delay in furnishing, or diminution in
the quality or quantity of any service resulting from any application of Law,
failure of equipment, performance of maintenance, repairs, improvements or
alterations, utility interruption, or event of Force Majeure (each, a “Service
Interruption”) shall not render Landlord liable to Tenant, constitute a
constructive eviction, or excuse Tenant from any obligation hereunder.
Notwithstanding the foregoing, if all or a material portion of the Premises is
made untenantable or inaccessible for more than five (5) consecutive business
days after notice from Tenant to Landlord by a Service Interruption that
Landlord can correct through reasonable efforts, then, as Tenant’s sole remedy,
Monthly Rent shall abate for the period beginning on the day immediately
following such 5-business-day period and ending on the day such Service
Interruption ends (it being agreed that all Service Interruptions resulting from
(i) damage to the Building, (ii) the performance of (or failure to perform) any
maintenance, repairs, improvements or alterations by Landlord, or (iii) any
other tenants or occupants of the Building are capable of being corrected by the
reasonable efforts of Landlord), but only in proportion to the percentage of the
rentable square footage of the Premises made untenantable or inaccessible.

 

7 REPAIRS AND ALTERATIONS.

7.1 Repairs. Subject to Section 11, Tenant, at its expense, shall perform all
maintenance and repairs (including replacements) to the Premises, and keep the
Premises in as good condition and repair as when Tenant took possession and as
thereafter improved by Landlord and/or Tenant, except for reasonable wear and
tear and repairs that are Landlord’s express responsibility hereunder. Tenant’s
maintenance and repair obligations shall include (a) all leasehold improvements
in the Premises, whenever and by whomever installed or paid for, including any
Tenant Improvements, any Alterations (defined in Section 7.2), and any leasehold
improvements installed pursuant to any prior lease, but excluding the Base
Building (the “Leasehold Improvements”); (b) all supplemental heating,
ventilation and air conditioning units, kitchens (including hot water heaters,
dishwashers, garbage disposals, insta-hot dispensers, and plumbing) and similar
facilities exclusively serving Tenant, whether located inside or outside of the
Premises, and whenever and by whomever installed or paid for; and (c) all Lines
(defined in Section 23). Notwithstanding the foregoing, Landlord may, at its
option, perform such maintenance and repairs on Tenant’s behalf, in which case
Tenant shall pay Landlord, upon demand, the cost of such work plus a
coordination fee equal to five percent (5%) of such cost. Landlord shall perform
all maintenance and repairs to (i) the roof and exterior walls and windows of
the Building, (ii) the Base Building, and (iii) the Common Areas. As used
herein, “Base Building” means the structural portions of the Building, together
with all mechanical (including HVAC), electrical, plumbing and fire/life-safety

 

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systems serving the Building in general, whether located inside or outside of
the Premises. In addition to the foregoing, Landlord shall at all times maintain
the Building in a manner consistent with Comparable Buildings and in compliance
with applicable Laws. Landlord shall perform its maintenance and repair
obligations in a manner that is reasonably designed to minimize disruption of
the operation of the businesses of Tenant and the other tenants of the Building;
provided that the foregoing shall not be construed to require Landlord to
perform work before or after normal business hours unless that nature of the
work is such that commonly accepted practice in Comparable Buildings would be to
perform such work before or after normal business hours.

7.2 Alterations. Tenant may not make any improvement, alteration, addition or
change to the Premises or to any mechanical, plumbing or HVAC facilities or
other systems serving the Premises (an “Alteration”) without Landlord’s prior
consent, which consent shall be requested by Tenant not less than 30 days before
commencement of work and shall not be unreasonably withheld by Landlord.
Notwithstanding the foregoing, provided that Landlord receives 10 business days’
prior notice, Landlord’s prior consent shall not be required for any Alteration
that (i) is reasonably estimated (together with any other Alterations performed
without Landlord’s consent pursuant to this sentence during the 12-month period
ending on the date of such notice) to cost less than $40,000.00; (ii) is not
visible from outside the Premises; (iii) does not affect any system or
structural component of the Building; and (iv) does not require work to be
performed inside the walls or above the ceiling of the Premises. For any
Alteration, (a) Tenant, before commencing work, shall deliver to Landlord, and
obtain Landlord’s approval of, plans and specifications; (b) Landlord, in its
reasonable discretion, may require Tenant to obtain security for performance
reasonably satisfactory to Landlord; (c) Tenant shall deliver to Landlord “as
built” drawings (in CAD format, if reasonably requested by Landlord), completion
affidavits, full and final lien waivers, and all governmental approvals; and
(d) Tenant shall pay Landlord upon demand (i) Landlord’s reasonable
out-of-pocket expenses incurred in reviewing the work, and (ii) a coordination
fee equal to five percent (5%) of the cost of the work; provided, however, that
this clause (d) shall not apply to any Tenant Improvements constructed pursuant
to Exhibit B.

7.3 Tenant Work. Before commencing any repair or Alteration (“Tenant Work”),
Tenant shall deliver to Landlord, and, if Landlord’s prior written approval is
required for such Tenant Work as provided in Section 7.2 above, obtain
Landlord’s approval of, (a) names of contractors, subcontractors, mechanics,
laborers and materialmen; (b) evidence of contractors’ and subcontractors’
insurance; and (c) any required governmental permits. Tenant shall perform all
Tenant Work (i) in a good and workmanlike manner using materials of a quality,
and if Landlord’s approval is required for such work as provided in Section 7.2
above, reasonably approved by Landlord; (ii) in compliance with any approved
plans and specifications, all Laws, the National Electric Code, and Landlord’s
construction rules and regulations; and (iii) in a manner that does not impair
the Base Building. If, as a result of any Tenant Work, Landlord becomes required
under Law to perform any inspection, give any notice, or cause such Tenant Work
to be performed in any particular manner, Tenant shall comply with such
requirement and promptly provide Landlord with reasonable documentation of such
compliance. Landlord’s approval of Tenant’s plans and specifications shall not
relieve Tenant from any obligation under this Section 7.3. In performing any
Tenant Work, Tenant shall not use contractors, services, labor, materials or
equipment that, in Landlord’s reasonable judgment, would disturb labor harmony
with any workforce or trades engaged in performing other work or services at the
Project.

8    LANDLORD’S PROPERTY. All Leasehold Improvements shall become Landlord’s
property upon installation and without compensation to Tenant. Notwithstanding
the foregoing, if any Tenant-Insured Improvements are not, in Landlord’s
reasonable judgment, Building-standard, then before the expiration or earlier
termination hereof, Tenant shall, at Landlord’s election, either (a) at Tenant’s
expense, and except as otherwise notified by Landlord, remove such
Tenant-Insured Improvements, repair any resulting damage to the Premises or
Building, and restore the affected portion of the Premises to its condition
existing before the installation of such Tenant-Insured Improvements (or, at
Landlord’s election, to a Building-standard tenant-improved condition as
determined by Landlord), or (b) pay Landlord an amount equal to the estimated
cost of such work, as reasonably determined by Landlord. If Tenant fails to
timely perform any work required under clause (a) of the preceding sentence,
Landlord may perform such work at Tenant’s expense. Notwithstanding the
foregoing, except for Lines (defined in Section 23), Landlord shall not require
Tenant to remove any Tenant Improvements or Alterations unless Landlord, at the
time that it granted approval for such Tenant Improvements or Alterations,
advised Tenant in writing that removal would be required by Tenant at the end of
the Term.

9     LIENS. Tenant shall keep the Project free from any lien arising out of any
work performed, material furnished or obligation incurred by or on behalf of
Tenant. Tenant shall remove any such lien within 10 business days after notice
from Landlord, and if Tenant fails to do so, Landlord, without limiting its
remedies, may pay the amount necessary to cause such removal, whether or not
such lien is valid. The amount so paid, together with reasonable attorneys’ fees
and expenses, shall be reimbursed by Tenant upon demand. Notwithstanding the
foregoing, in lieu of removing such lien, Tenant, upon prior written notice to
Landlord, at Tenant’s expense, may contest, by appropriate legal proceedings
conducted in good faith and with due diligence, the amount, validity or
application, in whole or in part, of any such lien; subject, however, to the
further requirement that (a) the commencement and continuation of such
proceedings shall suspend the collection thereof from Landlord and the Project;
(b) neither the Project, the

 

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rent or income therefrom nor any part or interest in either thereof would be in
any danger of being sold, forfeited, attached or lost pending the outcome of
such proceedings; and (c) Tenant shall give such reasonable security as may be
required by Landlord to insure ultimate payment of the same and to prevent any
sale or forfeiture of the Project, the rent or income therefrom or any part or
interest in either by reason of such nonpayment. If any such contest is finally
resolved against Tenant, Tenant shall promptly pay the amount required to be
paid, together with all interest and penalties accrued thereon. Tenant shall
indemnify, defend, protect and save Landlord harmless from and against any
liability, cost or expense of any kind that may be imposed upon Landlord in
connection with any such contest and any loss resulting therefrom.

 

10 INDEMNIFICATION; INSURANCE.

10.1 Waiver and Indemnification. Tenant waives all claims against Landlord, its
Security Holders (defined in Section 17), Landlord’s managing agent(s), their
(direct or indirect) owners, and the beneficiaries, trustees, officers,
directors, employees and agents of each of the foregoing (including Landlord,
the “Landlord Parties”) for (i) any damage to person or property (or resulting
from the loss of use thereof), except to the extent such damage is caused by the
negligence or willful misconduct of any Landlord Party, or (ii) any failure to
prevent or control any criminal or otherwise wrongful conduct by any third party
or to apprehend any third party who has engaged in such conduct. Tenant shall
indemnify, defend, protect, and hold the Landlord Parties harmless from any
obligation, loss, claim, action, liability, penalty, damage, cost or expense
(including reasonable attorneys’ and consultants’ fees and expenses) (each, a
“Claim”) that is imposed or asserted by any third party and arises from (a) any
cause in, on or about the Premises, (b) occupancy of the Premises by, or any
negligence or willful misconduct of, Tenant, any party claiming by, through or
under Tenant, their (direct or indirect) owners, or any of their respective
beneficiaries, trustees, officers, directors, employees, agents, contractors,
licensees or invitees, or (c) any breach by Tenant of any representation,
covenant or other term contained herein, except to the extent such Claim arises
from the negligence or willful misconduct of any Landlord Party. Landlord shall
indemnify, defend, protect, and hold Tenant, its (direct or indirect) owners,
and their respective beneficiaries, trustees, officers, directors, employees and
agents (including Tenant, the “Tenant Parties”) harmless from any Claim that is
imposed or asserted by any third party and arises from (a) any negligence or
willful misconduct of any Landlord Party, or (b) any breach by Landlord of any
representation, covenant or other term contained herein, except to the extent
such Claim arises from the negligence or willful misconduct of any Tenant Party.

10.2 Tenant’s Insurance. Tenant shall maintain the following coverages in the
following amounts:

10.2.1 Commercial General Liability Insurance covering claims of bodily injury,
personal injury and property damage arising out of Tenant’s operations and
contractual liabilities, including coverage formerly known as broad form, on an
occurrence basis, with minimum primary limits of $1,000,000 each occurrence and
$2,000,000 annual aggregate (and not more than $25,000 self-insured retention)
and a minimum excess/umbrella limit of $2,000,000.

10.2.2 Property Insurance covering (i) all office furniture, trade fixtures,
office equipment, free-standing cabinet work, movable partitions, merchandise
and all other items of Tenant’s property in the Premises installed by, for, or
at the expense of Tenant, and (ii) any Leasehold Improvements installed by or
for the benefit of Tenant, whether pursuant to this Lease or pursuant to any
prior lease or other agreement to which Tenant was a party (“Tenant-Insured
Improvements”). Such insurance shall be written on a special cause of loss form
for physical loss or damage, for the full replacement cost value (subject to
reasonable deductible amounts) new without deduction for depreciation of the
covered items and in amounts that meet any co-insurance clauses of the policies
of insurance, and shall include coverage for damage or other loss caused by fire
or other peril, including vandalism and malicious mischief, theft, water damage
of any type, including sprinkler leakage, bursting or stoppage of pipes, and
explosion, and providing business interruption coverage for a period of one
year.

10.2.3 Worker’s Compensation and Employer’s Liability or other similar insurance
to the extent required by Law.

10.3 Form of Policies. The minimum limits of insurance required to be carried by
Tenant shall not limit Tenant’s liability. Such insurance shall be issued by an
insurance company that has an A.M. Best rating of not less than A-VIII and shall
be in form and content reasonably acceptable to Landlord. Tenant’s Commercial
General Liability Insurance shall (a) name the Landlord, Landlord’s property
manager and any other party designated in writing by Landlord as having an
insurable interest in the Property (“Additional Insured Parties”) as additional
insureds; and (b) be primary insurance as to all claims thereunder and provide
that any insurance carried by Landlord is excess and non-contributing with
Tenant’s insurance. Landlord shall be designated as a loss payee with respect to
Tenant’s Property Insurance on any Tenant-Insured Improvements and trade
fixtures. Tenant shall deliver to Landlord, on or before the Commencement Date
and at least 15 days before the expiration dates thereof, certificates from
Tenant’s insurance company on the forms currently designated “ACORD 25-S”
(Certificate of Liability Insurance) and “ACORD 28” (Evidence of Commercial
Property Insurance) or the equivalent.

 

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Attached to the ACORD 25-S (or equivalent) there shall be an endorsement naming
the Additional Insured Parties as additional insureds, and attached to the
ACORD 28 (or equivalent) there shall be an endorsement designating Landlord as a
loss payee with respect to Tenant’s Property Insurance on any Tenant-Insured
Improvements and trade fixtures, and each such endorsement shall be binding on
Tenant’s insurance company. Upon Landlord’s request, Tenant shall deliver to
Landlord, in lieu of such certificates, copies of the policies of insurance
required to be carried under Section 10.2 showing that the Additional Insured
Parties are named as additional insureds and that Landlord is designated as a
loss payee with respect to Tenant’s Property Insurance on any Tenant-Insured
Improvements and trade fixtures.

10.4 Subrogation. Each party waives, and shall cause its insurance carrier to
waive, any right of recovery against the other party, any of its (direct or
indirect) owners, or any of their respective beneficiaries, trustees, officers,
directors, employees or agents for any loss of or damage to property which loss
or damage is (or, if the insurance required hereunder had been carried, would
have been) covered by property insurance. For purposes of this Section 10.4
only, (a) any deductible with respect to a party’s insurance shall be deemed
covered by, and recoverable by such party under, valid and collectable policies
of insurance, and (b) any contractor retained by Landlord to install, maintain
or monitor a fire or security alarm for the Building shall be deemed an agent of
Landlord.

10.5 Additional Insurance Obligations. Tenant shall maintain such increased
amounts of the insurance required to be carried by Tenant under this Section 10,
and such other types and amounts of insurance covering the Premises and Tenant’s
operations therein, as may be reasonably requested by Landlord, but not in
excess of the amounts and types of insurance then being required by landlords of
buildings comparable to and in the vicinity of the Building.

10.6 Landlord’s Insurance. Landlord shall maintain the following insurance,
together with such other insurance coverage as Landlord, in its reasonable
judgment, may elect to maintain, the premiums of which shall be included in
Expenses: (a) Commercial General Liability insurance applicable to the Property,
Building and Common Areas providing, on an occurrence basis, a minimum combined
single limit of at least $3,000,000.00; (b) Special Cause of Loss Insurance on
the Building at replacement cost value as reasonably estimated by Landlord;
(c) Worker’s Compensation insurance to the extent required by Law; and
(d) Employers Liability Coverage to the extent required by Law.

11     CASUALTY DAMAGE. With reasonable promptness after discovering any damage
to the Premises, or to the Common Areas necessary for access to and/or use of
the Premises, resulting from any fire or other casualty (a “Casualty”), Landlord
shall notify Tenant of Landlord’s reasonable estimate of the time required to
substantially complete repair of such damage (the “Landlord Repairs”). If,
according to such estimate, the Landlord Repairs cannot be substantially
completed within 270 days after they are commenced, either party may terminate
this Lease upon 60 days’ notice to the other party delivered within 10 days
after Landlord’s delivery of such estimate. Within 90 days after discovering any
damage to the Building or Project resulting from any Casualty, Landlord may,
whether or not the Premises is affected, terminate this Lease by notifying
Tenant if (i) any Security Holder terminates any ground lease or requires that
any insurance proceeds be used to pay any mortgage debt; (ii) any damage to
Landlord’s property is not fully covered by Landlord’s insurance policies;
(iii) Landlord decides to rebuild the Building or Common Areas so that it or
they will be substantially different structurally or architecturally; (iv) the
damage occurs during the last 12 months of the Term; or (v) any owner, other
than Landlord, of any damaged portion of the Project does not intend to repair
such damage; provided, however, that Landlord may not terminate this Lease
pursuant to this sentence unless the Premises has been materially damaged or
Landlord also exercises all rights it may have acquired as a result of the
Casualty to terminate any other similarly situated leases of space in the
Building. Tenant may terminate this Lease, by notice to Landlord within 30 days
after receiving Landlord’s estimate of the time required to substantially
complete the Landlord Repairs, if (a) the Casualty has occurred during the last
12 months of the Term and has damaged a material portion of the Premises, and
(b) such estimate indicates that the damage cannot reasonably be repaired within
60 days after Tenant’s receipt of such estimate. If this Lease is not terminated
pursuant to this Section 11, Landlord shall promptly and diligently perform the
Landlord Repairs, subject to reasonable delays for insurance adjustment and
other events of Force Majeure. The Landlord Repairs shall restore the Premises
(including any Tenant-Insured Improvements and trade fixtures) and the Common
Areas necessary for access to the Premises to substantially the same condition
that existed when the Casualty occurred, except for (a) any modifications
required by Law or any Security Holder, and (b) any modifications to the Common
Areas that are deemed desirable by Landlord, are consistent with the character
of the Project, and do not materially impair access to or use of the Premises.
Notwithstanding Section 10.4, Tenant shall assign to Landlord (or its designee)
all insurance proceeds payable to Tenant under Tenant’s insurance required under
Section 10.2 with respect to any Tenant-Insured Improvements and trade fixtures,
and if the estimated or actual cost of restoring any Tenant-Insured Improvements
and trade fixtures exceeds the insurance proceeds received by Landlord from
Tenant’s insurance carrier, Tenant shall pay such excess to Landlord within
15 days after Landlord’s demand. No Casualty and no restoration performed as
required hereunder shall render Landlord liable to Tenant, constitute a
constructive eviction, or excuse Tenant from any obligation hereunder; provided,
however, that if the Premises or any Common Area necessary for Tenant’s access
to or use of the Premises is damaged by a Casualty, then, during any time that,
as a result of such damage,

 

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any portion of the Premises is untenantable or inaccessible and is not used and
occupied by Tenant for the conduct of business, Monthly Rent shall be abated in
proportion to the rentable square footage of such portion of the Premises.

12     NONWAIVER. No provision hereof shall be deemed waived by either party
unless it is waived by such party expressly and in writing, and no waiver of any
breach of any provision hereof shall be deemed a waiver of any subsequent breach
of such provision or any other provision hereof. Landlord’s acceptance of Rent
shall not be deemed a waiver of any preceding breach of any provision hereof,
other than Tenant’s failure to pay the particular Rent so accepted, regardless
of Landlord’s knowledge of such preceding breach at the time of such acceptance.
No acceptance of payment of an amount less than the Rent due hereunder shall be
deemed a waiver of Landlord’s right to receive the full amount of Rent due,
whether or not any endorsement or statement accompanying such payment purports
to effect an accord and satisfaction. No receipt of monies by Landlord from
Tenant after the giving of any notice, the commencement of any suit, the
issuance of any final judgment, or the termination hereof shall affect such
notice, suit or judgment, or reinstate or extend the Term or Tenant’s right of
possession hereunder.

13     CONDEMNATION. If any part of the Premises, Building or Project is taken
for any public or quasi-public use by power of eminent domain or by private
purchase in lieu thereof (a “Taking”) for more than 180 consecutive days,
Landlord may terminate this Lease. Notwithstanding the foregoing, with respect
to any Taking which does not include a portion of the Premises, Landlord shall
not terminate this Lease in accordance with the immediately preceding sentence
unless Landlord also terminates the leases of similarly affected tenants in the
Building for whom Landlord has the right to terminate. If more than 25% of the
rentable square footage of the Premises is Taken, or access to or use of the
Premises is substantially impaired as a result of a Taking, for more than
180 consecutive days, Tenant may terminate this Lease. Any such termination
shall be effective as of the date possession must be surrendered to the
authority, and the terminating party shall provide termination notice to the
other party within 45 days after receiving written notice of such surrender
date. Except as provided above in this Section 13, neither party may terminate
this Lease as a result of a Taking. Tenant shall not assert any claim for
compensation because of any Taking; provided, however, that Tenant may file a
separate claim for any Taking of Tenant’s personal property or any fixtures that
Tenant is entitled to remove upon the expiration hereof, and for moving
expenses, so long as such claim does not diminish the award available to
Landlord or any Security Holder and is payable separately to Tenant. If this
Lease is terminated pursuant to this Section 13, all Rent shall be apportioned
as of the date of such termination. If a Taking occurs and this Lease is not so
terminated, Monthly Rent shall be abated for the period of such Taking in
proportion to the percentage of the rentable square footage of the Premises, if
any, that is subject to, or rendered inaccessible or untenantable by, such
Taking.

 

14 ASSIGNMENT AND SUBLETTING.

14.1 Transfers. Except for a Permitted Transfer as hereinafter provided, Tenant
shall not, without Landlord’s prior consent, assign, mortgage, pledge,
hypothecate, encumber, permit any lien to attach to, or otherwise transfer this
Lease or any interest hereunder, permit any assignment or other transfer hereof
or any interest hereunder by operation of law, enter into any sublease or
license agreement, otherwise permit the occupancy or use of any part of the
Premises by any persons other than Tenant and its employees and contractors, or
permit a Change of Control (defined in Section 14.6) to occur (each, a
“Transfer”). If Tenant desires Landlord’s consent to any Transfer, Tenant shall
provide Landlord with (i) notice of the terms of the proposed Transfer,
including its proposed effective date (the “Contemplated Effective Date”), a
description of the portion of the Premises to be transferred (the “Contemplated
Transfer Space”), a calculation of the Transfer Premium (defined in
Section 14.3), and a copy of all existing executed and/or proposed documentation
pertaining to the proposed Transfer, and (ii) current financial statements of
the proposed transferee (or, in the case of a Change of Control, of the proposed
new controlling party(ies)) certified by an officer or owner thereof and any
other information reasonably required by Landlord in order to evaluate the
proposed Transfer (collectively, the “Transfer Notice”). Within 30 days after
receiving the Transfer Notice, Landlord shall notify Tenant of (a) its consent
to the proposed Transfer, (b) its refusal to consent to the proposed Transfer,
and stating with reasonable specificity the reasons therefor, or (c) its
exercise of its rights under Section 14.4. Except for a Permitted Transfer, any
Transfer made without Landlord’s prior consent shall, at Landlord’s option, be
void and shall, at Landlord’s option, constitute a Default (defined in
Section 19). Tenant shall pay Landlord a fee of $1,500.00 for Landlord’s review
of any proposed Transfer, whether or not Landlord consents to it.

14.2 Landlord’s Consent. Subject to Section 14.4, Landlord shall not
unreasonably withhold its consent to any proposed Transfer. Without limiting
other reasonable grounds for withholding consent, it shall be deemed reasonable
for Landlord to withhold consent to a proposed Transfer if:

14.2.1 The proposed transferee is not a party of reasonable financial strength
in light of the responsibilities to be undertaken in connection with the
Transfer on the date the Transfer Notice is received; or

14.2.2 The proposed transferee has a character or reputation or is engaged in a
business that is not consistent with the quality of the Building or the Project;
or

 

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14.2.3 The proposed transferee is a governmental entity or a nonprofit
organization; or

14.2.4 INTENTIONALLY OMITTED; or

14.2.5 The proposed transferee or any of its Affiliates, on the date the
Transfer Notice is received, leases or occupies (or, at any time during the
6-month period ending on the date the Transfer Notice is received, has
negotiated with Landlord to lease) space in the Project.

Notwithstanding any contrary provision hereof, (a) if Landlord consents to any
Transfer pursuant to this Section 14.2 but Tenant does not enter into such
Transfer within six (6) months thereafter, such consent shall no longer apply
and such Transfer shall not be permitted unless Tenant again obtains Landlord’s
consent thereto pursuant and subject to the terms of this Section 14; and (b) if
Landlord unreasonably withholds its consent under this Section 14.2, Tenant’s
sole remedies shall be contract damages (subject to Section 20) or specific
performance, and Tenant waives all other remedies, including any right to
terminate this Lease.

14.3 Transfer Premium. Except with respect to a Change of Control, a Permitted
Transfer or any other Transfer not requiring Landlord’s prior written consent,
if Landlord consents to a Transfer, Tenant shall pay Landlord an amount equal to
50% of any Transfer Premium (defined below). As used herein, “Transfer Premium”
means (a) in the case of an assignment, any consideration (including payment for
Leasehold Improvements) paid by the assignee for such assignment, less any
reasonable and customary expenses directly incurred by Tenant on account of such
assignment, including brokerage fees, legal fees, and Landlord’s review fee; or
(b) in the case of a sublease, license or other occupancy agreement, the amount
by which all rent and other consideration paid by the transferee to Tenant
pursuant to such agreement (less all reasonable and customary expenses directly
incurred by Tenant on account of such agreement, including brokerage fees, legal
fees, construction costs and Landlord’s review fee) exceeds the Monthly Rent
payable by Tenant hereunder with respect to the Contemplated Transfer Space for
the term of such agreement. Payment of Landlord’s share of the Transfer Premium
shall be made (x) in the case of an assignment, within 10 days after Tenant or
the prior controlling party(ies), as the case may be, receive(s) the
consideration described above, and (y) in the case of a sublease, license or
other occupancy agreement, on the first day of each month during the term of
such agreement, in the amount of 50% of the amount by which the rent and other
consideration paid by the transferee to Tenant under such agreement for such
month (less all reasonable and customary expenses directly incurred by Tenant on
account of such agreement, including brokerage fees, legal fees, construction
costs and Landlord’s review fee, as amortized on a monthly, straight-line basis
over the term of such agreement) exceeds the Monthly Rent payable by Tenant
hereunder with respect to the Contemplated Transfer Space for such month.

14.4 Landlord’s Right to Recapture. Notwithstanding any contrary provision
hereof, except in the case of a Permitted Transfer (defined in Section 14.8),
Landlord, by notifying Tenant within 30 days after receiving the Transfer
Notice, may terminate this Lease with respect to the Contemplated Transfer Space
as of the Contemplated Effective Date; provided, however, that such termination
shall not be effective if Tenant, by notifying Landlord within five (5) days
after receiving Landlord’s notice of termination, withdraws the Transfer Notice.
If Tenant does not timely withdraw the Transfer Notice, and if the Contemplated
Transfer Space is less than the entire Premises, then Base Rent, Tenant’s Share,
and the number of parking spaces to which Tenant is entitled under Section 1.9
shall be deemed adjusted on the basis of the percentage of the rentable square
footage of the Premises retained by Tenant. Upon request of either party, the
parties shall execute a written agreement prepared by Landlord memorializing
such termination.

14.5 Effect of Consent. If Landlord consents to a Transfer, (i) such consent
shall not be deemed a consent to any further Transfer, (ii) Tenant shall deliver
to Landlord, promptly after execution, an executed copy of all documentation
pertaining to the Transfer in form reasonably acceptable to Landlord, and
(iii) Tenant shall deliver to Landlord, upon Landlord’s request, a complete
statement, certified by an independent CPA or Tenant’s chief financial officer,
setting forth in detail the computation of any Transfer Premium. In the case of
an assignment, the assignee shall assume in writing, for Landlord’s benefit, all
of Tenant’s obligations hereunder. No Transfer, with or without Landlord’s
consent, shall relieve Tenant or any guarantor hereof from any liability
hereunder. Notwithstanding any contrary provision hereof, Tenant, with or
without Landlord’s consent, shall not enter into, or permit any party claiming
by, through or under Tenant to enter into, any sublease, license or other
occupancy agreement that provides for payment based in whole or in part on the
net income or profit of the subtenant, licensee or other occupant thereunder.

14.6 Change of Control. As used herein, “Change of Control” means (a) if Tenant
is a closely held professional service firm, the withdrawal or change (whether
voluntary, involuntary or by operation of law) of 50% or more of its equity
owners within a 12-month period; and (b) in all other cases, any transaction(s)
resulting in the acquisition of a Controlling Interest (defined below) by one or
more parties that did not own a Controlling Interest immediately before such
transaction(s). As used herein, “Controlling Interest” means any direct or
indirect equity or beneficial ownership interest in Tenant that confers upon its
holder(s) the direct or indirect power to direct the ordinary management and
policies of Tenant, whether through the ownership of voting securities, by
contract or otherwise (but not through the

 

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ownership of voting securities (i) listed on any recognized securities exchange
or authorized for quotation on a recognized market or other comparable trading
system or (ii) traded over any over-the-counter market, including, without
limitation, the OTCBB, the OTC QX or the Pink Sheets). Notwithstanding the
foregoing, a Change of Control shall not be deemed to have occurred for purposes
of this Article 14 so long as Alan H. Auerbach remains the Chief Executive
Officer of Tenant following such transaction(s), and the tangible net worth of
the Tenant after the transaction is the same or better than the tangible net
worth immediately prior to the exchange.

14.7 Effect of Default. If Tenant is in Default, Landlord is irrevocably
authorized, as Tenant’s agent and attorney-in-fact, to direct any transferee
under any sublease, license or other occupancy agreement to make all payments
under such agreement directly to Landlord (which Landlord shall apply towards
Tenant’s obligations hereunder) until such Default is cured. Such transferee
shall rely upon any representation by Landlord that Tenant is in Default,
whether or not confirmed by Tenant.

14.8 Permitted Transfers. Notwithstanding any contrary provision hereof, each of
the following shall be permitted without the Landlord’s prior written consent,
without the payment of any Transfer Premium pursuant to Section 14.3 (each, a
“Permitted Transfer”):

14.8.1 The transfer of securities of Tenant among the members of the immediate
family of a security holder, to a living trust for estate planning purposes or
by will or intestacy, to existing shareholders of Tenant or to Tenant;

14.8.2 Any transfer or issuance of securities of Tenant to an institutional or
other investor (herein, an “Investor”), so long as in connection therewith Alan
H. Auerbach remains the Chief Executive Officer of Tenant;

14.8.3 Any transfer or issuance of securities of any Investor, regardless of
whether such transfer results in a Change of Control of such Investor;

14.8.4 A sale, issuance or transfer of securities of Tenant to the public or
public trading of the securities of Tenant (A) listed on any recognized
securities exchange or authorized for quotation on a recognized market or other
comparable trading system or (B) traded over any over-the-counter market,
including, without limitation, the OTCBB, the OTC QX or the Pink Sheets);

14.8.5 If Tenant is not in Default, (a) an assignment of this Lease or
subletting or licensing of all or any portion of the Premises to an Affiliate of
Tenant, (b) an assignment of this Lease or subletting of all of the Premises as
an entirety to (i) any surviving entity in any merger, consolidation or
reorganization to which Tenant or its parent is a party, or (ii) to any entity
which acquires all or substantially all of the outstanding capital securities or
assets of Tenant or its parent, provided that (i) at least 10 business days
before any such Transfer, Tenant notifies Landlord of such Transfer and delivers
to Landlord any documents or information reasonably requested by Landlord
relating thereto, including reasonable documentation that the Transfer satisfies
the requirements of this Section 14.8.5; (ii) in the case of an assignment
pursuant to clause (a) or ( b) above (other than a where the surviving entity
assumes the obligations of the Tenant hereunder by operation of law (e.g., a
merger)), the assignee executes and delivers to Landlord, at least 10 business
days before the assignment, a commercially reasonable instrument pursuant to
which the assignee assumes, for Landlord’s benefit, all of Tenant’s obligations
hereunder; (iii) in the case of an assignment pursuant to clause (b) above,
(A) the surviving entity has a net worth (as determined in accordance with GAAP,
but excluding intellectual property and any other intangible assets (“Net
Worth”)) immediately after the Transfer that is not less than the Net Worth of
Tenant immediately before the Transfer, and (B) if Tenant is a closely held
professional service firm, at least 75% of its equity owners existing 12 months
before the Transfer are also equity owners of the successor entity; (iv) in the
case of an assignment pursuant to either clause (a) or (b), the transferee is
qualified to conduct business in the State of California; and (v) the Transfer
is made for a good faith operating business purpose and not in order to evade
the requirements of this Section 14. As used herein, “Affiliate” means, with
respect to any party, a person or entity that controls, is under common control
with, or is controlled by such party.

15     SURRENDER. Upon the expiration or earlier termination hereof, and subject
to Sections 8 and 11 and this Section 15, Tenant shall surrender possession of
the Premises to Landlord in as good condition and repair as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, except for
reasonable wear and tear, damage by Casualty and repairs that are Landlord’s
express responsibility hereunder. Before such expiration or termination, Tenant,
without expense to Landlord, shall (a) remove from the Premises all debris and
rubbish and all furniture, equipment, trade fixtures, Lines, free-standing
cabinet work, movable partitions and other articles of personal property that
are owned or placed in the Premises by Tenant or any party claiming by, through
or under Tenant (except for any Lines not required to be removed under
Section 23), and (b) repair all damage to the Premises and Building resulting
from such removal. If Tenant fails to timely perform such removal and repair,
Landlord may do so at Tenant’s expense (including storage costs). If Tenant
fails to remove such property from the Premises, or from

 

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storage, within 30 days after notice from Landlord, any part of such property
shall be deemed, at Landlord’s option, either (x) conveyed to Landlord without
compensation, or (y) abandoned.

16     HOLDOVER. If Tenant fails to surrender the Premises upon the expiration
or earlier termination hereof, Tenant’s tenancy shall be subject to the terms
and conditions hereof; provided, however, that such tenancy shall be a tenancy
at sufferance only, for the entire Premises, and Tenant shall pay Monthly Rent
(on a per-month basis without reduction for any partial month) at a rate equal
to 150% of the Monthly Rent applicable during the last calendar month of the
Term. Nothing in this Section 16 shall limit Landlord’s rights or remedies or be
deemed a consent to any holdover. If Landlord is unable to deliver possession of
the Premises to a new tenant or to perform improvements for a new tenant as a
result of Tenant’s holdover, Tenant shall be liable for all resulting damages,
including lost profits, incurred by Landlord.

17     SUBORDINATION; ESTOPPEL CERTIFICATES.

17.1 Except as set forth in Section 17.2 to the contrary, this Lease shall be
subject and subordinate to all existing and future ground or underlying leases,
mortgages, trust deeds and other encumbrances against the Building or Project,
all renewals, extensions, modifications, consolidations and replacements thereof
(each, a “Security Agreement”), and all advances made upon the security of such
mortgages or trust deeds, unless in each case the holder of such Security
Agreement (each, a “Security Holder”) requires in writing that this Lease be
superior thereto. Upon any termination or foreclosure (or any delivery of a deed
in lieu of foreclosure) of any Security Agreement, Tenant, upon request, shall
attorn, without deduction or set-off, to the Security Holder or purchaser or any
successor thereto and shall recognize such party as the lessor hereunder
provided that such party agrees not to disturb Tenant’s occupancy so long as
Tenant timely pays the Rent and otherwise performs its obligations hereunder.
Within 10 days after request by Landlord, Tenant shall execute such further
instruments as Landlord may reasonably deem necessary to evidence the
subordination or superiority of this Lease to any Security Agreement. Tenant
waives any right it may have under Law to terminate or otherwise adversely
affect this Lease or Tenant’s obligations hereunder upon a foreclosure. Within
10 business days after Landlord’s request, Tenant shall execute and deliver to
Landlord a commercially reasonable estoppel certificate in favor of such parties
as Landlord may reasonably designate, including current and prospective Security
Holders and prospective purchasers, provided that, except in the case of a
proposed sale or transfer of the Building and/or land thereunder, Landlord shall
not request from Tenant such estoppel certificate more than twice in any
calendar year. Within 10 business days after Tenant’s request, Landlord shall
execute and deliver to Tenant a commercially reasonable estoppel certificate in
favor of such parties as Tenant may reasonably designate, including current and
prospective assignee’s of Tenant’s interest under this Lease, provided that
Tenant shall not request from Tenant such estoppel certificate more than twice
in any calendar year. Notwithstanding the foregoing, Landlord will use
commercially reasonable efforts to obtain a non-disturbance, subordination and
attornment agreement from Landlord’s current Mortgagee (as hereinafter defined)
on such Mortgagee’s current standard form of agreement. “Commercially reasonable
efforts” of Landlord shall not require Landlord to incur any cost, expense or
liability to obtain such agreement, it being agreed that Tenant shall be
responsible for any fee or review costs charged by the Mortgagee. Commercially
reasonable efforts shall, however, require Landlord to: (i) provide Mortgagee
with a request to provide Tenant with a SNDA in accordance with the terms of
Landlord’s Security Agreement with the Mortgagee; (ii) promptly provide the
Mortgagee with such back-up documentation and other information as the Mortgagee
shall request, including, without limitation, a summary of the terms of this
Lease, Tenant financial information, and a relevant market information;
(iii) periodically follow-up with Mortgagee about the status of Mortgagee’s
approval of the SNDA; and (iv) if Mortgagee refuses to enter into an SNDA,
inquire as to the reasons for such disapproval. As used herein, the term
“Mortgagee” shall mean the holder of a mortgage or deed of trust recorded
against the Property as of the date hereof. Tenant will, subject to commercially
reasonable modifications requested by Tenant, execute the Mortgagee’s form of
non-disturbance, subordination and attornment agreement and return the same to
Landlord for execution by the Mortgagee. Landlord’s failure to obtain a
non-disturbance, subordination and attornment agreement for Tenant shall have no
effect on the rights, obligations and liabilities of Landlord and Tenant or be
considered to be a default by Landlord hereunder.

17.2 Notwithstanding Section 17.1, Tenant’s agreement to subordinate this Lease
to a future Security Agreement shall not be effective unless Landlord has
provided Tenant with a commercially reasonable non-disturbance agreement from
the Security Holder. For purposes of the preceding sentence, a non-disturbance
agreement shall not be deemed commercially reasonable unless it provides that:
(a) so long as no Default exists, this Lease and Tenant’s right to possession
hereunder shall remain in full force and effect; (b) the Security Holder shall
have additional time (not to exceed 90 days after written notice from Tenant) to
cure any default of Landlord; and (c) neither the Security Holder nor any
successor in interest shall be (i) bound by (A) any payment of Rent for more
than one (1) month in advance, or (B) any amendment of this Lease made without
the written consent of the Security Holder or such successor in interest;
(ii) liable for any act, omission, representation, warranty or default of any
prior landlord (including Landlord); or (iii) subject to any offset or defense
that Tenant might have against any prior landlord (including Landlord).

 

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18     ENTRY BY LANDLORD. At all reasonable times and upon reasonable notice to
Tenant, or in an emergency, Landlord may enter the Premises to (i) inspect the
Premises; (ii) show the Premises to prospective purchasers, current or
prospective Security Holders or insurers, or, during the last 12 months of the
Term (or while an uncured Default exists), prospective tenants; (iii) post
notices of non-responsibility; or (iv) perform maintenance, repairs or
alterations. At any time and without notice to Tenant, Landlord may enter the
Premises to perform required services. If reasonably necessary, Landlord may
temporarily close any portion of the Premises to perform maintenance, repairs or
alterations. In an emergency, Landlord may use any means it deems proper to open
doors to and in the Premises. No entry into or closure of any portion of the
Premises pursuant to this Section 18 shall render Landlord liable to Tenant,
constitute a constructive eviction, or excuse Tenant from any obligation
hereunder. As used herein, an “emergency” shall be any circumstances or set of
facts posing an imminent threat of injury to or death of persons or damage to
property. All entries by Landlord and all notices and other items placed in the
Premises by Landlord shall, to the extent possible under the circumstances, be
conducted in a manner which causes the least practicable interference with the
operation of Tenant’s business in the Premises.

19     DEFAULTS; REMEDIES.

19.1 Events of Default. The occurrence of any of the following shall constitute
a “Default”:

19.1.1 Any failure by Tenant to pay any Rent when due unless such failure is
cured within five (5) business days after notice; or

19.1.2 Except where a specific time period is otherwise set forth for Tenant’s
performance herein (in which event the failure to perform by Tenant within such
time period shall be a Default), and except as otherwise provided in this
Section 19.1, any failure by Tenant to observe or perform any other provision,
covenant or condition hereof where such failure continues for 30 days after
notice from Landlord; provided that if such failure cannot reasonably be cured
within such 30-day period, Tenant shall not be in Default as a result of such
failure if Tenant diligently commences such cure within such period, thereafter
diligently pursues such cure to completion; or

19.1.3 INTENTIONALLY OMITTED; or

19.1.4 Any failure by Tenant to observe or perform the provisions of
Sections 14, or 17 where such failure continues for more than five (5) business
days after notice from Landlord; or

19.1.5 Tenant becomes in breach of Section 25.3 where such failure continues for
more than five (5) business days after notice from Landlord.

If Tenant breaches a particular provision hereof (other than a provision
requiring payment of Rent) on three (3) separate occasions during any 12-month
period, Tenant’s subsequent breach of such provision shall be, at Landlord’s
option, an incurable Default. The notice periods provided herein are in lieu of,
and not in addition to, any notice periods provided by Law, and Landlord shall
not be required to give any additional notice in order to be entitled to
commence an unlawful detainer proceeding.

19.2 Remedies Upon Default. Upon any Default, Landlord shall have, in addition
to any other remedies available to Landlord at law or in equity (which shall be
cumulative and nonexclusive), the option to pursue any one or more of the
following remedies (which shall be cumulative and nonexclusive) without any
notice or demand:

19.2.1 Landlord may terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy it may have for possession
or arrearages in Rent, enter upon and take possession of the Premises and expel
or remove Tenant and any other person who may be occupying the Premises or any
part thereof, without being liable for prosecution or any claim or damages
therefor; and Landlord may recover from Tenant the following:

(a) The worth at the time of award of the unpaid Rent which has been earned at
the time of such termination; plus

(b) The worth at the time of award of the amount by which the unpaid Rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably
avoided; plus

(c) The worth at the time of award of the amount by which the unpaid Rent for
the balance of the Term after the time of award exceeds the amount of such Rent
loss that Tenant proves could have been reasonably avoided; plus

(d) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations hereunder or
which in the ordinary

 

18

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course of things would be likely to result therefrom, including brokerage
commissions, advertising expenses, expenses of remodeling any portion of the
Premises for a new tenant (whether for the same or a different use), and any
special concessions made to obtain a new tenant; plus

(e) At Landlord’s option, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by Law.

As used in Sections 19.2.1(a) and (b), the “worth at the time of award” shall be
computed by allowing interest at a rate per annum equal to the lesser of (i) the
annual “Bank Prime Loan” rate cited in the Federal Reserve Statistical Release
Publication G.13(415), published on the first Tuesday of each calendar month (or
such other comparable index as Landlord shall reasonably designate if such rate
ceases to be published) plus two (2) percentage points, or (ii) the highest rate
permitted by Law. As used in Section 19.2.1(c), the “worth at the time of award”
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus 1%.

19.2.2 Landlord shall have the remedy described in California Civil Code
§ 1951.4 (lessor may continue lease in effect after lessee’s breach and
abandonment and recover Rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies hereunder, including the right to recover all
Rent as it becomes due.

19.2.3 Landlord shall at all times have the rights and remedies (which shall be
cumulative with each other and cumulative and in addition to those rights and
remedies available under Sections 19.2.1 and 19.2.2, or any Law or other
provision hereof), without prior demand or notice except as required by Law, to
seek any declaratory, injunctive or other equitable relief, and specifically
enforce this Lease, or restrain or enjoin a violation or breach of any provision
hereof.

19.3 Efforts to Relet. Unless Landlord provides Tenant with express notice to
the contrary, no re-entry, repossession, repair, maintenance, change,
alteration, addition, reletting, appointment of a receiver or other action or
omission by Landlord shall (a) be construed as an election by Landlord to
terminate this Lease or Tenant’s right to possession, or to accept a surrender
of the Premises, or (b) operate to release Tenant from any of its obligations
hereunder. Tenant waives, for Tenant and for all those claiming by, through or
under Tenant, California Civil Code § 3275 and California Code of Civil
Procedure §§ 1174(c) and 1179 and any existing or future rights to redeem or
reinstate, by order or judgment of any court or by any legal process or writ,
this Lease or Tenant’s right of occupancy of the Premises after any termination
hereof.

19.4 Landlord Default. Landlord shall not be in default hereunder unless it
breaches a provision hereof and such breach continues for 30 days after notice
from Tenant; provided that if such breach cannot reasonably be cured within such
30-day period, Landlord shall not be in default as a result of such breach if
Landlord diligently commences such cure within such period, thereafter
diligently pursues such cure, and completes such cure within 60 days after
Tenant’s notice. Before exercising any remedies for a default by Landlord,
Tenant shall give notice and a reasonable time to cure to any Security Holder of
which Tenant has been notified.

20     LANDLORD EXCULPATION. Notwithstanding any contrary provision hereof,
(a) the liability of the Landlord Parties to Tenant shall be limited to an
amount equal to the lesser of (i) Landlord’s interest in the Building, or
(ii) the equity interest Landlord would have in the Building if the Building
were encumbered by third-party debt in an amount equal to 75% of the value of
the Building (as such value is determined by Landlord); (b) Tenant shall look
solely to Landlord’s interest in the Building for the recovery of any judgment
or award against any Landlord Party; (c) no Landlord Party shall have any
personal liability for any judgment or deficiency, and Tenant waives and
releases such personal liability on behalf of itself and all parties claiming
by, through or under Tenant; and (d) no Landlord Party shall be liable for any
injury or damage to, or interference with, Tenant’s business, including loss of
profits, loss of rents or other revenues, loss of business opportunity, loss of
goodwill or loss of use, or for any form of special or consequential damage.

21     SECURITY DEPOSIT. Concurrently with its execution and delivery hereof,
Tenant shall deposit with Landlord the Security Deposit, if any, as security for
Tenant’s performance of its obligations hereunder. If Tenant breaches any
provision hereof, Landlord may, at its option, without notice to Tenant, apply
all or part of the Security Deposit to pay any past-due Rent, cure any breach by
Tenant, or compensate Landlord for any other loss or damage caused by such
breach. If Landlord so applies any portion of the Security Deposit, Tenant,
within five (5) business days after demand therefor, shall restore the Security
Deposit to its original amount. The Security Deposit is not an advance payment
of Rent or measure of damages. Any unapplied portion of the Security Deposit
shall be returned to Tenant within 60 days after the latest to occur of (a) the
expiration of the Term, (b) Tenant’s surrender of the Premises as required
hereunder, or (c) determination of the final Rent due from Tenant. Landlord
shall not be required to keep the Security Deposit separate from its other
accounts.

 

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22     RELOCATION. INTENTIONALLY OMITTED.

23     COMMUNICATIONS AND COMPUTER LINES. All Lines installed pursuant to this
Lease shall be (a) installed in accordance with Section 7; and (b) clearly
marked with adhesive plastic labels (or plastic tags attached to such Lines with
wire) to show Tenant’s name, suite number, and the purpose of such Lines
(i) every six (6) feet outside the Premises (including the electrical room
risers and any Common Areas), and (ii) at their termination points. Landlord may
designate specific contractors for work relating to vertical Lines. Sufficient
spare cables and space for additional cables shall be maintained for other
occupants, as reasonably determined by Landlord. Unless otherwise notified by
Landlord, Tenant, at its expense and before the expiration or earlier
termination hereof, shall remove all Lines and repair any resulting damage. As
used herein, “Lines” means all communications or computer wires and cables
serving the Premises, whenever and by whomever installed or paid for, including
any such wires or cables installed pursuant to any prior lease.

24     PARKING. Tenant may park in the Building’s parking facilities (the
“Parking Facility”), in common with other tenants of the Building, upon the
following terms and conditions. Tenant shall not use more than the number of
unreserved and/or reserved parking passes set forth in Section 1.9. Tenant shall
pay Landlord, in accordance with Section 3, any fees for the parking passes
described in Section 1.9. Tenant shall pay Landlord any fees, taxes or other
charges imposed by any governmental or quasi-governmental agency in connection
with the Parking Facility, to the extent such amounts are reasonably and
properly allocated to Tenant by Landlord. Landlord shall not be liable to
Tenant, nor shall this Lease be affected, if any parking is impaired by (or any
parking charges are imposed as a result of) any Law. Tenant shall comply with
all non-discriminatory rules and regulations established by Landlord from time
to time for the orderly operation and use of the Parking Facility, including any
sticker or other identification system and the prohibition of vehicle repair and
maintenance activities in the Parking Facility. Landlord may, in its discretion,
allocate and assign parking passes among Tenant and the other tenants in the
Building. Tenant’s use of the Parking Facility shall be at Tenant’s sole risk,
and Landlord shall have no liability for any personal injury or damage to or
theft of any vehicles or other property occurring in the Parking Facility or
otherwise in connection with any use of the Parking Facility by Tenant, its
employees or invitees, except to the extent caused by Landlord’s negligence or
willful misconduct. Landlord may alter the size, configuration, design, layout
or any other aspect of the Parking Facility, and, in connection therewith,
temporarily deny or restrict access to the Parking Facility, in each case
without abatement of Rent or liability to Tenant, except as otherwise provided
herein. Landlord may delegate its responsibilities hereunder to a parking
operator, in which case (i) such parking operator shall have all the rights of
control reserved herein by Landlord, (ii) Tenant shall enter into a parking
agreement with such parking operator consistent with the terms hereof,
(iii) Tenant shall pay such parking operator, rather than Landlord, any charge
established hereunder for the parking passes, and (iv) Landlord shall have no
liability for claims arising through acts or omissions of such parking operator
except to the extent caused by Landlord’s negligence or willful misconduct.
Tenant’s parking rights under this Section 24 are solely for the benefit of
Tenant’s employees and invitees and such rights may not be transferred without
Landlord’s prior consent, except pursuant to a Transfer permitted under
Section 14.

25     MISCELLANEOUS.

25.1 Notices. No notice, demand, statement, designation, request, consent,
approval, election or other communication given hereunder (“Notice”) shall be
binding upon either party unless (a) it is in writing; (b) it is (i) sent by
certified or registered mail, postage prepaid, return receipt requested,
(ii) delivered by a nationally recognized courier service, or (iii) delivered
personally; and (c) it is sent or delivered to the address set forth in
Section 1.10 or 1.11, as applicable, or to such other place (other than a
P.O. box) as the recipient may from time to time designate in a Notice to the
other party. Any Notice shall be deemed received on the earlier of the date of
actual delivery or the date on which delivery is refused, or, if Tenant is the
recipient and has vacated its notice address without providing a new notice
address, three (3) days after the date the Notice is deposited in the U.S. mail
or with a courier service as described above.

25.2 Force Majeure. If either party is prevented from performing any obligation
hereunder by any strike, act of God, war, terrorist act, shortage of labor or
materials, governmental action, civil commotion or other cause beyond such
party’s reasonable control (“Force Majeure”), such obligation shall be excused
during (and any time period for the performance of such obligation shall be
extended by) the period of such prevention; provided, however, that this
Section 25.2 shall not (a) permit Tenant to hold over in the Premises after the
expiration or earlier termination hereof, or (b) excuse any of Tenant’s
obligations under Sections 3, 4, 21 or 25.3.

25.3 Representations and Covenants. Tenant represents, warrants and covenants
that (a) Tenant is, and at all times during the Term will remain, duly
organized, validly existing and in good standing under the Laws of the state of
its formation and qualified to do business in the state of California;
(b) neither Tenant’s execution of nor its performance under this Lease will
cause Tenant to be in violation of any agreement or Law; (c) Tenant (and any
guarantor hereof) has not, and at no time during the Term will have, (i) made a
general assignment for the benefit of creditors, (ii) filed a voluntary petition
in bankruptcy or suffered the filing of an involuntary petition by creditors,
(iii) suffered the appointment of a

 

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receiver to take possession of all or substantially all of its assets,
(iv) suffered the attachment or other judicial seizure of all or substantially
all of its assets, (v) admitted in writing its inability to pay its debts as
they come due, or (vi) made an offer of settlement, extension or composition to
its creditors generally; and (d) each party that (other than through the passive
ownership of interests traded on a recognized securities exchange) constitutes,
owns, controls, or is owned or controlled by Tenant, any guarantor hereof or any
subtenant of Tenant is not, and at no time during the Term will be, (i) in
violation of any Laws relating to terrorism or money laundering, or (ii) among
the parties identified on any list compiled pursuant to Executive Order 13224
for the purpose of identifying suspected terrorists or on the most current list
published by the U.S. Treasury Department Office of Foreign Assets Control at
its official website, http://www.treas.gov/ofac/tllsdn.pdf or any replacement
website or other replacement official publication of such list.

25.4 Signs. Tenant shall be entitled to 11 lines on the tenant directory located
in the lobby on the first floor of the Building. If any part of the Premises is
located on a multi-tenant floor, Landlord, at Tenant’s cost (subject to the
Allowance (as defined in Exhibit B)), shall provide identifying suite signage
for Tenant comparable to that provided by Landlord on similar floors in the
Building. Tenant may not install (a) any signs outside the Premises, or
(b) without Landlord’s prior consent in its sole and absolute discretion, any
signs, window coverings, blinds or similar items that are visible from outside
the Premises. Landlord and Tenant acknowledge and agree that Tenant shall have
the right to have their entrance doors of the Premises facing the elevator lobby
open during Building HVAC Hours (provided such entryway doors are equipped with
emergency release hold open devices that is tied in with the fire life safety
system.

25.5 Supplemental HVAC. If any supplemental HVAC unit (a “Unit”) serves the
Premises, then (a) Tenant shall pay the costs of all electricity consumed in the
Unit’s operation, together with the cost of installing a meter to measure such
consumption; (b) Tenant, at its expense, shall (i) operate and maintain the Unit
in compliance with all applicable Laws and such reasonable rules and procedures
as Landlord may impose; (ii) keep the Unit in as good working order and
condition as exists upon its installation (or, if later, on the date Tenant
takes possession of the Premises), subject to normal wear and tear and damage
resulting from Casualty; (iii) maintain in effect, with a contractor reasonably
approved by Landlord, a contract for the maintenance and repair of the Unit,
which contract shall require the contractor, at least once every three (3)
months, to inspect the Unit and provide to Tenant a report of any defective
conditions, together with any recommendations for maintenance, repair or
parts-replacement; (iv) follow all reasonable recommendation of such contractor;
and (v) promptly provide to Landlord a copy of such contract and each report
issued thereunder; (c) the Unit shall become Landlord’s property upon
installation and without compensation to Tenant; provided, however, that upon
Landlord’s request at the expiration or earlier termination hereof, Tenant, at
its expense, shall remove the Unit and repair any resulting damage.
Notwithstanding the foregoing, Tenant shall have no obligation to remove the
Unit that is located in the Premises as of the date of this Lease; (d) the Unit
shall be deemed (i) a Leasehold Improvement (except for purposes of Section 8),
and (ii) for purposes of Section 11, part of the Premises; (e) if the Unit
exists on the date of mutual execution and delivery hereof, Tenant accepts the
Unit in its “as is” condition, without representation or warranty as to quality,
condition, fitness for use or any other matter; and (f) if the Unit connects to
the Building’s condenser water loop (if any), then Tenant shall pay to Landlord,
as Additional Rent, Landlord’s standard (i.e., the same rate charged to other
tenants for such connection) monthly per-ton usage fee (currently $150.00 per
ton).

25.6 Attorneys’ Fees. In any action or proceeding between the parties, including
any appellate or alternative dispute resolution proceeding, the prevailing party
may recover from the other party all of its costs and expenses in connection
therewith, including reasonable attorneys’ fees and costs. Tenant shall pay all
reasonable attorneys’ fees and other fees and costs that Landlord incurs in
enforcing this Lease or otherwise protecting its rights hereunder (a) where
Tenant has failed to pay Rent when due, or (b) in any bankruptcy case,
assignment for the benefit of creditors, or other insolvency, or liquidation
proceeding involving Tenant or this Lease.

25.7 Brokers. Tenant represents to Landlord that it has dealt only with Tenant’s
Broker as its broker in connection with this Lease. Tenant shall indemnify,
defend, and hold Landlord harmless from all claims of any brokers, other than
Tenant’s Broker, claiming to have represented Tenant in connection with this
Lease. Landlord shall indemnify, defend and hold Tenant harmless from all claims
of any brokers, including Landlord’s Broker, claiming to have represented
Landlord in connection with this Lease. Tenant acknowledges that any Affiliate
of Landlord that is involved in the negotiation of this Lease is representing
only Landlord, and that any assistance rendered by any agent or employee of such
Affiliate in connection with this Lease or any subsequent amendment or other
document related hereto has been or will be rendered as an accommodation to
Tenant solely in furtherance of consummating the transaction on behalf of
Landlord, and not as agent for Tenant.

25.8 Governing Law; WAIVER OF TRIAL BY JURY. This Lease shall be construed and
enforced in accordance with the Laws of the State of California. THE PARTIES
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY
LITIGATION ARISING OUT OF OR RELATING TO THIS LEASE, THE RELATIONSHIP OF

 

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LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM
FOR INJURY OR DAMAGE OR ANY EMERGENCY OR STATUTORY REMEDY.

25.9 Waiver of Statutory Provisions. Each party waives California Civil
Code §§ 1932(2) and 1933(4). Tenant waives (a) any rights under (i) California
Civil Code §§ 1932(1), 1941, 1942, 1950.7 or any similar Law, or (ii) California
Code of Civil Procedure § 1265.130; and (b) any right to terminate this Lease
under California Civil Code § 1995.310.

25.10 Interpretation. As used herein, the capitalized term “Section” refers to a
section hereof unless otherwise specifically provided herein. As used in this
Lease, the terms “herein,” “hereof,” “hereto” and “hereunder” refer to this
Lease and the term “include” and its derivatives are not limiting. Any reference
herein to “any part” or “any portion” of the Premises, the Property or any other
property shall be construed to refer to all or any part of such property.
Wherever this Lease requires Tenant to comply with any Law, rule, regulation,
procedure or other requirement or prohibits Tenant from engaging in any
particular conduct, this Lease shall be deemed also to require Tenant to cause
each of its employees, licensees, invitees and subtenants, and any other party
claiming by, through or under Tenant, to comply with such requirement or refrain
from engaging in such conduct, as the case may be. Wherever this Lease requires
Landlord to provide a customary service or to act in a reasonable manner
(whether in incurring an expense, establishing a rule or regulation, providing
an approval or consent, or performing any other act), this Lease shall be deemed
also to provide that whether such service is customary or such conduct is
reasonable shall be determined by reference to the practices of owners of
buildings that (i) are comparable to the Building in size, age, class, quality
and location, and (ii) if applicable, have been, or are being prepared to be,
certified under the U.S. Green Building Council’s Leadership in Energy and
Environmental Design (LEED) rating system or a similar rating system. Tenant
waives the benefit of any rule that a written agreement shall be construed
against the drafting party.

25.11 Entire Agreement. This Lease sets forth the entire agreement between the
parties relating to the subject matter hereof and supersedes any previous
agreements (none of which shall be used to interpret this Lease). Tenant
acknowledges that in entering into this Lease it has not relied upon any
representation, warranty or statement, whether oral or written, not expressly
set forth herein. This Lease can be modified only by a written agreement signed
by both parties.

25.12 Other. Landlord, at its option, may cure any Default, without waiving any
right or remedy or releasing Tenant from any obligation, in which event Tenant
shall pay Landlord, upon demand, the reasonable out-of-pocket cost incurred by
Landlord of such cure. If any provision hereof is void or unenforceable, no
other provision shall be affected. Submission of this instrument for examination
or signature by Tenant does not constitute an option or offer to lease, and this
instrument is not binding until it has been executed and delivered by both
parties. If Tenant is comprised of two or more parties, their obligations shall
be joint and several. Time is of the essence with respect to the performance of
every provision hereof in which time of performance is a factor. So long as
Tenant performs its obligations hereunder, Tenant shall have peaceful and quiet
possession of the Premises against any party claiming by, through or under
Landlord, subject to the terms hereof. Landlord may transfer its interest
herein, in which event Landlord shall be released from, Tenant shall look solely
to the transferee for the performance of, and the transferee shall be deemed to
have assumed (and shall assume in writing), all of Landlord’s obligations
arising hereunder after the date of such transfer (including the return of any
Security Deposit, LC Proceeds Account and any Letter of Credit or Renewal or
Replacement LC) and Tenant shall attorn to the transferee. Landlord reserves all
rights not expressly granted to Tenant hereunder, including the right to make
alterations to the Project; provided that Tenant’s rights under this Lease are
not reduced and Tenant’s obligations hereunder are not increased and Tenant’s
use of, parking for or access to the Premises is not affected thereby. No rights
to any view or to light or air over any property are granted to Tenant
hereunder. The expiration or termination hereof shall not relieve either party
of any obligation that accrued before, or continues to accrue after, such
expiration or termination.

[SIGNATURES ARE ON THE FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed
the day and date first above written.

 

LANDLORD: CA-10880 WILSHIRE LIMITED PARTNERSHIP, a Delaware limited partnership
By:   EOP Owner GP L.L.C., a Delaware limited liability company, its general
partner   By:  

/s/ Frank Campbell

    Name: Frank Campbell     Title: Market Managing Director TENANT: PUMA
BIOTECHNOLOGY, INC., a Delaware corporation By:  

/s/ Alan H. Auerbach

Name:   Alan H. Auerbach Title:   Chief Executive Officer and President By:  

/s/ Charles Eyler

Name:   Charles Eyler Title:   Senior Vice President – Finance & Treasurer

 

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EXHIBIT A

10880 WILSHIRE BOULEVARD

OUTLINE OF PREMISES

LOGO [g269128g76z85.jpg]

 

 

Exhibit A

1

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EXHIBIT B

10880 WILSHIRE BOULEVARD

WORK LETTER

As used in this Exhibit B (this “Work Letter”), the following terms shall have
the following meanings: “Agreement” means the Lease of which this Work Letter is
a part. “Tenant Improvements” means all improvements to be constructed in the
Premises pursuant to this Work Letter. “Tenant Improvement Work” means the
construction of the Tenant Improvements, together with any related work
(including demolition) that is necessary to construct the Tenant Improvements.

 

1 ALLOWANCE.

1.1 Allowance. Tenant shall be entitled to a one-time tenant improvement
allowance (the “Allowance”) in the amount of $675,954.00 (i.e. $51.00 per
rentable square foot of the Premises) to be applied toward the Allowance Items
(defined in Section 1.2 below). Tenant shall be responsible for all costs
associated with the Tenant Improvement Work, including the costs of the
Allowance Items, to the extent such costs exceed the lesser of (a) the
Allowance, or (b) the aggregate amount that Landlord is required to disburse for
such purpose pursuant to this Work Letter. Notwithstanding any contrary
provision of this Agreement, if Tenant fails to use the entire Allowance in
connection with the performance of the Tenant Improvement Work, the unused
amount shall revert to Landlord and Tenant shall have no further rights with
respect thereto.

1.2 Disbursement of the Allowance. Except as otherwise provided in this Work
Letter, the Allowance shall be disbursed by Landlord only for the following
items (the “Allowance Items”): (a) the fees of the Architect (defined in
Section 2.1 below) and the Engineers, and any fees reasonably incurred by
Landlord for review of the Plans (defined in Section 2.1 below) by Landlord’s
third party consultants; (b) plan-check, permit and license fees relating to
performance of the Tenant Improvement Work; (c) the cost of performing the
Tenant Improvement Work, including after-hours charges, testing and inspection
costs, and trash removal costs, and contractors’ fees and general conditions;
(d) the cost of any change to the base, shell or core of the Premises or
Building required by the Plans (including if such change is due to the fact that
such work is prepared on an unoccupied basis), including all direct
architectural and/or engineering fees and expenses incurred in connection
therewith; (e) the cost of any change to the Plans or Tenant Improvement Work
required by Law; (f) the Landlord Supervision Fee (defined in Section 3.2.2
below); (g) sales and use taxes; (h) project management fees and the fees of any
other consultant retained by Tenant in connection with the Tenant Improvement
Work, (i) the cost of purchasing and installing furniture, fixtures and
equipment in the Premises; (j) the cost of purchasing and installing
telecommunications and data cabling in the Premises, and (k) all other costs
expended by Landlord in connection with the performance of the Tenant
Improvement Work. Notwithstanding the foregoing, in no event may Tenant apply
more than a total of $238,572.00 (i.e. $18.00 per rentable square foot of the
Premises) toward the costs described in (a), (h), (i) and (j) above.

1.3 In addition to the above described Allowance, Landlord agrees to provide
Tenant with a space planning allowance (the “Space Planning Allowance”) in an
amount not to exceed $1,590.48 to be applied toward the cost of the preparation
of a preliminary space plan for the Premises to be prepared by the Architect
(defined below). If the Space Planning Allowance exceeds the cost of the
preparation of the preliminary plan, any remaining Space Planning Allowance
shall accrue to the sole benefit of Landlord, it being agreed that Tenant shall
not be entitled to any credit, offset, abatement or payment with respect
thereto. The Space Planning Allowance shall be paid to Tenant on or before the
later of (i) thirty (30) days after the date Landlord approves the final Plans
for the Tenant Improvement Work, or (ii) thirty (30) days after Landlord’s
receipt of a paid invoice with respect to the cost of preparing the preliminary
space plan.

 

2 PLANS AND PRICING.

2.1 Selection of Architect. Tenant shall retain SAA as the architect/space
planner (the “Architect”) and engineering consultants approved by Landlord (the
“Engineers”) to prepare all architectural plans for the Premises and all
engineering working drawings relating to the structural, mechanical, electrical,
plumbing, HVAC, life-safety, and sprinkler work in the Premises. The plans and
drawings to be prepared by the Architect and the Engineers shall be referred to
in this Work Letter as the “Plans.” All Plans shall (a) comply with the drawing
format and specifications required by Landlord, (b) be consistent with
Landlord’s requirements for avoiding aesthetic, engineering or other conflicts
with the design and function of the balance of the Building, and (c) otherwise
be subject to Landlord’s reasonable approval. Notwithstanding any review of the
Plans by Landlord or any of its space planners, architects, engineers or other
consultants, and notwithstanding any advice or assistance that may be rendered
to Tenant by Landlord or any such consultant, Landlord shall not be liable for
any error or

 

Exhibit B

1

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omission in the Plans or have any other liability relating thereto. Without
limiting the foregoing, Tenant shall be responsible for ensuring (x) that all
elements of the design of the Plans comply with Law and are otherwise suitable
for Tenant’s use of the Premises, and (y) that no Tenant Improvement impairs any
system or structural component of the Building, and neither Landlord’s nor its
consultants’ approval of the Plans shall relieve Tenant from such
responsibility.

2.2 [Intentionally Omitted.]

2.3 Space Plan. Landlord and Tenant have approved the space plan attached hereto
as Exhibit B-1 (the “Space Plan”).

2.4 [Intentionally Omitted.]

2.5 Construction Drawings. Tenant shall cause the Architect and the Engineers to
complete the architectural, engineering and final architectural working drawings
for the Tenant Improvement Work in a form that is sufficient to enable
subcontractors to bid on the work and to obtain all applicable permits
(collectively, the “Construction Drawings”), and, no later than 10 days after
the execution of the Lease by Landlord and Tenant, shall deliver four (4) copies
of the Construction Drawings, signed by Tenant, to Landlord for its approval.
Notwithstanding the foregoing, at Tenant’s option, the Construction Drawings may
be prepared in two phases (first the architectural drawings, then engineering
drawings consistent with the previously provided architectural drawings),
provided that each phase shall be subject to Landlord’s approval. Landlord shall
provide Tenant with notice approving or reasonably disapproving the Construction
Drawings (or the applicable component thereof) within 10 business days after the
later of Landlord’s receipt thereof or the mutual execution and delivery of this
Agreement. If Landlord disapproves the Construction Drawings (or any component
thereof), Landlord’s notice of disapproval shall describe with reasonable
specificity the basis for such disapproval and the changes that would be
necessary to resolve Landlord’s objections. If Landlord disapproves the
Construction Drawings (or any component thereof), Tenant shall cause the
Construction Drawings to be modified and resubmitted to Landlord for its
approval. Such procedure shall be repeated as necessary until Landlord has
approved the Construction Drawings (or the applicable component thereof). No
revision may be made to the approved Construction Drawings (the “Approved
Construction Drawings”) without Landlord’s prior consent, which shall not be
unreasonably withheld.

2.6 Construction Pricing. Within a reasonable time after the Approved
Construction Drawings are approved by Landlord and Tenant, Landlord shall
provide Tenant with Landlord’s reasonable estimate (the “Construction Pricing
Proposal”) of the cost of all Allowance Items to be incurred by Tenant in
connection with the performance of the Tenant Improvement Work pursuant to the
Approved Construction Drawings. Tenant shall provide Landlord with notice
approving or disapproving the Construction Pricing Proposal. If Tenant
disapproves the Construction Pricing Proposal, Tenant’s notice of disapproval
shall be accompanied by proposed revisions to the Approved Construction Drawings
that Tenant requests in order to resolve its objections to the Construction
Pricing Proposal, and Landlord shall respond as required under Section 2.7
below. Such procedure shall be repeated as necessary until the Construction
Pricing Proposal is approved by Tenant. Upon Tenant’s approval of the
Construction Pricing Proposal, Landlord may purchase the items set forth in the
Construction Pricing Proposal and, to the extent any required Permits have been
delivered to Landlord, commence construction relating to such items.

2.7 Revisions to Approved Construction Drawings. If Tenant requests Landlord’s
approval of any revision to the Approved Construction Drawings, Landlord shall
provide Tenant with notice approving or reasonably disapproving such revision,
and, if Landlord approves such revision, Landlord shall provide Tenant with
notice of any resulting change in the most recent Construction Pricing Proposal,
if any, within 5 business days after Landlord’s receipt of such request
(together with the proposed revision) if such revision is not material, and
within such longer period of time as may be reasonably necessary (but not more
than 10 business days after receipt) if such revision is material, whereupon
Tenant, within one (1) business day, shall notify Landlord whether it desires to
proceed with such revision. If Landlord has commenced performance of the Tenant
Improvement Work, then, in the absence of such authorization, Landlord shall
have the option to continue such performance disregarding such revision.

2.8 Permits. Tenant shall submit the Approved Construction Drawings to the
appropriate municipal authorities and otherwise apply for and obtain from such
authorities, and deliver to Landlord, all permits necessary to enable the
Contractor (defined in Section 3.1 below) to complete the Tenant Improvement
Work (the “Permits”). Tenant shall coordinate with Landlord in order to allow
Landlord, at its option, to take part in all phases of the permitting process
and shall supply Landlord, as soon as possible, with all plan check numbers and
dates of submittal. Notwithstanding any contrary provision hereof, Tenant, and
not Landlord or its consultants, shall be responsible for obtaining any Permit
or certificate of occupancy; provided, however, that Landlord shall cooperate
with Tenant in executing

 

Exhibit B

2

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permit applications and performing other ministerial acts reasonably necessary
to enable Tenant to obtain any Permit or certificate of occupancy.

2.9 Time Deadlines. Tenant shall use commercially reasonable efforts to
cooperate with its architect, engineers and other consultants, and with Landlord
and its contractors and consultants, to complete all phases of the Plans,
approve the Construction Pricing Proposal and obtain the Permits as soon as
possible after the execution of this Agreement, and Tenant shall meet with
Landlord, in accordance with a schedule mutually agreed upon by Landlord and
Tenant, to discuss Tenant’s progress. Without limiting the foregoing, Tenant
shall approve the Construction Pricing Proposal pursuant to Section 2.6 above
and deliver the Permits to Landlord pursuant to Section 2.8 above on or before
Tenant’s Approval and Permitting Deadline (defined below). As used in this Work
Letter, “Tenant’s Approval and Permitting Deadline” means 14 days after the
parties approval of the Approved Construction Drawings; provided, however, that
Tenant’s Approval and Permitting Deadline shall be extended by one day for each
day, if any, by which the date on which Tenant approves the Construction Pricing
Proposal pursuant to Section 2.6 above and delivers the Permits to Landlord
pursuant to Section 2.8 above is delayed by any failure of Landlord to perform
its obligations under this Section 2.

 

3 CONSTRUCTION.

3.1 Contractor. Landlord shall retain Holwick (the “Contractor”) as the general
contractor to perform the Tenant Improvement Work. Landlord shall cause
contractor to competitively bid all major subcontracts to not less than three
(3) qualified subcontractors with the exception that Landlord shall not be
required to competitively bid work to be performed by the Building’s fire life
safety vendor..

3.2 Construction.

3.2.1 Over-Allowance Amount. If the Construction Pricing Proposal exceeds the
Allowance, then, concurrently with its delivery to Landlord of approval of the
Construction Pricing Proposal, Tenant shall deliver to Landlord cash in the
amount of such excess (the “Over-Allowance Amount”). Any Over-Allowance Amount
shall be disbursed by Landlord before the Allowance and pursuant to the same
procedure as the Allowance. After the Construction Pricing Proposal is approved
by Tenant, if any revision is made to the Approved Construction Drawings or the
Tenant Improvement Work that increases the Construction Pricing Proposal, or if
the Construction Pricing Proposal is otherwise increased to reflect the actual
cost of all Allowance Items to be incurred by Tenant in connection with the
performance of the Tenant Improvement Work pursuant to the Approved Construction
Drawings, then Tenant shall deliver any resulting Over-Allowance Amount (or any
resulting increase in the Over-Allowance Amount) to Landlord immediately upon
Landlord’s request.

3.2.2 Landlord’s Retention of Contractor. Landlord shall independently retain
the Contractor to perform the Tenant Improvement Work in accordance with the
Approved Construction Drawings. Tenant shall pay a construction supervision and
management fee (the “Landlord Supervision Fee”) to Landlord in an amount equal
to 5% of the aggregate amount of all Allowance Items other than the Landlord
Supervision Fee.

3.2.3 Contractor’s Warranties. Tenant waives all claims against Landlord
relating to any defects in the Tenant Improvements; provided, however, that if,
after substantial completion of the Tenant Improvements, Tenant provides notice
to Landlord of any non-latent defect in the Tenant Improvements, or if, after
substantial completion of the Tenant Improvements, Tenant provides notice to
Landlord of any latent defect in the Tenant Improvements, then Landlord shall,
at its option, either (a) assign to Tenant any right Landlord may have under the
Construction Contract (defined below) to require the Contractor to correct, or
pay for the correction of, such defect, or (b) at Tenant’s expense, use
reasonable efforts to enforce such right directly against the Contractor for
Tenant’s benefit. As used in this Work Letter, “Construction Contract” means the
construction contract between Landlord and the Contractor pursuant to which the
Tenant Improvements will be constructed.

3.2.4 Tenant’s Covenants. At the conclusion of construction, Tenant shall cause
the Architect to (i) update the Approved Construction Drawings as necessary to
reflect all changes made to the Approved Construction Drawings during the course
of construction, (ii) certify to the best of its knowledge that the updated
drawings are true and correct, which certification shall survive the expiration
or termination of the Lease, and (iii) deliver to Landlord two (2) CD ROMS of
such updated drawings in accordance with Landlord’s CAD Format Requirements
(defined below) within 30 days following issuance of a certificate of occupancy
for the Premises. For purposes of this Work Letter, “Landlord’s CAD Format
Requirements” shall mean (w) the version is no later than current Autodesk
version of AutoCAD plus the most recent release version, (x) files must be
unlocked and fully accessible (no “cad-lock”, read-only, password protected or
“signature” files), (y) files must be in “.dwg” format, and (z) if the data was
electronically in a non-Autodesk product, then files must be converted into
“dwg” files when given to Landlord.

 

Exhibit B

3

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3.2.5 Landlord shall provide to Contractor and all subcontractors, without
additional charge, parking, utilities, HVAC during normal Business Hours,
freight elevator service, use of the loading docks, and restrooms, during the
construction of the Tenant Improvement Work and during Tenant’s move into the
Premises.

 

4 COMPLETION.

4.1 Ready for Occupancy. For purposes of Section 1.3.2 of this Agreement, the
Premises shall be deemed “Ready for Occupancy” upon the substantial completion
of the Tenant Improvement Work. Subject to Section 4.2 below, the Tenant
Improvement Work shall be deemed to be “substantially complete” upon the
completion of the Tenant Improvement Work pursuant to the Approved Construction
Drawings (as reasonably determined by Landlord), with the exception of any
details of construction, mechanical adjustment or any other similar matter the
non-completion of which does not materially interfere with Tenant’s use of the
Premises.

4.2 Tenant Delay. If the substantial completion of the Tenant Improvement Work
is delayed (a “Tenant Delay”) as a result of (a) any failure of Tenant to
approve the Construction Pricing Proposal pursuant to Section 2.6 above and
deliver the Permits to Landlord pursuant to Section 2.8 above on or before
Tenant’s Approval and Permitting Deadline; (b) Tenant’s failure to timely
approve any matter requiring Tenant’s approval; (c) any breach by Tenant of this
Work Letter or the Lease; (d) any change (or Tenant’s request for Landlord’s
approval of any change) in the Approved Construction Drawings (except to the
extent such delay results from any failure of Landlord to perform its
obligations under Section 2.7 above); (e) Tenant’s requirement for materials,
components, finishes or improvements that are not available in a commercially
reasonable time given the anticipated date of substantial completion of the
Tenant Improvement Work as set forth in this Agreement; or (f) any other act or
omission of Tenant or any of its agents, employees or representatives, then,
notwithstanding any contrary provision of this Agreement, and regardless of when
the Tenant Improvement Work is actually substantially completed, the Tenant
Improvement Work shall be deemed to be substantially completed on the date on
which the Tenant Improvement Work would have been substantially completed if no
such Tenant Delay had occurred.

5     MISCELLANEOUS. Notwithstanding any contrary provision of this Agreement,
if Tenant defaults under this Agreement before the Tenant Improvement Work is
completed, Landlord’s obligations under this Work Letter shall be excused until
such default is cured and Tenant shall be responsible for any resulting delay in
the completion of the Tenant Improvement Work. This Work Letter shall not apply
to any space other than the Premises.

 

Exhibit B

4

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EXHIBIT C

10880 WILSHIRE BOULEVARD

CONFIRMATION LETTER

                        , 2011

PUMA BIOTECHNOLOGY, INC.

10880 Wilshire Boulevard

Suite 2150

Los Angeles, California

 

Re: Office Lease (the “Lease”) dated                         , 2011, between
CA-10880 WILSHIRE LIMITED PARTNERSHIP, a Delaware limited partnership
(“Landlord”), and PUMA BIOTECHNOLOGY, INC., a Delaware corporation (“Tenant”),
concerning Suite 2150 (the “Premises”) on the 21ST floor of the building located
at 10880 Wilshire Boulevard, Los Angeles, California.

Lease ID:                                                  

Business Unit Number:                           

Dear                                 :

In accordance with the Lease, Tenant accepts possession of the Premises and
confirms the following:

 

  1. The Commencement Date is                          and the Expiration Date
is                         .

Please acknowledge the foregoing by signing all three (3) counterparts of this
letter in the space provided below and returning two (2) fully executed
counterparts to my attention. Please note that, pursuant to Section 2.1.1 of the
Lease, if Tenant fails to execute and return (or, by notice to Landlord,
reasonably object to) this letter within 10 days after receiving it, Tenant
shall be deemed to have executed and returned it without exception.

 

 

Agreed and Accepted as of                         , 2011.

 

“Tenant”:

 

PUMA BIOTECHNOLOGY, INC., a Delaware corporation

  

“Landlord”:

 

EQUITY OFFICE MANAGEMENT, L.L.C.,

as agent for CA-10880 Wilshire Limited Partnership

     By:  

 

       Name:  

 

By:  

 

     Title:   Authorized Signatory Name:  

 

       Title:  

 

      

 

Exhibit C

1

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EXHIBIT D

10880 WILSHIRE BOULEVARD

RULES AND REGULATIONS

Tenant shall comply with the following rules and regulations (as modified or
supplemented from time to time, the “Rules and Regulations”). Landlord shall not
be responsible to Tenant for the nonperformance of any of the Rules and
Regulations by any other tenants or occupants of the Project, provided that
Landlord shall enforce the rules and regulations for the Building in good faith
and in a non-discriminatory manner with respect to all tenants of the Building.
In the event of any conflict between the Rules and Regulations and the other
provisions of this Lease, the latter shall control.

1. Tenant shall not alter any lock or install any new or additional locks or
bolts on any doors or windows of the Premises without obtaining Landlord’s prior
consent. Tenant shall bear the cost of any lock changes or repairs required by
Tenant. Two (2) keys will be furnished by Landlord for the Premises, and any
additional keys required by Tenant must be obtained from Landlord at a
reasonable cost to be established by Landlord. Upon the termination of this
Lease, Tenant shall restore to Landlord all keys of stores, offices and toilet
rooms furnished to or otherwise procured by Tenant, and if any such keys are
lost, Tenant shall pay Landlord the cost of replacing them or of changing the
applicable locks if Landlord deems such changes necessary.

2. All doors opening to public corridors shall be kept closed at all times
except for normal ingress and egress to the Premises.

3. Landlord may close and keep locked all entrance and exit doors of the
Building during such hours as are customary for comparable buildings in the
vicinity of the Building. Tenant shall cause its employees, agents, contractors,
invitees and licensees who use Building doors during such hours to securely
close and lock them after such use. Any person entering or leaving the Building
during such hours, or when the Building doors are otherwise locked, may be
required to sign the Building register, and access to the Building may be
refused unless such person has proper identification or has a previously
arranged access pass. Landlord will furnish passes to persons for whom Tenant
requests them. Tenant shall be responsible for all persons for whom Tenant
requests passes 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 with
regard to the admission or exclusion of any person to or from the Building. In
case of invasion, mob, riot, public excitement or other commotion, Landlord may
prevent access to the Building or the Project during the continuance thereof by
any means it deems appropriate for the safety and protection of life and
property.

4. No furniture, freight or equipment shall be brought into the Building without
prior notice to Landlord. All moving activity into or out of the Building shall
be scheduled with Landlord and done only at such time and in such manner as
Landlord designates. Landlord may prescribe the weight, size and position of all
safes and other heavy property brought into the Building and also the times and
manner of moving the same in and out of the Building. Safes and other heavy
objects shall, if considered necessary by Landlord, stand on supports of such
thickness as is necessary to properly distribute the weight. Landlord will not
be responsible for loss of or damage to any such safe or property. Any damage to
the Building, its contents, occupants or invitees resulting from Tenant’s moving
or maintaining any such safe or other heavy property shall be the sole
responsibility and expense of Tenant (notwithstanding Sections 7 and 10.4 of
this Lease).

5. No furniture, packages, supplies, equipment or merchandise will be received
in the Building or carried up or down in the elevators, except in such specific
elevator and by such personnel as shall be designated by Landlord.

6. Employees of Landlord shall not perform any work or do anything outside their
regular duties unless under special instructions from Landlord.

7. No sign, advertisement, notice or handbill shall be exhibited, distributed,
painted or affixed by Tenant on any part of the Premises or the Building without
Landlord’s prior consent. Tenant shall not disturb, solicit, peddle or canvass
any occupant of the Project.

8. The toilet rooms, 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 shall be thrown therein. Notwithstanding Sections 7 and 10.4 of this
Lease, Tenant shall bear the expense of any breakage, stoppage or damage
resulting from any violation of this rule by Tenant or any of its employees,
agents, contractors, invitees or licensees.

 

Exhibit D

1

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9. Tenant shall not overload the floor of the Premises, or mark, drive nails or
screws or drill into the partitions, woodwork or drywall of the Premises, or
otherwise deface the Premises, without Landlord’s prior consent. Tenant shall
not purchase bottled water, ice, towel, linen, maintenance or other like
services from any person not approved by Landlord.

10. Except for vending machines intended for the sole use of Tenant’s employees
and invitees, no vending machine or machines other than fractional horsepower
office machines shall be installed, maintained or operated in the Premises
without Landlord’s prior consent.

11. No inflammable, explosive or dangerous fluids or substances shall be used or
kept by Tenant in the Premises or about the Project, except for such substances
as are typically found in similar premises used for general office purposes and
are being used by Tenant in a safe manner and in accordance with all Laws.
Without limiting the foregoing, Tenant shall not, without Landlord’s prior
consent, use, store, install, disturb, spill, remove, release or dispose of,
within or about the Premises or any other portion of the Project, any
asbestos-containing materials or any solid, liquid or gaseous material now or
subsequently considered toxic or hazardous under the provisions of 42 U.S.C.
Section 9601 et seq. or any other applicable environmental Law. Tenant shall
comply with all Laws pertaining to and governing the use of these materials by
Tenant and shall remain solely liable for the costs of abatement and removal. No
burning candle or other open flame shall be ignited or kept by Tenant in the
Premises or about the Project.

12. Tenant shall not, without Landlord’s prior consent, use any method of
heating or air conditioning other than that supplied by Landlord or otherwise
reasonably approved by Landlord.

13. Tenant shall not use or keep any foul or noxious gas or substance in or on
the Premises, or occupy or use the Premises in a manner offensive or
objectionable to Landlord or other occupants of the Project by reason of noise,
odors or vibrations, or interfere with other occupants or those having business
therein, whether by the use of any musical instrument, radio, CD player or
otherwise. Tenant shall not throw anything out of doors, windows or skylights or
down passageways.

14. Tenant shall not bring into or keep within the Project, the Building or the
Premises any animals (other than service animals), birds, aquariums, or, except
in areas designated by Landlord, bicycles or other vehicles.

15. No cooking shall be done in the Premises, nor shall the Premises be used for
lodging, for living quarters or sleeping apartments, or for any improper,
objectionable or immoral purposes. Notwithstanding the foregoing, Underwriters’
laboratory-approved equipment and microwave ovens may be used in the Premises
for heating food and brewing coffee, tea, hot chocolate and similar beverages
for employees and invitees, provided that such use complies with all Laws.

16. The Premises shall not be used for manufacturing or for the storage of
merchandise except to the extent such storage may be incidental to the Permitted
Use. Tenant shall not occupy the Premises as an office for a messenger-type
operation or dispatch office, public stenographer or typist, or for the
manufacture or sale of liquor, narcotics or tobacco, or as a medical office, a
barber or manicure shop, or an employment bureau, without Landlord’s prior
consent. Tenant shall not engage or pay any employees in the Premises except
those actually working for Tenant in the Premises, nor advertise for laborers
giving an address at the Premises.

17. Landlord may exclude from the Project any person who, in Landlord’s
judgment, is intoxicated or under the influence of liquor or drugs, or who
violates any of these Rules and Regulations.

18. Tenant shall not loiter in or on the entrances, corridors, sidewalks,
lobbies, courts, halls, stairways, elevators, vestibules or any Common Areas for
the purpose of smoking tobacco products or for any other purpose, nor in any way
obstruct such areas, and shall use them only as a means of ingress and egress
for the Premises.

19. Tenant shall not waste electricity, water or air conditioning, shall
cooperate with Landlord to ensure the most effective operation of the Building’s
heating and air conditioning system, and shall not attempt to adjust any
controls. Tenant shall install and use in the Premises only ENERGY STAR rated
equipment, where available. Tenant shall use recycled paper in the Premises to
the extent consistent with its business requirements.

20. Tenant shall store all its trash and garbage inside the Premises. No
material shall be placed in the trash or garbage receptacles if, under Law, it
may not be disposed of in the ordinary and customary manner of disposing of
trash and garbage in the vicinity of the Building. All trash, garbage and refuse
disposal shall be made only through entryways and elevators provided for such
purposes at such times as Landlord shall designate. Tenant shall comply with
Landlord’s recycling program, if any.

 

Exhibit D

2

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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. Any persons employed by Tenant to do janitorial work shall be subject to
Landlord’s prior consent and, while in the Building and outside of the Premises,
shall be subject to the control and direction of the Building manager (but not
as an agent or employee of such manager or Landlord), and Tenant shall be
responsible for all acts of such persons.

23. No awning or other projection shall be attached to the outside walls of the
Building without Landlord’s prior consent. Other than Landlord’s
Building-standard window coverings, no curtains, blinds, shades or screens shall
be attached to or hung in, or used in connection with, any window or door of the
Premises. All electrical ceiling fixtures hung in the Premises or spaces along
the perimeter of the Building must be fluorescent and/or of a quality, type,
design and a warm white bulb color approved in advance by Landlord. Neither the
interior nor exterior of any windows shall be coated or otherwise sunscreened
without Landlord’s prior consent. Tenant shall abide by Landlord’s regulations
concerning the opening and closing of window coverings.

24. Tenant shall not obstruct any sashes, sash doors, skylights, windows or
doors that reflect or admit light or air into the halls, passageways or other
public places in the Building, nor shall Tenant place any bottles, parcels or
other articles on the windowsills.

25. Tenant must comply with requests by Landlord concerning the informing of
their employees of items of importance to the Landlord.

26. Tenant must comply with the State of California “No-Smoking” law set forth
in California Labor Code Section 6404.5 and with any local “No-Smoking”
ordinance that is not superseded by such law.

27. Tenant shall cooperate in any reasonable safety or security program
developed by Landlord or required by Law.

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

29. Tenant shall not use any hand trucks except those equipped with rubber tires
and rubber side guards.

30. No auction, liquidation, fire sale, going-out-of-business or bankruptcy sale
shall be conducted in the Premises without Landlord’s prior consent.

31. Without Landlord’s prior consent, Tenant shall not use the name of the
Project or Building or use pictures or illustrations of the Project or Building
in advertising or other publicity or for any purpose other than as the address
of the business to be conducted by Tenant in the Premises.

Landlord may from time to time modify or supplement these Rules and Regulations
in a manner that, in Landlord’s reasonable judgment, is appropriate for the
management, safety, care and cleanliness of the Premises, the Building, the
Common Areas and the Project, for the preservation of good order therein, and
for the convenience of other occupants and tenants thereof, provided that no
changed or new rule and/or regulation shall materially and adversely affect any
of Tenant’s material rights under this Lease or unreasonably interfere with the
conduct of Tenants business in the Premises. Landlord may waive any of these
Rules and Regulations for the benefit of any tenant, but no such waiver shall be
construed as a waiver of such Rule and Regulation in favor of any other tenant
nor prevent Landlord from thereafter enforcing such Rule and Regulation against
any tenant. Landlord shall not discriminate against Tenant in Landlord’s
enforcement of the rules and regulations. The rules and regulations shall be
generally applicable, and generally applied in the same manner, to all tenants
of the Building.

 

Exhibit D

3

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EXHIBIT E

10880 WILSHIRE BOULEVARD

JUDICIAL REFERENCE

IF THE JURY-WAIVER PROVISIONS OF SECTION 25.8 OF THIS LEASE ARE NOT ENFORCEABLE
UNDER CALIFORNIA LAW, THE PROVISIONS SET FORTH BELOW SHALL APPLY.

It is the desire and intention of the parties to agree upon a mechanism and
procedure under which controversies and disputes arising out of this Lease or
related to the Premises will be resolved in a prompt and expeditious manner.
Accordingly, except with respect to actions for unlawful or forcible detainer or
with respect to the prejudgment remedy of attachment, any action, proceeding or
counterclaim brought by either party hereto against the other (and/or against
its officers, directors, employees, agents or subsidiaries or affiliated
entities) on any matters arising out of or in any way connected with this Lease,
Tenant’s use or occupancy of the Premises and/or any claim of injury or damage,
whether sounding in contract, tort, or otherwise, shall be heard and resolved by
a referee under the provisions of the California Code of Civil Procedure,
Sections 638 — 645.1, inclusive (as same may be amended, or any successor
statute(s) thereto) (the “Referee Sections”). Any fee to initiate the judicial
reference proceedings and all fees charged and costs incurred by the referee
shall be paid by the party initiating such procedure (except that if a reporter
is requested by either party, then a reporter shall be present at all
proceedings where requested and the fees of such reporter – except for copies
ordered by the other parties – shall be borne by the party requesting the
reporter); provided however, that allocation of the costs and fees, including
any initiation fee, of such proceeding shall be ultimately determined in
accordance with Section 25.6 of this Lease. The venue of the proceedings shall
be in the county in which the Premises is located. Within 10 days of receipt by
any party of a request to resolve any dispute or controversy pursuant to this
Exhibit E, the parties shall agree upon a single referee who shall try all
issues, whether of fact or law, and report a finding and judgment on such issues
as required by the Referee Sections. If the parties are unable to agree upon a
referee within such 10-day period, then any party may thereafter file a lawsuit
in the county in which the Premises is located for the purpose of appointment of
a referee under the Referee Sections. If the referee is appointed by the court,
the referee shall be a neutral and impartial retired judge with substantial
experience in the relevant matters to be determined, from Jams/Endispute, Inc.,
ADR Services, Inc. or a similar mediation/arbitration entity approved by each
party in its sole and absolute discretion. The proposed referee may be
challenged by any party for any of the grounds listed in the Referee Sections.
The referee shall have the power to decide all issues of fact and law and report
his or her decision on such issues, and to issue all recognized remedies
available at law or in equity for any cause of action that is before the
referee, including an award of attorneys’ fees and costs in accordance with this
Lease. The referee shall not, however, have the power to award punitive damages,
nor any other damages that are not permitted by the express provisions of this
Lease, and the parties waive any right to recover any such damages. The parties
may conduct all discovery as provided in the California Code of Civil Procedure,
and the referee shall oversee discovery and may enforce all discovery orders in
the same manner as any trial court judge, with rights to regulate discovery and
to issue and enforce subpoenas, protective orders and other limitations on
discovery available under California Law. The reference proceeding shall be
conducted in accordance with California Law (including the rules of evidence),
and in all regards, the referee shall follow California Law applicable at the
time of the reference proceeding. The parties shall promptly and diligently
cooperate with one another and the referee, and shall perform such acts as may
be necessary to obtain a prompt and expeditious resolution of the dispute or
controversy in accordance with the terms of this Exhibit E. In this regard, the
parties agree that the parties and the referee shall use best efforts to ensure
that (a) discovery be conducted for a period no longer than 6 months from the
date the referee is appointed, excluding motions regarding discovery, and (b) a
trial date be set within 9 months of the date the referee is appointed. In
accordance with Section 644 of the California Code of Civil Procedure, the
decision of the referee upon the whole issue must stand as the decision of the
court, and upon the filing of the statement of decision with the clerk of the
court, or with the judge if there is no clerk, judgment may be entered thereon
in the same manner as if the action had been tried by the court. Any decision of
the referee and/or judgment or other order entered thereon shall be appealable
to the same extent and in the same manner that such decision, judgment, or order
would be appealable if rendered by a judge of the superior court in which venue
is proper hereunder. The referee shall in his/her statement of decision set
forth his/her findings of fact and conclusions of law. The parties intend this
general reference agreement to be specifically enforceable in accordance with
the Code of Civil Procedure. Nothing in this Exhibit E shall prejudice the right
of any party to obtain provisional relief or other equitable remedies from a
court of competent jurisdiction as shall otherwise be available under the Code
of Civil Procedure and/or applicable court rules.

 

Exhibit E

1

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EXHIBIT F

10880 WILSHIRE BOULEVARD

ADDITIONAL PROVISIONS

 

1. Asbestos Notification. Tenant acknowledges that it has received the asbestos
notification letter attached to this Lease as Exhibit G, disclosing the
existence of asbestos in the Building. Tenant agrees to comply with the
California “Connelly Act” and other applicable laws, including by 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 and other
applicable laws.

 

2. Premises Furniture. Landlord and Tenant acknowledge and agree that the prior
tenant in the Premises surrendered the Premises with certain items of furniture
remaining in the Premises (the “Premises Furniture”). Landlord consents to
Tenant’s use of the Premises Furniture during the Term. Tenant accepts such
Premises Furniture for use during the Term in as-is, where-is condition with no
representations or warranties from Landlord as to title, quality, condition,
merchantability or fitness for use; any such warranties being specifically
excluded. Tenant shall maintain the Premises Furniture in good condition and
repair during the Term, at Tenant’s sole cost and expense, and upon expiration
of the Term, Tenant shall have the right to purchase the Tenant Furniture for
the sum of $1.00.

 

3. Extension Option.

 

  3.1. Grant of Option; Conditions. Tenant shall have the right (the “Extension
Option”) to extend the Term for one additional period of five (5) years
commencing on the day following the Expiration Date and ending on the fifth
(5th) anniversary of the Expiration Date (the “Extension Term”), if:

 

  A. Not less than 10 nor more than 12 full calendar months before the
Expiration Date, Tenant delivers written notice to Landlord (the “Extension
Notice”) electing to exercise the Extension Option and stating Tenant’s estimate
of the Prevailing Market (defined in Section 3.5 below) rate for the Extension
Term;

 

  B. Tenant is not in Default under the Lease beyond any applicable cure period
when Tenant delivers the Extension Notice;

 

  C. Not more than 25% of the Premises is sublet when Tenant delivers the
Extension Notice (except in connection with a Permitted Transfer); and

 

  D. The Lease has not been assigned (except in connection with a Permitted
Transfer) before Tenant delivers the Extension Notice.

 

  3.2. Terms Applicable to Extension Term.

 

  A. During the Extension Term, (a) the Base Rent rate per rentable square foot
shall be equal to the Prevailing Market rate per rentable square foot; (b) Base
Rent shall increase, if at all, in accordance with the increases assumed in the
determination of Prevailing Market rate; and (c) Base Rent shall be payable in
monthly installments in accordance with the terms and conditions of the Lease.

 

  B. During the Extension Term Tenant shall pay Tenant’s Share of Expenses and
Taxes for the Premises in accordance with the Lease. Tenant’s Base Year shall be
reset to be the calendar year in which the applicable Extension Term commences.

 

  3.3. Procedure for Determining Prevailing Market.

 

  A.

Initial Procedure. Within 30 days after receiving the Extension Notice, Landlord
shall give Tenant either (i) written notice (“Landlord’s Binding Notice”)
accepting Tenant’s estimate of the Prevailing Market rate for the Extension Term
stated in the Extension Notice, or (ii) written notice (“Landlord’s Rejection
Notice”) rejecting such estimate and stating Landlord’s estimate of the
Prevailing Market rate for the Extension Term. If Landlord gives Tenant a
Landlord’s Rejection Notice, Tenant, within 15 days thereafter, shall give
Landlord either (i) written notice (“Tenant’s Binding Notice”) accepting
Landlord’s estimate of the Prevailing Market rate for the Extension Term stated
in such Landlord’s

 

Exhibit F

1

--------------------------------------------------------------------------------

  Rejection Notice, or (ii) written notice (“Tenant’s Rejection Notice”)
rejecting such estimate. If Tenant gives Landlord a Tenant’s Rejection Notice,
Landlord and Tenant shall work together in good faith to agree in writing upon
the Prevailing Market rate for the Extension Term. If, within 30 days after
delivery of a Tenant’s Rejection Notice, the parties fail to agree in writing
upon the Prevailing Market rate, the provisions of Section 3.3.B below shall
apply.

 

  B. Dispute Resolution Procedure.

 

  1. If, within 30 days after delivery of a Tenant’s Rejection Notice, the
parties fail to agree in writing upon the Prevailing Market rate, Landlord and
Tenant, within five (5) days thereafter, shall each simultaneously submit to the
other, in a sealed envelope, its good faith estimate of the Prevailing Market
rate for the Extension Term (collectively, the “Estimates”). Within seven (7)
days after the exchange of Estimates, Landlord and Tenant shall each select an
appraiser to determine which of the two Estimates most closely reflects the
Prevailing Market rate for the Extension Term. Each appraiser so selected shall
be certified as an MAI appraiser or as an ASA appraiser and shall have had at
least five (5) years’ experience within the previous 10 years as a real estate
appraiser working in Los Angeles, California, with working knowledge of current
rental rates and leasing practices relating to buildings similar to the Building
and shall not be then employed by such selecting party, or have been in the
employment of such selecting party within the last 5 years. For purposes hereof,
an “MAI” appraiser means an individual who holds an MAI designation conferred
by, and is an independent member of, the American Institute of Real Estate
Appraisers (or its successor organization, or in the event there is no successor
organization, the organization and designation most similar), and an “ASA”
appraiser means an individual who holds the Senior Member designation conferred
by, and is an independent member of, the American Society of Appraisers (or its
successor organization, or, in the event there is no successor organization, the
organization and designation most similar).

 

  2. If each party selects an appraiser in accordance with Section 3.B.1 above,
the parties shall cause their respective appraisers to work together in good
faith to agree upon which of the two Estimates most closely reflects the
Prevailing Market rate for the Extension Term. The Estimate, if any, so agreed
upon by such appraisers shall be final and binding on both parties as the
Prevailing Market rate for the Extension Term and may be entered in a court of
competent jurisdiction. If the appraisers fail to reach such agreement within
20 days after their selection, then, within 10 days after the expiration of such
20-day period, the parties shall instruct the appraisers to select a third
appraiser meeting the above criteria (and if the appraisers fail to agree upon
such third appraiser within 10 days after being so instructed, either party may
cause a court of competent jurisdiction to select such third appraiser).
Promptly upon selection of such third appraiser, the parties shall instruct such
appraiser (or, if only one of the parties has selected an appraiser within the
7-day period described above, then promptly after the expiration of such 7-day
period the parties shall instruct such appraiser) to determine, as soon as
practicable but in any case within 14 days after his selection, which of the two
Estimates most closely reflects the Prevailing Market rate. Such determination
by such appraiser (the “Final Appraiser”) shall be final and binding on both
parties as the Prevailing Market rate for the Extension Term and may be entered
in a court of competent jurisdiction. If the Final Appraiser believes that
expert advice would materially assist him, he may retain one or more qualified
persons to provide such expert advice. The parties shall share equally in the
costs of the Final Appraiser and of any experts retained by the Final Appraiser.
Any fees of any other appraiser, counsel or expert engaged by Landlord or Tenant
shall be borne by the party retaining such appraiser, counsel or expert.

 

  C.

If the Prevailing Market rate has not been determined by the commencement date
of the Extension Term, Tenant shall pay Base Rent for the Extension Term upon
the terms and conditions in effect during the last month ending on or before the
Extended Expiration Date until such time as the Prevailing Market rate has

 

Exhibit F

2

--------------------------------------------------------------------------------

  been determined. Upon such determination, the Base Rent for the Extension Term
shall be retroactively adjusted. If such adjustment results in an under- or
overpayment of Base Rent by Tenant, Tenant shall pay Landlord the amount of such
underpayment, or receive a credit in the amount of such overpayment, with or
against the next Base Rent due under the Lease.

 

  3.4. Extension Amendment. If Tenant is entitled to and properly exercises its
Extension Option, and if the Prevailing Market rate for the Extension Term is
determined in accordance with Section 3.3 above, Landlord, within a reasonable
time thereafter, shall prepare and deliver to Tenant an amendment (the
“Extension Amendment”) reflecting changes in the Base Rent, the term of the
Lease, the expiration date of the Lease, and other appropriate terms, and Tenant
shall execute and return the Extension Amendment to Landlord within 15 days
after receiving it. Notwithstanding the foregoing, upon determination of the
Prevailing Market rate for the Extension Term in accordance with Section 3.3
above, an otherwise valid exercise of the Extension Option shall be fully
effective whether or not the Extension Amendment is executed.

 

  3.5. Definition of Prevailing Market. For purposes of this Extension Option,
“Prevailing Market” shall mean the arms-length, fair-market, initial annual
rental rate per rentable square foot under extension and renewal leases and
amendments entered into on or about the date on which the Prevailing Market is
being determined hereunder for space comparable to the Premises in the Building
and Project. The determination of Prevailing Market shall take into account any
material economic differences between the terms of the Lease and any comparison
lease or amendment, such as rent abatements, construction costs and other
concessions, and the manner, if any, in which the landlord under any such lease
is reimbursed for operating expenses and taxes. The determination of Prevailing
Market shall also take into consideration any reasonably anticipated changes in
the Prevailing Market rate from the time such Prevailing Market rate is being
determined and the time such Prevailing Market rate will become effective under
the Lease..

 

4. Acceleration Option.

 

  4.1 Tenant shall have the right (the “Acceleration Option”) to accelerate the
Expiration Date, with respect to the entire Premises only, from the scheduled
Expiration Date to the last day of the 60th full calendar month following the
Commencement Date (the “Accelerated Expiration Date”) if:

 

  A. Tenant delivers to Landlord, at least 270 days before the Accelerated
Expiration Date, a written notice (the “Acceleration Notice”) exercising the
Acceleration Option.

 

  B. Tenant is not in default under the Lease when Tenant delivers the
Acceleration Notice to Landlord;

 

  C. No part of the Premises is sublet past the Accelerated Expiration Date when
Tenant delivers the Acceleration Notice to Landlord (unless such sublease will
automatically terminate as of the Accelerated Expiration Date in accordance with
its terms and conditions); and

 

  D. The Lease has not been assigned (other than pursuant to a Permitted
Transfer) before Tenant delivers the Acceleration Notice to Landlord.

 

  4.2 If Tenant validly exercises the Acceleration Option, then
(i) notwithstanding any contrary provision of the Lease, but subject to the
terms of this Section 4, the term of the Lease shall expire, with respect to the
entire Premises, on the Accelerated Expiration Date with the same force and
effect as if such term were, by the provisions of the Lease, fixed to expire on
the Accelerated Expiration Date; and (ii) without limiting the foregoing:

 

  A. The portion of the Base Rent schedule set forth in Section 1.4 of the Lease
that applies during the period following the Accelerated Expiration Date shall
be deleted from the Lease; and

 

  B. Tenant shall surrender the Premises to Landlord in accordance with the
terms of the Lease on or before the Accelerated Expiration Date; and

 

Exhibit F

3

--------------------------------------------------------------------------------

  C. Tenant shall remain liable for all Rent and other amounts payable under the
Lease for the period up to and to and including the Accelerated Expiration Date,
even though billings for such amounts may occur after the Accelerated Expiration
Date; and

 

  D. Tenant’s restoration obligations shall be as set forth in the Lease; and

 

  E. If Tenant fails to surrender any portion of the Premises on or before the
Accelerated Expiration Date, Tenant’s tenancy shall be subject to Section 16 of
the Lease; and

 

  F. Any other rights or obligations of Landlord or Tenant under the Lease that,
in the absence of the Acceleration, would have survived the scheduled Expiration
Date shall survive the Accelerated Expiration Date.

 

  4.3 If Tenant exercises the Acceleration Option, then Tenant shall pay to
Landlord, as a fee in connection with the acceleration of the Expiration Date
and not as a penalty, an amount (the “Acceleration Fee”) equal to the sum of the
portion of each of the following amounts that remains unamortized (as determined
using an interest rate of 8% per annum) as of the Accelerated Expiration Date:
the Abated Base Rent, the Allowance and any internal or external brokerage
commissions paid by Landlord in connection with the Lease. At any time after
Landlord receives the Acceleration Notice, Landlord may deliver to Tenant an
invoice specifying the amount of the Acceleration Fee, whereupon Tenant shall
pay the Acceleration Fee to Landlord within 15 days after receiving such
invoice.

 

  4.4 If, after delivering an Acceleration Notice to Landlord, Tenant defaults
under the Lease (including, without limitation, by failing to timely pay the
Acceleration Fee), Landlord, at its option, may (i) declare Tenant’s exercise of
the Acceleration Option to be null and void (in which event Landlord shall
return to Tenant any Acceleration Fee received from Tenant, but only after
applying it against any past due Rent, or (ii) continue to honor Tenant’s
exercise of its Acceleration Option in accordance with the terms hereof.

 

  45 If Tenant validly exercises the Acceleration Option, Landlord shall prepare
an amendment (the “Acceleration Amendment”) reflecting the same. Landlord shall
deliver the Acceleration Amendment to Tenant within a reasonable time after
receiving the Acceleration Notice, and Tenant shall execute and return the
Acceleration Amendment to Landlord within 15 days after receiving it. At
Landlord’s option, an otherwise valid exercise of the Acceleration Option shall
be fully effective whether or not the Acceleration Amendment is executed.

 

  4.6 Notwithstanding any contrary provision of the Lease, from and after the
date Tenant delivers an Acceleration Notice to Landlord, (a) any unexercised
right or option of Tenant to renew or extend the Term or to expand the Premises
(whether in the form of an expansion option, right of first offer or refusal, or
any other similar right), and any outstanding tenant improvement allowance or
other allowance not claimed and properly used by Tenant in accordance with the
Lease as of such date, shall immediately be deemed terminated and no longer
available or of any further force or effect, and (b) Tenant shall not sublease
all or any portion of the Premises for any period following the Accelerated
Expiration Date.

 

5. TEMPORARY SPACE.

 

  5.1.

During the period beginning on: (i) the later of the full and final execution of
this Lease by Landlord and Tenant (including delivery by Tenant of any Security
Deposit, prepaid rental and certificates of insurance covering the Premises and
Temporary Space during the Temporary Space Term), and ending on (ii) the
Commencement Date (such period being referred to herein as the “Temporary Space
Term”), Landlord shall allow Tenant to use approximately 3,657 rentable square
feet of space known as Suite No. 530 located on the fifth (5th) floor of the
Building as shown on Exhibit H of this Lease (the “Temporary Space”) for the
Permitted Use. During the Temporary Space Term, the Temporary Space shall be
deemed the “Premises” for purposes of Article 10

 

Exhibit F

4

--------------------------------------------------------------------------------

  (Indemnification; Insurance) of the Lease. Such Temporary Space shall be
accepted by Tenant in its “as-is” condition and configuration, it being agreed
that Landlord shall be under no obligation to perform any work in the Temporary
Space or to incur any costs in connection with Tenant’s move in, move out or
occupancy of the Temporary Space. Tenant acknowledges that it shall be entitled
to use and occupy the Temporary Space at its sole cost, expense and risk. Tenant
shall not construct any improvements or make any alterations of any type to the
Temporary Space without the prior written consent of Landlord. All costs in
connection with making the Temporary Space ready for occupancy by Tenant shall
be the sole responsibility of Tenant.

 

  5.2. The Temporary Space shall be subject to all the terms and conditions of
the Lease except as expressly modified herein and except that (i) Tenant shall
not be entitled to receive any allowances or other financial concession in
connection with the Temporary Space which was granted with respect to the
Premises unless such concessions are expressly provided for herein with respect
to the Temporary Space, (ii) the Temporary Space shall not be subject to any
renewal or expansion rights of Tenant under the Lease, (iii) Tenant shall not be
required to pay Base Rent for the Temporary Space during the portion of the
Temporary Space Term beginning on the full and final execution of the Lease and
ending on December 14, 2011, and (iv) Tenant shall not be required to pay
Tenant’s Share of Expenses and Taxes for the Temporary Space during the
Temporary Space Term. In the event that the Temporary Space Term does not expire
on or before December 14, 2011, during the period beginning on December 15, 2011
and ending on the last day of the Temporary Space Term, Tenant shall pay Base
Rent for the Temporary Space at the rate of $372.71 per day.

 

  5.3 Upon termination of the Temporary Space Term, Tenant shall vacate the
Temporary Space and deliver the same to Landlord in the same condition that the
Temporary Space was delivered to Tenant, ordinary wear and tear and damage by
Casualty excepted. At the expiration or earlier termination of the Temporary
Space Term, Tenant shall remove all debris, all items of Tenant’s personalty,
and any trade fixtures of Tenant from the Temporary Space. Tenant shall be fully
liable for all damage Tenant or Tenant’s agents, employees, contractors, or
subcontractors cause to the Temporary Space.

 

  5.4. Tenant shall have no right to hold over or otherwise occupy the Temporary
Space at any time following the expiration or earlier termination of the
Temporary Space Term, and in the event of such holdover, Landlord shall
immediately be entitled to institute dispossessory proceedings to recover
possession of the Temporary Space, without first providing notice thereof to
Tenant. In the event of holding over by Tenant after expiration or termination
of the Temporary Space Term without the written authorization of Landlord,
Tenant shall pay, for such holding over, the sum of $5.00 per rentable square
foot per month for each month or partial month of holdover, plus all actual and
proximate (but not consequential, punitive or other special) damages that
Landlord incurs as a result of the Tenant’s hold over. During any such holdover,
Tenant’s occupancy of the Temporary Space shall be deemed that of a tenant at
sufferance, and in no event, either during the Temporary Space Term or during
any holdover by Tenant, shall Tenant be determined to be a tenant-at-will under
applicable law. While Tenant is occupying the Temporary Space, Landlord or
Landlord’s authorized agents shall be entitled to enter the Temporary Space,
upon reasonable notice, to display the Temporary Space to prospective tenants.

 

6. LETTER OF CREDIT.

 

  6.1.

General Provisions. Within five (5) business days after Tenant’s execution of
this Lease, Tenant shall deliver to Landlord, as collateral for the full
performance by Tenant of all of its obligations under this Lease and for all
losses and damages Landlord may suffer as a result of Tenant’s failure to comply
with one or more provisions of this Lease, including, but not limited to, any
post lease termination damages under section 1951.2 of the California Civil
Code, a standby, unconditional, irrevocable, transferable letter of credit (the
“Letter of Credit”) in the form of Exhibit I hereto and containing the terms
required herein, in the face amount of $1,000,000.00 (the “Letter of Credit
Amount”), naming Landlord as beneficiary, issued (or confirmed) by Wells Fargo
N.A., or another financial institution reasonably approved by Landlord,
permitting multiple and partial draws thereon, and otherwise in form reasonably
acceptable to Landlord. Tenant shall cause the Letter of Credit to be
continuously maintained in effect (whether through replacement, renewal or
extension) in the Letter of Credit Amount through the date (the “Final LC
Expiration Date”) that is 60 days after the expiration date of the Term or any
renewal

 

Exhibit F

5

--------------------------------------------------------------------------------

  Term or any earlier termination of this Lease (including an early termination
by reason of Tenant’s exercise of its Acceleration Option). If the Letter of
Credit held by Landlord expires earlier than the Final LC Expiration Date
(whether by reason of a stated expiration date or a notice of termination or
non-renewal given by the issuing bank), Tenant shall deliver a new Letter of
Credit or certificate of renewal or extension (a “Renewal or Replacement LC”) to
Landlord not later than 30 days prior to the expiration date of the Letter of
Credit then held by Landlord. Any Renewal or Replacement LC shall comply with
all of the provisions of this Section 6.1, shall be irrevocable, transferable
and shall remain in effect (or be automatically renewable) through the Final LC
Expiration Date upon the same terms as the expiring Letter of Credit or such
other terms as may be acceptable to Landlord in its sole discretion.

 

  6.2. Drawings under Letter of Credit. Upon the occurrence of a Default by
Tenant’s or the occurrence of an event which with notice and passage of time, or
both, would constitute a default but for the fact that Landlord is barred from
providing notice thereof to Tenant by reason of any applicable debtor relief
laws (herein, a “Deemed Default”) , or as otherwise specifically agreed by
Landlord and Tenant pursuant to this Lease or any amendment hereof, Landlord
may, without prejudice to any other remedy provided in this Lease or by Law,
draw on the Letter of Credit and use all or part of the proceeds to (a) satisfy
any amounts due to Landlord from Tenant, and (b) satisfy any other damage,
injury, expense or liability caused by Tenant’s Default or Deemed Default. In
addition, if Tenant fails to furnish a Renewal or Replacement LC complying with
all of the provisions of this Section 6 at least 30 days prior to the stated
expiration date of the Letter of Credit then held by Landlord, Landlord may draw
upon such Letter of Credit and hold the proceeds thereof (and such proceeds need
not be segregated) in accordance with the terms of this Section 6 (the “LC
Proceeds Account”).

 

  6.3. Use of Proceeds by Landlord. If Landlord is entitled draw on the Letter
of Credit pursuant to the provisions of this Section 6, then the proceeds of the
Letter of Credit shall constitute Landlord’s sole and separate property (and not
Tenant’s property or the property of Tenant’s bankruptcy estate) and Landlord
may immediately upon any draw (and without notice to Tenant) apply or offset the
proceeds of the Letter of Credit: (a) against any Rent payable by Tenant under
this Lease that is not paid when due; (b) against all losses and damages that
Landlord has suffered or that Landlord reasonably estimates that it may suffer
as a result of Tenant’s Default or Deemed Default, including any damages arising
under section 1951.2 of the California Civil Code following termination of the
Lease; (c) against any costs incurred by Landlord in connection with the Lease
(including attorneys’ fees); and (d) against any other amount that Landlord may
spend or become obligated to spend by reason of Tenant’s Default or Deemed
Default. Provided Tenant has performed all of its obligations under this Lease,
Landlord agrees to pay to Tenant within 45 days after the Final LC Expiration
Date the amount of any proceeds of the Letter of Credit received by Landlord and
not applied as allowed above; provided, that if prior to the Final LC Expiration
Date a voluntary petition is filed by Tenant or any Guarantor, or an involuntary
petition is filed against Tenant or any Guarantor by any of Tenant’s or
Guarantor’s creditors, under the Federal Bankruptcy Code, then Landlord shall
not be obligated to make such payment in the amount of the unused Letter of
Credit proceeds until either all preference issues relating to payments under
this Lease have been resolved in such bankruptcy or reorganization case or such
bankruptcy or reorganization case has been dismissed, in each case pursuant to a
final court order not subject to appeal or any stay pending appeal.

 

  6.4. Additional Covenants of Tenant. If, as result of any application or use
by Landlord of all or any part of the Letter of Credit, the amount of the Letter
of Credit shall be less than the Letter of Credit Amount, Tenant shall, within 5
days thereafter, provide Landlord with additional letter(s) of credit in an
amount equal to the deficiency (or a replacement letter of credit in the total
Letter of Credit Amount), and any such additional (or replacement) letter of
credit shall comply with all of the provisions of this Section 6, and if Tenant
fails to comply with the foregoing, notwithstanding anything to the contrary
contained in this Lease, the same shall constitute an incurable Default by
Tenant. Tenant further covenants and warrants that it will neither assign nor
encumber the Letter of Credit or any part thereof and that neither Landlord nor
its successors or assigns will be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance.

 

  6.5.

Nature of Letter of Credit. Landlord and Tenant (a) acknowledge and agree that
in no event or circumstance shall the Letter of Credit or any renewal thereof or
substitute therefor or any proceeds thereof (including the LC Proceeds Account)
be deemed to be or treated as a “security deposit” under any Law applicable to
security deposits in the commercial context including Section 1950.7 of the
California Civil Code, as such

 

Exhibit F

6

--------------------------------------------------------------------------------

  section now exist or as may be hereafter amended or succeeded (“Security
Deposit Laws”), (b) acknowledge and agree that the Letter of Credit (including
any renewal thereof or substitute therefor or any proceeds thereof) is not
intended to serve as a security deposit, and the Security Deposit Laws shall
have no applicability or relevancy thereto, and (c) waive any and all rights,
duties and obligations either party may now or, in the future, will have
relating to or arising from the Security Deposit Laws. Tenant hereby waives the
provisions of Section 1950.7 of the California Civil Code and all other
provisions of Law, now or hereafter in effect, which (i) establish the time
frame by which Landlord must refund a security deposit under a lease, and/or
(ii) provide that Landlord may claim from the security deposit only those sums
reasonably necessary to remedy Defaults in the payment of rent, to repair damage
caused by Tenant or to clean the Premises, it being agreed that Landlord may, in
addition, claim those sums specified above in this Section 6 and/or those sums
reasonably necessary to compensate Landlord for any loss or damage caused by
Tenant’s breach of this Lease or the acts or omission of Tenant or any other
Tenant Related Parties, including any damages Landlord suffers following
termination of the Lease.

 

  6.6.

Reduction in Letter of Credit Amount. Provided that, during the 12 month period
immediately preceding the effective date of any reduction of the Letter of
Credit, no Default has occurred under this Lease which was not cured by Tenant
within any applicable notice and cure periods (the “LC Reduction Conditions”),
Tenant may reduce the Letter of Credit Amount so that the reduced Letter of
Credit Amounts will be as follows: (a) $857,143.00 effective as of the first
(1st) anniversary of the Commencement Date; (b) $714,286.00 effective as of the
second (2nd) anniversary of the Commencement Date; (c) $517,429.00 effective as
of the third (3rd) anniversary of the Commencement Date; (d) $428,572.00
effective as of the fourth (4th) anniversary of the Commencement Date,
(e) $285,715.00 effective as of the fifth (5th) anniversary of the Commencement
Date and (f) $142,858.00 effective as of the sixth (6th) anniversary of the
Commencement Date. If Tenant is not entitled to reduce the Letter of Credit
Amount as of a particular reduction effective date due to Tenant’s failure to
satisfy the LC Reduction Conditions described above, then any subsequent
reduction(s) Tenant is entitled to hereunder shall be reduced by the amount of
the reduction Tenant would have been entitled to had Tenant satisfied the LC
Reduction Conditions necessary for such earlier reduction. Notwithstanding
anything to the contrary contained herein, if Tenant has been in Default under
this Lease at any time prior to the effective date of any reduction of the
Letter of Credit Amount and Tenant has failed to cure such Default within any
applicable notice and cure period, then Tenant shall have no further right to
reduce the Letter of Credit Amount as described herein. Any reduction in the
Letter of Credit Amount shall be accomplished by Tenant providing Landlord with
a substitute letter of credit in the reduced amount or an amendment to the
existing Letter of Credit reflecting the reduced amount..

 

Exhibit F

7

--------------------------------------------------------------------------------

EXHIBIT G

10880 WILSHIRE BOULEVARD

ASBESTOS NOTIFICATION

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 Property Manager. The Property 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.

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 to minimize exposure and consequently minimize the
accumulation of fibers, 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 Property 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 Building Service Hours.

Because of the presence of ACM in the Building, Landlord is 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.

 

Exhibit G

1

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Please contact the Property Manager with any questions regarding the contents of
this Exhibit.

 

Exhibit G

2

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EXHIBIT H

OUTLINE AND LOCATION OF TEMPORARY SPACE

LOGO [g269128g30r89.jpg]

 

Exhibit H

1

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EXHIBIT I

FORM OF LETTER OF CREDIT

 

 

[Name of Financial Institution]

 

  Irrevocable Standby  

Letter of Credit

 

No.                                     

 

Issuance Date:                   

 

Expiration Date:               

 

Applicant:                         

Beneficiary

CA-10880 WILSHIRE LIMITED PARTNERSHIP, a Delaware limited partnership

Equity Office

Two North Riverside Plaza, Suite 2100

Chicago, Illinois 60606

Attention: Treasury Department.

A copy of any notices

and amendments should be sent to:

CA-10880 Wilshire Limited Partnership

c/o Equity Office

10880 Wilshire Boulevard

Suite 1010

Los Angeles, CA 90024

Attention: Property Manager

Ladies/Gentlemen:

We hereby establish our Irrevocable Standby Letter of Credit in your favor for
the account of the above referenced Applicant in the amount of                 
U.S. Dollars ($                ) available for payment at sight by your draft
drawn on us when accompanied by the following documents:

 

1. An original copy of this Irrevocable Standby Letter of Credit.

 

2. Beneficiary’s dated statement purportedly signed by an authorized signatory
or agent reading: “This draw in the amount of                  U.S. Dollars
($                ) under your Irrevocable Standby Letter of Credit No.
                     represents funds due and owing to us pursuant to the terms
of that certain lease by and between                                 , as
landlord, and                                 , as tenant, and/or any amendment
to the lease or any other agreement between such parties related to the lease.”

It is a condition of this Irrevocable Standby Letter of Credit that it will be
considered automatically renewed for a one year period upon the expiration date
set forth above and upon each anniversary of such date, unless at least 30 days
prior to such expiration date or applicable anniversary thereof, we notify you
in writing, by certified mail return receipt requested or by recognized
overnight courier service at the addresses set forth above, that we elect not to
so renew this Irrevocable Standby Letter of Credit. In addition to the
foregoing, we understand and agree that you shall be entitled to draw upon this
Irrevocable Standby Letter of Credit in accordance with 1 and 2 above in the
event that we elect not to renew this Irrevocable Standby Letter of Credit and,
in addition, you provide us with a dated statement purportedly signed by an
authorized signatory or agent of Beneficiary stating that the Applicant has
failed to provide you with an acceptable substitute irrevocable standby letter
of credit in accordance with the terms of the above referenced lease. We further
acknowledge and agree that: (a) upon receipt of the documentation required
herein, we will honor your draws against this Irrevocable Standby Letter of
Credit without inquiry into the accuracy of Beneficiary’s signed statement and
regardless of whether Applicant disputes the content of such statement; (b) this
Irrevocable Standby Letter of Credit shall permit partial draws and, in the
event you elect to draw upon less than the full stated

 

Exhibit I

1

--------------------------------------------------------------------------------

amount hereof, the stated amount of this Irrevocable Standby Letter of Credit
shall be automatically reduced by the amount of such partial draw; and (c) you
shall be entitled to transfer your interest in this Irrevocable Standby Letter
of Credit from time to time and more than one time without our approval and
without charge. In the event of a transfer, we reserve the right to require
reasonable evidence of such transfer as a condition to any draw hereunder.

This Irrevocable Standby Letter of Credit is subject to the International
Standby Practices (ISP98) ICC Publication No. 590.

We hereby engage with you to honor drafts and documents drawn under and in
compliance with the terms of this Irrevocable Standby Letter of Credit.

All communications to us with respect to this Irrevocable Standby Letter of
Credit must be addressed to our office located at
                                         to the attention of
                                        .

 

Very truly yours,

 

[name]

[title}

 

Exhibit I

2