Exhibit 10.38

OFFICE LEASE

LAKESHORE TOWERS

LAKESHORE TOWERS LIMITED PARTNERSHIP PHASE I,

a California limited partnership,

as Landlord,

and

EPICOR SOFTWARE CORPORATION,

a Delaware corporation,

as Tenant.

 

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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TABLE OF CONTENTS

 

         Page  

ARTICLE 1

 

PREMISES, BUILDING, PROJECT, AND COMMON AREAS

     5   

1.1

 

Premises, Building, Project and Common Areas

     5   

1.2

 

Verification of Rentable Square Feet and Usable Square Feet of Premises,
Building, and Project

     5   

1.3

 

Right of First Refusal

     6   

1.4

 

Expansion Option

     6   

1.5

 

Storage

     7   

ARTICLE 2

 

LEASE TERM; OPTION TERM

     9   

2.1

 

Lease Term

     9   

2.2

 

Option Term

     9   

2.3

 

Early Termination

     10   

ARTICLE 3

 

BASE RENT

     10   

ARTICLE 4

 

ADDITIONAL RENT; SECURITY DEPOSIT

     11   

4.1

 

General Terms

     11   

4.2

 

Definitions of Key Terms Relating to Additional Rent

     11   

4.3

 

Allocation of Direct Expenses

     17   

4.4

 

Calculation and Payment of Additional Rent

     17   

4.5

 

Taxes and Other Charges for Which Tenant Is Directly Responsible

     17   

4.6

 

Landlord’s Books and Records

     18   

ARTICLE 5

 

USE OF PREMISES

     18   

5.1

 

Permitted Use

     18   

5.2

 

Prohibited Uses

     18   

5.3

 

Tenant’s Security Responsibilities

     18   

ARTICLE 6

 

SERVICES AND UTILITIES

     19   

6.1

 

Standard Tenant Services

     19   

6.2

 

Overstandard Tenant Use

     19   

6.3

 

Interruption of Use

     20   

ARTICLE 7

 

REPAIRS

     20   

ARTICLE 8

 

ADDITIONS AND ALTERATIONS

     20   

8.1

 

Landlord’s Consent to Alterations

     20   

8.2

 

Manner of Construction

     20   

8.3

 

Payment for Improvements

     21   

8.4

 

Construction Insurance

     21   

8.5

 

Landlord’s Property

     21   

8.6

 

Communications and Computer Lines

     21   

8.7

 

Telecommunications Equipment

     21   

8.8

 

Diesel Generator

     22   

ARTICLE 9

 

COVENANT AGAINST LIENS

     23   

ARTICLE 10

 

INSURANCE

     23   

10.1

 

Indemnification/Waiver

     23   

10.2

 

Tenant’s Compliance With Landlord’s Fire and Casualty Insurance

     24   

10.3

 

Tenant’s Insurance

     24   

10.4

 

Form of Policies

     25   

10.5

 

Subrogation

     25   

10.6

 

Additional Insurance Obligations

     25   

10.7

 

Landlord Insurance

     25   

ARTICLE 11

 

DAMAGE AND DESTRUCTION

     25   

11.1

 

Repair of Damage to Premises by Landlord

     25   

11.2

 

Landlord’s Option to Repair

     26   

11.3

 

Waiver of Statutory Provisions

     26   

ARTICLE 12

 

NONWAIVER

     27   

ARTICLE 13

 

CONDEMNATION

     27   

ARTICLE 14

 

ASSIGNMENT AND SUBLETTING

     27   

 

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      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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TABLE OF CONTENTS

(continued)

 

         Page  

14.1

 

Transfers

     27   

14.2

 

Landlord’s Consent

     28   

14.3

 

Transfer Premium

     28   

14.4

 

Landlord’s Option as to Subject Space

     28   

14.5

 

Effect of Transfer

     29   

14.6

 

Occurrence of Default

     29   

14.7

 

Non-Transfers

     29   

14.8

 

Qualified Transferee

     29   

ARTICLE 15

 

SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES

     29   

15.1

 

Surrender of Premises

     29   

15.2

 

Removal of Tenant Property by Tenant

     29   

ARTICLE 16

 

HOLDING OVER

     30   

ARTICLE 17

 

ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS

     30   

17.1

 

Estoppel Certificates

     30   

17.2

 

Financial Statements

     30   

ARTICLE 18

 

SUBORDINATION

     30   

ARTICLE 19

 

DEFAULTS; REMEDIES

     31   

19.1

 

Events of Default

     31   

19.2

 

Remedies Upon Default

     31   

19.3

 

Subleases of Tenant

     32   

19.4

 

Efforts to Relet

     32   

19.5

 

Landlord Default

     32   

ARTICLE 20

 

COVENANT OF QUIET ENJOYMENT

     33   

ARTICLE 21

 

[INTENTIONALLY DELETED]

     33   

ARTICLE 22

 

SIGNS

     33   

22.1

 

Tenant’s Signage Rights Within the Building

     33   

22.2

 

Tenant’s Right to Exterior Building Signs

     33   

22.3

 

Tenant’s Installation of Signs

     33   

22.4

 

Removal, Repair and Restoration

     34   

22.5

 

Maintenance of Tenant’s Signs

     34   

22.6

 

Prohibited Signage and Other Items

     34   

22.7

 

Building Lobby Signage

     34   

22.8

 

Monument Signs

     34   

ARTICLE 23

 

COMPLIANCE WITH LAW

     34   

23.1

 

Applicable Laws

     34   

23.2

 

Hazardous Materials

     34   

23.3

 

Notice of Release and Investigation

     35   

23.4

 

Indemnification

     35   

23.5

 

Remediation Obligations; Tenant’s Rights on Cleanup by Landlord

     35   

23.6

 

Definition of “Hazardous Material”

     35   

ARTICLE 24

 

LATE CHARGES

     35   

ARTICLE 25

 

LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT

     36   

25.1

 

Landlord’s Cure

     36   

25.2

 

Tenant’s Reimbursement

     36   

ARTICLE 26

 

ENTRY BY LANDLORD

     36   

ARTICLE 27

 

TENANT PARKING

     36   

27.1

 

Parking In General

     36   

27.2

 

Landlord Reservations

     36   

27.3

 

Visitor Validations

     37   

27.4

 

Access Card Recognition

     37   

 

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      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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TABLE OF CONTENTS

(continued)

 

         Page  

ARTICLE 28

 

MISCELLANEOUS PROVISIONS

     37   

28.1

 

Terms; Captions

     37   

28.2

 

Binding Effect

     37   

28.3

 

No Air Rights

     37   

28.4

 

Intentionally Omitted

     37   

28.5

 

Transfer of Landlord’s Interest

     37   

28.6

 

Prohibition Against Recording

     37   

28.7

 

Landlord’s Title

     37   

28.8

 

Relationship of Parties

     37   

28.9

 

Application of Payments

     37   

28.10

 

Time of Essence

     37   

28.11

 

Partial Invalidity

     37   

28.12

 

No Warranty

     37   

28.13

 

Exculpation

     38   

28.14

 

Entire Agreement

     38   

28.15

 

Right to Lease

     38   

28.16

 

Force Majeure

     38   

28.17

 

Intentionally Omitted

     38   

28.18

 

Notices

     38   

28.19

 

Joint and Several

     38   

28.20

 

Authority

     38   

28.21

 

Attorneys’ Fees

     39   

28.22

 

GOVERNING LAW; WAIVER OF TRIAL BY JURY

     39   

28.23

 

Submission of Lease

     39   

28.24

 

Brokers

     39   

28.25

 

Independent Covenants

     39   

28.26

 

Project or Building Name and Signage

     39   

28.27

 

Counterparts

     39   

28.28

 

Confidentiality

     39   

28.29

 

Development of the Project

     39   

28.30

 

Building Renovations

     40   

28.31

 

No Violation

     40   

28.32

 

No Discrimination

     40   

28.33

 

OFAC Compliance

     40   

28.34

 

Definition of Landlord

     40   

28.35

 

Tenant Representation With Respect to the General Electric Pension Trust

     40   

28.36

 

Reasonableness

     41   

 

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      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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LIST OF DEFINED TERMS

 

Abatement Event

     32   

Accountant

     18   

Additional Rent

     11   

Additional Required Work

     21   

Affiliate

     29   

Alterations

     20   

Applicable Laws

     35   

Arbitration Fair Market Rental Value

     9   

AST

     22   

Base Building

     21   

Base Rent

     10   

Base Taxes

     16   

Base Year

     11   

BOMA

     17   

Brokers

     39   

Building

     5   

Building Common Areas

     5   

Building Direct Expenses

     11   

Building Hours

     19   

Building Operating Expenses

     11   

Building Storage Area

     7   

Building Tax Expenses

     11   

Claims

     24   

Consultant

     23   

Contemplated Effective Date

     28   

Contemplated Transfer Space

     28   

Control

     29   

Cosmetic Alterations

     20   

Damage Termination Date

     26   

Damage Termination Notice

     26   

Delivery Date

     7   

Direct Expenses

     11   

Electricity Usage Standard

     20   

Eligibility Period

     33   

Embargoed Person

     40   

Environmental Assessment

     23   

Environmental Laws

     35   

Estimate Statement

     17   

Estimated Excess

     17   

Expansion Notice

     6   

Expansion Space

     6   

Expense Year

     11   

Fair Market Rental Value

     9   

First Offer Notice

     6   

Force Majeure

     38   

Generator

     22   

Ground Lease

     30   

Hazardous Material

     35   

Holidays

     19   

HVAC

     19   

Intention to Transfer Notice

     28   

Landlord

     1   

Landlord Parties

     23   

Landlord Repair Notice

     26   

Lease

     1   

Lease Commencement Date

     9   

Lease Expiration Date

     9   

Lease Term

     9   

Lines

     21   

List

     40   

Mail

     38   

Management Fee Cap

     13   

MetLife SNDA

     31   

Monument

     34   

None-Month Period

     29   

Notices

     38   

OFAC

     40   

Operating Expenses

     11   

Option Term

     9   

Original Improvements

     25   

Other Improvements

     40   

Outside Agreement Date

     9   

Parking Structure

     37   

Premises

     5   

Project

     5   

Proposition 13

     15   

Renovations

     40   

Rent

     11   

SNDA

     31   

Storage Space

     7   

Storage Space Commencement Date

     7   

 

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      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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Storage Space Rent

     7   

Subject Space

     27   

Successor

     29   

Summary

     1   

Superior Leases

     6   

Tax Expenses

     15   

Telecommunications Equipment

     22   

Tenant

     1   

Tenant Auditor

     18   

Tenant Parties

     24   

Tenant Work Letter

     5   

Tenant’s Share

     16   

Tenant’s Signs

     33   

Tenant’s Top Signs

     33   

Tenant’s Transfer Costs

     28   

Tenant’s Walkway Sign

     33   

Transfer Notice

     27   

Transfer Premium

     28   

Transfer(s)

     27   

Transferee

     27   

 

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      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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EXHIBITS

 

A-1    OUTLINE OF PREMISES – 15TH FLOOR A-2    OUTLINE OF PREMISES – 16TH FLOOR
A-3    OUTLINE OF PREMISES – 17TH FLOOR A-4    BUILDING STORAGE AREA A-5   
GENERATOR LOCATION B    TENANT WORK LETTER C    LEGAL DESCRIPTION D    LOBBY
RENOVATION E    FORM OF NOTICE OF LEASE TERM DATES F    DIRECT EXPENSES
ALLOCATION G    RULES AND REGULATIONS H    FORM OF TENANT’S ESTOPPEL CERTIFICATE
I    FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT J   
TENANT’S TOP SIGNS K    TENANT’S WALKWAY SIGN L    TENANT’S MONUMENT SIGN M   
JANITORIAL SPECIFICATIONS

 

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      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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LAKESHORE TOWERS

OFFICE LEASE

This Office Lease (the “Lease”) , dated as of the date set forth in Section 1 of
the Summary of Basic Lease Information (the “Summary”), below, is made by and
between LAKESHORE TOWERS LIMITED PARTNERSHIP PHASE I, a California limited
partnership (“Landlord”), and EPICOR SOFTWARE CORPORATION, a Delaware
corporation (“Tenant”).

SUMMARY OF BASIC LEASE INFORMATION

 

TERMS OF LEASE

  

DESCRIPTION

1.      Date:

   February 10, 2011

2.      Premises (Article 1):

  

2.1    Building:

   Lakeshore Towers Building I 18101 Von Karman Avenue Irvine, California

2.2    Premises:

   68,235 rentable (62,289 usable) square feet of space located on the 15th,
16th and 17th floors of the Building and commonly known as Suites 1500, 1600 and
1700, as further set forth in Exhibits A-1, A-2 and A-3 to the Lease.

3.      Lease Term (Article 2).

  

3.1    Lease Term:

   Ten (10) years, plus the partial month, if any, between the Lease
Commencement Date and the first day of the following calendar month.

3.2    Lease Commencement Date:

   Upon delivery of exclusive possession of the Premises to Tenant free and
clear of all occupants, and all personal property, furniture, fixtures and
equipment of any prior occupants. The Lease Commencement Date is estimated to be
February 15, 2011.

3.3    Lease Expiration Date:

   July 31, 2021, provided Tenant receives exclusive possession of the Premises
on or before February 15, 2011.

3.4    Rent Commencement Date:

   Estimated to be August 1, 2011, provided Tenant receives exclusive possession
of the Premises on or before February 15, 2011, and to be determined as provided
in Exhibit B.

 

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      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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4.      Base Rent (Article 3):

  

 

Time Period

   Annual
Base Rent*      Monthly
Installment
of Base Rent*      Annual
Rental Rate
per Rentable
Square Foot  

Lease Commencement Date through the day preceding Rent Commencement Date

   $ -0-       $ -0-       $ -0-   

Rent Commencement Date through July 31, 2012

   $ 1,547,569.80       $ 128,964.15       $ 22.68   

August 1, 2012 through July 31, 2013

   $ 1,593,969.60       $ 132,830.80       $ 23.36   

August 1, 2013 through July 31, 2014

   $ 1,641,734.10       $ 136,811.18       $ 24.06   

August 1, 2014 through July 31, 2015

   $ 1,690,863.30       $ 140,905.28       $ 24.78   

August 1, 2015 through July 31, 2016

   $ 1,742,039.55       $ 145,169.96       $ 25.53   

August 1, 2016 through July 31, 2017

   $ 1,793,898.15       $ 149,491.51       $ 26.29   

August 1, 2017 through July 31, 2018

   $ 1,847,803.80       $ 153,983.65       $ 27.08   

August 1, 2018 through July 31, 2019

   $ 1,903,074.15       $ 158,589.51       $ 27.89   

August 1, 2019 through July 31, 2020

   $ 1,960,391.55       $ 163,365.96       $ 28.73   

August 1, 2020 through Lease Expiration Date

   $ 2,019,073.65       $ 168,256.14       $ 29.59   

 

* So long as Tenant is not in default under this Lease after the expiration of
all applicable notice and/or grace periods (i) the Tenant Improvement Credit (as
such term is defined in the Tenant Work Letter attached hereto at Exhibit B)
shall be applied to Base Rent commencing on the Rent Commencement Date until
such Tenant Improvement Credit is exhausted, (ii) during the eleven (11) months
following the month in which the Tenant Improvement Credit is exhausted, fifty
percent (50%) Base Rent shall be abated monthly, and (iii) during the period of
August 1, 2018 through January 31, 2019, Base Rent shall be abated in the amount
of Seventy-Nine Thousand Two Hundred Ninety-Four and 76/100 Dollars ($79,294.76)
per calendar month.

 

5.      Base Year (Article 4):

   Calendar year 2012

6.      Tenant’s Share (Article 4):

   Approximately 17.49% (which includes both the Premises and Storage Space)

7.      Permitted Use (Article 5):

   General office use consistent with a first-class office building including
but not limited to (i) corporate headquarters functions; (ii) research and
development of software and related products, including non-destructive
electronic laboratory and server room facilities; (iii) storage, packaging and
shipping of finished goods; (iv) kitchen; (v) work-out/health area to serve
employees and guests of Tenant and not to exceed 7,500 useable square feet; (vi)
on-site nurse’s station/office to serve the employees and guests of Tenant; and
(vii) any other non-retail use permitted by applicable law, so long as all such
uses are consistent with the applicable zoning ordinances of the City of Irvine
and with the CC&Rs.

8.      Security Deposit (Article 4):

   None

 

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      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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9.      Parking (Article 27):

   3.75 unreserved parking spaces per each 1,000 rentable square feet of the
Premises of which twenty (20) spaces may, subject to the terms of Article 27 of
this Lease, be designated as reserved parking spaces for Tenant’s exclusive use.
Based on the initial rentable square footage of the Premises, Tenant shall be
entitled to a total of 256 parking spaces.

 

     Unreserved Rate Per
Space
Per Month  

Parking Space Fees:

  

Rent Commencement Date through July 31, 2016

   $ 20.00   

August 1, 2016 through July 31, 2020

   $ 40.00   

August 1, 2020 through July 31, 2021

   $ 60.00         Reserved Rate
Per Space
Per Month  

Rent Commencement Date through July 31, 2013

   $ 60.00   

August 1, 2013 through July 31, 2015

   $ 70.00   

August 1, 2015 through July 31, 2018

   $ 80.00   

August 1, 2018 through July 31, 2021

   $ 100.00   

 

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      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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10.    Address of Tenant (Section 28.18):

  

Prior to Lease Commencement Date:

 

Epicor Software Corporation

18200 Von Karman, Suite 1000

Irvine, CA 92612

Attention: Chief Information Officer

 

with a copy of any default notices to:

 

Epicor Software Corporation

18200 Von Karman, Suite 1000

Irvine, CA 92612

Attention: John D. Ireland

General Counsel/Sr. Vice-President

 

and a copy of any default notices to:

 

Allen Matkins Leck Gamble Mallory & Natsis LLP

1900 Main Street, Suite 500

Irvine, CA 92614

Attention: David W. Wensley, Esq.

 

After Lease Commencement Date:

 

Epicor Software Corporation

18101 Von Karman Avenue, Suite 1600

Irvine, CA 92612

Attention: Chief Information Officer

 

with a copy of default notices to:

 

18101 Von Karman Avenue, Suite 1600

Irvine, CA 92612

Attention: John D. Ireland

General Counsel/Sr. Vice-President

 

and a copy of any default notices to:

 

Allen Matkins Leck Gamble Mallory & Natsis LLP

1900 Main Street, Suite 500

Irvine, CA 92614

Attention: David W. Wensley, Esq.

11.    Address of Landlord (Section 28.18):

   See Section 28.18 of the Lease.

12.    Broker(s) (Section 28.24):

  

Landlord’s Broker:

 

Cushman & Wakefield of California, Inc.

Attention: Rick Kaplan and Robert W. Lambert

2020 Main Street, Suite 1000

Irvine, CA 92614

 

and

 

Sentre Partners

Attention: John Brand

401 West “A” Street, Suite 2300

San Diego, CA 92101-7933

 

Tenant’s Broker:

 

Real Tech

Attention: Kim Josephson and Michael J. Streff

1601 Dove Street, Suite 210

Newport Beach, CA 92660

 

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      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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ARTICLE 1

PREMISES, BUILDING, PROJECT, AND COMMON AREAS

1.1 Premises, Building, Project and Common Areas.

1.1.1 The Premises. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the premises set forth in Section 2.2 of the Summary (the
“Premises”). The outline of the Premises is set forth in Exhibits A-1, A-2 and
A-3 attached hereto and each floor or floors of the Premises has the number of
rentable square feet as set forth in Section 2.2 of the Summary. The parties
hereto agree that the lease of the Premises is upon and subject to the terms,
covenants and conditions herein set forth, and Landlord and Tenant covenant as a
material part of the consideration for this Lease to keep and perform each and
all of such terms, covenants and conditions by each of them respectively to be
kept and performed and that this Lease is made upon the condition of such
performance. The parties hereto hereby acknowledge that the purpose of
Exhibits A-1, A-2 and A-3 is to show the approximate location of the Premises in
the Building (as defined below) only, and such exhibit is not meant to
constitute an agreement, representation or warranty as to the construction of
the Premises, the precise area thereof or the specific location of the Common
Areas (as defined below) or the elements thereof or of the accessways to the
Premises or the Project (as defined below). Except as specifically set forth in
this Lease and in the Tenant Work Letter attached hereto as Exhibit B (the
“Tenant Work Letter”), Landlord shall not be obligated to provide or pay for any
improvement work or services related to the initial improvement of the Premises.
Tenant also acknowledges that neither Landlord nor any agent of Landlord has
made any representation or warranty regarding the condition of the Premises, the
Building or the Project or with respect to the suitability of any of the
foregoing for the conduct of Tenant’s business, except as specifically set forth
in this Lease and the Tenant Work Letter.

Subject to Landlord’s reasonable access requirements (such as the access card
recognition described at Section 27.4 below), casualty and force majeure, Tenant
shall have access to the Premises, Common Areas and Parking Structure at all
times during the Lease Term on a 24 hours per day, 7 days a week basis.

1.1.2 The Building and The Project. The Premises are a part of the building set
forth in Section 2.1 of the Summary (the “Building”). The Building is part of an
office project known as “Lakeshore Towers”. The term “Project”, as used in this
Lease, shall mean (i) the land on which the Project is located which land is
described in Exhibit C hereto, (ii) the Building, (iii) the Common Areas,
(iv) the other buildings located in the Project, and (v) at Landlord’s
discretion, any additional real property, areas, land, buildings or other
improvements added thereto outside of the Project.

1.1.3 Common Areas. Tenant shall have the non-exclusive right to use in common
with Project tenants, the Project Common Areas, and the non-exclusive right to
use in common with other Building tenants, the Building Common Areas, subject to
the terms of this Lease and the rules and regulations referred to in Article 5
of this Lease. Those portions of the Project which are provided, from time to
time, for use in common by Landlord, Tenant and any other tenants of the Project
and such other portions of the Project designated by Landlord, in its reasonable
discretion, including certain areas designated for the exclusive use of certain
tenants, or to be shared by Landlord and certain tenants, are collectively
referred to herein as the “Common Areas”. The Common Areas shall consist of the
Project Common Areas and the Building Common Areas. The term “Project Common
Areas” shall mean (i) the portion of the Project designated as such by Landlord
and (ii) all common areas designated in that certain Declaration of Covenants,
Conditions and Restrictions and Reservation of Easements for the Lakeshore
Towers, dated October 17, 1989, recorded October 23, 1989, as Instrument
No. 89569018 of the Official Records of Orange County, California (the “CC&Rs”).
The term “Building Common Areas” shall mean the portions of the Common Areas
located within the Building designated as such by Landlord. Landlord shall
maintain and operate or cause to be maintained and operated the Project and
Common Areas in a manner consistent with that of the following first-class,
high-rise office buildings in the John Wayne Airport/South Coast Plaza, Costa
Mesa, California area, which are comparable in size, quality of construction,
and services and amenities to the Building (the “Comparable Buildings”) and the
use thereof shall be subject to such commercially reasonable and
non-discriminatory rules, regulations and restrictions as Landlord may make from
time to time. As of the date of this Lease Comparable Buildings include, by way
of example, 18111 Von Karman, 2030 Main Street, 2040 Main Street, 611 Anton,
3200 Park Center Drive, 3 Park Plaza, 4 Park Plaza and 5 Park Plaza. So long as
Landlord’s activities do not change the nature of the Project or the Building to
something other than a first class office building project or adversely affect
Tenant’s signage or use of or access to the Premises, Building or the Project or
the parking areas serving the Building or Project, or increase Tenant’s annual
occupancy costs, Landlord reserves the right to close temporarily, make
alterations or additions to, or change the location of elements of the Project
and the Common Areas.

1.1.4 Lobby Renovation. Subject to Force Majeure, Landlord shall refurbish and
update the ground floor lobby in the Building (“Lobby Work”) with the Lobby Work
to be substantially complete by August 1, 2011. Renderings of the Lobby Work are
set forth on Exhibit D hereto. If Landlord shall fail to substantially complete
the Lobby Work on or before the later of (i) the Rent Commencement Date or
(ii) August 1, 2011, Tenant shall receive a one time credit against Base Rent of
Fifty Thousand Dollars ($50,000), with such credit to be applied to Base Rent
commencing as of month 32 of the Lease Term until such credit has been applied
in full.

1.2 Verification of Rentable Square Feet and Usable Square Feet of Premises,
Building, and Project. For purposes of this Lease, “rentable square feet” or
“rentable area” and “usable square feet” or “usable area” shall be calculated
pursuant to BOMA (as defined in Section 4.2.9 below). Prior to execution of this
Lease, Landlord and Tenant shall confirm the usable and rentable area of the
Premises in accordance with BOMA and all amounts, percentages and figures
appearing or referred to in this Lease based upon such rentable or usable area
(including, without limitation, the amount of the Rent (as defined below),
Tenant’s Share and Tenant’s Base Rent Credit (all as defined below)) shall be
modified in accordance with such determination. Thereafter, the rentable and
usable area of the Premises and the Building shall not be subject to any
adjustment throughout the Term of this Lease and any extensions, unless Tenant
shall lease more space in the Building or surrender space in the Building. In
the event that the rentable area of the Premises, the Building and/or the
Project shall hereafter change due to Tenant leasing additional space or
surrendering space in the Building, the rentable area of the Premises, the
Building and/or the Project, as the case may be, and all amounts, percentages
and figures appearing or referred to in this Lease based upon such rentable area
(including, without limitation, the amount of the Rent and Tenant’s Share) shall
be appropriately adjusted as of the effective date of such change, based upon
the written verification by Landlord’s space planner of such revised BOMA
rentable area.

 

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1.3 Right of First Refusal. Landlord hereby grants to Tenant a continuing right
of first refusal with respect to each of the spaces situated on the eighteenth
(18th) and nineteenth (19th) floors of the Building (each and all “First Refusal
Space”). Notwithstanding the foregoing, (i) such first refusal right of Tenant
shall commence only following the expiration or earlier termination of (i) that
certain Office Lease dated August 8, 1991, as amended, between Landlord, as
landlord, and Nossaman, Guthner, Knox & Elliott LLP, as tenant, (ii) that
certain Office Lease dated October 8, 2009 between Landlord, as landlord, and
Fineberg Grant Mayfield Kaneda & Litt LLP, as tenant, (iii) that certain Office
Lease dated August 10, 2006 between Landlord, as landlord, and Centerline
Mortgage (formerly known as CharterMac Mortgage Capital Corporation), and
(iv) that certain Office Lease dated December 28, 2010 between Landlord, as
landlord, and Christie, Parker & Hale LLP, as tenant (items (i) through (iv),
collectively, the “Superior Leases”), including any renewal or extension of such
Superior Leases, regardless of whether such renewal or extension is pursuant to
an express written provision in any such Superior Lease and regardless of
whether any such renewal or extension is consummated strictly pursuant to the
terms of such express written provisions, or pursuant to a lease amendment or a
new lease, and (ii) such first refusal right shall be subordinate and secondary
to all rights of expansion, first refusal, rights of first offer or similar
rights previously granted to the above named tenants of the Superior Leases (the
rights described in items (i) and (ii) above to be known collectively as
“Superior Rights. Landlord represents that there are no other tenant rights
superior to Tenant’s Right of First Refusal other than the Superior Rights
described in this Section 1.3. Tenant’s Right of First Refusal shall be on the
terms and conditions set forth in this Section 1.3.

1.3.1 Procedure for Offer. Landlord shall notify Tenant (the “First Refusal
Notice”) from time to time when Landlord has received or generated a bona fide
letter of intent to lease any First Refusal Space signed by Landlord and the
prospective tenant or their designated representatives on terms acceptable to
Landlord (a “First Refusal Offer”). Landlord shall deliver such First Refusal
Offer to Tenant with the First Refusal Notice and Landlord shall offer to lease
to Tenant such First Refusal Space on the terms and conditions set forth in the
First Refusal Offer.

1.3.2 Procedure for Acceptance. If Tenant wishes to exercise Tenant’s right of
first refusal with respect to the First Refusal Space described in a First
Refusal Offer, then within five (5) business days after delivery of the First
Refusal Notice to Tenant, Tenant shall deliver notice to Landlord of Tenant’s
exercise of its right of first refusal with respect to the entire space
described in the First Refusal Notice in question on the terms and conditions
contained in such notice. If Tenant does not so notify Landlord within the five
(5) business day period of Tenant’s exercise of its first refusal right, then
Tenant’s rights with respect to the First Refusal Space described in the First
Refusal Notice shall expire; provided, however, if Landlord does not enter into
a lease of such First Refusal Space on the terms and conditions contained in the
First Refusal Offer within one hundred eighty (180) days following the date of
the First Refusal Notice or if the economic terms are modified so that they are
more favorable to the prospective tenant under the First Refusal Offer in any
material way, then Tenant’s first refusal rights with respect to such First
Refusal Space shall be reinstated under this Section 1.3.

1.3.3 Termination of Right of First Refusal. Tenant shall not have the right to
lease any First Refusal Space, as provided in this Section 1.3, (i) if any such
First Refusal Space shall first come available to Tenant during the twelve
(12) month period immediately preceding the Lease Expiration Date (as such date
may be extended pursuant to Section 2.2 below), or (ii) if, as of the date of
the attempted exercise of any right of first refusal by Tenant, Tenant is in
monetary default or material non-monetary default under this Lease after
expiration of applicable notice and cure periods. The rights contained in this
Section 1.3 may only be exercised by Tenant and any Qualified Transferee (as
defined below) only if Tenant or such Qualified Transferee is leasing the entire
Premises as of the date of the First Refusal Notice.

1.4 Expansion Option.

1.4.1 Expansion Space. Landlord grants to Tenant two (2) options (“Expansion
Option(s)”) to expand the Premises in accordance with and subject to the
provisions of this Section 1.5 for an aggregate of up to a total of 10,000
rentable square feet in the Building (“Expansion Space”).

1.4.2 Location and Verification of Size of Expansion Space. Tenant’s Expansion
Options shall apply to any space within the Building which is becomes available
for lease during the two (2) year period of the Term following the Rent
Commencement Date. The exact location, size, and configuration of the Expansion
Space shall be determined by mutual agreement of Landlord and Tenant no later
than the first day on which Tenant can exercise the Expansion Option for the
Expansion Space; provided, however, the configuration of the Expansion Space
shall be such that any residual portion of the available space from which Tenant
selects the Expansion Space may be separately demised and leasable. Within
forty-five (45) days after completion of Tenant’s exercise of the Expansion
Option for the Expansion Space or, if the Expansion Space must be demised from
other portions of the Building, within forty-five (45) days after construction
of demising walls of the Expansion Space, Landlord’s architect shall calculate
and certify in writing to Landlord and Tenant the rentable square feet area and
useable square feet area of the Expansion Space in accordance with Section 1.2.

1.4.3 Exercise of Expansion Option. Tenant may exercise the Expansion Option for
an Expansion Space only by giving irrevocable written notice of such exercise
(“Expansion Notice”) to Landlord no later than the second anniversary of the
Rent Commencement Date. Tenant may exercise its Expansion Option only with
respect to all the space mutually agreed by Landlord and Tenant to constitute
the Expansion Space.

1.4.4 Terms and Conditions Applicable to Exercise of Expansion Option. Each
Expansion Option shall be personal to, and may be exercised only by, Tenant or a
Qualified Transferee. Tenant or such Qualified Transferee shall not have the
right to exercise an Expansion Option if Tenant or such Qualified Transferee (as
applicable) is in default of any monetary obligations under this Lease (after
the expiration of all applicable notice and cure periods) as of the date of the
attempted exercise.

 

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1.4.5 Delivery of Expansion Space; Notice. As soon as reasonably possible after
Tenant timely exercises an Expansion Option as provided herein, Landlord shall
deliver the Expansion Space free of all occupants, furniture, fixtures and
equipment and personal property of such occupants in its then as is condition to
Tenant. Such date of delivery is referred to herein as the “Delivery Date.”
Landlord shall provide Tenant with written notice at least thirty (30) days
prior to the estimated Delivery Date. Landlord shall not be liable to Tenant or
otherwise be in default under this Lease if Landlord is unable to deliver
Expansion Space to Tenant on the estimated Delivery Date due to the failure of
any other tenant to timely vacate and surrender to Landlord the Expansion Space
or any portion of it. Landlord agrees to use its commercially reasonable efforts
to (i) enforce its right to possession of the Expansion Space against such other
tenant, including institution of legal action and (ii) include in each lease
entered into after the date hereof with any such other tenant the right to
relocate such tenant’s premises if Tenant exercises the Expansion Option.

1.4.6 Terms and Conditions Applicable to Expansion Space. If Tenant timely
exercises an Expansion Option as provided herein, then, beginning on the
Delivery Date and continuing for the balance of the Lease Term (including any
extensions), the Expansion Space in question shall be part of the Premises under
this Lease (so that the term “Premises” in this Lease shall refer to the space
in the original Premises plus the Expansion Space in question). Tenant’s lease
of the Expansion Space shall be on the same terms and conditions as affect the
original Premises from time to time including Base Rent and Additional Rent.
Landlord shall provide to Tenant an improvement allowance for the Expansion
Space on the terms and conditions set forth in the attached Tenant Work Letter
provided that (i) such modification shall be made to the Tenant Work Letter to
reflect that the Expansion Space is being improved, and (ii) the Tenant
Improvement Allowance for the Expansion Space shall be Fifty-Five Dollars
($55.00) multiplied by the rentable square feet of the Expansion Space which
amount shall then be multiplied by a fraction, the denominator of which is 3,653
(the number of days of the Lease Term) and the numerator of which is the number
of days between the Delivery Date and Lease Expiration Date. Tenant’s obligation
to pay Rent with respect to the Expansion Space shall begin on the date which is
one hundred twenty (120) days after the Delivery Date.

1.4.7 Expansion Space Condition. If Tenant timely and validly exercises the
Expansion Option and Landlord delivers the space in the condition required in
this Section 1.4, Tenant shall lease the Expansion Space in its “as-is”
condition as of the Delivery Date. Landlord shall have no obligation to
construct any additional improvements in (except as provided in Section 1.4.6)
or (except as provided at Section 1.4.6 above) to contribute any funds for
improvement of, the Expansion Space. Landlord shall deliver the Expansion Space
broom clean, vacant of personal property and free of all leases and occupancy by
third parties.

1.4.8 Confirmation of Terms. If Tenant timely and validly exercises the
Expansion Option, Landlord and Tenant shall, within fifteen (15) days after
Tenant’s exercise of its Expansion Option as provided in Section 1.4.5 above,,
execute an amendment to this Lease to confirm in writing the addition of the
Expansion Space to the Premises on the terms and conditions set forth in this
Section 1.4.8. The Expansion Space amendment shall confirm:

1.4.8.1 The projected Delivery Date;

1.4.8.2 The location of the Expansion Space;

1.4.8.3 The rentable square feet area and useable square feet area of the
Premises with the addition of the Expansion Space;

1.4.8.4 The percentage that constitutes Tenant’s Share of Direct Expenses, as
adjusted in accordance with Section 1.2 to reflect the increased rentable square
feet area of the Premises due to the addition of the Expansion Space;

1.4.8.5 Base Rent for the Premises as increased by the Expansion Space; and

1.4.8.6 Any other term that either party reasonably requests be confirmed with
respect to the Expansion Space.

When the date for commencement of payment of Rent for the Expansion Space is
determined pursuant to Section 1.4.6, Landlord and Tenant shall execute an
additional amendment to this Lease confirming such date.

1.5 Storage.

1.5.1 Storage Space. Effective as of the Lease Commencement Date Tenant (for
purposes of this Section, the “Storage Space Commencement Date”), Landlord
hereby leases to Tenant approximately One Thousand One (1,001) rentable square
feet (875 usable square feet) of storage space (the “Storage Space”) in
Suite 175 of the Building (the “Building Storage Area”) as indicated on Exhibit
A-4 attached hereto.

 

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1.5.2 Storage Space Rent. Tenant shall pay Landlord rent for the Storage Space
(“Storage Space Rent”) in accordance with the following:

 

Time Period

   Annual Storage
Space Rent      Monthly
Installment of Storage
Space Rent      Annual
Rental Rate
per Rentable
Square Foot  

Rent Commencement Date through July 31, 2012

   $ 12,012.00       $ 1,001.00       $ 12.00   

August 1, 2012 through July 31, 2013

   $ 12,372.36       $ 1,031.03       $ 12.36   

August 1, 2013 through July 31, 2014

   $ 12,742.73       $ 1,061.89       $ 12.73   

August 1, 2014 through July 31, 2015

   $ $13,123.11       $ $1,093.59       $ 13.11   

August 1, 2015 through July 31, 2016

   $ 13,523.51       $ 1,126.96       $ 13.51   

August 1, 2016 through July 31, 2017

   $ 13,923.91       $ 1,160.33       $ 13.91   

August 1, 2017 through July 31, 2018

   $ 14,344.33       $ 1,195.36       $ 14.33   

August 1, 2018 through July 31, 2019

   $ 14,774.76       $ 1,231.23       $ 14.76   

August 1, 2019 through July 31, 2020

   $ 15,215.20       $ 1,267.93       $ 15.20   

August 1, 2020 through July 31, 2021

   $ 15,675.66       $ 1,306.31       $ 15.66   

1.5.3 Storage Space Rent Payment. Storage Space Rent shall be paid with and at
the same time as Base Rent commencing upon the delivery of possession of the
Storage Space to Tenant in the condition required by Section 1.5.4.

1.5.4 Condition of Storage Space. Landlord shall deliver the Storage Space to
Tenant broom clean, vacant of personal property and free of the occupancy by
third parties. Subject to Landlord’s compliance with its delivery obligations,
Tenant shall accept the Storage Space in its “AS IS” condition and Tenant’s
possession of the Storage Space shall be conclusive acknowledgment by Tenant
that it accepts the Storage Space in its then condition. To the extent that
Tenant requires improvements to the Storage Space, Tenant shall make such
improvements at its sole cost subject to the provisions of Article 8.

1.5.5 Storage Space Use. Tenant shall use the Storage Space for storage of
nonperishable items only, shall comply with all Applicable Laws in connection
with such use, and shall not do or permit anything to be done which obstructs or
interferes with the rights of others in connection with the use of the Building
Storage Area or which will invalidate or increase the cost of any insurance
policy maintained by Landlord. Tenant hereby represents and warrants to the
Landlord that it will not transport to or from, or store in the Storage Space,
any Hazardous Material (as defined below). Tenant shall not permit use of the
Storage Space by any

 

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persons other than Tenant unless approved in writing by Landlord. Landlord shall
have the right to inspect the contents of the Storage Space upon twenty-four
(24) hours notice to Tenant. All terms and provisions of this Lease shall apply
to Tenant’s use of the Storage Space.

1.5.6 Relocation. Landlord shall have the right to relocate Tenant’s Storage
Space to another comparably sized within the Building Storage Area upon thirty
(30) days prior written notice to Tenant in which event Landlord shall bear all
reasonable costs and expenses actually incurred by Tenant in physically
relocating Tenant’s property. Within ten (10) business days of receipt of such
notice, Tenant shall advise Landlord in writing that Tenant shall (1) accept
such relocation or (ii) terminate its obligation to lease the Storage Space. If
Tenant elects to terminate its lease of the Storage Space, Tenant shall remove
its personal property from the Storage Space by the end of such thirty (30) day
period. Notwithstanding the foregoing, Tenant may elect to terminate its lease
of the Storage Space at any time on thirty (30) days advance written notice to
Landlord.

ARTICLE 2

LEASE TERM; OPTION TERM

2.1 Lease Term. The terms and provisions of this Lease shall be effective as of
the date of this Lease. The term of this Lease (the “Lease Term”) shall be as
set forth in Section 3.1 of the Summary and shall commence on the date set forth
in Section 3.2 of the Summary (the “Lease Commencement Date” ); provided,
however, Tenant may occupy the Premises from and after the Lease Commencement
Date and prior to the Rent Commencement Date for the purpose of constructing the
Tenant Improvements (as such term is defined in the Tenant Work Letter) and
commencing its business operations. The term of this Lease shall terminate on
the date set forth in Section 3.3 of the Summary (the “Lease Expiration Date”)
unless this Lease is sooner terminated as hereinafter provided. At any time
during the Lease Term, Landlord may deliver to Tenant a notice in the form as
set forth in Exhibit E, attached hereto, as a confirmation only of the
information set forth therein, which Tenant shall execute and return to Landlord
within five (5) days of receipt thereof.

2.2 Option Term.

2.2.1 Option Right. Landlord hereby grants Tenant two (2) options to extend the
Lease Term for a period of five (5) years each (each, an “Option Term”), which
options shall be exercisable only by written notice delivered by Tenant to
Landlord as provided below, provided that, as of the date of delivery of such
notice, Tenant is not in default in any monetary obligations under this Lease,
after the expiration of all applicable notice and cure periods. Upon the proper
exercise of such option to extend and provided that, as of the end of the
initial Lease Term or Option Term, as applicable, Tenant is not in default under
this Lease, after the expiration of applicable cure periods, the Lease Term, as
it applies to the Premises, shall be extended for a period of five (5) years.
The rights contained in this Section 2.3 shall be personal to, and may only be
exercised by, Tenant or a Qualified Transferee.

2.2.2 Option Rent. The rent payable by Tenant during the Option Term (the
“Option Rent”) shall be equal to the “Fair Market Rental Value” for the
Premises. As used herein, “Fair Market Rental Value” shall be equal to the rent
(including additional rent and considering any “base year” or “expense stop”
applicable thereto), including all escalations, at which, as of the commencement
of the Option Term, taking into consideration only those transactions involving
the services of a professional real estate broker, tenants are leasing
non-sublease, non-encumbered, non-equity space comparable in size, location and
quality to the Premises for a term of five (5) years, or comparable to the term
of the lease of the First Offer Space, as applicable, which comparable space is
located in the Project and in Comparable Buildings (as defined in
Section 1.1.3), in either case taking into consideration the following: (a) base
rent and annual escalations, (b) annual additional rent (operating expenses,
taxes and insurance costs), including a new fair market base year, (c) parking
charges and concessions, (d) rental abatement concessions, if any, being granted
such tenants in connection with such comparable space (including free rent,
reduced rent and free or reduced rate occupancy periods); (e) the design,
permitting and construction of tenant improvements or allowances provided or to
be provided for such comparable space, such value to be based upon the age,
quality and layout of the improvements in the Premises as compared to such
Comparable Buildings; and (f) other reasonable monetary concessions being
granted or charges being imposed upon such tenants in connection with such
comparable space. When considering rental rates in the Comparable Buildings,
adjustments shall be made to such rates to increase or decrease such rates, as
applicable, based on substantial historical differences between the rental rates
of the Building and any applicable Comparable Building.

2.2.3 Exercise of Option. The option contained in this Section 2.3 shall be
exercised by Tenant, if at all, delivering written notice (“Option Exercise
Notice”) to Landlord not more than fifteen (15) months nor less than twelve
(12) months prior to the then Lease Expiration Date, stating that Tenant is
exercising its option. Within fifteen (15) business days after receipt of Option
Exercise Notice, Landlord shall deliver notice (the “Option Rent Notice”) to
Tenant setting forth the Option Rent. Within fifteen (15) business days after
Tenant’s receipt of the Option Rent Notice, Tenant may, at its option, object to
the Option Rent contained in the Option Rent Notice. If Tenant timely objects as
provided herein to the Option Rent contained in the Option Rent Notice, the
parties shall follow the procedure and the Option Rent shall be determined as
set forth in Section 2.3.4 below.

2.2.4 Determination of Option Rent. If Tenant fails to timely object to Option
Rent as provided herein, then the Option Rent shall be as set forth in the
Option Rent Notice. If Tenant timely and appropriately objects to the Option
Rent, Landlord and Tenant shall attempt to agree upon the applicable Fair Market
Rental Value using their best good-faith efforts. If Landlord and Tenant fail to
reach agreement within thirty (30) days following Tenant’s objection to the
Option Rent (the “Outside Agreement Date”), then each party shall make a
separate determination of the applicable Fair Market Rental Value (the
“Arbitration Fair Market Rental Value(s)”), within five (5) business days
following the Outside Agreement Date and such determinations shall be submitted
to arbitration in accordance with Sections 2.3.4.1 through 2.3.4.7 below.

2.2.4.1 Landlord and Tenant shall each appoint one arbitrator who shall by
profession be a Member Appraisal Institute approved appraiser who shall have
been active over the five (5) year period ending on the date of such appointment
in the appraisal of leases and setting of lease rates of Comparable Buildings in
the John Wayne Airport/South Coast Plaza area. The determination of the
arbitrators shall be limited solely to the issue of whether Landlord’s or
Tenant’s submitted Arbitration Fair Market Rental Value is the closest to the
actual Fair Market Rental Value as determined by the arbitrators, taking into
account the requirements of Section 2.3.2 of this Lease. Each such arbitrator
shall be appointed within twenty (20) days after the applicable Outside
Agreement Date.

 

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2.2.4.2 The two arbitrators so appointed shall within ten (10) business days of
the date of the appointment of the last appointed arbitrator agree upon and
appoint a third arbitrator who shall be qualified under the same criteria set
forth hereinabove for qualification of the initial two arbitrators.

2.2.4.3 The three arbitrators shall within thirty (30) days of the appointment
of the third arbitrator reach a decision as to whether the parties shall use
Landlord’s or Tenant’s submitted Fair Market Rental Value, and shall notify
Landlord and Tenant thereof.

2.2.4.4 The decision of the majority of the three arbitrators shall be binding
upon Landlord and Tenant.

2.2.4.5 If either Landlord or Tenant fails to appoint an arbitrator within
fifteen (15) business days after the applicable Outside Agreement Date, the
arbitrator appointed by one of them shall reach a decision, notify Landlord and
Tenant thereof, and such arbitrator’s decision shall be binding upon Landlord
and Tenant.

2.2.4.6 If the two arbitrators fail to agree upon and appoint a third
arbitrator, or both parties fail to appoint an arbitrator, then the appointment
of the third arbitrator or any arbitrator shall be dismissed and the matter to
be decided shall be forthwith submitted to arbitration under the provisions of
the American Arbitration Association Commercial Rules of Arbitration, but
subject to the instruction set forth in this Section 2.3.4.

2.2.4.7 The cost of the arbitrator appointed by Landlord shall be paid by
Landlord. The cost of the arbitrator appointed by Tenant shall be paid by
Tenant. The cost of the third arbitrator shall be shared equally by Landlord and
Tenant.

2.3 Early Termination. Notwithstanding anything in this Lease to the contrary,
Landlord hereby grants Tenant a one time right to elect an early expiration of
the Lease with respect to all or a portion of the Premises consisting of any
one, two or three full floors (and any additional space comprising the Premises)
effective as of July 31, 2017 (“Early Termination Right”), so long as written
notice of such election (“Early Termination Notice”) is delivered to Landlord no
earlier than May 1, 2016 and no later than July 31, 2016. In connection with
such Early Termination Notice:

2.3.1 As a condition to the effectiveness of the Early Termination Notice,
Tenant shall pay to Landlord an amount equal to $32.55 per rentable square foot
of the Premises surrendered (“Early Termination Fee”). One-half (1/2) of the
Early Termination Fee shall be delivered to Landlord with the Early Termination
Notice. The remainder of the Early Termination Fee must be delivered to Landlord
no later than July 31, 2017.

2.3.2 Tenant may elect an early Termination with respect to a portion of the
Premises so long as the portion of the Premises subject to the Termination are
full floor increments and if Tenant elects to keep the Lease in place for more
than one floor such floors must be contiguous. The Early Termination Notice
shall designate with specificity the portion of the Premises subject to early
Termination and absent such designation all of the Premises shall be subject to
early Termination. If Tenant timely and validly exercises the Early Termination
Right for less than all of the Premises, Landlord and Tenant shall, within
fifteen (15) days after Landlord’s request, execute an amendment to this Lease
to confirm in writing the reduction of the size of the Premises, the location of
the reduced Premises, the rentable square feet area and useable square feet area
of the reduced Premises, the percentage that constitutes Tenant’s Share of
Direct Expenses as adjusted in accordance with Section 1.2 to reflect the
reduced rentable square feet area of the Premises, the Base Rent for the reduced
Premises, and any other term that either party reasonably requests be confirmed
with respect to the reduced Premises.

2.3.3 The Early Termination Right shall automatically terminate upon Tenant’s
failure to timely deliver the Early Termination Notice or if the Early
Termination Fee is not timely paid.

2.3.4 Nothing herein relieves Tenant’s obligations under the Lease with respect
to the condition of the Premises when returned to Landlord.

ARTICLE 3

BASE RENT

Tenant shall pay, without prior notice or demand, to Landlord or Landlord’s
agent at the management office of the Project or, at Landlord’s option, at such
other place as Landlord may from time to time designate in writing, by a check
for currency which, at the time of payment, is legal tender for private or
public debts in the United States of America, base rent (“Base Rent”) as set
forth in Section 4 of the Summary, payable in equal monthly installments as set
forth in Section 4 of the Summary in advance on or before the first day of each
and every calendar month during the Lease Term, without any setoff or deduction
whatsoever except as otherwise provided in this Lease, including without
limitation, the Base Rent Credit to be provided to Tenant to apply against Base
Rent as provided in Exhibit B. The Base Rent for month 33 of the Lease Term
shall be paid upon the Rent Commencement Date. If any Base Rent payment date
(including the Rent Commencement Date) falls on a day of the month other than
the first day of such month or if any payment of Base Rent is for a period which
is shorter than one month, the Base Rent for any fractional month shall accrue
on a daily basis for the period from the date such payment is due to the end of
such calendar month or to the end of the Lease Term at a rate per day which is
equal to 1/365 of the applicable annual Base Rent. All other payments or
adjustments required to be made under the terms of this Lease that require
proration on a time basis shall be prorated on the same basis.

 

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ARTICLE 4

ADDITIONAL RENT; SECURITY DEPOSIT

4.1 General Terms. In addition to paying the Base Rent specified in Article 3 of
this Lease, Tenant shall pay Tenant’s Share (as defined below) of the annual
Building Direct Expenses (as defined below) which are in excess of the amount of
Building Direct Expenses for the Base Year (as defined below); provided,
however, that in no event shall any decrease in Building Direct Expenses for any
Expense Year (as defined below) below Building Direct Expenses for the Base Year
entitle Tenant to any decrease in Base Rent or any credit against sums due under
this Lease. Such payments by Tenant, together with any and all other amounts
payable by Tenant to Landlord pursuant to the terms of this Lease, are
hereinafter collectively referred to as the “Additional Rent”, and the Base
Rent, Storage Space Rent, and the Additional Rent are herein collectively
referred to as “Rent”. All amounts due under this Article 4 as Additional Rent
shall be payable for the same periods and in the same manner as the Base Rent.
Without limitation on other obligations of Tenant which survive the expiration
of the Lease Term, the obligations of Tenant to pay the Additional Rent provided
for in this Article 4 shall survive the expiration of the Lease Term.

4.2 Definitions of Key Terms Relating to Additional Rent. As used in this
Article 4, the following terms shall have the meanings hereinafter set forth:

4.2.1 Base Year. “Base Year” shall mean the period set forth in Section 5 of the
Summary.

4.2.2 Building Direct Expenses. “Building Direct Expenses” shall mean Building
Operating Expenses and Building Tax Expenses (as defined below).

4.2.3 Building Operating Expenses. “Building Operating Expenses” shall mean the
portion of Operating Expenses (as defined below) allocated to the tenants of the
Building pursuant to the terms of Section 4.3 below.

4.2.4 Building Tax Expenses. “Building Tax Expenses” shall mean that portion of
Tax Expenses (as defined below) allocated to the tenants of the Building
pursuant to the terms of Section 4.3 below.

4.2.5 Direct Expenses. “Direct Expenses” shall mean Operating Expenses and Tax
Expenses.

4.2.6 Expense Year. “Expense Year” shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires. Landlord, upon notice to Tenant, may change the
Expense Year from time to time to any other twelve (12) consecutive month period
and, in the event of any such change, Tenant’s Share of Building Direct Expenses
shall be equitably adjusted for any Expense Year involved in any such change.

4.2.7 Operating Expenses.

4.2.7.1 Inclusions to Operating Expenses. “Operating Expenses” shall mean all
actual, reasonable and documented expenses and costs which Landlord pays during
any Expense Year because of or in connection with the ownership, management,
maintenance, security, repair, replacement, restoration or operation of the
Project, or any portion thereof, subject to the terms and provisions of this
Section 4.2.7. Without limiting the generality of the foregoing, but subject to
the exclusions and limitations provided below in this Section 4.2.7, Operating
Expenses shall specifically include any and all of the following:

(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 and the cost of
contesting any governmental enactments which may affect Operating Expenses, and
the costs incurred in connection with a governmentally mandated transportation
system management program or similar program;

(iii) the cost of earthquake insurance and all other insurance carried by
Landlord in connection with the Project as reasonably determined by Landlord;

(iv) the cost of landscaping, relamping, and all supplies, tools, equipment and
materials used in the operation, repair and maintenance of the Project, or any
portion thereof;

(v) the cost of non-capital (as determined pursuant to generally accepted
accounting principles) parking area repair, restoration, and maintenance;

(vi) fees and other costs, including reasonable management fees, consulting
fees, legal fees and accounting fees, of all contractors and consultants in
connection with the management, operation, maintenance and repair of the
Project;

(vii) payments under any equipment rental agreements and the fair rental value
of any management office space;

(viii) subject to Section 4.2.7.2(vi) below, wages, salaries and other
compensation and benefits, including taxes levied thereon, of all persons
engaged in the operation, maintenance and security of the Project;

 

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(ix) operation, repair and maintenance of all systems and equipment and
components thereof of the Project;

(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, and repair to roofs and
reroofing;

(xi) amortization (including interest on the unamortized cost) over the useful
life, determined in accordance with generally accepted accounting principles, of
the cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Project, or any portion thereof;

(xii) the cost of capital improvements or other costs incurred in connection
with the Project (A) which are reasonably intended and expected to generate
savings in the operation or maintenance of the Project, or any portion thereof
(but only to the extent of the actual annual net cost savings which actually
result from such expenditures), (B) that are required to comply with present or
anticipated reasonable conservation programs, (C) which are replacements of
nonstructural items located in the Common Areas required to keep the Common
Areas in good order or condition (but specifically excluding the cost of the
Lobby Work), or (D) that are required under any governmental law or regulation
enacted after the date of this Lease; provided, however, that any permissible
capital expenditure shall be amortized (including interest on the amortized
cost) over its useful life reasonably determined in accordance with generally
accepted accounting principles;

(xiii) costs, fees, charges or assessments imposed by, or resulting from any
mandate imposed on Landlord by, any federal, state or local government for fire
and police protection, trash removal, community services, or other services
which do not constitute Tax Expenses; and

(xiv) payments under any easement, license, operating agreement, declaration,
restrictive covenant, or instrument pertaining to the sharing of costs by the
Building with other buildings in the Project.

Only as provided hereinafter in this Section 4.2.7.1 below in items [i], [ii],
and [iii], in the event Landlord incurs costs or expenses associated with or
relating to separate items or categories or subcategories of Operating Expenses
which were not part of Operating Expenses during the entire Base Year, Operating
Expenses for the Base Year shall be deemed increased by the amounts Landlord
would have incurred during the Base Year with respect to such costs and expenses
had such separate items or categories or subcategories of Operating Expenses
been included in Operating Expenses during the entire Base Year. The foregoing
shall only apply as follows: [i] in the event and to the extent any portion of
the Project is covered by a warranty or service agreement which provides
warranty-type protection at any time during the Base Year and is not covered by
such warranty or such warranty-type protection under such service agreement in a
subsequent Expense Year to the same extent, Operating Expenses for the Base Year
shall be deemed increased by the amount Landlord would have incurred during the
Base Year with respect to the items or matters covered by the subject warranty
or warranty-type protection, had such warranty or such service agreement not
been in effect during the Base Year; [ii] any insurance premium resulting from
any new forms of insurance, shall be deemed to be included in Operating Expenses
for the Base Year, except to the extent governmentally required; and [iii] any
new category of Operating Expenses for new services provided to the Project
and/or the Building after the Base Year, unless such new services are required
to comply with new applicable governmental laws or regulations enacted after the
Lease Commencement Date.

4.2.7.2 Exclusions to Operating Expenses. Notwithstanding the provisions of
Section 4.2.7.1 above, for purposes of this Lease, Operating Expenses shall not,
however, include:

(i) costs, including marketing costs, legal fees, space planners’ fees,
advertising and promotional expenses, and brokerage fees incurred in connection
with the original construction or development, or original or future leasing of
the Project, and costs, including permit, license and inspection costs, incurred
with respect to the installation of tenant improvements made for new tenants
initially occupying space in the Project after the Lease Commencement Date or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant space for tenants or other occupants of the Project
(excluding, however, such costs relating to any Common Areas or parking
facilities);

(ii) except as set forth in Sections 4.2.7. 1 (xi), (xii), and (xiii) above,
depreciation, interest and principal payments on mortgages and other debt costs,
if any, penalties and interest, costs of capital repairs and alterations, and
costs of capital improvements and equipment;

(iii) costs for which Landlord is reimbursed by any tenant or occupant of the
Project or by insurance by its carrier or any tenant’s carrier or by anyone
else, and electric power costs for which any tenant directly contracts with the
local public service company;

(iv) any bad debt loss, rent loss, or reserves for bad debts or rent loss;

(v) costs associated with the operation of the business of the partnership or
entity which constitutes Landlord, as the same are distinguished from the costs
of operation of the Project (which shall specifically include, but not be
limited to, accounting costs associated with the operation of the Project).
Costs associated with the operation of the business of the partnership or entity
which constitutes Landlord include costs of partnership accounting and legal
matters, costs of defending any lawsuits with any mortgagee (except as the
actions of the Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of Landlord’s interest in the
Project, and costs incurred in connection with any disputes between Landlord and
its employees, between Landlord and Project management, or between Landlord and
other tenants or occupants, and Landlord’s general corporate overhead and
general and administrative expenses;

 

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(vi) the wages and benefits of any employee who does not devote substantially
all of his or her employed time to the Project unless such wages and benefits
are prorated to reflect time spent on operating and managing the Project
vis-a-vis time spent on matters unrelated to operating and managing the Project;
provided, that in no event shall Operating Expenses for purposes of this Lease
include wages and/or benefits attributable to personnel above the level of
Project manager;

(vii) amounts paid as ground rental for the Project by Landlord;

(viii) except for a Project management fee to the extent allowed pursuant to
item (xiii), below, overhead and profit increment paid to the Landlord or to
subsidiaries or affiliates of Landlord for services in the Project to the extent
the same exceeds the costs of such services rendered by qualified, first-class
unaffiliated third parties on a competitive basis;

(ix) any compensation paid to clerks, attendants or other persons and other
charges in connection with commercial concessions operated by Landlord
(including without limitation for any child care services, athletic facilities
or similar amenities), provided that any compensation paid to any concierge at
the Project shall be includable as an Operating Expense;

(x) rentals and other related expenses incurred in leasing air conditioning
systems, elevators or other equipment which if purchased the cost of which would
be excluded from Operating Expenses as a capital cost, except equipment not
affixed to the Project which is used in providing janitorial or similar services
and, further excepting from this exclusion such equipment rented or leased to
remedy or ameliorate an emergency condition in the Project;

(xi) all items, utilities, HVAC, and services for which Tenant or any other
tenant in the Project reimburses Landlord or which Landlord provides selectively
to one or more tenants (other than Tenant) without reimbursement and costs of
any and all Building HVAC system replacements at any time prior to August 1,
2021;

(xii) costs, other than those incurred in ordinary maintenance and repair, for
sculpture, paintings, fountains or other objects of art;

(xiii) fees payable by Landlord for management of the Project (including the
Building) in excess of four percent (4%) (the “Management Fee Cap”) of
Landlord’s gross rental revenues, adjusted and grossed up to reflect a one
hundred percent (100%) occupancy of the Building and all other buildings in the
Project, with all tenants paying rent, including base rent, pass-throughs, and
parking fees (but excluding the cost of after hours services or utilities) from
the Project for any calendar year or portion thereof;

(xiv) any costs expressly excluded from Operating Expenses elsewhere in this
Lease;

(xv) rent for any office space occupied by Project management personnel to the
extent the size or rental rate of such office space exceeds the size or fair
market rental value of office space occupied by management personnel of the
Comparable Buildings in the vicinity of the Building, with adjustment where
appropriate for the size of the applicable project;

(xvi) costs arising from the negligence or willful misconduct of Landlord or its
agents, employees, vendors, contractors, or providers of materials or services;

(xvii) costs (A) incurred to comply with laws relating to the removal of
Hazardous Material (as defined below) except for immaterial amounts completed in
connection with routine maintenance and repairs; which was in existence in the
Building or on the Project prior to the Lease Commencement Date, and was of such
a nature that a federal, State or municipal governmental authority, if it then
had knowledge of the presence of such Hazardous Material, in the state, and
under the conditions that it then existed in the Building or on the Project,
would have then required the removal of such Hazardous Material or other
remedial or containment action with respect thereto; and (B) costs incurred to
remove, remedy, contain, or treat Hazardous Material, which hazardous material
is brought into the Building or onto the Project after the date hereof by
Landlord or any other tenant of the Project and is of such a nature, at that
time, that a federal, State or municipal governmental authority, if it had then
had knowledge of the presence of such Hazardous Material, in the state, and
under the conditions, that it then exists in the Building or on the Project,
would have then required the removal of such Hazardous Material or other
remedial or containment action with respect thereto except for immaterial
amounts completed in connection with routine maintenance and repairs;

(xviii) costs arising from Landlord’s charitable or political contributions;

(xix) any gifts provided to any entity whatsoever, including, but not limited
to, Tenant, other tenants, employees, vendors, contractors, prospective tenants
and agents;

(xx) the cost of any magazine, newspaper, trade or other subscriptions;

(xxi) any amount paid to Landlord or to subsidiaries or affiliates of Landlord
for goods or services in the Project to the extent the same exceeds the cost of
such goods or services rendered by qualified, first-class unaffiliated third
parties on a competitive basis;

 

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(xxii) costs arising from Landlord’s failure to comply with any applicable
governmental laws or regulations in existence at the time of the Lease
Commencement Date;

(xxiii) costs relating to categories of expenses for the Project parking areas
which were not included in Operating Expenses during the Base Year, except to
the extent the Base Year is retroactively adjusted to include such categories;

(xxiv) any entertainment expenses and travel expenses of Landlord, its
employees, agents, partners and affiliates;

(xxv) The cost to repair or rebuild the Building, including the Premises, to the
extent the cost of the repairs is reimbursed by insurance or condemnation
proceeds, covered by warranty or otherwise reimbursed by third parties other
than as a part of Operating Expenses, provided no deductible attributable to
damage by terrorist acts, earthquake, flood, tornado or hurricane may be passed
through to Tenant in excess of One Dollar ($1.00) per rentable square foot of
the Premises;

(xxvi) The cost of repairs or replacements to utility systems dedicated to the
use of a single tenant;

(xxvii) Legal, accounting, consulting and other related expenses associated with
the enforcement of leases, disputes with tenants or prospective tenants, or the
defense of Landlord’s title to the Building, including the costs of defending
any lawsuits with any mortgagee (except as the actions of the Tenant may be in
issue), including costs of judgment or settlement in connection with such
disputes;

(xxviii) Any compensation paid to clerks, attendants or other persons in
commercial concessions, including parking facilities operated by Landlord and
other costs directly related to the operation of such commercial concessions
including bookkeeping, parking insurance, parking management fees, tickets,
striping and uniforms, and all other costs directly related to the installation,
operation and maintenance of such commercial concessions;

(xxix) Fines, penalties, and interest assessed by a third party or governmental
agency as a result of Landlord’s failure to make payments in a timely manner or
to comply with applicable laws;

(xxx) Liability covered by insurance carried by Landlord the premiums for which
are included in Operating Expenses, or which would have been covered by
insurance otherwise required to be carried by Landlord under this Lease but for
failure to insure as a result of Landlord’s intentional acts or omissions or
negligence (but not as a result of commercial impracticability of obtaining such
insurance);

(xxxi) Operating Expenses incurred to bring the Building or Premises into in
full compliance with governmental regulations, ordinances and laws that were in
effect at the effective date of this Lease;

(xxxii) Costs incurred in connection with upgrading the Building to comply with
handicap, life, fire and safety codes in effect as of the Lease Commencement
Date and costs of any other upgrades to the Common Areas of the Building or the
Project;

(xxxiii) Costs for which Landlord has been compensated by a management fee,
including labor, office rent, supplies, and improvements in the Building;

(xxxiv) Any Operating Expenses in connection with retail space in the Building
which are unique to such retail operations and are therefore appropriately
allocated only among retail operators in the Building;

(xxxv) Costs arising from repairs of defects in the Building (including defects
in original construction and subsequent improvements) or in tenant improvements
installed by Landlord;

(xxxvi) Any recalculation of or additional Operating Expenses actually incurred
more than three (3) years prior to the year in which the Landlord proposes that
such costs be included;

(xxxvii) Any amounts grossed-up which do not vary with occupancy (exclusions
will be deducted prior to gross-up, and gross-up will not result in
reimbursement of more than 100% of expenses);

(xxxviii) Any dues or charges for professional associations of property owners,
managers, or tenants in the Project;

(xxxix) The cost of insurance on leasehold improvements to the premises of
tenants of the Project (unless the cost of such insurance on Tenant’s leasehold
improvements is also included within Operating Expenses), or any cost or expense
for which insurance reimbursement would be available but for the decision of
Landlord to maintain a deductible from coverage or not make or pursue a valid
claim thereon;

(xl) New or additional landscaping (other than normal plant replacements);

 

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(xli) Automobile or travel expense for Landlord or its employees or agents;

(xlii) Fees and payments arising under the CC&Rs, any recorded easements or
similar instruments other than ordinary assessments payable with respect to the
Building under the CC&Rs, easements or instruments to the extent such items are
included in the Base Year Operating Expenses;

(xliii) Any electricity, water, sewer or other utility “tap-in” fees or
connections charges;

(xliv) Costs associated with implementation of any traffic management programs
unless required by governmental mandate and only if incurred during the Base
Year or added into the Base Year and included in the Base Year and all
subsequent years;

(xlv) Any other expenses which, in accordance with generally accepted accounting
principles, consistently applied, would not normally be treated as Operating
Expenses by landlords of Comparable Buildings; and to the extent that an expense
is not specifically included or excluded as a component of Operating Expenses
pursuant to the Lease, whether such expenses shall be treated as Operating
Expenses shall be determined in accordance with generally accepted accounting
principles, consistently applied; and to the extent that an expense is included
as Operating Expenses under the Lease, but a method for the treatment or
calculation of such expense is not specifically set forth in the Lease, then the
treatment and calculation of such expense shall be done in accordance with
generally accepted accounting principles, consistently applied;

(xlvi) With respect to any assessments or taxes for which Landlord has the right
to elect to make a lump sum payment, or cause such assessment or tax to be
amortized and paid over a period of time, Landlord shall include in the
definition of Operating Expenses only the amortized portion (calculated at the
longest period of time permitted by such taxing authority) of such taxes and
assessments (regardless of any applicable interest charges); and

(xlvii) Tax Expenses.

If Landlord is not furnishing any particular work or service (the cost of which,
if performed by Landlord, would be included in Operating Expenses) to a tenant
who has undertaken to perform such work or service in lieu of the performance
thereof by Landlord, Operating Expenses shall be deemed to be increased by an
amount equal to the additional Operating Expenses which would reasonably have
been incurred during such period by Landlord if it had at its own expense
furnished such work or service to such tenant. If the Project is not at least
ninety-five percent (95%) occupied during all or a portion of the Base Year or
any Expense Year, Landlord shall make an appropriate adjustment to the
components of Operating Expenses for such year to determine the amount of
Operating Expenses that would have been incurred had the Project been
ninety-five percent (95%) occupied; and the amount so determined shall be deemed
to have been the amount of Operating Expenses for such year. Operating Expenses
for the Base Year shall not include market-wide labor-rate increases due to
extraordinary circumstances, including, but not limited to, boycotts and
strikes, and utility rate increases due to extraordinary circumstances
including, but not limited to, conservation surcharges, boycotts, embargoes or
other shortages, or amortized costs relating to capital improvements.

4.2.8 Taxes.

4.2.8.1 Tax Expenses. “Tax Expenses” shall mean all federal, state, county, or
local governmental or municipal taxes, fees, charges or other impositions of
every kind and nature, whether general, special, ordinary or extraordinary
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of rent,
unless required to be paid by Tenant, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Project, or
any portion thereof), which shall be paid or accrued during 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 and
operation of the Project, or any portion thereof including the parking areas.
Tax Expenses shall include, without limitation:

(i) any tax on the rent, right to rent or other income from the Project, or any
portion thereof, or as against the business of leasing the Project, or any
portion thereof;

(ii) any assessment, tax, fee, levy or charge in addition to, or in
substitution, partially or totally, of any assessment, tax, fee, levy or charge
previously included within the definition of real property tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election (“Proposition 13”)
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street, sidewalk and
road maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and, in further
recognition of the decrease in the level and quality of governmental services
and amenities as a result of Proposition 13, Tax Expenses shall also include any
governmental or private assessments or the Project’s contribution towards a
governmental or private cost-sharing agreement for the purpose of augmenting or
improving the quality of services and amenities normally provided by
governmental agencies;

(iii) any assessment, tax, fee, levy, or charge allocable to or measured by the
area of the Premises or the Rent payable hereunder, including, without
limitation, any business or gross income tax or excise tax with respect to the
receipt of such rent, or upon or with respect to the possession, leasing,
operating, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof;

 

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(iv) any assessment, tax, fee, levy or charge, upon this transaction or any
document to which Tenant is a party, creating or transferring an interest or an
estate in the Premises; and

(v) all of the real estate taxes and assessments imposed upon or with respect to
the Building and Project. To the extent such taxes are not currently known,
Landlord shall reasonably estimate the taxes and the Base Year Tax Expenses
shall be adjusted accordingly upon receipt of the actual tax adjustment based
upon such reassessment.

4.2.8.2 Other Costs. Any costs and expenses (including, without limitation,
reasonable attorneys’ and consultants’ fees) incurred in attempting to protest,
reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense
Year such expenses are incurred. Tax refunds shall be credited against Tax
Expenses and refunded to Tenant regardless of when received, based on the
Expense Year to which the refund is applicable; provided, however, in no event
shall the amount to be refunded Tenant for any such Expense Year exceed the
total amount paid by Tenant as Additional Rent under this Article 4 for such
Expense Year. If Tax Expenses for any period during the Lease Term or any
extension thereof are increased after payment thereof for any reason, including,
without limitation, error or reassessment by applicable governmental or
municipal authorities, Tenant shall pay Landlord upon demand Tenant’s Share of
any such increased Tax Expenses included by Landlord as Building Tax Expenses
pursuant to the terms of this Lease. Notwithstanding anything to the contrary
contained in this Section 4.2.8 (except as set forth in Section 4.2.8.1, above),
there shall be excluded from Tax Expenses (i) all excess profits taxes,
franchise taxes, gift taxes, capital stock taxes, inheritance and succession
taxes, estate taxes, federal and state income taxes, and other taxes to the
extent applicable to Landlord’s general or net income (as opposed to rents,
receipts or income attributable to operations at the Project), (ii) any items
included as Operating Expenses, and (iii) any items paid by Tenant under
Section 4.5 of this Lease.

4.2.8.3 Base Taxes. The amount of Tax Expenses for the Base Year attributable to
the valuation of the Project, inclusive of tenant improvements, shall be known
as the “Base Taxes.” If in any comparison year subsequent to the Base Year the
amount of Tax Expenses decreases below the amount of Base Taxes for the
Premises, then for purposes of all subsequent comparison years, including the
comparison year in which such decrease in Tax Expenses occurred, the Base Taxes
and therefore the Base Year shall be decreased by an amount equal to the
decrease in Tax Expenses; provided, however, if the amount of Tax Expenses for
the Premises subsequently increases in any comparison year from that decreased
amount, the Base Taxes for the Premises shall be increased by an amount equal to
the increase in the Tax Expenses for the Premises but not in excess of the Base
Taxes for the Base Year (calendar year 2012). Base Taxes and Tax Expenses for
all subsequent years shall exclude the value of tenant improvements installed in
the Building by or for any tenant of the Building that 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.

4.2.8.4 Reassessment. Notwithstanding any other provision of this Lease, if
during the initial Lease Term any sale or change in ownership of the Building is
consummated and, as a result, all or part of the Building is reassessed (a
“Reassessment”) for real estate tax purposes by the appropriate governmental
authority under the terms of Proposition 13, the following shall apply:

(i) For purposes of this Section 4.2.8.4, the term “Tax Increase” shall mean
that portion of the Tax Expenses as calculated immediately following the
Reassessment that is attributable solely to the Reassessment. Accordingly, a Tax
Increase shall not include any portion of the Tax Expenses, as calculated
immediately following Reassessment, that is:

(1) Attributable to the initial assessment of the value of the Building, the
Base Building, or the tenant improvements located in the Building;

(2) Attributable to assessments pending immediately before the Reassessment that
were conducted during, and included in, that Reassessment or that were otherwise
rendered unnecessary following the Reassessment;

(3) Attributable to the annual statutory permissible increase in real estate
taxes (currently 2% per year); or

(4) Part of the Tax Expenses incurred or considered to be incurred during the
Base Year as determined under this Lease.

(ii) Tenant shall not be obligated to pay any portion of the Tax Increase
relating to a Reassessment occurring during the initial Lease Term.

Notwithstanding the foregoing, Landlord, in its sole discretion, may terminate
the Tax Increase protection at any time by paying Tenant an amount equal to the
then present value of the Tax Increase Protection Amount calculated on the basis
of a discount rate of eight percent (8%) per year and, in the event that there
is less than twelve (12) months remaining on the Tax Increase protection,
prorating such amount.

4.2.9 Tenant’s Share. “Tenant’s Share” shall mean the percentages set forth in
Section 6 of the Summary. Tenant’s Share is calculated by multiplying by 100 the
sum of (i) number of rentable square feet of the Premises as set forth in
Section 2 of the Summary plus (ii) the number of the rentable square feet of the
Storage Space as set forth in Section 1.5.1 above, and dividing the applicable
product by the rentable square feet in the Building. The rentable square feet in
the Premises, Storage Space and Building is measured pursuant to the Building
Owners and Managers Association Standard Method for Measuring Floor Area in
Office Buildings, ANSI/BOMA Z65.1 - 1996 (“BOMA”), provided that the rentable
square footage of the Building shall include all of, and the rentable square
footage of the Premises and Storage Space therefore shall include a portion of,
the square footage of the ground floor Common Areas located within the Building
and the Common Area and occupied space of the portion of the Building or
Project, dedicated to the service of the Building. In the event the rentable
square feet of the Premises, Storage Space and/or the total rentable square feet
of the Building is remeasured, Tenant’s Share for the Premises and Storage Space
shall be appropriately adjusted and, as to the Expense Year in which such change
occurs, Tenant’s Share for the Premises for such Expense Year shall be
determined on the basis of the number of days during such Expense Year that each
such Tenant’s Share was in effect.

 

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4.3 Allocation of Direct Expenses. The parties acknowledge that the Building is
a part of a multi-building project and that the costs and expenses incurred in
connection with the Project (i.e., the Direct Expenses) shall be shared between
the tenants of the Building and the tenants of the other buildings in the
Project in accordance with the CC&Rs for the Project and the allocation of such
Direct Expenses described on Exhibit F attached hereto. Accordingly, as set
forth in Section 4.2 above, Direct Expenses (which consist of Operating Expenses
and Tax Expenses) shall be determined annually for the Project as a whole, and a
portion of the Direct Expenses for the Project shall be allocated to the tenants
of the Building in accordance with the CC&Rs as further described in Exhibit F
hereto . For purposes of this Lease, Direct Expenses allocated to the tenants of
the Building shall include all Direct Expenses attributable solely to the
Building and an equitable portion of the Direct Expenses attributable to the
Project as a whole allocated as provided in the CC&Rs as described in Exhibit F
attached hereto.

4.4 Calculation and Payment of Additional Rent. Beginning January 1, 2013, if
for calendar year 2013 or any subsequent Expense Year ending or commencing
within the Lease Term, Tenant’s Share of Building Direct Expenses for such
Expense Year exceeds Tenant’s Share of Building Direct Expenses applicable to
the Base Year for the Premises, then Tenant shall pay to Landlord, in the manner
set forth in Section 4.4.1, below, and as Additional Rent, an amount equal to
the excess (the “Excess”).

4.4.1 Statement of Actual Building Direct Expenses and Payment by Tenant.
Landlord shall give to Tenant following the end of each Expense Year, a
statement (the “Statement”) which shall state the Building Direct Expenses
incurred or accrued for such preceding Expense Year and which shall indicate the
amount of the Excess. Upon receipt of the Statement for calendar year 2013 or
any subsequent Expense Year commencing or ending during the Lease Term, if an
Excess is present, Tenant shall pay, with its next installment of Base Rent due,
the full amount of the Excess for such Expense Year, less the amounts, if any,
paid during such Expense Year as Estimated Excess (as defined below), and if
Tenant paid more as Estimated Excess than the actual Excess, Tenant shall
receive a credit in the amount of Tenant’s overpayment against all Rent next
coming due under this Lease. The failure of Landlord to timely furnish the
Statement for any Expense Year shall not prejudice Landlord or Tenant from
enforcing its rights under this Article 4; provided, however, Tenant shall not
be liable for any Excess Expenses (other than Tax Expenses) which are not billed
to Tenant within three (3) years following the end of the Expense Year in which
such Excess Expenses were incurred. Even though the Lease Term has expired and
Tenant has vacated the Premises, when the final determination is made of
Tenant’s Share of Building Direct Expenses for the Expense Year in which this
Lease terminates, if an Excess is present, Tenant shall within thirty (30) days
of written invoice from Landlord pay to Landlord such amount; provided, however,
Tenant shall not be liable for any such Excess which is not billed to Tenant
prior to the first anniversary of the Lease Expiration Date. If Tenant paid more
as Estimated Excess than the actual Excess, Landlord shall, within thirty
(30) days, deliver a check payable to Tenant in the amount of the overpayment.
The provisions of this Section 4.4.1 shall survive the expiration or earlier
termination of the Lease Term.

4.4.2 Statement of Estimated Building Direct Expenses. On or before April 1 of
each Expense Year, Landlord shall give Tenant a yearly expense estimate
statement (the “Estimate Statement”) which shall set forth Landlord’s reasonable
estimate (the “Estimate”) of what the total amount of Building Direct Expenses
for the then-current Expense Year shall be and the estimated excess (the
“Estimated Excess”) as calculated by comparing the Building Direct Expenses for
such Expense Year, which shall be based upon the Estimate, to the amount of
Building Direct Expenses for the Base Year. Subject to Section 4.4.1 above, the
failure of Landlord to timely furnish the Estimate Statement for any Expense
Year shall not preclude Landlord from enforcing its rights to collect any
Estimated Excess under this Article 4, nor shall Landlord be prohibited from
revising any Estimate Statement or Estimated Excess theretofore delivered to the
extent necessary. Thereafter, Tenant shall pay, with its next installment of
Base Rent due, a fraction of the Estimated Excess for the then-current Expense
Year (reduced by any amounts paid pursuant to the last sentence of this
Section 4.4.2). Such fraction shall have as its numerator the number of months
which have elapsed in such current Expense Year, including the month of such
payment, and twelve (12) as its denominator. Until a new Estimate Statement is
furnished (which Landlord shall have the right to deliver to Tenant at any time)
including for any Expense Year for which Landlord has not provided an Estimate
Statement by January 1, Tenant shall pay monthly, with the monthly Base Rent
installments, an amount equal to one-twelfth (1/12) of the total Estimated
Excess set forth in the previous Estimate Statement delivered by Landlord to
Tenant.

4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible.

4.5.1 Personal Property Taxes. Tenant shall be liable for and shall pay ten
(10) days before delinquency, taxes levied against Tenant’s equipment,
furniture, fixtures and any other personal property located in or about the
Premises. If any such taxes on Tenant’s equipment, furniture, fixtures and any
other personal property are levied against Landlord or Landlord’s 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 any other personal
property and if Landlord pays the taxes based upon such increased assessment,
which Landlord shall have the right to do regardless of the validity thereof but
only under proper protest if requested by Tenant, Tenant shall upon demand repay
to Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.

4.5.2 Taxes on Improvements in Premises. If the tenant improvements in the
Premises, whether installed and/or paid for by Landlord or Tenant and whether or
not affixed to the real property so as to become a part thereof, are assessed
for real property tax purposes at a valuation higher than the valuation at which
tenant improvements conforming to Landlord’s “building standard” in other space
in the Building are assessed, then the Tax Expenses levied against Landlord or
the property by reason of such excess assessed valuation shall be deemed to be
taxes levied against personal property of Tenant and shall be governed by the
provisions of Section 4.5.1, above; provided that Landlord uniformly applies
such excess assessed valuation for the same period uniformly to all tenants in
the Building.

 

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4.5.3 Other Taxes. Notwithstanding any contrary provision herein, Tenant shall
pay prior to delinquency any (i) rent tax or sales tax, service tax, transfer
tax or value added tax, or any other applicable tax on the rent or services
herein or otherwise respecting this Lease, (ii) taxes assessed upon or with
respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion of
the Project, including the Project parking facility, or (iii) taxes assessed
upon this transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises.

4.6 Landlord’s Books and Records. Within two (2) years after receipt of a
Statement by Tenant, if Tenant disputes the amount of Additional Rent set forth
in the Statement, an independent certified public accountant (which accountant
is a member of a nationally or regionally recognized accounting firm, has
previous experience in reviewing financial operating records of landlords of
office buildings, and is retained by Tenant on a non contingency fee basis and
provided such auditor shall not employ any individual in connection with such
audit any individual previously employed in connection with the management or
operation of any portion of the Project) (the “Tenant Auditor”), designated and
paid for by Tenant, may, after five (5) business days written notice to Landlord
and at reasonable times, inspect Landlord’s records with respect to the
Statement at Landlord’s offices in Orange County or San Diego County, California
(“Landlord’s records”), provided Tenant has paid all amounts required to be paid
under the applicable Estimated Statement and Statement, as the case may be, and
provided Landlord’s record shall not include tax returns or other books or
records which would not otherwise pertain to Direct Expenses. In connection with
such inspection, Tenant and Tenant’s agents must agree in advance to follow
Landlord’s reasonable and non-discriminatory (as among all tenants) rules and
procedures regarding inspections of Landlord’s records, and shall execute a
commercially reasonable confidentiality agreement regarding such inspection.
Tenant’s failure to dispute the amount of Additional Rent set forth in any
Statement within two (2) years following Tenant’s receipt of such Statement
shall be deemed to be Tenant’s approval of such Statement and Tenant,
thereafter, waives the right or ability to dispute the amounts set forth in such
Statement. If after such inspection, Tenant still disputes such Additional Rent,
a determination as to the proper amount shall be made, at Tenant’s expense, by
an independent certified public accountant (the “Accountant”) selected by
Landlord and subject to Tenant’s reasonable approval; provided that if such
certification by the Accountant proves that Direct Expenses were overstated by
more than four percent (4%), then the cost of the Accountant, and the cost of
such determination certification, shall be paid by Landlord. Any reimbursement
amounts determined to be owing by Landlord to Tenant or by Tenant to Landlord
shall be (i) in the case of amounts owing from Tenant to Landlord, paid within
thirty (30) days following such determination, and (ii) in the case of amounts
owing from Landlord to Tenant, credited against the next payments of Rent due
Landlord under the terms of this Lease, or if the Lease Term has expired, paid
to Tenant within thirty (30) days following such determination. In no event
shall this Section 4.6 be deemed to allow any review of any of Landlord’s
records by any subtenant of Tenant. Tenant agrees that this Section 4.6 shall be
the sole method to be used by Tenant to dispute the amount of any Direct
Expenses payable or not payable by Tenant pursuant to the terms of this Lease,
and Tenant hereby waives any other rights at law or in equity relating thereto.

ARTICLE 5

USE OF PREMISES

5.1 Permitted Use. Tenant shall use the Premises solely for the Permitted Use
set forth in Section 7 of the Summary and Tenant shall not use or permit the
Premises or the Project to be used for any other purpose or purposes whatsoever
without the prior written consent of Landlord, which may be withheld in
Landlord’s sole discretion.

5.2 Prohibited Uses. Tenant shall not use the Premises or permit the Premises to
be used for a banking branch operation. As used herein, a “banking branch
operation” means an office open to the general public engaged in the taking of
deposits, making of loans and provision of financial and other services
typically provided in bank branches including, without limitation, trust
services and rental of safe deposit boxes. Tenant further covenants and agrees
that Tenant shall not use, or suffer or permit any person or persons to use, the
Premises or any part thereof for any use or purpose contrary to the provisions
of the Rules and Regulations set forth in Exhibit G, attached hereto, or in
violation of the laws of the United States of America, the State of California,
or the ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the Project
including, without limitation, any such laws, ordinances, regulations or
requirements relating to Hazardous Material. Tenant shall not do or knowingly
(after written notice from Landlord) permit anything to be done in or about the
Premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or Project, or injure them or use or
knowingly (after written notice from Landlord) allow the Premises to be used for
any unlawful purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises. Tenant shall comply with, and Tenant’s rights and
obligations under the Lease and Tenant’s use of the Premises shall be subject
and subordinate to, all recorded easements, covenants, conditions and
restrictions now of record and affecting the Project; provided, however,
Landlord warrants that such recorded easements, covenants, conditions and
restrictions do not materially interfere with Tenant’s use or occupancy of the
Premises or Common Areas in accordance with the terms of this Lease.

5.3 Tenant’s Security Responsibilities. Tenant shall (1) lock the doors to the
Premises and take other reasonable steps to secure the Premises and the personal
property of Tenant, Tenant’s employees and invitees, and any of Tenant’s
transferees, contractors or licensees in the Common Areas and parking facilities
of the Building and Project, from unlawful intrusion, theft, fire and other
hazards; (2) keep and maintain in good working order all security and safety
devices installed in the Premises by or for the benefit of Tenant (such as
locks, smoke detectors and burglar alarms); and (3) cooperate with Landlord and
other tenants in the Building on Building safety matters. Tenant acknowledges
that Landlord is not obligated to provide security personnel or measures for the
protection of Tenant, its employees, invitees or personal property.
Notwithstanding anything to the contrary contained herein, Landlord shall
maintain or cause to be maintained at the Project, on a 24-hour per day basis,
an “observe and report” system consisting of personnel, electronic monitoring
systems or a combination of both. Tenant further acknowledges that any security
or safety measures employed by Landlord are for the protection of Landlord’s own
interests; that Landlord is not a guarantor of the security or safety of Tenant,
its employees, invitees and agents or their property; and that such security and
safety matters are the responsibility of Tenant and the local law enforcement
authorities.

Subject to compliance with Article 8, Tenant may, at its sole cost and expense,
install a card access system to the Premises along with a card access system at
the stairwell entrances on the floors occupied by Tenant in order to facilitate
travel between floors occupied by Tenant.

 

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ARTICLE 6

SERVICES AND UTILITIES

6.1 Standard Tenant Services. Landlord shall provide the following services on
all days (unless otherwise stated below) during the Lease Term.

6.1.1 Subject to limitations imposed by all governmental rules, regulations and
guidelines applicable thereto, Landlord shall provide heating, ventilation and
air conditioning (“HVAC”) when necessary for normal comfort for normal office
use in the Premises from 8:00 A.M. to 6:00 P.M. Monday through Friday, and on
Saturdays from 9:00 A.M. to 1:00 P.M. (collectively, the “Building Hours”),
except for the date of observation of New Year’s Day, Independence Day, Labor
Day, Memorial Day, Thanksgiving Day, Christmas Day and, at Landlord’s discretion
upon not less than six (6) months notice from Landlord to Tenant, not more than
two (2) other subsequently adopted locally or nationally recognized holidays
(collectively, the “Holidays”).

6.1.2 Landlord shall provide adequate electrical wiring and facilities for
connection to Tenant’s lighting fixtures and normal and customary office
equipment, provided that (i) the connected electrical load of for the Premises
does not exceed an average of six (6) watts per usable square foot of the
Premises, and (ii) the connected electrical load of Tenant’s lighting fixtures
does not exceed an average of two (2) watts per usable square foot of the
Premises, which electrical usage shall be subject to applicable laws and
regulations, including Title 24. Tenant shall bear the cost of replacement of
lamps, starters and ballasts for non-Building standard lighting fixtures within
the Premises.

6.1.3 Landlord shall provide city water from the regular Building outlets for
drinking, lavatory and toilet purposes in the Building Common Areas and for
typical office kitchen and break room and ancillary service area sinks and ice
maker.

6.1.4 Landlord shall provide janitorial services to the Premises and window
washing services in a manner consistent with Comparable Buildings, and, at a
minimum as provided in the janitorial services specifications described on
Exhibit M attached hereto.

6.1.5 Landlord shall provide nonexclusive, non-attended automatic passenger
elevator service during the Building Hours and shall have one elevator available
at all other times, including on the Holidays.

6.1.6 Landlord shall provide nonexclusive freight elevator service subject to
scheduling by Landlord.

6.1.7 Landlord shall provide security to the Building in accordance with the
specifications set forth at Exhibit H hereto.

Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems.

6.2 Overstandard Tenant Use.

6.2.1 Non-Electrical Usage. Except for all server equipment and other equipment
identified on the Final Construction Documents (as defined in the Tenant Work
Letter) as approved by Landlord, Tenant shall not, without Landlord’s prior
written consent, not to be unreasonably withheld, conditioned or delayed, use
heat-generating machines, or equipment or lighting other than Building standard
lights in the Premises (and lights approved by Landlord’s approval of the Final
Construction Documents) and customary office equipment including, without
limitation, computer servers, personal computers, copiers, shredders and
collating machines, which may affect the temperature otherwise maintained by the
air conditioning system or increase the water normally furnished for the
Premises by Landlord pursuant to the terms of Section 6.1 of this Lease. If
Tenant uses water, heat or air conditioning in excess of that supplied by
Landlord pursuant to Section 6.1 of this Lease, and Landlord notifies Tenant of
such excess use and the basis for Landlord’s determination and Tenant does not
cease such excess use within ten (10) days of such written notice of excess use,
Tenant shall pay to Landlord, within ten (10) days after billing, the actual,
reasonable and documented cost of such excess consumption, the actual,
reasonable and documented cost of the installation, operation, and maintenance
of equipment which is installed in order to supply such excess consumption, and
the actual, reasonable and documented cost of the increased wear and tear on
existing equipment caused by such excess consumption; and Landlord may install
devices to separately meter any increased use and in such event Tenant shall pay
the actual, reasonable and documented cost of such increased use directly to
Landlord, on demand, at the rates charged by the public utility company
furnishing the same, including the actual, reasonable and documented cost of
such additional metering devices. If Tenant desires to use HVAC during
non-Building Hours, Tenant shall give Landlord such prior notice, if any, as
Landlord shall from time to time establish as required of all tenants of the
Building, of Tenant’s desired use in order to supply such non-Building Hours
HVAC, and Landlord shall supply HVAC to the Premises during such non-Building
Hours. The cost of non-Building Hours HVAC shall equal Sixty-Five Dollars
($65.00) per hour, per floor during the period of August 1, 2011 through
July 31, 2014. Thereafter such non-Building Hours cost shall increase to the
extent of increases charged by landlords of Comparable Buildings for HVAC
services during “non-standard” hours. The cost of HVAC supplied by Landlord
during non-Building Hours shall be paid by Tenant as Additional Rent.

6.2.2 Electrical Usage. If in any month Tenant uses electricity (not including
any electricity consumed in connection with the operation of the Building’s main
HVAC system) in excess of the Electricity Usage Standard (as defined below),
Tenant shall pay to Landlord, upon billing, Landlord’s actual, reasonable and
documented cost of such excess consumption and the actual, reasonable and
documented cost of the installation, operation, and maintenance of equipment
which is required to be installed to supply such excess capacity and/or
consumption to Tenant. For purposes hereof, the “Electricity Usage Standard”
shall be an average of five (5) watts per rentable square foot of the Premises
of actual consumption, on a monthly Building Hours basis. Tenant’s use of
electricity shall not exceed the capacity of the feeders to the Project or the
risers or wiring installation (which capacity is eight (8) watts per rentable
square foot) and Tenant shall promptly discontinue any such excess use promptly

 

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following receipt of notice of the same from Landlord. In those cases where
Landlord proposes to install equipment to be paid for by Tenant or otherwise is
proposing to require Tenant to pay for any cost related to such excess
consumption, Tenant may require Landlord, as a condition of such charge by
Landlord, to reasonably demonstrate that Landlord’s actions and such charges are
consistent with the requirements of this Lease.

6.3 Interruption of Use. Except as set forth in Section 19.5.2, below, Tenant
agrees that Landlord shall not be liable for damages, by abatement of Rent or
otherwise, for failure to furnish or delay in furnishing any service (including
telephone and telecommunication services), or for any diminution in the quality
or quantity thereof, when such failure or delay or diminution is occasioned, in
whole or in part, by breakage, repairs, replacements, or improvements, by any
strike, lockout or other labor trouble, by inability to secure electricity, gas,
water, or other fuel at the Building or Project after reasonable effort to do
so, by any riot or other dangerous condition, emergency, accident or casualty
whatsoever, by act or default of Tenant or other parties, or by any other cause
beyond Landlord’s reasonable control; and such failures or delays or diminution
shall never be deemed to constitute an eviction or disturbance of Tenant’s use
and possession of the Premises or relieve Tenant from paying Rent or performing
any of its obligations under this Lease, except as set forth in Section 19.5.2,
below. Furthermore, Landlord shall not be liable under any circumstances for a
loss of, or injury to, property or for injury to, or interference with, Tenant’s
business, including, without limitation, loss of profits, however occurring,
through or in connection with or incidental to a failure to furnish any of the
services or utilities as set forth in this Article 6.

ARTICLE 7

REPAIRS

Subject to Landlord’s repair obligations and utilities and services to be
provided by Landlord as set forth in this Lease, Tenant shall, at Tenant’s own
expense, keep the interior of the Premises, including all tenant improvements,
fixtures and furnishings therein, and the floor or floors of the Building on
which the Premises are located, in good order, repair and condition at all times
during the Lease Term. In addition, Tenant shall, at Tenant’s own expense, but
under the supervision and subject to the prior approval of Landlord, and within
any reasonable period of time specified by Landlord, promptly and adequately
repair all damage to the Premises and replace or repair all damaged, broken, or
worn fixtures and appurtenances, except for damage caused by ordinary wear and
tear or beyond the reasonable control of Tenant; provided however, that, at
Landlord’s option, or if Tenant fails to make such repairs, Landlord may, but
need not, make such repairs and replacements, and Tenant shall pay Landlord the
cost thereof, including a percentage of the cost thereof (to be uniformly
established for the Building and/or Project) sufficient to reimburse Landlord
for all overhead, general conditions, fees and other costs or expenses arising
from Landlord’s involvement with such repairs and replacements forthwith upon
being billed for same. Notwithstanding the foregoing, Landlord shall be
responsible for repairs to the exterior walls, foundation and roof of the
Building, the structural portions of the floors of the Building, and the systems
and equipment and all Common Areas of the Building, except to the extent that
such repairs are required due to the negligence or willful misconduct of Tenant;
provided, however, that if such repairs are due to the negligence or willful
misconduct of Tenant, Landlord shall make such repairs at Tenant’s expense, and,
if covered by Landlord’s insurance, Tenant shall only be obligated to pay any
deductible in connection therewith. Landlord may, but shall not be required to,
enter the Premises at all reasonable times to make such repairs, alterations,
improvements or additions to the Premises or to the Project or to any equipment
located in the Project as Landlord shall desire or deem necessary or as Landlord
may be required to do by governmental or quasi-governmental authority or court
order or decree. Tenant hereby waives any and all rights under and benefits of
subsection 1 of Section 1932 and Sections 1941 and 1942 of the California Civil
Code or under any similar law, statute, or ordinance now or hereafter in effect.

ARTICLE 8

ADDITIONS AND ALTERATIONS

8.1 Landlord’s Consent to Alterations. After installation of the initial Tenant
Improvements for the Premises pursuant to Exhibit B, Tenant may not make any
improvements, alterations, additions or changes to the Premises or any
mechanical, plumbing or HVAC facilities or systems pertaining to the Premises
(collectively, the “Alterations”) without first procuring the prior written
consent of Landlord to such Alterations, which consent shall be requested by
Tenant not less than thirty (30) days prior to the commencement thereof, and
which consent shall not be unreasonably withheld, conditioned or delayed by
Landlord, provided it shall be deemed reasonable for Landlord to withhold its
consent to any Alteration which adversely affects the structural portions or the
systems or equipment of the Building or is visible from the exterior of the
Building. Notwithstanding the foregoing, Tenant shall be permitted to make
Alterations to the Premises following five (5) business days notice to Landlord,
and without Landlord’s prior consent, to the extent that such Alterations do not
adversely affect the systems and equipment of the Building, exterior appearance
of the Building, or structural aspects of the Building (the “Cosmetic
Alterations”). The construction of the initial improvements to the Premises
shall be governed by the terms of the Tenant Work Letter and not the terms of
this Article 8.

8.2 Manner of Construction.

8.2.1 Conditions to Alterations. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such reasonable requirements as Landlord in its reasonable discretion
may deem desirable, including, but not limited to, (i) the requirement that
Tenant utilize for such purposes only contractors, subcontractors, materials,
mechanics and materialmen selected by Tenant from a list provided and approved
by Landlord, and (ii) the requirement that upon Landlord’s request made at the
time such consent is granted Tenant shall, at Tenant’s expense, remove such
Alterations upon the expiration or any early termination of the Lease Term.
Tenant shall construct such Alterations and perform such repairs in a good and
workmanlike manner, in conformance with any and all applicable federal, state,
county or municipal laws, rules and regulations and pursuant to a valid building
permit, issued by the City of Irvine, all in conformance with Landlord’s
construction rules and regulations; provided, however, that prior to commencing
to construct any Alteration, Tenant shall meet with Landlord to discuss
Landlord’s design parameters and code compliance issues. In performing the work
of any such Alterations, Tenant shall have the work performed in such manner as
not to unreasonably obstruct access to the Project or any portion thereof, by
any other tenant of the Project, and so as not to unreasonably obstruct the
business of Landlord or other tenants in the Project. Tenant shall not use (and
upon reasonable prior notice from Landlord shall cease using) contractors,
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Landlord’s reasonable judgment, would disturb labor harmony with the workforce
or trades engaged in performing other work, labor or services in or about the
Building or the Common Areas. In addition to Tenant’s obligations under Article
9 of this Lease, upon completion of any Alterations, Tenant agrees to cause a
Notice of Completion to be recorded in the office of the Recorder of the County
of Orange in accordance with Section 3093 of the Civil Code of the State of
California or any successor statute, and Tenant shall deliver to the Project
construction manager a reproducible copy of the “as built” drawings of the
Alterations (not including any Cosmetic Alterations), as well as all permits,
approvals and other documents issued by any governmental agency in connection
with the Alterations.

8.2.2 Base Building Changes. In the event any Alterations which Tenant proposes
to make to the Premises require or give rise to governmentally-required changes
(“Additional Required Work”) to the Base Building, Landlord and Tenant shall
work together to eliminate, if possible, or otherwise minimize the Additional
Required Work. Absent elimination of such Additional Required Work or a mutually
acceptable allocation of such changes as between Landlord and Tenant, the cost
of such changes shall be borne by Tenant. As used herein, (i) “Base Building”
means the structural portions of the Building, the Base Building Systems, the
public restrooms, elevators, exit stairwells and the systems and equipment
located in the internal core of the Building, and (ii) “Base Building Systems”
means all systems and equipment (including plumbing, HVAC, electrical
fire/life/safety elevator and security systems) that serve all or part of the
Building.

8.3 Payment for Improvements. If payment is made directly to contractors, Tenant
shall (i) comply with Landlord’s requirements for final lien releases and
waivers in connection with Tenant’s payment for work to contractors, and
(ii) cause its contractors to sign Landlord’s standard contractor’s rules and
regulations. If Tenant orders any work directly from Landlord, Tenant shall pay
to Landlord an amount equal to five percent (5%) of the cost of such work to
compensate Landlord for all overhead, general conditions, fees and other costs
and expenses arising from Landlord’s involvement with such work. If Tenant does
not order any work directly from Landlord, Tenant shall reimburse Landlord for
Landlord’s reasonable, actual, out-of-pocket costs and expenses actually
incurred for any third party engineers or consultants engaged by Landlord to
review such Alteration work to the extent the scope of such Alteration work
reasonably requires such review by Landlord’s engineers and consultants.

8.4 Construction Insurance. In addition to the requirements of Article 10 of
this Lease, in the event that Tenant makes any Alterations, prior to the
commencement of such Alterations, Tenant shall provide Landlord with evidence
that Tenant carries “Builder’s All Risk” insurance in an amount approved by
Landlord covering the construction of such Alterations, and such other insurance
as Landlord may reasonably require, it being understood and agreed that all of
such Alterations shall be insured by Tenant pursuant to Article 10 of this Lease
immediately upon completion thereof.

8.5 Landlord’s Property. All Alterations, improvements, fixtures, equipment
and/or appurtenances which may be installed or placed in or about the Premises,
from time to time, shall be at the sole cost of Tenant and shall be and become
the property of Landlord, except that Tenant may remove any Alterations,
improvements, fixtures and/or equipment which Tenant can substantiate to
Landlord have not been paid for with any Tenant improvement allowance funds
provided to Tenant by Landlord, provided Tenant repairs any damage to the
Premises and Building caused by such removal and returns the affected portion of
the Premises to a building standard tenant improved condition as reasonably
determined by Landlord, ordinary wear and tear excepted. Furthermore, if
Landlord, as a condition to Landlord’s consent to any Alterations, requires, at
the time such consent is granted, that Tenant remove such Alterations upon the
expiration or earlier termination of the Lease Term, Landlord may, by written
notice to Tenant prior to the end of the Lease Term, or given following any
earlier termination of this Lease, require Tenant, at Tenant’s expense, to
remove any such Alterations or improvements and to repair any damage to the
Premises and Building caused by such removal and returns the affected portion of
the Premises to a building standard tenant improved condition as reasonably
determined by Landlord, ordinary wear and tear excepted. If Tenant fails to
complete such removal and/or to repair any damage caused by the removal of any
Alterations or improvements in the Premises and return the affected portion of
the Premises to a building standard tenant improved condition as reasonably
determined by Landlord, Landlord may do so and may charge the actual, reasonable
and documented cost thereof to Tenant. Tenant hereby protects, defends,
indemnifies and holds Landlord harmless from any liability, cost, obligation,
expense or claim of lien in any manner relating to the installation, placement,
removal or financing of any such Alterations, improvements, fixtures and/or
equipment in, on or about the Premises, which obligations of Tenant shall
survive the expiration or earlier termination of this Lease. Notwithstanding the
foregoing, Tenant shall not be required to remove any Cosmetic Alterations upon
the expiration or earlier termination of this Lease, or the initial improvements
to the Premises constructed pursuant to the terms of the Tenant Work Letter.

8.6 Communications and Computer Lines. After completion of the initial Tenant
Improvements pursuant to Exhibit B, Tenant may install additional communications
or computer wires and cables (collectively, the “Lines”) in or serving the
Premises, provided that (i) Tenant shall obtain Landlord’s prior written consent
(which consent Landlord shall not unreasonably withhold, condition or delay),
use an experienced and qualified contractor reasonably approved in writing by
Landlord, and comply with all of the other provisions of Articles 7 and 8 of
this Lease, (ii) an acceptable number of spare Lines and space for additional
Lines shall be maintained for existing and future occupants of the Project, as
determined in Landlord’s reasonable opinion, (iii) the Lines (including riser
cables) shall be appropriately insulated to prevent excessive electromagnetic
fields or radiation, and shall be surrounded by a protective conduit reasonably
acceptable to Landlord, (iv) any new or existing Lines servicing the Premises
shall comply with all applicable governmental laws and regulations, (v) as a
condition to permitting the installation of new Lines, Landlord may require that
Tenant remove existing Lines located in or serving the Premises and repair any
damage in connection with such removal, and (vi) Tenant shall pay all costs in
connection with installation of new Lines. Landlord reserves the right to
require that Tenant remove any Lines located in or serving the Premises
(a) which are installed in violation of these provisions, or (b) which are at
any time in violation of any laws or represent a dangerous or potentially
dangerous condition.

8.7 Telecommunications Equipment.

8.7.1 Telecommunications Equipment Installation. During the term of this Lease
and subject to the terms of the Lease, Tenant shall have the right to install,
use, maintain, repair and replace on the roof of the Building one
(1) telecommunications antennae or satellite dishes and across the roof and
through the vertical shafts and horizontal raceways of the Building, such
electrical wires and cable as are reasonably necessary to connect the such
antennae or satellite dishes to the Premises (collectively, “Telecommunications
Equipment”). The Telecommunications Equipment shall be of a size and type
acceptable to Landlord and shall not be visible from ground level. The
provisions of this Lease shall apply to Tenant’s installation, use, maintenance,
repair and replacement of the Telecommunications Equipment.

 

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8.7.2 Location. The Telecommunications Equipment shall be installed by Tenant at
a location on the roof of the Building selected by Tenant subject to Landlord’s
reasonable approval. Landlord may reasonably withhold such approval so long as
Landlord designates an alternative location on the roof of the Building
reasonably acceptable to Tenant. Landlord shall also have the right, from time
to time during the Lease Term, to require Tenant to reasonably relocate the
Telecommunications Equipment to a different location on the roof of the Building
provided the functions of the Telecommunications Equipment are not impaired by
such relocation. In any such event, the cost of relocation shall be the
responsibility of Landlord.

8.7.3 Utilities. Landlord shall not be obligated to provide water, gas or other
utilities to any of the Telecommunications Equipment, except that Landlord shall
allow Tenant to connect to Landlord’s existing electrical panels servicing the
roof of the Building and to draw therefrom, at Tenant’s expense, electrical
power for ordinary use of the Telecommunications Equipment. At Landlord’s
request, Tenant shall install a separate meter to measure the amount of
electricity used by Tenant for the operation of the Telecommunications
Equipment. Tenant shall pay Landlord, as Additional Rent, the cost of such
electricity used as reasonably monitored and documented by Landlord.

8.7.4 Attachment. The Telecommunications Equipment shall be attached in a manner
acceptable to Landlord. In no event, however, shall there be any penetrations
into the roof surface.

8.7.5 Use. The Telecommunications Equipment may only be used by Tenant in its
ordinary course of business. Tenant shall not sell or lease the
Telecommunications Equipment to any other party or permit the use of the
Telecommunications Equipment by any other party. Tenant, at its sole expense,
shall comply with all laws and regulations and secure all permits regarding
installation, construction, operation and maintenance of the Telecommunications
Equipment.

8.7.6 Interference. In no event may the Telecommunications Equipment interfere
with the reception of or signal from any other antenna or satellite dish
presently erected on or about the Building. If the operation of the
Telecommunications Equipment interferes with any such other existing antenna or
satellite dish then, immediately following written notice from Landlord to
Tenant of such interference, Tenant shall eliminate such interference. If Tenant
is unable to eliminate promptly such interference, then Landlord may, upon
further written notice to Tenant, require Tenant to shut down such
Telecommunications Equipment and Tenant shall immediately do so. Landlord shall
use reasonable efforts to prevent other antennae and satellite dishes on the
roof of the Building from interfering with the operation of the
Telecommunications Equipment.

8.7.7 Removal. Upon the expiration or any sooner termination of the Lease,
Tenant shall remove all of the Telecommunications Equipment from the roof and
other areas of the Building and restore such areas to their condition prior to
such installation.

8.7.8 Roof Access. Tenant may have access to the roof and other areas of the
Building for the purposes permitted by this Section 8.7 during Building Hours
upon not less than twenty-four (24) hours prior telephone notice to Landlord
given during normal business hours (except in the event of an emergency when no
such notice shall be required; provided, however, Tenant shall advise Landlord
of such access as soon as reasonably possible after such emergency). As part of
such notice, Tenant shall designate to Landlord the work to be performed, the
estimated length of time to perform the work and the authorized person or
persons who will perform the work. Upon receipt of such notice which is required
in this section, Landlord shall advise Tenant of the time(s) during which such
work may be performed.

8.7.9 Maintenance. Landlord shall have no obligation to design, install,
construct, use, operate, maintain, repair, replace or remove the
Telecommunications Equipment or have any other responsibility or liability in
connection therewith or the operations thereof.

8.8 Diesel Generator.

8.8.1 Generator Installation. Landlord hereby grants to Tenant the right to
install, in the locations identified on Exhibit A-5 attached hereto, a fully
enclosed diesel generator and related equipment typical for space of the size of
the Premises to provide auxiliary power for the Premises (collectively the
“Generator”). The method of installation of the Generator shall be subject to
Landlord’s prior written approval not to be unreasonably withheld or delayed and
in no event may the installation of the Generator involve the installation of an
underground storage tank. The above-ground storage tank associated with the
Generator (the “AST”) shall have a fuel capacity typical for the size of the
Generator, shall be double-walled in thickness, shall contain diesel fuel only
(to only power the Generator), and shall employ at a minimum a double
containment system whereby if the first containment system fails, a second
containment system shall be present to prevent releases of Hazardous Material
(the area available for the AST including the containment system is thirty
(30) feet long by ten (10) feet wide by eight (8) feet three (3) inches high and
the size of generator and AST must fit in such area and meet any requirements of
Applicable Law). For these purposes, a sealed, uncracked concrete basement slab
containment area without drains shall be sufficient to constitute the second
containment system, provided it is large enough to completely contain a release
of the maximum volume of Hazardous Material which could be present in the first
containment system. All handling, use, storage and disposal of Hazardous
Material relating to the AST or the Generator shall be accomplished by Tenant at
its sole cost and expense in accordance with and subject to the terms of the
Lease. Upon the expiration or earlier termination of the Term of this Lease,
Tenant agrees to (i) promptly remove from the Project, at its sole cost and
expense, the AST (including the basement slab) and the Generator and all
Hazardous Material which are brought upon, stored, used, generated or released
upon, in, under or about the Project or any portion thereof by Tenant or any of
Tenant’s agents, and (ii) return the Project to substantially the condition in
which it existed prior to Tenant’s installation of the same. Tenant shall be
solely responsible for complying with any and all Environmental Laws (as defined
below) relating to the AST, the Generator and/or Hazardous Material associated
with either of the same, including, without limitation, all permitting
obligations. For purposes of the Environmental Laws, Tenant shall be the owner
and operator of the Generator and AST. Tenant shall be responsible for ensuring
compliance by all of Tenant’s agents with all Environmental Laws relating to the
AST or the Generator. Any acknowledgement, consent

 

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or approval by Landlord of Tenant’s use or handling of Hazardous Material in
connection with the AST and the Generator shall not constitute an assumption of
risk respecting the same nor a warranty or certification by Landlord that
Tenant’s proposed use and handling of Hazardous Material is safe or reasonable
or in compliance with the Environmental Laws.

8.8.2 Environmental Compliance. From time to time during the Lease Term and for
up to sixty (60) days thereafter, if Landlord has reasonable grounds to believe
that Tenant is not in compliance with the terms of this Section 8.8, and in any
event upon expiration or earlier termination of the Lease Term, Landlord may,
and upon Landlord’s request, Tenant shall, retain a registered environmental
consultant (the “Consultant”) reasonably acceptable to Landlord to conduct an
investigation of the Project (the “Environmental Assessment”) (i) for Hazardous
Material contamination in, about or beneath the Project relative to the AST or
the Generator, and (ii) to assess the activities of Tenant and all of Tenant’s
agents for compliance with the Environmental Laws relative to the AST or the
Generator and to recommend the use of procedures intended to reasonably reduce
the risk of a release of Hazardous Material. If the Environmental Assessment
discloses any material breach of the Environmental Laws by Tenant or any of
Tenant’s agents relative to the AST or the Generator, then the cost thereof
shall be the sole responsibility of Tenant, payable as Additional Rent under
this Lease. Otherwise, the costs of the Environmental Assessment shall be the
responsibility of Landlord. If Landlord so requires, Tenant shall comply, at its
sole cost and expense, with all reasonable recommendations contained in the
Environmental Assessment, including any reasonable recommendations with respect
to precautions which should be taken with respect to Tenant’s or Tenant’s
agents’ activities at the Project relative to the AST or the Generator or any
recommendations for additional testing and studies to detect the presence of
Hazardous Material relative to the AST or the Generator. Tenant covenants to
reasonably cooperate with the Consultant and to allow entry and reasonable
access to the AST and the Generator for the purpose of Consultant’s
investigation.

8.8.3 Environmental Monitoring. If any cleanup or monitoring procedure is
required by any applicable governmental authorities in or about the Project as a
consequence of any Hazardous Material contamination by Tenant, or any of
Tenant’s agents, and the procedure for cleanup is not completed (to the
satisfaction of all applicable governmental authorities) prior to the expiration
or earlier termination of the Lease Term, then, if as a result thereof the
Premises cannot reasonably be occupied by a third party tenant, then, at
Landlord’s election, this Lease shall be deemed renewed for a term commencing on
the expiration or earlier termination of the Lease Term and ending on the date
the cleanup procedure is completed with Rent to be determined pursuant to
Article 16 below.

8.8.4 Lease Compliance. Notwithstanding anything herein to the contrary, the
installation, maintenance and repair of the Generator and/or AST shall be
subject to all terms and conditions of this Lease.

ARTICLE 9

COVENANT AGAINST LIENS

Tenant shall keep the Project and Premises free from any liens or encumbrances
arising out of the work performed, materials furnished or obligations incurred
by or on behalf of Tenant, and shall protect, defend, indemnify and hold
Landlord harmless from and against any claims, liabilities, judgments or costs
(including, without limitation, reasonable attorneys’ fees and costs) arising
out of same or in connection therewith. Tenant shall give Landlord notice at
least twenty (20) days prior to the commencement of any such work on the
Premises (or such additional time as may be necessary under Applicable Laws (as
defined below)) to afford Landlord the opportunity of posting and recording
appropriate notices of non-responsibility. Tenant shall remove any such lien or
encumbrance by bond or otherwise within ten (10) days after notice by Landlord,
and if Tenant shall fail to do so, Landlord may pay the amount necessary to
remove such lien or encumbrance, without being responsible for investigating the
validity thereof. The amount so paid shall be deemed Additional Rent under this
Lease payable upon demand, without limitation as to other remedies available to
Landlord under this Lease. Nothing contained in this Lease shall authorize
Tenant to do any act which shall subject Landlord’s title to the Building or
Premises to any liens or encumbrances whether claimed by operation of law or
express or implied contract. Any claim to a lien or encumbrance upon the
Building or Premises arising in connection with any such work or respecting the
Premises not performed by or at the request of Landlord shall be null and void,
or at Landlord’s option shall attach only against Tenant’s interest in the
Premises and shall in all respects be subordinate to Landlord’s title to the
Project, Building and Premises.

ARTICLE 10

INSURANCE

10.1 Indemnification/Waiver.

10.1.1 Tenant Waiver. Subject to Landlord’s indemnification obligations set
forth below, Tenant hereby assumes all risk of damage to property or injury to
persons in, upon or about the Premises from any cause whatsoever (including, but
not limited to, any personal injuries resulting from a slip and fall in, upon or
about the Premises) and agrees that Landlord, its partners and their respective
officers, agents, servants, employees, and independent contractors
(collectively, “Landlord Parties”) shall not be liable for, and are hereby
released from any responsibility for, any damage either to person or property or
resulting from the loss of use thereof, which damage is sustained by Tenant or
by other persons claiming through Tenant. The foregoing release shall not be
applicable to damage to property in, upon or about the Premises to the extent
covered by Landlord’s insurance under Section 10.7 below; provided, however,
nothing herein expands Landlord’s obligations with respect to insurance.

10.1.2 Tenant’s Indemnification of Landlord Parties. To the fullest extent
permitted by law, but subject to this Section 10.1, Tenant shall, at Tenant’s
sole cost and with counsel reasonably acceptable to Landlord (provided, counsel
employed by Tenant’s insurer shall be deemed acceptable), indemnify, defend, and
hold harmless Landlord Parties from and against all Claims (as defined below)
from any cause arising out of or relating (directly or indirectly) to this Lease
and the tenancy created under this Lease for the Premises, including:

 

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10.1.2.1 The use or occupancy or manner of use or occupancy of the Premises by
Tenant, its partners and their respective officers, agents, servants, employees
and independent contractors (collectively “Tenant Parties”);

10.1.2.2 Any act, error, omission or negligence of Tenant Parties in, on or
about the Project;

10.1.2.3 Tenant’s conducting of its business;

10.1.2.4 Any alterations, activities, work or things done, omitted or permitted
by Tenant Parties in, or at the Premises or Building, including the violation or
failure to comply with any Applicable Laws, except to the extent that compliance
with Applicable Laws is expressly made the responsibility of Landlord pursuant
to the terms of this Lease; and

10.1.2.5 Any breach or default in the performance of any obligation on the
Tenant’s part to be performed under this Lease.

10.1.3 Landlord’s Indemnification of Tenant Parties. Because Landlord is
required to maintain insurance on the Building and Tenant compensates Landlord
for such insurance as part of Tenant’s Share of Operating Expenses and because
of the waivers of subrogation in Section 10.5, Landlord shall, with counsel
reasonably acceptable to tenant (provided, counsel employed by Landlord’s
insurer shall be deemed acceptable), indemnify, defend, and hold harmless Tenant
Parties from and against all claims for damages to property outside the Premises
to the extent that such claims are covered by such insurance (or would have been
covered if Landlord had carried the insurance required under this Lease), even
if resulting from the negligent acts, omissions, willful misconduct of the
Tenant Parties. In addition, Landlord shall with counsel reasonably acceptable
to Tenant, indemnify, defend and hold harmless Tenant Parties from and against
all claims resulting from the negligent acts, omissions, willful misconduct of
Landlord Parties in connection with Landlord Parties’ activities in, on, or
about the Project or Building, except to the extent that such claim is for
damage to the Tenant Improvements and Tenant’s personal property, fixtures,
furniture, and equipment in the Premises and is covered by insurance that Tenant
is required to obtain under this Lease (or would have been covered had Tenant
carried the insurance required under this Lease).

10.1.4 Indemnification and Insurance. Notwithstanding anything to the contrary
set forth in this Lease, either party’s agreement to indemnify the other party
as set forth in this Section 10.1 shall be ineffective to the extent the matters
for which such party agreed to indemnify the other party are covered by
insurance required to be carried by the non-indemnifying party pursuant to this
Lease. Further, Tenant’s agreement to indemnify Landlord and Landlord’s
agreement to indemnify Tenant pursuant to this Section 10.1 are not intended to
and shall not relieve any insurance carrier of its obligations under policies
required to be carried pursuant to the provisions of this Lease, to the extent
such policies cover, or if carried, would have covered the matters, subject to
the parties’ respective indemnification obligations; nor shall they supersede
any inconsistent agreement of the parties set forth in any other provision of
this Lease. The provisions of this Section 10.1 shall survive the expiration or
sooner termination of this Lease with respect to any claims or liability arising
in connection with any event occurring prior to such expiration or termination.
Notwithstanding anything to the contrary contained in this Lease, nothing in
this Lease shall impose any obligations on Tenant or Landlord to be responsible
or liable for, and each hereby releases the other from all liability for,
consequential damages other than those consequential damages incurred by
Landlord in connection with a holdover (without Landlord’s consent) of the
Premises by Tenant after the expiration or earlier termination of this Lease or
incurred by Landlord in connection with any repair, physical construction or
improvement work performed by or on behalf of Tenant in the Project.

10.1.5 Claims. For purposes of this Lease, “Claims” means any and all claims,
losses, costs, damages, expenses, liabilities, liens, actions, causes of action
(whether in tort or contract, law or equity, or otherwise), charges,
assessments, fines and penalties of any kind (including consultant and expenses,
court costs and attorneys’ fees actually incurred).

10.2 Tenant’s Compliance With Landlord’s Fire and Casualty Insurance. Tenant
shall, at Tenant’s expense, comply with all insurance company requirements
pertaining to the use of the Premises. If Tenant’s conduct or use of the
Premises causes any increase in the premium for such insurance policies then
Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant’s
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.

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

10.3.1 Commercial General Liability Insurance covering the insured against
claims of bodily injury, personal injury and property damage (including loss of
use thereof) arising out of Tenant’s operations, and contractual liabilities
(covering the performance by Tenant of its indemnity agreements) including a
Broad Form endorsement covering the insuring provisions of this Lease and the
performance by Tenant of the indemnity agreements set forth in Section 10.1 of
this Lease, for limits of liability not less than:

 

Bodily Injury and

Property Damage Liability

  

$3,000,000 each occurrence

$3,000,000 annual aggregate

Personal Injury Liability

  

$3,000,000 each occurrence

$3,000,000 annual aggregate

0% Insured’s participation

10.3.2 Physical Damage Insurance covering (i) all office furniture, business and
trade fixtures, office equipment, free-standing cabinet work, movable
partitions, merchandise and all other items of Tenant’s property on the Premises
installed by, for, or at the expense of Tenant, (ii) the Tenant Improvements,
and any other improvements which exist in the Premises as of the Lease
Commencement Date (excluding the Base Building) (the “Original Improvements”),
and (iii) all other improvements, alterations and additions to the Premises.

 

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Such insurance shall be written on an “all risks” of physical loss or damage
basis, 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, but not limited to, 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.

10.3.3 Worker’s Compensation and Employer’s Liability or other similar insurance
pursuant to all applicable state and local statutes and regulations.

10.4 Form of Policies. The minimum limits of policies of insurance required of
Tenant under this Lease shall in no event limit the liability of Tenant under
this Lease. Such insurance shall (i) name Landlord, and any other party the
Landlord so specifies, as an additional insured, including Landlord’s managing
agent, if any; (ii) specifically cover the liability assumed by Tenant under
this Lease, including, but not limited to, Tenant’s obligations under
Section 10.1 of this Lease; (iii) be issued by an insurance company having a
rating of not less than A-; VII in Best’s Insurance Guide or which is otherwise
acceptable to Landlord and licensed to do business in the State of California;
(iv) be primary insurance as to all claims thereunder and provide that any
insurance carried by Landlord is excess and is non-contributing with any
insurance requirement of Tenant; (v) be in form and content reasonably
acceptable to Landlord; and (vi) provide that said insurance shall not be
canceled or coverage changed unless advance written notice is promptly provided
to Landlord and any mortgagee of Landlord. Tenant shall deliver said policy or
policies or certificates thereof to Landlord on or before the Lease Commencement
Date and at least thirty (30) days before the expiration dates thereof. In the
event Tenant shall fail to procure such insurance, or to deliver such policies
or certificate, Landlord may, at its option, procure such policies for the
account of Tenant, and the cost thereof shall be paid to Landlord within five
(5) days after delivery to Tenant of bills therefor.

10.5 Subrogation. Landlord and Tenant intend that their respective property loss
risks shall be borne by insurance carriers to the extent above provided, and
Landlord and Tenant hereby agree to look solely to, and seek recovery only from,
their respective insurance carriers in the event of a property loss to the
extent that such coverage is agreed to be provided hereunder. The parties each
hereby waive all rights and claims against each other for such losses, and waive
all rights of subrogation of their respective insurers, provided such waiver of
subrogation shall not affect the right to the insured to recover thereunder. The
parties agree that their respective insurance policies are now, or shall be,
endorsed such that the waiver of subrogation shall not affect the right of the
insured to recover thereunder, so long as no material additional premium is
charged therefor.

10.6 Additional Insurance Obligations. Tenant shall carry and maintain during
the entire Lease Term, at Tenant’s sole cost and expense, increased amounts of
the insurance required to be carried by Tenant pursuant to this Article 10 and
such other reasonable types of insurance coverage and in such reasonable amounts
covering the Premises and Tenant’s operations therein, as may be reasonably
requested by Landlord, but in no event in excess of the amounts and types of
insurance then being required of tenants in Comparable Buildings occupying
comparable space and engaged in a similar use as Tenant.

10.7 Landlord Insurance. Landlord shall maintain the following coverages in the
following amounts:

10.7.1 A policy of all risk property insurance insuring the Building in an
amount at least equal to the replacement cost thereof; and

10.7.2 Commercial general liability insurance covering Landlord against claims
of bodily injury, personal injury and property damage (including loss of use
thereof) arising out of Landlord’s operations, and contractual liabilities
including a Broad Form Endorsement, for limits of liabilities not less than:

 

Bodily Injury and $3,000,000 each occurrence

Property Damage Liability

   $3,000,000 annual aggregate

Personal Injury Liability

   $3,000,000 each occurrence    $3,000,000 annual aggregate

Such coverages may be provided by excess liability insurance coverage and shall
be from such companies and on such other terms and conditions as Landlord from
time to time may reasonably determine. At Landlord’s option, such insurance
coverage may include the risks of earthquake, flood damage or other perils;
business income (rental loss) and extra expense coverage; and loss payee
endorsements in favor of the holders of any mortgages or deeds of trust
encumbering the interest of Landlord in the Building or underlying lessors of
all or part of the Building, provided such coverages are maintained during the
Base Year.

ARTICLE 11

DAMAGE AND DESTRUCTION

11.1 Repair of Damage to Premises by Landlord.

11.1.1 Damage to Building. Tenant shall promptly notify Landlord of any damage
to the Premises resulting from fire or any other casualty. If the Premises or
any Common Areas serving or providing access to the Premises shall be damaged by
fire or other casualty, Landlord shall promptly and diligently, subject to
reasonable delays for insurance adjustment or other matters beyond Landlord’s
reasonable control, and subject to all other terms of this Article 11, restore
the Base Building and such Common Areas. Such restoration shall be to
substantially the same condition of the Base Building and the Common Areas prior
to the casualty, except for modifications required by zoning and building codes
and other laws or by the holder of a mortgage on the Building or Project or any
other modifications to the Common Areas deemed desirable by Landlord, which are
consistent with the character of the Project, provided that access to the
Premises and any restrooms serving the Premises shall not be materially
impaired.

 

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11.1.2 Damage to Premises. Upon the occurrence of any damage to the Premises,
upon notice (the “Landlord Repair Notice”) to Tenant from Landlord, Tenant shall
assign to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Tenant’s insurance required under
Section 10.3.2(ii) and (iii) of this Lease, and Landlord shall repair any injury
or damage to the Tenant Improvements and the Original Improvements installed in
the Premises and shall return such Tenant Improvements and Original Improvements
to their original condition; provided that if the cost of such repair by
Landlord exceeds the amount of insurance proceeds received by Landlord from
Tenant’s insurance carrier, as assigned by Tenant, the cost of such repairs
shall be paid by Tenant to Landlord prior to Landlord’s commencement of repair
of the damage. In the event that Landlord does not deliver the Landlord Repair
Notice within sixty (60) days following the date the casualty becomes known to
Landlord, Tenant shall, at its sole cost and expense, repair any injury or
damage to the Tenant Improvements and the Original Improvements installed in the
Premises and shall return such Tenant Improvements and Original Improvements to
their original condition. Whether or not Landlord delivers a Landlord Repair
Notice, prior to the commencement of construction, Tenant shall submit to
Landlord, for Landlord’s review and approval, all plans, specifications and
working drawings relating thereto, and Landlord shall select the contractors to
perform such improvement work. Landlord shall not be liable for any
inconvenience or annoyance to Tenant or its visitors, or injury to Tenant’s
business resulting in any way from such damage or the repair thereof.
Notwithstanding the foregoing, (i) if such fire or other casualty shall have
damaged the Premises or Common Areas necessary to Tenant’s occupancy, and the
Premises are not occupied by Tenant as a result thereof, then during the time
and to the extent the Premises are unfit for occupancy until the Premises shall
be restored to the condition existing prior to such casualty, the Rent shall be
abated in proportion to the ratio that the amount of rentable square feet of the
Premises which is unfit for occupancy for the purposes permitted under this
Lease bears to the total rentable square feet of the Premises, and (ii) if
Tenant cannot and does not operate its business from the Premises despite the
fact that the Premises are not completely damaged, in which case rent shall
abate in full during the time and to the extent the Premises are unfit for
occupancy until the earlier of the date Tenant operates its business from the
Premises or the date the Premises shall be restored to the condition existing
prior to such casualty. In the event that Landlord shall not deliver the
Landlord Repair Notice, Tenant’s right to rent abatement pursuant to the
preceding sentence shall terminate as of the date which is reasonably determined
by Landlord to be the date Tenant should have completed repairs to the Premises
assuming Tenant used reasonable due diligence in connection therewith.

11.2 Landlord’s Option to Repair. Notwithstanding the terms of Section 11.1 of
this Lease, Landlord may elect not to rebuild and/or restore the Premises,
Building and/or Project, and instead terminate this Lease, by notifying Tenant
in writing of such termination within sixty (60) days after the date of
discovery of the damage, such notice to include a termination date giving Tenant
sixty (60) days to vacate the Premises, but Landlord may so elect only if the
Building or Project shall be damaged by fire or other casualty or cause, whether
or not the Premises are affected, and one or more of the following conditions is
present: (i) in Landlord’s reasonable judgment, repairs cannot reasonably be
completed within one (1) year after the date of discovery of the damage (when
such repairs are made without the payment of overtime or other premiums);
(ii) the holder of any mortgage on the Building or Project or ground lessor with
respect to the Building or Project shall require that the insurance proceeds or
any portion thereof be used to retire the mortgage debt, or shall terminate the
ground lease, as the case may be; (iii) the damage is not fully covered by
Landlord’s insurance policies after application of any deductible; (iv) Landlord
decides to rebuild the Building or Common Areas so that they will be
substantially different structurally or architecturally, and Landlord terminates
all other leases for premises in the Building; or (v) the damage occurs during
the last twelve (12) months of the Lease Term or any Option Term. In the event
Landlord does not terminate this Lease as set forth above, and in Landlord’s
reasonable judgment, the repairs cannot be completed within such one hundred
eighty (180) days, as set forth in (i) above, Landlord shall provide Tenant with
written notice (“Repair Notice”) of the time within which such repairs may be
completed, in Landlord’s reasonable judgment. Tenant, at Tenant’s option, may
elect to terminate this Lease by written notice to Landlord within thirty
(30) days following Tenant’s receipt of the Repair Notice, which written notice
shall include a termination date of not less than sixty (60) days following
Tenant’s written notice. Furthermore, if neither Landlord nor Tenant has
terminated this Lease, and the repairs are not actually completed within such
180-day period (or such longer period as set forth in the Repair Notice if
Tenant did not timely elect to terminate after receipt of the Repair Notice),
Tenant shall have the right to terminate this Lease during the first five
(5) business days of each calendar month following the end of such period until
such time as the repairs are complete, by notice to Landlord (the “Damage
Termination Notice”), effective as of a date set forth in the Damage Termination
Notice (the “Damage Termination Date”), which Damage Termination Date shall not
be less than ten (10) business days following the end of each such month.
Notwithstanding the foregoing, if Tenant delivers a Damage Termination Notice to
Landlord, then Landlord shall have the right to suspend the occurrence of the
Damage Termination Date for a period ending thirty (30) days after the Damage
Termination Date set forth in the Damage Termination Notice by delivering to
Tenant, within five (5) business days of Landlord’s receipt of the Damage
Termination Notice, a certificate of Landlord’s contractor responsible for the
repair of the damage certifying that it is such contractor’s good faith judgment
that the repairs shall be substantially completed within thirty (30) days after
the Damage Termination Date. If repairs shall be substantially completed prior
to the expiration of such thirty-day period, then the Damage Termination Notice
shall be of no force or effect, but if the repairs shall not be substantially
completed within such thirty-day period, then this Lease shall terminate upon
the expiration of such thirty-day period. At any time, from time to time, after
the date occurring sixty (60) days after the date of the damage, Tenant may
request that Landlord inform Tenant of Landlord’s reasonable opinion of the date
of completion of the repairs and Landlord shall respond to such request within
five (5) business days. Notwithstanding the foregoing provisions of this
Section 11.2, Tenant shall have the right to terminate this Lease under this
Section 11.2 only if, as a result of the damage, Tenant cannot reasonably, and
does not, conduct business from the Premises. Nothing in this Section 11.2
limits Tenant’s Rent abatement rights under Section 11.1.2

11.3 Waiver of Statutory Provisions. The provisions of this Lease, including
this Article 11, constitute an express agreement between Landlord and Tenant
with respect to any and all damage to, or destruction of, all or any part of the
Premises, the Building or the Project, and any statute or regulation of the
State of California, including, without limitation, Sections 1932(2) and 1933(4)
of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.

 

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ARTICLE 12

NONWAIVER

No provision of this Lease shall be deemed waived by either party hereto unless
expressly waived in a writing signed thereby. The waiver by either party hereto
of any breach of any term, covenant or condition herein contained shall not be
deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord’s knowledge of such preceding breach at the time of acceptance of such
Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be
deemed a waiver of Landlord’s right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord’s right to recover
the full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant’s right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of Rent shall not waive or affect said notice, suit or judgment.

ARTICLE 13

CONDEMNATION

If the whole or any material part of the Premises, Building or Project shall be
taken by power of eminent domain or condemned by any competent authority for any
public or quasi-public use or purpose, or if any adjacent property or street
shall be so taken or condemned, or reconfigured or vacated by such authority in
such manner as to require the use, reconstruction or remodeling of any material
part of the Premises, Building or Project, or if Landlord shall grant a deed or
other instrument in lieu of such taking by eminent domain or condemnation,
Landlord shall have the option to terminate this Lease effective as of the date
possession is required to be surrendered to the authority, provided that
Landlord also terminates the leases of all similarly situated tenants in the
Building. If more than twenty-five percent (25%) of the rentable square feet of
the Premises is taken, or if access to the Premises is substantially impaired,
in each case for a period in excess of one hundred eighty (180) days, Tenant
shall have the option to terminate this Lease effective as of the date
possession is required to be surrendered to the authority. Landlord shall be
entitled to the entire award or payment in connection therewith; provided,
however, Tenant will have the right to recover from the condemning authority any
compensation as may be awarded or recoverable by Tenant for the taking of
Tenant’s furniture, fixtures, equipment and other personal property taken, if
any, for Tenant’s relocation expenses, and for any loss of goodwill or other
compensable damage to Tenant’s business. If any part of the Premises shall be
taken, and this Lease shall not be so terminated, the Rent shall be
proportionately abated. Tenant hereby waives any and all rights it might
otherwise have pursuant to Section 1265.130 of the California Code of Civil
Procedure. Notwithstanding anything to the contrary contained in this Article
13, in the event of a temporary taking of all or any portion of the Premises for
a period of one hundred eighty (180) days or less, then this Lease shall not
terminate but the Base Rent and the Additional Rent shall be abated for the
period of such taking in proportion to the ratio that the amount of rentable
square feet of the Premises taken bears to the total rentable square feet of the
Premises. Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking.

ARTICLE 14

ASSIGNMENT AND SUBLETTING

14.1 Transfers. Tenant shall not, without the prior written consent of Landlord,
assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach
to, or otherwise transfer, this Lease or any interest hereunder, permit any
assignment, or other transfer of this Lease or any interest hereunder by
operation of law, sublet the Premises or any part thereof, or enter into any
license or concession agreements or otherwise permit the occupancy or use of the
Premises or any part thereof by any persons other than Tenant and its employees
and contractors (all of the foregoing are hereinafter sometimes referred to
collectively as “Transfer(s)” and any person to whom any Transfer is made or
sought to be made is hereinafter sometimes referred to as a “Transferee”). If
Tenant desires Landlord’s consent to any Transfer, Tenant shall notify Landlord
in writing, which notice (the “Transfer Notice”) shall include (i) the proposed
effective date of the Transfer, which shall not be less than thirty (30) days
nor more than one hundred eighty (180) days after the date of delivery of the
Transfer Notice, (ii) a description of the portion of the Premises to be
transferred (the “Subject Space”), (iii) all of the material terms of the
proposed Transfer and the consideration therefor, including calculation of the
Transfer Premium (as defined below) in connection with such Transfer, the name
and address of the proposed Transferee, and a copy of all existing executed
and/or proposed documentation pertaining to the proposed Transfer, including all
existing operative documents to be executed to evidence such Transfer or the
agreements incidental or related to such Transfer, (iv) latest available
financial statements of the proposed Transferee certified by an officer, partner
or owner thereof, business credit and personal references and history of the
proposed Transferee and any other information reasonably required by Landlord
which will enable Landlord to determine the financial responsibility, character,
and reputation of the proposed Transferee, nature of such Transferee’s business
and proposed use of the Subject Space, and (v) an executed estoppel certificate
from Tenant in the form attached hereto as Exhibit H. Any Transfer made without
Landlord’s prior written consent shall, at Landlord’s option, be null, void and
of no effect, and shall, at Landlord’s option, constitute a default by Tenant
under this Lease. Whether or not Landlord consents to any proposed Transfer,
Tenant shall pay Landlord’s reasonable review and processing fees, as well as
any reasonable professional fees (including, without limitation, attorneys’,
accountants’, architects’, engineers’ and consultants’ fees) incurred by
Landlord, within thirty (30) days after written request by Landlord, in an
amount not to exceed One Thousand Five Hundred Dollars ($1,500) in the
aggregate, for a Transfer in the ordinary course of business (for purposes
hereof, a Transfer shall be deemed not to be in the “ordinary course of
business” if Landlord is required to review documentation related to such
Transfer on more than two (2) separate occasions).

 

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14.2 Landlord’s Consent. Landlord shall not unreasonably withhold, condition or
delay its consent to any proposed Transfer of the Subject Space to the
Transferee on the terms specified in the Transfer Notice. Without limitation as
to other reasonable grounds for withholding consent, the parties hereby agree
that it shall be reasonable under this Lease and under any applicable law for
Landlord to withhold consent to any proposed Transfer where one or more of the
following apply:

14.2.1 The Transferee is of a character or reputation or engaged in a business
which is not consistent with the quality of the Building or the Project;

14.2.2 The Transferee intends to use the Subject Space for purposes which are
not permitted under this Lease;

14.2.3 The Transferee is either a governmental agency or instrumentality
thereof;

14.2.4 In the case of a Transfer which is an assignment of the Lease, the
Transferee is not a party of reasonable financial worth and/or financial
stability in light of the responsibilities to be undertaken in connection with
the Transfer on the date consent is requested;

14.2.5 The proposed Transfer would cause a violation of another lease for space
in the Project which has been disclosed to Tenant at the time of creation of
such restriction; or

14.2.6 Either the proposed Transferee, or any person or entity which directly or
indirectly, controls, is controlled by, or is under common control with, the
proposed Transferee, is actively negotiating with Landlord immediately preceding
the date Landlord receives the Transfer Notice, to lease space in the Project.

If Landlord consents to any Transfer pursuant to the terms of this Section 14.2,
Tenant may within six (6) months after Landlord’s consent, but not later than
the expiration of said six-month period, enter into such Transfer of the
Premises or portion thereof, upon the same terms and conditions as are set forth
in the Transfer Notice furnished by Tenant to Landlord pursuant to Section 14.1
of this Lease, provided that if there are any changes in the terms and
conditions from those specified in the Transfer Notice (i) such that Landlord
would initially have been entitled to refuse its consent to such Transfer under
this Section 14.2, or (ii) which would cause the proposed Transfer to be more
favorable to the Transferee than the terms set forth in Tenant’s original
Transfer Notice, Tenant shall again submit the Transfer to Landlord for its
approval and other action under this Article 14. Notwithstanding anything to the
contrary in this Lease, if Tenant or any proposed Transferee claims that
Landlord has unreasonably withheld or delayed its consent under this
Section 14.2 or otherwise has breached or acted unreasonably under this
Article 14, their sole remedy shall be a suit for declaratory judgment and an
injunction for the relief sought and Tenant hereby waives all other remedies
including, without limitation, any right at law or equity to terminate this
Lease, on its own behalf and, to the extent permitted under Applicable Laws, on
behalf of the proposed Transferee.

14.3 Transfer Premium. If Landlord consents to a Transfer as a condition thereto
which the parties hereby agree is reasonable, Tenant shall pay to Landlord
one-half (1/2) of any Transfer Premium received by Tenant from such Transferee.
“Transfer Premium” shall mean all rent, additional rent or other consideration
payable by such Transferee in connection with the Transfer in excess of the Base
Rent and Additional Rent payable by Tenant under this Lease during the term of
the Transfer (on a per rentable square foot basis if less than all of the
Premises is transferred), after deducting the reasonable expenses incurred by
Tenant for (i) any free or reduced base rent reasonably provided to the
Transferee in connection with the Transfer, and (ii) any brokerage commissions
in connection with the Transfer (collectively, “Tenant’s Transfer Costs”).
“Transfer Premium” shall also include, but not be limited to, key money, bonus
money or other cash consideration paid by Transferee to Tenant in connection
with such Transfer, and any payment in excess of fair market value for services
rendered by Tenant to Transferee or for assets, fixtures, inventory, equipment,
or furniture transferred by Tenant to Transferee in connection with such
Transfer. The determination of the amount of Landlord’s applicable share of the
Transfer Premium shall be made on a monthly basis as rent or other consideration
is received by Tenant under the Transfer. For purposes of calculating the
Transfer Premium on a monthly basis, (i) Tenant’s Transfer Costs shall be deemed
to be expended by Tenant in equal monthly amounts over the entire term of the
Transfer and (ii) the rent paid for the Subject Space by Tenant shall be
computed after adjusting such rent to the actual effective rent to be paid,
taking into consideration any and all leasehold concessions granted in
connection therewith, including, but not limited to, any rent credit and tenant
improvement allowance. For purposes of calculating any such effective rent all
such concessions shall be amortized on a straight-line basis over the relevant
term.

14.4 Landlord’s Option as to Subject Space. Notwithstanding anything to the
contrary contained in this Article 14, in the event Tenant contemplates a
Transfer of seventy-five percent (75%) or more of the usable square footage of
the Premises whether in one or more transactions, Tenant shall give Landlord
notice (the “Intention to Transfer Notice”) of such contemplated transfer. The
Intention to Transfer Notice shall specify the portion of the rentable amount of
square feet of the Premises which Tenant intends to transfer (the “Contemplated
Transfer Space”), the contemplated date of commencement of the contemplated
transfer (the “Contemplated Effective Date”) and the contemplated length of the
term of such contemplated transfer, and shall specify that such Intention to
Transfer Notice is delivered to Landlord pursuant to this Section 14.4 in order
to allow Landlord to elect to recapture the Contemplated Transfer Space for the
term set forth in the Intention to Transfer Notice. Thereafter, Landlord shall
have the option, by giving written notice to Tenant within thirty (30) days
after receipt of any Intention to Transfer Notice, to recapture the Contemplated
Transfer Space. Such recapture shall cancel and terminate this Lease with
respect to such Contemplated Transfer Space as of the Contemplated Effective
Date until the last day of the term of the contemplated transfer is set forth in
the Intention to Transfer Notice. In the event of a recapture by Landlord with
respect to less than the entire Premises, the Rent reserved herein shall be
prorated on the basis of the number of rentable square feet retained by Tenant
in proportion to the number of rentable square feet contained in the Premises,
and this Lease as so amended shall continue thereafter in full force and effect,
and upon request of either party, the parties shall execute written confirmation
of the same. If Landlord declines, or fails to elect in a timely manner, to
recapture such Contemplated Transfer Space under this Section 14.4, then,
subject to the other terms of this Article 14, for a period of nine (9) months
(the “Nine Month Period”) commencing on the last day of such thirty (30) day
period, Landlord shall not have any right to recapture the Contemplated Transfer
Space with respect to any Transfer made during the Nine Month Period, provided
that any such transfer is substantially on the terms set forth in the Intention
to Transfer Notice and, provided further, that any such transfer shall be
subject to the remaining terms of this Article 14. If such a transfer is not so
consummated within the Nine Month Period (or if the Transfer is so consummated,
then upon the expiration of the term of any transfer of such Contemplated
Transfer Space consummated within such Nine Month Period), Tenant shall again be
required to submit a new Intention to Transfer Notice to Landlord with respect
to any contemplated Transfer, as provided above in this Section 14.4.

 

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14.5 Effect of Transfer. If Landlord consents to a Transfer, (i) the terms and
conditions of this Lease shall in no way be deemed to have been waived or
modified, (ii) such consent shall not be deemed consent to any further Transfer
by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord,
promptly after execution, an original executed copy of all documentation
pertaining to the Transfer in form reasonably acceptable to Landlord,
(iv) Tenant shall furnish upon Landlord’s request a complete statement,
certified by an independent certified public accountant, or Tenant’s chief
financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord’s consent, shall relieve Tenant or any
guarantor of the Lease from any liability under this Lease, including, without
limitation, in connection with the Subject Space. Landlord or its authorized
representatives shall have the right at all reasonable times to audit the books,
records and papers of Tenant relating to any Transfer, and shall have the right
to make copies thereof. If the Transfer Premium respecting any Transfer shall be
found understated, Tenant shall, within thirty (30) days after demand, pay the
deficiency, and if understated by more than five percent (5%), Tenant shall pay
Landlord’s costs of such audit.

14.6 Occurrence of Default. Any sublease of the Premises shall be subordinate
and subject to the provisions of this Lease, and if this Lease shall be
terminated during the term of any sublease, Landlord shall have the right to:
(i) treat such sublease as canceled and repossess the Subject Space by any
lawful means, or (ii) require that such Transferee attorn to and recognize
Landlord as its landlord under any such Transfer. If Tenant shall be in default
under this Lease, Landlord is hereby irrevocably authorized, as Tenant’s agent
and attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenant’s obligations under this Lease) until such default is cured. Such
Transferee shall rely on any representation by Landlord that Tenant is in
default hereunder, without any need for confirmation thereof by Tenant. Upon any
assignment, the assignee shall assume in writing all obligations and covenants
of Tenant thereafter to be performed or observed under this Lease. No collection
or acceptance of rent by Landlord from any Transferee shall be deemed a waiver
of any provision of this Article 14 or the approval of any Transferee or a
release of Tenant from any obligation under this Lease, whether theretofore or
thereafter accruing. In no event shall Landlord’s enforcement of any provision
of this Lease against any Transferee be deemed a waiver of Landlord’s right to
enforce any term of this Lease against Tenant or any other person. If Tenant’s
obligations hereunder have been guaranteed, Landlord’s consent to any Transfer
shall not be effective unless the guarantor also consents to such Transfer.

14.7 Non-Transfers. Notwithstanding anything to the contrary contained in this
Article 14, an assignment or subletting of all or a portion of the Premises to
an entity which is controlled by, controls, or is under common control with,
Tenant (an “Affiliate”), or to any successor entity by merger or by purchase of
stock or assets of Tenant, and any sale or transfer of stock or ownership
interests in Tenant privately or in a public market including through a public
stock offering or through venture capital or other financing (“Successor”),
shall not be deemed a Transfer under this Article 14, provided that Tenant
notifies Landlord of any such assignment or sublease and promptly supplies
Landlord with any documents or information requested by Landlord regarding such
assignment or sublease or such Affiliate, and further provided that such
assignment or sublease is not a subterfuge by Tenant to avoid its obligations
under this Lease. “Control”, as used in this Section 14.7, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity, whether by the
ownership of voting securities, by contract or otherwise. Notwithstanding
anything to the contrary contained in this Article 14, Tenant may allow any
person or company which is a client or customer of Tenant or which is providing
service to Tenant or one of Tenant’s clients to occupy, during the period of
such business relationship, certain portions of the Premises without such
occupancy being deemed a Transfer as long as (i) such relationship was not
created as a subterfuge to avoid the obligations set forth in Article 14,
(ii) such occupancy shall not exceed seven thousand five hundred
(7,500) rentable square feet at any one time, and (iii) Tenant shall advise
Landlord in writing at least ten (10) business days in advance of the
commencement of any such occupancy and shall provide Landlord with information
with respect to such occupancy pursuant to Section 14.1. Notwithstanding
anything herein to the contrary, any such occupancy shall be subject to all
terms and provisions of this Lease.

14.8 Qualified Transferee. As used herein a “Qualified Transferee” means (i) an
Affiliate of Tenant, (ii) a Successor to Tenant, and (iii) a Transferee who
receives an assignment of this Lease and assumes in writing all of Tenant’s
duties and obligations under this Lease and Landlord has provided its consent to
such assignment pursuant to Section 14.2 above.

ARTICLE 15

SURRENDER OF PREMISES; OWNERSHIP AND

REMOVAL OF TRADE FIXTURES

15.1 Surrender of Premises. No act or thing done by Landlord or any agent or
employee of Landlord during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in writing by Landlord. The delivery of keys to the
Premises to Landlord or any agent or employee of Landlord shall not constitute a
surrender of the Premises or effect a termination of this Lease, whether or not
the keys are thereafter retained by Landlord, and notwithstanding such delivery
Tenant shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Tenant, whether accepted by Landlord or not, or
a mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises or terminate any or all such sublessees or
subtenancies.

15.2 Removal of Tenant Property by Tenant. Upon the expiration of the Lease
Term, or upon any earlier termination of this Lease, Tenant shall, subject to
the provisions of this Article 15, quit and surrender possession of the Premises
to Landlord in as good order and condition as when Tenant took possession and as
thereafter improved by Landlord and/or Tenant, reasonable wear and tear and
repairs which are specifically made the responsibility of Landlord hereunder
excepted. Upon such expiration or termination, Tenant shall, without expense to
Landlord, remove or cause to be removed from the Premises all debris and
rubbish, and such items of furniture, equipment, business and trade fixtures,
free-standing cabinet work, movable partitions and other articles of personal
property owned by Tenant or installed or placed by Tenant at its expense in the
Premises, and such similar articles of any other persons claiming under Tenant,
as Landlord may, in its sole discretion, require to be removed, and Tenant shall
repair at its own expense all damage to the Premises and Building resulting from
such removal.

 

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ARTICLE 16

HOLDING OVER

If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Rent shall
be payable at a monthly rate equal to the product of (i) the Rent applicable
during the last rental period of the Lease Term under this Lease, and (ii) a
percentage equal to 110% during the first three (3) months immediately following
the expiration or earlier termination of the Lease Term and 150% thereafter.
Such month-to-month tenancy shall be subject to every other applicable term,
covenant and agreement contained herein. Nothing contained in this Article 16
shall be construed as consent by Landlord to any holding over by Tenant, and
Landlord expressly reserves the right to require Tenant to surrender possession
of the Premises to Landlord as provided in this Lease upon the expiration or
other termination of this Lease. The provisions of this Article 16 shall not be
deemed to limit or constitute a waiver of any other rights or remedies of
Landlord provided herein or at law. If Tenant fails to surrender the Premises
upon the termination or expiration of this Lease, in addition to any other
liabilities to Landlord accruing therefrom, Tenant shall protect, defend,
indemnify and hold Landlord harmless from all direct losses, costs (including
reasonable attorneys’ fees) and liability resulting from such failure,
including, without limiting the generality of the foregoing, any direct damages
suffered by Landlord founded upon such failure to surrender.

ARTICLE 17

ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS

17.1 Estoppel Certificates. Within ten (10) business days following a request in
writing by Landlord, Tenant shall execute, acknowledge and deliver to Landlord
an estoppel certificate, which, as submitted by Landlord, shall be substantially
in the form of Exhibit H, attached hereto (or such other form as may be required
by any prospective mortgagee or purchaser of the Project, or any portion
thereof), indicating therein any exceptions thereto that may exist at that time,
and shall also contain any other information reasonably requested by Landlord or
Landlord’s mortgagee or prospective mortgagee. Any such certificate may be
relied upon by any prospective mortgagee or purchaser of all or any portion of
the Project. Tenant shall execute and deliver whatever other instruments may be
reasonably required for such purposes. Failure of Tenant to timely execute,
acknowledge and deliver such estoppel certificate or other instruments shall
constitute an acceptance of the Premises and an acknowledgment by Tenant that
statements included in the estoppel certificate are true and correct, without
exception. Landlord hereby agrees to provide to Tenant an estoppel certificate
signed by Landlord, containing the same type of information, and within the same
period of time, as set forth above, with such changes as are reasonably
necessary to reflect that the estoppel certificate is being granted and signed
by Landlord to Tenant, rather than by Tenant to Landlord or a lender.

17.2 Financial Statements. At any time during the Lease Term, but not more often
than once per calendar year, and provided Tenant’s financial information is not
available from publicly available sources, Landlord may require Tenant to
provide Landlord with a current financial statement and financial statements of
the two (2) years prior to the current financial statement year. Such statements
shall be prepared in accordance with generally accepted accounting principles
and, if such is the normal practice of Tenant, shall be audited by an
independent certified public accountant.

ARTICLE 18

SUBORDINATION

This Lease shall be subject and subordinate to all present (including that
certain Second Amended and Restated Ground Lease (Parcel 1), dated September 25,
1989, between Parker-Hannifin Corporation, as lessor, and Landlord, as lessee,
as amended by that certain First Amendment to Second Amended and Restated Ground
Lease (Parcel 1), dated October 17, 1989) (the “Ground Lease” ) and to the lien
of any mortgage, trust deed or other encumbrances now or hereafter in force
against the Building or Project or any part thereof, if any, and to all
renewals, extensions, modifications, consolidations and replacements thereof,
and to all advances made or hereafter to be made upon the security of such
mortgages or trust deeds (collectively, “Superior Interests”), unless the
holders of such mortgages, trust deeds or other encumbrances, or the lessors
under such ground lease or underlying leases, require in writing that this Lease
be superior thereto; provided, however, that as a condition to such
subordination, Landlord shall cause all holders of any such Superior Interests
(other than the ground lessor under the Ground Lease) to provide Tenant with a
commercially reasonable subordination, nondisturbance agreement, as the same may
be negotiated by Tenant and the holders of such Superior Interests (“SNDA”).
Notwithstanding the foregoing, the form of the SNDA for Metropolitan Life
Insurance Company (“MetLife”), the beneficiary under a deed of trust currently
encumbering the Building, as the same has been modified to reflect modifications
desired by Tenant is attached hereto at Exhibit I (the “MetLife SNDA”; such
modifications are marked on the attached MetLife SNDA). Promptly upon execution
of this Lease, Landlord agrees to submit to MetLife, the MetLife SNDA in the
form of Exhibit I attached along with a clean copy of such MetLife SNDA, and
Landlord and Tenant agree to diligently negotiate in good faith with MetLife the
terms of the MetLife SNDA to obtain the mutual approval of MetLife, Landlord and
Tenant, such approval by Landlord and Tenant not to be unreasonably withheld;
provided, however, it is understood that Tenant shall be reasonable in
withholding its approval if the Met Life SNDA does not reflect the changes
contained in Exhibit I attached hereto or otherwise approved by Tenant. If
MetLife does not execute, acknowledge and deliver the MetLife SNDA in form
acceptable to Tenant as provided herein within forty-five (45) days following
the date hereof, then Tenant may terminate this Lease by giving Landlord written
notice thereof at any time prior to such delivery of the SNDA. Tenant covenants
and agrees in the event any proceedings are brought for the foreclosure of any
such mortgage or deed in lieu thereof (or if any ground lease is terminated), to
attorn, without any deductions or set-offs whatsoever except as expressly
provided in this Lease, to the lienholder or purchaser or any successors thereto
upon any such foreclosure sale or deed in lieu thereof (or to the ground
lessor), if so requested to do so by such purchaser or lienholder or ground
lessor, and to recognize such purchaser or lienholder

 

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or ground lessor as the lessor under this Lease, provided such lienholder or
purchaser or ground lessor shall agree to accept this Lease and not disturb
Tenant’s occupancy, so long as Tenant timely pays the Rent and observes and
performs the terms, covenants and conditions of this Lease to be observed and
performed by Tenant. Landlord’s interest herein may be assigned as security at
any time to any lienholder. Tenant shall, within ten (10) days of request by
Landlord, execute such further instruments or assurances as Landlord may
reasonably deem necessary to evidence or confirm the subordination or
superiority of this Lease to any such mortgages, trust deeds, ground leases or
underlying leases. Tenant waives the provisions of any current or future
statute, rule or law which may give or purport to give Tenant any right or
election to terminate or otherwise adversely affect this Lease and the
obligations of the Tenant hereunder in the event of any foreclosure proceeding
or sale.

Landlord represents that the only ground lease superior to this Lease existing
at the date of this Lease is the Ground Lease. Landlord further represents that
there are no existing defaults by Landlord under the Ground Lease. Landlord
shall submit this Lease to the ground lessor under the Ground Lease not later
than ten (10) days after execution by Landlord and Tenant. If such ground lessor
disapproves this Lease pursuant to the terms of the Ground Lease, Tenant may
within ten (10) days after Landlord has provided a copy of any such disapproval
of this Lease to Tenant upon written notice to Landlord terminate this Lease.
Landlord hereby advises Tenant that the Ground Lease provides that failure of
the ground lessor to disapprove this Lease shall be deemed ground lessor’s
consent to this Lease, the ground lessor shall not provide an SNDA to Tenant and
Landlord’s only obligation with respect to subordination of the Ground Lease is
to provide the above-described notice to the ground lessor.

ARTICLE 19

DEFAULTS; REMEDIES

19.1 Events of Default. The occurrence of any of the following shall constitute
an “Event of Default” of this Lease by Tenant:

19.1.1 Any failure by Tenant to pay any Rent or any other charge required to be
paid under this Lease, or any part thereof, when due unless such failure is
cured within five (5) days after written notice to Tenant; or

19.1.2 Except where a specific time period is otherwise set forth for Tenant’s
performance in this Lease, in which event the failure to perform by Tenant
within such time period shall be a default by Tenant under this Section 19.1.2,
any failure by Tenant to observe or perform any other provision, covenant or
condition of this Lease to be observed or performed by Tenant where such failure
continues for thirty (30) days after written notice thereof from Landlord to
Tenant; provided that if the nature of such default is such that the same cannot
reasonably be cured within a thirty (30) day period, Tenant shall not be deemed
to be in default if it diligently commences such cure within such period and
thereafter diligently proceeds to rectify and cure such default; or

19.1.3 Abandonment or vacation of all or a substantial portion of the Premises
by Tenant while Tenant is otherwise in default under this Lease; or

19.1.4 The failure by Tenant to observe or perform according to the provisions
of Articles 5, 14, 17 or 18 of this Lease where such failure continues for more
than five (5) days after written notice from Landlord, provided however, such
notice shall be in addition to, and not in lieu of, the periods, if any, for
performance set forth in such Articles of this Lease.

The notice periods provided herein are in lieu of, and not in addition to, any
notice periods provided by law.

19.2 Remedies Upon Default. Upon the occurrence of any Event of Default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity (all of which remedies shall be distinct, separate
and cumulative), the option to pursue any one or more of the following remedies,
each and all of which shall be cumulative and nonexclusive.

19.2.1 Terminate this Lease upon written notice to Tenant, 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 which 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:

(i) The worth at the time of award of the amount of any unpaid rent which has
been earned at the time of such termination; plus

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

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

(iv) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, specifically including but not limited to, brokerage commissions and
advertising expenses incurred, and any special concessions made to obtain a new
tenant; and

(v) Such other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable law.

 

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The term “rent” as used in this Section 19.2 shall be deemed to be and to mean
all sums of every nature required to be paid by Tenant pursuant to the terms of
this Lease, whether to Landlord or to others. As used in Paragraphs 19.2.1(i)
and (ii), above, the “worth at the time of award” shall be computed by allowing
interest at the rate set forth in Article 24 of this Lease, but in no case
greater than the maximum amount of such interest permitted by law. As used in
Paragraph 19.2.1(iii) above, the “worth at the time of award” shall be computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%).

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

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, above, or any law or other
provision of this Lease), without prior demand or notice except as required by
applicable 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 Subleases of Tenant. Whether or not Landlord elects to terminate this Lease
on account of any default by Tenant, as set forth in this Article 19, Landlord
shall have the right to terminate any and all subleases, licenses, concessions
or other consensual arrangements for possession entered into by Tenant and
affecting the Premises or may, in Landlord’s sole discretion, succeed to
Tenant’s interest in such subleases, licenses, concessions or arrangements. In
the event of Landlord’s election to succeed to Tenant’s interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.

19.4 Efforts to Relet. No re-entry or repossession, repairs, maintenance,
changes, alterations and additions, reletting, appointment of a receiver to
protect Landlord’s interests hereunder, or any other action or omission by
Landlord shall 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, nor
shall same operate to release Tenant in whole or in part from any of Tenant’s
obligations hereunder, unless express written notice of such intention is sent
by Landlord to Tenant. Tenant hereby irrevocably waives any right otherwise
available under any law to redeem or reinstate this Lease.

19.5 Landlord Default.

19.5.1 General. Notwithstanding anything to the contrary set forth in this
Lease, Landlord shall not be in default in the performance of any obligation
required to be performed by Landlord pursuant to this Lease unless (i) in the
event such default is with respect to the payment of money, Landlord fails to
pay such unpaid amounts within five (5) business days of written notice from
Tenant that the same was not paid when due, or (ii) in the event such default is
other than the obligation to pay money, Landlord fails to perform such
obligation within thirty (30) days after the receipt of notice from Tenant
specifying in detail Landlord’s failure to perform; provided, however, if the
nature of Landlord’s obligation is such that more than thirty (30) days are
required for its performance, then Landlord shall not be in default under this
Lease if it shall commence such performance within such thirty (30) day period
and thereafter diligently pursue the same to completion. Upon any such default
by Landlord under this Lease, Tenant may, except as otherwise specifically
provided in this Lease to the contrary, exercise any of its rights provided at
law or in equity.

19.5.2 Abatement of Rent. In the event that Tenant is prevented from using, and
does not use, the Premises or any portion thereof, as result of (i) any repair,
maintenance or alteration performed by Landlord, or which Landlord failed to
perform, after the Lease Commencement Date and required by the Lease, which
substantially interferes with Tenant’s use of the Premises, or (ii) any failure
to provide services, utilities or access to the Premises (either such set of
circumstances as set forth in items (i) or (ii), above, to be known as an
“Abatement Event”), then Tenant shall give Landlord notice of such Abatement
Event, and if such Abatement Event continues for five (5) consecutive business
days after Landlord’s receipt of any such notice or ten (10) consecutive
business or non-consecutive business days after Landlord’s receipt of any such
notice as to each such consecutive or non-consecutive day period in any twelve
(12) month period (the “Eligibility Period”), then the Base Rent and Tenant’s
Share of Building Direct Expenses and Tenant’s obligation to pay for parking
shall be abated or reduced, as the case may be, after expiration of the
Eligibility Period for such time that Tenant continues to be so prevented from
using, and does not use, the Premises or a portion thereof, in the proportion
that the rentable area of the portion of the Premises that Tenant is prevented
from using, and does not use, bears to the total rentable area of the Premises;
provided, however, in the event that Tenant is prevented from using, and does
not use, a portion of the Premises for a period of time in excess of the
Eligibility Period and the remaining portion of the Premises is not sufficient
to allow Tenant to effectively conduct its business therein, and if Tenant does
not conduct its business from such remaining portion, then for such time after
expiration of the Eligibility Period during which Tenant is so prevented from
effectively conducting its business therein, the Base Rent and Tenant’s Share of
Building Direct Expenses and Tenant’s obligation to pay for parking for the
entire Premises shall be abated for such time as Tenant continues to be so
prevented from using, and does not use, the Premises. If, however, Tenant
reoccupies any portion of the Premises during such period, the rent allocable to
such reoccupied portion, based on the proportion that the rentable area of such
reoccupied portion of the Premises bears to be the total rentable area of the
Premises, shall be payable by Tenant from the date Tenant reoccupies such
portion of the Premises. Such right to abate Base Rent and Tenant’s Share of
Building Direct Expenses shall be Tenant’s sole and exclusive remedy at law or
in equity for an Abatement Event. Except as provided in this Section 19.5.2,
nothing contained herein shall be interpreted to mean that Tenant is excused
from paying Rent due hereunder.

 

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ARTICLE 20

COVENANT OF QUIET ENJOYMENT

Landlord covenants that Tenant, on paying the Rent, charges for services and
other payments herein reserved and on keeping, observing and performing all the
other terms, covenants, conditions, provisions and agreements herein contained
on the part of Tenant to be kept, observed and performed, shall, during the
Lease Term, peaceably and quietly have, hold and enjoy the Premises subject to
the terms, covenants, conditions, provisions and agreements hereof without
interference by any persons lawfully claiming by or through Landlord.

ARTICLE 21

[INTENTIONALLY DELETED]

ARTICLE 22

SIGNS

22.1 Tenant’s Signage Rights Within the Building. In all passenger elevators
within the Building, Tenant may, at its sole cost, install its logo on the
elevator cab floor buttons corresponding to Tenant’s reception floor so long as
such logos do not adversely interfere with the operation of the elevator and so
long as such installation is at Tenant’s sole cost and expense. The right to
install elevator cab floor buttons shall be personal to Epicor Software
Corporation and any Qualified Transferee.

For those portions of the Premises which comprise less than an entire floor of
the Building, Tenant may, at Tenant’s sole expense, (i) install identification
signs and a directory in the elevator lobby of such floor(s) and on such floors
Landlord shall not permit any tenant to install an elevator lobby sign larger or
more prominent than Tenant’s sign and (ii) install identification signs
(including its logo) on the entrance door to the Premises and elsewhere within
such portion of the Premises so long as:

22.1.1 Tenant shall obtain Landlord’s prior written approval for such signs,
which Landlord may not unreasonably withhold, condition or delay. Failure by
Landlord to advise Tenant in writing of its disapproval of any such signs within
ten (10) days after receive of Tenant’s written request for approval shall be
deemed approval by Landlord; and

22.1.2 All signs must be in keeping with the quality, design, and style of the
Building.

Notwithstanding anything herein to the contrary, no sign of Tenant within the
Premises may be visible from the exterior of the Building.

22.2 Tenant’s Right to Exterior Building Signs. As long as Tenant or a Qualified
Transferee continues to lease at least two (2) full floors of the Building
during the Lease Term, Tenant or such Qualified Transferee shall have the
exclusive right to display its name (including its logo) on (i) two (2) signs on
the exterior of the Building as shown on Exhibit J (“Tenant’s Top Signs”) and
(ii) a “walkway” sign or the walkway monument as shown on Exhibit K (“Tenant’s
Walkway Sign”). Tenant’s Top Signs and Tenant’s Walkway Sign are collectively
referred to herein as “Tenant Signs.” Tenant’s Signs must:

22.2.1 Comply with all applicable governmental laws, statutes, regulations,
rules, codes and ordinances;

22.2.2 Comply with the provisions of this Lease;

22.2.3 Have been approved in advance by all appropriate governmental agencies;

22.2.4 Have been approved in advance by Landlord (which approval shall not be
unreasonably withheld, conditioned or delayed); provided, however, Landlord
approves Tenant’s Top Sign lettering of a maximum height of seven (7) feet.
Failure by Landlord to advise Tenant in writing of its disapproval of Tenant’s
Signs within ten (10) days after receipt of Tenant’s written request for
approval shall be deemed approval by Landlord; and

22.2.5 Comply with all instruments recorded or unrecorded against the Project
that are provided to Tenant by Landlord.

22.3 Tenant’s Installation of Signs. Tenant may install Tenant’s Signs at any
time after the Commencement Date and installation of Tenant’s Signs shall be in
accordance with the procedures and requirements of Article 8 above except to the
extent in conflict with the provisions of this Article 22. Tenant shall, at its
sole cost and expense, install Tenant’s Signs. Such costs and expenses include,
but are not limited, to the follows:

22.3.1 Costs of Tenant’s Signs;

22.3.2 Costs of obtaining permits and approvals;

22.3.3 Costs of installing, maintaining, repairing and replacing Tenant’s Signs;

22.3.4 The cost of any electrical consumption illuminating Tenant’s Signs which
is in excess of Tenant’s standard usage allotment; and

 

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22.3.5 Costs associated with the removal of Tenant’s Signs, repair of any damage
caused by such removal and restoration of the sites of Tenant’s Signs on the
Building to the condition in which those portions of the Building existed before
the installation of Tenant’s Signs excluding ordinary wear and tear (including
fading of Building façade) and damage due to casualty.

22.4 Removal, Repair and Restoration. On termination or expiration of the Lease
Term, on termination of Tenant’s Sign rights under this Article 22 or at any
earlier time at Tenant’s election, Tenant shall remove, at its sole cost and
expense, Tenant’s Signs, repair any damage caused by such removal and restore
those parts of the Building on which Tenant’s Signs were located to the
condition that existed before the installation of Tenant’s Signs, ordinary wear
and tear and damage due to casualty excepted. Such removal, repair and
restoration shall be in accordance with the procedures and requirements of
Article 8 above, except to the extent in conflict with this Article 22.

22.5 Maintenance of Tenant’s Signs. Tenant, at its sole cost and expense, shall
at all time during the Lease Term maintain Tenant’s Signs in working order and
first class condition.

22.6 Prohibited Signage and Other Items. Any signs, notices, logos, pictures,
names or advertisements which are installed or placed by Tenant outside of the
Premises that have not been separately approved by Landlord may be removed with
ten (10) days prior written notice by Landlord at the sole expense of Tenant.
Except as otherwise set forth herein, Tenant may not install any signs on the
exterior or roof of the Project or the Common Areas. Any signs, window
coverings, or blinds (even if the same are located behind the Landlord-approved
window coverings for the Building), or other items visible from the exterior of
the Premises or Building, shall be subject to the prior approval of Landlord,
which shall not be unreasonably withheld, conditioned or delayed.

22.7 Building Lobby Signage. So long as Tenant leases at least two (2) full
floors in the Building, no other tenant may maintain signage in the Building
lobby other than within the Building directory and signage to a ground floor
tenant’s entry door. Such ground floor entry door signage shall be adjacent to
such ground floor tenant’s suite entrance and shall be Building standard and in
uniform in size. A Building directory will be located in the lobby of the
Building. Tenant shall have the right, at Tenant’s sole cost and expense, to
designate Tenant’s pro rata share of the available name lines for the Building
to be displayed under Tenant’s entry in such directory.

22.8 Monument Signs. Tenant shall have the nonexclusive right to have its name
(including its logo) displayed on two (2) sides of the monument located on Von
Karman Avenue (“Monument”). Tenant’s right to maintain its name on the Monument
shall be subject to the following requirements:

22.8.1.1 Installation, maintenance and repair of Tenant’s name on the Monument
shall be performed by Landlord. All expenses connected with such installation
(including the cost of the sign), maintenance and repair of Tenant’s name on the
Monument shall be paid by Tenant within ten (10) days of demand.

22.8.1.2 The design, size, location, materials, colors and lighting of the
Monument shall be determined by Landlord in its reasonable discretion and
consultation with Tenant.

22.8.1.3 The design, size, location, specifications, graphics, materials, colors
and lighting (if applicable) of Tenant’s name on the Monument shall be as set
forth in Exhibit L hereto. The foregoing may be changed by Landlord, in its
reasonable discretion in consultation with Tenant.

22.8.1.4 Tenant shall pay to Landlord, from time to time and within thirty
(30) days after written demand, Tenant’s proportionate share of all expenses
incurred by Landlord that are attributable to the installation, insurance,
lighting (if applicable), maintenance, and repair of the Monument during the
period of time that Tenant’s name is on the Monument. Tenant’s portion of such
expenses shall be calculated by Landlord by dividing such expenses among Tenant
and Project occupants that have signs on the Monument in question in proportion
to the Monument surface and as used by each in relation to the surface area used
by all.

ARTICLE 23

COMPLIANCE WITH LAW

23.1 Applicable Laws. Tenant shall not do anything or suffer anything to be done
in or about the Premises or the Project which will in any way conflict with any
law, statute, ordinance or other governmental rule, regulation or requirement
now in force or which may hereafter be enacted or promulgated (including,
without limitation, the Americans with Disabilities Act of 1990 and all
amendments thereto) (collectively, “Applicable Laws”). At its sole cost and
expense, Tenant shall promptly comply with all such Applicable Laws which relate
to (i) Tenant’s use of the Premises, (ii) the Alterations or Tenant Improvements
in the Premises, or (iii) the Base Building, but as to the Base Building, only
to the extent such obligations are triggered by Tenant’s Alterations, the Tenant
Improvements, or Tenant’s use of the Premises for non-general office use. Should
any standard or regulation now or hereafter be imposed on Landlord or Tenant by
a state, federal or local governmental body charged with the establishment,
regulation and enforcement of occupational, health or safety standards for
employers, employees, landlords or tenants, then Tenant agrees, at its sole cost
and expense, to comply promptly with such standards or regulations. Tenant shall
be responsible, at its sole cost and expense, to make all alterations to the
Premises as are required to comply with the governmental rules, regulations,
requirements or standards described in this Article 23. The judgment of any
court of competent jurisdiction or the admission of Tenant in any judicial
action, regardless of whether Landlord is a party thereto, that Tenant has
violated any of said governmental measures, shall be conclusive of that fact as
between Landlord and Tenant. Landlord shall comply with all Applicable Laws
relating to the Building and Common Areas, provided that compliance with such
Applicable Laws is not the responsibility of Tenant under this Lease. Landlord
shall be permitted to include in Operating Expenses any costs or expenses
incurred by Landlord under this Article 23 but only to the extent allowed under
the terms of Section 4.2.7 above.

23.2 Hazardous Materials. Subject to Section 8.8, Tenant shall not cause or
permit any Hazardous Material to be generated, brought into, used, stored, or
disposed of in or about the Premises, Building or Project by Tenant or its
agents, employees, contractors, subtenants, or invitees, except for such
substances that are required in the ordinary course of Tenant’s business
conducted on the Premises so long as used and stored in compliance with
Applicable Law. Tenant shall:

23.2.1 Use, store, and dispose of all such Hazardous Material in strict
compliance with all applicable statutes, ordinances, and regulations in effect
during the Lease Term that relate to public health and safety and protection of
the environment (“Environmental Laws”), including those Environmental Laws
identified in Section 23.6; and

 

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23.2.2 Comply at all times during the Lease Term with all Environmental Laws.

23.3 Notice of Release and Investigation. If, during the Lease Term (including
any extensions), Tenant becomes aware of (i) any actual or threatened release of
any Hazardous Material on, under, or about the Premises, Building or Project, or
(ii) any inquiry, investigation, proceeding, or claim by any government agency
or other person regarding the presence of Hazardous Material on, under, or about
the Premises, Building or Project, Tenant shall give Landlord written notice of
the release or investigation within five (5) days after learning of it and shall
simultaneously furnish to Landlord copies of any claims, notices of violation,
reports, or other writings received by Tenant providing notice that concern the
release or investigation.

23.4 Indemnification. Tenant shall, at Tenant’s sole expense and with counsel
reasonably acceptable to Landlord, indemnify, defend, and hold harmless Landlord
and Landlord’s Parties with respect to all losses arising out of or resulting
from the release of any Hazardous Material in or about the Premises, Building or
Project, or the violation of any Environmental Law, by Tenant or Tenant’s
employees, agents, contractors, or invitees. This indemnification includes all
losses, liabilities, obligations, penalties, fines, claims, actions (including
remedial or enforcement actions of any kind and administrative or judicial
proceedings, orders, or judgments), damages and costs (including attorney,
consultant, and expert fees and expenses) resulting from the release or
violation. This indemnification provided in this Section 23.4 shall survive the
expiration or termination of this Lease.

23.5 Remediation Obligations; Tenant’s Rights on Cleanup by Landlord. If the
presence of any Hazardous Material brought onto the Premises, Building or
Project by either Landlord or Tenant or by Landlord’s or Tenant’s employees,
agents, contractors, or invitees results in contamination of the Premises,
Building or Project, that party shall promptly take all necessary actions, at
the party’s sole expense, to return the Premises, Building or Project to the
condition that existed before the introduction of such Hazardous Material.
Tenant shall first obtain Landlord’s approval of the proposed remedial action,
which shall not be unreasonably withheld or delayed. This provision does not
limit the indemnification obligations set forth in Section 23.4 above.

If Landlord undertakes any cleanup, detoxification, or similar action, whether
or not required by any government or quasi-government agency, as a result of the
presence, release, or disposal in or about the Building or Project of any
Hazardous Material, and that action requires that Tenant be denied access to the
Premises or Tenant is otherwise unable to conduct its business on the Premises
for a period of greater than twenty-four (24) hours, Base Rent shall be abated
for the period that Tenant is unable to conduct its business at the Premises.
Subject to Sections 4.2.7.2(xvii) and 23.4, the costs of any Hazardous Material
testing, cleanup or remediation undertaken by Landlord during the Lease Term
shall be borne by Landlord, shall not be included in Operating Expenses and
shall not be the obligation of Tenant.

23.6 Definition of “Hazardous Material”. As used herein, the term “Hazardous
Material” shall mean any hazardous or toxic substance, material, or waste that
is or becomes regulated by the United States, the State of California, or any
local government authority having jurisdiction over the Building or Project.
Hazardous Material includes:

23.6.1 Any “hazardous substance,” as that term is defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (42
United States Code Sections 9601-9675);

23.6.2 “Hazardous waste,” as that term is defined in the Resource Conservation
and Recovery Act of 1976 (RCRA) (42 United States Code Sections 6901-6992k);

23.6.3 Any pollutant, contaminant, or hazardous, dangerous, or toxic chemical,
material, or substance, within the meaning of any other applicable federal,
state, or local law, regulation, ordinance, or requirement (including consent
decrees and administrative orders imposing liability or standards of conduct
concerning any hazardous, dangerous, or toxic waste, substance, or material, now
or hereafter in effect);

23.6.4 Petroleum products (except as provided in Section 8.8);

23.6.5 Radioactive material, including any source, special nuclear, or byproduct
material as defined in 42 United States Code Sections 2011-2297g-4;

23.6.6 Asbestos in any form or condition; and

23.6.7 Polychlorinated biphenyls (PCBS) and substances or compounds containing
PCBS.

ARTICLE 24

LATE CHARGES

If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord’s designee within five (5) days after Tenant’s
receipt of written notice from Landlord that said amount is due, then Tenant
shall pay to Landlord a late charge equal to five percent (5%) of the overdue
amount plus any reasonable attorneys’ fees incurred by Landlord by reason of
Tenant’s failure to pay Rent and/or other charges when due hereunder. The late
charge shall be deemed Additional Rent and the right to require it shall be in
addition to all of Landlord’s other rights and remedies hereunder or at law and
shall not be construed as liquidated damages or as limiting Landlord’s remedies
in any manner. In addition to the late charge described above, any Rent or other
amounts owing hereunder which are not paid within ten (10) days after the date
they are due shall bear interest from the date when due until paid at a rate per
annum equal to ten percent (10%) or, if less, the highest rate permitted by
applicable law.

 

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ARTICLE 25

LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT

25.1 Landlord’s Cure. All covenants and agreements to be kept or performed by
Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and
expense and without any reduction of Rent, except to the extent, if any,
otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under Section 19.1.2, above, unless a specific time period is
otherwise stated in this Lease, Landlord may, but shall not be obligated to,
make any such payment or perform any such act on Tenant’s part without waiving
its rights based upon any default of Tenant and without releasing Tenant from
any obligations hereunder.

25.2 Tenant’s Reimbursement. Except as may be specifically provided to the
contrary in this Lease, Tenant shall pay to Landlord, upon delivery by Landlord
to Tenant of statements therefor: (i) sums equal to expenditures reasonably made
and obligations incurred by Landlord in connection with the remedying by
Landlord of Tenant’s defaults pursuant to the provisions of Section 25.1;
(ii) sums equal to all losses, costs, liabilities, damages and expenses referred
to in Article 10 of this Lease; and (iii) sums equal to all expenditures made
and obligations incurred by Landlord in collecting or attempting to collect the
Rent or in enforcing or attempting to enforce any rights of Landlord under this
Lease or pursuant to law, including, without limitation, all reasonable legal
fees and other amounts so expended. Tenant’s obligations under this Section 25.2
shall survive the expiration or sooner termination of the Lease Term.

ARTICLE 26

ENTRY BY LANDLORD

Landlord reserves the right at all reasonable times and upon reasonable notice
to Tenant (which shall be a minimum of 24 hours prior notice except in the case
of an emergency) to enter the Premises to (i) inspect them; (ii) show the
Premises to prospective purchasers, or to current or prospective mortgagees,
ground or underlying lessors or insurers, or (during the last 9 months of the
Lease Term as such Lease Term may be extended) to prospective tenants;
(iii) post notices of nonresponsibility; or (iv) alter, improve or repair the
Premises or the Building, or for structural alterations, repairs or improvements
to the Building or the Building’s systems and equipment. Notwithstanding
anything to the contrary contained in this Article 26, Landlord may enter the
Premises at any time during Business Hours and upon reasonable prior notice
(other than regularly scheduled janitorial service which shall not require prior
notice) to (A) perform services required of Landlord, including janitorial
service; (B) take possession due to any breach of this Lease in the manner
provided herein; and (C) perform any covenants of Tenant which Tenant fails to
perform. Landlord may make any such entries without the abatement of Rent,
except as otherwise provided in this Lease, and may take such reasonable steps
as required to accomplish the stated purposes. Tenant hereby waives any claims
for damages (other than personal injury and property damage to the extent caused
by Landlord’s negligence or willful misconduct in connection with an entry by
Landlord into the Premises) or for any injuries or inconvenience to or
interference with Tenant’s business, lost profits, any loss of occupancy or
quiet enjoyment of the Premises, and any other loss occasioned thereby. For each
of the above purposes, Landlord shall at all times have a key with which to
unlock all the doors in the Premises, excluding Tenant’s vaults, safes and
special security areas designated in advance by Tenant. In an emergency,
Landlord shall have the right to use any means that Landlord may deem proper to
open the doors in and to the Premises. Any entry into the Premises by Landlord
in the manner hereinbefore described shall not be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an actual or
constructive eviction of Tenant from any portion of the Premises.
Notwithstanding anything contained in this Article 26, Tenant may require that
Landlord be accompanied by a representative of Tenant for any such entry into
the Premises other than for regularly scheduled janitorial service. No provision
of this Lease shall be construed as obligating Landlord to perform any repairs,
alterations or decorations except as otherwise expressly agreed to be performed
by Landlord in this Lease.

ARTICLE 27

TENANT PARKING

27.1 Parking In General. Tenant shall have the right, but not the obligation, to
rent from Landlord, commencing on the Lease Commencement Date, up to the amount
of parking spaces set forth in Section 9 of the Summary, on a monthly basis
throughout the Lease Term, which parking spaces shall pertain to the Project
parking structure (“Parking Structure”). The location of the reserved parking
spaces shall be mutually agreed upon by Landlord and Tenant prior to Lease
execution. Tenant shall pay Landlord for automobile parking spaces at the time
Base Rent is due on a monthly basis at the prevailing rate set forth in
Section 9 of the Summary. In addition, Tenant shall be responsible for the full
amount of any taxes imposed by any governmental authority in connection with the
renting of such parking spaces by Tenant or the use of the Parking Structure by
Tenant. Tenant’s continued right to use the parking spaces is conditioned upon
Tenant abiding by all rules and regulations which are reasonably prescribed from
time to time for the orderly operation and use of the Parking Structure
including any sticker or other identification system established by Landlord,
Tenant’s cooperation in seeing that Tenant’s employees and visitors also comply
with such rules and regulations and Tenant not being in default under this
Lease.

27.2 Landlord Reservations. So long as Tenant’s use is not adversely and
materially affected (and it is deemed not to be adversely and materially
affected if reasonably comparable and comparably proximate substitute parking is
made available), Landlord specifically reserves the right to change the size,
configuration, design, layout and all other aspects of the Parking Structure at
any time and Tenant acknowledges and agrees that Landlord may, without incurring
any liability to Tenant and without any abatement of Rent under this Lease, from
time to time, close-off or restrict access to the Parking Structure for purposes
of permitting or facilitating any such construction, alteration or improvements.
Landlord may delegate its responsibilities hereunder to a parking operator in
which case such parking operator shall operate the Parking Structure and any
other parking facilities at the Project in a first class manner and shall have
all the rights of control attributed hereby to the Landlord. The parking spaces
used by Tenant

 

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pursuant to this Article 27 are provided to Tenant solely for use by Tenant’s
own personnel and such spaces may not, except in the case of a Transfer approved
by Landlord pursuant to Article 14 above, be transferred, assigned, subleased or
otherwise alienated by Tenant without Landlord’s prior approval. Notwithstanding
anything to the contrary contained in this Lease, Landlord shall at all times
provide the parking to be provided to Tenant throughout the Lease Term and in
all events the parking for the Project shall be not less than that required by
Applicable Law and Landlord shall not grant parking in excess of 3.75 parking
spaces per 1,000 rentable square foot on average as among all tenants of the
Building and the Project.

27.3 Visitor Validations. Tenant may validate visitor parking by such method or
methods as Landlord may establish, at the validation rate from time to time
generally applicable to visitor parking.

27.4 Access Card Recognition. Landlord shall maintain an access card recognition
system for the Parking Structure, Building and Building elevator. The number of
parking facility access cards available to Tenant shall equal the number of
parking spaces rented by Tenant. Effective on the first day of a calendar month,
on at least thirty (30) days’ prior notice to Landlord, Tenant may decrease or
increase the number of parking spaces which it rents in the Parking Structure
subject to the maximum number of parking spaces as set forth in the Summary.
Tenant shall pay the deposit established by Landlord for the Building and
Parking Structure access cards which deposit shall initially be Fifteen Dollars
($15) per card.

ARTICLE 28

MISCELLANEOUS PROVISIONS

28.1 Terms; Captions. The words “Landlord” and “Tenant” as used herein shall
include the plural as well as the singular. The necessary grammatical changes
required to make the provisions hereof apply either to corporations or
partnerships or individuals, men or women, as the case may require, shall in all
cases be assumed as though in each case fully expressed. The captions of
Articles and Sections are for convenience only and shall not be deemed to limit,
construe, affect or alter the meaning of such Articles and Sections.

28.2 Binding Effect. Subject to all other provisions of this Lease, each of the
covenants, conditions and provisions of this Lease shall extend to and shall, as
the case may require, bind or inure to the benefit not only of Landlord and of
Tenant, but also of their respective heirs, personal representatives, successors
or assigns, provided this clause shall not permit any assignment by Tenant
contrary to the provisions of Article 14 of this Lease.

28.3 No Air Rights. No rights to any view or to light or air over any property,
whether belonging to Landlord or any other person, are granted to Tenant by this
Lease. If at any time any windows of the Premises are temporarily darkened or
the light or view therefrom is temporarily obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant’s obligations under this Lease.

28.4 Intentionally Omitted.

28.5 Transfer of Landlord’s Interest. Tenant acknowledges that Landlord has the
right to transfer all or any portion of its interest in the Project or Building
and in this Lease, and Tenant agrees that in the event of any such transfer,
Landlord shall automatically be released from all liability under this Lease
arising from and after the date of such transfer and Tenant agrees to look
solely to such transferee for the performance of Landlord’s obligations
hereunder after the date of transfer and such transferee shall be deemed to have
fully assumed and be liable for all obligations of this Lease to be performed by
Landlord from and after the date of such transfer, including the return of any
Security Deposit, and Tenant shall attorn to such transferee.

28.6 Prohibition Against Recording. Neither this Lease, nor any memorandum,
affidavit or other writing with respect thereto, shall be recorded by Tenant or
by anyone acting through, under or on behalf of Tenant.

28.7 Landlord’s Title. Landlord’s title is and always shall be paramount to the
title of Tenant. Nothing herein contained shall empower Tenant to do any act
which can, shall or may encumber the title of Landlord.

28.8 Relationship of Parties. Nothing contained in this Lease shall be deemed or
construed by the parties hereto or by any third party to create the relationship
of principal and agent, partnership, joint venturer or any association between
Landlord and Tenant.

28.9 Application of Payments. Landlord shall have the right to apply payments
received from Tenant pursuant to this Lease, regardless of Tenant’s designation
of such payments, to satisfy any obligations of Tenant hereunder, in such order
and amounts as Landlord, in its sole discretion, may elect.

28.10 Time of Essence. Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor.

28.11 Partial Invalidity. If any term, provision or condition contained in this
Lease shall, to any extent, be invalid or unenforceable, the remainder of this
Lease, or the application of such term, provision or condition to persons or
circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.

28.12 No Warranty. In executing and delivering this Lease, Tenant has not relied
on any representations, including, but not limited to, any representation as to
the amount of any item comprising Additional Rent or the amount of the
Additional Rent in the aggregate or that Landlord is furnishing the same
services to other tenants, at all, on the same level or on the same basis, or
any warranty or any statement of Landlord which is not set forth herein or in
one or more of the exhibits attached hereto.

 

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28.13 Exculpation. The liability of Landlord or the Landlord Parties to Tenant
for any default by Landlord under this Lease or arising in connection herewith
or with Landlord’s operation, management, leasing, repair, renovation,
alteration or any other matter relating to the Project or the Premises shall be
limited solely and exclusively to an amount which is equal to the interest of
Landlord in the Building; provided, however, that in no event shall such
liability (i) extend to any sales or insurance proceeds received by Landlord or
the Landlord Parties in connection with the Project, Building or Premises or
(ii) exceed Ten Million Dollars ($10,000,000). Neither Landlord nor any of the
Landlord Parties shall have any personal liability therefor, and Tenant hereby
expressly waives and releases such personal liability on behalf of itself and
all persons claiming by, through or under Tenant. The limitations of liability
contained in this Section 28.13 shall inure to the benefit of Landlord’s and the
Landlord Parties’ present and future partners, beneficiaries, officers,
directors, trustees, shareholders, agents and employees, and their respective
partners, heirs, successors and assigns. Under no circumstances shall any
present or future partner of Landlord (if Landlord is a partnership) or trustee
or beneficiary (if Landlord or any partner of Landlord is a trust) have any
liability for the performance of Landlord’s obligations under this Lease.
Notwithstanding any contrary provision herein, neither Landlord nor the Landlord
Parties shall be liable under any circumstances for injury or damage to, or
interference with, Tenant’s business, including but not limited to, loss of
profits, loss of rents or other revenues, loss of business opportunity, loss of
goodwill or loss of use, in each case, however occurring.

28.14 Entire Agreement. It is understood and acknowledged that there are no oral
agreements between the parties hereto affecting this Lease and this Lease
constitutes the parties’ entire agreement with respect to the leasing of the
Premises and supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Landlord to Tenant with respect to the subject
matter thereof, and none thereof shall be used to interpret or construe this
Lease. None of the terms, covenants, conditions or provisions of this Lease can
be modified, deleted or added to except in writing signed by the parties hereto.

28.15 Right to Lease. Landlord reserves the absolute right to effect such other
tenancies in the Project as Landlord in the exercise of its sole business
judgment shall determine to best promote the interests of the Building or
Project. Tenant does not rely on the fact, nor does Landlord represent, that any
specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project.

28.16 Force Majeure. An actual delay or stoppage resulting from fire,
earthquake, explosion, flood, hurricane, the elements, acts of God or the public
enemy, war, invasion, insurrection, rebellion, riots, industry-wide labor
strikes or lock-outs (which objectively preclude Landlord or Tenant from
obtaining from any reasonable source, labor or substitute materials at a
reasonable cost necessary for performing its respective obligations hereunder),
or governmental acts, and other causes beyond the reasonable control of the
party obligated to perform, except with respect to the obligations imposed with
regard to Rent and other charges to be paid by Tenant pursuant to this Lease
(unless such events are of a nature as to preclude the transfer of funds on a
national or regional basis) (collectively, a “Force Majeure”), notwithstanding
anything to the contrary contained in this Lease, shall excuse the performance
of such party for a period equal to any such prevention, delay or stoppage and,
therefore, if this Lease specifies a time period for performance of an
obligation of either party, that time period shall be extended by the period of
any delay in such party’s performance caused by a Force Majeure.

28.17 Intentionally Omitted.

28.18 Notices. All notices, demands, statements, designations, approvals or
other communications (collectively, “Notices”) given or required to be given by
either party to the other hereunder or by law shall be in writing, shall be
(A) sent by United States certified or registered mail, postage prepaid, return
receipt requested (“Mail”), (B) transmitted by facsimile, if such facsimile is
promptly followed by a Notice sent by Mail, or (C) delivered by a nationally
recognized overnight courier with verification of delivery requested. Any Notice
shall be sent, transmitted, or delivered, as the case may be, to Tenant at the
appropriate address set forth in Section 10 of the Summary, or to such other
place as Tenant may from time to time designate in a Notice to Landlord, or to
Landlord at the addresses set forth below, or to such other places as Landlord
may from time to time designate in a Notice to Tenant. Any Notice will be deemed
given (i) three (3) days after the date it is posted if sent by Mail, (ii) the
date the facsimile is transmitted if transmitted before 5:00 p.m. Pacific Time
on a business day, otherwise on the next business day, or (iii) the date the
overnight courier delivery is made. As of the date of this Lease, any Notices to
Landlord must be sent, transmitted, or delivered, as the case may be, to the
following addresses:

Lakeshore Towers Limited Partnership Phase I

Attention: Building Manager

18101 Von Karman Avenue, Suite 1220

Irvine, CA 92612

and

LTLP I Corp.

c/o Skipper Realty Corporation

Attention: Asset Manager

2029 Century Park East, Suite 2000

Los Angeles, CA 90067

28.19 Joint and Several. If there is more than one Tenant, the obligations
imposed upon Tenant under this Lease shall be joint and several.

28.20 Authority. If Tenant is a corporation, trust or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. In such event, Tenant shall, within ten (10) days after
execution of this Lease, deliver to Landlord satisfactory evidence of such
authority and, if a corporation, upon demand by Landlord, also deliver to
Landlord satisfactory evidence of (i) good standing in Tenant’s state of

 

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incorporation and (ii) qualification to do business in California. Landlord
hereby represents and warrants that Landlord is a duly formed and existing
entity qualified to do business in California and that Landlord has full right
and authority to execute and deliver this Lease and that each person signing on
behalf of Landlord is authorized to do so.

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

28.22 GOVERNING LAW; WAIVER OF TRIAL BY JURY. This Lease shall be construed and
enforced in accordance with the laws of the State of California. IN ANY ACTION
OR PROCEEDING ARISING THEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE
JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, (II) SERVICE
OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN THE INTEREST
OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR
SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
LEASE, THE RELATIONSHIP OF 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. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY PROCEEDINGS OR ACTION FOR
NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT SHALL NOT INTERPOSE ANY
COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH COUNTERCLAIM SHALL BE
MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE RELEGATED TO AN
INDEPENDENT ACTION AT LAW.

28.23 Submission of Lease. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of, option for or option
to lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.

28.24 Brokers. Landlord and Tenant hereby warrant to each other that they have
had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease, excepting only the real estate brokers or agents
specified in Section 12 of the Summary (the “Brokers”), and that they know of no
other real estate broker or agent who is entitled to a commission in connection
with this Lease. Each party agrees to indemnify and defend the other party
against and hold the other party harmless from any and all claims, demands,
losses, liabilities, lawsuits, judgments, costs and expenses (including without
limitation reasonable attorneys’ fees) with respect to any leasing commission or
equivalent compensation alleged to be owing on account of any dealings with any
real estate broker or agent, other than the Brokers, occurring by, through, or
under the indemnifying party. Landlord agrees (i) to pay a commission to
Tenant’s Broker equal to Four Hundred Seventy-Seven Thousand Seven Hundred
Ninety-Five and no/100 Dollars ($477,795.00) and (ii) to pay a commission to
Landlord’s Broker pursuant to a separate agreement. The commission payable to
Tenant’s Broker shall be due one-half (1/2) upon execution and delivery of both
the Lease by Landlord and Tenant and the MetLife SNDA by Landlord, Tenant and
MetLife and, so long as Tenant is not then in default under this Lease, the
remainder shall be due on the later of the date Tenant takes possession of the
Premises for the conduct of its business or the Lease Commencement Date.

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

28.26 Project or Building Name and Signage. Landlord shall have the right at any
time to change the name of the Project or Building and to install, affix and
maintain any and all signs on the exterior and on the interior of the Project or
Building as Landlord may, in Landlord’s sole discretion, desire. Tenant shall
not use the words “Lakeshore” or 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, without the prior written consent of
Landlord.

28.27 Counterparts. This Lease may be executed in counterparts with the same
effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.

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

28.29 Development of the Project.

28.29.1 Subdivision. Landlord reserves the right to further subdivide all or a
portion of the Project. Tenant agrees to execute and deliver, upon demand by
Landlord and in the form requested by Landlord, any additional documents needed
to conform this Lease to the circumstances resulting from such subdivision.

28.29.2 The Other Improvements. If portions of the Project or property adjacent
to the Project (collectively, the “Other Improvements”) are owned by an entity
other than Landlord, Landlord, at its option, may enter into an agreement with
the owner or owners of any or all of the Other Improvements to provide (i) for
reciprocal rights of access and/or use of the Project and the Other
Improvements, (ii) for the common management, operation, maintenance,
improvement and/or repair of all or any portion of the Project and the Other
Improvements, provided that Tenant’s rights under this Lease are not materially
impaired, (iii) for the allocation of a portion of the Direct Expenses to the
Other Improvements and the operating expenses and taxes for the Other
Improvements to the Project, and (iv) for the use or improvement of the Other
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improvement, construction, and/or excavation of the Other Improvements and/or
the Project. Nothing contained herein shall be deemed or construed to limit or
otherwise affect Landlord’s right to convey all or any portion of the Project or
any other of Landlord’s rights described in this Lease.

28.29.3 Construction of Project and Other Improvements. Tenant acknowledges that
portions of the Project and/or the Other Improvements may be under construction
following Tenant’s occupancy of the Premises, and that such construction may
result in levels of noise, dust, obstruction of access, etc. which are in excess
of that present in a fully constructed project. Tenant hereby waives any and all
rent offsets or claims of constructive eviction which may arise in connection
with such construction.

28.30 Building Renovations. It is specifically understood and agreed that
Landlord has no obligation and has made no promises to alter, remodel, improve,
renovate, repair or decorate the Premises, Building, or any part thereof and
that no representations respecting the condition of the Premises or the Building
have been made by Landlord to Tenant except as specifically set forth in this
Lease or in the Tenant Work Letter. However, Tenant hereby acknowledges that
Landlord is currently renovating or may during the Lease Term renovate, improve,
alter, or modify (collectively, the “Renovations”) the Project, the Building
and/or the Premises. Except for (i) emergencies, or (ii) repairs, alterations,
improvements or additions required by governmental or quasi governmental
authorities or court order or decree, such Renovations shall be performed in a
manner so as not to materially interfere with Tenant’s access to the Premises or
Parking Structure. Subject to the forgoing, Tenant hereby agrees that such
Renovations shall in no way constitute a constructive eviction of Tenant nor
entitle Tenant to any abatement of Rent. Landlord shall have no responsibility
and shall not be liable to Tenant for any injury to or interference with
Tenant’s business arising from the Renovations, nor shall Tenant be entitled to
any compensation or damages from Landlord for loss of the use of the whole or
any part of the Premises or of Tenant’s personal property or improvements
resulting from the Renovations, or for any inconvenience or annoyance occasioned
by such Renovations.

28.31 No Violation. Tenant hereby warrants and represents that neither its
execution of nor performance under this Lease shall cause Tenant to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which Tenant is bound, and Tenant shall protect, defend, indemnify and hold
Landlord harmless against any claims, demands, losses, damages, liabilities,
costs and expenses, including, without limitation, reasonable attorneys’ fees
and costs, arising from Tenant’s breach of this warranty and representation.

28.32 No Discrimination. Tenant covenants by and for itself, its successors and
assigns, and all persons claiming under or through them, and this Lease is made
and accepted upon and subject to the following conditions: That there shall be
no discrimination against or segregation of any person or group of persons, on
account of sex, marital status, age, race, color, religion, creed, national
origin or ancestry, in the leasing, subleasing, renting, transferring, use,
occupancy, tenure or enjoyment of the Premises herein leased, nor shall Tenant
itself, or any person claiming under or through it, establish or permit such
practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenant’s lessees, sublessees,
subtenants or vendees in the Premises.

28.33 OFAC Compliance. Tenant represents and warrants that (a) Tenant and each
person or entity owning an interest in Tenant is (i) not currently identified on
the Specially Designated Nationals and Blocked Persons List maintained by the
Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and/or on
any other similar list maintained by OFAC pursuant to any authorizing statute,
executive order or regulation (collectively, the “List”), and (ii) not a person
or entity with whom a citizen of the United States is prohibited to engage in
transactions by any trade embargo, economic sanction, or other prohibition of
United States law, regulation, or Executive Order of the President of the United
States, (b) none of the funds or other assets of Tenant constitute property of,
or are beneficially owned, directly or indirectly, by any Embargoed Person (as
hereinafter defined), (c) no Embargoed Person has any interest of any nature
whatsoever in Tenant (whether directly or indirectly), (d) none of the funds of
Tenant have been derived from any unlawful activity with the result that the
investment in Tenant is prohibited by law or that this Lease is in violation of
law, and (e) Tenant has implemented procedures, and will consistently apply
those procedures, to ensure the foregoing representations and warranties remain
true and correct at all times. The term “Embargoed Person” means any person,
entity or government subject to trade restrictions under U.S. law, including but
not limited to, the International Emergency Economic Powers Act, 50 U.S.C.A. §
1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
Executive Orders or regulations promulgated thereunder with the result that the
investment in Tenant is prohibited by law or Tenant is in violation of law.

Tenant covenants and agrees (a) to comply with all requirements of law relating
to money laundering, anti-terrorism, trade embargos economic sanctions, now or
hereafter in effect, (b) to immediately notify Landlord in writing if any of the
representations, warranties or covenants set forth in this Section 28.33 are no
longer true or have been breached or if Tenant has a reasonable basis to believe
that they may no longer be true or have been breached, (c) not to use funds from
any “Prohibited Person” (as such term is defined in the September 24, 2001
Executive Order Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism) to make any payment due to
Landlord under this Lease and (d) at the request of Landlord, to provide such
information as may be requested by Landlord to determine Tenant’s compliance
with the terms hereof.

Tenant hereby acknowledges and agrees that Tenant’s inclusion on the List at any
time prior to the expiration or earlier termination of this Lease shall be a
material default of this Lease. Notwithstanding anything to the contrary, Tenant
shall not permit the Premises or any portion thereof to be used or occupied by
any person or entity on the List or by any Embargoed Person (on a permanent,
temporary or transient basis), and any such use or occupancy of the Premises by
any such person or entity shall be a material default of this Lease.

28.34 Definition of Landlord. The term “Landlord,” as used in this Lease, so far
as covenants or obligations on the part of Landlord are concerned, shall be
limited to mean and include only the owner or owners, at the time such covenant
or obligation is to be performed, of the Building or the lessees under any
ground lease of the Building, if any.

28.35 Tenant Representation With Respect to the General Electric Pension Trust.
Tenant is not aware of any ownership relationship between Tenant and the General
Electric Pension Trust or its affiliates, except to the extent Tenant is a
publicly traded company and the General Electric Pension Trust or its affiliates
may own shares of Tenant’s stock.

 

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28.36 Reasonableness. Except where a party is expressly given the right to
consent to any matter in its sole or absolute discretion, and except for matters
which (1) could have an adverse effect on the structural integrity of the
Building Structure, (2) could have an adverse effect on the Building Systems, or
(3) could have an effect on the exterior appearance of the Building and/or the
Project (whereupon in each such case Landlord’s duty is to act in good faith and
in compliance with the terms of this Lease), any time the consent of Landlord or
Tenant is required, such consent shall not be unreasonably withheld, conditioned
or delayed. Whenever this Lease grants Landlord or Tenant the right to take
action, exercise discretion, establish rules and regulations or make allocations
or other determinations (other than decisions to exercise expansion,
contraction, cancellation, termination or renewal options), Landlord and Tenant
shall act reasonably and in good faith and take no action which might result in
the frustration of the reasonable expectations of a sophisticated tenant or
landlord concerning the benefits to be enjoyed hereunder.

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

 

“Landlord”: LAKESHORE TOWERS LIMITED PARTNERSHIP PHASE I, a California limited
partnership   SKIPPER REALTY CORPORATION, a Delaware corporation   Sole General
Partner   By:   /s/ Robert Jones   Name:   Robert Jones   Title:   Vice
President “Tenant”: EPICOR SOFTWARE CORPORATION, a Delaware corporation By:  
/s/ L. George Klaus Name:   L. George Klaus Title:   CEO By:   /s/ Michael
Pietrini Name:   Michael Pietrini Title:   CFO

 

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EXHIBIT A-1

LAKESHORE TOWERS

OUTLINE OF PREMISES – 15TH FLOOR

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EXHIBIT A-2

LAKESHORE TOWERS

OUTLINE OF PREMISES – 16TH FLOOR

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EXHIBIT A-3

LAKESHORE TOWERS

OUTLINE OF PREMISES – 17TH FLOOR

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EXHIBIT A-4

LAKESHORE TOWERS

STORAGE SPACE

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EXHIBIT A-5

LAKESHORE TOWERS

GENERATOR LOCATION

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EXHIBIT B

LAKESHORE TOWERS

TENANT WORK LETTER

(Tenant Build)

This Tenant Work Letter shall set forth the terms and conditions relating to the
construction of the tenant improvements in the Premises. This Tenant Work Letter
is essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Tenant Work Letter
to Articles or Sections of “this Lease” shall mean the relevant portion of
Articles 1 through 29 of the Office Lease to which this Tenant Work Letter is
attached as Exhibit B and of which this Tenant Work Letter forms a part, and all
references in this Tenant Work Letter to Sections of “this Tenant Work Letter”
shall mean the relevant portion of Sections 1 through 6 of this Tenant Work
Letter.

SECTION 1

DELIVERY OF THE PREMISES

Promptly following surrender of the Premises by the existing tenant, Landlord
and Tenant shall conduct a joint walk through of the Premises to confirm the
condition of the Premises. In any event, Landlord shall deliver the Premises
free and clear of all furniture, fixtures and equipment of the existing tenant,
in broom clean condition with all Base Building (as defined in this Lease)
elements of the Premises as of the date of delivery, in good condition and
working order and, to the extent necessary to allow Tenant to legally occupy the
Premises for general office use, in compliance with all applicable building
codes and other governmental laws, ordinances and regulations including without
limitation the Americans with Disabilities Act of 1990, as amended (“ADA”),
which were enacted prior to the construction of the Building, and with such
items as are identified by Landlord and Tenant in the joint walk through of the
Premises corrected or to be corrected by Landlord at Landlord’s sole cost during
the construction of the Tenant Improvements (as described below) as provided in
this Tenant Work Letter except to the extent that the construction of the Tenant
Improvements would make such corrective work unnecessary or would otherwise be
included in the construction of the Tenant Improvements.

SECTION 2

TENANT IMPROVEMENTS

2.1 Tenant Improvements/Base Rent Credit. Landlord and Tenant acknowledge and
agree that, except as expressly provided herein, Tenant shall fund all costs
relating to the initial design and construction of Tenant’s improvements which
are permanently affixed to the Premises (the “Tenant Improvements”). In exchange
for Tenant funding the cost of the Tenant Improvement Allowance Items (as
defined below), Landlord shall provide to Tenant a credit to offset Base Rent
(“Base Rent Credit”). Such Base Rent Credit shall equal the sum of (i) the
amount paid by Tenant on account of the Tenant Improvement Allowance Items plus
(ii) an annual interest factor of eight percent (8%) on the Tenant Improvement
Allowance Items amount outstanding from time to time (i.e., not yet applied as a
credit against Base Rent); provided, however, the total of such Base Rent Credit
shall not exceed the sum of (y) Three Million Seven Hundred Fifty Two Thousand
Nine Hundred Twenty Five Dollars ($3,752,915.00) (which is 68,235 (the rentable
square footage of the Premises) multiplied by Fifty Five Dollars ($55.00)) plus
(z) such eight percent (8%) interest factor. Landlord shall apply the annual
eight percent (8%) interest rate to the Tenant Improvement Allowance Items
commencing on the Base Rent Commencement Date (as defined below) and Tenant
shall receive such credit against Base Rent until the Base Rent Credit has been
applied in full to offset Base Rent. An example of the application of the Base
Rent Credit assuming a Rent Commencement Date of August 1, 2011 and an
expenditure by Tenant of Three Million Seven Hundred Fifty Two Thousand Nine
Hundred Twenty Five Dollars ($3,752,915.00) on account of Tenant Improvement
Allowance Items is attached hereto at Schedule 1. For purposes of the Base Rent
Credit, the “Rent Commencement Date” shall be deemed to be August 1, 2011
subject to adjustment pursuant to Section 5 below.

2.2 Tenant Improvement Allowance Items.

2.2.1 Tenant Improvement Allowance Items Definition. For purposes of calculating
the Base Rent Credit, the “Tenant Improvement Allowance Item(s)” shall include
only the following items and costs paid by Tenant:

2.2.1.1 Payment of all fees and costs of the Architect/Space Planner and all
Engineers (both as defined below);

2.2.1.2 The payment of all plan check, permit and license fees and costs
relating to demolition and construction of the Tenant Improvements;

2.2.1.3 All costs of construction of the Tenant Improvements, including, without
limitation, demolition and disposal of all existing tenant improvements in the
Premises, testing and inspection costs, trash removal costs, and contractors’
fees and general conditions;

2.2.1.4 The cost of any changes anywhere in the Base Building or the floors of
the Building on which the Premises is located, when such changes are required by
the Construction Documents (including if such changes are due to the fact that
the Premises is vacant) or to comply with applicable governmental regulations or
building codes, including ADA (collectively, “Codes”), such cost to include all
direct architectural and/or engineering fees and expenses incurred in connection
therewith, provided that if such costs for compliance with Codes pertains to any
elements of the Base Building (as defined in the Lease) or due to any structural
or latent defects in the Building or any Hazardous Materials in the Building in
violation of Environmental Laws, then the costs thereof shall be borne by
Landlord and shall not be part of the Tenant Improvement Allowance Items;

 

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2.2.1.5 The cost of any changes to the Construction Documents or Tenant
Improvements required by Codes and not attributable to any Base Building
non-compliance with Codes which were enacted prior to the construction of the
Building or structural or latent defects in the Building or any Hazardous
Materials in the Building in violation of Environmental Laws;

2.2.1.6 Sales and use taxes and Title 24 fees;

2.2.1.7 The cost of cable and other telecommunications lines installed as part
of the Tenant Improvements, but specifically excluding any costs for Tenant’s
telephone equipment or service;

2.2.1.8 Tenant’s Signs and Tenant’s sign panels for Tenant’s name on the
Monument; and

2.2.1.9 All other costs expended by Tenant and reasonably approved by Landlord
in connection with the construction of the Tenant Improvements. Without limiting
the foregoing, Tenant Improvement Allowance Items may include up to Three
Hundred Forty-One Thousand One Hundred Seventy-Five Dollars ($341,175.00) (which
is 68,235 (the rentable square footage of the Premises) multiplied by Five
Dollars ($5.00)) for furniture and supplemental HVAC units for the Premises.

Landlord shall not charge Tenant for its review of any matters subject to
Landlord’s approval or disapproval hereunder. Landlord shall not charge Tenant
for use of freight elevators, access to loading docks, utilities, restrooms
(provided Tenant and Tenant’s Agents (as defined below) shall have access only
to the restrooms within the Premises), or temporary electricity or HVAC during
the construction of the Tenant Improvements and Tenant’s move into the Premises.
Immediately upon execution of the Lease and provided Tenant delivers to Landlord
certificates of insurance evidencing the insurance required to be carried by
Tenant under this Lease, Landlord shall provide Tenant and Tenant’s Agents
reasonable access to the Premises, use of freight elevator and parking at no
charge in the Parking Structure or elsewhere in reasonable proximity to the
Building for demolition and at all times during construction of the Tenant
Improvements. Landlord may impose reasonable restraints on the hours of
construction with respect to “noisy” work such as shooting wall tracts, floor
coring, ceiling grid hangar shots and similar “noisy” work similar to the
restraints, if any, which Landlord imposes if Landlord were performing the
Tenant Improvement work. Until the Tenant Improvements are completed, Landlord
acknowledges Tenant will require use of the freight elevator for demolition and
debris removal during night hours and for construction in general. Landlord
shall use commercially reasonable efforts to schedule other tenants’ and
janitorial crews’ use of the freight elevator and to cause other tenants and
janitorial crews to use passenger elevators ( to the extent such use is
reasonably feasible given the activities of such other tenants and janitorial
crews) so that Tenant’s demolition and debris removal and construction
activities are not adversely affected. Notwithstanding the foregoing, Tenant
acknowledges that other tenants and janitorial crews may have the need to use
the freight elevator.

2.2.2 Confirmation of Payment and Approval of Tenant Improvement Allowance
Items. During the construction of the Tenant Improvements, Tenant shall provide
Landlord with the following information in order to confirm, among other things,
the amounts advanced by Tenant which Tenant seeks to include as part of the
Tenant Improvement Allowance items for purposes of the Base Rent Credit.

2.2.2.1 Monthly Notices. No later than the 10th day of each calendar month
during the construction of the Tenant Improvements, Tenant shall deliver to
Landlord copies of invoices from Tenant’s general contractor with line item
subcontractor break down for all labor rendered and materials delivered to the
Premises for the previous calendar month.

2.2.2.2 Completion of the Tenant Improvements. The Tenant Improvements shall be
deemed complete upon (i) Tenant or Contractor, as Tenant shall elect, delivering
to Landlord (a) properly executed unconditional mechanics lien releases from all
of Tenant’s Agents in compliance with both California Civil Code
Section 3262(d)(2) and either Section 3262(d)(3) or Section 3262(d)(4), as to
all amounts previously paid by Tenant, (b) an application and certificate for
payment (AIA form G702-1992 or equivalent) signed by the Architect/Space
Planner, (c) a breakdown sheet (AIA form 3703-1992 or equivalent), (d) original
stamped building permit plans, (e) copy of the building permit, (f) original
stamped building permit inspection card with all final sign-offs, (g) a
reproducible copy (in a form as reasonably approved by Landlord) of the “as
built” drawings of the Tenant Improvements, (h) air balance reports, (i) excess
energy use calculations, (j) one year warranty letters from Tenant’s Agents,
(k) manufacturer’s warranties and operating instructions, (l) final punchlist
completed and signed off by Tenant and the Architect/Space Planner, and (m) an
acceptance of the Premises signed by Tenant (collectively, the “Final Closing
Package”).

2.2.2.3 Other Terms. All Tenant Improvement Allowance Items shall be deemed
Landlord’s property under the terms of Section 8.5 of this Lease. Tenant shall
not be required to remove any of the Tenant Improvements upon the Lease
Expiration Date or any earlier termination of the Lease Term; provided, however,
if the Tenant Improvements or any Alteration to the Premises includes an
internal stairwell or stairwells, Tenant shall, at its sole cost, remove the
stairwell(s) and restore the affected area to its original condition (including,
without limitation, restoration of the floor area(s) cut to install the
stairwell(s)) upon Landlord’s election on the earlier of the Lease Expiration
Date, any earlier termination of this Lease, or upon Tenant’s ceasing to lease
all of the floors connected by a stairwell.

2.3 Building Standards. Tenant shall utilize Landlord’s building standard tenant
improvement items (“Building Standards”) or items of equal or higher quality to
assure the consistent quality and appearance of the Building. The Building
Standards are described in Schedule 2. In the preparation of the Final Space
Plan, Construction Documents and Final Construction Documents, all entry doors
and hardware, interior doors and hardware, entry graphics, ceiling systems,
light fixtures within two (2) feet of the curtain wall and lamp color
throughout, demising partitions, life safety systems and perimeter window
coverings and motion sensors shall conform to the Building Standards or such
comparable standard as is reasonably approved by Landlord during

 

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preparation of the Construction Documents as provided below. Subject to
Landlord’s approval, which approval will not be unreasonably withheld and other
than as specified above, Tenant may deviate from the Building Standards as to
partitions, floor coverings, wall finishings, special lighting fixtures, or
other items as to which deviations may be permitted, provided that no deviation
shall be of lesser quality than the Building Standards. Landlord will not
approve of any deviations which (a) do not conform to applicable governmental
regulations or are disapproved by any governmental agency, (b) that require
services or maintenance beyond those required in connection with Building
Standards items unless Tenant pays the excess cost relating thereto directly to
Landlord, (c) that because of fabrication time or other factors would delay the
construction schedule (unless Tenant agrees that such delay is not a Rent
Commencement Date Delay), or (d) that in Landlord’s reasonable opinion are of a
nature or quality that are inconsistent with Landlord’s overall plan or
objectives for the Building.

SECTION 3

CONSTRUCTION DOCUMENTS

3.1 Selection of Architect/Space Planner/Construction Documents. Subject to
Landlord’s approval, which approval shall not be unreasonably withheld,
conditioned or delayed, Tenant shall retain an architect or space planner (the
“Architect/Space Planner”) to prepare the Construction Documents. Subject to
Landlord’s approval, which approval shall not be unreasonably withheld,
conditioned or delayed, Tenant shall retain engineering consultants
(collectively the “Engineer”) to prepare all engineering working drawings and
specifications relating to the structural, mechanical, electrical, plumbing,
HVAC, life safety, and sprinkler work of the Tenant Improvements; provided,
however, for purposes of the mechanical, plumbing and electrical work of the
Tenant Improvements, Tenant shall select from the following approved
contractors: Mechanical: Control Air, ACCO, and K & S Air Conditioning;
Plumbing: Carr Plumbing, D & E Plumbing, and Elite Plumbing; Electrical:
Anderson & Howard Electric, Nazzareno Electric, and Hackney Electric,
respectively, so long as each is available to perform the work during a
commercially reasonable time period at rates that are commercially reasonable in
comparison to similar providers in Orange County, California. The working
drawings, specification and contract documents to be prepared by Architect/Space
Planner and the Engineer hereunder shall be known collectively as the
“Construction Documents.” All Construction Documents shall comply with the
drawing format and specifications as reasonably determined by Landlord, and
shall be subject to Landlord’s reasonable approval. Promptly following execution
of the Lease, Landlord shall provide Tenant and the Architect/Space Planner with
accurate, as-built architectural drawings for the Premises including mechanical,
electrical and plumbing plans and drawings for the Premises. Tenant and
Architect/Space Planner shall verify, in the field, the dimensions and
conditions as shown on the relevant portions of the Base Building plans, and
Tenant and Architect/Space Planner shall be solely responsible for the same, and
Landlord shall have no responsibility in connection therewith. Landlord’s review
of the Construction Documents as set forth in this Section 3 shall be at its
cost and expense and for its sole purpose and shall not imply Landlord’s review
of the same, or obligate Landlord to review the same, for quality, design, Code
compliance or other like matters. Accordingly, notwithstanding that any
Construction Documents are reviewed by Landlord or its space planner, engineers
and consultants, and notwithstanding any advice or assistance which may be
rendered to Tenant by Landlord or Landlord’s space planner, engineers, and
consultants, Landlord shall have no liability whatsoever in connection therewith
and shall not be responsible for any occasions or errors contained in the
Construction Documents, and Tenant’s waiver and indemnity set forth in
Section 10.1 of this Lease shall specifically apply to the Construction
Documents.

3.2 Final Space Plan. Tenant and the Architect/Space Planner shall prepare the
final space plan for Tenant Improvements in the Premises (the “Final Space
Plan”), which Final Space Plan shall include a layout and designation of all
offices, rooms and other partitioning, their intended use, and equipment to be
contained therein, and shall deliver the Final Space Plan to Landlord for
Landlord’s reasonable approval, provided Landlord agrees that Tenant may submit
the Final Space Plan to Landlord for review on a floor by floor basis as same
are completed. Landlord may, within three (3) business days of receipt of each
Final Space Plan submittal, request reasonable clarification or more specific
drawings for special use items not included in such Final Space Plan submittal.
Landlord shall advise Tenant in writing within five (5) business days after
Landlord’s receipt of each Final Space Plan submittal for the Premises of
Landlord’s approval or reasonable disapproval of the same. If Tenant is advised
of Landlord’s reasonable disapproval and the specific and reasonable grounds
therefor, Tenant shall promptly cause the Final Space Plan to be revised to
correct any deficiencies or other matters Landlord may reasonably require and
shall resubmit such Final Space Plan to Landlord for Landlord’s reasonable
approval or disapproval in the same manner and pursuant to the same guidelines
governing Tenant’s initial submission except that Landlord’s response period
shall be shortened from five (5) business days to three (3) business days. The
resubmission process shall continue until Landlord has reasonably approved the
Final Space Plan in accordance with the terms hereof.

3.3 Final Construction Documents. The Architect/Space Planner and the Engineer
shall complete the architectural and engineering drawings and specifications for
the Premises, and the final architectural working drawings in a form which is
complete to allow subcontractors to bid on the work and to obtain all applicable
permits (collectively, the “Final Construction Documents”) and shall submit the
same to Landlord for Landlord’s reasonable approval. Tenant may submit the Final
Construction Documents to Landlord for review on a floor by floor basis as same
are completed. Tenant shall supply Landlord with four (4) copies signed by
Tenant of such Final Construction Documents. Landlord shall advise Tenant in
writing within five (5) business days after Landlord’s receipt of the Final
Construction Documents for the Premises of Landlord’s approval or the specific,
itemized grounds for Landlord’s reasonable disapproval of the same, which shall,
in any event be limited to the Final Construction Documents not being consistent
with the Final Space Plans. If Tenant is advised of Landlord’s reasonable
disapproval and the specific and reasonable grounds therefor, Tenant shall
immediately revise the Final Construction Documents in accordance with such
review and any reasonable disapproval of Landlord in connection therewith as
provided herein. Tenant shall then re-submit the revised Final Construction
Documents to Landlord for Landlord’s approval or reasonable disapproval in the
same manner and pursuant to the same guidelines governing Tenant’s initial
submission except that Landlord’s response period shall be shortened from five
(5) business days to three (3) business days. The resubmission process shall
continue until Landlord has reasonably approved the Final Construction Documents
in accordance with the terms hereof.

3.4 Permits. The Final Construction Documents shall be reasonably approved by
Landlord (the “Approved Construction Documents”) in accordance with Section 3.3
next above prior to the commencement of the construction of the Tenant
Improvements. Prior to commencement of construction of the Tenant Improvements,
Tenant shall cause the Architect/Space Planner to submit the Approved
Construction Documents to the appropriate

 

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municipal authorities for all applicable building permits necessary to allow
Contractor to commence and fully complete the construction of the Tenant
Improvements (the “Permits”). Tenant hereby agrees that neither Landlord nor
Landlord’s consultants shall be responsible for obtaining such permits or any
certificate of occupancy for the Premises and that the obtaining of the same
shall be Tenant’s responsibility, provided Landlord shall cooperate and assist
Tenant in obtaining such permits and approvals as owner of the Building. No
changes, modifications or alterations in the Approved Construction Documents
which affect the exterior appearance of the Building or adversely affect the
mechanical, electrical, structural or fire life safety systems of the Building
may be made without the prior written consent of Landlord, which consent shall
not be unreasonably withheld or delayed beyond three (3) business days.

3.5 Time Deadlines. Landlord and Tenant shall each use its best, good faith,
efforts and all due diligence to cooperate with the Architect/Space Planner, the
Engineer, and each other to complete each party’s obligations during all phases
of preparation of the Construction Documents and throughout the permitting
process so as to allow Tenant to receive the permits to meet the time
requirements set forth herein.

3.6 Landlord Approval. Wherever Landlord has the right to approve Construction
Documents, Final Space Plan or Final Construction Documents, such approval shall
not be unreasonably withheld or delayed. Landlord may withhold its approval of
the Final Space Plan, Construction Documents or Final Construction Documents or
other work requested by Tenant which require work which: (i) exceeds or
materially and adversely affects the structural integrity of the Building, or
any part of the heating, ventilating, air conditioning, plumbing, mechanical,
electrical, communication or other systems of the Building; (ii) is not approved
by the holder of any mortgage or deed of trust encumbering the Building at the
time the work is proposed; (iii) would not be approved by a prudent owner of
property similar to the Building; (iv) violates any agreement which affects the
Building or binds Landlord of which Tenant is made aware; (v) Landlord
reasonably believes will materially increase the cost of operation or
maintenance of any of the systems of the Building where such increased costs
cannot reasonably be accounted for and charged to Tenant; (vi) Landlord
reasonably believes will reduce the market value of the Premises or Project at
the end of the Lease Term; (vii) does not conform to applicable building codes
or is not approved by any governmental authority with jurisdiction over the
Premises; (viii) is not a Building Standards item or an item of equal or higher
quality; (ix) in Landlord’s determination detrimentally affects the uniform
exterior appearance of the Building; or (x) is reasonably and specifically
disapproved by Landlord for any other reason not set forth herein.

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1 Tenant’s Selection of the Contractor.

4.1.1 The Contractor. Subject to Landlord’s approval, which approval shall not
be unreasonably withheld, conditioned or delayed, Tenant shall retain a general
contractor duly licensed by the State of California (the “Contractor”) as
contractor for the construction of the Tenant Improvements. Any change in the
Contractor shall be subject to Landlord’s approval which shall not be
unreasonably withheld, conditioned or delayed. Landlord hereby approves Clune
Construction Company and Howard Building Corporation as the Contractor.

4.1.2 Tenant’s Agents. All contractors, laborers, materialmen, and suppliers
under direct contract with Tenant (such persons and/or entities and the
Contractor to be known collectively as “Tenant’s Agents”) shall be subject to
the reasonable approval of Landlord; provided, however, for purposes of the
mechanical, plumbing and electrical engineering for the Tenant Improvements,
Tenant shall retain or cause the Contractor to retain K-1 (electrical) and TKSC
(mechanical and plumbing), so long as each is available to perform their
respective engineering services during a commercially reasonable time period at
rates that are commercially reasonable in comparison to similar providers in
Orange County, California.

4.2 Construction of Tenant Improvements by Tenant’s Agents.

4.2.1 Construction Contract, Cost Budget. Upon Tenant’s execution of the
construction contract and general conditions with Contractor (the “Contract”),
Tenant shall provide a copy of the Contract to Landlord. If not included in the
Contract, upon request by Landlord, Tenant shall provide Landlord with a
breakdown, by trade, of the final costs to be incurred in connection with the
design and construction of the Tenant Improvements (the “Final Costs”).

4.2.2 Tenant’s Agents.

4.2.2.1 General Conditions for Tenant’s Agents, Landlord’s Agents and Tenant
Improvement Work. Tenant’s and Tenant’s Agents’ construction of the Tenant
Improvements shall comply with the following: (i) the Tenant Improvements shall
be constructed in substantial conformity with the Approved Construction
Documents; (ii) Tenant and Tenant’s Agents shall not, in any way, knowingly,
after notice from Landlord, interfere with, obstruct, or delay, any other work
in the Building; and (iii) Tenant shall abide by all reasonable rules made by
Landlord’s Building manager with respect to the use of freight, loading dock and
service elevators, storage of materials, coordination of work with the
contractors of other tenants, and any other matter in connection with this
Tenant Work Letter, including, without limitation, the construction of the
Tenant Improvements and Tenant shall promptly execute all reasonable documents
including, but not limited to, Landlord’s standard contractor’s rules and
regulations, as Landlord may deem reasonably necessary to evidence or confirm
Tenant’s agreement to so abide; provided, however, Landlord shall employ
commercially reasonable efforts so that Tenant shall receive priority with
respect to all freight elevator usage for delivery of materials and construction
of the Tenant Improvements as among all other tenants of the Building and
Landlord and, upon receiving Tenant’s proposed schedule for its freight elevator
use, Landlord shall provide advance notice to Tenant of any anticipated
scheduling conflicts with respect to freight elevator use and deliveries or
construction in connection with the Tenant Improvements. Landlord’s standard
contractor’s rules and regulations (attached hereto at Schedule 3 and
incorporated herein) shall not interfere with or prohibit Tenant’s construction
of Tenant Improvements or delivery of construction materials, furniture or
equipment to the Premises. Landlord’s agents, employees, contractors, and
subcontractors shall not, in any way, interfere with, obstruct or delay the work
of Tenant’s Agents with respect to the Tenant Improvements work. Notwithstanding
the foregoing provisions of this Section 4.2.2.1, Landlord shall be obligated to
provide to Tenant, at no cost to Tenant, access and use of material hoists and
elevators on a priority basis during normal construction hours.

 

EXHIBIT B – Page 4

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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4.2.2.2 Indemnity. Tenant’s indemnity of Landlord as set forth in Section 10.1
of this Lease shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to any act or omission of
Tenant or Tenant’s Agents, or anyone directly or indirectly employed by any of
them, or in connection with Tenant’s non-payment of any amount arising out of
the Tenant Improvements and/or Tenant’s disapproval of all or any portion of any
request for payment unless Tenant’s disapproval is based on Landlord’s
disapproval. Such indemnity by Tenant, as set forth in Section 10.1 of this
Lease, shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to Landlord’s performance of any
ministerial acts reasonably necessary (i) to permit Tenant to complete the
Tenant Improvements, and (ii) to enable Tenant to obtain any certificate of
occupancy for the Premises.

4.2.2.3 Requirements of Tenant’s Agents. Tenant’s general contractor shall
warrant that the Tenant Improvements shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the
date of completion thereof. Tenant’s general contractor shall be responsible for
the replacement or repair, without additional charge, of all work done or
furnished in accordance with its contract that shall become defective within one
(1) year after the completion of the work. The correction of such work shall
include, without additional charge, all additional expenses and damages incurred
in connection with such removal or replacement of all or any part of the Tenant
Improvements and/or the Building and/or common areas that may be damaged or
disturbed thereby. All such warranties or guarantees as to materials or
workmanship of or with respect to the Tenant Improvements shall be contained in
the Contract or applicable subcontracts and shall be written such that such
guarantees or warranties shall inure to the benefit of both Landlord and Tenant,
as their respective interests may appear, and can be directly enforced by
either. Tenant covenants to give to Landlord any assignment or other assurances
which may be necessary to effect such right of direct enforcement.

4.2.2.4 Insurance Requirements.

4.2.2.4.1 General Coverages. All of Tenant’s Agents shall carry worker’s
compensation insurance covering all of their respective employees, and shall
also carry public liability insurance, including property damage, all with
limits, in form and with companies as are required to be carried by Tenant as
set forth in Article 10 of this Lease, and the policies therefor shall insure
Landlord and Tenant, as their interests may appear, as well as the Contractor
and subcontractors.

4.2.2.4.2 Special Coverages. Tenant or Contractor shall carry “Builder’s All
Risk” insurance in an amount approved by Landlord (not to exceed replacement
cost) covering the construction of the Tenant Improvements, it being understood
and agreed that the Tenant Improvements shall be insured by Tenant to the extent
required by Article 10 of this Lease immediately upon completion thereof.

4.2.2.4.3 General Terms. Certificates for all insurance carried pursuant to this
Section 4.2.2.4 shall be delivered to Landlord before the commencement of
construction of the Tenant Improvements and before the Contractor’s equipment is
moved onto the site. All such policies of insurance must contain a provision
that the company writing such policy shall endeavor to give Landlord ten
(10) days prior written notice of any cancellation or lapse of the effective
date or any reduction in the amount of such insurance. In the event that the
Tenant Improvements are damaged by any cause during the course of the
construction thereof, Tenant shall immediately repair the same at Tenant’s sole
cost and expense. Tenant’s Agents shall maintain all of the foregoing insurance
coverage in force until the Tenant Improvements are fully completed and accepted
by Landlord, except for any Products and Completed Operation Coverage insurance
required by Landlord, which is to be maintained for ten (10) years following
completion of the work and acceptance by Landlord and Tenant. All insurance,
except Workers’ Compensation, maintained by Tenant’s Agents shall preclude
subrogation claims by the insurer against anyone insured thereunder. Such
insurance shall provide that it is primary insurance as respects the owner and
that any other insurance maintained by owner is excess and noncontributing with
the insurance required hereunder. The requirements for the foregoing insurance
shall not derogate from the provisions for indemnification of Landlord by Tenant
under Section 4.2.2.2 of this Tenant Work Letter.

4.2.3 Governmental Compliance. Subject to Landlord’s obligations with respect to
Base Building elements of the Building and Premises as provided in this Work
Letter, the Base Building and Tenant Improvements shall comply in all respects
with the following: (i) all Codes and other state, federal, city or
quasi-governmental laws, codes, ordinances and regulations, as each may apply
according to the rulings of the controlling public official, agent or other
person; (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical
Code; and (iii) building material manufacturer’s specifications.

4.2.4 Inspection by Landlord. Landlord shall have the right to inspect the
Tenant Improvements at all times. Landlord’s failure to inspect the Tenant
Improvements shall in no event constitute a waiver of any of Landlord’s rights
hereunder nor shall Landlord’s inspection of the Tenant Improvements constitute
Landlord’s approval of the same. Should Landlord disapprove any portion of the
Tenant Improvements due to material nonconformance with the Approved
Construction Documents, Landlord shall notify Tenant in writing of such
disapproval and shall specify the items disapproved. Any defects or deviations
in, and/or disapproval by Landlord of, the Tenant Improvements shall be
rectified by Tenant as soon as reasonably possible after notification from
Landlord at no expense to Landlord.

4.2.5 Meetings. Commencing upon the execution of this Lease, Tenant shall hold
weekly meetings at a reasonable time with the Architect/Space Planner and the
Contractor regarding the progress of the preparation of Construction Documents
Construction Drawings and the construction of the Tenant Improvements, which
meetings may be held at the office of the Project, and Landlord and/or its
agents shall receive prior notice of, and shall have the right to attend, all
such meetings. In addition, minutes shall be taken at all such meetings, a copy
of which minutes shall be promptly delivered to Landlord.

 

EXHIBIT B – Page 5

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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4.2.6 Notice of Completion; Copy of Updated Approved Construction Documents
Working Drawings Plans. Within ten (10) days after completion of construction of
the Tenant Improvements, Tenant shall cause a Notice of Completion to be
recorded in the office of the Recorder of the County of Orange in accordance
with Section 3093 of the Civil Code of the State of California or any successor
statute, and shall furnish a copy thereof to Landlord upon such recordation. At
the conclusion of construction, (i) Tenant shall cause the Contractor (a) to
update the Approved Construction Documents through annotated changes, as
necessary, to reflect all changes made to the Approved Construction Documents
during the course of construction, (b) to certify to the best of Contractor’s
knowledge that such updated Approved Construction Documents are true and
correct, which certification shall survive the expiration or termination of this
Lease, and (c) to deliver to Landlord final compact discs of such updated
Approved Construction Documents, together with any permits or similar documents
issued by governmental agencies in connection with the construction of the
Tenant Improvements, within ninety (90) days following issuance of a certificate
of occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy
of all warranties, guaranties, and operating manuals and information relating to
the improvements, equipment, and systems in the Premises.

SECTION 5

DELAY OF

RENT COMMENCEMENT DATE

5.1 Rent Commencement Date Delays. The Rent Commencement Date shall occur as
provided in Article 2 of the Lease, provided that the Rent Commencement Date
shall be delayed by the number of days of delay of the substantial completion of
the Tenant Improvements (as defined below) in the Premises which is caused
solely by a Rent Commencement Date Delay. As used herein, the term “Rent
Commencement Date Delay” shall mean only a Force Majeure Delay or a Landlord
Caused Delay (as defined below).

5.1.1 Force Majeure Delay. As used herein, “Force Majeure Delay” shall mean only
an actual delay or stoppage resulting from fire, earthquake, explosion, flood,
hurricane, the elements, acts of God or the public enemy, war, invasion,
insurrection, rebellion, riots, industry-wide labor strikes or lockouts (which
objectively preclude Landlord or Tenant from obtaining from any reasonable
source of labor or substitute materials at a reasonable cost necessary for
completing the Base Building or Tenant Improvements), governmental acts, delay
and/or inaction (which do not specifically relate to the construction of the
Base Building or Tenant Improvements and which objectively preclude construction
of tenant improvements in the Building by any person) and other causes beyond
the reasonable control of either party, except with respect to obligations
imposed with regard to monetary obligations of either party. Notwithstanding
anything to the contrary contained herein, a Force Majeure Delay shall not
include any of the foregoing delays to the extent a result of a Tenant Caused
Delay or Landlord Caused Delay.

5.1.2 Landlord Caused Delay. As used herein, “Landlord Caused Delay” shall mean
only an actual delay resulting from the acts or omissions of Landlord including,
but not limited to (i) failure of Landlord to timely approve or disapprove any
Construction Drawings; or (ii) material interference by Landlord, its agents or
contractors with the completion of the Tenant Improvements and which stop,
hinder or delay construction of the Tenant Improvements and/or delivery and
installation of furniture or equipment in the Building by Tenant or any material
interference with access by Tenant, its agents and contractors to the Building
or any Building facilities (including loading docks and freight elevators) or
service (including temporary power and parking areas as provided herein) during
or after construction hours.

5.1.2 Tenant Caused Delay. As used herein, “Tenant Caused Delay” shall mean only
an actual delay resulting from the acts or omissions of the Tenant including,
but not limited to, negligence or willful misconduct of Tenant or Tenant’s
Agents.

5.2 Determination of Rent Commencement Date Delay. If Tenant contends that a
Rent Commencement Date Delay has occurred, Tenant shall notify Landlord in
writing (the “Delay Notice”) of (i) the date upon which such Rent Commencement
Date Delay becomes known to Tenant, Architect, or Contractor and (ii) the date
upon which such Rent Commencement Date Delay ends (the “Termination Date”).
Tenant’s failure to deliver such notice to Landlord shall be deemed to be a
waiver by Tenant of the contended Rent Commencement Date Delay. If such actions,
inaction or circumstances described in the Delay Notice are not cured within two
(2) business days of Landlord’s receipt of the Delay Notice and if such actions,
inaction or circumstances otherwise qualify as a Force Majeure Delay, then a
Rent Commencement Date Delay shall be deemed to have occurred commencing as of
the date of Landlord’s receipt of the Delay Notice and ending as of the
Termination Date. If such actions, inactions or circumstances described in the
Delay Notice are not cured by Landlord upon receipt of the Delay Notice and if
such actions, inactions or circumstances otherwise qualify as a Landlord Caused
Delay, then a Rent Commencement Date Delay shall be deemed to have occurred
commencing as of the date of Landlord’s receipt of the Delay Notice and ending
as of the Termination Date.

5.3 Definition of Substantial Completion of the Tenant Improvements. For
purposes of this Section 5, “substantial completion of the Tenant Improvements”
shall mean completion of construction of the Tenant Improvements in the Premises
pursuant to the Approved Construction Documents with the exception of any punch
list items, any furniture or equipment (even if the same requires installation
or electrification by Tenant’s Agents), and any tenant improvement finish items
and materials which are selected by Tenant but which are not available within a
reasonable time (given the date of the Rent Commencement Date).

SECTION 6

MISCELLANEOUS

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

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

 

EXHIBIT B – Page 6

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6.3 Time of the Essence in This Tenant Work Letter. Unless otherwise indicated,
all references herein to a “number of days” shall mean and refer to calendar
days. In all instances where either party is required to approve or deliver an
item, if no written notice of approval is given or the item is not delivered
within the stated time period, at the other party’s sole option, at the end of
such period the item shall automatically be deemed approved or delivered by the
party so failing to act and the next succeeding time period shall commence.

6.4 Tenant’s Lease Default. Notwithstanding any provision to the contrary
contained in this Lease, if Tenant fails to carry or cause to be carried
insurance in connection with the construction of the Tenant Improvements as
required by this Tenant Work Letter or the Lease after ten (10) days written
notice from Landlord, then (i) in addition to all other rights and remedies
granted to Landlord pursuant to the Lease, if Tenant shall not provide
replacement insurance within three (3) business days of a second written notice
of demand for such insurance, Landlord may cause Contractor to cease the
construction of the Premises (in which case, such delay shall be deemed a Tenant
Caused Delay), and (ii) all other obligations of Landlord under the terms of
this Tenant Work Letter shall be forgiven until such time as such insurance is
in place.

 

EXHIBIT B – Page 53

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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SCHEDULE 1

BASE RENT CREDIT CALCULATION EXAMPLE

Epicor

Tl Amortization Schedule

 

                 Rent Credit      Interest     Principal     3,752,925  

Square Feet

    68,235        1         128,964         (25,020 )      (103,945 )     
3,648,980   

Tenant Improvement

  $ 3,752,925        2         128,964         (24,327 )      (104,638 )     
3,544,343   

Interest Rate

    8.00 %      3         128,964         (23,629 )      (105,335 )     
3,439,008          4         128,964         (22,927 )      (106,037 )     
3,332,970          5         128,964         (22,220 )      (106,744 )     
3,226,226          6         128,964         (21,508 )      (107,456 )     
3,118,770          7         128,964         (20,792 )      (108,172 )     
3,010,597          8         128,964         (20,071 )      (108,894 )     
2,901,704          9         128,964         (19,345 )      (109,619 )     
2,792,084          10         128,964         (18,614 )      (110,350 )     
2,681,734          11         128,964         (17,878 )      (111,086 )     
2,570,648          12         128,964         (17,138 )      (111,826 )     
2,458,822          13         132,833         (16,392 )      (116,441 )     
2,342,381          14         132,833         (15,616 )      (117,217 )     
2,225,164          15         132,833         (14,834 )      (117,999 )     
2,107,165          16         132,833         (14,048 )      (118,785 )     
1,988,380          17         132,833         (13,256 )      (119,577 )     
1,868,802          18         132,833         (12,459 )      (120,374 )     
1,748,428          19         132,833         (11,656 )      (121,177 )     
1,627,251          20         132,833         (10,848 )      (121,985 )     
1,505,266          21         132,833         (10,035 )      (122,798 )     
1,382,469          22         132,833         (9,216 )      (123,617 )     
1,258,852          23         132,833         (8,392 )      (124,441 )     
1,134,411          24         132,833         (7,563 )      (125,270 )     
1,009,141          25         136,818         (6,728 )      (130,090 )     
879,050          26         136,818         (5,860 )      (130,958 )     
748,093          27         136,818         (4,987 )      (131,831 )     
616,262          28         136,818         (4,108 )      (132,710 )     
483,552          29         136,818         (3,224 )      (133,594 )     
349,958          30         136,818         (2,333 )      (134,485 )     
215,473          31         136,818         (1,436 )      (135,382 )      80,091
         32         80,625         (534 )      (80,091 )      —     

 

EXHIBIT B – Page 8

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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SCHEDULE 2

BUILDING STANDARDS

TENANT AREA

 

1. DEMISING PARTITION

 

  A. 2-1/2” 20-GAUGE METAL STUDS 24” ON CENTER WITH SEISMIC BRACING U.N.O.

 

  B. 5/8” TYPE “X” DRYWALL, ONE LAYER EACH SIDE OF STUDS.

 

  C. R-8 BATT INSULATION IN WALL CAVITY.

 

  D. R-11 SOUND BLANKET 4’-0” EACH DIRECTION.

 

  E. SOUND BOOTS AT HVAC PENETRATIONS AT DEMISING WALLS.

 

  F. HEIGHT FROM FLOOR SLAB TO STRUCTURE ABOVE (GROUND FLOOR, 17’-0”, FLOORS
2-17, 13’-5”, 18TH FLOOR, 13’-11”).

 

  G. PARTITION TO BE TAPED SMOOTH AND SANDED TO RECEIVE PAINT OR WALLCOVERING.

 

  H. “L” METAL AT TERMINATION OF PARTITION AT CEILING.

 

  I. STRAIGHT LINE TERMINATION AT BUILDING COLUMNS. SOUND SEALED GASKET CLOSURE
AT MULLION TERMINATION.

 

  J. STAGGER AND CAULK AROUND ELECTRICAL OUTLETS AND OTHER BOXES, CAULK AROUND
CONDUIT AND OTHER THROUGH-THE-WALL PENETRATIONS. CAULK ENTIRE PERIMETER OF WALL
AT FLOOR, EXTERIOR WALL AND CEILING, AND BETWEEN “L” METAL FINISHED DRYWALL AND
INTERSECTED SURFACE.

ALLOWANCE: 1.5 LINEAL FEET PER 100 SQ. FT. OF USABLE FLOOR AREA.

 

2. INTERIOR PARTITION

 

  A. 2-1/2”, 25-GAUGE METAL STUDS 24” ON CENTER WITH SEISMIC BRACING, U.N.O.

 

  B. 5/8” DRYWALL TAPE TYPE “X” ONE LAYER EACH SIDE OF STUDS.

 

  C. HEIGHT FROM FLOOR SLAB TO UNDERSIDE OF CEILING GRID – 9’-0”.

 

  D. PARTITION TAPED SMOOTH TO RECEIVE PAINT OR WALLCOVERING.

 

  E. “L” METAL AT TERMINATION OF PARTITION AT CEILING.

 

  F. SOUND SEALED GASKET CLOSURE AT MULLION TERMINATION.

ALLOWANCE: 10 LINEAL FEET OF PARTITION PER 150 SQ. FT. OF USABLE FLOOR AREA.

 

3. COLUMN COVERS

 

  A. 2-1/2”, 25-GAUGE METAL STUDS WITH ONE LAYER DRYWALL AND CORNER BEADS.

 

  B. EXTEND TO 6” ABOVE SUSPENDED CEILING.

 

  C. TAPE SMOOTH AND SAND TO RECEIVE PAINT.

 

  D. SEE DETAILS

 

4. PERIMETER WALL FURRING

 

  A. 5/8” DRYWALL AT SPANDREL GLASS.

 

  B. 2-1/2”, 25-GAUGE METAL STUDS 24” ON CENTER WITH ONE LAYER 5/8” DRYWALL AND
R-B BATT INSULATION.

 

5. SINGLE TENANT ENTRY DOOR ASSEMBLY

 

  A. DOOR: 3’-0” X 8’-10” X 1-3/4” SOLID CORE, PLAIN SLICED CHERRY, PREMIUM
GRADE, PRE-MORTISED PRE-FINISHED 4” TOP AND BOTTOM RAIL HARDWOOD EDGES, CAL-WOOD
OR EQUIVALENT. FINISH TO MATCH SAMPLE BY H. HENDY ASSOCIATES. 20-MINUTE FIRE
RATED WITH RATING LABEL ATTACHED TO HINGE SIDE OF DOOR.

 

EXHIBIT B – Page 55

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  B. FRAME: 3’-0” X 9’-0” X 3-3/4”. FACTORY PAINTED ALUMINUM DOOR FRAME BY
ARCHITECTURAL COMPONENTS, INC. (AC), 20-MINUTE FIRE RATED WITH RATING LABEL
ATTACHED TO HINGE SIDE OF FRAME. FACTORY FINISHED BLACK.

 

  C. LOCKSET: SCHLAGE MORTISE LOCKSET L-9000 SERIES, POLISHED STAINLESS STEEL
L-9453-03A-629 WITH RUSSWIN D-4 KEYWAY, 2 KEYS PER DOOR.

 

  D. HINGES: 4-1/2” X 4-1/2” STANLEY FBB191 BLACK FINISH. BUTT HINGES, BALL
BEARING, TWO PAIR PER DOOR.

 

  E. CLOSER: NORTON #6501 PARALLEL ARM DOOR CLOSER BLACK FINISH.

 

  F. DOORSTOP: QUALITY #331 FLOOR MOUNTED DOME STOP. RISER AS REQUIRED. ALUMINUM
FINISH.

ALLOWANCE: ONE ENTRY DOOR ASSEMBLY PER 3,000 SQ. FT. USABLE FLOOR AREA.

NOTE: IN A DOUBLE DOOR ENTRY SPECIFICATION ASTRAGAL SHOULD BE WOOD VENEERED TO
MATCH CHERRY WOOD AND FINISH.

 

6. INTERIOR DOOR

 

  A. DOOR: 3’-0” X 8’-10” X 1-3/4” SOLID CORE, PLAIN SLICED PREMIUM GRADE CHERRY
WOOD, PRE-MORTISED AND PREFINISHED WITH 4” TOP AND BOTTOM RAIL HARDWOOD EDGES,
CAL-WOOD OR EQUAL, FINISH TO MATCH SAMPLE BY H. HENDY ASSOCIATES.

 

  B. FRAME: 3’-0” X 9’-0” X 3-3/4” FACTORY PAINTED ALUMINUM DOOR FRAME BY ACI –
ARCHITECTURAL COMPONENTS, INC. FINISHED BLACK.

 

  C. LATCHSET: SCHLAGE L-9000 SERIES MORTISE LATCHSET L-9010-03A-629 POLISHED
STAINLESS STEEL.

 

  D. HINGES: 4-1/2” X 4-1/2” STANLEY F191 BLACK FINISH, TWO PAIR PER DOOR.

 

  E. DOORSTOP: QUALITY #331 FLOOR MOUNTED DOME STOP. RISER AS REQUIRED ALUMINUM
FINISH.

 

  F. COAT HOOK: HEW 1 #50B BLACK WITH BLACK SCREWS.

ALLOWANCE; ONE INTERIOR DOOR ASSEMBLY PER 350 SQ. FT. USABLE FLOOR AREA.

 

EXHIBIT B – Page 56

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7. LIGHT FIXTURE

 

  A-1;  2’ X 4’ LITHONIA DOUBLE DOOR FRAME TYPE FX-A #2PM3STD
332-D9LD-277ES-LPS35K-LST OCT TRON (ALUMINUM FINISH).

ALLOWANCE: ONE LIGHT FIXTURE PER 80 SQ. FT.

 

8. ACOUSTIC CEILING

 

  A. 2’ X 2’ DONN FINELINE GRID WITH CELOTEX “CASHMERE” 2 X 2 CEILING TILE.

 

  B. PARTITION ATTACHMENT CLIPS.

 

  C. NON-COMBUSTIBLE STRUT FASTENED TO THE MAIN RUNNER SHALL BE EXTENDED AND
FASTENED TO THE STRUCTURAL MEMBERS SUPPORTING THE ROOF OR FLOOR ABOVE.

ALLOWANCE: THROUGHOUT TENANT’S SPACE.

 

9. FIRE SPRINKLER

 

  A. DROPS AND HEAD FROM EXISTING DISTRIBUTION.

 

  B. ADJUSTABLE HEADS.

 

  C. SEMI-RECESSED HEADS MODE “H-2” ORIFICE WITH WHITE ENAMEL TRIM, BY CENTRAL
SPRINKLER CORPORATION. LOCATED IN CENTER OF CEILING TILE (EXCEPT AS CODE
REQUIRED NEAR SOFFIT).

ALLOWANCE: ONE (1) PER 125 SQUARE FEET OF USABLE AREA.

 

10. PAINT.

 

  A. TWO COATS OF FLAT LATEX PAINT OVER PRIMER. FRAZEE PAINTS.

ALLOWANCE: THROUGHOUT TENANT’S SPACE, SINGLE COLOR PER ROOM OR OFFICE ONLY.

 

11. FLOOR COVERING

 

  A. CARPET: PATCRAFT, HEADLINES II, FAMOUS LAST WORDS II, TWIST & SHOUT II OR
COLOR STILL MATTERS.

 

  B. 2-1/2” RUBBER STRAIGHT BASE, BURKE, COLOR VARIES WITH CARPET SELECTION.

 

  C. VCT: ARMSTRONG “EXCELON” 1/8” GAUGE – TENANT’S STORAGE AND WET AREAS.

 

  D. 2-1/2” RUBBER TOPSET BASE, BURKE, COLOR VARIES WITH VCT.

ALLOWANCE: THROUGHOUT THE TENANT’S SPACE.

 

12. WINDOW COVERING

 

  A. PERFORATED VINYL VERTICAL BLIND. DRAW AND TILT FUNCTION, WITH 3” 21%
PERFORATED P.V.C. VANES.

 

  B. LOUVER DRAPE HARDWARE – MODIFIED #7700 USING MODIFIED TRACK CHANNEL TO
INTEGRATE THE BENSON HEAD SECTION AND CORD ACTUATED TRAVERSE SYSTEM AND #7025
CARRIER USING STAINLESS STEEL SPACER LINK AND 3” SPACING PLASTIC VANE CLIP.

 

  C. SIZED TO FIT WITHIN EACH WINDOW BAY, MULLION TO MULLION.

 

  D. FULL-HEIGHT MOUNTED TO UNDERSIDE OF GLAZING HEADER MULLION.

 

  E. TO BE INSTALLED PER MANUFACTURER’S RECOMMENDATIONS.

 

13. ELECTRICAL WALL OUTLET

 

  A. LEVITON, SELF-GROUNDING OR EQUAL, DUPLEX RECEPTACLE.

 

  B. COLOR: WHITE.

 

  C. MOUNTED VERTICALLY 18” A.F.F. TO CENTER OF OUTLET.

SPECIAL OUTLETS, VOLTAGES, SEPARATE CIRCUITS, AND CRT WIRING REQUIRED FOR TENANT
EQUIPMENT WILL BE CONSIDERED TENANT OVER-STANDARD WORK.

 

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14. LIGHT CONTROL SYSTEM (FOR USE IN PRIVATE OFFICES AND SUPPORT ROOMS, AND
CONFERENCE ROOMS.)

 

  A. LIGHT-O-MATIC, #01-133 WALL SENSOR.

 

  B. TEFLON WIRE, CONTROL RELAY AND TRANSFORMER.

ALLOWANCE: ONE (1) SWITCH PER 250 SQ. FT. OF USABLE SPACE (70% TOTAL).

 

15. LIGHT CONTROL DEVICES (FOR USE IN RECEPTION AREA, GENERAL OFFICE AND OTHER
AREAS NOT LISTED ABOVE.)

 

  A. LEVITON DECORA #5601 AND 5603, WHITE.

 

  B. SWITCHED PAIRED IN DOUBLE GANG BOX TO MEET TITLE 24 REQUIREMENTS.

 

  C. HEIGHT 40” AF.F. TO CENTER LINE OF SWITCH.

ALLOWANCE: ONE (1) SWITCH PER 250 SQ. FT. OF USABLE SPACE (30% TOTAL).

 

16. TELEPHONE WALL OUTLET

 

  A. SINGLE GANG BOX IN WALL VERTICALLY MOUNTED.

 

  B. 3/4” METAL CONDUIT FRAME OUTLET BOX STUB-UP CONDUIT AND PULL WIRE TO 6”
ABOVE CEILING. PLENUM RATED CABLE OR CONDUIT TO TELEPHONE BACKBOARD BY TENANT.

 

  C. COVERPLATE AND CABLING BY TENANT. MATCH OTHER PLATES.

 

  D. OUTLET HEIGHT AT 18” A.F.F. TO CENTER LINE OF OUTLET.

ALLOWANCE: ONE (1) TELEPHONE OUTLET PER 200 SQ. FT. OF USABLE FLOOR AREA.

SPECIAL ELECTRICAL SERVICE, CONDUIT, WIRING, HOMERUNS AND CABLE REQUIRED FOR
TENANT’S PRIVATELY OWNED TELEPHONE SYSTEM WILL BE CONSIDERED TENANT OVERSTANDARD
WORK. PLENUM RATED CABLE OR CONDUIT TO TENANT’S BACKBOARD WILL BE TENANT
OVER-STANDARD WORK.

 

17. SECURITY SYSTEMS

 

  A. BEAM SYSTEM – PROVIDE ONE CONNECTION PER 3,000 SQ. FT.

 

18. FIRE/LIFE SAFETY

 

  A. INSTALL FIRE MANAGEMENT SPEAKER 1/1800 SQUARE FEET.

 

  B. CONNECT TO EXISTING FIRE/LIFE SAFETY SYSTEM.

ALLOWANCE: AS REQUIRED PER APPLICABLE CODES.

 

19. EXIT SIGNS (ILLUMINATED)

 

  A. LITHONIA LTG #F2RPWIG-C-277V.

 

20. HVAC

 

  A. 2’ X 2’ SUPPLY AIR REGISTERS, PERFORATED FACE DIFFUSER.

 

  B. 2’ X 2’ RETURN AIR GRILLES, PERFORATED FACE DIFFUSER.

 

  C. THERMOSTATS LOCATED PER ZONE REQUIREMENTS 42” A.F.F. TO CENTERLINE. CENTER
ABLE LIGHT SWITCHES WHERE APPROPRIATE.

 

  D. THE HVAC DISTRIBUTION AND ENERGY MANAGEMENT SYSTEM AS TYPICALLY DESIGNED BY
LANDLORD’S ENGINEER TO MEET NORMAL HVAC REQUIREMENTS WILL BE TENANT ALLOWANCE.
ALL TENANT REQUESTS OR REQUIREMENTS ADDING ADDITIONAL ZONES, 24-HOUR
CONDITIONING, EXHAUST FANS, ETC., WILL BE TENANT OVER-STANDARD WORK.

ALLOWANCE:     INTERIOR ZONES – 1 PER 1,850 SQ. FT.

                           EXTERIOR ZONES – 1 PER 1,150 SQ. FT.

                           DISTRIBUTION AND DUCTWORK

                           ENGINEERING

 

21. FIRE EXTINGUISHER CABINETS

 

  A. POTTER ROEMER, INC. 1724 PAINT CABINET TO MATCH ADJACENT WALL.

 

EXHIBIT B – Page 58

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22. SIGNAGE

 

  A. ONE BUILDING STANDARD TENANT ENTRY SIGN, INCLUDING INSTALLATION ADJACENT TO
TENANT’S MAIN ENTRY AND ONE BUILDING STANDARD TENANT SIGN AT BUILDING DIRECTORY.

 

23. ARCHITECTURAL SERVICES

 

  A. ARCHITECTURAL AND ENGINEERING DESIGN SERVICES FOR ONE SPACE PLAN, INCLUDING
ONE MAJOR REVISION, AND ONE SET OF CONSTRUCTION DRAWINGS, NO REVISIONS INCLUDED.
CITY BUILDING STANDARD WORK INCLUDED.

 

24. COMMON CORRIDOR ALLOCATION

 

  A. BUILDING STANDARD ALLOWANCE SHALL INCLUDE TENANT’S APPORTIONED SHARE OF
BUILDING STANDARD CORRIDOR CONSTRUCTION.

 

25. SMOKE DETECTORS

 

  A. SIMPLEX #2098-9201

 

  B. WITH ADDRESSABLE PROGRAMMING 2098-9637

 

26. LIFE SAFETY SPEAKERS

 

  A. PAINT TO MATCH CEILING.

 

  B. SIMPLEX E9025-WS-24-OF-W-STROB.

 

EXHIBIT B – Page 59

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SCHEDULE 3

LANDLORD’S CONTRACTOR RULES AND REGULATIONS

Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. 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
written consent. Tenant shall bear the cost of any lock changes or repairs
required by Tenant. Two 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, either furnished to, or otherwise procured by, Tenant and in the event of
the loss of keys so furnished, Tenant shall pay to Landlord the cost of
replacing same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such changes.

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 reserves the right to close and keep locked all entrance and exit
doors of the Building during such hours as are customary for comparable
buildings in the Irvine, California area. Tenant, its employees and agents must
be sure that the doors to the Building are securely closed and locked when
leaving the Premises if it is after the normal hours of business for the
Building. Any tenant, its employees, agents or any other persons entering or
leaving the Building at any time when it is so locked, or any time when it is
considered to be after normal business hours for the Building, may be required
to sign the Building register. Access to the Building may be refused unless the
person seeking access has proper identification or has a previously arranged
pass for access to the Building. Landlord will furnish passes to persons for
whom Tenant requests same in writing. 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 his agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person. In case of invasion, mob, riot, public excitement, or
other commotion, Landlord reserves the right to 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 of any kind 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 shall have the right to 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 in any case. Any damage to any part of the Building,
its contents, occupants or visitors by moving or maintaining any such safe or
other property shall be the sole responsibility and expense of Tenant.

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

6. The requirements of Tenant will be attended to only upon application at the
management office for the Project or at such office location designated by
Landlord. 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
the prior written consent of the Landlord. Tenant shall not disturb, solicit,
peddle, or canvass any occupant of the Project and shall cooperate with Landlord
and its agents of Landlord to prevent same.

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 of any kind whatsoever shall be thrown therein. The expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by the tenant who, or whose servants, employees, agents, visitors or
licensees shall have caused same.

9. Tenant shall not overload the floor of the Premises, nor mark, drive nails or
screws, or drill into the partitions, woodwork or drywall or in any way deface
the Premises or any part thereof without Landlord’s prior written consent.
Tenant shall not purchase spring water, ice, towel, linen, maintenance or other
like services from any person or persons 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 upon the Premises
without the written consent of Landlord.

11. Tenant shall not use or keep in or on the Premises, the Building, or the
Project any kerosene, gasoline or other inflammable or combustible fluid,
chemical, substance or material.

12. Tenant shall not without the prior written consent of Landlord use any
method of heating or air conditioning other than that supplied by Landlord.

 

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13. Tenant shall not use, keep or permit to be used or kept, any foul or noxious
gas or substance in or on the Premises, or permit or allow the Premises to be
occupied or used 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 tenants or those having business therein, whether by the use of any
musical instrument, radio, phonograph, or in any other way. 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, birds, aquariums, or, except in areas designated by
Landlord, bicycles or other vehicles.

15. No cooking shall be done or permitted on the Premises, nor shall the
Premises be used for the storage of merchandise, for lodging 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 visitors, provided that such use is in accordance
with all applicable federal, state, county and city laws, codes, ordinances,
rules and regulations.

16. The Premises shall not be used for manufacturing or for the storage of
merchandise except as such storage may be incidental to the use of the Premises
provided for in the Summary. Tenant shall not occupy or permit any portion of
the Premises to be occupied 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 in any form, or as a medical office, or as a
barber or manicure shop, or as an employment bureau without the express prior
written consent of Landlord. Tenant shall not engage or pay any employees on the
Premises except those actually working for such tenant on the Premises nor
advertise for laborers giving an address at the Premises.

17. Landlord reserves the right to exclude or expel from the Project any person
who, in the judgment of Landlord, is intoxicated or under the influence of
liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.

18. Tenant, its employees and agents 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 and agrees to
cooperate fully with Landlord to ensure the most effective operation of the
Building’s heating and air conditioning system, and shall refrain from
attempting to adjust any controls.

20. Tenant shall store all its trash and garbage within the interior of the
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in Irvine,
California without violation of any law or ordinance governing such disposal.
All trash, garbage and refuse disposal shall be made only through entry-ways and
elevators provided for such purposes at such times as Landlord shall designate.

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 the
prior written approval of Landlord, and while in the Building and outside of the
Premises, shall be subject to and under the control and direction of the
Building manager (but not as an agent or servant of such manager or of
Landlord), and Tenant shall be responsible for all acts of such persons.

23. No awnings or other projection shall be attached to the outside walls of the
Building without the prior written consent of Landlord, and 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 other than Landlord standard drapes. 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 in writing by Landlord. Neither the
interior nor exterior of any windows shall be coated or otherwise sunscreened
without the prior written consent of Landlord. Tenant shall abide by Landlord’s
regulations concerning the opening and closing of window coverings which are
attached to the windows in the Premises, if any, which have a view of any
interior portion of the Building or Building Common Areas.

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

25. Tenant must comply with requests by the 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 any local “No Smoking” ordinance
which may be in effect from time to time and which is not superseded by such
State law.

27. Tenant hereby acknowledges that Landlord shall have no obligation to provide
guard service or other security measures for the benefit of the Premises, the
Building or the Project. Tenant hereby assumes all responsibility for the
protection of Tenant and its agents, employees, contractors, invitees and
guests, and the property thereof, from acts of third parties, including keeping
doors locked and other means of entry to the Premises closed, whether or not
Landlord, at its option, elects to provide security protection for the Project
or any portion thereof. Tenant further assumes the risk that any safety and
security devices, services and programs which Landlord elects, in its sole
discretion, to provide may not be effective, or may malfunction or be
circumvented by an unauthorized third party, and Tenant shall, in addition to
its other insurance obligations under this Lease, obtain its own insurance
coverage to the extent Tenant desires protection against losses related to such
occurrences. Tenant shall cooperate in any reasonable safety or security program
developed by Landlord or required by law.

 

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

29. Tenant shall not use in any space or in the public halls of the Building,
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 the prior written consent of
Landlord.

31. No tenant shall use or permit the use of any portion of the Premises for
living quarters, sleeping apartments or lodging rooms.

32. Tenant shall have the exclusive right to use its reserved parking spaces, if
any, from 8:00 A.M. to 6:00 P.M. Monday through Friday.

Landlord reserves the right at any time to change or rescind any one or more of
these Rules and Regulations, or to make such other and further reasonable Rules
and Regulations as in Landlord’s judgment may from time to time be necessary for
the management, safety, care and cleanliness of the Premises, Building, the
Common Areas and the Project, and for the preservation of good order therein, as
well as for the convenience of other occupants and tenants therein. Landlord may
waive any one or more of these Rules and Regulations for the benefit of any
particular tenants, but no such waiver by Landlord shall be construed as a
waiver of such Rules and Regulations in favor of any other tenant, nor prevent
Landlord from thereafter enforcing any such Rules or Regulations against any or
all tenants of the Project. Tenant shall be deemed to have read these Rules and
Regulations and to have agreed to abide by them as a condition of its occupancy
of the Premises.

 

EXHIBIT B – Page 62

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EXHIBIT C

LAKESHORE TOWERS

PROJECT LEGAL DESCRIPTION

Parcels 1 through 7 of Parcel Map 89-274 in the City of Irvine, County of
Orange, State of California as recorded in Book 267, Pages 18-26 of Parcel Maps.

 

EXHIBIT B – Page 63

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EXHIBIT D

LAKESHORE TOWERS

LOBBY RENOVATION

LOGO [g148576img006.jpg]

 

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EXHIBIT E

LAKESHORE TOWERS

NOTICE OF LEASE COMMENCEMENT DATE

 

To: Epicor Software Corporation

18101 Von Karman Avenue, Suite 1500

Irvine, CA 92612

ATTN:                                         

 

  Re: Office Lease dated February 10, 2011 between Lakeshore Towers Limited
Partnership Phase I, a California limited partnership (“Landlord”), and Epicor
Software Corporation, a Delaware corporation (“Tenant”) concerning Suites 1500,
1600 and 1700 on the 15th, 16th and 17th floors of the office building located
at 18101 Von Karman Avenue, Irvine, California.

Gentlemen:

In accordance with the Office Lease (the “Lease”), we wish to advise you and/or
confirm as follows:

 

1. The Lease Term shall commence on or has commenced on             , 2011
(“Lease Commencement Date”) for a term of ten years ending on July 31, 2021.

 

2. Base Rent commenced to accrue on             , 2011 (“Rent Commencement
Date”), in the amount of $                     per month.

 

3. If the Lease Commencement Date is other than the first day of the month, the
first billing will contain a pro rata adjustment. Each billing thereafter, with
the exception of the final billing, shall be for the full amount of the monthly
installment as provided for in the Lease.

 

4. Rent checks shall be made payable to                      at
                            ,                             , California.

 

5. The exact number of rentable/usable square feet within the Premises is
68,235/ square feet.

 

6. Base Rent is as follows:

 

Time Period

   Annual
Base Rent      Monthly
Installment
of Base Rent      Annual
Rental Rate
per Rentable
Square Foot  

Lease Commencement Date through the day preceding Rent Commencement Date

   $ -0-       $ -0-       $ -0-   

Rent Commencement Date through July 31, 2012

   $ 1,547,569.80       $ 128,964.15       $ 22.68   

August 1, 2012 through July 31, 2013

   $ 1,593,969.60       $ 132,830.80       $ 23.36   

August 1, 2013 through July 31, 2014

   $ 1,641,734.10       $ 136,811.18       $ 24.06   

August 1, 2014 through July 31, 2015

   $ 1,690,863.30       $ 140,905.28       $ 24.78   

 

EXHIBIT E – Page 1

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Time Period

   Annual
Base Rent      Monthly
Installment
of Base Rent      Annual
Rental Rate
per Rentable
Square Foot  

August 1, 2015 through July 31, 2016

   $ 1,742,039.55       $ 145,169.96       $ 25.53   

August 1, 2016 through July 31, 2017

   $ 1,793,898.15       $ 149,491.51       $ 26.29   

August 1, 2017 through July 31, 2018

   $ 1,847,803.80       $ 153,983.65       $ 27.08   

August 1, 2018 through July 31, 2019

   $ 1,903,074.15       $ 158,589.51       $ 27.89   

August 1, 2019 through July 31, 2020

   $ 1,960,391.55       $ 163,365.96       $ 28.73   

August 1, 2020 through July 31, 2021

   $ 2,019,073.65       $ 168,256.14       $ 29.59   

 

7. Tenant’s Share as adjusted based upon the exact number of rentable square
feet within the Premises is 17.49%.

 

“Landlord”: LAKESHORE TOWERS LIMITED PARTNERSHIP PHASE I, a California limited
partnership By:   SKIPPER REALTY CORPORATION, a Delaware corporation Title:  
Sole General Partner   By:       Name:       Title:    

Agreed to and accepted as

of                     , 2011.

 

“Tenant”:

EPICOR SOFTWARE CORPORATION,

a Delaware corporation

By:     Name:     Title:     By:     Name:     Title:    

 

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EXHIBIT F

LAKESHORE TOWERS

DIRECT EXPENSES ALLOCATION

Common Area Expenses as defined in Paragraph 2.12 of the CC&Rs shall be assessed
to the various buildings in the Project pursuant to paragraph 10 of the CC&Rs.
Paragraph 10.5 of the CC&Rs provides for allocation of assessments in an
equitable manner based on relative gross square footage of the buildings. The
ratios are as follows:

 

Building I – Office

   390,144 sq. ft.    45.41%

Restaurant

   9,600 sq. ft.    1.12%

Sporting Club

   100,000 sq. ft.    11.64%

Building II

   127,912 sq. ft.    14.88%

Building III

   231,548 sq. ft.    26.95%

TOTAL

   859,204 sq. ft.    100.0%

 

EXHIBIT F – Page 1

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EXHIBIT G

LAKESHORE TOWERS

RULES AND REGULATIONS

Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. In the event of any
conflict between the Rules and Regulations and the other provisions of this
Lease, the latter shall control.

33. 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
written consent. Tenant shall bear the cost of any lock changes or repairs
required by Tenant. Two 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, either furnished to, or otherwise procured by, Tenant and in the event of
the loss of keys so furnished, Tenant shall pay to Landlord the cost of
replacing same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such changes.

34. All doors opening to public corridors except Tenant’s reception lobby shall
be kept closed at all times except for normal ingress and egress to the
Premises.

35. Landlord reserves the right to close and keep locked all entrance and exit
doors of the Building during such hours as are customary for Comparable
Buildings in the John Wayne Airport/South Coast Plaza area. Tenant, its
employees and agents must be sure that the doors to the Building are securely
closed and locked when leaving the Premises if it is after the normal hours of
business for the Building. Any tenant, its employees, agents or any other
persons entering or leaving the Building at any time when it is so locked, or
any time when it is considered to be after normal business hours for the
Building, may be required to sign the Building register. Access to the Building
may be refused unless the person seeking access has proper identification or has
a previously arranged pass for access to the Building. Landlord will furnish
passes to persons for whom Tenant requests same in writing. 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 his agents shall in no
case be liable for damages for any error with regard to the admission to or
exclusion from the Building of any person. In case of invasion, mob, riot,
public excitement, or other commotion, Landlord reserves the right to 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.

36. No oversized or large quantities of furniture, freight or equipment of any
kind shall be brought into the Building without prior notice to Landlord. All
significant 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 shall have the right to 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 in any case.
Any damage to any part of the Building, its contents, occupants or visitors by
moving or maintaining any such safe or other property shall be the sole
responsibility and expense of Tenant.

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

38. The requirements of Tenant will be attended to only upon application at the
management office for the Project or at such office location designated by
Landlord. Employees of Landlord shall not perform any work or do anything
outside their regular duties unless under special instructions from Landlord.

39. 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
the prior written consent of the Landlord. Tenant shall not disturb, solicit,
peddle, or canvass any occupant of the Project and shall cooperate with Landlord
and its agents of Landlord to prevent same.

40. 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 of any kind whatsoever shall be thrown therein. The expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by the tenant who, or whose servants, employees, agents, visitors or
licensees shall have caused same.

41. Tenant shall not knowingly overload the floor of the Premises, nor (with the
exception of securing wall units and other furniture and hanging pictures and
other wall décor) mark, drive nails or screws, or drill into the partitions,
woodwork or drywall or in any way deface the Premises or any part thereof
without Landlord’s prior written consent. Tenant shall not purchase spring
water, ice, towel, linen, maintenance or other like services from any person or
persons not approved by Landlord.

42. 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 upon the Premises
without the written consent of Landlord.

43. Except as expressly permitted in the Lease as used in the ordinary course of
Tenant’s business or with respect to the emergency generator, Tenant shall not
use or keep in or on the Premises, the Building, or the Project any kerosene,
gasoline or other inflammable or combustible fluid, chemical, substance or
material.

 

EXHIBIT G – Page 1

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44. Tenant shall not without the prior written consent of Landlord use any
method of heating or air conditioning other than that supplied by Landlord.

45. Tenant shall not use, keep or permit to be used or kept, any foul or noxious
gas or substance in or on the Premises, or permit or allow the Premises to be
occupied or used 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 tenants or those having business therein, whether by the use of any
musical instrument, radio, phonograph, or in any other way. Tenant shall not
throw anything out of doors, windows or skylights or down passageways.

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

47. No cooking shall be done or permitted on the Premises, nor shall the
Premises be used for the storage of merchandise or for lodging. 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 visitors, provided that such
use is in accordance with all applicable federal, state, county and city laws,
codes, ordinances, rules and regulations.

48. The Premises shall not be used for manufacturing or for the storage of
merchandise except as such storage may be incidental to the use of the Premises
provided for in the Summary. Tenant shall not occupy or permit any portion of
the Premises to be occupied 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 in any form, or as a medical office, or as a
barber or manicure shop, or as an employment bureau without the express prior
written consent of Landlord. Tenant shall not engage or pay any employees on the
Premises except those actually working for such tenant on the Premises nor
advertise for laborers giving an address at the Premises.

49. Landlord reserves the right to exclude or expel from the Project any person
who, in the judgment of Landlord, is intoxicated or under the influence of
liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.

50. Tenant, its employees and agents 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.

51. Tenant shall not waste electricity, water or air conditioning and agrees to
cooperate fully with Landlord to ensure the most effective operation of the
Building’s heating and air conditioning system, and shall refrain from
attempting to adjust any controls.

52. Tenant shall store all its trash and garbage within the interior of the
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in Irvine,
California without violation of any law or ordinance governing such disposal.
All trash, garbage and refuse disposal shall be made only through entry-ways and
elevators provided for such purposes at such times as Landlord shall designate.

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

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

55. No awnings or other projection shall be attached to the outside walls of the
Building without the prior written consent of Landlord, and 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 other than Landlord standard drapes. All
electrical ceiling fixtures hung in the Premises or spaces within 3’ of the
perimeter of the Building must be fluorescent and/or of a quality, type, design
and a warm white bulb color approved in advance in writing by Landlord. Neither
the interior nor exterior of any windows shall be coated or otherwise
sunscreened without the prior written consent of Landlord. Tenant shall abide by
Landlord’s regulations concerning the opening and closing of window coverings
which are attached to the windows in the Premises, if any, which have a view of
any interior portion of the Building or Building Common Areas.

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

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

58. Tenant must comply with the State of California “No Smoking” law set forth
in California Labor Code Section 6404.5, and any local “No Smoking” ordinance
which may be in effect from time to time and which is not superseded by such
State law.

59. Except as otherwise provided in the Lease, Tenant hereby acknowledges that
Landlord shall have no obligation to provide guard service or other security
measures for the benefit of the Premises, the Building or the Project. Tenant
hereby assumes all responsibility for the protection of Tenant and its agents,
employees, contractors, invitees and guests, and the property thereof, from acts
of third parties, including keeping doors locked and other means of entry to the
Premises closed, whether or not Landlord, at its option, elects to provide
security protection for the Project or any portion thereof. Tenant further
assumes the risk that any safety and security devices, services and

 

EXHIBIT G – Page 2

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programs which Landlord elects, in its sole discretion, to provide may not be
effective, or may malfunction or be circumvented by an unauthorized third party,
and Tenant shall, in addition to its other insurance obligations under this
Lease, obtain its own insurance coverage to the extent Tenant desires protection
against losses related to such occurrences. Tenant shall cooperate in any
reasonable safety or security program developed by Landlord or required by law.

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

61. Tenant shall not use in any space or in the public halls of the Building,
any hand trucks except those equipped with rubber tires and rubber side guards.

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

63. No tenant shall use or permit the use of any portion of the Premises for
living quarters, sleeping apartments or lodging rooms.

64. Tenant shall have the exclusive right to use its reserved parking spaces on
a 24 hour per day, 7 day per week basis.

Landlord shall enforce the Rules and Regulations on a reasonable and
non-discriminatory basis, provided Landlord reserves the right at any time to
change or rescind any one or more of these Rules and Regulations, or to make
such other and further reasonable Rules and Regulations as in Landlord’s
judgment may from time to time be necessary for the management, safety, care and
cleanliness of the Premises, Building, the Common Areas and the Project, and for
the preservation of good order therein, as well as for the convenience of other
occupants and tenants therein. Provided Landlord enforces the Rules and
Regulations on a reasonable and non-discriminatory basis, Landlord may waive any
one or more of these Rules and Regulations for the benefit of any particular
tenants, but no such waiver by Landlord shall be construed as a waiver of such
Rules and Regulations in favor of any other tenant, nor prevent Landlord from
thereafter enforcing any such Rules or Regulations against any or all tenants of
the Project. Tenant shall be deemed to have read these Rules and Regulations and
to have agreed to abide by them as a condition of its occupancy of the Premises.

 

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EXHIBIT H

LAKESHORE TOWERS

FORM OF TENANT’S ESTOPPEL CERTIFICATE

The undersigned as Tenant under that certain Office Lease (the “Lease”) made and
entered into as of             ,              by and between                  as
Landlord, and the undersigned as Tenant, for Premises on the             
floor(s) of the office building located at                 ,                 ,
California             , certifies as follows:

1. Attached hereto as Exhibit A is a true and correct copy of the Lease and all
amendments and modifications thereto. The documents contained in Exhibit A
represent the entire agreement between the parties as to the Premises.

2. The undersigned currently occupies the Premises described in the Lease, the
Lease Term commenced on                 , and the Lease Term expires on
                , and the undersigned has no option to terminate or cancel the
Lease or to purchase all or any part of the Premises, the Building and/or the
Project.

3. Base Rent became payable on                     .

4. The Lease is in full force and effect and has not been modified, supplemented
or amended in any way except as provided in Exhibit A.

5. Tenant has not transferred, assigned, or sublet any portion of the Premises
nor entered into any license or concession agreements with respect thereto
except as follows:

6. Tenant shall not modify the documents contained in Exhibit A without the
prior written consent of Landlord’s mortgagee.

7. All monthly installments of Base Rent, all Additional Rent and all monthly
installments of estimated Additional Rent have been paid when due through
                . The current monthly installment of Base Rent is
$                        .

8. To the best knowledge of Tenant, all conditions of the Lease to be performed
by Landlord necessary to the enforceability of the Lease have been satisfied and
Landlord is not in default thereunder. In addition, the undersigned has not
delivered any notice to Landlord regarding a default by Landlord thereunder.

9. No rental has been paid more than thirty (30) days in advance and no security
has been deposited with Landlord except as provided in the Lease.

10. As of the date hereof, there are no existing defenses or offsets, or, to the
undersigned’s knowledge, claims or any basis for a claim, that the undersigned
has against Landlord.

11. If Tenant is a corporation or partnership, each individual executing this
Estoppel Certificate on behalf of Tenant hereby represents and warrants that
Tenant is a duly formed and existing entity qualified to do business in
California and that Tenant has full right and authority to execute and deliver
this Estoppel Certificate and that each person signing on behalf of Tenant is
authorized to do so.

12. There are no actions pending against the undersigned under the bankruptcy or
similar laws of the United States or any state.

13. Other than in compliance with all applicable laws and incidental to the
ordinary course of the use of the Premises, the undersigned has not used or
stored any hazardous substances in the Premises.

14. To the undersigned’s knowledge, all tenant improvement work to be performed
by Landlord under the Lease has been completed in accordance with the Lease and
has been accepted by the undersigned and all reimbursements and allowances due
to the undersigned under the Lease in connection with any tenant improvement
work have been paid in full.

The undersigned acknowledges that this Estoppel Certificate may be delivered to
Landlord or to a prospective mortgagee or prospective purchaser, and
acknowledges that said prospective mortgagee or prospective purchaser will be
relying upon the statements contained herein in making the loan or acquiring the
property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.

Executed at                      on the      day of                 ,
            .

 

“Tenant”: _____________________________, a____________________________

By:

   

Its:

   

By:

   

Its:

   

 

EXHIBIT H – Page 1

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EXHIBIT I

LAKESHORE TOWERS

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

RECORDING REQUESTED

BY AND WHEN

RECORDED RETURN TO:

Nancy Lundeen, Esq.

Allen Matkins Leck Gamble Mallory & Natsis LLP

Three Embarcadero Center, 12th Floor

San Francisco, CA 94111

SUBORDINATION

NONDISTURBANCE

AND ATTORNMENT AGREEMENT

NOTICE:

THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT RESULTS IN YOUR
LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN
THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.

DEFINED TERMS

Execution Date: As of                     , 20        2011

Beneficiary & Address:

Individually and collectively, Metropolitan Life Insurance Company, a New York
corporation, and its (“MetLife”), and MetLife Bank, N.A., a national banking
association (“MetLife Bank”), and their respective affiliates, as applicable

c/o Metropolitan Life Insurance Company

10 Park Avenue

Morristown, New Jersey 07962

Attn: Senior Vice President

   Real Estate Investments

with a copy to:

Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, CA 94105

Attn: Associate General Counsel

Tenant & Address:

Tenant & Address:

Epicor Software Corporation, a Delaware corporation

Epicor Software Corporation

18101 Von Karman, Suite 1600

Irvine, CA 92612

Attention: Chief Information Officer

With a copy of any default notices to:

Epicor Software Corporation

18101 Von Karman, Suite 1600

Irvine, CA 92612

Attention: John D. Ireland

General Counsel/Sr. Vice-President

and a copy of any default notices to:

Allen Matkins Leck Gamble Mallory & Natsis LLP

1900 Main Street, Suite 500

Irvine, CA 92614

Attention: David W. Wensley, Esq.

Landlord & Address:

Lakeshore Towers Limited Partnership Phase I, a California limited partnership

Lakeshore Towers Limited Partnership Phase I

Attention: Building Manager

18101 Von Karman Avenue

Irvine, CA 92612

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Loan: A first mortgage loan in the originalaggregate principal amount of
$                     from Beneficiary to Landlord and affiliates of Landlord
that own certain neighboring properties (the “Other Borrowers”).

Note: AIndividually and collectively, (i) a Promissory Note dated as of April
            , 2010, executed by Landlord and the Other Borrowers in favor of
Beneficiary in the amount of the Loan dated as of MetLife in the amount of
$            , (ii) a Promissory Note dated as of April             , 2010,
executed by Landlord and the Other Borrowers in favor of MetLife Bank in the
amount of $            .

Deed of Trust: A Leasehold Deed of Trust, Security Agreement and Fixture Filing
dated as of April             , 2010, executed by Landlord, to First American
Title Insurance Company, as Trustee, for the benefit of Beneficiary securing
repayment of the Note to be recorded in the records of the County in which the
Property is located.

Lease and Lease Date: The leaseunrecorded Office Lease entered into by Landlord
and Tenant dated as of February 10, 2011 covering the Premises.

[Add amendments]

Property: [Property Name] Lakeshore Towers Building I

[Street Address 1]

[City, State, Zip]

18101 Von Karman Avenue

Irvine, CA 92612

The Property is more particularly described on Exhibit A.

THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (the “Agreement”) is
made by and among Tenant, Landlord, and Beneficiary and affects the Property
described in Exhibit A. Certain terms used in this Agreement are defined in the
Defined Terms. This Agreement is entered into as of the Execution Date with
reference to the following facts:

A. Landlord and Tenant have entered into the Lease covering certain space in the
improvements located in and upon the Property (the “Premises”).

B. Beneficiary has made or is making the Loan to Landlord evidenced by the Note.
The Note is secured, among other documents, by the Deed of Trust.

C. Landlord, Tenant and Beneficiary all wish to subordinate the Lease to the
lien of the Deed of Trust.

D. Tenant has requested that Beneficiary agree not to disturb Tenant’s rights in
the Premises pursuant to the Lease in the event Beneficiary forecloses the Deed
of Trust, or acquires the Property pursuant to the trustee’s power of sale
contained in the Deed of Trust or receives a transfer of the Property by a
conveyance in lieu of foreclosure of the Property (collectively, a “Foreclosure
Sale”) but only if Tenant is not then in default under the Lease beyond all
applicable notice and cure periods and Tenant attorns to Beneficiary or a third
party purchaser at the Foreclosure Sale (a “Foreclosure Purchaser”).

NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:

1. Subordination. The Subject in all events to the terms of this Agreement, the
Lease and the leasehold estate created by the Lease and all of Tenant’s rights
under the Lease are and shall remain subordinate to the Deed of Trust and the
lien of the Deed of Trust, to all rights of Beneficiary under the Deed of Trust
and to all renewals, amendments, modifications and extensions of the Deed of
Trust, provided no such renewals, amendments, modification or extensions of the
Deed of Trust modify the terms of this Agreement without the written consent of
Tenant.

2. Acknowledgments by Tenant. Tenant agrees that: (a) Tenant has notice that the
Lease and the rent and all other sums due under the Lease have been or are to be
assigned to Beneficiary as security for the Loan. In the event that Beneficiary
notifies Tenant of a default under the Deed of Trust and requests Tenant to pay
its rent and all other sums due under the Lease to Beneficiary, Tenant shall pay
such sums directly to Beneficiary or as Beneficiary may otherwise request and
all amounts so paid to Beneficiary shall be credited against Tenant’s
obligations under the Lease. (b) Tenant shall send a copy of any notice or
statement under the Lease to Beneficiary at the same time Tenant sends such
notice or statement to Landlord. (c) This Agreement satisfies any condition or
requirement in the Lease relating to the granting of a nondisturbance agreement.

3. Foreclosure and Sale. In the event of a Foreclosure Sale,

(a) So long as Tenant complies with this Agreement and is not in default under
any of the provisions of the Lease beyond any applicable notice and cure
periods, the Lease shall continue in full force and effect as a direct lease
between Beneficiary and Tenant, Tenant shall have all rights as provided in the
Lease including, without limitation, the right to apply Base Rent Credits
against Tenant’s rent obligations as provided in Exhibit B and the Lease, and
Beneficiary will not disturb the possession of Tenant, subject to this
Agreement. To the extent that the Lease is extinguished as a result of a
Foreclosure Sale, a new lease shall automatically go into effect upon the same
provisions as contained in the Lease between Landlord and Tenant, except as set
forth in this Agreement, for the unexpired term of the Lease. Subject to the
terms of this Agreement, Tenant agrees to attorn to and accept Beneficiary as
landlord under the Lease and to be bound by and perform all of the obligations
imposed by the Lease, or, as the case may be, under the new lease, in the event
that the Lease is extinguished by a Foreclosure Sale.

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

Upon Beneficiary’s acquisition of title to the Property, Beneficiary will
perform all of the obligations imposed on the Landlord by the Lease except as
set forth in this Agreement; provided, however, that Beneficiary shall not be:
(i) liable for any act or omission of a prior landlord (including Landlord); or
(ii) subject to any offsets or defenses that Tenant might have against any prior
landlord (including Landlord), except for Tenant’s right to apply Base Rent
Credits to its rent obligations as provided in the Lease, Tenant’s right to
receive a rent credit under Section 1.1.4 of the Lease, and except to the extent
any other such offsets or defenses continue after any Foreclosure Sale and
transfer of the Property to Beneficiary; or (iii) bound by any rent or
additional rent which Tenant might have paid in advance to any prior landlord
(including Landlord) for a period in excess of one month or by any security
deposit, cleaning deposit or other sum that Tenant may have paid in advance to
any prior landlord (including Landlord), except for Tenant’s right to apply Base
Rent Credits to its rent obligations as provided in the Lease, and Tenant’s
right to receive a rent credit under Section 1.1.4 of the Lease; or (iv) bound
by any amendment, modification, assignment or termination of the Lease made
without the written consent of Beneficiary; (v) obligated or liable with respect
to any representations, warranties or indemnities contained in the Lease, except
to the extent of Landlord’s indemnities as to any and all matters which arise
from and after the date of any Foreclosure Sale and transfer of the Property to
Beneficiary; or (vi) liable to Tenant or any other party for any conflict
between the provisions of the Lease and the provisions of any other lease
affecting the Property which is not entered into by Beneficiary.

(b) Upon the written request of Beneficiary after a Foreclosure Sale, the
parties shall execute a lease of the Premises upon the same provisions as
contained in the Lease between Landlord and Tenant, except as set forth in this
Agreement, for the unexpired term of the Lease.

(c) Notwithstanding any provisions of the Lease to the contrary, from and after
the date that Beneficiary acquires title to the Property as a result of a
Foreclosure Sale, (i) Beneficiary will not be obligated to expend any monies to
restore casualty damage in excess of available insurance proceeds;
(ii) tenantTenant shall not have the right to make repairs and deduct the cost
of such repairs from the rent without a judicial determination that Beneficiary
is in default of its obligations under the Lease; (iii) in no event will
Beneficiary be obligated to indemnify Tenant, except where Beneficiary is in
breach of its obligations under the Lease or where Beneficiary has been actively
negligent in the performance of its obligations as landlord; and (iv) other than
determination of fair market value, no disputes under the Lease shall be subject
to arbitration unless Beneficiary and Tenant agree to submit a particular
dispute to arbitration.

4. Subordination and Release of Purchase Options. Tenant represents that it has
no right or option of any nature to purchase the Property or any portion of the
Property or any interest in the Grantor. To the extent Tenant has or acquires
any such right or option, these rights or options are acknowledged to be subject
and subordinate to the Mortgage and are waived and released as to Beneficiary
and any Foreclosure Purchaser.

5. Acknowledgment by Landlord. In the event of a default under the Deed of
Trust, at the election of Beneficiary, Tenant shall and is directed to pay all
rent and all other sums due under the Lease to Beneficiary.

6. Construction of Improvements. Beneficiary shall not have any obligation or
incur any liability with respect to the completion of tenant improvements for
the Premises.

7. Notice. All notices under this Agreement shall be deemed to have been
properly given if delivered by overnight courier service or mailed by United
States certified mail, with return receipt requested, postage prepaid to the
party receiving the notice at its address set forth in the Defined Terms (or at
such other address as shall be given in writing by such party to the other
parties) and shall be deemed complete upon receipt or refusal of delivery.

8. Miscellaneous. Beneficiary shall not be subject to any provision of the Lease
that is inconsistent with this Agreement. Nothing contained in this Agreement
shall be construed to derogate from or in any way impair or affect the lien or
the provisions of the Deed of Trust. This Agreement shall be governed by and
construed in accordance with the laws of the State of in which the Property is
located.

9. Liability and Successors and Assigns. In the event that Beneficiary acquires
title to the Premises or the Property, Beneficiary shall have no obligation nor
incur any liability in an amount in excess of $3,000,00010,000,000 and Tenant’s
recourse against Beneficiary shall in no extent exceed the amount of
$3,000,000.10,000,000. This Agreement shall run with the land and shall inure to
the benefit of the parties and, their respective successors and permitted
assigns including a Foreclosure Purchaser. If a Foreclosure Purchaser acquires
the Property or if Beneficiary assigns or transfers its interest in the Note and
Deed of Trust or the Property, all obligations and liabilities of Beneficiary
under this Agreement arising from and after the transfer by Beneficiary of its
interest in the Property to a Foreclosure Purchaser shall terminate and be the
responsibility of the Foreclosure Purchaser or other party to whom Beneficiary’s
interest is assigned or transferred. The interest of Tenant under this Agreement
may not be assigned or transferred except in connection with an assignment of
its interest in the Lease which has been consented to by Beneficiary.

10. OFAC Provisions Tenant and Beneficiary hereby represent, warrant and
covenant to each other, either that (i) it is regulated by the SEC, FINRA or the
Federal Reserve (a “Regulated Entity”), or is a wholly-owned subsidiary or
affiliate of a Regulated Entity or (ii) neither it nor any person or entity that
directly or indirectly (a) controls it or (b) has an ownership interest in it of
twenty-five percent (25%) or more, appears on the list of Specially Designated
Nationals and Blocked Persons (“OFAC List”) published by the Office of Foreign
Assets Control (“OFAC”) of the U.S. Department of the Treasury.

With respect to each Guarantor of Tenant’s obligations under this Lease, Tenant
further represents, warrants and covenants either that (i) any such Guarantor is
a Regulated Entity or a wholly-owned subsidiary or affiliate of a Regulated
Entity or (ii) neither Guarantor nor any person or entity that directly or
indirectly (a) controls such Guarantor or (b) has an ownership interest in such
Guarantor of twenty-five percent (25%) or more, appears on the OFAC List.

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

IN WITNESS WHEREOF, the parties have executed this Subordination, Nondisturbance
and Attornment Agreement as of the Execution Date.

IT IS RECOMMENDED THAT THE PARTIES CONSULT WITH THEIR ATTORNEYS PRIOR TO THE
EXECUTION OF THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT.

 

BENEFICIARY:     METROPOLITAN LIFE INSURANCE COMPANY,     a New York corporation
      By               :         Its               :

State of             

County of             

 

    METLIFE BANK, N.A.,     a national banking association       By:  
Metropolitan Life Insurance Company       Its:   Servicer

On             , 20            before me,             , personally appeared
            , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.

 

          By:           Name:           Title:    

WITNESS my hand and official seal.

[SEE ADDITIONAL SIGNATURES ON NEXT PAGE]

Signature             (Seal)

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

TENANT: EPICOR SOFTWARE CORPORATION,

a Delaware corporation a              By:     Name:     Title:     By       Its
            

State of             

County of             

On             , 20            before me,             , personally appeared
            , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

 

Name:     Title:    

Signature             (Seal)

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

LANDLORD: LAKESHORE TOWERS LIMITED PARTNERSHIP PHASE I, a California limited
partnership   a       By       Its     By:   Skipper Realty Corporation, a
Delaware corporation, its Sole General Partner   By:       Name:       Title:  
 

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

TENANT:

State of             

County of             

On             , 20__2011 before me,                                 ,
personally appeared                                 , personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.

WITNESS my hand and official seal.

Signature                                          
                                                         (Seal)

State of             

County of             

On                     , 2011 before me,                             ,
personally appeared                         , personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.

WITNESS my hand and official seal.

Signature                                          
                                                        (Seal)

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

LANDLORD:

State of             

County of             

On                     , 2011 before me,                     , personally
appeared                     , personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.

WITNESS my hand and official seal.

Signature                                          
                                            (Seal)

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

EXHIBIT A

PROPERTY DESCRIPTION

The undersigned Guarantor to the Lease hereby consents to the foregoing
Subordination, Nondisturbance and Attornment Agreement and reaffirms that the
Guaranty of Lease dated                                 remains in full force
and effect as of the date of the foregoing Subordination, Nondisturbance and
Attornment Agreement.

GUARANTOR:             

a             

By             

Its             

Parcels 1 through 7 of Parcel Map 89-274 in the City of Irvine, County of
Orange, State of California as recorded in Book 267, Pages 18-26 of Parcel Maps.

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

EXHIBIT J

LAKESHORE TOWERS

TENANT’S TOP SIGNS

LOGO [g148576img007.jpg]

 

EXHIBIT J – Page 1

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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EXHIBIT K

LAKESHORE TOWERS

TENANT’S WALKWAY SIGN

LOGO [g148576img008.jpg]

 

EXHIBIT K – Page 1

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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EXHIBIT L

LAKESHORE TOWERS

TENANT’S MONUMENT SIGN

LOGO [g148576img009.jpg]

 

EXHIBIT L – Page 1

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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EXHIBIT M

JANITORIAL SPECIFICATIONS

Janitorial Requirements

Lobby

 

SERVICE

   Daily    Weekly    Monthly    Quarterly    Yearly

Vacuum all carpeted areas

   •            

Spot clean carpets

   •            

Sweep, damp mop all floored surfaces

   •            

Buff floored areas to insure high luster appearance

         •      

Clean all ledges and moldings

   •            

Clean and polish security station

   •            

Clean and polish all chrome/anodized metal finishes

   •            

Clean all entry glass (inside and out) up to 10’

   •            

Clean and polish all entry thresholds

   •            

Dust all mullions and sills

   •            

Clean all baseboard with detergent and water

      •         

Empty all waste receptacles

   •            

Police entrance (int and ext) for trash and debris

   •            

Sweep all stairwells and corridors

   •            

Clean and dust stairwell railings

   •            

Strip and wax tile floors

         •      

Dust all furnishings

   •            

Dust all artwork

      •         

Polish wood furnishings

      •         

Screen all Project sand urns for cigarettes and debris at least once daily

              

Remove all trash, rubbish and debris from the Premises, Building and Project
daily

              

Clean and disinfect telephones weekly

              

 

EXHIBIT M – Page 1

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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

Janitorial Requirements

Work Areas

 

SERVICE

   Daily    Weekly    Monthly    Quarterly    Yearly

Empty all waste baskets and replace liners as needed

   •            

Vacuum all carpeted areas, to include around and beneath desks

      •         

Spot clean all doors, frames and switchplates

   •            

Dust all horizontal, including artwork and furnishings, surfaces (up to 7’) with
a treated cloth or wand

   •    3x         

Dust all baseboards

      3x         

Spot clean carpet

   •            

Dust all surfaces (higher than 7’)

      •         

Spot clean all partitions, walls glass and windows

      •         

Clean all chrome/anodized metal finishes

   •            

Wash all vinyl and metal door kick plates

   •            

Vacuum/clean all ceiling air supply and exhaust diffusers/grills

            •   

Clean all ledges and moldings

   •            

Polish wood furnishings

         •      

Dust all mullions and sills

   •            

 

EXHIBIT M – Page 2

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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Janitorial Requirements

Rest Rooms

 

SERVICE

   Daily    Weekly    Monthly    Quarterly    Yearly

Clean, disinfect and polish toilets and urinals

   •            

Damp wipe/disinfect all ledges, counters, stalls, and smooth surfaces

   •            

Sweep and mop with germicide, all floored surfaces

   •            

Clean, disinfect and polish all mirrors, soap dispensers and chrome fixtures

   •            

Clean, disinfect and polish sinks and faucets

   •            

Clean and disinfect all dispensers

   •            

Furnish/refill all soap, paper and product dispensers

   •            

Clean, disinfect and replace liners in all trash and product waste receptacles

   •            

Clean all baseboards with a germicidal cleanser

   •            

Remove and clean urinal screens*

              

Clean and flush floor drains*

              

Vacuum all ceiling air supply and exhaust diffusers/grills

            •   

Strip, disinfect and wax all floored surfaces

         •      

Vacuum/clean all ceiling air supply and exhaust diffusers/grills*

            •   

Polish all chrome and porcelain surfaces

      •         

 

* Replaced as needed.

 

EXHIBIT M – Page 3

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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

Janitorial Requirements

Lounge, Copy and Conference Rooms

 

SERVICE

   Daily    Weekly    Monthly    Quarterly    Yearly

Dust/polish conference tables

   •            

Vacuum chairs

         •      

Empty all trash receptacles

   •            

Clean, remove any remaining food or beverage/trash

   •            

Vacuum all carpeted areas

   •            

Clean/disinfect all counter surfaces

   •            

Mop/disinfect all floored surfaces

   •            

Detergent clean (inside and outside) of microwave*

   •            

Spot clean all doors, frames and switchplates

   •            

Empty all waster receptacles and replace liners as needed

   •            

Dust all horizontal surfaces (up to 7’) with a treated cloth or wand

   •            

Clean all baseboards with detergent and water

   •            

Spot clean carpet

   •            

Sweep, damp mop all floored surfaces

   •            

Buff floored areas to insure high luster appearance

         •      

Strip, disinfect and wax floors

         •      

Clean refrigerator*

         •      

Vacuum all ceiling air supply and exhaust diffusers and grills

            •   

 

* Extra cost to be charged directly to Tenant.

 

EXHIBIT M – Page 4

      LAKESHORE TOWERS BUILDING I       [Epicor Software Corporation]

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SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

RECORDING REQUESTED

BY AND WHEN

RECORDED RETURN TO:

Associate General Counsel

Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, CA 94105

SUBORDINATION

NONDISTURBANCE

AND ATTORNMENT AGREEMENT

NOTICE: THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT RESULTS IN
YOUR LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.

DEFINED TERMS

Execution Date: As of March 9, 2011

Beneficiary & Address:

Individually and collectively, Metropolitan Life Insurance Company, a New York
corporation, (“MetLife”), and MetLife Bank, N.A., a national banking association
(“MetLife Bank”), and their respective affiliates, as applicable

c/o Metropolitan Life Insurance Company

10 Park Avenue

Morristown, New Jersey 07962

Attn: Senior Vice President

        Real Estate Investments

with a copy to:

Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, CA 94105

Attn: Associate General Counsel

Tenant & Address:

Epicor Software Corporation, a Delaware corporation

Epicor Software Corporation

18101 Von Karman, Suite 1600

Irvine, CA 92612

Attention: Chief Information Officer

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

With a copy of any default notices to:

Epicor Software Corporation

18101 Von Karman, Suite 1600

Irvine, CA 92612

Attention: John D. Ireland

General Counsel/Sr. Vice-President

and a copy of any default notices to:

Allen Matkins Leck Gamble Mallory & Natsis LLP

1900 Main Street, Suite 500

Irvine, CA 92614

Attention: David W. Wensley, Esq.

Landlord & Address:

Lakeshore Towers Limited Partnership Phase I, a California limited partnership

Lakeshore Towers Limited Partnership Phase I

Attention: Building Manager

18101 Von Karman Avenue

Irvine, CA 92612

Loan: A first mortgage loan in the aggregate principal amount of $95,000,000
from Beneficiary to Landlord and affiliates of Landlord that own certain
neighboring properties (the “Other Borrowers”).

Note: Individually and collectively, (i) a Promissory Note dated as of April 29,
2010, executed by Landlord and the Other Borrowers in favor of MetLife in the
amount of $83,388,888.83, (ii) a Promissory Note dated as of April 28, 2010,
executed by Landlord and the Other Borrowers in favor of MetLife Bank in the
amount of $11,611,111.17.

Deed of Trust: a Leasehold Deed of Trust, Security Agreement and Fixture Filing
dated as of April 28, 2010, executed by Landlord, to First American Title
Insurance Company, as Trustee, for the benefit of Beneficiary securing repayment
of the Note to be recorded in the records of the County in which the Property is
located.

Lease and Lease Date: The unrecorded Office Lease entered into by Landlord and
Tenant dated as of February 10, 2011 covering the Premises.

Property: Lakeshore Towers Building I

            18101 Von Karman Avenue

            Irvine, CA 92612

 

-2-

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

The Property is more particularly described on Exhibit A.

THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (the “Agreement”) is
made by and among Tenant, Landlord, and Beneficiary and affects the Property
described in Exhibit A. Certain terms used in this Agreement are defined in the
Defined Terms. This Agreement is entered into as of the Execution Date with
reference to the following facts:

A. Landlord and Tenant have entered into the Lease covering certain space in the
improvements located in and upon the Property (the “Premises”).

B. Beneficiary has made or is making the Loan to Landlord evidenced by the Note.
The Note is secured, among other documents, by the Deed of Trust.

C. Landlord, Tenant and Beneficiary all wish to subordinate the Lease to the
lien of the Deed of Trust.

D. Tenant has requested that Beneficiary agree not to disturb Tenant’s rights in
the Premises pursuant to the Lease in the event Beneficiary forecloses the Deed
of Trust, or acquires the Property pursuant to the trustee’s power of sale
contained in the Deed of Trust or receives a transfer of the Property by a
conveyance in lieu of foreclosure of the Property (collectively, a “Foreclosure
Sale”) but only if Tenant is not then in default under the Lease beyond all
applicable notice and cure periods and Tenant attorns to Beneficiary or a third
party purchaser at the Foreclosure Sale (a “Foreclosure Purchaser”).

NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:

1. Subordination. Subject in all events to the terms of this Agreement, the
Lease and the leasehold estate created by the Lease and all of Tenant’s rights
under the Lease are and shall remain subordinate to the Deed of Trust and the
lien of the Deed of Trust, to all rights of Beneficiary under the Deed of Trust
and to all renewals, amendments, modifications and extensions of the Deed of
Trust.

2. Acknowledgments by Tenant. Tenant agrees that: (a) Tenant has notice that the
Lease and the rent and all other sums due under the Lease have been or are to be
assigned to Beneficiary as security for the Loan. In the event that Beneficiary
notifies Tenant of a default under the Deed of Trust and requests Tenant to pay
its rent and all other sums due under the Lease to Beneficiary, Tenant shall pay
such sums directly to Beneficiary or as Beneficiary may otherwise request and
all amounts so paid to Beneficiary shall be credited against Tenant’s
obligations under the Lease. (b) Tenant shall send a copy of any notice or
statement under the Lease to Beneficiary at the same time Tenant sends such
notice or statement to Landlord. (c) This Agreement satisfies any condition or
requirement in the Lease relating to the granting of a nondisturbance agreement.

 

-3-

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

3. Foreclosure and Sale. In the event of a Foreclosure Sale,

(a) So long as Tenant complies with this Agreement and is not in default under
any of the provisions of the Lease beyond any applicable notice and cure
periods, the Lease shall continue in full force and effect as a direct lease
between Beneficiary and Tenant, Tenant shall have all rights as provided in the
Lease including, without limitation, the right to apply Base Rent Credits
against Tenant’s rent obligations as provided in the Lease, and Beneficiary will
not disturb the possession of Tenant, subject to this Agreement. To the extent
that the Lease is extinguished as a result of a Foreclosure Sale, a new lease
shall automatically go into effect upon the same provisions as contained in the
Lease between Landlord and Tenant, except as set forth in this Agreement, for
the unexpired term of the Lease. Subject to this Section 3(a), Tenant agrees to
attorn to and accept Beneficiary as landlord under the Lease and to be bound by
and perform all of the obligations imposed by the Lease, or, as the case may be,
under the new lease, in the event that the Lease is extinguished by a
Foreclosure Sale. Upon Beneficiary’s acquisition of title to the Property,
Beneficiary will perform all of the obligations imposed on the Landlord by the
Lease except as set forth in this Agreement; provided, however, that Beneficiary
shall not be: (i) liable for any act or omission of a prior landlord (including
Landlord); or (ii) subject to any offsets or defenses that Tenant might have
against any prior landlord (including Landlord), except for Tenant’s right to
apply Base Rent Credits to its rent obligations as provided in the Lease,
Tenant’s right to receive a rent credit under Section 1.1.4 of the Lease, and
except to the extent any other such offsets or defenses continue after any
Foreclosure Sale and transfer of the Property to Beneficiary; or (iii) bound by
any rent or additional rent which Tenant might have paid in advance to any prior
landlord (including Landlord) for a period in excess of one month or by any
security deposit, cleaning deposit or other sum that Tenant may have paid in
advance to any prior landlord (including Landlord) except for Tenant’s right to
apply Base Rent Credits to its rent obligations as provided in the Lease, and
Tenant’s right to receive a rent credit under Section 1.1.4 of the Lease; or
(iv) bound by any amendment, modification, assignment or termination of the
Lease made without the written consent of Beneficiary; (v) obligated or liable
with respect to any representations, warranties or indemnities contained in the
Lease, except to the extent of Landlord’s indemnities as to any and all matters
which arise from and after the date of any Foreclosure Sale and transfer of the
Property to Beneficiary; or (vi) liable to Tenant or any other party for any
conflict between the provisions of the Lease and the provisions of any other
lease affecting the Property which is not entered into by Beneficiary.

(b) Upon the written request of Beneficiary after a Foreclosure Sale, the
parties shall execute a lease of the Premises upon the same provisions as
contained in the Lease between Landlord and Tenant, except as set forth in this
Agreement, for the unexpired term of the Lease.

(c) Notwithstanding any provisions of the Lease to the contrary, from and after
the date that Beneficiary acquires title to the Property as a result of a
Foreclosure Sale, (i) Beneficiary will not be obligated to expend any monies to
restore casualty damage in excess of available insurance proceeds; (ii) Tenant
shall not have the right to make repairs and deduct the cost of such repairs
from the rent without a judicial

 

-4-

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

determination that Beneficiary is in default of its obligations under the Lease;
(iii) in no event will Beneficiary be obligated to indemnify Tenant, except
where Beneficiary is in breach of its obligations under the Lease or where
Beneficiary has been actively negligent in the performance of its obligations as
landlord; and (iv) other than determination of fair market value, no disputes
under the Lease shall be subject to arbitration unless Beneficiary and Tenant
agree to submit a particular dispute to arbitration.

4. Subordination and Release of Purchase Options. Tenant represents that it has
no right or option of any nature to purchase the Property or any portion of the
Property or any interest in the Grantor. To the extent Tenant has or acquires
any such right or option, these rights or options are acknowledged to be subject
and subordinate to the Mortgage and are waived and released as to Beneficiary
and any Foreclosure Purchaser.

5. Acknowledgment by Landlord. In the event of a default under the Deed of
Trust, at the election of Beneficiary, Tenant shall and is directed to pay all
rent and all other sums due under the Lease to Beneficiary.

6. Construction of Improvements. Beneficiary shall not have any obligation or
incur any liability with respect to the completion of tenant improvements for
the Premises.

7. Notice. All notices under this Agreement shall be deemed to have been
properly given if delivered by overnight courier service or mailed by United
States certified mail, with return receipt requested, postage prepaid to the
party receiving the notice at its address set forth in the Defined Terms (or at
such other address as shall be given in writing by such party to the other
parties) and shall be deemed complete upon receipt or refusal of delivery.

8. Miscellaneous. Beneficiary shall not be subject to any provision of the Lease
that is inconsistent with this Agreement. Nothing contained in this Agreement
shall be construed to derogate from or in any way impair or affect the lien or
the provisions of the Deed of Trust. This Agreement shall be governed by and
construed in accordance with the laws of the State of in which the Property is
located.

9. Liability and Successors and Assigns. In the event that Beneficiary acquires
title to the Premises or the Property, Beneficiary shall have no obligation nor
incur any liability in an amount in excess of $10,000,000 and Tenant’s recourse
against Beneficiary shall in no extent exceed the amount of $10,000,000. This
Agreement shall run with the land and shall inure to the benefit of the parties
and, their respective successors and permitted assigns including a Foreclosure
Purchaser. If a Foreclosure Purchaser acquires the Property or if Beneficiary
assigns or transfers its interest in the Note and Deed of Trust or the Property,
all obligations and liabilities of Beneficiary under this Agreement arising from
and after the transfer by Beneficiary of its interest in the Property to a
Foreclosure Purchaser shall terminate and be the responsibility of the
Foreclosure Purchaser or other party to whom Beneficiary’s interest is assigned
or transferred. The interest of Tenant under this Agreement may not be assigned
or transferred except in connection with an assignment of its interest in the
Lease which has been consented to by Beneficiary.

 

-5-

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

10. OFAC Provisions Tenant and Beneficiary hereby represent, warrant and
covenant to each other, either that (i) it is regulated by the SEC, FINRA or the
Federal Reserve (a “Regulated Entity”), or is a wholly-owned subsidiary or
affiliate of a Regulated Entity or (ii) neither it nor any person or entity that
directly or indirectly (a) controls it or (b) has an ownership interest in it of
twenty-five percent (25%) or more, appears on the list of Specially Designated
Nationals and Blocked Persons (“OFAC List”) published by the Office of Foreign
Assets Control (“OFAC”) of the U.S. Department of the Treasury.

With respect to each Guarantor of Tenant’s obligations under this Lease, Tenant
further represents, warrants and covenants either that (i) any such Guarantor is
a Regulated Entity or a wholly-owned subsidiary or affiliate of a Regulated
Entity or (ii) neither Guarantor nor any person or entity that directly or
indirectly (a) controls such Guarantor or (b) has an ownership interest in such
Guarantor of twenty-five percent (25%) or more, appears on the OFAC List.

11. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which taken together shall
constitute a single instrument.

IN WITNESS WHEREOF, the parties have executed this Subordination, Nondisturbance
and Attornment Agreement as of the Execution Date.

IT IS RECOMMENDED THAT THE PARTIES CONSULT WITH THEIR ATTORNEYS PRIOR TO THE
EXECUTION OF THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT.

 

-6-

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

BENEFICIARY:    

METROPOLITAN LIFE INSURANCE COMPANY,

a New York corporation

      By   /s/ John D. Menne       Its   Managing Director    

METLIFE BANK, N.A.,

a national banking association

      By:   Metropolitan Life Insurance Company       Its:   Servicer        
By:   /s/ John D. Menne         Name:   John D. Menne         Title:   Managing
Director

[SEE ADDITIONAL SIGNATURES ON NEXT PAGE]

 

-7-

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

TENANT:  

EPICOR SOFTWARE CORPORATION,

a Delaware corporation

    By:   /s/ John D. Ireland     Name:   John D. Ireland     Title:   SVP &
General Counsel     By:   /s/ Vincent Lowder     Name:   Vincent Lowder    
Title:   VP & Assistant General Counsel LANDLORD:  

LAKESHORE TOWERS LIMITED PARTNERSHIP PHASE I,

a California limited partnership

  By:   Skipper Realty Corporation,
a Delaware corporation,   Its:   Sole General Partner     By:   /s/ Robert Jones
    Name:   Robert Jones     Title:   Vice President

 

-8-

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

TENANT:

State of                     

County of                     

On                     , 2011 before me,                         , personally
appeared                         , personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.

WITNESS my hand and official seal.

Signature                                          (Seal)

TENANT:             

  a     By     Its      

State of                     

County of                     

On                     , 2011 before me,                         , personally
appeared                         , personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.

WITNESS my hand and official seal.

Signature                                  (Seal)

 

-9-

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

LANDLORD:

State of                     

County of                     

On                     , 2011 before me,                         , personally
appeared                         , personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.

WITNESS my hand and official seal.

Signature                                              (Seal)

 

 

-10-

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

EXHIBIT A

PROPERTY DESCRIPTION

Parcels 1 through 7 of Parcel Map 89-274 in the City of Irvine, County of
Orange, State of California as recorded in Book 267, Pages 18-26 of Parcel Maps.

 

-11-