Exhibit 10.1

 

GENESIS CORPORATE CENTRE LEASE

 

5958 Priestly Drive, Carlsbad, California

 

BETWEEN

 

PACIFIC CARLSBAD PARTNERS, LLC,

a California limited liability company

 

(“Landlord”)

 

And

 

DOCUMENT SCIENCES CORPORATION,

a Delaware corporation

 

(“Tenant”)

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TABLE OF CONTENTS

 

SECTION

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   PAGE

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    BASIC LEASE PROVISIONS    BLP-1

1

  PREMISES    1     (a)  

Premises, Building and Project

   1     (b)  

Access

   1

2

  TERM    1     (a)  

Length of Term

   1     (b)  

Commencement Date

   1

3

  RENTAL    1     (a)  

Basic Rent

   1     (b)  

Table of Basic Rent

   2     (c)  

Direct Operating Expenses Rent

   2     (d)  

Late Charges

   4     (e)  

Interest

   4     (f)  

Security Deposit

   4

4

  USE    4     (a)  

Permitted Uses

   4     (b)  

Prohibited Uses

   4     (c)  

Compliance With Laws, Rules and Regulations; Declaration

   5     (d)  

Insurance Use Requirements

   5

5

  TENANT IMPROVEMENTS    5     (a)  

Description of Improvements

   5     (b)  

Tenant Acknowledgment of Completion

   5     (c)  

Payment for Tenant Improvements

   5     (d)  

Estimated Completion Date

   6

6

  MAINTENANCE, REPAIR AND ALTERATION OF PREMISES; COMMUNICATIONS SYSTEMS; AND
SECURITY    6     (a)  

Maintenance and Repair

   6     (b)  

Alterations

   7     (c)  

Condition on Termination

   7     (d)  

Communications Systems

   7

7

  UTILITIES AND SERVICES; ACCESS    8     (a)  

Utilities and Services Furnished by Landlord

   8     (b)  

Utilities and Services Furnished by Tenant

   8     (c)  

Access

   8

8

  TAXES    8

9

  LANDLORD’S RIGHT TO ALTER BUILDING    8

10

  SIGNS    8     (a)  

General

   8     (b)  

Exclusive for Building Sign

   8

 

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11

  

LIABILITY INSURANCE AND INDEMNITY

   9     

(a)

  

Tenant Insurance

   9     

(b)

  

Landlord Insurance

   9     

(c)

  

Waiver of Liability of Landlord

   10     

(d)

  

Indemnity

   10

12

  

DAMAGE OR DESTRUCTION

   10     

(a)

  

Repair of Premises

   10     

(b)

  

Abatement of Rent

   10     

(c)

  

Destruction of Premises

   10     

(d)

  

Landlord’s Option to Terminate

   10

13

  

EMINENT DOMAIN

   11

14

  

DEFAULT BY TENANT OR BY LANDLORD

   11     

(a)

  

Remedies Upon Default by Tenant

   11     

(b)

  

Default by Tenant ( Notification of Reletting

   11     

(c)

  

Default by Tenant ( Right of Landlord to Re-Enter

   12     

(d)

  

Default by Tenant ( Landlord’s Right to Pursue Other Remedies

   12     

(e)

  

Default by Landlord

   12     

(f)

  

Default by Landlord ( Notice to Lender

   12

15

  

SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATE

   12     

(a)

  

Subordination

   12     

(b)

  

Attornment

   13     

(c)

  

Estoppel Certificate

   13

16

  

RECAPTURE OF FRONT END EXPENSES

   13

17

  

ASSIGNMENT AND SUBLETTING

   14     

(a)

  

Prohibition of Assignment or Sublet

   14     

(b)

  

Procedure for Consent

   14     

(c)

  

Continuing Obligation of Tenant

   15     

(d)

  

Effect of Termination

   15     

(e)

  

Assignment or Sublease Without Landlord’s Consent

   15

18

  

PARKING

   15     

(a)

  

General

   15     

(b)

  

Tenant’s Exclusive Parking

   15

19

  

NOTICE

   15

20

  

HOLDING OVER BY TENANT

   16

21

  

WAIVER

   16

22

  

LANDLORD’S RIGHT OF ENTRY

   16

23

  

HAZARDOUS MATERIALS

   16

24

  

NO LIGHT, AIR OR VIEW EASEMENT

   17

25

  

PROJECT NAME

   18

 

 

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26

  KEYS, SECURITY AND SECURITY SYSTEM    18     (a)  

Keys

   18     (b)  

Security System

   18

27

  LIMITATION ON PUBLIC ANNOUNCEMENTS    18

28

  BROKERAGE COMMISSIONS    18

29

  COUNTERPARTS    19

30

  GOVERNING LAW    19

31

  CAPTIONS AND INTERPRETATIONS    19

32

  SEVERABILITY    19

33

  ATTORNEY’S FEES    19

34

  SUCCESSORS AND ASSIGNS    19

35

  TIME OF THE ESSENCE    19

36

  LEASE NOT EFFECTIVE UNTIL DELIVERED; LEASE NOT EFFECTIVE UNTIL CONSTRUCTION
LOAN
OBTAINED; LENDER APPROVAL    19

37

  ADDENDA AND EXHIBITS    20

38

  DELAYING CAUSES    20

39

  ENTIRE AGREEMENT    20

40

  QUIET ENJOYMENT    20

 

    Exhibits          “A”  

Floor Plan

         “A-1”  

Site Plan

         “B”  

Rules and Regulations

         “C”  

Work Letter Agreement

         “D”  

Form of Tenant Estoppel Certificate

         “E”  

Subordination, Non-Disturbance and Attornment Agreement

         “E-1”  

1st Pacific Bank of California SNDA

         Addenda          Addendum No. 1        Option to Extend         
Addendum No. 2        Abatement of Rent     

 

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GENESIS CORPORATE CENTRE LEASE

 

THIS GENESIS CORPORATE CENTRE LEASE (“Lease”) is made at San Diego County,
California, as of the date set forth in Paragraph A, between PACIFIC CARLSBAD
PARTNERS, LLC, a California limited liability company (“Landlord”), and DOCUMENT
SCIENCES CORPORATION, a Delaware corporation (“Tenant”).

 

BASIC LEASE PROVISIONS

 

The words and figures set forth in Paragraphs A through P are part of this Lease
wherever appropriate reference is made thereto, unless and except to the extent
they are expressly modified elsewhere in this Lease.

 

General

 

A. Date of Lease: As of February 14, 2005.

 

B. Parties and Addresses for Notice:

 

Landlord:

 

Tenant:

Pacific Carlsbad Partners, LLC

 

Document Sciences Corporation

3838 Camino del Rio North, Suite 300

 

5958 Priestly Drive

San Diego, California 92108

 

Carlsbad, California 92008

Telephone: (619) 280-6400

 

Telephone:                         

Telecopy: (619) 280-3169

 

Telecopy:                         

Contact: Mr. Rick Dentt

 

Contact:                         

 

C. Premises: The area identified as such on the floor plan attached as Exhibit
“A”, comprising the Building (described in Paragraph D), and consisting of
approximately 17,056 rentable square feet. The parcel on which the Building is
located is the “Parcel”.

 

D.      Building:    Name:    Genesis Corporate Centre, Building               
          Address:    5958 Priestly Drive                  Carlsbad, California
92008 E.      Term of Lease:    Six (6) years and two and one-half (2 1/2)
months, with one (1) option to extend the Term for an additional period of five
(5) years; see Addendum No. 1. F.      Commencement Date:    Immediately upon
Substantial Completion of the Tenant Improvements by Landlord pursuant to
Exhibit “C”; see Section 2(b) and Section 5(d). Payment of Basic Rent G.     
Initial Monthly Basic Rent:    $37,182.08; also see Section 3(b). H.     
Prepaid Basic Rent:    $37,182.08.

 

BLP-1

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I.      Month and Day of
Adjustment Date:    [Not Applicable] J.      Month of Base Period Index:    [Not
Applicable] K.      Security Deposit:    $37,182.08; also see Section 3(f). L.
     Use of Premises:    For the following uses only, and for no other use or
purpose: (a) general office purposes and computer laboratory; and (b) any other
lawful purpose with the prior written consent of Landlord, which shall not be
unreasonably withheld, conditioned or delayed. Tenant Improvements M.     
Tenant Improvement Allowance:    [Not Applicable] N.      Estimated Completion
Date:    April 1, 2005. Excess Direct Operating Expenses Rent O.      Direct
Operating Expenses
Percentage    100 % P.      Base Year:    2005

 

BLP-2

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GENESIS CORPORATE CENTRE LEASE

 

LEASE AGREEMENT

 

Landlord hereby leases and Tenant hereby hires the premises described in
Paragraph C of the Basic Lease Provisions (“Premises”).

 

SECTION 1. PREMISES.

 

(a) Premises, Building and Project. The location of the Premises is more
particularly shown on the floor plan attached hereto as Exhibit “A”. The
Premises are located in the building described in Paragraph D of the Basic Lease
Provisions (“Building”). The Building is located in the “Project”, which is the
Genesis Corporate Centre comprising a nine-building complex located at 5930
though 5962 Priestly Drive, Carlsbad, California. The Site Plan of the Project
is attached hereto as Exhibit “A-1”.

 

(b) Access. Landlord, as the owner of the Parcel, and Tenant, as the lessee of
the Premises, have the right of vehicular and pedestrian access, ingress and
egress across the parking areas, drive areas, sidewalks and other outdoor common
areas of the Project. Such parking areas, drive areas, sidewalks and other
outdoor common areas of the Project are owned by the Genesis Corporate Centre
Association, a California non-profit mutual benefit corporation (“Association”),
and are maintained by the Association pursuant to that certain Declaration
Establishing Covenants, Conditions and Grants of Easements for Genesis Corporate
Centre recorded June 29, 2001, as Document No. 2001-0443570, as it may be
amended (“Declaration”).

 

SECTION 2. TERM.

 

(a) Length of Term. The term of this Lease (“Term”) shall be for the period of
time specified in Paragraph E of the Basic Lease Provisions, and shall also
include any fraction of a calendar month between the commencement of the Term
(“Commencement Date”) and the first day of the first full calendar month of the
Term.

 

(b) Commencement Date. Subject to Section 5(d), the Commencement Date shall be
immediately upon Substantial Completion of the Tenant Improvements by Landlord
pursuant to Exhibit “C”. Landlord shall notify Tenant approximately ten (10)
days before Substantial Completion of the Tenant Improvements, in Landlord’s
good faith estimate based on then-current circumstances.

 

SECTION 3. RENTAL. From and after the Commencement Date, Tenant agrees to pay
Landlord, in advance, on the first day of each and every calendar month during
the Term, the Basic Rent and other charges specified in this Section 3. Such
rent for any fraction of a month at the beginning of the Term will be prorated
and paid at the Commencement Date. Payment of all such rent and other charges
shall be without offset or demand, shall be in lawful money of the United States
of America and shall be made at the address set forth for Landlord in Paragraph
B of the Basic Lease Provisions or at such other place as Landlord may direct in
writing. Such rent and other charges shall include the following:

 

(a) Basic Rent. Tenant agrees to pay Landlord monthly rent (“Basic Rent”) in the
amounts specified in Section 3(b). Tenant shall pay to Landlord as prepaid Basic
Rent, immediately upon Tenant’s signing this Lease (in addition to the security
deposit required pursuant to Section 3(f)), the amount specified in Paragraph H
of the Basic Lease Provisions, which amount shall be applied to the first
calendar month of the Term for which payment of Basic Rent is due.

 

1

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(b) Table of Basic Rent. The Basic Rent for which Section 3(a) provides shall be
the following for the following periods during the initial Term:

 

Year of Term

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

  

Beginning

Month of Year

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Month Through
Which Monthly
Basic Rent is

Payable

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Monthly

Basic Rent

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1*

   1    12    $ 37,182.08

2

   13    24    $ 38,297.54

3

   25    36    $ 39,446.47

4

   37    48    $ 40,629.86

5

   49    60    $ 41,848.76

6*

   61    72    $ 43,104.22

7*

   73    74 1/2    $ 44,397.35

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* See Addendum No. 2 regarding abatement of Base Rent

 

If the option to extend the Term is exercised pursuant to Addendum No. 1, the
Basic Rent during the extension of the Term shall be determined pursuant to
Addendum No. 1.

 

(c) Direct Operating Expenses Rent. Tenant agrees to pay to Landlord, from and
after the first anniversary of the Commencement Date, a portion of Direct
Operating Expenses incurred by Landlord in connection with the Premises and the
Building in addition to rent (“Direct Operating Expenses Rent”), as follows:

 

(i) “Direct Operating Expenses” means all direct costs of operation and
maintenance of the Building (excluding such costs as are paid directly by Tenant
and other tenants in the Building), the parking lot(s) serving the Building and
the landscaping and other areas adjacent to the Building.

 

(ii) Direct costs of operation and maintenance of the Premises and the Building
shall be determined in accordance with generally accepted accounting principles
and shall include, by way of illustration but not limitation, all taxes and
assessments (including, but not limited to, real property taxes and assessments,
rent taxes and gross receipt taxes); insurance premiums paid by Landlord; water,
sewer and all other utility charges (other than with respect to utilities
separately metered and paid directly by Tenant or other tenants); janitorial
services; fire detection and security services; management; amortization of such
capital improvements as Landlord may install to comply with governmental
regulations and rules or undertaken in good faith with a reasonable expectation
of reducing operating costs; and costs of labor, supplies, materials and tools.
Direct costs of operation and maintenance of the parking lot(s) serving the
Building and the landscaping and other areas adjacent to the Building shall be
those imposed on Landlord pursuant to the Declaration as the owner of the Parcel
and shall include, by way of illustration but not limitation, landscape
maintenance; road, sidewalk and driveway maintenance; amortization of such
capital improvements as may be installed to comply with governmental regulations
and rules or undertaken in good faith with a reasonable expectation of reducing
operating costs; and costs of labor, supplies, materials and tools. Direct
Operating Expenses shall not include (A) depreciation on the Building or
equipment therein; (B) loan payments or real estate broker’s commissions; (C)
capital improvements to or major repairs of the

 

 

2

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Building shell (i.e., the Building structure, exterior walls and roof); (D) any
costs or expenses incurred by Landlord relating to periods before the
Commencement Date or relating to the period after the expiration of the Term
(except to the extent Tenant holds over in possession of the Premises after the
expiration of the Term); or (E) any costs or expenses incurred by Landlord with
regard to clean-up or testing (or other cost incurred by Landlord with regard
to) Hazardous Materials (defined in Section 23(a)) located (or suspected to be
located) in, on or under, the Building, the Project or the Premises.

 

(iii) The amount of annual Direct Operating Expenses Rent payable by Tenant to
Landlord shall be the amount by which Tenant’s proportional share of the Direct
Operating Expenses, as specified in Paragraph O of the Basic Lease Provisions,
exceeds the Direct Operating Expenses actually incurred by Landlord (as “grossed
up” pursuant to Section 3(c)(iv)) for the Base Year specified in Paragraph P
thereof (“Base Year Expenses”).

 

(iv) If the occupancy of the Building during the Base Year is less than
ninety-five percent (95%), then Direct Operating Expenses for the Base Year
shall be “grossed up” to that amount of Direct Operating Expenses that, using
reasonable projections, would normally be expected to be incurred if the
Building had been ninety-five percent (95%) occupied during the Base Year, as
determined under generally accepted accounting principles consistently applied.

 

(v) Tenant shall pay to Landlord Direct Operating Expenses Rent pursuant to the
following procedure:

 

(A) Landlord shall provide to Tenant, at or before the Commencement Date, a good
faith estimate of annual Direct Operating Expenses for the calendar year in
which the Commencement Date occurs. Landlord shall also provide to Tenant, as
soon as possible following the first day of each succeeding calendar year, a
good faith estimate of annual Direct Operating Expenses with respect to such
calendar year of the Term.

 

(B) Each estimate of annual Direct Operating Expenses Rent determined by
Landlord pursuant to Subsection (A) immediately above shall be divided into
twelve (12) equal monthly installments. Commencing on the first anniversary of
the Commencement Date, Tenant shall pay to Landlord such monthly installment of
Direct Operating Expenses Rent with each monthly payment of Basic Rent pursuant
to Section 3(a). In the event the estimated amount of Direct Operating Expenses
Rent has not yet been determined for any calendar year, Tenant shall pay the
monthly installment in the estimated amount determined for the preceding
calendar year until the estimate for the current calendar year has been provided
to Tenant, at which time Tenant shall pay any shortfall for (or Landlord shall
reimburse Tenant for any overpayment for) the preceding months of the calendar
year, and Tenant shall, thereafter, make the monthly installment payment in
accordance with the current estimate.

 

(C) As soon as reasonably possible following the end of each calendar year of
the Term, Landlord shall determine and provide to Tenant a statement setting
forth the amount of Direct Operating Expenses actually incurred and the amount
of Direct Operating Expenses Rent actually payable by Tenant with respect to
such calendar year. In the event the amount of such Direct Operating Expenses
Rent exceeds the sum of the monthly installments actually paid by Tenant for
such calendar year, Tenant shall pay to Landlord, within thirty (30) days
following receipt of such statement, the difference. In the event the sum of
such installments exceeds the amount of Direct Operating Expenses Rent actually
due and owing, the difference shall be applied as a credit to Direct Operating
Expenses Rent payable by Tenant pursuant to this Section 3(c).

 

(vi) Landlord shall provide, upon written request of Tenant, an accounting of
the Direct Operating Expenses for the preceding calendar year and Tenant shall
have the right, upon

 

3

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reasonable notice to Landlord, not more frequently than annually and at Tenant’s
sole cost and expense, to conduct an audit of Landlord’s books and records
regarding such Direct Operating Expenses to confirm the accuracy of Landlord’s
accounting; provided, however, that such audit shall not unreasonably interfere
with the conduct of Landlord’s business, and in no event shall the Direct
Operating Expenses of any year be audited more than once.

 

(vii) [Intentionally Omitted]

 

(d) Late Charges. Tenant’s failure to pay any rent promptly may cause Landlord
to incur unanticipated costs. The exact amount of such costs are impractical or
extremely difficult to ascertain. Such costs may include, but are not limited
to, processing and accounting charges and late charges which may be imposed on
Landlord by assessment or by any ground lease, mortgage or trust deed
encumbering the Premises. Therefore, if Landlord does not receive any rent
payment within ten (10) days after it becomes due, Tenant shall pay Landlord a
late charge equal to ten percent (10%) of the overdue amount. The parties agree
that such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of such late payment.

 

(e) Interest. Any amount owed by Tenant to Landlord which is not paid within ten
(10) days after the date due shall bear daily interest from the due date of such
amount at the annual rate of the lesser of (i) the discount rate charged by the
San Francisco Federal Reserve Bank plus five (5) percentage points, or (ii) the
highest rate allowed by applicable law. However, interest shall not be payable
on late charges to be paid by Tenant under this Lease. The payment of interest
on such amounts shall not excuse or cure any default by Tenant under this Lease.

 

(f) SecurityDeposit. Tenant shall pay to Landlord, concurrently with Tenant’s
signing this Lease, a security deposit in the amount specified in Paragraph K of
the Basic Lease Provisions. Said amount shall be held by Landlord as security
for the faithful performance by Tenant of all of the terms, covenants and
conditions of this Lease to be kept and performed by Tenant during the Term. If
Tenant defaults with respect to any provision of this Lease, including, but not
limited to, the provisions relating to the payment of rent, Landlord may (but
shall not be required to) use, apply or retain all or any part of the security
deposit for the payment of any rent or any other amount in default, or for the
payment of any other amount which Landlord reasonably may spend or become
obligated to spend by reason of Tenant’s default or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of Tenant’s
default. If any portion of said deposit is so used or applied, Tenant shall,
within ten (10) days after delivery of written demand therefor, deposit cash
with Landlord in an amount sufficient to restore the security deposit to its
original amount and Tenant’s failure to do so shall be a material breach of this
Lease. Landlord shall not be required to keep the security deposit separate from
its general funds, and Tenant shall not be entitled to interest on such deposit.
If Tenant fully and faithfully performs every provision of this Lease to be
performed by it, the security deposit or any balance thereof shall be returned
to Tenant (or at Landlord’s option, to the last assignee of Tenant’s interests
hereunder) at the expiration of the Term, provided that Landlord may retain the
security deposit until such time as any amount due from Tenant under this Lease
has been determined and paid in full, but in no event after any period for such
return prescribed by applicable law.

 

SECTION 4. USE.

 

(a) Permitted Uses. Tenant may use the Premises for the purposes specified in
Paragraph L of the Basic Lease Provisions and for no other use or purpose.

 

(b) Prohibited Uses. Notwithstanding any other provision of this Lease, Tenant
shall not use the Premises or any part thereof for the purpose of operating an
executive, administrative or legal business center providing office space,
administrative and support services (e.g., mail services, photocopying and
telecopying) to subtenants, licensees, interim occupants or other users
occupying the Premises for general office purposes.

 

4

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(c) Compliance With Laws, Rules and Regulations; Declaration. Tenant shall
comply with all laws, ordinances, rules and regulations pertaining to the use of
the Project, the Building or the Premises. Tenant agrees to abide by all
reasonable rules and regulations established by Landlord from time to time with
respect to the Project or the Building. A copy of the rules and regulations in
existence on the date of this Lease is attached hereto as Exhibit “B”, but
Landlord reserves the right to amend the rules and regulations at any time by
giving notice of amendment to Tenant, if Landlord reasonably determines such
amendment to be in the best interests of the Building and its tenants. In
addition, this Lease is subject to the Declaration, and Tenant shall not violate
any provisions of the Declaration.

 

(d) Insurance Use Requirements. Tenant shall neither use nor occupy the Premises
in any manner, nor commit or omit any act, resulting in a cancellation or
reduction of any insurance or increase in premiums on any insurance policy
covering the Project, the Building or the Premises. Tenant shall, at its
expense, comply with all requirements of any insurer pertaining to Tenant’s use
of the Premises and reasonably necessary for maintenance of economic and proper
fire, liability and other insurance desired to be carried by Landlord.

 

SECTION 5. TENANT IMPROVEMENTS.

 

(a) Description of Improvements. The Premises shall consist of the following:

 

(i) The Premises to be provided by Landlord, at Landlord’s expense (and
exclusive of Tenant Improvements and exclusive of Tenant’s network,
telecommunications or other cabling), consisting of a concrete floor, exterior
Building walls, off-Premises service points from which electrical and telephone
service to the Premises can be made and off-Premises service points from which
plumbing connections for the supply of water to the Premises may be made.

 

(ii) Additional improvements (“Tenant Improvements”), including, but not limited
to, ceilings, interior partitions, insulation, drywall (including taping and
sanding), painting, window coverings, carpet, lighting fixtures, electrical
systems, plumbing connections and fixtures for the supply of water to the
Premises and the equipment and distribution system for heating, ventilation and
air conditioning (“HVAC”) for the Premises, including, but not limited to, all
ducts, baffles and thermostats to serve the Premises; provided, however, the
Tenant Improvements do not include Tenant’s network, telecommunications or other
cabling. The Tenant Improvements all shall be made pursuant to plans and
specifications to be approved in writing by Landlord and Tenant. The work to be
done and the responsibility for preparation of plans and specifications is
described in the Work Letter Agreement attached as Exhibit “C”. The Work Letter
Agreement also describes the parties coordinating construction and installation
with respect to Tenant’s network, telecommunications and other cabling (if any).

 

(b) Tenant Acknowledgment of Completion. By accepting occupancy of the Premises,
Tenant shall acknowledge satisfactory completion of all improvements
constituting the Premises, including Tenant Improvements, except for those minor
items not yet completed, which Tenant shall identify in the punchlist to which
the Work Letter Agreement refers and which Landlord shall complete as soon as
reasonably possible following receipt of the punchlist.

 

(c) Payment for Tenant Improvements. Landlord shall pay the cost and expense of
the Tenant Improvements as set forth in the Work Letter Agreement attached to
this Lease as Exhibit “C”, except that Tenant shall pay the cost of any Change
Orders in accordance with the Work Letter Agreement. All of the Tenant
Improvements for which Landlord pays the cost and expense shall be the property
of Landlord, regardless of such items’ classification as fixtures, furnishings,
equipment or otherwise.

 

 

5

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(d) Estimated Completion Date. It is estimated that the Tenant Improvements
shall be Substantially Completed on or before the Estimated Completion Date
specified in Paragraph N of the Basic Lease Provisions; provided, however, in
the event such Tenant Improvements are not Substantially Completed on or before
that date (i) Landlord shall not be liable for any damage incurred by Tenant as
a result thereof; (ii) this Lease shall not thereby become void or voidable;
(iii) Tenant shall not thereby be entitled to any offset or abatement of rent;
and (iv) the Commencement Date shall be the date determined under Section 2(b).
Notwithstanding the foregoing, in the event the Tenant Improvements are not
Substantially Completed and Landlord has not tendered delivery of the Premises
for occupancy before September 1, 2005, then either party may cancel and
terminate this Lease, without any liability to the other party, upon written
notice to the other party.

 

SECTION 6. MAINTENANCE, REPAIR AND ALTERATION OF PREMISES; COMMUNICATIONS
SYSTEMS; AND SECURITY.

 

(a) Maintenance and Repair.

 

(i) Tenant, at Tenant’s sole cost and expense, shall at all times during the
Term of this Lease keep clean and maintain the Premises in good order and repair
and in a first-class attractive and fully-operative condition. To perform such
maintenance and repair, Tenant may retain contractors to perform such work at
Tenant’s cost and expense or may arrange with Landlord for the purpose of having
Landlord retain contractors to perform such work at Tenant’s cost and expense.
If Tenant elects to have Landlord retain a contractor to perform any such work
at Tenant’s cost and expense, Landlord also shall be entitled to a ten percent
(10%) management fee with respect to such work. (For example and illustration
only, if carpet in the Premises requires cleaning or repair, Tenant may retain a
carpet cleaning or carpet repair service directly; or Tenant may arrange with
Landlord to retain a carpet cleaning or carpet repair service. If Tenant retains
the service directly, Tenant shall pay the service contractor directly. If
Tenant arranges with Landlord to retain the services, Tenant shall pay Landlord
the amount of the service contractor’s invoice plus ten percent (10%) as
Landlord’s management fee.)

 

(ii) Tenant, at Tenant’s sole cost and expense, shall maintain and repair
promptly any system or equipment in the Premises (i.e., within the interior
surface of the walls of the Premises). Tenant shall arrange with Landlord for
the purpose of having Landlord retain contractors to perform such work at
Tenant’s cost and expense at customary and standard rates for the work being
performed. (For example and illustration only, if plumbing under a sink in the
Premises is clogged or otherwise requires repair, Tenant shall arrange with
Landlord to retain a plumber to repair the plumbing at customary and standard
rates for the work being performed, and Tenant shall pay Landlord the amount of
the plumber’s invoice.)

 

(iii) If Tenant fails to perform such maintenance or repair pursuant to Section
6(a)(i) or 6(a)(ii), then Landlord may, on ten (10) days’ prior written notice
(except in the case of emergency, in which case no notice shall be required),
enter the Premises and perform or cause to be performed such repair or
maintenance on behalf of Tenant. In such event, Tenant shall be obligated to pay
to Landlord, immediately upon receipt of demand for payment, as additional rent,
all of the costs incurred by Landlord (in addition to the ten percent (10%)
management fee if applicable pursuant to Section 6(a)(i)).

 

(iv) Landlord shall maintain and repair, or cause to be maintained and repaired:
(A) the structural portions of the Building, including, but not limited to, the
structural portions of the roof, the bearing walls and the foundations, the cost
of which shall be Landlord’s responsibility; (B) the common areas of the
Building and the Project, the cost of which shall be included in the Direct
Operating Expenses described in Section 3(c); and (C) except as set forth in
Section 6(a)(ii), systems or equipment in the Building which serve the Premises,
the cost of which shall be included in the Direct Operating Expenses described
in Section 3(c).

 

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(v) Landlord shall replace, or cause to be replaced, any system or equipment in
the Premises (i.e., within the interior surface of the walls of the Premises)
which cannot be repaired by Tenant pursuant to Section 6(a)(ii). The cost of
such replacement shall be Landlord’s responsibility. (For example and
illustration only, appliances in the Premises which are not able to be repaired
shall be replaced by Landlord.)

 

(b) Alterations. Tenant shall not make any alteration, addition or improvement
to the Premises: (i) which is structural in nature without the prior written
consent of Landlord, which shall not be unreasonably withheld, conditioned or
delayed; or (ii) which is non-structural in nature without the prior written
consent of Landlord, which shall not be unreasonably withheld or delayed. In the
event Landlord grants its consent, such consent may be conditioned upon the
requirements that (A) Tenant remove such alterations, additions or improvements
prior to the expiration of the Term or earlier termination of this Lease and to
restore the Premises to its prior condition (i.e., the condition as of the
Commencement Date), all at Tenant’s sole cost and expense; and/or (B) Tenant
provide a lien completion bond in form and amount satisfactory to Landlord. Any
alteration, addition or improvement for which Landlord grants its written
consent shall be accomplished by Tenant in a good and workmanlike manner, in
conformity with all applicable laws and regulations and by a contractor retained
by Tenant and approved by Landlord. Upon completion of any such work, Tenant
shall provide to Landlord “as-built” plans, copies of all construction
contracts, building permits, inspection reports and all other required
governmental approvals, and proof of payment of all labor and materials. Tenant
shall pay when due all claims for such labor and materials and shall give
Landlord at least ten (10) days’ prior written notice of the commencement of any
such work. Landlord may enter upon the Premises, in such case, for the purpose
of posting appropriate notices, including, but not limited to, notices of
non-responsibility.

 

(c) Condition on Termination. Upon the termination of this Lease, Tenant shall
surrender the Premises to Landlord, broom clean and in the same condition as
received, except for ordinary wear and tear which Tenant was not otherwise
obligated to remedy under any provision of this Lease. All alterations,
additions and improvements, which are not already Landlord’s property and which
Landlord does not require Tenant to remove pursuant to Section 6(b), shall
become Landlord’s property and shall be surrendered to Landlord upon termination
of this Lease. In no event shall Tenant remove any fixtures, alterations,
additions or improvements from the Premises without Landlord’s prior written
consent, including, but not limited to, any power wiring or power panels,
lighting or lighting fixtures, cabinetry, window coverings, carpets, other floor
coverings, heaters, air conditioners or other heating or air conditioning
equipment, any item or equipment that is fastened in any manner to the Premises’
walls, floor or ceiling, or any other similar equipment and decorations.

 

(d) Communications Systems. Landlord hereby grants Tenant permission to install,
maintain and replace (all at Tenant’s cost and expense, and not as a part of the
Tenant Improvements) from time to time a satellite dish, microwave antenna,
similar communications equipment or similar transmission/receiving device
(“Satellite Dish”) on the roof of the Building, provided no roof warranties of
which Landlord has the benefit would be voided or compromised, and provided
Tenant’s transmissions and reception do not interfere with transmission or
reception by any other satellite dish in the Project, and subject to (i)
applicable governmental laws; (ii) the right of Landlord to supervise any roof
penetrations and to designate the location of the Satellite Dish on the roof of
the Building (provided such location does not adversely affect transmission and
reception by the Satellite Dish), and (iii) compliance with the conditions of
any roof bond maintained by Landlord. Tenant shall be responsible for the repair
of any damage to any portion of the Building or the Premises, including the
personal property of other occupants, caused by Tenant’s installation, use or
removal of the Satellite Dish. The Satellite Dish shall remain the exclusive
property of Tenant, and Tenant shall have the right to remove the Satellite Dish
at any time during the Term. Tenant shall indemnify, defend, protect and hold
Landlord harmless from and against any and all claims, damages, liabilities,
costs or expenses of every kind and nature (including, without limitation,
reasonable attorneys’ fees) imposed upon, incurred by or asserted against
Landlord arising out of Tenant’s installation, maintenance, use or removal of
the Satellite Dish. Subject to the foregoing, Landlord reserves full right to
possession of the roof and exterior walls of the Building, including the right
to locate satellite dishes, microwave antennae or any other communications
equipment on the roof of the Building (and including the right to grant or
assign such right to others on an exclusive or non-exclusive basis).

 

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SECTION 7. UTILITIES AND SERVICES; ACCESS.

 

(a) Utilities and Services Furnished by Landlord. Landlord shall provide
janitorial service for the Building and the Premises five (5) nights each week,
exclusive of holidays.

 

(b) Utilities and Services Furnished by Tenant. Tenant shall furnish and pay, at
Tenant’s sole expense, all utilities for the Premises (including, but not
limited to, water, electricity, heating, ventilating and air conditioning and
telephone service) and other services which Tenant requires with respect to the
Premises, save and except as provided pursuant to Section 7(a). Water and
electricity for the Premises shall be separately metered, and the accounts
therefor shall be in Tenant’s name. Tenant shall pay for Tenant’s consumption of
electricity and water directly to the providers before delinquency according to
the amount shown on such separate meters.

 

(c) Access. Tenant shall have access to the Premises and the Building
twenty-four (24) hours per day, seven (7) days per week.

 

SECTION 8. TAXES. Tenant shall pay before delinquency all taxes and license fees
levied, assessed or imposed by reason of Tenant’s use of the Premises and all
taxes on Tenant’s personal property located on the Premises. Landlord shall pay
or cause to be paid all property taxes or assessments with respect to the
Building and the common areas of the Project.

 

SECTION 9. LANDLORD’S RIGHT TO ALTER BUILDING. Landlord reserves and shall at
any and all times have the right to alter the Building or add thereto; provided,
however, Landlord shall provide Tenant with thirty (30) days prior written
notice of Landlord’s intent to alter the Building; and provided further,
Landlord shall coordinate any such alterations with Tenant. Landlord may for
such purposes erect scaffolding and all other necessary structures, and Tenant
shall not, in that event, claim or be allowed, or paid, any damage for any
injury or inconveniences occasioned thereby, unless and to the extent any
injury, damage or loss of use is caused by Landlord or Landlord’s contractors,
nor shall there be any abatement in rent. Landlord also reserves the right to
install, use, maintain, repair and replace pipes, ducts, conduits, wires and
appurtenant meters and equipment for service to other parts of the Building
above the ceiling surfaces, below the floor surfaces, within the walls and in
the central core areas, and to relocate any pipes, ducts, conduits, wires and
appurtenant meters and equipment which are located within the Premises or
outside the Premises. All such work by Landlord shall be performed in good and
workmanlike manner.

 

SECTION 10. SIGNS.

 

(a) General. Tenant shall be entitled to be listed on identification signage at
the main entrance to the Premises. Except for such identification signage, and
except as set forth in Section 10(b), Tenant shall not place or permit to be
placed, any sign, advertisement, notice or other similar matter on the doors,
windows, exterior walls, roof or other areas of the Premises which are open to
the view of persons in the common area of the Building or the Project, except
with the advance written consent of Landlord, which consent may be withheld in
Landlord’s sole, absolute and unfettered discretion.

 

(b) Exclusive for Building Sign. Provided Tenant complies with the following
requirements, Tenant may, at Tenant’s cost and expense, design, fabricate,
install, keep in place and replace during the Term an exterior building sign
near the top of the Building: (i) the City-approved Genesis Corporate Centre
Sign Conformance dated June 14, 2001 (Sign Permit No. PS 01-60); and (ii)
obtaining any and all City and other governmental approvals which may be
required before fabricating and installing such sign (collectively, “Sign
Requirements”). For so long as Tenant keeps in place such exterior building sign
pursuant to this Section 10(b), Landlord shall not grant to any other tenant in
the Building (if any) the right to install an exterior sign near the top of the
Building.

 

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SECTION 11. LIABILITY INSURANCE AND INDEMNITY.

 

(a) Tenant Insurance. Prior to the earlier of the Commencement Date or Tenant’s
occupancy of the Premises, Tenant, at its sole cost and expense, shall obtain
from, and shall thereafter keep in force with, companies licensed to do business
in California, with a Best’s rating of A:X or better and otherwise reasonably
acceptable to Landlord, the following insurance policies:

 

(i) Either comprehensive general liability insurance or commercial general
liability insurance applying to the use and occupancy of the Premises or the
Building, or any part of either, or any areas adjacent thereto, and the business
operated by Tenant, or any other occupant, on the Premises. Such insurance shall
include broad form contractual liability insurance coverage insuring all of
Tenant’s indemnity obligations under this Lease. Such coverage shall have a
minimum combined single limit liability of at least Two Million Dollars
($2,000,000.00). All such policies shall be written to apply to all bodily
injury, property damage, personal injury and other covered loss, however
occasioned, occurring during the policy term. Such coverage shall contain
endorsements: (A) [intentionally omitted]; (B) including employees as additional
insureds; (C) deleting any liquor liability exclusion; and (D) providing for
coverage of employer’s automobile non-ownership liability. All such insurance
shall provide for severability of interests; shall provide that an act or
omission of one of the named insureds shall not reduce or avoid coverage to the
other named insureds; and shall afford coverage for all claims based on acts,
omissions, injury and damage, which claims occurred or arose (or the onset of
which occurred or arose) in whole or in part during the policy period.

 

(ii) A standard policy insuring against “all risk” perils (also known as
“special causes of loss”) covering at least one hundred percent (100%) of both
(A) the full replacement value of all trade fixtures, fixtures, equipment and
other personal property which may, from time to time, be located upon the
Premises, and (B) the excess of the full replacement cost (without deduction for
depreciation) of the additions, alterations and improvements to the Premises
over the full replacement cost (without deduction for depreciation) of the
Tenant Improvements, which shall be insured by Landlord pursuant to Section
11(b).

 

(iii) Workers’ Compensation insurance in accordance with California law, and
employers’ liability insurance with limit no less than $1,000,000.00 per
employee and $1,000,000.00 per occurrence, endorsed to waive the insurer’s
rights of subrogation against Landlord.

 

(iv) Such other insurance as Tenant or Landlord or any beneficiary of any deed
of trust encumbering the Building or the property of which the Premises are a
part, may from time to time reasonably require, in form, amount and protecting
against such risks as would be obtained by a prudent person.

 

Each of the foregoing policies of insurance shall name Landlord and any other
person or entity designated by Landlord as having an insurable interest under
this Lease (including, but not limited to, any beneficiary of any deed of trust
encumbering the Building or the property of which the Premises are a part) as an
additional insured. The policy limits herein specified shall be increased, from
time to time, upon written demand from Landlord, if circumstances reasonably
justify such increases. Tenant shall furnish Landlord with both a certificate of
each such policy and a copy of the “additional insured endorsement” naming
Landlord and the others designated by Landlord as additional insureds within
thirty (30) days after the Commencement Date and whenever required shall satisfy
Landlord that such policy is in full force and effect. Each policy shall be
endorsed to provide that its coverage shall be primary and noncontributing with
any insurance carried by Landlord. Each policy shall be further endorsed to
provide that it shall not be canceled or altered without thirty (30) days’ prior
written notice to Landlord.

 

(b) Landlord Insurance. Landlord shall, at Landlord’s cost and expense, carry a
standard policy insuring against “all risk” perils (also known as “special
causes of loss”) covering the Building shell and core and the Tenant
Improvements to the Premises in the amount of their full replacement cost

 

 

 

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(without deduction for depreciation), rental income insurance equal to Basic
Rent for up to twelve (12) months, and such other insurance of such types and
amounts as Landlord, in its discretion, considers appropriate (including, but
not limited to, coverage for earthquake or flood). Any policy required to be
maintained by Landlord under this Section 11(b) may be maintained by a “blanket
policy” insuring other parties and/or locations in addition to the Building. In
addition to the foregoing, in the event Tenant fails to provide or keep in force
any of the insurance as required pursuant to Section 11(a), Landlord, in its
discretion, may provide such insurance, in which event, the cost thereof shall
be payable by Tenant to Landlord as additional rent on the first day of the
calendar month immediately following demand therefor from Landlord.

 

(c) Waiver of Liability of Landlord. Landlord shall not be liable to Tenant (or
any subtenant, assignee, licensee or invitee of Tenant) for any injury or damage
that may result to any person or property by or from any cause whatsoever, and
without limiting the generality of the foregoing, whether caused by water
leakage of any character from the room, walls, basement or other portion of the
Premises, or caused by gas, fire, oil, electricity or any cause whatsoever, in,
on or about the Premises or the Building or any part thereof, other than injury
or damage resulting from the sole negligence or willful misconduct of Landlord.

 

(d) Indemnity. Tenant agrees to indemnify, protect and hold Landlord harmless
from and defend Landlord against any and all losses, costs, expenses, claims and
liabilities for any injury or damage to any person or property arising during
the Term and occurring in, on or about the Premises or any part thereof;
provided, however, Tenant shall not be obligated so to indemnify Landlord
against such claims or liabilities to the extent the same arise from the
negligence or willful misconduct of Landlord or its employees, agents or
contractors.

 

SECTION 12. DAMAGE OR DESTRUCTION.

 

(a) Repair of Premises. If the Premises (including the Tenant Improvements) are
damaged or destroyed during the Term of this Lease, Landlord shall, except as
hereinafter provided, diligently repair or rebuild them to substantially the
condition in which they existed immediately prior to such damage or destruction.
In no event, however, shall Landlord be obligated to spend for such repairs more
than the amount of available insurance proceeds, plus the amount of any
deductible elected by Landlord.

 

(b) Abatement of Rent. In the event all or a portion of the Premises is damaged
or destroyed to the extent Tenant cannot reasonably use the affected portion,
monthly Basic Rent shall be abated by that proportion which the usable floor
area of the Premises rendered unusable as a result of such damage bears to the
total usable floor area of the Premises before such damage. Such abatement shall
continue for the period commencing with such damage or destruction and ending
with substantial completion by Landlord of the work or repair or reconstruction
which Landlord is obligated or undertakes to do.

 

(c) Destruction of Premises. If the Premises are damaged or destroyed to the
extent that Landlord determines that they cannot, with reasonable diligence, be
fully repaired or restored by Landlord within one hundred eighty (180) days
after the date of the damage or destruction, Tenant shall have the right to
terminate this Lease. Landlord shall send Tenant written notice of Landlord’s
determination within thirty (30) days after the date of the damage or
destruction. If Landlord determines that the Premises can be fully repaired or
restored within said one hundred eighty (180) day period, or if it is determined
that such repair or restoration cannot be made within said period but Tenant
does not elect to terminate this Lease within thirty (30) days after Tenant is
notified of such determination, this Lease shall remain in full force and effect
and Landlord shall diligently repair and restore the damage as soon as
reasonably possible in accordance with Section 12(a).

 

(d) Landlord’s Option to Terminate. Notwithstanding anything in this Lease to
the contrary, in the event of damage to or destruction of all or any portion of
the Premises which is not fully covered by the insurance proceeds received by
Landlord (excluding applicable deductibles) or which is not within the scope of
coverage of the insurance policies required to be carried under the terms of
this Lease, Landlord may terminate this Lease by written notice to Tenant, given
within thirty (30) days after the date of notice to Landlord that said damage or
destruction is not so covered. No deductible payment required under any

 

 

 

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insurance policy maintained by Landlord shall give rise to Landlord’s right to
terminate pursuant to this Section 12(d). If Landlord does not elect to
terminate this Lease, this Lease shall remain in full force and effect and the
Premises shall be repaired and rebuilt in accordance with the provisions for
repair set forth in Section 12(a). If the Premises are destroyed or damaged
during the last twelve (12) months of the Term such that the reasonable cost of
repair would exceed six (6) months Basic Rent, Landlord may, at Landlord’s
option, cancel and terminate this Lease as of the date of occurrence of such
damage by giving written notice to Tenant of Landlord’s election to do so within
thirty (30) days after the date of occurrence of such damage.

 

SECTION 13. EMINENT DOMAIN. In the event that all or part of the Premises is
taken under power of eminent domain or sold under threat of such taking, this
Lease shall terminate as to the part so taken or sold, and the rent shall be
reduced in proportion to the number of square feet so taken. The entire award or
proceeds from taking or sale of land and improvements, including severance
damages, shall belong to Landlord, and Tenant shall be entitled only to the
portion of the award or proceeds for its personal property which may be taken,
and any relocation allowance actually paid by the condemning authority. If more
than twenty percent (20%) of the Premises is taken, or if the principal access
to the Premises is taken, or if more than twenty percent (20%) of the parking
spaces of the Project is taken, then Tenant may terminate this Lease by notice
to Landlord within thirty (30) days after the taking or sale; and any such
termination shall be effective as of the date of such taking.

 

SECTION 14. DEFAULT BY TENANT OR BY LANDLORD.

 

(a) Remedies Upon Default by Tenant. Tenant agrees that if default be made
hereunder in the payment of rent and such default continues for a period of ten
(10) days after written notice thereof, or if Tenant fails materially to perform
any of its obligations and such failure to perform continues for a period of ten
(10) days after written notice thereof (provided that if the nature of a
non-monetary default is such that it cannot be fully cured within said ten-day
(10-day) period, Tenant shall have such additional time as may be reasonably
necessary to cure the default so long as Tenant proceeds promptly after service
of Landlord’s notice and proceeds diligently at all times to complete said
cure), or if the Premises be vacated or abandoned, or if Tenant makes an
assignment for the benefit of creditors, or if Tenant enters a general extension
agreement with creditors, then such events shall constitute a breach of this
Lease and Landlord may, at Landlord’s option, exercise any or all rights
available to a landlord under the laws of the State of California, including,
without limitation, the right to do any of the following:

 

(i) terminate Tenant’s right to possession of the Premises because of such
breach and recover from Tenant all damages allowed under ‘1951.2 of the
California CIVIL CODE, including, without limitation, the worth at the time of
the award of the amount by which the unpaid rent for the balance of the Term
after the time of the award exceeds the amount of such rental loss for the same
period that Tenant proves could be reasonably avoided; or

 

(ii) not terminate Tenant’s right to possession because of such breach, but
continue this Lease in full force and effect; and in that event (i) Landlord may
enforce all rights and remedies under this Lease and under the provisions of
‘1951.4 of the California CIVIL CODE, including the right to recover the rent
and all other amounts due under this Lease as such rent and other amounts become
due under this Lease; and (ii) Tenant may assign its interest in this Lease with
Landlord’s prior written consent, which consent shall not be unreasonably
withheld. The parties intend that this Section 14(a)(ii) satisfies the
requirements of California CIVIL CODE ‘1951.4(a) and that the Landlord has the
remedy set forth in California CIVIL CODE ‘1951.4.

 

(b) Default by Tenant B Notification of Reletting. In the event Landlord
terminates this Lease pursuant to Section 14(a)(i), and Tenant has made an
advance payment of rent as defined in California CIVIL CODE ‘1951.7, and Tenant
has requested in writing that Landlord notify it of any initial reletting of the
Premises, then and only then must Landlord notify Tenant pursuant to California
CIVIL CODE ‘1951.7(c) that the Premises have been relet.

 

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(c) Default by Tenant B Right of Landlord to Re-Enter. In the event of
termination of this Lease pursuant to this Section 14, Landlord shall have the
right to enter upon and repossess the Premises; and any personal property of
Tenant may be removed from the Premises and stored in any public warehouse in
accordance with California CIVIL CODE ‘ ’ 1980, et seq.

 

(d) Default by Tenant B Landlord’s Right to Pursue Other Remedies. In the event
of any breach of this Lease, Landlord may pursue any of the foregoing remedies,
and Landlord may consecutively or concurrently therewith pursue any other remedy
or enforce any right to which Landlord may be by law entitled.

 

(e) Default by Landlord. If Landlord fails to perform any of its material
obligations under this Lease, then Landlord shall be in default. Landlord shall
commence promptly to cure such default immediately after receipt of written
notice from Tenant specifying the nature of such default and shall complete such
cure within thirty (30) days thereafter, provided that if the nature of such
default is such that it cannot be cured within said thirty-day (30-day) period,
Landlord shall have such additional time as may be reasonably necessary to
complete its performance so long as Landlord has proceeded with diligence after
receipt of Tenant’s notice and is then proceeding with diligence to cure such
default; provided that (i) Landlord commences such cure within thirty (30) days
after such notice and diligently prosecutes such cure thereafter to completion;
and (ii) in no event shall such cure period exceed ninety (90) days.

 

(f) Default by Landlord B Notice to Lender. Whenever Tenant serves notice on
Landlord of Landlord’s default, written notice shall also be served at the same
time upon the mortgagee under any mortgage or beneficiary under any deed of
trust for which Tenant has been previously provided the name and address (as set
forth below). Such mortgagee or beneficiary shall have the periods of time
within which to cure Landlord’s defaults as are provided in Section 14(e), which
periods shall commence to run thirty (30) days after the commencement of the
periods within which Landlord must cure its defaults under Section 14(e). In
this connection any representative of the mortgagee or beneficiary shall have
the right to enter upon the Premises for the purpose of curing Landlord’s
default. Such mortgagee or beneficiary shall notify Landlord and Tenant in the
manner provided by Section 19 of the address of such mortgagee or beneficiary to
which such notice shall be sent, and the agreements of Tenant under this Section
14(f) are subject to prior receipt of such notice. If the nature of the default
is such that the mortgagee’s or beneficiary’s possession is required to cure the
default, then Tenant will not terminate the Lease so long as such mortgagee or
beneficiary commences proceedings to obtain possession of the Premises within
the period of time afforded to the mortgagee or beneficiary to cure such
default, and once the mortgagee or beneficiary has obtained possession,
diligently proceeds to cure the default. Nothing contained in this Lease shall
be construed to impose any obligation on any mortgagee or beneficiary to cure
any default by Landlord under the Lease.

 

SECTION 15. SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATE.

 

(a) Subordination.

 

(i) Future Deeds of Trust. Landlord hereby expressly reserves the right, at its
option, to place liens, deeds of trust and encumbrances upon and against the
Parcel after the date of this Lease. Tenant agrees that this Lease shall be
subordinate to any such mortgage(s) or deed(s) of trust encumbering the Parcel
that may hereafter be placed upon the Parcel, and to any advances to be made
thereunder, and any interest thereon, and all renewals, replacements and
extensions thereof, provided that such mortgagees or beneficiaries request such
subordination and agree in writing to recognize this Lease and not to disturb
Tenant’s tenancy and possession in the event of foreclosure so long as Tenant is
not in default. To effect such subordination, Tenant shall, within ten (10) days
following written request by Landlord, sign, enter into and acknowledge a
subordination, non-disturbance and attornment agreement substantially in the
form and content attached hereto as Exhibit “E” and by this reference made a
part hereof. With respect to changes in or deviations from the form and content
of the subordination, non-disturbance and attornment agreement attached as
Exhibit “E”, Tenant agrees to be reasonable in response to the reasonable
requests of Landlord’s lender. Tenant’s failure to sign and deliver such
instrument shall constitute a default under this Lease.

 

 

 

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(ii) Existing Deed of Trust. Tenant shall, concurrently with signing and
entering into this Lease, sign, enter into and acknowledge a subordination,
non-disturbance and attornment agreement substantially in the form and content
attached hereto as Exhibit “E-1” and by this reference made a part hereof. With
respect to changes in or deviations from the form and content of the
subordination, non-disturbance and attornment agreement attached as Exhibit
“E-1”, Tenant agrees to be reasonable in response to the reasonable requests of
Landlord’s lender.

 

(b) Attornment. Tenant acknowledges that Landlord may not now or in the future
be the owner of a fee interest in the Building or of the ground underlying the
Building, and that if Landlord is not the owner of such a fee interest, Landlord
may be the owner of a leasehold interest therein. If Landlord’s interest in the
Premises is or should at some future time become a leasehold interest, and if
that leasehold interest is terminated for any reason, the following shall apply,
notwithstanding such termination:

 

(i) Tenant shall not disaffirm this Lease or any of its obligations hereunder;
and

 

(ii) At the request of the owner of a fee interest in the Building or of the
ground underlying the Building, Tenant shall attorn to such fee owner and to
effect such attornment, ground lessor and Tenant shall enter into an acknowledge
a non-disturbance and attornment agreement as is reasonably acceptable to both
ground lessor and Tenant.

 

(c) Estoppel Certificate. Tenant shall sign and deliver to Landlord, within ten
(10) days after receipt of Landlord’s written request, any estoppel certificate
or other statement to be furnished to any prospective purchaser of or any lender
against the Premises. Such estoppel certificate shall, at Landlord’s option,
either (i) be substantially in the form attached hereto as Exhibit “D”, or (ii)
acknowledge and certify each of the following matters, to the extent each may be
true: that the Lease is in effect and not subject to any rental offsets, claims
or defenses to its enforcement; the commencement and termination dates of the
Term; that Tenant is paying rent on a current basis; that the Tenant
Improvements required to be furnished under the Lease have been completed in all
respects; that the Lease constitutes the entire agreement between Tenant and
Landlord relating to the Premises; that Tenant has accepted the Premises and is
in possession thereof; that the Lease has not be modified, altered or amended
except in specified respects by specified instruments; and that Tenant has no
notice of any prior assignment, hypothecation or pledge of rents or the Lease.
Notwithstanding anything in this Section 15(c) to the contrary (or which may be
interpreted as being to the contrary), if Landlord’s request for an estoppel
certificate or other statement pursuant to this Section states that the facts
set forth in the estoppel certificate or other requested statement will be
deemed true if Tenant fails to respond to Landlord’s request within the
applicable period of time, and if Tenant fails to deliver its response to
Landlord within the applicable period of time, then the facts set forth in the
estoppel certificate or other requested statement will be deemed true upon the
expiration of the applicable period of time.

 

SECTION 16. RECAPTURE OF FRONT END EXPENSES. Tenant acknowledges that Landlord
has undertaken or will undertake certain expenses in connection with this Lease,
including some or all of the following: design fees, permit fees, construction
of the Tenant Improvements, payment of brokerage commissions and other
categories of cost or expense (“Front End Expenses”). In the event of premature
termination of this Lease upon default by Tenant, pursuant to Section 14(a)(i),
Landlord may not be able to recover fully the Front End Expenses pursuant to
Landlord’s rights under Section 14(a)(i)(B) and (C), which relate to unpaid rent
which would accrue after the date of such termination. Accordingly, and
notwithstanding any provision or implication to the contrary in this Lease, in
the event of premature termination of the Term of this Lease pursuant to Section
14(a)(i) following Tenant’s default, there shall be immediately due and payable
from Tenant to Landlord, as unpaid rent which has been fully earned at the time
of termination, the unamortized portion of the Front End Expenses incurred by
Landlord. For purposes of this Section, the unamortized portion of the Front End
Expenses shall be determined by multiplying the total Front End Expenses
actually incurred by Landlord by a fraction, (i) the numerator of which is the
number of months remaining in the Term following

 

 

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premature termination in which unabated Basic Rent would have been payable to
Landlord pursuant to this Lease, and (ii) the denominator of which is the total
number of months in the Term, both before and after the premature termination,
in which unabated Basic Rent was paid or would have been payable to Landlord had
this Lease not been terminated. Any Front End Expenses due to Landlord in
accordance with this Section shall be in addition to any sums otherwise
recoverable pursuant to Section 14(a)(i) of this Lease.

 

SECTION 17. ASSIGNMENT AND SUBLETTING.

 

(a) Prohibition of Assignment or Sublet. Except as otherwise provided in Section
17(e), Tenant shall not (i) assign this Lease or any interest in this Lease
(including, but not limited to, any hypothecation) without the express prior
written consent of Landlord, which shall not be unreasonably withheld or
delayed; or (ii) sublet or otherwise permit any other person to occupy the
Premises or any portion thereof without the express prior written consent of
Landlord, which shall not be unreasonably withheld, conditioned or delayed. In
any event, Tenant’s obtaining Landlord’s consent shall be subject to the
provisions of Section 17(b). For purposes of this Section 17(a), any transfer of
the majority of the voting stock in any corporate Tenant, or majority or
managing interest in the partnership of any partnership Tenant, or majority or
managing interest in the limited liability company of any limited liability
company Tenant, shall constitute an assignment hereunder. Consent to one
assignment or subletting shall not constitute a waiver of this provision or
consent to any further assignment or subletting. No assignee for the benefit of
creditors, trustee in bankruptcy or purchaser at any execution sale, shall have
any right to possess or occupy the Premises or any part thereof, or claim any
right hereunder or assignment.

 

(b) Procedure for Consent. In the event Tenant wishes to sublet the Premises, or
any portion thereof, or assign this Lease, then the following procedure shall
apply:

 

(i) Tenant shall submit in writing to Landlord (A) the name of the proposed
subtenant or assignee, (B) a statement describing the nature of the business to
be carried on in the Premises, (C) a copy of the proposed sublease or
assignment, including all terms and conditions thereof, (D) Landlord’s lease
application form, completed by the proposed assignee or subtenant, (E) most
recent annual and quarterly financial statements for the proposed assignee or
subtenant, and (F) such other information (including financial information)
regarding such subtenant or assignee as Landlord shall reasonably request.

 

(ii) At any time within thirty (30) days after Landlord’s receipt of all of the
information specified in clauses (A) through (F) of Section 17(b)(i), Landlord
may, by written notice to Tenant, elect to: (A) [Intentionally Omitted]; or (B)
terminate this Lease as to the portion (including all) of the Premises so
proposed to be subleased or assigned, with a proportionate abatement in the
Basic Rent payable under this Lease; or (C) consent to such sublease or
assignment; or (D) deny Landlord’s consent. If Tenant receives rent or other
compensation or consideration for an assignment of this Lease or a sublease of
the Premises (net of costs incurred by Tenant in connection with the assignment
or sublease, including, but not limited to, real estate commission or
improvements installed for the assignee or subtenant), whether payable in lump
sum or in installments, in excess of the Basic Rent and other amounts payable by
Tenant at the time of the assignment or sublease (including, in the case of a
sublease of a portion of the Premises, an amount greater than the Basic Rent and
other amounts fairly allocable to such portion), then Tenant shall pay to
Landlord, as additional rent and promptly after receipt by Tenant, fifty percent
(50%) of such excess of each such payment received by Tenant. If Landlord fails
to respond to Tenant’s request for consent within thirty (30) days after receipt
of all of the information specified in clauses (A) through (F) of Section
17(b)(i), Landlord’s consent will be deemed to have been denied.

 

(iii) It shall be reasonable for Landlord to consider, in deciding whether to
consent to an assignment or sublease, any or all of the following factors
regarding the proposed assignee or subtenant: (A) whether the proposed assignee
or subtenant has continuing financial strength comparable to or greater than
Tenant and any guarantors of this Lease; (B) proposed use of

 

 

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the Premises by the assignee or subtenant, including the applicability of any
covenants not to compete undertaken by Landlord to other tenants in the Building
or the Project, whether made before or after execution of this Lease; (C) the
proposed assignee’s or subtenant’s business reputation; (D) the tenant mix
within the Building or the Project; (E) the applicability and effect upon any
percentage rental provisions; and (F) the business capability, experience and
other qualifications of the proposed assignee or subtenant.

 

(c) Continuing Obligation of Tenant. Unless released by Landlord in writing, no
transfer permitted by this Section 17 shall release Tenant or change Tenant’s
primary liability to pay the rent and to perform all other obligations of Tenant
under this Lease. Landlord’s acceptance of rent from any other person is not a
waiver of any provision of this Section 17. Consent to one transfer is not a
consent to any subsequent transfer. If Tenant’s transferee defaults under this
Lease, Landlord may proceed directly against Tenant without pursuing remedies
against the transferee. Landlord may consent to subsequent assignments or
modifications of this Lease by Tenant’s transferee, without notifying Tenant or
obtaining its consent. Such action shall not relieve Tenant’s liability under
this Lease.

 

(d) Effect of Termination. In the event of Tenant’s surrender of this Lease or
the termination of this Lease in any other manner, Landlord may, at its option,
either terminate any or all subtenancies or succeed to the interest of Tenant as
sublessor thereunder. No merger shall result from Tenant’s sublease of the
Premises under this Section 17, Tenant’s surrender of this Lease or the
termination of this Lease in any other manner.

 

(e) Assignment or Sublease Without Landlord’s Consent. Notwithstanding anything
in Section 17(a) to the contrary, Landlord’s consent shall not be required for
the following: (a) any assignment of this Lease, sublease of all or any portion
of the floor area of the Premises or sublease of the entire Premises to any of
the following: (i) an entity controlling, controlled by or under common control
with Tenant (as “control” is defined in Section 160 of the California
CORPORATIONS CODE), (ii) the surviving entity resulting from a merger or
consolidation of Tenant, or (iii) an entity which acquires all or substantially
all of the assets of Tenant as a going concern; or (b) any transfer of the stock
or equity interests in Tenant or in Tenant’s parent corporation, if Tenant or
such parent is a corporation or other entity the stock or equity interests of
which are publicly traded. Tenant shall notify Landlord of the effective date of
any assignment or sublease for which Landlord’s consent is not required, and
such notice shall include the name and address of the assignee or subtenant.

 

SECTION 18. PARKING.

 

(a) General. In connection with its use and occupancy of the Premises, Tenant
shall have the right to park in the parking area adjacent to the Building on the
Project on a non-exclusive, non-reserved basis (except as set forth in Section
18(b)), on terms and conditions to be established reasonably by Landlord from
time to time during the Term; provided, however, such right is subject to (i)
exclusive parking rights granted pursuant to the Declaration to other tenants
and occupants of the Project; and (ii) exclusive parking rights granted by
Landlord to Tenant pursuant to Section 18(b). The parking authorized by this
Section 18 shall be for personal transportation to and from the Building, and
not for long-term storage of automobiles or for short- or long-term storage of
boats, trailers or recreational vehicles. Except as provided in this Section,
the parking areas in the Project shall be used on a non-exclusive basis by
tenants and other occupants of the Project and their respective invitees.

 

(b) Tenant’s Exclusive Parking. Landlord hereby grants to Tenant the exclusive
right during the Term to use the seven (7) covered parking spaces shown marked
on the Site Plan attached hereto as Exhibit “A-1”.

 

SECTION 19. NOTICE. Whenever, under this Lease, provision is made for notice or
demand, it shall be in writing and signed by or on behalf of the party giving
the notice or making the demand and served by personal delivery or by recognized
overnight courier (such as, but not limited to, Federal Express, DHL or UPS). If
served by overnight

 

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courier, it shall be addressed to the party to whom such notice or demand is to
be given at the address stated in Paragraph B of the Basic Lease Provisions, and
service to the addressee shall be conclusively deemed made as confirmed by the
courier service making delivery. The address of either party may be changed for
the purpose of this Lease by written notice to the other party under this
Section 19. NOTICES SHALL NOT BE EFFECTIVE IF SENT BY REGISTERED, CERTIFIED OR
REGULAR UNITED STATES MAIL.

 

SECTION 20. HOLDING OVER BY TENANT. Tenant agrees upon the expiration or
termination of this Lease, immediately and peaceably to yield up and surrender
the Premises; notice to quit or vacate is hereby expressly waived. Tenant shall
be liable to Landlord for any and all damages incurred by Landlord as the result
of any failure by Tenant, timely, to surrender possession of the Premises as
required herein. If Tenant holds over after the expiration of this Lease for any
cause, such holding over shall be deemed a tenancy at sufferance or, at the
sole, absolute and unfettered discretion of Landlord, a tenancy from
month-to-month only, in which event such month-to-month tenancy shall be upon
the same terms, conditions and provisions as in this Lease contained, at: (a)
150% of the Basic Rent in effect immediately prior to the expiration; and (b)
the Direct Operating Expenses Rent in effect immediately prior to the
expiration.

 

SECTION 21. WAIVER. One or more waivers by Landlord of any breach of any
covenant or condition shall not be construed as a waiver of any other breach of
the same or of any other covenant or condition, and the consent or approval by
Landlord to or of any act by Tenant requiring Landlord’s consent or approval
shall not be deemed to waive or render unnecessary Landlord’s consent or
approval to or of any subsequent act.

 

SECTION 22. LANDLORD’S RIGHT OF ENTRY. Landlord and Landlord’s agents may enter
upon the Premises at any reasonable time and upon reasonable notice (except no
such notice shall be required in an emergency) to make such repairs, additions
or improvements as Landlord shall deem reasonably necessary, to post such
notices as Landlord may deem necessary to exempt Landlord and Landlord’s
interest in the Project, the Building and the Premises from responsibility on
account of any work or repairs done by Tenant upon or in connection with the
Premises, to inspect and examine the Premises and see that the covenants hereof
are being kept and performed, or to exhibit the Premises to prospective tenants
or purchasers thereof.

 

SECTION 23. HAZARDOUS MATERIALS. Tenant makes the following covenants regarding
hazardous materials:

 

(a) Tenant shall at all times and in all respects comply with all federal, state
and local laws, ordinances and regulations, including, but not limited to, the
Federal Water Pollution Control Act (33 U.S.C. ‘1251, et seq.), Resource
Conservation & Recovery Act (42 U.S.C. ‘6901, et seq.), Safe Drinking Water Act
(42 U.S.C. ‘3000f, et seq.), Toxic Substances Control Act (15 U.S.C. ‘2601, et
seq.), the Clean Air Act (42 U.S.C. ‘7401, et seq.), Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. ‘9601, et seq.), California
Health & Safety Code (‘25100, et seq., ‘39000, et seq.), California Safe
Drinking Water & Toxic Enforcement Act of 1986 (California Health & Safety Code
‘25249.5, et seq.), California Water Code (‘13000, et seq.), and other
comparable state laws (“Hazardous Materials Laws”), relating to industrial
hygiene, environmental protection or the use, analysis, generation, manufacture,
storage, disposal or transportation of any oil, flammable explosives, asbestos,
urea formaldehyde, radioactive materials or waste, or other hazardous, toxic,
contaminated or polluting materials, substances or wastes, including, without
limitation, any “hazardous substances”, “hazardous wastes”, “hazardous
materials” or “toxic substances” under any such laws, ordinances or regulations
(collectively, “Hazardous Materials”).

 

(b) Tenant shall, at its own expense, procure, maintain in effect and comply
with all conditions of any and all permits, licenses, and other governmental and
regulatory approvals required for Tenant’s use of the Premises, including,
without limitation, discharge of (appropriately treated) materials or wastes
into or through any sanitary sewer serving the Premises. Except as discharged
into the sanitary sewer in strict accordance and conformity with all applicable
Hazardous Materials Laws, Tenant shall cause any and all Hazardous Materials
removed from the Premises to be removed and transported solely by duly licensed
haulers to duly licensed facilities for final disposal of such materials and
wastes. Tenant shall in all respects handle, treat, deal with and manage any and
all Hazardous Materials in, on, under or about the Premises in total conformity
with all applicable Hazardous Materials Laws and prudent industry practices
regarding management

 

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of such Hazardous Materials. Upon expiration or earlier termination of the Term,
Tenant shall cause all Hazardous Materials to be removed from the Premises and
transported for use, storage or disposal in accordance with and compliance with
all applicable Hazardous Materials Laws. Tenant shall not take any remedial
action in response to the presence of any Hazardous Materials in or about the
Premises, the Building or the Project, nor enter into any settlement agreement,
consent decree or other compromise in respect to any claims relating to any
Hazardous Materials in any way connected with the Premises, the Building or the
Project, without first notifying Landlord of Tenant’s intention to do so and
affording Landlord ample opportunity to appear, intervene or otherwise
appropriately assert and protect Landlord’s interest with respect thereto.

 

Tenant shall immediately notify Landlord in writing of: (i) any enforcement,
cleanup, removal or other governmental or regulatory action instituted,
completed or threatened pursuant to any Hazardous Materials Laws; (ii) any claim
made or threatened by any person against Tenant, the Premises, the Building or
the Project relating to damage, contribution, cost recovery compensation, loss
or injury resulting from or claimed to result from any Hazardous Materials; and
(iii) any reports made to any environmental agency arising out of or in
connection with any Hazardous Materials in or removed from the Premises, the
Building or the Project, including any complaints, notices, warnings or asserted
violations in connection therewith. Tenant shall also supply to Landlord as
promptly as possible, and in any event within five (5) business days after
Tenant first receives or sends the same, with copies of all claims, reports,
complaints, notices, warnings or asserted violations, relating in any way to the
Premises, the Building or the Project or Tenant’s use thereof. Tenant shall
promptly deliver to Landlord copies of hazardous waste manifests reflecting the
legal and proper disposal of all Hazardous Materials removed from the Premises.

 

(c) Tenant shall indemnify, defend (by counsel reasonably acceptable to
Landlord), protect, and hold Landlord and each of Landlord’s managers, members,
partners, shareholders, directors, officers, employees, agents, attorneys,
successors and assigns, free and harmless from and against any and all claims,
liabilities, penalties, forfeitures, losses or expenses (including attorney’s
fees), or death of or injury to any person or damage to any property whatsoever,
arising from or caused in whole or in part, directly or indirectly, by any of
the following during the Term or when Tenant is in possession of the Premises:
(i) the presence in, on, under or about the Premises, the Building or the
Project, or the discharge in or from the Premises, the Building or the Project,
of any Hazardous Materials which were brought or caused to be brought into or
onto the Premises, the Building or the Project by Tenant or its agents,
employees or contractors; (ii) Tenant’s use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of Hazardous
Materials to, in, on, under, about or from the Premises, the Building or the
Project; or (iii) Tenant’s failure to comply with any Hazardous Materials Law.
Tenant’s obligations hereunder shall include, without limitation, and whether
foreseeable or unforeseeable, all costs of any required or necessary repair,
cleanup or detoxification or decontamination of the Premises, the Building or
the Project, or the preparation and implementation of any closure, remedial
action or other required plans in connection therewith, and shall survive the
expiration or earlier termination of the Term. For purposes of the release and
indemnity provisions of this Section, any acts or omissions of Tenant, or by
employees, agents, assignees, subtenants, contractors or subcontractors of
Tenant or others acting for or on behalf of Tenant (whether or not they are
negligent, intentional, willful or unlawful) shall be strictly attributable to
Tenant.

 

(d) If at any time it reasonably appears to Landlord that Tenant is not
maintaining sufficient insurance or other means of financial capacity to enable
Tenant to fulfill its obligations to Landlord under this Section, whether or not
then accrued, liquidated, conditional or contingent, Tenant shall procure and
thereafter maintain in full force and effect such insurance or other form of
financial assurance, with or from companies or persons and in forms reasonably
acceptable to Landlord, as Landlord may from time to time reasonably request.

 

SECTION 24. NO LIGHT, AIR OR VIEW EASEMENT. No diminution or shutting off of
light, air or view by any structure which may be erected on lands adjacent to
the Building shall in any way affect this Lease or impose any liability on
Landlord.

 

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SECTION 25. PROJECT NAME. Landlord may change the name of the Project without
the consent of Tenant.

 

SECTION 26. KEYS, SECURITY AND SECURITY SYSTEM.

 

(a) Keys. Two (2) keys to the Premises will be furnished by Landlord. Tenant
may, at Tenant’s cost and expense, duplicate such keys for use by Tenant’s
employees or authorized agents; and Tenant shall certify to Landlord in writing
the number of such duplicate keys made by Tenant. Tenant shall not cause or
allow any employee or other person to duplicate such keys, and Tenant shall not
cause or allow any keys to be possessed by any person other than an employee or
authorized agent of Tenant. Tenant agrees, at the termination of the tenancy, to
return all keys (including duplicates) of all doors. No additional lock or locks
shall be placed by Tenant on any door in the Building unless (a) the written
consent of Landlord shall have been first obtained, which shall not be
unreasonably withheld; and (b) such additional locks are keyed to the master key
for the Building, or copies thereof are given to Landlord.

 

(b) Security Services. Landlord shall not be obligated to provide security
guards, security patrols, private police or any other type of security services
(collectively, “Security Services”) for the Premises or in the Building or the
Project. Tenant hereby acknowledges that Landlord shall not be so obligated and
that Landlord will not provide any Security Services of any type for the
Premises or in the Building or the Project during the Term of this Lease. Tenant
hereby waives any and all claims for damages to persons or property sustained by
Tenant, or by any other person or entity, arising from, out of or in connection
with, or alleged to arise from, out of or in connection with, Landlord’s not
providing Security Services for the Premises or in the Building or the Project.
In addition, Tenant assumes the responsibility to provide, at Tenant’s sole cost
and expense, any such Security Services as Tenant may require in connection with
Tenant’s use of the Premises, and Tenant assumes all risk in connection with any
failure to provide or lack of such Security Services in the Premises.
Notwithstanding anything in this Section 26(b) to the contrary:

 

(i) Landlord may elect, in Landlord’s sole, absolute and unfettered discretion,
to provide Security Services in the Common Area of the Project; and if such
Security Services are provided, the cost thereof shall be included in Direct
Operating Expenses.

 

(ii) [Intentionally Omitted]

 

(iii) The key card entry system for the Building shall be programmed to Tenant’s
requirements, provided (a) the system has the applicable capability; (b) the
programming does not enable Tenant to enter the premises of other tenants; (c)
the programming does not enable other tenants to enter the Premises; and (d) the
programming satisfies applicable access, ingress and egress requirements of the
Fire Marshal.

 

SECTION 27. LIMITATION ON PUBLIC ANNOUNCEMENTS. Tenant shall not cause or permit
to be disseminated, published or released, itself or through any broker,
employee, agent or contractor, any public announcement, advertisement or other
communication through any public media which, in any way, describes or refers to
any of the terms or conditions of this Lease (distinguished from the existence
of this Lease), without the prior written consent of Landlord, which consent may
be withheld for any reason.

 

SECTION 28. BROKERAGE COMMISSION. Landlord and Tenant each has engaged CB
Richard Ellis (“Broker”) as its broker in connection with this transaction.
Landlord and Tenant each represents to the other that (a) no broker or finder
other than Broker has been engaged by it or represents it in connection with
this Lease; (b) Broker has been engaged by it pursuant to a separate written
agreement between them; and (c) it has no knowledge of any broker or finder
other than Broker in any way connected with this Lease. Landlord shall be
responsible for a commission payable to Broker by reason of this transaction,
which commission shall be payable pursuant to the separate written agreement
between them. In the event of any claim or liability for any broker’s or
finder’s fee or commission in connection with the negotiation, execution or
consummation of this Lease other than the commission payable by Landlord to
Broker, then (a) Landlord shall indemnify, protect, save harmless and defend
Tenant from and against any such claims or liabilities if they

 

18

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are based upon any statement or representation or agreement by Landlord; and (b)
Tenant shall indemnify, protect, save harmless and defend Landlord from and
against any such claims or liabilities if they are based upon any statement,
representation or agreement made by Tenant. The foregoing notwithstanding,
Landlord and Tenant agree that nothing in this Paragraph (or in any other
provision of this Lease) creates or is intended to create in Broker (or in any
other person or entity) any right as a third party beneficiary of this Lease;
specifically, neither Broker nor any other person or entity has any right to
cause (i) either Landlord or Tenant to sign or enter into this Lease; (ii)
Tenant to exercise any option to extend the Term or to exercise any option to
purchase the Building; (iii) either Landlord or Tenant to perform any obligation
or exercise any right either may have pursuant to this Lease; or (iv) either
Landlord or Tenant to forebear from exercising any right either may have
pursuant to this Lease, including, but not limited to, any right to terminate
this Lease.

 

SECTION 29. COUNTERPARTS. This Lease may be signed in two (2) or more
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.

 

SECTION 30. GOVERNING LAW. This Lease has been negotiated and entered into in
the State of California, and shall be governed by, construed and enforced in
accordance with the internal laws of the State of California applied to
contracts made in California by California domiciliaries to be wholly performed
in California.

 

SECTION 31. CAPTIONS AND INTERPRETATIONS. Section titles or captions contained
in this Lease are inserted as a matter of convenience and for reference and in
no way define, limit, extend or describe the scope of this Lease or any
provision hereof. No provision in this Lease is to be interpreted for or against
either party because that party or his legal representative drafted such
provision.

 

SECTION 32. SEVERABILITY. If any term, covenant, condition or provision of this
Lease is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

 

SECTION 33. ATTORNEY’S FEES. In case suit shall be brought for any unlawful
detainer of the Premises, for the recovery of any rent due on the provisions of
this Lease, or because of the breach or alleged breach of any other covenant
herein contained on the part of either party to be kept or performed (including,
but not limited to, enforcement of an indemnity provision), the prevailing party
shall recover from the non-prevailing party all costs and expenses incurred
therein, including reasonable attorney’s fees and costs, including expert
witness fees and costs (whether or not the expert is called to testify), and
including attorney’s fees and costs incurred in enforcing any judgment.

 

SECTION 34. SUCCESSORS AND ASSIGNS. The covenants and conditions herein
contained shall, subject to the provisions governing assignments, apply to and
bind the heirs, successors, executors, administrators and assigns of the
respective parties hereof. If this Lease is signed by more than one person as
Tenant, their obligation shall be joint and several.

 

SECTION 35. TIME OF THE ESSENCE. Time is expressly declared to be of the essence
of this Lease, and of all covenants and conditions herein contained.

 

SECTION 36. LEASE NOT EFFECTIVE UNTIL DELIVERED; LEASE NOT EFFECTIVE UNTIL
CONSTRUCTION LOAN OBTAINED; LENDER APPROVAL.

 

(a) Submission by Landlord of this Lease for examination or signature by Tenant
shall not constitute an option. Notwithstanding such submission of this Lease,
and notwithstanding Landlord’s proceeding with space planning or other activity
relating to construction of the Tenant Improvements, this Lease shall not become
effective until signed by both Tenant and Landlord and the fully signed Lease is
delivered to both Landlord and Tenant. The Lease shall not be deemed to be
signed by Landlord unless and until signed by the duly authorized managing
member of Landlord.

 

(b) Landlord and Tenant hereby agree that this lease and all of Landlord’s
obligations under this Lease are expressly conditioned upon review and approval
of this lease by Landlord’s construction and permanent lender(s). Tenant hereby
acknowledges that in determining whether to approve, Landlord’s

 

 

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lender will consider Tenant’s lease application, credit information,
biographical data on Tenant’s key officers or principals, and financial
statements relating to Tenant’s business. This condition is expressly for the
sole benefit of Landlord and may be waived by Landlord by written notice of such
waiver from Landlord to Tenant.

 

SECTION 37. ADDENDA AND EXHIBITS. This Lease, in addition to the terms and
conditions specified herein, shall also include the following Addenda and
Exhibits, attached hereto and incorporated herein by this reference:

 

Exhibits “A”   Floor Plan “A-1”   Site Plan “B”   Rules and Regulations “C”  
Work Letter Agreement “D”   Form of Tenant Estoppel Certificate “E”  
Subordination, Non-Disturbance and Attornment Agreement “E-1”   1st Pacific Bank
of California SNDA

Addenda Addendum No. 1      Option to Extend Addendum No. 2      Abatement of
Rent

 

SECTION 38. DELAYING CAUSES. If either party is delayed in the performance of
any covenant of this Lease because of any of the following causes: action of the
elements, war, riot, labor dispute, inability to procure or general shortage of
labor or material in the normal channels of trade, delay in transportation,
delay in inspections, governmental action or moratorium, or any other cause
beyond the reasonable control of the party so obligated, whether similar or
dissimilar to the foregoing, financial inability excepted, then such performance
shall be excused for the period of the delay and the period for such performance
shall be extended for a period equivalent to the period of such delay, except
that the foregoing shall in no way affect (a) Tenant’s obligation to pay the
Basic Rent or any other amount payable under this Lease; or (b) the length of
the Term of this Lease.

 

SECTION 39. ENTIRE AGREEMENT. This Lease constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, fully
supersedes any and all prior understandings, representations, warranties and
agreements between the parties hereto, or any of them, pertaining to the subject
matter hereof, and may be modified only by written agreement, signed by all of
the parties hereto.

 

SECTION 40. QUIET ENJOYMENT. Subject to Tenant’s performing its obligations
pursuant to this Lease, Landlord hereby confirms unto Tenant, Tenant’s right to
have the quiet enjoyment and possession of the Premises during the Term.

 

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date
set forth in Paragraph A.

 

LANDLORD:

 

   

PACIFIC CARLSBAD PARTNERS, LLC, a

California limited liability company

   

By

     

/s/ Frank Sciacci

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Title

     

Managing Member

 

20

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TENANT:     DOCUMENT SCIENCES CORPORATION, a Delaware corporation     By  

/s/ John L. McGannon

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    Title   CEO     By  

 

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    Title  

 

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21

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EXHIBIT “A”

 

GENESIS CORPORATE CENTRE BUILDING             

 

Floor Plan

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EXHIBIT “A-1”

 

GENESIS CORPORATE CENTRE BUILDING             

 

Site Plan

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EXHIBIT “B”

 

GENESIS CORPORATE CENTRE BUILDING             

 

Rules and Regulations

 

1. The purpose of this Exhibit is hereby agreed to be: To adopt a workable code
of regulations protecting the Landlord and Tenant of the Building toward the
goal of creating a harmonious atmosphere of high professional competence in the
Building.

 

2. Landlord agrees that Tenant is entitled to, and shall have, the quiet
enjoyment of the Premises.

 

3. Tenant and Tenant’s employees shall not loiter in the entrance or corridors
of the Building, or in any way obstruct the sidewalks, halls, stairways and
elevators, and shall use the same only as a means of passage to and from their
respective offices.

 

4. The water closets, urinals and other plumbing shall be used for the purpose
for which they were constructed and no rubbish, newspapers or other substances
of any kind shall be thrown into them.

 

5. All electric and telephone wiring shall be installed as directed by Landlord
and boring or cutting of floors and partitions for wires will not be permitted,
except with the written consent of Landlord.

 

6. Tenant shall not install or use any machinery in the Premises which may cause
any unreasonable noise, jar, vibration or tremor to the floors or walls, or
which by its weight might injure or affect the integrity of the floors of the
Building. All damage to the Building caused by installing or removing any safe,
furniture, equipment or other property shall be repaired at the expense of
Tenant.

 

7. Tenant and Tenant’s agents and employees shall not play any musical
instrument, including radio and television, in a loud or objectionable manner,
or make or permit any improper noises in the Building, or interfere in any way
with other tenants or those having business with them, or bring into or keep
within the Building any animal, bird or vehicle.

 

8. Tenant shall not conduct (or permit to be conducted) any auction on the
Premises.

 

9. All furniture, equipment and freight shall be moved into and out of the
Building only during such hours as shall be reasonably approved by and under the
supervision of Landlord. Landlord will not be responsible for loss of or damage
to any furniture, equipment or freight from any cause.

 

10. All keys to the Premises or the Building shall be returned to Landlord upon
the termination of Tenant’s lease. Except in accordance with Section 26(a) of
the Lease, Tenant shall not change the locks or install other locks on doors of
the Premises.

 

11. [Intentionally Omitted]

 

12. Landlord reserves the right to exclude or expel from the Building any person
who, in the judgment of the Landlord, is intoxicated or under the influence of
liquor or drugs, or who shall do any act in violation of the rules and
regulations of the Building.

 

13. Rooms used in common by Tenant shall be subject to such regulations as are
posted therein.

 

14. Landlord reserves the right to close and keep locked all entrance and exit
doors of the Building during hours Landlord may reasonably deem advisable for
the adequate protection of the property. Except to those having keys to the
Building, use of the Building before 7:00 a.m. or after 6:00 p.m., on Monday
through Saturday, or at any time

 

B-1

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during Sundays or legal holidays shall be permissive and subject to the rules
and regulations Landlord may reasonably prescribe. Landlord assumes no
responsibility and shall not be liable for any damage resulting from the entry
of any authorized or unauthorized person to the Building.

 

15. Landlord shall have the right to prohibit any advertising by any agent which
in Landlord’s opinion, tends to impair the reputation of the Building or its
desirability as a Building for offices, and upon written notice from Landlord,
such Tenant shall refrain from or discontinue such advertising.

 

16. Landlord shall establish a reasonable window covering program for the
Building, and Tenant shall not install blinds, shades, awnings or other form of
inside or outside window covering, or window ventilators or similar devices that
do not comply with such program without the reasonable prior written consent of
Landlord.

 

17. Tenant shall give Landlord prompt notice of any accidents to or defects in
the water pipes, gas pipes, electric lights and fixtures, heating apparatus or
any other service equipment.

 

18. Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein.

 

19. No cooking shall be done or permitted by Tenant on the Premises, except in
areas specifically designed for the purpose, without the consent of Landlord,
nor shall the Premises be used for the storage of merchandise, for washing
clothes, for lodging, or for any improper, objectionable or immoral purposes.

 

20. Tenant shall not use or keep in the Premises or the building any kerosene,
gasoline or inflammable or combustible fluid or material, or use any method of
heating or air conditioning other than that permitted or approved.

 

21. Tenant shall see that the doors of the Premises are closed and securely
locked before leaving the Premises, and must observe strict care and caution
that all water faucets or water apparatus are shut off before Tenant or Tenant’s
employees leave, and that all electricity shall likewise be carefully shut off,
so as to prevent waste or damage, and for any default or carelessness Tenant
shall make good all injuries sustained by other tenants or occupants of the
Building or Landlord.

 

22. Tenant may install up to three (3) vending machines in a kitchen or lounge
area for the convenience of Tenant’s employees. Such vending machines shall be
of a type typically found in the kitchen or lounge areas of offices, such as
those for the sale of soda, cookies and snacks. Tenant shall not install any
video games or arcade machines.

 

23. [Intentionally Omitted]

 

24. If Tenant has any outdoor area in its control or designated for its
exclusive use (not including exclusive parking areas), Tenant shall take all
necessary or proper actions and precautions to prevent standing water in such
area that could result in mosquitoes breeding (e.g., Tenant shall not permit
rain water or other water to accumulate or stand in any pails, buckets, trays,
flower pots or other containers; or on any patio areas).

 

25. From time to time it may become advantageous to make amendments to this list
which are in the best interests of both Landlord and Tenant and which are not
inconsistent with the Lease. Landlord reserves the right to make such reasonable
amendments by giving notice to Tenant.

 

    “LANDLORD”   “TENANT”    

/s/ Frank Sciacci

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/s/ John L. McGannon

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    2/24/05   2/18/05

 

B-2

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EXHIBIT “C”

 

GENESIS CORPORATE CENTRE BUILDING             

 

Work Letter Agreement

 

Document Sciences Corporation

Attention: Facilities Manager

 

Ladies and Gentlemen:

 

You (“Tenant”) and we (“Landlord”) are executing simultaneously with this Work
Letter Agreement, a written lease (“Lease”) covering those certain premises
(“Premises”) known as Building             , located in the Genesis Corporate
Centre at 5958 Priestly Drive, Carlsbad, California. To induce Tenant to enter
into the Lease (which is hereby incorporated by reference to the extent that the
provisions of this Work Letter Agreement may apply thereto) and in consideration
of the mutual covenants hereinafter contained, Landlord and Tenant mutually
agree that certain improvements to the Premises shall be constructed by Landlord
as follows:

 

1. DESCRIPTION OF IMPROVEMENTS

 

(a) The Premises to be provided by Landlord, at Landlord’s expense (and
exclusive of Tenant Improvements), shall consist of a concrete floor, exterior
Building walls, off-Premises service points from which electrical and telephone
service to the Premises can be made and off-Premises service points from which
plumbing connections for the supply of water to the Premises may be made.

 

(b) Additional improvements (“Tenant Improvements”), including, but not limited
to, ceilings, interior partitions, insulation, drywall (including taping and
sanding), painting, millwork and cabinets, window coverings, carpet, lighting
fixtures, electrical systems, plumbing connections and fixtures for the supply
of water to the Premises and the equipment and distribution system for heating,
ventilation and air conditioning (“HVAC”) for the Premises, including, but not
limited to, all ducts, baffles and thermostats to serve the Premises. The Tenant
Improvements do not include Tenant’s network, telecommunications or other
cabling (“Tenant’s Cabling”). The Tenant Improvements all shall be made by
Landlord pursuant to the City-Approved Working Drawings (defined in Section 2(b)
of this Work Letter Agreement) approved by Landlord and Tenant. The cost of the
Tenant Improvements shall be paid in accordance with Section 5 of this Work
Letter.

 

2. PLANS AND SPECIFICATIONS; WORKING DRAWINGS

 

(a) Landlord’s space planner prepared a space plan of the Premises depicting the
space layout of the Premises and setting forth the specifications for materials
and finishes therein (“Space Plan”); the Space Plan was approved by Landlord and
Tenant.

 

(b) Based on the approved Space Plan, Landlord caused Smith Consulting
Architects to prepare that certain Construction Modification Drawing dated
February 9, 2005, and bearing original Job No. 98316.T06, as supplemented by
that certain narrative entitled Building Standards for Tenant Improvements,
dated February 5, 2005 (a copy of which is attached hereto as Attachment “1”)
(collectively, “Working Drawings”). By signing and entering into the Lease,
Landlord and Tenant (i) approve the Working Drawings; and (ii) understand and
acknowledge that the Working Drawings are subject to being revised based on the
input and comments of the Building Department of the City of Carlsbad. The
Working Drawings, as approved by the Building Department of the City of
Carlsbad, shall be referred to as the “City-Approved Working Drawings”.

 

(c) Landlord and Tenant have agreed in writing on the weight limitations, size
and position of all files, safes and heavy equipment used in the Building, which
in all cases shall stand on a wood or metal base of a size and type on which the
parties have agreed in writing. Agreement between the parties for the purpose of
this Section 2(c) may be (but is not necessarily) by initials or other written
designation on the Working Drawings or the City-Approved Working Drawings.

 

C-1

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3. CONSTRUCTION OF TENANT IMPROVEMENTS

 

(a) Construction of the Tenant Improvements pursuant to this Work Letter
Agreement shall be performed by such contractor as Landlord shall reasonably
select, under Landlord’s supervision. Construction shall commence promptly
following the parties signing and entering into this Lease, and shall be
diligently prosecuted to completion thereafter. Landlord shall arrange for its
contractor to coordinate with Tenant’s installers and providers with respect to
the timing for installing Tenant’s Cabling, the stated objective being to enable
Tenant’s installers and providers to install Tenant’s Cabling without having to
remove or demolish any of the Tenant Improvements; provided, however, Landlord
shall have no responsibility or liability for delays in constructing the Tenant
Improvements if and to the extent the delay(s) result from (i) Landlord’s
contractor coordinating with or accommodating Tenant’s installers or providers;
or (ii) the work or activities of Tenant’s installers or providers.

 

(b) Landlord reserves the right to use pre-stocked materials in constructing the
Tenant Improvements, including drywall and studs, lighting fixtures and air
handling boxes.

 

(c) Tenant shall be permitted, during the course of construction, upon
reasonable notice to Landlord, and without unreasonably interfering with the
conduct of such construction, to inspect the progress of the work and, upon
written notice to Landlord, to cause any material defects or deficiencies to be
repaired.

 

(d) Upon completion of construction of the Tenant Improvements, Landlord shall
cause the Premises to be thoroughly cleaned to Tenant’s reasonable satisfaction
prior to Tenant’s occupancy of the Premises.

 

(e) Landlord shall repair or replace as soon as reasonably possible all
incomplete or defective items identified in any “pick-up list” or “punchlist”
delivered by Tenant to Landlord. Tenant shall deliver such “pick-up list” or
“punchlist” to Landlord within fifteen (15) days after commencement of Tenant’s
actual occupancy of the Premises.

 

4. CHANGE ORDERS

 

Any material change from the City-Approved Working Drawings desired by Tenant
(“Change Order”) shall be requested of Landlord in writing. Upon receipt of a
Change Order request, Landlord shall cause the modification to be incorporated
into the Working Plans and transmitted to the contractor for pricing and for an
estimate of the delay, if any, which would be caused by incorporation of the
requested Change Order. Upon receipt of pricing information, Landlord shall
forward the cost of the work, including the overhead of the contractor, the
space planner and Landlord, and a statement of the estimated number of
additional working days, if any, required to execute the change, to Tenant for
approval. Work with respect to the Change Order shall proceed only upon Tenant’s
written approval of the pricing and estimated delay. Whether or not a requested
Change Order is ultimately approved by Tenant or incorporated in the Tenant
Improvements, all of Landlord’s costs and expenses associated with the requested
Change Order, including modification of the City-Approved Working Drawings,
shall be charged to the Tenant, and shall be due and payable to Landlord within
ten (10) days after delivery of billing.

 

5. PAYMENT OF COST OF CONSTRUCTION

 

Landlord shall pay the cost and expense of the Tenant Improvements, except that
Tenant shall bear all costs and expenses related to any Change Orders (including
the work to be performed pursuant to any Change Orders) as set forth in Section
4 of this Work Letter Agreement.

 

6. SUBSTANTIAL COMPLETION

 

“Substantial Completion” (or conjugations and declensions thereof), for purposes
of this Work Letter Agreement and for purposes of the Lease, shall mean both:
(a) completion of construction of the Tenant Improvements substantially in
accordance with the City-Approved Working Drawings and any Change Orders
sufficient for Tenant to occupy the Premises for the use intended, including
completion of the ceiling system, water and sewer service, electrical

 

C-2

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service, and floor finishes, with the Premises subject only to minor corrective
punchlist items; and (b) the inspector from the Building Department of the City
of Carlsbad signing the on-site job card indicating that the Tenant
Improvements, as so substantially completed, are approved for occupancy. The
completed work shall be clean and free of debris or obstructions, and floors
shall be cleaned to Tenant’s reasonable satisfaction.

 

If the foregoing correctly sets forth our understanding, kindly sign three (3)
copies of this Work Letter Agreement where indicated.

 

LANDLORD:         PACIFIC CARLSBAD PARTNERS, LLC,     a California limited
liability company     By  

/s/ Frank Sciacci

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    Title Managing Member ACCEPTED AND APPROVED:         , 20    . TENANT:  
DOCUMENT SCIENCES CORPORATION, a Delaware corporation     By  

/s/ John L. McGannon

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    Title CEO 2/18/05     By  

 

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    Title  

 

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C-3

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Attachment “1” to Exhibit “C”

 

Building Standards for Tenant Improvements

 

C-4

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EXHIBIT “D”

 

GENESIS CORPORATE CENTRE BUILDING             

 

Form of

Tenant Estoppel Certificate

 

Attn:

 

RE:

 

Gentlemen:

 

The undersigned, as Tenant, under a lease of certain premises executed by
                                        , dba:
                                         (“Lease”), does hereby state, declare,
represent and warrant to you as follows:

 

1. The copy of the Lease attached hereto as Exhibit “1” is a true and correct
copy of the Lease and the Lease is in full force and effect and has not been
amended, supplemented or changed, except as follows (if none, so state)
                                        
                                        

 

2. Tenant has accepted possession of the premises demised under the Lease, and
all items of an executory nature have been completed under the terms of the
Lease, including, but not limited to, completion of construction of the premises
(and all other improvements required under the Lease) in accordance with
applicable plans and specifications and within the time periods set forth in the
Lease. Tenant further acknowledges that the term commenced on         , 20    
and shall expire on             , 20     and unless sooner terminated or
extended in accordance with the terms of the Lease.

 

3. To Tenant’s actual knowledge, no default on the part of the undersigned
exists under the Lease in the performance of the terms, covenants and conditions
of the Lease required to be performed on the part of the undersigned.

 

4. To Tenant’s actual knowledge, no default on the part of Landlord exists under
the Lease in the performance of the terms, covenants and conditions of the Lease
required to be performed on the part of Landlord.

 

5. Tenant has no option to purchase the property of which the premises are a
part.

 

6. Rentals has been paid through                             , 20    .

 

7. No prepayments or rentals due under the Lease have been made and no security
or deposits as security have been made thereunder, except as set forth in the
Lease.

 

8. To Tenant’s actual knowledge, Tenant has no defense as to its obligations
under the Lease and claims no setoff or counterclaim against Landlord, except as
provided in the Lease.

 

9. To Tenant’s actual knowledge, Tenant has not received notice of any
assignment, hypothecation, mortgage or pledge of Landlord’s interest in the
Lease or the rents or other amounts payable thereunder.

 

D-1

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The undersigned understands and acknowledges that you are about to enter into a
transaction with Landlord with respect to the Lease, the Premises or the Parcel
(all defined in the Lease), and you are entitled to rely on the representations
and warranties contained herein in connection with such transaction.

 

Very truly yours,

 

 

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D-2

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EXHIBIT “E”

 

GENESIS CORPORATE CENTRE BUILDING             

 

Form of

Subordination, Non-disturbance and

Attornment Agreement

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Recording Requested by and

When Recorded Return to:

 

SUBORDINATION, NON-DISTURBANCE AND

ATTORNMENT AGREEMENT

 

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

 

THIS AGREEMENT is entered into by and among Tenant, Landlord and Beneficiary and
affects the Property described on Exhibit “1” attached hereto. The terms
“Tenant”, “Landlord”, “Beneficiary”, “Premises”, “Lease”, “Property”, “Loan”,
“Note” and “Mortgage” are defined in the Schedule of Definitions attached hereto
as Exhibit “2”. This Agreement is entered into with reference to the following
facts:

 

A. Landlord and Tenant have entered into the Lease covering the Premises.

 

B. Beneficiary has agreed to make the Loan to Landlord to be evidenced by the
Note, which Note is to be secured by the Mortgage covering the Property,
provided that the Lease is subordinated to the lien of the Mortgage.

 

C. For the purposes of completing the Loan, the parties hereto desire expressly
to subordinate the Lease to the lien of the Mortgage, it being a condition
precedent to Beneficiary’s obligation to consummate the Loan that the lien of
the Mortgage be unconditionally and at all times prior and superior to the
leasehold interests and estates created by the Lease.

 

D. Tenant has requested that Beneficiary agree not to disturb Tenant’s
possessory rights in the Premises in the event Beneficiary should foreclose the
Mortgage; provided that Tenant is not then in default under the Lease and,
provided further, that Tenant attorns to Beneficiary or the purchaser at any
foreclosure or trustee’s sale of the Property.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

 

1. Subordination. Notwithstanding anything to the contrary set forth in the
Lease, the Lease and the leasehold estate created thereby and all of Tenant’s
rights thereunder shall be and shall at all times remain subject, subordinate
and inferior to the Mortgage and the lien thereof, and all rights of Beneficiary
thereunder and to any and all renewals, modifications, consolidations,
replacements and extensions thereof.

 

2. Acknowledgment and Agreement by Tenant. Tenant acknowledges and agrees that:

 

(a) Beneficiary would not make the Loan without this Agreement.

 

(b) [Intentionally Omitted]

 

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(c) Beneficiary, in making any disbursements to Landlord, is under no obligation
or duty to oversee or direct the application of the proceeds of such
disbursements, and such proceeds may be used by Landlord for purposes other than
improvements of the Property.

 

(d) From and after the date hereof, in the event of any act or omission by
Landlord which would give Tenant the right, either immediately or after the
lapse of time, to terminate the Lease or to claim a partial or total eviction,
Tenant will not exercise any such right:

 

(i) until Tenant has given written notice of such act or omission to
Beneficiary; and

 

(ii) until the same period of time as is given to Landlord under the Lease to
cure such act or omission shall have elapsed following such giving of notice to
Beneficiary and following the time when Beneficiary shall have become entitled
under the Mortgage to remedy the same.

 

(e) Tenant has notice that the Lease and the rent and all other sums due
thereunder have been assigned or are to be assigned to Beneficiary as security
for the Loan secured by the Mortgage. In the event that Beneficiary notifies
Tenant of a default under the Mortgage and demands that Tenant pay its rent and
all other sums due under the Lease to Beneficiary, Tenant shall honor such
demand and pay its rent and all other sums due under the Lease directly to
Beneficiary or as otherwise required pursuant to such notice.

 

(f) Tenant shall send a copy of any notice or statement under the Lease to
Beneficiary at the same time such notice or statement is sent to Landlord,
provided that Tenant has previously received notice of Beneficiary’s address as
set forth in the Lease.

 

(g) Tenant has no right or option of any nature whatsoever, whether pursuant to
the Lease or otherwise to purchase the Premises or the Property, or any portion
thereof or any interest therein, except for the leasehold interest and the
option to extend the Term as set forth in the Lease; and to the extent that
Tenant has had or hereafter acquires any such right or option, the same is
hereby acknowledged to be subject and subordinate to the Mortgage and is hereby
waived and released as against Beneficiary.

 

(h) This Agreement satisfies any condition or requirement in the Lease relating
to the granting of a non-disturbance agreement.

 

3. Foreclosure and Sale. In the event of foreclosure of the Mortgage, or upon a
sale of the Property pursuant to the trustee’s power of sale contained therein,
or upon a transfer of the Property by conveyance in lieu of foreclosure, then:

 

(a) Non-Disturbance. So long as Tenant complies with this Agreement and is not
in default under any of the terms, covenants or conditions of the Lease, the
Lease shall continue in full force and effect as a direct lease between the
succeeding owner of the Property and Tenant, upon and subject to all of the
terms, covenants and conditions of the Lease for the balance of the term of the
Lease. Tenant hereby agrees to adhere to and accept any such successor owner as
landlord under the Lease, and to be bound by and perform all of the obligations
imposed by the Lease, and Beneficiary, or any such successor owner of the
Property, will not disturb the possession of Tenant and will be bound by all of
the obligations imposed on Landlord by the Lease; provided, however, that
Beneficiary or any purchaser at a trustee’s or sheriff’s sale or any successor
owner of the Property shall not be:

 

(i) liable for any act or omission of a prior landlord (including Landlord); or

 

(ii) subject to any offset or defenses which Tenant might have against any prior
landlord (including Landlord); or

 

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(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 cleaning deposit or other prepaid charge which Tenant might have
paid in advance to any prior Landlord (including Landlord), except that
Beneficiary agrees to be bound by any cleaning deposit or security deposit to
the extent actually transferred to and received by Beneficiary; or

 

(iv) bound by any agreement or modification of the Lease made without the
written consent of Beneficiary, except those made prior to this Agreement.

 

(b) [Intentionally Omitted]

 

(c) No Liability. Beneficiary shall have no liability 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, including, but not limited to, any
provisions relating to renewal options and options to expand, and in the event
of such a conflict, Tenant shall have no right to cancel the Lease or take any
other remedial action against Beneficiary or action against any other party for
which Beneficiary would be liable.

 

4. Acknowledgment and Agreement by Landlord. Landlord, as landlord under the
Lease and mortgagor or trustor under the Mortgage, acknowledges and agrees for
itself and its heirs, successors and assigns, that:

 

(a) This Agreement does not:

 

(i) constitute a waiver by Beneficiary of any of its rights under the Mortgage;
and/or

 

(ii) in any way release Landlord from its obligations to comply with the terms,
provisions, conditions, covenants, agreements and clauses of the Mortgage;

 

(b) The provisions of the Mortgage remain in full force and effect and must be
complied with by Landlord; and

 

(c) In the event of a default under the Mortgage of which Tenant has been
notified by Beneficiary, Tenant may pay all rent and all other sums due under
the Lease to Beneficiary as provided in this Agreement.

 

5. No Obligation of Beneficiary. Except for the Tenant Improvements defined in
Section 5 of the Lease, which are to be constructed by Landlord pursuant to
Exhibit “C” of the Lease, Beneficiary shall have no obligation or incur any
liability with respect to the erection or completion of the improvements in
which the Premises are located or for completion of the Premises or any
improvements for Tenant’s use and occupancy, either at the commencement of the
term of the Lease or upon any renewal or extension thereof or upon the addition
of additional space, pursuant to any expansion rights contained in the Lease.

 

6. Notice. All notices hereunder to Beneficiary shall be deemed to have been
duly given if mailed by United States registered or certified mail, with return
receipt requested, postage prepaid to Beneficiary at its address set forth on
Exhibit “2” attached hereto (or at such other address as shall be given in
writing by Beneficiary to Tenant) and shall be deemed complete upon any such
mailing.

 

7. Miscellaneous.

 

(a) As between Tenant and Beneficiary, this Agreement supersedes any
inconsistent provision of the Lease.

 

(b) Nothing contained in this Agreement shall be construed to derogate from or
in any way impair or affect the lien and charge or provisions of the Mortgage.

 

E-3

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(c) Beneficiary shall have no obligation nor incur any liability with respect to
any warranties of any nature whatsoever, whether pursuant to the Lease or
otherwise, including, without limitation, any warranties respecting use,
compliance with zoning, Landlord’s title, Landlord’s authority, habitability,
fitness for purpose or possession.

 

(d) In the event that Beneficiary shall acquire title to the Premises or the
Property, Beneficiary shall have no obligation, nor incur any liability, beyond
Beneficiary’s then equity interest, if any, in the Premises, and Tenant shall
look exclusively to such equity interest of Beneficiary, if any, in the Premises
for the payment and discharge of any obligation imposed upon Beneficiary
hereunder or under the Lease, and Beneficiary is hereby released and relieved of
any other obligations hereunder and under the Lease.

 

(e) This Agreement shall inure to the benefit of the parties hereto, their
respective successors and permitted assigns; provided, however, that in the
event of the assignment or transfer of the interest of Beneficiary, all
obligations and liabilities of Beneficiary under this Agreement shall terminate,
and thereupon all such obligations and liabilities shall be the responsibility
of the party to whom Beneficiary’s interest is assigned or transferred; and
provided further, that the interest of Tenant under this Agreement may not be
assigned or transferred without the prior written consent of Beneficiary.

 

(f) This Agreement shall be governed by and construed in accordance with the
laws of the State of California.

 

IN WITNESS WHEREOF, the parties have executed this Subordination,
Non-Disturbance and Attornment Agreement as of .

 

NOTICE:    THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT CONTAINS
PROVISIONS WHICH ALLOW THE PERSON OBLIGATED ON THE LEASE TO OBTAIN A LOAN, A
PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT OF THE
PROPERTY.

 

IT IS RECOMMENDED THAT PRIOR TO THE EXECUTION OF THIS SUBORDINATION,
NON-DISTURBANCE AND ATTORNMENT AGREEMENT, THE PARTIES CONSULT WITH THEIR
ATTORNEYS WITH RESPECT THERETO.

 

BENEFICIARY:

                                                                     , a     By
 

 

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TENANT:

                                                                 , a     By  

 

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    By  

 

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E-4

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LANDLORD:     PACIFIC CARLSBAD PARTNERS, LLC,     a California limited liability
company     By  

 

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    Title  

 

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STATE OF CALIFORNIA    )      ) ss. COUNTY OF                         )

 

On                     , 20    , before me,
                                                                                
                                                                      , Notary
Public in and for said State, personally appeared
                                                                                
                                              

___________________________________________________________________________________________________________

___________________________________________________________________________________________________________,

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

 

WITNESS my hand and official seal.

 

Signature  

 

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  (Seal)

 

E-5

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STATE OF CALIFORNIA    )      ) ss. COUNTY OF                         )

 

On                     , 20    , before me,
                                                                                
                                                                  , Notary
Public in and for said State, personally appeared
                                        
                                        
                                        

______________________________________________________________________________________________________________

                                                                               
                                        
                                        
                                                       ,

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

 

WITNESS my hand and official seal.

 

Signature  

 

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   (Seal)

 

STATE OF CALIFORNIA    )      ) ss. COUNTY OF                         )

 

On                     , 20    , before me,
                                                                                
                                                                  , Notary
Public in and for said State, personally appeared
                                                                                
                                         

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________,

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

 

WITNESS my hand and official seal.

 

Signature  

 

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   (Seal)

 

E-6

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EXHIBIT “1”

TO

EXHIBIT “E”

 

Legal Description

 

 

Parcel A:

 

Lot                  of Carlsbad Tract No. 99-17(Lot 12-Carlsbad Research
Center), in the City of Carlsbad, County of San Diego, State of California,
according to Map thereof No. 14074, filed in the Office of the County Recorder
of San Diego County, November 17, 2000.

 

Parcel B:

 

Non-exclusive easements in favor of the owners of each Lot, their respective
successors, assigns, occupants, customer and invitees, for ingress and egress of
vehicular traffic, utility, drainage, and landscaping purposes over the Common
Area of Lot 10 of Carlsbad Tract No. 99-17 (Lot 12-Carlsbad Research Center), in
the City of Carlsbad, County of San Diego, State of California, according to Map
thereof No. 14074, filed in the Office of the County Recorder of San Diego
County, November 17, 2000, as set forth, defined and described in that certain
Declaration establishing Covenants, Conditions and Restrictions and Grant of
Easements for Genesis Corporate Center, recorded June 29, 2001 as instrument no.
2001-0443570 of Official Records.

 

APN: 212-240-                -

 

E-7

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EXHIBIT “2”

TO

EXHIBIT “E”

 

Schedule of Definitions

 

“Beneficiary” shall mean                                       
                                              . All notices hereunder to
Beneficiary shall be mailed to:

 

______________________________

______________________________

______________________________

Attention:                                              

With copy to:

______________________________

______________________________

______________________________

Attention:                                              

 

“Landlord” shall mean PACIFIC CARLSBAD PARTNERS, LLC, a California limited
liability company, having an office at 3838 Camino del Rio North, Suite 300, San
Diego, California 92108.

 

“Lease” shall mean a certain lease entered into by and among Landlord and Tenant
dated as of                     , 20    , covering the Premises.

 

“Loan” shall mean a mortgage loan from Beneficiary to Landlord.

 

“Mortgage” shall mean a first lien Mortgage or Deed of Trust and Security
Agreement with Assignment of Rents and Fixture Filing dated as
of                                    , encumbering the Property, executed by
Landlord, as Mortgagor or Trustor, to                                     , a
                                , as Trustee, in favor of Beneficiary, securing
repayment of the Loan evidenced by the Note, to be recorded in the records of
the County in which the Property is located.

 

“Note” shall mean that certain Note executed by Landlord in favor of
                                    , dated as of                     , in the
amount of $            .

 

“Premises” shall mean certain space in the improvements located in and upon the
Property which is subject to the Lease.

 

“Property” shall mean the real property described on Exhibit “1” attached hereto
together with the improvements thereon.

 

“Tenant” shall mean                                         
                                                                 , a
                                , having an office at
                                        
                                                                 .

 

E-8

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EXHIBIT “E-1”

 

GENESIS CORPORATE CENTRE BUILDING             

 

1st PACIFIC BANK OF CALIFORNIA SNDA

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GENESIS CORPORATE CENTRE BUILDING             

 

LEASE ADDENDUM NO. 1

 

OPTION TO EXTEND

 

Addendum No. 1 to Lease between PACIFIC CARLSBAD PARTNERS, LLC, a California
limited liability company, as Landlord, and DOCUMENT SCIENCES CORPORATION, a
Delaware corporation, as Tenant:

 

Provided all of the following conditions are satisfied, Tenant shall have the
option to extend the Term for one (1) additional period of five (5) years upon
the same terms and conditions as provided in the Lease, except the Basic Rent
for each such additional period shall be determined under this Addendum:

 

(i) Tenant has not assigned the Lease or sublet the Premises (or any portion
thereof) at the time a Notice of Exercise (defined below) is delivered and on
the last day of the Term, as it may have been extended previously;

 

(ii) Tenant is not in default under the Lease at the time a Notice of Exercise
(defined below) is delivered and on the last day of the Term, as it may have
been extended previously; and

 

(iii) This Lease is in effect at the time a Notice of Exercise is delivered and
on the last day of the Term, as it may have been extended previously.

 

If Tenant has an interest in extending the Term, then not more than twelve (12)
months and not less than nine (9) months before the expiration of the initial
Term, Tenant shall deliver to Landlord a notice of intention to extend the Term
for the ensuing additional period (“Notice of Intention”). Within ten (10) days
after the delivery of the Notice of Intention, Landlord and Tenant shall meet
and confer to agree upon the Basic Rent for the first year of the ensuing
additional period, which shall be an agreed-upon amount equal to then-prevailing
fair market rent per square foot then being charged for comparable premises,
comparably improved, by landlords of comparable office buildings in San Diego
County, California; provided, however, rent inducements and rent concessions
then being offered only to new tenants (i.e., tenants other than renewing or
extending tenants) and brokerage commissions payable by landlords shall be
disregarded in arriving at the fair market rent; and provided further, in no
event shall the monthly Base Rent for the first year of the ensuing additional
period be less than 103% of the Base Rent payable by Tenant during the last full
calendar month of the initial Term. If Landlord and Tenant are unable to agree
on the Base Rent for the first year of the ensuing additional period within
thirty (30) days after Tenant’s delivering its Notice of Intention, the Base
Rent for the first year of the ensuing additional period shall be determined as
follows: Landlord and Tenant shall cause a determination to be made of the
then-current fair market rental value by three appraisers, each of whom shall be
an MAI appraiser with at least five (5) years experience appraising multi-tenant
office properties (among other commercial real property) in the San Diego area.
Each at their own cost, Landlord and Tenant each shall select one appraiser and
shall immediately notify the other of the appraiser so selected. Such selections
shall be made within ten (10) days after the earlier of (A) the expiration of
such thirty-day (30-day) period; or (B) the date on which Landlord and Tenant
agree that they are unable to agree on the Base Rent for the first year of the
ensuing additional period. The two appraisers so selected shall select a third
appraiser within ten (10) days after their being selected. Landlord and Tenant
each shall bear one-half (1/2) of the cost of selecting the third appraiser and
of paying the third appraiser’s fee. The third appraiser, however selected,
shall be a person who is not and who has not previously been an employee of or
consultant or appraiser for either Landlord or Tenant. In the event the two
appraisers are unable to agree upon the selection of a third appraiser, the two
appraisers shall, within five (5) days after the date on which they agree they
are unable to agree on a third appraiser, request the Superior Court in and for
the County of San Diego, State of California, to appoint the third appraiser.
Within thirty (30) days after the selection of the third appraiser, a majority
of the appraisers shall establish the current fair market rent. If no two
appraisers agree on the current fair market rent, the determination which is
neither highest nor lowest shall control. In establishing the current fair
market rent, the appraisers shall make their determination based upon the terms
of the Lease, taking into consideration all of the terms, covenants, conditions,
provisions, obligations and rights set forth in the Lease; provided, however,
rent inducements and rent concessions then being offered only to new tenants
(i.e., tenants other than

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renewing or extending tenants) and brokerage commissions payable by landlords
shall be disregarded in arriving at the fair market rent; and provided further,
in no event shall the monthly Base Rent for the first year of the ensuing
additional period be less than 103% of the Base Rent payable by Tenant during
the last full calendar month of the initial Term. If the Term is so extended by
Tenant: (aa) the Base Rent for first year of the ensuing additional period shall
be the then-current fair market rent as so determined; and (bb) on each
anniversary of the commencement of the ensuing additional period, the Base Rent
payable during the ensuing additional period shall be increased by three percent
(3%) of the Base Rent payable during the immediately preceding year. Tenant
shall exercise its option to extend, if at all, by delivering to Landlord
irrevocable written notice of its exercise (“Notice of Exercise”) before 180
days before the expiration of the initial Term. If Tenant fails to comply with
any of the deadlines or time requirements set forth in this Paragraph, or if
Tenant otherwise fails to exercise its option to extend in accordance with this
Paragraph, Tenant’s option to extend as provided in this Paragraph shall be void
and of no further force and effect. Following Tenant’s exercise of its option,
all references to the “Term” shall mean the term, as so extended.

 

“LANDLORD”

  “TENANT”

/s/ Frank Sciacci

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/s/ John L. McGannon

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Managing Memeber   CEO

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GENESIS CORPORATE CENTRE BUILDING             

 

LEASE ADDENDUM NO. 2

 

CONDITIONAL ABATEMENT OF BASIC RENT

 

Addendum No. 2 to Lease between PACIFIC CARLSBAD PARTNERS, LLC, a California
limited liability company, as Landlord, and DOCUMENT SCIENCES CORPORATION, a
Delaware corporation, as Tenant:

 

Notwithstanding anything in the Lease to the contrary, the obligation of Tenant
to pay Basic Rent shall be conditionally abated for the 2nd month of the Term
and for each of the 71st through and including 74th months of the Term on the
following condition: In the event of a premature termination of the Lease
pursuant to Section 14 of the Lease, all of the conditional abatement of Basic
Rent shall be rescinded, and there shall be immediately and unconditionally due
and payable from Tenant to Landlord, as unpaid Rent that has been earned fully
at the time of such termination, the entire amount of Basic Rent that has been
conditionally abated during the Term as of the date of termination.

 

“LANDLORD”

  “TENANT”

/s/ Frank Sciacci

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/s/ John L. McGannon

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2/24/05   2/18/05