Exhibit 10.23

LEASE AGREEMENT

By and Between

WESTPORT OFFICE PARK, LLC,

a California limited liability company

(“Landlord”)

and

NEVRO CORP.,

a Delaware corporation

(“Tenant”)

March 5, 2015

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

TABLE OF CONTENTS

 

     Page  

ARTICLE 1. PREMISES; COMMON AREAS

     4   

ARTICLE 2. TERM AND CONDITION OF PREMISES

     5   

ARTICLE 3. USE, NUISANCE, OR HAZARD

     6   

ARTICLE 4. RENT

     7   

ARTICLE 5. RENT ADJUSTMENT

     9   

ARTICLE 6. SERVICES TO BE PROVIDED BY LANDLORD

     17   

ARTICLE 7. REPAIRS AND MAINTENANCE BY LANDLORD

     19   

ARTICLE 8. REPAIRS AND CARE OF PREMISES BY TENANT

     20   

ARTICLE 9. TENANT’S EQUIPMENT AND INSTALLATIONS

     20   

ARTICLE 10. FORCE MAJEURE

     21   

ARTICLE 11. CONSTRUCTION, MECHANICS’ AND MATERIALMAN’S LIENS

     21   

ARTICLE 12. ARBITRATION

     22   

ARTICLE 13. INSURANCE

     23   

ARTICLE 14. QUIET ENJOYMENT

     25   

ARTICLE 15. ALTERATIONS

     25   

ARTICLE 16. FURNITURE, FIXTURES, AND PERSONAL PROPERTY

     26   

ARTICLE 17. PERSONAL PROPERTY AND OTHER TAXES

     27   

ARTICLE 18. ASSIGNMENT AND SUBLETTING

     28   

ARTICLE 19. DAMAGE OR DESTRUCTION

     33   

ARTICLE 20. CONDEMNATION

     35   

ARTICLE 21. HOLD HARMLESS

     36   

ARTICLE 22. DEFAULT BY TENANT

     36   

ARTICLE 23. [INTENTIONALLY OMITTED]

     41   

ARTICLE 24. [INTENTIONALLY OMITTED]

     41   

ARTICLE 25. ATTORNEYS’ FEES

     41   

ARTICLE 26. NON-WAIVER

     42   

ARTICLE 27. RULES AND REGULATIONS

     42   

ARTICLE 28. ASSIGNMENT BY LANDLORD

     42   

ARTICLE 29. LIABILITY OF LANDLORD

     42   

ARTICLE 30. SUBORDINATION AND ATTORNMENT

     43   

 

-i-

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

ARTICLE 31. HOLDING OVER

  44   

ARTICLE 32. SIGNS

  45   

ARTICLE 33. HAZARDOUS SUBSTANCES

  45   

ARTICLE 34. COMPLIANCE WITH LAWS AND OTHER REGULATIONS

  48   

ARTICLE 35. SEVERABILITY

  49   

ARTICLE 36. NOTICES

  50   

ARTICLE 37. OBLIGATIONS OF, SUCCESSORS, PLURALITY, GENDER

  50   

ARTICLE 38. ENTIRE AGREEMENT

  50   

ARTICLE 39. CAPTIONS

  51   

ARTICLE 40. CHANGES

  51   

ARTICLE 41. AUTHORITY

  51   

ARTICLE 42. BROKERAGE

  51   

ARTICLE 43. EXHIBITS

  52   

ARTICLE 44. APPURTENANCES

  52   

ARTICLE 45. PREJUDGMENT REMEDY, REDEMPTION, COUNTERCLAIM, AND JURY

  52   

ARTICLE 46. RECORDING

  52   

ARTICLE 47. MORTGAGEE PROTECTION

  53   

ARTICLE 48. OTHER LANDLORD CONSTRUCTION

  53   

ARTICLE 49. PARKING

  54   

ARTICLE 50. ELECTRICAL CAPACITY

  54   

ARTICLE 51. OPTION TO EXTEND LEASE

  54   

ARTICLE 52. TELECOMMUNICATIONS LINES AND EQUIPMENT

  57   

ARTICLE 53. ERISA

  59   

ARTICLE 54. LETTER OF CREDIT

  60   

 

-ii-

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

LEASE AGREEMENT

THIS LEASE AGREEMENT, (this “Lease”) is made and entered into as of March 5,
2015 by and between WESTPORT OFFICE PARK, LLC, a California limited liability
company (“Landlord”), and Tenant identified in the Basic Lease Information
below.

BASIC LEASE INFORMATION

Tenant: NEVRO CORP., a Delaware corporation

Premises: The entire Building, containing approximately 50,470 square feet of
rentable area, outlined in Exhibit B to this Lease.

Building: The Building commonly known as 1800 Bridge Parkway, Redwood City,
California 94065. The rentable area of the Building is 50,470 square feet.

Base Rent:

 

Period

(In Months)

   Annual
Base Rent      Monthly
Base Rent  

01 – 12

   $ 2,028,894.00       $ 169,074.50   

13 – 14

     Abated *       Abated * 

15 – 24

   $ 1,741,467.40       $ 174,146.74   

25 – 36

   $ 2,152,453.68       $ 179,371.14   

37 – 48

   $ 2,217,027.24       $ 184,752.27   

49 – 60

   $ 2,283,538.08       $ 190,294.84   

61 – 72

   $ 2,352,044.16       $ 196,003.68   

73 – 84

   $ 2,422,605.60       $ 201,883.80   

 

*

As an inducement to Tenant entering into this Lease, so long as no Event of
Default shall have occurred and shall be continuing under this Lease, Base Rent
in the amount of $174,146.74 per month shall be abated for the thirteenth
(13th) and fourteenth (14th) months after the Commencement Date. The amount of
Base Rent set forth in the foregoing table for that period reflects that rent
abatement. During such abatement period, Tenant shall still be responsible for
the payment of all of its other monetary obligations under the Lease. In the
event that an Event of Default shall have occurred and be continuing when such
abatement is contemplated, such abatement shall be suspended, and Tenant shall
be entitled to the full amount of such suspended abatement beginning at such
time as such Event of Default is no longer continuing.

Security Deposit Amount: $0.00

 

-1-

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

Letter of Credit Required Amount: $605,651.40, subject to increase and/or
reduction as provided in Article 54.

Rent Payable Upon Execution: $227,115.00

Tenant’s Building Percentage: 100%

Tenant’s Common Area Building Percentage: 5.06%

Commencement Date: The date that is the later of June 1, 2015 or the date upon
which Substantial Completion (as defined in Section 5 of the Tenant Work Letter
attached hereto as Exhibit C) of the Landlord’s Work occurs, but in no event
later than June 30, 2015.

Expiration Date: The date that is the day prior to the day that is eighty-four
(84) months after the Commencement Date. If the Expiration Date falls on a day
other than the last day of the calendar month, then, the Expiration Date shall
be extended to the last day of the calendar month in which the day that the Term
of this Lease would otherwise end but for this proviso occurs, and the Term of
this Lease shall be extended accordingly.

 

Landlord’s Address:

c/o The Prudential Insurance Company of America

4 Embarcadero Center, 27th Floor

San Francisco, CA 94111

Attn: PRISA II Asset Management

With a copy by the same method to:

c/o The Prudential Insurance Company of America

7 Giralda Farms

Madison, New Jersey 07940

Attention: James Marinello, Esquire

With a copy by the same method to:

Harvest Properties, Inc.

6425 Christie Avenue, Suite 220

Emeryville, California 94608

Attention: Joss Hanna

 

-2-

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

Address for rental payment:

Payments via FedEx/UPS/Courier:

JP Morgan Chase

2710 Media Center Dr.

Building #6, Suite #120

Los Angeles, CA 90065

Attn: PREI’s Westport Office Park/100170

Payments via regular mail (lockbox address):

Remit to: PREI’s Westport Office Park #171201

P. O. Box 100170

Pasadena, CA 91189-0170

Payments via either FED wire or ACH wire:

Bank Account Name:

Harvest Properties, Inc. LLC,

as agent for PREI’s Westport Office Park

Bank Account Number 921254751

Bank Name: JP Morgan Chase Bank, N.A.

Bank City & State Location: Baton Rouge, LA

ABA Routing Number: 071000013

Tenant’s Address:

4040 Campbell Avenue, Suite 210

Menlo Park, California 94025

Attention: Andrew Galligan

(If on or after the Commencement Date to the Premises)

Attention: Andrew Galligan

Landlord’s Broker: Cassidy Turley / BT Commercial Real Estate.

Tenant’s Broker: Kidder Mathews.

Parking Allocation: One hundred sixty-six (166), which is based on a parking
ratio of 3.3 non-exclusive parking spaces per one thousand (1,000) square feet
of rentable space in the Premises.

Tenant Improvement Allowance: $2,271,150.00

 

-3-

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

The Basic Lease Information is incorporated into and made part of this Lease.
Each reference in this Lease to any Basic Lease Information shall mean the
applicable information set forth in the Basic Lease Information, except that in
the event of any conflict between an item in the Basic Lease Information and
this Lease, this Lease shall control. Additional defined terms used in the Basic
Lease Information shall have the meanings given those terms in this Lease.

ARTICLE 1.

PREMISES; COMMON AREAS

1.1 Subject to all of the terms and conditions hereinafter set forth, Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord the Premises. The
property shown on Exhibit A to this Lease and all improvements thereon and
appurtenances on that land thereto, including, but not limited to, the Building,
other office buildings, access roadways, and all other related areas, shall be
collectively hereinafter referred to as the “Project.” Tenant acknowledges and
agrees that Landlord may elect to sell one or more of the buildings within the
Project and that upon any such sale Tenant’s pro-rata share of those Operating
Expenses and Taxes (each as defined below) allocated to the areas of the Project
other than buildings may be adjusted accordingly by Landlord. The parties hereto
hereby acknowledge that the purpose of Exhibit A and Exhibit B are to show the
approximate location of the Premises in the Building and the general layout of
the Project and such Exhibits are not meant to constitute an agreement,
representation or warranty as to the construction of the Premises, the Building
or the Project, the precise area of the Premises, the Building or the Project or
the specific location of the Building, “Common Areas,” as that term is defined
in Section 1.3, below, or the elements thereof or of the accessways to the
Premises, or the Project.

1.2 For purposes of this Lease, (1) “rentable area” and “usable area” shall be
calculated pursuant to the Standard Method for Measuring Floor Area in Office
Buildings (ANSI/BOMA Z65.1, 1996); (2) “rentable square feet” and “rentable
footage” shall have the same meaning as the term “rentable area;” and
(3) “usable square feet” and “usable square footage” shall have the same meaning
as the term “usable area.” Notwithstanding anything to the contrary in this
Lease, the recital of the rentable area herein above set forth is for
descriptive purposes only. Tenant shall have no right to terminate this Lease or
receive any adjustment or rebate of any Base Rent or Additional Rent (as
hereinafter defined) payable hereunder if said recital is incorrect. Tenant has
inspected the Premises and is fully familiar with the scope and size thereof and
agrees to pay the full Base Rent and Additional Rent set forth herein in
consideration for the use and occupancy of said space, regardless of the actual
number of square feet contained therein.

1.3 Tenant shall have the non-exclusive right to use in common with other
tenants in the Project, and subject to the rules and regulations referred to in
Article 27 of this Lease, those portions of the Project which are provided, from
time to time, for use in common by Landlord, Tenant and any other tenants of the
Project (such areas, together with such other portions of the Project designated
by Landlord, in its reasonable discretion, including certain areas designated
for the exclusive use of certain tenants, or to be shared by Landlord and
certain tenants, are collectively referred to herein as the “Common Areas”). The
Common Areas shall consist of the “Project Common Areas” and the “Building
Common Areas.” The term “Project

 

-4-

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

Common Areas,” as used in this Lease, shall mean the portion of the Project
reasonably designated as such by Landlord. The term “Building Common Areas,” as
used in this Lease, shall mean the portions of the Common Areas located within
the Building reasonably designated as such by Landlord. The manner in which the
Common Areas are maintained and operated shall be at the reasonable discretion
of Landlord and the use thereof shall be subject to such reasonable rules,
regulations and restrictions as Landlord may make from time to time. Landlord
reserves the right to close temporarily, make alterations or additions to, or
change the location of elements of the Project and the Common Areas; provided
that in exercising its rights under this sentence, Landlord shall make
commercially reasonable efforts to minimize the disruption to Tenant’s business
operations during standard business hours. Subject to “Applicable Laws,” as that
term is defined in Section 5.1(a) of this Lease, except when and where Tenant’s
right of access is specifically excluded in this Lease, and except in the event
of an emergency, Tenant shall have the right of access to the Premises, the
Building, and the parking facilities servicing the Building twenty-four (24)
hours per day, seven (7) days per week during the “Term,” as that term is
defined in Section 2.1, below.

ARTICLE 2.

TERM AND CONDITION OF PREMISES

2.1 The term of this Lease (the “Term”) shall commence on the Commencement Date
and end on the Expiration Date, unless sooner terminated (the “Termination
Date”) as hereinafter provided. The Commencement Date of this Lease and the
obligation of Tenant to pay Base Rent, Additional Rent and all other charges
hereunder shall not be delayed or postponed by reason of any delay by Tenant in
performing changes or alteration in the Premises not required to be performed by
Landlord. In the event the Term shall commence on a day other than the first day
of a month, then the Base Rent shall be immediately paid for such partial month
prorated in accordance with Section 4.4 below. As soon as the Commencement Date
is determined, Tenant shall execute a Commencement Date memorandum in the form
attached hereto as Exhibit F acknowledging, among other things, the
(a) Commencement Date, (b) scheduled Expiration Date of this Lease and
(c) Tenant’s acceptance of the Premises. The Tenant’s failure to execute the
Commencement Date Memorandum shall not affect Tenant’s liability hereunder.

2.2 Landlord shall perform the construction work as provided in Exhibit C hereto
(“Landlord’s Work”). Except for Landlord’s Work, Landlord has no obligation to
construct improvements in the Premises.

2.3 Tenant shall give Landlord written notice of any incomplete work,
unsatisfactory conditions or defects (the “Punch List Items”) which were part of
Landlord’s Work in the Premises within thirty (30) days after the Commencement
Date and Landlord shall, at its sole expense, complete said work and/or remedy
such unsatisfactory conditions or defects as soon as possible. The existence of
any incomplete work, unsatisfactory conditions or defects as aforesaid shall not
affect the Commencement Date or the obligation of Tenant to pay Base Rent,
Additional Rent and all other charges hereunder.

2.4 Subject to completion of the Punch List Items and the warranties that are
the subject of Section 4.3.3 of the Tenant Work Letter set forth in Exhibit C
hereof, the taking of

 

-5-

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

possession of the Premises by Tenant shall be conclusive evidence that the
Premises and the Building were in good and satisfactory condition at the time
possession was taken by Tenant. Neither Landlord nor Landlord’s agents have made
any representations or promises with respect to the condition of the Building,
the Premises, the land upon which the Building is constructed, or any other
matter or thing affecting or related to the Building or the Premises, except as
herein expressly set forth, and no rights, easements or licenses are acquired by
Tenant by implication or otherwise except as expressly set forth in this Lease.

ARTICLE 3.

USE, NUISANCE, OR HAZARD

3.1 The Premises shall be used and occupied by Tenant solely for general office
purposes, medical device research and development, and for no other purposes
without the prior written consent of Landlord, which shall not be unreasonably
withheld, conditioned or delayed.

3.2 Tenant shall not use, occupy, or permit the use or occupancy of the Premises
for any purpose which Landlord, in its reasonable discretion, deems to be
illegal, immoral, or dangerous; permit any public or private nuisance; do or
permit any act or thing which may disturb the quiet enjoyment of any other
tenant of the Project; keep any substance or carry on or permit any operation
which might introduce offensive odors or conditions into other portions of the
Project, use any apparatus which might make undue noise or set up vibrations in
or about the Project; permit anything to be done which would increase the
premiums paid by Landlord for fire and extended coverage insurance on the
Project or its contents or cause a cancellation of any insurance policy covering
the Project or any part thereof or any of its contents; or permit anything to be
done which is prohibited by or which shall in any way conflict with any law,
statute, ordinance, or governmental rule, regulation or covenants, conditions
and restrictions affecting the Project, including without limitation the CC&R’s
(as defined below) now or hereinafter in force. Should Tenant do any of the
foregoing without the prior written consent of Landlord, and the same is not
cured within five (5) business days after notice from Landlord (which five
(5) business day period shall be subject to extension if the nature of the
breach is such that it is not possible to cure the same within such five
(5) business day period so long as the Tenant commences the cure of such breach
within such five (5) day period and diligently prosecutes the same to
completion) it shall constitute an Event of Default (as hereinafter defined) and
shall enable Landlord to resort to any of its remedies hereunder.

3.3 The ownership, operation, maintenance and use of the Project shall be
subject to certain conditions and restrictions contained in an instrument
(“CC&R’s”) recorded or to be recorded against title to the Project. Tenant
agrees that regardless of when those CC&R’s are so recorded, this Lease and all
provisions hereof shall be subject and subordinate thereto. Accordingly, as a
consequence of that subordination, during any period in which the entire Project
is not owned by Landlord, (a) the portion of Operating Expenses and Taxes (each
as defined below) for the Common Areas shall be allocated among the owners of
the Project as provided in the CC&R’s, and (b) the CC&R’s shall govern the
maintenance and insuring of the portions of the Project not owned by Landlord.
Tenant shall, promptly upon request of Landlord, sign all documents reasonably
required to carry out the foregoing into effect.

 

-6-

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

ARTICLE 4.

RENT

4.1 Tenant hereby agrees to pay Landlord the Base Rent. For purposes of Rent
adjustment under the Lease, (a) if the Commencement Date falls on a date that is
prior to the 15th day of the calendar month, the number of months is measured
from the first day of the calendar month in which the Commencement Date falls,
or (a) if the Commencement Date falls on a date that is the 15th or a later day
of the calendar month, the number of months is measured from the first day of
the calendar month after the calendar month in which the Commencement Date
falls. Each monthly installment (the “Monthly Rent”) shall be payable by check
or by money order on or before the first day of each calendar month. In addition
to the Base Rent, Tenant also agrees to pay Tenant’s Share of Operating Expenses
and Taxes (each as hereinafter defined), and any and all other sums of money as
shall become due and payable by Tenant as hereinafter set forth, all of which
shall constitute additional rent under this Lease (the “Additional Rent”).
Landlord expressly reserves the right to apply any payment received to Base Rent
or any other items of Rent that are not paid by Tenant. The Monthly Rent and the
Additional Rent are sometimes hereinafter collectively called “Rent” and shall
be paid when due in lawful money of the United States without demand, deduction,
abatement, or offset to the addresses for the rental payment set forth in the
Basic Lease Information, or as Landlord may designate from time to time.

4.2 In the event any Monthly or Additional Rent or other amount payable by
Tenant hereunder is not paid within five (5) days after its due date, Tenant
shall pay to Landlord a late charge (the “Late Charge”), as Additional Rent, in
an amount of five percent (5%) of the amount of such late payment. Failure to
pay any Late Charge shall be deemed a Monetary Default (as hereinafter defined).
Provision for the Late Charge shall be in addition to all other rights and
remedies available to Landlord hereunder, at law or in equity, and shall not be
construed as liquidated damages or limiting Landlord’s remedies in any manner.
Failure to charge or collect such Late Charge in connection with any one (1) or
more such late payments shall not constitute a waiver of Landlord’s right to
charge and collect such Late Charges in connection with any other similar or
like late payments.

4.3 Simultaneously with the execution hereof, Tenant shall deliver to Landlord
(i) the Rent Payable Upon Execution as payment of the first installment of
Monthly Rent and Tenant’s Share of Operating Expenses and Taxes due hereunder
and (ii) an amount equal to the Security Deposit Amount to be held by Landlord
as security for Tenant’s faithful performance of all of the terms, covenants,
conditions, and obligations required to be performed by Tenant hereunder (the
“Security Deposit”). The Security Deposit shall be held by Landlord as security
for the performance by Tenant of all of the covenants of this Lease to be
performed by Tenant and Tenant shall not be entitled to interest thereon. The
Security Deposit is not an advance rent deposit, an advance payment of any other
kind, or a measure of Landlord’s damages in any case of Tenant’s default. If
Tenant fails to perform any of the covenants of this Lease to be performed by
Tenant, including without limitation the provisions relating to payment of Rent,
the removal of property at the end of the Term, the repair of damage to the
Premises caused by Tenant, and the cleaning of the Premises upon termination of
the tenancy created hereby, then Landlord shall have the right, but no
obligation, to apply the Security Deposit, or so much thereof as may be
necessary, for the payment of any Rent or any other sum in default and/or to

 

-7-

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

cure any other such failure by Tenant. If Landlord applies the Security Deposit
or any part thereof for payment of such amounts or to cure any such other
failure by Tenant, then Tenant shall immediately pay to Landlord the sum
necessary to restore the Security Deposit to the full amount then required by
this Section 4.3 Landlord’s obligations with respect to the Security Deposit are
those of a debtor and not a trustee. Landlord shall not be required to maintain
the Security Deposit separate and apart from Landlord’s general or other funds
and Landlord may commingle the Security Deposit with any of Landlord’s general
or other funds. Upon termination of the original Landlord’s or any successor
owner’s interest in the Premises or the Building, the original Landlord or such
successor owner shall be released from further liability with respect to the
Security Deposit upon the original Landlord’s or such successor owner’s
complying with California Civil Code Section 1950.7. Subject to the foregoing,
Tenant hereby waives the provisions of Section 1950.7 of the California Civil
Code, and all other provisions of law, now or hereafter in force, which
(a) establish a time frame within which a landlord must refund a security
deposit under a lease, and/or (b) provide that Landlord may claim from a
security deposit only those sums reasonably necessary to remedy defaults in the
payment of Rent, to repair damage caused by Tenant or to clean the Premises, it
being agreed that Landlord may, in addition, claim those sums reasonably
necessary to compensate Landlord for any other loss or damage caused by the
default of Tenant under this Lease, including without limitation all damages or
Rent due upon termination of this Lease pursuant to Section 1951.2 of the
California Civil Code. If Tenant performs every provision of this Lease to be
performed by Tenant, the unused portion of the Security Deposit shall be
returned to Tenant or the last assignee of Tenant’s interest under this Lease
within thirty (30) days following expiration or termination of the Term of this
Lease.

4.4 If the Term commences on a date other than the first day of a calendar month
or expires or terminates on a date other than the last day of a calendar month,
the Rent for any such partial month shall be prorated to the actual number of
days in such partial month.

4.5 All Rents and any other amount payable by Tenant to Landlord hereunder, if
not paid when due, shall bear interest from the date due until paid at a rate
equal to the prime commercial rate established from time to time by Bank of
America, plus four percent (4%) per annum; but not in excess of the maximum
legal rate permitted by law. Failure to charge or collect such interest in
connection with any one (1) or more delinquent payments shall not constitute a
waiver of Landlord’s right to charge and collect such interest in connection
with any other or similar or like delinquent payments.

4.6 If Tenant fails to make when due two (2) consecutive payments of Monthly
Rent or makes two (2) consecutive payments of Monthly Rent which are returned to
Landlord by Tenant’s financial institution for insufficient funds, Landlord may
require, by giving written notice to Tenant, that all future payments of Rent
shall be made in cashier’s check or by money order. The foregoing is in addition
to any other remedy of Landlord hereunder, at law or in equity.

 

-8-

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

ARTICLE 5.

RENT ADJUSTMENT

5.1 Definitions.

(a) “Operating Expenses”, as said term is used herein, shall mean all expenses,
costs, and disbursements of every kind and nature which Landlord shall pay or
become obligated to pay because of or in connection with the ownership,
operation, management, security, repair, restoration, replacement, or
maintenance of the Project, or any portion thereof. Operating Expenses shall be
computed in accordance with generally accepted real estate management practices,
consistently applied, and shall include, but not be limited to, the items as
listed below:

(i) Wages, salaries, other compensation and any and all taxes, insurance and
benefits of, the Building manager and of all other persons engaged in the
operation, maintenance and security of the Project ; provided that if such other
persons are employed by Landlord they are at or below the grade of senior
Building manager or chief Building engineer;

(ii) Payments under any equipment rental agreements or management agreements,
including without limitation the cost of any actual or charged management fee
and all expenses for the Project management office including rent, office
supplies, and materials therefor;

(iii) Costs of all supplies, equipment, materials, and tools and amortization
(including interest on the unamortized cost) of the cost of acquiring or the
rental expense of personal property used in the maintenance, operation and
repair of the Project, or any portion thereof;

(iv) All costs incurred in connection with the operation, maintenance, and
repair of the Project including without limitation, the following: (A) the cost
of operation, repair, maintenance and replacement of all systems and equipment
and components thereof of the Project; (B) the cost of janitorial, alarm,
security and other services, replacement of wall and floor coverings, ceiling
tiles and fixtures in common areas, maintenance and replacement of curbs and
walkways, repair to roofs and re-roofing; (C) the cost of licenses,
certificates, permits and inspections and the cost of contesting any
governmental enactments which are reasonably anticipated by Landlord to increase
Operating Expenses, and the cost incurred in connection with a transportation
system management program or similar program; (D) the cost to maintain existing
landscaping, decorative lighting, and relamping, the cost of maintaining
fountains, sculptures, bridges; (E) costs, fees, charges or assessments imposed
by, or resulting from any mandate imposed on Landlord by, any federal, state or
local government for fire and police protection, trash removal, community
services, or other services which do not constitute “Taxes” as that term is
defined below; and (F) costs and expenses of complying with, or participating
in, conservation, recycling, sustainability, energy efficiency, waste reduction
or other programs or practices

 

-9-

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

implemented or enacted from time to time at the Building, including, without
limitation, in connection with any LEED (Leadership in Energy and Environmental
Design) rating or compliance system or program, including that currently
coordinated through the U.S. Green Building council or Energy Star rating and/or
compliance system or program (collectively, “Conservation Costs”).

(v) The cost of supplying all utilities, the cost of operating, maintaining,
repairing, replacing, renovating and managing the utility systems, mechanical
systems, sanitary, storm drainage systems, communication systems and escalator
and elevator systems, and the cost of supplies, tools, and equipment and
maintenance and service contracts in connection therewith.

(vi) The cost of all insurance carried by Landlord in connection with the
Project as reasonably determined by Landlord, including without limitation
commercial general liability insurance, physical damage insurance covering
damage or other loss caused by fire, earthquake, flood or other water damage,
explosion, vandalism and malicious mischief, theft or other casualty, rental
interruption insurance and such insurance as may be required by any lessor under
any present or future ground or underlying lease of the Building or Project or
any holder of a mortgage, deed of trust or other encumbrance now or hereafter in
force against the Building or Project or any portion thereof, and any
deductibles payable thereunder; including, without limitation, Landlord’s cost
of any self insurance deductible or retention;

(vii) Capital improvements made to or capital assets acquired for the Project,
or any portion thereof, after the Commencement Date that (1) are intended to
reduce Operating Expenses, or (2) are necessary for the health, safety and/or
security of the Project, its occupants and visitors and are deemed advisable and
the reasonable judgment of Landlord, or (3) are Conservation Costs, or (4) are
required under any and all applicable laws, statutes, codes, ordinances, orders,
rules, regulations, conditions of approval and requirements of all federal,
state, county, municipal and governmental authorities and all administrative or
judicial orders or decrees and all permits, licenses, approvals and other
entitlements issued by governmental entities, and rules of common law, relating
to or affecting the Project, the Premises or the Building or the use or
operation thereof, whether now existing or hereafter enacted, including, without
limitation, the Americans with Disabilities Act of 1990, 42 USC 12111 et seq.
(the “ADA”) as the same may be amended from time to time, all Environmental Laws
(as hereinafter defined), and any CC&R’s, or any corporation, committee or
association formed in connection therewith, or any supplement thereto recorded
in any official or public records with respect to the Project or any portion
thereof (collectively, “Applicable Laws”), (except for capital repairs,
replacements or other improvements to remedy a condition existing prior to the
Commencement Date which an applicable governmental authority, if it had
knowledge of such condition prior to the Commencement Date, would have then
required to be remedied pursuant to then-current governmental laws or
regulations in their form existing as of the Commencement Date and pursuant to
the then-current interpretation of such

 

-10-

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

governmental laws or regulations by the applicable governmental authority as of
the Commencement Date) which capital costs, or an allocable portion thereof,
shall be amortized over the useful life of the improvements (under generally
accepted accounting principles) as reasonably determined by Landlord, in each
case together with interest on the unamortized balance at a rate determined by
Landlord not to exceed 8% per annum;

(viii) fees, charges and other costs, including management fees (or amounts in
lieu thereof), consulting fees, legal fees and accounting fees, of all
contractors, engineers, consultants and other persons engaged by Landlord or
otherwise incurred by or charged by Landlord in connection with the management,
operation, maintenance and repair of the Buildings and the Project; and

(ix) payments, fees or charges under the CC&R’s and any easement, license,
operating agreement, declaration, restricted covenant, or instrument pertaining
to the sharing of costs by the Project, or any portion thereof.

Notwithstanding anything to the contrary set forth in clauses (i) – (ix) above,
expressly excluded from Operating Expenses are the following items:

(x) Advertising and leasing commissions, and other costs of leasing space in the
Project, including without limitation, leasing incentives and costs of
construction of tenant improvements or tenant improvement allowances;

(xi) Repairs and restoration paid for by the proceeds of any insurance policies
or amounts otherwise reimbursed to Landlord or paid by any other source (other
than by tenants paying their share of Operating Expenses);

(xii) Principal, interest, and other costs directly related to financing the
Project or ground lease rental or depreciation;

(xiii) The cost of special services to tenants (including Tenant) for which a
special charge is made;

(xiv) The costs of repair of casualty damage or for restoration following
condemnation to the extent covered by insurance proceeds or condemnation awards;

(xv) The costs of any capital expenditures (according to generally accepted
accounting principles), regardless of whether covered by clauses (i) through
(ix) above, except as expressly permitted to be included in Operating Expenses
as provided under clauses (vi), and (vii) above;

(xvi) The costs, including permit, license and inspection costs and supervision
fees, incurred with respect to the installation of tenant improvements within
the Project or incurred in renovating or otherwise

 

-11-

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

improving, decorating, painting or redecorating vacant space within the Project
or promotional or other costs in order to market space to potential tenants;

(xvii) The legal fees and related expenses and legal costs incurred by Landlord
(together with any damages awarded against Landlord) due to the violation by
Landlord or the violation by tenant of the terms and conditions of any lease of
space in the Project;

(xviii) Costs incurred: (x) to comply with Applicable Laws with respect to any
Hazardous Materials (as defined below) which were in existence in, on, under or
about the Project (or any portion thereof) prior to the Commencement Date, and
were of such a nature that a federal, state or municipal governmental or
quasi-governmental authority, if it had then had knowledge of the presence of
such Hazardous Materials, in the state, and under the conditions that they then
existed in, on, under or about the Project, would have then required the
removal, remediation or other action with respect thereto; and/or (y) with
respect to Hazardous Materials which are disposed of or otherwise introduced
into, on, under or about the Project after the date hereof by Landlord or
Landlord’s agents or employees and are of such a nature, at time of disposition
or introduction, that a federal, state or municipal governmental or
quasi-governmental authority, if it had then had knowledge of the presence of
such Hazardous Materials, in the state, and under the conditions, that they then
existed in, on, under or about the Project, would have then required the
removal, remediation or other action with respect thereto; provided, however,
Operating Expenses shall include costs incurred in connection with the clean-up,
remediation, monitoring, management and administration of (and defense of claims
related to) the presence of (1) Hazardous Materials used by Landlord (provided
such use is not negligent and is in compliance with Applicable Laws) in
connection with the operation, repair and maintenance of the Project to perform
Landlord’s obligations under this Lease (such as, without limitation, fuel oil
for generators, cleaning solvents, and lubricants) and which are customarily
found or used in Comparable Buildings and (2) Hazardous Materials created,
released or placed in the Premises, Building or the Project by Tenant (or
Tenant’s affiliates or their tenants, contractors, employees or agents) prior to
or after the Commencement Date;

(xix) The attorneys’ fees in connection with the negotiation and preparation of
letters, deal memos, letters of intent, leases, subleases and/or assignments,
space planning costs, and other costs and expenses incurred in connection with
lease, sublease and/or assignment negotiations and transactions with present or
prospective tenants or other occupants of the Project;

(xx) The expenses in connection with services or other benefits which are not
available to Tenant;

(xxi) The overhead and profit paid to Landlord or to subsidiaries or affiliates
of Landlord for goods and/or services in the Project to the extent the

 

-12-

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

same exceeds the costs of such goods and/or services rendered by qualified,
unaffiliated third parties on a competitive basis;

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

(xxiii) The costs (other than ordinary maintenance and insurance) for sculpture,
paintings and other objects of art;

(xxiv) The interest and penalties resulting from Landlord’s failure to pay any
items of Operating Expense when due;

(xxv) The Landlord’s general corporate overhead and general and administrative
expenses, costs of entertainment, dining, automobiles or travel for Landlord’s
employees, and costs associated with the operation of the business of the
partnership or entity which constitutes Landlord as the same are distinguished
from the costs of the operation of the Project, including partnership accounting
and legal matters, costs of defending any lawsuits with any mortgagee, costs of
selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s
interest in the Project, costs of any disputes between Landlord and its
employees, disputes of Landlord with management, or outside fees paid in
connection with disputes with other Project tenants or occupants (except to the
extent such dispute is based on Landlord’s good faith efforts to benefit Tenant
or meet Landlord’s obligations under this Lease);

(xxvi) The costs arising from the gross negligence or willful misconduct of
Landlord;

(xxvii) The management office rental to the extent such rental exceeds the fair
market rental for such space;

(xxviii) The costs of correction of latent defects in the Project to the extent
covered by warranties;

(xxix) The costs of Landlord’s membership in professional organizations (such
as, by way of example and without limitation, BOMA) in excess of $2,500.00 per
year; and

(xxx) management fees in excess of an amount equal to three percent (3%) of all
gross receipts for the Project (as fully grossed up for a one hundred percent
(100%) occupancy level).

(b) “Taxes” shall mean all ad valorem taxes, personal property taxes, and all
other taxes, assessments, embellishments, use and occupancy taxes, transit
taxes, water, sewer and pure water charges not included in Section 5.1.(a)(v)
above, excises, levies, license fees or taxes, and all other similar charges,
levies, penalties, or taxes, if any, which are levied, assessed, or imposed, by
any Federal, State, county, or municipal authority, whether by taxing districts
or authorities presently in existence or by others

 

-13-

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

subsequently created, upon, or due and payable in connection with, or a lien
upon, all or any portion of the Project, or facilities used in connection
therewith, and rentals or receipts therefrom and all taxes of whatsoever nature
that are imposed in substitution for or in lieu of any of the taxes,
assessments, or other charges included in its definition of Taxes, and any costs
and expenses of contesting the validity of same.

(c) “Lease Year” shall mean the twelve (12) month period commencing January 1st
and ending December 31st.

(d) “Tenant’s Building Percentage” shall mean Tenant’s percentage of the entire
Building as determined by dividing the Rentable Area of the Premises by the
total Rentable Area of the Building. If there is a change in the total Building
Rentable Area as a result of an addition to the Building, partial destruction,
modification or similar cause, which event causes a reduction or increase on a
permanent basis, Landlord shall cause adjustments in the computations as shall
be necessary to provide for any such changes. Landlord shall segregate Operating
Expenses into two (2) separate categories, one (1) such category, to be
applicable only to Operating Expenses incurred for the Building and the other
category applicable to Operating Expenses incurred for the Common Areas and/or
the Project as a whole. Accordingly, two (2) Tenant’s Building Percentages shall
apply, one (1) such Tenant’s Building Percentage shall be calculated by dividing
the Rentable Area of the Premises by the total Rentable Area in the Building
(“Tenant’s Building Only Percentage”), and the other Tenant’s Building
Percentage to be calculated by dividing the Rentable Area of the Premises by the
total Rentable Area of all buildings in the Project (“Tenant’s Common Area
Building Percentage”). Any reference in this Lease to “Tenant’s Building
Percentage” shall mean and refer to both Tenant’s Building Only Percentage and
Tenant’s Common Area Building Percentage of Operating Expenses.

(e) “Tenant’s Tax Percentage” shall mean the percentage determined by dividing
the Rentable Area of the Premises by the total Rentable Area of all buildings in
the Project.

(f) “Market Area” shall mean the Redwood Shores submarket of Redwood City,
California (the “City”).

(g) “Comparable Buildings” shall mean comparable Class “A” office/R&D use
buildings owned by institutions in the Market Area.

5.2 Tenant shall pay to Landlord, as Additional Rent, Tenant’s Share (as
hereinafter defined) of the Operating Expenses. “Tenant’s Share” shall be
determined by multiplying Operating Expenses for any Lease Year or pro rata
portion thereof, by Tenant’s Building Percentage. Landlord shall, in advance of
each Lease Year, estimate what Tenant’s Share will be for such Lease Year based,
in part, on Landlord’s operating budget for such Lease Year, and Tenant shall
pay Tenant’s Share as so estimated each month (the “Monthly Escalation
Payments”). The Monthly Escalation Payments shall be due and payable at the same
time and in the same manner as the Monthly Rent.

 

-14-

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

5.3 Landlord shall, within one hundred fifty (150) days after the end of each
Lease Year, or as soon thereafter as reasonably possible, provide Tenant with a
written statement of the actual Operating Expenses incurred during such Lease
Year for the Project and such statement shall set forth Tenant’s Share of such
Operating Expenses. Tenant shall pay Landlord, as Additional Rent, the
difference between Tenant’s Share of Operating Expenses and the amount of
Monthly Escalation Payments made by Tenant attributable to said Lease Year, such
payment to be made within thirty (30) days of the date of Tenant’s receipt of
said statement (except as provided in Section 5.4 below); similarly, Tenant
shall receive a credit if Tenant’s Share is less than the amount of Monthly
Escalation Payments collected by Landlord during said Lease Year, such credit to
be applied to future Monthly Escalation Payments to become due hereunder, or if
the Term has expired or this Lease has terminated for any reason, Landlord shall
pay the amount of such overpayment to Tenant within thirty (30) days of the date
of such statement. If utilities, janitorial services or any other components of
Operating Expenses increase during any Lease Year, Landlord may revise Monthly
Escalation Payments due during such Lease Year by giving Tenant written notice
to that effect; and thereafter, Tenant shall pay, in each of the remaining
months of such Lease Year, a sum equal to the amount of the revised difference
in Operating Expenses multiplied by Tenant’s Building Percentage divided by the
number of months remaining in such Lease Year.

5.4 If, within one hundred twenty (120) days following Tenant’s receipt of the
Operating Expense statement or Taxes statement, neither party hereto delivers to
the other party a notice referring in reasonable detail to one (1) or more
errors in such statement, it shall be deemed conclusively that the information
set forth in such statement(s) is correct. Tenant shall, however, be entitled to
conduct or require an audit to be conducted, provided that (a) not more than one
(1) such audit may be conducted during any Lease Year of the Term, (b) the
records for each Lease Year may be audited only once, (c) such audit is
commenced within one hundred twenty (120) days following Tenant’s receipt of the
applicable statement, and (d) such audit is completed and a copy thereof is
delivered to Landlord within one hundred eighty (180) days following Tenant’s
receipt of the applicable statement. If Landlord responds to any such audit with
an explanation of any issues raised in the audit within thirty (30) days of its
receipt of such audit, such issues shall be deemed resolved unless Tenant
responds to Landlord with further written objections within thirty (30) days
after receipt of Landlord’s response to the audit. In no event shall payment of
Rent ever be contingent upon the performance of such audit. For purposes of any
audit, Tenant or Tenant’s duly authorized representative, at Tenant’s sole cost
and expense, shall have the right, upon fifteen (15) days’ written notice to
Landlord, to inspect Landlord’s books and records pertaining to Operating
Expenses and Taxes at the offices of Landlord or Landlord’s managing agent
during ordinary business hours, provided that such audit must be conducted so as
not to interfere with Landlord’s business operations and must be reasonable as
to scope and time. Alternatively, at Landlord’s sole discretion, Landlord may
provide an audit of such books and records prepared by a certified public
accountant of Landlord’s selection, prepared at Tenant’s expense, which shall be
deemed to be conclusive for the purposes of this Lease. If actual Operating
Expenses or Taxes are determined to have been overstated or understated by
Landlord for any calendar year, then the parties shall within thirty (30) days
thereafter make such adjustment payment or refund as is applicable, and if
actual Operating Expenses and Taxes are determined to have been overstated by
Landlord for any calendar year by in excess of seven percent (7%), then Landlord
shall pay the reasonable cost of Tenant’s audit, not to exceed $3,000.00.

 

-15-

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

5.5 If the occupancy of the Building during any part of any Lease Year is less
than one hundred percent (100%), Landlord shall make an appropriate adjustment
of the variable components of Operating Expenses for that Lease Year, as
reasonably determined by Landlord using sound accounting and management
principles, to determine the amount of Operating Expenses that would have been
incurred had the Building been one hundred percent (100%) occupied. This amount
shall be considered to have been the amount of Operating Expenses for that Lease
Year. For purposes of this Section 5.5, “variable components” include only those
component expenses that are affected by variations in occupancy levels.

5.6 Tenant shall pay to Landlord, as Additional Rent, “Tenant’s Tax Share” (as
hereinafter defined) of the Taxes. “Tenant’s Tax Share” shall be determined by
multiplying Taxes for any Lease Year or pro rata portion thereof, by Tenant’s
Tax Percentage. Landlord shall, in advance of each Lease Year, estimate what
Tenant’s Tax Share will be for such Lease Year and Tenant shall pay Tenant’s Tax
Share as so estimated each month (the “Monthly Tax Payments”). The Monthly Tax
Payments shall be due and payable at the same time and in the same manner as the
Monthly Rent.

5.7 Landlord shall, within one hundred fifty (150) days after the end of each
Lease Year, or as soon thereafter as reasonably possible, provide Tenant with a
written statement of the actual Taxes incurred during such Lease Year for the
Project and such statement shall set forth Tenant’s Tax Share of such Taxes.
Tenant shall pay Landlord, as Additional Rent, the difference between Tenant’s
Tax Share of Taxes and the amount of Monthly Tax Payments made by Tenant
attributable to said Lease Year, such payment to be made within thirty (30) days
of the date of Tenant’s receipt of said statement; similarly, Tenant shall
receive a credit if Tenant’s Tax Share is less than the amount of Monthly Tax
Payments collected by Landlord during said Lease Year, such credit to be applied
to future Monthly Tax Payments to become due hereunder, or if the Term has
expired or this Lease has terminated for any reason, Landlord shall pay the
amount of such overpayment to Tenant within thirty (30) days of the date of such
statement. If Taxes increase during any Lease Year, Landlord may revise Monthly
Tax Payments due during such Lease Year by giving Tenant written notice to that
effect; and, thereafter, Tenant shall pay, in each of the remaining months of
such Lease Year, a sum equal to the amount of revised difference in Taxes
multiplied by Tenant’s Tax Percentage divided by the number of months remaining
in such Lease Year.

5.8 If the Taxes for any Lease Year are changed as a result of protest, appeal
or other action taken by a taxing authority, the Taxes as so changed shall be
deemed the Taxes for such Lease Year. Any expenses incurred by Landlord in
attempting to protest, reduce or minimize Taxes shall be included in Taxes in
the Lease Year in which those expenses are paid. Landlord shall have the
exclusive right to conduct such contests, protests and appeals of the Taxes as
Landlord shall determine is appropriate in Landlord’s sole discretion.

5.9 Tenant’s obligation with respect to Additional Rent and the payment of
Tenant’s Share of Operating Expenses and Tenant’s Tax Share of Taxes shall
survive the Expiration Date or Termination Date of this Lease and Landlord shall
have the right to retain the Security Deposit, or so much thereof as it deems
necessary, to secure payment of Tenant’s Share of Operating Expenses and
Tenant’s Tax Share of Taxes for the final year of the Lease, or part thereof,
during which Tenant was obligated to pay such expenses.

 

-16-

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

ARTICLE 6.

SERVICES TO BE PROVIDED BY LANDLORD

6.1 Subject to Articles 5 and 10 herein, and provided Tenant is not in default
under this Lease, Landlord agrees to furnish or cause to be furnished to the
Premises the utilities and services described in the Standards for Utilities and
Services, attached hereto as Exhibit G, subject to the conditions and in
accordance with the standards set forth herein.

6.2 Landlord shall not be liable for any loss or damage arising or alleged to
arise in connection with the failure, stoppage, or interruption of any such
services; nor shall the same be construed as an eviction of Tenant, work an
abatement of Rent, entitle Tenant to any reduction in Rent, or relieve Tenant
from the operation of any covenant or condition herein contained; it being
further agreed that Landlord reserves the right to discontinue temporarily such
services or any of them at such times as may be necessary by reason of repair or
capital improvements performed within the Project, accident, unavailability of
employees, repairs, alterations or improvements, or whenever by reason of
strikes, lockouts, riots, acts of God, or any other happening or occurrence
beyond the reasonable control of Landlord. In the event of any such failure,
stoppage or interruption of services, Landlord shall use commercially reasonable
efforts to have the same restored. Neither diminution nor shutting off of light
or air or both, nor any other effect on the Project by any structure erected or
condition now or hereafter existing on lands adjacent to the Project, shall
affect this Lease, abate Rent, or otherwise impose any liability on Landlord.

6.3 Landlord shall have the right to reduce heating, cooling, or lighting within
the Premises and in the public area in the Building as required by any mandatory
fuel or energy-saving program.

6.4 Unless otherwise provided by Landlord, Tenant shall separately arrange with
the applicable local public authorities or utilities, as the case may be, for
the furnishing of and payment of all telephone and facsimile services as may be
required by Tenant in the use of the Premises. Tenant shall directly pay for
such telephone and facsimile services as may be required by Tenant in the use of
the Premises, including the establishment and connection thereof, at the rates
charged for such services by said authority or utility; and the failure of
Tenant to obtain or to continue to receive such services for any reason
whatsoever shall not relieve Tenant of any of its obligations under this Lease.

6.5 Landlord shall have the exclusive right, but not the obligation, to provide
any locksmithing services, and Landlord shall also have the non-exclusive right,
but not the obligation, to provide any additional services which may be required
by Tenant, including without limitation additional repairs and maintenance,
provided that Tenant shall pay to Landlord upon billing, the sum of all costs to
Landlord of such additional services plus an administration fee. If Tenant
requests the Landlord provide locksmithing services and Landlord declines, then
Tenant shall not be obligated to use Landlord’s locksmithing services. Charges
for any utilities or service for which Tenant is required to pay from time to
time hereunder, shall be deemed Additional Rent hereunder and shall be billed on
a monthly basis.

 

-17-

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

6.6 At all times during the Term Landlord shall have the right to select the
utility company or companies that shall provide electric, telecommunication
and/or other utility services to the Premises and, subject to all Applicable
Requirements, Landlord shall have the right at any time and from time to time
during the Term to either (a) contract for services from electric,
telecommunication and/or other utility service provider(s) other than the
provider with which Landlord has a contract as of the date of this Lease (the
“Current Provider”), or (b) continue to contract for services from the Current
Provider. The cost of such utility services and any energy management and
procurements services in connection therewith shall be Operating Expenses.

6.7 If Tenant is billed directly by a public utility with respect to Tenant’s
electrical usage at the Premises, upon request from time to time, Tenant shall
provide monthly electrical utility usage for the Premises to Landlord for the
period of time requested by Landlord (in electronic or paper format) or, at
Landlord’s option, provide any written authorization or other documentation
required for Landlord to request information regarding Tenant’s electricity
usage with respect to the Premises directly from the applicable utility company.

6.8 Notwithstanding anything to the contrary in Section 6.2 or elsewhere in this
Lease, if (a) Landlord fails to provide Tenant with the electrical service or
elevator service described in Section 6.1, or Landlord enters the Premises and
such entry interferes with Tenant’s reasonable use of the Premises (b) such
failure or Landlord’s entry is not due to any one or more Force Majeure Events
or to an event covered by Article 19, (c) Tenant has given Landlord reasonably
prompt written notice of such failure or that such entry by Landlord is
unreasonably interfering with Tenant’s use of the Premises and (d) as a result
of such failure or entry all or any part of the Premises are rendered
untenantable (and, as a result, all or such part of the Premises are not used by
Tenant during the applicable period) for more than five (5) consecutive business
days, then Tenant shall be entitled to an abatement of Rent proportional to the
extent to which the Premises are thereby rendered unusable by Tenant, commencing
with the later of (i) the sixth business day during which such untenantability
continues or (ii) the sixth business day after Landlord receives such notice
from Tenant, until the Premises (or part thereof affected) are again usable or
until Tenant again uses the Premises (or part thereof rendered unusable) in its
business, whichever first occurs. The foregoing rental abatement shall be
Tenant’s exclusive remedy therefor. Notwithstanding the foregoing, the
provisions of Article 19 below and not the provisions of this subsection shall
govern in the event of casualty damage to the Premises or Project and the
provisions of Article 20 below and not the provisions of this subsection shall
govern in the event of condemnation of all or a part of the Premises or Project.
Notwithstanding anything contained in this Section 6.8 to the contrary, if the
conditions described in clauses (a), (b), and (c) of this Section 6.8 have been
satisfied and as a result of such interruption the Premises, or material portion
thereof, is rendered untenantable and is in fact not used by Tenant for one
hundred eighty (180) consecutive days, then Tenant may give Landlord notice of
its intent to terminate the Lease effective on the two hundred tenth
(210th) consecutive day the Premises is untenantable and is in fact not used by
Tenant, in which event this Lease shall terminate as of the two hundred tenth
(210th) day unless prior to that date the Premises become tenantable again.
Tenant’s failure to give that notice to Landlord within one hundred ninety
(190) days after the Premises is rendered untenantable and is in fact not used
by Tenant shall be a waiver of Tenant’s termination right under the prior
sentence. Any such termination shall be treated as if the Term of the Lease
expired on that date and such termination shall be Tenant’s

 

-18-

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

sole remedy for such interruption (in addition to any rent abatement otherwise
available to Tenant under this Section 6.8).

ARTICLE 7.

REPAIRS AND MAINTENANCE BY LANDLORD

7.1 Landlord shall provide for the operation, cleaning, maintenance and upkeep
of the Common Areas and the public portions of the Project in a first class
manner, in keeping with the standard for Comparable Buildings as part of
Operating Expenses to the extent permitted under Section 5.1. Unless otherwise
expressly stipulated herein, Landlord shall not be required to make any
improvements or repairs of any kind or character to the Premises during the
Term, except such repairs as may be required to the exterior walls, corridors,
windows, roof, integrated Building utility and mechanical systems and other Base
Building (as defined below) elements and other structural elements and equipment
of the Project, and subject to Section 13.4, below, such additional maintenance
as may be necessary because of the damage caused by persons other than Tenant,
its agents, employees, licensees, or invitees. As used in this Lease, the “Base
Building” shall include the structural portions of the Building, and the public
restrooms, elevators, exit stairwells and the systems and equipment located in
the internal core of the Building on the floor or floors on which the Premises
are located.

7.2 Landlord or Landlord’s officers, agents, and representatives (subject to any
security regulations imposed by any governmental authority) shall have the right
to enter all parts of the Premises at all reasonable hours upon reasonable prior
notice to Tenant (other than in an emergency) to inspect, clean, make repairs,
alterations, and additions to the Project or the Premises which it may deem
necessary or desirable, to make repairs to adjoining spaces, to cure any
defaults of Tenant hereunder that Landlord elects to cure pursuant to
Section 22.5, below, to show the Premises to prospective tenants (during the
final nine (9) months of the Term or at any time after the occurrence of an
Event of Default that remains uncured), mortgagees or purchasers of the
Building, or to provide any service which it is obligated or elects to furnish
to Tenant; and Tenant shall not be entitled to any abatement or reduction of
Rent by reason thereof. Landlord shall have the right to enter the Premises at
any time and by any means in the case of an emergency. At any time that Landlord
or its agents are on the Premises, Landlord and its agents shall use their
reasonable efforts to minimize interference with the conduct of Tenant’s
business, and if requested by Tenant shall be accompanied by a representative of
Tenant at all times that they are on the Premises; provided that Tenant’s
failure to make a Tenant representative available at the time of Landlord’s
entry into the Premises shall not limit Landlord’s or Landlord’s officers,
agents, representatives’ right to enter the Premises.

7.3 Except as otherwise expressly provided in this Lease, Tenant hereby waives
all rights it would otherwise have under California Civil Code Sections 1932(1)
and 1942(a) or any successor statutes to deduct repair costs from Rent and/or
terminate this Lease as the result of any failure by Landlord to maintain or
repair.

 

-19-

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

ARTICLE 8.

REPAIRS AND CARE OF PREMISES BY TENANT

8.1 If the Building, the Project, or any portion thereof, including but not
limited to, the elevators, boilers, engines, pipes, and other apparatus, or
members of elements of the Building (or any of them) used for the purpose of
climate control of the Building or operating of the elevators, or of the water
pipes, drainage pipes, electric lighting, or other equipment of the Building or
the roof or outside walls of the Building and also the Premises improvements,
including but not limited to, the carpet, wall coverings, doors, and woodwork,
become damaged or are destroyed through the negligence or willful misconduct of
Tenant, its servants, agents, employees, or anyone permitted by Tenant to be in
the Building, or through it or them, then the reasonable cost of the necessary
repairs, replacements, or alterations shall be borne by Tenant who shall pay the
same to Landlord as Additional Rent within fifteen (15) business days after
demand, subject to Section 13.4 below. Landlord shall have the exclusive right,
but not the obligation, to make any repairs necessitated by such damage.

8.2 Subject to Section 13.4 below, Tenant agrees, at its sole cost and expense,
to repair or replace any damage or injury done to the Project, or any part
thereof, caused by the negligence or willful misconduct of Tenant, Tenant’s
agents, employees, licensees, or invitees which Landlord elects not to repair.
Tenant shall not injure the Project or the Premises and shall maintain the
elements of the Premises not to be maintained by Landlord pursuant to this Lease
in a clean, attractive condition and in good repair, ordinary wear and tear and
damage from casualty that is the obligation of Landlord to repair under this
Lease excepted. If Tenant fails to keep such elements of the Premises in such
good order, condition, and repair as required hereunder to the satisfaction of
Landlord, following written notice to Tenant and a reasonable opportunity to
cure, Landlord may restore the Premises to such good order and condition and
make such repairs without liability to Tenant for any loss or damage that may
accrue to Tenant’s property or business by reason thereof, and within ten
(10) days after completion thereof, Tenant shall pay to Landlord, as Additional
Rent, upon demand, the cost of restoring the Premises to such good order and
condition and of the making of such repairs, plus an additional charge of ten
percent (10%) thereof. Upon the Expiration Date or the Termination Date, Tenant
shall surrender and deliver up the Premises to Landlord in the same condition in
which it existed at the Commencement Date, excepting only ordinary wear and tear
and damage arising from any cause not required to be repaired by Tenant. Upon
the Expiration Date or the Termination Date, Landlord shall have the right to
re-enter and take possession of the Premises.

8.3 Tenant shall provide its own janitorial and cleaning services to the
Premises at Tenant’s sole cost and expense. Landlord is not obligated to provide
any janitorial or cleaning services to the Premises.

ARTICLE 9.

TENANT’S EQUIPMENT AND INSTALLATIONS

9.1 If heat-generating machines or equipment, including telephone equipment,
cause the temperature in the Premises, or any part thereof, to exceed the
temperatures the Building’s air conditioning system would be able to maintain in
such Premises were it not for such heat-generating equipment, then Landlord
reserves the right to install supplementary air

 

-20-

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

conditioning units in the Premises, and the cost thereof, including the cost of
installation and the cost of operation and maintenance thereof, including water,
shall be paid by Tenant to Landlord within ten (10) days after demand by
Landlord.

9.2 Except for desk or table-mounted typewriters, adding machines, office
calculators, dictation equipment, personal computers, printers, copiers,
scanners, telecommunications equipment, server room equipment and other typical
office equipment, consistent with first-class general office use in Comparable
Buildings, Tenant shall not install within the Premises any fixtures, equipment,
facilities, or other improvements without the specific written consent of
Landlord (which consent shall not be unreasonably withheld, conditioned, or
delayed), subject to Article 15, below. Tenant shall not, without the specific
written consent of Landlord (which consent shall not be unreasonably withheld,
conditioned, or delayed), install or maintain any apparatus or device within the
Premises which shall increase the usage of electrical power or water for the
Premises to an amount greater than would be normally required for general office
use for space of comparable size in the Market Area; and if any such apparatus
or device is so installed, Tenant agrees to furnish Landlord a written agreement
to pay for any additional costs of utilities as the result of said installation.

ARTICLE 10.

FORCE MAJEURE

10.1 It is understood and agreed that with respect to any service or other
obligation to be furnished or obligations to be performed by either party, in no
event shall either party be liable for failure to furnish or perform the same
when prevented from doing so by strike, lockout, breakdown, accident, supply, or
inability by the exercise of reasonable diligence to obtain supplies, parts, or
employees necessary to furnish such service or meet such obligation; or because
of war or other emergency; or for any cause beyond the reasonable control with
the party obligated for such performance; or for any cause due to any act or
omission of the other party or its agents, employees, licensees, invitees, or
any persons claiming by, through, or under the other party; or because of the
failure of any public utility to furnish services; or because of order or
regulation of any federal, state, county or municipal authority (collectively,
“Force Majeure Events”). Nothing in this Section 10.1 shall limit or otherwise
modify or waive Tenant’s obligation to pay Base Rent and Additional Rent as and
when due pursuant to the terms of this Lease.

ARTICLE 11.

CONSTRUCTION, MECHANICS’ AND MATERIALMAN’S LIENS

11.1 Tenant shall not suffer or permit any construction, mechanics’ or
materialman’s lien to be filed against the Premises or any portion of the
Project by reason of work, labor services, or materials supplied or claimed to
have been supplied to Tenant. Nothing herein contained shall be deemed or
construed in any way as constituting the consent or request of Landlord,
expressed or implied, by inference or otherwise, for any contractor,
subcontractor, laborer, or materialman to perform any labor or to furnish any
materials or to make any specific improvement, alteration, or repair of or to
the Premises or any portion of the Project; nor of giving Tenant any right,
power, or authority to contract for, or permit the rendering of, any services or
the furnishing of any

 

-21-

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

materials that could give rise to the filing of any construction, mechanics’ or
materialman’s lien against the Premises or any portion of the Project.

11.2 If any such construction, mechanics’ or materialman’s lien shall at any
time be filed against the Premises or any portion of the Project as the result
of any act or omission of Tenant, Tenant covenants that it shall, within twenty
(20) days after Tenant has notice of the claim for lien, procure the discharge
thereof by payment or by giving security or in such other manner as is or may be
required or permitted by law or which shall otherwise satisfy Landlord. If
Tenant fails to take such action, Landlord, in addition to any other right or
remedy it may have, may take such action as may be reasonably necessary to
protect its interests. Any amounts paid by Landlord in connection with such
action, all other expenses of Landlord incurred in connection therewith,
including reasonable attorneys’ fees, court costs, and other necessary
disbursements shall be repaid by Tenant to Landlord within ten (10) days after
demand.

ARTICLE 12.

ARBITRATION

12.1 In the event that a dispute arises under Sections 5.3-5.7 above, the same
shall be submitted to arbitration in accordance with the provisions of
applicable state law, if any, as from time to time amended. Arbitration
proceedings, including the selection of an arbitrator, shall be conducted
pursuant to the rules, regulations, and procedures from time to time in effect
as promulgated by the American Arbitration Association (the “Association”).
Prior written notice of application by either party for arbitration shall be
given to the other at least ten (10) days before submission of the application
to the said Association’s office in the city wherein the Building is situated
(or the nearest other city having an Association office). The arbitrator shall
hear the parties and their evidence. The decision of the arbitrator may be
entered in the appropriate court of law; and the parties consent to the
jurisdiction of such court and further agree that any process or notice of
motion or other application to the court or a judge thereof may be served
outside the state wherein the Building is situated by registered mail or by
personal service, provided a reasonable time for appearance is allowed. The
costs and expenses of each arbitration hereunder and their apportionment between
the parties shall be determined by the arbitrator in his or her award or
decision, subject to the penultimate sentence of this section. No arbitrable
dispute shall be deemed to have arisen under this Lease (a) prior to the
expiration of the period of twenty (20) days after the date of the giving of
written notice by the party asserting the existence of the dispute, together
with a description thereof sufficient for an understanding thereof, and
(b) where Tenant disputes the amount of a Tenant payment required hereunder
(e.g., Operating Expense excess under Section 5.3 hereof), prior to Tenant
paying in full the amount billed by Landlord, including the disputed amount. The
prevailing party in such arbitration shall be reimbursed for its expenses,
including reasonable attorneys’ fees. Notwithstanding the foregoing, in no event
shall this Article 12 affect or delay Landlord’s unlawful detainer rights under
California law.

 

-22-

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

ARTICLE 13.

INSURANCE

13.1 Landlord shall maintain, as a part of Operating Expenses, special causes of
loss form property insurance on the Project in an amount equal to the full
replacement cost of the Project, subject to such deductibles as Landlord may
determine. Landlord shall not be obligated to insure, and shall not assume any
liability of risk of loss for, any of Tenant’s furniture, equipment, machinery,
goods, supplies, improvements or alterations upon the Premises. Such insurance
shall be maintained with an insurance company selected, and in amounts desired,
by Landlord or Landlord’s mortgagee, and payment for losses thereunder shall be
made solely to Landlord subject to the rights of the holder of any mortgage or
deed of trust which may now or hereafter encumber the Project. Additionally
Landlord may maintain such additional insurance, including, without limitation,
earthquake insurance, flood insurance, liability insurance and/or rent
insurance, as Landlord may in its sole discretion elect. The cost of all such
additional insurance shall also be part of the Operating Expenses. Any or all of
Landlord’s insurance may be provided by blanket coverage maintained by Landlord
or any affiliate of Landlord under its insurance program for its portfolio of
properties or by Landlord or any affiliate of Landlord’s program of self
insurance, and in such event Operating Expenses shall include the portion of the
reasonable cost of blanket insurance or self-insurance that is allocated to the
Project.

13.2 Tenant, at its own expense, shall maintain with insurers authorized to do
business in the State of California and which are rated A- and have a financial
size category of at least VIII in the most recent Best’s Key Rating Guide, or
any successor thereto (or if there is none, an organization having a national
reputation), (a) commercial general liability insurance with the following
minimum limits: General Aggregate $3,000,000.00; Products/Completed Operations
Aggregate $2,000,000.00; Each Occurrence $2,000,000.00; Personal and Advertising
Injury $1,000,000.00; Medical Payments $5,000.00 per person, (b) Umbrella/Excess
Liability on a following form basis with the following minimum limits: General
Aggregate $5,000,000.00; Each Occurrence $5,000,000.00; (c) Workers’
Compensation with statutory limits; (d) Employer’s Liability insurance with the
following limits: Bodily injury by disease per person $1,000,000.00; Bodily
injury by accident policy limit $1,000,000.00; Bodily injury by disease policy
limit $1,000,000.00; (e) property insurance on special causes of loss insurance
form covering (i) all office furniture, business and trade fixtures, office
equipment, free-standing cabinet work, movable partitions, merchandise and all
other items of Tenant’s property on the Premises installed by, for, or at the
expense of Tenant, (ii) the “Tenant Improvements,” as that term is defined in
Section 2.1 of the Tenant Work Letter, and any other improvements which exist in
the Premises as of the Commencement Date (excluding the Base Building) (the
“Original Improvements”), and (iii) all other improvements, alterations and
additions to the Premises (such insurance shall be for the full replacement cost
value (subject to reasonable deductible amounts) new without deduction for
depreciation of the covered items and in amounts that meet any co-insurance
clauses of the policies of insurance and shall include coverage for damage or
other loss caused by fire or other peril including, but not limited to,
vandalism and malicious mischief, theft, water damage of any type, including
sprinkler leakage, bursting or stoppage of pipes, and explosion); and
(f) business auto liability insurance having a combined single limit of not less
than One Million Dollars ($1,000,000.00) per occurrence and insuring Tenant
against liability for claims arising out of ownership, maintenance or use of any
owned, hired or non-owned automobiles. At all times during the Term, such
insurance shall be maintained, and Tenant shall

 

-23-

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

cause a current and valid certificate of such policies to be deposited with
Landlord. If Tenant fails to have a current and valid certificate of such
policies on deposit with Landlord at all times during the Term and such failure
is not cured within three (3) business days following Tenant’s receipt of notice
thereof from Landlord, Landlord shall have the right, but not the obligation, to
obtain such an insurance policy, and Tenant shall be obligated to pay Landlord
the amount of the premiums applicable to such insurance within ten (10) days
after Tenant’s receipt of Landlord’s request for payment thereof. Said policy of
liability insurance shall name Landlord and Landlord’s managing agent as
additional insureds and Tenant as the insured and shall be noncancellable with
respect to Landlord except after thirty (30) days’ written notice from the
insurer to Landlord.

13.3 Tenant shall adjust annually the amount of coverage established in
Section 13.2 hereof to such amount as in Landlord’s reasonable opinion,
adequately protects Landlord’s interest; provided the same is consistent with
the amount of coverage customarily required of comparable tenants in Comparable
Buildings.

13.4 Notwithstanding anything in this Lease to the contrary, Landlord and Tenant
each hereby waives any and all rights of recovery, claim, action, or cause of
action against the other, its agents, employees, licensees, or invitees for any
loss or damage to or at the Premises or the Project or any personal property of
such party therein or thereon by reason of fire, the elements, or any other
cause which would be insured against under the terms of (i) special causes of
loss form property insurance or (ii) the liability insurance referred to in
Section 13.2, to the extent of such insurance, regardless of cause or origin,
including omission of the other party hereto, its agents, employees, licensees,
or invitees. Landlord and Tenant covenant that no insurer shall hold any right
of subrogation against either of such parties with respect thereto. This waiver
shall be ineffective against any insurer of Landlord or Tenant to the extent
that such waiver is prohibited by the laws and insurance regulations of the
State of California. The parties hereto agree that any and all such insurance
policies required to be carried by either shall be endorsed with a subrogation
clause, substantially as follows: “This insurance shall not be invalidated
should the insured waive, in writing prior to a loss, any and all right of
recovery against any party for loss occurring to the property described therein,
“ and shall provide that such party’s insurer waives any right of recovery
against the other party in connection with any such loss or damage.

13.5 In the event Tenant’s occupancy or conduct of business in or on the
Premises, whether or not Landlord has consented to the same, results in any
increase in premiums for the insurance carried from time to time by Landlord
with respect to the Building, Tenant shall pay any such increase in premiums as
Rent within ten (10) days after bills for such additional premiums shall be
rendered by Landlord. In determining whether increased premiums are a result of
Tenant’s use or occupancy of the Premises, a schedule issued by the organization
computing the insurance rate on the Building showing the various components of
such rate, shall be conclusive evidence of the several items and charges which
make up such rate. Tenant shall promptly comply with all reasonable requirements
of the insurance authority or of any insurer now or hereafter in effect relating
to the Premises.

 

-24-

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

ARTICLE 14.

QUIET ENJOYMENT

14.1 Provided Tenant is not in default under this Lease after the expiration of
any period for cure in the performance of all its obligations under this Lease,
including, but not limited to, the payment of Rent and all other sums due
hereunder, Tenant shall peaceably and quietly hold and enjoy the Premises for
the Term, without hindrance by Landlord, subject to the provisions and
conditions set forth in this Lease.

ARTICLE 15.

ALTERATIONS

15.1 Tenant agrees that it shall not make or allow to be made any alterations,
physical additions, or improvements in or to the Premises without first
obtaining the written consent of Landlord in each instance. As used herein, the
term “Minor Alteration” refers to an alteration that (a) does not affect the
outside appearance of the Building and is not visible from the Common Areas,
(b) is non-structural and does not impair the strength or structural integrity
of the Building, and (c) does not affect the mechanical, electrical, HVAC or
other systems of the Building. Landlord agrees not to unreasonably withhold,
condition or delay its consent to any Minor Alteration. Landlord’s consent to
any other alteration may be conditioned, given, or withheld in Landlord’s sole
discretion. Notwithstanding the foregoing, Landlord consents to any repainting,
recarpeting, or other purely cosmetic changes or upgrades to the Premises, so
long as (i) the aggregate cost of such work is less than $25,000.00 in any
twelve-month period, (ii) such work constitutes a Minor Alteration (iii) no
building permit is required in connection therewith, and (iv) such work conforms
to the then existing Building standards. At the time of said request, Tenant
shall submit to Landlord plans and specifications of the proposed alterations,
additions, or improvements; and Landlord shall have a period of not less than
fifteen (15) days therefrom in which to review and approve or disapprove said
plans; provided that if Landlord determines in good faith that Landlord requires
a third party to assist in reviewing such plans and specifications, Landlord
shall instead have a period of not less than thirty (30) days in which to review
and approve or disapprove said plans. Tenant shall pay to Landlord upon demand
the cost and expense of Landlord in (A) reviewing said plans and specifications,
and (B) inspecting the alterations, additions, or improvements to determine
whether the same are being performed in accordance with the approved plans and
specifications and all laws and requirements of public authorities, including,
without limitation, the fees of any architect or engineer employed by Landlord
for such purpose. In any instance where Landlord grants such consent, and
permits Tenant to use its own contractors, laborers, materialmen, and others
furnishing labor or materials for Tenant’s construction (collectively, “Tenant’s
Contractors”), Landlord’s consent shall be deemed conditioned upon each of
Tenant’s Contractors (1) working in harmony and not interfering with any laborer
utilized by Landlord, Landlord’s contractors, laborers, or materialmen; and
(2) furnishing Landlord with evidence of acceptable liability insurance,
worker’s compensation coverage and if required by Landlord, completion bonding,
and if at any time such entry by one or more persons furnishing labor or
materials for Tenant’s work shall cause such disharmony or interference, the
consent granted by Landlord to Tenant may be withdrawn immediately upon written
notice from Landlord to Tenant. Tenant, at its expense, shall obtain all
necessary governmental permits and certificates for the commencement and
prosecution of alterations, additions, or improvements and for final approval
thereof upon

 

-25-

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

completion, and shall cause any alterations, additions, or improvements to be
performed in compliance therewith and with all applicable laws and requirements
of public authorities and with all applicable requirements of insurance bodies.
All alterations, additions, or improvements shall be diligently performed in a
good and workmanlike manner, using new materials and equipment at least equal in
quality and class to be better than (a) the original installations of the
Building, or (b) the then standards for the Comparable Building. Upon the
completion of work and upon request by Landlord, Tenant shall provide Landlord
copies of all waivers or releases of lien from each of Tenant’s Contractors. No
alterations, modifications, or additions to the Project or the Premises shall be
removed by Tenant either during the Term or upon the Expiration Date or the
Termination Date without the express written approval of Landlord. Tenant shall
not be entitled to any reimbursement or compensation resulting from its payment
of the cost of constructing all or any portion of said improvements or
modifications thereto unless otherwise expressly agreed by Landlord in writing.
Tenant agrees specifically that no food, soft drink, or other vending machine
shall be installed within the Premises, without the prior written consent of
Landlord as to the weight, location, manner of installation and number of those
vending machines.

15.2 Landlord’s approval of Tenant’s plans for work shall create no
responsibility or liability on the part of Landlord for their completeness,
design sufficiency, or compliance with all laws, rules, and regulations of
governmental agencies or authorities, including, but not limited to, the
Americans with Disabilities Act. Landlord may, at its option, at Tenant’s
expense, require that Landlord’s contractors be engaged for any work upon the
integrated Building mechanical or electrical systems or other Building or
leasehold improvements.

15.3 At least five (5) days prior to the commencement of any work permitted to
be done by persons requested by Tenant on the Premises, Tenant shall notify
Landlord of the proposed work and the names and addresses of Tenant’s
Contractors. During any such work on the Premises, Landlord, or its
representatives, shall have the right to go upon and inspect the Premises at all
reasonable times, and shall have the right to post and keep posted thereon
notices of non-responsibility or to take any further action which Landlord may
deem to be proper for the protection of Landlord’s interest in the Premises.

ARTICLE 16.

FURNITURE, FIXTURES, AND PERSONAL PROPERTY

16.1 Tenant, at its sole cost and expense, may remove its trade fixtures, office
supplies and moveable office furniture and equipment not attached to the Project
or Premises provided:

(a) Such removal is made prior to the Expiration Date or the Termination Date;
and

(b) Tenant promptly repairs all damage caused by such removal.

16.2 If Tenant does not remove its trade fixtures, office supplies, and moveable
furniture and equipment as herein above provided prior to the Expiration Date or
the Termination

 

-26-

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

Date (unless prior arrangements have been made with Landlord and Landlord has
agreed in writing to permit Tenant to leave such items in the Premises for an
agreed period), then, in addition to its other remedies, at law or in equity,
Landlord shall have the right to have such items removed and stored at Tenant’s
sole cost and expense and all damage to the Project or the Premises resulting
from said removal shall be repaired at the cost of Tenant; Landlord may elect
that such items automatically become the property of Landlord upon the
Expiration Date or the Termination Date, and Tenant shall not have any further
rights with respect thereto or reimbursement therefor subject to the provisions
of applicable law. All other property in the Premises, any alterations, or
additions to the Premises (including wall-to-wall carpeting, paneling, wall
covering, specially constructed or built-in cabinetry or bookcases), and any
other article attached or affixed to the floor, wall, or ceiling of the Premises
shall become the property of Landlord and shall remain upon and be surrendered
with the Premises as a part thereof at the Expiration or Termination Date
regardless of who paid therefor; and Tenant hereby waives all rights to any
payment or compensation therefor. If, however, Landlord so requests, in writing,
Tenant shall remove, prior to the Expiration Date or the Termination Date, any
and all alterations, additions, fixtures, equipment, and property (other than
the initial Tenant Improvements (as defined in the Tenant Work Letter)) placed
or installed in the Premises and shall repair any damage caused by such removal.
Upon submission of any plans for Landlord’s approval, Tenant may request prior
to the installation of specific fixtures, equipment or improvements in the
Premises, that Landlord agree not to require Tenant to remove such items upon
expiration or termination of the Lease or agree to permit Tenant to remove any
item it may otherwise not be permitted to remove under the terms of this Lease.
Such consent, which may be granted or denied in Landlord’s sole discretion, must
be granted in writing prior to the installation of the subject items in order to
be binding against Landlord.

16.3 All the furnishings, fixtures, equipment, effects, and property of every
kind, nature, and description of Tenant and of all persons claiming by, through,
or under Tenant which, during the continuance of this Lease or any occupancy of
the Premises by Tenant or anyone claiming under Tenant, may be on the Premises
or elsewhere in the Project shall be at the sole risk and hazard of Tenant, and
if the whole or any part thereof shall be destroyed or damaged by fire, water,
or otherwise, or by the leakage or bursting of water pipes, steam pipes, or
other pipes, by theft, or from any other cause, no part of said loss or damage
is to be charged to or be borne by Landlord unless due to the gross negligence
or willful misconduct of Landlord or its employees, agents or contractors.

ARTICLE 17.

PERSONAL PROPERTY AND OTHER TAXES

17.1 During the Term hereof, Tenant shall pay, prior to delinquency, all
business and other taxes, charges, notes, duties, and assessments levied, and
rates or fees imposed, charged, or assessed against or in respect of Tenant’s
occupancy of the Premises or in respect of the personal property, trade
fixtures, furnishings, equipment, and all other personal and other property of
Tenant contained in the Project (including without limitation taxes and
assessments attributable to the cost or value of any leasehold improvements made
in or to the Premises by or for Tenant (to the extent that the assessed value of
those leasehold improvements exceeds the assessed value of standard office
improvements in other space in the Project regardless of whether title to those
improvements is vested in Tenant or Landlord)), and shall

 

-27-

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

hold Landlord harmless from and against all payment of such taxes, charges,
notes, duties, assessments, rates, and fees, and against all loss, costs,
charges, notes, duties, assessments, rates, and fees, and any and all such
taxes. Tenant shall cause said fixtures, furnishings, equipment, and other
personal property to be assessed and billed separately from the real and
personal property of Landlord. In the event any or all of Tenant’s fixtures,
furnishings, equipment, and other personal property shall be assessed and taxed
with Landlord’s real property, Tenant shall pay to Landlord Tenant’s share of
such taxes within ten (10) days after delivery to Tenant by Landlord of a
statement in writing setting forth the amount of such taxes applicable to
Tenant’s property.

17.2 The demised property herein may be subject to a special assessment levied
by the City of Redwood as part of an Improvement District.

ARTICLE 18.

ASSIGNMENT AND SUBLETTING

18.1 Tenant shall not, without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, conditioned or delayed (except that
Landlord shall in no event be obligated to consent to an encumbrance of this
Lease or any transfer by operation of law): (a) assign, convey, mortgage or
otherwise transfer this Lease or any interest hereunder, or sublease the
Premises, or any part thereof, whether voluntarily or by operation of law; or
(b) permit the use of the Premises or any part thereof by any person other than
Tenant and its employees. Any such transfer, sublease or use described in the
preceding sentence (a “Transfer”) occurring without the prior written consent of
Landlord shall, at Landlord’s option, be void and of no effect. Landlord’s
consent to any Transfer shall not constitute a waiver of Landlord’s right to
withhold its consent to any future Transfer. Landlord may require as a condition
to its consent to any assignment of this Lease that the assignee execute an
instrument in which such assignee assumes the remaining obligations of Tenant
hereunder; provided that the acceptance of any assignment of this Lease by the
applicable assignee shall automatically constitute the assumption by such
assignee of all of the remaining obligations of Tenant that accrue following
such assignment. The voluntary or other surrender of this Lease by Tenant or a
mutual cancellation hereof shall not work a merger and shall, at the option of
Landlord, terminate all or any existing sublease or may, at the option of
Landlord, operate as an assignment to Landlord of Tenant’s interest in any or
all such subleases.

18.2 For purposes of this Lease, the term “Transfer” shall also include (i) if a
Tenant is a partnership or limited liability company, the withdrawal or change,
voluntary, involuntary or by operation of law, of fifty percent (50%) or more of
the partners, members or managers thereof, or transfer of twenty-five percent
(25%) or more of partnership or membership interests therein within a twelve
(12) month period, or the dissolution of the partnership or the limited
liability company without immediate reconstitution thereof, and (ii) if Tenant
is a corporation whose stock is not publicly held and not traded through an
exchange or over the counter or any other form of entity, (A) the dissolution,
merger, consolidation or other reorganization of Tenant, the sale or other
transfer of more than an aggregate of fifty percent (50%) of the voting shares
or other interests of or in Tenant (other than to immediate family members by
reason of gift or death), within a twelve (12) month period, or (B) the sale,

 

-28-

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

mortgage, hypothecation or pledge of more than an aggregate of fifty percent
(50%) of the value of the unencumbered assets of Tenant within a twelve
(12) month period.

18.3 If Tenant desires the consent of Landlord to a Transfer, Tenant shall
submit to Landlord, at least thirty (30) business days prior to the proposed
effective date of the Transfer, a written notice (the “Transfer Notice”) which
includes (a) the name of the proposed sublessee or assignee, (b) the nature of
the proposed sublessee’s or assignee’s business, (c) the terms and provisions of
the proposed sublease or assignment, and (d) current financial statements and
information on the proposed sublessee or assignee. Upon receipt of the Transfer
Notice, Landlord may request additional information concerning the Transfer or
the proposed sublessee or assignee (the “Additional Information”). Subject to
Landlord’s rights under Section 18.6, Landlord shall not unreasonably withhold,
condition or delay its consent to any assignment or sublease (excluding an
encumbrance or transfer by operation of law), which consent or lack thereof
shall be provided within thirty (30) business days of receipt of Tenant’s
Transfer Notice; provided, however, Tenant hereby agrees that it shall be a
reasonable basis for Landlord to withhold its consent if Landlord has not
received the Additional Information requested by Landlord. Without limiting any
other reasonable basis for Landlord to withhold its consent to the proposed
Transfer, Landlord and Tenant agree that for purposes of this Lease and any
Applicable Law, Landlord shall not be deemed to have unreasonably withheld its
consent if, in the judgment of Landlord: (i) the transferee is of a character or
engaged in a business which is not in keeping with the standards or criteria
used by Landlord in leasing the Project, or the general character or quality of
the Project; (ii) the financial condition of the transferee is such that it may
not be able to perform its obligations in connection with this Lease (or
otherwise does not satisfy Landlord’s standards for financial standing with
respect to tenants under direct leases of comparable economic scope); (iii) the
transferee, or any person or entity which directly or indirectly controls, is
controlled by, or is under common control with, the transferee, is a tenant of
or negotiating for space in the Project occupies space in the Project or has
negotiated with Landlord within the preceding ninety (90) days (or is currently
negotiating with Landlord) to lease space in the Project, (iv) the transferee
has the power of eminent domain, is a governmental agency or an agency or
subdivision of a foreign government; (v) an Event of Default by Tenant has
occurred and is uncured at the time Tenant delivers the Transfer Notice to
Landlord; (vi) in the judgment of Landlord, such a Transfer would violate any
term, condition, covenant, or agreement of Landlord involving the Project or any
other tenant’s lease within it or would give an occupant of the Project a right
to cancel or modify its lease; (vii) [intentionally omitted]; (viii) in
Landlord’s judgment, the use of the Premises by the proposed transferee would
not be comparable to the types of office use by other tenants in the Project,
would entail any alterations which would lessen the value of the tenant
improvements in the Premises, would result in more than a reasonable density of
occupants per square foot of the Premises, would increase the burden on
elevators or other Building systems or equipment over the burden thereon prior
to the proposed Transfer, would require increased services by Landlord or would
require any alterations to the Project to comply with applicable laws; (ix) the
transferee intends to use the space for purposes which are not permitted under
this Lease; (x) the terms of the proposed Transfer would allow the transferee to
exercise a right of renewal, right of expansion, right of first offer, or other
similar right held by Tenant (or will allow the transferee to occupy space
leased by Tenant pursuant to any such right); (xi) the proposed Transfer would
result in more than three subleases per each full floor of the Premises being in
effect at any one time during the Term; or (xii) any ground lessor or mortgagee
whose consent to such Transfer is required fails to

 

-29-

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

consent thereto. Tenant hereby waives any right to terminate the Lease as a
remedy for Landlord wrongfully withholding its consent to any Transfer.

18.4 Landlord and Tenant agree that, in the event of any approved assignment or
subletting, the rights of any such assignee or sublessee of Tenant herein shall
be subject to all of the terms, conditions, and provisions of this Lease,
including, without limitation, restriction on use, assignment, and subletting
and the covenant to pay Rent. Landlord may collect the rent owing by the
assignee or sublessee directly from such assignee or sublessee and apply the
amount so collected to the Rent herein reserved. No such consent to or
recognition of any such assignment or subletting shall constitute a release of
Tenant or any guarantor of Tenant’s performance hereunder from further
performance by Tenant or such guarantor of covenants undertaken to be performed
by Tenant herein. Tenant and any such guarantor shall remain liable and
responsible for all Rent and other obligations herein imposed upon Tenant, and
Landlord may condition its consent to any Transfer upon the receipt of a written
reaffirmation from each such guarantor in a form acceptable to Landlord (which
shall not be construed to imply that the occurrence of a Transfer without such a
reaffirmation would operate to release any guarantor). Consent by Landlord to a
particular assignment, sublease, or other transaction shall not be deemed a
consent to any other or subsequent transaction. In any case where Tenant desires
to assign, sublease or enter into any related or similar transaction, whether or
not Landlord consents to such assignment, sublease, or other transaction, Tenant
shall pay any reasonable attorneys’ fees incurred by Landlord in connection with
such assignment, sublease or other transaction, including, without limitation,
fees incurred in reviewing documents relating to, or evidencing, said
assignment, sublease, or other transaction; provided that those costs shall not
exceed $1,500.00 with respect to any single Transfer so long as Tenant and the
proposed transferee execute Landlord’s standard form of consent document without
negotiation. All documents utilized by Tenant to evidence any subletting or
assignment for which Landlord’s consent has been requested and is required
hereunder, shall be subject to prior approval (not to be unreasonably withheld,
conditioned or delayed) by Landlord or its attorney.

18.5 Tenant shall be bound and obligated to pay Landlord a portion of any sums
or economic consideration payable to Tenant by any sublessee, assignee,
licensee, or other transferee, within ten (10) days following receipt thereof by
Tenant from such sublessee, assignee, licensee, or other transferee, as the case
might be, as follows:

(a) In the case of an assignment, fifty percent (50%) of any sums or other
economic consideration received by Tenant as a result of such assignment shall
be paid to Landlord after first deducting the unamortized cost of reasonable
leasehold improvements paid for by Tenant in connection with such assignment and
reasonable cost of any real estate commissions incurred by Tenant in connection
with such assignment.

(b) In the case of a subletting, fifty percent (50%) of any sums or economic
consideration received by Tenant as a result of such subletting shall be paid to
Landlord after first deducting (i) the Rent due hereunder prorated to reflect
only Rent allocable to the sublet portion of the Premises, (ii) the reasonable
cost of tenant improvements made to the sublet portion of the Premises by Tenant
for the specific benefit of the sublessee, which shall be amortized over the
term of the sublease, and

 

-30-

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

(iii) the reasonable cost of any real estate commissions incurred by Tenant in
connection with such subletting, which shall be amortized over the term of the
sublease.

(c) Tenant shall provide Landlord with a detailed statement setting forth any
sums or economic consideration Tenant either has or will derive from such
Transfer, the deductions permitted under (a) and (b) of this Section 18.5, and
the calculation of the amounts due Landlord under this Section 18.5. In
addition, Landlord or its representative shall have the right at all reasonable
times to audit the books and records of Tenant with respect to the calculation
of the Transfer profits. If such inspection reveals that the amount paid to
Landlord was incorrect, then within ten (10) days of Tenant’s receipt of the
results of such audit, Tenant shall pay Landlord the deficiency and the cost of
Landlord’s audit.

18.6 If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. or any
successor or substitute therefor (the “Bankruptcy Code”), any and all monies or
other consideration payable or otherwise to be delivered in connection with such
assignment shall be paid or delivered to Landlord, shall be and remain the
exclusive property of Landlord, and shall not constitute property of Tenant or
of the estate of Tenant within the meaning of the Bankruptcy Code. Any such
monies or other consideration not paid or delivered to Landlord shall be held in
trust for the benefit of Landlord and shall be promptly paid or delivered to
Landlord. Any person or entity to whom this Lease is so assigned shall be
deemed, without further act or deed, to have assumed all of the remaining
obligations arising under this Lease as of the date of such assignment. Any such
assignee shall, upon demand therefor, execute and deliver to Landlord an
instrument confirming such assumption.

18.7 Landlord shall have the following option with respect to any assignment of
this Lease or a Triggering Sublease (as defined below) proposed by Tenant:

(a) Notwithstanding any other provision of this Article, Landlord has the
option, by written notice to Tenant (the “Recapture Notice”) within thirty
(30) days after receiving any Transfer Notice to recapture the space covered by
the proposed sublease or the entire Premises in the case of an assignment (the
“Subject Space”) by terminating this Lease for the Subject Space or taking an
assignment or a sublease of the Subject Space from Tenant. A timely Recapture
Notice terminates this Lease with respect to the Subject Space, effective as of
the date specified in the Transfer Notice. After such termination, Landlord may
(but shall not be obligated to) enter into a lease with the party to the
sublease or assignment proposed by Tenant. As used herein, “Triggering
Subletting” means subleasing of fifty percent (50%) or more of the Premises,
either in a single transaction or, in the aggregate, following a series of
transactions, for a term or terms expiring during the last year of the Term.

(b) To determine the new Base Rent under this Lease in the event Landlord
recaptures the Subject Space without terminating this Lease, the original Base
Rent under the Lease shall be multiplied by a fraction, the numerator of which
is the rentable square feet of the Premises retained by Tenant after Landlord’s
recapture and the denominator of which is the total rentable square feet in the
Premises before Landlord’s

 

-31-

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

recapture. The Additional Rent, to the extent that it is calculated on the basis
of the rentable square feet within the Premises, shall be reduced to reflect
Tenant’s proportionate share based on the rentable square feet of the Premises
retained by Tenant after Landlord’s recapture. This Lease as so amended shall
continue thereafter in full force and effect. Either party may require a written
confirmation of the amendments to this Lease necessitated by Landlord’s
recapture of the Subject Space. If Landlord recaptures the Subject Space,
Landlord shall, at Landlord’s sole expense, construct any partitions required to
segregate the Subject Space from the remaining Premises retained by Tenant.
Tenant shall, however, pay for painting, covering or otherwise decorating the
surfaces of the partitions facing the remaining Premises retained by Tenant.

18.8 Notwithstanding anything to the contrary contained in this Article 18,
Tenant may assign this Lease or sublet the Premises without the need for
Landlord’s prior consent if such assignment or sublease is to (x) any parent,
subsidiary or affiliate business entity which the initially named Tenant
controls, is controlled by or is under common control with (each, an
“Affiliate”), or (y) any entity which acquires all or substantially all of the
ownership interests in Tenant or assets of Tenant, or which merges with Tenant
(such transferee contemplated in (x) and (y) and meeting the requirements of
this Section 18.8 being a “Permitted Transferee” and the transactions
contemplated in (x) and (y) and meeting the requirements of this Section 18.8
being “Permitted Transfers”); provided that: (i) at least thirty (30) days prior
to such assignment or sublease, Tenant delivers to Landlord the financial
statements or other financial and background information of the assignee or
sublessee as required for other transfers; (ii) if the transfer is an
assignment, the assignee assumes, in full, the obligations of Tenant under this
Lease (or if a sublease, the sublessee of a portion of the Premises or term
assumes, in full, the obligations of Tenant with respect to such portion);
(iii) the proposed Permitted Transferee meets the Net Worth Threshold (as
defined below); (iv) Tenant remains fully liable under this Lease; and
(v) unless Landlord consents to the same, the use of the Premises set forth
herein remains unchanged. As used herein, the term “Net Worth Threshold” shall
mean the proposed Permitted Transferee has a tangible net worth equal to or
greater than (x) that of Tenant immediately prior to such transaction, and
(y) that of the originally named Tenant as of December 31 of the year prior to
the Commencement Date (determined in accordance with generally accepted
accounting principles consistently applied and excluding from the determination
of total assets all assets which would be classified as intangible assets under
generally accepted accounting principles, including, without limitation,
goodwill, licenses, trademarks, trade names, copyrights and franchises), and as
evidenced by financial statements audited by a certified public accounting firm
reasonably acceptable to Landlord. As used in this section, “control”
(including, with its correlative meanings, “controlled by” and “under common
control with”) shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies through ownership of at least
fifty-one (51%) of the securities or partnership or other ownership interests of
the entity subject to control. In addition, Landlord’s consent shall not be
required with respect to (the infusion of additional equity capital in Tenant or
an initial public offering of equity securities of Tenant under the Securities
Act of 1933, as amended, which results in Tenant’s stock being traded on a
national securities exchange, including, but not limited to, the NYSE, the
NASDAQ Stock Market or the NASDAQ Small Cap Market System or any sale of such
equity securities on such national securities exchanges (each a “Permitted Stock
Transfer”). Notwithstanding anything to the contrary set forth in this
Article 18, the provisions of Sections

 

-32-

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

18.1 through 18.7 hereof shall not be applicable to Permitted Transfers,
Permitted Transferees, or Permitted Stock Transfers.

ARTICLE 19.

DAMAGE OR DESTRUCTION

19.1 If the Premises or Building should be damaged or destroyed by fire or other
casualty, Tenant shall give immediate written notice to Landlord. If the
Premises or any common areas of the Building or Project serving or providing
access to the Premises shall be damaged by fire or other casualty, Landlord
shall promptly and diligently, subject to reasonable delays for insurance
adjustment or other matters beyond Landlord’s reasonable control, and subject to
all other terms of this Article 19, restore the base, shell, and core of the
Premises and such common areas. Such restoration shall be to substantially the
same condition of the base, shell, and core of the Premises and common areas
prior to the casualty, except for modifications required by zoning and building
codes and other laws or by the holder of a mortgage on the Project, or the
lessor of a ground or underlying lease with respect to the Project and/or the
Building, or any other modifications to the common areas deemed desirable by
Landlord, provided access to the Premises and any common restrooms serving the
Premises shall not be materially impaired. Landlord shall not be liable for any
inconvenience or annoyance to Tenant or its visitors, or injury to Tenant’s
business resulting in any way from such damage or the repair thereof; provided
however, that if such fire or other casualty shall have damaged the Premises or
common areas necessary to Tenant’s occupancy, and if such damage is not the
result of the negligence or willful misconduct of Tenant or Tenant’s employees,
contractors, licensees, or invitees, Landlord shall allow Tenant a proportionate
abatement of Base Rent and Tenant’s Share of Operating Expenses and Tenant’s Tax
Share of Taxes to the extent Landlord is reimbursed from the proceeds of rental
interruption insurance purchased by Landlord as part of Operating Expenses,
during the time and to the extent the Premises are unfit for occupancy for the
purposes permitted under this Lease, and not occupied by Tenant as a result
thereof.

19.2 Notwithstanding the terms of Section 19.1 of this Lease, Landlord may elect
not to rebuild and/or restore the Premises, the Building and/or any other
portion of the Real Property and instead terminate this Lease by notifying
Tenant in writing of such termination within sixty (60) days after the date of
Landlord’s discovery of such damage (the “Damage Discovery Date”), such notice
to include a termination date giving Tenant ninety (90) days to vacate the
Premises, but Landlord may so elect only if the Building shall be damaged by
fire or other casualty or cause, whether or not the Premises are affected, and
one or more of the following conditions is present: (i) repairs cannot
reasonably be completed within one hundred eighty (180) days of the Damage
Discovery Date (when such repairs are made without the payment of overtime or
other premiums); (ii) the holder of any mortgage on the Project or ground or
underlying lessor with respect to the Project and/or the Building shall require
that the insurance proceeds or any portion thereof be used to retire the
mortgage debt, or shall terminate the ground or underlying lease, as the case
may be; or (iii) the damage is not fully covered (except for deductible amounts
in the case of a casualty other than earthquake or flood) by Landlord’s
insurance policies. In addition, if the Premises or the Building is destroyed or
damaged to any substantial extent during the last twelve (12) months of the
Term, then notwithstanding anything contained in this Article 19, Tenant and
Landlord shall each have the option to terminate this Lease by giving written
notice to the other of the exercise of such option

 

-33-

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

within thirty (30) days after the Damage Discovery Date, in which event this
Lease shall cease and terminate as of the date of such notice. Upon any such
termination of this Lease pursuant to this Section 19.2, Tenant shall pay the
Base Rent and Additional Rent, properly apportioned up to such date of
termination, and both parties hereto shall thereafter be freed and discharged of
all further obligations hereunder, except as provided for in provisions of this
Lease which by their terms survive the expiration or earlier termination of the
Term.

19.3 If there is an occurrence of any damage to the Premises that does not
result in the termination of this Lease pursuant to this Article 19, then upon
notice (the “Landlord Repair Notice”) to Tenant from Landlord, Tenant shall
assign to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Tenant’s insurance required under
Sections 13.2(e)(ii) and (iii) above with respect to any improvements in the
Premises required to be insured by Tenant hereunder (excluding proceeds for
Tenant’s Property), and Landlord shall repair any injury or damage to the Tenant
Improvements, alterations and the Original Improvements installed in the
Premises and shall return such Tenant Improvements, alterations and Original
Improvements to their original condition; provided that if the cost of such
repair by Landlord exceeds the sum of (A) amount of insurance proceeds received
by Landlord from Tenant’s insurance carrier, as assigned by Tenant, plus (B) any
insurance proceeds received by Landlord with respect to such Tenant
Improvements, alterations and Original Improvements (it being acknowledged and
agreed that Tenant’s insurance as to the Tenant Improvements, Alterations and
Original Improvements is primary in nature and Landlord’s insurance, if any,
with respect to same is secondary in nature), the cost of such repairs shall be
paid by Tenant to Landlord prior to Landlord’s commencement of repair of the
damage. In the event that Landlord does not deliver the Landlord Repair Notice
within forty-five (45) days following the Damage Discovery Date, Tenant shall,
at its sole cost and expense, repair any injury or damage to the Tenant
Improvements, alterations, and the Original Improvements installed in the
Premises and shall return such Tenant Improvements, alterations, and Original
Improvements to their original condition. Whether or not Landlord delivers a
Landlord Repair Notice, prior to the commencement of construction, Tenant shall
submit to Landlord, for Landlord’s review and approval, all plans,
specifications and working drawings relating thereto, and Landlord shall select
the contractors to perform such improvement work.

19.4 In the event this Lease is terminated in accordance with the terms of this
Article 19, Tenant shall assign to Landlord (or to any party designated by
Landlord) all insurance proceeds payable to Tenant under Tenant’s insurance
required under Sections 13.2(e)(ii) and (iii).

19.5 The provisions of this Lease, including this Article 19, constitute an
express agreement between Landlord and Tenant with respect to damage to, or
destruction of, all or any portion of the Premises or the Project, and any
statute or regulation of the State of California, including without limitation
Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any
rights or obligations concerning damage or destruction in the absence of an
express agreement between the parties (and any other statute or regulation now
or hereafter in effect with respect to such rights or obligations), shall have
no application to this Lease or to any damage or destruction to all or any
portion of the Premises or the Project.

 

-34-

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

ARTICLE 20.

CONDEMNATION

20.1 Total Condemnation. If all of the Premises is condemned by eminent domain,
inversely condemned or sold under threat of condemnation for any public or
quasi-public use or purpose (“Condemned”), this Lease shall terminate as of the
earlier of the date the condemning authority takes title to or possession of the
Premises, and Rent shall be adjusted to the date of termination.

20.2 Partial Condemnation. If any portion of the Premises or Building is
condemned and such partial condemnation materially impairs Tenant’s ability to
use the Premises for Tenant’s business as reasonably determined by Landlord,
Landlord shall have the option in Landlord’s sole and absolute discretion of
either (i) relocating Tenant to comparable space within the Project; provided,
that Tenant, in its sole and absolute discretion, shall consent to such
relocation or (ii) terminate this Lease as of the earlier of the date title
vests in the condemning authority or as of the date an order of immediate
possession is issued and Rent shall be adjusted to the date of termination. If
such partial condemnation does not materially impair Tenant’s ability to use the
Premises for the business of Tenant, Landlord shall promptly restore the
Premises to the extent of any condemnation proceeds recovered by Landlord,
excluding the portion thereof lost in such condemnation, and this Lease shall
continue in full force and effect except that after the date of such title
vesting or order of immediate possession Rent shall be adjusted as reasonably
determined by Landlord. Tenant shall have the right to terminate this Lease in
the event that any partial condemnation results in a decrease in the square
footage of the Premises by more than 5,000 rentable square feet and, as a result
thereof, are no longer reasonably suitable for Tenant’s operations.

20.3 Award. If the Premises are wholly or partially condemned, Landlord shall be
entitled to the entire award paid for such condemnation, and Tenant waives any
claim to any part of the award from Landlord or the condemning authority;
provided, however, Tenant shall have the right to recover from the condemning
authority such compensation as may be separately awarded to Tenant in connection
with costs in removing Tenant’s merchandise, furniture, fixtures, leasehold
improvements and equipment to a new location. No condemnation of any kind shall
be construed to constitute an actual or constructive eviction of Tenant or a
breach of any express or implied covenant of quiet enjoyment. Tenant hereby
waives the effect of Sections 1265.120 and 1265.130 of the California Code of
Civil Procedure.

20.4 Temporary Condemnation. In the event of a temporary condemnation not
extending beyond the Term, this Lease shall remain in effect, Tenant shall
continue to pay Rent and Tenant shall receive any award made for such
condemnation except damages to any of Landlord’s property. If a temporary
condemnation is for a period which extends beyond the Term, this Lease shall
terminate as of the date of initial occupancy by the condemning authority and
any such award shall be distributed in accordance with the preceding section. If
a temporary condemnation remains in effect at the expiration or earlier
termination of this Lease, Tenant shall pay Landlord the reasonable cost of
performing any obligations required of Tenant with respect to the surrender of
the Premises.

 

-35-

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

ARTICLE 21.

HOLD HARMLESS

21.1 Tenant agrees to defend, with counsel approved by Landlord, all actions
against Landlord, any member, partner, trustee, stockholder, officer, director,
employee, or beneficiary of Landlord (collectively, “Landlord Parties”), holders
of mortgages secured by the Premises or the Project and any other party having
an interest therein (collectively with Landlord Parties, the “Indemnified
Parties”) with respect to, and to pay, protect, indemnify, and save harmless, to
the extent permitted by law, all Indemnified Parties from and against, any and
all liabilities, losses, damages, costs, expenses (including reasonable
attorneys’ fees and expenses), causes of action, suits, claims, demands, or
judgments of any nature to which any Indemnified Party is subject because of its
estate or interest in the Premises or the Project arising from (a) injury to or
death of any person, or damage to or loss of property (x) on the Premises, or
(y) on the Project, adjoining sidewalks, streets or ways, if connected with the
use, condition, or occupancy of the Premises and resulting from the negligence
or willful misconduct of Tenant, except in the case of both (x) and (y) to the
extent, if any, caused by the gross negligence or willful misconduct of Landlord
or its employees, contractors or agents, (b) any violation of this Lease by or
attributable to Tenant, or (c) subject to Section 13.4, any act, fault,
omission, or other misconduct of Tenant or its agents, contractors, licensees,
sublessees, or invitees. Tenant agrees to use and occupy the Premises and other
facilities of the Project at its own risk, and hereby releases the Indemnified
Parties from any and all claims for any damage or injury, except to the extent
caused by the gross negligence or willful misconduct of Landlord or such
Indemnified Party, to the fullest extent permitted by law.

21.2 Tenant agrees that Landlord shall not be responsible or liable to Tenant,
its agents, employees, or invitees for fatal or non-fatal bodily injury or
property damage occasioned by the acts or omissions of any other tenant, or such
other tenant’s agents, employees, licensees, or invitees, of the Project.
Landlord shall not be liable to Tenant for losses due to theft, burglary, or
damages done by persons on the Project.

ARTICLE 22.

DEFAULT BY TENANT

22.1 The term “Event of Default” refers to the occurrence of any one (1) or more
of the following:

(a) Failure of Tenant to pay when due any sum required to be paid hereunder (the
“Monetary Default”) within five (5) days of receipt of written notice from
Landlord; provided, however, that after the first failure to pay any sum
required to be paid hereunder in any calendar year, in the event that Tenant
fails a second time to pay when due any sum required to be paid hereunder during
such calendar year, such failure shall be deemed to automatically constitute a
Monetary Default without any obligation on Landlord to provide any additional
written notice, and provided further that Tenant acknowledges that any such
written notice provided hereunder shall be in lieu of, and not in addition to,
any notice to pay rent or quit pursuant to any applicable statutes;

 

-36-

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

(b) Failure of Tenant, after fifteen (15) days written notice thereof, to
perform any of Tenant’s obligations, covenants, or agreements except a Monetary
Default, provided that if the cure of any such failure is not reasonably
susceptible of performance within such fifteen (15) day period, then an Event of
Default of Tenant shall not be deemed to have occurred so long as Tenant has
promptly commenced and thereafter diligently prosecutes such cure to completion
and completes that cure within ninety (90) days;

(c) Tenant, or any guarantor of Tenant’s obligations under this Lease (the
“Guarantor”), admits in writing that it cannot meet its obligations as they
become due; or is declared insolvent according to any law; or assignment of
Tenant’s or Guarantor’s property is made for the benefit of creditors; or a
receiver or trustee is appointed for Tenant or Guarantor or its property; or the
interest of Tenant or Guarantor under this Lease is levied on under execution or
other legal process; or any petition is filed by or against Tenant or Guarantor
to declare Tenant bankrupt or to delay, reduce, or modify Tenant’s debts or
obligations; or any petition filed or other action taken to reorganize or modify
Tenant’s or Guarantor’s capital structure if Tenant is a corporation or other
entity. Any such levy, execution, legal process, or petition filed against
Tenant or Guarantor shall not constitute a breach of this Lease provided Tenant
or Guarantor shall vigorously contest the same by appropriate proceedings and
shall remove or vacate the same within ninety (90) days from the date of its
creation, service, or filing;

(d) The abandonment of the Premises by Tenant, which shall mean that Tenant has
vacated the Premises for ten (10) consecutive days, whether or not Tenant is in
Monetary Default and such abandonment has impaired Landlord’s insurance coverage
for the Premises or the Building;

(e) The discovery by Landlord that any financial statement given by Tenant or
any of its assignees, subtenants, successors-in-interest, or Guarantors was
materially false; or

(f) If Tenant or any Guarantor shall die, cease to exist as a corporation or
partnership, or be otherwise dissolved or liquidated or become insolvent, or
shall make a transfer in fraud of creditors.

22.2 In the event of any Event of Default by Tenant, Landlord, at its option,
may pursue one or more of the following remedies without notice or demand in
addition to all other rights and remedies provided for at law or in equity:

(a) Landlord may continue this Lease in full force and effect, and this Lease
shall continue in full force and effect as long as Landlord does not terminate
Tenant’s right to possession, and Landlord shall have the right to collect Rent
when due. Landlord may enter the Premises and relet it, or any part of it, to
third parties for Tenant’s account, provided that any Rent in excess of the Rent
due hereunder shall be payable to Landlord. Tenant shall be liable immediately
to Landlord for all costs Landlord incurs in reletting the Premises, including,
without limitation, brokers’ commissions, expenses of cleaning and redecorating
the Premises required by the reletting and like costs. Reletting

 

-37-

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

may be for a period shorter or longer than the remaining Term of this Lease.
Tenant shall pay to Landlord the Rent and other sums due under this Lease on the
dates the Rent is due, less the Rent and other sums Landlord receives from any
reletting. No act by Landlord allowed by this Section 22.2(a) shall terminate
this Lease unless Landlord notifies Tenant in writing that Landlord elects to
terminate this Lease.

“The lessor has the remedy described in Civil Code Section 1951.4 (lessor may
continue the lease in effect after lessee’s breach and abandonment and recover
rent as it becomes due, if lessee has the right to sublet or assign subject only
to reasonable limitations).”

(b) Landlord may terminate Tenant’s right to possession of the Premises at any
time by giving written notice to that effect. No act by Landlord other than
giving written notice to Tenant shall terminate this Lease. Acts of maintenance,
efforts to relet the Premises or the appointment of a receiver on Landlord’s
initiative to protect Landlord’s interest under this Lease shall not constitute
a termination of Tenant’s right to possession. On termination, Landlord shall
have the right to remove all personal property of Tenant and store it at
Tenant’s cost and to recover from Tenant as damages: (i) the worth at the time
of award of unpaid Rent and other sums due and payable which had been earned at
the time of termination; plus (ii) the worth at the time of award of the amount
by which the unpaid Rent and other sums due and payable which would have been
payable after termination until the time of award exceeds the amount of the Rent
loss that Tenant proves could have been reasonably avoided; plus (iii) the worth
at the time of award of the amount by which the unpaid Rent and other sums due
and payable for the balance of the Term after the time of award exceeds the
amount of the Rent loss that Tenant proves could be reasonably avoided; plus
(iv) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform Tenant’s obligations under
this Lease, or which, in the ordinary course of things, would be likely to
result therefrom, including, without limitation, any costs or expenses incurred
by Landlord: (A) in retaking possession of the Premises, including reasonable
attorneys’ fees and costs therefor; (B) maintaining or preserving the Premises
for reletting to a new tenant, including repairs or alterations to the Premises
for the reletting; (C) leasing commissions; (D) any other costs necessary or
appropriate to relet the Premises; and (E) at Landlord’s election, such other
amounts in addition to or in lieu of the foregoing as may be permitted from time
to time by the laws of the State of California.

The “worth at the time of award” of the amounts referred to in
Sections 22.2(b)(i) and 22.2(b)(ii) shall be calculated by allowing interest at
the lesser of twelve percent (12%) per annum or the maximum rate permitted by
law, on the unpaid Rent and other sums due and payable from the termination date
through the date of award. The “worth at the time of award” of the amount
referred to in Section 22.2(b)(iii) shall be calculated by discounting the
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award, plus one percent (1%). Tenant waives redemption or relief from
forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or
under any other present or future law, if Tenant is evicted or Landlord takes
possession of the Premises by reason of any Event of Default by Tenant.

 

-38-

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

22.3 If Landlord shall exercise any one or more remedies hereunder granted or
otherwise available, it shall not be deemed to be an acceptance or surrender of
the Premises by Tenant whether by agreement or by operation of law; it is
understood that such surrender can be effected only by the written agreement of
Landlord and Tenant. No alteration of security devices and no removal or other
exercise of dominion by Landlord over the property of Tenant or others in the
Premises shall be deemed unauthorized or constitute a conversion, Tenant hereby
consenting to the aforesaid exercise of dominion over Tenant’s property within
the Premises after any Event of Default.

22.4 Each right and remedy provided for in this Lease shall be cumulative and
shall be in addition to every other right or remedy provided for in this Lease
or now or hereafter existing at law or in equity or by statute or otherwise,
including, but not limited to, suits for injunctive relief and specific
performance. The exercise or beginning of the exercise by Landlord of any one or
more of the rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity, or by statute or otherwise shall not preclude the
simultaneous or later exercise by Landlord for any or all other rights or
remedies provided for in this Lease or now or hereafter existing at or in equity
or by statute or otherwise. All such rights and remedies shall be considered
cumulative and non-exclusive. All costs incurred by Landlord in connection with
collecting any Rent or other amounts and damages owing by Tenant pursuant to the
provisions of this Lease, or to enforce any provision of this Lease, including
reasonable attorneys’ fees from the date such matter is turned over to an
attorney, whether or not one or more actions are commenced by Landlord, shall
also be recoverable by Landlord from Tenant. If any notice and grace period
required under subparagraphs 22.1(a) or (b) was not previously given, a notice
to pay rent or quit, or to perform or quit, as the case may be, given to Tenant
under any statute authorizing the forfeiture of leases for unlawful detainer
shall also constitute the applicable notice for grace period purposes required
by subparagraphs 22.1(a) or (b). In such case, the applicable grace period under
subparagraphs 22.1(a) or (b) and under the unlawful detainer statute shall run
concurrently after the one such statutory notice, and the failure of Tenant to
cure the default within the greater of the two (2) such grace periods shall
constitute both an unlawful detainer and an Event of Default entitling Landlord
to the remedies provided for in this Lease and/or by said statute.

22.5 If Tenant should fail to make any payment or cure any default hereunder
within the time herein permitted and such failure constitutes an Event of
Default (except in the case where if Landlord in good faith believes that action
prior to the expiration of any cure period under Section 22.1 is necessary to
prevent damage to persons or property, in which case Landlord may act without
waiting for such cure period to expire), Landlord, without being under any
obligation to do so and without thereby waiving such default, may make such
payment and/or remedy such default for the account of Tenant (and enter the
Premises for such purpose), and thereupon, Tenant shall be obligated and hereby
agrees to pay Landlord, upon demand, all reasonable costs, expenses, and
disbursements, plus ten percent (10%) overhead cost incurred by Landlord in
connection therewith.

22.6 In addition to Landlord’s rights set forth above, if Tenant fails to pay
its Rent or any other amounts owing hereunder on the due date thereof more than
two (2) times during any calendar year during the Term, then upon the occurrence
of the third or any subsequent default in the payment of monies during said
calendar year, Landlord, at its sole

 

-39-

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

option, shall have the right to require that Tenant, as a condition precedent to
curing such default, pay to Landlord, in check or money order, in advance, the
Rent and Landlord’s estimate of all other amounts which will become due and
owing hereunder by Tenant for a period of two (2) months following said cure.
All such amounts shall be paid by Tenant within thirty (30) days after notice
from Landlord demanding the same. All monies so paid shall be retained by
Landlord, without interest, for the balance of the Term and any extension
thereof, and shall be applied by Landlord to the last due amounts owing
hereunder by Tenant. If, however, Landlord’s estimate of the Rent and other
amounts for which Tenant is responsible hereunder are inaccurate, when such
error is discovered, Landlord shall pay to Tenant, or Tenant shall pay to
Landlord, within thirty (30) days after written notice thereof, the excess or
deficiency, as the case may be, which is required to reconcile the amount on
deposit with Landlord with the actual amounts for which Tenant is responsible.

22.7 Nothing contained in this Article 22 shall limit or prejudice the right of
Landlord to prove and obtain as damages in any bankruptcy, insolvency,
receivership, reorganization, or dissolution proceeding, an amount equal to the
maximum allowed by any statute or rule of law governing such a proceeding and in
effect at the time when such damages are to be proved, whether or not such
amount be greater, equal, or less than the amounts recoverable, either as
damages or Rent, referred to in any of the preceding provisions of this
Article 22. Notwithstanding anything contained in this Article to the contrary,
any such proceeding or action involving bankruptcy, insolvency, reorganization,
arrangement, assignment for the benefit of creditors, or appointment of a
receiver or trustee, as set forth above, shall be considered to be an Event of
Default only when such proceeding, action, or remedy shall be taken or brought
by or against the then holder of the leasehold estate under this Lease.

22.8 Landlord is entitled to accept, receive, in check or money order, and
deposit any payment made by Tenant for any reason or purpose or in any amount
whatsoever, and apply them at Landlord’s option to any obligation of Tenant, and
such amounts shall not constitute payment of any amount owed, except that to
which Landlord has applied them. No endorsement or statement on any check or
letter of Tenant shall be deemed an accord and satisfaction or recognized for
any purpose whatsoever. The acceptance of any such check or payment shall be
without prejudice to Landlord’s rights to recover any and all amounts owed by
Tenant hereunder and shall not be deemed to cure any other default nor prejudice
Landlord’s rights to pursue any other available remedy, Landlord’s acceptance of
partial payment of Rent does not constitute a waiver of any rights, including
without limitation any right Landlord may have to recover possession of the
Premises.

22.9 In the event that Tenant’s right of possession of the Premises is
terminated prior to the end of the initial Term by reason of an Event of Default
by Tenant, then immediately upon such termination, an amount shall be due and
payable by Tenant to Landlord equal to the unamortized portion as of that date
(which amortization shall be based on an interest rate of eleven percent
(11%) per annum) of the sum of (a) the cost of Landlord’s Work (if any), (b) the
Allowance (if any), (c) the value of any free Base Rent (i.e., the Base Rent
stated in this Lease to be abated as an inducement to Tenant’s entering into
this Lease) enjoyed as of that date by Tenant, and (d) the amount of all
commissions paid by Landlord in order to procure this Lease.

 

-40-

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

22.10 Tenant waives the right to terminate this Lease on Landlord’s default
under this Lease. Tenant’s sole remedy on Landlord’s default is an action for
damages or injunctive or declaratory relief. Landlord’s failure to perform any
of its obligations under this Lease shall constitute a default by Landlord under
this Lease if the failure continues for thirty (30) days after written notice of
the failure from Tenant to Landlord. If the required performance cannot be
completed within thirty (30) days, Landlord’s failure to perform shall
constitute a default under the Lease unless Landlord undertakes to cure the
failure within thirty (30) days and diligently and continuously attempts to
complete this cure as soon as reasonably possible. All obligations of each party
hereunder shall be construed as covenants, not conditions.

ARTICLE 23.

[INTENTIONALLY OMITTED]

ARTICLE 24.

[INTENTIONALLY OMITTED]

ARTICLE 25.

ATTORNEYS’ FEES

25.1 All costs and expenses, including reasonable attorneys’ fees (whether or
not legal proceedings are instituted), involved in collecting rents, enforcing
the obligations of Tenant, or protecting the rights or interests of Landlord
under this Lease, whether or not an action is filed, including without
limitation the cost and expense of instituting and prosecuting legal proceedings
or recovering possession of the Premises after default by Tenant or upon
expiration or sooner termination of this Lease, shall be due and payable by
Tenant on demand, as Additional Rent. In addition, and notwithstanding the
foregoing, if either party hereto shall file any action or bring any proceeding
against the other party arising out of this Lease or for the declaration of any
rights hereunder, the prevailing party in such action shall be entitled to
recover from the other party all costs and expenses, including reasonable
attorneys’ fees incurred by the prevailing party, as determined by the trier of
fact in such legal proceeding. For purposes of this provision, the terms
“attorneys’ fees” or “attorneys’ fees and costs,” or “costs and expenses” shall
mean the fees and expenses of legal counsel (including external counsel and
in-house counsel) of the parties hereto, which include printing, photocopying,
duplicating, mail, overnight mail, messenger, court filing fees, costs of
discovery, and fees billed for law clerks, paralegals, investigators and other
persons not admitted to the bar for performing services under the supervision
and direction of an attorney. For purposes of determining in-house counsel fees,
the same shall be considered as those fees normally applicable to a partner in a
law firm with like experience in such field. In addition, the prevailing party
shall be entitled to recover reasonable attorneys’ fees and costs incurred in
enforcing any judgment arising from a suit or proceeding under this Lease,
including without limitation post-judgment motions, contempt proceedings,
garnishment, levy and debtor and third party examinations, discovery and
bankruptcy litigation, without regard to schedule or rule of court purporting to
restrict such award. This post-judgment award of attorneys’ fees and costs
provision shall be severable from any other provision of this Lease and shall
survive any judgment/award on such suit or arbitration and is not to be deemed
merged into the judgment/award or terminated with the Lease.

 

-41-

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

ARTICLE 26.

NON-WAIVER

26.1 Neither acceptance of any payment by Landlord from Tenant nor, failure by
Landlord to complain of any action, non-action, or default of Tenant shall
constitute a waiver of any of Landlord’s rights hereunder. Time is of the
essence with respect to the performance of every obligation of each party under
this Lease in which time of performance is a factor. Waiver by either party of
any right or remedy arising in connection with any default of the other party
shall not constitute a waiver of such right or remedy or any other right or
remedy arising in connection with either a subsequent default of the same
obligation or any other default. No right or remedy of either party hereunder or
covenant, duty, or obligation of any party hereunder shall be deemed waived by
the other party unless such waiver is in writing, signed by the other party or
the other party’s duly authorized agent.

ARTICLE 27.

RULES AND REGULATIONS

27.1 Such reasonable rules and regulations applying to all lessees in the
Project for the safety, care, and cleanliness of the Project and the
preservation of good order thereon are hereby made a part hereof as Exhibit D,
and Tenant agrees to comply with all such rules and regulations. Landlord shall
have the right at all times to change such rules and regulations or to amend
them in any reasonable and non-discriminatory manner as may be deemed advisable
by Landlord, all of which changes and amendments shall be sent by Landlord to
Tenant in writing and shall be thereafter carried out and observed by Tenant.
Landlord shall not have any liability to Tenant for any failure of any other
lessees of the Project to comply with such rules and regulations.

ARTICLE 28.

ASSIGNMENT BY LANDLORD

28.1 Landlord shall have the right to transfer or assign, in whole or in part,
all its rights and obligations hereunder and in the Premises and the Project. In
such event, no liability or obligation shall accrue or be charged to Landlord
with respect to the period from and after such transfer or assignment and
assumption of Landlord’s obligations by the transferee or assignee.

ARTICLE 29.

LIABILITY OF LANDLORD

29.1 It is expressly understood and agreed that the obligations of Landlord
under this Lease shall be binding upon Landlord and its successors and assigns
and any future owner of the Project only with respect to events occurring during
its and their respective ownership of the Project. In addition, Tenant agrees to
look solely to Landlord’s interest in the Project for recovery of any judgment
against Landlord arising in connection with this Lease, it being agreed that
neither Landlord nor any successor or assign of Landlord nor any future owner of
the Project, nor any partner, shareholder, member, or officer of any of the
foregoing shall ever be personally liable for any such judgment. The limitations
of liability contained in this

 

-42-

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

Section 29.1 shall inure to the benefit of Landlord’s and the Landlord Parties’
present and future partners, beneficiaries, officers, directors, trustees,
shareholders, agents and employees, and their respective partners, heirs,
successors and assigns. Under no circumstances shall any present or future
partner of Landlord (if Landlord is a partnership), or trustee or beneficiary
(if Landlord or any partner of Landlord is a trust), have any liability for the
performance of Landlord’s obligations under this Lease. Notwithstanding any
contrary provision herein, neither Landlord nor the Landlord Parties shall be
liable under any circumstances for any indirect or consequential damages or any
injury or damage to, or interference with, Tenant’s business, including but not
limited to, loss of profits, loss of rents or other revenues, loss of business
opportunity, loss of goodwill or loss of use, in each case, however occurring.

ARTICLE 30.

SUBORDINATION AND ATTORNMENT

30.1 This Lease, at Landlord’s option, shall be subordinate to any present or
future mortgage, ground lease or declaration of covenants regarding maintenance
and use of any areas contained in any portion of the Building, and to any and
all advances made under any present or future mortgage and to all renewals,
modifications, consolidations, replacements, and extensions of any or all of
same. Tenant agrees, with respect to any of the foregoing documents, that no
documentation other than this Lease shall be required to evidence such
subordination. If any holder of a mortgage shall elect for this Lease to be
superior to the lien of its mortgage and shall give written notice thereof to
Tenant, then this Lease shall automatically be deemed prior to such mortgage
whether this Lease is dated earlier or later than the date of said mortgage or
the date of recording thereof. Tenant agrees to execute such documents as may be
further required to evidence such subordination or to make this Lease prior to
the lien of any mortgage or deed of trust, as the case may be, and Tenant’s
failure to do so within ten (10) business days after written demand and delivery
of the applicable documents shall be an Event of Default. Tenant hereby attorns
to all successor owners of the Building, whether or not such ownership is
acquired as a result of a sale through foreclosure or otherwise. As of the date
of this Lease, there is no (a) deed of trust or mortgage encumbering the Project
or (b) ground lease affecting the Building

30.2 Each party shall, at such time or times as the other party may request,
upon not less than ten (10) business days’ prior written request by the
requesting party, sign and deliver to the requesting party a certificate stating
whether this Lease is in full force and effect; whether any amendments or
modifications exist; whether any Monthly Rent has been prepaid and, if so, how
much; whether to the knowledge of the certifying party there are any defaults
hereunder; and in the circumstance where Landlord is the requesting party, such
other information and agreements as may be reasonably requested, it being
intended that any such statement delivered pursuant to this Article may be
relied upon by the requesting party and by any prospective purchaser of all or
any portion of the requesting party’s interest herein, or a holder or
prospective holder of any mortgage encumbering the Building. Tenant’s failure to
deliver such statement within ten (10) days after Landlord’s second written
request therefor shall constitute an Event of Default (as that term is defined
elsewhere in this Lease) and shall conclusively be deemed to be an admission by
Tenant of the matters set forth in the request for an estoppel certificate.

 

-43-

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

30.3 Tenant shall deliver to Landlord prior to the execution of this Lease and
thereafter at any time upon Landlord’s request, Tenant’s most recently available
current audited financial statements, including a balance sheet and profit and
loss statement for the most recent prior year (collectively, the “Statements”),
which Statements shall accurately and completely reflect the financial condition
of Tenant. Landlord shall have the right to deliver the same to any proposed
purchaser of the Building or the Project, and to any encumbrancer of all or any
portion of the Building or the Project, subject to a commercially reasonable
form of confidentiality agreement with Tenant.

30.4 Tenant acknowledges that Landlord is relying on the Statements in its
determination to enter into this Lease, and Tenant represents to Landlord, which
representation shall be deemed made on the date of this Lease and again on the
Commencement Date, that no material change in the financial condition of Tenant,
as reflected in the Statements, has occurred since the date Tenant delivered the
Statements to Landlord. The Statements are represented and warranted by Tenant
to be correct and to accurately and fully reflect Tenant’s true financial
condition as of the date of submission of any Statements to Landlord.

30.5 As a condition to the subordination in Section 30.1 of this Lease to its
mortgage or deed of trust, any future mortgagee or beneficiary shall deliver to
Tenant a written subordination and non-disturbance agreement in recordable form
acceptable to such mortgagee or beneficiary in its sole discretion providing
that so long as Tenant performs all of the terms of this Lease, Tenant’s
possession under this Lease shall not be disturbed and Tenant shall not be
joined by the holder of any mortgage or deed of trust in any action or
proceeding to foreclose thereunder, except where such is necessary for
jurisdictional or procedural reasons. Landlord agrees to use commercially
reasonable efforts to obtain a written subordination and non-disturbance
agreement from such mortgagee or beneficiary in a form reasonably acceptable to
Tenant; provided that Tenant shall pay all costs incurred by Landlord in
obtaining that subordination and non-disturbance agreement. “Commercially
reasonable efforts” of Landlord shall not require Landlord to incur any cost,
expense or liability to obtain such agreement, it being agreed that Tenant shall
be responsible for any fee or review costs charged by such mortgagee or
beneficiary. Landlord’s failure to obtain a non-disturbance, subordination and
attornment agreement for Tenant in a form reasonably acceptable to Tenant shall
have no effect on the rights, obligations and liabilities of Landlord and Tenant
or be considered to be a default by Landlord hereunder.

ARTICLE 31.

HOLDING OVER

31.1 In the event Tenant, or any party claiming under Tenant, retains possession
of the Premises after the Expiration Date or Termination Date, such possession
shall be that of a tenant at sufferance and an unlawful detainer. No tenancy or
interest shall result from such possession, and such parties shall be subject to
immediate eviction and removal. Tenant or any such party shall pay Landlord, as
Base Rent for the period of such holdover, a monthly amount equal to one hundred
fifty percent (150%) of (a) the Base Rent for the last period prior to the date
of such termination plus (b) Additional Rent attributable to Operating Expenses
and Taxes as provided in Article 5 of this Lease during the time of holdover,
together with all other Additional Rent and other amounts payable pursuant to
the terms of this Lease.

 

-44-

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

Such tenancy at sufferance shall be subject to every other applicable term,
covenant and agreement contained herein. Tenant shall also be liable for any and
all damages sustained by Landlord as a result of such holdover. Tenant shall
vacate the Premises and deliver same to Landlord immediately upon Tenant’s
receipt of notice from Landlord to so vacate. The Rent during such holdover
period shall be payable to Landlord on demand. Landlord’s acceptance of Rent if
and after Tenant holds over shall not convert Tenant’s tenancy at sufferance to
any other form of tenancy or result in a renewal or extension of the Term of
this Lease, unless otherwise specified by notice from Landlord to Tenant.

ARTICLE 32.

SIGNS

32.1 No sign, symbol, or identifying marks shall be put upon the Project, the
exterior of the Building, in the halls, elevators, staircases, entrances,
parking areas, or upon the doors or walls, other than within the Premises,
without the prior written approval of Landlord. Should such approval ever be
granted, all signs or lettering shall conform in all respects to the sign and/or
lettering criteria established by Landlord. Landlord, at Landlord’s sole cost
and expense, reserves the right to change the door plaques as Landlord deems
reasonably desirable.

32.2 Landlord shall, at Tenant’s sole cost and expense, install one line of
signage (the “Monument Signage”) on the Building monument sign and at the top of
the Building (the “Building-top Signage”) identifying Tenant’s name. The
graphics, materials, color, design, lettering, size and specifications of
Tenant’s Monument Signage and Building-top Signage shall be subject to the
approval of Landlord and all applicable governmental authorities and shall
conform to Landlord’s approved sign plan for the Building. At the expiration or
earlier termination of this Lease or termination of Tenant’s sign rights as
provided below, Landlord shall, at Tenant’s sole cost and expense, cause the
Monument Signage and Building-top Signage to be removed and the area of the
monument sign and top of the Building affected by the Monument Signage and
Building-top Signage, as applicable, to be restored to the condition existing
prior to the installation of Tenant’s Monument Signage and Building-top Signage.
The right to Monument Signage and Building-top Signage is personal to the
initially named Tenant in this Lease and any Permitted Transferee who is an
assignee of Tenant’s entire interest in this Lease. All of Tenant’s rights to
install and maintain Monument Signage on the monument sign and Building-top
Signage at the top of the Building in accordance with this Section 32.2 shall
permanently terminate upon notice from Landlord following the date upon which
Tenant ceases to occupy at least 33,647 rentable square feet within the
Building.

32.3 Landlord, at Tenant’s sole cost and expense, shall provide Tenant with
Building standard lobby and suite signage.

ARTICLE 33.

HAZARDOUS SUBSTANCES

33.1 Except for Hazardous Material (as defined below) contained in products used
by Tenant for ordinary cleaning and office purposes in quantities not violative
of applicable Environmental Requirements, Tenant shall not permit or cause any
party to bring any Hazardous Material upon the Premises and/or the Project or
transport, store, use, generate, manufacture,

 

-45-

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

dispose, or release any Hazardous Material on or from the Premises and/or the
Project without Landlord’s prior written consent. Tenant, at its sole cost and
expense, shall operate its business in the Premises in strict compliance with
all Environmental Requirements (as defined below) and all requirements of this
Lease. Tenant shall complete and certify to disclosure statements as requested
by Landlord from time to time relating to Tenant’s transportation, storage, use,
generation, manufacture, or release of Hazardous Materials on the Premises, and
Tenant shall promptly deliver to Landlord a copy of any notice of violation
relating to the Premises or the Project of any Environmental Requirement.

33.2 The term “Environmental Requirements” means all applicable present and
future statutes, regulations, ordinances, rules, codes, judgments, permits,
authorizations, orders, policies or other similar requirements of any
governmental authority, agency or court regulating or relating to health,
safety, or environmental conditions on, under, or about the Premises or the
environment, including without limitation, the following: the Comprehensive
Environmental Response, Compensation and Liability Act; the Resource
Conservation and Recovery Act; the Clean Air Act; the Clean Water Act; the Toxic
Substances Control Act and all state and local counterparts thereto; all
applicable California requirements, including, but not limited to,
Sections 25115, 25117, 25122.7, 25140, 25249.8, 25281, 25316 and 25501 of the
California Health and Safety Code and Title 22 of the California Code of
Regulations, Division 4.5, Chapter 11, and any policies or rules promulgated
thereunder as well as any County or City ordinances that may operate independent
of, or in conjunction with, the State programs, and any common or civil law
obligations including, without limitation, nuisance or trespass, and any other
requirements of Article 3 of this Lease. The term “Hazardous Materials” means
and includes any substance, material, waste, pollutant, or contaminant that is
or could be regulated under any Environmental Requirement or that may adversely
affect human health or the environment, including, without limitation, any solid
or hazardous waste, hazardous substance, asbestos, petroleum (including crude
oil or any fraction thereof, natural gas, synthetic gas, polychlorinated
biphenyls (PCBs), and radioactive material). For purposes of Environmental
Requirements, to the extent authorized by law, Tenant is and shall be deemed to
be the responsible party, including without limitation, the “owner” and
“operator” of Tenant’s “facility” and the “owner” of all Hazardous Materials
brought on the Premises by Tenant, its agents, employees, contractors or
invitees, and the wastes, by-products, or residues generated, resulting, or
produced therefrom.

33.3 Tenant, at its sole cost and expense, shall remove all Hazardous Materials
stored, disposed of or otherwise released by Tenant, its assignees, subtenants,
agents, employees, contractors or invitees onto or from the Premises, in a
manner and to a level satisfactory to Landlord in its reasonable discretion, but
in no event to a level and in a manner less than that which complies with all
Environmental Requirements and does not limit any future uses of the Premises or
require the recording of any deed restriction or notice regarding the Premises.
Tenant shall perform such work at any time during the Term of the Lease upon
written request by Landlord or, in the absence of a specific request by
Landlord, before Tenant’s right to possession of the Premises terminates or
expires. If Tenant fails to perform such work within the time period specified
by Landlord or before Tenant’s right to possession terminates or expires
(whichever is earlier), Landlord may at its discretion, and without waiving any
other remedy available under this Lease or at law or equity (including without
limitation an action to compel Tenant to perform such work), perform such work
at Tenant’s cost. Tenant shall pay all costs

 

-46-

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

incurred by Landlord in performing such work within ten (10) days after
Landlord’s request therefor. Such work performed by Landlord is on behalf of
Tenant and Tenant remains the owner, generator, operator, transporter, and/or
arranger of the Hazardous Materials for purposes of Environmental Requirements.
Tenant agrees not to enter into any agreement with any person, including without
limitation any governmental authority, regarding the removal of Hazardous
Materials that have been disposed of or otherwise released onto or from the
Premises without the written approval of Landlord.

33.4 Tenant shall indemnify, defend, and hold Landlord harmless from and against
any and all losses (including, without limitation, diminution in value of the
Premises or the Project and loss of rental income from the Project), claims,
demands, actions, suits, damages (including, without limitation, punitive
damages), expenses (including, without limitation, remediation, removal, repair,
corrective action, or cleanup expenses), and costs (including, without
limitation, actual attorneys’ fees, consultant fees or expert fees and
including, without limitation, removal or management of any asbestos brought
into the Premises or disturbed in breach of the requirements of this Article 33,
regardless of whether such removal or management is required by law) which are
brought or recoverable against, or suffered or incurred by Landlord as a result
of any release of Hazardous Materials or any breach of the requirements under
this Article 33 by Tenant, its agents, employees, contractors, subtenants,
assignees or invitees, regardless of whether Tenant had knowledge of such
noncompliance. The obligations of Tenant under this Article 33 shall survive any
termination of this Lease.

33.5 Landlord shall have access to, and a right to perform inspections and tests
of, the Premises to determine Tenant’s compliance with Environmental
Requirements, its obligations under this Article 33, or the environmental
condition of the Premises. Access shall be granted to Landlord upon Landlord’s
prior notice to Tenant and at such times so as to minimize, so far as may be
reasonable under the circumstances, any disturbance to Tenant’s operations. Such
inspections and tests shall be conducted at Landlord’s expense, unless such
inspections or tests reveal that Tenant has not complied with any Environmental
Requirement, in which case Tenant shall reimburse Landlord for the reasonable
cost of such inspection and tests. Landlord’s receipt of or satisfaction with
any environmental assessment in no way waives any rights that Landlord holds
against Tenant. Tenant shall promptly notify Landlord of any communication or
report that Tenant makes to any governmental authority regarding any possible
violation of Environmental Requirements or release or threat of release of any
Hazardous Materials onto or from the Premises. Tenant shall, within five
(5) days of receipt thereof, provide Landlord with a copy of any documents or
correspondence received from any governmental agency or other party relating to
a possible violation of Environmental Requirements or claim or liability
associated with the release or threat of release of any Hazardous Materials onto
or from the Premises. At any time that Landlord or its agents are on the
Premises, Landlord and its agents shall use their reasonable efforts to minimize
interference with the conduct of Tenant’s business, and if requested by Tenant
shall be accompanied by a representative of Tenant at all times that they are on
the Premises; provided that Tenant’s failure to make a Tenant representative
available at the time of Landlord’s entry into the Premises shall not limit
Landlord’s or Landlord’s officers, agents, representatives’ right to enter the
Premises.

33.6 In addition to all other rights and remedies available to Landlord under
this Lease or otherwise, Landlord may, in the event of a breach of the
requirements of this

 

-47-

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

Article 33 that is not cured within thirty (30) days following notice of such
breach by Landlord, require Tenant to provide financial assurance (such as
insurance, escrow of funds or third party guarantee) in an amount and form
satisfactory to Landlord. The requirements of this Article 33 are in addition to
and not in lieu of any other provision in the Lease.

33.7 Landlord hereby informs Tenant, and Tenant hereby acknowledges, that the
Premises and adjacent properties overlie a former solid waste landfill site
commonly known as the Westport Landfill (“Former Landfill”). Landlord further
informs Tenant, and Tenant hereby acknowledges, that (i) prior testing has
detected the presence of low levels of certain volatile and semi-volatile
organic compounds and other contaminants in the groundwater, in the leachate
from the landfilled solid waste, and/or in certain surface waters of the
Project, as more fully described in the California Regional Water Quality
Control Board, San Francisco Bay Region’s (“Regional Board”) Order No.
R2-2003-0074 (Updated Waste Discharge Requirements and Rescission of Order
No. 94-181) (“Order”), (ii) methane gas is or may be generated by the landfilled
solid waste (item “i” immediately preceding and this item “ii” are hereafter
collectively referred to as the “Landfill Contamination”), and (iii) the
Premises and the Former Landfill are subject to the Order. The Order is attached
hereto as Exhibit H. As evidenced by their initials on said Exhibit H, Tenant
acknowledges that Landlord has provided Tenant with copies of the Order, and
Tenant acknowledges that Tenant and Tenant’s experts (if any) have had ample
opportunity to review the Order and that Tenant has satisfied itself as to the
environmental conditions of the Property and the suitability of such conditions
for Tenant’s intended use of the Property. Additional environmental reports are
available for Tenant’s review at Landlord’s offices. In the event the Regional
Board determines that the majority of the Premises cannot be occupied for a
period in excess of thirty (30) days due to the any Hazardous Materials
conditions related to the Landfill Contamination, then, provided Tenant has not
caused and/or contributed to the incident responsible for said occupancy
restriction, Tenant may terminate this Lease provided Tenant gives Landlord
written notice within five (5) days of Tenant’s receipt of notice that the
Premises cannot be occupied for the purpose referenced in this Lease of its
election to so terminate the Lease in the event Tenant cannot occupy the
majority of the Premises at the conclusion of the thirty (30) day period. In the
event said notice is received by Landlord as required herein and the majority of
the Premises cannot be occupied as referenced above, this Lease shall thereafter
terminate on the date of termination referenced in said Tenant notice (which
date shall not be less than thirty (30) days from the date the Premises are
deemed un-occupiable). Tenant agrees to cooperate and provide Landlord and the
Regional Board or their authorized representatives, upon presentation of
credentials, during normal business hours, immediate entry upon the Premises to
assess any and all aspects of the environmental condition of the Project and its
use, including, but not limited to, conducting any environmental assessment or
audit, taking samples of soil, groundwater or other water, air or building
materials, the inspection of treatment equipment, monitoring equipment or
monitoring methods, or sampling of any discharge governed by the Order.

ARTICLE 34.

COMPLIANCE WITH LAWS AND OTHER REGULATIONS

34.1 Tenant, at its sole cost and expense, shall promptly comply with all laws,
statutes, ordinances, and governmental rules, regulations, or requirements now
in force or which may hereafter become in force, of federal, state, county, and
municipal authorities, including, but

 

-48-

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

not limited to, the Americans with Disabilities Act, with the requirements of
any board of fire underwriters or other similar body now or hereafter
constituted, and with any occupancy certificate issued pursuant to any law by
any public officer or officers, which impose, any duty upon Landlord or Tenant,
insofar as any thereof relate to or affect the condition, use, alteration, or
occupancy of the Premises. Landlord’s approval of Tenant’s plans for any
improvements shall create no responsibility or liability on the part of Landlord
for their completeness, design sufficiency, or compliance with all laws, rules,
and regulations of governmental agencies or authorities, including, but not
limited to, the Americans with Disabilities Act.

34.2 As an inducement to Landlord to enter into this Lease, Tenant hereby
represents and warrants that: (i) Tenant is not, nor is it owned or controlled
directly or indirectly by, any person, group, entity or nation named on any list
issued by the Office of Foreign Assets Control of the United States Department
of the Treasury pursuant to Executive Order 13224 or any similar list or any
law, order, rule or regulation or any Executive Order of the President of the
United States as a terrorist, “Specially Designated National and Blocked Person”
or other banned or blocked person (any such person, group, entity or nation
being hereinafter referred to as a “Prohibited Person”); (ii) Tenant is not (nor
is it owned or controlled, directly or indirectly, by any person, group, entity
or nation which is) acting directly or indirectly for or on behalf of any
Prohibited Person; and (iii) neither Tenant (nor any person, group, entity or
nation which owns or controls Tenant, directly or indirectly) has conducted or
will conduct business or has engaged or will engage in any transaction or
dealing with any Prohibited Person, including without limitation any assignment
of this Lease or any subletting of all or any portion of the Premises or the
making or receiving of any contribution of funds, goods or services to or for
the benefit of a Prohibited Person. Tenant covenants and agrees (a) to comply
with all requirements of law relating to money laundering, anti-terrorism, trade
embargos and economic sanctions, now or hereafter in effect, (b) to immediately
notify Landlord in writing if any of the representations, warranties or
covenants set forth in this Section 34.2 are no longer true or have been
breached or if Tenant has a reasonable basis to believe that they may no longer
be true or have been breached, (c) not to use funds from any Prohibited Person
to make any payment due to Landlord under the Lease and (d) at the request of
Landlord, to provide such information as may be requested by Landlord to
determine Tenant’s compliance with the terms hereof. Any breach by Tenant of the
foregoing representations and warranties shall be deemed an Event of Default by
Tenant under this Lease and shall be covered by the indemnity provisions of
Section 21.1 above. The representations and warranties contained in this
subsection shall be continuing in nature and shall survive the expiration or
earlier termination of this Lease.

34.3 Pursuant to California Civil Code Section 1938, Tenant is hereby notified
that, as of the date hereof, the Property has not undergone an inspection by a
“Certified Access Specialist.” Tenant acknowledges that Landlord has made no
representation regarding compliance of the Premises or the Building with
accessibility standards.

ARTICLE 35.

SEVERABILITY

35.1 This Lease shall be construed in accordance with the laws of the State of
California. If any clause or provision of this Lease is illegal, invalid, or
unenforceable under present or future laws effective during the Term, then it is
the intention of the parties hereto that

 

-49-

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

the remainder of this Lease shall not be affected thereby. It is also the
intention of both parties that in lieu of each clause or provision that is
illegal, or unenforceable, there is added as a part of this Lease a clause or
provision as similar in terms to such illegal, invalid, or unenforceable clause
or provision as may be possible and still be legal, valid, and enforceable.

ARTICLE 36.

NOTICES

36.1 Whenever in this Lease it shall be required or permitted that notice or
demand be given or served by either party to this Lease to or on the other, such
notice or demand shall be given or served in writing and delivered personally,
or forwarded by certified or registered mail, postage prepaid, or recognized
overnight courier, addressed to Landlord’s address and Tenant’s address, as
applicable, as specified in the Basic Lease Information. Either party may change
its address for notice from time to time by serving written notice of the new
address as provided in this Article 36.

36.2 Notice hereunder shall become effective upon (a) delivery in case of
personal delivery and (b) receipt or refusal in case of certified or registered
mail or delivery by overnight courier.

ARTICLE 37.

OBLIGATIONS OF, SUCCESSORS, PLURALITY, GENDER

37.1 Landlord and Tenant agree that all the provisions hereof are to be
construed as covenants and agreements as though the words imparting such
covenants were used in each paragraph hereof, and that, except as restricted by
the provisions hereof, shall bind and inure to the benefit of the parties
hereto, their respective heirs, legal representatives, successors, and assigns.
If the rights of Tenant hereunder are owned by two or more parties, or two or
more parties are designated herein as Tenant, then all such parties shall be
jointly and severally liable for the obligations of Tenant hereunder. Whenever
the singular or plural number, masculine or feminine or neuter gender is used
herein, it shall equally include the other.

ARTICLE 38.

ENTIRE AGREEMENT

38.1 This Lease and any attached addenda or exhibits constitute the entire
agreement between Landlord and Tenant. No prior or contemporaneous written or
oral leases or representations shall be binding. This Lease shall not be
amended, changed, or extended except by written instrument signed by Landlord
and Tenant.

38.2 THE SUBMISSION OF THIS LEASE BY LANDLORD, ITS AGENT OR REPRESENTATIVE FOR
EXAMINATION OR EXECUTION BY TENANT DOES NOT CONSTITUTE AN OPTION OR OFFER TO
LEASE THE PREMISES UPON THE TERMS AND CONDITIONS CONTAINED HEREIN OR A
RESERVATION OF THE PREMISES IN FAVOR OF TENANT, IT BEING INTENDED HEREBY THAT
THIS LEASE SHALL ONLY BECOME EFFECTIVE UPON THE EXECUTION HEREOF BY LANDLORD AND
DELIVERY OF A FULLY EXECUTED LEASE TO TENANT.

 

-50-

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

ARTICLE 39.

CAPTIONS

39.1 Paragraph captions are for Landlord’s and Tenant’s convenience only, and
neither limit nor amplify the provisions of this Lease.

ARTICLE 40.

CHANGES

40.1 Should any mortgagee require a modification of this Lease, which
modification will not bring about any increased cost or expense to Tenant or in
any other way materially and adversely change the rights and obligations of
Tenant hereunder, then and in such event Tenant agrees that this Lease may be so
modified and agrees to execute whatever documents which are reasonably required
therefor and are in form and substance reasonably acceptable to Tenant, and to
deliver the same to Landlord within ten (10) business days following a request
therefor.

ARTICLE 41.

AUTHORITY

41.1 All rights and remedies of Landlord under this Lease, or those which may be
provided by law, may be exercised by Landlord in its own name individually, or
in its name by its agent, and all legal proceedings for the enforcement of any
such rights or remedies, including distress for Rent, unlawful detainer, and any
other legal or equitable proceedings may be commenced and prosecuted to final
judgment and be executed by Landlord in its own name individually or in its name
by its agent. Landlord and Tenant each represent to the other that each has full
power and authority to execute this Lease and to make and perform the agreements
herein contained, and Tenant expressly stipulates that any rights or remedies
available to Landlord, either by the provisions of this Lease or otherwise, may
be enforced by Landlord in its own name individually or in its name by its agent
or principal.

ARTICLE 42.

BROKERAGE

42.1 Tenant represents and warrants to Landlord that it has dealt only with
Tenant’s Broker and Landlord’s Broker, in negotiation of this Lease. Landlord
shall make payment of the brokerage fee due the Landlord’s Broker pursuant to
and in accordance with a separate agreement between Landlord and Landlord’s
Broker. Landlord’s Broker shall pay a portion of its commission to Tenant’s
Broker pursuant to a separate agreement between Landlord’s Broker and Tenant’s
Broker. Except for amounts owing to Landlord’s Broker and Tenant’s Broker, each
party hereby agrees to indemnify and hold the other party harmless of and from
any and all damages, losses, costs, or expenses (including, without limitation,
all attorneys’ fees and disbursements) by reason of any claim of or liability to
any other broker or other person claiming through the indemnifying party and
arising out of or in connection with the negotiation, execution, and delivery of
this Lease. Additionally, except as may be otherwise expressly agreed upon by
Landlord in writing, Tenant acknowledges and agrees that Landlord and/or
Landlord’s agent shall have no obligation for payment of any brokerage fee or
similar compensation to any

 

-51-

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

person with whom Tenant has dealt or may in the future deal with respect to
leasing of any additional or expansion space in the Building or renewals or
extensions of this Lease.

ARTICLE 43.

EXHIBITS

43.1 Exhibits A through I are attached hereto and incorporated herein for all
purposes and are hereby acknowledged by both parties to this Lease.

ARTICLE 44.

APPURTENANCES

44.1 The Premises include the right of ingress and egress thereto and therefrom;
however, Landlord reserves the right to make changes and alterations to the
Building, fixtures and equipment thereof, in the street entrances, doors, halls,
corridors, lobbies, passages, elevators, escalators, stairways, toilets and
other parts thereof which Landlord may deem necessary or desirable; provided
that Tenant at all times has a means of access to the Premises (subject to a
temporary interruption due to Force Majeure Events or necessary maintenance that
cannot reasonably be performed without such interruption of access). Neither
this Lease nor any use by Tenant of the Building or any passage, door, tunnel,
concourse, plaza or any other area connecting the garages or other buildings
with the Building, shall give Tenant any right or easement of such use and the
use thereof may, without notice to Tenant, be regulated or discontinued at any
time and from time to time by Landlord without liability of any kind to Tenant
and without affecting the obligations of Tenant under this Lease.

ARTICLE 45.

PREJUDGMENT REMEDY, REDEMPTION, COUNTERCLAIM, AND JURY

45.1 Tenant, for itself and for all persons claiming through or under it, hereby
expressly waives any and all rights which are, or in the future may be,
conferred upon Tenant by any present or future law to redeem the Premises, or to
any new trial in any action for ejection under any provisions of law, after
reentry thereupon, or upon any part thereof, by Landlord, or after any warrant
to dispossess or judgment in ejection. If Landlord shall acquire possession of
the Premises by summary proceedings, or in any other lawful manner without
judicial proceedings, it shall be deemed a reentry within the meaning of that
word as used in this Lease. In the event that Landlord commences any summary
proceedings or action for nonpayment of Rent or other charges provided for in
this Lease, Tenant shall not interpose any counterclaim of any nature or
description in any such proceeding or action. Tenant and Landlord both waive a
trial by jury of any or all issues arising in any action or proceeding between
the parties hereto or their successors, under or connected with this Lease, or
any of its provisions.

ARTICLE 46.

RECORDING

46.1 Tenant shall not record this Lease but will, at the request of Landlord,
execute a memorandum or notice thereof in recordable form satisfactory to both
Landlord and Tenant specifying the date of commencement and expiration of the
Term of this Lease and other

 

-52-

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

information required by statute. Either Landlord or Tenant may then record said
memorandum or notice of lease at the cost of the recording party.

ARTICLE 47.

MORTGAGEE PROTECTION

47.1 Tenant agrees to give any mortgagees and/or trust deed holders, by
registered mail, a copy of any notice of default served upon Landlord, provided
that prior to such notice Tenant has been notified, in writing of the address of
such mortgagees and/or trust deed holders. Tenant further agrees that if
Landlord shall have failed to cure such default within the time provided for in
this Lease, then the mortgagees and/or trust deed holders shall have an
additional thirty (30) days within which to cure such default or if such default
cannot be cured within that time, then such additional time as may be necessary
to cure such default (including but not limited to commencement of foreclosure
proceedings, if necessary to effect such cure) in which event this Lease shall
not be terminated while such remedies are being so diligently pursued.

ARTICLE 48.

OTHER LANDLORD CONSTRUCTION

48.1 Tenant acknowledges that portions of the Project may be under construction
following Tenant’s occupancy of the Premises, and that such construction may
result in levels of noise, dust, odor, obstruction of access, etc. which are in
excess of that present in a fully constructed project. Tenant hereby waives any
and all rent offsets or claims of constructive eviction which may arise in
connection with such construction. If any excavation or construction is made
adjacent to, upon or within the Building, or any part thereof, Tenant shall
afford to any and all persons causing or authorized to cause such excavation or
construction license to enter upon the Premises for the purpose of doing such
work as such persons shall deem necessary to preserve the Building or any
portion thereof from injury or damage and to support the same by proper
foundations, braces and supports, without any claim for damages or indemnity or
abatement of Rent (subject to the express provisions of this Lease), or of a
constructive or actual eviction of Tenant.

48.2 It is specifically understood and agreed that Landlord has no obligation
and has made no promises to alter, remodel, improve, renovate, repair or
decorate the Premises, the Building, or any part thereof and that no
representations respecting the condition of the Premises or the Building have
been made by Landlord to Tenant except as specifically set forth herein or in
the Tenant Work Letter. However, Tenant hereby acknowledges that Landlord is
currently renovating or may during the Lease Term renovate, improve, alter, or
modify (collectively, the “Renovations”) the Project. Tenant hereby agrees that
such Renovations shall in no way constitute a constructive eviction of Tenant
nor entitle Tenant to any abatement of Rent. Landlord shall have no
responsibility and shall not be liable to Tenant for any injury to or
interference with Tenant’s business arising from the Renovations, nor shall
Tenant be entitled to any compensation or damages from Landlord for loss of the
use of the whole or any part of the Premises or of Tenant’s personal property or
improvements resulting from the Renovations, or for any inconvenience or
annoyance occasioned by such Renovations.

 

-53-

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

48.3 In exercising its rights under this Article 48, Landlord shall make
commercially reasonable efforts to minimize the disruption to Tenant’s business
operations during standard business hours.

ARTICLE 49.

PARKING

49.1 The use by Tenant, its employees and invitees, of the parking facilities of
the Project shall be on the terms and conditions set forth in Exhibit E attached
hereto and by this reference incorporated herein and shall be subject to such
other agreement between Landlord and Tenant as may hereinafter be established
and to such other rules and regulations as Landlord may establish. Tenant, its
employees and invitees shall use the Parking Allocation. Tenant’s use of the
parking spaces shall be confined to the Project. If, in Landlord’s reasonable
business judgment, it becomes necessary, Landlord shall exercise due diligence
to cause the creation of cross-parking easements and such other agreements as
are necessary to permit Tenant, its employees and invitees to use parking spaces
on properties and buildings which are separate legal parcels from the Project.
Tenant acknowledges that other tenants of the Project and the tenants of the
other buildings, their employees and invitees, may be given the right to park at
the Project.

ARTICLE 50.

ELECTRICAL CAPACITY

Tenant covenants and agrees that at all times, its use of electric energy shall
never exceed the capacity of the existing feeders to the Building or the risers
of wiring installation. Any riser or risers to supply Tenant’s electrical
requirements upon written request of Tenant shall be installed by Landlord at
the sole cost and expense of Tenant, if, in Landlord’s sole judgment, the same
are necessary and will not cause or create a dangerous or hazardous condition or
entail excess or unreasonable alterations, repairs or expense or interfere with
or disrupt other tenants or occupants. In addition to the installation of such
riser or risers, Landlord will also, at the sole cost and expense of Tenant,
install all other equipment proper and necessary in connection therewith subject
to the aforesaid terms and conditions.

ARTICLE 51.

OPTION TO EXTEND LEASE

51.1 Extension Option. Tenant shall have the option to extend this Lease (the
“Extension Option”) for one additional term of five (5) years (the “Extension
Period”), upon the terms and conditions hereinafter set forth:

(a) If the Extension Option is exercised, then the Base Rent per annum for such
Extension Period (the “Option Rent”) shall be an amount equal to the Fair Market
Rental Value (as defined hereinafter) for the Premises as of the commencement of
the Extension Option for such Extension Period.

(b) The Extension Option must be exercised by Tenant, if at all, only at the
time and in the manner provided in this Section 51.1(b).

 

-54-

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

(i) If Tenant wishes to exercise the Extension Option, Tenant must, on or before
the date occurring twelve (12) months before the expiration of the initial Lease
Term (but not before the date that is fifteen (15) months before the expiration
of the Initial Lease Term), exercise the Extension Option by delivering written
notice (the “Exercise Notice”) to Landlord. If Tenant timely and properly
exercises its Extension Option, the Lease Term shall be extended for the
Extension Period upon all of the terms and conditions set forth in the Lease, as
amended, except that the Base Rent for the Extension Period shall be as provided
in Section 51.1(a) and Tenant shall have no further options to extend the Lease
Term.

(ii) If Tenant fails to deliver a timely Exercise Notice, Tenant shall be
considered to have elected not to exercise the Extension Option.

(c) It is understood and agreed that the Extension Option hereby granted is
personal to Tenant and is not transferable except to a Permitted Transferee in
connection with an assignment of Tenant’s entire interest in this Lease. In the
event of any assignment or subletting of the Premises or any part thereof (other
than to a Permitted Transferee), the Extension Option shall automatically
terminate and shall thereafter be null and void.

(d) Tenant’s exercise of the Extension Option shall, if Landlord so elects in
its absolute discretion, be ineffective in the event that (i) an Event of
Default by Tenant remains uncured at the time of delivery of the Exercise Notice
or at the commencement of the Extension Period, or (ii) Tenant shall have
reduced the size of the Premises below 25,000 rentable square feet by agreement
with Landlord or pursuant to an express right in this Lease.

51.2 Fair Market Rental Value. The provisions of this Section shall apply in any
instance in which this Lease provides that the Fair Market Rental Value is to
apply.

(a) “Fair Market Rental Value” means the annual amount per square foot that a
willing tenant would pay and a willing landlord would accept in arm’s length
negotiations, without any additional inducements, for a lease of the applicable
space on the applicable terms and conditions for the applicable period of time.
Fair Market Rental Value shall be determined considering the most recent new
direct leases (and market renewals and extensions, if applicable) in the
Building and in Comparable Buildings owned or managed by Landlord in the Market
Area. If there are no such direct leases that are recent, consideration shall be
given to the most recent new direct leases (and market renewals and extensions,
if applicable) in other Comparable Buildings in the Market Area.

(b) In determining the rental rate of comparable space, the parties shall
include all escalations and take into consideration the following concessions:

(i) Rental abatement concessions, if any, being granted to tenants in connection
with the comparable space;

(ii) Tenant improvements or allowances provided or to be provided for the
comparable space, taking into account the value of the existing improvements in
the Premises, based on the age, quality, and layout of the improvements.

 

-55-

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

(c) If in determining the Fair Market Rental Value the parties determine that
the economic terms of leases of comparable space include a tenant improvement
allowance, Landlord may, at Landlord’s sole option, elect to do the following:

(i) Grant some or all of the value of the tenant improvement allowance as an
allowance for the refurbishment of the Premises; and

(ii) Reduce the Base Rent component of the Fair Market Rental Value to be an
effective rental rate that takes into consideration the total dollar value of
that portion of the tenant improvement allowance that Landlord has elected not
to grant to Tenant (in which case that portion of the tenant improvement
allowance evidenced in the effective rental rate shall not be granted to
Tenant).

51.3 Determination of Fair Market Rental Value. The determination of Fair Market
Rental Value shall be as provided in this Section 51.3.

(a) Negotiated Agreement. Landlord and Tenant shall diligently attempt in good
faith to agree on the Fair Market Rental Value on or before the tenth (10th) day
after Tenant’s exercise of the Extension Option (the “Outside Agreement Date”).

(b) Parties’ Separate Determinations. If Landlord and Tenant fail to reach
agreement on or before the Outside Agreement Date, Landlord and Tenant shall
each make a separate determination of the Fair Market Rental Value and notify
the other party of this determination within five (5) days after the Outside
Agreement Date.

(i) Two Determinations. If each party makes a timely determination of the Fair
Market Rental Value, those determinations shall be submitted to arbitration in
accordance with subsection (c).

(ii) One Determination. If Landlord or Tenant fails to make a determination of
the Fair Market Rental Value within the five (5) day period, that failure shall
be conclusively considered to be that party’s approval of the Fair Market Rental
Value submitted within the five (5) day period by the other party.

(c) Arbitration. If both parties make timely individual determinations of the
Fair Market Rental Value under subsection (b), the Fair Market Rental Value
shall be determined by arbitration under this subsection (c).

(i) Scope of Arbitration. The determination of the arbitrators shall be limited
to the sole issue of whether Landlord’s or Tenant’s submitted Fair Market Rental
Value is the closest to the actual Fair Market Rental Value as determined by the
arbitrators, taking into account the requirements of Section 51.2.

(ii) Qualifications of Arbitrator(s). The arbitrators must be licensed real
estate brokers who have been active in the leasing of commercial multi-story
properties in the Market Area over the five-year period ending on the date of
their appointment as arbitrator(s).

 

-56-

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

(iii) Parties’ Appointment of Arbitrators. Within fifteen (15) days after the
Outside Agreement Date, Landlord and Tenant shall each appoint one arbitrator
and notify the other party of the arbitrator’s name and business address.

(iv) Appointment of Third Arbitrator. If each party timely appoints an
arbitrator, the two (2) arbitrators shall, within ten (10) days after the
appointment of the second arbitrator, agree on and appoint a third arbitrator
(who shall be qualified under the same criteria set forth above for
qualification of the initial two (2) arbitrators) and provide notice to Landlord
and Tenant of the arbitrator’s name and business address.

(v) Arbitrators’ Decision. Within thirty (30) days after the appointment of the
third arbitrator, the three (3) arbitrators shall decide whether the parties
will use Landlord’s or Tenant’s submitted Fair Market Rental Value and shall
notify Landlord and Tenant of their decision. The decision of the majority the
three (3) arbitrators shall be binding on Landlord and Tenant.

(vi) If Only One Arbitrator is Appointed. If either Landlord or Tenant fails to
appoint an arbitrator within fifteen (15) days after the Outside Agreement Date,
the arbitrator timely appointed by one of them shall reach a decision and notify
Landlord and Tenant of that decision within thirty (30) days after the
arbitrator’s appointment. The arbitrator’s decision shall be binding on Landlord
and Tenant.

(vii) If Only Two Arbitrators Are Appointed. If each party appoints an
arbitrator in a timely manner, but the two (2) arbitrators fail to agree on and
appoint a third arbitrator within the required period, the arbitrators shall be
dismissed without delay and the issue of Fair Market Rental Value shall be
submitted to binding arbitration under the real estate arbitration rules of
JAMS, subject to the provisions of this section.

(viii) If No Arbitrator Is Appointed. If Landlord and Tenant each fail to
appoint an arbitrator in a timely manner, the matter to be decided shall be
submitted without delay to binding arbitration under the real estate arbitration
rules of JAMS subject the provisions of this Section 51.3(c).

51.4 Cost of Arbitration. The cost of the arbitration shall be paid by the party
whose submitted Fair Market Rental Value is not selected by the arbitrators.

ARTICLE 52.

TELECOMMUNICATIONS LINES AND EQUIPMENT

52.1 Location of Tenant’s Equipment and Landlord Consent:

52.1.1 Tenant may install, maintain, replace, remove and use communications or
computer wires, cables and related devices (collectively, the “Lines”) at the
Building in or serving the Premises only with Landlord’s prior written consent,
which consent may not be unreasonably withheld, conditioned or delayed. Tenant
shall locate all electronic telecommunications equipment within the Premises and
shall coordinate the location of all Lines with Landlord. Any request for
consent shall contain such information as Landlord may request.

 

-57-

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

52.1.2 Landlord’s approval of, or requirements concerning, the Lines or any
equipment related thereto, the plans, specifications or designs related thereto,
the contractor or subcontractor, or the work performed hereunder, shall not be
deemed a warranty as to the adequacy or appropriateness thereof, and Landlord
hereby disclaims any responsibility or liability for the same.

52.1.3 If Landlord consents to Tenant’s proposal, Tenant shall pay all of
Tenant’s and Landlord’s third party costs in connection therewith (including
without limitation all costs related to new Lines) and shall use, maintain and
operate the Lines and related equipment in accordance with and subject to all
laws governing the Lines and equipment and at Tenant’s sole risk and expense.
Tenant shall comply with all of the requirements of this Lease concerning
alterations in connection with installing the Lines. As soon as the work is
completed, Tenant shall submit as-built drawings to Landlord.

52.1.4 Landlord reserves the right to require that Tenant remove any Lines
located in or serving the Premises which are installed in violation of these
provisions, or which are at any time in violation of any laws or present a
dangerous or potentially dangerous condition (whether such Lines were installed
by Tenant or any other party), within three (3) days after written notice.

52.2 Reallocation of Line Space. Landlord may (but shall not have the obligation
to) (a) install and relocate Lines at the Building; and (b) monitor and control
the installation, maintenance, replacement and removal of, the allocation and
periodic re-allocation of available space (if any) for, and the allocation of
excess capacity (if any) on, any Lines now or hereafter installed at the
Building by Landlord, Tenant or any other party.

52.3 Line Problems. Except to the extent arising from the gross negligence or
willful misconduct of Landlord or Landlord’s contractors, agents or employees,
Landlord shall have no liability for damages arising from, and Landlord does not
warrant that the Tenant’s use of any Lines will be free from the following
(collectively called “Line Problems”): (a) any shortages, failures, variations,
interruptions, disconnections, loss or damage caused by the installation,
maintenance, or replacement, use or removal of Lines by or for other tenants or
occupants in the Building, by any failure of the environmental conditions or the
power supply for the Building to conform to any requirement of the Lines or any
associated equipment, or any other problems associated with any Lines by any
other cause; (b) any failure of any Lines to satisfy Tenant’s requirements; or
(c) any eavesdropping or wiretapping by unauthorized parties. Landlord in no
event shall be liable for damages by reason of loss of profits, business
interruption or other consequential damage arising from any Line Problems.

52.4 Electromagnetic Fields. If Tenant at any time uses any equipment that may
create an electromagnetic field and/or radio frequency exceeding the normal
insulation ratings of ordinary twisted pair riser cable or cause radiation
higher than normal background radiation, Landlord reserves the right to require
Tenant to appropriately insulate that equipment and the Lines therefor
(including without limitation riser cables), and take such other remedial action
at Tenant’s sole cost and expense as Landlord may require in its sole discretion
to prevent such excessive electromagnetic fields, radio frequency or radiation.

 

-58-

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

52.5 Removal of Electrical and Telecommunications Wires.

52.5.1 Within thirty (30) days after the expiration or sooner termination of the
Lease, Landlord may elect by written notice to Tenant to:

(a) Retain any or all Lines installed by Tenant in the risers of the Building;

(b) Remove any or all such Lines and restore the Premises and risers to their
condition existing prior to the installation of the Lines (“Wire Restoration
Work”). Landlord shall perform such Wire Restoration Work at Tenant’s sole cost
and expense; or

(c) Require Tenant to perform the Wire Restoration Work at Tenant’s sole cost
and expense.

52.5.2 In the event Landlord elects to retain the Lines, Tenant covenants that
Tenant shall have good right to surrender such Lines, free of all liens and
encumbrances, and that all Lines shall be left in their then existing condition,
properly labeled at each end and in each telecommunications/electrical closet
and junction box, and in a condition that is not hazardous.

52.5.3 In the event Tenant fails or refuses to pay all costs of the Wire
Restoration Work within ten (10) days of Tenant’s receipt of Landlord’s notice
requesting Tenant’s reimbursement for or payment of such costs, Landlord may
apply all or any portion of Tenant’s Security Deposit toward the payment of such
unpaid costs relative to the Wire Restoration Work. The retention or application
of such Security Deposit by Landlord pursuant to this clause does not constitute
a limitation on or waiver of Landlord’s right to seek further remedy under law
or equity. The provisions of this clause shall survive the expiration or sooner
termination of the Lease.

ARTICLE 53.

ERISA

53.1 It is understood that from time to time during the Lease Term, Landlord may
be subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”) and as a result may be prohibited by law from
engaging in certain transactions. Tenant represents and warrants to the best of
its knowledge after due inquiry that at the time this Lease is entered into and
at any time thereafter when its terms are amended or modified, neither Tenant
nor its affiliates (within the meaning of part VI(c) of Department of Labor
Prohibited Transaction Class Exemption 84-14 (“PTE 84-14”, as amended), has or
will have the authority to appoint or terminate The Prudential Insurance Company
of America (“Prudential”) as an investment manager to any employee benefit plan
then holding a ten percent (10%) or greater interest in the Prudential separate
account PRISA II, nor the authority to negotiate the terms of any management
agreement between Prudential and any such employee pension benefit plan for its
investment in PRISA II. Further, Tenant is not “related” to Prudential within
the meaning of part VI(h) of PTE 84-14.

 

-59-

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

ARTICLE 54.

LETTER OF CREDIT

54.1 Letter of Credit. Tenant agrees to provide, at Tenant’s sole cost and
expense, a Letter of Credit (as defined below) in the Required Amount (as
defined below) as additional security for the faithful performance and
observance by Tenant of all of the provisions of this Lease, on the terms and
conditions set forth below. The use, application or retention of the Letter of
Credit, or any portion thereof, by Landlord shall not prevent Landlord from
exercising any other right or remedy provided by this Lease or by law, it being
intended that Landlord shall not first be required to proceed against the Letter
of Credit and the Letter of Credit shall not operate as a limitation on any
recovery to which Landlord may otherwise be entitled. As used herein the term
“Required Amount” initially means $605,651.40. In the event that Tenant does not
receive full approval from the U.S. Food and Drug Administration for the Senza®
Spinal Cord Stimulation System (“FDA Approval”) by December 31, 2015, then the
Required Amount shall be increased to $1,211,302.80. Tenant’s failure to replace
the Letter of Credit then being held by Landlord with a new Letter of Credit in
the new Required Amount or amend the then-existing Letter of Credit to that new
Required Amount by January 15, 2016, shall constitute an Event of Default
without the right to any notice or cure period. Subject to the remaining terms
of this Article 54, and provided the Reduction Conditions (as defined below)
have been satisfied at the particular reduction effective date, Tenant shall
have the right to reduce the Required Amount so that the new Required Amount
shall be $605,651.40 effective at any time after December 31, 2015. If Tenant is
entitled to a reduction in the Required Amount, Tenant shall provide Landlord
with written notice requesting that the Required Amount be reduced as provided
above (the “Reduction Notice”). If Tenant provides Landlord with a Reduction
Notice, and Tenant is entitled to reduce the Required Amount as provided herein,
the reduction shall be effectuated by Tenant replacing the Letter of Credit then
being held by Landlord with a new Letter of Credit in the new Required Amount or
amending the then-existing Letter of Credit to that new Required Amount. The
term “Reduction Conditions” means the following conditions:

(1) Tenant has received FDA Approval after December 31, 2015.

(2) No Event of Default shall have occurred and be continuing under this Lease.

54.2 Delivery of Letter of Credit. (a) Tenant shall cause a Letter of Credit, in
the amount of the Required Amount to be issued by the L/C Bank (as defined
below) in favor of Landlord, and its successors, assigns and transferees;
(b) Tenant will cause the Letter of Credit to remain in full force and effect
during the entire Lease Term and thereafter until sixty (60) days after
expiration or earlier termination of the Lease; and (c) the initial Letter of
Credit will be delivered to Landlord upon the execution and delivery of this
Lease by Tenant. So long as no Event of Default then exists, Landlord shall
return the Letter of Credit to Tenant within sixty (60) days after the
Expiration Date. The specific requirements for the Letter of Credit and the
rights of Landlord to make draws thereon will be as set forth in this Article
54. All of Tenant’s rights and all of Landlord’s obligations under this Lease
are strictly contingent on Tenant’s

 

-60-

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

delivering and thereafter causing the Letter of Credit to remain in full force
and effect during the entire Lease Term.

54.3 Draws on the Letter of Credit. Immediately upon, and at any time or from
time to time after, the occurrence of any one or more Draw Events (as defined
below), Landlord will have the unconditional right to draw on the Letter of
Credit in accordance with this Article 54. Upon the payment to Landlord of the
Draw Proceeds, Landlord will hold the Draw Proceeds in its own name and for its
own account, without liability for interest, to use and apply any and all of the
Draw Proceeds only (a) to cure any Event of Default by Tenant; (b) to pay any
other sum to which Landlord becomes obligated by reason of Tenant’s Event of
Default under this Lease; or (c) to compensate Landlord for any monetary loss or
damage which Landlord suffers thereby arising from Tenant’s Event of Default
under this Lease. In addition, if the Draw Event is the failure of Tenant to
renew the Letter of Credit as required hereunder, then Landlord shall be
entitled to draw the entire Letter of Credit as a cash security deposit, held as
a pledge under the California Uniform Commercial Code to secure Tenant’s
obligations under this Lease. Among other things, it is expressly understood
that the Draw Proceeds will not be considered an advance payment of Base Rent or
Additional Rent or a measure of Landlord’s damages resulting from any Event of
Default hereunder (past, present or future). Further, immediately upon the
occurrence and during the continuance of any one or more Draw Events, Landlord
may, from time to time and without prejudice to any other remedy, use the Draw
Proceeds (whether from a contemporaneous or prior draw on the Letter of Credit)
to the extent necessary to make good any arrearages of Base Rent or Additional
Rent, to pay to Landlord any and all amounts to which Landlord is entitled in
connection with the pursuit of any one or more of its remedies hereunder, and to
compensate Landlord for any and all other damage, injury, expense or liability
caused to Landlord by any and all such Events of Default. Any delays in
Landlord’s draw on the Letter of Credit or in Landlord’s use of the Draw
Proceeds as provided in this Article 54 will not constitute a waiver by Landlord
of any of its rights hereunder with respect to the Letter of Credit or the Draw
Proceeds. Following any such application of the Draw Proceeds, Tenant will
either pay to Landlord on demand the cash amount so applied in order to restore
the Draw Proceeds to the full amount thereof immediately prior to such
application or cause the Letter of Credit to be replenished to its full amount
thereunder. Failure to either pay that cash amount or cause the Letter of Credit
to be replenished to its full amount thereunder within three (3) days after that
application of the Draw Proceeds shall constitute an Event of Default without
the right to any notice or cure period. Landlord will not be liable for any
indirect, consequential, special or punitive damages incurred by Tenant arising
from a claim that Landlord violated the bankruptcy code’s automatic stay in
connection with any draw by Landlord of any Draw Proceeds, Landlord’s liability
(if any) under such circumstances being limited to the reimbursement of direct
costs as and to the extent expressly provided in this Section 54.3. Nothing in
this Lease or in the Letter of Credit will confer upon Tenant any property
rights or interests in any Draw Proceeds; provided, however, that upon the
expiration or earlier termination of this Lease, and so long as there then exist
no Draw Events or Events of Default hereunder, Landlord agrees to return of any
remaining unapplied balance of the Draw Proceeds then held by Landlord to
Tenant, and the Letter of Credit itself (if and to the extent not previously
drawn in full) to the L/C Bank. Landlord may draw on the Letter of Credit and/or
apply any Security Deposit in any order.

54.4 Applicable Definitions.

 

-61-

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

“Draw Event” means each of the following events:

(1) the occurrence of any one or more of the following which shall have also
been preceded, simultaneously accompanied, or succeeded by an Event of Default
under this Lease regardless of the absence of any notice of default which might
otherwise be required with respect to an Event of Default if the giving of
notice to Tenant about such breach by Tenant is stayed or barred due to one of
the following events: (i) Tenant’s filing of a petition under any chapter of the
Bankruptcy Code, or under any federal, state or foreign bankruptcy or insolvency
statute now existing or hereafter enacted, or Tenant’s making a general
assignment or general arrangement for the benefit of creditors, (ii) the filing
of an involuntary petition under any chapter of the Bankruptcy Code, or under
any federal, state or foreign bankruptcy or insolvency statute now existing or
hereafter enacted, or the filing of a petition for adjudication of bankruptcy or
for reorganization or rearrangement, by or against Tenant and such filing not
being dismissed within sixty (60) days, (iii) the entry of an order for relief
under any chapter of the Bankruptcy Code, or under any federal, state or foreign
bankruptcy or insolvency statute now existing or hereafter enacted, (iv) the
appointment of a “custodian,” as such term is defined in the Bankruptcy Code (or
of an equivalent thereto under any federal, state or foreign bankruptcy or
insolvency statute now existing or hereafter enacted), for Tenant, or the
appointment of a trustee or receiver to take possession of substantially all of
Tenant’s assets located at the Premises or of Tenant’s interest in this Lease
and possession not being restored to Tenant within sixty (60) days, or (v) the
subjection of all or substantially all of Tenant’s assets located at the
Premises or of Tenant’s interest in this Lease to attachment, execution or other
judicial seizure and such subjection not being discharged within ninety
(90) days;

(2) the failure of Tenant, not less than thirty (30) days prior to the stated
expiration date of the Letter of Credit then in effect, to cause an extension,
renewal or replacement issuance of the Letter of Credit, to be effected, which
extension, renewal or replacement issuance will be made by an L/C Bank, will
otherwise meet all of the requirements of the initial Letter of Credit
hereunder, which failure will be an Event of Default under this Lease;

(3) the failure of Tenant to make when due any payment of Base Rent, of any
monthly installment of any Additional Rent, or pay any other monetary obligation
within five (5) days after the amount is due; provided that in the event Tenant
is entitled to a notice prior to the occurrence of an Event of Default for
non-payment of Base Rent pursuant to Section 22.1(a), this Draw Event shall not
be deemed to have occurred until expiration of five (5) days after that notice
(or, if Landlord is prevented from giving notice by application of the
bankruptcy code’s automatic stay, any failure of Tenant to make when due any
payment of Base Rent, of any monthly installment of any Additional Rent, or to
pay any other monetary obligation within five (5) days after the amount is due).

 

-62-

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

(4) the payment by Landlord of any sum to cure a failure by Tenant to comply
with any non-monetary obligation hereunder which Tenant has not cured within
thirty (30) days after notice thereof by Landlord (or, if Landlord is prevented
from giving notice by application of the bankruptcy code’s automatic stay, the
payment of Landlord of any sum to cure a failure by Tenant to comply with any
non-monetary obligation hereunder that Tenant has not cured within thirty
(30) days from the date of the breach).

“Draw Proceeds” means the proceeds of any draw or draws made by Landlord under
the Letter of Credit, together with any and all interest accruing thereon.

“L/C Bank” means any United States bank which is approved by Landlord in
Landlord’s sole discretion. Landlord hereby approves Bank of America, N.A., as
the L/C Bank for the initial Letter of Credit.

54.4.2 “Letter of Credit” means that certain one-year irrevocable letter of
credit, in the Required Amount, issued by the L/C Bank, as required under
Section 54.2 and, if applicable, as extended, renewed, replaced or modified from
time to time in accordance with this Lease, which letter of credit will be
transferable and in substantially the same form as attached Exhibit I.

54.5 Transfer of Letter of Credit. The Letter of Credit shall not be mortgaged,
assigned or encumbered in any manner whatsoever by Tenant. Tenant acknowledges
that Landlord has the right to transfer or mortgage its interest in the Premises
and the Building and in this Lease and Tenant agrees that in the event of any
such transfer or mortgage, Landlord shall have the right to transfer or assign
the Letter of Credit and/or the Draw Proceeds to the transferee or mortgagee,
and in such event, Tenant shall look solely to such transferee or mortgagee for
return of the Letter of Credit and/or the Draw Proceeds so transferred. Tenant
shall pay all fees and charges of the L/C Bank with respect to any transfer of
the Letter of Credit. Tenant shall, within ten (10) business days of written
request by Landlord, execute such further instruments or assurances as Landlord
may reasonably deem necessary to evidence or confirm Landlord’s transfer or
assignment of the Letter of Credit and/or the Draw Proceeds to such transferee
or mortgagee.

54.6 Letter of Credit is Not Security Deposit. Landlord and Tenant acknowledge
and agree that in no event or circumstance shall the Letter of Credit, any
renewal thereof or substitute therefor or the proceeds thereof be (i) deemed to
be or treated as a “security deposit” within the meaning of California Civil
Code Section 1950.7, (ii) subject to the terms of such Section 1950.7, or
(iii) intended to serve as a “security deposit” within the meaning of such
Section 1950.7. The parties hereto (A) recite that the Letter of Credit is not
intended to serve as a security deposit and such Section 1950.7 and any and all
other laws, rules and regulations applicable to security deposits in the
commercial context (“Security Deposit Laws”) shall have no applicability or
relevancy thereto and (B) waive any and all rights, duties and obligations
either party may now or, in the future, will have relating to or arising from
the Security Deposit Laws. Notwithstanding the foregoing, to the extent
California Civil Code 1950.7 in any way: (a) is determined to be applicable to
this Lease or the Letter of Credit (or any proceeds thereof); or (b) controls
Landlord’s rights to draw on the Letter of Credit or apply the proceeds of the

 

-63-

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

Letter of Credit to any amounts due under this Lease or any damages Landlord may
suffer following termination of this Lease, then Tenant fully and irrevocably
waives the benefits and protections of Section 1950.7 of the California Civil
Code, it being agreed that Landlord may recover from the Letter of Credit (or
its proceeds) all of Landlord’s damages under this Lease and California law
including, but not limited to, any damages accruing upon the termination of this
Lease in accordance with this Lease and Section 1951.2 of the California Civil
Code.

54.7 Substitute Letter of Credit. In the event the L/C Bank is declared
insolvent by the FDIC or is closed for any reason, Tenant shall immediately
provide a substitute Letter of Credit meeting the requirements of this
Article 54 from another United States bank which is approved by Landlord in
Landlord’s sole discretion.

 

-64-

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

IN WITNESS WHEREOF, Landlord and Tenant, acting herein through duly authorized
individuals, have caused these presents to be executed as of the date first
above written.

 

TENANT:

NEVRO CORP., a Delaware corporation

By:

/s/ Andrew Galligan

Andrew Galligan CFO

[Printed Name and Title]

If Tenant is a corporation, this instrument must be executed by the chairman of
the board, the president or any vice president and the secretary, any assistant
secretary, the chief financial officer or any assistant financial officer or any
assistant treasurer of such corporation, unless the bylaws or a resolution of
the board of directors shall otherwise provide, in which case the bylaws or a
certified copy of the resolution, as the case may be, must be attached to this
instrument.

Tenant’s NAICS Code:                     

 

-65-

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

LANDLORD:

WESTPORT OFFICE PARK, LLC,

a California limited liability company

By: 

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, acting
solely on behalf of and for the benefit of, and with its liability limited to
the assets of, its insurance company separate account, PRISA II, its member

By:

/s/ Jeffrey D. Mills

Jeffrey D. Mills Vice President [Printed Name and Title]

 

-66-

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

EXHIBIT A

The Project

(See attached)

 

Exhibit A

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

Exhibit A

 

LOGO [g850984dsp_071.jpg]

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

EXHIBIT B

PREMISES

(See Attached)

 

Exhibit B

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

LOGO [g850984dsp_073.jpg]

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

LOGO [g850984dsp_074.jpg]

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

EXHIBIT C

WORK LETTER

TENANT WORK LETTER

This Tenant Work Letter (“Tenant Work Letter”) sets forth the terms and
conditions relating to the construction of improvements for the Premises. All
references in this Tenant Work Letter to “the Lease” shall mean the relevant
portions of the Lease to which this Tenant Work Letter is attached as Exhibit C.

Section 1

BASE, SHELL AND CORE

Landlord has previously constructed the base, shell, and core (i) of the
Premises and (ii) of the floor(s) of the Building on which the Premises are
located (collectively, the “Base, Shell, and Core”), and Tenant shall accept the
Base, Shell and Core in its current “As-Is” condition existing as of the date of
the Lease and the Commencement Date. Landlord shall install in the Premises
certain “Tenant Improvements” (as defined below) pursuant to the provisions of
this Tenant Work Letter. Except for the Tenant Improvement work described in
this Tenant Work Letter and except for the Tenant Improvement Allowance set
forth below, Landlord shall not be obligated to make or pay for any alterations
or improvements to the Premises, the Building or the Project.

Section 2

TENANT IMPROVEMENTS

2.1 Tenant Improvement Allowance. Tenant shall be entitled to a one-time tenant
improvement allowance (the “Tenant Improvement Allowance”) in the amount of up
to, but not exceeding $45.00 per rentable square foot of the Premises (i.e., up
to $2,271,150.00, based on 50,470 rentable square feet in the Premises), for the
costs relating to the design and construction of Tenant’s improvements which are
permanently affixed to the Premises (the “Tenant Improvements”). In no event
shall Landlord be obligated to make disbursements pursuant to this Tenant Work
Letter in a total amount which exceeds the Tenant Improvement Allowance. Tenant
shall not be entitled to receive any cash payment or credit against Rent or
otherwise for any portion of the Tenant Improvement Allowance which is not used
to pay for the Tenant Improvement Allowance Items (as such term is defined
below). In no event shall the Tenant Improvement Allowance be used for purposes
of constructing improvements in the Premises for purposes of offering space for
sublease or for the benefit of a subtenant.

2.2 Disbursement of the Tenant Improvement Allowance. Except as otherwise set
forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be
disbursed by Landlord, only for the following items and costs (collectively, the
“Tenant Improvement Allowance Items”):

 

Exhibit C

-1-

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

2.2.1 Payment of the fees of the “Architect” and the “Engineers,” as those terms
are defined in Section 3.1 of this Tenant Work Letter may be deducted from the
Tenant Improvement Allowance to pay for such fees), and payment of the fees
incurred by, and the cost of documents and materials supplied by, Landlord and
Landlord’s consultants in connection with the preparation and review of the
“Construction Drawings,” as that term is defined in Section 3.1 of this Tenant
Work Letter (which may include any and all amounts incurred prior to the date
hereof);

2.2.2 The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements;

2.2.3 The cost of construction of the Tenant Improvements, including, without
limitation, contractors’ fees and general conditions, testing and inspection
costs, costs of utilities, trash removal, parking and hoists;

2.2.4 The cost of any changes in the Base, Shell and Core when such changes are
required by the Construction Drawings (including if such changes are due to the
fact that such work is prepared on an unoccupied basis), such cost to include
all direct architectural and/or engineering fees and expenses incurred in
connection therewith;

2.2.5 The cost of any changes to the Construction Drawings or Tenant
Improvements required by any applicable laws;

2.2.6 Sales and use taxes and Title 24 fees;

2.2.7 “Landlord’s Supervision Fee,” as that term is defined in Section 4.3.2 of
this Tenant Work Letter;

2.2.8 The costs and expenses associated with complying with all national, state
and local codes, including California Energy Code, Title 24, including, without
limitation, all costs associated with any lighting or HVAC retrofits required
thereby; and

2.2.9 All other costs to be expended by Landlord in connection with the
construction of the Tenant Improvements.

2.3 Specifications for Building Standard Components. Landlord has established
specifications (the “Specifications”) for the Building standard components to be
used in the construction of the Tenant Improvements in the Premises, which
Specifications have been received by Tenant. Unless otherwise agreed to by
Landlord, the Tenant Improvements shall comply with the Specifications. Landlord
may make changes to the Specifications from time to time.

Section 3

CONSTRUCTION DRAWINGS

3.1 Selection of Architect/Construction Drawings. Landlord shall retain an
architect/space planner (the “Architect”) to prepare the “Construction
Drawings,” as that term is

 

Exhibit C

-2-

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

defined in this Section 3.1. Landlord shall retain Landlord’s engineering
consultants (the “Engineers”) to prepare all plans and engineering working
drawings relating to the structural, mechanical, electrical, plumbing, HVAC,
lifesafety, and sprinkler work in the Premises. The plans and drawings to be
prepared by Architect and the Engineers hereunder shall be known collectively as
the “Construction Drawings.” Notwithstanding that any Construction Drawings are
reviewed by Landlord or prepared by its Architect, Engineers and consultants,
and notwithstanding any advice or assistance which may be rendered to Tenant by
Landlord or Landlord’s Architect, Engineers, and consultants, Landlord shall
have no liability whatsoever in connection therewith and shall not be
responsible for any omissions or errors contained in the Construction Drawings,
and Tenant’s waiver and indemnity set forth in Article 10 of the Lease shall
specifically apply to the Construction Drawings.

3.2 Final Space Plan. Within three (3) days of the full execution and delivery
of the Lease by Landlord and Tenant, Tenant shall meet with Landlord’s Architect
and provide Landlord’s Architect with information regarding the preliminary
layout and designation of all proposed offices, rooms and other partitioning,
and their intended use and equipment to be contained therein (the
“Information”). Landlord and Architect shall, based on such Information (subject
to changes reasonably required by Landlord), prepare the final space plan for
Tenant Improvements in the Premises (collectively, the “Final Space Plan”),
which Final Space Plan shall include a layout and designation of all offices,
rooms and other partitioning, their intended use, and equipment to be contained
therein, and shall deliver the Final Space Plan to Tenant for Tenant’s approval.
Tenant shall approve or reasonably disapprove the Final Space Plan or any
revisions thereto within three (3) business days after Landlord delivers the
Final Space Plan or such revisions to Tenant; provided, however, that Tenant may
only disapprove the Final Space Plan to the extent the same is not (subject to
changes reasonably required by Landlord) in substantial conformance with the
Information provided by Tenant to Architect (“Space Plan Design Problem”).
Tenant’s failure to disapprove the Final Space Plan for any Space Plan Design
Problem or any revisions thereto by written notice to Landlord (which notice
shall specify in detail the reasonable reasons for Tenant’s disapproval
pertaining to any Space Plan Design Problem) within said three (3) business day
period shall be deemed to constitute Tenant’s approval of the Final Space Plan
or such revisions.

3.3 Final Working Drawings. Based on the Final Space Plan, Landlord shall cause
the Architect and the Engineers to complete the architectural and engineering
drawings for the Premises, and Architect shall compile a fully coordinated set
of architectural, structural, mechanical, electrical and plumbing working
drawings in a form which is complete to allow subcontractors to bid on the work
and to obtain all applicable permits (collectively, the “Final Working
Drawings”) and shall submit the same to Tenant for Tenant’s approval. The Final
Working Drawings shall incorporate modifications to the Final Space Plan as
necessary to comply with the floor load and other structural and system
requirements of the Building. To the extent that the finishes and specifications
are not completely set forth in the Final Space Plan for any portion of the
Tenant Improvements depicted thereon, the actual specifications and finish work
shall be in accordance with the Specifications. Tenant shall approve or
reasonably disapprove the Final Working Drawings or any revisions thereto within
three (3) business days after Landlord delivers the Final Working Drawings or
any revisions thereto to Tenant; provided, however, that Tenant may only
disapprove the Final Working Drawings to the extent the same are not (subject to
changes reasonably required by Landlord) in substantial conformance with the

 

Exhibit C

-3-

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

Final Space Plan (“Working Drawing Design Problem”). Tenant’s failure to
reasonably disapprove the Final Working Drawings or any revisions thereto by
written notice to Landlord (which notice shall specify in detail the reasonable
reasons for Tenant’s disapproval pertaining to any Working Drawing Design
Problem) within said three (3) business day period shall be deemed to constitute
Tenant’s approval of the Final Working Drawings or such revisions.

3.4 Approved Working Drawings. The Final Working Drawings shall be approved or
deemed approved by Tenant (the “Approved Working Drawings”) prior to the
commencement of the construction of the Tenant Improvements. Landlord shall
cause the Architect to submit the Approved Working Drawing to the applicable
local governmental agency for all applicable building permits necessary to allow
“Contractor,” as that term is defined in Section 4.1 of this Tenant Work Letter,
to commence and fully complete the construction of the Tenant Improvements (the
“Permits”). No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord not to be
unreasonably withheld, conditioned or delayed beyond the applicable time periods
in this Section 3, provided that Landlord may withhold its consent, in its sole
discretion, to any change in the Approved Working Drawings, if such change would
directly or indirectly delay the Substantial Completion of the Premises.

3.5 Time Deadlines. Tenant shall use reasonable efforts to cooperate with
Architect, the Engineers, and Landlord to complete all phases of the
Construction Drawings and the permitting process and to receive the Permits, and
with Contractor, for approval of the “Cost Proposal,” as that term is defined in
Section 4.2 below as soon as possible after the execution of the Lease and, in
this regard, to the extent Landlord considers such meeting(s) to be reasonably
necessary, Tenant shall meet with Landlord on a weekly basis to discuss Tenant’s
progress in connection with the same.

3.6 Design Problem. Notwithstanding anything to the contrary in this Tenant Work
Letter, Landlord shall be deemed to have acted reasonably in disapproving plans
or designs if Landlord determines in good faith that the matter disapproved
constitutes or would create a Design Problem (as defined below). As used herein,
a “Design Problem” shall mean (i) adverse effect on the structural integrity of
the Building; (ii) possible damage to the Building’s systems;
(iii) non-compliance with applicable codes; (iv) adverse effect on the exterior
appearance of the Building; (v) creation of the potential for unusual expenses
to be incurred upon the removal of the alteration or improvement and the
restoration of the Premises upon termination of this Lease, unless Tenant agrees
to pay for the incremental removal costs caused by the non-typical alterations;
(vi) creation of the potential for unusual expenses to be incurred in connection
with the maintenance by Landlord of the alteration or improvement, unless Tenant
agrees to pay for the incremental maintenance costs caused by the non-typical
alterations, (vii) a material effect any other tenant or occupant of the
Building, (viii) creation of an obligation to make other alterations, additions
or improvements to the Premises or Common Areas in order to comply with
applicable laws (including, without limitation, the Americans with Disabilities
Act) or (xix) adverse effect on the LEED rating of the Building.

 

Exhibit C

-4-

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

Section 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1 Contractor. A contractor, under the supervision of and mutually selected by
Landlord and Tenant from a list of approved contractors provided by Landlord,
shall construct the Tenant Improvements (the “Contractor”).

4.2 Cost Proposal. After the Approved Working Drawings are signed by Landlord
and Tenant, Landlord cause the Contractor to competitively bid the subcontracts
with the major trades to at least three (3) subcontractors in each such major
trade and based on that bidding process shall provide Tenant with a cost
proposal in accordance with the Approved Working Drawings, which cost proposal
shall include, as nearly as possible, the cost of all Tenant Improvement
Allowance Items to be incurred by Tenant in connection with the construction of
the Tenant Improvements (the “Cost Proposal”). Notwithstanding the foregoing,
portions of the cost of the Tenant Improvements may be delivered to Tenant as
such portions of the Tenant Improvements are priced by Contractor (on an
individual item-by-item or trade-by-trade basis), even before the Approved
Working Drawings are completed (the “Partial Cost Proposal”). Tenant shall
approve and deliver the Cost Proposal to Landlord within five (5) business days
of the receipt of the same (or, as to a Partial Cost Proposal, within two
(2) business days of receipt of the same). The date by which Tenant must approve
and deliver the Cost Proposal, or the last Partial Cost Proposal to Landlord, as
the case may be, shall be known hereafter as the “Cost Proposal Delivery Date.”
The total of all Partial Cost Proposals, if any, shall be known as the Cost
Proposal.

4.3 Construction of Tenant Improvements by Landlord’s Contractor under the
Supervision of Landlord.

4.3.1 Over-Allowance Amount. On the Cost Proposal Delivery Date, Tenant shall
deliver to Landlord cash in an amount (the “Over-Allowance Amount”) equal to the
difference between (i) the amount of the Cost Proposal and (ii) the amount of
the Tenant Improvement Allowance (less any portion thereof already disbursed by
Landlord, or in the process of being disbursed by Landlord, on or before the
Cost Proposal Delivery Date). The Over-Allowance Amount shall be disbursed by
Landlord prior to the disbursement of any then remaining portion of the Tenant
Improvement Allowance, and such disbursement shall be pursuant to the same
procedure as the Tenant Improvement Allowance. In the event that, after the Cost
Proposal Delivery Date, any revisions, changes, or substitutions shall be made
to the Construction Drawings or the Tenant Improvements, any additional costs
which arise in connection with such revisions, changes or substitutions shall be
added to the Cost Proposal and shall be paid by Tenant to Landlord immediately
upon Landlord’s request to the extent such additional costs increase any
existing Over-Allowance Amount or result in an Over-Allowance Amount. Following
completion of the Tenant Improvements, Landlord shall deliver to Tenant a final
cost statement which shall indicate the final costs of the Tenant Improvement
Allowance Items, and if such cost statement indicates that Tenant has underpaid
or overpaid the Over-Allowance Amount, then within ten (10) business days after
receipt of such statement, Tenant shall deliver to Landlord the amount of such
underpayment or Landlord shall return to Tenant the amount of such overpayment,
as the case may be.

 

Exhibit C

-5-

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

4.3.2 Landlord Supervision. After Landlord selects the Contractor, Landlord
shall independently retain Contractor to construct the Tenant Improvements in
accordance with the Approved Working Drawings and the Cost Proposal and Landlord
shall supervise the construction by Contractor, and Tenant shall pay a
construction supervision and management fee (the “Landlord’s Supervision Fee”)
to Landlord in an amount equal to the product of (i) three percent (3%) and
(ii) an amount equal to the Tenant Improvement Allowance plus the Over-Allowance
Amount (as such Over-Allowance Amount may increase pursuant to the terms of this
Tenant Work Letter).

4.3.3 Contractor’s Warranties and Guaranties. Landlord hereby assigns to Tenant
all warranties and guaranties by Contractor relating to the Tenant Improvements,
which assignment shall be on a non-exclusive basis such that the warranties and
guarantees may be enforced by Landlord and/or Tenant, and Tenant hereby waives
all claims against Landlord relating to, or arising out of the construction of,
the Tenant Improvements.

Section 5

SUBSTANTIAL COMPLETION;

LEASE COMMENCEMENT DATE

5.1 Substantial Completion. For purposes of the Lease, including for purposes of
determining the Commencement Date “Substantial Completion” of the Premises shall
occur upon the later of (a) completion of construction of the Tenant
Improvements in the Premises pursuant to the Approved Working Drawings, with the
exception of any punchlist items and any tenant fixtures, work-stations,
built-in furniture, or equipment to be installed by Tenant or under the
supervision of Contractor and (b) Landlord’s receipt of a final sign-off on the
permits for the Tenant Improvements sufficient under customary practices in
Redwood City, California, to allow legal occupancy of the Premises.

5.2 Tenant Delays. If there shall be a delay or there are delays in the
Substantial Completion of the Premises (as a direct, indirect, partial, or total
result of any of the following (collectively, “Tenant Delays”):

5.2.1 Tenant’s failure to timely approve any matter requiring Tenant’s approval,
including a Partial Cost Proposal or the Cost Proposal and/or Tenant’s failure
to timely perform any other obligation or act required of Tenant hereunder;

5.2.2 a breach by Tenant of the terms of this Tenant Work Letter or the Lease;

5.2.3 Tenant’s request for changes in the Construction Drawings;

5.2.4 Tenant’s requirement for materials, components, finishes or improvements
which are not available in a reasonable time (based upon the anticipated date of
the Commencement Date) or which are different from, or not included in, the
Specifications;

 

Exhibit C

-6-

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

5.2.5 changes to the Base, Shell and Core required by the Approved Working
Drawings;

5.2.6 any changes in the Construction Drawings and/or the Tenant Improvements
required by (i) applicable laws if such changes are directly attributable to
Tenant’s use of the Premises or Tenant’s specialized tenant improvement(s) (as
reasonably determined by Landlord), and/or (ii) Landlord pursuant to Section 4.2
above; or

5.2.7 any other acts or omissions of Tenant, or its agents, or employees;

5.2.8 then, notwithstanding anything to the contrary set forth in the Lease and
regardless of the actual date of the Substantial Completion of the Premises, the
Commencement Date shall be deemed to be the date the Commencement Date would
have occurred if no Tenant Delays, as set forth above, had occurred.

Section 6

MISCELLANEOUS

6.1 Tenant’s Entry Into the Premises Prior to Substantial Completion. Subject to
the terms hereof and provided that Tenant and its agents do not interfere with,
or delay, Contractor’s work in the Building and the Premises, at Landlord’s
reasonable discretion, Contractor shall allow Tenant access to the Premises
three (3) weeks prior to the Substantial Completion of the Premises for the
purpose of Tenant installing overstandard equipment or fixtures (including
Tenant’s data and telephone equipment) in the Premises and otherwise preparing
the Premises for occupancy. Prior to Tenant’s entry into the Premises as
permitted by the terms of this Section 6.1, Tenant shall submit a schedule to
Landlord and Contractor, for their reasonable approval, which schedule shall
detail the timing and purpose of Tenant’s entry. In connection with any such
entry, Tenant acknowledges and agrees that Tenant’s employees, agents,
contractors, consultants, workmen, mechanics, suppliers and invitees shall fully
cooperate, work in harmony and not, in any manner, interfere with Landlord or
Landlord’s Contractor, agents or representatives in performing work in the
Building and the Premises, or interfere with the general operation of the
Building and/or the Project. If at any time any such person representing Tenant
shall not be cooperative or shall otherwise cause or threaten to cause any such
disharmony or interference, including, without limitation, labor disharmony, and
Tenant fails to immediately institute and maintain corrective actions as
directed by Landlord, then Landlord may revoke Tenant’s entry rights upon
twenty-four (24) hours’ prior written notice to Tenant. Tenant acknowledges and
agrees that any such entry into and occupancy of the Premises or any portion
thereof by Tenant or any person or entity working for or on behalf of Tenant
shall be deemed to be subject to all of the terms, covenants, conditions and
provisions of the Lease, excluding only the covenant to pay Rent (until the
occurrence of the Commencement Date). Tenant further acknowledges and agrees
that Landlord shall not be liable for any injury, loss or damage which may occur
to any of Tenant’s work made in or about the Premises in connection with such
entry or to any property placed therein prior to the Commencement Date, the same
being at Tenant’s sole risk and liability. Tenant shall be liable to Landlord
for any damage to any portion of the Premises, including the Tenant Improvement
work, caused by Tenant or any of Tenant’s employees, agents, contractors,
consultants, workmen, mechanics,

 

Exhibit C

-7-

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

suppliers and invitees. In the event that the performance of Tenant’s work in
connection with such entry causes extra costs to be incurred by Landlord or
requires the use of any Building services, Tenant shall promptly reimburse
Landlord for such extra costs and/or shall pay Landlord for such Building
services at Landlord’s standard rates then in effect (the “Extra Charges”). In
addition, Tenant shall hold Landlord harmless from and indemnify, protect and
defend Landlord against any loss or damage to the Building or Premises and
against injury to any persons caused by Tenant’s actions pursuant to this
Section 6.1. Tenant shall not be required to pay any Base Rent or Taxes or
Operating Expenses (other than the Extra Charges) during prior to the
Commencement Date.

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

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

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

6.5 Tenant’s Lease Default. Notwithstanding any provision to the contrary
contained in the Lease, if an Event of Default by Tenant under the Lease or any
default by Tenant under this Tenant Work Letter has occurred at any time on or
before the Substantial Completion of the Premises, then (i) in addition to all
other rights and remedies granted to Landlord pursuant to the Lease, at law
and/or in equity, Landlord shall have the right to withhold payment of all or
any portion of the Tenant Improvement Allowance and/or Landlord may cause
Contractor to cease the construction of the Premises (in which case, Tenant
shall be responsible for any delay in the Substantial Completion of the Premises
caused by such work stoppage as set forth in Section 5.2 of this Tenant Work
Letter), and (ii) all other obligations of Landlord under the terms of this
Tenant Work Letter shall be forgiven until such time as such Event of Default is
cured pursuant to the terms of the Lease (in which case, Tenant shall be
responsible for any delay in the Substantial Completion of the Premises caused
by such inaction by Landlord). In addition, if the Lease is terminated prior to
the Commencement Date, for any reason due to an Event of Default by Tenant under
the Lease or a default under this Tenant Work Letter, in addition to any other
remedies available to Landlord under the Lease, at law and/or in equity, Tenant
shall pay to Landlord, as Additional Rent under the Lease, within five (5) days
of receipt of a statement therefor, any and all costs incurred by Landlord
(including any portion of the Tenant Improvement Allowance disbursed by
Landlord) and not reimbursed or otherwise paid by Tenant through the date of
such termination in connection with the Tenant Improvements to the extent
planned, installed and/or constructed as of such date of termination, including,
but not limited to,

 

Exhibit C

-8-

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

any costs related to the removal of all or any portion of the Tenant
Improvements and restoration costs related thereto.

 

Exhibit C

-9-

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

EXHIBIT D

RULES AND REGULATIONS

Tenant shall faithfully observe and comply with the following Rules and
Regulations:

1. Except in connection with Tenant’s work (if any) under Exhibit C, Tenant
shall not alter any locks or install any new or additional locks or bolts on any
doors or windows of the Premises without obtaining Landlord’s prior written
consent (not to be unreasonably withheld, conditioned or delayed). Tenant shall
bear the cost of any lock changes or repairs required by Tenant and Tenant shall
promptly deliver any new keys to Landlord.

2. All doors opening to public corridors shall be kept closed at all times
except for normal ingress and egress to the Premises. Tenant shall assume any
and all responsibility for protecting the Premises from theft, robbery and
pilferage, which includes keeping doors locked and other means of entry to the
Premises closed.

3. Tenant, its employees and agents must be sure that the entry doors to the
Premises are securely closed and locked when leaving the Premises if it is after
the normal hours of business of the Project. Tenant, its employees, agents or
any other persons entering or leaving the Project at any time when it is so
locked, or any time when it is considered to be after normal business hours for
the Project, may be required to sign the Project register. Access to the Project
may be refused unless the person seeking access has proper identification or has
a previously received authorization for access to the Project. Landlord and its
agents shall in no case be liable for damages for any error with regard to the
admission to or exclusion from the Project of any person. In case of invasion,
mob, riot, public excitement, or other commotion, Landlord reserves the right to
prevent access to the Project during the continuance thereof by any means it
deems appropriate for the safety and protection of life and property.

4. Landlord reserves the right, in the event of an emergency in Landlord’s
reasonable discretion, to close or limit access to the Project and/or the
Premises, from time to time, due to damage to the Project and/or the Premises,
to ensure the safety of persons or property or due to government order or
directive, and Tenant agrees to immediately comply with any such reasonable
decision by Landlord. If Landlord closes or limits access to the Project and/or
the Premises for the reasons described above, Landlord’s actions shall not
constitute a breach of the Lease.

5. Tenant shall not disturb, solicit, or canvass any occupant of the Project and
shall cooperate with Landlord and its agents to prevent the same. Tenant, its
employees and agents shall not loiter in or on the entrances, corridors,
sidewalks, lobbies, halls, stairways, elevators, or any Common Areas for the
purposes of smoking tobacco products or for any other purpose, nor in any way
obstruct such areas, and shall use them only as a means of ingress and egress
for the Premises. Smoking shall not be permitted in the Common Areas.

6. The toilet rooms, urinals and wash bowls shall not be used for any purpose
other than that for which they were constructed, and no foreign substance of any
kind whatsoever shall be thrown therein. The expense of any breakage, stoppage
or damage resulting from the violation

 

Exhibit D

-1-

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

of this rule shall be borne by the tenants who, or whose employees or agents,
shall have caused it.

7. Except for vending machines intended for the sole use of Tenant’s employees
and invitees, no vending machine or machines other than fractional horsepower
office machines shall be installed, maintained or operated upon the Premises
without the written consent of Landlord (not to be unreasonably withheld,
conditioned, or delayed). All vendors or other persons visiting the Premises
shall be subject to the reasonable control of Landlord. Tenant shall not permit
its vendors or other persons visiting the Premises to solicit other tenants of
the Project.

8. Tenant shall not use or keep in or on the Premises or the Project any
kerosene, gasoline or other inflammable or combustible fluid or material, except
as otherwise permitted in the Lease. Tenant shall not bring into or keep within
the Premises or the Project any animals (other than service animals), birds or
vehicles (other than passenger vehicles, forklifts or bicycles).

9. Tenant shall not use, keep or permit to be used or kept, any noxious gas or
substance in or on the Premises or permit or allow the Premises to be occupied
or used in a manner offensive or objectionable to Landlord or other occupants of
the Project by reason of noise, odors, or vibrations, or to otherwise
unreasonably interfere with the use of the Project by other tenants.

10. No cooking shall be done or permitted on the Premises nor shall the Premises
be used for the storage of merchandise, for loading or for any improper,
objectionable or immoral purposes. Notwithstanding the foregoing, Underwriters’
Laboratory approved equipment and microwave ovens may be used in the Premises
for heating food and brewing coffee, tea, hot chocolate and similar beverages
for employees and visitors of Tenant, provided that such use is in accordance
with all applicable federal, state and city laws, codes, ordinances, rules and
regulations; and provided further that such cooking does not result in odors
escaping from the Premises.

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

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

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

14. Tenant acknowledges that the local fire department has previously required
Landlord to participate in a fire and emergency preparedness program or may
require Landlord and/or Tenant to participate in such a program in the future.
Tenant agrees to take all actions reasonably necessary to comply with the
requirements of such a program including, but not

 

Exhibit D

-2-

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

limited to, designating certain employees as “fire wardens” and requiring them
to attend any necessary classes and meetings and to perform any required
functions.

15. Tenant and its employees shall comply with all federal, state and local
recycling and/or resource conservation laws and shall take all actions
reasonably requested by Landlord in order to comply with such laws. Tenant shall
comply with and participate in any program for metering or otherwise measuring
the use of utilities and services, including, without limitation, programs
requiring the disclosure or reporting of the use of any utilities or services.
Tenant shall also cooperate and comply with, participate in, and assist in the
implementation of (and take no action that is inconsistent with, or which would
result in Landlord, the Building and/or the Project failing to comply with the
requirements of) any conservation, sustainability, recycling, energy efficiency,
and waste reduction programs, environmental protection efforts and/or other
programs that are in place and/or implemented from time to time at the Building
and/or the Project, including, without limitation, any required reporting,
disclosure, rating or compliance system or program (including, but not limited
to any LEED ([Leadership in Energy and Environmental Design] rating or
compliance system, including those currently coordinated through the U.S. Green
Building Council).

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

To the extent these Rules and Regulations conflict with the provisions of the
Lease, the provisions of the Lease shall control.

 

Exhibit D

-3-

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

EXHIBIT E

PARKING RULES

1. Parking areas shall be used only for parking by vehicles no longer than full
size, passenger automobiles, pickup trucks and sport utility vehicles. Tenant
and its employees shall park automobiles within the lines of the parking spaces.

2. Tenant shall not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant’s employees, suppliers, shippers, customers, or
invitees to be loaded, unloaded, or parked in areas other than those designated
by Landlord for such activities. Users of the parking area will obey all posted
signs and park only in the areas designated for vehicle parking.

3. Parking stickers and parking cards, if any, shall be the property of Landlord
and shall be returned to Landlord by the holder thereof upon termination of the
holder’s parking privileges. Landlord may require Tenant and each of its
employees to give Landlord a commercially reasonable deposit when a parking card
or other parking device is issued. Landlord shall not be obligated to return the
deposit unless and until the parking card or other device is returned to
Landlord. Tenant will pay such replacement charges as is reasonably established
by Landlord for the loss of such devices. Loss or theft of parking
identification stickers or devices from automobiles must be reported to the
parking operator immediately. Any parking identification stickers reported lost
or stolen found on any unauthorized car will be confiscated and the illegal
holder will be subject to prosecution.

4. Unless otherwise instructed, every person using the parking area is required
to park and, lock his own vehicle. Landlord will not be responsible for any
damage to vehicles, injury to persons or loss of property, all of which risks
are assumed by the party using the parking area.

5. The maintenance, washing, waxing or cleaning of vehicles in the parking
structure or Common Areas is prohibited.

6. Tenant shall be responsible for seeing that all of its employees, agents and
invitees comply with the applicable parking rules, regulations, laws, and
agreements. Parking area managers or attendants, if any, are not authorized to
make or allow any exceptions to these Parking Rules and Regulations. Landlord
reserves the right to terminate parking rights for any person or entity that
willfully refuses to comply with these rules and regulations.

7. Every driver is required to park his or her own car. Tenant agrees that all
responsibility for damage to cars or the theft of or from cars is assumed by the
driver, and further agrees that Tenant will hold Landlord harmless for any such
damages or theft.

8. No vehicles shall be parked in the parking areas overnight. The parking area
shall only be used for daily parking and no vehicle or other property shall be
stored in a parking space.

9. Any vehicle parked by Tenant, its employees, contractors or visitors in a
reserved parking space or in any area of the parking area that is not designated
for the parking of such a vehicle may, at Landlord’s option, and without notice
or demand, be towed away by any towing

 

Exhibit E

-1-

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

company selected by Landlord, and the cost of such towing shall be paid for by
Tenant and/or the driver of said vehicle.

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

 

Exhibit E

-2-

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

EXHIBIT F

COMMENCEMENT DATE MEMORANDUM

With respect to that certain lease (“Lease”) dated                     , 2015
between WESTPORT OFFICE PARK, LLC, a California limited liability company
(“Landlord”), and NEVRO CORP., a Delaware corporation (“Tenant”), whereby
Landlord leased to Tenant and Tenant leased from Landlord approximately
             rentable square feet of that certain office building located at
                     , California (“Premises”), Tenant hereby acknowledges and
certifies to Landlord as follows:

(1) Landlord delivered possession of the Premises to Tenant substantially
complete on                     ;

(2) The Lease commenced on                      (“Commencement Date”) and
Tenant’s obligation to pay Rent commenced on                      (“Rent
Commencement Date”);

(3) The Premises contain                      rentable square feet of space; and

(4) Tenant has accepted and is currently in possession of the Premises and the
Premises are acceptable for Tenant’s use.

(5) Tenant’s Building Percentage is                     

(6) Base Rent Per Month is                     

IN WITNESS WHEREOF, this Commencement Date Memorandum is executed this day of
                    

 

“Tenant”

NEVRO CORP., a Delaware corporation

By:

 

    Its:                                                                  

By:

 

    Its:                                                                  

 

Exhibit F

-1-

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

EXHIBIT G

STANDARDS FOR UTILITIES AND SERVICES

The following Standards for Utilities and Services are in effect. Landlord
reserves the right to adopt nondiscriminatory modifications and additions
hereto:

As long as Tenant is not in default under any of the terms, covenants,
conditions, provisions, or agreements of this Lease, Landlord shall:

(a) On Monday through Friday, except holidays, from 8 A.M. to 6 P.M. (and other
times for a reasonable additional charge to be fixed by Landlord), ventilate the
Premises and furnish air conditioning or heating on such days and hours, when in
the judgment of Landlord it may be required for the comfortable occupancy of the
Premises. The air conditioning system achieves maximum cooling when the window
coverings are closed. Landlord shall not be responsible for room temperatures if
Tenant does not keep all window coverings in the Premises closed whenever the
system is in operation. Tenant agrees to cooperate fully at all times with
Landlord, and to abide by all regulations and requirements which Landlord may
prescribe for the proper function and protection of said air conditioning
system. Tenant agrees not to connect any apparatus, device, conduit or pipe to
the Building chilled and hot water air conditioning supply lines. Tenant further
agrees that neither Tenant nor its servants, employees, agents, visitors,
licensees or contractors shall at any time enter mechanical installations or
facilities of the Building or adjust, tamper with, touch or otherwise in any
manner affect said installations or facilities. The cost of maintenance and
service calls to adjust and regulate the air conditioning system shall be
charged to Tenant if the need for maintenance work results from either Tenant’s
adjustment of room thermostats or Tenant’s failure to comply with its
obligations under this section, including keeping window coverings closed as
needed. Such work shall be charged at hourly rates equal to then current
journeymen’s wages for air conditioning mechanics.

(b) Landlord reserves the right to charge Tenant for the cost to Landlord of
providing such after-hours heating and air-conditioning.

(c) Landlord shall furnish to the Premises, during the usual business hours on
business days, electric current sufficient for normal office use. Tenant agrees,
should its electrical installation or electrical consumption be in excess of the
aforesaid quantity or extend beyond normal business hours, to reimburse Landlord
monthly for the measured consumption at the average cost per kilowatt hour
charged to the Building during the period. If a separate meter is not installed
at Tenant’s cost, such excess cost will be established by an estimate agreed
upon by Landlord and Tenant, and if the parties fail to agree, as established by
an independent licensed engineer. Said estimates to be reviewed and adjusted
quarterly. Tenant agrees not to use any apparatus or device in, or upon, or
about the Premises which may in any way increase the amount of such services
usually furnished or supplied to said Premises, and Tenant further agrees not to
connect any apparatus or device with wires, conduits or pipes, or other means by
which such services are supplied, for the purpose of using additional or unusual
amounts of such services without written consent of Landlord (not to be
unreasonably withheld, conditioned or delayed). Should Tenant use the same to
excess, the refusal on the part of Tenant to pay upon

 

Exhibit G

-1-

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

demand of Landlord the amount established by Landlord for such excess charge
shall constitute a breach of the obligation to pay Rent under this Lease and
shall entitle Landlord to the rights therein granted for such breach. At all
times Tenant’s use of electric current shall never exceed the capacity of the
feeders to the Building or the risers or wiring installation without the prior
written consent of Landlord (not to be unreasonably withheld, delayed or
conditioned). If Tenant is billed directly by a public utility with respect to
Tenant’s electrical usage at the Premises, upon request from time to time,
Tenant shall provide monthly electrical utility usage for the Premises to
Landlord for the period of time requested by Landlord (in electronic or paper
format) or, at Landlord’s option, provide any written authorization or other
documentation required for Landlord to request information regarding Tenant’s
electricity usage with respect to the Premises directly from the applicable
utility company.

(d) Water will be available in public areas for drinking and lavatory and break
rooms and kitchenette purposes only, but if Tenant requires, uses or consumes
water for any purposes in addition to ordinary drinking and lavatory purposes of
which fact Tenant constitutes Landlord to be the sole judge, Landlord may
install a water meter and thereby measure Tenant’s water consumption for all
purposes. Tenant shall pay Landlord for the cost of the meter and the cost of
the installation thereof and throughout the duration of Tenant’s occupancy
Tenant shall keep said meter and installation equipment in good working order
and repair at Tenant’s own cost and expense, in default of which Landlord may
cause such meter and equipment to be replaced or repaired and collect the cost
thereof from Tenant. Tenant agrees to pay for water consumed, as shown on said
meter, as and when bills are rendered, and on default in making such payment,
Landlord may pay such charges and collect the same from Tenant. Any such costs
or expenses incurred, or payments made by Landlord for any of the reasons or
purposes hereinabove stated shall be deemed to be additional rent payable by
Tenant and collectible by Landlord as such.

(e) Landlord reserves the right to stop service of the elevator, plumbing,
ventilation, air conditioning and electric systems, when necessary, by reason of
accident or emergency or for repairs, alterations or improvements, in the
judgment of Landlord desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed, and shall further have no
responsibility or liability for failure to supply elevator facilities, plumbing,
ventilating, air conditioning or electric service, when prevented from so doing
by strike or accident or by any cause beyond Landlord’s reasonable control, or
by laws, rules, orders, ordinances, directions, regulations or requirements of
any federal, state, county or municipal authority or failure of gas, oil or
other suitable fuel supply or inability by exercise of reasonable diligence to
obtain gas, oil or other suitable fuel. It is expressly understood and agreed
that any covenants on Landlord’s part to furnish any service pursuant to any of
the terms, covenants, conditions, provisions or agreements of this Lease, or to
perform any act or thing for the benefit of Tenant, shall not be deemed breached
if Landlord is unable to furnish or perform the same by virtue of a strike or
labor trouble or any other cause whatsoever beyond Landlord’s control.

 

Exhibit G

-2-

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

EXHIBIT H

COPY OF ORDER

(See Attached.)

 

Exhibit H

-1-

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

CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD

SAN FRANCISCO BAY REGION

ORDER NO. R2-2003-0074

UPDATED WASTE DISCHARGE REQUIREMENTS

AND RESCISSION OF ORDER NO. 94-181 FOR:

WESTPORT LANDFILL

JOHN ARRILLAGA SURVIVOR’S TRUST, THE PEERY PRIVATE

INVESTMENT COMPANY, PEERY PUBLIC INVESTMENT COMPANY

REDWOOD CITY, SAN MATEO COUNTY

The California Regional Water Quality Control Board, San Francisco Bay Region,
(hereinafter called the Board), finds that:

SITE OWNER AND LOCATION

 

1.

The legal owners of the site are the John Arrillaga Survivor’s Trust, The Peery
Private Investment Company, and the Peery Public Investment Company and are
hereinafter referred to as the Dischargers. The unlined landfill site, as shown
in Figure 1, is located adjacent to Belmont Slough in Redwood City. A commercial
business park including twenty (20) two-story buildings and associated site
improvements has been constructed at the site (Figure 2).

PURPOSE OF ORDER UPDATE

 

2.

The primary purposes of this Order are 1) to update the existing Waste Discharge
Requirements (WDRs) to reflect recent site development and current facility
conditions and 2) to assure compliance with the appropriate portions of Title 27
of the California Code Of Regulations (formerly known as Chapter 15, Title 23),
referred to hereinafter as Title 27. The “appropriate portions” of Title 27 are
hereby defined as the relevant sections pertaining to post-closure maintenance
and water quality monitoring.

SITE DESCRIPTION

 

3.

The site was tidal marshlands until approximately 1910, at which time the area
was diked and portions used for pastureland and for a hog farm. The landfill
area was used as a refuse disposal site from about 1948 to its closing in about
1970. Disposal in the southeastern portion of the site (referred to as the
Panhandle area) reportedly ceased in about 1963, while disposal in the
northeastern portion of the site (the Mound area) continued until about 1970.

 

4.

The Westport Landfill is a closed 45-acre unlined site located approximately
one-mile east of Highway 101, and is bordered by Belmont Slough to the north and
west, and by existing residential developments and Marine World Parkway to the

 

1

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

 

east and south. The landfill covers the majority of two contiguous parcels that
have been developed as a commercial business park called Westport Office Park.

 

5.

The site currently includes a commercial business park with twenty
(20) two-story office and research buildings totaling approximately 968,000
leasable square feet. The site (Figure 2) is currently covered by approximately
522,000 square feet of building footprints (14.2% of entire area), 1,522,100
square feet of asphalt and concrete pavement (41.4% of entire area), and
1,631,400 square feet of landscaped area (44.4% of entire area).

REGULATORY HISTORY

 

6.

On July 20, 1976 Waste Discharge Requirements were adopted for the site in Board
Order No. 76-77. In that Order Parkwood 101, Limited (the previous landfill
owner), was required to place “a final cover of at least four-feet of compacted
inert fill material” over the waste disposal areas. Board Order No. 76-77 was
subsequently revised on October 18, 1977 by Order No. 77-134, wherein a revised
time schedule was adopted for compliance with site closure specifications.
Closure activities at the site included placement of additional cover material
over the waste disposal areas and grading to eliminate ponding.

 

7.

On December 14, 1994, the Board adopted Order No. 94-181, rescinding Order Nos.
76-77 and 77-134. Among other activities in response to the requirements of
Order No. 94-181, and in conjunction with the reconstructed cap and site
development, the lateral extent of refuse was determined using historical aerial
photos taken throughout the operational period of the landfill and through
organized trenching. Based on the results of these studies a perimeter cut-off
wall was installed consisting of a vertical clay barrier with a minimum width of
two-feet connecting the overlying low permeability cover layer with the
underlying young Bay Mud, completing the containment envelope. The vertical
extent of the refuse as depicted in various geotechnical studies was confirmed
by a deep boring program and by pile driving observations.

LANDFILL HISTORY

 

8.

Approximately 45 acres of the project site were used for landfill disposal of
municipal solid waste and incinerator ash from about 1948 to about 1970.
Approximately 650,000 cubic yards of fill material was disposed of at the site
on the existing unlined Bay Mud. The waste material reportedly disposed at the
site consists of non-hazardous material including: municipal solid waste,
construction debris paper, glass, plastic, wood, rock fragments, and incinerator
ashes.

 

9.

The landfill can be divided into three areas. Refuse is present primarily in the
southern and eastern portions of the site and forms two elevated areas, referred
to as (1) the Mound (35 acres) in the eastern portion of the site, and (2) the
Panhandle (an elongated area of 10 acres) along the southeastern property

 

2

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

 

boundary. The third area (40 acres), located between the refuse fill and the
levees, is a low-lying area where unplanned sporadic refuse disposal occurred.
Limited refuse disposal activities occurred outside the current property
boundary as indicated by small pockets of discontinuous refuse identified during
the installation of underground utilities and a perimeter leachate collection
system. The site’s surface soils are currently composed largely of fill that has
been used to: establish a cap over the refuse fill area; to fill low-lying
elevations; to construct building pads; to serve as a base for site paving; and,
to provide topsoil for landscaped areas.

LANDFILL INVESTIGATIONS AND WORK

 

10.

During the 1970’s several possible real estate developments were proposed and
various site investigations were performed. Until Westport Office Park, no
proposed project continued beyond the preliminary stage. In conjunction with the
planning and design of Westport Office Park, additional site investigations were
performed and substantial information was developed and recorded.

 

11.

Preliminary Soil and Groundwater Investigation- 1988: In 1988, a preliminary
soil and groundwater investigation was conducted by Kaldveer Associates.
Kaldveer installed five monitoring wells in the western portion of the site to
evaluate shallow groundwater quality adjacent to the refuse fill area.

 

12.

SWAT- 1988 to 1989: In 1988 and 1989, Levine-Fricke conducted a Solid Waste
Assessment Test (SWAT) to determine the landfill’s potential to have adverse
effects on water quality. Levine-Fricke installed seven shallow groundwater
monitoring wells outside the primary refuse areas, seven monitoring wells within
the primary refuse areas, and three deeper wells.

 

13.

Addendum to SWAT- 1992 and 1993: Levine-Fricke conducted groundwater monitoring
activities to complete the SWAT.

 

14.

Removal and Replacement of Lead-Affected Soils and Landfill Materials- 1994:
Levine-Fricke investigated and remediated lead-affected soil in three locations
at the site. In order to complete the removal activities, two monitoring wells
were abandoned. (P-1A and P-5)

 

15.

On March 2, 1994, United Soil Engineering, Inc., (USE) conducted an
investigation to determine the thickness of the landfill cover. A total of 77
borings were advanced to a depth of 6 feet. USE’s investigation revealed that
some portions of the landfill cover did not meet the four-foot cover requirement
as specified in Order No. 76-77 and as revised by Order No. 77-134. USE’s
investigations revealed that an additional one to two feet of clay or low
permeability soil was required to achieve the minimum required thickness for
most of the landfill cover.

 

3

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

16.

Provision C.10 of WDR Order No. 94-181 required the Dischargers to reconstruct
those portions of the landfill cap that did not meet the requirements of
Section 2581 of Article 8, Chapter 15 (e.g., a cap containing a minimum of two
feet of foundation material, one foot low permeability layer with a hydraulic
conductivity of less than or equal to 10-6 cm/sec, and a one foot layer for
erosion protection). The Dischargers submitted a Cap Reconstruction Plan dated
February 14, 1995. The Cap Reconstruction is now complete in conformance with
the Cap Reconstruction Plan.

 

17.

Deep Boring Program - 1995: Geomatrix performed a subsurface study to determine
the physical characteristics of the soil by advancing 13 deep borings to
approximately 140 feet BGS.

 

18.

Additional Well Installation - 1996-1998: Geomatrix installed four new
monitoring wells to provide additional monitoring points for the landfill, as
required by Board Order No. 94-181. (MW3-1R, MW3-2, MW-4, and P5-1)

 

19.

Ammonia Investigation - 1998: Geomatrix conducted an assessment of ammonia in
soil and groundwater in the vicinity of the former pig farm and found that these
conditions may not be related to the landfill. Soil and grab groundwater samples
were collected from 11 borings.

 

20.

Acetone Investigation - 1999: Following the detection of acetone in a
groundwater sample collected during a semi-annual monitoring event, an
investigation was conducted by Geomatrix to assess the lateral extent of the
acetone. Grab groundwater samples were collected from borings placed in the
vicinity of the well where acetone had been detected.

 

21.

Concurrent with site and building approval and construction (most of which took
place in the late 1990s), landfill gas (LFG) venting and monitoring systems were
approved and installed and meet regulatory requirements.

SITE GEOLOGIC SETTING

 

22.

The site is domed in the northeast, central, and southeast portions of the site
where refuse was placed and is relatively flat in the northwest and west
portions. Elevations at the site currently range from 104.5 to 133.5 feet where
City of Redwood City datum 100.0 equals mean sea level. The fill at the site
overlies estuarine deposits referred to as Bay Mud. The Bay Mud deposits
surround San Francisco Bay and generally consist of very low permeability
plastic silty clays with high organic content. Stiff to very stiff sandy
clay/clayey sand has been encountered below the Bay Mud extending to a depth of
approximately 200 feet below ground surface (bgs). It has been reported that a
moderately permeable sequence of clay, sand, and gravel underlies the stiff
clays, beginning at a depth of 200 feet bgs. Franciscan bedrock was reported to
exist at a depth of

 

4

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

 

approximately 300 feet bgs along the western side of the site and 500 feet bgs
along the eastern side of the site

SITE HYDROGEOLOGIC SETTING

 

23.

Hydrogeologic investigations have shown that, within the former landfill, the
groundwater movement is radially away from the Mound area (eastern portion of
site). As part of corrective action at the site groundwater collection trenches
were installed along the northern and southeastern margins of the Mound and the
Panhandle to assist with containment and removal of leachate-impacted
groundwater adjacent to the primary refuse disposal areas.

 

24.

The direction of deeper groundwater flow cannot be established with a high level
of certainty because of the relatively discontinuous nature of the water bearing
zones in the low permeability clay layer beneath the younger Bay Mud. However,
it has been reported that regional hydrogeologic conditions suggest that deeper
groundwater flows in an easterly direction towards San Francisco Bay.

 

25.

Comparisons of shallow and deep groundwater levels have indicated the existence
of both upward and downward vertical hydraulic gradients across the site.

 

26.

Confined regional aquifer zones of moderate permeability are present at a depth
of approximately 190 to 200 feet bgs. These aquifer zones are an extension of
the major artesian basin of the south Bay and Santa Clara Valley and consists
chiefly of unconsolidated Quaternary Alluvium.

GROUND WATER CONTAMINATION AND WATER QUALITY

 

27.

Groundwater within the landfill refuse has been shown to contain volatile
organic compounds (VOCs), semi-volatile organic compounds (SVOCs),
polychlorinated biphenyls (PCBs), and ammonia.

 

28.

Shallow and deep groundwater around the perimeter and/or beneath the landfill,
outside the refuse limit, has had sporadic detections of low levels of VOCs and
SVOCs at the following maximum concentrations: benzene at 7.2 micrograms per
liter (µg/L), ethyl-benzene at 5µg/L, acetone at 120 µg/L, toluene at 6 µg/L,
trichloroethylene at 33 µg/L, carbon tetra-chloride at 5 µg/L,
1,1,1-trichloroethane at 7 µg/L, chloroform at 1 µg/L, 4-methy l-2-pentanone at
43 µg/L, phenol at 54 µg/L, bis (2-ethylhexyl) phthalate at 81 µg/L. Elevated
concentrations of ammonia are present along the western edge of the landfill
where a pig farm operated during the 1940’s and 1950’s and is the suspected
ammonia source.

LEACHATE COLLECTION AND REMOVAL SYSTEM (LCRS)

 

29.

The leachate collection system at the site was expanded and upgraded in 1998,
concurrent with site development and consists of three groundwater collection

 

5

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

 

trenches. The trenches were excavated to depths of 8 to 13 feet bgs and
intercept the full thickness of the refuse-containing fill layer. The collection
trenches are filled with permeable material to allow leachate to flow into
perforated collection pipes. The trenches are capped with low-permeability clay.
The locations of the leachate control trenches are shown in Figure 2. The
northern leachate collection and removal trench is 1,400 feet long and is fitted
with a sensor-activated automatic pumping system that periodically pumps
leachate from manhole No. 3 to a connection with the sanitary sewer lateral
where the leachate then flows by gravity to the South Bayside System Authority
(SBSA) publicly operated treatment works (POTW) plant. The two southeastern
leachate collection and removal trenches total 2,800 feet in length. To remove
leachate-impacted groundwater from these trenches, sensor activated automatic
pumping systems have been installed in manhole No.’s 1 and 2; leachate-impacted
groundwater is automatically pumped from manhole No. 2 and from manhole No. 1 to
the sanitary sewer lateral where the leachate then flows by gravity to the SBSA
POTW plant.

 

30.

Leachate is discharged under a permit issued by the SBSA. The SBSA does random
sampling and testing of the leachate discharge. All repeat test results
forwarded by the SBSA have shown that the leachate discharge meets the SBSA
criteria for discharge to the SBSA system without treatment.

LANDFILL GAS MANAGEMENT

 

31.

Concurrently with site and building approval and construction, landfill gas
(LFG) venting and monitoring systems for each building were approved and
installed. A trench network was excavated under each building. A perforated
high-density polyethylene (HDPE) pipe was embedded in rounded rock backfill in
these trenches. The perforated pipes were extended beyond the building perimeter
where they were manifolded together. The LFG pipe manifolds are connected to
vertical LFG vent risers that allow the LFG to be vented to, and dissipated in,
the atmosphere. The LFG vent risers and their immediate vicinity are monitored
at a minimum of monthly to insure that dangerous concentrations of gas do not
exist.

 

32.

A continuous 60 mil HDPE membrane was installed on the underside of each first
floor building slab to prevent LFG penetration into each building. Each building
has a system of ten LFG sensors that are continuously monitored by an offsite
life safety monitoring company. The LFG sensors are calibrated quarterly. The
LFG detection alarm system and the LFG sensor calibration records are inspected
annually by the San Mateo County Health Services Agency.

 

33.

The LCRS trenches described above also act as a LFG cut-off wall. There are 13
LFG vent risers connected to the vadose zone in the permeable material above the
leachate. They serve to collect the LFG intercepted by the leachate trenches and
to vent this gas to the atmosphere before the LFG migrates to the property line.

 

6

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

 

These LFG vent risers are monitored and inspected not less frequently then once
per month.

CURRENT AND FUTURE LAND USES

 

34.

In accordance with plans submitted to, and approved by, the City of Redwood City
and the San Mateo County Health Services Agency, the former landfill site has
been developed, occupied, and maintained as a commercial business park.

 

35.

The parcels are zoned for commercial use by the City of Redwood City. Permits
for additional development and/or modifications to the existing developments may
be applied for in the future.

POST CLOSURE MONITORING AND MAINTENANCE

 

36.

The Dischargers submitted Utility Inspection, Maintenance, and Settlement
Monitoring programs for different portions of the site to the City of Redwood
City as part of the site’s post-closure activities. This program includes
providing surveyed permanent benchmarks on the property, surveyed utility
alignments, and detailed periodic observations and records of settlement of the
water facilities and the sanitary sewer force main.

MONITORING PROGRAMS

 

37.

Title 27 requires that the Dischargers maintain a groundwater-monitoring program
designed to detect the presence of waste constituents in groundwater outside of
the waste management unit (WMU). The required monitoring is included in the
Discharge Monitoring Program (Attachment A) and consists of a list of
constituents of concern (COCs), sampling frequency, approved analytical methods,
reporting requirements, the point of compliance, and an approved evaluation
method to determine compliance consistent with Title 27.

 

38.

Groundwater Monitoring - Board Order No. 94-181 required the Dischargers to
document the installation of four additional monitoring wells to be included in
the Discharge Monitoring Program (Attachment A). A report documenting completion
of these wells, or their equivalent monitoring points, was submitted to the
Board in a letter dated June 28, 1996. (MW3-1R, MW3-2, MW-4, and P5-1)

 

39.

Groundwater Monitoring - There are 12 shallow (4 feet to 32 feet bgs)
groundwater monitoring wells and piezometers at the site. These are shown on
Figure 2 and include P3-R, P-7, P-8, MW-4, MW-4P, K-4, P5-1R, MW-3, MW3-2R,
UPG-1, UPG-2, and K-1. There are three deeper (35 feet to 72 feet bgs)
groundwater-monitoring wells and piezometers at the site. These are shown on
Figure 2 and include DW-1, DW-2 and DW-3. Groundwater-monitoring is detailed in
the Discharge Monitoring Program attached to this Order (Attachment

 

7

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

 

A). The Dischargers are required to analyze according to the monitoring
parameters presented in Attachment A of this Order.

 

40.

Leachate Monitoring - There are 17 leachate monitoring wells/piezometers at the
site. These are shown on Figure 2 and include S-2, S-3A, S-4A, S-5, P-2A, P3-PZ,
P-4, P5-1-PZ, P-6, K3-R, K3-PZ, MW3-1R, PZ-2, PZ-2P, PZ-3A, PZ-3B, and PZ-3C.
The Leachate Monitoring Program is detailed in the Discharge Monitoring Program
attached to this Order (Attachment A).

 

41.

Vadose Zone Monitoring - Vadose zone monitoring is conducted as part of the
landfill gas venting and monitoring program and has been integrated into the
commercial development of the site.

BASIN PLAN

 

42.

The Regional Board adopted a revised Water Quality Plan for the San Francisco
Bay Basin (Basin Plan) in June 21, 1995. This updated and consolidated plan
represents the Board’s master water quality control planning document. The State
Water Resource Control Board and the Office of the Administrative Law approved
the revised Basin Plan on July 20 and November 13, respectively, of 1995. A
summary of regulatory provisions is contained in Title 23 of the California Code
of Regulations, Section 3912. The Basin Plan defines beneficial uses and water
quality objectives for waters of the State, including surface waters and
groundwater.

 

43.

State Board Resolution No. 89-39, “Sources of Drinking Water,” defines potential
sources of drinking water to include all groundwater in the region, with limited
exceptions for areas containing high TDS, high background contaminant levels, or
those areas with a low-yield. Shallow and deeper (33-75 feet bgs) groundwater at
the site is not considered a potential drinking water source as it exceeds
electrical conductivities of 5,000 microseimens per centimeter (uS/cm). There is
no current use of the site’s shallow or deep groundwater, nor any anticipated
plans for its use. However, any groundwater at the site meeting Resolution 89-39
requirements of TDS concentrations below 3000 mg/L, electrical conductivities
below 5,000 uS/cm, and with production yields greater that 200 gallons per day
will be considered a potential drinking water source.

BENEFICIAL USES

 

44.

The beneficial uses of Belmont Slough, and South San Francisco Bay as contained
in the Basin Plan are as follows:

 

  a.

Wildlife habitat;

 

  b.

Brackish and salt water marshes;

 

  c.

Water contact recreation;

 

  d.

Non-water contact recreation;

 

  e.

Commercial and sport fishing;

 

8

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

  f.

Preservation of rare and endangered species;

 

  g.

Estuarine habitat;

 

  h.

Fish migration and spawning;

 

  i.

Industrial process supply; and,

 

  j.

Industrial service supply.

 

45.

The present and potential beneficial uses of the groundwater are as follows:

 

  a.

Domestic and municipal water supply;

 

  b.

Freshwater replenishment; and,

 

  c.

Agricultural supply.

STORM WATER POLLUTION PREVENTION

 

46.

Board Order No. 94-181 required the Dischargers to prepare, implement and submit
a Storm Water Pollution Prevention Plan (SWPPP) in accordance with requirements
specified in State Water Resources Control Board General Permit for Storm Water
Discharges Associated with Industrial Activities (NPDES Permit No. CAS000001).
The Dischargers prepared and submitted a SWPPP dated March 24, 1995, in
accordance with requirements specified in State Water Resources Control Board
General Permit for Storm Water Discharges Associated with Construction
Activities (NPDES Permit No. CAS000002). The SWPPP was implemented at the site
during the construction phase. The NPDES General Permit requires the Dischargers
to submit annual reports. The Dischargers implemented the SWPPP and submitted
annual reports. With the completion of the construction phase, the Dischargers
have filed a Notice of Termination for the site.

CONTINGENCY PLAN

 

47.

Board Order No. 94-181 required the Dischargers to submit a Contingency Plan
that would be implemented in the event of a leak or spill from the leachate
collection facilities. An acceptable Contingency Plan was submitted to the Board
on March 15, 1995. The Contingency Plan provides for immediate notice to the
Board, the Local Enforcement Agency, and the California Department of Toxic
Substances Control. The Contingency Plan also provides for the implementation of
a corrective action plan to stop and contain the migration of pollutants from
the site.

POST-EARTHQUAKE INSPECTION AND CORRECTIVE ACTION PLAN

 

48.

Board Order No. 94-181 required the Dischargers to submit a detailed
Post-Earthquake Inspection and Corrective Action Plan to be implemented in the
event of an earthquake generating ground shaking of Richter Magnitude 7 or
greater at, or within 30 miles of, the landfill. The Dischargers submitted an
acceptable Plan dated March 14, 1995. The Plan describes containment features
and groundwater monitoring and leachate control facilities potentially impacted
by the static and

 

9

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

 

seismic deformations of the landfill. The Plan provides for reporting results of
the post earthquake inspection to the Board within 72 hours of the occurrence of
an appropriate earthquake. Immediately after an earthquake event causing damage
to the landfill structures, the Plan includes the implementation of the
corrective action plan and includes providing notification of any damage to the
Board.

CALIFORNIA ENVIRONMENTAL QUALITY ACT

 

49.

The Dischargers have completed a Final Environmental Impact Report, a
Supplemental Environmental Impact Report, a Health Risk Assessment, and a
Technical Addendum for development at the site that resulted in the filing of
Notice of Determination 108639 Appendix H by the Redwood City Planning Division
on March 3, 1995 stating that the findings were pursuant to California
Environmental Quality Act (CEQA).

 

50.

This action is exempted from the provision of CEQA pursuant to Section 15301,
Title 14, of the California Code of Regulations.

PUBLIC NOTICE

 

51

The Board has notified the Dischargers and interested agencies and persons of
its intent to issue waste discharge requirements for the Dischargers and has
provided them with an opportunity for a public hearing and an opportunity to
submit their written views and recommendations.

PUBLIC MEETING

 

52

The Board in a public meeting heard and considered all comments pertaining to
the discharge.

IT IS HEREBY ORDERED that the Dischargers, their agents, successors and assigns
are to conduct post-closure maintenance and monitoring and shall meet the
applicable provisions contained in Title 27, Division 2, Subdivision 1 of the
California Code of Regulations and Division 7 of the California Water Code and
shall comply with the following:

 

A.

PROHIBITIONS

 

1.

Waste shall not be in contact with ponded water from any source whatsoever.

 

2.

The site is regulated as a closed facility. Therefore, no further waste shall be
deposited or stored at this site.

 

3.

Leachate from waste and ponded water containing leachate or in contact with
solid wastes shall not be discharged to the waters of the State or the United
States.

 

10

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

4.

Neither the treatment nor the discharge of waste shall create a condition of
pollution, contamination or nuisance, as defined by Section 13050 of the
California Water Code (CWC). (H & SC Section 5411, CWC Section 13263)

 

5.

The Dischargers, or any future site owner or operator of the site, shall not
cause the following conditions to exist in waters of the State at any place
outside the waste management facility:

 

  a.

Surface Waters

 

  1)

Floating, suspended, or deposited macroscopic particulate matter or foam.

 

  2)

Bottom deposits or aquatic growths;

 

  3)

Alteration of temperature, turbidity, or apparent color beyond natural
background levels;

 

  4)

Visible, floating, suspended or deposited oil or other products of petroleum
origin; and,

 

  5)

Toxic or other deleterious substances to be present in concentrations or
quantities which may cause deleterious effects on aquatic biota, wildlife or
waterfowl, or which render any of these unfit for human consumption either at
levels created in the receiving waters or as a result of biological
concentrations.

 

  b.

Groundwater

 

  1)

Groundwater shall not be degraded as a result of the waste maintained at this
facility.

 

B.

SPECIFICATIONS

 

1.

All reports pursuant to this order shall be prepared under the supervision of a
registered civil engineer, California registered geologist or certified
engineering geologist.

 

2.

The final cover system shall be maintained to promote lateral runoff and prevent
ponding and infiltration of water.

 

3.

Surface drainage from tributary areas and internal site drainage from surface
sources shall not contact or percolate through wastes during the life of the
site.

 

4.

The site shall be protected from any washout or erosion of wastes or covering
material and from inundation which could occur as a result of a 100-year,
24-hour

 

11

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

 

precipitation event, or as the result of flooding with a return frequency of 100
years.

 

5.

The existing LCRS shall be inspected monthly or more frequently as necessary and
any excess accumulated fluid shall be removed.

 

6.

The existing containment, drainage, landfill gas, leachate collection, and
monitoring systems at the facility, shall be operated and/or maintained as long
as leachate or landfill gas is present and either or both pose a threat to water
quality. In the event these existing features are found to be ineffective at
resolving impairments to groundwater, the Dischargers may be required to take
additional corrective actions.

 

7.

The Dischargers shall assure that the foundation of the site, the solid waste
fill, and the structures (including future site structures) which control
leachate, surface drainage, erosion, and gas are maintained to relevant
engineering criteria, including the ability to withstand conditions generated
during the maximum probable earthquake. Furthermore, new structures shall be
constructed and maintained in compliance with approved engineering criteria.

 

8.

The Dischargers shall analyze the samples from the specified groundwater wells
as outlined in the Discharge Monitoring Program (Attachment A).

 

9.

The Dischargers shall install any reasonable additional groundwater and leachate
monitoring devices required to fulfill the terms of any future Discharge
Monitoring Program issued by the Executive Officer.

 

10.

Landfill gases shall be adequately vented, removed from the landfill, or
otherwise controlled to minimize the danger of explosion, adverse health
effects, nuisance conditions, or the impairment of beneficial uses of water.

 

11.

The Dischargers are subject to performance standards adopted by the California
Integrated Waste Management Board for post-closure land use, which specify that
the devices and features installed in accordance with this Order are designed,
maintained, and continue to operate as intended without significant
interruption.

 

12.

The Dischargers shall maintain a minimum of two surveyed permanent monuments
installed by a licensed land surveyor near the landfill from which the location
and elevation of wastes, containment structures, and monitoring facilities can
be determined throughout the operation and post-closure maintenance period.

 

13.

The Regional Board shall be notified immediately of any failure occurring in the
waste management unit. Any failure that threatens the integrity of containment
features or the landfill shall be promptly corrected after approval of the
method and schedule by the Executive Officer.

 

12

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

14.

The Dischargers shall maintain the facility so as to prevent a statistically
significant increase in the concentrations of indicator parameters or
constituents of concern at groundwater monitoring points as provided in
Section 20415 (e) (7) of Title 27. The Dischargers shall maintain the facility
so as not to exceed the “Water Quality Protection Standard” (WQPS) of the
Discharge Monitoring Program (Attachment A).

 

15.

In the event of a release of a constituent of concern from the WMU beyond the
Point of Compliance (Section 20405, Title 27), the site begins a Compliance
Period (Section 20410, Title 27). During the Compliance Period, the Dischargers
shall perform an Evaluation Monitoring Program and, depending on the findings,
prepare an Optional Demonstration Report or Feasibility Study and Corrective
Action Program, as appropriate. The Point of Compliance is defined as the
vertical surface located along the hydraulically downgradient limit of the waste
management unit and extending through the uppermost aquifer underlying the unit.

 

16.

The Dischargers shall comply with all applicable provisions of Title 27 of the
California Code of Regulations not specifically referred to in this Order.

 

C.

PROVISIONS

 

1.

The Dischargers shall comply with all Prohibitions, Specifications and
Provisions of this Order. All required submittals must be acceptable to the
Executive Officer. The Dischargers must also comply with all conditions of these
Waste Discharge Requirements. Violations may result in enforcement actions,
including Regional Board orders or court orders requiring corrective action or
imposing civil monetary liability, or in modification or revocation of these
waste discharge requirements by the Regional Board. (CWC Section 13261, 13263,
13265, 13267, 13268, 13300, 13301, 13304, 13340, 13350).

 

2.

All technical and monitoring reports submitted in accordance to this Order are
being requested pursuant to Section 13267 of the California Water Code. Failure
to submit reports in accordance with schedules established by this Order or
failure to submit a report of sufficient technical quality to be acceptable to
the Executive Officer may subject the Dischargers to enforcement action pursuant
to Section 13268 of the California Water Code.

 

3.

In addition to printed submittals, all reports submitted pursuant to this Order
must be submitted as electronic files in PDF format. The Regional Board has
implemented a document imaging system, which is ultimately intended to reduce
the need for printed report storage space and streamline the public file review
process. Documents in the imaging system may be viewed, and print copies made,
by the public, during file reviews conducted at the Regional Board’s office. PDF
files can be created by converting the original electronic files format (e.g.,
Microsoft Word) and/or by scanning printed text, figures, and tables. Data
tables

 

13

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

 

containing water level measurements, sample analytical results, coordinates,
elevations and other monitoring information shall also be provided
electronically in Microsoft Excel® or similar spreadsheet format to provide an
easy to review summary, and to facilitate data computations and/or plotting that
Regional Board staff may undertake during their review. Data tables submitted in
electronic spreadsheet format will not be included in the case file for public
review. All electronic files must be submitted on CD or diskette and included
with the print report.

 

4.

The Dischargers shall file with the Regional Board, Discharger Monitoring
Reports, performed according to the attached Discharge Monitoring Program issued
by the Executive Officer. The Executive Officer may amend the Discharge
Monitoring Program at any time, as water quality conditions warrant.

 

5.

The Dischargers shall submit an Annual Monitoring Report, acceptable to the
Executive Officer, by January 31 of each year in accordance with the attached
Discharge Monitoring Program (Attachment A). The annual report to the Board
shall cover the previous calendar year as described in Part A of the Discharge
Monitoring Program. In addition to the requirements outlined in Attachment A,
this report shall also include the following: location and operational condition
of all leachate and groundwater monitoring wells; groundwater and leachate
potentiometric contours for each monitoring event; and tabulation of monthly
leachate volumes discharged to the sanitary district along with any tabulated
analytical results (if collected by the Dischargers). Furthermore, the
Dischargers shall submit Semi-Annual Monitoring Reports, in accordance with the
Discharge Monitoring Program (Attachment A), no later than January 31 and
July 31 of each year; the January 31 semi-annual report may be combined with the
annual report. The semi-annual report shall document any proposed maintenance
activities for the upcoming monitoring period.

REPORT DUE DATES:

SEMI-ANNUAL AND ANNUAL REPORTS:

ANNUAL REPORT—January 31 (Each Year)

SEMI-ANNUAL REPORT—January 31 and July 31 (Each Year)

 

6.

The Dischargers shall immediately notify the Board of any flooding, equipment
failure, slope failure, or other change in site conditions that could impair the
integrity of waste or leachate containment facilities or precipitation and
drainage control structures.

REPORT DUE DATE:

Verbally Report Immediately (Written Report to follow within 5 Days)

 

14

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

7.

The Dischargers shall prepare and submit a Development Proposal, acceptable to
the Executive Officer, for any proposed additional development at the landfill.

COMPLIANCE DUE DATE:

120 days prior to commencement of construction

 

8.

The Discharge Monitoring Program accompanying this Order (Attachment A) does not
require the installation of any new wells. However, for any new wells required
and installed as part of any future revised Discharge Monitoring Program, the
Dischargers shall submit a Well Installation Report, acceptable to the Executive
Officer, that provides all well construction details, geologic boring logs, and
well development logs for these new wells.

COMPLIANCE DUE DATE:

45 days following completion of well installation activities

 

9.

The Dischargers shall maintain a copy of these waste discharge requirements and
these requirements shall be available to site personnel at the facility office
at all times. (CWC Section 13263).

 

10.

The Board considers the property owner(s) to have continuing responsibility for
correcting any problems that arise in the future as a result of waste discharged
or related activities.

 

11.

The Dischargers shall permit the Regional Board or its authorized
representative, upon presentation of credentials, during normal business hours:

 

  a.

Immediate entry upon the premises on which wastes are located or in which any
required records are kept;

 

  b.

Access to copy any records required to be kept under the terms and conditions of
this order;

 

  c.

Inspection of any treatment equipment, monitoring equipment, or monitoring
methods required by this order or by any other California State Agency; and,

 

  d.

Sampling of any discharge or groundwater governed by this order.

 

12.

The Dischargers shall notify the succeeding owners or operators of this Order by
letter in the event of any change in control, ownership of land, or waste
discharge facilities presently owned or controlled by the Dischargers. The
Dischargers must notify the Executive Officer, in writing at least 30 days in
advance of any proposed transfer of this Order’s responsibility and coverage to
a new discharger. The notice must include a written agreement between the
existing Dischargers and the new dischargers-containing a specific date for the
transfer of this order’s responsibility and coverage between the current
Dischargers and the new dischargers. This agreement shall include an
acknowledgment that the existing Dischargers are liable for violations up to the
transfer date and that the new

 

15

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

 

dischargers are liable from the transfer date on. (CWC Sections 13267 and
13263). The request must contain the requesting entity’s full legal name, and
the address and telephone number of the persons responsible for contact with the
Board. Failure to submit the request shall be considered a discharge without
requirements, a violation of the California Water Code.

 

13.

This Order is subject to Board review and updating, as necessary, to comply with
changing State and Federal laws, regulations, policies, or guidelines; changes
in the Board’s Basin Plan; or changes in the discharge characteristics (CWC
Section 13263).

 

14.

Where the Dischargers becomes aware that they failed to submit any relevant
facts in a Report of Waste Discharge or submitted incorrect information in a
Report of Waste Discharge or in any report to the Regional Board, it shall
promptly submit such facts or information (CWC Sections 13260 and 13267).

 

15.

This Order does not convey any property rights of any sort or any exclusive
privileges. The requirements prescribed herein do not authorize the commission
of any act causing injury to persons or property, do not protect the Dischargers
from liability under Federal, State or local laws, nor do they create a vested
right for the Dischargers to continue waste discharge [CWC Section 13263(g)].

 

16.

Provisions of these waste discharge requirements are severable. If any provision
of these requirements is found invalid, the remainder of these requirements
shall not be affected.

 

17.

The Dischargers shall, at all times, properly operate and maintain all
facilities and systems of treatment and control (and related appurtenances)
which are installed or used by the Dischargers to achieve compliance with
conditions of this Order. Proper operation and maintenance includes effective
performance, adequate funding, adequate operator staffing and training, and
adequate laboratory and process controls including appropriate quality assurance
procedures. This provision requires the operation of backup or auxiliary
facilities or similar systems only when necessary to achieve compliance with the
conditions of this order [CWC Section 13263(f)].

 

18.

Except for a discharge which is in compliance with these waste discharge
requirements, any person who, without regard to intent or negligence, causes or
permits any hazardous substance or sewage to be discharged in or on any waters
of the State, or discharged or deposited where it is, or probably will be,
discharged in or on any waters of the State, shall, as soon as (a) that person
has knowledge of the discharge, (b) notification is possible, and
(c) notification can be provided without substantially impeding cleanup or other
emergency measures, immediately notify the Office of Emergency Services of the
discharge in accordance with the spill reporting provision of the state toxic
disaster contingency plan adopted pursuant to Article 3.7 (commencing with
Section

 

16

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

 

8574.7) of Chapter 7 of Division 1 of Title 2 of the Government Code, and
immediately notify the State Board or the appropriate Regional Board of the
discharge. This provision does not require reporting of any discharge of less
than a reportable quantity as provided for under subdivisions (f) and (g) of
Section 13271 of the Water Code unless the Dischargers are in violation of a
prohibition in the applicable Water Quality Control Plan [CWC Section 13271(a)].

 

19.

The Dischargers shall report any noncompliance that may endanger health or the
environment. Any such information shall be provided orally to the Executive
officer within 24 hours from the time the Dischargers becomes aware of the
circumstances. A written submission shall also be provided within five days of
the time the Dischargers becomes aware of the circumstances. The written
submission shall contain a description of the noncompliance and its cause; the
period of noncompliance, including exact dates and times, and if the
noncompliance has not been corrected; the anticipated time it is expected to
continue and steps taken or planned to reduce, eliminate, and prevent recurrence
of the noncompliance. The Executive Officer, or an authorized representative,
may waive the written report on a case-by-case basis if the oral report has been
received within 24 hours [CWC Sections 13263 and 13267].

 

20.

All monitoring instruments and devices used by the Dischargers to fulfill the
prescribed Discharge Monitoring Program (Attachment A) shall be properly
maintained and calibrated as necessary to ensure their continued accuracy.

 

21.

Unless otherwise permitted by the Regional Board Executive officer, all analyses
shall be conducted at a laboratory certified for such analyses by the State
Department of Health Services. The Executive Officer may allow use of an
uncertified laboratory under exceptional circumstances, such as when the closest
laboratory to the monitoring location is outside the State boundaries and
therefore not subject to certification. All analyses shall be required to be
conducted in accordance with the latest edition of “Guidelines Establishing Test
Procedures for Analysis of Pollutants” (40 CFR, Part 1360) promulgated by the
U.S. Environmental Protection Agency (CCR Title 23, Section 2230).

 

22.

This Board’s Order No. 94-181 is hereby rescinded.

 

17

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

I, Loretta K. Barsamian, Executive Officer, do hereby certify that the foregoing
is a full, complete, and correct copy of an Order adopted by the California
Regional Water Quality Control Board, San Francisco Bay Region, on August 20,
2003.

 

/s/ Loretta K. Barsamian

Loretta K. Barsamian

Executive Officer

 

Figures:

Figure 1 - Site Location Map Figure 2 - Site Plan

Attachment:

 Attachment A - Discharge Monitoring Program

 

18

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

Base map from The Thomas Guide, San Mateo County, 1993 Edition. Reproduced with
permission granted by THOMAS BROS. MAPS*. This map is copyrighted by THOMAS
BROS. MAPS*. It is unlawful to copy or reproduce all or any part thereof,
whether for personal use or resale, without permission. All rights reserved.
Feet SITE LOCATION MAP 2965.02M Former Landfill-Westport Office Park GEOMATRIX
Redwood City, California Figure § 1

 

LOGO [g850984dsp_110.jpg]

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

 

LOGO [g850984dsp_111.jpg]

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

CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD

SAN FRANCISCO BAY REGION

DISCHARGE MONITORING PROGRAM

FOR

WESTPORT LANDFILL

JOHN ARRILLAGA SURVIVOR’S TRUST, PEERY

PRIVATE INVESTMENT COMPANY, AND THE PEERY

PUBLIC INVESTMENT COMPANY

REDWOOD CITY, SAN MATEO COUNTY

ORDER NO. R2-2003-0074

CONSISTS OF

PART A

AND

PART B

 

1

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

PART A

 

A.

GENERAL

Reporting responsibilities of waste dischargers are specified in Sections
13225(a), 13267(b), 13383, and 13387(b) of the California Water Code and this
Regional Board’s Resolution No.73-16. This Discharge Monitoring Program is
issued in accordance with Provision C.3 of Regional Board Order No. R2-2003-0074

The principal purposes of a discharge-monitoring program are:

 

  (1)

to document compliance with waste discharge requirements and prohibitions
established by the Board,

 

  (2)

to facilitate self-policing by the Dischargers in the prevention and abatement
of pollution arising from waste discharge,

 

  (3)

to develop or assist in the development of standards of performance and toxicity
standards, and

 

  (4)

to assist the Dischargers in complying with the requirements of Title 27.

 

B.

SAMPLING AND ANALYTICAL METHODS

Sample collection, storage, and analyses shall be performed according to the
most recent version of EPA Standard Methods and in accordance with an approved
sampling and analysis plan.

Water and waste analysis shall be performed by a laboratory approved for these
analyses by the State of California. The director of the laboratory whose name
appears on the certification shall supervise all analytical work in his/her
laboratory and shall sign all reports of such work submitted to the Regional
Board.

All monitoring instruments and equipment shall be properly calibrated and
maintained to ensure accuracy of measurements.

 

C.

DEFINITION OF TERMS

 

  1.

A grab sample is a discrete sample collected at any time.

 

  2.

Receiving waters refers to any surface water, which actually or potentially
receives surface or groundwater which passes over, through, or under waste
materials or contaminated soils. In this case, the groundwater adjacent to the
landfill areas and the surface runoff from the site are considered receiving
waters.

 

2

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

  3.

Standard observations refer to:

 

  a.

Receiving Waters:

 

  1)

Floating and suspended materials of waste origin: presence or absence, source,
and size of affected area;

 

  2)

Discoloration and turbidity: description of color, source, and size of affected
area;

 

  3)

Evidence of odors, presence or absence, characterization, source, and distance
of travel from source;

 

  4)

Evidence of beneficial use: presence of water associated wildlife;

 

  5)

Flow rate; and,

 

  6)

Weather conditions: wind direction and estimated velocity, total precipitation
during the previous five days and on the day of observation.

 

  b.

Perimeter of the Waste Management Unit:

 

  1)

Evidence of liquid leaving or entering the waste management unit, estimated size
of affected area and flow rate. (Show affected area on map);

 

  2)

Evidence of odors, presence or absence, characterization, source, and distance
of travel from source; and,

 

  3)

Evidence of erosion and/or daylighted refuse.

 

  c.

The Waste Management Unit:

 

  1)

Evidence of ponded water at any point on the waste management facility;

 

  2)

Evidence of odors, presence or absence, characterization, source, and distance
of travel from source;

 

  3)

Evidence of erosion, slope movement, ground movement, and/or daylighted refuse;
and,

 

  4)

Standard Analysis (SA) and measurements are listed on Part B, 1., A., Table A
(attached)

 

D.

SAMPLING, ANALYSIS, AND OBSERVATIONS

The Dischargers are required to perform sampling, analyses, and observations in
the following media:

 

  1.

Groundwater per Section 20415 and

 

  2.

Surface water per Section 20415 and per the general requirements specified in
Section 20415 of Title 27 is not required. Due to the extensive Bay Mud flats
surrounding the site and the hazards associated with traversing them, sampling
this medium is not feasible. Shallow groundwater is considered receiving waters
at this site.

 

  3.

Vadose zone per Section 2550.7(d) which is accomplished by sampling, analyzing,
and recording the landfill gas concentrations at gas vent risers located at each
building and at the east and southeast boundary of the site.

 

3

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

E.

RECORDS TO BE MAINTAINED

Written reports shall be maintained by the Dischargers or laboratory, and shall
be retained for a minimum of five years. This period of retention shall be
extended during the course of any unresolved litigation regarding this discharge
or when requested by the Board. Such records shall show the following for each
sample:

 

  1.

Identity of sample and sample station number;

 

  2.

Date and time of sampling;

 

  3.

Date and time that analyses are started and completed, and name of the personnel
performing the analyses;

 

  4.

Complete procedure used, including method of preserving the sample, and the
identity and volumes of reagents used;

 

  5.

Calculation of results; and,

 

  6.

Results of analyses, and detection limits for each analysis.

 

F.

REPORTS TO BE FILED WITH THE BOARD

 

  1.

MONITORING REPORTS

Written discharge monitoring reports shall be filed by the 31st day of the month
following the reporting period (the reporting period is specified in Part B of
this program). In addition an annual report shall be filed as indicated in F.3
below. The reports shall comprise the following:

 

  a.

Letter of Transmittal

A letter transmitting the essential points in each report should accompany each
report. Such a letter shall include a discussion of any requirement violations
found during the last report period, and actions taken or planned for correcting
the violations. If the Dischargers have previously submitted a detailed time
schedule for correcting requirement violations, a reference to the
correspondence transmitting such schedule will be satisfactory. If no violations
have occurred in the last report period this shall be stated in the letter of
transmittal. Monitoring reports and the letter transmitting the monitoring
reports shall be signed by a principal executive officer at the level of vice
president or his duly authorized representative, if such representative is
responsible for the overall operation of the facility from which the discharge
originates. The letter shall contain a statement by the official, under penalty
of perjury, that to the best of the signer’s knowledge the report is true,
complete, and correct.

 

  b.

Each monitoring report shall include a compliance evaluation summary. The
summary shall contain:

 

4

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

  1)

Concentration Limits for the Westport Landfill for all constituents of concern
except ammonia, are “laboratory non-detect” based upon laboratory non-detect
results for background concentrations of the listed COCs. As such, a
non-statistical method is appropriate to determine whether a measurably
significant release has occurred from the Westport Landfill. Therefore, any
reported laboratory detection at a point of compliance monitoring well is
considered a potential release. For ammonia, a statistically significant
increase shall be evaluated using a statistical method acceptable to the
Regional Board staff. Any potential release must be evaluated through additional
monitoring and analyses acceptable to the Executive Officer.

 

  2)

A graphic description of the direction of groundwater flow under/around the
waste management unit, based upon the water level elevations obtained during the
monitoring period and pertinent visual observations.

 

  3)

The method and time of water level measurement, the type of pump used for
purging, pump placement in the well; method of purging, pumping rate, equipment
and methods used to monitor field pH, temperature, and conductivity during
purging, calibration of the field equipment, results of pH, temperature, and
conductivity testing, and the method of disposing of the purge water.

 

  4)

Type of pump used, pump placement for sampling, a detailed description of the
sampling procedure; number and description of equipment, field and travel
blanks; number and description of duplicate samples; type of sample containers
and preservatives used, the date and time of sampling, the name and
qualifications of the person actually taking the samples, and any other
observations.

 

  c.

A map or aerial photograph shall accompany each report showing observation and
monitoring station locations.

 

  d.

Laboratory statements of results of analyses specified in Part B, Table A must
be included in each report. The director of the laboratory whose name appears on
the laboratory certification shall supervise all analytical work in his/her
laboratory and shall sign all reports of such work submitted to the Board.

 

  1)

The methods of analyses and detection limits must be appropriate for the
expected concentrations. Specific methods of analyses must be identified. If
methods other than EPA approved methods or Standard Methods are used, the exact
methodology must be submitted for review and approved by the Executive Officer
prior to use.

 

  2)

In addition to the results of the analyses, laboratory quality assurance/quality
control (QA/QC) information must be included in the

 

5

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

 

monitoring report. The laboratory QA/QC information should include the method,
equipment and analytical detection limits; the recovery rates; an explanation
for any recovery rate that is less than 80% of the specific laboratory recovery
limits; the results of equipment and method blanks; the results of spiked and
surrogate samples; the frequency of quality control analysis; and the name and
qualifications of the person(s) performing the analyses.

 

  e.

An evaluation of the effectiveness of the leachate monitoring or control
facilities, which includes an evaluation of leachate buildup within the disposal
units, a potentiometric surface map, a summary of leachate volumes removed from
the units, and a discussion of the leachate disposal methods utilized.

 

  f.

A summary and certification of completion of all standard observations for the
waste management unit, the perimeter of the waste management unit, and the
receiving waters.

 

  2.

CONTINGENCY REPORTING

A report shall be made by telephone of any seepage from the disposal area
immediately after it is discovered. A written report shall be filed with the
Board within five working days thereafter. This report shall contain the
following information:

 

  1)

A map showing the location(s) of discharge;

 

  2)

Approximate flow rate;

 

  3)

Nature of effects; i.e. all pertinent observations and analyses; and

 

  4)

Corrective measures underway, proposed, or as specified in the Waste Discharge
Requirements.

 

  3.

REPORTING

By January 31 of each year the Dischargers shall submit an annual report to the
Board covering the previous calendar year. This report shall contain:

 

  a.

Tabular summaries of the historical and recent monitoring data obtained during
the previous year; the report should be accompanied by a compact disk (CD),
MS-EXCEL format, tabulating the year’s data.

 

  b.

A comprehensive discussion of the compliance record, and the corrective actions
taken or planned which may be needed to bring the Dischargers into full
compliance with the waste discharge requirements.

 

6

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

  c.

A written summary of the groundwater analyses indicating any change in the
quality of the groundwater.

 

  d.

An evaluation of the effectiveness of the leachate monitoring/ control
facilities, which includes an evaluation of leachate buildup within the disposal
units, a summary of leachate volumes removed from the units, and a discussion of
the leachate disposal methods utilized.

 

  4.

WELL LOGS

Although no new wells are required at the time of the adoption of this Order, if
future conditions require the installation of additional monitoring wells, a
boring log and a monitoring well construction log shall be submitted for each
new sampling well established for this monitoring program, as well as a report
of inspection or certification that each well has been constructed in accordance
with the construction standards of the Department of Water Resources. These
shall be submitted within 45 days after well installation.

 

7

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

PART B

 

1.

DESCRIPTIONS OF OBSERVATION STATIONS AND SCHEDULE OF OBSERVATIONS.

 

A.

GROUNDWATER AND LEACHATE MONITORING

Report Semi-annually

 

  i.

Groundwater: Groundwater samples shall be analyzed as outlined in Table A
(Attached). Groundwater elevations shall be recorded quarterly and reported
semi-annually in the July and January semi-annual monitoring reports.

 

Monitoring Points:

Groundwater

P-8, P-7, P3-R, MW-4, MW-4P,

K-4, P5-1R, MW3-2R, MW-3, DW-1,

DW-2, DW-3, UPG-1, UPG-2

 

MW-4 and MW-4P are in close proximity, therefore only one well needs to be
monitored for the parameters listed in Table A. The other well (MW-4P) is
intended as a piezometer well and shall be monitored for water elevation only.
MW-4 is considered a POC well.

Wells UPG-1, UPG-2, and MW-3 shall be monitored for water elevation only.

 

  ii.

Leachate samples shall be analyzed once every five years (First leachate
chemical analysis due for the January through July 2003 semi-annual monitoring
event) for the parameters outlined in Table A (Attached). Leachate water
elevations shall be recorded quarterly and reported semiannually in the July and
January semi-annual monitoring reports.

 

Monitoring Points:

Leachate-Impacted Groundwater

S-2, S-3A, S-4A, S-5, P-2A, P3-PZ,

P-4, P5-1-PZ, P-6, K3-R, K3-PZ*, MW3-1R,

PZ-2*, PZ-2P, PZ-3A*, PZ-3B*, PZ-3C

 

All wells shall be monitoring for water elevation. All wells shall be monitored
for chemical constituents outlined in Table A (Attached) once every 5 Years.
Wells denoted with an asterisk (*) shall be monitored for leachate elevations
only.

B. FACILITIES MONITORING

The Dischargers shall inspect all facilities to ensure proper and safe operation
once per quarter and report semi-annually.

 

8

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

MONITORING REPORT SCHEDULE

Reports shall be due on the following schedule:

 

First semi-annual report:

July 31 of each year

Second semi-annual Report:

January 31 of each year

Annual Report:

Combined with the second semi-

annual report, due January 31 of each year

I, Loretta K. Barsamian, Executive Officer, hereby certify that the foregoing
Self-Monitoring Program:

 

1.

Has been developed in accordance with the procedures set forth in this Board’s
Resolution No. 73-16 in order to obtain data and document compliance with waste
discharge requirements established in this Board’s Order No. R2-2003-0074

 

2.

Is effective on the date shown below.

 

3.

May be reviewed or modified at any time subsequent to the effective date, upon
written notice from the Executive Officer.

 

/s/ Loretta K. Barsamian

Loretta K. Barsamian

Executive Officer

Date Ordered: August 20, 2003

Attachment: Table A—Schedule for Sampling, Measurement, and Analysis

 

9

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

Table A - Discharge Monitoring Program, List of Analytical Parameters-Leachate
and Groundwater

 

Field/Inorganic Parameters

  

Method1

   Frequency

pH

  

Field

  

Semi-Annual

Electrical conductivity

  

Field

  

Semi-Annual

Groundwater Elevations

  

Field

  

Quarterly 2

Leachate Elevations

  

Field

  

Quarterly 2

Total Ammonia

  

350.3

  

Semi-Annual

Ammonia (un-ionized)

  

350.1

  

Semi-Annual

Organics/ PCBs

  

Method1

   Frequency

Volatile Organic Compounds (including MTBE)

  

8260

  

Semi-Annual 3,4

Semi-Volatile Organic Compounds

  

8270

  

Semi-Annual 3,4

PCBs

  

8082

  

Semi-Annual 3,4

Notes:

1.

Test methods per Methods for Chemical Analysis of Water and Waste, USEPA
600/4/79/029, revised March 1983, or Test Methods for Evaluating Solid Wastes:
Physical/Chemical Methods, USEPA SW-846, 3rd edition, November 1986 and
revisions. Board staff may consider alternative EPA and/or Standard Methods,
with comparable MDLs and PQLs, for use at the Westport Landfill.

2.

Analyzed quarterly and reported semi-annually.

3.

Analysis of groundwater (wells located outside the waste management unit) shall
be conducted during the 2003 calendar year. Any identified impacted groundwater
monitoring wells shall be analyzed semi-annually thereafter. All other
groundwater- monitoring wells shall be sampled annually, thereafter.

4.

Analysis of existing leachate-impacted groundwater wells within the WMU shall be
conducted during the 2003 calendar year and once every 5 years, thereafter.

 

10

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

DRAFT FOR DISCUSSION PURPOSES ONLY

EXHIBIT I

FORM OF LETTER OF CREDIT

BANK OF AMERICA

1 FLEET WAY

SCRANTON, PA 18507-1999

ATTN: GTO – STANDBY UNIT

DATE:

IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER                         

APPLICANT:

BENEFICIARY:

AMOUNT: USD

EXPIRY DATE:

EXPIRE PLACE: OUR COUNTERS

GENTLEMEN:

WE HEREBY ISSUE THIS IRREVOCABLE LETTER OF CREDIT NO.                      IN
                     YOUR FAVOR, FOR THE ACCOUNT OF APPLICANT, FOR UP TO AN
AGGREGATE AMOUNT OF USD                      AVAILABLE BY YOUR DRAFT(S) IN THE
FORM OF ANNEX 1 ATTACHED HERETO, DRAWN ON US AT SIGHT, ACCOMPANIED BY THE
ORIGINAL OF THIS LETTER OF CREDIT AND AMENDMENT(S), IF ANY.

PARTIAL DRAWINGS ARE PERMITTED.

IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT IS DEEMED TO BE AUTOMATICALLY
EXTENDED WITHOUT AMENDMENT FOR PERIOD(S) OF ONE YEAR EACH FROM THE CURRENT
EXPIRY DATE HEREOF, OR ANY FUTURE EXPIRATION DATE, UNLESS AT LEAST SIXTY (60)
DAYS PRIOR TO ANY EXPIRATION DATE, WE NOTIFY YOU BY REGISTERED MAIL OR OVERNIGHT
COURIER AT THE ABOVE LISTED ADDRESS THAT WE ELECT NOT TO CONSIDER THIS LETTER OF
CREDIT EXTENDED FOR ANY SUCH ADDITIONAL PERIOD.

ANY SUCH NOTICE SHALL BE EFFECTIVE WHEN SENT BY US.

THIS LETTER OF CREDIT IS TRANSFERABLE IN FULL AND NOT IN PART. ANY TRANSFER MADE
HEREUNDER MUST CONFORM STRICTLY TO THE TERMS HEREOF AND TO THE CONDITIONS OF
RULE 6 OF THE INTERNATIONAL STANDBY PRACTICES (ISP98) FIXED BY THE INTERNATIONAL
CHAMBER OF COMMERCE, PUBLICATION NO. 590.

SHOULD YOU WISH TO EFFECT A TRANSFER UNDER THIS CREDIT, SUCH TRANSFER WILL BE
SUBJECT TO THE RETURN TO US OF THE ORIGINAL CREDIT INSTRUMENT, ACCOMPANIED BY
OUR

 

-2-

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

DRAFT FOR DISCUSSION PURPOSES ONLY

 

FORM OF TRANSFER, PROPERLY COMPLETED AND SIGNED BY AN AUTHORIZED SIGNATORY OF
YOUR FIRM, BEARING YOUR BANKERS STAMP AND SIGNATURE AUTHENTICATION. SUCH
TRANSFER FORM IS AVAILABLE UPON REQUEST.

ALL TRANSFER FEE AND CHARGES IN CONNECTION WITH ANY TRANSFER OF THIS LETTER OF
CREDIT ARE FOR THE APPLICANT’S ACCOUNT. ANY TRANSFER OF THIS LETTER OF CREDIT IS
NOT CONTINGENT ON APPLICANT’S ABILITY TO PAY THE TRANSFER FEES OR OTHER CHARGES.

DRAFT(S) MUST STATE: “DRAWN UNDER BANK OF AMERICA, N.A. STANDBY L/C NO.
                    DATED                         .”

DRAFTS AND DOCUMENTS MUST BE PRESENTED AT OUR OFFICE ADDRESSED: BANK OF AMERICA,
N.A., 1 FLEET WAY, SCRANTON, PA 18507-1999, ATTN: GTO – STANDBY DEPT.
PRESENTATION OF DRAFTS DRAWN HEREUNDER MAY BE ALSO BE MADE VIA FACSIMILE TO
800-755-8743 (IF PRESENTED BY FAX IT MUST BE FOLLOWED UP BY A PHONE CALL TO US
AT 800-370-7519 TO CONFIRM RECEIPT). IN THE EVENT OF FASCIMILE PRESENTATION THE
ORIGINAL DOCUMENTATION IS NOT REQUIRED TO BE PRESENTED BY MAIL.

WE HEREBY AGREE WITH YOU THAT DRAFT(S) DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED UPON DUE PRESENTATION TO
US.

DRAFTS PRESENTED PRIOR TO 10:00 AM EASTERN TIME ON ANY BUSINESS DAY SHALL BE
PAID BY WIRE TRANSFER, AT BENEFICIARY’S INSTRUCTION, BY 5:00 P.M. EASTERN TIME
ON THE NEXT BUSINESS DAY. DRAFTS PRESENTED AFTER 10:00 AM EASTERN TIME ON ANY
BUSINESS DAY SHALL BE PAID BY WIRE TRANSFER, AT BENEFICIARY’S INSTRUCTION, BY
5:00 PM EASTERN TIME ON THE SECOND SUCCEEDING BUSINESS DAY.

OUR OBLIGATION UNDER THIS CREDIT SHALL NOT BE AFFECTED BY ANY CIRCUMSTANCES,
CLAIM OR DEFENSE, REAL OR PERSONAL, IT BEING UNDERSTOOD THAT OUR OBLIGATION
SHALL BE THAT OF A PRIMARY OBLIGOR AND NOT THAT OF A SURETY, GUARANTOR OR
ACCOMMODATION MAKER AND WE HEREBY WAIVE ANY RIGHT TO DEFER HONORING A DRAFT.

THIS CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING, AND SUCH
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED OR AMPLIFIED BY REFERENCE TO ANY
DOCUMENT, INSTRUMENT OR AGREEMENT REFERRED TO HEREIN OR IN WHICH THIS CREDIT IS
REFERRED TO OR TO WHICH THIS CREDIT RELATES, AND ANY SUCH REFERENCE SHALL NOT BE
DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY DOCUMENT, INSTRUMENT OR AGREEMENT.

THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES (ISP98),
THE INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 590, AND TO THE EXTENT
NOT INCONSISTENT THEREWITH SHALL ALSO BE GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA U.S.A. (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS
THEREOF) INCLUDING, BUT NOT LIMITED TO, ARTICLE 5 OF THE UNIFORM COMMERCIAL CODE
AS IN EFFECT ON THE DATE OF ISSUANCE OF THIS LETTER OF CREDIT.

FORM AND CONTENTS ACCEPTED BY:

(SIGNATURE -MUST BE THE SAME AS THAT ON LETTER OF CREDIT APPLICATION)

 

AUTHORIZED SIGNATURE FOR

 

APPLICANT

 

-3-

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

DRAFT FOR DISCUSSION PURPOSES ONLY

ANNEX 1

(FORM OF SIGHT DRAFT)

DATE:

AGGREGATE AMOUNT: U.S. DOLLARS                     

TO: [NAME OF ISSUER]

AT SIGHT OF THIS DRAFT, PAY TO THE ORDER OF OURSELVES, THE AGGREGATE AMOUNT OF
U.S. DOLLARS                     (INSERT DOLLAR AMOUNT IN
WORDS)                     DRAWN UNDER [NAME OF ISSUER] STANDBY IRREVOCABLE
TRANSFERABLE LETTER OF CREDIT NO.             DATED

 

[BENEFICIARY]

BY:

(SIGNATURE)

(PRINT NAME AND TITLE)

 

Exhibit I

-1-