Exhibit 10.16

LEASE

(Single Tenant; Stand-Alone; Net)

BETWEEN

THE IRVINE COMPANY LLC

AND

SENORX, INC.

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INDEX TO LEASE

 

ARTICLE I. BASIC LEASE PROVISIONS

   1

ARTICLE II. PREMISES

   3

SECTION 2.1.

   LEASED PREMISES    3

SECTION 2.2.

   ACCEPTANCE OF PREMISES    3

SECTION 2.3.

   BUILDING NAME AND ADDRESS    3

ARTICLE III. TERM

   4

SECTION 3.1.

   GENERAL    4

SECTION 3.2.

   DELAY IN POSSESSION    4

SECTION 3.3.

   EARLY OCCUPANCY    4

SECTION 3.4.

   RIGHT TO EXTEND THIS LEASE    4

ARTICLE IV. RENT AND OPERATING EXPENSES

   5

SECTION 4.1.

   BASIC RENT    5

SECTION 4.2.

   OPERATING EXPENSES    5

SECTION 4.3.

   SECURITY DEPOSIT    8

SECTION 4.4.

   LETTER OF CREDIT    8

ARTICLE V. USES

      9

SECTION 5.1.

   USE    9

SECTION 5.2.

   SIGNS    9

SECTION 5.3.

   HAZARDOUS MATERIALS    10

ARTICLE VI. COMMON AREAS; SERVICES

   11

SECTION 6.1.

   UTILITIES AND SERVICES    11

SECTION 6.2.

   OPERATION AND MAINTENANCE OF COMMON AREAS    12

SECTION 6.3.

   USE OF COMMON AREAS    12

SECTION 6.4.

   PARKING    12

SECTION 6.5.

   CHANGES AND ADDITIONS BY LANDLORD    13

ARTICLE VII. MAINTAINING THE PREMISES

   13

SECTION 7.1.

   TENANT’S MAINTENANCE AND REPAIR    13

SECTION 7.2.

   LANDLORD’S MAINTENANCE AND REPAIR    13

SECTION 7.3.

   ALTERATIONS    14

SECTION 7.4.

   MECHANIC’S LIENS    15

SECTION 7.5.

   ENTRY AND INSPECTION    15

ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT’S PROPERTY

   15

ARTICLE IX. ASSIGNMENT AND SUBLETTING

   15

SECTION 9.1.

   RIGHTS OF PARTIES    15

SECTION 9.2.

   EFFECT OF TRANSFER    17

SECTION 9.3.

   SUBLEASE REQUIREMENTS    17

SECTION 9.4.

   CERTAIN TRANSFERS    17

ARTICLE X. INSURANCE AND INDEMNITY

   18

SECTION 10.1.

   TENANT’S INSURANCE    18

SECTION 10.2.

   LANDLORD’S INSURANCE    18

SECTION 10.3.

   TENANT’S INDEMNITY    18

SECTION 10.4.

   LANDLORD’S NONLIABILITY    19

SECTION 10.5.

   WAIVER OF SUBROGATION    19 ARTICLE XI. DAMAGE OR DESTRUCTION    19

SECTION 11.1.

   RESTORATION    19

SECTION 11.2.

   LEASE GOVERNS    20

ARTICLE XII. EMINENT DOMAIN

   21

SECTION 12.1.

   TOTAL OR PARTIAL TAKING    21

SECTION 12.2.

   TEMPORARY TAKING    21

SECTION 12.3.

   TAKING OF PARKING AREA    21

ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS

   21

SECTION 13.1.

   SUBORDINATION    21

SECTION 13.2.

   ESTOPPEL CERTIFICATE    21

SECTION 13.3.

   FINANCIALS    22

ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES

   22

SECTION 14.1.

   TENANT’S DEFAULTS    22

SECTION 14.2.

   LANDLORD’S REMEDIES    23

SECTION 14.3.

   LATE PAYMENTS    24

 

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SECTION 14.4.

   RIGHT OF LANDLORD TO PERFORM    24

SECTION 14.5.

   DEFAULT BY LANDLORD    24

SECTION 14.6.

   EXPENSES AND LEGAL FEES    24

SECTION 14.7.

   WAIVER OF JURY TRIAL/JUDICIAL REFERENCE    25

SECTION 14.8.

   SATISFACTION OF JUDGMENT    26

ARTICLE XV. END OF TERM

   26

SECTION 15.1.

   HOLDING OVER    26

SECTION 15.2.

   MERGER ON TERMINATION    26

SECTION 15.3.

   SURRENDER OF PREMISES; REMOVAL OF PROPERTY    26

ARTICLE XVI. PAYMENTS AND NOTICES

   27

ARTICLE XVII. RULES AND REGULATIONS

   27

ARTICLE XVIII. BROKER’S COMMISSION

   27

ARTICLE XIX. TRANSFER OF LANDLORD’S INTEREST

   27

ARTICLE XX. INTERPRETATION

   27

SECTION 20.1.

   GENDER AND NUMBER    27

SECTION 20.2.

   HEADINGS    27

SECTION 20.3.

   JOINT AND SEVERAL LIABILITY    27

SECTION 20.4.

   SUCCESSORS    27

SECTION 20.5.

   TIME OF ESSENCE    28

SECTION 20.6.

   CONTROLLING LAW/VENUE    28

SECTION 20.7.

   SEVERABILITY    28

SECTION 20.8.

   WAIVER AND CUMULATIVE REMEDIES    28

SECTION 20.9.

   INABILITY TO PERFORM    28

SECTION 20.10.

   ENTIRE AGREEMENT    28

SECTION 20.11.

   QUIET ENJOYMENT    28

SECTION 20.12.

   SURVIVAL    28

SECTION 20.13.

   INTERPRETATION    28

ARTICLE XXI. EXECUTION AND RECORDING

   28

SECTION 21.1.

   COUNTERPARTS    28

SECTION 21.2.

   CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP AUTHORITY    28

SECTION 21.3.

   EXECUTION OF LEASE; NO OPTION OR OFFER    28

SECTION 21.4.

   RECORDING    29

SECTION 21.5.

   AMENDMENTS    29

SECTION 21.6.

   EXECUTED COPY    29

SECTION 21.7.

   ATTACHMENTS    29 ARTICLE XXII. MISCELLANEOUS    29

SECTION 22.1.

   NONDISCLOSURE OF LEASE TERMS    29

SECTION 22.2.

      29

SECTION 22.3.

   CHANGES REQUESTED BY LENDER    29

SECTION 22.4.

   MORTGAGEE PROTECTION    29

SECTION 22.5.

   COVENANTS AND CONDITIONS    29

SECTION 22.6.

   SECURITY MEASURES    29

SECTION 22.7.

   SDN LIST    29

SECTION 22.8.

   JAMS    30

SECTION 22.9.

   APPROVALS    30

EXHIBITS

Exhibit A

  

Description of Premises

Exhibit B

  

Environmental Questionnaire

Exhibit C

  

Landlord’s Disclosures

Exhibit D

  

Insurance Requirements

Exhibit E

  

Rules and Regulations

Exhibit X

  

Work Letter

Exhibit Y

  

Site Plan

 

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LEASE

(Single Tenant; Net)

THIS LEASE is made as of the 5th day of March, 2008 by and between THE IRVINE
COMPANY LLC, a Delaware limited liability company hereafter called “Landlord,”
and SENORX, INC., a Delaware corporation, hereinafter called “Tenant.”

ARTICLE I. BASIC LEASE PROVISIONS

Each reference in this Lease to the “Basic Lease Provisions” shall mean and
refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.

 

1. Premises: The Premises are more particularly described in Section 2.1.

 

2. Address of Building: 3 Morgan, Irvine, CA

 

3. Use of Premises: General office, warehouse, manufacturing, product testing,
and research and development and any other use permitted under the applicable
zoning ordinance, except that no retail use shall be permitted.

 

4. Commencement Date: November 1, 2008

 

5. Expiration Date: January 31, 2014

 

6. Basic Rent: Commencing on the Commencement Date, the Basic Rent shall be
Forty Four Thousand Three Hundred Dollars ($44,300.00) per month, based on $1.07
per rentable square foot.

Basic Rent is subject to adjustment as follows:

Commencing on November 1, 2009, the Basic Rent shall be Forty Five Thousand Nine
Hundred Fifty-Six Dollars ($45,956.00) per month, based on $1.11 per rentable
square foot.

Commencing on November 1, 2010, the Basic Rent shall be Forty Eight Thousand
Twenty-Six Dollars ($48,026.00) per month, based on $1.16 per rentable square
foot.

Commencing on November 1, 2011, the Basic Rent shall be Fifty Thousand
Ninety-Six Dollars ($50,096.00) per month, based on $1.21 per rentable square
foot.

Commencing on November 1, 2012, the Basic Rent shall be Fifty Two Thousand One
Hundred Sixty-Seven Dollars ($52,167.00) per month, based on $1.26 per rentable
square foot.

 

7. Guarantor(s): None

 

8. Floor Area: Approximately 41,402 rentable square feet

 

9. Security Deposit: $57,463.00 (see also Section 4.4 for Letter of Credit
requirements).

 

10. Broker(s): “Landlord’s Broker”: Irvine Realty Company

      “Tenant’s Broker”: Studley

 

11. Additional Insureds: None

 

12. Address for Notices:

 

LANDLORD

  

TENANT

THE IRVINE COMPANY LLC

550 Newport Center Drive

Newport Beach, CA 92660

Attn:  Senior Vice President, Operations

 Irvine Office Properties

 

with a copy of notices to:

 

THE IRVINE COMPANY LLC

550 Newport Center Drive

Newport Beach, CA 92660

Attn: Vice President, Operations

 

  

Prior to the Commencement Date:

SENORX, INC.

11 Columbia, Suite A

Aliso Viejo, CA 92656

Attn: Chief Financial Officer

 

after the Commencement Date:

 

SENORX, INC.

3 Morgan

Irvine, CA 92618

Attn: Chief Financial Officer

 

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Irvine Office Properties,

Technology Portfolio

 

13. Address for Payments: All payments due under this Lease shall be made to the
address shown on the invoice for the payment due, or if no address is shown, to
Landlord’s notice address above.

 

14. Tenant’s Liability Insurance Requirement: $2,000,000.00

 

15. Vehicle Parking Spaces: All on-site parking, consisting of not less than one
Hundred Thirty-Seven (137) spaces.

 

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ARTICLE II. PREMISES

SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases from
Landlord the premises shown in Exhibit A (the “Premises”), containing
approximately the rentable square footage set forth as the “Floor Area” in
Item 8 of the Basic Lease Provisions. The Premises consist of all of the
rentable square footage within the building identified in Item 1 of the Basic
Lease Provisions (the Premises together with such building and the underlying
real property, are called the “Building”). The Building is located on the site
shown on Exhibit Y (the “Site”). All references to “Floor Area” in this Lease
shall mean the rentable square footage set forth in Item 8 of the Basic Lease
Provisions. The rentable square footage set forth in Item 8 may include or have
been adjusted by various factors, including, without limitation, a load factor
for any vertical penetrations, stairwells or similar features or areas of the
Building. Tenant agrees that the Floor Area set forth in Item 8 shall be binding
on Landlord and Tenant for purposes of this Lease regardless of whether any
future or differing measurements of the Premises or the Building are consistent
or inconsistent with the Floor Area set forth in Item 8.

SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither Landlord
nor any representative of Landlord has made any representation or warranty with
respect to the Premises, the Building or the Site (except as expressly provided
in this Lease). Not by way of limitation of the foregoing, no representation or
warranty has been made with respect to the suitability or fitness for any
purposes of the Premises, the Building or the Site, nor regarding the compliance
of Tenant’s use of the Premises with the applicable zoning or regarding any
other land use matters, and Tenant shall be solely responsible as to such
matters. Further, that neither Landlord nor any representative of Landlord has
made any representations or warranties regarding (i) what other tenants or uses
may be permitted or intended in the Building or the Site, (ii) any exclusivity
of use by Tenant with respect to its permitted use of the Premises as set forth
in Item 3 of the Basic Lease Provisions, or (iii) any construction of portions
of the Site not yet completed. Tenant further acknowledges that neither Landlord
nor any representative of Landlord has agreed to undertake any alterations or
additions or to construct any improvements to the Premises except as expressly
provided in this Lease, including for the “Tenant Improvements” to be
constructed by Landlord pursuant to the Work Letter attached hereto as Exhibit X
(the “Work Letter”). Tenant further acknowledges that, although Landlord has no
actual knowledge of issues respecting the existing flooring materials installed
in the Premises, the flooring materials which may be installed within the
portions of the Premises located on the ground floor of the Building may be
limited by the moisture content of the Building slab and underlying soils. As of
the Commencement Date, Tenant shall be conclusively deemed to have accepted the
Premises and those portions of the Building and Site in which Tenant has any
rights under this Lease, which acceptance shall mean that it is conclusively
established that the Premises and those portions of the Building and Site in
which Tenant has any rights under this Lease were in satisfactory condition and
in conformity with the provisions of this Lease, subject only to (A) those
defective or incomplete portions of the Tenant Improvements which Tenant shall
have itemized on a written punch list and delivered to Landlord within thirty
(30) days after the Commencement Date (as defined in Section 3.1) and
(B) Landlord’s obligations expressly contained in Section 2.4 of this Lease.
Nothing contained in this Section shall affect the commencement of the Term or
the obligation of Tenant to pay rent. Landlord shall diligently complete all
punch list items of which it is notified as provided above.

SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any name
selected by Landlord from time to time for the Building and/or the Site as any
part of Tenant’s corporate or trade name. Landlord shall have the right to
change the name, address, number or designation of the Building or Site without
liability to Tenant. Notwithstanding the foregoing, Landlord shall reimburse
Tenant for all reasonable out-of-pocket expenses incurred by Tenant, including,
without limitation, Tenant’s costs of obtaining new business cards, stationery
and informing Tenant’s customers and vendors of Tenant’s new address, not to
exceed Five Thousand Dollars ($5,000.00) in the aggregate, resulting from any
changed name, address, number or designation of the Building or Site initiated
by Landlord.

SECTION 2.4. LANDLORD’S RESPONSIBILITIES.

(a) Notwithstanding the provisions of Section 7.2 of this Lease, during the
initial 63-month Term of this Lease (as same may be extended by Tenant pursuant
to Section 3.3 below), Landlord agrees to repair and/or replace, at its sole
cost and expense and not as a “Site Cost”, all structural walls, foundations,
structural elements of the roof of the Building, and underground utility pipes
and and/or facilities serving the Building (the “Structural Elements”).
Notwithstanding the foregoing, Landlord’s obligation contained in this
Section 2.4(a) to bear such costs and expenses shall not apply: (i) to the costs
and expenses of periodic maintenance of the Structural Elements, nor (ii) to the
extent of the negligence or willful misconduct by Tenant, its employees, agents,
contractors, licensees or invitees (in which case Tenant shall be responsible
for the reasonable costs of such repairs and/or replacements). Tenant shall give
Landlord prompt notice when Tenant becomes aware of any repairs or replacements
required of Landlord pursuant to this Section 2.4(a), and such repairs shall be
made promptly following notice from Tenant.

(b) Landlord warrants to Tenant as follows: (i) that the roof, plumbing, fire
sprinkler system, lighting, heating, ventilation and air conditioning systems
and electrical systems serving the Premises shall be in good operating condition
on the Commencement Date, and (ii) that the Premises shall be delivered to
Tenant on the Commencement Date in a vacant and “broom clean” condition.
Provided that Tenant shall notify Landlord of any non-compliance with the
foregoing warranties contained in subsections (i) and/or (ii) above not later
than thirty (30) days following the Commencement Date, then Landlord shall,
except as otherwise provided in this Lease, promptly after receipt of written
notice from Tenant setting forth the nature and extent of such non-compliance,
rectify same at Landlord’s sole cost and expense and not as a Site Cost.

 

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(c) Landlord shall correct, repair and/or replace any non-compliance of the
Building, the Tenant Improvements, and/or the Common Areas with all applicable
building permits and codes in effect as of the date of the issuance of building
permit(s) therefor, including without limitation, the provisions of Title III of
the Americans With Disabilities Act (“ADA”). Said costs of compliance shall be
Landlord’s sole cost and shall not be part of Site Costs; including any costs of
bringing to code compliance any portions of the Building, the Tenant
Improvements and/or the Common Areas which were in compliance when they were
built but are nonetheless required by the applicable governmental entity to be
upgraded to current codes, such upgrading requirement, however, not to be
triggered as the result of either Alterations by Tenant or by any further
revisions or amendments to the codes themselves. Landlord shall correct, repair
or replace any non-compliance of the Building, the Tenant Improvements and/or
the Common Areas with any further revisions or amendments to applicable building
codes (including, without limitation, the ADA) becoming effective after the date
of issuance of the applicable building permit(s) therefor, provided that,
subject to the first sentence of this Section 2.4(c), the amortized cost of such
repairs or replacements (amortized over the useful life thereof in accordance
with generally accepted accounting principles, consistently applied, and using a
market cost of funds reasonably determined by Landlord) shall be included as
Site Costs payable by Tenant, and provided that any compliance work “triggered”
by Landlord’s performance of the Tenant Improvements Work shall be Landlord’s
sole cost. All other ADA compliance issues which pertain to the Premises,
including without limitation, in connection with Tenant’s construction of any
Alterations or other improvements in the Premises (and any resulting ADA
compliance requirements in the Common Areas if Landlord shall consent to same as
more particularly provided in Section 7.3 of this Lease) and the operation of
Tenant’s business and employment practices in the Premises, shall be the
responsibility of Tenant at its sole cost and expense. The repairs, corrections
or replacements required of Landlord or of Tenant under the foregoing provisions
of this Section 2.4(c) shall be made promptly following notice of non-compliance
from any applicable governmental agency.

ARTICLE III. TERM

SECTION 3.1. GENERAL. Subject to the provisions of Section 3.2 below, the term
of this Lease (“Term”) shall commence on the date set forth in Item 4 of the
Basic Lease Provisions (the “Commencement Date”), and shall expire on the date
set forth in Item 5 of the Basic Lease Provisions (the “Expiration Date”);
provided, however, that the Commencement Date shall be extended by that number
days that the “Early Occupancy Date” (as defined below) is delayed beyond
August 1, 2008 due to the following reasons only: (A) Landlord’s default, gross
negligence or willful misconduct in the performance of its obligations under the
Work Letter, (B) the existence of Hazardous Materials on or about the Premises
as of the execution of this Lease, (C) the failure of the Premises to comply
with applicable building codes, including without limitation the ADA, in effect
as of the execution of this Lease, or (D) any casualty or condemnation of the
Premises as defined in Articles XI and XII of this Lease, respectively.

SECTION 3.2. DELAY IN POSSESSION. If Landlord, for any reason whatsoever, cannot
deliver possession of the Premises to Tenant on or before the “Early Occupancy
Date” (as defined below) and/or Commencement Date as set forth in Item 4 of the
Basic Lease Provisions, this Lease shall not be void or voidable nor shall
Landlord be liable to Tenant for any resulting loss or damage. However, Tenant
shall not be liable for any rent and the Commencement Date shall not occur until
Landlord tenders possession of the Premises to Tenant.

SECTION 3.3. EARLY OCCUPANCY. Subject to the provisions of Section 3.2 above,
Landlord agrees that Tenant shall be permitted to occupy the Premises on that
date (the “Early Occupancy Date”) on which all of the following have occurred:
the Premises are tendered to Tenant with the tenant improvements to be
constructed by Landlord pursuant to the Work Letter (“Tenant Improvements”)
substantially completed but for minor “punch list” matters that do not
materially interfere with the use of the Premises for Tenant’s regular business
operations therein (provided Landlord has then obtained all governmental
approvals required for the legal of occupancy for the Premises for the permitted
use) (the “substantial completion” of the Tenant Improvements, or the Tenant
Improvements “substantially completed” herein), subject to the following terms
and conditions: (a) concurrently with the execution and delivery of this Lease,
and prior to any such early occupancy by Tenant, Tenant shall deliver to
Landlord the first installment of Basic Rent and Operating Expenses due under
the Lease, the Security Deposit set forth in Item 9 of the Basic Lease
Provisions and the required certificate(s) of insurance and a completed
Environmental Questionnaire (see Exhibit C attached hereto); (b) Tenant’s
occupancy of the Premises prior to the Commencement Date shall be subject to all
of the covenants and conditions on Tenant’s part contained in this Lease
(including, without limitation, the covenants contained in Sections 5.3, 6.1,
7.1, 7.3, 7.4, 10.1 and 10.3 of the Lease), except for the obligation to pay
Basic Rent and Operating Expenses, and (c) Tenant shall contract and pay for all
of its electrical utility services during such early occupancy period.

SECTION 3.4. RIGHT TO EXTEND THIS LEASE. Provided that no Event of Default has
occurred and is continuing under any provision of this Lease, at the time of
exercise of the extension right granted herein, and provided further that Tenant
has not assigned its interest in this Lease or sublet more than twenty-five
percent (25%) of the Floor Area of the Premises (in the aggregate), to other
than a “Permitted Transferee” (as hereinafter defined), then Tenant may extend
the Term of this Lease for one (1) period of sixty (60) months. Tenant shall
exercise its right to extend the Term by and only by delivering to Landlord, not
less than nine (9) months or more than twelve (12) months prior to the
expiration date of the Term, Tenant’s irrevocable written notice of its
commitment to extend (the “Commitment Notice”). The Basic Rent payable under the
Lease during any extension of the Term shall be determined as provided in the
following provisions.

If Landlord and Tenant have not by then been able to agree upon the Basic Rent
for the extension of the Term, then within one hundred twenty (120) and ninety
(90) days prior to the expiration date of the Term, Landlord shall notify Tenant
in writing of the Basic Rent that would reflect the prevailing market rental
rate for a 60-month

 

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renewal of comparable space in the Irvine Spectrum (together with any increases
thereof during the extension period) as of the commencement of the extension
period (“Landlord’s Determination”). Should Tenant disagree with the Landlord’s
Determination, then Tenant shall, not later than twenty (20) days thereafter,
notify Landlord in writing of Tenant’s determination of those rental terms
(“Tenant’s Determination”). Within ten (10) days following delivery of the
Tenant’s Determination, the parties shall attempt to agree on an appraiser to
determine the fair market rental. If the parties are unable to agree in that
time, then each party shall designate an appraiser within ten (10) days
thereafter. Should either party fail to so designate an appraiser within that
time, then the appraiser designated by the other party shall determine the fair
market rental. Should each of the parties timely designate an appraiser, then
the two appraisers so designated shall appoint a third appraiser who shall,
acting alone, determine the fair market rental for the Premises. Any appraiser
designated hereunder shall have an MAI certification with not less than five
(5) years experience in the valuation of commercial industrial buildings in the
vicinity of the Site.

Within thirty (30) days following the selection of the appraiser and such
appraiser’s receipt of the Landlord’s Determination and the Tenant’s
Determination, the appraiser shall determine whether the rental rate determined
by Landlord or by Tenant more accurately reflects the fair market rental rate
for the 60-month renewal of the Lease for the Premises, as reasonably
extrapolated to the commencement of the extension period. Accordingly, either
the Landlord’s Determination or the Tenant’s Determination shall be selected by
the appraiser as the fair market rental rate for the extension period. In making
such determination, the appraiser shall consider rental comparables for the
Irvine Spectrum, including, without limitation, factors for tenant improvement
allowances or “free rent” provisions then being granted by landlords for
renewals of leases (which factors may equate to a corresponding adjustment to
Base Rent), but the appraiser shall not attribute any factor for market tenant
improvement allowances or brokerage commissions or any improvements paid for by
Tenant in making its determination of the fair market rental rate. At any time
before the decision of the appraiser is rendered, either party may, by written
notice to the other party, accept the rental terms submitted by the other party,
in which event such terms shall be deemed adopted as the agreed fair market
rental. The fees of the appraiser(s) shall be borne entirely by the party whose
determination of the fair market rental rate was not accepted by the appraiser.

Within twenty (20) days after the determination of the fair market rental,
Landlord shall prepare an appropriate amendment to this Lease in commercially
reasonable form for the extension period, and Tenant shall execute and return
same to Landlord within twenty (20) days after Tenant’s receipt of same. Should
the fair market rental not be established by the commencement of the extension
period, then Tenant shall continue paying rent at the rate in effect during the
last month of the initial Term, and a lump sum adjustment shall be made promptly
upon the determination of such new rental.

If Tenant fails to timely exercise the extension right granted herein within the
time period expressly set forth for exercise by Tenant in the initial paragraph
of this Section 3.4, Tenant’s right to extend the Term shall be extinguished and
the Lease shall automatically terminate as of the expiration date of the Term,
without any extension and without any liability to Landlord. Tenant’s rights
under this Section 3.4 shall belong solely to SenoRx, Inc., a Delaware
corporation, and any attempted assignment or transfer of such rights other than
to a “Permitted Transferee” shall be void and of no force and effect. Tenant
shall have no other right to extend the Term beyond the single sixty (60) month
extension period created by this Section 3.4. Unless agreed to in a writing
signed by Landlord and Tenant, any extension of the Term, whether created by an
amendment to this Lease or by a holdover of the Premises by Tenant, or
otherwise, shall be deemed a part of, and not in addition to, any duly exercised
extension period permitted by this Section 3.4.

ARTICLE IV. RENT AND OPERATING EXPENSES

SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant shall pay
to Landlord without deduction or offset, the rental amount for the Premises
shown in Item 6 of the Basic Lease Provisions (the “Basic Rent”), including
subsequent adjustments, if any. If the Commencement Date is other than the first
day of the calendar month, any rental adjustments shown in Item 6 occurring with
reference to the monthly anniversary of the Commencement Date, shall be deemed
to occur on the first day of the next calendar month following the specified
monthly anniversary of the Commencement Date. The rent shall be due and payable
in advance commencing on the Commencement Date (as prorated for any partial
month) and continuing thereafter on the first day of each successive calendar
month of the Term. No demand, notice or invoice shall be required for the
payment of Basic Rent. An installment of rent in the amount of one (1) full
month’s Basic Rent at the initial rate specified in Item 6 of the Basic Lease
Provisions and one (1) month’s estimated Tenant’s Share of Operating Expenses
(as defined in Section 4.2) shall be delivered to Landlord concurrently with
Tenant’s execution of this Lease and shall be applied against the Basic Rent and
Operating Expenses first due hereunder.

SECTION 4.2. OPERATING EXPENSES.

(a) From and after the Commencement Date, Tenant shall pay to Landlord, as
additional rent, Tenant’s Share of all Operating Expenses, as defined in
Section 4.2(f), incurred by Landlord in the operation of the Building and the
Site. The term “Tenant’s Share” means one hundred percent (100%) of any
Operating Expenses reasonably determined by Landlord to benefit or relate
substantially to the Building and/or the Site, plus an allocated portion of any
Operating Expenses, as reasonably determined from time to time by Landlord,
which benefit or relate both to the Building or the Site and to other projects
owned by Landlord and/or its affiliates. In the event that any management and/or
overhead fee payable or imposed by Landlord for the management of Tenant’s
Premises is calculated as a percentage of the rent payable by Tenant, then the
full amount of such management and/or overhead

 

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fee which is attributable to the rent paid by Tenant shall be additional rent
payable by Tenant, in full, provided, however, that Landlord may elect to
include such full amount as part of Tenant’s Share of Operating Expenses.

(b) Prior to the start of each full Expense Recovery Period (as defined in this
Section 4.2), Landlord shall give Tenant a written estimate of the amount of
Tenant’s Share of Operating Expenses for the applicable Expense Recovery Period.
Any delay or failure by Landlord in providing such estimate shall not relieve
Tenant from its obligation to pay Tenant’s Share of Operating Expenses or
estimated amounts thereof, if and when Landlord provides such estimate or final
payment amount. Tenant shall pay the estimated amounts to Landlord in equal
monthly installments, in advance concurrently with payments of Basic Rent. If
Landlord has not furnished its written estimate for any Expense Recovery Period
by the time set forth above, Tenant shall continue to pay monthly the estimated
Tenant’s Share of Operating Expenses in effect during the prior Expense Recovery
Period; provided that when the new estimate is delivered to Tenant, Tenant
shall, at the next monthly payment date, pay any accrued estimated Tenant’s
Share of Operating Expenses based upon the new estimate. For purposes hereof,
“Expense Recovery Period” shall mean every twelve month period during the Term
(or portion thereof for the first and last lease years) commencing July 1 and
ending June 30, provided that Landlord shall have the right to change the date
on which an Expense Recovery Period commences in which event appropriate
reasonable adjustments shall be made to Tenant’s Share of Operating Expenses so
that the amount payable by Tenant shall not materially vary as a result of such
change.

(c) Within one hundred twenty (120) days after the end of each Expense Recovery
Period, Landlord shall furnish to Tenant a statement (a “Reconciliation
Statement”) showing in reasonable detail the actual or prorated Tenant’s Share
of Operating Expenses incurred by Landlord during such Expense Recovery Period,
and the parties shall within thirty (30) days thereafter make any payment or
allowance necessary to adjust Tenant’s estimated payments of Tenant’s Share of
Operating Expenses, if any, to the actual Tenant’s Share of Operating Expenses
as shown by the Reconciliation Statement. Any delay or failure by Landlord in
delivering any Reconciliation Statement shall not constitute a waiver of
Landlord’s right to require Tenant to pay Tenant’s Share of Operating Expenses
pursuant hereto. Any amount due Tenant shall be credited against installments of
Basic Rent and Operating Expenses next coming due, and any deficiency shall be
paid by Tenant together with the next installment of Basic Rent. Should Tenant
fail to object in writing to Landlord’s determination of Tenant’s Share of
Operating Expenses or fail to give written notice of its intent to audit
Landlord’s Operating Expenses pursuant to the provisions of the next succeeding
paragraph within one hundred eighty (180) days following delivery of Landlord’s
Reconciliation Statement, Landlord’s determination of Tenant’s Share of
Operating Expenses for the applicable Expense Recovery Period shall be
conclusive and binding on the parties for all purposes and any future claims to
the contrary shall be barred.

Provided no Event of Default has occurred and is continuing, Tenant shall have
the right to cause a certified public accountant, engaged on a non-contingency
fee basis, to audit Operating Expenses by inspecting Landlord’s general ledger
of expenses not more than once during any Expense Recovery Period. However, to
the extent that insurance premiums or any other component of Operating Expenses
is determined by Landlord on the basis of an internal allocation of costs
utilizing information Landlord in good faith deems proprietary, such expense
component shall not be subject to audit so long as it does not exceed the amount
per square foot typically imposed by landlords of other first class business
parks in Orange County, California. Tenant shall give notice to Landlord of
Tenant’s intent to audit within one hundred eighty (180) days after Tenant’s
receipt of Landlord’s expense statement which sets forth Tenant’s Share of
Landlord’s actual Operating Expenses. Such audit shall be conducted at a
mutually agreeable time during normal business hours at the office of Landlord
or its management agent where such accounts are maintained. If Tenant’s audit
determines that actual Operating Expenses have been overstated by more than five
percent (5%), then subject to Landlord’s right to review and/or contest the
audit results, Landlord shall reimburse Tenant for the reasonable out-of-pocket
costs of such audit. Tenant’s rent shall be appropriately adjusted to reflect
any overstatement in Operating Expenses. In the event of a dispute between
Landlord and Tenant regarding such audit, such dispute shall be submitted and
resolved by binding arbitration pursuant to Section 22.8 below. All of the
information obtained by Tenant and/or its auditor in connection with such audit,
as well as any compromise, settlement, or adjustment reached between Landlord
and Tenant as a result thereof, shall be held in strict confidence and, except
as may be required pursuant to litigation, shall not be disclosed to any third
party, directly or indirectly, by Tenant or its auditor or any of their
officers, agents or employees. Landlord may require Tenant’s auditor to execute
a separate confidentiality agreement affirming the foregoing as a condition
precedent to any audit. In the event of a violation of this confidentiality
covenant in connection with any audit, then in addition to any other legal or
equitable remedy available to Landlord, Tenant shall forfeit its right to any
reconciliation or cost reimbursement payment from Landlord due to said audit
(and any such payment theretofore made by Landlord shall be promptly returned by
Tenant), and Tenant shall have no further audit rights under this Lease.
Notwithstanding the foregoing, Tenant shall have no right of audit with respect
to any Expense Recovery Period unless the total Operating Expenses per square
foot for such Expense Recovery Period, as set forth in Landlord’s annual expense
reconciliation, exceed the total Operating Expenses per square foot during the
initial Expense Recovery Period during the Term, as increased by the percentage
change in the United States Department of Labor, Bureau of Labor Statistics,
Consumer Price Index for all Urban Consumers, San Francisco – Oakland – San Jose
Area Average, all items (1982-84 = 100) (the “Index”), which change in the Index
shall be measured by comparing the Index published for January of the initial
Expense Recovery Period during the Term with the Index published for January of
the applicable Expense Recovery Period.

(d) Even though this Lease has terminated and the Tenant has vacated the
Premises, when the final determination is made of Tenant’s Share of Operating
Expenses for the Expense Recovery Period in which this Lease terminates, Tenant
shall within thirty (30) days of written notice pay the entire increase over the
estimated Tenant’s Share of Operating Expenses already paid. Conversely, any
overpayment by Tenant shall be rebated by Landlord to Tenant not later than
thirty (30) days after such final determination.

 

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(e) If, at any time during any Expense Recovery Period, any one or more of the
Operating Expenses are increased to a rate(s) or amount(s) in excess of the
rate(s) or amount(s) used in calculating the estimated Tenant’s Share of
Operating Expenses for the year, then the estimate of Tenant’s Share of
Operating Expenses may be increased by written notice from Landlord for the
month in which such rate(s) or amount(s) becomes effective and for all
succeeding months by an amount equal to the estimated amount of Tenant’s Share
of the increase. If Landlord gives Tenant written notice of the amount or
estimated amount of the increase and the month in which the increase will or has
become effective, then Tenant shall pay the increase to Landlord as a part of
Tenant’s monthly payments of the estimated Tenant’s Share of Operating Expenses
as provided in Section 4.2(b), commencing with the month following delivery of
Landlord’s notice. In addition, Tenant shall pay upon written request any such
increases which were incurred prior to the Tenant commencing to pay such monthly
increase.

(f) The term “Operating Expenses” shall mean and include all Site Costs, as
defined in subsection (g), and Property Taxes, as defined in subsection (h).

(g) The term “Site Costs” shall mean all expenses of operation, management,
repair, replacement and maintenance of the Building and the Site, including
without limitation all appurtenant Common Areas (as defined in Section 6.2), and
shall include the following charges by way of illustration but not limitation:
water and sewer charges; insurance premiums and deductibles and/or reasonable
premium and deductible equivalents should Landlord elect to self-insure all or
any portion of any risk that Landlord is authorized to insure hereunder
(provided, however, that Tenant’s Share of any such deductible or deductible
equivalent shall not exceed the amount of One Hundred Thousand Dollars
($100,000.00) per occurrence for any casualty); license, permit, and inspection
fees (but excluding business management and/or broker licenses); light; power;
window washing; trash pickup; heating, ventilating and air conditioning;
supplies; materials; equipment; tools; the cost of any insurance, tax or other
consultant utilized by Landlord in connection with the Building and/or Site;
establishment of reasonable reserves for replacements and/or repairs (provided,
however, that Landlord shall first exhaust such reserves in performing such
replacement or repair work and Landlord shall only be entitled to include, as a
Site Cost, only the amount by which the cost to perform such work exceeds the
existing reserve as amortized pursuant to the applicable provisions hereof);
costs incurred in connection with compliance with any laws or changes in laws
becoming effective after the Commencement Date applicable to the Building or the
Site (provided that, except for laws or changes in laws that pertain
particularly to Tenant or to Tenant’s particular use of the Premises (which
shall be the sole responsibility of Tenant at its cost), to the extent such laws
or change in laws require expenditures of a “capital” nature (as determined by
generally accepted accounting principles, consistently applied), then such
“capital” expenditure shall be amortized (using a market cost of funds as
reasonably determined by Landlord) over the useful life of such asset and only
the amortized cost thereof shall be includable in Site Costs during the
remaining Term of the Lease); the cost of any capital expenditures or
replacements in accordance with generally accepted accounting principles,
consistently applied (other than tenant improvements for specific tenants) to
the extent of the amortized amount thereof over the useful life of such capital
expenditures or replacements (or, if such capital expenditures are anticipated
to achieve a cost savings as to the Operating Expenses, any shorter estimated
period of time over which the cost of the capital expenditures would be
recovered from the estimated cost savings) in accordance with generally accepted
accounting principles, consistently applied, calculated at a market cost of
funds, all as reasonably determined by Landlord, for each year of useful life or
shorter recovery period of such capital expenditure whether such capital
expenditure occurs prior to or during the Term (provided, however, that Project
Costs for capital expenditures which have occurred prior to the Commencement
Date, exclusive of roof reserves, shall not exceed the annualized amount of
Eleven Thousand Twelve Dollars ($11,012.00), that is, the annualized amount of
the amortization component of Project Costs for the Expense Recovery Period
ended June 30, 2008); costs associated with the maintenance of an air
conditioning, heating and ventilation service agreement; labor; reasonably
allocated wages and salaries, fringe benefits, and payroll taxes for
administrative and other personnel directly applicable to the Building and/or
Site, including both Landlord’s personnel and outside personnel; any expense
incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and 10.2; and a market
competitive overhead and/or management fees for the professional operation of
the Building and the Site. It is understood and agreed that Site Costs may
include competitive charges for direct services (including, without limitation,
management and/or operations services) provided by any subsidiary, division or
affiliate of Landlord. Notwithstanding anything to the contrary herein, “Site
Costs” shall not include and Tenant shall in no event have any obligation to
perform or to pay directly, or to reimburse Landlord for, all or any portion of
the following repairs, maintenance, improvements, replacements, premiums,
claims, losses, fees, charges, costs and expenses (collectively, “Costs”):
(i) Costs occasioned by the breach by Landlord of any of its obligations under
this Lease; (ii) Costs of any renovation, improvements, painting or redecorating
of any leasable space within the Site not made available for Tenant’s use;
(iii) Costs incurred in connection with negotiations or disputes with any other
occupant of the Site; (iv) Costs incurred in connection with the presence of any
Hazardous Material, except to the extent Tenant is responsible therefor pursuant
to Section 5.3 of this Lease; (v) interest, charges and fees incurred on debt
incurred by Landlord; (vi) Costs occasioned by casualties or by the exercise of
the power of eminent domain (as described in Sections 11.1(a) and 12.1 of this
Lease, respectively); (viii) Costs for which Landlord is responsible as
expressly provided in Section 2.4 of this Lease (or elsewhere in this Lease,
where such condition is set forth as Landlord’s “sole cost and expense”);
(ix) Costs which could properly be capitalized under generally accepted
accounting principles, consistently applied, except to the extent amortized over
the useful life of the item in question as set forth above and (x) Costs
occasioned by the violation of any law by Landlord, its authorized agents,
employees or contractors.

(h) The term “Property Taxes” as used herein shall include any form of federal,
state, county or local government or municipal taxes, fees, charges or other
impositions of every kind (whether general, special, ordinary or extraordinary)
related to the ownership, leasing or operation of the Premises, Building or
Site, including without limitation, the following: (i) all real estate taxes or
personal property taxes levied against the Premises, the Building or Site, as
such property taxes may be reassessed from time to time; and (ii) other taxes,
charges and assessments which are levied with respect to this Lease or to the
Building and/or the Site, and any improvements, fixtures and

 

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equipment and other property of Landlord located in the Building and/or the
Site, (iii) all assessments and fees for public improvements, services, and
facilities and impacts thereon, including without limitation arising out of any
Community Facilities Districts, “Mello Roos” districts, similar assessment
districts, and any traffic impact mitigation assessments or fees; (iv) any tax,
surcharge or assessment which shall be levied in addition to or in lieu of real
estate or personal property taxes, other than taxes covered by Article VIII; and
(v) taxes based on the receipt of rent (including gross receipts or sales taxes
applicable to the receipt of rent), and (vi) costs and expenses incurred in
contesting the amount or validity of any Property Tax by appropriate
proceedings. Notwithstanding the foregoing, general net income or franchise
taxes imposed against Landlord shall be excluded, and “Property Taxes” shall not
include and Tenant shall not be required to pay any portion of any tax or
assessment expense or any increase therein (i) in excess of the amount which
would be payable if such tax or assessment expense were paid in installments
over the longest permitted term; (ii) imposed on land and improvements other
than the Building or the Site; or (iii) attributable to Landlord’s inheritance,
gift or estate taxes.

SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant’s delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions, to be held by Landlord as security for the full and
faithful performance of all of Tenant’s obligations under this Lease (the
“Security Deposit”). Landlord shall not be required to keep this Security
Deposit separate from its general funds, and Tenant shall not be entitled to
interest on the Security Deposit. Subject to the last sentence of this Section,
the Security Deposit shall be understood and agreed to be the property of
Landlord upon Landlord’s receipt thereof, and may be utilized by Landlord in its
sole and absolute discretion towards the payment of all expenses by Landlord for
which Tenant would be required to reimburse Landlord under this Lease, including
without limitation brokerage commissions and Tenant Improvement costs. Upon any
Event of Default by Tenant (as defined in Section 14.1), Landlord may, in its
sole and absolute discretion and notwithstanding any contrary provision of Civil
Code Section 1950.7, retain, use or apply the whole or any part of the Security
Deposit to pay any sum which Tenant is obligated to pay under this Lease
including, without limitation, amounts estimated by Landlord as the amounts due
it for prospective rent and for damages pursuant to Section 14.2(a)(i) of this
Lease and/or Civil Code Section 1951.2, sums that Landlord may expend or be
required to expend by reason of the Event of Default by Tenant or any loss or
damage that Landlord may suffer by reason of the Event of Default or costs
incurred by Landlord in connection with the repair or restoration of the
Premises pursuant to Section 15.3 of this Lease upon expiration or earlier
termination of this Lease. In no event shall Landlord be obligated to apply the
Security Deposit upon an Event of Default and Landlord’s rights and remedies
resulting from an Event of Default, including without limitation, Tenant’s
failure to pay Basic Rent, Tenant’s Share of Operating Expenses or any other
amount due to Landlord pursuant to this Lease, shall not be diminished or
altered in any respect due to the fact that Landlord is holding the Security
Deposit. If any portion of the Security Deposit is applied by Landlord as
permitted by this Section, Tenant shall within five (5) days after written
demand by Landlord deposit cash with Landlord in an amount sufficient to restore
the Security Deposit to its original amount. If Tenant fully performs its
obligations under this Lease, the Security Deposit shall be returned to Tenant
(or, at Landlord’s option, to the last assignee of Tenant’s interest in this
Lease) within thirty (30) days after the expiration of the Term.

SECTION 4.4. LETTER OF CREDIT. In addition to the Security Deposit and as
security hereunder, Tenant shall deliver to Landlord, concurrently with Tenant’s
execution of this Lease, an irrevocable standby Letter of Credit in the amount
of One Hundred Fourteen Thousand Six Hundred Eighty-Six Dollars ($114,686.00)
(the “Letter of Credit”). The Letter of Credit shall be in form and with the
substance of EXHIBIT F attached hereto (or otherwise acceptable to Landlord),
and shall be issued by a financial institution acceptable to Landlord. The
Letter of Credit shall be maintained in full force and effect through that date
which is thirty (30) days after the Expiration Date of the Term of this Lease
(including any extensions of the Term as provided in this Lease). In the event
the Letter of Credit is not renewed by the issuing financial institution (or in
the event that Tenant shall not deliver a replacement Letter of Credit from
another financial institution acceptable to Landlord) on or before thirty
(30) days prior to the then-scheduled expiration date of the Letter of Credit,
then Landlord shall have the right to draw the full amount of such Letter of
Credit and to hold such amount as part of the Security Deposit pursuant to
Section 4.3 of this Lease. Upon any “Event of Default” by Tenant (as hereinafter
defined), Landlord shall be entitled to draw upon said Letter of Credit by the
issuance of Landlord’s sole written demand to the issuing financial institution,
which draw shall be in an amount necessary to pay any sum which Tenant is
obligated to pay under this Lease notwithstanding any contrary provision of
Civil Code Section 1950.7, including, without limitation, amounts estimated by
Landlord as the amounts due for prospective rent and for damages pursuant to
Section 14.2(a)(i) of this Lease and/or Civil Code Section 1951.2, sums that
Landlord may expend or be required to expend by reason of the Event of Default
by Tenant or any loss or damage that Landlord may suffer by reason of the Event
of Default, or costs incurred by Landlord in connection with the repair or
restoration of the Premises pursuant to Section 15.3 of this Lease upon
expiration or earlier termination of this Lease. Landlord shall only draw upon
the Letter of Credit following an Event of Default and only to the extent
required to cure the Event of Default, but if the amount of such draw cannot be
readily determined by Landlord, then the full amount of the Letter of Credit may
be drawn by Landlord pending determination of said amount. Notwithstanding the
foregoing, while the amount of any such draw shall be solely determined by
Landlord as provided in the foregoing, if the amount of any such draw(s) shall
ultimately exceed the amount of damages actually incurred by Landlord as the
result of Tenant’s default (as determined pursuant to the applicable provisions
of Article XIV of this Lease), then Landlord shall promptly refund any such
excess to Tenant. Any such draw shall be without waiver or any rights Landlord
may have under this Lease or at law or in equity as a result of the default, as
a setoff for full or partial compensation for the default. If any portion of the
Letter of Credit is drawn after a default by Tenant, Tenant shall within five
(5) days after written demand by Landlord restore the Letter of Credit. Failure
to so restore said Letter of Credit within said five (5) days shall be a default
by Tenant under this Lease. Partial drawings upon said Letter of Credit shall be
permitted. In the event that Landlord draws upon the Letter of Credit solely due
to Tenant’s failure to renew the Letter of Credit at least thirty (30) days
before its expiration (i) such failure to renew shall not constitute a default
hereunder and (ii) Tenant shall at any time thereafter be entitled to provide
Landlord with a replacement Letter of Credit that satisfies

 

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the requirements hereunder, at which time Landlord shall return the cash
proceeds of the original Letter of Credit drawn by Landlord.

Provided that: (a) no Event of Default has occurred at any time during the Term
of this Lease and (b) Tenant shall demonstrate by the delivery to Landlord of
its audited financial statements (prepared by a nationally-recognized accounting
firm) that Tenant has achieved positive net income (as determined by generally
accepted accounting principles, consistently applied) for any of Tenant’s fiscal
years commencing with the fiscal year ended December 31, 2009 then, upon written
request of Tenant, Landlord shall authorize a reduction to the principal amount
of the Letter of Credit in the amount of Fifty Seven Thousand Three Hundred
Eighty-Three Dollars ($57,383.00); and if Tenant satisfies the condition
described in Subsection (a) above and shall demonstrate by the delivery of its
audited financial statement (described in Subsection (b) above) that Tenant has
again achieved positive net income (as determined by generally accepted
accounting principles, consistently applied) for any subsequent fiscal year
during the Term then, upon the written request of Tenant, Landlord shall
authorize a full exoneration and release of the Letter of Credit.

ARTICLE V. USES

SECTION 5.1. USE. Tenant shall use the Premises only for the purposes stated in
Item 3 of the Basic Lease Provisions, all in accordance with applicable laws and
restrictions and pursuant to approvals to be obtained by Tenant from all
relevant and required governmental agencies and authorities. The parties agree
that any contrary use shall be deemed to cause material and irreparable harm to
Landlord and shall entitle Landlord to injunctive relief in addition to any
other available remedy. Tenant, at its expense, shall procure, maintain and make
available for Landlord’s inspection throughout the Term, all governmental
approvals, licenses and permits required for the proper and lawful conduct of
Tenant’s permitted use of the Premises. Tenant shall not use or allow the
Premises to be used for any unlawful purpose, nor shall Tenant permit any
nuisance or commit any waste in the Premises or the Site. Tenant shall not
perform any work or conduct any business whatsoever in the Site other than
inside the Premises. Tenant shall not do or permit to be done anything which
will invalidate or increase the cost of any insurance policy(ies) covering the
Building, the Site and/or their contents unless Tenant pays for such increase,
and shall comply with all applicable insurance underwriters rules. Tenant shall
comply at its expense with all present and future laws, ordinances,
restrictions, regulations, orders, rules and requirements of all governmental
authorities that pertain to Tenant or its use of the Premises, including without
limitation all federal and state occupational health and safety requirements,
whether or not Tenant’s compliance will necessitate expenditures or interfere
with its use and enjoyment of the Premises. Tenant shall comply at its expense
with all existing covenants, conditions, easements or restrictions now or
hereafter affecting or encumbering the Building and/or Site, including without
limitation the payment by Tenant of any periodic or special dues or assessments
charged against the Premises or Tenant which may be allocated to the Premises or
Tenant in accordance with the provisions thereof. Tenant shall also comply at
its expense with any future amendments or modifications to such existing
covenants, conditions, easements or reservations, and with any future covenants,
conditions, easements or restrictions hereafter affecting or encumbering the
Building and/or the Site, provided same do not materially impair Tenant’s use
and enjoyment of the Premises. Tenant shall promptly upon demand reimburse
Landlord for any additional insurance premium charged by reason of Tenant’s
failure to comply with the provisions of this Section, and shall indemnify
Landlord from any liability and/or expense resulting from Tenant’s
noncompliance. Notwithstanding anything to the contrary contained in this
Section 5.1, in the event Tenant’s obligation for compliance with all future and
present laws, ordinances, restrictions, regulations, orders, rules and
requirements of all governmental authorities, and with all present and future
covenants, conditions, easements or restrictions now or hereafter affecting or
encumbering the Building and/or the Site, results in a “capital” expenditure (as
determined by generally accepted accounting principles, consistently applied) on
Tenant’s part (or Tenant’s being obligated to reimburse Landlord for a “capital”
expenditure), Tenant shall only be responsible for the amortized cost of such
“capital” expenditure (amortized at a market cost of funds as reasonably
determined by Landlord) over the useful life of said improvement during the
Term, except in the event each obligation for capital expenditure is required
due to Tenant’s particular use of the Premises (in which case Tenant shall be
fully responsible for the entire cost of such “capital” expenditure).

SECTION 5.2. SIGNS. Provided Tenant or any Permitted Transferee continues to
lease the entire Building: (i) Tenant shall have the exclusive right to one
(1) exterior top of Building sign on the side of the Building facing Morgan, for
Tenant’s name and/or graphics, subject to Landlord’s right of prior approval
that such exterior signage is in compliance with the Signage Criteria (defined
below), and (ii) Landlord will not place or authorize to be placed any other
signs on or about the Site, other than directional signs in the Common Areas,
without the prior written consent of Tenant. Except as provided in the
foregoing, and for signage within the lobby of the Premises which shall be
subject to Landlord’s prior right of approval of the specifications therefor,
and for Landlord’s standard suite signage identifying Tenant’s name and/or logo
and installed at a location designated by Landlord, Tenant shall have no right
to maintain signs in any location in, on or about the Premises, the Building or
the Site and shall not place or erect any signs that are visible from the
exterior of the Building. The size, design, graphics, material, style, color and
other physical aspects of any permitted sign shall be subject to Landlord’s
written determination, as determined solely by Landlord, prior to installation,
that signage is in compliance with any covenants, conditions or restrictions
encumbering the Premises and Landlord’s signage program for the Site, as in
effect from time to time and approved by the City in which the Premises are
located (“Signage Criteria”). Prior to placing or erecting any such signs,
Tenant shall obtain and deliver to Landlord a copy of any applicable municipal
or other governmental permits and approvals and comply with any applicable
insurance requirements for such signage. Tenant shall be responsible for all
costs of any permitted sign, including, without limitation, the fabrication,
installation, maintenance and removal thereof and the cost of any permits
therefor. If Tenant fails to maintain its sign in good condition, or if Tenant
fails to remove same upon termination of this Lease and repair and restore any
damage caused by the sign or its removal, Landlord may do so at Tenant’s
expense. Landlord shall have the right to temporarily remove any signs in
connection with any repairs or maintenance in or upon the Building. The term

 

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“sign” as used in this Section shall include all signs, designs, monuments,
displays, advertising materials, logos, banners, projected images, pennants,
decals, pictures, notices, lettering, numerals or graphics.

SECTION 5.3. HAZARDOUS MATERIALS.

(a) For purposes of this Lease, the term “Hazardous Materials” means (i) any
“hazardous material” as defined in Section 25501(o) of the California Health and
Safety Code, (ii) hydrocarbons, polychlorinated biphenyls or asbestos, (iii) any
toxic or hazardous materials, substances, wastes or materials as defined
pursuant to any other applicable state, federal or local law or regulation, and
(iv) any other substance or matter which may result in liability to any person
or entity as a result of such person’s possession, use, storage, release or
distribution of such substance or matter under any statutory or common law
theory.

(b) Tenant shall not cause or knowingly permit its agents, employees,
contractors, licensees or invitees to bring upon, store, use, generate, release
or dispose of any Hazardous Materials on, under, from or about the Premises
(including without limitation the soil and groundwater thereunder) without the
prior written consent of Landlord, which consent may be given or withheld in
Landlord’s sole and absolute discretion. Notwithstanding the foregoing, Tenant
shall have the right, without obtaining prior written consent of Landlord, to
utilize within the Premises a reasonable quantity of standard office products
that may contain Hazardous Materials (such as photocopy toner, “White Out”, and
the like), provided however, that (i) Tenant shall maintain such products in
their original retail packaging, shall follow all instructions on such packaging
with respect to the storage, use and disposal of such products, and shall
otherwise comply with all applicable laws with respect to such products, and
(ii) all of the other terms and provisions of this Section 5.3 shall apply with
respect to Tenant’s storage, use and disposal of all such products.
Additionally, Tenant shall be permitted to use such Hazardous Materials in such
quantities and in such manner as described in the Environmental Questionnaire
(defined below). Landlord may, in its sole and absolute discretion, place such
conditions as Landlord deems appropriate with respect to Tenant’s use, storage
and/or disposal of any other Hazardous Materials requiring Landlord’s consent.
Tenant understands that Landlord may utilize an environmental consultant to
assist in determining conditions of approval in connection with the storage,
use, release, and/or disposal of Hazardous Materials by Tenant on or about the
Premises, and/or to conduct periodic inspections of the storage, generation,
use, release and/or disposal of such Hazardous Materials by Tenant on and from
the Premises, and, in the event any violations of this Section 5.3 are found,
then Tenant agrees that any costs incurred by Landlord in connection therewith
shall be reimbursed by Tenant to Landlord as additional rent hereunder upon
demand.

(c) Prior to the execution of this Lease, Tenant shall complete, execute and
deliver to Landlord an Environmental Questionnaire and Disclosure Statement (the
“Environmental Questionnaire”) in the form of Exhibit B attached hereto. The
completed Environmental Questionnaire shall be deemed incorporated into this
Lease for all purposes, and Landlord shall be entitled to rely fully on the
information contained therein. On each anniversary of the Commencement Date
until the expiration or sooner termination of this Lease, Tenant shall disclose
to Landlord in writing the names and amounts of all Hazardous Materials which
were stored, generated, used, released and/or disposed of on, under or about the
Premises by Tenant or its agents, employees, contractors, licensees or invitees
for the twelve-month period prior thereto, and which Tenant desires to store,
generate, use, release and/or dispose of on, under or about the Premises for the
succeeding twelve-month period. In addition, to the extent Tenant is permitted
to utilize Hazardous Materials upon the Premises, Tenant shall promptly provide
Landlord with complete and legible copies of all the following environmental
documents relating thereto: reports filed pursuant to any self-reporting
requirements; permit applications, permits, monitoring reports, emergency
response or action plans, workplace exposure and community exposure warnings or
notices and all other reports, disclosures, plans or documents (even those which
may be characterized as confidential) relating to water discharges, air
pollution, waste generation or disposal, and underground storage tanks for
Hazardous Materials; orders, reports, notices, listings and correspondence (even
those which may be considered confidential) of or concerning the release,
investigation, compliance, cleanup, remedial and corrective actions, and
abatement of Hazardous Materials; and all complaints, pleadings and other legal
documents filed by or against Tenant related to Tenant’s storage, generation,
use, release and/or disposal of Hazardous Materials.

(d) Landlord and its agents shall have the right, but not the obligation, to
inspect, sample and/or monitor the Premises and/or the soil or groundwater
thereunder at any time to determine whether Tenant is complying with the terms
of this Section 5.3, and in connection therewith Tenant shall provide Landlord
with full access to all facilities, records and personnel related thereto. If
Tenant is not in compliance with any of the provisions of this Section 5.3, or
in the event of a release of any Hazardous Material on, under, from or about the
Premises caused or permitted by Tenant, its agents, employees, contractors,
licensees or invitees, Landlord and its agents shall have the right, but not the
obligation, without limitation upon any of Landlord’s other rights and remedies
under this Lease, to immediately enter upon the Premises without notice and to
discharge Tenant’s obligations under this Section 5.3 at Tenant’s expense,
including without limitation the taking of emergency or long-term remedial
action. Landlord and its agents shall endeavor to minimize interference with
Tenant’s business in connection therewith, but shall not be liable for any such
interference. In addition, Landlord, at Tenant’s expense, shall have the right,
but not the obligation, to join and participate in any legal proceedings or
actions initiated in connection with any claims arising out of the storage,
generation, use, release and/or disposal by Tenant or its agents, employees,
contractors, licensees or invitees of Hazardous Materials on, under, from or
about the Premises.

(e) If the storage, use, generation, release or disposal of any Hazardous
Materials on, under, from or about the Premises or the Site caused or knowingly
permitted by Tenant or its agents, employees, contractors, licensees or invitees
results in (i) injury to any person, (ii) injury to or any contamination of the
Premises or the Site, or (iii) injury to or contamination of any real or
personal property wherever situated, Tenant, at its expense, shall promptly take
all actions necessary to return the Premises and the Site and any other affected
real or personal

 

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property owned by Landlord to the condition existing prior to the introduction
of such Hazardous Materials and to remedy or repair any such injury or
contamination, including without limitation, any cleanup, remediation, removal,
disposal, neutralization or other treatment of any such Hazardous Materials as
required by law. Notwithstanding the foregoing, Tenant shall not, without
Landlord’s prior written consent, which consent may be given or withheld in
Landlord’s sole and absolute discretion, take any remedial action in response to
the presence of any Hazardous Materials on, under, from or about the Premises or
the Site or any other affected real or personal property owned by Landlord or
enter into any similar agreement, consent, decree or other compromise with any
governmental agency with respect to any Hazardous Materials claims; provided
however, Landlord’s prior written consent shall not be necessary in the event
that the presence of Hazardous Materials on, under, from or about the Premises
or the Site or any other affected real or personal property owned by Landlord
(i) imposes an immediate threat to the health, safety or welfare of any
individual and (ii) is of such a nature that an immediate remedial response is
necessary and it is not possible to obtain Landlord’s consent before taking such
action. To the fullest extent permitted by law, Tenant shall indemnify, hold
harmless, protect and defend (with attorneys reasonably acceptable to Landlord)
Landlord and any successors to all or any portion of Landlord’s interest in the
Premises and the Site and any other real or personal property owned by Landlord
from and against any and all liabilities, losses, damages, diminution in value,
judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses
(including without limitation reasonable attorneys’ fees, court costs and other
professional expenses), whether foreseeable or unforeseeable, arising directly
or indirectly out of the use, generation, storage, treatment, release, on- or
off-site disposal or transportation of Hazardous Materials on, into, from, under
or about the Premises, the Building or the Site and any other real or personal
property owned by Landlord knowingly caused or permitted by Tenant, its agents,
employees, contractors, licensees or invitees. Such indemnity obligation shall
specifically include, without limitation, the cost of any required or necessary
repair, restoration, cleanup or detoxification of the Premises, the Building and
the Site and any other real or personal property owned by Landlord, the
preparation of any closure or other required plans, whether such action is
required or necessary during the Term or after the expiration of this Lease and
any loss of rental due to the inability to lease the Premises or any portion of
the Building or Site as a result of such Hazardous Materials, the remediation
thereof or any repair, restoration or cleanup related thereto. If it is at any
time discovered that Tenant may have knowingly permitted its agents, employees,
contractors, licensees or invitees to release a Hazardous Material on, under,
from or about the Premises, the Building or the Site or any other real or
personal property owned by Landlord, or caused such a release, Tenant shall, at
Landlord’s request, immediately prepare and submit to Landlord a comprehensive
plan, subject to Landlord’s approval, specifying the actions to be taken by
Tenant to return the Premises, the Building or the Site or any other real or
personal property owned by Landlord to the condition existing prior to the
introduction of such Hazardous Materials. Upon Landlord’s approval of such plan,
Tenant shall, at its expense, and without limitation of any rights and remedies
of Landlord under this Lease or at law or in equity, immediately implement such
plan and proceed to cleanup, remediate and/or remove all such Hazardous
Materials in accordance with all applicable laws and as required by such plan
and this Lease. The provisions of this Section 5.3(e) shall expressly survive
the expiration or sooner termination of this Lease.

(f) Landlord hereby discloses to Tenant, and Tenant hereby acknowledges, certain
facts relating to Hazardous Materials at the Site known by Landlord to exist as
of the date of this Lease, as more particularly described in Exhibit C attached
hereto. Tenant shall have no liability or responsibility with respect to the
Hazardous Materials facts described in Exhibit C, nor with respect to any
Hazardous Materials which Tenant proves were neither released on the Premises
during the Term nor caused by Tenant, its agents, employees, contractors,
licensees or invitees. Notwithstanding the preceding two sentences, Tenant
agrees to notify its agents, employees, contractors, licensees, and invitees of
any exposure or potential exposure to Hazardous Materials at the Premises that
Landlord brings to Tenant’s attention. Tenant hereby acknowledges that this
disclosure satisfies any obligation of Landlord to Tenant pursuant to California
Health & Safety Code Section 25359.7, or any amendment or substitute thereto or
any other disclosure obligations of Landlord. Landlord shall take
responsibility, at its sole cost and expense and not as a Site Cost, for any
governmentally-ordered clean-up, remediation, removal, disposal, neutralization
or other treatment of Hazardous Materials conditions described in this
Section 5.3(f). The foregoing obligation on the part of Landlord shall include
the reasonable costs (including, without limitation, reasonable attorney’s fees)
of defending Tenant (with attorneys reasonably acceptable to Tenant) from and
against any legal action or proceeding instituted by any governmental agency in
connection with such clean-up, remediation, removal, disposal, neutralization or
other treatment of such conditions, provided that Tenant promptly tenders such
defense to Landlord.

(g) In the event of any foreclosure of a mortgage or deed of trust encumbering
the Building and/or the Site, the obligations on the part of Landlord contained
in Section 5.3(f) above shall be personal to Landlord and shall not be binding
on nor inure against any lender acquiring the Building and/or the Site by
foreclosure of its mortgage or deed of trust or deed in lieu of foreclosure, or
any successor in interest to such lender

(h) Except as disclosed in Section 5.3(f) above (and/or as may otherwise be
disclosed to Tenant in writing), Landlord represents that to “Landlord’s
knowledge” (as hereinafter defined), there are no Hazardous Materials in or
about the Site which are in violation of any applicable federal, state or local
law, ordinance or regulation. As used herein, “Landlord’s knowledge” shall mean
the actual knowledge, without duty of inquiry or investigation, of the current
employees or authorized agents of Landlord responsible for Hazardous Materials
compliance matters.

ARTICLE VI. COMMON AREAS; SERVICES

SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for and shall
pay promptly, directly to the appropriate supplier, all charges for water, gas,
electricity, sewer, heat, light, power, telephone,

 

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telecommunications service, refuse pickup, janitorial service, interior
landscape maintenance and all other utilities, materials and services furnished
directly to Tenant or the Premises or used by Tenant in, on or about the
Premises during the Term, together with any taxes thereon. If any utilities or
services are not separately metered or assessed to Tenant, Landlord shall make a
reasonable determination of Tenant’s proportionate share of the cost of such
utilities and services, and Tenant shall pay such amount to Landlord, as an item
of additional rent, within ten (10) days after delivery of Landlord’s statement
or invoice therefor. Alternatively, Landlord may elect to include such cost in
the definition of Site Costs in which event Tenant shall pay Tenant’s
proportionate share of such costs in the manner set forth in Section 4.2. Tenant
shall also pay to Landlord as an item of additional rent, within ten (10) days
after delivery of Landlord’s statement or invoice therefor, Landlord’s “standard
charges” (as hereinafter defined, which shall be in addition to the electricity
charge paid to the utility provider) for “after hours” usage by Tenant of each
HVAC unit servicing the Premises. “After hours” shall mean more than three
thousand six hundred forty (3,640) hours of usage during each calendar year
during the Term (as such hourly amount shall be prorated for any partial
calendar year of the Term). “After hours” usage shall be determined based upon
the operation of the applicable HVAC unit during each calendar year (or partial
calendar year) of the Term on a “non-cumulative” basis (that is, without regard
to Tenant’s usage or nonusage of other unit(s) serving the Premises, or of the
applicable unit during other years during the Term). As used herein, “standard
charges” shall mean the following charges for each hour of “after hours” use (in
addition to the applicable electricity charges paid to the utility provider) of
the following described HVAC units: (i) $1.00 per hour for 1-4 ton HVAC units,
(ii) $5.00 per hour for 5-9 ton HVAC units and (iii) $10.00 per hour for HVAC
units of greater than 10 tons. Landlord shall not be liable for damages or
otherwise for any failure or interruption of any utility or other service
furnished to the Premises, and no such failure or interruption shall be deemed
an eviction or entitle Tenant to terminate this Lease or withhold or abate any
rent due hereunder. Landlord shall at all reasonable times have free access to
the Building and Premises to install, maintain, repair, replace or remove all
electrical and mechanical installations of Landlord. Tenant acknowledges that
the costs incurred by Landlord related to providing above-standard utilities and
services to Tenant, including, without limitation, telephone lines, may be
charged to Tenant.

Notwithstanding the foregoing, if as a result of the direct actions of Landlord,
its employees, contractors or authorized agents, for more than three
(3) consecutive business days following written notice to Landlord there is no
HVAC or electricity services to all or a portion of the Premises, or such an
interruption of other essential utilities and building services, such as fire
protection or water, so that all or a portion of the Premises cannot be used by
Tenant, then Tenant’s Basic Rent (or an equitable portion of such Basic Rent to
the extent that less than all of the Premises are affected) shall thereafter be
abated until the Premises are again usable by Tenant; provided, however, that if
Landlord is diligently pursuing the repair of such utilities or services and
Landlord provides substitute services reasonably suitable for Tenant’s purposes,
as for example, bringing in portable air-conditioning equipment, then there
shall not be an abatement of Basic Rent. The foregoing provisions shall be
Tenant’s sole recourse and remedy in the event of such an interruption of
services, and shall not apply in case of the actions of parties other than
Landlord, its employees, contractors or authorized agents, or in the case of
damage to, or destruction of, the Premises (which shall be governed by the
provisions of Article XI of the Lease). Any disputes concerning the foregoing
provisions shall be submitted to and resolved by JAMS arbitration pursuant to
Section 22.8 of this Lease.

SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate and maintain all Common Areas within the Site in a
comparable condition to that existing as of the Commencement Date as Landlord
may determine to be appropriate. All costs incurred by Landlord for the
maintenance and operation of the Common Areas shall be included in Site Costs
(to the extent properly included therein). The term “Common Areas” shall mean
all areas of the Site which are not held for exclusive use by persons entitled
to occupy space including Tenant, and their respective employees and invitees,
including without limitation parking areas and structures, driveways, sidewalks,
landscaped and planted areas, and common electrical and utility rooms and roof
access entries, if any, in the Building.

SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the Premises shall
include the use of the Common Areas as provided in this Article VI, subject,
however, to compliance with all rules and regulations as are prescribed from
time to time by Landlord. Landlord shall at all times during the Term have
exclusive control of the Common Areas, and may restrain or permit any use or
occupancy, except as authorized by Landlord’s rules and regulations. Tenant
shall keep the Common Areas clear of any obstruction or unauthorized use related
to Tenant’s operations or use of Premises, including without limitation,
planters and furniture. Nothing in this Lease shall be deemed to impose
liability upon Landlord for any damage to or loss of the property of, or for any
injury to, Tenant, its invitees or employees. Landlord may temporarily close any
portion of the Common Areas for repairs, remodeling and/or alterations, to
prevent a public dedication or the accrual of prescriptive rights, or for any
other reason deemed sufficient by Landlord, without liability to Tenant.
Landlord’s temporary closure of any portion of the Common Areas for such
purposes shall not deprive Tenant of reasonable access to the Premises.

SECTION 6.4. PARKING. Tenant shall be entitled to use its allocated share of the
vehicle parking spaces on those portions of the Common Areas designated by
Landlord for parking on an unreserved and unassigned basis. For purposes of this
Section 6.4 Tenant’s allocated share shall mean vehicle parking spaces equal to
the same portion of all vehicle parking spaces available for the Site as the
ratio of Floor Area to the total rentable square footage of the Site. Tenant
shall not use more than its allocated share of vehicle parking spaces. All
parking spaces shall be used only for parking of vehicles no larger than full
size passenger automobiles, sport utility vehicles or pickup trucks. 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. If Tenant permits or allows any of the prohibited activities
described above, then Landlord shall have the right, without notice, in addition
to such other rights and remedies that Landlord may have, to remove or tow away
the vehicle involved and charge the costs to Tenant. Parking within the Common
Areas shall be limited to striped parking stalls, and no parking shall be
permitted in any driveways, access ways or

 

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in any area which would prohibit or impede the free flow of traffic within the
Common Areas. There shall be no parking of any vehicles for longer than a
forty-eight (48) hour period unless otherwise authorized by Landlord, and
vehicles which have been abandoned or parked in violation of the terms hereof
may be towed away at the owner’s expense. Landlord shall have the right to
establish, and from time to time amend, and to enforce against all users all
reasonable rules and regulations (including the designation of areas for
employee parking) that Landlord may deem necessary and advisable for the proper
and efficient operation and maintenance of parking within the Common Areas.
Landlord shall have the right to construct, maintain and operate lighting
facilities within the parking areas; to change the area, level, location and
arrangement of the parking areas and improvements therein; to restrict parking
by tenants, their officers, agents and employees to employee parking areas;
after the expiration of the initial sixty-three (63) month Term of this Lease,
to enforce parking charges (by operation of meters or otherwise, provided
Landlord is then generally enforcing parking charges throughout its technology
building portfolio); and to do and perform such other acts in and to the parking
areas and improvements therein as, in the use of good business judgment,
Landlord shall determine to be advisable. Any person using the parking area
shall observe all directional signs and arrows and any posted speed limits.
Parking areas shall be used only for parking vehicles. Washing, waxing, cleaning
or servicing of vehicles, or the storage of vehicles for longer than 48-hours,
is prohibited unless otherwise authorized by Landlord. Tenant shall be liable
for any damage to the parking areas caused by Tenant or Tenant’s employees,
suppliers, shippers, customers or invitees, including without limitation damage
from excess oil leakage. Tenant shall have no right to install any fixtures,
equipment or personal property in the parking areas.

SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the right to
make alterations or additions to the Building or the Site, or to the attendant
fixtures, equipment and Common Areas. Landlord may at any time relocate or
remove any of the driveways, sidewalks, landscaped and planted areas and parking
areas of the Common Areas, from time to time. No change shall entitle Tenant to
any abatement of rent or other claim against Landlord. No such change shall
deprive Tenant of reasonable access to or use of the Premises or reduce the
number of parking spaces granted under this Lease.

ARTICLE VII. MAINTAINING THE PREMISES

SECTION 7.1. TENANT’S MAINTENANCE AND REPAIR. Except as provided in Section 7.2
below and subject to Landlord’s obligations expressly contained in Section 2.4
of this Lease, Tenant at its sole expense shall maintain and make all repairs
and replacements necessary to keep the Premises and the Building in the
condition as existed on the Commencement Date (or on any later date that the
improvements may have been installed), excepting ordinary wear and tear,
casualty and condemnation, including without limitation all interior glass,
doors, door closures, hardware, fixtures, fire extinguisher equipment and other
equipment installed in the Premises and all Alterations constructed by Tenant
pursuant to Section 7.3 below. Tenant at its sole cost and expense shall
maintain, repair and/or replace those two (2) HVAC units installed as part of
the Tenant Improvement Work and serving Tenant’s clean room in the Premises (the
“Supplemental HVAC Units”). Any damage or deterioration of the Premises shall
not be deemed ordinary wear and tear if the same could have been prevented by
good maintenance practices by Tenant. As part of its maintenance obligations
hereunder, Tenant shall, at Landlord’s request, provide Landlord with copies of
all maintenance schedules, reports and notices prepared by, for or on behalf of
Tenant. All repairs and replacements shall be at least equal in quality to the
original work, shall be made only by a licensed contractor reasonably approved
in writing in advance by Landlord. Any contractor utilized by Tenant shall be
subject to Landlord’s standard requirements for contractors, as modified from
time to time. Landlord may impose reasonable restrictions and requirements with
respect to repairs and replacements, as provided in Section 7.3, and the
provisions of Section 7.4 shall apply to all repairs and replacements. If Tenant
fails to properly maintain and/or repair the Premises or the Building as herein
provided following Landlord’s notice and the expiration of the applicable cure
period (or earlier if Landlord determines that such work must be performed prior
to such time in order to avoid damage to the Premises or Building or other
detriment), then Landlord may elect, but shall have no obligation, to perform
any repair or maintenance required hereunder on behalf of Tenant and at Tenant’s
expense, and Tenant shall reimburse Landlord upon demand for all reasonable
costs incurred upon submission of an invoice. Notwithstanding anything to the
contrary in this Section 7.1, Landlord shall perform and construct, and Tenant
shall have no responsibility to perform or construct, any repair, maintenance or
improvements which could be treated as a “capital” expenditure under generally
accepted accounting principles, consistently applied; provided, however, that
Tenant shall pay for its share of such “capital expenditures” to the extent such
costs are properly included in Operating Expenses.

SECTION 7.2. LANDLORD’S MAINTENANCE AND REPAIR. Subject to Section 7.1 and
Article XI, Landlord shall provide service, maintenance and repair with respect
to any air conditioning, ventilating or heating equipment which serves the
Premises (exclusive, however, of the Supplemental HVAC Units) and shall maintain
in good repair the roof (including the roof membrane), foundations, footings,
the exterior surfaces of the exterior walls of the Building (including exterior
glass), and the structural, electrical, plumbing, life safety and mechanical
systems (including elevators, if any, serving the Building), except that Tenant
at its expense shall make all repairs resulting from the act or negligence of
Tenant, its agents, employees, invitees, subtenants or contractors. Landlord
shall have the right to employ or designate any reputable person or firm,
including any employee or agent of Landlord or any of Landlord’s affiliates or
divisions, to perform any service, repair or maintenance function. Landlord need
not make any other improvements or repairs except as specifically required under
this Lease, and nothing contained in this Section shall limit Landlord’s right
to reimbursement from Tenant for maintenance, repair costs and replacement costs
as provided elsewhere in this Lease. Tenant understands that it shall not
perform any maintenance or make any repairs or replacements at Landlord’s
expense and shall have no right to any rental offset for any maintenance,
repairs or replacements performed by Tenant. Except for normal preventive
maintenance, which Landlord shall perform regardless of any notice from Tenant,
Tenant further understands that Landlord shall not be required to make any
repairs to the roof, foundations, footings, the exterior surfaces of the
exterior walls of the Building (excluding exterior glass), or structural,
electrical or mechanical systems unless and until Tenant has

 

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notified Landlord in writing of the need for such repair and Landlord shall have
a reasonable period of time thereafter to commence and complete said repair, if
warranted. Subject to the express provisions of Section 2.4 above and to the
limitations set forth in Section 4.2, all costs of any maintenance, repairs and
replacements on the part of Landlord provided hereunder shall be considered part
of Site Costs. Tenant further agrees that if Tenant fails to report any such
need for repair in writing within sixty (60) days of its discovery by Tenant,
including without limitation moisture conditions which could cause mold, Tenant
shall be responsible for any costs and expenses and other damages related to
such repair which are in excess of those which would have resulted had such need
for repair been reported to Landlord within such sixty (60) day period.

SECTION 7.3. ALTERATIONS. Except as otherwise provided in this Section, Tenant
shall make no alterations, additions, fixtures or improvements (“Alterations”)
to the Premises or the Building without the prior written consent of Landlord,
which consent shall not be unreasonably withheld. Notwithstanding the foregoing,
Tenant may make Alterations to the Premises costing less than One Dollar ($1.00)
per square foot of the improved portion of the Premises during each calendar
year of the Term without Landlord’s consent, provided, however, that any
Alterations which change the structural, electrical or mechanical systems of the
Premises, or which require a governmental permit as a prerequisite to the
construction thereof, shall require Landlord’s prior written consent, which
shall not be unreasonably withheld. Notwithstanding anything to the contrary
contained in either of the foregoing sentences, however, no Alterations shall:
(i) affect the exterior of the Building or outside areas (or be visible from
adjoining sites), or (ii) adversely affect or penetrate any of the structural
portions of the Building, including but not limited to the roof, or
(iii) require any change to the basic floor plan of the Premises (including,
without limitation, the adding of any additional “office” square footage) or any
change to any structural or mechanical systems of the Premises, or (iv) fail to
comply with any applicable governmental requirements, or (v) result in the
Premises requiring building services beyond the level normally provided to other
tenants, or (vi) interfere in any manner with the proper functioning of, or
Landlord’s access to, any mechanical, electrical, plumbing, or HVAC systems,
facilities or equipment located in or serving the Building, or (vii) diminish
the value of the Premises including, without limitation, using lesser quality
materials than those existing in the Premises, or (viii) alter or replace
Standard Improvements. Further, in the event that any Alteration would result in
a change from Landlord’s building standard materials and specifications
(“Standard Improvements”), then subject to Landlord’s election contained in the
last paragraph of this Section 7.3, Tenant shall be responsible for the cost of
replacing such non-standard improvement (“Non-Standard Improvement”) with the
applicable Standard Improvement (“Replacements”) which Replacements shall be
completed prior to the Expiration Date or earlier termination of this Lease.
Landlord may impose any reasonable condition to its consent, including but not
limited to a requirement that the installation and/or removal of all Alterations
and Replacements in excess of One Hundred Thousand Dollars ($100,000.00) be
covered by a lien and completion bond satisfactory to Landlord in its reasonable
discretion. Landlord shall in all events, whether or not Landlord’s consent is
required, have the right to reasonably approve prior to the commencement of any
work the contractor performing the installation and removal of Alterations and
Replacements and Tenant shall not permit any contractor not approved by Landlord
to perform any work on the Premises or on the Building. Tenant shall obtain all
required permits for the installation and removal of Alterations and
Replacements and shall perform the installation and removal of Alterations and
Replacements in compliance with all applicable laws, regulations and ordinances,
including without limitation the Americans with Disabilities Act, all covenants,
conditions and restrictions affecting the Site, and the Rules and Regulations as
described in Article XVII. Tenant understands and agrees that Landlord shall be
entitled to a supervision fee in the amount of five percent (5%) of the cost of
such Alterations either requiring a permit from the City of Irvine or affecting
any mechanical, electrical, plumbing or HVAC systems, facilities or equipment
located in or serving the Building. Under no circumstances shall Tenant make any
Alterations or Replacements which incorporate any Hazardous Materials, including
without limitation asbestos-containing construction materials into the Premises,
the Building or the Common Areas. If any governmental entity requires, as a
condition to any proposed Alterations by Tenant, that improvements be made to
the Common Areas, and if Landlord consents to such improvements to the Common
Areas (which consent may be withheld in the sole and absolute discretion of
Landlord), then Tenant shall, at Tenant’s sole expense, make such improvements
to the Common Areas required by law and in such manner, utilizing such
materials, and with such contractors, architects and engineers as Landlord may
require in its sole and absolute discretion. Landlord shall have the right, but
not the obligation, to elect to make any such improvements to be made to the
Common Areas at Tenant’s expense, in which case Tenant shall reimburse Landlord
upon demand for all reasonable costs incurred in making such improvements. Any
request for Landlord’s consent to any proposed Alterations shall be made in
writing and shall contain architectural plans describing the work in detail
reasonably satisfactory to Landlord. Landlord may elect to cause its architect
to review Tenant’s architectural plans, and the reasonable cost of that review
shall be reimbursed by Tenant. Should the work proposed by Tenant and consented
to by Landlord modify the basic floor plan of the Premises, then Tenant shall,
at its expense, furnish Landlord with as-built drawings and CAD disks compatible
with Landlord’s systems and standards. Unless Landlord otherwise agrees in
writing, all Alterations made or affixed to the Premises, the Building or to the
Common Areas (excluding moveable trade fixtures, equipment, personal property
and furniture), and all telephone and data cabling, shall become the property of
Landlord and shall be surrendered with the Premises at the end of the Term;
except that Landlord may, as provided in the next succeeding paragraph of this
Section 7.3, require Tenant to remove by the Expiration Date, or sooner
termination date of this Lease, all or any of the Alterations installed either
by Tenant or by Landlord at Tenant’s request and to repair any damage to the
Premises, the Building or the Common Areas arising from that removal and restore
the Premises to their condition prior to making such Alterations. The foregoing
restoration requirements shall be in addition to Tenant’s “Restoration
Requirement” as set forth in the Work Letter attached to this Lease. The
foregoing provisions for removal of Alterations, however, shall not be
applicable to the Tenant Improvements constructed pursuant to the Work Letter,
which Work Letter itself shall govern any removal of the Tenant Improvements
upon the expiration of the Term.

If Landlord conditions its consent on the same, Landlord shall have the right to
require Tenant to remove any Alterations, and to replace the same with the
applicable Replacements, as of the Expiration Date or sooner

 

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termination of the Lease. Any Alterations for which Landlord’s consent is not
given, however, shall be subject to Landlord’s right, exercisable at any time,
to require same to be removed (and replaced with the Replacements) at the
Expiration Date or sooner termination of this Lease.

SECTION 7.4. MECHANIC’S LIENS. Tenant shall keep the Premises and the Site free
from any liens arising out of any services or work performed, materials
furnished, or obligations incurred by or for Tenant. Upon request by Landlord,
Tenant shall promptly (but in no event later than five (5) business days
following such request) cause any such lien to be released by posting a bond in
accordance with California Civil Code Section 3143 or any successor statute. In
the event that Tenant shall not, within thirty (30) days following Tenant’s
actual notice of the imposition of any lien, cause the lien to be released of
record by payment or posting of a proper bond, Landlord shall have, in addition
to all other available remedies, the right to cause the lien to be released by
any means it deems proper, including payment of or defense against the claim
giving rise to the lien. All reasonable expenses so incurred by Landlord,
including Landlord’s attorneys’ fees, and any consequential or other damages
incurred by Landlord arising out of such lien, shall be reimbursed by Tenant
upon demand, together with interest from the date of payment by Landlord at the
maximum rate permitted by law until paid. Tenant shall give Landlord no less
than ten (10) days’ prior notice in writing before commencing construction of
any kind on the Premises or Common Areas and shall again notify Landlord that
construction has commenced, such notice to be given on the actual date on which
construction commences, so that Landlord may post and maintain notices of
nonresponsibility on the Premises or Common Areas, as applicable, which notices
Landlord shall have the right to post and which Tenant agrees it shall not
disturb. Tenant shall also provide Landlord notice in writing within ten
(10) days following the date on which such work is substantially completed. The
provisions of this Section shall expressly survive the expiration or sooner
termination of this Lease.

SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times, upon
written or oral notice (except in emergencies, when no notice shall be required)
have the right to enter the Premises to inspect them, to supply services in
accordance with this Lease, to perform any work required or permitted to be
performed by Landlord within the Premises, to have access to install, repair,
maintain, replace or remove all electrical and mechanical installations of
Landlord and to protect the interests of Landlord in the Premises, and to submit
the Premises to prospective or actual purchasers or encumbrance holders (or,
during the last one hundred and eighty (180) days of the Term or when an Event
of Default exists, to prospective tenants), all without being deemed to have
caused an eviction of Tenant and without abatement of rent except as provided
elsewhere in this Lease. Landlord shall have the right, if desired, to retain a
key which unlocks all of the doors in the Premises, excluding Tenant’s vaults
and safes, and Landlord shall have the right to use any and all means which
Landlord may deem proper to open the doors in an emergency in order to obtain
entry to the Premises, and any entry to the Premises obtained by Landlord as
provided in this Section 7.5 shall not be deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or any eviction of Tenant from the
Premises. In exercising any of Landlord’s rights of entry, inspection, repair,
maintenance and construction under this Lease, including, without limitation,
under Sections 5.3(d), 6.1, 6.5 and 7.5, Landlord shall comply with Tenant’s
reasonable security measures and operating procedures and shall use commercially
reasonable efforts to minimize any disruption to Tenant. Further, Landlord shall
not exercise any such rights in any such manner as would unreasonably interfere
with Tenant’ use of, access to, or parking at the Premises.

ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT’S PROPERTY

Tenant shall be liable for and shall pay before delinquency, all taxes and
assessments levied against all personal property of Tenant located in the
Premises, and, if required by Landlord, against all Non Standard Improvements to
the Premises (as defined in Section 7.3) made by Landlord or Tenant, and against
any Alterations (as defined in Section 7.3) made to the Premises or the Building
by or on behalf of Tenant. If requested by Landlord, Tenant shall cause its
personal property, Non-Standard Improvements and Alterations to be assessed and
billed separately from the real property of which the Premises form a part. If
any taxes required to be paid by Tenant on Tenant’s personal property,
Non-Standard Improvements and/or Alterations are levied against Landlord or
Landlord’s property and if Landlord pays the same, or if the assessed value of
Landlord’s property is increased by the inclusion of a value placed upon
Tenant’s personal property, Non-Standard Improvements and/or Alterations and if
Landlord pays the taxes based upon the increased assessment, Landlord shall have
the right to require that Tenant pay to Landlord the taxes so levied against
Landlord or the proportion of the taxes resulting from the increase in the
assessment. In calculating what portion of any tax bill which is assessed
against Landlord separately, or Landlord and Tenant jointly, is attributable to
Tenant’s Non-Standard Improvements, Alterations and personal property,
Landlord’s reasonable determination shall be conclusive.

ARTICLE IX. ASSIGNMENT AND SUBLETTING

SECTION 9.1. RIGHTS OF PARTIES.

(a) Notwithstanding any provision of this Lease to the contrary, and except as
to transfers expressly permitted without Landlord’s consent pursuant to
Section 9.4, Tenant will not, either voluntarily or by operation of law, assign,
sublet, encumber, or otherwise transfer all or any part of Tenant’s interest in
this Lease or the Premises, or permit the Premises to be occupied by anyone
other than Tenant, without Landlord’s prior written consent, which consent shall
not unreasonably be withheld in accordance with the provisions of
Section 9.1(b). Except as to transfers expressly permitted without Landlord’s
consent pursuant to Section 9.4, no assignment (whether voluntary, involuntary
or by operation of law), subletting or other transfer shall be valid or
effective without Landlord’s prior written consent and, at Landlord’s election,
any such assignment, subletting or other transfer shall be void and of no force
and effect. Landlord shall not be deemed to have given its consent to any
assignment, subletting or other transfer by any course of action, including
without limitation its acceptance of rent or any other payment due under

 

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this Lease from any person or entity other than Tenant or its acceptance of any
name for listing in the Building directory, other than Landlord’s written
consent. To the extent not prohibited by provisions of the Bankruptcy Code, 11
U.S.C. Section 101 et seq., (the “Bankruptcy Code”), including
Section 365(f)(1), Tenant on behalf of itself and its creditors, administrators
and assigns waives the applicability of Section 365(e) of the Bankruptcy Code
unless the proposed assignee of the Trustee for the estate of the bankrupt meets
Landlord’s standard for consent as set forth in Section 9.1(b) of this Lease. If
this Lease is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code, any and all monies or other considerations to be delivered in
connection with the assignment shall be 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
person or entity to which this Lease is assigned pursuant to the provisions of
the Bankruptcy Code shall be deemed to have assumed all of the obligations
arising under this Lease on and after the date of the assignment, and shall upon
demand execute and deliver to Landlord an instrument confirming that assumption.

(b) If Tenant desires to assign, sublease or otherwise transfer an interest in
this Lease or the Premises, it shall first notify Landlord of its desire and
shall submit in writing to Landlord: (i) the name and address of the proposed
assignee, subtenant or transferee; (ii) the nature of any proposed assignee’s,
subtenant’s or transferee’s business to be carried on in the Premises; (iii) the
terms and provisions of any proposed assignment, sublease or other transfer,
including a copy of the proposed assignment, sublease or transfer form;
(iv) evidence that the proposed assignee, subtenant or transferee will comply
with the requirements of Exhibit D hereto; (v) a completed Environmental
Questionnaire from the proposed assignee, subtenant or transferee; (vi) any
other information requested by Landlord and reasonably related to the transfer
and (vii) the fee described in Section 9.1(e). Except as provided in Section 9.1
(c), Landlord shall not unreasonably withhold its consent, provided that the
parties agree that it shall be reasonable for Landlord to withhold its consent
if: (1) the use of the Premises will not be consistent with the provisions of
this Lease; (2) insurance requirements of the proposed assignee or subtenant may
not be brought into conformity with Landlord’s then current leasing practice;
(3) the proposed assignee, subtenant or transferee has failed to submit to
Landlord all reasonable information as requested by Landlord concerning the
proposed assignee, subtenant or transferee, including, but not limited to,
current financial statements; (4) the proposed assignee or subtenant is a
prospect with whom Landlord is “actively negotiating” (as hereinafter defined)
to become a tenant at the Site (provided Landlord has available space in the
Site for such existing tenant or prospect); or (5) the proposed transfer will
impose additional burdens or adverse tax effects on Landlord. As used herein,
“actively negotiating” shall mean that the prospect shall have countered a
written proposal from Landlord in writing within four (4) months prior to
Tenant’s proposed transfer for the lease of space in the Building or the Site.
Tenant’s exterior sign rights under this Lease, are personal to Tenant and any
Permitted Transferee and may not be assigned or transferred to any assignee of
this Lease or subtenant of the Premises other than a Permitted Transferee
without Landlord’s prior written consent, which may be withheld in Landlord’s
sole and absolute discretion. Notwithstanding the foregoing, Landlord shall not
unreasonably withhold its consent to a transfer of such signage rights in
connection with Tenant’s assignment of this Lease or sublease of the entire
Premises, provided that Landlord shall have the right of prior approval that
such signage continues to comply with the Sign Criteria and the other
requirements of Section 5.2 of this Lease, and provided further that any name
and/or graphics on such signage do not materially devalue the Project as
determined by Landlord in its sole and absolute discretion.

If Landlord consents to the proposed transfer, Tenant may within ninety
(90) days after the date of the consent effect the transfer upon the terms
described in the information furnished to Landlord; provided that any material
change in the terms shall be subject to Landlord’s consent as set forth in this
Section 9.1. Landlord shall approve or disapprove any requested transfer within
fifteen (15) business days following delivery of Tenant’s written request, the
information set forth above, and the fee set forth below.

(c) Except with respect to an assignment or subletting to a Permitted
Transferee, in the event of an assignment of this Lease or a subletting or more
than fifty percent (50%) of the Floor Area of the Premises (in the aggregate),
in lieu of consenting to a proposed assignment or subletting, Landlord may
elect, within the fifteen (15) business day period permitted for Landlord to
approve or disapprove a requested transfer, to terminate this Lease in its
entirety in the event of a proposed assignment or to terminate this Lease as to
the portion of the Premises proposed to be subleased with a proportionate
abatement in the rent payable under this Lease. Any such termination so elected
by Landlord shall be effective thirty (30) days following written notice by
Landlord of its election. Landlord may thereafter, at its option, assign, sublet
or re-let any space so sublet, obtained by assignment or obtained by termination
to any third party, including without limitation the proposed transferee of
Tenant. In the event of any termination of this Lease as to a portion of the
Premises pursuant to this Section 9.1(c), Landlord shall promptly prepare and
deliver to Tenant an amendment to this Lease appropriately amending those
provisions of the Lease affected by such termination, and Tenant shall execute
and return same to Landlord within twenty (20) business days thereafter subject
to Tenant’s reasonable review and approval thereof.

(d) Except with respect to an assignment or subletting to a Permitted
Transferee, in the event that Landlord approves the requested assignment,
subletting or other transfer, Landlord shall be entitled to receive fifty
percent (50%) of any amounts paid by the assignee or subtenant, however
described, in excess of (i) the Basic Rent and Operating Expenses payable by
Tenant hereunder, or in the case of a sublease of a portion of the Premises, in
excess of the Basic Rent and Operating Expenses reasonably allocable to such
portion as determined by Landlord, plus (ii) Tenant’s direct out-of-pocket costs
which Tenant certifies to Landlord have been paid to provide occupancy related
services to such assignee or subtenant of a nature commonly provided by
landlords of similar space (including, without limitation, brokerage
commissions, legal fees and tenant improvement costs paid by Tenant in
connection with such subletting or assignment), shall be the property of
Landlord and such amounts shall be payable directly to Landlord by the assignee
or subtenant concurrently with such assignee’s or subtenant’s payment(s) to
Tenant, or, at Landlord’s option, by Tenant within ten (10) days of Tenant’s
receipt thereof. Landlord shall have the right to review or audit the books and
records of Tenant, or have such books and records reviewed or

 

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audited by an outside accountant, to confirm any such direct out-of-pocket
costs. In the event that such direct out-of-pocket costs claimed by Tenant are
overstated by more than five percent (5%), Tenant shall reimburse Landlord for
any of Landlord’s costs related to such review or audit. At Landlord’s request,
a written agreement shall be entered into by and among Tenant, Landlord and the
proposed assignee or subtenant confirming the requirements of this
Section 9.1(d).

(e) Tenant shall pay to Landlord a fee equal to the greater of (i) Landlord’s
actual and reasonable costs related to such assignment, subletting or other
transfer or (ii) Five Hundred Dollars ($500.00), to process any request by
Tenant for an assignment, subletting or other transfer under this Lease. Tenant
shall pay Landlord the sum of Five Hundred Dollars ($500.00) concurrently with
Tenant’s request for consent to any assignment, subletting or other transfer,
and Landlord shall have no obligation to consider such request unless
accompanied by such payment. Tenant shall pay Landlord upon demand any costs in
excess of such payment to the extent Landlord’s actual and reasonable costs
related to such request exceeds $500.00. Such fee is hereby acknowledged as a
reasonable amount to reimburse Landlord for its costs of review and evaluation
of a proposed transfer.

SECTION 9.2. EFFECT OF TRANSFER. No assignment, subletting or other transfer,
even with the consent of Landlord, shall relieve Tenant of its obligation to pay
rent and to perform all its other obligations under this Lease. Moreover, Tenant
shall indemnify and hold Landlord harmless, as provided in Section 10.3, for any
act or omission by an assignee, subtenant or transferee. Each assignee, other
than Landlord, shall assume all obligations of Tenant under this Lease and shall
be liable jointly and severally with Tenant for the payment of all rent, and for
the due performance of all of Tenant’s obligations, under this Lease. No
assignment, subletting or transfer shall be effective or binding on Landlord
unless documentation in form and substance satisfactory to Landlord in its
reasonable discretion evidencing the transfer, and in the case of an assignment,
the assignee’s assumption of the obligations of Tenant under this Lease, is
delivered to Landlord and both the assignee/subtenant and Tenant deliver to
Landlord an executed consent to transfer instrument prepared by Landlord in a
commercially reasonable form and consistent with the requirements of this
Article. Consent by Landlord to one or more transfers shall not operate as a
waiver or estoppel to the future enforcement by Landlord of its rights under
this Lease or as a consent to any subsequent transfer.

SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions shall
apply to any subletting by Tenant of all or any part of the Premises and shall
be deemed included in each sublease:

(a) Such subletting and any subtenant of the Premises shall be subject to each
and every provision contained in this Lease.

(b) Tenant hereby irrevocably assigns to Landlord all of Tenant’s interest in
all rentals and income arising from any sublease of the Premises, and Landlord
may collect such rent and income and apply same toward Tenant’s obligations
under this Lease; provided, however, that until there is an Event of Default by
Tenant, Tenant shall have the right to receive and collect the sublease rentals.
Landlord shall not, by reason of this assignment or the collection of sublease
rentals, be deemed liable to the subtenant for the performance of any of
Tenant’s obligations under the sublease. Tenant hereby irrevocably authorizes
and directs any subtenant, upon receipt of a written notice from Landlord
stating that an uncured Event of Default exists in the performance of Tenant’s
obligations under this Lease, to pay to Landlord all sums then and thereafter
due under the sublease. Tenant agrees that the subtenant may rely on that notice
without any duty of further inquiry and notwithstanding any notice or claim by
Tenant to the contrary. Tenant shall have no right or claim against the
subtenant or Landlord for any rentals so paid to Landlord; provided, however,
that any such amounts received by Landlord shall be credited towards any amount
Tenant owes under this Lease.

(c) In the event of the termination of this Lease for any reason, including
without limitation as the result of an Event of Default by Tenant or by the
mutual agreement of Landlord and Tenant, Landlord may, at its sole option, take
over Tenant’s entire interest in any sublease and, upon notice from Landlord,
the subtenant shall attorn to Landlord. In no event, however, shall Landlord be
liable for any previous act or omission by Tenant under the sublease or for the
return of any advance rental payments or deposits under the sublease that have
not been actually delivered to Landlord, nor shall Landlord be bound by any
sublease modification executed without Landlord’s consent or for any advance
rental payment by the subtenant in excess of one month’s rent. The provisions of
this Lease (other than with respect to the payment of rent), including without
limitation those pertaining to insurance and indemnification, shall be deemed
incorporated by reference into the sublease despite the termination of this
Lease. In the event Landlord does not elect to take over Tenant’s interest in a
sublease in the event of any such termination of this Lease, such sublease shall
terminate concurrently with the termination of this Lease and such subtenant
shall have no further rights under such sublease and Landlord shall have no
obligations to such subtenant.

SECTION 9.4. CERTAIN TRANSFERS. Notwithstanding anything to the contrary
contained in this Article IX, Landlord’s consent shall not be required for and
Tenant may, without Landlord’s prior written consent and without constituting an
assignment or sublease hereunder, sublet the Premises or assign the Lease to
(A) an entity controlling, under common control with or controlled by Tenant
(“Affiliate”), (B) a successor entity related to Tenant by purchase, merger,
consolidation, nonbankruptcy reorganization, or government action, or (C) a
purchaser of substantially all of Tenant’s assets located in the Premises ((A),
(B) and (C) are collectively referred to herein as a “Permitted Transferees” and
individually as a “Permitted Transferee” and transfers to such Permitted
Transferees shall be collectively referred to herein as “Permitted Transfers”),
so long as (i) the net worth of the Permitted Transferee is at least equal to
the net worth of Tenant immediately prior to the date of such Permitted
Transfer, or, in Landlord’s reasonable determination, such Permitted Transferee
has sufficient net worth to perform Tenant’s obligations under this Lease,
evidence of which, satisfactory to Landlord, shall be presented to Landlord
prior to

 

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such Permitted Transfer, provided, however, that the provisions of this clause
(i) shall not apply to transfers to an Affiliate, (ii) Tenant shall provide to
Landlord, prior to such Permitted Transfer, written notice of such Permitted
Transfer and such assignment documentation and other information as Landlord may
reasonably require in connection therewith, and (iii) all of the other terms and
requirements of Sections 9.2 and 9.3 (but not Section 9.1) shall apply with
respect to such Permitted Transfer. A sale or transfer of Tenant’s capital stock
shall not be deemed an assignment, subletting, or any other transfer of this
Lease or the Premises.

ARTICLE X. INSURANCE AND INDEMNITY

SECTION 10.1. TENANT’S INSURANCE. Tenant, at its sole cost and expense, shall
provide and maintain in effect the insurance described in Exhibit D. Evidence of
that insurance must be delivered to Landlord prior to the Commencement Date or
any earlier date on which Tenant may enter upon or take possession of the
Premises for any reason whatsoever.

SECTION 10.2. LANDLORD’S INSURANCE. Landlord shall provide the following types
of insurance, with or without deductible and in amounts and coverages as
Landlord may from time to time deem appropriate: property insurance, including
fire, vandalism, malicious mischief and such other additional perils as may be
included in a standard “special form” policy,” subject to standard exclusions
(such as, but not limited to, earthquake and flood exclusions), covering the
full replacement value of the Building including all Tenant Improvements
constructed pursuant to the Work Letter (the “Property Policy”). In addition,
Landlord may, at its election, obtain insurance for such other risks as Landlord
or its mortgagees may from time to time deem appropriate, including, without
limitation, coverage for earthquake, flood and commercial general liability.
Landlord shall not be required to carry insurance of any kind on Tenant’s
Alterations or on Tenant’s other property, including, without limitation, trade
fixtures, furnishings, equipment, signs and all other items of personal
property, and shall not be obligated to repair or replace that property should
damage occur. All proceeds of insurance maintained by Landlord upon the Building
and/or Site shall be the property of Landlord, whether or not Landlord is
obligated to or elects to make any repairs. At Landlord’s option, Landlord may
self-insure all or any portion of the risks for which Landlord elects or is
obligated to provide insurance hereunder.

SECTION 10.3. JOINT INDEMNITY.

(a) To the fullest extent permitted by law, Tenant shall defend, indemnify,
protect, save and hold harmless Landlord, its agents, and any and all affiliates
of Landlord, including, without limitation, any corporations or other entities
controlling, controlled by or under common control with Landlord, from and
against any and all claims, demands, actions, losses, liabilities, costs or
expenses arising either before or after the Commencement Date from Tenant’s use
or occupancy of the Premises, the Building or the Common Areas, including,
without limitation, the use by Tenant, its agents, employees, invitees or
licensees of any recreational facilities within the Common Areas; the conduct of
Tenant’s business; any activity, work, or thing done, permitted or suffered by
Tenant or its agents, employees, invitees or licensees in or about the Premises,
the Building or the Common Areas; or from any Event of Default in the
performance of any obligation on Tenant’s part to be performed under this Lease;
or from any act or negligence or willful misconduct of Tenant or its agents,
employees, visitors, patrons, guests, invitees or licensees. In cases of alleged
negligence asserted by third parties against Landlord which arise out of, are
occasioned by, or in any way attributable to Tenant, its agents, employees,
contractors, licensees or invitees use and occupancy of the Premises, the
Building or the Common Areas, or from the conduct of its business or from any
activity, work or thing done, permitted or suffered by Tenant or its agents,
employees, invitees or licensees on Tenant’s part to be performed under this
Lease, or from any negligence or willful misconduct of Tenant, its agents,
employees, licensees or invitees, Tenant shall accept any tender of defense for
Landlord and shall, notwithstanding any allegation of negligence or willful
misconduct on the part of the Landlord, defend Landlord with counsel reasonably
satisfactory to Landlord and protect and hold Landlord harmless and pay all
costs, expenses and attorneys’ fees incurred in connection with such litigation,
provided that Tenant shall not be liable for any such injury or damage, and
Landlord shall reimburse Tenant for the reasonable attorneys’ fees and costs for
the attorney representing both parties, all to the extent and in the proportion
that such injury or damage is ultimately determined by a court of competent
jurisdiction (or in connection with any negotiated settlement agreed to by
Landlord) to be attributable to the active negligence or willful misconduct of
Landlord. Upon Landlord’s request, Tenant shall at Tenant’s sole cost and
expense, retain a separate attorney reasonably selected by Landlord to represent
Landlord in any such suit if Landlord reasonably determines that the
representation of both Tenant and Landlord by the same attorney would cause a
conflict of interest; provided, however, that to the extent and in the
proportion that the injury or damage which is the subject of the suit is
ultimately determined by a court of competent jurisdiction (or in connection
with any negotiated settlement agreed to by Landlord) to be attributable to the
active negligence or willful misconduct of Landlord, Landlord shall reimburse
Tenant for the reasonable legal fees and costs of the separate attorney retained
by Tenant. The provisions of this Section 10.3(a) shall expressly survive the
expiration or sooner termination of this Lease.

(b) To the fullest extent permitted by law, but subject to the express
limitations on liability contained in this Lease (including, without limitation,
the provisions of Sections 10.5 and 14.8 of this Lease), Tenant shall not
indemnify Landlord for, and Landlord shall defend, indemnify, protect, save and
hold harmless Tenant, its agents and any and all affiliates of Tenant, including
without limitation, any corporations, or other entities controlling, controlled
by or under common control with Tenant, from and against, any and all claims,
liabilities, costs or expenses arising either before or after the Commencement
Date from the active negligence or willful misconduct of Landlord, its employees
or authorized agents in connection with the operation, maintenance or repair of
the Common Areas of the Site. The provisions of this Subsection 10.3(b) shall
expressly survive the expiration or sooner termination of this Lease.

 

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SECTION 10.4. LANDLORD’S NONLIABILITY. Subject only to the express indemnity
obligations contained in Section 10.3(b) of this Lease but notwithstanding any
other provision of this Lease to the contrary, Landlord, its agents, and any and
all affiliates of Landlord, shall not be liable to Tenant, its employees, agents
and/or invitees, and Tenant hereby waives all claims against Landlord, its
agents, and any and all affiliates of Landlord, for injuries to or deaths of
persons whatsoever resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak or flow from or into any part of the
Premises, mold, or from the breakage, leakage, obstruction or other defects of
the pipes, sprinklers, wires, appliances, plumbing, air conditioning, electrical
works, roof, windows or other fixtures in the Building (whether the damage or
injury results from conditions arising in the Premises or in other portions of
the Building), regardless of the negligence of Landlord, its agents or any and
all affiliates of Landlord in connection with any of the foregoing.
Notwithstanding any provision of this Lease to the contrary, including, without
limitation, the provisions of Section 10.3(b) of this Lease, Landlord shall not
be liable to Tenant, its employees, agents and invitees, and Tenant hereby
waives all claims against Landlord, for loss of or damage to any property, or
any other loss, cost, damage, injury or liability to property whatsoever
resulting from fire, explosion, falling plaster, steam, gas, electricity, water
or rain which may leak or flow from or into any part of the Premises or from the
breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works or other fixtures in
the Building, whether the damage or injury results from conditions arising in
the Premises or in other portions of the Building, regardless of the negligence
of Landlord, its agents or any and all affiliates of Landlord in connection with
any of the foregoing. It is understood that any such condition may require the
temporary evacuation or closure of all or a portion of the Building.
Notwithstanding any provision of this Lease to the contrary, including, without
limitation, the provisions of Section 10.3(b) of this Lease, Landlord shall in
no event be liable to Tenant, its employees, agents, and invitees, and Tenant
hereby waives all claims against Landlord, for loss or interruption of Tenant’s
business or income (including, without limitation, any consequential damages and
lost profit or opportunity costs), or any other loss, cost, damage, injury or
liability resulting from Acts of God (except with respect to restoration
obligations pursuant to Article XI below), acts of civil disobedience or
insurrection, acts or omissions (criminal or otherwise) of any third parties
(other than Landlord’s employees or authorized agents), including without
limitation, any other tenants within the Site or their agents, employees,
contractors, guests or invitees. Landlord shall have no liability whatsoever
(including without limitation consequential damages and lost profit or
opportunity costs) and, except as provided in Sections 11.1 and 12.1 below,
there shall be no abatement of rent, by reason of any injury to or interference
with Tenant’s business arising from the making of any repairs, alterations or
improvements to any portion of the Building, including repairs to the Premises,
nor shall any related activity by Landlord constitute an actual or constructive
eviction. In making repairs, alterations or improvements, however, Landlord
shall interfere as little as reasonably practicable with the conduct of Tenant’s
business in the Premises. Should Tenant elect to receive any service or products
from a concessionaire, licensee or third party tenant of Landlord, Landlord
shall have no liability for any services or products so provided or for any
breach of contract by such third party provider. Neither Landlord nor its agents
shall be liable for interference with light or other similar intangible
interests. Tenant shall immediately notify Landlord in case of fire or accident
in the Premises, the Building or the Site and of defects in any improvements or
equipment.

SECTION 10.5. WAIVER OF SUBROGATION. Notwithstanding anything to the contrary
contained in this Lease, Landlord and Tenant each hereby waives all rights of
recovery against the other and the other’s agents on account of loss and damage
occasioned to the property of such waiving party to the extent that the waiving
party is entitled to proceeds for such loss or damage under any property
insurance policies carried or required to be carried by the provisions of this
Lease (including, without limitation, the Property Policy required of Landlord
in the first sentence of Section 10.2 of this Lease); provided however, that the
foregoing waiver shall not apply to the extent of Tenant’s obligations to pay
deductibles under any such policies and this Lease. By this waiver it is the
intent of the parties that neither Landlord nor Tenant shall be liable to any
insurance company (by way of subrogation or otherwise) insuring the other party
for any loss or damage insured against under any property insurance policies
contemplated by this Lease, even though such loss or damage might be occasioned
by the negligence of such party, its agents, employees, contractors, guests or
invitees. All of Landlord’s and Tenant’s repair and indemnity obligations under
this Lease shall be subject to the waiver contained in this Section 10.5.

ARTICLE XI. DAMAGE OR DESTRUCTION

SECTION 11.1. RESTORATION.

(a) If the Premises or the Building or a part thereof are materially damaged by
any fire, flood, earthquake or other casualty, Landlord shall have the right to
terminate this Lease upon written notice to Tenant if: (i) Landlord reasonably
determines that proceeds necessary to pay the full cost of repair are not
available from Landlord’s Property Policy (or if Landlord chooses to self-insure
all or any portion of such Property Policy coverage, that the necessary proceeds
would not have been available if the Property Policy had been in place through
third-party insurers) and/or from its other property insurance policies (if
any), including without limitation proceeds to cover any earthquake casualty,
plus such additional amounts Tenant elects, at its option, to contribute,
excluding however the deductible (for which Tenant shall be responsible for
Tenant’s Share not to exceed One Hundred Thousand Dollars ($100,000.00) for any
single casualty); (ii) Landlord reasonably determines that the Premises cannot,
with reasonable diligence, be fully repaired by Landlord (or cannot be safely
repaired because of the presence of hazardous factors, including without
limitation Hazardous Materials, earthquake faults, and other similar dangers)
within two hundred seventy (270) days after the date of the damage; (iii) an
Event of Default by Tenant has occurred and is continuing; or (iv) the material
damage occurs during the final twelve (12) months of the Term. Landlord shall
notify Tenant in writing (“Landlord’s Notice”) within sixty (60) days after the
damage occurs as to (A) whether Landlord is terminating this Lease as a result
of such material damage and (B) if Landlord is not terminating this Lease, the
number of days within which Landlord estimates that the Premises, with
reasonable diligence, are likely to be fully repaired. In the event Landlord
elects to terminate this Lease, this Lease shall

 

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terminate as of the date specified for termination by Landlord’s Notice (which
termination date shall in no event be later than sixty (60) days following the
date of the damage, or, if no such date is specified, such termination shall be
the date of Landlord’s Notice). In the event Landlord elects to terminate this
Lease (but not in the event of a termination of this Lease by Tenant pursuant to
Section 11.1(b) below), Tenant shall have no obligation for reimbursement of
Landlord’s insurance deductible.

(b) If Landlord has the right to terminate this Lease pursuant to
Section 11.1(a) and does not elect to so terminate this Lease, and provided that
at the time of Landlord’s Notice neither an uncured Event of Default exists nor
has Landlord delivered Tenant a notice of any failure by Tenant to fulfill an
obligation under this Lease which, unless cured by Tenant within the applicable
grace period, would constitute an Event of Default, then within ten
(10) business days following delivery of Landlord’s Notice pursuant to
Section 11.1(a), Tenant may elect to terminate this Lease by written notice to
Landlord, but only if (i) Landlord’s Notice specifies that Landlord has
determined that the Premises cannot be repaired, with reasonable diligence,
within two hundred seventy (270) days after the date of damage or (ii) the
casualty has occurred within the final twelve (12) months of the Term and such
material damage has a materially adverse impact on Tenant’s continued use of the
Premises. If Tenant fails to provide such termination notice within such ten
(10) business day period, Tenant shall be deemed to have waived any termination
right under this Section 1l.1(b) or any other applicable law.

(c) In the event that neither Landlord nor Tenant terminates this Lease pursuant
to this Section 11.1 as a result of material damage to the Building or Premises
resulting from a casualty, Landlord shall repair all material damage to the
Premises or the Building as soon as reasonably possible and this Lease shall
continue in effect for the remainder of the Term. Subject to any provision to
the contrary in the Work Letter, such repair by Landlord shall include repair of
material damage to the Tenant Improvements constructed pursuant to the Work
Letter. Landlord’s repair of material damage shall be at Landlord’s sole cost
and expense except for any insurance deductible (for which Tenant shall be
responsible for Tenant’s Share, not to exceed One Hundred Thousand Dollars
($100,000.00) for any single casualty). Landlord shall have the right, but not
the obligation, to repair or replace any other leasehold improvements made by
Tenant or any Alterations (as defined in Section 7.3) constructed by Tenant as
part of Landlord’s repair of material damage, in which case Tenant shall make
available to Landlord upon demand insurance proceeds from insurance required to
be maintained by Tenant. If Landlord elects to repair or replace such leasehold
improvements and/or Alterations, all insurance proceeds available for such
repair or replacement shall be made available to Landlord. Landlord shall have
no liability to Tenant in the event that the Premises or the Building has not
been fully repaired within the time period specified by Landlord in Landlord’s
Notice to Tenant as described in Section 11.1(a). Notwithstanding the provisions
of this Article XI, the repair of damage to the Premises to the extent such
damage is not material shall be governed by Sections 7.1 and 7.2.

Notwithstanding anything to the contrary contained in this Section 11.1(c), if
for any reasons other than delays caused by Tenant, or other matters beyond
Landlord’s reasonable control, the Premises and/or the Building have not been
substantially repaired within the time period specified in Landlord’s Notice to
Tenant as described in Section 11.1(a), then Tenant may, by written notice to
Landlord given at any time thereafter but prior to the actual date of the
substantial completion of the repair of the Premises or the Building, elect to
terminate this Lease effective thirty (30) days from and after the date of such
notice, provided that if Landlord shall substantially complete such repairs on
or before the effective date of such termination, then Tenant’s election to
terminate this Lease shall thereupon be cancelled and of no further force or
effect. Notwithstanding the foregoing, if at any time during the construction
period, Landlord reasonably determines that the substantial completion of said
repairs will be delayed beyond the time period specified in Landlord’s Notice
(for reasons other than Tenant-caused delays and/or force majeure delays), then
Landlord may notify Tenant in writing of such determination and of a new outside
date for completion of such repairs, and Tenant must elect within five (5) days
of receipt of such notice to either terminate this Lease or waive its right to
terminate this Lease provided such repairs are substantially completed within
thirty (30) days following the new outside date established by Landlord in such
notice to Tenant. Tenant’s failure to elect to terminate this Lease within such
five (5) day period shall be deemed Tenant’s waiver of its right to terminate
this Lease as provided in this paragraph as to the previous outside date, but
not as to the new outside date established by said notice.

(d) Commencing on the date of such material damage to the Building, and ending
on the sooner of the date the damage is repaired or the date this Lease is
terminated, the rental to be paid under this Lease shall be abated in the same
proportion that the Floor Area of the Premises that is rendered unusable by the
damage from time to time bears to the total Floor Area of the Premises, as
reasonably determined by Landlord.

(e) Tenant shall fully cooperate with Landlord in removing Tenant’s personal
property and any debris from the Premises to facilitate all inspections of the
Premises and the making of any repairs. Notwithstanding anything to the contrary
contained in this Lease, if Landlord in good faith believes there is a risk of
injury to persons or damage to property from entry into the Building or Premises
following any damage or destruction thereto, Landlord may restrict entry into
the Building or the Premises by Tenant, its employees, agents and contractors in
a non-discriminatory manner, without being deemed to have violated Tenant’s
rights of quiet enjoyment to, or made an unlawful detainer of, or evicted Tenant
from, the Premises. Upon request, Landlord shall consult with Tenant to
determine if there are safe methods of entry into the Building or the Premises
solely in order to allow Tenant to retrieve files, data in computers, and
necessary inventory, subject however to all indemnities and waivers of liability
from Tenant to Landlord contained in this Lease and any additional indemnities
and waivers of liability which Landlord may reasonably require.

SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this Lease,
including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.

 

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ARTICLE XII. EMINENT DOMAIN

SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the
Premises is taken by any lawful authority by exercise of the right of eminent
domain, or sold to prevent a taking, either Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
the authority. In the event title to a portion of the Building or Site, whether
or not including a portion of the Premises, is taken or sold to prevent a
taking, and if Landlord elects to restore the Building in such a way as to alter
the Premises materially, either party may terminate this Lease, by written
notice to the other party, effective on the date of vesting of title. In the
event neither party has elected to terminate this Lease as provided above, then
Landlord shall promptly, after receipt of a sufficient condemnation award,
proceed to restore the Premises to substantially their condition prior to the
taking, and a proportionate allowance shall be made to Tenant for the rent
corresponding to the time during which, and to the part of the Premises of
which, Tenant is deprived on account of the taking and restoration. In the event
of a taking, Landlord shall be entitled to the entire amount of the condemnation
award without deduction for any estate or interest of Tenant; provided that
nothing in this Section shall be deemed to give Landlord any interest in, or
prevent Tenant from seeking any award against the taking authority for, the
taking of personal property and fixtures belonging to Tenant or for relocation
or business interruption expenses recoverable from the taking authority.

SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed ninety
(90) days.

SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a taking of
the parking area of the Site such that Landlord can no longer provide sufficient
parking to comply with this Lease, Landlord may substitute reasonably equivalent
parking in a location reasonably close to the Building; provided that if
Landlord fails to make that substitution within ninety (90) days following the
taking and if the taking materially impairs Tenant’s use and enjoyment of the
Premises, Tenant may, at its option, terminate this Lease by written notice to
Landlord. If this Lease is not so terminated by Tenant, there shall be no
abatement of rent and this Lease shall continue in effect.

ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS

SECTION 13.1. SUBORDINATION. At the option of Landlord or any lender of
Landlord’s that obtains a security interest in the Building, this Lease shall be
either superior or subordinate to all ground or underlying leases, mortgages and
deeds of trust, if any, which may hereafter affect the Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as no uncured Event of Default exists under this Lease,
Tenant’s possession and quiet enjoyment of the Premises shall not be disturbed
and this Lease shall not terminate in the event of termination of any such
ground or underlying lease, or the foreclosure of any such mortgage or deed of
trust, to which this Lease has been subordinated pursuant to this Section.
Tenant shall, at any time upon not less than twenty (20) days prior written
notice from Landlord, execute and deliver any documents or agreements that are
in commercially reasonable form and are requested by Landlord or such lessor or
lender which provide Tenant with the non-disturbance protections set forth in
this Section. In the event of a termination or foreclosure, Tenant shall become
a tenant of and attorn to the successor-in-interest to Landlord upon the same
terms and conditions as are contained in this Lease, and shall execute any
instrument reasonably required by Landlord’s successor for that purpose. Tenant
shall also, upon written request of Landlord, execute and deliver all
instruments as may be required from time to time to subordinate the rights of
Tenant under this Lease to any ground or underlying lease or to the lien of any
mortgage or deed of trust (provided that such instruments include the
nondisturbance and attornment provisions set forth above and are in commercially
reasonable form), or, if requested by Landlord, to subordinate, in whole or in
part, any ground or underlying lease or the lien of any mortgage or deed of
trust to this Lease. Tenant agrees that any purchaser at a foreclosure sale or
lender taking title under a deed-in-lieu of foreclosure shall not be responsible
for any act or omission of a prior landlord, shall not be subject to any offsets
or defenses Tenant may have against a prior landlord, and shall not be liable
for the return of the security deposit to the extent it is not actually received
by such purchaser or bound by any rent paid for more than the current month in
which the foreclosure occurred.

Landlord hereby represents and warrants to Tenant that, as of the execution of
this Lease, the Premises and the Site are not encumbered by any deed of trust,
mortgage or ground lease referred to in Section 13.1 above.

SECTION 13.2. ESTOPPEL CERTIFICATE.

(a) Tenant shall at any time upon not less than twenty (20) days prior written
notice from Landlord, execute, acknowledge and deliver to Landlord, in any
commercially reasonable form that Landlord may reasonably require, a statement
in writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of the modification and certifying
that this Lease, as modified, is in full force and effect) and the dates to
which the rental, additional rent and other charges have been paid in advance,
if any, and (ii) acknowledging that, to Tenant’s knowledge, there are no uncured
defaults on the part of Landlord, or specifying each default if any are claimed,
and (iii) setting forth all further information that Landlord or any prospective
purchaser or encumbrancer may reasonably require. Tenant’s statement may be
relied upon by any prospective purchaser or encumbrancer of all or any portion
of the Building or Site.

 

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(b) Notwithstanding any other rights and remedies of Landlord, Tenant’s failure
to deliver any estoppel statement within the provided time shall be conclusive
upon Tenant that (i) this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) there are no uncured
Events of Default in Landlord’s performance, and (iii) not more than one month’s
rental has been paid in advance.

SECTION 13.3. FINANCIALS.

(a) Tenant shall deliver to Landlord, prior to the execution of this Lease and
thereafter at any time and from time to time within twenty (20) days following
Landlord’s written request (but not more frequently than once during any
calendar year during the Term), Tenant’s current tax returns and financial
statements, certified to be true, accurate and complete by the chief financial
officer of Tenant, 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;
provided, however, that in the event and so long as Tenant is a publicly traded
corporation on a nationally recognized stock exchange, the foregoing obligation
to deliver the Statements shall be waived. If delivered to Landlord marked or
otherwise designated as “confidential”, Landlord agrees that it will keep the
Statements confidential, except that Landlord shall have the right to deliver
the same to any proposed purchaser of the Building or Site, and to any
encumbrancer or proposed encumbrancer of all or any portion of the Building or
Site.

(b) 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, 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.

ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES

SECTION 14.1. TENANT’S DEFAULTS. The occurrence of any one or more of the
following events (following the expiration of any cure period set forth below,
if any is provided) shall constitute an ‘Event of Default” by Tenant:

(a) The failure by Tenant to make any payment of Basic Rent or additional rent
required to be made by Tenant, as and when due, where the failure continues for
a period of five (5) days after written notice from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure Section 1161
and 1161(a) as amended. For purposes of these Events of Default and remedies
provisions, the term “additional rent” shall be deemed to include all amounts of
any type whatsoever other than Basic Rent to be paid by Tenant pursuant to the
terms of this Lease and the Work Letter.

(b) Except as provided in Article IX of this Lease, the assignment, sublease,
encumbrance or other transfer of this Lease by Tenant, either voluntarily or by
operation of law, whether by judgment, execution, transfer by intestacy or
testacy, or other means, where such assignment, sublease, encumbrance or other
transfer remains in effect for a period of fifteen (15) days after written
notice from Landlord to Tenant.

(c) The discovery by Landlord that any financial statement provided by Tenant,
or by any affiliate, successor or guarantor of Tenant, was materially false.

(d) The failure of Tenant to timely and fully provide any subordination
agreement, estoppel certificate or financial statements in accordance with the
requirements of Article XIII, where the failure continues for a period of three
(3) business days after written notice from Landlord to Tenant.

(e) The abandonment of the Premises by Tenant.

(f) The failure or inability by Tenant to observe or perform any of the express
or implied covenants or provisions of this Lease to be observed or performed by
Tenant, other than as specified in this Section 14.1, where the failure
continues for a period of thirty (30) days after written notice from Landlord to
Tenant or such shorter period as is specified in any other provision of this
Lease; provided, however, that any such notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended (but the foregoing shall not limit or modify
the cure periods specifically set forth in this Section 14). However, if the
nature of the failure is such that more than thirty (30) days are reasonably
required for its cure, then an Event of Default shall not be deemed to have
occurred if Tenant commences the cure within thirty (30) days, and thereafter
diligently pursues the cure to completion.

(g)(i) The making by Tenant of any general assignment for the benefit of
creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or for reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against Tenant, the same is
dismissed within sixty (60) days); (iii) 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, if possession is not
restored to Tenant within sixty (60) days; (iv) the attachment, execution or
other judicial seizure of substantially all of Tenant’s assets located at the
Premises or of Tenant’s interest in this Lease, where the seizure is not
discharged within sixty (60) days; (v) Tenant’s convening of a meeting of its
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of effecting a moratorium upon or composition of its debts or (vi) the failure
of Tenant to pay its material obligations to creditors as and when they become
due and payable, other than as a result of a good faith dispute by Tenant as to
the amount due to such creditors. Landlord shall not be deemed to have knowledge
of any event described in this Section 14.1(g) unless notification in writing is
received by Landlord, nor shall there be any presumption attributable to
Landlord of Tenant’s insolvency. In the event that any provision of this
Section 14.1(g) is contrary to applicable law, the provision shall be of no
force or effect.

(h) Any other breach of this Lease which this Lease provides is an Event of
Default.

SECTION 14.2. LANDLORD’S REMEDIES.

(a) If an Event of Default by Tenant occurs, then in addition to any other
remedies available to Landlord, Landlord may exercise the following remedies:

(i) Landlord may terminate Tenant’s right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. Such termination
shall not affect any accrued obligations of Tenant under this Lease. Upon
termination, Landlord shall have the right to reenter the Premises and remove
all persons and property. Landlord shall also be entitled to recover from Tenant
(and to retain, use or apply any Security Deposit held by Landlord towards
amounts estimated by Landlord as):

(1) The worth at the time of award of the unpaid Basic Rent and additional rent
which had been earned at the time of termination;

(2) The worth at the time of award of the amount by which the unpaid Basic Rent
and additional rent which would have been earned after termination until the
time of award exceeds the amount of such loss that Tenant proves could have been
reasonably avoided;

(3) The worth at the time of award of the amount by which the unpaid Basic Rent
and additional rent for the balance of the Term after the time of award exceeds
the amount of such loss that Tenant proves could be reasonably avoided;

(4) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result from
Tenant’s Event of Default, including, but not limited to, the cost of recovering
possession of the Premises, refurbishment of the Premises, marketing costs,
commissions and other expenses of reletting, including necessary repair, the
unamortized portion of any tenant improvements and brokerage commissions funded
by Landlord in connection with this Lease, reasonable attorneys’ fees, and any
other reasonable costs; and

(5) At Landlord’s election, all other amounts in addition to or in lieu of the
foregoing as may be permitted by law. The term “rent” as used in the Lease shall
be deemed to mean the Basic Rent, Tenant’s Share of Operating Expenses and any
other sums required to be paid by Tenant to Landlord pursuant to the terms of
this Lease whether or not designated as additional rent hereunder, including,
without limitation, any sums that may be owing from Tenant pursuant to
Section 4.3 of this Lease. Any sum, other than Basic Rent, shall be computed on
the basis of the average monthly amount accruing during the twenty-four
(24) month period immediately prior to the Event of Default, except that if it
becomes necessary to compute such rental before the twenty-four (24) month
period has occurred, then the computation shall be on the basis of the average
monthly amount during the shorter period. As used in Sections 14.2(a)(i) (1) and
(2) above, the “worth at the time of award” shall be computed by allowing
interest at the rate of ten percent (10%) per annum. As used in
Section 14.2(a)(i)(3) above, the “worth at the time of award” shall be computed
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%).

(ii) Landlord may elect not to terminate Tenant’s right to possession of the
Premises and to continue to enforce all of its rights and remedies under this
Lease, including the right to collect all rent as it becomes due as provided in
Civil Code Section 1951.4. Efforts by the Landlord to maintain, preserve or
relet the Premises, or the appointment of a receiver to protect the Landlord’s
interests under this Lease, shall not constitute a termination of the Tenant’s
right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy provided by this Section 14.2(a)(ii), Landlord shall not
unreasonably withhold its consent to an assignment or subletting of the Premises
subject to the reasonable standards for Landlord’s consent as are contained in
this Lease.

(b) The various rights and remedies reserved to Landlord in this Lease or
otherwise shall be cumulative and, except as otherwise provided by California
law, Landlord may pursue any or all of its rights and remedies at the same time.

(c) No delay or omission of Landlord to exercise any right or remedy shall be
construed as a waiver of the right or remedy or of any breach or Event of
Default by Tenant. The acceptance by Landlord of rent shall not be a (i) waiver
of any preceding breach or Event of Default by Tenant of any provision of this
Lease, other than the failure of Tenant to pay the particular rent accepted,
regardless of Landlord’s knowledge of the preceding breach or Event of Default
at the time of acceptance of rent, or (ii) a waiver of Landlord’s right to
exercise any remedy available to Landlord by virtue of the breach or Event of
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lesser amount than the rent required by this Lease shall be deemed to be other
than a partial payment on account of the earliest due stipulated rent, nor shall
any endorsement or statement on any check or letter be deemed an accord and
satisfaction and Landlord shall accept the check or payment without prejudice to
Landlord’s right to recover the balance of the rent or pursue any other remedy
available to it. No act or thing done by Landlord or Landlord’s agents during
the Term shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender shall be valid unless in writing and signed by
Landlord. No employee of Landlord or of Landlord’s agents shall have any power
to accept the keys to the Premises prior to the termination of this Lease, and
the delivery of the keys to any employee shall not operate as a termination of
this Lease or a surrender of the Premises.

SECTION 14.3. LATE PAYMENTS.

(a) Any payment due to Landlord under this Lease, including without limitation
Basic Rent, Tenant’s Share of Operating Expenses or any other payment due to
Landlord under this Lease whether or not designated as additional rent
hereunder, that is not received by Landlord within five (5) days following the
date due shall bear interest at the maximum rate permitted by law from the date
due until fully paid. The payment of interest shall not cure any breach or Event
of Default by Tenant under this Lease. In addition, Tenant acknowledges that the
late payment by Tenant to Landlord of Basic Rent and Tenant’s Share of Operating
Expenses will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult and impracticable to
ascertain. Those costs may include, but are not limited to, administrative,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any ground lease, mortgage or trust deed covering the
Premises. Accordingly, if any Basic Rent or Tenant’s Share of Operating Expenses
due from Tenant shall not be received by Landlord or Landlord’s designee within
five (5) days following the date due, then Tenant shall pay to Landlord, in
addition to the interest provided above, a late charge, which the Tenant agrees
is reasonable, in a sum equal to the greater of five percent (5%) of the amount
overdue or One Hundred Dollars ($100.00) for each delinquent payment.
Notwithstanding the foregoing, the late fee for the initial late payment of
Basic Rent and/or Operating Expenses during each calendar year of the Term shall
be waived. Acceptance of a late charge by Landlord shall not constitute a waiver
of Tenant’s breach or Event of Default with respect to the overdue amount, nor
shall it prevent Landlord from exercising any of its other rights and remedies.

(b) Following each second installment of Basic Rent and/or the payment of
Tenant’s Share of Operating Expenses within any twelve (12) month period that is
not paid within five (5) days following the date due, Landlord shall have the
option to require that beginning with the first payment of Basic Rent next due,
Basic Rent and the Tenant’s Share of Operating Expenses shall no longer be paid
in monthly installments but shall be payable quarterly three (3) months in
advance. Should Tenant deliver to Landlord, at any time during the Term, two
(2) or more insufficient checks, the Landlord may require that all monies then
and thereafter due from Tenant be paid to Landlord by cashier’s check. If any
check for any payment to Landlord hereunder is returned by the bank for any
reason, such payment shall not be deemed to have been received by Landlord and
Tenant shall be responsible for any applicable late charge, interest payment and
the charge to Landlord by its bank for such returned check. Nothing in this
Section shall be construed to compel Landlord to accept Basic Rent, Tenant’s
Share of Operating Expenses or any other payment from Tenant if there exists an
Event of Default unless such payment fully cures any and all such Events of
Default. Any acceptance of any such payment shall not be deemed to waive any
other right of Landlord under this Lease. Any payment by Tenant to Landlord may
be applied by Landlord, in its sole and absolute discretion, in any order
determined by Landlord to any amounts then due to Landlord.

SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be
performed by Tenant under this Lease shall be performed at Tenant’s sole cost
and expense and without any abatement of rent or right of set-off. If Tenant
fails to pay any sum of money, other than rent payable to Landlord, or fails to
perform any other act on its part to be performed under this Lease, and the
failure continues beyond any applicable grace period set forth in Section 14.1,
then in addition to any other available remedies, Landlord may, at its election
make the payment or perform the other act on Tenant’s part and Tenant hereby
grants Landlord the right to enter onto the Premises in order to carry out such
performance. Landlord’s election to make the payment or perform the act on
Tenant’s part shall not give rise to any responsibility of Landlord to continue
making the same or similar payments or performing the same or similar acts nor
shall Landlord be responsible to Tenant for any damage caused to Tenant as the
result of such performance by Landlord. Tenant shall, promptly upon demand by
Landlord, reimburse Landlord for all sums paid by Landlord and all necessary
incidental costs, together with interest at the maximum rate permitted by law
(not to exceed ten percent (10%) per annum) from the date of the payment by
Landlord.

SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in default
in the performance of any obligation under this Lease, and Tenant shall have no
rights to take any action against Landlord, unless and until Landlord has failed
to perform the obligation within thirty (30) days after written notice by Tenant
to Landlord specifying in reasonable detail the nature and extent of the
failure; provided, however, that if the nature of Landlord’s obligation is such
that more than thirty (30) days are required for its performance, then Landlord
shall not be deemed to be in default if it commences performance within the
thirty (30) day period and thereafter diligently pursues the cure to completion.
In the event of Landlord’s default under this Lease, Tenant’s sole remedies
shall be to seek damages or specific performance from Landlord, provided that
any damages shall be limited to Tenant’s actual out-of-pocket expenses and shall
in no event include any consequential damages, lost profits or opportunity
costs.

SECTION 14.6. EXPENSES AND LEGAL FEES. All sums reasonably incurred by Landlord
in connection with any Event of Default by Tenant under this Lease or holding
over of possession by Tenant after the expiration or earlier termination of this
Lease, or any action related to a filing for bankruptcy or reorganization by
Tenant, including without limitation all reasonable costs, expenses and actual
accountants, appraisers, attorneys and

 

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other professional fees, and any collection agency or other collection charges,
shall be due and payable to Landlord on demand, and shall bear interest at the
rate of ten percent (10%) per annum. Should either Landlord or Tenant bring any
action in connection with this Lease, the prevailing party shall be entitled to
recover as a part of the action its reasonable attorneys’ fees, and all other
costs. The prevailing party for the purpose of this Section shall be determined
by the trier of the facts.

SECTION 14.7. WAIVER OF JURY TRIAL/JUDICIAL REFERENCE.

(a) LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE
ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY, AND
TO THE EXTENT ENFORCEABLE UNDER CALIFORNIA LAW, EACH PARTY DOES HEREBY EXPRESSLY
AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER
(AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR
AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY
CLAIM OF INJURY OR DAMAGE. FURTHERMORE, THIS WAIVER AND RELEASE OF ALL RIGHTS TO
A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF EACH AND EVERY OTHER PROVISION,
COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE.

(b) IN THE EVENT THAT THE JURY WAIVER PROVISIONS OF SECTION 14.7(a) ARE NOT
ENFORCEABLE UNDER CALIFORNIA LAW, THEN THE PROVISIONS OF THIS SECTION 14.7(b)
SHALL APPLY. IT IS THE DESIRE AND INTENTION OF THE PARTIES TO AGREE UPON A
MECHANISM AND PROCEDURE UNDER WHICH CONTROVERSIES AND DISPUTES ARISING OUT OF
THIS LEASE OR RELATED TO THE PREMISES WILL BE RESOLVED IN A PROMPT AND
EXPEDITIOUS MANNER. ACCORDINGLY, EXCEPT WITH RESPECT TO ACTIONS FOR UNLAWFUL OR
FORCIBLE DETAINER OR WITH RESPECT TO THE PREJUDGMENT REMEDY OF ATTACHMENT OR
WITH RESPECT TO MATTERS EXPRESSLY STATED TO BE RESOLVED PURSUANT TO THE
PROVISIONS OF SECTION 22.8 OF THIS LEASE, ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY
MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE,
TENANT’S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE,
SHALL BE HEARD AND RESOLVED BY A REFEREE UNDER THE PROVISIONS OF THE CALIFORNIA
CODE OF CIVIL PROCEDURE, SECTIONS 638 – 645.1, INCLUSIVE (AS SAME MAY BE
AMENDED, OR ANY SUCCESSOR STATUTE(S) THERETO) (THE “REFEREE SECTIONS”). ANY FEE
TO INITIATE THE JUDICIAL REFERENCE PROCEEDINGS SHALL BE PAID BY THE PARTY
INITIATING SUCH PROCEDURE; PROVIDED HOWEVER, THAT THE COSTS AND FEES, INCLUDING
ANY INITIATION FEE, OF SUCH PROCEEDING SHALL ULTIMATELY BE BORNE IN ACCORDANCE
WITH SECTION 14.6 ABOVE. THE VENUE OF THE PROCEEDINGS SHALL BE IN THE COUNTY IN
WHICH THE PREMISES ARE LOCATED. WITHIN TEN (10) DAYS OF DELIVERY BY ANY PARTY TO
THE OTHER PARTY OF A WRITTEN REQUEST TO RESOLVE ANY DISPUTE OR CONTROVERSY
PURSUANT TO THIS SECTION 14.7(b), THE PARTIES SHALL AGREE UPON A SINGLE REFEREE
WHO SHALL TRY ALL ISSUES, WHETHER OF FACT OR LAW, AND REPORT A FINDING AND
JUDGMENT ON SUCH ISSUES AS REQUIRED BY THE REFEREE SECTIONS. IF THE PARTIES ARE
UNABLE TO AGREE UPON A REFEREE WITHIN SUCH TEN (10) DAY PERIOD, THEN ANY PARTY
MAY THEREAFTER FILE A LAWSUIT IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED
FOR THE PURPOSE OF APPOINTMENT OF A REFEREE UNDER CALIFORNIA CODE OF CIVIL
PROCEDURE SECTIONS 638 AND 640, AS SAME MAY BE AMENDED OF ANY SUCCESSOR
STATUTE(S) THERETO. IF THE REFEREE IS APPOINTED BY THE COURT, THE REFEREE SHALL
BE A NEUTRAL AND IMPARTIAL RETIRED JUDGE WITH SUBSTANTIAL EXPERIENCE IN THE
RELEVANT MATTERS TO BE DETERMINED, FROM JAMS/ENDISPUTE, INC., THE AMERICAN
ARBITRATION ASSOCIATION OR SIMILAR MEDIATION/ARBITRATION ENTITY. THE PROPOSED
REFEREE MAY BE CHALLENGED BY ANY PARTY FOR ANY OF THE GROUNDS LISTED IN SECTION
641 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, AS SAME MAY BE AMENDED OR ANY
SUCCESSOR STATUTE(S) THERETO. THE REFEREE SHALL HAVE THE POWER TO DECIDE ALL
ISSUES OF FACT AND LAW AND REPORT HIS OR HER DECISION ON SUCH ISSUES, AND TO
ISSUE ALL RECOGNIZED REMEDIES AVAILABLE AT LAW OR IN EQUITY FOR ANY CAUSE OF
ACTION THAT IS BEFORE THE REFEREE, INCLUDING AN AWARD OF ATTORNEYS’ FEES AND
COSTS IN ACCORDANCE WITH CALIFORNIA LAW. THE REFEREE SHALL NOT, HOWEVER, HAVE
THE POWER TO AWARD PUNITIVE DAMAGES, NOR ANY OTHER DAMAGES WHICH ARE NOT
PERMITTED BY THE EXPRESS PROVISIONS OF THIS LEASE, AND THE PARTIES HEREBY WAIVE
ANY RIGHT TO RECOVER ANY SUCH DAMAGES. THE PARTIES SHALL BE ENTITLED TO CONDUCT
ALL DISCOVERY AS PROVIDED IN THE CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE
REFEREE SHALL OVERSEE DISCOVERY AND MAY ENFORCE ALL DISCOVERY ORDERS IN THE SAME
MANNER AS ANY TRIAL COURT JUDGE, WITH RIGHTS TO REGULATE DISCOVERY AND TO ISSUE
AND ENFORCE SUBPOENAS, PROTECTIVE ORDERS AND OTHER LIMITATIONS ON DISCOVERY
AVAILABLE UNDER CALIFORNIA LAW. THE REFERENCE PROCEEDING SHALL BE CONDUCTED IN
ACCORDANCE WITH CALIFORNIA LAW (INCLUDING THE RULES OF EVIDENCE), AND IN ALL
REGARDS, THE REFEREE SHALL FOLLOW CALIFORNIA LAW APPLICABLE AT THE TIME OF THE
REFERENCE PROCEEDING. IN

 

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ACCORDANCE WITH SECTION 644 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, THE
DECISION OF THE REFEREE UPON THE WHOLE ISSUE MUST STAND AS THE DECISION OF THE
COURT, AND UPON THE FILING OF THE STATEMENT OF DECISION WITH THE CLERK OF THE
COURT, OR WITH THE JUDGE IF THERE IS NO CLERK, JUDGMENT MAY BE ENTERED THEREON
IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT. THE PARTIES
SHALL PROMPTLY AND DILIGENTLY COOPERATE WITH ONE ANOTHER AND THE REFEREE, AND
SHALL PERFORM SUCH ACTS AS MAY BE NECESSARY TO OBTAIN A PROMPT AND EXPEDITIOUS
RESOLUTION OF THE DISPUTE OR CONTROVERSY IN ACCORDANCE WITH THE TERMS OF THIS
SECTION 14.7(b). TO THE EXTENT THAT NO PENDING LAWSUIT HAS BEEN FILED TO OBTAIN
THE APPOINTMENT OF A REFEREE, ANY PARTY, AFTER THE ISSUANCE OF THE DECISION OF
THE REFEREE, MAY APPLY TO THE COURT OF THE COUNTY IN WHICH THE PREMISES ARE
LOCATED FOR CONFIRMATION BY THE COURT OF THE DECISION OF THE REFEREE IN THE SAME
MANNER AS A PETITION FOR CONFIRMATION OF AN ARBITRATION AWARD PURSUANT TO CODE
OF CIVIL PROCEDURE SECTION 1285 ET SEQ. (AS SAME MAY BE AMENDED OR ANY SUCCESSOR
STATUTE(S) THERETO).

SECTION 14.8. SATISFACTION OF JUDGMENT. The obligations of Landlord do not
constitute the personal obligations of the individual partners, trustees,
directors, officers, members or shareholders of Landlord or its constituent
partners or members. Should Tenant recover a money judgment against Landlord,
such judgment shall be satisfied only from the interest of Landlord in the Site
and out of the rent or other income from such property receivable by Landlord or
out of consideration received by Landlord from the sale or other disposition of
all or any part of Landlord’s right, title or interest in the Site and no action
for any deficiency may be sought or obtained by Tenant.

ARTICLE XV. END OF TERM

SECTION 15.1. HOLDING OVER. This Lease shall terminate without further notice
upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. Any period of time following the Expiration Date or earlier termination
of this Lease required for Tenant to remove its property or to place the
Premises in the condition required pursuant to Section 15.3 (or for Landlord to
do so if Tenant fails to do so) shall be deemed a holding over by Tenant. If
Tenant holds over for any period after the Expiration Date (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only and an Event of Default
under this Lease; such holding over with the prior written consent of Landlord
shall constitute a month-to-month tenancy commencing on the first (1st) day
following the termination of this Lease and terminating thirty (30) days
following delivery of written notice of termination by either Landlord or Tenant
to the other . In either of such events, possession shall be subject to all of
the terms of this Lease, except that the monthly Basic Rent shall be the greater
of (a) one hundred fifty percent (150%) of the Basic Rent for the month
immediately preceding the date of termination or (b) the fair market rental for
the Premises. If Tenant fails to surrender the Premises upon the expiration of
this Lease despite demand to do so by Landlord, Tenant shall indemnify and hold
Landlord harmless from all loss or liability, including without limitation, any
claims made by any succeeding tenant relating to such failure to surrender.
Acceptance by Landlord of rent after the termination shall not constitute a
consent to a holdover or result in a renewal of this Lease. The foregoing
provisions of this Section are in addition to and do not affect Landlord’s right
of re-entry or any other rights of Landlord under this Lease or at law.

SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of this
Lease by Tenant, or a mutual termination of this Lease, shall terminate any or
all existing subleases unless Landlord, at its option, elects in writing to
treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.

SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Subject to the
provisions of Section 7.3 of this Lease and of the Work Letter attached hereto,
upon the Expiration Date or upon any earlier termination of this Lease, Tenant
shall quit and surrender possession of the Premises to Landlord in as good
order, condition and repair as when received or as hereafter may be improved by
Landlord or Tenant, reasonable wear and tear, casualty, condemnation and repairs
which are Landlord’s obligation excepted, and shall, without expense to
Landlord, remove or cause to be removed from the Premises all personal property,
removable trade fixtures, and equipment and debris and perform all work required
under Section 7.3 of this Lease and/or the Work Letter attached hereto
(including the “Restoration Requirement” as defined in the Work Letter) as to
Replacements of Non-Standard Improvements and removal of Alterations, except for
any items that Landlord may by written authorization allow to remain. Tenant
shall repair all damage to the Premises resulting from the removal, which repair
shall include the patching and filling of holes and repair of structural damage,
provided that Landlord may instead elect to repair any structural damage at
Tenant’s expense. If Tenant shall fail to comply with the provisions of this
Section, Landlord may effect the removal and/or make any repairs, and the cost
to Landlord shall be additional rent payable by Tenant upon demand. If Tenant
fails to remove Tenant’s personal property from the Premises upon the expiration
of the Term, Landlord may remove, store, dispose of and/or retain such personal
property, at Landlord’s option, in accordance with then applicable laws, all at
the expense of Tenant. If requested by Landlord, Tenant shall execute,
acknowledge and deliver to Landlord an instrument in writing releasing and
quitclaiming to Landlord all right, title and interest of Tenant in the
Premises.

 

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ARTICLE XVI. PAYMENTS AND NOTICES

All sums payable by Tenant to Landlord shall be deemed to be rent under this
Lease and shall be paid, without deduction or offset, in lawful money of the
United States to Landlord at the address specified in Item 13 of the Basic Lease
Provisions, or at any other place as Landlord may designate in writing. Unless
this Lease expressly provides otherwise, as for example in the payment of Basic
Rent and the Tenant’s Share of Operating Expenses pursuant to Sections 4.1 and
4.2, all payments shall be due and payable within five (5) days after demand.
All payments requiring proration shall be prorated on the basis of the number of
days in the pertinent calendar month or year, as applicable. Any notice,
election, demand, consent, approval or other communication to be given or other
document to be delivered by either party to the other may be delivered in person
or by courier or overnight delivery service to the other party, or may be
deposited in the United States mail, duly registered or certified, postage
prepaid, return receipt requested, and addressed to the other party at the
address set forth in Item 12 of the Basic Lease Provisions. Either party may, by
written notice to the other, served in the manner provided in this Article,
designate a different address. If any notice or other document is sent by mail,
duly registered or certified, it shall be deemed served or delivered three
(3) business days after mailing. If more than one person or entity is named as
Tenant under this Lease, service of any notice upon any one of them shall be
deemed as service upon all of them.

ARTICLE XVII. RULES AND REGULATIONS

Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit E, and any reasonable and nondiscriminatory
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good
order, or cleanliness of the Premises, Building, Site and Common Areas. Landlord
shall not be liable to Tenant for any violation of the Rules and Regulations or
the breach of any covenant or condition in any lease by any other tenant or such
tenant’s agents, employees, contractors, guests or invitees. One or more waivers
by Landlord of any breach of the Rules and Regulations by Tenant or by any other
tenant(s) shall not be a waiver of any subsequent breach of that rule or any
other. Tenant’s failure to keep and observe the Rules and Regulations shall
constitute a breach of this Lease. In the case of any conflict between the Rules
and Regulations and this Lease, this Lease shall be controlling.

ARTICLE XVIII. BROKER’S COMMISSION

The parties recognize as the broker(s) who negotiated this Lease the firm(s),
whose name(s) is (are) stated in Item 10 of the Basic Lease Provisions, and
agree that Landlord shall be responsible for the payment of brokerage
commissions to those broker(s) unless otherwise provided in this Lease. It is
understood and agreed that Landlord’s Broker represents only Landlord in this
transaction and that Tenant’s Broker (if any) represents only Tenant. Each party
warrants that it has had no dealings with any other real estate broker or agent
in connection with the negotiation of this Lease, and agrees to indemnify and
hold the other party harmless from any cost, expense or liability (including
reasonable attorneys’ fees) for any compensation, commissions or charges claimed
by any other real estate broker or agent employed by the indemnifying party in
connection with the negotiation of this Lease. The foregoing agreement shall
survive the termination of this Lease.

ARTICLE XIX. TRANSFER OF LANDLORD’S INTEREST

In the event of any transfer of Landlord’s interest in the Premises, provided
the transferee assumes in writing the transferor’s obligations under this Lease
accruing from and after the effective date of said transfer, the transferor
shall be automatically relieved of all further obligations on the part of
Landlord, and the transferor shall be relieved of any obligation to pay any
funds in which Tenant has an interest to the extent that such funds have been
turned over, subject to that interest, to the transferee and Tenant is notified
of the transfer as required by law. No beneficiary of a deed of trust to which
this Lease is or may be subordinate, and no landlord under a so-called
sale-leaseback, shall be responsible in connection with the Security Deposit,
unless the mortgagee or beneficiary under the deed of trust or the landlord
actually receives the Security Deposit. It is intended that the covenants and
obligations contained in this Lease on the part of Landlord shall, subject to
the foregoing, be binding on Landlord, its successors and assigns, only during
and with respect to obligations arising during their respective successive
periods of ownership.

ARTICLE XX. INTERPRETATION

SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease requires,
the words “Landlord” and “Tenant” shall include the plural as well as the
singular, and words used in neuter, masculine or feminine genders shall include
the others.

SECTION 20.2. HEADINGS. The captions and headings of the articles and sections
of this Lease are for convenience only, are not a part of this Lease and shall
have no effect upon its construction or interpretation.

SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or entity is
named as Tenant, the obligations imposed upon each shall be joint and several
and the act of or notice from, or notice or refund to, or the signature of, any
one or more of them shall be binding on all of them with respect to the tenancy
of this Lease, including, but not limited to, any renewal, extension,
termination or modification of this Lease.

SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators,

 

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successors and assigns. Nothing contained in this Section is intended, or shall
be construed, to grant to any person other than Landlord and Tenant and their
successors and assigns any rights or remedies under this Lease.

SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease.

SECTION 20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California. Any
litigation commenced concerning any matters whatsoever arising out of or in any
way connected to this Lease shall be initiated in the Superior Court of the
county in which the Site is located.

SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the deletion
of which would not adversely affect the receipt of any material benefit by
either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.

SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES. One or more waivers by Landlord or
Tenant of any breach of any term, covenant or condition contained in this Lease
shall not be a waiver of any subsequent breach of the same or any other term,
covenant or condition. Consent to any act by one of the parties shall not be
deemed to render unnecessary the obtaining of that party’s consent to any
subsequent act. No breach by Tenant of this Lease shall be deemed to have been
waived by Landlord unless the waiver is in a writing signed by Landlord. The
rights and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord may have.

SECTION 20.9. INABILITY TO PERFORM. In the event that either party shall be
delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, other than financial inability, then the
performance of the work or the doing of the act shall be excused for the period
of the delay and the time for performance shall be extended for a period
equivalent to the period of the delay. The provisions of this Section shall not
operate to excuse Tenant from the prompt payment of rent or from the timely
performance of any other obligation under this Lease within Tenant’s reasonable
control.

SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Building and the Site, and all preliminary
negotiations, oral agreements, understandings and/or practices, except those
contained in this Lease, are superseded and of no further effect. Tenant waives
its rights to rely on any representations or promises made by Landlord or others
which are not contained in this Lease. No verbal agreement or implied covenant
shall be held to modify the provisions of this Lease, any statute, law, or
custom to the contrary notwithstanding.

SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance of all the
covenants, terms and conditions on Tenant’s part to be observed and performed,
and subject to the other provisions of this Lease, Tenant shall have the right
of quiet enjoyment and use of the Premises for the Term without hindrance or
interruption by Landlord or any other person claiming by or through Landlord.

SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which reasonably
would be intended to survive the expiration or sooner termination of this Lease,
including without limitation any warranty or indemnity hereunder, shall so
survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.

SECTION 20.13. INTERPRETATION. This Lease shall not be construed in favor of or
against either party, but shall be construed as if both parties prepared this
Lease.

ARTICLE XXI. EXECUTION AND RECORDING

SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.

SECTION 21.2. CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP AUTHORITY. If
Tenant is a corporation, limited liability company or partnership, Tenant
represents and warrants that each individual executing this Lease on behalf of
the corporation, limited liability company or partnership is duly authorized to
execute and deliver this Lease on behalf of the corporation, limited liability
company or partnership, and that this Lease is binding upon the corporation,
limited liability company or partnership in accordance with its terms.

SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of this
Lease to Tenant shall be for examination purposes only, and shall not constitute
an offer to or option for Tenant to lease the Premises. Execution of this Lease
by Tenant and its return to Landlord shall not be binding upon Landlord,
notwithstanding any time interval, until Landlord has in fact executed and
delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.

 

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SECTION 21.4. RECORDING. Tenant shall not record this Lease without the prior
written consent of Landlord. Tenant, upon the request of Landlord, shall execute
and acknowledge a “short form” memorandum of this Lease for recording purposes.

SECTION 21.5. AMENDMENTS. No amendment or termination of this Lease shall be
effective unless in writing signed by authorized signatories of Tenant and
Landlord, or by their respective successors in interest. No actions, policies,
oral or informal arrangements, business dealings or other course of conduct by
or between the parties shall be deemed to modify this Lease in any respect.

SECTION 21.6. EXECUTED COPY. Any fully executed photocopy or similar
reproduction of this Lease shall be deemed an original for all purposes.

SECTION 21.7. ATTACHMENTS. All exhibits, amendments, riders and addenda attached
to this Lease are hereby incorporated into and made a part of this Lease.

ARTICLE XXII. MISCELLANEOUS

SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees that
the terms of this Lease are confidential and constitute proprietary information
of Landlord. Disclosure of the terms could adversely affect the ability of
Landlord to negotiate other leases and impair Landlord’s relationship with other
tenants. Accordingly, Tenant agrees that it, and its partners, members,
shareholders, officers, directors, employees and attorneys, shall not
intentionally and voluntarily disclose, by public filings or otherwise, the
terms and conditions of this Lease (“Confidential Information”) to any third
party, either directly or indirectly, without the prior written consent of
Landlord, which consent may be given or withheld in Landlord’s sole and absolute
discretion. The foregoing restriction shall not apply if either: (i) Tenant is
required to disclose the Confidential Information in response to a subpoena or
other regulatory, administrative or court order, (ii) Tenant is required to
disclose the Confidential Information to, or file a copy of this Lease with, any
governmental agency or any stock exchange; provided however, that if disclosure
of the Confidential Information is required by subpoena or other regulatory,
administrative or court order, Tenant shall provide Landlord with as much
advance notice of the possibility of such disclosure as practical so that
Landlord may attempt to stop such disclosure or obtain an order concerning such
disclosure. In addition, Tenant may disclose the terms of this Lease (i) to
prospective assignees of this Lease and prospective subtenants under this Lease
with whom Tenant is actively negotiating such an assignment or sublease, (ii) to
Tenant’s attorneys, accountants and financial advisors, and (iii) in connection
with any acquisition of Tenant by merger, consolidation, nonbankruptcy
reorganization, or government action, a sale of substantially all of Tenant’s
assets, any sale or transfer of Tenant’s capital stock or any financing by, or
any current or potential future investment in Tenant.

SECTION 22.2. Intentionally deleted.

SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with obtaining
financing for the Site, the lender shall request reasonable modifications in
this Lease as a condition to the financing, Tenant will not unreasonably
withhold or delay its consent, provided that the modifications do not materially
increase the obligations of Tenant or materially and adversely affect the
leasehold interest created by this Lease.

SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the part of
Landlord which would otherwise entitle Tenant to be relieved of its obligations
hereunder shall result in such a release or termination unless (a) Tenant has
given notice by registered or certified mail to any beneficiary of a deed of
trust or mortgage encumbering the Premises whose address has been furnished to
Tenant in writing and (b) such beneficiary is afforded a reasonable opportunity
to cure the default by Landlord (which in no event shall be less than sixty
(60) days), including, if necessary to effect the cure, time to obtain
possession of the Premises by power of sale or judicial foreclosure provided
that such foreclosure remedy is diligently pursued. Tenant agrees that each
beneficiary of a deed of trust or mortgage encumbering the Premises is an
express third party beneficiary hereof, Tenant shall have no right or claim for
the collection of any deposit from such beneficiary or from any purchaser at a
foreclosure sale unless such beneficiary or purchaser shall have actually
received and not refunded the deposit, and Tenant shall comply with any written
directions by any beneficiary to pay rent due hereunder directly to such
beneficiary without determining whether a default exists under such
beneficiary’s deed of trust.

SECTION 22.5. COVENANTS AND CONDITIONS. All of the provisions of this Lease
shall be construed to be conditions as well as covenants as though the words
specifically expressing or imparting covenants and conditions were used in each
separate provision.

SECTION 22.6. SECURITY MEASURES. Tenant hereby acknowledges that Landlord shall
have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Site. Tenant assumes all
responsibility for the protection of Tenant, its employees, agents, invitees and
property from acts of third parties. Nothing herein contained shall prevent
Landlord, at its sole option, from providing security protection for the Site or
any part thereof, in which event the cost thereof shall be included within the
definition of Site Costs.

SECTION 22.7. SDN LIST. Tenant hereby represents and warrants that neither
Tenant nor any officer, director, employee, partner, member or other principal
of Tenant (collectively, “Tenant Parties”) is listed as a Specially Designated
National and Blocked Person (“SDN”) on the list of such persons and entities
issued by the U.S. Treasury Office of Foreign Assets Control (OFAC). In the
event Tenant or any Tenant Party is or becomes

 

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listed as an SDN, Tenant shall be deemed in breach of this Lease and Landlord
shall have the right to terminate this Lease immediately upon written notice to
Tenant.

SECTION 22.8. JAMS.

(a) All claims or disputes between Landlord and Tenant arising out of, or
relating to the Lease which either party is expressly authorized by a provision
hereof to submit to arbitration, shall be decided by the JAMS/ENDISPUTE, or its
successor, in Orange County, California (“JAMS”), unless the parties mutually
agree otherwise. Within ten (10) business days following submission to JAMS,
JAMS shall designate three arbitrators and each party may, within five
(5) business days thereafter, veto one of the three persons so designated. If
two different designated arbitrators have been vetoed, the third arbitrator
shall hear and decide the matter. Any arbitration pursuant to this Section 22.8
shall be decided within thirty (30) days of submission of JAMS. The decision of
the arbitrator shall be final and binding on the parties. In no event shall the
arbitrator be empowered or authorized to award consequential or punitive damages
(including any award for lost profit or opportunity costs or loss or
interruption of business or income). All costs associated with arbitration shall
be awarded to the prevailing party as determined by the arbitrator.

(b) Notice of the demand for arbitration by either party to the Lease shall be
filed in writing with the other party to the Lease and with JAMS and shall be
made within a reasonable time after the dispute has arisen. The award rendered
by the arbitrators shall be final, and judgment may be entered upon it in
accordance with applicable law in any court having jurisdiction thereof. Except
by written consent of the person or entity sought to be joined, no arbitration
arising out of or relating to the Lease shall include, by consolidation, joinder
or in any other manner, any person or entity not a party to the Lease under
which such arbitration is filed unless (1) such person or entity is
substantially involved in a common question of fact or law, (2) the presence of
such person or entity is required if complete relief is to be accorded in the
arbitration, or (3) the interest or responsibility of such person or entity in
the matter is not insubstantial.

(c) The agreement herein among the parties to the Lease and any other written
agreement to arbitrate referred to herein shall be specifically enforceable
under prevailing law.

SECTION 22.9. APPROVALS. Whenever this Lease requires an approval, consent,
determination, selection or judgment by either Landlord or Tenant, unless
another standard is expressly set forth, such approval, consent, determination,
selection or judgment and any conditions imposed thereby shall be reasonable and
shall not be unreasonably withheld or delayed.

 

LANDLORD:   TENANT: THE IRVINE COMPANY LLC   SENORX, INC., a Delaware limited
liability company   a Delaware corporation By:   /s/ E. Valjean Wheeler     By:
  /s/ Lloyd Malchow   E. Valjean Wheeler       Name (Print): Lloyd Malchow  
President, Office Properties       Title (Print): CEO By:   /s/ Jeanne M.
Gettemy     By:   /s/ Kevin Cousins   Jeanne M. Gettemy       Name: Kevin
Cousins   Senior Vice President, Office Properties       Title: CFO

 

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3 Morgan

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EXHIBIT A

 

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EXHIBIT B

THE IRVINE COMPANY – INVESTMENT PROPERTIES GROUP

HAZARDOUS MATERIAL SURVEY FORM

The purpose of this form is to obtain information regarding the use of hazardous
substances on Investment Properties Group (“IPG”) property. Prospective tenants
and contractors should answer the questions in light of their proposed
activities on the premises. Existing tenants and contractors should answer the
questions as they relate to ongoing activities on the premises and should update
any information previously submitted.

If additional space is needed to answer the questions, you may attach separate
sheets of paper to this form. When completed, the form should be sent to the
following address:

THE IRVINE COMPANY MANAGEMENT OFFICE

111 Innovation Drive

Irvine, CA 92617

Your cooperation in this matter is appreciated. If you have any questions,
please call your property manager at (949) 720-4400 for assistance.

 

1. GENERAL INFORMATION.

 

Name of Responding Company:    

                   

Check all that apply:

  Tenant    (     )  

Contractor

  (    )      Prospective    (     )  

Existing

  (    )   

Mailing Address:                                         
                                        
                                        
                                                     

Contact person & Title:                                         
                                        
                                        
                                           

Telephone Number: (    )                                              

Current TIC Tenant(s):

Address of Lease Premises:                                         
                                        
                                                                           

Length of Lease or Contract Term:                                         
                                        
                                                               

Prospective TIC Tenant(s):

Address of Leased Premises:                                         
                                        
                                                                         

Address of Current Operations:                                         
                                        
                                                                     

Describe the proposed operations to take place on the property, including
principal products manufactured or services to be conducted. Existing tenants
and contractors should describe any proposed changes to ongoing operations.

     

 

2. HAZARDOUS MATERIALS. For the purposes of this Survey Form, the term
“hazardous material” means any raw material, product or agent considered
hazardous under any state or federal law. The term does not include wastes which
are intended to be discarded.

 

  2.1 Will any hazardous materials be used or stored on site?

 

Chemical Products

   Yes    (     )    No    (     )

Biological Hazards/ Infectious Wastes

   Yes    (     )    No    (     )

Radioactive Materials

   Yes    (     )    No    (     )

Petroleum Products

   Yes    (     )    No    (     )

 

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  2.2 List any hazardous materials to be used or stored, the quantities that
will be on-site at any given time, and the location and method of storage (e.g.,
bottles in storage closet on the premises).

 

Hazardous Materials

        

Location and Method

of Storage

        

Quantity

                                                                       

 

  2.3 Is any underground storage of hazardous materials proposed or currently
conducted on the premises?

Yes (    )             No (    )

If yes, describe the materials to be stored, and the size and construction of
the tank. Attach copies of any permits obtained for the underground storage of
such substances.

     

 

3. HAZARDOUS WASTE. For the purposes of this Survey Form, the term “hazardous
waste” means any waste (including biological, infectious or radioactive waste)
considered hazardous under any state or federal law, and which is intended to be
discarded.

 

  3.1 List any hazardous waste generated or to be generated on the premises, and
indicate the quantity generated on a monthly basis.

 

Hazardous Materials

        

Location and Method

of Storage

        

Quantity

                                                                       

 

  3.2 Describe the method(s) of disposal (including recycling) for each waste.
Indicate where and how often disposal will take place.

 

Hazardous Materials

        

Location and Method

of Storage

        

Disposal Method

                                                                       

 

  3.3 Is any treatment or processing of hazardous, infectious or radioactive
wastes currently conducted or proposed to be conducted on the premise?

   Yes (    )             No (    )

If yes, please describe any existing or proposed treatment methods.

     

 

  3.4 Attach copies of any hazardous waste permits or licenses issued to your
company with respect to its operations on the premises.

 

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4. SPILLS

 

  4.1 During the past year, have any spills or releases of hazardous materials
occurred on the premises?

Yes (            )             No (            )

If so, please describe the spill and attach the results of any testing conducted
to determine the extent of such spills.

     

 

  4.2 Were any agencies notified in connection with such spills?

Yes (    )             No (    )

If so, attach copies of any spill reports or other correspondence with
regulatory agencies.

 

  4.3 Were any clean-up actions undertaken in connection with the spills?

Yes (    )             No (    )

If so, briefly describe the actions taken. Attach copies of any clearance
letters obtained from any regulatory agencies involved and the results of any
final soil or groundwater sampling done upon completion of the clean-up work.

     

 

5. WASTEWATER TREATMENT/DISCHARGE

 

  5.1 Do you discharge industrial wastewater to:

 

            storm drain?

               sewer?

            surface water?

               no industrial discharge

 

  5.2 Is your industrial wastewater treated before discharge?

Yes (    )             No (    )

If yes, describe the type of treatment conducted.

     

 

  5.3 Attach copies of any wastewater discharge permits issued to your company
with respect to its operations on the premises.

 

6. AIR DISCHARGES.

 

  6.1 Do you have any air filtration systems or stacks that discharge into the
air?

Yes (    )             No (    )

 

  6.2 Do you operate any equipment that requires air emissions permits?

Yes (    )             No (    )

 

  6.3 Attach copies of any air discharge permits pertaining to these operations.

 

7. HAZARDOUS MATERIALS DISCLOSURES.

 

  7.1 Does your company handle an aggregate of at least 500 pounds, 55 gallons
or 200 cubic feet of hazardous material at any given time?

Yes (    )             No (    )

 

  7.2 Has your company prepared a Hazardous Materials Disclosure – Chemical
Inventory and Business Emergency Plan or similar disclosure document pursuant to
state or county requirements?

Yes (    )             No (    )

If so, attach a copy.

 

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  7.3 Are any of the chemicals used in your operations regulated under
Proposition 65?

If so, describe the procedures followed to comply with these requirements.

     

 

  7.4 Is your company subject to OSHA Hazard Communication Standard
Requirements?

Yes (    )             No (    )

If so, describe the procedures followed to comply with these requirements.

     

 

8. ANIMAL TESTING.

 

  8.1 Does your company bring or intend to bring live animals onto the premises
for research or development purposes?

Yes (    )             No (    )

If so, describe the activity.

     

 

  8.2 Does your company bring or intend to bring animal body parts or bodily
fluids onto the premises for research or development purposes?

Yes (    )             No (    )

If so, describe the activity.

     

 

9. ENFORCEMENT ACTIONS, COMPLAINTS.

 

  9.1 Has your company ever been subject to any agency enforcement actions,
administrative orders, lawsuits, or consent orders/decrees regarding
environmental compliance or health and safety?

Yes (    )             No (    )

If so, describe the actions and any continuing obligations imposed as a result
of these actions.

     

 

  9.2 Has your company ever received any request for information, notice of
violation or demand letter, complaint, or inquiry regarding environmental
compliance or health and safety?

Yes (    )             No (    )

 

  9.3 Has an environmental audit ever been conducted which concerned operations
or activities on premises occupied by you?

Yes (    )             No (    )

 

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  9.4 If you answered “yes” to any questions in this section, describe the
environmental action or complaint and any continuing compliance obligation
imposed as a result of the same.

         

 

    By:       Name:       Title:       Date:    

 

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EXHIBIT C

LANDLORD’S DISCLOSURES

SPECTRUM

The capitalized terms used and not otherwise defined in this Exhibit shall have
the same definitions as set forth in the Lease. The provisions of this Exhibit
shall supersede any inconsistent or conflicting provisions of the Lease.

1. Landlord has been informed that the El Toro Marine Corps Air Station (MCAS)
has been listed as a Federal Superfund site as a result of chemical releases
occurring over many years of occupancy. Various chemicals including jet fuel,
motor oil and solvents have been discharged in several areas throughout the MCAS
site. A regional study conducted by the Orange County Water District has
estimated that groundwaters beneath more than 2,900 acres have been impacted by
Trichloroethlene (TCE), an industrial solvent. There is a potential that this
substance may have migrated into the ground water underlying the Premises. The
U.S. Environmental Protection Agency, the Santa Ana Region Quality Control
Board, and the Orange County Health Care Agency are overseeing the
investigation/cleanup of this contamination. To the Landlord’s current actual
knowledge, the ground water in this area is used for irrigation purposes only,
and there is no practical impediment to the use or occupancy of the Premises due
to the El Toro discharges.

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EXHIBIT D

TENANT’S INSURANCE

The following requirements for Tenant’s insurance shall be in effect at the
Building, and Tenant shall also cause any subtenant to comply with these
requirements. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to these insurance requirements after the expiration
of the initial 63-month Term of this Lease. Tenant agrees to obtain and present
evidence to Landlord that it has fully complied with the insurance requirements.

1. Tenant shall, at its sole cost and expense, commencing on the date Tenant is
given access to the Premises for any purpose and during the entire Term,
procure, pay for and keep in full force and effect: (i) commercial general
liability insurance with respect to the Premises and the operations of or on
behalf of Tenant in, on or about the Premises, including but not limited to
coverage for personal injury, contractual liability, independent contractors,
broad form property damage, fire legal liability, products liability (if a
product is sold from the Premises), and liquor law liability (if alcoholic
beverages are sold, served or consumed within the Premises), which policy(ies)
shall be written on an “occurrence” basis and for not less than the amount set
forth in Item 14 of the Basic Lease Provisions, with a combined single limit
(with a $50,000 minimum limit on fire legal liability) per occurrence for bodily
injury, death, and property damage liability, or the current limit of liability
carried by Tenant, whichever is greater; (ii) workers’ compensation insurance
coverage as required by law, together with employers’ liability insurance of at
least One Million Dollars ($1,000,000.00); (iii) with respect to Alterations and
the like required or permitted to be made by Tenant under this Lease, builder’s
risk insurance in an amount equal to the replacement cost of the work;
(iv) insurance against fire, vandalism, malicious mischief and such other
additional perils as may be included in a standard “special form” policy,
insuring Tenant’s Alterations, trade fixtures, furnishings, equipment and items
of personal property of Tenant located in the Premises, in an amount equal to
not less than ninety percent (90%) of their actual replacement cost (with
replacement cost endorsement); and (v) business interruption coverage in amounts
satisfactory to cover one (1) year of loss. In no event shall the limits of any
policy be considered as limiting the liability of Tenant under this Lease.

2. In the event Landlord consents to Tenant’s use, generation or storage of
Hazardous Materials on, under or about the Premises pursuant to Section 5.3 of
this Lease, Landlord shall have the continuing right to require Tenant, at
Tenant’s sole cost and expense (provided the same is available for purchase upon
commercially reasonable terms), to purchase insurance specified and approved by
Landlord, with coverage not less than Five Million Dollars ($5,000,000.00),
insuring (i) any Hazardous Materials shall be removed from the Premises,
(ii) the Premises shall be restored to a clean, healthy, safe and sanitary
condition, and (iii) any liability of Tenant, Landlord and Landlord’s officers,
directors, shareholders, agents, employees and representatives, arising from
such Hazardous Materials.

3. All policies of insurance required to be carried by Tenant pursuant to this
Exhibit D shall be written by responsible insurance companies authorized to do
business in the State of California and with a general policyholder rating of
not less than “A-” and financial rating of not less than “VIII” in the most
current Best’s Insurance Report. The deductible or other retained limit under
any policy carried by Tenant shall be commercially reasonable, and Tenant shall
be responsible for payment of such retained limit with full waiver of
subrogation in favor of Landlord. Any insurance required of Tenant may be
furnished by Tenant under any blanket policy carried by it or under a separate
policy. A true and exact copy of each paid up policy evidencing the insurance
(appropriately authenticated by the insurer) or a certificate of insurance,
certifying that the policy has been issued, provides the coverage required by
this Exhibit D and contains the required provisions, together with endorsements
acceptable to Landlord evidencing the waiver of subrogation and additional
insured provisions required below, shall be delivered to Landlord prior to the
date Tenant is given the right of possession of the Premises. Proper evidence of
the renewal of any insurance coverage shall also be delivered to Landlord not
less than thirty (30) days prior to the expiration of the coverage. In the event
of a loss covered by any policy under which Landlord is an additional insured,
Landlord shall be entitled to review a copy of such policy.

4. Each policy evidencing insurance required to be carried by Tenant pursuant to
this Exhibit D shall contain the following provisions and/or clauses reasonably
satisfactory to Landlord: (i) with respect to Tenant’s commercial general
liability insurance, a provision that the policy and the coverage provided shall
be primary and that any coverage carried by Landlord shall be in excess of and
noncontributory with respect to any policies carried by Tenant, together with a
provision including Landlord, the Additional Insureds identified in Item 11 of
the Basic Lease Provisions and any other parties in interest designated by
Landlord, as additional insureds; (ii) except with respect to Tenant’s
commercial general liability insurance, a waiver by the insurer of any right to
subrogation against Landlord, its agents, employees, contractors and
representatives which arises or might arise by reason of any payment under the
policy or by reason of any act or omission of Landlord, its agents, employees,
contractors or representatives; and (iii) a provision that the insurer will not
cancel or reduce the coverage provided by the policy without first giving
Landlord thirty (30) days prior written notice. Tenant shall also name Landlord,
the Additional Insureds identified in Item 11 of the Basic Lease Provisions and
any other parties in interest designated by Landlord, as additional insureds on
any excess or umbrella liability insurance policy carried by Tenant to the
extent required under this Lease.

5. In the event that Tenant fails to procure, maintain and/or pay for, at the
times and for the durations specified in this Exhibit D, any insurance required
by this Exhibit D, or fails to carry insurance required by any governmental
authority, Landlord may at its election procure that insurance and pay the
premiums, in which event

 

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Tenant shall repay Landlord all sums paid by Landlord, together with interest at
the maximum rate permitted by law and any related costs or expenses incurred by
Landlord, within ten (10) days following Landlord’s written demand to Tenant.

NOTICE TO TENANT: IN ACCORDANCE WITH THE TERMS OF THIS LEASE, TENANT MUST
PROVIDE EVIDENCE OF THE REQUIRED INSURANCE TO LANDLORD’S MANAGEMENT AGENT PRIOR
TO BEING AFFORDED ACCESS TO THE PREMISES.

 

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EXHIBIT E

RULES AND REGULATIONS

This Exhibit sets forth the rules and regulations governing Tenant’s use of the
Premises leased to Tenant pursuant to the terms, covenants and conditions of the
Lease to which this Exhibit is attached and therein made part thereof. In the
event of any conflict or inconsistency between this Exhibit and the Lease, the
Lease shall control.

1. Tenant shall not place anything or allow anything to be placed near the glass
of any window, door, partition or wall, which may appear unsightly from outside
the Premises.

2. The walls, walkways, sidewalks, entrance passages, elevators, stairwells,
courts and vestibules shall not be obstructed or used for any purpose other than
ingress and egress of pedestrian travel to and from the Premises, and shall not
be used for smoking, loitering or gathering, or to display, store or place any
merchandise, equipment or devices, or for any other purpose. The walkways,
sidewalks, entrance passageways, courts, vestibules and roof are not for the use
of the general public and Landlord shall in all cases retain the right to
control and prevent access thereto by all persons whose presence in the judgment
of the Landlord shall be prejudicial to the safety, character, reputation and
interests of the Building and its tenants, provided that nothing herein
contained shall be construed to prevent such access to persons with whom Tenant
normally deals in the ordinary course of Tenant’s business unless such persons
are engaged in illegal activities. Smoking is permitted outside the building and
within the project only in areas designated by Landlord. Neither Tenant nor its
employees, agents, contractors, invitees or licensees shall bring any firearm,
whether loaded or unloaded, into the Site at any time. No tenant or employee or
invitee or agent of any tenant shall be permitted upon the roof of the Building
without prior written approval from Landlord.

3. No awnings or other projection shall be attached to the outside walls of the
Building. No security bars or gates, curtains, blinds, shades or screens shall
be attached to or hung in, or used in connection with, any window or door of the
Premises without the prior written consent of Landlord. Neither the interior nor
exterior of any windows shall be coated or otherwise sunscreened without the
express written consent of Landlord.

4. Except as permitted under the Lease, Tenant shall not mark, nail, paint,
drill into, or in any way deface any part of the Premises or the Building except
to affix standard pictures or other wall hangings on the interior walls of the
premises so long as they are not visible from the exterior of the building.
Tenant shall not lay linoleum, tile, carpet or other similar floor covering so
that the same shall be affixed to the floor of the Premises in any manner except
as approved by Landlord in writing. The expense of repairing any damage
resulting from a violation of this rule or removal of any floor covering shall
be borne by Tenant.

5. The toilet rooms, urinals, wash bowls and other plumbing apparatus shall not
be used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein. Any pipes or
tubing used by Tenant to transmit water to an appliance or device in the
Premises must be made of copper or stainless steel, and in no event shall
plastic tubing be used for that purpose. The expense of any breakage, stoppage
or damage resulting from the violation of this rule shall be borne by the tenant
who, or whose employees or invitees, caused it.

6. Landlord shall direct electricians as to the manner and location of any
future telephone wiring. No boring or cutting for wires will be allowed without
the prior consent of Landlord. The locations of the telephones, call boxes and
other office equipment affixed to the Premises shall be subject to the prior
written approval of Landlord.

7. The Premises shall not be used for manufacturing or for the storage of
merchandise except as permitted under the Lease. No exterior storage shall be
allowed at any time without the prior written approval of Landlord. The Premises
shall not be used for cooking or washing clothes without the prior written
consent of Landlord, or for lodging or sleeping or for any immoral or illegal
purposes. Notwithstanding anything to the contrary herein or in the

 

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Lease, Tenant shall be permitted, without Landlord’s consent, to use such
standard kitchen appliances as are typically found in an office kitchenette,
including microwave ovens, refrigerators, dishwashers and garbage disposals.

8. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of this or neighboring buildings
or premises or those having business with them, whether by the use of any
musical instrument, radio, phonograph, noise, or otherwise. Tenant shall not
use, keep or permit to be used, or kept, any foul or obnoxious gas or substance
in the Premises or permit or suffer the Premises to be used or occupied in any
manner offensive or objectionable to Landlord or other occupants of this or
neighboring buildings or premises by reason of any odors, fumes or gases.

9. No animals, except for seeing eye dogs, shall be permitted at any time within
the Premises.

10. Tenant shall not use the name of the Building or the Site in connection with
or in promoting or advertising the business of Tenant, except as Tenant’s
address, without the written consent of Landlord. Landlord shall have the right
to prohibit any advertising by any Tenant which, in Landlord’s reasonable
opinion, tends to impair the reputation of the Site or its desirability for its
intended uses, and upon written notice from Landlord any Tenant shall refrain
from or discontinue such advertising.

11. Canvassing, soliciting, peddling, parading, picketing, demonstrating or
otherwise engaging in any conduct that unreasonably impairs the value or use of
the Premises or the Site are prohibited and each Tenant shall cooperate to
prevent the same. Landlord shall have full and absolute authority to regulate or
prohibit the entrance to the Premises of any vendor, supplier, purveyor,
petitioner, proselytizer or other similar person if, in the good faith judgment
of Landlord, such person will be involved in general solicitation activities, or
the proselytizing, petitioning, or disturbance of other tenants or their
customers or invitees, or engaged or likely to engage in conduct which may in
Landlord’s opinion distract from the use of the Premises for its intended
purpose. Notwithstanding the foregoing, Landlord reserves the absolute right and
discretion to limit or prevent access to the Buildings by any food or beverage
vendor, whether or not invited by Tenant, and Landlord may condition such access
upon the vendor’s execution of an entry permit agreement which may contain
provisions for insurance coverage and/or the payment of a fee to Landlord.

12. No equipment of any type shall be placed on the Premises which in Landlord’s
opinion exceeds the load limits of the floor or otherwise threatens the
soundness of the structure or improvements of the Building.

13. Except as permitted under the Lease or in the Work Letter, no air
conditioning unit or other similar apparatus shall be installed or used by any
Tenant without the prior written consent of Landlord.

14. The entire Premises, including vestibules, entrances, parking areas, doors,
fixtures, windows and plate glass, shall at all times be maintained in a safe,
neat and clean condition by Tenant. All trash, refuse and waste materials shall
be regularly removed from the Premises by Tenant and placed in the containers at
the locations designated by Landlord for refuse collection. All cardboard boxes
must be “broken down” prior to being placed in the trash container. All
styrofoam chips must be bagged or otherwise contained prior to placement in the
trash container, so as not to constitute a nuisance. Pallets must be immediately
disposed of by tenant and may not be disposed of in the Landlord provided trash
container or enclosures. Pallets may be neatly stacked in an exterior location
on a temporary basis (no longer than 5 days) so long as Landlord has provided
prior written approval. The burning of trash, refuse or waste materials is
prohibited.

15. Tenant shall use at Tenant’s cost such pest extermination contractor as
Landlord may direct and at such intervals as Landlord may require.

 

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16. All keys for the Premises shall be provided to Tenant by Landlord and Tenant
shall return to Landlord any of such keys so provided upon the termination of
the Lease. Tenant shall not change locks or install other locks on doors of the
Premises, without the prior written consent of Landlord. In the event of loss of
any keys furnished by Landlord for Tenant, Tenant shall pay to Landlord the
costs thereof. Upon the termination of its tenancy, Tenant shall deliver to
Landlord all the keys to lobby(s), suite(s) and telephone & electrical room(s)
which have been furnished to Tenant or which Tenant shall have had made.

17. No person shall enter or remain within the Site while intoxicated or under
the influence of liquor or drugs. Landlord shall have the right to exclude or
expel from the Site any person who, in the absolute discretion of Landlord, is
under the influence of liquor or drugs.

18. The moving of large or heavy objects shall occur only between those hours as
may be designated by, and only upon previous written notice to, Landlord, and
the persons employed to move those objects in or out of the Building must be
reasonably acceptable to Landlord. Without limiting the generality of the
foregoing, no freight, furniture or bulky matter of any description shall be
received into or moved out of the lobby of the Building or carried in the
elevator.

19. Tenant shall not install equipment, such as but not limited to electronic
tabulating or computer equipment, requiring electrical or air conditioning
service in excess of that to be provided by Landlord under the Lease without
prior written consent of Landlord.

20. Landlord may from time to time grant other tenants of the project individual
and temporary variances from these Rules, provided that any variance does not
have a material adverse effect on the use and enjoyment of the Premises by
Tenant.

21. Landlord reserves the right to amend or supplement the foregoing Rules and
Regulations and to adopt and promulgate additional rules and regulations
applicable to the Premises. Notice of such rules and regulations and amendments
and supplements thereto, if any, shall be given to the Tenant.

 

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EXHIBIT X

INDUSTRIAL WORK LETTER

DOLLAR ALLOWANCE

[PREAPPROVED PRELIMINARY PLAN]

The tenant improvement work to be contracted for by Landlord hereunder (“Tenant
Improvement Work”) shall consist of the design and construction of all tenant
improvements (“Tenant Improvements”), including work in place as of the date
hereof, required for the Premises pursuant to the approved final Working
Drawings and Specifications (as hereinafter defined). All of the Tenant
Improvement Work shall be performed by Rosetti Construction Co. (the
“Contractor”) and in accordance with the procedures and requirements set forth
below.

I. ARCHITECTURAL AND CONSTRUCTION PROCEDURES.

 

  A. Prior to the execution of this Lease, Tenant and Landlord have approved a
preliminary plan dated February 25, 2008 (the “Preliminary Plan”) for the Tenant
Improvements prepared by Rengel & Co. Architects (“Architect”). A copy of the
Preliminary Plan is attached hereto as Exhibit X-1. The Tenant Improvements Work
shall include the work shown on the Preliminary Plan. Except as otherwise noted
in the Preliminary Plan, the Tenant Improvements Work shall include Landlord’s
building standard tenant improvements, materials and specifications for the Site
as set forth in Schedule 1 attached hereto (“Building Standard Improvements”).

 

  B. Within ten (10) days following any request from Landlord, Tenant shall
provide in writing to Landlord or the Architect all specifications and
information requested by Landlord for the preparation of final construction
documents and costing, including without limitation Tenant’s final selection of
paint and floor finishes, complete specifications and locations (including
electrical, load and HVAC requirements) of Tenant’s equipment (collectively,
“Programming Information”). Tenant understands that final construction documents
for the Tenant Improvements shall be predicated on the Programming Information,
and accordingly that such information must be accurate and complete and that
Landlord shall have no obligation or liability for any defects or problems
arising from any incomplete or inaccurate Programming Information.

 

  C. Not later than three (3) weeks following the execution of this Lease,
Landlord shall cause the Architect and Landlord’s selected engineers to prepare
and deliver to Tenant working drawings and specifications for the Tenant
Improvements based on the approved Preliminary Plan (“Working Drawings and
Specifications”). Upon approval of the Working Drawings and Specifications,
Landlord shall prepare a final construction cost estimate (“Final Cost
Estimate”) of the Completion Cost for the Tenant Improvements in conformity with
the Working Drawings and Specifications. A copy of the Final Cost Estimate shall
be delivered to Tenant for its approval. Tenant shall have five (5) business
days from the receipt thereof to approve or disapprove the Working Drawings and
Specifications and (if delivered to Tenant) the Final Cost Estimate. Tenant
shall not unreasonably withhold or delay its approval, and any disapproval or
requested modification shall be limited to items not consistent with the
approved Preliminary Plan, subject to Tenant’s right to request a Change
pursuant to Section 1.D below. Should Tenant disapprove the Working Drawings and
Specifications or the Final Cost Estimate, such disapproval shall be accompanied
by specific reasons for disapproval and a detailed list of requested revisions.
The parties shall confer and negotiate in good faith to reach agreement on
revisions to the Working Drawings and Specifications and the Final Cost estimate
as a consequence of such revisions. Any revision so requested by Tenant and
accepted by Landlord shall be incorporated into a revised set of Working
Drawings and Specifications, and the Final Cost Estimate, and Tenant shall
approve same in writing within five (5) business days of receipt without further
revision. Landlord shall enter into a “lump /sum” or “fixed price” construction
contract with the Contractor for construction of the Tenant Improvements in
accordance with the approved and final Working Drawings and Specifications (“TI
Contract”). The Contractor is the contractor only of Landlord and Tenant shall
have no liability to the Contractor or under the TI Contract.

 

  D.

In the event that Tenant subsequently requests in writing a revision to the
Working Drawings and Specifications approved by the parties pursuant to Section
I.C above (“Change”), and Landlord so approves such Change as provided in
Section I.E. herein, Landlord shall advise Tenant by written change order
(“Change Order”) as soon as is practical of any net cost increase in the
Completion Cost above the Final Cost Estimate (taking into account any cost
savings attributable to such Change Order together with previous Change Orders).
Tenant shall approve or disapprove such Change Order in writing within two
(2) business days following Tenant’s receipt of such Change Order. If Tenant
approves any such Change Order, Landlord, at its election, may either
(i) require as a condition to the effectiveness of such Change Order that Tenant
pay the cost increase in the Completion Cost set forth in such Change Order in
excess of Landlord’s Maximum Contribution concurrently with delivery of Tenant’s
approval of the Change Order, or (ii) defer Tenant’s payment of such increase
until the date ten (10) days after delivery of invoices for same, provided
however,

 

1

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that such payment must in any event be paid in full prior to Tenant’s commencing
occupancy of the Premises. If Tenant disapproves any such Change Order, Tenant
shall nonetheless be responsible for the reasonable architectural and/or
planning fees incurred in preparing such Change Order. Landlord shall have no
obligation to interrupt or modify the Tenant Improvement Work pending Tenant’s
approval of a Change Order, but if Tenant fails to timely approve a Change
Order, Landlord may (but shall not be required to) suspend the applicable Tenant
Improvement Work. In no event shall Landlord have the right to make any
revisions to the Working Drawings and Specifications without Tenant’s prior
written consent, which consent shall not be unreasonably withheld or delayed.

 

  E. Landlord agrees that it shall not unreasonably withhold its consent to
Tenant’s requested Changes. Notwithstanding the foregoing, Landlord shall in no
event be required to approve any Non-Standard Improvement if Landlord determines
that such requested Change (i) is of a lesser quality than the corresponding
Tenant Improvements previously approved by Landlord, (ii) fails to conform to
applicable governmental requirements, (iii) would result in the Premises
requiring building services beyond the level normally provided to other tenants,
(iv) interferes in any manner with the proper functioning of, or Landlord’s
access to, any mechanical, electrical, plumbing or HVAC systems, facilities or
equipment in or serving the Building, or (v) would have an adverse aesthetic
impact to the Premises or cause additional expenses to Landlord in reletting the
Premises.

 

  F. All Tenant Improvements shall become the property of Landlord and shall be
surrendered with the Premises at the end of the Term; except that Landlord may,
by notice to Tenant given at the time of Landlord’s approval of any Non-Standard
Improvements incorporated into the Tenant Improvements as a “Change,” require
Tenant either to remove all or any of the Non-Standard Tenant Improvements
approved by way of such Change, to repair any damage to the Premises or the
Common Areas arising from such removal, and to replace any Non-Standard
Improvements approved by way of such Change with the applicable Building
Standard, or to reimburse Landlord for the reasonable cost of such removal,
repair and replacement upon demand. Any such removals, repairs and replacements
by Tenant shall be completed by the Expiration Date or sooner termination of
this Lease. In addition to the foregoing restoration obligation(s), Tenant shall
also be required to remove, repair and replace the premises as shown on Schedule
2 attached to this Work Letter, including without limitation, the restoration of
all lighting, ceiling tiles, flooring and related electrical work to their
condition prior to the date of this Lease (the “Restoration Requirement”). Such
removal, repairs and replacements by Tenant shall be completed by the Expiration
Date or sooner termination of this Lease. Notwithstanding the foregoing, in the
event that Tenant shall be contractually obligated to lease the Premises for at
least one hundred twenty (120) months from and after the Commencement Date of
this Lease (and this Lease shall not be terminated at any time during said 120
months due to Tenant’s default), then the Restoration Requirement shall be
waived in its entirety.

 

  G. [Intentionally Deleted]

 

  H. Landlord shall permit Tenant and its agents to enter the Premises for at
least fourteen (14) days prior to the Early Occupancy Date of the Lease in order
that Tenant may install fixtures, furniture, cabling, related telecommunication
equipment, and other personal property through Tenant’s own contractors prior to
the Early Occupancy Date. Any such work shall be subject to Landlord’s prior
written approval, and shall be performed in a manner and upon terms and
conditions and at times satisfactory to Landlord’s representative. The foregoing
license to enter the Premises prior to the Early Occupancy Date is, however,
conditioned upon Tenant’s contractors and their subcontractors and employees
working in harmony and not interfering with the work being performed by Landlord
as determined by Landlord in Landlord’s sole and absolute discretion. If at any
time that entry shall cause disharmony or interfere with the work being
performed by Landlord as defined by Landlord in Landlord’s sole and absolute
discretion, this license may be withdrawn by Landlord upon twenty-four
(24) hours written notice to Tenant. That license is further conditioned upon
the compliance by Tenant’s contractors with all requirements imposed by Landlord
on third party contractors, including without limitation the maintenance by
Tenant and its contractors and subcontractors of workers’ compensation and
public liability and property damage insurance in amounts and with companies and
on forms satisfactory to Landlord, with certificates of such insurance being
furnished to Landlord prior to proceeding with any such entry. The entry shall
be deemed to be under all of the provisions of the Lease except as to the
covenants to pay rent. Landlord shall not be liable in any way for any injury,
loss or damage which may occur to any such work being performed by Tenant, the
same being solely at Tenant’s risk. In no event shall the failure of Tenant’s
contractors to complete any work in the Premises extend either the Early
Occupancy Date or the Commencement Date of this Lease.

 

  I.

Tenant hereby designates Kevin Cousins (“Tenant’s Construction Representative”),
Telephone No. (949) 362-4800 Ext. 109, as its agent for all matters related to
the Tenant Improvement Work, including but not by way of limitation, for
purposes of receiving notices, approving submittals and issuing requests for
Changes, and Landlord shall be entitled to rely upon authorizations and
directives of such person(s) as if given directly by Tenant. The foregoing
authorization is intended to provide assurance to Landlord that it may rely upon
the directives and decision making of the Tenant’s Construction Representative
with respect to the Tenant Improvement Work and is not

 

2

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intended to limit or reduce Landlord’s right to reasonably rely upon any
decisions or directives given by other officers or representatives of Tenant.
Tenant may amend the designation of its Tenant’s Construction Representative(s)
at any time upon delivery of written notice to Landlord.

II. COST OF TENANT IMPROVEMENTS

 

  A. Landlord shall complete, or cause to be completed, the Tenant Improvements,
at the construction cost shown in the Final Cost Estimate (subject to increases
for Landlord approved Changes to be paid by Tenant as set forth in this Work
Letter), in accordance with final Working Drawings and Specifications approved
by both Landlord and Tenant. The Tenant Improvements shall be constructed by
Landlord in accordance with all rules, regulations, codes, ordinances, statutes,
and laws of any governmental or quasi-governmental authority in effect as of the
date of the issuance of the applicable building permit(s) therefor, and in a
good and workman-like manner using material and equipment of new and otherwise
of good quality. Landlord shall use commercially reasonable efforts to obtain
standard warranties on the HVAC units installed pursuant to this Work Letter and
for other elements of the Tenant Improvements that Tenant is responsible for
maintaining under the Lease and shall assign to Tenant, or otherwise cooperate
to make available to Tenant the benefit of, all such warranties.

 

  B. Landlord shall pay up to Three Hundred Ten Thousand Five Hundred Fifteen
Dollars ($310,515.00), based on $7.50 per rentable square foot of the Premises
(“Landlord’s Maximum Contribution”), of the final “Completion Cost” (as defined
below). Tenant acknowledges that the Landlord’s Maximum Contribution is intended
only as the maximum amount Landlord will pay toward approved Tenant
Improvements, and not by way of limitation, any partitions, modular office
stations, fixtures, cabling, furniture and equipment requested by Tenant are in
no event subject to payment as part of Landlord’s Contribution. In the event the
Completion Cost for the Tenant Improvements is less than the Landlord’s Maximum
Contribution, Landlord’s actual contribution toward the Completion Cost
(“Landlord’s Contribution”) shall equal such lesser amount, and Tenant shall
have no right to receive any credit, refund or allowance of any kind for any
unused portion of the Landlord’s Maximum Contribution nor shall Tenant be
allowed to make revisions to an approved Preliminary Plan, Working Drawings and
Specifications or request a Change in an effort to apply any unused portion of
Landlord’s Maximum Contribution.

 

  C. Tenant shall pay the difference between Final Cost Estimate and Landlord’s
Maximum Contribution, plus any net increases above the Final Cost Estimate as
set forth in approved Change Orders, to the extent such Tenant Delay costs or
Change Order costs exceed the Landlord’s Maximum Contribution. The amounts to be
paid by Tenant for the Tenant Improvements pursuant to this Section II.C are
sometimes cumulatively referred to herein as the “Tenant’s Contribution”. Tenant
shall pay the Tenant’s Contribution, if any, within thirty (30) days of (i) the
determination of the Final Cost Estimate, and (ii) the determination of any
increases caused by a Change Order, pursuant to the provisions of this Work
Letter.

 

  D. The “Completion Cost” shall mean all costs of Landlord in completing the
Tenant Improvements in accordance with the approved Working Drawings and
Specifications, including but not limited to the following: (i) payments made to
the Contractor, the Architect, engineers, subcontractors and other third party
consultants in the performance of the work, (ii) salaries and fringe benefits of
persons, if any, in the direct employ of Landlord performing any part of the
construction work, (iii) permit fees and other sums paid to governmental
agencies, and (iv) costs of all materials incorporated into the work or used in
connection with the work. The Completion Cost shall also include an
administrative/supervision fee to be paid to Landlord or to Landlord’s
management agent in the amount of five percent (5%) of the Completion Cost.
Unless expressly authorized in writing by Landlord, the Completion Cost shall
not include (and no portion of the Landlord Contribution shall be paid for) any
costs incurred by Tenant, including without limitation, any costs for space
planners, managers, advisors or consultants retained by Tenant in connection
with the Tenant Improvements and shall not include (a) costs for improvements
which are not shown on or described in the Working Drawings and Specification
unless otherwise approved by Tenant; (b) costs incurred due to the presence of
Hazardous Materials in the Site or the surrounding area; (c) attorneys’ fees
incurred in connection with negotiation of construction contracts, and
attorneys’ fees, experts’ fees and other costs in connection with disputes with
third parties; (d) interest and other costs of financing construction costs; or
(e) costs to bring the Premises into compliance with applicable laws and
restrictions.

 

  E. Prior to start of construction of the Tenant Improvements, Tenant shall pay
to Landlord in full the amount of the Tenant’s Contribution set forth in the
Final Cost Estimate (once approved by Tenant). The balance of any sums not
otherwise paid by Tenant shall be due and payable on or before the Commencement
Date of this Lease. If Tenant defaults beyond cure periods in the payment of any
sums due under this Work Letter, Landlord shall (in addition to all other
remedies) have the same rights as in the case of Tenant’s failure to pay rent
under the Lease, including, without limitation, the right to terminate this
Lease and recover damages from Tenant and/or to charge a late payment fee and to
collect interest on delinquent payments, and Landlord may (but shall not be
required to) suspend the Tenant Improvement Work following such default.

 

3

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III. DISPUTE RESOLUTION

All claims or disputes between Landlord and Tenant arising out of, or relating
to, this Work Letter shall be decided by JAMS pursuant to Section 22.8 of the
Lease.

 

IV. LANDLORD’S WORK

In addition to the foregoing, prior to the Early Occupancy Date, Landlord shall,
at Landlord’s sole cost, (a) install automatic timers on all HVAC units serving
the Premises, to automatically “turn on” and “turn off” such units, (b) patch
all roof leaks and ensure that the roof is in good condition and (c) replace [9]
of the existing HVAC units serving the Premises. Landlord shall perform such
work in a good and workmanlike manner, in compliance with all laws. With respect
to the roof or equipment serving the Premises that are covered by a warranty,
Landlord shall use commercially reasonable efforts to have any necessary repairs
covered by such warranty performed pursuant to such warranty.

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TENANT IMPROVEMENT / INTERIOR CONSTRUCTION OUTLINE SPECIFICATIONS

(By Tenant/Tenant Allowance)

 

TENANT STANDARD GENERAL

OFFICE:

   CARPET       Direct glue, from one of the following options:      
Designweave - Z6354 Tempest Esq.:    Designweave – Z6356 Techno:   

a)      553 Steel Wool

  

a)      336 Lido

  

b)      773 Melba Toast

  

b)      252 Topaz

  

c)      575 Silver Smoke

  

c)      518 Night Sky

  

d)      535 Dolphin

  

d)      997 Silver Plum

  

e)      454 Denim

  

e)      496 Galactic

   VINYL COMPOSITION TILE (VCT)       12x12 VCT Armstrong Standard Excelon, from
the following options:   

a)      51803 Pearl White

  

c)      51908 Pewter

  

b)      51899 Cool White

  

d)      51899 Cool White

  

 

PAINT / WALLS

5/8” gypsum drywall on 2-1/2” x 25 ga. metal studs, floor to ceiling
construction, no walls shall penetrate the grid unless required by code. All
walls shall be straight, and parallel to building perimeter walls. All offices
and rooms shall be constructed of a standard size and tangent to a building
shell or core wall. Paint finish, one standard color to be Benjamin Moore AC-40,
Glacier White, flat finish.

 

BASE

2-1/2”Burke rubber base color: Pearl 137P, straight at cut pile carpet, coved at
resilient flooring and loop carpet.

 

RUBBER TRANSITION STRIP

Transition strip between carpet and resilient flooring to be Burke #150, color:
to match adjacent V.C.T.

 

PLASTIC LAMINATE

Plastic laminate color at millwork to be Nevamar “Smoky White”, Textured
#S-7-27T.

  

CEILING

2x4 USG Radar Illusions #2842 grid and scored tile on 9/16” T-bar grid.
Continuous grid throughout.

  

PERIMETER WALLS

Furring, 25 ga. metal studs with 5/8” gypsum drywall, with batt insulation.

  

LIGHTING

2X4 fluorescent, 3-lamp energy saving ballast, 18-cell parabolic lens fixture.

  

DOORS

1-3/4” solid core, 3”-0” x 8’-10”, plain sliced white oak, Western Integrated
clear anodized aluminum frames, Schlage “D” series “Sparta” latchset hardware,
dull chrome finish.

  

OFFICE SIDELITES

All interior offices to have sidelite glazing adjacent to office entry door. 2’
wide x door height, Western Integrated clear anodized aluminum frame integral to
door frame with clear tempered glass.

Schedule 1

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TENANT IMPROVEMENT / INTERIOR CONSTRUCTION OUTLINE SPECIFICATIONS

(Continued)

 

TENANT STANDARD GENERAL

OFFICE (CONTINUED):

  

WINDOW COVERINGS

Vertical blinds: Mariak Industries PVC blinds at building perimeter windows,
Model M-3000, Color: Light Grey.

TENANT STANDARD

MECHANICAL:

  

HVAC

Interior and Exterior zone VAV boxes shall be connected to the main supply air
loop. Exterior zone VAV boxes shall be provided with single-row hot water reheat
coil.

 

Air distribution downstream of VAV boxes shall be provided complete with
ductwork, 2’x2’ perforated face ceiling diffusers, 2’x2’ perforated return air
grilles and air balance.

 

Pneumatic thermostats with blank white cover shall be provided for each zone.
Thermostats shall be located adjacent to light switch at 48” above finished
floor.

 

Exterior corner spaces with more than one exposure shall be provided with a
separate zone.

 

Conference Room (or Training Room) 20’x13’ or larger shall be provided with a
separate zone.

 

Exterior zone shall be limited to a single exposure and a maximum of 750 to 1000
square feet.

 

Interior zone shall be limited to a maximum of 2000 square feet.

  

FIRE PROTECTION

Pendant satin chrome plated, recessed heads, adjustable canopies, minimum K
factor to be 5.62, located at center of scored ceiling tile. Ceiling drops from
shell supply loop.

TENANT STANDARD

ELECTRICAL:

  

ELECTRICAL SYSTEM

277/480 volt, three phase, four wire metered distribution section added to main
service at Main Electrical Room.

 

Electrical tenant distribution capacity suitable for 22 watts per s.f. to
accommodate HVAC, lighting, data processing, computer loads and convenience
outlets.

 

Tenant Electrical Room, located within the lease space, to include 270/480 volt
and 120/208 volt panels, transformer, lighting control panel, as required.

  

LIGHTING

Double switch per Title 24, paired in double gang box, Leviton “Decora” white
plastic coverplate, 42” AFF to switch centerline. Provide occupancy sensors as
required by code. 2x4 fluorescent light fixtures, 3-lamp energy saving ballast,
18-cell parabolic lens fixture based upon one (1) fixture per 80 square feet.

 

Exit signs: Internally illuminated, white sign face with green text.

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TENANT IMPROVEMENT / INTERIOR CONSTRUCTION OUTLINE SPECIFICATIONS

(Continued)

 

TENANT STANDARD ELECTRICAL (CONTINUED):   

OUTLETS

Power: 15-amp 125-volt specification grade duplex receptacle mounted vertically,
18” AFF to centerline, white plastic coverplate. Feeds to systems furniture by
Tenant to be via walls, furred columns or ceiling J-box. Power poles and
furniture by Tenant. Ratio of one (1) feed per eight (8) workstations. Assumes
four (4) circuits, eight (8) wire configuration of systems furniture.

 

Telephone/Data: Single gang box with mud ring and pull string, mounted
vertically, 18” AFF to centerline, Cover plate by telephone and/or cabling
company. Teflon cable by tenant.

 

One (1) empty 2” conduit to be routed from Tenant’s Server Room, 4x8 backboard
to building main telephone backboard.

TENANT STANDARD WAREHOUSE/SHIPPING AND RECEIVING:   

FLOORS

Sealed concrete.

  

WALLS

5/8” gypsum wallboard standard partition. Paint to match Benjamin Moore AC-40
Glacier White; rated partition at occupancy separation as required by code.

  

CEILING

Exposed structure, non-painted.

  

WINDOWS

None

  

ACCESS

7’-6” H x 7’-6” W glazed service doors. Glazing is bronze reflective glass.

  

HVAC

None

  

PLUMBING

Single accommodation restroom, if required.

 

Sheet vinyl flooring to be Armstrong Classic Corlon “Seagate” #86526 Oyster,
with Smooth White FRP panel wainscot to 48” high. Painted walls and ceiling to
be Benjamin Moore AC-40 Glacier White, semi-gloss finish.

  

LIGHTING

Chain hung florescent strip fixtures.

  

OTHER ELECTRICAL

Convenience outlets; surface mounted at exposed concrete walls.

  

SECURITY

Lockable doors.

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Schedule II

(TBD)

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EXHIBIT Y