Exhibit 10.1
OFFICE LEASE
BREA FINANCIAL COMMONS
MAGUIRE PROPERTIES – 130 S. STATE COLLEGE, LLC,
a Delaware limited liability company,
as Landlord,
and
CAPITALSOURCE BANK,
a California corporation,
as Tenant

 

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TABLE OF CONTENTS

         
 
  Page  
ARTICLE 1 PREMISES
    3    
ARTICLE 2 TERM
    3    
ARTICLE 3 RENT; LATE CHARGES
    4    
ARTICLE 4 ADDITIONAL RENTAL
    5    
ARTICLE 5 ADDITIONAL TAXES
    10    
ARTICLE 6 SECURITY
    10    
ARTICLE 7 USE OF PREMISES
    11    
ARTICLE 8 UTILITIES AND SERVICES
    13    
ARTICLE 9 MAINTENANCE AND REPAIRS
    16    
ARTICLE 10 ALTERATIONS, ADDITIONS AND IMPROVEMENTS
    18    
ARTICLE 11 INDEMNIFICATION AND INSURANCE
    19    
ARTICLE 12 DAMAGE OR DESTRUCTION
    21    
ARTICLE 13 CONDEMNATION
    22    
ARTICLE 14 INTENTIONALLY DELETED
    22    
ARTICLE 15 ASSIGNMENT AND SUBLETTING
    22    
ARTICLE 16 DEFAULT AND REMEDIES
    24    
ARTICLE 17 ATTORNEYS FEES; COSTS OF SUIT
    26    
ARTICLE 18 SUBORDINATION AND ATTORNMENT
    26    
ARTICLE 19 QUIET ENJOYMENT
    26    
ARTICLE 20 PARKING
    27    
ARTICLE 21 RULES AND REGULATIONS
    27    
ARTICLE 22 ESTOPPEL CERTIFICATES
    27    
ARTICLE 23 ENTRY BY LANDLORD
    27    
ARTICLE 24 LANDLORD’S LEASE UNDERTAKINGS-EXCULPATION FROM PERSONAL LIABILITY
TRANSFER OF LANDLORD’S INTEREST
    28    
ARTICLE 25 HOLDOVER TENANCY
    28    
ARTICLE 26 NOTICES
    29    
ARTICLE 27 BROKERS
    29    
ARTICLE 28 SIGNAGE RIGHTS
    29    
ARTICLE 29 INTENTIONALLY OMITTED
    30    
ARTICLE 30 MISCELLANEOUS
    31  

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INDEX

              Page(s)
Abated Rent Amount
    5  
ADA
    12  
Additional Rent
    15  
Affiliate
    22  
Affiliated Assignee
    21  
Alterations
    17  
Back Up Power
    14  
Base Building
    12  
Base Rent
    4  
Base Year
    5  
BOMA
    3  
Broker(s)
    2  
Building
    1  
Building Structure
    12  
Building Systems
    12  
Building Top Sign
    29  
Building Top Sign Occupancy Requirement
    29  
Business Name
    29  
Capital Items
    6  
Casualty
    21  
CC&Rs
    13  
Change Order
  Exhibit C  
Claims, Damages and Costs
    18  
Commencement Date
    1  
Common Areas
    3  
Comparison Year
    9  
Control
    20  
Controlling
    20  
Current CC&Rs
    13  
Damage Notice
    21  
Effective Date
    1  
Environmental Damages
    12  
Environmental Laws
    12  
Event of Default
    24  
Excess Electrical Requirements
    13  
Expense Year
    5  
Fair Market Rental Rate
    4  
Final Space Plan
  Exhibit C  
Force Majeure
    31  
Future CC&Rs
    13  
Future Security Document
    26  
Handle
    12  
Handled
    12  
Handling
    12  
Hazardous Materials
    12  
Holder
    26  
HVAC
    12  
Initial Term
    1  
Institutional Owner Practices
    9  
Interest Rate
    5  
Landlord
    1  
Landlord Parties
    28  
Landlord’s Lease Undertakings
    28  
Landlord’s Statement
    9  
Landlord’s Work
  Exhibit C  
Late Charge
    5  
Laws
    12  
Lease
  Exhibit F  
Lease Documents
    28  
Lease Expiration Date
    1  
Leasehold Improvements
    19  
Monument Sign
    30  
Objectionable Name
    29  
OFAC
    32  
Operating Expenses
    6  
Options to extend the Term
    1  
Original Tenant
    1  
Other Improvements
    32  
Parking Facilities
    3  
Parking Rules
  Exhibit D  
Parking Spaces
    26  
Partial Lease Month Rent
    5  
Partial Month
    1  
Permitted Transfer
    21  
Permitted Use
    2  
Premises
    1  
Project
    1  
Property Taxes
    5  
Reimbursements
    8  
Renewal Notice
    4  

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              Page(s)
Renewal Option
    4  
Renewal Term
    4  
Renewal Term Commencement Date
    4  
Renovation Work
    32  
Rent
    5  
Rentable Area
    1  
rentable square feet
    3  
Restoration
    21  
Restoration Estimate
    21  
Rules and Regulations
    27  
Security Documents
    26  
SNDAA
    26  
Standard Lease Provisions
    2  
Substantial Completion
  Exhibit C  
Successor
    22  
Successor Landlord
    26  
Taking
    21  
Target Term Commencement Date
    1  
Tenant Improvement Allowance
  Exhibit C  
Tenant Improvement Costs
  Exhibit C  
Tenant Improvements
  Exhibit C  
Tenant Parties
    26  
Tenant Party
    12  
Tenant’s Property
    19  
Tenant’s Security System
    14  
Tenant’s Authorized Representative
  Exhibit C  
Tenant’s Percentage Share
    9  
Term
    1  
Transfer
    22  
Transfer Notice
    21  
Transfer Profits
    21  
Transferee
    22  
Usable Area
    3  
usable square feet
    3  
Work Letter
  Exhibit C  
worth at the time of award
    24  

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OFFICE LEASE
     THIS OFFICE LEASE (“Lease”) is made and entered into by and between MAGUIRE
PROPERTIES — 130 S. STATE COLLEGE, LLC, a Delaware limited liability company
(“Landlord”) and the Tenant described in Item 1 of the Basic Lease Provisions as
of November 5, 2008 (the “Effective Date”).
BASIC LEASE PROVISIONS

1.   Tenant: CAPITALSOURCE BANK, a California corporation (“Original Tenant”)  
2.   Description of Premises/Building/Project:

  2.1   Premises: All of the Rentable Area contained in the Building (defined
below), including Suites 100 and 200. The outline of the Premises is shown on
Exhibit “A”.     2.2   Rentable Area: Approximately 42,884 square feet
(Section 1.3)     2.3   Building: The building located at 130 South State
College Boulevard, Brea, California     2.4   Project: That certain project with
all common areas, commonly known as Brea Financial Commons.

3.   Term:

  3.1   Initial Term: Subject to Section 2.2 of the Standard Lease Provisions,
sixty-six (66) months commencing on the Commencement Date.     3.2   Option to
extend the Term: One (1) option to extend for five (5) years.     3.3  
Commencement Date: The earlier to occur of (a) the date that is the later of
(i) April 1, 2009 (the “Projected Commencement Date”) and (ii) one hundred
twenty (120) days after the Delivery Date (as defined in Section 1.2), or
(b) the date that Tenant occupies any portion of the Premises for the conduct of
business and not just tenant work or inspections. The Commencement Date is
subject to postponement pursuant to Section 7 of Exhibit “C” attached hereto.  
  3.4   Lease Expiration Date: The last day of the calendar month which is
sixty-six (66) months after the Commencement Date, which is anticipated to be
September 30, 2014.

4.   Base Rent (Article 3)

                              Monthly Base             Rent Rate   Monthly Base
Rent   Annual Base Rent Months   (S/RSF/mo.)   ($/mo.)   ($/vr.)
        1
  $ 2.15     $ 92,200.60       N/A  
       2-7
  $ 0.00     $ 0.00     $ 0.00  
      8-12*
  $ 2.15     $ 92,200.60       N/A  
     13-24
  $ 2.21     $ 94,773.64     $ 1,137,283.68  
     25-36
  $ 2.28     $ 97,775.52     $ 1,173,306.24  
     37-48
  $ 2.35     $ 100,777.40     $ 1,209,328.80  
     49-60
  $ 2.42     $ 103,779.28     $ 1,245,351.36  
     61-66
  $ 2.49     $ 106,781.16       N/A  

 

*   If the Commencement Date occurs on any day other than the first day of a
calendar month, months 1 – 12 shall include the partial month (“Partial Month”)
in which the Commencement Date occurs (and the monthly Base Rent payable with
respect to such Partial Month shall be prorated in accordance with Section
3.1.2, below) and the twelve calendar months immediately following such Partial
Month.

5.   Additional Rent (Article 4)

  5.1   Base Year: The calendar year 2009     5.2   Tenant’s Percentage Share:
100% (Section 4.2)

6.   Security: See Article 6   7.   Parking Spaces: See Article 20   8.  
Brokers: Grubb & Ellis Company representing Tenant, and Maguire Properties, L.P.
representing Landlord (Article 27)

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9.   Permitted Use: (i) General office and administrative use, (ii) a gym for
use by Tenant’s employees (to be constructed in accordance with the Final Plans
(as defined in Section 2.2 of Exhibit “C” attached hereto)), but not the general
public, and (iii) any other lawful use which is allowed within the zoning
classification in which the Premises are located and which is consistent with
the existing first-class office character of the Building apart from Tenant’s
use. (Section 7.1)   10.   Addresses for Notices (Article 26):

To:       Tenant
Prior to and after the Commencement Date:
CapitalSource Bank
4445 Willard Avenue, 12th Floor
Chevy Chase, Maryland 20815
Attn: Chief Legal Officer

     
To:       Landlord
  With a copy to:  
c/o Maguire Properties, Inc.
  Gilchrist & Rutter Professional Corporation
355 South Grand Avenue, 33rd Floor
  1299 Ocean Avenue, Suite 900
Los Angeles, California 90071
  Santa Monica, California 90401
Attn: Senior Vice President Leasing
  Attention: Jonathan S. Gross, Esq.

11.   Address for Payments: All payments payable to Landlord under this Lease
shall be sent to the following address or to such other address as Landlord may
designate.

Maguire Properties-130 S. State College, LLC
PO Box 60577
Los Angeles, CA 90060-0577
Wire Transfer Instructions Information:
Bank of the West
ABA #121-100-781
Account #737-010314
Maguire Properties-130 S. State College, LLC

12.   Guarantor: None

     This Lease shall consist of the foregoing Basic Lease Provisions, and the
provisions of the Standard Lease Provisions (the “Standard Lease Provisions”)
(consisting of Articles 1 through 30 which follow) and Exhibits “A” through “G”,
inclusive, all of which are incorporated herein by this reference as of the
Effective Date. In the event of any conflict between the provisions of the Basic
Lease Provisions and the provisions of the Standard Lease Provisions, the
Standard Lease Provisions shall control. Any initially capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the
Standard Lease Provisions.

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STANDARD LEASE PROVISIONS
ARTICLE 1
PREMISES
     1.1 Lease of Premises. Landlord hereby leases the Premises (as defined in
Item 2.1 of the Basic Lease Provisions) to Tenant (defined below), and Tenant
hereby leases the Premises from Landlord, upon all of the terms, covenants and
conditions contained in this Lease. Pursuant to the terms of this Lease, Tenant
shall have access to the Premises 24 hours per day, seven days per week. As used
in this Lease, “Tenant” means Original Tenant, and any person or entity to whom
or to which all of Original Tenant’s interest in this Lease is assigned (or
otherwise transferred) in accordance with the provisions of Article 15 of this
Lease.
     1.2 Delivery and Acceptance of Premises. Subject to Landlord’s express
representations, warranties and covenants in this Lease (collectively,
“Landlord’s Warranties”), Landlord shall deliver the Premises to Tenant in its
As-Is condition for Tenant’s installation of Tenant Improvements therein in
accordance with the provisions of Exhibit “C” attached hereto within one
(1) business day after the mutual execution and delivery of this Lease (the
actual date of delivery of the Premises to Tenant, the “Delivery Date”), and
Tenant shall accept the Premises in its As-Is condition for Tenant’s use and
occupancy and improvement thereof in accordance with this Lease, subject to
Landlord’s Warranties, including Landlord’s obligation to perform the Landlord’s
Work (as defined in Section 1.1 of Exhibit “C” attached hereto). The parties
anticipate that the Delivery Date will occur on or before December 1, 2008.
Except as otherwise expressly provided in this Lease, Landlord shall have no
obligation to repair, restore, renovate or improve the Premises. If there are
latent defects in the Premises or any part thereof, Tenant shall be deemed to
have accepted same unless Tenant notifies Landlord thereof within six (6) months
after Tenant obtains actual knowledge of such defect(s). Landlord shall have no
responsibility to correct or liability with respect to any latent defects in any
portion of the Tenant Improvements or Alterations (as defined in Section 10.2
below) installed by a contractor of Tenant, but shall be responsible for repair
of or liable for latent defects in the core and shell of the Building, subject
to all applicable statutes of limitation. Except as otherwise expressly provided
in this Lease, Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty with respect to the Premises,
the Building or any other portion of the Project, including without limitation,
any representation or warranty with respect to the suitability or fitness of the
Premises, the Building or any other portion of the Project for the conduct of
Tenant’s business. Nothing in this Section 1.2 shall modify, diminish or
otherwise affect the repair and maintenance obligations of Landlord and Tenant
set forth in Sections 9.1 and 9.2 below.
     1.3 Measurement of the Rentable Area of Premises and the Building.
          1.3.1 For purposes of this Lease, the parties hereby stipulate that
the number of rentable square feet contained within the Premises is as set forth
in Item 2.2 of the Basic Lease Provisions.
          1.3.2 The “Rentable Area” or “rentable square feet” and “Usable Area”
or “usable square feet” of any portion of the Premises shall be calculated by
Landlord in accordance with the Standard Method for Measuring Floor Area in
Office Buildings, ANSI Z65.1 - 1996 (“BOMA”).
     1.4 Common Areas. “Common Areas” shall mean the plaza and sidewalk areas,
accessways and Project parking facilities, including surface parking
(collectively the “Parking Facilities”), and the area on individual floors in
the other buildings of the Project, devoted to corridors, fire vestibules,
elevators, foyers, lobbies, electric and telephone closets, restrooms,
mechanical rooms, janitor’s closets, and other similar facilities for the
benefit of all tenants and invitees and shall also mean those areas of the other
buildings of the Project devoted to mechanical and service rooms servicing the
Building, or the other buildings of the Project, as applicable. The Common Areas
shall be subject to the exclusive management and control of Landlord. Landlord
shall have the right from time to time to designate, relocate and limit the use
of particular areas or portions of the Common Areas so long as such relocation
or limitation does not prevent Tenant from accessing the Premises or Parking
Facilities or materially interfere with Tenant’s use of the Premises for the
conduct of its business (Landlord shall use commercially reasonable efforts to
give Tenant advance notice of such actions if Tenant would be affected thereby).
Landlord shall also have the right to temporarily close all or any portion of
the Common Areas as may, in the reasonable discretion of Landlord, be necessary
to prevent a dedication thereof or the accrual of any rights in any person so
long as such action does not prevent Tenant from accessing the Premises or
Parking Facilities or materially interfere with Tenant’s use of the Premises for
the conduct of its business (Landlord shall use commercially reasonable efforts
to give Tenant advance notice of such temporary closures if Tenant would be
affected thereby).
ARTICLE 2
TERM
     2.1 Term. Unless earlier terminated or extended in accordance with the
express provisions hereof, the initial term of this Lease shall be the period
shown in Item 3.1 of the Basic Lease Provisions (the “Term”). Promptly following
the Commencement Date, Landlord and Tenant shall confirm the Commencement Date
and the Lease Expiration Date by executing and delivering a notice substantially
in the form attached hereto as Exhibit “B”, which Tenant shall execute and
return to Landlord within thirty (30) days of receipt thereof.
     2.2 Commencement. The Term shall commence on the Commencement Date as
defined in Item 3.3 of the Basic Lease Provisions; provided, however, that in
the event the Term shall commence on a day other than the first day of any
calendar month, for purposes of calculating the Lease Expiration Date and the
timing of all scheduled increases in Base Rent during the Term, the Commencement
Date shall be deemed to be the first day of the calendar month following the
Commencement Date. This Lease shall be a binding contractual obligation
effective upon execution hereof by Landlord and Tenant notwithstanding the later
commencement of the Term of this Lease. Notwithstanding anything to the contrary
set forth in this Lease, if the Commencement Date has not occurred by August 31,
2009 due to Landlord Delay (as defined in Paragraph 7.1(a) of Exhibit “C”) or
Landlord’s Work Delay (as defined in Section 7.3 of Exhibit “C”), then Landlord
shall reimburse Tenant for the excess amount of the monthly rent paid by Tenant
for its existing office space in Brea, California or for any other office space
Tenant occupies because the landlord of its existing office space refuses to
allow Tenant to remain in its existing office space (collectively, “Existing
Space”) over the amount of monthly rent that is owed by Tenant under its
existing lease for such Existing Space prior to the expiration of the term
thereof, for the period from September 1, 2009 until the Commencement

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Date occurs (but not beyond February 28, 2010) (“Excess Rent”); provided further
that if Tenant is unable to remain in its Existing Space after the termination
of its existing lease and relocates to a temporary location, then Landlord
shall, in addition to reimbursing Tenant for the Excess Rent, reimburse Tenant
for all expenses incurred in packing, moving, and unpacking to a temporary
location, including the costs of rewiring telephone, computer and other
equipment, new stationary, cards, announcements and all other costs that would
not have been incurred but for the “double move.” Tenant will not consent to any
increase in the holdover rent payable by Tenant, or other terms regarding
Tenant’s obligations with respect to holding over in the Existing Space that
could increase Landlord’s obligation hereunder, if not required by Tenant’s
existing landlord or the fee owner of the property where the Existing Space is
located as determined by Tenant in good faith, without Landlord’s prior written
consent. If the Commencement Date has not occurred by October 1, 2009 due to
Landlord Delay or Landlord’s Work Delay, Tenant shall have the right, upon
fifteen (15) days’ notice to Landlord (which notice shall be ineffective if the
Commencement Date has occurred by the end of such fifteen (15) day period) to
terminate this Lease, and in the event of such termination Landlord shall refund
to Tenant the amount of actual out-of-pocket costs Incurred by Tenant, in excess
of the Tenant Improvement Allowance, to design and construct the Tenant
Improvements, within ten (10) days of receipt of reasonable evidence of such
costs. Without limiting all other remedies and rights of Tenant under this Lease
(including recovery of Excess Rent), if the Commencement Date has not occurred
by September 1, 2009 due to Landlord Delay or Landlord’s Work Delay and this
Lease has not been terminated pursuant to the preceding sentence, then following
the Commencement Date, Tenant shall receive a rent credit equal to three
(3) days of Base Rent for each day after September 1, 2009 that the Commencement
Date fails to occur due to Landlord Delay or Landlord’s Work Delay. By way of
example, if the Commencement Date does not occur until September 15, 2009 due to
Landlord Delay, then Tenant shall receive a Base Rent credit equal to forty-five
(45) days of Base Rent.
     2.3 Renewal Term.
          2.3.1 Provided that a monetary Event of Default is not in existence as
of the date of exercise of the Renewal Option, Tenant shall have one (1) option
to renew this Lease (“Renewal Option”) for the entire Premises for a period of
five (5) years (the “Renewal Term”) commencing on the first day after the Lease
Expiration Date (“Renewal Term Commencement Date”). The Renewal Option shall be
exercisable by Tenant giving written notice (“Renewal Notice”) to Landlord of
its exercise of the Renewal Option at least nine (9) months, but not more than
fifteen (15) months, prior to the expiration of the initial Term of the Lease.
          2.3.2 The Base Rent payable hereunder for the Premises during the
Renewal Term shall be adjusted to the Fair Market Rental Rate (as defined in
Section 2.4 below) as of the Renewal Term Commencement Date. In order to
determine the Fair Market Rental Rate for the Renewal Term, Landlord and Tenant
ten (10) days after the date on which the Renewal Notice is given by Tenant (but
not earlier than twelve (12) months prior to the Renewal Term Commencement
Date), shall commence discussions to endeavor to agree upon the applicable Fair
Market Rental Rate. In the event Landlord and Tenant do not agree upon such rate
within twenty (20) days after the expiration of said ten (10) day period, on the
twenty-fifth (25th) day after the expiration of said ten (10) day period,
Landlord and Tenant shall each simultaneously submit to the other in writing its
good faith estimate of the Fair Market Rental Rate. If the higher of said
estimates is not more than one hundred and five percent (105%) of the lower of
such estimates, the Fair Market Rental Rate in question shall be deemed to be
the average of the submitted rates. If otherwise, then the rate shall be set by
arbitration to be held in Irvine, California in accordance with the Real Estate
Valuation Arbitration Rules of the American Arbitration Association, except that
the arbitration shall be conducted by a single arbitrator mutually acceptable to
the parties and otherwise appointed in accordance with the rules of the American
Arbitration Association and shall be on the basis that the arbitrator shall pick
one of the two rates submitted, being the rate which is closer to the Fair
Market Rental Rate as determined by the arbitrator using the definition set
forth in Section 2.4 below. The parties agree to be bound by the decision of the
arbitrator, which shall be final and non-appealable, and shall share equally the
costs of arbitration, and judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof.
          2.3.3 During the Renewal Term, Tenant shall pay Additional Rent in
accordance with the provisions of Article 4, but with a Base Year determined in
connection with the determination of the Fair Market Rental Rate.
          2.3.4 The Renewal Option set forth in this Section 2.3 is personal to
Tenant and may not be assigned, transferred or conveyed to any party, except in
connection with an assignment of the Lease in its entirety to an Affiliate or
Successor of Tenant (as defined in Section 15.1).
     2.4 Fair Market Rental Rate. The phrase “Fair Market Rental Rate” shall
mean the fair market value annual rental rate which Landlord and other landlords
leasing space of comparable type, size, level of improvement, quality and floor
height in first class office buildings comparably located would obtain, at or
about the time of the determination of the Fair Market Rental Rate, from any
prospective tenant for general office use of such space. Fair Market Rental Rate
shall take into account the value of any rent or equivalent economic concessions
then usually and customarily given in connection with the leasing of such
comparable space for a comparable lease term including such items as the amount
and quality of existing or new tenant improvements provided by the landlord,
tenant improvement allowances (taking into account the level of existing tenant
improvements which, in determining the Fair Market Rental Rate for the Renewal
Term, shall be deemed suitable for Tenant, but Tenant shall be entitled to
repair and refurbishment of such existing tenant improvements to the extent such
repair or refurbishment is available in comparable transactions and the Premises
require the same), free rent and the level of any escalation base or “stop” for
such comparable space, but excluding brokerage commission obligations. Solely as
an example to illustrate the operation of this Section 2.4, if comparable space
leases in the Project (or in comparable buildings for similar space) give a
tenant space for $40.00 per square foot of Rentable Area, with a $6.00 per
square foot tax and operating expense base amount, give four (4) months free
rent, and an allowance of $40.00 per square foot of Usable Area for tenant
improvements in unimproved space, and if the space has not been improved
previously for occupancy, the Fair Market Rental Rate shall not be $40.00 per
square foot of Rentable Area only, but, after taking into account any of such
concessions to which Tenant is entitled under this Lease, shall also account for
the value of the $6.00 per square foot tax and operating expense base amount,
four (4) months free rent and $40.00 per square foot of Usable Area tenant
improvement allowance.
ARTICLE 3
RENT; LATE CHARGES
     3.1 Base Rent; Rent.
          3.1.1 Tenant agrees to pay during the Term of this Lease as Base Rent
(“Base Rent”) for the Premises the sums shown for such periods in Item 4 of the
Basic Lease Provisions.

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          3.1.2 Except as expressly provided to the contrary herein, Base Rent
shall be payable in equal consecutive monthly installments, in advance, without
abatement, deduction or offset (except as expressly provided herein), commencing
on the Commencement Date and continuing on the first day of each calendar month
thereafter, or, in the event the first day of a calendar month is not a business
day, then the next business day, except that the amount of Ninety-Two Thousand
Two Hundred and 60/100 Dollars ($92,200.60) shall be paid to Landlord upon
Tenant’s execution hereof and shall be applied by Landlord to the first payment
of Base Rent due hereunder. If the Commencement Date is a day other than the
first day of a calendar month, then the Base Rent for the Partial Lease Month
(the “Partial Lease Month Rent”) shall be calculated on a per diem basis
determined by dividing the initial Monthly Base Rent shown in Item 4 of the
Basic Lease Provisions by the actual number of days in such Partial Lease Month
and by multiplying such amount by the number of remaining days of such month
from and including the Commencement Date. Base Rent, all forms of Additional
Rent (defined below) payable hereunder by Tenant and all other amounts, fees,
payments or charges payable hereunder by Tenant shall (i) each constitute rent
payable hereunder (and shall sometimes collectively be referred to herein as
“Rent”), (ii) be payable to Landlord when due without any prior notice or demand
therefor (except as otherwise expressly required under this Lease) in lawful
money of the United States and without any abatement, offset or deduction
whatsoever (except as expressly provided herein) and (iii) be payable to
Landlord at the address of Landlord described in Item 11 of the Basic Lease
Provisions or to such other person or to such other place as Landlord may from
time to time designate in writing to Tenant.
          3.1.3 Notwithstanding anything to the contrary in this Lease, all of
Tenant’s obligations to pay Base Rent (as set forth in Section 4 of the Basic
Lease Provisions) and Additional Rent under Article 4 of this Lease shall be
fully abated for each of the second (2nd), third (3rd), fourth (4th), fifth
(5th), sixth (6th) and seventh (7th) months of the Initial Term (the aggregate
amount of Rent so abated is referred to herein as the “Abated Rent Amount”).
          3.1.4 No payment by Tenant or receipt by Landlord of a lesser amount
than the correct Rent due hereunder shall be deemed to be other than a payment
on account; nor shall any endorsement or statement on any check or any letter
accompanying any check or payment be deemed to effect or evidence an accord and
satisfaction; and Landlord may accept such check or payment without prejudice to
Landlord’s right to recover the balance or pursue any other remedy in this Lease
or at law or in equity provided.
     3.2 Late Charge; Interest. Tenant acknowledges that the late payment of
Base Rent, Additional Rent or any other amounts payable by Tenant to Landlord
hereunder will cause Landlord to incur administrative costs and other damages,
the exact amount of which would be impracticable or extremely difficult to
ascertain. Landlord and Tenant agree that if Landlord does not receive any such
payment on or before the date that is seven (7) days after the date the payment
is due, Tenant shall pay to Landlord, as Additional Rent, (i) a late charge
(“Late Charge”) equal to three percent (3%) of the overdue amount to cover such
additional administrative costs, and (ii) interest on all delinquent amounts at
the lesser of (l) the Interest Rate (as hereinafter defined) or (2) the maximum
amount allowed by law, from the date due until the date paid. Notwithstanding
the foregoing, Tenant shall not be obligated to pay the Late Charge for the
first two (2) late payments in any consecutive twelve (12) month period,
provided each such payment is not outstanding more than five (5) business days
after notice thereof from Landlord to Tenant stating that payment was not made
or received when due. For purposes of this Lease, the “Interest Rate” shall mean
the floating commercial loan rate announced from time to time by such national
recognized money-center bank as Landlord shall in good faith select, as its
prime or reference rate, plus 2% per annum.
     3.3 Additional Rent. For purposes of this Lease, all amounts (other than
Base Rent) payable by Tenant to Landlord pursuant to this Lease, whether or not
denominated as such, shall constitute additional rent (“Additional Rent”)
hereunder.
ARTICLE 4
ADDITIONAL RENTAL
     4.1 Payment of Excess Operating Expenses and Property Taxes. Subject to the
provisions of this Lease, in addition to paying Base Rent pursuant to Article 3
of this Lease, with respect to each Expense Year (defined below), Tenant shall
also pay as Additional Rent Tenant’s Percentage Share of the positive excess, if
any, of the Operating Expenses (defined below) allocable hereunder to such
Expense Year over Operating Expenses allocable hereunder to the Base Year.
Subject to the provisions of this Lease, in addition to paying Base Rent
pursuant to Article 3 of this Lease, with respect to each Expense Year Tenant
shall also pay as Additional Rent Tenant’s Percentage Share of the positive
excess, if any, of Property Taxes (defined below) allocable hereunder to such
Expense Year over the Property Taxes allocable hereunder to the Base Year.
Subject to the provisions of this Lease, in addition to paying Base Rent
pursuant to Article 3 of this Lease, with respect to each Expense Year Tenant
shall also pay as Additional Rent the Utility Excess (as defined in Section 8.2
below), if any.
     4.2 Definitions.
          4.2.1 “Base Year” shall mean the calendar year specified in Item 5.1
of the Basic Lease Provisions. However, the Base Year applicable during the
Renewal Term shall be determined as specified in Section 2.3.3 above. “Expense
Year” shall mean each calendar year in which any portion of the Term of this
Lease falls, through and including the calendar year in which the Term of this
Lease expires.
          4.2.2 “Property Taxes” shall mean all real property taxes,
assessments, fees, charges, or impositions and other similar governmental or
quasi-governmental ad valorem or other charges levied on or attributable to the
Building or its ownership, operation or transfer of any and every type, kind,
category or nature, whether direct or indirect, general or special, ordinary or
extraordinary and all taxes, assessments, fees, charges or similar impositions
imposed in lieu or substitution (partially or totally) of the same including,
without limitation (i) all taxes, assessments, levies, charges or impositions on
any interest of Landlord in the Building, the Premises or in this Lease, or on
the occupancy or use of space in the Building or the Premises; (ii) any transit
taxes or charges, business or license fees or taxes, annual or periodic license
or use fees, park and/or school fees, arts charges, parks charges, housing fund
charges; (iii) all taxes, assessments, levies, charges or impositions imposed
for street, refuse, police, sidewalks, fire protection and/or similar services
and/or maintenance, whether previously provided without charge or for a
different charge, whether provided by governmental agencies or private parties,
and whether charged directly or indirectly through a funding mechanism designed
to enhance or augment benefits and/or services provided by governmental or
quasi-governmental agencies; (iv) any possessory taxes charged or levied in lieu
of real estate taxes; and (v) any costs or expenses incurred or expended by
Landlord in investigating, calculating, protesting, appealing or otherwise
attempting to reduce or minimize Property Taxes. Notwithstanding any provision
hereof to the contrary, there shall be excluded from Property taxes (i) all
income taxes, capital stock, inheritance, estate, gift, or any other taxes
imposed upon or measured by Landlord’s gross income or profits unless the same
shall be imposed in lieu of real estate taxes or other ad valorem taxes and
(ii) all documentary

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transfer, mortgage or stamp taxes arising from any direct or indirect transfer
of Landlord’s interest in any part of the Project or the Lease.
          4.2.3 “Operating Expenses” shall mean, subject to Section 4.2.4,
below, all costs, fees, amounts, disbursements and expenses paid or incurred by
or on behalf of Landlord with respect to any Expense Year in connection with the
operation, ownership, maintenance, insurance, restoration, management,
replacement or repair of the Building, or any portion thereof, and to the extent
equitably allocated to the Building in accordance with Section 4.3.2, below, the
Project, or any portion thereof, in a first class manner at least equal to the
quality of the Project as of the Delivery Date, including, without limitation,
amounts paid or incurred with respect to:
               (i) Premiums for property, casualty, liability, rent
interruption, flood, earthquake, terrorism or other types of insurance (if
Landlord elects to provide such coverages, and with no obligation to do so
except as otherwise expressly required by this Lease) carried by Landlord from
time to time, and any commercially standard and reasonable deductibles
thereunder actually paid by Landlord with respect to the Building, excluding the
amount of any deductible in excess of Twenty-Five Thousand Dollars ($25,000.00).
               (ii) Salaries, wages and other amounts paid or payable for
personnel (including, without limitation, the Project manager, Building manager,
superintendent, operation and maintenance staff, the Parking Facilities (defined
below) manager, concierge (if any) and other employees of Landlord not above the
level of general manager), but only to the extent they are involved in the
maintenance and operation of the Building, including contributions and premiums
towards fringe benefits, unemployment taxes and insurance, social security
taxes, disability and worker’s compensation insurance, pension plan
contributions and similar premiums and contributions which may be levied on such
salaries, wages, compensation and benefits and the total charges of any
independent contractors or property managers engaged in the operation, repair,
care, maintenance and cleaning of any portion of the Building.
               (iii) Cleaning expenses, janitorial services, window cleaning,
and garbage and refuse removal.
               (iv) Subject to the limitation on Capital Items in
Section 4.2.3(x), landscaping and hardscape expenses, irrigating, trimming,
mowing, fertilizing, seeding, and replacing plants, trees and hardscape.
               (v) The cost of providing fuel, gas, electricity, water, sewer,
telephone, steam and other utility services to the Common Areas.
               (vi) Subject to the limitations on Capital Items in
Section 4.2.3(x), the cost of maintaining, operating, restoring, renovating,
managing, repairing and replacing components of equipment or machinery,
including, without limitation, heating, refrigeration, ventilation, electrical,
plumbing, mechanical, elevator, escalator, sprinklers, fire/life safety,
security and energy management systems, including service contracts, maintenance
contracts, supplies and parts with respect thereto.
               (vii) The costs of security for, and supervision of, the
Building.
               (viii) Rental, supplies and other costs with respect to the
operation of the management office for the Building.
               (ix) All cost and fees for licenses, certificates, permits and
inspections, and the cost incurred in connection with the implementation of a
transportation system management program or similar program in which
participation is required by any applicable Laws.
               (x) The cost of replacement, repair, acquisition, installation
and modification of (A) carpeting and wallcoverings, ceiling systems and
fixtures in the Common Areas, and other furnishings in the Common Areas, (B)
materials, tools, supplies and equipment purchased by Landlord, but only to the
extent they are used in the maintenance, operation and repair of the Building,
and (C) any other form of improvements, additions, repairs, or replacements to
the Building, the Common Areas of the Project or the systems, equipment or
machinery operated or used in connection with the Building; provided, however,
that with respect to those items described above which constitute a capital
item, addition, repair or improvement (collectively “Capital Items”) in
accordance with generally accepted accounting and management practices, in each
case the cost of each such Capital Item shall be amortized (including interest
on the unamortized cost) over the shorter of (A) the useful life, or (B) the
cost recovery period (i.e., the anticipated period to recover the full cost of
such capital item from cost savings achieved by such capital item), of the
relevant capital item as reasonably determined by Landlord in accordance with
generally accepted accounting and management practices; provided further,
however, that Capital Items shall be included in Operating Expenses only if the
implementation of such items is reasonably anticipated to achieve economies in
the operation, maintenance or repair of the Project or portion thereof (provided
such reasonably anticipated economies are reasonably evident before the capital
cost is incurred in a comparison of the savings reasonably anticipated to be
achieved from the capital item to the amortization of the expected cost of such
capital items as set forth hereinabove), or is required under any Law becoming
effective after the date of this Lease (or as enforced after the date of this
Lease). Nothing set forth in this Section 4.2.3(x) shall limit, curtail or
otherwise affect Landlord’s obligations under Section 7.2.3 below.
               (xi) Attorneys’, accountants’ and consultants’ fees and expenses
reasonably related to the management, operation, administration, maintenance and
repair of the Building, including, but not limited to, such expenses that relate
to seeking or obtaining reductions in or refunds of Property Taxes, or
components thereof, or the costs of contesting the validity of applicability of
any governmental enactments which may reduce Operating Expenses.
               (xii) Property management fee in an amount not to exceed three
percent (3%) of the gross revenues of the Project.
               (xiii) Sales, use and excise taxes on goods and services
purchased by Landlord for the management, maintenance, administration or
operation of the Building.
               (xiv) Payments required under any covenants, conditions and
restrictions pertaining to the Building or any easement, license, parking or
operating agreement or similar instrument which affects the Building.

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               (xv) The costs (except for any Capital Items which shall be
treated in accordance with Section 4.2.3(x) above) of repairing, restoring and
maintaining the Parking Facilities for the Building, including, without
limitation, the resurfacing, restriping and cleaning of such facilities.
               (xvi) Costs of any cost-sharing arrangements with adjacent
properties to the extent such cost-sharing arrangement results in an aggregate
reduction in Operating Expenses.
          4.2.4 Notwithstanding any provision to the contrary in this Lease, the
following costs and expenses shall be excluded from Operating Expenses for
purposes of this Lease:
               (i) expenses relating to leasing space in the Building or Project
(including tenant improvements, leasing and brokerage commissions and
advertising expenses);
               (ii) legal fees and disbursements incurred for collection of
tenant accounts or negotiation of leases, or relating to disputes between
Landlord and other tenants and occupants of the Building or Project;
               (iii) any costs for any Capital Items unless specifically
permitted by Section 4.2.3, parts (i) through (xvi), inclusive;
               (iv) Property Taxes;
               (v) costs of any items to the extent Landlord receives insurance
proceeds or reimbursement from third parties to cover such costs;
               (vi) except to the extent specifically provided in Section 4.2.3,
parts (i) through (xvii), inclusive, depreciation or payments of principal and
interest on any mortgages upon the Building;
               (vii) payments of ground rent pursuant to any ground lease
covering the Building;
               (viii) subject to Section 4.3.1, the costs of gas, steam or other
fuel; operation of elevators and security systems; heating, cooling, air
conditioning and ventilating; chilled water, hot and cold domestic water, sewer
and other utilities or any other service work or facility or benefit, or level
or amount thereof, provided to any other tenant or occupant in the Building or
Project which either (a) is not required to be supplied or furnished by Landlord
to Tenant under the provisions of this Lease or (b) is supplied or furnished to
Tenant pursuant to the terms of this Lease with separate or additional charge;
               (ix) the cost of any Tenant Improvements and any Landlord’s Work
(as such terms are defined in the Work Letter), and the cost of correcting any
latent defects in me Landlord’s Work;
               (x) any costs for which Landlord is reimbursed by any tenant or
occupant of the Building or the Project or by insurance carried by Landlord,
Tenant or any other party, or self-insurance, or covered by any warranty to the
extent such amounts are actually received by Landlord;
               (xi) except to the extent specifically provided otherwise in this
Lease, and except as to the management fees payable to Landlord or its
subdivisions or affiliates, the overhead and profit increments paid to Landlord,
or to any subdivision or affiliate of Landlord, for goods and/or services in the
Building, to the extent such overhead and profit increments exceed the costs of
comparable, first-class, high quality goods and/or services, delivered or
rendered by unaffiliated third parties of comparable reputation, stature,
experience and quality to Landlord, on a competitive basis;
               (xii) costs incurred in developing and leasing the Building and
the Project, including, without limitation, architectural fees, engineering
fees, space planning fees, broker’s commissions, advertising, promotional or
marketing costs and attorney and other professional fees;
               (xiii) except as specifically set forth in Section 4.2.3 above,
depreciation, amortization, interest, principal and other payments on mortgages
and any other form of monetary encumbrance or any form of financing of Landlord
relating to the Project, and any other cost or expense relating or required
pursuant to or on account of any such mortgage, encumbrance or financing, if
any;
               (xiv) any reserves for bad debts or rent loss, or similar losses,
or capital reserves for ownership of the Project;
               (xv) Landlord’s general corporate overhead and general
administrative expenses not related to the operation of the Building and all
compensation to executives, officers or partners of Landlord or to persons who
are executives or officers of partners of Landlord or to any other person at or
above the level of building manager, other than the Project manager;
               (xvi) interest, fines or penalties assessed as a result of
Landlord’s failure to make payments in a timely manner, including without
limitation, Property Taxes;
               (xvii) any expenses of any employee who does not devote
substantially all of his or her employed time to the management, operation or
maintenance of the Project unless such wages, benefits and expenses are
reasonably and equitably prorated to reflect time spent on operating and
managing the Project vis-à-vis time spent on matters unrelated to operating and
managing the Project;
               (xviii) any cost or expense related to the removal, abatement,
cleanup, containment or remediation of any Hazardous Materials (as hereinafter
defined), including without limitation, hazardous substances in the ground water
or soil, unless the Hazardous Materials were in or on the Building or the
Project as a result of the negligence or willful misconduct of Tenant or its
agents or employees (provided, however, that unless caused by the negligence or
willful misconduct of Landlord, its agents or employees or in violation of
Landlord’s obligations under this Lease, Operating Expenses shall include costs
incurred in connection with the clean-up, remediation, monitoring, management
and administration of Hazardous Materials used in accordance with all applicable
Laws by Landlord after the Commencement Date and reasonably

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required for the operation, repair and maintenance of the Project to perform
Landlord’s obligations under this Lease (such as, without limitation, fuel oil
for generators, cleaning solvents, and lubricants) and which are customarily
found or required in first-class office buildings);
               (xix) costs, including permit, license and inspection costs and
any allowances or other tenant improvement concessions, incurred or provided
with respect to the design, construction and/or installation of other tenants’
or occupants’ improvements made for tenants or other occupants in the Project or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant space for tenants or other occupants in the Project;
               (xx) except for making repairs or keeping permanent systems in
operation while repairs are being made, rentals and other related expenses
incurred in leasing air conditioning systems, elevators or other equipment
ordinarily considered to be of a capital nature, except equipment not affixed to
the Building or Project which is used in providing janitorial or similar
services;
               (xxi) to the extent applicable, electric power costs or other
utility costs for which any tenant directly contracts with the local public
service company (but Landlord shall have the right to “gross up” as if the floor
was vacant);
               (xxii) costs arising from Landlord’s charitable or political
contributions;
               (xxiii) costs arising from Landlord’s warranties to bring the
Building Property (as defined in Section 7.2.2 below) into compliance with Laws
and to correct certain water intrusion defects (if any) pursuant to
Sections 7.2.2, 7.2.3 and 9.1 of this Lease;
               (xxiv) costs arising from any breach of this Lease by Landlord;
               (xxv) costs incurred in bringing the Project into compliance with
the Current CC&Rs in effect on the Commencement Date;
               (xxvi) costs of repairs and replacements of the Building
Structure and/or Building Systems, except (A) as expressly permitted under
Section 4.2.3(x) in the case of Capital Items, and (B) minor repairs and
replacements which do not constitute Capital Items and are not required due to
defects in existence on the Commencement Date;
               (xxvii) any cost or expense related to the removal, abatement,
cleanup, containment or remediation of any mold, unless the presence of such
mold in the Building or Project resulted from the negligence or willful
misconduct of Tenant or its agents or employees; and
               (xxviii) any other costs or expenses customarily excluded from
operating expenses under Institutional Owner Practices.
          4.2.5 “Tenant’s Percentage Share” shall mean the percentage set forth
in Item 5.2 of the Basic Lease Provisions; provided, however, that Landlord
shall as appropriate during the Term of this Lease recalculate Tenant’s
Percentage Share (based solely on the increase or decrease of tenantable space
or re-measurement of space in the Project), in which case Tenant’s Percentage
Share shall be calculated by dividing the number of square feet of Rentable Area
in the Premises by the number of square feet of Rentable Area in the Building
and expressing such quotient in the form of a percentage.
     4.3 Calculation Methods and Adjustments.
          4.3.1 Operating Expenses shall be adjusted to reflect one hundred
percent (100%) occupancy of the Building during any period in which the Building
is not one hundred percent (100%) occupied.
          4.3.2 As of the date of this Lease, the Project includes the buildings
located at 100, 120, 130 and 140 South State College Boulevard and the Operating
Expenses incurred for the common areas shared by the Building and buildings 100,
120 and 140 shall be equitably allocated to the Building in accordance with
generally accepted accounting and management practices. Landlord shall have the
right, from time to time, to add or remove buildings to (i) the Project and/or
(ii) the calculation of Operating Expenses and then equitably allocate some or
all of the Operating Expenses and/or Property Taxes among different buildings
(including any additional buildings) of the Project in accordance with generally
accepted accounting and management practices. In such event, Landlord shall
reasonably determine a method of allocating such Operating Expenses and/or
Property Taxes attributable to such other buildings of the Project to the
Building and Tenant shall be responsible for paying Tenant’s Percentage Share of
such expenses; provided, however, no such allocation shall result in Tenant’s
monetary obligations under this Lease being increased.
          4.3.3 Subject to the provisions of this Section 4.3.3, all
calculations, determinations, allocations and decisions to be made hereunder
with respect to Operating Expenses or Property Taxes shall be made in accordance
with generally accepted accounting and management practices. Landlord shall have
the right to equitably allocate some or all of Operating Expenses among
particular classes or groups of tenants in the Project (for example, retail
tenants) to reflect Landlord’s reasonable determination that measurably
different amounts or types of services, work or benefits associated with
Operating Expenses are being provided to or conferred upon such classes or
groups. Subject to the provisions of this Section 4.3.3, from time to time
Landlord shall have the right to expand or contract the amount, scope, level or
types of services, work, items or benefits, the cost of which is included within
Operating Expenses, so long as Landlord’s treatment of the same for purposes of
the calculation of Operating Expenses is generally consistent with generally
accepted accounting and management practices. Whenever services, benefits or
work are provided to the Building and to additional projects (where allocation
of the cost thereof among such projects is required for calculation of Operating
Expenses hereunder), in allocating the overall cost thereof (for all such
projects) to Operating Expenses hereunder, there shall be excluded from
Operating Expenses Landlord’s reasonable determination of the additional overall
cost comparison allocable to the provision of such services, benefits or work to
the additional projects. All discounts, reimbursements, rebates, refunds, or
credits (collectively, “Reimbursements”) attributable to Operating Expenses or
Property Taxes received by Landlord in a particular year shall be deducted from
Operating Expenses or Property Taxes in the year the same are received. Landlord
shall have the right to exclude from Base Year Operating Expenses the cost of
items of service, work or benefits (i) not provided following the Base Year, and
(ii) amortized costs relating to capital improvements the amortized cost of
which are included in Operating Expenses during the Base Year and are not
included in any subsequent Expense Year (because the cost thereof has been fully
amortized). All assessments and premiums of Operating

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Expenses or Property Taxes which can be paid by Landlord in periodic
installments shall be paid by Landlord in the maximum number of periodic
installments permitted by Law.
          4.3.4 Subject to applicable Laws and Section 8.2 below, Landlord shall
solely determine in its reasonable discretion all decisions with respect to the
method and manner by which all utility services shall be billed and provided in
the Building, which determinations shall be reasonably made by Landlord on a
basis consistent with the practice of the majority of the institutional owners
of institutional grade first-class office projects in Orange County, California
(“Institutional Owner Practices”).
          4.3.5 In the event and to the extent Landlord incurs costs or expenses
associated with or relating to separate items or categories or subcategories of
Operating Expenses which were not part of Operating Expenses during the entire
Base Year, Operating Expenses for the Base Year shall be deemed increased by the
amounts Landlord would have incurred during the Base Year with respect to such
costs and expenses had such separate items or categories or subcategories of
Operating Expenses been included in Operating Expenses during the entire Base
Year. For example, any new or additional annual premium resulting from any new
forms or increased amounts of insurance, including earthquake insurance, any
increase in insurance limits or coverage including conversion of coverage from a
single-building policy to a blanket policy, or vice versa , or any decrease in
deductibles in any year after the Base Year, shall be deemed to be included in
Operating Expenses for the Base Year.
     4.4 Payment Procedure; Estimates. During each Expense Year following the
Base Year (a “Comparison Year”), Landlord shall give Tenant at least ten
(10) days prior written notice of its estimate of any increased amounts payable
under Section 4.1 for the Comparison Year: Subject to such notice requirement on
or before the first day of each calendar month during such Comparison Year,
Tenant shall pay to Landlord one-twelfth (1/12th) of such estimated amounts;
provided, however, that, not more often than semi-annually, Landlord may, by
written notice to Tenant, revise its estimate for such Comparison Year, and all
subsequent payments due at least thirty (30) days after Tenant’s receipt of such
notice under this Section 4.4 by Tenant for such Comparison Year shall be based
upon such revised estimate. Landlord shall deliver to; Tenant within one hundred
fifty (150) days after the close of each Comparison Year, a statement of that
Comparison Year’s Property Taxes and Operating Expenses, and Tenant’s Percentage
Share of actual excess Property Taxes and actual Operating Expenses payable for
such Comparison Year pursuant to Section 4.1, as reasonably determined by
Landlord (the “Landlord’s Statement”) and such Landlord’s Statement shall be
binding upon Landlord and Tenant, except as provided in Section 4.5. If the
amount of Tenant’s Percentage Share of actual excess Property Taxes and
Operating Expenses for any Comparison Year is more than the estimated payments
with respect thereto made by Tenant, Tenant shall pay the deficiency to Landlord
within thirty (30) days of Tenant’s receipt of Landlord’s Statement. If the
amount of Tenant’s Percentage Share of actual excess Property Taxes and
Operating Expenses for any Comparison Year is less than the estimated payments
for such Comparison Year made by Tenant, such excess payments shall be credited
against Rent next payable by Tenant under this Lease or, if the Term of this
Lease has expired, such excess shall be paid to Tenant within thirty (30) days
of the delivery by Landlord of Landlord’s Statement. No delay in providing any
Landlord’s Statement described in this Section 4.4 shall act as a waiver of
Landlord’s right to receive payment from Tenant under Section 4.1 above with
respect to Tenant’s Percentage Share of Property Taxes and/or Operating Expenses
for the period covered thereby. Notwithstanding the immediately preceding
sentence, Tenant shall not be responsible for payment of any Property Taxes or
Operating Expenses attributable to any Comparison Year which are first billed to
Tenant more than one (1) year after the expiration of the applicable Comparison
Year (such one (1) year period shall be shortened to six (6) months with respect
to any billings after the Lease Expiration Date), provided that in any event
Tenant shall be responsible for Tenant’s Percentage Share of actual excess
Property Taxes and Operating Expenses which were in dispute or which were
undeterminable, or which are levied by any governmental authority or by any
public utility companies at any time following the Lease Expiration Date which
are attributable to any Comparison Year (provided that Landlord delivers Tenant
a bill for such amounts within six (6) months following Landlord’s receipt of
the bill therefor). If this Lease shall terminate on a day other than the end of
a calendar year, the amount of Tenant’s Percentage Share of actual Property
Taxes and actual Operating Expenses payable under Section 4.1 that is applicable
to the calendar year in which such termination occurs shall be prorated on the
basis that the number of days from January 1 of such calendar year to the
termination date bears to 365. The expiration or early termination of this Lease
shall not affect the obligations of Landlord and Tenant pursuant to this
Section 4.4 to be performed after such expiration or early termination.
     4.5 Records; Audit. Landlord shall maintain in a safe and orderly manner
all of its records pertaining to the Additional Rent payable pursuant to this
Article 4 for a period of three (3) years after the completion of each calendar
year. Landlord shall maintain such records on a current basis and in sufficient
detail to permit adequate review thereof and, at all reasonable times, copies of
such records shall be available to Tenant’s accounting personnel (but not other
representatives except as set forth in this Section 4.5) for such purposes at
the management office of the Project. In connection with such inspection, Tenant
and Tenant’s agents must agree in advance to follow Landlord’s reasonable rules
and regulations regarding inspections of Landlord’s records, and shall execute a
commercially reasonable confidentiality agreement regarding such inspection. If
Tenant disputes the Landlord’s Statement provided under Section 4.4 above,
provided a monetary Event of Default does not exist, Tenant may, by written
notice to Landlord within one hundred twenty (120) days after receipt of
Landlord’s Statement for a particular Comparison Year, cause an audit to be
commenced of the Operating Expenses and Property Taxes for such Comparison Year
by a nationally or regionally recognized firm of certified public accountants on
a non-contingency fee basis, at Tenant’s sole expense, to verify if Landlord’s
Statement was accurate, and for the avoidance of doubt such audit may include
review of whether any expense was properly allocated or charged to Tenant in
accordance with this Lease. If such audit reveals an overpayment of Operating
Expenses and/or Property Taxes for the year covered by such Landlord’s
Statement, then, provided Landlord does not dispute the result of such audit,
Landlord shall refund the overpayment within thirty (30) days. If such audit
reveals an underpayment of Operating Expenses and/or Property Taxes for the year
covered by such Landlord’s Statement then Tenant shall pay the same within
thirty (30) days, or if the Term has expired, within thirty (30) days after
receipt of the audit results. Tenant’s failure to dispute a Landlord’s Statement
and commence an audit of Operating Expenses and Property Taxes within ninety
(90) days after receipt of Landlord’s Statement for a particular Comparison Year
shall constitute Tenant’s acknowledgment of the accuracy of such Landlord’s
Statement. Tenant agrees to keep the results of any audit hereunder
confidential, except as required by law and/or to enforce Tenant’s rights
hereunder. Tenant agrees to pay the cost of any audit hereunder by Tenant;
provided that if it is finally determined with respect to any Comparison Year,
that Landlord has billed Tenant for Tenant’s Percentage Share of Operating
Expenses and Property Taxes more than three percent (3%) in excess of the
Operating Expenses and Property Taxes that Tenant should pay for such Comparison
Year pursuant to the terms of the Lease, then Landlord shall pay the reasonable
cost of such audit.
     4.6 Limitation on Expenses. Operating Expenses payable by Tenant under this
Lease shall be calculated after giving effect to the limitation set forth in
this Section 4.6. Notwithstanding any provision to the contrary in this Lease,
Controllable Expenses (hereinafter defined) shall not increase after the Base
Year by more than five percent (5%) per Expense Year on a compounding and
cumulative basis over the course of the Initial Term. In other words,
Controllable Expenses for the first Expense Year after the Base Year shall not
exceed 105% of the Controllable Expenses for the Base Year, Controllable

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Expenses for the second Expense Year after the Base Year shall not exceed 105%
of the limit on Controllable Expenses for the first Expense Year after the Base
Year; Controllable Expenses for the third Expense Year after the Base Year shall
not exceed 105% of the limit on Controllable Expenses for the second Expense
Year after the Base Year, etc. Landlord shall be solely responsible (as between
Landlord and Tenant) and Tenant shall have no obligation to reimburse Landlord
for any increase in Controllable Expenses above the limits permitted by this
Section 4.6. By way of illustration, if Controllable Expenses were $10.00 per
rentable square foot for the Base Year, then Controllable Expenses for the first
Expense Year following the Base Year shall not exceed $10.50 per rentable square
foot, Controllable Expenses for the second Expense Year following the Base Year
shall not exceed S11.025 per rentable square foot, and Controllable Expenses for
the third Expense Year following the Base Year shall not exceed $11.57625 per
rentable square foot, etc. As used herein, “Controllable Expenses” shall mean
all Operating Expenses allocable to the Common Areas other than the following:
Property Taxes and all other taxes, assessments and governmental charges;
janitorial, cleaning and access control services; utilities; insurance
maintained by Landlord as of the Effective Date or otherwise required by Law or
the terms of this Lease; Landlord’s management fee (which is based on the gross
revenues of the Project); and union wages.
     4.7 Tax Challenge Right. So long as Tenant is leasing all of the Rentable
Area of the Building, Tenant shall have the right to provide Landlord with a
written request to challenge Property Taxes (a “Tax Challenge Notice”). In the
event Tenant delivers such a Tax Challenge Notice, at Landlord’s option, either
(i) Landlord shall diligently pursue claims for reductions in Property Taxes, in
which event Landlord shall provide Tenant with detailed information as to how
Landlord will pursue such claims, or (ii) Tenant may pursue such claims with
Landlord’s concurrence, in the name of Landlord. If Tenant pursues such claims
with Landlord’s concurrence, then the costs of such proceedings shall be paid by
Tenant. If Landlord agrees to pursue such claims, the costs of such proceedings
shall be paid by Landlord and included in Property Taxes in the calendar year
such costs are paid. Tenant may give a Tax Challenge Notice prior to the
issuance of the actual tax bill by the taxing authority. Tenant’s entry into one
or more subleases of the Premises hereunder as permitted by Article 15 below
shall not limit or otherwise affect Tenant’s rights under this Section 4.7.
Notwithstanding anything to the contrary set forth herein, Tenant shall not have
the right to pursue a tax challenge if doing so would violate the CC&Rs (as
defined in Section 7.4 below).
ARTICLE 5
ADDITIONAL TAXES
     In addition to the Base Rent and all other forms of Additional Rent payable
by Tenant hereunder, Tenant shall reimburse Landlord upon demand as Additional
Rent for any and all taxes, impositions or similar fees or charges (other than
any of the same actually included by Landlord in Property Taxes with respect to
the Expense Year in question) payable by or imposed or assessed upon Landlord
upon or with respect to (or measured by or otherwise attributable to the cost or
value of): (i) any fixtures, equipment or other personal property owned or
leased by Tenant located in or about the Premises; (ii) any leasehold
improvements made in or to the Premises by or for Tenant (without regard to
ownership of such improvements) if and to the extent the original cost,
replacement cost or value thereof exceeds the cost of Landlord’s then effective
“Building Standard” tenant improvements, as reasonably determined by Landlord;
(iii) the Rent payable hereunder, including, without limitation, any gross
receipts tax, license fee or excise tax levied by any governmental authority
other than income tax or substitutes in lieu thereof; (iv) the possession,
leasing, operation, management, maintenance, alteration, repair, use or
occupancy of any portion of the Premises; or (v) this transaction.
ARTICLE 6
SECURITY
     6.1 Letter of Credit. Concurrent with Tenant’s execution and delivery of
this Lease, Tenant shall deliver to Landlord an unconditional, irrevocable
letter of credit (“LC”) in the original amount of Seven Hundred Fifty Thousand
Dollars ($750,000) (the “LC Stated Amount”). The LC shall be issued by a
national money center bank or governmental agency reasonably acceptable to
Landlord, and shall be substantially in the form attached hereto as Exhibit “F”.
Landlord hereby approves of Federal Home Loan Bank of San Francisco as the
issuer of the LC. Tenant shall pay all expenses, points and/or fees incurred in
obtaining and renewing the LC. The LC shall be effective from the date of
delivery thereof through the date which is thirty (30) days after the Lease
Expiration Date (the “LC Expiration Date”). The LC may be re-issued, renewed or
replaced for annual periods, provided that the LC Stated Amount is not reduced
except as expressly provided below. Each reissue, renewal or replacement LC
shall be substantially in the form attached hereto as Exhibit “F”, and shall be
subject to Landlord’s prior written approval. Subject to the provisions of
Subparagraphs (1) and (2) immediately below, the LC Stated Amount may be reduced
to the following amounts on the following yearly anniversaries of the
Commencement Date (each a “Reduction Date”):

         
1st anniversary of the Commencement Date
  $ 600,000.00  
2nd anniversary of the Commencement Date
  $ 450,000.00  
3rd anniversary of the Commencement Date
  $ 300,000.00  
4th anniversary of the Commencement Date
  $ 150,000.00  

     (1) Notwithstanding any contrary provision hereof, if a monetary Event of
Default has occurred and is continuing on a Reduction Date, or if a monetary
Event of Default would exist and be continuing on a Reduction Date but Landlord
is barred by applicable law from sending a notice of default to Tenant with
respect thereto, or if Tenant is in monetary default under this Lease and Tenant
has received notice thereof as required by this Lease, but failed to cure such
monetary default within the time period permitted under this Lease or such
lesser time as may remain before a Reduction Date, then the LC Stated Amount
shall not be reduced on such Reduction Date (but shall be reduced upon the
curing of such monetary default, subject, however, to Landlord’s draw on the LC
as permitted hereunder in connection with an Event of Default).
     (2) Notwithstanding any contrary provision hereof, but subject to
Subparagraph (1) above, if Tenant provides to Landlord, not less than thirty
(30) days or more than forty-five (45) days prior to a Reduction Date, evidence
that Tenant has maintained a “total risk-based capital ratio” (as defined in,
and calculated pursuant to, Section 206.5 of Regulation F (12 C.F.R. Part 206))
at least equal to the greater of (i) the minimum total risk-based capital ratio
required to qualify as “Well-capitalized” under Regulation F, or (ii) thirteen
percent (13%), on average during the entire two (2) year period prior to the
applicable Reduction Date, then in lieu of the reduction set forth above, the LC
Stated Amount shall be reduced on the later of (i) such Reduction Date or (ii)
fifteen (15) days after Landlord receives such evidence, as follows:

         
1st anniversary of the Commencement Date
  $ 500,000.00  
2nd anniversary of the Commencement Date
  $ 250,000.00  
3rd anniversary of the Commencement Date
  $ 175,000.00  
4th anniversary of the Commencement Date
  $ 100,000.00  

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For purposes of the foregoing, the evidence provided by Tenant to Landlord shall
be in the form of certified copies of the reports provided by Tenant to its
regulators for purposes of Regulation F compliance.
     6.2 Failure to Reissue, Renew or Replace. If the bank that issues the LC
fails to extend the expiration date thereof through the LC Expiration Date,
and/or if Landlord receives a notice of non-renewal from such bank (as described
in the LC), then Tenant shall provide Landlord with a substitute LC. If Tenant
fails to provide Landlord with a substitute LC in a form reasonably acceptable
to Landlord at least fifteen (15) days prior to the expiration of the then
existing LC, then (i) such failure shall be deemed an Event of Default
hereunder, and (ii) Landlord shall be entitled to draw down the full amount of
the LC then available and apply, use and retain the proceeds thereof in
accordance with Section 6.3.
     6.3 Application of LC and LC Account. Any amount of the LC which is drawn
upon by Landlord, but not used or applied by Landlord shall be held by Landlord
in an account (the “LC Account”) as security for the full and faithful
performance of each of the terms hereof by Tenant, subject to use and
application as set forth below. If an Event of Default shall occur and be
continuing with respect to any provision of this Lease, including, but not
limited to, the provisions relating to the payment of rent, or an Event of
Default would exist under the Lease but Landlord is barred by applicable law
from sending a notice of default to Tenant with respect thereto, or in the event
the LC is not renewed or reissued at least fifteen (15) days prior to the
expiration of the then existing LC, Landlord may, but shall not be required to,
draw upon all or any part of the LC and/or LC Account or use, retain or apply
all or any part of the proceeds thereof for the payment of any sum in default
(including past due rent), to repair damages caused by Tenant, to clean the
Premises to the extent Tenant has failed to do so in accordance with this Lease,
or for the payment of any other amount which Landlord may be entitled to spend
under this Lease or become obligated to spend by reason of Tenant’s default or
to compensate Landlord for loss or damage which Landlord may suffer by reason of
Tenant’s default, including without limitation the amounts to which Landlord may
become entitled pursuant to Article 16 below (whether or not such amounts have
been awarded) and any other loss, liability, expense and damages that may accrue
upon Tenant’s default or the act or omission of Tenant or any officer, employee,
agent or invitee of Tenant, and costs and attorneys’ fees incurred by Landlord
to recover possession of the Premises upon a default by Tenant hereunder. The
use, application, retention or draw of the LC and/or LC Account, or any portion
thereof, by Landlord shall not (i) constitute the cure of any default by Tenant
or the waiver of such default except to the extent of the application, (ii)
prevent Landlord from exercising any other remedies provided for under this
Lease or by law, it being intended that Landlord shall not first be required to
proceed against the LC and/or LC Account, or (iii) operate as a limitation on
the amount of any recovery to which Landlord may otherwise be entitled. If any
portion of the LC and/or LC Account is so drawn upon, or any part of the
proceeds thereof is used or applied in accordance with this Lease, Tenant shall,
within five (5) business days after written demand therefor, deposit cash with
Landlord in an amount equal to the draw upon the LC and/or the amount of the LC
Account that was used or applied in accordance with this Lease (so that the
combined amount of the remaining sums available to be drawn upon the LC and the
LC Account balance equals the LC Stated Amount), and Tenant’s failure to do so
shall be an Event of Default under this Lease. The LC Account may be commingled
with other funds of Landlord, shall be held in Landlord’s name, and Tenant shall
not be entitled to any interest or earnings thereon. Notwithstanding any
contrary provision herein, in the event that the total amount of the LC
outstanding plus any amount remaining in the LC Account exceeds the LC Stated
Amount (“Excess Security”), then Landlord shall return the amount of the Excess
Security to Tenant upon Tenant’s request to the extent that such amount is
available in the LC Account.
     6.4 Waiver. Tenant hereby waives the provisions of Section 1950.7 of the
California Civil Code, and all similar or successor provisions of law, now or
hereafter in force, and Landlord and Tenant hereby acknowledge that their entire
agreement with respect to the LC and the LC Account is set forth herein.
     6.5 Expiration of LC. Unless an Event of Default has occurred and is
continuing under this Lease or an Event of Default would exist under the Lease
but Landlord is barred by applicable law from sending a notice of default to
Tenant With respect thereto, within thirty (30) days after the LC Expiration
Date, Landlord shall return any LC previously delivered by Tenant and any
balance remaining in the LC Account after use and application in accordance with
this Article 6, to Tenant (or, at Landlord’s option, to the last assignee, if
any, of Tenant’s interest hereunder), and Tenant shall have no further
obligation to provide the LC.
     6.6 Landlord’s Transfer. Tenant acknowledges that Landlord has the right to
transfer or mortgage its interest in the Building and in this Lease, and Tenant
agrees that in the event of any such transfer or mortgage, Landlord shall have
the right to transfer or assign the LC and/or the LC Account to the transferee
or mortgagee. Upon such transfer or assignment of the LC and/or LC Account, and
provided such transferee or mortgagee expressly assumes all obligations relating
to such LC and/or the LC Account, Landlord shall be deemed released by Tenant
from all liability or obligation for the return of the LC and LC Account, as
applicable, and Tenant shall look solely to such transferee or mortgagee for the
return thereof. Landlord will comply with the transfer requirements set forth in
the LC. Subject to the foregoing, if Landlord transfers or assigns the LC and
Tenant fails to cause the bank that issued the LC to accept such transfer or
assignment, or to issue a replacement LC which complies with the provisions of
this Article 6, such failure shall be an Event of Default hereunder.
     6.7 Bank Obligation. Tenant acknowledges and agrees that the LC is a
separate and independent obligation of the issuing bank to Landlord and that
Tenant is not a third party beneficiary of such obligation, and that Landlord’s
right to draw upon the LC for the full amount due and owing thereunder shall not
be, in any way, restricted, impaired, altered or limited by virtue of any
provision of the United States Bankruptcy Code, including without limitation,
Section 502(b)(6) thereof.
ARTICLE 7
USE OF PREMISES
     7.1 Tenant’s Permitted Use. Tenant shall use the Premises only for Tenant’s
Permitted Use as set forth in Item 9 of the Basic Lease Provisions and shall not
use or permit the Premises to be used for any other purpose. Tenant shall, at
its sole cost and expense, obtain and maintain in full force and effect all
governmental licenses, approvals and permits required to allow Tenant to conduct
Tenant’s Permitted Use. Landlord disclaims any warranty that the Premises are
suitable for Tenant’s use and Tenant acknowledges that it has had a full
opportunity to make its own determination in this regard. In no case shall
Tenant use any portion of the Premises for (i) offices of any health care
professionals or for the provision of any health care services, (ii) any schools
or other training facility (except for in house training of employees of Tenant
and its Affiliates), (iii) any retail or restaurant uses, (iv) any residential
use, or (v) broadcasting radio stations and/or television stations.

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     7.2 Compliance With Laws and Other Requirements.
          7.2.1 Without limiting Landlord’s obligations under Sections 7.2.2,
7.2.3 and 9.1 of this Lease, Tenant shall not do anything in or about the
Premises, the Building or the Project that will in any way violate any
applicable federal, state and local statutes, laws, ordinances, building codes,
rules, regulations, orders and directives of any governmental authority having
jurisdiction (including without limitation any certificate of occupancy and the
ADA) now in force or which may hereafter be enacted (collectively, “Laws”).
Tenant shall, at its sole cost and expense, timely take all action required to
comply with all Laws applicable to the Premises, the Building or the Project
triggered by (a) Tenant’s specific and unique use of the Premises that is
different than use for general office purposes or (b) Tenant’s Alterations.
Tenant shall not use the Premises, or permit the Premises to be used, in any
manner, or do or suffer any act in or about the Premises which: (i) violates or
conflicts with any applicable Law; (ii) except for minor damage which is
promptly repaired and reasonably necessary in connection with approved
Alterations, causes or is reasonably likely to cause damage to the Project, the
Premises or the Building systems, including, without limitation, the life
safety, electrical, heating, ventilation and air conditioning (“HVAC”), plumbing
or sprinkler systems (collectively, the “Building Systems”) for the Building
and/or the Project; (iii) violates a requirement or condition of any policy of
insurance covering the Project and/or the Premises, or increases the cost of
such policy; (iv) constitutes or is reasonably likely to constitute a nuisance;
(v) materially interferes with, or is reasonably likely to materially interfere
with, the transmission or reception of microwave, television, radio, telephone,
or other communication signals by antennae or other facilities located in the
Project; or (vi) violates the Rules and Regulations.
          7.2.2 Except as otherwise set forth in Section 7.2.1, above and
Section 7.2.3 below, Landlord shall take all timely actions to cause the Base
Building, the Building and the portions of the Project, Common Areas and Parking
Facilities owned by Landlord and Landlord’s Work (collectively referred to
herein as the “Building Property”) to be in compliance with all Laws, including,
without limitation, any Law requiring any form of improvement or alteration to
the Building Property or Landlord’s Work. The “Base Building” shall include all
of the structural portions of the Building (the “Building Structure”) and the
Building Systems (defined below).
          7.2.3 Landlord represents and warrants that as of the Commencement
Date, to the best knowledge of Landlord, the Building (other than the Tenant
Improvements and subject to Tenant’s obligations under the last sentence of this
Section 7.2.3) and Landlord’s Work, will comply with all Laws, including
applicable building codes and the requirements of the Americans With
Disabilities Act (“ADA”) in effect as of the Commencement Date. In the event it
is discovered that the foregoing representation is not true at any time
(including by enforcement after the Commencement Date), then Landlord shall
promptly upgrade the Building and/or Premises at Landlord’s sole cost and
expense so as to bring the Building and/or Premises into compliance with such
Laws and ADA in effect as of the Commencement Date. Operating Expenses shall not
include any cost incurred by Landlord in connection with upgrading the Building
and/or Premises to comply with the requirements of Law and the ADA that are in
effect as of the Commencement Date, including payment of all penalties or
damages incurred due to such noncompliance. Notwithstanding the foregoing
provisions of this Section 7.2.3, to the extent that any modifications or
upgrades to the Building are required by Laws (including the ADA) due to
Tenant’s particular manner of use, occupancy, repair or alteration of the
Premises (as opposed to use, occupancy, repair or alteration for normal and
customary office purposes by tenants generally) including, without limitation,
due to Tenant’s construction of a gym in the Premises, then Tenant, and not
Landlord, shall be responsible for the cost of such modifications and upgrades.
     7.3 Hazardous Materials.
          7.3.1 Definitions.
               (i) “Environmental Laws” means and includes all now and hereafter
existing statutes, laws, ordinances, codes, regulations, rules, rulings, orders,
decrees, directives, policies and requirements by any federal, state or local
governmental authority regulating, relating to, or imposing liability or
standards of conduct concerning public health and safety or the environment.
               (ii) “Hazardous Materials” means: (a) any material or substance:
(i) which is defined or becomes defined as a “hazardous substance”, “hazardous
waste,” “infectious waste,” “chemical mixture or substance,” “Toxic Substance”
or “air pollutant” under Environmental Laws; (ii) containing petroleum, crude
oil or any fraction thereof; (iii) containing polychlorinated biphenyls (PCB’s);
(iv) which constitutes asbestos or asbestos-containing material; (v) which is
radioactive; (vi) which is infectious; or (b) any other material or substance
displaying toxic, reactive, ignitable, explosive or corrosive characteristics,
as all such terms are used in their broadest sense.
               (iii) “Handle,” “Handled,” or “Handling” means any installation,
handling, generation, storage, treatment, use, disposal, discharge, release,
manufacture, refinement, emission, abatement, removal, transportation or any
other activity of any other type in connection with or involving Hazardous
Materials.
               (iv) “Environmental Damages” means (a) all actual and proximate
claims, judgments, damages, penalties, fines, costs, liabilities, and losses
(but excluding consequential, special or punitive damages or “Stigma” damages);
(b) all sums paid for settlement of claims, reasonable attorneys’ fees,
consultants’ fees and experts’ fees; and (c) all costs incurred in connection
with investigation or remediation relating to the presence of any Hazardous
Materials in, on, under or about the Premises or otherwise relating to the
Handling of any Hazardous Materials.
          7.3.2 Tenant’s Obligations.
               (i) No Hazardous Materials shall be Handled upon, about, in,
above or beneath the Premises or any portion of the Project by or on behalf of
Tenant, its subtenants or its assignees, or their respective contractors,
clients, officers, directors, employees, agents, or invitees (collectively, a
“Tenant Party”). Notwithstanding the foregoing, normal quantities of those
Hazardous Materials customarily used in the conduct of general administrative
and executive office activities (e.g., copier fluids and cleaning supplies) may
be used and stored at the Premises without Landlord’s prior written consent, but
only in compliance with all applicable Environmental Laws (defined below).
               (ii) Tenant shall, at its sole cost and expense, promptly take
all actions (or at Landlord’s election, reimburse Landlord for taking all
actions) required by any Law (including any Environmental Laws) that arises in
connection with the Handling by Tenant or any other Tenant Party of any
Hazardous Materials upon, about, above or beneath the Premises or any portion of
the Project. Tenant shall take all actions (or at Landlord’s election, reimburse
Landlord for taking all

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actions) necessary to restore the Premises or any portion of the Building to the
condition existing prior to the introduction of Tenant’s Hazardous Materials to
the extent required under any applicable Environmental Laws.
               (iii) Tenant shall indemnify, defend, protect and hold harmless
Landlord and each of the Landlord Parties from and against any and all Claims,
Damages, Costs and Environmental Damages incurred by Landlord and the Landlord
Parties which arise out of any breach by Tenant of any of its obligations under
this Section 7.3.2 and/or any Handling by Tenant or any other Tenant Party of
any Hazardous Materials.
          7.3.3 Landlord’s Obligations.
               (i) Subject to Section 7.3.2, above, in the event that during the
Term of this Lease, it is determined that there exists in, on, under or about
the Premises or Project any Hazardous Materials (other than any Hazardous
Materials that became present in, on, under or about the Project as a result of
the Handling by Tenant or any other any Tenant Party of Hazardous Materials in,
on, under or about the Premises or Project), and if (a) a governmental agency
having jurisdiction with respect to the presence of Hazardous Materials in,
under, on or about the Premises or Project requires remediation of such
Hazardous Materials, or (b) the presence of such Hazardous Materials in, on,
under or about the Premises or Project (i) creates a health or safety hazard for
Tenant’s employees, visitors, customers, agents or any Tenant Party or
(ii) interferes with Tenant’s use of the Premises for the Permitted Use, then
Landlord shall cause such Hazardous Materials to be abated or remediated in
accordance with applicable Environmental Laws.
               (ii) Landlord shall indemnify, defend (with counsel reasonably
approved by Tenant), protect and hold harmless Tenant and each of the Tenant
Parties, from and against any and all Claims, Damages and Costs which arise from
or are related in any way to any contamination of the Premises, Building or the
Project, except to the extent caused by Tenant or a Tenant Party. Landlord’s
obligation to defend, with counsel reasonably approved by Tenant, indemnify and
hold harmless Tenant and the Tenant Parties shall apply in every instance in
which Claims, Damages and Costs are asserted against Tenant and/or the Tenant
Parties solely due to Tenant’s status as a Tenant, occupant or operator of the
Premises, Building or Project. The foregoing indemnification and
responsibilities of Landlord shall survive the termination or expiration of this
Lease.
               (iii) Landlord covenants to Tenant that, to the best knowledge of
Landlord, as of the Effective Date, the Project does not currently contain any
Hazardous Materials in violation of any existing applicable Environmental Laws.
For purposes of this Section, 7.3.3(iii), the phrase “the best knowledge of
Landlord” shall mean the present, actual knowledge of Landlord’s managing agent
for the Project.
     7.4 CC&Rs. Tenant shall not violate the Current CC&Rs (defined below).
Landlord represents that Tenant’s use of the Premises for general office use
will not, in and of itself, violate the Current CC&Rs. The “Current CC&Rs” means
the Declaration of Protective Covenants, Conditions and Restrictions for Brea
Financial Commons recorded August 12, 1982 in the Orange County Official Records
as the same may be amended from time to time. A copy of the Current CC&Rs has
been provided by Landlord to Tenant prior to the Effective Date. Additionally,
Tenant acknowledges that the Project may be subject to any future covenants,
conditions, and restrictions and/or amendments to the Current CC&Rs (in any such
event, the “Future CC&Rs”) which Landlord, in Landlord’s discretion, deems
reasonably necessary or desirable, and Tenant agrees that this Lease shall be
subject and subordinate to the Current CC&Rs and such Future CC&Rs
(collectively, the “CC&Rs”); provided, however, that (i) no Future CC&Rs shall
materially and unreasonably interfere with Tenant’s use of the Premises for
general office use and reasonably incidental uses and (ii) Landlord will not
voluntarily enter into or agree to any Future CC&Rs that would increase Tenant’s
costs and obligations to comply with such Future CC&RS in comparison to the
Current CC&RS. Tenant shall not be responsible for, and as provided in
Section 4.2.4(xxv) above Operating Expenses shall not include, costs incurred in
bringing the Project into compliance with the Current CC&Rs in effect on the
Commencement Date.
ARTICLE 8
UTILITIES AND SERVICES
     8.1 Building Services. Landlord agrees to furnish or cause to be furnished,
subject to the provisions of this Lease, as part of Operating Expenses to the
Premises, the following utilities and services, subject to the conditions and
standards set forth herein:
               8.1.1 Non-attended automatic elevator service.
               8.1.2 Subject to all governmental Laws, rules, regulations and
guidelines applicable thereto, HVAC to the Premises, which in Landlord’s
reasonable judgment is required for the comfortable use and occupancy of the
Premises and meets Institutional Owner Practices for general office purposes,
shall be furnished during the periods from 8:00 a.m. to 6:00 p.m., Monday
through Friday and, upon Tenant’s prior request, from 9:00 a.m. to 1:00 p.m.
Saturday, except New Year’s Eve Day, New Year’s Day, President’s Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Eve Day, Christmas
Day (on the days such holidays are generally observed) and such other holidays
as are generally recognized and observed by Institutional Owner Practices (such
hours and days of operation are herein called “Normal Working Hours”). The HVAC
for the Premises will be in working order when the Premises are delivered to
Tenant. Tenant shall be responsible for and shall pay to Landlord any additional
costs (including, without limitation, the costs of installation of additional
HVAC equipment) reasonably incurred by Landlord because of the failure of the
HVAC system to perform its function due to arrangement of partitioning in the
Premises or changes or alterations thereto or from any use by Tenant of
heat-generating machinery or equipment other than normal office equipment,
including small photocopying machines and personal computers not linked to a
central mainframe at the Premises.
               8.1.3 To the electrical power systems providing electricity to
the Premises electric current as reasonably required for the Permitted Use;
provided, however, that Landlord shall have no obligation under this Section 8.1
to make any modifications, additions, or alterations to the Base Building or to
otherwise perform any action required to increase the electrical supply provided
to the Premises after Landlord has complied with its obligations under the Work
Letter and so long as the power specifications in the Work Letter are
maintained. Tenant’s electrical usage shall be subject to all applicable Laws,
and without Landlord’s prior written consent, Tenant shall not use in the
Premises any equipment or machines that would damage Building Systems by virtue
of their power requirements beyond the capacity required to be provided by
Landlord under this Lease (“Excess Electrical Requirements”). If Tenant shall
require or utilize Excess Electrical Requirements, Tenant shall obtain
Landlord’s prior consent thereto, in Landlord’s reasonable discretion, and
Landlord, at its election may condition its consent upon Tenant’s payment in
advance of Landlord’s total out of pocket cost of designing, installing,
maintaining and providing any

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additional facilities, machinery and equipment required to satisfy such Excess
Electrical Requirements and/or required to restore temperature levels in the
Building to levels that would have existed but for Tenant’s use of Excess
Electrical Requirements. If Tenant’s Excess Electrical Requirements materially
affect the temperature level in the Premises or in the Building, Landlord may,
following written notice to Tenant of such proposed installation and Tenant’s
continued demand for Excess Electrical Requirements despite such notice,
install, at Tenant’s sole cost and expense, any machinery or equipment
(including additional HVAC equipment) necessary to restore the temperature level
to that otherwise required to be provided and Tenant shall, upon demand,
reimburse Landlord for all reasonable, actual costs incurred by Landlord in
connection with such additional equipment or systems. Landlord shall have no
responsibility for the provision of emergency, supplemental or back-up power
(“Back Up Power”) to the Premises.
          8.1.4 City water for drinking and rest room purposes.
          8.1.5 Janitorial and cleaning services conforming to the Landlord’s
Project standards in effect from time to time (which shall be consistent with
Institutional Owner Practices), provided that the Premises are used exclusively
for office purposes and are kept reasonably in order by Tenant. Landlord shall
not be required to provide janitorial services for portions of the Premises used
for preparing or consuming food or beverages, for storage, as a mailroom, or for
a lavatory (other than the Common Area lavatory rooms) other than normal “light”
janitorial services such as emptying of waste containers, standard vacuuming,
mopping, toilet bowl cleaning and sweeping. Landlord shall not be responsible
for more extensive lunch room cleaning such as the washing of dishware or
cleaning any refrigerator located therein.
          Any amounts which Tenant is required to pay to Landlord pursuant to
this Section 8.1 shall be payable within thirty (30) days of Landlord’s invoice
to Tenant and shall constitute Additional Rent. From time to time during the
Term, Landlord shall have the right, with Tenant’s consent not to be
unreasonably withheld, to modify the services provided to Tenant hereunder;
provided, however, such modified services (a) do not materially derogate from
the services provided on the Commencement Date and (b) are consistent with
Institutional Owner Practices, and (c) comply with Tenant’s reasonable security
and other operational requirements. Notwithstanding the foregoing, Tenant’s
consent shall not be required with respect to any modifications required by
applicable Laws.
     8.2 Separately Metered Utilities. The Premises are separately metered for
Utility Services (as hereinafter defined). Tenant shall bear the cost of any
fixture unit charges, hook-up fees, use fees, acreage fees, connection fees or
other similar charges or fees imposed or assessed in connection with any use of
the Premises by Tenant other than for general office purposes. Tenant shall pay,
as a separate monthly cost item and not as part of Operating Expenses for the
Premises, for the cost of all fuel, electricity, gas, water and any other
utilities for the Premises (collectively, the “Utility Services”) used in or
delivered to the Premises during each Comparison Year in excess of the cost of
Utility Services used in or delivered to the Premises for the Base Year
(referred to herein as the “Utility Excess”), provided that if Tenant does not
occupy 100% of the Building during the Base Year, the cost of Utility Services
for the Base Year shall be adjusted to reflect one hundred percent (100%)
occupancy.
     8.3 Tenant Rights and Responsibilities Regarding Utilities and Services.
          8.3.1 Extraordinary Services. Freight and passenger elevator services,
HVAC, electricity, and access to and use of the loading dock facilities will be
available twenty-four (24) hours a day, subject to the provisions of this
Article 8. Landlord may impose a reasonable direct charge and establish
reasonable rules and regulations for any of the following: (a) the use of any
HVAC by Tenant at any time other than during Normal Working Hours; (b) the usage
of any services provided to Tenant (including without limitation, passenger or
freight elevator service, or use of the loading dock facilities by Tenant) at
any time other than during Normal Working Hours; (c) additional or unusual
janitorial services required because of any non-building standard improvements
in the Premises, the carelessness of Tenant, the nature of Tenant’s business
(including the operation of Tenant’s business other than during Normal Working
Hours); and (d) the removal of any refuse and rubbish from the Premises except
for discarded material placed in wastepaper baskets and left for emptying as an
incident to Landlord’s normal cleaning of the Premises. The cost of HVAC
provided outside of Normal Working Hours shall be the “Actual Cost,” which shall
mean the actual costs incurred by Landlord (including Landlord’s reasonable
estimated related administrative cost for the cost of services not already
included in Operating Expenses and if applicable, depreciation related to
increased utilization of HVAC related equipment) in providing the HVAC outside
of Normal Working Hours. The current Actual Cost is $65.00 per hour. The
foregoing direct charges shall be payable by Tenant as Additional Rent on the
next rent payment date after submission of an invoice therefor by Landlord.
          8.3.2 Security Service. Subject to Article 10, Tenant shall have the
right to install its own integrated security system (“Tenant’s Security System”)
in the Premises and in the doorways leading into the Premises from the Common
Areas; provided, however, that Tenant shall coordinate the installation and
operation of Tenant’s Security System with Landlord. Tenant shall be solely
responsible, at Tenant’s sole cost and expense, for the monitoring, operation,
repair and removal of Tenant’s Security System.
          8.3.3 Back-Up Power. Tenant shall be entitled, subject to the
provisions of this Section 8.3.3, at Tenant’s sole cost and expense, to install
one (1) emergency backup generator for the provision of electricity to the
Premises in the event electricity is not otherwise available to the Premises
(the “Tenant Generator”). Tenant shall have the right to install such fuel
tanks, fuel lines, additional risers, conduits, feeders, switchboards,
appurtenances and/or additional electrical equipment in the Premises and/or the
Building (“Tenant Electrical Equipment”) as may be necessary for the use of the
Tenant Generator for service to the Premises and which complies and is
consistent with the specifications for the Tenant Generator and the Tenant
Electrical Equipment approved by Landlord as provided herein. Landlord shall
have the right to approve plans and specifications for such Tenant Generator and
the Tenant Electrical Equipment (“Generator Plans”), which approval shall not be
unreasonably withheld. Such Generator Plans shall include reasonable screening
devices and other appropriate reasonable improvements intended to visually
screen the Tenant Generator and Tenant Electrical Equipment from view by
visitors and tenants in the Project and to mitigate the penetration of noise or
vibration from such Tenant Generator and Tenant Electrical Equipment into the
Common Areas. Landlord’s prior written approval must be obtained by Tenant as to
the location of the Tenant Generator and Tenant Electrical Equipment in the
Project as well as the aesthetic and security aspects of the Tenant Generator
and the Tenant Electrical Equipment to make sure they are consistent with the
quality of the Building and the Project, provided that any aesthetic or security
aspects of the installation of the Tenant Generator that are set forth on the
Generator Plans approved by Landlord shall not require any further approval by
Landlord hereunder. The Tenant Generator and Tenant Electrical Equipment shall
not create any material adverse impact on the Building Systems or on the Project
and must comply with (i) the Generator Plans as approved by Landlord, and
(ii) applicable insurance regulations and applicable Laws. No work on the
installation of the Tenant Generator shall be undertaken unless and until
Landlord has reviewed and approved the Generator Plans. After installation, at
Tenant’s sole expense, Tenant shall insure the Tenant Generator and Tenant
Electrical Equipment as part of Tenant’s property consistent with the provisions
of Section 11.2 below, and Tenant, through Tenant’s contractor reasonably
approved by Landlord, shall maintain

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and repair the Tenant Generator and Tenant Electrical Equipment in accordance
with the provisions of Section 9.2 below. Upon expiration or any earlier
termination of this Lease, at Landlord’s request, Tenant shall, at Tenant’s sole
expense, remove the Tenant Generator and Tenant Electrical Equipment and repair
all damage to the Project or any improvements therein caused by such removal,
including removal of the diesel fuel tank and related equipment and restoration
of the portion of the Common Areas used to house such equipment. All testing,
inspection, repair and replacement of the Tenant Generator and Tenant Electrical
Equipment shall be conducted by Tenant at Tenant’s expense upon reasonable prior
notice to Landlord or on a schedule reasonably approved by Landlord, and shall
be conducted at such time(s) that will cause the least disruption to the
operations of other tenants in the Project as is reasonably practicable. Upon
the expiration or earlier termination of this Lease, Tenant shall provide
Landlord with a report from a qualified environmental consultant which confirms
that there has been no leakage of diesel fuel outside of the diesel fuel tank
installed by Tenant in connection with the Tenant Generator, or if there has
been any such leakage, Tenant shall immediately remediate such leakage at
Tenant’s sole cost and expense and Tenant shall indemnify the Landlord
Indemnified Parties in accordance with Section 11.1 with respect to such
leakage.
          8.3.4 Risers. Tenant, at no additional cost to Tenant for occupying
such spaces or for the use of such, shall have the right to its proportionate
share of the Building’s risers, shafts and conduits for Tenant’s
telecommunication and electrical systems cabling and/or wiring from the point of
entry of such telecommunications and electrical service into the Building to the
Premises and from any other point in or on the Building to the Premises, and for
the distribution of such wiring within the Premises (i.e., for its electrical
wiring from the Tenant Generator, if installed by Tenant, to the Premises).
Tenant shall be provided reasonable access to such risers, shafts and conduits
for Tenant’s installations between the Delivery Date and the Commencement Date
at no cost or expense to Tenant. Tenant’s rights hereunder may not be
transferred to or used by any Transferee or other person or entity in the
business of providing satellite, voice, data or other telecommunications
services to third parties, except to the extent such Transferee or other person
or entity will use the rights hereunder only to service its own satellite,
voice, data and other telecommunications requirements at the Premises.
          8.3.5 Rooftop Equipment.
               (i) As long as this Lease is in full force (a) Tenant shall have
the right, at Tenant’s sole cost and expense, to install, use, operate,
maintain, repair and remove telecommunications, antennae, microwave dish and/or
other similar telecommunications equipment (“Telecommunications Equipment”) and
(b) Tenant shall have the right, at Tenant’s sole cost and expense, subject to
obtaining Landlord’s reasonable approval, to install, use, operate, maintain,
repair and remove HVAC and other rooftop equipment which is customary for the
Permitted Use hereunder including by businesses similar to Tenant (together with
the Telecommunications Equipment, collectively, the “Rooftop Equipment”), on an
area on the roof of the Building (the “Rooftop Equipment Area”) mutually
acceptable to Landlord and Tenant. Landlord agrees to only install and maintain
on the rooftop of the Building such items as are necessary to operate the
Building and Project in accordance with Institutional Owner Practices. The use,
installation, operation, maintenance, repair and removal of the Rooftop
Equipment and the Rooftop Equipment Area shall be subject to all of the terms
and conditions of this Lease (as if the Rooftop Equipment Area were a part of
the Premises), and upon the expiration or earlier termination of the Term of
this Lease, the Rooftop Equipment shall be treated as Tenant’s personal property
under the provisions of Section 10.5.
               (ii) Tenant’s rights under this Section 8.3.5 are personal to
Original Tenant and any Transferees consented to by Landlord, and
notwithstanding the provisions of Article 15 of this Lease, Tenant’s rights
under this Section 8.3.5 are (a) except as expressly provided otherwise in this
Section 8.3.5(ii), not transferable by assignment, subletting or otherwise and
(b) are intended solely for (and may be used solely for) servicing the business
conducted from the Premises. Tenant acknowledges that Landlord expressly
reserves the right: (A) to use all portions of the roof of the Building outside
of the Rooftop Equipment Area (defined above) for any purpose whatsoever, but
which use will not materially interfere with Tenant’s Rooftop Equipment, and (B)
to install (or to require Tenant to install) screening around the Rooftop
Equipment (at Tenant’s sole cost and expense) to be constructed with materials
and in a configuration, size and height approved by Landlord. Tenant hereby
assumes any and all costs, expenses, liabilities and risks associated with the
Rooftop Equipment. Tenant agrees that Landlord is under no obligation to perform
any work or provide any materials to repair any portion of the Building or roof
for construction and installation of the Rooftop Equipment, and that, in no
event, shall Landlord have any obligation in the event of a fire or other
casualty to repair or restore the Rooftop Equipment. Tenant agrees to pay for
all utility hook-up charges necessary for the installation of the Rooftop
Equipment, and Tenant shall pay for all electrical power consumed or used by or
delivered to the Rooftop Equipment. Landlord shall have no liability (whether to
Tenant or to any third party) for any interruption of service and all associated
costs resulting from any such interruption of service shall be the sole
responsibility of Tenant.
               (iii) Tenant shall cause the Rooftop Equipment to comply with,
and shall comply with, all Laws applicable to the installation, use, operation,
maintenance, repair and removal of the Rooftop Equipment. Tenant agrees to
obtain, at its sole cost and expense, all governmental approvals and permits
required for the installation and operation of the Rooftop Equipment, to submit
same to Landlord prior to the installation of any Rooftop Equipment, and to
maintain the same in effect throughout the Term of this Lease. Tenant
acknowledges that Landlord has made no representations or warranties to Tenant
concerning the appropriateness of the Rooftop Equipment Area or Rooftop
Equipment under applicable Laws, or any other representations or warranties
whatsoever with respect to the Rooftop Equipment Area or Rooftop Equipment.
Tenant shall not operate the Rooftop Equipment in such a manner as to cause
(A) interference to any other tenant or licensee who has previously acquired a
right to install communications facilities on the roof of the Project (but not
the Building) or (B) interference with Landlord’s business operations equipment
including telephones, radios, televisions and other electrical equipment in the
Building and Project Upon receipt of notice from Landlord of any breach of its
obligations under this Section 8.3.5(iii), Tenant shall take all commercially
reasonable steps necessary to correct and eliminate interference.
               (iv) Tenant agrees, at its sole cost and expense, to maintain the
Rooftop Equipment and the Rooftop Equipment Area in a safe, clean, neat and
sightly condition and in good order and repair at all times during the Term of
this Lease. Tenant agrees to reimburse Landlord for any expenses incurred by
Landlord for any damage to the roof or any equipment located thereon or any
improvements, fixtures and furnishings therein which results from any work by
Tenant or any Tenant Party. Additionally, Tenant agrees upon removal of the
Rooftop Equipment to, at Tenant’s sole cost and expense, repair and restore the
Rooftop Equipment. Area to its original condition as existed prior to the
installation of the Rooftop Equipment, subject to ordinary wear and tear. The
Rentable Area of the Premises set forth in this Lease and used to calculate Base
Rent does not and shall not include any of the roof space to which Tenant is
given access rights under this Lease.
          8.3.6 UPS/Right to Access Basement. Tenant shall have the right to
access and use the currently existing uninterrupted power supply battery backup
system (the “UPS”) servicing the Premises, at Tenant’s sole risk and at Tenant’s
sole cost and expense. Tenant accepts such UPS in its as-is condition and
acknowledges and agrees that Landlord has not made any representations or
warranties regarding the UPS. Tenant’s use of the UPS shall comply with any
applicable insurance regulations and applicable Laws and shall not cause damage
or injury to the Base Building or the Premises. Tenant

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shall be responsible for all costs related to Tenant’s use of the UPS including
without limitation, costs of maintenance, modifications, repairs and insurance
thereof. Upon the expiration or earlier termination of the Lease Term, Tenant
shall surrender the UPS to Landlord. The UPS is located in the basement of the
Building. Tenant shall have the right during the Term (as the same may be
extended) to access the basement of the Building in order to maintain, inspect,
repair and otherwise access the UPS and related equipment. Tenant agrees to
reimburse Landlord for any expenses incurred by Landlord for any damage to the
basement or any Building Systems or other improvements located therein which
results from any work in the basement by Tenant or any Tenant Party. The
Rentable Area of the Premises set forth in this Lease and used to calculate Base
Rent does not and shall not include any of the basement space to which Tenant is
given access rights under this Lease.
     8.4 Interruption of Services.
          8.4.1 Landlord shall not be liable for any failure to furnish,
stoppage of, or interruption in furnishing any of the services or utilities
described in Section 8.1 when such failure is caused by accident, breakage,
shortages, power outages, repairs, strikes, lockouts, labor disputes, labor
disturbances, governmental regulation, civil disturbances, acts of war,
moratorium or other governmental action, or any other cause beyond Landlord’s
reasonable control, and, in such event, except as expressly provided in
Section 8.4.2, below, Tenant shall not be entitled to any damages nor shall any
failure or interruption abate or suspend Tenant’s obligation to pay Base Rent
and Additional Rent required under this Lease or constitute or be construed as a
constructive or other eviction of Tenant. In the event any governmental or
quasi-governmental authority or public utility promulgates or revises any Law or
issues mandatory controls or voluntary controls relating to the use or
conservation of energy, water, gas, light or electricity, the reduction of
automobile or other emissions, or the provision of any other utility or service,
Landlord may take any reasonably appropriate action to comply with such Law,
mandatory control or voluntary guideline without affecting Tenant’s obligations
hereunder except as expressly provided in Section 8.4.2. Tenant recognizes that
any security services provided by Landlord at the Project are for the protection
of Landlord’s property and under no circumstances shall Landlord be responsible
for, and Tenant waives any rights with respect to, providing security or other
protection for Tenant or its employees, invitees or property in or about the
Premises or the Project. Landlord makes no representation with respect to the
adequacy or fitness of the Project’s HVAC system to maintain temperatures as may
be required for the operation of any computer, data processing or other special
equipment.
          8.4.2 Notwithstanding anything to the contrary set forth in
Section 8.4.1, if the Premises or any portion thereof are rendered untenantable
and are not used by Tenant for a period of five (5) consecutive business days or
ten (10) business days in any twelve (12) month period (the “Eligibility
Period”) as a result of failure in the water, sewage, air conditioning, heating,
ventilating, vertical transportation or electrical systems of the Building, or
as a result of Landlord’s performance of Renovation Work (as defined in
Section 30.24 below), Tenant’s Rent shall be reduced and abated after the
expiration of the Eligibility Period for such time as the Premises or such
portion thereof remain untenantable and are not used by Tenant, in the
proportion that the Rentable Area of the portion of the Premises rendered
untenantable and not used by Tenant bears to the total Rentable Area of the
Premises, provided, however, there shall be no abatement of rent if the failure
of Building Systems is caused in whole or in part by the negligent or willful
acts or omissions of Tenant, its agents, employees, contractors, licensees or
invitees. To the extent rental loss insurance carried by Landlord, the premiums
for which are included in Operating Expenses, covers rent loss for any portion
of the Eligibility Period, the Eligibility Period shall be reduced to the extent
of such coverage. Notwithstanding the foregoing, during any rent abatement under
this Lease, Tenant shall pay Landlord Additional Rent for all services and
utilities provided to and actually used by Tenant during the period of the rent
abatement with respect to any portion of the Premises for which Base Rent is not
being abated or entitled to be abated pursuant to this Section 8.4.2.
ARTICLE 9
MAINTENANCE AND REPAIRS
     9.1 Landlord’s Obligations. Landlord shall keep the Building and the Common
Areas on the Building Property in good working order and repair and in a safe,
clean and neat condition. Subject to Section 9.2, below, Landlord shall make all
necessary repairs, within a reasonable period following receipt of notice from
Tenant (or in the case of emergency, after such oral or written notice, if any,
as may be practical under the circumstances), to the Building Structure
(including the exterior walls, exterior doors and windows of the Building), the
Building Systems, and the Common Areas. If, during the Term (as it may be
renewed), Tenant experiences any damage within the Premises due to any water
seepage through the parapet wall at the raised planter, subject to the
provisions of Section 11.5, Landlord shall promptly, at Landlord’s sole cost,
repair, or replace if necessary, such damage and shall repair the Building
Structure and/or Building Systems to correct such water intrusion, and such
costs shall not be reimbursable as Operating Expenses or Additional Rent.
Without limiting the generality of the foregoing, Landlord covenants and agrees
to enforce all of Landlord’s rights and remedies against Healthy Buildings
International, Inc., as issuer of the Mold Assessment Report and Clearance
Document issued September 9, 2008, for Tenant’s benefit, in the event of any
inaccuracy in the subject report or any water seepage, damage or other problem
which arises during the Term and is covered by the subject report. To the extent
such maintenance and repair is required due to the act (other than ordinary use
as contemplated by this Lease), neglect, misuse, or fault of Tenant, its agents,
employees, contractors, licensees or invitees, Tenant shall pay to Landlord the
cost of such maintenance and repairs except to the extent Tenant has been
relieved of such liability pursuant to this Lease, including, without
limitation, under Section 11.5. Landlord shall perform all repairs to the
Premises and the Building Property (including correction of latent defects and
repairs of the Leasehold Improvements (as defined in Section 11.2.1)) except as
otherwise expressly agreed to be performed by Tenant pursuant to Section 9.2 of
this Lease. The cost of such repairs performed by Landlord shall be included in
Operating Expenses, unless such cost is subject to exclusion pursuant to
Section 4.2.4 above. With respect to Landlord’s repair of damage to Leasehold
Improvements which are required to be insured by Tenant pursuant to
Section 11.2.1, Tenant shall assign and make available such proceeds to Landlord
as a condition precedent to Landlord’s obligation to perform such repairs, and
Tenant shall be responsible for any deductible under such insurance or failure
to provide the required insurance. As a material inducement to Landlord entering
into this Lease, Tenant agrees that Tenant’s sole right to make repairs at
Landlord’s expense shall be as set forth in Section 9.4 below, and Tenant hereby
waives and releases its right to make repairs at Landlord’s expense under
Section 1942 of the California Civil Code or under any other law, statute or
ordinance now or hereafter in effect, and Tenant waives and releases the right
to terminate this Lease under Section 1932(1) of the California Civil Code or
any similar or successor statute.
     9.2 Tenant’s Obligations. During the Term of this Lease, Tenant shall, at
its sole cost and expense, maintain Tenant’s Property (as defined in
Section 11.2.1) in the Premises in good order and repair and in a safe, clean
and neat condition. Tenant shall make all repairs to same (including, without
limitation, all damaged and broken fixtures and appurtenances) with replacements
of any materials to be made by use of materials of equal or better quality.
Further, Tenant shall be responsible for, and upon demand by Landlord shall
promptly reimburse Landlord for, any damage to any portion of the Project or the
Premises caused by (a) activities of Tenant or any Tenant Party in the Building
or the Premises (except normal wear and tear and damage by casualty); (b) the
performance or existence of any alterations, additions or improvements made by
Tenant or any Tenant Party

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in or to the Premises; (c) the installation, use, operation or movement of
Tenant’s property in or about the Building or the Premises; or (d) any act or
omission by Tenant or any Tenant Party or any other person permitted in or
invited to the Premises or the Project by Tenant or any Tenant Party.
     9.3 Landlord’s Rights. Landlord and its contractors shall have the right,
at all reasonable times, to enter upon the Premises to make any repairs to the
Premises or the Building or the Project reasonably required or deemed reasonably
necessary by Landlord and to erect such equipment, including scaffolding, as is
reasonably necessary to effect such repairs. In the event of any failure of
Tenant to perform any of its obligations under this Article 9, or under Article
7, 10 or 11, where such failure remains uncured for thirty (30) days after
delivery by Landlord to Tenant of written notice of such failure (or in the case
of an emergency, after such oral or written notice, if any, as may be practical
under the circumstances), Landlord may (but shall not be obligated to) elect to
perform such obligation of Tenant at Tenant’s sole cost and expense, and in the
event of such performance by Landlord, Tenant shall pay to Landlord, within
thirty (30) days of written demand therefor, Landlord’s actual costs (including
interest at the Interest Rate, overhead, general conditions and administration)
in performing such obligations of Tenant.
     9.4 Tenant’s Right to Perform Actions. Notwithstanding any provision set
forth in this Lease to the contrary, if (a) Tenant provides prior written notice
to Landlord of an event or circumstance which requires the action of Landlord
with respect to a repair, maintenance or service (referred to herein as an
“Action”), (b) Landlord is, in fact, required to perform such Action under the
terms of this Lease, and (c) Landlord fails to commence such Action within a
reasonable period of time, given the circumstances, after the receipt of such
notice, but in any event not later than thirty (30) days after receipt of such
notice (or within three (3) business days in the case of an Emergency (defined
in this Section 9.4, below)), then Tenant may proceed to take the required
Action after delivery of an additional two (2) business days notice to Landlord
and the holder of any Security Documents for which Landlord has given Tenant an
address for notices (such second notice given not earlier than the expiration of
the aforesaid thirty (30) day period) specifying that the thirty (30) day period
has expired, the specific Action required and that Tenant intends to make such
required Action; provided, however, if Tenant reasonably anticipates that a
dispute will result under this Section 9.4, Tenant may, but is not obligated to,
submit the anticipated dispute to arbitration in accordance with Section 9.5 by
written notice given not earlier than ten (10) days after Tenant’s delivery of
the first aforesaid notice. Notwithstanding any other provision hereof, Tenant
shall be entitled to make any such Action only if there is a material adverse
effect on the operation of Tenant’s business or Tenant is unable to occupy a
material portion of the Premises. If Landlord believes that the requested Action
is not required because it is not necessary pursuant to the terms of this Lease,
or if Landlord is already taking the requested Action or other action Landlord
believes appropriate in the circumstances in accordance with its obligations
under this Lease, Landlord shall have the option within said two (2) business
day period to obtain an injunction against Tenant’s performance of such Action
or commence the requested Action. If such Action is required under the terms of
this Lease to be taken by Landlord and is not taken by Landlord within such two
(2) business day period and Landlord has not obtained an injunction against
Tenant, then Tenant shall be entitled to prompt reimbursement by Landlord of
Tenant’s reasonable and necessary, actual out-of-pocket costs and expenses in
taking such Action (and only such Action as specified in the 2-business day
notice given to Landlord) plus interest thereon at the Interest Rate but in no
event in excess of the maximum interest rate permitted by law. Such amounts
shall be promptly reimbursed by Landlord on the receipt from Tenant of a
detailed invoice setting forth a particularized breakdown of the costs and
expenses incurred in connection with the action taken by Tenant. In the event
Tenant takes such action, and such work affects the Building Systems or Building
Structure, Tenant shall use only those contractors used by Landlord in the
Building for work on such systems unless such contractors are unwilling or
unable to perform, or timely perform, such work, in which event Tenant may
utilize the services of any other qualified contractor which normally and
regularly performs similar work in other first class office buildings in the
Brea submarket of Orange County. Further, if Landlord or the holder of any
Security Document does not deliver a detailed written objection to Tenant within
ten (10) days after Landlord’s receipt of an invoice by Tenant of its costs and
expenses of taking such action which Tenant claims should have been taken by
Landlord, and if such invoice from Tenant sets forth a particularized breakdown
of its costs and expenses incurred in connection with taking such action, then
Tenant shall be entitled to deduct from Rent the amount set forth in the
invoice. If, however, Landlord or the holder of any Security Documents delivers
to Tenant within ten (10) days after receipt of Tenant’s invoice, a written
objection to the payment of such invoice, setting forth with reasonable
particularity Landlord’s reasons for its claim that such action did not have to
be taken by Landlord pursuant to the terms of this Lease or that the charges are
excessive (in which case Landlord shall pay the amount it contends would not
have been excessive), then Tenant shall not be entitled to such deduction from
Rent, but as Tenant’s sole remedy, Tenant may submit the dispute to arbitration
in accordance with Section 9.5. If Tenant prevails in the arbitration action and
receives an award, then Tenant shall be entitled to deduct the amount of such
award, together with attorneys’ fees and related arbitration costs to which
Tenant is entitled under Article 17, from the Rents next due and payable under
this Lease if Landlord fails to pay the same within ten (10) days after the date
the award is final. As used in this Section 9.4, an “Emergency” shall be a
situation in which there is an immediate and material threat to life, safety, or
to the operation of Tenant’s business in the Premises.
     9.5 Arbitration. Whenever in Section 9.4 above it is provided that a
dispute may be submitted to arbitration, the arbitration shall be conducted in
Irvine, California, as provided in this Section 9.5. The party desiring such
arbitration shall give written notice thereof to the other specifying the
dispute to be arbitrated. Within twenty (20) days after the date on which the
arbitration procedure is invoked as provided in Section 9.4, each party shall
appoint an experienced arbitrator and notify the other party of the arbitrator’s
name and address. The two arbitrators so appointed shall appoint a third
experienced arbitrator. If the three arbitrators to be so appointed are not
appointed within thirty (30) days after the date the arbitration procedure is
invoked as provided in Section 9.4, then the arbitrator or arbitrators, if any,
who have been selected shall proceed to carry out the arbitration. The
arbitrator or arbitrators so selected shall furnish Landlord and Tenant with a
written decision within thirty (30) days after the date of selection of the last
of the arbitrators to be so selected. Any decision so submitted shall be signed
by a majority of the arbitrators, if more than two have been selected. If only
two arbitrators have been selected and they are unable to agree, then either
Landlord or Tenant shall be entitled to apply to the presiding judge of the
Superior Court of Orange County, California for the selection of a third
arbitrator who shall be selected from a list of names of experienced arbitrators
submitted by Landlord or from a list of names submitted by Tenant, as the case
may be, unless both Landlord and Tenant submit lists of names, in which case the
Court, in its sole discretion, shall select the third arbitrator from the lists.
In designating arbitrators and in deciding the dispute, the arbitrators shall
act in accordance with the Commercial Rules of Arbitration and the Real Estate
Valuation Arbitration Rules then in force of the American Arbitration
Association, subject, however, to such limitations as may be placed upon them by
the provisions of this Lease. The decision of the arbitrators shall be final and
binding upon the parties, and judgment on the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.

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ARTICLE 10
ALTERATIONS, ADDITIONS AND IMPROVEMENTS
     10.1 Landlord’s Work. Subject to Landlord’s Warranties, including repair
obligations, Landlord’s sole construction obligation under this Lease is set
forth in the Work Letter attached hereto as Exhibit “C”.
     10.2 Landlord’s Consent; Conditions. Except for Alterations that (x) cost
less than Fifty Thousand Dollars ($50,000.00) per Alteration (not the aggregate
of all Alterations in a given period), (y) are non-structural and (z) are
cosmetic or decorative, Tenant shall not make or permit to be made any
alterations, additions, or improvements in or to the Premises (“Alterations”)
without first obtaining the prior written consent of Landlord, which consent
shall be requested in writing not less than fifteen (15) business days prior to
the scheduled and actual commencement of any work therein. All such Alterations
(i) shall comply with all applicable Laws; (ii) shall be compatible (as
reasonably determined by Landlord) with the Building and its mechanical,
electrical, heating, ventilating, air-conditioning, and life safety systems;
(iii) shall not be visible from the exterior of the Building or from any Common
Areas; and (iv) shall not affect the structural integrity of the Building. In
addition, Landlord may impose as a condition to such consent such additional
requirements as Landlord in its reasonable discretion deems necessary or
desirable including without limitation: (A) Tenant’s submission to Landlord, for
Landlord’s prior written approval, of all plans and specifications relating to
the Alterations; (B) Landlord’s prior written approval of the time or times when
the Alterations are to be performed; (C) Landlord’s prior written approval of
the contractors and subcontractors performing work in connection with the
Alterations; (D) Tenant’s receipt of all necessary permits and approvals from
all governmental authorities having jurisdiction over the Premises prior to the
construction of the Alterations; (E) Tenant’s written notice of whether the
Alterations include the Handling of any Hazardous Materials; (F) Tenant’s
delivery to Landlord of such insurance as Landlord shall customarily require;
(G) Tenant’s payment to Landlord within thirty (30) days of written demand
therefor of all actual and reasonable out-of-pocket third party structural and
engineering costs and expenses incurred by Landlord’s consultants in accordance
with Institutional Owner Practices; and (H) Tenant’s (and Tenant’s contractor’s)
compliance with such construction rules and regulations and building standards
as Landlord may promulgate from time to time. Except for building code
modifications which are unrelated to Tenant’s Alterations and except for ADA
requirements related to the Building in general (in which case such
modifications shall be performed by Landlord as an Operating Expense subject to
Sections 1.2 and 4.2.4 above and Section 9.1 of this Lease), all direct and
indirect costs relating to any modifications, alterations or improvements of the
Project or the Building, whether outside or inside of the Premises, required by
any governmental agency or by Law as a condition or as the result of any
Alteration requested or effected by Tenant shall be borne by Tenant, and in
connection therewith, with respect to any such alterations or improvements that
are located outside of the Premises, Landlord may elect to perform such
modifications, alterations or improvements (at Tenant’s sole cost and expense)
or require such performance directly by Tenant. The construction of the initial
improvements to the Premises shall be governed by the terms of the Work Letter
and not the terms of this Article 10.
     10.3 Performance of Alterations Work. All work relating to the Alterations
shall be performed in compliance with the plans and specifications approved by
Landlord, all applicable Laws, and the requirements of all carriers of insurance
on the Premises and the Building, the Board of Underwriters, Fire Rating Bureau,
or similar organization. Except for building code modifications which are
unrelated to Tenant’s Alterations and except for ADA requirements related to the
Building in general (in which case such modifications shall be performed by
Landlord as an Operating Expense subject to Sections 1.2 and 4.2.4 above), all
work shall be performed by Tenant at Tenant’s sole cost and expense and shall be
prosecuted to completion in a diligent, first class manner and so as not to
unreasonably interfere with any other tenants or occupants of the Building.
Without Landlord’s prior written consent, which Landlord may withhold in its
reasonable discretion, Tenant shall not use any portion of the Common Areas in
connection with the making of any Alterations, and subject to Tenant’s rights
under Sections 8.3.4 and 8.3.5, Tenant shall not modify or alter any
improvements or components of the Building or the Project outside of the
Premises. Upon completion of any Alterations, Tenant agrees to cause a timely
Notice of Completion to be recorded in the office of the Recorder of Orange
County in accordance with the terms of Section 3093 of the Civil Code of the
State of California or any successor statute, and Tenant shall deliver to the
Building management office, within thirty (30) days following completion of the
Alterations, a reproducible copy of the “as built” drawings of the Alterations
together with a CAD file of the “as built” documents of the Alterations (current
version of AutoCad), if such drawings and/or documents have been obtained by
Tenant in connection with the Alterations.
     10.4 Liens. Tenant shall pay when due all costs for work performed and
materials supplied to the Premises. Tenant shall keep Landlord, the Premises and
the Project free from all liens, stop notices and violation notices relating to
the Alterations or any other work performed for, materials furnished to or
obligations incurred by Tenant and Tenant shall indemnify, defend and hold
harmless Landlord, the Premises and the Project of and from any and all loss,
cost, damage, liability and expense, including attorneys’ fees, arising out of
or related to any such liens or notices. Tenant shall give Landlord not less
than seven (7) business days prior written notice before commencing any
Alterations in or about the Premises to permit Landlord to post appropriate
notices of non-responsibility. During the progress of such work, Tenant shall,
upon Landlord’s request, furnish Landlord with sworn contractor’s statements and
lien waivers covering all work theretofore performed. Tenant shall remove all
liens, stop notices or other claims or encumbrances, by bond or otherwise,
within ten (10) business days after Landlord notifies Tenant in writing that any
such lien, stop notice, claim or encumbrance has been filed. If Tenant fails to
remove such lien, claim or encumbrance, by bond or otherwise, within such ten
(10) business day period, Landlord, at its election, may pay and satisfy the
same and in such event the sums so paid by Landlord, with interest from the date
of payment at the Interest Rate, shall be deemed to be Additional Rent due and
payable by Tenant at once without notice or demand.
     10.5 Surrender. Upon expiration or earlier termination of this Lease,
Tenant shall surrender the Premises to Landlord in its then improved, broom
clean condition, subject to ordinary wear and tear. Except as otherwise provided
herein, all Alterations and the Tenant Improvements shall become a part of the
Premises and shall become the property of Landlord upon the expiration or
earlier termination of this Lease. Tenant shall not be required to remove any
Tenant Improvements (other than cabling) completed prior to the Commencement
Date. Tenant shall not be required to remove any Alterations from the Premises
unless Landlord conditioned its consent upon such removal by written notice to
Tenant at the time Landlord first consented to the Alteration. If Landlord
conditioned its consent on Tenant’s obligation to remove any Alterations from
the Premises, Tenant shall promptly remove prior to the date of such expiration
or termination the Alterations designated by Landlord to be so removed and shall
promptly restore, patch and repair any resulting damage, all at Tenant’s sole
expense. All business and trade fixtures, machinery and equipment, furniture,
movable partitions, wallcoverings, telecommunications equipment, data cabling
and items of personal property owned by Tenant or installed by Tenant at its
expense in the Premises shall be and remain the property of Tenant; upon the
expiration or earlier termination of this Lease, Tenant shall, at its sole
expense, remove all such items and repair any damage to the Premises or the
Project caused by such removal. If Tenant fails to remove any such items or
repair such damage promptly after the expiration or earlier termination of this
Lease, Tenant shall be deemed to have abandoned the same, in

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which case Landlord may store the same at Tenant’s expense (and Tenant shall pay
Landlord the cost thereof within thirty (30) days of demand) and thereafter
dispose of the same in any manner permitted by applicable Laws.
ARTICLE 11
INDEMNIFICATION AND INSURANCE
     11.1 Waiver of Liability and Indemnification.
          11.1.1 Subject to Section 11.5 below, Tenant shall indemnify, protect,
defend and hold harmless, Landlord, its officers, directors, partners, members,
agents, attorneys and employees, and any affiliate of Landlord, including
without limitation, any corporations or any other entities controlling,
controlled by or under common control with Landlord (collectively, “Landlord
Indemnified Parties”), from and against any and all claims, suits, demands,
liability, damages and expenses, including attorneys’ fees and costs
(collectively, “Claims, Damages and Costs”) (but excluding injury to or
interference with Landlord’s or any Landlord Indemnified Parties’ business and
any consequential damages), arising from or in connection with Tenant’s use or
alteration of the Premises or the conduct of its business or from any activity
performed or permitted by Tenant in or about the Premises, the Building or any
part of the Project during the Term or prior to the Commencement Date if Tenant
has been provided access to the Premises, the Building or any part of the
Project for any purpose, or arising from any breach or default in the
performance of any obligation on Tenant’s part to be performed under the terms
of this Lease, or arising from Tenant’s use of the Building Systems in excess of
their capacity or arising from any other act, neglect, fault or omission of
Tenant or any of its officers, agents, directors, contractors, employees,
subtenants, assignees, licensees or invitees. If any action or proceeding is
brought against any of the Landlord Indemnified Parties for an Claims, Damages
and Costs for which Tenant is required to indemnify the Landlord Indemnified
Parties under this Section 11.1.1, Tenant, upon notice from Landlord, shall
defend the same at Tenant’s expense with counsel approved by Landlord, which
approval shall not be unreasonably withheld. Tenant’s obligations under this
Section 11.1.1 shall survive the expiration or earlier termination of this
Lease. Notwithstanding any provision to the contrary in this Lease, in no event
shall Tenant be required to indemnify or defend Landlord for any Claims, Damages
and Costs to the extent arising from Landlord’s negligence or willful
misconduct.
          11.1.2 As a material part of the consideration to the Landlord for
entering into this Lease, Tenant hereby assumes all risk of and releases,
discharges and holds harmless Landlord from and against any and all liability to
Tenant for damage to property or injury to persons in, upon or about the
Premises from any cause whatsoever, except as provided in Section 11.1.3 below.
In no event shall Landlord be liable to Tenant for any injury to any person in
or about the Premises or damage to the Premises or for any loss, damage or
injury to any property of Tenant therein or by any malfunction of any utility or
other equipment, installation or system, or by the rupture, leakage or overflow
of any plumbing or other pipes, including without limitation, water, steam and
refrigeration lines, sprinklers, tanks, drains, drinking fountains or similar
cause in, about or upon the Premises, the Building or any other portion of the
Project, except as provided in Section 11.1.3 below.
          11.1.3 Notwithstanding the provisions of Sections 11.1.1 and 11.1.2 to
the contrary, but subject to the limitation on Landlord’s liability set forth in
Section 24.1 and subject to Section 11.5, Landlord shall indemnify, protect,
defend and hold harmless Tenant and its officers, directors, partners, agents,
shareholders, attorneys, employees and any affiliate of Tenant, including
without limitation, any corporations or any other entities controlling,
controlled by or under common control with Tenant and their respective
successors and assigns (collectively, “Tenant Indemnified Parties”), from and
against any Claims, Damages and Costs (but excluding injury to or interference
with Tenant’s or any Tenant Indemnified Parties’ business and any consequential
damages), to the extent arising or resulting from (i) the negligence or willful
misconduct of Landlord, or any of its agents, contractors or employees (but only
to the extent such agents, contractors and employees are acting within the scope
of their relationship with Landlord); and/or (ii) a breach of any Landlord
representation set forth in this Lease or the default in the performance by
Landlord of any obligations on Landlord’s part to be performed under the terms
of this Lease provided, however, that Landlord’s indemnity shall not apply or
extend to any Claims, Damages and Costs which are covered by any insurance
maintained by Tenant or any Tenant Indemnified Parties (or which would have been
covered had Tenant obtained the insurance required under the provisions of this
Lease).
     11.2 Property Insurance.
          11.2.1 At all times during the Term of this Lease, Tenant shall
procure and maintain in effect, at its sole expense, policies of insurance
covering (i) all Tenant Improvements and Alterations in and to the Premises,
including, without limitation, all floor and wall coverings (collectively, the
“Leasehold Improvements”); and (ii) Tenant’s office furniture, business and
personal trade fixtures, equipment, furniture system and other personal property
from time to time situated in the Premises (collectively, “Tenant’s Property”),
in an amount not less than one hundred percent (100%) of their full replacement
cost from time to time during the Term, providing protection against any peril
included within the classification “all risk coverage” or “causes of loss –
special form” together with insurance against sprinkler water damage (including
earthquake caused sprinkler damage), vandalism and malicious mischief. Such
property insurance shall provide equivalent or greater coverage than that
provided by ISO Form CP 10 30. The proceeds of such insurance, so long as this
Lease remains in effect, shall be used for the repair or replacement of the
property so insured. Upon termination of this Lease due to any casualty, the
proceeds of insurance shall be paid to Landlord and Tenant, as their interests
appear in the insured property. The full replacement value of the items to be
insured under this Section 11.2.1 shall be determined by Tenant and acknowledged
by the company issuing the insurance policy by the issuance of an agreed amount
endorsement at the time the policy is initially obtained, and shall be increased
from time to time in order to maintain replacement value coverage.
          11.2.2 Tenant shall at all times during the Term, and at its own cost
and expense, procure and maintain in effect insurance providing coverage for the
extra expenses attributable to perils commonly insured against by prudent
tenants and attributable to prevention of access to the Premises as a result of
such perils.
     11.3 Liability Insurance.
          11.3.1 At all times during the Term of this Lease (and prior to the
commencement of the Term with respect to any activity of Tenant hereunder at the
Project), Tenant shall procure and maintain, at its sole expense, commercial
general liability insurance applying to the use and occupancy by Tenant of the
Premises and the Parking Facilities and the business operated by Tenant. Such
insurance shall have a minimum combined single limit of liability of at least
One Million Dollars ($1,000,000) per occurrence and a general aggregate limit of
at least Two Million Dollars ($2,000,000), and Tenant shall provide in addition
excess liability insurance on a following form basis, excess of the primary
liability policies, with overall limits of at least Five Million Dollars
($5,000,000).

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          11.3.2 At all times during the Term of this Lease, Tenant shall
procure and maintain, at its sole expense, primary automobile liability
insurance with limits of not less than One Million Dollars ($1,000,000) per
occurrence covering owned, hired and non-owned vehicles used by Tenant, which
shall be endorsed to include Landlord as an additional insured, but solely with
respect to those matters for which Tenant is required to provide indemnification
under this Lease, and then only to the extent of the indemnification provided by
Tenant under this Lease.
          11.3.3 At all times during the Term of this Lease, Tenant shall
procure and maintain Workers’ Compensation Insurance and Employer’s Liability or
other similar insurance in accordance with the laws of the State of California.
The limits of liability under the workers’ compensation insurance policy shall
be at least equal to the statutory requirements therefor, and the limits of
liability under the Employer’s Liability Insurance policy shall be at least One
Million Dollars ($1,000,000).
     11.4 Policy Requirements.
          11.4.1 All insurance required to be maintained by Tenant shall be
issued by insurance companies qualified to do insurance business in the State of
California and reasonably acceptable to Landlord. Insurance companies rated
A:VII or better by Best’s Insurance Reports shall be deemed acceptable.
          11.4.2 Each policy shall be written on an “occurrence” basis and shall
have a deductible or deductibles, if any, which do not exceed the deductible
amount(s) maintained by similarly situated tenants in office buildings
comparable to the Building in the Brea submarket area of Orange County,
California. Each policy shall name Landlord, Landlord’s Project manager and
Landlord’s lender as additional insureds, as their interests may appear, and
certificates evidencing the existence and amounts of such insurance and further
evidencing that such insurance is in full force and effect, shall be delivered
to Landlord by Tenant prior to Tenant’s occupancy of any portion of the
Premises, and in any event, prior to any activity of Tenant hereunder at the
Project. No such policy shall be cancelable except after thirty (30) days
written notice to Landlord. Copies of the relevant portions of Tenant’s
insurance policies (suitably redacted to protect information that Tenant deems
confidential and not relevant to the insurance requirements provided hereunder)
and endorsements thereto shall be delivered to Landlord within fifteen (15) days
after Landlord’s request, to the extent in Tenant’s possession or control (and
to the extent not in Tenant’s possession or control Tenant shall use
commercially reasonable efforts to obtain same) if reasonably required by
Landlord in lieu of certificates to pursue or defend claims or losses related to
such policies. Tenant shall, at least thirty (30) days prior to the expiration
of any such policy, furnish Landlord with renewals or “binders” thereof. Should
Tenant at any time neglect or refuse to provide the insurance required by this
Lease, or should such insurance be cancelled, Landlord shall have the right, but
not the duty, to procure the same and Tenant shall pay the cost thereof as
Additional Rent promptly upon Landlord’s demand.
          11.4.3 The policies of insurance required to be carried by Tenant
shall be primary and non-contributing with, and not in excess of any other
insurance available to Landlord. The cost of defending any claims made against
any of the policies required to be carried by Tenant shall not be included in
any of the limits of liability for such policies. Tenant shall immediately
report to Landlord, and promptly thereafter confirm in writing, the occurrence
of any injury, loss or damage incurred by Tenant, or Tenant’s receipt of notice
or knowledge of any claim by a third party or any occurrence that might give
rise to such claims. It shall be the responsibility of Tenant not to violate nor
knowingly permit to be violated any condition of the policies required by this
Lease.
          11.4.4 If any of the liability insurance policies required to be
maintained by Tenant pursuant to this Article 11 contains aggregate limits which
apply to operations of Tenant other than those operations which are the subject
of this Lease, and such limits are diminished by more than Two Hundred Thousand
Dollars ($200,000) after any one or more incidents, occurrences, claims,
settlements, or judgments against such insurance, Tenant shall take immediate
steps to restore aggregate limits or shall maintain other insurance protection
for such aggregate limits. Any policy of property insurance required hereunder
may be in “blanket coverage” form, provided any such “blanket coverage” policy
(i) specifically provides that the amount of insurance coverage required
hereunder shall in no way be prejudiced by other losses covered by the policy or
(ii) is in an amount not less than the sum of one hundred percent (100%) of the
actual replacement costs of all of the properties covered under such “blanket
coverage” insurance policy. Neither the issuance of any such property insurance
policy nor the minimum limits specified in this Section 11.4.4 shall be deemed
to limit or restrict in any way Tenant’s liability arising under or out of this
Lease.
     11.5 Mutual Waiver of Subrogation. Notwithstanding any provision to the
contrary in this Lease, Landlord and Tenant each hereby releases the other, and
waives its entire right of recovery against the other for any direct or
consequential loss or damage arising out of or incident to any damage to
property, including by perils covered by the property insurance policy or
policies carried by, or required to be carried by, the waiving party pursuant to
this Lease (including deductible amounts), whether or not such damage or loss
may be attributable to the negligence of either party or their agents, invitees,
contractors, or employees. Each insurance policy carried by either Landlord or
Tenant in accordance with this Lease shall include a waiver of the insurer’s
rights of subrogation to the extent necessary.
     11.6 Miscellaneous. Landlord makes no representation that the insurance
coverage specified to be carried by Tenant pursuant to this Article 11 is
adequate to protect Tenant against Tenant’s undertaking under the terms of this
Lease or otherwise, and in the event Tenant believes that any such insurance
coverage called for under this Lease is insufficient, Tenant shall provide, at
its own expense, such additional insurance as Tenant deems adequate. Tenant
shall not keep, use, sell or offer for sale in or upon the Premises any article
which may be prohibited by any insurance policy periodically in force covering
the Premises, the Building or the Project. If any of Landlord’s insurance
policies shall be canceled or cancellation shall be threatened or the coverage
thereunder reduced or threatened to be reduced in any way because of the use of
the Premises or any part thereof by Tenant or any assignee, subtenant, licensee
or invitee of Tenant in violation of this Lease and, if Tenant fails to remedy
the condition giving rise to such cancellation, threatened cancellation,
reduction of coverage, or threatened reduction of coverage, within ten
(10) business days after notice thereof, Landlord may enter upon the Premises
and attempt to remedy such condition, and Tenant shall promptly pay the cost
thereof to Landlord as Additional Rent. Landlord shall not be liable for any
damage or injury caused to any property of Tenant or of others located on the
Premises resulting from such entry, except as provided in Section 11.1.3 above.
If Landlord is unable, or elects not to remedy such condition, then Landlord
shall have all of the remedies provided for in this Lease upon the occurrence
and continuance of an Event of Default. If, as a result of any act or omission
by or on the part of Tenant in violation of this Lease, the rate of “All Risk”
or other property insurance maintained by Landlord on or with respect to the
Building and fixtures and property therein, shall be increased to an amount
higher than it otherwise would be, Tenant shall reimburse Landlord for all
increases of Landlord’s insurance premiums so caused within thirty (30) days
after delivery of written demand therefor by Landlord. In any action or
proceeding wherein Landlord and Tenant are parties, a schedule or “make-up” of
rates for the Project or the Premises issued by the body making fire insurance
rates or established by insurance carrier providing coverage for the Building or
Premises shall be presumptive evidence of the facts stated therein

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including the items and charges taken into consideration in fixing the “All
Risk” insurance rate then applicable to the Building or the Premises.
     11.7 Landlord’s Insurance. At all times during the Term of this Lease,
Landlord will carry and maintain “All Risk” property insurance covering the
Building Property and its equipment in amounts not less than their full
replacement cost. Landlord shall also carry commercial general liability
insurance with respect to the Building Property. Such coverage shall be in such
amounts, from such companies, and on such other terms and conditions, as
Landlord may from time to time determine in good faith, and in any case shall be
consistent with Institutional Owner Practices. Additionally, at the option of
Landlord, such insurance coverage may include the risks of earthquakes and/or
flood damage and additional hazards, a rental loss endorsement and one or more
loss payee endorsements in favor of the holders of any mortgages or deeds of
trust encumbering the interest of Landlord in the Building or the ground or
underlying lessors of the Building, or any portion thereof. Notwithstanding
anything to the contrary contained in this Lease, in no event shall Landlord be
required to carry earthquake insurance, flood insurance, or terrorism insurance.
ARTICLE 12
DAMAGE OR DESTRUCTION
     12.1 Landlord’s Repair Obligation. Tenant and Landlord shall each promptly
notify the other in writing (a “Damage Notice”) of any casualty event, damage or
condition to which this Article 12 is or may be applicable. Landlord shall,
within thirty (30) days after the date of Landlord’s discovery of any Casualty
affecting the Premises or access to the Premises (except that such thirty
(30) day period shall be extended to sixty (60) days in the case of an
earthquake), deliver to Tenant a non-binding estimate (the “Restoration
Estimate”) of the time that Landlord expects will be required to complete the
Restoration (defined below). Unless this Lease is terminated in accordance with
this Article 12, Landlord shall, within a reasonable time after the discovery by
Landlord of any damage resulting from any casualty event (“Casualty”), subject
to reasonable delays for insurance adjustment or other matters beyond Landlord’s
reasonable control, and subject to all other terms of this Article 12, begin to
repair the damage to the Building Property (as defined in Section 7.2.2 above)
and the Premises resulting from such Casualty and shall proceed with reasonable
diligence to restore the Building Property and Premises to substantially the
same condition as existed immediately before such Casualty, except for
(i) modifications required by applicable Laws or covenants, conditions and
restrictions, and (ii) modifications to the Building Property reasonably deemed
desirable by Landlord and approved by Tenant in its reasonable discretion and
which does not materially interfere with Tenant’s use and enjoyment of the
Premises; provided, however, that Landlord shall not be required to repair or
replace any of the Leasehold Improvements or any of Tenant’s Property which may
have been placed by, or at the request of, Tenant or other occupants in the
Project or the Premises. Base Rent, and Additional Rent payable under Article 4,
shall abate on a day-for-day basis relative to that portion of the Premises
affected by the Casualty from the date of the Casualty until the date the
Restoration to be performed by Landlord is substantially complete, as determined
by Landlord’s architect and the local governmental inspector, if applicable, and
Tenant shall have been given a reasonable period of time to complete its repair
and restoration of the Leasehold Improvements in the Premises. Unless this Lease
is terminated in accordance with this Article 12, Tenant shall, at its sole cost
and expense (using contractors and subcontractors reasonably approved by
Landlord) promptly and diligently restore the Leasehold Improvements in the
Premises. Prior to commencing the repair of same, Tenant shall submit to
Landlord, for Landlord’s approval in accordance with Article 10, above, all
plans and specifications relating to such work.
     12.2 Exceptions to Landlord’s Obligations.
          12.2.1 Notwithstanding anything to the contrary contained in this
Article 12, Landlord shall have no obligation to repair the Premises and shall
have the right to terminate this Lease in any case where (a) any portion of the
Premises or any material portion of the Project is damaged and (b) (i) Landlord
reasonably estimates that the repair and restoration of such damage under
Section 12.1 (“Restoration”) cannot reasonably be completed (without the payment
of overtime) within two hundred seventy (270) days of (or for any Casualty that
occurs during the last twelve (12) months of the Term (disregarding the Renewal
Term if the Renewal Option has not been exercised), within ninety (90) days of)
the date Landlord is informed of the Casualty, or (ii) the cost of such
Restoration is not fully covered by insurance proceeds available to Landlord
and/or payments received by Landlord from tenants. Such right of termination
shall be exercisable by Landlord by delivery of written notice to Tenant at any
time following the Casualty until thirty (30) days following the later of
(X) delivery of the Damage Notice or (Y) Landlord’s discovery or determination
of any of the events described in clauses (i) through (ii) of the preceding
sentence and shall be effective upon delivery of such notice of termination (or
if Tenant has not vacated the Premises, upon the expiration of thirty (30) days
thereafter).
          12.2.2 Notwithstanding anything to the contrary contained in this
Article 12, following a Casualty that affects the Premises or access to the
Premises in a manner that materially and substantially interferes with Tenant’s
ability to conduct its business in the Premises, if (i) the Restoration Estimate
indicates that Landlord cannot complete the Restoration within two hundred
seventy (270) days (or if the Casualty occurs during the last twelve (12) months
of the Term (disregarding the Renewal Term if the Renewal Option has not been
exercised), within ninety (90) days) after the date Landlord is informed of the
Casualty, Tenant shall have the right to terminate this Lease upon written
notice to Landlord within fifteen (15) days after Tenant’s receipt of the
Restoration Estimate, in which case this Lease shall terminate on the date set
forth in Tenant’s notice (which termination date shall not be later than sixty
(60) days following the date of delivery of Tenant’s notice to Landlord) as if
such date were the Expiration Date of the Lease or (ii) if Landlord does not
elect to terminate this Lease under Section 12.2.1, above and Tenant does not
elect to terminate this Lease under clause (i), above and Landlord does not
substantially complete the Restoration on or before the date (the “Outside
Completion Date”) which is the later of (a) two hundred seventy (270) days after
the date Landlord is informed of the Casualty and (b) ninety (90) days after the
date set forth in the Restoration Notice, and if the damage not repaired on the
Outside Completion Date renders a substantial part of the Premises untenantable
for the Permitted Use, then Tenant shall have the right to terminate this Lease
upon thirty (30) days written notice delivered to Landlord at any time on or
before the date on which Landlord substantially completes the Restoration, in
which case, if Tenant so delivers such notice of termination, this Lease shall
terminate unless Landlord substantially completes the Restoration on or before
the date that is thirty (30) days after the date on which it receives such
notice.
     12.3 Waiver. Landlord and Tenant agree that the provisions of this
Article 12 and the remaining provisions of this Lease shall exclusively govern
the rights and obligations of the parties with respect to any and all damage to,
or (destruction of, all or any portion of the Premises or the Project, and
Landlord and Tenant hereby waive and release each and all of their respective
common law and statutory rights inconsistent herewith, whether now or
hereinafter in effect (including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, as amended from time to time).

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ARTICLE 13
CONDEMNATION
     13.1 Taking. In the event the whole or a material portion of the Premises,
the Building or the Project shall be taken under the power of eminent domain, or
sold to prevent the exercise thereof (collectively, a “Taking”), this Lease
shall automatically terminate as of the date of such Taking. In the event of a
Taking of (i) such portion of the Project, the Building and the Premises as
shall, in the reasonable opinion of Landlord, substantially interfere with
Landlord’s operation thereof and Landlord’s receipt of rents, Landlord may
terminate this Lease upon thirty (30) days’ written notice to Tenant or
(ii) such portion of the Premises or access to the Premises, the loss of which,
in the reasonable opinion of Tenant, substantially interferes with Tenant’s
ability to conduct its business in the Premises, Tenant may terminate this Lease
upon thirty (30) days’ written notice to Landlord, in either case, given at any
time within sixty (60) days following the date of such Taking. For purposes of
this Lease, the date of Taking shall be the earlier of the date of transfer of
title resulting from such Taking or the date of transfer of possession resulting
from such Taking.
     13.2 Restoration of Premises. In the event that a portion of the Premises
is so taken and this Lease is not terminated, Landlord shall, with reasonable
diligence, proceed to restore (to the extent permitted by Law and covenants,
conditions and restrictions then applicable to the Project) the Premises (other
than Tenant’s personal property and fixtures, and Leasehold Improvements) to a
complete, functioning unit, to the extent of the condemnation award received by
Landlord. In such case, the Base Rent shall be reduced proportionately based on
the portion of the Premises so taken.
     13.3 Award. In the event of any Taking, the entire award for such taking
shall belong to Landlord, except that Tenant shall be entitled to independently
pursue a separate award relating to the loss of, or damage to, Tenant’s personal
property and trade fixtures and Tenant’s relocation costs directly associated
with the taking. Except as provided herein, Tenant shall not assert any claim
against Landlord or the condemning authority for, and hereby assigns to
Landlord, any compensation in connection with any such Taking, and Landlord
shall be entitled to receive the entire amount of any award therefor, without
deduction for any estate or interest of Tenant.
     13.4 Temporary Taking. Any award for a temporary taking shall belong to
Tenant to the extent that the award applies to any time period during the Term
of this Lease and to Landlord to the extent that the award applies to any time
period outside the Term.
     13.5 Exclusive Remedy. This Article 13 shall be Tenant’s sole and exclusive
remedy in the event of a Taking. Each party hereby waives the provisions of
Sections 1265.130 and 1265.150 of the California Code of Civil Procedure and the
provisions of any successor or other law of like import.
ARTICLE 14
INTENTIONALLY DELETED
ARTICLE 15
ASSIGNMENT AND SUBLETTING
     15.1 Restriction.
          15.1.1 General. Tenant shall not directly or indirectly, voluntarily
or involuntarily assign, mortgage or otherwise encumber all or any portion of
its interest in this Lease or in the Premises (collectively, “Assignment”) or
permit the Premises to be occupied by anyone other than Tenant or Tenant’s
employees or sublet the Premises (collectively, “Sublease”) or any portion
thereof without obtaining the prior consent of Landlord, which, subject to
Sections 15.3 and 15.4, shall not be unreasonably withheld, conditioned or
delayed, and any such attempted Assignment or Sublease (collectively,
“Transfer”) without such consent shall be null and void and of no effect.
          15.1.2 Permitted Transfers. Notwithstanding the foregoing
Section 15.1.1, Tenant shall have the right, after notice thereof to Landlord,
to Transfer all or a portion of the Premises, or the leasehold hereunder, to an
Affiliate (or a combination of Affiliates) or Successor of Tenant without
Landlord’s consent and without Landlord having any of the rights provided under
Sections 15.2 to 15.5 below. For purposes hereof, an “Affiliate” or “Successor”
of Tenant is an entity which is a successor-in-interest to Tenant by merger,
consolidation or corporate reorganization, or by the purchase of all or
substantially all of the assets or shares of Tenant, or an entity controlling,
under common control with or controlled by Tenant, but excluding, in each case,
any entity formed to avoid the restrictions on Transfer by Tenant hereunder and
excluding any agency or department of the United States Government. For purposes
of this definition, the word “control,” as used above, means with respect to a
Person that is a corporation, the right to exercise, directly or indirectly,
more than fifty percent (50%) of the voting rights attributable to the shares of
the controlled corporation and, with respect to a Person that is not a
corporation, the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of the controlled Person. The
word “Person” means an individual, partnership, trust, corporation, firm or
other entity. Any such Affiliate or Successor of Tenant must expressly assume in
writing a pro rata share of Tenant’s obligations hereunder in the proportion
that the number of square feet of Rentable Area of the Premises subleased or
assigned to such Affiliate or Successor of Tenant bears to the total number of
square feet of Rentable Area in the Premises, without relieving Tenant of any
liability hereunder.
     15.2 Notice to Landlord. If Tenant desires at any time to Transfer the
Premises or any portion thereof, it shall first give Landlord a notice (the
“First Transfer Notice”) specifying (a) the size and location of the space
Tenant proposes to Transfer (the “Transfer Space”); (b) the term for which
Tenant proposes to Transfer the Transfer Space; and (c) the date on which Tenant
proposes that the Transfer be effective, which shall not be less than sixty (60)
days after the Transfer Notice.
     15.3 Landlord’s Options. At any time within fifteen (15) days after
Landlord’s receipt of all of the information required in the First Transfer
Notice, but excluding for Transfers to an Affiliate or Successor of Tenant
pursuant to Section 15.1.2 above, Landlord may by written notice to Tenant elect
to terminate this Lease as to the Transfer Space specified in the First Transfer
Notice, in the case of a proposed Assignment or Sublease for all or
substantially all of the remaining Term, with a proportionate abatement in the
rent payable hereunder.

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     15.4 Landlord’s Consent; Standards.
               (a) If Landlord does not elect or is not entitled to elect to
terminate the Lease as set forth in Section 15.3 and Tenant desires to
consummate a Transfer, Tenant shall give a second written notice (the “Second
Transfer Notice”) to Landlord with respect to such Transfer and which notice
shall specify (1) the Transfer Space, (2) the name of the proposed assignee,
subtenant, transferee or occupant (“Transferee”), (3) the nature of the proposed
Transferee’s business to be carried on in the Transfer Space, (4) the terms and
provisions of the proposed Transfer, and (5) such financial information as
Landlord may reasonably request concerning the proposed Transferee. If the
Transfer described in the Second Transfer Notice differs by more than twenty
percent (20%) from the First Transfer Notice in amount of space covered or in
length of term, or materially differs as to the location of the Transfer Space,
then Landlord shall have the option set forth in Section 15.3 with respect to
the Transfer proposed in the Second Transfer Notice, such option to be exercised
within fifteen (15) days after Landlord’s receipt of the Second Transfer Notice.
               (b) If Landlord does not elect or is not permitted to terminate
this Lease as set forth in Section 15.3, and does not elect or is not entitled
to elect such option pursuant to Paragraph (a) above, Landlord shall within
fifteen (15) days of receipt of the Second Transfer Notice, notify Tenant
whether Landlord consents to the proposed Transfer, which consent shall not be
unreasonably withheld. If Landlord fails to respond within said 15 day period,
Tenant may give Landlord a second (2nd) notice. If Landlord fails to notify
Tenant whether Landlord consents to the proposed Transfer within five (5) days
of receipt of such second notice, then Landlord shall be deemed to have approved
of the proposed Transfer, provided, however, that Landlord’s refusal to consent
to any Transfer shall be deemed reasonable if:
                    (1) The Transferee is of a character or reputation or
engaged in a business which is not consistent with the quality of the Building
or the Project, based on objective factors;
                    (2) The Transferee intends to use the Transfer Space for
purposes which are not permitted under this Lease;
                    (3) The Transferee intends to use the Transfer Space for
purposes in violation of the terms of any other lease in the Project, it being
understood that the purpose for which any Transferee intends to use the Transfer
Space may not be in violation of this Lease;
                    (5) The Transfer Space is not suitable for normal renting
purposes in conformity with all applicable building and safety codes;
                    (6) The Transferee is either a government (or subdivision or
agency thereof) or an occupant of the Project (and, if an occupant of the
Project, provided Landlord has space available of a size that will satisfy the
space requirements set forth in the proposed transfer); or
                    (7) The Transferee is insolvent or does not have the
financial capacity to perform the obligations to be assumed for the term of the
Transfer.
               (c) If Landlord consents to any Transfer under this Section 15.4,
Tenant may thereafter within one hundred eighty (180) days after Landlord’s
consent, but not later than the expiration of said one hundred eighty
(180) days, enter into such Transfer of the Transfer Space, upon the same terms
and conditions as are set forth in the Second Transfer Notice furnished by
Tenant to Landlord pursuant to Section 15.4(a).
               (d) As a condition to Landlord’s consent to any Sublease, such
Sublease shall provide that it is subject and subordinate to this Lease; that
Landlord may enforce the provisions of the Sublease, including collection of
rent; that the cost of any modification to the Premises, Building and/or Project
arising from or as a result of the Sublease shall be the sole responsibility of
Tenant (as between Landlord and Tenant); that in the event of termination of
this Lease for any reason, including without limitation a voluntary surrender by
Tenant, Landlord may, at its option, either (i) terminate the Sublease or
(ii) take over all of the right, title and interest of Tenant, as sublessor,
under such Sublease, in which case the Transferee shall attorn to Landlord, but
that nevertheless Landlord shall not (1) be liable for any previous act or
omission of Tenant under such Sublease, (2) be subject to any defense or offset
previously accrued in favor of the Transferee against Tenant, or (3) be bound by
any previous modification of any Sublease made without Landlord’s written
consent, or by any previous prepayment by the Transferee of more than one
month’s rent Notwithstanding anything to the contrary in this Lease, Tenant
waives any right it may have at law or in equity to terminate this Lease as a
result of Landlord’s failure to consent to a Transfer, including any of its
rights under California Civil Code Section 1995.310; provided, however, Landlord
shall be liable to Tenant for all direct damages incurred by Tenant as a result
of such failure by Landlord in breach of this Lease. If Landlord improperly
denies its consent to a Transfer which Tenant is permitted to make under this
Article 15, Landlord shall reimburse Tenant for all direct damages incurred by
Tenant as a result of such improper refusal to consent.
     15.5 Profits.
               (a) If there are any Profits (as defined in paragraph (b) below)
from any Transfer (excluding any Transfer to an Affiliate or Successor of
Tenant), Tenant shall pay fifty percent (50%) of such Profits to Landlord as
Additional Rent. Landlord’s share of Profits shall be paid to Landlord within
ten (10) days after receipt thereof by Tenant. The payments of Profits to
Landlord shall be made on a monthly basis as Additional Rent with respect to
each Transfer separately, subject to an annual reconciliation on each
anniversary date of the Transfer. If the payments to Landlord under this Section
during the twelve (12) months preceding each annual reconciliation exceed the
amount of Profits determined on an annual basis, then Landlord shall promptly
refund to Tenant the amount of such overpayment or credit the overpayment
against Tenant’s future obligations under this Section, at Tenant’s option. If
Tenant has underpaid its obligations hereunder during the preceding twelve
(12) months, Tenant shall promptly pay to Landlord the amount owing after the
annual reconciliation.
               (b) For purposes of this Article 14, “Profits” are defined as all
cash or cash equivalent amounts and sums which Tenant (including any Affiliate
or Successor of Tenant or other entity related to Tenant) receives on an annual
basis from any Transferee, directly or indirectly, attributable to the Premises
or any portion thereof, less the sum of (1) the amortized amount for each such
annual period of (i) any additional tenant improvement costs paid to Tenant’s
Transferee by Tenant; (ii) reasonable leasing commissions paid by Tenant in
connection with the Transfer; (iii) other economic concessions (planning
allowance, lease takeover payments, moving expenses, etc.) paid by Tenant to or
on behalf of the Transferee in connection with the Transfer; (iv) reasonable
costs incurred by Tenant in advertising the Transfer Space; and (v) Tenant’s

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reasonable attorneys’ fees paid by Tenant in connection with the Transfer (such
amounts to be amortized over the term of the Transfer), and (2) the Base Rent
and Additional Rent pursuant to Article 4 of the Lease paid during each such
annual period by Tenant attributable pro rata based on Rentable Area to the
Transfer Space. Any lump sum payment received by Tenant from a Transferee shall
be treated like any other amount so received by Tenant for the applicable annual
period and shall be utilized in computing Profits in accordance with the
foregoing. All Profits and the components thereof shall be subject to audit by
Landlord or its representatives at reasonable times. Tenant shall deliver to
Landlord, upon request, any information reasonably required by Landlord to
calculate and/or substantiate the amount of Profits hereunder.
     15.6 No Release of Tenant’s Obligations. No Transfer shall relieve Tenant
of its obligation to pay the rent and to perform all of the other obligations to
be performed by Tenant hereunder. The acceptance of rent by Landlord from any
other person shall not be deemed to be a waiver by Landlord of any provision of
this Lease or to be a consent to any Transfer. Consent to one Transfer shall not
be deemed to constitute consent to any subsequent Transfer.
     15.7 Assumption of Obligations. Each Transferee, other than Landlord, shall
assume, as provided in this Section 15.7, all obligations of Tenant under this
Lease arising after the date of the Transfer and shall be and remain liable
jointly and severally with Tenant for the payment of the rent, and for the
performance of all of the terms, covenants, conditions and agreements herein
contained on Tenant’s part to be performed for the term of this Lease arising
after the date of the Transfer; provided, however, that the Transferee shall be
liable to Landlord for rent only in the amount set forth in the Transfer. No
Assignment shall be binding on Landlord unless the Transferee or Tenant shall
deliver to Landlord a counterpart of the Assignment and an instrument in
recordable form which contains a covenant of assumption by the Transferee
satisfactory in substance and form to Landlord consistent with the requirements
of this Section 15.7, but the failure or refusal of the Transferee to execute
such instrument of assumption shall not release or discharge the Transferee from
its liability as set forth above.
     15.8 Costs. Tenant agrees to reimburse Landlord for Landlord’s reasonable
costs and attorneys’ fees incurred in connection with the processing and
documentation of any requested Transfer whether or not Landlord consents to the
Transfer or the same is finally consummated; provided Tenant shall not be
obligated to reimburse such costs and fees in excess of One Thousand Five
Hundred Dollars ($1,500) for any proposed Transfer for which Tenant and the
Transferee execute Landlord’s standard form consent to sublease or assignment.
ARTICLE 16
DEFAULT AND REMEDIES
     16.1 Events of Default By Tenant. The occurrence of any of the following
shall constitute a material default and breach of this Lease by Tenant (an
“Event of Default”):
          16.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, within five
(5) business days of notice that the same is due, which notice shall be in lieu
of any notice required under California Code of Civil Procedure Section 1161 or
any similar or successor law.
          16.1.2 The abandonment of the Premises by Tenant coupled with the
failure to pay rent, as provided in Section 1951.3 of the California Civil Code.
          16.1.3 The failure by Tenant to observe or perform the provisions of
Section 7.1 or Article 10 where such failure continues and is not remedied
within three (3) business days after notice thereof from Landlord to Tenant;
          16.1.4 Any failure by Tenant to execute and deliver any statement or
document described in Articles 18 and 22 requested by Landlord within the time
periods specified therein, where such failure continues for five (5) business
days after notice thereof by Landlord to Tenant; provided, however, that any
such notice shall be in lieu of, and not in addition to, any notice required
under Section 1161 et seq., of the California Code of Civil Procedure.
          16.1.5 The failure by Tenant to observe or perform any other provision
of this Lease to be observed or performed by Tenant, other than those described
in Sections 16.1.1, 16.1.2 and 16,1.3 above, if such failure continues for
thirty (30) days after written notice thereof by Landlord to Tenant; provided,
however, that if the nature of the default is such that it cannot be cured
within the thirty (30) day period, no default shall exist if Tenant commences
the curing of the default within the thirty (30) day period and thereafter
diligently prosecutes the same to completion. The thirty (30) day notice
described herein shall be in lieu of, and not in addition to, any notice
required under Section 1161 of the California Code of Civil Procedure or any
other law now or hereafter in effect requiring that notice of default be given
prior to the commencement of an unlawful detainer or other legal proceeding.
          16.1.6 Any Rent paid by Tenant is recovered by the debtor or
bankruptcy trustee as a preference payment in the event of the filing by or
against Tenant of any proceeding under bankruptcy law.
          16.1.7 Any failure by Tenant to provide Landlord with a renewed LC or
a substitute LC in form reasonably acceptable to Landlord at least fifteen
(15) days prior to the expiration of the then existing LC.
     16.2 Landlord’s Right To Terminate Upon Tenant Default. In the event of any
Event of Default by Tenant as provided in Section 16.1 above, Landlord shall
have the right to terminate this Lease and recover possession of the Premises by
giving written notice to Tenant of Landlord’s election to terminate this Lease,
in which event Landlord shall be entitled to receive from Tenant:
          16.2.1 The worth at the time of award of any unpaid Rent which had
been earned at the time of such termination; plus
          16.2.2 The worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss Tenant proves could have been
reasonably avoided; plus
          16.2.3 The worth at the time of award of the amount by which the
unpaid Rent for the balance of the Term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided; plus

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          16.2.4 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 therefrom; and
          16.2.5 At Landlord’s election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by applicable law.
     As used in Sections 16.2.1 and 16.2.2 above, “worth at the time of award”
shall be computed by allowing interest at the Interest Rate. As used in
Section 16.2.3 above, “worth at the time of award” shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award plus one percent (1%).
     16.3 Landlord’s Right To Continue Lease Upon Tenant Default. In the event
of an Event of Default of this Lease and abandonment of the Premises by Tenant,
if Landlord does not elect to terminate this Lease as provided in Section 16.2
above, Landlord may from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease. Without limiting the foregoing,
Landlord has the remedy described in California Civil Code Section 1951.4
(Landlord may continue this Lease in effect after Tenant’s breach and
abandonment and recover Rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations). To the fullest extent
permitted by Law, the proceeds of any reletting shall be applied first to pay to
Landlord all costs and expenses of such reletting (including without limitation,
costs and expenses of retaking or repossessing the Premises, removing persons
and property therefrom, securing new tenants, including expenses for
redecoration, alterations and other costs in connection with preparing the
Premises for the new tenant, and if Landlord shall maintain and operate the
Premises, the costs thereof) and receivers’ fees incurred in connection with the
appointment of and performance by a receiver to protect the Premises and
Landlord’s interest under this Lease and any necessary or reasonable
alterations; second, to the payment of any indebtedness of Tenant to Landlord
other than Rent due and unpaid hereunder; third, to the payment of Rent due and
unpaid hereunder; and the residue, if any, shall be held by Landlord and applied
in payment of other or future obligations of Tenant to Landlord as the same may
become due and payable, and Tenant shall not be entitled to receive any portion
of such revenue. No re-entry or taking of possession of the Premises by Landlord
pursuant to this Section 16.3 shall be construed as an election to terminate
this Lease unless a written notice of such election shall be given to Tenant or
unless the termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Landlord, Landlord may, at
any time after such reletting, elect to terminate this Lease for any such
default. Upon the occurrence of an Event of Default by Tenant under Section 16.1
above, if the Premises or any portion thereof are sublet, Landlord, in addition
and without prejudice to any other remedies herein provided or provided by Law,
may, at its option, collect directly from the sublessee all rentals becoming due
to the Tenant and apply such rentals against other sums due hereunder to
Landlord.
     16.4 Right of Landlord to Perform. All covenants and agreements to be
performed by Tenant under this Lease shall be performed by Tenant at Tenant’s
sole cost and expense. If Tenant shall fail to pay any sum of money, other than
Base Rent, required to be paid by it hereunder or shall fail to perform any
other act on its part to be performed hereunder, then, in addition to and
without prejudice to any other right or remedy of Landlord (including, without
limitation, any right or remedy provided under Article 9), Landlord may cure the
same at the expense of Tenant (i) immediately and without notice in the case
(a) of emergency, (b) where such default unreasonably interferes with any other
tenant in the Project, or (c) where such default will result in the violation of
Law or the cancellation of any insurance policy maintained by Landlord and
(ii) in any other case if such default continues beyond the applicable notice
and cure period (such that such default constitutes an Event of Default). Any
sums so paid by Landlord and all incidental costs, together with interest
thereon at the Interest Rate, shall be payable to Landlord as Additional Rent on
demand, and Landlord shall have the same rights and remedies in the event of
nonpayment as in the case of default by Tenant in the payment of Rent.
     16.5 Efforts to Relet. For the purposes of this Article 16, Tenant’s right
to possession shall not be deemed to have been terminated by efforts of Landlord
to relet the Premises, by its acts of maintenance or preservation with respect
to the Premises, or by appointment of a receiver to protect Landlord’s interests
hereunder. The foregoing enumeration is not exhaustive, but merely illustrative
of acts which may be performed by Landlord without terminating Tenant’s right to
possession.
     16.6 Waiver of Right of Redemption. Tenant hereby waives for Tenant and for
all those claiming under Tenant all right now or hereafter existing to redeem by
order or judgment of any court or by any legal process or writ, Tenant’s rights
of occupancy of the Premises after any termination of this Lease.
Notwithstanding any provision of this Lease to the contrary, the expiration or
termination of this Lease and/or the termination of Tenant’s rights to
possession of the Premises shall not discharge, relieve or release Tenant from
any obligation or liability whatsoever under any indemnity provision of this
Lease including without limitation the provisions of Section 11.1 hereof.
     16.7 Non-Waiver. Nothing in this Article 16 shall be deemed to affect
Landlord’s rights to indemnification for liability or liabilities arising prior
to termination of this Lease for personal injury or property damages under the
indemnification clause or clauses contained in this Lease. No acceptance by
Landlord of a lesser sum than the Rent then due shall be deemed to be other than
on account of the earliest installment of such Rent due, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord’s right to recover the
balance of such installment or pursue any other remedy provided in this Lease.
The delivery of keys to any employee of Landlord or to Landlord’s agent or any
employee thereof shall not operate as a termination of this Lease or a surrender
of the Premises.
     16.8 Waiver of Trial by Jury. Landlord and Tenant each expressly waive
their right to trial by jury in any trial held as a result of a claim arising
out of or in connection with this Lease in which Landlord and Tenant are adverse
parties. The filing of a cross-complaint by one against the other is sufficient
to make the parties “adverse.”
     16.9 Cumulative Remedies. Subject to Section 24.4 of this Lease, the
specific remedies to which Landlord may resort under the terms of this Lease are
cumulative and are not intended to be exclusive of any other remedies or means
of redress to which it may be lawfully entitled in case of any breach or
threatened breach by Tenant of any provisions of this Lease. In addition to the
other remedies provided in this Lease, Landlord shall be entitled to a restraint
by injunction of the violation or attempted or threatened violation of any of
the covenants, conditions or provisions of this Lease or to a decree compelling
specific performance of any such covenants, conditions or provisions.
     16.10 Default by Landlord. Landlord’s failure to perform or observe any of
its obligations under this Lease shall constitute a default by Landlord under
this Lease if such failure shall continue for a period of thirty (30) days
(provided, however, that if the nature of the default is such that it cannot
reasonably be cured within the thirty (30) day period, no default shall exist if
Tenant commences the curing of the default within the thirty (30) day period and
thereafter diligently prosecutes the same to

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completion) after Landlord receives written notice from Tenant specifying the
default, which notice shall describe in reasonable detail the nature and extent
of the failure and shall identify the Lease provision(s) containing the
obligation(s) in question. Subject to the remaining provisions of this Lease
(and without limiting Tenant’s rights under Section 9.4 above), following the
occurrence of any such default, Tenant shall have the right to pursue any other
remedy available under Law or under this Lease for such default by Landlord;
provided, however, that in no case shall Tenant have any right to terminate this
Lease on account of any such default.
ARTICLE 17
ATTORNEYS FEES; COSTS OF SUIT
     If either Landlord or Tenant shall commence any action or other proceeding
against the other arising out of, or relating to, this Lease or the Premises,
the prevailing party shall be entitled to recover from the losing party, in
addition to any other relief, reasonable attorneys fees irrespective of whether
or not the action or other proceeding is prosecuted to judgment.
ARTICLE 18
SUBORDINATION AND ATTORNMENT
     18.1 Subordination.
          18.1.1 Subject to Tenant’s receiving an SNDAA (as hereinafter
defined), this Lease, and the rights of Tenant hereunder, are and shall be
subordinate to the interests of (i) future ground leases and master leases of
all or any part of the Building; (ii) future mortgages and deeds of trust
encumbering all or any part of the Building; (iii) future advances made under
any such mortgages or deeds of trust; and (iv) all renewals, modifications,
replacements and extensions of any such future ground leases, master leases,
mortgages and deeds of trust (collectively, “Security Documents”) which
hereafter constitute a lien upon or affect the Project, the Building or the
Premises. Such subordination shall be effective without the necessity of the
execution by Tenant of any additional document for the purpose of evidencing or
effecting such subordination. In addition, Landlord shall have the right to
subordinate or cause to be subordinated any such Security Documents to this
Lease and in such case, in the event of the termination or transfer of
Landlord’s estate or interest in the Project by reason of any termination or
foreclosure of any such Security Documents, Tenant shall, notwithstanding such
subordination, attorn to and become the Tenant of the successor in interest to
Landlord so long as Tenant is provided a commercially reasonable subordination
non-disturbance and attornment agreement (an “SNDAA”). Furthermore, Tenant shall
within ten (10) days of demand therefor execute any commercially reasonable
instruments or other documents which may reasonably be required by Landlord or
the holder (“Holder”) of any Security Document which does not materially impair
Tenant’s rights under this Lease or materially increase Tenant’s liabilities,
and specifically shall execute, acknowledge and deliver within ten (10) business
days of demand therefor a subordination of lease or subordination of deed of
trust, in the commercially reasonable form required by the Holder of the
Security Document requesting the document, provided such document does not
materially impair Tenant’s rights under this Lease or subject Tenant to
materially increased liabilities; the failure to do so by Tenant within such
time period shall be a material default hereunder. Such instruments may contain,
among other things, provisions to the effect that such lessor, mortgagee or
beneficiary (hereafter, for the purposes of this Section 18.1, a “Successor
Landlord”) shall (a) not be liable for any act or omission of Landlord or its
predecessors, if any, prior to the date of such Successor Landlord’s succession
to Landlord’s interest under this Lease (provided that the Successor Landlord
shall remain obligated to cure any defaults of Landlord that remain outstanding
(as a continuing default) at the time of transfer); (b) not be subject to any
offsets or defenses which Tenant might have been able to assert against Landlord
or its predecessors, if any, prior to the date of such Successor Landlord’s
succession to Landlord’s interest under this Lease; (c) not be liable for the
return of any security deposit under this Lease unless the same shall have
actually been deposited with such Successor Landlord; and (d) be entitled to
receive notice of any Landlord default under this Lease plus the same
opportunity to cure such default as Landlord prior to Tenant having any right or
ability to terminate this Lease as a result of such Landlord default.
          18.1.2 There is currently no Security Document encumbering the
Building. Landlord’s delivery to Tenant of a commercially reasonable SNDAA in
favor of Tenant from each Holder of any Security Document which shall come into
existence at any time after the Effective Date (each a “Future Security
Document”) shall be in consideration of, and shall be a condition precedent to,
Tenant’s (a) agreement under Section 18.1.1 to subordinate its interest
hereunder to such Future Security Document and (b) agreement under Section 18.2
to attorn to and recognize as the landlord hereunder, the Holder of any such
Future Security Document.
     18.2 Attornment. Provided Tenant receives the applicable SNDAA referenced
above, Tenant shall attorn to and recognize as Tenant’s landlord under this
Lease any superior lessor, superior mortgagee or other purchaser or person
taking title to the Building by reason of the termination of any superior lease
or the foreclosure of any superior mortgage or deed of trust, and Tenant shall,
within ten (10) days of demand therefor execute any commercially reasonable
instruments or other documents which may be required by Landlord or the Holder
of any such Security Document to evidence the attornment described in this
Section 18.2 which does not materially impair Tenant’s rights under this Lease
or materially increase Tenant’s liabilities.
     18.3 Mortgage and Ground Lessor Protection. Tenant agrees to give each
Holder of any Security Document, by any manner permitted under this Lease, a
copy of any notice of default served upon the Landlord by Tenant, provided that
prior to such notice Tenant has been notified in writing of the address of such
Holder.
ARTICLE 19
QUIET ENJOYMENT
     Provided that Tenant performs all of its obligations hereunder, Tenant
shall have and peaceably enjoy the Premises during the Term of this Lease,
subject to all of the terms and conditions contained in this Lease, from and
against all persons holding an interest in the Project from and through
Landlord. Landlord covenants that no other party will have a possessory interest
in the Premises or Building as of the Commencement Date.

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ARTICLE 20
PARKING
     20.1 Tenant shall have the right to lease from Landlord in connection with
Tenant’s lease of the Premises, at no additional cost to Tenant during the
Initial Term, up to two hundred fourteen (214) car parking spaces (“Parking
Spaces”) (equivalent to 5 per 1,000 square feet of Usable Area in the Premises)
for use for parking in the Project’s surface parking lot. From such two hundred
fourteen (214) Parking Spaces, Landlord shall designate fifteen (15) Parking
Spaces as reserved for Tenant’s executives, and five (5) Parking Spaces as
visitor parking; the remaining Parking Spaces shall be unreserved. The
aforementioned 15 reserved Parking Spaces and 5 visitor parking spaces shall be
in locations mutually reasonably agreed upon by Landlord and Tenant, provided
that Landlord shall use commercially reasonable efforts to cause such spaces to
be located as close to the main entrance of the Building as possible.
     20.2 Tenant shall have no obligation to pay any amount for any of the
Parking Spaces leased by Tenant pursuant to Section 20.1 above during the
Initial Term.
     20.3 Tenant’s employees, visitors and guests shall only have the right to
park in Tenant’s designated area(s). Landlord shall have the right to modify,
change, add to or delete the design, configuration, layout, size, ingress,
egress, areas, method of operation, and other characteristics of or relating to
the Parking Facilities at any time, and/or to provide for nonuse, partial use or
restricted use of portions thereof, but in no event will Tenant’s access to the
surface parking lot be restricted or Tenant’s right to its allocated number of
Parking Spaces hereunder be reduced (Landlord shall use commercially reasonable
efforts to give Tenant advance notice of such actions if Tenant would be
affected thereby).
     20.4 If any employee, contractor or other individual using one of Tenant’s
Parking Spaces violates any of the terms and conditions of this Article or such
parking rules and regulations, then, after written notice and the opportunity to
cure, Landlord may revoke the license granted hereunder with respect to the
particular violating party’s use of the Parking Facilities (provided, however,
Tenant’s allotted number of Parking Spaces hereunder shall not be reduced).
Landlord may delegate its responsibilities hereunder to a parking operator in
which case such parking operator shall have all the rights of control attributed
hereby to the Landlord. The Parking Spaces provided to Tenant pursuant to this
Article 20 are provided to Tenant solely for use by Tenant’s employees,
visitors, guests, customers, agents, vendors, officers, directors, affiliates,
sublessees and assignees, and such spaces may not otherwise be transferred,
assigned, subleased or otherwise alienated by Tenant to any other type of
transferee (except a Transferee consented to by Landlord or for which Landlord’s
consent is not required under this Lease) without Landlord’s prior approval. The
Parking Facilities shall contain at least the minimum number of handicap parking
spaces as required by applicable law.
     20.5 Tenant’s business visitors may park in the Parking Facilities on a
space-available basis, upon payment of the prevailing fee for parking charged to
visitors to the Building.
ARTICLE 21
RULES AND REGULATIONS
     Tenant shall abide by, and faithfully observe and comply with the Rules and
Regulations. As used herein, the “Rules and Regulations” means the “Rules and
Regulations’’ and the “Parking Rules” attached hereto as Exhibit “D” (which are
hereby incorporated by reference herein and made a part hereof) and any
reasonable and non-discriminatory amendments, modifications and/or additions
thereto as may hereafter be adopted and published by written notice to tenants
by Landlord for the safety, care, security, good order and/or cleanliness of the
Premises and/or the Project consistent with Institutional Owner Practices,
provided that (i) in the event of any conflict between the Rules and Regulations
and any of the other express terms of this Lease, the latter shall control and
(ii) any amendments, modifications and/or additions shall not materially
interfere with Tenant’s use and enjoyment of the Premises. Landlord shall not be
liable to Tenant for any violation of such rules and regulations by any other
tenant or occupant of the Project.
ARTICLE 22
ESTOPPEL CERTIFICATES
     Tenant agrees at any time and from time to time upon not less than ten
(10) business days’ prior written notice from Landlord, execute, acknowledge and
deliver to Landlord a statement in writing certifying to those facts for which
certification has been requested by Landlord or any current or prospective
purchaser, holder of any Security Document, ground lessor or master lessor,
including, but without limitation, that except as may be disclosed by Tenant in
such certification, (i) this Lease is unmodified and in full force and effect
(or if there have been modifications, that the same is in full force and effect
as modified and stating the modifications), (ii) the dates to which the Base
Rent, Additional Rent and other charges hereunder have been paid, if any, and
(iii) whether or not to the actual knowledge of Tenant, Landlord is in default
in the performance of any covenant, agreement or condition contained in this
Lease and, if so, specifying each such default of which Tenant may have
knowledge. Tenant’s failure to execute and deliver such statement within such
time period, subject to notice and cure as provided in Section 16.1.4, shall
constitute an Event of Default under this Lease. In the event that such
certificate is being given to any Holder or ground lessor, such statement may
contain any other provisions reasonably and customarily required, without
limitation, an agreement on the part of Tenant to furnish to such Holder or
ground lessor, as applicable, written notice of any Landlord default and a
reasonable opportunity for such Holder or ground lessor to cure such default
prior to Tenant being able to terminate this Lease. Any statement delivered
pursuant to this Article 22 may be relied upon by any prospective purchaser of
the fee of the Building or the Project or any mortgagee, ground lessor or other
like encumbrancer thereof or any assignee of any such encumbrance upon the
Building or the Project.
ARTICLE 23
ENTRY BY LANDLORD
     Landlord may enter the Premises at reasonable times, with reasonable (not
to be less than twenty-four (24) hours) prior notice (except in the case of an
emergency, in which case, Landlord shall provide such notice (if any) as may be
reasonable under the circumstances) and subject at all times to Tenant’s
reasonable security requirements, to: inspect the same; exhibit the same to
prospective purchasers, lenders or, during the last nine (9) months of the Term,
tenants; determine whether Tenant is complying

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with all of its obligations under this Lease; supply janitorial and other
services to be provided by Landlord to Tenant under this Lease; post notices of
non-responsibility; and make repairs or improvements in or to the Project or the
Premises; provided, however, that all such work shall be done as promptly as
reasonably possible and so as to cause as little interference to Tenant as
reasonably possible. No such entry made in compliance with the foregoing shall
be construed as a forcible or unlawful entry into, or a detainer of, the
Premises, or an eviction of Tenant. Landlord shall, subject to Tenant’s
reasonable security requirements, at all times have and retain a key with which
to unlock all of the doors in, on or about the Premises, and upon emergency and
only after attempting to contact Tenant if reasonable under the circumstances,
Landlord shall have the right to use any and all reasonable means by which
Landlord may deem proper to open such doors to obtain entry to the Premises, and
any entry to the Premises obtained by Landlord by any such means, and under such
circumstances, shall not be deemed or construed to be a forcible or unlawful
entry into or a detainer of the Premises or an eviction, actual or constructive,
of Tenant from any part of the Premises. Such entry by Landlord shall not act as
a termination of Tenant’s duties under this Lease. If Landlord shall be required
to obtain entry by means other than a key provided by Tenant (because Tenant has
failed to provide such key), the actual cost of such entry shall be payable by
Tenant to Landlord as Additional Rent.
ARTICLE 24
LEASE UNDERTAKINGS; EXCULPATION FROM PERSONAL
LIABILITY; TRANSFER OF LANDLORD’S INTEREST; WAIVER OF CONSEQUENTIAL DAMAGES
     24.1 Landlord’s Lease Undertakings. Notwithstanding anything to the
contrary contained in this Lease or in any exhibits, riders or addenda hereto
attached (collectively the “Lease Documents”), it is expressly understood and
agreed by and between the parties hereto that: (a) the recourse of Tenant or its
successors or assigns against Landlord (and the liability of Landlord to Tenant,
its successors and assigns) with respect to (i) any actual or alleged breach or
breaches by or on the part of Landlord of any representation, warranty,
covenant, undertaking or agreement contained in any of the Lease Documents or
(ii) any matter relating to Tenant’s occupancy of the Premises (collectively,
“Landlord’s Lease Undertakings”) shall be limited to solely an amount equal to
Landlord’s interest in the Building; (b) Tenant shall have no recourse against
any other assets of Landlord or the Landlord Parties (as defined below); and
(c) no present or future officer, director, employee, trustee, mortgagee, ground
lessor, member, retirant, beneficiary, internal investment contractor, manager,
investment manager, agent, successor and assign of Landlord (collectively, the
“Landlord Parties”) shall have any personal liability or personal
responsibility, directly or indirectly, with respect to any of Landlord’s Lease
Undertakings and recourse shall not be had against any such officer, director,
shareholder, employee, trustee, mortgagee, ground lessor, member, retirant,
beneficiary, internal investment contractor, investment manager, agent,
successor and assign under or in connection with any Landlord’s Lease
Undertakings or any alleged breach thereof. The limitations of liability
provided in this Section 24.1 are in addition to, and not in limitation of, any
limitation on liability applicable to Landlord provided by Law or in any other
contract, agreement or instrument.
     24.2 Sale by Landlord. The term “Landlord” as used in this Lease, so far as
covenants or obligations on the part of Landlord are concerned, shall be limited
to mean and include only the owner or owners, at the time in question, of the
fee title of the Premises or the lessees under ground leases of the Land or
master leases of the Building, if any. In the event of any transfer, assignment
or other conveyance of any such title, Landlord herein named (and in case of any
subsequent transfer or conveyance, the then grantor) shall be automatically
freed and relieved from and after the date of such transfer, assignment or
conveyance of all liability for the performance of any covenant or obligation on
the part of Landlord contained in this Lease thereafter to be performed;
provided that the transferee assumes, in writing, all of Landlord’s obligations
hereunder. Without further agreement, the transferee of such title shall be
deemed to have assumed and agreed to observe and perform any and all obligations
of Landlord hereunder, during its ownership of the Premises. Landlord may
transfer its interest in the Premises without the consent of Tenant and such
transfer or subsequent transfer shall not be deemed a violation on Landlord’s
part of any term or condition of this Lease.
     24.3 Tenant’s Lease Undertakings. Notwithstanding any provisions of this
Lease to the contrary, including the remedies available to Landlord hereunder,
this Lease is executed and delivered by Tenant on the express condition that in
all events, including an Event of Default by Tenant, no personal liability is
assumed by nor shall any personal liability be asserted against any individual
(whether current, former, or retired), or any manager, member, trustee, partner,
shareholder, officer or director of Tenant, all such personal liability having
been waived and Landlord’s only recovery for damages or otherwise being limited
to the assets of Tenant. Landlord agrees that, in any action arising out of or
relating to the performance of this Lease, Landlord will proceed only against
Tenant or its successors and assigns and not against any individual shareholder
or officer of Tenant (or any entity to which Tenant may assign this Lease), or
any of such shareholder’s directors, officers, employees, agents, shareholders,
or members, or any personal representative, successor or assign of any of the
foregoing, except to the extent necessary to proceed against Tenant or its
successors and assigns. Nothing contained herein, however, shall limit the
liability of persons for their own negligence or willful misconduct in their
individual capacities, as distinct from their capacities as constituent
shareholders of Tenant. In addition, all property and assets of Tenant shall
remain liable for the obligations set forth in this Lease, notwithstanding any
dissolution, liquidation, reformation, or other reorganization of Tenant. The
provisions of this Section 24.3 are enforceable by both Tenant and any
constituent shareholder of Tenant, and shall survive the expiration or earlier
termination of this Lease.
     24.4 Waiver of Consequential Damages. Notwithstanding anything to the
contrary contained in this Lease, neither Landlord nor Tenant shall be liable
under any circumstances for, and each hereby releases the other from all
liability for, consequential damages and injury or damage to, or interference
with, the other party’s business, including, but not limited to, loss of
profits, loss of business opportunity or loss of goodwill, in each case however
occurring except as provided in Article 25 in the case of a holding over.
ARTICLE 25
HOLDOVER TENANCY
     If Tenant holds possession of the Premises after the expiration or
termination of the Term of this Lease, by lapse of time or otherwise, with or
without the express or implied consent of Landlord, Tenant shall become a tenant
at sufferance upon all of the terms contained herein, except as to Term and Base
Rent and any other provision reasonably determined by Landlord to be
inapplicable. During such holdover period, Tenant shall pay to Landlord a
monthly Base Rent equivalent to one hundred fifty percent (150%) of the greater
of (i) the Base Rent payable by Tenant to Landlord during the last month of the
Term of this Lease, and (ii) Landlord’s then prevailing rate for space in the
Project that is comparable to the Premises. The monthly rent payable for such
holdover period shall in no event be construed as a penalty or as liquidated
damages for such retention of possession. Neither any provision hereof nor any
acceptance by Landlord of any rent after any such expiration or earlier
termination shall be deemed a consent to any holdover hereunder or result in a
renewal of this Lease or an extension of the Term, or any waiver of

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any of Landlord’s rights or remedies with respect to such holdover.
Notwithstanding any provision to the contrary contained herein, (a) Landlord
expressly reserves the right to require Tenant to surrender possession of the
Premises upon the expiration of the Term of this Lease or upon the earlier
termination hereof or at any time during any holdover and the right to assert
any remedy at law or in equity to evict Tenant and collect damages in connection
with any such holdover, and (b) Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all claims, demands, actions, proceedings,
losses, damages, liabilities, obligations, penalties, costs and expenses
incurred or suffered by or asserted against Landlord by reason of Tenant’s
failure to surrender the Premises on the expiration or earlier termination of
this Lease in accordance with the provisions of this Lease; provided, however,
that Landlord shall not be entitled to any damages incurred by Landlord due to
the loss of a prospective tenant or delay in delivering the Premises or any
portion thereof to a prospective tenant resulting from Tenant’s holdover unless
Landlord has given notice to Tenant of the execution of a lease and the date
Landlord, pursuant to such lease, intends to deliver the Premises or any portion
thereof to the prospective tenant at least thirty (30) days prior to such date.
ARTICLE 26
NOTICES
     All notices which Landlord or Tenant may be required, or may desire, to
serve on the other may be served, as an alternative to personal service, by
(i) mailing the same by registered or certified mail, postage prepaid, or
(ii) by a reputable overnight courier service, which provides evidence of
delivery, addressed to the Landlord at the address for Landlord set forth in
Item 10 of the Basic Lease Provisions and to Tenant at the address for Tenant
set forth in Item 10 of the Basic Lease Provisions, or addressed to such other
address or addresses as either Landlord or Tenant may from time to time
designate to the other in writing or to such addresses required to comply with
applicable Law. Any notice shall be deemed to have been served at the time the
same was delivered (or at the time delivery was rejected).
ARTICLE 27
BROKERS
     Landlord and Tenant each warrants to the other that it has not had any
contact or dealings with any person or real estate broker other than the firms
specified in Item 8 of the Basic Lease Provisions (collectively, “Broker”) which
would give rise to the payment of any fee or brokerage commission in connection
with this Lease, and Landlord and Tenant shall indemnify, hold harmless and
defend the other from and against any liability with respect to any fee or
brokerage commission (except one owing to Broker) arising out of any act or
omission of the indemnifying party. Landlord covenants and agrees to pay all
real estate commissions due in connection with this Lease to Broker in
accordance with the commission agreement executed by Landlord.
ARTICLE 28
SIGNAGE RIGHTS
     28.1 Tenant shall not (i) place or install (or permit to be placed or
installed by any Tenant Party) any signs, advertisements, logos, identifying
materials, pictures or names of any type on the roof, exterior areas or Common
Areas of the Building or the Project or in any area of the Building, Premises or
Project which is visible from the exterior of the Building or outside of the
Premises except for the Building Top Sign and Monument Sign or (ii) place or
install (or permit to be placed or installed by any Tenant Party) in or about
any portion of the Premises any window covering (even if behind Building
standard window coverings) or any other material visible from outside of the
Premises or from the exterior of the Building.
     28.2 Subject to compliance with applicable Laws and such Building signage
criteria as Landlord shall apply from time to time and subject to receipt of
Landlord’s prior written consent, Tenant may require Landlord to install, at
Landlord’s sole cost and expense (including the cost to remove at the expiration
or earlier termination of this Lease), Project-standard suite identification
signage and lobby directory signage for the Premises. In addition, Tenant may
place in any portion of the inside of the Premises not visible from the exterior
of the Building or from outside of the Premises such additional identification
signage as Tenant shall desire at Tenant’s sole cost and expense. All signage
described in this Article 28 shall be treated as Tenant’s personal property
under the provisions of Section 10.5 with respect to Tenant’s obligation at the
expiration or early termination of this Lease.
     28.3 Exterior Signs.
          28.3.1 Grant of Rights. Subject to the provisions of this
Section 28.3, Tenant shall have the exclusive right to cause Landlord to display
a sign (the “Building Top Sign”) identifying Tenant by its Business Name on the
parapet of the Building in an exact location mutually agreed by Landlord and
Tenant in good faith; provided, however, that if Tenant is unable to obtain the
necessary governmental permits and approvals for the Building Top Sign, Tenant
shall have the exclusive right, subject to the provisions of this Section 28.3,
to cause Landlord to identify Tenant by its Business Name on an eyebrow sign
(“Eyebrow Signage”), in lieu of the Building Top Sign, on the exterior of the
Building in an exact location reasonably agreeable to Landlord and Tenant and
all references herein to the Building Top Sign shall refer and apply to the
Eyebrow Signage.
          28.3.2 Definitions.
               (i) “Business Name” means “CapitalSource Bank”, and may include
the CapitalSource Bank logo, and no other name, logo or trade name except of a
Permitted Transferee in accordance with Section 28.3.7 below.
               (ii) “Building Top Sign Occupancy Requirement” means, and shall
be satisfied only if, the Tenant or Permitted Transferee whose Business Name is
on the Building Top Sign leases and occupies at least 1% in the case of Tenant,
or 25% as to a Permitted Transferee, of the Rentable Area in the Building
(provided that, for purposes of determining whether the Building Top Sign
Occupancy Requirement is satisfied, space that is occupied by any of such
Tenant’s Affiliates or Successors shall be deemed occupied by the Tenant whose
Business Name is on the Building Top Sign).
               (iii) “Objectionable Name” means any name or trade name or logo
that (a) relates to an entity that is of a character or reputation, or is
associated with a political faction or orientation that is materially
inconsistent with the quality of the Project, or that would otherwise be
reasonably objectionable to an institutional quality landlord of a building

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comparable to the Building (taking into consideration the visibility, location,
size and prominence of the Building Top Sign) or (b) conflicts with any
covenants contained in any other leases of space in the Project.
          28.3.3 Intentionally Omitted.
          28.3.4 Specifications and Permits. The graphics, materials, color,
design, lettering, size, area exact location, lighting and specifications and
all other aesthetic factors of the Building Top Sign shall be (i) subject to the
prior written consent of Landlord (in Landlord’s reasonable discretion),
(ii) consistent with the size and quality of comparable signage on comparable
institutionally owned first-class office buildings in the local market, and
(iii) consistent with the overall character of the Project’s architecture (as
determined by Landlord in its reasonable discretion). In addition, all of
Tenant’s rights under this Section 28.3 shall be subject to (a) the receipt of
and continuing compliance with all required governmental permits and approvals
(and the submission of copies thereof to Landlord) required for the installation
and continuing display of the Building Top Sign and (b) the continuing
compliance of such signs with all applicable Laws. Landlord shall, at no expense
to Landlord, reasonably cooperate with Tenant’s efforts to obtain the necessary
governmental permits and approvals for the Building Top Sign, but Landlord makes
no representation or warranty as to Tenant’s ability to obtain same.
          28.3.5 Cost and Maintenance; Removal. The Building Top Sign shall be
installed by a contractor retained by Tenant and approved by Landlord (in its
reasonable discretion), and shall be operated and maintained by Tenant, at
Tenant’s sole cost and expense. Without limiting the foregoing, Tenant shall be
responsible for all costs and expenses incurred in connection with or relating
to the installation, operation, lighting (including electrical charges
therefor), maintenance and repairs of the Building Top Sign and the eventual
removal and disposal of the Building Top Sign. Within a reasonable time
following the expiration or earlier termination of this Lease (or after
termination of Tenant’s rights with respect to the Building Top Sign pursuant to
Section 28.3.6 or 28.3.7, below), which shall in no event be later than thirty
(30) days after such expiration or termination of this Lease (or after such
termination of such signage rights), Tenant shall, at Tenant’s sole cost and
expense, commence, and thereafter shall diligently pursue, the removal of the
Building Top Sign, and shall cause the areas in which such Building Top Sign
were located to be restored to the condition existing immediately prior to the
placement of such Building Top Sign on the Building (subject to ordinary wear
and tear). If Tenant fails to timely remove the Building Top Sign or to restore
the areas in which the Building Top Sign was located, as provided in the
immediately preceding sentence, then Landlord may perform such work, and all
reasonable costs incurred by Landlord in so performing such work, plus interest
at the Interest Rate from the date of Landlord’s payment of such costs to the
date of Tenant’s reimbursement to Landlord, shall be reimbursed by Tenant to
Landlord within thirty (30) days after Tenant’s receipt of an invoice therefor.
The terms of this Section 28.3.5 shall survive the expiration or earlier
termination of this Lease.
          28.3.6 Termination. Notwithstanding any provision of this Lease to the
contrary, by notice delivered to Tenant, Landlord may, at its option, elect to
terminate all of Tenant’s rights with respect to the Building Top Sign at any
time that the Building Top Sign Occupancy Requirement is no longer satisfied, in
which case, upon delivery of such notice all of Tenant’s rights under this
Section 28.3 to the Building Top Sign shall terminate and shall be of no further
force or effect. In the event that Tenant’s rights with respect to the Building
Top Sign are terminated in accordance with the previous sentence, Tenant shall,
at its sole cost and expense, remove the Building Top Sign in accordance with
Section 28.3.5, above.
          28.3.7 Transfer of Rights. The rights granted under this Section 28.3
shall not be transferable in any respect whatsoever other than to a Transferee
consented to by Landlord pursuant to Article 15 or an Affiliate or Successor of
Tenant (each a “Permitted Transferee”), in each case in connection with an
assignment or a sublease to such Permitted Transferee; provided, however, that
Tenant may only effectuate a transfer of its rights under this Section 28.3 to
such Permitted Transferee if and to the extent such Permitted Transferee does
not have an Objectionable Name. Following any such assignment or a change in
name of Tenant or a Permitted Transferee, Tenant shall have the right to cause a
contractor retained by Tenant and approved by Landlord (in Landlord’s reasonable
discretion) to install a different sign identifying such Permitted Transferee by
its business or trade name on the parapet of the Building in the same location
as the previous sign, but only on the condition that such different business or
trade name is the business or trade name of the Tenant or such Permitted
Transferee, as applicable, is not an Objectionable Name and is otherwise in
substantial conformance with all of the requirements of this Article 28.
          28.3.8 Monument Sign. Landlord and Tenant acknowledge and agree that
there is not currently a monument sign located near the front entrance to the
Building. To the extent Tenant desires to install a single tenant monument sign,
Tenant shall have the right to seek, at Tenant’s sole cost and expense, all
required governmental permits and approvals for the construction of such
monument sign, in a location mutually reasonably agreed upon by Landlord and
Tenant near the front entrance to the Building, and the placement of Tenant’s
Business Name thereon (“Monument Sign”). In the event Tenant seeks such permits
and approvals and is unsuccessful, the obligations of Tenant under this Lease
shall not be affected. If Tenant successfully obtains such permits and
approvals, Tenant’s installation, repair and usage of such monument sign shall
be at Tenant’s sole cost and expense and subject to all terms set forth above in
this Section 28.3 related to the Building Top Sign. Landlord shall, at no
expense to Landlord, reasonably cooperate with Tenant’s efforts to obtain the
necessary governmental permits and approvals for the Monument Sign, but Landlord
makes no representation or warranty as to Tenant’s ability to obtain same.
          28.3.9 Restriction on Landlord. For so long as Tenant retains its
rights with respect to the Building Top Sign, Landlord shall not grant Building
top signage rights to any other tenant.
ARTICLE 29
BROKERAGE COMMISSION — OFFSET RIGHT
     If (a) Landlord breaches its obligation relating to the payment of any
commission due to Grubb & Ellis Company (“Tenant’s Broker”) as set forth in
Article 27 above, (b) Tenant has paid to Tenant’s Broker such amount which was
required to be paid by Landlord to Tenant’s Broker pursuant to Article 27, and
(c) Landlord does not reimburse Tenant for such amount within ten (10) business
days after demand therefor by Tenant, then Tenant shall have the right to offset
any such amount paid by Tenant to Tenant’s Broker against the Base Rent next
falling due after the expiration of said ten (10) business day period. Any such
offset made by Tenant shall be credited against Landlord’s obligations with
respect to the payment of commissions to Tenant’s Broker. This Article 29 shall
not negate or limit Landlord’ indemnification obligations under Article 27.

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ARTICLE 30
MISCELLANEOUS
     30.1 Entire Agreement. This Lease contains all of the agreements and
understandings relating to the leasing of the Premises and the obligations of
Landlord and Tenant in connection with such leasing. Landlord has not made, and
Tenant is not relying upon, any warranties, or representations, promises or
statements made by Landlord or any agent of Landlord, except as expressly set
forth herein. This Lease supersedes any and all prior agreements and
understandings between Landlord and Tenant and alone expresses the agreement of
the parties.
     30.2 Amendments. This Lease shall not be amended, changed or modified in
any way unless in writing executed by Landlord and Tenant. Landlord shall not
have waived or released any of its rights hereunder unless in writing and
executed by the Landlord.
     30.3 Successors. Except as expressly provided herein, this Lease and the
obligations of Landlord and Tenant contained herein shall bind or inure to the
benefit Landlord and Tenant and their respective successors and assigns,
provided this clause shall not permit any Transfer by Tenant contrary to the
provisions of Article 15.
     30.4 Intentionally Omitted.
     30.5 Force Majeure. Neither Landlord nor Tenant shall be liable for any
failure to comply or delay in complying with its obligations hereunder to the
extent such failure or delay is due to acts of God, inability to obtain labor,
strikes, lockouts, lack of materials, governmental restrictions, enemy actions,
war, terrorism, bioterrorism, civil commotion, fire, earthquake, unavoidable
casualty or other similar causes beyond Landlord’s or Tenant’s (as applicable)
reasonable control (all of which events are herein referred to as “Force
Majeure”). It is expressly agreed that Landlord shall not be obliged to settle
any strike to avoid a force majeure event from continuing. In no event shall
failure to pay Rent or other sums due hereunder from one party to the other be
excused as a result of Force Majeure.
     30.6 Intentionally Omitted.
     30.7 Intentionally Omitted.
     30.8 Governing Law. This Lease shall be governed by, and construed in
accordance with, the laws of the state of California (without regard to its
conflicts of laws rules or principles).
     30.9 Prohibition Against Recording. Neither this Lease nor any memorandum,
affidavit or other writing with respect thereto shall be recorded by Tenant or
by anyone acting through, under or on behalf of Tenant.
     30.10 Severability. In the event any provision of this Lease is found to be
unenforceable, the remainder of this Lease shall not be affected, and any
provision found to be invalid shall be enforceable to the extent permitted by
law. The parties agree that in the event two different interpretations may be
given to any provision hereunder, one of which will render the provision
unenforceable, and one of which will render the provision enforceable, the
interpretation rendering the provision enforceable shall be adopted.
     30.11 Captions. All captions, headings, titles, numerical references and
computer highlighting are for convenience only and shall have no effect on the
interpretation of this Lease.
     30.12 Interpretation. Tenant acknowledges that it has read and reviewed
this Lease and that it has had the opportunity to confer with counsel in the
negotiation of this Lease. Accordingly, this Lease shall be construed neither
for nor against Landlord or Tenant, but shall be given a fair and reasonable
interpretation in accordance with the meaning of its terms and the intent of the
parties.
     30.13 Independent Covenants. Except as otherwise provided herein, each
covenant, agreement, obligation or other provision of this Lease to be performed
by Tenant and Landlord are separate and independent covenants of Tenant and
Landlord, as applicable, and not dependent on any other provision of this Lease.
     30.14 Number and Gender. All terms and words used in this Lease, regardless
of the number or gender in which they are used, shall be deemed to include the
appropriate number and gender, as the context may require.
     30.15 Time is of the Essence. Time is of the essence of this Lease and the
performance of all obligations hereunder.
     30.16 Joint and Several Liability. If Tenant comprises more than one person
or entity, all such persons shall be jointly and severally liable for payment of
Rents and the performance of Tenant’s obligations hereunder.
     30.17 Intentionally Omitted.
     30.18 Choice of Jurisdiction. Tenant hereby submits to local jurisdiction
in the State of California and agrees that any action by Tenant against Landlord
shall be instituted in the State of California and that Landlord shall have
personal jurisdiction over Tenant for any action brought by Landlord against
Tenant in the State of California.
     30.19 Rights Reserved by Landlord. Landlord reserves the following rights
exercisable without notice (except as otherwise expressly provided to the
contrary in this Lease) and without being, deemed an eviction or disturbance of
Tenant’s use or possession of the Premises or giving rise to any claim for
set-off or abatement of Rent: (i) to change the name or street address of the
Project (provided that, notwithstanding the foregoing, Landlord shall not
initiate a change of name or address for the Building); (ii) to install, affix
and maintain all signs on the exterior and/or interior of the Building (subject
to the restriction set forth in Section 28.3.9, and provided that Landlord shall
not grant any tenant, licensee, occupant or other party the right to exterior
identification signage on the Building Property without Tenant’s consent) and/or
the Project; (iii) to designate and/or approve prior to installation, all types
of signs, window shades, blinds, drapes, awnings or other similar items, and all
internal lighting that may be visible from the exterior of the Premises and,
notwithstanding the provisions of Article 10, the design,

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arrangement, style, color and general appearance of the portion of the Premises
visible from the exterior, and contents thereof, including, without limitation,
furniture, fixtures, signs, art work, wall coverings, carpet and decorations,
and all changes, additions and removals thereto, shall, at all times have the
appearance of premises having the same type of exposure and used for
substantially the same purposes that are generally prevailing in first class
office buildings in the area. Any violation of this provision shall be deemed a
material breach of this Lease; (iv) to display the Premises and/or the Building
and/or the Project to mortgagees, prospective mortgagees, prospective purchasers
and ground lessors at reasonable hours upon reasonable advance notice to Tenant;
(v) to change the arrangement of entrances, doors, corridors, elevators and/or
stairs in the Building and/or the Project, provided no such change shall
materially adversely affect access to the Premises; (vi) to grant any party the
exclusive right to conduct any business or render any service in the Project,
provided such exclusive right shall not materially interfere with Tenant’s use
of the Premises for the purposes permitted under this Lease, and further
provided that Landlord shall give Tenant prior notice of any such exclusive
rights; (vii) to prohibit the placement of vending or dispensing machines of any
kind in or about the Premises other than for use by Tenant’s employees;
(viii) to prohibit the placement of video or other electronic games in the
Premises; (ix) to have access for Landlord and United States Post Office workers
to any mail chutes and boxes located in or on the Premises according to the
rules of the United States Post Office and to discontinue any mail chute
business in the Building and/or the Project; (x) to close the Building after
normal business hours, except that Tenant and its employees and invitees shall
be entitled to admission at all times under such rules and regulations as
Landlord prescribes for security purposes; (xi) to install, operate and maintain
security systems which monitor, by closed circuit television or otherwise, all
persons entering or leaving the Building and/or the Project; and (xii) to
install and maintain pipes, ducts, conduits, wires and structural elements
located in the Premises which serve other parts or other tenants of the Building
and/or the Project and do not impair Tenant’s operations.
     30.20 Intentionally Omitted.
     30.21 Authority. If Tenant signs as a corporation, the person(s) executing
this Lease on behalf of Tenant hereby covenant and warrant that Tenant is a duly
authorized and existing entity, that Tenant has and is qualified to do business
in California, that Tenant has full right and authority to enter into this
Lease, and that the person signing on behalf of Tenant is authorized to do so.
The person executing this Lease on behalf of Landlord hereby covenants and
warrants that Landlord has full right and authority to enter into this Lease and
that the person signing on behalf of Landlord is authorized to do so. If
requested by the other party within thirty (30) days after the Effective Date, a
party shall deliver to the other party resolutions or other evidence of the
authority of the person(s) signing this Lease on behalf of such party to execute
and deliver this Lease on its behalf; provided, however, that Landlord agrees
not to request such resolutions or evidence from Tenant if this Lease is
executed by two (2) of the corporate officers which satisfy the presumption of
authority set forth in Section 313 of the California Corporations Code.
     30.22 Transportation Management. Tenant shall fully comply with all present
or future programs required by Law or implemented at the Project consistent with
Intuitional Owner Practices to manage parking, transportation or traffic in and
around the Building, and in connection therewith, Tenant shall take responsible
action for the transportation planning and management of all employees located
at the Premises by working directly with Landlord, any governmental
transportation management organization or any other transportation-related
committees or entities.
     30.23 The Other Improvements. If portions of the Project or property
adjacent to the Project (collectively, the “Other Improvements”) are owned by an
entity other than Landlord, Landlord, at its option, in its sole and absolute
discretion, may enter into an agreement with the owner or owners of any or all
of the Other Improvements to provide (i) for reciprocal rights of access and/or
use of the Project and the Other Improvements, (ii) for the common management,
operation, maintenance, improvement and/or repair of all or any portion of the
Project and the Other Improvements, (iii) for the allocation of a portion of the
Operating Expenses to the Other Improvements and the operating expenses and
taxes for the Other Improvements to the Project, and (iv) for the use or
improvement of the Other Improvements and/or the Project in connection with the
improvement, construction, and/or excavation of the Other Improvements and/or
the Project to the extent such actions will not materially impair Tenant’s use
and operation of the Premises or materially increase Tenant’s liabilities
hereunder. Nothing contained herein shall be deemed or construed to limit or
otherwise affect Landlord’s right to convey all or any portion of the Project or
any other of Landlord’s rights described in this Lease.
     30.24 Renovation of the Project and Other Improvements. Tenant acknowledges
that portions of the Project and/or the Other Improvements may be under
construction following Tenant’s occupancy of the Premises, and that such
construction may result in levels of noise, dust, obstruction of access, etc.
which are in excess of that present in a fully constructed project. Tenant
acknowledges and agrees that Landlord may alter, remodel, improve and/or
renovate (collectively, the “Renovation Work”) the Building and/or the Project,
and in connection with any Renovation Work, Landlord may, among other things,
erect scaffolding or other necessary structures in the Building, or the Project,
restrict access to portions of the Project, including portions of the Common
Areas, or perform work in the Building and/or the Project. Landlord agrees to
use commercially reasonable efforts to minimize any disruption or interference
with Tenant’s business operations during the course of the Renovation Work and
at all times to comply with governmental security regulations and Tenant’s
reasonable internal security procedures.
     30.25 No Partnership or Joint Venture. Nothing contained in this Lease
shall be deemed or construed to create the relationship of principal and agent,
or partnership, or joint venturer, or any other relationship between Landlord
and Tenant other than landlord and tenant.
     30.26 Right to Lease. Landlord reserves the absolute right to lease space
in the Project and to create such other tenancies in the Project as Landlord, in
its sole business judgment, shall determine is in the best interests of the
Project. Landlord does not represent and Tenant does not rely upon any specific
type or number of tenants occupying any space in the Building and/or the Project
during the Term of this Lease.
     30.27 Counterparts. This Lease may be executed in counterparts, each of
which shall be deemed an original, but such counterparts, when taken together,
shall constitute one agreement.
     30.28 OFAC. Tenant represents and warrants that, to Tenant’s knowledge,
neither Tenant nor any of its affiliates, nor any of their respective partners,
members, shareholders or other equity owners, and none of their respective
employees, officers, directors, representatives or agents, is a person or entity
with whom U.S. persons or entities are restricted from doing business under
regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of
the Treasury (including those named on OFAC’s Specially Designated and Blocked
Persons List) or under any statute, executive order (including the September 24,
2001, Executive Order Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit, or Support Terrorism), or other
governmental action. Landlord represents and warrants that, to Landlord’s
knowledge,

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neither Landlord nor any of its affiliates, nor any of their respective
partners, members, shareholders or other equity owners, and none of their
respective employees, officers, directors, representatives or agents, is a
person or entity with whom U.S. persons or entities are restricted from doing
business under OFAC (including those named on OFAC’s Specially Designated and
Blocked Persons List) or under any statute, executive order (including the
September 24, 2001, Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action.
ARTICLE 31
PATIO
     (a) Landlord conceptually approves of Tenant’s construction of a patio area
in the location shown on the Space Plan (as defined in Section 2.1(a) of Exhibit
“C”) (the “Patio”), for the exclusive use of Tenant, its employees and invitees.
Notwithstanding Landlord’s approval of the Space Plan, Tenant’s right to
construct the Patio is subject to Tenant’s obtaining, at its sole cost and
expense, the approvals from the required governmental entities (including the
City of Irvine, if applicable). Landlord shall, at no expense to Landlord,
reasonably cooperate with Tenant’s efforts to obtain such approvals, but
Landlord makes no representation or warranty as to Tenant’s ability to obtain
same.
     (b) All costs of any planning, construction and/or improvement in
connection with the Patio shall be borne by Tenant. The submittal by Tenant and
review and approval by Landlord of plans for the Patio shall be governed by
Exhibit “C”; provided that the landscaping design for the Patio shall be
consistent with the landscaping plan for the Project. Tenant may place, but
shall seek Landlord’s advance written consent (not to be unreasonably withheld)
to all proposed furniture, fixtures, umbrellas, large plants or other large
material items of any kind whatsoever which Tenant desires to place on the
Patio, and the general configuration thereof.
     (c) Tenant acknowledges that Landlord has an interest in maintaining
control over the exterior appearance of the Building Property in order to
preserve the image and reputation of the Building as a first class office
building. Tenant agrees, therefore, that Landlord shall have the right to
approve or reasonably withhold approval of any furniture, fixtures, plants or
other items that Tenant desires to place on the Patio, and the configuration
thereof, on such grounds. In determining whether to approve such items, Landlord
may consider such factors as, without limitation, which Tenant agrees are
reasonable factors, (i) whether such items are compatible with a first-class
project and its appearance to the public, (ii) the impact of such items on the
overall ambience and atmosphere of the Project, and (iii) whether such items are
compatible with the appearance of the Building’s exterior. Tenant shall not be
permitted to display any graphics, signs or insignias or the like on the Patio
without Landlord’s consent.
     (d) The cleaning and landscape maintenance for the Patio shall be performed
by Landlord’s contractors, and included in Operating Expenses. Landlord shall be
entitled to reasonable access to the Patio in order to fulfill its
responsibility with respect to maintenance and landscape maintenance and perform
its other obligations under this Lease, and Landlord shall be entitled to access
the Patio at any time and to the extent reasonably necessary in the event of an
emergency.
     (e) Tenant’s use of the Patio shall, at all times, be consistent with a
first-class commercial office project (by way of example, uses of the Patio may
include, without limitation, office meetings and luncheons). Without limiting
the generality of the foregoing, the Patio shall not be used for weddings,
wedding receptions, proms, bar mitzvahs, or other events inconsistent with a
first-class commercial office project. Compliance with all rules, regulations,
statutes and laws of any governmental agency pertaining to Tenant’s use of the
Patio will be the sole responsibility of Tenant.
     (f) Promptly following the substantial completion of the Patio, Tenant
shall furnish Landlord with evidence that Tenant’s current insurance coverages,
per the terms of this Lease, are extended to cover the Patio.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, this Lease is hereby executed as of the Effective Date.

                  LANDLORD:    
 
                MAGUIRE PROPERTIES — 130 S. STATE COLLEGE, LLC,         a
Delaware limited liability company    
 
           
 
  By:
Name:   /s/ Douglas J. Gardner
 
Douglas J. Gardner    
 
  Title:   EVP    
 
                TENANT:    
 
                CAPITALSOURCE BANK,         a California corporation    
 
           
 
  By:
Name:   /s/ Mark Gordon
 
Mark Gordon    
 
  Title:   SVP Corporate Real Estate    
 
           
 
  By:
Name:   /s/ John A. Bogler
 
John A. Bogler    
 
  Title:   CPO    

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