Exhibit 10.23

BRANDIN COURT PARTNERS, LLC

AMENDED AND RESTATED STANDARD NNN LEASE

WITNESSETH

This Amended and Restated Standard NNN Lease (the “Lease”) is entered into by
and between Brandin Court Partners, LLC, a California Limited Liability Company
(“Landlord”), and 3PAR Inc., a Delaware Corporation (“Tenant”).

RECITALS

WHEREAS, Landlord and Tenant previously entered into that certain, Standard NNN
Lease, dated as of August 17, 2007 (the “Original Lease”), regarding the lease
by Tenant from Landlord of the property commonly known as 5070 Brandin Court,
Fremont, California (the “5070 Premises”);

WHEREAS, Landlord is also the owner of that certain property commonly known as
5020 Brandin Court, Fremont, California (the “5020 Premises”), which property is
located immediately adjacent to the 5070 Premises;

WHEREAS, First International Computer of American, Inc., a California
corporation (“FICA”), is the current tenant of the 5020 Premises under a lease
with Landlord (the “FICA Lease”) that will expire on or about July 6, 2009;

WHEREAS, FICA and Landlord desire to terminate early the FICA Lease pursuant to
a separate agreement between Landlord and FICA to be entered into concurrent
with this Lease; and

WHEREAS, Landlord and Tenant desire to amend and restate the Original Lease to
provide for the inclusion of the 5020 Premises and to provide for such
additional terms and conditions related to Tenant’s lease of the 5020 Premises
from Landlord.

NOW, THEREFORE, in consideration of the payment of rents and the performance of
covenants herein set forth by Tenant, Landlord does hereby lease to Tenant and
Tenant accepts the Premises described below subject to the agreements herein
contained.

1. BASIC LEASE TERMS.

 

1.1

   EFFECTIVE DATE:    October 16, 2008 1.2    TENANT:    3PAR Inc., a Delaware
Corporation    Address (of the Premises):    5020 and 5070 Brandin Court      
Fremont, California 94538       Tel: _________________       Fax:
_________________    Address (for Notices):    4209 Technology Drive, Fremont Ca
94538

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1.3

   LANDLORD:    Brandin Court Partners, LLC    Address (for Notices):    11828
La Grange Avenue      

Los Angeles, California 90025

Attn: Keith M. Wolff

      Tel: 310-625-8184       Fax: 603-720-8057       Email:
kwolff@wolffurban.com

1.4

   TENANT’S USE:    Office, manufacturing, and warehouse of electronic, computer
or medical equipment, products, devices or software and related uses.

1.5

   BUILDING:    76,599 Rentable Square Feet in the building located at 5020
Brandin Court (the “5020 Building”) and 56,257 Rentable Square Feet in the
building located at 5070 Brandin Court (the “5070 Building”)

1.6

   PREMISES AREA:    The 5020 Building, the 5070 Building, and related parking
areas

1.7

   BUSINESS PARK:    132,856 Rentable Square Feet

1.8

   INSURING PARTY:    Landlord is the “Insuring Party” unless otherwise stated
herein.

1.9

   TERM (inclusive):    Commencement Date for the 5020 Premises: the later of
(i) the date on which Landlord delivers possession of the 5020 Premises in the
condition required hereunder and (ii) January 1, 2009 (the “5020 Commencement
Date”)       Commencement Date for the 5070 Premises: August 1, 2007 (the “5070
Commencement Date”)       Expiration Date: December 31, 2012       Number of
Months Remaining as of the Effective Date: approximately [50]

 

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1.10

   % OF BUSINESS PARK:   

From the 5070 Commencement Date until the 5020 Commencement Date: 42.3% (56,257
sq. ft. / 132,856 sq. ft.);

From the 5020 Commencement Date until the Expiration Date: 100% (132,856 sq. ft.
/ 132,856 sq. ft.)

1.11

   PARKING SPACES:    All spaces in the Business Park.

1.12

   BASE RENT ADJUSTMENT:       The step adjustment provisions of ¶4.2 apply for
the periods shown below:    Periods (inclusive)    Monthly Base Rent    03/01/08
- 12/31/08    $17,439.67 per month ($0.00 per sq. ft. in the 5020 Building and
$0.31 per sq. ft. in the 5070 Building)    01/01/09 - 06/30/09    $19,689.95 per
month ($0.00 per sq. ft. in the 5020 Building and $0.35 per sq. ft. in the 5070
Building)    07/01/09 - 12/31/09    $56,457.47 per month ($0.48 per sq. ft. in
the 5020 Building and $0.35 per sq. ft. in the 5070 Building)    01/01/10 -
12/31/10    $61,927.44 per month ($0.50 per sq. ft. in the 5020 Building and
$0.42 per sq. ft. in the 5070 Building)    01/01/11 - 12/31/11    $65,709.70 per
month ($0.52 per sq. ft. in the 5020 Building and $0.46 per sq. ft. in the 5070
Building)    01/01/12 - 12/31/12    $69,491.96 per month ($0.54 per sq. ft. in
the 5020 Building and $0.50 per sq. ft. in the 5070 Building)

1.13

   SECURITY DEPOSIT:    $123,498.68 ($41,362.78 for the 5020 Premises and
$82,135/22 for the 5070 Premises).

1.14

   GUARANTORS:    None

1.15

   BROKER(S):    CB Richard Ellis represents the Landlord. The Landlord shall
pay CB Richard Ellis a lease commission per separate agreement.

1.16

   EXHIBITS:    Exhibits lettered “A” through “D” are attached hereto and made a
part hereof.

2. PREMISES, PARKING AND COMMON AREAS.

2.1 Premises. The 5020 Premises and the 5070 Premises are collectively referred
to herein as the “Premises”. The Premises, the 5020 Building, the 5070 Building,
the Common Areas, the land upon which the same are located, along with all other
buildings and improvements thereon or thereunder, are herein collectively
referred to as the “Business Park” as described in ¶1 and Exhibit A. Landlord
hereby leases to Tenant and Tenant leases from

 

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Landlord for the Term (as defined below), at the rental, and upon all of the
conditions set forth herein, the Premises, including rights to the Common Areas
as hereinafter specified. Subject to any additional work Landlord has agreed
therein to do, Tenant hereby accepts the 5020 Premises in their condition
existing as of the date of the execution hereof, subject to all applicable
zoning, municipal, county and state laws, ordinances and regulations governing
and regulating the use of the 5020 Premises, and accepts this Lease subject
thereto and to all matters disclosed thereby and by any exhibits attached
hereto. Tenant acknowledges that Tenant accepted the 5070 Premises in the
condition existing as of the date of the mutual execution of the Original Lease,
subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the 5070 Premises, and
accepted the Original Lease subject thereto and to all matters disclosed thereby
and by any exhibits attached thereto. Notwithstanding the foregoing, Landlord
warrants that: (i) the 5070 Premises was in good and clean operating condition
and repair as of the 5070 Commencement Date; (ii) the lights, doors, electrical,
mechanical, HVAC, plumbing, sewer, elevator and other systems serving the 5070
Premises and the 5070 Building were in good operating condition and repair as of
the 5070 Commencement Date; (iii) the roof of the 5070 Building was in good
condition and water tight as of the 5070 Commencement Date; and (iv) to
Landlord’s knowledge (without duty of investigation or inquiry), the 5070
Building complies with all applicable laws, rules, regulations, codes,
ordinances, underwriter’s requirements, covenants, conditions and restrictions
(collectively, “Laws”) as of the 5070 Commencement Date; provided, however, that
Landlord make no representation or warranty herein regarding the condition of
any of the foregoing as they may apply to the 5070 Premises for the period
following the 5070 Commencement Date. Further notwithstanding the foregoing,
Landlord warrants that (a) the 5020 Premises will be in good and clean operating
condition and repair as of the 5020 Commencement Date; (b) the lights, the
doors, electrical, mechanical, HVAC, plumbing, sewer, elevator and other systems
serving the 5020 Premises and the 5020 Building will be in good operating
condition and repair as of the 5020 Commencement Date; (c) the roof of the 5020
Building will be in good condition and water tight as of the 5020 Commencement
Date; and (d) to Landlord’s knowledge (without duty of investigation or inquiry)
the 5020 Premises and 5020 Building comply with all applicable Laws as of the
5020 Commencement Date. The foregoing warranties do not apply to the use to
which Tenant has or will put the Premises, modifications which may be required
by the ADA or similar laws as a result of Tenant’s use, or to any Alterations
made or to be made by Tenant. Landlord shall, promptly after receipt of notice
from Tenant, remedy any non-compliance with the foregoing warranty at Landlord’s
sole cost and expense; provided, however, if Tenant does not give Landlord
written notice of a non-compliance with said warranty within 180 days after the
5020 Commencement Date, correction of that non-compliance shall be the
obligation of Tenant at Tenant’s sole cost and expense. Tenant agrees with the
square footage specified for the Premises in ¶1 and will not hereafter challenge
such determination and agreement. The rental payable by Tenant pursuant to this
Lease is not subject to revision in the event of any discrepancy in the rentable
square footage for the Premises.

2.2 Vehicle Parking. So long as Tenant is not in default (after applicable
notice and cure periods, if any), and subject to the Rules and Regulations
attached hereto as Exhibit B, and as reasonably established by Landlord from
time to time, Tenant shall be entitled to use the number of parking spaces set
forth in ¶1. If Tenant commits, permits or allows any of the prohibited
activities described in the Lease or the Rules and Regulations then in effect
(after applicable notice and cure periods, if any), then Landlord shall have the
right, without notice, in addition to such other rights and remedies that it may
have, to remove or tow away the vehicle involved and charge the cost to Tenant,
which cost shall be immediately payable upon demand by Landlord.

 

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2.3 Common Areas - Definition. The term “Common Areas” is defined as all areas
and facilities outside the Premises and within the exterior boundary line of the
Business Park that are provided and designated by the Landlord from time to time
for the general non-exclusive use of Landlord, Tenant and of other tenants of
the Business Park and their respective employees, suppliers, shippers, customers
and invitees, including but not limited to common entrances, lobbies, corridors,
stairways and stairwells, public restrooms, elevators, parking areas to the
extent not otherwise prohibited by this Lease, loading and unloading areas,
trash areas, roadways, sidewalks, walkways, parkways, ramps, driveways,
landscaped areas and decorative walls.

2.4 Common Areas - Rules and Regulations. Tenant agrees to abide by and conform
to the Rules and Regulations attached hereto as Exhibit B with respect to the
Business Park and Common Areas, and to cause its employees, suppliers, shippers,
customers and invitees to so abide and conform. Landlord or such other person as
Landlord may appoint, shall have the exclusive control and management of the
Common Areas and shall have the right, from time to time, to reasonably modify,
amend and enforce said rules and regulations. Landlord shall not be responsible
to Tenant for the non-compliance with said rules and regulations by other
tenants, their agents, employees and invitees. Landlord shall, however, enforce
all rules and regulations non-discriminatorily.

2.5 Building and Common Areas - Changes. Landlord shall have the right, in
Landlord’s reasonable discretion, from time to time:

2.5.1 To make changes to the Common Areas, including, without limitation,
changes in the location, size, shape, number and appearance thereof, including
but not limited to the lobbies, windows, stairways, air shafts, elevators,
restrooms, driveways, entrances, parking spaces, parking areas, loading and
unloading areas, ingress, egress, direction of traffic, decorative walls,
landscaped areas and walkways so long as Tenant’s use and occupancy is not
unreasonably impaired thereby;

2.5.2 To close temporarily any of the Common Areas for maintenance purposes so
long as reasonable access to the Premises remains available;

2.5.3 To designate other land and improvements outside the boundaries of the
Business Park to be a part of the Common Areas, provided that such other land
and improvements have a reasonable and functional relationship to the Business
Park;

2.5.4 To add additional buildings and improvements to the Common Areas;

2.5.5 To use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Business Park or any portion thereof; and

 

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2.5.6 To do and perform such other acts and make such other changes in, to or
with respect to the Common Areas and Business Park as Landlord may, in the
exercise of sound business judgment deem to be appropriate so long as Tenant’s
use and occupancy, access, and parking is not unreasonably impaired thereby. In
exercising all such rights, Landlord shall use reasonable efforts to minimize
any disruption to Tenant and shall use reasonable efforts to comply with
Tenant’s reasonable security measures and operating procedures.

2.6 Acceptance; Quiet Enjoyment. Landlord represents that it is the fee simple
owner of the Business Park and has full right and authority to make this Lease.
Landlord hereby leases the Premises to Tenant and Tenant hereby accepts the same
from Landlord, in accordance with the provisions of this Lease. Landlord
covenants that Tenant shall have peaceful and quiet enjoyment of the Premises
during the Term (as defined below) of this Lease. Tenant covenants that it will
not interfere with other tenants’ quiet enjoyment of their premises.

3. TERM. The term (“Term”) of this Lease shall be as follows: (i) with respect
to the 5070 Premises, the period that commenced at 12:01 a.m. on the 5070
Commencement Date and expires at 11:59 p.m. on the Expiration Date; and
(ii) with respect to the 5020 Premises, the period that commences at 12:01 a.m.
on the 5020 Commencement Date and expires at 11:59 p.m. on the Expiration Date.
The parties acknowledge that Landlord has delivered possession of the 5070
Premises to Tenant and Tenant has accepted such delivery.

4. RENT.

4.1 Base Rent. Tenant shall pay Landlord in lawful money of the United States,
without notice, demand, offset or deduction (except as otherwise expressly
provided herein), rent in the amount(s) set forth in ¶1 which shall be payable
in advance on the first day of each and every calendar month (“Base Rent”).
Unless otherwise specified in writing by Landlord, all installments of Base Rent
shall be payable to Brandin Court Partners LLC (11828 La Grange Ave, Los
Angeles, CA 90025). Base Rent for any partial month at the beginning or end of
this Lease will be prorated in accordance with the number of days in the subject
month.

For purposes of Section 467 of the Internal Revenue Code, the parties to this
Lease hereby agree to allocate the stated Base Rent provided herein to the
periods which correspond to the actual Base Rent payments as provided under the
terms and conditions of this Agreement.

4.2 Step Increase. The Base Rent shall be increased periodically to the amounts
and at the times set forth in ¶1.

4.3 Rent Without Offset and Late Charge. All Rent shall be paid without prior
demand or notice and without any deduction or offset whatsoever (except as
otherwise expressly provided in this Lease). All Rent shall be paid in lawful
currency of the United States of America. Tenant acknowledges that late payment
by Tenant to Landlord of any Rent will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of such cost being extremely
difficult and impracticable to ascertain. Such costs include, without
limitation, processing and accounting charges and late charges that may be
imposed on Landlord by the terms of any encumbrance or note secured by the
Premises. Therefore, if any Rent is not received by Landlord within five
(5) days of its due date, Tenant shall pay to Landlord a late charge equal to
five percent (5%) of such overdue payment; provided, however, Landlord shall not
impose a late charge unless Tenant has been past due on such payment of Rent
more than

 

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once in any 12 month period. Landlord and Tenant hereby agree that such late
charge represents a fair and reasonable estimate of the costs that Landlord will
incur by reason of any such late payment and that the late charge is in addition
to any and all remedies available to the Landlord and that the assessment and/or
collection of the late charge shall not be deemed a waiver of any other default.
Additionally, all such delinquent Rent or other sums shall bear interest from
the due date thereof at the lesser of ten percent (10%) per annum or the maximum
legal interest rate permitted by law. Any payments of any kind returned for
insufficient funds will be subject to an additional handling charge of $25.00,
and after the third such returned payment for the remainder of the Term hereof,
Landlord may require Tenant to pay all future payments of Rent or other sums due
by cashier’s check.

4.4 Intentionally Deleted.

4.5 Rent. The term “Rent” as used in this Lease shall refer to Base Rent, Real
Property Taxes, Operating Expenses, Security Deposit(s), Insurance Costs,
repairs and maintenance costs, utilities, late charges and other similar charges
payable by Tenant pursuant to this Lease to Landlord.

5. OPERATING EXPENSES.

5.1 Payment by Tenant. Except as otherwise set forth in this Lease, from the
5070 Commencement Date until the 5020 Commencement Date, Tenant shall pay to
Landlord, as additional Rent, on a monthly basis the greater of: (a) the
Operating Expenses for the 5070 Premises, and (b) the sum of $12,939.11 ($.23
per square foot) per month (the “Initial Operating Expense Floor Amount”).
Except as otherwise set forth in this Lease, from the 5020 Commencement Date
until the Expiration Date, Tenant shall pay to Landlord, as additional Rent, on
a monthly basis the greater of: (a) the Operating Expenses for the Business
Park, and (b) the sum of $30,556.88 ($.23 per square foot) per month (the
“Operating Expense Floor Amount”).

5.2 Operating Expenses. The term “Operating Expenses” shall mean all reasonable
expenses, costs and disbursements (not specifically excluded from the definition
of Operating Expenses below) of every kind and nature which Landlord shall pay
or become obligated to pay because of or in connection with the ownership,
maintenance, repair and operation of the Business Park or any portion thereof
(including all buildings and Common Areas of the Business Park). Operating
Expenses shall include, but not be limited to, the following:

5.2.1 Wages and salaries of all employees of Landlord below the level of
property manager engaged in the operation, maintenance and security of the
Business Park, including taxes, insurance and benefits relating thereto, and the
reasonable rental cost and overhead reasonably allocated to any office and
storage space used to provide such services to the Business Park and other
properties owned by Landlord or any of its affiliates within the general
vicinity of the Business Park.

5.2.2 All supplies and materials used in the operation, repair or maintenance of
the Business Park.

 

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5.2.3 Cost of all utilities, including surcharges, for the Business Park,
including the cost of water, power and lighting which are not separately billed
to and paid for by Tenant or any other party.

5.2.4 Cost of all maintenance and service agreements for the Business Park and
the equipment thereon, including but not limited to, security services, exterior
window cleaning, janitorial service, engineers, gardeners and trash removal
services.

5.2.5 All Insurance Costs, as such term is defined in ¶16.

5.2.6 Cost of all repairs and general maintenance (excluding repairs and general
maintenance paid by proceeds of insurance or by Tenant or other third parties).

5.2.7 An industry standard management fee for the property management of the
Business Park (not to exceed four percent (4%) of gross revenue from the
Business Park, excluding revenue for reimbursement of Real Property Taxes and
Insurance Costs).

5.2.8 The costs of any additional services not provided to the Business Park at
the Commencement Date but thereafter provided by Landlord in its management of
the Business Park.

5.2.9 The cost of any capital Improvements to the Business Park or any part
thereof which are made during the Term hereof with such cost to be amortized
over the useful life of the improvement as reasonably determined by Landlord.

5.2.10 Real Property Taxes, as that term is defined in ¶11.

5.3 Operating Expenses shall not include:

5.3.1 Costs paid for directly by Tenant or other tenants;

5.3.2 Costs incurred in connection with the financing, sale or acquisition of
the Business Park or any portion thereof;

5.3.3 Costs incurred in leasing or procuring tenants (including without
limitation, lease commissions, advertising expenses, attorneys’ fees and
expenses of renovating space for tenants);

5.3.4 Salaries and overhead of off-site personnel employed by Landlord except
for the charge (or pro rata share) of employees below of the property manager of
the Business Park;

5.3.5 Subject to the provisions of ¶5.2.9 above, depreciation on the Building or
other improvements on the Business Park;

5.3.6 Legal expenses for disputes with tenants and any other professional fees
of attorneys, auditors or consultants not incurred in connection with the normal
maintenance and operation of the Business Park;

 

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5.3.7 Expenses which relate to the preparation of rental space for tenants,
including without limitation building permit, license and inspection costs
incurred with respect to the installation or improvements made for occupants of
the Business Park or incurred in renovating or otherwise improving, decorating,
painting or decorating vacant tenant space for the Business Park or other
occupants of the Business Park;

5.3.8 Costs incurred that are reimbursed by tenants of the Business Park,
including Tenant, or third parties, including insurers;

5.3.9 Expenses for repair or replacement covered by warranties, and any costs
due to casualty that are covered by insurance carried by Landlord or that would
have been covered by insurance that Landlord is required to carry under this
Lease or condemnation;

5.3.10 Rentals and other payments by Landlord under any ground lease or other
lease underlying the Lease, and interest, principal, points and other fees on
debt or amortization of any debt secured in whole or part by all or any portion
of the Business Park;

5.3.11 Repairs or replacements caused by Landlord’s gross negligence or the
gross negligence of Landlord’s employees or agents;

5.3.12 Net Income, franchise, capital stock, estate or inheritance taxes or
taxes which are the personal obligation of Landlord or another tenant of the
Business Park;

5.3.13 Landlord’s charitable or political contributions;

5.3.14 Payments to subsidiaries and affiliates of Landlord for services to the
Business Park for supplies or other materials to the extent that the cost of
such services, supplies or materials exceed the cost which would have been paid
had the services, supplies or materials been provided by unaffiliated parties on
a competitive basis (provided, however, any fee for management services paid to
an affiliate of Landlord shall be in the amount set forth in ¶5.2.7);

5.3.15 Any compensation paid to clerks, attendants or other persons in
commercial concessions operated by Landlord:

5.3.16 Advertising and promotional expenditures:

5.3.17 Costs of repairs and other work occasioned by fire, windstorm or other
casualty of an insurable nature to the extent covered by insurance or that would
have been covered by insurance that Landlord is required to carry under this
Lease or deductibles exceeding $10,000 under such insurance (excluding however,
earthquake, flood and terrorism insurance); or

5.3.18 Costs for sculpture, paintings or other objects of art other than for
normal and customary lobby furnishings (nor insurance thereon or extraordinary
security in connection therewith);

5.3.19 Costs for the repair, maintenance, replacement, or restoration of any
portion of the Building or the Business Park not made available for Tenant’s
use;

 

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5.3.20 Costs incurred in connection with the presence of any Hazardous Materials
that (a) existed on the 5070 Premises as of the 5070 Commencement Date, and
exist on the 5020 Premises as of the 5020 Commencement Date, (b) result from
underground migration from property outside of the Business Park, or (c) have
been released at the Business Park by other tenants of the Business Park;

5.3.21 Costs to repair, maintain, replace, or restore the structural portions of
the Building or any other improvements in the Business Park and which are
properly capitalized under generally accepted accounting principles, except to
the extent amortized over the useful life of the capital item in question; and

5.3.22 Expense reserves.

Notwithstanding the foregoing, in the event Landlord obtains earthquake, flood
and/or terrorism insurance, then Operating Expenses shall include the
commercially reasonable cost of the premiums available in the market for such
insurance; provided, however, if Landlord elects not to obtain one or more of
the foregoing insurance or the deductible for such insurance exceeds $10,000 and
the Building suffers a casualty due to a risk that otherwise would be covered
under the insurance so not obtained, then Tenant shall not be responsible for
the cost to repair such uninsured or underinsured casualty (including any
deductible) as part of Operating Expenses, and the same shall be Landlord’s
responsibility but only to the extent Landlord is obligated to repair and
restore the Building under the first sentence of Section 17.5 below.

5.4 Extraordinary Services. Tenant shall pay within thirty (30) days of receipt
of an invoice from Landlord the cost of additional or extraordinary services
provided to Tenant at Tenant’s request and not paid or payable by Tenant
pursuant to other provisions of this Lease.

5.5 Impound. Landlord reserves the right, at Landlord’s option from time to time
during the calendar year to estimate the annual cost of Operating Expenses
incurred by Landlord (“Projected Operating Expenses”) and to require Tenant to
pay Tenant’s Share thereof in advance. Except as provided below in this ¶5.5,
Tenant shall pay to Landlord, monthly in advance as additional Rent, one-twelfth
(1/12) of Tenant’s Share of the Projected Operating Expenses. The failure of
Landlord to timely furnish to Tenant a schedule of the Projected Operating
Expenses for any Calendar Year shall not preclude Landlord from enforcing its
rights to collect any Projected Operating Expenses under this ¶5.

When Landlord provides Tenant with a revised Projected Operating Expense Budget
during any calendar year, the following payment adjustments will be due
Landlord: (1) Effective the first of the month following notification of the new
Projected Operating Expense Budget, Tenant shall pay monthly in advance,
one-twelfth (1/12) of Tenant’s Share of the new Projected Operating Expenses,
and (2) if the revised Projected Operating Expense Budget exceeds the prior
Budget, Landlord shall invoice to Tenant a retroactive billing and Tenant shall
pay said billing within thirty (30) days of receipt of same. The retroactive
billing will reflect the additional amount payable by the Tenant for Tenant’s
Share of the new Operating Expense Budget for the calendar year to date. For
example, assume an annual existing Operating Expense Budget of $144,000 for a
tenant with a tenant’s share of 50% and where such tenant was initially making
$6,000 a month of estimated payments. If the revised Operating Expense Budget
increases by $12,000 to $156,000 and the tenant is notified in June, then the
amounts due per 1) & 2) above are computed as follows:

5.5.1 New Monthly Payment (Effective July 1):

 

Revised Annual Operating Expense Budget

   $  156 000

Tenant’s Share @ 50%

   $ 78 000

New Payment @ 1/12 Monthly

   $ 6,500

 

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5.5.2 Retroactive Billing:

 

Revised Annual Operating Expense Budget

   $  156,000  

Tenant’s Share @ 50% for 6 (of 12) months

   $ 39,000  

Less payments, to date (6 @ $6,000)

     (36,000 )

Retroactive Balance Due

   $ 3,000  

As an alternative to a retroactive billing, Landlord may, at Landlord’s option,
spread the increase over the remaining months in the current calendar year in
equal monthly payments.

5.6 Adjustment.

5.6.1 Accounting. Within one hundred eighty (180) days (or as soon thereafter as
possible) after the close of each calendar year or portion thereof of occupancy,
Landlord shall provide Tenant a statement of such year’s actual Operating
Expenses compared to the Projected Operating Expenses. If the actual Operating
Expenses are more than the Projected Operating Expenses then Tenant shall pay
Landlord, within thirty (30) days of receipt of a bill therefore, the
difference. If the actual Operating Expenses are less than the Projected
Operating Expenses but greater than Operating Expense Floor Amount, then Tenant
shall receive a credit against future Operating Expenses payments equal to the
amount in excess of the actual Operating Expenses; provided, that in the case of
an overpayment for the final lease year of the Term, Landlord shall credit the
difference against any sums due from Tenant to Landlord in accordance with the
terms of this Lease; and if no sums are due and unpaid, shall promptly refund
the net amount to Tenant.

5.6.2 Tenant’s Right to Audit. Within ninety (90) days after receipt of
Landlord’s statement setting forth actual Operating Expenses (the “Statement”),
Tenant shall have the right to audit at Landlord’s local offices, at Tenant’s
expense, Landlord’s accounts and records relating to Operating Expenses. Such
audit shall be conducted by a certified public accountant. If such audit reveals
that Landlord has overcharged Tenant, the amount overcharged shall be paid to
Tenant within thirty (30) days after the audit is concluded. If such audit
reveals that Landlord has undercharged Tenant, the amount of undercharge shall
be paid by Tenant to Landlord within 30 days after the audit is concluded. In
addition, if the Statement exceeds the Operating Expenses which should have been
charged to Tenant by more than five percent (5%), the cost of the audit shall be
paid by Landlord. Tenant may not withhold any payment due as set forth in this
Lease pending completion of the audit.

5.6.3 Proration. Tenant’s liability to pay Operating Expenses shall be prorated
on the basis of a 365 (or 366, as the case may be) day year to account for any
fractional portion of a year included at the commencement or expiration of the
Term of this Lease.

 

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5.6.4 Survival. Landlord and Tenant’s obligations to pay for or credit any
increase or decrease in payments pursuant to this ¶5 shall survive this Lease.

5.7 Failure to Pay. Failure of Tenant to pay any of the charges required to be
paid under this ¶5 (after applicable notice and cure periods, if any) shall
constitute a material default and breach of this Lease and Landlord’s remedies
shall be as specified in ¶21.

6. SECURITY DEPOSIT. Landlord acknowledges that Tenant delivered to Landlord
concurrently with Tenant’s execution of the Original Lease a security deposit in
the amount of $82,135.22 and that Landlord currently holds such amount from
Tenant. Upon execution of this Lease, Tenant shall deliver to Landlord
additional immediately available funds in an amount equal to $41,363.46. Such
amount, when combined with the aforementioned funds currently held by Landlord
collectively form the security deposit (the “Security Deposit”) required under
this Lease. If Tenant is in default beyond applicable notice and cure periods,
Landlord can (but without any requirement to do so) use the Security Deposit or
any portion of it to cure the default or to compensate Landlord for any damages
sustained by Landlord resulting from Tenant’s default. Upon demand, Tenant shall
immediately pay to Landlord a sum equal to the portion of the Security Deposit
expended or applied by Landlord to restore the Security Deposit to its full
amount. In no event will Tenant have the right to apply any part of the Security
Deposit to any Rent due under this Lease. Landlord’s obligations with respect to
the Security Deposit are those of a debtor and not a trustee, and Landlord can
commingle the Security Deposit with Landlord’s general funds. Landlord shall not
be required to pay Tenant interest on the Security Deposit. Tenant hereby waives
the provisions of California Civil Code Section 1950.7, and all other provisions
of law now in force or which may become in force after the date of execution of
this Lease that provide that Landlord may claim from its security deposit only
those sums reasonably necessary to remedy defaults in the payment of rent, to
repair damages caused by the tenant, or to clean the premises or otherwise limit
the application of a security deposit. With respect to the Security Deposit,
Landlord and Tenant agree that Landlord may claim and employ the Security
Deposit in connection with any and all sums reasonably necessary to compensate
Landlord for any loss or damage caused by or resulting from any default by
Tenant pursuant to this Lease as well as any loss or damage resulting from any
act or omission by Tenant or Tenant’s officers, agents, employees, independent
contractors, or invitees. If Tenant is not in default at the expiration or
termination of this Lease and has fully complied with the provisions of ¶9, ¶14
and ¶26, Landlord shall return the Security Deposit to Tenant.

7. USE OF PREMISES.

7.1 Tenant’s Use. Tenant shall use the Premises solely for the purposes stated
in ¶1 and for no other purposes without obtaining the prior written consent of
Landlord. Tenant acknowledges that neither Landlord nor any agent of Landlord
has made any representation or warranty with respect to the Premises or with
respect to the suitability of the Premises to the conduct of Tenant’s business,
nor has Landlord agreed to undertake any modification, alteration or improvement
to the Premises, except as provided in writing in this Lease. Tenant shall
promptly comply with all laws, statutes, ordinances, orders and governmental
regulations now or hereafter existing affecting the Premises, unless Landlord
has otherwise expressly agreed to do the same pursuant to the terms of this
Lease. Tenant shall not do or permit anything to be done in or about the
Premises or bring or keep anything in the Premises that will in any way increase

 

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the premiums paid by Landlord on its insurance related to the Premises. Tenant
will not perform any act or carry on any practices that may injure the Premises.
Tenant shall not use the Premises for sleeping, washing clothes, or the
preparation, manufacture or mixing of anything that emits any objectionable
odor, noises, vibrations or lights onto such other tenants. If, in Landlord’s
reasonable judgment, sound insulation is required to muffle noise produced by
Tenant on the Premises, Tenant at its own cost shall provide all necessary
insulation. Tenant shall not do anything on the Premises which will overload any
existing parking or service to the Premises. Pets and/or animals of any type
(other than Seeing Eye dogs) shall not be kept on or about the Premises. Tenant
covenants that it will not interfere with other tenants’ quiet enjoyment of
their premises.

7.2 Rules and Regulations. Tenant shall comply with and use the Premises in
accordance with the Rules and Regulations attached hereto as Exhibit B and to
any reasonable, non-discriminatory modifications to such Rules and Regulations
as Landlord may adopt from time to time, provided however that if any rule or
regulation is in conflict with any term, covenant or condition of this Lease,
this Lease shall prevail. In addition, no such rule or regulation, or any
subsequent amendment thereto adopted by Landlord, shall in any material way
alter, reduce or adversely affect any of Tenant’s rights or materially enlarge
Tenant’s obligations under this Lease.

8. EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE.

8.1 Emissions. Tenant shall not:

8.1.1 Knowingly permit any vehicle on the Premises or in the Commons Areas to
emit Hazardous Materials (defined below) which is in violation of any
governmental law, rule, regulation or requirement;

8.1.2 Discharge, emit or permit to be discharged or emitted, any liquid, solid
or gaseous Hazardous Material, or any combination thereof, into the atmosphere
or on, into or under the Premises, any building or other improvements of which
the Premises are a part, or the ground or any body of water which Hazardous
Material, if discharged or emitted into the atmosphere, the ground or any body
of water would be in violation of law or regulation and does or may (a) pollute
or contaminate the same, or (b) adversely affect the (i) health or safety of
persons, whether on the Premises or anywhere else, (ii) condition, use or
enjoyment of the Premises or any real or personal property, whether on the
Premises or anywhere else, or (iii) the Premises or any of the improvements
thereto including buildings, foundations, pipes, utility lines, landscaping or
parking areas;

8.1.3 Produce, or permit to be produced, any intense glare, light or heat in
violation of law or regulations;

8.1.4 Create, or permit to be created, any sound pressure level which will
create a nuisance or violate any governmental law, rule, regulation or
requirement;

8.1.5 Create, or permit to be created, any vibration that is discernible outside
the Premises; or

 

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8.1.6 Transmit, receive or permit to be transmitted or received from or to the
Premises, any electromagnetic, microwave or other radiation which is or may be
harmful or hazardous to any person or property in, or about the Premises, or
anywhere else.

8.2 Storage and Use.

8.2.1 Storage. Subject to the uses permitted and prohibited to Tenant under this
Lease, Tenant shall store in appropriate leak proof containers all solid, liquid
or gaseous Hazardous Materials, or any combination thereof, which Hazardous
Materials, if discharged or emitted into the atmosphere, the ground or any body
of water would be in violation of law or regulation and does or may (a) pollute
or contaminate the same, or (b) adversely affect the (i) health or safety of
persons, whether on the Premises or anywhere else, (ii) condition, use or
enjoyment of the Premises or any real or personal property, whether on the
Premises or anywhere else, or (ii) Premises.

8.2.2 Use. In addition, without Landlord’s prior written consent, Tenant shall
not use, store or permit to remain on or about the Premises any solid, liquid or
gaseous Hazardous Materials which is, or may become dangerously radioactive. If
Landlord does give its consent, Tenant shall store the materials in such a
manner that no radioactivity will be detectable outside a designated storage
area and Tenant shall use the materials in such a manner that (a) no real or
personal property outside the designated storage area shall become contaminated
thereby and (b) there are and shall be no adverse effects on the (i) health or
safety of persons, whether on the Premises or anywhere else, (ii) condition, use
or enjoyment of the Premises or any real or personal property thereon or
therein, or (iii) Premises or any of the improvements thereto or thereon.

8.2.3 Hazardous Materials. Subject to the uses permitted and prohibited to
Tenant under this Lease, Tenant shall store, use, employ, transport and
otherwise deal with all Hazardous Materials (as defined below) employed on or
about the Premises in accordance with all federal, state, or local law,
ordinances, rules or regulations applicable to Hazardous Materials in connection
with or respect to the Premises.

8.3 Disposal of Waste.

8.3.1 Refuse Disposal. Tenant shall not keep any trash, garbage, waste or other
refuse on the Premises except in sanitary containers and shall regularly and
frequently remove same from the Premises. Tenant shall keep all incinerators,
containers or other equipment used for storage or disposal of such materials in
a clean and sanitary condition.

8.3.2 Sewage Disposal. Tenant shall properly dispose of all sanitary sewage and
shall not use the sewage disposal system (a) for the disposal of anything except
sanitary sewage or (b) amounts in excess of the lesser of: (i) that reasonably
contemplated by the uses permitted under this Lease or (ii) that permitted by
any governmental entity. Tenant shall keep the sewage disposal system free of
all obstructions and in good operating condition.

8.3.3 Disposal of Other Waste. Tenant shall properly dispose of all other waste
or other matter delivered to, stored upon, located upon or within, used on, or
removed from, the Premises in such a manner that it does not, and will not,
violate any law or regulation and

 

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adversely affect the (a) health or safety of persons, wherever located, whether
on the Premises or elsewhere, (b) condition, use or enjoyment of the Premises or
any other real or personal property, wherever located, whether on the Premises
or anywhere else, or (c) Premises or any of the improvements thereto or thereon
including buildings, foundations, pipes, utility lines, landscaping or parking
areas.

8.4 Information. Tenant shall provide Landlord with reasonable information
regarding Hazardous Materials used by Tenant in the Premises, including copies
of all filings and reports to governmental entities at the time they are
originated, and any other information reasonably requested by Landlord. In the
event of any accident, spill or other incident involving Hazardous Materials,
Tenant shall immediately report the same to Landlord and supply Landlord with
all information and reports with respect to the same. All information described
herein shall be provided to Landlord regardless of any claim by Tenant that it
is confidential.

8.5 Intentionally Omitted.

8.6 Indemnity. Tenant hereby agrees to indemnify, defend and hold Landlord, its
agents, employees, lenders, shareholders, directors, representatives, successors
and assigns harmless from and against any and all actions, causes of action,
losses, damages, costs, claims, expenses, penalties, obligations or liabilities
of any kind whatsoever (including but not limited to reasonable attorneys’ fees)
arising out of or relating to any Hazardous Materials employed, used,
transported across, or otherwise dealt with by Tenant (or invitees, or persons
or entities under the control of Tenant) in connection with or with respect to
the Premises and the Business Park. Notwithstanding any of the provisions of
this Lease, the indemnity obligation of Tenant pursuant to this ¶8.6 shall
survive the termination of this Lease and shall relate to any occurrence as
described in this ¶8.6 occurring in connection with this Lease. Landlord hereby
agrees to indemnify, defend and hold Tenant, its agents, employees, lenders,
shareholders, directors, representatives, successors and assigns harmless from
and against any and all actions, causes of action, losses, damages, costs,
claims, expenses, penalties, obligations or liabilities of any kind whatsoever
(including reasonable attorneys’ fees) arising out of or relating to
(i) Hazardous Materials employed, used, transported to the Premises, or the
Business Park of which the Premises are a part thereof, by Landlord, its agents
or employees or invitees or persons or entities under the control of Landlord or
(ii) Hazardous Materials existing on, in or under the Business Park as of the
5070 Commencement Date with respect to the 5070 Premises and of the 5020
Commencement Date with respect to the 5020 Premises. For purposes of this Lease
the term “Hazardous Materials” shall mean any hazardous, toxic or dangerous
waste, substance or material, pollutant or contaminant, as defined for purposes
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980 (42 U.S.C. Sections 9601 et seq.), as amended, or the Resource Conservation
and Recovery Act (42 U.S.C. Sections 6901 et seq.), as amended, or any other
federal, state, or local law, ordinance, rule or regulation applicable to the
Premises or the environment, or any substance which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous, or any substance which contains gasoline, diesel fuel or
other petroleum hydrocarbons, polychlorinated biphenyls (PCB’s), or radon gas,
urea formaldehyde, asbestos or lead.

 

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8.7 Landlord Representations. Except as otherwise disclosed to Tenant in writing
prior to the mutual execution of this Lease, to knowledge actual knowledge of
Landlord (without any duty of inquiry or investigation), (a) no Hazardous
Material is present in the Premises, the Building, or at the Business Park or
the soil, surface water or groundwater thereof in violation of environmental
laws, (b) no underground storage tanks are present on the Business Park, and
(c) no action, proceeding or claim is pending or threatened in writing regarding
the Building or the Business Park concerning any Hazardous Material or pursuant
to any environmental Law.

9. SIGNS AND COMMUNICATIONS ANTENNAE. Tenant shall not place any sign or
communications antennae upon or adjacent to the Premises, except that Tenant
may, with Landlord’s reasonable prior written consent, install (but not on the
roof) such signs as are reasonably required to indicate Tenant’s company name or
logo provided such signs are in compliance with Landlord’s reasonable sign
criteria or install communications antennae used exclusively by Tenant and
provided such signs and/or communications antennae are in compliance with all
applicable governmental requirements. The installation of any sign or
communications antennae on or adjacent to the Premises by or for Tenant shall be
subject to the provisions of ¶13 (Repairs and Maintenance). Tenant shall remove
any sign or communications antennae placed on or adjacent to the Premises by
Tenant upon the expiration of the Term or sooner termination of this Lease, and
Tenant shall repair any damage or injury to the Premises caused thereby, all at
Tenant’s expense. If any signs or communications antennae are not removed, or
necessary repairs not made, Landlord shall have the right to remove the signs or
communications antennae and repair any damage or injury to the Premises at
Tenant’s sole cost and expense. Notwithstanding any other provision of this
Lease to the contrary, Landlord reserves all rights to the use of the roof and
the right to install and receive all revenues from the installation of such
other signs or communications antennae on the Premises as do not unreasonably
interfere with the conduct of Tenant’s business within the Premises.

10. PERSONAL PROPERTY TAXES. Tenant shall pay at least ten (10) days prior to
delinquency all taxes assessed against and levied upon Tenant owned leasehold
improvements, trade fixtures, furnishings, equipment and all personal property
of Tenant contained in the Premises or elsewhere. When possible, Tenant shall
cause its leasehold improvements, trade fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Landlord. If any of Tenant’s said personal property shall be
assessed with Landlord’s real property, Tenant shall pay Landlord the taxes
attributable to Tenant within thirty (30) days after receipt of a written
statement setting forth the taxes applicable to Tenant’s property, but in no
event more than thirty (30) days prior to delinquency.

11. REAL PROPERTY TAXES.

11.1 Payment of Taxes. Landlord shall pay the Building’s and the Business Park’s
Real Property Taxes, as defined in ¶11.3, during the Term of this Lease. Subject
to ¶11.2, Tenant shall promptly reimburse Landlord according to ¶5 for Tenant’s
Share of Business Park of such Real Property Taxes paid by Landlord.

11.2 Advance Payment. In order to ensure payment when due and before delinquency
of any or all Real Property Taxes, Landlord shall estimate the current Real
Property Taxes applicable to the 5070 Premises prior to the 5020 Commencement
Date and the entire Premises on and after the 5020 Commencement Date, and
require Tenant to pay monthly in advance with the payment of the Base Rent an
amount which, over the number of months remaining before the

 

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month in which the applicable tax installment would become delinquent, would
provide a fund large enough to fully discharge before delinquency the estimated
installment of Real Property Taxes to be paid. When the actual amount of the
applicable tax bill is known, Landlord may, but is not required to, adjust the
amount of such equal monthly advance payment so as to provide the funds needed
to pay the applicable Real Property Taxes before delinquency. If the amounts
paid to Landlord by Tenant under the provisions of this ¶11 are insufficient to
discharge the obligations of Tenant to pay such Real Property Taxes before
delinquency, Tenant shall pay to Landlord, upon Landlord’s demand, such
additional sums as are necessary to pay such obligations. All moneys paid to
Landlord under this ¶11 may be intermingled with other moneys of Landlord and
shall not bear interest.

11.3 Definition of “Real Property Taxes”. As used herein, the term “Real
Property Taxes” shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any commercial rental tax,
improvement bond or bonds, levy or tax or other fee, charge, or excise which may
be imposed as a substitute for any of the foregoing (other than inheritance,
personal income or estate taxes) imposed upon the Business Park by any authority
having the direct or indirect power to tax, including any city, county, state or
federal government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, levied against any legal or
equitable interest of Landlord in the Business Park or Landlord’s right to rent.
The term “Real Property Taxes” shall also include any tax, fee, levy, assessment
or charge, or any increase therein, imposed by reason of events occurring, or
changes in applicable law taking effect, during the Term of this Lease,
including but not limited to a change in the ownership of the Business Park or
in the improvements thereon, the execution of this Lease, or any modification,
amendment or transfer thereof, and whether or not contemplated by the parties
hereto. Notwithstanding the foregoing, Real Property Taxes shall not include and
Tenant shall not be required to pay any tax or assessment expense or any
increase therein (i) levied on Landlord’s rental income, unless such tax or
assessment expense is imposed in lieu of real property taxes; (ii) in excess of
the amount which would be payable if such tax or assessment expense were paid in
installments over the longest possible term; (iii) imposed on land and
improvements other than the Business Park; or (iv) attributable to Landlord’s
net income, inheritance, gift, or estate taxes.

12. UTILITIES. Tenant shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the 5070
Premises prior to the 5020 Commencement Date and the entire Premises on and
after the 5020 Commencement Date, together with any taxes thereon. If any such
services are not separately metered to Tenant, Tenant shall pay a reasonable
proportion, to be determined by Landlord, of all charges jointly metered with
other premises.

13. REPAIRS AND MAINTENANCE.

13.1 Landlord’s Obligations. As an Operating Expense to the Business Park (to
the extent included within the definition of Operating Expenses under
Section 5), Landlord shall be responsible to keep the Business Park, including
the foundation, exterior walls, roof, and common area of the Business Park, and
the equipment whether used exclusively for the Premises or in common with other
premises, in good condition and repair subject to reimbursement by Tenant in
accordance with ¶5. There shall be no abatement of Rent or liability to Tenant
on

 

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account of any injury or interference with Tenant’s business with respect to any
Improvements, alterations or repairs made by Landlord to the Business Park or
any part thereof; provided, however, that Landlord shall use reasonable efforts
in performing all Improvements, alterations and repairs to minimize any
disruption of Tenant’s use of the Premises.

13.2 Tenant’s Obligations.

13.2.1 General. Tenant shall, at Tenant’s sole cost and expense and at all
times, contract for janitorial services and supplies, keep the Premises in good
order, condition and repair, including, without limiting the generality of the
foregoing, all equipment or facilities serving the Premises, such as HVAC,
electrical, lighting facilities, boilers, fired or unfired pressure vessels,
fixtures, interior walls, ceilings, floors, windows, window frames, interior and
exterior doors and door frames, plate glass and skylights. Tenant shall not
cause or permit any Hazardous Material to be spilled or released in, on, under
or about the Premises (including through the plumbing or sanitary sewer system)
and shall promptly, at Tenant’s expense, take all investigatory and/or remedial
action required by law for the cleanup of any contamination of, and for the
maintenance, security and/or monitoring of the Premises, the elements
surrounding same, or neighboring properties, that was caused by Tenant,
pertaining to or involving any Hazardous Materials and/or storage tank brought
onto the Premises by or for Tenant or under its control. Tenant, in keeping the
Premises in good order, condition and repair, shall exercise and perform good
maintenance practices. Tenant’s obligations shall include restorations,
replacements or renewals when necessary to keep the Premises and all
improvements thereon or a part thereof in good order, condition and state of
repair, except to the extent the same is Landlord’s obligation pursuant to the
express terms of this Lease.

13.2.2 Contracts. Tenant shall, at Tenant’s sole cost and expense, procure and
maintain contracts, with copies to Landlord, for, and with contractors
specializing and experienced in, the inspection, maintenance and service of
HVAC, mechanical, electrical and other systems serving the Premises, if any,
servicing the Premises. Tenant shall keep a reasonably detailed preventative
maintenance schedule and log showing the frequency of maintenance on all
mechanical, electrical and other systems, servicing the Premises and provide
Landlord with a copy of same quarterly.

13.2.3 As-Is Condition. The parties affirm that Landlord, its subsidiaries,
officers, shareholders, directors, members, managers, agents and/or employees
have made no representations to Tenant respecting the condition of the Premises
except as specifically stated herein.

13.2.4 ADA. Tenant acknowledges that as of the Effective Date, the Premises may
not comply with the accessibility provisions of Title 24 of the California Code
of Regulations as interpreted by the Office of the State Architect, and that
Landlord shall have no obligation with respect to any such failure of the
Premises to so comply. Tenant shall, at its cost, at any time during the Term as
required by any applicable governmental agency having jurisdiction over the
Premises, make such modifications and alterations to the Premises as may be
required in order to fully comply with the provisions of the ADA, as from time
to time amended, and any and all regulations issued pursuant to or in connection
with the ADA in such a manner as to satisfy the applicable governmental agency
or agencies requiring remediation.

 

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Tenant shall at least fifteen (15) days prior to the commencement of any
construction in connection with satisfaction of the ADA, give written notice to
Landlord of its intended commencement of construction together with sufficient
details so as to reasonably disclose to Landlord the nature of the proposed
construction, copies of any notices received by Tenant from applicable
governmental agencies in connection with the ADA and such other documents or
information as Landlord may reasonably request.

13.3 Compliance with Governmental Regulations. Tenant shall, at its own cost and
expense, promptly and properly observe and comply with all present and future
orders, regulations, directions, rules, laws, ordinances, and requirements of
all governmental authorities (including but not limited to state, municipal,
county and federal governments and their departments, bureaus, boards and
officials) arising from the use or occupancy of, or applicable to, the Premises
or privileges appurtenant to or in connection with the enjoyment of the
Premises. Tenant shall also comply with all such rules, laws, ordinances and
requirements at the time Tenant makes any alteration, addition or change to the
Premises.

13.4 Miscellaneous.

13.4.1 Subject to the other terms and conditions of this Lease, Landlord and
Tenant shall each do all acts required to comply with all applicable laws,
ordinances and rules of any public authority relating to their respective
maintenance obligations as set forth herein.

13.4.2 Tenant expressly waives the benefits of any statute now or hereafter in
effect which would otherwise afford the Tenant the right to make repairs at
Landlord’s expense or to terminate this Lease because of Landlord’s failure to
keep the Premises and the Business Park in good order, condition and repair and
Tenant hereby specifically waives the provisions of California Civil Code
Sections 1941 and 1942.

13.4.3 Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry, as
reasonably determined by Landlord or Landlord’s structural engineer. The cost of
any such determination made by Landlord’s structural engineer shall be paid for
by Tenant upon demand.

13.4.4 Except as otherwise expressly provided in this Lease, Landlord shall have
no liability to Tenant nor shall Tenant’s obligations under this Lease be
reduced or abated in any manner whatsoever by reason of any inconvenience,
annoyance, interruption or injury to business arising from Landlord making any
repairs or changes which Landlord is required to make or is permitted to make by
this Lease or by any tenant’s lease or is required by law to make in or to any
portion of the Premises. Landlord shall nevertheless use reasonable efforts to
minimize any interference with Tenant’s business in the Premises.

13.4.5 Tenant shall give Landlord prompt notice of any damage to or defective
condition in any part or appurtenance of the Premises’ mechanical, electrical,
plumbing, HVAC or other systems serving, located in or passing through the
Premises. Upon request by Landlord, Tenant shall provide Landlord with evidence
reasonably acceptable to Landlord of service contracts on such HVAC systems.

 

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13.4.6 Landlord may, at Landlord’s option, choose to perform any of the Tenant’s
obligations in this ¶13. The cost of any such Tenant’s obligations so performed
by Landlord shall be at Tenant’s sole cost and expense. Tenant shall reimburse
Landlord for any such costs incurred by Landlord in the performance of such
Tenant’s obligations within ten (10) days of receipt of a billing from Landlord.

If Tenant is prevented from using either the 5020 Premises or the 5070 Premises,
or both, for more than seven (7) consecutive calendar days in any thirty
(30) calendar day period as a sole consequence of Landlord’s failure to maintain
and repair the Premises (to the extent Landlord is obligated to do so under this
Lease) and such failure is within Landlord’s reasonable control, then Tenant
shall be entitled to an equitable abatement of Rent to the extent of the
interference with Tenant’s use of either the 5020 Premises or the 5070 Premises,
or both, occasioned thereby. If Tenant is prevented from using the Premises as a
result of the foregoing for more than thirty (30) consecutive calendar days in
any 180 calendar day period, then Tenant shall have the right to terminate this
Lease.

13.5 Certain Capital Expenditures. Notwithstanding the foregoing provisions of
this Section 13 or of Section 7, if the Laws are hereafter changed so as to
require during the term of this Lease the construction of an addition to or an
alteration of the Premises or the reinforcement or other physical modification
of the Premises or if the repair or replacement of any portion of the Building
(excluding any of the Tenant’s Alterations) for which Tenant is otherwise
responsible to repair or replace under this Lease is of a capital nature under
generally accepted accounting principals and the cost to repair or replace the
same exceeds $10,000 per occasion not to exceed $40,000 per year (each, a “CAP
Expenditure”), then Landlord and Tenant shall allocate the cost of such work as
follows:

13.5.1 If such CAP Expenditure is not the result of the specific and unique use
of the Premises by Tenant (such as, governmentally mandated seismic
modifications), then Landlord and Tenant shall allocate the cost of such CAP
Expenditure as follows: Landlord shall perform the capital improvement and
advance the funds necessary for such CAP Expenditure but Tenant shall be
obligated to pay, each month during the remainder of the term of this Lease, on
the date on which Base Rent is due, an amortized portion of such expenditure.
Provided, however, that if such CAP Expenditure exceeds the Landlord Max CAP Exp
(defined below), Landlord shall have the option to terminate this Lease upon 90
days prior written notice to Tenant unless Tenant notifies Landlord, in writing,
within 30 days after receipt of Landlord’s termination notice that Tenant will
pay for the CAP Expenditure in excess of the Landlord Max CAP Exp. For purposes
of this Lease, “Landlord Max CAP Exp” shall mean $500,000 from the 5070
Commencement Date through December 31, 2011, and shall be reduced to $250,000
from January 1, 2012 through the expiration of the Term.

13.5.2 Notwithstanding the foregoing, if the CAP Expenditures are instead
triggered by Tenant as a result of an actual or proposed change in use, change
in intensity of use, or modification to the Premises then, and in that event,
Tenant shall be fully responsible for the cost thereof.

13.6 Timing of Obligations. Notwithstanding anything in this Section 13 to the
contrary, all of Tenant’s repair, maintenance and compliance obligations with
respect to the Premises shall refer only to the 5070 Premises prior to the 5020
Commencement Date and to the entire Premises from and after the 5020
Commencement Date.

 

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14. ALTERATIONS. Tenant shall not make any alterations (“Alterations”) to the
Premises or the Business Park without Landlord’s prior written consent, which
consent shall not be unreasonably withheld. Once Landlord’s written consent is
granted, Tenant must provide Landlord at least ten (10) business days prior to
the commencement of any Alteration with a complete description of each such
Alteration including any building permit drawing(s) and specifications. Landlord
may post notices regarding non-responsibility in accordance with the laws of the
state in which the Premises are located. All Alterations made by Tenant shall be
performed by Tenant and its contractors in a good and workmanlike manner and
permits and inspections shall be obtained from all required governmental
entities. Any Alterations made shall remain on and be surrendered with the
Premises upon expiration or termination of this Lease, except that Landlord may,
within thirty (30) days before or thirty (30) days after expiration of the Term,
elect to require Tenant to remove some or all of the Alterations which Tenant
may have made to the Premises. If Landlord so elects, Tenant shall at its own
cost restore the 5020 Premises to the condition that existed as of the 5020
Commencement Date and the 5070 Premises to the condition that existed as of the
5070 Commencement Date, before the last day of the Term or within thirty
(30) days after notice of its election is given, whichever is later. If
requested by Tenant at the time of Tenant’s request for approval of Alterations,
Landlord shall advise Tenant in writing whether Landlord shall require Tenant to
remove some or all of said Alterations upon expiration or termination of the
Lease. Should Landlord consent in writing to Tenant’s Alteration of the
Premises, Tenant shall contract with a contractor approved by Landlord for the
construction of such Alterations, shall secure all appropriate governmental
approvals and permits, and shall complete such Alterations with due diligence in
compliance with plans and specifications reasonably approved by Landlord. Tenant
shall pay all costs for such construction and shall keep the Premises free and
clear of all mechanics’ liens which may result from construction by Tenant.
Notwithstanding the foregoing, Tenant may construct non-structural Alterations
within the interior of either the 5020 Building or the 5070 Building without
Landlord’s prior approval, if the cost of any such project does not exceed Fifty
Thousand Dollars ($50,000) in each of the 5020 Building or the 5070 Building in
any twelve (12)-month period. Tenant’s trade fixtures, furniture, equipment and
other personal property installed in the Premises (collectively, “Tenant’s
Property”) shall at all times be and remain Tenant’s property. Tenant may remove
Tenant’s Property from the Premises, provided that Tenant repairs all damage
caused by such removal. Landlord shall have no lien or other interest in any
item of Tenant’s Property.

15. RELEASE AND INDEMNITY. As material consideration to Landlord, Tenant agrees
that Landlord shall not be liable to Tenant for any damage to Tenant or Tenant’s
property from any cause, except for damages resulting from Landlord’s gross
negligence or willful misconduct, and Tenant waives all claims against Landlord
for damage to persons or property arising for any reason, except for damage
resulting directly from Landlord’s breach of its express obligations under this
Lease which Landlord has not cured within a reasonable time after written notice
of such breach from Tenant. Tenant shall indemnify and hold Landlord harmless
from all damages including attorneys’ fees and costs arising out of any damage
to any person or property occurring in, on or about the Premises or Tenant’s use
of the Premises or Tenant’s breach of any term of this Lease.

 

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16. INSURANCE.

16.1 Payment For Insurance. Regardless of whether the Landlord or Tenant is the
Insuring Party, Tenant shall pay for its proportionate share of all insurance
required under this ¶16 (“Insurance Costs”) either directly or by reimbursement
to Landlord as specified in this ¶16. Premiums for policy periods commencing
prior to or extending beyond the Lease Term shall be prorated to correspond to
the Lease Term. Payment shall be made by Tenant to Landlord within sixty
(60) days following receipt of an invoice for any amount due.

16.2 Liability Insurance.

16.2.1 Carried by Tenant. Whether or not Tenant is the Insuring Party, Tenant
shall obtain and keep in force during the Term of this Lease workers’
compensation insurance and commercial general liability policy of insurance
protecting Tenant and Landlord (as an additional insured) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the 5070 Premises
and all areas appurtenant thereto prior to the 5020 Commencement Date and the
entire Premises and all areas appurtenant thereto from and after the 5020
Commencement Date. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $3,000,000 per occurrence with
an “Additional Insured Managers or Landlords of Premises” endorsement and
contain an “Amendment of the Pollution Exclusion” for damage caused by heat,
smoke or fumes from a hostile fire. The policy shall not contain any
intra-Insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an “insured contract”
for the performance of Tenant’s indemnity obligations under this Lease. The
limits of said insurance required by this Lease or as carried by Tenant shall
not, however, limit the liability of Tenant nor relieve Tenant of any obligation
hereunder. All insurance to be carried by Tenant shall be primary to and not
contributory with any similar insurance carded by Landlord, whose insurance
shall be considered excess insurance only. All insurance coverage required
pursuant to this ¶16 which is to name Landlord as an additional insured shall
also name Landlord’s members and managers as additional insureds.

16.2.2 Carried by Landlord. In the event Landlord is the Insuring Party,
Landlord shall also maintain liability insurance as described in ¶16.2.1), in
addition to, and not in lieu of the insurance required to be maintained by
Tenant. Tenant shall be named as an additional insured therein under any
insurance obtained by Landlord in accordance with this ¶16.2.2).

16.3 Property Insurance - Building, Improvements and Rental Value.

16.3.1 Building and Improvements. The Insuring Party shall obtain and keep in
force during the Term of this Lease a policy or policies in the name of
Landlord, with loss payable to Landlord and to the holders of any mortgages,
deeds of trust or ground leases on the Business Park (“Lender(s)”), insuring
loss or damage to the Business Park. The amount of such insurance shall be equal
to the full replacement cost of the Business Park, as the same shall exist from
time to time, or the amount required by Lender(s), but in no event more than the
commercially reasonable and available insurable value thereof. If, by reason of
the unique

 

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nature or age of the Improvements involved, such latter amount is less than full
replacement cost, such policy or policies shall insure against all risks of
direct physical loss or damage (including at Landlord’s sole discretion Boiler
and Machinery coverage and the perils of flood and earthquake), including
coverage for any additional costs resulting from debris removal and reasonable
amounts of coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any undamaged sections of the Business Park
required to be demolished shall also contain an agreed valuation provision in
lieu of any coinsurance clause, waiver of subrogation and inflation guard
protection causing an increase in the annual property insurance coverage amount
by a factor of not less than the adjusted U.S. Department of Labor Consumer
Price Index for All Urban Consumers for the city nearest to where the Business
Park is located. If such insurance coverage has a deductible clause, then Tenant
shall be liable for its proportionate share of such deductible amount, subject
to Section 5 above. Even if Landlord is the Insuring Party, Tenant’s personal
property shall be insured by Tenant under ¶16.4 rather than by Landlord.

16.3.2 Rental Value. The Insuring Party shall, in addition, obtain and keep in
force during the term of this Lease a policy or policies in the name of
Landlord, with loss payable to Landlord and Lender(s), insuring the loss of the
full rental and other charges payable by Tenant to Landlord under this Lease for
one (1) year (including all Real Property Taxes, Insurance Costs and any
scheduled Rent Increases). Said insurance shall provide that in the event the
Lease is terminated by reason of an insured loss, the period of indemnity for
such coverage shall be extended beyond the date of the completion of repairs or
replacement of the Premises, to provide for one full year’s loss of Rent from
the date of any such loss. Said insurance shall contain an agreed valuation
provision in lieu of any coinsurance clause, and the amount of coverage shall be
adjusted annually to reflect the projected Rent, Real Property Taxes, Insurance
Costs and other expenses, if any, otherwise payable by Tenant, for the next
twelve (12) month period. Tenant shall be liable for any deductible amount in
the event of such loss.

16.3.3 Adjacent Premises. If the Premises are part of a larger building, or if
the Premises are part of a group of buildings owned by Landlord which are
adjacent to the Premises, the Tenant shall pay for any increase in the premiums
for the property insurance of such building or buildings to the extent said
increase is caused by Tenant’s acts, omissions, use or occupancy of the
Premises.

16.3.4 Tenant’s Improvements. If the Landlord is the Insuring Party, the
Landlord shall not be required to insure Tenant’s personal property and
leasehold improvements unless the item in question has become the property of
Landlord under the terms of this Lease. If Tenant is the Insuring Party, the
policy carried by Tenant under this ¶16.3 shall insure Tenant’s personal
property and leasehold improvements.

16.4 Tenant’s Property Insurance. Subject to the requirements of ¶16.5, Tenant
at its cost shall either by separate policy or by endorsement to a policy
already carried, maintain insurance coverage on all of Tenant’s personal
property and Tenant’s leasehold Improvements in, on or about the Premises
similar in coverage to that carried by the Insuring Party under ¶16.3. Such
insurance shall be full replacement cost coverage with a deductible of not to
exceed $10,000 per occurrence. The proceeds from any such insurance shall be
used by Tenant for the replacement of personal property or the restoration of
Tenant owned leasehold improvements. Tenant shall be the Insuring Party with
respect to the insurance required by this ¶16.4 and shall provide Landlord with
written evidence that such insurance is in force.

 

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16.5 Insurance Policies. Insurance required per this ¶16 shall be with companies
duly licensed to transact business in the state where the Premises are located,
and maintaining during the policy term a “General Policyholders Rating” of at
least A- VIII, or such other minimal rating as may be required by Lender(s) as
set forth in the most current issue of “Best’s Insurance Guide.” Tenant shall
not do or permit to be done anything which shall invalidate the insurance
policies referred to in this ¶16. If Tenant is the Insuring Party, Tenant shall
cause to be delivered to Landlord certified copies of policies of such insurance
or certificates evidencing the existence and amounts of such insurance with the
insureds and loss payable clauses as required by this Lease. No such policy
shall be cancelable or subject to modification or lapse except after thirty
(30) days prior written notice to Landlord. Tenant shall at least thirty
(30) days prior to the expiration of such policies, furnish Landlord with
evidence of renewals or “insurance binders” evidencing renewal thereof, or
Landlord may order such insurance and charge the cost thereof to Tenant, which
amount shall be payable by Tenant to Landlord upon demand. If the Insuring Party
shall fail to procure and maintain the insurance required to be carried by the
Insuring Party under this ¶16, the other Party may, but shall not be required
to, procure and maintain the same, but at the expense of the Party that was
originally required to pay such insurance either directly or as part of
Operating Expenses.

16.6 Mutual Waiver. Notwithstanding anything to the contrary contained in this
Lease, to the extent that this release and waiver does not invalidate or impair
their respective insurance policies, the parties hereto release each other, and
their respective agents, employees, officers, directors, shareholders, members,
managers, successors, assignees and subtenants from all liability for damage to
any property that is caused by or results from a risk which is actually insured
against, or would have been insured against if the parties had maintained the
insurance required to be maintained pursuant to the provisions of this Lease,
without regard to the negligence or willful misconduct of the parties so
released. Each party shall use its reasonable efforts to cause each insurance
policy it obtains to provide that the insurer thereunder waives all right of
recovery by way of subrogation as required herein in connection with any injury
or damage covered by the policy. If such insurance policy cannot be obtained
with such waiver of subrogation, or if such waiver of subrogation is only
available at additional cost and the party for whose benefit the waiver is not
obtained does not pay such additional costs after reasonable notice, then the
party obtaining such insurance shall promptly notify the other party of the
inability to obtain insurance coverage with the waiver of subrogation.

17. DAMAGE AND DESTRUCTION.

17.1 Damage - Restoration Required. In the event that the Business Park is
damaged by fire or other casualty which is covered under insurance pursuant to
the provisions of ¶16 above, Landlord shall restore such damage provided that:
(i) the destruction of either the 5020 Building or the 5070 Building does not
exceed sixty percent (60%) of the then replacement value of the 5020 Building or
the 5070 Building, respectively; (ii) the insurance proceeds are available
(inclusive of any deductible amounts) to pay one hundred percent (100%) of the
cost of restoration; and (iii) in the reasonable judgment of Landlord, the
restoration can be completed within two hundred and seventy (270) days after the
date of the damage or casualty under the

 

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laws and regulations of the state, federal, county and municipal authorities
having jurisdiction. The deductible amount of any insurance coverage for damage
to the Premises shall be paid by Tenant. If such conditions apply so as to
require Landlord to restore such damage pursuant to this ¶17.1, this Lease shall
continue in full force and effect, unless otherwise agreed to in writing by
Landlord and Tenant shall be entitled to a proportionate reduction of Rent while
such restoration takes place, such proportionate reduction to be based on the
extent to which the damage and restoration efforts interfere with Tenant’s
business in the Premises; and Tenant’s right to a reduction of Rent hereunder
shall be Tenant’s sole and exclusive remedy in connection with any such damage.

17.2 Damage - Restoration Not Required. In the event that the Business Park is
damaged by a fire or other casualty and Landlord is not required to restore such
damage in accordance with the provisions of ¶17.1 immediately above, Landlord
shall have the option to either (i) repair or restore such damage, with the
Lease continuing in full force and effect, but Rent to be proportionately abated
as provided in ¶17.1 above; or (ii) give notice to Tenant at any time within
thirty (30) days after the occurrence of such damage terminating this Lease with
respect to the 5020 Building or the 5070 Building, as applicable, as of a date
to be specified in such notice which date shall not be less than thirty (30) nor
more than sixty (60) days after the date on which such notice of termination is
given. In the event of the giving of such notice of termination, this Lease
shall expire and all interest of Tenant in either or both of the 5020 Premises
and/or 5070 Premises, as applicable, shall terminate on the date so specified in
such notice and the Rent, reduced by any proportionate reduction in Rent as
provided for in ¶17.1 above, shall be paid to the date of such termination.
Notwithstanding the foregoing, if Tenant delivers to Landlord the funds
necessary to make up the shortage (or absence) in insurance proceeds and the
restoration can be completed in a two hundred seventy (270) day period, as
reasonably determined by Landlord, and the destruction of either the 5020
Building and/or the 5070 Building does not exceed sixty percent (60%) of the
then replacement value of the applicable building, then Landlord shall restore
the Premises as provided in ¶17.1 above.

17.3 End of Term Casualty. Notwithstanding the provisions of ¶17.1 and ¶17.2
above, if the 5020 Building or the 5070 Building is damaged by fire or other
casualty, then either Landlord or Tenant may terminate this Lease as it pertains
the building that is damaged, so long as Landlord’s reasonably estimated cost of
restoration of the 5020 Building and/or the 5070 Building exceeds ten percent
(10%) of the then replacement value of the 5020 Building and/or the 5070
Building and such damage or casualty occurs during the last twelve (12) months
of the Term of this Lease (or the Term of any renewal option, if applicable) by
giving the other notice thereof at any time within thirty (30) days following
the occurrence of such damage or casualty. Such notice shall specify the date of
such termination which date shall not be less than thirty (30) nor more than
sixty (60) days following the date on which such notice of termination is given.
In the event of the giving of such notice of termination, this Lease shall
expire and all interest of Tenant in the 5020 Building or the 5070 Building, as
applicable, shall terminate on the date so specified in such notice and the
Rent, reduced by any proportionate reduction in Rent as provided for in ¶17.1
above, shall be paid to the date of such termination.

17.4 Termination by Tenant. In the event that the damage to the Business Park
(i) cannot be restored as required herein under applicable laws and regulations
within one hundred eighty (180) days of the date of discovery of the damage or
casualty, as reasonably

 

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determined by Landlord at the date of the discovery of the casualty; or (ii) is
not restored as required herein under applicable laws and regulations within one
hundred eighty (180) days of the date of the discovery of the damage or casualty
where Landlord had determined at the date of the discovery of the casualty that
such restoration would be done within one hundred eighty (180) days, then Tenant
shall have the right to terminate this Lease by giving the Landlord notice
thereof within thirty (30) days of date of Landlord’s determination that the
Premises cannot be restored within the 180 days as specified under clause
(i) above or of that date by which the Premises were scheduled to but not
restored within the 180 days as specified under clause (ii) above, specifying
the date of termination which shall not be less than thirty (30) days nor more
than sixty (60) days following the date on which such notice of termination is
given. In the event of the giving of such notice of termination, this Lease
shall expire and all interest of Tenant in the Premises shall terminate on the
date so specified in such notice and the Rent, reduced by any proportionate
reduction in Rent as provided for in 17.1 above, shall be paid to the date of
such termination. Notwithstanding anything to the contrary herein, in addition
to Tenant’s termination rights provided above, Tenant’s termination rights with
respect to this Section 17.4 may be exercised with respect to either the 5020
Premises only or the 5070 Premises only with respect to which either clause
(i) or clause (ii) above applies.

17.5 Restoration. Notwithstanding the foregoing, in the event that the damage to
the Business Park (i) was as a result of an uninsured or underinsured casualty,
(ii) was not caused by any act or omission of Tenant or any of its agents,
employees, invitees or contractors, (iii) did not occur during the last six
(6) months of the term, and (iv) did not cost more than $250,000 of the
replacement cost of either the 5020 Building or the 5070 Building, as
applicable, to repair or restore, then Landlord shall not have the right to
terminate this Lease and shall repair and restore the 5020 Building or the 5070
Building, as applicable. In addition, if the damage is limited only to one of
the building comprising the Premises, then Landlord’s right to terminate this
Lease pursuant to this Section 17.5 shall only extend to the building that was
damaged. Landlord agrees that, in any case in which Landlord is required to, or
otherwise agrees to restore the 5020 Building and the 5070 Building, Landlord
shall proceed with due diligence to make all appropriate claims and applications
for the proceeds of insurance and to apply for and obtain all permits necessary
for the restoration of the 5020 Building and the 5070 Building. Landlord shall
use reasonable efforts to enforce any and all provisions in any mortgage, deed
of trust or other encumbrance on the Business Park requiring Landlord and Lender
to permit insurance proceeds to be used for restoration. Landlord shall restore
the Premises at least equal to the condition existing prior to the date of the
damage if permitted by applicable law. Landlord shall not be required to restore
alterations made by Tenant, Tenant’s improvements, Tenant’s trade fixtures and
Tenant’s personal property, such excluded Items being the sole responsibility of
Tenant to restore provided, however, that Landlord shall, to the extent of
available insurance proceeds, restore Tenant Improvements to the Premises made
by Tenant such as interior offices, lab and production improvements and other
like improvements.

17.6 Waiver. Tenant waives the provisions of Civil Code § 1932(2) and Civil Code
§ 1933(4) with respect to any destruction of the Premises.

 

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18. CONDEMNATION.

18.1 Definitions. The following definitions shall apply: (1) “Condemnation”
means (a) the exercise of any governmental power of eminent domain, whether by
legal proceedings or otherwise by condemnor, or (b) the voluntary sale or
transfer by Landlord to any condemnor either under threat of condemnation or
while legal proceedings for condemnation are proceeding; (2) “Date of Taking”
means the date the condemnor has right to possession of the property being
condemned; (3) “Award” means all compensation, sums or anything of value
awarded, paid or received on a total or partial Condemnation; and
(4) “Condemnor” means any public or quasi-public authority, or private
corporation or individual, having power of Condemnation.

18.2 Obligations to be Governed by Lease. If during the Term of the Lease there
is any taking of all or any part of the Business Park, the rights and
obligations of the parties shall be determined strictly pursuant to this Lease.
Each party waives the provisions of Code of Civil Procedure § 1265.130 allowing
either party to petition the Superior Court to terminate this Lease in the event
of a partial condemnation of the Premises.

18.3 Total or Partial Taking. If the Business Park is totally taken by
Condemnation, this Lease shall terminate on the Date of Taking. If any portion
of the Business Park is taken by Condemnation, this Lease shall remain in
effect, except that Tenant can elect to terminate this Lease if the remaining
portion of the Premises is rendered unsuitable for Tenant’s continued use of the
Premises. If Tenant elects to terminate this Lease, Tenant must exercise its
right to terminate by giving notice to Landlord within thirty (30) days after
the nature and extent of the Condemnation have been finally determined. If
Tenant elects to terminate this Lease, Tenant shall also notify Landlord of the
date of termination, which date shall not be earlier than thirty (30) days nor
later than ninety (90) days after Tenant has notified Landlord of its election
to terminate; except that this Lease shall terminate on the Date of Taking if
the Date of Taking falls on a date before the date of termination as designated
by Tenant. If any portion of the Premises is taken by Condemnation and this
Lease remains in full force and effect, on the Date of Taking the Base Rent
shall be reduced by an amount in the same ratio as the total number of square
feet in the Premises taken bears to the total number of square feet in the
Premises immediately before the Date of Taking. Any Award for the taking of all
or any part of the Premises under the power of eminent domain or any payment
made under threat of the exercise of such power shall be the property of
Landlord, whether such Award shall be made as compensation for diminution in
value of the leasehold or for the taking of the fee, or as severance damages;
provided, however, that Tenant shall be entitled to any compensation separately
awarded to Tenant for Tenant’s relocation expenses and/or loss of Tenant’s trade
fixtures.

19. ASSIGNMENT OR SUBLEASE.

19.1 Tenant shall not assign or encumber its interest in this Lease or the
Premises or sublease all or any part of the Premises or allow any other person
or entity (except Tenant’s authorized representatives, employees, invitees or
guests) to occupy or use all or any part of the Premises without first obtaining
Landlord’s written consent, which consent shall not be unreasonably withheld.
Any assignment, encumbrance or sublease without Landlord’s prior written consent
shall be voidable and at Landlord’s election (after applicable notice and cure
periods, if any), shall constitute a default. If Tenant is a partnership, a sale
or other transfer of a

 

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controlling percentage of the partnership interest of Tenant, or the sale of at
least fifty percent (50%) of the value of the assets of Tenant, or the
dissolution of the partnership shall be deemed a voluntary assignment. If Tenant
consists of more than one person, a purported assignment, voluntary or
involuntary or by operation of law from one person to the other shall be deemed
a voluntary assignment. Except as otherwise set forth below, if Tenant is a
corporation, any dissolution, merger, consolidation or other reorganization of
Tenant, or sale or other transfer of a controlling percentage of the capital
stock of Tenant, or the sale of at least fifty percent (50%) of the value of the
assets of Tenant shall be deemed a voluntary assignment.

In the event of a sublease all Sublease Rent received by Tenant in excess of the
Rent payable by Tenant to Landlord under this Lease applicable to the portion of
the Premises subleased shall be deemed the “Bonus Amount”, after deducting
therefrom the “Subleasing Costs” which shall include (i) commercially reasonable
brokerage commissions, (ii) tenant Improvements made at the request of a
subtenant, and (iii) attorneys’ fees incurred by Tenant in negotiating and
documenting the sublease. Fifty percent (50%) of the Bonus Amount shall be
promptly paid to Landlord following receipt by Tenant. If the Subleasing Costs
are not known at the commencement of the sublease, the fifty percent (50%) of
Bonus Amount due Landlord will be computed without deduction of Subleasing Costs
and promptly paid to Landlord. Once the Subleasing Costs are presented to and
verified by Landlord, the Bonus Amount paid by Tenant to date will be adjusted
and Landlord shall give Tenant a credit against the next payment(s) due to
Landlord from Tenant. The term “Sublease Rent” as used herein shall include any
consideration of any kind received by Tenant from or on behalf of any subtenant,
if the sums are reasonably related to the Premises, including, without
limitation Rent, operating expense payments, bonus money and payments (in excess
of fair market value) for the purchase of or usage of Tenant’s furniture,
fixtures, inventory, equipment, accounts, goodwill, general intangibles and
other assets. Each sublease approved by Landlord shall stand alone as to the
computation of the Bonus Amount.

In the event of an assignment all Transfer Payments received by Tenant shall be
deemed the “Bonus Amount”, after deducting therefrom the “Assignment Costs”
which shall include (i) commercially reasonable brokerage commissions and
(ii) attorneys’ fees incurred by Tenant in negotiating and documenting the
assignment. Fifty percent (50%) of the Bonus Amount shall be promptly paid to
Landlord following receipt by Tenant. If the Assignment Costs are not known at
the commencement of the Assignment, the fifty percent (50%) of Bonus Amount due
Landlord will be computed without deduction of Assignment Costs and promptly
paid to Landlord. Once the Assignment Costs are presented to and verified by
Landlord, the Bonus Amount paid by Tenant to date will be adjusted and Landlord
shall give Tenant a credit against the next payment(s) due to Landlord from
Tenant. The term “Transfer Payments” as used herein shall include any
consideration of any kind received by Tenant from or on behalf of any assignee,
if the sums are reasonably related to the Premises, including, without
limitation assignment consideration, Rent, operating expense payments, bonus
money, and payments (in excess of fair market value) for the purchase of or
usage of Tenant’s furniture, fixtures, inventory, equipment, accounts, goodwill,
general intangibles and other assets.

If Tenant requests Landlord to consent to a proposed assignment or subletting,
Tenant shall pay to Landlord, whether or not consent is ultimately given, an
amount equal to Landlord’s reasonable attorneys’ fees and costs incurred in
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consent to an assignment or subletting shall be in writing, and shall be
accompanied by reasonable information as may be relevant to Landlord’s
determination as to the financial and operational responsibility and stability
of the proposed assignee or sublessee and the appropriateness of the proposed
use by such assignee or sublessee. Such information shall include a summary of
the proposed use of, and any proposed modifications to, the Premises. Tenant
shall provide Landlord with such other or additional information and/or
documentation as may reasonably be requested by Landlord. Tenant shall, upon
completion of any assignment or subletting of all or any portion of the
Premises, immediately and irrevocably assign to Landlord as security for
Tenant’s obligations under the Lease, all Sublease Rent and/or Transfer Payments
from any such subletting or assignment. While a default (after applicable notice
and cure periods, if any) by Tenant exists under this Lease, Landlord, as
assignee for Tenant, shall have the right to collect all rent and other revenues
collectable pursuant to any such sublet or assignment and apply such rent and
other revenues towards Tenant’s obligations under the Lease.

Any assignee of, or subtenant under this Lease shall, by reason of accepting
such assignment or entering into such sublease, be deemed, for the benefit of
Landlord, to have assumed and agreed to conform and comply with each and every
term, covenant, condition and obligation herein to be observed or performed by
Tenant during the term of said assignment or sublease, other than such
obligations as are contrary to or inconsistent with provisions or an assignment
or subtenant to which Landlord has specifically consented in writing. Any such
assignee or subtenant shall execute an acknowledgment that they have entered
into occupancy of the Premises after Landlord acquired the Business Park, that
Landlord plans to redevelop the Business Park and, therefore, that the assignee
or subtenant is an interim tenant post acquisition who will not be entitled to
relocation benefits under state or federal law if Landlord requires the assignee
or subtenant to relocate from the Premises after the expiration of the original
Term of this Lease.

19.2 No interest of Tenant in this Lease shall be assignable by involuntary
assignment through operation of law (including without limitation the transfer
of this Lease by testacy or intestacy). Each of the following acts shall be
considered an involuntary assignment: (a) if Tenant is or becomes bankrupt or
insolvent, makes an assignment for the benefit of creditors, or institutes
proceedings under the Bankruptcy Act in which Tenant is the bankrupt; or if
Tenant is a partnership or consists of more than one person or entity, if any
partner of the partnership or other person or entity is or becomes bankrupt
insolvent, or makes an assignment for the benefit of creditors; or (b) if a writ
of attachment or execution is levied on this Lease; or (c) if in any proceeding
or action to which Tenant is a party, a receiver is appointed with authority to
take possession of the Premises. An involuntary assignment (after applicable
notice and cure periods, if any) shall constitute a default by Tenant and
Landlord shall have the right to elect to terminate this Lease, in which case
this Lease shall not be treated as an asset of Tenant.

19.3 Notwithstanding any provision to this Lease to the contrary, in any event
where Landlord’s consent is required for assignment or sublease, Landlord may,
at its option, elect to terminate the Lease by giving written notice to Tenant
instead of approving the requested assignment or sublease (as to the portion of
the Premises being subleased). Should Landlord so elect to terminate this Lease,
all of the obligations of the parties thereunder shall terminate on the later of
sixty (60) days following Landlord’s notice to Tenant of its election hereunder,
or the

 

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effective date of the proposed assignment or subletting sought by the Tenant,
but in no event later than one hundred twenty (120) days following the date of
Landlord’s election under this ¶19.3. At the time of termination, all
obligations of both parties hereunder shall terminate as to obligations
thereafter accruing except as otherwise expressly provided in this Lease.

19.4 Notwithstanding any other term or condition in this Article 19 (but subject
to Section 19.5 below), Tenant may, without Landlord’s prior written consent and
without payment of any amount to Landlord, reincorporate in any other
jurisdiction and/or sublet the Premises or assign this Lease to (a) a
subsidiary, affiliate, division or corporation controlling, controlled by or
under common control with Tenant, (b) a successor corporation related to Tenant
by merger, consolidation, nonbankruptcy reorganization, or government action, or
(c) a purchaser of substantially all of Tenant’s assets or stock (each, a
“Permitted Transferee”). Neither the sale or transfer of Tenant’s stock in
connection with the merger, consolidation or nonbankruptcy reorganization of
Tenant or any sale through any private or public offering or public stock
exchange or market, nor the pledge of or grant of a security interest in any of
the Tenant’s stock, shall be deemed an assignment, subletting or other transfer
of this Lease or the Premises. In addition, Tenant may from time to time,
without Landlord’s prior written consent or payment of any amount to Landlord,
permit Tenant’s suppliers to store and warehouse at the Premises products and
goods intended to be purchased by Tenant.

19.5 Notwithstanding anything to the contrary contained in this Lease, no
sublease, assignment or other transfer of this Lease shall relieve Tenant of any
of its obligations and/or liabilities under this Lease. Tenant shall give
Landlord written notice no later than ten (10) days after any transfer to a
Permitted Transferee and in connection with such transfer shall provide to
Landlord copies of any documents or other information as Landlord may reasonably
request.

20. DEFAULT. The occurrence of any of the following shall constitute a default
by Tenant: (a) a failure of Tenant to pay Rent within ten (10) days of its due
date; (b) abandonment of the Premises; or (c) failure to timely perform any
other provision of this Lease where such failure continues for a period in
excess of thirty days following notice of such failure, provided however, that
if the nature of such failure is such that it cannot reasonably be cured within
thirty days, then Tenant shall not be in default if Tenant commences to cure
such failure within thirty days and thereafter diligently prosecutes the cure to
completion. Tenant shall give written notice to Landlord of any default by
Landlord of its obligations pursuant to this Lease asserted by Tenant (with a
copy of such notice to any lender (“Lender”) whose loan is secured by the
Business Park and who has previously notified Tenant in writing of such Lender’s
address). Landlord and Landlord’s Lender shall be afforded a reasonable
opportunity to cure any claimed default by Landlord and Landlord shall not be
considered in default so long as Landlord (or Landlord’s Lender) commences such
cure within a reasonable period of time and thereafter, continues to attempt to
complete such cure. Landlord, from time to time, shall provide Tenant with the
name and address of its Lender.

21. LANDLORD’S REMEDIES. Upon the occurrence of a default by Tenant, Landlord
shall have, in addition to any other remedies available to Landlord at law or in
equity, the option to pursue any one or more of the following remedies, each and
all of which shall be cumulative and nonexclusive, without any notice or demand
whatsoever.

 

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21.1 Terminate this Lease, in which event Tenant shall immediately surrender the
Premises to Landlord, and if Tenant fails to do so, Landlord may, without
prejudice to any other remedy which it may have for possession or arrearages in
rent, enter upon and take possession of the Premises and expel or remove Tenant
and any other person who may be occupying the Premises or any part thereof,
without being liable for prosecution or any claim or damages therefor; and
Landlord may recover from Tenant the following:

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

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

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

(iv) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, specifically including but not limited to, brokerage commissions
allocable to the remainder term of this Lease and advertising expenses incurred,
expenses of restoring the Premises or any portion thereof to the condition
required under Section 26 below; and

(v) 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.

The term “rent” as used in this Section 21 shall be deemed to be and to mean all
sums of every nature required to be paid by Tenant pursuant to the terms of this
Lease, whether to Landlord or to others. As used in this Section 21.1(i) and
(ii), above, the “worth at the time of award” shall be computed by allowing
interest at the rate of 12% per annum, but in no case greater than the maximum
amount of such interest permitted by law. As used in Section 21.1(iii) above,
the “worth at the time of award” shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).

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

21.3 Whether or not Landlord elects to terminate this Lease on account of any
default by Tenant, as set forth in this Article 21, Landlord shall have the
right to terminate any and all subleases, licenses, concessions or other
consensual arrangements for possession entered into by Tenant and affecting the
Premises or may, in Landlord’s sole discretion, succeed to Tenant’s

 

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interest in such subleases, licenses, concessions or arrangements. In the event
of Landlord’s election to succeed to Tenant’s interest in any such subleases,
licenses, concessions or arrangements, Tenant shall, as of the date of notice by
Landlord of such election, have no right to or interest in the rent or other
consideration thereafter accruing. For the purposes of this Article 21, 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.

22. ENTRY OF PREMISES. Landlord and/or its authorized representatives shall have
the right after reasonable notice except for emergencies to enter the Premises
at all reasonable times for any of the following purposes: (a) to determine
whether the Premises are in good condition and whether Tenant is complying with
its obligations under this Lease; (b) to do any necessary maintenance and to
make any restoration to the Premises that Landlord has the right or obligation
to perform; (c) to post “for sale” signs at any time during the Term, or to post
“for rent” or “for lease” signs during the last one hundred eighty (180) days of
the Term or during any period while Tenant is in default; (d) to show the
Premises to prospective brokers, agents, buyers, tenants or persons interested
in leasing or purchasing the Premises, at any time during the Term; or (e) to
repair, maintain or improve the Premises and to erect scaffolding and protective
barricades around and about the Premises but not so as to prevent entry to the
Premises or to unreasonably interfere with Tenant’s use of the Premises and to
do any other act or thing necessary for the safety or preservation of the
Premises. Landlord shall not be liable in any manner for any inconvenience,
disturbance, loss of business, nuisance or other damage arising out of
Landlord’s entry onto the Premises as provided in this ¶22. Tenant shall not be
entitled to an abatement or reduction of Rent if Landlord exercises any rights
reserved in this ¶22. Landlord shall conduct its activities on the Premises as
provided herein in a commercially reasonable manner that will lessen the
inconvenience, annoyance or disturbance to Tenant, and Landlord shall use
reasonable efforts to comply with Tenant’s reasonable security measures and
operating procedures.

23. SUBORDINATION.

23.1 Automatic Subordination. Without the necessity of any additional document
being executed by Tenant for the purpose of effecting a subordination, and at
the election of Landlord or Landlord’s Lender, this Lease shall be subject and
subordinate at all times to (i) all ground leases or underlying leases which may
now exist or hereafter be executed affecting the Premises, (ii) the lien of any
mortgage or deed of trust which may now exist or hereafter be executed affecting
the Premises, and (iii) the lien of any mortgage or deed of trust which may
hereafter be executed in any amount for which the Premises, ground leases or
underlying leases, or Landlord’s interest or estate in any of said items is
specified as security. In the event that any ground lease or underlying lease
terminates for any reason or pay mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall,
notwithstanding any subordination, attorn to and become the Tenant of the
successor in interest (including without limitation to Lender) to Landlord
(“Successor”). In connection with any such termination of a ground lease or
underlying lease or any foreclosure or conveyance in lieu of foreclosure made in
connection with any mortgage or deed of trust and as a condition to the

 

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foregoing attornment by Tenant, then so long as Tenant is not in default after
all applicable notice and cure periods pursuant to this Lease, Tenant shall not
be disturbed in its possession of the Premises or in the enjoyment of its rights
pursuant to this Lease during the Term of this Lease or any extension or renewal
thereof. Notwithstanding any subordination of this Lease to the lien of any
mortgage or deed of trust, the Lender, at any time, shall be entitled to
subordinate the lien of its mortgage or deed of trust to this Lease by filing a
notice of subordination in the County in which the Premises are located, and
Lender shall agree in connection with any such filing, that Tenant shall not be
disturbed in its possession of the Premises so long as Tenant is not in default
pursuant to this Lease after applicable notice and cure periods, if any. In
connection with any such filing, Tenant shall be obligated to attorn to and to
become a Tenant of any Successor.

23.2 Additional Subordination. From time to time at the request of Landlord,
Tenant covenants and agrees to execute and deliver within ten (10) business days
following the date of written request from Landlord, documents evidencing the
priority or subordination of this Lease with respect to any ground lease or
underlying lease or the lien of any mortgage or deed of trust in connection with
the Premises. Any and all such documents shall be in such form as is reasonably
acceptable to the Lender(s) and in a commercially reasonable form. Any
subordination agreement so requested by Landlord shall provide for Tenant to
attorn to the Successor and shall further provide that Tenant shall not be
disturbed in its possession of the Premises or in the enjoyment of its rights
pursuant to this Lease so long as Tenant is not in default after all applicable
notice and cure periods with respect to its obligations pursuant to the Lease.
Any such Subordination, Non-disturbance and Attornment Agreement shall be
recorded in the official records of the office of the County Recorder in the
County in which the Premises is located.

23.3 Notice from Lender. Tenant shall be entitled to rely upon any notice given
by a Lender in connection with the Premises requesting that Tenant make all
future Rent payments to such Lender, and Tenant shall not be liable to Landlord
for any payment made to such Lender in accordance with such notice.
Notwithstanding any provision to the contrary of this Lease, a Successor shall
not be (i) obligated to recognize the payment of Rent for a period of more than
one month in advance; (ii) responsible for liabilities accrued pursuant to this
Lease prior to the date (“Succession Date”) upon which the Successor becomes the
“Landlord” hereunder; (iii) responsible to cure defaults of the Landlord
pursuant to this Lease existing as of the Succession Date, except for defaults
of a continuing nature of which Tenant afforded Successor a reasonable cure
period following notice; (iv) responsible for any Security Deposit delivered by
Tenant pursuant to this Lease not actually received by the Successor; or
(v) bound by any execution, modification, termination or extension of this Lease
made without a Lender’s consent or any grant of a purchase option or right of
first refusal to purchase pursuant to this Lease, except in accordance with the
provisions of an assignment of leases executed by Landlord in favor of a Lender.

24. ESTOPPEL CERTIFICATE; TENANT FINANCIAL STATEMENTS. Tenant, at any time and
from time to time, upon not less than ten (10) business days written notice from
Landlord, will execute, acknowledge and deliver to Landlord and, at Landlord’s
request, to any existing or prospective purchaser, ground lessor or mortgagee of
any part of the Premises, a certificate of Tenant stating: (a) that Tenant has
accepted the Premises (or, if Tenant has not done

 

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so, Tenant has not accepted the Premises and specifying the reasons therefor);
(b) the Commencement and Expiration Dates of this Lease; (c) that this Lease is
unmodified and in full force and effect (or, if there have been modifications,
that same is in full force and effect as modified and stating the
modifications); (d) whether or not to Tenant’s knowledge there are then existing
any defenses against the enforcement of any of the obligations of Tenant under
this Lease (and, if so, specifying same); (e) whether or not to Tenant’s
knowledge there are then existing any defaults by Landlord in the performance of
its obligations under this Lease (and, if so, specifying same); (f) the dates,
if any, to which the Rent and other charges under this Lease have been paid;
(g) whether or not there are Rent increases during the Lease Term and if so the
amount of same; (h) whether or not the Lease contains any options or rights of
first offer or first refusal; (i) the amount of any Security Deposit or other
sums due Tenant; (j) the current notice address for Tenant; and (k) any other
information that may reasonably be required by any of such persons. It is
intended that any such certificate of Tenant delivered pursuant to this ¶24 may
be relied upon by Landlord and any existing or prospective purchaser, ground
lessor or mortgagee of the Business Park. Tenant agrees, at any time upon
request by Landlord, to deliver to Landlord the most recent unaudited financial
statements of Tenant, including a balance sheet and profit and loss statement
for the most recent prior three years, all prepared in accordance with generally
accepted accounting principles consistently applied. Landlord agrees to hold
such financial statements confidential and to share them only with prospective
lenders and purchasers of the Premises. Other than for prospective lenders and
purchasers, Landlord shall not request financial statements more often than
twice in any calendar year.

25. WAIVER. No delay or omission in the exercise of any right or remedy by
Landlord shall impair such right or remedy or be construed as a waiver. No act
or conduct of Landlord, including without limitation, acceptance of the keys to
the Premises, shall constitute an acceptance of the surrender of the Premises by
Tenant before the expiration of the Term. Only written notice from Landlord to
Tenant shall constitute acceptance of the surrender of the Premises and
accomplish termination of the Lease. Landlord’s consent to or approval of any
act by Tenant requiring Landlord’s consent or approval shall not be deemed to
waive or render unnecessary Landlord’s consent to or approval of any subsequent
act by Tenant. Any waiver by Landlord of any Default must be in writing and
shall not be a waiver of any other Default concerning the same or any other
provision of the Lease.

26. SURRENDER OF PREMISES. Upon expiration of the Term, Tenant shall surrender
to Landlord the 5020 Premises and the 5070 Premises and all tenant Improvements
and Alterations clean and in the same condition as existed at the 5020
Commencement Date and the 5070 Commencement Date, respectively, except for
ordinary wear and tear, casualty, and condemnation, Alterations which Tenant has
the right or is obligated to remove under the provisions of ¶14 herein, and
Hazardous Materials that (a) exist on the 5020 Premises as of the 5020
Commencement Date and on the 5070 Premises as of the 5070 Commencement Date,
(b) result from underground migration from property outside of the Business
Park, and (c) have been released at the Business Park by other tenants of the
Business Park. Tenant shall remove all personal property including, without
limitation, all wallpaper, paneling and other decorative improvements or
fixtures and shall perform all restoration made necessary by the removal of any
Alterations or Tenant’s fixtures, furnishings, equipment and other personal
property before the expiration of the Term, including, for example, restoring
all wall surfaces located in the 5020 Premises and the 5070 Premises to their
condition as of the 5020 Commencement Date and the

 

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5070 Commencement Date, respectively. In any event, Tenant shall cause the
following to be done prior to the expiration or the sooner termination of this
Lease: (i) all interior walls shall be cleaned; (ii) all tiled floors shall be
cleaned; (iii) all carpets shall be cleaned and shampooed; (iv) all broken,
marred, stained or nonconforming acoustical ceiling tile shall be replaced;
(v) all exterior and interior windows shall be washed; (vi) the HVAC system
shall be serviced by a reputable and licensed service firm and left in good
operating condition and repair as so certified by such firm; and (vii) the
plumbing and electrical systems and lighting shall be placed in good order and
repair (including replacement of any burned out, discolored or broken light
bulbs, ballasts, or lenses). Landlord can elect to retain or dispose of in any
manner permitted by law Tenant’s personal property not removed from the Premises
by Tenant prior to the expiration of the Term. Tenant waives all claims against
Landlord for any damage to Tenant resulting from Landlord’s retention or
disposition of Tenant’s personal property in compliance with law. Tenant shall
be liable to Landlord for Landlord’s cost for storage, removal and disposal of
Tenant’s personal property. Notwithstanding the foregoing, upon expiration of
the Term Tenant shall not be required to remove the following Alterations on the
5070 Building that have been approved pursuant to Section 29 below: (a) the new
enclosure surrounding the loading dock door, (b) the portion of the office area
improvements crosshatched on Exhibit D attached hereto, and (c) the 30 ton HVAC
unit to be installed on the lower roof of the 5070 Building which will service
the warehouse portion of the 5070 Premises.

27. HOLDOVER. If Tenant with Landlord’s consent remains in possession of the
Premises after expiration of the Term or after the date in any notice given by
Landlord to Tenant terminating this Lease, such possession by Tenant shall be
deemed to be a month to month tenancy cancelable by either party on thirty
(30) days written notice given at any time by either party and all provisions of
this Lease, except those pertaining to Term, renewal options and Base Rent,
shall apply and Tenant shall thereafter pay monthly Base Rent computed on a per
month basis, for each month or part thereof (without reduction for any partial
month) that Tenant remains in possession, in an amount equal to the Base Rent
that was in effect for the last full calendar month immediately preceding
expiration of the Term.

If Tenant holds over after the expiration or earlier termination of the Term
hereof, without the consent of Landlord, Tenant shall become a Tenant at
sufferance only with a continuing obligation to pay Rent provided that the Base
Rent shall be one hundred fifty percent (150%) of the Base Rent that was in
effect for the last full calendar month immediately preceding expiration of the
Term. In any such case of Holdover without the consent of Landlord, the monthly
Base Rent shall be computed on a per month basis, for each month or part thereof
(without reduction for any partial month) that Tenant remains in possession.
Acceptance by Landlord of Rent after expiration or earlier termination of the
Term shall not constitute a consent to a holdover hereunder or result in a
renewal. The foregoing provisions of this ¶27 are in addition to and do not
affect Landlord’s right of re-entry or any rights of Landlord hereunder or as
otherwise provided by law. If Tenant fails to surrender the Premises upon the
expiration of this Lease despite demand to do so by Landlord, Tenant shall
indemnify and hold Landlord harmless from all loss or liability arising out of
such failure, including without limitation, any claim made by any succeeding
tenant founded on or resulting from such failure to surrender. No provision of
this ¶27 shall be construed as implied consent by Landlord to any holding over
by Tenant. Landlord expressly reserves the right to require Tenant to surrender
possession of the Premises to Landlord as provided in this Lease upon expiration
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Lease. The provisions of this ¶27 shall not be considered to limit or constitute
a waiver of any other rights or remedies of Landlord provided in this Lease or
at law. Notwithstanding anything to the contrary herein, if Tenant’s holdover is
limited to either the 5020 Premises or the 5070 Premises, then such holdover
penalty shall only be payable with respect to such premises.

28. NOTICES. All notices, demands, or other communications required or
contemplated under this Lease, including any notice delivered to Tenant by the
Lender, shall be in writing and shall be deemed to have been duly given two
(2) business days from the time of mailing if mailed by registered or certified
mail, return receipt requested, postage prepaid, or 24 hours from the time of
shipping by overnight carrier, or the actual time of delivery if delivered by
personal service to the parties at the addresses specified in ¶1. Either Tenant
or Landlord may change the address to which notices are to be given to such
party hereunder by giving written notice of such change of address to the other
in accordance with the notice provisions hereof.

29. TENANT IMPROVEMENTS. Except as otherwise expressly provided in this Lease,
Tenant shall accept the 5020 Premises as of the 5020 Commencement Date and the
5070 Premises as of the 5070 Commencement Date in their then current, AS IS
condition, with no additional improvements completed by Landlord. As of the 5020
Commencement Date, the 5020 Building shall be served by a 225 kVA transformer.
Landlord hereby tentatively approves, in concept only, the proposed alterations
described in Exhibit C attached hereto (the “Anticipated Tenant Improvements”);
provided, however, that Landlord’s approval of the Anticipated Tenant
Improvements is expressly conditioned upon Tenant’s compliance with all of the
terms, conditions and procedures set forth in ¶14 above when processing and
prosecuting the Anticipated Tenant Improvements, including, without limitation,
Landlord’s review and approval of the plans and specifications to be submitted
by Tenant prior to construction.

30. DELIVERY OF 5020 PREMISES.

30.1 Delivery of 5020 Second Floor. Landlord and Tenant acknowledge and agree as
follows: (i) on or before November 1, 2008 (the “Second Floor Delivery Date”)
Landlord shall deliver only the second floor of the 5020 Building (the “5020
Second Floor”) to Tenant, (ii) notwithstanding anything to the contrary
contained in this Lease, in addition to any other charges or expenses owed by
Tenant to Landlord under this Lease, Tenant only shall be obligated to pay
Operating Expenses to the extent they are applicable to the 5020 Second Floor
commencing on the Second Floor Delivery Date; (iii) from and after the 5020
Commencement Date, Tenant shall be obligated to pay both Base Rent and Operating
Expenses for the 5020 Second Floor; (iv) Landlord has informed Tenant that the
5020 Second Floor is subject to the FICA Lease, and Landlord will use its
commercially reasonable efforts to deliver possession of the 5020 Second Floor
to Tenant on or before the Second Floor Delivery Date; (v) if, however, Landlord
is unable to deliver possession of the 5020 Second Floor to Tenant on or before
the Second Floor Delivery Date, then the terms and conditions of ¶30.3 shall
apply; and (vi) all other terms and conditions contained in this Lease
(including, without limitation, the obligation of Tenant to pay Rent owed to
Landlord for the 5070 Premises) shall apply throughout the entire effective Term
of this Lease as set forth herein.

 

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30.2 Delivery of 5020 First Floor. Landlord and Tenant acknowledge and agree as
follows: (i) on or before the 5020 Commencement Date Landlord shall deliver the
first floor of the 5020 Building (the “5020 First Floor”) to Tenant,
(ii) Landlord has informed Tenant that the 5020 First Floor is subject to the
FICA Lease, and Landlord will use its commercially reasonable efforts to deliver
possession of the 5020 First Floor to Tenant on or before the 5020 Commencement
Date; (iii) if, however, Landlord is unable to deliver possession of the 5020
First Floor to Tenant on or before the 5020 Commencement Date, then the terms
and conditions of ¶30.3 shall apply; (iv) upon the later of the 5020
Commencement Date and the date on which Landlord delivers the 5020 First Floor
to Tenant, in addition to any other charges or expenses owed by Tenant to
Landlord under this Lease, Tenant shall be obligated thereafter to pay all Rent
as it is applicable to the entire 5020 Premises; and (v) all other terms and
conditions contained in this Lease (including, without limitation, the
obligation of Tenant to pay Rent owed to Landlord for the 5070 Premises) shall
apply throughout the entire effective Term of this Lease as set forth herein.

30.3 Delay in Possession. If Landlord, for any reason, cannot deliver possession
of the 5020 Second Floor to Tenant on or before November 1, 2008, or the 5020
Premises to Tenant on or before January 1, 2009, then this Lease shall not be
void or voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting from such delay. In that event, however, there shall be an abatement
of Rent for the 5020 Premises covering the period between the 5020 Commencement
Date, and the date when Landlord delivers possession to Tenant, and all other
terms and conditions of this Lease shall remain in full force and effect (and
such abatement of Rent shall serve to advance the six (6) months of free Base
Rent for the 5020 Premises following the 5020 Commencement Date). If a delay in
possession is caused by Tenant’s failure to perform any obligation in accordance
with this Lease, then the Term with respect to the 5020 Premises shall commence
as of the date when the 5020 Commencement Date would have occurred but for
Tenant’s failure, and there shall be no reduction of Rent for the 5020 Premises
between such date and the time Tenant takes possession of the 5020 Premises.
Notwithstanding anything to the contrary in this Lease, in the event Landlord
cannot deliver possession of any or all of the 5020 Building on or before
March 1, 2009, then Tenant shall have a right to terminate this Lease as to the
5020 Premises only, and any amounts of Rent or Security Deposit paid by Tenant
to Landlord with respect to the 5020 Premises shall be refunded to Tenant.

31. MISCELLANEOUS PROVISIONS.

31.1 Time of Essence. Time is of the essence of each provision of this Lease.

31.2 Successor. This Lease shall be binding on and inure to the benefit of the
parties and their successors, except as provided in ¶19.

31.3 Approvals. Except as otherwise set forth in this Lease, whenever this Lease
requires an approval, consent, designation, determination, selection or judgment
by either Landlord or Tenant, such approval, consent, designation,
determination, selection or judgment and any conditions imposed thereby shall be
reasonable and shall not be unreasonably withheld or delayed.

31.4 Personal Rights. Notwithstanding any other provision(s) of this Lease to
the contrary, any provisions of this Lease providing for the renewal, extension
or early termination of the Lease and/or for the expansion of the Premises (to
include without limitation rights to

 

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negotiate, rights of first refusal, etc.) shall be (1) personal to the original
Tenant and shall not be assignable or otherwise transferable other than to a
Permitted Transferee (either voluntarily or involuntarily) to any third party
for any reason whatsoever, and (2) conditioned upon Tenant not then being in
default (after applicable notice and cure periods, if any) under this Lease.

31.5 Commissions. Each party represents that it has not had dealings with any
real estate broker, finder or other person with respect to this Lease in any
manner, except for the Broker(s) identified in ¶1, who shall be compensated by
Landlord in accordance with the separate agreement between Landlord and the
Broker(s).

31.6 Other Charges; Legal Fees. If Landlord becomes a party to any litigation
concerning this Lease or the Premises by reason of any act or omission of Tenant
or Tenant’s authorized representatives, Tenant shall be liable to Landlord for
reasonable attorneys’ fees and court costs incurred by Landlord in the
litigation. Should the court render a decision which is thereafter appealed by
any party thereto, Tenant shall be liable to Landlord for reasonable attorneys’
fees and court costs incurred by Landlord in connection with such appeal. If
either party commences any litigation against the other party or files an appeal
of a decision arising out of or in connection with the Lease, the prevailing
party shall be entitled to recover from the other party reasonable attorneys’
fees and costs of suit. If Landlord employs a collection agency to recover
delinquent charges, Tenant agrees to pay all collection agency and attorneys’
fees charged to Landlord in addition to Rent, late charges, interest and other
sums payable under this Lease.

31.7 Landlord’s Successors. In the event of a sale or conveyance by Landlord of
the Business Park, the same shall operate to release Landlord from any liability
thereafter accruing under this Lease, including as to any Security Deposit to
the extent transferred to Landlord’s successor-in-interest, and in such event
Landlord’s successor in interest shall assume in writing Landlord’s obligations
under this Lease and shall be solely responsible for all obligations of Landlord
thereafter accruing under this Lease.

31.8 Interpretation. This Lease shall be construed and interpreted in accordance
with the laws of the state in which the Premises are located. This Lease
constitutes the entire agreement between the parties with respect to the
Premises, except for such guarantees or modifications as may be executed in
writing by the parties from time to time. When required by the context of this
Lease, the singular shall include the plural, and the masculine shall include
the feminine and/or neuter. “Party” shall mean Landlord or Tenant. If more than
one person or entity constitutes Landlord or Tenant, the obligations Imposed
upon that party shall be joint and several. The unenforceability, invalidity or
illegality of any provision shall not render the other provisions unenforceable,
invalid or illegal.

31.9 Auctions. Tenant shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Landlord’s prior written consent. Notwithstanding anything to the
contrary in this Lease, Landlord shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.

 

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31.10 Quiet Possession. Upon payment by Tenant of the Rent for the Premises and
the observance and performance of all of the covenants, conditions and
provisions on Tenant’s part to be observed and performed under this Lease,
Tenant shall have quiet possession of the Premises for the entire Term hereof
subject to all of the provisions of this Lease.

31.11 Conflict. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions initial by all parties hereto.

31.12 Offer. Preparation of this Lease by Landlord or Landlord’s agent and
submission of same to Tenant shall not be deemed an offer to lease to Tenant.
This Lease is not intended to be binding until executed by all Parties hereto.

31.13 Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other Rent payable under this Lease.

31.14 Construction. The Landlord and Tenant acknowledge that each has had its
counsel review this Lease, and hereby agree that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Lease or in any amendments
or exhibits hereto.

31.15 Relocation Waiver. Tenant acknowledges that they have entered into
occupancy of the Premises after Landlord acquired the Premises and that Landlord
plans to redevelop the Business Park. Therefore, Tenant acknowledges and agrees
that it is an interim tenant post acquisition that will not be entitled to
relocation benefits under state or federal law if Landlord requires Tenant to
relocate from the Premises after the expiration of the original Term of this
Lease. Nothing in this ¶31.15 changes the Term, the Monthly Base Rent or any
other provision in this Lease. For example, this ¶31.15 does not allow Landlord
to relocate Tenant prior to the expiration of the Term, but after the expiration
of the Term, Tenant will not receive (and has hereby waived) relocation benefits
if Landlord requires Tenant to relocate from the Premises.

31.16 Intentionally Deleted.

31.17 Captions. Article, section and paragraph captions are not a part hereof.

31.18 Exhibits. For reference purposes the Exhibits are listed below.

         Exhibit A: Business Park

         Exhibit B: Rules and Regulations

         Exhibit C: Anticipated Tenant Improvements

         Exhibit D: Crosshatch of Office Area Alterations Not Required to be
Removed

 

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31.19 Reasonable Expenditures. Any expenditure by a party permitted or required
under this Lease, for which such party is entitled to demand and does demand
reimbursement from the other party, shall be limited to the fair market value of
the goods and services involved, shall be reasonably incurred, and shall be
substantiated by documentary evidence available for inspection and review by the
other party or its representative during normal business hours.

31.20 Amended and Restated Lease. Upon the mutual execution and delivery of this
Lease by Landlord and Tenant, this Lease shall completely amend, restate,
replace, and supersede the Original Lease, and the Original Lease shall be of no
further force and effect.

 

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IN WITNESS WHEREOF, the parties have executed this Lease as of the Effective
Date.

 

BRANDIN COURT PARTNERS, LLC,     3PAR Inc., a Delaware Corporation a California
limited liability company     By:   WOLFF URBAN DEVELOPMENT,     By:   /s/
ADRIEL LARES   LLC, a California limited liability company     Name:   Adriel
Lares Its:   Manager     Title:   VP Finance & CFO           Date:   10/15/08  
By:   /s/ KEITH WOLFF           Name:   Keith M. Wolff           Title:  
Manager      

 

Signature Page

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EXHIBIT A

Business Park

5020 – 5070 Brandin Court, Fremont, California

LOGO [g72995g07z57.jpg]

 

Exhibit A

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EXHIBIT B

Rules & Regulations

This Exhibit B is attached to and made a part of that certain Lease by and
between Brandin Court Partners LLC, a California Limited Liability Company as
Landlord and 3PAR Inc., a Delaware Corporation as Tenant.

1. No sign, placard, picture, advertisement, name or notice (collectively,
“Signs”) shall be installed or displayed on any part of the Premises without the
prior written consent of Landlord, except that Tenant may post Signs inside the
Building which are not visible from the exterior of the Building. Landlord shall
have the right to remove, at Tenant’s expense and without notice, any sign
installed or displayed in violation of this rule. All approved signs or
lettering on doors and walls shall be printed, painted, affixed or inscribed at
the expense of Tenant.

2. Except as consented to in writing by Landlord, no draperies, curtains,
blinds, shades, screens or other devices shall be hung at or used in connection
with any window or exterior door or doors of the Premises and no awning shall be
permitted on any part of the Premises. Tenant shall not place anything against
or near glass partitions or doors or windows which may appear unsightly from
outside the Premises.

3. Neither Tenant nor any employee or invitee of Tenant, shall make any
structural roof or terrace penetrations.

4. Tenant shall not cause any unnecessary labor by carelessness or indifference
to the good order and cleanliness of the Premises. Landlord shall not in any way
be responsible to any Tenant for any loss of property on the Premises, or for
any damage to any Tenant’s property, except as otherwise provided in the Lease.

5. Landlord will furnish Tenant, free of charge, with six (6) keys to the
Premises. Tenant shall not alter any lock or install a new additional lock or
bolt on any door of its Premises without Landlord’s prior written consent.
Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys
of all locks for doors on the Premises, and in the event of loss of any keys
furnished by Landlord, shall pay Landlord therefore.

6. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord’s reasonable
instructions in their installation.

7. Tenant shall not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which is
allowed by law. Landlord shall have the reasonable right to prescribe the
weight, size and position of all equipment, materials, furniture or other
property brought into the Premises. Heavy objects shall, if considered necessary
by Landlord, stand on such platforms as determined by Landlord to be necessary
to properly distribute the weight. Business machines and mechanical equipment
belonging to Tenant, which cause noise or vibration that may be transmitted to
the structure of the Premises to such a degree as to be unreasonable, shall be
placed and maintained by Tenant, at Tenant’s expense, on vibration eliminators
or other devices sufficient to eliminate noise or vibrations. Landlord will not
be responsible for loss of, or damage to, any such equipment or other property
from any cause, and all damage done to the Premises by maintaining or moving
such equipment or other property shall be repaired at the expense of Tenant.

 

Exhibit B

1

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8. Tenant shall not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those reasonable
quantities necessary for the operation of Tenant’s business. Tenant shall not
use or permit to be used in the Premises any foul or noxious gas or substance,
or permit or allow the Premises to be occupied or used in a manner offensive or
objectionable to Landlord by reason of noise, odors or vibrations. Tenant shall
not bring or keep or permit to be brought or kept in the Premises any animal
life form, other than human, except seeing eye dogs when in the company of their
masters.

9. Tenant shall not waste electricity, water or air-conditioning and agrees to
cooperate reasonably with Landlord to comply with any governmental energy-saving
rules, laws or regulations of which Tenant has actual notice.

10. Landlord reserves the right, exercisable with one hundred twenty (120) days
prior written notice, but without liability to Tenant, to change the name and
street address of the Premises.

11. Tenant shall close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus, and other equipment which is not
required to be continuously run.

12. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein. The expense of
any breakage, stoppage or damage resulting for the violation of this rule shall
be borne by the Tenant who, or whose employees or invitees, shall have caused
it.

13. Tenant shall not sell, or permit the retail sale of newspapers, magazines,
periodicals, theater tickets or any other goods or merchandise to the general
public in or on the Premises. Tenant shall not make any room-to-room
solicitation of business from other tenants in the Business Park. Tenant shall
not use the Premises for any business or activity other than that specifically
provided for in Tenant’s Lease. Notwithstanding the above, Tenant shall have the
right to install vending machines for use by Tenant, its employees and invitees.

14. Tenant shall not interfere with radio or television broadcasting or
reception from or in neighboring areas.

15. Canvassing, soliciting and distribution of handbills or any other written
materials, and peddling in the Business Park are prohibited, and Tenant shall
cooperate to prevent same.

16. Landlord reserves the right to exclude or expel from the Premises any person
who, in Landlord’s judgment, is intoxicated or under the influence of liquor or
drugs or who is in violation of any of the Rules and Regulations of the
Premises.

 

Exhibit B

2

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17. Tenant shall store all its trash and garbage within its Premises or in
reasonable locations specifically identified by Landlord for such purposes.
Tenant shall not place in any trash box or receptacle any material which cannot
be disposed of in the ordinary and customary manner of trash and garbage
disposal. All garbage and refuse disposal shall be made in accordance with
reasonable directions issued from time to time by Landlord.

18. The Premises shall not be used for the storage of merchandise held for sale
to the general public, or for lodging nor shall the Premises by used for any
illegal purpose. No cooking (other than customary heating or ordinary lunchroom
items for Tenant’s employees) shall be done or permitted by any tenant on the
Premises, except that (a) use by Tenant in its kitchen, if any, located in the
Premises and Underwriters Laboratory’s approved equipment for brewing coffee,
tea, hot chocolate and similar beverages and microwaving food shall be
permitted, and (b) Tenant shall have the right to hold company picnics,
barbeques, and similar functions at the Premises or in the parking lot from time
to time subject to Landlord’s prior written approval, provided that such
kitchen, equipment and use is in accordance with all applicable federal, state,
county and city laws, codes, ordinances, rules and regulations.

19. Tenant shall not use in any part of the Premises any hand truck except those
equipped with rubber tires and side guards or such other reasonable
material-handling equipment as Landlord may approve.

20. Without the written consent of Landlord. Tenant shall not use the name of
the Business Park in connection with or in promoting or advertising the business
of Tenant except as Tenant’s address.

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

22. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes locking doors and securing other
means of entry to the Premises.

23. The requirements of Tenant will be attended to only upon appropriate
application to the office of Landlord by an authorized individual. Employees of
Landlord shall not perform any work or do anything outside of their regular
duties unless under special instructions from Landlord.

24. Tenant shall not park its vehicles in any parking areas outside the Business
Park. Tenant shall not store or abandon vehicles in the Business Park parking
areas nor park any vehicles in the Business Park parking areas other than
automobiles, motorcycles, motor driven or non-motor driven bicycles,
four-wheeled trucks, or other equipment used in the operation of Tenant’s
business. Tenant, its agents, employees and invitees shall not park any one
(1) vehicle in more than one (1) parking space.

25. Landlord reserves the right to make such other reasonable Rules and
Regulations as, in its judgment, may from time to time be appropriate for safety
and security, for care and cleanliness of the Premises and for the preservation
of good order therein. Tenant agrees to abide for all such Rules and Regulations
hereinabove stated and any additional Rules and Regulations which are adopted.

26. Tenant shall be responsible for the observance of all of the foregoing Rules
and Regulations by Tenant’s employees, agents, clients, customers, invitees and
guests.

 

Exhibit B

3

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EXHIBIT C

Anticipated Tenant Improvements

List of anticipated Tenant Improvements of 5020 Brandin Court

 

  •  

Construction of additional offices on the first floor

 

  •  

Construction of a training facility for students, customers and internal
employees

 

  •  

Construction of a Fitness Center

 

  •  

Installation of a new security system and cameras similar to 5070 Brandin Court

 

  •  

Installation of signage on the 5020 Building duplicating 5070 Brandin Court

 

  •  

Construction of a small lab for a demo room

 

Exhibit C

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EXHIBIT D

Crosshatch of Office Area Alterations Not Required to be Removed

See attached.

 

Exhibit D