Document:

Exhibit 10.5

First Amendment to Lease

This Amendment, dated
November 17, 2004, is executed by and between 95 College Plaza, Ltd., a
California limited partnership (“Landlord”),
and 1st Pacific Bank of California, a California corporation (“Tenant”). This Amendment is entered into
with reference to the following facts:

A.                      On or about
November 1, 1999, Landlord, as landlord, and Tenant, as tenant, executed that
certain Shopping Center Lease (“the Lease”)
pertaining to the premises commonly known as 3500 College Boulevard, Oceanside,
California 92054 (“the Premises”).

B.                        The
original term of the Lease will expire on December 31, 2004 (“the Original Term Expiration Date”).

C.                        By this
Amendment, Landlord and Tenant desire to extend the term of the Lease and otherwise
amend the Lease, as provided below.

In consideration of the
above recitals and the mutual agreements stated below, the parties agree:

1.                          Term
Extension. The term of the Lease is extended for a period commencing
January 1, 2005, through December 31, 2009 (“the
Extended Term”). As a consequence of such extension, the option to
extend the term, as provided in the Addendum to the Lease, is hereby deleted
(i.e., Tenant has no further option to extend the term of the Lease).

2.                          Minimum
Annual Rent. During the first Lease Year (defined below), the Minimum
Annual Rent will be $8,797.80/mo. The Minimum Annual Rent for the second Lease
Year of the Extended Term and each subsequent Lease Year of the term of the
Lease will be equal to the amount derived by multiplying the Minimum Annual
Rent for the first Lease year of the Extended Term by a fraction, the numerator
of which is the Index (defined below) amount for the last period for which the
Index is published and that ends before the commencement of the Lease Year for
which the calculation is being made and the denominator of which is the Index
amount for the same calendar period immediately preceding the commencement of
the first Lease year of the Extended Term. As used herein, “Lease Year” means each calendar year
commencing on January 1 and ending on December 31. The “Index” is that published by the United
States Price Index for all urban consumers for the Los Angeles area, all items,
1982-84 base. Notwithstanding the foregoing, the maximum increase to Minimum Annual
Rent during the Extended Term shall not exceed 3 percent above the amount of
the Minimum Annual Rent during the preceding Lease Year. If the Bureau of Labor
Statistics discontinues the publication of the Index, publishes the Index less
frequently, or alters the Index in some other manner, then Lessor and Lessee
will adopt a substitute index or substitute procedure that reasonably reflects
and monitors charges in consumer prices. In no event will the Minimum Annual
Rent during a subsequent Lease Year be reduced below the Minimum Annual Rent
for the preceding Lease Year. Lessor’s failure,

 1
 

by reason of oversight, mistake or otherwise, to make
the calculation or advise Lessee thereof prior to the end of any Lease Year or
to collect any increased Minimum Annual Rent determined as set forth in this
paragraph will not release Lessee of Lessee’s obligation to pay to Lessor,
forthwith upon discovery of such oversight or mistake, an amount equal to the
difference between the Minimum Annual Rent actually paid and the increased
Minimum Annual Rent that should have been paid during the period in which such
mistake or oversight continued.

3.                          Improvements.
Landlord and Tenant further agree as follows:

3.1                     Landlord
agrees, at Landlord’s cost, to perform the following work:

3.1.1            Landlord shall paint the exterior of the
Premises in a color selected by Landlord or its architect, which color should
be acceptable to Lessee.

3.1.2            Landlord shall install a fence and gate in
an area mutually agreed upon by Landlord and Tenant.

3.13               Landlord
shall install motion-detector lights on the exterior walls of the rear and side
of the Premises.

3.1.4            Landlord shall engage the services of a
pest control contractor to abate rat and other rodent infestation in and around
the Premises on an ongoing basis.

3.1.5            Landlord shall cause six regular-sized
parking stalls in the area in front of the Premises to be marked “1st Pacific
Bank of California.”

3.2                     Tenant
may, at Tenant’s expense, install (1) a night-deposit drop-box in the location
generally shown on Exhibit 1 attached hereto and/or (2) subject to Tenant’s
compliance with all permits and other approvals required from the City of
Oceanside, additional signage as generally depicted in Exhibit 2 attached
hereto,

4.                          Lessee’s
Representations. In connection with execution of this Amendment, Lessee
hereby represents to Landlord:

4.1                     No
Lessor Default. To Lessee’s actual knowledge, Lessor is not in default and
has not been in default in the performance of Lessor’s obligations under the
Lease, and there exists no condition that with the passage of time or delivery
of notice or both would constitute a default by Lessor under the terms of the
Lease.

4.2                     No
Offset. Tenant has no right, claim, or action for recovery against Lessor,
except as provided in Section 3(k) of the Lease pertaining to the $6,000.00
Security Deposit.

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5.3                     No
Insolvency. Tenant has not initiated any insolvency proceeding and has no
present intention to initiate any insolvency proceeding.

6.                          Confirmation.
Except as modified by this Amendment, the Lease is hereby ratified and
confirmed.

	
  95 College Plaza, Ltd.,

  	
   

  	
  1st Pacific Bank of California,

  
	
  a California limited partnership

  	
   

  	
  a California corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By Cal Diego Builders, Inc.,

  	
   

  	
   

  
	
   

  	
  a California corporation, its General Partner

  	
   

  	
  By

  	
  /s/ A. Vincent
  Siciliano

  	
   

  
	
   

  	
   

  	
   

  	
  Print name

  	
  A. Vincent
  Siciliano

  	
   

  
	
   

  	
   

  	
   

  	
  Title 

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Harkishan B. Parekh

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harkishan B. Parekh, President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By

  	
  /s/ James
  Burgess

  	
   

  
	
   

  	
   

  	
   

  	
  Print name

  	
  James Burgess

  	
   

  
	
   

  	
   

  	
   

  	
  Title 

  	
  EVP/CFO

  	
   

  
													

 

Schedule
of Exhibits

	
   

  	
  Exhibit 1

  	
   

  	
  Diagram depicting location of night deposit box

  
	
   

  	
  Exhibit 2

  	
   

  	
  Diagram depicting new signage

  

 

 3Exhibit 10.6

LEASE

For and in consideration of the rental and of the
covenants and agreements hereinafter set forth to be kept and performed by the
Tenant, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
the Premises described below in Paragraph 1.2 for the term, at the rental and
subject to and upon all of the terms, covenants and agreements hereinafter set
forth.

1.                         Basic
Lease Provisions.

1.1
Parties: This Lease, dated for reference purposes only as of
April 18, 2003, is made by and between Griffin Properties, LLC, a California
limited liability company (hereinafter “Landlord”) and 1st Pacific Bank of California, a California
corporation (hereinafter “Tenant”).

1.2
Premises: The premises leased hereunder are commonly known as
8889 Rio San Diego Drive, Suite        , San
Diego, CA 92108, deemed to be approximately 2,791 rentable square feet, more or
less, which are to be constructed in a manner substantially as shown in Exhibit
“A” attached hereto and made a part hereof (hereinafter the “Premises”).

1.3 Building: The “Building” is that certain building to be constructed on the real
property commonly described as being located at 8889 Rio San Diego Drive, in
the City of San Diego, County of San Diego, State of California, as more particularly
shown in Exhibit “A” attached hereto and made a part hereof. Tenant
acknowledges that the sole purpose of any floor plan provided herein is to
identify the location of the Premises in the Building.

1.4
Project: The Premises, the Building, the Common Areas (as
defined below) and the land upon which the same are located, along with all
other improvements thereon or thereunder, are herein collectively referred to
as the “Project” . The Project, as is anticipated to be constructed, is more
particularly described in Exhibit “B” attached hereto.

1.5 Use:
The Premises shall be utilized solely for general office use
consistent with the character of the Building as a first-class office building,
and for no other purpose whatsoever, and shall be fully subject to all
provisions contained in Paragraph 7, below.

1.6
Term: The term of this Lease (the “Lease Term” shall be for a
period of ten (10) years, commencing on the earlier of the date Tenant occupies
the Premises for purposes of conducting business therein, or August 15, 2003
(hereinafter “Commencement Date”) and ending ten (10) years (and the remaining
part of the month in which the Commencement Date occurs, if other than the
first day of a month) thereafter (“Termination Date”). In addition, Tenant
shall have two (2) options to extend the Term by an additional five (5) years
each pursuant to the provisions contained in Paragraph 3.5, below.

1.7 Base
Rent: Initial base rent (the “Base Rent”) for the Premises
shall be Seven Thousand One Hundred Seventeen and 05/100 Dollars ($7.117.05)
per month, payable on the first (1st) day of each month subject to Paragraph 4
below. Notwithstanding the foregoing, however, the parties agree that Base Rent
for the first (1st)
month of the Term shall be paid upon execution of this Lease, pursuant to
Paragraph 1.10, below.

1.8 Base
Rent Increase: On the first anniversary of the Commencement
Date, and on each anniversary thereafter, the monthly Base Rent payable under
the provisions of this Lease shall be increased by an amount equal to 3% of the
Base Rent payable immediately prior to such anniversary date, resulting in the
following rent schedule:

	
  Months

  	
   

  	
  Monthly

  Base Rent

  	
   

  
	
  01-12

  	
   

  	
  $

  	
  7,117.05

  	
   

  
	
  13-24

  	
   

  	
  $

  	
  7,330.56

  	
   

  
	
  25-36

  	
   

  	
  $

  	
  7,550.48

  	
   

  
	
  37-48

  	
   

  	
  $

  	
  7,776.99

  	
   

  
	
  49-60

  	
   

  	
  $

  	
  8,010.30

  	
   

  
	
  61-72

  	
   

  	
  $

  	
  8,250.61

  	
   

  
	
  73-84

  	
   

  	
  $

  	
  8,498.13

  	
   

  
	
  85-96

  	
   

  	
  $

  	
  8,753.07

  	
   

  
	
  97-108

  	
   

  	
  $

  	
  9,015.67

  	
   

  
	
  109-120

  	
   

  	
  $

  	
  9,286.14

  	
   

  

 

1.9
Rent: For purposes of this Lease, the term “Rent” means Base
Rent, Additional Rent (as hereafter defined), and all other amounts payable by
Tenant hereunder and defined as “rent” or “additional rent” hereunder.

1.10
Rent Paid Upon Execution: Upon execution of this Lease,
Tenant shall pay Seven Thousand One Hundred Seventeen and 05/100 Dollars
($7,117.05) for the first month’s Base Rent.

1.11
Security Deposit: No security deposit shall be required.

1.12
Tenant’s Share: Tenant’s Share, as defined in Paragraph
4.5(a), below, shall be an amount calculated by dividing the rentable square
footage of the Premises by the rentable square footage of the Building.
Landlord shall notify Tenant of Tenant’s Share upon completion of its
construction of the Building and completion of its calculation of the rentable
square footage thereof.

1.13
Work of Improvement. Landlord shall not be required to perform
any work or supply any material or labor to prepare the Premises for occupancy.
Landlord’s sole obligation shall be to
deliver to Tenant a Warm Shell; any improvements to the Premises shall be the
sole responsibility of Tenant. For purposes of this Lease, the term “Warm
Shell” means that the Landlord shall deliver the Building with the items set
forth on Exhibit “C” completed.

1.14
Base Year. The term “Base Year” means the calendar year
ending on December 31, 2003. In the event the Project has not been completed
for the entire Base Year, then the Operating Expenses incurred by Landlord from
and after the date the Project is substantially completed until the end of the
Base Year shall be annualized to determine Base Year Operating Expenses. For
purposes of calculating Real Property Taxes for the Base Year, such taxes shall
be calculated as if all of

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the tenant improvements for all space in the Building
were fully constructed and the Real Property, the Building and all tenant
improvements in the Building were fully assessed for the entire Base Year.

1.15
Tenant Allowance. Landlord shall reimburse Tenant up to a
maximum of One Hundred Seventeen Thousand Dollars ($117,000.00) for the
construction of the Tenant Improvements (the “Tenant Improvement Allowance”);
any and all costs for Tenant Improvements in excess of the Tenant Improvement
Allowance shall be paid by Tenant. Landlord shall reimburse Tenant for any
costs incurred by Tenant in constructing the Tenant Improvements, up to a
maximum amount equal to the Tenant Improvement Allowance, within thirty (30)
days of receiving invoices from Tenant detailing the Tenant Improvement costs
incurred by Tenant. In the event Landlord pays more than the Tenant Improvement
Allowance for any Tenant Improvements, any such excess amount shall reimbursed
to Landlord by Tenant within ten (10) business days of receiving an invoice
therefore from Landlord. In the event Tenant fails to pay any amounts it is
required to pay hereunder when due, Tenant shall be responsible to pay any and
all late charges, interest and other charges related thereto, and agrees to
indemnify and hold Landlord harmless from and against any and all claims,
liabilities, charges, damages, costs and expenses incurred by Landlord as a
result of any late payment or failure to pay by Tenant of any amounts required
to be paid hereunder by Tenant. The Tenant Improvement Allowance will be used
only for the Tenant Improvements to be constructed under Paragraph 2.7,
below, and shall not be applied against moveable furniture, consultant fees or
other relocation-related uses.

1.16
Refurbishment Allowance. Landlord agrees to pay to Tenant up
to Eight Thousand Three Hundred Seventy-three Dollars ($8,373.00) towards any
costs incurred by Tenant during the sixty-first (61st) month of the Term in refurbishing the
Premises. Landlord shall pay such amounts to Tenant within thirty (30) days of
receiving invoices from Tenant detailing the refurbishment costs incurred by
Tenant in the sixty-first (61st)
month of the Term.

1.17
Utilities. The cost of all utilities used by Tenant at the
Premises which are metered separately shall be paid by Tenant in accordance
with Paragraph 8.1, below.

1.18
Signage. Landlord shall allow Tenant to install, at Tenant’s
expense, Building top signage on the glass spandrel directly east of the main
entry. Any such signage shall be subject to Landlord’s prior written consent,
and shall be subject to the provisions of Paragraph 9.3, below. Tenant shall be
permitted to install signage in size up to a maximum of one-third (1/3) of the
allowable frontage signage for the Building.

1.19
Automated Teller Machine. If permitted under applicable
codes, regulations and ordinances, Landlord shall allow Tenant to install an
automated teller machine (“ATM”) at the Premises, the installation of which
shall be subject to the provisions of Paragraph 9.3. Tenant shall be
responsible for any maintenance and security for any ATM it has installed.
Landlord makes no representation regarding whether or not an ATM is permitted
under applicable codes, regulations or ordinances.

1.20
Early Occupancy. Landlord anticipates completing the Project
and delivering to Tenant a Warm Shell on or around June 1, 2003; however,
Landlord shall have no liability to Tenant whatsoever if Landlord does not, in
fact, complete the Project by June 1, 2003. Upon execution of this Lease,
Tenant shall be permitted access to the Premises for purposes of preparing its
space plan and constructing its Tenant Improvements in the Premises; provided,
however, that in no event shall such access and/or construction interfere with
Landlord’s completion of the Project, and Tenant shall immediately cease
conducting any activities at the Premises and/or any other part of the Project
which interferes with Landlord’s completion of the Project. Upon Landlord’s
completion of the Project (including, without limitation, all Building systems
located within or supporting the Building and/or the Premises) and Tenant’s
completion of the Tenant Improvements, and upon issuance of a certificate of
occupancy and any and all other permits or approvals necessary to allow Tenant
to occupy the Premises, Landlord shall notify Tenant, and Tenant shall be
permitted to occupy the Premises from such date. During the period of time
commencing on the date hereof until the Commencement Date (the “Early Occupancy
Period”), Tenant shall not be required to pay Base Rent; however, all other
provisions of this Lease shall apply to Tenant during the Early Occupancy
Period.

2.                         Premises,
Parking, Common Areas, Work of Improvement:

2.1
Premises. The Premises consists of a portion of the first
floor of the Building, and shall include the parking specified in Paragraph
2.2, below. Landlord agrees that Landlord shall cause the Building to be
constructed substantially as depicted on Exhibit “A” attached hereto. Landlord
shall attempt to substantially complete construction of the Building and any
Tenant Improvements required to be constructed by Landlord as described in
Paragraph 2.7, below, by August 1, 2003. In the event Landlord does not
substantially complete the Building (as indicated by the architect for the
Building indicating that the Building has been substantially completed) by
August 1, 2003, then the Commencement Date shall be delayed until such time as
the Building has been completed. In the event Landlord does not substantially
complete the Building by January 1, 2004, then Tenant may, during the ten (10)
day period following January 1, 2004, elect, by providing written notice to
Landlord, to terminate this Lease Agreement. In the event Landlord is
constructing any Tenant Improvements pursuant to Paragraph 2.7, below, if such
Tenant Improvements are not completed by Landlord by August 1, 2003, and the
delays are not caused by or contributed to by Tenant (including, without
limitation, Tenant’s failure to promptly approve space plans submitted by
Landlord to Tenant), then the Commencement Date shall be delayed by the same
number of days that Landlord is delayed in completing the Tenant Improvements
due to no fault or contribution by Tenant. In the event the delays in causing
the Tenant Improvements to be completed are caused by or contributed to by
Tenant, then no delay in the Commencement Date shall occur as a result of such
delay in completion. The rights of Tenant pursuant to this Paragraph 2.1 are
Tenant’s sole and exclusive rights for a failure of Landlord to deliver the
Premises to Tenant hereunder, and Landlord shall have no liability whatsoever
to Tenant for failure to deliver the Premises and/or the Tenant Improvements to
Tenant by the outside date specified herein. In the event the Commencement Date
does not occur on or before January 1, 2004, then Landlord may, at any time
thereafter until the Commencement Date, terminate this Lease. Upon termination
by Tenant or Landlord hereunder, neither party shall have any other rights or
obligations with respect to this Lease Agreement, except that Landlord shall
refund to Tenant the payment made pursuant to Paragraph 1.10, above.

2.2
Vehicle Parking. Tenant shall be entitled to the
non-exclusive use of unreserved and unassigned parking spaces on those portions
of the Common Area designated by Landlord for parking. In addition, subject to
the rights of adjacent landowners and their tenants, invitees and customers
under reciprocal parking agreements now or hereafter affecting the Project,
Landlord shall provide for the following parking: (i) Tenant shall be entitled
to two (2) parking spaces during the Term which shall be reserved to Tenant as
against any other tenant in the Building during the hours from 7:30 a.m.
through 5:00 p.m., Monday through Friday, the location of which shall be
designated, from time to time, by Landlord, but which shall be as close to
Tenant’s ATM as is reasonably practical taking into account the

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parking layout and the
parking spaces already reserved to other tenants of the Project; and (ii)
Landlord shall provide a minimum of eight (8) parking spaces designated as “Customer
Parking” which shall be reserved to customers and visitors of the Project as
against any other tenant in the Building during the hours from 7:30 a.m.
through 5:00 p.m., Monday through Friday, the location of which shall be
designated, from time to time, by Landlord, but which shall be as close to the
front entrance to the Building as is reasonably practical taking into account
the parking layout and the parking spaces already reserved to other tenants of
the Project. A copy of the current reciprocal parking agreements are attached
as Exhibit “D” hereto. All parking spaces shall be used only for parking by
vehicles no larger than full size passenger automobiles or pick-up trucks,
called “Permitted Size Vehicles”. Vehicles other than Permitted Size Vehicles
are referred to as “Oversized Vehicles”. Tenant shall not at any time park or
permit the parking of Tenant’s vehicles, trucks, Oversized Vehicles, or the
vehicles, trucks or Oversized Vehicles of Tenant’s employees, invitees,
suppliers or others, in any portion of the Common Area not designated by
Landlord for such use by Tenant. Tenant shall not abandon any inoperative
vehicles or equipment on any portion of the Common Area, nor shall Tenant, its
employees, invitees, suppliers or others park or store any vehicle (Permitted
Size or otherwise) on any portion of the Common Area, including designated
parking areas, unattended for any period longer than twenty-four (24) hours. If
Tenant commits, permits or allows any of the prohibited activities described in
the Lease or the rules then in effect, 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 paid by Tenant to Landlord upon demand from Landlord.

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 Project that are provided
and designated by Landlord from time to time for the general non-exclusive use
of Landlord, Tenant, and the other tenants and other authorized users of the
Project and their respective employees, suppliers, shippers, customers and
invitees, including, but not limited to common entrances, lobbies, corridors,
stairways and stairwells, public restrooms, elevators, escalators, heating,
ventilation and air conditioning (“HVAC”) systems, parking areas to the extent
not otherwise referenced in this Lease, loading and unloading areas, trash
areas, roadways, sidewalk, walkways, parkways, ramps, driveways, landscaped
areas and decorative walls.

2.4
Common Areas - Tenant’s Rights. Landlord hereby grants to
Tenant, for the benefit of Tenant and its employees, suppliers, shippers,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Landlord under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Project. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporarily or permanently, in the
Common Areas or to construct or install any improvements in the Common Areas.
Any such storage shall be permitted only by the prior written consent of
Landlord or Landlord’s designated agent, which consent may be revoked at any
time. In the event that any unauthorized storage shall occur, Landlord shall
have the right, without notice, in addition to such other rights and remedies
that it may have, to remove the property and charge the cost to Tenant, which
cost shall be immediately payable by Tenant to Landlord upon demand by
Landlord.

2.5
Common Areas - Rules and Regulations/CC&R’s. Landlord or
such other person(s) 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 establish, modify, amend and enforce reasonable non-discriminatory rules and
regulations with respect thereto. Tenant agrees to abide by and conform to all
such rules and regulations, as well as any private conditions, covenants, and
restrictions of public record now or hereafter affecting the Premises and any
amendment thereof, and to cause its employees, suppliers, shippers, customers
and invitees to abide and conform; provided, however, that no such modified or
new Covenants, Conditions and Restrictions will adversely affect Tenant’s
rights under this Lease or impose a material burden on Tenant. Tenant’s
obligation to comply with modifications or new Covenants, Conditions and
Restrictions shall not arise until Landlord shall have provided copies of any
such new Covenants, Conditions and Restrictions, and any modifications to any
existing Covenants, Conditions and Restrictions, to Tenant. Landlord shall not
be responsible to Tenant for the non-compliance with said rules and regulations
by other tenants or authorized users of the Project. Any failure by Tenant or
its agents, employees or representatives to observe and comply with the rules
and regulations established by Landlord with respect to the Common Areas which
failure continues after notice provided in accordance with Paragraph 18.1,
below, shall be a default by Tenant hereunder. Tenant agrees to comply with all
terms and conditions of the Covenants, Conditions and Restrictions applicable
to the Premises, as the same may be modified from time to time in accordance
with the provisions of this Paragraph 2.5. A copy of the current Covenants,
Conditions and Restrictions are attached hereto as Exhibit “E”. A copy of the
rules and regulations governing the Common Areas, together with any
modifications thereto, shall be provided to Tenant from time to time during the
Term by Landlord.

2.6 Common Areas - Changes. Landlord shall have the right at Landlord’s
sole discretion, from time to time:

(a) To make changes to
the Common Areas, including, without limitation, changes in the location, size,
shape and number of driveways entrances, parking spaces, parking areas, loading
and unloading areas, ingress, egress, direction of traffic, landscaped areas
and walkways; (b) to close temporarily any of the Common Areas for maintenance
purposes, so long as reasonable access to the Premises remains available; (c)
to use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Project, or any portion thereof; (d) to close, at
reasonable times, all or any portion of the parking areas for any reasonable
purpose, including without limitation, the prevention of a dedication thereof,
or the accrual of the rights of any person or public therein; (e) to designate
portions of the Common Areas as reserved exclusively for specific tenants or
others; and, (f) to do and perform such other acts and make such other changes
in, to or with respect to the Common Areas and the Project as Landlord may, in
the exercise of sound business judgment, deem to be appropriate.

2.7
Tenant Improvements. Landlord shall be responsible for
delivering a Warm Shell to Tenant; Tenant shall be responsible for developing a
work plan (the “Tenant Improvement Plans”) depicting all improvements to be
constructed on the Premises by Tenant (the “Tenant Improvement”). The Tenant
Improvement Plans and the Tenant Improvements shall be subject to the approval
of Landlord, which shall be delivered to Tenant within 5 business days of
receipt by Landlord of a complete set of Tenant Improvement Plans, which
approval shall not be unreasonably withheld, conditioned or delayed, and shall
further be subject to the provisions of Paragraph 9.3, below entitled “Alterations”,
below, prior to submittal to any governmental entity which is also required to
approve such Tenant Improvement Plans and issue permits therefore. Tenant
agrees that it shall construct the Tenant Improvements substantially in
accordance with the Tenant Improvement Plans. Any changes or additions to the
Tenant Improvement Plans desired by Tenant shall be at Tenant’s sole cost and expense,
and shall be subject to the provisions of Paragraph 9.3, below.

 3
 

3.                         Term

3.1
Term. The Lease Term, the Commencement Date and the
Termination Date shall be as specified in Paragraph 1.6, above, unless
terminated earlier pursuant to this Lease, or unless extended by Tenant
pursuant to Paragraph 3.5, below.

3.2
Delay in Commencement. Tenant agrees that in the event of the
inability of Landlord for any reason to deliver possession of the Premises to
Tenant on said Commencement Date set forth in Paragraphs 1.6 and 2.1, above,
Landlord shall not be liable for any damage thereby nor shall such inability
affect the validity of this Lease or the obligations of Tenant hereunder, but
in such case, so long as the delay is not caused by or contributed to by Tenant,
Tenant shall not be obligated to pay rent or other monetary sums until
possession of the Premises is tendered to Tenant; provided that if the delay in
the Commencement Date exceeds thirty (30) days, then the Termination Date shall
be extended by the period of time computed from the scheduled Commencement Date
to the actual Commencement Date. If Tenant occupies the Premises prior to said
Commencement Date, such occupancy shall be subject to all provisions hereof.

3.3
Commencement After Construction. Possession shall not be
deemed tendered and the term of this Lease shall not commence until the first
to occur of the following:

(a) The date on which all
improvements to be constructed by Landlord have been substantially completed
except for: (i) punch list items which do not prevent Tenant from using the
Premises for its intended use; (ii) work Landlord is required to perform but
which is delayed because of fault or neglect of Tenant, acts of Tenant or
Tenant’s agents (including, without limitation, delays caused by work done on
the Premises by Tenant or Tenant’s agents or by acts of Tenant’s contractors or
subcontractors) or delays caused by change orders requested by Tenant or
required because of errors or omissions in plans submitted by Tenant; and (iii)
work Landlord is required to perform but cannot complete until Tenant performs
necessary portions of construction work it has elected or is required to do;
or,

(b)
After a Certificate of Occupancy, or its equivalent, is granted by the proper
governmental agency or, if no Certificate of Occupancy, or its equivalent, is
issued by any local agency, then after notification by Landlord’s architect or
contractor that Landlord’s construction work has been completed; or

(c)
Upon the occupancy of the Premises by any of Tenant’s operating personnel.

3.4
Confirmation of Commencement Date. Landlord and Tenant shall
execute a written acknowledgment setting forth the Commencement Date.

3.5
Extension of Term. Landlord grants to Tenant two (2) options
(each, an “Option”) to extend the Lease Term for a period of five years each.
Tenant must exercise such right of extension by delivering written notice of
Tenant’s exercise at least six (6) months, but no more than twelve (12) months,
prior to the expiration of the existing Lease Term. Such extension of the Term
will be on the same terms, covenants and conditions as in this Lease, except
that the Base Rent for the extension period will be equal to an amount
determined by agreement between Landlord and Tenant. In the event Landlord and
Tenant, for any reason whatsoever, fail to agree on the Base Rent to be paid by
Tenant during the extension period within thirty (30) days of the date Tenant
delivers its notice of exercise of an Option, then the Option shall be null,
void and of no force or effect, and the Term of the lease shall expire at its
scheduled expiration date. Neither party shall have any liability whatsoever to
the other party as a result of a failure to agree on Base Rent during the
extension term.

4.                         Rent

4.1 Base
Rent. Tenant shall pay to Landlord as Base Rent for the
Premises in advance on the first day of each calendar month of the Lease Term
without deduction, offset, prior notice or demand, in lawful money of the
United States, the sum as defined in Paragraphs 1.7 and 1.8, above. If the
Commencement Date is not the first day of a month, or if the Termination Date
is not the last day of a month, a prorated monthly installment shall be paid at
the then current rate for the fractional month during which the Lease commences
and/or terminates.

Concurrently with Tenant’s
execution of this Lease, Tenant shall pay to Landlord the sum set forth in
Paragraph 1.10, above as Base Rent for the period defined in Paragraph 1.10,
above.

4.2
Additional Rent. Commencing with the calendar year beginning
on January 1, 2004, and continuing throughout the remainder of the Lease Term,
Tenant shall pay, as Additional Rent, all of the following: (i) increases in
Operating Expenses as defined in Paragraph 4.5 below, including, without
limitation, increases in Real Property Taxes as required by Paragraph 6.1 and
insurance premiums pursuant to Paragraph 13.2; and (ii) all other charges
payable by Tenant hereunder and designated as Additional Rent hereunder. All
Operating Expenses, Real Property Taxes, insurance costs, late charges, costs,
expenses and other sums which Tenant is required to pay under this Lease,
together with all interest and penalties that may accrue thereon in the event
of Tenant’s failure to pay such amounts, and all reasonable damages, costs and
attorneys’ fees and expenses which Landlord may incur by reason of any default
of Tenant, or failure on Tenant’s part to comply with the terms of this Lease,
shall be deemed to be additional rent (“Additional Rent”) and shall be paid in
addition to the Base Rent, and, in the event of non-payment by Tenant, Landlord
shall have all the rights and remedies with respect thereto as Landlord has for
the non-payment of the Base Rent.

4.3
Late Charges. Tenant hereby acknowledges that late payment by
Tenant to Landlord of Base Rent, Additional Rent and other sums due hereunder
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs include,
but are not limited to, processing, accounting charges and late payment fees
which may be imposed on Landlord by the terms of any mortgage or trust deed
covering the Premises. Accordingly, if any installment of Base Rent, Additional
Rent or any other sum due from Tenant shall not be received by Landlord or
Landlord’s designee within seven (7) days after such amount shall be due,
Tenant shall pay to Landlord as Additional Rent a late charge equal to seven
and one-half percent (7.5%) of such overdue amount. The parties hereby agree
that such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of late payments by Tenant. Acceptance of such
late charge by Landlord shall in no event constitute a waiver of Tenant’s
default with respect to such overdue amount, nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder. In no event
shall this provision for a late charge be deemed to grant to Tenant a grace
period or extension of time within which to pay any installment of Base Rent or
Additional Rent or prevent Landlord from exercising any right or remedy
available to Landlord upon Tenant’s failure to make such payment when due. In
the event any payment of Base Rent or Additional Rent is not received by
Landlord by the thirtieth (30th) day after the due date for such payment or
installment, such payment or installment shall bear interest at the Permitted
Rate, as defined in Paragraph 20.17 below, commencing on the thirty-first
(31st) day after the due date for such payment or installment and continuing
until the same is paid.

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4.4
Returned Check Fee. A twenty-five dollar ($25.00) charge will
be paid by Tenant as Additional Rent to Landlord for each check returned unpaid
by the bank and Tenant shall replace the payment with a Cashier’s Check or
Certified Check. If Tenant has two (2) or more checks returned for insufficient
funds at any time during its tenancy, Landlord, at its option, may request all
payments, current and future, be made by Cashier’s Check or Certified Check.

4.5
Operating Expenses. Tenant shall pay to Landlord during the
term hereof, in addition to the Base Rent, Tenant’s Share, as hereinafter
defined, of all Operating Expenses, as hereinafter defined, incurred by
Landlord during each calendar year of the term of this Lease which are in
excess of the Operating Expenses incurred by Landlord during the Base Year (“Excess
Operating Expenses”), in accordance with the following provisions:

(a)
“Tenant’s Share” is defined, for purposes of this Lease, as the respective
percentage set forth in Paragraph 1.12, above. It is understood and agreed that
the footage figures set forth in Paragraph 1.2, above, are approximate, which
Landlord and Tenant agree are reasonable and shall not be subject to revision
except in connection with a significant change in the plans and specifications
for the Building which results in a material change in the size of the
Premises, or a material change in the space available for lease in the
Building.

(b)
“Operating Expenses” as defined, for purposes of this Lease, shall include all
costs and expenses incurred by Landlord in connection with the ownership and
operation of the Project, including but not limited to the following:

(i)           the operating, repair, maintenance,
and replacement in neat, clean, good order and condition of the following:

(aa)
the Common Areas, including parking areas, loading and unloading areas, trash
areas, roadways, sidewalks, walkways, parkways, driveways, landscaped areas,
striping, bumpers, irrigation systems, Common Area lighting facilities,
electric rooms, elevators, fences and gates;

(bb)
Common Area signage (i.e., address, directional, Project identity and tenant
directories);

(cc)
fire detection systems, including sprinkler systems; and,

(dd)
security services, if provided.

(ii)          the cost of water, gas, electricity
and other utilities to serve the Common Areas or which are not separately
charged to the Premises under Paragraph 8.1, below;

(iii)         trash disposal and janitorial services;

(iv)         costs for maintenance and repair of
elevators, HVAC systems and other systems serving the Project or any part
thereof;

(v)          increases in Real Property Taxes as
provided in Paragraph 6.1;

(vi)         property insurance premiums as provided
in Paragraph 13.2;

(vii)        the cost of liability insurance carried
by Landlord with respect to the Common Areas;

(viii)       any deductible portion of an insured loss
concerning the Project or any portion thereto;

(ix)         the cost of any capital improvements
made to the Building or Project by Landlord, which cost, if less then ten
thousand dollars ($10,000), shall be expensed in the year incurred, or if at
least ten thousand dollars ($10,000), shall be amortized over such period of
time as permitted under Generally Acceptable Accounting Principles with interest
on the unamortized balance at the rate of six percent (6%) per annum or such
higher rate as may have been paid by Landlord on funds borrowed for the purpose
of constructing such capital improvements;

(x)          fees for licenses and permits required
for the operation of the Building, Common Areas and Project;

(xi)         the cost of contesting the validity or
applicability of any governmental enactment’s or assessments, including without
limitation property tax assessments, which may affect Operating Expenses;

(xii)        the repair, maintenance or patching, but
not replacement, of the roof membrane of the Building;

(xiii)       any other services to be provided by
Landlord that are stated elsewhere in this Lease to be an Operating Expense;

(xiv)       if the Project is not fully occupied during
any portion of any Lease year, Landlord may adjust (an “Equitable Adjustment”)
Operating Costs to equal what would have been incurred by Landlord had the
Project been fully occupied. This Equitable Adjustment shall apply only to
Operating Costs which are variable and therefore increase as occupancy of the
Project increases. Landlord may incorporate the Equitable Adjustment in its
estimates of Operating Costs. In addition, if Landlord does not furnish any
particular service whose cost would have constituted an Operating Cost to a
tenant other than Tenant who has undertaken to perform such service itself,
Operating Costs shall be increased by the amount which Landlord would have
incurred if it had furnished the service to such tenant; and

(xv)        payments under any equipment rental
agreements or management agreements (including the cost of any market rate
management fee and the fair rental value of any office space provided
thereunder).

(c)
Except as specifically provided in subparagraph (b), above, Operating Expenses
shall not include: (a) charges for depreciation, interest or amortization with
respect to the Building; (b) expenses for capital improvements to or
rehabilitation of structural components of the Building and roof; (c) expenses
resulting from the grossly negligent acts of Landlord; (d) expenses associated
with the operation of the general business of Landlord not directly
attributable to management and operation of the Common Areas such as personnel
costs of employees not directly involved in management and operation of the
Common Area, legal and accounting fees involving relations or disputes with
employees, tenants or others, tax return preparation and expenses, costs of
leasing and re-leasing, bad debts and other business losses; (e) amounts for
which recovery is obtained under warranties, insurance coverage or from other
tenants; and (g) the cost of providing tenant improvements for other tenants in
the Building.

(d)
The inclusion of the improvements, facilities and services set forth in Paragraph
4.5(b) shall not be deemed to impose an obligation by Landlord to either have
said improvements or facilities or to provide those services. Without limiting
the generality of the foregoing, nothing contained in Paragraph 4.5(b) or
elsewhere in this Lease shall create or imply an obligation or duty on the part
of Landlord to provide any security services or protection for the Premises,
the Building, Common Area and/or the Project.

(e)
Tenant’s Share of Excess Operating Expenses shall be payable by Tenant within
ten (10) days after a reasonably detailed statement of actual expenses is
presented to Tenant by Landlord. At Landlord’s option, however, an amount may
be estimated by Landlord from time to time of Tenant’s Share of annual Excess
Operating Expenses and the same shall be payable monthly or quarterly, as
Landlord shall designate, during the Lease Term herein, on the same day as the
Base Rent is

 5
 

due hereunder. In the event that Tenant pays Landlord’s
estimate of Tenant’s Share of Excess Operating Expenses as aforesaid, Landlord
shall provide Tenant with a reasonably detailed statement reconciling Tenant’s
Share of the actual Excess Operating Expenses. Said detailed statement shall be
provided on an annual basis within ninety (90) days following the end of each
calendar year, or within thirty (30) days of the expiration of this Lease or
Tenant’s vacation of the Premises. If Tenant’s payments under this Paragraph
4.5 (d) during the preceding year exceed Tenant’s Share as indicated on said
statement, Tenant shall be entitled to credit the amount of such overpayment
against Tenant’s Share of Excess Operating Expenses next falling due. If Tenant’s
payments under this Paragraph during said preceding year were less than Tenant’s
Share, as indicated on said statement, Tenant shall pay to Landlord the amount
of the deficiency within ten (10) days after delivery by Landlord to Tenant of
said statement.

(f) Tenant and its
representatives will have the right to audit Landlord’s determination of the
actual amount of Tenant’s Share of Excess Operating Expenses for any calendar
year and to inspect, copy and audit Landlord’s records, invoices and other data
relating to Operating Expenses for such year. This right must be exercised by
Tenant, if at all, by providing Landlord written notice of Tenant’s desire to
conduct an audit within thirty (30) days of the date Tenant receives Landlord’s
detailed statement of annual actual Excess Operating Expenses. Such audit will
take place during regular business hours at a time and place reasonably
acceptable to Landlord. A copy of the audit shall be provided to Landlord
immediately upon completion of the same. If Landlord accepts the results of the
audit, and the audit report shows that Landlord overcharged Tenant for Tenant’s
Share of Excess Operating Expenses, then Landlord will refund the excess amount
to Tenant within 10 days after Landlord receives a copy of the audit report. If
the audit shows that Tenant underpaid for Tenant’s Share of Excess Operating
Expenses, then Tenant will pay the underpayment to Landlord within 10 days
after Tenant receives a copy of the audit.

5.                         Security
Deposit. [Intentionally Omitted]

6.                         Taxation.

6.1
Payment of Increases in Real Property Taxes as Additional Rent.
Tenant shall pay, as Additional Rent, Tenant’s Share of the all Real Property
Taxes levied against the Premises which are attributable to periods occurring
after the Base Year and during the term of this Lease which are in excess of
the Real Property Taxes incurred by Landlord which are attributable to the Base
Year, except as otherwise provided in this Lease. Such increases shall be
considered Operating Expenses, and shall be paid by Tenant pursuant to
Paragraph 4.5, above.

6.2
Definition of “Real Property Tax”. For the purpose of this
Lease, “Real Property Taxes” means and includes all taxes, assessments
(including, but not limited to, assessments for public improvements or
benefits), taxes based on vehicles utilizing parking areas, taxes based or
measured by the rent paid, payable or received under this Lease, taxes on the
value, use, or occupancy of the Premises, the Buildings and/or the Project,
Environmental Surcharges, and all other governmental impositions, fees and
charges of every kind and nature whatsoever, whether or not customary or within
the contemplation of the parties hereto and regardless of whether the same
shall be extraordinary or ordinary, general or special, unforeseen or foreseen,
similar or dissimilar to any of the foregoing which, at any time during the
Lease Term, shall be applicable to the Premises, the Building and/or the
Project, or assessed, levied or imposed upon the Premises, the Building and/or
the Project, or become due and payable and a lien or charge upon the Premises,
the Building and/or the Project, or any part thereof, under or by virtue of any
present or future laws, statutes, ordinances, regulations or other requirements
of any governmental authority whatsoever. The term “Environmental Surcharges”
shall mean and include any and all expenses, taxes, charges or penalties
imposed by the Federal Department of Energy, the Federal Environmental
Protection Agency, the Federal Clean Air Act, or any regulations promulgated
thereunder or any other local, state or federal governmental agency or entity
now or hereafter vested with the power to impose taxes, assessments, or other
types of surcharges as a means of controlling or abating environmental
pollution or the use of energy. The term “Real Property Taxes” shall not
include any federal, state or local net income, estate, or inheritance tax
imposed on Landlord. Notwithstanding the foregoing, however, the term “Real
Property Taxes” shall not include any increases in any Real Property Taxes
which are attributable solely to a change in ownership of the Premises from the
original Landlord hereunder to a successor. The exclusion for increases in Real
Property Taxes resulting in a change in ownership of the Premises from the
original Landlord is applicable only to the first change in ownership from the
original Landlord hereunder, and shall not be applicable to any increases
resulting from subsequent changes in ownership which may occur thereafter.

6.3
Personal Property Taxes.

(a) Tenant shall pay
prior to delinquency all taxes assessed against and levied upon trade fixtures,
furnishings, equipment and all other personal property of Tenant contained in
the Premises or elsewhere. When possible, Tenant shall cause said trade
fixtures, furnishings, equipment and all other personal property to be assessed
and billed separately from the real property of Landlord.

(b)
If any of Tenant’s personal property shall be assessed with Landlord’s real
property, Tenant shall pay to Landlord the taxes attributable to Tenant within
ten (10) days after receipt of a written statement setting forth the taxes
applicable to Tenant’s property.

6.4
Other Taxes. Tenant shall, as Additional Rent, pay or
reimburse Landlord for any tax based upon, allocable to, or measured by the
area of the Premises; or by the rent paid, payable or received under this
Lease; any tax upon or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy of the Premises
or any portion thereof; any privilege tax, excise tax, business and occupation
tax, gross receipts tax, sales and/or use tax, water tax, sewer tax, employee
tax, occupational license tax imposed upon Landlord or Tenant with respect to
the Premises; any tax upon this transaction or any document to which Tenant is
a party creating or transferring an interest or an estate in the Premises.

7.                         Use

7.1 Use.
The Premises shall be used and occupied by Tenant only for the purpose as set
forth in Paragraph 1.5, above, and for no other purpose whatsoever.

7.2
Suitability. Upon completion of the Warm Shell, Tenant shall
be permitted to inspect the Premises and either accept the Premises or, if
there are items which are not acceptable, shall list such items in writing to
Landlord. If Tenant fails to provide a list of disapproved items prior to its
occupancy of the Premises, Tenant shall be deemed to have accepted the Premises
and all tenant improvements to be constructed by Landlord as being completed in
accordance with the plans and specifications for such improvements and, if
Tenant has provided Landlord with a list of disapproved items, Tenant shall be
deemed to have accepted the Premises and

 6
 

all tenant improvements to be constructed by Landlord
as being completed in accordance with the plans and specifications for such
improvements subject only to such list of disapproved items. Tenant
acknowledges that neither Landlord nor Landlord’s agent has made any
representation, warranty, estimation or promise of any kind as to the
suitability of the Premises for the conduct of Tenant’s business, or the use or
occupancy which may be made thereof. Tenant hereby warrants to Landlord that
Tenant (i) has made its own investigation and examination of all the relevant
data relating to or affecting the Premises; (ii) is relying solely on its own
judgment in entering into this Lease; and, (iii) is satisfied that the Premises
will be suitable for Tenant’s intended use and that the Building and Premises
will meet all governmental requirements for such intended use, if constructed
in the manner contemplated hereunder.

7.3 Uses
Prohibited.

(a) Tenant shall not do
or permit anything to be done in or about the Premises which will increase the
existing rate of insurance upon the Premises (unless Tenant shall pay any
increased premium as a result of such use or acts) or cause the cancellation of
any insurance policy covering said Premises, the Building or the Project, nor
shall Tenant sell or permit to be kept, used or sold in or about said Premises
any articles which may be prohibited by a standard form policy of fire
insurance.

(b) Tenant shall not do or
permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of any
building of which the Premises may be a part or injure or annoy them or use or
allow the Premises to be used for any unlawful or objectionable purpose, nor
shall Tenant cause, maintain or permit any nuisance in, on or about the
Premises. Tenant shall not commit or suffer to be committed any waste in or
upon the Premises and Tenant shall keep the Premises in a clean, attractive
condition, free of any objectionable noises, odors, dust or debris.

(c)
Tenant shall not use the Premises or permit anything to be in or about the
Premises which will in any way conflict with or violate any law, statute,
zoning restriction, ordinance, governmental rule, regulation, requirements now
in force or which may hereafter be enacted or promulgated. Tenant shall, at its
sole cost and expense, promptly comply with all laws, statutes, ordinances and
governmental rules, regulations or requirements now in force or which may
hereafter be in force and with requirements of any board of fire underwriters
or other similar body now or hereafter constituted relating to or affecting the
condition, use or occupancy of the Premises, whether applicable due to Tenant’s
particular use of the Premises, applicable to business uses in general, or
otherwise. Tenant shall also comply, at its sole cost, with the provisions of
all recorded documents affecting the Premises insofar as the same relate to or
affect the condition, use or occupancy of the Premises. Tenant shall obtain,
prior to taking possession of the Premises, any permits, licenses or other
authorizations required for the lawful operation of its business at the
Premises. The judgment of any court of competent jurisdiction or the admission
of Tenant in any action against Tenant, whether Landlord be a party thereto or
not, that Tenant has violated any law, statute, ordinance or governmental rule,
regulation, recorded document, or requirement, shall be conclusive of that fact
as between Landlord and Tenant. Tenant shall indemnify and hold Landlord
harmless from and against any and all loss, expense, cost, damage, attorney’s
fees, penalties or liability arising out of the failure of Tenant or Tenant’s
agents or employees to comply with any applicable law, statute, ordinance,
rule, regulation, order, requirement or recorded document.

(d)
Tenant shall not store, park or operate any vehicles inside the Building, other
than those operated by electricity.

8.                         Utilities, Waste Disposal and Janitorial

8.1
Utilities. Tenant shall contract and pay for all water, gas,
heat, light, power, telephone and other utilities servicing the Premises to the
extent they are separately metered, and shall use its best efforts to have such
utilities separately metered to the Premises. If any such services are not
separately metered or billed to Tenant, they shall constitute Operating
Expenses. The lack or shortage of any utilities or services described above due
to any cause whatsoever other than Landlord’s gross negligence or willful
misconduct shall not affect any obligation of Tenant hereunder, and Tenant
shall faithfully keep and observe all the terms, conditions and covenants of
this Lease and pay all rentals due hereunder, all without diminution, credit or
deduction.

8.2 Waste Disposal. Tenant shall store its waste either inside the Premises or in the
Building’s dumpsters located within outside trash enclosures. Tenant shall not
store, place or maintain any garbage, trash, rubbish, other refuse or Tenant’s
personal property in any area of the Common Area or exterior of the Premises
not specifically designated therefor by Landlord at any time. Tenant, at its
sole expense, shall be responsible to maintain and keep the area outside the
designated trash enclosures and Common Area free of Tenant’s garbage, trash,
rubbish, other refuse or Tenant’s personal property.

8.3 No Landlord Representation Regarding Utilities. Tenant acknowledges and agrees that Landlord
has made no representation whatsoever regarding the availability or quality of
any utility or other services to the Premises, the Building or the Project, and
Tenant agrees that Landlord shall not be liable in any manner whatsoever for
any failure or interruption of any such services, or for any diminution in the
quality or quantity thereof, whether such failure, interruption or diminution
occurs due to acts or omissions of the service provider, Tenant, Landlord or
any other party.

8.4 Janitorial Services. Landlord shall provide janitorial services
five (5) days per week except the date of observation of any nationally or
locally recognized holidays in accordance with practices for similar
first-class buildings in San Diego County. The cost of any such janitorial
services shall be considered an Operating Cost pursuant to Paragraph 4.5,
above.

9.                         Maintenance
and Repairs, Alterations and Additions

9.1 Landlord’s Obligations. Subject to the provisions of Paragraph 14 and
except for damage caused by a negligent or intentional act or omission of
Tenant and Tenant’s agents, employees or invitees, Landlord, at Landlord’s
expense, shall keep in good order, condition and repair the foundations,
exterior walls, the exterior roof, the roof membrane and other exterior
portions of the Premises, together with the Common Areas located at the
Project. In addition, Landlord shall be repair any construction defects which
exist in the Building (excluding any tenant improvements installed by Tenant).
The cost of such repairs shall constitute an Operating Expense under paragraph
4.5, above, and Tenant shall pay Tenant’s Share of the cost thereof pursuant to
paragraph 4.5, above. Landlord shall not, however, be obligated to maintain the
interior surface of exterior walls, ceiling or doors located within the
Premises, nor shall Landlord be required to maintain, repair or replace
windows, doors, skylights or plate glass located on the Premises. Landlord
shall have no obligation to make repairs under this Paragraph 9.1 until a
reasonable time after receipt of written notice of the need for such repairs.
Landlord shall maintain, repair or patch the roof membrane (as an Operating
Expense), and Tenant shall pay

 7
 

Tenant’s Share of the cost thereof, pursuant to
Paragraph 4.5 above. Tenant expressly waives the benefits of any statute
(including, without limitation, the provisions of subsection 1 of Section 1932,
Section 1941 and Section 1942 of the California Civil Code and any similar law,
statute or ordinance now or hereafter in effect) which would otherwise afford
Tenant the right to make repairs at Landlord’s expense (or to deduct the cost
of such repairs from rent due hereunder) or to terminate this Lease because of
Landlord’s failure to keep the Premises in good order, condition and repair.

9.2
Tenant’s Obligations.

(a)
Subject to the provisions of Paragraphs 9.1 and 14, Tenant, at Tenant’s
expense, shall maintain in good order, condition and repair the Premises and
every part thereof, regardless of whether the damaged portion of the Premises
or the means of repairing the same are accessible to Tenant, including, but not
limited to floors, ceilings, windows, doors, skylights, interior walls, and the
interior surfaces of the exterior walls, interior plumbing, interior
telecommunications equipment and intra-building network cabling, interior
electrical and lighting facilities and equipment including interior circuit
breakers.

(b)
All glass in the Premises, both interior and exterior, is at the sole risk of
Tenant, and any broken glass shall promptly be replaced by Tenant at Tenant’s
expense with glass of the same kind, size and quality according to the current
local code.

(c)
In the event the Premises, the Building, the Project or any part thereof are
damaged due to an attempted burglary or forcible entry into Premises, Tenant
shall be responsible for any ensuing damage to the Premises, the Building or
the Project.

(d)
In the event Tenant fails to perform Tenant’s obligations under this Paragraph
9, Landlord shall give Tenant notice to do such acts as are reasonably required
to so maintain the Premises. If Tenant, within ten (10) days after notice from
Landlord, fails to commence to do the work and diligently prosecute it to
completion, then Landlord shall have the right (but not the obligation), in
addition to any other rights and remedies available to Landlord under this
Lease, at law or in equity, to do such acts and expend such funds at the
expense of Tenant as are reasonably required to perform such work. Any amount
so expended by Landlord shall be paid by Tenant promptly after demand with
interest at the Permitted Rate from the date of such work until paid. Landlord
shall have no liability to Tenant for any damage, inconvenience or interference
with the use of the Premises by Tenant as a result of performing any such work.

(e)
Upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises in the same condition as received, broom clean, ordinary
wear and tear and damage by fire, earthquake, act of God or the elements alone
excepted. On the last day of the Lease Term or upon the sooner termination of
the Lease, Tenant shall, to the reasonable satisfaction of Landlord surrender
the Premises in good condition (and free of all Hazardous Materials used,
generated or stored by Tenant and its agents, employees and contractors) with
all originally painted interior walls and doors cleaned and repaired, all
carpets cleaned and in good condition, and all floors cleaned and waxed. Tenant
further agrees to remove all Tenant’s personal property and trade fixtures from
the Premises and repair any damage to the Premises caused by or in connection
with the removal of any articles of personal property, business or trade
fixtures, machinery, equipment or furniture, including without limitation
thereto, repairing the floor and patching and painting the walls where required
by Landlord to Landlord’s reasonable satisfaction. Tenant agrees that all
Tenant’s personal property and trade fixtures not removed shall be deemed to be
abandoned by Tenant and may be removed by Landlord at Tenant’s expense. Tenant
shall continue to pay Rent at the rate paid by Tenant prior to the termination
of this Lease until such time that the Premises are returned in a condition as
required above; however, said payment of Rent does not constitute an extension
or renewal of this Lease nor does it constitute a month-to-month tenancy, it
shall constitute immediate compensation for Tenant’s detention of the Premises
and does not preclude Landlord from obtaining additional monetary damages for
Tenant’s delay in surrendering the Premises, as set forth below. Tenant shall
indemnify the Landlord against any loss or liability resulting from delay by
Tenant in so surrendering the Premises, including without limitation, any
claims made by any succeeding tenant founded in whole or in part on such delay.

9.3
Alterations.

(a) Tenant shall not
construct any improvements or additions or otherwise alter, change or improve
the Premises in excess of Ten Thousand Dollars ($10,000) without Landlord’s
prior written approval, and not until Landlord shall have first approved the
plans and specifications therefor, which approvals shall not be unreasonably
withheld. Landlord’s approval of the plans, specifications and working drawings
for Tenant’s alterations shall create no responsibility or liability on the
part of Landlord for their completeness, design sufficiency, or compliance with
all laws, rules and regulations of governmental agencies or authorities. All
such approved alterations, or improvements shall be installed by Tenant at
Tenant’s expense using a licensed contractor first approved by Landlord in
compliance with the approved plans and specifications therefor and in strict
accordance with all laws. All such construction shall be done in a good and
workmanlike manner using new materials of good quality. As a condition to
consenting to any leasehold improvement or alteration or change requested by
Tenant, the cost of which may exceed Twenty-five Thousand Dollars ($25,000),
Landlord shall have the right to require Tenant to post a completion bond in an
amount and in a form satisfactory to Landlord. In no event shall Tenant make
any structural changes to the Premises or make any changes to the Premises
which would weaken or impair the structural integrity of the Building or the
roof membrane integrity of the Building. Tenant shall not commence construction
of any alterations, additions, or improvements (whether or not Landlord’s
consent to the improvements are required therefore) until (i) all required
governmental approvals and permits shall have been obtained, (ii) all
requirements regarding insurance imposed by this Lease have been satisfied, and
(iii) Tenant shall have given Landlord at least ten (10) days prior written
notice of its intention to commence such construction. All alterations,
additions and improvements constructed by Tenant shall remain the property of
Tenant during the Lease Term but shall not be damaged, altered, or removed from
the Premises. At the expiration or sooner termination of the Lease Term, all
alterations, additions, or improvements shall be surrendered to Landlord as a
part of the realty and shall then become Landlord’s property, and Landlord
shall have no obligation to reimburse Tenant for all or any portion of the
value or cost thereof; provided, however, that, notwithstanding the foregoing,
Landlord may, at its option, require Tenant to remove any alterations,
additions, or improvements in which case Tenant shall so remove such
alterations, additions or improvements prior to the expiration or sooner
termination of the Lease Term, repair any damage to the Premises caused by such
removal, and restore the Premises to the condition they were in at the
commencement of this Lease.

(b) Alterations Required by Law. If during the term of this Lease, any
alteration, addition or change of any sort, whether structural or otherwise to
all or any portion of the Premises is required by law (including, but not
limited to, alterations from the original construction later required by the
Americans with Disabilities Act of 1990 or any amendments thereto or any
regulations propagated thereunder (collectively the “ADA”)) for any reason
whatsoever, including, without limitation, because of (i) Tenant’s use or
occupancy of the Premises or change of use or occupancy of the Premises, (ii)
Tenant’s application for any permit or governmental approval, (iii) Tenant’s
construction or installation of any leasehold improvements or trade fixtures,
(iv) any violation by Tenant of any law, ordinance, statute,

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regulation or rule (including, without limitation, any
requirement of the ADA) (collectively, “Laws”), (v) any special use of the
Premises or any part thereof by Tenant or any subtenant or assignee of Tenant
(including, but not limited to any use for a facility which constitutes, or if
open to the public would generally constitute a “place of public accommodation”
under the ADA requirements), or (vi) any special needs of the employees of
Tenant or any assignee or subtenant of Tenant, then Tenant shall promptly make
the same at its sole cost and expense. Within ten (10) days after receipt,
Tenant shall notify Landlord in writing and provide Landlord with copies of (i)
any notices alleging any violation of any Law relating to the Premises or
Tenant’s occupancy or use of the Premises, including, without limitation, any
notices alleging a violation of or relating to the ADA to any portion of the
Project or the Premises; (ii) any claims made or threatened in writing
regarding non-compliance with the ADA or any Law relating to the Project or the
Premises; or (iii) any governmental or regulatory actions or investigations
instituted or threatened regarding non-compliance with the ADA or any Law
relating to any portion of the Project or the Premises.

10.                  Entry by
Landlord

Landlord and Landlord’s
agents shall have the right at reasonable times and upon reasonable prior
notice to enter the Premises to inspect the same or to maintain or repair, make
alterations or additions to the Premises or any portion thereof or to show the
Premises to prospective purchasers, tenants or lenders. Landlord may, at any
time, place on or about the Premises any ordinary “for sale” signs; Landlord
may at any time during the last one hundred eighty (180) days of the term of
the Lease place on or about the Premises any ordinary “for lease” signs;
provided, however, that no such signs shall be placed in the windows of the
Premises. Tenant hereby waives claim for abatement of rent or for damages for
any injury or inconvenience to or interference with Tenant’s business, any loss
of occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby.

11.                  Liens

Tenant shall keep the
Premises and any building of which the Premises are a part free from any liens
arising out of work performed, materials furnished or obligations incurred by
Tenant and shall indemnify, hold harmless and defend Landlord from any liens
and encumbrances arising out of any work performed or materials furnished to or
at the direction of Tenant. In the event that Tenant shall not, within twenty
(20) days following the imposition of any such liens, cause such lien to be
released of record by payment or posting of a proper bond, Landlord shall have,
in addition to all other remedies provided herein and by law, the right, but not
the obligation, to cause the same to be released by such means as it shall deem
proper, including payment of the claim giving rise to such lien. All such sums
paid by Landlord and all expenses incurred by it in connection therewith
including, without limitation, attorneys’ fees and costs, plus an
administrative fee equal to ten percent (10%) of all such amounts, shall be
payable to Landlord by Tenant on demand with interest at the Permitted Rate (as
defined in Paragraph 20.17 below). Landlord shall have the right at all times
to post and keep posted on the Premises any notices permitted or required by
law, or which Landlord shall deem proper, for the protection of Landlord and
the Premises, and any other party having an interest therein, from mechanics’ and
material person’s liens and Tenant shall give to Landlord at least ten (10)
business days prior written notice of the expected date of commencement of any
work relating to alterations, improvements or additions to the Premises.

12.                  Indemnity

12.1
Indemnity. Tenant agrees to indemnify, protect and defend
Landlord, Landlord’s agents, employees, members, officers, directors and
shareholders (collectively, Landlord’s “Agents”), and any creditors or lenders
of Landlord (collectively, Landlord’s “Lenders”) against and hold Landlord and
Landlord’s Agents and Lenders harmless from any and all claims, causes of
action, judgments, obligations or liabilities and all reasonable expenses
incurred in investigating or resisting the same (including, without limitation,
attorneys’ fees), on account of, or arising out of (i) the Tenant’s operation,
maintenance, use or occupancy of the Premises, (ii) any bodily injury, death or
property damage occurring in or about the Premises, (iii) any act, omission or
neglect of Tenant or its agents, employees, customers, vendors, contractors or
invitees (collectively, Tenant’s “Agents”), (iv) any breach or default in the
performance in a timely manner of any obligation on Tenant’s part to be
performed under this Lease; or (v) any other cause related to or occurring on
the Premises which is in any way related to Tenant’s operation, maintenance,
use or occupancy of the Premises. In the event any legal proceeding is brought
against Landlord by reason of any such Claim, Tenant upon notice from Landlord
shall defend the same at Tenant’s expense by counsel satisfactory to Landlord.
Tenant, as a material part of the consideration to Landlord, hereby assumes all
risk of damage to property or injury to persons, in, upon or about the Premises
arising from any cause which is in any way related to Tenant’s operation,
maintenance, use or occupancy of the Premises and Tenant hereby waives all
claims in respect thereof against Landlord. The provisions of this Paragraph
12.1 shall survive termination of the Lease with respect to any default, claim,
liability, cost, damage, injury or death occurring or accruing prior to such
termination, or otherwise during Tenant’s use or occupancy of the Premises, or
any part thereof.

12.2 Exemption of Landlord from Liability. Landlord shall not be liable for injury and
Tenant waives all claims against Landlord including, without limitation, claims
related to Tenant’s business or loss of income therefrom or for damage which
may be sustained by the person, goods, wares, merchandise or property of
Tenant, its employees, invitees, customers, agents or contractors or any other
person in or about the Premises, caused by or resulting from fire, steam,
electricity, gas, water or rain, which may leak or flow from or into any part of
the Premises, or from the breakage, leakage, obstruction or other defects of
the pipes, sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures of the same, whether the said damage or injury results from
conditions arising upon the Premises or upon other portions of the Building, or
from other sources or places and regardless of whether the cause of such damage
or injury or the means of repairing the same is inaccessible to Tenant.
Landlord shall not be liable for any damages arising from any act or neglect of
any other tenant, if any, of the Building or of the Project.

12.3 Landlord Gross Negligence or Willful Misconduct. Notwithstanding the foregoing, nothing in
this Paragraph 12 shall be construed to release Landlord from any liability
which is solely the result of the Landlord’s gross negligence, willful
misconduct or willful violation of law.

13.                  Insurance

13.1
Tenant’s Insurance. Tenant shall, at its own expense,
maintain in full force and effect during the Lease Term the following
insurance:

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(a) Tenant shall maintain
a policy or policies of comprehensive general liability insurance (or “commercial”
general liability insurance, if such policy is substantially similar to what
was previously known as comprehensive general liability insurance), including
fire and property damage carried with a company or companies satisfactory to
Landlord, which will insure Tenant and Landlord (and such others as are timely
designated by Landlord) against liability for personal injury, bodily injury,
death, and damage to property (including but not limited to, Tenant’s personal
property, inventory, trade fixtures and improvements constructed by Tenant
within the Premises with coverage for the full actual replacement cost
thereof), occurring in or about, or resulting from any occurrence in or about,
the Premises or use or occupancy of the Premises (and Tenant’s operations on
the Premises) or arising out of Tenant’s or its agents’, employees’, or
representatives’ use of the Building, Common Areas or Project with combined
single limit coverage of not less than three million dollars ($3,000,000.00).
Such comprehensive (or commercial) general liability insurance shall be
extended to include a “blanket contractual liability” endorsement, if
reasonably available, insuring Tenant’s performance of Tenant’s obligation to
indemnify Landlord contained in Paragraph 12.1 and all of the other broadened
liability features normally contained in an extended liability endorsement. If
Landlord’s lender, insurance advisor or counsel reasonably determines at any
time that the amount of such coverage is not adequate (such determination to be
made not more frequently than every three (3) years), Tenant shall increase
such coverage to such amount as Landlord’s lender, insurance advisor or counsel
reasonably deems adequate. The limits of such insurance shall not limit the
liability of Tenant. Tenant shall deliver to Landlord, prior to possession, and
at least thirty (30) days prior to the expiration of any policy, a certificate of
insurance evidencing the existence of the policy required hereunder and such
certificate shall certify that the policy (i) names Landlord as additional
insured, (ii) shall not be canceled or reduced in coverage without thirty (30)
days prior written notice to Landlord, (iii) insures performance of the
indemnity set forth in Paragraphs 12.1, above; (iv) provides coverage which is
primary and not contributing with and not in excess of coverage which Landlord
may carry; and (v) contains a cross-liability endorsement providing coverage
for claims between or among insureds. In the event Tenant fails to procure and
maintain such insurance, Landlord may (but shall not be required to) procure
the same at Tenant’s expense after ten (10) days prior written notice. No such
policy shall be cancelable or subject to reduction of coverage or other
modification except after thirty (30) days prior written notice to Landlord by
the insurer. All such policies shall be written as primary policies, not
contributing with and not in excess of coverage which Landlord may carry.
Tenant shall have the right to provide such insurance coverage pursuant to
blanket policies obtained by Tenant provided such blanket policies expressly
afford coverage to the Premises and to Tenant as required by this lease.

(b)
Tenant, at its sole cost, shall procure and maintain in force during the Lease
Term, “all-risk” property insurance, including vandalism, sprinkler damage, and
malicious mischief on all leasehold improvements installed in the Premises by
Tenant at its expense and all equipment, trade fixtures and personal property
located on, in or about the Premises. Such insurance shall be an amount equal
to the full replacement cost of the aggregate of the foregoing.

(c)
The policies required to be maintained by Tenant pursuant to subparagraphs (a)
and (b) above shall be with companies, on forms, with deductible amounts (if
any) and loss payable clauses reasonably satisfactory to Landlord and shall
include Landlord and the beneficiary of any deed of trust encumbering the
Premises as additional insureds, and shall provide that such parties may,
although additional insureds, recover for any loss suffered by Tenant’s
negligence.

13.2 Property Insurance. Landlord shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss
or damage to the Premises, the Building and all other buildings located in the
Project, in such amounts and with such coverage and loss limitations as
Landlord shall reasonably determine, which shall include coverage for the full
replacement cost thereof, and shall include protection against those perils
included within the classification of “all risk” insurance, a policy of rental
income insurance in the amount of up to 100% of 12 months Rent (including,
without limitation, sums payable as Additional Rent) plus, at Landlord’s
option, flood insurance and earthquake insurance and any other coverage which
may be required from time to time by Landlord’s Lender; provided, however, that
if such additional coverage is not originally included in the insurance costs
for the Base Year, the initial premiums for such additional insurance coverage
shall be added to the Base Year insurance amounts in the first year such
coverage is implemented. Tenant shall have no interest in nor any right to the
proceeds of any insurance procured by Landlord on the Premises, the Building or
the Project. Landlord shall not be required to cause such insurance to cover
any of Tenant’s personal property, inventory, trade fixtures or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Premises. During the term of this Lease, Tenant shall pay to
Landlord Tenant’s Share (as defined in Paragraph 4.5(a) above) of the increase
in the amount of any premium for the insurance maintained by Landlord over the
premiums paid by Landlord during the Base Year under this Paragraph 13.2,
including, without limitation, any increase in insurance premiums due to a
Lender’s requirements or due to an increase in value. Such amounts shall be
included as an Operating Cost and shall be payable pursuant to Paragraph 4.5,
above.

13.3 Mutual Waiver of Subrogation. Tenant and Landlord hereby mutually waive
their respective rights of recovery against each other of any loss of or damage
to the property of either party, to the extent such loss or damage is covered
by any applicable insurance policy. Each party shall obtain any special
endorsements, if required by the insurer, whereby the insurer waives its right
of subrogation against the other party hereto. The provisions of this
Subparagraph 13.3 shall not apply in those instances in which the waiver of
subrogation would cause either party’s insurance coverage to be voided or
otherwise made uncollectible; or, if any such insurance policy cannot be
obtained with such a waiver of subrogation, then the party obtaining such
insurance shall notify the other party of that fact and thereon shall be
relieved of the obligation to obtain such a waiver of subrogation rights from the
insurer with respect to the particular insurance involved.

14.                  Damage or
Destruction

14.1
Partial Damage–Insured. Subject to the provisions of
Paragraphs 12 and 13 above, and if at any time during the term of this Lease
there is partial damage to the Premises that is not caused by the fault,
omission, or negligence of Tenant or Tenant’s Agents, which is covered under an
insurance policy being maintained pursuant to Paragraph 13.2, then Landlord
shall repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If there is a monetary deductible applicable
to the aforementioned insurance policy coverage which is required to be paid
prior to coverage of such casualty or damage, it shall be the sole
responsibility for Tenant to reimburse Landlord for said monetary deductible
unless the casualty or damage is not caused by the fault, omission or
negligence of Tenant or Tenant’s Agents, in which case such monetary deductible
shall be included in Operating Costs. Tenant shall reimburse Landlord within
thirty (30) days of receipt by Tenant of a copy of the monetary deductible
statement provided such statement is accompanied by documentation reasonably
substantiating the amount expended and its applicability to the deductible. In
the event of damage to the Premises or the Building by fire or other causes
resulting from fault, omission or negligence of Tenant, its agents, employees,
contractors, or invitees, such damage shall be promptly reported to Landlord
and shall be repaired by and at expense of

 10
 

Tenant under direction and supervision of Landlord and
there shall be no abatement of rent during the period of repair. Tenant shall
indemnify and hold harmless Landlord from and against any damages, injuries,
losses, claims, liabilities or causes of action arising out of or relating to
the repair or restoration of the Premises or Building by Tenant.
Notwithstanding the foregoing, the indemnity obligations provided for in the
immediately preceding sentence shall terminate one year following the
completion of all such repair or restorations of the Premises or Building by
Tenant as long as Tenant assigns to Landlord any and all warranties and causes
of action it may have on account of such repair or restoration including,
without limitation, any express warranties and any claims for either latent or
patent construction defects. Nothing herein shall be construed to require any
action or agreement by Tenant that negates any insurance coverage potentially
applicable to the damage or to Tenant’s potential liability therefore.

14.2
Partial Damage–Uninsured. In the event the improvements on
the Premises are damaged, except by a negligent or willful act or omission of
Tenant or any of Tenant’s Agents, or from an attempted burglary or forcible entry
pursuant to Paragraph 9.2 (c), by any casualty not covered under an insurance
policy being maintained pursuant to Paragraph 13.2, then Landlord may, at
Landlord’s option, either (a) repair such damage as soon as reasonably possible
at Landlord’s expense, in which event this Lease shall continue in full force
and effect or (b) give written notice to Tenant within ninety (90) days after
the date of occurrence of such damage of Landlord’s intention to cancel and
terminate this Lease as of the date of the occurrence of the damage. In the
event Landlord elects to terminate this Lease pursuant to this Paragraph 14.2,
Tenant shall have the right within ten (10) days of receipt of the required
notice to notify Landlord of Tenant’s election to repair such damage, at Tenant’s
sole cost and expense, in which event this Lease shall continue in full force
and effect, and Tenant shall proceed to make such repairs as soon as reasonably
possible (or Landlord may elect, in its
sole discretion, to require Tenant to pay to Landlord within ten (10) days
following written request therefor, or furnish evidence reasonably satisfactory
to Landlord of Tenant’s ability to fund that portion of the cost of such repair
or restoration which is not covered by insurance proceeds, in which event
Landlord shall proceed to make such repairs). If Tenant does not give such
notice within the ten (10) day period, this Lease shall be canceled and
terminated as of the date of the occurrence of such damage. All insurance
proceeds available from the fire and property damage insurance carried by
Landlord pursuant to Paragraph 13.2 shall be paid to and become the property of
Landlord. If this Lease is not terminated under this Paragraph 14.2, then upon
receipt of the insurance proceeds (if the loss is covered by insurance) and the
issuance of all necessary governmental permits, Landlord shall commence and
diligently prosecute to completion the restoration of the leased Premises, to
the extent then allowed by law, to substantially the same condition in which
the leased Premises were in immediately prior to such damage. Landlord’s
obligation to restore shall be limited to the building and interior
improvements constructed by Landlord as they existed as of the Commencement
Date. Landlord’s obligation to repair or restore the Premises shall not,
however, include restoration of Tenant’s trade fixtures, equipment,
merchandise, or any improvements alterations or additions made by Tenant to the
Premises.

14.3 Total Destruction. If the Premises are totally destroyed during
the term of this Lease from any cause whether or not covered by the insurance
required under Paragraph 13.2 (including any destruction required by any
authorized public authority), this Lease, at Landlord’s option, may
automatically terminate as of the date of such total destruction. If this Lease
is not terminated pursuant to this Paragraph 14.3, Landlord shall immediately
begin the process of reconstructing the Premises and all rent for the Premises
shall be abated from the date of total destruction to the date the Premises are
ready and available for reoccupancy by Tenant.

14.4 Damage Near End of the Term. If the Premises are partially destroyed or
damaged during the last six (6) months of the term of this Lease, and Tenant
has not exercised an option to extend the Term beyond the succeeding six (6)
month period, Landlord may, at Landlord’s option, cancel and terminate this
Lease as of the date of occurrence of such damage by giving written notice to
Tenant of Landlord’s election to do so within thirty (30) days after the date
of occurrence of such damage.

14.5 Landlord’s Obligations. The Landlord shall not be required to repair
any injury or damage by fire or other cause, or to make any restoration or
replacement of any paneling, decorations, office fixtures, partitions,
railings, ceilings, floor covering, equipment, machinery or fixtures or any
other improvements or property installed in the Premises by Tenant or at the
direct or indirect expense of Tenant. Tenant shall be required to restore or
replace the same in the event of damage.

14.6 Abatement of Rent; Tenant’s Remedies.

(a) If the Premises are
partially destroyed or damaged and Landlord or Tenant repairs them pursuant to
this Lease, the rent payable hereunder for the period during which such damage
and repair continues shall be abated in proportion to the extent to which
Tenant’s use of the Premises is impaired; provided, however, there shall be no
abatement of rent if the damage or destruction was caused by the fault,
omission, negligence or willful misconduct of Tenant or any of its Agents.
Except for abatement of rent, if any, Tenant shall have no claim against
Landlord for any damage suffered by reason of any such damage, destruction or
restoration.

(b)
If Landlord shall be obligated to repair or restore the Premises under this
Paragraph 14 and shall not commence such repair or restoration within ninety
(90) days after such obligation shall accrue, Tenant, at Tenant’s option, may
cancel and terminate this Lease by written notice to Landlord at any time prior
to the commencement of such repair or restoration. In such event, the Lease
shall terminate as of the date of such notice.

14.7 Termination–Advance Payments. Upon termination of this Lease pursuant to
this Paragraph 14, an equitable adjustment shall be made concerning advance
rent and any advance payments made by Tenant to Landlord.

15.                  Condemnation

15.1 Definition of Terms. For the purposes of this Lease, the term (1) “Taking”
means a taking of the Premises or damage to the Premises related to the
exercise of the power to eminent domain and includes a voluntary conveyance in
lieu of court proceedings, to any agency, authority, public utility, person or
corporate entity empowered to condemn property; (2) “Total Taking” means the
taking of the entire Premises or so much of the Premises as to prevent or
substantially impair the use thereof by Tenant for the uses herein specified;
(3) “Partial Taking” means the taking of only a portion of the Premises which
does not constitute a Total Taking; (4) “Date of Taking” means the date upon
which the title to the Premises, or a portion thereof, passes to and vests in
the condemnor or the effective date of any order for possession if issued prior
to the date title vests in the condemnor, and (5) “Award” means the amount of
any award made, consideration paid, or damages ordered as a result of a Taking.

 11
 

15.2
Rights. The parties agree that in the event of a Taking all
rights between them or in and to an Award shall be as set forth herein and
Tenant shall have no right to any Award except as set forth herein.

15.3  Total
Taking. In the event
of a Total Taking during the term hereof; (1) the rights of Tenant under the
Lease and the leasehold estate of Tenant in and to the Premises shall cease and
be terminated as of the date of Taking; (2) Landlord shall refund to Tenant any
prepaid rent; (3) Tenant shall pay to Landlord any rent or charges due Landlord
under the Lease, each prorated as of the Date of Taking; (4) Tenant shall
receive from the Award those portions of the Award specifically made
attributable to trade fixtures of Tenant; and (5) the remainder of the Award
shall be paid to and be the property of Landlord.

15.4 Partial Taking. In the event of a Partial Taking during the term hereof; (1) the rights
of Tenant under the Lease and the leasehold estate of Tenant in and to the
portion of the Premises taken shall cease and terminate as of the Date of
Taking; (2) from and after the Date of Taking the monthly installment of rent
shall be an amount equal to the product obtained by multiplying the monthly
installment of rent immediately prior to the Taking by the quotient obtained by
dividing the number of square feet of floor area contained in the Premises
after the Taking by the number of square feet of floor area contained in the
Premises prior to the Taking; (3) Tenant shall receive from the Award the
portions of the Award specifically made attributable to trade fixtures of
Tenant, and (4) the remainder of the Award shall be paid to and be the property
of Landlord. Each party waives the provisions of California Code of Civil
Procedure Section 1265.130 allowing either party to petition the Superior Court
to terminate this Lease in the event of a Partial Taking.

16.                  Assignment &
Subletting

16.1 Landlord’s Consent Required. Tenant’s interest in this Lease is not
assignable, by operation of law or otherwise, nor shall Tenant have the right
to sublet the Premises, transfer any interest of Tenant therein or permit any
use of the Premises by another party, without the prior written consent of
Landlord to each such assignment, subletting, transfer or use, which consent
Landlord agrees not to withhold unreasonably subject to the provisions of
Subparagraphs 16.3 and 16.4, below. A consent to one assignment, subletting,
occupancy or use by another party shall not be deemed to be a consent to any
subsequent assignment, subletting, occupancy or use by another party. Any
assignment or subletting without such consent shall be void and shall, at the
option of Landlord, constitute an incurable default which shall permit
Landlord, in addition to all other rights and remedies available under this
Lease, at law and in equity, to terminate this Lease.

Landlord’s
waiver or consent to any assignment or subletting hereunder shall not relieve
Tenant from any obligation under this Lease unless the consent shall so
provide.

If
Tenant is a corporation, association, limited liability company, partnership or
other legal entity, any dissolution, merger, consolidation or other
reorganization of Tenant, or the sale, transfer or issuance of interests in
Tenant such that, following such sale, transfer or issuance, those in control
of Tenant as of the Commencement Date are no longer in control of Tenant, or
the sale or other transfer of fifty percent (50%) of the value of the assets of
Tenant, shall be deemed a voluntary assignment pursuant to the terms hereof.

16.2 Transferee Information Required. If Tenant desires to assign its interest in
this Lease or sublet the Premises or any part thereof, or transfer any interest
of Tenant therein, or permit the use of the Premises by another party
(hereinafter collectively referred to as a “Transfer”), Tenant shall give
Landlord at least thirty (30) business days prior written notice of the
proposed Transfer and of the name and legal composition of the proposed
transferee, financial statements and Federal and State income tax returns of
the proposed transferee for the past three (3) years, the nature of the
proposed use of the Premises by the proposed transferee (including a list of
the type and quantities of all Hazardous Materials to be used by the transferee
on the Premises), names and addresses of any and all lessors from whom the
proposed transferee has leased real property during the past five (5) years, the
terms of the proposed Transfer, and such other reasonably pertinent information
as may be requested by Landlord, all in sufficient detail to enable Landlord to
evaluate the proposed Transfer and the prospective transferee. Failure to
provide such information shall be reasonable grounds for Landlord to withhold
consent to the proposed assignment or sublease.

16.3 Landlord’s Recapture Rights. In the event Tenant provides Landlord of a
Transfer notice pursuant to Paragraph 16.2, above, Landlord may, in its
discretion, elect to terminate this Lease with respect to the portion of the
Premises described in the Transfer notice, which termination shall be effective
as of the proposed effective date of the proposed Transfer. Upon such
termination, Tenant shall be released from any further liability accruing after
such termination date with respect to that portion of the Premises described in
the Transfer notice except for obligations of Tenant which survive termination
of this Lease. Such termination shall be effected by Landlord giving Tenant
written notice of such termination within thirty (30) days after receipt by
Landlord of Tenant’s notice of intent to Transfer as provided above. If
Landlord makes such election to terminate this Lease, Tenant shall surrender the
affected portion of Premises, in accordance with Paragraph 9.2(e), on or before
the effective termination date. If Landlord does not elect to terminate this
Lease pursuant hereto, then Tenant may, subject to receipt of Landlord’s
consent as required under Paragraph 16.1, above, Transfer the Premises to the
transferee and under the terms and conditions specified in the Transfer notice.
If any change occurs in the identity of the transferee or the terms and
conditions of the Transfer of the Premises, or if the Transfer is not completed
within ninety (90) days of the date Landlord grants its consent thereto, then
the Transfer shall be considered a new Transfer subject to all provisions of
this Paragraph 16.

16.4 Consent. As a condition for granting its consent to any subletting or
assignment, Landlord may require any or all of the following:

(a)
Tenant shall provide Landlord with adequate evidence that the proposed assignee
or sublessee is creditworthy and experienced in the business for which the
Premises are let hereunder, and that he, she, it or they can satisfy the
conditions of this Lease including, but not limited to, the payment of any and
all additional costs incurred by Landlord for maintenance and repair as a
result of any change in the nature of the occupancy caused by such assignment
or sublease.

(b)
The assignment or sublease shall be on the same terms set forth in the Tenant’s
written notice given to Landlord.

(c)
Tenant, or the proposed assignee or sublessee, agrees to pay to Landlord, upon
demand, as Additional Rent, a sum equal to the additional costs, if any,
reasonably incurred by Landlord for maintenance and repair as a result of any
change in the nature of the occupancy caused by such assignment or subletting.

(d)
The occupancy resulting from such assignment or subletting shall conform with
the use restrictions set forth in this Lease, with the proposed use by the new
Tenant or occupant being subject to the reasonable consent of Landlord;

            (e) No assignment or sublease shall
be valid, and no assignee or sublessee shall take possession of the Premises
until an executed counterpart of such assignment or sublease has been delivered
to Landlord, containing a copy of this Lease, and expressly providing that the
assignee or sublessee has expressly assumed all obligations under this Lease;
that Tenant and assignee or sublessee are jointly and severally liable for the
payment of all sums due under this Lease and the

 12
 

performance and observance of all of the agreements,
covenants, conditions and provisions to be performed and observed by Tenant
under this Lease as and when performance and observances are due; and that
Landlord shall have the right to enforce such agreements, covenants, conditions
and provisions directly against Tenant and assignee or sublessee, and each of
them.

(f)
Any further assignment or subletting by such assignee or sublessee shall be and
shall remain subject to the terms of this Lease.

(g) Landlord may require
that the assignee or sublessee pay directly to Landlord, on a monthly basis,
all monies due to Tenant from said assignee or sublessee. Any difference
between the amount due Landlord under this Lease and the amount paid to
Landlord by said assignee or sublessee shall be retained by Landlord as
Additional Rent.

(h)
Landlord may require Tenant, or the proposed assignee or sublessee, to make
such improvements to the Premises as may be required to bring the Premises to
the same standard and appearance as the remainder of the Building and/or the
Project. Such improvements will be determined in Landlord’s reasonable judgment
and will be at the expense of Tenant, or the proposed assignee or sublessee.

16.5 Release of Tenant. Landlord’s waiver or consent to any
assignment or subletting shall not release Tenant from any obligations under
this Lease, unless the consent specifically so provides.

16.6 Corporate or Limited Liability Company Transfers. The provisions of this paragraph 16.6 shall
apply to any Transfer of this Lease from Tenant to any corporation or limited
liability company, including, without limitation, any corporation or limited
liability company of which Tenant is the sole shareholder or member. If
Landlord determines not to consent to the proposed transaction because of the
financial capacity of the proposed transferee, then Landlord, instead of
disapproving the transaction, may condition its consent to a transfer to a
corporation or limited liability company upon the personal guarantee of this
Lease by the directors, shareholders and/or members of any corporate or limited
liability company Tenant.

16.7 Payment of Landlord’s Expenses. If Tenant assigns or sublets the Premises, or
requests the consent of Landlord for any act that Tenant proposes to do
including, without limitation, the assignment or subletting of the Premises,
then Tenant shall pay Landlord’s reasonable attorneys’, engineers’, architects’
and accountants’ fees incurred in connection therewith, whether or not such
consent is granted.

17.      Subordination.
The following provisions shall govern the relationship of this Lease to any
underlying lease, mortgage or deed of trust which now or hereafter affects the
Premises or Landlord’s interest or estate therein and any renewal,
modification, consolidation, replacement, or extension thereof (a “Security
Instrument”).

17.1 Priority. This Lease is subject and subordinate to all Security Instruments
existing as of the Commencement Date. However, if any Lender so requires, this
Lease shall become prior and superior to any such Security Instrument.

17.2 Subsequent Security Instruments. At Landlord’s election, this Lease shall
become subject and subordinate to any Security Instrument created after the
Commencement Date, which shall occur automatically upon Landlord’s providing
written notice to Tenant thereof. Notwithstanding such subordination, Tenant’s
right to quiet possession of the Premises shall not be disturbed so long as
Tenant is not in default and performs all of its obligations under this Lease,
unless this Lease is otherwise terminated pursuant to its terms.

17.3 Documents. Tenant shall execute any reasonable document or instrument required by
Landlord or any Lender to make this Lease either prior or subordinate to a
Security Instrument, which may include such other matters as the Lender
customarily requires in connection with such agreements, including provisions
that the Lender, if it succeeds to the interest of Landlord under this Lease,
shall not be (i) liable for any act or omission of any prior landlord
(including Landlord), (ii) subject to any offsets or difference which Tenant
may have against any prior landlord (including Landlord), (iii) bound by any
Rent or Additional Rent paid more than one (1) month in advance of the date due
under this Lease, (iv) liable for any defaults on the part of Landlord
occurring prior to the time that Lender takes possession of the Premises in
connection with enforcement of its Security Instrument, (v) liable for the
return of any security deposit unless such deposit has been delivered to
Lender, and (vi) bound by any agreement or modification of the Lease made
without the prior written consent of the Lender. Tenant’s failure to execute
any such documents reasonably requested by Landlord or Landlord’s Lender shall
constitute a default of this Lease by Tenant.

17.4 Tenant’s Attornment. Tenant shall attorn (1) to any purchase of
the Premises at any foreclosure sale or private sale conducted pursuant to any
Security Instrument encumbering the Premises; (2) to any grantee or transferee
designated in any deed given in lieu of foreclosure; or (3) to the lessor under
any underlying ground lease should such ground lease be terminated. Any such
attornment shall be subject to such purchaser, transferee or lessor agreeing
that, so long as Tenant is not in default hereunder, such purchaser, transferee
or lessor shall recognize Tenant’s rights under this Lease.

18.                  Default;
Remedies

18.1 Default. The occurrence of any of the following shall constitute a material
default and breach of this Lease by Tenant:

(a)
Default in payment when due of any installment of Base Rent, Additional Rent or
other payment required to be made by Tenant hereunder, where such default shall
not have been cured within three (3) days after written notice of such default
is given to Tenant;

(b)
The abandonment or vacation of the Premises by Tenant (failure to occupy and
operate the Premises for ten (10) consecutive days shall be deemed an
abandonment and vacation unless repair work is being performed) where such
abandonment or vacation shall have continued for fifteen (15) days after
written notice thereof by Landlord to Tenant;

(c)
A failure by Tenant to observe and perform any other provision of the Lease to
be observed or performed by Tenant, where such failure shall have continued for
thirty (30) days after written notice thereof by Landlord to Tenant;

(d) Tenant or any guarantor of Tenant’s obligations hereunder shall
commence any case, proceeding or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization, or
relief of debtors, or seek appointment of a receiver, trustee, custodian, or
other similar official for it or for all or any substantial part of its
property, and such action shall not be dismissed within fifteen (15) days after
written notice thereof by Landlord to Tenant;

 13
 

(e) Tenant or any such
guarantor shall take any corporate action to authorize any of the actions set
forth in Clause (d) above, and does not rescind such resolution or authorization
within fifteen (15) days after written notice to rescind has been given by
Landlord to Tenant;

(f)
Any case, proceeding or other action against Tenant or any guarantor of Tenant’s
obligations hereunder shall be commenced seeking to have an order for relief
entered against it as debtor, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts under
any law relating to bankruptcy, insolvency, reorganization or relief of
debtors, or seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property, and
such case, proceeding or other action (i) results in the entry of an order for
relief against it which is not fully stayed within seven (7) business days
after the entry thereof or (ii) is not dismissed within forty-five (45) days of
filing such case, action or proceeding.

(g)
Levy of a writ of attachment or execution of Tenant’s interest under this Lease
where such writ continues for a period of fifteen (15) days after issuance;

(h)
An assignment, sublease or other transfer of this Lease or Tenant’s interest in
the Premises or portion thereof contrary to the provisions of Paragraph 16, and
such assignment, sublease or other transfer is not rescinded within fifteen
(15) days of Landlord giving written notice to Tenant to rescind such
transaction; or

(i)
Execution of an assignment for the benefit of creditors of substantially all
assets of Tenant available by law for the satisfaction of judgment creditor.

18.2
Remedies. In the event of any such material default or breach
by Tenant, Landlord may at any time thereafter, with or without notice and
demand and without limiting Landlord in
the exercise of any right or remedy at law or in equity which Landlord may have
by reason of such default or breach:

(a)
Maintain this Lease in full force and effect and recover the rent and other
monetary charges as they become due, without terminating Tenant’s right to
possession, irrespective or whether Tenant shall have abandoned the Premises.
In the event Landlord elects to not terminate the Lease, Landlord shall have
the right to enter the Premises and to re-let the Premises, or any part
thereof, at such rent and upon such conditions and for such a term as Landlord
shall determine, for Tenant’s account, and to do all acts necessary to maintain
or preserve the Premises as Landlord deems reasonable and necessary without
being deemed to have elected to terminate the Lease including removal of all
persons and property from the Premises; such property may be removed and stored
in a public warehouse or elsewhere at the cost of and for the account of
Tenant. Tenant shall be liable immediately to Landlord for all costs Landlord
incurs in reletting the Premises, including, without limitation, brokers’
commissions, expenses of remodeling the Premises required by the reletting,
attorneys’ fees incurred in negotiating and drafting the documentation related
to the reletting, and like costs. Reletting can be for a period shorter or
longer than the remaining term of this Lease. Tenant shall pay to Landlord any
amounts due under this Lease on the dates when such amounts are due, less the
rent Landlord receives from any reletting. No act by Landlord allowed by this
paragraph shall terminate this Lease unless Landlord notifies Tenant that
Landlord elects to terminate this Lease. After Tenant’s default and for as long
as Landlord does not terminate Tenant’s right to possession of the Premises, if
Tenant obtains Landlord’s consent, Tenant shall have the right to assign or
sublet its interest in this Lease, but Tenant shall not be released from
liability. Any such assignment or subletting shall be subject to the provisions
of Paragraph 16, above. Notwithstanding that Landlord fails to elect to
terminate the Lease initially, Landlord at any time during the Term of this
Lease may elect to terminate this Lease by virtue of such previous default of
Tenant.

(b)
Terminate this Lease by giving Tenant written notice of termination or other
lawful means. On the giving of the notice, all of tenant’s rights in the
Premises and the Building and Project shall terminate. Upon the giving of the
notice of termination. Tenant shall surrender and vacate the Premises in the
condition required by Paragraph 9.2(e). and Landlord may re-enter and take
possession of the Premises and all the remaining improvements or property and
eject Tenant or any of Tenant’s subtenants, assignees or the person or persons
claiming any right under or through Tenant or eject some and not others or
eject none. This Lease may also be terminated by a judgment specifically
providing for termination. Any termination under this paragraph shall not
release Tenant from the payment of any sum then due Landlord or from any claim
for damages or rent previously accrued or then accruing against Tenant. In no
event shall any one or more of the following actions by Landlord constitute a
termination of this Lease:

(i)             maintenance
and preservation of the Premises;

(ii)            efforts to relet the Premises;

(iii)           appointment of a receiver
in order to protect Landlord’s interest hereunder;

(iv)          consent to any subletting of the
Premises or assignment of this Lease by Tenant, whether pursuant to provisions
hereof concerning subletting and assignment or otherwise; or

(v)           any other action by Landlord or
Landlord’s Agents intended to mitigate the adverse effects from any breach of
this Lease by Tenant.

(c) In the event this
Lease terminated pursuant to Subparagraph 18.2(b) above, or otherwise, Landlord
shall be entitled to damages in the following sums:

(i)             the
worth at the time of award of the unpaid rent which has been earned at the time
of 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 term after the time of
award exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided; and

(iv)          any other amount necessary to
compensate Landlord for all detriment proximately caused by Tenant’s failure to
perform Tenant’s obligations under the Lease, or which in ordinary course of
things would be likely to result therefrom including, without limitation, the
following: (A) expenses for cleaning, repairing or restoring the Premises; (B)
expenses for altering, remodeling or otherwise improving the Premises for the
purpose of reletting, including installation of leasehold improvements (whether
such installation be funded by a reduction of rent, direct payment or allowance
to the succeeding lessee, or otherwise); (C) real estate broker’s fees,
advertising costs and other expenses of reletting the Premises; (D) costs of
carrying the Premises such as taxes and insurance premiums thereon, utilities
and security precautions; (E) expenses in retaking possession of the Premises;
(F) attorneys’ fees and court costs; and (G) any unamortized real estate
brokerage commission paid in connection with this Lease.

(v)           The “worth at the time of award” of
the amounts referred to in Subparagraphs (i) and (ii) of this paragraph 18.2(c)
is computed by allowing interest at the rate of ten percent (10%) per annum.
The “worth at the time of award” of the amounts referred to in Subparagraph
(iii) of this Paragraph 18.2(c) is computed by discounting such amount at the
discount rate of the Federal Reserve Board of San Francisco at the time of
award plus one percent (1%). The term “rent” as used in this

 14
 

Paragraph 18 shall include all sums required to be
paid by Tenant to Landlord pursuant to the terms of this Lease, including,
without limitation, Base Rent, Additional Rent and Operating Expenses.

18.3 Default by Landlord. Landlord shall not be in default unless
Landlord fails to perform obligations required of Landlord hereunder within a
reasonable time, but in no event later than thirty (30) days after written
notice by Tenant to Landlord and to the holder of any first mortgage or deed of
trust covering the Premises whose name and address shall have theretofore been
furnished to Tenant in writing, specifying wherein Landlord has failed to
perform such obligation, provided, however, that if the nature of Landlord’s
obligation is such that more than thirty (30) days are required for
performance, then Landlord shall not be in default if Landlord commences
performance within such thirty-day period and thereafter diligently prosecutes
the same to completion. In no event shall Tenant have the right to terminate
this Lease as a result of Landlord’s default. Any money judgment obtained by
Tenant based upon Landlord’s breach of this Lease shall be satisfied only out
of the proceeds of the sale or disposition of Landlord’s interest in the
Premises (whether by Landlord or by execution of judgment).

19.                  Hazardous
Materials.

19.1 Definitions. As used herein, the term “Hazardous Material” shall mean any substance:
(i) the presence of which requires investigation or remediation under any
federal, state or local statute, regulation, ordinance, order, action, policy
or rules; (ii) any “hazardous substance”, pollutant or contaminant as now or
hereafter defined under any federal, state or local statute, regulation, rule
or ordinance or amendments thereto, whether now existing or hereafter enacted,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and/or the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.); (iii) which is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous and is or becomes regulated by any
governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, the State of California or any political
subdivision thereof; (iv) the presence of which on the Premises causes or
threatens to cause a nuisance upon the Premises or to the adjacent properties
or poses or threatens to pose a hazard to the health or safety of persons on or
about the Premises; (v) the presence of which on adjacent properties could
constitute a trespass by Landlord or Tenant; (vi) any substance which contains
gasoline, diesel fuel or other petroleum hydrocarbons; (vii) any substance
which contains polychlorinated biphenyl’s (PCBs), asbestos or urea formaldehyde
foam insulation; and/or (viii) radon gas.

19.2 Permitted Use. Subject to the compliance by Tenant with the provisions of Paragraphs
19.3, 19.4, 19.5, 19.6, 19.7, 19.8 and 19.9 below, Tenant shall be permitted to
use and store on the Premises those Hazardous Materials listed in Paragraph
19.11, in the quantities set forth in Paragraph 19.11. In addition, Tenant
shall be permitted to utilize reasonable quantities of Hazardous Materials
typically associated with general office uses.

19.3 Hazardous Materials Management Plan.

(a)
Prior to Tenant using, handling, transporting or storing any Hazardous Material
at or about the Premises (including, without limitation, those listed in
Paragraph 19.11), Tenant shall submit to Landlord a Hazardous Materials
Management Plan (“HMMP”) for Landlord’s review and approval, which approval
shall be in Landlord’s sole discretion. The HMMP shall describe: (i) the
quantities of each material to be used, (ii) the purpose for which each
material is to be used, (iii) the method of storage of each material, (iv) the
method of transporting each material to and from the Premises and within the
Premises (v) the methods Tenant will employ to monitor the use of the material
and to detect any leaks or potential hazards, (vi) any other information any
department of any governmental entity (city, state or federal) requires prior
to the issuance of any required permit for the Premises or during Tenant’s
occupancy of the Premises; and (vii) any other information which Landlord may
request. Landlord may, but shall have no obligation to review and approve the
foregoing information and HMMP, and such review and approval or failure to
review and approve shall not act as an estoppel or otherwise waive Landlord’s
rights under this Lease or relieve Tenant of its obligations under this Lease.
If Landlord determines in its sole discretion by inspection of the Premises or
review of the HMMP or otherwise that the methods in use or described by Tenant
are not adequate in Landlord’s opinion to prevent or eliminate the existence of
environmental hazards, then Tenant shall not use, handle, transport, or store such
Hazardous Materials at or about the Premises unless and until such methods are
approved by Landlord and added to an approved HMMP. Once approved by Landlord,
Tenant shall strictly comply with the HMMP and shall not change its use,
operations or procedures with respect to Hazardous Materials without submitting
an amended HMMP for Landlord’s review and approval as provided above.

(b)
Tenant shall pay to Landlord when Tenant submits an HMMP (or amended HMMP) the
amount reasonably determined by Landlord to cover all Landlord’s costs and
expenses reasonably incurred or to be incurred in connection with Landlord’s
review of the HMMP which costs and expenses shall include, among other things,
all reasonable out-of-pocket fees of attorneys, environmental engineers and
consultants, architects, or other consultants incurred by Landlord in
connection with Landlord’s review of the HMMP. Landlord shall have no
obligation to consider a request for consent to a proposed HMMP unless and
until Tenant has paid all such costs and expenses to Landlord irrespective of
whether Landlord consents to such proposed HMMP. Tenant shall pay to Landlord
on demand the excess, if any, of such costs and expenses actually incurred by
Landlord over the amount of such costs and expenses actually paid by Tenant,
and Landlord shall promptly refund to Tenant the excess, if any, of such costs
and expenses actually paid by Tenant over the amount of such costs and expenses
actually incurred by Landlord.

19.4 Use Restriction. Except as specifically allowed in Paragraph
19.2 above, Tenant shall not cause or permit any Hazardous Material to be used,
stored, generated, discharged, transported to or from, or disposed of in or
about the Premises, or any other land or improvements in the vicinity of the Premises.
Without limiting the generality of the foregoing, Tenant, at its sole cost,
shall comply with all Laws relating to the storage, use, generation, transport,
discharge and disposal by Tenant or its Agents of any Hazardous Material. If
the presence of any Hazardous Materials results in contamination of the
Premises or any soil, air, ground or surface waters under, through, over, on,
in or about the Premises, or in any surrounding properties, Tenant, at its
expense, shall promptly take all actions necessary to return the Premises
and/or the surrounding real property to the condition existing prior to the
appearance of such Hazardous Material. In the event there is a release,
discharge or disposal of or contamination of the Premises by a Hazardous Material,
or in the event any part of the Project or any surrounding properties are
contaminated with Hazardous Materials which is of the type that has been
stored, handled, transported or otherwise used or permitted by Tenant or its
Agents on or about the Premises, Tenant shall have the burden of proving that
such release, discharge, disposal or contamination is not the result of the
acts or omissions of Tenant or its Agents.

19.5 Tenant Indemnity. Tenant shall defend, protect, hold harmless
and indemnify Landlord and its Agents and Lenders with respect to all actions,
claims, losses (including, diminution in value of the Premises), fines,
penalties, fees (including, but not limited to, attorneys’ and consultants’
fees) costs, damages, liabilities,

 15
 

remediation costs, investigation costs, response costs
and other expenses arising out of resulting from, or caused by any Hazardous
Material used, generated, discharged, transported to or from, stored, or
disposed of by Tenant or its Agents in, on, under, over through or about the
Premises and/or the surrounding real property, or otherwise being introduced
to, on or about the Premises during the period of time in which Tenant is in
possession of the Premises. Tenant shall not suffer any lien to be recorded
against the Premises as a consequence of the disposal of any Hazardous Material
on the Premises by Tenant or its Agents, including any so called state, federal
or local “super fund” lien related to the “clean up” of any Hazardous Material
in, over, on, under, through or about the Premises.

19.6 Compliance. Tenant shall immediately notify Landlord of any inquiry, test,
investigation, enforcement proceeding by or against Tenant or the Premises
concerning any Hazardous Material. Any remediation plan prepared by or on behalf
of Tenant must be submitted to Landlord prior to conducting any work pursuant
to such plan and prior to submittal to any applicable government authority and
shall be subject to Landlord’s consent. Tenant acknowledges that Landlord, as
the owner of the Property, at its election, shall have the sole right to
negotiate, defend, approve and appeal any action taken or order issued with
regard to any Hazardous Material by any applicable governmental authority.

19.7 Assignment and Subletting. It shall not be unreasonable for Landlord to
withhold its consent to any proposed assignment or subletting if (i) the
proposed assignee’s or subtenant’s anticipated use of the Premises involves the
storage, generation, discharge, transport, use or disposal of any Hazardous Material;
(ii) if the proposed assignee or subtenant has been required by any prior
landlord, lender or governmental authority to “clean up” or remediate any
Hazardous Material; (iii) if the proposed assignee or subtenant is subject to
investigation or enforcement order or proceeding by any governmental authority
in connection with the use, generation, discharge, transport, disposal of
storage of any Hazardous Material.

19.8 Surrender. Upon the expiration or earlier termination of the Lease, Tenant, at its
sole cost, shall remove all Hazardous Materials from the Premises that Tenant
or its Agents introduced to the Premises. If Tenant fails to so surrender the
Premises, Tenant shall indemnify, protect, defend and hold Landlord harmless
from and against all damages resulting from Tenant’s failure to surrender the
Premises as required by this Paragraph, including without limitation, any
actions, claims, losses, liabilities, fees, (including but not limited to
attorneys’ and consultants’ fees), fines costs, penalties, or damages in
connection with the condition of the Premises including, without limitation,
damages occasioned by the inability to relet the Premises or a reduction in the
fair market and/or rental value of the Premises by reason of the existence of any
Hazardous Material in, on, over, under, through or around the Premises.

19.9 Right to Appoint Consultant. Landlord shall have the right to appoint a
consultant to conduct an investigation to determine whether any Hazardous
Material is being used, generated, discharged, transported to or from, stored
or disposed of in, on, over, through, or about the Premises, in an appropriate
and lawful manner and in compliance with the requirements of this Lease. Tenant
shall reimburse Landlord for the cost of such investigation. Tenant, at its
expense, shall comply with all reasonable recommendations of the consultant
required to conform Tenant’s use, storage or disposal of Hazardous Materials to
the requirements of applicable Law or to fulfill the obligations of Tenant
hereunder.

19.10 Holding Over. If any action of any kind is required or requested to be taken by any
governmental authority to clean-up, remove, remediate or monitor any Hazardous
Materials (the presence of which is the result of the acts or omissions of Tenant
or its Agents) and such action is not completed prior to the expiration or
earlier termination of the Lease, Tenant shall be deemed to have impermissibly
held over until such time as such required action is completed, and Landlord
shall be entitled to all damages directly or indirectly incurred in connection
with such holding over, including, without limitation, damages occasioned by
the inability to re-let the Premises or a reduction of the fair market and/or
rental value of the Premises.

19.11 Materials. Tenant shall provide the list of its Hazardous Materials to be legally
used during its tenancy in the following section provided below in this
Paragraph 19.11, or attach a separate list and so indicate below or indicate “NONE”
and initial below to indicate if no Hazardous Materials will be used:

	
  Materials:

  	
   

  	
  Quantities:

  	
   

  	
  Location and Method of Storage:

  
	
     

  	
   

  	
     

  	
   

  	
     

  
	
     

  	
   

  	
     

  	
   

  	
     

  
	
     

  	
   

  	
     

  	
   

  	
     

  

 

19.12 Provisions Survive Termination. The provisions of this Paragraph 19 shall
survive the expiration or termination of this Lease.

19.13 Controlling Provisions. The provisions of this Paragraph 19 are
intended to govern the rights and liabilities of the Landlord and Tenant
hereunder respecting Hazardous Materials to the exclusion of any other
provisions in this Lease that might otherwise be deemed applicable. The
provisions of this Paragraph 19 shall be controlling with respect to any
provisions in this Lease that are inconsistent with this Paragraph 19.

20.                  Miscellaneous

20.1 Estoppel Certificate.

(a) Tenant shall at any time, upon not less than ten (10) days prior
written notice from Landlord, execute, acknowledge and deliver to Landlord a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and
the date to which the rent and other charges are paid in advance, if any, (ii)
acknowledging that there are not, to Tenant’s knowledge, any uncured defaults
on the part of Landlord hereunder, or specifying such defaults if any are
claimed; (iii) evidence the status of this Lease as may be required by a lender
making a loan to Landlord to be secured by a deed of trust covering the
Premises, Building or Project or a purchaser of the same from Landlord, (iv)
certify that all improvements to be constructed on or in the Premises by
Landlord have been substantially completed except for punch list items which do
not prevent Tenant from using the Premises for its intended use; and (v)
certify such other matters relating to the Lease and/or the Premises as may be
requested by a lender making a loan to Landlord or a purchaser of the Premises,
Building or Project from Landlord. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises.

 16
 

(b) Tenant’s failure to
deliver such statement within such time shall be conclusive upon Tenant (i)
that this Lease is in full force and effect without modification except as may
be represented by Landlord, (ii) that there are no uncured defaults in Landlord’s
performance, and (iii) that not more than one month’s rent has been paid in
advance; and, (iv) the improvements to be constructed on the Premises by
Landlord have been substantially completed except for punch list items which do
not prevent Tenant from using the Premises for its intended use.

(c)
If Landlord desires to finance, refinance or sell said Premises, or any part
hereof, Tenant hereby agrees to deliver to Landlord, its agent or any
prospective purchaser or lender designated by Landlord such financial
statements of Tenant as may be reasonably required by such lender or
prospective purchaser. Such statements shall include the past three years
financial statements of Tenant, certified as accurate in all material respects
by Tenant’s chief financial officer and chief executive officer. All such
financial statements shall be received by Landlord in confidence and shall be
used only for the purposes herein set forth.

20.2 Transfer of Landlord’s Interest. In the event of a sale or conveyance by
Landlord of Landlord’s interest in the Premises other than a transfer for
security purposes only, Landlord shall be relieved from and after the date
specified in such notice of transfer of all obligations and liabilities
accruing thereafter on the part of the Landlord, provided that any funds in the
hands of Landlord at the time of transfer in which Tenant has an interest,
shall be delivered to the successor of Landlord. This Lease shall not be
affected by any such sale and Tenant agrees to attorn to the purchaser or
assignee.

20.3 Captions; Attachments; Defined Terms.

(a)
The captions of the paragraphs of this Lease are for convenience only and shall
not be deemed to be relevant in resolving any question of interpretation or
construction of any part of this Lease.

(b)
Exhibits attached hereto, and addenda and schedules initialed by the parties,
are deemed by attachment to constitute part of this Lease and are incorporated
herein.

(c)
The words “Landlord” and ‘Tenant” as used herein shall include the plural as
well as the singular. Words used in neuter gender include the masculine and
feminine and words in the masculine or feminine gender include the neuter. If
there be more than one Tenant, the obligations hereunder imposed upon Tenant
shall be joint and several. If the Tenants are husband and wife, the
obligations shall extend individually to their sole and separate property as
well as to their community property. The term “Landlord” shall mean only the
owner or owners at the time in question of the fee title or a tenant’s interest
in a ground lease of the Premises. The obligations contained in this Lease to
be performed by Landlord shall be binding on Landlord’s successors and assigns
only during their respective periods of ownership.

(d)
Law. As used in this Lease, the
term “Law” or “Laws” shall mean any judicial decision, statute, constitution,
ordinance, resolution, regulation, rule, administrative order, or other
requirement of any government agency or authority having jurisdiction over the
parties to this Lease or the Premises or both, in effect at the Commencement
Date of this Lease or any time during the Lease Term, including, without
limitation, any regulation, order, or policy of any quasi-official entity or
body (e.g.,  board of fire
examiners, public utility or special district).

(e)
Agent. As used in this Lease, the
term “Agent” shall mean, with respect to either Landlord or Tenant, its
respective agents, employees, contractors (and their subcontractors), and
invitees (and in the case of Tenant, its subtenants, assignees, licensees,
vendors, customers and any person or entity holding under Tenant).

(f)
Lender. As used in this Lease, the
term “Lender” shall mean any beneficiary, mortgagee, secured party or other
holder of any deed of trust, mortgage or other written security device or
agreement affecting Landlord’s interest in the Premises.

20.4 Entire Agreement. This instrument along with any exhibits and
attachments hereto constitutes the entire agreement between Landlord and Tenant
relative to the Premises and this Agreement and the exhibits and attachments
may be altered, amended or revoked only by an instrument in writing signed by
both Landlord and Tenant. Landlord and Tenant agree hereby that all prior or
contemporaneous oral agreements between and among themselves and their agents
or representatives relative to the leasing of the Premises are merged in or revoked
by this Agreement.

20.5 Severability. If any term or provision of this Lease shall, to any extent, be
determined by a court of competent jurisdiction to be invalid or unenforceable,
the remainder of this Lease shall not be affected thereby, and each term and
provision of this Lease shall be valid and enforceable to the fullest extent
permitted by law.

20.6 Attorneys’ Fees; Costs.

(a)
If Tenant or Landlord shall bring any action for any relief against the other,
declaratory or otherwise, arising out of this Lease, including any suit by
Landlord for the recovery of rent or possession of the Premises, the losing
party shall pay the successful party a reasonable sum for attorneys’ fees as
awarded by the court or other tribunal presiding over the action which shall be
deemed to have accrued on the commencement of such action. Any attorney’s fee
award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse attorneys’ fees reasonably incurred in good
faith in any such action and in the appeal or enforcement of any judgment
rendered in any such action.

(b)
If Landlord is required to retain an attorney in connection with any failure by
Tenant to perform any of its obligations hereunder, all costs and expenses
incurred by Landlord including, without limitation, reasonable attorneys’ fees
incurred by Landlord in connection therewith, shall be immediately reimbursed
by Tenant upon demand therefore by Landlord, whether or not an action is
actually commenced by Landlord.

20.7 Landlord as Party Defendant. Should Landlord, without fault on Landlord’s
part, be made a party to any litigation instituted by Tenant or by any third
party against Tenant, or by or against any person holding under or using the
Premises by license of Tenant, or for the foreclosure of any lien for labor or
material furnished to or for Tenant or any such other person or otherwise
arising out of or resulting from any act or transaction of Tenant or of any
such other person, Tenant covenants to save and hold Landlord harmless from any
judgment rendered against Landlord or the Premises or any part thereof, and all
damages, liabilities, costs and expenses, including, without limitation,
reasonable attorneys fees, incurred by Landlord in or in connection with such
litigation. Such indemnity obligation shall survive termination of this Lease.

20.8 Waiver of Jury Trial. Tenant hereby waives its right to trial by
jury of any cause of action, claim, counterclaim, cross-complaint in any
action, proceeding and/or hearing brought by either Landlord against Tenant or
Tenant against Landlord on any matter whatsoever arising out of, or in any way
connected with, this Lease, the relationship of Landlord and Tenant, Tenant’s
use or occupancy of the Premises, or any claim or injury or damage, or the
enforcement of any remedy under any law, statute or regulation, emergency or
otherwise, now or hereafter in effect.

 17
 

20.9
Time. Time is of the essence of this Lease and each and every
provision hereof, except as to the conditions relating to the delivery of
possession of the Premises to Tenant. All rights and remedies of Landlord shall
be cumulative and non-exclusive of any other remedy at law or in equity.

20.10 Binding Effect: Choice of Law. Each provision of this Lease to be performed
by Tenant shall be construed as both a covenant and condition. Subject to any
provisions hereof restricting assignment or subletting by Tenant, and subject
to Paragraph 18.2, all of the provisions hereof shall bind and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State of California, and exclusive venue for any action with
respect to this Lease shall lie with the State and Federal Courts located in
San Diego County, California.

20.11 Waiver. No covenant term or condition or the breach thereof shall be deemed
waived, except by written consent of the party against whom the waiver is
claimed, and any waiver or the breach of any covenant, term or condition shall
not be deemed to be a waiver of any preceding or succeeding breach of the same
of any other covenant, term or condition. Acceptance by Landlord of the
performance by Tenant after the time the same shall have become due shall not constitute
a waiver by Landlord of the breach or default of any covenant, term or
condition unless otherwise expressly agreed to by Landlord in writing.

Landlord’s
failure to enforce against Tenant or any other tenant of the Building or the
Project any of the rules or regulations made by Landlord shall not be deemed a
waiver of such rules or regulations. No act or thing done by Landlord, its
agents or employees during this Lease Term shall be deemed an acceptance of a
surrender of the Premises and no agreement to accept a surrender of the
Premises shall be valid unless it is in writing and is signed by Landlord. The
delivery of keys to any of Landlord’s Agents shall not serve to terminate this
Lease or surrender the Premises. No payment by Tenant, or receipt and
acceptance by Landlord, of a lesser amount than the Base Rent, Additional Rent
or other amount due shall be deemed to be other than on account of the earliest
stipulated Rent or Additional Rent, nor shall any endorsement or statement on
any check or any letter accompanying a payment as rent be deemed an accord and
satisfaction. The receipt and acceptance by Landlord of any delinquent rent
shall not constitute a waiver of any other default; it shall only be a waiver
of timely payment for that particular month of Base Rent, Additional Rent or
other payment involved. Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the balance of such Base Rent,
Additional Rent or other amount due, or pursue any other remedy available to
Landlord.

20.12 Surrender of Premises. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and
shall, at the option of the Landlord, terminate all or any existing subleases
or subtenancies, or may, at the option of Landlord, operate as an assignment to
it of any or all such subleases or subtenancies.

20.13 Holding Over.

(a)
Surrender of Possession. Tenant shall surrender possession of the Premises
immediately upon the expiration or earlier termination of the Lease. If Tenant
shall continue to occupy or possess the Premises after such expiration or
termination without the consent of Landlord, then Tenant shall be a tenant at
sufferance. If Landlord has consented to such holdover in writing, Tenant shall
be a tenant from month-to-month. All the terms, provisions and conditions of
the Lease shall apply to the month-to-month tenancy except those terms,
provisions and conditions pertaining to the Lease Term, and except that the
Base Rent shall be immediately adjusted upward upon the expiration or earlier
termination of the Lease to equal the greater of (i) one hundred fifty percent
(150%) of the then prevailing monthly rental rate for similar commercial space,
as determined by Landlord; or (ii) one hundred fifty percent (150%) of the Base
Rent for the Premises in effect under this Lease on the day immediately prior
to the date of the expiration or earlier termination of the Lease.

The
month-to-month tenancy may be terminated by Landlord or Tenant upon thirty (30)
days prior notice to the non-terminating party. In the event that Tenant fails
to surrender the Premises upon such expiration or earlier termination, then
Tenant shall indemnify and hold Landlord harmless against all claims,
liabilities, losses, damages, costs and expenses (including, without
limitation, attorneys’ fees) resulting from or arising out of Tenant’s failure
to surrender the Premises. This includes, but is not limited to any amounts
required to be paid or damages incurred due to the loss of any tenant or
prospective tenant who was to have occupied the Premises after said termination
or expiration and any related attorneys’ fees and brokerage commissions.

20.14 Payment of Money After Termination. No payment of money by Tenant to Landlord
after the termination of the Lease by Landlord or after the giving of any
notice of termination to Tenant by Landlord, which Landlord is entitled to give
Tenant under the Lease, shall reinstate, continue or extend the Term of the
Lease or shall affect any such notice given to Tenant prior to the payment of
such money. It is agreed that after the service of such notice or the
commencement of any suit by Landlord to obtain possession of the Premises,
Landlord may receive and collect when due any and all payments owed by Tenant
under the Lease and otherwise exercise its rights and remedies. The making of
any such payments by Tenant shall not waive such notice or in any manner affect
any pending suit or judgment obtained.

20.15 Signs and Auctions.

(a)
Tenant shall not place any sign upon the Premises or conduct any auction
thereon without Landlord’s prior written consent. All such signs placed on the
Premises by Tenant and consented to by Landlord shall comply with all recorded
documents affecting the Premises and applicable statutes, ordinances, rules and
regulations of governmental agencies having jurisdiction thereof. At Landlord’s
option, Tenant shall, at the expiration or earlier termination of the Lease,
remove any sign which it has placed on the Premises and shall at its sole cost,
repair any damage caused by the installation or removal of such sign.

(b)
Obtaining permits for Tenant signs as may be required by any governmental
agency shall be the responsibility of Tenant.

20.16 Reasonable Consent. Except as limited elsewhere in this Lease,
wherever in this Lease Landlord or Tenant is required to give consent or
approval to any action on the part of the other, such consent or approval shall
not be unreasonably withheld. In the event of failure to give any such consent,
the other party shall be entitled to specific performance at law and shall have
such other remedies to it under this Lease, but in no event shall Landlord or
Tenant be responsible in monetary damages for failure to give consent unless said
failure is withheld maliciously or in bad faith.

20.17 Interest on Past Due Obligations. Any installment of Base Rent or Additional
Rent due from Tenant, or any other sum due under this Lease from Tenant, which
is not received by Landlord when due, shall bear interest from said due date
until paid, at an annual rate equal to the lesser of (the “Permitted Rate”):
(a) ten percent (10%); or (b) the highest rate allowable at law. Payment of
such interest shall not excuse or cure any default by Tenant. In addition,
Tenant shall pay all costs and attorneys’ fees incurred by Landlord in
collection of such amounts.

20.18 Recording. Tenant shall not record this Lease without
Landlord’s prior written consent (which may be given or withheld in Landlord’s
sole and absolute discretion), and such recordation shall, at the option of
Landlord, constitute a non-curable default of Tenant hereunder.

 18
 

20.19
Notices. All notices or demands of any kind required or
desired to be given by Landlord or Tenant hereunder shall be in writing and
shall be deemed delivered on the date received if personally delivered to
Landlord or Tenant, as the case may be, or if mailed, then forty-eight (48)
hours after depositing the notice or demand in the United States mail,
certified or registered, postage prepaid, addressed to the Landlord or Tenant
respectively at the addresses set forth after their signatures at the end of
this Lease, or when received when delivered by facsimile, electronic mail or by
commercial carrier.

20.20 Corporate Authority. If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation individually and personally
represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of said corporation in accordance with a duly
adopted resolution of the Board of Directors of said corporation or in
accordance with the Bylaws of said corporation, that this Lease is binding upon
said corporation in accordance with its terms, and that all information
provided to Landlord by Tenant is true, correct and complete in all material
respects. If Tenant is a corporation Tenant shall, within thirty (30) days
after execution of this Lease, deliver to Landlord a certified copy of a
resolution of the Board of Directors of said corporation authorizing or
ratifying the execution of this Lease.

20.21 Limitation on Landlord’s Liability. Tenant, for itself and its successors and
assigns (to the extent this Lease is assignable), hereby agrees that in the
event of any actual or alleged, breach or default by Landlord under this Lease
that:

(a)
Tenant’s sole and exclusive remedy and recourse against Landlord shall be as
against Landlord’s interest in the Project;

(b)
No partner, shareholder or member of Landlord shall be sued or named as a parry
in a suit or action (except as may be necessary to secure jurisdiction of
Landlord);

(c)
No service of process shall be made against any partner, shareholder or member
of Landlord (except as may be necessary to secure jurisdiction of Landlord);

(d)
No partner, shareholder or member of Landlord shall be required to answer or
otherwise plead to any service of process;

(e)
No judgment will be taken against any partner, shareholder or member of
Landlord;

(f)
Any judgment taken against any partner, shareholder or member of Landlord may
be vacated and set aside at any time nunc pro tunc;

(g)
No writ of execution will ever be levied against the assets of any partner,
shareholder or member of Landlord; and,

(h)
The covenants and agreements of Tenant set forth in this Paragraph 20.21 shall
be enforceable by Landlord and any partner, shareholder or member of Landlord,
and any partner, shareholder or member of Landlord is hereby declared to be an
intended third party beneficiary of the provisions of this Paragraph 20.21.

20.22 Construction of Lease Provisions. Although printed provisions of this Lease
were prepared by Landlord, Tenant acknowledges that it has reviewed this lease
and has obtained such legal counsel as Tenant has deemed necessary or
appropriate to fully explain Tenant’s rights, obligations and tax consequences
hereunder; consequently, the doctrine or rule that ambiguities in an agreement
or document are to be construed against the drafting party, shall not be
utilized in interpreting this Lease and this Lease shall instead be construed
or interpreted neutrally and in accordance with the general tenor of the
language. The words “include,” “includes” and “including” when used herein is
used in a non-exclusive sense and shall be deemed in each case to be followed
by the words “without limitation.”

20.23 Rules and Regulations. Landlord shall, in a manner it deems proper
in its opinion, establish and enforce reasonable non-discriminatory rules and
regulations concerning the Common Areas and the parking areas, close any of the
Common Areas to whatever extent required, in the opinion of Landlord, to
prevent a dedication of any of the Common Areas or the accrual of any rights of
any person or of the public to the Common Areas, close temporarily any of the
Common Areas for maintenance purposes, and make changes to the Common Areas,
including, without limitation, changes in the location of entrances and exits.
Landlord reserves the right to make any reasonable rules affecting the Project
throughout the term hereof. All delivery and dispatch of merchandise, supplies,
fixtures, equipment and furniture shall be by means and during hours
established by Landlord.

20.24 Confidentiality. Except as may be required by law or by the
rules of any exchange on which Tenant’s stock may be traded, Tenant hereby
agrees not to disclose the terms of this lease (specifically including, without
limitation, the rent or rental rate to be paid by Tenant hereunder and/or any
tenant improvement allowance to be furnished by Landlord to Tenant) to any
existing or prospective tenant of the Building or other third party; provided,
however, Tenant may disclose the terms of this Lease to its accountant,
bookkeeper or tax advisor or any employee of Tenant who has a need to know such
information for a legitimate business purpose. If Tenant discloses such
confidential information as permitted hereunder, Tenant shall inform the
disclosee of the requirements of this Paragraph and shall require each such
person to comply with such confidentiality requirements. In the event Tenant or
any person to whom it discloses such confidential information fails in any
respect to comply with its obligations under this Paragraph, Tenant shall be
liable to Landlord for breach of this Paragraph 20.24 and Landlord may bring an
action against Tenant for damages as a result of such breach. In addition,
nothing stated herein shall preclude or prohibit Landlord from seeking an
injunction to prevent disclosure of such confidential information or an order
compelling specific protection of such confidential information. The provisions
of this Paragraph 20.24 shall survive the termination of this Lease.

20.25 Counterparts. This Lease Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

20.26 No Third Party Beneficiaries. Except as may be specifically provided
herein, the provisions of this Agreement are intended solely for the benefit of
the parties hereto and are not to be construed for the benefit of any other
person or entity. Except as may be specifically provided for herein, no
creditor, customer or other person who is not a party hereto shall obtain any
rights under the provisions of this Agreement, and no such person shall have
the right to make any claim with respect to any debt, liability or obligation
against any party hereto on the basis of this Agreement.

LANDLORD
AND TENANT HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND BY EXECUTION OF THIS LEASE SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT AT THE TIME THIS
LEASE IS EXECUTED THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANT.

 19
 

In
Witness Whereof, Landlord and Tenant have executed this Lease
the date and year first above written.

	
  LANDLORD:

  	
   

  	
  TENANT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Griffin
  Properties, LLC

  	
   

  	
  1st Pacific Bank of California

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Gary Beyler

  	
   

  	
  By:

  	
  /s/ A. Vincent Siciliano

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Printed:

  	
  Gary Beyler

  	
   

  	
  Printed:

  	
  A. Vincent Siciliano

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Member

  	
   

  	
  Its:

  	
   

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  4/21/02

  	
   

  	
  Dated:

  	
   

  	
  4/18/03

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Printed:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  P.O. Box 675431

  	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
  6757 Poco Lago

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Rancho Santa Fe, CA 92067

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Note: If Tenant is a corporation,
  the signatures of two corporate officers is required, one signature must be
  one of the following: chairman of the board, president or any vice-president
  and the second signature must be one of the following: secretary, assistant
  secretary, chief financial officer or any assistant treasurer.

  
																	

 

 20

EXHIBIT “A”

PREMISES

EXHIBIT A – rev 7/24/03

EXHIBIT “B”

THE PROJECT

EXHIBIT “C”

WARM SHELL

For purposes of the Lease, the term “Warm Shell” means that the
Landlord shall deliver the Premises to the Tenant with the following items
completed:

a.                         The
Premises shall include a 200 amp electrical meter with conduits installed
directly to the Premises;

b.                        Conduits
shall be provided from the telephone room to the Premises for both Pacific Bell
and Time Warner Cable;

c.                         For
water source heat pump system, a condenser water piping risers will be provided
to each floor of the Building;

d.                        The
HVAC system will include roof platforms in place for split systems along with
all water piping from the roof to the Premises;

e.                         The
HVAC main outside condenser water loop shall be in place on each floor and
ready to receive taps for water source heat pumps;

f.                           The
central outside air system will be installed with risers to each floor of the
Building;

g.                        The
fire sprinkler system piping shall be in place throughout each floor of the
Building with temporary heads in place;

h.                        Sewage
and domestic water shall be stubbed to the Premises for ease of connection; and

i.                            All
walls adjacent to common areas are fire taped only; any further finish
conducted by Tenant.

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