Document:

exv10w3

 

EXHIBIT 10.3

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE — GROSS

(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1. Basic Provisions (“Basic Provisions”).

     1.1 Parties. This Lease (“Lease”), dated for reference purposes only August 28, 2004, is made
by and between RICHARD E. BATTENSCHLAG and BOB B KAY (“Lessor”) and SILVERGRAPH LGT a DELAWARE LLC
(“Lessee”), collectively the “Parties,” or individually a “Party”).

     1.2 Premises. That certain real property, including all improvements therein or to be
provided by Lessor under the terms of this Lease, commonly known as 11925-11927 Burke Street
located in the County of Los Angeles, State of California and generally described as (describe
briefly the nature of the property and, if applicable, the “Project” if the property is located
within a Project) an approximately 9,150 sq. ft. Concrete Tilt-up Building

     1.3 Term. Three (3) years and -0- months (“Original Term”) commencing October 1, 2004
(“Commencement Date”) and ending September 30, 2007 (“Expiration Date”). (See also Paragraph 3)

     1.4 Early Possession:  --- (“Early Possession Date”). (See also Paragraphs 3.2 and 3.3)

     1.5 Base Rent: $5,900.00 per month (“Base Rent”), payable on the First day of each month
commencing October 1, 2004. Per agreement, $2,000.00 off the first and last month’s rent. (See
also Paragraph 4)

	o	 	If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted.

     1.6 Base Rent and Other Monies Paid Upon Execution:

	 	(a)	 	Base Rent: $5,900.00 for the period October 1 through October 31, 2004 less $2,000.00 as
per agreement.
	 
	 	(b)	 	Security Deposit: $5,900.00 (“Security Deposit”). (See also Paragraph 5)
	 
	 	(c)	 	Association Fees: $ -- for the period --
	 
	 	(d)	 	Other: $ -- for --
	 
	 	(e)	 	Total Due Upon Execution of this Lease: $9,800.00

     1.7 Agreed Use: Graphic reproductions and any related lawful uses and general office use.
(See also Paragraph 6).

     1.8 Insuring Party. Lessor is the “Insuring Party”. The annual “Base Premium” is $1,733.00
(See also Paragraph 8)

     1.9 Real Estate Brokers: (See also Paragraph 15)

               (a) Representation. The following real estate brokers (the “Brokers”) and brokerage
relationships exist in this transaction (check applicable boxes:

	 	 	 	 	 
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	o	 	 ----- represents Lessor exclusively (“Lessor’s Broker”);
	 
	o	 	 ----- represents Lessee exclusively (“Lessee’s Broker”); or
	 
	o	 	----- represents both Lessor and Lessee (“Dual Agency”(.

          (b) Payment to Brokers. Upon execution and delivery of this Lease by both Parties, Lessor
shall pay to the Broker the fee agreed to in their separate written agreement (or if there is no
such agreement, the sum of — or — % of the total Base Rent) for the brokerage services rendered by
the Brokers.

     1.10 Grantor. The obligations of the Lessee under this Lease are to be guaranteed by William
Lee, James R. Simpson, James Martin (“Guarantor”) (See also Paragraph 37).

     1.11 Attachments. Attached hereto are the following, all of which constitute a part of this
Lease:

	þ	 	an Addendum consisting of Paragraphs 51 through 55;
	 
	o	 	a plot plan depicting the Premises;
	 
	o	 	a current set of the Rules and Regulations;
	 
	o	 	a Work Letter;
	 
	þ	 	other (specify): Rent adjustment — See Addendum Paragraph 52

2. Premises.

     2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set
forth in this Lease. Unless otherwise provided herein, any statement of size set forth in this
Lease, or that may have been used in calculating Rent, is an approximation which the Parties agree
is reasonable and any payments based thereon are not subject to revision whether or not the actual
size is more or less. Note: Lessee is advised to verify the actual size prior to executing this
Lease.

     2.2 Condition. Lessor shall deliver the Premises to Lessee broom clean and free of debris on
the Commencement Date or the Early Possession Date, whichever first occurs (“Start Date”), and, so
long as the required service contracts described in Paragraph 7.1(b) below are obtained by Lessee
and in effect within thirty days following the Start Date, warrants that the existing electrical,
plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”),
loading doors, sump pumps, if any, and all other such elements in the Premises, other than those
constructed by Lessee, shall be in good operating condition on said date and that the surface and
structural elements of the roof, bearing walls and foundation of any buildings on the Premises (the
“Building”) shall be free of material defects. If a non-compliance with said warranty exists as of
the Start Date, or if one of such systems or elements should malfunction or fail within the
appropriate warranty period, Lessor shall, as Lessor’s sole obligation with respect to such matter,
except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance, malfunction or
failure, rectify same at Lessor’s expense. The warranty periods shall be as follows: (i) 6

	 	 	 	 	 
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months as to the HVAC systems, and (ii) 30 days as to the remaining systems and other elements
of the Building. If Lessee does not give Lessor the required notice within the appropriate
warranty period, correction of any such non-compliance, malfunction or failure shall be the
obligation of Lessee at Lessee’s sole cost and expense, except for the roof, foundations, and
bearing walls which are handled as provided in paragraph 7.

     2.3 Compliance. Lessor warrants that the improvements on the Premises comply with the
building codes, applicable laws, covenants or restrictions of record, regulations, and ordinances
(“Applicable Requirements”) that were in effect at the time that each improvement, or portion
thereof, was constructed. Said warranty does not apply to the use to which Lessee will put the
Premises, modifications which may be required by the Americans with Disabilities Act or any similar
laws as a result of Lessee’s use (see Paragraph 50), or to any Alterations or Utility Installations
(as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee Is responsible for
determining whether or not the Applicable Requirements, and especially the zoning, are appropriate
for Lessee’s intended use, and acknowledges that past uses of the Premises may no longer be
allowed. If the Premises do not comply with said warranty, Lessor shall, except as otherwise
provided, promptly after receipt of written notice from Lessee setting forth with specificity the
nature and extent of such non-compliance, rectify the same at Lessor’s expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within 6 months following the
Start Date, correction of that non-compliance shall be the obligation of Lessee at Lessee’s sole
cost and expense. If the Applicable Requirements are hereafter changed so as to require during the
term of this Lease the construction of an addition to or an alteration of the Premises and/or
Building, the remediation of any Hazardous Substance, or the reinforcement or other physical
modification of the Unit, Premises and/or Building (“Capital Expenditure”), Lessor and Lessee shall
allocate the cost of such work as follows:

          (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result
of the specific and unique use of the Premises by Lessee as compared with uses by tenants in
general, Lessee shall be fully responsible for the cost thereof, provided, however that if such
Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds
6 months’ Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within 10 days after receipt of Lessee’s termination notice that Lessor has elected to pay
the difference between the actual cost thereof and an amount equal to 6 months’ Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires
such Capital Expenditure and deliver to Lessor written notice specifying a termination date at
least 90 days thereafter. Such termination date shall, however, in no event be earlier than the
last day that Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

          (b) If such Capital Expenditure is not the result of the specific and unique use of the
Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor and Lessee
shall allocate the obligation to pay for such costs pursuant to the provisions of Paragraph 7.1(d);
provided, however, that if such Capital Expenditure is required during the last 2 years of this
Lease or if Lessor reasonably determines that it is not economically feasible to pay its share
thereof, Lessor shall have the option to terminate this Lease upon 90 days prior written notice to
Lessee unless Lessee notifies Lessor, in writing, within 10 days after receipt of Lessor’s
termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure, Lessee may advance such
funds and deduct same, with Interest, from Rent until Lessor’s share of such costs have been fully
paid. If Lessee is unable to finance Lessor’s share, or if the balance of the Rent due and payable
for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis,
Lessee shall have the right to terminate this Lease upon 30 days written notice to Lessor.

	 	 	 	 	 
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          (c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to
apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital
Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use,
change in intensity of use, or modification to the Premises then, and in that event, Lessee shall
either: (i) immediately cease such changed use or intensity of use and/or take such other steps as
may be necessary to eliminate the requirement for such Capital Expenditure, or (ii) complete such
Capital Expenditure at its own expense. Lessee shall not, however, have any right to terminate
this Lease.

     2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor and/or
Brokers to satisfy itself with respect to the condition of the Premises; (including but not limited
to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements and the Americans with Disabilities Act), and their suitability for
Lessee’s intended use, (b) Lessee has made such investigation as it deems necessary with reference
to such matters and assumes all responsibility therefor as the same relate td its occupancy of the
Premises, and (c) neither Lessor, Lessor’s agents, nor Brokers have made any oral or written
representations of warranties with respect to said matters other than as set forth in this Lease.
In addition, Lessor acknowledges that: (i) Brokers have made no representations, promises or
warranties concerning Lessee’s ability to honor the Lease or suitability to occupy the Premises,
and (ii) it is Lessor’s sole responsibility to investigate the financial capability and/or
suitability of all proposed tenants.

     2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of
no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the
Premises. In such event, Lessee shall be responsible for any necessary corrective work.

3. Term.

     3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph 1.3.

     3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early
possession. All other terms of this Lease (including but not limited to the obligations to pay
Real Property Taxes and insurance premiums and to maintain the Premises) shall, however, be in
effect during such period. Any such early possession shall not affect the Expiration Date.

     3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to
deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts,
Lessor is unable to deliver possession by such date, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent or perform its other obligations until Lessor delivers possession of the
Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from
the date of delivery of possession and continue for a period equal to what Lessee would otherwise
have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of
Lessee. If possession is not delivered within 60 days after the Commencement Date, Lessee may, at
its option, by notice in writing within 10 days after the end of such 60 day period, cancel this
Lease, in which event the Parties shall be discharged from all obligations hereunder. If such
written notice is not received by Lessor within said 10 day period, Lessee’s right to cancel shall
terminate. If possession of the Premises is not delivered within 120 days after the Commencement
Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in
writing.

	 	 	 	 	 
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     3.4 Lessee Compliance. Lessor shall not be required to deliver possession of the Premises to
Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5).
Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under
this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor’s
election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee
is required to perform any other conditions prior to or concurrent with the Start Date, the Start
Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied.

4. Rent.

     4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease
(except for the Security Deposit) are deemed to be rent (“Rent”).

     4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of
the United States on or before the day on which it is due, without offset :or deduction (except as
specifically permitted in this Lease). Rent for any period during the term hereof which is for
less than one full calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or to such other
persons or place as Lessor may from time to time designate in writing. Acceptance of a payment
which is less than the amount then due shall not be a waiver of Lessor’s rights to the balance of
such Rent, regardless of Lessor’s endorsement of any check so stating. In the event that any
check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any
reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any Late Charge and Lessor, at
its option, may require all future payments to be made by Lessee to be by cashier’s check.
Payments will be applied first to accrued late charges and attorney’s fees, second to accrued
interest, then to Base Rent and Operating Expense Increase, and any remaining amount to any other
outstanding charges or costs.

     4.3 Association Fees. In addition to the Base Rent, Lessee shall pay to Lessor each month an
amount equal to any owner’s association or condominium fees levied or assessed against the
Premises. Said monies shall be paid at the same time and in the same manner as the Base Rent.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit
as security for Lessee’s faithful performance of its obligations under this Lease. If Lessee fails
to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any
portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or Incur by
reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall
within 10 days after written request therefor deposit monies with Lessor sufficient to restore said
Security Deposit to the full amount required by this Lease. If the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit additional moneys with
Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion
to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should
the Agreed Use be amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit
to the extent necessary, in Lessor’s reasonable judgment, to account for any increased wear and
tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs
during this Lease and following such change the financial condition of Lessee is, in Lessor’s
reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based
on such change in financial condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts.

	 	 	 	 	 
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Within 14 days after the expiration or termination of this Lease, if Lessor elects to apply the
Security Deposit only to unpaid Rent, and otherwise within 30 days after the Premises have been
vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the Security
Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be
held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this
Lease.

6. Use.

     6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal
use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance,
or that disturbs occupants of or causes damage to neighboring premises or properties. Lessor shall
not unreasonably withhold or delay its content to any written request for a modification of the
Agreed Use, so long as the same will not impair the structural integrity of the improvements on the
Premises or the mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after
such request give written notification of same, which notice shall include an explanation of
Lessor’s objections to the change in the Agreed Use.

     6.2 Hazardous Substances.

          (a) Reportable Uses Require Consent. The term “Hazardous Substance” as used in this Lease
shall mean any product, substance, or waste whose presence, use; manufacture, disposal,
transportation, or release, either by itself or in combination with other materials expected to be
on the Premises,; is either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a
basis for potential liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substances shall include, but not be limited
to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a
Reportable Use of Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee’s expense) with all Applicable Requirements. “Reportable Use” shall
mean (i) the installation or use of any above or below ground storage tank, (ii) the generation,
possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a
permit from, or with respect to which a report, notice, registration or business plan is required
to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a
Hazardous Substance with respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in
the normal course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue,
etc.) and common household cleaning materials, so long as such use is in compliance with all
Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring
property to any meaningful risk of contamination or damage or expose Lessor to any liability
therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such
additional assurances as Lessor reasonably deems necessary to protect itself, the public, the
Premises and/or the environment against damage, contamination, injury and/or liability, including,
but not limited to, the installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the Security Deposit.

          (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a
Hazardous Substance has come to be located in, on, under or about the Premises, other than as

	 	 	 	 	 
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previously consented to by Lessor, Lessee shall immediately give written notice of such fact
to Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which
it has concerning the presence of such Hazardous Substance.

          (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under, or about the Premises (including through the plumbing or
sanitary sewer system) and shall promptly, at Lessee’s expense, comply with all Applicable
Requirements and take all investigatory and/or remedial action reasonably recommended, whether or
not formally ordered or required, for the cleanup of any contamination of, and for the maintenance,
security and/or monitoring of the Premises or neighboring properties, that was caused of materially
contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the
Premises during the term of this Lease, by or for Lessee, or any third party.

          (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents,
employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys’ and
consultants’ fees arising out of or involving any Hazardous Substance brought onto the Premises by
or for Lessee, or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance under the Premises from
adjacent properties not caused or contributed to by Lessee). Lessee’s obligations shall include,
but not be limited to, the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of this Lease. No
termination, cancellation or release agreement entered into by Lessor and Lessee shall release
Lessee from its obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.

          (e) Lessor Indemnification. Lessor and its successors and assigns shall indemnify, defend,
reimburse and hold Lessee, its employees and lenders, harmless from and against any and all
environmental damages, including the cost of remediation, which result from Hazardous Substances
which existed on the Premises prior to Lessee’s occupancy or which are caused by the gross
negligence or willful misconduct of Lessor, its agents or employees. Lessor’s obligations, as and
when required by the Applicable Requirements, shall include, but not be limited to, the cost of
investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration
or termination of this Lease.

          (f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises prior to Lessee’s occupancy,
unless such !remediation measure is required as a result of Lessee’s use (including “Alterations”,
as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible
for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor,
including allowing Lessor and Lessor’s agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor’s investigative and remedial responsibilities.

          (g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e))
occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by the Applicable Requirements
and thin Lease shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, ail Lessor’s option, either (1) investigate and
remediate

	 	 	 	 	 
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such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor’s
expense, in which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $100,000,
whichever is greater, give written notice to Lessee, within 30 days after receipt by Lessor of
knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to terminate
this Lease/ as of the date 60 days following the date of such notice. In the event Lessor elects
to give a termination notice, Lessee may, within 1d days thereafter, give written notice to Lessor
of Lessee’s commitment to pay the amount by which the cost of the remediation of such Hazardous
Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within 30 days following such commitment. In such event, this Lease shall continue in full
force and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible
after the required funds are available. If Lessee does not give such notice and provide the
required funds or assurance thereof within the time provided, this Lease shall terminate as of the
date specified in Lessor’s notice of termination.

     6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in this
Lease, Lessee shall, at Lessee’s sole expense, fully, diligently and in a timely manner, materially
comply with all Applicable Requirements, the requirements of any applicable fire insurance
underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or consultants
which relate in any manner to the such Requirements, without regard to whether such Requirements
are now in effect or become effective after the Start Date. Lessee shall, within 10 days after
receipt of Lessor’s written request, provide Lessor with copies of all permits and other documents,
and other information evidencing Lessee’s compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor i writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable
Requirements.

     6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and
consultants shall have the right to enter into Premises at any time, in the case of an emergency,
and otherwise at reasonable times after reasonable notice, for the purpose of inspecting the
condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any
such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or a
Hazardous Substance Condition (see paragraph 9.1) is found to exist or be imminent, or the
inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon
request reimburse Lessor for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination. In addition, Lessee shall provide copies of all
relevant material safety data sheets (MSDS) to Lessor within 10 days of the receipt of a written
request therefor.

7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.

     7.1 Lessee’s Obligations.

          (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3
(Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or
Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations (intended for Lessee’s exclusive use, no matter where located), and
Alterations in good order, condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily accessible to
Lease , and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior
use, the elements or the age of

	 	 	 	 	 
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such portion of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing, HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fire
protection system, fixtures, walls (interior and exterior), ceilings, floors, windows, doors, plate
glass, skylights, landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks
and parkways located in, on, or adjacent to the Premises. Lessee is also responsible for keeping
the roof and roof drainage clean and free of debris. Lessor shall keep the surface and structural
elements of the roof, foundations, and bearing walls in good repair (see paragraph 7.2). Lessee,
in keeping the Premises in !good order, condition and repair, shall exercise and perform good
maintenance practices, specifically including the procurement and maintenance of the service
contracts required by Paragraph 7.1(b) below. Lessee’s obligations shall include restorations,
replacements or renewals when necessary to keep the Premises and all improvements thereon or a part
thereof in good order, condition and state of repair. Lessee shall, during the term of this Lease,
keep the exterior appearance of the Building in a first-class condition (including, e.g. graffiti
removal) consistent with the exterior appearance of other similar facilities of comparable age and
size in the vicinity, including, when necessary, the exterior repainting of the Building.

          (b) Service Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain
contracts, with copies to Lessor, in customary form and substance for, and with contractors
specializing and experienced in the maintenance of the following equipment and improvements, if
any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure vessels,
(iii) fire extinguishing systems, including fire alarm and/or smoke detection, (iv) landscaping and
irrigation systems, (v) clarifiers, (vi) basic utility feed to the perimeter of the Building, and
(viii) any other equipment, if reasonably required by Lessor. However, Lessor reserves the right,
upon notice to Lessee, to procure and maintain any or all of such service contracts, and if Lessor
so elects, Lessee shall reimburse Lessor, upon demand, for the cost thereof.

          (c) Failure to Perform. If Lessee fails to perform Lessee’s obligations under this Paragraph
7.1, Lessor may enter upon the Premises after 10 days’ prior written notice to Lessee (except in
the case of an emergency, in which case no notice shall be required), perform such obligations on
Lessee’s behalf, and put the Premises in good order, condition and repair, and Lessee shall
promptly pay to Lessor a sum equal to 115% of the cost thereof.

          (d) Replacement. Subject to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7
below, and without relieving Lessee of liability resulting from Lessee’s failure to exercise and
perform good maintenance practices, if an item described in Paragraph 7.1(b) cannot be repaired
other than at a cost which is in excess of 50% of the cost of replacing such item, then such item
shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the remainder of the term of this Lease, on the
date on which Base Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (i.e.
1/144th of the cost per month). Lessee shall pay interest on the unamortized balance at a rate
that is commercially reasonable in the judgment of Lessors accountants. Lessee may, however,
prepay its obligation at any time.

     7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance), 9 (Damage or Destruction) and 14 (Condemnation), it is intended by the Parties hereto
that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises, or
the equipment therein, all of which obligations are intended to be that of the Lessee, except for
the surface and structural elements of the roof, foundations and bearing walls, the repair of which
shall be the responsibility of Lessor upon receipt of written notice that such a repair is
necessary. It is the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance

	 	 	 	 	 
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and repair of the Premises, and they expressly waive the benefit of any statute now or
hereafter in effect to the extent it is inconsistent with the terms of this Lease.

     7.3 Utility Installations; Trade Fixtures; Alterations.

          (a) Definitions. The term “Utility Installations” refers to all floor and window coverings,
air and/or vacuum lines, power panels, electrical distribution, security and fire protection
systems, communication cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in or on
the Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can be
removed without doing material damage to the Premises. The term “Alterations” shall mean any
modification of the improvements, other than Utility Installations or Trade Fixtures, whether by
addition or deletion. “Lessee Owned Alterations and/or Utility Installations” are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a).

          (b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises
without Lessor’s prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, will not affect the electrical, plumbing,
HVAC, and/or life safety systems, and the cumulative cost thereof during this Lease as extended
does not exceed a sum equal to 3 month’s Base Rent in the aggregate or a sum equal to one month’s
Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or install anything on the roof without the prior written approval of Lessor.
Lessor may, as a precondition to granting such approval, require Lessee to utilize a contractor
chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall
desire to make and which require the consent of the Lessor shall be presented to Lessor in written
form with detailed plans. Consent shall be deemed conditioned upon Lessee’s: (i) acquiring all
applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the
plans and specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and
sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and
specifications. For work which costs an amount in excess of one month’s Base Rent, Lessor may
condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150%
of the estimated cost of such Alteration or Utility Installation and/or upon Lessee’s posting an
additional Security Deposit with Lessor.

          (c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or
alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or
may be secured by any mechanic’s or materialmen’s lien against the Premises or any interest
therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then
Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the
same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount
equal to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against
liability for the same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor’s attorneys’ fees and costs.

     7.4 Ownership; Removal; Surrender; and Restoration.

	 	 	 	 	 
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          (a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereinafter
provided, all Alterations and Utility Installations made by Lessee shall! be the property of
Lessee, but considered a part of the Premises. Lessor may, at any time, elect in writing to be the
owner of all or any specified part of the Lessee Owned Alterations and Utility Installations.
Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility
Installations shall, at the expiration or termination of this Lease, become the property of Lessor
and be surrendered by Lessee with the Premises.

          (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not
later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all
Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of
this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent.

          (c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any
earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and
free of debris, and in good operating order, condition and state of repair, ordinary wear and tear
excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if this Lease is for
12 months or less, then Lessee shall surrender the Premises in the same condition as delivered to
Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any
damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned
Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee. Lessee shall completely remove from the Premises any and
all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except
Hazardous Substances which were deposited via underground migration from areas outside of the
Premises, or if applicable, the Project) even if such removal would require Lessee to perform or
pay for work that exceeds statutory requirements. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before
the Expiration Date or any earlier termination date shall be deemed to have been abandoned by
Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to
timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of
Lessor shall constitute a holdover under the provisions of Paragraph 26 below.

8. Insurance; Indemnity.

     8.1 Payment of Premium Increases.

          (a) Lessee shall pay to Lessor any insurance cost increase (“Insurance Cost Increase”)
occurring during the term of this Lease. Insurance Cost Increase is defined as any increase in the
actual cost of the insurance required under Paragraph 8.2(b), 8.3(a) and 8.3(b) (“Required
Insurance”), over and above the Base Premium as hereinafter defined calculated on an annual basis.
Insurance Cost Increase shall include but not be limited to increases resulting from the nature of
Lessee’s occupancy, any act or omission of Lessee, requirements of the holder of mortgage or deed
of trust covering the Premises, increased valuation of the Premises and/or a premium rate increase.
The parties are encouraged to fill in the Base Premium in paragraph 1.9 with a reasonable premium
for the Required Insurance based on the Agreed Use of the Premises. If the parties fail to insert
a dollar amount in Paragraph 1.9, then the Base Premium shall be the lowest annum premium
reasonably obtainable for the Required Insurance as of the commencement of the Original Term for
the Agreed Use of the Premises. In

	 	 	 	 	 
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           no event, however, shall Lessee be responsible for any portion of the increase in the premium
cost attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of
$2,000,000 per occurrence.

          (b) Lessee shall pay any such Insurance Cost Increase to Lessor within 30 days after receipt
by Lessee of a copy of the premium statement or other reasonable evidence of the amount due. If
the insurance policies maintained hereunder cover other property besides the Premises, Lessor shall
also deliver to Lessee a statement of the amount of such Insurance Cost Increase attributable only
to the Premises showing in reasonable detail the manner in which such amount was computed.
Premiums for policy periods commencing prior to, or extending beyond the term of this Lease, shall
be prorated to correspond to the term of this Lease.

     8.2 Liability Insurance.

          (a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability
policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily
injury, personal injury and property damage based upon or arising out of the ownership, use,
occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall
be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per
occurrence with an annual aggregate of not less than $2,000,000, an “Additional Insured-Managers or
Lessors of Premises Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement”
for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall include coverage
for liability assumed under this Lease as an “insured contract” for the performance of Lessee’s
indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by
Lessee shall be primary to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.

          (b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph
8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee.
Lessee shall not be named as an additional insured therein.

     8.3 Property Insurance — Building, Improvements and Rental Value.

          (a) Building and Improvements. The Insuring Party shall obtain and keep in force a policy or
policies in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender
insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or the amount required
by any Lender, but in no event more than the commercially reasonable and available insurable value
thereof. If Lessor is the Insuring Party, however, Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee’s personal property shall be insured by Lessee under
Paragraph 8.4 rather than by Lessor. If the coverage is available and commercially appropriate,
such policy or policies shall insure against all risks of direct physical loss or damage (except
the perils of flood and/or earthquake unless required by a Lender or included in the Base Premium),
including coverage for debris removal and the enforcement of any Applicable Requirements requiring
the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the
result of a covered loss. Said policy or policies shall also contain an agreed valuation provision
in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an
increase in the annual property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city

	 	 	 	 	 
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nearest to where the Premises are located. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $1,000 per occurrence, and Lessee shall be liable
for such deductible amount in the event of an Insured Loss.

          (b) Rental Value. The Insuring Party shall obtain and keep in force a policy or policies in
the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent
for one year with an extended period of indemnity for an additional 180 days (“Rental Value
insurance”). Said insurance shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next 12 month period. Lessee shall be liable for any
deductible amount in the event of such loss.

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

     8.4 Lessee’s Property; Business Interruption Insurance.

          (a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such
insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and (lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in force.

          (b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense
insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable
to all perils commonly insured against by prudent lessees in the business of Lessee or attributable
to prevention of access to the Premises as a result of such perils.

          (c) No Representation of Adequate Coverage. Lessor makes no representation that the limits or
forms of coverage of insurance specified herein are adequate td cover Lessee’s property, business
operations or obligations under this Lease.

     8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or
admitted to transact business in the state where the Premises are located, and maintaining during
the policy term a “General Policyholders Rating” of at least B+, V, as set forth in the most
current issue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender.
Lessee shall not do or permit to be done anything which invalidates the required insurance
policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of
such insurance or certificates evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable or subject to modification except after 30 days prior written
notice to Lessor. Lessee shall, at least 30 days prior to the expiration of such policies, furbish
Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may
order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee
to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less. If either Party shall fail to procure and
maintain the insurance required to be carried by it, the other Party may, but shall not be required
to, procure and maintain the same.

	 	 	 	 	 
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     8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor
each hereby release and relieve the other, and waive their entire right to recover damages against
the other, for loss of or damage to its property arising out of or incident to the perils required
to be insured against herein. The effect of such releases and waivers is not limited by the amount
of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to
have their respective property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

     8.7 Indemnity. Except for Lessor’s gross negligence or willful misconduct, Lessee shall
indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s master
or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or
damages, liens judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities
arising out of, involving, or in connection with, the use and/or occupancy of the Premises by
Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing
matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or indemnified.

     8.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to
the person or goods, wares, merchandise or other property of Lessee, Lessee’s employees,
contractors, invitees, customers, or any other person in or about the Premises, whether such damage
or injury Is caused by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage
results from conditions arising upon the Premises or upon other portions of the building of which
the Premises are a part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor nor from the allure of Lessor
to enforce the provisions of any other lease in the Project. Notwithstanding Lessor’s negligence
or breach of this Lease, Lessor shall under no circumstances be liable for injury to Lessee’s
business or for any loss of income or profit therefrom.

     8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on its part to obtain
or maintain the insurance required herein will expose Lessor to risks and potentially cause Lessor
to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to
ascertain. Accordingly, for any month or portion thereof that Lessee does not maintain the
required insurance and/or does not provide Lessor with the required binders or certificates
evidencing the existence of the required insurance, the Base Rent shall be automatically increased,
without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base
Rent or $100, whichever is greater. The parties agree that such increase in Base Rent represents
fair and reasonable compensation for the additional risk/ costs that Lessor will incur by reason of
Lessee’s failure to maintain the required insurance. Such increase in Base Rent shall in no event
constitute a waiver of Lessee’s Default or Breach with respect to the failure to maintain such
insurance, prevent the exercise of any of the other rights and remedies granted hereunder, nor
relieve Lessee of its obligation to maintain the insurance specified in this Lease.

9. Damage or Destruction.

     9.1 Definitions.

          (a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations, which can

	 	 	 	 	 
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reasonably be repaired in 6 months or less from the date of the damage or destruction. Lessor
shall notify Lessee in writing within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.

          (b) “Premises Total Destruction” shall mean damage or destruction to the Premises, other than
Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be
repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within 30 days from the date of the damage or destruction as to whether or not
the damage is Partial or Total.

          (c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other
than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an
event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.

          (d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by
Lessor at the time of the occurrence to their condition existing immediately prior thereto,
including demolition, debris removal and upgrading required by the operation of Applicable
Requirements, and without deduction for depreciation.

          (e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition
involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph
6.2(a), in, on, or under the Premises which requires repair, remediation, or restoration.

     9.2 Partial Damage — Insured Loss. If a Premises Partial Damage that is an Insured Loss
occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures
or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this
Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair of which is $10,000
or less, and, in such event, Lessor shall make any applicable insurance proceeds available to
Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required
insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee’s responsibility) as and when required to complete said repairs. In the event,
however, such shortage was due to the fact that, by reason of the unique nature of the
improvements, full replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to
fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to
cover same, or adequate assurance thereof, within 10 days following receipt of written notice of
such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof
within said 10 day period, the party responsible for making the repairs shall complete them as soon
as reasonably possible and this Lease shall remain in full force and effect. If such funds or
assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement
of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial
Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may
be some insurance coverage, but the net proceeds of any such insurance shall be made available for
the repairs if made by either Party.

	 	 	 	 	 
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     9.3 Partial Damage — Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss
occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon as reasonably
possible’ at Lessor’s expense, in which event this Lease shall continue in full force and effect,
or (ii) terminate this Lease by giving written notice to Lessee within 30 days after receipt by
Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days
following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee
shall have the right within 10 days after receipt of the termination notice to give written notice
to Lessor of Lessee’s commitment to pay for the repair of such damage without reimbursement from
Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30
days after making such commitment. In such event this Lease shall continue in full force and
effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the
required funds are available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.

     9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total
Destruction occurs, this Lease shall terminate 60 days following such Destruction. If the damage
or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall
have the right to recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.

     9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is
damage for which the cost to repair exceeds one month’s Base Rent, whether or not an Insured Loss,
Lessor may terminate this Lease effective 60 days following the date of occurrence of such damage
by giving a written termination notice to Lessee within 30 days after the date of occurrence of
such damage. Notwithstanding the foregoing,; if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a)
exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or
adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date
which is 10 days after Lessee’s receipt of Lessor’s written notice purporting to terminate this
Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises
such option during such period and provides Lessor with funds (or adequate assurance thereof) to
cover any shortage in insurance proceeds, Lessor shall, at Lessor’s commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall continue in full
force and effect. If Lessee fails to exercise such option and provide such funds or assurance
during such period, then this;’ Lease shall terminate on the date specified in the termination
notice and Lessee’s option shall be extinguished.

     9.6 Abatement of Rent; Lessee’s Remedies.

          (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent
payable by Lessee for the period required for the repair, remediation or restoration of such damage
shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such
damage, destruction, remediation, repair or restoration except as provided herein.

          (b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not
commence, in a substantial and meaningful way, such repair or restoration within 90 days after such
obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessee’s election to

	 	 	 	 	 
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terminate this Lease do a date not less than 60 days following the giving of such notice. If
Lessee gives such notice and such repair or restoration is not commenced within 30 days thereafter,
this Lease shall terminate as of the date specified in said notice. If the repair or restoration
is commenced within such 30 days, this Lease shall continue in full force and effect. “Commence”
shall mean either the unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.

     9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph
6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any
other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so
much of Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.

     9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the
effect of any damage to or destruction of the Premises with respect to the termination of this
Lease and hereby waive the provisions of any present or future statute to the extent inconsistent
herewith.

10. Real Property Taxes.

     10.1 Definition. As used herein, the term “Real Property Taxes” shall include any form of
assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other
than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed
upon or levied against any legal or equitable interest of Lessor in the Premises or the Project,
Lessors right to other income therefrom, and/or Lessor’s business of leasing, by any authority
having the direct or indirect power to tax and where the funds are generated with reference to the
Building address and where the proceeds so generated are to be applied by the city, county or other
local taxing authority of a jurisdiction within which the Premises are located. Real Property
Taxes shall also include any tax, fee, levy, assessment or charge, or any Increase therein: (i)
imposed by reason of events occurring during the term of this Lease, including but not limited to,
a change in the ownership of the Premises, and (ii) levied or assessed on machinery or equipment
provided by Lessor to Lessee pursuant to this Lease.

     10.2

          (a) Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Premises
provided, however, that Lessee shall pay to Lessor the amount, if any, by which Real Property Taxes
applicable to the Premises Increase over the fiscal tax year during which the Commencement Date
occurs (“Tax Increase”). Payment of any such Tax Increase shall be made by Lessee to Lessor within
30 days after receipt of Lessors written statement setting forth the amount due and the computation
thereof. If any such taxes shall cover any period of time prior to or after the expiration or
termination of this Lease, Lessee’s share of such taxes shall be prorated to cover only that
portion of the tax bill applicable to the period that this Lease is in effect. In the event Lessee
incurs a late charge on any Rent payment, Lessor may estimate the current Real Property Taxes, and
require that the Tax Increase be paid in advance to Lessor by Lessee monthly in advance with the
payment of the Base Rent. Such monthly payment shall be an amount equal to the amount of the
estimated installment of the Tax Increase divided by the number of months remaining before the
month in which said installment becomes delinquent. When the actual amount of the applicable Tax
Increase is known, the amount of such equal monthly advance payments shall be adjusted as required
to provide the funds needed to pay the applicable Tax Increase. If the amount collected by Lessor
is insufficient to pay the Tax Increase when due, Lessee shall pay Lessor, upon demand, such
additional sums as are necessary to pay such obligations. Advance payments may be intermingled
with other moneys of Lessor and shall not bear interest. In the event of a Breach by Lessee

	 	 	 	 	 
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in the performance of its obligations under this Lease, then any such advance payments may be
treated by Lessor as an additional Security Deposit. TAX BASE $1608 .66. LESSEE to pay any TAX
Base increase).

     (b) Additional Improvements. Notwithstanding anything to the contrary in this Paragraph 10.2,
Lessee shall pay to Lessor upon demand therefor the entirety of any increase in Real Property Taxes
assessed by reason of Alterations or Utility Installations placed upon the Premises by Lessee or at
Lessee’s request.

     10.3 Joint Assessment. If the Premises are not separately assessed, Lessee’s liability shall
be an equitable proportion of the Tax Increase for all of the land and improvements included within
the tax parcel assessed, such proportion to be conclusively determined by Lessor from the
respective valuations assigned in the assessors work sheets or such other information as may be
reasonably available.

     10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all taxes assessed
against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures,
furnishings, equipment and all personal property of Lessee. When possible, Lessee shall cause its
Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real property of Lessor. If
any of Lessee’s said property shall be assessed with Lessor’s real property, Lessee shall pay
Lessor the taxes attributable to Lessee’s property within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee’s property.

11. Utilities and Services. Lessee shall pay for all water, gas, heat, light, power, telephone,
trash disposal and other utilities and services supplied to the Premises, together with any taxes
thereon. If any such services are not separately metered or billed to Lessee, Lessee shall pay a
reasonable proportion, to be determined by Lessor, of all charges jointly metered or billed. There
shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever for the
inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Lessors reasonable control or in
cooperation with governmental request or directions.

12. Assignment and Subletting.

     12.1 Lessor’s Consent Required.

          (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber
(collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in this Lease
or in the Premises without Lessors prior written consent.

          (b) Unless Lessee is a corporation and its stock is publicly traded on a national stock
exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The
transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a
change in control for this purpose.

          (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by
way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee’s assets occurs, which results or
will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net
Worth as it was represented at the time of the execution of this Lease or at the time of the most
recent

	 	 	 	 	 
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assignment to which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its consent. “Net Worth of
Lessee” shall mean the net worth of Lessee (excluding any guarantors) established under generally
accepted accounting principles.

          (d) An assignment or subletting without consent shall, at Lessors option, be a Default curable
after notice per Paragraph 13.1(c), , or a noncurable Breach without the necessity of any notice
and grace period. If Lessor elects to treat such unapproved assignment or subletting as a
noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days written
notice, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the
event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the
Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously in
effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the remainder of the
Lease term shall be increased to 110% of the scheduled adjusted rent.

          (e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited to
compensatory damages and/or injunctive relief.

     12.2 Terms and Conditions Applicable to Assignment and Subletting.

          (a) Regardless of Lessor’s consent, no assignment or subletting shall: (i) be effective
without the express written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other obligations to be
performed by Lessee.

          (b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than
Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or
disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver
or estoppel of Lessors right to exercise its remedies for Lessee’s Default or Breach.

          (c) Lessor’s consent to any assignment or subletting shall not constitute a consent to any
subsequent assignment or subletting.

          (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against
Lessee, any Guarantors or anyone else responsible for the performance of Lessee’s obligations under
this Lease, including any assignee or sublessee, without first exhausting Lessor’s remedies against
any other person or entity responsible therefor to Lessor, or any security held by Lessor.

          (e) Each request for consent to an assignment or subletting shall be in writing, accompanied
by information relevant to Lessor’s determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any, together with a fee of
$500 as consideration for Lessor’s considering and processing said request. Lessee agrees to
provide Lessor with such other or additional information and/or documentation as may be reasonably
requested. (See also Paragraph 36)

          (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment or entering into such sublease, be deemed to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to be observed or
performed by

	 	 	 	 	 
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Lessee during the term of said assignment or sublease, other than such obligations as are
contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.

          (g) Lessor’s consent to any assignment or subletting shall not transfer to the assignee or
sublessee any Option granted to the original Lessee by this Lease unless such transfer is
specifically consented to by Lessor in writing. (See Paragraph 39.2)

     12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and
conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or not expressly incorporated therein:

          (a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent payable
on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s obligations under
this Lease; provided, however, that until a Breach shall occur in the performance of Lessee’s
obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor
exceeds Lessee’s obligations any such excess shall be refunded to Lessee. Lessor shall not, by
reason of the foregoing or any assignment of such sublease, nor by reason of the collection of
Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of
Lessee’s obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the
performance of Lessee’s obligations under this Lease, to pay to Lessor all Rent due and to become
due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all
Rents to Lessor without any obligation or right to inquire as to whether such Breach exists,
notwithstanding any claim from Lessee to the contrary.

          (b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn
to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall hot be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.

          (c) Any matter requiring the consent of the sublessor under a sublease shall also require the
consent of Lessor.

          (d) No sublessee shall further assign or sublet all or any part of the Premises without
Lessor’s prior written consent.

          (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee,
who shall have the right to cure the Default of Lessee within the grace period, if any, specified
in such notice. The sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.

13. Default; Breach; Remedies.

     13.1 Default; Breach. A “Default” is defined as a failure by the Lessee to comply with or
perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A
“Breach” is defined as the occurrence of one or more of the following Defaults, and the failure of
Lessee to cure such Default within any applicable grace period:

	 	 	 	 	 
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          (a) The abandonment of the Premises; or the vacating of the Premises without providing a
commercially reasonable level of security, or where the coverage of the property insurance
described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.

          (b) The failure of Lessee to mike any payment of Rent or any Security Deposit required to be
made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable
evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of 3 business days
following written notice to Lessee.

          (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42,
(viii) material safety data sheets (MSDS), or (ix) any other documentation or information which
Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure
continues for a period of 10 days following written notice to Lessee.

          (d) A Default by Lessee as to, the terms, covenants, conditions or provisions of this Lease,
or of the rules adopted under Paragraph 40 hereof, other than those described in subparagraphs
13.1(a), (b) or (c), above, where such Default continues for a period of 30 days after written
notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days
are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently prosecutes such cure to
completion.

          (e) The occurrence of any of the following events: (i) the making of any general arrangement
or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. §101
or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same
is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease,
where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee’s assets located at the Premises or of
Lessee’s interest in this Lease, where such seizure is not discharged within 30 days; provided,
however, in the event that any provision of this subparagraph (e) is contrary to any applicable
law, such provision shall be of no force or effect, and not affect the validity of the remaining
provisions.

          (f) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor
was materially false.

          (g) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death
of a Guarantor, (ii) the termination of a Guarantor’s liability with respect to this! Lease other
than in accordance with the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a
Guarantor’s breach of its guaranty obligation on an anticipatory basis, and Lessee’s failure,
within 60 days following written notice of any such event, to provide written alternative assurance
or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the time of execution of
this Lease.

	 	 	 	 	 
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     13.2 Remedies. It Lessee fails to perform any of its affirmative duties or obligations,
within 10 days after written notice (or in case of an emergency, without notice), Lessor may, at
its option, perform such duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, Insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred
by Lessor in such performance upon receipt of an invoice therefor. In the event of a Breach,
Lessor may, with, or without further notice or demand, and without limiting Lessor in the exercise
of any right or remedy which Lessor may have by reason of such Breach:

          (a) Terminate Lessee’s right toy possession of the Premises by any lawful means, in which case
this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (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 the Lessee proves could have been reasonably avoided; (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 the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment proximately caused by the
Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary renovation and alteration of
the Premises, reasonable attorneys’ fees, and that portion of any leasing commission paid by Lessor
in connection with this Lease applicable to the unexpired term of this Lease. The worth at the
time of award of the amount referred to in provision (iii) of the immediately preceding sentence
shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of
the District within which the Premises are located at the time of award plus one percent. Efforts
by Lessor to mitigate damages caused by Lessee’s Breach of this Lease shall not waive Lessor’s
right to recover damages under Paragraph 12. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding
any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover
all or any part thereof in a separate suit. If a notice and grace period required under Paragraph
13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee
under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1.
In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer
statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of
the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease
entitling Lessor to the remedies provided for in this Lease and/or by said statute.

          (b) Continue the Lease and lessee’s right to possession and recover the Rent as it becomes
due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of
maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s
interests, shall not constitute a termination of the Lessee’s right to possession.

          (c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of
the state wherein the Premises are located. The expiration or termination of this Lease and/or the
termination of Lessee’s right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by
reason of Lessee’s occupancy of the Premises.

	 	 	 	 	 
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     13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus inducement or consideration
for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to as
“Inducement Provisions,” shall be deemed conditioned upon Lessee’s full and faithful performance of
all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any
such Inducement Provision shall automatically be deemed deleted from this Lease and of no further
force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated,
given or paid by Lessor under such an inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in
writing by Lessor ht the time of such acceptance.

     13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause
Lessor 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 and accounting
charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 5 days after such amount shall be due, then, without any
requirement for notice to Lessee, Lessee shall immediately pay to Lessor a one-time late charge
equal to 10% of each such overdue amount or $100, whichever is greater. The Parties hereby agree
that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute
a waiver of Lessee’s Default or Breach with respect to such overdue amount, nor prevent the
exercise of any of the other rights and remedies granted hereunder. In the event that a late
charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent,
then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor’s
option, become due and payable quarterly in advance.

     13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor, when due as to scheduled payments (such as Base Rent or within 30 days
following the date on which it was due for non-scheduled payment, shall bear interest from the date
when due, as scheduled payments, or the 31st day after it was due as to non-scheduled payments.
The interest (“Interest”) charged shall be computed at the rate of 10% per annum but shall not
exceed the maximum rate allowed by law. Interest is payable in addition to the potential late
charge provided for in Paragraph 13.4.

     13.6 Breach by Lessor.

          (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails
within a reasonable time to perform an obligation required to be performed by Lessor. For purposes
of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by
Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such
purpose, of written notice specifying wherein such obligation of Lessor has not been performed;
provided, however, that if the nature of Lessor’s obligation is such that more than’, 30 days are
reasonably required for its performance, then Lessor shall not be in breach if performance is
commenced within such 36 day period and thereafter diligently pursued to completion.

          (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender
cures said breach within 30 days after receipt of said notice, or if having commenced said cure
they do not diligently pursue it to completion, then Lessee may elect to cure said breach at
Lessee’s expense and offset from Rent the actual and reasonable cost to perform such cure, provided
however, that

	 	 	 	 	 
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such offset shall not exceed an amount equal to the greater of one month’s Base Rent or the
Security Deposit, reserving Lessee’s right to seek reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent
domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this
Lease shall terminate as to the part taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the Building, or more than 25% of that
portion of the Premises not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee’s option, to be exercised in writing within 10 days after Lessor shall have given Lessee
written notice of such taking (or in the absence of such notice, within 10 days after the
condemning authority shall have taken possession) terminate this Lease as of the date the
condemning authority takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the portion of the
Premises remaining, except that the, Base Rent shall be reduced in proportion to the reduction in
utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be
the property of Lessor, whether such award shall be made as compensation for diminution in value of
the leasehold, the value of the part taken, or for severance damages; provided, however, that
Lessee shall be entitled to any compensation for Lessee’s relocation expenses, loss of business
goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant
to the provisions of this Paragraph. All Alterations and Utility Installations made to the
Premises by Lessee, for purposes of Condemnation only, shall be considered the property of the
Lessee and Lessee shall be entitled to any and all compensation Which is payable therefor. In the
event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any
damage to the Premises caused by such Condemnation.

15. Brokerage Fees.

     15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.9 above,
and unless Lessor and the Brokers otherwise agree in writing, Lesson agrees that: (a) If Lessee
exercises any Option, (b) if Lessee acquires any rights to the Premises or other premises owned by
Lessor and located within the same Project, If any, within which the Premises is located, (c) if
Lessee remains in possession of the Premises, with the consent of Lessor, after the expiration of
this Lease, or (d) if Base Rent is increased, whether by agreement or operation of an escalation
clause herein, then, Lessor shall pay Brokers a fee in accordance with the schedule of the Brokers
in effect at the time of the execution of this Lease.

     15.2 Assumption of Obligations. Any buyer or transferee of Lessor’s interest in this Lease
shall be deemed to have assumed Lessor’s obligation hereunder. Brokers shall be third party
beneficiaries of the provisions of Paragraphs 1.9, 15, 22 and 31. If Lessor fails to pay to
Brokers any amounts due as and for brokerage fees pertaining to this Lease when due, then such
amounts shall accrue Interest. In addition, if Lessor fails to pay arty amounts to Lessee’s Broker
when due, Lessee’s Broker may send written notice to Lessor and Lessee of such failure and if
Lessor fails to pay such amounts within 10 days after said notice, Lessee shall pay said monies to
its Broker and offset such amounts against Rent. In addition, Lessee’s Broker shall be deemed to
be a third party beneficiary of any commission agreement entered into by and/or between Lessor and
Lessor’s Broker for the limited purpose of collecting any brokerage fee owed.

     15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each
represent and warrant to the other that it has had no dealings with any person, firm, broker or
finder (other

	 	 	 	 	 
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than the Brokers, if any) in connection with this Lease, and that no one other than said named
Brokers is entitled to any commission or finder’s fee in connection herewith. Lessee and Lessor do
each hereby agree to indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed broker, finder or
other similar party by reason of any dealings or actions of the indemnifying Party, including any
costs, expenses, attorneys’ fees reasonably incurred with respect thereto.

16. Estoppel Certificates.

          (a) Each Party (as “Responding Party”) shall within 10 days after written notice from the
other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a
statement in writing in form similar to the then most current “Estoppel Certificate” form published
by the American Industrial Real Estate Association, plus such additional information, confirmation
and/or statements as may de reasonably requested by the Requesting Party.

          (b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within
such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the
Lease is in full force and effect without modification except as may be represented by the
Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and
(iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance.
Prospective purchasers and encumbrancers may rely upon the Requesting Party’s Estoppel Certificate,
and the Responding Party shall be estopped from denying the truth of the facts contained in said
Certificate.

          (c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee
and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such
financial statements as may be reasonably required by such lender or purchaser, including but not
limited to Lessee’s financial statements for the past 3 years. All such financial statements shall
be received by Lessor and such lender or purchaser In confidence and shall be used only for the
purposes herein set forth.

17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s
interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the
Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such transfer
or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all’ liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined.

18. Severability. The invalidity of any provision of this Lease, as determined by a court of
competent jurisdiction, shall in no way affect the validity of any other provision hereof.

19. Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this
Lease shall mean and refer to calendar days.

20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute
personal obligations of Lessor or its partners, members, directors, officers or shareholders, and
Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to

	 	 	 	 	 
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this Lease, and shall not seek recourse against Lessor’s partners, members, directors, officers or
shareholders, or any of their personal assets for such satisfaction.

21. Time of Essence. Time is of the essence with respect to the performance of all obligations to
be performed or observed by the Parties under this Lease.

22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between
the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous
agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to
the Brokers that it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease and as to the use,
nature, quality and character of the Premises. Brokers have no responsibility with respect thereto
or with respect to any default or breach hereof by either Party. The liability (including court
costs and attorneys’ fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or modification hereto
shall be limited to an amount up to the fee received by such Broker pursuant to this Lease;
provided, however, that the; foregoing limitation on each Broker’s liability shall not be
applicable to any gross negligence or willful misconduct of such Broker.

23. Notices.

     23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law
shall be in writing and may be delivered in person (by hand or by courier) or may be sent by
regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or
by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified
in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be
that Party’s address for delivery or mailing of notices. Either Party may by written notice to the
other specify a different address for notice, except that upon Lessee’s taking possession of the
Premises, the Premises shall constitute Lessee’s address for notice. A copy of all notices to
Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may
from time to time hereafter designate in writing.

     23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt card, or if no
delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed
given 48 hours after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered
upon telephone confirmation of receipt (confirmation report from fax machine insufficient),
provided a copy is also delivered via delivery or mail. If notice is received on a Saturday,
Sunday or legal holiday, it shall be deemed received on the next business day.

24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition
hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of
any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition
hereof. Lessors consent to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or
Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages
due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection
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conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by
Lessor at or before the time of deposit of such payment.

25. Disclosures Regarding The Nature of a Real Estate Agency Relationship.

          (a) When entering into a discussion with a real estate agent regarding a real estate
transaction, a Lessor or Lessee should from the outset understand what type of agency relationship
or representation it has with the agent or agents in the transaction. Lessor and Lessee
acknowledge being advised by the Brokers in this transaction, as follows:

               (i) Lessor’s Agent. A Lessor’s agent under a listing agreement with the Lessor acts
as the agent for the Lessor only. A Lessor’s agent or subagent has the following affirmative
obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and
loyalty in dealings with the Lessor. To the Lessee and the Lessor: a. Diligent exercise
of reasonable skills and care in performance of the agent’s duties. b. A duty of honest and fair
dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting
the value or desirability of the property that are not known to, or within the diligent attention
and observation of, the Parties. An agent is not obligated to reveal to either Party any
confidential information obtained from the other Party which does not involve the affirmative
duties set forth above.

               (ii) Lessee’s Agent. An agent can agree to act as agent for the Lessee only. In
these situations, the agent is not the Lessor’s agent, even if by agreement the agent may receive
compensation for services rendered, either in full or in part from the Lessor. An agent acting
only for a Lessee has the following affirmative obligations. To the Lessee: A fiduciary
duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the
Lessee and the Lessor: a. Diligent exercise of reasonable skills and care in performance of
the agent’s duties, b. A duty of honest and fair dealing and good faith. c. A duty to disclose all
facts known to the agent materially affecting the value or desirability of the property that are
not known to, or within the diligent attention and observation of, the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from the other Party
which does not involve the affirmative duties set forth above.

               (iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting
directly or through one or more associate licenses, can legally be the agent of both the Lessor and
the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the
Lessee. In a dual agency situation, the agent has the following affirmative obligations to both
the Lessor and the Lessee: a. A fiduciary duty of utmost tare, integrity, honesty and loyalty in
the dealings with either Lessor or the Lessee. b. Other duties to the Lessor and the Lessee as
stated above in subparagraphs (i) or (ii). In representing both Lessor and Lessee, the agent may
not without the express permission of the respective Party, disclose to the other Party that the
Lessor will accept rent in an amount less than that indicated in the listing or that the Lessee is
willing to pay a higher rent than that offered. The above duties of the agent in a real estate
transaction do not relieve a Lessor or Lessee from the responsibility to protect their own
interests. Lessor and Lessee should carefully read all agreements to assure that they adequately
express their understanding of the transaction. A real estate agent is a person qualified to
advise about real estate. If legal or tax advice is desired, consult a competent professional.

          (b) Brokers have no responsibility with respect to any default or breach hereof by either
Party. The liability (including court costs and attorneys’ fees), of any Broker With respect to
any breach of duty, error or omission relating to this Lease shall not exceed the fee received by
such Broker

	 	 	 	 	 
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pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s
liability shall not be applicable to any gross negligence or willful misconduct of such Broker.

          (c) Lessor and Lessee agree to identify to Brokers as “Confidential” any communication or
information given Brokers that is considered by such Party to be confidential.

26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part
thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over,
then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the
expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any
holding over by Lessee.

27. Cumulative Remedies. No remedy, or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other remedies at law or in equity.

28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be
observed or performed by Lessee are both covenants and conditions. In construing this Lease, all
headings and titles are for the convenience of the Parties only and shall not be considered a part
of this Lease. Whenever required by the context, the singular shall include the plural and vice
versa. This Lease shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepared it.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal
representatives, successors and assigns and be governed by the laws of the State in which the
Premises are located. Any litigation between the Parties hereto concerning this Lease shall be
initiated in the county in which the Premises are located.

30. Subordination; Attornment; Non-disturbance.

     30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate
to any ground lease, mortgage, deed of trust, or other hypothecation or security device
(collectively, “Security Device”), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals, modifications, and extensions thereof.
Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as
“Lender”) shall have no liability or obligation to perform any of the obligations of Lessor under
this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to
the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates
of the documentation or recordation thereof.

     30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises
are acquired by another upon the foreclosure or termination of a Security Device to which this
Lease is subordinated (i) Lessee shall, subject to the non-disturbance provisions of Paragraph
30.3, attorn to such new owner, and upon request, enter into a new lease, containing all of the
terms and provisions of this Lease, with such new owner for the remainder of the term hereof, or,
at the election of such new owner, this Lease shall automatically become a new Lease between Lessee
and such new owner, upon all of the terms and conditions hereof, for the remainder of the term
hereof, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such
new owner shall assume all of Lessor’s obligations hereunder, except that such new owner shall not:
(a) be liable for any act or omission of any prior lessor or with respect to events occurring prior
to acquisition of ownership; (b) be subject to any offsets or

	 	 	 	 	 
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defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more
than one month’s rent, or (d) be liable for the return of any security deposit paid to any prior
lessor.

     30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”) from the Lender
which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long as Lessee is not in
Breach hereof and attorns to the record owner of the Premises. Further, within 60 days after the
execution of this Lease, Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by
the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within
said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and attempt to negotiate
for` the execution and delivery of a Non-Disturbance Agreement.

     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without
the execution of any further documents; provided, however, that, upon written request from Lessor
or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor
shall execute such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises
whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party
(as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate
suit, whether or not such action or proceeding is pursued to decision or judgment. The term,
“Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or
the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award
shall not be computed in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to
attorneys’ fees, costs and expanses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is subsequently commenced
in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence
for such services and consultation).

32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to
enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times
after reasonable prior notice for the purpose of showing the same to prospective purchasers,
lenders, or tenants, and making such alterations, repairs, improvements or additions to the
Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of
utilities, services, pipes and conduits through the Premises and/or other premises as long as there
is no material adverse effect to Lessee’s use of the Premises. All such activities shall be
without abatement of rent or liability to Lessee.

33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises
without Lessor’s prior written consent. Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to permit an auction.

34. Signs. Lessor may place on the Premises ordinary “For Sale” signs at anytime and ordinary “For
Lease” signs during the last 6 months of the term hereof. Except for ordinary “for sublease”
signs, Lessee

	 	 	 	 	 
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shall not place any sign upon the Premises without Lessor’s prior written consent. All signs must
comply with all Applicable Requirements.

35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary
or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a
termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or
lesser estate’ in the Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor’s failure within 10 days following any such event to elect to the
contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s
election to have such event constitute the termination of such interest.

36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party
is required to an act by or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor’s actual reasonable costs and expenses (including but not limited to architects’,
attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response
to, a request by Lessee for any Lessor consent, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee
upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act,
assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee
of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or
Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such
consent. The failure to specify herein any particular condition to Lessor’s consent shall not
preclude the imposition by Lessor at the time of consent of such further or other conditions as are
then reasonable with reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other hereunder and reasonably
requests the reasons for such determination, the determining party shall furnish its reasons in
writing and in reasonable detail within 10 business days following such request.

37. Guarantor.

     37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most
recently published by the American Industrial Real Estate Association, and each such Guarantor
shall have the same obligations as Lessee under this Lease.

     37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses,
upon request to provide: (a) evidence of the execution of the guaranty, including the authority of
the party signing on Guarantor’s behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors authorizing the making of
such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written
confirmation that the guaranty is still in effect.

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on Lessee’s part to be observed and performed under this
Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term
hereof.

39. Options. If Lessee is granted an Option, as defined below, then the following provisions shall
apply:

     39.1 Definition. “Option” shall mean: (a) the right to extend the term of or renew this Lease
or to extend or renew any lease that Lessee has on other property of Lessor; (b) the right of first
refusal or

	 	 	 	 	 
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first offer to lease either the Premises or other property of Lessor; (c) the right to
purchase or the right of first refusal to purchase the Premises or other property of Lessor.

     39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is
personal to the original Lessee, and cannot be assigned or exercised by anyone other than said
original Lessee and only while the original Lessee is in full possession of the Premises and, if
requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.

     39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew
this Lease, a later Option cannot be exercised unless the prior Options have been validly
exercised.

     39.4 Effect of Default on Options.

          (a) Lessee shall have no right to exercise an Option: (i) during the period commencing with
the giving of any notice of Default and continuing until said Default is cured, (ii) during the
period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given
3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month
period immediately preceding the exercise of the Option.

          (b) The period of time within; which an Option may be exercised shall not be extended or
enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of
Paragraph 39.4(a).

          (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the Option, if, after such exercise and prior to; the commencement of
the extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30
days after such !Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii)
if Lessee commits a Breach of this Lease.

40. Multiple Buildings. If the Premises are a part of a group of buildings controlled by Lessor,
Lessee agrees that it will abide by and conform to all reasonable rules and regulations which
Lessor may make from time to time for the management, safety, and care of said properties,
including the care and cleanliness of the grounds and including the parking, loading and unloading
of vehicles, and to cause its employees, suppliers, shippers, customers, contractors and invitees
to so abide and conform. Lessee also agrees to pay its fair share of common expenses incurred in
connection with such rules and regulations.

41. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does
not include the cost of guard service or other security measures, and that Lessor shall have no
obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of third parties.

42. Reservations. Lessor reserves 4 itself the right, from time to time, to grant, without the
consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary,
and to cause the recordation of parcel maps and restrictions, so long as such easements, rights,
dedications, (naps and restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such
easement rights, dedication, map or restrictions.

	 	 	 	 	 
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43. Performance Under Protest. If at, any time a dispute shall arise as to any amount or sum of
money to be paid by one Party to the other under the provisions hereof, the Party against whom the
obligation to pay the money is asserted shall have the right to make payment “under protest” and
such payment shall not be regarded as a voluntary payment and there shall survive the right on the
part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there
was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party
shall be entitled to recover such sum or so much thereof as It was not legally required to pay.

44. Authority; Multiple Parties; Execution.

          (a) If either Party hereto is la corporation, trust, limited liability company, partnership,
or similar entity, each individual executing this Lease on behalf of such entity represents and
warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each
party shall, within 30 days after request, deliver to the other party satisfactory evidence of such
authority.

          (b) If this Lease is executed by more than one person or entity as “Lessee”, each such person
or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named
Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary
thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named
Lessees had executed such document.

          (c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed
an original and all of which together shall constitute one and the same instrument.

45. Conflict. Any conflict between the printed provisions of this Lease and typewritten or
handwritten provisions shall be controlled by the typewritten or handwritten provisions.

46. Offer. Preparation of this Lease by either Party or their agent and submission of same to the
other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended
to be binding until executed and delivered by all Parties hereto.

47. Amendments. This Lease may be modified only in writing, signed by the Parties In interest at
the time of the modification. As long as they do not materially change Lessee’s obligations
hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be
reasonably required by a Lender in connection with the obtaining of normal financing or refinancing
of the Premises.

48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.

49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or the
Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease  ̈ is
 ̈ is not attached to this Lease.

50. Americans with Disabilities Act. Since compliance with the Americans with Disabilities Act
(ADA) is dependent upon Lessee’s specific use of the Premises, Lessor makes no warranty or
representation as to whether or not the Premises comply with ADA or any similar legislation. In
the event that Lessee’s use of the Premises requires modifications or additions to the Premises in
order to be

	 	 	 	 	 
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in ADA compliance, Lessee agrees to make any such necessary modifications and/or additions at
Lessee’s expense.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED
HEREIN, AND BY THE 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 LESSOR AND LESSEE WITH RESPECT TO
THE PREMISES.

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS,
COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE
PREMISES FOR LESSEE’S INTENDED USE.

WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES ARE LOCATED.

					
	 	 	 	 	 
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The parties hereto have executed this Lease at the place and on the dates specified above their
respective signatures.

	 	 	 
	Executed at: Santa Fe Springs, California

	 	Executed at: Santa Fe Springs, California
	 
	 	 
	on: 8/30/04

	 	on: August 30, 2004
	 
	 	 
	By LESSOR:

	 	By LESSEE:
	 
	 	 
	RICHARD E. BATTENSCHLAG

	 	SILVERGRAPH LGT a DELAWARE
	and BOB B. KAY

	 	CORPORATION LLC

	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Richard E. Battenschlag
 

	 	 	 	By:
	 	/s/ William W. Lee
 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name Printed: Richard E. Battenschlag	 	 	 	Name Printed: William W. Lee	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:	 	Owner	 	 	 	Title: Principal	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Bob B. Kay
	 	 	 	By:
	 	/s/ James R. Simpson	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name Printed: Bob B. Kay	 	 	 	Name Printed: James R. Simpson	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title: Owner	 	 	 	Title: Principal	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Address:

	 	 24666 Dana Point Drive
	 	 	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 

	 	Dana Point, California 92629	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Telephone: (949) 493-8549 (REB)	 	 	 	Telephone: ( )                                                            	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Facsimile: (714) 525-8578 (BBK)	 	 	 	Facsimile: ( )                                                            	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Federal ID No. 95-6168294	 	 	 	Federal ID No.                                                             	 	 

					
	 	 	 	 	 
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GUARANTY OF LEASE

     WHEREAS, Richard E. Battenschlag and Bob B. Kay , hereinafter “Lessor”, and
Silvergraph LGT , hereinafter “Lessee”, are about to execute a document entitled “Lease”
dated August 28, 2004 , concerning the premises commonly known as 11925-11927 Burke
Street, Wherein Lessor will lease the premises to Lessee, and

     WHEREAS, James R. Martin, James R. Simpson and William W. Lee
hereinafter “Guarantors” have a financial interest in Lessee, and

     WHEREAS, Lessor would not execute the Lease if Guarantors did not execute and deliver to
Lessor this Guarantee of Lease.

     NOW THEREFORE, in consideration of the execution of the foregoing Lease by Lessor and as a
material inducement to Lessor to execute said Lease, Guarantors hereby jointly, severally,
unconditionally and irrevocably guarantee the prompt payment by Lessee of all rents and all other
sums payable by Lessee under said Lease and the faithful and prompt performance by Lessee of each
and every one of the terms, conditions and covenants of said Lease to be kept and performed by
Lessee.

     It is specifically agreed that the terms of the foregoing Lease may be modified by agreement
between Lessor and Lessee, or by a course of conduct, and said Lease may be assigned by Lessor or
any assignee of Lessor without consent or notice to Guarantors and that this Guaranty shall
guarantee the performance of said Lease as so modified.

     This Guaranty shall not be released, modified or affected by the failure or delay on the part
of Lessor to enforce any of the rights or remedies of the Lessor under said Lease, whether pursuant
to the terms thereof or at law or in equity.

     No notice of default need be given to Guarantors, it being specifically agreed that the
guarantee of the undersigned is a continuing guarantee under which Lessor may proceed immediately
against Lessee and/or against Guarantors following any breach or default by Lessee or for the
enforcement of any rights which Lessor may have as against Lessee under the terms of the Lease or
at law or in equity.

     Lessor shall have the right to proceed against Guarantors hereunder following any breach or
default by Lessee without first proceeding against Lessee and without previous notice to or demand
upon either Lessee or Guarantors.

     Guarantors hereby waive (a) notice of acceptance of this Guaranty, (b) demand of payment,
presentation and protest, (c) all right to assert or plead any statute of limitations relating to
this Guaranty or the Lease, (d) any right to require the Lessor to proceed against the Lessee or
any other Guarantor or any other person or entity liable to Lessor, (e) any right to require Lessor
to apply to any default, any security deposit or other security it may hold under the Lease, (f)
any right to require Lessor to proceed under any other remedy Lessor may have before proceeding
against Guarantors, (g) any right of subrogation.

     Guarantors do hereby subrogate all existing or future indebtedness of Lessee to Guarantors to
the obligations owed to Lessor under the Lease and this Guaranty.

     If a Guarantor is married, such Guarantor expressly agrees that recourse may be had against
his or her separate property for all of the obligations hereunder.

 

 

     The obligations of Lessee under the Lease to execute and deliver estoppel statements and
financial statements, as therein provided, shall be deemed to also require the Guarantors hereunder
to do and provide the same.

     The term “Lessor” refers to and means the Lessor named in the Lease and also Lessor’s
successors and assigns. So long as Lessor’s interest in the Lease, the leased premises or the
rents, issues and profits therefrom, are subject to any mortgage or deed of trust or assignment for
security, no acquisition by Guarantors of the Lessor’s interest shall affect the continuing
obligation of Guarantors under this Guaranty which shall nevertheless continue in full force and
effect for the benefit of the mortgagee, beneficiary, trustee or assignee under such mortgage, deed
of trust or assignment and their successors and assigns.

     The term “Lessee” refers to and means the Lessee named in the Lease and also Lessee’s
successors and assigns.

     In the event any action be brought by said Lessor against Guarantors hereunder to enforce the
obligation of Guarantors hereunder, the unsuccessful party in such action shall pay to the
prevailing party therein a reasonable attorney’s fee which shall be fixed by the court.

If this Form has been filled in, it has been prepared for submission to your attorney for
his approval. No representation or recommendation is made by the American Industrial Real
Estate Association, the real estate broker or its agents or employees as to the legal
sufficiency, legal effect, or tax consequences of this Form or the transaction relating
thereto.

	 	 	 	 	 	 	 	 	 
	Executed
at Santa Fe Springs, California

	 	 	 	/s/ William W. Lee
 

	 	 
	 
	 	 	 	 	 	 	 	 
	on
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	/s/ James R. Simpson	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Address:
 11925-11927 Burke Street

	 	 	 	/s/ James R. Martin	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Santa Fe Springs, California
	 	 	 	               “GUARANTORS”	 	 

     For this form, write: American Industrial Real Estate Association, 700 S. Flower Street,
Suite 600, Los Angeles, Calif. 90017exv10w4

 

EXHIBIT
10.4

EQUIPMENT LEASE

This form is subject to Federal and State legal requirements.

1. Equipment Leased.

Lessor hereby leases to Lessee, and Lessee hereby hires and takes from Lessor the
following-described personal property (hereinafter, with all attachments, replacement parts,
substitutions, additions, repairs and accessories incorporated therein and/or affixed thereto, and
proceeds, referred to as “Equipment”): Describe Equipment fully, including make, kind of unit,
model and serial numbers, and any other pertinent information.

One (1) 2002 Multi Graphic Screen Printing Press Model 1014, S/N: 0319

And all additions, substitutions, attachments, replacements and accessions thereof,
plus the proceeds of all the foregoing.

and Lessor agrees within ___days from the date hereof to cause said Equipment to be delivered to
Lessee, f.o.b.

 

2. Term.

This Lease
is for a term of 60 months, beginning on
                    , and ending on
                    .

3. Rentals.

For said term or any portion thereof, Lessee shall pay to Lessor rentals aggregating
$433,500.00, of which $0.00 is herewith paid in advance and the balance of the rental,
$433,500.00 is payable in 60 equal, successive, monthly rental payments of $ 7,
225.00 each, of which the first is due  4/10/03  and the others on a like date of each
month thereafter, until fully paid.

Special Provisions

If this Lease is prepaid prior to the date provided for repayment, the Lessee agrees to pay the
following fees: During the first lease year — NO PREPAYMENT
ALLOWED; during the second lease year —
5% of the then unpaid balance; during the third lease year — 4% of the then unpaid balance; during
the fourth lease year — 3% of the then unpaid balance; during
the fifth lease year — 2% of the then
unpaid balance.

See Addendum “A” consisting of one (1) page attached hereto and made a part hereof.

Other Than Successive Monthly Payments

WL                    Page 1 of 9

 

 

4. Purchase Option

At the expiration of the original term hereof, if Lessee has paid in full all rentals owing under
this Lease, and be not then in default hereunder, Lessee shall have the option to purchase all but
not less than all the items of Equipment hereunder upon giving written notice to Lessor not less
than 30 days prior to the expiration of the original term hereof.

The purchase price shall be $35,000.00.

5. Use, Nature and Location of Equipment.

Lessee warrants and agrees that the Equipment is to be used primarily for:

£ business or commercial purposes (other than agricultural).

£ agricultural purposes (see definition on the final page), or

£ both agricultural and business or commercial purposes.

Lessee and Lessor agree that regardless of the manner of affixation, the Equipment shall remain
personal property and not become part of the re: i estate. Lessee agrees to keep the Equipment at

	 	 	 	 	 	 	 	 	 	 	 
	11919 Burke Street	 	Santa Fe Springs	 	L.A.	 	CA	 	90670	 	 
	 
	Address

	 	City
	 	County
	 	State
	 	Zip Code	 	 

but upon prior written notice to Lessor may change the location of the Equipment within such
State. Lessee will not remove the Equipment from such State without the prior written consent of
Lessor (except that in the State of Pennsylvania, the Equipment will not be removed from the above
location without such prior written consent).

6. Repairs.

Lessor shall not be obligated to install, erect, test, adjust, service or make any repairs or
replacements; Lessee shall not incur for Lessors account or liability any expense therefor without
Lessor’s prior written consent. Lessee shall inspect the Equipment within 48 hours after its
receipt; unless within said time Lessee notifies Lessor, stating the details of any defects, Lessee
shall be conclusively presumed to have accepted the Equipment in its then condition. Thereafter,
Lessee shall effect and bear the expense of all necessary repairs, maintenance, operation and
replacements required to be made to maintain the Equipment in good condition, normal wear and tear
excepted.

7. Operators.

Lessee shall cause the Equipment to be operated by competent employees only, and shall pay all
expenses of operation.

8. Liability.

Lessee shall indemnify and save Lessor harmless from any and all injury to or loss of the Equipment
from whatever cause, and from liability arising out of the use, maintenance and/or delivery thereof
but shall be credited with any amounts received by Lessor from insurance procured by Lessee. Damage
for any loss or

WL                    Page 2 of 9

 

 

injury shall be based on the then true and reasonable market value of the Equipment irrespective of
rentals theretofore paid or accrued.

9. Insurance.

All risk of loss, damage to or destruction of the collateral shall at all times be on Lessee.
Lessee will procure forthwith and maintain at Lessee’s expense insurance against all risks of loss
or physical damage to the collateral for the full insurable value thereof for the life of this
Lease plus breach of warranty insurance and such other) insurance thereon in amounts and against
such risks as Lessor may specify, and shall promptly deliver each policy to Lessor with a standard
long-form mortgagee endorsement attached thereto showing loss payable to Lessor; and providing
Lessor with not less than 30 days written notice of cancellation; each such policy shall be in
form, terms and amount and with insurance carriers satisfactory to Lessor; Lessor’s acceptance of
policies in lesser amounts or risks shall not be a waiver of Lessee’s foregoing obligation. As to
Lessor’s interest in such policy, no act or omission of Lessee or any of its officers, agents,
employees or representatives shall affect the obligations of the insurer to pay It a full amount of
any loss.

Lessee hereby assigns to Lessor any monies which may become payable under any such policy of
insurance and irrevocably constitutes and appoints Lessor as Lessee’s attorney in fact (a) to hold
each original insurance policy, (b) to make, settle and adjust claims under each policy of
insurance, (c) to make claims for any monies which may become payable under such and other
insurance on the collateral including returned or unearned premiums, and (d) to endorse Lessee’s
name on any check, draft or other instrument received in payment of claims or returned or unearned
premiums under each policy and to apply the funds to the payment of the indebtedness owing to
Lessor; provided, however, Lessor is under no obligation to do any of the foregoing.

Should Lessee fail to furnish such insurance policy to Lessor, or to maintain such policy in full
force, or to pay any premium in hole or in part relating thereto, then Lessor, without waiving or
releasing any default or obligation by Lessee may (but shall he under no obligation to) obtain and
maintain insurance and pay the premium therefor on behalf of Lessee and charge the premium to
Lessee’s indebtedness under this Lease. The full amount of any such premium paid by Lessor shall be
payable by Lessee upon demand, and failure to pay same shall constitute an event of default under
this Lease.

10. Taxes.

Lessee shall comply with and conform to all laws, ordinances and regulations relating to the
ownership, possession, use or maintenance of the Equipment, and save Lessor harmless against actual
or asserted violations, and pay all costs and expenses of every character occasioned by or arising
out of such use. Lessee agrees that, during the term of this Lease, in addition to the rent and all
other amounts provided herein to be paid, it will promptly pay all taxes, assessments and other
governmental charges (including penalties and interest, if any, and fees for titling or
registration, if required) levied or assessed:

	 	(a)	 	upon the interest of the Lessee in the Equipment or upon the use or operation
thereof or on the earnings arising therefrom; and
	 
	 	(b)	 	against Lessor on account of its acquisition or ownership of the Equipment or
any part thereof; or the use or operation thereof or the leasing thereof to the Lessee,
or the rent herein provided for, or the earnings arising therefrom, exclusive, however,
of any taxes based on net income of Lessor.

WL                    Page 3 of 9

 

 

Lessee agrees to file, in behalf of Lessor, all required tax returns and reports concerning the
Equipment with all appropriate governmental agencies, and within not more than 45 days after the
due date of such filing, to send Lessor confirmation, in form satisfactory to Lessor, of such
filing.

11. Title.

All said Equipment shall remain personal property, and except as provided in the next sentence,
title thereto shall remain in Lessor exclusively. With respect to any software financed hereunder
as to which Lessor is not the licensee or licensor, Lessee hereby grants Lessor a security interest
in such software to secure the payment and performance of Lessee’s obligations under this Lease.
Lessee shall keep the Equipment free from any and all liens and claims, and shall do or permit no
act or thing whereby Lessor’s title or rights may be encumbered or impaired. Upon expiration or
termination hereof by other than default, the Equipment shall be returned unencumbered to Lessor by
Lessee at the place where the rent is payable or to such other place as Lessor and Lessee agree
upon, at Lessee’s sole expense and in the same condition as when received by Lessee, normal wear
and tear resulting from proper use thereof alone excepted. Lessee shall pay rent at the said rate
until all said Equipment arrives at Lessor’s premises, or other place designated by Lessor.

12. Inspection.

Lessee shall, whenever requested, advise Lessor of the exact location and condition of the
Equipment and shall give Lessor immediate notice of any attachment or other judicial process
affecting me Equipment, and indemnify and save Lessor harmless from any loss or damage caused
thereby. Lessor may, for the purpose of inspection, at all reasonable times enter upon any job,
building or place where the Equipment is located; and may remove the Equipment forthwith, without
notice to lessee, if the Equipment is in the opinion of Lessor, being used beyond its capacity or
in any manner improperly cared for or abused.

13. Non-Waiver.

Time is of the essence. Lessor’s failure at any time to require strict performance by Lessee of
any of the provisions hereof shall not waive or diminish Lessor’s right thereafter to demand strict
compliance therewith or with any other provision. Waiver of any default shall not waive any other
default. No remedy of Lessor hereunder shall be exclusive of any other remedy herein or by law
provided, but each shall be cumulative and in addition to every other remedy.

14. No Warranty.

Lessor, not being the manufacturer of the Equipment, nor manufacturer’s agent, makes no warranty or
representation, either express or implied, as to the fitness, quality, design, condition, capacity,
suitability, merchantability or performance of the Equipment or of the material or workmanship
thereof, it being agreed that the Equipment is leased “as is” and that all such risks, as between
the Lessor and the Lessee, are to be borne by the Lessee at its sole risk and expense. Lessee
accordingly agrees not to assert any claim whatsoever against the Lessor based thereon. Lessee
further agrees, regardless of cause, not to assert any claim whatsoever against the Lessor for loss
of anticipatory profits or consequential damages. No oral agreement, guaranty, promise, condition,
representation or warranty shall be binding; all prior conversations, agreements or representations
related hereto and/or to said Equipment are integrated herein.

WL                    Page 4 of 9

 

 

15. Possession.

Lessor covenants to and with Lessee that Lessor is the lawful owner of said Equipment free from all
encumbrances and that, conditioned upon Lessee’s performing the conditions hereof, Lessee shall
peaceably and quietly hold, possess and use the Equipment during said term without let or
hindrance.

16. Performance of Obligations of Lessee by Lessor.

In the event that the Lessee shall fail duly and promptly to perform any of its obligations under
the provisions of this Lease, the Lessor may, at its option, perform the same for the account of
Lessee without thereby waiving such default, and any amount paid or expense (including reasonable
attorneys’ fees), penalty or other liability incurred by the Lessor in such performance, together
with interest at the rate of 1 1/2% per month thereon until paid by the Lessee to the Lessor, shall
be payable by the Lessee upon demand as additional rent for the Equipment.

17. Further Assurances.

Lessee shall execute and deliver to Lessor, upon Lessor’s request such instruments and assurances
as Lesser deems necessary or advisable for the confirmation or perfection of this Lease and
Lessor’s rights hereunder. If any of the Equipment consists of software, Lessee agrees, at Lessor’s
request, to inform Lessor of the name of the licensor of such software and to provide Lessor with a
copy of the license agreement.

18. Default.

An Event of Default shall occur if:

	 	(a)	 	Lessee fails to pay when due any installment of rent and such failure continues
for a period of 10 days;
	 
	 	(b)	 	Lessee shall fail to perform or observe any covenant, condition or agreement to
be performed or observed by it hereunder and such failure continues uncured for 15 days
after written notice thereof to Lessee by Lessor;
	 
	 	(c)	 	Lessee dies, ceases doing business as a going concern, makes an assignment for
the benefit of creditors, admits in writing its inability to pay its debts as they
become due, files a voluntary petition in bankruptcy, is adjudicated a bankrupt or an
insolvent, files a petition seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar arrangement under any
present or future statute, law or regulation, or files an answer admitting the material
allegations of a petition filed against it in any such proceeding, consents to or
acquiesces in the appointment of a trustee, receiver, or liquidator of it or of alt or
any substantial part of its assets or properties, or if it or its shareholders shall
take any action looking to its dissolution or liquidation;
	 
	 	(d)	 	within 60 days after the commencement of any proceedings against Lessee seeking
reorganization, arrangement. readjustment, liquidation, dissolution or similar relief
under any present or future statute, law or regulation, such proceedings ,shall not
have been dismissed, or if within 60 days after the appointment without Lessee’s
consent or acquiescence of any trustee, receiver of liquidator of it or of all or any
substantial part of its assets and properties, such appointment shall not be vacated;

WL                    Page 5 of 9

 

 

	 	(e)	 	Lessee attempts to remove, sell, transfer, encumber, part with possession or
sublet the Equipment or any item thereof or
	 
	 	(f)	 	a third party takes any action to foreclose on, obtain possession or control
of, collect, sell or otherwise dispose of or exercise any rights with respect to any of
the Equipment without the express written consent of Lessor. Upon the occurrence of an
Event of Default, Lessor, at its option, may:

	 	(i)	 	declare all sums due and to become due hereunder immediately
due and payable;
	 
	 	(ii)	 	proceed by appropriate court action or actions or other
proceedings either at law or equity to enforce performance by the Lessee of any
and all covenants of this Lease and to recover damages for the breach thereof;
	 
	 	(iii)	 	demand that Lessee deliver the Equipment forthwith to Lessor
at Lessee’s expense at such place as Lessor may designate; and
	 
	 	(iv)	 	Lessor and/or its agents may, without notice or liability or
legal process, enter into any premises of or under control or jurisdiction of
Lessee or any agent of Lessee where the Equipment may be or by Lessor is
believed to be, and repossess all or any item thereof, disconnecting and
separating all thereof from any other property and using all force necessary or
permitted by applicable law so to do, Lessee hereby expressly waiving all
further rights to possession of the Equipment.

and all claims for injures suffered through or loss caused by such repossession; Lessor may sell or
lease the Equipment at a time and location of its choosing provided that the Lessor acts in good
faith and in a commercially reasonable manner, but the Lessor shall, nevertheless, be entitled to
recover immediately as liquidated damages for toss of the bargain and not as a penalty any unpaid
rent that accrued on or before the occurrence of the event of default plus an amount equal to the
difference between the aggregate rent reserved hereunder for the unexpired term of this Lease and
the then aggregate rental value of all Equipment for such unexpired term, provided, however, that
if any statute governing the proceeding in which such damages are to be proved specifies the amount
of such claim, Lessor shall be entitled to prove as and for damages for the breach an amount equal
to that allowed under such statute. The provisions of this Paragraph shall be without prejudice to
any rights given to the Lessor by such statute to prove for any amounts allowed thereby. Should any
proceedings be instituted by or against Lessor for monies due to Lessor hereunder and/or for
possession of any or all of the Equipment or for any other relief, Lessee shall pay a reasonable
sum as attorneys’ fees. No remedy referred to herein is intended to be exclusive of any other
remedy stated herein or of any other remedy otherwise available to Lessor at law or in equity.

19. Assignments.

Without the prior written consent of Lessor, Lessee shall not assign this Lease or its interests
hereunder or enter into any sub-lease with respect to the Equipment covered hereby, it being agreed
Lessor will not unreasonably withhold its consent to a sub-lease of the Equipment. The conditions
hereof shall bind any permitted successors and assigns of Lessee. Lessor may assign the rents
reserved herein or all or any of Lessor’s other rights hereunder. After such assignment, Lessor
shall not be assignee’s agent for any purpose; Lessee will settle all claims arising out of alleged
breach of warranties or otherwise, defenses, set-offs and counterclaims it may have against Lessor
directly with Lessor, and not set up any such against Lessor’s assignee, Lessor hereby agreeing to
remain responsible therefor. Lessee on receiving notice of any such assignment shall abide thereby
and make payment as may therein

WL                    Page 6 of 9

 

 

be directed. Following such assignment, solely for the purpose of determining assignee’s rights
hereunder, the term “Lessor” shall be deemed to include or refer to Lessor’s assignee.

20. Miscellaneous.

Lessee will not change or remove any insignia or lettering on the Equipment and shall conspicuously
identify each item of the Equipment by suitable lettering thereon to indicate Lessor’s ownership.
All transportation charges shall be borne by Lessee. All notices relating hereto shall be sent
certified mail, return receipt requested to Lessor or Lessee at its respective address shown herein
or at any later address last known to the sender. If any part hereof is contrary to, prohibited by
or deemed invalid under applicable laws or regulations of any jurisdiction, such provision shall be
inapplicable and deemed omitted but shall not invalidate the remaining provisions hereof. Lessee
waives all rights under all exemption laws. Lessee acknowledges the receipt of a true copy of this
Lease. This Lease is irrevocable for the full term hereof and for the aggregate rental herein
reserved, and the rent shall not abate by reason of termination of Lessee’s right of possession
and/or the taking of possession by Lessor or for any other reason. Any payment not made when due
shall, at the option of Lessor, bear late charges thereon calculated at the rate of 1-1/2% per
month, but in no event greater than the highest rate permitted by relevant law. In the event this
Lease is deemed to create a security interest, Lessee grants Lessor a security interest in the
Equipment as security for all of Lessee’s indebtedness and obligations owing under this Lease as
well as alt other present and future indebtedness and obligations of Lessee to Lessor of every kind
and nature whatsoever. Lessee shall be responsible for and pay to Lessor a returned check fee, not
to exceed the maximum permitted by law, which fee will be equal to the sum of (i) the actual bank
charges incurred by Lessor plus (ii) all other actual costs and expenses incurred by Lessor. The
returned check fee is payable upon demand as additional rent under this Equipment Lease. Lessee
authorizes Lessor to file a financing statement with respect to the Equipment and ratifies the
filing by Lessor of any such financing statement previously filed.

If Lessee is an organization, Lessee (a) is the type of organization, (b) is organized under the
laws of the jurisdiction, (c) has its chief executive office, and (d) if it is a “registered
organization” as defined in Article 9 of the Uniform Commercial Code (i.e., organized solely under
the laws of a single State and as to which the State must maintain a public record showing the
organization to have been organized), has the organizational identification number (or, if none,
has been assigned no such number by the State of organization), all as set forth under Lessee’s
name (which is its exact and complete legal name) at the signature line of this Lease. If Lessee is
an individual, Lessee’s exact and complete legal name and principal residence are as set forth at
and under Lessee’s name at the signature line of this Lease. Lessee agrees to notify Lessor
immediately in the event of a change in any of the foregoing facts and information.

WL                    Page 7 of 9

 

 

This Lease contains the entire agreement between the parties with respect to the Equipment, and may
not be altered, modified, terminated or discharged except by a writing signed by the arty against
whom such alteration, modification, termination or discharge is sought. Lessee’s initials
 WL 

If Lessee is a corporation, this Lease is executed by authority of its Board of Directors.

Dated: March 6, 2003

Lessee:

	 	 	 	 	 	 	 	 	 
	 

	 	      Lee Graphic Technologies, Inc.
	 	 	 	 	 	 
	 	 	 
	Name of individual, corporation or partnership	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	     /s/ William W. Lee
	 	Title
	 	     President	 	 
	 

	 	 
	 	 	 	 	 	 
	 	 	If corporation, have signed by President, Vice President or Treasurer, and give official title.

If owner or partner, state which

	 	 	 	 	 	 	 	 	 
	      11919 Burke Street

	 	 	 	 	 	 	 	 
	 	 	 
	Address
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	      Santa Fe Springs

	 	CA
	 	 	90670	 	 	 
	 	 	 
	City

	 	State
	 	   Zip Code
	 	 

	 	 	 	 	 	 	 	 	 	 	 
	If an organization:	 	 	 	 	 	If an individual,	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Type of organization:	 	     Corporation	 	 	 	Principal residence:	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Jurisdiction of organization	 	     California	 	 	 	—	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Organizational identification	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Number (or “None”):	 	     CA C1889656	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

	 	 	 	 	 
	Location of chief executive officer:

	 	          11919 Burke Street
	 	 
	 

	 	 	 	 
	 

	 	          Santa Fe Springs, CA 90670	 	 

WL                    Page 8 of 9

 

 

Lessor:

	 	 	 	 	 	 	 	 	 
	 
	 	Interchange Equipment, Inc.
	 	 	 	 	 	 
	 	 	 	 
	Name of individual, corporation or partnership	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	     /s/ Marc Herrmann
	 	Title
	 	     President	 	 
	 

	 	 
	 	 	 	 	 	 
	 	 	If corporation, have signed by President, Vice President or Treasurer, and give official title.

If owner or partner, state which

	 	 	 	 	 	 	 	 	 
	         90 Dayton Avenue

	 	 	 	 	 	 	 	 
	 	 	 
	Address
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	         Passaic

	 	NJ
	 	 	07055	 	 	 
	 	 	 
	City

	 	State
	 	  Zip Code
	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 
	If Lessee is a partnership enter:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Partners’ names

	 	 	 	      Home address
	 	 

 

			
	NOTICE:	 	Do not use this form for transactions for personal, family or household purposes.
For agricultural and other transactions subject to Federal or State regulations, consult legal
counsel to determine documentation requirements.

Agricultural purposes generally means farming, including dairy farming, but it also includes
the transportation, harvesting and processing of farm, dairy or forest products if what is
transported, harvested, or processed is farm, dairy or forest products grown or bred by the user of
the Equipment itself. It does not apply, for instance, to a logger who harvests someone else’s
forest, or a contractor who prepares land or harvests products on someone else’s farm.

 

WL                    Page 9 of 9

 

 

ADDENDUM “A”

Attached to and made a part of Equipment Lease dated 3/6/03, between The
CIT Group/Equipment Financing, Inc. as Lessor and Lee Graphic Technologies, Inc. as Lessee.

Notwithstanding anything to the contrary stated in Section 4 of the Equipment Lease (Lease) at the
expiration of the original term of the Lease, Lessee shall exercise its purchase option set forth
in the Lease and agrees that, in addition to other amounts due and to become due under the Lease,
to pay Lessor the purchase price of $35,000.00 provided, however, Lessee shall not be
entitled to receive title to the leased equipment until Lessee has paid in full all rentals owing
under the Lease and has fulfilled all of its other obligations thereunder.

Upon completion of the foregoing, Lessor shall transfer title to Lessee AS-IS, WHERE-IS, without
recourse, representation or warranty of any kind except that Lessor will warrant that the Equipment
is free and clear of any liens created by Lessor.

	 	 	 	 	 	 	 	 	 	 	 
	Lessor:	 	 	 	Lessee:	 	 
	Interchange Equipment, Inc.	 	 	 	Lee Graphic Technologies, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Marc Herrmann
	 	 	 	By:
	 	/s/ William W. Lee	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title: President	 	 	 	Title: President	 	 

WL                    Page 10 of 9

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