Document:

QuickLinks
 -- Click here to rapidly navigate through this document
Exhibit 10.24  

AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION 

STANDARD
INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE—NET

(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, March 31, 2001, is made by and between El Cedro
LLC, a California limited liability company ("Lessor") and Alphatec Manufacturing, Inc., a California corporation ("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, and commonly known as 6110 Corte del Cedro, located in the County of San Diego, 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) approximately a 21,592 square foot industrial building ("Premises"). (See also Paragraph 2) 

        1.3   Term: 3 years and 0 months ("Original Term") commencing June 1, 2001 ("Commencement Date") and
ending May 31, 2004 ("Expiration Date"). (See also Paragraph 3) 

        1.4   Early Possession: April 1, 2001 ("Early Possession Date"). (See also Paragraphs 3.2 and 3.3) 

        1.5   Base Rent: $14, 035.00 per month ("Base Rent"), payable on the 1st day of each month commencing
June 1, 2001. (See also Paragraph 4) 

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

        1.6   Base Rent Paid Upon Execution: $14, 035.00 as Base Rent for the period June 2001. 

        1.7   Security Deposit: $14, 035.00 ("Security Deposit"). (See also Paragraph 5) 

        1.8   Agreed Use: General office, warehousing, distribution and manufacturing for a medical device company. (See also
Paragraph 6) 

        1.9   Insuring Party: Lessor is the "Insuring Party" unless otherwise stated herein. (See also Paragraph 8) 

        1.10 Real Estate Brokers: (See also Paragraph 15) 

        (a)   Representation: The following real estate brokers (collectively, the "Brokers") and brokerage relationships exist in this
transaction (check applicable boxes): 

o                         represents Lessor exclusively ("Lessor's
Broker"); 

o represents Lessee exclusively ("Lessee's Broker"); 

or ý Business Real Estate Brokerage 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 6% of the total Base Rent for the brokerage services rendered by said Broker). 

        1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by    None
    ("Guarantor"). (See also Paragraph 37) 

        1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of Paragraphs 50 through 56 and Exhibits A,
all of which constitute a part of this Lease. 

 

	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
rental, is an approximation which the Parties agree is reasonable and the rental based thereon is not subject to revision whether or not the actual size is more or less. 

        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 within thirty
(30) days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC"), loading doors, if any,
and all other such elements in the Premises, other than those constructed by Lessee, shall be to good operating condition on said date and that the 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, 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, rectify same at Lessor's expense. If, after the Start Date, Lessee does not give Lessor written notice of any non-compliance with this warranty
within: (1) one year as to the surface of the roof and the structural portions of the roof, foundations and bearing walls, (ii) six (6) months as to the HVAC systems,
(iii) thirty (30) days as to the remaining systems and other elements of the Building, correction of such non-compliance shall be the obligation of Lessee at Lessee's sole
cost and expense. 

        2.3   Compliance. Lessor warrants that the improvements on the Premises comply with all applicable laws, covenants or
restrictions of record, building codes, regulations and ordinances ("Applicable Requirements") in effect on the Start Date. Said warranty does not apply to the use to which Lessee will put the
Premises 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 zoning is
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 six (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 (as opposed to being in existence at the Start Date, which is addressed in
Paragraph 6.2(e) below) so as to require during the term of this Lease the construction of an addition to or an alteration of the Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the 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 two (2) years of this Lease and the cost thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing,
within ten (10) days after receipt of Lessee's termination notice that Lessor has elected to pay the difference between the actual cost thereof and the amount equal to six (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 ninety (90) days thereafter. Such termination date shall, however, in no event be 

2

 

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(c); provided, however,
that if such Capital Expenditure is required during the last two 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 ninety (90) days prior written notice to Lessee unless Lessee notifies Lessor, in writing, within ten (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 thirty (30) days written notice to
Lessor. 

        (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 be fully responsible for the cost thereof, and Lessee shall not 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 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 to its occupancy of the Premises; and (c) neither Lessor, Lessor's agents, nor any Broker has made any oral or written representations or warranties with respect to
said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (a) Broker has made no representations, promises or warranties concerning Lessee's ability to honor
the Lease or suitability to occupy the Premises; and (b) 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 as agreed, 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 

3

 

perform
its other obligations until it receives possession of the Premises. If possession is not delivered within sixty (60) days after the Commencement Date, Lesses may, at its option, by
notice in writing within ten (10) days after the end of such sixty (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 ten (10) day period, Lessee's right to cancel shall terminate. Except as otherwise provided, if possession is not tendered to Lessee by
the Start Date and Lessee does not terminate this Lease, as aforesaid, 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 of the Premises is
not delivered within four (4) months after the Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in writing. 

        3.4   Lessee Compliance. Lessor shall not be required to tender 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, without offset
or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. Rent for any period during the term hereof which is for less than one (1) 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 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. 

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 said Security Deposit, Lessee shall within ten (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 monies 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 said change in financial condition. Lessor shall not be 

4

 

required
to keep the Security Deposit separate from its general accounts. Within fourteen (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 thirty (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 owners and/or
occupants of, or causes damage to neighboring properties. Lessor shall not unreasonably withhold or delay its consent 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, is not significantly more burdensome to the Premises. If Lessor elects to
withhold consent, Lessor shall within five (5) business days after such request give written notification of same, which notice shall include an explanation of Lessor's objections to the change
in 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, 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 previously consented to by Lessor, Lessee shall immediately give written notice of such fact to 

5

 

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, 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 or 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). 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 existed as a result of Hazardous Substances on the Premises prior to the
Start Date 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 the Start Date, 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 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 this Lease shall continue in full force and effect,
but subject to Lessor's rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and remediate 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 twelve (12) times the then monthly Base Rent or $100,000, whichever is greater, give written notice to Lessee, within thirty (30) days after receipt by Lessor of knowledge 

6

 

of
the occurrence of such Hazardous Substance Condition, of Lessor's desire to terminate this Lease as of the date sixty (60) days following the date of such notice. In the event Lessor elects
to give a termination notice, Lessee may, within ten (10) 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 twelve (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 thirty (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 Premises, without regard to whether said requirements are now in effect or become effective after the Start
Date. Lessee shall, within ten (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 in 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 below) and consultants shall have
the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times, 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 contamination 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 Lesser for the cost of such inspections, so long as such inspection is reasonably
related to the violation or contamination. 

	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, 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 Lessee, 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 such portion of the Premises), including, but not limited to, all equipment or
facilities, such as plumbing, heating, ventilating, air-conditioning, electrical, lighting facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and
exterior), foundations, ceilings, roofs, 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, 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 

7

 

state
of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condition 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) roof covering and drains, (vi) driveways and parking lots, (vii) clarifiers (viii) basic utility feed to the perimeter of the Building, and (ix) any
other equipment, if reasonably required by Lessor. 

        (c)   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 the Basic Elements 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 Basic Elements, then such Basic Elements 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 the number of months of the useful life of such replacement as such useful life is specified pursuant to
Federal income tax regulations or guidelines for depreciation thereof (including interest on the unamortized balance as is then commercially reasonable in the judgment of Lessor's accountants), with
Lessee reserving the right to 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. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance 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; Consent Required. The term "Utility installations" refers to all floor and window coverings, air lines,
power panels, electrical distribution, security and fire protection systems, communication systems, 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(e). 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, and the cumulative cost thereof during this Lease as extended does not exceed $50,000 in the
aggregate or $10,000 in any one year. 

8

 

        (b)   Consent. Any Alteration 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 equal to the greater of one month's Base Rent, or $10,000, Lessor may
condition its consent upon Lessee providing a lien and completion bond in an amount equal to one and one-half times the estimated cost of such Alteration or Utility Installation and/or
upon Lessee's posting an additional Security Deposit with Lessor. 

        (c)   Indemnification. 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 ten (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 one and
one-half times 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.

        (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. 

9

  

        (b)   Removal. By delivery to Lessee of written notice from Lessor not earlier than ninety (90) and not later than
thirty (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. 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, and the removal,
replacement, or remediation of any soil, material or groundwater contaminated by Lessee. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. 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 For Insurance. Lessee shall pay for all insurance required under Paragraph 8 except to the extent of the
cost attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per occurrence. Premiums for policy periods commencing prior to or extending beyond the
Lease term shall be prorated to correspond to the Lease term. Payment shall be made by Lessee to Lessor within ten (10) days following receipt of an invoice. 

        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 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 $2,000,000 per occurrence with 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 or 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 groundlessor, and to any Lender(s) 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 Lenders, 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 

10

 

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), 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 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 (1) year. Said insurance shall provide that in the event the Lease is terminated by reason of an insured loss, the
period of indemnity for such coverage shall be extended beyond the date of the completion of repairs or replacement of the Premises, to provide for one full year's loss of Rent from the date of any
such loss. Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise
payable by
Lessee, for the next twelve (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 to 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 

11

 

modification
except after thirty (30) days prior written notice to Lessor. Lessee shall, at least thirty (30) days prior to the expiration of such polices, furnish 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. 

        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. 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. 

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

12

 

        (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 8.2(a), in, on, or under the Premises. 

        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 ten (10) days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds
or adequate assurance thereof within said ten (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 ten (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 have this Lease terminate thirty
(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. 

        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 thirty (30) days after receipt
by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective sixty (60) days following the date of such notice. In the event Lessor elects to terminate this
Lease, Lessee shall have the right within ten (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 thirty (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 

13

 

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 sixty (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 six (6) months of this Lease there is
damage for which the cost to repair exceeds one (1) month's Base Rent, whether or not an Insured Loss, Lessee or Lessor may terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving a written termination notice to Lessee within thirty (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 ten 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 ninety (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 terminate this Lease on a date not less than sixty (60) days following
the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within thirty (30) days thereafter, this Lease shall terminate as of the date specified in
said notice. If the repair or restoration is commenced within said thirty (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. 

14

 

        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 of "Real Property Taxes."     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, Lessor's 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. The term "Real Property Taxes"
shall also include any tax, fee, levy, assessment or charge, or any increase therein, imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the
ownership of the Premises. 

        10.2  

         (a)   Payment of Taxes.     Lessee shall pay the Real Property Taxes applicable to the Premises during the term of this
Lease. Subject to
Paragraph 10.2(b), all such payments shall be made at least ten (10) days prior to any delinquency date. Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid. 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, and Lessor shall reimburse Lessee for any overpayment. If Lessee shall fail to pay any required Real Property Taxes,
Lessor shall have the right to pay the same, and Lessee shall reimburse Lessor therefor upon demand. 

        (b)   Advance Payment.     In the event Lessee incurs a late charge on any Rent payment, Lessor may, at Lessor's
option, estimate the current Real Property Taxes, and require that such taxes be paid in
advance to Lessor by Lessee, either: (i) in a lump sum amount equal to the installment due, at least twenty (20) days prior to the applicable delinquency date, or (ii) monthly in
advance with the payment of the Base Rent. If Lessor elects to require payment monthly in advance, the monthly payment shall be an amount equal to the amount of the estimated installment of taxes
divided by the number of months remaining before the month in which said installment becomes delinquent. When the actual amount of the applicable tax bill is known, the amount of such equal monthly
advance payments shall be adjusted as required to provide the funds needed to pay the applicable taxes. If the amount collected by Lessor is insufficient to pay such Real Property Taxes when due,
Lessee shall pay Lessor, upon demand, such additional sums as are necessary to pay such obligations. All monies paid to Lessor under this Paragraph may be intermingled with other monies of Lessor and
shall not bear interest. In the event of a Breach by Lessee in the performance of its obligations under this Lease, then any balance of funds paid to Lessor under the provisions of this Paragraph may,
at the option of Lessor, be treated as an additional Security Deposit. 

        10.3 Joint Assessment.     If the Premises are not separately assessed, Lessee's liability shall be an equitable
proportion of the Real Property Taxes 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 assessor's 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 

15

 

and
all personal property of Lessee. When possible, Lessee shall cause such property to be assessed and billed separately from the real property of Lessor. If any of Lessee's said personal property
shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee's property within ten (10) days after receipt of a written statement. 

11.    Utilities.     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 to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of
all charges jointly metered. 

	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 Lessor's prior written consent, which
shall not be unreasonably withheld. 

        (b)   A change in the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis,
of twenty-five percent (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 twenty-five percent (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 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 Lessor's 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 thirty (30) days written notice, increase the monthly Base Rent to one hundred ten percent (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 one
hundred ten percent (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 One Hundred Ten Percent (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, any assignment or subletting shall not: (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. 

16

 

        (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 Lessor's 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 therefore 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. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. 

        (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 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. 

        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. 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 not 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. 

17

 

        (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 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: 

        (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 make 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 three (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) a Estoppel Certificate, (v) a requested subordination,
(vi) evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42 (easements), or (viii) 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 ten (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 thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than thirty (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 thirty (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. Section 101 or any successor statute thereto (unless, in the case
of a petition filed against Lessee, the same is dismissed within sixty (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 thirty (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 thirty (30) days; provided,
however, in the event that any provision of this subparagraph 13.1 (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. 

18

 

        (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
sixty (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. 

        13.2 Remedies.     If Lessee fails to perform any of its affirmative duties or obligations, within ten
(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. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee
upon receipt of invoice therefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which it is drawn, Lessor, at its option, may require all future payments to be made by
Lessee to be by cashier's check. 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 to 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 (1%). 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. 

19

 

        (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. 

        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 at 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 five (5) business days after such amount shall be due, then, without any
requirement for notice to Lessee, Lessee shall pay to Lessor a one-time late charge equal to ten percent (10%) of each such overdue amount. 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 three (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 thirty (30) days following the date on which it was due for non-scheduled payment, shall bear interest from the date
when due, as to scheduled payments, or the thirty-first (31st) day after it was due as to non-scheduled payments. The interest ("Interest")
charged shall be equal to the prime rate reported in the Wall Street Journal as published closest prior to the date when due plus four percent (4%), 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. 

20

  

        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 thirty (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 thirty (30) days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced
within such thirty (30) 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 thirty
(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 an amount equal to the greater of one month's Base Rent or the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee's right to 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 ten percent (10%) of any building portion of the Premises, or more than twenty-five percent (25%) of the land area 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 ten (10) days after Lessor shall have given Lessee written
notice of such taking (or in the absence of such notice, within ten (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.
	Brokers' Fee.

        15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.10 above, and unless Lessor and
the Brokers otherwise agree in writing, Lessor 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 said Brokers
in effect at the time of the execution of this Lease. 

21

 

        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. Each Broker shall be a third party beneficiary of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to a Broker any amounts due as and for
commissions pertaining to this Lease when due, then such amounts shall accrue Interest. In addition, if Lessor fails to pay any 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 ten (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. 

        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 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, and/or attorneys'
fees reasonably incurred with respect thereto. 

	16.
	Estoppel Certificates.  

        (a)   Each Party (as "Responding Party") shall within ten (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 be reasonably requested by the Requesting Party. 

        (b)   If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such ten 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 three (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. Notwithstanding the above, and subject to the provisions of Paragraph 20 below, the original Lessor under this Lease, and all subsequent holders of 

22

 

the
Lessor's interest in this Lease shall remain liable and responsible with regard to the potential duties and liabilities of Lessor pertaining to Hazardous Substances as outlined in
Paragraph 6 above. 

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. Subject to the provisions of Paragraph 17 above, the obligations of Lessor under this Lease shall not
constitute personal obligations of Lessor, the individual partners of Lessor or its or their individual partners, 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 this Lease, and shall not seek recourse against the individual partners of Lessor, or its or their individual
partners, 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 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 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 forty-eight (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
twenty-four (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, 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. 

23

 

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. Lessor's 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 monies or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or 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.    Recording. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a short form
memorandum of this Lease for recording purposes. The Party requesting recordation shall be responsible for payment of any fees applicable thereto. 

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 one hundred fifty percent (150%) of the Base Rent applicable during the month 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
"Lessor's 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. Subject to the non-disturbance provisions of Paragraph 30.3, Lessee agrees to attorn to a
Lender or any other party who acquires ownership of the Premises by reason of a foreclosure of a Security Device, and that in the event of such foreclosure, such new owner shall not: (i) be
liable for any act or omission of any prior lessor or with respect to events occurring prior to 

24

 

acquisition
of ownership; (ii) be subject to any offsets or defenses which Lessee might have against any prior lessor, or (iii) be bound by prepayment of more than one (1) month's
rent. 

        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 sixty (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 sixty (60) days, then Lessee may, at Lessee's option, directly contact Lessor's 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 to enforce the terms hereof 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 expenses 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. 

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 for the purpose of showing the same to prospective purchasers, lenders, or lessees, and making such alterations, repairs, improvements or
additions to the Premises as Lessor may deem necessary. All such activities shall be without abatement of rent or liability to Lessee. Lessor may at any time place on the Premises any ordinary
"For Sale" signs and Lessor may during the last six (6) months of the term hereof place on the Premises any ordinary "For
Lease" signs. Lessee may at any time place on or about the Premises any ordinary "For Sublease" sign. 

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. Except for ordinary "For Sublease" signs, Lessee 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 

25

 

estate
in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessor's failure within ten (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 ten
(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) a Tenancy Statement, 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.

         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 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. Each 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. 

26

 

        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 three (3) or more notices of separate Default, whether or not the Defaults are cured, during the twelve
(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, (i) Lessee fails to pay Rent for a period of thirty (30) days after such Rent becomes due (without any
necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee three (3) or more notices of separate Default during any twelve (12) month period, whether or not the
Defaults are cured, or (iii) 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 observe 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 that Lessee will pay its fair share of common expenses incurred in connection therewith. 

41.    Security Measures. Lessee hereby acknowledges that the rental 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 to 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, maps 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. 

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. If either Party hereto is a 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 thirty
(30) days after request, deliver to the other Party satisfactory evidence of such authority. 

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

27

 

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.    Multiple Parties. If more than one person or entity is named herein as either Lessor or Lessee, such multiple Parties shall have joint
and several responsibility to comply with the terms of this Lease. 

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 o is
ý is not attached to this Lease. 

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, AND THE SUITABILITY OF THE PREMISES
FOR LESSEE'S INTENDED USE.  

WARNING: IF THE PREMISES IS 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 IS LOCATED.

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

28

 

	

Executed at:	
 	

    
	
 	

Executed at:	
 	

    

	

 	
 	

 	
 	

 	
 	

 

	

On:	
 	

    
	
 	

On:	
 	

    

	

 	
 	

 	
 	

 	
 	

 

	

By LESSOR:	
 	

By LESSEE:
	

El Cedro, LLC	
 	

Alphatec Manufacturing, Inc.
	

a California limited liability company	
 	

a California Corporation
	

By:	
 	

/s/  GEORGE AYOUB      
	
 	

By:	
 	

/s/  SHUNSHIRO YOSHIMI      

	

 	
 	

 	
 	

 	
 	

 

	

Name Printed:	
 	

George Ayoub	
 	

Name Printed:	
 	

Shunshiro Yoshimi
	

 	
 	

 	
 	

 	
 	

 

	

Title:	
 	

Managing Member	
 	

Title:	
 	

President
	

 	
 	

 	
 	

 	
 	

 

	

By:	
 	

    
	
 	

By:	
 	

    

	

 	
 	

 	
 	

 	
 	

 

	

Name Printed:	
 	

    
	
 	

Name Printed:	
 	

    

	

 	
 	

 	
 	

 	
 	

 

	

Title:	
 	

    
	
 	

Title:	
 	

    

	

 	
 	

 	
 	

 	
 	

 

	

Address:	
 	

5940 Darwin Court, Suite A

Carlsbad, CA 92008	
 	

Address:	
 	

6110 Corte del Cedro

Carlsbad, CA 92009
	

 	
 	

 	
 	

 	
 	

 

	

Telephone: (760)	
 	

    
	
 	

Telephone: (760)	
 	

    

	

Facsimile: (760)	
 	

    
	
 	

Facsimile: (760)	
 	

    

	

Federal ID No:	
 	

    
	
 	

Federal ID No: 33-0412288	
 	

 

Note: These forms are often modified to meet the changing requirements of law and industry needs. Always write or call to make sure you are utilizing the most current form: AMERICAN INDUSTRIAL REAL
ESTATE ASSOCIATION, 700 So. Flower Street, Suite 600, Los Angeles, California 90017. (213) 687-8777. Fax No. (213) 687-8616. 

29

 

ADDENDUM
TO LEASE DATED MARCH 31, 2001 BY AND BETWEEN EL CEDRO LLC, AS LESSOR AND ALPHATEC MANUFACTURING, INC., AS LESSEE FOR THE PROPERTY LOCATED AT 6110 CORTE DEL CEDRO, CARLSBAD, CALIFORNIA
92009. 

This
addendum modifies the Lease in the following particulars only. Should the terms and conditions of this addendum conflict with the terms and conditions of the Lease, the terms and conditions of
this addendum shall prevail. 

	50.
	EARLY POSSESSION DATE:

In
the event that Lessor delivers the Premises to Lessee after April 1, 2001 then Lessee shall receive sixty (60) days of Early Possession as defined in the lease, commencing from the
actual date that Lessor delivers the Premises to Lessee. The Base Rent for the month of June shall then be prorated and adjusted accordingly. In any event Lessor shall deliver the Premises to Lessee
by April 9, 2001 

	51.
	RENT ADJUSTMENTS:

The
monthly Base Rent shall be increased to the following amounts as set forth below: 

	

Months 1-12	
 	

$14,035.00 per month, NNN	
 	

 
	Months 13-24	 	$14,456.00 per month, NNN	 	 
	Months 25-36	 	$14,890.00 per month, NNN	 	 

	52.
	TENANT IMPROVEMENTS:

Landlord
shall provide the Premises with the following improvements: 

	a.
	Broom-swept
warehouse and replace needed ceiling tiles.

	b.
	Deliver
the Premises with all systems in good working order.

	c.
	Deliver
the Premises in compliance with all building codes.

	d.
	Landlord
shall remove their company sign from the building.

 

	53.
	SIGNAGE:

Tenant
to be allowed to place signage on the exterior portion of the building, at Tenant's sole expense, subject to the restrictions set forth by the City of Carlsbad and mutually acceptable to
Landlord and Tenant. Lessee shall, at its sole cost and expense, repair any damage caused by the removal of said signs upon the termination of Lessee's tenancy. 

	54.
	FLAGPOLE:

Tenant
shall be allowed to install three flagpoles on the landscape of the property (near the entry area) subject to the restrictions set forth by the City of Carlsbad and mutually acceptable to
Landlord and Tenant. Lessor shall have the option of requiring Lessee to remove the flagpoles at the termination of Lessee's tenancy and Lessee shall, at its sole cost and expense, repair any damage
caused by the removal of said flagpoles. 

	55.
	OPTION TO EXTEND:—Attached.

	56.
	HAZARDOUS MATERIALS/ADA WARNING & DISCLAIMER:—Attached. 

	AGREED & ACCEPTED:	 	 	 	 
	

LESSOR	
 	

LESSEE
	

EL Cedro LLC,	
 	

Alphatec Manufacturing, Inc.,
	

a California Limited Liability Company	
 	

a California Corporation
	

By:	
 	

/s/  GEORGE AYOUB      
	
 	

By:	
 	

/s/  SHUNSHIRO YOSHIMI      

	Title:	 	Managing Member
	 	Title:	 	President

	Date:	 	  
	 	Date:	 	  

30

 
 
 

FIRST AMENDMENT TO LEASE    
    

This
First Amendment to Lease is entered into by and between El Cedro LLC, a California Limited Liability Company as Lessor and Alphatec Manufacturing, Inc., A California Corporation as Lessee
for the Premises located at 6110 Corte Del Cedro, Carlsbad, California 92009. This First Amendment is dated February 23, 2004 for reference purposes only. 

 
 

RECITALS

	A.
	El
Cedro LLC and Alphatec Manufacturing Inc., entered into that certain ("Lease") dated March 31, 2001 for approximately 21,592 square feet ("Premises") located at 6110
Corte Del Cedro, Carlsbad, California 92009.

	B.
	The
Lease is in full force and effect, and neither Lessor nor Lessee has actual knowledge of any default or breach by the other under the Lease.

	C.
	Lessor
and Lessee desire to amend the Lease pursuant to this First Amendment and Paragraph 55 of the Lease, "Option To Extend". 

NOW,
THEREFORE, in consideration of the covenants contained herein, the parties agree as set forth below. 

	1.
	Lessee
has exercised its Option To Extend the Lease pursuant to Paragraph 55 of the Lease, therefore; the Base Rent shall be increased to the following amounts on the dates set
Forth below: 

June 1,
2004 = $15,485.00 per month 

June 1,
2205 = $16,105.00 per month 

June 1,
2006 = $16,750.00 per month 

	2.
	Broker
and Lessor have agreed to a reduced fee of 3% of the total Base Rent, which is due and payable by Lessor upon full execution of this Amendment. 

Except
as specifically set forth in this First Amendment to the Lease, there are no other modifications to the Lease and the remaining terms, conditions, and covenants therein shall remain in full
force and effect. 

IN
WITNESS WHEREOF the parties have executed this First Amendment as of the date set forth below. 

	LESSOR	 	LESSEE
	

EL Cedro LLC,	
 	

Alphatec Manufacturing, Inc.,
	

a California Limited Liability Company	
 	

a California Corporation
	

By:	
 	

/s/  GEORGE AYOUB      
	
 	

By:	
 	

/s/  SHUNSHIRO YOSHIMI      

	Title:	 	Managing Member
	 	Title:	 	President

	Date:	 	  
	 	Date:	 	  

31

  

 
 

LEASE EXTENSION AGREEMENT    
    

        This
LEASE EXTENSION AGREEMENT (the "Agreement") is made and entered into as of the 19th day of April, 2006, by and between EL CEDRO LLC, a California limited liability
company ("Lessor"), and ALPHATEC SPINE, INC., a California Corporation, formerly known as Alphatec Manufacturing, Inc. (the "Lessee"). Lessor and Lessee are sometimes referred to herein
as a "party" and together as "the parties". 

 
 

RECITALS    
    

        WHEREAS, the parties entered into that certain Standard Industrial/Commercial Multi-Lessee dated March 31, 2001, as amended by that certain First Amendment
to Lease dated February 23, 2004 (together, the "Lease" attached hereto as Exhibit "A"), wherein the Lessor agreed to lease to Lessee certain premises known as 6110 Corte Del Cedro, city of
Carlsbad, County of San Diego, state of California (the "Premises"); 

        WHEREAS,
the Lease by its terms is set to expire June 1, 2007; provided however that pursuant to Paragraph 55 of the Addendum to Lease, Lessee has an option to extend the
Term; 

        WHEREAS,
Lessor and Lessee, now desire to extend the term of the Lease to March 31, 2008, pursuant to the terms and conditions set forth herein; 

        WHEREAS,
Paragraph 47 of the Lease provides that any amendment or modification of the Lease must be in writing; 

        WHEREAS,
the Lease is in full force and effect, and neither Lessor nor Lessee has actual knowledge of any default or breach by the other under the Lease; 

        WHEREAS,
capitalized terms used, but not otherwise defined in this Agreement, shall be as defined in the Lease; 

        NOW
THEREFORE, in consideration of the premises, the promises and covenants of the parties hereto, and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Lease is hereby modified and amended, and the parties mutually agree as follows: 

 
 

TERMS    
    

        1.    Effect of Agreement.    Except as expressly amended herein, there are no other modifications to the Lease and
the remaining terms, conditions and covenants therein shall remain in full force and effect. 

        2.    Extension of Term.    The Term of the Lease is hereby extended to February 28, 2008; provided that Lessee
shall have two (2) options to extend the Lease for a period of one (1) year each by providing written notice so indicating to the Lessor no later than ninety (90) days prior to
the last day of the Term in each instance. 

        3.    Rent.    Lessee shall pay $16,750.00 per month as Base Rent, payable on the first day of each month commencing
June 1, 2007 through the last month of the Term. 

        4.    Security Deposit.    Lessor and Lessee hereby acknowledges and agrees that any security deposit it has made with
Lessor under the Lease shall continue to be held by Lessor and, at the conclusion of the Term, as it may be extended, such security deposit shall first be applied against any amounts owed by Lessee by
reason of the Lease, or this Agreement, and, thereafter, refunded to Lessee, as and to the extent any portion of the security deposit remains after payment of all such items. 

1

 

        5.    Successors.    The provisions of this Agreement shall inure to the benefit of and be binding upon the parties
hereto, and their respective successors and assigns. 

        6.    Counterparts.    This Agreement may be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument, and it shall constitute sufficient proof of the Agreement to present any copy, copies or facsimiles signed by the
parties to be charged. 

        7.    Entire Agreement.    This Agreement sets forth the entire agreement between the parties with respect to the
matters set forth herein. There have been no additional oral or written representations or agreements. In case of any inconsistency between the provisions of the Lease and this Agreement, the
provisions of this Agreement shall govern and control. 

        8.    Authority.    If either party hereto is a corporation, trust, limited liability company, partnership, or similar
entity, each individual executing this Agreement on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Agreement on its behalf. 

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and date first above written. 

	 	 	LESSOR:
	

 	
 	

EL CEDRO LLC, a California limited liability company
	

 	
 	

By:	

/s/  GEORGE AYOUB      
 Name: George Ayoub

Title: Managing Member
	

 	
 	

Dated this: 19th day of April, 2006
	

 	
 	

LESSEE:
	

 	
 	

ALPHATEC SPINE, INC., a California Corporation,
	

 	
 	

By:	

/s/  VICKY A. ROMANOSKI      
 Name: Vicky A. Romanoski

Title: Chief Administrative Officer and Vice President
	

 	
 	

Dated this: 19th day of April, 2006

2

 

EXHIBIT
"A" 

Copy
of Lease

(attached) 

3

QuickLinks

FIRST AMENDMENT TO LEASE

RECITALS

LEASE EXTENSION AGREEMENT

RECITALS

TERMSQuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.25  

 
 

STANDARD INDUSTRIAL/COMMERCIAL
  MULTI-TENANT LEASE—GROSS AIR COMMERCIAL
  REAL ESTATE ASSOCIATION    
    

	1.
	Basic Provisions ("Basic Provisions").

        1.1   Parties: This Lease ("Lease"), dated for reference purposes only December 11,
2003, is made by and between Roy P. Josepho and Robert B. Josepho, Trustee ("Lessor") and Alphatec
Manufacturing, Inc., a California Corporation ("Lessee"), (collectively the "Parties", or individually a "Party"). 

        1.2(a) Premises: That certain portion of the Project (as defined below), including all improvements therein or to be provided
by Lessor under the terms of this Lease, commonly known by the street address of 6078 Corte Del Cedro, Suite B, located in the city of  Carlsbad, County of
San Diego, state of California, with
zip code 92009, as outlined on Exhibit N/A attached hereto ("Premises") and generally described as
(describe briefly the nature of the Premises): approx. 3, 367 sq. ft. industrial located in            . In addition to Lessee's rights to use
and
occupy the Premises as hereinafter specified, Lessee shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as hereinafter specified, but shall not
have any rights to the roof, exterior walls or utility raceways of the building containing the Premises ("Building") or to any other buildings in the Project. The Premises, the Building, the Common
Areas, the land upon which they are located, along with all other buildings and improvements thereon, are herein collectively referred to as the "Project." (See also Paragraph 2.) 

        1.2(b) Parking: pro rata unreserved vehicle parking spaces ("Unreserved
Parking Spaces"); and zero (0) reserved vehicle parking spaces ("Reserved Parking Spaces"). (See also Paragraph 2.6.) 

        1.3   Term: three (3) years and  -0- months ("Original Term") commencing February 15,
2004 ("Commencement
Date") and ending February 28, 2007 ("Expiration Date"). (See also Paragraph 3.) 

        1.4   Early Possession: upon execution ("Early Possession Date"). (See also
Paragraphs 3.2 and 3.3.) 

        1.5   Base Rent: $2,189.00 per month ("Base Rent"), payable on the  first day of each month commencing March 1, 2004. (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   Lessee's Share of Common Area Operating Expenses: fifty percent
(50%) ("Lessee's Share"). 

        1.7   Base Rent and Other Monies Paid Upon Execution: 

        (a)   Base
Rent: $3, 284.00 for the period February 15—March 31,
2004. 

        (b)   Common
Area Operating Expenses: $ N/A for the period N/A. 

        (c)   Security
Deposit: $2,367.00 ("Security Deposit"). (See also Paragraph 5.) 

        (d)   Other:  $336.70 for Common area-association fee for
March 2004. 

        (e)   Total
Due Upon Execution of this Lease: $5,987.70. 

        1.8   Agreed Use: General office and manufacturing of orthopedic medical
devices. (See also Paragraph 8.) 

        1.9   Insuring Party: Lessor is the "Insuring Party". (See also Paragraph 8.) 

        1.10 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): 

        ý    Colliers International—Jim Spain/Josh McFadyen represents Lessor
exclusively ("Lessor's Broker"); 

        ý    Colliers International—Russ Jabara 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 Brokers a brokerage fee agreed to in a separate written agreement
(or if there is no such agreement, the sum of as agreed or N/A% of the total Base Rent for the brokerage
services rendered by the Brokers). 

        1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by  N/A ("Guarantor"). (See also Paragraph 37.) 

        1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of Paragraphs  50 through 59 and Exhibits
A through  C, all of which constitute a part of this Lease. 

	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 to more or less. 

        2.2   Condition. Lessor shall deliver that portion of the Premises contained within the Building ("Unit") 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, if any, and all other such elements in the Unit, other than those constructed by Lessee, shall be in good operating condition on said date, that the
structural elements of the roof, bearing walls and foundation of the Unit shall be free of material defects. If a non-compliance with such 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 alter 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 months as to the HVAC systems, and (ii) 30 days as to the remaining systems and other elements of the
Unit. 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 repairs to the fire sprinkler systems, roof, foundations, and/or bearing walls—see Paragraph 7). 

        2.3   Compliance. Lessor warrants that the improvements on the Premises and the Common Areas comply with the building codes
that were in effect at the time that each such improvement, or portion thereof, was constructed, and also with all applicable laws, covenants or restrictions of record, regulations, and ordinances in
effect on the Start Date ("Applicable Requirements"). Said warranty does not apply to the use to which Lessee will put the Premises 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 zoning is 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 

2

 

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 Unit, 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 the 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 the portion of such costs reasonably attributable to the Premises pursuant to the formula set out in 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, half 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. 

        (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 be fully responsible for the cost thereof, and Lessee shall not 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 to its occupancy of the Premises, and (c) neither Lessor, Lessor's agents, nor Brokers have made any oral or written
representations or 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 

3

 

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. 

        2.6   Vehicle Parking. Lessee shall be entitled to use the number of Unreserved Parking Spaces and Reserved Parking Spaces
specified in Paragraph 1.2(b) on those portions of the Common Areas designated from time to time by Lessor for parking. Lessee shall not use more parking spaces than said number. Said parking
spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called "Permitted Size Vehicles." Lessor may regulate the
loading and unloading of vehicles by adopting Rules and Regulations as provided in Paragraph 2.9. No vehicles other than Permitted Size Vehicles may be parked in the Common Area without the
prior written permission of Lessor. 

        (a)   Lessee
shall not permit or allow any vehicles that belong to or are controlled by Lessee or Lessee's employees, suppliers, shippers, customers, contractors or invitees
to be loaded, unloaded, or parked in areas other than those designated by Lessor for such activities. 

        (b)   Lessee
shall not service or store any vehicles in the Common Areas. 

        (c)   If
Lessee permits or allows any of the prohibited activities described in this Paragraph 2.6, then Lessor shall have the right, without notice, in addition to
such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be made payable upon demand by Lessor. 

        2.7   Common Areas—Definition. The term "Common Areas" is defined as all areas and facilities outside the Premises
and within the exterior boundary line of the Project and interior utility raceways and installations within the Unit that are provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other tenants of the Project and their respective employees, suppliers, shippers, customers, contractors and invitees, including parking areas,
loading and unloading areas, trash areas, roadways, walkways, driveways and landscaped areas. 

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

        2.9   Common Areas—Rules and Regulations. Lessor or such other person(s) as Lessor may appoint shall have the
exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable rules and regulations ("Rules and Regulations") for
the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of
the Building and the Project and their invitees. Lessee agrees to abide by and conform to all such Rules and Regulations, and to cause its employees, suppliers, shippers, 

4

 

customers,
contractors and invitees to so abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations by other tenants of the
Project. 

        2.10 Common Areas—Changes. Lessor shall have the right, in Lessor's sole discretion, from time to time: 

        (a)   To
make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking
areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways; 

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

        (c)   To
designate other land outside the boundaries of the Project to be a part of the Common Areas; 

        (d)   To
add additional buildings and improvements to the Common Areas; 

        (e)   To
use the Common Areas while engaged in making additional improvements, repairs or alterations to the Project, or any portion thereof; 

        (f)    To
do and perform such other acts and make such other changes in, to, or with respect to the Common Areas and Project as Lessor may, in the exercise of sound business
judgment, deem to be appropriate. 

	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 Lessee's Share of Common Area Operating
Expenses, 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 as agreed, 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 it receives possession of the Premises. If possession is not delivered within
60 days after the Commencement Date, Lessee may, at its option, by notice in writing 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 notice is not received by Lessor within said 10 day period, Lessee's right to cancel shall terminate. Except as otherwise provided,
if possession is not tendered to Lessee by the Start Date and Lessee does not terminate this Lease, as aforesaid, 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 thereof, but minus any days of delay caused by the acts or omissions of
Lessee. If possession of the Premises is not delivered within 4 months after the Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in
writing. 

        3.4   Lessee Compliance. Lessor shall not be required to tender 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. 

5

 
	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   Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in addition to the Base Rent, Lessee's
Share (as specified in Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in accordance with the following
provisions: 

        (a)   "Common
Area Operating Expenses" are defined, for purposes of this Lease, as all costs incurred by Lessor relating to the ownership and operation of the Project,
including, but not limited to, the following: 

        (i)    The
operation, repair and maintenance, in neat, clean, good order and condition, but not the replacement (see subparagraph (e)), of the following: 

        (aa) The
Common Areas and Common Area improvements, including parking areas, loading and unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped
areas, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators, roofs, and roof drainage systems. 

        (bb) Exterior
signs and any tenant directories. 

        (cc) Any
fire sprinkler systems. 

        (ii)   The
cost of water, gas, electricity and telephone to service the Common Areas and any utilities not separately metered. 

        (iii)  Trash
disposal, pest control services, property management, security services, and the costs of any environmental inspections. 

        (iv)  Reserves
set aside for maintenance and repair of Common Areas. 

        (v)   Any
increase above the Base Real Property Taxes (as defined in Paragraph 10). 

        (vi)  Any
"Insurance Cost increase" (as defined in Paragraph 8). 

        (vii) Any
deductible portion of an insured loss concerning the Building or the Common Areas. 

        (viii) The
cost of any Capital Expenditure to the Building or the Project not covered under the provisions of Paragraph 2.3; provided, however, that Lessor shall
allocate the cost of any such Capital Expenditure over a 12 year period and Lessee shall not be required to pay more than Lessee's Share of 1/144th of the cost of such Capital Expenditure in
any given month. 

        (ix)  Any
other services to be provided by Lessor that are stated elsewhere in this Lease to be a Common Area Operating Expense. 

        (b)   Any
Common Area Operating Expenses and Real Property Taxes that are specifically attributable to the Unit, the Building or to any other Building in the Project or to the
operation, repair and maintenance thereof, shall be allocated entirely to such Unit, Building, or other building. However, any Common Area Operating Expenses and Real Property Taxes that are not
specifically attributable to the Building or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings in the Project. 

        (c)   The
inclusion of the improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said
improvements or 

6

 

facilities
or to provide those services unless the Project already has the same, Lessor already provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of them. 

        (d)   Lessee's
Share of Common Area Operating Expenses shall be payable by Lessee within 10 days after a reasonably detailed statement of actual expenses is presented
to Lessee. At Lessor's option, however, an amount may be estimated by Lessor from time to time of Lessee's Share of annual Common Area Operating Expenses and the same shall be payable monthly or
quarterly, as Lessor shall designate, during each 12 month period of the Lease Term, on the same day as the Base Rent is due hereunder. Lessor shall deliver to Lessee within 60 days
after the expiration of each calendar year a reasonably detailed statement showing Lessee's Share of the actual Common Area Operating Expenses incurred during the preceding year. If Lessee's, payments
under this Paragraph 4.2(d) during the preceding year exceed Lessee's Share as indicated on such statement, Lessor shall credit the amount of such over-payment against Lessee's
Share of Common Area Operating Expenses next becoming due. If Lessee's payments under this Paragraph 4.2(d) during the preceding year were less than Lessee's Share as indicated on such
statement, Lessee shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor to Lessee of the statement. 

        (e)   When
a capital component such as the roof, foundations, exterior walls or a Common Area capital improvement, such as the parking lot paving, elevators, fences, etc.
requires replacement, rather than repair or maintenance, Lessor shall, at Lessor's expense, be responsible for such replacement. Such expenses and/or costs are not Common Area Operating Expenses. 

        (f)    Payment.
Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, without offset or deduction (except as specifically permitted
in this Lease), on or before the day on which it is due. 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. 

        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 monies 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 a commercially reasonable level based on such change in financial condition. Lessor shall not be required to keep the Security Deposit 

7

 

separate
from its general accounts. 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 unused of 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 curbs occupants of or
causes damage to neighboring premises or properties. Lessor shall not unreasonably withhold or delay its consent 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 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, 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 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. 

8

 

        (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, 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 or 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
areas outside of the Project). 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 existed as a result of Hazardous Substances on the Premises prior to the Start Date 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, mediation, 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 the Start Date, 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, 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 this Lease shall continue in full force and effect, but subject to
Lessor's rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and remediate such Hazardous Substance Condition, if required, as
soon as reasonably possible at Lessor's expense, in the 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
10 days thereafter, give written notice to 

9

 

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 Premises, without regard to whether said 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 in writing (with copies of any documents involved) of any threatened or actual claim, lien,
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 anytime, in the case of an emergency, and otherwise at reasonable times, 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 Hazard 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. 

10

  

	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
Lessee, 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 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, fixtures, interior walls, interior surfaces of other walls, ceilings, floors,
windows, doors, plate glass, and skylights but excluding any items which are the responsibility of Lessor pursuant to 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 hereof in good order, condition and state of repair. 

        (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 equipments, (ii) boiler
and pressure vessels, (iii) clarifiers, and (iv) 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 reimburse Lessor for 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 in 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 Lessor's 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), 4.2 (Common Area
Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2 shall keep in good order,
condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems, fire
hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs, utility systems serving the Common Areas and all parts thereof, as well as providing the services for 

11

 

which
there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Lessor be
obligated to maintain, repair or replace windows, doors or plate glass of the Premises. Lessee expressly waives 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 lines, power panels, electrical distribution, security and fire protection
systems, communication systems, lighting futures, 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, and the cumulative cost thereof, during this Lease as extended does not exceed a sum equal to three (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 consent 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 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)   Indemnification.
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 herein. Lessee shall give Lessee not less than 10 days notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have 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. 

12

 

        7.4   Ownership; Removal; Surrender; and Restoration.

        (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 also 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 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. 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)   As
used herein, the term "Insurance Cost Increase" is defined as any increase in the actual cost of the insurance applicable to the Building and/or the Project and
required to be carried by Lessor, pursuant to Paragraphs 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, requirements of the holder of a mortgage or deed of trust covering the Premises, Building and/or Project, increased valuation of the
Premises, Building and/or Project, and/or a general premium rate increase. The term Insurance Cost Increase shall not, however, include any premium increases resulting from the nature of the occupancy
of any other tenant of the Building. If the parties insert a dollar amount in Paragraph 1.9, such amount shall be considered the "Base Premium." The Base Premium shall be the annual premium
applicable to the 12 month period immediately preceding the Start Date. If, however, the Project was not insured for the entirety of such 12 month period, then the Base Premium shall be
the lowest annual premium reasonably obtainable for the Required Insurance as of the Start Date, assuming the most nominal use possible of the Building. In no event, however, shall Lessee be
responsible for any portion of the premium cost attributable to liability insurance coverage in excess of $2,000,000 procured under Paragraph 8.2(b). 

13

 

        (b)   Lessee
shall pay any Insurance Cost Increase to Lessor pursuant to Paragraph 4.2. Premiums for policy periods commencing prior to, or extending beyond, the term
of this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date. 

        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. Lessor shall obtain and keep in force a policy or policies of insurance 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. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and
Lessee's personal property shall be insured by Lessee under Paragraph 8.4. 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), 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 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. 

        (b)   Rental
Value. Lessor shall also 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. 

14

 

        (c)   Adjacent
Premises. Lessee shall pay for any increase in the premium for the property insurance of the Building and for the Common Areas or other buildings in the Project
if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises. 

        (d)   Lessee's
Improvements. Since Lessor is the insuring Party, Lessor shall not be required to insure Lessee Owned Alterations and Utility Installations unless the item in
question has become the property of Lessor under the terms of this Lease. 

        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 to 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, furnish 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. 

        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 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 

15

 

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, 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 failure 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. 

	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
reasonably be repaired in 3 months or less from the date of the damage or destruction, and the cost thereof does not exceed a sum equal to 6 month's Base Rent. 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 improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which cannot reasonably be repaired in 3 months or less from the date of the damage or destruction and/or the cost thereof exceeds a sum equal to 6 month's Base Rent.
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. 

        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 $5,000 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 

16

 

insurance
proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds 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. 

        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. 

17

 

        9.6   Abatement of Rent; Lessee's Remedies.

        (a)   Aatement.
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 terminate this Lease on 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 Definitions.

        (a)   "Real
Property Taxes." 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
Project, Lessor's 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 Project 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 Project is located. The term "Real
Property Taxes" shall also include any tax, fee, levy, assessment or charge, or any increase therein, imposed by reason of events occurring during the term of this Lease, including but not limited to,
a change in the ownership of the Project or any portion thereof or a change in the improvements thereon. 

        (b)   "Base
Real Property Taxes." As used herein, the term "Base Real Property Taxes" shall be the amount of Real Property Taxes, which are assessed against the Premises,
Building, Project or Common Areas in the calendar year during which the Lease is executed. In calculating Real Property Taxes for any calendar year, the Real Property Taxes for any real estate tax
year shall be included in the calculation of Real Property Taxes for such calendar year based upon the number of days which such calendar year and tax year have in common. 

        10.2 Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Project, and except as otherwise provided
in Paragraph 10.3, any increases in such amounts over the Base Real 

18

 

Property
Taxes shall be included in the calculation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2. 

        10.3 Additional Improvements. Common Area Operating Expenses shall not include Real Property Taxes specified in the tax
assessor's records and work sheets as being caused by additional improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of such other lessees. Notwithstanding
Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property
Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at Lessee's request. 

        10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes allocated to the Building shall be an
equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be reasonably available. Lessor's reasonable determination thereof, in good faith, shall be conclusive. 

        10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned
Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises. 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. 

19

   11.    Utilities. 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. Notwithstanding the provisions of Paragraph 4.2, if at any time in Lessor's sole judgment, Lessor determines that Lessee is using a
disproportionate amount of water, electricity or other commonly metered utilities, or that Lessee is generating such a large volume of trash as to require an increase in the size of the dumpster
and/or an increase in the number of times per month that the dumpster is emptied, then Lessor may increase Lessee's Base Rent by an amount equal to such increased costs. 

	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 Lessor's prior written consent. 

        (b)   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 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 Lessor's 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, any assignment or subletting shall not: (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 Lessor's right to exercise its remedies for Lessee's Default or Breach. 

20

 

        (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 therefore 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 $1,000 or 10% of the
current monthly Base Rent applicable to the portion of the Premises which is the subject of the proposed assignment or sublease, whichever is greater, 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. 

        (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 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. 

        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. 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 not 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 

21

 

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. 

        (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 make 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) 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 41 (easements), or (viii) 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 2.9 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 

22

 

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. 

        13.2 Remedies. If 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. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee upon receipt of invoice therefor.
If any check given to Lessor by Lessee shall not be honored by the bank upon which it is drawn, Lessor, at its option, may require all future payments to be made by Lessee to be by cashier's check. 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 to 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 

23

 

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. 

        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 at 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 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 to
scheduled payments, or the 31st day after it was due as to non-scheduled payments. The interest ("Interest") charged shall be equal to the prime rate reported in the Wall Street Journal as
published closest prior to the date when due plus 4%, 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 30 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 

24

 

expense
and offset from Rent an amount equal to the greater of one month's Base Rent or the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee's right to
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 floor area of the Unit, or more than 25% of Lessee's Reserved Parking Spaces, 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 1.10 above, and unless Lessor and
the Brokers otherwise agree in writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee acquired from Lessor any rights to the Premises or other premises owned by
Lessor and located within the Project, (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 1.10, 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 any 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 earned 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 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 

25

 

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 AIR Commercial Real Estate Association, plus such additional information,
confirmation and/or statements as may be 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. Notwithstanding the above, and subject to the
provisions of Paragraph 20 below, the original Lessor under this Lease, and all subsequent holders of the Lessor's interest in this Lease shall remain liable and responsible with regard to the
potential duties and liabilities of Lessor pertaining to Hazardous Substances as outlined in Paragraph 6.2 above. 

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. Subject to the provisions of Paragraph 17 above, the obligations of Lessor under this Lease shall not
constitute personal obligations of Lessor, the individual partners of Lessor or its or their individual partners, 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 this Lease, and shall not seek recourse against the individual partners of Lessor, or its or their individual
partners, directors, officers or shareholders, or any of their personal assets for such satisfaction. 

26

 

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 is sufficient), 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. Lessor's 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 monies or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or 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. 

27

 

	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 any 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 care, 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 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)   Buyer
and Seller agree to identify to Brokers as "Confidential" any communication or information given Brokers that is considered by such Party to be confidential. 

28

 

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. Subject to the non-disturbance provisions of Paragraph 30.3, Lessee agrees to attorn to a
Lender or any other party who acquires ownership of the Premises by reason of a foreclosure of a Security Device, and that in the event of such foreclosure, 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 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. 

29

 

        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 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 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 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 expenses 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 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. All such activities shall be without abatement of rent or liability to Lessee. Lessor may at any time place on the Premises any ordinary "For
Sale" signs and Lessor may during the last 6 months of the term hereof place on the Premises any ordinary "For Lease" signs. Lessee may at any time place on the Premises any ordinary "For
Sublease" sign. 

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. Except for ordinary "For Sublease" signs which may be placed only on the Premises, Lessee shall not place any sign upon the
Project 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 

30

 

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 AIR
Commercial 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 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, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes 

31

 

due
(without any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee 3 or more notices of separate Default during any 12 month period, whether or not the Defaults
are cured, or (iii) if Lessee commits a Breach of this Lease. 

40.    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. 

41.    Reservations. Lessor reserves the right: (i) to grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, (ii) to cause the recordation of parcel maps and restrictions, and (iii) to create and/or install new utility raceways, so long as such
easements, rights, dedications, maps, restrictions, and utility raceways do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested
by Lessor to effectuate such rights. 

42.    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. 

43.    Authority. If either Party hereto is a 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. 

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

45.    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. 

46.    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. 

47.    Multiple Parties. If more than one person or entity is named herein as either Lessor or Lessee, such multiple Parties shall have joint
and several responsibility to comply with the terms of this Lease. 

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 o is
ý is not attached to this Lease. 

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 

32

 

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. 

33

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

	

Executed at:	
 	

    
	
 	

Executed at:	
 	

    

	

 	
 	

 	
 	

 	
 	

 

	

On:	
 	

December 11, 2003
	
 	

On:	
 	

December 11, 2003

	

By: LESSOR /s/ ROY P. JOSEPHO	
 	

By: LESSEE /s/ LINDA YOUNG
	

Roy P. Josepho and Roberta B. Josepho, Trustees	
 	

Alphatec Manufacturing, Inc.

a California Corporation
	

Name Printed: Roy P. Josepho	
 	

Name Printed: Linda Young
	

Title: Trustee	
 	

Title: Senior Vice President
	

 	
 	

 	
 	

 	
 	

 

	

By:	
 	

 
	

Name Printed:	
 	

Name Printed:
	

Address: c/o Colliers International	
 	

Address: 6110 Corte Del Cedro
	

1 Roymar Road, Suite B	
 	

Carlsbad, CA. 92009
	

Oceanside, CA 92054	
 	

 
	

Telephone: (760) 757-7111	
 	

Telephone: (760) 431-9286
	

Facsimile: (760) 757-7981	
 	

Facsimile: (        )
	

Federal ID No.	
 	

Federal iD Mo.

These
forms are often modified to meet changing requirements of law and needs of the industry. Always write or call to make sure you are utilizing most current form: AIR Commercial Real Estate
Association, 700 South Flower Street, Suite 600, Los Angeles, CA 90017 (213) 687-8777. 

(c)
Copyright 1998 By AIR Commercial Real Estate Association. 

All
rights reserved. 

No
part of these works may be reproduced in any form without permission in writing. 

ADDENDUM
TO LEASE DATED DECEMBER 11, 2003 BY AND BETWEEN ROY P. JOSEPHO AND ROBERTA B. JOSEPHO, TRUSTEES, AS LESSOR, ALPHATEC MANUFACTURING, INC., A CALIFORNIA CORPORATION, AS LESSEE, FOR THE
PREMISES KNOWN AS 6078 CORTE DEL CEDRO, SUITE B, CARLSBAD, CALIFORNIA. 

THIS
ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE—GROSS ("Addendum") is made and entered into as of the date set forth on the first page of that certain Standard
Industrial/Commercial Multi-Tenant Lease—Gross (the "Lease") between Lessor and Lessee to which this Addendum is attached and incorporated. The terms, covenants and conditions set forth
herein are intended to and shall have the same force and effect as if set forth at length in the body of the Lease. To the extent that the provisions of this Addendum are inconsistent with any
provisions of the Lease, the provisions of this Addendum shall supersede and control. 

50. RENT SCHEDULE: Monthly base rent shall be paid according to the following schedule: 

	February 15, 2004 through March 31, 2004	 	$	3,284.00	 	 
	April 1, 2004 through February 28, 2005	 	$	2,189.00	 	 
	March 1, 2005 through February 28, 2006	 	$	2,276.00	 	 
	March 1, 2006 through February 28, 2007	 	$	2,367.00	 	 

34

 

51. LESSOR EXCULPATION: It is expressly understood and agreed that notwithstanding anything in this Lease to the contrary, and
notwithstanding any applicable law to the contrary, the liability of Lessor and any of the officers, directors, shareholders, employees, servants or agents of Lessor ("Lessor Parties") hereunder
(including any successor lessor) and any recourse by Lessee against Lessor or the Lessor Parties shall be limited solely and exclusively to an amount which is equal to the interest of Lessor in the
Premises and neither Lessor, nor any of the Lessor Parties, shall have any personal liability therefore, and Lessee hereby expressly waives and releases such personal liability on behalf of itself and
all persons claiming by, through or under Lessee. 

52. LESSEE DUE DILIGENCE: Not withstanding anything to the contrary anywhere in this Lease, Lessor makes no warranties about conformance of the Premises
with federal, state or local law, including but not limited to the Americans With Disabilities Act, building codes, regulations and any recorded covenants or restrictions, of any kind. Lessee
acknowledges the foregoing and accepts the Premises "as is", including all patent and latent defects and subject to all applicable laws, ordinances and regulations governing and regulating the use of
the Premises, and any recorded covenants or restrictions, based solely on Lessee's own due diligence. Lessee's taking possession of any part of the Premises shall be deemed to be an acceptance
thereof. 

53. RENT: Any and all amounts payable by Lessee to Lessor pursuant to the terms of this Lease shall constitute rent and are sometimes referred to in the
Lease collectively as "rent". 

54. HOLDOVER: Lessee agrees to indemnify, defend, and hold Lessor harmless from all liability, damages, costs (including attorney and court costs),
losses, direct and indirect, suffered by Lessor as a result of Lessee's failure to surrender the Premises upon termination or expiration of this Lease, including, but not limited to, any claims made
by any succeeding tenant. 

55. WAIVER OF JURY TRIAL: Lessor and Lessee agree that in any court proceeding between the parties based on this Lease, or on any such court proceeding
based on events associated with or occurring during the tenancy created thereunder, a trial by jury is waived. All such proceedings shall be tried to a judge. However, in all matters arising under an
Unlawful Detainer action, the parties agree in advance that such matters may be heard by a Commissioner. Nothing in this provision restricts the parties in choosing any form of alternative dispute
resolution, including mediation or arbitration, in resolving any claims arising under this Lease. 

56. COMMON AREA MAINTENANCE/ASSOCIATION FEE: Lessee shall pay to Lessor, as additional rent, monthly common area maintenance and association fees of
$336.70. Said fees shall be paid in addition to Lessee's rent. Lessor reserves the right to increase such fees if the cost charged for such services is increased or if Lessee's usage becomes
excessive. 

57. LESSOR'S WORK: Lessor, at Lessor's sole expense shall provide work consisting of: 1) Patch existing walkthrough in walls adjoining the
existing suites and repaint those areas to match the existing paint, and 2) Lessor shall remove the drop ceiling from the warehouse portion of the suite. Otherwise, the space shall be delivered
in "as is" condition. 

58. LESSEE'S WORK: Lessee, at Lessee's sole expense shall upgrade the existing power in the suite to accommodate its manufacturing machinery. Lessee
shall acquire approval from the City of Carlsbad and the Lessor for all electrical work. 

59. OPTION TO RENEW LEASE: So long as the Lessee remains in good standing throughout the initial lease term, with no items in default of the Lease, the
Lessor shall grant the Lessee the option to renew at the current Fair Market Value for the suite. In no case shall the base rent increase more than six percent (6%) from the amount in the final year
of the initial term. 

60. CONTINGENCY: Offer shall be contingent upon Lessee receiving approval from the City of Carlsbad for intended electrical improvements. 

	LESSOR R J. LAND COMPANY, L.P.	 	LESSEE: Alphatec Manufacturing, Inc.
	 	 	a California Corporation

35

 
EXHIBIT
"A" 

NOTICE
TO OWNERS AND PROSPECTIVE BUYERS

OR TENANTS OF REAL PROPERTY REGARDING THE

AMERICANS WITH DISABILITIES ACT (ADA) 

The
government of the United States has recently enacted the Americans With Disabilities Act (ADA), a federal law codified at 42/USC Section 12101 et seq. Among other requirements of the ADA
that could apply to your property, this act is intended to make owners and tenants of certain types of business establishments defined as "public accommodations" provide facilities that are equally
accessible to persons with a variety of disabilities. State and local laws may also impose requirements. 

The
real estate brokers in this transaction are not qualified to advise you as to what, if any, changes may be required now, or in the future. We recommend that owners and tenants consult attorneys
and
design professionals of their choice for information regarding these mattes and the impact, if any, on the proposed lease or purchase agreement and the property. These are legal issues and you are
responsible for conducting your own independent investigation of these issues. Colliers International cannot give you legal advice on these issues. 

36

 
EXHIBIT
"B" 

RULES
AND REGULATIONS 

	1.
	We
send out monthly invoices as a courtesy. All rent is due on the first day of the month regardless of your date of occupancy.

	2.
	Pay
rent on time to avoid a late charge which is assessed after your grace period. Additionally, Lessee agrees that if two (2) or more rent cheeks are returned for
non-sufficient funds with a six (6) month period, Lessee will be required to do the following:

	a)
	Pay
the next six (6) months' rent by cashier's check.

	b)
	Immediately
deposit with Landlord an additional security deposit equal to one month's rent.

	3.
	No
sign, placard, picture, advertisement, name or notice shall be inscribed, displayed or printed or affixed on or to any part of the outside or inside of the Building without the
written consent of Lessor first. Lessor shall have the right to remove any such sign, placard, picture, advertisement, name or 

        notice
without notice to and at the expense of Lessee. 

	4.
	All
approved signs or lettering on doors shall be printed, painted, affixed or inscribed at the expense of Lessee by a person approved of by Lessor. Lessee shall not place anything or
allow anything to be placed near the glass of any window, door, partition or wall which may appear unsightly from outside the premises as determined by Lessor, provided, however, that Lessee may
furnish and install a Building Standard window covering at all exterior windows. Lessee shall not, without prior written consent of Lessor, tint any window.

	5.
	Your
lease states that "The Lessor is responsible for the exterior walls, roof and foundation." You, as the Lessee, are responsible for the interior, which includes the plumbing,
electrical, walls, ceiling, heat, air-conditioning (subject to Paragraph 7.1 of the lease), doors and windows. Your insurance carrier should provide glass coverage. Lessee shall not
be hold responsible for pre-existing problems with the building.

	6.
	Lessor's
written permission must be obtained before making any improvements or alterations to your premises.

	7.
	Parking
is not assigned or reserved Parking spaces are for in and out parking only. Parking spaces and common area not to be used for vehicle repairs, storage, or overflow work from
your Premises.

	8.
	The
sidewalks, exits, entrances, shall not be obstructed by any of the Lessees or used by them for any purpose other than for ingress and egress from their respective Premises.

	9.
	The
toilet rooms, urinals, washbowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind
whatsoever shall be thrown therein. The cost of any damage caused by Lessee's violation of this rule shall be borne by Lessee.

	10.
	Lessee
shall not in any way deface the Premises or any part thereof.

	11.
	Lessee
shall not use, keep or permit to be used or keep any foul or noxious gas or substance in the Premises, or permit or suffer the Premises to be occupied or used a manner
offensive or objectionable to the Lessor or other occupants of the project by reasons of noise, odors and/or vibrations, or interfere in any way with other tenants or those having business therein.

	12.
	Lessee
shall not use or keep la the Premises any kerosene, gasoline or inflammable or combustible fluid or material, or use any method of heating or air conditioning other than that
supplied by Lessor. 

37

 
	13.
	Lessor
reserves the right to exclude or expel from the Premises any person who, in the judgment of Lessor is intoxicated or under the influence of liquor or drugs, or who shall in any
manner do any act in violation of any of these Rules and Regulations.

	14.
	Lessor
shall have the right, exercisable without notice and without liability to Lessee to change the name and street address of the Building of which the Premises are a part.

	15.
	All
garbage and refuse shall be placed by Lessee in containers. Any excessive amount of refuse (determined in Lessor's sole discretion) shall be disposed of off-site at
Lessee's sole cost and expense. All trash bins shall remain within their enclosures at all times. Doors shall remain closed when not in active use.

	16.
	No
loud speakers, television, phonographs, radios or other devices shall be used in a manner so as to be heard or seen outside of the Leased Premises without the prior written consent
of Lessor.

	17.
	The
outside areas immediately adjoining the Leased Premises shall be kept clean and free from dirt and rubbish by Lessee, to the satisfaction of the Lessor and Lessee shall not place
or permit any construction or materials in such areas. Unless an enclosed yard has been supplied as part of the Leased Premises, no exterior storage shall be allowed including, without limitation, the
storage of motor vehicles, trucks, boats, trailers, pallets, drums,or equipment of any kind or nature. No vehicle shall remain, without regular use on the premises for longer than 24 hours. In
the event any vehicle is left without regular use for a period of more than 24 hours, Lessor shall have the right to have said vehicle towed away at Lessee's expense without further notice.

	18.
	Lessee
shall use at Lessee's cost such pest extermination contractor as Lessor may direct and at such intervals as Lessor may require.

	19.
	Lessee
shall not burn any trash or garbage of any kind in or about the Leased Premises or the Project.

	20.
	No
residential uses, including without limiting the generality of the foregoing, residing, sleeping or cooking are permitted on the Premises or anywhere on the Project.

	21.
	No
animals of any type, including, without limiting the generality of the foregoing, pets, guard dogs, exotic animals, reptiles or birds, are permitted on the Premises or anywhere on
the Project. This provision does not apply to search dogs, or seeing eye dogs.

	22.
	The
Lessee shall not enter upon the roof of the Premises. Lessee may not install anything (antennae, rooftop equipment, etc.) outside its leased premises without written permission
from Lessor. In the event Lessee installs such non-conforming items, Lessor will notify Lessee. If, within three (3) days of such notification, Lessee has not removed said items,
then Lessor may remove and dispose of same at Lessee's expense.

	23.
	Lessee
shall not re-key premises without delivering to Lessor one key to the subject premises which shall be used for emergency access purpose only.

	24.
	Upon
the termination of the tenancy, Lessee shall deliver to the Lessor the keys of offices, rooms, and toilet rooms which shall have been furnished the Lessee or which the Lessee
shall have had made, and in the event of loss of any keys so furnished, Lessee shall pay to Lessor therefore. 

FROM
TIME TO TIME, IT MAY BECOME ADVANTAGEOUS TO MAKE AMENDMENTS TO THIS LIST WHICH ARE IN THE BEST INTERESTS OF BOTH LESSOR AND LESSEE AND WHICH ARE NOT INCONSISTENT WITH THE LEASE. LESSOR RESERVES
THE RIGHT TO MAKE SUCH AMENDMENTS BY GIVING WRITTEN NOTICE TO LESSEE AND LESSEE AGREES TO ABIDE BY ALL SUCH RULES AND REGULATIONS. 

38

 
EXHIBIT
"C" 

NOTICE
TO OWNERS, BUYERS AND TENANTS REGARDING HAZARDOUS WASTES OR SUBSTANCES AND UNDERGROUND STORAGE TANKS 

Comprehensive
federal and state laws and regulations have been enacted in the last few years in art effort to develop controls over the use, storage, handling, cleanup, removal and disposal of
hazardous wastes or substances (including pollutants). Some of these laws and regulations, such as, for example, the so-called "Superfund Act," provide for broad liability schemes wherein
an owner, tenant or other user of the property may be liable for cleanup costs and damages regardless of fault and oven though the contamination occurred prior to the time he acquired an interest in
the property. Other laws and regulations set standards for the handling of asbestos or establish requirements for the use, modification, abandonment, or closing of underground storage tanks. Still
other laws and regulations apply to the release of any pollutants that may reach an aquifer or the environment. 

It
is often difficult to determine whether hazardous wastes or substances are present. With respect to improved property, for instance, various items utilized in the construction of improvements may
contain materials that have been or may in the future be determined to contain hazardous wastes or substances and may need to be specially treated, specially handled and/or removed from the property.
For example, some electrical transformers and other electrical components can contain PCB's, and asbestos has been used in a wide variety of building components such as fire-proofing, air
duct insulation, acoustical tiles, spray-on acoustical materials, linoleum, floor tiles and plaster. Hazardous wastes or substances may be in above-ground and below-ground containers on
the property or may be present on or in soil, water, building components or other portions of the property in areas
that may or may not be accessible or noticeable. It is generally important to obtain expert assistance for site investigations and building inspections. The past uses of the property may also provide
valuable information as to the likelihood of hazardous wastes or substances or underground storage tanks being on the property. 

It
is not practical or possible to list all the applicable laws and regulations or all the areas of concern in this Notice. Therefore, owners, buyers and tenants are urged to consult legal counsel to
determine their respective rights and liabilities with respect to the issues described in this Notice as well as all other aspects of the proposed transaction. You and your counsel should review and
analyze all inspection reports, studies, letters, test results, advisories and similar documents (collectively, "Reports"), addressing the issue of the existence or non-existence on the
property of hazardous wastes or substances or storage tanks. To the extent such Reports are deemed inadequate or do not exist, you should obtain appropriate Reports from qualified independent
inspectors. Finally, you and your counsel should reach an independent conclusion with respect to the impact, if any, of the existence on the property of hazardous wastes or substances or storage
tanks. If hazardous wastes or substances (including pollutants) have been, or are going to be used, stored, handled or disposed of on the property, or if the property has or may have underground
storage tanks, it is essential that legal and technical advice be obtained to determine, among other things, what permits and approvals have been or may be required, if any, the estimated costs and
expenses associated with the use, storage, handling, cleanup, removal or disposal of the hazardous wastes or substances and what contractual provisions and protections are necessary or desirable. 

Colliers
International has not made investigations or obtained Reports regarding the subject matter of this Notice, except as may be described in a separate written document signed by Colliers
international. Colliers International makes no representations regarding the existence or nonexistence of hazardous wastes or substances or underground storage tanks on the property, and has no
expertise in this area that may be relied upon by any party. 

The
term "hazardous wastes or substances" is used in this Notice in its very broadest sense and includes, but is not limited to, petroleum base products, paints and solvents, lead, cyanide, DDT,
printing inks, acids, pesticides, ammonium compounds, asbestos, PCB's, contaminants, toxic wastes, toxic pollutants, dredged soil, solid waste, pesticides, herbicides, fertilizers and other
agricultural 

39

 

chemicals,
incinerator residue, sewage, garbage, sewage sludge, munitions, chemical wastes and products, biological materials, radioactive materials, wrecked or discarded equipment, and mining,
industrial, municipal and agricultural wastes or any other liquid, solid or gaseous pollutants or hazardous substances, and the same or any other wastes or substances subject to regulation under any
State or Federal environmental protection law or regulation. Hazardous wastes or substances and underground storage tanks may be present on all types of real property. This Notice is therefore meant
to apply to any transaction involving any type of real property, whether improved or unimproved. 

The
undersigned acknowledges receipt of a copy of this Notice. 

LESSOR:
ROY P. JOSEPHO AND ROBERTA B. JOSEPHO, TRUSTEES. 

LESSEE:
Alphatec Manufacturing, Inc., a California Corporation 

40

FIRST AMENDMENT TO

STANDARD FORM LESSEE INDUSTRIAL LEASE  

THIS FIRST AMENDMENT DATED MAY 1, 2006 TO THAT CERTAIN LEASE DATED DECEMBER 11, 2003 BY AND BETWEEN RRJ TRUST, SUCCESSOR IN INTEREST TO ROY P. JOSEPHO AND
ROBERTA B. JOSEPHO, TRUSTEES, AS LESSOR, AND ALPHATEC MANUFACTURING, INC., A CALIFORNIA CORPORATION, AS LESSEE.

	A
	Lessee
entered into an industrial building lease dated December 11, 2003 (the "Lease"), affecting certain leasable space designated as approximately 3,367 square feet located at
6078 Corte Del Cedro, Suite B, Carlsbad, California

	B
	Lessor
and Lessee desire to amend the Lease as provided in this Amendment

	C
	Unless
otherwise defined, or the context otherwise indicates, the terms as used herein have the meaning defined in the Lease. The provisions of this First Amendment shall control over
any inconsistent provisions of the Lease. All provisions in the Lease which are not addressed in this Amendment shall remain in full force and effect 

NOW
THEREFORE, in consideration of the Covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor and Lessee as set forth
below. 

The
Lease is hereby amended as follows:

	1.1
	 PARTIES:    Lessee is hereby amended to the Alphatec Spine, Inc., a California Corporation  

	1.3
	 TERM:    The lease term is hereby extended through February 28, 2008  

	1.4
	 BASE RENT:    Monthly Base Rent for the extension term shall be paid according to the following schedule:

March 1,
2007 through February 28, 2008        $2,462.00 

	AGREED:	 	 	 	 
	
LESSOR:	

RRJ TRUST, SUCCESSOR IN INTEREST TO ROY P. JOSEPHO AND ROBERTA B. JOSEPHO, TRUSTEES
	

 	
 	

 	

/s/  ROY P. JOSEPHO      
Roy P. Josepho, Trustee	
 	

Dated	
 	

5/1/06

	
LESSEE:	

ALPHATEC SPINE, INC., A CALIFORNIA CORPORATION, SUCCESSOR IN INTEREST TO ALPHATEC MANUFACTURING, INC.
	
By:	
 	

/s/  VICKY A. ROMANOSKI      
Vicky A. Romanoski, VP/Chief Admin. Officer	
 	

Dated	
 	

5/1/06

QuickLinks

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE—GROSS AIR COMMERCIAL REAL ESTATE ASSOCIATION

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]