Document:

Exhibit 10.2

CHICKEN
ACQUISITION CORP. 

INDEPENDENT DIRECTORS STOCK PLAN

          1.
Purpose of the Plan. The purpose of the Chicken Acquisition Corp.
Independent Directors Stock Plan (“Plan”) is to enable Independent Directors to
elect to receive Stock in lieu of all or any portion of their Directors Fees in
order to align their compensation with the equity interests of the Company’s
stockholders. The Plan was approved by the Board on May 1, 2007.

          2.
Definitions.

                    “Board”
shall mean the Board of Directors of the Company.

                    “Company”
shall mean Chicken Acquisition Corp., a Delaware corporation.

                    “Director
Fees” shall mean the fees paid to an Independent Director for attending a
meeting of the Board of Directors of an EPL Entity or a committee thereof, any
annual retainer paid to an Independent Director for serving as a director of an
EPL Entity or as chairperson of any committee of the Board of Directors of an
EPL Entity, and any other fees paid to an Independent Director for
extraordinary or special services as a director of an EPL Entity, in each case
as established from time to time by the Board of Directors of such EPL Entity.

                    “EPL
Entity” shall mean any of Holdings, EPL Intermediate, Inc., El Pollo Loco, Inc.
and any of their respective wholly owned subsidiaries.

                    “Fair
Market Value” of the Stock on a particular date shall be, if the Common Stock is listed
on a national stock exchange, the officially quoted closing price on such stock
exchange, or if the Common Stock is listed on the NASDAQ National Market, the
officially quoted closing price on NASDAQ, or, if the Common Stock is listed on
NASDAQ but not on the National Market, the average of the closing bid and asked
prices reported by NASDAQ, in each case on the date as of which the value is to
be determined (or if such date is not a trading day, as of the preceding
trading day), or if the Common Stock is not so listed, the fair market value
determined in good faith by the Holdings Board.

                    “Independent
Director” shall mean a director of an EPL Entity who the Board of Directors of
such EPL Entity has determined is independent in accordance with the provisions
of Item 407(a) of Regulation S-K under the Securities Exchange Act of 1934, as
amended.

                    “Holdings”
shall mean EPL Holdings, Inc., a Delaware corporation and an indirect wholly
owned subsidiary of the Company.

                    “Holdings
Board” shall mean the Board of Directors of Holdings.

                    “Stock”
shall mean shares of Common Stock, par value $0.01 per share, of the Company,
and any other equity securities that are substituted for the Stock pursuant to
Section 6 hereof.

                    “Stockholders
Agreement” shall mean the Stockholders Agreement dated as of November 18, 2005,
among the Company and certain other stockholders of the Company, as it may be
amended from time to time.

                    “Termination
Date” shall mean the date an Independent Director’s service on the Holdings
Board terminates, for any reason, as determined by the Holdings Board.

          3.
Stock Subject to the Plan. The maximum number of shares of Stock
reserved for issuance pursuant to the Plan shall be 5000 shares, subject to
adjustment as provided in Section 6 of the Plan.

          4.
Annual Election. Each Independent Director shall be entitled to make an
annual election to receive Stock in lieu of all or any portion of the Director
Fees he or she would otherwise be entitled to receive in cash during the next
year (the “Annual Election”). The Annual Election shall be made on the election
form attached hereto as Appendix A (or on such other form as the Board shall
from time to time approve) and shall be delivered to the Secretary of the
Company and Holdings no later than December 15 of each year; provided, however,
that in 2007, the Annual Election relating to Director Fees earned in 2007 must
be delivered by July 1, 2007. The Annual Election shall apply to Director Fees
earned in the next succeeding year and shall be irrevocable after December 31
of the year in which the Annual Election is made. The Annual Election shall
specify by percentage the amount of Directors Fees that the Independent
Director elects to receive in Stock.

          5.
Payment. Stock in lieu of Director Fees shall be issued on a quarterly
basis within 30 days of the end of each calendar quarter with respect to
Director Fees earned in such quarter; provided, however, that Stock shall be issued
as soon as practicable after the Independent Director’s Termination Date or
upon a termination of the Plan pursuant to Section 11. The Independent Director
shall receive a number of shares of Stock determined by dividing (a) 100% of
the dollar amount of Director Fees the Independent Director elected to forego
during the applicable calendar quarter in exchange for Stock by (b) the Fair
Market Value of the Stock as of the last day of the applicable calendar
quarter. The Company shall not issue fractions of shares. Whenever under the
terms of this Plan a fractional share would otherwise be required to be issued,
the Independent Director shall be paid in cash for such fractional share.

          6.
Change in Capital Structure. In the event of any change in the Stock by
reason of any stock dividend, split, combination of shares, exchange of shares,
reclassification, recapitalization, merger, consolidation or other change in
capitalization or transaction, appropriate adjustment shall be made by the
Board in the number and kind

2

of shares subject to the Plan and any other relevant
provisions of the Plan, whose determination shall be binding and conclusive on
all persons.

          7.
Restrictions on Transfer.

                    (a)
Except as provided in Section 13, the right to receive Stock pursuant to the
Plan (“Right”) may not be transferred, pledged, assigned, hypothecated or
otherwise disposed of in any way. The Right shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Right contrary to the provisions
hereof, and the levy of any execution, attachment or similar process upon the
Right shall be null and void and without effect. 

                    (b)
Any Stock issued to an Independent Director pursuant to the Plan shall be
subject to the provisions contained in the Stockholders Agreement applicable to
Stock held by Management Stockholders (as defined therein) and shall be deemed
Stock (as defined in the Stockholders Agreement) for all purposes thereunder.
If an Independent Director is not a party to the Stockholders Agreement, then
the Company may, as a condition to the issuance of Stock hereunder, require
such Independent Director to become a party to the Stockholders Agreement.

          8.
Restrictive
Legends. All stock
certificates representing Stock issued pursuant to the Plan shall, unless
otherwise determined by the Board, have affixed thereto legends substantially
in the following form: 

	
 

	
 

	
 

	
“THE SHARES
 REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS AGREEMENT AMONG
 CHICKEN ACQUISITION CORP. AND CERTAIN MINORITY STOCKHOLDERS NAMED THEREIN, A
 COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. NO TRANSFER,
 SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
 SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE
 WITH THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT. THE HOLDER OF THIS
 CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF
 THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT.”

	
 

	
 

	
 

	
“THE SHARES
 REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
 ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
 SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER AN EFFECTIVE
 REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT OF 1933 OR
 AN OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

3

          9.
Administration of the Plan. The Board shall have full power, discretion
and authority to interpret and administer the Plan. The Board’s interpretations
and actions shall be final, conclusive and binding on all persons for all
purposes.

          10.
Compliance
with Legal and Trading Requirements. This Plan, an Independent Director’s rights pursuant to an
Annual Election, and the Company’s obligations under this Plan and any Annual
Elections shall be subject to all applicable federal and state laws, rules and
regulations, and to such approvals by any regulatory or governmental agency as
may be required. The Company, in its reasonable discretion, may postpone the
issuance or delivery of Stock until completion of such stock exchange or market
system listing or registration, if the Stock is so listed, or qualification of
such Stock or other required action under any state or federal law, rule or
regulation as the Company may consider appropriate in order to comply with the
applicable laws, and may require any Independent Director to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of Stock in compliance with applicable
laws, rules and regulations. No provisions of this Plan shall be interpreted or
construed to obligate the Company to register any Stock under federal or state
law.

          11.
Amendment or Termination of the Plan. Notwithstanding the existence of
outstanding Annual Elections, the Board may, at any time, amend or terminate
the Plan. Annual Elections in effect at the time of any amendment of the Plan
shall be subject to such amendment. Upon a termination of the Plan, all
outstanding Annual Elections shall be deemed null and void.

          12.
No Right to Renomination. Nothing in the Plan or in any Annual Election
shall confer upon any Independent Director the right to be nominated for
reelection to the Holdings Board.

          13.
Payments upon Death. In the event of an Independent Director’s death,
any Stock issuable to such Independent Director pursuant to the Plan shall be
issued to the beneficiary designated by the Director, or in the absence of an
executed beneficiary form, to the person legally entitled thereto, as
designated under his or her will, or to such heirs as determined under the laws
of intestacy for the state of his or her domicile.

          14.
No Rights as
a Stockholder. An
Independent Director shall not have any rights or privileges of a stockholder
with respect to any Stock unless and until certificates representing such Stock
shall be issued by the Company to such person.

          15.
Governing Law. The Plan and all actions taken under the Plan shall be
governed by and construed in accordance with the laws of the State of Delaware.

4

APPENDIX
A

CHICKEN
ACQUISITION CORP.

Independent
Directors Stock Plan

Annual Election Form

          The
undersigned Independent Director hereby elects to receive Stock in lieu of
Director Fees pursuant to the Chicken Acquisition Corp. (the “Company”)
Independent Directors Stock Plan (the “Plan”) in accordance herewith. This
Annual Election is subject to the terms and conditions of the Plan. Any
capitalized terms used herein that are not defined shall have the meanings
given them in the Plan, a copy of which has been previously delivered to the
undersigned.

	
 

	
 

	
 

	
 

	
 

	
Name:

	
 

	
_______________________________

	
 

	
 

	
 

	
 

	
 

	
Percentage of Director Fees

	
 

	
 

	
 

	
to be paid in Stock:

	
 

	
_________%

          This
election applies to Director Fees earned in the next calendar year and is
irrevocable after December 31 of this year.

Investment Representations

	
 

	
 

	
 

	
The undersigned hereby represents and warrants to
 the Company that:

	
 

	
 

	
 

	
          $     The Stock is being acquired for my own account,
 for investment and without any present intention of distributing or reselling
 such Stock except as may be permitted under the Securities Act of 1933, as
 amended (the “Securities Act”) and applicable state securities laws;

	
 

	
 

	
 

	
          $     I understand that the Stock has not been
 registered under the Securities Act or any state securities law; that the
 Stock must be held indefinitely unless it is registered under the Securities
 Act or unless an exemption from such registration is available; that the
 Company is under no obligation to register the Stock; and, that an exemption
 from registration may not be available;

	
 

	
 

	
 

	
          $     I have a pre-existing business relationship with
 the Company or its officers, directors or controlling persons, and by reason
 of my business or financial experience I have the capacity to protect my own
 interest in connection with the purchase of the Stock; and

	
 

	
 

	
 

	
          $     I am fully aware that there may be no public
 trading market for the Stock and that I may not be able to sell or dispose of
 the Stock.

A-1

          I
will indemnify the Company against and hold it free and harmless from any loss,
damage, expense or liability resulting to the Company if any sale or
distribution of the Stock by me is contrary to these representations and
agreements.

Transfer
Restrictions

          The
undersigned acknowledges and agrees that the Stock is subject to the
restrictions on transfer set forth in the Plan, the terms of which are hereby
incorporated herein by reference.

          The
undersigned acknowledges and agrees that the Company may require an opinion of
counsel acceptable to it to the effect that any subsequent transfer of the
Stock does not violate the Securities Act or applicable state securities laws
and that the certificates for the Stock will bear appropriate legends
prohibiting the transfer thereof except in compliance with the terms hereof and
applicable federal and state securities laws.

Tax Consequences

          The
undersigned understands that the acquisition of the Stock in lieu of Director
Fees could result in adverse tax consequences. The undersigned has consulted
with any tax consultants he deems advisable in connection with this election and
he is not relying on the Company for any tax advice.

	
 

	
 

	
 

	
 

	
Date:

	
_______________________________

	
 

	
_______________________________

	
 

	
 

	
Signature

A-2EXHIBIT 10.3

HARBOR GATEWAY BUSINESS CENTER

HI-TECH/RESEARCH AND DEVELOPMENT

BUILDING LEASE

          Landlord
hereby leases to Tenant, and Tenant hereby hires from Landlord the following
described premises (the “Premises”) located in the following described building
(the “Building”), upon the following terms and conditions. The following Basic
Lease Provisions are an integral part of this Lease and each reference in this
Lease to any Basic Lease Provision incorporates all of the terms provided under such
Basic Lease Provision. In the event of any conflict between any Basic Lease Provision and the
balance of this Lease, the latter shall control. References to specific Articles are for
convenience only and designate some of the Articles where references to the particular Basic
Lease Provisions appear.

BASIC LEASE PROVISIONS

Date of Lease: May 18, 2007

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1.

	
Landlord:
 C.J. SEGERSTROM & SONS, a California general partnership

	
 

	
2.

	
Tenant:
 El Pollo Loco, Inc., a Delaware corporation

	
 

	
3.

	
Tenant’s
 Trade Name: El Pollo Loco

	
 

	
 

	
 

	
4.

	
Building
 Address: 

	
 

	
3535
 Harbor Boulevard, Suite #100

 Costa Mesa, California 92626

	
 

	
5.

	
Target
 Commencement Date: 

	
 

	
Initial
 Premises: October 1, 2007

	
 

	
(2.1) 

	
 

	
 

	
 

	
 

	
 

	
 

	
Additional
 Premises: January 1, 2009

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Expiration
 Date: Ten (10) years and six and
one-half (6 1⁄2) months after actual
Commencement Date for the Initial
Premises (estimated
 to be April 15, 2018).

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
6.

	
Basic
 Annual Rent (triple net):

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(a)

	
Initial
 Annual Rent: $13.44 per square foot of Rentable Area ($294,215.04); triple
 net

	
 

	
(3.1)
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Initial
 Monthly Rent: $1.12 per square foot of Rentable Area ($24,517.92); triple
 net

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(b)

	
The
 Basic Annual Rent shall be increased as set forth in Section 48.4.

	
 

	
(3.4) 

	
 

	
 

	
 

	
 

	
 

	
7.

	
Operating
 Expenses:

	
 

	
(4)
 

	
 

	
 

	
 

	
 

	
 

	
(a)

	
Tenant’s
 Proportionate Share of Total Operating Expenses: Initial Premises: 42.639% and
 Initial Premises together with the Additional Premises: 48.483% (Tenant’s Rentable
 Area/Building Rentable Area)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(b)

	
Initial
 estimated Total Operating Expenses = $ 0.34 per square foot per month for the
 full lease year 2007. Actual Total Operating Expenses for 2007
 shall be determined and used as the basis for adjustments for future years as described in
 Section 4 of Exhibit “B.”

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
8.

	
Rentable
 Area of Premises: The Rentable Area of the Initial premises is 21,891 square
 feet; the Rentable Area of the Additional Premises is 3,000 square feet; the
 Rentable Area of the Initial Premises together with the Additional Premises
 is 24,891 square feet.

	
 

	
(47.5) 

	
 

	
 

	
 

	
 

	
9.

	
Tenant’s
 Allocated Parking Spaces: 125 spaces (Approximately five per 1,000 square feet
 based upon the entire Premises)

	
 

	
(44)
 

i

	
 

	
 

	
 

	
 

	
 

	
10.

	
Deposits: Security: $44,845.29; 1st month’s rent: $31,960.86 (for a
 total of $76,806.15)

	
 

	
(3.1 & 5) 

	
 

	
 

	
 

	
 

	
11.

	
Use of
 Premises: Subject to the limitations set forth in the balance of this Lease,
 solely for general office and corporate headquarters use compatible with a high quality business park, and for no
 other purposes without the prior written consent of Landlord.

	
 

	
(10) 

	
 

	
 

	
 

	
 

	
12.

	
Alterations:
 Tenant shall not make any alterations of or to the Premises without the prior written consent of Landlord
 except as set forth in Section 9.1.

	
 

	
(9) 

	
 

	
 

	
 

	
 

	
13.

	
Brokers: Cushman & Wakefield for the Tenant only.

	
 

	
(38) 

	
 

	
 

	
 

	
 

	
14.

	
Addresses
 for payments and notices: 

	
 

	
(3.5 & 35) 

	
 

	
 

	
 

	
 

	
 

	
Notices to Landlord:

	
 

	
To Tenant

	
 

	
 

	
 

	
 

	
 

	
C.J. Segerstrom & Sons

	
 

	
El Pollo Loco, Inc.

	
 

	
3315
 Fairview Road

	
 

	
3535 Harbor
 Boulevard, Suite 100

	
 

	
Costa Mesa, California 92626

	
 

	
Costa Mesa, CA. 92626

	
 

	
Attn: Controller

	
 

	
Attn: CFO and Legal Dept.

	
 

	
 

	
 

	
 

	
 

	
Payments to Landlord:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
C.J. Segerstrom & Sons 

	
 

	
 

	
 

	
File Number
 54859

	
 

	
 

	
 

	
Los Angeles, California 90074-4859

	
 

	
 

          IN
WITNESS WHEREOF, Landlord and Tenant have executed this Lease, consisting of the foregoing provisions and
Articles 1 through 48 which follow, together with Exhibits “A” through “I” incorporated herein by this reference,
as of the date first
above written.

	
 

	
 

	
 

	
 

	
 

	
 

	
C.J. SEGERSTROM & SONS, 

	
 

	
EL Pollo Loco, Inc., 

	
a California
 general partnership

	
 

	
a Delaware corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
By

	
Henry T. Segerstrom Management LLC, a 
California
 limited liability company,

	
 

	
By

	

	
 

	
Manager

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By

	

	
 

	
Title:

	
SR. VICE PRESIDENT

	
 

	
 

	
By

	

	
 

	
 

	

	
 

	
 

	

	
 

	
 

	
Manager

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By

	
HTS
 Management Co., Inc., 

	
 

	
Title:

	
Senior Vice
 President, General Counsel 

	
 

	
a California corporation, Manager

	
 

	
 

	
and
 Secretary

	
 

	
 

	
By

	

	
 

	
 

	
“Tenant”

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Title: Senior Vice President

	
 

	
 

	
 

	
 

	
 

	
 

	
    “Landlord”

	
 

	
 

	
 

ii

TABLE OF CONTENTS

	
 

	
 

	
 

	
 

	
 

	
Article

	
 

	
 

	
 

	
Page

	

	
 

	
 

	
 

	

	
 

	
Article
 1.

	
 

	
PREMISES

	
 

	
1

	
Article
 2.

	
 

	
TERM

	
 

	
1

	
Article 3.

	
 

	
RENT

	
 

	
2

	
Article 4.

	
 

	
COMMON FACILITIES EXPENSES

	
 

	
3

	
Article 5.

	
 

	
SECURITY
 DEPOSIT

	
 

	
3

	
Article
 6.

	
 

	
UTILITIES

	
 

	
4

	
Article 7.

	
 

	
PAYMENT
 OF TAXES

	
 

	
4

	
Article
 8.

	
 

	
MAINTENANCE AND REPAIR

	
 

	
5

	
Article
 9.

	
 

	
ALTERATIONS
 AND FIXTURES

	
 

	
6

	
Article
 10.

	
 

	
USE
 OF PREMISES; HAZARDOUS MATERIALS

	
 

	
8

	
Article
 11.

	
 

	
ACCEPTANCE
 OF PREMISES

	
 

	
11

	
Article
 12.

	
 

	
LIENS

	
 

	
11

	
Article
 13.

	
 

	
ENTRY
 AND INSPECTION

	
 

	
12

	
Article
 14.

	
 

	
ASSIGNMENT
 AND SUBLETTING

	
 

	
12

	
Article
 15.

	
 

	
INSURANCE
 PROVISIONS

	
 

	
.14

	
Article
 16.

	
 

	
TRANSFER
 OF LANDLORD’S INTEREST

	
 

	
17

	
Article
 17.

	
 

	
DAMAGE
 OR DESTRUCTION

	
 

	
17

	
Article
 18.

	
 

	
EMINENT
 DOMAIN

	
 

	
18

	
Article
 19.

	
 

	
DEFAULTS

	
 

	
18

	
Article
 20.

	
 

	
REMEDIES

	
 

	
19

	
Article
 21.

	
 

	
DEFAULT
 BY LANDLORD

	
 

	
21

	
Article
 22.

	
 

	
SURRENDER
 OF PREMISES; REMOVAL OF PROPERTY

	
 

	
21

	
Article
 23.

	
 

	
COSTS
 OF SUIT

	
 

	
21

	
Article
 24.

	
 

	
WAIVER

	
 

	
22

	
Article
 25.

	
 

	
HOLDING
 OVER

	
 

	
22

	
Article
 26.

	
 

	
SUBORDINATION

	
 

	
22

	
Article
 27.

	
 

	
RULES
 AND REGULATIONS

	
 

	
24

	
Article
 28.

	
 

	
DEFINED
 TERMS

	
 

	
24

	
Article
 29.

	
 

	
SUCCESSORS
 AND ASSIGNS

	
 

	
24

	
Article
 30.

	
 

	
TIME
 OF ESSENCE

	
 

	
24

	
Article
 31.

	
 

	
ENTIRE
 AGREEMENT

	
 

	
24

	
Article
 32.

	
 

	
WORK
 LETTER

	
 

	
25

	
Article
 33.

	
 

	
RIGHT
 OF LANDLORD TO PERFORM

	
 

	
25

	
Article
 34.

	
 

	
LATE
 CHARGE AND INTEREST ON TENANT’S OBLIGATIONS

	
 

	
25

	
Article
 35.

	
 

	
PAYMENTS
 AND NOTICES

	
 

	
25

	
Article
 36.

	
 

	
ESTOPPEL
 CERTIFICATES

	
 

	
26

	
Article
 37.

	
 

	
CENTER
 NAME AND ADDRESS

	
 

	
26

	
Article
 38.

	
 

	
BROKERS

	
 

	
26

	
Article
 39.

	
 

	
NON-DISCLOSURE
 OF LEASE TERMS

	
 

	
27

	
Article
 40.

	
 

	
TENANT’S
 AUTHORITY

	
 

	
27

	
Article
 41.

	
 

	
NO
 OFFER; APPROVAL BY LENDER

	
 

	
27

	
Article
 42.

	
 

	
INABILITY
 TO PERFORM

	
 

	
27

	
Article
 43.

	
 

	
COMMON
 FACILITIES

	
 

	
27

	
Article
 44.

	
 

	
PARKING
 FACILITIES

	
 

	
28

	
Article 45.

	
 

	
TRAFFIC
 AND ENERGY MANAGEMENT

	
 

	
30

	
Article
 46.

	
 

	
SIGNS

	
 

	
30

	
Article
 47.

	
 

	
MISCELLANEOUS

	
 

	
30

	
Article
 48.

	
 

	
ADDENDUM

	
 

	
32

TABLE OF EXHIBITS

	
 

	
 

	
 

	
EXHIBIT
 “A”

	
 

	
DEPICTION
 OF PREMISES AND BUILDING

	
EXHIBIT
 “B”

	
 

	
PAYMENT
 AND ADJUSTMENT OF OPERATING EXPENSES

	
EXHIBIT
 “C”

	
 

	
RULES
 AND REGULATIONS

	
EXHIBIT
 “D”

	
 

	
WORK
 LETTER

	
EXHIBIT
 “E”

	
 

	
TENANT
 SIGN PROGRAM — CRITERIA RESEARCH AND DEVELOPMENT BUILDINGS

	
EXHIBIT
 “F”

	
 

	
FORM
 OF LENDER’S ESTOPPEL CERTIFICATE

	
EXHIBIT
 “G”

	
 

	
FORM
 OF LENDER’S SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

	
EXHIBIT “H”

	
 

	
PARKING
 PLAN

	
EXHIBIT “I”

	
 

	
SPACE
 PLAN 

HARBOR GATEWAY BUSINESS CENTER

HI-TECH/RESEARCH AND DEVELOPMENT LEASE

	
 

	
 

	
 

	
 

	
Tenant:

	
EL
 Pollo Loco, Inc.

	
 

	
 

	
 

	
 

	
Premises:

	
3535
 Harbor Boulevard, Suite 100

 Costa Mesa, California 92626

HARBOR GATEWAY BUSINESS CENTER

HI-TECH BUILDING LEASE

	
 

	
 

	
 

	
Article
 1. 

	
PREMISES

	
 
 

          1.1.
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
portion of that certain building (the “Building”) identified in the applicable
Basic Lease Provision and depicted on
the plan attached hereto as Exhibit “A.” The Initial Premises consists of
approximately 21,891 square feet of Rentable Area and is located as depicted on
Exhibit “A” attached hereto. The Additional Premises consists of approximately
3,000 square feet of Rentable Area and is located as depicted on Exhibit “A”.
The Initial Premises and the Additional Premises are collectively referred to
as the “Premises”. The Premises are located in the Harbor Gateway Business
Center depicted on Exhibit “A” (the “Center”). Subject to Article 9, Tenant has
the right to design and build a patio/seating area substantially as depicted on
Exhibit “I” at the southwest corner of the Premises, which area shall be
maintained by Landlord as part of Common Facilities so long as the area remains
a non-exclusive use area as set forth in section 1.2 below. Tenant may, at its
option, request the patio/seating area to become an exclusive use area and
Landlord and Tenant will negotiate in good faith to attempt to reach mutually
agreeable terms regarding such exclusive use.

          1.2. Tenant
is obtaining a right of exclusive use only of the Premises. Landlord
reserves to itself, its successors and assigns, together with the right to
grant and transfer all or a portion of the same, the non-exclusive right of use
of all portions of the Center other than that occupied by the Premises for all
purposes not inconsistent with Tenant’s use of the Premises.

	
 

	
 

	
 

	
Article
 2. 

	
TERM (See Sections 48.1 and 48.2)

	
 
 

          2.1.
The term for the Initial Premises shall commence on the Target Commencement
Date specified in the applicable Basic Lease Provision or on such earlier or
later date as possession of the Initial Premises is delivered to Tenant by
Landlord (the “Commencement Date”), and shall end on the Expiration Date
specified in the applicable Basic Lease Provision. Possession of the Initial
Premises shall be deemed delivered to Tenant for the purposes of this Article 2
immediately upon notice to Tenant from Landlord that the improvements required
to be installed or constructed by Landlord in the Initial Premises pursuant to
Exhibit “D” hereto, if any, are substantially completed and that a certificate
of occupancy or a temporary certificate of occupancy has been issued. The
determination of Landlord’s engineer or architect that such improvements are
substantially complete shall be conclusive for purposes of establishing the
Commencement Date. If Tenant shall occupy the Initial Premises prior to the
Commencement Date, such occupancy shall be subject to all of the provisions of
this Lease, excluding the provisions relating to rent and other sums payable
hereunder. Such early possession shall not, however, affect the Expiration
Date. Provided that Tenant and its agents do not interfere with the completion
of Landlord’s Work Landlord shall allow Tenant access to the Initial Premises
and the Additional Premises prior to the Substantial Completion of the Initial
Premises (i) four (4) weeks prior to Substantial Completion for Tenant’s
vendors to install telephone wiring, security systems, computer/data cabling
and other equipment wiring, and as to the Initial Premises, (ii) two (2) weeks
prior to Substantial Completion for the purpose of

1

installing
furniture systems, fixtures and equipment (but if in any case such access is to
be prior to the issuance of a certificate of occupancy of the Building by the
City of Costa Mesa, then such access shall be only as allowed by the City of
Costa Mesa). Prior to Tenant’s entry into the Initial Premises or the
Additional Premises as permitted by the terms of this Section 2.1, Tenant shall
submit a schedule to Landlord, for Landlord’s approval (which shall not be
delayed or unreasonably withheld), which schedule shall detail the timing and
purpose of Tenant’s entry. In connection with the foregoing, it is understood and
agreed that Tenant will be separately contracting for the installation of its
telecommunications and data network including, without limitation, all cabling
and related connection points throughout the Initial Premises and the
Additional Premises. Tenant’s contractor shall coordinate all such activities
with Landlord’s contractor. Tenant shall hold Landlord harmless from and
indemnify, protect and defend Landlord against any loss or damage to the
Building or Premises and against injury to any persons caused by Tenant’s
actions pursuant to this Section 2.1.

          2.2. Except as set forth in section 48.8, if
Landlord does not deliver possession of the Initial Premises to Tenant on the
Target Commencement Date, Landlord shall not be subject to any liability for
such failure, but the Commencement Date shall be extended until actual delivery
to Tenant, and the Expiration Date shall be extended by a number of days equal
to the number of days between the Target Commencement Date and the actual
Commencement Date. However, if Landlord’s failure to deliver possession on the
Target Commencement Date is attributable, in whole or in part, to any action or
inaction by Tenant, the Commencement Date shall not be advanced based upon such
late delivery and Landlord shall be entitled to full performance by Tenant
(including the payment of rent) from the Commencement Date as determined
pursuant to Exhibit “D.” In such event, the Expiration Date shall not be
affected.

          2.3.
Within fifteen (15) days following the Commencement Date, Landlord and Tenant
shall execute a letter agreement memorializing the Commencement Date and the
Expiration Date of the term. Failure of Tenant to execute such letter agreement
shall not affect the occurrence of the Commencement Date and Expiration Date in
accordance with Article 2 of this Lease.

          2.4
Tenant agrees to lease the Additional Premises from Landlord. The Additional
Premises consist of 3,000 square feet of Rentable Area as identified in Exhibit
“I”. Landlord shall deliver possession of the Additional Premises to Tenant on
January 1, 2009, with all improvements required to be installed or constructed
by Landlord pursuant to Exhibit “D” completed. Landlord agrees to build and
maintain a demising wall between the Initial Premises and the Additional
Premises until Landlord delivers possession of the Additional Premises on
January 1, 2009. Such demising wall shall be a part of the original
improvements installed by Landlord as Landlord’s Work pursuant to Section 48.7
hereof. Beginning on January 1, 2009 and continuing for the remainder of the
term of the Lease, and any options, the Additional Premises shall be part of
the Premises under this Lease (so that the term “Premises” in this Lease shall
refer to both the Initial Premises and the Additional Premises). Tenant’s lease
of the Additional Premises shall be on the same terms and conditions as the
Initial Premises, including: (a) the same tenant improvement allowance per
square foot of Rentable Area as the Initial Premises; (b) the same Basic Annual
Rent per square foot of Rentable Area as in effect from time to time as
applicable to the Initial Premises; (c) the same formula for determining
Tenant’s Proportionate Share of Operating Expenses based Rentable Area; and (d)
the same Expiration Date. Within fifteen (15) days following the delivery of
the Additional Premises on January 1, 2009, Landlord and Tenant shall execute
an amended letter agreement memorializing the inclusion of the Additional
Premises in the Lease.

	
 

	
 

	
 

	
Article
 3. 

	
RENT (See Sections 48.3 and 48.4)

	
 
 

          3.1.
Tenant shall pay, for each lease year, a basic annual rent in the amount shown
in the applicable Basic Lease Provision and in Section 48.4, in equal monthly
installments payable, without prior notice or demand, on the first day of each
month in advance. If the Commencement Date for the Initial Premises occurs on
other than the first day of a month, the basic rent for the fraction of the
month starting with the Commencement Date shall be prorated and paid on said
Commencement Date. If the term hereof ends on a day other than the last day of
a month, the basic rent for the month during which said expiration occurs shall
be prorated on the basis of the actual number of days in said month. Tenant has
deposited with Landlord the

2

sum
set forth in the applicable Basic Lease Provision as the first month’s basic
rent due hereunder, which sum shall be applied by Landlord, without interest,
to the first installment(s) of basic rent due hereunder until applied in full.

          3.2.
As used herein, a “lease year” is a period of twelve (12) consecutive full
calendar months commencing on January 1 and ending on December 31, except that
if the Commencement Date occurs on a date other than January 1 there shall be a
partial lease year for the period from the Commencement Date to the next
following December 31, both dates inclusive, and the last lease year, if this
Lease expires or is terminated on a date other than December 31, shall be a
partial lease year for the period beginning on January 1 following the last
preceding lease year and ending on the expiration or termination date.

          3.3.
In addition to the basic rent, Tenant agrees to pay Tenant’s Proportionate
Share of Total Operating Expenses as and when provided in Article 4. Basic rent
and such expenses are hereinafter sometimes referred to collectively as the
“rent.”

          3.4.
The basic annual rent to be paid shall be adjusted upward at the times and to
the amounts set forth in Section 48.4.

          3.5.
All rent and other amounts payable to Landlord pursuant to this Lease shall be
paid to Landlord at the second address set forth in the applicable Basic Lease
Provision. Landlord reserves the right, at any time, to change its address for
payments by written notice to Tenant given in the manner provided in Article
35.

	
 

	
 

	
 

	
Article
 4.

	
COMMON FACILITIES EXPENSES

	
 
 

          With
respect to each full or partial lease year, commencing with the lease year in
which the Commencement Date occurs, Tenant shall pay an amount equal to
Tenant’s Proportionate Share of Landlord’s estimate of Total Operating Expenses
for such lease year. At the end of each lease year, an adjustment shall be made
by Landlord, and Tenant shall pay such amount or receive a credit of such amount
as is necessary to adjust Tenant’s payments to the actual Proportionate Share
of Total Operating Expenses for such lease year. Such payments and adjustments
will be made as provided in Exhibit “B.” “Total Operating Expenses” and
“Tenant’s Proportionate Share” are each defined in Exhibit “B.”

	
 

	
 

	
 

	
Article
 5.

	
SECURITY DEPOSIT

	
 

          Tenant
has deposited with Landlord the sum set forth in the applicable Basic Lease
Provision as security for the full and faithful performance of every provision
of this Lease to be performed by Tenant. If Tenant defaults with respect to any
provision of this Lease, Landlord may, but shall not be required to, use, apply
or retain all or any part of this security deposit for the payment of any rent
or other sum in default, or for the payment of any other amount which Landlord
may spend or become obligated to spend by reason of Tenant’s default or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant’s default, including but not limited to costs and attorneys’
fees incurred to recover possession of the Premises upon a default by Tenant.
If any portion of said deposit is so used or applied, Tenant shall within five
(5) days after written demand therefor deposit cash with Landlord in an amount
sufficient to restore the security deposit to its original amount. Landlord
shall not be required to keep this security deposit separate from its general
funds, and Tenant shall not be entitled to interest on such deposit. Tenant
acknowledges that Landlord may invest and reinvest such security deposit for
Landlord’s own account. No notice to Tenant shall be required to enable
Landlord to draw upon such security deposit. Such security deposit may also be
assigned as security in connection with any mortgage of the Center. No
application of Tenant’s security deposit shall (i) cure or constitute a waiver
of a default by Tenant, (ii) fix or determine the amounts which Landlord is
entitled to recover under this Lease or otherwise or (iii) limit or waive Landlord’s
right to pursue any remedies provided for in this Lease. If Tenant shall
faithfully perform every provision of this Lease, the security deposit shall be
applied against any amounts owed by Tenant to Landlord at the expiration or
termination of this Lease and any balance thereof shall be returned to Tenant
(or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder)
within sixty (60) days after Tenant delivers possession of the Premises to
Landlord.

3

	
 

	
 

	
 

	
Article 6.

	
UTILITIES

	
 

          6.1.
Tenant shall pay all charges for
utility services furnished to the Premises during the term, together with all taxes thereon as set forth on the
purveyors’ bills and shall indemnify
Landlord and the Center from and against any such charges or liens arising
therefrom. Landlord contemplates that all such services shall be separately
metered to Tenant; if any such services are not separately metered, Tenant
shall pay a reasonable proportion to be determined by Landlord of all charges
jointly metered with other Premises.

          6.2.
Tenant shall comply with all rules
and regulations which Landlord may reasonably establish and which do not
unreasonably interfere with Tenant’s business operations, for the proper functioning and protection of the
air conditioning, electrical, heating and plumbing systems. Tenant shall not overload any of the
mechanical, electrical, plumbing, sewer or other utility equipment. Landlord
shall not be liable in damages or otherwise for any failure or interruption of
any utility service being furnished to the Premises. However, if (a) one or
more of the utility services to the
Building are unavailable for a period of forty-eight (48) hours or more, (b) such unavailability is the result of
the gross negligence or willful misconduct of Landlord, its employees or agents and (c) as a result of such
unavailability the Premises are rendered untenantable, Basic Rent payable
hereunder shall be abated from and after such forty-eight (48) hour period to and until such service
is again available. Any abatement pursuant to this Section shall be in proportion to the portion of the Premises
which is rendered untenantable, including
totally, if applicable. No abatement pursuant to this Section shall defeat or
diminish any rights of Landlord to
make a claim against any rental interruption insurance maintained by Landlord.

	
 

	
 

	
 

	
Article 7.

	
PAYMENT OF TAXES

	
 

          7.1.
Tenant shall pay, not later than ten
(10) days prior to delinquency, all real property taxes levied or assessed by
any taxing or assessing authority upon, against or with respect to the Premises. The term “real property
taxes” shall include (i) all taxes, assessments and governmental charges and surcharges (including, without limitation,
assessments for public improvements
or benefits whether or not commenced or completed during the term of this
Lease, or for water, sewer, or storm
drains, and other rents, rates, charges, excises, levies, license fees, service
fees, use fees, permit fees and other authorization fees) and all other charges
(in each case, whether general or
special, ordinary or extraordinary, foreseen or unforeseen) of every kind and character (including all penalties and
interest thereon), levied upon or with respect to the Premises, (ii) any tax or
excise on or measured by rents, and (iii) any other tax, however described, levied against Landlord or Tenant on
account of the rent reserved hereunder or on the business of renting the Premises. Without limiting the generality of
the foregoing, real property taxes
shall include any assessment by any governmental authority pursuant to any
enabling statute (such as, for example an “SB 55 Assessment”) or payment to
retire bonds or other indebtedness created by a special assessment district, an
improvement district or other governmental authority (such as, for example,
1911 Act and 1915 Act Bonds). Notwithstanding anything to the contrary in the foregoing, “real property taxes” shall
not include franchise, estate, inheritance,
succession, capital levy, net income or excise profits taxes imposed upon
Landlord, except that if real
property taxes are withdrawn in whole or in part and any substitute tax is made
therefor, such tax shall for the purpose of this Lease be considered a real
property tax, regardless of how
denominated or the source from which collected. Tenant shall, not later than
the delinquency date for any real
property tax, furnish to Landlord a copy of the receipted tax bill or other documentary proof of said payment. Tenant
appoints Landlord as its attorney-in-fact for the purpose of performing, at
Tenant’s sole cost, all acts necessary to cause the Premises to be separately assessed, and Tenant agrees to pay to
Landlord, within ten (10) days after the date of billing, all costs reasonably
incurred by Landlord in performing such acts.

          7.2.
Tenant shall be responsible for and
shall pay not later than ten (10) days prior to delinquency all municipal,
county and state taxes, levies and fees of every kind and nature, including but
not limited to, general or special assessments, assessed during the term of
this Lease against any leasehold interest, leasehold improvement and all
furniture, fixtures, equipment and other personal property of any kind placed,
installed or located within, upon or about the Premises. Tenant shall cause all
taxes imposed upon any personal property situated in the Premises to be levied
or assessed separately from the Premises and not as a lien thereon. Upon
request of Landlord, Tenant shall, not later than the delinquency date for any
such tax, furnish to Landlord documentary proof of payment of said tax.

4

          7.3.
If at any time during the term any of
the above-described taxes are not levied and assessed separately to Tenant,
Tenant shall pay to Landlord (a) that portion of such taxes assessed against
the land underlying the tax parcel which the gross area of the land underlying the Premises bears to the gross area
of the entire tax parcel; plus (b) that portion of such taxes assessed against the improvements
included within the tax parcel which the valuation assigned by the taxing authorities to the Premises
bears to the valuation so assigned to all improvements included within such tax parcel; plus (c) with
respect to the other types of taxes, a reasonable
proportion thereof as determined by Landlord. If separate valuations as to the Premises, the improvements thereto and Tenant’s
personal property in the Premises are not reasonably available to Landlord, then the reasonable determination by
Landlord in good faith, from the
best information reasonably available to it, of the portion of such taxes
assessed against the Premises, the
improvements thereto and Tenant’s personal property in the Premises shall be conclusive. If the Premises, the improvements
thereto
and Tenant’s personal property in the Premises
are not separately assessed and taxed, then such taxes shall be paid to
Landlord within ten (10) days after
Tenant’s receipt of Landlord’s invoice therefor.

          7.4.
Provided that the Premises are separately
assessed and taxed, Tenant may, at
Tenant’s sole risk and cost, contest the amount and/or validity of applicable
taxes by appropriate legal
proceedings; provided, however, that said right shall be availed of only upon condition that Tenant shall indemnify and hold
Landlord and the Center harmless from all losses, costs and expenses, including but not limited to,
Landlord’s reasonable attorneys’ fees and court costs, which in any manner arise from or with respect to such contest
and upon further condition that
Tenant shall take all actions required to prevent the loss or forfeiture of the
Center or any part thereof. The
foregoing shall not, however, relieve, modify, or extend Tenant’s covenant to pay any such taxes at the time and in the manner
provided in this Article unless such proceedings operate to prevent the sale of the Center or any part thereof or the
placing of any lien thereon to satisfy such taxes prior to the final
determination of such proceedings. Upon termination of such proceedings, Tenant
shall promptly pay all taxes then payable and the interest and penalties in
connection therewith, and the charges accruing in such proceedings.

          7.5.
All taxes for the first and last
lease year of this Lease shall be prorated between Landlord and Tenant on the
basis of the fiscal year of the appropriate governmental authority. Taxes which are levied on a fiscal year
basis shall be deemed to apply one-twelfth (1/12) to each calendar month in
such fiscal year.

	
 

	
 

	
 

	
Article 8.

	
MAINTENANCE
 AND REPAIR

	
 

          8.1.
Except as provided in Sections 8.2
and 8.3 and Articles 17 and 18, Tenant at its expense shall keep in first-class
order, condition, and repair (including replacement of parts and equipment, if necessary) the Premises and
every part thereof and all equipment, (excluding all heating, ventilating and
air conditioning equipment) trade fixtures, furnishings and other personal
property in the Premises or serving the Premises, and shall furnish and repair
all expendables (soap, towels,
etc.). Tenant shall promptly at Tenant’s cost make all repairs necessary to
maintain the Premises in first-class condition. Tenant shall provide whatever treatment may be necessary, as often as may be
required, to keep the Premises neat and attractive.

          On
the last day of the term hereof, or on any sooner termination of this Lease, Tenant shall, subject to the provisions of
Articles 17 and 18, surrender the Premises to Landlord in first-class condition, ordinary wear and tear
to the Premises excepted.

          8.2.
Landlord shall repair and maintain the exterior walls of the Building and the
roof and foundations of the Building. Landlord shall also maintain and repair
all equipment installed by Landlord on the exterior of the Building. Landlord
shall not be liable for failure to make any repairs or maintenance unless such
failure persists for an unreasonable time after written notice of the need
therefor is given to Landlord by Tenant. However, if (a) one or more of the
services to the Building (such as HVAC or lighting) are unavailable for a
period of forty-eight (48) hours or more, (b) such unavailability is the
result of the gross negligence or willful misconduct of Landlord, its employees
or agents and (c) as a result of such unavailability the Premises are rendered untenantable, Basic Rent
payable hereunder shall be abated from and after such forty-eight (48)
hour period to and until such service is again available. Any abatement
pursuant to this Section shall be in proportion to the portion of the Premises
which is rendered untenantable, including totally, if applicable. No abatement
pursuant to this Section shall defeat

5

or diminish any rights of Landlord to make a claim
against any rental interruption insurance maintained by Landlord. Except as
provided herein and in Section 6.2 and in Articles 17 and 18, there shall be no
abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from
the making of any repairs, alterations, or improvements in or to any
portion of the Premises, or in or to the fixtures, appurtenances and equipment therein or to the Common Facilities or
the improvements thereon. Landlord’s costs incurred in repair and
maintenance of the Building and the equipment described in this Section shall
be included in Total Operating Costs as defined in Exhibit “B.” Except as
provided in this Article and Articles 17
and 18, Landlord shall not be obligated to repair or maintain the Premises or
to bear any part of the expense of the Premises.

          Tenant
expressly waives and releases its right to make repairs at Landlord’s expense under Sections 1932(1) and 1942 of the
California Civil Code or any other statute or rule of law now or
hereafter in effect.

          8.3. Landlord
shall maintain, repair and replace the heating, ventilating and air conditioning
system in or serving the Premises. Tenant shall reimburse Landlord for
Landlord’s costs so incurred, together with an amount equal to fifteen percent
(15%) of such costs to cover Landlord’s
administrative and overhead expenses. Such reimbursement may be, at Landlord’s election,
retrospective or in advance based upon Landlord’s estimate of the costs to be
incurred and may be in periodic
installments not more frequent than monthly. If Landlord elects to collect such
reimbursement in advance based upon an estimate of costs, at the end of each
lease year Landlord shall adjust as necessary the estimated amounts paid by
Tenant to actual costs with a billing to Tenant for any additional amount due
or a credit to Tenant against the next amounts due equal to any amount paid by
Tenant in excess of the actual costs of Landlord hereunder. Landlord may cause
the maintenance services hereunder to be performed by a service which maintains the system in the Premises and systems
located in other tenant premises in the Center. Unless the provider of
such services allocates its charges among individual tenant premises, Tenant’s obligation hereunder shall be to
reimburse Landlord for a portion of the total cost charged as determined
by Landlord. The amounts to be reimbursed by Tenant pursuant to this Section shall be additional rent.

          8.4. Tenant shall also be responsible to
insure that all truck loading areas and loading
doors which constitute a part of the Premises, if any, are not unreasonably
damaged and do not accumulate litter
or debris as a result of deliveries to and pickups from Tenant. Any unreasonable
costs borne by Landlord (i.e., any costs of work performed by Landlord over
and above Landlord’s standard work with
respect to the Common Facilities) to keep such areas clean and in working order
shall be billed by Landlord to Tenant and Tenant shall pay the same within ten
(10) days after receipt of an invoice from Landlord.

          8.5
Landlord shall secure the MPOE cabinet housing Tenant’s telephone and cable
wiring and related equipment (which cabinet is located in the adjacent tenant’s
premises) with a lock mechanism and
Landlord’s on-site property manager shall maintain keys for access to the
cabinet. In the event of an emergency, Landlord will provide immediate access
to the MPOE cabinet to Tenant to enable
Tenant to repair any emergency condition. Tenant shall work diligently
to complete all repairs and take reasonable steps to minimize any possible
disruption caused by such repairs to the
adjacent tenant. In the event Tenant requires non-emergency access to the MPOE cabinet, Tenant shall provide
at least twenty-four (24) hours advance notice to Landlord and Landlord
shall provide access to Tenant at mutually agreeable times.

	
 

	
 

	
 

	
Article 9.

	
ALTERATIONS
 AND FIXTURES

	 

          9.1.
Tenant shall not make any alterations, additions or improvements (including
replacements and repairs) (“alterations”) of or to the Premises without the
prior written consent of Landlord which consent will not be unreasonably
withheld, conditioned or delayed unless the making or installation of the
alteration (i) affects the Building structural components, (ii) affects the
Building mechanical, electrical, HVAC or plumbing systems, (iii) affects the
exterior appearance of the Building, (iv) does not comply with applicable laws
or regulations, or (v) unreasonably
interferes with the normal and customary business operations of the
other tenants in the Building. If any of clauses (i) to (v) above is applicable
to any proposed alteration, Landlord may give, condition or withhold its consent
at its sole and absolute discretion as to any of the Building’s primary
operating systems, but consent will not be unreasonably withheld, conditioned
or delayed in connection with alterations to the distribution

6

portions of those systems. The
foregoing notwithstanding, in the event that the alteration or improvement project has a value of less than
$50,000.000, does not require a building permit and does not involve any
of the matters covered in clauses (i) though (v), then Landlord’s prior consent
shall not be require provided that Landlord receives not less than ten (10)
business days prior written notice of Tenant’s intent to alter or install
(including a complete description of the work) and such addition or alteration
is in the nature of usual and customary office improvements. All alterations to the roof top elements of the Premises
must comply with Landlord’s standard plans and specifications for such
elements on the Building, which plans are available from Landlord upon request.
Tenant expressly agrees that Landlord may disapprove any alterations of roof top elements that do not comply with Landlord’s
standard plans. Landlord may impose such additional conditions to its
consent to any alteration as Landlord deems reasonable, including, but not limited
to, a requirement that all work be covered by a lien and completion bond in an
amount equal to one and one-half times the estimated cost of the work. Any
request for consent shall be in writing and shall contain architectural plans
describing such work in reasonable detail.
Failure of Landlord to respond to such request within sixty (60) days after
receipt of a complete set of architectural plans shall be deemed approval of
such request. Tenant, at Tenant’s cost,
shall prepare or cause to be prepared and shall deliver to Landlord within
thirty (30) days after completion of any work requiring Landlord’s consent, a
detailed set of “as-built” plans and specifications reflecting the alterations
to the Premises constructed by Tenant.

          All
alterations of or to the Premises shall be scheduled through the office of the Center and shall otherwise be completed in
accordance with the applicable provisions of Exhibit “D” attached
hereto. All alterations of or to the Premises shall become the property of Landlord
and shall be surrendered with the Premises at the end of the term, unless at
the time of approval Landlord expressly requires Tenant to remove all or a
designated portion of such alterations installed
or constructed by Tenant and to repair any damage to the Premises resulting
from such removal.

          All
alterations to the Premises shall be at least equal to the original work in quality.
The adequacy of such work shall be determined by Landlord as measured by the
same standards used for original
construction. Tenant shall be responsible for determining that the Premises
comply with the provisions of this Lease, all matters of record affecting the
Premises, all applicable governmental
requirements, and all exterior architectural design, location and color criteria
as approved by Landlord. All work shall be performed only by a licensed, bonded
contractor approved in advance by Landlord, and shall be made only at such time
or times as shall be approved by Landlord. Tenant shall indemnify and save harmless
Landlord against all actions, claims, and damages by reason of Tenant’s failure
to comply with any of the foregoing provisions.

          The approval by Landlord of any specifications,
working drawings or other plans for alterations to be made by Tenant of
or to the Premises, whether upon commencement of possession by Tenant of the Premises or at any other time during the
term of this Lease, shall not be deemed to be a representation or
warranty by Landlord as to the adequacy or sufficiency of such specifications,
working drawings or other plans or of the improvements or construction contemplated thereby for any use or purpose. By
its approval thereof, Landlord assumes no liability or responsibility
therefor, or for any defect in any improvements or construction made pursuant thereto.

          Before commencement of any work of improvement in
the Premises, Tenant shall give Landlord thirty (30) days written notice
thereof, specifying precisely the expected date of commencement. Landlord may
maintain in the Premises such notices of non-responsibility or other notices as
may be necessary to protect Landlord against liability for liens and claims.

          9.2.
All articles of personal property and all business and trade fixtures,
machinery and equipment, furniture and movable partitions installed by Tenant
at its expense shall be the property of Tenant and may be removed by Tenant at
any time during the last thirty (30) days of the term if Tenant is not in
default hereunder, provided that Tenant repairs any damage to the Premises
caused by such removal. On the expiration of the term, or on any earlier
termination of this Lease, Tenant shall remove all such personal property,
etc., in accordance with the provisions of Article 22.

7

	
 

	
 

	
 

	
Article 10.

	
USE
 OF PREMISES; HAZARDOUS MATERIALS

	 

          10.1. Tenant shall use the Premises only
for the purpose specified in the applicable Basic Lease Provision and for no
other purpose without the prior written consent of Landlord. Tenant shall not
use the Premises in violation of any applicable law, ordinance or governmental
regulation or of the certificate of occupancy issued for the Premises, and
shall, upon five (5) days’ written notice from Landlord, discontinue any use of
the Premises which is declared by any governmental authority having
jurisdiction to be a violation of any applicable law, ordinance or governmental regulation or of said certificate of
occupancy. Tenant shall promptly comply with all protective covenants
and architectural standards applicable to the Premises and all present and
future laws, ordinances, orders, rules, regulations and requirements of all governmental authorities having
jurisdiction over the Premises, or any applicable insurance underwriters.

          Tenant shall not do or permit anything to be done
in or about the Premises which will interfere with the rights of other
occupants of the Center, or injure or annoy them, or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance or commit any waste in, on or about the Premises. Tenant shall not (a) place a load upon
any floor of the Premises which exceeds the floor load per square foot
which such floor was designed to carry, (b) attach or hang any object or item
from the ceiling or roof of the Premises or any structural component of the
Premises without Landlord’s prior written
consent thereto, (c) use an electric cart or any other vehicle, excluding
automobiles, in the Center except as previously approved by Landlord in
writing, or (d) violate any mandatory restrictions imposed by any governmental
authority with respect to conservation of
energy, water, gas or electricity or reduction of automobile or other emissions
or any rules of Landlord adopted in compliance therewith. Tenant shall not do
or permit to be done anything which will injure the Premises or
invalidate or increase the cost of any insurance policy(ies) covering the Premises, the Center and/or property located
therein. Tenant shall maintain no outside storage. Tenant shall promptly upon
demand reimburse Landlord for any additional premium charged for any
such policy maintained by Landlord by reason of Tenant’s failure to comply with
the provisions of this Article.

          10.2. Notwithstanding the foregoing, Tenant
may contest any governmental requirement or
alleged violation thereof, so long as Landlord’s interest in the Premises and
the Center are not thereby adversely affected, and Landlord shall, at Tenant’s
request, join in such contest if its participation is necessary, but at no
expense to Landlord. If any security must be posted, or any order must be obtained to forestall compliance with such
requirement pending the determination of such contest, Tenant shall post
such security or shall obtain such order prior to commencing such contest and such action shall be a condition to
Tenant’s right to contest. If such contest is finally determined
adversely to Tenant, Tenant shall promptly comply with the requirement(s)
determined to be applicable to the Premises and shall indemnify and
hold Landlord harmless from all liabilities, damages, costs (including costs
and attorneys’ fees incurred or awarded in
such contest) and expenses occasioned by any non-compliance by Tenant and
any delay in effecting compliance, including any delay occasioned by a contest
determined adversely to Tenant.

          10.3. Without limiting the generality of
Section 10.01, Tenant covenants and agrees that Tenant, its employees, agents
and other third parties entering upon the Center at the request or invitation
of Tenant shall not bring into, maintain upon or release or discharge in or about the Center any hazardous or toxic
substances or hazardous waste (collectively, “hazardous materials”). The foregoing covenant shall not
extend to substances typically found or used in general office and
administrative environments so long as (a) such substances are maintained only
in such quantities as are reasonably necessary for Tenant’s operations in the
Premises, (b) such substances and any equipment which generates such substances
are used and stored strictly in accordance
with all applicable laws and regulations, the highest standards prevailing in
the industry for such substances and the manufacturers’ instructions therefor,
(c) such substances are not disposed of in or about the Center in a
manner which would constitute a release or discharge thereof and (d) all such
substances and any equipment which generates such substances are removed from
the Center by Tenant upon the expiration or earlier termination of this Lease. Tenant shall, within thirty (30) days
after the Commencement Date, and shall thereafter
within thirty (30) days after any material change and after any specific
request therefor by Landlord, provide to Landlord a written list
identifying any hazardous materials then maintained by Tenant in the Premises
which such materials are not typically found and/or used

8

in an office environment, the use of each such
hazardous material and the approximate quantity of each such hazardous material
so maintained by Tenant, together with written certification by Tenant stating,
in substance, that neither Tenant nor any person for whom Tenant is responsible
has released or discharged any hazardous
materials in or about the Center.

          In
the event that Tenant proposes to conduct any use or to operate any equipment which will or may utilize or generate a hazardous
material other than as specified in the first paragraph of this Section,
Tenant shall first in writing submit such use or equipment to Landlord for approval. No approval by Landlord shall
relieve Tenant of any obligation of Tenant pursuant to this Section, including
the removal, clean-up and indemnification obligations imposed upon Tenant by this Section. Tenant shall, within five
(5) days after receipt thereof, furnish to Landlord copies of all
notices and other communications received by Tenant with respect to any actual or alleged release or discharge of any
hazardous material in or about the Premises or the Center and shall, whether or
not Tenant receives any such notice or communication, notify Landlord in
writing of any discharge or release of hazardous material by Tenant or anyone
for whom Tenant is responsible in or about the Premises or the Center.

          In
the event that Tenant is required to maintain any hazardous materials license
or permit in connection with any use conducted by Tenant or any equipment
operated by Tenant in the Premises, copies
of each such license or permit, each renewal thereof and any communication
relating to suspension, renewal or revocation thereof shall be furnished to Landlord within five (5) days after receipt thereof
by Tenant. Compliance by Tenant with the two immediately preceding sentences shall not relieve Tenant of any
obligation of Tenant pursuant to this Section.

          Upon
any violation of the foregoing covenants, Tenant shall be obligated, at Tenant’s
sole cost, to clean-up and remove from the Center all hazardous materials
introduced into the Center by Tenant
or any third party for whom Tenant is responsible. Such clean-up and removal
shall include all testing and investigation required by any lender, owner or
governmental authorities having
jurisdiction, and preparation and implementation of any remedial action plan required by any governmental authorities having
jurisdiction. All such clean-up and removal activities of Tenant shall, in each instance, be conducted to the
satisfaction of Landlord and all governmental
authorities having jurisdiction. Landlord’s right of entry pursuant to Article
13 shall include the right to enter, inspect and test the Premises for
violations of Tenant’s covenants herein. If
any governmental authority or lender shall require testing for hazardous
materials in the Premises, then
Tenant shall reimburse Landlord for all costs of such testing upon demand as
additional rent due hereunder.

          Tenant
shall indemnify, defend and hold harmless Landlord, its partners, and its and
their successors, assigns, partners, directors, officers, trustees,
beneficiaries, members, managers, employees, agents, lenders, attorneys
and affiliates and any parties providing contract management or security services at the Center (collectively, the “Indemnified
Parties”) from and against any and all claims, liabilities, losses, actions,
costs and expenses (including attorneys’ fees and costs of defense) incurred by
such Indemnified Parties, or any of them, as the result of (i) the
introduction into or about the Center by Tenant or anyone for whom Tenant is
responsible of any hazardous materials, (ii) the usage, storage, maintenance,
generation, production, disposal, release or discharge by Tenant or anyone for
whom Tenant is responsible of hazardous materials in or about the Center, (iii) the discharge or release in or about the
Center by Tenant or anyone for whom Tenant is responsible of any
hazardous materials, (iv) any injury to or death of persons or damage to or destruction of property resulting
from the use, introduction, production, storage, generation, disposal,
disposition, release or discharge by Tenant or anyone for whom Tenant is
responsible of hazardous materials in or about the Center, and (v) any failure
of Tenant or anyone for whom Tenant is responsible to observe the foregoing
covenants of this Section. Payment shall not be a condition precedent to enforcement
of the foregoing indemnification provision.

          Landlord
shall indemnify, defend and hold harmless Tenant, its successors, assigns,
partners, directors, officers, employees, (collectively, the “Tenant
Indemnified Parties”) from and against any
and all claims, liabilities, losses, actions, costs and expenses (including attorneys’ fees and costs of defense) incurred by
such Tenant Indemnified Parties, or any of them, as the result of (i)
the introduction into or about the Center by Landlord, its employees or agents of any hazardous materials in violation of
applicable law, (ii) the usage, storage, maintenance, generation, production,
disposal, release or discharge by Landlord, its employees

9

or
agents of hazardous materials in or about the Center in violation of applicable
law or (iii) the discharge or release in or about the Center by Landlord,
its employees or agents of any hazardous materials in violation of applicable
law.

          Upon
any violation of the foregoing covenants Landlord shall be entitled to exercise
all remedies available to a landlord against a defaulting tenant, including but
not limited to those set forth in Article 20. Without limiting the generality of the
foregoing, Tenant expressly agrees that upon any such violation Landlord may, at its
option, (A) immediately terminate this Lease or (B) continue this Lease in
effect until compliance by Tenant with its clean-up and removal covenant
notwithstanding any earlier expiration date of the term of this Lease. No action by
Landlord hereunder shall impair the obligations of Tenant pursuant to this Section.

          As
used in this Section, “hazardous materials” shall include asbestos, all petroleum products and
all hazardous materials, hazardous wastes and hazardous or toxic substances as
defined or designated in or pursuant to the comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. §§
9601, et seq.) (including specifically any element, compound, mixture or
solution), the Resource Conservation and Recovery Act, as amended (42 U.S.C. §§ 6901, et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. §§
2601, et seq.), and California Health and Safety Code Section
25316, including such hazardous or toxic substances or wastes as are
identified, defined or listed elsewhere where such identifications, definitions
or lists are incorporated into such acts or code section by reference, as well as all products
containing such hazardous substances. In addition, “hazardous materials”
shall include any substance designated pursuant to the Clean Water Act (33
U.S.C. §§ 1321 et seq.), any hazardous waste having the
characteristics identified under or listed pursuant to the Solid Waste Disposal Act,
(42 U.S.C. §§ 1317(a), et seq.), any hazardous air pollutant listed
under Section 112 of the Clean Air Act (42 U.S.C. §§ 7412, et seq.)
and any imminently
hazardous chemical substance or mixture with respect to which the Administrator
of the
Environmental Protection Agency has taken action pursuant to Section 7 of the
Toxic Substances Control Act (15 U.S.C. §§ 2606, et seq.). The
term also includes, but is not limited to, polycholorinated biphenyls, urea
formaldehyde or related substances. By its signature to this Lease, Tenant confirms
that it has conducted its own examination of the Premises with respect to hazardous materials and
accepts the same “AS IS” and with no hazardous materials present thereon.

          Within
180 days prior to the expiration of this Lease (or within thirty (30) days
after any earlier expiration), Landlord may at its election retain a hazardous
materials consultant to conduct a survey or audit of the Premises to determine
whether or not hazardous materials introduced by Tenant or its agents, employees or
contractors are present in or about the Premises. Tenant shall cooperate fully
with Landlord and such consultant in the conduct of any such survey or audit
and shall reimburse Landlord, as additional rent, for the costs and fees of
such consultant within ten (10) days after receipt of Landlord’s invoice therefor. If
the audit or survey discloses the presence of hazardous materials introduced by Tenant
or its agents, employees or contractors, the fourth, fifth and sixth paragraphs
of this Section 10.3 shall apply to such hazardous materials and Tenant’s obligations
with respect thereto.

          The
covenants contained in this Section 10.3 shall survive the expiration or any earlier termination of
this Lease.

          10.4.
Tenant shall not create or permit to exist in or about the Premises any condition conducive to
the growth of mold, fungus or other potentially dangerous organisms
(collectively, “Biological Toxants”). For this purpose, a condition conducive
to the growth of Biological Toxants shall include the presence of wet or damp
wood, wet or damp cellulose wallboard or other wet or damp materials which may
constitute a food supply for Biological Toxants, including but not limited to
waste food and beverages.

          In the
event that Tenant observes the presence of any Biological Toxant in the
Premises, the Building or the Center, whether by sight or smell, Tenant shall
promptly notify Landlord in writing of such
presence and the precise location thereof. If such presence is the result
of the action or omission of Tenant or its agents, employees or contractors,
Tenant shall promptly, at Tenant’s cost,
conduct such remediation work as shall be necessary to completely remove
the Biological Toxant from the Premises, the Building or the Center, as
applicable. such remediation shall include removal and replacement of any
infected host materials (i.e., wood,

10

wallboard, etc.) as well as any repairs and
refinishing required as the result of such removal and replacement. The
foregoing does not impose upon Tenant an affirmative obligation to seek out any
such conditions but rather, only to report and further investigate conditions
observed in the ordinary course of Tenant’s business.

          If
Tenant is not responsible to remediate such Biological Toxant pursuant to the
immediately preceding paragraph, Landlord shall conduct such remediation and
any repairs and refinishing required as the result of such remediation. The
cost of such remediation, repair, replacement and refinishing shall be included
in Building Operating Expenses or Center Operating Expenses, as applicable.
Tenant shall cooperate with Landlord as reasonably requested in connection with
any such remediation which impacts Tenant’s use of the Premises, the Building
or the Center, as applicable.

          There
shall be no abatement of rent on account of any remediation of a Biological
Toxant for which Tenant is responsible pursuant to the second paragraph of this
Section. In the event of any remediation (a) for which Landlord is responsible
pursuant to this Section and (b) which interferes with Tenant’s use of the
Premises, rent shall be abated for the period of such remediation to the same
degree as the interference with Tenant’s use of the Premises.

          Landlord’s
right of entry pursuant to Article 13 shall include the right to enter, inspect
and test the Premises for the presence of Biological Toxants therein. If any
such inspection and/or testing reveals the presence of Biological Toxants in
the Premises, Landlord or Tenant shall promptly remediate the same pursuant to
the second, third and fourth paragraphs of this Section.

          In
addition, if Tenant violates the covenant set forth in the first paragraph of
this Section, the fourth paragraph (clean-up and removal obligation), the fifth
paragraph (Tenant indemnification obligation) and the sixth paragraph (Tenant
default) of Section 10.3 above shall all apply to such violation.

	
 

	
 

	
 

	
Article 11.

	
ACCEPTANCE OF PREMISES

	
 

          Tenant
acknowledges that, except as provided in this Lease, including but not limited
to section 48.11, neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the Premises or the suitability or
fitness of the Premises for the conduct of Tenant’s business or for any other
purpose. Taking of possession of the Premises by Tenant shall conclusively
establish that the Premises were at such time in satisfactory condition and in
conformity with the provisions of this Lease in all respects, except as to any
items as to which Tenant shall give Landlord a written punchlist in reasonable
detail within fifteen (15) business days after Tenant takes possession of
either the Initial Premises or the Additional Premises, respectively. Landlord
shall promptly correct any actual defects of which it is so notified. Nothing
contained in this Article shall affect the commencement of the term or the obligation
of Tenant to pay rent hereunder.

	
 

	
 

	
 

	
Article 12.

	
LIENS

	
 

          Tenant
shall keep the Premises free from any mechanic’s liens arising out of any work
performed, materials furnished or obligations incurred by Tenant, and agrees to
defend, indemnify and hold harmless Landlord from and against any such lien or
claim or action thereon, together with costs of suit and reasonable attorney’s
fees incurred by Landlord in connection therewith. If any such lien shall be
filed against the Premises, Tenant shall notify Landlord promptly and shall
either cause the same to be discharged of record within twenty (20) days after
the date of filing of the same or, if Tenant in good faith determines to
contest such lien, Tenant shall furnish such security as may be necessary to
(a) prevent any foreclosure proceedings against the Premises during the
pendency of such contest, and (b) cause Chicago Title Insurance Company to
remove such lien as a matter affecting title to the Premises on a preliminary
title report with respect thereto.

          If
Tenant shall fail to perform its obligation in this Section to remove any lien
for which Tenant is responsible, Landlord shall have, in addition to all other
remedies provided herein or by law, the right but not the obligation to cause
such lien to be released by such means as Landlord shall deem proper, including
payment of and/or defense against the claim giving rise to such lien. All sums
paid by Landlord and all expenses incurred by it in connection therewith

11

shall create automatically an obligation of Tenant to
pay an equivalent amount to Landlord as additional rent, which additional rent
shall be payable by Tenant on Landlord’s demand therefor, together with
interest at the maximum rate per annum then permitted by law until paid to
Landlord. Nothing herein shall imply any consent by Landlord to subject
Landlord’s estate to liability under any mechanics’ or other lien law. Tenant
shall give Landlord adequate opportunity, and Landlord shall have the right, to
post such notices of nonresponsibility as are provided for in the mechanics’
lien laws of California.

	
 

	
 

	
 

	
Article 13.

	
ENTRY AND INSPECTION

	
 

          Landlord
and its agents may at all reasonable times during normal business hours and at
any time in case of emergency, enter upon the Premises for the purposes of (a)
inspecting the same, and protecting the interest therein of Landlord, and (b)
taking all required materials and equipment into the Premises, and performing
all work therein which Landlord is required or permitted to perform hereunder,
(c) maintaining any service provided by Landlord to Tenant hereunder and (d)
posting notices of nonresponsibility, all without rebate of rent to Tenant for
any loss of occupancy or quiet enjoyment of the Premises, or damage, injury or
inconvenience thereby occasioned except to the extent of Landlord’s gross
negligence or willful misconduct. Landlord and its agents may also enter and/or
pass through the Premises, at reasonable times during normal business hours, to
show the Premises to holders of encumbrances on the interest of Landlord, to
prospective purchasers, mortgagees or lessees of the Building. During the six
(6) months prior to the expiration date of this Lease, Landlord may exhibit the
Premises to prospective tenants. Landlord may also enter on and/or pass through
the Premises at such times as shall be required by circumstances of emergency.
If during the last month of the term hereof Tenant has removed substantially
all property and personnel from the Premises and completely ceased all business
operations from the Premises, Landlord may enter the Premises and repair, alter
and redecorate the same, without abatement of rent and without liability to
Tenant. If Tenant is not personally present to open the Premises when such an
entry by Landlord is permitted, Landlord may enter by means of a master key
without liability to Tenant except for any failure to exercise due care for
Tenant’s property.

          Nothing
contained herein shall constitute an actual or constructive eviction or relieve
Tenant of any obligation with respect to making any repair, replacement or
improvement or complying with any law, order or requirement of any government
or other authority. Nothing contained herein shall impose upon Landlord any
obligation to Tenant except as specifically provided in this Lease.

          Landlord
may, for the purpose of altering, improving, or repairing the Premises or any
other portion of the Building, erect scaffolding and other necessary structures
where reasonably required by the character of the work to be performed,
provided that the business of Tenant shall be interfered with as little as is
reasonably practicable. Tenant hereby waives any claim for damages for any
injury or inconvenience to or interference with Tenant’s business, any loss of
occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby except to the extent of Landlord’s gross negligence or willful
misconduct. Landlord shall have the right to use any and all means which
Landlord may deem proper to open any doors in an emergency in order to obtain
entry to the Premises, and any such entry to the Premises shall not be
construed or deemed to be a forcible or unlawful entry into, or a detainer of,
the Premises, or an eviction of Tenant from the Premises or any portion
thereof. No provision of this Section shall be construed as obligating Landlord
to perform any repairs, alterations, or decorations, except as otherwise
expressly agreed to be performed by Landlord under this Lease.

	
 

	
 

	
 

	
Article 14.

	
ASSIGNMENT AND
 SUBLETTING (See Section 48.6)

	
 

          14.1.
Tenant shall not, either voluntarily or by operation of law, assign, sell,
encumber, pledge or otherwise transfer all or any part of Tenant’s leasehold
estate, or permit the Premises to be occupied by anyone other than Tenant or
Tenant’s employees, or sublet the Premises or any portion thereof, without
Landlord’s prior written consent in each instance. Consent by Landlord to one
or more assignments or to one or more sublettings shall not operate to exhaust
Landlord’s rights under this Section. The voluntary or other surrender of this
Lease by Tenant or a mutual cancellation hereof shall not work a merger, and
shall, at the option of Landlord, terminate all or any subleases or subtenancies
or shall operate as an assignment to Landlord of such subleases or
subtenancies. If Tenant is a corporation which, under then current guidelines
published by the Commissioner of Corporations, is not deemed a public
corporation,

12

or is an unincorporated association or partnership,
the actual transfer or assignment of any stock or other profit interest in such
corporation, association or partnership in the aggregate in excess of fifty
percent (50%) shall be deemed an assignment under this Article, provided,
however, Landlord’s consent shall not be required and no assignment or transfer
of this Lease shall be deemed to have occurred in connection with a bona fide
public offering of ownership interests in Tenant or by virtue of Tenant filing
a registration statement with the Securities and Exchange Commission for the
issuance of public stock in accordance with the provisions of the Securities
Act of 1933, as amended, and listed on such stock in the New York stock
exchange or another recognized national security exchange and/or in connection
with any restructuring of Tenant’s financing. Tenant agrees to reimburse
Landlord, as additional rent, for Landlord’s reasonable costs and attorneys’
fees incurred in connection with processing and documentation of any requested
assignment, subletting, transfer, change of ownership or hypothecation of this
Lease or Tenant’s interest in the Premises.

          14.2.
If Tenant desires to assign this Lease or to sublet the Premises or any portion
thereof, or to engage in any other transfer described in Section 14.1, it
shall first notify Landlord of its desire to do so and shall submit in writing
to Landlord (i) the name of the proposed subtenant or assignee; (ii) the nature
of the proposed subtenant’s or assignee’s business to be carried on in the
Premises; (iii) the terms and provisions of the proposed sublease or
assignment; and (iv) such reasonable financial information as Landlord may
request concerning the proposed subtenant or assignee, including but not
limited to a balance sheet of the proposed subtenant or assignee as of a date
within 90 days prior to such submission to Landlord.

          14.3.
Within thirty (30) days after Landlord’s receipt of the last of the
information specified in Section 14.2, Landlord shall by written notice to
Tenant elect to (i) consent to the subletting or assignment upon the terms and
to the subtenant or assignee proposed; (ii) refuse to give its consent; or
(iii) if the proposed transaction is (x) an assignment or (y) a sublease of
one-third of the Premises or more and at the end of the term of such sublease,
one year or less shall remain on the term of this Lease, then in either such
event Landlord may terminate this Lease as to the portion (including all) of
the Premises so proposed to be subleased or assigned with a proportionate
reduction in the rent payable hereunder. If Landlord elects to proceed under
clause (iii), Tenant shall be relieved of its obligations under this Lease to
the extent of the area deleted from the Premises. In the event that Landlord
does not elect to proceed under clause (iii), Landlord shall not unreasonably
withhold its consent provided that the financial condition and quality of use
of the proposed subtenant or assignee are equal to or better than that of Tenant.
Landlord may also consent to a proposed subletting or assignment subject to
such conditions as Landlord, in its sole discretion, deems appropriate. No
assignment or subletting consented to by Landlord shall impair or diminish any
covenant, condition or obligation imposed upon Tenant by this Lease or any
right, remedy or benefit afforded Landlord. If Landlord consents or does not
exercise any option set forth herein within said thirty (30) day period, Tenant
may within sixty (60) days after the expiration of said thirty (30) day period
enter into a valid assignment or sublease of the Premises or portion thereof,
upon the terms and conditions described in the information required to be
furnished by Tenant to Landlord, or upon other terms not less favorable to
Tenant; provided, however, that any material change in such terms shall be
subject to Landlord’s consent as provided herein, and provided further that any
amount to be paid to Landlord by Tenant pursuant to Section 14.4 shall be paid
to Landlord upon the consummation of such transaction.

          14.4.
In connection with any assignment or subletting, Landlord shall be entitled to
receive, in the case of a subletting, all rent (however denominated and paid)
payable by the subtenant to Tenant in excess of that payable by Tenant to
Landlord pursuant to the other provisions of this Lease and, in the case of an
assignment, all consideration given, directly or indirectly, by the assignee to
Tenant in connection with such assignment. In both cases, such amounts shall be
paid after recovery by Tenant of Tenant’s transaction expenses as set forth in
section 48.6(a). For the purposes of this clause, “rent” shall mean all
consideration paid or given, directly or indirectly, for the use of the
Premises or any portion thereof. “Consideration” shall include money, services,
property or any other thing of value such as payment of costs, cancellation of
indebtedness, discounts, rebates and the like. “Sublet” and “sublease” shall
include a sublease as to which Tenant is sublessor and any sub-sublease or
other subtenancy, irrespective of the number of tenancies and tenancy levels
between the ultimate occupant and Landlord, and as to which Tenant receives any
consideration, as defined in this Section, and Tenant shall require in any
sublease which it executes that Tenant receive the profit from all
sub-subtenancies, irrespective of the number of levels thereof. The rent or
other consideration to be

13

passed through to Landlord pursuant to this clause
shall be paid to Landlord promptly upon receipt by Tenant and shall be paid in
cash, irrespective of the form in which received by Tenant. If any rent or
other consideration received by Tenant from a subtenant or assignee is in a
form other than cash, Tenant shall pay to Landlord in cash the fair value of
such consideration. Landlord and Tenant agree that the payment required by this
Section represents payment for Landlord’s property rights in and to the
leasehold estate hereby created. Moreover, nothing contained in this Section 14.4
shall be deemed or construed to permit any sub-subletting of all or any portion
of the Premises. Any such sub-subletting shall be only with the prior written
consent of Landlord, and it is Landlord’s policy not to permit any
sub-subletting.

          14.5.
All options to extend, renew or expand, if any, contained in this Lease are
personal to Tenant and to those parties to which Tenant may sublet or assign
without Landlord’s consent in a Permitted Transaction pursuant to Section 48.6
hereof.

          14.6.
No subletting or assignment, even with the consent of Landlord, shall relieve
Tenant of its obligation to pay the rent and to perform all other obligations
to be performed by Tenant, unless such obligation is expressly waived by
Landlord in writing. The acceptance of any payment due hereunder by Landlord
from any other person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any assignment or subletting.

	
 

	
 

	
 

	
Article 15.

	
INSURANCE PROVISIONS

	
 

          15.1.
Tenant shall at all times during the term and at its cost, maintain in full
force and effect a policy or policies of insurance which afford the following
coverages:

               (a)
Worker’s Compensation in the statutorily required amount, including employer’s
liability with a liability amount not less than $1,000,000 per occurrence.

               (b)
Comprehensive General Liability Insurance with a liability amount not less than
$1,000,000 combined single limit for both bodily injury and property damage,
including blanket contractual liability, broad form property damage, personal
injury, completed operations, products liability, fire legal liability, host
liquor liability (or liquor liability, if applicable) and owned and non-owned
automobile coverage.

          The
minimum limit on the coverage provided pursuant to paragraph (b) above shall be
adjusted upward or downward at the expiration of each third lease year as
follows: Not less than sixty (60) days prior to the relevant adjustment date,
Landlord shall request such insurance brokerage firm as is then placing
insurance for Landlord (the “Reviewing Broker”) to review Tenant’s then
existing liability insurance coverage, to review the then use of the Premises
and the claims history with respect thereto and to recommend, in writing, the
amount of coverage to be carried by Tenant. Such recommendation shall be based
upon the then use of the Premises and the liability claims history with respect
to the Premises and shall be certified to be consistent with amounts of
coverage generally recommended by such Reviewing Broker for similar types of
users of property with uses similar to that of the Premises in the geographical
area which includes the Premises. If the Reviewing Broker shall recommend an
increase(s) or decrease(s) in the amount of coverage then provided by Tenant,
Tenant shall promptly increase or decrease its coverage to the recommended
amount(s). In no event shall there be any reduction in the amounts of coverage
provided by Tenant under paragraph (b) below the initial amounts set forth
herein, notwithstanding any recommendation by the Reviewing Broker.

          Landlord,
any lender with respect to the Center, any party providing management or
security services at the Center under contract with Landlord and any other
persons designated by Landlord, shall be added as additional insureds pursuant
to such policies (although they shall not have any obligations as “named”
insureds therein). The insurance required by this Article shall be the primary insurance
as respects Landlord (and any other additional insureds designated by Landlord)
and not contributory. Each policy providing coverage required by paragraph (b)
shall contain an endorsement providing, in substance, that “such insurance as
is afforded hereby for the benefit of [Landlord] shall be primary and any
insurance carried by [Landlord] shall be excess and not contributory.” In no
event shall the limits of any coverage maintained by Tenant be considered as
limiting the liability of Tenant pursuant to this Lease.

14

          15.2.
Tenant shall at all times during the term and at its cost, maintain in effect
policies of insurance covering (a) all tenant improvements on or in the
Premises, providing protection against any risk included within the
classification “Causes of Loss–Special Form” (ISO Form 10 30), including but
not limited to insurance against sprinkler leakage, vandalism and malicious
mischief, such insurance to be in an amount not less than the full replacement
value of such improvements, which shall be determined at the time the policy is
initially obtained, and not less frequently than once every three (3) years
thereafter; (b) all personal property of Tenant located in or at the Premises,
including but not limited to fixtures, furnishings, equipment and furniture, in
an amount not less than their full replacement value, providing protection
against any peril included within the classification “Causes of Loss–Special
Form” (ISO Form 10 30), including but not limited to insurance against
sprinkler leakage, vandalism and malicious mischief; and (c) business
interruption insurance assuring that all rent payable hereunder will be paid
for a period of twelve (12) months if the Premises are destroyed or rendered
inaccessible by a risk insured against by a “Causes of Loss–Special Form” (ISO
Form 10 30) policy, with any endorsements required by this Section. Similarly,
Landlord shall at all times during the term maintain in full force and effect a
policy or policies of fire insurance with an extended coverage endorsement
covering the Building (other than tenant improvements), and Landlord may
maintain such other coverage and endorsements, including, but not limited to,
“Cause of Loss–Special Form” (ISO Form 10 30), sprinkler leakage, vandalism,
malicious mischief, and flood and earthquake insurance, as Landlord deems
necessary or desirable (but exclusive of the coverages maintained by Tenant
pursuant to this Section), such insurance to be in an amount not less than the
full replacement cost of the Building, all improvements constructed thereon and
any additions thereto or replacements thereof, exclusive of foundation and
excavation costs. Landlord’s insurance may include loss of rent insurance
covering losses by perils covered by the aforementioned insurance in amounts
not less than one year’s full rent, the proceeds of which shall be payable to
Landlord and any first mortgagee, as their interests may appear. Said property
insurance shall not contain a coinsurance or contribution provision, but will
contain replacement cost endorsements and deductibles. Landlord may also, but
shall not be obligated to, maintain terrorism coverage in such amount as
Landlord determines. The cost of the insurance maintained by Landlord,
including all deductibles and insurance reserves with respect thereto, shall be
included in Total Operating Expenses pursuant to Article 4 and Exhibit “B.”

          The
proceeds of such insurance, so long as this Lease remains in effect, shall be
used to repair or replace the Building, tenant improvements and personal
property so insured. Upon any termination of this Lease pursuant to Article 17,
the proceeds, if any, of the insurance provided for in clauses (a) and (c) of
this Section and of the insurance maintained by Landlord shall be retained by
Landlord and the proceeds, if any, of the insurance provided for in clause (b)
shall be retained by Tenant.

          15.3.
All insurance required to be carried by Tenant shall be with companies rated A:VIII,
or better, in the then most recent version of Best’s Key Rating Guide and
licensed or otherwise permitted to provide the relevant insurance in the State
of California. Tenant shall deliver to Landlord at least fifteen (15) days
prior to the time when such insurance is required, and thereafter at least
thirty (30) days prior to the expiration or renewal date of any policy
maintained by Tenant, copies of the policies or certificates evidencing such
insurance. All certificates delivered by Tenant pursuant to this Section shall
be on ACORD Form 27. All policies and certificates delivered pursuant to this
Article shall contain liability limits not less than those set forth herein,
shall list the additional insureds and shall specify all endorsements and
special coverages required. Each policy shall contain a provision requiring not
less than ten (10) days written notice to Landlord prior to any cancellation,
non-renewal or material amendment thereof. For the purposes of this Article,
“term” and “term of this Lease” shall mean the period from the Commencement
Date through the later of the expiration or termination of the Lease term or
the date Tenant surrenders possession of the Premises to Landlord.

          15.4.
Landlord shall at all times during the term maintain in full force and effect a
policy or policies of comprehensive liability insurance insuring against loss,
damage or liability for injury to or death of any person or loss or damage to
property occurring in the Common Facilities (as defined in Exhibit “B” hereto)
or in the public areas of the Building, with not less than $2,000,000.00
combined single limit. Landlord or any first mortgagee with an interest in the
Center may from time to time require that such insurance limits be increased to
a level which Landlord or any such first mortgagee reasonably deems necessary
for full and adequate

15

protection. The cost of all insurance obtained by
Landlord hereunder shall be included in Total Operating Expenses (as defined in
Exhibit “B” hereto).

           15.5. Landlord
and Tenant each hereby waives all rights of recovery against the other
and against any other occupant of the Center and against the officers,
employees, agents, representatives and
business visitors of such other party and of such other occupant, for loss of
or damage to such waiving party or to its property or the property of others
under its control, arising from any cause insured against under any
policy of insurance required to be carried by such waiving party pursuant to
Section 15.2 of this Lease (or any other policy of property insurance carried
by such waiving party in lieu thereof) or actually carried by such waiving
party at the time of such loss or damage.
The foregoing waiver shall be effective whether or not a waiving party actually obtains and maintains the property
insurance which such waiving party is required to obtain and maintain pursuant to this Lease (or any substitute
therefor). Landlord and Tenant shall, upon obtaining the policies of
property insurance which they are required hereunder to maintain or otherwise
maintain, give notice to their respective insurance carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.

          15.6.
To the fullest extent permitted by law, Tenant shall indemnify and hold
harmless Landlord, its agents and employees and all partners, owners and
affiliates of Landlord and the owner of the Center from and against all
liabilities for any damage or injury (including, without limitation, loss of
life) to any person or property in or about the Center arising from the use of
the Premises or the Center by Tenant, its subtenants, assignees or licensees or
the respective agents, employees or invitees of any of the foregoing persons,
or any other persons permitted in the
Premises or elsewhere in the Center by Tenant, or any of them. Such indemnification
shall extend to liabilities arising from any activity, work, or thing done,
permitted or suffered by Tenant or any such person in or about the Center and
shall further extend to any liabilities arising from any default in the
performance of any obligation on Tenant’s part hereunder. “Liabilities” shall
include all suits, actions, claims and demands and all expenses (including
attorneys’ fees and costs of defense) incurred in or about any such liability and any action or proceeding brought thereon. If
any claim shall be made or any action or proceeding brought against
Landlord on the basis of any liability described in this Section, Tenant shall,
upon notice from Landlord, defend the same at Tenant’s expense by counsel reasonably satisfactory to Landlord. Provided,
however, that nothing contained herein shall operate to relieve Landlord from any loss, damage, injury, liability,
claim, cost or expense which it is determined by a court of competent
jurisdiction was proximately caused by the sole negligence or willful misconduct
of Landlord or its agents or employees.

          15.7.
Neither Landlord nor its agents or employees shall be liable for any damage to property entrusted to Landlord’s agents
or employees in the Center, nor for loss of any property by theft. Neither Landlord
nor its agents or employees shall be liable for any injury, death or
damage which may be sustained by the person, goods, wares or property of
Tenant, its employees, invitees or visitors or any other person in or about the
Premises, or for loss or interruption of business, caused by or resulting from
any peril which may affect the Premises, whether such damage or injury results
from conditions arising in the Premises or in other portions of the Center or
from other sources, unless solely and proximately caused by the negligence of
Landlord, its agents or employees, as determined by a court of competent jurisdiction. Tenant, as a material consideration
to Landlord, assumes all risk of damage to property and injury to or
death of persons in or about the Center from any cause other than Landlord’s sole negligence as determined by a
court of competent jurisdiction and for damage to the Premises resulting
from any act or negligence of any employee, agent, visitor or licensee of
Tenant. Landlord shall not be liable for any damages arising from any act or
neglect of any other tenant of the Center or any of their officers, employees,
agents, representatives, customers, business visitors or invitees.

          15.8.
Tenant acknowledges that it is aware that the Center is in an area
designated as a “flood hazard area” by the Department of Housing and Urban
Development. Tenant may, but is not
required to, obtain and maintain at Tenant’s cost National Flood Insurance
business and personal property coverage, available from private insurance
companies to tenants in nonresidential
buildings located in flood hazard areas. Such insurance may be required
if Tenant obtains financing in connection with its business in the Premises
from federally supervised, regulated or
insured lenders. When seeking information on such insurance, Tenant
should inform its insurance broker that (a) the Center is located in a
designated “flood hazard area,” (b) the Premises were constructed after 1974 in
full compliance with the City of

16

Costa Mesa’s finish grading
plans and “flood-proofing” criteria adopted to reduce damage from flooding
buildings and their contents and (c) the actual finish floor elevation of the
Premises is higher than the water surface
elevation on the City of Costa Mesa flood plain maps covering the Center. Flood insurance maintained by Landlord
with respect to the Premises, if any, shall not cover improvements made
by Tenant or any property placed by Tenant in the Premises.

          15.9.
Tenant shall give prompt notice to
Landlord in case of fire or accidents in the Premises or in the Building
and of defects therein or in the fixtures or equipment therein.

          15.10.
If on account of the failure of
Tenant to comply with the provisions of this Article 15, Landlord or any
other person is adjudged a co-insurer by its insurance carrier, then any loss or damage which Landlord or such other
person shall sustain by reason thereof shall be borne by Tenant and
shall be immediately paid by Tenant upon receipt of a bill therefor and evidence of such loss.

          15.11.
Landlord makes no representation
that the limits of liability specified to be carried by Tenant under the
terms of this Article are adequate to protect Tenant against Tenant’s undertaking under this Lease. In the event Tenant
believes that any such insurance coverage called for under this Lease is
insufficient, Tenant shall provide, at its own expense, such additional insurance as Tenant deems adequate. In
no event shall the limits of any coverage maintained by Tenant pursuant
to this Article 15 be considered as limiting Tenant’s liability under this Lease.

	
 

	
 

	
 

	
Article 16.

	
TRANSFER
 OF LANDLORD’S INTEREST

	
 

          Upon
any transfer or transfers of Landlord’s interest in the Premises, other than a
transfer for security purposes only, the transferor shall be automatically
relieved of all obligations on the part of Landlord accruing after the date of
such transfer, including the obligation of Landlord under Article 5 to return
the security deposit as provided therein, provided
such obligations are assumed in writing by the transferee. No holder of a
mortgage or deed of trust to which
this Lease is or may be subordinate, and no landlord under a so-called sale leaseback,
shall be responsible in connection with the security deposited, or in
connection with any other funds paid by Tenant hereunder, unless such
mortgagee, holder of a deed of trust or landlord shall actually receive such
funds. The covenants contained in this Lease on the part of Landlord shall, subject to the foregoing, be
binding on Landlord, its successors and assigns, only during and in
respect of their respective periods of ownership of the landlord’s interest in
this Lease.

	
 

	
 

	
 

	
Article 17.

	
DAMAGE
 OR DESTRUCTION

	
 

          17.1.
If (a) the Building is damaged or
destroyed to at least twenty-five percent (25%) of its Rentable Area, or (b)
the Building is partially damaged or destroyed during the last three (3)
years of the term, or (c) the Building is damaged and such damage is caused by
a casualty not insured against by Landlord, then, in any such event, Landlord
may elect to terminate this Lease effective as of the occurrence of the damage
or destruction, by written notice within sixty (60) days after the occurrence.
A total destruction of the Building shall terminate
this Lease.

          17.2.
Upon a partial destruction which does not result in a termination of
this Lease pursuant to Section 17.1, Landlord shall repair the same to the
extent of available insurance proceeds, provided such repairs can be made, in
Landlord’s opinion, within six (6) months after notice to Landlord of the
occurrence of such damage, without the payment of overtime or other premiums,
in conformity with all then applicable laws and regulations, and such partial destruction shall not void this
Lease. If such repairs cannot, in Landlord’s opinion, be made within
such six (6) month period or if available insurance proceeds shall be
insufficient to cover the cost of the
repairs, Landlord may elect to make such repairs within a reasonable time and
pay any cost in excess of available insurance proceeds with this Lease
continuing in effect, or elect to not make such repairs. Landlord’s election to
make such repairs must be evidenced by written
notice to Tenant within sixty (60) days after the occurrence of the damage. If
Landlord does not so elect to make such repairs, this Lease may be
terminated by either party by written notice to the other party given within
fifteen (15) days after the expiration of the period for Landlord’s election,
with such termination to be effective as of the date of occurrence of the damage. During any repair by Landlord pursuant to
this Section, Tenant shall be entitled to a

17

proportionate reduction of rent
while such repairs are being made, such proportionate reduction to be
based upon the extent to which the Premises, or part thereof, may be
untenantable.

          17.3.
No damages, compensation or claim shall be payable by Landlord for
inconvenience, loss of business or annoyance arising from any repair or
restoration of the Premises. Landlord shall use its best efforts to effect such
repairs or restoration promptly and in such manner as not unreasonably to
interfere with Tenant’s use and occupancy. All proceeds of the insurance maintained pursuant to Sections
15.2 and 15.4 upon the Premises (but not Tenant’s personal property therein)
shall be the property of Landlord, whether or not Landlord is obligated to or elects to make any repairs hereunder. The
restoration obligations of Landlord hereunder shall not include repair, restoration or replacement of Tenant’s
equipment or personal property or of any improvements installed by
Tenant.

          17.4.
Tenant waives the provisions of
Section 1932, subdivision 2, and Section 1933, subdivision 4, of the California
Civil Code and all comparable statutes or rules of law now or hereafter in
effect with respect to any partial destruction which Landlord must or may elect
to repair under this Article. The
provisions of this Article constitute an agreed alternative method of
dealing with damage or destruction of the Premises and are in lieu of the less
comprehensive provisions contained in such statutory sections.

	
 

	
 

	
 

	
Article 18.

	
EMINENT
 DOMAIN

	
 

          18.1.
If the entire Premises or greater than twenty-five percent (25%) of the
Rentable Area of the Premises shall be taken under power of eminent domain,
this Lease shall terminate as of the date of such condemnation, or as of the
date possession is taken by the condemning authority, whichever is earlier. No
award for any taking shall be apportioned, and Tenant hereby assigns to
Landlord any award made in such taking or condemnation together with all rights of Tenant in or to the same or
any part thereof. However, nothing contained herein shall give Landlord
any interest in or require Tenant to assign to Landlord any award made to Tenant for the taking of personal
property and fixtures of Tenant and/or for interruption of or damage to
Tenant’s business, provided that such award does not diminish the award to Landlord.

          18.2.
If less than twenty-five percent (25%) of the Rentable Area of the
Premises is so taken, rent shall be abated in proportion to the part of the
Premises so taken, effective the date on
which the condemning authority requires possession. Landlord shall restore the
portion of the Premises remaining usable to as near its former condition as
reasonably possible and this Lease shall
continue in effect. Notwithstanding anything to the contrary in the foregoing,
for a period of ten (10) business days following any such taking, Tenant shall
have the right to terminate the Lease upon
thirty (30) days written notice if the taking of less than twenty-five
percent (25%) of the Rentable Area of the Premises materially interferes with
Tenant’s business operations at the Premises.

          18.3.
Notwithstanding anything to the
contrary in the foregoing, no temporary taking of the Premises or any
part thereof, and/or of Tenant’s rights therein shall terminate this Lease or give Tenant any right to any abatement
of rent; any award to Tenant by reason of such temporary taking shall
belong entirely to Tenant.

          18.4.
A sale by Landlord to any authority
having the power of eminent domain, either under threat of condemnation
or while condemnation proceedings are pending, shall be deemed a taking by
eminent domain for all purposes under this Article. Landlord may, without any
obligation to Tenant, agree to sell and/or convey to the taking authority the
Premises, the Building, the Center or any portion thereof sought by the taking
authority free from this Lease and the rights of Tenant thereunder, without
first requiring that any action or proceeding be instituted or, if instituted,
pursued to a judgment.

	
 

	
 

	
 

	
Article 19.

	
DEFAULTS

	
 

          Each
of the following shall constitute a default hereunder by Tenant:

               (a)
Failure by Tenant to make any payment required to be made by Tenant hereunder,
as and when due. Landlord shall give Tenant five (5) days written notice of such default; provided, however, that any such
notice shall be in lieu of, and not in addition to,

18

any notice required under
Section 1161, et. seq., of the California Code of Civil Procedure, as amended. 

               (b)
In the event that Landlord imposes a parking control system, use by
Tenant and/or Tenant’s agents, employees, customers and invitees of parking
spaces in the Common Facilities in excess of that number of Allocated Parking
Spaces set forth in the applicable Basic Lease Provision, where such use
continues for an aggregate of three (3) days after written notice thereof from
Landlord to Tenant; provided, however, that any such notice shall be in lieu
of, and not in addition to, any notice required under Section 1161, et seq.,
of the California Code of Civil Procedure, as amended. Use of a parking space
for any portion of a day shall be deemed use of the space for a full day for
purposes of this subsection (c).

               (c)
Failure by Tenant to observe or perform any express or implied covenant
or provision of this Lease to be observed or performed by Tenant, other than as
specified in (a) or (b) above, where such
failure continues for an aggregate of twenty (20) days after written
notice thereof from Landlord to Tenant; provided, however, that any such notice
shall be in lieu of, and not in addition
to, any notice required under Section 1161, et seq., of the California
Code of Civil Procedure, as amended; provided, further, that if the nature of
such failure is such that more than twenty
(20) days are reasonably required for its cure, then Tenant shall not be
in default if Tenant commences such cure within said twenty (20) day period,
and thereafter diligently prosecutes such
cure to completion within sixty (60) days after said notice. 

               (d)
(i) The making by Tenant of any
general assignment for the benefit of creditors; (ii) the filing by or
against Tenant of a petition to have Tenant adjudged a “debtor” under 11 U.S.C.
Sec. 101 or a petition for reorganization or arrangement under any law relating
to bankruptcy (unless, in the case of a
petition filed against Tenant, the same is dismissed within thirty (30)
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Tenant’s assets
located at the Premises or of Tenant’s interest in this Lease, where possession
is not restored to Tenant within thirty (30) days; (iv) the attachment,
execution or other judicial seizure of substantially all of Tenant’s assets
located at the Premises or of Tenant’s interest in this Lease, where such
seizure is not discharged within thirty (30) days; or (v) Tenant’s convening of
a meeting of its creditors or any class thereof for the purpose of effecting a
moratorium upon or composition of its debts.

               (e)
Tenant makes or has made or furnishes or has furnished any warranty,
representation, or statement to Landlord in connection with this Lease, or any
other agreement to which Tenant and
Landlord are parties, which is or was false or misleading in any material
respect when made or furnished.

	
 

	
 

	
 

	
Article 20.

	
REMEDIES

	
 

          20.1.
Upon any default by Tenant, Landlord, in addition to any other remedies available
to Landlord, may exercise the following remedies:

               (a)
Terminate Tenant’s right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord. In such event Landlord shall
be entitled to recover from Tenant:

                    (i)
All damages permitted by California Civil Code Sec. 1951.2(a), including the worth at the time of award of
the amount by which the unpaid rent and additional rent for the balance of the
term after the time of award exceeds the amount of such loss that Tenant proves could be reasonably avoided and the cost of
recovering possession of the Premises, expenses of reletting, including
necessary repair, renovation and alteration of the Premises, brokers’ fees
incurred, reasonable attorneys’ fees, and any other reasonable costs; and

                    (ii) At Landlord’s election, such other sums in
addition to or in lieu of the foregoing as
may be permitted from time to time by applicable law. As used herein “rent” includes the basic annual rent and all
other sums required to be paid by Tenant pursuant to this Lease. The
“worth at the time of award” of the amounts due prior to the date of award
shall be computed by allowing interest at the rate per annum determined
pursuant to Article 34 from the date such amounts accrued to Landlord. The
worth at the time of award of amounts due after

19

the date of award shall be
computed by discounting such amounts at one (1) percentage point above
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award.

               (b)
Without terminating or effecting a forfeiture of this Lease or otherwise
relieving Tenant of any obligation hereunder in the absence of express written
notice of Landlord’s election to do so, Landlord may enter and relet the
Premises or any portion thereof at any time or from time to time and for such
term(s) and upon such condition(s) and at such rental as Landlord deems proper. Whether or not the Premises are relet,
Tenant shall pay to Landlord all amounts required hereunder up to the
date that Landlord terminates Tenant’s right to possession, and thereafter
Tenant shall pay to Landlord, until the end of the term hereof, all rent and additional rent required hereunder.
Payments by Tenant shall be due at the times provided in this Lease, and Landlord need not wait until the termination
of this Lease to recover them in any manner. Reletting of the Premises
or any portion thereof shall not relieve Tenant of any obligation hereunder.
Proceeds received by Landlord from such reletting shall be applied: first, to
any indebtedness other than rent due from Tenant; second, to costs of
reletting; third, to the cost of any alterations and repairs to the Premises;
fourth, to rent due and unpaid hereunder. Any residue shall be held by Landlord
and applied in payment of future rent as the same becomes due hereunder. Should that portion of the proceeds received by
Landlord from reletting applied to payment of rent hereunder be less
than the rent payable by Tenant hereunder during any month, Tenant shall pay
such deficiency to Landlord immediately upon demand. Landlord may execute any
lease hereunder in its own name, and the lessee thereunder shall have no
obligation to see to application by Landlord of proceeds received by Landlord,
nor shall Tenant have any right to collect
such proceeds. Landlord shall not by any re-entry or other act be deemed
to accept any surrender by Tenant of the Premises or be deemed to terminate
this Lease or to relieve Tenant of any obligation hereunder, unless Landlord
gives Tenant express written notice of
Landlord’s election to do so.

               (c)
Landlord may, at any time, terminate this
Lease by express written notice to
Tenant of its election to do so. Such termination shall terminate Tenant’s
right to possession but shall not relieve Tenant of any obligation
hereunder accrued prior to the date of termination.
Upon such termination, Landlord may recover from Tenant the amounts determined pursuant
to subsection (a) above.

          20.2.
Any legal action by Landlord to
enforce any obligation of Tenant or in pursuit of any remedy hereunder shall be
timely filed if commenced prior to one (1) year after expiration of the
term or prior to four (4) years after the cause of action accrues, whichever period expires later.

          20.3.
In any action for unlawful detainer, the reasonable rental value of the Premises for the period of the unlawful detainer
shall be the rent and additional rent reserved in this Lease for such
period, unless Landlord or Tenant proves to the contrary by competent evidence.

          20.4.
The rights and remedies reserved to Landlord herein, including those not
specifically described, shall be cumulative, and, except as otherwise provided
by California statutory law in effect at
the time, Landlord may pursue any or all or such rights and remedies, at the
same time or otherwise.

          20.5.
No delay or omission of Landlord to
exercise any right or remedy shall be a
waiver of such right or remedy or of any default by Tenant hereunder.
Acceptance by Landlord of rent or additional rent hereunder shall not be
a waiver of any preceding breach or default by Tenant, other than the failure
of Tenant to pay the particular rent or additional rent accepted, regardless of
Landlord’s knowledge of such preceding breach or default at the time of acceptance,
or a waiver of Landlord’s right to exercise any remedy available to Landlord by
virtue of such breach or default. Acceptance of any payment from a debtor in
possession, a trustee, a receiver or any
other person acting on behalf of Tenant or Tenant’s estate shall not waive
or cure a default under Article 19(d).

20

          20.6.
LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTIONS OF THE
UNITED STATES AND THE STATE OF
CALIFORNIA. EACH PARTY EXPRESSLY AND KNOWINGLY WAIVES AND RELEASES ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ANY
MATTERS ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE
PREMISES, AND/OR ANY CLAIM FOR INJURY
OR DAMAGE.

	
 

	
 

	
 

	
LANDLORD’S
INITIALS

	
 

	
TENANT’S INITIALS

	

	
 

	

	
HTS
SSD 

	
 

	

	
 

	
 

	
 

	
Article 21.

	
DEFAULT
 BY LANDLORD

	
 

          Landlord
shall not be in default in performance of any obligation required of it
hereunder unless and until it has failed to perform such obligation within
thirty (30) days after written notice by Tenant to Landlord specifying wherein
Landlord has failed to perform; provided, however, that if the nature of
Landlord’s obligation is such that more than thirty (30) days are required for
its performance then Landlord shall not be in default if it shall commence such performance within such thirty (30) day
period and thereafter diligently prosecute the same to completion.

	
 

	
 

	
 

	
Article 22.

	
SURRENDER
 OF PREMISES; REMOVAL OF PROPERTY

	
 

          22.1.
Upon expiration of the term or any earlier termination of this Lease, Tenant shall surrender possession of the Premises
to Landlord in good condition, at Tenant’s sole cost and expense,
repairs which are Landlord’s obligation excepted and ordinary wear and tear
excepted. Tenant shall also, without expense to Landlord, remove from the
Premises all debris, all furniture,
equipment, machinery, business and trade fixtures, moveable partitioning and
other articles of personal property owned or installed by Tenant at its
expense in the Premises (exclusive of any
items described in Section 22.3) and all similar articles of any persons
claiming under Tenant unless Landlord exercises its option to have any
subleases or subtenancies assigned to
it. Tenant shall repair all damages to the Premises resulting from such
removal. If requested by Landlord, Tenant shall execute, acknowledge and
deliver to Landlord one or more instruments releasing to Landlord all right,
title and interest of Tenant in and to the Premises.

          22.2.
Whenever Landlord shall re-enter the Premises as provided in Article 20, or as
otherwise provided in this Lease, any property of Tenant not removed by Tenant
upon the expiration of the term (or within forty-eight (48) hours after a
termination by reason of Tenant’s default) shall be considered abandoned
and Landlord may remove any or all of such items and dispose of the same as
provided in California Civil Code Sec. 1980 et seq. or as otherwise provided by law. Tenant waives all claims for
damages caused by Landlord’s re-entering and taking possession of the
Premises or removing and storing the property of Tenant as provided herein, and
no such entry shall be considered a forcible entry.

          22.3.
All fixtures, equipment, alterations or additions attached to or built into the Premises prior to or during the term shall be
and remain part of the Premises and shall not be removed by Tenant at
the end of the term unless otherwise expressly provided for in this Lease or
unless such removal is required by Landlord pursuant to Article 9. Such
fixtures, equipment, alterations and
additions shall include but not be limited to: all floor coverings, drapes,
paneling, molding, doors, built-in cabinets, vaults, plumbing systems,
lighting systems, silencing equipment,
communication systems, all fixtures and outlets for the systems mentioned above
and for all telephone, radio, and telegraph purposes, and any special flooring
or ceiling installations.

	
 

	
 

	
 

	
Article 23.

	
COSTS
 OF SUIT

	
 

          23.1.
If either party incurs any expense, including reasonable attorneys’ fees, in
connection with any action or arbitration instituted by either party by reason
of any alleged default of the other party hereunder or for a declaration of the
rights and obligations of the parties
hereunder, or if Landlord incurs such expense in connection with collecting any
amount

21

due hereunder or enforcing any obligation of Tenant
hereunder, the party prevailing, in the case of an action or proceeding, and
Landlord in the case of such collection or enforcement, shall be entitled to recover such reasonable expenses from
the other party. For purposes of this provision, in any action or
proceeding instituted by Landlord based upon any default or alleged default by
Tenant hereunder, Landlord shall be the prevailing party if (a) judgment is
entered in favor of Landlord or (b) prior to judgment Tenant shall pay or agree
to pay all or any portion of the rent and
charges claimed by Landlord, eliminate the condition(s), cease the act(s) or otherwise
cure the omission(s) claimed by Landlord to constitute a default by Tenant
hereunder.

          23.2.
Should either party (“First Party ”) without fault on the part of First Party,
be made a party to any litigation instituted by the other party (“Second
Party”) or by any third party against Second Party or by or against any
person holding under or using the Premises under license from Second Party, or for the foreclosure of any lien for labor
or material furnished to or for Second Party or any such other person or
arising out of any act or transaction of Second Party or of any such other person, Second Party shall save and hold First
Party harmless from any judgment rendered against First Party or the Premises,
and all costs and expenses, including reasonable
attorney’s fees, incurred by First Party in or in connection with such
litigation.

          23.3
The attorney fees and costs to which Landlord may be entitled to recover pursuant to Sections 23.1 or 23.2 above shall not
be deemed to be additional rent.

	
 

	
 

	
 

	
Article 24.

	
WAIVER

	
 

          Waiver
by Landlord or Tenant of any breach of any provision hereof shall not be a
waiver of such provision as to any subsequent breach of the same or any other
provision hereof. Consent to or
approval of any act by one of the parties shall not render unnecessary the
obtaining of such party’s consent to or approval of any subsequent act. No act
or thing done by Landlord or
Landlord’s agents during the term of this Lease shall be deemed an acceptance
of a surrender of the Premises, and no agreement to accept such a surrender
shall be valid unless in writing and
signed by Landlord. No employee of Landlord or of Landlord’s agents shall have any
power to accept the keys to the Premises prior to the expiration of this Lease,
and delivery of the keys to any such
employee shall not operate as a termination of this Lease or a surrender of the Premises.

	
 

	
 

	
 

	
Article 25.

	
HOLDING
 OVER

	
 

          This
Lease shall terminate without further notice upon expiration of the term. Any
holding over by Tenant after such expiration or any earlier termination shall
not constitute a renewal or give Tenant any
rights hereunder or in or to the Premises, except as otherwise herein provided. This Lease cannot be extended except by
a writing signed by both parties. If Tenant holds over after expiration
of the term, Landlord may, at its option, exercised by written notice to
Tenant, treat Tenant as a tenant from month-to-month commencing on the first
day following the expiration of this Lease
and subject to the terms and conditions herein contained except that the basic
monthly rental, which shall be payable in advance, shall be one hundred fifty
percent (150%) of the basic monthly rental in effect hereunder at the
expiration date. All additional rent provided
herein shall also be payable with respect to such month-to-month tenancy. Any
such month-to-month tenancy shall be terminable at the end of any
calendar month by either party by written
notice to the other given not less than ten (10) days prior to the end of such
month. If Tenant fails to surrender
the Premises upon expiration of this Lease despite demand to do so by Landlord,
Tenant shall indemnify and hold Landlord harmless from all loss or liability,
including without limitation any claims made
by any succeeding lessee, or resulting from such failure to surrender, and
Landlord shall be entitled to the benefit of all provisions of law respecting summary
recovery of possession to the same extent as if statutory or other notice had
been given, without requirement of giving
such statutory or other notice.

	
 

	
 

	
 

	
Article 26.

	
SUBORDINATION

	
 

          At
the option of Landlord, this Lease shall be either superior or subordinate to
all ground or underlying leases, any first mortgage or first deed of trust
which now or hereafter affects the Premises, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Tenant shall, upon written request of Landlord,
execute and deliver such instruments as may be reasonably required to
subordinate the rights of Tenant under this Lease to such ground or underlying leases or to the lien of any such first
mortgage or first deed of trust,

22

or, if requested by Landlord, to
subordinate any ground or underlying lease or the lien of any such first mortgage or first deed of trust to
this Lease. Notwithstanding any subordination, so long as Tenant is not in default hereunder, this
Lease shall not be terminated nor shall Tenant’s quiet enjoyment of the
Premises be disturbed in the event of termination of any such ground or
underlying lease or the foreclosure of any such first mortgage or first deed of
trust. With respect to future lenders, Tenant shall not be required to
subordinate the Lease unless Landlord obtains a non-disturbance agreement from such future lender in a commercially
reasonable form, reasonably
satisfactory to Tenant. In the event of such termination or foreclosure, Tenant
shall become a tenant of and attorn
to the successor-in-interest to Landlord upon the same terms and conditions
contained in this Lease, and shall execute any instrument reasonably required
by such successor for such purpose. Tenant
hereby waives any right to terminate this Lease because of any such lease termination or foreclosure.

          Concurrently
with their execution and delivery of this Lease, Tenant and Landlord shall execute, acknowledge and deliver a subordination,
non-disturbance and attornment agreement
in the form attached hereto as Exhibit “G” (the “Agreement”). Landlord shall promptly deliver to Teachers (as
defined below) an
executed copy of this Lease, the Agreement and a written request that Teachers
(i) execute and acknowledge the Agreement and (ii) approve this Lease as required by Section 41.2. Landlord
shall use commercially reasonable efforts to cause Teachers to approve this Lease in writing and execute the
Agreement within twenty-one (21)
days after the full execution of this Lease. Promptly upon receipt of such
written approval and the fully
executed Agreement, Landlord shall (A) furnish to Tenant a copy of such written
approval, (B) record the Agreement in the office of the County Recorder of Orange
County, California and (C) furnish copies of the Agreement bearing the filing
stamp of such recorder to Tenant and
Teachers. Pending a termination of this Lease pursuant to Section 41.2, each
party shall diligently perform its respective obligations pursuant to this
Lease. Landlord shall have no obligation to commence any architectural
plans or tenant improvement work unless and until the approval of this Lease by
Teachers is obtained and the Agreement is fully executed by the parties thereto.

          If
in connection with any attempt by Landlord to obtain financing to construct the
Premises, or permanent financing upon
completion of construction, the prospective lender shall request modifications
to this Lease as a condition to such financing, Tenant shall not unreasonably
withhold or delay its consent thereto, provided that such modifications do not
materially increase the obligations of Tenant hereunder or materially and
adversely affect the leasehold interest hereby created.

          Tenant
agrees to give the holder of any first mortgage or deed of trust (a “Holder”),
by registered mail, a copy of any notice of default served upon the Landlord,
provided that prior to such notice Tenant
has been notified in writing (by way of notice of assignment of rents and leases or otherwise) of the address of
such Holder. Such notice copy shall be sent to Holder at the same time the notice is served upon Landlord. If Landlord
shall have failed to cure such default within thirty (30) days (or such longer
cure period as Landlord may have under Article 21), Holder shall have an
additional (30) days within which to cure such default or, if such default
cannot be cured within that time, then such additional time as may be necessary
to cure such default (including the time necessary to foreclose or otherwise
terminate its encumbrance, if necessary to effect such cure), and this Lease
shall not be terminated so long as such remedies are being diligently pursued
by Holder.

          Tenant
acknowledges that Landlord has obtained financing on the Center from Teachers
Insurance and Annuity Association of America (such lender and any successor
beneficiary under the Deed of Trust is herein referred to as “Teachers”). In
connection with such financing, Tenant acknowledges that:

               (a)
Landlord has executed in favor of Teachers a deed of trust (the “Deed of
Trust”) encumbering Landlord’s interest in the Center, has assigned to Teachers
the tenant leases at the Center (including
this Lease) and has assigned to Teachers all security deposits under such
tenant leases.

               (b)
Neither Teachers nor any purchaser at a foreclosure of the Deed of Trust
will be liable or responsible for any tenant improvement obligation of Landlord
pursuant to this Lease, any tenant allowance or credit provided to Tenant
pursuant to this Lease or any lease commission payable pursuant to this Lease.

23

               (c)
In no event shall this Lease or any sublease by Tenant of all or any portion
of the Premises ever provide for any rent based, in whole or in part, on the
net income or net profits realized from operation of the Premises or any
portion thereof. In connection with the foregoing
prohibition, Landlord and Tenant acknowledge and agree that:

                    (i)
Tenant will not enter into, and Landlord will not approve, any sublease
providing for rent based, in whole or in part, on the net income or net profits
derived from operation of the Premises or
any portion thereof;

                    (ii)
If (A) Teachers succeeds to the Landlord’s interest under the Lease and
(B) Teachers is advised by legal counsel that all or any portion of the rent
payable under this Lease is or may be deemed to be unrelated business income
within the meaning of the Internal Revenue
Code of 1986 or the regulations issued thereunder, Teachers may elect to unilaterally
amend the calculation of the rent under this Lease so that none of the rent
payable to Teachers hereunder will
constitute unrelated business income. Any such amendment shall not (1) increase
Tenant’s payment obligations under this Lease, (2) increase Tenant’s other obligations under this Lease or (3) reduce the
landlord’s obligations under this Lease.

                    (iii)
Tenant shall, within ten (10) business days after receipt of the same,
execute and deliver any amendment to this Lease or other document prepared by Teachers to give effect to the provisions of
clause (ii).

Nothing contained in this subsection (c) shall
prohibit or limit the payment of percentage rent based upon gross receipts or gross sales (but not net sales or net
profits)

	
 

	
 

	
 

	
Article 27.

	
RULES
 AND REGULATIONS

	
 

          The
Rules and Regulations attached hereto as Exhibit “C” by this reference are hereby incorporated herein and made a part
hereof. Tenant agrees to abide by said Rules and Regulations and any
reasonable and non-discriminatory amendments and/or additions thereto as may be adopted and published by written notice to
tenants by Landlord. Landlord shall not be liable to Tenant for any violation
of such rules and regulations by any other tenant, provided, however, that
Landlord shall use commercially reasonable efforts to enforce such Rules and
Regulations. Any amendment to the Rules and Regulations shall be effective upon
delivery of a copy thereof to
Tenant. Tenant shall be responsible for compliance with such rules and regulations by its employees, agents and business
visitors.

	
 

	
 

	
 

	
Article 28.

	
DEFINED
 TERMS

	
 

          “Landlord”
and “Tenant” include the plural as well as the singular. Words used in the
neuter gender include the masculine and feminine and words in the masculine or
feminine gender include the neuter. If
there be more than one Tenant, the obligations imposed upon Tenant shall be
joint and several. Headings or titles to the articles of this Lease shall have
no effect upon interpretation of any part hereof. Whenever, under the
provisions of this Lease, Landlord is required or agrees to take any
action, Landlord’s obligation to take such action shall be deemed satisfied if Landlord causes such action to be taken by any
other person.

	
 

	
 

	
 

	
Article 29.

	
SUCCESSORS
 AND ASSIGNS

	
 

          Subject
to Article 14, this Lease shall bind the heirs, executors, administrators, personal representatives, successors and assigns
of all parties. Nothing contained herein, however, shall be construed to
confer upon any person other than Landlord and Tenant any rights or remedies
under this Lease.

	
 

	
 

	
 

	
Article 30.

	
TIME
 OF ESSENCE

	
 

          Time
is of the essence with respect to the performance of every provision of this Lease in which time of performance is a
factor.

	
 

	
 

	
 

	
Article 31.

	
ENTIRE
 AGREEMENT

	
 

          This
Lease and the exhibits hereto cover in full all agreements whatsoever between
the parties hereto concerning the Premises, the Building and the Center, and all
preliminary negotiations and agreements with respect to the Premises,
the Building and the

24

Center, except those contained herein or therein, are
superseded and of no further force or effect. No person, firm or corporation
has had any authority from Landlord to make any representations or promises on behalf of Landlord, and Tenant
agrees that if any such representations or promises have been made, Tenant waives all right to rely thereon. No
verbal agreement or implied covenant
shall be held to vary the provisions hereof, any statute, law, or custom to the
contrary notwithstanding. No provision of this Lease may be amended or added to
except by an agreement in writing
signed by the parties hereto or their respective successors in interest. No employee or agent of Landlord shall have
authority, by letter, memorandum or other written communication, to amend, vary
or delete any provision of this Lease. If any term or provision of this
Lease the deletion of which would not adversely affect the receipt of any
material benefit by either party hereunder
shall be held invalid or unenforceable to any extent, the remainder of this
Lease shall not be affected thereby and each term and provision of this Lease
shall be valid and enforceable to the fullest extent permitted by law.

	
 

	
 

	
 

	
Article 32.

	
WORK
 LETTER

	
 

          Landlord
shall cause the interior of the Premises to be completed in accordance with the plans and specifications to be approved
by both parties and upon the terms and conditions set forth in the Work Letter
attached hereto as Exhibit “D” and Tenant agrees to perform all of its
obligations therein at the times and in the manner therein provided.

	
 

	
 

	
 

	
Article 33.

	
RIGHT
 OF LANDLORD TO PERFORM

	
 

          All
covenants and agreements to be performed by Tenant under the terms of this Lease shall be performed at Tenant’s sole cost
and without any abatement of rent. If Tenant shall fail to pay any sum of money, other than rent, required to be paid
by it hereunder or shall fail to perform any other act on its part to be
performed hereunder, and such failure shall continue beyond any applicable
grace period set forth in Article 19, Landlord may, but shall not be obligated
so to do, make any such payment or perform any such other act on Tenant’s part.
Landlord’s election to make such
payment or perform such act on Tenant’s part shall not give rise to any responsibility of Landlord to continue
making the same or similar payments or performing
the same or similar acts. All sums so paid by Landlord and all necessary
incidental costs, together with interest thereon at the rate per annum
determined pursuant to Article 34 from the
date of such payment by Landlord, shall be payable by Tenant to Landlord on
demand as additional rent.

	
 

	
 

	
 

	
Article 34.

	
LATE
 CHARGE AND INTEREST ON TENANT’S OBLIGATIONS

	
 

          Landlord
and Tenant acknowledge that failure by Tenant to pay any amounts due hereunder when due shall cause Landlord to incur
costs not otherwise provided for herein. Accordingly, Tenant shall pay to
Landlord a late charge equal to the greater of 10% of the amount due and unpaid
or $50.00 with respect to any payment due from Tenant hereunder not paid within ten (10) days after the date due.
Landlord and Tenant acknowledge and agree that the late payment by Tenant of rent will cause Landlord to incur fees and
costs which Landlord would not incur
but for such late payment by Tenant. Accordingly, the late payment charge provided for herein is agreed to be reasonable
liquidated damages to Landlord rather than a penalty to Tenant for such late payment. Any amount due from Tenant to
Landlord hereunder which is not paid when due shall bear interest from
the due date until paid, at a rate equal to five points in excess of the discount rate of the Federal Reserve Bank of San
Francisco to member banks as in effect at the date such obligation is due but
not less than ten percent (10%) per annum.
Payment of such late charge and such interest shall not excuse or cure any
default by Tenant under this Lease.

	
 

	
 

	
 

	
Article 35.

	
PAYMENTS
 AND NOTICES

	
 

          All
amounts payable by either party hereunder to the other shall be paid in lawful
money of the United States to the party entitled to receive the same at its
address set forth in the applicable Basic
Lease Provision or at such other address as a party may designate by notice to the other pursuant to this Article. All amounts
to be paid by Tenant shall be paid without deduction or offset. All notices which Landlord or Tenant may be
required to serve on the other may be served, as an alternative to personal
service, by mailing the same by registered or certified mail, postage prepaid
and return receipt requested, addressed as set forth in the applicable Basic
Lease Provision, or, after the Commencement Date, to Tenant at the Premises

25

whether or not Tenant has departed from the Premises,
or addressed to such other addresses as either
party may from time to time designate to the other in writing. Service of any
written notice hereunder shall be
complete upon personal delivery or if deposited in the United States properly
addressed and postage prepaid, on the date of receipt or refusal indicated on
the return receipt. If more than one tenant
is named in this Lease, service of any notice upon any one of said tenants shall be service upon all tenants.
Notices may also be sent by reputable overnight courier and shall be effective
on the date indicated on such courier’s delivery receipt.

	
 

	
 

	
 

	
Article 36.

	
ESTOPPEL
 CERTIFICATES

	
 

          36.1.
Tenant agrees, from time to time upon
not less than thirty (30) days prior notice by Landlord, to execute,
acknowledge and deliver to Landlord a statement in writing certifying that this
Lease is unmodified and in full force and effect (or if there have been
modifications, certifying that the same is in full force and effect as modified
and stating the modifications), the dates to which the basic rent and
additional rent have been paid in advance, if any,
stating whether or not Landlord is in default in performance of any covenant or
agreement contained in this Lease and, if so, specifying each such default of
which the signer has knowledge and the accuracy of any other statements as to
Tenant or this Lease included in such statement or certificate. Any such
statement delivered may be relied upon by any prospective purchaser of
Landlord’s interest in the Premises or any mortgagee thereof or any assignee of
any mortgagee upon Landlord’s interest in
the Premises.

          36.2.
Tenant’s failure to deliver such
statement within such time shall be conclusive upon Tenant that (a) this
Lease is in full force and effect, without modification except as may be
represented by Landlord, (b) there are no uncured defaults in Landlord’s
performance, (c) not more than one month’s
rental has been paid in advance and (d) the other statements therein as to
Tenant or this Lease are accurate.

          36.3.
Without limiting the generality of
Section 36.1, Tenant shall, at any time after the Commencement Date and
upon written request by Landlord, (a) execute and deliver an estoppel
certificate in favor of Landlord’s lender with respect to the Premises in
substantially the form attached hereto as
Exhibit “F” and (b) execute, acknowledge and deliver a subordination,
non-disturbance and attornment agreement in favor of such lender in
substantially the form attached
hereto as Exhibit “G.” In each instance, Landlord shall complete all blanks in
the respective document (using
relevant information with respect to Tenant and this Lease), and Tenant shall retype the estoppel certificate on
Tenant’s letterhead prior to execution. Tenant shall execute,
acknowledge and return both such items to Landlord within twenty (20) days
after Tenant’s receipt of such items from
Landlord and failure to do so shall, upon notice of default and failure to cure
within the time set forth in Article 19(d), constitute a default by Tenant pursuant
to this Lease.

	
 

	
 

	
 

	
Article 37.

	
CENTER
 NAME AND ADDRESS

	
 

          Landlord
may adopt any name it may select for the Center, and Landlord reserves the right at any time and from time to time to
change the name and/or address of the Center and/or the Building. Tenant may use the name of the Center and/or
Building as its advertised business
address for its business in the Premises, but shall not use any such name for
any other purpose. Tenant shall not
acquire any property right in or to any such name or to any word combination which contains all or a part of such
name as the result of such permitted use. Tenant shall not use the name
of the Center and/or the Building, or any part thereof, at any other location
(other than in an advertisement which lists Tenant’s business conducted at the
Premises) or after the termination or
expiration of this Lease.

	
 

	
 

	
 

	
Article 38.

	
BROKERS

	
 

          Landlord
shall be responsible for a broker’s commission to the broker(s), if any, identified
in the applicable Basic Lease Provision, payable only at such time, in such
amount and upon such terms as Landlord and
such broker may agree in writing. Except as to such broker’s commission, each
party represents and warrants to the other that no broker’s fee, finder’s fee
or other compensation of any kind is
due to any person or entity in connection with this Lease. Each party shall
defend, indemnify and hold the other harmless from and against all claims, causes of action and proceedings, and against all
liabilities, costs (including attorneys’ fees and costs of defense),
expenses and damages incurred or awarded therein, which may be instituted by

26

any broker, agent or finder, claiming through, under
or by reason of the conduct of the indemnifying
party in connection with this Lease.

	
 

	
 

	
 

	
Article 39.

	
NON-DISCLOSURE
 OF LEASE TERMS

	
 

          The
terms of this Lease are confidential and constitute proprietary information of Landlord and Tenant. Disclosure of the terms hereof
could adversely affect the ability of Landlord to negotiate other leases
with respect to the Center, and impair Landlord’s relationship with other Center tenants. Each of Landlord and
Tenant agree that they, and their respective partners, officers, directors,
employees and attorneys shall not disclose the terms of this Lease to any other
person except as required by law or the operations of their respective
businesses (such as to their lenders and
accountants). Damages would be an inadequate remedy for the breach of this
provision by either party, and each shall have the right to specific
performance of this provision and to injunctive relief to prevent its breach or
continued breach.

	
 

	
 

	
 

	
Article 40.

	
TENANT’S
 AUTHORITY

	
 

          Each
individual executing this Lease on behalf of Tenant represents that the
execution and delivery of this Lease on behalf of Tenant is duly authorized, in
accordance with (if Tenant is a corporation) a duly adopted resolution
of its Board of Directors or its By-laws, and that
this Lease is binding upon Tenant in accordance with its terms. Tenant shall,
if Tenant is a corporation, at
execution of this Lease deliver to Landlord a certified copy of a resolution of
its Board of Directors or Executive Committee authorizing or ratifying such
execution.

	
 

	
 

	
 

	
Article 41.

	
NO OFFER; APPROVAL BY
 LENDER

	
 

          41.1.
Neither the submission of this Lease to Tenant, nor execution and return
to Landlord, shall create any interest of
Tenant in the Premises or bind Landlord until Landlord executes and delivers
this Lease to Tenant.

          41.2.
The effectiveness of this Lease is subject to the review and approval of
its terms and provisions by Landlord’s
lender, Teachers Insurance and Annuity Association. If Teachers Insurance and Annuity Association does
not approve this Lease, then this Lease shall be null and void and the parties
shall have no further obligations hereunder.

	
 

	
 

	
 

	
Article 42.

	
INABILITY
 TO PERFORM

	
 

          This
Lease and the obligations of Tenant hereunder shall not be affected, impaired or excused because Landlord is unable to fulfill
any obligation hereunder or is delayed in doing so by reason of any cause beyond the reasonable control of Landlord.
Nothing contained in this Lease shall
be construed as abridging Landlord’s right to obtain specific performance of
any covenant of Tenant contained herein.

	
 

	
 

	
 

	
Article 43.

	
COMMON
 FACILITIES

	
 

          43.1.
Landlord shall, at Landlord’s cost,
construct the Common Facilities (as defined in Exhibit “B”) of the Center.
Landlord may construct the Center and the Common Facilities in phases or
stages and not all Common Facilities of the Center may be constructed by the
Commencement Date. Notwithstanding the foregoing, however, Landlord has
constructed or shall construct prior to the Commencement Date such portions of
the Common Facilities as shall be reasonably
required (a) to provide ingress and egress to the Premises and the parking associated
therewith from one or more public streets adjacent to the Center and (b) to
provide to the Premises its Allocated Parking Spaces located within the Common
Facilities pursuant to the “Parking Plan”
attached hereto as Exhibit “H” and made a part hereof. Except as otherwise specifically provided herein, Landlord shall
cause
all “Common Facilities” to be constructed, operated, maintained, repaired,
lighted, cleaned and equipped during the term of this Lease in such manner and
at such times as Landlord determines to be appropriate.

          43.2.
Provided such changes do not materially and adversely affect Tenant’s
use of or access to the Premises, Landlord
may make changes from time to time in the size, shape, location, and extent of
the Common Facilities, which in Landlord’s sole discretion are desirable
(including, but not limited to, the addition, elimination, location, or
relocation of surface, underground, or multiple-deck parking areas, driveways,
entrances, exits, landscaped, or prohibited
areas, and the determination of direction and flow of traffic). No such change
shall

27

entitle Tenant to any abatement
of rent except as provided below; provided, however, that Landlord shall make
no changes in a manner that will unreasonably interfere with Tenant’s use of
the Premises as permitted hereunder. Except as expressly provided in this
Section, Landlord shall not be obligated to design, construct, install, or pay
for any other improvements or assessments
of any type or extent whatsoever. In the event of Landlord’s failure or
inability to design, construct, and install such improvements in a
timely manner, Tenant’s exclusive remedy shall
be to abate payment of rent for a period of time commencing on the date by
which Allocated Parking Spaces are required to be completed and continuing
until that date on which the same are finally completed, but only if Tenant
gives Landlord timely written notice setting forth the facts reasonably giving rise to such rent abatement. No such
delay in completion of such
improvements shall entitle Tenant to terminate this Lease.

          43.3.
Use by Tenant of the Premises shall
include the use of the Common Facilities in common with Landlord and with all
others for whose use the same have been or hereafter may be provided by
Landlord. Landlord may temporarily close any Common Facility for repairs or
alterations, to prevent a public dedication thereof or the accrual of
prescriptive rights therein, or for any other reason deemed sufficient by
Landlord. Landlord shall have exclusive control of all Common Facilities
and may at any time restrain any use thereof except as authorized by rules and
regulations for the use of such areas established or amended by Landlord from time to time. Tenant shall keep all Common
Facilities free and clear of any obstructions created or permitted by or
resulting from Tenant’s operations. If in the opinion of Landlord unauthorized persons are improperly using any
Common Facilities by reason of the presence of Tenant in the Center, then
Tenant, upon demand, shall restrain such persons from such unauthorized use by taking all appropriate
actions. Nothing herein shall affect the right of Landlord to remove any
unauthorized person from the Common Facilities nor to prohibit the use of any Common Facilities by unauthorized persons.

          43.4.
Tenant understands that Landlord, in
its sole discretion, may:

               (a)
Sell or otherwise transfer its interest in the Center, or any portion thereof, including without limitation, the
Premises and the Common Facilities, to any entity which will assume Landlord’s
obligations regarding the same under this Lease;

               (b)
Form an association (“Association”)
to which Tenant and/or subsequent lessees or purchasers must belong and assign
the Common Facilities maintenance, operation, management, repair, replacement
and cleaning (collectively “Maintenance”) obligations under this Lease to such
Association. Any such Association shall have the power to enforce Common
Facilities Maintenance charges through liens against Tenant’s leasehold
interest in the Premises, which liens may be foreclosed upon pursuant to the
terms of the Declaration;

               (c)
Designate property to be included in or eliminate property from the Common Facilities of the Center; and

               (d)
Use the common areas or Common Facilities of the Center while engaged in making alterations in or additions or
repairs to the Center or the buildings therein.

          43.5.
Tenant acknowledges that the Center is subject to the provisions of a certain Declaration as to Easements, Restrictions
and Common Facility Provisions for Harbor Gateway Center dated July 31, 1981,
executed by C. J. Segerstrom & Sons, a partnership, and recorded in
the Office of the County Recorder of Orange County, California (the
“Declaration”). This Lease and the rights and obligations of the parties with
respect to the Common Facilities are subject
to the provisions of the Declaration.

	
 

	
 

	
 

	
Article 44.

	
PARKING
 FACILITIES

	
 

          44.1.
Landlord has constructed or shall construct for the use by Tenant within the
Common Facilities that number of Allocated Parking Spaces set forth in the
applicable Basic Lease Provision and as
identified in the Parking Plan attached as Exhibit “H”. Such parking spaces
may consist of surface parking area(s), spaces in a parking structure or other
parking areas or any combination thereof.
In no event shall Tenant, its agents, employees, customers and invitees
utilize in the aggregate at any time a number of parking spaces in the Common
Facilities in excess of that number of
Allocated Parking Spaces set forth in the applicable Basic Lease

28

Provision.
In addition to any other remedies granted to Landlord in this Lease or by law,
upon default by Tenant
under the terms of this Section 44.1, Landlord shall have the right to tow away
any vehicles belonging to Tenant or Tenant’s
agents, employees, customers or invitees as necessary to reduce the number of
parking spaces used by Tenant and such persons to that number of Allocated
Parking Spaces set forth in the applicable Basic Lease Provision. Upon request
from Landlord, Tenant shall furnish Landlord with a list of its employees’
vehicle license numbers and shall thereafter notify Landlord of any change in
such list within five (5) days after such
change occurs.

          44.2. As used in this
Article, the term “Parking Area” shall include all parking spaces in the Common
Facilities. The Parking Area shall be used by Tenant in common with other persons to whom Landlord may grant a
right of use and Tenant shall not have any reserved spaces in the Parking Area.

          44.3. All costs of cleaning,
maintaining, operating, repairing, holding and making available the Parking
Area shall be included within Common Facilities Expenses, as defined in Exhibit
“B” and a portion thereof shall be included in Tenant’s Share as provided in
Exhibit “B.”

          44.4. Landlord shall keep
the Parking Area in a clean and orderly condition, properly lighted and
landscaped, and shall repair any damage thereto. Nothing herein shall create liability upon
Landlord for damage to motor vehicles of Tenant, its agents, employees, customers or invitees, or for loss of
property from within such motor vehicles, unless caused by the negligence of
Landlord, its agents or employees. Landlord may also establish, and from time to time change, alter and amend, and enforce
against all users of the Parking Area such reasonable rules and
regulations (including the exclusion of employee parking therefrom) as are deemed necessary for the efficient operation and
maintenance of the Parking Area.

          44.5. Landlord shall at all times have exclusive
control of the Parking Area, and may at any time exclude and restrain any
person from use thereof, excepting, however, bona fide customers, patrons and service-suppliers of Tenant who use said area in
accordance with any rules and regulations established by Landlord from time to
time with respect thereto. The rights of Tenant referred to in this Article are
subject to the rights of Landlord and the other tenants of the Center to use
the same in common with Tenant, and it shall be the duty of Tenant to permit
the use of any of said area only for normal parking and ingress and egress by
its agents, employees, customers, patrons, service-suppliers or other invitees.

          44.6. Landlord shall have the right to
designate portions of the Parking Area for “Visitor
Only” parking or “Reserved” for a particular person or entity, and Tenant and
its employees shall not park in any
area so designated. Landlord may from time to time in its sole discretion change such designated areas upon
reasonable advance written notice to Tenant. Tenant assumes responsibility for
compliance by its agents and employees with the parking provisions contained herein. If Tenant’s agents
or employees park in such designated parking areas, then Landlord may tow away any vehicles belonging to Tenant or
Tenant’s employees parked in violation of these provisions, and/or attach
violation stickers or notices to such vehicles. If Landlord elects, or is
required by any governmental authority having jurisdiction, to limit or control
parking in the Center, whether by validation of parking stickers, parking
meters or any other method of assessment, or to undertake any program for bus,
rapid transit, free or reduced cost transportation, Tenant agrees to
participate in such validation, assessment or transportation program under such
reasonable rules and regulations as are from time to time established by
Landlord, all upon reasonable advance written notice to Tenant. Any net income
derived from paid parking shall first be applied by Landlord to reduce the
costs and expenses associated with the Common Facilities. Any such net income
in excess of costs and expenses associated with the Common Facilities shall be
the property of Landlord. Notwithstanding anything herein to the contrary,
Landlord shall not designate parking spaces (for Visitor Only, Reserved or
otherwise) in such manner as to deprive Tenant of the amount of parking to
which Tenant is entitled hereunder.

          44.7.
Landlord
may authorize persons other than tenants of the Center, their agents, employees, customers and invitees
to utilize the Parking Area; provided, however, that in no event shall the number of spaces available for Tenant be less than
that number of Allocated Parking
Spaces set forth in the Basic Lease Provisions. The terms of such usage shall
be as

29

determined by Landlord in
its sole discretion and may include the right to use the Parking Area without charge.

          44.8.
In no event shall Tenant, its employees or agents use an electric cart or any other vehicle in the Center, other than
automobiles, without the prior written consent of Landlord thereto, which
consent may be withheld by Landlord in its sole discretion.

          44.9
The Parking Plan attached as Exhibit “H” depicts certain areas of parking reserved
exclusively for Tenant. Area A contains seven (7) standard stalls reserved
exclusively for Tenant. Area B contains seventeen (17) standard stalls reserved
exclusively for Tenant and two
(2) handicap stalls which shall remain available for common use. The remainder
of Tenant’s parking areas shall be provided in an “in-common” basis on the west
side of the Premises in the area designated
as C on the Parking Plan.

	
 

	
 

	
 

	
Article 45.

	
TRAFFIC AND ENERGY MANAGEMENT

	
 

          45.1. Landlord and Tenant
agree to cooperate and use their best efforts to participate in governmentally
mandated and voluntary traffic management programs generally applicable to
businesses located in Costa Mesa, California or to the Center and, initially,
shall encourage and support van and car pooling by employees and shall
encourage and support staggered and flexible working hours for employees to the
fullest extent permitted by the requirements of Tenant’s business. Neither this
subsection nor any other provision of this Lease, however, is intended to or shall create any
rights or benefits in any other person, firm, company, governmental entity or the public.

          45.2. Landlord and tenant agree to
cooperate and use their best efforts to comply with any and all guidelines or controls imposed upon either Landlord or
Tenant by federal or state governmental organizations or by any energy
conservation association to which Landlord is a
party concerning energy management.

          45.3. All costs, fees, assessments and other charges paid
by Landlord to any government authority or voluntary association in connection
with any program of the types described in this Article, all costs and fees
paid by Landlord to any governmental authority or third party pursuant
to or to effect such program and all costs associated with administration and management of such program or compliance
therewith, shall be included in Total Operating Expenses for the purposes of
Article 4, whether or not specifically listed in Exhibit “B.”

	
 

	
 

	
 

	
Article 46.

	
SIGNS

	
 

          Tenant
shall erect, install and maintain only such signs as comply with and are approved by Landlord pursuant to Landlord’s
sign program, a copy of which is attached to this Lease as Exhibit “E.”

	
 

	
 

	
 

	
Article 47.

	
MISCELLANEOUS

	
 

          47.1. No payment by Tenant
of a lesser amount than the aggregate amount due at the date of such payment
shall be other than on account of the oldest outstanding amount due, nor shall any endorsement or statement on
any check or any letter accompanying any payment be deemed an accord and satisfaction. Landlord may accept such payment
without prejudice to Landlord’s right to recover the balance due from
Tenant or to pursue any other remedy available to Landlord.

          47.2. Each and every indemnification and
hold harmless provision contained in this Lease shall survive the expiration or
earlier termination of this Lease to and until the last to occur of (a) the
last date permitted by law for the bringing of any claim or action with respect
to which indemnification may be claimed under such provision or (b) the date on
which any claim or action for which
indemnification may be claimed under such provision is fully and finally
resolved and, if applicable, paid in full. Payment shall not be a condition
precedent to indemnification under any indemnification provision contained in
this Lease.

          47.3.
This Lease may be
executed in two or more counterparts, each of which shall constitute an original, but all of which shall constitute one and
the same instrument.

30

          47.4. Within ten (10) days
after the last execution of this Lease Tenant shall by written notice to Landlord designate one
individual employee or agent who shall be authorized to act on behalf of Tenant with respect to all matters pertaining to this
Lease, including all matters provided
for in the Work Letter. Landlord may treat any approval or consent given by
such person as the approval or
consent of Tenant. Tenant may, by written notice to Landlord, change its
designated representative with respect to matters arising after the date of
Landlord’s receipt of such notice.

          47.5. “Rentable Area” means:

               (a) With respect to
Premises which
constitute an entire building, the entire area bounded by the outside surfaces
of the exterior walls of such building plus the entire area of any truck well(s) servicing the building.

               (b) With
respect to Premises constituting less than an entire building, (i) the area
included within the Premises, being the area bounded by the outside surfaces of
exterior building walls, the exterior of all walls separating the Premises from
any public corridors or other public areas and the centerline of all walls
separating the Premises from other areas leased or to be leased to other
tenants of such building and (ii) a pro rata portion of all areas of such building used for public areas or
otherwise not leased or to be leased to tenants of such building,
including a pro rata portion of the electrical room for the building and the
truck well(s) servicing the building.

               (c) In
calculating Rentable Area for any Premises and any building, there shall be no
deductions for columns, structural portions of such building, vertical penetrations,
lobbies, corridors, restrooms, mechanical rooms, electrical rooms, telephone
closets or other features of such building
required for the occupancy thereof. However, the Rentable Area of the electrical room for the building,
although located in one suite, and the truck well(s) servicing the building shall
be allocated, pro rata, to each suite based upon the respective Rentable Areas
of the suites before giving effect to such prorations.

               (d) The Rentable Area
contained within the
Premises shall, subject to the provisions of Section 2.3, be the number of
square feet set forth in the applicable item of the Basic Lease Provisions.

          47.6.
All
references to the terms “mortgage,” “trust deed” and “mortgagee” appearing in
this Lease shall be deemed to mean “first mortgage,” first trust deed” and
“first mortgagee,” wherever in this Lease or the Exhibits hereto such terms
appear.

          47.7.
Neither
Tenant nor any other person or entity having any interest in the possession,
use, occupancy or utilization of the Premises shall enter into any sublease,
license, concession or other agreement for the use, occupancy or utilization of
space in the Premises by any person or entity (“Subtenant”) which provides for
rental or any other payment for such use, occupancy or utilization based in
whole or in part on the net income or profits derived by Subtenant from the
portion of the Premises leased, used, occupied or utilized (other than an
amount based upon a fixed percentage or percentages of receipts or sales). Any
lease, sublease, license,
concession or other agreement in violation of the foregoing covenant shall be
absolutely void and ineffective as a conveyance of any right or interest in the
possession, use, occupancy or utilization
of any part of the Premises. Tenant further covenants to use reasonable efforts
to prevent any Subtenant from entering into an agreement of the type
described in this Section with respect to
the Premises or any part thereof.

          47.8. This lease and the exhibits hereto cover in
full each and every agreement of every kind
or nature whatsoever between the parties hereto concerning the Premises, the
Building and the Center, and all preliminary negotiations and agreements of
whatsoever kind with respect to the Premises, the Building or the Center,
except as contained herein, are superseded and of no further force or effect.
No verbal agreement or implied covenant shall be held to vary the provisions of
this Lease, any statute or law or custom to the contrary notwithstanding. No provision of this Lease may
be amended or added to except by an agreement in writing signed by the parties
hereto or their respective successors in interest. No employee or agent of Landlord shall have
authority, by letter, memorandum or other written communication, to amend, vary
or delete any provision of this Lease unless such written instrument bears the
signature of two managing partners of Landlord.

31

          47.9. This Lease shall be governed by, and
constructed in accordance with, the laws of
the State of California.

          47.10.
In
no event shall the review, approval, inspection or examination by Landlord of
any item to be reviewed, approved, inspected or examined by Landlord under the
terms of this Lease be deemed to be an approval of, or representation or
warranty as to, the adequacy, accuracy, sufficiency or soundness of any such item or the
quality or suitability of such item for its intended use. Any such review,
approval, inspection or examination by Landlord shall be for the sole purpose
of protecting Landlord’s interest in the Premises, the Building and the
Center under this Lease, and no third parties shall have any rights pursuant
thereto. By its approval of any specifications, plans or drawings, Landlord
assumes no liability or responsibility for any defect in any construction made
pursuant thereto.

          47.11. If at any time prior to the
Commencement Date (a) Tenant shall make any general
assignment for the benefit of creditors, (b) there shall be filed by or against
Tenant a petition to have Tenant adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy, (c) a
trustee or receiver shall be appointed to take possession of substantially all Tenant’s assets or of Tenant’s interest
in this Lease, (d) substantially all of Tenant’s assets or Tenant’s interest in
this Lease shall be seized by attachment,
execution or other judicial seizure, or (e) Tenant shall convene a meeting of
its creditors or any class thereof
for the purpose of effecting a moratorium upon or composition of its debts, then this Lease shall automatically be
canceled and terminated and neither Tenant nor any person claiming through or
under Tenant or by virtue of any statute or by an order of any court shall be entitled to possession of the
Premises. In such event Landlord, in addition to the other rights and remedies given in Section 20
hereof, may retain as damages any rent, security deposit or other monies
received by it from Tenant or others on behalf of Tenant.

          47.12.
In no event shall this
Lease be assigned or assignable by operation of law, and in no event shall this Lease be an asset of Tenant in any
receivership, bankruptcy, insolvency, or reorganization proceeding.

	
Article 48.

	
ADDENDUM

	
 

          The
following provisions of this Article 48 shall be included in and form a part of
this Lease and shall supersede and override any other provision in this Lease
to the extent the same
are inconsistent:

          48.1. Term. Notwithstanding anything
to the contrary contained in this Lease, the
term of this Lease shall be for ten (10) years and six and one-half (6 1⁄2) months following the Commencement
Date, subject to any earlier termination of this Lease pursuant to any provision
hereof.

          48.2. Option to Extend. Provided that:

          (1) Tenant is not in default pursuant to
this Lease beyond any notice and cure period,
either at the date of exercise or the date when an Additional Term would
otherwise commence; and

          (2) Tenant and/or an
assignee and/or a subtenant(s) permitted pursuant to Section 48.6 without the
consent of Landlord is then in possession of the entire then Premises, Tenant shall have the right (the “Option”)
to extend the term of this Lease for the entire Premises for one (1) additional term of five (5) years (the
“Additional Term”). In no event may the Option be exercised for less than the entire Premises. The Option and
Additional Term shall be subject to
and upon the following terms:

               (a) Such
Option must be exercised, if at all, by written notice of exercise by
Tenant to Landlord given not more than twelve (12) months and not less than
nine (9) months prior to the expiration of
the initial Lease Term.

               (b) If
Tenant is not entitled to exercise the Option, or is entitled to exercise
the Option but fails to timely and properly exercise, the Option shall lapse
and thereafter not be exercisable by Tenant.

32

               (c)
If Tenant is entitled to exercise the Option, and timely and properly does so,
then the Additional Term shall be upon all of the terms and provisions of this
Lease, except that:

                    (i)
There shall be no further options to extend the term of this Lease beyond the
Option set forth in this Section.

                    (ii)
The Additional Term shall commence immediately upon the expiration of the
initial term.

                    (iii)
All provisions of this Lease relating to the abatement or partial abatement of Basic Rent or any
other rental concession at the commencement of the term shall not apply during the Additional Term.

                    (iv)
The provisions of Sections 2.1, 2.2, 2.3, 32, 38, 48.3, 48.4, 48.7 and 48.8 and all provisions as to the
commencement of the Lease Term shall not be applicable with respect to the
Additional Term.

                    (v)
Basic Rent for the Additional Term shall be determined pursuant to the provisions of this paragraph.

                         (A)
Within
fifteen (15) days after Landlord’s receipt of Tenant’s notice of exercise,
Landlord shall notify Tenant in writing of Landlord’s determination of
the fair market Basic Rent for the Additional Term, as of the commencement of
the Additional Term, including any periodic
increases therein. Such fair market Basic Rent shall be determined by
reference to the comparable spaces and the disproportionate weight factor
identified in clause (C)(II) below. Within
fifteen (15) business days after Tenant’s receipt of Landlord’s notice as to
Landlord’s determination of the fair market Basic Rent for the Additional Term,
Tenant shall approve or reasonably disapprove of Landlord’s determination by
written notice to Landlord. Tenant’s failure to approve or reasonably
disapprove of such determination in such manner and within such time shall be deemed approval
thereof. If Tenant shall timely and properly accept such fair market Basic Rent, then such fair market
Basic Rent rate, as determined by Landlord, including any periodic increases
therein, shall be the Basic Rent for the Additional Term.

                         (B)
In the
event that Tenant reasonably disapproves of Landlord’s
determination of the fair market Basic Rent rate for the Additional Term within
the time and in the manner set forth in clause (A) above, then Landlord and
Tenant shall meet (the “Meeting”) within fifteen (15) business days after the
date of Tenant’s notice of reasonable disapproval pursuant to clause (A) above,
and attempt to agree on the Basic Rent for the Additional Term,
including any periodic increases therein. The parties shall exchange, in writing, their
respective last, best and final offer to one another prior to the conclusion of
the Meeting. In the event that Landlord and Tenant so agree, such agreement
shall be reduced to writing, shall be executed by Landlord and Tenant, and
shall be binding and conclusive upon them as to such determination. If Landlord and
Tenant are unable to agree upon the Basic Rent for the Additional Term, including any
periodic increases therein, then Tenant may within five (5) business days
thereafter on written notice to Landlord either rescind its exercise of the
Option, in which case it shall be of no further force or effect, or it may
elect to initiate the resolution process described herein. A failure by Tenant
to so elect shall be deemed a election to proceed with the resolution process. If
Tenant gives written notice of its election to initiate the resolution process,
then Landlord and Tenant shall each, by written notice to each other given
within thirty (30) days after Tenant’s notice, select an independent real estate
broker with at least five (5)
years of experience in commercial brokerage for buildings comparable to the
Building in the area of the Building to
determine the fair market Basic Rent for the Additional Term. The fair market Basic Rent determined by the brokers
who shall select either the fair market rental determined by Landlord or that
determined by the Tenant and presented as their last, best and final offer pursuant to the Meeting and no other
amount. Any discrepancies between the determinations
of the two (2) brokers shall be resolved by the two (2) brokers and their resolution shall be binding on the parties
hereto. If no such resolution is reached, then the two (2) brokers shall select a third broker of the
same qualifications to determine the fair market Basic Rent for the Additional
Term. In such event, the determination of the third broker shall be conclusive,
however, in no event shall such determination be anything other than the fair
market rental determined by Landlord or Tenant as their last, best and
final offer pursuant to the Meeting and no
other amount.

33

                         (C)
For the purposes of this clause (v), the following shall pertain:

                              (I)
If
either party shall fail to designate its broker by written notice
to the other party within the thirty (30) day period specified herein, then the broker timely selected by the other party
shall be the sole broker and shall alone determine the fair market Basic Rent
for the relevant Additional Term.

                              (II)
Each
broker hereunder shall supply his or her determination within thirty (30) days
after his or her appointment, and such determination may be in the form of a
letter or memorandum rather than in the form of a formal report or appraisal. Each broker shall make his or her
determination based upon the rents for recent (i.e., within the last year) leases of comparable space
in the Center and in other master-planned projects of comparable size,
quality, location, improvements and with comparable parking in the Irvine Business Complex and South Coast Metro
areas. Provided, however, that in making such determinations the brokers shall
give disproportionate weight to rental data with respect to comparable space in
the Center and shall take account of the fact that the Center, due to its
unique attributes, may be able to command above-market rents.

                              (III)
The
third broker hereunder shall be appointed if the first two (2) brokers
cannot agree as to the fair market Basic Rent for the Additional Term within forty-five (45) days after the appointment of the
second broker.

                              (IV)
If the
two (2) brokers are unable to agree upon a third broker within fifteen (15)
days after the expiration of the period specified in clause (III) above,
or if neither party timely designates its initial broker, the third or sole
broker shall be appointed by the Presiding
Judge of the Orange County Superior Court or his or her designee upon application of either party. If neither
party timely designates its broker, the fair market Basic Rent for the
Additional Term shall be determined by a sole broker appointed as aforesaid.

                         (D)
Notwithstanding anything herein to the contrary, in no event shall the initial Basic Rent during the Additional Term be less
than the rate of Basic Rent payable by Tenant during the last year of the
initial term. In addition, during the Additional Term, Tenant shall pay all
additional rent payable under this Lease.

          48.3. Basic Annual Rent
Abatement. Notwithstanding the provisions of Section 3.1, and provided Tenant is
not in default of any provision of this Lease, Tenant shall not be required to
pay Basic Annual Rent for the Initial Premises for the first six and one-half
(61⁄2) months
following the Commencement Date (the “Initial Premises Abatement Period”).
During the
Initial Premises Abatement Period, Tenant shall pay all additional rent
provided for in this Lease and perform and observe all other obligations of
Tenant pursuant to this Lease, including but not limited to payment of all
charges for utilities services used in the Initial Premises and separately billed to
the Premises. Notwithstanding the provisions of Section 3.1, Tenant shall not be required to pay
Basic Annual Rent, Additional Rent, Operating Expenses, charges for utility
services or any other charges for the Additional Premises until January 1,
2009.

          48.4. Basic Annual Rent
Increases. During the initial term of this Lease, Basic Annual Rent shall be
increased in accordance with the following schedule:

	
 

	
 

	
Months of Initial Term 

	
Basic Monthly Rent

Per
Rentable Square Foot 

	

	
1-12

	
$1.12 (subject to Section 48.3)

	
13-24

	
$1.1536(subject to Section 48.3)

	
25-36

	
$1.1862

	
37-48

	
$1.2218

	
49-60

	
$1.2585

	
61-72

	
$1.2963

	
73-84

	
$1.3351

	
85-96

	
$1.3752

	
97-108

	
$1.4165

	
109-120

	
$1.4589

	
121-126.5

	
$1.5027

34

          48.5.
Utilities/Janitorial. With respect to the Premises, Tenant shall be
solely responsible to (i) contract for and pay for all interior janitorial
services for the Premises and (ii) pay directly to the utility purveyors all
charges for utilities services used in the Premises and separately billed to
the Premises. Such responsibilities shall commence as of Tenant’s early
occupancy of the Premises.

          48.6.
Assignment and Subletting. Notwithstanding the provisions of Article 14:

               (a)
For purposes of Section 14.4 of this Lease, the “rent” or “consideration”
payable to Landlord in connection with an assignment or subletting of the
Premises (or any portion thereof) shall be net of the transaction expenses of Tenant
to effect such assignment or sublease. For the purposes of this provision,
“transaction expenses” shall mean and include all out-of-pocket expenses
incurred by Tenant to effect such transaction, including brokerage commissions,
attorneys’ fees, reasonable costs of securing such subtenancy or assignment
including marketing and advertising costs, tenant improvements, other
consulting costs and out-of-pocket economic concessions granted by Tenant such
as improvement allowances and lease takeover costs.

               (b)
Tenant may, without the consent of Landlord, assign this Lease or sublet all or
a portion of the Premises to a parent, subsidiary, subsidiary of a parent or a
transferee who acquires all or substantially all of the stock of Tenant as
constituted as of the date hereof, as long as the transaction is not entered
into as a subterfuge to avoid the restrictions of this Lease. For the purposes
of this subsection:

                         (A)
Any such transaction described in this subsection is referred to herein as a
“Permitted Transaction.”

                         (B)
Sections 14.1 through 14.5 shall not apply to a Permitted Transaction.

                         (C)
In connection with a Permitted Transaction, there shall be no change in the use
of the Premises.

                         (D)
Within fifteen (15) business days after the effective date of a Permitted
Transaction, Tenant shall notify Landlord of the occurrence and effective date
thereof, the name and notice address of the assignee or subtenant and the facts
which constitute such transfer as a Permitted Transaction.

                         (E)
Any changes in Tenant’s signage as the result of a Permitted Transaction shall
be the sole responsibility of Tenant, both as to performance and payment of the
costs thereof, shall comply with Exhibit “E” and shall be subject to the prior
written approval of Landlord.

          48.7.
Landlord’s Work. Notwithstanding anything to the contrary in Section 32
or Exhibit “D,” Landlord shall concurrently construct Tenant improvements to
the entire Premises including the Initial Premises and the Additional Premises
(“Landlord’s Work”) for Tenant’s use. Tenant shall have access to the Initial
Premises only on the Commencement Date and Landlord shall not deliver
possession of the Additional Premises until January 1, 2009. Landlord’s Work
shall be in accordance with the following:

               (a)
Landlord’s Work shall be designed by an architect or interior designer selected
by Tenant, subject to Landlord’s reasonable approval (the “Designer”). Landlord
approves H. Hendy & Associates.

               (b)
Landlord’s Work shall be in accordance with the final space plan, which is
attached as Exhibit “I”’ and which has been approved by Landlord, and with the
Construction Documents and approved by Landlord and Tenant, which approval
shall not be unreasonably withheld, and shall be deemed given unless a party
shall disapprove by written notice to the other party and the Designer given
within ten (10) days after receipt of the Construction Documents. Any notice of
disapproval shall state with particularity the item(s) so disapproved. In the
event of any such disapproval, the Designer shall revise the Construction
Documents to meet such objections and resubmit the same for approval pursuant
to this subsection. Failure of the Designer to complete its Construction
Documents for the Initial

35

Premises by May 30, 2007 shall be deemed a Tenant
Delay and the Commencement Date shall be that date on which the Commencement
Date would have occurred but for such Tenant delay.

               (c)
Promptly following approval of the Construction Documents (the “Approved
Plans”), Landlord shall obtain bids for Landlord’s Work from three (3) licensed
general contractors selected by Landlord and Tenant consisting of Co-well
Contractors, Alton Builders and Casco Contractors. Landlord and Tenant shall
mutually select the contractor whose bid provides for a complete Landlord’s
Work in accordance with the Approved Plans. The contractor shall perform under
a cost plus general conditions and fees/Guaranteed Maximum Price contract based
on the fee structure provided and approved by Tenant and Landlord.

               (d)
Landlord shall retain the contractor selected pursuant to subsection (c) to
perform Landlord’s Work. Landlord shall cause such work to be diligently
performed and to be completed by the Target Commencement Date or soon
thereafter, as practicable.

               (e)
The phrase “costs of Landlord’s Work” shall mean all out-of-pocket costs
incurred by Landlord with respect to Landlord’s Work, including all planning,
design and engineering fees and costs, costs and fees with respect to Tenant’s
third-party project management team, the costs of obtaining all required
governmental approvals and permits with respect to Landlord’s Work and all
costs of construction and installation of Landlord’s Work, including purchase
of materials and equipment and contractors’ fees, overhead, profit and general
conditions. There shall be no administrative charge or fee by Landlord with
respect to Landlord’s Work.

               (f)
Landlord shall initially pay all costs of Landlord’s Work provided, however, in
no event shall Landlord be obligated to make disbursements in a total amount
which exceeds that portion of the costs of Landlord’s Work equal to the lesser
of (i) the entire costs of Landlord’s Work and (ii) an amount equal to $25.00
per square foot of Rentable Area of the Premises (the Initial Premises and the
Additional Premises). The Tenant Improvement Allowance shall be disbursed by
Landlord directly to the contractor, subcontractor or vendor as designated in
accordance with the construction contract (each of which disbursements shall be
made pursuant to Landlord’s disbursement process). Promptly upon awarding the contract
to the contractor pursuant to subsection (c), Landlord shall notify Tenant in
writing of the total costs of Landlord’s Work and any portion thereof for which
Tenant is responsible. If the total cost of the Tenant Improvements as set
forth in the selected bid is greater than the Tenant Improvement Allowance,
then Tenant shall be responsible for payment of such amount in excess of the
Tenant Improvement Allowance and each payment made in relation to the costs of
constructing the Tenant Improvements which is required after the Tenant
Improvement Allowance has been fully expended shall be made by Tenant. Tenant
shall pay to Landlord all Contractor invoices which apply to amounts in excess
of the Tenant Improvement Allowance as incurred in the ordinary course of
construction and in no event later than fifteen (15) days after receipt by
Tenant of any such invoice whether from Contractor or Landlord. Landlord shall
thereafter pay Contractor in accordance with the terms of the construction
contract. In the event that, after the bid is accepted, any revisions, changes,
or substitutions shall be made to the Tenant Improvements, any additional costs
which arise in connection with such revisions, changes or substitutions or any
other additional costs shall also be paid by Tenant. Within thirty (30) days
after completion of Landlord’s Work, Landlord shall provide to Tenant a
summary, in reasonable detail, of the final total costs of Landlord’s Work and
any portion for which Tenant is responsible. Any additional amount owed by
Tenant shall be paid, as additional rent, within fifteen (15) days after
Tenant’s receipt of Landlord’s Summary. Any overpayment by Tenant shall be
credited against the first rent payable by Tenant pursuant to this Lease.

          In
addition to Landlord’s Work, Landlord shall, at Landlord’s sole cost, (A)
perform any work necessary to cause the Premises (in shell condition) and
associated Common Facilities to be ADA compliant (other than such work as is
caused by and which is a part of the work on the Approved Plans), (B) install
new roof-mounted package HVAC units with condensation lines, platforms, curbs
and drops through the roof structure to service the Premises (at a capacity of
one (1) ton per 400 square feet of the Premises) this work is to include
required MEP and structural engineering drawings and related permits, (C)
install main electrical switchgear to service the Premises (not including
sub-panels or interior electrical distribution) which such electrical service
shall be 800 amps, 277/480 volt, 3-phase, 4-wire power, including providing an
(max) 800 amp feeder connection from the meter servicing the Premises to the
Premises, (D) install a new roof structure and membrane, (E) new sanitary sewer
line running

36

east-west through the Premises, (F) new overhead fire
sprinkler system, excluding drops based upon Tenant’s interior plan, (G) 2”
water service stubbed into the southeast corner of the Premises, (H) separate
conduit with pull strings for telephone and data stubbed into the Premises (and
Landlord to remove all old phone equipment within the existing MPOE cabinet or
expand the existing MPOE cabinet to allow space for Tenant’s equipment and
secure access to the Tenant’s conduit from the adjacent tenant) and (I) new,
ADA compliant perimeter sidewalks with ADA compliant handicap parking stalls
based upon the existing location of entry/exit doors (collectively, the
“Supplemental Building Work”). All such Supplemental Work has been completed as
of the date hereof except item (B). All of such Supplemental Building Work
shall be constructed as determined by Landlord’s in its discretion, by a
contractor chosen by Landlord. In the event that Tenant requires additional
HVAC capacity, Landlord shall cooperate with Tenant to obtain same, at no cost
to Landlord. All HVAC work below the roof structure, including, but not limited
to, ducting, thermostats and grills, shall not be included in the Supplemental
Building Work.

          Landlord’s
Work shall not include (1) telecommunications cabling for Tenant, (2) Tenant’s
furniture, fixtures and equipment, (3) Tenant’s signage and (4) Tenant’s
antennas pursuant to Section 48.10. All such items shall be the responsibility
of Tenant, both as to performance and payment of the costs thereof.

          48.8.
Lender Consent. Landlord shall, promptly upon the last execution of this
Lease, submit a copy of this Lease to Landlord’s lender with a request for
approval by such lender in writing. Promptly upon receipt of such written
approval, Landlord shall supply a copy thereof to Tenant. Notwithstanding
anything to the contrary herein, neither party shall be obligated to proceed
pursuant to Section 48.7 until receipt of such approval. If Landlord’s lender
declines to approve this Lease, Landlord shall promptly return to Tenant all
money and other items deposited by Tenant with Landlord. In the event that
Landlord has not received lender’s consent or disapproval by the time Tenant
has received a building permit for installation of the Tenant Improvements and
construction is otherwise ready to commence, such delay shall be a Landlord
Delay and the Commencement Date shall be delayed one (1) day for each day that
any such delay actually delays completion of the Tenant Improvements without
need for overtime labor.

          48.9.
Tenant’s Signage. Tenant shall be entitled to two (2) building and one
(1) monument sign allocated to that portion of the 3535 Harbor Boulevard
building occupied by Tenant. The monument sign will be shared with the other
tenant of the Building, with each tenant being entitled to 1⁄2 of the monument on each side. All
building and monument signage must (a) comply with the sign criteria for the
Center set forth in Exhibit “E,” (b) comply with all applicable governmental
requirements and (c) be approved in advance in writing by Landlord based upon
sign drawings prepared by and submitted by Tenant. Tenant shall be permitted to
incorporate its corporate logo into such signage provided such signage is
approved by the City of Costa Mesa. In addition, Tenant shall be responsible,
both as to performance and payment of the costs thereof, to:

                    (i)
Obtain all governmental permits and approvals required with respect to Tenant’s
signage;

                    (ii)
Fabricate and install Tenant’s signage utilizing Tenant’s sign contractor
(subject to Landlord’s reasonable approval) in coordination with the other
tenant of the Building with each such tenant being responsible for one-half of
the total cost of fabrication and installation;

                    (iii)
Clean, maintain and repair and replace Tenant’s signage as necessary to
maintain the same in a clean and good condition;

                    (iv)
Remove and discard the same upon the expiration or any earlier termination of
this Lease; and

                    (v)
Repair any damage to the buildings and/or monument(s) occasioned by Tenant’s
signage or removal thereof.

          48.10.
Tenant’s Satellite Antenna. Tenant shall have the non-exclusive right to
install on the roof of or near the Premises one or more satellite and/or
microwave antennae as

37

necessary for Tenant’s telecommunication needs (the
“Antennae”). Such Antennae and all associated cabling (collectively, the
“Equipment”) shall be subject to and in accordance with the following:

               (a)
Tenant shall not be required to pay to Landlord any rent for the placement of
such Equipment.

               (b)
Tenant shall be solely responsible to purchase, install, maintain and repair
the Equipment.

               (c)
The specifications for and the locations of the Antennae (including all
associated cabling) shall be as approved by Landlord. In addition, Landlord
shall specify or approve the method of installation of the Equipment, including
but not limited to all roof penetrations, if any. If deemed necessary by
Landlord, Tenant shall be responsible to provide roof reinforcement or other
supports as necessary to support or distribute the weight of the Antennae.
Tenant shall retain Landlord’s roofer, Mesa Roofing (or such other vendor
designated by Landlord), to do all roof work (including all roof penetrations)
in connection with the Antennae to avoid loss of Landlord’s roof warranty. All
required approvals by Landlord pursuant to this Section shall not be delayed or
unreasonably withheld.

               (d)
Any power required for the operation of the Equipment shall be supplied by
Tenant from the Premises and shall be billed to Tenant on Tenant’s electrical
meter for the Premises.

               (e)
Tenant shall be responsible, at Tenant’s cost, to service, maintain, repair and
replace the Equipment as required for the operation thereof. Landlord shall
have absolutely no responsibility with respect to the Equipment, including no
obligation to insure the same or to safeguard and protect the Equipment.

               (f)
Tenant acknowledges that Landlord’s HVAC Units for the 3535 Harbor Boulevard
building are located on the roof of the Building. Accordingly, access to the
roof of the Building is strictly limited by Landlord. All access to the
Building roof for Tenant, its employees, agents and contractors shall be
obtained through Landlord’s Property Manager. All persons afforded access to
the roof of the Building must comply with all reasonable guidelines and
restrictions imposed by Landlord or its Property Manager.

               (g)
All Antennae shall be either located so as not to be visible from the common
areas of the Center or shall be appropriately screened as approved by Landlord,
or as required by the City of Costa Mesa, to prevent such visibility.

               (h)
The Equipment shall not interfere with the operation of any equipment or
systems of Landlord or of any other occupant of the Center. In the event of any
such interference, Tenant shall, promptly upon notice from Landlord, eliminate
such interference.

               (i)
Within ten (10) days after the expiration or any earlier termination of this
Lease, Tenant shall remove the Equipment and repair any damage occasioned by
such removal. Such repair shall include filling and patching all roof and wall
penetrations to the reasonable satisfaction of Landlord. All such repair work
shall be performed concurrently with such removal, shall be at the sole cost of
Tenant, and shall be performed by Landlord’s roofing contractor.

          48.11.
Hazardous Materials. To the best of Landlord’s current actual knowledge,
without duty of further inquiry, no hazardous materials, as defined in Section
10.3, are located in, on or under the Premises. To the best of Landlord’s
current actual knowledge, without duty of further inquiry no conditions as
described in Section 10.4 currently exist within the Premises.

38

Exhibit “A”

PAYMENT AND
ADJUSTMENT OF OPERATING EXPENSES

          1. “Total
Operating Expenses” means, with respect to each lease year, the sum of (1) Landlord’s Building Operating Expenses
for such lease year and (2) the Building Share of all Common Facilities Expenses for such lease year. The
definitions, method of proration and
method of adjustment of these expenses are as set forth in this Exhibit “B.”

          2. As
used in this Exhibit “B,” the following terms have the following meanings:

               (a)
“Building Operating Expenses” means the
reasonable and customary aggregate
expenses incurred by Landlord in the management, operation, maintenance and
repair of the Building, all determined in accordance with sound management
principles and generally accepted accounting practice on an accrual basis and
the cost, as reasonably amortized by
Landlord, with interest at the rate per annum determined pursuant to Article 34
on the unamortized amount, of (x) any capital improvements made after the
Commencement Date which reduce other items of Building Operating Expenses, in
an amount not to exceed such reduction for the relevant year and/or (y) any
reasonably necessary capital repair and/or replacement. Building Operating Expenses shall include, but shall not be
limited to:

                    (i)
Wages, salaries, related fringe benefits, all employer taxes and insurance of all on-site employees engaged by
Landlord in the operation and maintenance of the Building;

                    (ii)
All supplies, materials and utilities used by Landlord in operation and
maintenance of the Building;

                    (iii)
Cost of replacement of equipment and all maintenance and service agreements on equipment located in or used
to maintain the Building;

                    (iv)
Cost of property and liability insurance, including earthquake, flood, terrorism and rental insurance,
if carried by Landlord, applicable to the Building and Landlord’s personal
property used in connection therewith, including the cost of funding all
deductibles and insurance reserves;

                    (v)
Cost of repairs and general maintenance of the Building;

                    (vi)
Cost of all accounting, legal (excluding those recoverable pursuant to any attorneys’ fees provisions in any
tenant’s lease) and other professional fees incurred in connection with the operation of the Building; and

                    (vii)
An amount equal to fifteen percent (15%) of all such costs and expenses to cover Landlord’s overhead and
administrative expenses with respect to the Building.

               (b)
“Common Facilities” means all areas
(and all improvements thereon) within
the exterior boundaries of the Center which (i) are not now or hereafter held
for exclusive use by Tenant, or any other tenant of the Center and (ii) are
made available for the common use of Landlord, Tenant and other occupants and
their respective employees and invitees in or around the Center. Common
Facilities shall include, without limiting the generality of the foregoing, all
parking areas, entrances, exits, landscaped and planted areas, retaining walls,
irrigation systems and controllers, drains, sewers, lighting fixtures, wiring,
electrical panels and automatic control systems, driveways, delivery passages,
loading docks, sidewalks, stairways,
ramps, open and enclosed courts and malls, central identification signs and
structures designed for the use of all owners, occupants, employees and
invitees and shall include any
“greenbelt” or set back areas maintained by Landlord on any parcel leased for
the exclusive use of a tenant. Common
Facilities shall not include lobbies or other common areas within any building which is leased to one or more tenants but
shall include any legal parcel which constitutes a portion of the Center and on
which no buildings have been or may be constructed for occupancy.

               (c)
“Common Facilities Expenses” means the
reasonable and customary aggregate
expenses incurred by Landlord in the management, operation, maintenance

EXHIBIT “B” PAGE 1

and repair of the Common
Facilities, all determined in accordance with sound management principles and
generally accepted accounting practice on an accrual basis and the cost, as
reasonably amortized by Landlord, with interest at the rate per annum
determined pursuant to Article 34 on the unamortized amount, of (x) any capital
improvements to the Common Facilities made after the Commencement Date which
reduce other items of Common Facilities Expenses, but in an amount not to
exceed such reduction for the relevant lease year and/or (y) any reasonably
necessary capital repair and/or replacement of the Common Facilities. Common
Facilities Expenses shall include, but not be limited to:

                    (i)
Expenses of the types specified in subparagraph (a) above but applicable to the
Common Facilities;

                    (ii)
Real property taxes as defined in Article 7 and all other taxes with respect to
the Common Facilities;

                    (iii)
Repaving, resurfacing, painting and striping, sweeping, trash removal and
security with respect to the Common Facilities;

                    (iv)
Advertising and similar expenses for the general promotion of the Center (but
not including any advertising expenses incurred to procure tenants for vacant
space); and

                    (v)
An amount equal to fifteen percent (15%) of all such costs and expenses to
cover Landlord’s overhead and administrative expenses with respect to the
Common Facilities.

          3. For
the purposes of this Exhibit “B,” the following shall pertain:

               (a)
Neither Building Operating Expenses nor Common Facilities Expenses shall
include the initial cost of construction of the Common Facilities (or any
improvements thereto).

               (b)
Neither Building Operating Expenses nor Common Facilities Expenses shall
include expenses for which Landlord is indemnified (either by an insurer,
condemnor, tenant or otherwise); expenses incurred in leasing or procuring
tenants (including, without limitation, lease commissions, advertising expenses,
and expenses of renovating space for tenants); rental under any ground or
underlying lease or leases; wages, salaries or other compensation paid to any
executive employees above the grade of property manager; or the cost of any
work or service performed for or facilities furnished to a tenant at the
tenant’s cost.

               (c)
If any real property tax or other item of expense shall relate partly to any
building occupied by one or more tenants in the Center and partly to the Common
Facilities, such item of expense shall be allocated as between such building,
on the one hand, and the Common Facilities, on the other hand, on such basis as
Landlord determines to be reasonable under the circumstances.

               (d)
Tenant’s Allocated Parking Spaces as set forth in the applicable Basic Lease
Provision are those parking spaces allocated to Tenant and located within the
Common Facilities. Allocated Parking Spaces for Tenant and for other tenants of
the Building shall be as determined or redetermined from time to time by
Landlord.

               (e)
Building Operating Expenses for any year shall be extrapolated to reflect
ninety-five percent (95%) occupancy of the Rentable Area of the Building, a
full year of operation and a full year of occupancy by Tenant.

          4.
Method of Proration

               (a)
The “Building Share of Common Facilities Expenses” means:

                    (i)
To and until completion of all Common Facilities for the Center the sum of:

                         (A)
That portion of the costs and expenses applicable to the parking areas (and
landscaping located therein) of the Center obtained by multiplying the

EXHIBIT “B” PAGE 2

total costs by a percentage
obtained by dividing the Building’s Allocated Parking Spaces by the average
number of Center spaces completed during the course of the lease year; and

                         (B)
That portion of the costs and expenses applicable to the Common Facilities
other than those in (A) above obtained by multiplying the total costs by a
percentage obtained by dividing the Building’s Allocated Parking Spaces by the
total parking spaces planned (whether or not then completed) for the Center as
of the last day of a lease year.

                    (ii)
From and after the completion of all Common Facilities for the Center that
portion of the total Common Facilities Expenses for any lease year determined
by multiplying such total by a percentage determined by dividing the Building’s
Allocated Parking Spaces by the total parking spaces in the Center.

               (b)
“Tenant’s Proportionate Share” is the Rentable Area of the Premises divided by
the Rentable Area of the Building.

          5.
Method of Adjustment.

          For each lease year, including the lease year in which the
Commencement Date occurs, Tenant shall pay Tenant’s Proportionate Share of the
Total Operating Expenses as follows:

               (a)
During the first lease year, Tenant shall pay, in equal monthly installments in
advance, on account of Tenant’s Proportionate Share of Total Operating
Expenses, that amount set forth in the applicable Basic Lease Provision.

               (b)
Prior to the commencement of each lease year subsequent to the first lease
year, Landlord shall provide to Tenant a written estimate of Total Operating Expenses
for such lease year and Tenant’s Proportionate Share thereof. Tenant shall pay
during such lease year, in equal monthly installments in advance along with its
monthly installments of basic rent pursuant to Article 3, the amount set forth
on such written estimate.

          Within
one hundred twenty (120) days after the end of each lease year, including the
first lease year, Landlord shall provide to Tenant a statement in reasonable
detail showing actual Total Operating Expenses for such lease year and Tenant’s
Proportionate Share thereof. If the amount shown on such statement exceeds the
estimated amount previously paid by Tenant with respect to such lease year,
then Tenant shall pay such excess to Landlord within thirty (30) days after
receipt of such statement. If the amount shown on such statement is less than
the estimated amount previously paid by Tenant with respect to such lease year,
such overpayment shall be credited by Landlord against the next amounts due
from Tenant pursuant to this Lease. Any overpayment by Tenant with respect to
the last lease year of the term shall be offset against any other amounts due
from Tenant pursuant to this Lease and the balance shall be refunded to Tenant
without interest along with Landlord’s statement pursuant to this subparagraph
(c). The annual determination of Operating Expenses shall be made by Landlord
and the fact that such Operating Expenses have in fact been incurred by
Landlord shall be certified by a regionally recognized firm of certified public
accountants designated by Landlord. A copy of Landlord’s determination and such
certification shall be made available to Tenant upon request. If Landlord does
not secure certification as provided above, then for a period of one (1) year
following the receipt by Tenant of any statement from Landlord, in the event
Tenant disputes the amount due as Tenant’s proportionate share of Operating
Expenses, Tenant shall have the right, after reasonable notice and at
reasonable times, to audit Landlord’s accounting records at Landlord’s office
in Southern California for sole purpose of verifying the accuracy of each
expense and the amount allocated to Tenant. Such audit shall be conducted by a
regionally recognized public accountancy firm who is engaged on a non-contingency
fee or “results” fee basis. No “forensic” accounting consultant shall be
utilized at any time. If, after such audit, (i) Tenant continues to dispute the
amount of its proportionate share of Operating Expenses and (ii) Landlord
declines to make the adjustments requested by Tenant, Tenant may pursue its
remedies at law or in equity. All reviews and/or audits shall utilize the
Tenant’s Building Proportionate Share as designated in the Basic Lease
Provisions. If the dispute resolution results in a finding that Landlord has
overcharged Tenant for Tenant’s Proportionate Share of Operating Expenses by
more than five percent (5%), Landlord shall pay the actual and reasonable costs
of the audit. The results and content of all audits shall be held in strict
confidence and Landlord may require that all persons

EXHIBIT “B” PAGE 3

and entities requesting access to
the books and records execute a reasonable confidentiality agreement prior to
Landlord granting access.

               (c)
Any Total Operating Expenses for any partial lease year during the term shall
be apportioned so that Tenant shall pay its Proportionate Share of only that
portion of the Total Operating Expenses for such year as falls within the term.
This provision shall survive the expiration or earlier termination of the term.

               (d)
If any special assessment is included as part of real property taxes and such
assessment may be paid in installments, Tenant shall be obligated to pay only
Tenant’s Proportionate Share of the installments falling within the term
whether or not Landlord pays such assessment in installments.

EXHIBIT “B” PAGE 4

HARBOR GATEWAY CENTER

RULES AND REGULATIONS

          The
Premises are located within and constitute a part of an integrated, multi-use
planned development being developed by Landlord as a high-quality business
center. Consistent with such development, Landlord has adopted the following
Rules and Regulations to preserve the high quality of the development and
retains certain rights of approval, in its sole discretion, to preserve the
aesthetic appearance, quality and value of the Center as a whole.

          1.
Each tenant shall take all actions necessary to preserve the external appearance
of his premises in a neat, clean and orderly condition and to prevent his
operations from interfering with the use by other Center occupants of their
respective premises. By way of illustration but not limitation of the
foregoing:

               (a)
Sidewalks, passages, paths, courts, and stairways exterior to any Premises
shall not be obstructed or used other than for ingress and egress. All tenant
vehicles and property shall be located within a building or within an approved
exterior structure. No unauthorized tenant and no employees, agents or invitees
of any tenant shall go upon the roof of any building without approval.

               (b)
No trash shall be allowed to accumulate outside of a building, except in
approved receptacles or screened enclosures.

               (c)
No awnings or other projections shall be attached to the outside walls of any
building without approval and no curtains, blinds, shades or screens shall be attached
to or hung in any window or door of any premises without approval. All
electrical ceiling fixtures hung along any perimeter of any premises bordered
by windows must be fluorescent and of an approved quality, type, design and
bulb color.

               (d)
No sign, advertisement or notice shall be exhibited, painted or affixed on any
part of, or so as to be seen from the outside of, any premises without
approval.

               (e)
Premises features which reflect or admit light and air shall not be covered or
obstructed in any way.

               (f)
No tenant shall mark, paint, drill into, or in any way deface any exterior part
of any building.

               (g)
No bicycles, motorbikes, mopeds, motor scooters, or motorcycles shall be stored
outside of any building except in approved racks or other facilities.

               (h)
No tenant shall permit any unusual or objectionable odor to permeate from any
building or permit any noises which disturb or interfere with occupants of
neighboring buildings or those having business with them whether from
machinery, musical instruments, radios, photographs or other sources. No tenant
shall throw anything out of doors, windows or skylights. No tenant shall
perform any work activity out of doors. No tenant shall cook or otherwise
prepare food out of doors.

               (i)
All machinery which generates noise and/or vibrations shall be placed in
approved settings to avoid damage to premises and creation of noise and
vibrations in areas outside of premises.

               (j)
All electric carts and other vehicles used on the Premises or in the Common
Areas which are not designed for ordinary use on public streets and highways
must be approved by Landlord. Landlord may condition its approval as it deems
appropriate, and may in any case require that such vehicles be white and that
they be supplied by Taylor-Dunn Manufacturing Company. Such vehicles are
subject to all rules pertaining to auto safety contained herein or in any deed
restrictions or easement agreements applicable to the Premises or pursuant to
governmental regulation. All approvals required shall be by Landlord, must be
in advance in writing and shall include appearance, location, quality, style
and such other factors as Landlord deems relevant. No requirement of Landlord
shall be held to be unreasonable or

EXHIBIT “C” PAGE 1

unenforceable because
materials, methods of application or other requirements selected by Landlord
may be more expensive or more onerous than alternative materials or methods of application
which may be available to achieve the same objectives. Upon any violation of
the foregoing provisions, Landlord may, if Tenant shall fail to do so within
three (3) days after written notice from Landlord, remove any offending item
without any liability, and may charge the expense incurred in removal
(including the repair of any damage to any Premises caused thereby) to the
tenant violating this rule.

               2.
No flammable, combustible, explosive, caustic or poisonous fluids, chemicals or
other substances shall be discarded in Center trash receptacles or enclosures
or dumped into Center sewer or drain systems. All operations which emit gases,
dust, smoke, particulates and other noxious substances shall be hooded,
ventilated or otherwise conducted to prevent the escape of such substances from
the building. Washing, draining, spraying and other operations involving use of
any liquid shall be conducted to prevent runoff outside of any building and
oozing or seepage into other portions of the Center.

               3. Each
tenant shall obtain at its own expense and keep in its premises in a reasonably
accessible place at least one ABC-type fire extinguisher in working condition.

               4. Landlord
reserves the right to prohibit or impose conditions upon the installation in
any premises of heavy objects which might overload the premises floors.

               5. Except
as provided in this paragraph, canvassing, soliciting, peddling or selling
products or services to tenants, their employees or visitors are expressly
prohibited and each tenant shall cooperate with Landlord to prevent such
practices. Tenants shall purchase spring water, ice, soft drinks, catering
services, foodstuffs, janitorial services or maintenance services and other
like products or services only from company(ies) or person(s) that comply with
rules and regulations imposed by Landlord, including insurance requirements,
reasonable fees, solicitation prohibitions, time, location and frequency
limitations and equipment restrictions. Within ten (10) days after written
request by Landlord, each tenant shall notify Landlord in writing of the names
of those vendors providing goods and services to such tenant at its premises.
Landlord shall not have a right of approval of such vendors but may exclude a particular
company or person entirely and may exclude any person who appears to be intoxicated,
under the influence of drugs or liquor or who violates these Rules. Landlord acknowledges
that Tenant will frequently solicit delivery of catered food and drink items in
the ordinary course of business to service it employees and business
associates. Provided that such vendors comply with the reasonable rules and
regulations imposed by Landlord from time to time, Landlord shall not preclude
such deliveries.

               6. Landlord
may prohibit advertising by any tenant which, in Landlord’s opinion, impairs
the reputation of the Center, and upon written notice from Landlord any tenant shall
discontinue such advertising.

               7. Employees
of Landlord shall not perform any work outside of their regular duties except
under special instructions from Landlord. Landlord will under no circumstances open
any building for any tenant or its employees.

               8. Water
and wash closets, plumbing fixtures, mirrors and partitions shall not be used
for any purpose other than those for which constructed. No sweepings, rubbish,
rags or other substances shall be thrown therein. All expenses of repair or
replacement resulting from misuse shall be borne by the tenant who causes the
same.

               9. No
boring, cutting, stringing of wires, laying of linoleum or other similar floor
coverings, or hanging of any objects or items from the ceiling or roof shall be
permitted, except with the prior written consent of Landlord, and then only as
Landlord may direct. The location of exterior telephone boxes, call boxes and
other equipment affixed to any premises shall be subject to Landlord’s
approval. Landlord will direct electricians as to where and how telephone or
telegraph wires are to be introduced into any premises.

               10. No
air conditioning unit or other similar apparatus shall be installed or used by
any tenant without the prior written consent of Landlord and all installations
shall be as directed by Landlord.

EXHIBIT “C” PAGE 2

               11. In
the event that any tenant shall change any lock or install any new lock on any
exterior or interior door to or within his premises, such tenant shall
immediately deliver a key to each such lock to Landlord. Landlord shall use
such keys only for emergency entries and for such other purposes as are
permitted by these Rules and Regulations and such tenant’s lease.

               12. A
copy of these Rules and Regulations shall be attached to and form a part of
each tenant lease in the Center. Landlord is not responsible to any person for
non-observance or violation of these Rules by any tenant or other person. Each
tenant is responsible for any loss or damage occasioned by any violation of
these Rules by such tenant or by any employee, agent, visitor or invitee of
such tenant.

               13. No
waiver of any Rule by Landlord shall be effective unless in a writing signed by
Landlord. Landlord may amend these Rules from time to time when desirable in Landlord’s
judgment to preserve good order in the Center, for the convenience of tenants
or visitors of the Center or to comply with any law or regulation now or
hereafter in effect. Any amendment to these Rules shall be effective and
binding upon each tenant upon delivery to such tenant of a copy thereof.

EXHIBIT “C” PAGE 3

WORK LETTER

          In
connection with the Lease to which this work letter is attached, Landlord and
Tenant agree as follows:

          1.
The purpose of this work letter is to set forth the agreements of Landlord and
Tenant covering construction of certain interior improvements to the Premises.

          2.
Landlord and Tenant acknowledge that Landlord has previously completed interior
improvements to the Premises. Landlord shall have no responsibility, either as
to performance or payment of costs, for any additional improvements to the
Premises, except as set forth in Section 48.7 of this Lease. Except as set
forth therein, Tenant takes the Premises “AS IS”, with the exception of
Landlord Work performed at Landlord’s sole cost as specified under section 48.7
and Landlord shall obtain appropriate warranties in favor of both Landlord and
Tenant and any additional improvements to the Premises shall be the
responsibility of Tenant and shall be subject to approval and performance in
accordance with the provisions of the Lease and this work letter. In addition,
Tenant shall:

               (a)
Acquire Tenant’s sign from Tenant’s (subject to reasonable approval by
Landlord) sign contractor at Tenant’s cost as described more fully in Exhibit
“E” to this Lease.

               (b)
Arrange for all utilities services with the companies supplying the same,
including making all service deposits, arranging for all utilities to be turned
on and arranging for installation of all telephones and telephone equipment in
the Premises necessary to the conduct of Tenant’s business.

               (c)
Provide such interior window coverings as may be required by Tenant, which
window coverings shall be window coverings meeting Landlord’s approval; and

               (d)
Obtain, deliver and install all necessary and desired furniture, business
equipment and machinery, artwork and other similar items.

          3.
If any alterations, additions or improvements are installed by Tenant, whether
with respect to initial construction or later during the term of the Lease,
such work shall be completed by Tenant in compliance with the following:

               (a)
All such work shall be completed at Tenant’s sole cost and expense.

               (b)
No such work shall proceed without Landlord’s prior written approval of (i) a
certificate of insurance evidencing the insurance required to be carried by
Tenant under Section 15.1 of the Lease, endorsed to show Landlord as an
additional insured, (ii) detailed plans and specifications for such work completed
by a certified architect approved by Landlord, and (iii) the licensed, and
bondable contractor to perform such work.

               (c)
All such work shall be done in conformity with a valid building permit when
required, a copy of which shall be furnished to Landlord before the work is
commenced, and any work not acceptable to any governmental agency or department
with jurisdiction, or not reasonably satisfactory to Landlord, shall be
promptly replaced at Tenant’s expense. Notwithstanding any failure by Landlord
to object to any such work, Landlord shall have no responsibility therefor.

               (d)
In connection with Tenant’s early access work, Tenant shall reimburse Landlord
for any extra expense incurred by Landlord by reason of faulty work done by
Tenant or by reason of delays caused by such work, or by reason of inadequate
cleanup only after Tenant is provided with one (1) business days written notice
and a reasonable opportunity to cure (not to exceed one additional business
day).

               (e)
Tenant, at Tenant’s cost, shall prepare or cause to be prepared and shall
deliver to Landlord within thirty (30) days after completion of such work a
detailed set of “as-built” plans and specifications reflecting the alterations,
additions or improvements to the Premises installed by Tenant.

EXHIBIT “D” PAGE 1

          4.
Notwithstanding anything to the contrary contained in Section 2.1 of the Lease,
the Commencement Date shall be the Target Commencement Date specified in the
applicable Basic Lease Provision. There shall be no delay or extension of the
Commencement Date and Expiration Date of the Lease on account of any delay in
performance or completion by Tenant of (i) any additional works of improvement
in or to the Premises or (ii) any of the specific matters which are the
responsibility of Tenant pursuant to paragraph 2 of this work letter.

          5.
All costs payable by Tenant pursuant to paragraph 3(e) above shall be
additional rent payable by Tenant pursuant to this Lease. All such additional
rent shall be paid within thirty (30) days after Tenant’s receipt of Landlord’s
invoice for such additional rent.

EXHIBIT “D” PAGE 2

TENANT SIGN
PROGRAM — CRITERIA

RESEARCH AND DEVELOPMENT BUILDINGS

	
 

	
 

	
 

	
(i)

	
Purpose

	
 

	
 

	
 

	
The purpose of this Criteria is to insure a
 continuity in Graphic Elements throughout Harbor Gateway Business Center.

	
 

	
 

	
 

	
It is the intent of this Criteria to provide
 individual tenants maximum signing exposure, without visual clutter and in a
 manner that will enhance the overall image of the Center. It is not the
 intent of this Criteria to limit individual identity or corporate expression.

	
 

	
 

	
(ii)

	
General Conditions

	
 

	
 

	
 

	
1.

	
Each tenant is responsible for providing his own
 sign at his own expense. Tenant to submit to the owner, for approval, two
 drawings to scale showing graphic layout and copy.

	
 

	
 

	
 

	
 

	
2.

	
Each tenant is also responsible for obtaining all
 required building permits and approvals from the City of Costa Mesa for any
 sign proposed. The Center sign Program has been preapproved by the City and
 the sign contractor will assist in this matter. (Tenant any receive
 assistance for any matter relating to signing from the designated sign
 contractor.)

	
 

	
 

	
 

	
 

	
3.

	
These criteria will be strictly enforced and any
 sign not conforming will be brought into conformance or removed at the
 expense of the tenant.

	
 

	
 

	
 

	
 

	
4.

	
All signs and their installations must comply with
 all applicable local building codes.

	
 

	
 

	
 

	
 

	
5.

	
No additional advertisement or temporary banners,
 flags, painted window glass, or similar devices are permitted in the Center
 unless provided herein.

	
 

	
 

	
 

	
 

	
6.

	
No animated, flashing or audible signs will be
 allowed.

	
 

	
 

	
 

	
 

	
7.

	
In the event that a tenant should terminate his
 occupancy he may remove the metal insert portion of his sign, (that portion
 which contains his personal graphics), however the wood portion of the sign
 is to remain in place and is considered a part of the building.

	
 

	
 

	
 

	
(iii)

	
Designated Sign Contractor

	
 

	
 

	
 

	
Tenant may use its own sign contractor subject to
 the reasonable approval of Landlord.

	
 

	
 

	
(iv)

	
Approvals

	
 

	
 

	
Every tenant sign must be submitted to Landlord for
 approval. The drawings to be submitted must clearly indicate sign size,
 letter size, color, construction material, location and sign message. Written
 approval must be obtained before fabrication and installation of any sign.

	
 

	
 

	
(v)

	
Tenant Sign Specification, Page 3.
 *

	
 

	
 

	
(vi)

	
Typical Sign Location, Page 7. *

	
 

	
 

	
(vii)

	
Secondary (Window) Signage, Page 8. *

* All dimensions set forth are maximum sizes permitted.

EXHIBIT “E” PAGE 1

STATEMENT OF
TENANT IN RE: LEASE 

[Tenant’s Letterhead]

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Date

	
 

	
 

	
 

	
 

	
Teachers Insurance and Annuity 

	
 

	
 

	
 

	
Association of America 

	
 

	
 

	
 

	
730 Third Avenue 

	
 

	
 

	
 

	
New York, New York 10017 

	
 

	
 

	
 

	
Attn: ______________________________

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Re:

	
TIAA Appl. # AAA-1068 

	
 

	
 

	
 

	
TIAA Mtge. #003695-01

	
 

	
 

	
 

	
Name of Project Harbor Gateway
 Business Center 

	
 

	
 

	
 

	
Address (Including zip code) 

	
 

	
 

	
 

	
Tenant’s Floor and Suite #

Ladies and Gentlemen:

          It
is our understanding that you have placed a mortgage upon the subject premises and in connection therewith have required this
certification of the undersigned.

          The
undersigned, as lessee, under that certain lease dated ________, made with C.J. Segerstrom & Sons, as lessor, hereby ratifies said
lease and
certifies that:

	
 

	
 

	
 

	
 

	
1.

	
the “Commencement Date” of said
 Lease is_____________; and

	
 

	
 

	
 

	
 

	
2.

	
the undersigned is presently
 solvent and free from reorganization and/or bankruptcy and is in
 occupancy, open, and conducting business with the public in the premises; and

	
 

	
 

	
 

	
 

	
3.

	
the operation and use of the
 premises do not involve the generation, treatment, storage, disposal or release of a hazardous substance or a
 solid waste into the environment other than to the extent necessary to conduct its ordinary course of business in the premises
 and in accordance with applicable
 environmental laws, and that the Premises are being operated in accordance
 with all applicable environmental laws, zoning ordinances and building codes; and

	
 

	
 

	
 

	
 

	
4.

	
the current Base Rent payable
 pursuant to the terms of said lease is $_______ per annum; and further, additional rental pursuant to said lease is
 payable as follows: ______________________; and

	
 

	
 

	
 

	
 

	
5.

	
said lease is in full force and
 effect and has not been assigned, modified, supplemented or amended in any way (except by agreement(s)
 dated __________), and neither party thereto is in default thereunder; and

	
 

	
 

	
 

	
 

	
6.

	
the lease described above
 represents the entire agreement between the parties as to the leasing of the premises; and

	
 

	
 

	
 

	
 

	
7.

	
the term of said lease expires
 on _______________; and

	
 

	
 

	
 

	
 

	
8.

	
all conditions under said lease
 to be performed by the lessor have been satisfied, including, without limitation, all co-tenancy requirements thereunder, if any;
and

	
 

	
 

	
 

	
 

	
9.

	
all required contributions by
 lessor to lessee on account of lessee’s improvements have been received; and

	
 

	
 

	
 

	
 

	
10.

	
on this date there are no
 existing defenses or offsets, claims or counterclaims which the undersigned has against the enforcement of
 said lease by the lessor; and

	
 

	
 

	
 

	
 

	
11.

	
no rental has been paid in
 advance and no security (except the security deposit in the amount of $__________) has been deposited with lessor; and

	
 

	
 

	
 

	
 

	
12.

	
lessee’s Rentable Area is
 _____________ square feet; and

EXHIBIT “F” PAGE 1

	
 

	
 

	
 

	
 

	
13.

	
the most recent payment of
 current Basic Rent was for the payment due on __________________,
 20 ______, and all Basic Rent and
 additional rental payable pursuant
 to the terms of the lease have been paid up to said date; and

	
 

	
 

	
 

	
 

	
14.

	
the undersigned acknowledges
 notice that lessor’s interest under the lease and the rent and all other sums
 due thereunder have been assigned to you as part of the security for a mortgage loan by you to lessor. In the
 event that Teachers Insurance and
 Annuity Association of America, as lender, notifies the undersigned of a
 default under the mortgage and demands that the undersigned pay its rent and all other sums due under the
 lease to lender, lessee agrees that
 it shall pay its rent and all such other sums to lender.

	
 

	
 

	
 

	
 

	
 

	
Very truly yours,

	
 

	
 

	
 

	

	
 

	
(Lessee)

	
 

	
By: 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Its: 

	
 

	
 

	
 

	
 

	

EXHIBIT “F” PAGE 2

RECORDING REQUESTED BY

AND MAILED TO:

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

          THIS
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”) is made by and between
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation
with offices at 730 Third Avenue, New York, New York 10017 (“Lender”) and _____________, a [an]
[individual] name/of/state [corporation] [limited liability company] [general
partnership] [limited partnership] [d/b/a/ ] with its principal place of
business at ___________ (“Tenant”).

          A.
Lender has made a loan (together with all advances and increases, the “Loan”) to C.J. SEGERSTROM &
SONS, a California general partnership (“Borrower”).

          B.
Borrower, as landlord, and Tenant have entered into a lease dated
____________ as amended by amendments dated _______________ (the “Lease”) which leased to Tenant
Suite No. _____________, ______________ (the “Leased
Space”) located in the Property (defined below).

          C.
The Loan is secured by the Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing
Statement recorded in the official records of the County of Orange, State of
California (together with all advances, increases, amendments or consolidations,
the “Mortgage”) and the
Assignment of Leases and Rents recorded in such official records (together with
all amendments or consolidations, the “Assignment”),
assigning to Lender the Lease and all rent, additional rent and other sums
payable by Tenant under the Lease (the “Rent”).

          D.
The Mortgage encumbers the real property, improvements and fixtures located in
the City of Costa Mesa, County of Orange, State of California, commonly known
as Harbor Gateway Business Center, and described on Exhibit “A” (the “Property”).

          IN
CONSIDERATION of the mutual agreements contained in this Agreement, Lender and
Tenant agree as follows:

          1. The
Lease and all of Tenant’s rights under the Lease are and will remain subject
and subordinate to the lien of the Mortgage and all of Lender’s rights under
the Mortgage and Tenant will not subordinate the Lease to any other lien
against the Property without Lender’s prior written consent.

          2. This
Agreement constitutes notice to Tenant of the Mortgage and the Assignment and,
upon receipt of notice from Lender, Tenant will pay the Rent as and when due
under the Lease to Lender and the payments will be credited against the Rent
due under the Lease.

          3. Tenant
does not have and will not acquire any right or option to purchase any portion
of or interest in the Property.

          4. Tenant
and Lender agree that if Lender exercises its remedies under the Mortgage or
the Assignment and if Tenant is not then in default under this Agreement and if
Tenant is not then in default beyond any applicable grace and cure periods
under the Lease:

EXHIBIT “G” PAGE 1

          (a)
Lender will not name Tenant as a party to any judicial or non-judicial
foreclosure or other proceeding to enforce the Mortgage unless joinder is
required under applicable law but in such case Lender will not seek affirmative
relief against Tenant, the Lease will not be terminated, and Tenant’s
possession of the Leased Space will not be disturbed;

          (b)
If Lender or any other entity (a “Successor
Landlord”) acquires the Property through foreclosure, by other
proceeding to enforce the Mortgage or by deed-in-lieu of foreclosure (a
“Foreclosure”), Tenant’s possession of the Leased Space will not be disturbed
and the Lease will continue in full force and effect between Successor Landlord
and Tenant; and 

          (c)
If, notwithstanding the foregoing, the Lease is terminated as a result of a
Foreclosure, a lease between Successor Landlord and Tenant will be deemed
created, with no further instrument required, on the same terms as the Lease
except that the term of the replacement lease will be the then unexpired term
of the Lease. Successor Landlord and Tenant will execute a replacement lease at
the request of either.

          5. Upon
Foreclosure, Tenant will recognize and attorn to Successor Landlord as the
landlord under the Lease for the balance of the term. Tenant’s attornment will
be self-operative with no further instrument required to effectuate the
attornment except that at Successor Landlord’s request, Tenant will execute
instruments reasonably satisfactory to Successor Landlord confirming the
attornment.

          6. Successor
Landlord will not be:

          (a)
liable for any act or omission of any prior landlord under the Lease occurring
before the date of the Foreclosure except for repair and maintenance
obligations of a continuing nature imposed on the landlord under the Lease;

          (b)
required to credit Tenant with any Rent paid more than one month in advance or
for any security deposit unless such Rent or security deposit has been received
by Successor Landlord;

          (c)
bound by any amendment, renewal or extension of the Lease that is inconsistent
with the terms of this Agreement or is not in writing and signed both by Tenant
and landlord;

          (d)
bound by any reduction of the Rent unless the reduction is in connection with
an extension or renewal of the Lease at prevailing market terms or was made
with Lender’s prior written consent;

          (e) bound
by any reduction of the term1 of the Lease or any termination, cancellation or
surrender of the Lease unless the reduction, termination, cancellation or
surrendered occurred during the last 6 months of the term or was made with
Lender’s prior written consent; 

          (f) bound
by any amendment, renewal or extension of the Lease entered into without
Lender’s prior written consent if the Leased Space represents 50% or more of
the net rentable area of the building in which the Leased Space is located;

          (g) subject
to any credits, offsets, claims, counterclaims or defenses that Tenant may have
that arose prior to the date of the Foreclosure or liable for any damages
Tenant may suffer as a result of any misrepresentation, breach of warranty or
any act of or failure to act by any party other than Successor Landlord;

          (h)
bound by any obligation to make improvements to the Property, including the
Leased Space, to make any payment or give any credit or allowance to Tenant
provided for in the Lease or to pay any leasing commissions arising out of the
Lease, except that Successor Landlord will be:

	
 

	
 

	
1 

	
For purposes of this
subparagraph “the term of the Lease” includes any renewal term after the right
to renew has been exercised.

EXHIBIT “G” PAGE 2

               (i)
bound by any such obligations provided for in the Lender approved form lease;

               (ii)
bound by any such obligations if the overall economic terms of the Lease
(including the economic terms of any renewal options) represented market terms
for similar space in properties comparable to the Property when the Lease was
executed; and

               (iii)
bound to comply with the casualty and condemnation restoration provisions
included in the Lease provided that Successor Landlord receives the insurance
or condemnation proceeds; or

          (i)
liable for obligations under the Lease with respect to any off-site property or
facilities for the use of Tenant (such as off-site leased space or parking)
unless Successor Landlord acquires in the Foreclosure the right, title or
interest to the off-site property.

          7. Lender
will have the right, but not the obligation, to cure any default by Borrower,
as landlord, under the Lease. Tenant will notify Lender of any default that
would entitle Tenant to terminate the Lease or abate the Rent and any notice of
termination or abatement will not be effective unless Tenant has so notified
Lender of the default and Lender has had a 30-day cure period (or such longer
period as may be necessary if the default is not susceptible to cure within 30
days) commencing on the latest to occur of the date on which (i) Landlord’s
cure period under the Lease expires; (ii) Lender receives the notice required
by this paragraph; and (iii) Successor Landlord obtains possession of the
Property if the default is not susceptible to cure without possession.

          8. All
notices, requests or consents required or permitted to be given under this
Agreement must be in writing and sent by certified mail, return receipt requested
or by nationally recognized overnight delivery service providing evidence of
the date of delivery, with all charges prepaid, addressed to the appropriate
party at the address set forth above.

          9. Any
claim by Tenant against Successor Landlord under the Lease or this Agreement
will be satisfied solely out of Successor Landlord’s interest in the Property
and Tenant will not seek recovery against or out of any other assets of
Successor Landlord. Successor Landlord will have no liability or responsibility
for any obligations under the Lease that arise subsequent to any transfer of
the Property by Successor Landlord.

          10. This
Agreement is governed by and will be construed in accordance with the laws of
the state in which the Property is located.

          11. Lender
and Tenant waive trial by jury in any proceeding brought by, or counterclaim
asserted by, Lender or Tenant relating to this Agreement.

          12. If
there is a conflict between the terms of the Lease and this Agreement, the terms
of this Agreement will prevail as between Successor Landlord and Tenant.

          13. This
Agreement binds and inures to the benefit of Lender and Tenant and their
respective successors, assigns, heirs, administrators, executors, agents and
representatives.

          14. This
Agreement contains the entire agreement between Lender and Tenant with respect
to the subject matter of this Agreement, may be executed in counterparts that
together constitute a single document and may be amended only by a writing
signed by Lender and Tenant.

          15. Tenant
certifies that: the Lease represents the entire agreement between the landlord
under the Lease and Tenant regarding the Leased Space; the Lease is in full
force and effect; neither party is in default under the Lease beyond any
applicable grace and cure periods and no event has occurred which with the giving of notice or passage of
time would constitute a default under the Lease; Tenant has entered into
occupancy and is open and conducting business in the Leased Space; and all
conditions to be performed to date by the landlord under the Lease have been
satisfied.

EXHIBIT “G” PAGE 3

          IN
WITNESS WHEREOF, Lender and Tenant have executed and delivered this Agreement
as of _____________, 20 _____.

	
 

	
 

	
 

	
 

	
TEACHERS INSURANCE AND
 ANNUITY ASSOCIATION OF AMERICA, a New York corporation

	
 

	
 

	
 

	
By: 

	
 

	
 

	
 

	

	
 

	
Name: 

	
 

	
 

	
 

	

	
 

	
Title: 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
Insert Name of Tenant                 
            ,

	
 

	
a [an] [individual] _
 [corporation] [limited 

	
 

	
liability company] [general
 partnership] [limited 

	
 

	
partnership] [d/b/a/_] 

	
 

	
 

	
 

	
By: 

	
 

	
 

	
 

	

	
 

	
Name: 

	
 

	
 

	
 

	

	
 

	
Title: 

	
 

	
 

	
 

	

EXHIBIT “G” PAGE 4

	
 

	
 

	
State of ______________

	
)

	
 

	
)  ss.

	
County of ____________

	
)

           On ____________________________,
2003, before me, _________________, Notary Public, personally
appeared ________________________________, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

           WITNESS
my hand and official seal.

Signature _________________________________

	
 

	
 

	
State of ______________

	
)

	
 

	
)  ss.

	
County of ____________

	
)

           On ____________________________,
2003, before me, _________________, Notary Public, personally
appeared __________________________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

           WITNESS
my hand and official seal.

Signature

EXHIBIT “G” PAGE 5

EXHIBIT A

Property Description

EXHIBIT A TO EXHIBIT “G” PAGE 1

EXHIBIT “H”

PARKING PLAN

EXHIBIT “H”

          Exhibit “I”
Approved Space Plan

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