Document:

Exhibit 10.3

 

CATALINA
LANDING

AMENDED AND RESTATED OFFICE LEASE

 

Dated: May 9, 2003

 

This Amended and Restated Lease (“Lease”), is by and between AC-CATALINA LANDING LLC,  a Delaware limited liability company (“Landlord”), and OBAGI MEDICAL PRODUCTS, INC.,  a California corporation (“Tenant”). John Hancock Mutual
Life Insurance Company, a Massachusetts corporation, Landlord’s predecessor in
interest, and Tenant, are parties to that certain lease, dated February 27,
1998, and that certain First Amendment to Standard Office Lease, dated October
30, 1998 (collectively, the “Lease”), for the premises described below. Now,
therefore, Landlord and Tenant hereby express their mutual desire and intent to
amend and restate the Original Lease and First Amendment as follows:

 

1.        Basic Lease Provisions (“Basic Lease Provisions”)

 

1.1      Parties: This Lease, dated, for reference purposes
only, the ninth day of May, 2003, is made by and between AC-Catalina LLC, a Delaware limited liability company
(“Landlord”), and Obagi Medical Products,
Inc.,  a California corporation.

 

1.2      Premises: The premises are located at 310 Golden Shore,
Suite 120, Long Beach, Los Angeles County, CA, as shown on Exhibit “A-11”
hereto (the “Premises”). The Premises collectively contain approximately 12,023
Rentable Square Feet (subject to adjustment as provided in this Lease).
Notwithstanding anything contained in this Lease to the contrary, the parties
hereto agree and acknowledge that any statement of size, square footage, or
dimension set forth in this Lease or lease proposals that may have been used in
calculating rents or expense recoveries is a reasonable approximation. All
rents and/or expense recoveries based thereon is not subject to revision or
modification whether or not the actual size is greater or less than stated
herein.

 

1.3      Building and Project: Commonly described as being located at 310
Golden Shore, Long Beach, Los Angeles County, CA 90802 (the Building”), as
more particularly described in Exhibit “A” hereto. The Catalina Landing Office Project
(“The Office Building Project”) consists of four office buildings (310, 320,
330 and 340 Golden Shore) containing approximately 276,160 rentable square
feet.

 

1.4      Use: General Office, subject to paragraph 6.

 

1.5                   Term:                                Sixty (60) Lease Months

Commencement Date:     August 1, 2003 (“Commencement Date”)

Expiration Date:              July 31, 2008 (“Expiration Date”), as defined
in paragraph 3.

 

1.6      Base Rent Schedule: Monthly Base Rent is payable in advance on
the first day of each month, per paragraph 4.1.

 

	
  EFFECTIVE DATES OF INCREASE

  	
   

  	
  MONTHLY BASE RENT

  	
   

  
	
  August 1, 2003 – July 31,
  2004

  	
   

  	
  21,040

  	
   

  
	
  August 1, 2004 – July 31,
  2005

  	
   

  	
  21,671

  	
   

  
	
  August 1, 2005 – July 31,
  2006

  	
   

  	
  22,322

  	
   

  
	
  August 1, 2006 – July 31,
  2007

  	
   

  	
  22,991

  	
   

  
	
  August 1, 2007 – July 31,
  2008

  	
   

  	
  23,681

  	
   

  

 

1.7      Base Year:                                      1998

 

1.8      Rent paid upon execution:            $21,040 - To Be Billed

 

1.9      Security Deposit:                            $17,433.35 -
Previously Remitted

 

1.10    Tenant’s Share of Operating Expense
Increase:              4.35% [as defined in Paragraph 4.2]

 

2.        Premises,
Parking and Common Areas.

 

2.1      Premises: The Premises are a portion of a building,
herein sometimes referred to as the “Building” identified in paragraph 1.3 of
the Basic Lease Provisions. The Premises, the Building, the Common Areas, the
land upon which the same are located, along with all other buildings and
improvements thereon or thereunder, are herein collectively referred to as the “Office
Building Project.” Landlord hereby leases to Tenant and Tenant leases from
Landlord for the term, at the rental, and upon all of the conditions set forth
herein, the real property referred to in the Basic Lease Provisions, paragraph
1.2, as the “Premises,” including rights to the Common Areas as hereinafter
specified.

 

2.2      Vehicle Parking:   So
long as Tenant is not in default, and subject to the rules and regulations
attached hereto, and as established by Landlord from time to time and in
accordance with the prevailing parking rates charged by Landlord, Tenant shall
be entitled to use up to forty-two (42) parking spaces in the Office Building
Project including up to twelve (12) reserved spaces, three of which will be
billed at the non-reserved rate.

 

Initial            

Initial            

 

1

 

2.2.1   If
Tenant commits, permits or allows any of the prohibited activities described in
the Lease or the rules then in effect, then Landlord shall have the right,
without notice, in addition to such other rights and remedies that it may have,
to remove or tow away the vehicle involved and charge the cost to Tenant, which
cost shall be immediately payable upon demand by Landlord.

 

2.2.2   Intentionally Omitted

 

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

 

2.4      Common Areas-Rules and Regulations. Tenant agrees to abide by and conform to the
rules and regulations attached hereto as Exhibit D with respect to the Office Building Project and Common Areas, and to
cause its employees, suppliers, shippers, customers, and invitees to so abide
and conform. Landlord or such other person(s) as Landlord may appoint shall
have the exclusive control and management of the Common Areas and shall have
the right, from time to time, to modify, amend and enforce said rules and
regulations. Landlord shall not be responsible to Tenant for the non-compliance
with said rules and regulations by other Tenants, their agents, employees and
invitees of the Office Building Project.

 

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

 

(a) To make changes to the Building
interior and exterior and Common Areas, including, without limitation, changes
in the location, size, shape, number, and appearance thereof, including but not
limited to the lobbies, windows, stairways, air shafts, elevators, escalators,
restrooms, driveways, entrances, parking spaces, parking areas, loading and
unloading areas, ingress, egress, direction of traffic, decorative walls,
landscaped areas and walkways; provided, however, Landlord shall at all times
provide the parking facilities required by applicable law;

 

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

 

(c) To designate other land and improvements
outside the boundaries of the Office Building Project to be a part of the
Common Areas, provided that such other land and improvements have a reasonable
and functional relationship to the Office Building Project;

 

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

 

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

 

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

 

3.        Term

 

3.1      Term. The term and Commencement Date of this Lease
shall be as specified in paragraph 1.5 of the Basic Lease Provisions.

 

3.2      Delivery of Possession. Landlord will deliver possession of the
Premises to Tenant in its current “as-is” condition. If, for any reason not
caused by Tenant, Landlord cannot deliver possession of the Premises to Tenant
on the Commencement Date, this Lease will not be void or voidable, nor will
Landlord be liable to Tenant for any loss or damage resulting from such delay,
but in such event, the Commencement Date and Tenant’s obligation to pay rent
will not commence until Landlord delivers possession to Tenant. If the delay in
possession is caused by Tenant, then the Term and Tenant’s obligation to pay
rent will commence as of the Commencement Date even though Tenant does not yet
have possession. Notwithstanding the foregoing, Landlord will not be obligated
to deliver possession of the Premises to Tenant (but Tenant will be liable for
rent if Landlord can otherwise deliver the Premises to Tenant) until Landlord
has received from Tenant all of the following: (i) a copy of this Lease fully
executed by Tenant and the guaranty of Tenant’s obligations under this Lease,
if any, executed by the Guarantor(s); (ii) the Security Deposit and the first
installment of Monthly Base Rent; and (iii) copies of policies of insurance or
certificates thereof as required in this Lease.

 

3.3      Early Possession. If Tenant occupies the Premises prior to said
Commencement Date, such occupancy shall be subject to all provisions of this
Lease, such occupancy shall not change the termination date, and Tenant shall
pay rent for such occupancy.

 

3.4      Uncertain Commencement. In the event commencement of the Lease term
is defined as the completion of the improvements, Tenant and Landlord shall
execute an amendment to this Lease establishing the date of Tender of
Possession (as defined in paragraph 3.2.1) or the actual taking of possession
by Tenant, whichever first occurs, as the Commencement Date.

 

4.        Rent

 

4.1      Base
Rent. Subject to adjustment as hereinafter provided in
paragraph 1.6, and except as may be otherwise expressly provided this Lease,
Tenant shall pay to Landlord the Base Rent for the Premises set forth in
paragraph 1.6 of the Basic Lease Provisions, without offset or deduction.
Tenant shall pay Landlord upon execution hereof the advance Base Rent described
in paragraph 1.8 of the

 

2

 

Basic Lease
Provisions. Rent for any period during the term hereof which is for less than
one month shall be prorated based upon the actual number of days of the calendar
month involved. Rent shall be payable in lawful money of the United States to
Landlord at the address stated herein or to such other persons or at such other
places as Landlord may designate in writing.

 

4.2      Operating
Expense Increase. Tenant shall
pay to Landlord during the term hereof, in addition to the Base Rent, Tenant’s
Share as hereinafter defined, of the amount by which all Operating Expenses, as
hereinafter defined, for each Comparison year exceeds the amount of all
Operating Expenses for the Base Year, such excess being hereinafter referred to
as the “Operating Expense Increase,” in accordance with the following
provisions:

 

(a) “Tenant’s Share” is defined, for purposes of this Lease, as
the percentage set forth in paragraph 1.10 of the Basic Lease Provisions, which
percentage has been determined by dividing the approximate square footage of
the Premises by the total approximate square footage of the rentable space
contained in the Office Building Project. It is understood and agreed that the
square footage figures set forth in Basic Lease Provisions are approximations
which Landlord and Tenant agree are reasonable and shall not be subject to
revision except in connection with an actual change in the size of the Premises
or a change in the space available for lease in the Office Building Project.

 

(b) “Base Year” is defined as the calendar year in which the Lease
term commences.

 

(c) “Comparison Year” is defined as each calendar year during the
term of this Lease subsequent to the Base Year; provided, however, Tenant shall
have no obligation to pay share of the Operating Expenses Increase applicable
to the first twelve (12) months of the Lease Term (other than such as are
mandated by a governmental authority as to which government mandated expenses Tenant
shall pay Tenant’s Share, notwithstanding they occur during the first twelve
(12) months). Tenant’s Share of the Operating Expense Increase for the first
and last Comparison Years of the Lease Term shall be prorated according to that
portion of such Comparison Year as to which Tenant is responsible for a share
of such increase.

 

(d) “Operating Expenses” is defined, for purposes of this Lease,
to include all costs, if any, incurred by Landlord in the exercise of its
reasonable discretion, for:

 

(i)        The operation, repair,
maintenance, and replacement, in neat, clean, safe, good order and condition,
of the Office Building Project, including but not limited to, the following:

 

(aa) The Common Areas, including their surfaces, coverings, decorative
items, carpets, drapes and window coverings, and including parking areas,
loading and unloading areas, trash areas, roadways, sidewalks, walkways,
stairways, parkways, driveways, landscaped area, striping, bumpers, irrigation systems, Common Area lighting
facilities, building exteriors and roofs, fences and gates;

 

(bb) All heating, air conditioning, plumbing, electrical systems, life
safety equipment, telecommunication and other equipment used in common by, or
for the benefit of, Tenants or occupants of the Office Building Project,
including elevators and escalators, tenant directories, fire detection systems
including sprinkler systems maintenance and repair.

 

(ii)                    Trash
disposal, janitorial and security services;

(iii)                 Any other service
to be provided by Landlord that is elsewhere in this Lease stated to be an “Operating
Expense”;

(iv)                The cost of the
premiums for the liability and property insurance policies to be maintained by
Landlord under paragraph 8 hereof;

(v)                   The amount of
the real property taxes to be paid by Landlord under paragraph 10.1 hereof;

(vi)                The cost of water,
sewer, gas, electricity, and other publicly mandated services to the Office
Building Project;

(vii)             Labor, salaries and
applicable fringe benefits and costs, materials, supplies and tools, used in
maintaining and/or cleaning the Office Building Project and accounting and a
management fee attributable to the operation of the Office Building Project;

(viii)          Replacing and /or adding
improvements mandated by any governmental agency and any repairs or removals
necessitated thereby amortized over its useful life according to Federal income
tax regulations or guidelines for depreciation thereof (including interest on
the unamortized balance as is then reasonable in the judgment of Landlord’s
accountants);

(ix)                  Replacements of
equipment or improvements that have a useful life for depreciation purposes
according to Federal income tax guidelines of five (5) years or less, as
amortized over such life.

 

(e) Operating Expenses shall not include the costs of replacements
of equipment or improvements that have a useful life for Federal income tax
purposes in excess of five (5) years unless it is of the type described in
paragraph 4.2(d)(viii), in which case their cost shall be included as above
provided.

 

(f) Operating Expenses shall not include any expenses paid by any
Tenant directly to third parties, or as to which Landlord is otherwise
reimbursed by any third party, other tenant, or by insurance proceeds.

 

(g) Tenant’s Share of Operating Expenses Increase shall be payable
by Tenant within ten (10) days after a reasonably detailed statement of actual
expenses is presented to Tenant by Landlord. At Landlord’s option, however, an
amount may be estimated

 

3

 

by Landlord from
time to time in advance of Tenant’s Share of the Operating Expense Increase for
any Comparison Year, and the same shall be payable monthly or quarterly, as
Landlord shall designate, during each Comparison Year of the Lease term, on the
same day as the Base Rent is due hereunder. In the event that Tenant pays
Landlord’s estimate of Tenant’s Share of Operating Expense Increase as
aforesaid, Landlord shall deliver to Tenant within sixty (60) days after the
expiration of each Comparison Year a reasonably detailed statement showing
Tenant’s Share of the actual Operating Expense Increase incurred during such
year. If Tenant’s payments under this paragraph 4.2(g) during said Comparison
Year exceed Tenant’s Share as indicated on said statement, Tenant shall be
entitled to credit the amount of such overpayment against Tenant’s Share of
Operating Expense Increase next falling due. If Tenant’s payments under this
paragraph during said Comparison Year were less than Tenant’s Share as
indicated on said statement, Tenant shall pay to Landlord the amount of the
deficiency within ten (10) days after delivery by Landlord to Tenant of said
statement. Landlord and Tenant shall forthwith adjust between them by cash
payment any balance determined to exist with respect to that portion of the
last Comparison Year for which Tenant is responsible as to Operating Expense
Increases, notwithstanding that the Lease term may have terminated before the
end of such Comparison Year.

 

5.        Security Deposit.
Tenant shall deposit with Landlord upon execution hereof the security deposit
set forth in paragraph 1.9 of the Basic Lease Provisions as security for Tenant’s
faithful performance of Tenant’s obligations hereunder. If Tenant fails to pay
rent or other charges due hereunder, or otherwise defaults with respect to any
provision of this Lease, Landlord may use, apply or retain all or any portion
of said deposit for the payment of any rent or other charge in default for the
payment of any other sum to which Landlord may become obligated by reason of
Tenant’s default, or to compensate Landlord for any loss or damage which
Landlord may suffer thereby. If Landlord so uses or applies all or any portion
of said deposit, Tenant shall within ten (10) days after written demand
therefor deposit cash with Landlord in an amount sufficient to restore said
deposit to the full amount then required of Tenant. If the monthly Base Rent
shall, from time to time, increase during the term of this Lease, Tenant shall,
at the time of such increase, deposit with Landlord additional money as a
security deposit so that the total amount of the security deposit held by
Landlord shall at all times bear the same proportion to the then current Base
Rent as the initial security deposit bears to the initial Base Rent set forth
in paragraph 1.6 of the Basic Lease Provisions. Landlord shall not be required
to keep said security deposit separate from its general accounts. If Tenant
performs all of Tenant’s obligations hereunder, said deposit, or so much
thereof as has not heretofore been applied by Landlord, shall be returned,
without payment of interest or other increment for its use, to Tenant (or, at
Landlord’s option, to the last assignee, if any, of Tenant’s interest
hereunder) at the expiration of the term hereof and after Tenant has vacated
the Premises. No trust relationship is created herein between Landlord and
Tenant with respect to said Security Deposit.

 

6.        Use.

 

6.1      Use.
The Premises shall be used and occupied only for the purpose set forth in
paragraph 1.4 of the Basic Lease
Provisions or any other use which is reasonably comparable to that use and for
no other purpose.

 

6.2      Compliance
with Law.

 

(a) Landlord warrants to Tenant that the Premises, in the state
existing on the date that the Lease term commences, but without regard to
alterations or improvements made by Tenant or the use for which Tenant will
occupy the Premises, does not violate any covenants or restrictions of record,
or any applicable building code, regulation or ordinance in effect on such
Lease term Commencement Date. In the event it is determined that this warranty
has been violated, than it shall be the obligation of the Landlord, after
written notice from Tenant, to promptly, at Landlord’s sole cost and expense,
rectify any such violation.

 

(b) Except as provided in paragraph 6.2(a) Tenant shall, at Tenant’s
expense, promptly comply with all applicable statutes, ordinances, rules,
regulations, orders, covenants and restrictions of record, and requirements of
any fire insurance underwriters or rating bureaus, now in effect or which may
hereafter come into effect, whether or not they reflect a change in policy from
that now existing, during the term or any part of the term hereof, relating in
any manner to the Premises and the occupation and use by Tenant of the
Premises. Tenant shall conduct its business in a lawful manner and shall not
use or permit the use of the Premises or the Common Areas in any manner that
will tend to create waste or nuisance or shall tend to disturb other occupants
of the Office Building Project.

 

6.3      Condition
of Premises.

 

(a) Landlord will deliver possession of the Premises to Tenant in
its current “as-is” condition. If, for any reason not caused by Tenant,
Landlord cannot deliver possession of the Premises to Tenant on the
Commencement Date, this Lease will not be void or voidable, nor will Landlord
be liable to Tenant for any loss or damage resulting from such delay, but in
such event, the Commencement Date and Tenant’s obligation to pay rent will not
commence until Landlord delivers possession to Tenant. If the delay in
possession is caused by Tenant, then the Term and Tenant’s obligation to pay
rent will commence as of the Commencement Date even though Tenant does not yet
have possession. Notwithstanding the foregoing, Landlord will not be obligated
to deliver possession of the Premises to Tenant (but Tenant will be liable for
rent if Landlord can otherwise deliver the Premises to Tenant) until Landlord
has received from Tenant all of the following: (i) a copy of this Lease fully
executed by Tenant and the guaranty of Tenant’s obligations under this Lease,
if any, executed by the Guarantor(s); (ii) the Security Deposit and the first
installment of Monthly Base Rent; and (iii) copies of policies of insurance or
certificates thereof as required in this Lease.

 

(b) Except as otherwise provided in this Lease, Tenant hereby
accepts the Premises and the Office Building Project in their condition
existing as of the Lease Commencement Date or the date that Tenant takes
possession of the Premises, whichever is earlier, subject to all applicable
zoning, municipal, county and state laws, ordinances and regulations governing
and regulating the use of the

 

4

 

Premises, and any
easements, covenants or restrictions of record, and accepts this Lease subject
thereto and to all matters disclosed thereby and by any exhibits attached
hereto. Tenant acknowledges that it has satisfied itself by its own independent
investigation that the Premises are suitable for its intended use, possession
and to have acknowledged that all work to be completed by Landlord has been
completed and there are no additional items needing work or repair by Landlord.
Tenant further acknowledges that neither Landlord nor Landlord’s agent or
agents has made any representation or warranty as to present or future
suitability of the Premises, Common Areas, or Office Building Project for the
conduct of Tenant’s business.

 

7.        Maintenance,
Repairs, Alterations and Common Area Services.

 

7.1      Landlords Obligations. Landlord shall keep the Office Building
Project, including the Premises, interior and exterior walls, roof, and common
areas, and the equipment whether used exclusively for the Premises or in common
with other premises, in good condition and repair: provided, however, Landlord
shall not be obligated to pain, repair or replace wall coverings, or to repair
or replace any improvements that are not ordinarily a part of the Building or
are above then Building standards. Except as provided in paragraph 9.5, there
shall be no abatement of rent or liability of Tenant on account of any injury
or interference with Tenant’s business with respect to any improvements,
alterations or repairs made by Landlord to the Office Building Project or any
part thereof. Tenant expressly waives the benefits of any stature now or
hereafter in effect which would otherwise afford Tenant the right to make
repairs at Landlord’s expense or to terminate this Lease because of Landlord’s
failure to keep the premises in good order, condition and repair.

 

7.2      Tenant’s Obligations.

 

(a) Not withstanding Landlord’s
obligation to keep the Premises in good condition and repair, Tenant shall be
responsible for payment of the cost thereof to Landlord as additional rent for
the portion of the cost of any maintenance and repair of the Premises, or any
equipment (wherever located) that serves only Tenant or the Premises, to the
extent such cost is attributable to causes beyond normal wear and tear. Tenant
shall be responsible for the cost of painting, repairing or replacing wall
coverings, and to repair or replace any Premises improvements that are not
ordinarily a part of the Building or that are above then Building standards.
Landlord may, at its option, upon reasonable notice, elect to have Tenant
perform any particular such maintenance or repairs the cost of which is
otherwise Tenant’s responsibility hereunder.

 

(b) On the last day of the term hereof,
or on any sooner termination, Tenant shall surrender the Premises to Landlord
in the same condition as received, ordinary wear and tear excepted, clean and
free of debris. Any damage or deterioration of the Premises shall not be deemed
ordinary wear and tear it the same could have been prevented by good
maintenance practices by Tenant. Tenant shall repair any damage to the Premises
occasioned by the installation or removal of Tenant’s trade fixtures,
alterations, furnishings and equipment. Except as otherwise stated in this
Lease, Tenant shall leave the air lines, power panels, electrical distribution
systems, lighting fixtures, air conditioning, window coverings, wall coverings,
carpets, wall paneling, ceilings and plumbing on the Premises and in good operation condition.

 

7.3      Alterations
and Additions.

 

(a) Tenant shall not without Landlord’s
prior written consent make any alterations, improvements, additions, Utility
Installations or repairs in, on or about the Premises, or the Office Building
Project. As used in this paragraph 7.3 the term “Utility Installation” shall
mean carpeting, window and wall coverings, power panels, electrical
distribution systems, lighting fixtures, air conditioning, plumbing, and
telephone and telecommunication wiring and equipment. At the expiration of the
term, Landlord may require the removal of any or all of said alterations,
improvements, additions or Utility Installations, and the restoration of the
Premises and the Office Building Project to their prior condition, at Tenant’s
expense. Should Landlord permit Tenant to make its own alterations, improvements,
additions or Utility Installations, Tenant shall use only such contractor as
has been expressly approved by Landlord, and Landlord may require Tenant to
provide Landlord, at Tenant’s sole cost and expense, a lien and completion bond
in an amount equal to one-half times the estimated cost of such improvements,
to insure Landlord against any liability for mechanic’s and materialmen’s liens
and to insure completion of the work. Should Tenant make any alterations,
improvements, additions or Utility Installations without the prior approval of
Landlord, or use a contractor not expressly approved by Landlord, Landlord may,
at any time during the term of this Lease, require that Tenant remove any part
or all of the same.

 

(b) Any alterations, improvements,
additions or Utility Installations in or about the Premises or the Office
Building Project that Tenant shall desire to make shall be presented to
Landlord in written form, with proposed detailed plans. If Landlord shall give
its consent to Tenant’s making such alteration, improvement, addition or
Utility Installation, the consent shall be deemed conditioned upon Tenant
acquiring a permit to do so from the applicable governmental agencies,
furnishing a copy thereof to Landlord prior to the commencement of the work,
and compliance by Tenant with all conditions of said permit in a prompt and
expeditious manner.

 

(c) Tenant shall pay, when due, all
claims for labor or materials furnished or alleged to been furnished to or for
Tenant at or for use in the Premises, which claims are or may be secured by any
mechanic’s or materialmen’s lien against the Premises, the Building or the
Office Building Project, or any interest therein.

 

(d) Tenant shall give Landlord not less than ten (10) days notice
prior to the commencement of any work in the Premises by Tenant, and Landlord
shall have the right to post notices of non-responsibility in or on the
Premises or the Building as provided by law. If Tenant shall, in good faith, contest the validity of any such lien,
claim or demand, then Tenant shall, at its sole expense defend itself and
Landlord against the same and shall pay and satisfy any such adverse judgment
that may be rendered thereon before the

 

5

 

enforcement thereof against the Landlord or the Premises, the Building
or the Office Building Project, upon the condition that if Landlord shall
require, Tenant shall furnish to Landlord a surety bond satisfactory to
Landlord in an amount equal to such contested lien claim or demand indemnifying
Landlord against liability for the same and holding the Premises, the Building
and the Office Building Project free from the
effect of such lien or claim. In addition, Landlord may require Tenant to pay
Landlord’s reasonable attorney’s fees and cost in participating in such action
if Landlord shall decide it is to Landlord’s best interest so to do.

 

(e) All alterations, improvements,
additions and Utility Installations (whether or not such Utility Installations
constitute trade fixtures of Tenant), which may be made to the Premises by
Tenant, including but not limited to, floor coverings, paneling, doors, drapes,
built-ins, moldings, sound attenuation, and lighting and telephone or
communication systems, conduit, wiring and outlets, shall be made and done in a
good and workmanlike manner and of good and sufficient quality and materials
and shall be the property of Landlord and remain upon and be surrendered with
the Premises at the expiration of the Lease term, unless Landlord requires their
removal pursuant to paragraph 7.3 (a). Provided Tenant is not in default,
notwithstanding the provisions of this paragraph 7.3(e), Tenants personal
property and equipment, other than that which is affixed to the Premises so
that it cannot be removed without material damage to the premises or the
building, and other than Utility Installations, shall remain the property of
Tenant and may be removed by Tenant subject to the provisions of paragraph 7.2.

 

(f) Tenant shall provide Landlord with
as-built plans and specifications for any alterations, improvements, additions,
or Utility Installations.

 

7.4      Utility Additions. Landlord reserves the right to install new or
additional utility facilities throughout the Office Building Project for the
benefit of Landlord or Tenant, or any other Tenant of the Office Building
Project, including, but not by way of limitation, such utilities as plumbing,
electrical systems, communication systems, and fire protection and detection
systems, so long as such installations do not unreasonably interfere with
Tenant’s use of the Premises.

 

8.        Insurance:
Indemnity.

 

8.1      Liability Insurance-Tenant. Tenant shall, at all Tenant’s expense, obtain
and keep in force during the term of this Lease a policy of Comprehensive
General Liability insurance utilizing and Insurance Services Office Standard
form with Broad Form General Liability Endorsement (GLO404), or equivalent, in
an amount of not less than $1,000,000 per occurrence of bodily injury and
property damage combined or in a greater amount as reasonably determined by
Landlord and shall insure Tenant with Landlord as an additional insured against
liability arising our of the use, occupancy or maintenance of the Premises
Compliance with the above requirement shall not however limit the liability of
Tenant hereunder.

 

8.2      Liability Insurance-Landlord. Landlord shall obtain and keep in force
during the term of this Lease a policy of Combined Single Limit Bodily Injury
and Broad Form Property Damage Insurance, plus coverage against such other
risks Landlord deems advisable from time to time, insuring Landlord, but not
Tenant, against liability arising out of the ownership, use, occupancy or
maintenance of the Office Building Project in an amount not less than
$5,000,000.00 per occurrence.

 

8.3      Property Insurance-Tenant. Tenant shall, at Tenant’s expense, obtain and
keep in force during the term of this Lease for the benefit of Tenant,
replacement cost fire and extended coverage insurance, with vandalism and
malicious mischief, sprinkler leakage and earthquake sprinkler leakage
endorsements, in an amount sufficient to cover not less than 100% of the full
replacement cost, as the same may exist from time to time, of all of Tenant’s
personal property, fixtures, equipment and tenant improvements.

 

8.4      Property Insurance-Landlord. Landlord shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss
or damage to the Office Building Project improvements, but not Tenant’s
personal property, fixtures, equipment or tenant improvements, in the amount of
the full replacement cost thereof, as the same may exist from time to time,
utilizing Insurance Services Office standard form, or equivalent, providing
protection against all perils included within the classification of fire,
extended coverage, vandalism, malicious mischief, plate glass, and such other
perils as Landlord deems advisable or may be required by a lender having a lien
on the Office Building Project. In addition, Landlord shall obtain and keep in
force during the term of this Lease, a policy of rental value insurance
covering a period of one year, with loss payable to Landlord which insurance
shall also cover all Operating Expenses for said period. Tenant will not be
named in any such policies carried by Landlord and shall have no right to any
proceeds therefrom. The policies required by these paragraphs 8.2 and 8.4 shall
contain such deductibles as Landlord or the aforesaid lender may determine. In
the event that the Premises shall suffer an insured loss as defined in
paragraph 9.1(f) hereof, the deductible amounts under the applicable insurance
policies shall be deemed an Operating Expense. Tenant shall not do or permit to
be done anything which shall invalidate the insurance policies carried by Landlord.
Tenant shall pay the entirety of any increase in the property insurance premium
of the Office Building Project over what it was immediately prior to the
commencement of the term of this Lease if the increase is specified by Landlord’s
insurance carrier as being caused by the nature of Tenant’s occupancy or any
act or omission of Tenant.

 

8.5      Insurance
Policies. Tenant shall deliver to Landlord copies of
liability insurance policies required under paragraph 8.1 or certificates
evidencing the existence and amounts of such insurance PRIOR TO TENANTS
POSSESSION OF SAID PREMISES. No such policy shall be cancelable or subject to
reduction of coverage or other modification except after thirty (30) days prior
written notice by Landlord. Tenant
shall, at least thirty(30) days prior to the expiration of such policies,
furnish Landlord with renewals thereof.

 

6

 

8.6      Waiver
of Subrogation. Tenant and Landlord each hereby release and
relieve the other, and waive their entire right of recovery against the other,
for direct or consequential loss or damage arising out of or incident to the
perils covered by property insurance carried by such party, whether due to the
negligence of Landlord or Tenant or their agents, employees, contractors and/or
invitees. If necessary all property insurance policies required under this
Lease shall be endorsed to so provide.

 

8.7      Indemnity.
Tenant shall indemnify and hold harmless Landlord and its agents, Landlord’s
master or ground Landlord, partners, members and lenders, from and against any
and all claims for damage to the person or property of anyone or any entity
arising from Tenant’s use of the Office Building Project, or from the conduct
of Tenant’s business or from any activity, work or things done, permitted or
suffered by Tenant in or about the Premises or elsewhere and shall further
indemnify and hold harmless Landlord from and against any and all claims, cost
and expenses arising from any breach or default in the performance of any
obligation on Tenant’s part to be performed under the terms of this Lease, or
arising from any act or omission of Tenant, or any of Tenant’s agents,
contractors, employees, or invitees, and from and against all costs, attorney’s
fees, expenses and liabilities incurred by Landlord as the result of any such
use, conduct , activity, work, things done, permitted or suffered, breach,
default or negligence, and in dealing reasonably therewith, including but not
limited to the defense or pursuit of any claim or any action or proceeding
involved therein; and in case any action or proceeding be brought against
Landlord by reason of any such matter, Tenant upon notice from Landlord shall
defend the same at Tenant’s expense by counsel reasonably satisfactory to Landlord
and Landlord shall cooperate with Tenant in such defense. Landlord need not
have first paid any such claim in order to be so indemnified. Tenant, as a
material part of the consideration to Landlord, hereby assumes all risk of
damage to property of Tenant or injury to persons. In, upon or about the Office
Building Project arising from any cause and Tenant hereby waives all claims in
respect thereof against Landlord.

 

8.8      Exemption
of Landlord from Liability. Tenant hereby agrees that
Landlord shall not be liable for injury to Tenant’s business or any loss of
income therefrom or for loss of or damage to the goods, wares, merchandise or
other property of Tenant, Tenant’s employees, invitees, customers, or any other
persons in or about the Premises or the Office Building Project, nor shall
Landlord be liable for injury to the person of Tenant, Tenant’s employees,
agents or contractors, whether such damage or injury is caused by or results
from theft, fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures, or from any other cause,
whether said damage or injury results from conditions arising upon the Premises
or upon other portions of the Office Building Project, or form other sources or
places, or from new construction or the repair, alteration or improvement of
any part of the Office Building Project, or of the equipment, fixtures or
appurtenances applicable thereto, and regardless of whether the cause of such
damage or injury or the means of repairing the same is inaccessible, Landlord
shall not be liable for any damages arising from any act or neglect of any
other Tenant, occupant or user of the Office Building Project, nor from the
failure of Landlord to enforce the provisions of any other lease of any other
Tenant of the Office Building Project.

 

8.9      No
Representation of Adequate Coverage. Landlord makes no
representation that the limits or forms of coverage of insurance specified in
this paragraph 8 are adequate to cover Tenant’s property or obligations under
this Lease.

 

8.10    Failure
to Maintain Insurance. For any period or periods in which
Tenant fails to maintain any insurance required by this Lease, or, if after ten
(10) days following the Commencement Date, Tenant has not provided Landlord
with the additional Insured-Manager’s or Landlord’s endorsement required to be
submitted pursuant to this Lease, without further notice, Base Rent shall be
automatically increased by One Hundred and Fifty Dollars ($150.00) per month,
until such time as Tenant complies with the insurance provisions of this Lease.
Notwithstanding anything contained herein to the contrary, the foregoing shall
not be construed, interpreted, or deemed (i) a waiver of any default created by
reason of Tenant’s failure to provide the insurance called for in this Lease;
(ii) limit any other right or remedy of Landlord; (iii) relieve Tenant of its
obligations regarding maintenance of insurance as provided by the lease; or
(iv) be considered a policy of insurance in favor of Tenant. Landlord and
Tenant agree the additional monthly charge described herein represents a fair
and reasonable estimate of the additional administrative costs Landlord will
incur by reason of any failure by Tenant to provide the required insurance
documentation to Landlord.

 

9.                         Damage or
Destruction.

 

9.1                 Definitions.

 

(a)                     “Premises
Damage” shall mean if the Premises are damaged or destroyed to any extent.

(b)                    “Premises
Building Partial Damage” shall mean if the Building of which the Premises are a
part is damaged or destroyed to the extent that the cost to repair is less than
fifty percent (50%) of the then Replacement Cost of the building.

(c)                     “Premises
Building Total Destruction” shall mean if the Building which the Premises are a
part is damaged or destroyed to the extent that the cost to repair is fifty
percent (50%) or more of the then Replacement Cost of the Building

(d)                    “Office
Building Project Buildings” shall mean all of the buildings on the Office
Building Project site.

(e)                     “Office
Building Project Buildings Total Destruction” shall mean if the Office Building
Project Buildings are damaged or destroyed to the extent that the cost of
repair is fifty percent (50%) or more of the then Replacement Cost of the
Office Building Project Buildings.

(f)                       “Insured
Loss” shall mean damage or destruction which was caused by an event required to
be covered by the Insurance described in paragraph 8. The fact that an insured
Loss has a deductible amount shall not make the loss an uninsured loss.

 

7

 

(g)                    “Replacement
Cost” shall mean the amount of money necessary to be spent in order to repair
or rebuild the damaged area to the condition that existed immediately prior to
the damage occurring, excluding all improvements made by Tenants, other than
those installed by Landlord at Tenant’s expense.

 

9.2      Premises Damage: Premises Building Partial
Damage.

 

(a) Insured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is an
Insured Loss and which falls into the classification of either Premises Damage
or Premises Building Partial Damage, then Landlord shall, as soon as reasonably
possible and to the extent the required materials and labor are readily
available through usual commercial channels, at Landlord’s expense, repair such
damage (but not Tenant’s fixtures, equipment or tenant improvements originally
paid for by Tenant) to its condition existing at the time of the damage, and
this Lease shall continue in full force and effect.

 

(b) Uninsured Loss: Subject to the provisions of paragraphs 9.4
and 9.5, if at any time during the term of this Lease there is damage which is
not an Insured Loss and which falls within the classification of Premises
Damage or Premises Building Partial Damage, unless caused by a negligent or
willful act of Tenant (in which event Tenant shall make the repairs at Tenant’s
expanse), which damage prevents Tenant from making any substantial use of the
Premises. Landlord may at Landlord’s option either (i) repair such damage as
soon as reasonably possible at Landlord’s expense, in which event this Lease
shall continue in full force and effect, or (ii) give written notice to Tenant
within thirty (30) days after the date of the occurrence of such damage of
Landlord’s intention to cancel and terminate this Lease as of the date of the
occurrence of such damage, in which event this Lease shall terminate as of the
date of the occurrence of such damage.

 

9.3      Premises
Building Total Destruction; Office Building Project Total Destruction.
Subject to the provisions of paragraphs 9.4 and 9.5, if at any time during the
term of this Lease there is damage, whether or not it is an Insured Loss, which
falls into the classifications of either (i) Premises Building Total
Destruction, or (ii) Office Building Total Destruction, then Landlord may at
Landlord’s option either (i) repair such damage or destruction as soon as
reasonably possible at Landlord’s expense (to the extent required materials are
readily available through usual commercial channels) to its condition existing
at the time of the damage, but not Tenant’s fixtures, equipment or tenant
improvements, and this Lease shall continue in full force and effect, or (ii)
give written notice to Tenant within thirty (30) days after the date of
occurrence of such damage of Landlord’s intention to cancel and terminate this
Lease, in which case this Lease shall terminate as of the date of the occurrence
of such damage.

 

9.4      Damage
Near End of Term.

 

(a) Subject to paragraph 9.4(b), if at any time during the last
twelve (12) months of the term of this Lease there is substantial damage to the
Premises. Landlord may at Landlord’s option cancel and terminate this Lease as
of the date of occurrence of such damage by giving written notice to Tenant of
Landlord’s election to do so within 30 days after the date of occurrence of
such damage.

 

(b) Notwithstanding paragraph 9.4(a), in the event that Tenant has
an option to extend or renew this Lease, and the time within which said option
may be exercised has not yet expired, Tenant shall exercise such option, if it
is to be exercised at all, no later than twenty (20) days after the occurrence
of an Insured Loss falling within the classification of Premises Damage during
the last twelve (12) months of the term of this Lease. If Tenant duly exercises
such option during said twenty (20) day period, Landlord shall, at Landlord’s
expense, repair such damage, but not Tenant’s fixtures, equipment or tenant
improvements, as soon as reasonably possible and this Lease shall continue in
full force and effect. If Tenant fails to exercise such option during said
twenty (20) day period, then Landlord may at Landlord’s option terminate and
cancel this Lease as of the expiration of said twenty (20) day period, at
Landlord’s expense, repair such damage, but not Tenant’s fixtures, equipment or
tenant improvements, as soon as reasonably possible and this Lease shall
continue in full force and effect. If Tenant fails to exercise such option
during said twenty (20) day period, then Landlord may at Landlord’s option
terminate and cancel this Lease as of the expiration of said twenty (20) day
period by giving written notice to Tenant of Landlord’s election to do so
within ten (10) days after the expiration of said twenty (20) day period,
notwithstanding any term or provision in the grant of option to the contrary.

 

9.5      Abatement of Rent: Tenant’s Remedies.

 

(a) In the event Landlord repairs or restores the Building or
Premises pursuant to the provisions of this paragraph 9, and any part of the
Premises are not usable (including loss of use due to loss of access or
essential services), the rent payable hereunder (including Tenant’s Share of Operating
Expense Increase) for the period during which such damage, repair or
restoration continues shall be abated, provided (1) the damage was not the
result of the negligence of Tenant, and (2) such abatement shall only be to the
extent the operation and profitability of Tenant’s business as operated from
the Premises is adversely affected. Except for said abatement of rent, if any
Tenant shall have no claim against Landlord for any damage suffered by reason
of any such damage, destruction, repair or restoration.

 

(b) If Landlord shall be obligated to repair or restore the
Premises or the Building under the provisions of this Paragraph 9 and shall not
commence such repair or restoration within ninety (90) days after such
occurrence, or if Landlord shall not complete the restoration and repair within
six (6) months after such occurrence, Tenant may at Tenant’s option cancel and
terminate this Lease by giving Landlord written notice of Tenant’s election to
do so at any time prior to the commencement or completion, respectively, of
such repair or restoration. In such event this Lease shall terminate as of the
date of such notice.

 

8

 

(c) Tenant agrees to cooperate with Landlord in connection with
any such restoration and repair, including but not limited to the approval
and/or execution of plans and specifications required.

 

9.6      Termination-
Advance Payments. Upon termination of this Lease pursuant to
this paragraph 9, an equitable adjustment shall be made concerning advance rent
and any advance payments made by Tenant to Landlord. Landlord shall, in
addition, return to Tenant so much of Tenant’s security deposit as has
therefore been applied by Landlord.

 

9.7      Waiver.
Landlord and Tenant waive the provisions of any statute which
relate to termination of leases when leased property is destroyed and agree
that such event shall be governed by the terms of this Lease.

 

10.      Real Property Taxes.

 

10.1    Payment
of Taxes. Landlord shall pay the real property tax, as defined
in paragraph 10.3, applicable to the Office Building Project subject to
reimbursement by Tenant of Tenant’s Share of such taxes in accordance with the
provisions of paragraph 4.2. except as otherwise provided in paragraph 10.2.

 

10.2    Additional
Improvements. Tenant shall not be responsible for paying any
increase in real property tax specified in the tax assessor’s records and work
sheets as being caused by additional improvements placed upon the Office
Building Project by other Tenants or by Landlord for the exclusive enjoyment of
any other Tenant. Tenant shall, however pay to Landlord at the time that
Operating Expenses are payable under paragraph 4.2(c) the entirety of any
increase in real property tax if assessed solely by reason of additional improvements
placed upon the Premises by Tenant or at Tenant’s request.

 

10.3    Definition
of “Real Property Tax.” As used herein, the term “real
property tax” shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed on the Office Building Project or any portion thereof
by any authority having the direct or indirect power to tax, including any
city, county, state or federal government, or any school, agricultural,
sanitary, fire, street, drainage or other improvement district thereof, as
against any legal or equitable interest of Landlord in the Office Building
Project or in any portion thereof, as against Landlord’s right to rent or other
income therefrom, and as against Landlord’s business of leasing the Office
Building Project. The term “real property tax” shall also include any tax, fee,
levy, assessment, or charge (i) in substitution of partially or totally, any
tax, fee, levy, assessment or charge hereinabove included within the definition
of “real property tax,” or (ii) the nature of which was hereinbefore included
within the definition of “real property tax,” or (iii) which is imposed for a service
or right not charged prior to June 1, 1978, or, if previously charged, has been
increased since June 1, 1978, or (iv) which is imposed as a result of a change
in ownership, as defined by applicable local statutes for property tax
purposes, of the Office Building Project or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of
such change of ownership, or (v) which is imposed by reason of this
transaction, any modifications or changes hereto, or any transfers hereof.

 

10.4    Joint
Assessment. If the improvements or property, the taxes for
which are to be paid separately by Tenant under paragraph 10.2 or 10.5 are not
separately assessed, Tenant’s portion of that tax shall be equitably determined
by Landlord form the respective valuations assigned in the assessor’s work
sheets or such other information (which may include the cost of construction)
as many be reasonably available. Landlord’s reasonable determination thereof,
in good faith, shall be conclusive.

 

10.5    Personal
Property Taxes.

 

(a) Tenant shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Tenant contained in the Premises or elsewhere.

 

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

 

11.      Utilities.

 

11.1    Services
Provided by Landlord. Landlord shall provide heating,
ventilation, air conditioning, and janitorial service as reasonably required,
reasonable amounts if electricity for normal lighting and office machines,
water for reasonable and normal drinking and lavatory use, and replacement
light bulbs and/or fluorescent tubes and ballast for standard overhead
fixtures.

 

11.2    Services
Exclusive to Tenant. Tenant shall pay for all water, gas,
heat, light, power, telephone and other utilities and services specially or
exclusively supplied and/or metered exclusively to the Premises or to Tenant,
together with any taxes thereon. If any such services are not separately
metered to the Premises Tenant shall pay at Landlord’s option, either Tenant’s
Share or a reasonable proportion to be determined by Landlord of all charges
jointly metered with other premises in the Building.

 

11.3    Hours
of Service. Said services and utilities shall be provided
during generally accepted business days and hours or such other days or hours
as may hereafter be set forth. Utilities and services required at other times
shall be subject to advance request and reimbursement by Tenant to Landlord of
the cost thereof.

 

9

 

11.4    Excess
Usage by Tenant. Tenant shall not make connection to the
utilities except by or through existing outlets and shall not install or use
machinery or equipment in or about the Premises that uses excess water, lighting
or power, or suffer or permit any act that causes extra burden upon the
utilities or services, including but not limited to security services, over
standard office usage for the Office Building Project. Landlord shall require
Tenant to reimburse Landlord for any excess expenses or costs that may arise
out of a breach of this subparagraph by Tenant. Landlord may, in its sole
discretion, install at Tenant’s expense supplemental equipment and/or separate
metering applicable to Tenant’s excess usage or loading.

 

11.5    Interruptions.
There shall be no abatement of rent and Landlord shall not be liable in any
respect whatsoever for the inadequacy, stoppage, interruption or discontinuance
of any utility or service due to riot, strike, labor dispute, breakdown, accident,
repair or other cause beyond Landlord’s reasonable control or in cooperation
with governmental request or directions.

 

12.      Assignment and Subletting.

 

12.1    Landlord’s
Consent Required. Tenant shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Tenant’s interest in the Lease or in the Premises,
without Landlord’s prior written consent, which Landlord shall not unreasonably
withhold. Landlord shall respond to Tenant’s request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a material
default and breach of this Lease without the need for notice to Tenant under
paragraph 13.1 “Transfer” within the meaning of this paragraph 12 shall include
the transfer or transfers aggregating; (a) if Tenant is a corporation, more
than twenty-five percent (25%) of the voting stock of such corporation, or (b)
if Tenant is a partnership, more than twenty-five percent (25%) of the profit
and loss participation in such partnership.

 

12.2    Tenant
Affiliate. Notwithstanding the provisions of paragraph 12.1
hereof, Tenant may assign or sublet the Premises, or any portion thereof,
without Landlord’s consent, to any corporation which controls, is controlled by
or is under common control with Tenant, or to any corporation resulting from
the merger or consolidation with Tenant, or to any person or entity which
acquires all the assets of Tenant as going concern of the business that is
being conducted on the Premises, all of which are referred to as “Tenant
Affiliate”; provided that before such assignment shall be effective, (a) said
assignee shall assume, in full, the obligations of Tenant under this Lease and
(b) Landlord shall be given written notice of such assignment and assumption.
Any such assignment shall not, in any way, affect or limit the liability of
Tenant under the terms of this Lease even if after such assignment or subletting
the terms of this Lease are materially changed or altered without the consent
of Tenant, the consent of whom shall not be necessary.

 

12.3    Terms
and Conditions Applicable to Assignment and Subletting.

 

(a) Regardless of Landlord’s consent, no assignment or subletting
shall release Tenant of Tenant’s obligations hereunder or after the primary
liability of Tenant to pay the rent and other sums due Landlord hereunder
included Tenant’s Share of Operating Expenses Increase, and to perform all
obligations to be performed by Tenant hereunder.

 

(b) Landlord may accept rent from anyone other than Tenant pending
approval or disapproval or disapproval of such assignment.

 

(c) Neither a delay in the approval or disapproval of such
assignment or subletting, nor the acceptance of rent, shall constitute a waiver
or estoppel of Landlord’s right to exercise its remedies for the breach of any
of the terms or conditions of this paragraph 12 or this Lease.

 

(d) If Tenant’s obligations under this Lease have been guaranteed by
third parties, then an assignment
or sublease, and Landlord’s consent thereto, shall not be effective unless said
guarantors give their written consent to such sublease and the terms thereof.

 

(e) The consent by Landlord to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting by Tenant
or to any subsequent or successive assignment or subletting by the subtenant.
However, Landlord may consent to subsequent sublettings and assignments of the
sublease or any amendments or modifications thereto without notifying Tenant or
anyone else liable on the Lease or sublease and without obtaining their consent
and such action shall not relieve such persons from liability under this Lease
or said sublease; however, such persons shall not be responsible to the extent
any such amendment or modification enlarges or increases the obligations of the
Tenant or subtenant under this Lease or such sublease.

 

(f) In the event of any default under this Lease, Landlord may
proceed directly against Tenant, any guarantors or any one else responsible for
the performance of this Lease, including the subtenant, without first
exhausting Landlord’s remedies against any other person or entity responsible
therefor to Landlord, or any security held by Landlord or Tenant.

 

(g) Landlord’s written consent to any assignment or subletting of
the Premises by Tenant shall not constitute an acknowledgment that no default
then exists under this Lease of the obligations to be performed by Tenant nor
shall such consent be deemed a waiver of any then existing default, except as
may be otherwise stated by Landlord at the time.

 

10

 

(h) The discovery of the fact that any financial statement relied
upon by Landlord in giving its consent to an assignment or subletting was
materially false shall, at Landlord’s election, render Landlord’s said consent
null and void.

 

12.4    Additional
Terms and Conditions Applicable to Subletting. Regardless of
Landlord’s consent, the following terms and conditions shall apply to any
subletting by Tenant of all or any part of the Premises and shall be deemed
included in all subleases under this Lease whether or not expressly
incorporated therein:

 

(a) Tenant hereby assigns and transfers to Landlord all of Tenant’s
interest in all rentals and income arising from any sublease heretofore or
hereafter made by Tenant, and Landlord may collect such rent and income and
apply same toward Tenant’s obligations under this Lease; provided, however, that
until a default shall occur in the performance of Tenant’s obligations under
this Lease, Tenant may receive, collect and enjoy the rents accruing under such
sublease. Landlord shall not, by reason of this or any other assignment of such
sublease to Landlord nor by reason of the collection of the rents from a
subtenant, be deemed liable to the subtenant for any failure of Tenant to
perform and comply with any of Tenant’s obligations to such subtenant under
such sublease. Tenant hereby irrevocably authorizes and directs any such
subtenant, upon receipt of a written notice from Landlord stating that a
default exists in the performance of Tenant’s obligations under this Lease, to
pay to Landlord the rents due and to become due under the sublease. Tenant agrees
that such subtenant shall have the right to rely upon any such statement and
request from Landlord, and that such subtenant shall pay such rents to Landlord
without any obligation or right to inquire as to whether such default exists
and notwithstanding any notice from or claim from Tenant to the contrary.
Tenant shall have no right or claim against said subtenant or Landlord for any
such rents so paid by said subtenant to Landlord.

 

(b) No sublease entered into by Tenant shall be effective unless
and until it has been approved in writing by Landlord. In entering into any
sublease, Tenant shall use only such form of subtenant as is satisfactory to
Landlord, and once approved by Landlord, such sublease shall not be changed or
modified without Landlord’s prior written consent. Any sublease shall, by
reason of entering into a sublease under this Lease, be deemed, for the benefit
of Landlord, to have assumed and agreed to conform and comply with each and
every obligation herein to be performed by Tenant other than such obligations
as are contrary to or inconsistent with provisions contained in a sublease to
which Landlord has expressly consented in writing.

 

(c) In the event Tenant shall default in the performance of its
obligations under this Lease, Landlord at its option and without any obligation
to do so, may require any subtenant to attorn to Landlord, in which event
Landlord shall undertake the obligations of Tenant under such sublease from the
time to the exercise of said option to the termination of such sublease;
provided, however, Landlord shall not be liable for any prepaid rents or
security deposit paid by such subtenant to Tenant or for any other prior
defaults of Tenant under such sublease.

 

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

 

(e) With respect to any subletting to which Landlord has
consented, Landlord agrees to deliver a copy of any notice of default by Tenant
to the subtenant. Such subtenant shall have the right to cure a default of
Tenant within three (3) days after service of said notice of default upon such
subtenant, and the subtenant shall have a right of reimbursement and offset
from and against Tenant for any such defaults cured by the subtenant.

 

12.5    Landlord’s
Expenses. In the event Tenant shall assign or sublet the
Premises or request the consent of Landlord to any assignment or subletting or
if Tenant shall request the consent of Landlord for any act Tenant proposes to
do then Tenant shall pay a minimum $250.00 consent fee in addition to Landlord’s
reasonable costs and expenses incurred in connection therewith, including
attorneys; architects; engineers’ or other consultants’ fees.

 

12.6    Conditions
to Consent. Landlord reserves the right to condition any
approval to assignee sublet upon Landlord’s determination that (a) the proposed
assignee or subtenant shall conduct a business on the Premises of a quality
substantially equal to that of Tenant and consistent with the general character
of the other occupants of the Office Building Project and not in violation of
any exclusives or rights then held by other tenants, and (b) the proposed
assignee or subtenant be at least as financially responsible as Tenant was
expected to be at the time of the execution of this Lease or of such assignment
or subletting, whichever is greater.

 

13.      Default; Remedies.

 

13.1    Default.
The occurrence of anyone or more of the following events shall constitute a
material default of this Lease by Tenant:

 

(a) The vacation or abandonment of the Premises by Tenant.
Vacation of the Premises shall include the failure to occupy the Premises for a
continuous period of fourteen (14) days or more, whether or not the rent is
paid.

 

(b) The breach by Tenant of any of the covenants, conditions or
provisions of paragraphs 7.3(a), (b) or (d) (alterations), 12.1 (assignment or
subletting), 13.1 (a) (vacation or abandonment), 13. 1 (e) (insolvency), 13.1
(f) (false statement), 16 (a) (estoppel certificate), 30 (b) (subordination),
33 (auctions), or 41.1 (easements), all of which are hereby deemed to be
material, non-curable defaults without the necessity of any notice by Landlord
to Tenant thereof.

 

(c) The failure by Tenant to make any payment of rent or any other
payment required to be made by Tenant hereunder, as and when due, where such
failure shall continue for a period of three (3) days after written notice
thereof from Landlord to Tenant. In the

 

11

 

event Landlord
serves Tenant with a Notice to Pay Rent or Quit pursuant to applicable Unlawful
Detainer statutes, such Notice to Pay Rent or Quit shall also constitute the notice required by this subparagraph.
Additionally, Tenant shall pay Landlord a $175.00 demand preparation fee each
occurrence Landlord serves Tenant with a Notice to Pay Rent or Quit.

 

(d) The failure by Tenant to observe or perform any of the
covenants, conditions, or provisions of this Lease to be observed or performed
by Tenant other than those referenced in subparagraphs (b) and (c), above,
where such failure shall continue for a period of thirty (30) days after
written notice there from Landlord to Tenant; provided, however, that if the
nature of Tenant’s noncompliance is such that more than thirty (30) days are
reasonably required for its cure, then Tenant shall not be deemed to be in
default provided Tenant commenced such cure within said thirty (30) day period
and thereafter diligently pursues such cure to completion. To the extent
permitted by law such thirty (30) day notice shall constitute the sole and
exclusive notice required to be given to Tenant under applicable Unlawful
Detainer statutes.

 

(e) (i) The making by Tenant of any general arrangement or general
assignment for the benefit of creditors: (ii) Tenant becoming a “debtor” as
defined in 11U.S.C. 101 or any successor stature thereto (unless, in the case
of a petition filed against Tenant, the same is dismissed within sixty (60)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: or (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. In the event that any provision of this paragraph 13.1 (e) is contrary to
any applicable law, such provision shall be of no force or effect.

 

(f) The discovery by Landlord that any financial statement given
to Landlord by Tenant, or its successor in interest or by any guarantor of
Tenant’s obligation hereunder, was materially false.

 

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

 

(a) Terminate Tenant’s right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. In
such event Landlord shall be entitled to recover from Tenant all damages
incurred by Landlord by reason of Tenant’s default including, but not limited
to, the cost of recovering possession of the Premises; expenses of reletting,
including necessary renovation and alteration of the Premises, reasonable
attorney’s fees and any real estate commission actually paid; the worth at the
time of award by the court having jurisdiction thereof of the amount by which
the unpaid rent for the balance of the term after the time of such award
exceeds the amount of such rental loss from the same period that Tenant proves
could be reasonably avoided; that portion of the leasing commission paid by
Landlord pursuant to paragraph 15 applicable to the unexpired term of this
Lease.

 

(b) Maintain Tenant’s right to possession in which case this Lease
shall continue in effect whether or not Tenant shall have vacated or abandoned
the Premises. In such event Landlord shall be entitled to enforce all of
Landlord’s rights and remedies under this Lease, including the right to recover
the rent as it becomes due hereunder.

 

(c) Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the state wherein the Premises are
located. Unpaid installments of rent and other unpaid monetary obligations of
Tenant under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.

 

13.3    Default
by Landlord. Landlord shall not be in default unless Landlord
fails to perform obligations required by Landlord within a reasonable time, but
in no event later than thirty (30) days after written notice by Tenant to
Landlord and to the holder of any first mortgage or deed or trust covering the
Premises whose name and address shall have theretofore been furnished to Tenant
in writing, specifying wherein Landlord has failed to perform such obligation;
provided, however, that if the nature of Landlord’s obligation is such that
more than thirty (30) days are required for performance then Landlord shall not
be in default if Landlord commences performance within such 30-day period and
thereafter diligently pursues the same to completion.

 

13.4    Late
Charges. Tenant hereby acknowledges that late payments by
Tenant to Landlord of Base Rent, Tenant’s Share of Operating Expense Increase
or other sums due hereunder will cause Landlord to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to
ascertain. Such costs include, but not limited to, processing and accounting
charges, and late charges which may be imposed on Landlord by the terms of any
mortgage or trust deed covering the Office Building Project. Accordingly, if
any installment of Base Rent, Operating Expense Increase, or any other sum due
from Tenant shall not be received by Landlord or Landlord’s designee within
five (5) days after such amount shall be due, then, without any requirement for
notice to Tenant, Tenant shall pay to Landlord a late charge equal to 10% of
such overdue amount. The parties hereby agree that such late charge represents
a fair and reasonable estimate of the costs Landlord will incur by reason of
late payment by Tenant. Acceptance of such late charge by Landlord shall in no
event constitute a waiver of Tenant’s default with respect to such overdue
amount, nor prevent Landlord from exercising any of the other rights and
remedies granted hereunder.

 

14.      Condemnation. If the
Premises or any portion thereof or the Office Building Project are taken under
the power of eminent domain, or sold under the threat of the exercise of said
power (all of which are herein called “condemnation”), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever first occurs; provided that if so much of

 

12

 

the Premises or
the Office Building Project are taken by such condemnation as would
substantially and adversely affect the operation and profitability of Tenant’s
business conducted from the Premises, Tenant shall have the option, to be
exercised only in writing within thirty (30) days after Landlord shall have
given Tenant written notice of such taking (or in the absence of such notice ,
within thirty (30) days after the condemning authority shall have taken
possession), to terminate this Lease as of the date the condemning authority
takes such possession. If Tenant does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the rent and Tenant’s Share of
Operating Expense Increase shall be reduced in the proportion that the floor
area of the Premises taken bears to the total floor area of the Premises.
Common Areas taken shall be excluded from the Common Areas usable by Tenant and
no reduction of rent shall occur with respect thereto or by reason thereof
Landlord shall have the option in its sole discretion to terminate this Lease
as of the taking of possession by the condemning authority, by giving written
notice to Tenant of such election within thirty (30) days after receipt of
notice of a taking by condemnation of any part of the Premises or the Office
Building Project. Any award for the taking of all or any part of the Premises
or the Office Building Project under the power of eminent domain or any payment
made under threat of the exercise of such power shall be the property of
Landlord, whether such award shall be made as compensation for diminution in
value of the leasehold or for the taking of the fee, or as severance damages;
provided however, that Tenant shall be entitled to any separate award for loss
of or damage to Tenant’s trade fixtures, removable personal property and
unamortized tenant improvements that have been paid for by Tenant. For that
purpose the cost of such improvements shall be amortized over the original term
of this Lease excluding any options. In the event that this Lease is not
terminated by reason of such condemnation, Landlord shall to the extent of
severance damages received by Landlord in connection with such condemnation,
repair any damage to the Premises caused by such condemnation except to the
extent that Tenant has been reimbursed therefor by the condemning authority.
Tenant shall pay any amount in excess of such severance damages required to
complete such repair.

 

15.      Broker’s Fee.

 

(a) The brokers involved in this transaction are _______ as “Listing
Broker,” and _______ as “Cooperating Broker,” licensed real estate broker(s). A
“Cooperating Broker” is defined as any broker other than the Listing Broker entitled
to a share of any commission arising under this Lease. Upon execution of this
Lease by both parties, Landlord shall pay to said brokers jointly, or in such
separate shares as they may mutually designate in writing, a fee as set forth
in a separate agreement between Landlord and said broker(s), or in the event
there is no separate agreement between Landlord and said broker(s), the sum of
$ _______ for brokerage services rendered by said broker(s) to Landlord in this
transaction.

 

(b) Landlord, Tenant, and Cooperating Broker further agree that no
commission or fee shall be paid to the Cooperating Broker if: (i) Tenant
exercises any Option, as defined in paragraph 39.1 of this Lease, which is
granted to Tenant under this Lease, or any subsequently granted option which is
substantially similar to an Option granted to Tenant under this Lease, or (ii)
Tenant acquires any rights to the Premises or other premises described in this
Lease which are substantially similar to what Tenant would have acquired had an
Option herein granted to Tenant been exercised, or (iii) Tenant remains in
possession of the Premises after the expiration of the term of this Lease after
having failed to exercise an Option, or (iv) said broker(s) are the procuring
cause of any other lease or sale entered into between the parties pertaining to
the Premises and /or any adjacent property in which Landlord has an interest,
or (v) except as provided in this Lease, the Base Rent is increased.

 

(c) Landlord agrees to pay said fee not only on behalf of Landlord but
also on behalf on any person, corporation, association, or other entity having
an ownership interest in said real property or any part thereof, when such fee
is due hereunder. Any transferee of Landlord’s interest in this Lease, whether such
transfer is by agreement or by operation of law, shall be deemed to have
assumed Landlord’s obligation under this paragraph 15. Each listing and
cooperating broker shall be a third party beneficiary of the provisions of this
paragraph 15 to the extent of their interest in any commission arising under
this Lease and may enforce that right directly against Landlord; provided,
however, that all brokers having a right to any part of such total commission
shall be a necessary party to any suit with respect thereto.

 

(d) Tenant and Landlord each represent and warrant to the other that
neither has had any dealings with any person, firm, broker or finder (other
than the person(s), if any, whose names are set forth in paragraph 15(a),
above) in connection with the negotiation of this Lease and/or the consummation
of the transaction contemplated hereby, and no other broker or other person,
firm or entity is entitled to any commission or finder’s fee in connection with
said transaction and Tenant and Landlord do each hereby indemnify and hold the
other harmless from and against any costs, expenses, attorneys’ fees or
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying party.

 

16.      Estoppel Certificate.

 

(a) Each party (as “responding party”) shall at any time upon not less
than ten (10) day’s prior written notice from the other party (“requesting
party”) execute, acknowledge and deliver to the requesting party a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to the responding party’s knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrancer of the Office Building Project or
of the business of Tenant.

 

13

 

(b) At the requesting party’s option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party who is to respond, without any further notice to such party, or it shall
be conclusive upon such party that (i) this Lease is in full force and effect,
without modification except as may be represented by the requesting party, (ii)
there are no uncured defaults in the requesting party’s performance, and (iii)
if Landlord is the requesting party, not more than one month’s rent has been
paid in advance.

 

(c) If Landlord desires to finance, refinance, or sell the Office
Building Project, or any part thereof, Tenant hereby agrees to deliver to any
lender or purchaser designated by Landlord such financial statements of Tenant
as may be reasonably required by such lender or purchaser. Such statements
shall include the past three (3) years’ financial statement of Tenant. All such
financial statements shall be received by Landlord and such lender or purchaser
in confidence and shall be used only for the purposes herein set forth.

 

17.      Landlord’s Liability.
The term “Landlord” as used herein shall mean only the owner or owners, at the
time in question, of the fee title or a Tenant’s interest in a ground lease of
the Office Building Project, and except as expressly provided in paragraph 15,
in the event of any transfer of such title or interest, Landlord herein named
(and in case of any subsequent transfers then the grantor) shall be relieved
from and after the date of such transfer of all liability as respects Landlord’s
obligations thereafter to be performed, provided that any funds in the hands of
Landlord or the then grantor at the time of such transfer, in which Tenant has
an interest, shall be delivered to the grantee. The obligations contained in
this Lease to be performed by Landlord shall, subject as aforesaid, be binding
on Landlord’s successors and assigns, only during their respective periods of
ownership.

 

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

 

19.      Interest on Past-due Obligations.
Except as expressly herein provided, any amount due to Landlord not paid when
due shall bear interest at the maximum rate then allowable by law or judgments
from the date due. Payment of such interest shall not excuse or cure any
default by Tenant under this Lease; provided, however, that interest shall not
be payable on late charges incurred by Tenant nor on any amounts upon which
late charges are paid by Tenant.

 

20.      Time of Essence. Time is
of the essence with respect to the obligations to be performed under this
Lease.

 

21.      Additional Rent. All
monetary obligations of Tenant to Landlord under the terms of this Lease,
including but not limited to Tenant’s Share of Operating Expense Increase and
any other expenses payable by Tenant hereunder shall be deemed to be rent.

 

22.      Incorporation of Agreement; Amendments.
This Lease contains all agreements of the parties with respect to any matter
mentioned herein. No prior or contemporaneous agreement or understanding
pertaining to any such matter shall be effective. This lease may be modified in
writing only signed by the parties in interest at the time of the modification.
Except as otherwise stated in this Lease, Tenant hereby acknowledges that
neither the real estate broker listed in paragraph 15 hereof nor any
cooperating broker on this transaction nor the Landlord or any employee or
agents of any of said person has made any oral or written warranties or
representations to Tenant relative to the condition or use by Tenant of the
Premises or the Office Building Project and Tenant acknowledges that Tenant
assumes all responsibility regarding the Occupational Safety Health Act, the
legal use and adaptability of the Premises and the compliance thereof with all
applicable laws and regulations in effect during the term of this Lease.

 

23.      Notices. Any notice
required or permitted to be given hereunder shall be in writing and may be
given by personal delivery or by certified or registered mail, and shall be
deemed sufficiently given if delivered or addressed to Tenant or to Landlord at
the address noted below or adjacent to the signature of the respective parties,
as the case may be. Mailed notices shall be deemed given upon actual receipt at
the address required, or forty-eight hours following deposit in the mail,
postage prepaid, whichever first occurs. Either party may by notice to the
other specify a different address for notice purposes except that upon Tenant’s
taking possession of the Premises, the Premises shall constitute Tenant’s
address for notice purposes. A copy of all notices required or permitted to be
given to Landlord hereunder shall be concurrently transmitted to such party or
parties at such addresses as Landlord may from time to time hereafter designate
by notice to Tenant.

 

24.      Waivers. No waiver by
Landlord of any provisions hereof shall be deemed a waiver of any other
provision hereof or of any subsequent breach by Tenant of the same or any other
provision, Landlord’s consent to, or approval of any act shall not be deemed to
render unnecessary the obtaining of Landlord’s consent to or approval of any
subsequent act by Tenant. The acceptance of rent hereunder by Landlord shall
not be a waiver of any preceding breach by Tenant of any provision hereof,
other than the failure of Tenant to pay the particular rent so accepted,
regardless of Landlord’s knowledge of such preceding breach at the time of
acceptance of such rent.

 

25.      Recording. Either Landlord
or Tenant shall, upon request of the other, execute, acknowledge and deliver to
the other a “short form” memorandum of this Lease for recording purposes.

 

26.      Holding Over. If Tenant,
with Landlord’s consent, remains in possession of the Premises or any part
thereof after the expiration of the term hereof, such occupancy shall be a
tenancy from month to month upon all the provisions of this Lease pertaining to
the obligations of Tenant, except that the rent payable shall be two hundred
percent (200%) of the rent payable immediately preceding the termination date
of this Lease, and all Options, if any, granted under the terms of this Lease
shall be deemed terminated and be of no further effect during said month to
month tenancy.

 

14

 

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

 

28.      Covenant
and Conditions. Each
provision of this Lease performable by Tenant shall be deemed both a covenant
and a condition.

 

29.      Binding
Effect; Choice of Law.
Subject to any provisions hereof restricting assignment or subletting by Tenant
and subject to the provisions of paragraph 17, this Lease shall bind the
parties, their personal representatives, successors and assigns. This Lease
shall be governed by the laws of the State where the Office Building Project is
located and any litigation concerning this Lease between the parties hereto
shall be initiated in the county in which the Office Building Project is
located.

 

30.      Subordination.

 

(a) This Lease, and any Option or right
of first refusal granted hereby, at Landlord’s option, shall be subordinate to
any ground lease, mortgage, deed of trust, or any other hypothecation or
security now hereafter placed upon the Office Building Project and to any and
all advances made on the security thereof and to all renewals, modifications,
consolidations, replacements and extensions thereof. Notwithstanding such subordination,
Tenant’s right to quiet possession of the Premises shall not be disturbed if
Tenant is not in default and so long as Tenant shall pay the rent and observe
and perform all of the provisions of this Lease, unless this Lease is otherwise
terminated pursuant to its terms. If any mortgagee, trustee or ground Landlord
shall elect to have this Lease and any Options granted hereby prior to the lien
of its mortgage, deed of trust or ground lease, and shall give written notice
thereof to Tenant, this Lease and such Options shall be deemed prior to such
mortgage, deed of trust or ground lease, whether this Lease or such Options are
dated prior or subsequent to the date of said mortgage, deed of trust or ground
lease or the date of recording thereof.

 

(b) Tenant agrees to execute any document
required to effectuate an attornment, a subordination, or to make this Lease or
any Option granted herein prior to the lien of any mortgage, deed of trust or
ground lease, as the case may be. Tenant’s failure to execute such documents
within ten (10) days after written demand shall constitute a material default
by Tenant hereunder without further notice to Tenant or, at Landlord’s option,
Landlord shall execute such documents on behalf of Tenant as Tenant’s
attorney-in-fact. Tenant does hereby make, constitute and irrevocably appoint
Landlord as Tenant’s attorney-in-fact and in Tenant’s name, place and stead, to
execute such documents in accordance with this paragraph 30(b).

 

31.      Professional
Fees and Costs. Any
expenses of any nature incurred by Landlord in connection with any performance
by it for the account of Tenant, and all costs and expenses, including
reasonable attorneys’ fees (whether or not legal proceedings are instituted)
involved in collecting monies due under this Lease and enforcing or
interpreting the obligations of Tenant under this Lease, including but not
limited to the cost and expense of instituting and prosecuting legal
proceedings or recovering possession of the Premises after default by Tenant or
upon expiration or sooner termination of this Lease (whether in the State
Courts or in the United States Bankruptcy Court), shall be due and payable by
Tenant, on demand, as Additional Rent. Additionally, and without any limitation
by any of the foregoing, in the event that either Landlord or Tenant shall
institute any action or proceeding (whether in the State Courts or in the
United States Bankruptcy Court) against the other relating to the provisions of
this Lease, or any default hereunder, the unsuccessful party in such action or
proceeding agrees to pay to the successful party the reasonable attorneys’ fees
and costs incurred therein by the successful party. Tenant agrees to pay a
minimum fee of $75.00 for the preparation of any demand for delinquent rent or
other amounts due under this Lease, or any notice to pay rent or quit.

 

32.      Landlord’s
Access.

 

32.1 Landlord and Landlord’s agents shall
have the right to enter the Premises at reasonable times for the purpose of
inspecting the same, performing any services required of Landlord, showing the
same to prospective purchasers, lenders or Tenants, taking such safety
measures, erecting such scaffolding or other necessary structures, making such
alterations, repairs, improvements or additions to the Premises or to the
Office Building Project as Landlord may reasonably deemed necessary or
desirable and the erecting, using and maintaining of utilities, services, pipes
and conduits through the Premises and/or other premises as long as there is no
material adverse effect to Tenant’s use of the Premises. Landlord may at any
time place on or about the Premises or the Building any ordinary “For Sale”
signs and Landlord may at any time during the last 120 days of the term hereof
place on or about the Premises any ordinary “For Lease” signs.

 

32.2 All activities of Landlord pursuant to
this paragraph shall be without abatement of rent, nor shall Landlord have any
liability to Tenant for the same.

 

32.3 Landlord shall have the right to retain
keys to the Premises and to unlock all doors in or upon the Premises other than
to files, vaults and safes, and in case of emergency to enter the Premises by
any reasonably appropriate means, and any such entry shall not be deemed a
forceable or unlawful entry or detainer to the Premises or an eviction. Tenant
waives any charges for damages or injuries or interference with Tenant’s
property or business in connection therewith.

 

33.      Auctions. Tenant shall not conduct, nor permit to be
conducted, either voluntarily or involuntarily, any auction upon the Premises
or the Common Areas without first having obtained Landlord’s prior written
consent. Not withstanding anything to the contrary in this lease, Landlord
shall not be obligated to exercise any standard of reasonableness in
determining whether to grant such consent. The holding of any auction on the
Premises or Common Areas in violation of this paragraph shall constitute a
material default of this Lease.

 

15

 

34.      Signs. Tenant shall not place any sign upon the
Premises or the Office Building Project without Landlord’s prior written
consent. Under no circumstances shall Tenant place a sign on any roof of the
Office Building Project.

 

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

 

36.      Consents. Except for paragraphs 33 (auctions and 34
(signs hereof, wherever in this Lease the consent of one party is required to
an act of the other party such consent shall not be unreasonably withheld or
delayed.)

 

37.      Guarantor. In the event that there is a guarantor of
this Lease, said guarantor shall have the same obligations as Tenant under this
Lease.

 

38.      Quiet
Possession. Upon
Tenant paying the rent for the Premises and observing and performing all of the
covenants, conditions and provisions on Tenant’s part to be observed and
performed hereunder, Tenant shall have quiet possession of the Premises for the
entire term hereof subject to all of the provisions of this Lease. The
individuals executing this Lease on behalf of Landlord represent and warrant to
Tenant that they are fully authorized and legally capable of executing this
Lease on behalf of Landlord and that such execution is binding upon all parties
holding an ownership interest in the Office Building Project.

 

39.      Options.

 

39.1 Definition. As used in this paragraph the word “Option”
has the following meaning: (1) the right or option to extend the term of this
Lease or to renew this Lease or to extend or renew any lease that Tenant has on
other property of Landlord; (2) the option of right of first refusal to lease
the Premises or the right of first offer to lease the Premises or the right of
first refusal to lease other space within the Office Building Project or other
property of Landlord or the right of first offer to lease other space within
the Office Building Project or other property of Landlord; (3) the right or
option to purchase the Premises or the Office Building Project, or the right of
first refusal to purchase the Premises or the Office Building Project or the
right of first offer to purchase the Premises or the Office Building Project,
or the right or option to purchase other property of Landlord, or the right of
first refusal to purchase other property of Landlord or the right of first offer
to purchase other property of Landlord.

 

39.2 Options
Personal. Each Option
granted to Tenant in this Lease is personal to the original Tenant and may be
exercised only by the original Tenant while occupying the Premises who does so
without the intent of thereafter assigning this Lease or subletting the
premises or any portion thereof, and may not be exercised by or assigned,
voluntarily or involuntarily, by or to any person or entity other than Tenant;
provided, however, that an Option may be exercised by or assigned to any Tenant
Affiliate as defined in paragraph 12.2 of this Lease. The options, if any,
herein granted to Tenant are not assignable separate and apart from this Lease,
nor may any Option be separated from this Lease in any manner, either by reservation
or otherwise.

 

39.3 Multiple
Options. In the event
that Tenant has any multiple options to extend or renew this Lease a later
option cannot be exercised unless the prior option to extend or renew this
Lease has been so exercised.

 

39.4 Effect
of Default on Options.

 

(a) Tenant shall have no right to
exercise an Option, notwithstanding any provision in the grant of Option to the
contrary, (i) during the time commencing from the date Landlord gives to Tenant
a notice of default pursuant to paragraph 13.1 (c) or 13.1 (d) and continuing
until the noncompliance alleged in said notice of default is cured, or (ii)
during the period of time commencing on the day after a monetary obligation to
Landlord is due from Tenant and unpaid (without any necessity for notice
thereof to Tenant) and continuing until the obligation is paid, or (iii) in the
event Landlord has given to Tenant three or more notices of default under
paragraph 13.1 (c), or paragraph 13.1 (d), whether or not the defaults are
cured, during the 12 month period of time immediately prior to the time that
Tenant attempts to exercise the subject Option, (iv) if Tenant has committed
any non-curable breach, including without limitation those described in
paragraph 13.1 (b), or is otherwise in default of any of the terms, covenants
or conditions of this Lease.

 

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

 

(c) All rights of Tenant under the
provisions of an Option shall terminate and be of no further force or effect,
notwithstanding Tenant’s due and timely exercise of the Option, if, after such
exercise and during the term of this Lease, (i) Tenant fails to pay to Landlord
a monetary obligation of Tenant for a period of thirty (30) days after such
obligation becomes due (without any necessity of Landlord to give notice
thereof to Tenant), or (ii) Tenant fails to commence to cure a default
specified in paragraph 13.1 (d) within thirty (30) days after the date that
Landlord gives notice to Tenant of such default and/or Tenant fails thereafter
to diligently prosecute said cure to completion, or (iii) Landlord gives to
Tenant three or more notices of default under paragraph 13.1 (c), or paragraph
13.1 (d), whether or not the defaults are cured, or (iv) if Tenant has
committed any non-curable breach, including without limitation those described
in paragraph 13.1 (b), or is otherwise in default of any of the terms,
covenants and conditions of this Lease.

 

16

 

40.      Security
Measures-Landlord’s Reservations.

 

40.1 Tenant hereby acknowledges
that Landlord shall have no obligation whatsoever to provide guard service or other
security measures for the benefit of the Premises or the Office Building
Project. Tenant assumes all responsibility for the protection of Tenant, if agents
and invitees and the property of Tenant and of Tenant’s agents and invitees
from acts of third parties. Nothing herein contained shall prevent Landlord, at
Landlord’s sole option, from providing security protection for the Office
Building project or any part thereof, in which event the cost thereof shall be
included within the definition of Operating Expenses, as set forth in paragraph
4.2 (b).

 

40.2 Landlord shall have the
following rights:

 

(a) To change the name, address or title of the Office Building
Project or building in which the Premises are located upon not less than 90
days prior written notice;

 

(b) To, at Tenant’s expense, provide and install Building standard
graphics on the door of the Premises and such portions of the Common Areas as
Landlord shall reasonably deem appropriate;

 

(c) To permit any Tenant the exclusive right to conduct any
business as long as such exclusive does not conflict with any rights expressly
given herein;

 

(d) To place such signs, notices or displays as Landlord
reasonably deems necessary or advisable upon the roof, exterior of the
buildings or the Office Building Project or on pole signs in the Common Areas;

 

40.3 Tenant shall not:

 

(a) Use a representation (photographic or otherwise) of the
Building or the Office Building Project or their name(s) in connection with
Tenant’s business;

 

(b) Suffer or permit anyone, except in emergency to go upon the
roof of the Building.

 

41.      Easements.

 

41.1 Landlord reserves to itself
the right, from time to time, to grant such easements, rights and dedications
that Landlord deems necessary or desirable, and to cause the recordation of
Parcel Maps and restrictions, so long as such easements, rights, dedications,
Maps and restrictions do not unreasonably interfere with the use of the
Premises by Tenant. Tenant shall sign any of the documents upon request of
Landlord and failure to do so shall constitute a material default of this
Tenant without the need for further notice to Tenant.

 

41.2 The obstruction of Tenant’s
view, air, or light by any structure erected in the vicinity of the Building,
whether by Landlord or third parties, shall in no way affect this Lease or
impose any liability upon Landlord.

 

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

 

43.      Authority. If Tenant is
a corporation, trust or general or limited partnership, Tenant, and each
individual executing this Lease on behalf of such entity represent and warrant
that such individual is duly authorized to execute and deliver this Lease on
behalf of said entity. If Tenant is a corporation, trust or partnership, Tenant
shall, within thirty (30) days after execution of this Lease, deliver to
Landlord evidence of such authority satisfactory to Landlord.

 

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

 

45.      No Offer. Preparation of
this Lease by Landlord or Landlord’s agent and submission of same to Tenant
shall not be deemed an offer to Tenant to lease. This Lease shall become
binding upon Landlord and Tenant only when fully executed by both parties.

 

46.      Lender Modification.
Tenant agrees to make such reasonable modifications to this Lease may be
reasonably required by an institutional lender in connection with the obtaining
of normal financing or refinancing of the Office Building Project.

 

47.      Multiple Parties. If
more than one person or entity is named as either Landlord or Tenant herein,
except as otherwise expressly provided herein, the obligations of the Landlord
or Tenant herein shall be the joint and several responsibility of all persons
or entities named herein as such Landlord or Tenant, respectively.

 

48.      Work Letter. This Lease
is supplemented by that certain Work Letter of even date executed by Landlord
and Tenant, attached hereto and incorporated herein.

 

17

 

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

 

Exhibit A       The Premises, The
Building, and The Project

Exhibit B        Lease Application

Exhibit C        Signage Program

Exhibit D        Rules and
Regulations

Exhibit E        Insurance
Requirements

Exhibit F        Tenant
Environmental Questionnaire

Exhibit G        fill in name

 

50.      Alterations and Additions.
Notwithstanding anything to the contrary in Section 7.3 of the Lease, in the
event that Tenant desires to make any modification to the interior or exterior
of the Premises after the initial tenant improvements have been installed,
Tenant shall submit to Landlord prior to commencement of construction, for
review and approval by Landlord, plans for any such modifications, along with
an architectural review fee of Two Hundred Fifty Dollars ($250.00). Landlord
shall have no liability for the inaccuracy, inadequacy or lack of safety
features of such plans and shall have no duty to review such plans at all.

 

51.      Toxic or Hazardous Substances.
Tenant shall not use, store or permit toxic waste or other toxic or hazardous
substances or material on the Premises during the term of this Lease, without
the prior written consent of Landlord. In the event Tenant desires to use or
store toxic or hazardous substances on the Premises (including but not limited
to petroleum based fuels), Tenant shall request such use in an application to
Landlord which shall explain in detail the types of chemicals/substances which
Tenant desires to use, the proposed location and manner of storage of same and
the manner of disposition of such chemicals/substances or by-products or
remains thereof. Tenant shall deliver to Landlord copies of all studies,
reports and other information submitted by Tenant to any governmental entity or
agency regulating the use of such substances and materials, concurrently with
the delivery of same to such governmental agency or entity. In no event shall
Tenant store any chemicals/substances in underground tanks. The proposed use of
such chemicals/substances shall label as to the chemicals/substances located within
the Premises. In the event that any such wastes, substances or materials are
hereinafter found on, under or about the Premises except as expressly allowed
by Landlord, Tenant shall take all necessary and appropriate actions and shall
spend all necessary sums to cause the same to be cleaned up and immediately
removed from the Premises, and Landlord shall in no event be liable or
responsible for any costs or expenses incurred in so doing. Tenant shall at all
times observe and satisfy the requirements of, and maintain the Premises in
compliance with, all federal, state and local environmental protection,
occupational, health and safety and similar laws, ordinances, restrictions,
licenses and regulations, including but not limited to, the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.). Resource Conservation and Recovery
Act (42 U.S.C. Section 6901 et seq.), Safe Drinking Water Act (42 U.S.C.
Section 3000 (f) et seq.), Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.), Clean Air Act (42 U.S.C. Section 7401 et seq.), Comprehensive
Environmental Response of Compensation and Liability Act (42 U.S.C. Section
9601 et seq.), California Health and Safety Code (Section 25100 et seq.,
Section 39000 et seq.), California Water Code (Section 13000 et seq.). Should
Tenant at any time receive any notice of violation of any laws, including those
aforementioned, or be given a citation with respect thereto, Tenant shall (i)
immediately notify Landlord of such violation or citation, (ii) provide
Landlord with a copy of same, (iii) cure the deficiency set forth in the
violation or citation within fifteen (15) days after the date of receipt
thereof and (iv) immediately provide Landlord with proof of the curing of such
deficiency or complained of matter. Should Tenant at any time default in or fail
to perform or observe any of its obligations under this Addendum Paragraph 52,
Landlord shall have the right, but not the duty, without limitation upon any of
the Landlord’s rights pursuant hereto, to perform the same, and Tenant agrees
to pay to Landlord on demand, all costs and expenses incurred by Landlord in
connection therewith, including without limitation, attorneys’ fees, together
with interest from the date of expenditure at the highest rate allowed by law.
Tenant hereby indemnifies Landlord and agrees to defend with counsel selected
by Landlord and hold Landlord harmless for any loss incurred by or liability
imposed on Landlord by reason of Tenant’s failure to perform or observe any of
its obligations or agreements under this Addendum Paragraph 52, including but
not limited to any damage, liability, fine, penalty, punitive damage, cost or
expense (including sickness, disease or death), tangible or intangible property
damage, compensation for lost wages, business income, profits, or other
economic loss, damage to the natural resources or the environment, nuisance,
pollution, contamination, leak, spill, release or other adverse effect on the
environment. Landlord may enter the Premises at any time, without notice for
the purpose of ascertaining compliance by Tenant with the requirements of this
Addendum Paragraph 52. If Tenant is a corporation, or is a partnership whose
general partners are corporations, the undersigned unconditionally personally
guarantees the performance by Tenant of all duties of Tenant under this
Addendum Paragraph 52 and the payment of all sums required hereby.

 

52.      Cross Default. In the
event of a default by Tenant under any other Lease for space which is in the
Project or in another real property owned by Landlord or an affiliate of
Landlord, such default shall, at the election of Landlord, constitute a default
by Tenant under this Lease, and shall entitle Landlord to all remedies
available to Landlord under this Lease.

 

53.      Limit on Landlord’s Liability.
The liability of Landlord under this Lease shall be limited to Landlord’s
estate in the Premises. Tenant agrees to look solely to Landlord’s interest in
the Premises for the satisfaction of any liability, duty or obligation of Landlord
with respect to this Lease, or the relationship of Landlord and Tenant
thereunder, and no other assets of Landlord shall be subject to any liability
therefor. In no event shall Tenant seek, and Tenant does hereby waive, any
recourse against the shareholders and/or constituent partners of Landlord and
the partners, members, directors, officers or shareholders thereof, and any of
their respective personal assets for such satisfaction.

 

18

 

54.      Surrender of Lease. The
voluntary or other surrender of this Lease by Tenant, or a mutual cancellation
thereof, shall not work a merger, and shall, at the option of Landlord,
terminate all or any existing subleases or sub-tenancies, or may, at the option
of Landlord, operate as an assignment to him of any or all of such sublease or
sub-tenancies.

 

55.      Sale of Premises by Landlord.
In the event of any sale of the Premises by Landlord, Landlord shall be and is
hereby entirely freed and relieved of all liability under any and all of its
covenants and obligations contained in or derived from this Lease arising out
of any act, occurrence or omission occurring after the consummation of such
sale; and the purchaser, at such sale or any subsequent sale of the Premises,
shall be deemed, without any further agreement between the parties or their
successors in interest or between the parties and any such purchaser, to have
assumed and agreed to carry out any and all of the covenants and obligations of
Landlord under this Lease.

 

56.      Tenant’s Performance Before Commencement.
In the event that Tenant shall abandon the premises or fail to occupy the
Premises and pay rent by the commencement of the term of this Lease, it is
expressly agreed by and between Landlord and Tenant that the amount of damage
to Landlord as a result of that default and the termination of this Lease under
this provision is difficult to calculate, and that Landlord, in addition to its
other rights or remedies provided in Section 13 and not as liquidated damages or
by way of forfeiture, shall be entitled to retain, at Landlord’s option, such
improvements as Tenant may have annexed to the property that cannot be removed
without damage thereto.

 

57.      Marginal Captions. The
various headings and numbers herein and the grouping of the provisions of this
Lease into separate sections and paragraphs are for the purpose of convenience
only and shall not be considered a part hereof.

 

58.      Subordination, Attornment and Estoppel.
This Lease, at Landlord’s option, shall be subordinate to the lien of any first
deed of trust or first mortgage subsequently placed upon the real property of
which the Premises are a part, and to any and all advances made on the security
thereof, and to all renewals, modifications, consolidations, replacements and
extensions thereof, as well as any reciprocal easement agreement now or
hereafter recorded against the office building project and any amendments
thereto, and Tenant shall execute any documents required by Landlord or
Landlord’s mortgagee in this regard within ten (10) days of written request to
do so and Tenant’s failure or refusal to do so shall constitute a material
default by Tenant hereunder and Landlord may, without further notice to Tenant,
declare the term hereof ended, and Landlord may at its option execute any such
documents on behalf of Tenant as Tenant’s attorney-in-fact and in Tenant’s
name, place and stead, to execute such documents, such appointment to be
irrevocable and coupled with an interest; provided, however, that as to the
lien of any such deed of trust or mortgage, Tenant’s right to quiet possession
of the Premises shall not be disturbed if Tenant is not in default and so long
as Tenant shall pay the rent and observe and perform all of the provisions of
this Lease, unless this Lease is otherwise terminated pursuant to its terms. If
any mortgagee, trustee or ground Landlord shall elect to have this Lease prior
to the lien of its mortgage, deed of trust or ground lease, and shall give
written notice thereof to Tenant, this Lease shall be deemed prior to such
mortgage, deed of trust or ground lease, whether this Lease is dated prior or
subsequent to the date of said mortgage, deed of trust or ground lease or the
date of recording thereof.

 

In the event any
proceedings or brought for foreclosure, or in the event of the exercise of the
power of sale under any mortgage or deed of trust made by Landlord covering the
Premises, Tenant shall, at the new owner’s option, attorn to the purchaser upon
any such foreclosure or sale and recognize such purchaser as Landlord under
this Lease.

 

If upon any sale,
assignment or hypothecation of the Premises or the land thereunder by Landlord,
or at any other time, an estoppel certificate, and/or financial statement or
Tenant, Tenant agrees, within ten (10) days thereafter, to deliver such
financial statement, and to deliver such estoppel certificate (in the form of
that attached hereto or as may be required by Landlord’s mortgagee or purchaser
or to Landlord certifying the requested information, including among other
things, the dates of commencement and termination of this Lease, the amounts of
security deposits, that this Lease is in full force and effect, if such be the
case, and that there are no differences, offsets or defaults of Landlord, or
noting such differences, offsets or defaults as actually exist. Tenant shall be
liable for any loss or liability resulting from any incorrect information
certified, and such mortgagee and purchaser shall have the right to rely on
such estoppel certificate and financial statement. Tenant shall in the same
manner acknowledge and execute any assignment of rights to receive rents as
required by any mortgagee of Landlord. Should Tenant fail to provide such
estoppel certificate, financial statement or assignment of rights within ten
(10) days of the service on Tenant or a written request therefor, then it is
agreed between the parties hereto that Landlord may suffer substantial damage
as a result of Tenant’s failure and therefore Tenant shall pay to Landlord
daily Additional Rental, in addition to all other rental due under this Lease,
in an amount equal to one-thirtieth (1/30th) of the Base Rent (as set forth in
Section 4 hereof) for each day commencing on the eleventh (11th) day after
service of the request for such estoppel certificate, financial statement or
assignment of rights until the same is provided to Landlord, its mortgagee or
purchaser. Said daily Additional Rental shall be due and payable daily for each
day commencing on the eleventh (11th) day following the service of such
request, and in default three (3) days after each such daily due date. In
addition but without limitation of the foregoing, Landlord may at its option
execute any such documents on behalf of Tenant as Tenant’s attorney-in-fact,
and Tenant does hereby appoint Landlord as Tenant’s attorney-in-fact and in
Tenant’s name, place and stead, to execute such documents, such appointment to
be irrevocable and coupled with an interest.

 

59.      Building Planning. In
the event Landlord requires the Premises for use in conjunction with another
suite or for other reasons connected with the Building planning program, upon
notifying Tenant in writing, Landlord shall have the right to move Tenant to
other space in the Building of which the Premises forms a part, at Landlord’s
cost and expense, and the terms and conditions of the original lease shall
remain in full force and effect, save and excepting that a revised Exhibit “A”
shall become part of this Lease and shall reflect the location of the new
space.

 

19

 

(a)       Prior
to Completion. Landlord reserves and is hereby granted the
right, at any time prior to occupancy by Tenant of Tenant’s Premises, upon not
less than thirty (30) days’ written notice to Tenant, to relocate Tenant and to
substitute as the Premises thereunder other Premises within the office building
project for the Premises originally leased to Tenant at the time of the
execution hereof; provided, however, that the substituted Premises shall
contain an area not less or greater than one hundred twenty percent (120%)
times the square footage contained in the original Premises, with a pro-rata
adjustment to Base Rent as a result of the increase or decrease in the size of
the Substituted Premises.

 

(b)       Subsequent
to Completion. In addition, Landlord shall have the right, at
any time and from time to time upon sixty (60) days’ prior written notice to
Tenant, and within a reasonable period of time after said notice, to relocate
to other Premises (“New Premises”) within the office building project; subject,
however, to the following terms and conditions: (a) The New Premises shall have
approximately the same Floor Area as is contained in the Premises; (b) the New
Premises shall be leased to Tenant on the same terms and conditions as provided
in this Lease, except that if the Floor Area in the New Premises in more or
less than that contained in the Premises, there shall be proportionate
adjustment of Base Rent and Additional Rental based upon the Floor Area in the New
Premises; (c) Landlord shall pay to Tenant, within thirty (30) days following
the date Tenant initially opens for business in the New Premises, those
expenses both direct and incidental reasonably incurred by Tenant in connection
with the relocation of Tenant’s personal property, together with Tenant’s
unamortized book value of Tenant’s leasehold improvements, excluding movable
trade fixtures (to the extent that said leasehold improvements were paid for by
Tenant, as evidenced by invoices and proofs of payment of same), depreciated on
a straight-line basis over the Term, and Tenant shall provide Landlord with a
bill of sale for said leasehold improvements; provided, however, Tenant has
first provided Landlord with an itemized list of these expenses (accompanied
with copies of invoices and proofs of payment of same), and (d) Landlord and
Tenant, during said sixty (60) day period, mutually agree in writing upon (i)
the scope and cost of all leasehold improvements to be constructed at the New
Premises, (ii) the extent of Landlord’s contribution to this cost, and (iii) a
timetable for completion of the leasehold improvements. Landlord and Tenant
shall use best efforts and act in good faith to reach agreement on the terms
set forth in subparagraph (d) above. If the provisions of subparagraphs (a),
(b), (c) and (d) are not met by Landlord, Landlord agrees that Tenant shall not
be required to relocate until such conditions are met.

 

60.      NO ORAL AGREEMENT. THIS
LEASE COVERS IN FULL EACH AND EVERY AGREEMENT OF EVERY KIND OR NATURE
WHATSOEVER BETWEEN THE PARTIES AND THEIR RESPECTIVE AGENTS AND REPRESENTATIVES
HERETO CONCERNING THIS LEASE, AND ALL PRELIMINARY NEGOTIATIONS AND AGREEMENTS
OF WHATSOEVER KIND OR NATURE ARE MERGED HEREIN, AND THERE ARE NO ORAL
AGREEMENTS OR IMPLIED COVENANTS. LANDLORD SPECIFICALLY DOES NOT WARRANT THAT
ANY OTHER OCCUPANCY, PRESENT OR FUTURE, IN THE OFFICE BUILDING PROJECT OF WHICH
THE PREMISES ARE A PART, SHALL REMAIN AN OCCUPANT DURING THE TERM OF THIS
LEASE.

 

61.      Tenant Entity. If Tenant
is a corporation, each individual executing this Lease on behalf of Tenant
represents and warrants that he is duly authorized to execute and deliver this
Lease on behalf of Tenant an shall deliver appropriate certification to that
effect, if requested. If Tenant is a partnership, joint venture, or other
unincorporated association, each individual executing this Lease on behalf of
Tenant represents that this Lease is binding on Tenant. Furthermore Tenant
agrees that the execution of any written consent hereunder, or of any written
modification or termination of this Lease, by any general partner of Tenant or
any other authorized agent of Tenant, shall be binding on Tenant.

 

62.      Americans with Disabilities Act.
Landlord agrees to be responsible for and shall pay all remedial costs
associated with, and shall use commercially reasonable diligence in complying
with, the Americans with Disabilities act (“ADA”), as it relates to the Common
Areas of the Building only, based solely on requirements existing or imposed on
Landlord as of the Commencement Date. Any changes, modifications,
rehabilitation or repair to the Common Area required by any amendment to ADA or
any regulations thereunder which are enacted or become effective after the
Commencement Date, shall be Landlord’s responsibility, but the cost thereof
shall be an Operating Expense for purposes of this Lease. Notwithstanding any
other provision of the Lease, Landlord shall have no duty, obligation or
responsibility, nor shall Landlord be obligated to expend any moneys over and
above the work specified in the Work Letter to make the Premises comply with
any requirements of ADA or any other similar laws, including life-fire safety
codes, physical handicap codes and/or earthquake safety codes.

 

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

 

20

 

IF THIS LEASE HAS
BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR HIS/HER
APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE REAL ESTATE BROKER
OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF HIS LEASE OR THE TRANSACTION RELATING THERETO; THE PARTIES SHALL
RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX
CONSEQUENSES OF THIS LEASE.

 

	
  Dated:

  	
   

  	
   

  	
  Dated:
  

  	
  6/16/03

  	
   

  
	
   

  	
   

  
	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  
	
  AC-CATALINA LANDING LLC, 

  	
  OBAGI MEDICAL PRODUCTS, INC., 

  
	
  a Delaware limited liability company

  	
  a California corporation

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ Curtis Cluff

  	
   

  
	
   

  	
  Donald G. Abbey

  	
  Name:

  	
  Curtis Cluff

  	
   

  
	
  Its:

  	
  Managing Member

  	
  Its:

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  or

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ David J. Gullen

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  David J. Gullen

  	
  Name:

  	
   

  	
   

  
	
  Its:

  	
  Vice President

  	
  Its:

  	
   

  	
   

  
										

 

21

 

ADDENDUM TO LEASE

 

This Addendum to
Lease (the “Addendum”) is entered into in connection with and as part of that
certain lease, dated May 9, 2003, by and between AC-CATALINA LANDING LLC,  a Delaware limited
liability company (“Landlord”), and OBAGI MEDICAL PRODUCTS, INC.,  a California
corporation (“Tenant”). Notwithstanding anything to the contrary
contained in the Lease, the parties further agree as follows:

 

63.       Provided Tenant is not then in default
under the Lease (in which event Tenant shall have no expansion rights under
this Addendum, provided that in the case of a non-monetary default Tenant shall
be deemed to be not in default for purposes of this Addendum if Tenant cures
the default within five (5) days after written notice of the existence of the
default), if Landlord decides that upon the expiration or other termination of
any lease between Landlord and a third party for space on the first (1st)
floor of the Building, Landlord will offer that space for lease to the general
public (“Expansion Space”), Landlord shall state the terms and conditions on
which Landlord is willing, in its sole discretion, to Lease the Expansion Space
to Tenant, provided that Landlord shall act in good faith to retain in Landlord’s
Notice as many of the non-economic provisions of this Lease as possible
consistent with the economic provisions (e.g., rent, base year, parking
concessions, moving allowances, and tenant improvement allowance) Landlord
desires to include in or exclude from Landlord’s Notice. Tenant shall have five
(5) business days after Landlord’s Notice is given within which to
unconditionally agree to lease all (and not less than all) of the Expansion
Space on all the terms contained in Landlord’s Notice. If Tenant duly exercises
its rights under this Rider, the Expansion Space shall become part of the
Premises as of the date on which Tenant shall first have the right to occupy
that Expansion Space (“Expansion Space Commencement Date”). This Right of First
Notice shall apply only during each six (6) month period after Tenant has given
Landlord written notice requesting that Landlord give Tenant Landlord’s Notice
in accordance with this Addendum.

 

If Tenant fails to duly exercise its rights under this Addendum within
the above five business-day period, then all rights of Tenant to lease the
Expansion Space identified in Landlord’s Notice under this Addendum shall
automatically terminate and Landlord shall thereafter have no further
obligation to notify Tenant of any proposal to lease the Expansion Space.
Landlord shall thereafter have the right to lease the Expansion Space to one or
more third parties on any terms and conditions Landlord negotiates in its sole
discretion, without further obligation to Tenant.

 

If Tenant duly exercises this Right of First Notice within the above
five business-day period, then Tenant shall enter into an amendment to the
Lease (i) incorporating the Expansion Space into the Lease on the terms and
conditions contained in Landlord’s Notice and (ii) adjusting Tenant’s share and
rent accordingly. All other terms and conditions of the Lease (except as
specified in the immediately preceding sentence, this Addendum, shall remain
the same and in full effect. If Tenant fails to duly execute and return the
lease amendment or any revised amendment, or submit reasonable written
objections to the contents of the Lease amendment to Landlord within ten (10)
days after it is delivered to Tenant for signature, this Right of First Notice
and Tenant’s acceptance of Landlord’s Notice shall automatically be void, any
right accrued under this Right of First Notice shall be of no effect, and
Landlord shall thereafter be free to unconditionally lease the Expansion Space
to one or more third parties as set forth above.

 

This Right of First Notice shall not apply to (a) offers from any third
parties to lease the Expansion Space, (b) leases or transfers among entities or
persons related to Landlord (including, but not limited to, partners if
Landlord is a partnership, and shareholders if Landlord is a corporation), 9(c)
any proposed sale or purchase of the Building, including, without limitation, a
proposed sale-and-leaseback of the Building, and (d) any space in the Building
which is vacant as of the date of the Lease. In addition, this Right of First
Notice is subject and subordinate to all now existing preferential rights to
the Expansion Space granted to other tenants of the Office Building Project

 

This Right of First Notice is personal to Tenant. If Tenant transfers
any of Tenant’s interest in the Lease before the permitted exercise of Tenant’s
rights under this Right of First Notice, those rights shall not be transferred
to any transferee but shall instead automatically lapse, and Landlord’s
obligations under this Right of First Notice shall automatically terminate.
This Right of First Notice shall automatically expire without notice on the
expiration of the original Term or sooner termination of the Lease for any
reason or upon any Transfer by Tenant of all or any part of Premises.

 

64.       Tenant has converted the area located
adjacent to the south end of the Building and shown on attached Exhibit “G” as
the area marked with diagonal lines (“South End Area”) into a reserved parking
area for Tenant’s and Landlord’s exclusive use during the Term (“South End
Parking”). Landlord and Tenant shall each be entitled to park one car in the
South End Parking. Tenant’s use of the South End Area will not be subject to
the monthly parking rate chargeable by Landlord. Tenant agrees that Tenant’s
use of the South End Area shall comply with all of Landlord’s parking rules and
regulations. All improvements constructed by Tenant in the South End Area or in
connection with the South End Parking shall at all times be and remain the
property of Landlord, provided that upon the expiration or earlier termination
of this Lease Landlord may require that Tenant immediately (a) restore the
South End Area to its condition existing on the date of this Lease and (b)
repair any damage caused to the Office Building Project or any other property
during such restoration. Any future improvements which Landlord desires to
complete to facilitate the joint parking arrangement between Landlord and
Tenant shall be paid for by Landlord.

 

65.       Tenant shall receive a rent credit of Thirty-One
Thousand Five Hundred & Sixty Dollars ($31,560); Twenty-One Thousand &
Forty Dollars ($21,040) of which will be applied against Tenant’s August 2003
rental obligation with the remaining balance of Ten Thousand Five Hundred &
Twenty Dollars ($10,520) to be applied against Tenant’s September 2003 rental
obligation.

 

22

 

EXHIBIT A

THE OFFICE BUILDING PROJECT

 

 

23A

 

FLOOR PLAN OF THE PREMISES

 

EXHIBIT A-II

 

 

24B

 

EXHIBIT B 

LEASE APPLICATION

 

[ATTACHED]

 

24

 

EXHIBIT C

SIGNAGE PROGRAM

 

This criteria
establishes a uniform policy for all tenant sign identification at Catalina
Landing. It is designed to establish standards, which assure an attractive
business complex for the benefits of all tenants. Plans for proposed signs
shall be submitted for design review and approval of owner. Adherence to these
rules shall be the responsibility of each tenant. Conformance will be strictly
enforced; any non-conforming signage shall be brought in to conformance at the
expense of the tenant.

 

Tenant shall be
represented on the interior building directory of Building 310 and Tenant’s
suite. All signs will be in accordance with existing building standards and
will be fabricated and installed at Landlord’s expense.

 

25

 

EXHIBIT D 

RULES AND REGULATIONS

 

General Rules and Regulations.
The following rules and regulations govern the use of the Building and the
Common Areas. Tenant will be bound by such rules and regulations and agrees to
cause Tenant’s Authorized Users, its employees, subtenants, assignees,
contractors, suppliers, customers and invitees to observe the same.

 

1.                          Except
as specifically provided in the Lease to which these Rules and Regulations are
attached, no sign, placard, picture, stickers, banners, advertisement, name or
notice may be installed or displayed on any part of the outside or inside of
the Building without the prior written consent of Landlord. Landlord will have
the right to remove, at Tenant’s expense and without notice, any sign installed
or displayed in violation of this rule. All approved signs or lettering on
doors and walls are to be printed, painted, affixed or inscribed at the expense
of Tenant and under the direction of Landlord by a person or company designated
or approved by Landlord.

 

2.                          If
Landlord objects in writing to any curtains, blinds, shades, screens or hanging
plants or other similar objects attached to or used in connection with any
window or door of the Premises, or placed on any windowsill, which is visible
from the exterior of the Premises. Tenant will immediately discontinue such
use. Tenant agrees not to place anything against or near glass partitions or
doors or windows which may appear unsightly from outside the Premises, including,
without limitation, stickers, tinting materials, foil shades, blinds or
Screens.

 

3.                          Tenant
will not obstruct any sidewalks, passages, exits or entrances of the Project.
The sidewalks, passages, exits and entrances are not open to the general
public, but are open, subject to reasonable regulations, to Tenant’s business
invitees. Landlord will in all cases retain the right to control and prevent
access thereto of all persons whose presence in the reasonable judgment of
Landlord would be prejudicial to the safety, character, reputation and Interest
of the Project and its tenants, provided that nothing herein contained will be
construed to prevent such access to persons with whom any tenant normally deals
in the ordinary course of its business, unless such persons are engaged in
illegal or unlawful activities. No tenant and no employee or invitee of any
tenant will go upon the roof of the Building.

 

4.                          Landlord
expressly reserves the right to absolutely prohibit solicitation, canvassing,
distribution of handbills or any other written material or goods, peddling,
sales and displays of products, goods and wares in all portions of the Project
except for such activities as may be expressly permitted under the Lease.
Landlord reserves the right to restrict and regulate the use of the Common
Areas of the Project by Invitees of tenants providing services to tenants on a
periodic or daily basis including food and beverage vendors. Such restrictions
may include limitations on time, place, manner and duration of access to a
tenant’s premises for such purposes.

 

5.                          Landlord
reserves the right to prevent access to the Project in case of invasion, mob,
riot, public excitement or other commotion by closing the doors or by other
appropriate action.

 

6.                          Landlord
reserves the right to approve companies providing cleaning and janitorial
services for the Premises. Tenant will not cause any unnecessary labor by
carelessness or indifference to the good order and cleanliness of the Premises.

 

7.                          Landlord
will furnish Tenant, free of charge, with two keys to each exterior entry door
lock to the Premises. Landlord may make a reasonable charge for any additional
keys. Tenant shall not make or have made additional keys, and Tenant shall not
alter any lock or install any new additional lock or bolt on any door of the
Premises. Tenant, upon the termination of its tenancy, will deliver to Landlord
the keys to all doors which have been furnished to Tenant.

 

8.                          If
Tenant requires telegraphic, telephonic, burglar alarm, satellite dishes,
antennae or similar services, it will first obtain Landlord’s approval, and
comply with, Landlord’s reasonable rules and requirements applicable to such
services, which may include separate licensing by, and fees paid to, Landlord,
as well as all federal, state, and local regulations. Tenant will not transmit
or receive any electromagnetic, microwave or other radiation which may be
harmful or hazardous to any person or property in or about the Premises or
elsewhere within the Project.

 

9.                          No
deliveries will be made which impede or interfere with other tenants or the
operation of the Building.

 

10.                    Tenant
will not use or keep in the Premises any kerosene, gasoline or inflammable or
combustible fluid or material other than those limited quantities necessary for
the operation or maintenance of office equipment. Tenant will not sleep, cook
or wash clothes in the Premises or use or permit to be used in the Premises any
foul or noxious gas or substance, or permit or allow the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors or vibrations, intense
glare, light or heat, nor will Tenant bring into or keep in or about the
Premises any birds or animals.

 

11.                    Landlord
reserves the right, exercisable without notice and without liability to Tenant,
to change the name and street address of the building. Without the written
consent of Landlord, Tenant will not use the name of the Building or the
Project in connection with or in promoting or advertising the business of
Tenant except as Tenant’s address.

 

26

 

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

 

13. Tenant will
not sell, or permit the sale at retail of newspapers, magazines, periodicals,
theater tickets or any other goods or merchandise to the general public in or
on the Premises. Tenant will not make any building-to-building solicitation of
business from other tenants in the Project. Tenant will not use the Premises
for any business or activity other than that specifically provided for in this
Lease. Tenant will not conduct, nor permit to be conducted, either voluntarily
or involuntarily, any auction upon the Premises without first having obtained
Landlord’s prior written consent, which consent Landlord may withhold in its
sole and absolute discretion.

 

14. Except for the
ordinary hanging of pictures and wall decorations, Tenant will not mark, drive
nails partitions, woodwork or plaster or in any way deface the Premises or any
part thereof, except inprovisions of the Lease pertaining to alterations.
Landlord reserves the right to direct electricians as to where and how
telephone and telegraph wires are to be introduced to the Premises. Tenant will
not cut or bore holes for wires. Tenant will not affix any floor covering to
the floor of the Premises in any manner except as approved by Landlord. Tenant
shall repair any damage resulting from noncompliance with this rule.

 

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

 

16. Tenant will
store all its trash and garbage within its Premises or in other facilities
provided by Landlord. Tenant will not place in any trash box or receptacle any
material which cannot be disposed of in the ordinary and customary manner of
trash and garbage disposal. All garbage and refuse disposal is to be made in
accordance with directions issued from time to time by Landlord.

 

17. The Premises
will not be used for lodging nor shall the Premises be used for any improper,
immoral or objectional purpose.

 

18. Tenant agrees
to comply with all safety, fire protection and evacuation procedures and
regulations established by Landlord or any governmental agency.

 

19. Tenant assumes
any and all responsibility for protecting its Premises from theft, robbery and
pilferage, which includes keeping doors locked and other means of entry to the
Premises closed. Tenant will not leave or store any equipment materials or
items of any kind outside the walls of the Premises.

 

20. Tenant shall
use at Tenant’s cost such pest extermination and control contractor(s) as
Landlord may direct and at such intervals as Landlord may reasonably require.

 

21. To the extent
Landlord reasonably deems it necessary to exercise exclusive control over any
portions of the Common Areas for the mutual benefit of the tenants in the
Project, Landlord may do so subject to reasonable, non-discriminatory
additional rules and regulations.

 

22. Tenant’s
requirements will be attended to only upon appropriate application to Landlord’s
management office for the Project by an authorized individual of Tenant.
Employees of Landlord will not perform any work or do anything outside of their
regular duties unless under special instructions from Landlord, and no employee
of Landlord will admit any person (Tenant or otherwise) to any office without
specific instructions from Landlord.

 

23. These Rules
and Regulations are in addition to, and will not be construed to in any way
modify or amend, in whole or in part, the terms, covenants, agreements and conditions
of the Lease. Landlord may waive any one or more of these Rules and Regulations
for the benefit of Tenant or any other tenant, but no such waiver by Landlord
will be construed as a waiver of such Rules and Regulations in favor of Tenant
or any other tenant, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all of the tenants of the Project.

 

24. Landlord
reserves the right to make such other and reasonable and non-discriminatory
Rules and Regulations as, in its judgment, may from time to time be needed for
safety and security, for care and cleanliness of the Project and for the
preservation of good order therein. Tenant agrees to abide by all such Rules
and Regulations herein above stated and any additional reasonable and
non-discriminatory rules and regulations which are adopted. Tenant is
responsible for the observance of all of the foregoing rules by Tenant’s
employees, agents, clients, customers, invitees and guests.

 

B. Parking Rules and Regulations. The
following rules and regulations govern the use of the parking facilities which
serve the Building. Tenant will be bound by such rules and regulations and
agrees to cause its employees, subtenants assignees, contractors, suppliers,
customers and invitees to observe the same:

 

1. Tenant Will not
permit or allow any vehicles that belong to or are controlled by Tenant or
Tenant’s employees, subtenants, customers or invitees to be loaded, unloaded or
parked in areas other than those designated by Landlord for such activities. No
vehicles are to be

 

27

 

left in the
parking areas overnight and no vehicles are to be parked in the parking areas
other than normally sized passenger automobiles, motorcycles and pick-up trucks.
No extended term storage of vehicles is permitted.

 

2. Vehicles must
be parked entirely within painted stall lines of a single parking stall.

 

3. All directional
signs and arrows must be observed.

 

4. The speed limit
within all parking areas shall be five (5) miles per hour.

 

5. Parking is
prohibited: (a) in areas not striped for parking; (b) in aisles or on ramps;
(c) where “no parking” signs are posted; (d) in cross-hatched areas; and (e) in
such other areas as may be designated from time to time by Landlord or Landlord’s
parking operator.

 

6. Landlord
reserves the right, without cost or liability to Landlord, to tow any vehicle
if such vehicle’s audio theft alarm system remains engaged for an unreasonable
period of time.

 

7. Washing,
waxing, cleaning or servicing of any vehicle in any area not specifically
reserved for such purpose is prohibited.

 

8. Landlord may
refuse to permit any person to park in the parking facilities who violates
these rules with unreasonable frequency, and any violation of these rules shall
subject the violator’s car to removal, at such car owner’s expense. Tenant
agrees to use its best efforts to acquaint its employees, subtenants,
assignees, contractors, suppliers, customers and invitees with these parking
provisions, rules and regulations.

 

9. Landlord
reserves the right, without cost or liability to Landlord, to tow any vehicles
which are used or parked in violation of these rules and regulations.

 

10. Landlord
reserves the right from time to time to modify and/or adopt such other
reasonable and non-discriminatory rules and regulations for the parking
facilities as it deems reasonably necessary for the operation of the parking
facilities.

 

RULES
AND REGULATIONS FOR ALTERATIONS

 

ALTERATIONS. After
installation of the initial Tenant Improvements for the Premises as described
on Exhibit “A” to the Lease. Tenant shall not make any alterations, additions,
improvements or decorations to the Premises (collectively, “Alterations”)
without Landlord’s prior written consent, which consent Landlord may withhold
in its reasonable but subjective discretion. All permitted Alterations shall be
subject to the following terms and conditions:

 

(a) Prohibited Alterations. Tenant may not make
any Alterations which: (i) affect any area outside the Premises; (ii) affect
the Building’s structure, equipment, services or systems, or the proper
functioning thereof, or Landlord’s access thereto; (iii) affect the
outside appearance, character or use of the Building or any Common Areas; (iv)
in the reasonable opinion of Landlord, lessen the value of the Building; or (v)
will violate or require a change in any occupancy certificate applicable to the
Premises.

 

(b) Landlord’s Approval. In requesting Landlord’s
approval of any Alterations, Tenant must deliver to Landlord written notice
requesting Landlord’s approval and a copy of any plans, specifications and
working drawings for any such Alterations at least ten (10) days prior to
commencement of the work thereof. Landlord’s approval of plans, specifications
and/or working drawings for Alterations will not create any responsibility or
liability on the part of Landlord for their completeness, design sufficiency,
or compliance with applicable permits, laws, rules and regulations of
governmental agencies or authorities, in approving any Alterations, Landlord
reserves the right to require Tenant to increase Its Security Deposit to
provide Landlord with additional reasonable security for the removal of such
Alterations by Tenant as may be required by the Lease.

 

(c) Contractors. Alterations may be made or
installed only by contractors and subcontractors which have been approved by
Landlord, which approval Landlord will not unreasonably withhold or delay;
provided, however. Landlord reserves the right to require that Landlord’s
contractor for the Building be given the first opportunity to bid for any
Alteration work. Before proceeding with any Alterations, Tenant agrees to
provide Landlord with ten (10) days prior written notice and Tenant’s
contractors must obtain and maintain, on behalf of Tenant and at Tenant’s sole
cost and expense: (i) all necessary governmental permits and approvals for the
commencement and completion of such Alterations; and (ii) if requested by
Landlord, a completion and lien indemnity bond, or other surety, reasonably
satisfactory to Landlord for such Alterations. Throughout the performance of
any Alterations, Tenant agrees to obtain, or cause its contractors to obtain,
workers compensation insurance and general liability insurance in compliance with
the provisions of Paragraph 19 of the Lease.

 

(d) Manner of Performance. All Alterations must
be performed: (i) in accordance with the approved plans, specifications and
working drawings; (ii) in a lien-free and first-class and workmanlike manner;
(iii) in compliance with all applicable permits, laws, statutes, ordinances,
rules, regulations, orders and rulings now or hereafter in effect and imposed
by any governmental agencies and authorities which assert jurisdiction; (iv) in
such a manner so as not to interfere with the occupancy of any other tenant in
the Building, nor impose

 

28

 

any additional
expense upon nor delay Landlord in the maintenance and operation of the
Building; and (v) at such times, in such manner, and subject to such rules and
regulations as Landlord may from time to time reasonably designate.

 

(e) Ownership. At
Landlord’s election, all Alterations will become the property of Landlord and
will remain upon and be surrendered with the Premises at the end of the Term of
the Lease, or, Landlord may, by written notice delivered to Tenant, identify
those Alterations which Landlord will require Tenant to remove at the end of
the Term of the Lease. Landlord may also require Tenant to remove Alterations
which Landlord did not have the opportunity to approve. If Landlord requires
Tenant to remove any Alterations, Tenant, at its sole cost and expense, agrees
to remove the identified Alterations on or before the expiration or earlier
termination of the Lease and repair any damage to the Premises caused by such
removal (or, at Landlord’s option, Tenant agrees to pay to Landlord all of
Landlord’s costs of such removal and repair).

 

(f) Personal
Property. All articles of personal property owned by Tenant or
installed by Tenant at its expense in the Premises (including Tenant’s business
and trade fixtures, furniture, movable partitions and equipment [such as
telephones, copy machines, computer terminals, refrigerators and facsimile
machines]) will be and remain the property of Tenant, and must be removed by
Tenant from the Premises, at Tenant’s sole cost and expense, on or before the
expiration or earlier termination of the Lease. Tenant agrees to repair any
damage caused by such removal at its cost on or before the expiration or
earlier termination of the Lease.

 

(g) Removal of Alterations. If
Tenant fails to remove by the expiration or earlier termination of the Lease
all of its personal property, or any Alterations identified by Landlord for
removal, Landlord may, at its option, treat such failure as a hold-over
pursuant to Subparagraph 11(b) of the Lease, and/or Landlord may (without
liability to Tenant for loss thereof) treat suchpersonal property and/or
Alterations as abandoned and, at Tenant’s sole cost and expense, and in
addition to Landlord’s other rights and remedies under the Lease, at law or in
equity: (a) remove and store such items; and/or (b) upon ten (10) days prior
notice to Tenant, sell, discard or otherwise dispose of all or any such items at
private or public sale for such price as Landlord may obtain or by other
commercially reasonable means. Tenant shall be liable for all costs of
disposition of Tenant’s abandoned property and Landlord shall have no liability
to Tenant with respect to any such abandoned property. Landlord agrees to apply
the proceeds of any sale of any such property to any amounts due to Landlord
under this Lease from Tenant (including Landlord’s attorneys’ fees and other
costs incurred in the removal, storage and/or sale of such items), with any
remainder to be paid to Tenant.

 

29

 

EXHIBIT E

TENANT’S INSURANCE REQUIREMENTS

 

This outlines the insurance requirements of your Lease. To assure
compliance with these terms, we suggest you send a copy of this Exhibit to your
insurer or agent. Initial Certificates must be provided to Landlord prior to
occupancy of the Premises, renewals ten (10) days before expiration.

 

1.                          Comprehensive
or Commercial General Liability Insurance:

 

$2,000,000
Combined Single Limit, each occurrence

 

$2,000,000
Aggregate (minimum) this location

 

$2,000,000
Products/Completed Operations Aggregate

 

$100,000 Fire
Legal Liability Limit, per fire

 

Bodily injury,
Property Damage, Personal Injury and Advertising Injury; Blanket Contractual
Liability - Covering Indemnity Paragraph 18(b); Products and Completed
Operations Liability; Landlord as an Additional Insured; Severability of
Interest, permitting Cross liability among insureds; provision stating that
tenant’s insurance is primary and non-contributing with any insurance carried
by Landlord.

 

2.                         Tenant’s
Property Insurance;

 

All Risks coverage
of Property owned by Tenant or for which the Tenant is legally liable;
replacement cost basis, covering no less than 90% of all values.

 

3.                          Tenant’s
Business Interruption Insurance (if requested):

 

All Risks coverage of operations at leased premises; covering one-years
business interruption due to insured peril.

 

4.                          Tenant’s
Workers’ Compensation and Employer’s Liability Insurance (if requested):

 

Statutory Limits and terms required by state of leased premises,
$1,000,000 Employer’s Liability Limit.

 

5.                          Tenant’s
Automobile Insurance (if requested):

 

$1,000,000
Combined Limit per accident; covering all owned, non-owned, hired autos (Symbol
1 - any auto).

 

All insurance is
to be with licensed insurers having a Best’s rating of “A 10” or better, and
must include the following:

 

Waiver of
Subrogation in favor of Landlord

Thirty (30) day pre-notice of cancellationinon renewal to Landlord

 

SEND
CERTIFICATE TO:                                   

AP-Catalina Landing LLC

Attn.: Property Manager 

310 Golden Shore, Suite 300 

Long Beach, California 90802

 

PLEASE INCLUDE:
Landlord and The Abbey Management Company LLC as additional insureds, and
reference the property address.

 

30

 

EXHIBIT F 

TENANT ENVIRONMENTAL QUESTIONNAIRE

 

The purpose of this form is to obtain information regarding the use or
proposed use of hazardous materials at the premises. Prospective tenants should
answer the questions in light of their proposed operations at the premises.
Existing tenants should answer the questions as they relate to ongoing
operations at the premises and should update any information previously
submitted. If additional space is needed to answer the questions, you may
attach separate sheets of paper to this form.

 

Your cooperation in this matter is appreciated.

 

1.0                  GENERAL INFORMATION

 

	
  Name of
  Responding Company:

  	
  OMP, Inc

  	
   

  
	
  Check the
  Applicable Status:

  	
  Prospective
  Tenant o
  Existing Tenant ý

  
	
   

  
	
  Mailing Address:

  	
  310 Golden Shore
  # 120

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Long Beach, CA
  90802

  	
   

  
	
   

  
	
  Contact Person
  and Title:

  	
   

  	
  ,

  	
   

  	
   Telephone Number: 

  	
   

  	
  /

  	
   

  	
   

  
	
   

  
	
  Address of
  Leased Premises:

  	
   

  	
   

  
	
   

  
	
  Length of Lease
  Term:

  	
  60 

  	
  months

  
																	

 

Describe the proposed operations to take place on the premises,
including principal products manufactured or services to be conducted. Existing
tenants should describe any proposed changes to ongoing operations.

 

 

2.0                  STORAGE OF HAZARDOUS MATERIALS

 

2.1                    Will
any hazardous materials be used or stored on-site?

 

	
  Wastes

  	
   

  	
  Yes o

  	
   

  	
  No ý

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chemical
  Products

  	
   

  	
  Yes o

  	
   

  	
  No ý

  

 

2.2                    Attach
a list of any hazardous materials to be used or stored, the quantities that
will be on-site at any given time, and the location and method of storage
(e.g., 55-gallon drums on concrete pad).

 

3.0                  STORAGE TANKS AND SUMPS

 

3.1                    Is
any above or below ground storage of gasoline, diesel or other hazardous
substances in tanks or sumps proposed or currently conducted at the premises?

 

Yes o                                   No ý

 

If yes, describe the materials to be stored, and the type, size and
construction of the sump or tank. Attach copies of any permits obtained for the
storage of such substances.

 

3.2                    Have
any of the tanks or sumps been inspected or tested for leakage?

 

Yes o                                   No ý

 

If yes, attach the results.

 

3.3                    Have
any spills or leaks occurred from such tanks or sumps?

 

Yes o                                   No ý

 

3.4                    Were
any regulatory agencies notified of the spill or leak?

 

Yes o                                   No ý

 

31

 

If yes, attach copies of any spill reports filed, any clearance letters
or other correspondence from regulatory agencies relating to the spill or leak.

 

3.5                    Have
any underground storage tanks or sumps been taken out of service or removed?

 

Yes o                                   No ý

 

If yes, attach copies of any closure permits and clearance obtained
from regulatory agencies relating to closure and removal of such tanks.

 

4.0                  SPILLS

 

4.1                    During
the past year, havs any spills occurred at the premises?

 

Yes o                                   No ý

 

If yes, please describe the location of the spill.

 

 

4.2                    Were
any agencies notified in connection with such spills?

 

Yes o                                   No ý

 

If yes, attach copies of any spill reports or other correspondence with
regulatory agencies.

 

4.3                    Were
any clean-up actions undertaken in connection with the spills?

 

Yes o                                   No ý

 

If yes, attach copies of any clearance letters obtained from any
regulatory agencies involved and the results of any final soil or groundwater
sampling done upon completion of the clean-up work.

 

5.0                  WASTE MANAGEMENT

 

5.1                    Has
your company been issued an EPA Hazardous Waste Generator I.D. Number?

 

Yes o                                   No ý

 

5.2                    Has
your company filed a biennial report as a hazardous waste generator?

 

Yes o                                   No ý

 

If yes, attach a copy of the most recent report filed.

 

5.3                    Attach
a list of the hazardous wastes, If any, generated or to be generated at the
premises, its hazard class and the quantity generated on a monthly basis.

 

5.4                    Describe
the method(s) of disposal for each waste. Indicate where and how often disposal
will take place.

 

	
  On-site treatment or recovery:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Discharged to sewer:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Transported & disposed of off-site:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Incinerator:

  	
   

  	
   

  

 

5.5                    Indicate
the name of the person(s) responsible for maintaining copies of hazardous waste
manifests completed for off-site shipments of hazardous waste.

 

 

32

 

5.6                    Is
any treatment of processing of hazardous wastes currently conducted or proposed
to be conducted at the premises:

 

Yes o                                   No ý

 

If yes, please describe any existing or proposed treatment methods.

 

 

5.7                    Attach
copies of any hazardous waste permits or licenses issued to your company with
respect to its operations at the premises.

 

6.0                  WASTEWATER TREATMENT/DISCHARGE

 

6.1                    Do
you discharge wastewater to:

 

	
  Storm drain:

  	
   

  	
  Yes o

  	
   

  	
  No ý

  	
   

  	
  Sewer:

  	
   

  	
  Yes o

  	
   

  	
  No ý

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Surface water:

  	
   

  	
  Yes o

  	
   

  	
  No ý

  	
   

  	
  Industrial
  disch.:

  	
   

  	
  Yes o

  	
   

  	
  No ý

  

 

Is your wastewater treated before discharge?

 

Yes o                                   No o

 

If yes, describe the type of treatment conducted.

 

 

6.3                    Attach
copies of any wastewater discharge permits issued to your company with respect
to its operations at the premises.

 

7.0                  AIR DISCHARGES

 

7.1                    Do
you have any filtration systems or stacks that discharge into the air?

 

Yes o                                   No ý

 

7.2                    Do
you operate any of the following types of equipment or any other equipment
requiring an air emissions permit?

 

	
  o
  Spray booth

  	
   

  	
  o
  Incinerator

  
	
  o
  Dip tank

  	
   

  	
  o
  Other (please describe) 

  
	
  o
  Drying oven

  	
   

  	
  o
  Other equipment requiring air permits

  

 

7.3                    Are
air emissions from your operations monitored?

 

Yes o                                   No o

 

If yes, indicate the frequency of monitoring and a description of the
monitoring results.

 

 

 

7.4                    Attach
copies of any air emissions permits pertaining to your operations at the
premises.

 

8.0                  HAZARDOUS MATERIALS DISCLOSURES

 

8.1                    Does
your company handle hazardous materials in a quantity equal to or exceeding an
aggregate of 500 pounds, 55 gallons, or 200 cubic feet per month?

 

Yes o                                   No ý

 

8.2                    Has
your company prepared a hazardous materials management plan pursuant to any
applicable requirements of a local fire department or governmental agency?

 

Yes o                                   No ý

 

If yes, attach a copy of the business plan.

 

33

 

8.3                    Has
your company adopted any voluntary environmental, health or safety program?

 

Yes o                                   No ý

 

If yes, attach a copy of the program.

 

9.0                  ENFORCEMENT ACTIONS, COMPLAINTS

 

9.1                    Has
your company ever been subject to any agency enforcement actions,
administrative orders, or consent decrees?

 

Yes o                                   No ý

 

If yes, describe the actions and any continuing compliance obligations
imposed as a result of these actions.

 

 

 

9.2                    Has
your company ever received requests for information, notice or demand letters,
or any other inquiries regarding its operations?

 

Yes o                                   No ý

 

9.3                    Have
there ever been, or are there now pending, any lawsuits against the company
regarding any environmental or health and safety concerns?

 

Yes o                                   No ý

 

9.4                    Has
an environmental audit ever been conducted at your company’s current facility?

 

Yes o                                   No ý

 

If yes, identify who conducted the audit and when it was conducted: 

 

 

 

34

 

EXHIBIT G

 

 

35

 

FIRST
AMENDMENT TO STANDARD OFFICE LEASE

 

THIS FIRST AMENDMENT TO STANDARD OFFICE LEASE (“Amendment”) is made as
of October 30, 1998 between JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a
Massachusetts corporation (“Landlord”), and OBAGI MEDICAL PRODUCTS, INC., a
California corporation (“Tenant”), with reference to the following facts:

 

A.                      Landlord and
Tenant entered into that certain Standard Office Lease, dated February 27, 1998
(“Lease”), for premises known as Suite 120 (“Premises”), 310 Golden Shore (the “Building”),
Long Beach, California. The Building is a portion of the Office Building
Project known as Catalina Landing.

 

B.                        Landlord
and Tenant desire to amend the Lease as set forth below. Unless otherwise
indicated in this Amendment, the defined terms used herein have the same
definitions as the defined terms used in the Lease.

 

THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.                          Rentable
Area. Tenant hereby agrees to lease an additional 1,694 Rentable Square
Feet of space commonly known as Suite 100, located on the first (1st) floor of
the Building, and depicted on Exhibit “A” attached hereto and incorporated
herein by reference (“Additional Premises”). Except as otherwise provided
herein, as used in the Lease, “Premises” shall mean and include the original
Premises and the Additional Premises and all terms and conditions of the Lease
applicable to the original Premises shall also apply to the Additional
Premises, except that the following provisions of the Lease shall not apply to
the Additional Premises:  the last
sentence of paragraph 2.2.3, paragraphs 52 and 53, and Lease Exhibit “C”.

 

2.                          Base
Rent. Monthly Base Rent for the Additional Premises shall initially be
$2,795.10 ($1.65 per rentable square foot). On December 10, 2000, Base Rent for
the Additional Premises shall increase to $2,964.50 per month ($1.75 per
Rentable Square Foot). Base Rent payable for the Additional Premises shall be
in addition to the Base Rent payable under the Lease for the Premises.

 

3.                          Term.
The term of the Lease with respect to the Additional Premises shall begin on
the Additional Premises Commencement Date as determined in accordance with
paragraph 8 of the Work Letter Agreement attached hereto as Exhibit “B”
(“Work Letter Agreement”) and shall thereafter be concurrent with the term set
forth in the Lease for the Premises.

 

1

 

4.                          Operating Expenses. For the purposes of calculating Tenant’s
share of any increases in Operating Expenses and/or Applicable Taxes for the
Additional Premises, “Base Year” and “Tax Base Year” shall be as set forth in
paragraphs 1.10 and 1.11 of the Lease, and “Tenant’s Share of Operating
Expenses” and “Tenant’s Tax Share” for the Additional Premises shall be 0.61%,
based on 275,962 total Rentable Square Feet of the Office Building Project.
Tenant’s Share of any increases in Operating Expenses and/or Applicable Taxes
for the original Premises shall continue to be determined in accordance with
the Lease without amendment or modification by this Amendment.

 

5.                          Tenant Improvements. Landlord shall perform certain work of remodeling or renovation in the Additional
Premises. Such work shall be performed and paid for in accordance with the
provisions of the Work Letter Agreement and shall constitute part of the “Tenant
Improvements” under the Lease. The Work Letter Agreement sets forth Landlord’s
sole obligation to make improvements to the Additional Premises.

 

6.                          Terms and Conditions for the Additional Premises. From and after the date of delivery of the
Additional Premises to Tenant, Tenant shall hold and occupy the Premises and
Additional Premises upon all of the terms and conditions of the Lease as
amended by this Amendment and, in the event of any inconsistency between the
Lease and this Amendment, the provisions of this Amendment shall control as to
the Additional Premises.

 

7.                          Real Estate Commission. Landlord and Tenant represent and warrant to
each other that they have had no dealings with any real estate broker or agent
in connection with the negotiation of this Lease except Matlow-Kennedy
Commercial Real Estate Services, Robert L. Alperin (“Matlow”), and CB
Commercial Properties, Timothy D. Vaughan (“CB”). Landlord shall pay CB a
commission pursuant to a separate written agreement. Landlord shall not,
however, have any obligation to pay any Compensation (defined below) to Matlow
in connection with this Lease. Landlord and Tenant each agree to indemnify and
defend the other from any cost, expense, claim, loss, or liability for any
compensation, fee, commission or charge (collectively, “Compensation”) claimed
by any party other than CB claiming by, through or on behalf of it with respect
to this Lease.

 

8.                          Parking. In addition to the parking spaces which Tenant has the right to use
under the Lease, and subject to the provisions of the Lease, Tenant shall be
entitled to use a total of six (6) parking spaces (of which one (1) may be
reserved) in the open parking lot appurtenant to the Office Building Project at
a monthly rate of $55.00 per space for unreserved parking or $80.00 per space
for reserved parking, subject to increase from time to time in Landlord’s sole
discretion upon five (5) day’s written notice to Tenant.

 

2

 

9.                          Security Deposit. Concurrently with execution and delivery of
this Amendment by Tenant, Tenant shall deposit with Landlord the sum of $2,964.50
as a Security Deposit pursuant to Paragraph 5 of the Lease and to secure Tenant’s
faithful performance of Tenant’s obligations under the Lease and this
Amendment. Such amount shall be in addition to the Security Deposit set forth
in Paragraph 1.8 of the Lease.

 

10.                    No Other Amendments. There are no other amendments,
modifications, or addenda to the Lease other than this Amendment. The Lease
remains in full force, except as amended by this Amendment, and is hereby
ratified and reaffirmed.

 

11.                    Conflicts. If any conflict between this Amendment and the Lease should arise, the
terms of this Amendment shall control.

 

12.                    Defined Terms. All terms used in this Amendment with
initial capital letters and not defined herein shall have the meanings given to
such terms in the Lease.

 

13.                    Counterparts. This Amendment may be executed in multiple counterparts, each of which
shall be deemed an original, but all of which shall together constitute a
single instrument.

 

The parties have executed this Amendment as of
the date first written above.

 

 

	
  Landlord:

  	
  Tenant:

  
	
   

  	
   

  
	
  JOHN
  HANCOCK MUTUAL LIFE 

  	
  OBAGI
  MEDICAL PRODUCTS, INC.

  
	
  INSURANCE
  COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  John P. McDonough

  	
   

  	
  By:

  	
    /s/
  Ian Walker

  
	
   

  	
  John
  P. McDonough,

  	
  Name:

  	
  Ian Walker

  
	
   

  	
  Investment
  Officer

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Ian Walker

  
	
   

  	
  Name:

  	
  Ian Walker

  
	
   

  	
  Title:

  	
  Secretary

  
									

 

3

 

FLOOR PLAN OF THE ADDITIONAL PREMISES

 

 

 

WORK LETTER AGREEMENT

 

In connection with the First Amendment to Standard Office Lease to
which this Work Letter Agreement is attached (the “Amendment”), and in
consideration of the mutual covenants hereinafter contained, Landlord and
Tenant agree as follows:

 

1.                          COMPLETION
SCHEDULE. Within ten (10) days after its execution of the Amendment,
Landlord shall deliver to Tenant, for Tenant’s review and approval, a schedule
(the “Work Schedule”) setting forth a timetable for the planning and completion
of the installation of the Tenant Improvements (as defined in Paragraph 2
below) to be constructed in the Additional Premises based on a target
Additional Premises Commencement Date of January 1, 1998 (“Target Additional
Premises Commencement Date”). The Work Schedule shall set forth each of the
various items of work to be done by or approval to be given by Landlord and
Tenant in connection with the completion of the Tenant Improvements. The Work
Schedule shall be submitted to Tenant for its approval and, upon approval by
both Landlord and Tenant, Landlord and Tenant agree to comply with that Work
Schedule, and it shall become the basis for the parties’ performance under this
Agreement. If Tenant shall fail to deliver to Landlord Tenant’s written
disapproval of the Work Schedule, as it may be modified after discussions
between Landlord and Tenant, within seven (7) days after the date the Work
Schedule is first received by Tenant, Landlord’s space planner for the Office
Building Project shall determine the final Work Schedule in its sole, good
faith judgment within ten (10) days after request by either Landlord or Tenant,
which determination shall be final and binding on all parties.

 

2.                          TENANT IMPROVEMENTS. “Tenant Improvements” shall include
all work to be done and improvements installed in the Additional Premises by
Landlord pursuant to the Tenant Improvement Plans (defined in Paragraph 3
below), including, but not limited to, partitioning, doors, ceilings, floor
coverings, wall finishes (including paint and wallcovering), electrical
(including lighting, switching, outlets, etc.), plumbing, heating, ventilating
and air conditioning, fire protection, cabinets and other millwork. All Tenant
Improvements and components thereof shall at all times be and remain the sole
property of Landlord.

 

3.                          TENANT
IMPROVEMENT PLANS. Within five (5) business days after execution of the
Amendment, Tenant agrees to meet with Landlord’s architect or space planner for the purpose of promptly preparing
a space plan (“Space Plan”). The Space Plan will provide a partition layout
depicting the configuration of the Additional Premises. If Tenant fails to
deliver to Landlord Tenant’s written disapproval of the Space Plan within five
(5) business days after the date the Space Plan, or any revised Space Plan, is
first received by Tenant, such failure shall constitute

 

EXHIBIT
"B"

 

 

a Tenant Delay and
the Commencement Date shall be accelerated one day for each day of such Tenant
Delay. Within fifteen (15) business days after the Space Plan is approved by
Tenant pursuant to this Paragraph (which approval shall not be unreasonably
withheld), Landlord’s architect or space planner shall promptly prepare final
working drawings and specifications for the Tenant Improvements. Those working
drawings and specifications are referred to herein as the “Tenant Improvement
Plans” and shall be approved by Landlord and Tenant pursuant to Paragraph 5
below. The Tenant Improvement Plans must be consistent with Landlord’s standard
specifications (the “Standards”) for tenant improvements for the Building, as
the same may be changed from time to time by Landlord.

 

4.                          NON-STANDARD TENANT IMPROVEMENTS. Landlord shall permit Tenant to deviate from
the Standards for the Tenant Improvements provided that (a) the deviations
shall not be of a lesser quality than the Standards; (b) the total lighting for
the Additional Premises shall comply with the provisions of Title 24 of the
California Administrative Code; (c) the deviations conform to applicable
governmental regulations, and necessary governmental permits and approvals have
been secured; (d) the deviations do not require building service beyond the
level normally provided to other tenants in the Building and do not overload
the weight-bearing capacity of the floors; (e) the deviations will not delay
completion of the Tenant Improvements unless Tenant agrees that any such delay
will constitute a Tenant Delay; and (f) Landlord has determined in its sole
discretion that the deviations are of a nature and quality that are consistent
with the overall objectives of the Landlord for the Building.

 

5.                          FINAL PRICING AND DRAWING SCHEDULE. After preparation by Landlord’s architect or space planner, the
Tenant Improvement Plans shall be submitted to Tenant for approval, which shall
not be unreasonably withheld. If Tenant fails to deliver to Landlord Tenant’s
written disapproval of the Tenant Improvement Plans, or any revised Tenant
Improvement Plans, within five (5) days after the date the Tenant Improvement
Plans, or any revised Tenant Improvement Plans, are received by Tenant, such
failure shall constitute a Tenant Delay and the Commencement Date shall be
accelerated one day for each day of such Tenant Delay. If the Tenant
Improvement Plans, or any revised Tenant Improvement Plans, are timely
disapproved by Tenant pursuant to this Paragraph, Tenant shall provide to
Landlord a written explanation of the reason(s) for such disapproval
concurrently with that disapproval, and the Tenant Improvement Plans shall be
revised and resubmitted to Tenant for approval. If Tenant fails to provide a
written explanation as and when required by this Paragraph, such failure shall
constitute a Tenant Delay and the Commencement Date shall be accelerated one
day for each day of such Tenant Delay. Within five (5) days after the Tenant
Improvement Plans are so approved by Tenant, the Tenant Improvement Plans shall
be submitted to the appropriate

 

EXHIBIT
"B"

 

 

governmental body
by Landlord for plan checking and the issuance of a building permit. Landlord
reserves the right to disapprove any proposed Tenant Improvements which
Landlord reasonably believes will adversely affect the Building or any Building
systems. Landlord, with Tenant’s cooperation, shall cause to be made to the
Tenant Improvement Plans any changes necessary to obtain the building permit
and to comply with the requirements of the Police and Fire Departments of the
City of Long Beach. Concurrently with the plan checking, Landlord shall have
prepared a final pricing for Tenant’s approval in accordance with the Work
Schedule, taking into account any modifications which may be required to
reflect changes in the Tenant Improvement Plans required by the City of Long
Beach or other agencies. Landlord shall have the option to increase or decrease
the final pricing, before or after Tenant approves the final pricing, to
reflect changes in the cost of performing the Tenant Improvements caused by
plan modifications required by the City of Long Beach or other agencies. After
final approval of the Tenant Improvement Plans no further changes may be made
thereto without the prior written approval from both Landlord and Tenant, and
then only after agreement by Tenant to pay any excess costs resulting from the
design or construction of such changes. Tenant acknowledges that any such
changes shall be subject to the terms of Paragraph 8 below.

 

6.                          CONSTRUCTION
OF TENANT IMPROVEMENTS. After a building permit for the Tenant Improvements
has been issued, Landlord shall cause its contractor to begin installation of
the Tenant Improvements in accordance with the Tenant Improvement Plans.
Landlord shall supervise the completion of such work and shall use its best
efforts to secure substantial completion of the work in accordance with the
Work Schedule. The cost of such work shall be paid as provided in Paragraph 7
below. Landlord shall not be liable for any direct or indirect damages as a
result of delays in construction beyond Landlord’s reasonable control,
including, but not limited to, acts of God, inability to secure governmental
approvals or permits, governmental restrictions, strikes, lack of availability
of materials or labor, or delays by Tenant (or its architect or anyone
performing services on behalf of Tenant).

 

7.                          PAYMENT
FOR THE TENANT IMPROVEMENTS.

 

(a)                      Landlord
grants to Tenant a “Tenant Improvement Allowance” of Nine and 00/100 Dollars
($9.00) per Rentable Square Foot of the Additional Premises. This Allowance
shall be automatically adjusted and finally determined upon the Rentable Square
Footage of the Additional Premises being finally determined by the Space
Accountant. The Tenant Improvement Allowance shall only be used for:

 

(i)                         Payment
of the cost of preparing the Space Plan and the Tenant Improvement Plans,
including mechanical, electrical, plumbing and structural drawings, and of all

 

EXHIBIT
"B"

 

 

other aspects
necessary to complete the Tenant Improvement Plans. The Tenant Improvement
Allowance will not be used for the payment of extraordinary design work not
included within the scope of Landlord’s Standards or for payments to any other
consultants, designers or architects other than Landlord’s architect, space
planner or Space Accountant, all of which other costs shall be paid for by
Tenant.

 

(ii)                      Payment
of plan check, permit and license fees relating to construction of the Tenant
Improvements.

 

(iii)                   Construction
of the Tenant Improvements, including, without limitation, the following:

 

(aa)                 Installation
within the Additional Premises of all partitioning, doors, floor coverings,
ceilings, wallcoverings and painting, millwork and similar items;

 

(bb)               All
electrical wiring, lighting fixtures, outlets and switches, and other
electrical work to be installed within the Additional Premises, excluding
however computer cable and wiring;

 

(cc)                 The
furnishing and installation of all duct work, terminal boxes, diffusers and
accessories required for the completion of the heating, ventilation and air
conditioning systems within the Additional Premises, including the cost of
meter and key control for after-hour air conditioning;

 

(dd)               Any
additional tenant requirements including, but not limited to, air quality
control, special heating, ventilation and air conditioning, noise or vibration
control or other special systems;

 

(ee)                 All
fire and life safety control systems such as fire walls, sprinklers, fire
alarms, including piping and wiring, installed within the Additional Premises;

 

(ff)                     All
plumbing, including fixtures and pipes, to be installed within the Additional
Premises;

 

(gg)               Testing
and inspection costs;

 

(hh)               Demolition
and/or removal of any existing improvements contained in the Additional
Premises which must be demolished in connection with construction of the Tenant
Improvements; and

 

(ii)                       Contractors’
fees, including, but not limited to, any fees based on general conditions.

 

EXHIBIT
"B"

 

 

(iv)                  Payment
to Landlord of a space improvement fee (“Improvement Fee”) to, among other
things, pay Landlord’s space improvement costs for the Additional Premises,
including without limitation costs for the following: plan check and permits;
utilities, including electrical and water consumption; elevator usage; and a
tenant supervision fee. The Improvement Fee shall be five percent (5%) of the
Tenant Improvement Allowance.

 

(v)                     All other costs to be expended by Landlord in
the construction of the Tenant Improvements, including those costs incurred by Landlord for construction of
elements of the Tenant Improvements in the Additional Premises, which
construction was performed by Landlord prior to the execution of the Amendment
and which construction is for the benefit of tenants and is customarily
performed by Landlord prior to the execution of leases for space in the
Building for reasons of economics (examples of such construction would include,
but not be limited to, the extension of mechanical, HVAC and electrical
distribution systems outside of the core of the Building, wall construction,
column enclosures and painting outside of the core of the Building, ceiling
hanger wires and window treatment).

 

(b)                     If the actual
costs of purchasing and installing the Tenant Improvements exceed the Tenant
Improvement Allowance, or if any of the Tenant Improvements are not to be paid
out of the Tenant Improvement Allowance as provided in Paragraph 7(a) above,
the excess shall be paid by Tenant to Landlord prior to the commencement of
construction of the Tenant Improvements.

 

(c)                      If, after the Tenant Improvement Plans have
been prepared and a price therefor has been established by Landlord, Tenant
shall require any changes or substitutions to the Tenant Improvement Plans, any
additional costs related thereto shall be paid by Tenant to Landlord prior to
the commencement of construction of the Tenant Improvements. Landlord shall
have the right to decline Tenant’s request for a change to the Tenant
Improvement Plans if such changes are inconsistent with the provisions of
Paragraphs 3 or 4 above, or if the change would, in Landlord’s subjective good
faith opinion, unreasonably delay construction of the Tenant Improvements.

 

(d)                     If increases in the cost of the Tenant
Improvements as set: forth in Landlord’s final pricing are due to
the requirements of any governmental agency, Tenant shall pay Landlord the
amount of such increase within five (5) days of Landlord’s written notice;
provided, however, that Landlord shall first apply toward such increase any
remaining balance in the Tenant Improvement Allowance.

 

(e)                      Any unused portion of the Tenant Improvement
Allowance upon completion of the Tenant Improvements shall not be

 

EXHIBIT
"B"

 

 

refunded to Tenant
or available to Tenant as a credit against any obligations of Tenant under the
Lease.

 

8.                          COMPLETION
AND RENTAL COMMENCEMENT DATE. The Term of the Lease applicable to the
Additional Premises, and Tenant’s obligation for the payment of rent for the
Additional Premises under the Amendment, shall commence on the “Additional
Premises Commencement Date”, which shall be the earlier of: (i) the date on
which the Tenant first conducts any business from all or part of the Additional
Premises; or (ii) the date on which the Tenant Improvements have been
substantially completed as determined by a certificate from Landlord’s
architect (the earlier of which dates shall be deemed to be the date on which
Landlord has tendered possession of the Additional Premises to Tenant under the
Amendment); provided that, if there shall be a delay in substantial completion
of the Tenant Improvements as a result of:

 

(a)                      Tenant’s
failure to approve any item or perform any other obligation in accordance with
and by the date specified in the Work Schedule;

 

(b)                     Tenant’s
request for materials, finishes or installations other than those readily
available, whether or not approved by Landlord or reflected in the Tenant
Improvement Plans;

 

(c)                      Tenant’s
changes in the Tenant Improvement Plans after Tenant approves the Tenant
Improvement Plans;

 

(d)                     Tenant’s
request to deviate from the Standards for the Building; or

 

(e)                      Tenant’s
failure to timely make any payment due from Tenant under this Work Letter
Agreement or the Lease;

 

then, as provided
for in the Lease, the commencement of the Term shall be accelerated by the
number of days of such delay. The Tenant Improvements shall be deemed
substantially complete notwithstanding the fact that minor items of the Tenant
Improvements (such as construction, mechanical adjustments, or decorations)
which do not materially interfere with Tenant’s use of the Additional Premises
remain to be performed (items normally referred to as “punch list” items),
which items Landlord shall promptly complete or correct.

 

EXHIBIT
"B"

 

 

CATALINA LANDING

FIRST AMENDMENT TO AMENDED AND RESTATED OFFICE LEASE

 

This FIRST AMENDMENT TO AMENDED AND RESTATED OFFICE LEASE (this “Amendment”),
dated as of April 20, 2005, is by and between AC-CATALINA LANDING LLC, a
Delaware limited liability company (“Landlord”), and OMP, INC., a Delaware
corporation, as successor-in-interest to Obagi Medical Products, Inc. (“Tenant”).

 

RECITALS

 

A.                      Landlord and
Tenant previously entered into that certain Amended and Restated Office Lease
dated May 9th, 2003, (the “Lease”), whereby Landlord leases to
Tenant 12,023 Rentable Square Feet of space commonly known as 310 Golden Shore,
Suite 120, Long Beach, California (the “Original Premises”).

 

B.                        Tenant now
desires to expand the Premises by taking an additional 2,698 Rentable Square
Feet of space in the Office Building Project (as defined in the Original Lease),
and Landlord agrees to lease such additional space to Tenant, subject to the
terms and conditions contained herein. Landlord and Tenant hereby express their
mutual desire and Intent to expand the Original Premises, and to otherwise
amend the Lease, as provided below.

 

AGREEMENT

 

IN WITNESS HEREOF, the parties hereto hereby agree as follows:

 

1.                          CAPITALIZED
TERMS. Unless otherwise expressly defined in this Amendment, initially
capitalized terms used in this Amendment shall have the meanings assigned in
the Original Lease.

 

2.                          EXPANSION
SPACE. Upon and following the Expansion Date (as defined in paragraph 5 below),
the “Premises” leased by Tenant under the Lease shall be deemed to Include the
1,393 additional Rentable Square Feet of space located at 330 Golden Shore,
Suite 450, Long Beach, California (“Suite 450”), and 1,305 additional Rentable
Square Feet of space located at 310 Golden Shore, Suite 100, Long Beach,
California (“Suite 100”), each, and as more particularly shown on Exhibit “A”
attached hereto. Suite 450 and Suite 100 shall herein be referred to
collectively as the “Expansion Space”. Tenant’s use and occupancy of the
Expansion Space shall be subject to all of the terms and conditions contained
in the Lease applicable to the Original Premises, provided that Tenant shall be
allowed to use Suite 450 as a conference room and employee training center.
Commencing upon the Expansion Date, any and all references in the Lease to the “Premises”
shall include both the Original Premises and the Expansion Space. After giving
effect to the Expansion Space, the entire Premises leased from Landlord by
Tenant shall be deemed to contain 14,721 Rentable Square Feet of space, as more
particularly shown on Exhibit “A” attached hereto.

 

3.                          TENANT’S
SHARE. After giving effect to the Expansion Space, Tenant’s Share under the
Lease shall be increased to 1.59%.

 

4.                          MONTHLY
BASE RENT. Upon and following the Expansion Date, monthly Base Rent to be paid
by Tenant for the entire Premises shall be payable in accordance with the
following schedule:

 

	
  Effective Date

  	
   

  	
  Base Rent

  	
   

  
	
  May 1, 2005 to June 30,
  2005

  	
   

  	
  $

  	
  21,671.00

  	
   per month

  	
   

  
	
  July 1, 2005 to July 31,
  2005

  	
   

  	
  $

  	
  26,689.00

  	
   per month

  	
   

  
	
  August 1, 2005 to July 31,
  2006

  	
   

  	
  $

  	
  27,381.00

  	
   per month

  	
   

  
	
  August 1, 2006 to July 31,
  2007

  	
   

  	
  $

  	
  28,117.00

  	
   per month

  	
   

  
	
  August 1, 2007 to July 31,
  2008

  	
   

  	
  $

  	
  29,000.00

  	
   per month

  	
   

  

 

5.                          EXPANSION
DATE. The “Expansion Date” shall mean the date on which Landlord has “Substantially
Completed” construction of the “Tenant Improvements” (each as defined below) to
be contained within Suite 450. For purposes hereof, “Substantial Completion”
(and any derivation thereof) means the Tenant Improvements have been
sufficiently completed to enable Tenant to use Suite 450 of the Premises, with
the exception of any Punch List Items (as defined below) and Tenant’s
controlled Improvements, If any (e.g., Tenant’s fixtures, telephones, data
lines, computers, furniture, etc.) to be installed by Tenant and/or under the
supervision of Landlord’s contractor. For

 

1

 

purposes hereof, “Substantial
Completion” (and any derivation thereof) means that (1) Landlord has
substantially completed the construction of the Tenant Improvements. “Punch
List Items” means uncompleted or improperly completed items of the Tenant
improvements which, in the aggregate, do not materially interfere with Tenant’s
occupancy of the Premises for the Permitted Use, as reasonable determined by
Landlord and Tenant. Subject to “Tenant Delays” and “Force Majeure Events”
(each as defined below). Landlord and Tenant anticipate that the Expansion Date
will fall on or about May 1, 2005.

 

Any delay(s) in the occurrence of Substantial Completion which result
directly, indirectly, partially, or totally from any acts, fault or omissions
of Tenant, or any of its agents, employees, and/or contractors, shall
constitute a “Tenant Delay”. If there shall be any Tenant Delay(s), then,
notwithstanding anything to the contrary set forth in the Lease, and regardless
of the actual date of the Substantial Completion, the Expansion Date shall be
the date on which Substantial Completion would have occurred if no Tenant
Delay(s) had occurred. If Tenant Delays exist, as reasonably determined by
Landlord, then upon the Substantial Completion of the Tenant Improvements,
Landlord shall notify Tenant of (i) the aggregate period of the Tenant Delays
and (ii) the Expansion Date as determined pursuant hereto. Tenant shall, within
five (5) days following receipt of such notice, perform or cause to be
performed all obligations under the Lease (including, without limitation, the
payment of Rent) that have accrued from the Expansion Date, as determined
pursuant hereto, to the data on which Tenant received Landlord’s notice, and
the Expansion Date shall, for all purposes under this Lease, be the Expansion
Date as determined pursuant hereto. Nothing contained herein shall be deemed to
relieve Landlord of its obligation to use commercially reasonable efforts to
complete the Tenant Improvements in a timely manner, subject to Tenant Delays
and delays due to the occurrence of any Force Majeure Event.

 

The time for performance by either party of any obligation under this
Lease (other than the payment of rent or other monetary obligations) shall be
extended for the period of delay resulting from fire, earthquake, explosion,
flood, the elements, acts of God or the public enemy, strike, other labor
trouble, interference of governmental authorities or agents, or shortages of
fuel, supplies or labor resulting therefrom or any other cause, whether similar
or dissimilar to the above, beyond the reasonable control of the party
obligated for such performance, financial inability excepted (collectively, any
“Force Majeure Event”).

 

6.                          TENANT
IMPROVEMENTS. Attached hereto as Exhibit “B” is a list of the work that
Landlord or its agents shall perform, as well as space plans (the “Landlord’s
Plans”) for certain Improvements to Suite 450 (the “Tenant Improvements”),
which Landlord’s Plans are hereby approved by Landlord and Tenant. Landlord
shall commence to construct, or cause to be constructed, the Tenant
Improvements in substantial conformance with the Landlord’s Plans.

 

7.                          BASE
YEAR. As to the Expansion Space only, the Base Year shall be the calendar year
of 2005; the parties acknowledge and agree that 2003 shall remain the Base Year
for the remainder of the Premises.

 

8.                          TENANT’S
WORK. The parties acknowledge and agree that Tenant may, In accordance with
this Paragraph 8 and this Lease, complete certain improvements (“Tenant’s
Initial Improvement Work”) within the Expansion Space. Except as may be
otherwise provided in the Lease, Tenant’s Initial Improvement Work shall become
the property of Landlord upon the expiration or earlier termination of the
Lease and shall remain on the Premises at all times during the term of the
Lease.

 

(a)                     Plans and
Specifications.

 

(1)                              Space
Plans. Attached hereto, as Exhibit “C”, are space plans (the “Space Plans”)
for Tenant’s Initial Improvement Work prepared by Tenant’s architect/designer (“Tenant’s
Designer”). Landlord and Tenant hereby approve the Space Plans.

 

(2)                              Cost
of Design and Engineering. The cost of all architectural and design work,
as well as the cost of all engineering and all permits, licenses and fees
relating to the development of Tenant’s Initial Improvement Work, shall be paid
by Tenant.

 

(3)                              Landlord’s
Review of Plans. Tenant agrees and understands that Landlord shall not be
the guarantor of, or responsible for, the correctness or accuracy of the Space
Plans or compliance of the Space Plans with any applicable laws.

 

(b)                    Permits.
Tenant shall be solely responsible for obtaining all governmental approvals in
the full extent necessary for the issuance of a building permit for Tenant’s
Initial Improvement Work based on the Space Plans. Thereafter, Tenant shall
also be solely responsible for obtaining all other necessary approvals and
permits, Including temporary and permanent certificates of occupancy from all
governmental agencies having authority over the construction and installation
of Tenant’s Initial Improvement Work, and shall undertake all steps necessary
to insure that the construction of Tenant’s Initial Improvement Work is
accomplished in strict compliance with the Space

 

2

 

Plans, all applicable laws and the requirements and standards of any
insurance underwriting board, inspection bureau or insurance carrier insuring
the Premises pursuant to this Lease.

 

(c)                     Construction. Tenant shall employ a contractor of Tenant’s
choosing, subject to Landlord’s reasonable approval (the “Contractor”) to
promptly and diligently construct Tenant’s Initial Improvement Work in
conformance with the approved Space Plans. The performance of Tenant’s Initial
Improvement Work by the Contractor shall be subject to the following
conditions:

 

(1)                      Landlord or Landlord’s agents shall have the
right at all times to inspect the construction of Tenant’s Initial Improvement
Work by Tenant during the progress thereof. If Landlord shall give notice of
faulty construction or any other deviation from the Space Plans, Tenant shall
cause the Contractor to make corrections promptly. However, neither the
inspections nor the right to make such inspections shall operate as a waiver of
any rights of Landlord to require good and workmanlike construction of Tenant’s
Initial Improvement Work in accordance with the Space Plans and applicable
laws.

 

(2)                      Tenant hereby indemnifies and holds Landlord
harmless with respect to any and all costs, losses, damages, injuries and liabilities
related in any way to any act or omission of Tenant or Tenant’s contractor(s),
or anyone directly or indirectly employed by any of them, or in connection with
Tenant’s non- payment of any amount arising out of Tenant’s Initial Improvement
Work. Such indemnity by Tenant, as set forth above, shall also apply with
respect to any and all costs, losses, damages, injuries and liabilities related
in any way to Landlord’s performance of any ministerial acts reasonably
necessary (i) to permit Tenant to complete Tenant’s Initial Improvement Work,
and (ii) to enable Tenant to obtain any building permit or certificate of
occupancy for the Expansion Space. Tenant shall ensure lien-free completion of
Tenant’s Initial Improvement Work, and Tenant shall comply with all provisions
of the Lease regarding liens.

 

(3)                      All Tenant’s Initial Improvement Work
performed shall comply with the Americans with Disabilities Act – 1990, as the
same may be amended from time to time. The Contractor and the subcontractors
utilized by the Contractor shall guarantee to Tenant and for the benefit of
Landlord that the portion of Tenant’s Initial Improvement Work for which it is
responsible shall be free from any defects in workmanship and materials for a
period of not less than one (1) year, and free from latent defects for a period
of not less then ten (10) years, each time period being measured from the date
of completion of such Tenant’s Initial Improvement Work. The Contractor and the
subcontractors utilized by the Contractor shall be responsible for the
replacement or repair, without additional charge, of all work done or furnished
in accordance with its contract that shall become defective within one (1) year
after the later to occur of (i) completion of the work performed by the Contractor
or subcontractors and (ii) the first day of the Original Term. The correction
of such work shall include, without additional charge, all additional expenses
and damages incurred in connection with such removal or replacement of all or
any part of Tenant’s Initial Improvement Work, and/or the Building and/or
common areas that may be damaged or disturbed thereby. All such warranties or
guarantees as to materials or workmanship of or with respect to Tenant’s
Initial Improvement Work shall be contained in the contract or subcontract and
shall be written such that such guarantees or warranties shall inure to the
benefit of both Landlord and Tenant, as their respective interests may appear,
and can be directly enforced by either. Tenant covenants to give to Landlord
any assignment or other assurances which may be necessary to affect such right
of direct enforcement.

 

(4)                      Landlord shall have the right at all times to
enter the Expansion Space to post notices of non-responsibility.

 

(d)                    Insurance Requirements.

 

(1)                      General Coverages. The Contractor and any of its subcontractors
shall carry workers’ compensation insurance covering all of their respective
employees, and shall also carry public liability insurance, including property
damage, all with limits, in form and with companies as are required to be
carried by Tenant as set forth in the Lease.

 

(2)                      Special Coverages. Tenant shall carry “Builder’s All Risk”
Insurance in an amount approved by Landlord covering the construction of Tenant’s
Initial Improvement Work, and such other insurance as Landlord may require, it
being understood and agreed that Tenant’s Initial Improvement Work shall be
insured by Tenant pursuant to the Lease immediately upon completion thereof.
Such insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that the Contractor shall carry excess liability
and Products and Completed Operation Coverage insurance, each in amounts not
less than $500,000 per incident, $1,000,000 in aggregate, and in form and with
companies as are required to be carried by Tenant as set forth in the Lease.

 

(3)                      General Terms. Certificates for all insurance carried
pursuant to this Paragraph 8 must comply with the requirements of this Lease
and shall be delivered to Landlord before the commencement of construction of
Tenant’s Initial Improvement Work and before the Contractor’s equipment is
moved onto the

 

3

 

Expansion Space.
In the event that Tenant’s Initial Improvement Work are damaged by any cause
during the course of the construction thereof, Tenant shall immediately repair
the same at Tenant’s sole cost and expense. The Contractor shall maintain all
of the foregoing insurance coverage in force until Tenant’s Initial Improvement
Work are fully completed and accepted by Landlord, except for any Products and
Completed Operation Coverage insurance required by Landlord, which is to be
maintained for ten (10) years following completion of the work and acceptance
by Landlord and Tenant. All policies carried under this Paragraph 8 shall
insure Landlord and Tenant, as their interests may appear, as well as the
Contractor. All insurance, except Workers’ Compensation, maintained by the
Contractor shall preclude subrogation claims by the Insurer against anyone
insured thereunder. Such insurance shall provide that it is primary insurance
as respects the owner and that any other insurance maintained by owner is
excess and noncontributing with the Insurance required hereunder.

 

(a)                     Delivery
of Warranties. At the conclusion of construction, Tenant shall deliver to
Landlord a copy of all warranties, guaranties, and operating manuals and
information relating to the improvements, equipment, and systems in the
Premises.

 

9.                          SECURITY
DEPOSIT. Tenant has on deposit with Landlord a Security Deposit in the amount
of $17,433.35. Upon execution of this Amendment, and in addition to all other
amounts due hereunder. Tenant will pay Landlord an additional deposit of
$5,316.00, thereby increases the total Security Deposit to $22,749.35.

 

10.                    PARKING. Commencing upon the Expansion Date,
Landlord shall offer Tenant the ability to secure three (3) additional
non-reserved parking stalls within the parking structure serving the Premises,
at the current rate then being charged for such stalls.

 

11.                    INSURANCE. Prior to the Expansion Date, Tenant
shall deliver to Landlord a Certificate of Insurance showing evidence of
current insurance coverage as required under the Lease for the entire Premises.
The Abbey Management Company LLC, Abbey-Properties LLC, and AC-CATALINA LANDING
LLC must be named as additional insureds. Tenant’s failure to satisfy the
foregoing requirement shall be deemed a material default under the Lease.

 

12.                    ENTIRE AGREEMENT. This Amendment represents
the entire agreement among the parties with respect to the matters contained in
this Amendment and supersedes any prior negotiations, representations, or
agreements, whether written or oral, with respect to the Amendment. Nothing in
this Amendment shall be deemed to waive or modify any of the provisions of the
Lease, except as expressly stated herein. This Amendment may be amended,
modified, or altered only by written instrument, signed by Landlord and Tenant.

 

13.                    EFFECT OF AMENDMENT; INCONSISTENCIES. Except
as modified or amended herein, each and all of the terms, covenants and
conditions of the Lease are hereby acknowledged and confirmed and remain in
full force and effect. If there are any inconsistencies between this Amendment
and the Lease with respect to the provisions of this Amendment, the provisions
of the Amendment shall prevail.

 

14.                    LEGAL ADVICE; NEUTRAL INTERPRETATION;
HEADINGS. Each party has received independent legal advice from their attorneys
with respect to the advisability of executing this Amendment and the meaning of
the provisions hereof. The provisions of this Amendment shall be construed as
to their fair meaning, and not for or against any party based upon any attribution
to such party as the source of the language in question. Headings used in this
Amendment are for convenience of reference only and shall not be used in
construing this Amendment.

 

15.                    AUTHORITY TO EXECUTE AGREEMENT. Each
Individual executing this Amendment on behalf of Tenant represents that he or
she is duly authorized to execute and deliver this Amendment on behalf of the
corporation and agrees to deliver evidence of his or her authority if requested
by Landlord.

 

16.                    CHOICE OF LAW. This Amendment shall be
governed by and construed in accordance with the domestic laws of the State of
California applicable to agreements executed and to be fully performed therein
without giving effect to any choice of law provision or rules (whether of the
State of California or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of California. The parties
hereto agree that any suit, action or proceeding arising out of or relating to
this Amendment shall be instituted and prosecuted in the United States District
Court for the district in which the Premises are located, or in any court of
competent jurisdiction of the State of California located in the county in
which the Premises are located, and the parties hereto irrevocably submit to
the jurisdiction of said courts and waive any rights to object to or challenge
the appropriateness of said forums. Service of process shall be in accordance
with the laws of the State of California.

 

17.                    SEVERABILITY. If any term, covenant, condition
or provision of this Amendment, or the application thereof to any person or
circumstance, shall to any extent be held by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the terms, covenants, conditions
or provisions of this Amendment, or the application

 

4

 

thereof to any
person or circumstance, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby.

 

18.                    SUBMISSION
OF AGREEMENT. The submission of this Amendment to Tenant, Tenant’s agent or
attorney for review or signature does not constitute an offer to Tenant. This
Amendment shall have no binding force or effect until its execution and
delivery by both Landlord and Tenant.

 

19.                    COUNTERPARTS.
This Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument. The signature page of any counterpart
may be detached therefrom without impairing the legal effect of the
signature(s) thereon provided such signature page is attached to any other
counterpart identical thereto except having additional signature pages executed
by other parties to this Amendment attached thereto.

 

IN WITNESS HEREOF,
the parties have executed this Amendment as of the date first written above.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  AC-CATALINA LANDING LLC, a 

  	
   

  	
  OMP, INC., a Delaware corporation

  
	
  Delaware limited liability company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ Steve Carlson

  	
   

  
	
   

  	
  By: 

  	
  /s/ Donald G. Abbey

  	
   

  	
   

  	
  Name:

  	
  Steve Carlson

  	
   

  
	
   

  	
   

  	
  Donald
  G. Abbey

  	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
	
   

  	
  Its: 

  	
  President

  	
   

  	
   

  	
   

  
	
  or

  	
   

  	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  David
  J. Gullen

  	
   

  	
  Title: 

  	
   

  	
   

  
	
   

  	
  Its: 

  	
  Vice
  President

  	
   

  	
   

  	
   

  	
   

  
									

 

5

 

EXHIBIT “A”

 

The Expansion Space &
The Premises

 

[see
attached]

 

6

 

EXHIBIT “B”

 

Landlord’s Plans

 

[see
attached]

 

7

 

EXHIBIT “C”

 

The Space Plans

 

[see
attached]

 

8

 

CATALINA
LANDING 

SECOND AMENDMENT TO AMENDED AND RESTATED OFFICE LEASE

 

This SECOND AMENDMENT TO AMENDED AND RESTATED OFFICE
LEASE (this “Amendment”), dated as of February 8, 2006, is by and between AC-CATALINA LANDING  LLC, a Delaware limited liability company
(“Landlord”), and OMP, INC., a
Delaware corporation, as successor-in-interest to Obagi Medical Products, Inc.
(“Tenant”).

 

RECITALS

 

A.                                                           Landlord
and Tenant previously entered into that certain Amended and Restated Office
Lease dated May 9, 2003, as amended by that certain First Amendment to Amended
and Restated Office Lease dated as of April 20, 2005 (collectively, the
“Lease”), whereby Landlord leases to Tenant 14,721 rentable square feet of
space commonly known as 310 Golden Shore, Suites 120 & 100, Long Beach,
California and 330 Golden Shore, Suite 450, Long Beach, California
(collectively the “Current Premises”).

 

B.                                                             Tenant
now desires to expand the Premises by taking an additional 2,599 rentable
square feet of space in the Office Building Project (as defined in the Lease),
and Landlord agrees to lease such additional space to Tenant, subject to the
terms and conditions contained herein. Landlord and Tenant hereby express their
mutual desire and intent to expand the Current Premises, and to otherwise amend
the Lease, as provided below.

 

AGREEMENT

 

IN WITNESS HEREOF, the parties hereto hereby agree as
follows:

 

1.                                       CAPITALIZED
TERMS. Unless otherwise expressly defined in this Amendment, initially
capitalized terms used in this Amendment shall have the meanings assigned in
the Original Lease.

 

2.                                       SUITE
220. Upon and following February 15, 2006 (the “Expansion Date”), the
“Premises” leased by Tenant under the Lease shall be deemed to include the
2.599 additional Rentable Square Feet of space located at 310 Golden Shore,
Suite 220, Long Beach, California (“Suite 220”), as more particularly shown on
Exhibit “A” attached hereto. Tenant’s use and occupancy of Suite 220 shall be
subject to all of the terms and conditions contained in the Lease applicable to
the Current Premises. Commencing upon the Expansion Date, any and all
references in the Lease to the “Premises” shall include both the Current
Premises and Suite 220. After giving effect to the expansion into Suite 220,
the entire Premises leased from Landlord by Tenant shall be deemed to contain
17,320 rentable square feet of space, as more particularly shown on Exhibit “A”
attached hereto.

 

3.                                       TENANT’S
SHARE. After giving effect to the expansion into Suite 220, Tenant’s Share
under the Lease shall be increased to 6.27%.

 

4.                                       MONTHLY
BASE RENT. Upon and following the Expansion Date, monthly Base Rent to be paid
by Tenant for the entire Premises shall be payable in accordance with the
following schedule:

 

	
  Effective Date

  	
   

  	
  Base Rent

  	
   

  
	
  February 15, 2006 to
  April 30, 2006

  	
   

  	
  $

  	
  27,381.00 per month

  	
   

  
	
  May 1, 2006 to July 31,
  2006

  	
   

  	
  $

  	
  32,215.00 per month

  	
   

  
	
  August 1, 2006 to July
  31, 2007

  	
   

  	
  $

  	
  33,081.00 per month

  	
   

  
	
  August 1, 2007 to July
  31, 2008

  	
   

  	
  $

  	
  34,120.00 per month

  	
   

  

 

5.                                       BASE
YEAR. As to Suite 220 only, the Base Year shall be the calendar year of 2006;
the parties acknowledge and agree that the Base Year for Suite 120 shall remain
2003, and 2005 shall remain the Base Year for Suites 450 and 100.

 

6.                                       TENANT’S
INITIAL IMPROVEMENT WORK. The parties acknowledge and agree that Tenant may, in
accordance with this Paragraph 6 and this Lease, complete certain improvements
(“Tenant’s Initial Improvement Work”) within Suite 220. Except as may be
otherwise provided in the Lease, Tenant’s Initial Improvement Work shall become
the property of Landlord upon the expiration or earlier termination of the
Lease and shall remain on the Premises at all times during the term of the
Lease. Landlord shall have no obligation to perform any tenant

 

1

 

improvement work in connection with any part of the Premises (including
Suite 220), nor to contribute any amount or reimbursement of any costs incurred
by Tenant in connection with Tenant’s Initial Improvement Work.

 

(a) Plans and
Specifications.

 

(1)                      Space
Plans. Once they have been prepared by Tenant’s architect/designer, the
parties shall attach to this Amendment as Exhibit “B”, the space plans (the
“Space Plans”) for Tenant’s Initial Improvement Work.

 

(2)                      Cost of
Design and Engineering. The cost of all architectural and design work, as
well as the cost of all engineering and all permits, licenses and fees relating
to the development of Tenant’s Initial Improvement Work, shall be paid by
Tenant.

 

(3)                      Landlord’s
Review of Plans. Tenant agrees and understands that Landlord shall not be
the guarantor of, or responsible for, the correctness or accuracy of the Space
Plans or compliance of the Space Plans with any applicable laws.

 

(b)                    Permits.
Tenant shall be solely responsible for obtaining all governmental approvals to
the full extent necessary for the issuance of a building permit for Tenant’s
Initial Improvement Work based on the Space Plans. Thereafter, Tenant shall
also be solely responsible for obtaining all other necessary approvals and
permits, including temporary and permanent certificates of occupancy from all
governmental agencies having authority over the construction and installation
of Tenant’s Initial Improvement Work, and shall undertake all steps necessary
to insure that the construction of Tenant’s Initial Improvement Work is
accomplished in strict compliance with the Space Plans, all applicable laws and
the requirements and standards of any insurance underwriting board, inspection
bureau or insurance carrier insuring the Premises pursuant to this Lease.

 

(c)                     Construction.
Tenant shall employ a contractor of Tenant’s choosing, subject to Landlord’s
reasonable approval (the “Contractor”) to promptly and diligently construct
Tenant’s Initial Improvement Work in conformance with the approved Space Plans.
The performance of Tenant’s Initial Improvement Work by the Contractor shall be
subject to the following conditions:

 

(1)                      Landlord or
Landlord’s agents shall have the right at all times to inspect the construction
of Tenant’s Initial Improvement Work by Tenant during the progress thereof. If
Landlord shall give notice of faulty construction or any other deviation from
the Space Plans, Tenant shall cause the Contractor to make corrections
promptly. However, neither the Inspections nor the right to make such
inspections shall operate as a waiver of any rights of Landlord to require good
and workmanlike construction of Tenant’s Initial Improvement Work in accordance
with the Space Plans and applicable laws.

 

(2)                      Tenant
hereby indemnifies and holds Landlord harmless with respect to any and all
costs, losses, damages, injuries and liabilities related in any way to any act
or omission of Tenant or Tenant’s contractor(s), or anyone directly or
indirectly employed by any of them, or in connection with Tenant’s non- payment
of any amount arising out of Tenant’s Initial Improvement Work. Such indemnity
by Tenant, as set forth above, shall also apply with respect to any and all
costs, losses, damages, injuries and liabilities related in any way to
Landlord’s performance of any ministerial acts reasonably necessary (i) to
permit Tenant to complete Tenant’s Initial Improvement Work, and (ii) to enable
Tenant to obtain any building permit or certificate of occupancy for Suite 220.
Tenant shall ensure lien-free completion of Tenant’s Initial Improvement Work,
and Tenant shall comply with all provisions of the Lease regarding liens.

 

(3)                      All Tenant’s
Initial Improvement Work performed shall comply with the Americans with
Disabilities Act - 1990, as the same may be amended from time to time. The
Contractor and the subcontractors utilized by the Contractor shall guarantee to
Tenant and for the benefit of Landlord that the portion of Tenant’s Initial
Improvement Work for which it is responsible shall be free from any defects in
workmanship and materials for a period of not less than one (1) year, and free
from latent defects for a period of not less than ten (10) years, each time
period being measured from the date of completion of such Tenant’s Initial
Improvement Work. The Contractor and the subcontractors utilized by the
Contractor shall be responsible for the replacement or repair, without
additional charge, of all work done or furnished in accordance with its
contract that shall become defective within one (1) year after the later to
occur of (i) completion of the work performed by the Contractor or
subcontractors and (ii) the first day of the Original Term. The correction of
such work shall include, without additional charge, all additional expenses and
damages incurred in connection with such removal or replacement of all or any
part of Tenant’s Initial Improvement Work, and/or the Building and/or common
areas that may be damaged or disturbed thereby. All such warranties or
guarantees as to materials or workmanship of or with respect to Tenant’s
Initial Improvement Work shall be contained in the contract or subcontract and
shall be written such that such guarantees or warranties shall inure to the
benefit of both Landlord and Tenant, as their respective interests may appear,
and can be directly enforced by either. Tenant covenants to give to Landlord
any assignment or other assurances which may be necessary to affect such right
of direct enforcement.

 

2

 

(4)                      Landlord
shall have the right at all times to enter Suite 220 to post notices of
non-responsibility.

 

(d)                    Insurance
Requirements.

 

(1)                      General
Coverages. The Contractor and any of its subcontractors shall carry
workers’ compensation insurance covering all of their respective employees, and
shall also carry public liability insurance, including property damage, all
with limits, in form and with companies as are required to be carried by Tenant
as set forth in the Lease.

 

(2)                      Special
Coverages. Tenant shall carry “Builder’s All Risk” insurance in an amount
approved by Landlord covering the construction of Tenant’s Initial Improvement
Work, and such other insurance as Landlord may require, it being understood and
agreed that Tenant’s Initial Improvement Work shall be insured by Tenant
pursuant to the Lease immediately upon completion thereof. Such insurance shall
be in amounts and shall include such extended coverage endorsements as may be
reasonably required by Landlord including, but not limited to, the requirement
that the Contractor shall carry excess liability and Products and Completed
Operation Coverage insurance, each in amounts not less than $500,000 per
incident, $1,000,000 in aggregate, and in form and with companies as are
required to be carried by Tenant as set forth in the Lease.

 

(3)                      General
Terms. Certificates for all insurance carried pursuant to this Paragraph 6
must comply with the requirements of this Lease and shall be delivered to
Landlord before the commencement of construction of Tenant’s Initial Improvement
Work and before the Contractor’s equipment is moved onto Suite 220. In the
event that Tenant’s Initial Improvement Work are damaged by any cause during
the course of the construction thereof, Tenant shall immediately repair the
same at Tenant’s sole cost and expense. The Contractor shall maintain all of
the foregoing insurance coverage in force until Tenant’s Initial Improvement
Work are fully completed and accepted by Landlord, except for any Products and
Completed Operation Coverage Insurance required by Landlord, which is to be
maintained for ten (10) years following completion of the work and acceptance
by Landlord and Tenant. All policies carried under this Paragraph 6 shall
insure Landlord and Tenant, as their interests may appear, as well as the Contractor.
All insurance, except Workers’ Compensation, maintained by the Contractor shall
preclude subrogation claims by the Insurer against anyone insured thereunder.
Such insurance shall provide that it is primary insurance as respects the owner
and that any other insurance maintained by owner is excess and noncontributing
with the insurance required hereunder.

 

(e)                     Delivery
of Warranties. At the conclusion of construction, Tenant shall deliver to
Landlord a copy of all warranties, guaranties, and operating manuals and
information relating to the improvements, equipment, and systems in the
Premises.

 

7.                          SECURITY
DEPOSIT. Tenant has on deposit with Landlord a Security Deposit in the amount
of $22,748.55. Upon execution of this Amendment, and in addition to all other
amounts due hereunder, Tenant will pay Landlord an additional deposit of
$5,120.00, thereby increases the total Security Deposit to $27,868.55.

 

8.                          PARKING.
Commencing upon the Expansion Date, Landlord shall offer Tenant the ability to
secure three (3) additional non-reserved parking stalls within the parking
structure serving the Premises, at the current rate then being charged for such
stalls.

 

9.                          INSURANCE.
Prior to the Expansion Date, Tenant shall deliver to Landlord a Certificate of
Insurance showing evidence of current insurance coverage as required under
Exhibit “C” attached hereto.

 

10.                    ENTIRE
AGREEMENT. This Amendment represents the entire agreement among the parties
with respect to the matters contained in this Amendment and supersedes any
prior negotiations, representations, or agreements, whether written or oral,
with respect to the Amendment. Nothing in this Amendment shall be deemed to
waive or modify any of the provisions of the Lease, except as expressly stated
herein. This Amendment may be amended, modified, or altered only by written
instrument, signed by Landlord and Tenant.

 

11.                    EFFECT
OF AMENDMENT; INCONSISTENCIES. Except as modified or amended herein, each and
all of the terms, covenants and conditions of the Lease are hereby acknowledged
and confirmed and remain in full force and effect. If there are any
inconsistencies between this Amendment and the Lease with respect to the
provisions of this Amendment, the provisions of the Amendment shall prevall.

 

12.                    LEGAL
ADVICE; NEUTRAL INTERPRETATION; HEADINGS. Each party has received independent
legal advice from their attorneys with respect to the advisability of executing
this Amendment and the meaning of the provisions hereof. The provisions of this
Amendment shall be construed as to their fair meaning, and not for or against
any party based upon any attribution to such party as the source of the
language in question. Headings used in this Amendment are for convenience of
reference only and shall not be used in construing this Amendment.

 

3

 

13.                    AUTHORITY
TO EXECUTE AGREEMENT. Each individual executing this Amendment on behalf of
Tenant represents that he or she is duly authorized to execute and deliver this
Amendment on behalf of the corporation and agrees to deliver evidence of his or
her authority if requested by Landlord.

 

14.                    CHOICE
OF LAW. This Amendment shall be governed by and construed in accordance with
the domestic laws of the State of California applicable to agreements executed
and to be fully performed therein without giving effect to any choice of law
provision or rule (whether of the State of California or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of California. The parties hereto agree that any suit,
action or proceeding arising out of or relating to this Amendment shall be
instituted and prosecuted in the United States District Court for the district
in which the Premises are located, or in any court of competent jurisdiction of
the State of California located in the county in which the Premises are
located, and the parties hereto irrevocably submit to the jurisdiction of said
courts and waive any rights to object to or challenge the appropriateness of said
forums. Service of process shall be in accordance with the laws of the State of
California.

 

15.                    SEVERABILITY.
If any term, covenant, condition or provision of this Amendment, or the
application thereof to any person or circumstance, shall to any extent be held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, covenants, conditions or provisions of this Amendment,
or the application thereof to any person or circumstance, shall remain in full
force and affect and shall in no way be affected, impaired or invalidated
thereby.

 

16.                    SUBMISSION
OF AGREEMENT. The submission of this Amendment to Tenant, Tenant’s agent or
attorney for review or signature does not constitute an offer to Tenant. This
Amendment shall have no binding force or effect until its execution and
delivery by both Landlord and Tenant.

 

17.                    COUNTERPARTS.
This Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument. The signature page of any counterpart
may be detached therefrom without impairing the legal effect of the
signature(s) thereon provided such signature page is attached to any other
counterpart identical thereto except having additional signature pages executed
by other parties to this Amendment attached thereto.

 

IN WITNESS HEREOF, the parties have executed this Amendment as of the
date first written above.

 

 

	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  
	
  AC-CATALINA LANDING LLC, a

  	
   

  
	
  Delaware limited liability company

  	
  OMP, INC., a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald G. Abbey

  	
   

  	
  By:

  	
  /s/ Jennifer Rougvie

  	
   

  
	
   

  	
   

  	
  Donald G. Abbey

  	
  Name:

  	
  Jennifer Rougvie

  	
   

  
	
   

  	
  Its:

  	
  President

  	
  Title:

  	
  OFFICE MANAGER

  	
   

  
							

 

or

 

	
   

  	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Stephen A. Garcia

  	
   

  
	
   

  	
   

  	
  David J. Gullen 

  	
   

  	
  Name:

  	
  Stephen A. Garcia 

  	
   

  
	
   

  	
  Its:

  	
  Vice President

  	
   

  	
  Title:

  	
  CFO

  	
   

  

 

4

 

EXHIBIT
“A”

 

 

Suite
220 & The Premises

 

 

[see attached]

 

5

 

EXHIBIT
“B”

 

 

The Space
Plans

 

 

[see attached]

 

6

 

EXHIBIT
“C”

 

TENANT’S
NEW INSURANCE REQUIREMENTS

 

This outlines the
insurance requirements of your Lease. To assure compliance with these terms, we
suggest you send a copy of this Exhibit to your insurer or agent. Initial
Certificates must be provided to Landlord prior to occupancy of the Premises.
All certificates must be amended to provide at least 30 days notice prior to
cancellation and/or expiration, with 10 days for non-payment of premium.
All certificates must be revised so that the following language is stricken
out in the notice of cancellation provision of the certificate of insurance:

 

•                            “Endeavor
to” and “but failure to do so shall impose no obligation or liability of any
kind to the company, its agents or representatives”.

 

Insurance Carriers/Coverage terms:

 

All carriers used by the
tenant must be licensed in the state in which the property is located.
Insurance carriers must have a financial rating of “A-” or better as defined by
the most recent AM Best’s rating. The financial size of the carrier must be “X”
or better as defined by the most recent AM Best’s rating.

 

Tenant may use admitted
or non-admitted insurance carrier(s) as long as the insurance carrier(s) is a licensed
carrier(s) in the state in which the property is located and that the insurance
carrier(s) meet the financial security as defined above. In addition:

 

•                            Tenant’s
coverage should be primary and non-contributing to Insurance provided by the
landlord.

 

•                            Tenant’s
policy must contain a waiver subrogation clause in favor of the landlord.

 

•                            Tenant’s
policy must provide severability of interest and may not contain “insured
versus insured” exclusions.

 

1.                          Comprehensive
or Commercial General Liability Insurance (Minimum Limits):

 

$1,000,000 Combined
Single Limit, each occurrence

 

$2,000,000 General
Aggregate (minimum) this location

 

$2,000,000
Products/Completed Operations Aggregate

 

$1,000,000 Personal
Injury & Advertising Injury

 

$ 300,000 Fire Legal
Liability Limit

 

$ 5,000-$10,000 Medical
Payments

 

•                            Deductible
or Self Insured Retention not greater than $5,000.

 

•                            Occurrence
based on ISO Form (1986 edition or newer). Claims made and/or modified
occurrence

forms are not acceptable.

 

2.                          Umbrella/Excess
Liability Insurance:

 

$2,000,000 per occurrence
(annual aggregate)

 

Coverage must be as broad
as the primary and meet the same requirements as noted in Section 1.

 

3.                          Tenant’s
Property Insurance:

 

“All Risks” coverage or
utilizing the ISO Special Cause of Loss form. Coverage should include
earthquake sprinkler damage. Coverage to be written on a replacement costs
basis sufficient to cover 100% of the replacement cost. Co-insurance must be
waived. Policy must contain a waiver subrogation clause in favor of the landlord.

 

4.                          Tenant’s
Business Interruption Insurance:

 

All Risks coverage of
operations at leased premises: covering a least 12 months due to insured peril.
Policy must contain a waiver subrogation clause in favor of the landlord.

 

5.                          Tenant’s
Workers’ Compensation and Employer’s Liability Insurance:

 

Statutory Limits and
terms required by law with subject statutory limits. Employer Liability should
be provided at limits not less than (1) $500,000 each accident or injury,
$500,000 each employee/disease and

 

7

 

$500,000 disease/policy
limit, or (2) current limit carried, whichever is greater. Coverage should
include a waiver of subrogation in favor of the landlord.

 

6.                          Tenant’s
Automobile Insurance (if requested):

 

$1,000,000 Combined
Single Limit per accident; covering all owned, non owned, hired autos (Symbol 1
any auto).

 

7.                          Additional
Insured Endorsement (required on endorsement form CG 2026 1185 or its
equivalent):

 

“AC-Catalina Landing LLC,
Abbey-Properties LLC, The Abbey Management Company LLC The Abbey Company and
their respective employees and agents, members, managers, officers and owners
(and their beneficiaries, if any) are additional insured, jointly and/or
severally, regarding any coverage afforded by this policy with respect to
services and for materials performed, furnished or supplied on, for or to such
properties.”

 

SEND
CERTIFICATE TO:

AC-Catalina Landing LLC

c/o The Abbey Management Company LLC

Attn.: Property Manager

310 Golden Shore, Suite 300

Long Beach, California 90638

Tel.: (562) 435-2100

 

8Exhibit 10.6

 

DISTRIBUTION AGREEMENT

 

THIS DISTRIBUTION AGREEMENT is made as of the 10th day of
November, 2005 (the “Effective Date”) by and between OMP, Inc., a company
established and existing under the laws of the State of Delaware, having its
principal place of business at 310 Golden Shore, Long Beach, California 90802,
USA (“OMP”) and Cellogique Corporation, a corporation organized and validly
existing under the laws of California, having its principal place of business
at 124 Woodland Road, Pittsburgh PA 15232 (“Distributor”). OMP and the
Distributor are sometimes referred to herein as the “Parties” and individually
as “Party.”

 

RECITALS

 

WHEREAS, OMP develops and manufactures certain proprietary skin care
products; WHEREAS, Distributor desires to distribute OMP’s skin care products;
and

 

WHEREAS, OMP and Distributor deem it to be in their mutual best
interests to enter into an agreement whereby Distributor shall be appointed as
an exclusive distributor of OMP’s products.

 

NOW THEREFORE, in consideration of the terms, conditions and mutual
covenants contained herein, the Parties hereto agree as follows:

 

1.         DEFINITIONS

 

For purposes of this Agreement, the following words shall have the
following meanings:

 

1.1       “Agreement”  means this Distribution Agreement and all exhibits, schedules and annexes
which are attached to this Agreement from time to time and form a part hereof.

 

1.2       “Confidential Information”  is defined in Section 13.1.

 

1.3       “Customer”  means any medical doctor,
clinic operated by a medical doctor, and retail pharmacy purchasing Products in
the Territory from Distributor.

 

1.4       “OMP Marks”  means the trademarks, trade names, service marks, domain names, and logos
of OMP, and other commercial symbols identifying OMP or its products or
services, including those set forth in Exhibit C, and similar marks, and
those developed in the future.

 

1.5       “Prices”  mean the prices payable by Distributor to OMP as consideration for the
purchase by Distributor of the Products, as set forth in Exhibit A.

 

1.6       “Products”  mean the OMP skin care products described in Exhibit A.

 

1.7       “Proprietary Information” is defined in Section 13.1.

 

1.8       “Territory” means the country(ies) set
forth in Exhibit A, including, without limitation, its territories and
possessions and any other geographic area designated by OMP for the exercise of
Distributor’s rights and obligations in this Agreement.

 

 

1.9       “Trade Secrets” is defined in Section 13.1.

 

2.         APPOINTMENT

 

2.1       Grant of Rights. OMP hereby grants to
Distributor, and Distributor hereby accepts, upon the terms and conditions set
forth in this Agreement, the exclusive right to promote, market, sell,
distribute and sub-distribute Products to Customers located within the
Territory.

 

2.2       Technical and Sales
Literature License. During the term of this Agreement, and subject to its terms and
conditions, OMP grants to Distributor a nonexclusive, nontransferable, royalty
free license, to use the OMP sales and technical literature and materials to
promote, market, sell and distribute the Products in the Territory.

 

2.3       Sales Outside the
Territory; Internet Sales. Distributor shall not distribute, sell or otherwise provide the Products
outside the Territory and shall not advertise, promote or solicit Customers for
the Products outside the Territory, unless authorized in writing by OMP.
Distributor may promote and sell Products using the Internet, provided
however, Distributor shall not accept or fill orders for Products from
Customers located outside the Territory and shall not deliver Product to or for
a Customer outside the Territory. OMP and Distributor shall monitor the
distribution and sale of Products within the Territory to insure that the
Products are not, directly or indirectly, being redistributed or resold outside
the Territory.

 

2.4       Reserved Rights. Except as otherwise set
forth in this Agreement, no express or implied right is granted to Distributor
regarding the Products, the OMP technical and sales literature and the OMP
Marks and Distributor acknowledges that all copyright, patent, trade secret and
other intellectual property rights in and to the Products, OMP technical and
sales literature and the OMP Marks are the sole property of OMP. OMP reserves
all rights not expressly granted herein.

 

2.5       Sub-Distributors. A listing of current
sub-distributors engaged in the distribution and sale of the Company’s products
under contract by the Distributor is included in Exhibit E. Distributor
shall not, without the prior written consent of OMP, which consent shall not be
unreasonably withheld, appoint any new sub-distributors to promote, market,
distribute and sell the Products within the Territory. Distributor shall submit
to OMP, for OMP’s prior approval, a copy of any written agreement, or the terms
and conditions of any oral agreement, proposed to be entered into between
Distributor and any proposed sub-distributor. Distributor shall require that
each such agreement shall, without limitation:  (i) terminate upon the expiration or
earlier termination of this Agreement; (ii) be expressly subject to this
Agreement and any restrictions regarding the Products, OMP technical and sales
literature, the OMP Marks and other Proprietary Information stated herein; (iii) provide
that the sub-distributor shall have no claims against OMP or Distributor arising
from the expiration or termination of this Agreement; (iv) require
adherence to internet policies consistent with physician ethics, as well as
OMP’s brand promotion and pricing guidelines, and (v) prohibit the
sub-distributor from appointing further sub-distributors or agents for the sale
of Products or assigning any rights or obligations under its agreement with
Distributor without OMP’s prior written consent. Distributor shall cause
sub-distributors to communicate directly with Distributor, not OMP.

 

 

3.         ADDITIONAL PRODUCTS

 

3.1       Related Products. OMP may from time to
time offer products for sale relating to skin care, which are not listed in Exhibit A
(“Related Product(s)”). Such Related Product(s), new or not, may be
incorporated into this Agreement by written amendment at any time during the
term of this Agreement. If OMP, in its sole discretion, chooses to distribute
such Related Products in the Territory during the term of this Agreement, OMP
shall offer Distributor the exclusive right to promote, market, sell and
distribute such Related Products in the Territory subject to this Agreement,
which offer shall be open for acceptance for a period no longer than thirty
(30) days. The terms and conditions
upon which OMP shall offer to Distributor the rights to distribute Related
Products in the Territory shall be at least as favorable as the terms and
conditions upon which OMP offers such distribution rights with respect to
Related Products to any third-party distributor(s) outside of the Territory,
including, but not limited to, maximum discounted prices and terms of
payment. In the event that Distributor chooses not to accept OMP’s offer to
include any such Related Products in this Agreement, OMP may use other
persons or entities to act as distributors of such Related Product(s) to
Customers in the Territory without further obligation to Distributor.

 

4.         GENERAL OBLIGATIONS
OF DISTRIBUTOR

 

4.1       Minimum Purchase
Requirement. During
the term of this Agreement, Distributor shall make the minimum purchases of the
Products from OMP set forth in Exhibit A (“Minimum Purchase Requirement”).
Purchases counted toward the Minimum Purchase Requirement for any period
provided herein shall be based on OMP’s net invoice prices for the Products
which are paid for prior to the expiration of the applicable period.
Distributor understands and agrees that achievement of Minimum Purchase
Requirement is of the essence of this Agreement and the failure of Distributor
to achieve any of the Minimum Purchase Requirement conditions in Exhibit A
in any one year shall constitute grounds for the conversion of this contract
from exclusive to a non-exclusive right to the channel and territory (all other
provisions of the contract remaining unchanged), while failure to achieve the minimums
in any two out of three years is grounds for non-renewal of the contract at the
Company’s option as of the renewal period following such failures. However,
notice of intention not to renew based on performance must be given 60 days in
advance of the new renewal period.

 

4.2       Promotion and Marketing.
Distributor shall
use commercially reasonable efforts to further the promotion, marketing, sale
and distribution of the Products in the Territory, including but not limited
to, building brand awareness and value. OMP may, in its reasonable discretion,
prepare promotional programs for the Products in the Territory and Distributor
agrees to cooperate with OMP in sales or promotional programs prepared by OMP.
Distributor shall not, and shall cause its sub-distributors to not, make any
materially misleading or untrue statements concerning the Products.

 

4.3       Competing Products. During the term of this
Agreement, Distributor shall not, and shall cause its agents and
representatives to not, sell, distribute, market, advertise or solicit 

 

 

purchase orders for any product that OMP deems to be
similar to or competitively positioned against the Products in the Territory.

 

4.4       Business Plan. By October 1 of each
calendar year during the term of this Agreement, Distributor shall submit to
OMP a marketing and business plan (“Business Plan”) for marketing, distribution
and sale of the Products in the Territory for the following calendar year. The
Business Plan shall include a description of the Distributor’s sales organization,
a competitive market analysis, methods of distribution, a marketing plan,
projected quarterly sales by Product, and other information.

 

4.5       Forecasts.  Distributor shall provide
to OMP on a quarterly basis a twelve (12) month rolling forecast of Distributor’s
projected purchase orders on the form attached hereto as Exhibit B.
Distributor shall submit forecasts to OMP on February 1 (for the twelve
(12) months commencing April 1), May 1 (for the twelve (12) months
commencing July 1), August 1 (for the twelve (12) months commencing October 1),
and November 1 (for the twelve (12) months commencing January 1) of
each calendar year. If the Effective Date falls within a quarter, the first
quarter forecast shall include only the remainder of that quarter. The
forecasts are for planning purposes only and shall not be binding on
Distributor or OMP.

 

4.6       Licensed Physician;
Sales Force. During
the term of this Agreement, Distributor shall retain the services of a
physician licensed and in good standing in the Territory and who is trained (in
accordance with Section 5.2) in the use of the Products (“Licensed
Physician). Within thirty (30) days of the Effective Date and within forty five
(45) days of a change of Licensed Physician, Distributor shall give OMP written
notice of the name of the Licensed Physician as well as physical evidence of
his or her license and good standing in the Territory. The Licensed Physician
shall advise Customers on the proper use of the Products. Distributor shall
maintain competent and trained personnel for marketing and distribution of the
Products in the Territory.

 

4.7       Governmental
Requirements. Subject
to the terms of this Agreement, Distributor shall (i) comply with all
applicable laws and regulations of the United States and the Territory,
including but not limited to, export laws and restrictions and regulations of
the United States Department of Commerce or other United States or foreign
agency or authority, and shall not export, or participate in any transaction
which may involve the export or re-export of any Product in violation of
any such restrictions, laws or regulations; (ii) assist OMP in obtaining
any required registrations, licenses and permits for the Products and the
marketing, sale and distribution of the Products in the Territory by supplying
such documentation or information as may be reasonably requested by OMP;
and (iii) obtain and maintain during the term of this Agreement all
governmental approvals and licenses necessary to import the Products into the
Territory. If any governmental registration, license or approval for the
marketing, sale and distribution of the Products is required, Distributor shall
obtain OMP written approval prior to commencing any registration or approval
process. Unless otherwise required by applicable law, all registrations,
licenses and approvals for the Products and the distribution of the Products in
the Territory shall be in the name of and shall be solely owned by OMP. OMP
will reimburse Distributor for any pre-approved and reasonable fees for such
registrations, licenses and approvals that are in OMP’s name or are transferred
to OMP upon termination of the Agreement. Distributor shall provide OMP with a
copy of all registrations, licenses and approvals obtained or 

 

 

received for the Products and distribution of the
Products in the Territory within five (5) business days of Distributor’s
receipt of each such registration, license and approval. In furtherance of, but
without limiting, the foregoing, Distributor represents that it has read, understood
and will comply with the anti-bribery provisions of the U.S. Foreign Corrupt
Practices Act.

 

4.8       Distributor Expenses.
Distributor assumes
full responsibility for all its own costs and expenses incurred in carrying out
its obligations under this Agreement, including but not limited to all rents,
salaries, commissions, advertising, translations of documents and materials,
demonstration, travel and accommodation for the employees, agents,
representatives or other personnel of Distributor.

 

4.9       Marketing Materials.  All marketing materials
created by or for Distributor relating to the Products shall be approved by OMP
prior to use by Distributor. Such marketing materials shall contain copyright,
trademark and accreditation notices as prepared by OMP.

 

4.10                                    Quarterly
Reports and Reviews. Distributor shall provide OMP with reports of its activities,
competitor activities, and other information regarding the Products and the markets for the
Products in the Territory in such detail and with such frequency as OMP and
Distributor shall mutually agree. Distributor agrees to participate with OMP in
quarterly reviews to discuss Distributor’s sales, marketing, and business plan
for distribution of the Products, and sales achievements and objectives.

 

5.         GENERAL OBLIGATIONS
OF OMP

 

5.1       General. OMP shall use commercially
reasonable efforts to maintain and enhance the reputation, usefulness, and
acceptance of its Products and to assist Distributor in all reasonable ways to
promote the sale of the Products in the Territory.

 

5.2       Distributor Training.
OMP shall provide
initial training on the Products for Distributor’s licensed physician and sales
force and subsequent training upon the release of new Products or Related
Products subject to this Agreement. The date, duration, content and location of
the initial training and training relating to any new Products or Related
Products subject to this Agreement, shall be mutually agreed upon by the
Parties. Notwithstanding the foregoing, Distributor shall bear all costs of travel
and living expenses for Distributor’s personnel to attend any training whether
during the initial period or subsequent thereto. If training is provided at
Distributor’s location, Distributor shall provide reasonable training
facilities without expense to OMP. For training in addition to that identified
above, OMP and Distributor shall mutually agree in writing on the charges for
such training, in advance of the training, including but not limited to OMP
travel and other related expenses.

 

5.3       Marketing Support. OMP shall provide
Distributor with an electronic and one hard copy of OMP technical and sales
literature and materials. Distributor’s shall provide language translations of
such materials at Distributor’s expense.

 

5.4       Quarterly Review. OMP agrees to participate
with Distributor in quarterly reviews to discuss Distributor’s sales,
marketing, and business plan for the distribution of the Products, and sales
achievement and objectives.

 

 

6.         PURCHASE OF PRODUCTS
AND SERVICES

 

6.1       Purchase Orders and
Delivery. Products
ordered by Distributor from OMP will be delivered by OMP directly to the
Distributor. OMP shall use its best efforts to deliver ordered Products within
thirty (30) days of the date of receipt of a purchase order from Distributor.
Distributor shall acquire the Products only from OMP and from no other source.

 

6.2       Modification of Orders.
Except as otherwise agreed to in writing or as
otherwise set forth herein, all order(s) are non-cancelable, non-refundable and
non-exchangeable. All order(s) placed with OMP by Distributor for Products
shall be made on through the submission of a Purchase Order. Notwithstanding
the content of Distributor’s purchase order, this Agreement shall take
precedence over Distributor’s purchase order, and, subject to applicable law,
in the event of any conflicting, inconsistent or additional terms of
Distributor’s purchase order, the terms of this Section 6 shall prevail.

 

6.3       Delivery Terms. All deliveries of the
Products shall be FOB OMP’s manufacturing or warehouse facility, Incoterms
2000. OMP shall consign each shipment to the freight forwarding agent and
customs broker specified by Distributor.

 

6.4       Title. Title to each of the
Products shall transfer upon consignment and delivery by OMP to the freight
forwarding agent specified in Distributor’s purchase orders.

 

6.5       Acceptance of Products.
In the event of any
shortage, damage or discrepancy in or to a shipment of Products, Distributor
shall promptly report the same to OMP and furnish such written evidence or other
documentation as Distributor may deem appropriate. OMP shall not be liable
for any such shortage, damage or discrepancy unless OMP has received notice and
evidence thereof from Distributor within thirty (30) days after delivery of the
Products at the FOB point. If such evidence demonstrates to OMP’s satisfaction
that OMP is responsible for such shortage, damage or discrepancy, OMP shall
promptly deliver additional or substitute Products to Distributor.

 

6.6       Return of Defective
Products. OMP
shall use reasonable commercial efforts to supply Distributor with Products
manufactured in accordance with good manufacturing practices. In the event a
Product is defective, OMP shall either, in its sole discretion, replace the
Product or credit Distributor for the purchase price of the Product as
reflected on Distributor’s paid invoice therefore, provided Distributor (a) has
obtained OMP’s prior written consent to return the Product and (b) Distributor
completes and returns with the Product the Product Complaint Form attached
hereto as Exhibit D.
OMP will pay transportation costs for return of such Product provided the
Product was shipped to Distributor by OMP within ninety (90) days of the date
Distributor obtains OMP’s approval to return the Product. The provisions of
this Section 6.6 shall constitute Distributor’s sole and exclusive remedy
with respect to defective Products.

 

6.7       Price Changes;
Notification. Prices
offered to Distributor are and shall remain based on distributor discount from
standard pricing to US physicians. Standard US Pricing from which distributor
discount is taken shall in no case be increased by a greater amount than
pricing changes implemented in the US. OMP shall give written notice to
Distributor of any amendment 

 

 

to the Prices listed in Exhibit A hereof. In
the event of a Price increase, OMP shall notify Distributor in 60 days in
advance of any such amendments.

 

6.8       Price Increase
Protection. In
the event OMP increases the Price on any Product, any orders for such Product
which are received by OMP before the effective date of the Price increase shall
be invoiced at the previous, or lower Price. Price protection will be extended
to Distributor by OMP for the purpose of satisfying Customer purchase
agreements and binding quotations which Distributor has in force on the
effective date of the Price increase, which Distributor cannot satisfy from its
inventories, for the period remaining on such purchase agreements and binding
quotations. In order to obtain price protection, within thirty (30) days of
notification of the Price increase, Distributor shall provide documentation to
OMP on such purchase agreements and binding quotations, acceptable to OMP.

 

6.9       Price Decrease
Protection. In
the event OMP decreases the Price of any Product, Distributor may apply
for a credit equal to the difference between the net Price paid by Distributor,
less any prior credits granted by OMP, and the new decreased Price for the
Product multiplied by the quantity of such Products in Distributor’s inventory
(including those delivered by OMP to the Distributor’s specified freight
forwarding agent) on the effective date of the Price reduction. Price
protection applies only to Products in Distributor’s inventory the three (3) months
preceding the effective date of the Price reduction, including Products in
transit to Distributor on the effective date of the Price decrease. Issuance of
the Price protection credit by OMP is contingent upon Distributor’s submission
to OMP, not later than thirty (30) days after the effective date of such Price
decrease, of an inventory report which indicates the quantity of such Product
in stock or in transit on the effective date of the Price decrease. Upon
verification of the inventory report by OMP, said credit will be applied to
Distributor’s account.

 

6.10                                    Product
Changes. OMP may do
any of the following upon reasonable notice and without liability to
Distributor:

 

(a)                              Alter
the specifications for any Product or any new Product or Related Product;

 

(b)                             Discontinue
the development of any new Product, whether or not such new Product has been
announced publicly and discontinue the sale of any Product; and

 

(c)                              Commence
the development and distribution of new Products and Related Products which may make
any Product obsolete.

 

 

7.         PRICES AND PAYMENT
TERMS

 

7.1       Products Prices. Distributor shall pay OMP
the Prices for Products in accordance with the Prices set forth in Exhibit A.
Distributor, in its sole discretion, shall set resale prices for sale of the
Products to Customers in the Territory. Subject to Section 6 hereof, OMP may change
the Prices in Exhibit A at any time, in its sole discretion.

 

7.2       Payment Terms  OMP shall extend credit,
and full payment shall be due ninety (90) days from the date of the OMP
invoice. The amount of credit extended shall be set by
OMP in its sole discretion. Distributor shall pay OMP
by international bank wire transfer, to an account specified by OMP in OMP’s
invoice to Distributor, or by a confirmed letter of credit.

 

7.3       Delinquent Accounts.
All amounts due and
owing to OMP hereunder, but not paid by Distributor within 5 days of the due
date thereof, shall bear interest in U.S. dollars at the rate of the lesser of:  (i) one per cent (1%) per
annum above the then applicable prime interest rate announced by the Wall
Street Journal for 90-day U.S. dollar loans to prime commercial customers in
the United States; or (ii) the maximum lawful interest rate permitted
under applicable law. Such interest shall accrue on the balance of unpaid
amounts from time to time outstanding from the date on which portions of such
amounts become due and owing until payment thereof in full.

 

7.4       Taxes. Prices do not include, and
Distributor shall be responsible for, all excise, sales, use, value added and
other taxes, including any goods and services tax payable in the Territory and
excluding any tax on the income of OMP. Notwithstanding the foregoing, the
Parties understand that payments made by Distributor to OMP may be subject
to withholding taxes in the Territory, which, if applicable, shall be withheld
and promptly paid by Distributor, on behalf of OMP, to the applicable tax
authorities and promptly evidenced by appropriate certificate of receipt or
other evidence issued by such authorities; provided however, should the tax
authorities in the Territory determine that any payments due OMP from
Distributor are subject to such taxes, Distributor shall use reasonable
commercial efforts to provide OMP such documentation as may be necessary
for the Parties to receive the reduced rate of withholding tax under any
applicable treaty. OMP may, in its sole discretion, file an application with
the applicable authorities for such reduced rate of withholding tax. Any other
applicable charge, tax or duty shall be borne by Distributor in addition to the
Prices invoiced.

 

 

8.         TERMS AND TERMINATION

 

8.1       Term. This Agreement shall
commence on the Effective Date and shall continue in effect for a period of
twelve (12) years beginning January 1, 2006, comprised of four (4) consecutive
three (3) year terms ending December 31, 2008; December 31,
2011; December 31 2014; and December 31, 2017, subject to the
provisions under section 4.1, unless otherwise terminated pursuant to the
provisions hereof.

 

(a)                              Notwithstanding
any other provision of this Agreement, either Party shall have the right to
immediately terminate this Agreement for cause by giving written notice of such
termination to the other Party, if the other Party fails to comply with any
material term hereof and fails to correct such lack of compliance within thirty
(30) days after receipt of written notice of such failure. Without limiting the
foregoing, any failure by Distributor to pay amounts when due shall be deemed a
failure to comply with a material term of this Agreement and OMP shall be entitled
to immediately terminate this Agreement without further notice to Distributor
and opportunity to cure,
unless Distributor cures such failure within the foregoing thirty (30) day
period.

 

(b)                             Either
Party may immediately terminate this Agreement for cause by giving written
notice of such termination to the other Party upon the occurrence of any of the
following events:

 

(i)                    if the other Party makes a
voluntary petition in bankruptcy, insolvency or similar petition;

 

(ii)                 an involuntary petition in bankruptcy,
insolvency or similar petition is made against the other Party;

 

(iii)              if the other Party becomes insolvent or
makes a general assignment for the benefit of creditors, suffers or permits an
appointment of a receiver for its business or assets or is liquidated; or

 

(iv)             the enactment or adoption of any change in
laws, rules, regulations or governmental policies or other change in
circumstances that makes it illegal, impossible or impracticable to export,
import, market, sell and distribute the Products to or in the Territory as
contemplated in this Agreement.

 

8.2       Rights Upon Termination. Upon termination or
expiration of this Agreement:  (a) all of Distributor’s rights granted
hereunder shall immediately cease; (b) Distributor shall return to OMP or
destroy at OMP direction any and all language translations of OMP’s sales and
technical literature and materials in Distributor’s possession or control; (c) Distributor
shall return to OMP any Products in its possession purchased within ninety (90)
days of the date of termination or expiration of the Agreement at the price
paid by Distributor, including any Products delivered to the freight forwarding
agent ninety (90) days prior or the date of termination or expiration of this
Agreement, except those Products required to meet Customer purchase agreements
and binding quotations for a period no longer than forty-five (45) days from
the date of termination or expiration and which Distributor has in force on the
date of termination or expiration of this Agreement, provided Distributor
furnishes OMP documentation of such 

 

 

purchase agreements and binding quotations
acceptable to OMP; (d) Distributor shall immediately return to OMP all
other OMP property, including, but not limited to, all original documents and
copies which contain OMP Proprietary Information; (e) Distributor shall
deliver to OMP such documents and instruments as OMP may reasonably
request in connection with the termination or expiration of this Agreement; and
(f) Distributor shall remove from its facilities and other premises all
signs, billboards and other similar items bearing any of the OMP Marks or
identifying Distributor as an authorized distributor of OMP or the Products
and, within a reasonable period of time following such termination, withdraw or
cancel any registrations or filings with governmental authorities relating to
Distributor’s use of any of the OMP Marks, and shall refund to Distributor in
cash any unutilized credit under Section 6.9. Under no circumstances shall
OMP be liable with respect to orders received by OMP after the termination or
expiration of this Agreement. In the event of a termination of this Agreement
under Section 8.1,
subject to the applicable provisions of this Section 8.2,
neither Party shall owe any compensation to the other Party for lost profits,
lost opportunities, goodwill, or any other loss or damages as a result of or
arising from such termination. Except as required for Distributor’s performance
of obligations under this Section 8.2 or Section 8.3,
upon expiration or earlier termination of this Agreement, Distributor shall
immediately cease and desist from any further use of Proprietary Information of
OMP. Without waiving any rights OMP may have at law or in equity, in the
event Distributor fails to comply with any of its obligations under this Section 8.2,
OMP shall be entitled to receive from Distributor and Distributor shall be
obligated to pay to OMP as liquidated damages, not penalty, an amount equal to
eight percent (8%) of Distributor’s gross revenue from the sale of the Products
during the preceding twelve (12) months or, in the event this Agreement has
been in effect less than twelve (12) months, twelve (12) annualized months from
the Effective Date.

 

8.3       Surviving Terms. The provisions of Sections 2.4,
7, 8.2, 9, 10, 11, 12, 13, 14, and 15 shall survive the expiration or the
termination of this Agreement by either Party for any reason.

 

8.4       Renewal Term. Six (6) months prior to the expiration of the initial twelve (12)
year term set forth in Section 8.1 hereof, OMP and Distributor shall enter into good faith
negotiations on an exclusive basis with respect to the renewal of this
Agreement (“Renewal Negotiations”), including the length of such renewal term, the prices
and discounts for Products and other material terms
and conditions relating to the subject matter hereof; provided, however, that
OMP agrees that the prices for Products and the length of the proposed renewal
term that it offers Distributor at the time of such Renewal Negotiations shall
be at least as favorable as the maximum discounted
prices and maximum term of any agreement then in effect between OMP and any
third party distributor of OMP’s Products.

 

9.         OMP WARRANTY AND
INDEMNITY.

 

9.1       Limited Warranties. Subject to Section 9.2,
OMP represents and warrants to Distributor that (a) OMP has full authority
to execute and perform this Agreement; (b) this Agreement has been
duly executed and delivered by OMP and constitutes OMP’s legal, enforceable and
binding obligation; (c) OMP’s execution and performance of this Agreement 

 

 

will not conflict with the terms or conditions of
any other agreement or contract to which it is a party or is otherwise bound;
and (d) no approval, action or authorization by any governmental authority
or agency is required for OMP’s execution and performance hereof (except for
governmental certifications, registrations, licenses and approvals for the
export of the Products to the Territory) which has not already been obtained.

 

9.2       Disclaimer of Warranties.
OMP GRANTS NO
WARRANTIES, EITHER EXPRESS OR IMPLIED, WITH REGARD TO THE PRODUCTS OR THE OMP
MARKS, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NON-INFRINGEMENT.

 

9.3       OMP Indemnification.

 

(a)                              OMP
shall defend, indemnify and hold harmless Distributor from and against any
claim of a third party to the extent arising from the negligence or willful
misconduct of OMP, its employees, agents, or contractors (other than
Distributor) in the performance of its obligations under this Agreement. OMP
will pay resulting court costs, damages and legal fees finally awarded,
provided Distributor promptly notifies OMP in writing of any such claim, OMP
has sole control of the defense and all related settlement negotiations, and
Distributor provides OMP with such assistance and all related information for
such defense as OMP may reasonably request.

 

(b)                             OMP
shall defend, indemnify and hold Distributor harmless from and against any
claim that the Products, OMP technical and sales literature or the OMP Marks
infringe, in the Territory, a patent, trademark or copyright of a third party
(a “Claim”), and pay resulting court costs, damages and legal fees incurred in
connection with such Claim, provided (i) Distributor notified OMP promptly
in writing of any such Claim and (ii) gives OMP sole control of the
defense of the same and all negotiations for its settlement or compromise.
Should any Products become, or in OMP’s opinion be likely to become, the
subject of a claim of infringement, Distributor shall permit OMP, at OMP’s
option and expense, to (x) procure for Distributor the right to continue using
the Products, (y) replace or modify the Products to become non-infringing, or
(z) if neither procurement or replacement are commercially reasonable, terminate
this Agreement by giving written notice thereof to the Distributor, with no
further obligation or liability to Distributor. Notwithstanding the foregoing,
OMP shall have no liability for any claim of infringement to the extent based
upon any modification of the Products, OMP technical and sales literature and
the OMP Marks not made by OMP or its authorized representatives. THE FOREGOING
STATES THE ENTIRE LIABILITY OF OMP WITH RESPECT TO INFRINGEMENT IN THE
TERRITORY OF ANY PROPERTY RIGHT OF A THIRD PARTY BY THE PRODUCTS, OMP TECHNICAL
AND SALES LITERATURE AND THE OMP MARKS.

 

10.       DISTRIBUTOR WARRANTY
AND INDEMNITY

 

10.1                                    Limited
Warranties. Distributor
represents and warrants to OMP that (a) Distributor has full authority to
execute and perform this Agreement; (b) this Agreement has been duly
executed and delivered by Distributor and constitutes Distributor’s legal,
enforceable 

 

 

 

and binding obligations; (c) Distributor’s
execution and performance of this Agreement will not conflict with the terms or
conditions of any other agreement or contract to which Distributor is a party
or is otherwise bound; and (d) no approval, action or authorization by any
governmental authority or agency is required for Distributor’s execution and
performance hereof (except for governmental certifications, registrations,
licenses and approvals for the marketing, sale and distribution of the Products
in the Territory) which has not already been obtained.

 

10.2                                    Distributor’s
Indemnification. Distributor
shall defend, indemnify and hold harmless OMP from and against any claim of a
third party that
is either reduced to final, non-appealable judgment or settled with Distributor’s consent, not to be unreasonably
withheld, to the extent arising out of or resulting
from:

 

(a)                              Distributor’s
and sub-distributor’s negligent acts or omissions or willful misconduct in the
use, import, marketing, promotion, advertising, distribution and sale of the
Products, including but not limited to Distributor’s and sub-distributor’s
promotional or advertising materials for the Products;

 

(b)                             Any
statements, claims, representations or warranties made by Distributor or
sub-distributors relating to the Products, other than as authorized or made by
OMP in writing, including but not limited to those made in the OMP technical
and sales literature and materials;

 

(c)                              Any
breach by Distributor and sub-distributors of their obligations under this
Agreement; and

 

(d)                             Any
infringement or claim thereof of any patent, copyright, trademark, service
mark, trade name, trade secret or any other property right of a third party
arising from the use by Distributor or any sub-distributors of (i) any
symbol, insignia, name or identifying characteristic other than the OMP’s
Marks, (ii) any combination of any OMP Mark with any materials not
provided or approved by OMP, (iii) any modification to the Products not
made by OMP, or (iv) any use of the Products not authorized or certified
by OMP or by the OMP technical and sales literature and materials.

 

11.       LIMITATION OF
LIABILITY.

 

11.1                                    DISTRIBUTOR AGREES THAT
OMP’ S TOTAL AGGREGATE LIABILITY UNDER THIS AGREEMENT SHALL NOT EXCEED THE
AGGREGATE FEES OR OTHER AMOUNTS PAID BY DISTRIBUTOR TO OMP FOR PRODUCTS UNDER
THIS AGREEMENT.

 

11.2                                    IN NO EVENT WILL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR CONSEQUENTIAL, EXEMPLARY, INCIDENTAL OR
INDIRECT OR PUNITIVE DAMAGES OR LOSS OF GOODWILL, BUSINESS OPPORTUNITY OR
PROFIT, IN CONNECTION WITH THE SUPPLY, USE OR PERFORMANCE OF THE PRODUCTS
PROVIDED HEREUNDER, OR IN CONNECTION WITH ANY CLAIM ARISING FROM OR RELATED TO
THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES OR IF THE EXCLUSIVE REMEDIES STATED HEREIN FAIL OF THEIR ESSENTIAL
PURPOSE.

 

 

11.3                                    Notwithstanding the
provisions of this Section 11, this Agreement shall not limit the
liability of either Party for personal injury, including death, arising from
the negligence or willful misconduct of such Party or its employees acting
within the scope of their employment.

 

12.       PROPRIETARY RIGHTS.

 

Except as otherwise provided herein, OMP expressly retains title and
ownership to all worldwide intellectual property rights, including without
limitation, design, know-how, patent rights, trademarks, and copyrights in and
to the Products, OMP trademarks, service marks and logos, and any
modifications, adaptations, derivative works, and enhancements made thereto.

 

13.       CONFIDENTIALITY.

 

13.1                                    Definitions. For purposes of this
Agreement, “Trade Secrets” means information which:  (a) derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use; and (b) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. “Confidential
Information” means information, other than Trade Secrets, that is of value to
its owner and is treated as confidential. “Proprietary Information” means
Trade Secrets and
Confidential Information.

 

13.2                                    Nondisclosure
Requirements. Each Party agrees to hold
Proprietary Information of the
other Party in strictest confidence and not to
copy, reproduce, distribute, manufacture, duplicate, reveal, report, publish,
disclose, cause to be disclosed, or otherwise transfer the Proprietary Information
of the other Party
to any third party, or utilize such Proprietary Information
for any purpose whatsoever other than as expressly contemplated by this
Agreement or as otherwise agreed to in writing by the Parties. Each Party
may only disclose the other Party’s Proprietary
Information to employees, representatives and consultants of such Party
who are under a written obligation to comply with the nondisclosure obligations
set forth herein.
Each Party agrees to notify the other Party
in writing of any suspected or known breach of the obligations or restrictions
set forth in this Section 13. The obligations of this Section 13.2
shall continue for so long as such information constitutes a Trade Secret under
applicable law and for Confidential Information, for the term of this Agreement
and for a period of three (3) years following termination or expiration of
this Agreement. Notwithstanding the foregoing, any previously executed
nondisclosure agreement between the Parties shall continue in full force and
effect, provided that to the extent of any inconsistency or ambiguity between
such non-disclosure agreement and this Agreement, this Agreement shall take
precedence and control and govern in all respects.

 

13.3                                    Exceptions. The foregoing
obligations of this Section 13 shall not apply if and to the extent that:  (i) the information
communicated was already known to a Party without obligation to
keep such information confidential at the time of a Party’s
receipt from the
other Party; (ii) the information communicated
was received by a
Party in good faith from a third party lawfully in
possession thereof and having no obligation to keep such information
confidential, or (iii) a
Party establishes that the information communicated
was publicly known at the time of such Party’s receipt from the other Party
or has become publicly known other than by a breach of this Agreement. If either Party
is required to disclose all or part of the Proprietary Information of 

 

 

the other Party pursuant to any legal
requirement of any country which may have jurisdiction over that Party, such Party
shall immediately upon becoming aware that such disclosure is required, give the other Party
notice of the circumstances in which the disclosure is required and, subject to applicable law, agree with the other Party
on the extent and timing of such disclosure.

 

14.       TRADEMARKS

 

14.1                                    Use
of the OMP Marks. OMP hereby grants to Distributor, and Distributor hereby accepts from
OMP, a nonexclusive, nontransferable, royalty-free license to use the OMP Marks
set forth on Exhibit C hereto, solely in connection with the marketing,
distribution, promotion, advertising and sale of the Products in the Territory
and in accordance with any OMP’ standards and instructions, and for no other
purpose. OMP may inspect and monitor Distributor’s use of the OMP Marks.
Distributor shall not adopt, use or register any words, phrases or symbols
which are identical to or confusingly similar to any of the OMP Marks or oppose
any such registration by OMP. Distributor is not granted any right, title or
interest in the OMP Marks other than the foregoing limited license, and
Distributor shall not use the OMP Marks as part of Distributor’s business
entity or trade name or permit any third party to do so.

 

14.2                                    Markings.
Distributor shall
not remove or alter any OMP trade names, trademarks, copyright notices, serial
numbers, labels, tags or other identifying marks, symbols or legends affixed to
any Products, documentation or containers or packages.

 

14.3                                    Infringements.
Distributor shall
provide prompt notice to OMP of any infringement or potential infringement of
the OMP Marks by a third party and of any challenge to its use of the OMP Marks
by a third party. OMP reserves the right in its sole discretion to institute
any proceedings against third party infringers of the OMP Marks, and
Distributor shall refrain from doing so. Distributor shall cooperate fully with
OMP in any legal action taken by OMP against such third parties, provided that
OMP shall pay all expenses of such action and all damages which may be
awarded or agreed upon in settlement of such action shall accrue to OMP.

 

14.4                                    Termination
of Use. Except
as otherwise provided in Section 8.2(c) hereof,
upon termination of this Agreement, Distributor shall immediately cease any use
of the OMP Marks in any manner. In addition, Distributor hereby appoints OMP
its attorney infact,
which appointment is coupled with an interest, to allow OMP to cancel, revoke
or withdraw any governmental registration or authorization permitting
Distributor to use the OMP Marks in the Territory. To effectuate the purposes
of this provision, Distributor shall sign and deliver any documents and perform all
further acts as may be reasonably requested by OMP.

 

14.5                                    Distributor
Web Sites. Distributor
shall not operate an Internet site that references any of the Products or the
OMP Marks (“Distributor Web Site”) without the prior written consent of OMP, not to be unreasonably withheld.
In consideration of OMP allowing Distributor to reference the Products or use
the OMP Marks in the Distributor Web Site, OMP may provide and Distributor
shall post on the Distributor Web Site, mandatory content, including but not
limited to privacy policies, terms of use, copyright and trademark notices, and
graphics and trademark policies. Subject to OMP’s prior written consent,
Distributor shall prominently 

 

 

provide on the home page of the Distributor Web
Site a link to OMP’s Internet site in location, style, size and manner
specified by OMP.

 

14.6                                    Internet
Search Strategies. Distributor may not use any OMP Mark of any of the Products in
connection with any domain name, directory, address, locator, linking,
co-branding, metatag, or with any other Internet search strategy.

 

15.       MISCELLANEOUS.

 

15.1                                    Independent
Contractors. Notwithstanding
anything set forth herein to the contrary, the relationship of the Parties is
that of independent contractors, and nothing herein shall be construed to
create a partnership, joint venture, franchise, employment or agency
relationship between the Parties. Neither party shall have authority to enter
into agreements of any kind on behalf of the other Party and
shall not have the power or authority to bind or obligate the other Party in
any manner to any third party.

 

15.2                                    Assignment.
Neither Party shall
assign or otherwise transfer its rights or obligations under this Agreement
except with the prior written consent of the other Party, provided, however,
either Party may assign or transfer all its rights and obligations under
this Agreement to a successor in interest to all or substantially all of its
assets or business by reason of sale, merger or operation of law, without the
prior written consent of the other Party, if such successor affirms in writing
that it will remain bound by all the terms and conditions of this Agreement.

 

15.3                                    Notices.
Notices permitted or
required to be given hereunder shall be deemed sufficient if given by (a) registered
or certified mail, postage prepaid, return receipt requested, (b) private
courier service, or (c) facsimile sent to the respective addresses or
facsimile numbers and to the attention of the representatives of the Parties
set forth below or at such other addresses or facsimile numbers or
representative as the respective Parties may designate by like notice from
time to time. Notices so given shall be effective upon receipt by the Party to
which notice is given.

 

To
Obagi Medical Products Inc.:

 

Obagi Medical Products 

Attn: Curtis Cluff, Executive VP

310 Golden Shore, First Floor 

Long Beach, CA 90802

Fax: (562) 437-2725

 

To
Distributor:

 

Cellogique Corporation

Attn: Mazen Youssef, President

124 Woodland Road, 

Pittsburgh PA 15232 

Fax: (412) 422-8650

 

 

With a copy to:

 

Michael R.
Morris, Esq.

Valensi, Rose, Magaram, Morris & Murphy PLC

2029 Century Park East, Suite 2050

Los Angeles, CA 90067 

Fax: (310) 277-1706

 

15.4                                    Arbitration.
If any dispute
arises between Distributor and OMP relating to the subject matter of this
Agreement, Distributor and OMP shall each make good faith efforts to negotiate
an amicable settlement of such matter. The Parties agree that, except as
otherwise provided below, any dispute, claim or controversy relating in any way
to this Agreement shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (“AAA”)
in the state of California,
with judgment upon the award rendered by the arbitrator to be entered in any
court of competent jurisdiction. Notwithstanding the foregoing or the
then-current specified Commercial Arbitration Rules, the following shall apply
with respect to the arbitration proceeding:  (i) the existence, subject, evidence,
proceedings, and ruling resulting from the arbitration proceedings shall be
deemed confidential information, and shall not be disclosed by either Party,
their representatives, or the arbitrator (except:  (a) to the professional advisers of OMP
and Distributor; (b) in connection with a public offering of securities by
OMP or Distributor; (c) as ordered by any court of competent jurisdiction;
or (d) as required to comply with any applicable governmental statute or
regulation) and (ii) the arbitrator shall be required to prepare written
findings of fact. Notwithstanding the foregoing, either Party may apply to
a court of competent jurisdiction for a temporary restraining order,
preliminary injunction or other equitable relief, as necessary, without breach
of this arbitration agreement and without abridgement of the powers of the
arbitrator.

 

15.5                                    Governing
Law. This
Agreement has been made, executed and delivered in California, in which state
the offices of OMP are located. Accordingly, the Parties invoke the laws of
California regarding the protection of their rights and enforcement of their
obligations hereunder and they mutually stipulate and agree that this Agreement
is in all respects (including, but not limited to, all matters of
interpretation, validity, performance and the consequences of breach) to be
exclusively construed, governed and enforced in accordance with the internal laws
(excluding all conflict of laws rules) of California and any applicable federal
laws of the United States of America, as from time to time amended and in
effect. The Parties agree that the United Nations Convention on Contracts for
the International Sale of Goods shall not apply in any respect to this
Agreement or the Parties.

 

15.6                                    Force
Majeure. Except
Distributor’s obligation to pay under Section 7, neither Party shall be
liable for any failure to perform or delay in performance of its
obligations hereunder caused by circumstances beyond its reasonable control,
including, but not limited to, fire, storm, flood, earthquake, explosion,
accident, acts of a public enemy or rebellion, insurrection, riot, civil
commotion, strikes or other labor disputes, sabotage, epidemic, quarantine or
any agency thereof, judicial action and any other such external circumstances (a “Force Majeure”). As
to Distributors obligation to pay under section 7, the Distributor shall
be allowed a 90 day grace period in the event
of Force Majeure, in order to comply with such obligations to pay.

 

 

15.7                                    No
Solicitation of Related Personnel. During the term of this Agreement, and for a period
of twenty four (24) months after termination of this Agreement, neither OMP,
nor Distributor, nor any subsidiary or parent thereof, shall, directly or
indirectly, (i) solicit for employment or consulting engagement, (ii) offer
employment to, or (iii) engage the related business services of any person
who is or was an officer, employee or consultant of the other Party.

 

15.8                                    Entire
Agreement. This
Agreement constitutes the entire agreement between the Parties concerning the
subject matter hereof, and supersedes and replaces all prior or contemporaneous
understandings or agreements, written or oral, regarding such subject matter.
No amendment to or modification of this Agreement, or any waiver of any term or
condition of this Agreement will be binding unless in writing and signed by a
duly authorized representative of both Parties. The section and subsection headings
in this Agreement are inserted solely as a matter of convenience and for
reference, and shall not be considered in the construction or interpretation of
any provision hereof. If any provision hereof is declared invalid by a court or
arbitral tribunal of competent jurisdiction, such provision shall be
ineffective only to the extent of such invalidity, so that the remainder of
that provision and all remaining provisions of this Agreement will
continue in full force and effect.

 

15.9                                    Language.
The official
language of this Agreement is English. All contract interpretations, notices,
and dispute resolutions shall be in English. Any amendments to this Agreement
shall be in English. Translations of any of these documents shall not be
construed as official or original versions of the documents, or otherwise
referred to in the interpretation or construction of the intentions of the
Parties hereto.

 

15.10                              Execution.
This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original hereunder. Each Party agrees to be bound by its own facsimile or
telecopy signature, and accepts the facsimile or telecopy signature of the
other Party hereto.

 

Accepted and
agreed on behalf of:

 

	
  OMP, INC.

  	
   

  	
   

  	
  CELLOGIQUE CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Curtis Cluff 

  	
   

  	
  /s/ Mazen Youssef 

  	
   

  
	
  Signature

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Curtis Cluff 

  	
   

  	
  Mazen Youssef 

  	
   

  
	
  Name

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  E.V.P. Corp. Dev. & Operations

  	
     11/14/05 

  	
   

  	
  President

  	
  11/14/05 

  	
   

  
	
  Title

  	
  Date

  	
   

  	
  Title

  	
  Date

  	
   

  
								

 

 

EXHIBIT A

 

TO
THE DISTRIBUTION AGREEMENT

BETWEEN OBAGI MEDICAL PRODUCTS, INC.

AND

CELLOGIQUE CORPORATION

 

A.                       PRODUCTS.

 

OMP
skin care products subject to this Distribution Agreement include:

 

Nu-Derm

Blue Peel 

Obagi C 

Obagi-C Rx

 

B.                       TERRITORY.

 

The
Territory of Distributor shall be the country(ies) of Syria, Egypt, Lebanon,
Jordan, Saudi Arabia, United Arab Emirates, Bahrain, Kuwait, Iraq, Oman, Yemen,
Libya, Tunisia, Morocco, Turkey, Cypress, Iran, Sudan, Algeria, Qatar, and
Israel, including, without limitation, any territories and possessions of any
of the foregoing countries, and any other geographic area designated by OMP and
agreed to by Distributor for the exercise of Distributor’s rights and
obligations in the Distribution Agreement.

 

C.                       PRICES AND
DISCOUNTS.

 

Distributor
shall receive a base discount from OMP’s standard prices to US physicians on
all purchases of the Products and additional discounts (“Additional Discounts”)
based on performance, promotional activities and volume targets as set forth
below. Distributor’s, right to Additional Discounts shall be determined on January 1
calendar year basis as described in below. All prices in the following table(s)
are in US Dollars.

 

 

	
   

  	
   

  	
   

  	
   

  	
  Base

  Price

  	
   

  	
  Distributor

  Discounts

  	
   

  	
  Additional Discounts

  	
   

  
	
  Obagi

  Nu-Derm Products

  	
   

  	
  Standard

  US Price

  to

  Physicians

  	
   

  	
  Suggested

  End User

  Price

  	
   

  	
  Basic

  Discount

  30%

  	
   

  	
  Investment

  Discount

  12.5%

  	
   

  	
  Volume

  Discount

  10.0%

  >1.5M

  	
   

  	
  or

  	
   

  	
  Volume

  Discount

  15.0%

  >1.8M

  	
   

  
	
  Gentle Cleanser

  	
   

  	
  16.00

  	
   

  	
  32.00

  	
   

  	
  11.20

  	
   

  	
  9.20

  	
   

  	
  7.60

  	
   

  	
   

  	
   

  	
  6.80

  	
   

  
	
  Foaming Gel

  	
   

  	
  16.00

  	
   

  	
  32.00

  	
   

  	
  11.20

  	
   

  	
  9.20

  	
   

  	
  7.60

  	
   

  	
   

  	
   

  	
  6.80

  	
   

  
	
  Toner

  	
   

  	
  16.00

  	
   

  	
  32.00

  	
   

  	
  11.20

  	
   

  	
  9.20

  	
   

  	
  7.60

  	
   

  	
   

  	
   

  	
  6.80

  	
   

  
	
  Clear

  	
   

  	
  39.50

  	
   

  	
  74.00

  	
   

  	
  27.65

  	
   

  	
  22.71

  	
   

  	
  18.76

  	
   

  	
   

  	
   

  	
  16.79

  	
   

  
	
  Exfoderm

  	
   

  	
  27.00

  	
   

  	
  54.00

  	
   

  	
  18.90

  	
   

  	
  15.53

  	
   

  	
  12.83

  	
   

  	
   

  	
   

  	
  11.48

  	
   

  
	
  Exfoderm Forte

  	
   

  	
  27.00

  	
   

  	
  54.00

  	
   

  	
  18.90

  	
   

  	
  15.53

  	
   

  	
  12.83

  	
   

  	
   

  	
   

  	
  11.48

  	
   

  
	
  Blender

  	
   

  	
  37.50

  	
   

  	
  69.00

  	
   

  	
  26.25

  	
   

  	
  21.56

  	
   

  	
  17.81

  	
   

  	
   

  	
   

  	
  15.94

  	
   

  
	
  Sunfadar

  	
   

  	
  29.50

  	
   

  	
  55.00

  	
   

  	
  20.65

  	
   

  	
  16.96

  	
   

  	
  14.01

  	
   

  	
   

  	
   

  	
  12.54

  	
   

  
	
  Healthy Skin Protection

  	
   

  	
  19.00

  	
   

  	
  38.00

  	
   

  	
  13.30

  	
   

  	
  10.93

  	
   

  	
  9.03

  	
   

  	
   

  	
   

  	
  8.08

  	
   

  
	
  Sunblock

  	
   

  	
  19.00

  	
   

  	
  38.00

  	
   

  	
  13.30

  	
   

  	
  10.93

  	
   

  	
  9.03

  	
   

  	
   

  	
   

  	
  8.08

  	
   

  
	
  Tolereen

  	
   

  	
  22.00

  	
   

  	
  44.00

  	
   

  	
  15.40

  	
   

  	
  12.65

  	
   

  	
  10.45

  	
   

  	
   

  	
   

  	
  9.35

  	
   

  
	
  Action

  	
   

  	
  17.50

  	
   

  	
  35.00

  	
   

  	
  12.25

  	
   

  	
  10.06

  	
   

  	
  8.31

  	
   

  	
   

  	
   

  	
  7.44

  	
   

  
	
  Eye Cream

  	
   

  	
  20.00

  	
   

  	
  40.00

  	
   

  	
  14.00

  	
   

  	
  11.50

  	
   

  	
  9.50

  	
   

  	
   

  	
   

  	
  8.50

  	
   

  
	
  Travel Set (Normal to Oily)

  	
   

  	
  89.50

  	
   

  	
  170.00

  	
   

  	
  62.65

  	
   

  	
  51.46

  	
   

  	
  42.51

  	
   

  	
   

  	
   

  	
  38.04

  	
   

  
	
  Travel Set (Normal to Dry)

  	
   

  	
  89.50

  	
   

  	
  170.00

  	
   

  	
  62.65

  	
   

  	
  51.46

  	
   

  	
  42.51

  	
   

  	
   

  	
   

  	
  38.04

  	
   

  
	
  Starter Set (Normal to Oily)

  	
   

  	
  175.00

  	
   

  	
  390.00

  	
   

  	
  122.50

  	
   

  	
  100.63

  	
   

  	
  83.13

  	
   

  	
   

  	
   

  	
  74.38

  	
   

  
	
  Starter Set (Normal to Dry)

  	
   

  	
  175.00

  	
   

  	
  390.00

  	
   

  	
  122.50

  	
   

  	
  100.63

  	
   

  	
  83.13

  	
   

  	
   

  	
   

  	
  74.38

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Obagi GRx

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cleansing Gel

  	
   

  	
  14.50

  	
   

  	
  29.00

  	
   

  	
  10.15

  	
   

  	
  8.34

  	
   

  	
  6.89

  	
   

  	
   

  	
   

  	
  6.16

  	
   

  
	
  Clarifying Serum

  	
   

  	
  44.50

  	
   

  	
  89.00

  	
   

  	
  31.15

  	
   

  	
  25.59

  	
   

  	
  21.14

  	
   

  	
   

  	
   

  	
  18.91

  	
   

  
	
  Exfoliating Day Lotion SPF 12

  	
   

  	
  24.50

  	
   

  	
  49.00

  	
   

  	
  17.15

  	
   

  	
  14.09

  	
   

  	
  11.64

  	
   

  	
   

  	
   

  	
  10.41

  	
   

  
	
  Exfoliating Day Lotion

  	
   

  	
  24.50

  	
   

  	
  49.00

  	
   

  	
  17.15

  	
   

  	
  14.09

  	
   

  	
  11.64

  	
   

  	
   

  	
   

  	
  10.41

  	
   

  
	
  Therapy Night Cream

  	
   

  	
  39.50

  	
   

  	
  79.00

  	
   

  	
  27.65

  	
   

  	
  22.71

  	
   

  	
  18.76

  	
   

  	
   

  	
   

  	
  16.79

  	
   

  
	
  Sun Guard SPF 30

  	
   

  	
  18.50

  	
   

  	
  37.00

  	
   

  	
  12.95

  	
   

  	
  10.64

  	
   

  	
  8.79

  	
   

  	
   

  	
   

  	
  7.86

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Obagi C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Obagi C 5%

  	
   

  	
  24.00

  	
   

  	
  48.00

  	
   

  	
  16.80

  	
   

  	
  13.80

  	
   

  	
  11.40

  	
   

  	
   

  	
   

  	
  10.20

  	
   

  
	
  Obagi C 10%

  	
   

  	
  40.00

  	
   

  	
  80.00

  	
   

  	
  28.00

  	
   

  	
  23.00

  	
   

  	
  19.00

  	
   

  	
   

  	
   

  	
  17.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Blue Peel

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Blue Peel Kit,

  	
   

  	
  525.00

  	
   

  	
  525.00

  	
   

  	
  367.50

  	
   

  	
  301.88

  	
   

  	
  249.38

  	
   

  	
   

  	
   

  	
  223.13

  	
   

  
	
  Cleanser

  	
   

  	
  19.00

  	
   

  	
  19.00

  	
   

  	
  13.30

  	
   

  	
  10.93

  	
   

  	
  9.03

  	
   

  	
   

  	
   

  	
  8.08

  	
   

  

 

 

	
   

  	
   

  	
   

  	
   

  	
  Base

  Price

  	
   

  	
  Distributor Discounts

  	
   

  	
  Additional Discounts

  	
   

  
	
  Obagi

  Proderm

  	
   

  	
  Standard

  US Price to

  Physicians

  	
   

  	
  Suggested

  End User

  Price

  	
   

  	
  Basic

  Discount

  30%

  	
   

  	
  Investment

  Discount

  12.5%

  	
   

  	
  Volume

  Discount

  10.0%

  >1.5M

  	
   

  	
  or

  	
   

  	
  Volume

  Discount

  15.0%

  >1.8M

  	
   

  
	
  Foaming Cleanser

  	
   

  	
  16.00

  	
   

  	
  32.00

  	
   

  	
  11.20

  	
   

  	
  9.20

  	
   

  	
  7.60

  	
   

  	
   

  	
   

  	
  6.80

  	
   

  
	
  Toner

  	
   

  	
  16.00

  	
   

  	
  32.00

  	
   

  	
  11.20

  	
   

  	
  9.20

  	
   

  	
  7.60

  	
   

  	
   

  	
   

  	
  6.80

  	
   

  
	
  Stimulator

  	
   

  	
  30.00

  	
   

  	
  32.00

  	
   

  	
  21.00

  	
   

  	
  17.25

  	
   

  	
  14.25

  	
   

  	
   

  	
   

  	
  12.75

  	
   

  
	
  Corrector

  	
   

  	
  25.00

  	
   

  	
  74.00

  	
   

  	
  17.50

  	
   

  	
  14.38

  	
   

  	
  11.88

  	
   

  	
   

  	
   

  	
  10.63

  	
   

  
	
  Refining Mask

  	
   

  	
  22.00

  	
   

  	
  54.00

  	
   

  	
  15.40

  	
   

  	
  12.65

  	
   

  	
  10.45

  	
   

  	
   

  	
   

  	
  9.35

  	
   

  
	
  Eye Support

  	
   

  	
  21.00

  	
   

  	
  54.00

  	
   

  	
  14.70

  	
   

  	
  12.08

  	
   

  	
  9.98

  	
   

  	
   

  	
   

  	
  8.93

  	
   

  
	
  Clarifier

  	
   

  	
  34.00

  	
   

  	
  69.00

  	
   

  	
  23.80

  	
   

  	
  19.55

  	
   

  	
  16.15

  	
   

  	
   

  	
   

  	
  14.45

  	
   

  

 

Investment Discount

 

Distributor
shall receive an investment of twelve and a half percent (12.5%) off
Distributor’s Base Price as consideration for investments already made high end
medical centers and/or retail shop (“Medical Center”) servicing each countries
in which the Distributor has operations. The twelve and a half percent (12.5%)
discount shall be applicable to all Distributor orders for Products so long as
the distributor continues to operate or cause to have operated Medical Centers
as a material part of the distributors operations, include the prominent
display and sale of Obagi products and periodic physician training on the same.

 

Volume Discount

 

Distributor
shall receive an additional volume discount based on Distributor’s purchase of
Products based on volume achieved over $1.5 million or $1.8 million as noted in
the table above. Discount shall be awarded against purchase orders based on the
distributors reasonable forecast of calendar year purchase volume. After the
close of first 12 months of this agreement, the Distributor will be
debited/credited the difference between the actual volume discounts applied to
purchases, and the volume discount actually earned per schedule C above,
if any.

 

Sample Product

 

In
addition to the discounts noted above, the Distributor shall also be entitled
to receive sample product equal to 5% of the net purchase price for any given
order placed. The expressed purpose of this product solely for providing free
product sampling to physicians to promote new account trial and ongoing
personal use by physicians and their staff to the extent applicable. The
distributor agrees that such product will be separately tracked and will not be
re-sold to the distributors profit.

 

D.                       DISTRIBUTOR’S
MINIMUM PURCHASE REQUIREMENT.

 

Distributor’s Minimum Purchase Requirements shall be
$1.5 million in the first full calendar year, and shall increase 10% each year
thereafter ($1.65 Million in 2007, $1,815 in 2008, etc.).

 

 

EXHIBIT B

 

PURCHASE ORDER AND
ROLLING FORECAST FORM

 

Rolling 4-Q Forecast by
Units and Actual P.O 

Rolling 3-Q Forecast by Units

 

Distributor’s Name:                                                                       

 

Distributor’s Signature:                                    
Date:                         

 

	
   

  	
   

  	
  QUARTER 1

  	
   

  	
  QUARTER 2

  	
   

  	
  QUARTER 3

  	
   

  	
  QUARTER 4

  
	
  * This Quarter represents a Purchase Order

  	
   

  	
  UNIT

  	
   

  	
  This Quarter is a Forecast Q2

  	
   

  	
  UNIT

  	
   

  	
  This Quarter is a Forecast Q3

  	
   

  	
  UNIT

  	
   

  	
  This Quarter is a Forecast Q4

  	
   

  	
  UNIT

  
	
  Products

  	
   

  	
  Oct. 02

  	
   

  	
  Nov. 02

  	
   

  	
  Dec. 02

  	
   

  	
  Qtr. Total

  	
   

  	
  Jan. 03

  	
   

  	
  Feb. 03

  	
   

  	
  Mar. 03

  	
   

  	
  Qtr. Total

  	
   

  	
  Apr. 03

  	
   

  	
  May. 03

  	
   

  	
  Jun. 03

  	
   

  	
  Qtr. Total

  	
   

  	
  Jul. 03

  	
   

  	
  Aug. 03

  	
   

  	
  Sept. 03

  	
   

  	
  Qtr.Total

  
	
  Foaming Gel

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gentle Cleanser

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Toner

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Clear

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exfoderm

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exfoderm Forte

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Blender

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Healthy Skin Protection

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sunblock

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Action

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tolereen

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eye Cream

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Blue Peel Kit (6)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Control Kit

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Therapeutic Kit

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Obagi-C 5%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Obagi-C 10%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(Note: This is
just a sample spreadsheet in the format in which to layout your spreadsheet.
Not all products are available in all countries. Please use only those products
that are appropriate for your market.)

 

*The Quarter not
shaded, signifies an actual Purchase Order and constitutes a binding order. The
following three shaded quarters are viewed as forecasts.

 

Your signature above
approves a shipment of product noted in Quarter one. Unit orders must be placed
in master shipper quantities.

 

This order is
subject to all the terms and conditions contained in your International Product
Distribution Agreement.

 

This Form (Purchase
order and Rolling 3-Q Forecast by units) must be provided to OMP by February 1,
by May l, by August 1, and by November 1 of each year.

 

 

 

	
  Obagi System Graphic Standards

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Logos

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Shown at right are the logos used for Obagi System
  and its products. These logos should appear as the 2-color version shown. The
  2 colors of the logos are PMS
  2748 and PMS 319.

  	
   

  	
  [GRAPHIC]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  As an alternative, the 1-color or black logo may be
  used. When the logo is to be placed on a dark background, the reversed
  version should be used. See demonstrations with the Obagi logo at right.

  	
   

  	
  [GRAPHIC]

  	
   

  	
  [GRAPHIC]

  	
   

  	
  [GRAPHIC]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Area
  of Isolation

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  It is important to keep the logo clear of any
  distracting elements. The minimum amount of clear space around the mark
  should be at least 1/2”.

  	
   

  	
  [GRAPHIC]

  

  L-Color

  	
   

  	
  [GRAPHIC]

  

  black

  	
   

  	
  [GRAPHIC]

  

  reversed

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Color

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Obagi System color palette is as follow.* To
  keep the image consistent, it is important to always use the designated
  PANTONE colors.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Obagi
  System

  	
   

  	
  [GRAPHIC]

  	
   

  	
  [GRAPHIC]

  	
   

  	
   

  
	
  Obagi Nu-Derm System

  	
   

  	
  Obagi System, Nu-Derm, Blue Peel

  	
   

  	
   

  
	
  Obagi Blue Peel

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PMS 2748 blue and PMS 319 teal

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [GRAPHIC]

  	
   

  	
  [GRAPHIC]

  	
   

  	
   

  
	
  Obagi-C
  Rx System

  PMS 2748 blue and PMS 132
  gold

  	
   

  	
  Obagi-C Rx System

  	
   

  	
   

  

 

	
   

  	
   

  	
  *The colors shown onthis page and throughout this
  document have not been evaluated by Pantone, Inc. for accuracy and may not
  match the PANTONE® Color Standards. For accurate color standards,
  refer to the current edition of the PANTONE Color Formula Guide. PANTONE is a
  registered trademark of Pantone, Inc.

  

 

 

 

EXHIBIT D

 

Defective Product
Complaint

(Quality Defect vs.
Medical Defect)

 

Below is the
written procedure for reporting, processing and handling complaints regarding
drug (and cosmetic) products manufactured by or for OMP, Inc. (“OMP”) as
required by United States Food and Drug Administration (FDA) regulations.

 

This procedure
applies to all OMP and Distributor personnel involved in reporting and
processing the complaints.

 

Upon receipt of a
complaint, the attached Product Complaint Form must be completed and fully
identify the complaint and product(s) involved. The complaint must be submitted
to OMP’s International Sales and Marketing Department, which receives all drug
complaints.

 

The nature of the
complaint must be classified as either a Quality Defect or Medical Defect, as
described below.

 

Quality Defect:

A product
complaint expressing dissatisfaction with the quality of a product, e.g. a
complaint expressing dissatisfaction with the attributes of the product, such
as missing lot numbers or expiration dates, discoloration of product, leaking
caps, etc.

 

Medical Defect (Adverse Drug Experience):

A product
complaint reporting an Adverse Drug Experience associated with the use of the
product with humans, whether or not considered drug related. An Adverse
Drug Experience is an event associated with the product, e.g. use of the
product, any significant performance failure or unexpected pharmacological
activity; drug abuse and drug withdrawal, such as rashes, hypo-pigmentation,
acne, headaches, etc.

 

The attached form must
be completed for either or both a Quality Defect or Medical Defect and
submitted to OMP’s International Sales and Marketing Department. Whenever
possible send the product associated with the complaint with the “Product
Complaint Form.”

 

 

 

[GRAPHIC]

 

DRUG & COSMETIC

 

PRODUCT
COMPLAINT FORM

 

	
  Distributor
  Name:

  	
   

  	
   

  	
  Date:

  	
   

  

 

	
   

  	
   

  	
   

  
	
  Type
  of Complaint: Quality o
  Medical o 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Return
  Authorization Number (if applicable):

  	
   

  

 

	
  Name
  of Account Reporting Complaint:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name
  of Medical Office / Institution:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Address:

  	
   

  	
   

  	
  Phone:

  	
  (     )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
  (     )

  	
   

  	
   

  
								

 

	
  Name
  of Product Receiving Complaint:

  	
   

  	
   

  	
  Product
  Size:

  	
   

  
	
   

  	
  (For
  example: 60 gram)

  

 

	
   

  	
   

  
	
  Lot
  No:

  	
   

  	
   

  	
  Exp
  Date (If available):

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Description
  of Complaint:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

	
  Sample
  Available: Yes o
  No o

  
	
  (If
  yes, please obtain sample and forward to International Sales &
  Marketing Department)

  

 

	
  Distributor Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Distributor’s Signature

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  
	
  OMP Representative who received complaint:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  September 23, 2002

  
					

 

Exhibit E

Sub-Distributors

 

 

None noted to date.

 

 

 

AMENDMENT TO DISTRIBUTION
AGREEMENT

 

            This amendment (the
“Amendment”) to the Distribution Agreement dated November 10, 2005 (the “Agreement”)
by and between OMP, Inc., a company established and existing under the laws of
the State of Delaware, having its principal place of business at 310 Golden
Shore, Long Beach, California 90802, USA (“OMP”) and Cellogique Corporation, a
corporation organized and validly existing under the laws of California, having
its principal place of business at 124 Woodland Road, Pittsburgh PA 15232
(“Distributor”), is made and entered into as of October 23, 2006 by and between
OMP and the Distributor.

 

            THE PARTIES AGREE AS
FOLLOWS:

 

            1.         Amendment to Exhibit A.  Exhibit A to the Agreement shall be amended
to include the following second sentence in Section B, which shall be read
directly after the first sentence of Section B.

 

            “Notwithstanding
the foregoing, if at any time any of the countries (or the territories or
possessions of the countries) identified in this Section B are identified as
state sponsors of terrorism by the government of the United States, the
Territory of the Distributor shall be deemed not to include such countries (or
territories or possessions of those countries), for the period of the Term such
portion of the Territory is so classified.”

 

            2.         Binding Effect.  This Amendment shall be binding upon the
heirs, legal representatives and successors of OMP and the Distributor.

 

            3.         Entire Agreement; Other Provisions.  This Amendment constitutes the entire
agreement of the parties pertaining to provisions of the Agreement described
herein.  All other provisions of the
Agreement remain in full force and effect.

 

            5.         Counterparts.  This Amendment may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.

 

	
   

  	
  OMP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Curtis A. Cluff

  
	
   

  	
  Name:

  	
  Curtis A. Cluff

  
	
   

  	
  Title:

  	
  EVP Corp. Development & Operations

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CELLOGIQUE CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mazen F. Youssef

  
	
   

  	
  Name:

  	
  Mazen F. Youssef

  
	
   

  	
  Title:

  	
  President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]