Document:

exv10w13

 

Exhibit 10.13

STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE — GROSS

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1. Basic Provisions (“Basic Provisions”).

     1.1 Parties: This Lease (“Lease”), dated for reference purposes only February 28, 2005, is made by
and between 2101 Williams Associates, LLC, a California Limited Liability Company (“Lessor”) and
Energy Recovery, Inc., a Delaware Corporation (ERI) (“Lessee”), (collectively the “Parties”, or
individually a “Party”).

     1.2(a) Premises: That certain portion of the Project (as defined below), including all improvements
therein or to be provided by Lessor under the terms of this Lease, commonly known by the street
address of 1908 Doolittle Drive, located in the City of San Leandro, County of Alameda, State of
California, with zip code 94577, as outlined on Exhibit A attached hereto (“Premises”) and
generally described as (describe briefly the nature of the Premises): that certain approx. 22,182
s.f. light industrial space incl. 8,017 s.f. offices and 14,165 s.f. warehouse & mfg. as shown in
red, being a portion of that larger multi-tenant project. See also
Para. 50.

     In addition to Lessee’s rights to use and occupy the Premises as hereinafter specified, Lessee
shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as
hereinafter specified, but shall not have any rights to the roof, exterior walls or utility
raceways of the building containing the Premises (“Building”) or to any other buildings in the
Project. The Premises, the Building, the Common Areas, the land upon which they are located, along
with all other buildings and improvements thereon, are herein collectively referred to as the
“Project.” (See also Paragraph 2.)

     1.2(b)
Parking: See par. 59 unreserved vehicle parking spaces
(“Unreserved Parking Spaces”); and
                    
reserved vehicle parking spaces (“Reserved Parking
Spaces”). (See also Paragraph 2.6.)

     1.3
Term: Five (5) years and -0- months (“Original Term”) commencing May 1, 2005 (“Commencement
Date”) and ending April 30, 2010 (“Expiration Date”). (See also Paragraph 3.) & 51.

     1.4
Early Possession: See par. 51. (“Early Possession Date”). (See also Paragraphs 3.2 and 3.3.)

     1.5
Base Rent: $17,300.00 per month (“Base Rent”), payable on the First day of each month
commencing May 1, 2005. (See also Paragraph 4.) & Par 51.

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

     1.6 Lessee’s Share of Common Area Operating Expenses: seventy-seven & 20/100 percent (77.20%)
(“Lessee’s Share”).

     1.7 Base Rent and Other Monies Paid Upon Execution:

          (a) Base
Rent: $ _________ for
the period
____________________________________.

          (b) Common Area Operating Expenses: $
_________ for
the period _________________________________.

          (c) Security
Deposit: $34,600 (“Security Deposit”). (See also Paragraph 5.) & Par. 53.

          (d) Other:
$ _________
for ____________________________________.

          (e) Total
Due Upon Execution of this Lease: $________________________.

     1.8
Agreed Use: General commercial & light manufacturing with related office use. (See also
Paragraph 6.)

     1.9
Insuring Party. Lessor is the “Insuring Party”. (See also Paragraph 8.)

     1.10
Real Estate Brokers: (See also Paragraph 15.)

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

þ 
Donald L. Jones Company represents Lessor exclusively (“Lessor’s Broker”);

o _____________________ represents Lessee exclusively (“Lessee’s Broker”); or

o _____________________
represents both Lessor and Lessee (“Dual Agency”).

          (b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall pay
to the Brokers the brokerage fee agreed to in a separate written agreement (or if there is no such
agreement, the sum of _________or _________% of the total Base Rent for the brokerage
services rendered by the Brokers). See Par. 56.

     1.11
Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by See Par. 53.
(“Guarantor”). (See also Paragraph 37.)

     1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of Paragraphs 50
through 65 and Exhibit A through D, all of which constitute a part of this Lease.

2. Premises.

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

     2.2  Condition. Lessor shall deliver that portion of the Premises contained within the Building
(“Unit”) to Lessee broom clean and free of debris on the Commencement Date or the Early Possession
Date, whichever first occurs (“Start Date”), and, so long as the required service contracts
described in Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty days
following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, if any, and
all other such elements in the Unit other than those constructed by Lessee, shall be in good
operating condition on said date and that the structural elements of the roof, bearing walls and
foundation of the Unit shall be free of material defects. If a non-compliance with such warranty
exists as of the Start Date, or if one of such systems or elements should malfunction or fall
within the appropriate warranty period, Lessor shall, as Lessor’s sole obligation with respect to
such matter, except as otherwise provided in this Lease, promptly alter receipt of written notice
from Lessee setting forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lesso’s expense. The warranty periods shall be as follows:
(i) 6 months as to the HVAC systems, and (ii) 30 days as to the remaining systems and other
elements of the Unit. If Lessee does not give Lessor the required notice within the appropriate
warranty period, correction of any such non-compliance, malfunction or failure shall be the
obligation of Lessee at Lessee’s sole cost and expense (except for

	 	 	 	 	 
	 
 

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the repairs to the fire sprinkler systems, roof,
foundations, and/or bearing walls — see Paragraph 7). See also Paragraph 51.

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

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

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

          (c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to
apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital
Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use,
change in intensity of use, or modification to the Premises then, and in that event, Lessee shall
be fully responsible for the cost thereof, and Lessee shall not have any right to terminate this
Lease.

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

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

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

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

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

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

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

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

     2.9 Common Areas — Rules and Regulations. Lessor or such other person(s) as Lessor may appoint
shall have the exclusive control and management of the Common Areas and shall have the right, from
time to time, to establish, modify, amend and enforce reasonable rules and regulations (“Rules and
Regulations”) for the management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the convenience of other
occupants or tenants of the Building and the Project and their invitees. Lessee agrees to abide by
and conform to all such Rules and Regulations, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to
Lessee for the non-compliance with said Rules and Regulations by other tenants of the Project.

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

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

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

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

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

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

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

3. Term.

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

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

     3.3 Delay
in Possession. Lessor agrees to use its best commercially reasonable
efforts to deliver possession of the Premises to Lessee by the Commencement Date. If, despite said
efforts, Lessor is unable to deliver possession as agreed, Lessor shall not be subject to any
liability therefore, nor shall such failure affect the validity of this Lease. Lessee shall not,
however, be obligated to pay Rent or perform its other obligations
until it receives possession of
the Premises. If possession is not delivered within 60 days after the Commencement Date, Lessee
may, at its option, by notice in writing within 10 days after the end of such 60 day period,
cancel this lease, in which event the Parties shall be discharged from all obligations hereunder.
If such written notice is not received by Lessor within said 10 day period, Lessee’s right to
cancel shall terminate. Except as otherwise provided, if possession is not tendered to Lessee by
the Start Date and Lessee does not terminate this Lease, as aforesaid, any period of rent
abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have enjoyed under the
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hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession of the
premises is not delivered within 4 months after the Commencement Date, this Lease shall
terminate unless other agreements are reached between Lesser and Lessee, in writing.

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

4. Rent.

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

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

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

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

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

               (bb) Exterior signs and any tenant directories.

               (cc) Any fire sprinkler systems.

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

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

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

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

          
(vi) Any “Insurance Cost Increase” (as defined in Paragraph 8).

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

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

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

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

     (c) The inclusion of the improvements, facilities and services set forth in Subparagraph
4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or
facilities or to provide those services unless the Project already has the same, Lessor already
provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of
them.

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

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

     4.3
Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of
the United States, without offset or deduction (except as specifically permitted in this Lease), on
or before the day on which it is due. Rent for any period during the term hereof which is for less
than one full calendar month shall be prorated based upon the actual number of days of said month.
Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or
place as Lessor may from time to time designate in writing. Acceptance of a payment which is less
than the amount then due shall not be a waiver of Lessor’s rights to the balance of such Rent,
regardless of Lessor’s endorsement of any check so stating. In the event that any check, draft, or
other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees
to pay to Lessor the sum of $25.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as
security for Lessee’s faithful performance of its obligations under this Lease. If Lessee fails to
pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any
portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall
within 10 days after written request therefore deposit monies with Lessor sufficient to restore
said Security Deposit to the full amount required by this Lease.
If the Base Rent increases during
the term of this Lease, Lessee shall, upon written request from Lesser, deposit additional monies
with Lesser so that the total amount of the Security Deposit shall at all times bear the same
proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base
Rent.
Should the Agreed Use be amended to accommodate a material change in the business of Lessee
or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security
Deposit to the extent necessary, in Lessor’s reasonable judgment, to account for any increased wear
and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs
during this Lease and following such change the financial condition of Lessee is, in Lessor’s
reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based
on such change in financial condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts. Within 14 days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within 30
days after the Premises have
been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the Security
Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be
held In trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this
Lease.

6. Use.

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

     6.2 Hazardous Substances.

          (a) Reportable
Uses Require Consent. The term “Hazardous
Substance” as used in this Lease shall
mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation,
or release, either by itself or in combination with other materials expected to be on the Premises,
is other: (i) potentially Injurious to the public health, safety or welfare, the environment or the
Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential
liability of Lessor to any governmental agency or third party under any applicable statute or
common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by-products or fractions thereof. Lessee
shall not engage in any activity in or on the Premises which constitutes a Reportable Use of
Hazardous Substances without the express prior written consent of Lessor and timely compliance (at
Lessee’s expense) with all Applicable Requirements.
“Reportable Use” shall mean (i) the
installation or use of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or
with respect to which a report, notice, registration or business plan is required to be filled
with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous
Substance with respect to which any Applicable Requirements requires that a notice be

	 	 	 	 	 
	 
 

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given to persons entering or occupying the Premises or neighboring properties. “Notwithstanding the
foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in
the normal course of the Agreed use, so long as such use is in compliance with all Applicable
Requirements, is not Reportable Use , and does not expose the Premises or neighboring property to
any meaningful risk of contamination of damage or expose Lessor to any liability therefor. In
addition, Lessor may condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public, the premises and/or
the environment against damage, contamination, injury and/or liability, including, but not limited
to the installation (and removal on or before Lease expiration of termination) of protective
modifications (such as concrete encasements) and/or increasing the Security Deposits.

          (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a
Hazardous Substance has come to be located in, on under or about the Premises, other than as
previously consented to by Lessor , Lessee shall immediately give written notice of such fact to
Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.

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

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

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

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

          (g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e) occurs
during the term of this Lease, unless Lessee is legally responsible therefor (in which case Lessee
shall make the Investigation and remediation thereof required by the Applicable Requirements and
this Lease shall continue In full force and effect, but subject to Lessor’s rights under Paragraph
6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i) Investigate and remediate
such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor’s
expense, in which event this Lease shall continue in full force and effect, or (ii) If the
estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within 30 days after receipt by
Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to
terminate this Lease as of the date 60 days following the date of such notice. In the event Lessor
elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to
Lessor of Lessee’s commitment to pay the amount by which the cost of the remediation of such
Hazardous Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfactory
assurance thereof within 30 days following such commitment. In such event,
this Lease shall continue in full force and effect, and Lessor shall proceed to make such
remediation as soon as reasonably possible after the required funds are available. If Lessee does
not give such notice and provide the required funds or assurance thereof within the time provided,
this Lease shall terminate as of the date specified in Lessor’s notice of termination.

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

     6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and
consultants shall have the right to enter into Premises at any time, in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and
for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid
by Lessor, unless a violation of Applicable Requirements, or a contamination is found to exist or
be imminent, or the inspection is requested or ordered by a governmental authority. In such case,
Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such
inspection is reasonably related to the violation or contamination.

7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations. See also Paragraph
54.

     7.1 Lessee’s Obligations.

          (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3
(Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or
Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations (intended for Lessee’s exclusive use, no matter where located), and
Alterations in good order, condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily accessible to
Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior
use, the elements or the age of such portion of the Premises), including, but not limited to, all
equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities,
boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings,
floors, windows, doors, plate glass, and skylights but excluding any Items which are the
responsibility of Lessor pursuant to Paragraph 7.2. Lessee in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices, specifically including
the procurement and maintenance of the service contracts required by Paragraph 7.1 (b) below.
Lessee’s obligations shall Include restorations, replacements or renewals when necessary to keep
the Premises and all improvements thereon or a part thereof in good order, condition and state of
repair.

          (b) Service Contracts. Lessee Lessor shall, at Lessee’s sole expense, procure and maintain
contracts, with copies to Lesser, in customary form and substance for, and with contractors
specializing and experienced in the maintenance of the following equipment and improvements, if
any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels,
(iii) clarifiers, and (iv) any other equipment, if reasonably required by Lessor. However, Lessor
reserves the right, upon notice to Lessee, to procure and maintain any or all of such service
contracts, and if Lesser so elects, Lessee shall reimburse Lessor, upon demand, for the cost
thereof.

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

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

     
7.2 Lessor’s Obligations. Subject to the provision of paragraphs 2.2 (Condition), 2.3
(Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9 (Damage
or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to paragraph 4.2.
shall keep in good order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke
detection systems, fire hydrants,
parking lots, walkways, parkways, dreiveways, landscaping, tences, signs and ability systems
serving the Common Areas and all parts therof, as well as providing the services for which there is
a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint
the exterior or interior surfaces of exterior walls nor shall Lessor be obligated to maintain,
repairs or replace windows, doors or plate glass of the Premises except for improvements pursuant
to Exhibit “B” of this Lease. Lessee expressly waives the benefit of any statute now or hereafter
in effect to the extent it is inconsistent with the terms of this Lease.

     7.3 Utility installations; Trade Fixture; Alterations.

	 	 	 	 	 
	 
 

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

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

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

     7.4 Ownership; Removal; Surrender; and Restoration.

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

          (b) Removal. By delivery to Lessee of written notice from Lessor not less than three (3)
months earlier than 00 and not later than 30 days prior to the end of the term of this Lease,
Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by
the expiration or termination of this Lease. Lessor may require the removal at any time of all or
any part of any Lessee Owned Alterations or Utility Installations made without the required
consent.

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

8. Insurance; Indemnity.

     
8.1 Payment of Premium Increases. See also Paragraph 60.

          (a) As used herein, the term “Insurance Cost Increase” is defined as any increase in the
actual cost of the insurance applicable to the Building and/or the Project and required to be
carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), (“Required Insurance”), over
and above the Base Premium, as hereinafter defined, calculated on an annual basis. Insurance Cost
increase shall include, but not be limited to, requirements of the holder of a mortgage or deed of
trust covering the Premises, Building and/or Project, increased valuation of the Premises, Building
and/or Project, and/or a general premium rate increase. The term Insurance Cost increase shall not,
however, include any premium increases resulting from the nature of the occupancy of any other
tenant of the Building. If the parties insert a dollar amount in Paragraph 1.9, such amount shall
be considered the “Base Premium.” The Base Premium shall be the annual premium applicable to the 12
month period immediately preceding the Start Date. If, however, the Project was not insured for the
entirety of such 12 month period, then the Base Premium shall be the lowest annual premium
reasonably obtainable for the Required Insurance as of the Start Date, assuming the most nominal
use possible of the Building. In no event, however, shall Lessee be responsible for any portion of
the premium cost attributable to liability insurance coverage in excess of $2,000,000 procured
under Paragraph 8.2(b).

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

     8.2 Liability Insurance.

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

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

     8.3
Property Insurance — Building, Improvements and Rental Value.

          (a) Building and Improvements. Lessor shall obtain and keep in force a policy or policies of
insurance in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender
insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lender, but in no event more than the commercially reasonable and available
insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and
Lessee’s personal property shall be insured by Lessee under Paragraph 8.4. If the coverage is
available and commercially appropriate, such policy or policies shall insure against all risks of
direct physical loss or damage (except the perils of flood and/or earthquake unless required by a
Lender), including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of
the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed  valuation provision in lieu of any coinsurance clause, wavier of
subrogation, and inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price
Index for All Urban Consumers of the city nearest to where the Premises are located. If such
insurance coverage has a deductible clause, the deductible amount shall not exceed $1,000 per
occurrence.

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

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

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

     
8.4 Lessee’s Property; Business Interruption Insurance.

          
(a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of
Lessee’s personal property, Trade Fixtures, and

	 	 	 	 	 
	 
 

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

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

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

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

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

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

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

9. Damage or Destruction.

     9.1 Definitions.

          (a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be
repaired in 3 months or less from the date of the damage or destruction, and the cost thereof does
not exceed a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing within 30
days from the date of the damage or destruction as to whether or not the damage is Partial or
Total.

          (b) “Premises Total Destruction” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which
cannot reasonably be repaired in 3 months or less from the date of the damage or destruction
and/or the cost thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in
writing within 30 days from the date of the damage or destruction as to whether or not the damage
is Partial or Total.

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

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

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

     9.2 Partial Damage — Insured Loss. If a Premises Partial Damage that is an Insured Loss
occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade
Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and
this Lease shall continue in full force and effect; provided, however, that Lessee shall, at
Lessor’s election, make the repair of any damage or destruction the total cost to repair of which
is $5,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds
available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the
required insurance was not in force or the insurance proceeds are not sufficient to effect such
repair, the Insuring Party shall promptly contribute the shortage in proceeds as and when required
to complete said repairs. In the event, however, such shortage was due to the fact that, by reason
of the unique nature of the Improvements, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in
insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides
Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following
receipt of written notice of such shortage and request therefor. If Lessor receives said funds or
adequate assurance thereof within said 10 day period, the party responsible for making the repairs
shall complete them as soon as reasonably possible and this Lease shall remain in full force and
effect. If such funds or assurance are not received, Lessor may nevertheless elect by written
notice to Lessee within 10 days thereafter to: (i) make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease
shall remain in full force and effect, or (ii) have this Lease terminate 30 days thereafter.
Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any
such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to
Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of
any such insurance shall be made available for the repairs if made by either Party. See also Par.
61.

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

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

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

     9.6 Abatement of Rent; Lessee’s Remedies.

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

          (b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not
commence in a substantial and meaningful way, such repair or restoration within 90 days after such
obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to lessor and to any Lenders of which Lessee has actual notice of
Lesses’s election to terminate this Lease on a date not less than 60 days following the giving of
such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30
days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair
or restoration is commenced within such 30 days, this Lease shall continue in full force and
effect. “Commence” shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever first occurs.

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

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

10. Real Property Taxes.

     10.1 Definitions. See Paragraph 60.

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

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

     10.2 Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Project, and
except as otherwise provided in Paragraph 10.3, any increases in such amounts over the Base Real
Property Taxes shall be included in the calculation of Common Area Operating Expenses in accordance
with the provisions of Paragraph 4.2.

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

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

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

11. Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal
and other utilities and services supplied to the Premises, together with any taxes thereon.
Notwithstanding the provisions of Paragraph 4.2, if at any time in Lessor’s sole judgment, Lessor
determines that Lessee is using a disproportionate amount of water, electricity or other commonly
metered utilities, or that Lessee is generating such a large volume of trash as to require an
increase in the size of the dumpster and/or an increase in the number of times per month that the
dumpster is emptied, then Lessor may increase Lessee’s Base Rent by an amount equal to such
increased costs. See also Paragraph 55

12. Assignment and Subletting.

     12.1 Lessor’s Consent Required.

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

          (b) A change in the control of Lessee shall constitute an assignment requiring consent. The
transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a
change in control for this purpose.

          (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by
way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee’s assets occurs, which results or
will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net
Worth as it was represented at the time of the execution of this Lease or at the time of the most
recent assignment to which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its consent. “Net Worth of
Lessee” shall mean the net worth of Lessee (excluding any guarantors) established under generally
accepted accounting principles.

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

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

     12.2 Terms and Conditions Applicable to Assignment and Subletting.

          (a) Regardless of Lessor’s consent, any assignment or subletting shall not: (i) be effective
without the express written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other obligations to be
performed by Lessee.

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

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

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

          (e) Each request for consent to an assignment or subletting shall be in writing, accompanied
by information relevant to Lessor’s determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises. If any, together with a fee of $1,000
or 10% of the current monthly Base Rent applicable to the portion of the Premises which is the subject of the proposed assignment or sublease, whichever is
greater as consideration for Lesser’s considering and processing said request. Lessee agrees to provide Lessor with such other or additional Information and/or documentation as
may be reasonably requested.

          (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment or entering into such sublease, be deemed to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.

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

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

          (b) In the event of a Breach of Lessee, Lessor may, at its option, require sublessee to atom
to Lessor, in which event Lessor shall undertake the obligations of the Sublessor under such
sublease from the time of the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit paid by such
sublessor to such sublessor or for any prior Defaults or Breaches of such sublessor.

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

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

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

13. Default; Breach; Remedies.

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

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

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

          (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41
(easements), or (viii) any other documentation or information which Lessor may reasonably require
of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days
following written notice to Lessee.

          (d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or
of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs 13.1
(a), (b) or (c), above, where such Default continues for a period of 30 days after written notice;
provided, however, that if the nature of Lessee’s Default is such that more than 30 days are
reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences
such cure within said 30 day period and thereafter diligently prosecutes such cure to completion.

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

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

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

     13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within
10 days after written notice (or in case of an emergency, without notice), Lessor may, at its
option, perform such duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be due and payable by
Lessee upon receipt of Invoice therefor. If any check given to Lessor by Lessee shall not be
honored by the bank upon which it is drawn, Lessor, at its option, may require all future payments
to be made by Lessee to be by cashier’s check. In the event of a Breach, Lessor may, with or
without further notice or demand, and without limiting Lessor in the exercise of any right or
remedy which Lessor may have by reason of such Breach:

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

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

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

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

     13.4
Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause
Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 5 days after such amount shall be due, then, without any
requirement for notice to Lessee, Lessee shall pay to Lessor a one-time late charge equal to 10%
of each such overdue amount or $100, whichever is greater. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such
late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of
Lessee’s Default or Breach with respect to such overdue amount, nor prevent the exercise of any of
the other rights and remedies granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor’s option,
become due and payable quarterly in advance. See also Par. 53.

     13.5
Interest. Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days
following the date on which it was due for non-scheduled payment, shall bear interest from the date
when due, as to scheduled payments, or the 31st day after it was due as to non-scheduled payments.
The interest (“Interest”) charged shall be equal to the prime rate reported in the Wall
Street Journal as published closest prior to the date when due plus 4%, but shall not exceed the
maximum rate allowed by law. Interest is payable in addition to the potential late
charge provided for in Paragraph 13.4.

     13.6 Breach by Lessor.

 
	 	 	 	 	 
	 
 

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

          (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender
cures said breach within 30 days after receipt of said notice, or if having commenced said cure
they do not diligently pursue it to completion, then Lessee may elect to cure said breach at
Lessee’s expense and offset from Rent an amount equal to the greater of one month’s Base Rent or
the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee’s right
to reimbursement from Lessor. Lessee shall document the cost of said cure and supply said
documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain
or sold under the threat of the exercise of said power (collectively “Condemnation”), this Lease
shall terminate as to the part taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the floor area of the Unit, or more than
25% of Lessee’s Reserved Parking Spaces, is taken by Condemnation, Lessee may, at Lessee’s option,
to be exercised in writing within 10 days after Lessor shall have given Lessee written notice of
such taking (or in the absence of such notice, within 10 days after the condemning authority shall
have taken possession) terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease
shall remain in full force and effect as to the portion of the Premises remaining, except that the
Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such
Condemnation.  Condemnation awards and/or payments shall be the property of Lessor, whether such
award shall be made as compensation for diminution in value of the leasehold, the value of the part
taken, or for severance damages; provided, however, that Lessee shall be entitled to any
compensation for Lessee’s relocation expenses, loss of business
goodwill and/or Trade Fixtures,without regard to whether or not this
Lease is terminated pursuant to the provisions of this Paragraph. All Alteration and Utility Installation made to the Premises by Lessee, for purpose of
Condemnation only, shall be considered the property of the Lessee and Lessee shall be untitled to
any and all compensation which is payable therefor. In the event that this Lease is not terminated
by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation. See also Par. 57.

15.
Brokerage Fees. See Paragraph 56.

     15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.10 above,
and unless Lessor and the Brokers otherwise agree in writing, Lessor agrees that: (a) if Lessee
exercises any Option, (b) if Lessee acquires from Lessor any rights to the Premises or other
premises owned by Lessor and located within the Project, (c) If Lessee remains in possession of the
Premises, with the consent of Lessor, after the expiration of this Lease, or (d) if Base Rent is
increased, whether by agreement or operation of an escalation clause herein, then, Lessor shall pay
Brokers a fee in accordance with the schedule of the Brokers in effect at the time of the execution
of this Lease.

     15.2 Assumption of Obligations. Any buyer or transferee of Lessor’s interest in this Lease
shall be deemed to have assumed Lesser’s obligation hereunder. Brokers shall be third party
beneficiaries of the provision of Paragraphs 1.10, 15, 22 and 31. If Lessor fail to pay to Brokers
any amounts due as and for brokerage fees pertoining to the Lease when due, then such amounts shall
accrue interest. In addition, If Lesser fails to pay any amounts to Lessee’s Broker when due,
Lessee’s Broker may send written notice to Lesser and Lessee of such failure and if Lesser fails to
pay such amounts within 10 days after said notice, Lessee shall pay said monies to its Broker and
offset such amounts against Rent. In addition, Lessee’s Broker shall be doomed to be a third party
beneficiary of any commission agreement entered into by and/or between Lesser and Lesser’s Broker
for the limited purpose of collecting any brokerage fee owed.

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

16. Estoppel Certificates.

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

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

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

17. Definition of Lessor The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or’ if this is a sublease, of the Lessee’s
interest in the prior lease. In the event of a transfer of Lessor’s title or Interest in the
Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such transfer
or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined. Notwithstanding the above, and subject to the provisions or Paragraph 20
below, the original Lessor under this Lease, and all subsequent holders of the Lessor’s interest in
this Lease shall remain liable and responsible with regard to the potential duties and liabilities
of Lessor pertaining to Hazardous Substances as outlined in Paragraph 6.2 above.

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

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

20 Limitation on Liability. Subject to the provisions of Paragraph 17 above, the obligations of
Lessor under this Lease shall not constitute personal obligations of Lessor, the individual
partners of Lessor or its or their individual partners, directors, officers or shareholders and
Lessee shall look to he Premises and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse against the individual
partners of Lessor, or its or their individual partners, directors, officers or shareholders, or
any of their personal assets for such satisfaction.

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

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

23. Notices.

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

	 	 	 	 	 
	 
 

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writing.

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

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

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

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

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

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

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

     (b) Brokers have no responsibility with respect to any default or breach hereof by either
Party. The liability (including court costs and attorneys’ fees), of any Broker with respect to
any breach of duty, error or omission relating to this Lease shall not exceed the fee received by
such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each
Broker’s liability shall not be applicable to any gross negligence or willful misconduct of such
Broker.

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

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

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

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

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

30. Subordination; Attornment; Non-Disturbance.

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

     30.2
Attornment. Subject to the non-disturbance provisions of Paragraph 30.3, Lessee
agrees to attorn to a Lender or any other party who acquires ownership of the Premises by
reason of a foreclosure of a Security Device, and that in the event of such foreclosure, such
new owner shall not: (a) be liable for any act or omission of any prior lessor or with
respect to events occuring prior to acquisition of ownership; (b) be subject to any offsets
or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of
more than one month’s rent, or (d) be liable for the return of any security deposit
paid to any prior lessor.

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

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

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

32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to
enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times for
the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such
alterations repairs, improvements or additions to the Premises as Lessor may deem necessary. All
such activities shall be without abatement of rent or liability to Lessee. Lessor may at any time
place on the Premises any ordinary “For Sale” signs and Lessor may during the last 6 months of the
term hereof place on the Premises any ordinary “For Lease” signs. Lessee may at any time place on
the Premises any ordinary “For Sublease” sign.

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

34. Signs. Except for ordinary “For Sublease” signs which may be placed only on the Premises,
Lessee shall not place any sign upon the Project without Lessor’s prior written consent which
consent shall not be unreasonably witheld. All signs must comply with all Applicable Requirements.

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

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

37. Guarantor.

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

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

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

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

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

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

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

     39.4 Effect of Default on Options.

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

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

          (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the Option, if, after such exercise and prior to the commencement of the
extended term, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due
(without any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee 3 or more
notices of separate Default during any 12 month period, whether or not
the Defaults are cured, or (iii) If Lessee commits a Breach of this Lease.

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

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

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

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

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

typewritten or handwritten provisions.

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

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

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

48. Waiver of Jury Trial. The
Parties hereby waive their respective rights to trial by jury in
any action or proceeding Involving the Property or arising
out of this Agreement.

	 	 	 	 	 
	 
 

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

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

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

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

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

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

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

	 	 	 	 	 	 	 
	Executed at: San Leandro, CA	 	Executed at: San Leandro, CA
	on:
	 	3/2/05 	 	on:	 	1 March 2005
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	By LESSOR:

	 	 	 	By LESSEE:	 	 
	 
	 	 	 	 	 	 
	2101 Williams Associates, LLC	 	Energy Recovery, Inc.
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Donald L. Jones
	 	By:
	 	/s/ G. G. PIQUE
	 

	 	 
	 	 	 	 
	Name Printed:
	 	Donald L. Jones
	 	Name Printed:
	 	G. G. PIQUE
	Title:

	 	Managing Member	 	Title:	 	PRESIDENT / CEO 
	 
	 	 	 	 	 	 
	By:
	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	Name Printed:
	 	 

	 	Name Printed:	 	 

	Title:

	 	 

	 	Title:
	 	 

	Address:
	 	2081 Adams Ave
	 	Address:
	 	1908 DOOLITTLE DR
	 

	 	San Leandro, CA 94577	 	 	 	SAN LEANDRO, CA 94577
	 
	Telephone:
	 	(__) 510-562-2580	 	Telephone:	 	(510) 483-7370
	Facsimile:
	 	(__) 510-562-9978	 	Facsimile:	 	(510) 483-7371
	Federal ID No.
	 	 	 	Federal ID No.	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 

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

(c)Copyright 1998 By American Industrial Real Estate Association.

All rights reserved.

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

 

 

ADDENDUM TO STANDARD INDUSTRIAL LEASE DATED FEBRUARY 28, 2005, BY AND BETWEEN 2101 WILLIAMS
ASSOCIATES, LLC, AS LESSOR, AND ENERGY RECOVERY, INC. (ERI), AS LESSEE.

	50.	 	Leased Premises. The subject Premises include that certain 9,559 square feet of plant
and offices, commonly known as 1908 Doolittle Drive and leased by Lessee pursuant to that
certain Lease dated July 25, 2000 (“Original Lease” and “Original Premises”), which is herein
being expanded to include (“Expansion Areas”):

(i) that certain 5,154 square feet of offices commonly known as 2199 Williams Street

(ii) that certain 4,250 square feet of light industrial space commonly known as 2191 Williams
Street

(iii) that certain 3, 219 square feet of warehouse commonly known as 2189 Williams Street

Cumulatively, the above is part of and shall be hereafter referred to as the “Premises” and
“1908 Doolittle Drive,” and are shown on Exhibit “A” attached hereto.

	51.	 	Renovation/Commencement of Lease/ Prior Occupancy/Early Possession of Expansion Areas.

a. Lessor agrees, at its sole cost and expense, and as soon as it can reasonably be
accomplished following the execution of this Lease, to commence and prosecute to completion in
a diligent and good and workmanlike manner: (1) plans and specifications, by an architect
and/or engineer where required, for the renovation and improvements set forth in Exhibit “B”
to this Lease; (2) the application and receipt of appropriate planning and building permits
where required; and (3) the construction and delivery of said improvements and Premises to
Lessee. Lessee understands that facets of the renovation and construction of improvements,
especially those to the Original Premises, will cause some inconvenience to Lessee and
disruption of normal operations, including the creation of dust and noise, the need for Lessee
to close areas while construction is underway, and the need for Lessee to provide access to
the Premises sometimes during non-business hours.

b. The parties hereto are aiming toward substantial completion and delivery of Lessee’s
Premises according to the approximate timeline described below, which is based on and subject
to: (1) the Lessee executing this Lease by March 1, 2005; (2) the cancellation of lease
provisions set forth in Paragraph 64; and (3) provided Lessor is not delayed by causes beyond
its control, which shall include but not be limited to any unanticipated delays in obtaining
building permits, any delays in construction due to fires, unusually severe weather, labor
problems, including strikes or slowdowns, acts of God, and other similar causes, and delays
caused by the Lessee or its agents and/or sub-contractors:

	 	 	 
	April 1, 2005-

	 	Original Premises (1908 Doolittle Drive)
	May 1, 2005-

	 	5,154 SF (formerly known as 2199 Williams)

4 250 SF (formerly known as 2191 Williams)

3,219 SF (formerly known as 2189 Williams) — subject to unreasonable

     delays due to engineering and permits
	 

	 	Exterior Improvements (including new exits and

     modifications to existing, but excluding paving and striping)
	June 1, 2005-
	 	Paving and Striping of all or a portion of the Southwest parking lot.

Should Lessor fail to deliver the Premises by any of the above dates, then this Lease shall
commence upon the date Lessor does substantially complete the above work and delivers possession to
Lessee. If the actual commencement date of this Lease is other than that set forth in Paragraph 1.3
above, then Lessor and Lessee shall prepare and execute an Amendment to Lease setting forth the
revised commencement and termination dates of the Lease term, but failure to execute such an
amendment shall not affect the actual commencement date.

“Substantial completion” or “Substantially completing” shall be the date as agreed between Lessor
and Lessee, or, if the parties cannot so agree, then it shall be upon execution of a certification
from the architect or engineer supervising the construction of the Premises that all of the
improvements hereto above described have been on the date specified in said certification
substantially completed in accordance with the plans and specifications to the extent that Lessee
can reasonably and conveniently use and occupy the building and appurtenances for the conduct of
its ordinary business and, if required, the issuance of a certificate, or temporary certificate, of
occupancy for the Premises. It is understood that Lessee may commence setting up its operations
and performing tenant related improvements within the Premises before Lessor substantially completes
its construction; however, Lessee agrees that its work shall not interfere with or delay Lessor’s
construction, including the date of substantial completion. Nor shall substantial

	 	 	 	 
	 	/s/ Illegible	 	/s/
	 	 

 

 

completion be delayed due to Lessee’s delay or failure to perform its tasks or complete any
improvements it undertakes.

c. Prior Occupancy. Lessee is granted prior occupancy of the demised Premises for the purposes
of setting up its operations and performing tenant related improvements, including bringing in
data and telephone cabling, provided that said prior occupancy and work shall not delay or
interfere with the conduct of Lessor’s work or performance, or cause labor difficulties. Any
such prior occupancy shall be upon all of the terms and conditions of this Lease, including
indemnifying Lessor and carrying liability and property damage insurance and reimbursing
Lessor for any utilities or services used, except that the Lessee shall not be responsible for
paying rent until the commencement date or early possession hereof of the particular expansion
space being improved.

d. Early Possession of Expansion Areas. Lessee is granted early possession for its operations
(i.e. prior to the formal commencement of the Lease on May 1, 2005) upon substantial
completion of each Expansion Area. Any early possession shall be upon all of the terms and
conditions of this Lease and Lessee shall pay additional rent for each Expansion Area as set
forth in Paragraph 52.

	52.	 	Rental Schedule.
	 
	a.	 	Early Possession Rent Schedule. Prior to the termination of the Original Lease provided
herein, Lessee shall continue to pay its current base monthly rent for the Original Premises
and other expenses due as set forth in the Original Lease. Base monthly rent for the Expansion
Areas shall be as follows and shall commence upon substantial completion of each Expansion
Area:

	 	 	 
	2189 Williams Street
	 	$1,930.00
	2199 Williams Street
	 	$4,640.00
	2191 Williams Street
	 	$2,975.00

b. The monthly base rent, as set forth in Paragraph 1.5 of the Lease, shall be adjusted
pursuant to this paragraph on the 31st month of the Lease term (the “adjustment
date”) and the rent as so adjusted shall be payable each succeeding month until the expiration
of the primary term of the Lease. The adjusted monthly base rent shall be $18,190.00.

	53.	 	Security Deposit. Lessor shall apply the six thousand, six hundred and ninety dollars
and no/100 ($6,690.00) security deposit paid by Lessee in August 2000 and held by Lessor
towards the security deposit due per Paragraph 1.7c of this Lease, provided that Lessee is not
in default in its performance of any material term or condition of the Lease, dated July 25,
2000, by and between 2101 Williams Associates, LLC, as Lessor, and Energy Recovery, Inc., as
Lessee, for the Premises commonly known as 1908 Doolittle Drive, San Leandro, California,
94577.
	 
	 	 	Notwithstanding the above paragraph or the provisions of paragraphs 1.7.c. and 5 of the Lease,
Lessee shall, to further secure its obligations under this Lease, establish an Escrow Account
at a conventional financial institution in the initial base amount of Sixty-Nine Thousand Two
Hundred dollars ($69,200.00) to function as follows:
	 
	 	 	If rent and other monies due under the Lease shall not be received by Lessor within ten (10)
days after such amount is due then, without any requirement for notice to Lessee, Lessor shall
have the right to withdraw said amount due from the Escrow Account. In that event, Lessee
shall within ten (10) days of written request from Lessor therefore deposit monies sufficient
to restore said Escrow Account to its full amount required by this clause. Lessee’s failure to
do so shall constitute a material default under this Lease.
	 
	 	 	Lessee’s obligation to maintain said Escrow Account shall cease upon the last day of the
thirty-sixth (36th) month of this Lease provided that Lessee has fulfilled its
material obligations under this Lease in a timely manner, is still in possession of the
subject Premises, and has provided Lessor with financial statements evidencing Lessee’s
continued financial security and ability to fulfill its remaining obligations under this Lease.
	 

All interest accrued on said Escrow Account shall
remain in said account and add to the $69,200.00
base amount; provided, however, that if the need for said Escrow Account shall cease as provided
for above, then any such accrued interest shall be paid to Lessee and become a part of the total
amount so withdrawn.

	 	 	 	 
	 	/s/ Illegible	 	/s/
	 	 

 

 

	54.	 	Repairs. Notwithstanding the provisions of paragraph 7.1 of this Lease, the Lessee
shall not be responsible, either in whole or in part and except as provided below, for the
following type repairs: structural repairs; utilities which are “external” to the Premises and
which serve the overall project or building of which the demised Premises are a part; repairs
of a “capital” nature such as the major repair or replacement of paving, air conditioning,
heating, plumbing, electrical or similar type equipment or improvements caused by old age or
extended use, it being the intent to this Lease that the Lessee should not be responsible for
excessive wear and tear of such equipment or improvements which occurred prior to Lessee’s
occupancy of the Premises; repairs due to design or structural defects, latent or patent;
repairs which are covered by warranty; and costs caused by the act or neglect of the Lessor,
or other tenants or third parties which are known to be the cause of the additional costs and
for which reimbursement can be obtained through the best efforts of the Lessor or its agents.
	 
	 	 	The Lessee shall be responsible, however, for its prorata share of regular and periodic
maintenance and repairs of all such equipment and improvements listed above; for replacement
of light bulbs and tubes; for its real or accrued prorata share of repairs and replacements
resulting from the use and depreciation of such equipment and improvements during Lessee’s
occupancy; for any repair, replacement or maintenance required because of the fault or
negligence of the Lessee (or of any other tenant, agent, invitee of the Project where cause
cannot be found or assigned through the best efforts of the Lessor); for minor plumbing
repairs or stoppages within the demised Premises; and for the general upkeep, maintenance, and
repair of Lessee’s exclusive premises except as provided herein. Part of the above
responsibilities are covered by the common area expense allocations established in paragraph
4.2 of the Lease.
	 
	55.	 	Utilities. Notwithstanding the standard Utility Clause contained in the Lease, it is
understood that portions of the water, electricity, and in some instances gas serving the
Premises will be or are currently being supplied under one meter for the entire building and
project of which the demised Premises are a part. Lessee agrees upon demand and as additional
rental hereunder to pay its prorata share of said utilities, to be determined as follows:

a. Electrical: Lessor will install house meters to help measure Lessee’s primary
electrical usage. Lessee will be responsible only for its own electrical usage and will
cooperate with Lessor in determining same.

b. Water, excluding fire sprinkler system standby charges: In reference to restroom,
lunchroom and similar type uses, Lessee shall pay its prorata share of water usage and sewer
service charges, based generally on the ratio that Lessee’s total rentable area and/or number
of employees, if that is a more accurate method of measuring usage, bears to the total
occupied area and/or number of employees in the project. In reference to Lessee’s
manufacturing or painting processes, any requirement for above normal water supply and usage
shall be measured by a house meter installed by Lessee.

c. Fire sprinkler system standby charges: Lessee shall pay its prorata share based on
the percentage that Lessee’s total rentable area bears to the total rentable area within the
building or buildings of which the demised Premises are a part and which are metered as one.

d. Gas. (Separately metered by PG&E if required.)

e. Common Area Expenses: Lessee’s prorata share will be generally determined based on
Lessee’s percentage occupancy, and use, of the total rentable area within the applicable
portion of the Project; provided, however, that Lessee shall also be responsible for nay
additional or special costs caused or incurred because of Lessee’s unique use or operation.

All such formulas and calculations will be based on sound and reasonable accounting practices
for projects similar to the subject development.

	56.	 	Brokers. Each party represents that it has not had dealings with any real estate
broker, agent, finder or other person with respect to this Lease in any manner, except for Donald L. Jones
Company. Each party shall hold harmless the other party from all damages resulting from any
claims that may be asserted against the other party by any broker, agent, finder, or other person
with whom such indemnifying party has or purportedly has dealt. Lessor shall be liable for any
commission or fee payable to Donald L. Jones Company.
	 
	57.	 	Condemnation. Notwithstanding the provisions of paragraph 14 above, in the event of
condemnation, as in paragraph 14 defined, Lessee shall participate in any award to the extant
of its unamortized costs for those leasehold improvements title to which passed to or,
upon the expiration of this Lease, may pass to Lessor, and for monetary damages related
to the bonus value of its lease, fixtures, moving expenses and business interruption, and
to any other portion of the

	 	 	 	 
	 	/s/ Illegible	 	/s/
	 	 

  

 

award which by statute compensates the Lessee for the termination of Lessee’s leasehold
estate, for which as to either or all of the above the condemning authorities make a specific
allocation in their award provided that said allocation does not reduce the award made to the
Lessor.

	58.	 	Limit on Liability. Lessor herein is a an LLC, and it is understood and agreed that
any claims by Lessee against Lessor shall be limited to the assets of the partnership or LLC,
and furthermore, Lessee expressly waives any and all rights to proceed against the individual
partners or the officers, directors or shareholders of any corporate partner, except to the
extent of their interest in said partnership.

	59.	 	Parking. Assigned parking and the use of outside area within the complex shall be
equitably prorated between the tenants; provided, however, that all parties understand and
agree that the number of available spaces as well as the tenant mix within the project can
change from time to time.
	 
	 	 	As of the date of this Lease, Lessee is allocated                      spaces as shown marked on the
attached exhibit (to be inserted upon completion of the Site Plan by Lessor’s architects).

	60.	 	Property Tax & Insurance Base Year and Increase Calculations.

a. Property Tax. The base year for calculating property tax shall be the annual amount of
property taxes assessed on the Project for the year 2004/2005 adjusted to include any increase
in assessment from improvements to be made to the property by the Lessor, in general
conformance with Exhibit “B” of this Lease. Notwithstanding the provisions of Paragraph 10 of
this Lease, Lessee shall not be responsible for any increase in real property taxes
attributable to renovation work and improvements made to the project either by or on behalf of
the Lessor or other tenants; provided, however, that Lessee shall be responsible for its
prorata share of any subsequent increase in taxes attributable to inflationary increases in
valuation or rate change of any such improvements. Except for the improvements to be made by
Lessor pursuant to this Lease, Lessee shall be responsible for increases to real property
taxes attributable to improvements made by or on behalf of Lessee. Lessee shall not be
responsible for any income, excess profits, estate, inheritance or franchise taxes (except
taxes imposed in either direct or indirect substitution for real property taxes) or taxes or
assessments or other charges or operating expenses otherwise paid by Lessee or by other
tenants of the building or project.

b. Insurance. The base year for calculating insurance increases shall be the annual amount of
premiums paid on the Property for the year 2004/2005 adjusted to reflect any increase in value
for all initial improvements to be made to the property by the Lessor in general conformance
with Exhibit “B” of this Lease. Notwithstanding the provisions of Paragraph 8 above, Lessee
shall not be responsible for any initial increase in valuation attributable to the renovation
work and improvements made to the project or by future capital type improvements made to the
Project either by the Lessor or by other tenants, except for capital improvements made for the
benefit of Lessee either in part or in whole (exclusive of those improvements made pursuant to
Exhibit “B” to this Lease). Lessee shall, however, be responsible for any subsequent
inflationary increase in valuation of said improvements. Lessee’s potential liability for
insurance increases assumes that Lessor uses its best efforts to secure said insurance at
competitive rates.

	61.	 	Damage or Destruction. Notwithstanding anything to the contrary contained in
paragraph 9 of the Lease, it is agreed that:

a. Lessor shall be required to provide to Lessee within thirty (30) days following the
occurrence of the damage or destruction, specific notice on whether the Lessor will have the
Premises rebuilt within six (6) months from the date of the casualty. Lessee shall have the
right to immediately terminate the Lease in the event:

	 	(1)	 	Lessor fails to provide such notice to Lessee within such thirty (30) day period;

	 
	 	(2)	 	Lessor states in said notice that it shall not have the Premises rebuilt within such
six (6)
month period; or
	 
	 	(3)	 	If Lessor notifies Lessee that it will rebuild the Premises within such six (6) month
period,
but fails to diligently begin the process of repairing the same no later than
sixty (60) days from the date of the casualty.

b. Under no circumstances shall Lessor have the right to terminate this Lease
unless it is electing not to rebuild the Premises within said approximately 6 month
period.

	 	 	 	 
	 	/s/ Illegible	 	/s/
	 	 

 

 

c. Partial Damage is defined as that in which the cost of restoration is less than twenty-five
(25%) percent of the then replacement value of the Premises.

	62.	 	Option to Renew. Lessor grants to Lessee an option to renew this Lease for one (1)
additional five(5) year period on the same terms, conditions, covenants, agreements or
amendments, if any, then if force pursuant to this Lease except for the amount of the rental
rate which shall be determined as set for below.
	 
	 	 	Lessee shall exercise this option by serving written notice upon Lessor of its intent to
exercise the above options at least six (6) months prior to the expiration of the initial five
year term of the lease. Lessee shall have the right to exercise this option only in the event
that Lessee is not in default in its performance of any material term or condition of the
Lease.
	 
	 	 	Said rent for the renewal term shall be determined either by agreement between the parties or
by arbitration based on 95% of the fair market rent value of the Premises. For the purposes of
this clause, fair market rent shall be defined as the probable industrial gross rent that the
Premises should bring in a competitive and open market at the time that this option is
exercised, with the Lessor and a “highest and best use” tenant acting prudently and
knowledgeably, based on the “as is” condition of the Premises at that time and upon lease
terms and conditions consistent with those that govern this Lease extension.
	 
	 	 	If Lessor and Lessee are unable to agree upon said fair market rent value within thirty (30)
days from notice of exercise of the option herein granted, then it will be set either by a
qualified MAI appraiser chosen by the parties, or by arbitration as follows:

a. Within five (5) days after written notice by either party to the other requesting
arbitration, one arbitrator shall be appointed by each party. Notice in writing of such
appointment, when made, shall be given by each party to the other. The two arbitrators so
named shall meet promptly and seek to reach a conclusion as to the fair market rent value of
the Premises, and their decision rendered in writing and delivered to the parties hereto shall
be final and binding on the parties.

b. If said two (2) arbitrators shall fail to reach a decision within fifteen (15) days after
appointment of the second arbitrator, then the two arbitrators shall forthwith choose a third
arbitrator within five (5) days to act with them. If they fail to select a third arbitrator
within said five (5) days, the third arbitrator shall be promptly appointed by the Presiding
Judge of the Superior Court, State of California, County of Alameda. The party making such
application to said Judge shall give the other party hereto five (5) days written notice
thereof.

c. The arbitration shall proceed with due dispatch. The third arbitrator shall select the
value submitted by one of the initial two arbitrators that is closest to the value determined
by the third arbitrator. The decision of third arbitrator, reached accordingly, shall be
binding, final and conclusive on the parties hereto. Such decision shall be in writing and
delivered to the parties.

d. If either party fails to appoint an arbitrator as herein provided, then the arbitrator that
has been appointed shall be the sole arbitrator.

e. The expense of any such arbitration shall be borne equally between the parties hereto,
except that the cost of any attorney’s fees incurred by the parties are their own respective
responsibilities.

f. The arbitration shall be conducted in accordance with the applicable statutes of the State
of California then in effect.

	63.	 	Right of First Refusal.
	 
	 	 	During the term of this Lease and at such time as Lessor is aware that the space commonly
known as 2181 Williams is under the control of Landlord or will be available for lease, Lessor
shall notify Lessee in writing of such availability. Thereafter, Lessee shall have the right
for a period of fifteen (15) days to exercise its right in
writing to lease said available space at the then paying escalated per square foot rate
for the initial Premises herein leased. All other terms shall be the same, including the
expiration date which shall be coterminous with the initial Premises and the base year
for property taxes and insurance. See Exhibit “C”
	 
	64.	 	Contingency and Cancellation Provisions. Portions of this Lease and the
approximate timeline
for delivery of portions of Lessee’s premises is subject to and contingent upon the
existing
tenants in the spaces commonly known as 2191 and 2199 Williams Street vacating their
premises
in a timely fashion upon Lessor’s 30 Day Notice to Vacate. Lessor’s 30 Day Notice to
Vacate to
such existing tenants shall be given upon execution of this Lease.

	 	 	 	 
	 	/s/ Illegible	 	/s/
	 	 

 

 

Additionally, this Lease is subject to the full execution and consummation of that Agreement
for Lease Termination, dated February 22, 2005, between 2101 Williams Associates and Energy
Recovery, Inc. of the Original Lease.

	65.	 	Cost Overruns. Should the total cost of the improvements paid or incurred by Lessor
exceed the total budgeted amount set forth in Exhibit “B” to this Lease, then Lessee at its
option shall either (1) pay the difference to Lessor in cash within thirty (30) days after
Lessor completes the construction and delivers the improved premises to the Lessee; or (2)
amortize the difference as additional rental over the extended term at a 10% annualized
interest rate.
	 
	 	 	Lessor will endeavor, in good faith, to provide Lessee with realistic budget estimates, and to
timely advise Lessee when said costs have or are expected to change.

 

 

Exhibit “A”

 

 

EXHIBIT “B”

To Standard Industrial Lease, dated February 28, 2005, by and between 2101 Williams, LLC, as

Lessor, and Energy Recovery, Inc. (ERI), as Lessee

RENOVATION AND IMPROVEMENTS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BUDGET
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Original Premises (1908 Doolittle Drive)	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	•	 	 	Remove (2) damaged window screens at south front entry	 	$	500	 
	 	•	 	 	Repair room partition wall in conference room so that it functions
properly	 	$	1,000	 
	 	•	 	 	Move water heater and/or install individual hot water units under sinks
(5) total in office and warehouse	 	$	2,500	 
	 	•	 	 	Re-paint walls and offices as necessary and requested by Lessee	 	$	1,500	 
	 	•	 	 	Replace water stained or broken ceiling titles throughout offices	 	$	500	 
	 	•	 	 	Insure lighting fixture ballasts are working throughout offices	 	$	1,000	 
	 	•	 	 	Remove door and door frame between office hallway into Inspection room,
frame, sheetrock and paint opening as shown on Exhibit “D”.	 	$	300	 
	 	•	 	 	Remove door, door frame and a portion of the walls in Southeast corner of
the Inspection room as shown on Exhibit “D”	 	$	300	 
	 	•	 	 	Remove door and door frame to Electrical Room. Enclose telecom and server
equipment — an approximately 6’ x 7’ are — with framed, sheetrocked and painted
walls to height of suspended ceiling. Install 3’ x 7’ solid wood door with
deadbolt into enclosed Telecom/Server room. Floor inside remains “as is”. See
Exhibit “D”	 	$	2,000	 
	 	•	 	 	Remove existing air conditioning wall unit and install window in same
wall to approximately match existing windows in size. Patch and paint exterior
wall as necessary.	 	$	2,500	 
	 	•	 	 	Carpet floor are in electrical room around the enclosed Telecom/Server
room	 	$	500	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BUDGET
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	2189 Williams (3,219 sq ft)	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	•	 	 	Install approximately 8’ x 7’ wide opening with double doors between 2189 Williams
and 2199 Williams, as shown on Exhibit “D”	 	$	1,500	 
	 	•	 	 	Install 120/208 volt, 225 amp electrical panel including house meter.
	 	Landlord
	 	•	 	 	Re-feed all existing electrical through new panel and house meter.
	 	Incl.
	 	•	 	 	Provide 3-way switching (switch at exterior entrance and at door between warehouse
and 2199 Williams
	 	Incl.
	 	•	 	 	Replace or repair existing metal roof including rotary roof vents to code
	 	Landlord
	 	•	 	 	Provide tenant $2,500 towards its cost of supplementing ventilation	 	$	2,500	 
	 	•	 	 	Patch, repair and paint walls as required	 	$	3,000	 
	 	•	 	 	Install new 3’ x 7’ storefront door, ADA ramp and landscaping to left of existing
truck door as shown on Exhibit “D”
	 	Landlord
	 	•	 	 	Repair or replace existing warehouse light fixtures
	 	Landlord
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	2199 Williams (5,154 sq ft)	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	•	Reopen former doorway in wall between 1908 Doolittle and 2199 Williams and
widen as structurally feasible, as shown on Exhibit “D”
	 	$	300	 
	 	 	 	•	Remove existing walls and doorways as shown on Exhibit “D”
	 	$	2,000	 
	 	 	 	•	Remove existing carpet and paint floors in areas marked “1” on Exhibit “D.”
Paint or seal floors as practical to convert area for more dry-manufacturing type use
	 	$	3,000	 
	 	 	 	•	Remove existing carpet and replace with VCT in areas marked “2” on Exhibit
“D”.
	 	$	2,000	 
	 	 	 	•	Replace existing carpet, re-paint walls, and install new suspended ceiling as
Required throughout offices
	 	Landlord
	 	 	 	•	Replace water stained or broken ceiling tiles throughout office
	 	$	500	 
	 	 	 	•	Install coffee counter and sink with running water, including individual hot

	 	$	3,000	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BUDGET
	 	 	 	 	water unit in area marked “2” on Exhibit “D”

	 	 	 	 
	 	 	 	•	Supplement existing HVAC to provide typical heat and air conditioning to
offices
	 	$	8,000	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	2191 Williams (warehouse) (4,250 sq ft)	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	•	Install 3’ x 7’ opening and door between 2191 Williams and 2199 Williams as
shown on Exhibit “D”
	 	$	2,500	 
	 	 	 	•	Install 8’ wide opening for forklift between 2191 Williams and 2189 Williams
as shown on Exhibit “D”
	 	$	1,500	 
	 	 	 	•	Construct two, approximately 8’ high, sheetrocked and painted walls in open
area as shown on Exhibit “D”
	 	$	2,000	 
	 	 	 	•	Add insulation, as practical, in wall between 2191 Williams and 2199 Williams
to improve acoustics in offices
	 	$	1,500	 
	 	 	 	•	Clear existing three (3) floor drains and insure proper drainage.
	 	$	1,500	 
	 	 	 	•	Allow ERI to install burm for water tank, to be removed by tenant upon
Vacating premises or termination of Lease
	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Exterior	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	•	Up to a maximum allowance of $50,000;	 	$	50,000	 
	 	 	 	 	 
	 	 	i.	 	 	Replace two (2) exterior windows on South-facing side of 1908	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	Doolittle entrance	 	 	 	 
	 	 	 	 	 
	 	ii.	 	Replace six (6) exterior windows on West-facing side of 1908	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	Doolittle office wing (up to metal siding)	 	 	 	 
	 	 	 	 	 
	 	iii.	 	Replace window film and/or panes as necessary in remaining exterior	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	windows along entire west-facing Doolittle frontage and north-facing	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	Williams frontage	 	 	 	 
	 	 	 	•	ERI to approve all window designs and pay for upgrades as deemed necessary
beyond minimum allowance
	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BUDGET
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	•	Repave and stripe all or portion of parking area in front of
1908 Doolittle to eliminate low spots and potholes.
	 	 	 	 
	 	 	 	•	Install appropriate “No parking — tow away “signs in Doolittle
parkinglot
	 	 	 	 
	 	 	 	•	Allow for larger signage to be attached to building or placed in front
landscape area of 1908 Doolittle per local zoning restrictions.
	 	 	 	 
	 	 	 	•	Allow ERI to install a removable chain link barrier on rear loading
dock between ERI and 88 Linen. New barrier to be coordinated with and approved
by 88 Linen.
	 	 	 	 
	 	 	 	•	Re-paint as necessary non-beige, painted exterior portions of the
Project to match as closely as possible existing beige color
	 	$	20,000	 
	 	 	 	•	Add emergency exit from 1908 Doolittle offices, with 3’ x 7’ metal door
with Panic bar hardware and ADA ramp from electrical room. Tenant to modify
fence it installed to accommodate new emergency exit
	 	Landlord
	 	 	 	•	Provide ADA ramp to existing 2199 Williams Street exit
	 	Landlord
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Additional Requirements	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	•	Insure that all existing doors, electrical, mechanical (including HVAC)
and plumbing systems serving all leased Premises are in good working order, and
maintain the roofing in good, water tight condition.
	 	 	 	 
	 	 	 	•	Allow ERI, Inc. to choose and pay for carpeting and interior painting
upgrades beyond minimum allowance for all building.
	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL	 	$	117,400	 

 

 

Exhibit “C”

 

 

Exhibit “D”

 

 

Exhibit “D”exv10w13w1

 

Exhibit 10.13.1

AMENDMENT TO LEASE

THIS AMENDMENT TO LEASE, being entered into this 3rd day of October,
2005, between 2101 Williams Associates, LLC, a California limited liability company,
hereinafter called Lessor, and Energy Recovery, Inc., a Delaware corporation (ERI),
hereinafter called Lessee, covering the premises commonly referred to as 1908
Doolittle Drive, San Leandro, California.

Lessor and Lessee hereby amend that certain Lease between them dated February 28, 2005 as follows:

	1.	 	The term of the Lease shall be changed to commence on June 15, 2005, and end
on June 14, 2010. The rent increase shall be effective on December 15, 2007.
	 
	2.	 	The premises as defined in paragraph 1.2a of the Lease are hereby expanded to
include that certain approximately 4,072 SF of warehouse and office commonly
known as 2181 Williams Street (Expansion Area) and outlined in green on Exhibit
“A” attached hereto.
	 
	 	 	Lessee’s total revised square footage, including the Expansion Area referenced
above, has herein been increased to approximately 26,254 square feet, including
8,847 SF of office and 17,407 SF of warehouse and manufacturing space.
	 
	3.	 	Lessor agrees at its sole cost and expense and as soon as it can reasonably be
accomplished following the execution of this Amendment, to commence and
prosecute to completion in a diligent and good and workmanlike manner the
construction and delivery of the improvements to the Expansion Area as set
forth in Exhibit “C.” Lessee understands that facets of the renovation and
construction of said improvements will cause some inconvenience to Lessee and
disruption of normal operations, including but not limited to the creation of
dust and noise.
	 
	4.	 	The parties hereto are aiming toward substantial completion and delivery of
the Expansion Area to the Lessee on October 15, 2005; provided that Lessor is
not delayed by causes beyond its control, which shall include but not be limited
to any unanticipated delays due to obtaining any necessary building permits,
any delays in construction due to fires, unusually severe weather, labor
problems including strikes or slowdowns, acts of God, and other similar causes,
and delays caused by the Lessee or its agents and/or subcontractors. The
Expansion Area lease term shall end coterminous with the initial Premises on
June 14, 2010.
	 
	 	 	Should Lessor fail to deliver the Expansion Area by the above date, then the
Expansion Area Lease term shall commence upon the date Lessor does substantially
complete the above work and delivers possession to Lessee. If the actual lease
commencement date of the Expansion Area is other than that set forth above, then
Lessor and Lessee shall prepare and execute a Second Amendment to Lease setting
forth the revised commencement and termination dates of the Expansion Area Lease
term, but failure to execute such an amendment shall not affect the actual
commencement date.
	 
	 	 	“Substantial completion” or “substantially completing” shall be the date as agreed between Lessor and
Lessee, or, if the parties cannot so agree, then it shall be upon execution of a certification from the architect
or engineer supervising the construction of the Premises that all of the improvements hereto above
described have been on the date specified in said certification substantially completed in accordance with
the plans and specifications to the extent that Lessee can reasonably and conveniently use and occupy the
building and appurtenances for the conduct of its ordinary business and, if required, the issuance of a
certificate, or temporary certificate, of occupancy for the Premises. It is understood that Lessee may
commence setting up its operations and performing its separate tenant related improvements within the
Expansion Area before Lessor substantially completes its construction; however, Lessee agrees that its

 

 

	 	 	work shall not interfere with or delay Lessor’s construction, including the date of
substantial completion. Nor shall substantial completion be delayed due to Lessee’s delay or
failure to perform its tasks or complete any improvements it undertakes.
	 
	5.	 	The base monthly rent for the Expansion Area, subject to existing and future increases
over base year taxes and insurance and other expenses as set forth in the subject Lease,
shall be as follows:

	 	 	 	 	 
	10/15/2005 — 12/14/2007

	 	—
	 	$3,828.00/month I.G.
	12/15/2007 — 06/14/2010

	 	—
	 	$3,990.00/month I.G.

	 	 	The total base monthly rent for all of Lessee’s premises shall be $21,128.00 ($0.80/SF), and
shall increase on December 15, 2007 to $22,180.00 ($0.84/SF).
	 
	6.	 	Should the total cost of the improvements to the Expansion Area paid or incurred by Lessor
exceed the total budgeted amount set forth in Exhibit “C” to this Lease, then Lessee at its
option shall either (1) pay the difference to Lessor in cash within thirty (30) days after
Lessor completes the construction and delivers the improved Expansion Area to the Lessee; or
(2) amortize the difference as additional rental over the term for the Expansion Area at a 10%
annualized interest rate. Lessor will endeavor, in good faith, to provide Lessee with
realistic budget estimates, and to timely advise Lessee when said costs have or are expected
to change.
	 
	7.	 	Lessee shall pay all common area expenses and all utility and service charges for the entire
building. Should Lessor lease the vacant premises commonly known as 1906 Doolittle Drive, then
Lessee’s share of common area expenses and utilities shall be reduced to its prorata share to
be determined as set forth in Paragraph 55 of the Lease.
	 
	8.	 	The Security Deposit paid and Escrow Account established pursuant to the Lease shall remain
in effect and cover the Expansion Area. At such time that the Escrow Account closes, Lessee
shall deposit with Lessor $2,600 as security for 2181 Williams Street.
	 
	9.	 	Lessee’s option to renew for one (1) additional five (5) year period at market rents, with
six (6) moths prior written notice will apply to the Expansion Area as well.
	 
	10.	 	Except as herein specified, all of the other terms and conditions of the subject Lease
shall remain in full force and effect.

IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment To Lease the day and year first
written above.

	 	 	 	 	 	 	 	 	 
	LESSOR	 	 	 	LESSEE
	 
	 	 	 	 	 	 	 	 
	2101 Williams Associates, LLC	 	 	 	Energy Recovery, Inc.
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Donald L. Jones
	 	 
	 	By:
	 	/s/ G.G. Pique
	 

	 	 
	 	 	 	 	 	 
	 

	 	Donald L. Jones, Manager
	 	 	 	 	 	G.G. Pique, President/CEO

 

 

EXHIBIT “C”

to Amendment To Lease, dated September 8, 2005, by and between 2101 Williams, LLC, as
Lessor, and Energy Recovery, Inc.

(ERI) as Lessee

RENOVATION AND IMPROVEMENTS FOR 2181 WILLIAMS STREET (4,072 SF)

	 	 	 	 	 	 	 	 
	 	 	 	 	 	BUDGET	 
	 	 	 	 
	 	 	 	 
	ELECTRICAL	 	$	9,800	 
	•	 	 	Replace existing three (3) exterior light fixtures around loading dock
with four (4) existing fixtures in Office 1 — one at 1908 Doolittle truck door, one at
2181 Williams truck door, and two along side of truck dock (existing fixture above main
electrical panel will not be replaced)
	 	 	 	 
	•	 	 	Repair and relamp all lighting fixtures
	 	 	 	 
	•	 	 	Remove all unused conduit and approximately 6 panels on north wall in warehouse
(Lessee responsible for meeting with electrician directly if any electrical improvements
should stay)
	 	 	 	 
	•	 	 	Connect two (2) new exhaust fans (fans should be 208V)
	 	 	 	 
	•	 	 	Remove one (1) unused electrical transformers — from northeast corner of warehouse
	 	 	 	 
	•	 	 	Check telephone system in Office 1 and remove if obsolete
	 	 	 	 
	•	 	 	Add new lights to new drop ceiling in Office 1
	 	 	 	 
	•	 	 	Remove obsolete panel on east wall of Office I
	 	 	 	 
	•	 	 	Replace existing quadplexes with 2 duplexes per wall on the east, south and west walls of
Office I — new duplexes should be closer to floor and recessed to make flush with new
5/8 sheetrock to be added
	 	 	 	 
	 	 	 	 
	 	 	 	 
	CARPENTRY	 	$	18,000	 
	•	 	 	Create 10’ x 12’ opening in wall between 2181 and 2189 Williams in approximate location
of previously filled opening.
	 	 	 	 

 

 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	BUDGET	 
	 	 	 	 
	 	 	 	 
	•	 	 	Remove wall cabinets and metal poster cabinet in Office 1. Save metal
poster cabinet for ERI
	 	 	 	 
	•	 	 	Repair sliding doors and/or replace tracks in Office 1
	 	 	 	 
	•	 	 	Install new drop ceiling (2’ x 4’ grid) in Office 1
	 	 	 	 
	•	 	 	Install door closer on door to warehouse in Office 1
	 	 	 	 
	•	 	 	Sheetrock, tape and texture walls in Office 1 (painting by others)
	 	 	 	 
	•	 	 	Patch hole in hallway at ceiling in front of restroom
	 	 	 	 
	•	 	 	Create 4’ x 7’ opening in wall between 2181 Williams and 2199 Williams mfg area
	 	 	 	 
	•	 	 	Drop sprinkler heads for new suspended ceiling
	 	 	 	 
	 	 	 	 
	 	 	 	 
	PLUMBING	 	$	1,500	 
	•	 	 	Remove unused gas piping on north wall in warehouse
	 	 	 	 
	•	 	 	Remove floor to roof pipe/vent near mezzanine structure
	 	 	 	 
	•	 	 	2” water line with meter to remain on north wall in warehouse
	 	 	 	 
	•	 	 	Remove gas pipe and bib on west wall in Office 1 to above suspended ceiling height
	 	 	 	 
	•	 	 	Hydro jet sanitary sewer lines from trench drains
	 	 	 	 
	 	 	 	 
	 	 	 	 
	HVAC	 	 	 	 
	•	 	 	Install two (2) new (each 12,000 CFM) exhaust fans (208V)

Similar to those installed in 1908 Doolittle and 2189 Williams 

Air handling will match or exceed capacity of 3 existing fans in 1908 Doolittle
	 	$	8,200	 
	•	 	 	Run HVAC to Office 1, Office 2, and hallway in front of Office 2 and restrooms
	 	$	15,955	 
	 	 	 	 
	 	 	 	 
	DOCK & DOOR EQUIPMENT	 	landlord
	•	 	 	Insure loading dock platform is in working order
	 	 	 	 
	•	 	 	Insure roll up door between 2181 Williams and 1908 Doolittle is in working order
	 	 	 	 
	•	 	 	Insure front roll up door to 2181 Williams is in working order
	 	 	 	 
	 	 	 	 
	 	 	 	 
	PAINTING	 	 	 	 
	•	 	 	Blow down dust and lint from warehouse ceiling
	 	landlord
	•	 	 	Paint exterior wall on south side of roll up door, roll up door and touch up

	 	landlord

 

 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	BUDGET	 

	 	 	 	North wall along recessed truck dock.
	 	 	 
	•	 	 	Paint Office 1, Office 2, and hallway in front of Office 2 and restrooms
	 	landlord	 
	 	 	 	 
	 	 	 	 
	MISCELLANEOUS	 	 	 	 
	•	 	 	Remove largest hoist from track (located closest to east wall)
	 	$	0	 
	•	 	 	
Fill secondary trench drains with concrete from in front of new passageway into 2189 Williams to
 northeast corner of warehouse.
	 	landlord	 
	•	 	 	
Grind down steel studs and remainder of concrete equipment pads on north side of
warehouse floor. Then clean warehouse floor
	 	$	4380	 
	•	 	 	Seal warehouse floor
	 	$	3206	 
	•	 	 	Clean and hose out trench drains.
	 	landlord	 
	•	 	 	Clean carpet in Office 2
	 	landlord	 
	•	 	 	Strip and clean existing VCT in Office 1
	 	landlord	 
	 	 	 	 
	 	 	 	 
	Contingency	 	$	1,000	 
	 	 	 	 
	 	 	 	 
	TOTAL	 	$	62,041

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