LEASE

Exhibit 10.6

LEASE

For and in consideration of the rental and of the covenants and agreements hereinafter set forth to be kept and performed by the Tenant, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises described below in Paragraph 1.2 for the term, at the rental and subject to and upon all of the terms, covenants and agreements hereinafter set forth.

1.                          Basic Lease Provisions.

1.1 Parties: This Lease, dated for reference purposes only as of April 18, 2003, is made by and between Griffin Properties, LLC, a California limited liability company (hereinafter “Landlord”) and 1 st  Pacific Bank of California, a California corporation (hereinafter “Tenant”).

1.2 Premises: The premises leased hereunder are commonly known as 8889 Rio San Diego Drive, Suite        , San Diego, CA 92108, deemed to be approximately 2,791 rentable square feet, more or less, which are to be constructed in a manner substantially as shown in Exhibit “A” attached hereto and made a part hereof (hereinafter the “Premises”).

1.3 Building: The “Building” is that certain building to be constructed on the real property commonly described as being located at 8889 Rio San Diego Drive, in the City of San Diego, County of San Diego, State of California, as more particularly shown in Exhibit “A” attached hereto and made a part hereof. Tenant acknowledges that the sole purpose of any floor plan provided herein is to identify the location of the Premises in the Building.

1.4 Project: The Premises, the Building, the Common Areas (as defined below) and the land upon which the same are located, along with all other improvements thereon or thereunder, are herein collectively referred to as the “Project” . The Project, as is anticipated to be constructed, is more particularly described in Exhibit “B” attached hereto.

1.5 Use: The Premises shall be utilized solely for general office use consistent with the character of the Building as a first-class office building, and for no other purpose whatsoever, and shall be fully subject to all provisions contained in Paragraph 7, below.

1.6 Term: The term of this Lease (the “Lease Term” shall be for a period of ten (10) years, commencing on the earlier of the date Tenant occupies the Premises for purposes of conducting business therein, or August 15, 2003 (hereinafter “Commencement Date”) and ending ten (10) years (and the remaining part of the month in which the Commencement Date occurs, if other than the first day of a month) thereafter (“Termination Date”). In addition, Tenant shall have two (2) options to extend the Term by an additional five (5) years each pursuant to the provisions contained in Paragraph 3.5, below.

1.7 Base Rent: Initial base rent (the “Base Rent”) for the Premises shall be Seven Thousand One Hundred Seventeen and 05/100 Dollars ($7.117.05) per month, payable on the first (1st) day of each month subject to Paragraph 4 below. Notwithstanding the foregoing, however, the parties agree that Base Rent for the first (1 st ) month of the Term shall be paid upon execution of this Lease, pursuant to Paragraph 1.10, below.

1.8 Base Rent Increase: On the first anniversary of the Commencement Date, and on each anniversary thereafter, the monthly Base Rent payable under the provisions of this Lease shall be increased by an amount equal to 3% of the Base Rent payable immediately prior to such anniversary date, resulting in the following rent schedule:

1.9 Rent: For purposes of this Lease, the term “Rent” means Base Rent, Additional Rent (as hereafter defined), and all other amounts payable by Tenant hereunder and defined as “rent” or “additional rent” hereunder.

1.10 Rent Paid Upon Execution: Upon execution of this Lease, Tenant shall pay Seven Thousand One Hundred Seventeen and 05/100 Dollars ($7,117.05) for the first month’s Base Rent.

1.11 Security Deposit: No security deposit shall be required.

1.12 Tenant’s Share: Tenant’s Share, as defined in Paragraph 4.5(a), below, shall be an amount calculated by dividing the rentable square footage of the Premises by the rentable square footage of the Building. Landlord shall notify Tenant of Tenant’s Share upon completion of its construction of the Building and completion of its calculation of the rentable square footage thereof.

1.13 Work of Improvement. Landlord shall not be required to perform any work or supply any material or labor to prepare the Premises for occupancy. Landlord’s sole obligation shall be to deliver to Tenant a Warm Shell; any improvements to the Premises shall be the sole responsibility of Tenant. For purposes of this Lease, the term “Warm Shell” means that the Landlord shall deliver the Building with the items set forth on Exhibit “C” completed.

1.14 Base Year. The term “Base Year” means the calendar year ending on December 31, 2003. In the event the Project has not been completed for the entire Base Year, then the Operating Expenses incurred by Landlord from and after the date the Project is substantially completed until the end of the Base Year shall be annualized to determine Base Year Operating Expenses. For purposes of calculating Real Property Taxes for the Base Year, such taxes shall be calculated as if all of

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the tenant improvements for all space in the Building were fully constructed and the Real Property, the Building and all tenant improvements in the Building were fully assessed for the entire Base Year.

1.15 Tenant Allowance. Landlord shall reimburse Tenant up to a maximum of One Hundred Seventeen Thousand Dollars ($117,000.00) for the construction of the Tenant Improvements (the “Tenant Improvement Allowance”); any and all costs for Tenant Improvements in excess of the Tenant Improvement Allowance shall be paid by Tenant. Landlord shall reimburse Tenant for any costs incurred by Tenant in constructing the Tenant Improvements, up to a maximum amount equal to the Tenant Improvement Allowance, within thirty (30) days of receiving invoices from Tenant detailing the Tenant Improvement costs incurred by Tenant. In the event Landlord pays more than the Tenant Improvement Allowance for any Tenant Improvements, any such excess amount shall reimbursed to Landlord by Tenant within ten (10) business days of receiving an invoice therefore from Landlord. In the event Tenant fails to pay any amounts it is required to pay hereunder when due, Tenant shall be responsible to pay any and all late charges, interest and other charges related thereto, and agrees to indemnify and hold Landlord harmless from and against any and all claims, liabilities, charges, damages, costs and expenses incurred by Landlord as a result of any late payment or failure to pay by Tenant of any amounts required to be paid hereunder by Tenant. The Tenant Improvement Allowance will be used only for the Tenant Improvements to be constructed under Paragraph 2.7 , below, and shall not be applied against moveable furniture, consultant fees or other relocation-related uses.

1.16 Refurbishment Allowance. Landlord agrees to pay to Tenant up to Eight Thousand Three Hundred Seventy-three Dollars ($8,373.00) towards any costs incurred by Tenant during the sixty-first (61 st ) month of the Term in refurbishing the Premises. Landlord shall pay such amounts to Tenant within thirty (30) days of receiving invoices from Tenant detailing the refurbishment costs incurred by Tenant in the sixty-first (61 st ) month of the Term.

1.17 Utilities. The cost of all utilities used by Tenant at the Premises which are metered separately shall be paid by Tenant in accordance with Paragraph 8.1, below.

1.18 Signage. Landlord shall allow Tenant to install, at Tenant’s expense, Building top signage on the glass spandrel directly east of the main entry. Any such signage shall be subject to Landlord’s prior written consent, and shall be subject to the provisions of Paragraph 9.3, below. Tenant shall be permitted to install signage in size up to a maximum of one-third (1/3) of the allowable frontage signage for the Building.

1.19 Automated Teller Machine. If permitted under applicable codes, regulations and ordinances, Landlord shall allow Tenant to install an automated teller machine (“ATM”) at the Premises, the installation of which shall be subject to the provisions of Paragraph 9.3. Tenant shall be responsible for any maintenance and security for any ATM it has installed. Landlord makes no representation regarding whether or not an ATM is permitted under applicable codes, regulations or ordinances.

1.20 Early Occupancy. Landlord anticipates completing the Project and delivering to Tenant a Warm Shell on or around June 1, 2003; however, Landlord shall have no liability to Tenant whatsoever if Landlord does not, in fact, complete the Project by June 1, 2003. Upon execution of this Lease, Tenant shall be permitted access to the Premises for purposes of preparing its space plan and constructing its Tenant Improvements in the Premises; provided, however, that in no event shall such access and/or construction interfere with Landlord’s completion of the Project, and Tenant shall immediately cease conducting any activities at the Premises and/or any other part of the Project which interferes with Landlord’s completion of the Project. Upon Landlord’s completion of the Project (including, without limitation, all Building systems located within or supporting the Building and/or the Premises) and Tenant’s completion of the Tenant Improvements, and upon issuance of a certificate of occupancy and any and all other permits or approvals necessary to allow Tenant to occupy the Premises, Landlord shall notify Tenant, and Tenant shall be permitted to occupy the Premises from such date. During the period of time commencing on the date hereof until the Commencement Date (the “Early Occupancy Period”), Tenant shall not be required to pay Base Rent; however, all other provisions of this Lease shall apply to Tenant during the Early Occupancy Period.

2.                          Premises, Parking, Common Areas, Work of Improvement:

2.1 Premises. The Premises consists of a portion of the first floor of the Building, and shall include the parking specified in Paragraph 2.2, below. Landlord agrees that Landlord shall cause the Building to be constructed substantially as depicted on Exhibit “A” attached hereto. Landlord shall attempt to substantially complete construction of the Building and any Tenant Improvements required to be constructed by Landlord as described in Paragraph 2.7, below, by August 1, 2003. In the event Landlord does not substantially complete the Building (as indicated by the architect for the Building indicating that the Building has been substantially completed) by August 1, 2003, then the Commencement Date shall be delayed until such time as the Building has been completed. In the event Landlord does not substantially complete the Building by January 1, 2004, then Tenant may, during the ten (10) day period following January 1, 2004, elect, by providing written notice to Landlord, to terminate this Lease Agreement. In the event Landlord is constructing any Tenant Improvements pursuant to Paragraph 2.7, below, if such Tenant Improvements are not completed by Landlord by August 1, 2003, and the delays are not caused by or contributed to by Tenant (including, without limitation, Tenant’s failure to promptly approve space plans submitted by Landlord to Tenant), then the Commencement Date shall be delayed by the same number of days that Landlord is delayed in completing the Tenant Improvements due to no fault or contribution by Tenant. In the event the delays in causing the Tenant Improvements to be completed are caused by or contributed to by Tenant, then no delay in the Commencement Date shall occur as a result of such delay in completion. The rights of Tenant pursuant to this Paragraph 2.1 are Tenant’s sole and exclusive rights for a failure of Landlord to deliver the Premises to Tenant hereunder, and Landlord shall have no liability whatsoever to Tenant for failure to deliver the Premises and/or the Tenant Improvements to Tenant by the outside date specified herein. In the event the Commencement Date does not occur on or before January 1, 2004, then Landlord may, at any time thereafter until the Commencement Date, terminate this Lease. Upon termination by Tenant or Landlord hereunder, neither party shall have any other rights or obligations with respect to this Lease Agreement, except that Landlord shall refund to Tenant the payment made pursuant to Paragraph 1.10, above.

2.2 Vehicle Parking. Tenant shall be entitled to the non-exclusive use of unreserved and unassigned parking spaces on those portions of the Common Area designated by Landlord for parking. In addition, subject to the rights of adjacent landowners and their tenants, invitees and customers under reciprocal parking agreements now or hereafter affecting the Project, Landlord shall provide for the following parking: (i) Tenant shall be entitled to two (2) parking spaces during the Term which shall be reserved to Tenant as against any other tenant in the Building during the hours from 7:30 a.m. through 5:00 p.m., Monday through Friday, the location of which shall be designated, from time to time, by Landlord, but which shall be as close to Tenant’s ATM as is reasonably practical taking into account the

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parking layout and the parking spaces already reserved to other tenants of the Project; and (ii) Landlord shall provide a minimum of eight (8) parking spaces designated as “Customer Parking” which shall be reserved to customers and visitors of the Project as against any other tenant in the Building during the hours from 7:30 a.m. through 5:00 p.m., Monday through Friday, the location of which shall be designated, from time to time, by Landlord, but which shall be as close to the front entrance to the Building as is reasonably practical taking into account the parking layout and the parking spaces already reserved to other tenants of the Project. A copy of the current reciprocal parking agreements are attached as Exhibit “D” hereto. All parking spaces shall be used only for parking by vehicles no larger than full size passenger automobiles or pick-up trucks, called “Permitted Size Vehicles”. Vehicles other than Permitted Size Vehicles are referred to as “Oversized Vehicles”. Tenant shall not at any time park or permit the parking of Tenant’s vehicles, trucks, Oversized Vehicles, or the vehicles, trucks or Oversized Vehicles of Tenant’s employees, invitees, suppliers or others, in any portion of the Common Area not designated by Landlord for such use by Tenant. Tenant shall not abandon any inoperative vehicles or equipment on any portion of the Common Area, nor shall Tenant, its employees, invitees, suppliers or others park or store any vehicle (Permitted Size or otherwise) on any portion of the Common Area, including designated parking areas, unattended for any period longer than twenty-four (24) hours. If Tenant commits, permits or allows any of the prohibited activities described in the Lease or the rules then in effect, then Landlord shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Tenant, which cost shall be immediately paid by Tenant to Landlord upon demand from Landlord.

2.3 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 that are provided and designated by Landlord from time to time for the general non-exclusive use of Landlord, Tenant, and the other tenants and other authorized users of the Project and their respective employees, suppliers, shippers, customers and invitees, including, but not limited to common entrances, lobbies, corridors, stairways and stairwells, public restrooms, elevators, escalators, heating, ventilation and air conditioning (“HVAC”) systems, parking areas to the extent not otherwise referenced in this Lease, loading and unloading areas, trash areas, roadways, sidewalk, walkways, parkways, ramps, driveways, landscaped areas and decorative walls.

2.4 Common Areas - Tenant’s Rights. Landlord hereby grants to Tenant, for the benefit of Tenant and its employees, suppliers, shippers, 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 Landlord 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 or to construct or install any improvements in the Common Areas. Any such storage shall be permitted only by the prior written consent of Landlord or Landlord’s designated agent, which consent may be revoked at any time. In the event that any unauthorized storage shall occur, Landlord 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 Tenant, which cost shall be immediately payable by Tenant to Landlord upon demand by Landlord.

2.5 Common Areas - Rules and Regulations/CC&R’s. Landlord or such other person(s) as Landlord may appoint, shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable non-discriminatory rules and regulations with respect thereto. Tenant agrees to abide by and conform to all such rules and regulations, as well as any private conditions, covenants, and restrictions of public record now or hereafter affecting the Premises and any amendment thereof, and to cause its employees, suppliers, shippers, customers and invitees to abide and conform; provided, however, that no such modified or new Covenants, Conditions and Restrictions will adversely affect Tenant’s rights under this Lease or impose a material burden on Tenant. Tenant’s obligation to comply with modifications or new Covenants, Conditions and Restrictions shall not arise until Landlord shall have provided copies of any such new Covenants, Conditions and Restrictions, and any modifications to any existing Covenants, Conditions and Restrictions, to Tenant. Landlord shall not be responsible to Tenant for the non-compliance with said rules and regulations by other tenants or authorized users of the Project. Any failure by Tenant or its agents, employees or representatives to observe and comply with the rules and regulations established by Landlord with respect to the Common Areas which failure continues after notice provided in accordance with Paragraph 18.1, below, shall be a default by Tenant hereunder. Tenant agrees to comply with all terms and conditions of the Covenants, Conditions and Restrictions applicable to the Premises, as the same may be modified from time to time in accordance with the provisions of this Paragraph 2.5. A copy of the current Covenants, Conditions and Restrictions are attached hereto as Exhibit “E”. A copy of the rules and regulations governing the Common Areas, together with any modifications thereto, shall be provided to Tenant from time to time during the Term by Landlord.

2.6 Common Areas - Changes. Landlord shall have the right at Landlord’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 and walkways; (b) to close temporarily any of the Common Areas for maintenance purposes, so long as reasonable access to the Premises remains available; (c) to use the Common Areas while engaged in making additional improvements, repairs or alterations to the Project, or any portion thereof; (d) to close, at reasonable times, all or any portion of the parking areas for any reasonable purpose, including without limitation, the prevention of a dedication thereof, or the accrual of the rights of any person or public therein; (e) to designate portions of the Common Areas as reserved exclusively for specific tenants or others; and, (f) to do and perform such other acts and make such other changes in, to or with respect to the Common Areas and the Project as Landlord may, in the exercise of sound business judgment, deem to be appropriate.

2.7 Tenant Improvements. Landlord shall be responsible for delivering a Warm Shell to Tenant; Tenant shall be responsible for developing a work plan (the “Tenant Improvement Plans”) depicting all improvements to be constructed on the Premises by Tenant (the “Tenant Improvement”). The Tenant Improvement Plans and the Tenant Improvements shall be subject to the approval of Landlord, which shall be delivered to Tenant within 5 business days of receipt by Landlord of a complete set of Tenant Improvement Plans, which approval shall not be unreasonably withheld, conditioned or delayed, and shall further be subject to the provisions of Paragraph 9.3, below entitled “Alterations”, below, prior to submittal to any governmental entity which is also required to approve such Tenant Improvement Plans and issue permits therefore. Tenant agrees that it shall construct the Tenant Improvements substantially in accordance with the Tenant Improvement Plans. Any changes or additions to the Tenant Improvement Plans desired by Tenant shall be at Tenant’s sole cost and expense, and shall be subject to the provisions of Paragraph 9.3, below.

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3.                          Term

3.1 Term. The Lease Term, the Commencement Date and the Termination Date shall be as specified in Paragraph 1.6, above, unless terminated earlier pursuant to this Lease, or unless extended by Tenant pursuant to Paragraph 3.5, below.

3.2 Delay in Commencement. Tenant agrees that in the event of the inability of Landlord for any reason to deliver possession of the Premises to Tenant on said Commencement Date set forth in Paragraphs 1.6 and 2.1, above, Landlord shall not be liable for any damage thereby nor shall such inability affect the validity of this Lease or the obligations of Tenant hereunder, but in such case, so long as the delay is not caused by or contributed to by Tenant, Tenant shall not be obligated to pay rent or other monetary sums until possession of the Premises is tendered to Tenant; provided that if the delay in the Commencement Date exceeds thirty (30) days, then the Termination Date shall be extended by the period of time computed from the scheduled Commencement Date to the actual Commencement Date. If Tenant occupies the Premises prior to said Commencement Date, such occupancy shall be subject to all provisions hereof.

3.3 Commencement After Construction. Possession shall not be deemed tendered and the term of this Lease shall not commence until the first to occur of the following:

(a) The date on which all improvements to be constructed by Landlord have been substantially completed except for: (i) punch list items which do not prevent Tenant from using the Premises for its intended use; (ii) work Landlord is required to perform but which is delayed because of fault or neglect of Tenant, acts of Tenant or Tenant’s agents (including, without limitation, delays caused by work done on the Premises by Tenant or Tenant’s agents or by acts of Tenant’s contractors or subcontractors) or delays caused by change orders requested by Tenant or required because of errors or omissions in plans submitted by Tenant; and (iii) work Landlord is required to perform but cannot complete until Tenant performs necessary portions of construction work it has elected or is required to do; or,

(b) After a Certificate of Occupancy, or its equivalent, is granted by the proper governmental agency or, if no Certificate of Occupancy, or its equivalent, is issued by any local agency, then after notification by Landlord’s architect or contractor that Landlord’s construction work has been completed; or

(c) Upon the occupancy of the Premises by any of Tenant’s operating personnel.

3.4 Confirmation of Commencement Date. Landlord and Tenant shall execute a written acknowledgment setting forth the Commencement Date.

3.5 Extension of Term. Landlord grants to Tenant two (2) options (each, an “Option”) to extend the Lease Term for a period of five years each. Tenant must exercise such right of extension by delivering written notice of Tenant’s exercise at least six (6) months, but no more than twelve (12) months, prior to the expiration of the existing Lease Term. Such extension of the Term will be on the same terms, covenants and conditions as in this Lease, except that the Base Rent for the extension period will be equal to an amount determined by agreement between Landlord and Tenant. In the event Landlord and Tenant, for any reason whatsoever, fail to agree on the Base Rent to be paid by Tenant during the extension period within thirty (30) days of the date Tenant delivers its notice of exercise of an Option, then the Option shall be null, void and of no force or effect, and the Term of the lease shall expire at its scheduled expiration date. Neither party shall have any liability whatsoever to the other party as a result of a failure to agree on Base Rent during the extension term.

4.                          Rent

4.1 Base Rent. Tenant shall pay to Landlord as Base Rent for the Premises in advance on the first day of each calendar month of the Lease Term without deduction, offset, prior notice or demand, in lawful money of the United States, the sum as defined in Paragraphs 1.7 and 1.8, above. If the Commencement Date is not the first day of a month, or if the Termination Date is not the last day of a month, a prorated monthly installment shall be paid at the then current rate for the fractional month during which the Lease commences and/or terminates.

Concurrently with Tenant’s execution of this Lease, Tenant shall pay to Landlord the sum set forth in Paragraph 1.10, above as Base Rent for the period defined in Paragraph 1.10, above.

4.2 Additional Rent. Commencing with the calendar year beginning on January 1, 2004, and continuing throughout the remainder of the Lease Term, Tenant shall pay, as Additional Rent, all of the following: (i) increases in Operating Expenses as defined in Paragraph 4.5 below, including, without limitation, increases in Real Property Taxes as required by Paragraph 6.1 and insurance premiums pursuant to Paragraph 13.2; and (ii) all other charges payable by Tenant hereunder and designated as Additional Rent hereunder. All Operating Expenses, Real Property Taxes, insurance costs, late charges, costs, expenses and other sums which Tenant is required to pay under this Lease, together with all interest and penalties that may accrue thereon in the event of Tenant’s failure to pay such amounts, and all reasonable damages, costs and attorneys’ fees and expenses which Landlord may incur by reason of any default of Tenant, or failure on Tenant’s part to comply with the terms of this Lease, shall be deemed to be additional rent (“Additional Rent”) and shall be paid in addition to the Base Rent, and, in the event of non-payment by Tenant, Landlord shall have all the rights and remedies with respect thereto as Landlord has for the non-payment of the Base Rent.

4.3 Late Charges. Tenant hereby acknowledges that late payment by Tenant to Landlord of Base Rent, Additional Rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing, accounting charges and late payment fees which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of Base Rent, Additional Rent or any other sum due from Tenant shall not be received by Landlord or Landlord’s designee within seven (7) days after such amount shall be due, Tenant shall pay to Landlord as Additional Rent a late charge equal to seven and one-half percent (7.5%) of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payments by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant’s default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder. In no event shall this provision for a late charge be deemed to grant to Tenant a grace period or extension of time within which to pay any installment of Base Rent or Additional Rent or prevent Landlord from exercising any right or remedy available to Landlord upon Tenant’s failure to make such payment when due. In the event any payment of Base Rent or Additional Rent is not received by Landlord by the thirtieth (30th) day after the due date for such payment or installment, such payment or installment shall bear interest at the Permitted Rate, as defined in Paragraph 20.17 below, commencing on the thirty-first (31st) day after the due date for such payment or installment and continuing until the same is paid.

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4.4 Returned Check Fee. A twenty-five dollar ($25.00) charge will be paid by Tenant as Additional Rent to Landlord for each check returned unpaid by the bank and Tenant shall replace the payment with a Cashier’s Check or Certified Check. If Tenant has two (2) or more checks returned for insufficient funds at any time during its tenancy, Landlord, at its option, may request all payments, current and future, be made by Cashier’s Check or Certified Check.

4.5 Operating Expenses. Tenant shall pay to Landlord during the term hereof, in addition to the Base Rent, Tenant’s Share, as hereinafter defined, of all Operating Expenses, as hereinafter defined, incurred by Landlord during each calendar year of the term of this Lease which are in excess of the Operating Expenses incurred by Landlord during the Base Year (“Excess Operating Expenses”), in accordance with the following provisions:

(a) “Tenant’s Share” is defined, for purposes of this Lease, as the respective percentage set forth in Paragraph 1.12, above. It is understood and agreed that the footage figures set forth in Paragraph 1.2, above, are approximate, which Landlord and Tenant agree are reasonable and shall not be subject to revision except in connection with a significant change in the plans and specifications for the Building which results in a material change in the size of the Premises, or a material change in the space available for lease in the Building.

(b) “Operating Expenses” as defined, for purposes of this Lease, shall include all costs and expenses incurred by Landlord in connection with the ownership and operation of the Project, including but not limited to the following:

(i)           the operating, repair, maintenance, and replacement in neat, clean, good order and condition of the following:

(aa) the Common Areas, including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area lighting facilities, electric rooms, elevators, fences and gates;

(bb) Common Area signage (i.e., address, directional, Project identity and tenant directories);

(cc) fire detection systems, including sprinkler systems; and,

(dd) security services, if provided.

(ii)          the cost of water, gas, electricity and other utilities to serve the Common Areas or which are not separately charged to the Premises under Paragraph 8.1, below;

(iii)         trash disposal and janitorial services;

(iv)         costs for maintenance and repair of elevators, HVAC systems and other systems serving the Project or any part thereof;

(v)          increases in Real Property Taxes as provided in Paragraph 6.1;

(vi)         property insurance premiums as provided in Paragraph 13.2;

(vii)        the cost of liability insurance carried by Landlord with respect to the Common Areas;

(viii)       any deductible portion of an insured loss concerning the Project or any portion thereto;

(ix)         the cost of any capital improvements made to the Building or Project by Landlord, which cost, if less then ten thousand dollars ($10,000), shall be expensed in the year incurred, or if at least ten thousand dollars ($10,000), shall be amortized over such period of time as permitted under Generally Acceptable Accounting Principles with interest on the unamortized balance at the rate of six percent (6%) per annum or such higher rate as may have been paid by Landlord on funds borrowed for the purpose of constructing such capital improvements;

(x)          fees for licenses and permits required for the operation of the Building, Common Areas and Project;

(xi)         the cost of contesting the validity or applicability of any governmental enactment’s or assessments, including without limitation property tax assessments, which may affect Operating Expenses;

(xii)        the repair, maintenance or patching, but not replacement, of the roof membrane of the Building;

(xiii)       any other services to be provided by Landlord that are stated elsewhere in this Lease to be an Operating Expense;

(xiv)       if the Project is not fully occupied during any portion of any Lease year, Landlord may adjust (an “Equitable Adjustment”) Operating Costs to equal what would have been incurred by Landlord had the Project been fully occupied. This Equitable Adjustment shall apply only to Operating Costs which are variable and therefore increase as occupancy of the Project increases. Landlord may incorporate the Equitable Adjustment in its estimates of Operating Costs. In addition, if Landlord does not furnish any particular service whose cost would have constituted an Operating Cost to a tenant other than Tenant who has undertaken to perform such service itself, Operating Costs shall be increased by the amount which Landlord would have incurred if it had furnished the service to such tenant; and

(xv)        payments under any equipment rental agreements or management agreements (including the cost of any market rate management fee and the fair rental value of any office space provided thereunder).

(c) Except as specifically provided in subparagraph (b), above, Operating Expenses shall not include: (a) charges for depreciation, interest or amortization with respect to the Building; (b) expenses for capital improvements to or rehabilitation of structural components of the Building and roof; (c) expenses resulting from the grossly negligent acts of Landlord; (d) expenses associated with the operation of the general business of Landlord not directly attributable to management and operation of the Common Areas such as personnel costs of employees not directly involved in management and operation of the Common Area, legal and accounting fees involving relations or disputes with employees, tenants or others, tax return preparation and expenses, costs of leasing and re-leasing, bad debts and other business losses; (e) amounts for which recovery is obtained under warranties, insurance coverage or from other tenants; and (g) the cost of providing tenant improvements for other tenants in the Building.

(d) The inclusion of the improvements, facilities and services set forth in Paragraph 4.5(b) shall not be deemed to impose an obligation by Landlord to either have said improvements or facilities or to provide those services. Without limiting the generality of the foregoing, nothing contained in Paragraph 4.5(b) or elsewhere in this Lease shall create or imply an obligation or duty on the part of Landlord to provide any security services or protection for the Premises, the Building, Common Area and/or the Project.

(e) Tenant’s Share of Excess Operating Expenses shall be payable by Tenant within ten (10) days after a reasonably detailed statement of actual expenses is presented to Tenant by Landlord. At Landlord’s option, however, an amount may be estimated by Landlord from time to time of Tenant’s Share of annual Excess Operating Expenses and the same shall be payable monthly or quarterly, as Landlord shall designate, during the Lease Term herein, on the same day as the Base Rent is

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due hereunder. In the event that Tenant pays Landlord’s estimate of Tenant’s Share of Excess Operating Expenses as aforesaid, Landlord shall provide Tenant with a reasonably detailed statement reconciling Tenant’s Share of the actual Excess Operating Expenses. Said detailed statement shall be provided on an annual basis within ninety (90) days following the end of each calendar year, or within thirty (30) days of the expiration of this Lease or Tenant’s vacation of the Premises. If Tenant’s payments under this Paragraph 4.5 (d) during the preceding year exceed Tenant’s Share as indicated on said statement, Tenant shall be entitled to credit the amount of such overpayment against Tenant’s Share of Excess Operating Expenses next falling due. If Tenant’s payments under this Paragraph during said preceding year were less than Tenant’s Share, as indicated on said statement, Tenant shall pay to Landlord the amount of the deficiency within ten (10) days after delivery by Landlord to Tenant of said statement.

(f) Tenant and its representatives will have the right to audit Landlord’s determination of the actual amount of Tenant’s Share of Excess Operating Expenses for any calendar year and to inspect, copy and audit Landlord’s records, invoices and other data relating to Operating Expenses for such year. This right must be exercised by Tenant, if at all, by providing Landlord written notice of Tenant’s desire to conduct an audit within thirty (30) days of the date Tenant receives Landlord’s detailed statement of annual actual Excess Operating Expenses. Such audit will take place during regular business hours at a time and place reasonably acceptable to Landlord. A copy of the audit shall be provided to Landlord immediately upon completion of the same. If Landlord accepts the results of the audit, and the audit report shows that Landlord overcharged Tenant for Tenant’s Share of Excess Operating Expenses, then Landlord will refund the excess amount to Tenant within 10 days after Landlord receives a copy of the audit report. If the audit shows that Tenant underpaid for Tenant’s Share of Excess Operating Expenses, then Tenant will pay the underpayment to Landlord within 10 days after Tenant receives a copy of the audit.

5.                          Security Deposit. [Intentionally Omitted]

6.                          Taxation.

6.1 Payment of Increases in Real Property Taxes as Additional Rent. Tenant shall pay, as Additional Rent, Tenant’s Share of the all Real Property Taxes levied against the Premises which are attributable to periods occurring after the Base Year and during the term of this Lease which are in excess of the Real Property Taxes incurred by Landlord which are attributable to the Base Year, except as otherwise provided in this Lease. Such increases shall be considered Operating Expenses, and shall be paid by Tenant pursuant to Paragraph 4.5, above.

6.2 Definition of “Real Property Tax”. For the purpose of this Lease, “Real Property Taxes” means and includes all taxes, assessments (including, but not limited to, assessments for public improvements or benefits), taxes based on vehicles utilizing parking areas, taxes based or measured by the rent paid, payable or received under this Lease, taxes on the value, use, or occupancy of the Premises, the Buildings and/or the Project, Environmental Surcharges, and all other governmental impositions, fees and charges of every kind and nature whatsoever, whether or not customary or within the contemplation of the parties hereto and regardless of whether the same shall be extraordinary or ordinary, general or special, unforeseen or foreseen, similar or dissimilar to any of the foregoing which, at any time during the Lease Term, shall be applicable to the Premises, the Building and/or the Project, or assessed, levied or imposed upon the Premises, the Building and/or the Project, or become due and payable and a lien or charge upon the Premises, the Building and/or the Project, or any part thereof, under or by virtue of any present or future laws, statutes, ordinances, regulations or other requirements of any governmental authority whatsoever. The term “Environmental Surcharges” shall mean and include any and all expenses, taxes, charges or penalties imposed by the Federal Department of Energy, the Federal Environmental Protection Agency, the Federal Clean Air Act, or any regulations promulgated thereunder or any other local, state or federal governmental agency or entity now or hereafter vested with the power to impose taxes, assessments, or other types of surcharges as a means of controlling or abating environmental pollution or the use of energy. The term “Real Property Taxes” shall not include any federal, state or local net income, estate, or inheritance tax imposed on Landlord. Notwithstanding the foregoing, however, the term “Real Property Taxes” shall not include any increases in any Real Property Taxes which are attributable solely to a change in ownership of the Premises from the original Landlord hereunder to a successor. The exclusion for increases in Real Property Taxes resulting in a change in ownership of the Premises from the original Landlord is applicable only to the first change in ownership from the original Landlord hereunder, and shall not be applicable to any increases resulting from subsequent changes in ownership which may occur thereafter.

6.3 Personal Property Taxes.

(a) Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Premises or elsewhere. When possible, Tenant shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord.

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

6.4 Other Taxes. Tenant shall, as Additional Rent, pay or reimburse Landlord for any tax based upon, allocable to, or measured by the area of the Premises; or by the rent paid, payable or received under this Lease; any tax upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy of the Premises or any portion thereof; any privilege tax, excise tax, business and occupation tax, gross receipts tax, sales and/or use tax, water tax, sewer tax, employee tax, occupational license tax imposed upon Landlord or Tenant with respect to the Premises; any tax upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.

7.                          Use

7.1 Use. The Premises shall be used and occupied by Tenant only for the purpose as set forth in Paragraph 1.5, above, and for no other purpose whatsoever.

7.2 Suitability. Upon completion of the Warm Shell, Tenant shall be permitted to inspect the Premises and either accept the Premises or, if there are items which are not acceptable, shall list such items in writing to Landlord. If Tenant fails to provide a list of disapproved items prior to its occupancy of the Premises, Tenant shall be deemed to have accepted the Premises and all tenant improvements to be constructed by Landlord as being completed in accordance with the plans and specifications for such improvements and, if Tenant has provided Landlord with a list of disapproved items, Tenant shall be deemed to have accepted the Premises and

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all tenant improvements to be constructed by Landlord as being completed in accordance with the plans and specifications for such improvements subject only to such list of disapproved items. Tenant acknowledges that neither Landlord nor Landlord’s agent has made any representation, warranty, estimation or promise of any kind as to the suitability of the Premises for the conduct of Tenant’s business, or the use or occupancy which may be made thereof. Tenant hereby warrants to Landlord that Tenant (i) has made its own investigation and examination of all the relevant data relating to or affecting the Premises; (ii) is relying solely on its own judgment in entering into this Lease; and, (iii) is satisfied that the Premises will be suitable for Tenant’s intended use and that the Building and Premises will meet all governmental requirements for such intended use, if constructed in the manner contemplated hereunder.

7.3 Uses Prohibited.

(a) Tenant shall not do or permit anything to be done in or about the Premises which will increase the existing rate of insurance upon the Premises (unless Tenant shall pay any increased premium as a result of such use or acts) or cause the cancellation of any insurance policy covering said Premises, the Building or the Project, nor shall Tenant sell or permit to be kept, used or sold in or about said Premises any articles which may be prohibited by a standard form policy of fire insurance.

(b) Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of any building of which the Premises may be a part or injure or annoy them or use or allow the Premises to be used for any unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or suffer to be committed any waste in or upon the Premises and Tenant shall keep the Premises in a clean, attractive condition, free of any objectionable noises, odors, dust or debris.

(c) Tenant shall not use the Premises or permit anything to be in or about the Premises which will in any way conflict with or violate any law, statute, zoning restriction, ordinance, governmental rule, regulation, requirements now in force or which may hereafter be enacted or promulgated. Tenant shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force and with requirements of any board of fire underwriters or other similar body now or hereafter constituted relating to or affecting the condition, use or occupancy of the Premises, whether applicable due to Tenant’s particular use of the Premises, applicable to business uses in general, or otherwise. Tenant shall also comply, at its sole cost, with the provisions of all recorded documents affecting the Premises insofar as the same relate to or affect the condition, use or occupancy of the Premises. Tenant shall obtain, prior to taking possession of the Premises, any permits, licenses or other authorizations required for the lawful operation of its business at the Premises. The judgment of any court of competent jurisdiction or the admission of Tenant in any action against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any law, statute, ordinance or governmental rule, regulation, recorded document, or requirement, shall be conclusive of that fact as between Landlord and Tenant. Tenant shall indemnify and hold Landlord harmless from and against any and all loss, expense, cost, damage, attorney’s fees, penalties or liability arising out of the failure of Tenant or Tenant’s agents or employees to comply with any applicable law, statute, ordinance, rule, regulation, order, requirement or recorded document.

(d) Tenant shall not store, park or operate any vehicles inside the Building, other than those operated by electricity.

8.                          Utilities, Waste Disposal and Janitorial

8.1 Utilities. Tenant shall contract and pay for all water, gas, heat, light, power, telephone and other utilities servicing the Premises to the extent they are separately metered, and shall use its best efforts to have such utilities separately metered to the Premises. If any such services are not separately metered or billed to Tenant, they shall constitute Operating Expenses. The lack or shortage of any utilities or services described above due to any cause whatsoever other than Landlord’s gross negligence or willful misconduct shall not affect any obligation of Tenant hereunder, and Tenant shall faithfully keep and observe all the terms, conditions and covenants of this Lease and pay all rentals due hereunder, all without diminution, credit or deduction.

8.2 Waste Disposal. Tenant shall store its waste either inside the Premises or in the Building’s dumpsters located within outside trash enclosures. Tenant shall not store, place or maintain any garbage, trash, rubbish, other refuse or Tenant’s personal property in any area of the Common Area or exterior of the Premises not specifically designated therefor by Landlord at any time. Tenant, at its sole expense, shall be responsible to maintain and keep the area outside the designated trash enclosures and Common Area free of Tenant’s garbage, trash, rubbish, other refuse or Tenant’s personal property.

8.3 No Landlord Representation Regarding Utilities. Tenant acknowledges and agrees that Landlord has made no representation whatsoever regarding the availability or quality of any utility or other services to the Premises, the Building or the Project, and Tenant agrees that Landlord shall not be liable in any manner whatsoever for any failure or interruption of any such services, or for any diminution in the quality or quantity thereof, whether such failure, interruption or diminution occurs due to acts or omissions of the service provider, Tenant, Landlord or any other party.

8.4 Janitorial Services. Landlord shall provide janitorial services five (5) days per week except the date of observation of any nationally or locally recognized holidays in accordance with practices for similar first-class buildings in San Diego County. The cost of any such janitorial services shall be considered an Operating Cost pursuant to Paragraph 4.5, above.

9.                          Maintenance and Repairs, Alterations and Additions

9.1 Landlord’s Obligations. Subject to the provisions of Paragraph 14 and except for damage caused by a negligent or intentional act or omission of Tenant and Tenant’s agents, employees or invitees, Landlord, at Landlord’s expense, shall keep in good order, condition and repair the foundations, exterior walls, the exterior roof, the roof membrane and other exterior portions of the Premises, together with the Common Areas located at the Project. In addition, Landlord shall be repair any construction defects which exist in the Building (excluding any tenant improvements installed by Tenant). The cost of such repairs shall constitute an Operating Expense under paragraph 4.5, above, and Tenant shall pay Tenant’s Share of the cost thereof pursuant to paragraph 4.5, above. Landlord shall not, however, be obligated to maintain the interior surface of exterior walls, ceiling or doors located within the Premises, nor shall Landlord be required to maintain, repair or replace windows, doors, skylights or plate glass located on the Premises. Landlord shall have no obligation to make repairs under this Paragraph 9.1 until a reasonable time after receipt of written notice of the need for such repairs. Landlord shall maintain, repair or patch the roof membrane (as an Operating Expense), and Tenant shall pay

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Tenant’s Share of the cost thereof, pursuant to Paragraph 4.5 above. Tenant expressly waives the benefits of any statute (including, without limitation, the provisions of subsection 1 of Section 1932, Section 1941 and Section 1942 of the California Civil Code and any similar law, statute or ordinance now or hereafter in effect) which would otherwise afford Tenant the right to make repairs at Landlord’s expense (or to deduct the cost of such repairs from rent due hereunder) or to terminate this Lease because of Landlord’s failure to keep the Premises in good order, condition and repair.

9.2 Tenant’s Obligations.

(a) Subject to the provisions of Paragraphs 9.1 and 14, Tenant, at Tenant’s expense, shall maintain in good order, condition and repair the Premises and every part thereof, regardless of whether the damaged portion of the Premises or the means of repairing the same are accessible to Tenant, including, but not limited to floors, ceilings, windows, doors, skylights, interior walls, and the interior surfaces of the exterior walls, interior plumbing, interior telecommunications equipment and intra-building network cabling, interior electrical and lighting facilities and equipment including interior circuit breakers.

(b) All glass in the Premises, both interior and exterior, is at the sole risk of Tenant, and any broken glass shall promptly be replaced by Tenant at Tenant’s expense with glass of the same kind, size and quality according to the current local code.

(c) In the event the Premises, the Building, the Project or any part thereof are damaged due to an attempted burglary or forcible entry into Premises, Tenant shall be responsible for any ensuing damage to the Premises, the Building or the Project.

(d) In the event Tenant fails to perform Tenant’s obligations under this Paragraph 9, Landlord shall give Tenant notice to do such acts as are reasonably required to so maintain the Premises. If Tenant, within ten (10) days after notice from Landlord, fails to commence to do the work and diligently prosecute it to completion, then Landlord shall have the right (but not the obligation), in addition to any other rights and remedies available to Landlord under this Lease, at law or in equity, to do such acts and expend such funds at the expense of Tenant as are reasonably required to perform such work. Any amount so expended by Landlord shall be paid by Tenant promptly after demand with interest at the Permitted Rate from the date of such work until paid. Landlord shall have no liability to Tenant for any damage, inconvenience or interference with the use of the Premises by Tenant as a result of performing any such work.

(e) Upon the expiration or earlier termination of this Lease, Tenant shall surrender the Premises in the same condition as received, broom clean, ordinary wear and tear and damage by fire, earthquake, act of God or the elements alone excepted. On the last day of the Lease Term or upon the sooner termination of the Lease, Tenant shall, to the reasonable satisfaction of Landlord surrender the Premises in good condition (and free of all Hazardous Materials used, generated or stored by Tenant and its agents, employees and contractors) with all originally painted interior walls and doors cleaned and repaired, all carpets cleaned and in good condition, and all floors cleaned and waxed. Tenant further agrees to remove all Tenant’s personal property and trade fixtures from the Premises and repair any damage to the Premises caused by or in connection with the removal of any articles of personal property, business or trade fixtures, machinery, equipment or furniture, including without limitation thereto, repairing the floor and patching and painting the walls where required by Landlord to Landlord’s reasonable satisfaction. Tenant agrees that all Tenant’s personal property and trade fixtures not removed shall be deemed to be abandoned by Tenant and may be removed by Landlord at Tenant’s expense. Tenant shall continue to pay Rent at the rate paid by Tenant prior to the termination of this Lease until such time that the Premises are returned in a condition as required above; however, said payment of Rent does not constitute an extension or renewal of this Lease nor does it constitute a month-to-month tenancy, it shall constitute immediate compensation for Tenant’s detention of the Premises and does not preclude Landlord from obtaining additional monetary damages for Tenant’s delay in surrendering the Premises, as set forth below. Tenant shall indemnify the Landlord against any loss or liability resulting from delay by Tenant in so surrendering the Premises, including without limitation, any claims made by any succeeding tenant founded in whole or in part on such delay.

9.3 Alterations.

(a) Tenant shall not construct any improvements or additions or otherwise alter, change or improve the Premises in excess of Ten Thousand Dollars ($10,000) without Landlord’s prior written approval, and not until Landlord shall have first approved the plans and specifications therefor, which approvals shall not be unreasonably withheld. Landlord’s approval of the plans, specifications and working drawings for Tenant’s alterations shall create no responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with all laws, rules and regulations of governmental agencies or authorities. All such approved alterations, or improvements shall be installed by Tenant at Tenant’s expense using a licensed contractor first approved by Landlord in compliance with the approved plans and specifications therefor and in strict accordance with all laws. All such construction shall be done in a good and workmanlike manner using new materials of good quality. As a condition to consenting to any leasehold improvement or alteration or change requested by Tenant, the cost of which may exceed Twenty-five Thousand Dollars ($25,000), Landlord shall have the right to require Tenant to post a completion bond in an amount and in a form satisfactory to Landlord. In no event shall Tenant make any structural changes to the Premises or make any changes to the Premises which would weaken or impair the structural integrity of the Building or the roof membrane integrity of the Building. Tenant shall not commence construction of any alterations, additions, or improvements (whether or not Landlord’s consent to the improvements are required therefore) until (i) all required governmental approvals and permits shall have been obtained, (ii) all requirements regarding insurance imposed by this Lease have been satisfied, and (iii) Tenant shall have given Landlord at least ten (10) days prior written notice of its intention to commence such construction. All alterations, additions and improvements constructed by Tenant shall remain the property of Tenant during the Lease Term but shall not be damaged, altered, or removed from the Premises. At the expiration or sooner termination of the Lease Term, all alterations, additions, or improvements shall be surrendered to Landlord as a part of the realty and shall then become Landlord’s property, and Landlord shall have no obligation to reimburse Tenant for all or any portion of the value or cost thereof; provided, however, that, notwithstanding the foregoing, Landlord may, at its option, require Tenant to r