NET LEASE AGREEMENT (OFFICE)

Exhibit 10.19

NET LEASE AGREEMENT (OFFICE)

2900 Kilgore Road
Rancho Cordova, California

between

Panattoni-Catlin Venture XXVI,
a California general partnership

and

Endosonics Corporation,
a Delaware corporation

January 10, 1996

TABLE OF CONTENTS

NET LEASE AGREEMENT (OFFICE)

2900 Kilgore Road
Rancho Cordova, California

Basic Lease Information

NET LEASE AGREEMENT
(OFFICE)

     This Lease is made and entered into by the Landlord and Tenant referred to in the Basic Lease Information. The Basic Lease Information attached to this Lease as page 1 is hereby incorporated Into this Lease by this reference.

     1.  PURCHASE TRANSACTION: [INTENTIONALLY DELETED]

     2.  BUILDING IMPROVEMENTS:

          a. Preliminary Plans: Within ten (10) days following the Lease Date, Landlord shall prepare and deliver to Tenant draft preliminary plans and specifications (“Preliminary Plans”) setting forth the description of (i) the shell of the Building, (ii) the materials to be used in the construction of the Building, (iii) the electrical, mechanical and HVAC systems to be used within the Building, (iv) a general landscaping plan for the Project, and (v) the space plan of the Premises and the improvements to be constructed therein. The improvements described in subsection (v) are referred to as the “Tenant Improvements.” Attached hereto as Exhibit B are specifications and standards (“Building Specifications”) which shall be more particularly set forth in the Preliminary Plans. Tenant shall approve or disapprove of the Preliminary Plans within ten (10) days following Tenant’s receipt of such documents by providing Landlord with written notice (“Objection Notice”) of such determination within such time period. The failure of Tenant to provide such notice shall be deemed Tenant’s approval of the Preliminary Plans. In the event that Tenant disapproves of the Preliminary Plans as provided herein, Landlord and Tenant shall use their good faith efforts and due diligence to resolve the matters set forth in the Objection Notice to the reasonable satisfaction of Landlord and Tenant; provided, however, if Landlord and Tenant have not resolved such matters within twenty (20) days following Landlord’s receipt of the Objection Notice, such disputed matter shall be submitted to an engineer or architect, reasonably acceptable to Landlord and Tenant, who shall render a determination of such matter within five (5) days following such appointment, which determination shall be binding upon Landlord and Tenant. Notwithstanding the foregoing, to the extent that Tenant requests any modifications to the Tenant Improvements, which modifications result in an increase in the cost to construct and/or install the Tenant Improvements, such increase expense shall be the responsibility of Tenant and Tenant shall have the right to elect, in writing, delivered to Landlord, to (i) have Landlord offset such excess expense against the Allowance (as hereinafter defined), (ii) pay such excess directly to Landlord, which amount shall be due prior to the commencement of construction of the Tenant Improvements, or (iii) amortize such excess cost over the Term, at a rate of nine percent (9.00%) per annum, and pay such amount on a monetary basis concurrent with the payment of Base Rent. If Tenant fails to make such election prior to the commencement of construction of the Tenant Improvements, Tenant shall be deemed to have elected Subsection (i) above. Upon Landlord and Tenant reaching agreement upon the Preliminary Plans, such document shall be referred to as the “Approved Preliminary Plans.”

          b. Final Plans: Within sixty (60) days following the Lease Date, Landlord shall prepare and deliver to Tenant final plans and specifications (“Final Plans”) substantially in conformity with the Approved Preliminary Plans. Within ten (10) days after delivery of the Final Plans, Tenant shall give written notice of any changes necessary to bring the Final Plans into substantial conformity with the Approved Preliminary Plans; Tenant shall not object to any logical refinement of the Approved Preliminary Plans or any change necessitated by applicable governmental laws or regulations. Failure of Tenant to deliver to Landlord written notice of such changes within the ten (10) day period shall be deemed approval of the Final Plans. Upon approval of the Final Plans, both parties shall endorse their approval on the Final Plans as may be necessary for filing such

documents with the appropriate governmental entity for approval, which shall be the responsibility of Landlord. Upon obtaining the appropriate approvals of the Final Plan from the applicable governmental entity, such document shall be referred to as the “Approved Final Plans.”

          c. Construction: Promptly upon obtaining the Approved Final Plans, Landlord shall commence construction of the building shell and improvements described therein, including the Tenant Improvements, which are collectively referred to as the “Building Improvements,” and diligently prosecute such construction to completion. Landlord shall hire Voit Construction (DeWeese Construction), and/or any other contractor reasonably acceptable to Tenant, to act as the general contractor to construct the Building Improvements. Landlord, using Landlord’s good faith efforts and due diligence, shall cause the Premises to be Ready for Occupancy (as hereinafter defined), excepting Punch List Items (as hereinafter defined), on or before the expiration of two hundred one (201) days following the Lease Date (“Completion Deadline”), provided that Landlord shall use its reasonable efforts to cause the Premises, to be Ready for Occupancy by June 10, 1996.

          d. Completion and Delivery: The Premises shall be ready for occupancy (“Ready for Occupancy”) when (i) construction of the Building Improvements is substantially completed in accordance with the Approved Final Plans, (ii) Landlord has obtained for the Premises any permits (temporary or final) that are legally required for Tenant’s occupancy, but not the operation of Tenant’s business, (iii) any and all parking areas to be constructed by Landlord, as set forth in the Approved Final Plans, relating to the Premises have been completed, (iv) any and all landscaping, sidewalks and other outdoor common area improvements in the Approved Final Plans have been completed, (v) any Tenant identification signs (monument or otherwise) described in the Approved Final Plans to be constructed by Landlord for Tenant have been completed, (vi) any all utility hook-ups necessary for the use of the Building are in place and are fully operational, and (vii) Tenant shall have received a fully executed and notarized nondisturbance and attornment agreement, in a form reasonably satisfactory to Tenant, from any lender of Landlord then having a lien on the Premises. Landlord shall deliver to Tenant a written statement certifying (a) that the Premises are Ready for Occupancy; and (b) the date of such completion. Landlord shall use its good faith efforts to give Tenant thirty (30) days prior written notice (“Pre-Occupancy Notice”) of the date when the Premises will be Ready for Occupancy.

          e. Early Entry: Tenant may, following its receipt of the Pre-Occupancy Notice, at Tenant’s sole risk, enter the Premises and install trade fixtures, equipment and other tenant improvements in the Premises; provided, however, that (i) Tenant’s early entry shall not unreasonably interfere with construction of the Building Improvements; (ii) all provisions of this Lease, excepting Sections 7, 9, 10 and 11, shall apply during such entrance; and (iii) Tenant shall pay utility charges reasonably allocated by Landlord to Tenant, based on Landlord’s reasonable estimate of Tenant’s use thereof arising from such pre-Commencement Date activities.

          f. Completion Deadline: In the event that Landlord has not caused the Premises to be Ready for Occupancy on or before the Completion Deadline, this Lease shall remain effective and in addition to any Rent free possession of the Premises provided in Section 7, the following shall apply:

               (1) If the Premises becomes Ready for Occupancy during the first seven (7) days following the Completion Deadline, Tenant shall accrue one (1) day Rent free possession of the Premises for every day that the Premises is not Ready for Occupancy following the Completion Deadline, or

               (2) If the Premises becomes Ready for Occupancy at any time between the eighth (8th) and twenty-first (21st) day following the Completion Deadline, Tenant shall accrue two (2) days Rent free possession of the Premises for every day that the Premises is not Ready for Occupancy following the Completion Deadline through the twenty-first (21st) day following the Completion Deadline, or

               (3) If the Premises becomes Ready for Occupancy at anytime after the twenty-first (2lst) day following the Completion Deadline, Tenant shall accrue three (3) days Rent free possession of the Premises for every day that the Premises is not Ready for Occupancy following the Completion Deadline.

     In the event that the Premises is not Ready for Occupancy within one hundred twenty (120) days following the Completion Deadline, for a period of ten (10) days thereafter, Tenant shall have the right to terminate this Lease by providing Landlord with written notice of such election, in which case this Lease shall terminate, and the parties shall have no further obligations hereunder, except (i) for those obligations of Landlord and Tenant hereunder which expressly survive the expiration or early termination of this Lease; (ii) that Landlord shall return to Tenant at the time such notice is received or given by Landlord, the Security Deposit (subject to Section 8), any prepaid Rent or other amounts prepaid by Tenant to Landlord hereunder; and (iii) Landlord shall promptly reimburse Tenant any amount of the Allowance to which Tenant is entitled pursuant to Section 2(h) which has not already been paid to Tenant by Landlord. The failure of Tenant to deliver such notice within such time period shall be deemed a waiver of such right to terminate. The Completion Deadline shall be automatically extended for any delays beyond the reasonable control of Landlord, such as acts of God, fire, earthquake, acts of a public enemy, riot, insurrection, unavailability of materials, governmental restrictions on the sale of materials or supplies or on the transportation of such materials or supplies, strike directly affecting construction or transportation of materials or supplies, shortages of materials or labor resulting from government controls, or weather conditions (collectively, “Force Majeure Event” ). Landlord shall provide Tenant with written notice of the occurrence of any Force Majeure Event, which notice specifies the action or inaction which Landlord contends constitutes such Force Majeure Event. If Tenant has not objected to such Force Majeure Event, in writing, within five (5) business days following Tenant’s receipt of such written notice from Landlord, the Force Majeure Event, as set forth in such notice, shall be deemed to have occurred. If Tenant objects to such Force Majeure Event, and such objection is not resolved within ten (10) days following Landlord’s receipt of such objection, the disputed matter shall be submitted to binding arbitration in accordance with the commercial rules of the American Arbitration Association ( “Arbitration” ).

          g. Measurement of Premises and Building: Within fifteen (15) days following the Premises becoming Ready for Occupancy, Landlord shall cause the Premises and the Building to be measured by Landlord’s engineer, or a third party engineer reasonably acceptable to Landlord and Tenant, to determine the Usable Area (as hereinafter defined) thereof, which determination shall be binding upon Landlord and Tenant. In the event that the Usable Area of the Premises and/or Building is different than that set forth in the Basic Lease Information, Landlord and Tenant shall execute a written amendment to modify the Usable Area and Rentable Area of the Premises and/or the Building, as applicable, and Tenant’s Proportionate Share. Landlord anticipates, but is not certain, that there will not be Building Common Areas (as hereinafter defined) within the Building, resulting in no difference between the Rentable Area and Usable Area (as such terms are hereinafter defined) for the Premises.

          h. Allowance: Landlord shall provide Tenant with a tenant improvement allowance ( “Allowance” ) in the amount of forty Six Thousand Five Hundred and No/100ths Dollars ($46,500.00)

which may be used by Tenant, as deemed appropriate by Tenant to pay any expenses incurred by Tenant as a result of entering into this Lease; provided, however, in the event that this Lease terminates prior to the Commencement Date, if such termination is a result of (i) a default by Tenant or Tenant has elected to terminate this Lease in accordance with its expressed rights set forth herein, Tenant shall immediately reimburse Landlord for the portion of the Allowance, if any, which has been released to Tenant, or (ii) a default by Landlord or Landlord has elected to terminate this Lease in accordance with its expressed rights set forth herein, Tenant shall be entitled to retain the Allowance distributed to Tenant as of the date of such termination. Payments of the Allowance shall be made by Landlord any time after the Lease Date within ten (10) business days following Landlord’s receipt of satisfactory evidence from Tenant of such expenses; provided that Landlord shall have no obligation for such payment if Tenant is in default hereunder.

          i. Construction: As of the Commencement Date, Landlord represents and warrants that the Building, Premises, Building Common Areas and Project Common Areas, to the extent that such were constructed by or caused to be constructed by Landlord, are in compliance with all applicable laws, statutes and ordinances, which includes ADA (as hereinafter defined), and shall be in good working order and repair.

     3.  PREMISES: This Lease shall be effective as of the date of execution hereof by Landlord and Tenant. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord upon the terms and conditions contained herein the Premises.

     4.  ACCEPTANCE OF PREMISES: Subject to Section 2(i) and excepting Punch List Items (as hereinafter-defined), if any, Tenant’s taking possession of the Premises shall constitute Tenant’s acknowledgment that the Premises are in good condition and that the Building Improvements are constructed in accordance with the provisions of this Lease and that Tenant agrees to accept the same in its condition existing as of the date of such entry and subject to all applicable municipal, county, state and federal statutes, laws, ordinances, including zoning ordinances, and regulations governing and relating to the use, occupancy or possession of the Premises, excepting latent defects. Within thirty (30) days after the Tenant takes possession of the Premises, Tenant shall deliver to Landlord a list of items ( “Punch List Items” ) that Tenant reasonably deems that Landlord complete or correct in order for the Premises to be reasonably acceptable. Following Landlord’s receipt of the Punch List Items, Landlord shall complete and/or correct such items set forth on the Punch List Items using its good faith efforts and due diligence within thirty (30) days following Landlord’s receipt of such document. If Tenant does not deliver the Punch List Items to Landlord within such time period, Tenant shall be deemed to have accepted the condition of the Premises. Landlord shall use its reasonable efforts to not unreasonably interfere with Tenant’s use of the Premises as a result of such repair work.

     5.  DEFINITIONS:

          a. “Building” shall refer to the entire structure in which the Premises are located, the term “Lot” shall refer to the Assessor’s tax parcel on which the Building is situated, and the term “Project” shall refer to the project as shown on Exhibit A. This Lease confers no rights either with regard to the subsurface of the land below the ground level of the Building or with regard to airspace above the roof of the Building.

          b. “Building Common Areas” shall mean the areas on individual floors devoted to corridors, fire vestibules, lobbies, electric and telephone closets, rest rooms, mechanical rooms, janitor closets and other similar facilities for the benefit of all lessees public lobbies, loading docks, and other similar facilities for the benefit of all lessees, but excluding public stairs, pipe shafts, and the enclosing walls thereof.

          c. “Project Common Areas” shall refer to all areas and facilities outside the Premises and within the Project that are provided and designated by Landlord from time to time for the general nonexclusive use of Landlord, Tenant, and of other lessees in the Project and their respective employees, suppliers, shippers, customers, and invitees. Landlord hereby grants to Tenant, during the term of this Lease, the nonexclusive right to use, in common with others entitled to such use, the Project Common Areas as they exist from time to time, subject to any rules, regulations, and restrictions governing the use of the Project as from time to time made or amended by Landlord. Provided that Landlord, using its reasonable efforts does not unreasonably interfere with Tenant’s use of the Premises, Landlord reserves the right at any time and from time to time, to: (i) make alterations in or additions to the Project and to the Project Common Areas; and (ii) temporarily close any of the Project Common Areas for maintenance purposes.

          d. “Rentable Area” shall mean:

               (1) as to a floor leased entirely by Tenant, all areas within outside permanent Building walls, measured to the inside surface of the dominant portion of the permanent outer Building walls, including restroom, janitorial, telephone and electrical closets, mechanical areas, excluding any major vertical penetrations of the floor, balconies, arcades and covered entrances, plus Tenant’s pro rata share of Building Common Areas.

               (2) as to a floor only a portion of which is leased by Tenant, the aggregate of the Usable Area of the portion of that floor occupied by Tenant, plus Tenant’s pro rata share of Building Common Areas on the floor leased in part by Tenant and Tenant’s pro rata share of Building Common Areas.

          e. “Usable Area” shall mean all floor area in the Tenant’s space, measured from the inside surface of the interior walls of the Premises, but excluding any balconies, arcades and covered entrances.

     6.  POSSESSION: Subject to and upon the terms and conditions set forth herein, the Term shall be for the period specified in the Base Lease Information, commencing upon the date on which the Premises is Ready for Occupancy ( “Commencement Date” ). Within thirty (30) days after the Commencement Date, Landlord and Tenant shall execute an amendment to this Lease, setting forth the Commencement Date and the expiration date of the Term.

     7.  RENT:

          a. Tenant agrees to pay Landlord, without prior notice, demand, deduction or offset, a Base Rent in the amount set forth in the Basic Lease Information as adjusted from time to time in the manner set forth in this Section. In addition to the Base Rent, for the purpose of this Lease, “Rent” also includes Tenant’s Proportionate Share of Operating Expenses, Taxes, and Utilities, and any other amounts owing from Tenant to Landlord pursuant to the terms of this Lease. The Rent shall be payable in advance on or before the first day of each month throughout the term of the Lease, except that if Tenant exercises Tenant’s option to eliminate any “free” Base Rent only, the first month’s Base Rent shall be paid upon the execution of this Lease; otherwise, the first payment of Base Rent due hereunder shall be paid on the first day of the first month in which Base Rent is actually due. Base Rent for any period during the term hereof which is for less than one month shall be a prorated portion of the monthly installment based upon a 30-day month.

          b. The Base Rent shall be increased during the Term of this Lease as follows:

     Notwithstanding the foregoing Base Rent schedule, prior to the Commencement Date, or at any time within the “free” Base Rent period, Tenant shall have the right to elect, by providing Landlord with written notice, to eliminate the “free” Base Rent for the first six (6) months of the Term (or the remaining portion of the “free” Base Rent Period), in which case the Base Rent for the first (1st) month through the eighteenth (18th) month of the Term shall be the amount of Twenty Three Thousand Eight Hundred Twenty Seven and No/100ths Dollars ($23,827.00) (or, if such election is made during such “free” Base Rent period, an appropriately prorated portion of such “free” Base Rent). Additionally, Tenant shall be entitled to credit against Base Rent owing in the seventh (7th) month following the Commencement Date, one-half (1/2) of the Security Deposit, and the remaining one-half (1/2) of the Security Deposit during the eighth (8th) month following the Commencement Date, following which Tenant’s Security Deposit shall be equal to zero.

     8.  SECURITY DEPOSIT: Tenant shall deposit the Security Deposit with Landlord at the times and in the amounts specified in the Basic Lease Information, as security for the full and faithful performance by Tenant of the provisions of this Lease. If Tenant is in default, beyond any applicable cure period, Landlord may use the Security Deposit, or any portion of it, to cure the default or to compensate Landlord for all damages which Landlord may suffer by reason of Tenant’s default. Tenant shall immediately on demand pay to Landlord a sum equal to the portion of the Security Deposit expended or applied by Landlord as provided in this Section so as to maintain the Security Deposit in the sum specified. Tenant’s failure to forthwith remit to Landlord an amount in cash sufficient to restore the Security Deposit to the original sum deposited within thirty (30) days after receipt of such demand from Landlord shall constitute an event of default under the terms of this Lease. Within thirty (30) days after the expiration or termination of this Lease, Landlord shall return the Security Deposit to Tenant, less such amounts as are reasonably necessary to remedy Tenant’s default, to repair damages to the Premises caused by Tenant, or to clean the Premises upon such termination, as soon as practicable thereafter. Landlord’s obligations with respect to the Security Deposit are those of a debtor and not a trustee. Landlord may maintain the Security Deposit with Landlord’s general and other funds. Landlord shall not be required to pay Tenant interest on the Security Deposit. Tenant shall not mortgage, assign, transfer or encumber the Security Deposit without the prior written consent of Landlord. If Landlord sells its interest in the Premises, Landlord may deliver the Security Deposit to the purchaser of Landlord’s interest and thereupon be relieved of any further liability or obligation with respect to the Security Deposit.

     9.  OPERATING EXPENSES:

          a. As additional Rent, Tenant shall pay Tenant’s Proportionate Share of all Operating Expenses. The term “Operating Expenses” means the total amounts paid or payable by Landlord or others on behalf of Landlord during the Term in connection with the ownership, maintenance, repair, and operation of the Premises, the Building and the Project in a quality, first class condition, and includes, but is not limited to, the amount paid for all hot and cold water; the amount paid for Project lighting; the amount paid for utilities and not paid separately by tenants in the Building; the amount paid for all labor and/or wages and other employment related payments, including cost to Landlord of workmen’s compensation and disability insurance, payroll taxes, welfare, and fringe benefits made to janitors, employees, building managers, contractors, and subcontractors of the Landlord involved in the operation, maintenance and repair of the Building to the extent such persons were involved in such activities; the cost of maintenance and repair (but not replacement) of the roof, landscaping, sidewalks, driveways, parking lots, fences and other exterior Project Common Areas and interior Building Common Areas; the amount paid for maintaining and repairing plumbing, alarm and security systems, heating, air conditioning and ventilation systems, including the cost of preventative maintenance contracts; modifications to the Building occasioned by any rules, regulations, or laws effective subsequent to the Commencement Date (subject to the limitations set forth in Section 9d); permits, licenses, and certificates necessary to operate and manage the Building; managerial fees (not to exceed three and one-half percent (3.5%) of the amount of Base Rent) and, as allowed by Section 9d below, managerial, administrative, and telephone expenses related to the Building; the total charges of any independent contractors employed in the care and operation, maintenance, cleaning, and repair of the Building and the Project landscaping; the amount paid for all supplies, tools, equipment, and necessities which are occasioned by everyday wear and tear; the costs of window and exterior wall cleaning; inspection and consulting services; the amount paid for premiums for all insurance obtained by Landlord or required by Landlord’s mortgagees (provided that in no event shall Tenant be required to pay any portion of annual earthquake insurance premiums in excess of $.03 per $100.00 of replacement cost); any expenses which are designated as capital expenditures by generally accepted accounting procedures ( “GAAP” ), provided that if such expenditure is (i) less than Two Thousand and No/l00ths Dollars ($2,000.00), such amount shall be included in Operating Expenses for the year such expense is incurred or (ii) more than Two Thousand and No/l00ths Dollars ($2,000.00), such amount shall be amortized over the useful life, as determined by GAAP, of such capital expenditure, and such amortization shall be included in Operating Expenses for each year of such useful life falling within the Term of the Lease (to the extent that the useful life of a capital expenditure exceeds the expiration of the Term, Tenant shall have no obligation to pay Landlord such amount following such expiration); and, subject to Section 9d below, compliance with applicable, laws, statutes and ordinances effecting the Project. Landlord, or an affiliate of Landlord, may act as the manager of the Building provided that the cost of such service is competitive with comparable services rendered by third party management companies. Unless otherwise set forth in this Lease, the listing of Operating Expense items shall not create an obligation on Landlord to provide such corresponding services.

          b. In determining the amount of Operating Expenses for any year, if during any period within such year less than ninety-five percent (95%) of the Project’s Rentable Area shall have been occupied by tenants, then with respect to such period, the Operating Expenses shall be proportionately increased to an amount equal to the Operating Expenses that would have been incurred had the occupancy of the Building been ninety-five percent (95%) throughout such portion of the year.

          c. Tenant acknowledges that Landlord shall have no obligation whatsoever to provide guard service or other security measures for the benefit of the Premises or Project. Should Landlord elect to provide security protection for the Project, the cost of guards and other protection services shall be included within the definition of Operating Expenses.

          d. Operating Expenses shall not, however, include interest on debt, capital retirement of debt, depreciation; subject to Section 9a, expenses properly chargeable to capital account, except for capital expenditures as required by applicable laws, statutes and ordinances, the compliance with which is not required as of the Lease Date, expenses directly chargeable by the Landlord to any tenant or tenants; legal fees, brokerage commissions, advertising costs and other related expenses incurred in connection with the leasing of the Building; repairs, alterations, additions, improvements, or replacements made to correct any defect in design, materials or workmanship of the Building or Property constructed by Landlord, its agents or contractors or to comply with any existing requirements of any governmental authority in effect as of the Commencement Date; damage and repairs attributable to condemnation, fire, flood or earthquake; damage and repairs covered under any warranty or insurance policy, to the extent Landlord receives such funds, carried by Landlord in connection with the Building or Property; damage and repairs necessitated by the gross negligence or willful misconduct of Landlord, its employees, contractors, or agents; executive salaries of Landlord; salaries of service personnel to the extent that such service personnel performs services not connected with the management, operation, repair or maintenance of the Building or Project Common Areas; Landlord’s general overhead expenses not related to the Building; payments of principal or interest on any mortgage or other encumbrance including ground lease payments and points, commissions and legal fees associated with financing; legal fees, accountant fees and other expenses incurred in connection with disputes with third parties, Tenant or any other tenants or occupants of the Building or associated with the enforcement of any leases; provided that if such action (i) confers a general benefit on all tenants of the Project, (ii) are not recovered by Landlord from the opposing party, (iii) Landlord has acted prudently and used sound business judgment in pursuing such opposing party, and (iv) Landlord has obtained the prior consent of Tenant, which consent shall not be unreasonably withheld, such expenses shall be included within Operating Expenses; costs (including permit, license and inspection fees) incurred in renovating or otherwise improving, decorating, painting or altering space for other occupants or vacant space in the Building; costs incurred due to violation by Landlord of the terms and conditions of the Lease; charitable or political contributions; any costs or expenses related to the testing for, removal, remediation, transportation or storage of Hazardous Materials from the Premises, Building or Project, except with respect to Hazardous Materials released or disposed upon the surface of the Project (as opposed to migrating subsurface Hazardous Materials) by third parties, other than Landlord, Landlord’s Parties (as hereinafter defined), or any other tenant of the Project, during the Term of this Lease (provided that nothing herein shall be deemed to, in any way, modify, limit or terminate Tenant’s obligations pursuant to Section 13); interests, penalties or other costs arising out of Landlord’s failure to make timely payments of its obligations; and costs incurred in advertising and promotional activities for the Building. Landlord shall not collect in excess of one hundred percent (100%) of Operating Expenses, or any item of cost more than once. Any Operating Expense charged to Landlord by any of its affiliates for goods or services provided to the Building shall not exceed the prevailing costs thereof that would be charged to Landlord by not affiliated parties.

          e. Tenant’s Proportionate Share of the Operating Expense shall be paid as follows: Landlord shall estimate from time to time, in good faith, the anticipated Operating Expenses, and shall compute Tenant’s Proportionate Share thereof. One-twelfth (1/12) of such amount due shall be paid by Tenant to

Landlord as additional Rent on the first day of each month. Landlord may revise the same from time to time, in good faith, and require Tenant to pay one-twelfth (1/12) of such revised annual amount as additional Rent hereunder as of the first of each month. Not later than March 1 of each calendar year, including the year following the year in which this Lease terminates, Landlord shall furnish to Tenant with a true and correct accounting of actual costs with respect to the items set forth above, and within thirty (30) days following Landlord’s delivery of such accounting, Tenant shall pay to Landlord the amount of any underpayment. Notwithstanding the failure by Landlord to timely provide such accounting by such date, such failure shall not constitute a waiver by Landlord of its right to collect Tenant’s share of any underpayment. Landlord shall credit the amount of any overpayment of Tenant toward the next estimated monthly installment(s) falling due, or where the term of the Lease has expired, promptly refund the amount of overpayment to Tenant within thirty (30) days’ following the termination of this Lease.

          f. Notwithstanding any other provision of this Lease to the contrary, in no event shall Tenant’s Proportionate Share of Operating Expenses and Taxes for the first six (6) months following the Commencement Date exceed Four Thousand Two Hundred Eighty and No/l00ths Dollars ($4,280.00) per month. During such six (6) month period, Tenant shall remain responsible for the Tenant’s Proportionate Share of the Utilities (as hereinafter defined).

          g. Provided that Tenant is not in default under the provisions of this Lease, Tenant shall have the right after reasonable written notice and at reasonable times to inspect Landlord’s accounting records at Landlord’s accounting office. If after such inspection any dispute arises as to the amount of any portion of the Operating Expenses owed by Tenant hereunder and Tenant and Landlord are unable to resolve such dispute within fifteen (15) days following the completion of Tenant’s inspection, an accountant, who shall be reasonably acceptable to Tenant and Landlord, shall prepare a certificate as to the proper amount of the expenditure, which certification shall be final and conclusive. Tenant agrees to pay the cost of such certification unless it is determined that Landlord’s original statement overstated Operating Expense by more than five percent (5.00%), in which case Landlord shall pay for such audit.

     10.  TAXES:

          a. Tenant shall pay as additional Rent, Tenant’s Proportionate Share of all Taxes. The term “Taxes” shall include all real property taxes, bonds and assessments levied against the Project and the various estates therein and the underlying land, all taxes, assessments and reassessments of every kind and nature whatsoever levied or assessed in lieu of or in substitution of any existing or additional real or personal property taxes and assessments on the Project, any increase in taxes or assessments resulting from a re-evaluation of the Project resulting from the sale, conveyance, assignment, ground lease or other transfer thereof, service payments in lieu of such taxes, excises, transit charges and fees, housing, park and child care assessments, development and other assessments, reassessments, levies, fees or charges, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind which are assessed, levied, charged, confirmed, or imposed by any public authority upon the Project, its operations or the Rent provided for in this Lease, or amounts necessary to be expended because of governmental orders, whether general or special, ordinary or extraordinary, unforeseen as well as foreseen, of any kind and nature for public improvements, services, benefits, or any other purposes which are assessed, levied, confirmed, imposed or become a lien upon the Premises, Building or Project or become payable during the Term. If at any time during the Term under the laws of the United States Government or the State of California, or any political subdivision thereof, a tax or excise on Rent herein reserved, or any other tax however described, is levied or

assessed by any such political body against Landlord on account of such Rent, or a portion thereof, Tenant shall pay One Hundred Percent (100%) of any such tax or excise as additional Rent hereunder. Notwithstanding the foregoing, in no event shall Tenant’s Proportionate Share of Taxes during the Term increase, as a result of a sale or transfer resulting in a reassessment of the Project, by more than three percent (3.00%) per annum, on a cumulative basis, above Tenant’s Proportionate Share of Taxes for the first calendar year following the Commencement Date. For the purpose of determining Taxes for the first calendar year of the Term, the occupancy of the Rentable Area of the Building shall be adjusted to ninety-five percent (95.00%) (any vacant space shall be assumed to have Tenant Improvements equal to Twenty and No/l00ths Dollars ($20.00) per rentable square foot) throughout such calendar year. The following shall not constitute Taxes for the purposes of this Lease, and nothing contained herein shall be deemed to require Tenant to pay any of the following: (i) any franchise, succession or transfer taxes; (ii) interest on taxes or penalties resulting from Landlord’s failure to pay taxes; (iii) any taxes which are essentially payments to a governmental agency with the right to make improvements to the Building; (iv) any Taxes which are due and payable in installments but which Landlord has voluntarily prepaid (which does not include making such prepayment to satisfy conditions to obtain entitlements or approvals from a governmental entity) in advance of the time such amount is due, to the extent of such prepayment only; or (v) any Taxes which relate to excessive tenant improvements installed by Landlord for the benefit of other tenants of the Project (the term “excessive” shall mean tenant improvements in excess of Twenty Two and 50/100ths Dollars ($22.50) per rentable square foot, increased by four percent (4.00%) for every calendar year following calendar year 1996. To the best of Landlord’s actual current knowledge, the Project is not subject to any special assessment of Taxes not of record as of the Lease Date.

          b. Taxes shall be paid as follows: Landlord shall determine or estimate, from time to time, Tenant’s share of the Taxes. One-twelfth (1/12) of the amount due or estimated by Landlord to be due shall be paid by Tenant to Landlord on the first day of each month. As soon as reasonably possible after Landlord has received the tax bill for the year, Landlord shall furnish Tenant with a true and correct tax statement, and within thirty (30) days of Landlord’s delivery of such statement, Tenant shall pay to Landlord the amount of any underpayment. Notwithstanding the failure of Landlord to timely provide such statement by such date, such failure shall not constitute a waiver of Landlord of its right to collect Tenant’s share of any underpayment. Landlord shall credit the amount of any overpayment of Tenant toward the next estimated monthly installment (s) falling due or, where the term of the Lease has expired, promptly refund the amount of overpayment to Tenant.

          c. Tenant shall pay before delinquent all taxes assessed against and upon equipment, furniture, fixtures, and other personal property of Tenant. If any taxes on Tenant’s personal property are levied against Landlord or Landlord’s property, or if the assessed value of the Building and other improvements, is increased by the inclusion of a value placed on Tenant’s personal property, and if Landlord pays the taxes on any of these items, Tenant, on demand, shall immediately reimburse Landlord for the sum of the taxes levied against Landlord, or the proportion of the taxes resulting from the increase in Landlord’s assessment. Landlord shall have the right to pay these taxes regardless of the validity of the levy.

     11.  UTILITIES:

          a. Tenant shall be solely responsible for paying the cost of all utilities, including, but not limited to, sewer use and connection fees, water, gas, electricity, telephone, and other utilities (the “Utilities” ) provided to the Premises and billed or metered separately to Tenant. Landlord shall have the right to separately meter, at the expense of Landlord, the Premises, in which case, to the extent Utilities are separately

metered to Tenant, such expense shall not be included in Operating Expenses. If the Utilities are not separately billed to Tenant, Tenant shall pay to Landlord within fifteen (15) days after receiving a bill from Landlord the Tenant’s Proportionate Share of the cost of Utilities. In determining Tenant’s Proportionate Share of the cost of Utilities attributable to Tenant’s use during any period of time, if during any period within such year less than ninety-five percent (95%) of the Project’s rentable area shall have been occupied by tenants, then with respect to such period, any portion of the Utilities which vary with the occupancy percentage of the Building and/or Project, if any, shall be proportionately increased to an amount equal to the Utilities that would have been incurred had the occupancy of the Building been ninety-five percent (95%) throughout such portion of the year. Extraordinary use of Utilities shall include, but not be limited to, use beyond normal business hours of 7:00 a.m. to 6:00 p.m., Monday through Friday; 7:00 a.m. to 12:00 on Saturdays, excluding any national holidays, and uses beyond those uses set forth in this Lease. Tenant shall have the right, upon reasonable advance written notice to Landlord, to request heating and air conditioning during other than normal business hours, and maintenance and cleaning services in addition to those set forth in this Lease. Tenant shall reimburse Landlord for the actual costs of any such after hour additional heating, air conditioning, maintenance and cleaning services within fifteen (15) days following Tenant’s receipt of written notice from Landlord.

          b. Failure by Landlord to furnish any Utilities, or any cessation thereof, which result from causes beyond the control of Landlord, shall not render Landlord liable in any respect for damages to either person or property, nor be construed as an eviction of Tenant, nor cause an abatement of rent, or relieve Tenant from fulfillment of any covenant or agreement hereof. If any of the machinery utilized in supplying services and Utilities breaks down, or ceases to function properly, Landlord shall use reasonable diligence to repair the same promptly. Tenant shall have no right to terminate this Lease, and shall have no claim for rebate of rent or damages on account of any interruptions in service or in Utilities occasioned thereby or resulting therefrom.

     12.  USE: Tenant shall use the Premises for the uses set forth in the Basic Lease Information and shall not use the Premises for any other purposes. Tenant shall be solely responsible for obtaining any necessary governmental approvals of such use. Tenant warrants that it shall not make any use of the Premises which may cause contamination of the soil, the subsoil or groundwater. Tenant shall not do, bring, or keep anything in or about the Premises that will cause a cancellation of any insurance covering the Premises. If the rate of any insurance carried by Landlord is increased as a result of Tenant’s use, Tenant shall pay to Landlord within thirty (30) days before the date Landlord is obligated to pay a premium on the insurance, or within thirty (30) days after Landlord delivers to Tenant a certified statement from Landlord’s insurance carrier stating that the rate increase was caused solely by an activity of Tenant on the Premises as permitted in this Lease, whichever date is later, a sum equal to the difference between the original premium and the increased premium. Landlord reserves the right to prescribe the weight and position of all safes, fixtures and heavy installations that Tenant desires to place in the Premises so as to distribute properly the weight, or to require plans prepared by a qualified structural engineer for such heavy objects, which shall be prepared at Tenant’s sole cost and expense.

     13.  COMPLIANCE WITH THE LAW: Neither, Tenant nor its agents, employees or contractors shall not use the Premises in any manner which will in any way conflict with any law, statute, zoning restriction, ordinance or governmental law or rule, regulation, or requirement of any duly constituted public authorities now in force or which may hereafter be enacted or promulgated including, but not limited to, any and all federal,

state and local laws, ordinances, regulations, orders and directives pertaining to any substance defined as “hazardous wastes”, “hazardous substances”, “hazardous materials”, “toxic substances” or words to that affect, including but not limited to petroleum based products, under any applicable current or future federal or state laws or regulations (collectively, “Hazardous Materials” ), or subject Landlord to any liability for injury to any person or property by reason of any business operation being conducted in or about the Premises. Following the Commencement Date, and subject to Section 2(i), Tenant shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances, and governmental rules, regulations, which includes, but is not limited to, the Americans with Disability Act (“ADA”) of 1990 (42 U.S.C. 12101 et . seq . ), and any amendment thereto or regulations promulgated thereunder, or requirements of any board or fire insurance underwriters or other similar bodies, now or hereafter constituted, relating to or affecting the condition, use, or occupancy of the Premises, to the extent such laws relate to Tenant’s particular use of the Premises (as opposed to general office use) or are implicated by Tenant’s making of Alterations. Otherwise, Landlord shall be responsible for the compliance with all applicable laws, statutes and ordinances affecting the Project which expense shall be within the definition of Operating Expenses, as more particularly described in Section 9 hereof. The final 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, or requirement, shall be conclusive of that fact as between Landlord and Tenant.

     Neither Tenant, nor any assignee, sublessee or occupier of any portion of the Premises, shall permit the introduction, placement, use, generation, manufacture, storage, disposal or transportation in or around the Premises of any hazardous, poisonous or toxic substance, material or waste of any kind that may be hazardous to health and/or the environment, including, without limitation, substances from time to time identified as such by federal and/or state laws and regulations, without the prior written consent of Landlord; provided, however, Tenant shall be entitled to possess and maintain, in compliance with all applicable laws, statutes and ordinances, within the Premises reasonable amounts of such Hazardous Materials which are customarily used in connection with Tenant’s permissible use of the Premises as set forth in this Lease, and Tenant agrees to indemnify, defend and hold Landlord harmless from any and all costs incurred (whether by Landlord or otherwise) in cleaning, decontaminating or otherwise correcting the effects of any such introduction, placement, use, storage or disposal in or about the Premises, as well as all costs of complying with all applicable laws, rules, regulations or requirements applicable thereto, including payment of any fines or penalties levied on account thereof or arising therefrom, and the cost of discharging any lien on the Premises securing such cost of correction.

     Landlord shall not permit any of its employees, agents or contractors (collectively, “Landlord’s Parties” ) to cause any Hazardous Materials to be used, generated, stored or disposed of, on or about the Premises, the Building or the Property.

     Landlord shall indemnify, defend by counsel acceptable to Tenant, protect and will hold Tenant and the Tenant Parties harmless from and against all liabilities, losses, costs and expenses, demands, causes of action, claims or judgments arising out of the presence of, use, generation, storage or disposal of Hazardous Materials at the Project (i) prior to the Lease Date, (ii) by Landlord or any of the Landlord’s Parties, or (iii) resulting from groundwater contamination from adjacent properties.

     To the extent that Landlord tests for, removes, remediates, transports and/or stores any Hazardous Materials released or disposed upon the surface of the Project (as opposed to migrating Subsurface Hazardous Materials) by third parties, other than

Landlord, Landlord’s Parties, or any other tenant of the Project, during the Term of this Lease, such expense shall be within the definition of Operating Expenses. The provisions of this Section 13 shall survive the expiration of this Lease.

     14.  ALTERATIONS AND ADDITIONS: Tenant shall not make or suffer to be made any alterations, additions, or improvements (collectively, “Alterations” ) to or of the Premises, or any part thereof, without first obtaining the written consent of Landlord, which shall not be unreasonably withheld. Any Alterations to the Premises, including, but not limited to, wall covering, paneling, and built-in cabinet work, but excepting movable furniture and trade fixtures, shall on the expiration of the Term become a part of the realty and belong to Landlord, and shall be surrendered with the Premises. However, Landlord can, at the time consent is requested by Tenant, require Tenant remove such Alterations that Tenant intends to make to the Premises. If Landlord so elects, Tenant, at its own cost, shall repair any damage caused by the removal of the Alterations. Before Landlord’s consent to such Alterations will be given, Tenant shall submit detailed specifications, floor plans and necessary permits (if applicable) to Landlord for review. In no event shall any Alterations affect the structure of the Building or its facade. As a condition to its consent, Landlord may request adequate assurance that all contractors who will perform such work have in force workman’s compensation and such other employee and public liability insurance as Landlord deems necessary. In the event Landlord consents to the making of any Alterations to the Premises by Tenant, the same shall be made by Tenant at Tenant’s sole cost and expense, comply with all applicable laws, statutes and ordinances, be completed to the satisfaction of Landlord, and any architect, contractor or person selected by Tenant to make the same must first be approved in writing by Landlord. If Tenant makes any Alterations to the Premises, the Alterations shall not be commenced until five (5) business days after Landlord has received notice from Tenant stating the date the installation of the alterations is to commence so that Landlord can post and record an appropriate notice of nonresponsibility. Notwithstanding the foregoing, without the prior consent of Landlord, but with the prior notice to Landlord, Tenant shall be entitled to make Alterations within the Premises, provided that (i) the cost of the constructing such Alterations does not exceed Ten Thousand and No/l00ths Dollars ($10,000.00) per project in the aggregate, (ii) does not affect the structure or mechanical systems of the Building, and (iii) Tenant otherwise complies with the provisions of this Section. Tenant shall indemnify, defend and hold the Landlord, the Building and the Premises free and harmless from any liability, loss, damage, cost, reasonable attorneys’ fees and other expenses incurred on account of such construction, or claims by any person performing work or furnishing materials or supplies for Tenant or any persons claiming under Tenant.

     15.  REPAIRS AND MAINTENANCE: Except as specified in the following paragraph, Tenant shall, at Tenant’s sole cost and expense, maintain the Premises in first class condition, clean and safe condition and repair, which includes maintaining janitorial service for the Premises for the Term, and any extension thereto. Without limiting the generality of the foregoing, Tenant shall be solely responsible for maintaining, and repairing (but not replacing) all fixtures, electrical lighting, ceilings and flooring coverings, windows, doors, plate glass, skylights, and interior walls within the Premises. To the extent that replacement of such items are required, Landlord may cause such replacement to occur, in which case such expense would be an Operating Expense, subject to the limitations set forth in Section 9. With respect to Utilities servicing the Premises, Tenant shall be responsible for the maintenance and repair of any such facilities servicing the Premises, including all such facilities that are within the walls or floor. In addition, subject to the provisions of Section 21j, Tenant shall be responsible for all repairs made necessary by Tenant, its employees, agents, contractors or invitees. Landlord shall have no obligation to alter, remodel, improve, repair, decorate or

paint the Premises except as specifically set forth in this Lease. Under no circumstances shall Tenant make any repairs to the Building or to the mechanical, electrical or heating, ventilating or air conditioning systems of the Premises or the Building, unless such repairs are previously approved in writing by Landlord. However, in no event shall Tenant’s obligations to repair under this subsection extend to (i) damage and repairs covered under any insurance policy carried by Landlord, to the extent such policies actually fund such repairs, in connection with the Building; (ii) damage caused by any defects in the design, construction or materials of the Building, including the Premises, installed therein by Landlord; (iii) damage caused by the gross negligence or willful misconduct of Landlord or Landlord’s Parties; (iv) conditions covered under any warranties of Landlord’s contractors pursuant to which such contractors perform such repair, and (v) reasonable wear and tear, (vi) damages to the Premises and/or Building required to be repaired by Landlord pursuant to this Lease, (vii) repairs required by to be made by Landlord pursuant to this Lease, (viii) damage caused by fire, flood or earthquake, or by acts of governmental authorities, or (ix) repairs made and charged as an Operating Expense (except as expressly provided in this Section 15).

     Landlord shall be responsible, at Landlord’s sole cost and expense, for repairing any latent defects and making all structural repairs to the Building, which includes latent defects relating to the installation and water tightness of the windows within the Building. Landlord shall maintain the roof, side-walls, and foundations of the Building in good, clean and safe condition and repair. Landlord shall also maintain all landscaping, driveways, parking lots, fences, signs, sidewalks and other exterior Project Common Areas and interior Building Common Areas of the Project. Landlord shall be responsible for maintenance and repair of all plumbing, heating, electrical, air conditioning and ventilation systems. Landlord shall obtain and maintain, at Landlord’s expense without right of reimbursement from Tenant, (i) a ten (10) year warranty (or similar protection providing the same level of repair assurance) on the roof of the Building, (ii) a ten (10) year warranty (or similar protection providing the same level of repair assurance) on the HVAC system servicing the Building, and (iii) a four (4) year warranty (or similar protection providing the same level of repair assurance) on the windows within the Building. Landlord shall use its reasonable efforts and due diligence to enforce such warranties when required. Except as otherwise provided in this Lease, Landlord shall have no liability to Tenant, nor shall Tenant’s obligations under this Lease be reduced or abated in any manner whatsoever by reason of any inconvenience, annoyance, interruption or injury to business arising from Landlord making any repairs or changes which Landlord is required or permitted by this Lease or by any other tenants’ lease or required by law to make in or to any portion of the Building or the Premises. Landlord shall use reasonable efforts to minimize any interference with Tenant’s business at the Premises. If Tenant fails to maintain the Premises in good order, condition and repair, Landlord may give Tenant thirty (30) days written notice to do such acts as are reasonably required to so maintain the Premises. If Tenant fails to promptly commence such work within such time period and diligently prosecute it to completion, then Landlord shall have the right 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 “Reference Rate” (formerly, “Prime Rate”) then being charged by the San Francisco main office of Bank of America NT & SA plus two percent (2%) per annum, from the date of such work, but not to exceed the maximum amount then allowed by law. Landlord shall have no liability to Tenant for any damage, inconvenience, or interference with the use of the Premises by Tenant as the result of performing any such work. In the event of an emergency whereby Landlord has an obligation to repair the condition causing such emergency pursuant to this Lease, provided that Landlord has not responded to such emergency for a period of forty-eight (48) hours following Landlord’s receipt of written

notice from Tenant, which is captioned “Emergency Notice ”, Tenant shall have the right to undertake temporary repairs of such nature as would be Landlord’s responsibility. Any such temporary repairs shall comply with all applicable laws, statutes and ordinances and, shall not exceed the level of repairs required to temporarily remediate such emergency condition. In the event that Tenant performs such emergency repairs, Landlord shall reimburse Tenant’s actual costs incurred within fifteen (15) days following Landlord’s receipt of written notice from Tenant, which notice shall include invoices for such repair work.

     16.  WASTE: Tenant shall not use the Premises in any manner that will constitute waste, nuisance, or unreasonable annoyance to owners or occupants of adjacent properties or to other tenants of the Building.

     17.  LIENS: Tenant shall keep the Premises and the Project free from any liens arising out of any work performed, materials furnished, or obligations incurred by Tenant.

     18.  ASSIGNMENT AND SUBLETTING: Tenant shall not assign, transfer, mortgage, pledge, hypothecate, or encumber this Lease or any interest therein, nor sublet the Premises or any part thereof, or any right or privilege appurtenant thereto or permit the use or occupancy by any other party without the written consent of the Landlord first had and obtained, which consent shall not be unreasonably withheld. Any attempted assignment, transfer, mortgage, encumbrance, or subletting without such consent shall be void and shall constitute a breach of this Lease without the need for notice to Tenant. Tenant shall give Landlord written notice of Tenant’s desire to assign or sublet all or some portion of the Premises and the date on which Tenant wishes to make such assignment or sublease; at least thirty (30) days prior to such date. Such written notice shall set forth the name of the proposed assignee or sublessee, the nature of the business to be carried on in the Premises, the space to be assigned or sublet, the material terms and provisions of the proposed sublease or assignment, and such financial information as Landlord may reasonably request. Landlord shall then have a period of thirty (30) days following receipt of such notice and accompanying information within which to notify Tenant of its decision with respect to the proposed sublease or assignment. The withholding of Landlord’s consent to the assignment or subletting will be deemed to have been reasonable where based upon Landlord’s good faith determination of: (i) the financial irresponsibility of assignee or sublessee; (ii) the lack of suitability of assignee’s or sublessee’s intended use of the Premises; or (iii) the intended unlawful use of the Premises by sublessee or assignee; provided, however, that the foregoing enumeration shall not be exclusive. Landlord shall, within such thirty (30) day period, notify Tenant in writing that Landlord elects either (i) in the case of a proposed assignment only, to terminate this Lease as of the date so specified by Tenant, in which event Tenant will be relieved of all further obligations hereunder and the Security Deposit (subject to Section 8) and any other prepaid sums by Tenant shall be returned to Tenant pro rata, if applicable, pursuant to the provisions of this Lease, (ii) reasonably withhold its consent to such proposed assignment or sublease, or (iii) to permit Tenant to make such assignment or sublease subject to the following:

          a. Any such assignment, sublease or the like must be pursuant to a written agreement in a form acceptable to Landlord in its reasonable discretion and must provide that such assignee, sublessee, or other transferee agrees not to violate the terms and conditions of this Lease. No sublease or assignment by Tenant shall relieve Tenant of any liability hereunder. Any sublease must provide that Tenant (Sublessor) has the right to reenter the Premises upon termination of such sublease. No sublessee or assignee shall further assign or sublet all or any part of the Premises.

          b. One-half (1/2) of any sums or other economic consideration received by Tenant as a result of such subletting,

which exceed in the aggregate the total sums which Tenant is obligated to pay Landlord under this Lease (prorated to reflect obligations allocable to that portion of the Premises subject to such sublease), plus the cost of (i) reasonable broker’s commissions paid by Tenant with regard to the transfer; (ii) the cost of improvements approved by Landlord pursuant to Section 13 made to the subleased premises by Tenant at Tenant’s expense for the purpose of subleasing; and (iii) reasonable legal fees paid by Tenant with regard to the transfer, shall be payable to Landlord as additional Rent under this Lease without affecting or reducing any other obligation of Tenant hereunder.

          c. No assignment or sublease shall be valid and no assignee or subtenant shall take possession of the Premises until an executed counterpart of such assignment or sublease has been delivered to Landlord. In the event Tenant assigns or sublets all or more than thirty percent (30.00%) of the Premises as permitted by this Lease, except in the event of an assignment or subletting to a Tenant affiliate, all options to purchase the Premises, to renew this Lease at the end of the original term, or to lease additional space in the Project, which options, if any, are defined and explained herein or in an addendum to this Lease, shall terminate.

          d. Any sale or other transfer of the majority of the voting stock of Tenant if Tenant is a corporation, or a majority of the partnership interest in Tenant if Tenant is a partnership shall be an assignment for the purposes of this Section 18; provided, however, in such event, Landlord’s consent to an assignment resulting from such sale or other transfer shall not be required if, following such transfer, the net worth of Tenant is not materially less than that as of the Lease Date (fifty percent (50.00%) or more decrease), and if such net worth as of the date of such proposed assignment is materially less than that as of the Lease Date, Landlord’s consent shall not be required if the transferee of such majority of the voting stock or majority of partnership interest (i) assumes and agrees to perform the obligations of Tenant hereunder arising following such assignment pursuant to documentation reasonably acceptable to Landlord, or (ii) guarantees the obligations of Tenant set forth in this Lease pursuant to documentation reasonably acceptable to Landlord. The sale of Tenant’s stock, which does not involve a shifting of the majority of the voting stock of Tenant, on a publicly traded exchange shall be inapplicable to the provisions of this Section 18.

          e. Tenant may assign this Lease or sublet the Premises or any portion thereof, without Landlord’s consent, to (i) any corporation which controls, is controlled by or is under common control with Tenant, (ii) any corporation resulting from the merger or consolidation of Tenant, provided that, to the extent that Endosonics Corporation no longer exists or its net worth is materially less than that as of the Lease Date (fifty percent (50.00%) or more decrease), the resulting entity must have a net worth equal to or greater than Tenant as of the Lease Date; or (iii) any person or entity acquires all of the assets of Tenant as an ongoing concern of the business being conducted at the Premises; provided that (a) the assignee or sublessee assumes, in full, the obligations of Tenant under this Lease, (b) except if Tenant no longer exists as provided in Subsection (11), Tenant remains fully liable under this Lease, (c) the permissible use of the Premises under this Lease remains unchanged, and (iv) Landlord receives not less than twenty (20) days’ prior written notice of such assignment or subletting.

          f. If Tenant requests Landlord to consent to a proposed assignment or subletting, Tenant shall pay Landlord, whether or not consent is ultimately given, Landlord’s reasonable costs, including attorneys’ fees (which attorneys’ fees shall not exceed Five Hundred and No/100ths Dollars ($500.00) for each proposed assignment or subletting) incurred in connection with evaluating such request and/or documenting such sublease or assignment.

     19.  INDEMNITY: Tenant shall indemnify, defend, protect and hold Landlord, any partner, co-venturer, officer, director, employee, agent, or representative of Landlord (collectively, “Landlord Group” ) harmless against and from all claims, damages and liabilities, arising from Tenant’s use of the Premises or the conduct of Tenant’s business or from any activity, work, or other thing done, permitted or suffered by Tenant in or about the Building, and shall further indemnify and hold the Landlord Group harmless against and from any and all claims, damages and liabilities, directly arising from any breach or default in the performance of any obligation on Tenant’s part to be performed under the terms of this Lease, or arising from any act or negligence of the Tenant or any officer, agent, employee, guest, or invitee of Tenant, and from all and against all costs, reasonable attorneys’ fees, expenses, and liabilities incurred in or about any such claim or any action or proceeding brought thereon, and, in any case, action, or proceeding brought against Landlord by reason of any such claim. Notwithstanding anything to the contrary herein, nothing herein shall be deemed to require Tenant to indemnify, defend, protect and hold the Landlord Group harmless from any claims, damages or liabilities resulting from the gross negligence or willful misconduct of Landlord or any members of the Landlord Group. Tenant, as a material part of the consideration to Landlord under this Lease, hereby assumes all risk of damage to property or injury to persons in, upon or about the Premises, except that Tenant shall not assume any risk for damage resulting from the gross negligence or wrongful act of Landlord or its authorized representatives.

          Subject to the preceding paragraph, Landlord shall indemnify, defend, protect and hold Tenant and any officer, director, employee, agent or representative of Tenant, harmless from any claims, damages or liabilities resulting from the gross negligence or willful of misconduct of Landlord or any member of the Landlord Group and from all and against all costs, reasonable attorney fees, expenses, and liabilities incurred in or about such claim or any action or proceeding brought thereon. The obligations of Landlord and Tenant pursuant to this Section 19, shall survive the expiration or earlier termination of this Lease.

          Landlord shall not be liable for injury or damage which may be sustained by the person or property of Tenant, its employees, invitees or customers, or any other person in or about the Premises, caused by or resulting from fire, steam, electricity, gas, water or rain which may leak or flow from or into any part of the Premises, or from the breakage, leakage, obstruction or other defects from pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, whether such damage or injury results from conditions arising upon the Premises or upon other portions of the Building or from other sources, except to the extent such damage or injury results from the gross negligence or willful misconduct of Landlord, its contractors or the Landlord Group. Landlord shall not be liable for any damages arising from any act or omission from any other tenant of the Building.

     20.  DAMAGE TO PREMISES OR BUILDING: All injury to the Premises or the Building caused by moving the property of Tenant or its employees, agents, guests or invitees into, in or out of the Building and all breakage done by Tenant or the agents, servants, employees, and visitors of Tenant shall be repaired as determined by the Landlord at the expense of the Tenant to the extent not covered and paid by insurance maintained by Landlord.

     21.  TENANT’S INSURANCE/WAIVER OF SUBROGATION:

          a. All insurance required to be carried by Tenant and Landlord shall be issued by responsible insurance companies which are rated by Best Insurance Reports as A:VII or better and licensed or authorized to do business in the State of California. Each policy maintained by Tenant shall name Landlord, and at Landlord’s request, any mortgagee of Landlord, as an additional insured, as their respective interests may appear. Each policy

maintained by Tenant shall contain (i) a separation of insureds condition, (ii) a provision that such policy and the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by Landlord and that any coverage carried by Landlord shall be excess insurance for Landlord’s interest only (with respect to Tenant’s policies only), and (iii) a waiver by the insurer of any right of subrogation against Landlord, its agents, employees and representatives, which arises or might arise by reason of any payment under such policy or by reason of any act or omission of Landlord, its agents, employees or representatives. A copy of each paid up policy (authenticated by the insurer) or certificate of the insurer evidencing the existence and amount of each insurance policy required hereunder shall be delivered to Landlord before the date Tenant is given possession of the Premises, and thereafter, within thirty (30) days after any demand by Landlord therefor. No such policy maintained by Tenant or Landlord shall be cancelable, materially changed or reduced in coverage except after thirty (30) days’ written notice to the other party. Tenant shall furnish Landlord with renewals or “binders” of any such policy at least ten (10) days prior to the expiration thereof. Tenant shall have the right to provide such insurance coverage pursuant to blanket policies obtained by the Tenant, provided such blanket policies expressly afford coverage to the Premises, Landlord, Landlord’s mortgagee and Tenant as required by this Lease.

          b. Beginning on the date Tenant is given access to the Premises for any purpose and continuing until expiration of the Term of the Lease, Tenant shall procure, pay for and maintain in effect policies of property insurance covering (i) any alterations, additions or improvements as may be made by Tenant pursuant to the provisions of Section 12 hereof, and (ii) trade fixtures, merchandise and other personal property from time to time, in, on or about the Premises, in an amount not less than one hundred percent (100%) of their actual replacement cost from time to time, providing protection against all risks of physical loss or damage. The proceeds of such insurance shall be used for the repair or replacement of the property so insured. Upon termination of this Lease following a casualty as set forth herein, the proceeds under (i) shall be paid to Landlord, and the proceeds under (ii) above shall be paid to Tenant.

          c. Beginning on the date Tenant is given access to the Premises for any purpose and continuing until expiration of the term of the Lease, Tenant shall procure, pay for and maintain in effect workers’ compensation and employer’s liability insurance and commercial general liability insurance which includes coverage for personal injury, contractual liability and Tenant’s independent contractors. The commercial general liability should be procured and maintained with not less than Two Million Five Hundred Thousand and No/100ths Dollars ($2,500,000.00) per occurrence combined single limit for bodily injury, personal injury or property damage liability. If such insurance covers more than one location, and general aggregate limit shall apply on a per location basis.

          d. Beginning on the date Tenant is given access to the Premises for any purpose and continuing until expiration of the term of the Lease, Tenant shall pay for and maintain in effect business income insurance on an “all risk” basis which, will provide recovery for a minimum of twelve (12) months of Tenant’s continuing Rent obligation to Landlord.

          e. Not more than twice during the Term, in Landlord’s reasonable judgment, good business practice or change in conditions indicate a need for additional or different types of insurance, Tenant shall upon request of Landlord obtain such insurance at its own expense.

          f. Tenant agrees to obtain certificates of insurance evidencing commercial general liability insurance, including completed operations and XCU coverage, and workers’ compensation insurance and employer’s liability insurance from any contractors or subcontractors engaged in repairs or maintenance to the

Premises during the term of the Lease. Such liability insurance must be for minimum limits of One Million Dollars ($1,000,000.00) per occurrence combined single limit for bodily injury including death and property damage liability.

          g. Landlord shall maintain a policy of comprehensive general liability insurance (including a blanket “contractual” liability endorsement) against liability for personal injury, bodily injury, death and damage to property occurring in or about, or resulting from an occurrence in or about, the Property with combined single limit coverage of not less than the amount of Two Million Five Hundred Thousand and No/100ths Dollars ($2,500,000.00). Landlord shall provide Tenant (i) with reasonable satisfactory evidence of the existence of such coverage, in the form copy of the policies in question or a certificate of the insurer, certifying that such policy has been issued, promptly following the Lease Date, and (ii) shall provide at least ten (10) days prior written notice before the expiration of such coverage.

          h. To the extent that Landlord maintains policies of insurance regarding Landlord’s ownership of the Building, Tenant shall have the right to review the amount of deductibles payable by Landlord thereunder to determine if such amounts are commercially reasonable as compared to similar buildings to the Building in the Rancho Cordova-California Highway 50 corridor area, and given the requirements of Landlord’s lender. If, following such review, Tenant disputes such amount, Tenant shall provide Landlord with written notice thereof, with supporting documentation evidencing the basis for such conclusion. If such disputed matter is not resolved within thirty (30) days following Landlord’s receipt of such notice, such disputed matter shall be submitted to Arbitration.

          i. Landlord shall secure and maintain policies of insurance for the Building in an “all risk” policy, if available, or if not, on a “special form” basis, in an amount equal to the full replacement value, including the Tenant Improvements, but excluding all subsequent alterations, additions and improvements to the Premises made by Tenant, with loss payable to Landlord and to the holders of any deeds of trust, mortgages or ground leases on the Building. Landlord shall not be obligated to obtain insurance for Tenant’s trade fixtures, equipment, furnishing, and machinery within the Premises. Such policy shall provide protection against fire and extended coverage perils and such additional perils as Landlord deems suitable, and with deductibles as are commercially reasonable, provided that in no event shall a deductible for earthquake insurance be more than twenty percent (20.00%) of the replacement cost of the Building. Tenant agrees that earthquake insurance is not required to be obtained by Landlord pursuant to this Lease. Tenant shall reimburse Landlord, as an Operating Expense, for Tenant’s Proportionate Share of any applicable deductible portion of earthquake insurance (if earthquake insurance is maintained only), provided that if the amount owing by Tenant, with respect thereto, exceeds an amount equal to one (1) month of the then payable Base Rent, then Tenant shall pay Landlord, as a lump sum, an amount equal to the then payable Base Rent only, and the remaining sum shall be amortized over the remaining Term of the Lease and paid by Tenant to Landlord as additional rent at the same time and, in the same manner as Base Rent is due hereunder. If the annual cost to Landlord for insurance exceeds the standard rates because of the nature of Tenant’s operations permitted under this Lease, Tenant shall, within ten (10) business days of receipt of appropriate invoices and supporting documentation, reimburse Landlord for such increase in costs, which amount shall be deemed Rent hereunder. Tenant shall not be named as an additional insured under any policy of insurance maintained by Landlord.

          j. Landlord and Tenant each hereby waive all rights of recovery against the other and against the officers, employees, agents, and representatives of the other, on account of loss by or damage to the waiving party of its property or the

property of others under its control, to the extent that such loss or damage is insured against and payment is made under any “all risk” insurance policy which either may have in force at the time of the loss or damage. Tenant shall, upon obtaining the policies of insurance required under this Lease, give notice to its insurance carrier or carriers that the foregoing mutual waiver of subrogation as contained in this Lease.

     22.  WAIVER: No delay or omission in the exercise of any right or remedy of Landlord or Tenant on any default by Tenant or Landlord shall impair such a right or remedy or be construed as a waiver. The subsequent acceptance of Rent by Landlord after breach by Tenant of any covenant or term of this Lease shall not be deemed a waiver of such breach, other than a waiver of timely payment for the particular Rent involved, and shall not prevent Landlord from maintaining an unlawful detainer or other action based on such breach. No act or conduct of Landlord, including without limitation the acceptance of the keys to the Premises, shall constitute an acceptance of the surrender of the Premises by Tenant before the expiration of the term. Prior to the scheduled expiration of the term of the Lease, only a notice from Landlord to Tenant shall constitute acceptance of the surrender of the Premises and accomplish an early termination of the Lease. Landlord’s consent to or approval of any act by Tenant requiring Landlord’s consent or approval shall not be deemed to waive or render unnecessary Landlord’s consent to or approval of any subsequent act by Tenant. Any waiver by Landlord or Tenant of any default must be in writing and shall not be a waiver of any other default concerning the same or any other provision of the Lease. The review, approval, or inspection by Landlord of any item to be reviewed, approved, or inspected by Landlord under the terms of this Lease shall not constitute the assumption of any responsibility by Landlord for the accuracy or sufficiency of any such item or the quality or suitability of such item for its intended use.

     23.  ENTRY BY LANDLORD: Landlord reserves, and shall at any and all reasonable times with reasonable written notice, at least twenty-four (24) hours in advance (except in the case of emergencies), have the right to enter the Premises to inspect the same, to supply any service to be provided by Landlord to Tenant hereunder, to show the Premises to prospective purchasers or tenants (during the last nine (9) months of the Term only and only if Tenant has not exercised Tenant’s right to extend in accordance with Section 39 of this Lease), to post notices of non-responsibility, and to maintain and repair the Premises and any portion of the Building that Landlord may deem necessary or desirable, without abatement of Rent, and may for that purpose erect scaffolding and other necessary structures, where reasonably required by the character of the work to be performed, always providing that the entrance to the Premises shall not be blocked thereby and further providing that the business of the Tenant shall not be interfered with unreasonably. With regard to any entrance into the Premises pursuant to this Section, Landlord agrees to use its good faith efforts to not unreasonably interfere with Tenant’s business operations at the Premises. Tenant hereby waives any claims for damages or for any injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby. For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises, excluding Tenant’s vaults, safes and files, and Landlord shall have the right to use any and all means which Landlord may deem proper to open said doors in the event of an emergency (as determined by Landlord or its employees or representatives acting in good faith), in order to obtain entry to the Premises without liability to Landlord. Any entry to the Premises obtained by Landlord by any of said means or otherwise shall not under any circumstances be construed or be deemed to be a forcible or unlawful entry into, or a detainer of the Premises, or an eviction of Tenant from the Premises or any portion thereof.

     24.  CASUALTY DAMAGE: During the term hereof, if the Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give prompt written notice thereof to Landlord. In case the Building shall be so damaged by fire or other casualty, that substantial alteration or reconstruction of the Building shall be required (whether or not the Premises shall have been damaged by such fire or other casualty), (i) if such damage cannot be repaired within two hundred ten (210) days, following the commencement of such construction, as verified by written statement from Landlord’s architect ( “Reconstruction Estimate” ) delivered to Tenant, (ii) if any mortgagee under a mortgage or deed of trust covering the Building requires that the insurance proceeds payable as a result of said fire or other casualty be used to retire or reduce such mortgage debt, or (iii) if such damage is not covered by insurance carried by Landlord, or required to be carried by Landlord pursuant to this Lease, Landlord may, at its option, terminate this Lease and the term and estate hereby granted by notifying Tenant in writing of such termination within forty-five (45) days after the date of such damage, in which event the Rent shall be abated as of the date of such damage. Similarly, if the Reconstruction Estimate specifies that such damage cannot be repaired within such two hundred ten (210) day period, Tenant may, at its option, terminate this Lease by notifying Landlord in writing of such termination within thirty (30) days following Tenant’s receipt of the Reconstruction Estimate, in which event the Rent shall be abated as of the date of such damage. If the damage does not require substantial alteration or reconstruction or if Landlord does not thus elect to terminate this Lease, Landlord shall, within sixty (60) days after the later of (i) date of such damage, or (ii) the date of the determination of the Arbitration if instituted by Tenant pursuant to this Section, commence to repair and restore the Building and shall proceed with reasonable diligence to restore the Building (except that Landlord shall not be responsible for delays outside its control) to substantially the same condition in which it was immediately prior to the happening of the casualty, except that Landlord shall not be required to rebuild, repair or replace any part of Tenant’s furniture and furnishings or fixtures and equipment removable by Tenant under the provisions of this Lease, but such work shall not exceed the scope of the work done by Landlord in originally constructing the Building. Tenant shall not be entitled to any compensation or damages from Landlord, and Landlord shall not be liable, for any loss of the use of the whole or any part of the Premises, the Building, Tenant’s personal property, or any inconvenience or annoyance occasioned by such loss of use, damage, repair, reconstruction or restoration, except that, subject to the provisions of the next sentence, Landlord shall allow Tenant a diminution of Rent on a square footage basis during the time and to the extent the Premises are unfit or unavailable for occupancy. Prior to Landlord’s commencement of reconstruction of repair of the Building, Tenant shall have the right, by providing written notice to Landlord, to contest Landlord’s conclusion that such reconstruction or repair shall take less than two hundred ten (210) days to complete. If Landlord and Tenant have not resolved such contested matter within five (5) days following Landlord’s receipt of such notice from Tenant, such contested matter shall be submitted to Arbitration for determination. If as a result of the Arbitration it is determined that such reconstruction or repair cannot be completed within two hundred ten (210) days, for a period of fifteen (15) days following such determination, Tenant shall have the right to terminate this Lease by providing Landlord with written notice of such election, which termination would become effective upon the date of such damage. Following Landlord’s commencement of such reconstruction, in the event that such reconstruction is not completed within two hundred seventy (270) days following such commencement, as may be extended by a Force Majeure Event, for a period of fifteen (15) days following the expiration of said two hundred seventy (270) day period, Tenant shall have the right to terminate this Lease by delivery of written notice of such election to Landlord, which termination would be effective upon Landlord’s receipt of such notice. Subject to Section 21j., if the Premises or any other portion of the Building are damaged by

fire or other casualty resulting from the negligence of Tenant or any of Tenant’s agents, employees, or invitees, and the cost thereof is not covered and funded by insurance maintained by Landlord, Tenant shall be liable to Landlord for the cost and expense of the repair and restoration of the Building caused thereby to the extent such cost and expense is not covered by insurance proceeds. Any insurance which may be carried by Landlord or Tenant against loss or damage to the Building or to the Premises shall be for the sole benefit of the party carrying such insurance and under its sole control. Tenant hereby specifically waives any and all rights it may have under any law, statute, ordinance or regulation to terminate the Lease by reason of casualty or damage to the Premises or Building, and the parties hereto specifically agree that the Lease shall not automatically terminate by law upon destruction of the Premises.

     If the Building or the Premises is damaged or destroyed during the last twelve (12) months of the Term of the Lease, and the Premises or the Building cannot be fully repaired or restored by Landlord within sixty (60) days after the date of damage or destruction, either Landlord or Tenant may terminate this Lease upon written notice to the other, which termination shall become effective upon the date of receipt of such notice.

     25.  CONDEMNATION:

          a. If the whole of the Building or Premises should be condemned, this Lease shall terminate as of the date when physical possession of the Building or the Premises is taken by the condemning authority. If less than substantially the whole of the Building or the Premises is thus taken or sold, this Lease shall be unaffected by such taking, provided that (i) Tenant shall have the right to terminate this Lease by written notice to Landlord given within ninety (90) days after the date Tenant is informed of such taking if twenty percent (20%) or more of the Premises is taken and the remaining area of the Premises is not reasonably sufficient for Tenant to continue operation of its business, and (ii) Landlord (whether or not the Premises are affected thereby) may terminate this Lease by giving written notice thereof to Tenant within sixty (60) days after the date of such taking, in which event this Lease shall terminate as of the date when physical possession of such portion of the Building or Premises is taken by the condemning authority. If, upon any such condemnation of less than substantially the whole of the Building or the Premises, this Lease shall not be thus terminated, the Rent payable hereunder shall be diminished by an amount representing that part of the Rent as shall properly be allocable to the portion of the Premises which was so condemned, and Landlord shall, at Landlord’s sole expense, restore and reconstruct the remainder of the Building and the Premises to substantially their former condition to the extent that the same, in Landlord’s reasonable judgment, may be feasible, but such work shall not exceed the scope of the work done in originally constructing the Building, nor shall Landlord in any event be required to spend for such work an amount in excess of the amount received by Landlord as compensation awarded upon a taking of any part or all of the Building or the Premises. Subject to the rights of any mortgagee under a mortgage or deed of trust covering the Building, Landlord shall be entitled to and shall receive the total amount of any award made with respect to condemnation of the Premises or Building, regardless of whether the award is baaed on a single award or a separate award as between the respective parties, and to the extent that any such award or awards shall be made to Tenant or to any person claiming through or under Tenant, Tenant hereby irrevocably assigns to Landlord all of its rights, title and interest in and to any such awards. No portion of any such award or awards shall be allocated to or paid to Tenant for any so-called bonus or excess value of this Lease by reason of the relationship between the rental payable under this Lease and what may at the time be a fair market rental for the Premises, nor for Tenant’s unamortized costs of leasehold improvements. The foregoing notwithstanding, and if Tenant be not in default for any reason, Landlord shall turn over to Tenant, promptly after receipt thereof by Landlord,

that portion of any such award received by Landlord hereunder which is attributable to Tenant’s fixtures and equipment which are condemned as part of the property taken but which Tenant would otherwise be entitled to remove and Tenant’s relocation cost, and the appraisal of the condemning authority with respect to the amount of any such award allocable to such items shall be conclusive. The foregoing shall not, however, be deemed to restrict Tenant’s right to pursue a separate award specifically for its relocation expenses or the taking of Tenant’s personal property or trade fixtures so long as such separate award does not diminish any award otherwise due Landlord as a result of such condemnation or taking. Tenant hereby specifically waives any and all rights it may have under any law, statute, ordinance or regulation (including, without limitation, Sections 1265.120 and 1265.130 of the California Code of Civil Procedure), to terminate or petition to terminate this Lease upon partial condemnation of the Premises or Building, and the parties hereto specifically agree that this Lease shall not automatically terminate upon condemnation.

          b. Landlord may, without any obligation or liability to Tenant and without affecting the validity and existence of this Lease other than as hereafter expressly provided, agree to sell and/or convey to the condemnor the Premises or portion thereof sought by the condemnor, without first requiring that any action or proceeding be instituted, or if such action or proceeding shall have been instituted, without first requiring any trial or hearing thereof (and Landlord is expressly empowered to stipulate to judgment therein), free from this Lease and the rights of Tenant hereunder.

          c. If all or any portion of the Premises is condemned or otherwise taken for a period (i) of less than one hundred twenty (120) days, this Lease shall remain in full force and effect and Tenant shall continue to perform all terms and covenants of this Lease; provided, however, Rent shall abate during such limited period in proportion to the portion of the Premises that is rendered unusable as a result of such condemnation or other taking, or (ii) of one hundred twenty (120) days or more, Tenant shall have the right to terminate this Lease by providing written notice of such election within thirty (30) days of the date Tenant is informed of such condemnation in which case Rent shall be abated as of the date of such condemnation.

          d. The words “condemnation” or “condemned” as used herein shall mean the taking for any public or quasi-public use under any governmental law, ordinance, or regulation, or the exercise of, or the intent to exercise, the power of eminent domain, expressed in writing, as well as the filing of any action or proceeding for such purpose, by any person, entity, body, agency, or authority having the right or power of eminent domain, and shall include a voluntary sale by Landlord to any such person, entity, body agency or authority, either under threat of condemnation expressed in writing or while condemnation proceedings are pending, and shall occur in point of time upon the actual physical taking of possession pursuant to the exercise of said power of eminent domain.

     26.  TENANT’S DEFAULT: The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant:

          a. The abandonment or vacation of the Premises by Tenant (failure to occupy and operate the Premises for thirty (30) consecutive days shall be deemed an abandonment).

          b. The failure by Tenant to make any payment of Rent or any other payment required to be made by Tenant hereunder as and when due, where such failure shall continue for a period of five (5) business days following Tenant’s receipt of written notice from Landlord that such payment is due; provided that if Landlord has delivered two (2) such notices during any given calendar year, but not more than six (6) notices during the Term,

during the remainder of such calendar year payments pursuant to this Section must be made within five (5) business days of the due date.

          c. Tenant’s failure to observe or perform any of the covenants, conditions, or provisions of this Lease to be observed or performed by Tenant, other than as described in subparagraph (b) above, where such failure shall continue for a period of thirty (30) days after written notice thereof by Landlord to Tenant; provided, however, that if the nature of Tenant’s default is such that more than sixty (60) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said sixty (60) day period and thereafter diligently prosecutes such cure to completion.

          d. The making by Tenant of any general assignment or general arrangement for the benefit of creditors, or the appointment of a trustee or a receiver to take possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where possession is not restored to Tenant within thirty (30) days, or the attachment, execution, or other judicial seizure of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where such seizure is not discharged in thirty (30) days.

          e. The filing of any voluntary petition in bankruptcy by Tenant, or the filing of any involuntary petition by Tenant’s creditors, which involuntary petition remains undischarged for a period of thirty (30) days. In the event that under applicable law the trustee in bankruptcy or Tenant has the right to affirm this Lease and perform the obligations of Tenant hereunder, such trustee or Tenant shall, in such time period as may be permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of this Lease, and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant’s obligation under this Lease.

          f. Without the prior written consent of Landlord, which shall not be unreasonably withheld, selling, leasing, assigning, encumbering, hypothecating, transferring, or otherwise disposing of all or substantially all of the Tenant’s assets.

          g. If Tenant is a partnership or consists of more than one (1) person or entity, if any partner of the partnership or other person or entity is involved in any of the acts or events described in Subparagraph (d) or (e) above.

     27.  REMEDIES FOR TENANT’S DEFAULT: In the event of Tenant’s default, Landlord may:

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

               (1) the worth at the time of the award of any unpaid rent which had been earned at the time of such termination; plus

               (2) the worth at the time of the 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 which Tenant proves could have been reasonably avoided, plus

               (3) the worth at the time of the 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 which Tenant proves could be reasonably avoided, plus

               (4) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom (including, without limitation, the cost of recovering possession of the Premises, expenses of reletting including necessary renovation and alteration of the Premises, reasonable attorneys’ fees, and real estate commissions actually paid and that portion of the leasing commission paid by Landlord and applicable to the unexpired portion of this Lease), plus

               (5) such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law.

     As used in Subsections (1) and (2) above, the “worth at the time of the award” shall be computed by allowing interest at the lesser of ten percent (10%) per annum, or the maximum rate permitted by law per annum. As used in subsection (3) above, the “worth at the time of award” shall be computed by discounting , such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

          b. Continue this Lease in full force and effect, and the Lease will continue in effect, as long as Landlord does not terminate Tenant’s right to possession, and Landlord shall have the right to collect Rent when due. During the period Tenant is in default, Landlord may enter the Premises and relet them, or any part of them, to third parties for Tenant’s account. Tenant shall be liable immediately to Landlord for all costs Landlord reasonably incurs in reletting the Premises, including, without limitation, brokers’ commissions, expenses of remodeling the Premises required by the reletting, and like costs. Reletting can be for a period shorter or longer than the remaining term of this Lease. Tenant shall pay to Landlord the Rent due under this Lease on the dates the Rent is due, less the rent Landlord receives from any reletting. In no event shall Tenant be entitled to any excess rent received by Landlord. No act by Landlord allowed by this paragraph shall terminate this Lease unless Landlord notifies Tenant in writing that Landlord elects to terminate this Lease. After Tenant’s default and for as long as Landlord does not terminate Tenant’s right to possession of the Premises, if Tenant obtains Landlord’s consent, Tenant shall have the right to assign or sublet its interest in this Lease, but Tenant shall not be released from liability.

          c. Cause a receiver to be appointed to collect Rent. Neither the filing of a petition for the appointment of a receiver nor the appointment itself shall constitute an election by Landlord to terminate the Lease.

          d. Cure the default at Tenant’s cost. If Landlord at any time, by reason of Tenant’s default, reasonably pays any sum or does any act that requires the payment of any sum, the sum paid by Landlord shall be due immediately from Tenant to Landlord at the time the sum is paid, and if paid at a later date shall bear interest at the lesser of ten percent (10%) per annum, or the maximum rate an individual is permitted by law to charge from the date the sum is paid by Landlord until Landlord is reimbursed by Tenant. The sum, together with interest on it, shall be additional Rent.

     The foregoing remedies are not exclusive; they are cumulative, in addition to any remedies now or later allowed by law, to any equitable remedies Landlord may have, and to any remedies Landlord may have under bankruptcy laws or laws affecting creditors’ rights generally.

     28.  SURRENDER OF PREMISES: On expiration of this Lease or within five (5) days after the earlier termination of the Term, Tenant shall surrender to Landlord the Premises in good condition (except for ordinary wear and tear, repair and maintenance which is the obligation of Landlord, and destruction to the Premises covered by Section 24). Tenant shall remove all its personal

property within the above-stated time. Tenant shall perform all restoration made necessary by the removal of any alterations or Tenant’s personal property within the time periods stated in this paragraph.

     29.  DEFAULT BY LANDLORD:

          a. Landlord shall not be deemed to be in default in the performance of any obligation required to be performed by it hereunder unless and until it has failed to perform such obligations within thirty (30) days after written notice by Tenant to Landlord specifying wherein Landlord has failed to perform such obligation, provided, however, that if the nature of Landlord’s obligation is such that more than thirty (30) days are required for its performance, then Landlord shall not be deemed to be in default if it shall commence such performance within such thirty (30) day period and thereafter diligently prosecute the same to completion. In no event shall Landlord be liable to Tenant for loss of profits, business interruption, or consequential damages if Landlord performs its obligations within the time periods specified in this paragraph.

          b. Tenant agrees to give any mortgagee and/or trust deed holders, by registered mail, a copy of any Notice of Default served upon the Landlord, provided that prior to such notice Tenant has been notified in writing (by way of Notice of Assignment of Rents and Leases, or otherwise) of the address of such mortgagee and/or trust deed holder. Tenant further agrees that if Landlord shall have failed to cure such default within the time provided for in this Lease, then the mortgagees and/or trust deed holders shall have an additional thirty (30) days within which to cure such default.

     30.  PARKING: Tenant shall have the right to park in the Building’s parking facilities in common with other tenants of the Building upon terms and conditions as may from time to time be established by Landlord. In this regard, during the term of the Lease, Tenant shall be entitled to (i) the non-exclusive use of up to three and 80/100 (3.80) parking spaces for every one thousand (1,000) square feet of Rentable Area of the Premises, at no cost to Tenant, and (ii) forty (40) reserved and designated parking stalls, the location of which is approved by Landlord and such location shall comply with applicable laws, statutes and ordinances, including ADA. Landlord shall have the right, in addition to pursuing any other legal remedy available, to tow any vehicle belonging to Tenant or Tenant’s employees which is not in compliance with the regulations for the parking facility then in effect if a violation continues after the first notice of such violation, at the reasonable expense of Tenant; nothing in this Lease, however, shall require Landlord to tow parked cars or take other actions to free occupied unreserved spaces for Tenant’s use. Landlord shall not be liable for any claims, losses, damages, expenses or demands with respect to injury or damage to the vehicles of Tenant or Tenant’s customers or employees that park in the parking areas of the Project, except for such loss or damage as may be caused by the negligence or willful misconduct of Landlord, its agents, employees, contractors and subcontractors.

     31.  ESTOPPEL CERTIFICATE: Tenant shall at any time and from time to time upon not less than ten (10) business days’ prior written notice from Landlord execute, acknowledge, and deliver to Landlord a statement in writing, (a) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease as modified is in full force and effect) and the date to which the Rental and other charges are paid in advance, if any; (b) certifying that the Premises have been accepted by Tenant; (c) confirming the Commencement Date and the expiration date of the Lease; and (d) acknowledging that there are not, to Tenant’s knowledge, any uncured defaults on the part of the Landlord hereunder, or specifying such defaults, if any are claimed. Any such statement may be relied upon by a prospective

purchaser or encumbrancer of all or any portion of the real property of which the Premises are a part.

     32.  SALE OF PREMISES: In the event of any sale of the Project, Landlord shall be and hereby is entirely freed and relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease and the purchaser, at such sale or any subsequent sale of the Premises , shall be deemed, provided such successor assumes in writing, the obligations of Landlord hereunder and any such purchaser, to have assumed and agreed to carry out any and all of the covenants and obligations of Landlord under this Lease. If any security deposit or prepaid Rent has been paid by Tenant, Landlord will transfer the security deposit and prepaid rent to Landlord’s successor and upon such transfer, Landlord shall be relieved of any and all further liability with respect thereto.

     33.  SUBORDINATION, ATTORNMENT:

          a. This Lease is and shall be subordinate to any encumbrance now of record or recorded after the date of this Lease affecting the Building, other improvements, and land of which the Premises are a part. If any mortgagee, trustee, or ground lessor shall elect to have this Lease and any options granted hereby prior to the lien of its mortgage, deed of trust, or ground lease, and shall give written notice thereof to Tenant, this Lease and such options shall be deemed prior to such mortgage, deed of trust, or ground lease, whether this Lease or such options are deeded prior or subsequent to the date of said mortgage, deed of trust, or ground lease, or the date of recording thereof.

          b. In the event any proceedings are brought for foreclosure, or in the event of a sale or exchange of the real property on which the Building is located, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by Landlord covering the Premises, Tenant shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Landlord under this Lease. Tenant agrees to execute any documents required to effectuate an attornment or to make this Lease or any options granted herein prior to the lien of any mortgage, deed of trust, or ground lease, as the case may be.

          c. Landlord agrees that Tenant’s obligations to subordinate under this Section to any future or existing ground lease, mortgage, or deed of trust shall be conditioned upon Tenant’s receipt of a non-disturbance agreement ( “Nondisturbance Agreement” ) from the party requiring such subordination (which party is referred to for the purposes of this Section as the “Superior Lienor” ). Such non-disturbance agreement shall provide, at a minimum, that Tenant’s possession of the Premises shall not be interfered with following a foreclosure, provided Tenant is not in default beyond any applicable cure periods. Landlord’s obligation with respect to such a non-disturbance agreement shall be limited to obtaining the non-disturbance agreement in such form as the Superior Lienor generally provides in connection with its standard commercial loans, however, Tenant shall have the right to negotiate, and Landlord shall use its good faith efforts and due diligence in assisting Tenant in the negotiation of, revisions to that non-disturbance directly with the Superior Lienor. Tenant agrees to use its good faith efforts to reach agreement with the Superior Lienor upon acceptable terms