Common use of Definition of Operating Expenses Clause in Contracts

Definition of Operating Expenses. As used in this Lease, the term "Operating Expenses" shall mean collectively, the "Project Operating Expenses" and the "Building Operating Expenses." As used herein, "Building Operating Expenses" shall include all costs and expenses for janitorial services for the Building, all costs and expenses for utilities which are separately metered to the Building, and all other costs and expenses of operation and maintenance of the Building as determined by generally accepted accounting principles consistently applied, which Landlord may, from time to time, separately allocate to the Building, all of which shall be calculated assuming the Building is ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the Building is more than ninety five percent (95%) occupied) during such calendar year. As used herein, "Project Operating Expenses" shall include all costs and expenses of operation and maintenance of the Project, as determined by generally accepted accounting principles consistently applied, calculated assuming both buildings in the Project are ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the two (2) buildings in the Project are more than ninety five percent (95%) occupied) during such calendar year, excluding, however, the Building Operating Expenses for the two (2) buildings in the Project. Project Operating Expenses shall include the following costs by way of illustration but not limitation: (a) Real Property Taxes and Assessments (as defined in Subparagraph 6.4 below) and any taxes or assessments imposed in lieu thereof; (b) any and all assessments imposed with respect to the Project pursuant to any covenants, conditions and restrictions affecting the Project and/or the Reciprocal Easement Agreement; (c) water and sewer charges and the costs of electricity, heating, ventilating, air conditioning and other utilities; (d) utilities surcharges and any other costs, levies or assessments resulting from statutes or regulations promulgated by any governmental authority in connection with the use or occupancy of the Project or the parking facilities serving the Project; (e) costs of insurance obtained by Landlord pursuant to Paragraph 23 of this Lease, including any deductibles paid by Landlord; (f) waste disposal and janitorial services; (g) security; (h) labor; (i) costs incurred in the management of the Project, including, without limitation: (1) supplies, (2) wages and salaries (and payroll taxes and similar governmental charges related thereto) of employees used directly in the management, operation and maintenance of the Project, (3) Project management office rental (if such management office is located on the Project) at a cost not to exceed the fair market rental value for such office in comparable suburban Class A office buildings in South Orange County and excluding any portion of such office which is occupied principally for marketing purposes; and (4) a management/administrative fee not to exceed five percent (5%) of the annual gross revenues of the Project exclusive of the proceeds of financing or a sale of the Project; (j) supplies, materials, equipment and tools; (k) repair and maintenance of the elevators and the structural portions of the improvements in the Project, including the plumbing, heating, ventilating, air-conditioning and electrical systems installed or furnished by Landlord; (1) maintenance, costs and upkeep of all parking and Common Areas; (m) depreciation on a straight line basis and rental of personal property used in maintenance; (n) amortization on a straight-line basis over the useful life of all costs of costs of any disputes between Landlord and its employees (if any) not engaged in Building operation, disputes of Landlord with Building management, or outside fees paid in connection with disputes with other tenants.

Definition of Operating Expenses. As used in this Lease, the term "“Operating Expenses" ” shall mean collectively, the "Project Operating Expenses" and the "Building Operating Expenses." As used herein, "Building Operating Expenses" shall include consist of all costs and expenses for janitorial services for of operation, maintenance, repair and replacement (subject to the terms hereof) of the Project (including the Building, all costs the Site and expenses for utilities which are separately metered to the Building, and all other costs and expenses of operation and maintenance of the Building Common Areas) as determined by generally accepted accounting principles consistently applied, which Landlord may, from time to time, separately allocate to the Building, all of which shall be (“GAAP”) and calculated assuming the Building Project is ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the Building is more than ninety ninety-five percent (95%) occupied) during such calendar year. As used herein, "Project Operating Expenses" shall include together with the Building’s Share of all costs and expenses of operation for the operation, maintenance, repair and maintenance replacement of the Project, Project and the Project Common Areas as determined by generally accepted accounting principles consistently applied, Landlord utilizing GAAP and calculated assuming both buildings in the Project are ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the two (2) buildings in the Project are more than ninety is ninety-five percent (95%) occupied) during such calendar year, excluding, however. The term “Building’s Share” shall mean a fraction, the numerator of which is the rentable square footage of the Building Operating Expenses for and the two (2) buildings in denominator of which is the rentable square footage of the Project. Project Operating Expenses shall include the following costs by way of illustration but not limitation: (a) Real Property Taxes and Assessments (as defined in Subparagraph 6.4 Section 4.5 below) and any taxes or assessments imposed in lieu thereof; (b) any and all assessments imposed with respect to the Project Building, Common Areas, and/or Site pursuant to any covenants, conditions and restrictions affecting the Project and/or the Reciprocal Easement AgreementSite, Common Areas or Building; (c) to the extent not charged to and paid by Tenant pursuant to Section 16.2 below, water and sewer charges and the costs of electricity, heating, ventilating, air conditioning and other utilities; (d) to the extent not charged to and paid by Tenant pursuant to Section 16.2 below, utilities surcharges and any other costs, levies or assessments resulting from statutes or regulations promulgated by any governmental government authority in connection with the use or occupancy of the Project Site, Building or the Premises or the parking facilities serving the ProjectSite, Building or the Premises; (e) costs of insurance obtained by Landlord pursuant to Paragraph 23 Section 21 of this Lease, including any deductibles paid by Landlord; (f) waste disposal and janitorial services; (g) securitysecurity (if any); (h) labor; (i) costs incurred in the management of the ProjectSite, Building and Common Areas, including, without limitation: (1) supplies, (2) wages wages, salaries (but not above the level of Project manager), benefits, pension payments, fringe benefits, uniforms and salaries dry-cleaning thereof (and payroll taxes, unemployment taxes, employer’s Social Security taxes, together with any other taxes levied on wages, salaries, compensation and benefits, insurance and similar governmental charges related thereto) of employees used directly in the management, operation and maintenance of the ProjectSite, Building and Common Areas, (3) Project the rental of personal property used by Landlord’s personnel in the maintenance, repair and operation of the Project, (4) management office rental expenses including rent and operating costs, (if such management office is located on 5) accounting fees directly related to the Project) at a cost not , legal fees directly related to exceed the fair market rental value for such office in comparable suburban Class A office buildings in South Orange County Project and excluding any portion of such office which is occupied principally for marketing purposes; real estate consultant’s fees, and (46) a management/administrative fee substantially consistent with that charged by landlords of Comparable Buildings, but in any event not to exceed five four percent (54%) of the annual gross revenues of the Project exclusive of the proceeds of financing or a sale of the Project; (ji) supplies, materials, equipment and tools; (kj) repair and maintenance of the elevators and the structural portions of the improvements in the ProjectBuilding, including the plumbing, heating, ventilating, air-conditioning conditioning, electrical and electrical other utility systems installed or furnished by Landlord; (1k) maintenance, costs and upkeep of all parking and Common Areas; (m) depreciation on a straight line basis and rental of personal property used in maintenance; (nl) amortization on a straight-line basis over the useful life (as reasonably determined by Landlord), together with interest at the Interest Rate (as defined in Section 1.14 of the Summary of this Lease) on the unamortized balance of all costs of a capital nature (including, without limitation, capital improvements, capital replacements, capital repairs, capital equipment and capital tools): (1) reasonably intended to produce a reduction in operating charges or energy consumption or effect other economies in the operation or maintenance of the Project (but only to the extent of the cost savings that result therefrom and with Landlord to provide, upon Tenant’s written request, backup information regarding the basis for Landlord’s reasonable belief in such reduction in operating expenses); or (2) required after the date of this Lease under any governmental law or regulation that was not in effect as of the Commencement Date; or (3) for repair or replacement of any equipment or improvements needed to operate and/or maintain the Building, the Common Areas and/or the Site at the same quality levels as prior to the repair or replacement; (m) costs and expenses of TXXXXX XXXXX COURT, LA JOLLA [Orexigen Therapeutics, Inc.] gardening and landscaping; (n) maintenance of signs; (o) personal property taxes levied on or attributable to personal property used in connection with the Building, the Common Areas and/or the Site; and (p) costs and expenses of repairs, resurfacing, repairing, maintenance, painting, lighting and similar items, including appropriate reserves. If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Expenses) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed to be increased by an amount equal to the additional Operating Expenses which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such work or service to such tenant. For purposes of determining Landlord’s Contribution to Operating Expenses, Operating Expenses shall not include (i) one-time special assessments, charges, costs or fees or extraordinary charges or costs incurred in the Base Year only, (ii) market-wide labor-rate increases due to extraordinary circumstances including, but not limited to, boycotts and strikes, (iii) utility rate increases due to extraordinary circumstances including, but not limited to, conservation surcharges, boycotts, embargoes or other shortages. As provided in Section 4.5 below, the Base Year shall be fully assessed for purposes of Real Property Taxes and Assessments. Landlord shall have the right, from time to time, to equitably allocate some or all of the Operating Expenses between the Building and/or among different tenants of the Project and/or different buildings of the Project as and when such different buildings are constructed and added to (and/or excluded from) the Project or otherwise (the “Cost Pools”). Such Cost Pools may include, without limitation, the office space tenants and industrial space tenants of the Project or of a building or buildings in the Project. Such Cost Pools may also include an allocation of certain Operating Expenses within or under covenants, conditions and restrictions affecting the Project. In addition, Landlord shall have the right from time to time, in its reasonable discretion, to include or exclude existing or future buildings in the Project for purposes of determining Operating Expenses and/or the provision of various services and amenities thereto, including allocation of Operating Expenses in any such Cost Pools. Landlord hereby agrees that the cost of any new type or increased amount of insurance coverage (including, but not limited to, earthquake insurance) (or increased limits of insurance or decrease in the amount of deductibles) which is obtained or effected by Landlord during any calendar year after the Base Year (but is not obtained or effected during the Base Year) shall be added to the Operating Expenses for the Base Year (but at the rate which would have been in effect during the Base Year or the rate in effect during such subsequent calendar year, whichever is lower) prior to the calculation of Tenant’s Share of Operating Expenses for each such calendar year in which such change in insurance is initially obtained or effected. In the event that any of Landlord’s insurance premiums applicable to the Project shall decrease in any calendar year subsequent to the Base Year (including, without limitation, as a result of any decrease in the amount or type of coverage or increase in deductibles), Operating Expenses attributable to the Base Year, shall, commencing the year of such decrease, but only as long as and to the extent such decrease remains in effect, thereafter be reduced by the amount of such decrease in the insurance premiums. Landlord further agrees that any costs incurred in any calendar year after the Base Year because of any added new type of discretionary services which were readily available during the Base Year, and customarily provided by landlords of Comparable Buildings during the Base Year (but not by Landlord), and not included in the Base Year shall be added to and included in the Base Year for purposes of determining the Operating Expenses payable for such calendar year in which such added new type of discretionary services are so provided, as if such services were provided in the Base Year (but at the rate for such services which would have been in effect during the Base Year, or the rate in effect during such subsequent calendar year, whichever is lower); provided, however, the foregoing provision shall not apply to the costs of any disputes between capital additions, capital alterations, capital repairs or capital improvements which shall be governed by the provisions of Section 4.4 above. In addition, if in the event and to the extent any portion of the Project is covered by a warranty or service agreement which provides warranty-type protection at any time during the Base Year and is not covered by such warranty or such warranty-type protection under such service agreement in a subsequent calendar year to the same extent, Operating Expenses for the Base Year shall be deemed increased by the amount Landlord and its employees (if any) would have incurred during the Base Year with respect to the items or matters covered by the subject warranty or warranty-type protection, had such warranty or such service agreement not engaged been in Building operationeffect during the Base Year. Notwithstanding anything in the definition of Operating Expenses set forth above, disputes of Landlord with Building management, or outside fees paid in connection with disputes with other tenants.Operating Expenses shall not include the following:

Definition of Operating Expenses. As used in this Lease, the term "“Operating Expenses" ” shall mean collectively, the "Project Operating Expenses" and the "Building Operating Expenses." As used herein, "Building Operating Expenses" shall include consist of all costs and expenses for janitorial services for the Building(paid or incurred) of operation, all costs ownership, maintenance, repair and expenses for utilities which are separately metered to the Building, and all other costs and expenses of operation and maintenance replacement of the Building Project and the Common Areas as determined by generally accepted Landlord utilizing standard accounting principles consistently applied, which Landlord may, from time to time, separately allocate to the Building, all of which shall be practices calculated assuming the Building Project is ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the Building is more than ninety ninety-five percent (95%) occupied) during such calendar year. As used herein, "Project Operating Expenses" shall include all costs and expenses of operation and maintenance If the occupancy of the Project, as determined by generally accepted accounting principles consistently applied, calculated assuming both buildings in the Project are ninety during any part of any Lease Year is less than ninety-five percent (95%) occupied (or calculated based on ), Landlord shall make an appropriate adjustment of the actual level variable components of occupancy Operating Expenses for that Lease Year, as reasonably determined by Landlord using sound accounting and management principles, to determine the calendar year in question if amount of Operating Expenses that would have been incurred had the two (2) buildings in the Project are more than ninety Project, as applicable, been ninety-five percent (95%) occupied) during such calendar year, excluding, however, . This amount shall be considered to have been the Building amount of Operating Expenses for the two (2) buildings that Lease Year. For purposes of this Section 4.4, “variable components” include only those component expenses that are affected by variations in the Projectoccupancy levels. Project Operating Expenses shall include the following costs by way of illustration but not limitation: (a) Real Property Taxes and Assessments (as defined in Subparagraph 6.4 Section 4.5 below) and any taxes or assessments imposed in lieu thereof; (b) any and all assessments imposed with respect to the Project pursuant to any covenants, conditions and restrictions affecting the Project and/or the Reciprocal Easement AgreementProject; (c) except to the extent paid by Tenant as part of Electricity Utility Charges (as defined in Section 16.2 below), water, pure water and sewer charges and the costs of electricity, heating, ventilating, air conditioning and other utilities; (d) except to the extent paid by Tenant as part of Electricity Utility Charges, utilities surcharges and any other costs, levies or assessments resulting from statutes or regulations promulgated by any governmental government authority in connection with the use or occupancy of the Project or the parking facilities serving the Project; (e) costs of insurance obtained by Landlord pursuant to Paragraph 23 to, or contemplated by, Section 21 of this Lease, including Lease and any deductibles paid by thereunder and including Landlord’s costs of any self insurance deductible or retention; (f) except to the extent paid by Tenant as part of Electricity Utility Charges, waste disposal and janitorial services; (g) security; (h) labor; (i) costs incurred in the management of the ProjectProject , including, without limitation: (1) supplies, (2) wages wages, salaries, benefits, pension payments, fringe benefits, uniforms and salaries dry-cleaning thereof (and payroll taxes taxes, insurance and similar governmental charges related thereto) of employees used directly in the managementoperation, operation management and maintenance of the Project, (3) Project the rental of personal property used by Landlord’s personnel in the maintenance, repair and operation of the Project, (4) management office rental expenses including rent, office supplies, materials therefor and operating costs, (if such management office is located on the Project5) at a cost not to exceed the fair market rental value for such office in comparable suburban Class A office buildings in South Orange County accounting fees, legal fees and excluding any portion of such office which is occupied principally for marketing purposes; real estate consultant’s fees, and (46) a management/administrative fee not to exceed five percent (5%) of the annual gross revenues of the Project exclusive of the proceeds of financing or a sale of the Projectfee; (ji) supplies, materials, equipment and tools; (kj) repair repair, replacement and maintenance of the elevators and elevators, the structural portions of the improvements in the Project, including the plumbing, heating, ventilating, air-conditioning conditioning, electrical and electrical other utility systems installed or furnished by Landlord; (1k) maintenance, costs and upkeep of all parking and Common Areas; (m) depreciation on a straight line basis and rental of personal property used in maintenance; (nI) amortization on a straight-line basis over the useful life (as reasonably determined by Landlord), together with interest at the Interest Rate (as defined in Section 1.14 of the Summary of this Lease) on the unamortized balance of all costs of a capital nature (including, without limitation, capital improvements, capital replacements, capital repairs, capital equipment and capital tools): (1) intended to produce a reduction in operating charges or energy consumption or effect other economies in the operation or maintenance of the Project; or (2) required under any and all applicable laws, statutes, codes, ordinances, orders, rules, regulations, conditions of approval and requirements of all federal, state, county, municipal and governmental authorities and all administrative or judicial orders or decrees and all permits, licenses, approvals and other entitlements issued by governmental entities, and rules of common law, relating to or affecting the Project or any part thereof or the use or operation thereof, whether now existing or hereafter enacted, including, without limitation, the Americans with Disabilities Act of 1990, 42 U.S.C. 12111 et seq. (the “ADA”) as the same may be amended from time to time, all Environmental Laws (as hereinafter defined), and any covenants, conditions and restrictions or any corporation, committee or association formed in connection therewith, or any supplement thereto recorded in any official or public records with respect to the Project or any portion thereof (collectively, “Applicable Laws”); (3) for repair or replacement of any equipment or improvements needed to operate and/or maintain the Project at the same quality levels as prior to the repair or replacement; or (4) which are reasonably determined by Landlord to be in the best interests of the Project; provided, however, that all costs of a capital nature which do not exceed $10,000 shall be fully expensed when incurred; (m) costs and expenses of gardening and landscaping; (n) maintenance of signs; (o) personal property taxes levied on or attributable to personal property used in connection with the Project; (p) license, permit and inspection fees; (q) legal, accounting, inspection and consultation fees incurred in connection the operation of the Project; and (r) costs and expenses of repairs, resurfacing, degreasing, washing, repairing, maintenance, painting, lighting, cleaning, refuse removal, security and similar items, including appropriate reserves. For purposes of determining Landlord’s Contribution to Operating Expenses, Operating Expenses shall not include (i) one-time special assessments, charges, costs or fees or extraordinary charges or costs incurred in the Base Year only, (ii) market-wide labor-rate increases due to extraordinary circumstances including, but not limited to, boycotts and strikes, (iii) utility rate increases due to extraordinary circumstances including, but not limited to, conservation surcharges, boycotts, embargoes or other shortages, and (iv) costs of any capital items or amortization of any capital items including, but not limited to, capital improvements, capital repairs and capital replacements (including such amortized costs where the actual improvement, repair or replacement was made in prior years). If in any calendar year subsequent to the Base Year, the amount of Operating Expenses decreases due to a reduction in the cost of providing utilities, security and/or other services to the Project for any reason, including without limitation, because of deregulation of the utility industry and/or reduction in rates achieved in contracts with utilities and/or service providers, then for purposes of the calendar year in which such decrease in Operating Expenses occurred and all subsequent calendar years, the Operating Expenses for the Base Year shall be decreased by an amount equal to such decrease. Notwithstanding anything to the contrary contained herein, Operating Expenses in any year subsequent to the Base Year shall always be deemed to be at least equal to the aggregate Operating Expenses in the Base Year. Notwithstanding anything to the contrary contained herein, Operating Expenses shall not include the following: (i) advertising and leasing commissions; (ii) repairs and restoration to the extent paid for by the proceeds of any insurance policies or amounts to the extent otherwise reimbursed by a third party to Landlord or to the extent paid by any other third party source (other than by tenants paying their share of Operating Expenses), net of collection costs; (iii) Project financing costs, ground lease rental or depreciation; (iv) the cost of special services to Project tenants for which a special charge is made; (v) the costs of repair of casualty damage or for restoration following condemnation to the extent reimbursed by insurance proceeds or condemnation awards (net of collection costs); (vi) the costs, including permit costs and supervision fees, incurred for the installation of tenant improvements; (vii) the legal fees and related expenses incurred by Landlord (together with any damages awarded against Landlord) due to Landlord’s or any tenant’s bad faith violation of any Project lease; (viii) costs incurred: (A) to comply with Applicable Laws with respect to any Hazardous Materials (as hereinafter defined) which were in existence in, on, under or about the Project (or any portion thereof) prior to the date hereof, and were of such a nature that a federal, state or municipal governmental or quasi-governmental authority, if it had then had knowledge of the presence of such Hazardous Materials, in the state, and under the conditions that they then existed in, on, under or about the Project, would have then required the removal, remediation or other action with respect thereto; and/or (B) with respect to Hazardous Materials which are disposed of or otherwise introduced into, on, under or about the Project after the date hereof by Landlord or Landlord’s agents or employees and are of such a nature, at time of disposition or introduction, that a federal, state or municipal governmental or quasi-governmental authority, if it had then had knowledge of the presence of such Hazardous Materials, in the state, and under the conditions, that they then existed in, on, under or about the Project, would have then required the removal, remediation or other action with respect thereto; provided, however, Operating Expenses shall include costs incurred in connection with the clean-up, remediation, monitoring, management and administration of (and defense of claims related to) the presence of (1) Hazardous Materials used by Landlord (provided such use is not negligent and is in compliance with Applicable Laws) in connection with the operation, repair and maintenance of the Project to perform Landlord’s obligations under this Lease (such as, without limitation, fuel oil for generators, cleaning solvents, and lubricants) and which are customarily found or used in office buildings and (2) Hazardous Materials created, released or placed in the Premises, Building or the Project by Tenant (or Tenant’s affiliates or their tenants, contractors, employees or agents) prior to or after the date hereof; (ix) the attorneys’ fees incurred for negotiating and preparing letters of intent, leases, subleases and/or assignments, space planning costs, and other costs incurred for lease, sublease and/or assignment negotiations and transactions with present or prospective Project tenants or occupants; (x) the expenses for services or other benefits which are not available to Tenant (other than as the result of an Event of Default); (xi) the overhead and profit paid to Landlord or its subsidiaries or affiliates for goods and/or services to the extent the same exceeds the costs of such goods and/or services rendered by qualified, third parties on a competitive basis; (xi) the costs arising from Landlord’s charitable or political contributions; (xiii) the costs (other than ordinary maintenance and insurance) for objects of art; (n) the interest and penalties resulting from Landlord’s failure to pay Operating Expense when due; (xiv) Landlord’s general corporate overhead and general and administrative expenses, and costs for the operation of the entity which constitutes Landlord as the same are distinguished from the costs of the operation of the Project, including accounting and legal matters, costs of defending any lawsuits with any mortgagee, costs of selling or mortgaging Landlord’s interest in the Project, costs of any disputes between Landlord and its employees (if any) not engaged in Building Project operation, disputes of Landlord with Building management, or outside fees paid in connection with for disputes with other tenantsProject tenants or occupants (except to the extent such dispute is based on Landlord’s good faith efforts to meet Landlord’s obligations under this Lease); (xv) the costs arising from the gross negligence or willful misconduct of Landlord; and (xvi) the management office rent to the extent it exceeds fair market rent for such space. Landlord shall have the right, from time to time, to equitably allocate some or all of the Operating Expenses between the Building and/or among different tenants of the Project and/or different buildings of the Project as and when such different buildings are constructed and added to (and/or excluded from) the Project or otherwise (the “Cost Pools”). Such Cost Pools may include, without limitation, the office space tenants and industrial space tenants of the Project or of a building or buildings in the Project. Such Cost Pools may also include an allocation of certain Operating Expenses within or under covenants, conditions and restrictions affecting the Project. In addition, Landlord shall have the right from time to time, in its reasonable discretion, to include or exclude existing or future buildings in the Project for purposes of determining Operating Expenses and/or the provision of various services and amenities thereto, including allocation of Operating Expenses in any such Cost Pools.

Definition of Operating Expenses. As used in this Lease, the term "“Operating Expenses" ” shall mean collectively, the "Project Operating Expenses" and the "Building Operating Expenses." As used herein, "Building Operating Expenses" shall include consist of all costs and expenses for janitorial services for of operation, maintenance, repair and replacement of the Project (including the Building, all costs the Site and expenses for utilities which are separately metered to the Building, and all other costs and expenses of operation and maintenance of the Building Common Areas) as determined by generally accepted standard accounting principles consistently applied, which Landlord may, from time to time, separately allocate to the Building, all of which shall be practices and calculated assuming the Building Project is ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the Building is more than ninety ninety-five percent (95%) occupied) during such calendar year. As used herein, "Project Operating Expenses" shall include together with the Building’s Share of all costs and expenses of operation for the operation, maintenance, repair and maintenance replacement of the Project, Project and the Project Common Areas as determined by generally accepted Landlord utilizing standard accounting principles consistently applied, practices and calculated assuming both buildings in the Project are ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the two (2) buildings in the Project are more than ninety is ninety-five percent (95%) occupied) during such calendar year, excluding, however. The term “Building’s Share” shall mean a fraction, the numerator of which is the rentable square footage of the Building Operating Expenses for and the two (2) buildings in denominator of which is the rentable square footage of the Project. Project Operating Expenses shall include the following costs by way of illustration but not limitation: (a) Real Property Taxes and Assessments (as defined in Subparagraph 6.4 Section 4.5 below) and any taxes or assessments imposed in lieu thereof; (b) any and all assessments imposed with respect to the Project Building, Common Areas, and/or Site pursuant to any covenants, conditions and restrictions affecting the Project and/or the Reciprocal Easement AgreementSite, Common Areas or Building; (c) to the extent not charged to and paid by Tenant pursuant to Section 16.2 below, water and sewer charges and the costs of electricity, heating, ventilating, air conditioning and other utilities; (d) to the extent not charged to and paid by Tenant pursuant to Section 16.2 below, utilities surcharges and any other costs, levies or assessments resulting from statutes or regulations promulgated by any governmental government authority in connection with the use or occupancy of the Project Site, Building or the Premises or the parking facilities serving the ProjectSite, Building or the Premises; (e) costs of insurance obtained by Landlord pursuant to Paragraph 23 Section 21 of this Lease, including any deductibles paid by Landlord; (f) waste disposal and janitorial services; (g) securitysecurity (if any); (h) labor; (i) costs incurred in the management of the ProjectSite, Building and Common Areas, including, without limitation: (1) supplies, (2) wages wages, salaries, benefits, pension payments, fringe benefits, uniforms and salaries dry-cleaning thereof (and payroll taxes, unemployment taxes, employer’s Social Security taxes, together with any other taxes levied on wages, salaries, compensation and benefits, insurance and similar governmental charges related thereto) of employees used directly in the management, operation and maintenance of the ProjectSite, Building and Common Areas, (3) Project the rental of personal property used by Landlord’s personnel in the maintenance, repair and operation of the Project, (4) management office rental expenses including rent and operating costs, (if such management office is located on the Project5) at a cost not to exceed the fair market rental value for such office in comparable suburban Class A office buildings in South Orange County accounting fees, legal fees and excluding any portion of such office which is occupied principally for marketing purposes; real estate consultant’s fees, and (46) a management/administrative fee substantially consistent with that charged by landlords of Comparable Buildings, but in any event not to exceed five four percent (54%) of the annual gross revenues of the Project exclusive of the proceeds of financing or a sale of the ProjectBuilding; (ji) supplies, materials, equipment and tools; (kj) repair and maintenance of the elevators and the structural portions of the improvements in the ProjectBuilding, including the plumbing, heating, ventilating, air-conditioning conditioning, electrical and electrical other utility systems installed or furnished by Landlord; (1k) maintenance, costs and upkeep of all parking and Common Areas; (m) depreciation on a straight line basis and rental of personal property used in maintenance; (nl) amortization on a straight-line basis over the useful life (as reasonably determined by Landlord), together with interest at the Interest Rate (as defined in Section 1.14 of the Summary of this Lease) on the unamortized balance of all costs of costs a capital nature (including, without limitation, capital improvements, capital replacements, capital repairs, capital equipment and capital tools): (1) intended to produce a reduction in operating charges or energy consumption or effect other economies in the operation or maintenance of the Project; or (2) required after the date of this Lease under any governmental law or regulation that was not in effect as of the Commencement Date; or (3) for repair or replacement of any disputes between Landlord equipment or improvements needed to operate and/or maintain the Building, the Common Areas and/or the Site at the same quality levels as prior to the repair or replacement; (m) costs and its employees expenses of gardening and landscaping; (if anyn) not engaged in Building operation, disputes maintenance of Landlord with Building management, signs; (o) personal property taxes levied on or outside fees paid attributable to personal property used in connection with disputes with the Building, the Common Areas and/or the Site; and (p) costs and expenses of repairs, resurfacing, repairing, maintenance, painting, lighting and similar items, including appropriate reserves. If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Expenses) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed to be increased by an amount equal to the additional Operating Expenses which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such work or service to such tenant. For purposes of determining Landlord’s Contribution to Operating Expenses, Operating Expenses shall not include (i) one-time special assessments, charges, costs or fees or extraordinary charges or costs incurred in the Base Year only, (ii) market-wide labor-rate increases due to extraordinary circumstances including, but not limited to, boycotts and strikes (except to the extent such extraordinary circumstances continue beyond the Base Year), (iii) utility rate increases due to extraordinary circumstances including, but not limited to, conservation surcharges, boycotts, embargoes or other tenants.shortages (except to the extent such extraordinary circumstances continue beyond the Base Year). In no event shall structural repairs or structural replacements to the Building (including without limitation the structural walls, foundations, concrete sub flooring, structural elements of the roof and underground utilities) be included in Operating Expenses. Landlord shall have the right, from time to time, to equitably allocate some or all of the Operating Expenses between the Building and/or among different tenants of the Project and/or different buildings of the Project as and when such different buildings are constructed and added to (and/or excluded from) the Project or otherwise (the “Cost Pools”). Such Cost Pools may include, without limitation, the office space tenants and industrial space tenants of the Project or of a building or buildings in the Project. Such Cost Pools may also include an allocation of certain Operating Expenses within or under covenants, conditions and restrictions affecting the Project, in addition, Landlord shall have the right from time to time, in its reasonable discretion, to include or exclude existing or future buildings in the Project for purposes of determining Operating Expenses and/or the provision of various services and amenities thereto, including allocation of Operating Expenses in any such Cost Pools. Landlord hereby agrees that the cost of any new type or increased amount of insurance coverage (including, but not limited to, earthquake insurance) (or increased limits of insurance or decrease in the amount of deductibles) which is obtained or effected by Landlord during any calendar year after the Base Year (but is not obtained or effected during the Base Year) shall be added to the Operating Expenses for the Base Year (but at the rate which would have been in effect during the Base Year or the rate in effect during such subsequent calendar year, whichever is lower) prior to the calculation of Tenant’s Share of Operating Expenses for each such calendar year in which such change in insurance is initially obtained or effected. In the event that any of Landlord’s insurance premiums applicable to the Project shall decrease in any calendar year subsequent to the Base Year (including, without limitation, as a result of any decrease in the amount or type of coverage or increase in deductibles), Operating Expenses attributable to the Base Year, shall, commencing the year of such decrease, but only as long as and to the extent such decrease remains in effect, thereafter be reduced by the amount of such decrease in the insurance premiums. Landlord further agrees that any costs incurred in any calendar year after the Base Year because of any added new type of discretionary services which were readily available during the Base Year, and customarily provided by landlords of Comparable Buildings during the Base Year (but not by Landlord), and not included in the Base Year shall be added to and included in the Base Year for purposes of determining the Operating Expenses payable for such calendar year in which such added new type of discretionary services are so provided, as if such services were provided in the Base Year (but at the rate for such services which would have been in effect during the Base Year, or the rate in effect during such subsequent calendar year, whichever is lower). Notwithstanding anything to the contrary in this Lease, Operating Expenses shall not include the following:

Definition of Operating Expenses. As used in this Lease, the term "“Operating Expenses" ” shall mean collectively, the "Project Operating Expenses" and the "Building Operating Expenses." As used herein, "Building Operating Expenses" shall include consist of all costs and expenses for janitorial services for the Buildingof operation, all costs maintenance and expenses for utilities which are separately metered to the Building, and all other costs and expenses of operation and maintenance repair of the Building and Building Common Areas as determined by generally accepted accounting principles principles, consistently applied, which Landlord may, from time to time, separately allocate to the Building, all of which shall be applied and with those Operating Expenses that vary by occupancy calculated assuming the Building is ninety five one hundred percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the Building is more than ninety five percent (95100%) occupied) during such calendar year. As used herein, "Project Operating Expenses" shall include together with the Building Percentage of all costs and expenses of operation and maintenance of the Project, Property Common Areas and the Site as determined by generally accepted accounting principles principles, consistently applied, applied and calculated assuming both buildings in the Project are ninety five Property is one hundred percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the two (2) buildings in the Project are more than ninety five percent (95100%) occupied) during such calendar year. In the event any facilities, excludingpersonnel, howeverequipment, services, utilities or any other item that may be considered an Operating Expense hereunder and if used or provided in connection with the Building but are also provided or used with any other building owned or operated by Landlord or its affiliates or vice versa, the Building costs incurred by Landlord in connection therewith shall be allocated to Operating Expenses by Landlord on a reasonably equitable basis and consistent with other relevant provisions of this Lease. Landlord will not collect or be entitled to collect Operating Expenses, Insurance Costs, Taxes or Utilities Costs for all of the tenants of the Building in an amount which is in excess of one hundred percent (100%) of the Operating Expenses, Insurance Costs, Taxes and/or Utilities Costs actually paid or incurred by Landlord in connection with the provisions of this Lease. Landlord shall maintain a commensurate level of services for the two (2) buildings Building and Property during the Base Year as was maintained in calendar year 2010 so to as ensure that the Projectlevel of expenses for the Base Year is not artificially low. Project Operating Expenses shall include the following costs by way of illustration but not limitation: (a) Real Property Taxes and Assessments (as defined in Subparagraph 6.4 below) and any taxes or assessments imposed in lieu thereof; (bi) any and all assessments imposed by any authorized sources with respect to the Project Building, Common Areas, and/or Site pursuant to any covenants, conditions and restrictions affecting the Project and/or the Reciprocal Easement AgreementProperty; (cii) water and sewer charges and the costs of electricity, heating, ventilating, air conditioning and other utilities; (d) utilities surcharges and any other costs, levies or assessments resulting from statutes or regulations promulgated by any governmental government authority in connection with the use or occupancy of the Project Site, Building or the Premises or the parking facilities serving the ProjectSite, Building or the Premises; (e) costs of insurance obtained by Landlord pursuant to Paragraph 23 of this Lease, including any deductibles paid by Landlord; (fiii) waste disposal and janitorial services; (giv) security; (h) labor; (iv) costs incurred in the management of the ProjectSite, Building and Common Areas, including, without limitation: (1) supplies, materials, equipment and tools, (2) wages wages, salaries, benefits, pension payments, fringe benefits, uniforms and salaries dry-cleaning thereof (and payroll taxes taxes, insurance and similar governmental charges related thereto) of employees used directly in the management, operation and maintenance of the ProjectSite, Building and Common Areas (to the level of senior Property manager adjusted on a commercially reasonable pro rata allocation for employees directly associated with the operation and maintenance of the Site, Building and Common Areas), (3) Project the rental of personal property used by Landlord’s personnel in the maintenance, repair and operation of the Property, (4) commercially reasonable management office rental expenses including rent and operating costs, (if such management office is located on the Project5) at a cost not to exceed the fair market rental value for such office in comparable suburban Class A office buildings in South Orange County accounting fees, legal fees and excluding any portion of such office which is occupied principally for marketing purposes; real estate consultant’s fees, and (46) a management/administrative fee not which shall be comparable to exceed five the then prevailing market management fee expressed as a percentage of annual gross receipts for comparable third party management companies offering comparable management services in Comparable Buildings, but in no event greater than four percent (54%) of the annual gross revenues of the Project exclusive of the proceeds of financing or a sale of the ProjectBuilding; (j) supplies, materials, equipment and tools; (kvi) repair and maintenance of the elevators elevators, if any, and the structural portions of the improvements in the ProjectBuilding, including the plumbing, heating, ventilating, air-conditioning and electrical systems installed or furnished by Landlord; (1vii) maintenance, costs and upkeep of all parking and Common Areas; (m) depreciation on a straight line basis and rental of personal property used in maintenance; (nviii) amortization on a straight-line basis over the useful life determined in accordance with generally accepted accounting principles on the unamortized balance of all costs of a capital nature (including, without limitation, capital improvements, capital replacements, capital repairs, capital equipment and capital tools): (1) reasonably intended to produce a reduction in operating charges or energy consumption, but only to the extent of such established savings on a year to year basis; or (2) required after the date of this Lease under any Law that was not applicable to the Building as of the date of this Lease (such costs, collectively, “Allowable Capital Costs”); (ix) costs and expenses of any disputes between gardening and landscaping; (x) maintenance of signs (other than signs of tenants of the Site); (xi) personal property taxes levied on or attributable to personal property used by Landlord and its employees (if any) not engaged in Building operation, disputes of Landlord with Building management, or outside fees paid in connection with disputes with other tenantsthe Building, the Common Areas and/or the Site; and (xii) costs and expenses of repairs, resurfacing, repairing, maintenance, painting, lighting, cleaning, refuse removal, security and similar items. Operating Expenses shall not include Taxes, Insurance Costs or Utilities Costs which shall be separately accounted for under the terms of this Lease, nor shall Operating Expenses include any of the exclusions from Operating Expenses set forth in subsection (j) hereof.

Definition of Operating Expenses. As used in this Lease, the term "“Operating Expenses" ” shall mean collectively, the "Project Operating Expenses" and the "Building Operating Expenses." As used herein, "Building Operating Expenses" shall include consist of all costs and expenses for janitorial services for incurred or reasonably reserved (based on the Buildingreasonable practices of landlord’s of Comparable Properties) by or on behalf of Landlord in connection with the ownership, all costs operation, maintenance, repair and expenses for utilities which are separately metered to the Building, and all other costs and expenses of operation and maintenance replacement of the Southern Building and Common Areas as determined by generally accepted standard accounting principles consistently applied, which Landlord may, from time to time, separately allocate to the Building, all of which shall be calculated assuming the Building is ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the Building is more than ninety five percent (95%) occupied) during such calendar year. As used herein, "Project Operating Expenses" shall include all costs and expenses of operation and maintenance of the Project, as determined by generally accepted accounting principles consistently applied, calculated assuming both buildings in the Project are ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the two (2) buildings in the Project are more than ninety five percent (95%) occupied) during such calendar year, excluding, however, the Building Operating Expenses for the two (2) buildings in the Project. Project Operating Expenses shall include practices including the following costs by way of illustration but not limitation: (a) Real Property Taxes and Assessments (as defined in Subparagraph 6.4 Section 6.3 below) and any taxes or assessments imposed in lieu thereof; (b) any and all assessments imposed with respect to the Southern Building, Land Common Areas and/or Project pursuant to any covenants, conditions and restrictions (“CCR’s) affecting the Project and/or Project, Common Areas or Southern Building including, but not limited to, the Reciprocal Easement AgreementCCR’s for the Business Park (“CCR Assessments”); (c) water and sewer charges and the costs of electricity, heating, ventilating, air conditioning HVAC and other utilities, excluding those which are furnished to the Demised Premises and other leased premises within the Southern Building which are separately metered and paid separately by the tenants, including Tenant (provided that Tenant’s Percentage thereof shall be reduced to reflect any portion of the Demised Premises that is separately metered); (d) utilities surcharges and any other costs, levies or assessments resulting from statutes or regulations promulgated by any governmental government authority in connection with the use or occupancy of the Project Southern Building, Land or the Demised Premises or the parking facilities serving the ProjectSouthern Building, Land or Demised Premises; (e) costs of insurance obtained by Landlord pursuant to Paragraph 23 Article VII of this Lease, including any deductibles paid by LandlordLease to the extent allocable to the Southern Building; (f) waste disposal and janitorial services; (g) security; (h) labor; (i) costs incurred in the management of the ProjectSouthern Building, Land and Common Areas, including, without limitation: (1) supplies, (2) wages and salaries (and payroll taxes and similar governmental charges related thereto) of employees used directly in the management, operation and maintenance of the ProjectSouthern Building, (3) Project management office rental (if such management office is located on the Project) at a cost not to exceed the fair market rental value for such office in comparable suburban Class A office buildings in South Orange County Land and excluding any portion of such office which is occupied principally for marketing purposes; Common Areas, and (42) a management/administrative fee not to exceed five 2.5 percent (52.5%) of the annual gross revenues base rent of the Project exclusive of the proceeds of financing or a sale of the ProjectSouthern Building; (ji) supplies, materials, equipment and toolstools to the extent used with respect to the Project; (kj) repair and maintenance of the elevators and the structural portions of the improvements in the Project, including the plumbing, heating, ventilating, air-conditioning any other Building Systems and electrical systems Equipment installed or furnished by Landlord; (1k) maintenance, maintenance costs and upkeep of all parking and Common AreasAreas (including, but not limited to, the Workout Facility); (m) depreciation on a straight line basis and rental of personal property used in maintenance; (nl) amortization on a straight-line basis over the actual useful life together with interest at ten percent (10%) per annum on the unamortized balance of all costs of costs a capital nature (including, without limitation, capital improvements, capital replacements, capital repairs, capital equipment and capital tools): (l) reasonably intended to produce a reduction in Operating Expenses or energy consumption; or (2) required after the date of this Lease under any governmental law or regulation that was not applicable to the Southern Building at the time they were originally constructed; or (3) for repair or replacement of any disputes between equipment or improvements needed to operate and/or maintain the Southern Building, Land, and/or the Common Areas, provided, however, to the extent Landlord and its employees has previously reserved funds for any such capital item, Landlord shall first apply such reserved funds against the cost of such capital item; (if anym) not engaged in Building operation, disputes maintenance of Landlord with Building management, signs (other than signs of tenants of the Project); (n) personal property taxes levied on or outside fees paid attributable to personal property used in connection with disputes with other tenants.the Southern Building, Land, and/or the Common Areas; and (o) costs and expenses of repairs, resurfacing, repairing, maintenance, painting, lighting, cleaning, refuse removal and similar items; provided, however, in no event shall Landlord include within Operating Expenses the cost for resurfacing or replacing the parking areas more than once every five (5) years (further provided, however, that such limitations shall not be deemed to include the cost of reslurring, patching and/or restriping of such parking areas as and when reasonably necessary). Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses shall not, however, include:

Definition of Operating Expenses. As used in this Lease, the term "“Operating Expenses" ” shall mean collectively, the "Project Operating Expenses" and the "Building Operating Expenses." As used herein, "Building Operating Expenses" shall include consist of all costs and expenses for janitorial services for of operation, maintenance, repair and replacement of the Project (including the Building, all costs the Site and expenses for utilities which are separately metered to the Building, and all other costs and expenses of operation and maintenance of the Building Common Areas) as determined by generally accepted standard accounting principles consistently applied, which Landlord may, from time to time, separately allocate to the Building, all of which shall be practices and calculated assuming the Building Project is ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the Building is more than ninety ninety-five percent (95%) occupied) during such calendar year. As used herein, "Project Operating Expenses" shall include together with the Building’s Share of all costs and expenses of operation for the operation, maintenance, repair and maintenance replacement of the Project, Project and the Project Common Areas as determined by generally accepted Landlord utilizing standard accounting principles consistently applied, practices and calculated assuming both buildings in the Project are ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the two (2) buildings in the Project are more than ninety is ninety-five percent (95%) occupied) during such calendar year, excluding, however. The term “Building’s Share” shall mean a fraction, the numerator of which is the rentable square footage of the Building Operating Expenses for and the two (2) buildings in denominator of which is the rentable square footage of the Project. Project Operating Expenses shall include the following costs by way of illustration but not limitation: (a) Real Property Taxes and Assessments (as defined in Subparagraph 6.4 Section 4.5 below) and any taxes or assessments imposed in lieu thereof; (b) any and all assessments imposed with respect to the Project Building, Common Areas, and/or Site pursuant to any covenants, conditions and restrictions affecting the Project and/or the Reciprocal Easement AgreementSite, Common Areas or Building; (c) to the extent not charged to and paid by Tenant pursuant to Section 16.2 below, water and sewer charges and the costs of electricity, heating, ventilating, air conditioning and other utilities; (d) to the extent not charged to and paid by Tenant pursuant to Section 16.2 below, utilities surcharges and any other costs, levies or assessments resulting from statutes or regulations promulgated by any governmental government authority in connection with the use or occupancy of the Project Site, Building or the Premises or the parking facilities serving the ProjectSite, Building or the Premises; (e) costs of insurance obtained by Landlord pursuant to Paragraph 23 Section 21 of this Lease, including any deductibles paid by Landlord; (f) waste disposal and janitorial services; (g) securitysecurity (if any); (h) labor; (i) costs incurred in the management of the ProjectSite, Building and Common Areas, including, without limitation: (1) supplies, (2) wages wages, salaries, benefits, pension payments, fringe benefits, uniforms and salaries dry-cleaning thereof (and payroll taxes, unemployment taxes, employer’s Social Security taxes, together with any other taxes levied on wages, salaries, compensation and benefits, insurance and similar governmental charges related thereto) of employees used directly in the management, operation and maintenance of the ProjectSite, Building and Common Areas, (3) Project the rental of personal property used by Landlord’s personnel in the maintenance, repair and operation of the Project, (4) management office rental expenses including rent and operating costs, (if such management office is located on the Project5) at a cost not to exceed the fair market rental value for such office in comparable suburban Class A office buildings in South Orange County accounting fees, legal fees and excluding any portion of such office which is occupied principally for marketing purposes; real estate consultant’s fees, and (46) a management/administrative fee substantially consistent with that charged by landlords of Comparable Buildings, but in any event not to exceed five four percent (54%) of the annual gross revenues of the Project exclusive of the proceeds of financing or a sale of the ProjectBuilding; (ji) supplies, materials, equipment and tools; (kj) repair and maintenance of the elevators and the structural portions of the improvements in the ProjectBuilding, including the plumbing, heating, ventilating, air-conditioning conditioning, electrical and electrical other utility systems installed or furnished by Landlord; (1k) maintenance, costs and upkeep of all parking and Common Areas; (m) depreciation on a straight line basis and rental of personal property used in maintenance; (nI) amortization on a straight-line basis over the useful life (as reasonably determined by Landlord), together with interest at the Interest Rate (as defined in Section 1.14 of the Summary of this Lease) on the unamortized balance of all costs of costs a capital nature (including, without limitation, capital improvements, capital replacements, capital repairs, capital equipment and capital tools): (1) intended to produce a reduction in operating charges or energy consumption or effect other economies in the operation or maintenance of the Project; or (2) required after the date of this Lease under any governmental law or regulation that was not in effect as of the Commencement Date; or (3) for repair or replacement of any disputes between Landlord equipment or improvements needed to operate and/or maintain the Building, the Common Areas and/or the Site at the same quality levels as prior to the repair or replacement; (m) costs and its employees expenses of gardening and landscaping; (if anyn) not engaged in Building operation, disputes maintenance of Landlord with Building management, signs; (o) personal property taxes levied on or outside fees paid attributable to personal property used in connection with disputes with the Building, the Common Areas and/or the Site; and (p) costs and expenses of repairs, resurfacing, repairing, maintenance, painting, lighting and similar items, including appropriate reserves. If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Expenses) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed to be increased by an amount equal to the additional Operating Expenses which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such work or service to such tenant. For purposes of determining Landlord’s Contribution to Operating Expenses, Operating Expenses shall not include (i) one-time special assessments, charges, costs or fees or extraordinary charges or costs incurred in the Base Year only, (ii) market-wide labor-rate increases due to extraordinary circumstances including, but not limited to, boycotts and strikes (except to the extent such extraordinary circumstances continue beyond the Base Year), (iii) utility rate increases due to extraordinary circumstances including, but not limited to, conservation surcharges, boycotts, embargoes or other tenants.shortages (except to the extent such extraordinary circumstances continue beyond the Base Year). In no event shall structural repairs or structural replacements to the Building (including without limitation the structural walls, foundations, concrete sub flooring, structural elements of the roof and underground utilities) be included in Operating Expenses. Landlord shall have the right, from time to time, to equitably allocate some or all of the Operating Expenses between the Building and/or among different tenants of the Project and/or different buildings of the Project as and when such different buildings are constructed and added to (and/or excluded from) the Project or otherwise (the “Cost Pools”). Such Cost Pools may include, without limitation, the office space tenants and industrial space tenants of the Project or of a building or buildings in the Project. Such Cost Pools may also include an allocation of certain Operating Expenses within or under covenants, conditions and restrictions affecting the Project. In addition, Landlord shall have the right from time to time, in its reasonable discretion, to include or exclude existing or future buildings in the Project for purposes of determining Operating Expenses and/or the provision of various services and amenities thereto, including allocation of Operating Expenses in any such Cost Pools. Landlord hereby agrees that the cost of any new type or increased amount of insurance coverage (including, but not limited to, earthquake insurance) (or increased limits of insurance or decrease in the amount of deductibles) which is obtained or effected by Landlord during any calendar year after the Base Year (but is not obtained or effected during the Base Year) shall be added to the Operating Expenses for the Base Year (but at the rate which would have been in effect during the Base Year or the rate in effect during such subsequent calendar year, whichever is lower) prior to the calculation of Tenant’s Share of Operating Expenses for each such calendar year in which such change in insurance is initially obtained or effected. In the event that any of Landlord’s insurance premiums applicable to the Project shall decrease in any calendar year subsequent to the Base Year (including, without limitation, as a result of any decrease in the amount or type of coverage or increase in deductibles), Operating Expenses attributable to the Base Year, shall, commencing the year of such decrease, but only as long as and to the extent such decrease remains in effect, thereafter be reduced by the amount of such decrease in the insurance premiums. Landlord further agrees that any costs incurred in any calendar year after the Base Year because of any added new type of discretionary services which were readily available during the Base Year, and customarily provided by landlords of Comparable Buildings during the Base Year (but not by Landlord), and not included in the Base Year shall be added to and included in the Base Year for purposes of determining the Operating Expenses payable for such calendar year in which such added new type of discretionary services are so provided, as if such services were provided in the Base Year (but at the rate for such services which would have been in effect during the Base Year, or the rate in effect during such subsequent calendar year, whichever is lower). Notwithstanding anything to the contrary in this Lease, Operating Expenses shall not include the following:

Definition of Operating Expenses. As used in this Lease, the term "“Operating Expenses" ” shall mean collectively, the "Project Operating Expenses" and the "Building Operating Expenses." As used herein, "Building Operating Expenses" shall include consist of all costs and expenses for janitorial services for of operation, maintenance, repair and replacement of the Project (including the Building, all costs the Site and expenses for utilities which are separately metered to the Building, and all other costs and expenses of operation and maintenance of the Building Common Areas) as determined by generally accepted standard accounting principles consistently applied, which Landlord may, from time to time, separately allocate to the Building, all of which shall be practices and calculated assuming the Building Project is ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the Building is more than ninety ninety-five percent (95%) occupied) during such calendar year. As used herein, "Project Operating Expenses" shall include together with the Building’s Share of all costs and expenses of operation for the operation, maintenance, repair and maintenance replacement of the Project, Project and the Project Common Areas as determined by generally accepted Landlord utilizing standard accounting principles consistently applied, practices and calculated assuming both buildings in the Project are ninety five percent (95%) occupied (or calculated based on the actual level of occupancy for the calendar year in question if the two (2) buildings in the Project are more than ninety is ninety-five percent (95%) occupied) during such calendar year, excluding, however. The term “Building’s Share” shall mean a fraction, the numerator of which is the rentable square footage of the Building Operating Expenses for and the two (2) buildings in denominator of which is the rentable square footage of the Project. Project Operating Expenses shall include the following costs by way of illustration but not limitation: (a) Real Property Taxes and Assessments (as defined in Subparagraph 6.4 Section 4.5 below) and any taxes or assessments imposed in lieu thereof; (b) any and all assessments imposed with respect to the Project Building, Common Areas, and/or Site pursuant to any covenants, conditions and restrictions affecting the Project and/or the Reciprocal Easement AgreementSite, Common Areas or Building; (c) to the extent not charged to and paid by Tenant pursuant to Section 16.2 below, water and sewer charges and the costs of electricity, heating, ventilating, air conditioning and other utilities; (d) to the extent not charged to and paid by Tenant pursuant to Section 16.2 below, utilities surcharges and any other costs, levies or assessments resulting from statutes or regulations promulgated by any governmental government authority in connection with the use or occupancy of the Project Site, Building or the Premises or the parking facilities serving the ProjectSite, Building or the Premises; (e) costs of insurance obtained by Landlord pursuant to Paragraph 23 Section 21 of this Lease, including any deductibles paid by Landlord; (f) waste disposal and janitorial services; (g) securitysecurity (if any); (h) labor; (i) costs incurred in the management of the ProjectSite, Building and Common Areas, including, without limitation: (1) supplies, (2) wages wages, salaries, benefits, pension payments, fringe benefits, uniforms and salaries dry-cleaning thereof (and payroll taxes, unemployment taxes, employer’s Social Security taxes, together with any other taxes levied on wages, salaries, compensation and benefits, insurance and similar governmental charges related thereto) of employees used directly in the management, operation and maintenance of the ProjectSite, Building and Common Areas, (3) Project the rental of personal property to the extent used by Landlord’s personnel in the maintenance, repair and operation of the Project, (4) management office rental expenses including rent and operating costs, (if such management office is located on the Project5) at a cost not to exceed the fair market rental value for such office in comparable suburban Class A office buildings in South Orange County accounting fees, legal fees and excluding any portion of such office which is occupied principally for marketing purposes; real estate consultant’s fees, and (46) a management/administrative fee substantially consistent with such fees being charged for comparable projects in the Sorrento Mesa area of San Diego County, but not to exceed five four percent (54%) of the annual gross revenues of the Project exclusive of and which percentage rate shall not increase for years subsequent to the proceeds of financing or a sale of Base Year over the Projectpercentage rate charged in the Base Year; (ji) supplies, materials, equipment and tools; (kj) repair and maintenance of the elevators and the structural portions of the improvements in Building (provided that with respect to structural repairs only, the Projectcost of any such structural repairs is otherwise permissible pursuant to clause (l) below), including and repair and maintenance of the plumbing, heating, ventilating, air-conditioning conditioning, electrical and electrical other utility systems installed or furnished by Landlord; (1k) maintenance, costs and upkeep of all parking and Common Areas; (m) depreciation on a straight line basis and rental of personal property used in maintenance; (nl) amortization on a straight-line basis over the useful life (as reasonably determined by Landlord), together with interest at the Interest Rate (as defined in Section 1.14 of the Summary of this Lease) on the unamortized balance of all costs of a capital nature (including, without limitation, capital improvements, capital replacements, capital repairs, capital equipment and capital tools): (1) intended to produce a reduction in operating charges or energy consumption or effect other economies in the operation or maintenance of the Project; or (2) required after the date of this Lease under any governmental law or regulation; or (3) for repair or replacement of any equipment or improvements needed to operate and/or maintain the Building, the Common Areas and/or the Site at the same quality levels as prior to the repair or replacement; (m) costs and expenses of gardening and landscaping; (n) maintenance of signs, other than Landlord’s identification signage; (o) personal property taxes levied on or attributable to personal property to the extent used in connection with the Building, the Common Areas and/or the Site; and (p) costs and expenses of repairs, resurfacing, repairing, maintenance, painting, lighting and similar items to the extent reasonably required by normal wear and tear. Notwithstanding the foregoing, the term “Operating Expenses” shall not include the following: (i) costs (including permit, license and inspection fees) incurred for tenant improvements for other tenants within the Building; (ii) legal and auditing fees (other than those fees reasonably incurred in connection with the maintenance and operation of all or any portion of the Building), leasing commissions, advertising expenses and similar costs incurred in connection with the leasing of the Building; (iii) depreciation, amortization and interest payments, (except as otherwise provided in this Lease and except on materials, [Axesstel, Inc.] tools, supplies and vendor-type equipment purchased by Landlord to enable Landlord to supply services Landlord might otherwise contract for with a third party where such depreciation, amortization and interest payments would otherwise have been included in the charge for such third party’s services, all as determined in accordance with standard real estate accounting practices, consistently applied, and when depreciation or amortization is permitted or required, the item shall be amortized over its reasonably anticipated useful life); (iv) any items for which Landlord is actually reimbursed by insurance or by direct reimbursement by any other tenant of the Building; (v) costs of repairs or other work necessitated by fire, windstorm or other casualty (excluding any disputes between deductibles) and/or costs of repair or other work necessitated by the exercise of the right of eminent domain to the extent Landlord is reimbursed by insurance proceeds or a condemnation award, as applicable, and its employees the same is actually received by Landlord for such purposes; (if anyvi) not engaged other than any interest charges for capital improvements, any interest payments on any financing for the Building and interest and penalties incurred as a result of Landlord’s late payment of any invoice; (vii) any costs expressly excluded from Operating Expenses elsewhere in Building operation, disputes this Lease; (viii) overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord with for goods and/or services in the Building managementto the extent the same exceeds the costs of such by unaffiliated third parties on a competitive basis; (ix) any payment under a ground lease or master lease; (x) costs of a capital nature (including structural additions), or outside except as otherwise set forth above in clause (l) and elsewhere in this Lease; (xi) attorneys’ fees paid and other costs and expenses incurred in connection with disputes with present or prospective tenants or other tenantsoccupants of the Building; (xii) costs arising from Landlord’s charitable or political contributions: (xiii) costs associated with the operation of the business of the partnership or entity which constitutes Landlord as the same are distinguished from the costs of operation of the Building; (xiv) costs for the acquisition of sculpture, paintings or other objects of art (except for maintenance costs with respect thereto); (xv) costs of correcting latent defects in the original construction of the Building; (xvi) costs, including penalties, fees and legal expenses, incurred due to a violation by Landlord of applicable laws in effect as of the date hereof, that would not have been incurred but for any such violation by Landlord; (xvii) any bad debt loss, rent loss, or reserves for bad debts or rent loss; (xviii) the wages and benefits of any employee who does not devote substantially all of his or her employed time to the Building unless such wages and benefits are prorated to reflect time spent on operating and managing the Building; (xix) any compensation paid to clerks, attendants or other persons in commercial concessions operated by the Landlord other than concierge services; (xx) electric power costs for which any tenant directly contracts with the local public service company; (xxi) tax penalties incurred as a result of the Landlord’s negligence, inability or unwillingness to make payments when due and (xxii) costs of structural repairs necessitated by fire, windstorm or other casualty (excluding deductibles) that would be covered by a special form all-risk policy or earthquake policy. If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Expenses) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed to be increased by an amount equal to the additional Operating Expenses which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such work or service to such tenant. For purposes of determining Landlord’s Contribution to Operating Expenses, Operating Expenses shall not include (i) one-time special assessments, charges, costs or fees or extraordinary charges or costs incurred in the Base Year only, (ii) market-wide labor-rate increases due to extraordinary circumstances including, but not limited to, boycotts and strikes which are limited to the Base Year only, and (iii) utility rate increases due to extraordinary circumstances including, but not limited to, conservation surcharges, boycotts, embargoes or other shortages and which occur in the Base Year only; provided, however, that if market increases excluded from the Base Year occur in any subsequent year of the Lease Term, the Base Year Operating Expenses shall be increased to include such previously excluded amounts. In no event shall costs for any item of utilities included in Operating Expenses for any year subsequent to the Base Year be less than the amount included in Operating Expenses for the Base Year for such utility item. Landlord hereby agrees that the cost of earthquake insurance, if obtained or effected by Landlord during any calendar year after the Base Year (but is not obtained or effected during the Base Year) shall be added to the Operating Expenses for the Base Year (but at the rate which would have been in effect during the Base Year or the rate in effect during such subsequent calendar year, whichever is lower) prior to the calculation of Tenant’s Percentage of Operating Expenses for each such calendar year in which such change in insurance is obtained or effected. Landlord further agrees that any costs incurred in any calendar year after the Base Year because of any added new type of discretionary services which were readily available during the Base Year and customarily provided by landlords of comparable buildings in the Sorrento Mesa area of San Diego County during the Base Year (but not by Landlord) and not included in the Base Year, shall be added to and included in the Base Year for purposes of determining the Excess Expenses payable for such calendar year in which such added new type of discretionary services are so provided, as if such services were provided in the Base Year (but at the rate for such services which would have been in effect during the Base Year or the rate in effect during such subsequent calendar year, whichever is lower); provided, however, the foregoing provision shall not apply to the costs of (i) any capital additions, capital alterations, capital repairs or capital improvements which shall be governed by the provisions of Section 4.4(l) above, or (ii) security and/or parking control services required to operate the Project as a first-class office building project. Landlord shall have the right, from time to time, to equitably allocate some or all of the Operating Expenses between the Building and/or among different tenants of the Project and/or different buildings of the Project as and when such different buildings are constructed and added to (and/or excluded from) the Project or otherwise (the “Cost Pools”). Such Cost Pools may include, without limitation, the office space tenants and industrial space tenants of the Project or of a building or buildings in the Project. Such Cost [Axesstel, Inc.] Pools may also include an allocation of certain Operating Expenses within or under covenants, conditions and restrictions affecting the Project. In addition, Landlord shall have the right from time to time, in its reasonable discretion, to include or exclude existing or future buildings in the Project for purposes of determining Operating Expenses and/or the provision of various services and amenities thereto, including allocation of Operating Expenses in any such Cost Pools.