Exhibit 10.3

SUBLEASE

This Sublease (the "Sublease") is made and entered into as of November 12, 2018
("Effective Date") between Ionis Pharmaceuticals, Inc., a Delaware corporation
("Sublessor"), with its principal place of business at 2855 Gazelle Court,
Carlsbad, CA 92010 and Akcea Therapeutics, Inc., a Delaware corporation
("Subtenant"), with its principal place of business at 22 Boston Wharf Road, 9th
Floor, Boston, MA 02210.

1.Premises: In accordance with that certain Standard Industrial/Commercial
Multi-Tenant Lease - Net dated January 25, 2018 between Sublessor and Landlord
(defined below) (“Prime Lease”), Sublessor leases from SR22 Carlsbad I, LLC, a
California limited liability company; APG Carlsbad I, LLC, a California limited
liability company; and PRE IV C Oaks, LLC, a California limited liability
company (collectively "Landlord") certain premises containing approximately
18,710 rentable square feet of industrial space in the approximate aggregate
156,977 square foot in the project known as Elevate located at 2870 Whiptail
Loop, Suite 102, Carlsbad, CA 92010 ("Leased Premises"). The Leased Premises are
further described in the Prime Lease, a copy of which is attached hereto as
Exhibit A and is incorporated by reference herein.

2.Demise: In accordance with this Sublease, Sublessor hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublessor, 4,723 square feet of
the Leased Premises ("Subleased Premises"). The actual Subleased Premises is
located within that portion of the Leased Premises identified in yellow on
Exhibit B attached hereto. Subject to the terms of the Prime Lease, at no
additional charge to Subtenant (except such charges as may be included in the
Common Area Operating Expenses in accordance with the terms of the Prime Lease,
Subtenant shall have the right to use all associated common areas and shall have
such other use and access rights as may be necessary for the exercise of its
rights and the performance of its obligations hereunder, including, but not
limited to, access to electrical, phone and data rooms, existing phone and data
wiring infrastructure, and restrooms.

3.Sublease: This Sublease is subject and subordinate to the Prime Lease and to
the matters to which the Prime Lease is or shall be subject and subordinate.

4.Term: The parties acknowledge and agree that Subtenant took possession of the
premises on March 15, 2018, the usage of which was in accordance with the
provisions of this Sublease.  As such, for the purposes of this Agreement, the
Sublease commenced on March 15, 2018 and shall expire on June 29, 2023 (the
"Term"), unless sooner terminated in accordance with this Sublease.

5.Prime Lease: The Prime Lease is incorporated herein by reference so that,
except to the extent that certain provisions of the Prime Lease are inapplicable
or modified by this Sublease, or excluded below, each and every term, covenant
and condition of the Prime Lease binding or inuring to the benefit of Landlord
shall, in respect of the Sublease, bind or inure to the benefit of Sublessor,
and each and every term, covenant and condition of the Prime Lease binding or
inuring to the benefit of lessee thereunder shall, in respect to the Sublease,
bind or inure to the benefit of Subtenant, with the same force and effect as if
such terms, covenants and conditions were completely set forth in the Sublease,
and as if the words "Lessor(s)" and "Lessee(s)", or words of similar import,
wherever the same appear in the Prime Lease, were construed to mean,
respectively, "Sublessor" and "Subtenant" in the Sublease, and as if the words
"Leased Premises", "Premises", "Leased Property", or words of similar import,
wherever the same appear in the Prime Lease, were construed to mean "Subleased
Premises" in the Sublease, and as if the word "Lease", or words of similar
import, wherever the same appear in the Prime Lease, were construed to mean the
"Sublease."

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If any of the express provisions of the Sublease shall conflict with any of the
provisions of the Prime Lease incorporated by reference herein, such conflict
shall be resolved in every instance in favor of the express provisions of the
Sublease. Notwithstanding the foregoing or anything to the contrary contained
herein, Subtenant shall not have the right to exercise any renewal options,
expansion options, rights of first offer or similar rights set forth in the
Prime Lease.

6.Rent: Subtenant shall pay a portion of the total rent paid by Sublessor,
including base rent, additional costs and other charges (collectively referred
to herein as "Rent") as set forth on Exhibit C. Subtenant shall make all
payments to Sublessor at the address set forth herein or to such other place as
Sublessor may designate in writing. If the Effective Date is other than the
first day of a calendar month, the Rent for the first month shall be prorated
and shall be tendered to Sublessor on the first day of the following calendar
month.

7.Performance by Sublessor: Any obligations of Sublessor which are contained in
the Sublease by the incorporation by reference of the provisions of the Prime
Lease shall be observed or performed by Sublessor using reasonable efforts to
cause the Landlord to observe and/or perform the same (which obligations
include, without limitation, services to be provided by Landlord and restoration
of damaged property), and Sublessor shall diligently enforce its rights to cause
such observance or performance. Subtenant shall not in any event have any rights
in respect of the Subleased Premises greater than Sublessor's right with respect
thereto under the Prime Lease.

8.No Breach of Prime Lease:  Subtenant shall not take any action or omission
which may constitute (or be reasonably likely to lead to) a breach or violation
of any term, covenant or condition of the Prime Lease by the lessee thereunder,
whether or not such act or thing is permitted under the provisions of the
Sublease. Sublessor shall not take any action or omission which may constitute
(or be reasonably likely to lead to) a breach or violation of any term, covenant
or condition of the Prime Lease.

9.No Privity of Estate or Contract: Nothing contained in the Sublease shall be
construed to create privity of estate or of contract between Subtenant and the
Landlord.

10.Indemnity:  Subtenant shall indemnify and hold harmless Sublessor from any
claims, liabilities and damages that Sublessor may sustain as a result of a
breach by Subtenant of this Sublease. Sublessor shall indemnify and hold
harmless Subtenant from any claims, liabilities and damages that Subtenant may
sustain as a result of a breach by Sublessor of this Sublease.

11.Releases: Subtenant hereby releases Sublessor or anyone claiming through or
under the Sublessor by way of subrogation or otherwise.  Subtenant hereby
releases the Landlord or anyone claiming through or under the Landlord by way of
subrogation or otherwise to the extent that Sublessor, as tenant, released the
Landlord pursuant to the terms of the Prime Lease, and/or the Landlord was
relieved of liability or responsibility pursuant to the provisions of the Prime
Lease. Subtenant will cause its insurance carriers to include any clauses or
endorsements in favor of the Sublessor, Landlord and any additional parties
which Sublessor is required to provide pursuant to the provisions of the Prime
Lease with respect to the Subleased Premises.

12.Use: Subtenant shall use and occupy the Subleased Premises solely for general
office purposes and lawful uses incidental thereto in accordance with the
provisions of the Prime Lease. Any other activities not specifically mentioned
above regarding the use and occupancy of the Subleased Premises are subject to
the prior written approval of Sublessor and Landlord.

13.Condition of Subleased Premises:  Subtenant is leasing the Subleased Premises
in its "as is," "where is" condition on the date hereof. On or before the end of
the Term of the Sublease, or earlier termination or expiration of this Sublease,
Subtenant shall restore the Subleased Premises to the condition existing as of
the commencement of the Term of the Sublease ordinary wear and tear
excepted.  The obligations of Subtenant hereunder shall survive the expiration
or earlier termination of this Sublease.

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14.Consent and Approvals: Sublessor shall reasonably cooperate to seek
Landlord's consent to any matter under the Prime Lease as may be reasonably
requested by Subtenant. Pursuant to the provisions of the Prime Lease, consent
of the Landlord is not required for any assignment or sublease by Sublessor to a
Lessee Affiliate as such term is defined in the Prime Lease.  

15.Notices:  Any notice, report, statement, approval, consent, designation,
demand or request to be given under this Sublease shall be effective when made
in writing, deposited for mailing with the United States Postal Service or with
a recognized overnight delivery service and addressed to Sublessor or Subtenant
at the following addresses:

 

Subtenant:

 

Akcea Therapeutics, Inc.

 

 

22 Boston Wharf Road, 9th Floor

 

 

Boston, MA 02210

 

 

Attn: Chief Operating Officer

 

 

 

With an email copy to:

 

Akcea Therapeutics, Inc.

 

 

22 Boston Wharf Road, 9th Floor

 

 

Boston, MA 02210

 

 

Attn: Vice President, Legal

 

 

 

 

 

With an email copy to: legalnotices@akceatx.com

 

 

 

Sublessor:

 

Ionis Pharmaceuticals, Inc.

 

 

2855 Gazelle Court

 

 

Carlsbad, CA 92010

 

 

Attn: Legal Department

 

With an email copy to: legalnotices@ionisph.com

Sublessor shall promptly give written notice to Subtenant of (i) all claims,
demands or controversies by or with the Landlord under the Prime Lease and (ii)
any events which require that Sublessor give notice to Landlord under the Prime
Lease, which would materially affect Subtenant's rights or obligations
hereunder.

16.Termination: If for any reason the Prime Lease shall terminate prior to the
expiration of the Sublease Term, this Sublease shall thereupon be terminated and
Sublessor shall have no liability whatsoever to Subtenant by reason thereof
(unless the termination occurred as a result of Sublessor's default or breach
under the Prime Lease.

17.Assignment and Subletting: Subtenant shall not sublet the Subleased Premises
or any part thereof or assign the Sublease or otherwise encumber or dispose of
its interest therein without Sublessor's and Landlord's prior written consent in
each instance, which consent may be withheld in Sublessor's and/or Landlord's
sole discretion.

18.Insurance: Subtenant shall, throughout the Term of this Sublease, maintain
for the Subleased Premises comparable insurance coverage as required of
Sublessor under the Prime Lease. Such insurance shall, in addition to complying
with the requirements of the Prime Lease, name Sublessor as an additional
insured.

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19.Default:  The default provisions set forth in the Prime Lease are
incorporated herein by reference, provided that Subtenant shall have a five (5)
day notice and cure period for monetary default and a thirty (30) day notice and
cure period for non-monetary default (unless such non-monetary default is not
capable of cure within thirty (30) days, in which case Subtenant shall have a
reasonable period of time in which to effect a cure, so long as Subtenant
diligently prosecutes the cure to completion). In addition, Subtenant shall be
responsible for payment of any applicable late charges and fees as set forth in
the Prime Lease arising out of any default by Subtenant.

20.Brokerage:  Each party represents and warrants to the other that no broker or
other person had any part, or was instrumental in any way, in bringing about the
Sublease. Each party agrees to indemnify, defend and hold harmless the other
from and against any claims made by any broker or other person for a brokerage
commission, finder's fee, or similar compensation, by reason of or in connection
with the Sublease, and any loss, liability, damage, cost and expense (including,
without limitation, reasonable attorney's fees) which may be incurred in
connection with such claims if such other broker or other person claims to have
had dealings with such party.

21.Waiver of Jury Trial and Right to Counterclaim: Each party hereby waives all
right to trial by jury in any action, proceeding or counterclaim arising out of
or in any way connected with the Sublease, the relationship of Sublessor and
Subtenant, the Subleased Premises and the use and occupancy thereof, and any
claim of injury or damages.

22.Modifications:  The Sublease cannot be changed orally or in any manner other
than by a written agreement executed by both parties. Sublessor shall not amend
the Prime Lease with respect to any material provision that would materially
affect Subtenant's rights or obligations hereunder without Subtenant's prior
written consent.

23.Successors and Assigns:  The provisions of the Sublease, except as herein
otherwise specifically provided, shall extend to, bind and inure to the benefit
of the parties hereto and their respective personal representatives, heirs,
successors and permitted assigns.

24.Interpretation:  This Sublease shall be governed by and construed in
accordance with the laws of the state in which the Subleased Premises are
located. If any provision of the Sublease or application thereof to any person
or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of the Sublease and the application of that
provision to other persons or circumstances shall not be affected but rather
shall be enforced to the extent permitted by law. The captions and headings are
solely for convenience of reference and shall be construed without regard to any
presumption or other rule requiring construction against the party causing the
Sublease to be drafted.

25.Authority: Each party represents and warrants that the undersigned has the
full right, power and authority to execute this Sublease on behalf of the party
indicated.

26.Quiet Enjoyment: Sublessor warrants that, upon payment of the Rent, as
defined herein, and performance of all obligations, covenants and agreements of
Subtenant hereunder, Subtenant shall peaceably and quietly have, hold and enjoy
the Subleased Premises during the Sublease Term, subject however to the
provisions of this Sublease.

27.Parking:  Subject to the terms and conditions of the Prime Lease, Sublessor
shall, at no cost to Subtenant, allow Subtenant the use of such parking as is
made available to Sublessor under the Prime Lease with respect to the Subleased
Premises.

28.Counterparts: This Sublease may be executed in multiple counterparts. A
signed copy of this Sublease delivered either by facsimile or email shall be
deemed to have the same legal effect as delivery of an original signed copy of
this Sublease.  

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IN WITNESS WHEREOF, Sublessor and Subtenant have hereunto executed the Sublease
as of the Effective Date.

 

SUBLESSOR:

 

 

 

 

 

By:

 

/s/ Elizabeth L. Hougen

 

 

 

Name:

 

Elizabeth L. Hougen

 

 

 

Date

 

December 21, 2018

 

 

 

SUBTENANT:

 

 

 

 

 

By:

 

/s/ Jeffrey M. Goldberg

 

 

 

Name:

 

Jeffrey M. Goldberg

 

 

 

Title

 

COO

 

 

 

Date

 

December 26, 2018

 

Exhibit A – Prime Lease

Exhibit B - Subleased Premises

Exhibit C – Rent Schedule

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Exhibit A –Prime Lease

 

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air cr standard industrial/commercial multi-tenant lease-net 1.basic provisions
(“basic provisions”). 1.1 parties. this lease(“lease”), dated for reference
purposes only january 25, 2018, is made by and between sr22 carlsbad oaks
distribution, llc, a california limited liability company; apg carlsbad I, LLC,
a california limited liability company; and pre iv c oaks, llc, a california
limited liability company (collectively” lessor”)and ionis pharmaceuticals, inc,
a delaware corporation (“lessee”), (collectively the “parties”, or individually
a”party”). 1.2(a) premises: that certain real property, including all
improvements therein or to be provided by lessor under the terms of this lease,
commonly known as (street address, unit/suite, city, state): 2870 whiptail loop,
suite 102, carlsbad, ca 92010 (“premises”).the premises are located in the
county of san dieao, and are generally described as (describe briefly the nature
of the premises and the premises are located in the county of san dieao, and are
geerally described as (describe briefly the nature of the premises and the
“project”): an approximately 18,710 rentable square foot industrial space in an
approximately 156,977 square foot project known as elevate in addition to
lessee’s rights to use and occupy the premises as hereinafter specified, lessee
shall have non-exclusive rights to any utility raceways of the building
containing the premises (“building”) and to the common areas (as defined in
paragraph 2.7 below), but shall not have any rights to the roof, or exterior
walls of the building or to any other buildings in the project. the premises,
the building, the common areas, the land upon which they are located, along with
all other buildings and improvements theron, are herein collectively referred to
as the “project”(see also paragraph 2) 1.2(b) parking: 43 unreserved vehicle
parking spaces. (see also paragraph 2.6) 1.3 term: five (5) years, and  three
(3) months and seventeen (17) days (“original term”) commencing march 15, 2018
(“commencement date”) and ending june 30, 2023 (“expiration date”). (see also
paragraph 3) 1.4 early possession: if the premises are available lessee may have
non-exclusive possession of the premises commencing upon full execution of this
lease, payment of monies due pursuant to paragraph 1.7 and compliance with other
provision of the lease (“early possession date”),(see also paragraphs 3.2 and
3.3) 1.5 base rent: $20,196.00 per month (“base rent”), payable on the first day
of each month commencing on the commencement date.(see also paragraph 4) ☑if
this box is checked, there are provisions in this lease for the base rent to be
adjusted. see paragraph 50 1.6 lessee’s share of common area operating expenses:
eleven and 92/100 percent (11.92%)(“lessee’s share”). in the event that the size
of the premises and/or the project are modified during the term of this lease.
lessor shall recalculate lessee’s share to reflect such modification. 1.7 base
rent and other monies paid upon execution: (a) base rent: $20,196.00 for the
period first calendar month of the term (b) common area operating expenses:
$4,677.50 for the period first calendar month of the term (c) security deposit:
$23,412.70 (“security deposit”). (see also paragraph 5) (d) other:-------------
for-------------------- (e) total due upon execution of this lease: $48,286.20
1.8 agreed use: administrative office, warehouse and distribution for a
pharmaceutical company.(see also paragraph 6) 1.9 insuring party. lessor is the
“insuring party”. (see also paragraph 8) 1.10 real estate brokers. (see also
paragraph 15 and 25) (a) representation: the following real estate brokers (the
“brokers”) and brokerage relationships exist in this transaction (check
applicable boxes): ☑cushman & wakefield (aric starck and dennis visser)
represents lessor exclusively(“lessor’s broker”) ☑cbre (roger carlson)
represents lessee exclusively(“lessee’s broker”);or ☐------ represents both
lessor and lessee(“dual agency”). (b) payment to brokers. (see paragraph 58)upon
execution and delivery of this lease by both parties,lessor shall pay to the
brokers the brokerage fee agreed to in a separate written agreement(or if there
is no such agreement, the sum of------or--------% of the total base rent) for
the brokerage services rendered by the brokers. 1.11 guarantor. the obligations
of the lessee under this lease are to be guaranteed by n/a (“guarantor”). (see
also paragraph 37) 1.12 attachments. attached here to are the following , all of
which constitute a part of this lease: ☑an addendum consisting of paragraph 50
through 60; ☑a site plan depicting the premises (exhibit a): ☐a site plan
depicting the project; ☐a current set of the rules and regulations for the
project; ☐a current set of the rules and regulations adopted by the owners’
association; ☐a work letter; ☑other(specify): option (s) to extend (paragraph
61). 2. premises. 2.1 letting. lessor hereby leases to lessee, and lessee hereby
leases from lessor,the premises, for the term,at the rental, and upon all of the
terms, covenants and conditions set forth in this lease. while the approximate
square footage of the premises may have been used in the marketing of the
premises for purposes of comparison, the base rent stated herein is not tied to
square footage and is not subject to adjustment should the actual size be
determined to be different. note :lessee is advised to verify the  page 1 of 20
initials last edited: 2/26/2018 3:14 PM initials © 2017 air cre. all rights
reserved. MTN-26.00, Revised 01-03-2017  

 

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actual size prior to executing this Lease. 2.2 Condition. Lessor shall deliver
that portion of the Premises contained within the Building ("Unit") to Lessee
broom clean and free of debris on the Commencement Date or the Early Possession
Date, whichever first occurs ("Start Date"), and, so long as the required
service contracts described in Paragraph 7.l(b) below are obtained by Lessee and
in effect within thirty days following the Start Date, warrants that the
existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating
and air conditioning systems ("HVAC") , loading doors, sump pumps, if any, and
all other such elements in the Unit, other than those constructed by Lessee,
shall be in good operating condition on said date, that the structural elements
of the roof, bearing walls and foundation of the Unit shall be free of material
defects, and that the Unit does not contain hazardous levels of any mold or
fungi defined as toxic under applicable state or federal law. If a
non-compliance with such warranty exists as of the Start Date, or if one of such
systems or elements should malfunction or fail within the appropriate warranty
period, Lessor shall, as Lessor's sole obligation with respect to such matter,
except as otherwise provided in this Lease, promptly after receipt of written
notice from Lessee setting forth with specificity the nature and extent of such
non-compliance, malfunction or failure, rectify same at Lessor's expense. The
warranty periods shall be as follows: (i) 6 months as to the HVAC systems, and
(ii) 30 days as to the remaining systems and other elements of the Unit. If
Lessee does not give Lessor the required notice within the appropriate warranty
period, correction of any such non-compliance, malfunction or failure shall be
the obligation of Lessee at Lessee's sole cost and expense (except for the
repairs to the fire sprinkler systems, roof, foundations, and/or bearing walls-
see Paragraph 7). Lessor also warrants, that unless otherwise specified in
writing, Lessor is unaware of (i) any recorded Notices of Default affecting the
Premise; (ii) any delinquent amounts due under any loan secured by the Premises;
and (iii) any bankruptcy proceeding affecting the Premises. 2.3 Compliance.
Lessor warrants that to the best of its knowledge the improvements on the
Premises comply with the building codes, applicable laws, covenants or
restrictions of record, regulations, and ordinances ("Applicable Requirements ")
that were in effect at the time that each improvement, or portion thereof, was
constructed. Said warranty does not apply to the use to which Lessee will put
the Premises, modifications which may be required by the Americans with
Disabilities Act or any similar laws as a result of Lessee's use (see Paragraph
49), or to any Alterations or Utility Installations (as defined in Paragraph
7.3(a)) made or to be made by Lessee. NOTE: Lessee Is responsible for
determining whether or not the Applicable Requirements, and especially the
zoning are appropriate for Lessee's Intended use, and acknowledges that past
uses of the Premises may no longer be allowed. If the Premises do not comply
with said warranty, Lessor shall, except as otherwise provided, promptly after
receipt of written notice from Lessee setting forth with specificity the nature
and extent of such non-compliance, rectify the same at Lessor's expense. If
Lessee does not give Lessor written notice of a non-compliance with this
warranty within 6 months following the Start Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense. If the Applicable Requirements are hereafter changed so as to require
during the term of this Lease the construction of an addition to or an
alteration of the Unit, Premises and/or Building, the remediation of any
Hazardous Substance, or the reinforcement or other physical modification of the
Unit, Premises and/or Building ("Capital Expenditure"), Lessor and Lessee shall
allocate the cost of such work as follows: (a) Subject to Paragraph 2.3(c)
below, if such Capital Expenditures are required as a result of the specific and
unique use of the Premises by Lessee as compared with uses by tenants in
general, Lessee shall be fully responsible for the cost thereof, provided,
however, that if such Capital Expenditure is required during the last 2 years of
this Lease and the cost thereof exceeds 6 months' Base Rent, Lessee may instead
terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days
after receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to 6 months'
Base Rent. If Lessee elects termination, Lessee shall Immediately cease the use
of the Premises which requires such Capital Expenditure and deliver to Lessor
written notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure. (b) If such Capital Expenditure is not the result of the specific
and unique use of the Premises by Lessee (such as, governmentally mandated
seismic modifications), then Lessor shall pay for such Capital Expenditure and
Lessee shall only be obligated to pay, each month during the remainder of the
term of this Lease or any extension thereof, on the date that on which the Base
Rent is due, an amount equal to 1/144th of the portion of such costs reasonably
attributable to the Premises. Lessee shall pay Interest on the balance but may
prepay its obligation at any time. If, however, such Capital Expenditure is
required during the last 2 years of this Lease or if lessor reasonably
determines that it is not economically feasible to pay its share thereof, Lessor
shall have the option to terminate this Lease upon 90 days prior written notice
to Lessee unless Lessee notifies Lessor, in writing, within 10 days after
receipt of Lessor's termination notice that Lessee will pay for such Capital
Expenditure. If Lessor does not elect to terminate, and fails to tender its
share of any such Capital Expenditure, Lessee may advance such funds and deduct
same, with Interest, from Rent until Lessor's share of such costs have been
fully paid. If Lessee is unable to finance Lessor's share, or if the balance of
the Rent due and payable for the remainder of this Lease is not sufficient to
fully reimburse Lessee on an offset basis, Lessee shall have the right to
terminate this Lease upon 30 days written notice to Lessor. (c) Notwithstanding
the above, the provisions concerning Capital Expenditures are intended to apply
only to non-voluntary, unexpected, and new Applicable Requirements. If the
Capital Expenditures are instead triggered by Lessee as a result of an actual or
proposed change in use, change in intensity of use, or modification to the
Premises then, and in that event, Lessee shall either : (i) immediately cease
such changed use or intensity of use and/or take such other steps as may be
necessary to eliminate the requirement for such Capital Expenditure, or (ii)
complete such Capital Expenditure at its own expense. Lessee shall not have any
right to terminate this Lease. 2.4 Acknowledgements. Lessee acknowledges that:
(a) it has been given an opportunity to inspect and measure the Premises, (b) it
has been advised by Lessor and/or Brokers to satisfy itself with respect to the
size and condition of the Premises (Including but not limited to the electrical,
HVAC and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements and the Americans with Disabilities Act), and their
suitability for Lessee's intended use, (c) Lessee has made such investigation as
it deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to its occupancy of the Premises, (d) it is not
relying on any representation as to the size of the Premises made by Brokers or
Lessor, (e) the square footage of the Premises was not material to Lessee's
decision to lease the Premises and pay the Rent stated herein, and (f) neither
Lessor, Lessor's agents, nor Brokers have made any oral or written
representations or warranties with respect to said matters other than as set
forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have
made no representations, promises or warranties concerning Lessee's ability to
honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor's
sole responsibility to investigating the financial capability and/or suitability
of all proposed tenants. 2.5 Lessee as Prior Owner/Occupant. The warranties made
by Lessor in Paragraph 2 shall be of no force or effect if immediately prior to
the Start Date Lessee was the owner or occupant of the Premises. In such event,
Lessee shall be responsible for

 

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any necessary corrective work. 2.6 Vehicle Parking. Lessee shall be entitled to
use the number of Parking Spaces specified in Paragraph 1.2(b) on those portions
of the Common Areas designated from time to time by Lessor for parking. Lessee
shall not use more parking spaces than said number. Said parking spaces shall be
used for parking by vehicles no larger than full-size passenger automobiles or
pick-up trucks, herein called "Permitted Size Vehicles." Lessor may regulate the
loading and unloading of vehicles by adopting Rules and Regulations as provided
in Paragraph 2.9. No vehicles other than Permitted Size Vehicles may be parked
in the Common Area without the prior written permission of Lessor. In addition:
(a) Lessee shall not permit or allow any vehicles that belong to or are
controlled by Lessee or Lessee's employees, suppliers, shippers, customers,
contractors or invitees to be loaded, unloaded, or parked in areas other than
those designated by Lessor for such activities. (b) Lessee shall not service or
store any vehicles in the Common Areas,  (c) If Lessee permits or allows any of
the prohibited activities described in this Paragraph 2.6, then Lessor shall
have the right, without notice, in addition to such other rights and remedies
that it may have, to remove or tow away the vehicle involved and charge the cost
to Lessee, which cost shall be immediately payable upon demand by Lessor. 2.7
Common Areas- Definition. The term "Common Areas" is defined as all areas and
facilities outside the Premises and within the exterior boundary line of the
Project and interior utility raceways and installations within the Unit that are
provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other tenants of the Project and their
respective employees, suppliers, shippers, customers, contractors and invitees,
including parking areas, loading and unloading areas, trash areas, roofs,
roadways, walkways, driveways and landscaped areas. 2.8 Common Areas- Lessee's
Rights. Lessor grants to Lessee, for the benefit of Lessee and its employees,
suppliers, shippers, contractors ,customers and invitees, during the term of
this Lease, the non-exclusive right to use, in common with others entitled to
such use, the Common Areas as they exist from time to time, subject to any
rights, powers, and privileges reserved by Lessor under the terms hereof or
under the terms of any rules and regulations or restrictions governing the use
of the Project. Under no circumstances shall the right herein granted to use the
Common Areas be deemed to include the right to store any property, temporarily
or permanently, in the Common Areas. Any such storage shall be permitted only by
the prior written consent of Lessor or Lessor's designated agent, which consent
may be revoked at any time. In the event that any unauthorized storage shall
occur, then Lessor shall have the right, without notice, in addition to such
other rights and remedies that it may have, to remove the property and charge
the cost to Lessee, which cost shall be immediately payable upon demand by
Lessor. 2.9 Common Areas- Rules and Regulations. Lessor or such other person(s)
as Lessor may appoint shall have the exclusive control and management of the
Common Areas and shall have the right. from time to time, to establish, modify,
amend and enforce reasonable rules and regulations ("Rules and Regulations") for
the management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Project and
their invitees. Lessee agrees to abide by and conform to all such Rules and
Regulations, and shall use its best efforts to cause its employees, suppliers,
shippers, customers, contractors and invitees to so abide and conform. Lessor
shall not be responsible to Lessee for the non-compliance with said Rules and
Regulations by other tenants of the Project. 2.10 Common Areas- Changes. Lessor
shall have the right, in Lessor's sole discretion, from time to time: (a) To
make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of driveways, entrances, parking spaces,
parking areas, loading and unloading areas, ingress, egress, direction of
traffic, landscaped areas, walkways and utility raceways; (b) To close
temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available; (c) To designate other land
outside the boundaries of the Project to be a part of the Common Areas; (d) To
add additional buildings and improvements to the Common Areas; (e) To use the
Common Areas while engaged in making additional improvements, repairs or
alterations to the Project, or any portion thereof; and (f) To do and perform
such other acts and make such other changes in, to or with respect to the Common
Areas and Project as Lessor may, in the exercise of sound business judgment,
deem to be appropriate. 3 Term. 3.1 Term. The Commencement Date, Expiration Date
and Original Term of this Lease are as specified in Paragraph 1.3. 3.2 Early
Possession. Any provision herein granting Lessee Early Possession of the
Premises is subject to and conditioned upon the Premises being available for
such possession prior to the Commencement Date. Any grant of Early Possession
only conveys a non-exclusive right to occupy the Premises. If Lessee totally or
partially occupies the Premises prior to the Commencement Date, the obligation
to pay Base Rent and Lessee's Share of Common Area Operating Expenses. Real
Property Taxes and insurance premiums shall be abated for the period of such
Early Possession. All other terms of this Lease (including but not limited to
the obligations to pay Lessee’s Share of Common Area Operating Expenses, Real
Property Taxes and insurance premiums and maintain the Premises) shall be in
effect during such period. Any such Early Possession shall not affect the
Expiration Date. 3.3 Delay In Possession. Lessor agrees to use its best
commercially reasonable efforts to deliver possession of the Premises to Lessee
by the Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession by such date, Lessor shall not be subject to any liability therefor,
nor shall such failure; affect the validity of this Lease or change the
Expiration Date Lessee shall not, however, be obligated to pay Rent or perform
its other obligations until Lessor delivers possession of the Premises and any
period of rent abatement that Lessee would otherwise have enjoyed shall run from
the date of delivery of possession and continue for a period equal to what
Lessee would otherwise have enjoyed under the term s here of, but minus any days
of delay caused by the acts or omissions of Lessee. If possession is not
delivered within 90 60 days after the Commencement Date. as the same may be
extended under the terms of any Work Letter executed by Parties, Lessee may, at
its option, by notice in writing within 10 days after I the end of such 90 60
days period, cancel this Lease, in which event the Parties shall be discharged
from all obligations hereunder. If such written notice is not received by Lessor
within said 10 day period, Lessee's right to cancel shall terminate. If
possession of the Premises is not delivered within 120 days after the
Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing. 3.4 Lessee Compliance. Lessor
shall not be required to tender possession of the Premises to Lessee until
Lessee complies with obligation to provide evidence of insurance (Paragraph
8.5). Pending delivery of such evidence. Lessee shall be required to perform all
of its obligations under this Lease from and after the Start Date, including the
payment of Rent, notwithstanding Lessor's election to withhold possession
pending receipt of such evidence of insurance. Further, if Lessee Is required to
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conditions prior to or concurrent with the Start Date, the Start Date shall
occur but Lessor may elect to withhold possession until such conditions are
satisfied. 4. Rent. 4.1 Rent Defined. All monetary obligations of Lessee to
Lessor under the terms of this Lease (except for the Security Deposit) are
deemed to be rent ("Rent"). All rent shall be payable to SR22 Carlsbad Oaks
Distribution, LLC, at the address sel forth below its signature to this Lease,
unless changed in accordance with Paragraph 23. 4.2 Common Area Operating
Expenses. Lessee shall pay to Lessor during the term hereof, in addition to the
Base Rent, Lessee's Share (as specified in Paragraph 1.6) of all Common Area
Operating Expenses, as hereinafter defined, during each calendar year of the
term of this Lease, in accordance with the following provisions: (a) "Common
Area Operating Expenses" are defined, for purposes of this Lease, as all costs
relating to the ownership and operation of the Project, including, but not
limited to, the following: (i) The operation, repair and maintenance, in neat,
clean, good order and condition, and if necessary the replacement, of the
following: (aa) The Common Areas and Common Area improvements, including parking
areas, loading and unloading areas, trash areas, roadways, parkways, walkways,
driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting
facilities, fences and gates, elevators, roofs, exterior walls of the buildings,
building systems and roof drainage systems. (bb) Exterior signs and any tenant
directories. (cc) Any tire sprinkler systems. (dd) All other areas and
improvements that are within the exterior boundaries of the Project but outside
of the Premises and/or any other space occupied by a tenant. (ii)  The cost of
water, gas, electricity and telephone to service the Common Areas and any
utilities not separately metered. (iii) The cost of trash disposal, pest control
services, property management (equal to 3% of scheduled Base Rent. without
giving effect to any abatements. and Lessee's Share of Common Area Operating
Expenses), security services, owners' association dues and fees, the cost to
repaint the exterior of any structures and the cost of any environmental
inspections. (iv) Reserves set aside for maintenance, repair and/or replacement
of Common Area improvements and equipment. (v) Real Property Taxes (as defined
in Paragraph 10). (vi) The cost of the premiums for the insurance maintained by
Lessor pursuant to Paragraph 8. (vii) Any deductible portion of an insured loss
concerning the Building or the Common Areas. (viii) Auditors', accountants' and
attorneys' fees and costs related to the operation, maintenance, repair and
replacement of the Project. (ix) The cost of any capital improvement to the
Building or the Project not covered under the provisions of Paragraph 2.3
provided; however, that lessor shall allocate the cost of any such capital
improvement over a 12 year period and lessee shall not be required to pay more
than lessee's Share of 1/144th of the cost of such capital improvement in any
given month. (x) The cost of any other services to be provided by lessor that
are stated elsewhere in this Lease to be a Common Area Operating Expense. (b)
Any Common Area Operating Expenses and Real Property Taxes that are specifically
attributable to the Unit, the Building or to any other building in the Project
or to the operation, repair and maintenance thereof, shall be allocated entirely
to such Unit, Building, or other building. However, any Common Area Operating
Expenses and Real Property Taxes that are not specifically attributable to the
Building or to any other building or to the operation, repair and maintenance
thereof, shall be equitably allocated by lessor to all buildings in the Project.
(c) The inclusion of the improvements, facilities and services set forth in
Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to
either have said improvements or facilities or to provide those services unless
the Project already has the same, Lessor already provides the services, or
Lessor has agreed elsewhere in this Lease to provide the same or some of them.
(d) lessee's Share of Common Area Operating Expenses is payable monthly on the
same day as the Base Rent is due hereunder. The amount of such payments shall be
based on Lessor's estimate of the annual Common Area Operating Expenses. Within
180 days after the expiration of each calendar year of the term written request
(but not more than once each year) Lessor shall deliver to Lessee a reasonably
detailed statement showing lessee's Share of the actual Common Area Operating
Expenses for the preceding year. If lessee's payments during such year exceed
lessee's Share, Lessor shall credit the amount of such over-payment against
Lessee's future payments or. if no future payments are remaining, Lessor shall
pay to Lessee the amount of such overpayment within 10 days after delivery by
Lessor to Lessee of the statement. If lessee's payments during such year were
less than Lessee's Share, lessee shall pay to lessor the amount of the
deficiency within 10 days after delivery by Lessor to Lessee of the statement.
(e) Common Area Operating Expenses shall not include any expenses paid by any
tenant directly to third parties, or as to which lessor is otherwise reimbursed
by any third party, other tenant, or insurance proceeds. 4.3 Payment. lessee
shall cause payment of Rent to be received by Lessor in lawful money of the
United States, without offset or deduction (except as specifically permitted in
this Lease), on or before the day an which it is due. All monetary amounts shall
be rounded to the nearest whole dollar. In the event that any invoice prepared
by Lessor is inaccurate such inaccuracy shall not constitute a waiver and lessee
shall be obligated to pay the amount set forth in this lease. Rent for any
period during the term hereof which Is for less than one full calendar month
shall be prorated based upon the actual number of days of said month. Payment of
Rent shall be made to Lessor at its address stated herein or to such other
persons or place as lessor may from time to time designate in writing.
Acceptance of a payment which is less than the amount then due shall not be a
waiver of lessor's rights to the balance of such Rent, regardless of lessor's
endorsement of any check so stating. In the event that any check, draft, or
other instrument of payment given by Lessee to Lessor is dishonored for any
reason, Lessee agrees to pay to lessor the sum of $25 in addition to any Late
Charge and Lessor, at its option, may require all future Rent be paid by
cashier's check. Payments will be applied first to accrued late charges and
attorney's fees, second to accrued interest, then to Base Rent and Common Area
Operating Expenses, and any remaining amount to any other outstanding charges or
costs. 5. Security Deposit. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit as security for Lessee’s faithful  

 

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performance of its obligations under this Lease. If Lessee fails to pay Rent, or
otherwise Defaults under this Lease, Lessor may use, apply or retain all or any
portion of said Security Deposit for the payment of any amount already due
Lessor, for Rents which will be due in the future, and/ or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefor deposit monies with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. If the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional monies with Lessor so that the total amount of the Security Deposit
shall at all times bear the same proportion to the increased Base Rent as the
initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor's reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor's reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on such change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within 90 days after the expiration or termination of this
Lease, Lessor shall return that portion of the Security Deposit not used or
applied by Lessor. Lessor shall upon written request provide Lessee with an
accounting showing how that portion of the Security Deposit that was not
returned was applied. No part of the Security Deposit shall be considered to be
held in trust, to bear interest or to be prepayment for any monies to be paid by
Lessee under this Lease. THE SECURITY DEPOSIT SHALL NOT BE USED BY LESSEE IN
LIEU OF PAYMENT OF THE LAST MONTH'S RENT. 6. Use. 6.1 Use. Lessee shall use and
occupy the Premises only for the Agreed Use, or any other legal use which is
reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful, creates damage,
waste or a nuisance, or that disturbs occupants of or causes damage to
neighboring premises or properties. Other than service guide, single and seeing
eye dogs, lessee shall not keep or allow in the. Premises any pets, animals,
birds, fish, or reptiles. Lessor shall not unreasonably withhold or delay its
consent to any written request for a modification of the Agreed Use, so long as
the same will not impair the structural integrity of the Building or the
mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Project. If Lessor elects to withhold consent, Lessor shall
within 7 days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in the Agreed
Use. 6.2 Hazardous Substances. (a) Reportable Uses Require Consent. The term
"Hazardous Substance" as used in this Lease shall mean any product, substance,
or waste whose presence, use, manufacture, disposal, transportation, or release,
either by itself or in combination with other materials expected to be on the
Premises, is either:(i) potentially injurious to the public health, safety or
welfare, the environment or the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for potential liability of Lessor to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substances shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products
or fractions thereof. Lessee shall not engage in any activity in or on the
Premises which constitutes a Reportable Use of Hazardous Substances without the
express prior written consent of Lessor and timely compliance (at Lessee's
expense) with all Applicable Requirements. "Reportable Use" shall mean (i) the
installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a Hazardous
Substance that requires a permit from, or with respect to which a report,
notice, registration or business plan is required to be filed with, any
governmental authority, and/or (iii) the presence at the Premises of a Hazardous
Substance with respect to which any Applicable Requirements requires that a
notice be given to persons entering or occupying the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may use any ordinary and
customary materials reasonably required to be used in the normal course of the
Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.)
and common household cleaning materials, so long as such use is in compliance
with all Applicable Requirements, is not a Reportable Use, and does not expose
the Premises or neighboring property to any meaningful risk of contamination or
damage or expose lessor to any liability therefor. In addition, lessor may
condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public,
the Premises and/or the environment against damage, contamination, injury and/or
liability, including, but not limited to, the installation (and removal on or
before Lease expiration or termination) of protective modifications (such as
concrete encasements) and/or increasing the Security Deposit. (b) Duty to Inform
Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous
Substance has come to be located in, on, under or about the Premises, other than
as previously consented to by Lessor, Lessee shall immediately give written
notice of such fact to Lessor, and provide Lessor with a copy of any report,
notice, claim or other documentation which it has concerning the presence of
such Hazardous Substance. (c) Lessee Remediation. Lessee shall not cause or
permit any Hazardous Substance to be spilled or released in, on, under, or about
the Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, comply with all Applicable Requirements and take
all investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or its agents, employees or
invitees. any third party (d) Lessee Indemnification. Lessee shall indemnify,
defend and hold Lessor, its agents, employees, lenders and ground lessor, if
any, harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, claims, expenses, penalties, and attorneys' and
consultants' fees arising out of or Involving any Hazardous Substance brought
onto the Premises by or for Lessee, or its agents, employees or invitees any
third party (provided, however, that Lessee shall have no liability under this
Lease with respect to underground migration of any Hazardous Substance under the
Premises from areas outside of the Project not caused or contributed to by
Lessee). Lessee's obligations shall include, but not be limited to, the effects
of any contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances, unless specifically so agreed by Lessor in
writing at the time of such agreement. (e) Lessor Indemnification. Except as
otherwise provided in paragraph 8.7, Lessor and its successors and assigns shall
identify, defend, reimburse and hold Lessee, its employees and lenders, harmless
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damages, including the cost of remediation, liabilities, judgments, claim,
expenses, penalties and attorneys' and consultants' fees which are suffered as a
direct result of Hazardous Substances on the Premises prior to Lessee taking
possession or which are caused by the gross negligence or willful misconduct of
Lessor, its agents or employees. Lessor's obligations, as and when required by
the Applicable Requirements, shall include, but not be limited to, the cost of
investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease. (f) Investigations and
Remediations. Lessor shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having
jurisdiction with respect to the existence of Hazardous Substances on the
Premises prior to the Lessee taking possession, unless such remediation measure
is required as a result of Lessee's use (including "Alterations", as defined in
paragraph 7.3(a) below) of the Premises, in which event Lessee shall be
responsible for such payment . Lessee shall cooperate fully in any such
activities at the request of lessor, including allowing lessor and lessor's
agents to have reasonable access to the Premises at reasonable times in order to
carry out Lessor's investigative and remedial responsibilities. (g) Lessor
Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e))
occurs during the term of this Lease, unless Lessee is legally responsible
therefor (in which case Lessee shall make the investigation and remediation
thereof required by the Applicable Requirements and this Lease shall continue in
full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue in full
force and effect, or (ii) if the estimated cost to remediate such condition
exceeds 12 times the then monthly Base Rent or $100,000, whichever is greater,
give written notice to Lessee, within 30 days after receipt by lessor of
knowledge of the occurrence of such Hazardous Substance Condition, of Lessor's
desire to terminate this Lease as of the date 60 days following the date of such
notice. In the event Lessor elects to give a termination notice, Lessee may,
within 10 days thereafter, give written notice to Lessor of Lessee's commitment
to pay the amount by which the cost of the remediation of such Hazardous
Substance Condition exceeds an amount equal to 12 times the then monthly Base
Rent or $100,000, whichever is greater. Lessee shall provide lessor with said
funds or satisfactory assurance thereof within 30 days following such
commitment. In such event, this lease shall continue in full force and effect,
and Lessor shall proceed to make such remediation as soon as reasonably possible
after the required funds are available. If Lessee does not give such notice and
provide the required funds or assurance thereof within the time provided, this
lease shall terminate as of the date specified in Lessor's notice of
termination. 6.3 lessee's Compliance with Applicable Requirements. Except as
otherwise provided in this Lease, lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
Applicable Requirements are now in effect or become effective after the Start
Date . Lessee shall, within 10 days after receipt of Lessor's written request,
provide Lessor with copies of all permits and other documents, and other
information evidencing Lessee's compliance with any Applicable Requirements
specified by Lessor, and shall immediately upon receipt, notify Lessor in
writing (with copies of any documents involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to or involving
the failure of Lessee or the Premises to comply with any Applicable
Requirements. likewise, Lessee shall immediately give written notice to lessor
of: (i) any water damage to the Premises and any suspected seepage, pooling,
dampness or other condition conducive to the production of mold; or (ii) any
mustiness or other odors that might indicate the presence of mold In the
Premises. 6.4 Inspection; Compliance. Lessor and Lessor 's "Lender" (as defined
in Paragraph 30) and consultants authorized by lessor shall have the right to
enter into Premises at any time, in the case of an emergency, and otherwise at
reasonable times after reasonable notice, for the purpose of inspecting and/or
testing the condition of the Premises and/or for verifying compliance by Lessee
with this Lease. The cost of any such inspections shall be paid by Lessor,
unless a violation of Applicable Requirements, or a Hazardous Substance
Condition (see Paragraph 9.1) is found to exist or be imminent, or the
Inspection is requested or ordered by a governmental authority. In such case,
Lessee shall upon request reimburse Lessor for the cost of such inspection, so
long as such inspection is reasonably related to the violation or contamination.
In addition, Lessee shall provide copies of all relevant material safety data
sheets (MSDS) to Lessor within 10 days of the receipt of written request
therefor. Lessee acknowledges that any failure on its part to allow such
inspections or testing will expose Lessor to risks and potentially cause Lessor
to incur costs not contemplated by this Lease, the extent of which will be
extremely difficult to ascertain. Accordingly, should the Lessee fail to allow
such inspections and/or testing in a timely fashion the Base Rent shall be
automatically increased, without any requirement for notice to Lessee, by an
amount equal to 10% of the then existing Base Rent or $100, whichever is greater
for the remainder to the Lease. The Parties agree that such Increase in Base
Rent represents fair and reasonable compensation for the additional risk/costs
that Lessor will incur by reason of Lessee's failure to allow such Inspection
and/or testing. Such increase in Base Rent shall in no event constitute a waiver
of Lessee's Default or Breach with respect to such failure nor prevent the
exercise of any of the other rights and remedies granted hereunder. 7.
Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations. 7.1
Lessee's Obligations. (a) In General. Subject to the provisions of Paragraph 2
.2 (Condition). 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations). 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations (intended for Lessee's exclusive use, no matter where
located), and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to lessee, and whether or not the
need for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including, but not limited
to, all equipment or facilities, such as plumbing, HVAC equipment, electrical,
lighting facilities, boilers, pressure vessels, fixtures, interior walls,
Interior surfaces of exterior walls, ceilings, floors (including floor
coverings). windows, doors, plate glass, and skylights but -excluding any items
which are the responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices, specifically including the procurement and
maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee's obligations shall include restorations. replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair. (b) Service Contracts. Lessee shall,
at Lessee's sole expense, procure and maintain contracts, with copies to Lessor,
in customary form and substance for, and with contractors specializing and
experienced in the maintenance of the following equipment and improvements, if
any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler and
pressure vessels, and (iii) clarifiers. However, Lessor reserves the right, upon
notice to Lessee, to procure and maintain any or all of such service contracts,
and Lessee shall reimburse Lessor, upon demand, for the cost thereof.  Initials
2017 AIR CRE. All Rights Reserved.  Initials  Page 6 of 20 Last Edited:
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(c) Failure to Perform. If lessee fails to perform lessee's obligations under
this Paragraph 7 .1, Lessor may enter upon the Premises after 10 days' prior
written notice to Lessee (except in the case of an emergency, in which case no
notice shall be required), perform such obligations on lessee's behalf, and put
the Premises in good order, condition and repair, and lessee shall promptly pay
to Lessor a sum equal to 115% of the cost thereof. (d) Replacement. Subject to
Lessee's indemnification of Lessor as set forth in Paragraph 8.7 below, and
without relieving Lessee of liability resulting from Lessee's failure to
exercise and perform good maintenance practices, if an item described in
Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of
50% of the cost of replacing such item, then such item shall be replaced by
Lessor, and the cost thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the remainder of the term of
this lease, on the date on which Base Rent is due, an amount equal to the
product of multiplying the cost of such replacement by a fraction, the numerator
of which is one, and the denominator of which is 144 (i.e. l/144th of the cost
per month). Lessee shall pay Interest on the unamortized balance but may prepay
its obligation at any time. 7.2 Lessor's Obligations. Subject to the provisions
of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating
Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14
(Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2,
shall keep in good order, condition and repair the foundations, exterior walls,
structural condition of interior bearing walls, exterior roof, fire sprinkler
system, Common Area fire alarm and/or smoke detection systems, fire hydrants,
parking lots, walkways, parkways, driveways, landscaping, fences, signs and
utility systems serving the Common Areas and all parts thereof, as well as
providing the services for which there is a Common Area Operating Expense
pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the exterior
or interior surfaces of exterior walls nor shall Lessor be obligated to
maintain, repair or replace windows, doors or plate glass of the Premises. 7.3
Utility Installations; Trade Fixtures; Alterations. (a) Definitions. The term
"Utility Installations" refers to all floor and window coverings, air and/or
vacuum lines, power panels, electrical distribution, security and fire
protection systems, communication cabling, lighting fixtures, HVAC equipment,
plumbing, and fencing in or on the Premises. The term "Trade Fixtures" shall
mean lessee's machinery and equipment that can be removed without doing material
damage to the Premises. The term "Alterations" shall mean any modification of
the improvements, other than Utility Installations or Trade Fixtures, whether by
addition or deletion. "Lessee Owned Alterations and/or Utility Installations"
are defined as Alterations and/or Utility Installations made by lessee that are
not yet owned by Lessor pursuant to Paragraph 7.4(a). (b) Consent. Lessee shall
not make any Alterations or Utility Installations to the Premises without
Lessor's prior written consent. Lessee may, however, make non-structural
Alterations or Utility Installations to the interior of the Premises (excluding
the roof) without such consent but upon notice to Lessor, as long as they are
not visible from the outside, do not involve puncturing, relocating or removing
the roof or any existing walls, will not affect the electrical, plumbing, HVAC,
and/or life safety systems, do not trigger the requirement for additional
modifications and/or improvements to the Premises resulting from Applicable
Requirements, such as compliance with Title 24, and/or life safety systems, and
the cumulative cost thereof during this Lease as extended does not exceed a sum
equal to 3 month's Base Rent in the aggregate or a sum equal to one month's Base
Rent in any one year. Notwithstanding the foregoing, Lessee shall not make or
permit any roof penetrations and/or install anything on the roof without the
prior written approval of Lessor. Lessor may, as a precondition to granting such
approval, require Lessee to utilize a contractor chosen and/or approved by
Lessor. Any Alterations or Utility Installations that Lessee shall desire to
make and which require the consent of the Lessor shall be presented to Lessor in
written form with detailed plans. Consent shall be deemed conditioned upon
Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing
Lessor with copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications. For work which costs an
amount in excess of one month's Base Rent, lessor may condition its consent upon
Lessee providing a lien and completion bond in an amount equal to 150% of the
estimated cost of such Alteration or Utility Installation and/or upon Lessee's
posting an additional Security Deposit with Lessor. (c) Liens; Bonds. Lessee
shall pay, when due, all claims for labor or materials furnished or alleged to
have been furnished to or for Lessee at or for use on the Premises, which claims
are or may be secured by any mechanic's or materialmen's lien against the
Premises or any interest therein. Lessee shall give Lessor not less than 10 days
notice prior to the commencement of any work in, on or about the Premises, and
lessor shall have the right to post notices of non-responsibility. If lessee
shall contest the validity of any such lien, claim or demand, then Lessee shall,
at its sole expense defend and protect itself, Lessor and the Premises against
the same and shall pay and satisfy any such adverse judgment that may be
rendered thereon before the enforcement thereof. If Lessor shall require, Lessee
shall furnish a surety bond in an amount equal to 150% of the amount of such
contested lien, claim or demand, indemnifying lessor against liability for the
same. IF lessor elects to participate in any such action, Lessee shall pay
Lessor's attorneys' Fees and costs. 7.4 Ownership; Removal; Surrender; and
Restoration. (a) Ownership. Subject to lessor's right to require removal or
elect ownership as hereinafter provided, all Alterations and Utility
Installations made by lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of lessor and be surrendered by
lessee with the Premises. (b) Removal. By delivery to Lessee of written notice
from Lessor not earlier than 90 and not later than 30 days prior to the end of
the term of this Lease, Lessor may require that any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or termination
of this lease. lessor may require the removal at any time of all or any part of
any lessee Owned Alterations or Utility Installations made without the required
consent. (c) Surrender; Restoration, lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. "Ordinary
wear and tear" shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if
the Lessee occupies the Premises for 12 months or less, then Lessee shall
surrender the Premises in the same condition as delivered to Lessee on the Start
Date with NO allowance for ordinary wear and tear. Lessee shall repair any
damage occasioned by the installation, maintenance or removal of Trade Fixture,
Lessee owned Alterations and/or Utility Installations, furnishings, and
equipment as well as the removal of any storage tank installed by or for lessee.
lessee shall also remove from the Premises any and all Hazardous Substances
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the Premises by or for Lessee, or its agents, employees or invitees any third
party (except Hazardous Substances which were deposited via underground
migration from areas outside of the Project) to the level specified in
Applicable Requirements. Trade Fixtures shall remain the property of Lessee and
shall be removed by Lessee. Any personal property of Lessee not removed on or
before the Expiration Date or any earlier termination date shall be deemed to
have been abandoned by Lessee and may be disposed of or retained by Lessor as
Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant
to this Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph 26 below. 8.Insurance;
Indemnity. 8.1 Payment of Premiums. The cost of the premiums for the insurance
policies required to be carried by lessor, pursuant to Paragraphs 8.2(b), 8.3(a)
and 8.3(b), shall be a Common Area Operating Expense. Premiums for policy
periods commencing prior to, or extending beyond, the term of this lease shall
be prorated to coincide with the corresponding Start Date or Expiration Date.
8.2 Liability Insurance. (a) Carried by lessee. Lessee shall obtain and keep in
force a Commercial General Liability policy of insurance protecting Lessee and
Lessor as an additional insured against claims for bodily injury, personal
injury, owned/non-owned/hired auto liability and property damage based upon or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not less than $1,000,000 per
occurrence with an annual aggregate of not less than $2.000,000 Lessee shall add
Lessor as an additional insured by means of an endorsement at least as broad as
the Insurance Service Organization's "Additional Insured-Managers and
or'-Lessors of Premises" Endorsement. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this lease as an "insured contract"
for the performance of Lessee's indemnity obligations under this Lease. The
limits of said insurance shall not, however, limit the liability of Lessee nor
relieve Lessee of any obligation hereunder. Lessee shall provide an endorsement
on its liability policy(ies) which provides that its insurance shall be primary
to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only. (b) Carried by Lessor.
Lessor shall maintain liability insurance as described in Paragraph 8.2(a), in
addition to, and not in lieu of, the insurance required to be maintained by
lessee. Lessee shall not be named as an additional insured therein. 8.3 Property
Insurance- Building, Improvements and Rental Value. (a) Building and
Improvements. lessor shall obtain and keep in force a policy or policies of
insurance in the name of Lessor, with loss payable to Lessor, any ground-lessor,
and to any Lender insuring loss or damage to the Premises. The amount of such
insurance shall be equal to the full insurable replacement cost of the Premises,
as the same shall exist from time to time, or the amount required by any Lender,
but in no event more than the commercially reasonable and available insurable
value thereof. Lessee Owned Alterations and Utility Installations, Trade
Fixtures, and Lessee's personal property shall be insured by Lessee not by
Lessor. If the coverage is available and commercially appropriate, such policy
or policies shall insure against all risks of direct physical loss or damage
(except the perils of flood and/or earthquake unless required by a Lender),
including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement
of any portion of the Premises as the result of a covered loss Said policy or
policies shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located. If
such insurance coverage has a deductible clause, the deductible amount shall not
exceed $5,000 per occurrence. (b) Rental Value. Lessor shall also obtain and
keep in force a policy or policies in the name of Lessor with loss payable to
lessor and any Lender, insuring the loss of the full Rent for one year with an
extended period of indemnity for an additional180 days ("Rental Value
insurance"). Said insurance shall contain an agreed valuation provision in lieu
of any coinsurance clause, and the amount of coverage shall be adjusted annually
to reflect the projected Rent otherwise payable by Lessee, for the next 12 month
period. (c) Adjacent Premises. Lessee shall pay for any increase in the premiums
for the property insurance of the Building and for the Common Areas or other
buildings in the Project if said increase is caused by Lessee's acts, omissions,
use or occupancy of the Premises. (d) Lessee's Improvements. Since Lessor is the
Insuring Party, Lessor shall not be required to insure Lessee Owned Alterations
and Utility Installations unless the item in question has become the property of
lessor under the terms of this Lease. 8.4 Lessee's Property; Business
Interruption Insurance; Worker's Compensation Insurance. (a) Property Damage.
lessee shall obtain and maintain insurance coverage on all of lessee's personal
property, Trade Fixtures, and Lessee Owned Alterations and Utility
Installations. Such insurance shall be full replacement cost coverage with a
deductible of not to exceed $75,000 $1,000 per occurrence. The proceeds from any
such insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and lessee Owned Alterations and Utility Installations. (b)
Business Interruption. Lessee shall obtain and maintain loss of income and extra
expense insurance in amounts as will reimburse Lessee for direct or indirect
loss of earnings attributable to all perils commonly insured against by prudent
lessees in the business of Lessee or attributable to prevention of access to the
Premises as a result of such perils. (c) Worker's Compensation Insurance. Lessee
shall obtain and maintain Worker's Compensation Insurance in such amount as may
be required by Applicable Requirements. Such policy shall include a 'Waiver of
Subrogation' endorsement. Lessee shall provide Lessor with a copy of such
endorsement along with the certificate of insurance or copy of the policy
required by paragraph 8.5. (d) No Representation of Adequate Coverage. Lessor
makes no representation that the limits or forms of coverage of insurance
specified herein are adequate to cover Lessee's property, business operations or
obligations under this Lease. 8.5 Insurance Policies. Insurance required herein
shall be by companies maintaining during the policy term a "General
Policyholders Rating" of at least A-, VII, as set forth in the most current
issue of "Best's Insurance Guide", or such other rating as may be required by a
Lender. Lessee shall not do or permit to be done anything which invalidates the
required insurance policies. Lessee shall, prior to the Start Date, deliver to
Lessor certified copies of policies of such insurance or certificates with
copies of the required endorsements evidencing the existence and amounts of the
required insurance. No such policy shall be cancelable except after 10 days’
prior written notice to Lessor in event of nonpayment of premium. Additionally,
within five (5) business days of receipt of any notice of cancellation of
insurance, Lessee shall provide Lessor with a copy of such notice received from
an insurer together with proof of replacement coverage that complies with the
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insurance requirements of this Lease. Or subject to modification except after 30
days prior written notice to lessor. Lessee shall, at least 10 days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may increase his
liability insurance coverage and charge the cost thereof to Lessee, which amount
shall be payable by Lessee to Lessor upon demand. Such policies shall be for a
term of at least one year, or the length of the remaining term of this Lease,
whichever is less. If either Party shall fail to procure and maintain the
insurance required to be carried by it, the other Party may, but shall not be
required to, procure and maintain the same. 8.6 Waiver of Subrogation. Without
affecting any other rights or remedies, Lessee and Lessor each hereby release
and relieve the other, and waive their entire right to recover damages against
the other, for loss of or damage to its property arising out of or incident to
the perils required to be insured against herein. The effect of such releases
and waivers is not limited by the amount of insurance carried or required, or by
any deductibles applicable hereto. The Parties agree to have their respective
property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby. 8.7 Indemnity. Except for Lessor's gross
negligence or willful misconduct, Lessee shall indemnify, protect, defend and
hold harmless the Premises, Lessor and its agents, Lessor's master or ground
lessor, partners and Lenders, from and against any and all claims, loss of rents
and/or damages, liens, judgments, penalties, attorneys' and consultants' fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the use and/or occupancy of the Premises by lessee. If any action or proceeding
is brought against Lessor by reason of any of the foregoing matters, Lessee
shall upon notice defend the same at Lessee's expense by counsel reasonably
satisfactory to Lessor and lessor shall cooperate with Lessee in such defense.
Lessor need not have first paid any such claim in order to be defended or
indemnified. 8.8 Exemption of Lessor and its Agents from liability.
Notwithstanding the negligence or breach of this Lease by Lessor or its agents,
but without limiting Lessor's liability for any of its covenants, obligations or
warranties expressly set forth in the Lease (nor any of Lessee's releases and
waivers set forth in Paragraph 8.6), neither Lessor nor its agents shall be
liable under any circumstances for: (i) injury or damage to the person or goods,
wares, merchandise or other property of Lessee, Lessee's employees, contractors,
invitees, customers, or any other person in or about the Premises, whether such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, indoor air quality, the presence of mold or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building, or from other sources or
places, (ii) any damages arising from any act or neglect of any other tenant of
Lessor or from the failure of Lessor or its agents to enforce the provisions of
any other lease in the Project, or (iii) injury to Lessee's business or for any
loss of income or profit therefrom. Instead, it is intended that Lessee's sole
recourse in the event of such damages or injury be to file a claim on the
insurance policy(ies) that Lessee is required to maintain pursuant to the
provisions of paragraph 8. 8.9 Failure to Provide Insurance. Lessee acknowledges
that any failure on its part to obtain or maintain the insurance required herein
will expose Lessor to risks and potentially cause Lessor to incur costs not
contemplated by this Lease, the extent of which will be extremely difficult to
ascertain. Accordingly, for any month or portion thereof that Lessee does not
maintain the required insurance and/or does not provide Lessor with the required
binders or certificates evidencing the existence of the required insurance, the
Base Rent shall be automatically increased, without any requirement for notice
to Lessee, by an amount equal to 10% of the then existing Base Rent or $100,
whichever is greater. The parties agree that such increase in Base Rent
represents fair and reasonable compensation for the additional risk/costs that
Lessor will incur by reason of lessee's failure to maintain the required
insurance. Such increase in Base Rent shall in no event constitute a waiver of
Lessee's Default or Breach with respect to the failure to maintain such
insurance, prevent the exercise of any of the other rights and remedies granted
hereunder, nor relieve Lessee of its obligation to maintain the insurance
specified in this Lease. 9. Damage or Destruction. 9.1 Definitions. (a)
"Premises Partial Damage" shall mean damage or destruction to the improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations,
which can reasonably be repaired in 6 3 months or less from receipt of insurance
proceeds, the date of the damage or destruction, and the cost thereof does not
exceed a sum equal to 6 month's Base Rent. Lessor shall notify Lessee in writing
within 30 days from the date of the damage or destruction as to whether or not
the damage is Partial or Total. (b) "Premises Total Destruction" shall mean
damage or destruction to the improvements on the Premises, other than Lessee
Owned Alterations and Utility Installations and Trade Fixtures, which cannot
reasonably be repaired in 6 3 months or less from receipt of insurance proceeds
the date of the damage or destruction, and/or the cost thereof exceeds a sum
equal to 6 month's Base Rent. Lessor shall notify Lessee in writing within 30
days from the date of the damage or destruction as to whether or not the damage
is Partial or Total. (c) "Insured Loss" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), and for which insurance
proceeds are received (provided that the foregoing limitation shall not apply
unless Lessor has maintained the required insurance coverage), less irrespective
of any deductible amounts or coverage limits involved. (d) "Replacement Cost"
shall mean the cost to repair or rebuild the improvements owned by Lessor at the
time of the occurrence to their condition existing immediately prior thereto,
including demolition, debris removal and upgrading required by the operation of
Applicable Requirements, and without deduction for depreciation. (e) "Hazardous
Substance Condition" shall mean the occurrence or discovery of a condition
involving the presence of, or a contamination by, a Hazardous Substance, in, on,
or under the Premises which requires restoration. 9.2 Partial Damage- Insured
Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor
shall, at Lessor's expense (if Lessor receives insurance proceeds, provided that
the foregoing limitation shall not apply unless Lessor has maintained the
required insurance coverage), repair such damage (but not Lessee's Trade
Fixtures or Lessee Owned Alterations and Utility Installations) as soon as
reasonably possible and this Lease shall continue in full force and effect;
provided, however, that Lessee shall, at Lessor's election, make the repair of
any damage or destruction the total cost to repair of which is $10,000 or less,
and, in such event, Lessor shall make any applicable insurance proceeds
available to Lessee on a reasonable basis for that purpose. Notwithstanding the
foregoing, if the required insurance was not in force or the insurance proceeds
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sufficient to effect such repair, the Insuring Party shall promptly contribute
the shortage in proceeds as and when required to complete said repairs. In the
event, however, such shortage was due to the fact that, by reason of the unique
nature of the improvements, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the unique aspects of
the Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within 10 days following receipt of written notice
of such shortage and request therefor. If Lessor receives said funds or adequate
assurance thereof within said 10 day period, the party responsible for making
the repairs shall complete them as soon as reasonably possible and this Lease
shall remain in full force and effect. If such funds or assurance are not
received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this Lease
shall remain in full force and effect, or (ii) have this Lease terminate 30 days
thereafter. Lessee shall not be entitled to reimbursement of any funds
contributed by Lessee to repair any such damage or destruction. Premises Partial
Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party. 9.3 Partial Damage- Uninsured Loss. If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense (subject to reimbursement pursuant to Paragraph 4.2), in which
event this Lease shall continue in full force and effect, or (ii) terminate this
Lease by giving written notice to Lessee within 30 days after receipt by Lessor
of knowledge of the occurrence of such damage. Such termination shall be
effective 60 days following the date of such notice. In the event Lessor elects
to terminate this Lease, Lessee shall have the right within 10 days after
receipt of the termination notice to give written notice to Lessor of Lessee's
commitment to pay for the repair of such damage without reimbursement from
Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within 30 days after making such commitment. In such event this Lease
shall continue in full force and effect, and Lessor shall proceed to make such
repairs as soon as reasonably possible after the required funds are available.
If Lessee does not make the required commitment, this Lease shall terminate as
of the date specified in the termination notice. 9.4  Total Destruction.
Notwithstanding any other provision hereof, if a Premises Total Destruction
occurs, this Lease shall terminate 60 days following such Destruction. If the
damage or destruction was caused by the gross negligence or willful misconduct
of Lessee, Lessor shall have the right to recover Lessor's damages from Lessee,
except as provided in Paragraph 8.6. 9.5 Damage Near End of Term. If at any time
during the last 6 months of this Lease there is damage for which the cost to
repair exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may
terminate this Lease effective 60 days following the date of occurrence of such
damage by giving a written termination notice to Lessee within 30 days after the
date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at
that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b) providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is 10 days after Lessee's receipt of Lessor's written notice
purporting to terminate this Lease, or (ii) the day prior to the date upon which
such option expires. If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any shortage
in insurance proceeds, Lessor shall, at Lessor's commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during such period, then this Lease shall
terminate on the date specified in the termination notice and Lessee's option
shall be extinguished. 9.6 Abatement of Rent; Lessee's Remedies. (a) Abatement.
In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which Lessee is not responsible under this
Lease, the Rent payable by Lessee for the period required for the repair,
remediation or restoration of such damage shall be abated In proportion to the
degree to which Lessee's use of the Premises is impaired, but not to exceed the
proceeds received from the Rental Value insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no
liability for any such damage, destruction, remediation, repair or restoration
except as provided herein. (b) Remedies. If Lessor is obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful way,
such repair or restoration within 90 days after such obligation shall accrue,
Lessee may, at any time prior to the commencement of such repair or restoration,
give written notice to Lessor and to any Lenders of which Lessee has actual
notice, of Lessee's election to terminate this Lease on a date not less than 60
days following the giving of such notice. If Lessee gives such notice and such
repair or restoration is not commenced within 30 days thereafter, this Lease
shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within such 30 days, this Lease shall continue in full
force and effect. "Commence" shall mean either the unconditional authorization
of the preparation of the required plans, or the beginning of the actual work on
the Premises, whichever first occurs. 9.7 Termination; Advance Payments. Upon
termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an
equitable adjustment shall be made concerning advance Base Rent and any other
advance payments made by Lessee to Lessor. Lessor shall, in addition, return to
Lessee so much of Lessee's Security Deposit as has not been, or is not then
required to be, used by Lessor. 9.8 Waive Statutes. Lessor and Lessee agree that
the terms of the Lease shall govern the effect or any damage to or destruction
of the Premises with respect to termination of this Lease and hereby waive the
provisions of any present or future statute to the extent inconsistent herewith.
including, but not limited to. Section 1932(2) and 1933(4) of the California
Civil Code (as may be amended or supplemented from time to time). 10. Real
Property Taxes. 10.1 Definition. As used herein, the term "Real Property Taxes"
shall include any form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Project, Lessor's right
to other income therefrom, and/or Lessor's business of leasing, by any authority
having the direct or indirect power to tax and where the funds are generated
with reference to the Project address. The term "Real Property Taxes" shall also
include any tax, fee, levy, assessment or charge, or any increase therein: (i)
imposed by reason of events occurring during the term of this Lease, including
but not limited to, a change in the ownership of the Project, (ii) a change in
the improvements thereon, and/or (iii) levied or assessed on machinery or
equipment provided by Lessor to Lessee pursuant to this Lease. In calculating
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year, the Real Property Taxes for any real estate tax year shall be included in
the calculation of Real Property Taxes for such calendar year based upon the
number of days which such calendar year and tax year have in common. 10.2
Payment of Taxes. Except as otherwise provided in Paragraph 10.3, Lessor shall
pay the Real Property Taxes applicable to the Project, and said payments shall
be included in the calculation of Common Area Operating Expenses in accordance
with the provisions of Paragraph 4.2. 10.3 Additional Improvements. Common Area
Operating Expenses shall not include Real Property Taxes specified in the tax
assessor's records and work sheets as being caused by additional Improvements
placed upon the Project by other lessees or by Lessor for the exclusive
enjoyment of such other lessees. Notwithstanding Paragraph 10.2 hereof, Lessee
shall, however, pay to Lessor at the time Common Area Operating Expenses are
payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes
if assessed solely by reason of Alterations, Trade Fixtures or Utility
Installations placed upon the Premises by Lessee or at Lessee's request or by
reason of any alterations or improvements to the Premises made by lessor
subsequent to the execution of this Lease by the Parties. 10.4 Joint Assessment.
If the Building is not separately assessed, Real Property Taxes allocated to the
Building shall be an equitable proportion of the Real Property Taxes for all of
the land and improvements included within the tax parcel assessed, such
proportion to be determined by Lessor from the respective valuations assigned in
the assessor's work sheets or such other information as may be reasonably
available. Lessor's reasonable determination thereof, in good faith, shall be
conclusive. 10.5 Personal Property Taxes. Lessee shall pay prior to delinquency
all taxes assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises. When possible, Lessee shall cause its
Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately
from the real property or Lessor. If any of Lessee's said property shall be
assessed with Lessor's real property, Lessee shall pay Lessor the taxes
attributable to Lessee's property within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee's property. 11. Utilities
and Services. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. Notwithstanding the provisions of
Paragraph 4.2, if at any time in Lessor's sole judgment, Lessor determines that
Lessee is using a disproportionate amount of water, electricity or other
commonly metered utilities, or that Lessee is generating such a large volume of
trash as to require an increase in the size of the trash receptacle and/or an
increase in the number of times per month that it is emptied, then Lessor may
increase Lessee's Base Rent by an amount equal to such increased costs. There
shall be no abatement of Rent and Lessor shall not be liable in any respect
whatsoever for the inadequacy, stoppage, interruption or discontinuance of any
utility or service due to riot, strike, labor dispute, breakdown, accident,
repair or other cause beyond Lessor's reasonable control or in cooperation with
governmental request or directions. 12. Assignment and Subletting. 12.1 Lessor's
Consent Required. (a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or encumber (collectively, "assign or assignment") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent; provided that Lessor's consent shall not
be required for any assignment or sublease between Lessor and any entity
controlled by, controlling or under common control with Lessee (a "Lessee
Affiliate"). (b) Unless Lessee, or a Lessee Affiliate controlling Lessee, is a
corporation and its stock is publicly traded on a national stock exchange, a
change in the control of Lessee (or such Lessee Affiliate) shall constitute an
assignment requiring consent, provided that neither of the following
transactions or series of transactions shall constitute an assignment requiring
Lessor's consent: (i) an initial public offering of the stock of Lessee on a
national exchange; or (ii) a merger, sale acquisition or other transfer of
substantially all of Lessee's shares or assets which does not result in the Net
Worth of Lessee being reduced in excess of the maximum amount permitted pursuant
to Paragraph 12.1(c) below, as long as the. The surviving entity (if Lessee is
not the surviving entity) assumes the Lessee's obligations under this Lease.
Without limiting the foregoing, the transfer, on a cumulative basis, of 50% 25%
or more of the voting control of Lessee (provided that reasonable restrictions
placed on the transfer or Lessee's stock or voting control pursuant to a bona
fide financing transaction shall not be considered a transfer of voting control
for the purposes hereof) shall constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction. or series of
transactions (by way of merger, sale, acquisition, financing, transfer,
leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction , whichever was or is greater, shall be considered
an assignment of this Lease to which Lessor may withhold its consent. "Net Worth
of Lessee" shall mean the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles. (d)  An assignment
or subletting without Lessor's consent as required herein shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(d). or a non
curable Breach without the necessity of any notice and grace period. If Lessor
elects to treat such unapproved assignment or subletting as a non-curable
Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days
written notice, increase the monthly Base Rent to 110% of the Base Rent then in
effect. Further, in the event of such Breach and rental adjustment, (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to 110% of the price previously in effect, and
(ii} all fixed and non-fixed rental adjustments scheduled during the remainder
of the Lease term shall be increased to 110% of the scheduled adjusted rent. (e)
Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be limited to
compensatory damages and/or injunctive relief. (f) Lessor may reasonably
withhold consent to a proposed assignment or subletting if Lessee is in Default
at the time consent is requested. (g) Notwithstanding the Foregoing, allowing a
de minimis portion of the Premises, i.e. 20 square feet or less, to be used by a
third party vendor in connection with the installation of a vending machine or
payphone shall not constitute a subletting. 12.2 Terms and Conditions Applicable
to Assignment and Subletting. (a) Regardless of Lessor's consent, no assignment
or subletting shall: (i) be effective without the express written INITIALS 2017
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assumption by such assignee or sublessee of the obligations of Lessee under this
Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the
primary liability of Lessee for the payment of Rent or for the performance of
any other obligations to be performed by Lessee. (b) Lessor may accept Rent or
performance of Lessee's obligations from any person other than Lessee pending
approval or disapproval of an assignment. Neither a delay in the approval or
disapproval of such assignment nor the acceptance of Rent or performance shall
constitute a waiver or estoppel of Lessor's right to exercise its remedies for
Lessee's Default or Breach. (c) Lessor's consent to any assignment or subletting
shall not constitute a consent to any subsequent assignment or subletting. (d)
In the event of any Default or Breach by Lessee, Lessor may proceed directly
against Lessee, any Guarantors or anyone else responsible for the performance of
Lessee's obligations under this Lease, including any assignee or sublessee,
without first exhausting Lessor's remedies against any other person or entity
responsible therefor to Lessor, or any security held by Lessor. (e) Each request
for consent to an assignment or subletting shall be in writing, accompanied by
information relevant to Lessor's determination as to the financial and
operational responsibility and appropriateness of the proposed assignee or
sublessee, including but not limited to the intended use and/or required
modification of the Premises, if any, together with a fee of $500 as
consideration for Lessor's considering and processing said request. Lessee
agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested. (See also Paragraph 36) (f) Any
assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment, entering into such sublease ,or entering into possession of the
Premises or any portion thereof, be deemed to have assumed and agreed to conform
and comply with each and every term, covenant, condition and obligation herein
to be observed or performed by Lessee during the term of said assignment or
sublease, other than such obligations as are contrary to or inconsistent with
provisions of an assignment or sublease to which Lessor has specifically
consented to in writing. (g) Lessor's consent to any assignment or subletting
shall not transfer to the assignee or sublessee any Option granted to the
original Lessee by this Lease unless such transfer is specifically consented to
by Lessor in writing. (See Paragraph 39.2) 12.3 Additional Terms and Conditions
Applicable to Subletting. The following terms and conditions shall apply to any
subletting by Lessee of all or any part of the Premises and shall be deemed
included in all subleases under this Lease whether or not expressly incorporated
therein: (a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided, however,
that until a Breach shall occur in the performance of Lessee's obligations,
Lessee may collect said Rent. In the event that the amount collected by Lessor
exceeds Lessee's then outstanding obligations any such excess shall be refunded
to Lessee. Lessor shall not, by reason of the foregoing or any assignment of
such sublease, nor by reason of the collection of Rent, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee's
obligations to such sublessee. Lessee hereby irrevocably authorizes and directs
any such sublessee, upon receipt of a written notice from Lessor stating that a
Breach exists in the performance of Lessee's obligations under this Lease, to
pay to lessor all Rent due and to become due under the sublease. Sublessee shall
rely upon any such notice from Lessor and shall pay all Rents to Lessor without
any obligation or right to inquire as to whether such Breach exists,
notwithstanding any claim from Lessee to the contrary. (b) In the event of a
Breach by Lessee, Lessor may, at its option, require sublessee to attorn to
lessor, in which event Lessor shall undertake the obligations of the sublessor
under such sublease from the time of the exercise of said option to the
expiration of such sublease ; provided , however, lessor shall not be liable for
any prepaid rents or security deposit paid by such sublessee to such sublessor
or for any prior Defaults or Breaches of such sublessor. (c) Any matter
requiring the consent of the sublessor under a sublease shall also require the
consent of Lessor. (d) No sublessee shall further assign or sublet all or any
part of the Premises without Lessor's prior written consent. (e) Lessor shall
deliver a copy of any notice of Default or Breach by Lessee to the sublessee,
who shall have the right to cure the Default of Lessee within the grace period,
if any, specified in such notice. The sublessee shall have a right of
reimbursement and I offset from and against Lessee for any such Defaults cured
by the sublessee. (f) Notwithstanding anything to the contrary herein, for an
approved sublease or the entire Premises for the entire remainder of the term,
if the Net Worth of the sublessee is equal to or greater than the Net Worth of
Lessee, the Lessee shall be released from any obligations under the Lease that
accrues after the effective date of the sublease. 13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or Rules and
Regulations under this Lease. A "Breach" is defined as the occurrence of one or
more of the following Defaults, and the failure of Lessee to cure such Default
within any applicable grace period: (a) The abandonment of the Premises; or the
vacating of the Premises without providing a commercially reasonable level of
security, or where the coverage of the property insurance described in Paragraph
8.3 is jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism . (b) The failure of Lessee to make
any payment of Rent or any Security Deposit required to be made by Lessee
hereunder, whether to lessor or to a third party, when due, to provide
reasonable evidence of insurance or surety bond, or to fulfill any obligation
under this lease which endangers or threatens life or property, where such
failure continues for a period of 3 business days following written notice to
lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY
DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS, INCLUDING
LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES. (c) The failure of lessee
to allow Lessor and/or its agents access to the Premises or the commission of
waste, act or acts constituting public or private nuisance, and/or an illegal
activity on the Premises by Lessee, where such actions continue for a period of
3 business days following written notice to Lessee. In the event that Lessee
commits waste, a nuisance or an illegal activity a second time then, the lessor
may elect to treat such conduct as a non-curable Breach rather than a Default.
(d) The failure by Lessee to provide (i) reasonable written evidence of
compliance with Applicable Requirements, (ii) the service contracts, (iii) the
rescission of an unauthorized assignment or subletting, (iv) an Estoppel
Certificate or financial statements, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested
under Paragraph 41, (viii) material safety data sheets (MSDS), or (ix) any other
documentation or information which Lessor may reasonably require of Lessee under
the terms of this Lease, where any such failure continues for a period of 10
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(e) A Default by Lessee as to the terms, covenants, conditions or provisions of
this Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those
described in subparagraphs 13.1(a). (b), (c) or (d), above, where such Default
continues for a period of 30 days after written notice; provided, however, that
if the nature of Lessee's Default is such that more than 30 days are reasonably
required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently
prosecutes such cure to completion. (f) The occurrence of any of the following
events: (i) the making of any general arrangement or assignment for the benefit
of creditors; (ii) becoming a "debtor" as defined in 11 U.S.C. § 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within 60 days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within 30 days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within 30 days; provided, however, in the event that any provision of
this subparagraph is contrary to any applicable law, such provision shall be of
no force or effect, and not affect the validity of the remaining provisions. (g)
The discovery that any financial statement of Lessee or of any Guarantor given
to Lessor was materially false. (h) If the performance of Lessee's obligations
under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the
termination of a Guarantor's liability with respect to this Lease other than in
accordance with the terms of such guaranty, (iii) a Guarantor's becoming
insolvent or the subject of a bankruptcy filing, (iv) a Guarantor's refusal to
honor the guaranty, or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory basis, and Lessee's failure, within 60 days following written
notice of any such event, to provide written alternative assurance or security,
which, when coupled with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease. 13.2 Remedies. If Lessee fails
to perform any of its affirmative duties or obligations, within 10 days after
written notice (or in case of an emergency, without notice), Lessor may, at its
option, perform such duty or obligation on Lessee's behalf, including but not
limited to the obtaining of reasonably required bonds, insurance policies, or
governmental licenses, permits or approvals. Lessee shall pay to Lessor an
amount equal to 115% of the costs and expenses incurred by Lessor in such
performance upon receipt of an invoice therefor. In the event of a Breach,
Lessor may, with or without further notice or demand, and without limiting
Lessor in the exercise of any right or remedy which Lessor may have by reason of
such Breach: (a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate, and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent. Efforts by Lessor to mitigate damages
caused by Lessee's Breach of this Lease shall not waive Lessor's right to
recover any damages to which Lessor is otherwise entitled. If termination of
this Lease is obtained through the provisional remedy of unlawful detainer,
Lessor shall have the right to recover in such proceeding any unpaid Rent and
damages as are recoverable therein, or Lessor may reserve the right to recover
all or any part thereof in a separate suit. If a notice and grace period
required under Paragraph 13.1 was not previously given, a notice to pay rent or
quit, or to perform or quit given to Lessee under the unlawful detainer statute
shall also constitute the notice required by Paragraph 13.1. In such case, the
applicable grace period required by Paragraph 13.1 and the unlawful detainer
statute shall run concurrently, and the failure of Lessee to cure the Default
within the greater of the two such grace periods shall constitute both an
unlawful detainer and a Breach of this Lease entitling Lessor to the remedies
provided for in this Lease and/or by said statute. (b) Continue the Lease and
Lessee's right to possession and recover the Rent as it becomes due, in which
event Lessee may sublet or assign, subject only to reasonable limitations. Acts
of maintenance, efforts to relet, and/or the appointment of a receiver to
protect the Lessor's interests, shall not constitute a termination of the
Lessee's right to possession. (c) Pursue any other remedy now or hereafter
available under the laws or judicial decisions of the state wherein the Premises
are located. The expiration or termination of this Lease and/or the termination
of Lessee's right to possession shall not relieve Lessee from liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises. 13.3
Inducement Recapture. Any agreement for free or abated rent or other charges,
the cost of tenant improvements for Lessee paid for or performed by Lessor, or
for the giving or paying by lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions," shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease. Upon Breach of this Lease by
Lessee, any such Inducement Provision shall automatically be deemed deleted from
this Lease and of no further force or effect, and any rent, other charge, bonus,
inducement or consideration theretofore abated, given or paid by Lessor under
such an Inducement Provision shall be immediately due and payable by Lessee to
Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The
acceptance by Lessor of rent or the cure of the Breach which initiated the
operation of this paragraph shall not be deemed a waiver by Lessor of the
provisions of this paragraph unless specifically so stated in writing by Lessor
at the time of such acceptance. 13.4 Late Charges. Lessee hereby acknowledges
that late payment by Lessee of Rent will cause lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon lessor by any
Lender. Accordingly, if any Rent shall not be received by Lessor within 5 days
after such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall immediately pay to Lessor a one•time late charge equal to
10% of each such overdue amount or $100, whichever is greater. The parties
hereby agree that such late charge represents a fair and reasonable estimate of
the costs Lessor will incur by reason of such late payment. Acceptance of such
late charge by Lessor shall in no event constitute a waiver of Lessee's Default
or Breach with respect to such overdue amount, nor prevent the exercise of any
of the other rights and remedies granted hereunder. In  INITIALS 2017 AIR CRE.
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the event that a late charge is payable hereunder, whether or not collected, for
3 consecutive installments of Base Rent, then notwithstanding any provision of
this lease to the contrary, Base Rent shall, at Lessor's option, become due and
payable quarterly in advance. 13.5 Interest. Any monetary payment due Lessor
hereunder, other than late charges, not received by lessor, when due shall bear
interest from the 31st day after it was due. The interest ("Interest") charged
shall be computed at the rate of 10% per annum but shall not exceed the maximum
rate allowed by law. Interest is payable in addition to the potential late
charge provided for in Paragraph 13.4. 13.6 Breach by Lessor. (a) Notice of
Breach. Lessor shall not be deemed in breach of this lease unless lessor fails
within a reasonable time to perform an obligation required to be performed by
Lessor. For purposes of this Paragraph, a reasonable time shall in no event be
less more than 30 days after receipt by lessor, and any lender whose name and
address shall have been furnished to Lessee in writing for such purpose, of
written notice specifying wherein such obligation of lessor has not been
performed; provided, however, that if the nature of lessor's obligation is such
that more than 30 days are reasonably required for its performance, then Lessor
shall not be in breach if performance is commenced within such 30 day period and
thereafter diligently pursued to completion. (b) Performance by Lessee on Behalf
of Lessor. In the event that neither Lessor nor Lender cures said breach within
30 days after receipt of said notice, or if having commenced said cure they do
not diligently pursue it to completion, then Lessee may elect to cure said
breach at lessee's expense and offset from Rent the actual and reasonable cost
to perform such cure, provided however, that such offset shall not exceed an
amount equal to the greater of one month's Base Rent or the Security Deposit,
reserving lessee's right to reimbursement from lessor for any such expense in
excess of such offset. Lessee shall document the cost of said cure and supply
said documentation to lessor. 14. Condemnation. If the Premises or any portion
thereof are taken under the power of eminent domain or sold under the threat of
the exercise of said power (collectively "Condemnation"), this Lease shall
terminate as to the part taken as of the date the condemning authority takes
title or possession, whichever first occurs. If more than 10% of the floor area
of the Unit, or more than 25% of the parking spaces is taken by Condemnation,
Lessee may, at lessee's option, to be exercised in writing within 10 days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within 10 days after the condemning authority shall have taken
possession) terminate this lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that lessee shall be entitled to any compensation paid by the condemnor
for Lessee's relocation expenses, loss of business goodwill and/or Trade
Fixtures, without regard to whether or not this Lease is terminated pursuant to
the provisions of this Paragraph. All Alterations and Utility Installations made
to the Premises by lessee, for purposes of Condemnation only, shall be
considered the property of the lessee and lessee shall be entitled to any and
all compensation which is payable therefor. In the event that this Lease is not
terminated by reason of the Condemnation, Lessor shall repair any damage to the
Premises caused by such Condemnation. 15. Brokerage Fees. 15.1 additional
commission. In addition to the payments owed pursuant to paragraph 1.10 above,
lessor agrees that: (a) if lessee exercises any option, (b) if lessee or anyone
affiliated with lessee acquires from lessor any rights to the premises or other
premises owned by lessor and located within the project, (c) if lessee remains
in possession of the premises, with the consent of lessor, after the expiration
of this lease, or (d) if base rent is increased, whether by agreement or
operation of an escalation clause herein, then, lessor shall pay brokers a fee
in accordance with the fee schedule of the brokers in effect at the time the
lease was executed. 15.2 Assumption of obligations, Anu buyer or transferee of
lessor’s interest in this lease shall be deemed to have assumed lessor’s
obligation hereunder brokers shall be third party beneficiaries of the
provisions of paragraphs 1.10,15, 22 and 31. If lessor fails to pay to brokers
any amounts due as and for brokerage fees pertaining to this lease when due,
then such amounts shall accrue interest. In addition, If lessor fails to pay any
amounts within 10 days after said notice, lessee shall pay said monies to its
broker and offset such amounts against rent. In addition, lessee’s broker shall
be deemed to be a third party beneficiary of any commission agreement entered
into by and/or between lesser and lessor’s broker for the limited purpose of
collecting any brokerage fee owed. 15.3 Representations and Indemnities of
Broker Relationships. lessee and Lessor each represent and warrant to the other
that it has had no dealings with any person, firm, broker or finder (other than
the Brokers, if any) in connection with this Lease, and that no one other than
said named Brokers is entitled to any commission or finder's fee in connection
herewith. lessee and lessor do each hereby agree to indemnify, protect, defend
and hold the other harmless from and against liability for compensation or
charges which may be claimed by any such unnamed broker, finder or other similar
party by reason of any dealings or actions of the indemnifying Party, including
any costs, expenses, attorneys' fees reasonably incurred with respect thereto.
16. Estoppel Certificates. (a) Each Party (as ''Responding Party") shall within
10 days after written notice from the other Party (the "Requesting Party")
execute, acknowledge and deliver to the Requesting Party a statement in writing
in form similar to the then most current "Estoppel Certificate" form published
BY AIR CRE, plus such additional information, confirmation and/or statements as
may be reasonably requested by the Requesting Party. (b) If the Responding Party
shall fail to execute or deliver the Estoppel Certificate within such 10 day
period, the Requesting Party may execute an Estoppel Certificate stating that:
(i) the lease is in full force and effect without modification except as may be
represented by the Requesting Party, (ii) there are no uncured defaults in the
Requesting Party's performance, and (iii) if Lessor is the Requesting Party, not
more than one month's rent has been paid in advance. Prospective purchasers and
encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and the
Responding Party shall be estopped from denying the truth of the facts contained
in said Certificate. In addition, Lessee acknowledges that any failure on Its
part to provide such an Estoppel Certificate will expose lessor to risks and
potentially cause lessor to incur costs not contemplated by this Lease, the
extent of which will be extremely difficult to ascertain. Accordingly, should
the lessee fail to execute and/or deliver a requested Estoppel Certificate in a
timely fashion the monthly Base Rent shall be automatically increased, without
any requirement for notice to Lessee, by an amount     INITIALS © 2017 AIR CRE.
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equal to 10% of the then existing Base Rent or $100, whichever is greater for
remainder of the lease. The Parties agree that such increase in Base Rent
represents fair and reasonable compensation for the additional risk/costs that
lessor will incur by reason of Lessee's failure to provide the Estoppel
Certificate. Such increase in Base Rent shall in no event constitute a waiver of
lessee's Default or Breach with respect to the failure to provide the Estoppel
Certificate nor prevent the exercise of any of the other rights and remedies
granted hereunder. (c) If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee and all Guarantors shall within 10 days
after written notice from Lessor deliver to any potential lender or purchaser
designated by Lessor such financial statements as may be reasonably required by
such lender or purchaser, including but not limited to Lessee's financial
statements for the past 3 years. All such financial statements shall be received
by Lessor and such lender or purchaser in confidence and shall be used only for
the purposes herein set forth. 17. Definition of Lessor. The term "Lessor" as
used herein shall mean the owner or owners at the time in question of the fee
title to the Premises, or, if this is a sublease, of the Lessee's interest in
the prior lease. In the event of a transfer of Lessor's title or interest in the
Premises or this lease, lessor shall deliver to the transferee or assignee (in
cash or by credit) any unused Security Deposit held by lessor. Upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. 18. Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof. 19. Days. Unless otherwise specifically
indicated to the contrary, the word "days" as used in this Lease shall mean and
refer to calendar days. 20. Limitation on liability. The obligations of Lessor
under this Lease shall not constitute personal obligations of lessor, or its
partners, members, directors, officers or shareholders, and Lessee shall look to
the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of lessor with respect to this lease, and shall not seek recourse
against Lessor's partners, members, directors, officers or shareholders, or any
of their personal assets for such satisfaction. 21. Time of Essence. Time is of
the essence with respect to the performance of all obligations to be performed
or observed by the Parties under this lease. 22. No Prior or Other Agreements;
broker disclaimer. This lease contains all agreements between the Parties with
respect to any matter mentioned herein, and no other prior or contemporaneous
agreement or understanding shall be effective. Lessor and lessee each represent
and warrants to the brokers that it has made and is relying solely upon its own
investigation as to the nature, quality, character and financial responsibility
of the other party to this lease and as to the use, nature, quality and
character of the premise, brokers have no responsibility with respect thereto or
with respect to any default or breach hereof by either party. 23. Notices. 23.1
Notice Requirements. All notices required or permitted by this lease or
applicable law shall be in writing and may be delivered in person (by hand or by
courier) or may be sent by regular, certified or registered mail or U.S. Postal
Service Express Mail, with postage prepaid, or by facsimile transmission, or by
email, and shall be deemed sufficiently given if served in a manner specified in
this Paragraph 23. The addresses noted adjacent to a Party's signature on this
lease shall be that Party 's address for delivery or mailing of notices. Either
Party may by written notice to the other specify a different address for notice,
except that upon lessee's taking possession of the Premises, the Premises shall
constitute lessee's address for notice. A copy of all notices to lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing. (See also Paragraph 60.)
23.2 Date of Notice. Any notice sent by registered or certified mail, return
receipt requested, shall be deemed given on the date of delivery shown on the
receipt card, or if no delivery date is shown, the postmark thereon. If sent by
regular mail the notice shall be deemed given 72 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal
Service or courier. Notices delivered by hand or transmitted by facsimile
transmission or by email shall be deemed delivered upon actual receipt. If
notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day. 24. Waivers. (a) No waiver by lessor of the
Default or Breach of any term, covenant or condition hereof by lessee, shall be
deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent Default or Breach by lessee of the same or of any other term,
covenant or condition hereof. lessor's consent to, or approval of, any act shall
not be deemed to render unnecessary the obtaining of lessor's consent to, or
approval of, any subsequent or similar act by lessee, or be construed as the
basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. (b) The acceptance of Rent by lessor shall not be a
waiver of any Default or Breach by Lessee  Any payment by lessee may be accepted
by lessor on account of monies or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by lessor at or before the
time of deposit of such payment. (c) The Parties Agree That The Terms Of This
Lease Shall Govern With Regard To All Matters Related Thereto And Hereby Waive
The Provisions Of Any Present Or Future Statute To The Extent That Such Statute
Is Inconsistent With This Lease. 25. Disclosures Regarding The Nature of a Real
Estate Agency Relationship. (a) When entering into a discussion with a real
estate agent regarding a real estate transaction, a Lessor or Lessee should from
the outset understand what type of agency relationship or representation it has
with the agent or agents in the transaction. lessor and lessee acknowledge being
advised by the Brokers in this transaction, as follows: (i) lessor’s Agent. A
Lessor's agent under a listing agreement with the Lessor acts as the agent for
the lessor only. A lessor agent or subagent has the following affirmative
obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty
and loyalty in dealings with the lessor, To the Lessee and the Lessor: (a)
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performance of the agent's duties. (b) A duty of honest and fair dealing and
good faith. (c) A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not known to, or
within the diligent attention and observation of, the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from
the other Party which does not Involve the affirmative duties set forth above.
(ii) Lessee's Agent. An agent can agree to act as agent for the Lessee only. In
these situations, the agent is not the Lessor's agent, even if by agreement the
agent may receive compensation for services rendered, either in full or in part
from the Lessor. An agent acting only for a Lessee has the following affirmative
obligations. To the Lessee: A fiduciary duty of utmost care, integrity, honesty,
and loyalty in dealings with the Lessee. To the Lessee and the Lessor: (a)
Diligent exercise of reasonable skills and care in performance of the agent's
duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to
disclose all facts known to the agent materially affecting the value or
desirability of the property that are not known to, or within the diligent
attention and observation of, the Parties. An agent is not obligated to reveal
to either Party any confidential information obtained from the other Party which
does not involve the affirmative duties set forth above. (iii) Agent
Representing Both Lessor and Lessee. A real estate agent, either acting directly
or through one or more associate licenses, can legally be the agent of both the
Lessor and the Lessee in a transaction, but only with the knowledge and consent
of both the Lessor and the Lessee. In a dual agency situation, the agent has the
following affirmative obligations to both the Lessor and the Lessee: (a) A
fiduciary duty of utmost care Integrity, honesty and loyalty in the dealings
with either Lessor or the Lessee. (b) Other duties to the Lessor and the Lessee
as stated above in subparagraphs (i) or (ii). In representing both Lessor and
Lessee, the agent may not without the express permission of the respective
Party, disclose to the other Party that the Lessor will accept rent in an amount
less than that indicated in the listing or that the Lessee is willing to pay a
higher rent than that offered. The above duties of the agent in a real estate
transaction do not relieve a Lessor or Lessee from the responsibility to protect
their own interests. Lessor and Lessee should carefully read all agreements to
assure that they adequately express their understanding of the transaction. A
real estate agent is a person qualified to advise about real estate. If legal or
tax advice is desired, consult a competent professional. (b) Brokers have no
responsibility with respect to any default or breach hereof by either party The
parties agree that no lawsuit or other legal proceeding involving any breach of
duty, error or omission relating to this lease may be brought against broker
more than one year  after the start date and that the liability (including court
costs and attorneys’ feel), of any Broker with respect to any such lawsuit
and/or legal preceding shall not exceed the fee received by such Broker pursuant
to this lease: provided, however, that the foregoing limitation on each Broker’s
liability shall not be applicable to any gross negligence or willful misconduct
of such Broker. (c) lessor and lessee agree to identify agree to identify to
Broker as “Confidential” any communication or information given broker that is
considered by such party to be confidential 26. No Right To Holdover. Lessee has
no right to retain possession of the Premises or any part thereof beyond the
expiration or termination of this Lease. In the event that Lessee holds over,
then the Base Rent shall be increased to 150% of the Base Rent applicable
immediately preceding the expiration or termination. Holdover Base Rent shall be
calculated on monthly basis. Nothing contained herein shall be construed as
consent by Lessor to any holding over by Lessee. 27. Cumulative Remedies. No
remedy or election hereunder shall be deemed exclusive but shall, wherever
possible, be cumulative with all other remedies at law or in equity. 28.
Covenants and Conditions; Construction of Agreement. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease all headings and titles are for the convenience of the
Parties only and shall not be considered a part of this Lease. Whenever required
by the content, the singular shall include the plural and vice versa. This Lease
shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated In the county in which
the Premises are located. 30. Subordination; Attornment; Non-Disturbance. 30.1
Subordination. This Lease and any Option granted hereby shall be subject and
subordinate to any ground lease, mortgage, deed of trust, or other hypothecation
or security device (collectively, "Security Device"), now or hereafter placed
upon the Premises, to any and all advances made on the security thereof, and to
all renewals, modifications, and extensions thereof. Lessee agrees that the
holders of any such Security Devices (in this Lease together referred to as
"Lender") shall have no liability or obligation to perform any of the
obligations of Lessor under this Lease. Any Lender may elect to have this Lease,
and/or any Option granted hereby superior to the lien of its Security Device by
giving written notice thereof to Lessee, whereupon this Lease and such Options
shall be deemed prior to such Security Device, notwithstanding the relative
dates of the documentation or recordation thereof. 30.2 Attornment. In the event
that Lessor transfers title to the Premises, or the Premises are acquired by
another upon the foreclosure or termination of a Security Device to which this
Lease is subordinated (I) Lessee shall, subject to the non-disturbance
provisions of Paragraph 30.3, attorn to such new owner, and upon request, enter
into a new lease, containing all of the terms and provisions of this Lease, with
such new owner for the remainder of the term hereof, or, at the election of the
new owner, this Lease will automatically become a new lease between Lessee and
such new owner, and (ii) Lessor shall thereafter be relieved of any further
obligations hereunder and such new owner shall assume all of Lessor's
obligations, except that such new owner shall not: (a) be liable for any act or
omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (b) be subject to any offsets or defenses which Lessee
might have against any prior lessor, (c) be bound by prepayment of more than one
month's rent, or (d) be liable for the return of any security deposit paid to
any prior lessor which was not paid or credited to such new owner. 30.3
Non-Disturbance. With respect to Security Devices entered into by Lessor after
the execution of this Lease, Lessee's subordination of this Lease shall be
subject to receiving a commercially reasonable non-disturbance agreement (a
"Non-Disturbance Agreement”) from the Lender which Non-Disturbance Agreement
provides that Lessee's possession of the Premises, and this Lease, including any
options to extend the term hereof, will not be disturbed so long as Lessee is
not in Breach hereof and attorns to the record owner of the Premises. Further,
within 60 days after the execution of this Lease, Lessor shall, if requested by
Lessee, use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premise. In the event that Lessor is unable to provide the
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Lessee may, at Lessee's option, directly contact Lender and attempt to negotiate
for the execution and delivery of a Non-Disturbance Agreement  30.4
Self-Executing. The agreements contained in this Paragraph 30 shall be effective
without the execution of any further documents; provided, however, that, upon
written request from Lessor or a Lender in connection with a sale, financing or
refinancing of the Premises, Lessee and Lessor shall execute such further
writings as may be reasonably required to separately document any subordination,
attornment and/or Non-Disturbance Agreement provided for herein. 31. Attorneys'
Fees. If any Party or Broker brings an action or proceeding involving the
Premises whether founded in tort, contract or equity, or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or judgment. The term,
"Prevailing Party" shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorneys' fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys' fees reasonably incurred. In addition, Lessor shall be
entitled to attorneys' fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach ($200 is a reasonable minimum per occurrence for such
services and consultation). 32. Lessor's Access; Showing Premises; Repairs.
Lessor and Lessor's agents shall have the right to enter the Premises at any
time, in the case of an emergency, and otherwise at reasonable times after
reasonable prior notice for the purpose of showing the same to I prospective
purchasers, lenders, appraisers, or tenants, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary
or desirable and the erecting, using and maintaining of utilities, services,
pipes and conduits through the Premises and/or other premises as long as there
is no material adverse effect on Lessee's use of the Premises. All such
activities shall be without abatement of rent or liability to Lessee. 33.
Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon
the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction. 34. Signs. Lessor may place on the Premises ordinary "For
Sale" signs at any time and ordinary "For Lease" signs during the last 6 /
months of the term hereof. Expect for ordinary “for sublease” signs which may be
placed only on the premises lessee shall not place any sign upon the Project
without Lessor's prior written consent. All signs must comply with all
Applicable Requirements. 35. Termination; Merger. Unless specifically stated
otherwise in writing by Lessor, the voluntary or other surrender of this Lease
by Lessee, the mutual termination or cancellation hereof, or a termination
hereof by Lessor for Breach by Lessee, shall automatically terminate any
sublease or lesser estate in the Premises; provided, however, that Lessor may
elect to continue any one or all existing subtenancies. Lessor's failure within
10 days Following any such event to elect to the contrary by written notice to
the holder of any such lesser interest, shall constitute Lessor's election to
have such event constitute the termination of such interest. 36. Consents. All
requests for consent shall be in writing. Except as otherwise provided herein,
wherever in this Lease the consent I of a Party is required to an act by or for
the other Party, such consent shall not be unreasonably withheld, conditioned or
delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' and other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent, including but not limited to consents to an assignment, a
subletting or the presence or use of a Hazardous Substance, shall be paid by
Lessee upon receipt of an invoice and supporting documentation therefor.
lessor's consent to any act, assignment or subletting shall not constitute an
acknowledgment that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent. The failure to specify herein any particular condition to
Lessor's consent shall not predude the imposition by Lessor at the time of
consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within 10 business days following such request. 37. Guarantor. 37.1 Execution.
The Guarantors, if any, shall each execute a guaranty in the form most recently
published BY AIR CRE. 37.2 Default. It shall constitute a Default of the Lessee
if any Guarantor fails or refuses, upon request to provide: (a) evidence of the
execution of the guaranty, including the authority of the party signing on
Guarantor's behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such guaranty, (b) current financial statements, (c)
an Estoppel Certificate, or (d) written confirmation that the guaranty is still
in effect. 38. Quiet Possession. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on lessee's part
to be observed and performed under this lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof. 39.
Options. If Lessee is granted any option, as defined below, then the following
provisions shall apply. 39.1 Definition. "Option" shall mean: (a) the right to
extend or reduce the term of or renew this Lease or to extend or reduce the term
of or renew any lease that Lessee has on other property of Lessor; (bl the right
of first refusal or first offer to lease either the Premises or other property
of Lessor; (c) the right to purchase, the right of first offer to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this
Lease is personal to the original Lessee, and cannot be assigned or exercised by
anyone other than said original Lessee and only while the original Lessee is in
full possession of the Premises and, if requested by Lessor, with lessee
certifying that Lessee has no intention of thereafter assigning or subletting.
39.3 Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this lease, a later Option cannot be exercised unless the prior
Options have been validly exercised. 39.4 Effect of Default on Options. (a)
Lessee shall have no right to exercise an Option: (i) during the period
commencing with the giving of any notice of Default and continuing until said
Default is cured, (ii) during the period of time any Rent is unpaid (without
regard to whether notice there of is given Lessee), (iii) during the time Lessee
is in Breach of this Lease, or (iv) in the event that Lessee has been given 3
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more notices of separate default, whether or not the defaults are cured, during
the 12 month period immediately preceding the exercise of the option . (b) the
period of time within which an option may be exercised shall not be extended or
enlarged by reason of Lessee's inability to exercise an Option because of the
provisions of paragraph 39.4(a). (c) An Option shall terminate and be of no
further force or effect, notwithstanding Lessee's due and timely exercise of the
Option, if, after such exercise and prior to the commencement of the extended
term or completion of the purchase, (i) Lessee fails to pay rent for a period of
30 days after such Rent becomes due (without any necessity of Lessor to give
notice thereof), or (ii) if Lessee commits a Breach of this Lease. 40. Security
Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder
does not include the cost of guard service or other security measures, and that
Lessor shall have no obligation whatsoever to provide same. Lessee assumes all
responsibility for the protection of the Premises, Lessee, its agents and
invitees and their property from the acts of third parties. 41. Reservations.
Lessor reserves the right: (i) to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that Lessor deems necessary, (ii)
to cause the recordation of parcel maps and restrictions, and (iii) to create
and/or install new utility raceways , so long as such easements, rights,
dedications, maps, restrictions, and utility raceways do not unreasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate such rights. 42.
Performance Under Protest. if at any time a dispute shall arise as to any amount
or sum of money to be paid by one party to the other under the provisions
hereof, the party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said party to institute suit for recovery of such sum. if it shall be adjudged
that there was no legal obligation on the part of said party to pay such sum or
any part thereof, said party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay. a party who does not initiate
suit for the recovery of sums paid "under protest" within 6 months shall be
deemed to have waived its right to protest such payment. 43. Authority; Multiple
Parties; Execution. (a) if either party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this lease on its behalf. each party
shall, within 30 days after request, deliver to the other party satisfactory
evidence of such authority. (b) if this lease is executed by more than one
person or entity as "lessee", each such person or entity shall be jointly and
severally liable hereunder. it is agreed that any one of the named lessees shall
be empowered to execute any amendment to this lease, or other document ancillary
thereto and bind all of the named lessees, and lessor may rely on the same as if
all of the named lessees had executed such document. (c) this lease may be
executed by the parties in counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same instrument.
44. Conflict. any conflict between the printed provisions of this lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions. 45. Offer. preparation of this lease by either party or
their agent and submission of same to the other party shall not be deemed an
offer to lease to the other party. this lease is not intended to be binding
until executed and delivered by all parties hereto. 46. Amendments. this lease
may be modified only in writing, signed by the parties in interest at the time
of the modification as long as they do not materially change lessee's
obligations hereunder, lessee agrees to make such reasonable non-monetary
modifications to this lease as may be reasonably required by a lender in
connection with the obtaining of normal financing or refinancing of the
premises. 47. Waiver of jury trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR
ARISING OUT OF THIS AGREEMENT. 48. Arbitration of disputes. an addendum
requiring the arbitration of all disputes between the parties and/or brokers
arising out of this lease ☐ is ☒ is not attached to this lease. 49.
Accessibility; Americans with disabilities act.  (a) the premises: ☒ have not
undergone an inspection by a certified access specialist (CASp). note: a
certified access specialist (CASp) can inspect the subject premises and
determine whether the subject premises comply with all of the applicable
construction-related accessibility standards under state law. although state law
does not require a CASp inspection of the subject premises, the commercial
property owner or lessor may not prohibit the lessee or tenant from obtaining a
CASp inspection of the subject premises for the occupancy or potential occupancy
of the lessee or tenant, if requested by the lessee or tenant. the parties shall
mutually agree on the arrangements for the time and manner of the CASp
inspection, the payment of the fee for the CASp inspection, and the cost of
making any repairs necessary to correct violations of construction-related
accessibility standards within the premises. ☒ have undergone an inspection by a
certified access specialist (CASp) and it was determined that the premises met
all applicable construction-related accessibility standards pursuant to
California civil code §55.51 et seq. lessee acknowledges that it received a copy
of the inspection report at least 48 hours prior to executing this lease and
agrees to keep such report confidential. ☒ have undergone an inspection by a
certified access specialist (CASp) and it was determined that the premises did
not meet all applicable construction-related accessibility standards pursuant to
California civil code §55.51 et seq. lessee acknowledges that it received a copy
of the inspection report at least 48 hours prior to executing this lease and
agrees to keep such report confidential except as necessary to complete repairs
and corrections of violations of construction related accessibility standards.
In the event that the premises have been issued an inspection report by a CASp
the lessor shall provide a copy of the disability access inspection certificate
to lessee within 7 days of the execution of this lease . (b) since compliance
with the Americans with disabilities act (ADA) and other state and local
accessibility statutes are dependent upon lessee's specific use of the premises,
lessor makes no warranty or representation as to whether or not the premises
comply with ADA or any similar legislation. In the event that lessee's use of
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additions to the premises in order to be in compliance with ada or other
accessibility statutes, lessee agrees to make any such necessary modifications
and/or additions at lessee's expense.  lessor and lessee have carefully read and
reviewed this lease and each term and provision contained herein, and by the
execution of this lease show their informed and voluntary consent thereto. the
parties hereby agree that, at the time this lease is executed, the terms of this
lease are commercially reasonable and effectuate the intent and purpose of
lessor and lessee with respect to the premises. attention: no representation or
recommendation is made by air cre or by any broker as to the legal sufficiency,
legal effect, or tax consequences of this lease or the transaction to which it
relates. the parties are urged to: 1. seek advice of counsel as to the legal and
tax consequences of this lease. 2. retain appropriate consultants to review and
investigate the condition of the premises. said investigation should include but
not be limited to: the possible presence of hazardous substances, the zoning of
the premises, the structural integrity, the condition of the roof and operating
systems, compliance with the Americans with disabilities act and the suitability
of the premises for lessee's intended use.  warning: if the premises are located
in a state other than California, certain provisions of the lease may need to be
revised to comply with the laws of the state in which the premises are
located.  the parties hereto have executed this lease at the place and on the
dates specified above their respective signatures. Executed at: on: by lessor:
sr22 carlsbad oaks distribution, llc, a california limited liability company by:
Name Printed: adam s, robinson title: manager phone: (858) 814-3116 fax: (760)
496-2847 email: by: name printed: title: phone: fax: email: address: 111 c
street, suite 200, Encinitas, ca 92024 federal id no.: apg Carlsbad I, llc, a
california limited liability company By: smb I group, l.p., a Delaware limited
partnership its: managing Member by: k associates, a california general
partnership its: general partner by: /s/Bonnie l name: Bonnie l its: managing
member pre IV coaks, llc. A california limited liability company by: pacifica
real estate IV, llc, a california limited liability company its: member by: /s/
steven c, leonard, manager Executed at: on: by lessee: ionis pharmaceuticals,
inc., a delaware corporation by: /s/ Elizabeth L. Hougen name printed: Elizabeth
L. Hougentitle: manager phone: fax: email: legalnotices@ionisph.com by: /s/
Brett P. Monia name printed: Brett P. Monia title: phone: fax: email: address:
2855 gazella court, Carlsbad, ca 92010 federal id no.: INITIALS ©2017 AIR CRE.
All Rights Reserved.  Page 19 of 20 Last Edited: 2/26/2018 3:14 PM  INITIALS
MTN-26 00,Revised 01-03-2017  

 

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[ghbmhu5ckop3000020.jpg]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[ghbmhu5ckop3000021.jpg]

BROKER Cushman & wakefield Attn: aric starck/dennis visser Title: Senior
managing director/managing director address: 1000 aviara parkwav, suite 100,
Carlsbad, ca 92011 phone: (760) 431-4211 fax: email: federal ID no.:
broker/agent BRE license #: 01325461 / 0125595 Broker CBRE attn: roger Carlson
title: senior vice president Address: 5780 Fleet Street. Suite 100 Carlsbad, CA
92008 Phone: (760) 438-8533 Fax: (760) 438-8577 Email: roger. carlson@cbre .com
Federal id No.: Broker/Agent BRE License #: 01236185 AIR CRE. 500 North Brand
Blvd, Suite 900, Glendale, CA 91203, Tel 213-687-8777, Email
contracts@aircre.com NOTICE: No part of these works may be reproduced in any
form without permission In writing. INITIALS ©2017 AIR CRE. All Rights
Reserved.  Page 20 of 20 Last Edited: 2/26/2018 3:14 PM  INITIALS MTN-26
00,Revised 01-03-2017  

 

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[ghbmhu5ckop3000022.jpg]

ADDENDUM TO THAT CERTAIN STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE-NET
DATED JANUARY 25,2018, BY AND BETWEEN SR22 CARLSBAD OAKS DISTRIBUTION, LLC, ETC.
("LESSOR") AND IONIS PHARMACEUTICALS, INC. ("LESSEE")   This Addendum amends the
provisions of the above-referenced lease including any attached exhibits or
addenda thereto (collectively, the "Lease"), it being the intent and agreement
that the provisions of the Lease are hereby affirmed by the parties, but, to the
extent that the provisions of this Addendum conflict with or differ from the
terms of the Lease, the provisions of this Addendum shall control. Capitalized
terms not defined herein shall have the definitions that are given to such terms
in the Lease.  50. Base Rent. During the Original Term, the monthly Base Rent
shall be as follows:  Months: Months 1 through 12 Months 13 through 24 Monthly
Base Rent: $20,196.00 $20,801.88 Months 25 through 36 $21,425.94 Months 37
through 48 $22,068.71 Months 49 through 60 $22,730.78 Months 61 through 63
$23,412.70  51. Abatement of Rent.  (a) For so long as Lessee is not in Breach
under the terms of this Lease, the Base Rent payable by Lessee as scheduled in
Paragraph 50 above shall be fully abated for months two (2) through four (4) of
the Original Term, for a total of three months. Lessee shall continue to pay
Lessee's Share of Common Area Operating Expenses during such abatement
period.  (b) The abatements set forth in this Paragraph 51 shall be considered
an Inducement Provision subject to the provisions of Paragraph 13.3 of this
Lease.  52. Condition of Premises. Lessor shall deliver the Premises to Lessee
on the Commencement Date in its "AS IS" condition with the existing interior
improvements in place, subject to the warranties set forth in Paragraph 2 of the
Lease, and Lessor shall not be responsible to construct any additional
improvements.  53. [Intentionally Omitted.]  54. Operating Expenses. Lessor
estimates that the Lessee's Share of Common Area Operating Expenses will
initially be $4,677.50 per month. Lessee understands that this is an estimate
only and the actual amount may vary from the estimate.  55. Audit Rights. Lessee
shall have the right, at its expense, and upon written notice given to Lessor no
later than ninety (90) days after Lessee's receipt of any statement of actual
Operating Expenses as provided in Paragraph 4.2(d) of the Lease (the
"Reconciliation") to make an audit of all of Lessor's bills, records, receipts,
insurance certificates and policies relating to Operating Expenses for the
preceding calendar year. Within fifteen (I 5) business days of Lessor's receipt
of such written request of Lessee, Lessor shall make available to Lessee, during
normal business hours, at the location where Lessor's books and records are
kept, such information as Lessee shall reasonably request. Lessor shall
cooperate with Lessee in its explanation of its bills and records. Lessee, at
Lessee's sole cost and expense, reserves the right to retain the services of an
independent certified public accountant for such audit provided that such
accountant is not retained by Lessee on a contingency fee basis. Lessee shall
diligently complete any such audit of Operating Expenses and shall deliver to
Lessor the written results of such audit within fifteen (15) business days after
Lessee •receives the same. If Lessor disagrees with the results of Lessee's
audit, Lessor and Lessee shall meet and attempt, in good faith, to resolve the
dispute. If Lessor and Lessee are unable to   Initials  Initials

 

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[ghbmhu5ckop3000023.jpg]

resolve the dispute within thirty (30) days after Lessor's receipt of Lessee's
audit, then Lessee shall have the right to submit the dispute to arbitration;
this right shall be exercised, if at all, by delivering a written notice of
election to arbitrate to Lessor not later than 180 days after receipt of the
Reconciliation. Lessor and Lessee shall agree, within 15 days after Lessee's
delivery of the arbitration election, to retain an arbitrator, who shall be a
mutually acceptable independent certified public accountant with experience in
operating expenses for commercial/industrial buildings, who shall make a
determination as to the correct amount of Lessee's share of Operating Expenses .
The decision shall be delivered simultaneously to Lessor and Lessee and shall be
final and binding on Lessor and Lessee. If the arbitrator determines that the
amount of the Operating Expenses billed to the Lessee was incorrect , the
appropriate party shall pay to the other party the deficiency or overpayment ,
as applicable, within thirty (30) days following delivery of the arbitrator's
decision, without interest. All costs and expenses of the arbitration shall be
paid by Lessee unless the final determination in the arbitration is that Lessor
overstated Operating Expenses by more than five percent (5%) of the originally
reported Operating Expenses, in which case Lessor shall pay all such costs and
expenses of the arbitration. Lessee and its auditor shall keep all of Lessor's
records strictly confidential and shall not disclose any information gained from
its review of Lessor's records to any third party, except as required by
law.  56. Signage. Lessee, with the approval of Lessor (which approval shall not
be unreasonably withheld) pursuant to the Lessor's sign criteria and the City of
Carlsbad, shall be allowed to install exterior identity signage, the exact
location and size of any signs to be approved by Lessor, which approval shall
not be unreasonably withheld or delayed. Lessee shall be responsible to
construct, install and maintain such signage at its sole cost, and shall remove
such signage upon expiration or earlier termination of the Lease and repair any
damage caused by such removal.  57. Security System. Lessee shall have the right
to install a security system for the perimeter and interior of the Premises.
Lessee shall be responsible to construct, install and maintain such security
system at its sole cost, and shall remove such security system upon expiration
or earlier termination of the Lease and repair any damage caused by such
removal.  58. Payment to Brokers. Lessor shall pay to the Brokers for the
brokerage services rendered by the Brokers in connection with the Lease an
amount pursuant to the terms of a separate agreement . Such amounts shall be
paid fifty percent (50%) upon full execution of this Lease and fifty percent
(50%) on the Commencement Date .  59. Lessee Access. Lessee shall have access to
the Premises and use of Lessee's parking spaces seven days a week, 24 hours per
day, subject to any reasonable Rules and Regulations established by Lessor.  60.
Notices to Lessee. A copy of all notices to Lessee shall be concurrently sent
via electronic mail to: legalnotices@ionisph.com.  [Signatures are on next
page.) Initials  Initials  

 

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[ghbmhu5ckop3000024.jpg]

IN WITNESS THEREOF, Lessor and Lessee have executed this Addendum concurrently
with the lease of even date herewith. Lessor: SR22 CARLSBAD OAKS DISTRIBUTION,
LLC, a California limited liability company By: Adam S Robinson, Manager APG
CARLSBAD I, LLC, a California limited liability company By: SMB I GROUP, L.P., a
Delaware limited partnership its: Managing Member By: K ASSOCIATES, a California
general partnership Its: General Partner By: /s/ Bonnie L Name: Bonnie L Its:
Managing Member PRE IV C OAKS, LLC. A California limited liability company By:
PACIFICA REAL ESTATE IV, LLC, A California limited liability company Its: Member
By: /s/ Steven C. Leonard, Manager LESSEE: IONIS PHARMACEUTICALS, INC., a
Delaware corporation By:              Name:             Title:          
By:                 Name:                Title:                 a    

 

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Exhibit a – site plan el e vate initials initials

 

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[ghbmhu5ckop3000026.jpg]

AIRCR OPTION(S) TO EXTEND STANDARD LEASE ADDENDUM Dated: By and Between Lessor:
SR22 CARLSBAD OAKS DISTRIBUTION, LLC, a California limited liability comoany;
APG CARLSBAD L , LLC, a California limited liabilitv comoanv; and PRE TV C:
O.Z>$S, J,J,C, 3 Californii'l limited liabi1it:v comoan•/ lessee: IONIS PHARf•
ACEUTICALS, INC., a De1a\•lare corporation Property Address : 2870 Whiptail
Loop. Suite 102, Carlsbad, CA 92010 (street address, city, state,
zip}  Paragraph:  A. OPTION(S) TO EXTEND: Lessor hereby grants to Lessee the
option to extend the term of this Lease for one (1) additional six tv (60) month
period(s} commencing when the prior term expires upon each and all of the
following terms and conditions: (i) In order to exercise an option to extend,
Lessee must give written notice of such election to Lessor and Lessor must
receive the same at least 9 but not more than 12 months prior to the date that
the option period would commence, time being of the essence. If proper
notification of the exercise of an option is not given and/or received, such
option shall automatically expire. Options (if there are more than one) may only
be exercised consecutively. (ii) The provisions of paragraph 39, including those
relating to Lessee's Default set forth in paragraph 39.4 of this Lease, are
conditions of this Option. (iii) Except for the provisions of this Lease
granting an option or options to extend the term, all of the terms and
conditions of this Lease except where specifically modified by this option shall
apply. (iv) This Option is personal to the original Lessee, and cannot be
assigned or exercised by anyone other than said original Lessee and only while
the original Lessee is in full possession of the Premises and without the
intention of thereafter assigning or subletting. (v) The monthly rent for each
month of the option period shall be calculated as follows, using the method(s)
indicated below: (Check Method(s) to be Used and Fill in Appropriately) ☐ I.Cost
of living Adjustment(s) (COlA) a.On (Fill In COLA Dates): the base rent shall be
adjusted by the change, if any, from the base Month specified below, in the
consumer price index of the bureau of labor statics of the U.S department of
labor for (sleect one):☐CPI w(urban wage earners and clerical workers) or☐ cpi u
(All Urban consumers), for (Fill in Urban Area): All items(1982-1984-100),
herein referred to as ‘’cpi’’.  b. the monthly base rent payble in accordance
with paragraph A,I,a: of this Addendum shall be calculated as follows: the base
rent forth in paragraph 1.5 of the attached lease, shall be multipled by a
fraction the numerator of which shall be the CPI of the calendar month 2 months
prior to the month(s) specified in paragraph A,I,a above during which the
adjustment is to take effect, ant the denominator of which shall be the cpi of
the calendar month which is 2 months prior to (select one): ☐ the first month of
the term of this lease as set forth in paragraph 1.3 (‘base month’) or ☐ (fill
in other ‘base month’): the sum so calculated shall constt=itute the new monthly
base rent hereunder, but in no event, shall any such new monthly base rent be
less than the base rent payble for the month immediately preceding the rent
adjustment. c in the event the compilation and/or publication of the cpi shall
be transferred to any other governmental department or bureau or agency or shall
be discontinued, then the index most nearly the same as the CPI shall be used to
make such calculation, in the event that the parties cannot agree on such
alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordane with the them rules of said
association ant the arbitrators shall be binding upon the parties.the codt of
said Arbitration shall be paid equally by the parties ☑ II.Market Rental llalue
Adjustment(s) (MRV) a.On (Fill in MRV Adjustment Date(s)) the date on which the
option period commences the Base Rent I shall be adjusted to the lesser of (a)
the Base Rent for the month immediately preceding the option period, or (b)
"Market Rental Value" of the property as follows: 1)Four months prior to each
Market Rental Value Adjustment Date described above, the Parties shall attempt
to agree upon what the new MRV will be on the adjustment date. If agreement
cannot be reached, within thirty days, then: (a} Lessor and Lessee shall
immediately appoint a mutually acceptable appraiser or broker to establish the
new MRV within the next 30 days. Any associated costs will be split equally
between the Parties, or (b)Both Lessor and Lessee shall each immediately make a
reasonable determination of the MRV and submit such determination, in writing,
to arbitration in accordance with the following provisions: (i)Within 15 days
thereafter, Lessor and Lessee shall each select an independent third party☐
appraiser or ☑ broker ("Consultant"- check one) of their choice to act as an
arbitrator (Note: the parties may not select either of the Brokers that was
involved in negotiating the lease). The two arbitrators so appointed shall
immediately select athird mutually acceptable. INITIALS 2017 AIR CRE ALL Rights
Reserved. Page 1 of 2 Last Edited:2/26/2018 3:14 pm INITIALS OE-6.00, Revised
01-03-2017

 

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[ghbmhu5ckop3000027.jpg]

Consultant to act as a third arbitrator. (ii) The 3 arbitrators shall within 30
days of the appointment of the third arbitrator reach a decision as to what the
actual MRV for the Premises is, and whether Lessor’s or Lessee’s submitted MRV
is the closest thereto. The decision of a majority of the arbitrators shall be
binding on the Parties. The submitted MRV which is determined to be the closest
to the actual MRV shall thereafter be used by the Parties. (iii) If either of
the Parties fails to appoint an arbitrator within the specified 15 days, the
arbitrator timely appointed by one of them shall reach a decision on his or her
own, and said decision shall be binding on the Parties. (iv) The entire cost of
such arbitration shall be paid by the party whose submitted MRV is not selected,
ie the one that is NOT the closest to the actual MRV. 2) When determining MRV,
the Lessor, Lessee and Consultants shall consider the terms of comparable market
transactions which shall include, but not limited to, rent, rental adjustments,
abated rent, lease term and financial condition of tenants. 3) Notwithstanding
the foregoing, the new Base Rent shall not be less than the rent payable for the
month immediately preceding the rent adjustment. b. Upon the establishment of
each New Market Rental Value: 1) the new MRVwill become the new “Base Rent” for
the purpose of calculating any further Adjustments, and 2). the first month of
each Market Rental Value term shall become the new “Base Month” for the purpose
of calculating any further Adjustments. 3). the Base Rent shall increase by
three percent (3%) on each anniversary of the MRV Adjustment Date during the
remainder of the option period.  ☐III. Fixed Rental Adjustments(s) (FRA)  The
Base Rent shall be increased to the following amounts on the dates set forth
below:    On (Fill in FRA Adjustment Date(s)):     The New Base Rent shall
be:        ☐IV. Initial Term Adjustments  The formula used to calculate
adjustments to the Base Rate during the original Term of the lease shall
continue to be used during the extended term.   B. NOTICE:  Unless specified
otherwise herein, notice of any rental adjustments, other than Fixed Rental
Adjustments, shall be made as specified in paragraph 23 of the Lease.   C.
BROKER’S FEE:  The Brokers shall be paid a Brokerage Fee for each adjustment
specified above in accordance with paragraph 15 of the Lease or if applicable,
paragraph 9 of the Sublease.    AJR CRE. 500 North Brand Blvd, Suite 900,
Glendale, CA 91203, Tel 213-687-8777, Email contracts@aircre.com NOTICE: No part
of these works may be reproduced in any form without permission In
writing.            INITIALS © 2017 AIR CRE. All Rights Reserved. Page 2 of 2
Last Edited: 2/26/2018 3:14 PM  INITIALS OE-6.00, Revised 01-03-2017  

 

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Exhibit B – Subleased Premises

 

[ghbmhu5ckop3000028.jpg]

 

 

 

 

FLOOR PLAN 2870 WHIPTAIL LOOP, SUITE 102, CARLSBAD 18,710 SF 1st Floor 2nd Floor
0 • -Warehouse '' /

 

 

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Exhibit C – Rent Schedule

 

Ionis Pharmaceuticals, Inc.

2870 Whiptail Loop Building Lease

Operating Lease

 

 

 

 

 

 

2870 Whiptail Loop Building Lease SCHEDULED RENT & CAM PAYMENTS

Debit/ (Credit)

 

 

 

 

 

 

 

 

IONIS

AKCEA

 

Date

Rent Payments

CAM CHARGES

TOTAL RENT AND CAM CHARGES

75%

25%

Beg Bal.

 

 

 

 

 

 

17 days

March-18

-

 

 

-

-

1

April-18

20,196.00

4,677.50

24,873.50

18,655.13

6,218.38

2

May-18

-

 

 

-

-

3

June-18

-

 

 

-

-

4

July-18

-

 

 

-

-

5

August-18

20,196.00

4,677.50

24,873.50

18,655.13

6,218.38

6

September-18

20,196.00

4,677.50

24,873.50

18,655.13

6,218.38

7

October-18

20,196.00

4,677.50

24,873.50

18,655.13

6,218.38

8

November-18

20,196.00

4,677.50

24,873.50

18,655.13

6,218.38

9

December-18

20,196.00

4,677.50

24,873.50

18,655.13

6,218.38

10

January-19

20,196.00

4,677.50

24,873.50

18,655.13

6,218.38

11

February-19

20,196.00

4,677.50

24,873.50

18,655.13

6,218.38

12

March-19

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

13

April-19

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

14

May-19

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

15

June-19

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

16

July-19

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

17

August-19

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

18

September-19

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

19

October-19

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

20

November-19

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

21

December-19

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

22

January-20

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

23

February-20

20,801.88

4,677.50

25,479.38

19,109.54

6,369.85

24

March-20

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

25

April-20

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

26

May-20

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

27

June-20

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

28

July-20

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

29

August-20

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

30

September-20

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

31

October-20

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

32

November-20

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

33

December-20

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

34

January-21

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

35

February-21

21,425.94

4,677.50

26,103.44

19,577.58

6,525.86

36

March-21

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

37

April-21

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

38

May-21

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

39

June-21

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

40

July-21

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

41

August-21

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

42

September-21

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

43

October-21

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

44

November-21

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

45

December-21

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

46

January-22

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

47

February-22

22,068.71

4,677.50

26,746.21

20,059.66

6,686.55

48

March-22

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

49

April-22

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

50

May-22

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

51

June-22

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

52

July-22

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

53

August-22

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

54

September-22

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

55

October-22

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

56

November-22

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

57

December-22

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

58

January-23

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

59

February-23

22,730.78

4,677.50

27,408.28

20,556.21

6,852.07

60

March-23

23,412.70

4,677.50

28,090.20

21,067.65

7,022.55

61

April-23

23,412.70

4,677.50

28,090.20

21,067.65

7,022.55

62

May-23

23,412.70

4,677.50

28,090.20

21,067.65

7,022.55

63

June-23

23,412.70

4,677.50

28,090.20

21,067.65

7,022.55

 

 

 

 

 

1,185,147.39

395,049.13

TOTAL LEASE PAYMENTS

1,299,546.52

 

 

 

1,580,196.52

 

 

 

 

 

 

TOTAL LEASE AND CAM PAYMENTS

 

1,580,196.52

 

 

 

--------------------------------------------------------------------------------

MONTHLY BILLS

 

VENDOR

DESCRIPTION

MONTHLY ESTIMATED AMOUNT

 

AMAZON

CONFERENCE ROOM ELETRONICS

 

VARIOUS

SAN DIEGO GAS & ELECTRIC

UTILITIES

 

VARIOUS

COVERALL OF SAN DIEGO

COMMERCIAL CLEANING OF FLOORS

$556.00

 

SIGNA SOLUTIONS, INC.

3 - MONTH MAINTENANCE CONTRACT FOR COPIER

$795.97

 

DE LAGE LANDEN FINANCIAL SERVICES, INC.

CANON COPIER

 

VARIOUS