Exhibit 10.1

STANDARD INDUSTRIAL NET LEASE

 

CENTER NAME:    6868 NANCY RIDGE LANDLORD:    CANTA RANA RANCH, L.P.,    a
California limited partnership TENANT:    PHAGE BIOTECHNOLOGY CORPORATION    A
Delaware corporation

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STANDARD INDUSTRIAL NET LEASE

TABLE OF CONTENTS

 

1.    BASIC LEASE TERMS    1.1    Address for Notice    1.2    Description of
Premises    1.3    Commencement Date    1.4    Lease Term    1.5    Minimum
Monthly Rent    1.6    Security Deposit    1.7    Tenant’s Percentage    1.8   
Permitted Use    1.9    Tenant’s Guarantor    1.10    Tenant’s Parking Spaces   
1.11    Landlord’s Broker/Tenant’s Broker    1.12    Additional Provisions   
1.13    Exhibits 2.    LEASE OF PREMISES 3.    LEASE TERM    3.1    Commencement
   3.2    Delay in Commencement    3.3    Early Occupancy    3.4    Partial
Occupancy 4.    RENT    4.1    Minimum Monthly Rent    4.2    Lease Year    4.3
   Additional Rent    4.4    Impounds    4.5    Payment by EFT or ACH 5.   
SECURITY DEPOSIT    5.1    Amount of Security Deposit    5.2    Use of Security
Deposit 6.    OPERATING COSTS    6.1    Payment of Operating Costs by Tenant   
6.2    Tenant’s Share    6.3    Operating Costs    6.4    Common Facilities 7.
   MAINTENANCE AND REPAIRS    7.1    Tenant’s Obligations    7.2    Landlord’s
Obligations    7.3    Performance By Landlord 8.    REAL PROPERTY TAXES    8.1
   Payment of Real Property Taxes by Tenant    8.2    Real Property Taxes
Defined    8.3    Personal Property Taxes 9.    INSURANCE    9.1    Landlord’s
Insurance    9.2    Tenant’s Insurance    9.3    Payment of Insurance Costs   
9.4    Waiver of Subrogation    9.5    Tenant’s Use Not to Increase Premium 10.
   UTILITIES 11.    USE    11.1    Permitted Use    11.2    Compliance with
Legal Requirements    11.3    Waste, Quiet Conduct    11.4    Rules and
Regulations    11.5    Signs    11.6    Parking    11.7    Entry by Landlord 12.
   ACCEPTANCE OF PREMISES; NONLIABILITY OF LANDLORD; DISCLAIMER    12.1   
Acceptance of Premises    12.2    Landlord’s Exemption From Liability    12.3   
No Warranties or Representations    12.4    Keys 13.    INDEMNIFICATION 14.   
HAZARDOUS MATERIALS    14.1    Definitions    14.2    Use of Hazardous Materials
   14.3    Compliance With Laws; Handling Hazardous Materials    14.4    Notice;
Reporting; Notice Under Health and Safety Code Section 25359.7    14.5   
Indemnity    14.6    Entry and Inspection; Cure    14.7    Termination;
Expiration    14.8    Exit Assessment    14.9    Event of Default    14.10   
Prior Conditions 15.    ALTERATIONS: LIENS    15.1    Alterations by Tenant   
15.2    Permits and Governmental Requirements    15.3    Liens    15.4   
Remodel 16.    DAMAGE AND DESTRUCTION    16.1    Partial Damage    16.2    Total
Destruction    16.3    Partial Destruction of Center or Building    16.4   
Insurance Deductible    16.5    Damage Near End of Term    16.6    Landlord’s
Termination Notice; Effective Date; Relocation    16.7    Rent Abatement    16.8
   Tenant’s Obligations    16.9    Waiver of Inconsistent Statutes 17.   
CONDEMNATION    17.1    Effect on Lease    17.2    Condemnation Award    17.3   
Waiver of Inconsistent Statutes 18.    ASSIGNMENT AND SUBLETTING    18.1   
Landlord’s Consent Required    18.2    Landlord’s Election    18.3    Costs;
Transfer Fee    18.4    Assumption; No Release of Tenant    18.5    No Merger   
18.6    Reasonable Restriction 19.    SUBORDINATION; ATTORNMENT; ESTOPPEL
CERTIFICATE    19.1    Subordination    19.2    Attornment    19.3    Estoppel
Certificates    19.4    Lease Term 20.    SURRENDER OF PREMISES    20.1   
Condition of Premises    20.2    Removal of Certain Alterations, Fixtures and
Equipment Prohibited    20.3    Holding Over 21.    DEFAULT BY TENANT 22.   
REMEDIES    22.1    Termination of Lease    22.2    Continuation of Lease   
22.3    Performance by Landlord    22.4    Late Charge; Interest on Overdue
Payments    22.5    Landlord’s Right to Require Advance Payment of Rent;
Cashier’s Checks 23.    DEFAULT BY LANDLORD    23.1    Notice to Landlord   
23.2    Notice to Mortgagees    23.3    Limitation on Remedies Against Landlord
24.    GENERAL PROVISIONS    24.1    Action or Defense by Tenant    24.2   
Arbitration and Mediation; Waiver Of Jury Trial    24.3    Attorneys’ Fees   
24.4    Authority of Landlord and Tenant    24.5    Binding Effect; Parties
Benefited    24.6    Brokers    24.7    Construction    24.8    Counterparts   
24.9    Covenants and Conditions    24.10    Entire Agreement    24.11   
Exhibits    24.12    Financial Statements    24.13    Force Majeure    24.14   
Governing Law    24.15    Joint and Several Liability    24.16    Modification
   24.17    Modification for Lender    24.18    Nondiscrimination    24.19   
Notice    24.20    Partial Invalidity    24.21    Quiet Enjoyment    24.22   
Recording; Non-Disclosure

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   24.23    Relationship of the Parties    24.24    Relocation of Tenant   
24.25    Time of the Essence    24.26    Transfer of Landlord’s Interest   
24.27    Waiver    24.28    OFAC Certification 25.    LANDLORD AS CO-OWNERSHIP
26.    OPTION TO RENEW    26.1    Option Notice    26.2    Extension Term   
26.3    Non-Transferable    26.4    No Right to Exercise Option 27.   
CONFIDENTIALITY

 

Exhibit “A” –   Site/Floor Plan of Premises/Description of Center Exhibit “B” –
  Rules and Regulations Exhibit “C” –   Sign Criteria Exhibit “D” –   Work
Letter (Landlord Build with Allowance) Exhibit “E” –   Standard Lease Guaranty
Exhibit “F” –   Estimate of Additional Rent Exhibit “G” –   Approved Form of
Letter of Credit

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STANDARD INDUSTRIAL NET LEASE

This STANDARD INDUSTRIAL NET LEASE (“Lease”), dated for reference purposes only
March 15, 2006, is entered into by CANTA RANA RANCH, L.P., a California limited
partnership (“Landlord”), and PHAGE BIOTECHNOLOGY CORPORATION, a Delaware
corporation (“Tenant”).

 

1. BASIC LEASE TERMS

The basic terms of the Lease set forth in this Article 1 shall be read in
conjunction with the other Articles of this Lease, which define and explain the
basic terms.

1.1 Address for Notice (see Section 24.19):

 

Landlord:

  

11750 Sorrento Valley Road, Suite 209

San Diego, California 92121

Attention: [6868 Nancy Ridge] Property Management

Tenant:

  

101 Academy Ste 120

Irvine, CA 92617

1.2 Description of Premises:

 

Center Name:    6868 Nancy Ridge Address:    6868 Nancy Ridge Drive    San
Diego, California 92121 Suite/Unit:    100

Approximate Rentable Square Footage (see Exhibit ”A”): 7,575*

 

* The Approximate Rentable Square Footage of the Premises, as stated herein, is
comprised of the following: (i) approximately 5,742 rentable square feet (“RSF”)
of lab and manufacturing space (“lab space”), and (ii) 1,833 RSF of shell space
to be immediately converted to office space (“office space”), for a total of
approximately 7,575 RSF. Tenant shall occupy the lab space at the Commencement
Date (defined below) of the Lease. Tenant shall occupy the office space upon
Substantial Completion (defined herein) of the office space improvements. Tenant
shall not be required to pay any Minimum Monthly Rent during the Lease Term for
the office space until Substantial Completion of the office space improvements.
“Substantial Completion” shall mean the earlier of (i) Tenant’s receipt of a
certificate of occupancy for the office space, or (ii) Tenant’s occupancy of the
office space and commencement of its operations therefrom, as distinguished from
occupancy for completion of office space improvements, including installation of
furnishings, fixtures and equipment

1.3 Commencement Date: March 15, 2006.

1.4 Lease Term (see Article 3): Approximately eighty-seven (87) months,
beginning on the Commencement Date and ending on the last day of the calendar
month seven (7) years after the Commencement Date (the “Expiration Date”).

1.5 Minimum Monthly Rent: $16,665.00 per month ($2.20 per RSF per month) for the
first Lease Year, as provided in Article 4. The Minimum Monthly Rent shall be
increased on the first day of the second (2nd) Lease Year and each first day of
each succeeding Lease Year by four percent (4%) of the Minimum Monthly Rent in
effect immediately prior to the date of such adjustment. The Minimum Monthly
Rent during the first Lease Year is obtained by multiplying the approximate
rentable square footage of the lab space of Suite 100 (i.e., 5,742 RSF) by $2.20
per RSF, for a total of $12,632.40 until Substantial Completion of the office
space. Upon Substantial Completion of the office space and throughout the
initial Lease Term, the Minimum Monthly Rent shall solely be based upon the
approximate square footage of Suite 100 (i.e., 7,575 RSF). Tenant shall not be
required to pay any Minimum Monthly Rent and Additional Rent during the Lease
Term for the office space until Substantial Completion of the office space
improvements. In addition, upon Substantial Completion of the office space
improvements, the Minimum Monthly Rent applicable to the Premises shall be
abated for the first three months following Substantial Completion thereof.

1.6 Security Deposit: $72,000.00, consisting of a cash security deposit equal to
four (4) months of Minimum Monthly Rent. If Guarantor (defined below) elects to
exercise its option to terminate the guaranty (subject to Tenant establishing
Five Million Dollars ($5,000,000.00) cash on Tenant’s bank account statement and
balance sheet – see Exhibit “E”), then in that event, Tenant shall post an
additional $72,000.00 to the Security Deposit for a total of $144,000.00 cash
security deposit. In such event, Tenant shall have the right to replace the
entire cash security deposit for of $144,000.00 with an irrevocable, clean sight
letter of credit issued by a bank reasonably acceptable to Landlord. (see
Article 5).

1.7 Tenant’s Percentage (see Article 6): 38%. Tenant’s Percentage, as calculated
herein, is based upon the Approximate Rentable Square Footage of the entire
Premises, as stated in Section 1.2. * The 38% consists of 29% for the lab plus
9% for the office space. Each to commence upon the Tenant taking possession and
occupancy.

1.8 Permitted Use (see Article 11): Pharmaceutical research and development,
pharmaceutical and chemical manufacturing, general office, and other legal
related uses, and for no other use.

1.9 Tenant’s Guarantor (If none, so state): Cardiovascular BioTherapeutics,
Inc., a Delaware corporation (see Exhibit “E”).

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1.10 Tenant’s Parking Spaces (Unassigned) (see Section 11.6): 26, which is based
upon a ratio of 3.5 spaces per every 1,000 square feet of leased premises.

1.11 Landlord’s Broker (If none, so state): Burnham Real Estate

Tenant’s Broker (If none, so state): Burnham Real Estate

1.12 Additional Provisions: The following additional provisions are attached to
and made a part of this Lease (if none, so state): None.

1.13 Exhibits: The following Exhibits are attached to and made a part of this
Lease:

 

Exhibit “A” -

   Description of Premises

Exhibit “B” -

   Rules and Regulations

Exhibit “C” -

   Sign Criteria

Exhibit “D” -

   Work Letter (Landlord Build with Allowance)

Exhibit “E” -

   Standard Lease Guaranty

Exhibit “F” -

   Estimate of Additional Rent

Exhibit “G” -

   Approved Form of Letter of Credit

 

2. LEASE OF PREMISES

Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the
premises (the “Premises”) described in Section 1.2, which Premises are indicated
on the site/floor plan attached as Exhibit ”A”. The Premises are part of the
office or industrial center identified in Section 1.2 (the “Center”). The
approximate Rentable Square Footage identified in Section 1.2 is a measurement
of the leaseable floor area of the Premises, as determined by Landlord and
applied on a consistent basis throughout the Center. As used herein, the term
“Building” means the building of which the Premises are a part; if the Premises
encompass the entire Building, then the terms “Premises” and “Building” shall
have the same meanings. Landlord shall deliver the Premises to Tenant clean and
free of debris on the Commencement Date and warrants to Tenant that the existing
plumbing; electrical systems; fire sprinkler system; lighting; heating,
ventilation and air conditioning systems; and roof (collectively, the “Major
Systems”), if any, in the Premises, other than those constructed by Tenant,
shall be in good operating condition on the Commencement Date.

 

3. LEASE TERM

3.1 Commencement. The term of this Lease (the “Lease Term”) shall commence on
the Commencement Date stated in Section 1.3, and shall continue for the period
stated in Section 1.4, unless sooner terminated pursuant to any provision of
this Lease.

3.2 Delay In Commencement. If Landlord cannot deliver possession of the Premises
defined in Section 1.2 on the Commencement Date specified in Section 1.3 for any
reason, Landlord shall not be subject to any liability therefor. Such
nondelivery shall not affect the validity of this Lease or the obligations of
Tenant hereunder. However: (a) Tenant shall not be obligated to pay rent until
possession of the Premises is delivered to Tenant, (b) if possession of the
Premises defined in Section 1.2 not delivered to Tenant within thirty (30) days
of the Commencement Date, the last day of the Lease Term shall be extended by
the total number of days that possession is so delayed, plus the minimum number
of additional days necessary to make the Expiration Date the last day of a
calendar month, and (c) if Landlord has not delivered possession of the Premises
defined in Section 1.2 within ninety (90) days after the Commencement Date,
Tenant may elect to terminate this Lease by delivering written notice to
Landlord within ten (10) days thereafter, in which event the parties shall be
discharged from all further obligations hereunder. Landlord shall return the
full deposit defined under Article 5, for any termination made pursuant to this
Section 3.2.

3.3 Early Occupancy. If Tenant occupies the Premises prior to the Commencement
Date, such occupancy shall be subject to all provisions of this Lease. Such
occupancy shall not advance the Expiration Date. Tenant shall pay Minimum
Monthly Rent at the rate in effect for the first Lease Year, Additional Rent and
all other charges required hereunder for such early occupancy period.

3.4 Partial Occupancy. On the Commencement Date, Tenant shall be entitled to
occupy a portion of the Premises (defined in Section 1.2 as the lab space).
Until Substantial completion to that portion of the Premises defined in
Section 1.2 as the office space, Tenant shall not be required to pay any Minimum
Monthly Rent (as defined in Section 4.1) or any Operating Costs (as defined in
Section 6.3) for the office space. Upon Substantial Completion of the office
space improvements, Tenant shall be required to pay Minimum Monthly Rent and
Operating Costs for the entire Premises, as described herein, subject to the
provisions of Section 1.5.

 

4. RENT

4.1 Minimum Monthly Rent. Tenant shall pay minimum monthly rent (“Minimum
Monthly Rent”) in the initial amount stated in Section 1.5. The Minimum Monthly
Rent shall be increased as set forth in Section 1.5 and/or elsewhere in this
Lease. Tenant shall pay the Minimum Monthly Rent on or before the first day of
each calendar month, in advance, at the office of Landlord or at such other
place designated by Landlord, without deduction, offset or prior demand. If the
Commencement Date is not the first day of a calendar month, the rent for the
partial month at the beginning of the Lease Term shall be prorated on a per diem
basis and shall be due on the first day of such partial month. Upon execution of
this Lease, and before the Commencement Date, Tenant shall pay to Landlord the
aggregate of the first month’s Minimum Monthly Rent calculated solely as to the
lab space, the first month’s Monthly Impound Payment (see Section 4.4), and the
Security Deposit (see Section 5).

4.2 Lease Year. As used in this Lease, the term “Lease Year” means (i) the first
period of twelve (12) full calendar months following the Commencement Date
(including, if the Commencement Date is not the first day of a calendar month,
the period between the Commencement Date and the next first day of the month),
(ii) each period of twelve (12) full calendar months thereafter, and (iii) any
remaining period at the end of the Lease Term of less than twelve (12) full
calendar months.

4.3 Additional Rent. All charges payable by Tenant for Operating Costs
(Article 6), Maintenance and Repairs (Article 7), Real Property Taxes
(Article 8), Insurance Costs (Article 9), and Utilities (Article 10) are
hereinafter referred to herein as “Additional Rent.” All Minimum Monthly Rent,
Additional Rent, and all other charges and monetary amounts due Landlord from
Tenant under this Lease or otherwise shall constitute “rent.” Unless this Lease
provides otherwise, all Additional Rent shall be paid by Tenant, without
limitation or offset, after Tenant’s receipt of a statement from Landlord.
Except as expressly stated otherwise, if any Minimum Monthly Rent is abated or
waived pursuant to another specific term of this Lease or in any separate
agreement, it is understood that such abatement or waiver shall apply only to
the Minimum Monthly Rent, and Tenant shall be obligated to pay all Additional
Rent and other charges (including the applicable impounds thereof) during such
periods of abatement or waiver of Minimum Monthly Rent. * (see previous page)

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4.4 Impounds. Landlord shall have the right, but not the obligation, to collect
and impound, in advance, any or all components of Additional Rent based upon
Landlord’s reasonable estimate of Tenant’s future liability for such amounts
under this Lease. Landlord shall initially establish the monthly amount of such
impound (“Monthly Impound Payments”), based upon its estimate of one-twelfth of
Tenant’s annual liability therefor. Landlord shall have the right at any time to
adjust the amount of the Monthly Impound Payment upon notice to Tenant. The
Monthly Impound Payment shall be due and payable on the first day of each month
throughout the Lease Term. Any failure to pay the Monthly Impound Payment when
due shall be considered a failure to pay rent when due under Section 21.1 and
other relevant provisions of this Lease, and shall entitle Landlord to exercise
any or all of its remedies available in the same manner as for the failure to
pay rent. Upon the occurrence of any Event of Default by Tenant hereunder,
Landlord shall have the right to apply all unapplied amounts of Monthly Impound
Payments to Tenant’s default. Within ninety (90) days after the end of each
calendar year, Landlord shall deliver to Tenant an accounting of Tenant’s actual
Share of Additional Rent and the estimated amounts of Monthly Impound Payments
previously paid by Tenant. During the Term, Tenant and its accountants and
agents may review, at Tenant’s sole cost and expense, the books and records
supporting such determination in an office of Landlord, or Landlord’s agent,
during normal business hours, upon giving Landlord five (5) days advance written
notice within sixty (60) days after receipt of such accounting, but in no event
more often than once in any one (1) year period, subject to execution of a
confidentiality agreement acceptable to both parties, and provided that if
Tenant utilizes an independent accountant to perform such review it shall be one
of national standing which is reasonably acceptable to Landlord, is not
compensated on a contingency basis and it shall be subject to such
confidentiality agreement. In the event of a dispute between Landlord and Tenant
relating to the accounting or any charges imposed on Tenant pursuant thereto,
the confidentiality agreement shall not preclude Tenant from including any such
accounting in any action asserting relief therefrom. If Tenant fails to object
to Landlord’s determination of Expenses within ninety (90) days after receipt,
Tenant shall be deemed to have approved such determination and shall have no
further right to object to or contest such determination. Any overpayment by
Tenant shall be credited against next Monthly Impound Payments due hereunder,
or, if the Term has expired, shall be remitted to Tenant. Tenant shall pay the
amount of any underpayment within fifteen (15) days after receipt of the
accounting. Tenant acknowledges that the Monthly Impound Payments are estimates
only and not a representation of the amount of Tenant’s ultimate liability for
Additional Rent

4.5 Payment by EFT or ACH. At Landlord’s election, and upon at least thirty (30)
days’ notice to Tenant, Landlord may require that all payments of Minimum
Monthly Rent, Additional Rent and other amounts due hereunder be made in
immediately available funds or by wire transfer by electronic fund transfer
through the Automated Clearing House network or any similar system designated by
Landlord (“ACH”). Such payments shall be initiated by Tenant or Landlord, at
Landlord’s election, to an account designated from time to time by Landlord at
an ACH member bank for settlement not later than 12:00 o’clock noon, San Diego,
California time, on the dates such sums or payments are respectively due. Any
payment received after such time shall be deemed to have been made after the due
date.

 

5. SECURITY DEPOSIT

5.1 Amount of Security Deposit. Upon execution of this Lease, Tenant shall
deposit with Landlord the amount specified in Section 1.6 (the “Security
Deposit”), to be held by Landlord, without liability for interest, as security
for Tenant’s performance of its obligations under this Lease. The Security
Deposit shall consist of a cash security deposit of $72,000.00. If the Standard
Lease Guaranty is terminated pursuant to the terms of the Standard Lease
Guaranty (See Exhibit “E”), Tenant’s Security Deposit, as set forth in
Section 1.6, throughout the remaining Lease Term, and any extensions thereof,
shall be increased by an additional $72,000.00 for an aggregate cash deposit of
$144,000.00.

5.2 Use of Security Deposit. Landlord shall not be required to keep the Security
Deposit separate from its other accounts. Landlord may apply all or a part of
the Security Deposit to any unpaid rent (including unpaid Additional Rent or
Monthly Impound Payments) or other monetary payments due from Tenant or to cure
any other default of Tenant hereunder and to compensate Landlord for all damage
and expense sustained as a result of such default. If all or any portion of the
Security Deposit is so applied, Tenant shall deposit cash sufficient to restore
the Security Deposit to its original amount within fifteen (15) days after
receipt of Landlord’s written demand. If Tenant fully and faithfully performs
each of its obligations under this Lease, the Security Deposit or any balance
thereof shall be returned to Tenant within thirty (30) days of the later of the
expiration or earlier termination of this Lease or the vacation of the Premises
by Tenant. At Landlord’s request, Tenant shall accompany Landlord or Landlord’s
representative on a “walk-through” of the Premises prior to Landlord’s return of
the Security Deposit.

5.3 Letter of Credit. If the Standard Lease Guaranty is terminated pursuant to
the terms of the Standard Lease Guaranty (See Exhibit “E”), Tenant shall
increase the Security Deposit by additional $72,000.00 either by cash deposit or
a letter of credit. Such Letter of Credit shall be issued by a financial
institution in a form and substance acceptable to Landlord (with the form
attached hereto as Exhibit “H” being acceptable). The Letter of Credit shall
have an original term of no less than one year with provisions for extensions
unless sixty (60) days prior written notice is given to Landlord by the issuing
bank. The Letter of Credit shall provide for partial draws. Except as provided
below, Tenant shall keep the Letter of Credit, at its expense, in full force and
effect throughout the Lease Term. Upon the happening of any “Draw Event” (as
defined below), Landlord or its assignee, at its option, may present its written
demand for payment of the entire face amount of the Letter of Credit and the
funds so obtained shall become due and payable to Landlord or its assignee to be
applied pursuant to the provisions of this Lease. A “Draw Event” shall mean any
of the following: (i) Tenant becomes or is the subject of any bankruptcy,
insolvency or similar proceeding or event, (ii) an Event of Default occurs under
the Lease (as defined in Article 21); or (iii) the Letter of Credit is not
extended or replaced within thirty (30) days prior to its expiration (which
non-renewal itself shall constitute an Event of Default under the Lease
immediately without further notice).

 

6. OPERATING COSTS

6.1 Payment of Operating Costs by Tenant. Tenant shall pay its Share of
Operating Costs to Landlord on a monthly or other periodic basis selected by
Landlord. Tenant shall pay the amount of such Share to Landlord, to the extent
such obligation exceeds any amount thereof impounded under Section 4.4, after
receipt of a statement from Landlord.

6.2 Tenant’s Share. Tenant’s “Share” (sometimes referred to as “Pro Rata Share”)
is the percentage or proportion of the various components of Additional Rent and
certain other charges for which Tenant is responsible under this Lease. Tenant’s
Share for each such component shall be Tenant’s Percentage as stated in
Section 1.7, unless Landlord determines that another percentage or proportion
would be equitable based on factors such as Tenant’s use of such in excess of
its Percentage, such component of Additional Rent applies to some but not all of
the Center, or factors set forth elsewhere in this Lease. Tenant’s Percentage
represents the approximate current ratio of the Rentable Square Footage of the
Premises (identified in Section 1.2) to the total Rentable Square Footage of the
Center, as determined by Landlord from time to time. Changes in Rentable Square
Footage shall be effective on the first day of the first calendar month
following the change.

6.3 Operating Costs. “Operating Costs” includes all costs of operating,
managing, repairing, replacing, and maintaining the Common Facilities, including
without limitation: gardening and landscaping; the cost of public liability,

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property damage and other insurance applicable to the Common Facilities,
including any deductibles thereunder; Real Property Taxes applicable to the
Common Facilities; utilities; line painting and parking lot repairs; roof
repairs; lighting; trash and refuse removal; supplies; equipment; exterior
painting; capital improvements (including without limitation the costs of roof,
parking lot and underground utilities replacements); the costs of altering,
improving, renovating, upgrading or retrofitting any portion of the Common
Facilities to comply with all laws, regulations and governmental requirements
applicable to the Center (including without limitation those related to disabled
persons, hazardous materials, lighting upgrades, sprinkler and energy-saving
retrofits); security service; property management costs and administrative fees;
bookkeeping services; labor; and the cost of personnel to implement such
services and to direct parking. In lieu of including the entire amount of any
such expense in Operating Costs in any one period, Landlord, at its election,
may spread the inclusion of, or may amortize, any such expenses, or a reasonable
reserve for anticipated expenses, in Operating Costs over such multiple periods
as Landlord shall determine. In addition, Landlord shall be entitled to recover,
as additional rent (which, along with any other capital expenditures
constituting Operating Costs, Landlord may either include in Operating Costs or
cause to be billed to Tenant along with Operating Costs and Taxes but as a
separate item), Tenant’s Share of: (i) an allocable portion of the cost of
capital improvement items which are reasonably anticipated to reduce operating
expenses, and (ii) subject to the provisions of Section 11.2, other capital
expenses which are required under any governmental laws, regulations or
ordinances which were not applicable to the Center at the time it was
constructed; but the costs described in this sentence shall be amortized over
the reasonable life of such expenditures in accordance with such reasonable life
and amortization schedules as shall be determined by Landlord. Notwithstanding
the foregoing, Operating Expenses shall not include the following:
(1) depreciation on the Building or equipment or systems therein (except to the
extent otherwise provided above); (2) debt service; (3) rental under any ground
or underlying lease; (4) interest (except to the extent otherwise provided
above); (5) Real Property Taxes (as hereinafter defined); (6) attorney’s fees
and expenses incurred in connection with lease negotiations with prospective
Building tenants; (7) capital expenditures except as expressly provided in this
Lease; (8) the cost of tenant improvements, including but not limited to the
cost of decorating, improving for tenant occupancy, painting or redecorating
portions of the Building to be demised to tenants; (9) executive salaries;
(10) advertising; and (11) real estate broker’s or other leasing commission.

6.4 Common Facilities. Common Facilities” (sometimes referred to herein as
“Common Areas”) means all areas, facilities, utilities, equipment and services
provided by Landlord for the common use or benefit of the occupants of the
Center and their employees, agents, customers and other invitees, including
without limitation, if the same exist: buildings, building lobbies, common
corridors and hallways, restrooms, pedestrian walkways, driveways and access
roads, access facilities for disabled persons (including elevators), truck
serviceways, loading docks, garages, driveways, parking lots, landscaped areas,
mechanical equipment yards, stairways, elevators, retaining walls, all areas
required to be maintained under the conditions of governmental approvals for the
Center, and other generally understood public or common areas. All Common
Facilities shall at all times be subject to the exclusive control and management
of Landlord. Landlord reserves the right to relocate, alter, improve, or adjust
the size and location of any Common Facilities from time to time without
liability to Tenant. Landlord shall have the right from time to time to
establish, modify and enforce reasonable rules and regulations with respect to
the Common Facilities. Landlord shall have the right to construct, maintain and
operate lighting facilities on the Common Facilities; to police the same; from
time to time to change the area, level, location and arrangement of parking
areas and other facilities; to restrict parking by tenants, their officers,
agents and employees to employee parking areas; to close all or any portion of
the Common Facilities to such extent; to close temporarily all or any portion of
the Common Facilities for any reason, including for the purpose of preventing a
dedication thereof or the accrual of any rights to any person or the public
therein; and to do and perform such other acts in and to the Common Facilities
which Landlord shall determine, using good business judgment, to be advisable to
improve the convenience and use thereof by tenants, their officers, agents,
employees and customers. Subject to the foregoing, all Common Facilities not
within the Premises, which Tenant may use under a revocable license, on a
nonexclusive basis in common with other tenants, and if any such license is
revoked, or if the amount of such areas is diminished, Landlord shall not be
subject to any liability and Tenant shall not be entitled to any compensation or
abatement of rent, nor shall such revocation or diminution be deemed
constructive or actual eviction.

 

7. MAINTENANCE AND REPAIRS

7.1 Tenant’s Obligations. Except as provided in Section 7.2, Tenant, at its sole
cost, shall keep the Premises in good and tenantable condition during the Lease
Term, including without limitation: all nonstructural, interior and exterior
areas; landscaped areas not part of the Common Facilities; all heating,
ventilation and air conditioning systems and equipment; all glass, glazing,
windows, window moldings, partitions, doors and door hardware; all interior
painting; all fixtures and appurtenances in the Premises or exclusively serving
the Premises including electrical, lighting and plumbing fixtures; and all other
portions of the Premises seen or unseen. If any portion or element of the
Premises, or the other systems or equipment for which Tenant is responsible
hereunder cannot be fully repaired, Tenant shall promptly replace the same at
its sole cost and expense regardless of whether the benefit of such replacement
extends beyond the Lease Term, provided however, if any replacement involves an
improvement specific and unique to Tenant’s use of the Premises, then Tenant
shall be fully responsible for the costs of replacement thereof, and, if such
replacement is not specific and unique to the use of the Premises by Tenant,
then Tenant shall be responsible to effect such replacement, and the cost of
such expenditure shall be amortized over such useful life as Landlord shall
reasonably determine. It is the intention of Landlord and Tenant that Tenant
shall maintain the Premises, at all times during the Lease Term, in a fully
operative condition and substantially in the condition as first delivered to
Tenant, at Tenant’s expense. As such, Tenant, at its sole expense, shall be
exclusively responsible for all interior maintenance and janitorial service for
the Premises. If any heating and air conditioning system or equipment
exclusively serves the Premises, Tenant shall additionally obtain and keep in
force a preventive maintenance contract providing for the regular (at least
quarterly) inspection and maintenance of the heating and air conditioning system
(including leaks around ducts, pipes, vents, and other parts of the air
conditioning) by a reputable licensed heating and air conditioning contractor
acceptable to Landlord. Prior to April 1 of each calendar year, Tenant shall
deliver Landlord written confirmation from such contractor verifying that such a
contract has been entered into and that the required service will be provided.
Notwithstanding the foregoing, Landlord shall have the right, upon written
notice to Tenant, to undertake the responsibility for preventive maintenance and
repair of the heating and air conditioning system, at Tenant’s sole cost and
expense.

7.2 Landlord’s Obligations. Landlord shall repair and maintain the Common
Facilities, the roof, the exterior walls, the foundations and structural
portions of the Premises and the Building. Tenant shall pay (a) its Share of the
costs of such maintenance, (b) the full amount of any maintenance and repairs
necessitated by any act, omission, conduct or activity of, or breach of this
Lease by, Tenant or any of Tenant’s officers, agents, customers or invitees
(plus fifteen percent (15%) of the cost thereof to reimburse Landlord for
overhead); and (c) any maintenance and repairs necessitated by breaking and
entering of the Premises. Tenant shall pay its Share of such maintenance and
repair costs incurred by Landlord, to the extent such obligation exceeds any
amount thereof impounded under Section 4.4, after receipt of a statement from
Landlord. Except to the extent contemplated in Section 16 hereof, there shall be
no abatement of rent, and no liability of Landlord, by reason of any injury to
or interference with Tenant’s

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business arising from the making of any repairs, alterations, or improvements to
any portion of the Premises or the Center. Tenant expressly waives all rights to
make repairs at the expense of Landlord or deduct any amounts from rent as
provided in any statute or ordinance now or hereafter in effect, including its
rights under the provisions of California Civil Code Sections 1941 and 1942.
Landlord’s obligations under this Section are not intended to alter or modify in
any way the provisions of Article 12.

7.3 Performance By Landlord. If Tenant refuses or neglects to perform its
maintenance obligations hereunder to the reasonable satisfaction of Landlord,
Landlord shall have the right (but not the obligation), upon ten (10) days’
prior notice to Tenant, to enter the Premises and perform such repairs and
maintenance on behalf of Tenant. Landlord shall also have the right (but not the
obligation), without prior notice to Tenant, to correct or remove any dangerous
or hazardous condition, to repair the heating, ventilation, air conditioning or
plumbing systems, to correct, repair or bring into legal compliance any fire or
other life safety systems of the Premises, and to repair or replace any broken
glass or glazing, if Tenant fails to correct or repair the same within
twenty-four (24) hours after the need arises. Landlord shall not be liable to
Tenant for any loss or damage to Tenant’s merchandise, fixtures, or other
property or to Tenant’s business in connection with Landlord’s performance
hereunder, and Tenant shall pay Landlord’s costs plus fifteen percent (15%) of
such amount for overhead, upon presentation of a statement therefor. Tenant
shall also pay interest at the rate provided in Section 22.4 from the date of
demand for payment of repairs by Landlord, which demand shall be accompanied by
invoices marked “paid” reflecting the repair work completed by Landlord, to the
date paid by Tenant. In the event that Landlord fails to perform its obligations
under this Section in a timely fashion, Tenant shall provide Landlord with ten
(10) days written notice of Tenant’s intention to perform such repairs.
Landlord, at its option, may approve or disapprove of Tenants proposed repairs
during the ten (10) day time period. If Landlord disapproves Tenant’s request,
Tenant shall not be permitted to make any of the repairs, unless the failure to
affect such repairs provides a substantial risk to Tenant’s operations within
the Premises. In the event that Landlord fails to respond during the ten
(10) day time period, such failure to respond shall be deemed to be Landlord’s
approval of Tenant’s right to make the proposed repairs at Landlord’s expense.
Tenant shall not be entitled to deduct the cost of any repairs made pursuant to
this Section from the Minimum Monthly Rent or any Additional Rent due and owing
under this Lease. Rather, Tenant shall be required to submit to Landlord any
invoices for payment of the repairs to the address specified in Section 1.1,
which amounts shall be paid immediately, or if not paid, shall bear interest at
the rate provided in Section 22.4 hereof.

 

8. REAL PROPERTY TAXES

8.1 Payment of Real Property Taxes by Tenant. Tenant shall pay all Real Property
Taxes applicable to the Premises during the Lease Term. If the Premises are not
separately assessed, Tenant shall pay its Share thereof as equitably determined
by Landlord based upon the Rentable Square Footage of the Premises compared to
the total Rentable Square Footage covered by the tax bill, the respective
valuations assigned in the assessor’s worksheet, and/or or other relevant
factors. Tenant shall pay its Share of Real Property Taxes to Landlord, to the
extent such obligation exceeds any amount thereof impounded under Section 4.4,
after receipt of a statement from Landlord.

8.2 Real Property Taxes Defined. “Real Property Taxes” means all taxes,
assessments, levies, fees and other governmental charges levied on or
attributable to the Premises or any part thereof, including without limitation:
(a) real property taxes and assessments levied with respect to all or a portion
of the Premises, (b) assessments, charges and fees charged by governmental
agencies or districts for services or facilities provided to the Premises,
(c) transfer, transaction, rental, gross receipts, license or similar taxes or
charges measured by rent received by Landlord, excluding any federal or state
income, franchise, estate or inheritance taxes of Landlord, (d) taxes based upon
a reassessment of the Premises due to a transfer or change of ownership, and
(e) any assessment, charge or fee that is a substitute in whole or in part for
any tax now or previously included within the definition of Real Property Taxes.
If Landlord elects to contest an assessment of any Real Property Taxes, Landlord
shall have the right to recover its actual costs of such contest (including
attorneys’ fees and costs) as part of Real Property Taxes, but only to the
extent such contest has resulted in a reduction of Real Property Taxes. Tenant
shall not be entitled to the benefit of any reduction, refund, rebate or credit
accruing or payable to Landlord prior to the commencement of or after the
expiration or other termination of the Lease Term.

8.3 Personal Property Taxes. Tenant shall pay prior to delinquency all taxes
charged against trade fixtures, furnishings, equipment or any other personal
property belonging to Tenant. Tenant shall attempt to have such personal
property taxed separately from the Premises. If any such taxes on Tenant’s
personal property are levied against Landlord or the Premises, or if the
assessed value of the Premises is increased by inclusion of a value placed upon
such personal property of Tenant, then: (a) Landlord, after written notice to
Tenant, shall have the right to pay the taxes levied against Landlord, or the
taxes based upon such increased valuation, but under protest if so requested by
Tenant in writing, and (b) Tenant shall pay to Landlord the taxes levied against
Landlord, or the taxes resulting from such increased valuation, after Tenant’s
receipt of a written statement from Landlord.

 

9. INSURANCE

9.1 Landlord’s Insurance. During the Lease Term, Landlord shall maintain
insurance covering loss or damage to the Premises and Center (excluding Tenant’s
Alterations, fixtures, equipment and personal property), insuring against any or
all risks of physical loss (and including, at Landlord’s option, flood,
earthquake, and boiler and machinery coverage), with the scope and amounts of
such coverage as determined by Landlord. Said insurance shall provide for
payment of loss thereunder to Landlord or to the holder of a first mortgage or
deed of trust on the Premises. Landlord may also maintain during the Lease Term,
as part of its casualty insurance, a policy of rental income insurance covering
a period of one (1) year, with loss payable to Landlord. Landlord may also
maintain (but shall not be required to maintain) liability and other insurance
(including environmental insurance) as Landlord, at its sole option, may elect
to maintain. Landlord shall maintain public liability insurance for Common
Facilities.

9.2 Tenant’s Insurance.

(a) Tenant shall carry, at Tenant’s sole expense, insurance against any or all
risks of physical loss in an amount adequate to cover the cost of replacement of
all of Tenant’s Alterations, trade fixtures, equipment and personal property. If
Tenant’s insurance does not otherwise cover losses caused by breakage or other
malfunction of any of Tenant’s machinery or equipment used by Tenant in the
Premises, then Tenant shall carry equipment breakdown insurance (so called
boiler and machinery insurance) covering Tenant’s equipment and machinery
(including any heating, ventilation and air conditioning systems, electrical
equipment, and the like). Tenant acknowledges that Landlord’s insurance is not
intended to cover Tenant’s Alterations, trade fixtures, equipment, and personal
property. If the Premises contain any plate glass, Tenant shall carry
plate-glass insurance covering all plate glass on the Premises at full
replacement cost. Any policy proceeds shall be used for the repair or
replacement of the property damaged or destroyed unless this Lease shall cease
and terminate under the provisions of Article 16, whereupon any insurance
proceeds covering any of Tenant’s Alterations, fixtures, equipment and personal
property that Tenant is required to leave in the Premises at the expiration or
earlier termination of the Lease Term under Article 20 shall be payable to
Landlord.

(b) Tenant shall carry, at Tenant’s sole expense, comprehensive or commercial
general liability insurance, fully covering any and all claims arising from
personal injury, death, and/or property damage occurring in or about the
Premises or the Center. Such liability insurance shall include without
limitation bodily injury (including wrongful death), property damage,
advertising injury, personal injury and contractual liability coverages
(including Tenant’s indemnification obligations under Article 13), independent
contractors, owned, nonowned, and hired vehicle liability

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and, if alcoholic beverages are served, sold, consumed or obtained in the
Premises, liquor-law liability. The initial limit to Tenant’s insurance broker
of such insurance shall be at least $3,000,000 combined single liability limit
if the Rentable Square Footage of the Premises (as indicated in Section 1.2)
exceeds 3,000 square feet, or $2,000,000 combined single liability limit if such
Rentable Square Footage is 3,000 square feet or less. Such liability insurance
limit shall be subject to periodic increase, at Landlord’s election, based upon
inflation, increased liability awards, lender requirements, the recommendations
of Landlord’s professional insurance advisors, and other relevant factors.
Tenant shall also, at its sole cost and expense, obtain worker’s compensation
coverage in an amount adequate to comply with law, and employer’s liability
coverage with a limit of not less than $2,000,000. If Tenant’s use of the
Premises involves any use, generation, manufacturing, storage or disposal of any
Hazardous Materials, or if any of Tenant’s activities increases any risk of any
liability to Tenant or Landlord under Hazardous Materials Laws, Tenant shall
carry such environmental insurance as may be reasonably required by Landlord or
Landlord’s lender. Tenant shall, at Tenant’s sole expense, maintain such other
liability insurance as Tenant reasonably deems necessary to protect Tenant.

(c) Each policy of insurance required to be carried by Tenant hereunder shall
(i) name Landlord, Landlord’s lender and Landlord’s property manager (if any) as
additional insureds, (ii) contain cross-liability and contractual liability
provisions, (ii) provide that no cancellation or reduction in coverage shall be
effective until thirty (30) days after written notice to Landlord and Landlord’s
lender, (iii) be issued by an insurer licensed in California and reasonably
approved by Landlord, (iv) not exclude coverage for acts of terrorism, and
(iv) be primary and noncontributory to any insurance carried by Landlord,
regardless of the absence of negligence or other fault of Tenant for alleged
injury, death and/or property damage. The deductible or self-insured retention
on any insurance required to be carried by Tenant hereunder shall not exceed,
without the prior written consent of Landlord, Five Thousand Dollars ($5,000)
per occurrence. Tenant shall be responsible for the payment of the full amount
of any deductible or self-insured retention on its insurance. No insurance
carried or required to be carried by Tenant, nor the amount or limits thereof,
shall limit Tenant’s liability nor relieve Tenant of any obligation under this
Lease.

(d) Each policy of insurance required to be carried by Tenant hereunder shall be
obtained by Tenant and maintained in full force and effect throughout the Lease
Term and any other period of Tenant’s actual or constructive possession of the
Premises. Prior to the Commencement Date or any earlier taking of possession of
any part of the Premises, Tenant shall deliver to Landlord (i) an ACORD Form 27
certificate (or such other certificate providing the greatest protection to
Landlord reasonably available) evidencing all insurance required to be
maintained by Tenant and identifying all additional insureds required to be so
designated under the terms of this Lease, and (ii) all additional insured
endorsements provided by the insurer in favor of Landlord, Landlord’s property
manager and Landlord’s lender as required by this Lease. Tenant shall deliver
evidence of a renewal of each required policy, together with all required
endorsements, at least thirty (30) days prior to expiration thereof. Tenant
shall permit Landlord at all reasonable times to inspect the policies of
insurance, and shall deliver copies thereof to Landlord within ten (10) days
after Landlord’s request therefor. Tenant shall be in material breach of this
Lease if Tenant fails to obtain the insurance required under this Section, or if
Tenant obtains insurance with terms, conditions and/or exclusions that are
inconsistent with the requirements and terms of this Lease.

9.3 Payment of Insurance Costs. Tenant shall pay directly all premiums for its
liability insurance required under Section 9.2 and for all other insurance
Tenant elects to carry. Tenant shall pay its Share of the premiums for the
insurance policies carried by Landlord described in this Article or elsewhere in
this Lease (“Insurance Costs”). If the Lease Term expires before the expiration
of any such insurance policy, Tenant’s liability for premiums shall be prorated
on an annual basis. Tenant shall pay its Share of Insurance Costs to Landlord,
to the extent such obligation exceeds any amount thereof impounded under
Section 4.5, within fifteen (15) days after receipt of a statement from
Landlord. If any insurance policy maintained by Landlord covers property other
than the Center (under a so-called “blanket” policy or otherwise), Landlord
shall reasonably apportion the premium therefor among the properties so covered.
In addition, Tenant shall pay its Share of any deductible amount under
Landlord’s insurance policies after receipt of a statement from Landlord.
Tenant’s Share of any such deductible shall be equitably determined by Landlord
based upon, among other factors, the Rentable Square Footage of the Premises
affected compared to the Rentable Square Footage of all other affected areas in
the Center, and the Replacement Cost (as defined in Section 16.1) applicable to
the damage to the Premises compared to that applicable to all other affected
areas. Landlord shall provide Tenant with a Certificate of Insurance identifying
Landlord’s insurer, policy number and separately stated value for the Center.

9.4 Waiver of Subrogation. So long as their respective insurers so permit,
Landlord and Tenant hereby mutually waive their respective rights of recovery
against each other for any loss insured by fire, extended coverage, All Risks or
other insurance now or hereafter existing for the benefit of the respective
party but only to the extent of the net insurance proceeds payable under such
policies. Each party shall obtain any special endorsements required by their
insurer to evidence compliance with the aforementioned waiver.

9.5 Tenant’s Use Not to Increase Premium. Tenant shall not keep, use,
manufacture, assemble, sell or offer for sale in or upon the Premises any
article that may be prohibited by, or that might invalidate, in whole or in
part, the coverage afforded by, a standard form of fire or all risk insurance
policy. Tenant shall pay the entire amount of any increase in premiums that may
be charged during the Lease Term for the insurance that may be maintained by
Landlord on the Premises or the Center resulting from the type of materials or
products stored, manufactured, assembled or sold by Tenant in the Premises,
whether or not Landlord has consented to the same. In determining whether
increased premiums are the result of Tenant’s use of the Premises, a schedule
issued by the entity making the insurance rate on the Premises showing the
various components of such rate shall be conclusive evidence of the items and
charges that make up the fire insurance rate on the Premises.

 

10. UTILITIES

Tenant shall pay the cost of all water, gas, heat, light, power, sewer,
telephone, refuse disposal, and all other utilities and services supplied to the
Premises. Tenant shall make payments for all separately metered utilities, when
due, directly to the appropriate supplier. Landlord shall have the right to
require Tenant to install, at Tenant’s sole expense, separate meters (or other
submeter, device or monitor for the measurement of utility usage) for any
utility for which a separate meter is not installed as of the Commencement Date.
If any utilities or services are not separately metered or monitored with
respect to the Premises, Tenant shall pay its Share thereof to Landlord, to the
extent such obligation exceeds any amount thereof impounded under Section 4.4,
after receipt of a statement from Landlord. Landlord represents that it will
take all necessary actions required to bring utilities to the Premises, provided
however, that Landlord shall in no way be liable or responsible for any loss,
damage or expense that Tenant may sustain or incur by reason of any change,
failure, interruption, interference or defect in the supply or character of the
electricity or other utilities supplied to the Premises. Landlord makes no
representation or warranty as the suitability of the utility service for
Tenant’s requirements, and no such change, failure, defect, unavailability or
unsuitability shall constitute any actual or constructive eviction, in whole or
in part, or entitle Tenant to any abatement or diminution of rent, or relieve
Tenant of any of its obligations under the Lease. Landlord shall not be liable
in damages or otherwise for any failure or interruption of any utility service,
and no such failure or interruption shall entitle Tenant to terminate this Lease
or abate the rent due hereunder.

 

11. USE

11.1 Permitted Use. The Premises shall be used and occupied only for the
permitted uses specified in Section 1.8, and shall not be used or occupied for
any other purposes without the prior written consent of Landlord. Should Tenant
desire to change its use, Tenant shall request Landlord’s consent to such change
in writing, and shall

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provide in writing such reasonably detailed information about the proposed new
use as may be requested by Landlord. Landlord shall not unreasonably withhold
its consent to any requested change of use, and shall have the right to impose
reasonable restrictions on such new use. Factors that Landlord may take into
account in granting or withholding its consent shall include, without
limitation: (i) whether the proposed use is compatible with the character and
tenant mix of the Center, (ii) whether the proposed use poses any increased risk
to Landlord or any other occupant of the Center, (iii) whether any proposed
Alterations to accommodate such proposed use might decrease the rental or sale
value of the Premises or the Center, and (iv) whether Tenant has the requisite
expertise and financial ability to successfully operate in the Premises with the
proposed new use.

11.2 Compliance with Legal Requirements. Tenant shall at all times and at its
sole expense comply with all federal, state, local and other laws, ordinances,
rules, regulations, orders, requirements, and recorded covenants and
restrictions applicable to the Center, whether now in force or hereafter in
effect (including without limitation those related to disabled persons, access,
hazardous materials, lighting upgrades, energy saving, and sprinkler and seismic
retrofits, and those required because of Tenant’s occupancy or the conduct of
Tenant’s business) (collectively, “Legal Requirements”). Tenant shall not do or
permit anything to be done in or about the Premises in conflict with any Legal
Requirement. Without limiting the generality of the foregoing, Tenant shall at
its sole cost take all actions, make all alterations, install all additional
facilities, and perform all work required to cause the Premises to comply with
all Legal Requirements. Notwithstanding the foregoing, if any capital
expenditures are required as a result of the specific and unique use of the
Premises by Tenant, as compared with uses by tenants in general, Tenant shall be
fully responsible for the costs thereof, provided however if such capital
expenditure is required during the last 2 years and the cost thereof exceeds six
months Minimum Monthly Rent, Tenant may instead terminate this Lease in writing,
unless, within 10 days after receipt of such termination notice Landlord advises
Tenant in writing that it shall pay the difference between the cost of the
repair and the six months Minimum Monthly Rent. In the event such capital
expenditure Is not the result of the specific and unique use of the Premises by
Tenant, Landlord shall be responsible to affect such capital repair, in which
event the cost of such expenditure will be amortized over fourteen years and
collected as part of the Operating Costs.

11.3 Waste, Quiet Conduct. Tenant shall not use or permit the use of the
Premises in any manner that tends to create waste or a nuisance that will cause
objectionable noise or odors, or that may disturb the quiet enjoyment of any
other tenant in the Center.

11.4 Rules and Regulations. Tenant shall comply with the Rules and Regulations
for the Center attached as Exhibit ”B”, as the same may be amended by Landlord
from time to time, upon notice to Tenant.

11.5 Signs. Tenant, at Tenant’s sole cost and expense, will be entitled to
building and monument signage consistent with other tenants at the Center and
subject to the terms and conditions of this Section 11.5. Tenant agrees, at
Tenant’s sole cost, to install a sign in strict conformance with Landlord’s sign
criteria attached hereto as Exhibit ”C” within fifteen (15) days after first
occupying the Premises. Tenant shall maintain all approved signs and other items
described herein in good condition and repair at all times. All signs must be
fabricated by a contractor selected by Landlord. Prior to construction of any
such sign, a detailed drawing of the proposed sign shall be prepared by
Landlord’s contractor, at the sole expense of Tenant, and submitted to Landlord
and Tenant for written approval. No sign, placard, pennant, flag, awning,
canopy, or advertising matter of any kind shall be placed or maintained on any
exterior door, wall or window of the Premises or in any area outside the
Premises, and no decoration, lettering or advertising matter shall be placed or
maintained on the glass of any window or door, or that can be seen through the
glass, of the Premises without first obtaining Landlord’s written approval. All
signs and sign cases shall be considered fixtures and improvements and shall
become the property of Landlord upon expiration or termination of this Lease.
Tenant has no rights to signage at the Center except as set forth in this
Section and subject to Legal Requirements. Landlord shall have the right from
time to time to revise the sign criteria, and within sixty (60) days after
Tenant’s receipt of written notice of any new sign criteria, Tenant shall, at
Tenant’s expense, remove all existing exterior signs and replace the same with
new signs conforming to the new sign criteria.

11.6 Parking. Tenant shall have the nonexclusive right, in common with others,
to use the parking areas of the Center; provided, however, that Tenant shall not
use more than the number of parking spaces designated in Section 1.10, or if no
number of such spaces is so indicated, Tenant shall not use more than its
reasonable share of parking spaces, as Landlord shall determine. Landlord
reserves the right, without liability to Tenant, to modify the parking areas, to
designate the specific location of the parking for Tenant and Tenant’s customers
and employees, and to adopt reasonable rules and regulations for use of the
parking areas.

11.7 Entry by Landlord. Tenant shall permit Landlord and Landlord’s agents to
enter the Premises upon not less than three (3) business days prior written
notice for any of the following purposes: (a) to inspect the Premises, (b) to
supply any services or to perform any maintenance obligations of Landlord,
including the erection and maintenance of such scaffolding, canopies, fences,
and props as may be required, (c) to make such improvements, replacements or
additions to the Premises or the Center as Landlord deems necessary or
desirable, (d) to post notices of nonresponsibility, (e) to place any usual or
ordinary “for sale” signs, or (f) within six (6) months prior to the expiration
of this Lease, to place any usual or ordinary “for lease” signs. No entry by
Landlord shall unreasonably interfere with Tenant’s operations at the Premises,
and in no event shall Landlord’s inspections extend to any designated “clean”
areas while in use. No entry shall result in any rebate of rent or any liability
to Tenant for any loss of occupation or quiet enjoyment of the Premises.
Landlord shall give reasonable notice to Tenant prior to any entry except in an
emergency or unless Tenant consents at the time of entry. If Tenant is not
personally present to open and permit an entry into the Premises, at any time
when for any reason an entry therein shall be necessary or permissible, Landlord
or Landlord’s agents may enter the same by a master key, or may forcibly enter
the same without rendering Landlord or such agents liable therefor, and without
in any manner affecting the obligations and covenants of this Lease. Nothing
herein contained, however, shall be deemed or construed to impose upon Landlord
any obligation, responsibility or liability whatsoever for the care, maintenance
or repair of the Premises or any part thereof, except as otherwise specifically
provided herein.

 

12. ACCEPTANCE OF PREMISES; NONLIABILITY OF LANDLORD; DISCLAIMER

12.1 Acceptance of Premises. By taking possession hereunder, Tenant acknowledges
that it has examined the Premises and accepts the condition thereof. Tenant
acknowledges and agrees that Landlord has no obligation to improve the Premises
other than as set forth specifically in this Lease. In particular, Tenant
acknowledges that any additional improvements or alterations needed to
accommodate Tenant’s intended use shall be made solely at Tenant’s sole cost and
expense, and strictly in accordance with the requirements of this Lease
(including the requirement to obtain Landlord’s consent thereto), unless such
improvements and alterations are specifically required of Landlord. Except to
the extent set forth in Section 11.2 hereof, Landlord shall have no
responsibility to do any work required under any building codes or other
governmental requirements not in effect or applicable at the time the Premises
were constructed, including without limitation any requirements related to
sprinkler retrofitting, seismic structural requirements, accommodation of
disabled persons, or hazardous materials. Landlord shall be under no obligation
to provide utility, telephone or other service or access beyond that which
exists at the Premises as of the date of this Lease, unless Landlord
specifically agrees in writing to provide the same. If it is anticipated that
Tenant will be doing any Alterations or installations prior to taking occupancy,
any delays encountered by Tenant in accomplishing such work or obtaining any
required permits therefor shall not delay the Commencement Date or the date that
Tenant becomes liable to pay rent, or the date that Landlord may effectively
deliver possession of the

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Premises to Tenant. By taking possession hereunder, Tenant acknowledges that it
accepts the square footage of the Premises as delivered and as stated in this
Lease. No discovery or alleged discovery after such acceptance of any variance
in such square footage as set forth in this Lease (or in any proposal,
advertisement or other description thereof) shall be grounds for any adjustment
in any component of the rent payable hereunder, unless such adjustment is
initiated by and implemented by Landlord.

12.2 Landlord’s Exemption From Liability. Landlord shall not be liable for
injury to Tenant’s business or loss of income therefrom, or for personal injury
or property damage that may be sustained by Tenant or any subtenant of Tenant,
or their respective employees, invitees, customers, agents or contractors or any
other person in or about the Premises, caused by or resulting from fire, flood,
earthquake or other natural disaster, or from steam, electricity, gas, water or
rain, or dampness of any origin, that may leak, flow or emanate from or into any
part of the Premises, or from the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air-conditioning,
lighting fixtures or computer equipment or software, whether such damage or
injury results from conditions arising upon the Premises or upon other portions
of the Building, or from other sources, and regardless of whether the cause of
such damage or injury or the means of repairing the same is inaccessible to
Tenant but the foregoing shall not extend to matters arising from Landlord’s
gross negligence or willful misconduct. Landlord shall not be liable for any
damages to property or for personal injury or loss of life arising from any use,
act or failure to act of any third parties (including other occupants of the
Center) occurring in, or about the Premises or in or about the Center (including
without limitation the criminal acts of any third parties). Landlord shall not
be liable for any latent defect in the Premises or in the Building. All property
of Tenant kept or stored on the Premises shall be so kept or stored at the risk
of Tenant only, and Tenant shall indemnify, protect, hold harmless and defend
Landlord and Landlord’s officers, directors, shareholders, partners, members,
principals, employees, agents, representatives, and other related entities and
individuals, and their respective successors and assigns, from and against any
claims arising out of damage to the same, including subrogation claims by
Tenant’s insurance carriers. The indemnifications and waivers of Tenant set
forth in this Section shall not apply to damage or liability caused (i) by the
gross negligence or willful misconduct of Landlord, and (ii) through no fault of
Tenant, its assignees or subtenants, or their respective agents, contractors,
employees, customers, invitees or licensees.

12.3 No Warranties or Representations.

(a) Neither Landlord nor Landlord’s agents make any warranty or representation
with respect to the suitability or fitness of the space for the conduct of
Tenant’s business, or for any other purpose, except to the extent expressly set
forth herein and except that Landlord will represent that the Premises are
approved for the use of hazardous chemicals and chemical processing.

(b) Neither Landlord nor Landlord’s agents make any warranty or representation
with respect to any other tenants or users that may or may not construct
improvements, occupy space or conduct business within the Center, and Tenant
hereby acknowledges and agrees that it is not relying on any warranty or
representation relating thereto in entering into this Lease.

(c) Landlord specifically disavows any oral representations made by or on behalf
of its employees, agents and independent contractors, and Tenant hereby
acknowledges and agrees that it is not relying and has not relied on any oral
representations in entering into this Lease.

(d) Landlord has not made any promises or representations, expressed or implied,
that it will renew, extend or modify this Lease in favor of Tenant or any
permitted transferee of Tenant, except as may be specifically set forth herein
or in a written instrument amending this Lease signed by all necessary parties.

(e) Notwithstanding that the rent payable to Landlord hereunder may at times
include the cost of guard service or other security measures, it is specifically
understood that Landlord does not represent, guarantee or assume responsibility
that Tenant will be secure from any damage, injury or loss of life because of
such guard service. Landlord shall have no obligation to hire, maintain or
provide such services, which may be withdrawn or changed at any time with or
without notice to Tenant or any other person and without liability to Landlord.
To induce Landlord to provide such service if Landlord elects in its sole
discretion to do so, Tenant agrees that in the absence of Landlord’s gross
negligence or willful misconduct (i) Landlord shall not be liable for any
damage, injury or loss of life related to the provision or nonprovision of such
service, and (ii) Landlord shall have no responsibility to protect Tenant, or
its employees or agents, from the acts of any third parties (including other
occupants of the Center) occurring in or about the Premises or in or about the
Center (including without limitation the criminal acts of any third parties),
whether or not the same could have been prevented by any such guard service or
other security measures.

12.4 Keys. Tenant shall re-key the Premises at its sole cost upon taking
possession thereof. Tenant hereby acknowledges that various persons have had
access to the keys to the Premises as keyed prior to Tenant’s possession, and
that Landlord disclaims all liability and responsibility for any unauthorized
distribution or possession of such prior keys.

 

13. INDEMNIFICATION

Tenant shall indemnify, protect, hold harmless and defend Landlord and
Landlord’s officers, directors, shareholders, partners, members, principals,
employees, agents, representatives and their respective successors and assigns
(collectively, “Landlord’s Related Entities”), from and against any and all
claims, actions, damages, liability, costs, and expenses, including attorneys’
fees and costs, arising from personal injury, death, and/or property damage and
arising from: (a) Tenant’s use or occupation of the Premises or any work or
activity done or permitted by Tenant in or about the Premises (including without
limitation any storage or display of materials or merchandise, or other activity
by Tenant in the Common Facilities), (b) any activity, condition or occurrence
in the Premises or other area under the control of Tenant, (c) any breach or
failure to perform any obligation imposed on Tenant under this Lease, (d) any
breach or failure by Tenant to cause the Premises (and any and all other areas
of the Center under the control of Tenant or that Tenant is required to
maintain) to comply with all Legal Requirements related to disabled persons or
access, or (e) any other act or omission of Tenant or its assignees or
subtenants or their respective agents, contractors, employees, customers,
invitees or licensees. Upon notice from Landlord, Tenant shall, at Tenant’s sole
expense and by counsel satisfactory to Landlord, defend any action or proceeding
brought against Landlord or Landlord’s Related Entities by reason of any such
claim. If Landlord or any of Landlord’s Related Entities is made a party to any
litigation commenced by or against Tenant, then Tenant shall indemnify, protect,
hold harmless and defend Landlord and Landlord’s Related Entities from and
against any and all claims, actions, damages, liability, costs, expenses and
attorneys’ fees and costs incurred or paid in connection with such litigation.
Tenant, as a material part of the consideration to Landlord hereunder, assumes
all risk of, and waives all claims against Landlord for, personal injury or
property damage in, upon or about the Premises, from any cause whatsoever.
Provided, however, that the indemnifications and waivers of Tenant set forth in
this Section shall not apply to damage and liability caused (i) by the gross
negligence or willful misconduct of Landlord, and (ii) through no fault of
Tenant, its assignees or subtenants, or their respective agents, contractors,
employees, customers, invitees or licensees.

 

14. HAZARDOUS MATERIALS

14.1 Definitions. “Hazardous Materials Laws” means any and all federal, state or
local laws, ordinances, rules, decrees, orders, regulations or court decisions
relating to hazardous substances, hazardous materials, hazardous waste, toxic
substances, environmental conditions on, under or about the Premises, or soil
and ground water conditions, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. §9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
§6901, et

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seq., the Hazardous Materials Transportation Act, 49 U.S.C. §1801, et seq., the
California Hazardous Waste Control Act, Cal. Health and Safety Code §25100, et
seq., the Carpenter-Presley-Tanner Hazardous Substances Account Act, Cal. Health
and Safety Code §25300, et seq., the Safe Drinking Water and Toxic Enforcement
Act, Cal. Health and Safety Code §25249.5, et seq., the Porter-Cologne Water
Quality Control Act, Cal. Water Code §13000, et seq., any amendments to the
foregoing, and any similar federal, state or local laws, ordinances, rules,
decrees, orders or regulations. “Hazardous Materials” means any chemical,
compound, material, substance or other matter that: (a) is defined as a
hazardous substance, hazardous material, hazardous waste or toxic substance
under any Hazardous Materials Law, (b) is controlled or governed by any
Hazardous Materials Law or gives rise to any reporting, notice or publication
requirements hereunder, or gives rise to any liability, responsibility or duty
on the part of Tenant or Landlord with respect to any third person hereunder; or
(c) is flammable or explosive material, oil, asbestos, urea formaldehyde,
radioactive material, nuclear medicine material, drug, vaccine, bacteria, virus,
mold, hazardous waste, toxic substance, or related injurious or potentially
injurious material (by itself or in combination with other materials).

14.2 Use of Hazardous Materials. Tenant shall not allow any Hazardous Material
to be used, generated, manufactured, released, stored or disposed of on, under
or about, or transported from, the Premises, unless: (a) such use is
specifically disclosed to and approved by Landlord in writing prior to such use,
and (b) such use is conducted in compliance with the provisions of this Article.
Landlord’s consent may be withheld in Landlord’s sole discretion except however,
such consent shall not be required in the event that the Hazardous Materials are
of the type or reasonably related to those materials described in the Hazardous
Materials List hereinafter defined. Landlord may approve such use subject to
reasonable conditions to protect the Premises and Landlord’s interests. Landlord
may withhold approval if Landlord determines that such proposed use involves a
material risk of a release or discharge of Hazardous Materials or a violation of
any Hazardous Materials Laws or that Tenant has not provided reasonably
sufficient assurances of its ability to remedy such a violation and fulfill its
obligations under this Article. Notwithstanding the foregoing, Landlord hereby
consents to allow Tenant to use Hazardous Materials in connection with its use
of the Premises, and Tenant agrees to deliver to Landlord prior to the
Commencement Date a list identifying each type (and quantity) of Hazardous
Materials to be present on the Premises and setting forth any and all
governmental approvals or permits required in connection with the presence of
Hazardous Materials on the Premises (“Hazardous Materials List”). Tenant shall
deliver to Landlord an updated Hazardous Materials List at least once a year and
shall also deliver an updated list before any new (or additional quantities of)
Hazardous Materials are brought onto the Premises or on or before the date
Tenant obtains any additional permits or approvals. Landlord also hereby
consents to Tenant’s use, storage or disposal of products containing small
quantities of Hazardous Materials that are of a type customarily found in
offices and households (such as aerosol cans containing insecticides, toner for
copies, paints, paint remover and the like) provided that Tenant shall handle,
use, store and dispose of such Hazardous Materials in a safe and lawful manner
and shall not allow such Hazardous Materials to contaminate the Premises

14.3 Compliance With Laws; Handling Hazardous Materials. Tenant shall strictly
comply with, and shall maintain the Premises in compliance with, all Hazardous
Materials Laws. Tenant shall obtain, maintain in effect and comply with the
conditions of all permits, licenses and other governmental approvals required
for Tenant’s operations on the Premises under any Hazardous Materials Laws,
including, but not limited to, the discharge of appropriately treated Hazardous
Materials into or through any sanitary sewer serving the Premises. At Landlord’s
request, Tenant shall deliver copies of, or allow Landlord to inspect, all such
permits, licenses and approvals. All Hazardous Materials removed from the
Premises shall be removed and transported by duly licensed haulers to duly
licensed disposal facilities, in compliance with all Hazardous Materials Laws.
Tenant shall perform any monitoring, testing, investigation, clean-up, removal,
detoxification, preparation of closure or other required plans and any other
remedial work required by any governmental agency or lender, or recommended by
Landlord’s environmental consultants, as a result of any release or discharge or
potential release or discharge of Hazardous Materials affecting the Premises or
the Center or any violation or potential violation of Hazardous Materials Laws
by Tenant or any assignee or subtenant of Tenant or their respective agents,
contractors, employees, licensees or invitees (collectively, “Remedial Work”).
Landlord shall have the right to intervene in any governmental action or
proceeding involving any Remedial Work, and to approve performance of the work,
in order to protect Landlord’s interests. Tenant shall not enter into any
settlement agreement, consent decree or other compromise with respect to any
claims relating to Hazardous Materials without notifying Landlord and providing
ample opportunity for Landlord to intervene. Tenant shall additionally comply
with the recommendations of Landlord’s and Tenant’s insurers based upon National
Fire Protection Association standards or other applicable guidelines regarding
the management and handling of Hazardous Materials. If any present or future law
imposes any requirement of reporting, survey, investigation or other compliance
upon Landlord, Tenant, or the Premises, and if such requirement is precipitated
by a transaction to which Tenant is a party, including without limitation any
Transfer (as defined in Section 18.1) of this Lease by Tenant, then Tenant shall
fully comply with and pay all costs of compliance with such requirement,
including Landlord’s attorneys’ fees and costs.

14.4 Notice; Reporting; Notice Under Health and Safety Code Section 25359.7.
Tenant shall notify Landlord, in writing, within three (3) days after any of the
following: (a) Tenant has knowledge, or has reasonable cause to believe, that
any Hazardous Material has been released, discharged or is located on, under or
about the Premises, whether or not the release or discharge is in quantities
that would otherwise be reportable to a public agency, (b) Tenant receives any
order of a governmental agency requiring any Remedial Work pursuant to any
Hazardous Materials Laws, (c) Tenant receives any warning, notice of inspection,
notice of violation or alleged violation or Tenant receives notice or knowledge
of any proceeding, investigation or enforcement action, pursuant to any
Hazardous Materials Laws; or (d) Tenant receives notice or knowledge of any
claims made or threatened by any third party against Tenant or the Premises
relating to any loss or injury resulting from Hazardous Materials. If the
potential risk of any of the foregoing events is material, Tenant shall deliver
immediate verbal notice to Landlord, in addition to written notice as set forth
above. Tenant shall deliver to Landlord copies of all test results, reports and
business or management plans required to be filed with any governmental agency
pursuant to any Hazardous Materials Laws. Landlord hereby notifies Tenant, and
Tenant hereby acknowledges that, prior to the leasing of the Premises pursuant
to this Lease, Tenant has been notified, pursuant to California Health and
Safety Code Section 25359.7 (or any successor statue), that Landlord knows, or
has reasonable cause to believe, that certain hazardous substances (as such term
is used in such Section 25359.7) may have come to be located in, on or beneath
the Premises.

14.5 Indemnity. Tenant shall indemnify, protect, hold harmless and defend
Landlord and Landlord’s officers, directors, shareholders, partners, members,
principals, employees, agents, representatives, and other related entities and
individuals, and their respective successors and assigns, from and against any
and all liabilities, claims, suits, judgments, actions, investigations,
proceedings, costs and expenses (including attorneys’ fees and costs) arising
out of or in connection with any breach of any provisions of this Article or
directly or indirectly arising out of the use, generation, storage, release,
disposal or transportation of Hazardous Materials by Tenant, or any assignee or
subtenant of Tenant, or their respective agents, contractors, employees,
licensees, or invitees, on, under or about the Premises during the Lease Term or
any other period of Tenant’s actual or constructive occupancy of the Premises,
including, but not limited to, all foreseeable and unforeseeable consequential
damages and the cost of any Remedial Work. Any defense of Landlord pursuant to
this Section shall be by counsel acceptable to Landlord. Neither the consent by
Landlord to the use, generation, storage, release, disposal or transportation of
Hazardous Materials nor the strict compliance with all Hazardous Materials Laws
shall excuse Tenant from Tenant’s indemnification obligations pursuant to this
Article. The foregoing indemnity shall be in addition to and not a limitation of
the indemnification provisions of Article 13 of this Lease. Tenant’s obligations
pursuant to this Article shall survive the termination or

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expiration of this Lease. Notwithstanding the foregoing, Landlord shall
indemnify, protect, hold harmless and defend Tenant and Tenant’s officers,
directors, shareholders, partners, members, principals, employees, agents,
representatives, and other related entities and individuals, and their
respective successors and assigns, from and against any and all liabilities,
claims, suits, judgments, actions, investigations, proceedings, costs and
expenses (including attorneys’ fees and costs) arising out of or in connection
with any pre-existing contamination of the Premises, generated before the
commencement of the Lease Term and/or Tenant’s actual or constructive occupancy
of the Premises.

14.6 Entry and Inspection; Cure. Tenant, at its sole expense, shall have the
right, prior to the Commencement Date, to perform its own environmental
assessment(s) of the Premises and/or to obtain any additional information
regarding the condition of the Premises. Landlord confirms that it has no
knowledge of the presence of any Hazardous Materials on, under or about the
Premises or the Building as of the commencement date hereof . Tenant shall pay
when due all claims for any environmental assessment services performed by or
for Tenant, and Tenant shall keep the Premises free from any liens arising with
respect thereto. Any entry by Tenant or Tenant’s agents shall be made in a
manner which results in the least interference with the use of the Center by
other occupants. Tenant shall indemnify and defend Landlord against, and hold
Landlord and the Premises harmless from and against, any and all costs,
expenses, attorney fees, damages, claims, liabilities, liens, encumbrances and
charges arising out of or in any way related to any entry by Tenant or Tenant’s
agents upon the Premises. Tenant shall repair any damage to the Premises as a
result of or caused by the entry by Tenant or Tenant’s agents on the Premises
and restore the Premises to the condition existing on the date immediately prior
to Tenant’s entry onto the Premises. Landlord agrees to allow Tenant access to
the Premises for such purpose. Landlord and its agents, employees and
contractors, shall have the right (but not the obligation) to enter the Premises
at all reasonable times to inspect the Premises and Tenant’s compliance with the
terms and conditions of this Article, or to conduct investigations and tests. No
prior notice to Tenant shall be required in the event of an emergency, or if
Landlord has reasonable cause to believe that violations of this Article have
occurred, or if Tenant consents at the time of entry. In all other cases,
Landlord shall give at least twenty-four (24) hours’ prior notice to Tenant.
Landlord shall have the right (but not the obligation) to remedy any violation
by Tenant of the provisions of this Article pursuant to Section 22.3 of this
Lease or to perform any Remedial Work. Tenant shall pay, upon demand, all costs
incurred by Landlord in investigating any such violations or potential
violations or performing Remedial Work, plus interest thereon at the rate
specified in this Lease from the date of demand until the date paid by Tenant.

14.7 Termination; Expiration. Upon termination or expiration of this Lease,
Tenant shall, at Tenant’s cost, remove any equipment, improvements or storage
facilities utilized in connection with any Hazardous Materials and shall clean
up, detoxify, repair and otherwise restore the Premises to a condition free of
Hazardous Materials, to the extent such condition is caused by Tenant or any
assignee or subtenant of Tenant or their respective agents, contractors,
employees, licensees or invitees. Tenant shall be fully responsible to “close
out” all permits required for Tenant’s operations on the Premises under any
Hazardous Materials Laws, including but not limited to, any and all permits
pertaining to the use of Hazardous Materials and radioactive substances.

14.8 Exit Assessment. No later than ten (10) days after the expiration or
earlier termination of this Lease, Tenant shall cause to be performed, at its
sole expense, an environmental assessment (the “Exit Assessment”) of the
Premises, which necessarily includes a Phase One Environmental Report. Landlord
agrees to allow Tenant access to the Premises for such purpose. The Exit
Assessment must be performed by a qualified environmental consultant acceptable
to Landlord, and shall include without limitation the following, as applicable
to the Premises and Tenant’s activities: (a) inspection of all floors, walls,
ceiling tiles, benches, cabinet interiors, sinks, the roof and other surfaces
for signs of contamination and/or deterioration related to Hazardous Materials,
(b) inspection of any and all ducts, hoods and exhaust systems for signs of
contamination, deterioration and/or leakage related or potentially related to
Hazardous Materials, (c) inspection of all readily accessible drain lines and
other discharge piping for signs of deterioration, loss of integrity and
leakage, (d) Tenant interviews and review of appropriate Tenant records to
determine the uses to which Tenant has put the Premises that involve or may have
involved Hazardous Materials, and to determine if any known discharges to the
Premises or ground or soils from Tenant’s activities have occurred,
(e) documentation in detail of all observations, including dated photographs,
(f) if applicable a certification that all areas inspected are clean and free of
any Hazardous Materials and that the investigation conducted by the consultant
does indicate that any release of any Hazardous Materials has occurred in the
Premises or the Center as a result of Tenant’s activities, (g) if applicable, a
detailed description of Hazardous Materials remaining in the Premises and of any
contamination, deterioration and/or leakage observed, together with detailed
recommendations for the removal, repair or abatement of the same, and (h) if
applicable, a detailed description of evidence of possible or past releases of
Hazardous Materials, together with detailed recommendations for the prevention
of the same in the future. Landlord shall have the right to require additional
evaluations or work in connection with the Exit Assessment based upon Tenant’s
use of the Premises, any actual or suspected Hazardous Materials issues, or
other reasonable factors. The original of the Exit Assessment shall be addressed
to Landlord and shall be provided to Landlord within twenty (20) days of the
expiration or earlier termination of this Lease. In addition to Tenant’s
obligations under Section 14.7, Tenant agrees to fully implement and address all
recommended actions contained in the Exit Assessment, at its sole cost, within
thirty (30) days of the date thereof.

14.9 Event of Default. The release or discharge of any Hazardous Material or the
violation of any Hazardous Materials Law by Tenant or any assignee or subtenant
of Tenant shall be a material Event of Default by Tenant under this Lease. In
addition to or in lieu of the remedies available under this Lease as a result of
such Event of Default, Landlord shall have the right, without terminating this
Lease, to require Tenant to suspend its operations and activities on the
Premises until Landlord is satisfied that appropriate Remedial Work has been or
is being adequately performed; Landlord’s election of this remedy shall not
constitute a waiver of Landlord’s right thereafter to declare an Event of
Default and pursue any other available remedy.

14.10 Prior Conditions. Prior to the execution of this Lease, Landlord provided
Tenant with a Phase One Environmental Site Assessment. Except for the contents
of the aforementioned document, Landlord makes no other representations and/or
warranties regarding the condition of the Premises, except that Landlord
represents that the Premises are certified for the use of hazardous chemicals
and chemical processing. Prior to the execution of this Lease, Landlord provided
Tenant with information for conformance to IBC, NFPA, EPA and California code
requirements including building occupancy class.

 

15. ALTERATIONS; LIENS

15.1 Alterations by Tenant. Except for those alterations, additions and
improvements specifically provided for in Exhibit “D” to this Lease, Tenant
shall not make any alterations, additions or improvements (“Alterations”) to the
Premises without Landlord’s prior written consent, except for nonstructural
Alterations that cost $10,000 or less and are not visible from the exterior of
the Premises. All Alterations installed by Tenant shall be new or completely
reconditioned. Landlord shall have the right to approve the contractor, the
method of payment of the contractor, and the plans and specifications for all
proposed Alterations. Tenant shall obtain Landlord’s consent to all proposed
Alterations requiring Landlord’s consent prior to the commencement of any such
Alterations. Tenant’s request for consent shall be accompanied by information
identifying the contractor and method of payment and two (2) copies of the
proposed plans and specifications. All Alterations of whatever kind and nature
shall become at once a part of the realty and shall be surrendered with the
Premises upon expiration or earlier termination of the Lease Term, unless

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Landlord requires Tenant to remove the same as provided in Article 20. If Tenant
demolishes or removes any then-existing tenant improvements or other portions of
the Premises or the Building (including without limitation any
previously-installed Alterations), Tenant shall promptly commence and diligently
pursue to completion all Alterations then underway; provided, however, that if
Tenant fails to do so, at the election of Landlord, Tenant shall restore the
Premises and the Building to its condition and state of improvement prior to
such demolition or removal. During the Lease Term, Tenant agrees to provide, at
Tenant’s expense, a policy of insurance covering loss or damage to Alterations
made by Tenant, in an amount adequate to repair or replace the same, naming
Landlord and Landlord’s property manager (if any) as additional insureds.
Provided, however, Tenant may install movable furniture, trade fixtures,
machinery or equipment in conformance with applicable governmental rules or
ordinances and remove the same upon expiration or earlier termination of this
Lease as provided in Article 20.

15.2 Permits and Governmental Requirements. Tenant shall obtain, at Tenant’s
sole cost and expense, all building permits and other permits of every kind and
nature required by any governmental agency having jurisdiction in connection
with the Alterations. Tenant shall indemnify, protect, hold harmless and defend
Landlord and Landlord’s officers, directors, shareholders, partners, members,
principals, employees, agents, representatives, and other related entities and
individuals, and their respective successors and assigns, from and against any
and all claims, actions, damages, liability, costs, and expenses, including
attorneys’ fees and costs, arising out of any failure by Tenant or Tenant’s
contractor or agents to obtain all required permits, regardless of when such
failure is discovered. Tenant shall do any and all additional construction,
alterations, improvements and retrofittings required to be made to the Premises
and/or the Center, or any other property of Landlord as a result of, or as may
be triggered by, Tenant’s Alterations. Landlord shall have the right to do such
construction itself; but in all instances Tenant shall pay all costs directly or
indirectly related to such work and shall indemnify, protect, hold harmless and
defend Landlord and Landlord’s officers, directors, shareholders, partners,
members, principals, employees, agents, representatives, and other related
entities and individuals, and their respective successors and assigns, from and
against any and all claims, actions, damages, liability, costs, and expenses,
including attorneys’ fees and costs, arising out of any such additionally
required work. All payment and indemnification obligations under this
Section shall survive the expiration or earlier termination of the Lease Term.

15.3 Liens. Tenant shall pay when due all claims for any work performed,
materials furnished or obligations incurred by or for Tenant, and Tenant shall
keep the Premises free from any liens arising with respect thereto. If Tenant
fails to cause any such lien to be released within fifteen (15) days after
imposition, by payment or posting of a proper bond, Landlord shall have the
right (but not the obligation) to cause such release by such means as Landlord
deems proper. Tenant shall pay Landlord upon demand for all costs incurred by
Landlord in connection therewith (including attorneys’ fees and costs), with
interest at the rate specified in Section 22.4 from the date of payment by
Landlord to the date of payment by Tenant. Tenant will notify Landlord in
writing thirty (30) days prior to commencing any alterations, additions,
improvements or repairs in order to allow Landlord time to file a notice of
nonresponsibility.

15.4 Remodel. Landlord may in the future remodel, renovate or refurbish
(“remodel”) all or any portion of the Center, which remodel shall include the
exterior of the Premises only. The remodeling will be done in accordance with
design specifications prepared by the project architect and reviewed and
approved by Landlord, and any such remodeling will not adversely impact the use
and enjoyment of the Premises by the Tenant. Copies of such specifications will
be made available to Tenant. Tenant shall not, through any act or omissions on
the part of Tenant, in any way impede, delay or prevent the completion of such
remodeling in a timely manner.

 

16. DAMAGE AND DESTRUCTION

16.1 Partial Damage. If, during the Lease Term, the Premises are damaged or
destroyed by fire or other casualty, or if the Building is damaged or destroyed
by fire or other casualty and such damage or destruction affects Tenant’s use of
the Premises (collectively, “Premises Damage”), Landlord shall perform the
necessary repairs (other than to Tenant’s Alterations, trade fixtures,
equipment, and personal property, the repair of which Tenant shall be solely
responsible), and this Lease shall continue in full force and effect. Provided,
however, that Landlord may, at its option, elect to terminate this Lease if
(i) Landlord’s repairs cannot reasonably be completed within One Hundred and
Twenty (120) days after the date of the Premises Damage in accordance with
applicable laws and regulations, or (ii) the Replacement Cost (defined below)
exceeds six (6) months’ Minimum Monthly Rent, or (iii) Landlord does not receive
sufficient insurance proceeds to pay the full Replacement Cost, the shortfall
exceeds one (1) month’s Minimum Monthly Rent and Tenant has not undertaken to
pay the remainder of the shortfall. As used herein, “Replacement Cost” shall
mean the cost to repair or rebuild the Premises, Building or Center (other than
Tenant’s Alterations, equipment, trade fixtures, and personal property) at the
time of the damage or destruction to their condition existing immediately prior
thereto, including without limitation all costs of demolition, debris removal,
permits, fees and other governmental requirements, and upgrading the Premises,
Building or Center as required by law or other requirements, without deduction
for depreciation.

16.2 Total Destruction. Notwithstanding any other provisions of this Lease, a
total destruction (including any destruction required by any authorized public
authority) of either the Premises or the Building shall, at the election of
Landlord, terminate this Lease as of the date of such destruction.

16.3 Partial Destruction of Center or Building. Notwithstanding any other
provision of this Lease, if fifty percent (50%) or more of the rentable area of
the Building or the Center is damaged or destroyed, notwithstanding that the
Premises may be unaffected, Landlord shall have the right to terminate this
Lease.

16.4 Insurance Deductible. If Landlord is required or elects to repair any
Premises Damage caused by an insured casualty as provided in Section 16.1,
Tenant shall, within fifteen (15) days after receipt of written notice from
Landlord, pay the amount of any deductible (or its Share thereof) under any
insurance policy covering such Premises Damage, in accordance with Section 9.3
above.

16.5 Damage Near End of Term. If at any time during the last twelve (12) months
of the Lease Term there is Premises Damage for which Replacement Cost exceeds
one (1) month’s Minimum Monthly Rent, Landlord or Tenant may, at its option,
elect to terminate this Lease; provided, however, that if Tenant has any valid,
unexercised option to extend the term of this Lease, Tenant may prevent
Landlord’s termination under this Section by exercising such option within
five (5) business days of receipt of Landlord’s election to terminate.

16.6 Landlord’s or Tenant’s Termination Notice; Effective Date; Relocation. If
Landlord or Tenant elects to terminate this Lease under any applicable provision
of this Article 16, Landlord or Tenant shall give notice of such election within
forty-five (45) days of the date of the damage or destruction. In the case of a
total destruction (Section 16.2) or Premises Damage that prevents Tenant from
occupying the Premises for its permitted use, the effective date of such
termination shall be the date of such Premises Damage; otherwise the effective
date of termination shall be a date selected by Landlord not earlier than
thirty (30) days from the date of Landlord’s notice. If Tenant has any right to
terminate this Lease as a result of any Premises Damage (whether provided in
this Lease, by law or otherwise) Landlord may offer within forty-five (45) days
of the Premises Damage to relocate Tenant to new Premises in the Center provided
in Section 24.24 of this Lease.

16.7 Rent Abatement. If Landlord repairs the Premises or the Building after a
Premises Damage as described in this Article 16, Minimum Monthly Rent and
Additional Rent shall be equitably reduced from the date of the Premises Damage
until the repairs are completed, based upon the extent to which such repairs
interfere with the business carried on by Tenant in the Premises, but only to
the extent Landlord receives proceeds from the rental income

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insurance described in Section 9.1. Landlord agrees to take reasonable steps to
make a claim for and collect any rental income insurance proceeds that might be
available.

16.8 Tenant’s Obligations. Landlord shall not be required to repair any injury
or damage by fire or other cause, or to make any restoration or replacement of,
any of Alterations, equipment, trade fixtures, and personal property owned,
placed or installed in or about the Premises by or on behalf of Tenant. Unless
this Lease is terminated pursuant to this Article, Tenant shall promptly repair,
restore or replace the same in the event of any damage thereto. If all or any
portion of the Premises, Building or Center is damaged or destroyed by reason of
any act or omission of Tenant, except as provided in Section 9.4 (Waiver of
Subrogation), Tenant shall either make the necessary repairs at Tenant’s expense
or pay to Landlord the Replacement Cost arising therefrom, regardless of whether
this Lease is terminated. Nothing contained in this Article shall be construed
as a limitation on Tenant’s liability for any damage or destruction if such
liability otherwise exists.

16.9 Waiver of Inconsistent Statutes. The parties’ rights and obligations in the
event of damage or destruction shall be governed by the provisions of this
Lease; accordingly, Tenant waives the provisions of California Civil Code
Sections 1932(2) and 1933(4), and any other statute, code or judicial decisions
that grants a tenant a right to terminate a lease in the event of damage or
destruction of a leased premises.

 

17. CONDEMNATION

17.1 Effect on Lease. If all of the Premises, or so much thereof that the
remaining portion of the Premises cannot be used by Tenant for its permitted
use, is taken under the power of eminent domain or sold under the threat of the
exercise of such power (collectively “Condemnation”), this Lease shall terminate
as of the earlier of the date title vests in the condemnor or the date the
condemnor is entitled to possession of the interest condemned (the “Condemnation
Date”). Landlord may offer within forty-five (45) days of the Condemnation to
relocate Tenant to new Premises in the Center provided in Section 24.24 of this
Lease. In all other cases, Landlord may terminate this Lease as of the
Condemnation Date if (i) the Condemnation affects any material portion of the
Premises or the Building, (ii) Landlord receives insufficient funds from the
condemnor to complete the restoration of the Premises required under this
Section, or (iii) if the Condemnation affects such a substantial portion of the
Center (including the Common Facilities, parking lots or access to the Center)
that it is no longer economically appropriate in Landlord’s business judgment to
lease the Premises on the terms and conditions of this Lease. If such
Condemnation affects the Premises and this Lease remains in effect, (a) this
Lease shall terminate as to the portion of the Premises taken as of the
Condemnation Date, (b) the Minimum Monthly Rent shall be equitably adjusted
based upon the rental value of the Premises remaining after the Condemnation
compared to the rental value of the Premises prior to Condemnation, (c) Tenant’s
Share shall be adjusted based on any changes in the Rentable Square Footage of
the Premises and/or the Center, and (d) Landlord shall, within a reasonable
period of time, undertake such construction or restoration as may be reasonably
necessary to place the remaining Premises in a useable condition (provided that
the cost of such construction or restoration does not exceed the amount awarded
to Landlord by the condemnor for such purpose). Landlord shall not be
responsible to restore or replace any of Tenant’s Alterations, fixtures,
equipment or personal property.

17.2 Condemnation Award. All compensation, damages and other items of value
awarded, paid or received in settlement or otherwise (“Award”) upon any partial
or total Condemnation shall be paid to Landlord, and Tenant shall have no claim
thereto. Tenant hereby irrevocably assigns and transfers to Landlord, and fully
waives, releases and relinquishes any and all claims to or interest in the
Award, including, without limitation, any amount attributable to the amount, if
any, by which rental value of the Premises exceeds the rent payable for the
remainder of the Lease Term, to the value of any unexercised options to extend
the term or expand the Premises, or to Tenant’s goodwill. Notwithstanding the
foregoing, Tenant shall have the right to make a separate claim and to recover
from the condemning authority, but not from Landlord, so long as the Award
payable to Landlord is not reduced thereby, such compensation as may be
separately awarded or recoverable by Tenant in Tenant’s own right on account of
(a) the taking of the unamortized or undepreciated value of any leasehold
improvements owned by Tenant that Tenant has the right to remove at the end of
the Lease Term and the Tenant elects not to remove; (b) reasonable removal and
relocation costs for any leasehold improvements that Tenant has the right to
remove and elects to remove (if the condemning authority approves of the
removal); and (c) relocation costs under Government Code Section 7262, the claim
for which Tenant may pursue by separate action independent of this Lease.

17.3 Waiver of Inconsistent Statutes. The parties’ rights and obligations in the
event of Condemnation shall be governed by the provisions of this Lease;
accordingly, Tenant waives the provisions of California Code of Civil Procedure
Sections 1265.110 through 1265.150, and any other statute, code or judicial
decisions that grants a tenant a right to terminate a lease in the event of the
Condemnation of a leased premises.

 

18. ASSIGNMENT AND SUBLETTING

18.1 Landlord’s Consent Required. Tenant shall not voluntarily or involuntarily
assign, sublease, mortgage, encumber, or otherwise transfer all or any portion
of the Premises or its interest in this Lease (collectively, “Transfer”) without
Landlord’s prior written consent, which consent Landlord shall not unreasonably
withhold or delay. Landlord may withhold its consent until Tenant has complied
with the provisions of Sections 18.2 and 18.3. Any attempted Transfer without
Landlord’s written consent shall be void and shall constitute a noncurable Event
of Default under this Lease. If Tenant is a corporation, and subject to the
exceptions provided for Permitted Transfers, as hereinunder defined, any sale of
stock which would result in a material change of control of Tenant, including
but not limited to the composition of Tenant’s existing board or directors or
officers shall constitute a Transfer requiring Landlord’s consent hereunder;
provided, however, that this sentence shall not apply to any corporation whose
(a) stock is publicly traded, (b) stock is sold to a company that is publicly
traded, (c) whose stock is sold pursuant to a registered public offering or an
unregistered private offering as defined by the Securities and Exchange
Commission, (d) whose stock is sold or transferred to a spouse or a dependent of
the existing majority shareholder . If Tenant is a partnership, limited
liability company, trust or other entity, any cumulative Transfer of more than
twenty percent (20%) of the partnership, membership, beneficial or other
ownership interests therein shall constitute a Transfer requiring Landlord’s
consent hereunder. Tenant shall not have the right to consummate a Transfer or
to request Landlord’s consent to any Transfer if any Event of Default has
occurred and is continuing or if Tenant or any affiliate of Tenant is in default
under any lease of any other real property owned or managed (in whole or in
part) by Landlord or any affiliate of Landlord. Notwithstanding the foregoing,
Landlord’s consent shall not be required for any Transfer to: (i) any entity who
controls, is controlled by, or is under common control with Tenant, or (ii) any
successor corporation resulting from a merger, acquisition, consolidation or
reorganization (each of the foregoing is hereinafter referred to as a “Permitted
Transfer”), provided that before such Transfer shall be effective (i) said
Permitted Transferee shall assume, in full, the obligations of Tenant under this
Lease, (ii) Landlord shall be given prompt written notice of such assignment and
assumption, and (iii) the use of the Premises by the Permitted Transferee shall
be for the Permitted Use only.

18.2 Landlord’s Election. Tenant’s request for consent to any Transfer shall be
accompanied by a written statement setting forth the details of the proposed
Transfer, including the name, business and financial condition of the
prospective Transferee, financial details of the proposed Transfer (e.g., the
term and the rent and security deposit payable), and any other related
information that Landlord may reasonably require. Landlord shall have the right:
(a) to withhold consent to the Transfer, if reasonable, (b) to grant consent,
(c) to terminate this Lease as to the portion of the Premises affected by any
proposed Transfer, in which event Landlord may enter into a lease directly with
the proposed Transferee (which election to terminate shall not be construed to
be a consent to the proposed Transfer), or (d) to

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consent on the condition that Landlord be paid fifty percent (50%) of all
subrent to be paid to Tenant under the terms of the sublease in excess of the
total rent due hereunder less Tenant’s costs of subletting Landlord may require
any permitted subtenant to make rental payments directly to Landlord, in the
amount of rent due hereunder. The grounds on which Landlord may reasonably
withhold its consent to any requested Transfer include, without limitation,
that: (i) the proposed Transferee’s contemplated use of the Premises following
the proposed Transfer is not reasonably similar to the use of the Premises
permitted hereunder, (ii) in Landlord’s reasonable business judgment, the
proposed Transferee lacks sufficient business reputation or experience to
operate a successful business of the type and quality permitted under this
Lease, (iii) in Landlord’s reasonable business judgment, the proposed Transferee
lacks sufficient net worth, working capital, anticipated cash flow and other
indications of financial strength to meet all of its obligations under this
Lease, (iv) the proposed Transfer would breach any covenant of Landlord
respecting a radius restriction, location, use or exclusivity in any other
lease, financing agreement, or other agreement relating to the Center, and
(v) in Landlord’s reasonable business judgment, the possibility of a release of
Hazardous Materials is materially increased as a result of the Transfer or if
Landlord does not receive sufficient assurances that the proposed Transferee has
the experience and financial ability to remedy a violation of Hazardous
Materials and to fulfill its obligations under Articles 13 and 14. In connection
with any such Transfer, Landlord shall have the right to require Tenant, at
Tenant’s sole cost, to cause environmental testing meeting the requirements of
an Exit Assessment described in Section 14.8 to be performed. Landlord need only
respond to any request by Tenant hereunder within a reasonable time of not less
than ten (10) business days after receipt of all information and other
submission required in connection with such request.

18.3 Costs; Transfer Fee. Tenant shall pay all costs and expenses in connection
with any permitted Transfer, including any real estate brokerage commissions due
with respect to the Transfer. Tenant shall pay all attorneys’ fees and costs
incurred by Landlord and a fee of $500 to reimburse Landlord for costs and
expenses incurred in connection with any request by Tenant for Landlord’s
consent to a Transfer. Such fee shall be delivered to Landlord concurrently with
Tenant’s request for consent. Such payment obligations shall apply regardless of
whether Landlord ultimately grants or denies Tenant’s request.

18.4 Assumption; No Release of Tenant. Any permitted assignee shall assume in
writing all obligations of Tenant under this Lease, utilizing a form of
assumption agreement provided or approved by Landlord, and an executed copy of
such assumption agreement shall be delivered to Landlord within fifteen
(15) days after the effective date of the Transfer. The taking of possession of
all or any part of the Premises by any such permitted assignee or subtenant
shall constitute an agreement by such person or entity to assume without
limitation or qualification all of the obligations of Tenant under this Lease,
notwithstanding any failure by such person to execute the assumption agreement
required in the immediately preceding sentence. No permitted Transfer shall
release or change Tenant’s primary liability to pay the rent and to perform all
other obligations of Tenant under this Lease unless expressly provided in the
consent. Landlord’s acceptance of rent from any other person is not a waiver of
any provision of neither this Article nor a consent to any Transfer. Consent to
one Transfer shall not constitute a consent to any subsequent Transfer. If any
transferee defaults under this Lease, Landlord may proceed directly against
Tenant without pursuing remedies against the transferee. Landlord may consent to
subsequent Transfers or modifications of this Lease by Tenant’s transferee,
without notifying Tenant or obtaining its consent, and such action shall not
relieve Tenant of its liability under this Lease.

18.5 No Merger. No merger shall result from any Transfer pursuant to this
Article, any surrender by Tenant of its interest under this Lease, or any
termination hereof in any other manner. In any such event, Landlord may either
terminate any or all subleases or succeed to the interest of Tenant thereunder.

18.6 Reasonable Restriction. Tenant acknowledges that the restrictions on
Transfer contained herein are reasonable restrictions for purposes of
Section 22.2 of this Lease and California Civil Code Section 1951.4.

 

19. SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATE

19.1 Subordination. The lien that is this Lease and terms of this Lease are and
shall be unconditionally junior and subordinate to the lien and terms of all
ground leases, mortgages, deeds of trust, and other security instruments now or
hereafter affecting the real property of which the Premises are a part, and to
all advances made on the security thereof, and to all renewals, modifications,
consolidations, replacements and extensions thereof, provided that Tenant is
furnished a commercially reasonable non-disturbance agreement from any such
lender or ground lessor requiring subordination. If any mortgagee, beneficiary
under deed of trust or ground lessor shall elect to have this Lease prior to its
mortgage, deed of trust or ground lease, and gives written notice thereof to
Tenant, this Lease shall be deemed prior thereto. Tenant agrees to execute any
documents required to effectuate such subordination or to make this Lease prior
to the lien of any such mortgage, deed of trust or ground lease, as the case may
be. If Tenant fails to deliver such agreement within ten (10) days after written
demand, (a) Tenant does hereby make, constitute and irrevocably appoint Landlord
as Tenant’s attorney-in-fact and in Tenant’s name, place and stead, to do so,
and (b) an Event of Default shall be deemed to have occurred and, in addition to
all other liability, Tenant shall be liable for the immediate payment of all
foreseeable and unforeseeable damages, penalties and attorneys’ fees and costs
incurred by Landlord as a result of such failure.

19.2 Attornment. If Landlord sells, transfers, or conveys its interest in the
Premises or this Lease, or if the same is foreclosed judicially or
nonjudicially, or is otherwise acquired, by a mortgagee, beneficiary under deed
of trust or ground lessor, upon the request and at the sole election of
Landlord’s lawful successor, Tenant shall attorn to said successor. Tenant
shall, upon request of Landlord, execute an attornment agreement in form and
substance reasonably acceptable to Landlord agreeing in advance to such
attornment to any such mortgagee, beneficiary, ground lessor or other successor.

19.3 Estoppel Certificates. Within fifteen(15) days after written request from
Landlord, Tenant at Tenant’s sole cost shall execute, acknowledge and deliver to
Landlord a written certificate in favor of Landlord and any prospective lender
on or purchaser of the Center or any part thereof, (a) that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modifications and certifying that this Lease is in full force and effect as
so modified), (b) the amount of any rent paid in advance, and (c) that there are
no uncured defaults on the part of Landlord, or specifying the nature of such
defaults if any are claimed. In addition to the foregoing, such certificate
shall include Tenant’s certification to such other matters of fact, and be on
such form, as Landlord or such prospective lender or purchaser shall reasonably
require. If Tenant fails to deliver such certificate within said 15-day period,
an Event of Default shall be deemed to have occurred and, in addition to all
other liability, Tenant shall be liable for the immediate payment of all
foreseeable and unforeseeable damages, penalties and attorneys’ fees and costs
incurred by Landlord as a result of such failure. Tenant’s failure to deliver
such certificate within said 15-day period shall constitute a conclusive
acknowledgment by Tenant: (i) that this Lease is in full force and effect
without modification except as may be represented by Landlord, (ii) that not
more than one month’s rent has been paid in advance, and (iii) that there are no
uncured defaults in Landlord’s performance.

19.4 Tenant Rights. Notwithstanding the foregoing, Tenant shall not be required
to execute any subordination agreement, attornment agreement, or estoppel
certificate at any time during the Lease Term that would adversely affect its
rights under this Lease.

 

20. SURRENDER OF PREMISES

20.1 Condition of Premises. Upon the expiration or earlier termination of this
Lease, Tenant shall surrender the Premises to Landlord, broom clean and in the
same condition and state of repair as at the commencement of the

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Lease Term, except for ordinary wear and tear that Tenant is not otherwise
obligated to remedy under the provisions of this Lease. Tenant shall deliver all
keys to the Premises and the Building to Landlord. Upon Tenant’s vacation of the
Premises, Tenant shall remove all portable furniture, trade fixtures, machinery,
equipment, signs and other items of personal property , and, at Landlord’s
option, shall remove any Alterations (whether or not made with Landlord’s
consent) that Landlord may require Tenant to remove. Tenant shall repair all
damage to the Premises caused by such removal and shall restore the Premises to
its prior condition, all at Tenant’s expense. Such repairs shall be performed in
a manner satisfactory to Landlord and shall include, but are not limited to, the
following: capping all plumbing, capping all electrical wiring, repairing all
holes in walls, restoring damaged floor and/or ceiling tiles, and thorough
cleaning of the Premises. If Tenant fails to remove any items that Tenant has an
obligation to remove under this Section when required by Landlord or otherwise,
such items shall, at Landlord’s option, become the property of Landlord and
Landlord shall have the right to remove and retain or dispose of the same in any
manner, without any obligation to account to Tenant for the proceeds thereof.
Tenant waives all claims against Landlord for any damages to Tenant resulting
from Landlord’s retention or disposition of such Alterations or personal
property. Tenant shall be liable to Landlord for Landlord’s costs of removing,
storing and disposing of such items.

20.2 Removal of Certain Alterations, Fixtures and Equipment Prohibited. All
Alterations, fixtures (whether or not trade fixtures), machinery, equipment,
signs and other items of personal property that Tenant is not permitted to
remove or Landlord has not required Tenant to remove under Section 20.1 shall
become Landlord’s property and shall be surrendered to Landlord with the
Premises, regardless of who paid for the same. In particular and without
limiting the foregoing, however subject to the provisions of Section 20.1
hereof, Tenant shall not remove any of the following materials or equipment
without Landlord’s prior written consent, regardless of who paid for the same
and regardless of whether the same are permanently attached to the Premises:
power wiring and power panels; piping for industrial gasses or liquids;
laboratory benches, sinks, cabinets and casework; fume hoods or specialized
air-handling and evacuation systems; drains or other equipment for the handling
of waste water or hazardous materials; computer, telephone and
telecommunications wiring, panels and equipment; lighting and lighting fixtures;
wall coverings; drapes, blinds and other window coverings; carpets and other
floor coverings; heaters, air conditioners and other heating or air conditioning
equipment; fencing; security gates and systems; and other building operating
equipment and decorations. Notwithstanding the foregoing, prior to the
installation of any Alterations to be installed by Tenant after the Commencement
Date that requires Landlord’s consent, Tenant shall first obtain Landlord’s
determination whether the Alteration shall be removed from the Premises at
Tenant’s cost, upon the expiration or earlier termination of the Lease.

20.3 Holding Over. Tenant shall vacate the Premises upon the expiration or
earlier termination of this Lease, and Tenant shall indemnify, protect, hold
harmless and defend Landlord against all liabilities, damages and expenses
incurred by Landlord as a result of any delay by Tenant in vacating the
Premises. If Tenant remains in possession of the Premises or any part thereof
after the expiration of the Lease Term with Landlord’s written permission,
Tenant’s occupancy shall be a tenancy from month-to-month only, and not a
renewal or extension hereof. All provisions of this Lease (other than those
relating to the term) shall apply to such month-to-month tenancy, except that
the Minimum Monthly Rent shall be increased to 150% of the Minimum Monthly Rent
in effect during the last month of the Lease Term. No acceptance of rent,
negotiation of rent checks or other act or omission of Landlord or its agents
shall extend the Expiration Date of this Lease other than a writing executed by
Landlord giving Tenant permission to remain in occupancy beyond the Expiration
Date under the terms of the immediately preceding sentence.

 

21. DEFAULT BY TENANT

The occurrence of any of the following shall constitute an “Event of Default”
under this Lease by Tenant:

21.1 Failure to pay within 10 days after due any Minimum Monthly Rent,
Additional Rent or any other monetary sums required to be paid by Tenant under
the terms of this Lease.

21.2 Failure to perform any other agreement or obligation of Tenant hereunder,
if such failure continues for thirty (30) days after written notice by Landlord
to Tenant or, if such default is not susceptible of cure during such 30 day
period and Tenant has not commenced and is not diligently prosecuting the cure
of same. Landlord’s notice described herein is intended to satisfy, and is not
in addition to, any and all legal notices required prior to commencement of an
unlawful detainer action, including without limitation the notice requirements
of California Code of Civil Procedure Sections 1161 et seq.

21.3 Abandonment or vacation of the Premises by Tenant, or failure to occupy the
Premises for a period of ten (10) consecutive days.

21.4 If any of the following occurs: (i) a petition is filed for an order of
relief under the federal Bankruptcy Code or for an order or decree of insolvency
or reorganization or rearrangement under any state or federal law, and such
petition is not dismissed within thirty (30) days after the filing thereof;
(ii) Tenant makes a general assignment for the benefit of creditors; (iii) a
receiver or trustee is appointed to take possession of any substantial part of
Tenant’s assets, unless such appointment is vacated within thirty (30) days
after the date thereof; (iv) Tenant consents to or suffers an attachment,
execution or other judicial seizure of any substantial part of its assets or its
interest under this Lease, unless such process is released or satisfied within
thirty (30) days after the occurrence thereof. If a court of competent
jurisdiction determines that any of the foregoing events is not a default under
this Lease, and a trustee is appointed to take possession (or if Tenant remains
a debtor in possession), and such trustee or Tenant transfers Tenant’s interest
hereunder, then Landlord shall receive the difference between the rent (or other
consideration) paid in connection with such transfer and the rent payable by
Tenant hereunder. Any assignee pursuant to the provisions of any bankruptcy law
shall be deemed without further act to have assumed all of the obligations of
the Tenant hereunder arising on or after the date of such assignment. Any such
assignee shall, upon demand, execute and deliver to Landlord an instrument
confirming such assumption.

21.5 The occurrence of any other event that is deemed to be an Event of Default
under any other provision of this Lease, or any other lease to which Landlord
(or any affiliate of Landlord) and Tenant (or any affiliate of Tenant) are
parties.

 

22. REMEDIES

Upon the occurrence of any Event of Default by Tenant, Landlord shall have the
following remedies, each of which shall be cumulative and in addition to any
other remedies now or hereafter available at law or in equity:

22.1 Termination of Lease. Landlord can terminate this Lease and Tenant’s right
to possession of the Premises by giving written notice of termination, and then
re-enter the Premises and take possession thereof. No act by Landlord other than
giving written notice to Tenant of such termination shall terminate this Lease.
Upon termination, Landlord has the right to recover all damages incurred by
Landlord as a result of Tenant’s default, including:

(a) The worth at the time of award of any unpaid rent that had been earned at
the time of such termination; plus

(b) The worth at the time of award of the amount by which the unpaid rent that
would have been earned after the date of termination until the time of award
exceeds the amount of the loss of rent that Tenant proves could have been
reasonably avoided; plus

(c) The worth at the time of award of the amount by which the unpaid rent for
the balance of the Lease Term after the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided; plus

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(d) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s default, including, but not limited to
(i) expenses for cleaning, repairing or restoring the Premises, (ii) expenses
for altering, remodeling or otherwise improving the Premises for the purpose of
reletting, (iii) brokers’ fees and commissions, advertising costs and other
expenses of reletting the Premises, (iv) costs of carrying the Premises, such as
taxes, insurance premiums, utilities and security precautions, (v) expenses in
retaking possession of the Premises, (vi) attorneys’ fees and costs, (vii) any
unearned brokerage commissions paid in connection with this Lease, and
(viii) reimbursement of any previously waived or abated Minimum Monthly Rent,
Additional Rent or other charges; plus

(e) At Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time under applicable law. As used in
paragraphs (a) and (b) above, the “worth at the time of award” shall be computed
by allowing interest at the maximum permissible legal rate. As used in
paragraph (c) above, the “worth at the time of award” shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%).

22.2 Continuation of Lease. Landlord has the remedy described in California
Civil Code Section 1951.4 (Landlord may continue this Lease in effect after
Tenant’s breach and abandonment and recover rent as it becomes due, if Tenant
has the right to sublet or assign, subject only to reasonable limitations), as
follows:

(a) Landlord can continue this Lease in full force and effect without
terminating Tenant’s right of possession, and Landlord shall have the right to
collect rent and other monetary charges when due and to enforce all other
obligations of Tenant hereunder. Landlord shall have the right to enter the
Premises to do acts of maintenance and preservation of the Premises, to make
alterations and repairs in order to relet the Premises, and/or to undertake
other efforts to relet the Premises. Landlord may also remove personal property
from the Premises and store the same in a public warehouse at Tenant’s expense
and risk. No act by Landlord permitted under this paragraph shall terminate this
Lease unless a written notice of termination is given by Landlord to Tenant or
unless the termination is decreed by a court of competent jurisdiction.

(b) In furtherance of the remedy set forth in this Section, Landlord may relet
the Premises or any part thereof for Tenant’s account, for such term (which may
extend beyond the Lease Term), at such rent, and on such other terms and
conditions as Landlord may deem advisable in its sole discretion. Tenant shall
be liable immediately to Landlord for all costs Landlord incurs in reletting the
Premises. Any rents received by Landlord from such reletting shall be applied to
the payment of: (i) any indebtedness other than rent due hereunder from Tenant
to Landlord, (ii) the costs of such reletting, including brokerage and
attorneys’ fees and costs, and the cost of any alterations and repairs to the
Premises, and (iii) the payment of rent due and unpaid hereunder, including any
previously waived or abated rent. Any remainder shall be held by Landlord and
applied in payment of future amounts as the same become due and payable
hereunder. In no event shall Tenant be entitled to any excess rent received by
Landlord after an Event of Default by Tenant and the exercise of Landlord’s
remedies hereunder. If the rent from such reletting during any month is less
than the rent payable hereunder, Tenant shall pay such deficiency to Landlord
upon demand.

(c) Landlord shall not, by any re-entry or other act, be deemed to have accepted
any surrender by Tenant of the Premises or Tenant’s interest therein, or be
deemed to have terminated this Lease or Tenant’s right to possession of the
Premises or the liability of Tenant to pay rent accruing thereafter or Tenant’s
liability for damages under any of the provisions hereof, unless Landlord shall
have given Tenant notice in writing that it has so elected to terminate this
Lease.

(d) Tenant acknowledges and agrees that the restrictions on the Transfer of this
Lease set forth in Article 18 of this Lease constitute reasonable restrictions
on such transfer for purposes of this Section and California Civil Code
Section 1951.4.

22.3 Performance By Landlord. If Tenant fails to pay any sum of money or perform
any other act to be performed by Tenant hereunder, and such failure continues
for fifteen (15) days after notice by Landlord, Landlord shall have the right
(but not the obligation) to make such payment or perform such other act without
waiving or releasing Tenant from its obligations. All sums so paid by Landlord
and all necessary incidental costs, together with interest thereon at the rate
specified in Section 22.4, shall be payable to Landlord on demand. Landlord
shall have the same rights and remedies in the event of nonpayment by Tenant as
in the case of default by Tenant in the payment of the rent.

22.4 Late Charge; Interest on Overdue Payments. The parties acknowledge that
late payment by Tenant of Minimum Monthly Rent, Additional Rent or other charges
hereunder will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult and impractical to determine,
including, but not limited to, processing and accounting charges, administrative
expenses, and additional interest expenses or late charges that Landlord may be
required to pay as a result of late payment on Landlord’s obligations.
Therefore, if any installment of Minimum Monthly Rent, Additional Rent or other
charges is not received by Landlord on the date due, and without regard to
whether Landlord gives Tenant notice of such failure or exercises any of its
remedies upon an Event of Default, Tenant shall pay a late charge equal to the
greater of ten percent (10%) of the overdue amount or One Hundred Dollars
($100). The parties hereby agree that such late charge represents a fair and
reasonable estimate of the damages Landlord will incur by reason of late payment
by Tenant. In addition, any amount due from Tenant that is not paid when due
shall bear interest at a rate equal to two percent (2%) over the then current
Bank of America prime or reference rate or ten percent (10%) per annum,
whichever is greater, but not in excess of the maximum permissible legal rate,
from the date such payment is due until the date paid by Tenant. Landlord’s
acceptance of any interest or late charge shall not constitute a waiver of
Tenant’s default or prevent Landlord from exercising any other rights or
remedies available to Landlord.

22.5 Landlord’s Right to Require Advance Payment of Rent; Cashier’s Checks. If
Tenant is late in paying any component of rent more than three (3) times during
the Lease Term, Landlord shall have the right, upon notice to Tenant, to require
that all rent be paid three (3) months in advance. Additionally, if any of
Tenant’s checks are returned for nonsufficient funds, or if Landlord at any time
serves upon Tenant a Three Day Notice to Pay Rent or Quit (pursuant to
California Civil Code Sections 1161 et seq. or any successor or similar unlawful
detainer statutes), Landlord may, at its option, require that all future rent
(including any sums demanded in any subsequent three (3) day notice) be paid
exclusively by money order or cashier’s check.

 

23. DEFAULT BY LANDLORD

23.1 Notice to Landlord. Landlord shall not be in default under this Lease
unless Landlord fails to perform an obligation required of Landlord within a
reasonable time, but in no event later than thirty (30) days after written
notice by Tenant to Landlord and to each Mortgagee as provided in Section 23.2,
specifying the nature of the alleged default; provided, however, that if the
nature of the obligation is such that more than thirty (30) days are required
for performance, then Landlord shall not be in default if Landlord commences
performance within such 30-day period and thereafter diligently prosecutes the
same to completion.

23.2 Notice to Mortgagees. Tenant agrees to give each mortgagee or trust deed
holder on the Premises or the Center (“Mortgagee”), by certified mail, a copy of
any notice of default served upon Landlord, provided that Tenant has been
previously notified in writing of the address of such Mortgagee. Tenant further
agrees that if Landlord fails to cure such default within the time provided for
in this Lease, then the Mortgagees shall have an additional thirty (30) days
after Tenant’s notice within which to cure such default, or if such default
cannot reasonably be cured within that time, then such additional time as may be
necessary if, within said 30-day period, any Mortgagee has commenced and is

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diligently pursuing the remedies necessary to cure the default (including but
not limited to commencement of foreclosure proceedings if necessary to affect
such cure), in which event this Lease shall not be terminated while such
remedies are being so diligently pursued.

23.3 Limitations on Remedies Against Landlord. In the event Tenant has any claim
or cause of action against Landlord: (a) Tenant’s sole and exclusive remedy
shall be against Landlord’s interest in the Building, and neither Landlord nor
any of Landlord’s officers, directors, shareholders, partners, members,
principals, employees, agents, representatives, or other related entities or
individuals, or their respective successors and assigns (collectively,
“Landlord’s Related Entities”), nor any other property of Landlord or Landlord’s
Related Entities shall be liable for any deficiency, (b) none of Landlord’s
Related Entities shall be sued or named as a party in any suit or action (except
as may be necessary to secure jurisdiction over Landlord), (c) no service of
process shall be made against any of Landlord’s Related Entities (except as may
be necessary to secure jurisdiction), and none of Landlord’s Related Entities
shall be required to answer or otherwise plead to any service of process, (d) no
judgment shall be taken against any of Landlord’s Related Entities and any
judgment taken against any of Landlord’s Related Entities may be vacated and set
aside at any time, and (e) no writ of execution will ever be levied against the
assets of any of Landlord’s Related Entities. The covenants and agreements set
forth in this Section shall be enforceable by Landlord and/or by any of
Landlord’s Related Entities. If Landlord fails to give any consent that a court
later holds Landlord was required to give under the terms of this Lease, Tenant
shall be entitled solely to specific performance and such other remedies as may
be specifically reserved to Tenant under this Lease, but in no event shall
Landlord be responsible for monetary damages (including incidental and
consequential damages) for such failure to give consent.

 

24. GENERAL PROVISIONS

24.1 Action or Defense by Tenant. Any claim, demand or right of defense of any
kind by Tenant that is based upon or arises in any connection with this Lease or
negotiations prior to its execution shall be barred unless Tenant commences an
action thereon or initiates a legal proceeding or defense by reason thereof
within six (6) months after the date of the occurrence of the event, act or
omission to which the claim, demand or right of defense relates. Tenant
acknowledges and understands that, after having had an opportunity to consult
with legal counsel, the purpose of this paragraph is to shorten the time period
within which Tenant would otherwise have to raise such claims, demands or rights
of defense.

24.2 Mediation. If any dispute ensues between Landlord and Tenant arising out of
or concerning this Lease, and if said dispute cannot be settled through direct
discussions between the parties, the parties shall first to attempt to settle
the dispute through mediation before a mutually acceptable mediator. The cost of
mediation shall be divided equally between the parties. The foregoing provisions
regarding mediation shall not apply to any issue or claim that might properly be
adjudicated in an unlawful detainer proceeding.

24.3 Attorneys’ Fees. Except as provided in Section 24.2, if either party brings
any legal action or proceeding, declaratory or otherwise, arising out of this
Lease, including any suit by Landlord to recover rent or possession of the
Premises or otherwise to enforce this Lease, the losing party shall pay the
prevailing party’s costs and attorneys’ fees and costs incurred in such
proceeding. As used herein, “attorneys’ fees and costs” include without
limitation attorneys’ fees and costs, printing, photocopying, duplicating and
other expenses, air freight charges, fees billed for law clerks, paralegals and
other persons not admitted to the bar but performing services under the
supervision of an attorney, experts’ fees, appraisers’ fees, accountants’ fees,
court costs, the fees of other professionals, costs incurred in connection with
any and all arbitrations, mediations, post-judgment motions, contempt
proceedings, garnishments, levies, debtor and third party examination, discovery
and bankruptcy litigation. If Landlord issues notice(s) to pay rent, notice(s)
to perform covenant, notice(s) of abandonment or similar documents as a result
of Tenant’s default under this Lease, and if Tenant cures such default, Tenant
shall pay to Landlord within fifteen (15) days of demand, the reasonable costs
incurred by Landlord in preparing and delivering the same, including Landlord’s
attorneys’ fees and costs

24.4 Authority of Landlord and Tenant. Landlord and Tenant represent and warrant
that they have full power and authority to execute and fully perform their
obligations under this Lease pursuant to their governing instruments, without
the need for any further action, and that the person(s) executing this Agreement
on behalf of Landlord and Tenant are the duly designated agents of Tenant and
are authorized to do so. Prior to execution of this Lease, Tenant shall supply
Landlord with such evidence as Landlord may request regarding the authority of
Tenant to enter into this Lease and Landlord shall supply Tenant with such
evidence as Tenant may request regarding the authority of Landlord to enter into
this Lease. Any actual or constructive taking of possession of the Premises by
Tenant shall constitute a ratification of this Lease by Tenant.

24.5 Binding Effect; Parties Benefited. Subject to the provisions of Article 18
restricting transfers by Tenant and subject to Section 24.26 regarding transfer
of Landlord’s interest, all of the provisions of this Lease shall bind and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. Except for Landlord’s employees and
agents (including without limitation any property manager or property management
firm engaged by Landlord with respect to the Premises), each of whom shall be
entitled to the benefits of and shall be third party beneficiaries of the
provisions of Articles 12 and 13, no third person shall be entitled to enforce
or be entitled to any rights hereunder or be a third party beneficiary of any
term or provision this Lease.

24.6 Brokers. Landlord and Tenant each warrants that it has had no dealings with
any real estate broker or agent in connection with the negotiation of this
transaction except only the broker(s) set forth in Section 1.11 of the Basic
Lease Provisions, and it knows of no other real estate broker or agent who is
entitled to a commission in connection with this transaction. Tenant
acknowledges that certain partners, affiliates or members of Landlord, or their
respective officers, directors, shareholders, members or employees, may hold
real estate sales person or broker licenses, and as such may have negotiated, or
may have a financial interest in, this transaction.

24.7 Construction. The headings and captions used in this Lease are for
convenience only and are not a part of the terms and provisions of this Lease.
In any provision relating to the conduct, acts or omissions of Tenant, the term
“Tenant” shall include Tenant, its subtenants and assigns and their respective
agents, employees, contractors, and invitees, and any others using the Premises
with Tenant’s express or implied permission.

24.8 Counterparts. This Lease may be executed in multiple copies, each of which
shall be deemed an original, but all of which shall constitute one Lease binding
on all parties after all parties have signed such a counterpart.

24.9 Covenants and Conditions. Each provision to be performed by Tenant shall be
deemed to be both a covenant and a condition.

24.10 Entire Agreement. This Lease, together with any and all exhibits,
schedules, riders and addenda attached or referred to herein, constitutes the
entire agreement between the parties with respect to the subject matter hereof.
There are no oral or written agreements or representations between the parties
hereto affecting this Lease, and this Lease supersedes, cancels and merges any
and all previous verbal or written negotiations, arrangements, representations,
brochures, displays, models, photographs, renderings, floor plans, elevations,
projections, estimates, agreements and understandings if any, made by or between
Landlord and Tenant and their agents, with respect to the subject matter, and
none thereof shall be used to interpret, construe, supplement or contradict this
Lease. This Lease and all amendments thereto is and shall be considered to be
the only agreement between the parties hereto and their representatives and
agents. There are no other representations or warranties between the parties,
and all reliance with respect to representations is solely based upon the
representations and agreements contained in this Lease.

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24.11 Exhibits. Any and all exhibits, schedules, riders and addenda attached or
referred to herein are hereby incorporated herein by reference.

24.12 Financial Statements. Within ten (10) days after written request from
Landlord, Tenant shall deliver to Landlord such financial statements from the
most recent prior year as are reasonably requested by Landlord to verify the net
worth of Tenant, or any assignee, subtenant, or guarantor of Tenant. Tenant may
submit either audited or proforma financial statements depending upon what is
available to Tenant at the time. Tenant represents and warrants to Landlord that
each such financial statement is a true and accurate statement as of the date of
such statement. All such financial statements shall be received in confidence
and shall be used only for the purposes set forth herein. Tenant hereby
irrevocably authorizes Landlord to conduct credit checks and other
investigations into Tenant’s financial affairs.

24.13 Force Majeure. The term “Force Majeure Delay” as used in the Lease or the
attached Work Letter (see Exhibit “D”) shall mean any actual delay in the design
and construction of the Tenant Improvements and the move into the Premises which
is attributable to any: (1) actual delay or failure to perform attributable to
any strike, lockout or other labor or industrial disturbance (whether or not on
the part of the employees of either party hereto), civil disturbance, future
order claiming jurisdiction, act of a public enemy, war, bioterrorism, riot,
sabotage, blockade, embargo, inability to secure customary materials, supplies
or labor through ordinary sources by reason of regulation or order of any
government or regulatory body; (2) delay attributable to the failure of Landlord
and/or Tenant to secure building permits and approvals within the same time
period that normally prevailed for obtaining such permits at the time this Lease
was negotiated; (3) delay in completing the Final Plans (as defined in Exhibit
“D”) and/or the construction of the Tenant Improvements because of changes in
any applicable laws, including, without limitation, the Americans with
Disabilities Act (the “ADA”), or the interpretation thereof; (4) delay
attributable to lightning, earthquake, fire, storm, hurricane, tornado, flood,
washout, explosion, or any other similar industry-wide cause beyond the
reasonable control of the party from whom performance is required, or any of its
contractors or other representatives; (5) other natural disaster, unusual and
unforeseeable delay that results from an interruption of any public utilities;
or (6) other unusual and unforeseeable delay not within the reasonable control
of Landlord.

24.14 Governing Law. This Lease shall be governed, construed and enforced in
accordance with the laws of the State of California.

24.15 Joint and Several Liability. If more than one person or entity executes
this Lease as Tenant, each of them is jointly and severally liable for all of
the obligations of Tenant hereunder.

24.16 Modification. The provisions of this Lease may not be modified or amended,
except by a written instrument signed by all parties.

24.17 Modification for Lender. If, in connection with obtaining financing or
refinancing for the Premises or the Center, Landlord’s lender requests
reasonable modifications to this Lease, Tenant will not unreasonably withhold or
delay its consent thereto, provided that such modifications do not increase the
obligations of Tenant hereunder or materially and adversely affect Tenant’s
rights hereunder.

24.18 Nondiscrimination. Tenant for itself and its officers, directors,
shareholders, partners, members, principals, employees, agents, representatives,
and other related entities and individuals, and their respective successors and
assigns, agrees to comply fully with any and all laws and other requirements
prohibiting discrimination against any person or group of persons on account of
race, color, religion, creed, sex, marital status, sexual orientation, national
origin, ancestry, age, physical handicap or medical condition, in the use
occupancy or patronage of the Premises and/or of Tenant’s business. Tenant shall
indemnify, protect, hold harmless and defend Landlord and Landlord’s officers,
directors, shareholders, partners, members, principals, employees, agents,
representatives, and other related entities and individuals, and their
respective successors and assigns, from and against all damage and liability
incurred by Landlord in the event of any violation of the foregoing covenant or
because of any event of or practice of discrimination against any such persons
or group of persons by Tenant or its officers, directors, shareholders,
partners, members, principals, employees, agents, representatives, and other
related entities and individuals, and their respective successors and assigns,
in accordance with the indemnification provisions of Article 13.

24.19 Notice. Any and all notices to either party shall be personally delivered,
sent by recognized courier service (such as Federal Express or United Parcel
Service), or sent by certified mail, return receipt requested, postage prepaid,
addressed to the party to be notified at the address specified in Section 1.1,
or at such other address as such party may from time to time designate in
writing. Notice shall be deemed delivered on the date of personal delivery, on
the date scheduled for delivery by such courier service, or three (3) business
days after deposit in the U.S. Mail, certified, return receipt requested.
Provided, however, that any notice required pursuant to California Code of Civil
Procedure Sections 1161 et seq. may be given as provided in such sections. Any
and all notices provided herein that Landlord may give setting forth or alleging
any default or breach of this Lease, or of any failure of Tenant to perform its
obligations hereunder shall be deemed to satisfy, and shall not be in addition
to, any and all legal notices required prior to the commencement of an unlawful
detainer action, including without limitation the notices required pursuant to
California Code of Civil Procedure Sections 1161 et seq.

24.20 Partial Invalidity. If any provision of this Lease is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Lease shall not be affected thereby. Each provision shall be valid and
enforceable to the fullest extent permitted by law.

24.21 Quiet Enjoyment. Landlord agrees that Tenant, upon paying the rent and
performing the terms, covenants and conditions of this Lease, may quietly have
the right to use and occupy the Premises as against Landlord during the Lease
Term, subject, however, to the lien and provisions of any mortgage or deed of
trust to which this Lease is or becomes subordinate.

24.22 Recording; Non-Disclosure. Tenant shall not record this Lease or any
memorandum hereof without Landlord’s prior written consent. Tenant shall not,
without the express written consent of Landlord, disclose the terms or
provisions of this Lease to any person, except for Tenant’s employees, agents,
attorneys, officers and directors whose duties require such persons to be
informed of such matters, or except as required by law.

24.23 Relationship of the Parties. Nothing contained in this Lease shall be
deemed or construed as creating a partnership, joint venture, principal-agent,
or employer-employee relationship between Landlord and any other person or
entity (including, without limitation, Tenant) or as causing Landlord to be
responsible in any way for the debts or obligations of such other person or
entity.

24.24 Intentionally Omitted.

24.25 Time of the Essence. Time is of the essence of each and every provision of
this Lease.

24.26 Transfer of Landlord’s Interest. In the event of a sale, assignment,
exchange or other disposition of Landlord’s interest in the Premises, other than
a transfer for security purposes only, Landlord shall be relieved of all
obligations and liabilities accruing hereunder after the effective date of said
sale, assignment, exchange or other disposition, provided that any Security
Deposit or other funds then held by Landlord in which Tenant has an interest are
delivered to Landlord’s successor. The obligations to be performed by Landlord
hereunder shall be binding on Landlord’s successors and assigns only during
their respective periods of ownership.

24.27 Waiver. No provision of this Lease or the breach thereof shall be deemed
waived, except by written consent of Landlord. A waiver of any such breach shall
not be deemed a waiver of any preceding or succeeding breach of the same or any
other provision. No delay or omission by Landlord in exercising any of its
remedies shall

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impair or be construed as a waiver thereof, unless such waiver is expressly set
forth in a writing signed by Landlord. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any previous breach
by Tenant, other than the failure of Tenant to pay the particular rental so
accepted, regardless of Landlord’s knowledge of such previous breach at the time
of acceptance of such rent. Tenant hereby waives any and all rights conferred by
section 3275 of the Civil Code of California and by Sections 1174 (c) and 1179
of the Code of Civil Procedure of California and any and all other regulations
and rules of law from time to time in effect during the term providing that
Tenant shall have any right to redeem, reinstate or restore this Lease following
its termination by reason of Tenant’s breach.

24.28 OFAC Certification. Tenant and each Guarantor hereby jointly and severally
certify, warrant, represent and covenant to and for the benefit of Landlord as
follows: (a) Tenant and each of its subsidiaries, predecessors, agents, direct
and indirect owners and their respective affiliates has at all applicable times
been, is now and will in the future be, in compliance with U.S. Executive Order
13224 and no action, proceeding, investigation, charge, claim, report or notice
has been filed, commenced or threatened against any of them alleging any failure
to so comply; (b) neither Tenant nor any Guarantor or any of their respective
agents, subsidiaries or other affiliates has, after due investigation and
inquiry, knowledge or notice of any fact, event, circumstance, situation or
condition which could reasonably be expected to result in any action,
proceeding, investigation, charge, claim, report or notice being filed,
commenced or threatened against any of them alleging any failure to comply with
the Order, or the imposition of any civil or criminal penalty against any of
them for any failure to so comply; (c) prior to any changes in direct or
indirect ownership of Tenant or any Guarantor, Tenant shall give a written
notice to Landlord signed by Tenant and each Guarantor advising Landlord in
reasonable detail as to the proposed ownership change, and reaffirming that the
representations and warranties herein contained will remain true and correct;
and (d) Tenant hereby agrees to defend, indemnify, and hold harmless Landlord
from and against any and all claims, damages, losses, risks, liabilities, and
expenses (including attorney’s fees and costs) arising from or related to any
breach of the foregoing certification.

 

25. LANDLORD AS CO-OWNERSHIP

The Center is owned by multiple co-owners, of which Canta Rana Ranch, L.P., a
California limited partnership, is one. Canta Rana Ranch, L.P., a California
limited partnership, is executing this Lease on behalf of and as authorized
agent for such purpose on behalf of all co-owners of the Center. All references
in the Lease to “Landlord” shall mean a reference to all co-owners of the Center
as of the date the Lease is executed.

 

26. OPTION TO RENEW

Provided the Lease is in full force and effect and there is not, at the time of
exercise, an uncured Event of Default by Tenant under any of the terms and
conditions of the Lease, Tenant shall have one (1) option (“Option”) to renew
this Lease, for a term of five (5) years (“Extension Term”), for the Premises
being leased by Tenant under this Lease as of the date the relevant Extension
Term is to commence, on the same terms and conditions set forth in the Lease,
except as modified by the terms, covenants and conditions as set forth below:

26.1 Option Notice. If Tenant elects to exercise its Option, then Tenant shall
provide Landlord with written notice (“Option Notice”) no less than the date
which is two hundred seventy (270) days prior to the expiration of the then
existing term. If Tenant fails to provide such notice, Tenant shall have no
further or additional rights to extend or renew the term of this Lease.

26.2 Extension Term. The Minimum Monthly Rent for the Extension Term (the “
Extension Term”) shall adjust to an amount equal to the Fair Market Rental Rate
(as defined below) for the Premises. In no event shall the Minimum Monthly Rent
during the Extension Term be less than the Minimum Monthly Rent during the
preceding year.

26.2.1 As used in this Lease, “Fair Market Rental Rate” shall mean the most
probable effective monthly base rent which the Premises should bring in a
competitive and open market under all conditions requisite to a fair rental, the
Landlord and Tenant each acting prudently and knowledgeably, and neither being
under any compulsion to lease and both having reasonable knowledge of relevant
facts. Determination of the Fair Market Rental Rate (as well as other terms and
conditions) shall include, without limitation, the consideration of (i) the
effective rent then being obtained for lab space comparable in size, location
and quality to the Premises for a similar term, which comparable lab space is
located in other comparable buildings and projects in the same submarket
(Sorrento Mesa), (ii) recently completed transactions at the project where the
Building and Premises are located, (iii) rental abatement concessions reflecting
free rent and/or no rent, (iv) free parking, if any (v) size and location of the
Premises being leased (including the floor level), quality and location of
project, (vi) the extent of services to be provided to the Premises, (vii) the
date as of which the Fair Market Rental Rate is to become effective,
(viii) additional discounts or concessions provided to tenants of similar credit
worthiness as Tenant for comparable space, (ix) all other monetary and
non-monetary concessions, if any, being granted to tenants in connection with
comparable space, and (x) other generally applicable terms and conditions of
tenancy for comparable space which could include tenant improvement allowances
and leasing commissions paid by landlords. If a fee or rent is charged or
allocated by Landlord for parking passes for the Premises, then such fact shall
be taken into account in evaluating the Fair Market Rental Rate for the
Premises. In determining the fair market base rent for the Premises, no value
shall be placed on any tenant improvements to the Premises paid for by Tenant.
Fair Market Rental Rate shall be determined as follows:

(a) Within thirty (30) days after the Option Notice for the Extension Term,
Landlord and Tenant shall meet in an effort to negotiate, in good faith, the new
fair market rental rate for the Extension Term. If Landlord and Tenant have not
agreed upon the new Minimum Monthly Rent for the Premises at least thirty
(30) days after the Option Notice, then the Fair Market Rental Rate shall be
determined by appraisal as described below.

(b) Landlord and Tenant shall attempt to agree in good faith upon a single
appraiser (which appraiser shall be an independent qualified third party
appraiser with at least ten (10) years experience as an MAI commercial real
estate appraiser in dealing with buildings of the same type and quality as the
Premises in the same submarket) within sixty (60) days after the Option Notice.
If Landlord and Tenant are unable to agree upon a single appraiser within such
time period, then Landlord and Tenant shall each appoint an appraiser not later
than seventy (70) days after the Option Notice. If Landlord and Tenant agree
upon a single appraiser, or if either Landlord or Tenant fails to appoint its
appraiser within the prescribed time period, the single appraiser appointed
shall determine the Fair Market Rental Rate of the Premises within ninety
(90) days of the Option Notice. If both parties fail to appoint appraisers
within the prescribed time periods, then the first appraiser thereafter selected
by a party shall determine the Fair Market Rental Rate of the Premises. If two
appraisers are appointed, they shall jointly determine the Fair Market Rental
Rate or, if the appraisers cannot agree, each appraiser shall promptly proceed
to mutually select a third appraiser, who shall have the aforesaid
qualifications of an appraiser. Such third appraiser shall determine the Fair
Market Rental Rate of the Premises and shall deliver to both Landlord and Tenant
a copy of such determination within ninety (90) days after the Option Notice. If
the original two appraisers shall fail to agree upon the selection of a third
appraiser within ten (10) days of the request of either, the same shall be
appointed by the presiding judge of the Superior Court of the State of
California, in and for the County of San Diego, acting in his/her individual and
nonofficial capacity on the application of either party and on ten (10) days’
notice to the other party. Each party shall bear the cost of its own appraiser
and the parties shall share equally the cost of the single or third appraiser if
applicable.

(c) The determination of Fair Market Rental Rate pursuant to such appraisal
process shall be binding on Landlord and Tenant, unless Tenant gives written
notice to Landlord of its rejection of such determination within

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fourteen (14) days after such determination is made, in which event the Option
Notice shall be null and void and this Lease shall expire at the end of the
then-current term.

26.3 Non-Transferable. Once Tenant has exercised the Option, Tenant shall have
no further right to extend the term of the Lease. The Option is not
transferable; the parties hereto acknowledge and agree that they intend the
aforesaid Option shall be “personal” to Tenant and that in no event will any
assignee or sublessee have any rights to exercise the aforesaid Option.

26.4 No Right to Exercise Option. Tenant shall not have the right to exercise
the Option described above, notwithstanding anything set forth above to the
contrary: (a) during any period of time in which an Event of Default has
occurred under any provision of this Lease and continuing until the default is
cured; and/or (b) during the period of time commencing on the day after a
monetary obligation to Landlord is due from Tenant and unpaid (after the giving
of written notice thereof to Tenant required pursuant to the Lease) and
continuing until the obligation is paid. The period of time within which the
Option may be exercised shall not be extended or enlarged by reason of Tenant’s
inability to exercise the Option because of the foregoing provisions of this
Section, even if the effect thereof is to eliminate Tenant’s right to exercise
the Option.

 

27. CONFIDENTIALITY

Each party to this Lease shall agree to keep the terms and conditions hereof
confidential and shall neither disclose this Lease nor the terms and conditions
hereto to any other person, entity or association, except where required by
applicable law. The negotiations and agreements reached between the parties that
form this Lease and any future negotiations regarding the Lease shall constitute
Confidential Information. The Confidential Information is proprietary and to be
held in strict confidence. This oath and condition of confidentiality shall
apply to Landlord and Tenant and their respective partners, successors,
subsidiaries, affiliates, shareholders, directors, officers, employees, entity
members, spouses, attorneys, accountants, consultants, brokers, agents,
principals and representatives, and each of their employees, officers,
directors, representatives, contractors, consultants and attorneys (hereafter,
collectively referred to as Affiliates). Landlord and Tenant agree that neither
the parties nor any of the Affiliates shall directly or indirectly disclose,
duplicate, reproduce, distribute, disseminate, transmit, discuss or otherwise
communicate, either verbally or in writing, any Confidential Information for any
purpose. The foregoing notwithstanding, Landlord and Tenant may disclose
Confidential Information only to directors, officers, entity members, employees
and attorneys having a business need to know (collectively, Authorized Persons),
so long as the disclosing party informs each of the Authorized Persons that the
Confidential Information is the confidential, proprietary information of the
parties and such Authorized Persons agree to be bound by the terms of
confidentiality set forth in this Lease. If the Confidential Information is
required to be disclosed to any other person, entity, or association, the
disclosing party shall use its good faith efforts to first give the other
non-disclosing party(ies) not less than ten (10) days prior written notice.

THE SUBMISSION OF THIS LEASE FOR EXAMINATION AND/OR SIGNATURE BY TENANT IS NOT A
COMMITMENT BY LANDLORD OR ITS AGENTS TO RESERVE THE PREMISES OR TO LEASE THE
PREMISES TO TENANT. THIS LEASE SHALL BECOME EFFECTIVE AND LEGALLY BINDING ONLY
UPON FULL EXECUTION AND DELIVERY BY BOTH LANDLORD AND TENANT. UNTIL LANDLORD
DELIVERS A FULLY EXECUTED COUNTERPART HEREOF TO TENANT, LANDLORD HAS THE RIGHT
TO OFFER AND TO LEASE THE PREMISES TO ANY OTHER PERSON TO THE EXCLUSION OF
TENANT.

EXECUTED, by Landlord and Tenant as of the date first written above.

 

TENANT:     LANDLORD:

PHAGE BIOTECHNOLOGY CORPORATION

a Delaware corporation

   

CANTA RANA RANCH, L.P.,

a California limited partnership

    By:  

COLLINS LAND COMPANY, LLC,

a California limited liability company

By:   /s/ Mickael A. Flaa     By:   /s/ Chris Collins Title:   Chief Financial
Officer     Title:   Member By:          By:      Title:          Title:     
Tenant’s Information:       EIN:   33-0795984      

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EXHIBIT “A-1”

SITE/FLOOR PLAN OF PREMISES/

DESCRIPTION OF CENTER

Exhibit A is intended only to show the general layout of the Premises and the
Center as of the beginning of the Term of this Lease. It does not in any way
supersede any of Landlord’s rights set forth in Section 15.4 with respect to
arrangements and/or locations of public parts of the Building and changes in
such arrangements and/or locations. It is not to be scaled; any measurements or
distances shown should be taken as approximate.

LOGO [g45959img_001.jpg]

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EXHIBIT “A-2”

SITE/FLOOR PLAN OF PREMISES/

DESCRIPTION OF CENTER

Exhibit A is intended only to show the general layout of the Premises and the
Center as of the beginning of the Term of this Lease. It does not in any way
supersede any of Landlord’s rights set forth in Section 15.4 with respect to
arrangements and/or locations of public parts of the Building and changes in
such arrangements and/or locations. It is not to be scaled; any measurements or
distances shown should be taken as approximate.

LOGO [g45959img_002.jpg]

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EXHIBIT “B”

RULES AND REGULATIONS

The following Rules and Regulations shall apply to the Center. Tenant agrees to
comply with the same and to require its agents, employees, contractors,
customers and invitees to comply with the same. Landlord shall have the right
from time to time to amend or supplement these Rules and Regulations, and Tenant
agrees to comply, and to require its agents, employees, contractors, customers
and invitees to comply, with such amended or supplemented Rules and Regulations,
provided that (a) notice of such amended or supplemental Rules and Regulations
is given to Tenant, and (b) such amended or supplemental Rules and Regulations
apply uniformly to all tenants of the Center. If Tenant or its subtenants,
employees, agents, or invitees violate any of these Rules and Regulations,
resulting in any damage to the Center or increased costs of maintenance of the
Center, or causing Landlord to incur expenses to enforce the Rules and
Regulations, Tenant shall pay all such costs to Landlord. In the event of any
conflict between the Lease and these or any amended or supplemental Rules and
Regulations, the provisions of the Lease shall control.

 

1. Tenant shall be responsible at its sole cost for the removal of all of
Tenant’s refuse or rubbish. All garbage and refuse shall be disposed of outside
of the Premises, shall be placed in the kind of container specified by Landlord,
and shall be prepared for collection in the manner and at the times and places
specified by Landlord. If Landlord provides or designates a service for picking
up refuse and garbage, Tenant shall use the same at Tenant’s sole cost. Tenant
shall not burn any trash or garbage of any kind in or about the Premises. If
Landlord supplies janitorial services to the Premises, Tenant shall not, without
Landlord’s prior written consent, employ any person or persons other than
Landlord’s janitorial service to clean the Premises.

 

2. No aerial, satellite dish, transceiver, or other electronic communication
equipment shall be erected on the roof or exterior walls of the Premises, or in
any other part of the Center, without Landlord’s prior written consent. Any
aerial, satellite dish, transceiver, or other electronic communication equipment
so installed without Landlord’s prior written consent shall be subject to
removal by Landlord without notice at any time and without liability to
Landlord.

 

3. No loudspeakers, televisions, phonographs, radios, or other devices shall be
used in a manner so as to be heard or seen outside of the Premises without
Landlord’s prior written consent. Tenant shall conduct its business in a quiet
and orderly manner so as not to create unnecessary or unreasonable noise. Tenant
shall not cause or permit any obnoxious or foul odors that disturb the public or
other occupants of the Center. If Tenant operates any machinery or mechanical
equipment that causes noise or vibration that is transmitted to the structure of
the Building, or to other parts of the Center, to such a degree as to be
objectionable to Landlord or to any other occupant of the Center, Tenant shall
install and maintain, at Tenant’s expense, such vibration eliminators or other
devices sufficient to eliminate the objectionable noise or vibration.

 

4. Tenant shall keep the outside areas immediately adjoining the Premises clean
and free from dirt, rubbish, pallets and other debris to the satisfaction of
Landlord. If Tenant fails to cause such outside areas to be maintained as
required within twelve (12) hours after verbal notice that the same do not so
comply, Tenant shall pay a fee equal to the greater of Fifty Dollars ($50.00) or
the costs incurred by Landlord to clean up such outside areas.

 

5. Tenant shall not store any merchandise, inventory, equipment, supplies,
finished or semi-finished products, raw materials, or other articles of any
nature outside the Premises (or the building constructed thereon if the Premises
includes any outside areas) without Landlord’s prior written consent.

 

6. Tenant and Tenant’s subtenants, employees, agents, or invitees shall park
only the number of cars allowed under the Lease and only in those portions of
the parking area designated for that purpose by Landlord. Upon request by
Landlord, Tenant shall provide the license plate numbers of the cars of Tenant
and Tenant’s employees in order to facilitate enforcement of this regulation.
Tenant and Tenant’s employees shall not store vehicles or equipment in the
parking areas, or park in such a manner as to block any of the accessways
serving the Center and its occupants.

 

7. The Premises shall not be used for lodging, sleeping, cooking, or for any
immoral or illegal purposes, or for any purpose that will damage the Premises or
the reputation thereof. Landlord reserves the right to expel from the Center any
person who is intoxicated or under the influence of liquor or drugs or who shall
act in violation of any of these Rules and Regulations. Tenant shall not conduct
or permit any sale by auction on the Premises. No video, pinball, or similar
electronic game machines of any description shall be installed, maintained or
operated upon the Premises without the prior written consent of Landlord.

 

8. Neither Tenant nor Tenant’s employees or agents shall disturb, solicit, or
canvas any occupant of the Center, and Tenant shall take reasonable steps to
discourage others from doing the same.

 

9. Tenant shall not keep in, or allow to be brought into, the Premises or Center
any pet, bird or other animal, other than “seeing-eye” dogs or other animals
under the control of and specifically assisting any disabled person.

 

10. The plumbing facilities shall not be used for any other purpose than that
for which they are constructed, and no foreign substance of any kind shall be
disposed of therein. The expense of any breakage, stoppage, or damage resulting
from a violation of this provision shall be borne by Tenant. Tenant shall not
waste or use any excessive or unusual amount of water.

 

11. Tenant shall use, at Tenant’s cost, such pest extermination contractor as
Landlord may direct and at such intervals as Landlord may require.

 

12. Tenant will protect the carpeting from undue wear by providing carpet
protectors under chairs with casters, and by providing protective covering in
carpeted areas where spillage or excessive wear may occur.

 

13.

Tenant shall be responsible for repair of any damage caused by the moving of
freight, furniture or other objects into, within, or out of the Premises or the
Center. No heavy objects (such as safes, furniture, equipment, freight, etc.)
shall be placed upon any floor without Landlord’s prior written

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approval as to the adequacy of the allowable floor loading at the point where
the objects are intended to be moved or stored. Landlord may specify the time of
moving to minimize any inconvenience to other occupants of the Center. If the
Building is equipped with a freight elevator, all deliveries to and from the
Premises shall be made using the freight elevator during the time periods
specified by Landlord, subject to such reasonable scheduling as Landlord in its
discretion shall deem appropriate.

 

14. Without Landlord’s prior written consent, no drapes or sunscreens of any
nature shall be installed in the Premises and the sash doors, sashes, windows,
glass doors, lights and skylights that reflect or admit light into the building
shall not be covered or obstructed. Tenant shall have the right to select and
install the type of window coverings at Tenant’s expense. Tenant shall not mark,
drive nails, screw or drill into, paint, or in any way deface any surface or
part of the building. Notwithstanding the foregoing, Tenant may hang pictures,
blackboards, or similar objects, provided Tenant repairs and repaint any nail or
screw holes, and otherwise returns the premises to the condition required under
the Lease and the expiration or earlier termination of the Lease Term. The
expense of repairing any breakage, stoppage, or damage resulting from a
violation of this rule shall be borne by Tenant.

 

15. No electrical wiring, electrical apparatus, or additional electrical outlets
shall be installed in the Premises without Landlord’s prior written approval.
Any such installation not so approved by Landlord may be removed by Landlord at
Tenant’s expense. Tenant may not alter any existing electrical outlets or
overburden them beyond their designed capacity. Landlord reserves the right to
enter the Premises, with reasonable notice to Tenant, for the purpose of
installing additional electrical wiring and other utilities for the benefit of
Tenant or adjoining tenants. Landlord will direct electricians as to where and
how telephone and affixed wires are to be installed in the Premises. The
location of telephones, call boxes, and other equipment affixed to the Premises
shall be subject to the prior written approval of Landlord.

 

16. If Tenant’s use of the Premises involves the sale and/or preparation of
food, Tenant shall at all times maintain a health department rating of “A” (or
such other highest health department or similar rating as is available). Any
failure by Tenant to maintain such “A” rating twice in any twelve (12) month
period shall, at the election of Landlord, constitute a noncurable Event of
Default under the Lease.

 

17. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

 

18. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.

 

19. If Tenant occupies any air-conditioned space, Tenant shall keep entry doors
opening onto corridors, lobby or courtyard closed at all times. All truck and
loading doors shall be closed at all times when not in use.

 

20. Tenant shall not paint any floor of the Premises without Landlord’s prior
written consent. Prior to surrendering the Premises upon expiration or
termination of the Lease, Tenant shall remove any paint or sealer therefrom
(whether or not previously permitted by Landlord) and restore the floor to its
original condition as of the Commencement Date, reasonable wear and tear
excepted. Tenant shall not affix any floor covering to the floor of the Premises
in any manner except as approved by Landlord.

 

/s/ MAF Tenant’s Initials

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EXHIBIT “C”

SIGN CRITERIA

TENANT TO OBTAIN APPROVAL OF LANDLORD FOR ITS SIGNAGE.

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EXHIBIT “D”

WORK LETTER

This WORK LETTER (“Agreement”) is being entered between Canta Rana Ranch, L.P.,
a California limited partnership (“Landlord”), and Phage Biotechnology
Corporation, a Delaware corporation (“Tenant”), in connection with the execution
of the Standard Industrial Net Lease between Landlord and Tenant of even date
herewith (“Lease”), who hereby agree as follows:

1. GENERAL.

(a) The purpose of this Agreement is to set forth how the Tenant Improvements
(as defined in Section 6 below) in the Premises are to be constructed, who will
undertake the construction of the Tenant Improvements, and who will pay for the
construction of the Tenant Improvements.

(b) Except as defined in this Agreement to the contrary, all terms utilized in
this Agreement shall have the same meaning ascribed to them in the Lease.

(c) The provisions of the Lease, except where clearly inconsistent or
inapplicable to this Agreement, are incorporated into this Agreement.

(d) The Tenant Improvements shall be constructed pursuant to this Agreement by
Landlord. Landlord shall provide Tenant Improvement Allowances in accordance
with Section 7 below.

2. COMMENCEMENT DATE. The “Commencement Date” shall have the definition set
forth in Section 1.3 of the Lease. In addition, the Tenant Improvements shall be
deemed to be “Substantially complete” as also described in Section 1.2
thereunder.

(a) Force Majeure Delay. The term “Force Majeure Delay” as used in the Lease or
this Agreement shall mean any actual delay in the design and construction of the
Tenant Improvements and the move into the Premises which is attributable to any:
(1) actual delay or failure to perform attributable to any strike, lockout or
other labor or industrial disturbance (whether or not on the part of the
employees of either party hereto), civil disturbance, future order claiming
jurisdiction, act of a public enemy, war, bioterrorism, riot, sabotage,
blockade, embargo, inability to secure customary materials, supplies or labor
through ordinary sources by reason of regulation or order of any government or
regulatory body; (2) delay attributable to the failure of Landlord and/or Tenant
to secure building permits and approvals within the same time period that
normally prevailed for obtaining such permits at the time this Lease was
negotiated; (3) delay in completing the Final Plans (as defined in Exhibit “D”)
and/or the construction of the Tenant Improvements because of changes in any
applicable laws, including, without limitation, the Americans with Disabilities
Act (the “ADA”), or the interpretation thereof; (4) delay attributable to
lightning, earthquake, fire, storm, hurricane, tornado, flood, washout,
explosion, or any other similar industry-wide cause beyond the reasonable
control of the party from whom performance is required, or any of its
contractors or other representatives; (5) other natural disaster, unusual and
unforeseeable delay that results from an interruption of any public utilities;
or (6) other unusual and unforeseeable delay not within the reasonable control
of Landlord.

(b) Landlord Delay. The term “Landlord Delay” as used in the Lease or this
Agreement shall mean any actual delay in the design and construction of the
Tenant Improvements and the move into the Premises which is due to any wrongful
or negligent act or omission of Landlord, its agents or contractors (including
acts or omissions while acting as agent or contractor for Tenant). The term
Landlord Delay shall include any: (1) delay in the giving of authorizations or
approvals by Landlord; and (2) delay attributable to the negligent acts or
failures to act of Landlord, its agents or contractors, where such acts or
failures to act delay the completion of the Tenant Improvements. Tenant shall
notify Landlord in writing of a claim of Landlord delay. Should the parties
mutually agree that a Landlord delay has taken place, the Commencement Date will
be modified on a one for one day basis. There shall be no modification to
Commencement Date: (i) where such inaccuracy could have been determined by a
measurement or visual inspection of the Premises or (ii) to the extent that
Tenant needs to reinforce the foundation or the roof due to Tenant’s
improvements to the Premises.

(c) Tenant Delay. In no event shall the Commencement date of the Lease be
extended or delayed due or attributable to delays due to the fault of Tenant
(“Tenant Delays”). Tenant Delays shall include delays caused by or resulting
from any one or more of the following:

(i) Tenant’s failure to timely reviews and reasonably approves the Working
Drawings or to promptly cooperate with Landlord’s representatives or Landlord’s
Design Team and furnish information to said parties for the preparation of the
Preliminary Plans and Working Drawings;

(ii) Tenant’s request for or use of special materials, finishes or installations
that are not readily available;

(iii) Change orders requested by Tenant to the extent of the delay period
specified in an approved changed order or the actual delay period, if shorter;

(iv) Interference by Tenant or Tenant’s agents with Landlords construction
activities;

(v) Tenant’s failure to approve any other item or perform any other obligation
in accordance with and by the dates specified herein or in the Construction
Contract;

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(vi) Tenant’s requested changes in the Space Plans, Working Drawings or any
other plans and specifications after the approval thereof by Tenant or
submission thereof by Tenant to Landlord;

(vii) Tenant’s obtaining or failure to obtain any necessary governmental
approvals or permits for Tenant’s intended use of the Premises.

3. PREPARATION OF PLANS AND CONSTRUCTION SCHEDULE AND PROCEDURES. Landlord shall
arrange for the construction of the Tenant Improvements in accordance with the
following schedule:

(a) Selection of Design Team. Landlord shall select an architect (“Architect”)
and an engineer (“Engineer”) familiar with all applicable laws and registered in
the State of California. Tenant shall cause the Architect to submit to Landlord
the Space Plan for Landlord’s review and approval. Within five (5) business days
after Landlord receives the Space Plan, Landlord shall either approve or provide
Tenant with the reasons that Landlord is disapproving the Space Plan and return
the Space Plan to Tenant. In such event, Landlord shall require, and Tenant
shall cause the Architect to make the necessary changes necessary in order to
address Landlord’s comments and shall return the Space Plan to Landlord, which
Landlord shall approve or disapprove within three (3) business days after
Landlord receives the revised Space Plan. This procedure shall be repeated until
the Space Plan is approved by Landlord and written approval has been delivered
to and received by Tenant. The complete Space Plan shall be submitted by Tenant
to Landlord in one package and at one time, and the time periods for Landlord’s
approval shall apply with respect to each resubmittal until finally approved by
Landlord.

(b) Preparation and Approval of Space Plan. Tenant shall submit to the Architect
all additional information, including occupancy requirements for the Premises,
necessary to enable the Architect to prepare a space plan showing all demising
walls, corridors, entrances, exits, doors, interior partitions, and the
locations of all offices, conference rooms, computer rooms, mini-service
kitchens, etc. (“Space Plan”) and the Working Drawings (as defined below).

(c) Preparation and Approval of Working Drawings. After the Space Plan is
approved by Landlord, Tenant shall submit to Landlord drawings prepared by the
Architect (“Working Drawings”) which shall be compatible with the design,
construction and equipment of the Building, include Building standard items,
mutually agreeable upgrades, comply with all applicable laws, be capable of
logical measurement and construction, contain all such information as may be
required for the construction of the Tenant Improvements, and the preparation of
the Engineering Drawings (as defined in Subsection (e) below), and contain all
demising walls, corridors, entrances, exists, interior partition locations,
plumbing locations, air conditioning system and duct work, special air
conditioning requirements, reflected ceiling plans, office equipment locations,
air handling systems, etc. The Working Drawings shall be submitted in one
package at one time, and the time periods for Landlord’s approval shall apply
with respect to each resubmittal until finally approved by Landlord.

Landlord shall approve the Working Drawings within seven (7) business days after
receipt of same or designate by notice given within such time period to Tenant
the specific changes reasonably required to be made to the Working Drawings in
order to correct any problem and shall return the Working Drawings to Tenant.
Tenant shall make the necessary changes necessary in order to correct any such
problem and shall return the Working Drawings to Landlord, which Landlord shall
approve or disapprove within three (3) business days after Landlord receives the
revised Working Drawings. This procedure shall be repeated until all of the
Working Drawings are approved by Landlord and written approval has been
delivered to and received by Tenant.

Landlord’s approval of any drawings shall not in any way relieve the Architect,
Engineers or General Contractor of their obligations, responsibilities, or
liabilities associated with the design and/or construction of this project.
Landlord’s approval is limited in scope as set forth in the terms and conditions
of this Agreement.

(d) Preparation and Approval of Engineering Drawings. After the Working Drawings
are finally approved by Landlord, Tenant shall submit to Landlord, for
Landlord’s review and approval, engineering drawings prepared by the Engineer,
showing complete mechanical, electrical, plumbing, HVAC, telecommunication, and
computer cabling plans (“Engineering Drawings”). The Engineering Drawings may be
submitted in one (1) or more stages and at one or more times, and the time
periods for Landlord’s approval shall apply with respect to each such portion
submitted.

Landlord shall approve the Engineering Drawings, or such portion as has from
time to time been submitted, within seven (7) business days after receipt of
same or designate by notice given within such time period to Tenant the specific
changes reasonably required to be made to the Engineering Drawings in order to
correct any problem, and shall return the Engineering Drawings to Tenant. Tenant
shall make the minimum changes necessary in order to correct any such problem
and shall return the Engineering Drawings to Landlord, which Landlord shall
approve or disapprove within three (3) business days after Landlord receives the
revised Engineering Drawings. This procedure shall be repeated until the
Engineering Drawings are approved by Landlord and written approval has been
delivered to and received by Tenant.

(e) Integration of Working Drawings and Engineering Drawings into Final Plans.
After Landlord has approved the Engineering Drawings, Tenant shall cause the
Architect to integrate the approved Working Drawings with the approved
Engineering Drawings (collectively “Final Plans”) and deliver the Final Plans to
Landlord. Tenant may submit the Final Plans in one (1) or more stages and at one
or more times, and the time periods for Landlord’s approval shall apply with
respect to each such portion submitted.

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Landlord shall approve the Final Plans within five (5) business days after
receipt of same or designate by notice given within such time period to Tenant
the specific changes reasonably required to be made to the Final Plans in order
to correct any problem, and shall return the Final Plans to Tenant. Tenant shall
make the changes necessary in order to correct any such problem and shall return
the Final Plans to Landlord, which Landlord shall approve or disapprove within
three (3) business days after Landlord receives the revised Final Plans. This
procedure shall be repeated until all of the Final Plans are finally approved by
Landlord and written approval has been delivered to and received by Tenant.

4. CONTRACTOR AND REVIEW OF PLANS.

(a) Selection of Landlord’s Contractor. Landlord shall select a contractor
(“Landlord’s Contractor”) familiar with all applicable laws.

(b) Landlord’s Review Responsibilities. Tenant agrees and understands that the
review of all plans pursuant to this Agreement by Landlord is solely to protect
the interests of Landlord in the Building, Landlord shall not be the guarantor
of, nor responsible for, the correctness or accuracy of any such plans or
compliance of such plans with applicable laws.

(c) Review Costs. Tenant shall not reimburse to Landlord costs incurred in
approving the Space Plan, Working Drawings, Engineering Drawings and Final
Plans, except as provided in Section 7 below.

5. CONSTRUCTION OF THE TENANT IMPROVEMENTS. After the Final Approval by
Landlord, the Tenant shall submit the approved Working Drawings to the
appropriate governmental body or bodies for final plan checking and a building
permit. After a building permit for the work has been issued and upon selection
of Landlord’s Contractor, Tenant shall enter into a construction contract (the
“Construction Contract”) with Landlord’s Contractor to cause the construction of
the Tenant Improvements which shall be carried out in conformance with the
Working Drawings in a good and workmanlike manner using first-class materials.
The Construction Contract shall provide that Landlord’s Contractor shall submit
invoices to Tenant for all of the costs and expenses of construction of the
Tenant Improvements (described below). Upon Tenant’s approval of the invoices,
Landlord shall be responsible for payment of the invoices in an amount not to
exceed the Tenant Improvement Allowances (described below after deduction for
any costs for design, permitting, etc.), which shall be paid directly by
Landlord to Landlord’s Contractor. All invoices for the remaining costs and
expenses shall be paid for by Tenant at its sole cost and expense. Landlord
shall see that the construction complies with all applicable building, fire,
health and sanitary codes and regulations. Landlord’s Contractor shall commence
and diligently proceed with the construction of all the Tenant Improvements and
Landlord’s Contractor shall use commercially reasonable efforts to expeditiously
complete the Tenant Improvements, subject to delays beyond the control of
Landlord or its contractor or subcontractors, including Tenant Delays and force
majeure.

6. TENANT IMPROVEMENTS. The term “Tenant Improvements” shall mean all
improvements shown in the Final Plans as integrated by the Architect, and, to
the extent specified in the Final Plans, all signage, built-ins, related
cabinets, reception desks to the extent specified in the mill work or comparable
contracts, and all carpets and floor coverings, but, except as provided above,
Tenant Improvements shall not include any personal property of Tenant

7. TENANT IMPROVEMENT ALLOWANCE.

7.1 Office Space. Landlord shall be responsible for bearing all costs and
expenses of completing the Tenant Improvements for the office space (“Office
Tenant Improvements”) up to a maximum of Seventy Three Thousand Three Hundred
Twenty Dollars ($73,320.00) (the “Office Tenant Improvement Allowance”). Office
Tenant Improvement costs shall include all costs related to the following:
(i) hard construction costs; (ii) standard contractor overhead and profit;
(iii) design costs; (iv) governmental processing and permitting costs;
(v) utility separation; and (vi) any other costs related to Tenant’s occupancy.
Such costs shall be paid by for Landlord from the Office Tenant Improvement
Allowance upon receipt of any invoices, receipts, and/or other request for
payment in connection with the construction of the Office Tenant Improvements at
the Premises. Said Office Tenant Improvement Allowance shall also include a
construction management fee payable to Landlord equivalent to five percent
(5%) of the total cost of the Office Tenant Improvements. All costs and expenses
in excess of the Office Tenant Improvement Allowance shall be payable by Tenant
upon demand by Landlord.

If Landlord at any time determines that the cost of the Office Tenant
Improvements is likely to exceed the amount of the Office Tenant Improvement
Allowance, Landlord may require Tenant to advance such estimated additional
excess (the “Additional Excess Amount”) to Landlord prior to (and as a condition
to) commencing or completing the Office Tenant Improvements, and any failure by
Tenant within ten (10) days to provide such funds to Landlord shall constitute
an Event of Default under the Lease.

7.2 Lab Space. Landlord shall be responsible for bearing all costs and expenses
of making adjustments to the lab space (“Lab Tenant Improvements”) up to a
maximum of Fifty Four Thousand Seven Hundred Twenty Dollars ($54,720.00) (the
“Lab Tenant Improvement Allowance”). Lab Tenant Improvement costs shall include
all costs related to the following: (i) hard construction costs; (ii) standard
contractor overhead and profit; (iii) design costs; (iv) governmental processing
and permitting costs; (v) utility separation; and (vi) any other costs related
to adjustments to the lab space. Such costs shall be paid by for Landlord from
the Lab Tenant Improvement Allowance upon receipt of any invoices, receipts,
and/or other request for payment in connection with the construction of the Lab
Tenant Improvements at the Premises. Said Lab Tenant Improvement Allowance shall
also include a construction management fee payable to Landlord equivalent to
five percent (5%) of the total cost of the Lab Tenant Improvements. All costs
and expenses in excess of the Lab Tenant Improvement Allowance shall be payable
by Tenant upon demand by Landlord.

If Landlord at any time determines that the cost of the Lab Tenant Improvements
is likely to exceed the amount of the Lab Tenant Improvement Allowance, Landlord
may require Tenant to advance such

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estimated additional excess (the “Additional Excess Amount”) to Landlord prior
to (and as a condition to) commencing or completing the Lab Tenant Improvements,
and any failure by Tenant within ten (10) days to provide such funds to Landlord
shall constitute an Event of Default under the Lease.

8. INTENTIONALLY DELETED.

9. CHANGE ORDERS. In the event that Tenant requests any changes to the Final
Plans, Landlord shall not unreasonably withhold its consent to any such changes,
and shall grant its consent to such reasonable changes within three (3) business
days after Landlord’s receipt of same, provided the changes do not create a
problem.

10. APPROVALS. Except as otherwise specified herein, to the extent any approval
is required of Landlord hereunder, such approval shall not be unreasonably
withheld or conditioned. Unless otherwise specified herein, any response to a
submittal shall be in writing and the time for any approval, disapproval or
comments with respect to any submittal shall be five (5) business days from the
date of such submittal, and if written disapproval of such submittal is not
delivered to Tenant within the specified time period, such submittal shall be
deemed approved. If Landlord approves any item shown on any submittal, Landlord
my not thereafter disapprove such item in connection with a later submittal. If
Landlord disapproves any submittal, Landlord shall accompany such disapproval
with a written statement detailing the Landlord’s specific objections to such
submittal. Tenant may re-submit any plans or drawings following a rejection by
Landlord of same.

11. DELIVERY OF PREMISES TO TENANT AND CONDITION OF PREMISES. Landlord shall
deliver possession of the Premises to Tenant in accordance with the terms of the
Lease.

12. POWER UPGRADE. Tenant shall be solely responsible for upgrading power in the
Premises to its required specifications.

13. NO LANDLORD LIABILITY. Unless caused by or resulting from the gross
negligence or willful misconduct of Landlord, its agents, employees or
contractors, Landlord shall not be liable for any loss, cost, damage or expense
incurred or claimed by Tenant or any other person or party on account of the
construction or installation of any work by tenant (“Tenant’s Work”) or any
other person or party on account of the construction or installation of Tenant’s
Work or any other improvements to the Building made by Tenant. Tenant hereby
acknowledges and agrees that the compliance of Tenant’s Work made to the
Premises by Tenant and any plans therefore, will comply with all applicable
governmental laws, codes and regulations shall be solely Tenant’s
responsibility. Landlord assumes no liability or responsibility resulting from
the failure of the Tenant to comply with all applicable governmental laws, codes
and regulations or for any defect in any of the Tenant’s Work to the Premises
made by Tenant. Tenant further agrees to indemnify, defend and hold harmless
Landlord from any loss, cost, damage or expense incurred, claimed, asserted or
arising in connection with any of the Tenant Improvements, Tenant’s Work or
other Alterations unless caused by or resulting from the gross negligence or
willful misconduct of Landlord, its agents, employees or contractors.

IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first written above.

 

TENANT:     LANDLORD:

PHAGE BIOTECHNOLOGY CORPORATION

a Delaware corporation

   

CANTA RANA RANCH, L.P.,

a California limited partnership

By:   /s/ Mickael A. Flaa     By:  

COLLINS LAND COMPANY, LLC,

a California limited liability company

Title:   Chief Financial Officer       By:          By:   /s/ Chris Collins
Title:          Title:   Member       By:            Title:     

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EXHIBIT “E”

STANDARD LEASE GUARANTY

 

Landlord:    CANTA RANA RANCH, L.P., a California limited partnership Tenant:   
PHAGE BIOTECHNOLOGY CORPORATION, a Delaware corporation Guarantor:   
CARDIOVASCULAR BIOTHERAPEUTICS, INC., a Delaware corporation Lease Title:   
Standard Industrial Net Lease - dated March 15, 2006,by and between Canta Rana
Ranch, L.P., a California limited partnership, as landlord, and Phage
Biotechnology Corporation., a Delaware corporation, as tenant

General Description of Premises: 6868 Nancy Ridge Drive, Suite 100, San Diego,
California 92121, as more particularly described in the Lease.

This STANDARD LEASE GUARANTY (“Guaranty” ) is entered into by the above-named
Guarantor concerning the Lease described above by and between the above-named
Landlord and Tenant covering the Premises.

GUARANTOR HEREBY AGREES AS FOLLOWS:

1. Guarantor hereby unconditionally guarantees the full performance of each and
every obligation of Tenant under the Lease.

2. This Guaranty shall continue notwithstanding any modification or extension of
the Lease. No assignment, subletting or other transfer of Tenant’s interest in
all or any portion of the Lease shall affect or release this Guaranty or
Guarantor’s liability hereunder without the express written consent of Landlord.

3. This Guaranty shall continue notwithstanding any bankruptcy, reorganization
or insolvency of Tenant.

4. If Tenant is in default under the Lease, following the notice and cure
periods provided in the Lease, Landlord, at its option, may proceed directly
against Guarantor or Tenant or both. Landlord shall provide Guarantor with
copies of all notices to be provided by Landlord to Tenant under the Lease,
contemporaneously with the delivery of such notices to Tenant, however the
failure to provide copies of any such notices to Guarantor shall not affect the
effectiveness of such notices provided to Tenant. This Guaranty shall not be
affected or released by Landlord’s failure or delay in enforcing any of its
rights under the Lease or this Guaranty.

5. Guarantor agrees to pay all costs and other expenses, including all
reasonable attorneys’ fees and costs, incurred by Landlord in enforcing or
attempting to enforce this Guaranty or the obligations guaranteed hereby.

6. Guarantor waives the right to require Landlord: (a) to proceed against
Tenant; (b) to proceed against or exhaust any security that Landlord holds from
Tenant; or (c) to pursue any other remedy in Landlord’s power. Guarantor
expressly waives the provisions of California Civil Code Section 2845. Guarantor
waives any defenses based on any disability of Tenant or on the termination of
Tenant’s liability. Until all of Tenant’s obligations to Landlord have been
discharged in full, Guarantor shall have no right of subrogation against Tenant.
Guarantor waives its right to enforce any remedy that Landlord may now or
hereafter have against Tenant. Guarantor waives any right to participate in any
security now or hereafter held by Landlord.

7. Guarantor waives: (a) notice of acceptance of this Guaranty;
(b) presentments, demands for performance, notices of default or nonperformance,
protests, notices of protest, and notices of dishonor; (c) notice of the
existence, creation or incurring of new or additional obligations regarding the
Lease and guaranteed hereby; (d) notice of modification, extension or assignment
of the Lease; and (e) the pleading or benefit of any statute of limitations.

8. Guarantor waives: (a) the defense of any statute of limitations affecting the
liability of Guarantor hereunder, the liability of Tenant, any assignee of the
Tenant’s interest in the Lease or any guarantor under the Lease, or the
enforcement hereof, to the extent permitted by law; (b) any defense arising by
reason of any invalidity or unenforceability of all or any portion of the Lease
or any disability of Tenant, any assignee of the Tenant’s interest in the Lease
or any guarantor or of any manner in which Landlord has exercised its rights and
remedies under the Lease, or by any cessation from any cause whatsoever of the
liability of Tenant, any assignee of the Tenant’s interest in the Lease or any
guarantor; (c) without limiting the generality of the foregoing or any other
provision hereof, any rights and benefits which might otherwise be available to

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Guarantor under California Civil Code Sections 2809, 2810, 2819, 2839, 2845,
2848, 2849, 2850, 2899 and 3433, or any successor sections.

9. Guarantor has a financial interest in Tenant and is willing to execute this
Guaranty as a material inducement to Landlord to enter into the Lease, and
acknowledges and agrees that Landlord would not enter into the Lease absent the
execution of this Guaranty. Guarantor’s obligations hereunder are independent of
Tenant’s obligations. If Guarantor is more than one person, each such person’s
obligations hereunder are joint and several, and Landlord may proceed against
any one Guarantor without proceeding against any other Guarantor. This Guaranty
shall be binding upon and inure to the benefit of the respective successors and
assigns of Guarantor and Landlord. This Guaranty may be assigned in whole or in
part by Landlord without notice to Guarantor. Uses in the Lease, or in any
addendum, amendment or other document related thereto, of the terms “lessor” or
“lessee” to refer to a party to the Lease shall be deemed to be references to
Landlord and Tenant, respectively.

10. Guarantor’s obligations hereunder shall not be affected by any failure on
the part of Landlord to inform Guarantor concerning the financial condition of
Tenant or any assignee of the Tenant’s interest in the Lease or notify Guarantor
of any adverse change in the financial condition of Tenant or any assignee of
the Tenant’s interest in the Lease of which Landlord becomes aware. Guarantor
assumes the obligation to make such inquiries with respect to such financial
condition as Guarantor deems necessary or prudent in the circumstances.

11. The obligations of Guarantor under this Lease Guaranty shall continue in
full force and effect so long as the Lease remains in effect and Tenant or any
assignee of the Tenant’s interest in the Lease occupies any portion of the
Premises.

12. Notwithstanding anything to the contrary herein, Guarantor will have the
option to terminate this Lease Guaranty upon Tenant submitting to Landlord and
Guarantor a bank statement and a company prepared financial statement showing at
least Five Million Dollars ($5,000,000.00) cash. To exercise its option to
terminate the Lease Guaranty, Guarantor shall then provide written notice to
Landlord of the termination of the Lease Guaranty. The obligations of Guarantor
under this Lease Guaranty shall remain in full force and effect until the
termination of this Lease Guaranty.

EXECUTED by Guarantor as of March 15, 2006.

 

GUARANTOR:     CARDIOVASCULAR BIOTHERAPEUTICS, INC.     a Delaware Corporation  
  ADDRESS: By:   /s/ Mickael A. Flaa     101 Academy Ste 120 Its:   Chief
Financial Officer     Irvine, CA 92617 By:            Its:                      
EIN   33-0795984      

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EXHIBIT “F”

ESTIMATE OF ADDITIONAL RENT

The Additional Rent for 2006 is estimated as follows:

 

Operating Costs    .1616 RSF Real Property Tax    .1511 RSF Insurance    .0475
RSF

The Additional Rent described herein is based upon Landlord’s reasonable
estimate of the future Operating Costs, Real Property Tax and Insurance for the
Center. These calculations are not exact and should be taken as an approximate
of what Landlord reasonably estimates what future costs for the Center may be in
2006.

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EXHIBIT “G”

APPROVED FORM OF LETTER OF CREDIT

At the request and for the account of [Name of Tenant] (“Applicant”), we hereby
establish our Irrevocable Letter of Credit for the benefit of [Name of Landlord]
(“Beneficiary”), in the aggregate amount of [Words] Dollars ($            ).

Funds under this Letter of Credit may be drawn down by Beneficiary, upon
presentation of the following at the office of the undersigned located at
                    , California, or any successor location which is the main
office of the undersigned in San Diego County, California:

 

  (1) The original of this Letter of Credit;

 

  (2) A written statement signed by an authorized officer, general partner or
other party or parties authorized to execute documents on behalf of Beneficiary
under the terms of its governing documents, certifying either (a) that
Beneficiary is entitled to draw on this Letter of Credit pursuant to that
Standard Industrial Net Lease between Beneficiary and Applicant for premises
located at [address], as the same may be amended from time to time, or (b) that
Beneficiary has received written notice from the undersigned that this Letter of
Credit will not be renewed and Applicant has failed to deliver a replacement
letter of credit within thirty (30) days prior to such expiration date; and

 

  (3) A sight draft executed and endorsed by an authorized officer, general
partner or other party or parties authorized to execute documents on behalf of
Beneficiary under the terms of its governing documents.

Partial and multiple drawings are permitted under this Letter of Credit.

This Letter of Credit is transferable in its entire undrawn balance to a
successor beneficiary upon presentation by Beneficiary of the original of this
Letter of Credit and a written request for transfer executed by Beneficiary.

Partial draws are permitted. The amount of each draft must be endorsed on the
reverse hereof by the negotiating bank. We hereby agree that this Letter of
Credit shall be duly honored upon presentation and delivery of the certification
specified above.

This Letter of Credit shall expire on             . Notwithstanding such
expiration date of this Letter of Credit, the term of this Letter of Credit
shall be automatically renewed, without written amendment, for successive,
additional one (1) year periods unless, at least sixty (60) days prior to any
such date of expiration, the undersigned shall give written notice to
Beneficiary, by certified mail, return receipt requested at the following
address or at such other address as may be given to the undersigned by
Beneficiary, that this Letter of Credit will not be renewed. Address for notice
of non-renewal:

[Name of Landlord]

c/o Asset Management Group

11750 Sorrento Valley Road, Suite 209

San Diego, CA 92121

Attention: President

This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 (UCP 500), and is otherwise governed by the law of the State
of California.