Exhibit 10.28

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under 17 C.F.R. Sections 200.80(b)(4) and
240.24b-2

 

3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

SUBLEASE AGREEMENT

This Sublease Agreement (“Sublease”) is made effective as of the 20th day of
October, 2014, (the “Effective Date”) by and between TRION WORLDS, INC., a
Delaware corporation (“Sublandlord”), and ACADIA PHARMACEUTICALS INC., a
Delaware corporation (“Subtenant”) with reference to the following facts:

A. KILROY REALTY, L.P., a Delaware limited partnership (“Master Landlord”) and
Sublandlord entered into that certain Office Lease dated August 8, 2012 (“Master
Lease”), whereby Master Landlord leased to Sublandlord and Sublandlord leased
from Master Landlord those certain premises consisting of (i) approximately
26,521 rentable square feet located on the third floor and approximately 12,459
rentable square feet located on the second floor (collectively “Phase I
Premises”) and (ii) approximately 12,459 rentable square feet located on the
second floor (“Phase II Premises”), for a total size of 51,439 rentable square
feet (as re-measured from the originally stated 52,000 rentable square feet)
located at 3611 Valley Centre Drive, Suites 200 and 300, San Diego, California
as further set forth in Exhibit A attached hereto and incorporated by reference
(the “Premises”).

B. Sublandlord agrees to sublease to Subtenant, and Subtenant agrees to sublease
from Sublandlord, the entire Premises upon the terms and conditions set forth in
this Sublease.

C. Subtenant has read this Sublease in its entirety and is familiar with all of
the terms, conditions and obligations contained herein and agrees that no prior
agreement, understanding, representation or warranty, oral or written, express
or implied, pertaining to the Premises or any such other matter shall be
effective for any purpose.

AGREEMENT

1. Sublease of Premises. Subject to the terms and conditions of this Sublease,
Sublandlord hereby subleases to Subtenant and Subtenant hereby subleases from
Sublandlord the Premises.

2. Master Lease and Other Agreements.

2.1 Subordinate to Master Lease. Except as specifically set forth herein, this
Sublease is subject and subordinate to all of the terms and conditions of the
Master Lease. Subtenant hereby assumes and agrees to perform the obligations of
“Tenant” under the Master Lease to the extent set forth hereafter. Unless
otherwise defined, all capitalized terms used herein shall have the same
meanings as given them in the Master Lease. A copy of the Master Lease is
attached hereto as Exhibit B and incorporated herein by this reference.
Subtenant shall not commit or permit to be committed any act or omission which
would violate any term or condition of the Master Lease. Subtenant shall neither
do nor permit anything to be done which would cause the Master Lease to be
terminated or forfeited by reason of any right of termination or forfeiture
reserved or vested in Master Landlord under the Master Lease, and Subtenant
shall indemnify and hold Sublandlord harmless from and against all claims,
liabilities, judgments, costs, demands, penalties, expenses, and damages of any
kind whatsoever, including, without limitation, attorneys’ fees, consultants’
fees and costs and court costs, (“Claims”) by reason of any failure on the part
of Subtenant to perform any of the obligations of “Tenant” under the Master
Lease which Subtenant has become obligated hereunder to perform, and such
indemnity and hold harmless shall survive the expiration or sooner termination
of this Sublease. In the event of the termination of the Master Lease for any
reason, voluntary or otherwise, then this Sublease shall terminate automatically
upon such termination without any liability owed to Subtenant by Master
Landlord, or by Sublandlord unless the termination is due to Sublandlord’s
breach of the Master Lease or this Sublease and not due to Subtenant’s breach of
the Sublease. Subtenant represents and warrants to Sublandlord that it has read
and is familiar with the Master Lease. Notwithstanding anything to the contrary,
Sublandlord shall be responsible to cure any default of the Master Lease which
occurred prior to the date the Premises are delivered to Subtenant.

2.2 Applicable Provisions. All of the terms and conditions contained in the
Master Lease as they may apply to the Premises are incorporated herein and shall
be terms and conditions of this Sublease, except those directly contradicted by
the terms and conditions contained in this Sublease. Each reference therein to
“Landlord”, “Tenant” and “Lease” to be deemed to refer to Sublandlord, Subtenant
and Sublease, respectively, as appropriate.

 

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3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

 

2.3 Modifications. For the purposes of incorporation herein, the terms of the
Master Lease are subject to the following additional modifications:

(a) In all provisions of the Master Lease (under the terms thereof and without
regard to modifications thereof for purposes of incorporation into this
Sublease) requiring the approval or consent of Master Landlord, Subtenant shall
be required to obtain the approval or consent of both Sublandlord and Master
Landlord, under the same standards of consent as set forth in the Master Lease
except that Sublandlord’s consent shall not be unreasonably withheld and the
approval of Sublandlord may be withheld if Master Landlord’s consent is not
obtained.

(b) In all provisions of the Master Lease requiring “Tenant” to submit, exhibit
to, supply or provide Master Landlord with evidence, certificates, or any other
matter or thing, Subtenant shall be required to submit, exhibit to, supply or
provide, as the case may be, the same to both Master Landlord and Sublandlord.

(c) Sublandlord shall have no obligation to restore or rebuild any portion of
the Premises after any destruction or taking by eminent domain or to maintain,
repair, restore or control any portion of the Building or Project.

(d) Sublandlord shall not be obligated to perform those obligations of Master
Landlord which Sublandlord cannot immediately and unilaterally perform as
“Landlord”, nor shall Sublandlord be deemed to have adopted as its own any
representations made by Master Landlord in the Master Lease.

(e) Sublandlord shall not be obligated to maintain any building systems (unless
such maintenance is the obligation of “Tenant” under the Master Lease and not
the obligation of Subtenant herein), any common area or any other repair or
maintenance obligations which are Master Landlord’s obligations under the Master
Lease.

(f) Sublandlord shall have no obligation to construct or pay for any
improvements.

(g) In all provisions of the Master Lease requiring “Tenant” to designate Master
Landlord as an additional or named insured on its insurance policy, Subtenant
shall be required to so designate Master Landlord, Sublandlord and any
individual, party or entity as required by Master Landlord or Sublandlord on its
insurance policy.

(h) If and to the extent that Sublandlord’s rental obligation is abated or
reduced pursuant to the Master Lease due to a casualty, condemnation or other
interference with the use of the Premises, the Rent hereunder shall be abated or
reduced in the same proportion and period as the abatement or reduction under
the Master Lease. Subtenant shall not be entitled to any further abatement or
reduction in Rent.

(i) Whenever in the Master Lease a time is specified for the giving of any
notice or the making of any demand by the “Tenant” thereunder, such time is
hereby changed, for the purpose of this Sublease only, by adding two
(2) business days thereto and whenever in the Master Lease a time is specified
for the giving of any notice or the making of any demand by the “Landlord”, such
time is hereby changed, for the purpose of this Sublease only, by subtracting
two (2) business days therefrom (but in no event shall such notice period be
reduced to less than two (2) business days or the period set forth in the Master
Lease, whichever is shorter). It is the purpose and intent of the foregoing
provisions to provide Sublandlord with time within which to transmit to Master
Landlord any notices or demands received from Subtenant and to transmit to
Subtenant any notices or demands received from Master Landlord.

(j) In the following provisions that are incorporated herein, the reference to
Landlord shall mean Master Landlord only: Sections 1.1.3, 5.2, and 6.1;
Section 6.2; Section 6.4; the 3rd sentence of Article 7; the 4th sentence of
Section 8.2; the last 2 sentences of Section 8.5, the first sentence of
Section 29.13; Section 29.29; and the 2nd, 3rd and 5th sentences and the 2nd
instance of the 4th sentence of Section 29.30.

(k) In the following provisions that are incorporated herein, the reference to
Landlord shall mean both Master Landlord and Sublandlord: Sections 6.2 (other
than “Landlord” on the 5th line and last sentence) and 6.3; Article 7 (except
the 3rd sentence), 8.1, 8.2 (except 4th sentence), 8.3 and 8.4; the last 2
sentences of Section 8.5; Article 9; Sections 10.2, 10.3, 10.4, 10.6, 10.6, 15.1
and 15.2; Article 17, 23, 24, 27 and 28; and Sections 29.30, 29.32 and 29.33
(except as excluded below).

 

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3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

 

2.4 Exclusions. Notwithstanding the terms of Section 2.2 above, Subtenant shall
have no rights under any of the following provisions of the Master Lease:
(i) any rights or options to expand, extend, renew or terminate the Master
Lease, this Sublease or the Premises, and (ii) any rights of first offer, rights
of first negotiation, or similar rights, or any rights to any tenant improvement
allowance (except for the tenant improvement allowance as expressly provided
herein). In addition, the following provisions of the Master Lease are NOT
incorporated herein: Sections 1, 3, 4, 6, 8, 9, 11, 13 and 14 of the Summary of
Basic Lease Information; Sections 1.2, 1.3, 2.2, 2.3, 3.2, 3.3, 4.6 (except as
provided in Section 4.6 below) and 8.6; the 2nd sentence of Section 10.1;
Sections 11.1 and 11.2; Article 13 (other than the waiver of Section 2365.130 of
the California Code of Civil Procedure); the 2nd, 3rd, 4th and 5th sentences of
Section 18, 21; Section 29.18; the 1st sentence of Section 29.33.2; the 1st
sentence of Section 29.33.4; Article 30; Exhibit B, Exhibit H and Exhibit I. All
of the incorporated terms of the Master Lease as referenced and qualified above
along with all of the following terms and conditions set forth in this document
shall constitute the complete terms and conditions of this Sublease.

2.5 Obligations of Sublandlord. Notwithstanding anything herein contained, the
only services or rights to which Subtenant is entitled hereunder are those to
which Sublandlord is entitled under the Master Lease, and for all such services
and rights Subtenant shall look solely to the Master Landlord under the Master
Lease, and the obligations of Sublandlord hereunder shall be limited to using
its reasonable good faith efforts to obtain the performance by Master Landlord
of its obligations, provided Subtenant shall reimburse Sublandlord for all
reasonable costs incurred by Sublandlord in such efforts. Sublandlord shall have
no liability to Subtenant or any other person for damage of any nature
whatsoever as a result of the failure of Master Landlord to perform said
obligations except for Master Landlord’s termination of the Sublandlord’s
interest as “Tenant” under the Master Lease in the event of Sublandlord’s breach
of the Master Lease (without cause of Subtenant), and Subtenant shall indemnify
and hold Sublandlord harmless from any and all Claims whatsoever incurred in
defending against same. Sublandlord shall not modify, amend or terminate the
Master Lease or exercise its right to terminate the Master Lease pursuant to
Section 2.3 of the Master Lease, if such modification, amendment or termination
shall materially affect Subtenant’s rights or obligations set forth herein
without the prior written consent of Subtenant, which consent shall not be
unreasonably withheld; provided however, nothing herein shall prohibit
Sublandlord from exercising its right to terminate the Master Lease as expressly
set forth in the Master Lease (other than as set forth above) nor shall
Sublandlord be liable to Subtenant for any termination of the Master Lease by
Master Landlord, whether or not permitted therein, unless such termination is
the result of a breach of the Master Lease by Sublandlord.

3. Term.

3.1 Initial Term. The term of this Sublease (“Term”) shall commence as follows:
(i) for the Phase I Premises, the earlier of (a) the date Subtenant first
commences to conduct business in the Phase I Premises, or (b) January 1, 2015
(“Phase I Commencement Date”), and (ii) for the Phase II Premises, the earlier
of (x) the date Subtenant first commences to conduct business in the Phase II
Premises, or (y) July 1, 2015 (“Phase II Commencement Date”), but in either
case, in no event before the date of Master Landlord’s consent of this Sublease
(“Commencement Date”) and shall end upon the expiration of the Master Lease
which is anticipated to be February 28, 2019 (“Expiration Date”), unless sooner
terminated pursuant to any provision of the Master Lease applicable to the
Premises or the terms of this Sublease. For the purposes of this Sublease, from
the Phase I Commencement Date until the Phase II Commencement Date,
“Commencement Date” shall mean the Phase I Commencement Date and Premises shall
mean the Phase I Premises (other than any terms which apply to the Phase II
Premises prior to the Commencement Date (i.e. early access, insurance,
indemnity, etc.) and upon the Phase II Premises Commencement Date, Premises
shall mean the entire Premises. Sublandlord shall have no obligation to
Subtenant to exercise any of its options to extend under the Master Lease.

3.2 Option to Extend. Subtenant shall have no option to extend this Sublease.

3.3 Sublandlord’s Inability to Deliver the Premises. In the event Sublandlord is
unable to deliver possession of the Phase I Premises on or before the Phase I
Commencement Date or the Phase II Premises on or before the Phase II
Commencement Date, Sublandlord shall not be liable for any damage caused
thereby, nor shall this Sublease be void or voidable, and the term hereof shall
not be extended by such delay. Notwithstanding anything to the contrary,
Sublandlord shall have no obligation to deliver possession of the Premises
unless and until Subtenant has delivered to Sublandlord the Security Deposit (as
defined below) and the Base Rent (as defined below) for the first full month,
and Subtenant’s failure to deliver the Security Deposit and first month’s Base
Rent shall not affect the Commencement Date. Notwithstanding the foregoing, if
Sublandlord has failed to deliver

 

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3611 Valley Centre Drive

San Diego, CA

  ACADIA Pharmaceuticals Inc.

 

possession of the Phase I Premises to Subtenant on or before January 1, 2015,
then at any time before delivery of possession, Subtenant may give written
notice to Sublandlord of Subtenant’s intention to terminate this Sublease, and
if Sublandlord has failed to deliver possession of the Premises within ten
(10) days following receipt of Subtenant’s termination notice, this Sublease
shall be terminated with neither party having any obligations to the other there
party thereafter.

3.4 Early Access. Upon Master Landlord’s consent to this Sublease, Subtenant
shall have reasonable access to the entire Premises for the purposes of
construction of approved improvements and installation of furniture, fixtures,
equipment and cables (which activity shall not be deemed to be “conducting
business”). Subtenant’s access shall be subject to all the terms and conditions
of this Sublease, including without limitation, all insurance and maintenance
obligations, and all monetary obligations except the payment of Base Rent.

4. Rent.

4.1 Base Rent. Subtenant shall pay to Sublandlord during the Term of this
Sublease, rent, in advance, on Subtenant’s execution hereof for the first full
month in the amount of $85,756.00 and on or before the 1st of each month
thereafter (“Base Rent”) per month pursuant to the following schedule:

 

Period During Term

   Monthly Base Rent Per
Rentable Square foot      Monthly Installment of
Base Rent  

Phase I Commencement Date through day immediately prior to Phase II

Commencement Date

   $ 2.20       $ 85,756.00   

Phase II Commencement Date through December 31, 2015

   $ 2.20       $ 113,165.80   

January 1, 2016 – December 31, 2016

   $ 2.28       $ 117,126.60   

January 1, 2017 – December 31, 2017

   $ 2.36       $ 121,226.03   

January 1, 2018 – December 31, 2018

   $ 2.44       $ 125,468.95   

January 1, 2019 – Expiration Date

   $ 2.52       $ 129,860.36   

Rent for partial months at the commencement or termination of this Sublease
shall be prorated. Rent shall be paid to the Sublandlord at its notice address
noted herein, or at any other place Sublandlord may from time to time designate
by written notice mailed or delivered to Subtenant.

4.2 Expenses and Taxes. Subtenant shall pay to Sublandlord all Direct Expenses
(as defined in the Master Lease) which Sublandlord is responsible to pay under
the Master Lease in the same manner as set forth in Section 4 of the Master
Lease except that the Base Year for such Expenses and Taxes shall be calendar
year 2015.

4.3 Intentionally Omitted.

4.4 Metered Utilities. Subtenant shall pay all utilities provided to the
Premises directly to the utility provider in the same manner as set forth in
Section 6.1.2 of the Master Lease. In the event the Premises are submetered by
Master Landlord, Subtenant shall pay for such utilities either directly to
Master Landlord or Sublandlord as Sublandlord shall direct.

4.5 Additional Services. If Subtenant shall procure any additional services from
Master Landlord, including, but not limited to, key cards beyond those provided
by Sublandlord, lost or stolen key cards or after-hours HVAC (outside of the
Building Hours set forth in Section 6.1.1 of the Master Lease), or if additional
rent or other sums are incurred under the Master Lease by Subtenant, Subtenant
shall make such payment to Sublandlord or Master Landlord, as Sublandlord shall
direct.

4.6 Landlord’s Books and Records. For any Expense Year for which Subtenant is
responsible to pay Direct Expenses, Subtenant shall have the right to review
Landlord’s records regarding Direct Expenses to the extent granted to
Sublandlord under Section 4.6 of the Master Lease provided Subtenant first
notifies Subtenant at least thirty (30) days prior to the expiration of the
Review Period (as set defined in the Master Lease). Following receipt of
Subtenant’s notice, Sublandlord may elect to either perform the review of
Landlord’s records, in which case Subtenant shall be responsible for all costs
and expenses incurred by Sublandlord as a result

 

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3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

 

of such review including any increase in Direct Expenses which may result, or
permit Subtenant to perform such review of Sublandlord’s behalf in which case
Subtenant shall be responsible for the costs of such review (subject to
reimbursement by Landlord pursuant to Section 4.6 of the Master Lease) and any
increase in Direct Expenses which may result. If such review results in a
reduction in Direct Expenses for such Expense Year, provided Subtenant is not in
default of this Sublease, Subtenant shall be entitled to a credit or reimburse
of the Direct Expenses paid by Subtenant during such Expense Year (prorated for
any partial months) in the same manner as set forth in Section 4.6 of the Master
Lease.

4.7 Rent. All amounts set forth in this Section 4 and any other rent or other
sums payable by Subtenant under this Sublease shall constitute and be due as
additional rent. Base Rent, and additional rent shall herein be referred to as
“Rent”.

5. Security Deposit. Upon execution hereof, Subtenant shall deposit with
Sublandlord the sum of $129,860.36 (“Security Deposit”) as and for a security
deposit to secure Subtenant’s full and timely performance of all of its
obligations hereunder. If Subtenant fails to pay Rent or any other sums as and
when due hereunder, or otherwise defaults and/or fails to perform with respect
to any provision of this Sublease, and such failure is not cured within the
applicable cure period, Sublandlord may (but shall not be obligated to) use,
apply, or retain all or any portion of the Security Deposit for payment of any
sum for which Subtenant is obligated or which will compensate Sublandlord for
any foreseeable or unforeseeable loss or damage which Sublandlord may suffer
thereby including, without limitation, any damage that will result in the future
through the Term, to repair damage to the Premises, to clean the Premises at the
end of the Term or for any loss or damage caused by the act or omission of
Subtenant or Subtenant’s officers, agents, employees, independent contractors or
invitees. Subtenant waives the provisions of California Civil Code
Section 1950.7 and all other provisions of law now in force or that become in
force after the date of execution of this Sublease that provide that Sublandlord
may claim from a security deposit only those sums reasonably necessary to remedy
defaults in the payment of Rent, to repair damage caused by Subtenant or to
clean the Premises. Any such use, application, or retention shall not constitute
a waiver by Sublandlord of its right to enforce its other remedies hereunder, at
law, or in equity. If any portion of the Security Deposit is so used, applied,
or retained, Subtenant shall, within ten (10) days after delivery of written
demand from Sublandlord, restore the Security Deposit to its original amount.
Subtenant’s failure to do so shall constitute a material breach of this
Sublease, and in such event Sublandlord may elect, among or in addition to other
remedies, to terminate this Sublease. Sublandlord shall not be a trustee of such
Security Deposit, and shall not be required to keep this Security Deposit
separate from its accounts. Sublandlord alone shall be entitled to any interest
or earnings thereon and Sublandlord shall have the free use of same. If
Subtenant fully and faithfully performs all of its obligations hereunder, then
so much of the Security Deposit as it remains shall be returned to Subtenant
(without payment of interest or earnings thereon) within 30 days after the later
of (i) expiration or sooner termination of the Term, or (ii) Subtenant’s
surrender of possession of the Premises to Sublandlord.

6. Premises.

6.1 Condition of the Premises. Subtenant acknowledges that as of the
Commencement Date, Subtenant shall have inspected the Premises, and every part
thereof, and by taking possession shall have acknowledged that the Premises is
in good condition and without need of repair, and Subtenant accepts the Premises
“as is”, Subtenant having made all investigations and tests it has deemed
necessary or desirable in order to establish to its own complete satisfaction
the condition of the Premises. Subtenant accepts the Premises in their condition
existing as of the Commencement Date, subject to all applicable zoning,
municipal, county and state laws, ordinances, and regulations governing and
regulating the use of the Premises and any covenants or restrictions of record.
Subtenant acknowledges that neither Sublandlord nor Master Landlord have made
any representations or warranties as to the condition of the Premises or its
present or future suitability for Subtenant’s purposes.

6.2 Maintenance and Surrender. Commencing upon Sublandlord’s delivery of the
Phase I Premises and the Phase II Premises to Subtenant or Subtenant’s early
access, Subtenant shall keep the Premises in good order and repair and perform
all maintenance, repair and replacement obligations of “Tenant” required under
the Master Lease. Subtenant shall surrender the Premises in the same condition
as required under the Master Lease, including, without limitation, removing all
cabling and Furniture (as defined below) which is required to be removed under
the Master Lease whether installed by Sublandlord or Subtenant. Sublandlord
represents that it has not been notified by Master Landlord that any Alterations
(as defined in the Master Lease) existing within the Premises as of the
Effective Date must be removed at the expiration or earlier termination of the
Master Lease.

 

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ACADIA Pharmaceuticals Inc.

 

6.3 Furniture. Subtenant may use certain furniture, fixtures and equipment and
security system located in the Premises as set forth on Exhibit C (“Furniture”).
Subtenant accepts the Furniture in its “as is” condition and Sublandlord makes
no warranty as to the condition of the Furniture or its present or future
suitability for Subtenant’s purposes. Provided this Sublease has not terminated
prior to the expiration of the Master Lease, upon the Expiration Date,
Sublandlord shall convey title to the Furniture to Subtenant for $1.00 and,
unless Landlord otherwise consents in writing, Subtenant shall be solely
responsible for removal of the Furniture from the Premises at the expiration of
this Sublease, and for repair of any damage caused by such removal. Otherwise,
if the Sublease terminates prior to the expiration of the Master Lease, at
Sublandlord’s option, upon termination of this Sublease, Subtenant shall return
the Furniture to Sublandlord in the same condition as received, ordinary wear
and tear excepted conditioned on the obligation of Subtenant to use the
Furniture in a careful and proper manner and to clean and repair the Furniture
in the manner necessary to maintain the Furniture in the condition it was
initially provided to Subtenant, normal wear and tear excepted. Upon Subtenant
written request, Sublandlord shall execute a bill of sale evidencing the
transfer of the Furniture to Subtenant. Subtenant shall be liable for any damage
to the Furniture and solely responsible for all costs associated with the
maintenance, cleaning and repair of the Furniture.

7. Insurance.

7.1 Subtenant’s Insurance. With respect to the “Tenant’s” insurance under the
Master Lease, the same is to be provided by Subtenant as described in the Master
Lease, and such policies of insurance shall include as additional insureds
Master Landlord, Sublandlord, any individual, party or entity as required by
Master Landlord and any individual, party or entity as required by Master
Landlord or Sublandlord.

7.2 Waiver of Subrogation. With respect to the waiver of subrogation contained
in the Master Lease, such waiver shall be deemed to be modified to constitute an
agreement by and among Master Landlord, Sublandlord and Subtenant (and Master
Landlord’s consent to this Sublease shall be deemed to constitute its approval
of this modification).

8. Use and Alterations.

8.1 Use of Premises. Subtenant shall use the Premises only for those purposes
permitted in the Master Lease.

8.2 Alterations. Subtenant shall not make any Alteration to the Premises without
the express prior written consent of Sublandlord and of Master Landlord (to the
extent Master Landlord’s consent is required under the Master Lease), which
consent by Sublandlord shall not be unreasonably withheld. Subtenant hereby
consents to the space plan attached hereto as Exhibit D for the Alterations
intended to be made by Subtenant (“Initial Alterations”), provided however,
Sublandlord shall have the right to review and consent to any modifications of
the Initial Alterations or the final plans. Subtenant shall reimburse Master
Landlord and Sublandlord for all reasonable costs which Master Landlord and
Sublandlord may incur in connection with reviewing Subtenant plans for such
Alteration, including, without limitation, Master Landlord’s and Sublandlord’s
reasonable attorneys’ fees and costs. Subtenant shall provide Master Landlord
and Sublandlord with a set of “as-built” drawings for any such work, together
with copies of all permits obtained by Subtenant in connection with performing
any such work, within fifteen (15) days after completing such work. Sublandlord
may impose as a condition of its consent to such alterations, improvements, or
modifications, such requirements as Sublandlord may deem reasonable and
desirable, including, but not limited to the requirement that Subtenant utilize
for such purposes only contractor(s), materials, mechanics and materialmen
approved by Sublandlord and that, in connection with any Alterations the
projected cost of which is in exceed $100,000.00 or if required by Master
Landlord, Subtenant, and/or Sublandlord’s contractor(s) post a payment and/or
completion bond to guarantee the performance of its construction obligations
hereunder. On termination of this Sublease, if required by Master Landlord,
Subtenant shall remove any or all of such Alterations and restore the Premises
(or any part thereof) to the condition required under the Master Lease; provided
however, if this Sublease terminates, for any reason, prior to the expiration of
the Master Lease, then Sublandlord shall have the right to require Subtenant to
remove such Alterations. Should Subtenant fail to remove such Alterations and
restore the Premises on termination of this Sublease unless as otherwise set
forth above, Sublandlord shall have the right to do so, and charge Subtenant
therefor, plus a service charge of ten percent (10%) of the costs incurred by
Sublandlord in addition to any costs or expenses charged by Master Landlord
under the Master Lease. Notwithstanding anything to the contrary, Subtenant
shall have no obligation to remove any Alterations existing within the Premises
as of the Effective Date.

 

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8.3 Parking. So long as Subtenant is not in Default and subject to Section 28 of
the Master Lease, Subtenant shall have the right to all parking spaces available
to Sublandlord under the Master Lease. Subtenant’s right to such parking is
conditioned upon Master Landlord’s consent to the transfer of such rights to
Subtenant. Subtenant shall be responsible for all costs incurred by Sublandlord
for Subtenant’s parking.

9. Assignment, Subletting and Encumbrance.

9.1 Consent Required. Subtenant shall not assign this Sublease or any interest
therein nor shall Subtenant sublet, license, encumber or permit the Premises or
any part thereof to be used or occupied by others, without Sublandlord’s and
Master Landlord’s prior written consent. Sublandlord’s consent shall not be
unreasonably withheld; provided, however, Sublandlord’s withholding of consent
shall in all events be deemed reasonable if for any reason Master Landlord’s
consent is not obtained. The consent by Sublandlord and Master Landlord to any
assignment or subletting shall not waive the need for Subtenant (and Subtenant’s
assignee or subtenant) to obtain the consent of Sublandlord and Master Landlord
to any different or further assignment or subletting. All conditions and
standards set forth in the Master Lease regarding assignments and subletting
shall apply.

9.2 Transfer Premium. To the extent there is any Transfer Premium as set forth
in Section 14.3 of the Master Lease, such Transfer Premium shall be split with
Sublandlord in the same manner as set forth in Section 14.3 of the Master Lease;
provided however, if Master Landlord is also entitled to any portion of the
Transfer Premium, such amount shall first be deducted from the Transfer Premium.

9.3 Form of Document. Every assignment, agreement, or sublease shall (i) recite
that it is and shall be subject and subordinate to the provisions of this
Sublease, if an assignment, that the assignee assumes Subtenant’s obligation
hereunder, that the termination of this Sublease shall, at Sublandlord’s sole
election, constitute a termination of every such sublease, and (ii) contain such
other terms and conditions as shall be reasonably requested or provided by
Sublandlord’s attorneys.

9.4 No Release of Subtenant. Regardless of Sublandlord’s consent, no subletting
or assignment shall release Subtenant of Subtenant’s obligation or alter the
primary liability of Subtenant to pay the Rent and to perform all other
obligations to be performed by Subtenant hereunder. The acceptance of Rent by
Sublandlord from any other person shall not be deemed to be a waiver by
Sublandlord of any provision hereof. In the event of default by any assignee,
subtenant or any other successor of Subtenant, in the performance of any of the
terms hereof, Sublandlord may proceed directly against Subtenant without the
necessity of exhausting remedies against such assignee, subtenant or successor.

9.5 Default. An involuntary assignment shall constitute a default and
Sublandlord shall have the right to elect to terminate this Sublease, in which
case this Sublease shall not be treated as an asset of Subtenant.

10. Default.

10.1 Default Described. The occurrence of any of the following shall constitute
a “Default” by Subtenant: (i) failure to pay Rent or any other amount within
three (3) days after written notice that such payment is past due; (ii) all
those items of default set forth in the Master Lease where the obligation is
incorporated in this Sublease which remain uncured after the one-half ( 1⁄2) of
the cure period provided in the Master Lease (but never less than two
(2) business days unless a shorter period of time is set forth in the Master
Lease in which case such period as set forth in the Master Lease); or
(iii) Subtenant’s failure to perform timely and remain uncured after fifteen
(15) days written notice of the default, any other provision of this Sublease or
in the event Subtenant shall reasonably require in excess of fifteen (15) days
to cure said default, shall fail to commence said cure with said fifteen
(15) day period, and thereafter diligently prosecute the same to completion but
in no event more than sixty (60) days following written notice of default.

10.2 Sublandlord’s Remedies. In the event of a Default, Sublandlord shall have
the remedies set forth in the Master Lease as if Sublandlord is Master Landlord.
These remedies are not exclusive; they are cumulative and in addition to any
remedies now or later allowed by law.

10.3 Subtenant’s Right to Possession Not Terminated. Sublandlord has the remedy
described in California Civil Code Section 1951.4 (landlord may continue lease
in effect after lessee’s breach and abandonment and recover rent as it becomes
due, if lessee has right to sublet or assign, subject only to reasonable

 

7

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3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

 

limitations). Sublandlord may continue this Sublease in full force and effect,
and Sublandlord shall have the right to collect rent and other sums when due.
During the period Subtenant is in default, Sublandlord may enter the Premises
and relet them, or any part of them, to third parties for Subtenant’s account
and alter or install locks and other security devices at the Premises. Subtenant
shall be liable immediately to Sublandlord for all costs Sublandlord incurs in
reletting the Premises, including, without limitation, attorneys’ fees, brokers’
commissions, expenses of remodeling the Premises required by the reletting, and
like costs. Reletting may be for a period equal to, shorter or longer than the
remaining term of this Sublease and rent received by Sublandlord shall be
applied to (i) first, any indebtedness from Subtenant to Sublandlord other than
rent due from Subtenant; (ii) second, all costs incurred by Sublandlord in
reletting, including, without limitation, brokers’ fees or commissions and
attorneys’ fees, the cost of removing and storing the property of Subtenant or
any other occupant, and the costs of repairing, altering, maintaining,
remodeling or otherwise putting the Premises into condition acceptable to a new
Subtenant or Subtenants; (iii) third, rent due and unpaid under this Sublease.
After deducting the payments referred to in this Section 10.3, any sum remaining
from the rent Sublandlord receives from reletting shall be held by Sublandlord
and applied in payment of future rent and other amounts as rent and such amounts
become due under this Sublease. In no event shall Subtenant be entitled to any
excess rent received by Sublandlord.

10.4 All Sums Due and Payable as Rent. Subtenant shall also pay without notice,
or where notice is required under this Sublease, immediately upon demand without
any abatement, deduction, or setoff, as additional rent all sums, impositions,
costs, expenses, and other payments which Subtenant in any of the provisions of
this Sublease assumes or agrees to pay, and, in case of any nonpayment thereof,
Sublandlord shall have, in addition to all other rights and remedies, all the
rights and remedies provided for in this Sublease or by law in the case of
nonpayment of rent.

10.5 No Waiver. Sublandlord may accept Subtenant’s payments without waiving any
rights under the Sublease, including rights under a previously served notice of
default. No payment by Subtenant or receipt by Sublandlord of a lesser amount
than any installment of rent due or other sums shall be deemed as other than a
payment on account of the amount due, nor shall any endorsement or statement on
any check or accompanying any check or payment be deemed an accord and
satisfaction; and Sublandlord may accept such check or payment without prejudice
of Sublandlord’s right to recover the balance of such rent or other sum or
pursue any other remedy provided in this Sublease, at law or in equity. If
Sublandlord accepts payments after serving a notice of default, Sublandlord may
nevertheless commence and pursue an action to enforce rights and remedies under
the previously served notice of default without giving Subtenant any further
notice or demand. Furthermore, Sublandlord’s acceptance of rent from Subtenant
when the Subtenant is holding over without express written consent does not
convert Subtenant’s tenancy from a tenancy at sufferance to a month-to-month
tenancy. No waiver of any provision of this Sublease shall be implied by any
failure of Sublandlord to enforce any remedy for the violation of that
provision, even if that violation continues or is repeated. Any waiver by
Sublandlord of any provision of this Sublease must be in writing. Such waiver
shall affect only the provisions specified and only for the time and in the
manner stated in the writing. No delay or omission in the exercise of any right
or remedy by Sublandlord shall impair such right or remedy or be construed as a
waiver thereof by Sublandlord. No act or conduct of Sublandlord, including,
without limitation the acceptance of keys to the Premises shall constitute
acceptance or the surrender of the Premises by Subtenant before the Expiration
Date. Only written notice from Sublandlord to Subtenant of acceptance shall
constitute such acceptance or surrender of the Premises. Sublandlord’s consent
to or approval of any act by Subtenant which requires Sublandlord’s consent or
approval shall not be deemed to waive or render unnecessary Sublandlord’s
consent to or approval of any subsequent act by Subtenant.

10.6 Sublandlord Default. For purposes of this Sublease, Sublandlord shall not
be deemed in default hereunder unless and until Subtenant shall first deliver to
Sublandlord thirty (30) days’ prior written notice, and Sublandlord shall fail
to cure said default within said thirty (30) day period, or in the event
Sublandlord shall reasonably require in excess of thirty (30) days to cure said
default, shall fail to commence said cure with said thirty (30) day period, and
thereafter diligently prosecute the same to completion.

10.7 Notice of Event of Default under Master Lease. Sublandlord shall notify
Subtenant of any Default under the Master Lease (and hereby authorizes Master
Landlord to give a copy to Subtenant of any such notice of Default upon request
of Subtenant), or of any other event of which Sublandlord has actual knowledge
which will impair Subtenant’s ability to conduct its normal business at the
Premises, as soon as reasonably practicable following Sublandlord’s receipt of
notice from Master Landlord of a Default or Sublandlord’s actual knowledge of
such impairment.

 

8

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3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

 

 

11. Consent of Master Landlord. Subtenant acknowledges that the Master Lease
requires that Sublandlord obtain the consent of Master Landlord to any
subletting by Sublandlord. This Sublease shall not be effective unless and until
Master Landlord (i) signs a consent to this subletting satisfactory to
Sublandlord and (ii) approved the Initial Alterations. Subtenant will sign such
consent if required by Master Landlord as reasonably presented by Master
Landlord.

12. Miscellaneous.

12.1 Notices and Payments. Any notice, demand, request, consent, approval,
submittal or communication that either party desires or is required to give to
the other party or any other person shall be in writing and either served
personally or sent by prepaid, first-class certified mail or commercial
overnight delivery service. Such Notice shall be effective on the date of actual
receipt (in the case of personal service or commercial overnight delivery
service) or two days after deposit in the United States mail, to the following
addresses (or other address provided by a party in a written notice):

 

To the Sublandlord:

Trion Worlds, Inc.

1200 Bridge Boulevard, Suite 102

Redwood City, California 94065

Attention: CFO

With a copy sent to:

Trion Worlds, Inc.

1200 Bridge Parkway, Suite 201

Redwood City, California 94065

Attention: Legal Department

To the Subtenant: At the Premises, whether or not Subtenant has abandoned or
vacated the Premises

When this Sublease requires service of a notice, that notice shall replace
rather than supplement any equivalent or similar statutory notice, including any
notices required by Code of Civil Procedure Section 1161 or any similar or
successor statute. When a statute requires service of a notice in a particular
manner, service of that notice (or a similar notice required by this Sublease)
shall replace and satisfy the statutory service-of-notice procedures, including
those required by Code of Civil Procedure Section 1162 or any similar or
successor statute.

12.2 Conflict with Master Lease; Interpretation. In the event of any conflict
between the provisions of the Master Lease and this Sublease, the Master Lease
shall govern and control except to the extent directly contradicted by the terms
of this Sublease. No presumption shall apply in the interpretation or
construction of this Sublease as a result of Sublandlord having drafted the
whole or any part hereof.

12.3 Remedies Cumulative. The rights, privileges, elections, and remedies of
Sublandlord in this Sublease, at law, and in equity are cumulative and not
alternative.

12.4 Waiver of Redemption. Subtenant hereby expressly waives any and all rights
of redemption to which it may be entitled by or under any present or future laws
in the event Sublandlord shall obtain a judgment for possession of the Premises.

12.5 Damage and Destruction; Condemnation. In the event of any damage,
destruction, casualty, condemnation or threat of condemnation affecting the
Premises, Rent payable hereunder shall be abated but only to the extent that
Rent is abated under the Master Lease with respect to the Premises. Subtenant
shall have no right to terminate this Sublease in connection with any damage,
destruction, casualty, condemnation or threat of condemnation except to the
extent the Master Lease is also terminated as to the Premises or any portion
thereof.

12.6 Holding Over. Subtenant shall have no right to Holdover. If Subtenant does
not surrender and vacate the Premises at the Expiration Date of this Sublease,
Subtenant shall be a tenant at sufferance, or at the sole election of
Sublandlord, a month to month tenancy, and the parties agree in either case that
the reasonable rental value, if at sufferance, or the Base Rent if a month to
month tenancy shall be at the monthly rate of one hundred fifty percent
(150%) of the monthly Base Rent set forth in Section 4.1; provided however, if
such holdover causes Sublandlord to be in holdover under the Master Lease, then
Base Rent shall be equal to any and all

 

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3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

 

Rent due to Master Landlord from Sublandlord under the holdover provisions of
the Master Lease, including, but not limited to, operating expenses and property
taxes due and payable during such holdover period of time. In connection with
the foregoing, Sublandlord and Subtenant agree that the reasonable rental value
of the Premises following the Expiration Date of the Sublease shall be the
amounts set forth above per month. Sublandlord and Subtenant acknowledge and
agree that, under the circumstances existing as of the Effective Date, it is
impracticable and/or extremely difficult to ascertain the reasonable rental
value of the Premises on the Expiration Date and that the reasonable rental
value established herein is a reasonable estimate of the damage that Sublandlord
would suffer as the result of the failure of Subtenant to timely surrender
possession of the Premises. The parties acknowledge that the liquidated damages
established herein is not intended as a forfeiture or penalty within the meaning
of California Civil Code sections 3275 or 3369, but is intended to constitute
liquidated damages to Sublandlord pursuant to California Civil Code sections
1671, 1676, and 1677. Notwithstanding the foregoing, and in addition to all
other rights and remedies on the part of Sublandlord if Subtenant fails to
surrender the Premises upon the termination or expiration of this Sublease, in
addition to any other liabilities to Sublandlord accruing therefrom, Subtenant
shall indemnify, defend and hold Sublandlord harmless from all Claims resulting
from such failure, including, without limitation, any Claims by any third
parties based on such failure to surrender and any lost profits to Sublandlord
resulting therefrom.

12.7 Effect of Conveyance. As used in this Sublease, the term “Sublandlord”
means the holder of the “Tenant’s” interest under the Master Lease. In the event
of any assignment or transfer of the “Tenant’s” interest under the Master Lease,
which assignment or transfer may occur at any time during the Term hereof in
Sublandlord’s sole discretion, Sublandlord shall be and hereby is entirely
relieved of the future performance of all covenants and obligations of
Sublandlord hereunder if such future performance is assumed by the transferee in
a writing and a copy thereof is delivered to Subtenant. Sublandlord may transfer
and deliver any security of Subtenant to the transferee of the Tenant’s interest
under the Master Lease, and thereupon Sublandlord shall be discharged from any
further liability with respect thereto if such transferee assumes in writing
Sublandlord’s obligations with regard to such security in a writing delivered to
Subtenant.

12.8 Broker’s Commission. Sublandlord and Subtenant represent and warrant to
each other that each has dealt with the following brokers Hughes Marino
(“Sublandlord’s Broker”) and RE:Align, Inc. (“Subtenant’s Broker”, collectively
the “Brokers”) and with no other agent, finder, or other such person with
respect to this Sublease and each agrees to indemnify and hold the other
harmless from any Claims asserted against the other by any broker, agent,
finder, or other such person not identified above as Sublandlord’s Broker or
Subtenant’s Broker. The Commission to the Brokers is payable by Sublandlord
pursuant to separate agreement.

12.9 Signage. Subtenant shall not place any signs on or about the Premises
without Sublandlord’s and Master Landlord’s prior written consent. All signs
shall be at Subtenant’s sole cost and shall comply with the terms of the Master
Lease and with all local, federal and state rules, regulations, statutes, and
ordinances at all times during the Term. Subtenant acknowledges and agrees that
its request for consent to signage shall be limited to signage at the Premises.
Subtenant, at Subtenant’s cost, shall remove all such signs and graphics prior
to the termination of this Sublease and repair any damage caused by such
removal.

12.10 Offer. Preparation of this Sublease by either Sublandlord or Subtenant or
either party’s agent and submission of same to Sublandlord or Subtenant shall
not be deemed an offer to Sublease. This Sublease is not intended to be binding
until executed and delivered by all Parties hereto.

12.11 Due Authority. If Subtenant signs as a corporation, Subtenant represents
and warrants that each of the persons executing this Sublease on behalf of
Subtenant has the authority to bind Subtenant, Subtenant has been and is
qualified to do business in the State of California, that the corporation has
full right and authority to enter into this Sublease, and that all persons
signing on behalf of the corporation were authorized to do so by appropriate
corporate actions. If Subtenant signs as a partnership, trust or other legal
entity, each of the persons executing this Sublease on behalf of Subtenant
represent and warrant that they have the authority to bind Subtenant, Subtenant
has complied with all applicable laws, rules and governmental regulations
relative to its right to do business in the State of California and that such
entity on behalf of the Subtenant was authorized to do so by any and all
appropriate partnership, trust or other actions. Subtenant agrees to furnish
promptly upon request a corporate resolution, proof of due authorization by
partners, or other appropriate documentation evidencing the authorization of
Subtenant to enter into this Sublease. If Sublandlord signs as a corporation,
Sublandlord represents and warrants that each of the persons executing this
Sublease on its behalf has the authority to bind Sublandlord,

 

10

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3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

 

Sublandlord has been and is qualified to do business in the State of California,
that the corporation has full right and authority to enter into this Sublease,
and that all persons signing on behalf of the corporation were authorized to do
so by appropriate corporate actions. Sublandlord agrees to furnish promptly upon
request a corporate resolution, proof of due authorization by partners, or other
appropriate documentation evidencing the authorization of Sublandlord to enter
into this Sublease.

12.12 Multiple Counterparts. This Sublease may be executed in two counterparts,
each of which shall be deemed an original and both of which together shall
constitute one and the same agreement. This Sublease may be executed by a
party’s signature transmitted by facsimile (“fax”) or by electronic mail in pdf
format (“pdf”), and copies of this Sublease executed and delivered by means of
faxed or pdf signatures shall have the same force and effect as copies hereof
executed and delivered with original signatures. All parties hereto may rely
upon faxed or pdf signatures as if such signatures were originals. Any party
executing and delivering this Sublease by fax or pdf shall promptly thereafter
deliver a counterpart of this Sublease containing said party’s original
signature. All parties hereto agree that a faxed or pdf signature page may be
introduced into evidence in any proceeding arising out of or related to this
Sublease as if it were an original signature page.

12.13 Attorney Fees. If Sublandlord becomes a party to any litigation brought by
someone other than Subtenant and concerning this Sublease, the Premises, or
Subtenant’s use and occupancy of the Premises to the extent, based upon any real
or alleged act or omission of Subtenant or its authorized representatives,
Subtenant shall be liable to Sublandlord for reasonable attorneys’ fees and
court costs incurred by Sublandlord in the litigation. In the event any action
or proceeding at law or in equity or any arbitration proceeding be instituted by
either party, for an alleged breach of any obligation of a party under this
Sublease, to recover rent, to terminate the tenancy of Subtenant at the
Premises, or to enforce, protect, or establish any right or remedy of a party to
this Sublease Agreement, the prevailing party (by judgment or settlement) in
such action or proceeding shall be entitled to recover as part of such action or
proceeding such reasonable attorneys’ fees, expert witness fees, and court costs
as may be fixed by the court or jury, but this provision shall not apply to any
cross-complaint filed by anyone other than Sublandlord in such action or
proceeding.

12.14 Sublandlord’s Costs. In any case where Subtenant requests permission from
Sublandlord and/or Master Landlord to assign, sublet, make alterations, or
receive any other consent or obtain any waiver from or modification to the terms
of this Sublease, Subtenant shall pay to Sublandlord any reasonable
out-of-pocket costs incurred to review Subtenant’s request including, without
limitation, reasonable attorney’s fees and such amount due Master Landlord as
set forth in the Master Lease.

12.15 Waiver of Damages. In no event shall Sublandlord be liable for, and
Subtenant hereby waives any claim for, any indirect, consequential or punitive
damages, including loss of profits or business opportunity, arising under or in
connection with this Sublease.

12.16 Certified Access Specialist Disclosure. Pursuant to Section 1938 of the
California Civil Code, Sublandlord hereby discloses to Subtenant that, to its
knowledge, the Premises have not undergone an inspection by a Certified Access
Specialist (CASp).

12.17 Exhibits and Attachments. All exhibits and attachments to this Sublease
are a part hereof.

[Signatures appear of following page.]

 

11

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3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

 

IN WITNESS WHEREOF, Sublandlord and Subtenant have executed and delivered this
Sublease on the date first set forth above.

 

SUBLANDLORD

SUBTENANT

TRION WORLDS, INC.,

a Delaware corporation

ACADIA PHARMACEUTICALS INC.,

a Delaware corporation

           /s/ Scott Hartsman

           /s/ Uli Hacksell

By:     Scott Hartsman

By:     Uli Hacksell, Ph.D.

Its:     Chief Executive Officer

Its:     Chief Executive Officer

           /s/ Stephen R. Davis

By:     Stephen R. Davis Its:     Chief Financial Officer

 

12

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3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

 

EXHIBIT A

DESCRIPTION OF PREMISES

Third Floor (Phase I Premises)

 

 

LOGO [g838665st_17.jpg]

 

A-1

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3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

 

EXHIBIT B

MASTER LEASE

[Master Lease on following page]

 

B-1

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

 

OFFICE LEASE

KILROY REALTY

KILROY CENTRE DEL MAR

KILROY REALTY, L.P.,

a Delaware corporation,

as Landlord,

and

TRION WORLDS, INC.,

a Delaware corporation,

as Tenant.

 

 

 

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

TABLE OF CONTENTS

 

         Page  

ARTICLE 1

  PREMISES, BUILDING, PROJECT, AND COMMON AREAS      5   

ARTICLE 2

  LEASE TERM; OPTION TERMS; TERMINATION OPTION      9   

ARTICLE 3

  BASE RENT      13   

ARTICLE 4

  ADDITIONAL RENT      14   

ARTICLE 5

  USE OF PREMISES      24   

ARTICLE 6

  SERVICES AND UTILITIES      25   

ARTICLE 7

  REPAIRS      27   

ARTICLE 8

  ADDITIONS AND ALTERATIONS      28   

ARTICLE 9

  COVENANT AGAINST LIENS      31   

ARTICLE 10

  INSURANCE      31   

ARTICLE 11

  DAMAGE AND DESTRUCTION      36   

ARTICLE 12

  NONWAIVER      38   

ARTICLE 13

  CONDEMNATION      39   

ARTICLE 14

  ASSIGNMENT AND SUBLETTING      39   

ARTICLE 15

  SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES      44   

ARTICLE 16

  HOLDING OVER      44   

ARTICLE 17

  ESTOPPEL CERTIFICATES      45   

ARTICLE 18

  SUBORDINATION      45   

ARTICLE 19

  DEFAULTS; REMEDIES      46   

ARTICLE 20

  COVENANT OF QUIET ENJOYMENT      49   

ARTICLE 21

  SECURITY DEPOSIT      50   

ARTICLE 22

  INTENTIONALLY OMITTED      51   

ARTICLE 23

  SIGNS      51   

 

(i)

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

ARTICLE 24

COMPLIANCE WITH LAW   51   

ARTICLE 25

LATE CHARGES   52   

ARTICLE 26

LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT   52   

ARTICLE 27

ENTRY BY LANDLORD   53   

ARTICLE 28

TENANT PARKING   54   

ARTICLE 29

MISCELLANEOUS PROVISIONS   54   

ARTICLE 30

LETTER OF CREDIT   63   

ARTICLE 4

AT SIGHT   4   

 

(ii)

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INDEX

 

     Page(s)  

17,000 RSF

     14   

17,000 RSF Base Rent Phase-In Period

     14   

8,000 RSF

     14   

8,000 RSF Base Rent Phase-In Period

     14   

Abatement Event

     27   

Abatement Period

     13   

Accountant

     23   

Additional Notice

     27   

Additional Rent

     14   

Alterations

     28   

Applicable Laws

     51   

Award

     12   

Bank Prime Loan

     52   

Bankruptcy Code

     63   

Bank’s Credit Rating Threshold

     63   

Base Building

     29   

Base Rent

     13   

Base Year

     15   

BOMA

     6   

Broker

     59   

Building

     5   

Building Common Areas,

     6   

Building Hours

     25   

Comparable Area

     2   

Comparable Buildings

     2   

Comparable Transactions

     1   

Contractor

     3   

Control,

     43   

Cosmetic Alterations

     28   

Damage Termination Date

     37   

Damage Termination Notice

     37   

Direct Expenses

     15   

Eligibility Period

     27   

Environmental Laws

     61   

Estimate

     22   

Estimate Statement

     22   

Estimated Excess

     22   

Excess

     21   

Exercise Notice

     11   

Expense Year

     15   

Force Majeure

     57   

Hazardous Material(s)

     61   

Holidays

     25   

HVAC

     25   

 

(iii)

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

     Page(s)  

Improvements

     1   

Initial Notice

     27   

Interest Rate

     52   

Landlord

     1   

Landlord Parties

     32   

Landlord Repair Notice

     36   

Landlord Response Date

     11   

Landlord Response Notice

     11   

Landlord’s Option Rent Calculation

     11   

L-C

     63   

L-C Amount

     63   

L-C Draw Event

     64   

Lease

     1   

Lease Commencement Date

     9   

Lease Expiration Date

     9   

Lease Term

     9   

Lease Year

     9   

Lines

     61   

Mail

     57   

Neutral Arbitrator

     11   

Non-Conforming Improvements

     2   

Notices

     57   

Operating Expenses

     15   

Option Rent

     10   

Option Term

     10   

Original Improvements

     33   

Outside Agreement Date

     11   

Permitted Chemicals

     62   

Permitted Transfer

     43   

Permitted Transferee

     43   

Permitted Use

     2   

Premises

     5   

Project

     5   

Project Common Areas,

     6   

Renewal Allowance

     2   

Renovations

     60   

Rent.

     15   

Review Period

     23   

Security Deposit Laws

     66   

Security System

     30   

Statement

     21   

Subject Space

     40   

Substantial Completion

     3   

Summary

     1   

Tax Expenses

     19   

 

(iv)

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

     Page(s)  

TCCs

     5   

Tenant

     1   

Tenant’s Occupants,

     43   

Tenant’s Option Rent Calculation

     11   

Tenant’s Share

     20   

Termination Date

     12   

Termination Fee

     12   

Termination Notice

     12   

Termination Option

     12   

Third Party Contractor

     35   

Transfer

     42   

Transfer Notice

     39   

Transfer Premium

     41   

Transferee

     39   

Transfers

     39   

Utilities Costs

     20   

Work Letter Agreement

     5   

 

(v)

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KILROY CENTRE DEL MAR

OFFICE LEASE

This Office Lease (the “Lease”), dated as of the date set forth in Section 1 of
the Summary of Basic Lease Information (the “Summary”), below, is made by and
between KILROY REALTY, L.P., a Delaware limited partnership (“Landlord”), and
TRION WORLDS, INC., a Delaware corporation (“Tenant”).

SUMMARY OF BASIC LEASE INFORMATION

 

TERMS OF LEASE DESCRIPTION 1. Date: August 8, 2012. 2. Premises: 2.1 Building:
That certain five (5)-story building (the “Building”) located at 3611 Valley
Centre Drive, San Diego, California 92130, which Building contains approximately
130,178 rentable square feet of space, and which Building is commonly referred
to as “Building 2” within the “Project” (defined below. 2.2 Premises:
Approximately 52,000 rentable (48,513 usable) square feet of space comprising
the entirety of the second (2nd) and third (3rd) floors of the Building commonly
known as Suites 200 and 300, as further identified in Exhibit A to this Lease.
2.3 Project: The Building is part of an office project known as “Kilroy Centre
Del Mar,” as further set forth in Section 1.1.2 of this Lease. 3. Lease Term
(Article 2): 3.1 Length of Term: Approximately six (6) years and two (2) months.
3.2 Lease Commencement Date: The earlier to occur of (i) the date upon which
Tenant first commences to conduct business in the Premises, and (ii) the date
upon which the Premises are “Ready for Occupancy” (as that term is set forth in
Section 5.1 of the Work Letter Agreement attached as Exhibit B to this Lease),
and in either event upon termination of the “Carmel Valley Corporate Center
Lease” (as that term is defined in Article 21 of this Lease), which Lease
Commencement Date is anticipated to be October 1, 2012.

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  3.3   Lease Expiration Date:   The last day of the seventy-fourth (74th) full
calendar month of the Lease Term. As the Lease Commencement Date is anticipated
to occur on October 1, 2012, the anticipated Lease Expiration Date is
November 30, 2018.   3.4   Option Term:   One (1), five (5)-year option to
renew, as more particularly set forth in Section 2.2 of this Lease. 4.        
Base Rent (Article 3):

 

Lease Months

   Annual
Base Rent   Monthly Installment
of Base Rent    Monthly
Rental Rate
per Rentable
Square Foot

1 – 18*

   $[…***…]¿   $[…***…]¿    $[…***…]

19 – 30

   $[…***…]¿   $[…***…]¿    $[…***…]

31 – 42

   $[…***…]       $[…***…]        $[…***…]

43 – 54

   $[…***…]       $[…***…]        $[…***…]

55 – 66

   $[…***…]       $[…***…]        $[…***…]

67 – Lease

       

Expiration Date

   $[…***…]       $[…***…]        $[…***…]

 

* Subject to abatement pursuant to Section 3.2, below.

¿ Subject to the Base Rent “phase-in” provisions contained in Section 3.3,
below.

 

5.

 

Base Year

(Article 4):

  Calendar year 2013; provided, however, electricity is separately metered and
directly paid by Tenant to the applicable utility provider or, at Landlord’s
option, to Landlord.

6.

 

Tenant’s Share

(Article 4):

  Approximately […***…]%.

7.

 

Permitted Use

(Article 5):

  Tenant shall use the Premises solely for general office use of a software
developer and uses incidental thereto (the “Permitted Use”); provided, however,
that notwithstanding anything to the contrary set forth hereinabove, and as more
particularly set forth in the Lease, Tenant shall be responsible for operating
and maintaining the Premises pursuant to, and in no event may Tenant’s Permitted
Use violate, (A) Landlord’s “Rules and Regulations,” as that term is set forth
in Section 5.2 of this Lease, (B) all “Applicable Laws” (as that term is set
forth in Article 24 of this Lease), (C) all applicable zoning, building codes
and the “CC&Rs” (as that term is set forth in Section 5.3 of this Lease), and
(D) the character of the Project as a first-class office building Project.

 

*** Confidential Treatment Requested

 

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8.

Security Deposit

(Article 21):

$[…***…]; provided, however, Landlord shall credit any then unapplied portion of
the “Existing Security Deposit” (as that term is defined in Article 21 of this
Lease) previously deposited with Landlord under the Carmel Valley Corporate
Center Lease against the Security Deposit required under this Lease.

9.

Letter of Credit

(Article 30):

$[…***…]

10.

Parking Pass Ratio

(Article 28):

Four point five (4.5) unreserved parking passes for every 1,000 rentable square
feet of the Premises (i.e., two hundred eighteen (218) unreserved parking
passes), of which up to six (6) of such unreserved parking passes may, subject
to the terms of Article 28 of this Lease, be converted to reserved parking
passes. All of such aforementioned parking passes shall be used in the parking
structures and surface parking lots located on the east side of the Building
only.

11.

Address of Tenant

(Section 29.18):

Trion Worlds, Inc.

1200 Bridge Parkway, Redwood City,

California 94065

Attention: Operations Manager

(Prior to and after Lease Commencement Date)

with a copy to:

Trion Worlds, Inc.

3611 Valley Centre Drive, Suite 200

San Diego, California 92130

Attention: Operations Manager

(After Lease Commencement Date)

12.

Address of Landlord

(Section 29.18):

See Section 29.18 of this Lease.

13.

Broker

(Section 29.24):

Representing Tenant: Representing Landlord:

Mr. Travis Carter

Hughes Marino

655 West Broadway, Suite 1650

San Diego, California 92101

None

 

*** Confidential Treatment Requested

 

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14.

Landlord Contribution Amount

(Work Letter Agreement):

[…***…] Dollars ($[…***…]).

 

*** Confidential Treatment Requested

 

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ARTICLE 1

PREMISES, BUILDING, PROJECT, AND COMMON AREAS

1.1 Premises, Building, Project and Common Areas.

1.1.1 The Premises. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the premises set forth in Section 2.2 of the Summary (the
“Premises”). The outline of the Premises is set forth in Exhibit A attached
hereto and the Premises has approximately the number of rentable square feet as
set forth in Section 2.2 of the Summary. The parties hereto agree that the lease
of the Premises is upon and subject to the terms, covenants and conditions (the
“TCCs”) herein set forth, and Tenant covenants as a material part of the
consideration for this Lease to keep and perform each and all of such TCCs by it
to be kept and performed and that this Lease is made upon the condition of such
performance. The parties hereto hereby acknowledge that the purpose of Exhibit A
is to show the approximate location of the Premises in the “Building” (as that
term is defined in Section 1.1.2, below), only, and such Exhibit A is not meant
to constitute an agreement, representation or warranty as to the construction of
the Premises, the precise area thereof or the specific location of the “Common
Areas” (as that term is defined in Section 1.1.3, below), or the elements
thereof or of the accessways to the Premises or the “Project” (as that term is
defined in Section 1.1.2, below). Except as specifically set forth in this Lease
and in the Work Letter Agreement attached hereto as Exhibit B (the “Work Letter
Agreement”), Landlord shall not be obligated to provide or pay for any
improvement work or services related to the improvement of the Premises. Tenant
also acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty regarding the condition of the Premises, the Building
or the Project or with respect to the suitability of any of the foregoing for
the conduct of Tenant’s business, except as specifically set forth in this Lease
and the Work Letter Agreement. The taking of possession of the Premises by
Tenant shall conclusively establish that the Premises and the Building were at
such time in good and sanitary order, condition and repair.

1.1.2 The Building and The Project. The Premises are a part of the building set
forth in Section 2.1 of the Summary (the “Building”). The Building is part of an
office project known as “Kilroy Centre Del Mar.” The term “Project,” as used in
this Lease, shall mean (i) the Building and the Common Areas, (ii) the land
(which is improved with landscaping, parking facilities and other improvements)
upon which the Building and the Common Areas are located, (iii) the other
buildings and improvements within the Project and their respective Common Areas,
and (iv) the land (which is improved with landscaping, parking facilities and
other improvements) upon which the other buildings and their respective Common
Areas are located. The outline of the Building and Project are shown on the
Project Site Plan attached hereto as Exhibit A-1.

1.1.3 Common Areas. Tenant shall have the non-exclusive right to use in common
with other tenants in the Project, and subject to the rules and regulations
referred to in Article 5 of this Lease, those portions of the Project which are
provided, from time to time, for use in common by Landlord, Tenant and any other
tenants of the Project (such areas, together with such other portions of the
Project designated by Landlord, in its discretion, including certain areas
designated for the exclusive use of certain tenants, or to be shared by Landlord
and certain

 

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tenants, are collectively referred to herein as the “Common Areas”). The Common
Areas shall consist of the “Project Common Areas” and the “Building Common
Areas.” The term “Project Common Areas,” as used in this Lease, shall mean the
portion of the Project designated as such by Landlord. The term “Building Common
Areas,” as used in this Lease, shall mean the portions of the Common Areas
located within the Building designated as such by Landlord. The manner in which
the Common Areas are maintained and operated shall be at the sole discretion of
Landlord and the use thereof shall be subject to such rules, regulations and
restrictions as Landlord may make from time to time, provided that such rules,
regulations and restrictions do not unreasonably interfere with the rights
granted to Tenant under this Lease and the permitted use granted under
Section 5.1, below. Landlord reserves the right to close temporarily, make
alterations or additions to, or change the location of elements of the Project
and the Common Areas; provided that no such changes shall be permitted which
materially reduce Tenant’s rights or access hereunder. Except when and where
Tenant’s right of access is specifically excluded in this Lease, Tenant shall
have the right of access to the Premises, the Building, and the Project parking
facilities located on the east side of the Building twenty-four (24) hours per
day, seven (7) days per week during the “Lease Term,” as that term is defined in
Section 2.1, below.

1.2 Verification of Rentable Square Feet of Premises and Building. For purposes
of this Lease, “rentable square feet” and “usable square feet” shall be
calculated pursuant to Office Buildings: Standard Methods of Measurement and
Calculating Rentable Area – 2010 (Method B), and its accompanying guidelines
(“BOMA”). Within thirty (30) days after the Lease Commencement Date, Landlord’s
space planner/architect shall measure the rentable and usable square feet of the
Premises in accordance with the provisions of this Section 1.2 and the results
thereof shall be presented to Tenant in writing. Tenant’s space
planner/architect may review Landlord’s space planner/architect’s determination
of the number of rentable square feet and usable square feet of the Premises and
Tenant may, within fifteen (15) business days after Tenant’s receipt of
Landlord’s space planner/architect’s written determination, object to such
determination by written notice to Landlord. Tenant’s failure to deliver written
notice of such objection within said fifteen (15) business day period shall be
deemed to constitute Tenant’s acceptance of Landlord’s space planner/architect’s
determination. If Tenant objects to such determination, Landlord’s space
planner/architect and Tenant’s space planner/architect shall promptly meet and
attempt to agree upon the rentable and usable square footage of the Premises. If
Landlord’s space planner/architect and Tenant’s space planner/architect cannot
agree on the rentable and useable square footage of the Premises within thirty
(30) days after Tenant’s objection thereto, Landlord and Tenant shall mutually
select an independent third party space measurement professional to field
measure the Premises under the BOMA Standard. Such third party independent
measurement professional’s determination shall be conclusive and binding on
Landlord and Tenant. Landlord and Tenant shall each pay one-half ( 1⁄2) of the
fees and expenses of the independent third party space measurement professional.
If the Lease Term commences prior to such final determination, Landlord’s
determination shall be utilized until a final determination is made, whereupon
an appropriate adjustment, if necessary, shall be made retroactively, and
Landlord shall make appropriate payment (if applicable) to Tenant. In the event
that pursuant to the procedure described in this Section 1.2 above, it is
determined that the square footage amounts shall be different from those set
forth in this Lease, all amounts, percentages and figures appearing or referred
to in this Lease based upon such incorrect amount (including, without
limitation, the amount of the “Rent,” as that term is defined in Section 4.1 of

 

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this Lease) shall be modified in accordance with such determination. If such
determination is made, it will be confirmed in writing by Landlord to Tenant.

1.3 Right of First Refusal. Landlord hereby grants to the originally named
Tenant herein (the “Original Tenant”), or its “Permitted Transferee” (as that
term is defined in Section 14.8, below) an ongoing right of first refusal during
the initial Lease Term only, with respect to any then-existing office space
located on the first (1St) floor of the Building (the “First Refusal Space”).

1.3.1 Procedure for Lease.

1.3.1.1 Procedure for Landlord’s Offer of the First Refusal Space to Tenant.
Landlord shall notify Tenant (the “First Refusal Notice”) from time-to-time when
and if Landlord receives a “bona-fide third-party offer” for the First Refusal
Space. Pursuant to such First Refusal Notice, Landlord shall offer to lease to
Tenant the applicable First Refusal Space. The First Refusal Notice shall
describe the First Refusal Space, and the lease term, rent and other fundamental
economic terms and conditions upon which Landlord proposes to lease such First
Refusal Space pursuant to the bona-fide third-party offer. For purposes of this
Section 1.3, a “bona-fide third-party offer” shall mean a counter-offer received
by Landlord to lease First Refusal Space from an unaffiliated and qualified
third party which Landlord would otherwise be willing to accept (but for
Tenant’s superior rights hereunder). For purposes of example only, the following
would each constitute a bona-fide third-party offer:

 

  (a) Landlord receives a request for proposal from an unaffiliated and
qualified third party. Landlord responds to the request for proposal with a
lease proposal and subsequently receives a written bona-fide counter proposal
from the unaffiliated and qualified third party.

 

  (b) Landlord receives a written offer to lease from an unaffiliated and
qualified third party. Landlord responds to the offer with ‘a written counter
offer and subsequently receives a bona-fide counter to Landlord’s counter offer
from the unaffiliated and qualified third party.

1.3.1.2 Procedure for Acceptance. If Tenant wishes to exercise Tenant’s right of
first refusal with respect to the First Refusal Space described in the First
Refusal Notice, then within seven (7) business days of delivery of the First
Refusal Notice to Tenant (the “Election Period”), Tenant shall deliver to
Landlord written notice (an “Election Notice”) of Tenant’s exercise of its right
of first refusal with respect to all of the First Refusal Space described in the
First Refusal Notice at the rent, for the term and upon the other fundamental
economic terms and conditions contained in such First Refusal Notice, including,
but not limited to rental concessions and improvement allowances. If Tenant does
not so notify Landlord within such Election Period of Tenant’s exercise of its
first refusal right, or Tenant affirmatively elects not to exercise such first
refusal right (either of the foregoing being referred to herein as a “First
Refusal Rejection”), then Landlord shall be free to negotiate and enter into a
lease for the First Refusal Space to anyone whom it desires on any terms it
desires; provided, however, in no event

 

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shall the net-effective economic terms pertaining to such a lease of the First
Refusal Space be more than ten percent (10%) more beneficial to such third-party
than those set forth in the First Refusal Notice. In the event Landlord wishes
to proceed with a lease to a third-party where the net-effective economic terms
are more than ten (10%) more beneficial to such third party than those set forth
in the most recently delivered First Refusal Notice, Tenant’s rights to such
First Refusal Space under this Section 1.3 shall renew, in which case the
provisions of this Section 1.3 shall again be effective and Landlord shall again
offer such First Refusal Space to the Tenant pursuant to the terms hereof (and
Tenant shall again have seven (7) business days within which to respond).
Notwithstanding the foregoing, Tenant’s ongoing right of first refusal shall
commence only following the expiration or earlier termination of any existing
lease of the First Refusal Space (or portion thereof), including any renewal,
extension or expansion rights set forth in such leases, regardless of whether
such renewal, extension or expansion rights are executed strictly in accordance
with their terms, or pursuant to a lease amendment or a new lease, and such
right of first refusal shall further be subordinate to (A) all rights of the
then-existing tenants in the First Refusal Space (i.e., at the time any
applicable First Refusal Notice is delivered), and (B) all rights of first
offer, first refusal, expansion or other similar rights with respect to such
First Refusal Space contained in an “Intervening Lease,” as that term is defined
below (each, a ROFR Superior Right Holder”). For purposes hereof, an
“Intervening Lease” shall mean any lease to a third-party of First Refusal Space
identified in a particular First Refusal Notice following Tenant’s election (or
deemed election) not to exercise its right to lease such space pursuant to the
terms of Section 1.3 of this Lease.

1.3.2 Amendment to Lease. If Tenant timely exercises Tenant’s right of first
refusal to lease First Refusal Space as set forth herein, Landlord and Tenant
shall within thirty (30) days thereafter execute an amendment to this Lease (the
“First Refusal Space Amendment”) for such First Refusal Space upon the terms set
forth in the First Refusal Notice, including, but not limited to rent (the
“First Refusal Space Rent”), but otherwise upon the TCCs set forth in this Lease
and this Section 1.3. Notwithstanding the foregoing, Landlord may, at its sole
option, require that a separate lease be executed by Landlord and Tenant in
connection with Tenant’s lease of the First Refusal Space, in which event such
lease (the “First Refusal Space Lease”) shall be on the same TCCs as this Lease,
except as provided in this Section 1.3 and specifically in this Lease to the
contrary. The First Refusal Space Lease, if applicable, shall be executed by
Landlord and Tenant within thirty (30) days following Tenant’s exercise of its
right to lease the First Refusal Space. Notwithstanding the foregoing
documentation obligations, Landlord and Tenant hereby acknowledge and agree that
Tenant’s timely delivery of the Election Notice shall, in and of itself,
conclusively establish Tenant’s obligation to lease the subject First Refusal
Space on the express TCCs set forth in the corresponding First Refusal Notice.

1.3.3 No Defaults; Required Financial Condition of Tenant. The rights contained
in this Section 1.3 shall be personal to the Original Tenant and its Permitted
Transferees and may only be exercised by the Original Tenant or a Permitted
Transferee (and not any other assignee, sublessee or other transferee of the
Original Tenant’s interest in this Lease) if the Original Tenant and/or a
Permitted Transferee occupies not less than the entire then-existing Premises.
The right to lease the First Refusal Space as provided in this Section 1.3 may
not be exercised if, as of the date Tenant attempts to exercise its right of
first refusal with respect to the First Refusal Space described in the First
Refusal Notice, or as of the scheduled date of delivery of such First Refusal
Space to Tenant, (A) Tenant is in default pursuant to the terms of this Lease

 

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(beyond the applicable notice and cure periods), and (B) Tenant has previously
been in default under this Lease (beyond the applicable notice and cure periods)
more than once.

1.3.4 First Refusal Space Commencement Date; Construction in First Refusal
Space. The commencement date for the First Refusal Space shall be the applicable
date specified in the applicable First Refusal Notice (the “First Refusal Space
Commencement Date”) and the term of Tenant’s lease of such First Refusal Space
shall expire on the applicable date set forth in the First Refusal Notice (the
“First Refusal Space Expiration Date”). The term of Tenant’s occupancy of the
First Refusal Space shall be referred to herein as a “First Refusal Space Lease
Term.” Except as otherwise expressly identified in the First Refusal Notice,
Tenant shall take the First Refusal Space in its “as is” condition, and the
construction of improvements in the First Refusal Space shall comply with the
terms of Article 8 of this Lease.

1.3.5 Termination of First Refusal Right. Tenant’s right of first refusal set
forth in this Section 1.3 shall automatically terminate and be of no further
force or effect as of the last day of the initial Lease Term (regardless of
whether such Lease Term is extended pursuant to the terms of Section 2.2 of this
Lease or otherwise).

ARTICLE 2

LEASE TERM; OPTION TERMS; TERMINATION OPTION

2.1 Initial Lease Term. The TCCs and provisions of this Lease shall be effective
as of the date of this Lease. The term of this Lease (the “Lease Term”) shall be
as set forth in Section 3.1 of the Summary, shall commence on the date set forth
in Section 3.2 of the Summary (the “Lease Commencement Date”), and shall
terminate on the date set forth in Section 3.3 of the Summary (the “Lease
Expiration Date”) unless this Lease is sooner terminated as hereinafter
provided. For purposes of this Lease, the term “Lease Year” shall mean each
consecutive twelve (12) month period during the Lease Term; provided, however,
that, if the Lease Commencement Date is any day other than the first (1st) day
of a calendar month, then the first Lease Year shall commence on the Lease
Commencement Date and end on the last day of the month in which the first
anniversary of the Lease Commencement Date occurs and the second and each
succeeding Lease Year shall commence on the first day of the next calendar
month; and further provided that the last Lease Year shall end on the Lease
Expiration Date. For purposes of this Lease, the term “Lease Month” shall mean
each succeeding calendar month during the Lease Term; provided that the first
Lease Month shall commence on the Lease Commencement Date and shall end on the
last day of the calendar month in which the Lease Commencement Date occurs and
that the last Lease Month shall expire on the Lease Expiration Date. At any time
during the Lease Term, Landlord may deliver to Tenant a notice in the form as
set forth in Exhibit C, attached hereto, as a confirmation only of the
information set forth therein, which Tenant shall execute and return to Landlord
within five (5) days of receipt thereof.

 

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2.2 Option Term.

2.2.1 Option Right. Landlord hereby grants the Original Tenant and its
“Permitted Transferees” (as that term is set forth in Section 14.8 of this
Lease), one (1) option to extend the Lease Term for the entire Premises, by a
period of five (5) years (the “Option Term”). The option shall be exercisable
only by Notice delivered by Tenant to Landlord as provided below, provided that,
as of the date of delivery of such Notice, (i) Tenant is not then in default
under this Lease (beyond any applicable notice and cure periods), (ii) Tenant
has not been in default under this Lease (beyond any applicable notice and cure
periods) more than once during the prior twelve (12) month period, (iii) Tenant
has not been in default under this Lease (beyond any applicable notice and cure
periods) more than three (3) times during any five (5) year period, and
(iv) during the prior twenty-four (24)-month period there has been no material
adverse change in Tenant’s financial condition that, in Landlord’s reasonable
discretion, has a negative affect on Tenant’s ability to satisfy its economic
obligations under this Lease. Upon the proper exercise of such option to extend,
and provided that, as of the end of the then applicable Lease Term, (A) Tenant
is not in default under this Lease (beyond any applicable notice and cure
periods), (B) Tenant has not been in default under this Lease (beyond any
applicable notice and cure periods) more than once during the prior twelve
(12) month period, (C) Tenant has not been in default under this Lease (beyond
any applicable notice and cure periods) more than three (3) times during the
Lease Term, and (D) there has been no material adverse change in Tenant’s
financial condition during the prior twenty-four (24)-month period, then the
Lease Term, as it applies to the entire Premises, shall be extended for a period
of five (5) years. The rights contained in this Section 2.2 shall only be
exercised by the Original Tenant or its Permitted Transferee (and not any other
assignee, sublessee or other transferee of the Original Tenant’s interest in
this Lease) if Original Tenant and/or its Permitted Transferee is in occupancy
of the entire then-existing Premises.

2.2.2 Option Rent. The Rent payable by Tenant during the Option Term (the
“Option Rent”) shall be equal to the “Market Rent” (as that term is defined in
Exhibit I, attached hereto and made a part hereof); provided, however, that the
Market Rent for each Lease Year during the Option Term shall be equal to the
amount set forth on a “Market Rent Schedule” (as that term is defined
hereinbelow). The “Market Rent Schedule” shall be derived from the Market Rent
for the Option Term as determined pursuant to Exhibit I, attached hereto, as
follows: (i) the Rent for the first Lease Year of the applicable Option Term
shall be equal to the sum of (a) the Market Rent, as determined pursuant to
Exhibit I, (b) the amount of Direct Expenses applicable to the Premises, as
reasonably determined by Landlord, for the calendar year in which the Option
Term commences, and (c) an amount equal to the monthly amortization
reimbursement payment for the “Renewal Allowance” (as that term is defined in
Section 3 of Exhibit I to this Lease), with such Renewal Allowance being
amortized at a reasonable rate of return to Landlord based on the rates of
return then being received by the landlords of the “Comparable Buildings” (as
that term is defined in Section 4 of Exhibit I), in connection with improvement
allowances then being granted by such landlords, and (ii) for each subsequent
Lease Year, the Market Rent component of Rent shall be equal to […***…] percent
([…***…]%) of the prior Lease Year’s Market Rent. The calculation of the Market
Rent shall be derived from a review of, and comparison to, the “Net Equivalent
Lease Rates” of the “Comparable Transactions” (as those terms are defined in
Exhibit I). Notwithstanding anything

 

*** Confidential Treatment Requested

 

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set forth in this Lease to the contrary, the Base Year for the Option Term with
respect to the Premises shall be the next calendar year after the year in which
the Option Term commences.

2.2.3 Exercise of Option. The option contained in this Section 2.2 shall be
exercised by Tenant, if at all, only in the manner set forth in this
Section 2.2.3. Tenant shall deliver notice (the “Exercise Notice”) to Landlord
not less than nine (9) months prior to the expiration of the initial Lease Term,
stating that Tenant is exercising its option. Concurrently with such Exercise
Notice, Tenant shall deliver to Landlord Tenant’s calculation of the Market Rent
(the “Tenant’s Option Rent Calculation”). Landlord shall deliver notice (the
“Landlord Response Notice”) to Tenant on or before the date which is thirty
(30) days after Landlord’s receipt of the Exercise Notice and Tenant’s Option
Rent Calculation (the “Landlord Response Date”), stating that (A) Landlord is
accepting Tenant’s Option Rent Calculation as the Market Rent, or (B) rejecting
Tenant’s Option Rent Calculation and setting forth Landlords calculation of the
Market Rent (the “Landlord’s Option Rent Calculation”). Within ten (10) business
days of its receipt of the Landlord Response Notice, Tenant may, at its option,
accept the Market Rent contained in the Landlord’s Option Rent Calculation. If
Tenant does not affirmatively accept or Tenant rejects the Market Rent specified
in the Landlord’s Option Rent Calculation, the parties shall follow the
procedure, and the Market Rent shall be determined as set forth in Section
2.2.4.

2.2.4 Determination of Market Rent. In the event Tenant objects or is deemed to
have objected to the Market Rent, Landlord and Tenant shall attempt to agree
upon the Market Rent using reasonable good-faith efforts. If Landlord and Tenant
fail to reach agreement within sixty (60) days following Tenant’s objection or
deemed objection to the Landlord’s Option Rent Calculation (the “Outside
Agreement Date”), then, within two (2) business days following such Outside
Agreement Date, (x) Landlord may reestablish the Landlord’s Option Rent
Calculation by delivering written notice thereof to Tenant, and (y) Tenant may
reestablish the Tenant’s Option Rent Calculation by delivering written notice
thereof to Tenant. If Landlord and Tenant thereafter fail to reach agreement
within seven (7) business days of the Outside Agreement Date, then in connection
with the Option Rent, Landlord’s Option Rent Calculation and Tenant’s Option
Rent Calculation, each as most recently delivered to the other party pursuant to
the TCCs of this Section 2.2, shall be submitted to the “Neutral Arbitrator” (as
that term is defined in Section 2.2.4.1, below), pursuant to the TCCs of this
Section 2.2.4. The submittals shall be made concurrently with the selection of
the Neutral Arbitrator pursuant to this Section 2.2.4 and shall be submitted to
arbitration in accordance with Sections 2.2.4.1 through 2.2.4.5, below, but
subject to the conditions, when appropriate, of Section 2.2.3.

2.2.4.1 Landlord and Tenant shall mutually and reasonably appoint one
(1) arbitrator who shall by profession be an MAI appraiser who shall have been
active over the ten (10) year period ending on the date of such appointment in
the appraisal of first-class corporate headquarters properties in the Comparable
Area (the “Neutral Arbitrator”). The determination of the Neutral Arbitrator
shall be limited solely to the issue of whether Landlord’s Option Rent
Calculation or Tenant’s Option Rent Calculation, each as submitted to the
Neutral Arbitrator pursuant to Section 2.2.4 above, is the closest to the actual
Market Rent as determined by such Neutral Arbitrator, taking into account the
requirements of Section 2.2.2 above. Such Neutral Arbitrator shall be appointed
within fifteen (15) days after the applicable Outside Agreement Date. Neither
the Landlord nor Tenant may, directly or indirectly, consult with the Neutral

 

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Arbitrator prior to subsequent to his or her appearance. The Neutral Arbitrator
shall be retained via an engagement letter jointly prepared by Landlord’s
counsel and Tenant’s counsel.

2.2.4.2 The Neutral Arbitrator shall, within thirty (30) days of his/her
appointment, reach a decision as to Market Rent and determine whether the
Landlord’s Option Rent Calculation or Tenant’s Option Rent Calculation, each as
submitted to the Neutral Arbitrator pursuant to Section 2.2.4 above), is closest
to Market Rent as determined by such Neutral Arbitrator and simultaneously
publish ‘a ruling (“Award”) indicating whether Landlord’s Option Rent
Calculation or Tenant’s Option Rent Calculation is closest to the Market Rent as
determined such Neutral Arbitrator. Following notification of the Award, the
Landlord’s Option Rent Calculation or Tenant’s Option Rent Calculation,
whichever is selected by the Neutral Arbitrator as being closest to Market Rent,
shall become the then applicable Option Rent.

2.2.4.3 The Award issued by such Neutral Arbitrator shall be binding upon
Landlord and Tenant.

2.2.4.4 If Landlord and Tenant fail to appoint the Neutral Arbitrator within
fifteen (15) days after the applicable Outside Agreement Date, either party may
petition the presiding judge of the Superior Court of San Diego County to
appoint such Neutral Arbitrator subject to the criteria in Section 2.2.4.1 of
this Lease, or if he or she refuses to act, either party may petition any judge
having jurisdiction over the parties to appoint such Neutral Arbitrator.

2.2.4.5 The cost of arbitration shall be paid by Landlord and Tenant equally.

2.3 Termination Option. Provided Tenant fully and completely satisfies each of
the conditions set forth in this Section 2.3, Tenant shall have the ongoing
option (the “Termination Option”) to terminate this Lease effective as of any
day (the “Termination Date”) after the commencement of the forty-eighth
(48th) full calendar month of the initial Lease Term. In order to exercise the
Termination Option, Tenant must fully and completely satisfy each and every one
of the following conditions: (a) Tenant must give Landlord written notice
(“Termination Notice”) of its exercise of the Termination Option, which
Termination Notice must be delivered to Landlord no less than six (6) months
prior to the Termination Date, (b) at the time Tenant delivers the Termination
Notice to Landlord, Tenant shall not be in default under this Lease (after
expiration of any applicable notice and cure periods), and (c) concurrently with
Tenant’s delivery of the Termination Notice to Landlord, Tenant shall pay to
Landlord the “Termination Fee” equal to the sum of the then-remaining
unamortized balance, as of the Termination Date, of the (i) Landlord
Contribution Amount granted by Landlord to Tenant pursuant to the terms of the
Work Letter, (ii) brokerage commissions paid by Landlord in connection with this
Lease, (iii) Base Rent abated pursuant to Section 3.2, below, and (iv) Base Rent
abated pursuant to the phase-in provisions of Section 3.3, below. Amortization
pursuant to subsection(c), above, shall be calculated on a seventy-one
(71) month amortization schedule during the months of the Lease Term when Base
Rent is scheduled to be paid based upon equal monthly payments of principal and
interest, with interest imputed on the outstanding principal balance at the rate
of seven percent (7%) per annum. Subject to Landlord’s timely receipt of the
Termination Notice and Termination Fee, upon the Termination Date, this Lease
shall automatically terminate and be of no further force or effect, and Landlord
and Tenant shall be relieved of their respective

 

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obligations under this Lease as of the Termination Date, except with respect to
those obligations set forth in this Lease which specifically survive the
expiration or earlier termination of this Lease including, without limitation,
the payment by Tenant of all amounts owed by Tenant under this Lease. The
termination right granted to Tenant under this Section 2.3 is personal to the
Original Tenant and may not otherwise be assigned or transferred to any other
person or entity.

ARTICLE 3

BASE RENT

3.1 Base Rent. Tenant shall pay, without prior notice or demand, to Landlord or
Landlord’s agent at the management office of the Project, or, at Landlord’s
option, at such other place as Landlord may from time to time designate in
writing, by a check for currency which, at the time of payment, is legal tender
for private or public debts in the United States of America, base rent (“Base
Rent”) as set forth in Section 4 of the Summary, payable in equal monthly
installments as set forth in Section 4 of the Summary in advance on or before
the first day of each and every calendar month during the Lease Term, without
any setoff or deduction whatsoever. The Base Rent for the first full month of
the Lease Term which occurs after the expiration of any free rent period shall
be paid at the time of Tenant’s execution of this Lease. If any Rent payment
date (including the Lease Commencement Date) falls on a day of the month other
than the first day of such month or if any payment of Rent is for a period which
is shorter than one month, the Rent for any such fractional month shall accrue
on a daily basis during such fractional month and shall total an amount equal to
the product of (i) a fraction, the numerator of which is the number of days in
such fractional month and the denominator of which is the actual number of days
occurring in such calendar month, and (ii) the then-applicable monthly
installment of Base Rent. All other payments or adjustments required to be made
under the TCCs of this Lease that require proration on a time basis shall be
prorated on the same basis.

3.2 Abatement of Base Rent. Notwithstanding anything to the contrary contained
herein and provided that Tenant faithfully performs all of the terms and
conditions of this Lease, Landlord hereby agrees to abate Tenant’s obligation to
pay monthly Base Rent for the months of January 2013, February 2013 as well as
for the twenty-fifth (25th) full calendar month of the initial Lease Term (the
(“Abatement Period”). During such Abatement Period, Tenant shall still be
responsible for the payment of all of its other monetary obligations under the
Lease, including, without limitation, its obligation to pay for the Premises’
separately metered electricity. In the event of a default by Tenant under the
terms of this Lease that results in early termination pursuant to the provisions
of Article 19 of this Lease, then in determining the amount of damages
recoverable by Landlord pursuant to Section 19.2 of this Lease, the parties
hereby acknowledge and agree that the monthly Base Rent that was abated under
the provisions of this Section 3.2 may specifically be considered.

3.3 Base Rent Phase-In.

3.3.1 17,000 RSF Base Rent Phase-In. Notwithstanding anything to the contrary
contained herein and provided that Tenant faithfully performs all of the terms
and conditions of this Lease, Landlord hereby agrees to abate Tenant’s
obligations to pay monthly Base Rent attributable to a portion of the Premises
comprising 17,000 rentable square feet of

 

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space (the “17,000 RSF”) for the twelve (12) month period commencing on the
first (1st) day of the first (1st) full calendar month of the initial Lease Term
and ending on the last day of the twelfth (12th) full calendar month of the
initial Lease Term (the “17,000 RSF Base Rent Phase-In Period”); provided,
however, in no event shall the 17,000 RSF Base Rent Phase-In Period include the
months of January 2013, February 2013 and the twenty-fifth (25th) full calendar
month of the Lease Term (as the abatement pertaining to such aforementioned
months is addressed in Section 3.2 above). During such 17,000 RSF Base Rent
Phase-In Period, Tenant shall still be responsible for the payment of all of its
other monetary obligations under this Lease, including, without limitation, its
obligation to pay for the entire Premises’ separately metered electricity. In
the event of a default by Tenant under the terms of this Lease that results in
early termination pursuant to the provisions of Article 19 of this Lease, then
in determining the amount of damages recoverable by Landlord pursuant to
Section 19.2 of this Lease, the parties hereby acknowledge and agree that the
Base Rent that was abated under the provisions of this Section 3.3.1 may
specifically be considered.

3.3.2 8,000 Base Rent Phase-In. Notwithstanding anything to the contrary
contained herein and provided that Tenant faithfully performs all of the terms
and conditions of this Lease, Landlord hereby agrees to abate Tenant’s
obligations to pay monthly Base Rent attributable to a portion of the Premises
comprising 8,000 rentable square feet of space (the “8,000 RSF”) for the twelve
(12) month period commencing on the first (1st) day of the thirteenth
(13th) full calendar month of the initial Lease Term and ending on the last day
of the twenty-fourth (24th) full calendar month of the initial Lease Term (the
“8,000 RSF Base Rent Phase-In Period”) provided, however, in no event shall the
8,000 RSF Base Rent Phase-In Period include the months of January 2013, February
2013 and the twenty-fifth (25th) full calendar month of the Lease Term (as the
abatement pertaining to such aforementioned months is addressed in Section 3.2
above). During such 8,000 RSF Base Rent Phase-In Period, Tenant shall still be
responsible for the payment of all of its other monetary obligations under this
Lease, including, without limitation, its obligation to pay for the entire
Premises’ separately metered electricity. In the event of a default by Tenant
under the terms of this Lease that results in early termination pursuant to the
provisions of Article 19 of this Lease, then in determining the amount of
damages recoverable by Landlord pursuant to Section 19.2 of this Lease, the
parties hereby acknowledge and agree that the Base Rent that was abated under
the provisions of this Section 3.3.2 may specifically be considered.

ARTICLE 4

ADDITIONAL RENT

4.1 General Terms. In addition to paying the Base Rent specified in Article 3 of
this Lease, Tenant shall pay “Tenant’s Share” of the annual “Direct Expenses,”
as those terms are defined in Sections 4.2.6 and 4.2.2, respectively, of this
Lease, which are in excess of the amount of Direct Expenses applicable to the
“Base Year,” as that term is defined in Section 4.2.1, below; provided, however,
that in no event shall any decrease in Direct Expenses for any Expense Year
below Direct Expenses for the Base Year entitle Tenant to any decrease in Base
Rent or any credit against sums due under this Lease. Such payments by Tenant,
together with any and all other amounts payable by Tenant to Landlord pursuant
to the TCCs of this Lease, are hereinafter collectively referred to as the
“Additional Rent,” and the Base Rent and the Additional Rent are

 

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herein collectively referred to as “Rent.” All amounts due under this Article 4
as Additional Rent shall be payable for the same periods and in the same manner
as the Base Rent; provided, however, the parties hereby acknowledge that the
first monthly installment of Tenant’s Share of any “Estimated Excess” (as that
term is set forth in, and pursuant to the terms and conditions of,
Section 4.4.2, below), shall first be due and payable for the calendar month
occurring immediately following the expiration of the first (1st) Lease Year
Without limitation on other obligations of Tenant which survive the expiration
of the Lease Term, the obligations of Tenant to pay the Additional Rent provided
for in this Article 4 shall survive the expiration of the Lease Term.

4.2 Definitions of Key Terms Relating to Additional Rent. As used in this
Article 4, the following terms shall have the meanings hereinafter set forth:

4.2.1 “Base Year” shall mean the period set forth in Section 5 of the Summary.

4.2.2 “Direct Expenses” shall mean “Operating Expenses,” “Tax Expenses,” and
“Utilities Costs.”

4.2.3 “Expense Year” shall mean each calendar year in which any portion of the
Lease Term falls, through and including the calendar year in which the Lease
Term expires, provided that Landlord, upon notice to Tenant, may change the
Expense Year from time to time to any other twelve (12) consecutive month
period, and, in the event of any such change, Tenant’s Share of Direct Expenses
shall be equitably adjusted for any Expense Year involved in any such change.

4.2.4 “Operating Expenses” shall mean all expenses, costs and amounts of every
kind and nature which Landlord pays or accrues during any Expense Year because
of or in connection with the ownership, management, maintenance, security,
repair, replacement, restoration or operation of the Project, or any portion
thereof, in accordance with sound real estate management and accounting
principles, consistently applied. Without limiting the generality of the
foregoing, Operating Expenses shall specifically include any and all of the
following: (i) the cost of operating, repairing, maintaining, and renovating the
utility, telephone, mechanical, sanitary, storm drainage, and elevator systems,
and the cost of maintenance and service contracts in connection therewith;
(ii) the cost of licenses, certificates, permits and inspections and the cost of
contesting any governmental enactments which may affect Operating Expenses, and
the costs incurred in connection with a governmentally mandated transportation
system management program or similar program; (iii) the cost of all premiums and
commercially reasonable deductible amounts applicable under the policies of
insurance carried by Landlord in connection with the Project; (iv) the cost of
landscaping, relamping, and all supplies, tools, equipment and materials used in
the operation, repair and maintenance of the Project, or any portion thereof;
(v) costs incurred in connection with the parking areas servicing the Project;
(vi) fees and other costs, including management fees (which management fees
shall be materially consistent with those being charged by the majority of
landlords of Comparable Buildings (as defined in Exhibit I), provided, however,
in, no event shall such management fee exceed four percent (4%) of the Project’s
gross revenues), consulting fees, legal fees and accounting fees, of all
contractors and consultants in connection with the management, operation,
maintenance and repair of the Project; (vii) payments under any equipment rental
agreements and the fair rental

 

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value of any management office space; (viii) wages, salaries and other
compensation and benefits, including taxes levied thereon, of all persons (other
than persons generally considered to be higher in rank than the position of
“Property Manager”) engaged in the operation, maintenance and security of the
Project; (ix) costs under any instrument pertaining to the sharing of costs by
the Project; (x) operation, repair, maintenance and replacement of all systems
and equipment and components thereof of the Building; (xi) the cost of
janitorial, alarm, security and other services, replacement of wall and floor
coverings, ceiling tiles and fixtures in common areas, maintenance and
replacement of curbs and walkways, repair to roofs and re-roofing;
(xii) amortization of the cost of acquiring or the rental expense of personal
property used in the maintenance, operation and repair of the Project, or any
portion thereof (which amortization calculation shall include interest at the
“Interest Rate,” as that term is set forth in Article 25 of this Lease);
(xiii) the cost of capital improvements (including any capital repairs or
replacements set forth above) or other capital costs incurred in connection with
the Project, (A) which are intended to effect economies in the operation or
maintenance of the Project, or any portion thereof, or (B) that are required
under any governmental law or regulation by a federal, state or local
governmental agency, except for capital repairs, replacements or other
improvements to remedy a condition existing prior to the Lease Commencement Date
which an applicable governmental authority, if it had knowledge of such
condition prior to the Lease Commencement Date, would have then required to be
remedied pursuant to then-current governmental laws or regulations in their form
existing as of the Lease Commencement Date and pursuant to the then-current
interpretation of such governmental laws or regulations by the applicable
governmental authority as of the Lease Commencement Date; provided, however,
that any capital expenditure shall be amortized with interest at a rate equal to
the annual “Bank Prime Loan” (as that term is set forth in Article 25, below)
plus one percent (1%) over the shorter of (X) seven (7) years, or (Y) its useful
life as Landlord shall reasonably determine in accordance with sound real estate
management and accounting principles; (xiv) costs, fees, charges or assessments
imposed by, or resulting from any mandate imposed on Landlord by any federal,
state or local government for fire and police protection, trash removal,
community services, or other services which do not constitute “Tax Expenses” as
that term is defined in Section 4.2.5, below; and (xv) payments under any
easement, license, operating agreement, declaration, restrictive covenant, or
instrument pertaining to the sharing of costs by the Building. Notwithstanding
the foregoing, for purposes of this Lease, Operating Expenses shall not,
however, include:

(a) costs, including marketing costs, legal fees, space planners’ fees,
advertising and promotional expenses, and brokerage fees incurred in connection
with the original construction or development, or original or future leasing of
the Project, and costs, including permit, license and inspection costs, incurred
with respect to the installation of improvements made for new tenants initially
occupying space in the Project after the Lease Commencement Date or incurred in
renovating or otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants of the Project (excluding, however, such
costs relating to any common areas of the Project or parking facilities);

(b) except as set forth in items (xii), (xiii), and (xiv) above, depreciation,
interest and principal payments on mortgages and other debt costs, if any,
penalties and interest;

 

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(c) costs for which the Landlord is entitled to reimbursement by any tenant or
occupant of the Project or by insurance by its carrier or any tenant’s carrier
or by anyone else, and electric power costs for which any tenant directly
contracts with the local public service company;

(d) any bad debt loss, rent loss, or reserves for bad debts or rent loss;

(e) costs associated with the operation of the business of the partnership or
entity which constitutes the Landlord, as the same are distinguished from the
costs of operation of the Project (which shall specifically include, but not be
limited to, accounting costs associated with the operation of the Project).
Costs associated with the operation of the business of the partnership or entity
which constitutes the Landlord include costs of partnership accounting and legal
matters, costs of defending any lawsuits with any mortgagee (except as the
actions of the Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of the Landlord’s interest in the
Project, and costs incurred in connection with any disputes between Landlord and
its employees, between Landlord and Project management, or between Landlord and
other tenants or occupants, and Landlord’s general corporate overhead and
general and administrative expenses;

(f) the wages and benefits of any employee who does not devote substantially all
of his or her employed time to the Project unless such wages and benefits are
prorated to reflect time spent on operating and managing the Project vis-a-vis
time spent on matters unrelated to operating and managing the Project; provided,
that in no event shall Operating Expenses for purposes of this Lease include
wages and/or benefits attributable to personnel above the level of Project
manager;

(g) amount paid as ground rental for the Project by the Landlord;

(h) overhead and profit increment paid to the Landlord or to subsidiaries or
affiliates of the Landlord for services in the Project to the extent the same
exceeds the costs of such services rendered by qualified, first-class
unaffiliated third parties on a competitive basis;

(i) any compensation paid to clerks, attendants or other persons in commercial
concessions operated by the Landlord, provided that any compensation paid to any
concierge at the Project shall be includable as an Operating Expense;

(j) rentals and other related expenses incurred in leasing air conditioning
systems, elevators or other equipment which if purchased the cost of which would
be excluded from Operating Expenses as a capital cost, except equipment not
affixed to the Project which is used in providing janitorial or similar services
and, further excepting from this exclusion such equipment rented or leased to
remedy or ameliorate an emergency condition in the Project ;

(k) all items and services for which Tenant or any other tenant in the Project
reimburses Landlord or which Landlord provides selectively to one or more
tenants (other than Tenant) without reimbursement;

 

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(l) costs, other than those incurred in ordinary maintenance and repair, for
sculpture, paintings, fountains or other objects of art;

(m) any costs expressly excluded from Operating Expenses elsewhere in this
Lease;

(n) rent for any office space occupied by Project management personnel to the
extent the size or rental rate of such office space exceeds the size or fair
market rental value of office space occupied by management personnel of the
Comparable Buildings in the vicinity of the Building, with adjustment where
appropriate for the size of the applicable project;

(o) costs to the extent arising from the gross negligence or willful misconduct
of Landlord or its agents, employees, vendors, contractors, or providers of
materials or services;

(p) costs incurred to comply with laws relating to the removal of hazardous
material (as defined under applicable law) which was in existence in the
Building or on the Project prior to the Lease Commencement Date, and was of such
a nature that a federal, State or municipal governmental authority, if it had
then had knowledge of the presence of such hazardous material, in the state, and
under the conditions that it then existed in the Building or on the Project,
would have then required the removal of such hazardous material or other
remedial or containment action with respect thereto; and costs incurred to
remove, remedy, contain, or treat hazardous material, which hazardous material
is brought into the Building or onto the Project after the date hereof by
Landlord or any other tenant of the Project and is of such a nature, at that
time, that a federal, State or municipal governmental authority, if it had then
had knowledge of the presence of such hazardous material, in the state, and
under the conditions, that it then exists in the Building or on the Project,
would have then required the removal of such hazardous material or other
remedial or containment action with respect thereto;

(q) capital repairs not specifically included in subsection (xiii), above,
including but not limited to the build-out of the Building occurring
concurrently with the execution of this Lease (which build-out includes the
lobbies, restrooms, and common area improvements associated therewith) and any
improvements provided to any other tenant of the Building; and

(r) deductible amounts applicable under the policies of earthquake insurance
carried by Landlord in connection with the Project.

If Landlord is not furnishing any particular work or service (the cost of which,
if performed by Landlord, would be included in Operating Expenses) to a tenant
who has undertaken to perform such work or service in lieu of the performance
thereof by Landlord, then in order to effectuate an equitable gross up of such
expense items, Operating Expenses shall be deemed to be increased by an amount
equal to the additional Operating Expenses which would reasonably have been
incurred during such period by Landlord if it had at its own expense furnished
such work or service to such tenant. If the Building and/or Project is not at
least ninety-five percent (95%) occupied during all or a portion of the Base
Year or any Expense

 

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Year, Landlord shall make an appropriate adjustment to the components of
Operating Expenses for such year to determine the amount of Operating Expenses
that would have been incurred had the Building and/or Project been ninety-five
percent (95%) occupied; and the amount so determined shall be deemed to have
been the amount of Operating Expenses for such year Operating Expenses for the
Base Year shall not include market-wide cost increases (including utility rate
increases) due to extraordinary circumstances, including, but not limited to,
Force Majeure, boycotts, strikes, conservation surcharges, embargoes or
shortages, or amortized costs relating to capital improvements; provided however
is no event shall any particular capital improvements incurred in or prior to
the Base Year have amortized costs relating thereto included in any subsequent
expense year. Landlord shall not (i) make a profit by charging items to
Operating Expenses that are otherwise also charged separately to others and
(ii) subject to Landlord’s right to adjust the components of Operating Expenses
described above in this paragraph, collect Operating Expenses from Tenant and
all other tenants in the Building in an amount in excess of what Landlord incurs
for the items included in Operating Expenses.

4.2.5 Taxes.

4.2.5.1 “Tax Expenses” shall mean all federal, state, county, or local
governmental or municipal taxes, fees, charges or other impositions of every
kind and nature, whether general, special, ordinary or extraordinary,
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of rent,
unless required to be paid by Tenant, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Project, or
any portion thereof), which shall be paid or accrued during any Expense Year
(without regard to any different fiscal year used by such governmental or
municipal authority) because of or in connection with the ownership, leasing and
operation of the Project, or any portion thereof.

4.2.5.2 Tax Expenses shall include, without limitation: (i) any tax on the rent,
right to rent or other income from the Project, or any portion thereof, or as
against the business of leasing the Project, or any portion thereof; (ii) any
assessment, tax, fee, levy or charge in addition to, or in substitution,
partially or totally, of any assessment, tax, fee, levy or charge previously
included within the definition of real property tax, it being acknowledged by
Tenant and Landlord that certain assessments, taxes, fees, levies and charges
may be imposed by governmental agencies for such services as fire, protection,
street, sidewalk and road maintenance, refuse removal and for other governmental
services formerly provided without charge to property owners or occupants;
(iii) any assessment, tax, fee, levy, or charge allocable to or measured by the
area of the Premises or the Rent payable hereunder, including, without
limitation, any business or gross income tax or excise tax with respect to the
receipt of such rent, or upon or with respect to the possession, leasing,
operating, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof; and (iv) any assessment, tax,
fee, levy or charge, upon this transaction or any document to which Tenant is a
party, creating or transferring an interest or an estate in the Premises.

4.2.5.3 Any costs and expenses (including, without limitation, reasonable
attorneys’ fees) incurred in attempting to protest, reduce or minimize Tax
Expenses shall be

 

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included in Tax Expenses in the Expense Year such expenses are paid, provided
that such costs and expenses shall not exceed the savings reasonably anticipated
to result. Except as set forth in Section 4.2.5.4, below, refunds of Tax
Expenses shall be credited against Tax Expenses and refunded to Tenant
regardless of when received, based on the Expense Year to which the refund is
applicable, provided that in no event shall the amount to be refunded to Tenant
for any such Expense Year exceed the total amount paid by Tenant as Additional
Rent under this Article 4 for such Expense Year. If Tax Expenses for any period
during the Lease Term or any extension thereof are increased after payment
thereof for any reason, including, without limitation, error or reassessment by
applicable governmental or municipal authorities, Tenant shall pay Landlord upon
demand Tenant’s Share of any such increased Tax Expenses included by Landlord as
Building Tax Expenses pursuant to the TCCs of this Lease. Notwithstanding
anything to the contrary contained in this Section 4.2.5 (except as set forth in
Section 4.2.5.1, above), there shall be excluded from Tax Expenses (i) all
excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal and state income taxes,
and other taxes to the extent applicable to Landlord’s general or net income (as
opposed to rents, receipts or income attributable to operations at the Project),
(ii) any items included as Operating Expenses, and (iii) any items paid by
Tenant under Section 4.5 of this Lease.

4.2.6 “Tenant’s Share” shall mean the percentage set forth in Section 6 of the
Summary.

4.2.7 “Utilities Costs” shall mean all actual charges for the Building and the
Project which Landlord shall pay during any Expense Year, including but not
limited to, the costs of water, sewer and electricity, and the costs of HVAC
(including, unless paid by Tenant pursuant to Section 6.2.3, below, the cost of
electricity to operate the HVAC air handlers) and other utilities (but excluding
(i) the cost of electricity consumed in the Premises and the premises of other
tenant of the Building and any other buildings in the Project (since Tenant is
separately paying for the cost of electricity pursuant to Section 6.1.2, below)
and (ii) those charges for which tenants directly reimburse Landlord or
otherwise pay directly to the utility company) as well as related fees,
assessments and surcharges. Utilities Costs shall be calculated assuming the
Buildings (and during the period of time when any other office buildings are
fully constructed and ready for occupancy and are included by Landlord within
the Project), are at least ninety-five percent (95%) occupied. If, during all or
any part of any Expense Year, Landlord shall not provide any utilities other
than gas and electricity (the cost of which, if provided by Landlord, would be
included in the Utilities Costs) to a tenant (including Tenant) who has
undertaken to provide the same instead of Landlord, then in order to effectuate
an equitable gross up of such expense items, Utilities Costs shall be deemed to
be increased by an amount equal to the additional Utilities Costs which would
reasonably have been incurred during such period by Landlord if Landlord had at
its own expense provided such utilities to such tenant. Utilities Costs shall
include any costs of utilities which are allocated to the real property under
any declaration, restrictive covenant, or other instrument pertaining to the
sharing of costs by the real property or any portion thereof, including any
covenants, conditions or restrictions now or hereafter recorded against or
affecting the real property. For purposes of determining Utilities Costs
incurred for the Base Year, the Utilities Costs for the Base Year shall not
include any one-time special charges, costs or fees or extraordinary charges or
costs incurred in the Base Year only, including those attributable to boycotts,
embargoes, strikes or other shortages of services or fuel. In addition, if in
any Expense Year subsequent to the Base Year, the amount of Utilities

 

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Costs decreases due to a reduction in the cost of providing utilities to the
real property for any reason, including, without limitation, because of
deregulation of the utility industry and/or reduction in rates achieved in
contracts with utilities providers, then for purposes of the Expense year in
which such decrease in Utilities Costs occurred and all subsequent Expense
Years, the Utilities Costs for the Base Year shall be decreased by an amount
equal to such decrease.

4.3 Method of Allocation.

4.3.1 In General. The parties acknowledge that the Building is a part of a
multi-building project and that the costs and expenses incurred in connection
with the Project (i.e. the Direct Expenses) should be shared between the tenants
of the Building and the tenants of the other buildings in the Project.
Accordingly, as set forth in Section 4.2 above, Direct Expenses (which consists
of Operating Expenses, Tax Expenses, and Utilities Costs) are determined
annually for the Project as a whole, and a portion of the Direct Expenses, which
portion shall be determined by Landlord on an equitable basis, shall be
allocated to the tenants of the Building (as opposed to the tenants of any other
buildings in the Project) and such portion shall be the Direct Expenses for
purposes of this Lease. Such portion of Direct Expenses allocated to the tenants
of the Building shall include all Direct Expenses attributable solely to the
Building and an equitable portion of the Direct Expenses attributable to the
Project as a whole.

4.3.2 Cost Pools. Landlord shall have the right, from time to time, to equitably
allocate some or all of the Direct Expenses for the Project among different
portions or occupants of the Project (the “Cost Pools”), in Landlord’s
discretion. Such Cost Pools may include, but shall not be limited to, the office
space tenants of a building of the Project or of the Project, and the retail
space tenants of a building of the Project or of the Project. The Direct
Expenses within each such Cost Pool shall be allocated and charged to the
tenants within such Cost Pool in an equitable manner.

4.4 Calculation and Payment of Additional Rent. If for any Expense Year ending
or commencing within the Lease Term, Tenant’s Share of Direct Expenses for such
Expense Year exceeds Tenant’s Share of Direct Expenses applicable to the Base
Year, then Tenant shall pay to Landlord, in the manner set forth in
Section 4.4.1, below, and as Additional Rent, an amount equal to the excess (the
“Excess”).

4.4.1 Statement of Actual Building Direct Expenses and Payment by, Tenant.
Landlord shall give to Tenant following the end of each Expense Year, a
statement (the “Statement”) which shall state in general major categories the
Building Direct Expenses incurred or accrued for the Base Year or such preceding
Expense Year, as applicable, and which shall indicate the amount of the Excess,
if any Landlord shall use commercially reasonable efforts to deliver such
Statement to Tenant on or before May 1 following the end of the Expense Year to
which such Statement relates. Upon receipt of the Statement for each Expense
Year commencing or ending during the Lease Term, if an Excess is present, Tenant
shall pay, within thirty (30) days after receipt of the Statement, the full
amount of the Excess for such Expense Year, less the amounts, if any, paid
during such Expense Year as “Estimated Excess” (as that is defined in
Section 4.4.2, below), and if Tenant paid more as Estimated Excess than the
actual Excess, Tenant shall receive a credit in the amount of Tenant’s
overpayment against Rent next due under this Lease. The failure of Landlord to
timely furnish the Statement for any

 

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Expense Year shall not prejudice Landlord or Tenant from enforcing its rights
under this Article 4. Even though the Lease Term has expired and Tenant has
vacated the Premises, when the final determination is made of Tenant’s Share of
Building Direct Expenses for the Expense Year in which this Lease terminates, if
an Excess is present, Tenant shall, within thirty (30) days after receipt of the
Statement, pay to Landlord such amount, and if Tenant paid more as Estimated
Excess than the actual Excess, Landlord shall, within thirty (30) days, deliver
a check payable to Tenant in the amount of the overpayment. The provisions of
this Section 4.4.1 shall survive the expiration or earlier termination of the
Lease Term. Notwithstanding the immediately preceding sentence, Tenant shall not
be responsible for Tenant’s Share of any Building Direct Expenses attributable
to any Expense Year which are first billed to Tenant more than two (2) calendar
years after the end of the Expense Year in which the expenses are incurred,
provided that in any event Tenant shall be responsible for Tenant’s Share of
Direct Expenses levied by any governmental authority or by any public utility
companies at any time following the Lease Expiration Date which are attributable
to any Expense Year.

4.4.2 Statement of Estimated Building Direct Expenses. In addition, Landlord
shall give Tenant a yearly expense estimate statement (the “Estimate Statement”)
which shall set forth in general major categories Landlord’s reasonable estimate
(the “Estimate”) of what the total amount of Building Direct Expenses for the
then-current Expense Year shall be and the estimated excess (the “Estimated
Excess”) as calculated by comparing the Building Direct Expenses for such
Expense Year, which shall be based upon the Estimate, to the amount of Building
Direct Expenses for the Base Year. Landlord shall use commercially reasonable
efforts to deliver such Estimate Statement to Tenant on or before May 1
following the end of the Expense Year to which such Estimate Statement relates.
The failure of Landlord to timely furnish the Estimate Statement for any Expense
Year shall not preclude Landlord from enforcing its rights to collect any
Additional Rent under this Article 4, nor shall Landlord be prohibited from
revising any Estimate Statement or Estimated Excess theretofore delivered to the
extent necessary. Thereafter, Tenant shall pay, within thirty (30) days after
receipt of the Estimate Statement, a fraction of the Estimated Excess for the
then-current Expense Year (reduced by any amounts paid pursuant to the second to
last sentence of this Section 4.4.2). Such fraction shall have as its numerator
the number of months which have elapsed in such current Expense Year, including
the month of such payment, and twelve (12) as its denominator. Until a new
Estimate Statement is furnished (which Landlord shall have the right to deliver
to Tenant at any time), Tenant shall pay monthly, with the monthly Base Rent
installments, an amount equal to one-twelfth (1/12) of the total Estimated
Excess set forth in the previous Estimate Statement delivered by Landlord to
Tenant. Throughout the Lease Term Landlord shall maintain books and records with
respect to Building Direct Expenses in accordance with generally accepted real
estate accounting and management practices, consistently applied.

4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible.

4.5.1 Tenant shall be liable for and shall pay ten (10) days before delinquency,
taxes levied against Tenant’s equipment, furniture, fixtures and any other
personal property located in or about the Premises. If any such taxes on
Tenant’s equipment, furniture, fixtures and any other personal property are
levied against Landlord or Landlord’s property or if the assessed value of
Landlord’s property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based

 

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upon such increased assessment, which Landlord shall have the right to do
regardless of the validity thereof but only under proper protest if requested by
Tenant, Tenant shall upon demand repay to Landlord the taxes so levied against
Landlord or the proportion of such taxes resulting from such increase in the
assessment, as the case may be.

4.5.2 If the improvements in the Premises, whether installed and/or paid for by
Landlord or Tenant and whether or not affixed to the real property so as to
become a part thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which improvements conforming to
Landlord’s “building standard” in other space in the Building are assessed, then
the Tax Expenses levied against Landlord or the property by reason of such
excess assessed valuation shall be deemed to be taxes levied against personal
property of Tenant and shall be governed by the provisions of Section 4.5.1,
above.

4.5.3 Notwithstanding any contrary provision herein, Tenant shall pay prior to
delinquency any (i) rent tax or sales tax, service tax, transfer tax or value
added tax, or any other applicable tax on the rent or services herein or
otherwise respecting this Lease, (ii) taxes assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion of the Project, including
the Project parking facility; or (iii) taxes assessed upon this transaction or
any document to which Tenant is a party creating or transferring an interest or
an estate in the Premises.

4.6 Landlord’s Books and Records. Upon Tenant’s written request given not more
than ninety (90) days after Tenant’s receipt of a Statement for a particular
Expense Year, and provided that Tenant is not then in default under this Lease
beyond the applicable cure period provided in this Lease, Landlord shall furnish
Tenant with such reasonable supporting documentation in connection with said
Building Direct Expenses as Tenant may reasonably request. Landlord shall
provide said information to Tenant within thirty (30) days after Tenant’s
written request therefor. Within one hundred eighty (180) days after receipt of
a Statement by Tenant (the “Review Period”), if Tenant disputes the amount of
Additional Rent set forth in the Statement, an independent certified public
accountant (which accountant (A) is a member of a nationally or regionally
recognized accounting firm, and (B) is not working on a contingency fee basis),
designated and paid for by Tenant, may, after reasonable notice to Landlord and
at reasonable times, inspect Landlord’s records with respect to the Statement at
Landlord’s offices, provided that Tenant is not then in default under this Lease
(beyond any applicable notice and cure periods) and Tenant has paid all amounts
required to be paid under the applicable Estimate Statement and Statement, as
the case may be; provided, however, that Tenant’s payment shall not be construed
as an acknowledgement of the validity of the charge(s). In connection with such,
inspection, Tenant and Tenant’s agents must agree in advance to follow
Landlord’s reasonable rules and procedures regarding inspections of Landlord’s
records, and shall execute a commercially reasonable confidentiality agreement
regarding such inspection. Tenant’s failure to dispute the amount of Additional
Rent set forth in any Statement within the Review Period shall be deemed to be
Tenant’s constructive approval of such Statement and Tenant, thereafter, waives
the right or ability to dispute the amounts set forth in such Statement. If
after such inspection, Tenant still disputes such Additional Rent, a
determination as to the proper amount shall be made, at Tenant’s expense, by an
independent certified public accountant (the “Accountant”) selected by Landlord
and subject to Tenant’s reasonable approval; provided that if such determination
by the Accountant proves that Direct Expenses were overstated by more

 

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than five percent (5%), then the cost of the Accountant and the cost of such
determination shall be paid for by Landlord. Tenant hereby acknowledges that
Tenant’s sole right to inspect Landlord’s books and records and to contest the
amount of Direct Expenses payable by Tenant shall be as set forth in this
Section 4.6, and Tenant hereby waives any and all other rights pursuant to
applicable law to inspect such books and records and/or to contest the amount of
Direct Expenses payable by Tenant.

ARTICLE 5

USE OF PREMISES

5.1 Permitted Use. Tenant shall use the Premises solely for the Permitted Use
set forth in Section 7 of the Summary and Tenant shall not use or permit the
Premises, the Building, or the Project to be used for any other purpose or
purposes whatsoever without the prior written consent of Landlord, which may be
withheld in Landlord’s sole discretion.

5.2 Prohibited Uses. The uses prohibited under this Lease shall include, without
limitation, use of the Premises or a portion thereof for (i) offices of any
agency or bureau of the United States or any state or political subdivision
thereof; (ii) offices or agencies of any foreign governmental or political
subdivision thereof; (iii) offices of any health care professionals or service
organization; (iv) schools or other training facilities which are not ancillary
to corporate, executive or professional office use; (v) retail or restaurant
uses; or (vi) communications firms such as radio and/or television stations.
Tenant shall not allow occupancy density of use of the Premises which is greater
than five (5) persons per one thousand (1,000) rentable square feet of the
Premises; provided, however, under no circumstances shall Tenant use, or be
entitled to, more parking than the ratio set forth in Section 10 of the Summary.
Tenant further covenants and agrees that Tenant shall not use, or suffer or
permit any person or persons to use, the Premises or any part thereof for any
use or purpose contrary to the provisions of the Rules and Regulations set forth
in Exhibit D, attached hereto, or in violation of the laws of the United States
of America, the State of California, or the ordinances, regulations or
requirements of the local municipal or county governing body or other lawful
authorities having jurisdiction over the Project) including, without limitation,
any such laws, ordinances, regulations or requirements relating to hazardous
materials or substances, as those terms are defined by applicable laws now or
hereafter in effect; provided, however, Landlord shall not enforce, change or
modify the Rules and Regulations in a discriminatory manner and Landlord agrees
that the Rules and Regulations shall not be unreasonably modified or enforced in
a manner which will unreasonably interfere with the normal and customary conduct
of Tenant’s business. Tenant shall not do or permit anything to be done in or
about the Premises which will in any way damage the reputation of the Project or
obstruct or interfere with the rights of other tenants or occupants of the
Building, or injure or annoy them or use or allow the Premises to be used for
any improper, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises. Tenant shall
comply with all recorded covenants, conditions, and restrictions now or
hereafter affecting the Project.

 

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ARTICLE 6

SERVICES AND UTILITIES

6.1 Standard Tenant Services. Landlord shall provide the following services on
all days (unless otherwise stated below) during the Lease Term.

6.1.1 Subject to reasonable change implemented by Landlord and any limitations
imposed by all governmental rules, regulations and guidelines applicable
thereto, Landlord shall provide heating and air conditioning (“HVAC”) when
necessary for normal comfort for normal office use in the Premises from 7:00
A.M. to 6:00 P.M. Monday through Friday, and on Saturdays from 9:00 A.M. to 1:00
P.M. (collectively, the “Building Hours”), except for the date of observation of
New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
Christmas Day and, at Landlord’s discretion, other locally or nationally
recognized holidays (collectively, the “Holidays”). Except when and where
Tenant’s right of access is specifically excluded in this Lease, Tenant shall
have the right of access to the Premises, the Building, and the Project parking
facility twenty-four (24) hours per day, seven (7) days per week during the
“Lease Term,” as that term is defined in Section 2.1, below.

6.1.2 Landlord shall provide adequate electrical wiring and facilities and power
for normal general office use as reasonably determined by Landlord. Commencing
on the Lease Commencement Date, Tenant shall pay directly to the utility company
pursuant to the utility company’s separate meters (or to Landlord in the event
Landlord provides submeters instead of the utility company’s meters), the cost
of all electricity provided to and/or consumed in the Premises (including normal
and excess consumption and including the cost of electricity to operate (i) the
HVAC equipment servicing the server room and sound room, on a twenty-four
(24) hour a day, seven (7) day a week basis, and (ii) the HVAC air handlers
serving the remainder of the Premises, if not charged to and paid by Tenant as
part of Utilities Costs), which electricity shall be separately metered (as
described above or otherwise equitably allocated and directly charged by
Landlord to Tenant and other tenants of the Building). Tenant shall pay such
cost (including the cost of such meters or submeters) within thirty (30) days
after demand and as Additional Rent under this Lease (and not as part of the
Operating Expenses). Landlord shall designate the electricity utility provider
from time to time.

6.1.3 As part of Operating Expenses, Landlord shall replace lamps, starters and
ballasts for Building standard lighting fixtures within the Premises.
Notwithstanding the foregoing, Tenant shall nevertheless bear the cost of
replacement of lamps, starters and ballasts for non-Building standard lighting
fixtures within the Premises.

6.1.4 Landlord shall provide city water from the regular Building outlets for
drinking, lavatory and toilet purposes in the Building Common Areas.

6.1.5 Landlord shall provide janitorial services to the Premises, except the
date of observation of the Holidays, in and about the Premises and window
washing services in a manner consistent with other comparable buildings in the
vicinity of the Building.

 

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6.1.6 Landlord shall provide nonexclusive, non-attended automatic passenger
elevator service during the Building Hours, shall have one elevator available at
all other times, except on the Holidays.

6.1.7 Landlord shall cause one (1) passenger elevator to be “padded” and
otherwise prepared and ready for freight service and shall make the same
reasonably available to Tenant on a nonexclusive basis, subject to scheduling by
Landlord.

Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems.

6.2 Overstandard Tenant Use. Tenant shall not, without Landlord’s prior written
consent, use heat-generating machines, machines other than normal fractional
horsepower office machines, or equipment or lighting other than Building
standard lights in the Premises, which may affect the temperature otherwise
maintained by the air conditioning system or increase the water normally
furnished for the Premises by Landlord pursuant to the terms of Section 6.1 of
this Lease. If such consent is given, Landlord shall have the right to install
supplementary air conditioning units or other facilities in the Premises,
including supplementary or additional metering devices, and the cost thereof,
including the cost of installation, operation and maintenance, increased wear
and tear on existing equipment and other similar charges, shall be paid by
Tenant to Landlord upon billing by Landlord. If Tenant uses water, electricity,
heat or air conditioning in excess of that supplied by Landlord pursuant to
Section 6.1 of this Lease, Tenant shall pay to Landlord, upon billing, the cost
of such excess consumption, the cost of the installation, operation, and
maintenance of equipment which is installed in order to supply such excess
consumption, and the cost of the increased wear and tear on existing equipment
caused by such excess consumption; and Landlord may install devices to
separately meter any increased use and in such event Tenant shall pay the
increased cost directly to Landlord, on demand, at the rates charged by the
public utility company furnishing the same, including the cost of such
additional metering devices. Tenant’s use of electricity shall never exceed the
capacity of the feeders to the Project or the risers or wiring installation, and
subject to the terms of Section 29.32, below, Tenant shall not install or use or
permit the installation or use of any computer or electronic data processing
equipment in the Premises (other than in the server room), without the prior
written consent of Landlord; provided, however, the foregoing restriction on
“computers” shall not apply to desktop micro-computers. Except with regard to
the HVAC equipment servicing the server room and sound room, if Tenant desires
to use heat, ventilation or air conditioning during hours other than those for
which Landlord is obligated to supply such utilities pursuant to the terms of
Section 6.1 of this Lease, Tenant shall give Landlord such prior notice, if any,
as Landlord shall from time to time establish as appropriate, of Tenant’s
desired use in order to supply such after hours usage, and Landlord shall supply
such after hours usage to Tenant at such hourly cost to Tenant (which shall be
treated as Additional Rent) as Landlord shall from time to time establish, which
is, as of the date hereof, anticipated to be Thirty Five and No/100 Dollars
($35.00) per hour per zone.

6.3 Interruption of Use. Except as otherwise provided in Section 6.4 or
elsewhere in this Lease, Tenant agrees that Landlord shall not be liable for
damages, by abatement of Rent or otherwise, for failure to furnish or delay in
furnishing any service (including telephone and

 

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telecommunication services), or for any diminution in the quality or quantity
thereof, when such failure or delay or diminution is occasioned, in whole or in
part, by breakage, repairs, replacements, or improvements, by any strike,
lockout or other labor trouble, by inability to secure electricity, gas, water,
or other fuel at the Building or Project after reasonable effort to do so, by
any riot or other dangerous condition, emergency, accident or casualty
whatsoever, by act or default of Tenant or other parties, or by any other cause
beyond Landlord’s reasonable control; and such failures or delays or diminution
shall never be deemed to constitute an eviction or disturbance of Tenant’s use
and possession of the Premises or relieve Tenant from paying Rent or performing
any of its obligations under this Lease, except as otherwise provided in
Section 6.4 or elsewhere in the Lease. Furthermore, Landlord shall not be liable
under any circumstances for a loss of, or injury to, property or for injury to,
or interference with, Tenant’s business, including, without limitation, loss of
profits, however occurring, through or in connection with or incidental to a
failure to furnish any of the services or utilities as set forth in this Article
6.

6.4 Abatement Event. If (i) Landlord fails to perform the obligations required
of Landlord under the TCCs of this Lease, (ii) such failure causes all or a
portion of the Premises to be untenantable and unusable by Tenant, and
(iii) such failure relates to (A) the nonfunctioning of the heat, ventilation,
and air conditioning system in the Premises, the electricity in the Premises,
the nonfunctioning of the elevator service to the Premises, or (B) a failure to
provide access to the Premises, Tenant shall give Landlord notice (the “Initial
Notice”), specifying such failure to perform by Landlord (the “Abatement
Event”). If Landlord has not cured such Abatement Event within five (5) business
days after the receipt of the Initial Notice (the “Eligibility Period”), Tenant
may deliver an additional notice to Landlord (the “Additional Notice”),
specifying such Abatement Event and Tenant’s intention to abate the payment of
Rent under this Lease. If Landlord does not cure such Abatement Event within
five (5) business days of receipt of the Additional Notice, Tenant may, upon
written notice to Landlord, immediately abate Rent payable under this Lease for
that portion of the Premises rendered untenantable and not used by Tenant, for
the period beginning on the date five (5) business days after the Initial Notice
to the earlier of the date Landlord cures such Abatement Event or the date
Tenant recommences the use of such portion of the Premises. Such right to abate
Rent shall be Tenant’s sole and exclusive remedy at law or in equity for an
Abatement Event. Except as provided in this Section 6.4, nothing contained
herein shall be interpreted to mean that Tenant is excused from paying Rent due
hereunder.

ARTICLE 7

REPAIRS

Tenant shall, at Tenant’s own expense, keep the Premises (including all
improvements, fixtures and furnishings therein, and, to the extent within the
demising wall envelope of the Premises, the floor or floors of the Building on
which the Premises are located), in good order, repair and condition at all
times during the Lease Term, except for damage caused by ordinary wear and tear
or, subject to the TCCs of Article 11, fire or other casualty beyond the
reasonable control of Tenant. In addition, Tenant shall, at Tenant’s own
expense, but under the supervision and subject to the prior approval of
Landlord, and within any reasonable period of time specified by Landlord,
promptly and adequately repair all damage to the Premises and replace or repair
all damaged, broken, or worn fixtures and appurtenances, except for damage
caused by ordinary

 

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wear and tear or, subject to the TCCs of Article 11, fire or other casualty
beyond the reasonable control of Tenant; provided however, that, at Landlord’s
option, or if Tenant fails to make such repairs, Landlord may, after written
notice to Tenant and Tenant’s failure to repair within five (5) days thereafter,
but need not, make such repairs and replacements, and Tenant shall pay Landlord
the cost thereof, including a percentage of the cost thereof (to be uniformly
established for the Building and/or the Project) sufficient to reimburse
Landlord for all overhead, general conditions, fees and other costs or expenses
arising from Landlord’s involvement with such repairs and replacements forthwith
upon being billed for same. Notwithstanding the foregoing, Landlord shall be
responsible for repairs to the exterior walls, foundation and roof of the
Building, the structural portions of the floors of the Building, and the systems
and equipment of the Building; provided, however, that if such repairs are due
to the negligence or willful misconduct of Tenant, Landlord shall make such
repairs at Tenant’s expense, or, if covered by Landlord’s insurance, Tenant
shall only be obligated to pay any deductible in connection therewith. Landlord
may, but shall not be required to, enter the Premises at all reasonable times to
make such repairs, alterations, improvements or additions to the Premises or to
the Project or to any equipment located in the Project as Landlord shall desire
or deem necessary or as Landlord may be required to do by governmental or
quasi-governmental authority or court order or decree; provided, however, except
for (i) emergencies, (ii) repairs, alterations, improvements or additions
required by governmental or quasi-governmental authorities or court order or
decree, or (iii) repairs which are the obligation of Tenant hereunder, any such
entry into the Premises by Landlord shall be performed in a manner so as not to
materially interfere with Tenant’s use of, or access to, the Premises; provided
that, with respect to items (ii) and (iii) above, Landlord shall use
commercially reasonable efforts to not materially interfere with Tenant’s use
of, or access to, the Premises. Tenant hereby waives any and all rights under
and benefits of subsection 1 of Section 1932 and Sections 1941 and 1942 of the
California Civil Code or under any similar law, statute, or ordinance now or
hereafter in effect.

ARTICLE 8

ADDITIONS AND ALTERATIONS

8.1 Landlord’s Consent to Alterations. Tenant may not make any improvements,
alterations, additions or changes to the Premises or any mechanical, plumbing or
HVAC facilities or systems pertaining to the Premises (collectively, the
“Alterations”) without first procuring the prior written consent of Landlord to
such Alterations, which consent shall be requested by Tenant not less than
fifteen (15) business days prior to the commencement thereof, and which consent
shall not be unreasonably withheld by Landlord, provided it shall be deemed
reasonable for Landlord to withhold its consent to any Alteration which
adversely affects the structural portions or the systems or equipment of the
Building or is visible from the exterior of the Building. Notwithstanding the
foregoing, Tenant shall be permitted to make Alterations following ten
(10) business days notice to Landlord, but without Landlord’s prior consent, to
the extent that such Alterations do not (i) adversely affect the systems and
equipment of the Building, exterior appearance of the Building, or structural
aspects of the Building, or (ii) adversely affect the value of the Premises or
Building (the “Cosmetic Alterations”). The construction of the initial
improvements to the Premises shall be governed by the terms of the Work Letter
Agreement and not the terms of this Article 8.

 

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8.2 Manner of Construction. Landlord may impose, as a condition of its consent
to any and all Alterations or repairs of the Premises or about the Premises,
such requirements as Landlord in its reasonable discretion may deem desirable,
including, but not limited to, the requirement that Tenant utilize for such
purposes only contractors reasonably approved by Landlord, and the requirement
that upon Landlord’s timely request (as more particularly set forth in
Section 8.5, below), Tenant shall, at Tenant’s expense, remove such Alterations
upon the expiration or any early termination of the Lease Term and return the
affected portion of the Premises to a building standard tenant improved
condition as determined by Landlord. Tenant shall construct such Alterations and
perform such repairs in a good and workmanlike manner, in conformance with any
and all applicable federal, state, county or municipal laws, rules and
regulations and pursuant to a valid building permit, issued by the City of San
Diego, all in conformance with Landlord’s construction rules and regulations;
provided, however, that prior to commencing to construct any Alteration, Tenant
shall meet with Landlord to discuss Landlord’s design parameters and code
compliance issues. In the event Tenant performs any Alterations in the Premises
which require or give rise to governmentally required changes to the “Base
Building,” as that term is defined below, then Landlord shall, at Tenant’s
expense, make such changes to the Base Building. The “Base Building” shall
include the structural portions of the Building, and the public restrooms,
elevators, exit stairwells and the systems and equipment located in the internal
core of the Building on the floor or floors on which the Premises are located.
In performing the work of any such Alterations, Tenant shall have the work
performed in such manner so as not to obstruct access to the Project or any
portion thereof, by any other tenant of the Project, and so as not to obstruct
the business of Landlord or other tenants in the Project. Tenant shall not use
(and upon notice from Landlord shall cease using) contractors, services,
workmen, labor, materials or equipment that, in Landlord’s reasonable judgment,
would disturb labor harmony with the workforce or trades engaged in performing
other work, labor or services in or about the Building or the Common Areas. In
addition to Tenant’s obligations under Article 9 of this Lease, upon completion
of any Alterations, Tenant agrees to cause a Notice of Completion to be recorded
in the office of the Recorder of the County of San Diego in accordance with
Section 3093 of the Civil Code of the State of California or any successor
statute, and Tenant shall deliver to the Project construction manager a
reproducible copy of the “as built” drawings of the Alterations, to the extent
applicable, as well as all permits, approvals and other documents issued by any
governmental agency in connection with the Alterations.

8.3 Payment for Improvements. If payment is made directly to contractors, Tenant
shall (i) comply with Landlord’s requirements for final lien releases and
waivers in connection with Tenant’s payment for work to contractors, and
(ii) sign Landlord’s standard contractor’s rules and regulations. If Tenant
orders any work directly from Landlord, Tenant shall pay to Landlord an amount
equal to […***…] percent ([…***…]%) of the cost of such work to compensate
Landlord for all overhead, general conditions, fees and other costs and expenses
arising from Landlord’s involvement with such work. If Tenant does not order any
work directly from Landlord, Tenant shall reimburse Landlord for Landlord’s
reasonable, actual, out-of-pocket costs and expenses actually incurred in
connection with Landlord’s review of such work.

8.4 Construction Insurance. In addition to the requirements of Article 10 of
this Lease, in the event that Tenant makes any Alterations, prior to the
commencement of such Alterations, Tenant shall provide Landlord with evidence
that Tenant carries “Builder’s All Risk” insurance in an amount reasonably
approved by Landlord covering the construction of such

 

*** Confidential Treatment Requested

 

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Alterations, and such other insurance as Landlord may reasonably require, it
being understood and agreed that all of such Alterations shall be insured by
Tenant pursuant to Article 10 of this Lease immediately upon completion thereof.
In addition, Landlord may, in its reasonable discretion, require Tenant to
obtain a lien and completion bond or some alternate form of security
satisfactory to Landlord in an amount sufficient to ensure the lien-free
completion of such Alterations and naming Landlord as a co-obligee.

8.5 Landlord’s Property. Landlord and Tenant hereby acknowledge and agree that
(i) all Alterations, improvements, fixtures, equipment and/or appurtenances
which may be installed or placed in or about the Premises, from time to time,
shall be at the sole cost of Tenant and shall be and become part of the Premises
and the property of Landlord, and (ii) the Improvements to be constructed in the
Premises pursuant to the TCCs of the Work Letter Agreement shall, upon
completion of the same, be and become a part of the Premises and the property of
Landlord. Furthermore, Landlord may, by written notice to Tenant prior to the
end of the Lease Term, or given following any earlier termination of this Lease,
require Tenant, at Tenant’s expense, to (A) remove any Alterations or
improvements in the Premises, and/or (B) remove any “Non-Conforming
Improvements,” as that term is defined in Article 2 of the Work Letter
Agreement, located within the Premises and replace the same with then existing
Building standard improvements, and to repair any damage to the Premises and
Building caused by such removal and return the affected portion of the Premises
to a building standard tenant improved condition as determined by Landlord;
provided, however, if, in connection with its notice to Landlord with respect to
any such Alterations or Cosmetic Alterations, (x) Tenant requests Landlord’s
decision with regard to the removal of such Alterations or Cosmetic Alterations,
and (y) Landlord thereafter agrees in writing to waive the removal requirement
with regard to such Alterations or Cosmetic Alterations, then Tenant shall not
be required to so remove such Alterations or Cosmetic Alterations; provided
further, however, that if Tenant requests such a determination from Landlord and
Landlord, within ten (10) business days following Landlord’s receipt of such
request from Tenant with respect to Alterations or Cosmetic Alterations, fails
to address the removal requirement with regard to such Alterations or Cosmetic
Alterations, Landlord shall be deemed to have agreed to waive the removal
requirement with regard to such Alterations or Cosmetic Alterations. If Tenant
fails to complete such removal and/or to repair any damage caused by the removal
of any Alterations or improvements in the Premises, and returns the affected
portion of the Premises to a building standard tenant improved condition as
reasonably determined by Landlord, then Landlord shall do so, in which event
Tenant shall be responsible for the number of days of holdover under Article 16
corresponding to the time reasonably needed for Landlord to effectuate such
repair (assuming Landlord commences and thereafter diligently prosecutes the
same to completion) and Tenant shall promptly reimburse Landlord’s actual,
reasonable costs therfore. Tenant hereby protects, defends, indemnifies and
holds Landlord harmless from any liability, cost, obligation, expense or claim
of lien in any manner relating to the installation, placement, removal or
financing of any such Alterations, improvements, fixtures and/or equipment in,
on or about the Premises, which obligations of Tenant shall survive the
expiration or earlier termination of this Lease.

8.6 Tenant’s Installation of Security System. Notwithstanding anything to the
contrary contained herein, Landlord and Tenant hereby acknowledge that Tenant
shall be authorized, during the initial Lease Term, to install in the Premises a
security system (the “Security System”). In connection therewith, Landlord and
Tenant hereby agree that any such

 

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installation by Tenant shall be at Tenant’s sole cost and expense, shall be in
accordance with the terms and conditions of this Article 8, and that Tenant
shall, within five (5) days of installation of any such Security System in the
Premises, furnish to Landlord specifications regarding such system. At
Landlord’s option, upon the expiration or earlier termination of this Lease,
Tenant shall remove such Security System and repair any damage to the Premises
resulting from such removal. Landlord shall in no event be obligated to monitor
or respond to such Security System. Landlord and Tenant agree and acknowledge
that nothing contained in this Article 8 shall be construed to limit the rights
of Landlord under Article 27 or any other provision of this Lease. In connection
therewith, Tenant shall provide to Landlord, within five (5) days of
installation of such Security System in the Premises, the telephone number(s) of
an authorized representative of Tenant to whom Landlord shall give reasonable
prior notice (as determined by Landlord, given the circumstances, emergency or
otherwise) in the event Landlord must enter the Premises pursuant to Article 27
hereof, but in no event shall Landlord, following Landlord’s provision of such
reasonable notice to Tenant’s authorized representative, be obligated to delay
Landlord’s entry into the Premises or to monitor or otherwise operate the
Security System while inside the Premises.

ARTICLE 9

COVENANT AGAINST LIENS

Tenant shall keep the Project and Premises free from any liens or encumbrances
arising out of the work performed, materials furnished or obligations incurred
by or on behalf of Tenant, and shall protect, defend, indemnify and hold
Landlord harmless from and against any claims, liabilities, judgments or costs
(including, without limitation, reasonable attorneys’ fees and costs) arising
out of same or in connection therewith. Tenant shall give Landlord notice at
least ten (10) days prior to the commencement of any such work on the Premises
(or such additional time as may be necessary under applicable laws) to afford
Landlord the opportunity of posting and recording appropriate notices of
non-responsibility. Tenant shall remove any such lien or encumbrance by bond or
otherwise within ten (10) days after notice by Landlord, and if Tenant shall
fail to do so, Landlord may pay the amount necessary to remove such lien or
encumbrance, without being responsible for investigating the validity thereof.
The amount so paid shall be deemed Additional Rent under this Lease payable upon
demand, without limitation as to other remedies available to Landlord under this
Lease. Nothing contained in this Lease shall authorize Tenant to do any act
which shall subject Landlord’s title to the Building or Premises to ally liens
or encumbrances whether claimed by operation of law or express or implied
contract. Any claim to a lien or encumbrance upon the Building or Premises
arising in connection with any such work or respecting the Premises not
performed by or at the request of Landlord shall be null and void, or at
Landlord’s option shall attach only against Tenant’s interest in the Premises
and shall in all respects be subordinate to Landlord’s title to the Project,
Building and Premises.

ARTICLE 10

INSURANCE

10.1 Indemnification and Waiver. Except to the extent (i) otherwise expressly
set forth in this Lease to the contrary (inclusive of any prohibition under
Applicable Law), or

 

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(ii) caused by the negligence or willful misconduct of the “Landlord Parties,”
as that term is defined in this Section 10.1, Tenant hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises from any
cause whatsoever and agrees that Landlord, its partners, subpartners and their
respective officers, agents, servants, employees, and independent contractors
(collectively, “Landlord Parties”) shall not be liable for, and are hereby
released from any responsibility for, any damage either to person or property or
resulting from the loss of use thereof, which damage is sustained by Tenant or
by other persons claiming through Tenant. Tenant shall indemnify, defend,
protect, and hold harmless the Landlord Parties from any and all loss, cost,
damage, expense and liability (including without limitation court costs and
reasonable attorneys’ fees) incurred in connection with or arising from: (a) any
causes in, on or about the Premises; (b) the use or occupancy of the Premises by
Tenant or any person claiming under Tenant; (c) any activity, work, or thing
done, or permitted or suffered by Tenant in or about the Premises; (d) any acts,
omission, or negligence of Tenant or any person claiming under Tenant, or the
contractors, agents, employees, invitees, or visitors of Tenant or any such
person; (e) any breach, violation, or non-performance by Tenant or any person
claiming under Tenant or the employees, agents, contractors, invitees, or
visitors of Tenant or any such person of any term, covenant, or provision of
this Lease or any law, ordinance, or governmental requirement of any kind;
(f) any injury or damage to the person, property, or business of Tenant, its
employees, agents, contractors, invitees, visitors, or any other person entering
upon the Premises under the express or implied invitation of Tenant; or (g) the
placement of any personal property or other items within the Premises, provided
that the terms of the foregoing indemnity shall not apply to the extent
(w) otherwise expressly set forth in this Lease to the contrary, or (x) caused
by the negligence or willful misconduct (including tortious activities) of the
Landlord Parties. Furthermore, because Landlord is required to maintain
insurance on the Building and the Project and Tenant compensates Landlord for
such insurance as part of Tenant’s Share of Direct Expenses and because of the
existence of waivers of subrogation set forth in Section 10.5 of this Lease,
Landlord hereby indemnifies and holds Tenant harmless from any Claim to any
property to the extent such Claim is covered by such insurance (or would have
been covered if Landlord had carried the insurance required hereunder), even if
resulting from the negligent acts, omissions, or willful misconduct of the
Tenant Parties. Should Landlord be named as a defendant in any suit brought
against Tenant in connection with or arising out of Tenant’s occupancy of the
Premises, Tenant shall pay to Landlord its costs and expenses incurred in such
suit, including without limitation, its actual professional fees such as
appraisers’, accountants’ and attorneys’ fees. Further, Tenant’s agreement to
indemnify Landlord pursuant to this Section 10.1 is not intended and shall not
relieve any insurance carrier of its obligations under policies required to be
carried by Tenant pursuant to the provisions of this Lease, to the extent such
policies cover the matters subject to Tenant’s indemnification obligations; nor
shall they supersede any inconsistent agreement of the parties set forth in any
other provision of this Lease. The provisions of this Section 10.1 shall survive
the expiration or sooner termination of this Lease with respect to any claims or
liability arising in connection with any event occurring prior to such
expiration or termination.

10.2 Tenant’s Compliance With Landlord’s Fire and Casualty Insurance. Tenant
shall, at Tenant’s expense, comply with Landlord’s insurance company
requirements pertaining to the use of the Premises. If Tenant’s conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant’s
expense, shall comply with all rules, orders, regulations or requirements of

 

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the American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.

10.3 Tenant’s Insurance. Tenant shall maintain the following coverages in the
following amounts. The required evidence of coverage must be delivered to
Landlord on or before the date required under Sections 10.4(I)(x) and
10.4(I)(y), or Section 10.4(II) below (as applicable). Such policies shall be
for a term of at least one (1) year, or the length of the remaining term of this
Lease, whichever is less.

10.3.1 Commercial General Liability Insurance, including Broad Form contractual
liability covering the insured against claims of bodily injury, personal injury
and property damage (including loss of use thereof) based upon or arising out of
Tenant’s operations, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be written on an “occurrence” basis.
Landlord and any other party the Landlord so specifies that has a material
financial interest in the Project, including Landlord’s managing agent, ground
lessor and/or lender, if any, shall be named as additional insureds as their
interests may appear using Insurance Service Organization’s form CG2011 or a
comparable form approved by Landlord. Tenant shall provide an endorsement or
policy excerpt showing that Tenant’s coverage is primary and any insurance
carried by Landlord shall be excess and non-contributing. The coverage shall
also be extended to include damage caused by heat, smoke or fumes from a hostile
fire. The policy shall not contain any intra-insured exclusions as between
insured persons or organizations. This policy shall include coverage for all
liabilities assumed under this Lease as an insured contract for the performance
of all of Tenant’s indemnity obligations under this Lease. The limits of said
insurance shall not, however, limit the liability of Tenant nor relieve Tenant
of any obligation hereunder. Limits of liability insurance shall not be less
than the following; provided, however, such limits may be achieved through the
use of an Umbrella/Excess Policy:

 

Bodily Injury and

Property Damage Liability

Five Million Dollars ($5,000,000)

each occurrence

Personal Injury and Advertising

Liability

One Million Dollars ($1,000,000)

each occurrence

Tenant Legal Liability/Damage to

Rented Premises Liability

One Million Dollars

($1,000,000.00)

10.3.2 Property Insurance covering (i) all office furniture, personal property,
business and trade fixtures, office equipment, free-standing cabinet work,
movable partitions, merchandise and all other items of Tenant’s business
personal property on the Premises installed by, for, or at the expense of
Tenant, (ii) the “Improvements,” as that term is defined in Section 2.1 of the
Work Letter Agreement, and any other improvements which exist in the Premises as
of the Lease Commencement Date (excluding the Base Building) (the “Original

 

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Improvements”), and (iii) all Alterations performed in the Premises. Such
insurance shall be written on a Special Form basis, for the full replacement
cost value (subject to reasonable deductible amounts), without deduction for
depreciation of the covered items and in amounts that meet any co-insurance
clauses of the policies of insurance and shall include coverage for (a) all
perils included in the CP 10 30 04 02 Coverage Special Form, and (b) water
damage from any cause whatsoever, including, but not limited to, backup or
overflow from sprinkler leakage, bursting, leaking or stoppage of any pipes,
explosion, and backup of sewers and drainage.

10.3.2.1 Adjacent Premises. Tenant shall pay for any increase in the premiums
for the property insurance of the Project if said increase is caused by Tenant’s
acts, omissions, use or occupancy of the Premises.

10.3.2.2 Property Damage. Tenant shall use the proceeds from any such insurance
for the replacement of personal property, trade fixtures Improvements, Original
Improvements and Alterations.

10.3.2.3 No representation of Adequate Coverage. Landlord makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Tenant’s property, business operations or
obligations under this Lease.

10.3.3 Property Insurance Subrogation. Landlord and Tenant intend that their
respective property loss risks shall be borne by insurance carriers to the
extent above provided (and, in the case of Tenant, by an insurance carrier
satisfying the requirements of Section 10.4(i) below), and Landlord and Tenant
hereby agree to look solely to, and seek recovery only from, their respective
insurance carriers in the event of a property loss to the extent that such
coverage is agreed to be provided hereunder. The parties each hereby waive all
rights and claims against each other for such losses, and waive all rights of
subrogation of their respective insurers. Landlord and Tenant hereby represent
and warrant that their respective “all risk” property insurance policies include
a waiver of (i) subrogation by the insurers, and (ii) all rights based upon an
assignment from its insured, against Landlord and/or any of the Landlord Parties
or Tenant and/or any of the Tenant Parties (as the case may be) in connection
with any property loss risk thereby insured against. Tenant will cause all other
occupants of the Premises claiming by, under, or through Tenant to execute and
deliver to Landlord a waiver of claims similar to the waiver in this
Section 10.3.3 and to obtain such waiver of subrogation rights endorsements. If
either party hereto fails to maintain the waivers set forth in items (i) and
(ii) above, the party not maintaining the requisite waivers shall indemnify,
defend, protect, and hold harmless the other party for, from and against any and
all claims, losses, costs, damages, expenses and liabilities (including, without
limitation, court costs and reasonable attorneys’ fees) arising out of,
resulting from, or relating to, such failure.

10.3.4 Business Income Interruption in commercially reasonable amounts.

10.3.5 Worker’s Compensation or other similar insurance pursuant to all
applicable state and local statutes and regulations, and Employer’s Liability
with minimum limits of not less than One Million Dollars ($1,000,000) each
accident/employee/disease.

 

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10.3.6 Commercial Automobile Liability Insurance covering all Owned (if any),
Hired, or Non-owned vehicles with limits not less than One Million Dollars
($1,000,000) combined single limit for bodily injury and property damage.

10.4 Form of Policies. The minimum limits of policies of insurance required of
Tenant under this Lease shall in no event limit the liability of Tenant under
this Lease. Such insurance shall (i) be issued by an insurance company having an
AM Best rating of not less than A-X, or which is otherwise acceptable to
Landlord and licensed to do business in the State of California, (ii) be in form
and content reasonably acceptable to Landlord and complying with the
requirements of Section 10.3 (including, Sections 10.3.1 through 10.3.6),
(iii) Tenant shall not do or permit to be done anything which invalidates the
required insurance policies, and (iv) provide that said insurance shall not be
canceled or coverage changed unless thirty (30) days prior written notice shall
have been given to Landlord and any mortgagee of Landlord, the identity of whom
has been provided to Tenant in writing. Tenant shall deliver said policy or
policies or certificates thereof and applicable endorsements which meet the
requirements of this Article 10 to Landlord on or before (I) the earlier to
occur of: (x) the Lease Commencement Date, and (y) the date Tenant and/or its
employees, contractors and/or’ agents first enter the Premises for occupancy,
construction of improvements, alterations, or any other move-in activities, and
(II) five (5) business days after the renewal of such policies. In the event
Tenant shall fail to procure such insurance, or to deliver such policies or
certificates and applicable endorsements, Landlord may, at its option, after
written notice to Tenant and Tenant’s failure to obtain such insurance within
five (5) days thereafter, procure such policies for the account of Tenant and
the sole benefit of Landlord, and the cost thereof shall be paid to Landlord
after delivery to Tenant of bills therefor.

10.5 Additional Insurance Obligations. Tenant shall carry and maintain during
the entire Lease Term, at Tenant’s sole cost and expense, increased amounts of
the insurance required to be carried by Tenant pursuant to this Article 10 and
such other reasonable types of insurance coverage and in such reasonable amounts
covering the Premises and Tenant’s operations therein, as may be reasonably
requested by Landlord. Notwithstanding the foregoing, Landlord’s request shall
only be considered reasonable if such increased coverage amounts and/or such new
types of insurance are consistent with the requirements of a majority of
Comparable Buildings, and Landlord shall not so increase the coverage amounts or
require additional types of insurance during the first five (5) years of the
Lease Term and thereafter no more often than one time in any five (5) year
period.

10.6 Third-Party Contractors. Tenant shall obtain and deliver to Landlord, Third
Party Contractor’s certificates of insurance and applicable endorsements at
least seven (7) business days prior to the commencement of work in or about the
Premises by any vendor or any other third-party contractor (collectively, a
“Third Party Contractor”). All such insurance shall (a) name Landlord as an
additional insured under such party’s liability policies as required by
Section 10.3.1 above and this Section 10.6, (b) provide a waiver of subrogation
in favor of Landlord under such Third Party Contractor’s commercial general
liability insurance, (c) be primary and any insurance carried by Landlord shall
be excess and non-contributing, and (d) comply with Landlord’s minimum insurance
requirements.

 

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ARTICLE 11

DAMAGE AND DESTRUCTION

11.1 Repair of Damage to Premises by Landlord. Tenant shall promptly notify
Landlord of any damage to the Premises resulting from fire or any other
casualty. If the Premises or any Common Areas serving or providing access to the
Premises shall be damaged by fire or other casualty, Landlord shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord’s reasonable control, and subject to all other terms of
this Article 11, restore the Base Building and such Common Areas. Such
restoration shall be to substantially the same condition of the Base Building
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or Project or any other modifications to the Common Areas deemed
desirable by Landlord, which are consistent with the character of the Project,
provided that access to the Premises and any common restrooms serving the
Premises shall not be materially impaired. Upon the occurrence of any damage to
the Premises, upon notice (the “Landlord Repair Notice”) to Tenant from
Landlord, Tenant shall assign to Landlord (or to any party designated by
Landlord) all insurance proceeds payable to Tenant under Tenant’s insurance
required under Section 10.3 of this Lease, and Landlord shall repair any injury
or damage to the Improvements and the Original Improvements installed in the
Premises and shall return such Improvements and Original Improvements to their
original condition; provided that if the cost of such repair by Landlord exceeds
the amount of insurance proceeds received by Landlord from Tenant’s insurance
carrier, as assigned by Tenant, the cost of such repairs shall be paid by Tenant
to Landlord prior to Landlord’s commencement of repair of the damage. In the
event that Landlord does not deliver the Landlord Repair Notice within sixty
(60) days following the date the casualty becomes known to Landlord, Tenant
shall, at its sole cost and expense, repair any injury or damage to the
Improvements and the Original Improvements installed in the Premises and shall
return such Improvements and Original Improvements to their original condition.
Whether or not Landlord delivers a Landlord Repair Notice, prior to the
commencement of construction, Tenant shall submit to Landlord, for Landlord’s
review and approval, all plans, specifications and working drawings relating
thereto, and Landlord shall select the contractors to perform such improvement
work. Landlord shall not be liable for any inconvenience or annoyance to Tenant
or its visitors, or injury to Tenant’s business resulting in any way from such
damage or the repair thereof; provided however, that if such fire or other
casualty shall have damaged the Premises or Common Areas necessary to Tenant’s
occupancy, and the Premises are not occupied by Tenant as a result thereof, then
during the time and to the extent the Premises are unfit for occupancy, the Rent
shall be abated in proportion to the greater of (x) the ratio that the amount of
rentable square feet of the Premises which is unfit for occupancy for the
purposes permitted under this Lease bears to the total rentable square feet of
the Premises, or (y) the ratio that the amount of rentable square feet of the
Premises in which Tenant cannot reasonably conduct business (and does not
conduct business) as a direct result of the subject damage, bears to the total
rentable square feet of the Premises. In the event that Landlord shall not
deliver the Landlord Repair Notice, Tenant’s right to rent abatement pursuant to
the preceding sentence shall terminate as of the date which is reasonably
determined by Landlord to be the date Tenant should have completed repairs to
the Premises assuming Tenant used reasonable due diligence in connection
therewith.

 

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11.2 Landlord’s Option to, Repair. Notwithstanding the terms of Section 11.1 of
this Lease, Landlord may elect not to rebuild and/or restore the Premises,
Building and/or Project, and instead terminate this Lease, by notifying Tenant
in writing of such termination within sixty (60) days after the date of
discovery of the damage, such notice to include a termination date giving Tenant
sixty (60) days to vacate the Premises, but Landlord may so elect only if the
Building or Project shall be damaged by fire or other casualty or cause, whether
or not the Premises are affected, and one or more of the following conditions is
present: (i) in Landlord’s reasonable judgment, repairs cannot reasonably be
completed within one hundred eighty (180) days after the date of discovery of
the damage (when such repairs are made without the payment of overtime or other
premiums); (ii) the holder of any mortgage on the Building or Project or ground
lessor with respect to the Building or Project shall require that the insurance
proceeds or any portion thereof be used to retire the mortgage debt, or shall
terminate the ground lease, as the case may be; (iii) the damage is not fully
covered by Landlord’s insurance policies; (iv) Landlord decides to rebuild the
Building or Common Areas so that they will be substantially different
structurally or architecturally (v) the damage occurs during the last twelve
(12) months of the Lease Term; or (vi) any owner of any other portion of the
Project, other than Landlord, does not intend to repair the damage to such
portion of the Project; provided, however, that if Landlord does not elect to
terminate this Lease pursuant to Landlord’s termination right as provided above,
and the repairs cannot, in the reasonable opinion of Landlord, be completed
within one hundred eighty (180) days after being commenced, or the damage occurs
during the last twelve (12) months of the Lease Term, Tenant may elect, no
earlier than sixty (60) days after the date of the damage and not later than
ninety (90) days after the date of such damage, to terminate this Lease by
written notice to Landlord effective as of the date specified in the notice,
which date shall not be less than thirty (30) days nor more than sixty (60) days
after the date such notice is given by Tenant. Furthermore, if neither Landlord
nor Tenant has terminated this Lease, and the repairs are not actually completed
within such 180-day period, Tenant shall have the right to terminate this Lease
during the first five (5) business days of each calendar month following the end
of such period until such time as the repairs are complete, by notice to
Landlord (the “Damage Termination Notice”), effective as of a date set forth in
the Damage Termination Notice (the “Damage, Termination Date”), which Damage
Termination Date shall not be less than ten (10) business days following the end
of each such month. Notwithstanding the foregoing, if Tenant delivers a Damage
Termination Notice to Landlord, then Landlord shall have the right to suspend
the occurrence of the Damage Termination Date for a period ending thirty
(30) days after the Damage Termination Date set forth in the Damage Termination
Notice by delivering to Tenant, within five (5) business days of Landlord’s
receipt of the Damage Termination Notice, a certificate of Landlord’s contractor
responsible for the repair of the damage certifying that it is such contractor’s
good faith judgment that the repairs shall be substantially completed within
thirty (30) days after the Damage Termination Date. If repairs shall be
substantially completed prior to the expiration of such thirty-day period, then
the Damage Termination Notice shall be of no force or effect, but if the repairs
shall not be substantially completed within such thirty-day period, then this
Lease shall terminate upon the expiration of such thirty-day period. At any
time, from time to time, after the date occurring sixty (60) days after the date
of the damage, Tenant may request that Landlord inform Tenant of Landlord’s
reasonable opinion of the date of completion of the repairs and Landlord shall
respond to such request within five (5) business days. Notwithstanding the
provisions of this Section 11.2, Tenant shall have the right to terminate this
Lease under this Section 11.2 only if each of the following conditions is
satisfied:

 

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(a) the damage to the Project by fire or other casualty was not caused by the
gross negligence or intentional act of Tenant or its partners or subpartners and
their respective officers, agents, servants, employees, and independent
contractors; (b) Tenant is not then in default under this Lease; (c) as a result
of the damage, Tenant cannot reasonably conduct business from the Premises; and,
(d) as a result of the damage to the Project, Tenant does not occupy or use more
than twenty percent (20%) of the then-existing Premises. In the event this Lease
is terminated in accordance with the terms of this Section 11.2, Tenant shall
assign to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Tenant’s insurance required under items
(ii) and (iii) of Section 10.3.2 of this Lease.

11.3 Waiver of Statutory Provisions. The provisions of this Lease, including
this Article 11, constitute an express agreement between Landlord and Tenant
with respect to any and all damage to, or destruction of, all or any part of the
Premises, the Building or the Project, and any statute or regulation of the
State of California, including, without limitation, Sections 1932(2) and 1933(4)
of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.

ARTICLE 12

NONWAIVER

No provision of this Lease shall be deemed waived by either party hereto unless
expressly waived in a writing signed thereby. The waiver by either party hereto
of any breach of any term, covenant or condition herein contained shall not be
deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord’s knowledge of such preceding breach at the time of acceptance of such
Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be
deemed a waiver of Landlord’s right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord’s right to recover
the full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant’s right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.

 

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ARTICLE 13

CONDEMNATION

If the whole or any part of the Premises, Building or Project shall be taken by
power of eminent domain or condemned by any competent authority for any public
or quasi-public use or purpose, or if any adjacent property or street shall be
so taken or condemned, or reconfigured or vacated by such authority in such
manner as to require the use, reconstruction or remodeling of any part of the
Premises, Building or Project, or if Landlord shall grant a deed or other
instrument in lieu of such taking by eminent domain or condemnation, Landlord
shall have the option to terminate this Lease effective as of the date
possession is required to be surrendered to the authority. If more than
twenty-five percent (25%) of the rentable square feet of the Premises is taken,
or if access to the Premises is substantially impaired, in each case for a
period in excess of one hundred eighty (180) days, Tenant shall have the option
to terminate this Lease effective as of the date possession is required to be
surrendered to the authority. Tenant shall not because of such taking assert any
claim against Landlord or the authority for any compensation because of such
taking and Landlord shall be entitled to the entire award or payment in
connection therewith, except that Tenant shall have the right to file any
separate claim available to Tenant for any taking of Tenant’s personal property
and fixtures belonging to Tenant and removable by Tenant upon expiration of the
Lease Term pursuant to the terms of this Lease, and for moving expenses, so long
as such claims do not diminish the award available to Landlord, its ground
lessor with respect to the Building or Project or its mortgagee, and such claim
is payable separately to Tenant. All Rent shall be apportioned as of the date of
such termination. If any part of the Premises shall be taken, and this Lease
shall not be so terminated, the Rent shall be proportionately abated. Tenant
hereby waives any and all rights it might otherwise have pursuant to
Section 1265.130 of The California Code of Civil Procedure. Notwithstanding
anything to the contrary contained in this Article 13, in the event of a
temporary taking of all or any portion of the Premises for a period of one
hundred and eighty (180) days or less, then this Lease shall not terminate but
the Base Rent and the Additional Rent shall be abated for the period of such
taking in proportion to the ratio that the amount of rentable square feet of the
Premises taken bears to the total rentable square feet of the Premises. Landlord
shall be entitled to receive the entire award made in connection with any such
temporary taking.

ARTICLE 14

ASSIGNMENT AND SUBLETTING

14.1 Transfers. Tenant shall not, without the prior written consent of Landlord,
assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach
to, or otherwise transfer, this Lease or any interest hereunder, permit any
assignment, or other transfer of this Lease or any interest hereunder by
operation of law, sublet the Premises or any part thereof, or enter into any
license or concession agreements or otherwise permit the occupancy or use of the
Premises or any part thereof by any persons other than Tenant and its employees
and contractors (all of the foregoing are hereinafter sometimes referred to
collectively as “Transfers” and any person to whom any Transfer is made or
sought to be made is hereinafter sometimes referred to as a “Transferee”). If
Tenant desires Landlord’s consent to any Transfer, Tenant shall notify Landlord
in writing, which notice (the “Transfer Notice”) shall include (i) the proposed

 

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effective date of the Transfer, which shall not be less than ten (10) business
days nor more than one hundred eighty (180) days after the date of delivery of
the Transfer Notice, (ii) a description of the portion of the Premises to be
transferred (the “Subject Space”), (iii) all of the terms of the proposed
Transfer and the consideration therefor, including calculation of the “Transfer
Premium” (as that term is defined in Section 14.3 below), in connection with
such Transfer, the name and address of the proposed Transferee, and a copy of
all existing executed and/or proposed documentation pertaining to the proposed
Transfer, including all existing operative documents to be executed to evidence
such Transfer or the agreements incidental or related to such Transfer,
(iv) current financial statements of the proposed Transferee certified by an
officer, partner or owner thereof, and any other information reasonably required
by Landlord which will enable Landlord to determine the financial
responsibility, character, and reputation of the proposed Transferee, nature of
such Transferee’s business and proposed use of the Subject Space and (v) an
executed estoppel certificate from Tenant in the form attached hereto as Exhibit
E. Any Transfer made without Landlord’s prior written consent shall, at
Landlord’s option, be null, void and of no effect, and shall, at Landlord’s
option, constitute a default by Tenant under this Lease. Whether or not Landlord
consents to any proposed Transfer, Tenant shall pay Landlord’s review and
processing fees, as well as any reasonable professional fees (including, without
limitation, attorneys’, accountants’, architects’, engineers’ and consultants’
fees) incurred by Landlord, within thirty (30) days after written request by
Landlord; provided that such costs and expenses shall not exceed Two Thousand
Five Hundred and No/100 Dollars ($2,500.00) for a Transfer in the ordinary
course of business. Landlord and Tenant hereby agree that a proposed Transfer
shall not be considered “in the ordinary course of business” if such particular
proposed Transfer involves the review of documentation by Landlord on more than
two (2) occasions.

14.2 Landlord’s Consent. Landlord shall not unreasonably withhold its consent to
any proposed Transfer of the Subject Space to the Transferee on the terms
specified in the Transfer Notice. Without limitation as to other reasonable
grounds for withholding consent, the parties hereby agree that it shall be
reasonable under this Lease and under any applicable law for Landlord to
withhold consent to any proposed Transfer where one or more of the following
apply:

14.2.1 The Transferee is of a character or reputation or engaged in a business
which is not consistent with the quality of the Building or the Project, or
would be a significantly less prestigious occupant of the Building than Tenant;

14.2.2 The Transferee intends to use the Subject Space for purposes which are
not permitted under this Lease;

14.2.3 The Transferee is either a governmental agency or instrumentality
thereof;

14.2.4 The Transferee is not a party of reasonable financial worth and/or
financial stability in light of the responsibilities to be undertaken in
connection with the Transfer on the date consent is requested;

14.2.5 The proposed Transfer would cause a violation of another lease for space
in the Project, or would give an occupant of the Project a right to cancel its
lease;

 

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14.2.6 The terms of the proposed Transfer will allow the Transferee to exercise
a right of renewal, right of expansion, right of first offer, or other similar
right held by Tenant (or will allow the Transferee to occupy space leased by
Tenant pursuant to any such right); or

14.2.7 Either the proposed Transferee, or any person or entity which directly or
indirectly, controls, is controlled by, or is under common control with, the
proposed Transferee, (i) occupies space in the Project at the time of the
request for consent, or (ii) is negotiating with Landlord to lease space in the
Project at such time, or (iii) has negotiated with Landlord during the six
(6)-month period immediately preceding the Transfer Notice; provided, however,
it shall only be deemed reasonable for Landlord to withhold its consent to a
Transfer pursuant to this Section 14.2.7 to the extent Landlord has
then-available space in the Project for such proposed Transferee.

If Landlord consents to any Transfer pursuant to the terms of this Section 14.2,
Tenant may within six (6) months after Landlord’s consent, but not later than
the expiration of said six (6)-month period, enter into such Transfer of the
Premises or portion thereof, upon substantially the same terms and conditions as
are set forth in the Transfer Notice furnished by Tenant to Landlord pursuant to
Section 14.1 of this Lease, provided that if there are any changes in the terms
and conditions from those specified in the Transfer Notice (i) such that
Landlord would initially have been entitled to refuse its consent to such
Transfer under this Section 14.2, or (ii) which would cause the proposed
Transfer to be more favorable to the Transferee than the terms set forth in
Tenant’s original Transfer Notice, Tenant shall again submit the Transfer to
Landlord for its approval and other action under this Article 14 (including
Landlord’s right of recapture, if any, under Section 14.4 of this Lease).
Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or delayed
its consent under Section 14.2 or otherwise has breached or acted unreasonably
under this Article 14, their sole remedies shall be a declaratory judgment and
an injunction for the relief sought together with monetary damages (including
attorneys’ fees and costs), and Tenant hereby waives all other remedies,
including, without limitation, any right at law or equity to terminate this
Lease.

14.3 Transfer Premium. If Landlord consents to a Transfer, as a condition
thereto which the parties hereby agree is reasonable, Tenant shall pay to
Landlord fifty percent (50%) of any “Transfer Premium,” as that term is defined
in this Section 14.3, received by Tenant from such Transferee. “Transfer
Premium” shall mean all rent, additional rent or other consideration payable by
such Transferee in connection with the Transfer in excess of the Rent and
Additional Rent payable by Tenant under this Lease during the term of the
Transfer on a per rentable square foot basis if less than all of the Premises is
transferred, after deducting the reasonable expenses incurred by Tenant for
(i) any changes, alterations and improvements to the Premises in connection with
the Transfer, (ii) any free base rent or other economic concessions reasonably
provided to the Transferee, (iii) any brokerage commissions in connection with
the Transfer, (iv) actual, reasonable legal expenses incurred by Tenant in
connection with the Transfer, and (v) any review and processing fee paid to
Landlord pursuant to the last sentence of Section 14.1, above. “Transfer
Premium” shall also include, but not be limited to, key money, bonus money or
other cash consideration paid by Transferee to Tenant in connection with such
Transfer, and any payment in excess of fair market value for (x) services
rendered by Tenant to Transferee or (y) assets, fixtures, inventory, equipment,
or furniture transferred by Tenant to Transferee in

 

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connection with such Transfer. In the calculations of the Rent (as it relates to
the Transfer Premium calculated under this Section 14.3) and the Transferee’s
Rent, the Rent paid during each annual period for the Subject Space and the
Transferee’s Rent shall be computed after adjusting such rent to the actual
effective rent to be paid, taking into consideration any and all leasehold
concessions granted in connection therewith, including, but not limited to, any
rent credit and improvement allowance. For purposes of calculating any such
effective rent all such concessions shall be amortized on a straight-line basis
over the relevant term.

14.4 Intentionally Omitted.

14.5 Effect of Transfer. If Landlord consents to a Transfer, (i) the TCCs of
this Lease shall in no way be deemed to have been waived or modified, (ii) such
consent shall not be deemed consent to any further Transfer by either Tenant or
a Transferee, (iii) Tenant shall deliver to Landlord, promptly after execution,
an original executed copy of all documentation pertaining to the Transfer in
form reasonably acceptable to Landlord, (iv) Tenant shall furnish upon
Landlord’s request a complete statement, certified by an independent certified
public accountant, or Tenant’s chief financial officer, setting forth in detail
the computation of any Transfer Premium Tenant has derived and shall derive from
such Transfer, and (v) no Transfer relating to this Lease or agreement entered
into with respect thereto, whether with or without Landlord’s consent, shall
relieve Tenant or any guarantor of the Lease from any liability under this
Lease, including, without limitation, in connection with the Subject Space.
Landlord or its authorized representatives shall have the right at all
reasonable times to audit the books, records and papers of Tenant relating to
any Transfer, and shall have the right to make copies thereof. If the Transfer
Premium respecting any Transfer shall be found understated, Tenant shall, within
thirty (30) days after demand, pay the deficiency, and if understated by more
than two percent (2%), Tenant shall pay Landlord’s costs of such audit.

14.6 Additional Transfers. For purposes of this Lease, the term “Transfer” shall
also include (i) if Tenant is a partnership, the withdrawal or change,
voluntary, involuntary or by operation of law, of more than fifty percent
(50%) or more of the partners, or transfer of more than fifty percent (50%) or
more of partnership interests, within a twelve (12)-month period, or the
dissolution of the partnership without immediate reconstitution thereof, and
(ii) if Tenant is a closely held corporation (i.e., whose stock is not publicly
held and not traded through an exchange or over the counter), (A) the
dissolution, merger, consolidation or other reorganization of Tenant or (B) the
sale or other transfer of an aggregate of more than fifty percent (50%) or more
of the voting shares of Tenant (other than to immediate family members by reason
of gift or death), within a twelve (12)-month period, or (C) the sale, mortgage,
hypothecation or pledge of an aggregate of more than fifty percent (50%) or more
of the value of the unencumbered assets of Tenant within a twelve (12)-month
period.

14.7 Occurrence of Default. Any Transfer hereunder shall be subordinate and
subject to the provisions of this Lease, and if this Lease shall be terminated
during the term of any Transfer, Landlord shall have the right to: (i) treat
such Transfer as cancelled and repossess the Subject Space by any lawful means,
or (ii) require that such Transferee attorn to and recognize Landlord as its
landlord under any such Transfer. If Tenant shall be in default under this
Lease, Landlord is hereby irrevocably authorized, as Tenant’s agent and
attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord

 

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(which Landlord shall apply towards Tenant’s obligations under this Lease) until
such default is cured. Such Transferee shall rely on any representation by
Landlord that Tenant is in default hereunder, without any need for confirmation
thereof by Tenant. Upon any assignment, the assignee shall assume in writing all
obligations and covenants of Tenant thereafter to be performed or observed under
this Lease. No collection or acceptance of rent by Landlord from any Transferee
shall be deemed a waiver of any provision of this Article 14 or the approval of
any Transferee or a release of Tenant from any obligation under this Lease,
whether theretofore or thereafter accruing. In no event shall Landlord’s
enforcement of any provision of this Lease against any Transferee be deemed a
waiver of Landlord’s right to enforce any term of this Lease against Tenant or
any other person. If Tenant’s obligations hereunder have been guaranteed,
Landlord’s consent to any Transfer shall not be effective unless the guarantor
also consents to such Transfer.

14.8 Permitted Transfers. Notwithstanding anything to the contrary contained in
this Article 14, including, but not limited to, any deemed Transfer under
Section 14.6, above, (i) an assignment or subletting of all or a portion of the
Premises to an affiliate of Tenant (an entity which is controlled by, controls,
or is under common control with, Tenant), (ii) an assignment of the Premises to
an entity which acquires all or substantially all of the assets or interests
(partnership, stock or other) of Tenant, (iii) an assignment of the Premises to
an entity which is the resulting entity of a merger or consolidation of Tenant,
(iv) a sale of corporate shares of capital stock in Tenant in connection with an
initial public offering of Tenant’s stock on a nationally-recognized stock
exchange, and the subsequent sale of Tenant’s capital stock as long as Tenant is
a publicly traded company on a nationally-recognized stock exchange, or (v) the
sale or other transfer of an aggregate of more than fifty percent (50%) of the
voting shares of Tenant to the extent the same occurs for the sole purpose of
raising financing, where such financing raised represents a fair market value
for the subject voting shares (as reasonably determined), shall be deemed
permitted hereunder (a “Permitted Transfer”), provided that Tenant notifies
Landlord of any such assignment or sublease, promptly supplies Landlord with any
documents or information requested by Landlord regarding such assignment or
sublease or such affiliate, further provided that such assignment or sublease is
not ‘a subterfuge by Tenant to avoid its obligations under this Lease or
otherwise effectuate any “release” by Tenant of such obligations and such
Permitted Transferee shall thereafter become liable, on a joint and several
basis, with such Tenant. The transferee under a transfer specified in items (i),
(ii), (iii), or (iv) above shall be referred to as a “Permitted Transferee.”
“Control,” as used in this Section 14.8, shall mean the ownership, directly or
indirectly, of at least fifty-one percent (51%) of the voting securities of, or
possession of the right to vote, in the ordinary direction of its affairs, of at
least fifty-one percent (51%) of the voting interest in, any person or entity.

14.9 Occupancy by Others. Notwithstanding any contrary provision of this
Article 14, Tenant shall have the right, without the payment of a Transfer
Premium, without the receipt of Landlord’s consent, and without prior Notice to
Landlord, to permit the occupancy of portions of the Premises to any
individual(s) or entities with a bona fide business relationship with Tenant
(which business relationship is not created solely in order to allow occupancy
of the Premises under this Section 14.9) (“Tenant’s Occupants”) on and subject
to the following conditions: (i) all such individuals or entities shall be of a
character and reputation consistent with the types of people generally rendering
similar types of services; (ii) such occupancy shall not be subterfuge by Tenant
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Transfers pursuant to this Article 14; (iii) the space occupied by such Tenant’s
Occupants is not separately demised from the Premises and does not have a
separate entrance from the Premises; and (iv) in the aggregate, such Tenant’s
Occupants do not occupy more than 2,000 rentable square feet of the Premises.
Tenant shall promptly supply Landlord with any documents or information
reasonably requested by Landlord regarding any such individuals or entities. Any
occupancy permitted under this Section 14.9 shall not be deemed a Transfer under
this Article 14. Notwithstanding the foregoing, no such occupancy shall relive
Tenant from any liability under this Lease.

ARTICLE 15

SURRENDER OF PREMISES; OWNERSHIP AND

REMOVAL OF TRADE FIXTURES

15.1 Surrender of Premises. No act or thing done by Landlord or any agent or
employee of Landlord during the Lease Term (including acceptance of keys to the
Premises, whether by Landlord, its agents, or employees) shall be deemed to
constitute an acceptance by Landlord of a surrender of the Premises unless such
intent is specifically acknowledged in writing by Landlord or made in connection
with an unlawful detainer action pursued by Landlord against Tenant. The
voluntary or other surrender of this Lease by Tenant, whether accepted by
Landlord or not, or a mutual termination hereof, shall not work a merger, and at
the option of Landlord shall operate as an assignment to Landlord of all
subleases or subtenancies affecting the Premises or terminate any or all such
sublessees or subtenancies.

15.2 Removal of Tenant Property by Tenant. Upon the expiration of the Lease
Term, or upon any earlier termination of this Lease, Tenant shall, subject to
the provisions of this Article 15, quit and surrender possession of the Premises
to Landlord in as good order and condition as when Tenant took possession and as
thereafter improved by Landlord and/or Tenant, reasonable wear and tear and
repairs which are specifically made the responsibility of Landlord hereunder
excepted. Upon such expiration or termination, Tenant shall, without expense to
Landlord, remove or cause to be removed from the Premises all debris and
rubbish, and such items of furniture, equipment, business and trade fixtures,
free-standing cabinet work, movable partitions and other articles of personal
property owned by Tenant or installed or placed by Tenant at its expense in the
Premises, and such similar articles of any other persons claiming under Tenant,
as Landlord may, in its sole discretion, require to be removed, and Tenant shall
repair at its own expense all damage to the Premises and Building resulting from
such removal.

ARTICLE 16

HOLDING OVER

If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from day-to-day only, and shall not constitute a renewal
hereof or an extension for any further term, and in such case Base Rent shall be
payable at the rate equal to the product of (i) the Base Rent applicable during
the last rental period of the Lease Term under this Lease, and (ii) a percentage
equal to one hundred twenty-five percent (125%) during the first two (2) months
immediately

 

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following the expiration or earlier termination of the Lease Term, and one
hundred fifty percent (150%) thereafter and Additional Rent shall continue to be
due in accordance with the terms of this Lease. Such month-to-month tenancy
shall be subject to every other applicable term, covenant and agreement
contained herein. Nothing contained in this Article 16 shall be, construed as
consent by Landlord to any holding over by Tenant, and Landlord expressly
reserves the right to, require Tenant to surrender possession of the Premises to
Landlord as provided in this Lease upon the expiration or other termination of
this Lease. The provisions of this Article 16 shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Landlord provided herein
or at law. If Tenant fails to surrender the Premises upon the termination or
expiration of this Lease, in addition to any other liabilities to Landlord
accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord
harmless from all loss, costs (including reasonable attorneys’ fees) and
liability resulting from such failure, including, without limiting the
generality of the foregoing, any claims made by any succeeding tenant founded
upon such failure to surrender and any lost profits to Landlord resulting
therefrom.

ARTICLE 17

ESTOPPEL CERTIFICATES

Within ten (10) business days following a request in writing by Landlord, Tenant
shall execute, acknowledge and deliver to Landlord an estoppel certificate,
which, as submitted by Landlord, shall be substantially in the form of Exhibit
E, attached hereto (or such other form as may be required by any prospective
mortgagee or purchaser of the Project, or any portion thereof), indicating
therein any exceptions thereto that may exist at that time, and shall also
contain any other information reasonably requested by Landlord or Landlord’s
mortgagee or prospective mortgagee. Any such certificate may be relied upon by
any prospective mortgagee or purchaser of all or any portion of the Project.
Tenant shall execute and deliver whatever other instruments may be reasonably
required for such purposes. At any time during the Lease Term, Landlord may
require Tenant to provide Landlord with a current financial statement and
financial statements of the two (2) years prior to the current financial
statement year. Such statements shall be prepared in accordance with generally
accepted accounting principles and, if such is the normal practice of Tenant,
shall be audited by an independent certified public accountant. Failure of
Tenant to timely execute, acknowledge and deliver such estoppel certificate or
other instruments shall constitute an acceptance of the Premises and an
acknowledgment by Tenant that statements included in the estoppel certificate
are true and correct, without exception.

ARTICLE 18

SUBORDINATION

This Lease shall be subject and subordinate to all present and future ground or
underlying leases of the Building or Project and to the lien of any mortgage,
trust deed or other encumbrances now or hereafter in force against the Building
or Project or any part thereof, if any, and to all renewals, extensions,
modifications, consolidations and replacements thereof, and to all advances made
or hereafter to be made upon the security of such mortgages or trust deeds,
unless the holders of such mortgages, trust deeds or other encumbrances, or the
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such ground lease or underlying leases, require in writing that this Lease be
superior thereto. For the three (3) month period following the date of this
Lease, Landlord shall use commercially reasonable efforts to provide Tenant, at
Tenant’s sole cost, with a non-disturbance agreement in a commercially
reasonable form (an “NDA”) from Landlord’s presently existing lender holding a
first deed of trust on the Project. In the event that, notwithstanding
Landlord’s use of commercially reasonable efforts to obtain an NDA, Landlord is
unable to attain such an NDA in the foregoing three (3) month period, the Tenant
shall have the right to contact Landlord’s existing lender directly to try to
obtain such an NDA. In the event Landlord’s lender provides such an NDA, then
the cost of such NDA shall be shared equally by Landlord and Tenant. Moreover,
Landlord’s delivery to Tenant of a commercially reasonable NDA in favor of
Tenant from any ground lessor, mortgage holders or lien holders of Landlord who
later come into existence at any time prior to the expiration of the Lease Term
shall be in consideration of, and a condition precedent to, Tenant’s agreement
to be bound by the terms of this Article 18. Tenant covenants and agrees in the
event any proceedings are brought for the foreclosure of any such mortgage or
deed in lieu thereof (or if any ground lease is terminated), to attorn, without
any deductions or set-offs whatsoever, to the lienholder or purchaser or any
successors thereto upon any such foreclosure sale or deed in lieu thereof (or to
the ground lessor), if so requested to do so by such purchaser or lienholder or
ground lessor, and to recognize such purchaser or lienholder or ground lessor as
the lessor under this Lease, provided such lienholder or purchaser or ground
lessor shall agree to accept this Lease and not disturb Tenant’s occupancy, so
long as Tenant timely pays the rent and observes and performs the TCCs of this
Lease to be observed and performed by Tenant. Landlord’s interest herein may be
assigned as security at any time to any lienholder. Tenant shall, within ten
(10) days of request by Landlord, execute such further instruments or assurances
as Landlord may reasonably deem necessary to evidence or confirm the
subordination or superiority of this Lease to any such mortgages, trust deeds,
ground leases or underlying leases. Tenant waives the provisions of any current
or future statute, rule or law which may give or purport to give Tenant any
right or election to terminate or otherwise adversely affect this Lease and the
obligations of the Tenant hereunder in the event of any foreclosure proceeding
or sale.

ARTICLE 19

DEFAULTS; REMEDIES

19.1 Events of Default. The occurrence of any of the following shall constitute
a default of this Lease by Tenant:

19.1.1 Any failure by Tenant to pay any Rent or any other charge required to be
paid under this Lease, or any part thereof, when due unless such failure is
cured within three (3) days after notice; or

19.1.2 Except where a specific time period is otherwise set forth for Tenant’s
performance in this Lease, in which event the failure to perform by Tenant
within such time period shall be a default by Tenant under this Section 19.1.2,
any failure by Tenant to observe or perform any other provision, covenant or
condition of this Lease to be observed or performed by Tenant where such failure
continues for thirty (30) days after written notice thereof from Landlord to
Tenant; provided that if the nature of such default is such that the same cannot

 

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reasonably be cured within a thirty (30) day period, Tenant shall not be deemed
to be in default if it diligently commences such cure within such period and
thereafter diligently proceeds to rectify and cure such default, but in no event
exceeding a period of time in excess of thirty (30) days after written notice
thereof from Landlord to Tenant; or

19.1.3 To the extent permitted by law, (i) Tenant or any guarantor of this Lease
being placed into receivership or conservatorship, or becoming subject to
similar proceedings under Federal or State law, or (ii) a general assignment by
Tenant or any guarantor of this Lease for the benefit of creditors, or (iii) the
taking of any corporate action in furtherance of bankruptcy or dissolution
whether or not there exists any proceeding under an insolvency or bankruptcy
law, or (iv) the filing by or against Tenant or any guarantor of any proceeding
under an insolvency or bankruptcy law, unless in the case of such a proceeding
filed against Tenant or any guarantor the same is dismissed within sixty
(60) days, or (v) the appointment of a trustee or receiver to take possession of
all or substantially all of the assets of Tenant or any guarantor, unless
possession is restored to Tenant or such guarantor within thirty (30) days, or
(vi) any execution or other judicially authorized seizure of all or
substantially all of Tenant’s assets located upon the Premises or of Tenant’s
interest in this Lease, unless such seizure is discharged within thirty
(30) days; or

19.1.4 Abandonment of all of the Premises by Tenant pursuant to California Civil
Code Section 1951.3; or

19.1.5 The failure by Tenant to observe or perform according to the provisions
of Articles 5, 14, 17 or 18 of this Lease where such failure continues for more
than two (2) business days after notice from Landlord; or

19.1.6 Tenant’s failure to occupy the Premises within ninety (90) days after the
Lease Commencement Date.

The notice periods provided herein are in lieu of, and not in addition to, any
notice periods provided by law.

19.2 Remedies Upon Default. Upon the occurrence of any event of default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity (all of which remedies shall be distinct, separate
and cumulative), the option to pursue, any one or more of the following
remedies, each and all of which shall be cumulative and nonexclusive, without
any notice or demand whatsoever.

19.2.1 Terminate this Lease, in which event Tenant shall immediately surrender
the Premises to Landlord, and if Tenant fails to do so, Landlord may, without
prejudice to any other remedy which it may have for possession or arrearages in
rent, enter upon and take possession of the Premises and expel or remove Tenant
and any other person who may be occupying the Premises or any part thereof,
without being liable for prosecution or any claim or damages therefor; and
Landlord may recover from Tenant the following:

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

 

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(b) The worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that 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

(d) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, specifically including but not limited to, brokerage commissions and
advertising expenses incurred, expenses of remodeling the Premises or any
portion thereof for a new tenant, whether for the same or a different use, and
any special concessions made to obtain a new tenant; and

(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 by applicable law.

The term “rent” as used in this Section 19.2 shall be deemed to be and to mean
all sums of every nature required to be paid by Tenant pursuant to the terms of
this Lease, whether to Landlord or to others. As used in Sections 19.2.1(a) and
(b), above, the “worth at the time of award” shall be computed by allowing
interest at the Interest Rate. As used in Section 19.2.1(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%).

19.2.2 Landlord shall have the remedy described in California Civil Code
Section 1951.4 (lessor may continue lease in effect after lessee’s breach and
abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.

19.2.3 Landlord shall at all times have the rights and remedies (which shall be
cumulative with each other and cumulative and in addition to those rights and
remedies available under Sections 19.2.1 and 19.2.2, above, or any law or other
provision of this Lease), without prior demand or notice except as required by
applicable law, to seek any declaratory, injunctive or other equitable relief,
and specifically enforce this Lease, or restrain or enjoin a violation or breach
of any provision hereof.

19.3 Subleases of Tenant. Whether or not Landlord elects to terminate this Lease
on account of any default by Tenant, as set forth in this Article 19, Landlord
shall have the right to terminate any and all subleases, licenses, concessions
or other consensual arrangements for possession entered into by Tenant and
affecting the Premises or may, in Landlord’s sole discretion, succeed to
Tenant’s interest in such subleases, licenses, concessions or arrangements. In
the event of Landlord’s election to succeed to Tenant’s interest in any such
subleases, licenses,

 

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concessions or arrangements, Tenant shall, as of the date of notice by Landlord
of such election, have no further right to or interest in the rent or other
consideration receivable thereunder.

19.4 Form of Payment After Default. Following the occurrence of an event of
default by Tenant, Landlord shall have the right to require that any or all
subsequent amounts paid by Tenant to Landlord hereunder, whether to cure the
default in question or otherwise, be paid in the form of cash, money order,
cashier’s or certified check drawn on an institution acceptable to Landlord, or
by other means approved by Landlord, notwithstanding any prior practice of
accepting payments in any different form.

19.5 Efforts to Relet. No re-entry or repossession, repairs, maintenance,
changes, alterations and additions, reletting, appointment of a receiver to
protect Landlord’s interests hereunder, or any other action or omission by
Landlord shall be construed as an election by Landlord to terminate this Lease
or Tenant’s right to possession, or to accept a surrender of the Premises, nor
shall same operate to release Tenant in whole or in part from any of Tenant’s
obligations hereunder, unless express written notice of such intention is sent
by Landlord to Tenant. Tenant hereby irrevocably waives any right otherwise
available under any law to redeem or reinstate this Lease.

19.6 Landlord Default. Notwithstanding anything to the contrary set forth in
this Lease, Landlord shall be in default in the performance of any obligation
required to be performed by Landlord pursuant to this Lease if Landlord fails to
perform such obligation within thirty (30) days after the receipt of notice from
Tenant specifying in detail Landlord’s failure to perform; provided, however, if
the nature of Landlord’s obligation is such that more than thirty (30) days are
required for its performance, then Landlord shall not be in default under this
Lease if it shall commence such performance within such thirty (30) day period
and thereafter diligently pursues the same to completion. Upon any such default
by Landlord under this Lease, Tenant may, except as otherwise specifically
provided in this Lease to the contrary, exercise any of its rights provided at
law or in equity. Any award from a court or arbitrator in favor of Tenant,
requiring payment by Landlord which is not paid by Landlord within the time
period directed by such award, may be offset by Tenant from Rent next due and
payable under this Lease; provided, however, Tenant may not deduct the amount of
the award against more than fifty percent (50%) of Base Rent next due and owing
(until such time as the entire amount of such judgment is deducted) to the
extent following a foreclosure or a deed-in-lieu of foreclosure.

ARTICLE 20

COVENANT OF QUIET ENJOYMENT

Landlord covenants that Tenant, on paying the Rent, charges for services and
other payments herein reserved and on keeping, observing and performing all the
other TCCs, provisions and agreements herein contained on the part of Tenant to
be kept, observed and performed, shall, during the Lease Term, peaceably and
quietly have, hold and enjoy the Premises subject to the TCCs, provisions and
agreements hereof without interference by any persons lawfully claiming by or
through Landlord. The foregoing covenant is in lieu of any other covenant
express or implied.

 

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ARTICLE 21

SECURITY DEPOSIT

Landlord and Tenant hereby acknowledge and agree that Tenant has been occupying
that certain space located on the first (1st) floors of those certain buildings
located at 12225 and 12235 El Camino Real, San Diego, commonly known as Suite
150 in the 12225 Building and Suites 110 and 105 in the 12235 Building
containing approximately 25,114 rentable square feet of space (the “CVCC
Premises”) pursuant to that certain Office Lease dated April 14, 2009 (as
amended, the “Carmel Valley Corporate Center Lease”), by and between Landlord
and Tenant. Landlord further acknowledges that Tenant has previously delivered
the sum of […***…] Dollars ($[…***…]) (the “Existing Security Deposit”) to
Landlord as security for the faithful performance by Tenant of the terms,
covenants and conditions of the Carmel Valley Corporate Center Lease. Landlord
and Tenant hereby acknowledge and agree that any unapplied portion of the
Existing Security Deposit following the expiration of the Carmel Valley
Corporate Center Lease shall continue to be held by Landlord as security for
this Lease, and therefore Tenant hereby expressly agrees that it will not have
the right to have such unapplied portion of the Existing Security Deposit
returned to it pursuant to the terms of the Carmel Valley Corporate Center Lease
(recognizing that, effective as of date which is sixty (60) days following the
expiration of the term of the Carmel Valley Corporate Center Lease, the terms of
this Article 21 shall govern Landlord’s use of the Existing Security Deposit as
opposed to any provision of the Carmel Valley Corporate Center Lease). To the
extent the Security Deposit is ever less than […***…] Dollars ($[…***…]), Tenant
shall pay any such difference within thirty (30) days following its receipt of a
demand therefor from Landlord. Accordingly, notwithstanding any provision to the
contrary contained in this Lease, the total Security Deposit to be held by
Landlord pursuant to this Lease shall at all times equal to […***…] Dollars
($[…***…]) (the “Security Deposit”). If Tenant defaults with respect to any
provisions of this Lease, including, but not limited to, the provisions relating
to the payment of Rent, the removal of property and the repair of resultant
damage, Landlord may, without notice to Tenant, but shall not be required to
apply all or any part of the Security Deposit for the payment of any Rent or any
other sum in default and Tenant shall, upon demand therefor, restore the
Security Deposit to its original amount. Any unapplied portion of the Security
Deposit shall be returned to Tenant, or, at Landlord’s option, to the last
assignee of Tenant’s interest hereunder, within sixty (60) days following the
expiration of the Lease Term. Tenant shall not be entitled to any interest on
the Security Deposit. Tenant hereby irrevocably waives and relinquishes any and
all rights, benefits, or protections, if any, Tenant now has, or in the future
may have, under Section 1950.7, except for subsection (b) thereof, of the
California Civil Code, any successor statute, and all other provisions of law,
now or hereafter in effect, including, but not limited to, any provision of law
which (i) establishes the time frame by which a landlord must refund a security
deposit under a lease, or (ii) provides that a landlord may claim from a
security deposit only those sums reasonably necessary to remedy defaults in the
payment of rent, to repair damage caused by a tenant, or to clean the subject
premises. Tenant acknowledges and agrees that (A) any statutory time frames for
the return of a security deposit are superseded by the express period identified
in this Article 21, above, and (B) rather than be so limited, Landlord may claim
from the Security Deposit (i) any and all sums expressly identified in this
Article 21, above, and (ii) any additional sums reasonably necessary to
compensate Landlord for any and all losses or damages caused by

 

 

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Tenant’s default of this Lease, including, but not limited to, all damages or
rent due upon termination of this Lease pursuant to Section 1951.2 of the
California Civil Code.

ARTICLE 22

INTENTIONALLY OMITTED

ARTICLE 23

SIGNS

23.1 Full Floors. Subject to Landlord’s prior written approval, in its sole
discretion, and provided all signs are in keeping with the quality, design and
style of the Building and Project, Tenant, if the Premises comprise an entire
floor of the Building, at its sole cost and expense, may install identification
signage anywhere in the Premises including in the elevator lobby of the
Premises, provided that such signs must not be visible from the exterior of the
Building.

23.2 Multi-Tenant Floors. If other tenants occupy space on the floor on which
the Premises is located, Tenant’s identifying signage shall be provided by
Landlord, at Tenant’s cost, and such signage shall be comparable to that used by
Landlord for other similar floors in the Building and shall comply with
Landlord’s Building standard signage program. In addition, Landlord shall
provide, at Tenant’s cost, Building standard directory signage.

23.3 Prohibited Signage and Other Items. Any signs, notices, logos, pictures,
names or advertisements which are installed and that have not been separately
approved by Landlord may be removed without notice by Landlord at the sole
expense of Tenant. Tenant may not install any signs on the exterior or roof of
the Project or the Common Areas. Any signs, window coverings, or blinds (even if
the same are located behind the Landlord-approved window coverings for the
Building), or other items visible from the exterior of the Premises or Building,
shall be subject to the prior approval of Landlord, in its sole discretion.

ARTICLE 24

COMPLIANCE WITH LAW

Tenant shall not do anything or suffer anything to be done in or about the
Premises or the Project which will in any way conflict with any law, statute,
ordinance or other governmental rule, regulation or requirement now in force or
which may hereafter be enacted or promulgated (collectively, “Applicable Laws”).
At its sole cost and expense, Tenant shall promptly comply with all such
Applicable Laws which relate to (i) Tenant’s use of the Premises for non-general
office use, (ii) Alterations Tenant installs or otherwise places in the
Premises, or (iii) the Base Building, but, as to the Base Building, only to the
extent such obligations are triggered by Tenant’s Alterations, or use of the
Premises for non-general office use. Should any standard or regulation be
imposed on Landlord or Tenant after the Lease Commencement Date by a state,
federal or local governmental body charged with the establishment, regulation
and enforcement of occupational, health or safety standards for employers and/or
employees, as to the use of the

 

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Premises, then Tenant agrees, at its sole cost and expense, to comply promptly
with such standards or regulations. The judgment of any court of competent
jurisdiction or the admission of Tenant in any judicial action, regardless of
whether Landlord is a party thereto, that Tenant has violated any of said
governmental measures, shall be conclusive of that fact as between Landlord and
Tenant. Except as set forth hereinabove, Landlord shall comply with all
Applicable Laws relating to the Base Building, provided that compliance with
such Applicable Laws is not the responsibility of Tenant under this Lease, and
provided further that Landlord’s failure to comply therewith would prohibit
Tenant from obtaining or maintaining a certificate of occupancy for the
Premises, or would unreasonably and materially affect the safety of Tenant’s
employees or create a significant health hazard for Tenant’s employees. Landlord
shall be permitted to include in Operating Expenses any costs or expenses
incurred by Landlord under this Article 24 to the extent consistent with the
terms of Section 4.2.4, above.

ARTICLE 25

LATE CHARGES

If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord’s designee when due, then Tenant shall pay to
Landlord a late charge equal to five percent (5%) of the overdue amount plus any
attorneys’ fees incurred by Landlord by reason of Tenant’s failure to pay Rent
and/or other charges when due hereunder; provided, however, with regard to the
first such failure in any twelve (12) month period, Landlord will waive such
late charge to the extent Tenant cures such failure within three (3) days
following Tenant’s receipt of written notice from Landlord that the same was not
received when due. The late charge shall be deemed Additional Rent and the right
to require it shall be in addition to all of Landlord’s other rights and
remedies hereunder or at law and shall not be construed as liquidated damages or
as limiting Landlord’s remedies in any manner. In addition to the late charge
described above, any Rent or other amounts owing hereunder which are not paid
within ten (10) days after the date they are due shall bear interest from the
date when due until paid at the “Interest Rate.” For purposes of this Lease, the
“Interest Rate” shall be an annual rate equal to the lesser of (i) the annual
“Bank Prime Loan” rate cited in the Federal Reserve Statistical Release
Publication H.15(519), published weekly (or such other comparable index as
Landlord and Tenant shall reasonably agree upon if such rate ceases to be
published), plus three (3) percentage points, and (ii) the highest rate
permitted by applicable law.

ARTICLE 26

LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT

26.1 Landlord’s Cure. All covenants and agreements to be kept or performed by
Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and
expense and without any reduction of Rent, except to the extent, if any,
otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under Section 19.1.2, above, unless a specific time period is
otherwise stated in this Lease, Landlord may, but shall not be obligated to,
make any such payment or perform any such act on Tenant’s part without waiving
its rights based upon any default of Tenant and without releasing Tenant from
any obligations hereunder.

 

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26.2 Tenant’s Reimbursement. Except as may be specifically provided to the
contrary in this Lease, Tenant shall pay to Landlord, upon delivery by Landlord
to Tenant of statements therefor: (i) sums equal to expenditures reasonably made
and obligations incurred by, Landlord in connection with the remedying by
Landlord of Tenant’s defaults pursuant to the provisions of Section 26.1;
(ii) sums equal to all losses, costs, liabilities, damages and expenses referred
to in Article 10 of this Lease; and (iii) sums equal to all expenditures made
and obligations incurred by Landlord in collecting or attempting to collect the
Rent or in enforcing or attempting to enforce any rights of Landlord under this
Lease or pursuant to law, including, without limitation, all legal fees and
other amounts so expended. Tenant’s obligations under this Section 26.2 shall
survive the expiration or sooner termination of the Lease Term.

ARTICLE 27

ENTRY BY LANDLORD

Landlord reserves the right at all reasonable times (during Building Hours with
respect to items (i) and (ii) below) and upon at least twenty-four (24) hours
prior notice to Tenant (except in the case of an emergency) to enter the
Premises to (i) inspect them; (ii) show the Premises to prospective purchasers,
or to current or prospective mortgagees, ground or underlying lessors or
insurers, or during the last nine (9) months of the Lease Term, to prospective
tenants; (iii) post notices of nonresponsibility; or (iv) alter, improve or
repair the Premises or the Building, or for structural alterations, repairs or
improvements to the Building or the Building’s systems and equipment.
Notwithstanding anything to the contrary contained in this Article 27, Landlord
may enter the Premises at any time to (A) perform services required of Landlord,
including janitorial service; (B) take possession due to any breach of this
Lease in the manner provided herein; and (C) perform any covenants of Tenant
which Tenant fails to perform. Landlord may make any such entries without the
abatement of Rent, except as otherwise provided in this Lease, and may take such
reasonable steps as required to accomplish the stated purposes; provided,
however, except for (x) emergencies, (y) repairs, alterations, improvements or
additions required by governmental or quasi-governmental authorities or court
order or decree, or (z) repairs which are the obligation of Tenant hereunder,
any such entry shall be performed in a manner so as not to unreasonably
interfere with Tenant’s use of the Premises and shall be performed after normal
business hours if reasonably practical. With respect to items (y) and (z) above,
Landlord shall use commercially reasonable efforts to not materially interfere
with Tenant’s use of, or access to, the Premises. Except as otherwise set forth
in Section 6.4, Tenant hereby waives any claims for damages or for any injuries
or inconvenience to or interference with Tenant’s business, lost profits, any
loss of occupancy or quiet enjoyment of the Premises, and any other loss
occasioned thereby. For each of the above purposes, Landlord shall at all times
have a key with which to unlock all the doors in the Premises, excluding
Tenant’s vaults, safes and special security areas designated in advance by
Tenant. In an emergency, Landlord shall have the right to use any means that
Landlord may deem proper to open the doors in and to the Premises. Any entry
into the Premises by Landlord in the manner hereinbefore described shall not be
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or an actual or constructive eviction of Tenant from any portion of the
‘‘Premises. No provision of this Lease shall be construed as obligating Landlord
to perform any repairs, alterations or decorations except as otherwise expressly
agreed to be performed by Landlord herein.

 

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ARTICLE 28

TENANT PARKING

Tenant shall rent from Landlord, commencing on the Lease Commencement Date, the
amount of parking passes set forth in Section 10 of the Summary, on a monthly
basis throughout the Lease Term, which parking passes shall pertain to the
Project parking facilities located on the east side of the Building only
Tenant’s use of the foregoing unreserved parking passes shall be free of charge
during the Lease Term (inclusive of any Option Term). In lieu of an equal number
of unreserved parking passes, Tenant shall have the right to rent passes for up
to six (6) reserved parking spaces in the Project parking facility on ‘a monthly
basis (the “Reserved Parking Right”), provided that the Reserved Parking Right
must be exercised by Tenant, if at all, pursuant to a written notice to Landlord
expressing Tenants’ desire to exercise said Reserved Parking Right. The location
of the reserved parking spaces shall be determined by Landlord in Landlord’s
sole and absolute discretion, subject to availability. Tenant shall pay to
Landlord for the reserved parking spaces on a monthly basis at the prevailing
rate charged by Landlord from time to time at the location of such reserved
parking spaces. Notwithstanding the foregoing or any provision to the contrary
set forth in this Article 28, Tenant shall be responsible for the full amount of
any taxes imposed by any governmental authority in connection with the renting
of all of the aforementioned parking passes (and if applicable, reserved parking
spaces) by Tenant or the use of the aforementioned parking facilities by Tenant.
Tenant’s continued right to use the parking passes is conditioned upon Tenant
abiding by all rules and regulations which are prescribed from time to time for
the orderly operation and use of the parking facilities where the parking passes
are located, including any sticker or other identification system established by
Landlord, Tenant’s cooperation in seeing that Tenant’s employees and visitors
also comply with such rules and regulations and Tenant not being in default
under this Lease. Landlord specifically reserves the right to change the size,
configuration, design, layout and all other aspects of the Project parking
facilities at any time and Tenant acknowledges and agrees that Landlord may,
without incurring any liability to Tenant and without any abatement of Rent
under this Lease, from time to time, close-off or restrict access to the Project
parking facilities for purposes of permitting or facilitating any such
construction, alteration or improvements. Landlord may delegate its
responsibilities hereunder to a parking operator in which case such parking
operator shall have all the rights of control attributed hereby to the Landlord.
The parking passes rented by Tenant pursuant to this Article 28 are provided to
Tenant solely for use by Tenant’s own personnel and such passes may not be
transferred, assigned, subleased or otherwise alienated by Tenant without
Landlord’s prior approval. Visitor parking will be free of charge for the entire
initial Lease Term.

ARTICLE 29

MISCELLANEOUS PROVISIONS

29.1 Terms Captions. The words “Landlord” and “Tenant” as used herein shall
include the plural as well as the singular. The necessary grammatical changes
required to make the provisions hereof apply either to corporations or
partnerships or individuals, men or women, as the case may require, shall in all
cases be assumed as though in each case fully expressed.

 

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The captions of Articles and Sections are for convenience only and shall not be
deemed to limit, construe, affect or alter the meaning of such Articles and
Sections.

29.2 Binding Effect. Subject to all other provisions of this Lease, each of the
covenants, conditions and provisions of this Lease shall extend to and shall, as
the case may require, bind or inure to the benefit not only of Landlord and of
Tenant, but also of their respective heirs, personal representatives, successors
or assigns, provided this clause shall not permit any assignment by Tenant
contrary to the provisions of Article 14 of this Lease.

29.3 No Air Rights. No rights to any view or to light or air over any property,
whether belonging to Landlord or any other person, are granted to Tenant by this
Lease. If at any time any windows of the Premises are temporarily darkened or
the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant’s obligations under this Lease.

29.4 Modification of Lease. Should any current or prospective mortgagee or
ground lessor for the Building or Project require a modification of this Lease,
which modification will not cause an increased cost or expense to Tenant or in
any other way materially and adversely change the rights and obligations of
Tenant hereunder, then and in such event, Tenant agrees that this Lease may be
so modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) business days
following a request therefor. At the request of Landlord or any mortgagee or
ground lessor, Tenant agrees to execute a short form of Lease and deliver the
same to Landlord within ten (10) business days following the request therefor.

29.5 Transfer of Landlord’s Interest. Tenant acknowledges that Landlord has the
right to transfer all or any portion of its interest in the Project or Building
and in this Lease, and Tenant agrees that in the event of any such transfer,
Landlord shall automatically be released from all liability under this Lease and
Tenant agrees to look solely to such transferee for the performance of
Landlord’s obligations hereunder after the date of transfer and such transferee
shall be deemed to have fully assumed and be liable for all obligations of this
Lease to be performed by Landlord, including the return of any Security Deposit,
and Tenant shall attorn to such transferee. Tenant further acknowledges that
Landlord may assign its interest in this Lease to a mortgage lender as
additional security and agrees that such an assignment shall not release
Landlord from its obligations hereunder and that Tenant shall continue to look
to Landlord for the performance of its obligations hereunder.

29.6 Prohibition Against Recording. Except as provided in Section 29.4 of this
Lease, neither this Lease, nor any memorandum, affidavit or other writing with
respect thereto, shall be recorded by Tenant or by anyone acting through, under
or on behalf of Tenant.

29.7 Landlord’s Title. Landlord’s title is and always shall be paramount to the
title of Tenant. Nothing herein contained shall empower Tenant to do any act
which can, shall or may encumber the title of Landlord.

 

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29.8 Relationship of Parties. Nothing contained in this Lease shall be deemed or
construed by the parties hereto or by any third party to create the relationship
of principal and agent, partnership, joint venturer or any association between
Landlord and Tenant.

29.9 Application of Payments. Landlord shall have the right to apply payments
received from Tenant pursuant to this Lease, regardless of Tenant’s designation
of such payments, to satisfy any obligations of Tenant hereunder, in such order
and amounts as Landlord, in its sole discretion, may elect.

29.10 Time of Essence. Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor.

29.11 Partial Invalidity. If any term, provision or condition contained in this
Lease shall, to any extent, be invalid or unenforceable, the remainder of this
Lease, or the application of such term, provision or condition to persons or
circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.

29.12 No Warranty. In executing and delivering this Lease, Tenant has not relied
on any representations, including, but not limited to, any representation as to
the amount of any item comprising Additional Rent or the amount of the
Additional Rent in the aggregate or that Landlord is furnishing the same
services to other tenants, at all, on the same level or on the same basis, or
any warranty or any statement of Landlord which is not set forth herein or in
one or more of the exhibits attached hereto.

29.13 Landlord Exculpation. The liability of Landlord or the Landlord Parties to
Tenant for any default by Landlord under this Lease or arising in connection
herewith or with Landlord’s operation, management, leasing, repair, renovation,
alteration or any other matter relating to the Project or the Premises shall be
limited solely and exclusively to an amount which is equal to the lesser of
(a) the interest of Landlord in the Building or (b) the equity interest Landlord
would have in the Building if the Building were encumbered by third-party debt
in an amount equal to eighty percent (80%) of the value of the Building (as such
value is determined by Landlord), provided that in no event shall such liability
extend to any sales or insurance proceeds received by Landlord or the Landlord
Parties in connection with the Project, Building or Premises. Neither Landlord,
nor any of the Landlord Parties shall have any personal liability therefor, and
Tenant hereby expressly waives and releases such personal liability on behalf of
itself and all persons claiming by, through or under Tenant. The limitations of
liability contained in this Section 29.13 shall inure to the benefit of
Landlord’s and the Landlord Parties’ present and future partners, beneficiaries,
officers, directors, trustees, shareholders, agents and employees, and their
respective partners, heirs, successors and assigns. Under no circumstances shall
any present or future partner of Landlord (if Landlord is a partnership), or
trustee or beneficiary (if Landlord or any partner of Landlord is a trust), have
any liability for the performance of Landlord’s obligations under this Lease.
Notwithstanding any contrary provision herein, neither Landlord nor the Landlord
Parties shall be liable under any circumstances for injury or damage to, or
interference with, Tenant’s business, including but not limited to, loss of
profits, loss of

 

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rents or other revenues, loss of business opportunity, loss of goodwill or loss
of use, in each case, however occurring.

29.14 Entire Agreement. It is understood and acknowledged that there are no oral
agreements between the parties hereto affecting this Lease and this Lease
constitutes the parties’ entire agreement with respect to the leasing of the
Premises and supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Landlord to Tenant with respect to the subject
matter thereof, and none thereof shall be used to interpret or construe this
Lease. None of the terms, covenants, conditions or provisions of this Lease can
be modified, deleted or added to except in, writing signed by the parties
hereto.

29.15 Right to Lease. Landlord reserves the absolute right to effect such other
tenancies in the Project as Landlord in the exercise of its sole business
judgment shall determine to best promote the interests of the Building or
Project. Tenant does not rely on the fact, nor does Landlord represent, that any
specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project.

29.16 Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts,
labor disputes, acts of God, inability to obtain services, labor, or materials
or reasonable substitutes therefor, governmental actions, civil commotions, fire
or other casualty, and other causes beyond the reasonable control of the party
obligated to perform, except with respect to the obligations imposed with regard
to Rent and other charges to be paid by Tenant pursuant to this Lease and except
as to Tenant’s obligations under Articles 5 and 24 of this Lease (collectively,
a “Force Majeure”), notwithstanding anything to the contrary contained in this
Lease, shall excuse the performance of such party for a period equal to any such
prevention, delay or stoppage and, therefore, if this Lease specifies a time
period for performance of an obligation of either party, that time period shall
be extended by the period of any delay in such party’s performance caused by a
Force Majeure.

29.17 Waiver of Redemption by Tenant. Tenant hereby waives, for Tenant and for
all those claiming under Tenant, any and all rights now or hereafter existing to
redeem by order or judgment of any court or by any legal process or writ,
Tenant’s right of occupancy of the Premises after any termination of this Lease.

29.18 Notices. All notices, demands, statements, designations, approvals or
other communications (collectively, “Notices”) given or required to be given by
either party to the other hereunder or by law shall be in writing, shall be
(A) sent by United States certified or registered mail, postage prepaid, return
receipt requested (“Mail”), (B) transmitted by telecopy, if such telecopy is
promptly followed by a Notice sent by Mail, (C) delivered by a nationally
recognized overnight courier, or (D) delivered personally. Any Notice shall be
sent, transmitted, or delivered, as the case may be, to Tenant at the
appropriate address set forth in Section 11 of the Summary, or to such other
place as Tenant may from time to time designate in a Notice to Landlord, or to
Landlord at the addresses set forth below, or to such other places as Landlord
may from time to time designate in a Notice to Tenant. Any Notice will be deemed
given (i) three (3) days after the date it is posted if sent by Mail, (ii) the
date the telecopy is transmitted, (iii) the date the overnight courier delivery
is made, or (iv) the date personal delivery is made or

 

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attempted to be made. If Tenant is notified of the identity and address of
Landlord’s mortgagee or ground or underlying lessor, Tenant shall give to such
mortgagee or ground or underlying lessor written notice of any default by
Landlord under the terms of this Lease by registered or. certified mail, and
such mortgagee or ground or underlying lessor shall be given a reasonable
opportunity to cure such default prior to Tenant’s exercising any remedy
available to Tenant. As of the date of this Lease, any Notices to Landlord must
be sent, transmitted, or delivered, as the case may be, to the following
addresses:

Kilroy Realty Corporation

12200 West Olympic Boulevard

Suite 200

Los Angeles, California 90064

Attention: Legal Department

with copies to:

Kilroy Realty Corporation

3611 Valley Centre Drive, Suite 550

San Diego, California 92130

Attention: Mr. Brian Galligan

and

Allen Matkins Leck Gamble Mallory & Natsis LLP

1901 Avenue of the Stars, Suite 1800

Los Angeles, California 90067

Attention: Anton N. Natsis, Esq.

29.19 Joint and Several. If there is more than one Tenant, the obligations
imposed upon Tenant under this Lease shall be joint and several.

29.20 Authority. If Tenant is a corporation, trust or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. In such event, Tenant shall, within ten (10) days after
execution of this Lease, deliver to Landlord satisfactory evidence of such
authority and, if a corporation, upon demand by Landlord, also deliver to
Landlord satisfactory evidence of (i) good standing in Tenant’s state of
incorporation and (ii) qualification to do business in California.

29.21 Attorneys’ Fees. In the event that either Landlord or Tenant should bring
suit for the possession of the Premises, for the recovery of any sum due under
this Lease, or because of the breach of any provision of this Lease or for any
other relief against the other, then all costs and expenses, including
reasonable attorneys’ fees, incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgment.

 

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29.22 Governing Law; WAIVER OF TRIAL BY JURY. This Lease shall be construed and
enforced in accordance with the laws of the State of California. IN ANY ACTION
OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE
JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, AND (II)
SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW.

29.23 Submission of Lease. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of, option for or option
to lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.

29.24 Broker. Landlord and Tenant hereby warrant to each other that they have
had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease, excepting only the real estate broker specified in
Section 13 of the Summary (the “Broker”), and that they know of no other real
estate broker or agent who is entitled to a commission in connection with this
Lease. Landlord shall pay the Broker pursuant to the terms of separate
commission agreements. Each party agrees to indemnify and defend the other party
against and hold the other party harmless from any and all claims, demands,
losses, liabilities, lawsuits, judgments, costs and expenses (including without
limitation reasonable attorneys’ fees) with respect to any leasing commission or
equivalent compensation alleged to be owing on account of any dealings with any
real estate broker or agent, other than the Broker, occurring by, through, or
under the indemnifying party.

29.25 Independent Covenants. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord’s expense or to any setoff of the Rent or other amounts owing
hereunder against Landlord.

29.26 Project or Building Name and Signage. Landlord shall have the right at any
time to change the name of the Project or Building and to install, affix and
maintain any and all signs on the exterior and on the interior of the Project or
Building as Landlord may, in Landlord’s sole discretion, desire. Tenant shall
not use the name of the Project or Building or use pictures or illustrations of
the Project or Building in advertising or other publicity or for any purpose
other than as the address of the business to be conducted by Tenant in the
Premises, without the prior written consent of Landlord.

29.27 Counterparts. This Lease may be executed in counterparts with the same
effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.

29.28 Confidentiality. Tenant acknowledges that the content of this Lease and
any related documents are confidential information. Tenant shall keep such
confidential information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenant’s financial,
legal, and space planning consultants.

 

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29.29 Transportation Management. Tenant shall fully comply with all present or
future programs intended to manage parking, transportation or traffic in and
around the Building, and in connection therewith, Tenant shall take responsible
action for the transportation planning and management of all employees located
at the Premises by working directly with Landlord, any governmental
transportation management organization or any other transportation-related
committees or entities.

29.30 Building Renovations. It is specifically understood and agreed that
Landlord has made no representation or warranty to Tenant and has no obligation
and has made no promises to alter, remodel, improve, renovate, repair or
decorate the Premises, Building, or any part thereof and that no representations
respecting the condition of the Premises or the Building have been made by
Landlord to Tenant except as specifically set forth herein or in the Work Letter
Agreement, and the completion of Landlord’s build-out of the lobby and lobby
area bathrooms prior to the Lease Commencement Date. However, Tenant hereby
acknowledges that Landlord is currently renovating or may during the Lease Term
renovate, improve, alter, or modify (collectively, the “Renovations”) the
Project, the Building and/or the Premises including without limitation the
parking structure, common areas, systems and equipment, roof, and structural
portions of the same, which Renovations may include, without limitation,
(i) installing sprinklers in the Building common areas and tenant spaces,
(ii) modifying the common areas and tenant spaces to comply with applicable laws
and regulations, including regulations relating to the physically disabled,
seismic conditions, and building safety and security, and (iii) installing new
floor covering, lighting, and wall coverings in the Building common areas, and
in connection with any Renovations, Landlord may, among other things, erect
scaffolding or other necessary structures in the Building, limit or eliminate
access to portions of the Project, including portions of the common areas, or
perform work in the Building, which work may create noise, dust or leave debris
in the Building. Tenant hereby agrees that such Renovations and Landlord’s
actions in connection with such Renovations shall in no way constitute a
constructive eviction of Tenant nor entitle Tenant to any abatement of Rent.
Landlord shall have no responsibility or for any reason be liable to Tenant for
any direct or indirect injury to or interference with Tenant’s business arising
from the Renovations, nor shall Tenant be entitled to any compensation or
damages from Landlord for loss of the use of the whole or any part of the
Premises or of Tenant’s personal property or improvements resulting from the
Renovations or Landlord’s actions in connection with such Renovations, or for
any inconvenience or annoyance occasioned by such Renovations or Landlord’s
actions. Landlord shall use commercially reasonable efforts to have all such
work performed on a continuous basis, and once started, to be completed
reasonably expeditiously, with such work being organized and conducted in a
manner which will minimize any interference to Tenant’s business operations in,
or access to, the Premises, the Project parking facilities and the Common Areas.

29.31 No Violation. Tenant hereby warrants and represents that neither its
execution of nor performance under this Lease shall cause Tenant to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which Tenant is bound, and Tenant shall protect, defend, indemnify and hold
Landlord harmless against any claims, demands, losses, damages, liabilities,
costs and expenses, including, without limitation, reasonable attorneys’ fees
and costs, arising from Tenant’s breach of this warranty and representation.

 

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29.32 Communications and Computer Lines. Tenant may install, maintain, replace,
remove or use any communications or computer wires and cables (collectively, the
“Lines”) at the Project in or serving the Premises, provided that (i) Tenant
shall obtain Landlord’s prior written consent, use an experienced and qualified
contractor approved in writing by Landlord, and comply with all of the other
provisions of Articles 7 and 8 of this Lease, (ii) the Lines therefor (including
riser cables) shall be (x) appropriately insulated to prevent excessive
electromagnetic fields or radiation, (y) surrounded by a protective conduit
reasonably acceptable to Landlord, and (z) identified in accordance with the
“Identification Requirements” (as that term is defined hereinbelow), (iii) any
new or existing Lines servicing the Premises shall comply with all applicable
governmental laws and regulations, (iv) as a condition to permitting the
installation of new Lines, Tenant shall remove existing Lines located in or
serving the Premises and repair any damage in connection with such removal, and
(v) Tenant shall pay all costs in connection therewith. All Lines shall be
clearly marked with adhesive plastic labels (or plastic tags attached to such
Lines with wire) to show Tenant’s name, suite number, telephone number and the
name of the person to contact in the case of an emergency (A) every four feet
(4’) outside the Premises (specifically including, but not limited to, the
electrical room risers and other Common Areas), and (B) at the Lines’
termination point(s) (collectively, the “Identification Requirements”). Upon the
expiration of the Lease Term, or immediately following any earlier termination
of this Lease, Tenant shall, at Tenant’s sole cost and expense, remove all Lines
installed by Tenant, and repair any damage caused by such removal. In the event
that Tenant fails to complete such removal and/or fails to repair any damage
caused by the removal of any Lines, Landlord may do so and may charge the cost
thereof to Tenant. Landlord reserves the right to require that Tenant remove any
Lines located in or serving the Premises which are installed in violation of
these provisions, or which are at any time (1) are in violation of any
Applicable Laws, (2) are inconsistent with then-existing industry standards
(such as the standards promulgated by the National Fire Protection Association
(e.g., such organization’s “2002 National Electrical Code”)), or (3) otherwise
represent a dangerous or potentially dangerous condition.

29.33 Hazardous Substances.

29.33.1 Definitions. For purposes of this Lease, the following definitions shall
apply: “Hazardous Material(s)” shall mean any solid, liquid or gaseous substance
or material that is described or characterized as a toxic or hazardous
substance, waste, material, pollutant, contaminant or infectious waste, or any
matter that in certain specified quantities would be injurious to the public
health or welfare, or words of similar import, in any of the “Environmental
Laws” (as that term is defined hereinbelow), or any other words which are
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity or reproductive toxicity and includes, without limitation, asbestos,
petroleum (including crude oil or any fraction thereof, natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel, or any mixture
thereof), petroleum products, polychlorinated biphenyls, urea formaldehyde,
radon gas, nuclear or radioactive matter, medical waste, soot, vapors, fumes,
acids, alkalis, chemicals, microbial matters (such as molds, fungi or other
bacterial matters), biological agents and chemicals which may cause adverse
health effects, including but not limited to, cancers and /or toxicity.
“Environmental Laws” shall mean any and all federal, state, local or
quasi-governmental laws (whether under common law, statute or otherwise),
ordinances, decrees, codes, rulings, awards, rules, regulations or guidance or
policy documents now or hereafter enacted or promulgated and

 

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as amended from time to time, in any way relating to (i) the protection of the
environment, the health and safety of persons (including employees), property or
the public welfare from actual or potential release, discharge, escape or
emission (whether past or present) of any Hazardous Materials or (ii) the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Materials.

29.33.2 Compliance with Environmental Laws. Landlord covenants that during the
Lease Term, Landlord shall comply with all Environmental Laws in accordance
with, and as required by, the TCCs of Article 24 of this Lease. Tenant
represents and warrants that, except as herein set forth, it will not use, store
or dispose of any Hazardous Materials in or on the Premises. However,
notwithstanding the preceding sentence, Landlord agrees that Tenant may use,
store and properly dispose of commonly available household cleaners and
chemicals to maintain the Premises and Tenant’s routine office operations (such
as printer toner and copier toner) (hereinafter the “Permitted Chemicals”).
Landlord and Tenant acknowledge that any or all of the Permitted Chemicals
described in this paragraph may constitute Hazardous Materials. However, Tenant
may use, store and dispose of same, provided that in doing so, Tenant fully
complies with all Environmental Laws.

29.33.3 Landlord’s Right of Environmental Audit. Landlord may, upon reasonable
notice to Tenant, be granted access to and enter the Premises no more than once
annually to perform or cause to have performed an environmental inspection, site
assessment or audit. Such environmental inspector or auditor may be chosen by
Landlord, in its sole discretion, and be performed at Landlord’s sole expense.
To the extent that the report prepared upon such inspection, assessment or
audit, indicates the presence of Hazardous Materials in violation of
Environmental Laws, or provides recommendations or suggestions to prohibit the
release, discharge, escape or emission of any Hazardous Materials at, upon,
under or within the Premises, or to comply with any Environmental Laws, Tenant
shall promptly, at Tenant’s sole expense, comply with such recommendations or
suggestions, including, but not limited to performing such additional
investigative or subsurface investigations or remediation(s) as recommended by
such inspector or auditor. Notwithstanding the above, if at any time, Landlord
has actual notice or reasonable cause to believe that Tenant has violated, or
permitted any violations of any Environmental Law, then Landlord will be
entitled to perform its environmental inspection, assessment or audit at any
time, notwithstanding the above mentioned annual limitation, and Tenant must
reimburse Landlord for the cost or fees incurred for such as Additional Rent.

29.33.4 Indemnifications. Landlord agrees to indemnify, defend, protect and hold
harmless the Tenant Parties from and against any liability, obligation, damage
or costs, including without limitation, attorneys’ fees and costs, resulting
directly or indirectly from any use, presence, removal or disposal of any
Hazardous Materials to the extent such liability, obligation, damage or costs
was a result of actions caused or knowingly permitted by Landlord or a Landlord
Party. Tenant agrees to indemnify, defend, protect and hold harmless the
Landlord Parties from and against any liability, obligation, damage or costs,
including without limitation, attorneys’ fees and costs, resulting directly or
indirectly from any use, presence, removal or disposal of any Hazardous
Materials or breach of any provision of this section, to the extent such
liability, obligation, damage or costs was a result of actions caused or
permitted by Tenant or a Tenant Party.

 

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29.34 No Discrimination. Tenant covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or through
Tenant, and this Lease is made and accepted upon and subject to the following
conditions: that there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, sex, religion,
marital status, ancestry or national origin in the leasing, subleasing,
transferring, use, or enjoyment of the Premises, nor shall Tenant itself, or any
person claiming under or through Tenant, establish or permit such practice or
practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy, of tenants, lessees, sublessees, subtenants
or vendees in the Premises.

ARTICLE 30

LETTER OF CREDIT

30.1 Delivery of Letter of Credit. Tenant shall deliver to Landlord,
concurrently with the mutual execution of this Lease, an unconditional, clean,
irrevocable letter of credit or an amendment to the existing “L-C” (as that term
is defined in Section 30.1 of the Carmel Valley Corporate Center Lease) (the
amendment to the existing L-C (along with the underlying existing L-C) or the
aforementioned new letter of credit (as the case may be) shall be referred to as
the “L-C”) in the amount set forth in Section 30.3, below (the “L-C Amount”),
which L-C shall be issued by a money-center, solvent, and nationally recognized
bank (a bank which accepts deposits, maintains accounts, has a local San Diego,
California office which will negotiate a letter of credit, and whose deposits
are insured by the FDIC) reasonably acceptable to Landlord (such approved,
issuing bank being referred to herein as the “Bank”), which Bank must have a
short term Fitch Rating which is not less than “F1,” and a long term Fitch
Rating which is not less than “A” (or, in the event such Fitch Ratings are no
longer available, a comparable rating from Standard and Poor’s Professional
Rating Service or Moody’s Professional Rating Service) (collectively, the
“Bank’s Credit Rating Threshold”), and which new letter of credit satisfying the
aforementioned L-C requirement shall be in the form of Exhibit H, attached
hereto. Tenant shall pay all expenses, points and/or fees incurred by Tenant in
obtaining the L-C. The L-C shall (i) be “callable” at sight, irrevocable and
unconditional, (ii) be maintained in effect, whether through renewal or
extension, for the period commencing on the date of this Lease and continuing
until the date (the “L-C Expiration Date”) that is no less than one hundred
(100) days after the expiration of the Lease Term, as the same may be extended,
and Tenant shall deliver a new L-C or certificate of renewal or extension to,
Landlord at least thirty (30) days prior to the expiration of the L-C then held
by Landlord, without any action whatsoever on the part of Landlord, (iii) be
fully assignable by Landlord, its successors and assigns, (iv) permit partial
draws and multiple presentations and drawings, and (v) be otherwise subject to
the Uniform Customs and Practices for Documentary Credits (1993-Rev),
International Chamber of Commerce Publication #500, or the International Standby
Practices-ISP 98, International Chamber of Commerce Publication #590. Landlord,
or its then managing agent, shall have the right to draw down an amount up to
the face amount of the L-C if any of the following shall have occurred or be
applicable: (A) such amount is due to Landlord under the terms of this Lease as
a result of a default which occurs under this Lease, or as a result of a
termination of this Lease, or (B) Tenant has filed a voluntary petition under
the U.S. Bankruptcy Code or any state bankruptcy code (collectively, “Bankruptcy
Code”), or (C) an involuntary petition has been filed against Tenant under the
Bankruptcy Code, or (D) the Bank has notified Landlord that the

 

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L-C will not be renewed or extended through the L-C Expiration Date, or
(E) Tenant is placed into receivership or conservatorship, or becomes subject to
similar proceedings under Federal or State law, or (F) Tenant executes an
assignment for the benefit of creditors, or (G) any of the Bank’s Fitch Ratings
(or other comparable ratings to the extend the Fitch Ratings are no longer
available) have been reduced below the Bank’s Credit Rating Threshold and Tenant
has failed to provide Landlord with a replacement letter of credit, conforming
in all respects to the requirements of this Article 30, in the amount of the
applicable L-C Amount, within ten (10) days following Landlord’s written demand
therefor (with no other notice or cure or grace period being applicable thereto,
notwithstanding anything in this Lease to the contrary) (each of the foregoing
being an “L-C Draw Event”). The L-C shall be honored by the Bank regardless of
whether Tenant disputes Landlord’s right to draw upon the L-C.

30.2 Application of L-C. Tenant hereby acknowledges and agrees that Landlord is
entering into this Lease in material reliance upon the ability of Landlord to
draw upon the L-C upon the occurrence of any L-C Draw Event. In the event of any
L-C Draw Event, Landlord may, but without obligation to do so, and without
notice to Tenant, draw upon the L-C, in part or in whole, to cure any such L-C
Draw Event and/or to compensate Landlord for any and all damages of any kind or
nature sustained, or which Landlord reasonably estimates that it will sustain,
resulting from Tenant’s breach or default of the Lease or other L-C Draw Event
and/or to compensate Landlord for any and all damages arising out of, or
incurred in connection with, the termination of this Lease, including, without
limitation, those specifically identified _ in Section 1951.2 of the California
Civil Code. The use, application or retention of the L-C, or any portion
thereof, by Landlord should not prevent Landlord from exercising any other right
or remedy provided by this Lease or by any applicable law, it being intended
that Landlord shall not first be required to proceed against the L-C, and such
L-C shall not operate as a limitation on any recovery to which Landlord may
otherwise be entitled. Tenant agrees not in interfere in any way with payment to
Landlord of the proceeds of the L-C, either prior to or following a “draw” by
Landlord of any portion of the L-C, regardless of whether any dispute exists
between Tenant and Landlord as to Landlord’s right to draw upon the L-C. No
condition or term of this Lease shall be deemed to render the L-C conditional to
justify the issuer of the L-C in failing to honor a drawing upon such L-C in a
timely manner. Tenant agrees and acknowledges that (i) the L-C constitutes a
separate and independent contract between Landlord and the Bank, (ii) Tenant is
not a third party beneficiary of such contract, (iii) Tenant has no property
interest whatsoever in the L-C or the portions thereof, and (iv) in the event
Tenant becomes a debtor under any chapter of the Bankruptcy Code, Tenant is
placed into receivership or conservatorship, and/or there is an event of a
receivership, conservatorship, or a bankruptcy filing by, or on behalf of,
Tenant, neither Tenant, nor any trustee, nor Tenant’s bankruptcy estate shall
have any right to restrict or limit Landlord’s claim and/or rights to the L-C
and/or the proceeds thereof by application of Section 5O2(b)(6) of the U.S.
Bankruptcy Code or otherwise.

30.3 L-C Amount; Termination of L-C Requirement; Maintenance of L-C by Tenant.

30.3.1 L-C Amount.

30.3.1.1 In General. The starting L-C Amount shall be equal to the amount set
forth in Section 9 of the Summary.

 

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30.3.1.2 Conditional Increase of L-C Amount. Landlord and Tenant hereby
acknowledge and agree that the L-C Amount is subject to increase during the
Lease Term at the end of (x) the first (1st) twelve (12) full calendar months of
the initial Lease Term, (y) the second (2nd) twelve (12) full calendar months of
the initial Lease Term (i.e., the last day of the twenty-fourth (24th) full
calendar month of the initial Lease Term), and (z) the third twelve (12) full
calendar months of initial Lease Term (i.e., the last day of the thirty-sixth
(36th) full calendar month of the initial Lease Term) (each of the time periods
identified in the foregoing items (x), (y) and (z) shall be referred to as an
“L-C Review Period”). While the starting L-C Amount shall be equal to the amount
set forth in Section 30.3.1.1 above, following the completion of each L-C Review
Period, the L-C Amount shall be subject to increase pursuant to this
Section 30.3.1.2 based on the Tenant’s cash and short-term investments as of the
completion of each such L-C Review Period. In the event that as of the last day
of any of the L¬C Review Periods set forth above, the amount of Tenant’s cash
and short-term investments is less than […***…] Dollars ($[…***…]), then the L-C
Amount shall be automatically increased by Tenant by an amount equal to […***…]
Dollars ($[…***…]) (and Tenant shall be immediately required to deliver an
amendment to the L-C to Landlord documenting such increase in the L-C Amount);
provided, however, in no event shall the L-C Amount exceed a total amount equal
to […***…] Dollars ($[…***…]). Tenant shall, within fifteen (15) days following
the end of each L-C Review Period, deliver to the Landlord the appropriate
financial documentation evidencing Tenant’s cash and short-term investments as
of the end of the particular L-C Review Period.

30.3.1.3 Termination of L-C Requirement. Notwithstanding any provision to the
contrary contained in this Lease, in the event the Tenant becomes a publicly
traded company on either the New York Stock Exchange (NYSE) or the NASDAQ,
Tenant shall no longer be required to maintain an L-C pursuant to the provisions
of this Article 30, and the L¬C requirements contained in this Article 30 shall
be deemed waived for so long as Tenant continues to remain a publicly traded
company on either of the aforementioned stock exchanges.

30.3.2 In General. If, as a result of any drawing by Landlord of all or any
portion of the L-C, the amount of the L-C shall be less than the L-C Amount,
Tenant shall, within five (5) days thereafter, provide Landlord with additional
letter(s) of credit in an amount equal to the deficiency, and any such
additional letter(s) of credit shall comply with all of the provisions of this
Article 30. Tenant further covenants and warrants that it will neither assign
nor encumber the L-C or any part thereof and that neither Landlord nor its
successors or assigns will be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance. Without limiting the generality
of the foregoing, if the L-C expires earlier than the L-C Expiration Date,
Landlord will accept a renewal thereof (such renewal letter of credit to be in
effect and delivered to Landlord, as applicable, not later than thirty (30) days
prior to the expiration of the L-C), which shall be irrevocable and
automatically renewable as above provided through the L-C Expiration Date upon
the same terms as the expiring L-C or such other terms as may be acceptable to
Landlord in its sole discretion. If Tenant exercises its option to extend the
Lease Term pursuant to Section 2.2 of this Lease then, not later than thirty
(30) days prior to the commencement of the Option Term, Tenant shall deliver to
Landlord a new L-C or certificate of renewal or extension evidencing the L-C
Expiration Date as one hundred twenty (120) days after the expiration of the
applicable Option Term. However, if the L-C is not timely renewed, or if Tenant
fails to maintain the L-C in the amount and in accordance with the terms

 

*** Confidential Treatment Requested

 

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set forth in this Article 30, Landlord shall have the right to present the L-C
to the Bank in accordance with the terms of this Article 30, and the proceeds of
the L-C may be applied by Landlord against any Rent payable by Tenant under this
Lease that is not paid when due and/or to pay for all losses and damages that
Landlord has suffered or that Landlord reasonably estimates that it will suffer
as a result of any breach or default by Tenant under this Lease. In the event
Landlord elects to exercise its rights under the foregoing item (x), (I) any
unused proceeds shall constitute the property of Landlord (and not Tenant’s
property or, in the event of a receivership, conservatorship, or a bankruptcy
filing by Tenant, property of such receivership, conservatorship, or Tenant’s
bankruptcy estate) and need not be segregated from Landlord’s other assets, and
(II) Landlord agrees to pay to Tenant within thirty (30) days after the L-C
Expiration Date the amount of any proceeds of the L-C received by Landlord and
not applied against any Rent payable by Tenant under this Lease that was not
paid when due or used to pay for any losses and/or damages suffered by Landlord
(or reasonably estimated by Landlord that it will suffer) as a result of any
breach or default by Tenant under this Lease; provided, however, that if prior
to the L-C Expiration Date a voluntary petition is filed by Tenant, or an
involuntary petition is filed against Tenant by any of Tenant’s creditors, under
the Bankruptcy Code, then Landlord shall not be obligated to make such payment
in the unused L-C proceeds until either all preference issues relating to
payments under this Lease have been resolved in such bankruptcy or
reorganization case or such bankruptcy or reorganization case has been
dismissed.

30.4 Transfer and Encumbrance. The L-C shall also provide that Landlord may, at
any time and without notice to Tenant and without first obtaining Tenant’s
consent thereto, transfer (one or more times) all or any portion of its interest
in and to the L-C to another party, person, or entity, regardless of whether or
not such transfer is from or as a part of the assignment by Landlord of its
rights and interest in and to this Lease. In the event of a transfer of
Landlord’s interest in and under this Lease, Landlord shall transfer the L-C, in
whole or in part, to the transferee and thereupon Landlord shall, without any
further agreement between the parties, be released by Tenant from all liability
therefor, and it is agreed that the provisions hereof shall apply to every
transfer or assignment of the whole of said L-C to a new landlord. In connection
with any such transfer of the L-C by Landlord, Tenant shall, at Tenant’s sole
cost and expense, execute and submit to the Bank such applications, documents
and instruments as may be necessary to effectuate such transfer and, Tenant
shall be responsible for paying the Bank’s transfer and processing fees in
connection therewith.

30.5 L-C Not a Security Deposit. Landlord and Tenant (1) acknowledge and agree
that in no event or circumstance shall the L-C or any renewal thereof or
substitute therefor or any proceeds thereof be deemed to be or treated’ as a
“security deposit” under any law applicable to security deposits in the
commercial context, including, but not limited to, Section 1950.7 of the
California Civil Code, as such Section now exists or as it may be hereafter
amended or succeeded (the “Security Deposit Laws”), (2) acknowledge and agree
that the L-C (including any renewal thereof or substitute therefor or any
proceeds thereof) is not intended to serve as a security deposit, and the
Security Deposit Laws shall have no applicability or relevancy thereto, and
(c) waive any and all rights, duties and obligations that any such party may
now, or in the future will, have relating to or arising from the Security
Deposit Laws. Tenant hereby irrevocably waives and relinquishes the provisions
of Section 1950.7 of the California Civil Code and any successor statue, and all
other provisions of law, now or hereafter in effect, which (x) establish the
time frame by which a landlord must refund a security deposit under a lease,

 

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and/or (y) provide that a landlord may claim from a security deposit only those
sums reasonably necessary to remedy defaults in the payment of rent, to repair
damage caused by a tenant or to clean the premises, it being agreed that
Landlord may, in addition, claim those sums specified in this Article 30 and/or
those sums reasonably necessary to (a) compensate Landlord for any loss or
damage caused by Tenant’s breach of this Lease, including any damages Landlord
suffers following termination of this Lease, and/or (b) compensate Landlord for
any and all damages arising out of, or incurred in connection with, the
termination of this Lease, including, without limitation, those specifically
identified in Section 1951.2 of the California Civil Code.

30.6 Non-Interference by Tenant. Tenant agrees not to interfere in any way with
any payment to Landlord of the proceeds of the L-C, either prior to or following
a “draw” by Landlord of all or any portion of the L-C, regardless of whether any
dispute exists between Tenant and Landlord as to Landlord’s right to draw down
all or any portion of the L-C. No condition or term of this Lease shall be
deemed to render the L-C conditional and thereby afford the Bank a justification
for failing to honor a drawing upon such L-C in a timely manner.

30.7 Waiver of Certain Relief. Tenant unconditionally and irrevocably waives
(and as an independent covenant hereunder, covenants not to assert) any right to
claim or obtain any of the following relief in connection with the L-C:

30.7.1 A temporary restraining order, temporary injunction, permanent
injunction, or other order that would prevent, restrain or restrict the
presentment of sight drafts drawn under any L-C or the Bank’s honoring or
payment of sight draft(s); or

30.7.2 Any attachment, garnishment, or levy in any manner upon either the
proceeds of any L-C or the obligations of the Bank (either before or after the
presentment to the Bank of sight drafts drawn under such L-C) based on any
theory whatever.

30.8 Remedy for Improper Drafts. Tenant’s sole remedy in connection with the
improper presentment or payment of sight drafts drawn under any L-C shall be the
right to obtain from Landlord a refund of the amount of any sight draft(s) that
were improperly presented or the proceeds of which were misapplied, together
with interest at the Interest Rate and reasonable actual out-of-pocket
attorneys’ fees, provided that at the time of such refund, Tenant increases the
amount of such L-C to the amount (if any) then required under the applicable
provisions of this Lease. Tenant acknowledges that the presentment of sight
draws drawn under any L-C, or the Bank’s payment of sight drafts drawn under
such L-C, could not under any circumstances cause Tenant injury that could not
be remedied by an award of money damages, and that the recovery of money damages
would be an adequate remedy therefor. In the event Tenant shall be entitled to a
refund as aforesaid and Landlord shall fail to make such payment within ten
(10) business days after demand, Tenant shall have the right to deduct the
amount thereof together with interest thereon at the Interest Rate from the next
installment(s) of Base Rent.

30.9 Notices to Bank. Tenant shall not request or instruct the Bank of any L-C
to refrain from paying sign draft(s) drawn under such L-C.

[Signature page immediately follows.]

 

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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed
the day and date first above written.

 

“LANDLORD”: KILROY REALTY, L.P., a Delaware limited partnership BY: Kilroy
Realty Corporation, a Maryland corporation, general partner By:

/s/ Jeffrey C. Hawken

Name:

Jeffrey C. Hawken

Its: Executive Vice President

Chief Operating Officer

By:

/s/ John T. Fucci

Name:

John T. Fucci

Its:

Sr. Vice President Asset Management

“TENANT”: TRION WORLDS, INC., a Delaware corporation By:

/s/ Ken Owyang

Name:

Ken Owyang

Its:

CFO

By:

/s/ Lars Buttler

Name:

Lars Buttler

Its:

CEO

 

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EXHIBIT A

KILROY CENTRE DEL MAR

OUTLINE OF PREMISES/SPACE PLAN

 

 

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EXHIBIT A

 

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EXHIBIT A-1

KILROY CENTRE DEL MAR

PROJECT SITE PLAN

 

 

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EXHIBIT A-1

 

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EXHIBIT B

KILROY CENTRE DEL MAR

WORK LETTER AGREEMENT

This Work Letter Agreement shall set forth the terms and conditions relating to
the construction of the improvements in the Premises. This Work Letter Agreement
is essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Work Letter
Agreement to Articles or Sections of “this Lease” shall mean the relevant
portion of Articles 1 through 30 of the Office Lease to which this Work Letter
Agreement is attached as Exhibit B and of which this Work Letter Agreement forms
a part, and all references in this Work Letter Agreement to Sections of “this
Work Letter Agreement” shall mean the relevant portion of Sections 1 through 6
of this Work Letter Agreement.

ARTICLE 1

IMPROVEMENTS

Using Building standard materials, components and finishes, Landlord shall cause
the installation and/or construction of the improvements in the Premises (the
“Improvements”) pursuant to that certain space plan attached to this Lease as
Exhibit A (the “Space Plan”). Other than as expressly contemplated by
Section 3.1 below, Tenant shall make no changes, additions or modifications to
the Improvements or the Space Plan or require the installation of any
“Non-Conforming Improvements” (as that term is defined in Article 2, below),
without the prior written consent of Landlord, which consent may be withheld in
Landlord’s sole discretion if such change or modification would directly or
indirectly delay the “Substantial Completion” (as that term is defined in
Section 5.1, below) of the Improvements or impose any additional costs.
Notwithstanding the foregoing or any contrary provision of this Lease, all
Improvements shall be deemed Landlord’s property under the terms of this Lease.
Notwithstanding any provision to the contrary contained in this Work Letter
Agreement, in no event shall the cost of the Improvements exceed a total amount
equal to […***…] Dollars ($[…***…]) (i.e., […***…] Dollars ($[…***…]) per each
of the rentable square feet of the Premises) (the “Landlord Contribution
Amount”). All costs in excess of the Landlord Contribution Amount shall be paid
to Landlord by Tenant in advance within five (5) days following Tenant’s receipt
of a request therefor. All such funds provided by Tenant shall be disbursed by
Landlord and exhausted prior to disbursement of the Landlord Contribution
Amount. Notwithstanding any provision to the contrary contained in this Lease or
this Work Letter, but except as expressly provided in Section 6.8 below, in no
event shall the Landlord be obligated to pay (via the Landlord Contribution
Amount or otherwise) for any moving costs or expenses or any costs or expenses
associated with the purchase, installation, operation or maintenance of any
furniture, fixtures, equipment, art, cabling, audio/visual equipment, access
controls, security equipment and/or office signage.

 

*** Confidential Treatment Requested

 

EXHIBIT B

 

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ARTICLE 2

OTHER IMPROVEMENTS; IMPROVEMENTS CHANGE

Notwithstanding anything to the contrary contained herein, Tenant shall be
responsible for the cost of any items not identified on the Space Plan and/or
any items requiring other than Building standard materials, components or
finishes (collectively, the “Non-Conforming Improvements”). In the event Tenant
desires such Non-Conforming Improvements, Tenant shall deliver written notice
(the “Change Notice”) of the same to Landlord, setting forth in detail the
Non-Conforming Improvements (the “Improvements Change”). Landlord shall,
following receipt of a Change Notice related to an Improvements Change, either
(i) approve the Improvements Change, or (ii) disapprove the Improvements Change.
In the event that Improvements Change is approved, and incorporated in the Final
Working Drawings or the Improvements, any additional costs which arise in
connection with any such Improvements Change shall be paid by Tenant to Landlord
in cash, in advance, upon Landlord’s request (including but not limited to all
costs incurred by Landlord in connection with its review of the Change Notice
and any related documents) (all such costs shall collectively be referred to as
the “Change Amount”). Any such amounts required to be paid by Tenant shall be
disbursed by Landlord prior to any Landlord provided funds for the costs of
construction of the Improvements. In the event Tenant fails to pay the Change
Amount, then Landlord may, at its option, cease work in the Premises until such
time as Landlord receives payment of such portion of the Change Amount (and such
failure to deliver shall be treated as a Tenant Delay, as that term is defined
in Section 5.2 below).

ARTICLE 3

CONSTRUCTION DRAWINGS,

3.1 Final Working Drawings. Within twenty (20) days following the full execution
and delivery of this Lease by Landlord and Tenant, Tenant shall cooperate and
coordinate with the Landlord and any architect and/or engineers retained by
Landlord in order to allow such parties to complete the architectural and
engineering drawings for the Premises based on the Space Plan, and which
drawings shall be consistent with, and a logical extension of, the Space Plan.
The final architectural working drawings shall be in a form to allow
subcontractors to bid on the work and to obtain all applicable permits
(collectively, the “Final Working Drawings”).

3.2 Permits. The Final Working Drawings shall be approved by Landlord (the
“Approved Working Drawings”) prior to the commencement of the construction of
the Improvements. Landlord shall submit the Approved Working Drawings to the
appropriate municipal authorities for all applicable building and other permits
necessary to allow Landlord to commence and fully complete the construction of
the Improvements; (the “Permits”). No changes, modifications or alterations in
the Approved Working Drawings may be made without the prior written consent of
Landlord, provided that Landlord may withhold its consent, in its sole
discretion, to any change in the Approved Working Drawings if such change would
directly or indirectly delay the “Substantial Completion” of the Premises as
that term is defined in Section 5.1 of this Work Letter Agreement, or otherwise
materially increase the costs of the

 

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Improvements (unless Tenant agrees to bear such increased cost). Any such
foregoing cost increases shall also be deemed a component of the Change Amount.

3.3 Contractor’s Warranties and Guaranties. Landlord hereby assigns to Tenant
all warranties and guaranties by the contractor who constructs the Improvements
the “Contractor”) relating to the Improvements, and Tenant hereby waives all
claims against Landlord relating to or arising out of the design and
construction of the Improvements and/or Non-Conforming Improvements.

ARTICLE 4

TENANT’S AGENTS

Tenant hereby protects, defends, indemnifies and holds Landlord harmless for any
loss, claims, damages or delays arising from the actions of Tenant’s space
planner/architect and/or any separate contractors, subcontractors or consultants
on the Premises or in the Building.

ARTICLE 5

COMPLETION OF THE IMPROVEMENTS;

LEASE COMMENCEMENT DATE

5.1 Ready for Occupancy. The Premises shall be deemed “Ready for Occupancy” upon
the Substantial Completion of the Improvements. For purposes of this Lease,
“Substantial Completion” of the Improvements shall occur upon the completion of
construction of the Improvements, with the exception of any punch list items,
which punch list items will be completed as soon as reasonably possible. The
server room must be fully operational for the Premises to be deemed “Ready for
Occupancy”.

5.2 Delay of the Substantial Completion of the Premises. Except as provided in
this Section 5.2, the Lease Commencement Date shall occur as set forth in
Article 2 of the Lease and Section 5.1 of this Work Letter Agreement, above. If
there shall be a delay or there are delays in the Substantial Completion of the
Improvements or in the occurrence of any of the other conditions precedent to
the Lease Commencement Date, as set forth in Article 2 of the Lease, as a
direct, indirect, partial, or total result of:

5.2.1 Tenant’s failure to timely approve any matter requiring Tenant’s approval;

5.2.2 A breach by Tenant of the terms of this Work Letter Agreement or the
Lease;

5.2.3 Tenant’s request for changes in the Improvements;

5.2.4 Any Non-Conforming Improvements;

5.2.5 Tenant’s requirement for materials, components, finishes or improvements
which are not available in a commercially reasonable time given the anticipated
date of

 

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Substantial Completion of the Premises, as set forth in the Lease, or which are
different from, or not included in, Landlord’s Building standards;

5.2.6 Any failure by Tenant to pay for in cash in advance any costs for
Non-Conforming Improvements;

5.2.7 Changes to the base, shell and core work of the Building required by the
Improvements or

52.8 Any other acts or omissions of Tenant, or its agents, or employees;

then, notwithstanding anything to the contrary set forth in the Lease or this
Work Letter Agreement and regardless of the actual date of the Substantial
Completion of the Improvements, the Substantial Completion of the Improvements
shall be deemed to be the date the Substantial Completion of the Improvements
would have occurred if no Tenant delay or delays, as set forth above, had
occurred.

ARTICLE 6

MISCELLANEOUS

6.1 Tenant’s Entry Into the Premises Prior to Substantial Completion. Provided
that Tenant and its agents do not interfere with the construction of the
Improvements, Tenant shall have reasonable access to the Premises prior to the
Substantial Completion of the Improvements for the sole purpose of Tenant
installing equipment, furniture, or fixtures (including Tenant’s data and
telephone equipment) in the Premises. Prior to Tenant’s entry into the Premises
as permitted by the terms of this Section 6.1, Tenant shall submit a schedule to
Landlord and Contractor, for their approval, which schedule shall detail the
timing and purpose of Tenant’s entry. Tenant shall hold Landlord harmless from
and indemnify, protect and defend Landlord against any loss or damage to the
Building or Premises and against injury to any persons caused by Tenant’s
actions pursuant to this Section 6.1.

6.2 Tenant’s Representative. Tenant has designated Nick Beliaeff as its sole
representative with respect to the matters set forth in this Work Letter
Agreement (whose e-mail address for the purposes of this Work Letter Agreement
is nick@trionworlds.com), who, until further notice to Landlord, shall have full
authority and responsibility to act on behalf of the Tenant as required in this
Work Letter Agreement.

6.3 Landlord’s Representative. Landlord has designated Mr. Jake Brehm as its
sole representative with respect to the matters set forth in this Work Letter
Agreement (whose e-mail address for the purposes of this Work Letter Agreement
is jbrehm@kilroyrealty.com), who, until further notice to Tenant, shall have
full authority and responsibility to act on behalf of the Landlord as required
in this Work Letter Agreement.

6.4 Tenant’s Agents. All subcontractors, laborers, materialmen, and suppliers
retained directly by Tenant shall all be union labor in compliance with the
master labor agreements existing between trade unions and the Southern
California Chapter of the Associated General Contractors of America.

 

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6.5 Time of the Essence in This Work Letter Agreement. Unless otherwise
indicated, all references herein to a “number of days” shall mean and refer to
calendar days. In all instances where Tenant is required to approve or deliver
an item, if no written notice of approval is given or the item is not delivered
within the stated time period, at Landlord’s sole option, at the end of such
period the item shall automatically be deemed approved or delivered by Tenant
and the next succeeding time period shall commence.

6.6 Tenant’s Lease Default. Notwithstanding any provision to the contrary
contained in the Lease or this Work Letter Agreement, if any default by Tenant
under the Lease or this Work Letter Agreement (including, without limitation,
any failure by Tenant to fund in advance the costs for any Non-Conforming
Improvements) occurs, then (i) in addition to all other rights and remedies
granted to Landlord pursuant to the Lease, Landlord shall have the right to
cause the cessation of construction of the Improvements (in which case, Tenant
shall be responsible for any delay in the Substantial Completion of the
Improvements and any costs occasioned thereby), and (ii) all other obligations
of Landlord under the terms of the Lease and this Work Letter Agreement shall be
forgiven until such time as such default is cured pursuant to the terms of this
Lease.

6.7 Electronic Approvals. Notwithstanding any provision to the contrary
contained in the Lease or this Work Letter Agreement, Landlord may, in
Landlord’s sole and absolute discretion, transmit or otherwise deliver any of
the approvals required under this Work Letter Agreement via electronic mail to
Tenant’s representative identified in Section 6.1 of this Work Letter Agreement,
or by any of the other means identified in Section 29.18 of this Lease.

6.8 Data Cabling/Moving Allowance (Remaining Unused Landlord Contribution
Amount). As set forth in Section 6.1 above, Tenant shall have the right to
install voice, data and other information technology (“IT”) cabling (“Data
Cabling”), at its sole cost and expense (but subject to the following terms of
this Section 6.8), and incur, at its sole cost and expense (but subject to the
following terms of this Section 6.8), reasonable out-of-pocket moving costs in
connection with its relocation from the CVCC Premises to the Premises (the
“Moving Costs”). All such Data Cabling shall be installed in the Premises
subject to the terms and conditions of Article 8 of the Lease. Notwithstanding
the foregoing, following the Substantial Completion of the Improvements (and the
disbursement of the Landlord Contribution Amount in connection with the
completion of the Improvements (which disbursements shall include, but not be
limited to, those related to the performance of punch-list items pertaining to
the Improvements)), Tenant shall be entitled to a one-time disbursement of any
then-remaining (i.e., after the Improvements’ have been fully paid for) portion
of the Landlord Contribution Amount not to exceed a total of […***…] Dollars per
each rentable square foot of the Premises (i.e., up to a total of […***…]
Dollars ($[…***…])) (which remaining portion of the Landlord Contribution Amount
(if any) shall be referred to herein as the “Data Cabling/Moving Allowance”) for
costs relating to the design and installation of Tenant’s Data Cabling and
Tenant’s Moving Costs. In no event shall any of the Data Cabling/Moving
Allowance be used to pay for Tenant’s furniture or other items of personal
property. The Data Cabling/Moving Allowance will be disbursed by Landlord in
accordance with Landlord’s standard disbursement procedures, including, without
limitation, following Landlord’s receipt of (i) evidence (i.e., invoices or
other documentation reasonably satisfactory to Landlord) of payment for the Data
Cabling and/or Moving Costs, and (ii) fully executed, unconditional lien

 

*** Confidential Treatment Requested

 

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releases from all contractors, subcontractors, laborers, materialmen, and
suppliers used by Tenant in connection with the Data Cabling. In no event shall
Landlord be obligated to disburse any portion of the Data Cabling/Moving
Allowance subsequent to December 31, 2013, nor shall Landlord be obligated to
disburse any amount in excess of the Data Cabling/Moving Allowance in connection
with the installation of the Data Cabling and/or the reimbursement for Moving
Costs. No portion of the Data Cabling/Moving Allowance, if any, remaining after
the installation of the Data Cabling/payment of Moving Costs shall be available
for use by Tenant (except as set forth in Section 6.9 below).

6.9 Tenant’s Construction Consultant. Tenant may, at Tenant’s option, elect to
retain a construction consultant to assist Tenant in connection with the
construction of the Improvements pursuant to the terms of this Work Letter (the
“Construction Consultant”), at its sole cost and expense (but subject to the
following terms of this Section 6.9). Any and all costs associated with Tenant’s
retention of the Construction Consultant shall be referred to herein as the
“Construction Consultant Costs.” Notwithstanding the foregoing, following the
Substantial Completion of the Improvements (and the disbursement of the Landlord
Contribution Amount in connection with the completion of the Improvements (which
disbursements shall include, but not be limited to, those related to the
performance of punch-list items pertaining to the Improvements) and the
disbursement of the Data Cabling/Moving Allowance (if any)), Tenant shall be
entitled to a one-time disbursement of any then-remaining (i.e., after the
Improvements, the Data Cabling and the Moving Costs have been fully paid for
pursuant to the terms of this Work Letter) portion of the Landlord Contribution
Amount not to exceed a total of […***…] ([…***…]%) of the hard costs incurred by
Landlord in constructing the Improvement pursuant to the terms hereof (which
remaining portion of the Landlord Contribution Amount (if any) following the
disbursement of any Data Cabling/Moving Allowance shall be referred to herein as
the “Construction Consultant Allowance”) for the Construction Consultant Costs.
In no event shall any of the Construction Consultant Allowance be used to pay
for Tenant’s furniture or other items of personal property. The Construction
Consultant Allowance will be disbursed by Landlord in accordance with Landlord’s
standard disbursement procedures, including, without limitation, following
Landlord’s receipt of evidence (i.e., invoices or other documentation reasonably
satisfactory to Landlord) of payment for the Construction Consultant Costs. In
no event shall Landlord be obligated to disburse any portion of the Construction
Consultant Allowance subsequent to December 31, 2013, nor shall Landlord be
obligated to disburse any amount in excess of the Construction Consultant
Allowance in connection with the reimbursement of Construction Consultant Costs.
No portion of the Construction Consultant Allowance, if any, remaining after the
payment of the Construction Consultant Costs shall be available for use by
Tenant.

 

*** Confidential Treatment Requested

 

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EXHIBIT C

KILROY CENTRE DEL MAR

FORM OF NOTICE OF LEASE TERM DATES

 

To:    

 

 

 

 

 

Re:    

Office Lease dated                     , 201     between                     , a
                     (“Landlord”), and                     , a
                     (“Tenant”) concerning Suite                      on
floor(s)                      of the office building located at
                    ,                     , California.

Gentlemen:

In accordance with the Office Lease (the “Lease”), we wish to advise you and/or
confirm as follows:

 

  1. The Lease Term shall commence on or has commenced on                     
for a term of                      ending on                     .

 

  2. Rent commenced to accrue on                     , in the amount of
                    .

 

  3. If the Lease Commencement Date is other than the first day of the month,
the first billing will contain a pro rata adjustment. Each billing thereafter,
with the exception of the final billing, shall be for the full amount of the
monthly installment as provided for in the Lease.

 

  4. Your rent checks should be made payable to                      at
                    .

 

  5. The exact number of rentable/usable square feet within the Premises is
                     square feet.

 

EXHIBIT C

 

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  6. Tenant’s Share as adjusted based upon the exact number of usable square
feet within the Premises is             %.

 

“Landlord”: KILROY REALTY, L.P.,

a Delaware limited partnership

By:

 

              Its:

 

 

Agreed to and Accepted as of                     , 201    . “Tenant”:

 

a

 

By:

 

                Its:

 

 

EXHIBIT C

 

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EXHIBIT D

KILROY CENTRE DEL MAR

RULES AND REGULATIONS

Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. In the event of any
conflict between the Rules and Regulations and the other provisions of this
Lease, the latter shall control.

1. Tenant shall not alter any lock or install any new or additional locks or
bolts on any doors or windows of the Premises without obtaining Landlord’s prior
written consent. Tenant shall bear the cost of any lock changes or repairs
required by Tenant. Two keys will be furnished by Landlord for the Premises, and
any additional keys required by Tenant must be obtained from Landlord at a
reasonable cost to be established by Landlord. Upon the termination of this
Lease, Tenant shall restore to Landlord all keys of stores, offices, and toilet
rooms, either furnished to, or otherwise procured by, Tenant and in the event of
the loss of keys so furnished, Tenant shall pay to Landlord the cost of
replacing same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such changes.

2. All doors opening to public corridors shall be kept closed at all times
except for normal ingress and egress to the Premises.

3. Landlord reserves the right to close and keep locked all entrance and exit
doors of the Building during such hours as are customary for comparable
buildings in the San Diego, California area Tenant, its employees and agents
must be sure that the doors to the Building are securely closed and locked when
leaving the Premises if it is after the normal hours of business for the
Building. Any tenant, its employees, agents or any other persons entering or
leaving the Building at any time when it is so locked, or any time when it is
considered to be after normal business hours for the Building, may be required
to sign the Building register. Access to the Building may be refused unless the
person seeking access has proper identification or has a previously arranged
pass for access to the Building. Landlord will furnish passes to persons for
whom Tenant requests same in writing. Tenant shall be responsible for all
persons for whom Tenant requests passes and shall be liable to Landlord for all
acts of such persons. The Landlord and his agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person. In case of invasion, mob, riot, public excitement, or
other commotion, Landlord reserves the right to prevent access to the Building
or the Project during the continuance thereof by any means it deems appropriate
for the safety and protection of life and property.

4. No furniture, freight or equipment of any kind shall be brought into the
Building without prior notice to Landlord. All moving activity into or out of
the Building shall be scheduled with Landlord and done only at such time and in
such manner as Landlord designates. Landlord shall have the right to prescribe
the weight, size and position of all safes and other heavy property brought into
the Building and also the times and manner of moving the same in

 

EXHIBIT D

 

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and out of the Building. Safes and other heavy objects shall, if considered
necessary by Landlord, stand on supports of such thickness as is necessary to
properly distribute the weight. Landlord will not be responsible for loss of or
damage to any such safe or property in any case. Any damage to any part of the
Building, its contents, occupants or visitors by moving or maintaining any such
safe or other property shall be the sole responsibility and expense of Tenant.

5. No furniture, packages, supplies, equipment or merchandise will be received
in the Building or carried up or down in the elevators, except between such
hours, in such specific elevator and by such personnel as shall be designated by
Landlord.

6. The requirements of Tenant will be attended to only upon application at the
management office for the Project or at such office location designated by
Landlord. Employees of Landlord shall not perform any work or do anything
outside their regular duties unless under special instructions from Landlord.

7. No sign, advertisement, notice or handbill shall be exhibited, distributed,
painted or affixed by Tenant on any part of the Premises or the Building without
the prior written consent of the Landlord. Tenant shall not disturb, solicit,
peddle, or canvass any occupant of the Project and shall cooperate with Landlord
and its agents of Landlord to prevent same.

8. The toilet rooms, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed, and no foreign
substance of any kind whatsoever shall be thrown therein. The expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by the tenant who, or whose servants, employees, agents, visitors or
licensees shall have caused same.

9. Tenant shall not overload the floor of the Premises, nor mark, drive nails or
screws, or drill into the partitions, woodwork or drywall or in any way deface
the Premises or any part thereof without Landlord’s prior written consent
(except for standard picture hanging). Tenant shall not purchase spring water,
ice, towel, linen, maintenance or other like services from any person or persons
not approved by Landlord.

10. Except for vending machines intended for the sole use of Tenant’s employees
and invitees, no vending machine or machines other than fractional horsepower
office machines shall be installed, maintained or operated upon the Premises
without the written consent of Landlord.

11. Tenant shall not use or keep in or on the Premises, the Building, or the
Project any kerosene, gasoline, explosive material, corrosive material, material
capable of emitting toxic fumes, or other inflammable or combustible fluid
chemical, substitute or material. Tenant shall provide material safety data
sheets for any Hazardous Material used or kept on the Premises.

12. Tenant shall not without the prior written consent of Landlord use any
method of heating or air conditioning other than that supplied by Landlord.

13. Tenant shall not use, keep or permit to be used or kept, any foul or noxious
gas or substance in or on the Premises, or permit or allow the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Project by reason of

 

EXHIBIT D

 

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noise, odors, or vibrations, or interfere with other tenants or those having
business therein, whether by the use of any musical instrument, radio,
phonograph, or in any other way. Tenant shall not throw anything out of doors,
windows or skylights or down passageways.

14. Tenant shall not bring into or keep within the Project, the Building or the
Premises any firearms, animals, birds, aquariums, or, except in areas designated
by Landlord, bicycles or other vehicles.

15. No cooking shall be done or permitted on the Premises, nor shall the
Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters’ laboratory-approved equipment and microwave ovens may be used in
the Premises for heating food and brewing coffee, tea, hot chocolate and similar
beverages for employees and visitors, provided that such use is in accordance
with all applicable federal, state, county and city laws, codes, ordinances,
rules and regulations.

16. The Premises shall not be used for manufacturing or for the storage of
merchandise except as such storage may be incidental to the use of the Premises
provided for in the Summary. Tenant shall not occupy or permit any portion of
the Premises to be occupied as an office for a messenger-type operation or
dispatch office, public stenographer or typist, or for the manufacture or sale
of liquor, narcotics, or tobacco in any form, or as a medical office, or as a
barber or manicure shop, or as an employment bureau without the express prior
written consent of Landlord. Tenant shall not engage or pay any employees on the
Premises except those actually working for such tenant on the Premises nor
advertise for laborers giving an address at the Premises.

17. Landlord reserves the right to exclude or expel from the Project any person
who, in the judgment of Landlord, is intoxicated or under the influence of
liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.

18. Tenant, its employees and agents shall not loiter in or on the entrances,
corridors, sidewalks, lobbies, courts, halls, stairways, elevators, vestibules
or any Common Areas for the purpose of smoking tobacco products or for any other
purpose, nor in any way obstruct such areas, and shall use them only as a means
of ingress and egress for the Premises. Furthermore, in no event shall Tenant,
its employees or agents smoke tobacco products within the Building or within
seventy-five feet (75’) of any entrance into the Building or into any other
Project building.

19. Tenant shall not waste electricity, water or air conditioning and agrees to
cooperate fully with Landlord to ensure the most effective operation of the
Building’s heating and air conditioning system, and shall refrain from
attempting to adjust any controls. Tenant shall participate in recycling
programs undertaken by Landlord.

20. Tenant shall store all its trash and garbage within the interior of the
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in San Diego,
California without violation of any law or ordinance governing such disposal.
All trash, garbage and refuse disposal shall be made only through entry-ways and

 

EXHIBIT D

 

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elevators provided for such purposes at such times as Landlord shall designate.
If the Premises is or becomes infested with vermin as a result of the use or any
misuse or neglect of the Premises by Tenant, its agents, servants, employees,
contractors, visitors or licensees, Tenant shall forthwith, at Tenant’s expense,
cause the Premises to be exterminated from time to time to the satisfaction of
Landlord and shall employ such licensed exterminators as shall be approved in
writing in advance by Landlord:

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

22. Any persons employed by Tenant to do janitorial work shall be subject to the
prior written approval of Landlord, and while in the Building and outside of the
Premises, shall be subject to and under the control and direction of the
Building manager (but not as an agent or servant of such manager or of
Landlord), and Tenant shall be responsible for all acts of such persons.

23. No awnings or other projection shall be attached to the outside walls of the
Building without the prior written consent of Landlord, and no curtains, blinds,
shades or screens shall be attached to or hung in, or used in connection with,
any window or door of the Premises other than Landlord standard drapes. All
electrical ceiling fixtures hung in the Premises or spaces along the perimeter
of the Building must be fluorescent and/or of a quality, type, design and a warm
white bulb color approved in advance in writing by Landlord. Neither the
interior nor exterior of any windows shall be coated or otherwise sunscreened
without the prior written consent of Landlord. Tenant shall be responsible for
any damage to the window film on the exterior windows of the Premises and shall
promptly repair any such damage at Tenant’s sole cost and expense. Tenant shall
keep its window coverings closed during any period of the day when the sun is
shining directly on the windows of the Premises. Prior to leaving the Premises
for the day, Tenant shall draw or lower window coverings and extinguish all
lights. Tenant shall abide by Landlord’s regulations concerning the opening and
closing of window coverings which are attached to the windows in the Premises,
if any, which have a view of any interior portion of the Building or Building
Common Areas.

24. The sashes, sash doors, skylights, windows, and doors that reflect or admit
light and air into the halls, passageways or other public places in the Building
shall not be covered or obstructed by Tenant, nor shall any bottles, parcels or
other articles be placed on the windowsills.

25. Tenant must comply with requests by the Landlord concerning the informing of
their employees of items of importance to the Landlord.

26. Tenant must comply with applicable “NO-SMOKING” ordinances and all related,
similar or successor ordinances, rules, regulations or codes. If Tenant is
required under the ordinance to adopt a written smoking policy, a copy of said
policy shall be on file in the office of the Building. In addition, no smoking
of any substance shall be permitted within the Project except in specifically
designated outdoor areas. Within such designated outdoor areas, all remnants of
consumed cigarettes and related paraphernalia shall be deposited in ash trays
and/or waste receptacles. No cigarettes shall be extinguished and/or left on the
ground or any other surface of the Project. Cigarettes shall be extinguished
only in ashtrays. Furthermore, in

 

EXHIBIT D

 

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no event shall Tenant, its employees or agents smoke tobacco products or other
substances within any interior areas of the Project or within seventy-five feet
(75’) of any entrance into the Building or into any other Project building.

27. Tenant hereby acknowledges that Landlord shall have no obligation to provide
guard service or other security measures for the benefit of the Premises, the
Building or the Project. Tenant hereby assumes all responsibility for the
protection of Tenant and its agents, employees, contractors, invitees and
guests, and the property thereof, from acts of third parties, including keeping
doors locked and other means of entry to the Premises closed, whether or not
Landlord, at its option, elects to provide security protection for the Project
or any portion thereof. Tenant further assumes the risk that any safety and
security devices, services and programs which Landlord elects, in its sole
discretion, to provide may not be effective, or may malfunction or be
circumvented by an unauthorized third party, and Tenant shall, in addition to
its other insurance obligations under this Lease, obtain its own insurance
coverage to the extent Tenant desires protection against losses related to such
occurrences. Tenant shall cooperate in any reasonable safety or security program
developed by Landlord or required by law.

28. All office equipment of any electrical or mechanical nature shall be placed
by Tenant in the Premises in settings approved by Landlord, to absorb or prevent
any vibration, noise and annoyance.

29. Tenant shall not use in any space or in the public halls of the Building,
any hand trucks except those equipped with rubber tires and rubber side guards.

30. No auction, liquidation, fire sale, going-out-of-business or bankruptcy sale
shall be conducted in the Premises without the prior written consent of
Landlord.

31. No tenant shall use or permit the use of any portion of the Premises for
living quarters, sleeping apartments or lodging rooms.

32. Tenant shall not purchase spring water, towels, janitorial or maintenance or
other similar services from any company or persons not approved by Landlord.
Landlord shall approve a sufficient number of sources of such services to
provide Tenant with a reasonable selection, but only in such instances and to
such extent as Landlord in its judgment shall consider consistent with the
security and proper operation of the Building.

33. Tenant shall install and maintain, at Tenant’s sole cost and expense, an
adequate, visibly marked and properly operational fire extinguisher next to any
duplicating or photocopying machines or similar heat producing equipment, which
may or may not contain combustible material, in the Premises.

Landlord reserves the right at any time to change or rescind any one or more of
these Rules and Regulations, or to make such other and further reasonable Rules
and Regulations as in Landlord’s judgment may from time to time be necessary for
the management, safety, care and cleanliness of the Premises, Building, the
Common Areas and the Project, and for the preservation of good order therein, as
well as for the convenience of other occupants and tenants therein. Landlord may
waive any one or more of these Rules and Regulations for the benefit of any
particular tenants, but no such waiver by Landlord shall be construed as a
waiver of such

 

EXHIBIT D

 

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Rules and Regulations in favor of any other tenant, nor prevent Landlord from
thereafter enforcing any such Rules or Regulations against any or all tenants of
the Project. Tenant shall be deemed to have read these Rules and Regulations and
to have agreed to abide by them as a condition of its occupancy of the Premises.

 

EXHIBIT D

 

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EXHIBIT E

KILROY CENTRE DEL MAR

FORM OF TENANT’S ESTOPPEL CERTIFICATE’

The undersigned as Tenant under that certain Office Lease (the “Lease”) made and
entered into as of             , 201     by and between                  as
Landlord, and the undersigned as Tenant, for Premises on the                 
floor(s) of the office building located at                 ,                 ,
California             , certifies as follows:

1. Attached hereto as Exhibit A is a true and correct copy of the Lease and all
amendments and modifications thereto. The documents contained in Exhibit A
represent the entire agreement between the parties as to the Premises.

2. The undersigned currently occupies the Premises described in the Lease, the
Lease Term commenced on             , and the Lease Term expires on
            , and the undersigned has no option to terminate or cancel the Lease
or to purchase all or any part of the Premises, the Building and/or the Project.

3. Base Rent became payable on                 .

4. The Lease is in full force and effect and has not been modified, supplemented
or amended in any way except as provided in Exhibit A.

5. Tenant has not transferred, assigned, or sublet any portion of the Premises
nor entered into any license or concession agreements with respect thereto
except as follows:

6. Tenant shall not modify the documents contained in Exhibit A without the
prior written consent of Landlord’s mortgagee.

7. All monthly installments of Base Rent, all Additional Rent and all monthly
installments of estimated Additional Rent have been paid when due through
            . The current monthly installment of Base Rent is $            .

8. All conditions of the Lease to be performed by Landlord necessary to the
enforceability of the Lease have been satisfied and Landlord is not in default
thereunder. In addition, the undersigned has not delivered any notice to
Landlord regarding a default by Landlord thereunder.

9. No rental has been paid more than thirty (30) days in advance and no security
has been deposited with Landlord except as provided in the Lease.

10. As of the date hereof, there are no existing defenses or offsets, or, to the
undersigned’s knowledge, claims or any basis for a claim, that the undersigned
has against Landlord.

 

EXHIBIT E

 

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11. If Tenant is a corporation or partnership, each individual executing this
Estoppel Certificate on behalf of Tenant hereby represents and warrants that
Tenant is a duly formed and existing entity qualified to do business in
California and that Tenant has full right and authority to execute and deliver
this Estoppel Certificate and that each person signing on behalf of Tenant is
authorized to do so.

12. There are no actions pending against the undersigned under the bankruptcy or
similar laws of the United States or any state.

13. Other than in compliance with all applicable laws and incidental to the
ordinary course of the use of the Premises, the undersigned has not used or
stored any hazardous substances in the Premises.

14. To the undersigned’s knowledge, all improvement work to be performed by
Landlord under the Lease has been completed in accordance with the Lease and has
been accepted by the undersigned and all reimbursements and allowances due to
the undersigned under the Lease in connection with any improvement work have
been paid in full.

The undersigned acknowledges that this Estoppel Certificate may be delivered to
Landlord or to a prospective mortgagee or prospective purchaser, and
acknowledges that said prospective mortgagee or prospective purchaser will be
relying upon the statements contained herein in making the loan or acquiring the
property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.

Executed at                  on the          day of                 , 201    .

 

“Tenant”:                                     
                                                                   , a

 

By:

 

Its:

 

By:

 

Its:

 

 

EXHIBIT E

 

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EXHIBIT F

KILROY CENTRE DEL MAR

RECOGNITION OF COVENANTS, CONDITIONS, AND RESTRICTIONS

RECORDING REQUESTED BY

AND WHEN RECRODED RETURN TO:

ALLEN MATKINS LECK GAMBLE

MALORY & NATSIS LLP

1901 Avenue of the Stars, 18th Floor

Los Angeles, California 90067

Attention: Anton N. Natsis, Esq.

 

 

RECOGNITION OF COVENANTS,

CONDITIONS, AND RESTRICTIONS

This Recognition of Covenants, Conditions, and Restrictions (this “Agreement”)
is entered into as of the     day of                 , 201    , by and between
                (“Landlord”), and                 (“Tenant”), with reference to
the following facts:

A. Landlord and Tenant entered into that certain Office Lease Agreement dated
                , 201    (the “Lease”). Pursuant to the Lease, Landlord leased
to Tenant and Tenant leased from Landlord space (the “Premises”) located in an
office building on certain real property described in Exhibit A attached hereto
and incorporated herein by this reference (the “Property”).

B. The Premises are located in an office building located on real property which
is part of an area owned by Landlord containing approximately
                (    ) acres of real property located in the City of
                , California (the “Project”), as more particularly described in
Exhibit B attached hereto and incorporated herein by this reference.

C. Landlord, as declarant, has previously recorded, or proposes to record
concurrently with the recordation of this Agreement, a Declaration of Covenants,
Conditions, and Restrictions (the “Declaration”), dated                 ,
201    , in connection with the Project.

D. Tenant is agreeing to recognize and be bound by the terms of the Declaration,
and the parties hereto desire to set forth their agreements concerning the same.

NOW, THEREFORE, in consideration of (a) the foregoing recitals and the mutual
agreements hereinafter set forth, and (b) for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows,

 

EXHIBIT F

 

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1. Tenant’s Recognition of Declaration. Notwithstanding that the Lease has been
executed prior to the recordation of the Declaration, Tenant agrees to recognize
and by bound by all of the terms and conditions of the Declaration.

2. Miscellaneous.

2.1 This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, estates, personal representatives,
successors, and assigns.

2.2 This Agreement is made in, and shall be governed, enforced and construed
under the laws of, the state of California.

2.3 This Agreement constitutes the entire understanding and agreements of the
parties with respect to the subject matter hereof, and shall supersede and
replace all prior understandings and agreements, whether verbal or in writing.
The parties confirm and acknowledge that there are no other promises, covenants,
understandings, agreements, representations, or warranties with respect to the
subject matter of this Agreement except as expressly set forth herein.

2.4 This Agreement is not to be modified, terminated, or amended in any respect,
except pursuant to any instrument in writing duly executed by both of the
parties hereto.

2.5 In the event that either party hereto shall bring any legal action or other
proceeding with respect to the breach, interpretation, or enforcement of this
Agreement, or with respect to any dispute relating to any transaction covered by
this Agreement, the losing party in such action or proceeding shall reimburse
the prevailing party therein for all reasonable costs of litigation, including
reasonable attorneys’ fees, in such amount as may be determined by the court or
other tribunal having jurisdiction, including matters on appeal.

2.6 All captions and heading herein are for convenience and ease of reference
only, and shall not be used or referred to in any way in connection with the
interpretation or enforcement of this Agreement.

2.7 If any provision of this Agreement, as applied to any party or to any
circumstance, shall be adjudged by a court of competent jurisdictions to be void
or unenforceable for any reason, the same shall not affect any other provision
of this Agreement, the application of such provision under circumstances
different form those adjudged by the court, or the validity or enforceability of
this Agreement as a whole.

2.8 Time is of the essence of this Agreement.

2.9 The Parties agree to execute any further documents, and take any further
actions, as may be reasonable and appropriate in order to carry out the purpose
and intent of this Agreement.

 

EXHIBIT F

 

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2.10 As used herein, the masculine, feminine or neuter gender, and the singular
and plural numbers, shall each be deemed to include the others whenever and
whatever the context so indicates.

 

EXHIBIT F

 

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SIGNATURE PAGE OF RECOGNITION OF

COVENANTS, CONDITIONS AND RESTRICTIONS

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

“Landlord”:

                                                                            
   ,

a                                                                              

By:  

                                                                               
              Its:                                   
                                                   

“Tenant”:

                                                                              
 ,

a                                                                              

By:  

 

Its:                                     
                                                 

By:  

 

Its:                                     
                                                 

 

EXHIBIT F

 

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EXHIBIT G

KILROY CENTRE DEL MAR

INTENTIONALLY OMITTED

 

EXHIBIT G

 

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EXHIBIT H

KILROY CENTRE DEL MAR

FORM OF LETTER OF CREDIT

**PROFORMA WORDING**FOR DISCUSSION ONLY** PLEASE REVIEW CAREFULLY***the verbiage
below are only suggestions. If you agree to utilize such suggestive language it
will be your sole decision. As a result of which you agree to hold harmless
COMERICA BANK from or against all liabilities, including principal, interest,
fines, damages, costs and expenses, incurred by or imposed on COMERICA BANK in
connection with your use of such suggested verbiage.

 

WORDING APPROVED, (APPLICANT).: DATE:                 

FAX NO:     (310) 297-2890

SWIFT:     MNBDUS6S LAX

COMERICA BANK

INTERNATIONAL TRADE SERVICES

2321 ROSECRANS AVE., 5TH FL.

EL SEGUNDO, CA. 90245

DATE OF ISSUE:     MMDDYYYY

BENEFICIARY:

Complete Name and Address)

GENTLEMEN:

WE HEREBY OPEN OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. [INSERT L/C NO.] IN
YOUR FAVOR, FOR ACCOUNT OF (APPLICANT’S COMPLETE NAME AND ADDRESS) FOR A SUM NOT
EXCEEDING USD             (Amount in Words AND 00/100’S U.S. DOLLARS) AVAILABLE
BY YOUR DRAFT(S) AT SIGHT DRAWN ON COMERICA BANK, (IN THE FORM ATTACHED HERETO
AS ANNEX A) WHEN ACCOMPANIED BY:

1. THE ORIGINAL OF THIS STANDBY LETTER OF CREDIT AND AMENDMENT(S) IF ANY.

2. BENEFICIARY’S STATEMENT ON ITS LETTERHEAD DATED AND SIGNED BY AN OFFICER OR A
DULY AUTHORIZED REPRESENTATIVE OF THE BENEFICIARY, INDICATING NAME AND TITLE OF
THE SIGNER AND WITH ONE OF THE FOLLOWING ALTERNATIVE WORDINGS:

(1) THE UNDERSIGNED HEREBY CERTIFIES THAT THE LANDLORD, EITHER (A) UNDER THE
LEASE (DEFINED BELOW) OR (B) AS A RESULT OF THE TERMINATION OF SUCH LEASE, HAS
THE RIGHT TO DRAW DOWN THE AMOUNT OF USD             IN ACCORDANCE WITH THE
TERMS OF THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS AMENDED
(COLLECTIVELY, THE “LEASE”), OR SUCH AMOUNT CONSTITUTES DAMAGES OWING BY THE
TENANT UNDER SUCH LEASE TO BENEFICIARY RESULTING FROM THE BREACH OF SUCH LEASE
BY THE TENANT THEREUNDER, AND SUCH AMOUNT REMAINS UNPAID AT THE TIME OF THIS
DRAWING.

OR

(2) THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN
THE FULL AMOUNT OF LETTER OF CREDIT NO.                 AS THE RESULT OF THE
FILING OF A VOLUNTARY PETITION UNDER THE U.S. BANKRUPTCY CODE OR A STATE
BANKRUPTCY CODE BY THE TENANT UNDER THAT CERTAIN OFFICE LEASED DATED [Insert
Lease Date], AS AMENDED (COLLECTIVELY, THE “LEASE”), WHICH FILING HAS NOT BEEN
DISMISSED AT THE TIME OF THIS DRAWING.

OR

 

EXHIBIT H

 

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(3) THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN
THE FULL AMOUNT OF LETTER OF CREDIT NO,                 AS THE RESULT OF AN
INVOLUNTARY PETITION HAVING BEEN FILED UNDER THE U.S. BANKRUPTCY CODE OR A STATE
BANKRUPTCY CODE AGAINST THE TENANT UNDER THAT CERTAIN OFFICE LEASE DATED,
[Insert Lease Date], AS AMENDED (COLLECTIVELY, THE “LEASE”), WHICH FILING HAS
NOT BEEN DISMISSED AT THE TIME OF THIS DRAWING.

OR

(4) THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN
THE FULL AMOUNT OF LETTER OF CREDIT NO.                 AS THE RESULT OF THE
REJECTION, OR DEEMED REJECTION, OF THAT CERTAIN OFFICE LEASE DATED [Insert Lease
Date], AS AMENDED, UNDER SECTION 365 OF THE U.S. BANKRUPTCY CODE.

SPECIAL CONDITIONS:

ALL SIGNATURES MUST BE MANUALLY EXECUTED IN ORIGINALS.

ALL INFORMATION REQUIRED WHETHER INDICATED BY BLANKS, BRACKETS OR OTHERWISE,
MUST BE COMPLETED AT THE TIME OF DRAWING.

PARTIAL DRAWINGS MAY BE MADE UNDER THIS LETTER OF CREDIT, PROVIDED, HOWEVER,
THAT EACH SUCH DEMAND THAT IS PAID BY US SHALL REDUCE THE AMOUNT AVAILABLE UNDER
THIS LETTER OF CREDIT.

IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE DEEMED AUTOMATICALLY
EXTENDED WITHOUT AMENDMENT FOR A PERIOD OF ONE YEAR FROM THE PRESENT OR ANY
FUTURE EXPIRATION DATE, UNLESS AT LEAST (60) SIXTY DAYS PRIOR TO THE CURRENT
EXPIRATION DATE WE SEND YOU NOTICE BY COURIER THAT WE ELECT NOT TO EXTEND THIS
CREDIT FOR ANY SUCH ADDITIONAL PERIOD. SAID NOTICE WILL BE SENT TO THE ADDRESS
INDICATED ABOVE UNLESS A CHANGE OF ADDRESS IS OTHERWISE NOTIFIED BY YOU TO US IN
WRITING BY RECEIPTED MAIL OR COURIER. UPON RECEIPT OF SUCH NOTICE, YOU MAY DRAW
HEREUNDER BY MEANS OF YOUR SIGHT DRAFT(S) DRAWN ON US AND YOUR SIGNED STATEMENT
READING AS FOLLOWS: “WE CERTIFY THAT THIS DRAWING REPRESENTS FUNDS DUE US AS A
RESULT OF OUR HAVING RECEIVED NOTIFICATION FROM COMERICA BANK OF ITS INTENTION
NOT TO EXTEND STANDBY LETTER OF CREDIT NO. [INSERT L/C NO]. IN NO EVENT, AND
WITHOUT FURTHER NOTICE FROM OURSELVES, SHALL THE EXPIRATION DATE BE EXTENDED
BEYOND A FINAL EXPIRATION DATE OF MM/DD/YYYY.

THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING AND SUCH
UNDERTAKING SHALL NOT BE IN ANY WAY MODIFIED, AMENDED OR AMPLIFIED BY REFERENCE
TO ANY DOCUMENT, INSTRUMENT OR AGREEMENT REFERRED TO HEREIN OR IN WHICH THIS
LETTER OF CREDIT IS REFERRED TO OR TO WHICH THIS LETTER OF CREDIT RELATES, AND
ANY SUCH REFERENCE SHALL NOT BE DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY
DOCUMENT, INSTRUMENT OR AGREEMENT.

ALL DRAFTS DRAWN UNDER THIS CREDIT MUST BE MARKED “DRAWN UNDER COMERICA BANK’S
LETTER OF CREDIT NO. [INSERT L/C NO.]”.

ALL DOCUMENTS MUST BE PRESENTED TO US IN ONE LOT VIA COURIER SERVICE TO:
COMERICA BANK INTERNATIONAL TRADE SERVICES, 2321 ROSECRANS AVE., 5TH FL., EL
SEGUNDO, CA 90245, ATTN: STANDBY LETTER OF CREDIT TEAM 44.

NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREINABOVE EXCEPT SO FAR AS
OTHERWISE EXPRESSLY STATED HEREIN, THIS STANDBY LETTER OF CREDIT IS SUBJECT TO
THE “INTERNATIONAL STANDBY PRACTICES” (ISP 98) INTERNATIONAL CHAMBER OF COMMERCE
(PUBLICATION NO. 590) (1998 VERSION AND ANY SUBSEQUENT REVISIONS).

WE ENGAGE WITH YOU THAT EACH DRAFT DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS
OF THIS CREDIT WILL BE DULY HONORED ON DELIVERY OF THE DOCUMENTS AS SPECIFIED IF
PRESENTED AT THIS OFFICE (IDENTIFIED HEREINABOVE) ON OR BEFORE 3:00PM,
                OR ANY AUTOMATICALLY EXTENDED DATE.

 

EXHIBIT H

 

-2-

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

ALL BANKING CHARGES ARE FOR THE APPLICANT’S ACCOUNT.

THIS LETTER OF CREDIT MAY BE TRANSFERRED SUCCESSIVELY IN WHOLE OR IN PART ONLY
UP TO THE THEN AVAILABLE AMOUNT IN FAVOR OF A NOMINATED TRANSFEREE
(“TRANSFEREE”), ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE IS IN COMPLIANCE WITH
ALL APPLICABLE U.S. LAWS AND REGULATIONS. AT THE TIME OF TRANSFER, THE ORIGINAL
LETTER OF CREDIT AND ORIGINAL AMENDMENT(S), IF ANY MUST BE SURRENDERED TO US
TOGETHER WITH OUR TRANSFER FORM (AVAILABLE UPON REQUEST) AND PAYMENT OF OUR
CUSTOMARY TRANSFER FEES BY APPLICANT. IN CASE OF ANY TRANSFER UNDER THIS LETTER
OF CREDIT, THE DRAFT AND ANY REQUIRED STATEMENT MUST BE EXECUTED BY THE
TRANSFEREE AND WHERE THE BENEFICIARY’S NAME APPEARS WITHIN THIS STANDBY LETTER
OF CREDIT, THE TRANSFEREE’S NAME IS AUTOMATICALLY’ SUBSTITUTED’ THEREFOR.

WE HEREBY AGREE WITH YOU THAT IF DRAFTS ARE PRESENTED TO COMERICA BANK UNDER
THIS LETTER OF CREDIT AT OR PRIOR TO [Insert Time – (e.g., 11:00 AM)], ON A
BUSINESS DAY, AND PROVIDED THAT SUCH DRAFTS PRESENTED CONFORM TO THE TERMS AND
CONDITIONS OF THIS LETTER OF CREDIT, PAYMENT SHALL BE INITIATED BY US IN
IMMEDIATELY AVAILABLE FUNDS BY OUR CLOSE OF BUSINESS ON THE SUCCEEDING BUSINESS
DAY. IF DRAFTS ARE PRESENTED TO COMERICA BANK UNDER THIS LETTER OF CREDIT AFTER
[Insert Time – (e.g., 11:00 AM)], ON A BUSINESS DAY, AND PROVIDED THAT SUCH
DRAFTS CONFORM WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT, PAYMENT
SHALL BE INITIATED BY US IN IMMEDIATELY AVAILABLE FUNDS BY OUR CLOSE OF BUSINESS
ON THE SECOND SUCCEEDING BUSINESS DAY. AS USED IN THIS LETTER OF CREDIT,
“BUSINESS DAY” SHALL MEAN ANY DAY OTHER THAN A SATURDAY, SUNDAY, OR A DAY ON
WHICH BANKING INSTITUTIONS IN THE STATE OF CALIFORNIA ARE AUTHORIZED OR REQUIRED
BY LAW TO CLOSE. IF THE EXPIRATION DATE FOR THIS LETTER OF CREDIT SHALL EVER
FALL ON A DAY WHICH IS NOT A BUSINESS DAY THEN SUCH EXPIRATION DATE SHALL
AUTOMATICALLY BE EXTENDED TO THE DATE WHICH IS THE NEXT BUSINESS DAY.

IN THE EVENT THAT THE ORIGINAL OF THIS STANDBY LETTER OF CREDIT IS LOST, STOLEN,
MUTILATED, OR OTHERWISE DESTROYED, WE HEREBY AGREE TO ISSUE A DUPLICATE ORIGINAL
HEREOF UPON RECEIPT OF A WRITTEN REQUEST FROM YOU AND A CERTIFICATION BY YOU
(PURPORTEDLY SIGNED BY YOUR AUTHORIZED REPRESENTATIVE) OF THE LOSS, THEFT,
MUTILATION, OR OTHER DESTRUCTION OF THE ORIGINAL HEREOF.

 

 

Authorized Signature

COMERICA BANK

[PLEASE ADD AN ANNEX B REGARDING FORM OF TRANSFER]

 

EXHIBIT H

 

-3-

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

ANNEX A

SIGHT DRAFT

 

 

DATE:                      REF. NO.                     

 

ARTICLE 31 AT SIGHT

 

PAY TO THE ORDER OF                                                  
US$            

 

US DOLLARS                                                                 
                                         
                                                                             

 

“DRAWN UNDER COMERICA BANK, IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER NO.
                     DATED                          , 2008”

 

TO:      COMERICA BANK

            2321 ROSECRANS AVE., 5TH FL

            EL SEGUNDO, CA 90245

 

(INSERT NAME OF BENEFICIARY)

 

AUTHORIZED SIGNATURE

 

GUIDELINES TO PREPARE THE SIGHT DRAFT:

 

1. DATE: ISSUANCE DATE OF DRAFT.

 

2. REF. NO.: YOUR REFERENCE NUMBER, IF ANY.

 

3. PAY TO THE ORDER OF: BENEFICIARY’S NAME

 

4 US$: AMOUNT OF DRAWING IN FIGURES.

 

5 US DOLLARS: AMOUNT OF DRAWING IN WORDS

 

6. LETTER OF CREDIT NUMBER: OUR STANDBY L/C NUMBER THAT PERTAINS TO THE DRAWING.

 

7. DATED: ISSUANCE DATE OF OUR STANDBY L/C.

NOTE: BENEFICIARY’S NAME SHOULD BE PRINTED AT THE BACK OF THE SIGHT DRAFT WITH
ENDORSEMENT.

 

EXHIBIT H

 

-4-

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

ANNEX B

FORM OF TRANSFER

[PLEASE PROVIDE]

 

EXHIBIT H

 

-5-

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

3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

EXHIBIT C

FURNITURE LIST

 

1 Lot of HON systems furniture 2 Maple laminate 24x30 return shell 2 3 Maple
laminate 24x36 return shell 9 4 Maple laminate 24x42 return shell 12 5 Maple
laminate 24x48 return shell 1 6 Maple laminate 30x48 return shell 2 7 Maple
laminate 30x60 desk shell 21 8 Maple laminate 30x66 desk shell 50 9 Cherry 30x66
desk shell 2 10 Maple laminate 36x72 bow front desk 2 11 Maple laminate 36x72
desk shell 1 12 Maple laminate 36x24x66 curved shell 6 13 Maple laminate 36
wide/2 high storage cabinet 1 14 Maple laminate 14x47 4 opening bookcase 17 15
Maple laminate 14x47 tall bookcase 1 16 Metal – misc colors Rolling BBF peds 20
17 Mesh task chair Black 10 18 Mahogany/Maple 42” round table 4 19 Mahogany 48”
round table 1 20 Mahogany 72x36 racetrack table 1 21 Mahogany 42x96 table 1 22
Mahogany 42x96 table 1 23 Mahogany 48x120 table 1 24 Mahogany 54x216 table 1 25
Mahogany 48x144 table 2 26 Mahogany Laminate 60” round table 1 27 Brown
wood/glass 60”x60”x60” Triangular table 1 28 Chairs to match table Fabric/wood 4
29 White refrigerator 1 30 JMG Security Panel 31 Altronix Panel 32 HP Color
Laserjet printer 5 33 1 lot – server room racks and data cable patch panels,
liebert APM power system & associated installation

 

C-1

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

3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

 

 

LOGO [g838665st_123.jpg]

 

C-2

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

3611 Valley Centre Drive

San Diego, CA

ACADIA Pharmaceuticals Inc.

EXHIBIT D

INITIAL ALTERATIONS

 

 

LOGO [g838665st_124.jpg]

 

 

D-1