Exhibit 10.1

EXECUTION VERSION

LEASE

by and between

BMR-6828 NANCY RIDGE DRIVE LLC,

a Delaware limited liability company

and

CARDIOVASCULAR BIOTHERAPEUTICS, INC.,

a Delaware corporation

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LEASE

THIS LEASE (this “Lease”) is entered into as of the 7th day of August, 2006 (the
“Effective Date”), by and between BMR-6828 NANCY RIDGE LLC, a Delaware limited
liability company (“Landlord”), and CARDIOVASCULAR BIOTHERAPEUTICS, INC., a
Delaware corporation (“Tenant”).

RECITALS

A. WHEREAS, Landlord owns certain real property (the “Property”) and the
building improvements thereon located at 6828 Nancy Ridge Drive in San Diego,
California, including the building located thereon (the “Building”) in which the
Premises (as defined below) are located; and

B. WHEREAS, Landlord wishes to lease to Tenant, and Tenant desires to lease from
Landlord, certain premises (the “Premises”) located in the Building, pursuant to
the terms and conditions of this Lease, as detailed below.

AGREEMENT

NOW, THEREFORE, Landlord and Tenant, in consideration of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
agree as follows:

1. Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, the Premises, as shown on Exhibit A attached hereto. The Property
and all landscaping, parking facilities and other improvements and appurtenances
related thereto, including, without limitation, the Building, are hereinafter
collectively referred to as the “Project.” All portions of the Project that are
for the non-exclusive use of tenants of the Building, including, without
limitation, driveways, sidewalks, parking areas, landscaped areas, service
corridors, stairways, elevators, public restrooms and Building lobbies, are
hereinafter referred to as “Common Area.”

2. Basic Lease Provisions. For convenience of the parties, certain basic
provisions of this Lease are set forth herein. The provisions set forth herein
are subject to the remaining terms and conditions of this Lease and are to be
interpreted in light of such remaining terms and conditions.

2.1. This Lease shall take effect upon the date of execution and delivery hereof
by all parties hereto and, except as specifically otherwise provided within this
Lease, each of the provisions hereof shall be binding upon and inure to the
benefit of Landlord and Tenant from the date of execution and delivery hereof by
all parties hereto.

2.2. Rentable Area of the Premises: 6,768 sq. ft., subject to adjustment
pursuant to the terms hereof

2.3. Rentable Area of the Building: 42,138 sq. ft., subject to adjustment
pursuant to the terms hereof

2.4. [Intentionally omitted]

2.5. [Intentionally omitted]

2.6. Initial Monthly Rental Installments of Basic Annual Rent:

6,768 s.f. x $2.25 per s.f. = $15,228.00, subject to adjustment pursuant to the
terms hereof

2.7. Initial Basic Annual Rent:

6,768 s.f. x $2.25 per s.f. x 12 months = $182,736.00, subject to adjustment
pursuant to the terms hereof

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2.8. Tenant’s Pro Rata Share: 16.06% of the Building, subject to adjustment
pursuant to the terms hereof

2.9. Term Commencement Date: September 1, 2006

2.10. Term Expiration Date: May 31, 2013

2.11. Security Deposit: $57,804.84

2.12. Permitted Use: General office and laboratory use in conformity with
Applicable Laws (as defined below)

 

2.13. Address for Rent Payment:   

Midland Loan Services

PNC Bank Lockbox

Lockbox Number 771223

1223 Solutions Center

Chicago, Illinois 60677-1002

2.14. Address for Notices to Landlord:   

BMR-6828 Nancy Ridge Drive LLC

17140 Bernardo Center Drive, Suite 222

San Diego, California 92128

Attn: General Counsel/Leasing

2.15. Address for Notices to Tenant:   

CardioVascular BioTherapeutics, Inc.

1635 Village Center Circle, Suite 250

Las Vegas, Nevada 89134

Attention: General Counsel

Phone: 702-839-7200

Fax: 702-304-2120

2.16. The following Exhibits are attached hereto and incorporated herein by
reference:

 

  Exhibit A Premises

  Exhibit B [Intentionally omitted]

  Exhibit C Tenant’s Personal Property

  Exhibit D Rules and Regulations

  Exhibit E Form of Estoppel Certificate

  Exhibit F [Intentionally omitted]

  Exhibit G Work Letter

3. Term.

3.1. This Lease shall take effect upon the date of execution and delivery hereof
by all parties hereto and, except as specifically otherwise provided within this
Lease, each of the provisions hereof shall be binding upon and inure to the
benefit of Landlord and Tenant from the date of execution and delivery hereof by
all parties hereto.

3.2. The actual term of this Lease (the “Term”) shall be that period from the
actual Term Commencement Date through the Term Expiration Date, subject to
earlier termination of this Lease as provided herein.

4. Possession and Commencement Date.

4.1 Landlord shall tender possession of the Premises in a vacant and clean
condition, with the Building systems in good working order and in compliance
with the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq. (together
with regulations promulgated pursuant thereto, the “ADA”), as of the Term
Commencement Date; provided, however, that Landlord shall provide a Phase 1
environmental analysis of the Premises to Tenant, no later August 15, 2006, and
Tenant shall have the right to access the Premises beginning August 1, 2006,
solely for the purposes of (a) monitoring construction of the Tenant
Improvements (as defined below) and (b) installing furniture, computer and fiber
networks, telecommunications equipment and other personal property permitted by
this Lease.

 

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4.2 [Intentionally omitted]

4.3 Prior to entering upon the Premises, Tenant shall furnish to Landlord
evidence satisfactory to Landlord that insurance coverages required of Tenant
under the provisions of Section 21 are in effect, and such entry shall be
subject to all the terms and conditions of this Lease other than the payment of
Basic Annual Rent or Additional Rent (as defined below).

4.4 Possession of areas of the Premises necessary for utilities, services,
safety and operation of the Building is reserved to Landlord.

4.5 Tenant shall cause to be constructed the tenant improvements in the Premises
(the “Tenant Improvements”) pursuant to the Work Letter at a cost to Landlord
(the “Tenant Improvement Allowance”) not to exceed Fifty Thousand Seven Hundred
Sixty and 00/100 Dollars ($50,760.00) (based upon Seven and 50/100 Dollars
($7.50) per usable square foot), which amount shall include the costs of
(a) construction, (b) project management by Landlord (which fee shall not exceed
four percent (4%) of the Tenant Improvement Allowance and Additional TI
Allowance (as defined below)), (c) space planning, architect, engineering and
other related services and (d) building permits and other planning and
inspection fees. If the total cost of the Tenant Improvements exceeds the sum of
the Tenant Improvement Allowance, then Landlord shall make available the
Additional TI Allowance in accordance with this Lease, and Tenant shall pay any
amount in excess of the Tenant Improvement Allowance and Additional TI Allowance
when due. Tenant shall have until March 31, 2007, to expend the unused portion
of the Tenant Improvement Allowance and Additional TI Allowance, after which
date Landlord’s obligation to fund such costs shall expire.

4.6 Landlord and Tenant shall mutually agree upon the selection of the
architect, engineer, general contractor and major subcontractors, and Landlord
and Tenant shall each participate in the review of the competitive bid process.

4.7 In addition to the Tenant Improvement Allowance, Landlord shall make
available to Tenant Fifty Thousand Seven Hundred Sixty and 00/100 Dollars
($50,760.00) (based upon Seven and 50/100 Dollars ($7.50) per usable square
foot) (the “Additional TI Allowance”) for construction of the initial Tenant
Improvements. Tenant shall repay to Landlord, in equal monthly installments as
Additional Rent (as defined below), the Additional TI Allowance amortized over
the initial Term of the Lease at an interest rate of nine percent (9%).

5. Rent.

5.1. Tenant shall pay to Landlord as Basic Annual Rent for the Premises,
commencing on the Term Commencement Date, the sum set forth in Section 2.7,
subject to the rental adjustments provided in Section 6 hereof. Basic Annual
Rent shall be paid in equal monthly installments as set forth in Section 2.6,
subject to the rental adjustments provided in Section 6 hereof, each in advance
on the first day of each and every calendar month during the Term; provided,
however, that Tenant shall have no obligation to pay Basic Annual Rent for the
first (1st), second (2nd), third (3rd), thirteenth (13th), fourteenth (14th) or
fifteenth (15th) calendar months of the Term.

5.2. In addition to Basic Annual Rent, Tenant shall pay to Landlord as
additional rent (“Additional Rent”) at times hereinafter specified in this Lease
(a) Tenant’s pro rata share, as set forth in Section 2.8 (“Tenant’s Pro Rata
Share”), of Operating Expenses as provided in Section 7 and (b) any other
amounts that Tenant assumes or agrees to pay under the provisions of this Lease
that are owed to Landlord, including, without limitation, any and all other sums
that may become due by reason of any default of Tenant or failure on Tenant’s
part to comply with the agreements, terms, covenants and conditions of this
Lease to be performed by Tenant, after notice and the lapse of any applicable
cure periods.

5.3. Basic Annual Rent and Additional Rent shall together be denominated “Rent.”
Rent shall be paid to Landlord, without abatement, deduction or offset, in
lawful money of the United States of America at the office of Landlord as set
forth in Section 2.13 or to such other person or at such other place as Landlord
may from time designate in writing. In the event the Term commences or ends on a
day other than the first day of a calendar month, then the Rent for

 

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such fraction of a month shall be prorated for such period on the basis of a
thirty (30) day month and shall be paid at the then-current rate for such
fractional month.

6. Rent Adjustments. The Basic Annual Rent shall be subject to an annual upward
adjustment of four percent (4%) of the then-current Basic Annual Rent. The first
such adjustment shall become effective commencing with that monthly rental
installment that is due on or after the first (1st) annual anniversary of the
Term Commencement Date, and subsequent adjustments shall become effective on
every successive annual anniversary for so long as this Lease continues in
effect.

7. Operating Expenses.

7.1. As used herein, the term “Operating Expenses” shall include:

(a) Government impositions including, without limitation, property tax costs
consisting of real and personal property taxes and assessments, including
amounts due under any improvement bond upon the Building or the Project,
including the parcel or parcels of real property upon which the Building and
areas serving such Building are located or assessments in lieu thereof imposed
by any federal, state, regional, local or municipal governmental authority,
agency or subdivision (each, a “Governmental Authority”) are levied; taxes on or
measured by gross rentals received from the rental of space in the Building;
taxes based on the square footage of the Premises, the Building or the Project,
as well as any parking charges, utilities surcharges or any other costs levied,
assessed or imposed by, or at the direction of, or resulting from Applicable
Laws (as defined below) or interpretations thereof, promulgated by any
Governmental Authority in connection with the use or occupancy of the Building
or the parking facilities serving the Building; taxes on this transaction or any
document to which Tenant is a party creating or transferring an interest in the
Premises; any fee for a business license to operate an office building; and any
expenses, including the reasonable cost of attorneys or experts, reasonably
incurred by Landlord in seeking reduction by the taxing authority of the
applicable taxes, less tax refunds obtained as a result of an application for
review thereof. Operating Expenses shall not include any net income, franchise,
capital stock, estate or inheritance taxes, or taxes that are the personal
obligation of Tenant or of another tenant of the Project; and

(b) All other costs of any kind paid or incurred by Landlord in connection with
the operation or maintenance of the Building and the Project including, by way
of example and not of limitation, costs of repairs and replacements to
improvements within the Project as appropriate to maintain the Project as
required hereunder, including costs of funding such reasonable reserves as
Landlord, consistent with good business practice, may establish to provide for
future repairs and replacements; costs of utilities furnished to the Common
Areas; sewer fees; cable television; trash collection; cleaning, including
windows; heating; ventilation; air-conditioning; maintenance of landscaping and
grounds; maintenance of drives and parking areas; maintenance of the roof;
security services and devices; building supplies; maintenance or replacement of
equipment utilized for operation and maintenance of the Project; license, permit
and inspection fees; sales, use and excise taxes on goods and services purchased
by Landlord in connection with the operation, maintenance or repair of the
Project or Building systems and equipment; telephone, postage, stationary
supplies and other expenses incurred in connection with the operation,
maintenance or repair of the Project; accounting, legal and other professional
fees and expenses incurred in connection with the Project; costs of furniture,
draperies, carpeting, landscaping and other customary and ordinary items of
personal property provided by Landlord for use in Common Areas; capital
expenditures; costs of complying with any federal, state, municipal or local
laws and regulations, including both statutory and common law and hazard waste
rules and regulations (“Applicable Laws”); insurance premiums, including
premiums for public liability, property casualty, earthquake and environmental
coverages; portions of insured losses paid by Landlord as part of the deductible
portion of a loss pursuant to the terms of insurance policies; service
contracts; costs of services of independent contractors retained to do work of a
nature referenced above; and costs of compensation (including employment taxes
and fringe benefits) of all persons who perform regular and recurring duties
connected with the day-to-day operation and maintenance of the Project, its
equipment, the adjacent walks, landscaped areas, drives and parking areas,
including, without limitation, janitors, floor waxers, window washers, watchmen,
gardeners, sweepers and handymen.

 

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Notwithstanding the foregoing, Operating Expenses shall not include any real
estate broker’s or other leasing commissions; expenses that relate to
preparation of rental space for a tenant; expenses of initial development and
construction, including, but not limited to, grading, paving, landscaping and
decorating (as distinguished from maintenance, repair and replacement of the
foregoing); legal expenses relating to other tenants; costs of repairs to the
extent reimbursed by payment of insurance proceeds received by Landlord;
interest upon loans to Landlord or secured by a mortgage or deed of trust
covering the Project or a portion thereof (provided that interest upon a
government assessment or improvement bond payable in installments shall
constitute an Operating Expense under Subsection 7.1(a)); salaries of executive
officers of Landlord; depreciation claimed by Landlord for tax purposes
(provided that this exclusion of depreciation is not intended to delete from
Operating Expenses actual costs of repairs and replacements and reasonable
reserves in regard thereto that are provided for in Subsection 7.1(a)); taxes of
the types set forth in Subsection 7.1(a); debt service; the cost of tenant
improvements, including but not limited to the cost of decorating, improving for
tenant occupancy, painting or redecorating portions of the Building to be
demised to tenants; rental under any ground or underlying lease; attorneys’ fees
and expenses incurred in connection with lease negotiations with prospective
Building tenants; and advertising.

“Applicable Laws” means all laws, codes, ordinances, rules and regulations of
governmental authorities having jurisdiction over the Property, the Building,
the Premises, Landlord or Tenant.

7.2. Tenant shall pay to Landlord on the first day of each calendar month of the
Term, as Additional Rent, (a) the Property Management Fee (as defined below) and
(b) Landlord’s estimate of Tenant’s Pro Rata Share of Operating Expenses with
respect to the Building and the Project, as applicable, for such month.

(x) The “Property Management Fee” shall equal two and one-half percent (2.5%) of
the Rent due from Tenant.

(y) Within ninety (90) days after the conclusion of each calendar year (or such
longer period as may be reasonably required by Landlord), Landlord shall furnish
to Tenant a statement showing in reasonable detail the actual Operating Expenses
and Tenant’s Pro Rata Share of Operating Expenses for the previous calendar
year. Any additional sum due from Tenant to Landlord shall be immediately due
and payable either upon Tenant’s receipt of such statement or after Tenant’s
review, if so elected, pursuant to Section 7.3 below. If the amounts paid by
Tenant pursuant to this Section 7.2 exceed Tenant’s Pro Rata Share of Operating
Expenses for the previous calendar year, then Landlord shall credit the
difference against the Rent next due and owing from Tenant; provided that, if
the Lease term has expired, Landlord shall accompany said statement with payment
for the amount of such difference.

(z) Any amount due under this Section 7.2 for any period that is less than a
full month shall be prorated (based on a thirty (30)-day month) for such
fractional month.

7.3. Landlord’s annual statement shall be final and binding upon Tenant unless
Tenant, within thirty (30) days after Tenant’s receipt thereof, shall contest
any item therein by giving written notice to Landlord, specifying each item
contested and the reasons therefor. If, during such thirty (30)-day period,
Tenant reasonably and in good faith questions or contests the correctness of
Landlord’s statement of Tenant’s Pro Rata Share of Operating Expenses, Landlord
shall provide Tenant with access to Landlord’s books and records and such
information as Landlord reasonably determines to be responsive to Tenant’s
questions. In the event that, after Tenant’s review of such information,
Landlord and Tenant cannot agree upon the amount of Tenant’s Pro Rata Share of
Operating Expenses, then Tenant shall have the right to have an independent
public accounting firm hired by Tenant (at Tenant’s sole cost and expense) and
approved by Landlord (which approval Landlord shall not unreasonably withhold or
delay) audit and review such of Landlord’s books and records for the year in
question at Landlord’s main corporate office (the “Independent Review”). Tenant
must begin the Independent Review within three (3) months of the date Landlord
has given Tenant access to Landlord’s books and records for the Independent
Review and shall complete the Independent Review and notify Landlord in writing
of Tenant’s specific objections to Landlord’s calculation of Operating Expenses
(including Tenant’s accounting firm’s written statement of the basis, nature and
amount of each

 

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proposed adjustment) no later than six (6) months after Landlord has first given
Tenant access to Landlord’s books and records for the Independent Review.
Landlord shall review the results of any such Independent Review. The parties
shall endeavor to agree promptly and reasonably upon Operating Expenses taking
into account the results of such Independent Review. If, as of ninety (90) days
after Tenant has submitted the Independent Review to Landlord, the parties have
not agreed on the appropriate adjustments to Operating Expenses, then the
parties shall engage a mutually agreeable independent third party accountant
with at least ten (10) years’ experience in commercial real estate accounting in
the San Diego, California, area (the “Accountant”). If the parties cannot agree
on the Accountant, each shall within ten (10) days after such impasse appoint an
Accountant (different from the accountant and accounting firm that conducted the
Independent Review) and, within ten (10) days after the appointment of both such
Accountants, those two Accountants shall select a third (which cannot be the
accountant and accounting firm that conducted the Independent Review). If either
party fails to timely appoint an Accountant, then the Accountant the other party
appoints shall be the sole Accountant. Within ten (10) days after appointment of
the Accountant(s), Landlord and Tenant shall each simultaneously give the
Accountants (with a copy to the other party) its determination of Operating
Expenses, with such supporting data or information as each submitting party
determines appropriate. Within ten (10) days after such submissions, the
Accountants shall by majority vote select either Landlord’s or Tenant’s
determination of Operating Expenses. The Accountants may not select or designate
any other determination of Operating Expenses. The determination of the
Accountant(s) shall bind the parties. If the parties agree or the Accountant(s)
determine that Tenant’s Pro Rata Share of Operating Expenses actually paid for
the calendar year in question exceeded Tenant’s obligations for such calendar
year, then Landlord shall, at Tenant’s option, either (a) credit the excess to
the next succeeding installments of estimated Additional Rent or (b) pay the
excess to Tenant within thirty (30) days after delivery of such results. If the
parties agree or the Accountant(s) determine that Tenant’s payments of Tenant’s
Pro Rata Share of Operating Expenses for such calendar year were less than
Tenant’s obligation for the calendar year, then Tenant shall pay the deficiency
to the Landlord within thirty (30) days after delivery of such results.

7.4. Tenant shall not be responsible for Operating Expenses attributable to the
time period prior to the Term Commencement Date; provided, however, that if
Landlord shall permit Tenant possession of the Premises prior to the Term
Commencement Date, Tenant shall be responsible for Operating Expenses from such
earlier date of possession if Tenant conducts any business other than to install
furniture, equipment or other personal property. Tenant’s responsibility for
Tenant’s Pro Rata Share of Operating Expenses shall continue to the latest of
(a) the date of termination of the Lease, (b) the date Tenant has fully vacated
the Premises or (c) if termination of the Lease is due to a default by Tenant,
the date of rental commencement of a replacement tenant.

7.5. Operating Expenses for the calendar year in which Tenant’s obligation to
share therein commences and for the calendar year in which such obligation
ceases shall be prorated on a basis reasonably determined by Landlord. Expenses
such as taxes, assessments and insurance premiums that are incurred for an
extended time period shall be prorated based upon the time periods to which they
apply so that the amounts attributed to the Premises relate in a reasonable
manner to the time period wherein Tenant has an obligation to share in Operating
Expenses.

8. Rentable and Usable Area.

8.1. The terms “Rentable Area” and “Usable Area” as set forth in Section 2 and
as referenced within the Work Letter, and as may otherwise be referenced within
this Lease, shall reflect such areas as reasonably calculated by Landlord’s
architect. The Usable Area refers generally to the approximate area to be
occupied by Tenant, such area having been calculated by measuring to the
finished surface of the office side of corridor and other permanent walls, to
the center of partitions that separate the office space of Tenant from adjoining
usable area of other tenants, and to the inside finished surfaces of the
dominant portion of the permanent outer Building walls. No deductions have been
made with respect to such calculations for any columns or projections that may
be included within that area that are structurally necessary for the Building.

8.2. The “Rentable Area” of the Building is generally determined by making
separate calculations of Rentable Area applicable to each floor within the
Building and totaling the

 

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Rentable Area of all floors within the Building. The Rentable Area of a floor is
computed by measuring to the outside finished surface of the permanent outer
Building walls. The full area calculated as previously set forth is included as
Rentable Area, without deduction for columns and projections or vertical
penetrations, including stairs, elevator shafts, flues, pipe shafts, vertical
ducts and the like, as well as such items’ enclosing walls.

8.3. The Rentable Area of the Project is the total Rentable Area of all
buildings within the Project.

8.4. The term “Rentable Area,” when applied to the Premises, is that area equal
to the Usable Area of the Premises, plus an equitable allocation of Rentable
Area within the Building that is not then utilized or expected to be utilized as
Usable Area, including, but not limited to, that portion of the Building devoted
to corridors, equipment rooms, restrooms, elevator lobby, atrium and mailroom.
In making such allocations, consideration shall be given to tenants benefited by
space allocated such that the area that primarily serves tenants of only one
floor, such as corridors and restrooms upon such floor, shall be allocated to
Usable Area of the Building as a whole.

8.5. Review of allocations of Rentable Areas as between tenants of the Building
and the Project shall be made as frequently as Landlord deems appropriate in
order to facilitate an equitable apportionment of Operating Expenses. If such
review is by a licensed architect and allocations are certified by such licensed
architect as being correct, then the Tenant shall be bound by such
certifications.

9. Security Deposit.

9.1. Tenant has deposited with Landlord the sum set forth in Section 2.11 (the
“Security Deposit”), which sum shall be held by Landlord as security for the
faithful performance by Tenant of all of the terms, covenants and conditions of
this Lease to be kept and performed by Tenant during the period commencing on
the Effective Date and ending upon the expiration or termination of this Lease.
If Tenant defaults with respect to any provision of this Lease, including, but
not limited to, any provision relating to the payment of Rent, then Landlord may
(but shall not be required to) use, apply or retain all or any part of the
Security Deposit for the payment of any Rent or any other sum in default, or to
compensate Landlord for any other loss or damage that Landlord may suffer by
reason of Tenant’s default. If any portion of the Security Deposit is so used or
applied, then Tenant shall, within ten (10) days following demand therefor,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its original amount, and Tenant’s failure to do so shall be a
material breach of this Lease. Landlord shall not be required to keep this
Security Deposit separate from its general fund, and Tenant shall not be
entitled to interest on the Security Deposit.

9.2. In the event of bankruptcy or other debtor-creditor proceedings against
Tenant, the Security Deposit shall be deemed to be applied first to the payment
of Rent and other charges due Landlord for all periods prior to the filing of
such proceedings.

9.3. Landlord may deliver to any purchaser of Landlord’s interest in the
Premises the funds deposited hereunder by Tenant, and thereupon Landlord shall
be discharged from any further liability with respect to such deposit. This
provision shall also apply to any subsequent transfers.

9.4. If Tenant shall fully and faithfully perform every provision of this Lease
to be performed by it, then the Security Deposit, or any balance thereof, shall
be returned to Tenant (or, at Landlord’s option, to the last assignee of
Tenant’s interest hereunder) within thirty (30) days after the expiration or
earlier termination of this Lease.

10. Use.

10.1. Tenant shall use the Premises for the purpose set forth in Section 2.12,
and shall not use the Premises, or permit or suffer the Premises to be used, for
any other purpose without Landlord’s prior written consent, which consent
Landlord may withhold in its sole and absolute discretion.

 

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10.2. Tenant shall not use or occupy the Premises in violation of Applicable
Laws; zoning ordinances; or the certificate of occupancy issued for the
Building, and shall, upon five (5) days’ written notice from Landlord,
discontinue any use of the Premises that is declared or claimed by any
Governmental Authority having jurisdiction to be a violation of any of the
above, or that in Landlord’s reasonable opinion violates any of the above.
Tenant shall comply with any direction of any Governmental Authority having
jurisdiction that shall, by reason of the nature of Tenant’s use or occupancy of
the Premises, impose any duty upon Tenant or Landlord with respect to the
Premises or with respect to the use or occupation thereof.

10.3. Tenant shall not do or permit to be done anything that will invalidate or
increase the cost of any fire, environmental, extended coverage or any other
insurance policy covering the Building and the Project, and shall comply with
all rules, orders, regulations and requirements of the insurers of the Building
and the Project, and Tenant shall promptly, upon demand, reimburse Landlord for
any additional premium charged for such policy by reason of Tenant’s failure to
comply with the provisions of this Section.

10.4. Tenant shall keep all doors opening onto public corridors closed, except
when in use for ingress and egress.

10.5. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by Tenant, nor shall any changes be made to existing locks or
the mechanisms thereof without Landlord’s prior written consent. Tenant shall,
upon termination of this Lease, return to Landlord all keys to offices and
restrooms either furnished to or otherwise procured by Tenant. In the event any
key so furnished to Tenant is lost, Tenant shall pay to Landlord the cost of
replacing the same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such change.

10.6. No awnings or other projections shall be attached to any outside wall of
the Building. 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’s standard window coverings. Neither the interior nor exterior of
any windows shall be coated or otherwise sunscreened without Landlord’s prior
written consent, nor shall any bottles, parcels or other articles be placed on
the windowsills. No equipment, furniture or other items of personal property
shall be placed on any exterior balcony without Landlord’s prior written
consent.

10.7. No sign, advertisement or notice shall be exhibited, painted or affixed by
Tenant on any part of the Premises or the Building without Landlord’s prior
written consent, which consent shall not be unreasonably withheld, conditioned
or delayed. Interior signs on doors and the directory tablet shall be inscribed,
painted or affixed for Tenant by Landlord at Tenant’s sole cost and expense, and
shall be of a size, color and type acceptable to Landlord. The directory tablet
shall be provided exclusively for the display of the name and location of
tenants only. Tenant shall not place anything on the exterior of the corridor
walls or corridor doors other than Landlord’s standard lettering.
Notwithstanding the foregoing, Tenant shall be entitled to Tenant’s Pro Rata
Share of building signage consistent in quality with that of other tenants, and,
subject to (a) Landlord’s prior written approval, which Landlord shall not
unreasonably withhold, condition or delay, and (b) the requirements of
Applicable Laws.

10.8. Tenant shall cause any office equipment or machinery to be installed in
the Premises so as to reasonably prevent sounds or vibrations therefrom from
extending into the Common Areas or other offices in the Building. Further,
Tenant shall not place any equipment weighing five hundred (500) pounds or
greater within the Premises without Landlord’s prior written approval, and such
equipment shall be placed in a location designed to carry the weight of such
equipment.

10.9. Tenant shall not (a) do or permit anything to be done in or about the
Premises that shall in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or the Project, or injure or annoy them, or
(b) use or allow the Premises to be used for immoral, unlawful or objectionable
purposes, nor shall Tenant knowingly cause, maintain or permit any nuisance or
waste in, on or about the Premises, the Building or the Project.

10.10. Notwithstanding any other provision herein to the contrary, Tenant shall
be responsible for all liabilities, costs and expenses arising out of or in
connection with the

 

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compliance of the Premises with the Americans with Disabilities Act, 42 U.S.C. §
12101, et seq. (together with regulations promulgated pursuant thereto, the
“ADA”), and Tenant shall indemnify, defend and hold harmless Landlord from and
against any loss, cost, liability or expense (including reasonable attorneys’
fees and disbursements) arising out of any failure of the Premises to comply
with the ADA. The provisions of this Section 10.10 shall survive the expiration
or earlier termination of this Lease.

11. Brokers.

11.1. Landlord and Tenant each represent and warrant that it has had no dealings
with any real estate broker or agent in connection with the negotiation of this
Lease other than Burnham Real Estate (“Broker”), and that it knows of no other
real estate broker or agent that is or might be entitled to a commission in
connection with this Lease. Landlord shall compensate Broker in relation to this
Lease pursuant to a separate agreement between Landlord and Broker.

11.2. Tenant represents and warrants that no broker or agent has made any
representation or warranty relied upon by Tenant in Tenant’s decision to enter
into this Lease, other than as contained in this Lease.

11.3. Tenant acknowledges and agrees that the employment of brokers by Landlord
is for the purpose of solicitation of offers of leases from prospective tenants
and that no authority is granted to any broker to furnish any representation
(written or oral) or warranty from Landlord unless expressly contained within
this Lease. Landlord is executing this Lease in reliance upon Tenant’s
representations and warranties contained within Sections 11.1 and 11.2.

12. Holding Over.

12.1. If, with Landlord’s prior written consent, Tenant holds possession of all
or any part of the Premises after the Term, Tenant shall become a tenant from
month to month after the expiration or earlier termination of the Term, and in
such case Tenant shall continue to pay (a) the Basic Annual Rent in accordance
with Section 5, as adjusted in accordance with Section 6, and (b) Tenant’s Pro
Rata Share of Operating Expenses. Any such month-to-month tenancy shall be
subject to every other term, covenant and agreement contained herein.

12.2. Notwithstanding the foregoing, if Tenant remains in possession of the
Premises after the expiration or earlier termination of the Term without
Landlord’s prior written consent, Tenant shall become a tenant at sufferance
subject to the terms and conditions of this Lease, except that the monthly rent
shall be equal to one hundred fifty percent (150%) of the Rent in effect during
the last thirty (30) days of the Term.

12.3. Acceptance by Landlord of Rent after the expiration or earlier termination
of the Term shall not result in an extension, renewal or reinstatement of this
Lease.

12.4. The foregoing provisions of this Section 12 are in addition to and do not
affect Landlord’s right of reentry or any other rights of Landlord hereunder or
as otherwise provided by Applicable Laws.

13. Taxes on Tenant’s Property.

13.1. Tenant shall pay prior to delinquency any and all taxes levied against any
personal property or trade fixtures placed by Tenant in or about the Premises.

13.2. If any such taxes on Tenant’s personal property or trade fixtures are
levied against Landlord or Landlord’s property or, if the assessed valuation of
the Building or the Property is increased by inclusion therein of a value
attributable to Tenant’s personal property or trade fixtures, and if Landlord,
after written notice to Tenant, pays the taxes based upon any such increase in
the assessed valued of the Building or the Project, then Tenant shall, upon
demand, repay to Landlord the taxes so paid by Landlord.

13.3. If any improvements in or alterations to the Premises, whether owned 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 standards (the “Building Standard”) in other

 

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spaces in the Building are assessed, then the real property taxes and
assessments levied against Landlord or the Building 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 13.2 above. Any
such excess assessed valuation due to improvements in or alterations to space in
the Building leased by other tenants of Landlord shall not be included in the
Operating Expenses defined in Section 7, but shall be treated, as to such other
tenants, as provided in this Section 13.3. If the records of the County Assessor
are available and sufficiently detailed to serve as a basis for determining
whether said Tenant improvements or alterations are assessed at a higher
valuation than the Building Standard, then such records shall be binding on both
Landlord and Tenant.

14. Condition of Premises. Tenant acknowledges that neither Landlord nor any
agent of Landlord has made any representation or warranty with respect to the
condition of the Premises, the Building or the Project, or with respect to the
suitability of the Premises, the Building or the Project for the conduct of
Tenant’s business. Tenant’s taking of possession of the Premises shall, except
as otherwise agreed to in writing by Landlord and Tenant, conclusively establish
that the Premises, the Building and the Project were at such time in good,
sanitary and satisfactory condition and repair. As of the Effective Date,
Landlord represents that it has not received any written notice that the current
and proposed uses and intended operation of the Building are not in full
compliance with applicable building and seismic codes; environmental, zoning and
land use laws; and other applicable local, state and federal laws regulations
and ordinances. Notwithstanding anything in this Section 14 or the remainder of
this Lease to the contrary, Landlord makes no representations or warranties
about whether Tenant’s proposed use of the Premises complies with Applicable
Laws, or whether Tenant will be able to secure permits necessary to operate its
business at the Premises. Tenant shall be solely responsible for ensuring that
their proposed use of the Premises complies with (a) Applicable Laws, including,
without limitation, zoning requirements, and (b) any CC&Rs (as defined below).

15. Common Areas and Parking Facilities.

15.1. Tenant shall have the non-exclusive right, in common with others, to use
the Common Areas, subject to the rules and regulations adopted by Landlord and
attached hereto as Exhibit D, together with such other reasonable and
nondiscriminatory rules and regulations as are hereafter promulgated by Landlord
in its sole and absolute discretion, provided that such rules and regulations
shall not unreasonably interfere with the operation of Tenant’s business (the
“Rules and Regulations”). Tenant shall faithfully observe and comply with the
Rules and Regulations. Landlord shall not be responsible to Tenant for the
violation or non-performance by any other tenant or any agent, employee or
invitee thereof of any of the Rules and Regulations.

15.2. Tenant shall have a non-exclusive, revocable license to use Tenant’s Pro
Rata Share of parking facilities serving the Building in common on an unreserved
basis with other tenants of the Building and the Project.

15.3. Tenant agrees not to unreasonably overburden the parking facilities and
agrees to cooperate with Landlord and other tenants in the use of the parking
facilities. Landlord reserves the right to determine that parking facilities are
becoming overcrowded and to limit Tenant’s use thereof. Upon such determination,
Landlord may reasonably allocate parking spaces among Tenant and other tenants
of the Building or the Project. Nothing in this Section, however, is intended to
create an affirmative duty on Landlord’s part to monitor parking.

15.4. Landlord reserves the right to modify the Common Areas, including the
right to add or remove exterior and interior landscaping and to subdivide real
property. Tenant acknowledges that Landlord specifically reserves the right to
allow the exclusive use of corridors and restroom facilities located on specific
floors to one or more tenants occupying such floors; provided, however, that
Tenant shall not be deprived of the use of the corridors reasonably required to
serve the Premises or of restroom facilities serving the floor upon which the
Premises are located.

16. Utilities and Services.

16.1. Tenant shall pay for all water (including the cost to service, repair and
replace reverse osmosis, de-ionized and other treated water), gas, heat, light,
power, telephone and other

 

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utilities supplied to the Premises, together with any fees, surcharges and taxes
thereon. If any such utility is not separately metered to Tenant, Tenant shall
pay a reasonable proportion (to be determined by Landlord) of all charges of
such utility jointly metered with other premises as part of Tenant’s Pro Rata
Share of Operating Expenses or, in the alternative, Landlord may, at its option,
monitor the usage of such utilities by Tenant and charge Tenant with the cost of
purchasing, installing and monitoring such metering equipment, which cost shall
be paid by Tenant as Additional Rent.

16.2. Landlord shall not be liable for, nor shall any eviction of Tenant result
from the failure to furnish any such utility or service, whether or not such
failure is caused by accident; breakage; repair; strike, lockout or other labor
disturbance or labor dispute of any character; governmental regulation,
moratorium or other governmental action; or Landlord’s inability, despite the
exercise of reasonable diligence or by any other cause, including Landlord’s
gross negligence, to furnish any such utility or service (collectively, “Force
Majeure”). In the event of such failure, Tenant shall not be entitled to any
abatement or reduction of Rent, nor shall Tenant be relieved from the operation
of any covenant or agreement of this Lease.

16.3. Tenant shall pay for, prior to delinquency of payment therefor, any
utilities and services that may be furnished to the Premises during or, if
Tenant occupies the Premises after the expiration or earlier termination of the
Term, after the Term.

16.4. Tenant shall not, without Landlord’s prior written consent, use any device
in the Premises (including, without limitation, data processing machines) that
will in any way (a) increase the amount of ventilation, air exchange, gas,
steam, electricity or water beyond the existing capacity of the Building as
proportionately allocated to the Premises based upon Tenant’s Pro Rata Share as
usually furnished or supplied for the use set forth in Section 2.12 or
(b) exceed Tenant’s Pro Rata Share of the Building’s capacity to provide such
utilities or services.

16.5. If Tenant shall require utilities or services in excess of those usually
furnished or supplied for tenants in similar spaces in the Building by reason of
Tenant’s equipment or extended hours of business operations, then Tenant shall
first procure Landlord’s consent of Landlord for the use thereof, which consent
Landlord may condition upon the availability of such excess utilities or
services, and Tenant shall pay as Additional Rent an amount equal to the cost of
providing such excess utilities and services.

16.6. Utilities and services provided by Landlord to the Premises shall be paid
by Tenant directly to the supplier of such utility or service, provided such
utility or service is separately metered to the Premises.

16.7. Landlord shall provide water in Common Areas for drinking and lavatory
purposes only; provided, however, that if Landlord determines that Tenant
requires, uses or consumes water for any purpose other than ordinary drinking
and lavatory purposes, Landlord may install a water meter and thereby measure
Tenant’s water consumption for all purposes. Tenant shall pay Landlord for the
costs of such meter and the installation thereof and, throughout the duration of
Tenant’s occupancy of the Premises, Tenant shall keep said meter and
installation equipment in good working order and repair at Tenant’s sole cost
and expense. If Tenant fails to so maintain such meter and equipment, Landlord
may repair or replace the same and shall collect the costs therefor from Tenant.
Tenant agrees to pay for water consumed, as shown on said meter, as and when
bills are rendered. If Tenant fails to timely make such payments, Landlord may
pay such charges and collect the same from Tenant. Any such costs or expenses
incurred, or payments made by Landlord for any of the reasons or purposes
hereinabove stated, shall be deemed to be Additional Rent payment by Tenant and
collectible by Landlord as such.

16.8. Landlord reserves the right to stop service of the elevator, plumbing,
ventilation, air conditioning and electric systems, when Landlord deems
necessary or desirable, due to accident, emergency or the need to make repairs,
alterations or improvements, until such repairs, alterations or improvements
shall have been completed, and Landlord shall further have no responsibility or
liability for failure to supply elevator facilities, plumbing, ventilation, air
conditioning or electric service when prevented from doing so by Force Majeure
or a failure by a third party to deliver gas, oil or another suitable fuel
supply, or Landlord’s inability by exercise of reasonable diligence to obtain
gas, oil or another suitable fuel. Without limiting the foregoing,

 

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it is expressly understood and agreed that any covenants on Landlord’s part to
furnish any service pursuant to any of the terms, covenants, conditions,
provisions or agreements of this Lease, or to perform any act or thing for the
benefit of Tenant, shall not be deemed breached if Landlord is unable to furnish
or perform the same by virtue of Force Majeure.

17. Alterations.

17.1. Tenant shall make no alterations, additions or improvements in or to the
Premises without Landlord’s prior written approval, which approval Landlord
shall not unreasonably withhold, except for alterations, additions or
improvements that comply with all of the following requirements: (a) they do not
affect (i) any structural portions of the Building, including exterior walls,
roof, foundation or core of the Building, (ii) the exterior of the Building or
(iii) any Building systems, including elevator, plumbing, air conditioning,
heating, electrical, security, life safety and power, (b) they cost Twenty-Five
Thousand Dollars ($25,000) or less in any one instance and Fifty Thousand
Dollars ($50,000) or less in any twelve (12) month period and (c) they are not
visible from the exterior of the Premises. With regard to alterations, additions
or improvements under Subsection (a) of this paragraph, Landlord may withhold
its approval with respect thereto in its sole and absolute discretion. Tenant
shall, in making any alterations, additions or improvements, use only those
architects, contractors, suppliers and mechanics of which Landlord has given
prior written approval, which approval shall be in Landlord’s sole and absolute
discretion. In seeking Landlord’s approval for any alterations, additions or
improvements that require Landlord’s consent, Tenant shall provide Landlord at
least fourteen (14) days in advance of any proposed construction, with plans,
specifications, bid proposals, work contracts, requests for laydown areas and
such other information concerning the nature and cost of the alterations as
Landlord may reasonably request.

17.2. Tenant shall not construct or permit to be constructed partitions or other
obstructions that might interfere with free access to mechanical installation or
service facilities of the Building, or interfere with the moving of Landlord’s
equipment to or from the enclosures containing such installations or facilities.

17.3. Tenant shall accomplish any work performed on the Premises or the Building
in such a manner as to permit any fire sprinkler system and fire water supply
lines to remain fully operable at all times.

17.4. Any work performed on the Premises or the Building by Tenant or Tenant’s
contractors shall be done at such times and in such manner as Landlord may from
time to time designate. Tenant covenants and agrees that all work done by Tenant
or Tenant’s contractors shall be performed in full compliance with Applicable
Laws. Regardless of whether Landlord’s consent is required under Section 17.1,
Tenant shall provide Landlord with complete “as-built” drawing print sets and
electronic CADD files on disc showing any changes in the Premises.

17.5. Before commencing any work, Tenant shall give Landlord at least fourteen
(14) days’ prior written notice of the proposed commencement of such work and
shall, if required by Landlord, secure, at Tenant’s own cost and expense, a
completion and lien indemnity bond satisfactory to Landlord for said work.

17.6. All alterations, attached equipment, decorations, fixtures, trade
fixtures, additions and improvements, subject to Section 17.8, attached to or
built into the Premises, made by either of the Parties, including, without
limitation, all floor and wall coverings, built-in cabinet work and paneling,
sinks and related plumbing fixtures, exterior venting fume hoods and walk-in
freezers and refrigerators, ductwork, conduits, electrical panels and circuits,
shall, unless, prior to such construction or installation, Landlord elects
otherwise, become the property of Landlord upon the expiration or earlier
termination of the Term, and shall remain upon and be surrendered with the
Premises as a part thereof.

17.7. Tenant shall repair any damage to the Premises caused by Tenant’s removal
of any property from the Premises. During any such restoration period, Tenant
shall pay Rent to Landlord as provided herein as if said space were otherwise
occupied by Tenant.

17.8. Except as to those items listed on Exhibit C attached hereto, all business
and trade fixtures, machinery and equipment, built-in furniture and cabinets,
together with all additions and

 

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accessories thereto, installed in and upon the Premises shall be and remain the
property of Landlord and shall not be moved by Tenant at any time during the
Term. Tenant may update Exhibit C from time to time by providing an updated
Exhibit C to Landlord. Any updated Exhibit C shall not contain (a) any items
contained in the Premises as of the date hereof that were not listed on the
original Exhibit C, (b) any items that are affixed to or that constitute a
portion of the Premises or the Building, (c) any items paid for (in whole or in
part) by Landlord (including as part of the Tenant Improvement Allowance) or
(d) any items that would not properly be classified as personal property. If
Tenant shall fail to remove any of its effects from the Premises prior to
termination of this Lease, then Landlord may, at its option, remove the same in
any manner that Landlord shall choose and store said effects without liability
to Tenant for loss thereof or damage thereto, and Tenant shall pay Landlord,
upon demand, any costs and expenses incurred due to such removal and storage or
Landlord may, at its sole option and without notice to Tenant, sell such
property or any portion thereof at private sale and without legal process for
such price as Landlord may obtain and apply the proceeds of such sale against
any (a) amounts due by Tenant to Landlord under this Lease and (b) any expenses
incident to the removal, storage and sale of said personal property.

17.9. Notwithstanding any other provision of this Section 17 to the contrary, in
no event shall Tenant remove any improvement from the Premises as to which
Landlord contributed payment, including, without limitation, the Tenant
Improvements made pursuant to the Work Letter without Landlord’s prior written
consent, which consent Landlord may withhold in its sole and absolute
discretion.

17.10. Tenant shall pay to Landlord an amount equal to four percent (4%) of the
cost to Tenant of all changes installed by Tenant or its contractors or agents
to cover Landlord’s overhead and expenses for plan review, coordination,
scheduling and supervision thereof, except in relation to the initial Tenant
Improvements. For purposes of payment of such sum, Tenant shall submit to
Landlord copies of all bills, invoices and statements covering the costs of such
charges, accompanied by payment to Landlord of the fee set forth in this
Section. Tenant shall reimburse Landlord for any extra expenses incurred by
Landlord by reason of faulty work done by Tenant or its contractors, or by
reason of delays caused by such work, or by reason of inadequate clean-up.

17.11. Within sixty (60) days after final completion of the Tenant Improvements
(or any other alterations, improvement or additions performed by Tenant with
respect to the Premises), Tenant shall submit to Landlord documentation showing
the amounts expended by Tenant (other than funds that constitute the Tenant
Improvement Allowance or Additional TI Allowance) with respect to such Tenant
Improvements (or any other alterations, improvement or additions performed by
Tenant with respect to the Premises), together with supporting documentation
reasonably acceptable to Landlord.

18. Repairs and Maintenance.

18.1. Landlord shall repair and maintain the structural and exterior portions
and Common Areas of the Building and the Project, including, without limitation,
roofing and covering materials, foundations, exterior walls, plumbing, fire
sprinkler systems (if any), heating, ventilating, air conditioning, elevators,
and electrical systems installed or furnished by Landlord. Any costs related to
the repair or maintenance activities specified in this Section 18.1 shall be
included as a part of Operating Expenses, unless such repairs or maintenance is
required in whole or in part because of any act, neglect, fault or omissions of
Tenant, its agents, servants, employees or invitees, in which case Tenant shall
pay to Landlord the cost of such repairs and maintenance.

18.2. Except for services of Landlord, if any, required by Section 18.1, Tenant
shall at Tenant’s sole cost and expense keep the Premises and every part thereof
in good condition and repair, damage thereto from ordinary wear and tear
excepted. Tenant shall, upon the expiration or sooner termination of the Term,
surrender the Premises to Landlord in as good of a condition as when received,
ordinary wear and tear excepted. Landlord shall have no obligation to alter,
remodel, improve, repair, decorate or paint the Premises or any part thereof.

18.3. Landlord shall not be liable for any failure to make any repairs or to
perform any maintenance that is an obligation of Landlord unless such failure
shall persist for an unreasonable

 

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time after Tenant provides Landlord with written notice of the need of such
repairs or maintenance, and provided no such failure persists, Tenant waives its
rights under Applicable Laws now or hereafter in effect to make repairs at
Landlord’s expense.

18.4. Repairs under this Section 18 that are obligations of Landlord are subject
to allocation among Tenant and other tenants as Operating Expenses, except as
otherwise provided in this Section 18.

18.5. This Section 18 relates to repairs and maintenance arising in the ordinary
course of operation of the Building and the Project and any related facilities.
In the event of fire, earthquake, flood, vandalism, war or similar cause of
damage or destruction, Section 22 shall apply in lieu of this Section 18.

19. Liens.

19.1. Tenant shall keep the Premises, the Building and the Project free from any
liens arising out of work performed, materials furnished or obligations incurred
by Tenant. Tenant further covenants and agrees that any mechanic’s lien filed
against the Premises, the Building or the Project for work claimed to have been
done for, or materials claimed to have been furnished to, shall be discharged or
bonded by Tenant within ten (10) days after the filing thereof, at Tenant’s sole
cost and expense.

19.2. Should Tenant fail to discharge or bond against any lien of the nature
described in Section 19.1, Landlord may, at Landlord’s election, pay such claim
or post a bond or otherwise provide security to eliminate the lien as a claim
against title, and Tenant shall immediately reimburse Landlord for the costs
thereof as Additional Rent.

19.3. In the event that Tenant leases or finances the acquisition of office
equipment, furnishings or other personal property of a removable nature utilized
by Tenant in the operation of Tenant’s business, Tenant warrants that any
Uniform Commercial Code financing statement executed by Tenant shall, upon its
face or by exhibit thereto, indicate that such financing statement is applicable
only to removable personal property of Tenant located within the Premises. In no
event shall the address of the Building be furnished on a financing statement
without qualifying language as to applicability of the lien only to removable
personal property located in an identified suite leased by Tenant. Should any
holder of a financing statement executed by Tenant record or place of record a
financing statement that appears to constitute a lien against any interest of
Landlord or against equipment that may be located other than within an
identified suite leased by Tenant, Tenant shall, within ten (10) days after
filing such financing statement, cause (a) a copy of the lender security
agreement or other documents to which the financing statement pertains to be
furnished to Landlord to facilitate Landlord’s ability to demonstrate that the
lien of such financing statement is not applicable to Landlord’s interest and
(b) Tenant’s lender to amend such financing statement and any other documents of
record to clarify that any liens imposed thereby are not applicable to any
interest of Landlord in the Premises, the Building or the Project.

20. Indemnification and Exculpation.

20.1. Tenant agrees to indemnify, defend and save Landlord harmless from and
against any and all demands, claims, liabilities, losses, costs, expenses,
actions, causes of action, damages or judgments, and all reasonable expenses
(including, without limitation, reasonable attorneys’ fees, charges and
disbursements) incurred in investigating or resisting the same (collectively,
“Claims”) arising from injury or death to any person or injury to any property
occurring within or about the Premises, the Building or the Property arising
directly or indirectly out of Tenant’s or Tenant’s employees’, agents’ or
guests’ use or occupancy of the Premises or a breach or default by Tenant in the
performance of any of its obligations hereunder, unless caused solely by
Landlord’s willful misconduct or gross negligence.

20.2. Notwithstanding any provision of Section 20.1 to the contrary, Landlord
shall not be liable to Tenant for, and Tenant assumes all risk of, damage to
personal property or scientific research, including, without limitation, loss of
records kept by Tenant within the Premises and damage or losses caused by fire,
electrical malfunction, gas explosion or water damage of any type (including,
without limitation, broken water lines, malfunctioning fire sprinkler systems,

 

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roof leaks or stoppages of lines), unless any such loss is due to Landlord’s
willful disregard of written notice by Tenant of need for a repair that Landlord
is responsible to make for an unreasonable period of time. Tenant further waives
any claim for injury to Tenant’s business or loss of income relating to any such
damage or destruction of personal property as described in this Section 20.2.

20.3. Landlord shall not be liable for any damages arising from any act,
omission or neglect of any other tenant in the Building or the Project, or of
any other third party.

20.4. Tenant acknowledges that security devices and services, if any, while
intended to deter crime, may not in given instances prevent theft or other
criminal acts. Landlord shall not be liable for injuries or losses caused by
criminal acts of third parties, and Tenant assumes the risk that any security
device or service may malfunction or otherwise be circumvented by a criminal. If
Tenant desires protection against such criminal acts, then Tenant shall, at
Tenant’s sole cost and expense, obtain appropriate insurance coverage.

20.5. The provisions of this Section 20 shall survive the expiration or earlier
termination of this Lease.

21. Insurance; Waiver of Subrogation.

21.1. Landlord shall maintain insurance for the Building and the Project in
amounts equal to full replacement cost (exclusive of the costs of excavation,
foundations and footings, and without reference to depreciation taken by
Landlord upon its books or tax returns) or such lesser coverage as Landlord may
elect, provided that such coverage shall not be less than ninety percent
(90%) of such full replacement cost or the amount of such insurance Landlord’s
lender, mortgagee or beneficiary (each, a “Lender”), if any, requires Landlord
to maintain, providing protection against any peril generally included within
the classification “Fire and Extended Coverage,” together with insurance against
sprinkler damage (if applicable), vandalism and malicious mischief. Landlord,
subject to availability thereof, shall further insure, if Landlord deems it
appropriate, coverage against flood, environmental hazard, earthquake, loss or
failure of building equipment, rental loss during the period of repairs or
rebuilding, workmen’s compensation insurance and fidelity bonds for employees
employed to perform services. Notwithstanding the foregoing, Landlord may, but
shall not be deemed required to, provide insurance for any improvements
installed by Tenant or that are in addition to the standard improvements
customarily furnished by Landlord, without regard to whether or not such are
made a part of or are affixed to the Building. Any costs incurred by Landlord
pursuant to this Section 21.1 shall constitute a portion of Operating Expenses.

21.2. In addition, Landlord shall carry public liability insurance with a single
limit of not less than One Million Dollars ($1,000,000) for death or bodily
injury, or property damage with respect to the Project. Any costs incurred by
Landlord pursuant to this Section 21.2 shall constitute a portion of Operating
Expenses.

21.3. Tenant shall, at its own cost and expense, procure and maintain in effect,
beginning on the Term Commencement Date or the date of occupancy, whichever
occurs first, and continuing throughout the Term (and occupancy by Tenant, if
any, after termination of this Lease) comprehensive public liability insurance
with limits of not less than Two Million Dollars ($2,000,000) per occurrence for
death or bodily injury and not less than One Million Dollars ($1,000,000) for
property damage with respect to the Premises.

21.4. The insurance required to be purchased and maintained by Tenant pursuant
to this Lease shall name Landlord, BioMed Realty, L.P., BioMed Realty Trust,
Inc., and their respective officers, employees, agents, general partners,
members and Lenders (“Landlord Parties”) as additional insureds. Said insurance
shall be with companies having a rating of not less than policyholder rating of
A and financial category rating of at least Class XII in “Best’s Insurance
Guide.” Tenant shall obtain for Landlord from the insurance companies or cause
the insurance companies to furnish certificates of coverage to Landlord. No such
policy shall be cancelable or subject to reduction of coverage or other
modification or cancellation except after thirty (30) days’ prior written notice
to Landlord from the insurer. All such policies shall be written as primary
policies, not contributing with and not in excess of the coverage that Landlord
may carry. Tenant’s policy may be a “blanket policy” that specifically provides
that the amount of

 

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insurance shall not be prejudiced by other losses covered by the policy. Tenant
shall, at least twenty (20) days prior to the expiration of such policies,
furnish Landlord with renewals or binders. Tenant agrees that if Tenant does not
take out and maintain such insurance, Landlord may (but shall not be required
to) procure said insurance on Tenant’s behalf and at its cost to be paid by
Tenant as Additional Rent.

21.5. Tenant assumes the risk of damage to any fixtures, goods, inventory,
merchandise, equipment and leasehold improvements, and Landlord shall not be
liable for injury to Tenant’s business or any loss of income therefrom, relative
to such damage, all as more particularly set forth within this Lease. Tenant
shall, at Tenant’s sole cost and expense, carry such insurance as Tenant desires
for Tenant’s protection with respect to personal property of Tenant or business
interruption.

21.6. In each instance where insurance is to name Landlord Parties as additional
insureds, Tenant shall, upon Landlord’s written request, also designate and
furnish certificates evidencing such Landlord Parties as additional insureds to
(a) any Lender of Landlord holding a security interest in the Building or the
Project, (b) the landlord under any lease whereunder Landlord is a tenant of the
real property upon which the Building is located if the interest of Landlord is
or shall become that of a tenant under a ground lease rather than that of a fee
owner, and (c) any management company retained by Landlord to manage the
Project.

21.7. Landlord and Tenant each hereby waive any and all rights of recovery
against the other or against the officers, directors, employees, agents and
representatives of the other on account of loss or damage occasioned by such
waiving party or its property or the property of others under such waiving
party’s control, in each case to the extent that such loss or damage is insured
against under any fire and extended coverage insurance policy that either
Landlord or Tenant may have in force at the time of such loss or damage. Such
waivers shall continue so long as their respective insurers so permit. Any
termination of such a waiver shall be by written notice to the other party,
containing a description of the circumstances hereinafter set forth in this
Section 21.7. Landlord and Tenant, upon obtaining the policies of insurance
required or permitted under this Lease, shall give notice to the insurance
carrier or carriers that the foregoing mutual waiver of subrogation is contained
in this Lease. If such policies shall not be obtainable with such waiver or
shall be so obtainable only at a premium over that chargeable without such
waiver, then the party seeking such policy shall notify the other of such
conditions, and the party so notified shall have ten (10) days thereafter to
either (a) procure such insurance with companies reasonably satisfactory to the
other party or (b) agree to pay such additional premium (in Tenant’s case, in
the proportion that the area of the Premises bears to the insured area). If the
parties do not accomplish either (a) or (b), then this Section 21.7 shall have
no effect during such time as such policies shall not be obtainable or the party
in whose favor a waiver of subrogation is desired refuses to pay the additional
premium. If such policies shall at any time be unobtainable, but shall be
subsequently obtainable, then neither party shall be subsequently liable for a
failure to obtain such insurance until a reasonable time after notification
thereof by the other party. If the release of either Landlord or Tenant, as set
forth in the first sentence of this Section 21.7, shall contravene Applicable
Laws, then the liability of the party in question shall be deemed not released
but shall be secondary to the other party’s insurer.

21.8. Landlord may require insurance policy limits required under this Lease to
be raised to conform with requirements of Landlord’s Lender or to bring coverage
limits to levels then being required of new tenants within the Project.

22. Damage or Destruction.

22.1. In the event of a partial destruction of the Building or the Project by
fire or other perils covered by extended coverage insurance not exceeding
twenty-five percent (25%) of the full insurable value thereof, and provided that
(a) the damage thereto is such that the Building or the Project may be repaired,
reconstructed or restored within a period of six (6) months from the date of the
happening of such casualty and (b) Landlord shall receive insurance proceeds
sufficient to cover the cost of such repairs (except for any deductible amount
provided by Landlord’s policy, which deductible amount, if paid by Landlord,
shall constitute an Operating Expense), Landlord shall commence and proceed
diligently with the work of repair,

 

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reconstruction and restoration of the Building or the Project, as applicable,
and this Lease shall continue in full force and effect.

22.2. In the event of any damage to or destruction of the Building or the
Project other than as described in Section 22.1, Landlord may elect to repair,
reconstruct and restore the Building or the Project, as applicable, in which
case this Lease shall continue in full force and effect. If Landlord elects not
to repair the Building or the Project, as applicable, then this Lease shall
terminate as of the date of such damage or destruction.

22.3. Landlord shall give written notice to Tenant of its determination pursuant
to Section 22.2 (a) not to repair or (b) to reconstruct or restore the Building
or the Project, as applicable, within sixty (60) days following the date of
damage or destruction. If such notice estimates a restoration period for the
Premises longer than twelve (12) months, or if Landlord fails to deliver such
notice or fails to state the estimated restoration period, Tenant may elect to
terminate this Lease as of the date that is seventy-five (75) days after the
date of such damage or destruction by written notice to Landlord.

22.4. Upon any termination of this Lease under any of the provisions of this
Section 22, the parties shall be released thereby without further obligation to
the other from the date possession of the Premises is surrendered to the
Landlord, except with regard to (a) items occurring prior to the damage or
destruction and (b) provisions of this Lease that, by their express terms,
survive the expiration or earlier termination hereof.

22.5. In the event of repair, reconstruction and restoration as provided in this
Section 22, all Rent to be paid by Tenant under this Lease shall be abated
proportionately based on the extent to which Tenant’s use of the Premises is
impaired during the period of such repair, reconstruction or restoration, unless
Landlord provides Tenant with other space during the period of repair that, in
Tenant’s reasonable opinion, is suitable for the temporary conduct of Tenant’s
business.

22.6. Notwithstanding anything to the contrary contained in this Section 22,
should Landlord be delayed or prevented from completing the repair,
reconstruction or restoration of the damage or destruction to the Premises after
the occurrence of such damage or destruction by Force Majeure, then the time for
Landlord to commence or complete repairs shall be extended on a day-for-day
basis; provided, however, that, at Landlord’s election, Landlord shall be
relieved of its obligation to make such repair, reconstruction or restoration.
Tenant shall be released from any obligations under this Lease (except with
regard to those provisions that, by their express terms, survive the expiration
or earlier termination hereof) if, on the date that is twelve (12) months after
the date of damage or destruction, the repair, reconstruction or restoration
required to be performed by Landlord to provide Tenant use of the Premises is
not then substantially completed.

22.7. If Landlord is obligated to or elects to repair, reconstruct or restore as
herein provided, then Landlord shall be obligated to make such repair,
reconstruction or restoration only with regard to those portions of the
Premises, the Building or the Project that were originally provided at
Landlord’s expense. The repair, reconstruction or restoration of improvements
not originally provided by Landlord or at Landlord’s expense shall be the
obligation of Tenant. In the event Tenant has elected to upgrade certain
improvements from the Building Standard, Landlord shall, upon the need for
replacement due to an insured loss, provide only the Building Standard, unless
Tenant again elects to upgrade such improvements and pay any incremental costs
related thereto, except to the extent that excess insurance proceeds, if
received, are adequate to provide such upgrades, in addition to providing for
basic repair, reconstruction and restoration of the Premises, the Building and
the Project.

22.8. Notwithstanding anything to the contrary contained in this Section 22,
Landlord shall not have any obligation whatsoever to repair, reconstruct or
restore the Premises if the damage resulting from any casualty covered under
this Section 22 occurs during the last twenty-four (24) months of the Term or
any extension hereof, or to the extent that insurance proceeds are not available
therefor.

22.9. Landlord’s obligation, should it elect or be obligated to repair or
rebuild, shall be limited to the Property and the Building; provided that Tenant
shall, at its expense, replace or

 

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fully repair all of Tenant’s personal property and any alterations installed by
Tenant existing at the time of such damage or destruction. If the Property or
the Building is to be repaired in accordance with the foregoing, Landlord shall
make available to Tenant any portion of insurance proceeds it receives that are
allocable to the alterations constructed by Tenant pursuant to this Lease,
provided Tenant is not then in default under this Lease.

23. Eminent Domain.

23.1. In the event the whole of the Premises, or such part thereof as shall
substantially interfere with the Tenant’s use and occupancy thereof, shall be
taken for any public or quasi-public purpose by any lawful power or authority by
exercise of the right of appropriation, condemnation or eminent domain, or sold
to prevent such taking, Tenant or Landlord may terminate this Lease effective as
of the date possession is required to be surrendered to said authority.

23.2. In the event of a partial taking of the Building or the Project, or of
drives, walkways or parking areas serving the Building or the Project for any
public or quasi-public purpose by any lawful power or authority by exercise of
right of appropriation, condemnation, or eminent domain, or sold to prevent such
taking, then, without regard to whether any portion of the Premises occupied by
Tenant was so taken, Landlord may elect to terminate this Lease as of such
taking if such taking is, in Landlord’s sole opinion, of a material nature such
as to make it uneconomical to continue use of the unappropriated portion for
purposes of renting office or laboratory space.

23.3. Tenant shall be entitled to any award that is specifically awarded as
compensation for (a) the taking of Tenant’s personal property that was installed
at Tenant’s expense and (b) the costs of Tenant moving to a new location. Except
as set forth in the previous sentence, any award for such taking shall be the
property of Landlord.

23.4. If, upon any taking of the nature described in this Section 23, this Lease
continues in effect, then Landlord shall promptly proceed to restore the
Premises, the Building and the Project, as applicable, to substantially their
same condition prior to such partial taking. To the extent such restoration is
feasible, as determined by Landlord in its sole and absolute discretion, the
Rent shall be decreased by a number, the numerator of which is the rental value
of the Premises prior to such taking, and the denominator of which is the value
of the Premises after such taking.

24. Defaults and Remedies.

24.1. Late payment by Tenant to Landlord of Rent and other sums due shall cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which shall be extremely difficult and impracticable to ascertain. Such costs
include, but are not limited to, processing and accounting charges and late
charges that may be imposed on Landlord by the terms of any mortgage or trust
deed covering the Premises. Therefore, if any installment of Rent due from
Tenant is not received by Landlord within five (5) days after the date such
payment is due, Tenant shall pay to Landlord an additional sum of six percent
(6%) of the overdue Rent as a late charge. The parties agree that this late
charge represents a fair and reasonable estimate of the costs that Landlord
shall incur by reason of late payment by Tenant. In addition to the late charge,
Rent not paid when due shall bear interest from the fifth (5th) day after the
date due until paid at the lesser of (a) twelve percent (12%) per annum or
(b) the maximum rate permitted by Applicable Laws.

24.2. No payment by Tenant or receipt by Landlord of a lesser amount than the
Rent payment herein stipulated shall be deemed to be other than on account of
the Rent, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as Rent be deemed an accord and satisfaction,
and Landlord may accept such check or payment without prejudice to Landlord’s
right to recover the balance of such Rent or pursue any other remedy provided in
this Lease or in equity or at law. If a dispute shall arise as to any amount or
sum of money to be paid by Tenant to Landlord hereunder, Tenant shall have the
right to make payment “under protest,” such payment shall not be regarded as a
voluntary payment, and there shall survive the right on the part of Tenant to
institute suit for recovery of the payment paid under protest.

 

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24.3. If Tenant fails to pay any sum of money (other than Basic Annual Rent or
Rental Adjustments) required to be paid by it hereunder, or shall fail to
perform any other act on its part to be performed hereunder, Landlord may,
without waiving or releasing Tenant from any obligations of Tenant, but shall
not be obligated to, make such payment or perform such act; provided that such
failure by Tenant continues for three (3) days after Landlord delivers notice to
Tenant demanding performance by Tenant; or that such failure by Tenant
unreasonably interfered with the use of the Building by any other tenant or with
the efficient operation of the Building, or resulted or could have resulted in a
violation of Applicable Laws or the cancellation of an insurance policy
maintained by Landlord. Tenant shall pay to Landlord as Additional Rent all sums
so paid or incurred by Landlord, together with interest thereon, from the date
such sums were paid or incurred, at the annual rate equal to twelve percent
(12%) per annum or highest rate permitted by Applicable Laws, whichever is less.

24.4. The occurrence of any one or more of the following events shall constitute
a “Default” hereunder by Tenant:

(a) The abandonment or vacation of the Premises by Tenant;

(b) The failure by Tenant to make any payment of Rent, as and when due, where
such failure shall continue for a period of five (5) days after written notice
thereof from Landlord to Tenant;

(c) The failure by Tenant to observe or perform any obligation or covenant
contained herein (other than described in Subsections 24.4(a) and 24.4(b)) to be
performed by Tenant, where such failure shall continue for a period of thirty
(30) days after written notice thereof from Landlord to Tenant; provided that,
if the nature of Tenant’s default is such that it reasonably requires more than
thirty (30) days to cure, Tenant shall not be deemed to be in default if Tenant
shall commence such cure within said thirty (30) day period and thereafter
diligently prosecute the same to completion; and provided, further, that such
cure is completed no later than ninety (90) days from the date of Tenant’s
receipt of written notice from Landlord;

(d) Tenant makes an assignment for the benefit of creditors;

(e) A receiver, trustee or custodian is appointed to or does take title,
possession or control of all or substantially all of Tenant’s assets;

(f) Tenant files a voluntary petition under the United States Bankruptcy Code or
any successor statute (the “Code”);

(g) Any involuntary petition if filed against Tenant under any chapter of the
Code and is not dismissed within one hundred twenty (120) days;

(h) Failure to deliver an estoppel certificate in accordance with Section 29; or

(i) Tenant’s interest in this Lease is attached, executed upon or otherwise
judicially seized and such action is not released within one hundred twenty
(120) days of the action.

Notices given under this Section 24.4 shall specify the alleged default and
shall demand that Tenant perform the provisions of this Lease or pay the Rent
that is in arrears, as the case may be, within the applicable period of time, or
quit the Premises. No such notice shall be deemed a forfeiture or a termination
of this Lease unless Landlord elects otherwise in such notice.

24.5. In the event of a Default by Tenant, and at any time thereafter, with or
without notice or demand and without limiting Landlord in the exercise of any
right or remedy that Landlord may have, Landlord shall be entitled to terminate
Tenant’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Tenant shall immediately surrender possession of
the Premises to Landlord. In such event, Landlord shall have the immediate right
to re-enter and remove all persons and property, and such property may be
removed and stored in a public warehouse or elsewhere at the cost and for the
account of Tenant, all without service of notice or resort to legal process and
without being deemed guilty of

 

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trespass or becoming liable for any loss or damage that may be occasioned
thereby. In the event that Landlord shall elect to so terminate this Lease, then
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant’s default, including, without limitation:

(a) The worth at the time of award of any unpaid Rent that had accrued at the
time of such termination; plus

(b) The worth at the time of award of the amount by which the unpaid Rent that
would have accrued during the period commencing with termination of the Lease
and ending at the time of award exceeds that portion of the loss of Landlord’s
rental income from the Premises that Tenant proves to Landlord’s reasonable
satisfaction 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 Term after the time of award exceeds that portion of the loss
of Landlord’s rental income from the Premises that Tenant proves to Landlord’s
reasonable satisfaction 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 that in the ordinary course of things would be likely to result
therefrom, including, without limitation, the cost of restoring the Premises to
the condition required under the terms of this Lease; plus

(e) At Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by Applicable Laws.

As used in Subsections 24.5(a) and 24.5(b), “worth at the time of award” shall
be computed by allowing interest at the rate specified in Section 24.1. As used
in Subsection 24.5(c) above, the “worth at the time of the award” shall be
computed by taking the present value of such amount, using the discount rate of
the Federal Reserve Bank of San Francisco at the time of the award plus one
(1) percentage point.

24.6. If Landlord does not elect to terminate this Lease as provided in
Section 24.5, then Landlord may, from time to time, recover all Rent as it
becomes due under this Lease. At any time thereafter, Landlord may elect to
terminate this Lease and to recover damages to which Landlord is entitled.

24.7. In the event Landlord elects to terminate this Lease and relet the
Premises, Landlord may execute any new lease in its own name. Tenant hereunder
shall have no right or authority whatsoever to collect any Rent from such
tenant. The proceeds of any such reletting shall be applied as follows:

(a) First, to the payment of any indebtedness other than Rent due hereunder from
Tenant to Landlord, including, without limitation, storage charges or brokerage
commissions owing from Tenant to Landlord as the result of such reletting;

(b) Second, to the payment of the costs and expenses of reletting the Premises,
including (i) alterations and repairs that Landlord deems reasonably necessary
and advisable and (ii) reasonable attorneys’ fees, charges and disbursements
incurred by Landlord in connection with the retaking of the Premises and such
reletting;

(c) Third, to the payment of Rent and other charges due and unpaid hereunder;
and

(d) Fourth, to the payment of future Rent and other damages payable by Tenant
under this Lease.

24.8. All of Landlord’s rights, options and remedies hereunder shall be
construed and held to be nonexclusive and cumulative. Landlord shall have the
right to pursue any one or all of such remedies, or any other remedy or relief
that may be provided by Applicable Laws, whether or not stated in this Lease. No
waiver of any default of Tenant hereunder shall be implied from any acceptance
by Landlord of any Rent or other payments due hereunder or any omission by

 

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Landlord to take any action on account of such default if such default persists
or is repeated, and no express waiver shall affect defaults other than as
specified in said waiver.

24.9. Landlord’s termination of (a) this Lease or (b) Tenant’s right to
possession of the Premises shall not relieve Tenant of any liability to Landlord
that has previously accrued or that shall arise based upon events that occurred
prior to the later to occur of (i) the date of Lease termination or (ii) the
date Tenant surrenders possession of the Premises.

24.10. To the extent permitted by Applicable Laws, Tenant waives any and all
rights of redemption granted by or under any present or future Applicable Laws
if Tenant is evicted or dispossessed for any cause, or if Landlord obtains
possession of the Premises due to Tenant’s default hereunder or otherwise.

24.11. Landlord shall not be in default under this Lease unless Landlord fails
to perform obligations required of Landlord within a reasonable time, but in no
event shall such failure to continue for more than thirty (30) days after
written notice from Tenant specifying the nature of Landlord’s failure;
provided, however, that if the nature of Landlord’s obligation is such that more
than thirty (30) days are required for its performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion, and
provided, further, that such cure is completed no later than ninety (90) days
from the date of Tenant’s written notice to Landlord.

24.12. In the event of any default by Landlord, Tenant shall give notice by
registered or certified mail to any (a) beneficiary of a deed of trust or
(b) mortgagee under a mortgage covering the Premises, the Building or the
Project and to any landlord of any lease of land upon or within which the
Premises, the Building or the Project is located, and shall offer such
beneficiary, mortgagee or landlord a reasonable opportunity to cure the default,
including time to obtain possession of the Building by power of sale or a
judicial action if such should prove necessary to effect a cure; provided that
Landlord shall furnish to Tenant in writing, upon written request by Tenant, the
names and addresses of all such persons who are to receive such notices.

25. Assignment or Subletting.

25.1. Except as hereinafter provided, Tenant shall not, either voluntarily or by
operation of Applicable Laws, directly or indirectly sell, hypothecate, assign,
pledge, encumber or otherwise transfer this Lease, or sublet the Premises or any
part hereof (each, a “Transfer”), without Landlord’s prior written consent,
which consent Landlord may not unreasonably delay, and which consent shall be
given or withheld in accordance with Section 25.3 below.

25.2. In the event Tenant desires to effect a Transfer, then, at least
forty-five (45) but not more than ninety (90) days prior to the date when Tenant
desires the assignment or sublease to be effective (the “Assignment Date”),
Tenant shall provide written notice to Landlord (the “Assignment Notice”)
containing information (including references) concerning the character of the
proposed transferee, assignee or sublessee; the Assignment Date; any ownership
or commercial relationship between Tenant and the proposed transferee, assignee
or sublessee; and the consideration and all other material terms and conditions
of the proposed Transfer, all in such detail as Landlord shall reasonably
require.

25.3. Landlord, in determining whether consent should be given to a proposed
Transfer, may give consideration to (a) the financial strength of such
transferee, assignee or sublessee (notwithstanding Tenant remaining liable for
Tenant’s performance), (b) any change in use that such transferee, assignee or
sublessee proposes to make in the use of the Premises, (c) Landlord’s desire to
exercise its rights under Section 25.8 to cancel this Lease and (d) any adverse
effect of the proposed Transfer on the status of Landlord’s indirect parent’s
status as a Real Estate Investment Trust under the Internal Revenue Code, as
amended from time to time. In no event shall Landlord be deemed to be
unreasonable for declining to consent to a Transfer to a transferee, assignee or
sublessee of poor reputation, lacking financial qualifications, seeking a change
in the Permitted Use, or jeopardizing directly or indirectly the status of
Landlord or any of Landlord’s affiliates as a Real Estate Investment Trust under
the Code.

 

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25.4. As conditions precedent to Tenant subleasing the Premises to Landlord
considering a request by Tenant to Tenant’s transfer of rights or sharing of the
Premises or, Landlord may require any or all of the following:

(a) Tenant shall remain fully liable under this Lease during the unexpired Term;

(b) Tenant shall provide Landlord with evidence reasonably satisfactory to
Landlord that the value of Landlord’s interest under this Lease shall not be
diminished or reduced by the proposed Transfer. Such evidence shall include,
without limitation, evidence respecting the relevant business experience and
financial responsibility and status of the proposed transferee, assignee or
sublessee;

(c) Tenant shall reimburse Landlord for Landlord’s actual costs and expenses,
including, without limitation, reasonable attorneys’ fees, charges and
disbursements incurred in connection with the review, processing and
documentation of such request;

(d) If Tenant’s transfer of rights or sharing of the Premises provides for the
receipt by, on behalf of or on account of Tenant of any consideration of any
kind whatsoever (including, without limitation, a premium rental for a sublease
or lump sum payment for an assignment, but excluding Tenant’s reasonable costs
in marketing and subleasing the Premises) in excess of the rental and other
charges due to Landlord under this Lease, Tenant shall pay fifty percent
(50%) of all of such excess to Landlord, prior to deductions for any transaction
costs incurred by Tenant, including marketing expenses, tenant improvement
allowances, alterations, cash concessions, brokerage commissions, attorneys’
fees and free rent. If said consideration consists of cash paid to Tenant,
payment to Landlord shall be made upon receipt by Tenant of such cash payment;

(e) The proposed transferee, assignee or sublessee shall agree that, in the
event Landlord gives such proposed transferee, assignee or sublessee notice that
Tenant is in default under this Lease, such proposed transferee, assignee or
sublessee shall thereafter make all payments otherwise due Tenant directly to
Landlord, which payments shall be received by Landlord without any liability
being incurred by Landlord, except to credit such payment against those due by
Tenant under this Lease, and any such proposed transferee, assignee or sublessee
shall agree to attorn to Landlord or its successors and assigns should this
Lease be terminated for any reason; provided, however, that in no event shall
Landlord or its Lenders, successors or assigns be obligated to accept such
attornment;

(f) Any such Transfer shall be effected on Landlord’s forms;

(g) Tenant shall not then be in default hereunder in any respect;

(h) Such proposed transferee, assignee or sublessee’s use of the Premises shall
be the same as the Permitted Use;

(i) Landlord shall not be bound by any provision of any agreement pertaining to
the Transfer, except for Landlord’s written consent to the same;

(j) Tenant shall deliver to Landlord one executed copy of any and all written
instruments evidencing or relating to the Transfer; and

(k) A list of Hazardous Materials (as defined in Section 39.7 below), certified
by the proposed transferee, assignee or sublessee to be true and correct, that
the proposed transferee, assignee or sublessee intends to use or store in the
Premises. Additionally, Tenant shall deliver to Landlord, on or before the date
any proposed transferee, assignee or sublessee takes occupancy of the Premises,
all of the items relating to Hazardous Materials of such proposed transferee,
assignee or sublessee as described in Section 39.2.

25.5. Any Transfer that is not in compliance with the provisions of this
Section 25 shall be void and shall, at the option of Landlord, terminate this
Lease.

25.6. The consent by Landlord to a Transfer shall not relieve Tenant or proposed
transferee, assignee or sublessee from obtaining Landlord’s consent to any
further Transfer, nor

 

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shall it release Tenant or any proposed transferee, assignee or sublessee of
Tenant from full and primary liability under this Lease.

25.7. Notwithstanding any Transfer, Tenant shall remain fully and primarily
liable for the payment of all Rent and other sums due or to become due
hereunder, and for the full performance of all other terms, conditions and
covenants to be kept and performed by Tenant. The acceptance of Rent or any
other sum due hereunder, or the acceptance of performance of any other term,
covenant or condition thereof, from any person or entity other than Tenant shall
not be deemed a waiver of any of the provisions of this Lease or a consent to
any Transfer.

25.8. If Tenant delivers to Landlord an Assignment Notice indicating a desire to
transfer this Lease to a proposed transferee, assignee or sublessee other than
as provided within Section 25.4, then Landlord shall have the option,
exercisable by giving notice to Tenant at any time within ten (10) days after
Landlord’s receipt of such Assignment Notice, to terminate this Lease as of the
date specified in the Assignment Notice as the Assignment Date, except for those
provisions that, by their express terms, survive the expiration or earlier
termination hereof. If Landlord exercises such option, then Tenant shall have
the right to withdraw such Assignment Notice by delivering to Landlord written
notice of such election within five (5) days after Landlord’s delivery of notice
electing to exercise Landlord’s option to terminate this Lease. In the event
Tenant withdraws the Assignment Notice as provided in this Section 25.8, this
Lease shall continue in full force and effect. No failure of Landlord to
exercise its option to terminate this Lease shall be deemed to be Landlord’s
consent to a proposed Transfer.

25.9. If Tenant sublets the Premises or any portion thereof, Tenant hereby
immediately and irrevocably assigns to Landlord, as security for Tenant’s
obligations under this Lease, all rent from any such subletting, and appoints
Landlord as assignee and attorney-in-fact for Tenant, and Landlord (or a
receiver for Tenant appointed on Landlord’s application) may collect such rent
and apply it toward Tenant’s obligations under this Lease; provided that, until
the occurrence of a Default by Tenant, Tenant shall have the right to collect
such rent.

26. Attorneys’ Fees. If either party commences an action against the other party
arising out of or in connection with this Lease, then the prevailing party shall
be entitled to have and recover from the non-prevailing party reasonable
attorneys’ fees, charges and disbursements and costs of suit.

27. Bankruptcy. In the event a debtor, trustee or debtor in possession under the
Code, or another person with similar rights, duties and powers under any other
Applicable Laws, proposes to cure any default under this Lease or to assume or
assign this Lease and is obliged to provide adequate assurance to Landlord that
(a) a default shall be cured, (b) Landlord shall be compensated for its damages
arising from any breach of this Lease and (c) future performance of Tenant’s
obligations under this Lease shall occur, then such adequate assurances shall
include any or all of the following, as designated by Landlord in its sole and
absolute discretion:

27.1. Those acts specified in the Code or other Applicable Laws as included
within the meaning of “adequate assurance,” even if this Lease does not concern
a shopping center or other facility described in such Applicable Laws;

27.2. A prompt cash payment to compensate Landlord for any monetary defaults or
actual damages arising directly from a breach of this Lease;

27.3. A cash deposit in an amount at least equal to the then-current amount of
the Security Deposit; or

27.4. The assumption or assignment of all of Tenant’s interest and obligations
under this Lease.

28. Definition of Landlord. With regard to obligations imposed upon Landlord
pursuant to this Lease, the term “Landlord,” as used in this Lease, shall refer
only to Landlord or Landlord’s then-current successor-in-interest. In the event
of any transfer, assignment or conveyance of Landlord’s interest in this Lease
or in Landlord’s fee title to or leasehold interest in the Property, as
applicable, the Landlord herein named (and in case of any subsequent transfers
or conveyances, the subsequent Landlord) shall be automatically freed and
relieved, from and after

 

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the date of such transfer, assignment or conveyance, from all liability for the
performance of any covenants or obligations contained in this Lease thereafter
to be performed by Landlord and, without further agreement, the transferee,
assignee or conveyee of Landlord’s in this Lease or in Landlord’s fee title to
or leasehold interest in the Property, as applicable, shall be deemed to have
assumed and agreed to observe and perform any and all covenants and obligations
of Landlord hereunder during the tenure of its interest in the Lease or the
Property. Landlord or any subsequent Landlord may transfer its interest in the
Premises or this Lease without Tenant’s consent.

29. Estoppel Certificate. Tenant shall, within ten (10) days of receipt of
written notice from Landlord, execute, acknowledge and deliver a statement in
writing substantially in the form attached to this Lease as Exhibit E, or on any
other form reasonably requested by a proposed Lender or purchaser,
(a) certifying that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this
Lease as so modified is in full force and effect) and the dates to which rental
and other charges are paid in advance, if any, (b) acknowledging that there are
not, to Tenant’s knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed, and (c) setting forth
such further information with respect to this Lease or the Premises as may be
requested thereon. Any such statement may be relied upon by any prospective
purchaser or encumbrancer of all or any portion of the real property of which
the Premises are a part. Tenant’s failure to deliver such statement within such
prescribed time shall, at Landlord’s option, constitute a Default under this
Lease, and, in any event, shall be binding upon Tenant that the Lease is in full
force and effect and without modification except as may be represented by
Landlord in any certificate prepared by Landlord and delivered to Tenant for
execution.

30. Joint and Several Obligations. If more than one person or entity executes
this Lease as Tenant, then:

30.1. Each of them is jointly and severally liable for the keeping, observing
and performing of all of the terms, covenants, conditions, provisions and
agreements of this Lease to be kept, observed or performed by Tenant; and

30.2. The term “Tenant” as used in this Lease shall mean and include each of
them, jointly and severally. The act of, notice from, notice to, refund to, or
signature of any one or more of them with respect to the tenancy under this
Lease, including, without limitation, any renewal, extension, expiration,
termination or modification of this Lease, shall be binding upon each and all of
the persons executing this Lease as Tenant with the same force and effect as if
each and all of them had so acted, so given or received such notice or refund,
or so signed.

31. Limitation of Landlord’s Liability.

31.1. If Landlord is in default under this Lease and, as a consequence, Tenant
recovers a monetary judgment against Landlord, the judgment shall be satisfied
only out of (a) the proceeds of sale received on execution of the judgment and
levy against the right, title and interest of Landlord in the Building and the
Project of which the Premises are a part, (b) rent or other income from such
real property receivable by Landlord or (c) the consideration received by
Landlord from the sale, financing, refinancing or other disposition of all or
any part of Landlord’s right, title or interest in the Building or the Project
of which the Premises are a part.

31.2. Landlord shall not be personally liable for any deficiency under this
Lease. If Landlord is a partnership or joint venture, then the partners of such
partnership shall not be personally liable for Landlord’s obligations under this
Lease, and no partner of Landlord shall be sued or named as a party in any suit
or action, and service of process shall not be made against any partner of
Landlord except as may be necessary to secure jurisdiction of the partnership or
joint venture. If Landlord is a corporation, then the shareholders, directors,
officers, employees and agents of such corporation shall not be personally
liable for Landlord’s obligations under this Lease, and no shareholder,
director, officer, employee or agent of Landlord shall be sued or named as a
party in any suit or action, and service of process shall not be made against
any shareholder, director, officer, employee or agent of Landlord. If Landlord
is a limited liability company, then the members of such limited liability
company shall not be personally liable for Landlord’s obligations under this
Lease, and no member of Landlord shall be sued or named as a party in any suit
or action, and service of process shall not be made against any member of

 

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Landlord except as may be necessary to secure jurisdiction of the limited
liability company. No partner, shareholder, director, employee, member or agent
of Landlord shall be required to answer or otherwise plead to any service of
process, and no judgment shall be taken or writ of execution levied against any
partner, shareholder, director, employee or agent of Landlord.

31.3. Each of the covenants and agreements of this Section 31 shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by Applicable Laws and shall survive the expiration or earlier
termination of this Lease.

32. Project Control by Landlord.

32.1. Landlord reserves full control over the Building and the Project to the
extent not inconsistent with Tenant’s enjoyment of the Premises as provided by
this Lease. This reservation includes, without limitation, Landlord’s right to
subdivide the Project, convert the Building to condominium units, grant
easements and licenses to third parties, and maintain or establish ownership of
the Building separate from fee title to the Property.

32.2. Tenant shall, at Landlord’s request, promptly execute such further
documents as may be reasonably appropriate to assist Landlord in the performance
of its obligations hereunder; provided that Tenant need not execute any document
that creates additional liability for Tenant or that deprives Tenant of the
quiet enjoyment and use of the Premises as provided by this Lease.

32.3. Landlord may, at any and all reasonable times during non-business hours
(or during business hours if Tenant so requests), and upon forty-eight
(48) hours’ prior notice (provided that no time restrictions shall apply or
advance notice be required if an emergency necessitates immediate entry), enter
the Premises, provided that Landlord takes commercially reasonable steps to
minimize any effects on the operation of Tenant’s business, to (a) inspect the
same and to determine whether Tenant is in compliance with its obligations
hereunder, (b) supply any service Landlord is required to provide hereunder,
(c) show the Premises to prospective purchasers or tenants during the final year
of the Term, (d) post notices of nonresponsibility, (e) access the telephone
equipment, electrical substation and fire risers and (f) alter, improve or
repair any portion of the Building other than the Premises for which access to
the Premises is reasonably necessary. Notwithstanding the foregoing, except in
an emergency, Landlord shall not have access to Tenant’s information technology
(“IT”), including but not limited to computer equipment and any adjoining
telephone equipment. In connection with any such alteration, improvement or
repair as described in Subsection 32.3(f) above, Landlord may erect in the
Premises or elsewhere in the Project scaffolding and other structures reasonably
required for the alteration, improvement or repair work to be performed. In no
event shall Tenant’s Rent abate as a result of Landlord’s activities pursuant to
this Section 32.3; provided, however, that all such activities shall be
conducted in such a manner so as to cause as little interference to Tenant as is
reasonably possible. Landlord shall at all times retain a key with which to
unlock all of the doors in the Premises. If an emergency necessitates immediate
access to the Premises, Landlord may use whatever force is necessary to enter
the Premises, and any such entry to the Premises shall not constitute a forcible
or unlawful entry to the Premises, a detainer of the Premises, or an eviction of
Tenant from the Premises or any portion thereof.

33. Quiet Enjoyment. So long as Tenant is not in default under this Lease,
Landlord or anyone acting through or under Landlord shall not disturb Tenant’s
occupancy of the Premises, except as permitted by this Lease.

34. Subordination and Attornment.

34.1. This Lease shall be subject and subordinate to the lien of any mortgage,
deed of trust, or lease in which Landlord is tenant now or hereafter in force
against the Building or the Project and to all advances made or hereafter to be
made upon the security thereof without the necessity of the execution and
delivery of any further instruments on the part of Tenant to effectuate such
subordination.

34.2. Notwithstanding the foregoing, provided Tenant is furnished a commercially
reasonable non-disturbance agreement from any such lender or lessor requiring
subordination, Tenant shall execute and deliver upon demand such further
instrument or instruments evidencing such subordination of this Lease to the
lien of any such mortgage or mortgages or deeds of trust

 

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or lease in which Landlord is tenant as may be required by Landlord. However, if
any such mortgagee, beneficiary or Landlord under lease wherein Landlord is
tenant so elects, this Lease shall be deemed prior in lien to any such lease,
mortgage, or deed of trust upon or including the Premises regardless of date and
Tenant shall execute a statement in writing to such effect at Landlord’s
request. If Tenant fails to execute any document required from Tenant under this
Section 34 within ten (10) days after written request therefor, Tenant hereby
constitutes and appoints Landlord or its special attorney-in-fact to execute and
deliver any such document or documents pursuant to this Section 34 in the name
of Tenant. Such power is coupled with an interest and is irrevocable.

34.3. Upon written request of Landlord and opportunity for Tenant to review,
Tenant agrees to execute any Lease amendments not materially altering the terms
of this Lease, if required by a mortgagee or beneficiary of a deed of trust
encumbering real property of which the Premises constitute a part incident to
the financing of the real property of which the Premises constitute a part. Any
change affecting the amount or timing of the consideration to be paid by Tenant
or modifying the term of this Lease shall be deemed as materially altering the
terms hereof.

34.4. In the event any proceedings are brought for foreclosure, or in the event
of the exercise of the power of sale under any mortgage or deed of trust made by
the Landlord covering the Premises, the Tenant shall at the election of the
purchaser at such foreclosure or sale attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as the Landlord under this
Lease.

35. Surrender.

35.1. No surrender of possession of any part of the Premises shall release
Tenant from any of its obligations hereunder, unless such surrender is accepted
in writing by Landlord.

35.2. The voluntary or other surrender of this Lease by Tenant shall not effect
a merger with Landlord’s fee title or leasehold interest in the Premises, the
Building or the Property, unless Landlord consents in writing, and shall, at
Landlord’s option, operate as an assignment to Landlord of any or all subleases.

35.3. The voluntary or other surrender of any ground or other underlying lease
that now exists or may hereafter be executed affecting the Building or the
Project, or a mutual cancellation thereof or of Landlord’s interest therein by
Landlord and its lessor shall not effect a merger with Landlord’s fee title or
leasehold interest in the Premises, the Building or the Property and shall, at
the option of the successor to Landlord’s interest in the Building or the
Project, as applicable, operate as an assignment of this Lease.

36. Waiver and Modification. No provision of this Lease may be modified, amended
or supplemented except by an agreement in writing signed by Landlord and Tenant.
The waiver by either party to this Lease of any breach by the other party of any
term, covenant or condition herein contained shall not be deemed to be a waiver
of any subsequent breach of the same or any other term, covenant or condition
herein contained.

37. Waiver of Jury Trial and Counterclaims. The parties waive trial by jury in
any action, proceeding or counterclaim brought by the other party hereto related
to matters arising out of or in any way connected with this Lease; the
relationship between Landlord and Tenant; Tenant’s use or occupancy of the
Premises, the Building or the Project; or any claim of injury or damage related
to this Lease or the Premises, the Building or the Project.

38. [Intentionally omitted]

39. Hazardous Materials.

39.1. Tenant shall not cause or permit any Hazardous Materials (as hereinafter
defined) to be brought upon, kept or used in or about the Premises, the Building
or the Project in violation of Applicable Laws by Tenant, its agents, employees,
contractors or invitees. If Tenant breaches such obligation, or if the presence
of Hazardous Materials as a result of such a breach results in contamination of
the Premises, the Building, the Project or any adjacent property, or if

 

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contamination of the Premises, the Building, the Project or any adjacent
property by Hazardous Materials by Tenant, its agents, employees, contractors or
invitees otherwise occurs during the term of this Lease or any extension or
renewal hereof or holding over hereunder, then Tenant shall indemnify, save,
defend and hold Landlord, its agents and contractors harmless from and against
any and all claims, judgments, damages, penalties, fines, costs, liabilities and
losses (including, without limitation, diminution in value of the Premises, the
Building, the Project or any portion thereof; damages for the loss or
restriction on use of rentable or usable space or of any amenity of the Premises
or Project; damages arising from any adverse impact on marketing of space in the
Premises, the Building or the Project; and sums paid in settlement of claims,
attorneys’ fees, consultants’ fees and experts’ fees) that arise during or after
the Term as a result of such breach or contamination. This indemnification of
Landlord by Tenant includes, without limitation, costs incurred in connection
with any investigation of site conditions or any cleanup, remedial, removal or
restoration work required by any Governmental Authority because of Hazardous
Materials present in the air, soil or groundwater above, on or under the
Premises. Without limiting the foregoing, if the presence of any Hazardous
Materials in, on, under or about the Premises, the Building, the Project or any
adjacent property caused or permitted by Tenant results in any contamination of
the Premises, the Building, the Project or any adjacent property, then Tenant
shall promptly take all actions at its sole cost and expense as are necessary to
return the Premises, the Building, the Project and any adjacent property to
their respective condition existing prior to the time of such contamination;
provided that Landlord’s written approval of such action shall first be
obtained, which approval Landlord shall not unreasonably withhold; and provided,
further, that it shall be reasonable for Landlord to withhold its consent if
such actions could have a material adverse long-term or short-term effect on the
Premises, the Building or the Project.

39.2. Landlord acknowledges that it is not the intent of this Section 39 to
prohibit Tenant from operating its business as described in Section 2.12 above.
Tenant may operate its business according to the custom of Tenant’s industry so
long as the use or presence of Hazardous Materials is strictly and properly
monitored according to Applicable Laws. As a material inducement to Landlord to
allow Tenant to use Hazardous Materials in connection with its business, Tenant
agrees to deliver to Landlord prior to the Term Commencement Date a list
identifying each type of Hazardous Material to be present on the Premises and
setting forth any and all governmental approvals or permits required in
connection with the presence of such Hazardous Material on the Premises (the
“Hazardous Materials List”). Tenant shall deliver to Landlord an updated
Hazardous Materials List on or prior to each annual anniversary of the Term
Commencement Date and shall also deliver an updated Hazardous Materials List
before any new Hazardous Materials are brought onto the Premises. Tenant shall
deliver to Landlord true and correct copies of the following documents
(hereinafter referred to as the “Documents”) relating to the handling, storage,
disposal and emission of Hazardous Materials prior to the Term Commencement Date
or, if unavailable at that time, concurrent with the receipt from or submission
to any Governmental Authority: permits; approvals; reports and correspondence;
storage and management plans; notices of violations of Applicable Laws; plans
relating to the installation of any storage tanks to be installed in or under
the Premises, the Building or the Project (provided that installation of storage
tanks shall only be permitted after Landlord has given Tenant its written
consent to do so, which consent Landlord may withhold in its sole and absolute
discretion); and all closure plans or any other documents required by any and
all Governmental Authority for any storage tanks installed in, on or under the
Premises, the Building or the Project for the closure of any such storage tanks.
Tenant shall not be required, however, to provide Landlord with any portion of
the Documents containing information of a proprietary nature that, in and of
themselves, do not contain a reference to any Hazardous Materials or activities
related to Hazardous Materials. Upon Landlord’s written request, Tenant agrees
that it shall enter into a written agreement with other tenants of the Building
and the Project concerning the equitable allocation of fire control areas (as
defined in the Uniform Building Code as adopted by the City of San Diego (the
“UBC”)) within the Building and the Project for the storage of Hazardous
Materials. In the event that Tenant’s use of Hazardous Materials is such that it
utilizes fire control areas in the Building or the Project in excess of Tenant’s
Pro Rata Share of the Building or the Project, as applicable, as set forth in
Section 2.8, Tenant agrees that it shall, at its sole cost and expense and upon
Landlord’s written request, establish and maintain a separate area of the
Premises classified by the UBC as an “H” occupancy area for the use and storage
of Hazardous Materials or take such other action as is necessary to ensure that
its share of the fire

 

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control areas of the Building and the Project is not greater than Tenant’s Pro
Rata Share of the Building or the Project, as applicable.

39.3. Notwithstanding the provisions of Section 39.1 above, if (a) Tenant or any
proposed transferee, assignee or sublessee of Tenant has been required by any
prior landlord, Lender or Governmental Authority to take remedial action in
connection with Hazardous Materials contaminating a property if the
contamination resulted from such party’s action or omission or use of the
property in question or (ii) Tenant or any proposed transferee, assignee or
sublessee is subject to an enforcement order issued by any Governmental
Authority in connection with the use, disposal or storage of Hazardous
Materials, then Landlord shall have the right to terminate this Lease in
Landlord’s sole and absolute discretion (with respect to any such matter
involving Tenant), and it shall not be unreasonable for Landlord to withhold its
consent to any proposed transfer, assignment or subletting (with respect to any
such matter involving a proposed transferee, assignee or sublessee).

39.4. At any time, and from time to time, prior to the expiration of the Term,
Landlord shall have the right to conduct appropriate tests of the Premises, the
Building and the Project to demonstrate that Hazardous Materials are present or
that contamination has occurred due to Tenant or Tenant’s agents, employees or
invitees. Landlord shall not unreasonably interfere with Tenant’s business
operations within the Premises while conducting such tests. Tenant shall pay all
reasonable costs of such tests of the Property if such tests reveal that Tenant
has breached its obligations under this Section 39.

39.5. If underground or other storage tanks storing Hazardous Materials are
located on the Premises or are hereafter placed on the Premises by any party,
Tenant shall monitor the storage tanks, maintain appropriate records, implement
reporting procedures, properly close any underground storage tanks, and take or
cause to be taken all other steps necessary or required under the Applicable
Laws.

39.6. Tenant’s obligations under this Section 39 shall survive the expiration or
earlier termination of the Lease. During any period of time needed by Tenant or
Landlord after the termination of this Lease to complete the removal from the
Premises of any such Hazardous Materials, Tenant shall continue to pay Rent in
accordance with this Lease, which Rent shall be prorated daily.

39.7. As used herein, the term “Hazardous Material” means any hazardous or toxic
substance, material or waste that is or becomes regulated by any Governmental
Authority.

39.8. Notwithstanding anything in this Section 39 to the contrary, Tenant shall
not be liable for any pre-existing environmental conditions present at the
Building upon the date Tenant takes possession of any portion of the Premises,
whether to conduct Tenant’s normal business or to begin construction of tenant
improvements.

39.9. At the end of the Term or any holdover thereafter, Tenant shall provide to
Landlord a Phase 1 environmental analysis of the Premises.

40. [Intentionally omitted]

41. Miscellaneous.

41.1. Where applicable in this Lease, the singular includes the plural and the
masculine or neuter includes the masculine, feminine and neuter. The section
headings of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any part hereof.

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

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

 

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41.4. Each provision of this Lease performable by either party shall be deemed
both a covenant and a condition.

41.5. Whenever consent or approval of either party is required, that party shall
not unreasonably withhold such consent or approval, except as may be expressly
set forth to the contrary.

41.6. The terms of this Lease are intended by the parties as a final expression
of their agreement with respect to the terms as are included herein, and may not
be contradicted by evidence of any prior or contemporaneous agreement.

41.7. Any provision of this Lease that shall prove to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provision hereof,
and all other provisions of this Lease shall remain in full force and effect and
shall be interpreted as if the invalid, void or illegal provision did not exist.

41.8. Neither party shall record this Lease.

41.9. The language in all parts of this Lease shall be in all cases construed as
a whole according to its fair meaning and not strictly for or against either
Landlord or Tenant.

41.10. Each of the covenants, conditions and agreements herein contained shall
inure to the benefit of and shall apply to and be binding upon the parties
hereto and their respective heirs; legatees; devisees; executors;
administrators; and permitted successors, assigns, sublessees. Nothing in this
Section 41.10 shall in any way alter the provisions of this Lease restricting
assignment or subletting.

41.11. Any notice, consent, demand, bill, statement or other communication
required or permitted to be given hereunder shall be in writing and shall be
given by personal delivery, overnight delivery with a reputable nationwide
overnight delivery service, or certified mail (return receipt requested), and if
given by personal delivery, shall be deemed delivered upon receipt; if given by
overnight delivery, shall be deemed delivered one (1) day after deposit with a
reputable nationwide overnight delivery service; and, if given by certified mail
(return receipt requested), shall be deemed delivered two (2) days after the
time the notifying party deposits the notice with the United States Postal
Service. Any notices given pursuant to this Lease shall be addressed to Tenant
at the Premises, or to Landlord or Tenant at the addresses shown in Sections
2.14 and 2.15, respectively. Either party may, by notice to the other given
pursuant to this Section, specify additional or different addresses for notice
purposes.

41.12. This Lease shall be governed by, construed and enforced in accordance
with the laws of the State in which the Premises are located, without regard to
such State’s conflict of law principles.

41.13. That individual or those individuals signing this Lease guarantee,
warrant and represent that said individual or individuals have the power,
authority and legal capacity to sign this Lease on behalf of and to bind all
entities, corporations, partnerships, limited liability companies, joint
venturers or other organizations and entities on whose behalf said individual or
individuals have signed.

41.14. To induce Landlord to enter into this Lease, Tenant agrees that it shall
promptly furnish to Landlord, from time to time, upon Landlord’s written
request, the most recent audited year-end financial statements reflecting
Tenant’s current financial condition; provided that Tenant shall not be forced
to furnish such statements prior to the time permitted by the rules of the
Securities and Exchange Commission. Tenant represents and warrants that all
financial statements, records and information furnished by Tenant to Landlord in
connection with this Lease are true, correct and complete in all respects.

41.15. This Lease may be executed in one or more counterparts, each of which,
when taken together, shall constitute one and the same document.

 

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41.16. This Lease is subject to the written consent of Landlord’s lender. If
such consent is not obtained within thirty (30) days following the Effective
Date, this Lease shall be void and of no further force or effect.

42. Option to Extend Term. Tenant shall have the option (“Option”) to extend the
Term of this Lease upon the following terms and conditions:

42.1. Tenant shall have one (1) option to extend the Term of this Lease by five
(5) years on the same terms and conditions as this Lease. Basic Annual Rent at
the commencement of the Option period shall equal the fair market rental rate as
of the commencement of the Option period for comparable laboratory space in the
Sorrento Mesa, California, area (“FMV”); provided, however, that the initial
Basic Annual Rent during the Option period shall not be less than one hundred
four percent (104%) of the Basic Annual Rent at the expiration of the initial
Term. Basic Annual Rent shall be adjusted on each annual anniversary of the
commencement of the Option period in accordance with Section 6. If Landlord and
Tenant cannot agree on the FMV, they shall mutually agree on a third party real
estate broker with experience in the leasing of life science properties in the
San Diego, California, area, who shall determine the FMV, which determination
shall be binding on Landlord and Tenant.

42.2. The Option is not assignable separate and apart from this Lease.

42.3. The Option is conditional upon Tenant giving Landlord written notice of
its election to exercise the Option at least twelve (12) months prior to the end
of the expiration of the initial Term of this Lease.

42.4. Notwithstanding anything contained in this Section 42, Tenant shall not
have the right to exercise the Option:

(a) During the time commencing from the date Landlord delivers to Tenant a
written notice that Tenant is in default under any provisions of this Lease and
continuing until Tenant has cured the specified default to Landlord’s reasonable
satisfaction; or

(b) At any time after an event of Default as described in Section 24 of the
Lease (provided, however, that, for purposes of this Subsection 42.4(b),
Landlord shall not be required to provide Tenant with notice of such Default)
and continuing until Tenant cures any such Default, if such Default is
susceptible to being cured; or

(c) In the event that Tenant has defaulted in the performance of its obligations
under this Lease three (3) or more times and a service or late charge has become
payable under Section 24.1 for each of such defaults during the twelve
(12)-month period immediately prior to the date that Tenant intends to exercise
the Option, whether or not Tenant has cured such defaults.

42.5. The period of time within which Tenant may exercise the Option shall not
be extended or enlarged by reason of Tenant’s inability to exercise the Option
because of the provisions of Section 42.4.

42.6. All of Tenant’s rights under the provisions of the Option shall terminate
and be of no further force or effect even after Tenant’s due and timely exercise
of an Option if, after such exercise, but prior to the commencement date of the
new term, (a) Tenant fails to pay to Landlord a monetary obligation of Tenant
for a period of twenty (20) days after written notice from Landlord to Tenant,
(b) Tenant fails to commence to cure a default (other than a monetary default)
within thirty (30) days after the date Landlord gives notice to Tenant of such
default or (c) Tenant has defaulted under this Lease three (3) or more times and
a service or late charge under Section 24.1 has become payable for any such
default, whether or not Tenant has cured such defaults.

43. Right of First Refusal. For so long as Tenant leases the entire initial
Premises, Tenant shall have a right of first refusal (“ROFR”) as to any rentable
premises in the Building for which Landlord is seeking a tenant (“Available
Premises”). To the extent that Landlord renews or extends an existing lease with
any existing tenant of any space, or enters into a new lease with such existing
tenant, the affected space shall not be deemed to be Available Premises. In the

 

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event Landlord intends to lease Available Premises, Landlord shall provide
written notice thereof to Tenant (the “Notice of Offer”), specifying the terms
and conditions of a proposed lease to Tenant of the Available Premises.
Notwithstanding anything in this Section 42 to the contrary, the ROFR shall be
subject and subordinate to any rights of tenants who have leases for space in
the Building as of the date hereof.

43.1. Within ten (10) days following its receipt of a Notice of Offer, Tenant
shall advise Landlord in writing whether Tenant elects to lease the Available
Premises on the terms and conditions set forth in the Notice of Offer. If Tenant
fails to notify Landlord of Tenant’s election within said ten (10) day period,
then Tenant shall be deemed to have elected not to lease the Available Premises.

43.2. If Tenant timely notifies Landlord that Tenant elects to lease the
Available Premises on the terms and conditions set forth in the Notice of Offer,
then Landlord shall lease the Available Premises to Tenant upon the terms and
conditions set forth in the Notice of Offer.

43.3. If Tenant notifies Landlord that Tenant elects not to lease the Available
Premises on the terms and conditions set forth in the Notice of Offer, or if
Tenant fails to notify Landlord of Tenant’s election within the ten (10)-day
period described above, then Landlord shall have the right to consummate the
lease of the Available Premises on the same terms as set forth in the Notice of
Offer within one hundred eighty (180) days following Tenant’s election (or
deemed election) not to lease the Available Premises. If Landlord does not lease
the Available Premises within said one hundred eighty (180)-day period, then
Tenant’s ROFR shall be fully reinstated, and Landlord shall not thereafter lease
the Available Premises without first complying with the procedures set forth in
this Section 43.

43.4. Notwithstanding anything in this Section 43 to the contrary, Tenant shall
not exercise the ROFR during such period of time that Tenant is in default under
any provision of this Lease. Any attempted exercise of the ROFR during a period
of time in which Tenant is so in default shall be void and of no effect. In
addition, Tenant shall not be entitled to exercise the ROFR if Landlord has
given Tenant two (2) or more notices of default under this Lease, whether or not
the defaults are cured, during the twelve (12) month period prior to the date on
which Tenant seeks to exercise the ROFR.

43.5. Notwithstanding anything in this Lease to the contrary, Tenant shall not
assign or transfer the ROFR, either separately or in conjunction with an
assignment or transfer of Tenant’s interest in the Lease, without Landlord’s
prior written consent, which consent Landlord may withhold in its sole and
absolute discretion.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date
first above written.

 

LANDLORD:

BMR-6828 NANCY RIDGE DRIVE LLC,

a Delaware limited liability company

By:   /s/ Alan D. Gold

Name:

  Alan D. Gold

Title:

  President & CEO

TENANT:

CARDIOVASCULAR BIOTHERAPEUTICS, INC.,

a Delaware corporation

By:   /s/ Daniel C. Montano

Name:

  Daniel C. Montano

Title:

  President

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EXHIBIT A

PREMISES

 

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LOGO [g21936newimg001.jpg]

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EXHIBIT B

[Intentionally omitted]

 

B-2

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EXHIBIT C

TENANT’S PERSONAL PROPERTY

 

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EXHIBIT D

RULES AND REGULATIONS

NOTHING IN THESE RULES AND REGULATIONS (“RULES AND REGULATIONS”) SHALL SUPPLANT
ANY PROVISION OF THE LEASE. IN THE EVENT OF A CONFLICT OR INCONSISTENCY BETWEEN
THESE RULES AND REGULATIONS AND THE LEASE, THE LEASE SHALL PREVAIL.

1. Except as specifically provided in the Lease to which these Rules and
Regulations are attached, no sign, placard, picture, advertisement, name or
notice shall be installed or displayed on any part of the outside of the
Premises or the Building without Landlord’s prior written consent. Landlord
shall have the right to remove, at Tenant’s sole cost and expense and without
notice, any sign installed or displayed in violation of this rule.

2. If Landlord objects in writing to any curtains, blinds, shades, screens or
hanging plants or other similar objects attached to or used in connection with
any window or door of the Premises or placed on any windowsill, which window,
door or windowsill is (a) visible from the exterior of the Premises and (b) not
included in plans approved by Landlord, then Tenant shall promptly remove said
curtains, blinds, shades, screens or hanging plants or other similar objects at
its sole cost and expense.

3. Tenant shall not obstruct any sidewalks or entrances to the Building, or any
halls, passages, exits, entrances or stairways within the Premises, in any case
that are required to be kept clear for health and safety reasons.

4. No deliveries shall be made that impede or interfere with other tenants in or
the operation of the Project.

5. Tenant shall not place a load upon any floor of the Premises that exceeds the
load per square foot that (a) such floor was designed to carry or (b) that is
allowed by Applicable Laws. Fixtures and equipment that cause noises or
vibrations that may be transmitted to the structure of the Building to such a
degree as to be objectionable to other tenants shall be placed and maintained by
Tenant, at Tenant’s sole cost and expense, on vibration eliminators or other
devices sufficient to eliminate such noises and vibrations to levels reasonably
acceptable to Landlord and other tenants of the Building.

6. Tenant shall not use any method of heating or air conditioning other than
that shown in the Tenant Improvement plans.

7. Tenant shall not install any radio, television or other antenna, cell or
other communications equipment, or any other devices on the roof or exterior
walls of the Premises except to the extent shown on approved Tenant Improvements
plans. Tenant shall not interfere with radio, television or other communications
from or in the Premises or elsewhere.

8. Canvassing, peddling, soliciting and distributing handbills or any other
written material within, on or around the Project (other than within the
Premises) are prohibited, and Tenant shall cooperate to prevent such activities.

9. Tenant shall store all of its trash, garbage and Hazardous Materials within
its Premises or in designated receptacles outside of the Premises. Tenant shall
not place in any such receptacle any material that cannot be disposed of in the
ordinary and customary manner of trash, garbage and Hazardous Materials
disposal.

10. The Premises shall not be used for any improper, immoral or objectionable
purpose. No cooking shall be done or permitted on the Premises; provided,
however, that Tenant may use (a) equipment approved in accordance with the
requirements of insurance policies that Landlord or Tenant is required to
purchase and maintain pursuant to the Lease for brewing coffee, tea, hot
chocolate and similar beverages, (b) microwave ovens for employees’ use and
(c) equipment shown on Tenant Improvement plans approved by Landlord; provided,
further, that any such equipment and microwave ovens are used in accordance with
Applicable Laws.

 

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11. Tenant shall not, without Landlord’s prior written consent, use the name of
the Project, if any, in connection with or in promoting or advertising Tenant’s
business except as Tenant’s address.

12. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any Governmental
Authority.

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

14. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or any other tenant, but no such waiver by Landlord shall be
construed as a waiver of such Rules and Regulations in favor of Tenant or any
other tenant, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against any or all of the tenants of the Project, including Tenant.

15. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms covenants,
agreements and conditions of the Lease.

16. Landlord reserves the right to make such other and reasonable rules and
regulations as, in its judgment, may from time to time be needed for safety and
security, the care and cleanliness of the Project, or the preservation of good
order therein; provided, however, that Landlord shall provide written notice to
Tenant of such rules and regulations prior to them taking effect. Tenant agrees
to abide by these Rules and Regulations and any additional rules and regulations
issued or adopted by Landlord.

17. Tenant shall be responsible for the observance of these Rules and
Regulations by Tenant’s employees, agents, clients, customers, invitees and
guests.

 

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EXHIBIT E

FORM OF ESTOPPEL CERTIFICATE

 

To: BMR-6828 Nancy Ridge Drive LLC

  17140 Bernardo Center Drive, Suite 222

  San Diego, CA 92128

  Attention: General Counsel/Leasing

 

  BioMed Realty, L.P.

  c/o BioMed Realty Trust, Inc.

  17140 Bernardo Center Drive, Suite 222

  San Diego, CA 92128

 

Re: Suite [            ] (the “Premises”) at 6828 Nancy Ridge Drive, San Diego,
California (the “Property”)

The undersigned tenant (“Tenant”) hereby certifies to you as follows:

1. Tenant is a tenant at the Property under a lease (the “Lease”) for the
Premises dated as of August 7, 2006. The Lease has not been cancelled, modified,
assigned, extended or amended [except as follows: [            ]], and there are
no other agreements, written or oral, affecting or relating to Tenant’s lease of
the Premises or any other space at the Property. The lease term expires on
[            ], 20[__].

2. Tenant took possession of the Premises, currently consisting of
[            ] square feet, on [            ], 20[__], and commenced to pay rent
on [            ], 20[__]. Tenant has full possession of the Premises, has not
assigned the Lease or sublet any part of the Premises, and does not hold the
Premises under an assignment or sublease[, except as follows: [            ]].

3. All base rent, rent escalations and additional rent under the Lease have been
paid through [            ], 20[__]. There is no prepaid rent[, except
$[            ]][, and the amount of security deposit is $[            ] [in
cash][in the form of a letter of credit]]. Tenant currently has no right to any
future rent abatement under the Lease.

4. Base rent is currently payable in the amount of $[            ] per month.

5. Tenant is currently paying estimated payments of additional rent of
$[            ] per month on account of real estate taxes, insurance, management
fees and common area maintenance expenses.

6. All work to be performed for Tenant under the Lease has been performed as
required under the Lease and has been accepted by Tenant[, except
[            ]], and all allowances to be paid to Tenant, including allowances
for tenant improvements, moving expenses or other items, have been paid.

7. The Lease is in full force and effect, free from default and free from any
event that could become a default under the Lease, and Tenant has no claims
against the landlord or offsets or defenses against rent, and there are no
disputes with the landlord. Tenant has received no notice of prior sale,
transfer, assignment, hypothecation or pledge of the Lease or of the rents
payable thereunder[, except [            ]].

8. [Tenant has the following expansion rights or options for the Property:
[            ].][Tenant has no rights or options to purchase the Property.]

9. To Tenant’s knowledge, no hazardous wastes have been generated, treated,
stored or disposed of by or on behalf of the Tenant in, on or around the
Premises or the Project in violation of any environmental laws.

10. The undersigned has executed this Estoppel Certificate with the knowledge
and understanding that [INSERT NAME OF LANDLORD, PURCHASER OR LENDER, AS
APPROPRIATE] or its assignee is acquiring the Property in reliance on this
certificate and that the undersigned shall be bound by this certificate. The
statements contained herein may be relied

 

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upon by [INSERT NAME OF PURCHASER OR LENDER, AS APPROPRIATE], [LANDLORD], BioMed
Realty, L.P., BioMed Realty Trust, Inc., and any mortgagee of the Property and
their respective successors and assigns.

Any capitalized terms not defined herein shall have the respective meanings
given in the Lease.

Dated this [            ] day of [            ], 20[__].

 

[            ], a [            ] By:      Name:      Title:     

 

E-2

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EXHIBIT F

[Intentionally omitted]

 

F-1

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EXHIBIT G

WORK LETTER

This Work Letter (the “Work Letter”) is made and entered into as of the 7th day
of August, 2006, by and between BMR-6828 NANCY RIDGE DRIVE LLC, a Delaware
limited liability company (“Landlord”), and CARDIOVASCULAR BIOTHERAPEUTICS,
INC., a Delaware corporation (“Tenant”), and is attached to and made a part of
that certain Lease dated as of August 7, 2006 (the “Lease”), by and between
Landlord and Tenant for the Premises located at 6828 Nancy Ridge Drive in San
Diego, California. All capitalized terms used but not otherwise defined herein
shall have the meanings given them in the Lease.

1. General Requirements.

1.1. Tenant’s Authorized Representative. Tenant designates Jack Jacobs
(“Tenant’s Authorized Representative”) as the person authorized to initial all
plans, drawings, changes orders and approvals pursuant to this Work Letter.
Landlord shall not be obligated to respond to or act upon any such item until
such item has been initialed by Tenant’s Authorized Representative.

1.2. Schedule. The schedule for design and development of Tenant’s Work (as
hereinafter defined), including, without limitation, the time periods for
preparation and review of construction documents, approvals and performance,
shall be in accordance with that certain schedule prepared by Landlord and
Tenant attached as Exhibit A to this Work Letter (the “Schedule”). The Schedule
shall be subject to adjustment as mutually agreed upon in writing by the
parties, or as provided in this Work Letter.

1.3. Architects and Consultants. The architect, engineering consultants, design
team, general contractor and subcontractors responsible for the construction of
Tenant’s Work shall be selected by Tenant and approved by Landlord. Landlord’s
approval of the same shall not be unreasonably withheld.

2. Tenant’s Work.

2.1. Tenant Work Plans. All work that Tenant requests to be performed as Tenant
Improvements, as defined in the Lease, on the Premises shall be performed by
Tenant (“Tenant’s Work”) at Tenant’s sole cost and expense and without cost to
Landlord except for the Tenant Improvement Allowance and, if requested by
Tenant, the Additional TI Allowance and in accordance with the Approved Plans
(as defined below). The quality of Tenant’s Work shall be of a nature and
character not less than (a) the quality of the tenant improvements in place at
the Building and the Project as of the date of the Lease and (b) the Building
Standard. The design drawings, plans and specifications listed on Schedule 2.1
to this Work Letter (the “Tenant Work Plans”) are the initial list of plans that
Tenant shall develop and submit to Landlord for approval. Tenant shall prepare
and submit to Landlord for approval schematics covering Tenant’s Work prepared
in conformity with the applicable provisions of this Work Letter (the “Draft
Plans”). The Draft Plans shall contain sufficient information and detail to
accurately describe Tenant’s proposed design to Landlord and such other
information as Landlord may reasonably request. Tenant shall be solely
responsible for ensuring that the Tenant Work Plans and the Draft Plans satisfy
Tenant’s obligations for Tenant’s Work.

2.2. Landlord Approval of Plans. Landlord shall notify Tenant in writing within
ten (10) business days after receipt of the Draft Plans whether Landlord
approves or objects to the Draft Plans and of the manner, if any, in which the
Draft Plans are unacceptable. Landlord shall not object to any Draft Plans that
satisfy the requirements set forth in Section 2.1. If Landlord objects to the
Draft Plans, then Tenant shall revise the Draft Plans and cause Landlord’s
objections to be remedied in the revised Draft Plans. Tenant shall then resubmit
the revised Draft Plans to Landlord for approval. Landlord’s approval of or
objection to revised Draft Plans and Tenant’s correction of the same shall be in
accordance with this Section 2.2, until Landlord has approved the Draft Plans in
writing. The iteration of the Draft Plans that is approved by Landlord without
objection shall be referred to herein as the “Approved Plans.”

 

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2.3. Completion of Tenant’s Work. Tenant shall perform and complete Tenant’s
Work (a) in strict conformance with the Approved Plans, (b) otherwise in
compliance with the Lease and (c) in accordance with Applicable Laws, Landlord’s
insurance carriers and the board of fire underwriters having jurisdiction over
the Project and the Premises. Completion of Tenant’s Work shall be subject to
Landlord confirming that Tenant has complied with this Section 2.3.

2.4. Conditions to Performance of Tenant’s Work. Prior to the commencement of
Tenant’s Work, Tenant shall submit to Landlord for Landlord’s approval (which
approval Landlord shall not unreasonably withhold) a list (the “Contractor
List”) of project managers, contractors and subcontractors that will perform
Tenant’s Work. Landlord shall give Tenant notice in writing of its approval or
disapproval of the Contractor List within seven (7) business days after
Landlord’s receipt of the same. If Landlord reasonably disapproves of one or
more parties on the Contractor List, Tenant shall revise the Contractor List and
resubmit the same to Landlord for Landlord’s approval in accordance with the
preceding two sentences. If permitted by Section 17.5 of the Lease, Landlord may
require that Tenant’s contractors and subcontractors provide the bonds provided
for in Section 17.5 of the Lease. For all subcontracts in excess of Fifty
Thousand Dollars ($50,000), Tenant shall require its general contractor to
provide Tenant with at least three (3) competitive bids.

2.5. Requests for Consent. Landlord shall respond to all requests for consents,
approvals or directions made by Tenant pursuant to this Work Letter within seven
(7) business days following Landlord’s receipt of such request. Landlord’s
failure to respond within such seven (7) business day period shall be deemed
approval by Landlord.

3. Tenant’s Construction Obligations Shall Not Delay Commencement of the Term.
Tenant is currently in possession of the Premises. Notwithstanding any Tenant
Work to be performed by Tenant, the commencement of the Term and Tenant’s
obligation to pay Rent shall not, under any circumstance, be extended or
delayed. Tenant shall perform promptly such of its obligations contained in this
Work Letter as are to be performed by it. Tenant shall also observe and perform
all of its obligations under this Lease from the Term Commencement Date.

4. Completion of Tenant’s Construction Obligations. Tenant, at its sole cost and
expense (except for the Tenant Improvement Allowance and, if requested by
Tenant, the Additional TI Allowance), shall complete Tenant’s Work described in
this Work Letter in all respects in accordance with the provisions of the Lease
and this Work Letter. Tenant’s Work shall be deemed completed at such time as
Tenant, at its sole cost and expense (except for the Tenant Improvement
Allowance and, if requested by Tenant, the Additional TI Allowance) shall
furnish to Landlord (a) evidence satisfactory to Landlord that (i) all Tenant’s
Work has been completed and paid for in full (which shall be evidenced by the
architect’s certificate of completion and the general contractor’s and each
subcontractor’s and material supplier’s final waivers and releases of liens),
(ii) all Tenant’s Work has been accepted by Landlord, (iii) any and all liens
related to Tenant’s Work have either been discharged of record (by payment,
bond, order of a court of competent jurisdiction or otherwise) or waived by the
party filing such lien and (iv) no security interests relating to Tenant’s Work
are outstanding, (b) all certifications and approvals with respect to Tenant’s
Work that may be required from any Governmental Authority and any board of fire
underwriters or similar body for the use and occupancy of the Premises,
(c) certificates of insurance required by the Lease to be purchased and
maintained by Tenant, (d) an affidavit from Tenant’s architect certifying that
all work performed in, on or about the Premises is in accordance with the
Approved Plans and (e) complete drawing print sets and electronic CADD files on
disc of all contract documents for work performed by their architect and
engineers in relation to Tenant’s Work.

5. Insurance. Prior to commencing Tenant’s Work, Tenant shall provide, or shall
cause Tenant’s contractors and subcontractors to provide, to Landlord, in
addition to the insurance required of Tenant pursuant to the Lease, the
following types of insurance in the following amounts, upon the following terms
and conditions:

5.1. Builders’ All-Risk Insurance. At all times during the period beginning with
commencement of construction of Tenant’s Work and ending with final completion
of Tenant’s Work, Tenant shall maintain, or cause to be maintained, casualty
insurance in Builder’s All-Risk

 

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Form, insuring the Landlord Parties and Tenant’s contractors, as their interests
may appear. Such policy shall, on a completed values basis for the full
insurable value at all times, insure against loss or damage by fire, vandalism
and malicious mischief and other such risks as are customarily covered by the
so-called “broad form extended coverage endorsement” upon all Tenant’s Work and
the general contractor’s and any subcontractors’ machinery, tools and equipment,
all while each forms a part of, or is contained in, Tenant’s Work or any
temporary structures on the Premises, or is adjacent thereto. Said Builder’s
All-Risk Insurance shall contain an express waiver of any right of subrogation
by the insurer against Landlord and its affiliates, agents and employees.

5.2. Workers’ Compensation. At all times during the period of construction of
Tenant’s Work, Tenant shall, or shall cause its contractors or subcontractors
to, maintain statutory Workers’ Compensation insurance as required by Applicable
Laws.

6. Liability. Tenant assumes sole responsibility and liability for any and all
injuries or the death of any persons, including Tenant’s contractors and
subcontractors and their respective employees, and for any and all damages to
property caused by, resulting from or arising out of any act or omission on the
part of Tenant, Tenant’s contractors or subcontractors, or their respective
employees in the prosecution of Tenant’s Work. Tenant agrees to indemnify,
defend, protect and save free and harmless Landlord and Landlord’s affiliates,
agents and employees from and against all losses and expenses, including
reasonable attorneys’ fees and expenses, that Landlord may incur as the result
of claims or lawsuits due to, because of, or arising out of any and all such
injuries, death or damage, whether real or alleged, and Tenant and Tenant’s
contractors and subcontractors shall assume and defend at their sole cost and
expense all such claims or lawsuits; provided, however, that nothing contained
in this Work Letter shall be deemed to indemnify or otherwise hold Landlord
harmless from or against liability caused by Landlord’s gross negligence or
willful misconduct. Any deficiency in design or construction of Tenant’s Work
shall be solely the responsibility of Tenant, notwithstanding the fact that
Landlord may have approved of the same in writing. All material and equipment
furnished by Tenant as Tenant’s Work shall be new or “like new” and Tenant’s
Work shall be performed in a first-class, workmanlike manner.

7. Tenant Improvement Allowance and Additional TI Allowance.

7.1. Application of Tenant Improvement Allowance and the Additional TI
Allowance. Landlord shall contribute the Tenant Improvement Allowance (and, if
requested by Tenant, the Additional TI Allowance) toward the costs and expenses
incurred in connection with the performance of Tenant’s Work, in accordance with
the terms and provisions of the Lease. If the entire Tenant Improvement
Allowance or Additional TI Allowance is not applied toward or reserved for the
costs of Tenant’s Work, Tenant shall not be entitled to a credit of such unused
portion of the Tenant Improvement Allowance or Additional TI Allowance.

7.2. Approval of Budget for Tenant’s Work. Notwithstanding anything to the
contrary set forth elsewhere in this Work Letter or the Lease, Landlord shall
not have any obligation to advance to Tenant any portion of the Tenant
Improvement Allowance or the Additional TI Allowance until Landlord shall have
approved in writing the budget for the Tenant’s Work (the “Approved Budget”).
Prior to Landlord’s approval of the Approved Budget, Tenant shall pay all of the
costs and expenses incurred in connection with Tenant’s Work as they become due.
Landlord shall not be obligated to reimburse Tenant for costs or expenses
relating to Tenant’s Work that exceed either (a) the amount of the Tenant
Improvement Allowance (and, if requested by Tenant, the Additional TI
Allowance), other than pursuant to Section 8.2, or (b) the Approved Budget,
either on a line item or overall basis.

7.3. Advance Requests. Upon submission by Tenant to Landlord of (a) a statement
(an “Advance Request”) setting forth the total amount requested, (b) a detailed
summary of the Tenant’s Work performed using AIA standard form Application for
Payment (G 702) executed by the general contractor and by the architect),
(c) lien releases from the general contractor and each subcontractor and
material supplier with respect to the portion of Tenant’s Work corresponding to
the Advance Request, then Landlord shall, within five (5) business days
following receipt by Landlord of an Advance Request and the accompanying
materials required by this Section 7.3, advance to Tenant the amount set forth
in such Advance Request; provided,

 

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however, that, with respect to any Advance Requests subject to the limits set
forth in Section 7.2, Landlord shall advance to Tenant the requested amount as
limited by Section 7.2.

7.4. Application of the Tenant Improvement Allowance and Additional TI
Allowance. Tenant may apply the Improvement Allowance (and, if requested by
Tenant, the Additional TI Allowance) for the payment of construction and other
costs (including, without limitation, standard laboratory improvements;
finishes; building fixtures; building permits; and architectural, engineering,
design and consulting fees), in each case as reflected in the Approved Budget
and the Approved Plans. In no event shall the Tenant Improvement Allowance or
Additional TI Allowance be applied to the purchase of any furniture, personal
property or other non-building system equipment.

8. Changes. Any changes to Tenant’s Work (each, a “Change”) requested by
Landlord or Tenant after Landlord approves the Approved Plans in writing shall
be requested and instituted in accordance with the provisions of this Section 8
and shall be subject to the reasonable written approval of the other party.

8.1. Changes Requested by Tenant.

(a) Tenant may request Changes after Landlord approves the Approved Plans by
notifying Landlord thereof in writing in substantially the same form as the AIA
standard change order form (a “Tenant Change Order Request”), which Tenant
Change Order Request shall detail the nature and extent of any requested
Changes. If the nature of a Change requires revisions to the Approved Plans,
then Tenant shall be solely responsible for the cost and expense of such
revisions. Tenant Change Order Requests shall be signed by Tenant’s Authorized
Representative.

(b) Landlord shall approve or reject any Tenant Change Order Requests in
accordance with the procedures established pursuant to Section 2. If Landlord
does not approve in writing a Tenant Change Order Request, then such Tenant
Change Order Request shall be deemed rejected by Landlord, and Tenant shall not
be permitted to alter Tenant’s Work as contemplated by such Tenant Change Order
Request.

8.2. Changes Requested by Landlord. Landlord may request Changes after Landlord
approves the Approved Plans by notifying Tenant thereof in writing in
substantially the same form as the AIA standard change order form (a “Landlord
Change Order Request”), which Landlord Change Order Request shall detail the
nature and extent of any requested Changes. If the nature of a Change requires
revisions to the Approved Plans, then Landlord shall be solely responsible for
the cost and expense of such revisions. Landlord shall reimburse Tenant for all
additional costs and expenses payable by Tenant to complete Tenant’s Work due to
a Landlord-requested Change in accordance with the payment provisions of this
Work Letter.

8.3. Preparation of Estimates. Tenant shall, before proceeding with any Change,
use its best efforts, prepare as soon as is reasonably practicable (but in no
event more than five (5) business days after delivering a Tenant Change Order
Request to Landlord or receipt of a Landlord Change Order Request) an estimate
of the increased costs or savings that would result from such Change, as well as
an estimate on such Change’s effects on the Schedule. Landlord shall have five
(5) business days after receipt of such information from Tenant to (a) in the
case of a Tenant Change Order Request, approve or reject such Tenant Change
Order Request in writing, or (b) in the case of a Landlord Change Order Request,
notify Tenant in writing of Landlord’s decision either to proceed with or
abandon the Landlord-requested Change.

9. Miscellaneous.

9.1. Headings, Etc. Where applicable in this Work Letter, the singular includes
the plural and the masculine or neuter includes the masculine, feminine and
neuter. The section headings of this Work Letter are not a part of this Work
Letter and shall have no effect upon the construction or interpretation of any
part hereof.

9.2. Time of the Essence. Time is of the essence with respect to the performance
of every provision of this Work Letter in which time of performance is a factor.

 

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9.3. Covenants. Each provision of this Work Letter performable by either party
shall be deemed both a covenant and a condition.

9.4. Consent. Whenever consent or approval of either party is required, that
party shall not unreasonably withhold such consent or approval, except as may be
expressly set forth to the contrary.

9.5. Entire Agreement. The terms of this Work Letter are intended by the parties
as a final expression of their agreement with respect to the terms as are
included herein, and may not be contradicted by evidence of any prior or
contemporaneous agreement, other than the Lease.

9.6. Invalid Provisions. Any provision of this Work Letter that shall prove to
be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof, and all other provisions of this Work Letter shall
remain in full force and effect and shall be interpreted as if the invalid, void
or illegal provision did not exist.

9.7. Construction. The language in all parts of this Work Letter shall be in all
cases construed as a whole according to its fair meaning and not strictly for or
against either Landlord or Tenant.

9.8. Assigns. Each of the covenants, conditions and agreements herein contained
shall inure to the benefit of and shall apply to and be binding upon the parties
hereto and their respective heirs; legatees; devisees; executors;
administrators; and permitted successors, assigns, sublessees. Nothing in this
Section 9.8 shall in any way alter the provisions of the Lease restricting
assignment or subletting.

9.9. Authority. That individual or those individuals signing this Work Letter
guarantee, warrant and represent that said individual or individuals have the
power, authority and legal capacity to sign this Work Letter on behalf of and to
bind all entities, corporations, partnerships, limited liability companies,
joint venturers or other organizations and entities on whose behalf said
individual or individuals have signed.

9.10. Counterparts. This Work Letter may be executed in one or more
counterparts, each of which, when taken together, shall constitute one and the
same document.

 

G-5

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Work Letter to be
effective on the date first above written.

 

LANDLORD:

BMR-6828 NANCY RIDGE DRIVE LLC,

a Delaware limited liability company

By:   /s/ Alan D. Gold Name:   Alan D. Gold Title:   President & CEO

TENANT:

 

CARDIOVASCULAR BIOTHERAPEUTICS, INC.,

a Delaware corporation

By:   /s/ Daniel C. Montano Name:   Daniel C. Montano Title:   President

 

G-6

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EXHIBIT A

SCHEDULE

[To be agreed upon by Landlord and Tenant prior

to commencement of Tenant’s Work]

 

G-A-1

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SCHEDULE 2.1

TENANT WORK PLANS

 

Architectural Drawings 1.   Site plan 2.   Floor and reflected ceiling plans 3.
  Elevations (exterior and interior) 4.   Sections (building and wall) 5.  
Details (exterior and interior) 6.   Schedules (doors, windows, finishes, etc.)
Engineering Drawings 1.   Mechanical 2.   Plumbing 3.   Electrical 4.   Fire
Protection 5.   Civil Engineering 6.   Landscape architecture
Specifications—Required for all disciplines listed above

 

G-2.1-1