Exhibit 10.155

 

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE – NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

 

1.                                       Basic Provisions (“Basic Provisions”)

 

1.1                                 Parties: This Lease (“Lease”), dated for
reference purposes only, December 15, 1997, is made by and between The Childs
Family Investment Partnership, L.P. and The A.J. Gardner Family Trust, U/T/A
3/5/81 (“Lessor”) and The Immune Response Corporation, a Delaware Corporation
(“Lessee”), (collectively the “Parties,” or individually a “Party”).

 

1.2                                 Premises: That certain real property,
including all improvements therein or to be provided by Lessor under the terms
of this Lease, and commonly known as 5931, Darwin Court, Carlsbad, California
92008 located in the County of San Diego, State of California and generally
described as (describe briefly the nature of the property and, if applicable,
the “Project”, if the property is located within a Project) An approximately
31,200 square foot concrete tilt up freestanding building and appurtances
located in the Carlsbad Research Center. (See Addendum) (“Premises”). (See also
Paragraph 2)

 

1.3.                              Term: Ten (10) years and Zero (0) months
(“Original Term”) commencing See Addendum (“Commencement Date”) and ending one
hundred twenty (120) months there after (“Expiration Date”). (See also Paragraph
3)

 

1.4                                 Early Possession: See Addendum (“Early
Possession Date”). (See also Paragraphs 3.2 and 3.3)

 

1.5                                 Base Rent: $18,408.00 (See Addendum) per
month (“Base Rent”), payable on the first (1st) day of each month commencing on
the Commencement Date (See also Paragraph 4)

 

ý  If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted.

 

1.6                                 Base Rent Paid Upon Execution: $18,408.00
(Eighteen Thousand Four Hundred Eight and no/100ths Dollars) as Base Rent for
the period first month following the Commencement Date.

 

1.7                                 Security Deposit: $24,024.00 (“Security
Deposit”). (See also Paragraph 5)

 

1.8                                 Agreed Use: See Addendum (See also Paragraph
6)

 

1.9                                 Insuring Party. Lessor is the “Insuring
Party” unless otherwise stated herein. (See also Paragraph 8)

 

1.10                           Real Estate Brokers: (See also Paragraph 15)

 

(a) Representation: The following real estate brokers (collectively, the
“Brokers”) and brokerage relationships exist in this transaction (check
applicable boxes):

 

ý                                    David Onosko, CB Commercial Real Estate
Group, Inc represents Lessor exclusively (“Lessor’s Broker”);

 

ý                                    William Driscoll, CB Commercial Real Estate
Group, Inc represents Lessee exclusively (“Lessee’s Broker”); or

 

o                                    represents both Lessor and Lessee (“Dual
Agency”).

 

(b)  Payment to Brokers: Upon execution and delivery of this Lease by both
Parties, Lessor shall pay to the Broker the fee agreed to in their separate
written agreement (or if there is no such agreement, the sum of    % of the
total Base Rent for the brokerage services rendered by said Broker).

 

1.11  Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by N/A (“Guarantor”). (See also Paragraph 37).

 

1.12  Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting
of 15 pgs through      and Exhibits 1.2, 5, 6.2, 50 and 56, all of which
constitute a part of this Lease.

 

2.  Premises.

 

2.1  Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease.  Unless otherwise provided
herein, any statement of size set forth in this Lease, or that may have been
used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.

 

2.2  Condition. Lessor shall deliver the Premises to Lessee broom clean and free
of debris on the Commencement Date or the Early Possession Date, whichever first
occurs (“Start Date”), and, so long as the required service contracts described
in Paragraph 7.1(b) below are obtained by Lessee within thirty (30) days
following the Start Date, warrants that the existing electrical, plumbing, fire
sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”),
loading doors, if any, and all other such elements in the Premises, other than
those constructed by Lessee, shall be in good operating condition on said date
and that the structural elements of the roof, bearing walls and foundation of
any buildings on the Premises (the “Building”) shall be free of material
defects. If a non-compliance with said warranty exists as of the Start Date,
Lessor shall, as Lessor’s sole obligation with respect to such matter, except as
otherwise provided in this Lease, promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify same at Lessor’s expense. If, after the Start Date,
Lessee does not give Lessor written notice of any non-compliance with this
warranty within: (i) one year* as to the surface of the roof and the structural
portions of the roof, foundations and bearing walls, (ii) six (6) months as to
the HVAC systems, (iii) thirty (30) days as to the remaining systems and other
elements of the Building, correction of such non-compliance shall be the
obligation of Lessee at Lessee’s sole cost and expense. * as to patent defects
and three (3) years as to latent defects

 

2.3  Compliance. Lessor warrants that the improvements on the Premises comply
with all applicable laws, covenants or restrictions or record, building codes,
regulations and ordinances (“Applicable Requirements”) in effect on the Start
Date. Said warranty does not apply to the use to which Lessee will put the
Premises or to any Alterations or Utility Installations (as defined in Paragraph
7.3 (a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the zoning is appropriate for Lessee’s intended use,
and acknowledges that past uses of the Premises may no longer be allowed. If the
Premises do not comply with said warranty, Lessor shall, except as otherwise
provided, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance, rectify the same
at Lessor’s expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within six (6) months following the Start
Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee’s sole cost and expense. If the Applicable Requirements are hereafter
changed (as opposed to being in existence at the Start Date, which is addressed
in Paragraph 6.2(e) below) so as to require during the term of this Lease the
construction of an addition to or an alteration of the Building, the remediation
of any Hazardous Substance, or the reinforcement or other physical modification
of the Building (“Capital Expenditure”), Lessor and Lessee shall allocate the
cost of such work as follows:

 

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(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required
as a result of the specific and unique use of the Premises by Lessee as compared
with uses by tenants in general, Lessee shall be fully responsible for the cost
thereof, provided, however that such Capital Expenditure is required during the
last two (2) years of this Lease and the cost thereof exceeds six (6) months’
Base Rent. Lessee may instead terminate this Lease unless Lessor notifies
Lessee, in writing, within ten (10) days after receipt of Lessee’s termination
notice that Lessor has elected to pay the difference between the actual cost
thereof and the amount equal to six (6) months’ Base Rent. If Lessee elects
Termination, Lessee shall immediately cease the use of the Premises which
requires such Capital Expenditure and deliver to Lessor written notice
specifying a termination date at least ninety (90) days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

 

(b) If such Capital Expenditure is not the result of the specific and unique use
of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay for
such costs pursuant to the provisions of Paragraph 7.1 (c): provided, however,
that if such Capital Expenditure is required during the last two years of this
Lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
ninety (90) days prior written notice to Lessee unless Lessee notifies Lessor,
in writing, within ten (10) days after receipt of Lessor’s termination notice
that Lessee will pay for such Capital Expenditure. If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure, Lessee
may advance such funds and deduct same, with Interest, from Rent until Lessor’s
share of such costs have been fully paid. If Lessee is unable to finance
Lessor’s share, or if the balance of the Rent due and payable for the remainder
of this Lease is not sufficient to fully reimburse Lessee on an offset basis,
Lessee shall have the right to terminate this Lease upon thirty (30) days
written notice to Lessor.

 

(c) Notwithstanding the above, the provisions concerning Capital Expenditures
are intended to apply only to non-voluntary, unexpected, and new Applicable
Requirements. If the Capital Expenditures are instead triggered by Lessee as a
result of an actual or proposed change in use, change in intensity of use, or
modification to the Premises then, and in that event, Lessee shall be fully
responsible for the cost thereof, and Lessee shall not have any right to
terminate this Lease.

 

2.4.                            Acknowledgements. Lessee acknowledges that: (a)
it has been advised by Lessor and/or Brokers to satisfy itself with respect to
the condition of the Premises (including but not limited to the electrical, HVAC
and fire sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements), and their suitability for Lessee’s intended use, (b)
Lessee has made such investigation as it deems necessary with reference to such
matters and assumes all responsibility therefore as the same relate to its
occupancy of the Premises, and (c) neither Lessor, Lessor’s agents, nor any
Broker has made any oral or written representations or warranties with respect
to said matters other than as set forth in this Lease. In addition, Lessor
acknowledges that: (a) Broker has made no representations, promises or
warranties concerning Lessee’s ability to honor the Lease or suitability to
occupy the Premises, and (b) it is Lessor’s sole responsibility to investigate
the financial capability and/or suitability of all proposed tenants.

 

2.5.                            Lessee as Prior Owner/Occupant. The warranties
made by Lessor in Paragraph 2 shall be of no force or effect if immediately
prior to the Start Date Lessee was the owner or occupant of the Premises. In
such event, Lessee shall be responsible for any necessary corrective work.

 

3.                                      Term.

 

3.1                               Term.  The Commencement Date, Expiration Date
and Original Term of this Lease are as specified in Paragraph 1.3.

 

3.2.                            Early Possession.  If Lessee totally or
partially occupies the Premises prior to the Commencement Date, the obligation
to pay Base Rent shall be abated for the period of such early possession. All
other terms of this Lease (including but not limited to the obligations to pay
Real Property Taxes and insurance premiums and to maintain the Premises) shall,
however, be in effect during such period. Any such early possession shall not
effect the Expiration Date.

 

3.3.                            Delay in Possession. Lessor agrees to use its
best commercially reasonable efforts to deliver possession of the Premises to
Lessee by December 31, 1997. If, despite said efforts, Lessor is unable to
deliver possession as agreed, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease. Lessee shall
not, however, be obligated to pay Rent or perform its other obligations until it
receives possession of the Premises. If possession is not delivered within sixty
(60) days after the Commencement Date, Lessee may, at its option, by notice in
writing within ten (10) days after the end of such sixty (60) day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said ten (10)
day period, Lessee’s  right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Lessee*. but minus any days of delay
caused by the acts or omissions of Lessee. If possession of the Premises is not
delivered within four (4) months after December 31, 1997, this Lease shall
terminate unless other agreements are reached between Lessor and Lessee, in
writing.

 

3.4.                            Lessee Compliance. Lessor shall not be required
to tender possession of the Premises to Lessee until Lessee complies with its
obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of
such evidence, Lessee shall be required to perform all of its obligations under
this Lease from and after the Start Date. including the Payment of Rent,
notwithstanding Lessor’s election to withhold possession pending receipt of such
evidence of insurance. Further, if Lessee is required to perform any other
conditions prior to or concurrent with the Start Date, the Start Date shall
occur but Lessor may elect to withhold possession until such conditions are
satisfied.

 

4.                                       Rent.

 

4.1                                 Rent Defined.  All monetary obligations of
Lessee to Lessor under the terms of this Lease (except for the Security Deposit)
are deemed to be rent (“Rent”).

 

4.2                                 Payment.  Lessee shall cause payment of Rent
to be received by Lessor in lawful money of the Unites States, without offset or
deduction, on or before the day on which it is due.  Rent for any period during
the term hereof which is for less than one (1) full calendar month shall be
prorated based upon the actual number of days of said month.  Payment of Rent
shall be made to Lessor at its address stated herein or to such other persons or
place as Lessor may from time to time designate in writing.  Acceptance of a
payment which is less than the amount then due shall not be a waiver of Lessor’s
rights to the balance of such Rent, regardless of Lessor’s endorsement of any
check so stating.

Rent shall be payable to LANDCO and mailed to 432 So.  Bentley Ave Los Angeles,
CA 90049-3513.

 

5.                                       Security Deposit.  Lessee shall deposit
with Lessor upon execution hereof the Security Deposit as security for Lessee’s
faithful performance of its obligations under this Lease.  If Lessee fails to
pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or
retain all or any portion of said Security Deposit for the payment of any amount
due Lessor or to reimburse or compensate Lessor for any liability, expense, loss
or damage which Lessor may suffer or incur by reason thereof.  If Lessor uses or
applies all or any portion of said Security Deposit, Lessee shall within ten
(10) days after written request therefor deposit monies with Lessor sufficient
to restore said Security Deposit to the full amount required by this Lease. If
the Base Rent increases during the term of this Lease, Lessee shall, upon
written request from Lessor, deposit additional moneys with Lessor so that the
total amount of the Security Deposit shall at all times bear the same proportion
to the increased Base Rent as the initial Security Deposit born to the initial
Base Rent.  Should the Agreed Use be amended to accommodate a material change in
the business of Lessee or to accommodate a sublessee or assignee, Lessor shall
have the right to increase the Security Deposit to the extent necessary, in
Lessor’s reasonable judgment, to account for any increased wear and tear that
the Premises may suffer as a result thereof.  If a change in control of Lessee
occurs during this Lease and following such change the financial condition of
Lessee is, in Lessor’s reasonable judgment, significantly reduced, Lessee shall
deposit such additional monies with Lessor as shall be sufficient to cause the
Security Deposit to be at a commercially reasonable level based on said change
in financial condition.  Lessor shall not be required to keep the Security
Deposit separate from its general accounts.  Within fourteen (14) days after the
expiration or termination of this Lease, if Lessor elects to apply the Security
Deposit only to unpaid Rent and otherwise within thirty (30) days after the
Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall
return that portion of the Security Deposit not used or applied by Lessor.  No
part of the Security Deposit shall be considered to be held in trust, to bear
interest or to be prepayment for any monies to be paid by Lessee under this
Lease.

 

6.                                       Use.

 

6.1                                 Use.  Lessee shall use and occupy the
Premises only for the Agreed use, or any other legal use which is reasonably
comparable thereto, and for no other purpose.  Lessee shall not use or permit
the use of the Premises in a manner that is unlawful, creates damage, waste or a
nuisance or that disturbs owners and/or occupants of, or causes damage to
neighboring properties.  Lessor shall not unreasonably withhold

 

by December 31, 1997 the April 1, 1998 date in 1.3 shall be extended by the
number of days beyond December 31, 1997 that the Lessor delivered possession.

 

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or delay its consent to any written request for a modification of the Agreed
Use, so long as the same will not impair the structural integrity of the
improvements on the Premises or the mechanical or electrical systems therein, is
not significantly more burdensome to the Premises. If Lessor elects to withhold
consent, Lessor shall with five (5) business days after such request give
written notification of same, which notice shall include an explanation of
Lessors objections to the change in use.

 

6.2.                              Hazardous Substances.       (See Addendum)

 

(a)  Reportable Uses Require Consent.  The term “Hazardous Substance” as used in
this Lease shall mean any product, substance or waste whose presence, use,
manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either: (i)
potentially injurious to the public health, safety or welfare, the environment
or the Premises, (ii) regulated or monitored by any governmental authority, or
(iii) a basis for potential liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products by-products or fractions thereof. 
Lessee shall not engage in any activity in or on the Premises which constitutes
a Reportable Use of Hazardous Substances without the express prior written
consent of Lessor and timely compliance (at Lessee’s expense) with all
Applicable Requirements.  “Reportable Use” shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties.  Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, so long as such use
is in compliance with all Applicable Requirements, is not a Reportable Use, and
does not expose the Premises or neighboring property to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor.  In
addition, Lessor may condition its consent to any Reportable Use upon receiving
such additional assurances as Lessor reasonably deems necessary to protect
itself, the public, the Premises and/or the environment against damage,
contamination, injury and/or liability, including, but not limited to, the
installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the
Security Deposit.

 

(b)  Duty to Inform Lessor.  If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on under or about
the Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor, and provide Lessor with
a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.

 

(c)  Lessee Remediation.  Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly at
Lessee’s expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any
contamination of , and for the maintenance, security and/or monitoring of the
Premises or neighboring properties, that was caused or materially contributed to
by Lessee, or pertaining to or involving any Hazardous Substance brought onto
the Premises during the term of this Lease, by or for Lessee, or any third
party.

 

(d)  Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its
agents, employees, lenders and ground lessor, if any, harmless from and against
any and all loss of rents and/or damages, liabilities, judgments, claims,
expenses, penalties, and attorneys and consultants’ fees arising out of or
involving any Hazardous Substance brought onto the Premises by or for Lessee, or
any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from adjacent properties unless migration is from an
affiliated company). Lessee’s obligations shall include, but not be limited to,
the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive  the
expiration or termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its
obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.

 

(e)  Lessor Indemnification.  Lessor and its successors and assigns shall
indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages which existed as a
result of Hazardous Substances on the Premises prior to Start Date or which are
caused by the gross negligence, or intentional acts of Lessor, its agents or
employees. Lessor’s obligations, as and when required by the Applicable
Requirements, shall include, but not be limited to, the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease.

 

(f)  Investigations and Remediations.  Lessor shall retain the responsibility
and pay for any investigations or remediation measures required by governmental
entities having jurisdiction with respect to the existence of Hazardous
Substances on the Premises prior to the Start Date. Lessee shall cooperate fully
in any such activities at the request of Lessor, including allowing Lessor and
Lessor’s agents to have reasonable access to the Premises at reasonable times in
order to carry out Lessor’s investigative and remedial responsibilities.

 

(g)  Landlord Termination Option.  If a Hazardous Substance Condition occurs
during the term of this Lease, unless Lessee is legally responsible therefor (in
which case Lessee shall make the investigation and remediation thereof required
by the Applicable Requirements and this Lease shall continue in full force and
effect, but subject to Lessor’s rights under Paragraph 6.2(d) and Paragraph 13),
Lessor may, at Lessor’s option, either (i) investigate and remediate such
Hazardous Substance Condition, if required, as soon as reasonably possible at
Lessor’s expense, in which event this Lease shall continue in full force and
effect, or (ii) if the estimated cost to remediate such condition exceeds twelve
(12) times the then monthly Base Rent or $100,000, whichever is greater, give
written notice to Lessee, within thirty (30) days after receipt by Lessor of
knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s
desire to terminate this Lease as of the date sixty (60) days following the date
of such notice. In the event Lessor elects to give a termination notice, Lessee
may, within ten (10) days thereafter, give written notice to Lessor of Lessee’s
commitment to pay the amount by which the cost of the remediation of such
Hazardous Substance Condition exceeds an amount equal to twelve (12) times the
then monthly Base Rent or $100,000, whichever is greater.  Lessee shall provide
Lessor with said funds or satisfactory assurance thereof within thirty (30) days
following such commitment.  In such event, this Lease shall continue in full
force and effect, and Lessor shall proceed to make such remediation as soon as
reasonably possible after the required funds are available. If Lessee does not
give such notice and provide the required funds or assurance thereof within the
time provided, this Lease shall terminate as of the date specified in Lessor’s
notice of termination.

 

6.3                                 Lessee’s Compliance with Applicable
Requirements.  Except as otherwise provided in this Lease, Lessee, shall, at
Lessee’s sole expense, fully, diligently and in a timely manner, materially
comply with all Applicable Requirements, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor’s
engineers and/or consultants which relate in any manner to the Premises, without
regard to whether said requirements are now in effect or become effective after
the Start Date. Lessee shall, within ten (10) days after receipt of Lessor’s
written request, provide Lessor with copies of all permits and other documents,
and other information evidencing Lessee’s compliance with any Applicable
Requirements specified by Lessor, and shall immediately upon receipt, notify
Lessor in writing (with copies of any documents involved) of any threatened or
actual claim, notice, citation, warning, complaint or report pertaining to or
involving the failure of Lessee or the Premises to comply with any Applicable
Requirements.

 

6.4                                 Inspection; Compliance.  Lessor and Lessor’s
Lender and consultants shall have the right to enter into Premises at any time,
in the case of an emergency, and otherwise at reasonable times, for the purpose
of inspecting the condition of the Premises and for verifying compliance by
Lessee with this Lease. The cost of any such inspections shall be paid by
Lessor, unless a violation of Applicable Requirements, or a contamination is
found to exist or be imminent, or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request reimburse Lessor
for the cost of such inspections, so long as such inspection is reasonably
related to the violation or contamination.

 

7.                                      Maintenance; Repairs, Utility
Installations; Trade Fixtures and Alterations.

 

7.1                                 Lessee’s Obligations.

 

(a) In General.  Subject to the provisions of Paragraph 2.2 (Condition), 2.3
(Compliance), 6.3 (Lessee’s Compliance with Applicable Requirements), 7.2
(Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee
shall, at Lessee’s sole expense, keep

 

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the Premises, Utility Installations, and Alterations in good order, condition
and repair (whether or not the portion of the Premises requiring repairs, or the
means of repairing the same, are reasonably or readily accessible to Lessee, and
whether or not the need for such repairs occurs as a result of Lessee’s use, any
prior use, the elements or the age of such portions of the Premises), including,
but not limited to, all equipment or facilities, such as plumbing, HVAC,
electrical, lighting facilities, boilers, pressure vessels, fire protection
system, fixtures, walls (interior and exterior), foundations, ceilings, roofs,
floors, windows, doors, plate glass, skylights, landscaping, driveways, parking
lots, fences, retaining walls, signs, sidewalks and parkways located in, on, or
adjacent to the Premises. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices,
specifically including the procurement and maintenance of the service contracts
required by Paragraph 7.1(b) below. Lessee’s obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair. Lessee shall, during the term of this Lease, keep the exterior
appearance of the Building in a first-class condition consistent with the
exterior appearance of other similar facilities of comparable age and size in
the vicinity, including, when necessary, the exterior repainting of the
Building.

 

(b)  Service Contracts. Lessee shall, at Lessee’s sole expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in the maintenance of the
following equipment and improvements.  (“Basic Elements”), if any, as and when
installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure
vessels, (iii) fire protection systems, (iv) landscaping and irrigation systems,
(v) roof covering and drains, and (vi) asphalt and parking lots, (vii)
clarifiers and (viii) any other equipment, if reasonably required by Lessor. 
Lessee may use its own qualified personnel with Lessor’s approval which shall
not be unreasonably withheld.

 

(c)  Replacement. Subject to Lessee’s indemnification of Lessor as set forth in
Paragraph 8.7 below, and without relieving Lessee of liability resulting from
Lessee’s failure to exercise and perform good maintenance practices, if the
Basic Elements described in Paragraph 7.1(b) cannot be repaired other than at a
cost which is in excess of 50% of the cost of replacing such Basic Elements,
then such Basic Elements shall be replaced by Lessor, and the cost thereof shall
be prorated between the Parties and Lessee shall only be obligated to pay, each
month during the remainder of the term of this Lease, on the date on which Base
Rent is due, an amount equal to the product of multiplying the cost of such
replacement as such useful life is specified pursuant to Federal income tax
regulations or guidelines for depreciation thereof (including interest on the
unamortized balance as is then commercially reasonable in the judgment of
Lessor’s accountants), with Lessee reserving the right to prepay its obligation
at any time.

 

7.2                                 Lessor’s Obligations. Subject to the
provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 9 (Damage or
Destruction) and 14 (Condemnation), it is intended by the Parties hereto that
Lessor have no obligation, in any manner whatsoever, to repair and maintain the
Premises, or the equipment therein , all of which obligations are intended to be
that of the Lessee. It is the intention of the Parties that the terms of this
Lease govern the respective obligations of the Parties as to maintenance and
repair of the Premises, and they expressly waive the benefit of any statute now
or hereafter in effect to the extent it is inconsistent with the terms of this
Lease.

 

7.3                                 Utility Installations; Trade Fixtures;
Alterations. (See Addendum)

 

(a)  Definitions; Consent Required. The term “Utility Installations” refers to
all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term “Alterations” shall mean any modification of the improvements, other
than Utility Installations or Trade Fixtures, whether by addition or deletion. 
“Lessee Owned Alterations and/or Utility Installations” are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or
Utility Installations to the Premises without Lessor’s prior written consent.
Lessee may, however, make non-structural Utility Installations to the interior
of the Premises (excluding the roof) without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls, and the
cumulative cost thereof during this Lease as extended does not exceed $50,000 in
the aggregate or $10,000 in any one year.

 

(b)  Consent. Any Alterations or Utility Installations that Lessee shall desire
to make and which require the consent of the Lessor shall be presented to Lessor
in written form with detailed plans. Consent shall be deemed conditioned upon
Lessee’s: (i) acquiring all applicable governmental permits, (ii) furnishing
Lessor with copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications. For work which costs an
amount equal to the greater of one month’s Base Rent, or $10,000, Lessor may
condition its consent upon Lessee providing a lien and completion bond in an
amount equal to one and one-half times the estimated cost of such Alteration or
Utility Installation and/or upon Lessee’s posting an additional Security Deposit
with Lessor.

 

(c)  Indemnification. Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use on the Premises, which claims are or may be secured by any mechanic’s or
materialmen’s lien against the Premises or any interest therein.  Lessee shall
give Lessor not less than ten (10) days’ notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility.  If Lessee shall contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof. If Lessor shall require, Lessee shall furnish a surety bond in an
amount equal to one and one-half times the amount of such contested lien, claim
or demand, indemnifying Lessor against liability for the same. If Lessor elects
to participate in any such action, Lessee shall pay Lessor’s attorney’s fees and
costs.

 

7.4                               Ownership; Removal; Surrender; and
Restoration.

 

(a)  Ownership. Subject to Lessor’s right to require removal or elect ownership
as hereinafter provided, all Alterations and Utility Installations, made by
Lessee shall be the property of Lessee, but considered a part of the Premises.
Lessor may, at any time, elect in writing to be the owner of all or any
specified part of the Lessee Owned Alterations and Utility Installations. Unless
otherwise instructed per Paragraph 7.4(b) hereof, all Lessee Owned Alterations
and Utility Installations shall, at the expiration or termination of this Lease,
become the property of Lessor and be surrendered by Lessee with the Premises.

 

(b)  Removal. By delivery to Lessee of written notice from Lessor not later than
ninety (90) days prior to the end of the term of this Lease, Lessor may require
that any or all Lessee Owned Alterations or Utility Installations be removed by
the expiration or termination of this Lease. Lessor may require the removal at
any time of all or any part of any Lessee Owned Alterations or Utility
Installations made without the required consent.

 

(c)  Surrender/Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. “Ordinary
wear and tear” shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Lessee shall repair any damage
occasioned by the installation, maintenance or removal of Trade Fixtures,
furnishings, and equipment as well as the removal of any storage tank installed
by or for Lessee, and the removal , replacement, or remediation of any soil,
material or groundwater contaminated by Lessee. Trade Fixtures shall remain the
property of Lessee and shall be removed by Lessee. The failure by Lessee to
timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express
written consent of Lessor shall constitute a holdover under the provisions of
Paragraph 26 below.

 

8.                                      Insurance; Indemnity.

 

8.1                               Payment for Insurance. Lessee shall pay for
all insurance required under paragraph 8 except to the extent of the cost
attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in
excess of $2,000,000 per occurrence. Premiums for policy periods commencing
prior to or extending beyond the Lease term shall be prorated to correspond to
the Lease term. Payment shall be made by Lessee to Lessor on a monthly basis
along with other estimated Triple Net Expenses.

 

8.2                               Liability Insurance.

 

(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial
General Liability Policy of Insurance protecting Lessee

 

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and Lessor against claims for bodily injury, personal injury and property damage
based upon or arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto.  Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$2,000,000 per occurrence with an “Additional Insured-Managers or Lessors of
Premises Endorsement” and contain the “Amendment of the Pollution Exclusion
Endorsement” for damage caused by heat, smoke or fumes from a hostile fire.  The
Policy shall not contain any intra-insured exclusions as between insured persons
or organizations, but shall include coverage for liability assumed under this
Lease as an “insured contract” for the performance of Lessee indemnity
obligations under this Lease.  The limits of said insurance shall not, however,
limit the liability of Lessee nor relieve lessee of any obligation hereunder. 
All insurance carried by Lessee shall be primary to and not contributory with
any similar insurance carried by Lessor, whose insurance shall be considered
excess insurance only.

 

(b)  Carried by Lessor.  Lessor may maintain liability insurance as described in
Paragraph 8.2(a), in addition to, and not in lieu of the insurance required to
be maintained by Lessee.  Lessee shall not be named as an additional insured
therein.

 

8.3                                 Property Insurance – Building, Improvements
and Rental Value.

 

(a)  Building and Improvements.  The insuring Party shall obtain and keep in
force a policy or policies in the name of Lessor, with loss payable to Lessor
and to any Lender insuring loss of damage to the Premises.  The amount of such
insurance shall be equal to the full replacement cost of the Premises, as the
same shall exist from time to time, or the amount required by any Lenders, but
in no event more than the commercially reasonable and available insurable value
thereof.  If Lessor is the Insuring Party, however, Lessee Owned Alterations and
Utility installations, Trade Fixtures, and Lessee’s personal property shall be
insured by Lessee under Paragraph 8.4 rather than by Lessor.  If the coverage is
available and commercially appropriate, such policy or policies shall insure
against all risks of direct physical loss or damage including earthquake (except
the perils of Flood), including coverage for debris removal and the enforcement
of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss.  Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located.  If such insurance coverage has a deductible clause,
the deductible amount shall not exceed $1,000 per occurrence, and Lessee shall
be liable for such deductible amount in the event of an Insured Loss.

 

(b)  Rental Value.  The Insuring Party shall obtain and keep in force a policy
or policies in the name of Lessor with loss payable to Lessor and any Lender,
insuring the loss of the full Rent for one (1) year.  Said insurance shall
provide that in the event the Lease is terminated by reason of an insured loss,
the period of indemnity for such coverage shall be extended beyond the date of
the completion of repairs or replacement of the Premises, to provide for one
full year’s loss of Rent from the date of any such loss.  Said insurance shall
contain an agreed valuation provision in lieu of any coinsurance clause, and the
amount of coverage shall be adjusted annually to reflect the projected Rent
otherwise payable by Lessee, for the next twelve (12) month period.  Lessee
shall be liable for any deductible amount in the event of such loss.

 

(c)  Adjacent Premises.  If the Premises are part of a larger building, or of a
group of buildings owned by Lessor which are adjacent to the Premises, the
Lessee shall pay for any increase in the premiums for the property insurance of
such building or buildings if said increase is caused by Lessee’s acts,
omissions, use or occupancy of the Premises.

 

8.4                                 Lessee’s Property/Business Interruption
Insurance.

 

(a)  Property Damage.  Lessee shall obtain and maintain insurance coverage on
all of Lessee’s personal property, Trade Fixtures, and Lessee Owned Alterations
and Utility Installations.  Such insurance shall be full replacement cost
coverage with a deductible of not to exceed $1,000 per occurrence.  The proceeds
from any such insurance shall be used by Lessee for the replacement of personal
property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations.  Lessee shall provide Lessor with written evidence that such
insurance is in force.

 

(b)  Business Interruption.  If reasonably available, and if Lessor requests
Lessee to do so in writing, Lessee shall obtain and maintain loss of income and
extra expense insurance in amounts as will reimburse Lessee for direct or
indirect loss of earnings attributable to all perils commonly insured against by
prudent lessees in the business of Lessee or attributable to prevention of
access to the Premises as a result of such perils.

 

(c)  No Representation of Adequate Coverage.  Lessor makes no representation
that the limits or forms of coverage of insurance specified herein are adequate
to cover Lessee’s property, business operations or obligations under this Lease.

 

8.5                                 Insurance Policies.  Insurance required
herein shall be by companies duly licensed or admitted to transact business in
the state where the Premises are located, and maintaining during the policy term
a “General Policyholders Rating” of at least B+, V, as set forth in the most
current issue of “Best’s Insurance Guide”, or such other rating as may be
required by a Lender.  Lessee shall not do or permit to be done anything which
invalidates the required insurance policies.  Lessee shall, prior to the Start
Date, deliver to Lessor certified copies of polices of such insurance or
certificates evidencing the existence and amounts of the required insurance.  No
such policy shall be cancelable or subject to modification except after thirty
(30) days prior written notice to Lessor.  Lessee shall, at least thirty (30)
days prior to the expiration of such policies, furnish Lessor with evidence of
renewals or “insurance binders” evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand.  Such policies shall be for a term of
at least one year, or the length of the remaining term of this Lease, whichever
is less.  If either Party shall fail to procure and maintain the insurance
required to be carried by it, the other Party may, but shall not be required to,
procure and maintain the same.

 

8.6                                 Waiver of Subrogation.  Without affecting
any other rights or remedies, Lessee and Lessor each hereby release and relieve
the other, and waive their entire right to recover damages against the other,
for loss of or damage to its property arising out of or incident to the perils
required to be insured against herein.  The effect of such releases and waivers
is not limited by the amount of insurance carried or required, or by any
deductibles applicable hereto.  The Parties agree to have their respective
property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.

 

8.7                                 Indemnity.  Except for Lessor’s sole
negligence, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor’s master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee.  If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee’s expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense.  Lessor need not
have first paid any such claim in order to be defended or indemnified.

 

8.8                                 Exemption of Lessor from Liability.  Lessor
shall not be liable for injury or damage to the person or goods, wares,
merchandise or other property of Lessee, Lessee’s employees, contractors,
invitees, customers, or any other person in or about the Premises, whether such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures,
or from any other cause, whether the said injury or damage results from
conditions arising upon the Premises or upon other portions of the Building of
which the Premises are a part, or from other sources or places.  Lessor shall
not be liable for any damages arising from any act or neglect of any other
tenant of Lessor.  Notwithstanding Lessor’s negligence or breach of this Lease,
Lessor shall under no circumstances be liable for injury to Lessee’s business or
for any loss of income or profit therefrom.

 

9.                                       Damage or Destruction.

 

9.1                                 Definitions.

 

(a)  “Premises Partial Damage” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in six (6) months or less from
the date of the damage or destruction.  Lessor shall notify Lessee in writing
within thirty (30) days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.

 

(b)  “Premises Total Destruction” shall mean damage or destruction to the
Premises, other than Lessee Owned Alterations and Utility Installations, which
cannot reasonably be repaired in six (6) months or less from the date of the
damage or destruction.  Lessor shall notify Lessee in writing within thirty (30)
days from the date of the damage or destruction as to whether or not the damage
is Partial or Total.

 

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(c) “Insured Loss” shall mean damage or destruction to improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.

 

(d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements
owned by Lessor at the time of the occurrence to their condition existing
immediately prior thereto, including demolition, debris removal and upgrading
required by the operation of Applicable Requirements, and without deduction for
depreciation.

 

(e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a
condition involving the presence of, or a contamination by, a Hazardous
Substance as defined in Paragraph 6.2(a), in, on, or under the Premises.

 

9.2                                 Partial Damage - Insured Loss. If a Premises
Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor’s
expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee Owned
Alterations and Utility Installations) as soon as reasonably possible and this
Lease shall continue in full force and effect; provided, however, that Lessee
shall, at Lessor’s election, make the repair of any damage or destruction the
total cost to repair of which is $10,000 or less, and, in such event, Lessor
shall make any applicable insurance proceeds available to Lessee on a reasonable
basis for that purpose. Notwithstanding the foregoing, if the required insurance
was not in force or the insurance proceeds are not sufficient to effect such
repair, the Insuring Party shall promptly contribute the shortage in proceeds
(except as to the deductible which is Lessee’s responsibility) as and when
required to complete said repairs. In the event, however, such shortage was due
to the fact that, by reason of the unique nature of the improvements, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within ten (10) day period, the party responsible for making the repairs shall
complete them as soon as reasonably possible and this Lease shall remain in full
force and effect. If such funds or assurance are not received, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to: (i) make such restoration and repair as is commercially reasonable with
Lessor paying any shortage in proceeds, in which case this Lease shall remain in
full force and effect, or have this Lease terminate thirty (30) days thereafter.
Lessee shall not be entitled to reimbursement of any funds contributed by Lessee
to repair any such damage or destruction. Premises Partial Damage due to flood
or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may
be some insurance coverage, but the net proceeds of any such insurance shall be
made available for the repairs if made by either Party.

 

9.3                                 Partial Damage - Uninsured Loss. If a
Premises Partial Damage that is not an Insured Loss occurs, unless caused by a
negligent or willful act of Lessee (in which event Lessee shall make the repairs
at Lessee’s expense), Lessor may either: (i) repair such damage as soon as
reasonably possible at Lessor’s expense, in which event this Lease shall
continue in full force and effect, or (ii) terminate this Lease by giving
written notice to Lessee within thirty (30) days after receipt by Lessor of
knowledge of the occurrence of such damage. Such termination shall be effective
sixty (60) days following the date of such notice. In the event Lessor elects to
terminate this Lease. Lessee shall have the right within ten (10) days after
receipt of the termination notice to give written notice to Lessor of Lessee’s
commitment to pay for the repair of such damage without reimbursement from
Lessor.  Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within thirty (30) days after making such commitment. In such event this
Lease shall continue in full force and effect, and Lessor shall proceed to make
such repairs as soon as reasonably possible after the required funds are
available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.

 

9.4                                 Total Destruction.  Notwithstanding any
other provision hereof, if a Premises Total Destruction occurs, this Lease shall
terminate sixty (60) days following such Destruction. If the damage or
destruction was caused by the gross negligence or willful misconduct of Lessee,
Lessor shall have the right to recover Lessor’s damages from Lessee except as
provided in Paragraph 8.6.

 

9.5                                 Damage Near End of Term. If at any time
during the last six (6) months of this Lease there is damage for which the cost
to repair exceeds one (1) month’s Base Rent, whether or not an Insured Loss,
Lessor may terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving a written termination notice to Lessee
within thirty (30) days after the date of occurrence of such damage.
Notwithstanding the foregoing, if Lessee at that time has an exercisable option
to extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, (a) exercising such option and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the repairs
on or before the earlier of (i) the date which is ten days after Lessee’s
receipt of Lessor’s written notice purporting to terminate this Lease, or (ii)
the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor’s commercially reasonable expense, repair such damage as soon
as reasonably possible and this Lease shall continue in full force and effect.
If Lessee fails to exercise such option and provide such funds or assurance
during such period, then this Lease shall terminate on the date specified in the
termination notice and Lessee’s option shall be extinguished.

 

9.6                                 Abatement of Rent; Lessee’s Remedies.

 

(a) Abatement.  In the event of Premises Partial Damage or Premises Total
Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee’s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.

 

(b) Remedies. If Lessor shall be obligated to repair or restore the Premises and
does not commence, in a substantial and meaningful way, such repair or
restoration within ninety (90) days after such obligation shall accrue, Lessee
may, at any time prior to the commencement of such repair or restoration, give
written notice to Lessor and to any Lenders of which Lessee has actual notice,
of Lessee’s election to terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Lessee gives such notice and such
repair or restoration is not commenced within thirty (30) days thereafter, this
Lease shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within said thirty (30) days, this Lease shall continue
in full force and effect. “Commence” shall mean either the unconditional
authorization of the preparation of the required plans, or the beginning of the
actual work on the Premises, whichever first occurs.

 

9.7                                 Termination-Advance Payments. Upon
termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an
equitable adjustment shall be made concerning advance Base Rent and any other
advance payments made by Lessee to Lessor. Lessor shall, in addition, return to
Lessee so much of Lessee’s Security Deposit as has not been, or is not then
required to be, used by Lessor.

 

9.8                                 Waive Statutes. Lessor and lessee agree that
the terms of this Lease shall govern the effect of any damage to or destruction
of the Premises with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent inconsistent
herewith.

 

10.                                 Real Property Taxes.

 

10.1                           Definition of “Real Property Taxes.” As used
herein, the term “Real Property Taxes” shall include any form of assessment;
real estate, general, special, ordinary or extraordinary, or rental levy or tax
(other than inheritance, personal income or estate taxes); improvement bond;
and/or license fee imposed upon or levied against any legal or equitable
interest of Lessor in the Premises. Lessor’s right to other income therefrom,
and/or Lessor’s business of leasing, by any authority having the direct or
indirect power to tax and where the funds are generated with reference to the
Building address and where the proceeds so generated are to be applied by the
city, county or other local taxing authority of a jurisdiction within which
which the Premises are located. The term “Real Property Taxes” shall also
include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring during the term of this Lease, including
but not limited to, a change in the ownership of the Premises. Not withstanding
the foregoing, Lessee shall not be responsible for any increase in Real Property
Taxes during the first five (5) years following the Start Date.

 

10.2

 

(a) Payment of Taxes. Lessee shall pay the Real Property Taxes applicable to the
Premises during the term of this Lease*. Lessee shall promptly furnish Lessor
with satisfactory evidence that such taxes have been paid. If any such taxes
shall cover any period of time prior to or after the expiration or

 

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*on a monthly basis along with other estimated Triple Net charge paid to Lessor.

 

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termination of this Lease, Lessee’s share of such taxes shall be prorated to
cover only that portion of the tax bill applicable to the period that this Lease
is in effect, and Lessor shall reimburse Lessee for any overpayment. If Lessee
shall fail to pay any required Real Property Taxes, Lessor shall have the right
to pay the same, and Lessee shall reimburse Lessor therefor upon demand.

 

(b) Advance Payment. In the event Lessee incurs a late charge on any Rent
payment, Lessor may, at Lessor’s option, estimate the current Real Property
Taxes, and require that such taxes be paid in advance to Lessor by Lessee,
either: (i) in a lump sum amount equal to the installment due, at least twenty
(20) days prior to the applicable delinquency date, or (ii) monthly in advance
with the payment of the Base Rent. If Lessor elects to require payment monthly
in advance, the monthly payment shall be an amount equal to the amount of the
estimated installment of taxes divided by the number of months remaining before
the month in which said installment becomes delinquent. When the actual amount
of the applicable tax bill is known, the amount of such equal monthly advance
payments shall be adjusted as required to provide the funds needed to pay the
applicable taxes. If the amount collected by Lessor is insufficient to pay such
Real Property Taxes when due, Lessee shall pay Lessor, upon demand, such
additional sums as are necessary to pay such obligations. All moneys paid to
Lessor under this Paragraph may be intermingled with other moneys of Lessor and
shall not bear interest. In the event of a Breach by Lessee in the performance
of its obligations under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may at the option of Lessor, be treated
as an additional Security Deposit.

 

10.3                           Joint Assessment. If the Premises are not
separately assessed, Lessee’s liability shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be conclusively determined by Lessor from
the respective valuations assigned in the assessor’s work sheets or such other
information as may be reasonably available.

 

10.4                           Personal Property Taxes. Lessee shall pay, prior
to delinquency, all taxes assessed against and levied upon Lessee Owned
Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and
all personal property of Lessee. When possible, Lessee shall cause such property
to be assessed and billed separately from the real property of Lessor. If any of
Lessee’s said personal property shall be assessed with Lessor’s real property,
Lessee shall pay Lessor the taxes attributable to Lessee’s property within ten
(10) days after receipt of a written statement.

 

11.                                 Utilities. Lessee shall pay for all water,
gas, heat, light, power, telephone, trash disposal and other utilities and
services supplied to the Premises, together with any taxes thereon. If any such
services are not separately metered to Lessee, Lessee shall pay a reasonable
proportion, to be determined by Lessor, of all charges jointly metered.

 

12.           Assignment and Subletting.

 

12.1                           Lessor’s Consent Required.      -      See
Addendum

 

(d) An assignment or subletting without consent shall, at Lessor’s option, be a
Default curable after notice per Paragraph 13.1(c), or a noncurable Breach
without the necessity of any notice and grace period. If Lessor elects to treat
such unapproved assignment or subletting as a noncurable Breach, Lessor may
either: (i) terminate this Lease, or (ii) upon thirty (30) days written notice,
increase the monthly Base Rent to one hundred ten percent (110%) of the Base
Rent then in effect. Further, in the event of such Breach and rental adjustment,
(i) the purchase price of any option to purchase the Premises held by Lessee
shall be subject to similar adjustment to one hundred ten percent (110%) of the
price previously in effect, and (ii) all fixed and non-fixed rental adjustments
scheduled during the remainder of the Lease term shall be increased to One
Hundred Ten Percent (110%) of the scheduled adjusted rent.

 

(e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited
to compensatory damages and/or injunctive relief.

 

12.2         Terms and Conditions Applicable to Assignment and Subletting.

 

(a) Regardless of Lessor’s consent, any assignment or subletting shall not: (i)
be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease (ii) release Lessee of
any obligations hereunder, or (iii) alter the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lesse.

 

(b) Lessor may accept Rent or performance of Lessee’s obligations from any
person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppel of
Lessor’s right to exercise its remedies for Lessee’s Default or Breach.

 

(c) Lessor’s consent to any assignment or subletting shall not constitute a
consent to any subsequent assignment or subletting.

 

(d) In the event of any Default or Breach by Lessee, Lessor may proceed directly
against Lessee, any Guarantors or anyone else responsible for the performance of
Lessee’s obligations under this Lease, including any assignee or sublessee,
without first exhausting  Lessor’s remedies against any other person or entity
responsible therefore to Lessor, or any security held by Lessor.

 

(e) Each request for consent to an assignment or subletting shall be in writing,
accompanied by information relevant to Lessor’s determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a fee of $1,000 or
ten percent (10%) of the current monthly Base Rent applicable to the portion of
the Premises which is the subject of the proposed assignment or sublease,
whichever is greater, as consideration for Lessor’s considering and processing
said request. Lessee agrees to provide Lessor with such other or additional
information and/or documentation as may be reasonably requested.

 

(f) Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment or entering into such sublease, be deemed to have
assumed and agreed to conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.

 

12.3         Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

 

(a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in
all Rent payable on any sublease, and Lessor may collect such Rent and apply
same toward Lessee’s obligations under this Lease; provided, however, that until
a Breach shall occur in the performance of Lessee’s obligations, Lessee may
collect said Rent. Lessor shall not, by reason of the foregoing or any
assignment of such sublease, nor by reason of the collection of Rent, be deemed
liable to the sublessee for any failure of Lessee to perform and comply with any
of Lessee’s obligations to such sublessee.  Lessee hereby irrevocably authorizes
and directs any such sublessee, upon receipt of a written notice from Lessor
stating that a Breach exists in the performance of Lessee’s obligations under
this Lease, to pay to Lessor all Rent due and to become due under the sublease.
Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to
Lessor without any obligation or right to inquire as to whether such Breach
exists, notwithstanding any claim from Lessee to the contrary.

 

(b) In the event of a Breach by Lessee, Lessor may, at its option, require
sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.

 

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(c) Any matter requiring the consent of the sublessor under a sublease shall
also require the consent of Lessor.

 

(d) No sublessee shall further assign or sublet all or any part of the Premises
without Lessor’s prior written consent.

 

(e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to
the sublessee, who shall have the right to cure the Default of Lessee within the
grace period, if any, specified in such notice. The sublessee shall have a right
of reimbursement and offset from and against Lessee for any such Defaults cured
by the sublessee.

 

13.                                 Default; Breach; Remedies.

 

13.1                           Default; Breach.   A “Default” is defined as a
failure by the Lessee to comply with or perform any of the terms, covenants,
conditions or rules under this Lease.  A “Breach” is defined as the occurrence
of one or more of the following Defaults, and the failure of Lessee to cure such
Default within any applicable grace period:

 

(a) The abandonment of the Premises; or the vacating of the Premises without
providing a commercially reasonable level of security, or where the coverage of
the property insurance described in Paragraph 8.3 is jeopardized as a result
thereof, or without providing reasonable assurances to minimize potential
vandalism.

 

(b) The failure of Lessee to make any payment of Rent or any other monetary
payment required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable evidence of insurance or surety bond, or
to fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of three (3) business days
following written notice to Lessee.

 

(c) The failure by Lessee to provide (i) reasonable written evidence of
compliance with Applicable Requirements, (ii) the service contracts, (iii) the
rescission of an unauthorized assignment or subletting, (iv) a Tenancy
Statement, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this Lease, where any such failure
continues for a period of ten (10) days following written notice to Lessee.

 

(d) A Default by Lessee as to the terms, covenants, conditions or provisions of
this Lease, or of the rules adopted under Paragraph 40 hereof, other than those
described in subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice; provided,
however, that if the nature of Lessee’s Default is such that more than thirty
(30) days are reasonably required for its cure, then it shall not be deemed to
be a Breach if Lessee commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion.

 

(e) The occurrence of any of the following events: (i) the making of any general
arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor”
as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the
case of a petition filed against Lessee, the same is dismissed within sixty (60)
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where such seizure is not discharged within thirty (30)
days; provided, however, in the event that any provision of this subparagraph
(e) is contrary to any applicable law, such provision shall be of no force or
effect, and not affect the validity of the remaining provisions.

 

(f) The discovery that any financial statement of Lessee or of any Guarantor
given to Lessor was materially false.

 

(g) If the performance of Lessee’s obligations under this Lease is guaranteed:
(i) the death of a Guarantor, (ii) the termination of a Guarantor’s liability
with respect to this Lease other than in accordance with the terms of such
guaranty, (iii) a Guarantor’s becoming insolvent or the subject of a bankruptcy
filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a Guarantor’s
breach of its guaranty obligation on an anticipatory basis, and Lessee’s
failure, within sixty (60) days following written notice of any such event, to
provide written alternative assurance or security, which, when coupled with the
then existing resources of Lessee, equals or exceeds the combined financial
resources of Lessee and the Guarantors that existed at the time of execution of
this Lease.

 

13.2                           Remedies. If Lessee fails to perform any of its
affirmative duties or obligations, within ten (10) days after written notice (or
in case of an emergency, without notice), Lessor may, at its option, perform
such duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental
licenses, permits or approvals. The costs and expenses of any such performance
by Lessor shall be due and payable by Lessee upon receipt of invoice therefor.
If any check given to Lessor by Lessee shall not be honored by the bank upon
which it is drawn, Lessor, at its option, may require all future payments to be
made by Lessee to be by cashier’s check. In the event of a Breach, Lessor may,
with or without further notice or demand, and without limiting Lessor in the
exercise of any right or remedy which Lessor may have by reason of such Breach:

 

(a) Terminate Lessee’s right to possession of the Premises by any lawful means,
in which case this Lease shall terminate and Lessee shall immediately surrender
possession to Lessor. In such event Lessor shall be entitled to recover from
Lessee: (i) the unpaid Rent which had been earned at the time of termination;
(ii) the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that the Lessee proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by the Lessee’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the
Premises, expenses of reletting, including necessary renovation and alteration
of the Premises, reasonable attorney’s fees, and that portion of any leasing
commission paid by Lessor in connection with this Lease applicable to the
unexpired term of this Lease. The worth at the time of award of the amount
referred to in provision (iii) of the immediately preceding sentence shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of the District within which the Premises are located at the time of award
plus one percent (1%). Efforts by Lessor to mitigate damages caused by Lessee’s
Breach of this Lease shall not waive Lessor’s right to recover damages under
Paragraph 12. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit. If a
notice and grace period required under Paragraph 13.1 was not previously given,
a notice to pay rent or quit, or to perform or quit given to Lessee under the
unlawful detainer statute shall also constitute the notice required by Paragraph
13.1. In such case, the applicable grace period required by Paragraph 13.1 and
the unlawful detainer statute shall run concurrently, and the failure of Lessee
to cure the Default within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
to the remedies provided for in this Lease and/or by said statute.

 

(b) Continue the Lease and Lessee’s right to possession and recover the Rent as
it becomes due, in which event Lessee may sublet or assign, subject only to
reasonable limitations. Acts of maintenance, efforts to relet, and/or the
appointment of a receiver to protect the Lessor’s interests, shall not
constitute a termination of the Lessee’s right to possession.

 

(c) Pursue any other remedy now or hereafter available under the laws or
judicial decisions of the state wherein the Premises are located. The expiration
or termination of this Lease and/or the termination of Lessee’s right to
possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee’s occupancy of the Premises.

 

13.3                           Inducement Recapture. Any agreement for free or
abated rent or other charges, or for the giving or paying by Lessor to or for
Lessee of any cash or other bonus, inducement or consideration for Lessee’s
entering into this Lease, all of which concessions are hereinafter referred to
as “Inducement Provisions,” shall be deemed conditioned upon Lessee’s full and
faithful performance of all of the terms, covenants and conditions of this
Lease. Upon Breach of this Lease by Lessee, any such inducement Provision shall
automatically be deemed deleted from this Lease and of no further force or
effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an inducement Provision
shall be immediately due and payable by Lessee to Lessor, notwithstanding any
subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or
the cure of the Breach which initiated the operation of this paragraph shall not

 

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be deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lesser at the time of such acceptance.

 

13.4                           Late Charges. Lessee hereby acknowledges that
late payment by Lessee of Rent will cause Lessor to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to
ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Lessor by any Lender. 
Accordingly, if any Rent shall not be received by Lessor within five (5) days
after such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall pay to Lessor a one-time late charge equal to ten percent
(10%) of each such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Lessor will incur
by reason of such late payment. Acceptance of such late charge by Lessor shall
in no event constitute a waiver of Lessor’s Default or Breach with respect to
such overdue amount, nor prevent the exercise of any of the other rights and
remedies granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for three (3) consecutive installments of
Base Rent, then notwithstanding any provision of this Lease to the contrary,
Base Rent shall, at Lessor’s option, become due and payable quarterly in
advance.

 

13.5                           Interest. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due. The interest (“Interest”) charged
shall be equal to the prime rate charged by the largest state chartered bank in
the state in which the Premises are located plus 4%, but shall not exceed the
maximum rate allowed by law. Interest is payable in addition to the potential
late charge provided for in Paragraph 13.4.

 

13.6                           Breach by Lessor.

 

(a)                                  Notice of Breach. Lessor shall not be
deemed in breach of this Lease unless Lessor fails within a reasonable time to
perform an obligation required to be performed by Lessor. For purposes of this
Paragraph, a reasonable time shall in no event be less than thirty (30) days
after receipt by Lessor, and any Lender whose name and address shall have been
furnished Lessee in writing for such purpose, of written notice specifying
wherein such obligation of Lessor has not been performed; provided, however,
that if the nature of Lessor’s obligation is such that more than thirty (30)
days are reasonably required for its performance, then Lessor shall not be in
breach if performance is commenced within such thirty (30) day period and
thereafter diligently pursued to completion.

 

(b)                                 Performance by Lessee on Behalf of Lessor.
In the event that neither Lessor nor Lender  cures said breach within thirty
(30) days after receipt of said notice, or if having commenced said cure they do
not diligently pursue it to completion, then Lessee may elect to cure said
breach at Lessee’s expense and offset from Rent an amount equal to the greater
of one month’s Base Rent or the Security Deposit, and to pay an excess of such
expense under protest, reserving Lessee’s right to reimbursement from Lessor.
Lessee shall document the cost of said cure and supply said documentation to
Lessor.

 

14.                                 Condemnation.  If the Premises or any
portion thereof are taken under the power of eminent domain or sold under the
threat of the exercise of said power (collectively “Condemnation”), this Lease
shall terminate as to the part taken as of the date the condemning authority
takes title or possession, whichever first occurs. If more than ten percent
(10%) of any building, or more than twenty-five percent (25%) of the land area
not occupied by any building, is taken by Condemnation, Lessee may, at Lessee’s
option, to be exercised in writing within ten (10) days after Lessor shall have
given Lessee written notice of such taking (or in the absence of such notice,
within ten (10) days after the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee’s
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

 

15.           Broker’s Fee.

 

15.3                           Representations and Indemnities of Broker
Relationships. Lessee and Lessor each represent and warrant to the other that it
has had no dealings with any person, firm, broker or finder (other than the
Brokers, if any) in connection with this lease, and that no one other than said
named Brokers is entitled to any commission or finder’s fee in connection
herewith. Lessee and lessor do each hereby agree to indemnify, protect, defend
or other similar party by reason of any dealings or actions of the indemnifying
Party, including any costs, expenses, attorneys’ fees reasonably incurred with
respect thereto.

 

16.                                 Tenancy Statement/Estoppel Certificate.

 

16.1                           Each Party (as “Responding Party”) shall within
ten (10) days after written notice from the other Party (the “Requesting Party”)
execute, acknowledge and deliver to the Requesting Party an estoppel certificate
in writing, in form similar to the then most current “Tenancy Statement” form
published by the American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.

 

16.2                           If Lessor desires to finance, refinance, or sell
the Premises, or any part thereof, Lessee and all Guarantors shall deliver to
any potential lender or purchaser designated by Lessor such financial statements
as may be reasonably required by such lender or purchaser, including but not
limited to Lessee’s financial statements for the past three (3) years. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

 

17.                                 Definition of Lessor. The term “Lessor” as
used herein shall mean the owner or owners at the time in question of the fee
title to the Premises, or, if this is a sublease, of the Lessee’s interest in
the prior lease. In the event of a transfer of Lessor’s title or interest in the
Premises or this Lease. Lessor shall deliver to the transferee or assignee (in
cash or by credit) any unused Security Deposit held by Lessor. Upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor. 
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor  as hereinabove
defined. Notwithstanding the above, the original Lessor under this Lease, and
all subsequent holders of the Lessor’s interest in this Lease shall remain
liable and responsible with regard to the potential duties and liabilities of
Lessor pertaining to Hazardous Substances as outlined in Paragraph 6 above.

 

18.                                 Severability. The invalidity of any
provision of this Lease, as determined by a court of competent jurisdiction,
shall in no way affect the validity of any other provision hereof.

 

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19.                                 Days.  Unless otherwise specifically
indicated to the contrary, the word “days” as used in this Lease shall mean and
refer to calendar days.

 

20.                                 Limitation on Liability.  Except with
respect to Lessor’s fraud, gross negligence or willful misconduct, the
obligations of Lessor under this Lease shall not constitute personal obligations
of Lessor, the individual partners of Lessor or its or their individual
partners, directors, officers or shareholders, and Lessee shall look to the
Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.

 

21.                                 Time of Essence.  Time is of the essence
with respect to the performance of all obligations to be performed or observed
by the Parties under the Lease.

 

22.                                 No Prior or Other Agreements;  Broker
Disclaimer. This Lease contains all agreements between the Parties with respect
to any matter mentioned herein, and no other prior or contemporaneous agreement
or understanding shall be effective. Lessor and Lessee each represents and
warrants to the Brokers that it has made, and is relying solely upon, its own
investigation as to the nature, quality, character and financial responsibility
of the other Party to this Lease and as to the nature, quality and character of
the Premises. Brokers have no responsibility with respect thereto or with
respect to any default or breach hereof by either Party. The liability
(including court costs and Attorney’s fees), of any Broker with respect to
negotiation, execution, delivery or performance by either Lessor or Lessee under
this Lease or any amendment or modification hereto shall be limited to an amount
up to the fee received by such Broker pursuant to this Lease: provided, however,
that the foregoing limitation on each Broker’s liability shall not be applicable
to any gross negligence or willful misconduct of such Broker.

 

23.                                 Notices.

 

23.1  Notice Requirements. All notices required or permitted by this Lease shall
be in writing and may be delivered in person (by hand or by courier) or may be
sent by regular, certified or registered mail or U.S. Postal Service Express
Mail, with postage prepaid, or by facsimile transmission, and shall be deemed
sufficiently given if served in a manner specified in this Paragraph 23. The
addresses noted adjacent to a Party’s signature on this Lease shall be that
Party’s address for delivery of mailing of notices. Either Party may by written
notice to the other specify a different address for notice, except that upon
Lessee’s taking possession of the Premises, the Premises shall constitute
Lessee’s address for notice.  A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.

 

23.2  Date of Notice. Any notice sent by registered or certified mail, return
receipt requested, shall be deemed given on the date of delivery shown on the
receipt card, or if no delivery date is shown, the postmark thereon. If sent by
regular mail the notice shall be deemed given forty-eight (48) hours after the
same is addressed as required herein and mailed with postage prepaid. Notices
delivered by United States Express Mail or overnight courier that guarantee next
day delivery shall be deemed given twenty-four (24) hours after delivery of the
same to the Postal Service or courier. Notices transmitted by facsimile
transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mail.
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.

 

24.                                 Waivers. No waiver by Lessor of the Default
or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a
waiver of any other term, covenant or condition hereof, or of any subsequent
Default or Breach by Lessee of the same or of any other term, covenant or
condition hereof. Lessor’s consent to, or approval of, any act shall not be
deemed to render unnecessary the obtaining of Lessor’s consent to, or approval
of, any subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. The acceptance of Rent by Lessor shall not be a waiver of any Default
or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account
of moneys or damages due Lessor, notwithstanding any qualifying statements or
conditions made by Lessee in connection therewith, which such statements and/or
conditions shall be of no force or effect whatsoever unless specifically agreed
to in writing by Lessor at or before the time of deposit of such payment.

 

25.                                 Recording.  Either Lessor or Lessee shall,
upon request of the other, execute, acknowledge and deliver to the other a short
form memorandum of this Lease for recording purposes. The Party requesting
recordation shall be responsible for payment of any fees applicable thereto.

 

26.                                 No Right  To Holdover.  Lessee has no right
to retain possession of the Premises or any part thereof beyond the expiration
or termination of this Lease.  In the event that Lessee holds over, then the
Base Rent shall be increased to one hundred fifty percent (150%) of the Base
Rent applicable during the month immediately preceding the expiration or
termination.  Nothing contained herein shall be construed as consent by Lessor
to any holding over by Lessee.

 

27.                                 Cumulative Remedies.  No remedy or election
hereunder shall be deemed exclusive but shall, wherever possible, be cumulative
with all other remedies at law or in equity.

 

28.                                 Covenants and Conditions;  Construction of
Agreement.  All provisions of this Lease to be observed or performed by Lessee
are both covenants and conditions.  In construing this Lease, all headings and
titles are for the convenience of the parties only and shall not be considered a
part of this Lease.  Whenever required by the context, the singular shall
include the plural and vice versa.  This Lease shall not be construed as if
prepared by one of the parties, but rather according to its fair meaning as a
whole, as if both parties had prepared it.

 

29.                                 Binding Effect;  Choice of Law.  This Lease
shall be binding upon the parties, their personal representatives, successors
and assigns and be governed by the laws of the State in which the Premises are
located.  Any litigation between the Parties hereto concerning this Lease shall
be initiated in the county in which the Premises are located.

 

30.                                 Subordination;  Attornment; 
Non-Disturbance.

 

30.1  Subordination.  This Lease and any Option granted hereby shall be subject
and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, “Security Device”), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof.  Lessee
agrees that the holders of any such Security Devices shall have no liability or
obligation to perform any of the obligations of Lessor under this Lease.  Any
Lender may elect to have this Lease and/or any Option granted hereby superior to
the lien of its Security Device by giving written notice thereof to Lessee, the
Lease and such Options shall be deemed prior to such Security Device,
notwithstanding the relative dates of the documentation or recordation thereof.

 

30.2  Attornment.  Subject to the non-disturbance provision of Paragraph 30.3,
Lessee agrees to attorn to a Lender or any other party who acquires ownership of
the Premises by reason of a foreclosure of a Security Device, and that in the
event of such foreclosure, such new owner shall not: (i) be liable for any act
or omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (ii) be subject to any offsets or defenses which
Lessee might have against any prior lessor, or (iii) be bound by prepayment of
more than one (1) month’s rent.

 

30.3  Non-Disturbance.  With respect to Security Devices entered into by Lessor
after the execution of this Lease, Lessee’s subordination of this Lease shall be
subject to receiving a commercially reasonable non-disturbance agreement (a
“Non-Disturbance Agreement”) from the Lender which Non-Disturbance Agreement
provides that Lessee’s possession of the Premises, and this Lease, including any
options to extend the term hereof, will not be disturbed so long as Lessee is
not in Breach hereof and attorns to the record owner of the Premises.  Further,
within sixty (60) days after the execution of this Lease, Lessor shall use its
commercially reasonable efforts to obtain a Non-Disturbance Agreement from the
holder of any pre-existing Security Device which is secured by the Premises.  In
the event that Lessor is unable to provide the Non-Disturbance Agreement within
said sixty (60) days, then Lessee may, at Lessee’s option, directly contact
Lessor’s lender and attempt to negotiate for the execution and delivery of a
Non-Disturbance Agreement.

 

30.4  Self-Executing.  The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

 

31.                                 Attorneys’ Fees.  If any Party brings an
action or proceeding to enforce the terms hereof or declare rights hereunder,
the Prevailing Party (as hereafter defined) in any such proceeding, action, or
appeal thereon, shall be entitled to reasonable attorneys’ fees.  Such fees may
be awarded in the same suit or recovered in a separate suit, whether or not such
action or proceeding is pursued to decision or

 

10

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judgment. The term, “Prevailing Party” shall include, without limitation, a
Party who substantially contains or defeats the relief sought, as the case may
be, whether by compromise, settlement, judgment, or the abandonment by the other
Party of its claim or defense. The attorneys’ fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be
entitled to attorneys’ fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether
or not a legal action is subsequently commenced in connection with such Default
or resulting Breach.

 

32.                                 Lessor’s Access; Showing Premises; Repairs.
Lessor and Lessor’s agents shall have the right to enter the Premises at any
time, in the case of an emergency, and otherwise at reasonable times for the
purpose of showing the same to prospective purchasers, lenders, or lessees, and
making such alterations, repairs, improvements or additions to the Premises as
Lessor may deem necessary. All such activities shall be without abatement of
rent or liability to Lessee. Lessor may at any time place on the Premises any
ordinary “For Sale” signs and Lessor may during the last six (6) months of the
term hereof place on the Premises any ordinary “For Lease” signs. Lessee may at
any time place on or about the Premises any ordinary “For Sublease” sign.

 

33.                                 Auctions. Lessee shall not conduct, nor
permit to be conducted, any auction upon the Premises without Lessor’s prior
written consent. Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to permit an auction.

 

34.                                 Signs. Except for ordinary “For Sublease”
signs, Lessee shall not place any sign upon the Premises without Lessor’s prior
written consent. All signs must comply with all Applicable Requirements.

 

35.                                 Termination; Merger. Unless specifically
stated otherwise in writing by Lessor, the voluntary or other surrender of this
Lease by Lessee, the mutual termination or cancellation hereof, or a termination
hereof by Lessor for Breach by Lessee, shall automatically terminate any
sublease or lessor estate in the Premises; provided, however, that Lessor may
elect to continue any one or all existing subtenancies. Lessor’s failure within
ten (10) days following any such event to elect to the contrary by written
notice to the holder of any such lesser interest, shall constitute Lessor’s
election to have such event constitute the termination of such interest.

 

36.                                 Consents. Except as otherwise provided
herein, wherever in this Lease the consent of  a Party is required to an act by
or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor’s actual reasonable costs and expenses (including but not
limited to architects’, attorneys’, engineers’, and other consultants’ fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent, including but not limited to consents to an assignment, a
subletting or the presence or use of a Hazardous Substance, shall be paid by
Lessee upon receipt of an invoice and supporting documentation therefor.
Lessor’s consent to any act, assignment or subletting shall not constitute an
acknowledgement that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent. The failure to specify herein any particular condition to
Lessor’s consent shall not preclude the imposition by Lessor at the time of
consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request.

 

37.                                 Guarantor.

 

37.1  Execution. The Guarantors, if any, shall each execute a guaranty in the
form most recently published by the American Industrial Real Estate Association,
and each such Guarantor shall have the same obligations as Lessee under this
Lease.

 

37.2  Default. It shall constitute a Default of the Lessee if any Guarantor
fails or refuses, upon request to provide: (a) evidence of the execution of the
guaranty, including the authority of the party signing on Guarantor’s behalf to
obligate Guarantor, and in the case of a corporate Guarantor, a certified copy
of a resolution of its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) a Tenancy Statement, or (d)
written confirmation that the guaranty is still in effect.

 

38.                                 Quiet Possession. Subject to payment by
Lessee of the Rent and performance of all of the covenants, conditions and
provisions on Lessee’s part to be observed and performed under this Lease,
Lessee shall have quiet possession and quiet enjoyment of the Premises during
the term hereof.

 

39.                                 Options.

 

39.1  Definition. “Option” shall mean: (a) the right to extend the term of or
renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.

 

39.2  Options Personal To Original Lessee. Each Option granted to Lessee in this
Lease is personal to the original Lessee, and cannot be assigned or exercised by
anyone other than said original Lessee and only while the original Lessee is in
full possession of the Premises and, if requested by Lessor, with Lessee
certifying that Lessee has no intention of thereafter assigning of subletting.

 

39.3  Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later Option cannot be exercised unless the prior
Options have been validly exercised.

 

39.4  Effect of Default on Options.

 

(a)  Lessee shall have no right to exercise an Option: (i) during the period
commencing with the giving of any notice of Default and continuing until said
Default is cured, (ii) during the period of time any Rent is unpaid (without
regard to whether notice thereof is given Lessee), (iii) during the time Lessee
is in Breach of this Lease, or (iv) in the event that Lessee has been given
three (3) or more notices of Default, whether or not the Defaults are cured,
during the twelve (12) month period immediately preceding the exercise of the
Option.

 

(b)  The period of time within which an Option may be exercised shall not be
extended or enlarged by reason of Lessee’s inability to exercise an Option
because of the provisions of Paragraph 39.4(a).

 

(c)  An Option shall terminate and be of no further force or effect,
notwithstanding Lessee’s due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term, (i) Lessee fails to
pay Rent for a period of thirty (30) days after such Rent becomes due (without
any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee
three (3) or more notices of separate Default during any twelve (12) month
period, whether do not the Defaults are cured, or (iii) if Lessee commits a
Breach of this Lease.

 

40.                                 Multiple Buildings. If the Premises are a
part of a group of buildings controlled by Lessor, Lessee agrees that it will
observe all reasonable rules and regulations which Lessor may make from time to
time for the management, safety, and care of said properties, including the care
and cleanliness of the grounds and including the parking, loading and unloading
of vehicles, and that Lessee will pay its fair share of common expenses incurred
in connection therewith.

 

41.                                 Security Measures. Lessee hereby
acknowledges that the rental payable to Lessor hereunder does not include the
cost of guard service or other security measures, and that Lessor shall have no
obligation whatsoever to provide same. Lessee assumes all responsibility for the
protection of the Premises, Lessee, its agents and invitees and their property
from the acts of third parties.

 

42.                                 Reservations. Lessor reserves to itself the
right, from time to time, to grant, without the consent or joinder of  Lessee,
such easements, rights and dedications that Lessor deems necessary, and to cause
the recordation of parcel maps and restrictions, so long as such easements,
rights, dedications, maps and restrictions do not unreasonably interfere with
the use of the Premises by Lessee. Lessee agrees to sign any documents
reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.

 

43.                                 Performance Under Protest. If at any time a
dispute shall arise as to any amount or sum of money to be paid by one Party to
the other under the provisions hereof, the Party against whom the obligation to
pay the money is asserted shall have the right to make payment “under protest”
and such payment shall not be regarded as a voluntary payment and there shall
survive the right on the part of said Party to institute suit for recovery of
such sum. If it shall be adjudged that there was no legal obligation on the part
of said Party to pay such sum or any part thereof, said Party shall be entitled
to recover such sum or so much thereof as it was not legally required to pay.

 

44.                                 Authority. If either Party hereto is a
corporation, trust, limited liability company, partnership, or similar entity,
each individual executing this Lease on behalf of such entity represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
its behalf. Each party shall, within thirty (30) days after request, deliver to
the other party satisfactory evidence of such authority.

 

11

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45.                                 Conflict. Any conflict between the printed
provisions of this Lease and the typewritten or handwritten provisions shall be
controlled by the typewritten or handwritten provisions.

 

46.                                 Offer. Preparation of this Lease by either
Party or their agent and submission of same to the other Party shall not be
deemed an offer to lease to the other Party. This Lease is not intended to be
binding until executed and delivered by all Parties hereto.

 

47.                                 Amendments. This Lease may be modified only
in writing, signed by the Parties in interest at the time of the modification.
As long as they do not materially change Lessee’s obligations hereunder, Lessee
agrees to make such reasonable non-monetary modifications to this Lease as may
be reasonably required by a Lender in connection with the obtaining of normal
financing or refinancing of the Premises.

 

48.                                 Multiple Parties. If more than one person or
entity is named herein as either Lessor or Lessee, such multiple Parties shall
have joint and several responsibility to comply with the terms of this Lease.

 

49.                                 Mediation and Arbitration of Disputes. An
Addendum requiring the Mediation and/or the Arbitration of all disputes between
the Parties and/or Brokers arising out of this Lease ý is o is not attached to
this Lease.

 

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

 

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

 

1.                                       SEEK ADVICE OF COUNSEL AS TO THE LEGAL
AND TAX CONSEQUENCES OF THIS LEASE.

2.                                       RETAIN APPROPRIATE CONSULTANTS TO
REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES.  SAID INVESTIGATION SHOULD
INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,
THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF
AND OPERATING SYSTEMS AND THIS SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED
USE.

 

WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.

 

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

 

Executed at:

 

 

Executed at:

 

on:

 

 

on:

 

By LESSOR:

 

By LESSEE:

The Childs Family Investment Partnership, L.P.

 

The Immune Response Corporation,

and The A.J. Gardner Family Trust, U/T/A 3/5/81

 

a Delaware Corporation

 

 

 

By: 

/s/ Roland A. Childs

 

By:

/s/ Paula Baxter Atkins

Name Printed:

Roland A. Childs

 

Name Printed:

Dennis J. Carlo, Ph. D.

Title:

 

 

Title:

 

President Chief Executive Officer

 

 

 

By:

/s/ Allan J. Gardner

 

By:

/s/ Dennis J. Carlo, Ph. D.

Name Printed:

Allan J. Gardner

 

Name Printed:

 

Title:

 

 

Title:

 

Address: c/o LANDCO – 432 South Bentley Avenue

 

Address:

 

 

Los Angeles, California 90049-3513

 

 

Telephone: (310)

476-3209

 

Telephone: (      )

 

Facsimile: (310)

476-0111

 

Facsimile:(       )

 

Federal ID No.

 

 

Federal ID No.

BROKER:

 

BROKER:

 

 

 

Executed at

 

 

Executed at

 

on:

 

 

on:

 

 

 

 

By:

 

 

By:

 

Name Printed:

 

 

Name Printed:

 

Title:

 

 

Title

 

Address:

 

 

Address:

 

 

 

 

Telephone: (         )

 

 

Telephone: (         )

 

Facsimile: (        )

 

 

Facsimile: (         )

 

Federal ID No.

 

 

Federal ID No.

 

 

NOTE:            These forms are often modified to meet changing requirements of
law and industry needs. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So. Flower
Street, Suite 600 Los Angeles, California 90017. (213) 687-8777. Fax No. (213)
687-8616

 

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ADDENDUM TO LEASE

 

This Addendum to Lease (“Addendum”) is made by and between The Childs Family
Partnership, L.P. and The A. J. Gardner Family Trust u/t/a 3/5/81, general
partners doing business as “Darwin Court” but holding title as tenants-in-common
(collectively, “Lessor”) and The Immune Response Corporation, a Delaware
corporation (“Lessee”) and shall supplement that certain Standard
Industrial/Commercial Single-Tenant Lease Net between Lessor and Lessee dated as
of December 15, 1997 and Exhibits thereto (collectively, the “Lease”).  Where
appropriate the numbering used in the Addendum shall refer to the same numbered
paragraphs in the Lease.  Notwithstanding anything contained in the Lease to the
contrary, the provisions set forth below will be deemed to be part of the Lease
and if there is any inconsistency between this Addendum and the Lease, the terms
of this Addendum shall supersede and control.  All references in the Lease and
in this Addendum shall be construed to mean the Lease and the Exhibits thereto,
as amended and supplemented by this Addendum.  All defined terms used in this
Addendum, unless specifically defined in this Addendum, shall have the same
meaning as such terms have in the Lease.  References to “Paragraph” shall refer
to the pre-printed Lease form and references to “Section” shall refer to this
Addendum.

 

1.1           Parties. The phrase “, general partners doing business as “Darwin
Court” but holding title as tenants-in-common” is inserted after the names of
the entities comprising Lessor.

 

1.2           Premises. Lessor at its expense shall construct a Building Shell
of approximately 31,200 square feet. The phrase “Building Shell” means the
Building improvements and related site improvements as shown on those certain
plans and specifications (collectively, “Lessor’s Plans”) prepared by Smith
Consulting Architects (“Lessor’s Architect”), dated on the various sheets
between April 3, 1997 and April 18, 1997 an entire set of which has been
delivered to Lessee by Lessor’s contractor, Riggins Construction & Management,
Inc. as listed on the attached Schedule 1.2. Lessee has the right to expand the
second floor office space at its cost in which case the total leasable area will
be correspondingly increased. Lessor shall not amend or modify Lessor’s Plans in
any material respect without the prior consent of Lessee.

 

Lessor represents and warrants that no part of the Building Shell will contain
asbestos, asbestos-containing material or other Hazardous Substances
(collectively “ACHM”).  If Lessor does employ ACHM, the ACHM will be promptly
removed in a manner required by the appropriate government agency and in
accordance with Applicable Requirements.

 

Lessor will be fully responsible for making all alterations and repairs to the
Premises and the Building Shell at its cost required to remove any and all ACHM
discovered at any time to have existed in the Premises or Building Shell as of
the Start Date, or resulting from or necessitated by the failure by Lessor
and/or Lessor’s contractor to comply with Applicable Requirements regarding
ACHM, or from Lessor’s and/or Lessor’s contractor’s utilization of Hazardous
Substances as defined by Applicable Requirements at the time the Lease is
executed, in violation of such Applicable Requirements or which could pose a
health risk to occupants of the Premises.

 

1.3           Term. The Commencement Date shall be the earliest of the
completion of Lessee’s completion of Lessee’s Tenant Improvements (as defined in
Addendum Section 50.1 below) or April 1, 1998. Lessor will confirm in writing
the exact Commencement Date and Lease expiration date both of which will be
acknowledged in writing by Lessee upon Lessee’s confirmation of the accuracy
thereof. For purposes of this Section 1.3, completion of Lessee’s Tenant
Improvements shall be deemed to have occurred on the date on which (i) Lessee’s
architect, with no undue delay, issues a certificate to Lessee stating that all
Tenant Improvements have, in all material respects, been completed in accordance
with drawings approved by Lessee therefor and are operable, (ii) all Utility
Installations which are identified as part of Lessee’s Tenant Improvements are
operational at the Premises, (iii) adequate access to the Premises for Lessee’s
uses under the Lease has been completed, and (iv) the government agency having
appropriate jurisdiction thereover issues a “right to occupy” designation (or
such similar designation) in the inspection record for Lessee’s Tenant
Improvements.

 

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1.4           Early Possession.  Early Possession will start when the Lessor has
completed the Building Shell in accordance with Lessor’s Plans and shall end at
the earliest of Lessee’s completion of the Tenant Improvements as described in
Section 1.3 above or April 1, 1998. In the event of the imposition of a water
moratorium by local governmental agencies with authority thereover such that
establishment of exterior landscaping to be installed by Lessor would be
adversely affected, Lessor may delay completion of such landscaping without
affecting the Start Date otherwise applicable, provided such landscaping is
completed as soon as practicable thereafter, and in all events not later than
the Commencement Date.

 

1.5           Base Rent.  Base Rent is calculated on the basis of $.59 per
square foot of the Premises per month on a “triple net” basis. The Base Rent
shall be subject to adjustment during the ninety (90) day period following the
Commencement Date by $.59/ft. if Lessor’s Architect determines the Building is
more or less than 31,200 sq. ft. based on Building “as-builts” filed with the
City of Carlsbad.  All square footage measurements shall be from the roof “drip
line” and in accordance with the Building Owners and Managers Association
International standards for industrial/commercial projects (the “BOMA
Standard”).  Lessor’s Architect shall complete such calculations within said
90-day period at Lessor’s expense. Lessee shall have the right, exercisable
within ninety (90) days after the later of (a) the date Lessor gives Lessee
written notice of the final calculation of the Premises and the Building as
contemplated above, or (b) the date Lessee commences business operations from
the Premises (or, when appropriate, any additional space leased by Lessee
pursuant to the Lease), to remeasure the Premises and the Building within such
ninety (90) day period.  In the event that subsequent remeasurement of the
Premises and/or the Building by Lessee, within the time period specified above,
indicates that the square footage measurement prepared by Lessor produces a
square footage number in excess of or lower than the square footage number which
would have resulted had the BOMA Standard been properly utilized, any payments
due to Lessor from Lessee based upon the amount of square feet contained in the
Premises shall be proportionally, retroactively and prospectively reduced or
increased, as appropriate, to reflect the actual number of square feet as
properly remeasured under the BOMA Standard.  If Lessor disagrees with Lessee’s
remeasurement and if a dispute occurs regarding the final accuracy of the
measurement of the Premises and the Building in accordance with the BOMA
Standard, such dispute will be resolved pursuant to binding arbitration pursuant
to this Addendum.  Operating Expenses (defined below) other than the
Administration Fee (defined below) shall commence on the Start Date.  Base Rent
and the Administration Fee shall not commence prior to the Commencement Date;
provided, however, to the extent Lessee commences business operations on, and
utilizes therefor, any portion of the Premises from and after the Start Date,
Lessee shall be responsible for payment of Base Rent and the Administration Fee
prorated with respect to the portion of the Premises so used.  In no event shall
use of the Premises for Lessee’s construction activities prior to the
Commencement Date be deemed to constitute a use of the Premises for Lessee’s
business operations.

 

1.8            Agreed Use. Lessee will use the Premises for general medical,
office use and biopharmaceutical use, research and development, product
production, manufacture and distribution and any other like use in keeping with
the class and character of the building and permitted uses within the Carlsbad
Research Center.

 

1.9            Insuring Party.  Lessee may opt to be the Insuring Party for all
leasehold improvements which are for biopharmaceutical uses as opposed to
industrial/office uses upon thirty (30) days prior written notice to Lessor. 
Lessee shall also have the option of insuring the Building Shell in the event
Lessee can obtain the insurance coverages required under the Lease with respect
thereto at a premium cost of at least ten percent (10%) less than the premium
cost obtained by Lessor provided Lessee’s carriers for such insurance are
substantially comparable in all material respects to Lessor’s.  Notwithstanding
the foregoing, Lessor may opt to remain the Insuring Party and retain its
insurance carrier if it pays the amounts in excess of such ten percent (10%)
premium differential at its sole cost and expense.

 

2.2           Condition.  Lessor’s delivery of the Premises shall include the
Building Shell fully completed in accordance with the Plans and ready for
Lessee’s construction of its Tenant Improvements. There shall be no requirement
that service contracts under Paragraph 7.1(b) of the Lease be obtained by Lessee
as a condition to Lessor’s warranty regarding the HVAC as the HVAC systems are
the responsibility of Lessee as part of the Tenant Improvements

 

2

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(defined below). Written notices to be given to Lessor regarding non-compliance
with the warranties given under Paragraph 2.2 of the Lease shall be given with
reasonable promptness by Lessee following discovery of the condition giving rise
to such notice and the period during which such notices may be given is modified
to one (1) year as to all systems and elements of the Building which are part of
the Building Shell, however, Lessee shall have the benefit of any longer
warranty periods otherwise accruing to Lessor from contractors and suppliers
providing services or materials to Lessor as part of the Building Shell
construction. The acknowledgements set forth in Paragraph 2.4 of the Lease shall
not affect this Section.

 

2.3            Compliance. Lessor shall be responsible for the compliance of the
Building Shell with all Applicable Requirements in effect as of the Start Date
throughout the Term of the Lease and shall effect such compliance promptly
following notice from any party, including Lessee, thereof at any time during
the Term or any extensions thereof.  Lessee shall not be required to comply with
the six month notification period stated in Paragraph 2.3 with respect to such
non-compliance.  All costs incurred by Lessor to comply with Applicable
Requirements in effect on the Start Date shall be born by Lessor solely and
shall not be part of the Base Rent or otherwise payable by Lessee. The
acknowledgements set forth in Paragraph 2.4 of the Lease shall not affect this
Section.

 

2.4            Acknowledgements.  All references to Brokers are hereby deleted
from Paragraph 2.4.

 

2.5            Lessee as Prior Owner/Occupant.  Paragraph 2.5 of the Lease is
hereby deleted.

 

3.3            Delay in Possession. In the event possession of the Premises is
not delivered by Lessor to Lessee by April 1, 1998, Lessee shall have the right
to terminate the Lease.

 

3.4            Lessee Compliance. The last sentence of Paragraph 3.4 is hereby
deleted.

 

5.             Security Deposit.  In the event Lessor utilizes the Security
Deposit as permitted under the Lease, Lessee shall have thirty (30) days after
request therefore to replenish the amount of the Security Deposit with the
required amount under the Lease.  Lessee shall have no obligation to increase
the amount of the Security Deposit, for any reason, so long as the L/C (as
defined below) is in place.  Any application by Lessor of the Security Deposit
shall cure the default to which such portion of the Security Deposit is applied,
to the extent thereof.  As additional security for monetary defaults, Lessee
shall deliver to Lessor no later than the Start Date an irrevocable Letter of
Credit for $600,000 from Union Bank of California or other comparable financial
institution having substantially the same net worth, substantially in the form
attached as Schedule 5 (excluding any terms which are found to be commercially
unreasonable by the issuer thereof), or otherwise on terms and conditions
mutually acceptable to Lessor, Lessee and such issuer (“L/C”).  If Lessee fails
to timely deliver the L/C, and such failure continues for a period of thirty
(30) days following the Start Date, Lessor shall have the right to immediately
terminate the Lease by giving Lessee written notice of such election, and such
termination shall be effective immediately upon Lessor’s delivery of such
notice. Lessee shall also have the option of maintaining the L/C amount as a
cash deposit with Lessor as contemplated under Section 5.2(i) below.

 

5.1           Lessor shall not resort to the L/C without first exhausting the
proceeds of the monetary portion of the Security Deposit. Fifteen (15) days
before each anniversary of the issuance of the L/C, Lessee shall obtain a
commitment of renewal and if the L/C is not renewed within ten (10) days, the
failure to renew will permit Lessor to draw down the L/C in full and maintain it
in lieu of the L/C as contemplated under Section 5.2(i) below.

 

5.2           Notwithstanding any other provision of the Lease and so long as no
uncured material Breach exists, Lessor agrees to release the L/C under any one
of the following independent conditions:

 

(i)            Lessee substitutes cash with Lessor which Lessor agrees to keep
in interest bearing accounts in the name of Lessor with Lessee entitled to an
offset against rental obligations for the amount of interest income earned (the
financial institutions with which such deposit, or portions thereof, is
maintained, and the rate of interest accruing thereon, shall be reasonably
acceptable to Lessee), or

 

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(ii)           Lessee reports net income of at least $50,000,000 for three years
in a row, or

 

(iii)          Lessee’s audited Balance Sheet indicates a Net Worth of at least
$100,000,000.

 

6.2           Hazardous Substances.  The word “potentially” is hereby deleted
from Paragraph 6.2(a)(i).  Paragraph 6.2(b) is hereby modified to provide that
such notice from Lessee to Lessor regarding the presence of Hazardous Substances
with respect to the Premises shall only be required if such presence of
Hazardous Substances is in violation of Applicable Requirements. Paragraph
6.2(c) is modified to require that Lessee shall not be responsible for any
Hazardous Substances brought on to the Premises by Lessor, its employees, agents
or representatives.  Paragraph 6.2(d) is modified to provide that Lessee shall
not be required to indemnify Lessor or its employees, agents or representatives
against such party’s own actions, negligence or omissions. Without limiting
Lessee’s obligations under this section regarding reporting requirements with
respect to Hazardous Substances, Lessee shall, within ten (10) business days
following Lessee’s first use of a Hazardous Substance required to be reported
thereon, complete and deliver to applicable government authorities a Hazardous
Materials Questionnaire in the form as set forth in Schedule 6.2 annexed to this
Addendum, with a copy to Lessor.

 

6.3           Lessee’s Compliance With Applicable Requirements.  Lessee shall be
entitled to satisfy its requirements regarding evidencing its compliance with
Applicable Requirements by providing Lessor with copies of permits filed with
applicable government authorities by Lessee on an annual basis other than
building permits, copies of which shall be provided to Lessor by Lessee as soon
as practicable following Lessee’s receipt of same.  Lessee shall only be
required to comply with reasonable recommendations of Lessor’s engineers and/or
consultants.

 

7.1           Lessee’s Obligations.  Lessor shall assign all warranties and
guarantees in connection with the Building Shell and the Premises for work
completed by or on behalf of Lessor, to Lessee and shall extend all reasonable
assistance to Lessee in the enforcement thereof. Lessor shall also provide a
list of all subcontractors and vendors supplying services or materials in
connection with the construction and completion of the Building Shell and the
Premises to Lessee promptly following the Commencement Date.

 

7.3           Alterations; Trade Fixtures.  Lessee is granted the right to make
non-structural alterations and improvements to the Premises costing less than
$100,000 per year without any consent required of Lessor, as long as (a) Lessee
pays for the entire cost of such alterations and improvements, (b) Lessee agrees
to remove said alterations and improvements upon the expiration or termination
of the Lease, if requested by Lessor, and (c) such alterations and improvements
will not adversely affect the structural integrity of the Premises and/or the
Building.  Any time Lessee proposes to make such alterations and/or improvements
for which Lessor has a right of approval hereunder, Lessee shall provide Lessor
with ten (10) business days’ notice of such proposed alterations and/or
improvements, together with the plans and specifications therefor and a list of
all vendors and subcontractors supplying services or materials with respect to
such alterations, and Lessor shall grant its approval within such ten (10) day
period, unless Lessor reasonably determines that such alterations and/or
improvements would adversely affect the structural integrity of the Premises
and/or the Building or would adversely affect the exterior appearance of the
Building.  Lessee shall not be required to provide any completion bonds with
respect to alterations installed by Lessee. Lessee shall provide “as-builts” for
all alterations.

 

Notwithstanding anything to the contrary in the Lease, all articles of personal
property and all Trade Fixtures, machinery and equipment, furniture and movable
partitions owned by Lessee or installed by or on behalf of Lessee in the
Premises shall remain the property of Lessee, and may be removed by Lessee at
any time during the Term of the Lease as long as Lessee is not in Breach
hereunder with any applicable cure period having expired.  If Lessee fails to
remove all of its effects from the Premises upon the expiration or earlier
termination of the Lease for any cause whatsoever, Lessor may, at its option,
any time after five (5) days’ written notice to Lessee of its intention to
remove such effects, remove same in any manner that Lessor shall choose and
store such effects without liability to Lessee for loss thereof, and Lessee
shall pay Lessor upon demand any and all reasonable expenses incurred in
connection with such removal, including court costs, attorneys’ fees, and
reasonable storage charges

 

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incurred while such effects were in Lessor’s possession. The term “Trade
Fixtures” shall mean Lessee’s machinery and equipment that has been installed
without penetrating the roof membrane and can be removed without doing material
damage to the Premises (unless repaired by Lessee) whether or not the item is
plugged into an electrical outlet or hot wired.

 

7.4(b)      Removal.  Lessee shall receive not less than one hundred twenty
(120) days prior written notice from Lessor to remove alterations required by
Lessor to be removed due to the expiration of the Lease Term, such removal to be
completed within said 120-day period or as soon as practicable thereafter with
due and diligent effort.  Such 120-day notice from Lessor may be given at any
time during the period commencing on the date which is six (6) months prior to
the expiration of the Term of the Lease and ending on the date which is six (6)
months after the expiration of the Term of the Lease.

 

8.1            Payment for Insurance.  To the extent Lessor is the Insuring
Party, payments for premiums shall be made by Lessee to Lessor annually not less
than fifteen (15) business days following Lessee’s receipt of notification from
Lessor of such premium amount based on the actual due date for Lessor’s annual
payment of such premiums.

 

8.3(a)      Property Insurance-Building and Improvements.  Notwithstanding
language to the contrary, deductibles for policies of insurance required to be
maintained hereunder may be $25,000 per occurrence.

 

8.3(b)      Rental Value.  Rental Value insurance required to be maintained
under the Lease shall not extend beyond the date of completion of repairs or
replacements with respect to any such loss giving rise to a claim thereunder, or
beyond the date of any termination of the Lease.

 

8.3(c)      Adjacent Premises.  Paragraph 8.3(c) is hereby deleted.

 

8.4            Lessee’s Property/Business Interruption Insurance.  Paragraph 8.4
is hereby deleted from the Lease.

 

8.5            Insurance Policies.  Lessor shall not do or permit to be done
anything which invalidates required insurance policies under the Lease.

 

8.8           Exemption of Lessor from Liability.  Lessor shall not be exempted
from liability for Lessor’s (or anyone acting through or on behalf of Lessor)
intentional misconduct.

 

9.2            Partial Damage - Insured Loss. The reference to a total cost of
repair of $10,000 shall be replaced with a reference to $100,000,  Lessee shall
have the right to effect any repairs to the Premises which Lessor elects not to
effect. To the extent any amounts contributed by Lessee to repair damage or
destruction are in excess of the actual cost thereof, or cost savings are
realized with respect thereto, the full amount of such excess proceeds or cost
savings shall be paid to Lessee.

 

9.4           Total Destruction.  Lessee shall not be liable for payment of any
rent under the Lease after the date of Lease termination (subject to any
abatement occurring from the date of Premises Total Destruction).

 

9.5           Damage Near End of Term.  Lessee shall be entitled to a reciprocal
right to terminate the Lease in the event of such damage.  Lessee is also
granted the following additional rights to terminate.

 

A.            Notwithstanding anything in the Lease to the contrary, and except
as expressly set forth in Subsection (B) below, in the event that Lessee is
notified or becomes aware of the occurrence of the following:

 

(i)            damage or destruction to the Premises, and/or the Building or any
part thereof so as to interfere substantially with Lessee’s use of the Premises,
Premises parking, and/or the Building;

 

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(ii)           a taking by eminent domain or exercise of other governmental
authority of the Premises, and/or the Building or any part thereof so as to
interfere substantially with Lessee’s use of the Premises, Premises parking,
and/or the Building; or

 

(iii)          any discovery of Hazardous Substances in, on or around the
Premises, the Building and/or the Building site not placed in, on or around the
Premises, the Building and/or the site by Lessee, that, considering the nature
and amount of the substances involved, interferes with Lessee’s use of the
Premises or which presents a health risk to any occupants of the Premises (each
of the items set forth in provision (A)(i), (ii) and (iii) being referred to
herein as a “Trigger Event”); and

 

Lessee cannot, within nine (9) months (“Non-Use Period”) of the occurrence of
the Trigger Event, be given reasonable use of, and access to, a fully repaired,
restored, safe and healthful Premises, Premises parking and Building (except for
minor “punch-list” items which will be repaired promptly thereafter), and the
utilities and services pertaining to the Premises, the Premises parking and the
Building, all suitable for the efficient conduct of Lessee’s business therefrom,
then Lessee may elect to exercise a right to terminate the Lease upon thirty
(30) days’ written notice sent to Lessor upon the expiration of the Non-Use
Period.

 

B.            In the event of any Trigger Event occurring during the last year
of the Lease Term or, if an applicable renewal option has been exercised, during
the last year of any renewal term, should the Non-Use Period continue for ninety
(90) days, Lessee may elect to exercise a right to terminate the Lease upon
thirty (30) days’ written notice sent to Lessor at any time following the
expiration of the Non-Use Period.

 

9.6           Abatement of Rent; Lessee’s Remedies.  Paragraph 9.6 of the Lease
is hereby deleted and replaced with the following:

 

In the event that Lessee is prevented from using, and does not use, the Premises
or any portion thereof, for five (5) consecutive business days or ten (10)
business days in any twelve (12) month period (the “Eligibility Period”) as a
result of (a) any damage or destruction to the Premises, the Premises parking
and/or the Building (other than due to Premises Total Destruction when abatement
of Lessee’s rent shall commence as of the date of such destruction, (b) any
repair, maintenance or alteration performed by Lessor after the Commencement
Date and required or permitted by the Lease, which substantially interferes with
Lessee’s use of the Premises, the Premises parking and/or the Building, (c) any
failure by Lessor to provide Lessee with services or access to the Premises, the
Premises parking and/or the Building, (d) because of an eminent domain
proceeding, or (e) because of the presence of Hazardous Substances in, on or
around the Premises, the Building or the Site which could pose a health risk to
occupants of the Premises, then Lessee’s Base Rent shall be abated or reduced,
as the case may be, after expiration of the Eligibility Period for such time
that Lessee continues to be so prevented from using, and does not use, the
Premises or a portion thereof, in the proportion that the rentable area of the
portion of the Premises that Lessee is prevented from using, and does not use,
bears to the total rentable area of the Premises.  However, in the event that
any portion of the Premises comprising seventy-five percent (75%) of the
rentable area of the Premises is rendered unusable as described hereinabove,
then for such time after expiration of the Eligibility Period during which such
portion of the Premises is so rendered unusable, the Base Rent for the entire
Premises shall be abated; provided, however, if Lessee reoccupies and conducts
its business from any portion of the Premises during such period, the rent
allocable to such reoccupied portion, based on the proportion that the rentable
area of such reoccupied portion of the Premises bears to the total rentable area
of the Premises, shall be payable by Lessee from the date such business
operations commence. If Lessee’s right to abatement occurs because of an eminent
domain taking and/or because of damage or destruction to the Premises, the
Premises parking, the Building, or Lessee’s property, provided rental value
insurance proceeds are available to

 

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Lessor therefor, Lessee’s abatement period shall continue until Lessee has been
given sufficient time and sufficient access to the Premises, the Premises
parking facility and/or the Building, to rebuild such portion it is required to
rebuild, to install its property, furniture, fixtures, and equipment to the
extent the same shall have been removed and/or damaged as a result of such
damage or destruction and/or eminent domain taking and to move in over one (1)
weekend. To the extent Lessee is entitled to abatement without regard to the
Eligibility Period, because of an event covered by Lease Articles 9 or 14, then
the Eligibility Period shall not be applicable.

 

10.1          Definition of “Real Property Taxes”.  Real Property Taxes shall
not include any tax based on any net income of Lessor with respect to the
Building for state or federal income tax purposes and shall not include any tax
penalties incurred as a result of Lessor’s negligence or failure to file any tax
or informational returns when due.

 

10.2          Payment of Taxes.  Paragraph 10.2 is hereby deleted.  Lessee shall
pay all Real Property Taxes to Lessor who shall pay such amounts directly to the
taxing authorities prior to delinquency thereof.  Such payment shall be made
only at such time as payment of Real Property Taxes is actually due to the
taxing authorities to prevent imposition of penalties for delinquent payment.
Real Property Taxes shall also include reimbursement to Lessor for its
prepayment of amounts assessed against the Premises under City of Carlsbad
Community Facilities District #1, provided such reimbursement is made in such
amounts and at such times as such assessment would have been payable by Lessor
in the ordinary course absent such prepayment.

 

10.3          Joint Assessment. Paragraph 10.3 of the Lease is hereby deleted.

 

10.4          Personal Property Taxes.  All of Paragraph 10.4 of the Lease
except for the first sentence thereof is hereby deleted.

 

12.1         Assignment and Subletting. Lessor’s Consent required.  All of
Paragraph 12.1 of the Lease is hereby deleted and replaced with the following:

 

Lessee shall not voluntarily or by operation of law assign, transfer, mortgage
or encumber (collectively, “assign or assignment”) or sublet all or any part of
Lessee’s interest in this Lease or in the Premises without Lessor’s prior
written consent. Notwithstanding the foregoing, Lessee may assign the Lease or
may sublet the Premises or any part thereof without Lessor’s consent to any
subsidiary, parent, affiliate or control corporation or to any corporation which
acquires all of Lessee’s assets or with which it may merge providing Lessee
remains liable and the use does not substantially change.

 

Notwithstanding any other provision in Paragraph 12 of the Lease, Lessor’s
consent to a sublease shall not be required and Lessor shall not have the right
to adjust the rental so long as all of the following conditions are and remain
satisfied: (a) the sublease is for a portion of the Premises constituting less
than fifty percent (50%) of the total rentable square feet of the Premises; (b)
Lessee continues to occupy the remaining portions of the Premises; (c) the
sublessee does not employ on the Premises Hazardous Substances in violation of
Applicable Requirements and its use is not otherwise in violation of the Lease;
and (d) Lessee is not otherwise in Breach of this Lease.

 

For any other assignment or subletting, Lessor agrees it will not unreasonably
withhold, condition or delay its consent to any such assignment or subletting. 
Rental amounts in excess of the Base Rent payable to Lessor by Lessee under the
Lease (the “Excess Rental”) on account of such assignment or subletting will be
shared between the Lessor and Lessee. Lessor shall be entitled to that portion
of the Excess Rental arising by virtue of the value of the Premises as a
warehouse (offices, distribution of electrical, bathrooms etc.) and Lessee shall
be entitled to that portion of the Excess Rental arising by virtue of the
improvements installed by Lessee having a biopharmaceutical use and character as
opposed to an industrial/office use and character; provided, however, Excess
Rental shall be calculated net of all expenses incurred by Lessee in any
assignment or subleasing of the Premises, including, without limitation, any
amounts paid to Lessor by Lessee during periods where the assigned or subleased
portion of the Premises was vacant; any improvement allowance or other

 

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economic concession paid by Lessee to any sublessee or assignee; broker’s
commissions; attorneys’ fees; lease take-over payments; costs of advertising the
space for sublease or assignment; and any other costs actually paid in assigning
or subletting the Premises.  Lessor shall not be paid any Excess Rental amounts
until Lessee has recovered all such costs incurred in connection with such
subleasing or assignment.

 

12.2(e)    The amount which Lessor may receive for consideration of any request
for assignment or subletting shall not exceed $500 in any instance.

 

12.3(c)    Paragraph 12.3(c) is hereby modified to provide that for any action
by a sublessee with respect to the Premises that would trigger a requirement for
Lessor’s consent under the Lease if such action were taken by Lessee under the
Lease, such subtenant shall be required to seek Lessor’s consent to such action.

 

12.3(e)    The last sentence of Paragraph 12.3(e) is hereby deleted.

 

13.1(b)    Paragraph 13.1(b) is hereby deleted and replaced with the following:

 

The failure to pay any installment of base rent, or any other monetary payment
required to be made by Lessee under the Lease, when due and payable hereunder,
upon the date when payment is due, such failure continuing for a period of five
(5) business days after written notice of such failure; or

 

13.1(c)    Paragraph 13.1(c) is hereby modified to replace the reference to “ten
(10) days” with a reference to “thirty (30) days.”

 

13.l(f)      Paragraph 13.1(f) is hereby deleted and replaced with the
following:   “All notices to be given pursuant to this Section 13.1 shall be in
addition to, and not in lieu of, the notice requirements of California Code of
Civil Procedure Section 1161.”

 

13.1(g)    Paragraph 13.1(g) is hereby deleted from the Lease.

 

13.4         Late Charges. The late charge of 10% is deleted and replaced with a
late charge of six percent (6%).

 

13.5         Interest.  The reference to 4% for purposes of calculating Interest
on the Lease is deleted and replaced with two percent (2%).

 

15.           Brokers’ Fees.  Lessor shall be responsible for payment of all
fees owed to the Brokers with respect to the Lease.

 

16.2         Lessee shall have no obligation to deliver any financial statements
to Lessor so long as Lessee is required to report to the United States
Securities and Exchange Commission with respect to its financial status and such
filings are publicly available.

 

26.           No Right to Holdover.  The amount of 150% as an increase in the
Base Rent for a holdover by Lessee shall not apply if Lessee has notified Lessor
not less than three (3) months prior to the expiration of the Term of the Lease
that Lessee intends to hold over in the Premises, subject to Lessor’s written
consent, not to be unreasonably withheld, conditioned or delayed, in which event
such holdover by Lessee shall be on all the terms and provisions of the Lease,
at a Base Rent adjusted pursuant to Section 55 below. The duration of such
holdover shall be specified by Lessee at the time notice of such holdover is
given to Lessor and shall not exceed three (3) months.

 

30.2         Attornment.  As a condition to any requirement of attornment
hereunder, the beneficiary of a Security Device shall have elected that this
Lease shall be prior and superior to such Security Device prior to any event of
foreclosure thereunder.

 

31.           Attorneys’ Fees.  The provisions of Paragraph 31 of the Lease
shall apply to arbitration.

 

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32.           Lessor’s Access.  Lessor shall only enter the Premises to the
extent reasonably required by Lessor and not “as Lessor may deem necessary.”

 

37.           Guarantor.  Paragraph 37 is hereby deleted from the Lease.

 

39.2         Options Personal to Original Lessee.  Notwithstanding the
provisions of Paragraph 39.2, Lessee may assign its Options under the Lease to
any permitted assignee under the Lease provided Lessee remains liable for full
performance of the Lease by such assignee.

 

40.           Multiple Buildings.  Paragraph 40 is hereby deleted from the
Lease.

 

50.           Tenant Improvements.  Lessee at its sole cost shall be responsible
for the Tenant Improvements including space plans, building plans, and for all
costs of construction including, but not by way of limitation, permit fees for
its Tenant Improvements.  Office improvements shall be constructed of a quality
comparable to the quality existing at 5935 Darwin Court or otherwise reasonably
acceptable to Lessor and consist of a minimum of 5,100 square feet on the second
floor and 5,100 square feet directly below on the first floor. A minimum of
5,100 square feet of such office improvements shall be completed within twelve
(12) months of the Commencement Date, with the remainder to be completed not
later than eighteen (18) months from the Commencement Date.  Lessee’s plans for
construction of the Tenant Improvements (“Lessee’s Plans”) and its general
contractor for such construction shall be subject to the Lessor’s prior approval
to be given not later than ten (10) business days after submittal to Lessor,
with Lessor’s approval not to be unreasonably withheld, conditioned or delayed. 
In the event Lessor disapproves Lessee’s Plans, Lessor shall specify the reasons
for such disapproval and Lessee shall have ten (10) business days to revise and
re-submit Lessee’s Plans for Lessor’s approval.  Lessor shall respond thereto
within five (5) business days and if the revised Lessee’s Plans are again
disapproved by Lessor, the foregoing procedure shall be re-instituted until
Lessor’s approval is obtained. Lessee warrants that the Tenant Improvements will
comply with all Applicable Requirements in effect at the time of such
construction.  Lessee shall construct as part of the Tenant Improvements,
screening of the HVAC units on the roof of the Building in accordance with the
requirements of the covenants, conditions and restrictions (“CC&Rs”) applicable
to the project of which the Building is a part.  Lessee acknowledges that Lessor
has notified those individuals responsible for administering the CC&Rs that such
screening will be completed in accordance with the attached Schedule 50.  Unless
Lessee is successful in obtaining such individual’s consent to a deviation from
the screening requirements set forth in the attached Schedule 50, Lessee shall
complete such screening to the satisfaction of such individuals in accordance
with the attached Schedule 50.

 

50.1         The phrase “Tenant Improvements” means all interior and exterior
(including HVAC systems) improvements which will not be part of the Building
Shell constructed by Lessor and shall include but not by way of limitation (a)
partitions, walls, doors, (b) all surface finishes, including wall coverings,
paint, floor coverings, suspended ceilings and other similar items, (c) duct
work, heat pumps, vents filters, diffusers, terminal boxes and accessories for
completion of heating, ventilation and air conditioning systems within the
Premises, (d) electrical distribution systems (including panels, subpanels,
wires and outlets), lighting fixtures, outlets, switches and other electrical
work to be installed in the Premises, (e) plumbing lines, fixtures and
accessories, and all fire and life safety control systems such as fire walls and
fire alarms (including piping, wiring and accessories) to be located in the
Premises , (f) improvements required for compliance with Title 24, and other
governmental agencies, and (g) all the construction specific for Lessee’s
biopharmaceutical needs, to the extent the foregoing are included in the Plans.

 

Lessee represents and warrants that no part of its Tenant Improvements will
contain ACHM in violation of Applicable Requirements in effect at the time of
such construction.  If Lessee does employ ACHM, the ACHM will be promptly
removed in a manner required by the appropriate government agency in accordance
with Applicable Requirements.

 

Lessee shall be fully responsible for making all alterations and repairs to the
Tenant Improvements at its cost to remove any and all ACHM resulting from or
necessitated by the failure of Lessee and/or Lessee’s contractor to comply with
Applicable Requirements

 

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regarding ACHM’s in effect at the time of such construction, or from Lessee’s
and/or Lessee’s contractor’s utilization of Hazardous Substances as defined by
Applicable Requirements, in violation of such Applicable Requirements or which
could pose a health risk to occupants of the Premises.

 

51            Operating Expenses.  In addition to payment of the Base Rent,
Lessee shall, from and after the Start Date, be responsible for payment of all
“Operating Expenses.”  The term “Operating Expenses” means all direct expenses
and costs attributable to Lessee’s use, occupancy and operation of the Premises
which are customary in a “triple net” lease.  Other than payments of Real
Property Taxes, the Administration Fee and premiums for insurance policies
maintained by Lessor as the Insuring Party, all Operating Expenses shall be paid
directly by Lessee to the appropriate third party provider of services,
utilities or items of operating expense prior to delinquency.  Lessor shall
promptly forward to Lessee any and all invoices received by Lessor with respect
to Operating Expenses, and in all events in sufficient time to permit timely
payment thereof by Lessee.  Operating Expenses shall also include a fee payable
to Lessor (the “Administration Fee”) for the due and punctual performance of all
administrative responsibilities of Lessor under the Lease. The Administration
Fee shall be payable concurrently with Base Rent in an amount equal to two
percent (2%) of the monthly Base Rent then payable with respect to the
Premises.  In the event of any abatement of rent permitted Lessee pursuant to
the provisions of the Lease, the Administration Fee shall also be abated in the
same proportion as the Base Rent.

 

52.           Services.  At the time of completion of the Building Shell, Lessor
and its contractors shall, at no cost to Lessee, provide “as-builts” for the
Building Shell and shall conduct a thorough inspection of the Building’s systems
in order to certify that the equipment and systems are in full working order. 
At the same time, Lessor will supply a written certification of the results of
its mechanical contractor’s inspection.  Lessee will be given all certifications
that Lessor receives from its contractors, subcontractors and vendors for
construction of the Building Shell.

 

53.           Non-Disturbance.  Lessor warrants and represents that in the event
Lessor introduces any lien or mortgage holder to the Premises, then Lessor will
obtain nondisturbance agreements in a form reasonably acceptable to Lessee from
any and all of such mortgage or lien holders, ground lessors, etc., which
agreements shall provide that as long as Lessee is not in default of the Lease
beyond any applicable grace period, Lessee’s occupancy of the Premises shall not
be disturbed, its rights under the Lease will continue to be recognized and all
of the Lessor’s future obligations under the Lease will continue to be
performed.

 

54.           Real Estate Licenses.  California law requires that Lessee be
informed that Roland A. Childs, a general partner of the Childs Family
Investment Partnership, L.P. and Allan J. Gardner, a trustee of the A. J.
Gardner Family Trust are each State of California Real Estate Licensees.

 

55.           Rent Adjustments. The monthly rent for each month of the
adjustment periods specified below shall be increased using the cost of living
adjustment.

 

(a)            On the month of the first anniversary of the Commencement Date
and each twelve months thereafter, the monthly rent payable under paragraph 1.5
(“Base Rent”) of the Lease shall be adjusted by the change, if any, from the
Base Month specified below, in the Consumer Price Index of the Bureau of Labor
Statistics of the US Department of Labor for CPI U (All Urban Consumers), for
Los Angeles-Anaheim-Riverside, All Items (1982- 1984=100), herein referred to as
“CPI.”

 

(b)           The monthly rent payable in accordance with subparagraph (a) of
this Section 55 shall be calculated as follows:  the Base Rent set forth in
Paragraph 1.5 of the Lease, shall be multiplied by a fraction the numerator of
which shall be the CPI of the calendar month 2 (two) months prior to the month
specified in (a) during which the adjustment is to take effect, and the
denominator of which shall be the CPI of the calendar month which is two (2)
months prior to the month containing the Commencement Date. The sum so
calculated shall constitute the new monthly rent hereunder, but in no event,
shall any such new monthly rent be less than the rent payable for the month
immediately preceding the date for rent adjustment nor shall it be less than
three (3) percent or more than six (6) percent during the

 

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first five (5) years unless the CPI exceeds twelve (12) percent in which case
the overage over twelve (12) percent will be added to the maximum six (6)
percent as additional rent. Thereafter, during the remainder of the initial term
and any extension if one or both of the two options to extend are exercised, the
Base Rent will be adjusted utilizing the same CPI in the same manner with an
annual minimum of three (3) percent increase and a maximum seven (7) percent
increase unless the CPI exceeds thirteen (13) percent in which case the overage
over thirteen (13) percent will be added to the maximum seven (7) percent as
additional rent.

 

56.           Options to Extend.  Lessor hereby grants to Lessee two (2) options
(each, an “Option”) to extend the Term of this Lease for an additional sixty
(60) month period for each Option, commencing when the prior term expires upon
each and all of the following terms and conditions:

 

(i)            Lessee gives to Lessor and Lessor actually receives (which
receipt may be independently confirmed by Lessee) on a date which is prior to
the date that the option period would commence (if exercised) by at least six
(6) and not more than nine (9) months, a written notice in accordance with the
Lease of the exercise of the options to extend this Lease for said additional
terms, time being of the essence. If said notification of the exercise of said
Options are not so given and received, the Options shall automatically expire;
said Options may only be exercised consecutively;

 

(ii)           The provisions of Paragraph 39, including the provision relating
to default of Lessee set forth in Paragraph 39.4 of this Lease are conditions of
the Options;

 

(iii)          All of the terms and conditions of this Lease except where
specifically modified by these Options shall apply;

 

(iv)          The monthly Base Rent for each month of the applicable Option
period shall be calculated as follows, using the methods indicated below:

 

Market Rental Value Adjustments (MRV)

 

(a)           On the 10th anniversary of the Commencement Date if the first
Option to extend is timely exercised and again five (5) years later if the
second Option to extend is timely exercised, Base Rent shall be adjusted to the
“Market Rental Value” of the Premises as follows:

 

1.             Four months prior to the Market Rental Value (MRV) Adjustment
Dates described above, Lessor and Lessee shall meet to establish an agreed upon
new MRV for comparable space in the Carlsbad Research Center for the specified
term. In determining MRV, the comparable space will be limited to an industrial
building with offices, electrical distribution and other typical warehouse space
such as but not limited to bath rooms but specifically excluding the peculiar
attributes required by a biopharmaceutical firm such as refrigeration, and
required plumbing and piping.  If agreement cannot be reached, then:

 

(i)            Lessor and Lessee shall immediately appoint a mutually acceptable
appraiser or broker to establish the new MRV within the next thirty (30) days.
Any associated costs will be split equally between the parties, or

 

(ii)           Both Lessor and Lessee shall each immediately select and pay the
appraiser or broker of their choice to establish a MRV within the next thirty
(30) days. If, for any reason, either one of the appraisals is not completed
within the next thirty (30) days, as stipulated, then the appraisal that is
completed at that time shall automatically become the new MRV.  If both
appraisals are completed and the two appraisers/brokers cannot agree on a
reasonable average MRV then they shall immediately select a third mutually
acceptable appraiser/broker to establish a third MRV within the next thirty (30)
days.  The average of the two appraisals closest in value shall then become the
new MRV.  The costs of the third appraisal will be split equally between the
parties.

 

2.              If Lessee does not add additional mezzanine to the existing
5,100 sq. ft., the minimum MRV will be One and Five One-Hundredths Dollars
($1.05) per ft, for the

 

11

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

 

eleventh (11th) year and One and Twenty-One One-Hundredths Dollars ($1.21) for
the sixteenth (16th) year. If Lessee adds additional mezzanine during the Term
of the Lease, the minimum MRV will be computed in the same manner as the stated
minimums were determined, the example of which is shown on the attached
Schedule 56. In any event, the new MRV shall not be less than the Base Rent
payable for the month immediately preceding the date for rent adjustment.

 

(b)           Upon the establishment of each new MRV:

 

1.              The monthly Base Rent so calculated for each Term as specified
in subsection (a) above will become the new “Base Rent” for the purpose of
calculating any further CPI adjustments as specified in Section 55 above; and

 

2.              the first month of each Market Rental Value term as specified in
subsection (a) above shall become the new “Base Month” for the purpose of
calculating any further Cost of Living Adjustments as specified in Paragraph 55.

 

57.           Arbitration.  This Addendum provision contains the sole and
exclusive method, means and procedure to resolve any and all disputes or
disagreements, including whether any particular matter constitutes, or with the
passage of time would constitute, a Default or Breach under the Lease.  The
parties hereby irrevocably waive any and all rights to the contrary and shall at
all times conduct themselves in strict, full, complete and timely accordance
with the provisions of this Addendum provision.  Any and all attempts to
circumvent the provisions of this Addendum provision shall be absolutely null
and void and of no force or effect whatsoever.  As to any matter submitted to
arbitration to determine whether it would, with the passage of time, constitute
a Default or Breach, such passage of time shall not commence to run until any
such affirmative determination, so long as it is simultaneously determined that
the challenge of such matter as a potential Default or Breach was made in good
faith, except with respect to the payment of money.  With respect to the payment
of money, such passage of time shall not commence to run only if the party which
is obligated to make the payment does in fact make the payment to the other
party. Such payment can be made “under protest,” which shall occur when such
payment is accompanied by a good-faith notice stating why the party has elected
to make a payment under protest.  This Section shall not prevent Lessor’s
recourse to the L/C or to cash held in lieu thereof for Breaches under the
Lease, however, if Lessee disputes the existence of such Breach any draw down of
the L/C or cash held in lieu thereof, as the case may be, shall be deemed made
“under protest” pending resolution of such dispute hereunder.  Such protest will
be deemed waived unless the subject matter identified in the protest is
submitted to arbitration as set forth in the following:

 

(a)           Arbitration Panel.  Within ninety (90) days after delivery of
written notice (“Notice of Dispute”) of the existence and nature of any dispute
given by any party to the other party, and unless otherwise provided herein in
any specific instance, the parties shall each: (i) appoint one (1) lawyer
actively engaged in the licensed and full-time practice of law, specializing in
real estate, in the County of San Diego for a continuous period immediately
preceding the date of delivery (“Dispute Date”) of the Notice of Dispute of not
less than ten (10) years, but who has at no time ever represented or acted on
behalf of any of the parties, and (ii) deliver written notice of the identity of
such lawyer and a copy of his or her written acceptance of such appointment and
acknowledgment of and agreement to be bound by the time constraints and other
provisions of this Addendum provision (“Acceptance”) to the other parties
hereto. The party who selects the lawyer may not consult with such lawyer,
directly or indirectly, to determine the lawyer’s position on the issue which is
the subject of the dispute.  In the event that any party fails to so act, such
arbitrator shall be appointed pursuant to the same procedure that is followed
when agreement cannot be reached as to the third arbitrator.  Within ten (10)
days after such appointment and notice, such lawyers shall appoint a third
lawyer (together with the first two (2) lawyers, “Arbitration Panel”) of the
same qualification and background and shall deliver written notice of the
identity of such lawyer and a copy of his or her written Acceptance of such
appointment to each of the parties.  In the event that agreement cannot be
reached on the appointment of a third lawyer within such period, such
appointment and notification shall be made as quickly as possible by any court
of competent jurisdiction, by any licensing authority, agency or organization
having jurisdiction over such lawyers, by any professional association of
lawyers in existence for not less than ten (10) years at the time of such
dispute or disagreement and the geographical

 

12

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

 

membership boundaries of which extend to the County of San Diego or by any
arbitration association or organization in existence for not less than ten (10)
years at the time of such dispute or disagreement and the geographical
boundaries of which extend to the County of San Diego, as determined by the
party giving such Notice of Dispute and simultaneously confirmed in writing
delivered by such party to the other party.  Any such court, authority, agency,
association or organization shall be entitled either to directly select such
third lawyer or to designate in writing, delivered to each of the parties, an
individual who shall do so.  In the event of any subsequent vacancies or
inabilities to perform among the Arbitration Panel, the lawyer or lawyers
involved shall be replaced in accordance with the provisions of this Addendum
provision as if such replacement was an initial appointment to be made under
this Addendum provision within the time constraints set forth in this Addendum
provision, measured from the date of notice of such vacancy or inability, to the
person or persons required to make such appointment, with all the attendant
consequences of failure to act timely if such appointed person is a party
hereto.

 

(b)            Duty.  Consistent with the provisions of this Addendum provision,
the members of the Arbitration Panel shall utilize their utmost skill and shall
apply themselves diligently so as to hear and decide, by majority vote, the
outcome and resolution of any dispute or disagreement submitted to the
Arbitration Panel as promptly as possible, but in any event on or before the
expiration of thirty (30) days after the appointment of the members of the
Arbitration Panel.  None of the members of the Arbitration Panel shall have any
liability whatsoever for any acts or omissions performed or omitted in good
faith pursuant to the provisions of this Addendum provision.

 

(c)            Authority.  The Arbitration Panel shall (i) enforce and interpret
the rights and obligations set forth in the Lease to the extent not prohibited
by law, (ii) fix and establish any and all rules as it shall consider
appropriate in its sole and absolute discretion to govern the proceedings before
it, including any and all rules of discovery, procedure and/or evidence, and
(iii) make and issue any and all orders, final or otherwise, and any and all
awards, as a court of competent jurisdiction sitting at law or in equity could
make and issue, and as it shall consider appropriate in its sole and absolute
discretion, including the awarding of monetary damages (but shall not award
consequential damages to either party and shall not award punitive damages
except in situations involving knowing fraud or egregious conduct condoned by,
or performed by, the person who, in essence, occupies the position which is the
equivalent of the chief executive officer of the party against whom damages are
to be awarded), the awarding of reasonable attorneys’ fees and costs to the
prevailing party as determined by the Arbitration Panel and the issuance of
injunctive relief. If the party against whom the award is issued complies with
the award, within the time period established by the Arbitration Panel, then no
Default or Breach will be deemed to have occurred, unless the Default or Breach
pertained to the non-payment of money by Lessee or Lessor, and Lessee or Lessor
failed to make such payment under protest.

 

(d)            Appeal. The decision of the Arbitration Panel shall be final and
binding, may be confirmed and entered by any court of competent jurisdiction at
the request of any party and may not be appealed to any court of competent
jurisdiction or otherwise except upon a claim of fraud on the part of the
Arbitration Panel, or on the basis of a mistake as to the applicable law.  The
Arbitration Panel shall retain jurisdiction over any dispute until its award has
been implemented, and judgment on any such award may be entered in any court
having appropriate jurisdiction.

 

(e)            Compensation. Each member of the Arbitration Panel (i) shall be
compensated for any and all services rendered under this Addendum provision at a
rate of compensation not to exceed the sum of (a) Two Hundred Fifty Dollars
($250.00) per hour and (b) the sum of Ten Dollars ($10.00) per hour multiplied
by the number of full years of the expired Term under the Lease, plus
reimbursement for any and all expenses incurred in connection with the rendering
of such services, payable in full promptly upon conclusion of the proceedings
before the Arbitration Panel. Such compensation and reimbursement shall be borne
by the nonprevailing party as determined by the Arbitration Panel in its sole
and absolute discretion

 

13

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

 

58.           Access; Parking.  Lessee shall have full and uninterrupted access
to the Premises twenty-four (24) hours per day, seven (7) days per week, every
day of the year. All parking allocated to the Building under Applicable
Requirements shall be for Lessee’s sole and exclusive use at no additional cost
or rent during the entire Lease Term or any extensions thereof.  Lessee’s
parking privileges shall be available to Lessee twenty-four (24) hours per day,
seven (7) days per week, every day of the year.

 

59.           Entry by Lessor. Notwithstanding anything to the contrary set
forth in the Lease to the contrary, Lessor and/or those acting on Lessor’s
behalf may only enter the Premises upon not less than two (2) business days
prior notice to Lessee acknowledged by Lessee, except in cases of emergency, in
which case only telephone notice shall be required. In any event, any such entry
shall be accomplished as expeditiously as reasonably possible, in a manner so as
to cause as little interference to Lessee as reasonably possible and in
accordance with Lessee’s security requirements.  Lessor shall be accompanied by
an employee of Lessee at all times. Lessee may designate certain areas of the
Premises as “Secured Areas” should Lessee require such areas for the purpose of
securing certain valuable properly or confidential information or operations. 
Lessor may not enter such Secured Areas except in the case of emergency or in
the event of a permitted Lessor inspection, in which case Lessor shall provide
Lessee with five (5) business days’ prior written notice of the specific date
and time of such Lessor inspection and be accompanied by an employee of Lessee
on all such inspections.

 

60.           When Payment Is Due.  Other than payment of Base Rent, whenever in
the Lease a payment is required to be made by one party to the other, but a
specific date for payment is not set forth or a specific number of days within
which payment is to be made is not set forth, or the words “immediately,”
“promptly” and/or “on demand,” or their equivalent, are used to specify when
such payment is due, then such payment shall be due thirty (30) days after the
party which is entitled to such payment sends written notice to the other party
demanding such payment.

 

61.           Lessor Bankruptcy Proceeding. In the event that the obligations of
Lessor under the Lease are not performed during the pendency of a bankruptcy or
insolvency proceeding involving the Lessor as the debtor, or following the
rejection of this Lease in accordance with Section 365 of the United States
Bankruptcy Code, then notwithstanding any provision of this Lease to the
contrary, Lessee shall have the right to set off against rents next due and
owing under this Lease (a) any and all damages caused by such non-performance of
Lessor’s obligations under the Lease by Lessor, debtor-in-possession, or the
bankruptcy trustee, and (b) any and all damages caused by the non-performance of
Lessor’s obligations under the Lease following any rejection of the Lease in
accordance with Section 365 of the United States Bankruptcy Code.

 

62.           Consent/Duty to Act Reasonably.  Regardless of any reference to
the words “sole” or “absolute” (but except for matters which (a) would have an
adverse effect on the structural integrity of the Building Shell, (b) could have
an adverse effect on the Building HVAC systems, or (c) could have an effect on
the exterior appearance of the Building, whereupon in each such case Lessor’s
duty is to act in good faith and in compliance with the Lease), any time the
consent of Lessor or Lessee is required, such consent shall not be unreasonably
withheld, conditioned or delayed. Whenever the Lease grants Lessor or Lessee the
right to take action, exercise discretion, establish rules and regulations or
make allocations or other determinations (other than decisions to exercise
expansion, contraction, cancellation, termination or renewal options), Lessor
and Lessee shall act reasonably and in good faith and take no action which might
result in the frustration of the reasonable expectations of a sophisticated
lessee or lessor concerning the benefits to be enjoyed under the Lease.

 

63.           Covenants and Agreements.  The failure of Lessor or Lessee to
insist in any instance on the strict keeping, observance or performance of any
covenant or agreement contained in the Lease, or the exercise of any election
contained in the Lease, shall not be construed as a waiver or relinquishment for
the future of such covenant or agreement, but the same shall continue and remain
in full force and effect.

 

64.           Days.  All references in the Lease to “days” involving less than
“ten (10) days” shall mean business days, and all references to “notice” shall
mean written notice.

 

14

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

 

65.           Joint and Several Obligations.  The obligations of Lessor under
the Lease shall be joint and several obligations of the entities comprising
Lessor.

 

66.           Definition of Applicable Requirements.  The use of the term
“Applicable Requirements” in the Lease and this Addendum shall mean those laws,
statutes, codes, ordinances, regulations, covenants and restrictions applicable
to the matter to which such Applicable Requirements are stated to apply in the
Lease and this Addendum.

 

15

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

 

SCHEDULE 1.2

 

LIST OF LESSOR’S PLANS

 

[ATTACHED]

 

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

 

RIGGINS

CONSTRUCTION &

MANAGEMENT, INC.

TRANSMITTAL

 

 

 

 

TO:

IMMUNE RESPONSE CORPORATION

 

FROM:

 RIGGINS CONSTRUCTION & MANAGEMENT, INC.

 

 

 

 

 

 

5935 DARWIN COURT

 

 

1816 N. OLD TUSTIN AVE., STE. A

 

 

 

 

 

 

CARLSBAD CA 92008

 

 

SANTA ANA, CA 92705

 

 

 

 

 

DATE:  December 2, 1997

 

JOB/EST.   #:  155

RECORD NUMBER:  2249

 

 

 

 

 

ATTN:  PAULA ATKINS

 

SENT BY: TOM RIGGINS

 

REFERENCE:  Job #:  155 CARLSBAD RESEARCH CENTER LOT #58 TILT-UP

 

WE ARE SENDING HEREWITH 1 COPY EACH OF:

 

At your request, enclosed please find a full set of Construction Drawing sheets
as follows:

 

Title sheets T1-T2, A5-A7 and A9 all dated 3/21/97 and sheets A1-A4, delta one
version, dated 4/30/97 and AB, A10-A13 also delta one version, dated 4/30/97,
all as prepared by Smith Consulting Architects, and Civil sheets C1 & C5. both
undated, C3 and C4 both dated 2-20-97, and C2 and C6, delta one version, dated
4/30/97 as prepared by Spear & Associates, structural sheets S1.0, S1.1, S1.2,
S1.3, S3.0, S3.1, S4.0, S4.1, S4.2, S4.3 and S6.1, all delta one versions, dated
4/30/97 and sheets S2.0, S3.2, S5.0 and S8.0, all delta 2 versions, all dated
5/30/97 as prepared by Flores Consulting Group and Landscape plans L1 and L4-L6
all dated 4/2/97 and L2, L3 and L7, all delta one versions, dated 5/9/97 as
prepared by Steven Ahles Landscape Architect, Plumbing sheets P1-P2, both dated
3/13/97 as prepared by Custom Plumbing. Inc., Electrical sheets E1 dated
4-18-97, E2 dated 1-31-97, both delta four versions, dated 6/13/97 as prepared
by Shepherd Electric.

 

 

PLEASE RETURN 0 COPY TO THIS OFFICE.

 

THESE ARE:  (checked below)

ý FOR YOUR INFORMATION

o APPROVED WITH CORRECTIONS AS NOTED

o COPY PREVIOUSLY FAXED

ý AS REQUESTED

o APPROVED FOR FABRICATION AS NOTED

ý COPY HAND DELIVERED

o FOR APPROVAL OR CORRECTIONS

o FOR USE ON JOB

ý PLEASE REVIEW

o APPROVED

o FOR YOUR FILES

 

 

 

BY:

/s/ Tom B. Riggins

 

 

Tom B. Riggins - Project Manager

 

 

 

1616 N. OLD TUSTIN AVE. - SUITE A - SANTA ANA, CA 92705 - PH (714) 953-6333 -
FAX (714) 543-7601

 

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

 

SCHEDULE 5

 

FORM OF LETTER OF CREDIT

 

[ATTACHED]

 

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

 

EXHIBIT FOR STANDBY L/C APPLICATION:  THE IMMUNE RESPONSE CORPORATION

(SUPPORTING LEASE)

 

Irrevocable Standby Letter of Credit No.           

 

SOUTHERN CALIFORNIA

INTERNATIONAL OPERATIONS CENTER

1980 [Saturn] Street,  VO1-519

Monterey Park,  California 91755-7417

Attention:  Standby Letter of Credit Section

 

Date:

BENEFICIARY

APPLICANT

Darwin Court, a California general partnership

The Immune Response Corporation,

[Insert Address]

a Delaware corporation

[City, State, Zip Code]

[Insert Address]

 

[City, State, Zip Code]

 

Currency

 

USD

Amount

 

600,000.00 [SIX HUNDRED THOUSAND AND NO/100 U.S.  DOLLARS]

Available by

 

Payment at this office.

Final Expiry Date

 

                , 1998 or any automatically extended date or any alternative
date as herein set forth at the close of business of this office in Monterey
Park, California.

 

 

Ladies/Gentlemen:

We hereby issue our Irrevocable Standby Letter of Credit (“Letter of Credit”) in
your favor.  This Letter of Credit is available by sight payment with ourselves
only against presentation at this office of the following documentation:

1.                                       Your sight draft drawn on us marked: 
“Drawn under Union Bank of California, N.A., Irrevocable Standby Letter of
Credit No.               , dated                            ,        .”

 

2.                                       A statement purportedly signed by an
authorized representative of Darwin Court, a California general partnership
stating:

“The undersigned being a duly authorized representative or officer of Darwin
Court, a California general partnership hereby represents and warrants that the
amount of the accompanying draft represents and covers moneys owing to Darwin
Court, a California general partnership, (the “Lessor”) by The Immune Response
Corporation, a Delaware corporation (the “Lessee”) as a result of default by
Lessee with respect to any provision of that certain Lease dated October 27,
1997 (the “Lease”), by and between the Lessor and the Lessee.”

 

Partial Drawings are permitted.

This Letter of Credit shall be deemed automatically extended without an
amendment for a one year period beginning on the present expiration date hereof
           , 1998, and upon each anniversary of such date, unless at least
fifteen (15) days prior to any such expiration date we

 

EXHIBIT TO APPLICATION.

 

 

CLIENT’S SIGNATURE:

 

 

DATE: 

 

 

1

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

 

have sent you written notice by courier service or overnight mail (or by
teletransmission through the Advising Bank) that we elect not to permit this
Letter of Credit to be so extended beyond its then current expiration date.

 

The Letter of Credit shall finally expire on                      ,           
if it has not previously expired in accordance with the preceding sentence.

 

This date this Letter of Credit expires in accordance with the above provision
is the “Final Expiry Date”. Upon the occurrence of the Final Expiry Date this
Letter of Credit shall fully and finally expire and no presentations made under
this Letter of Credit after such date will be honored.

 

This Letter of Credit sets forth in full the terms of our undertaking, and such
terms shall not be modified, amended or amplified by any document, instrument or
agreement referred to in this Letter of Credit, in which this Letter of Credit
is referred to or to which this Letter of Credit relates.

 

Except as stated herein, this Letter of Credit is not subject to any condition
or qualification and is our individual obligation which is in no way contingent
upon reimbursement.

 

SPECIAL INSTRUCTIONS:

The original of this Letter of Credit must be presented together with the above
documents in order to endorse the amount of each drawing on the reverse side.

 

All banking charges under this Letter of Credit, except as noted herein, are for
the account of the Applicant.

 

An interbank transfer fee of USD20.00 will be deducted from the proceeds if
settlement is to be remitted to an account at another bank.

 

We hereby agree with you that drafts drawn under and in compliance with the
terms of this credit will be duly honored upon presentation and delivery to
Union Bank of California, N.A., at the address above. Documents are to be sent
in one lot by courier service, overnight mail or hand delivery.

 

This Letter of Credit is subject to the “Uniform Customs and Practice for
Documentary Credits (1993 Revision)” - International Chamber of Commerce
Publication No. 500.

 

 

EXHIBIT TO APPLICATION.

 

 

CLIENT’S SIGNATURE:

 

 

DATE: 

 

 

2

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

 

SCHEDULE 6.2

 

FORM OF HAZARDOUS MATERIALS QUESTIONAIRE

 

[ATTACHED]

 

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

 

[SEAL]

County of San Diego

 

 

Building Inspection Department

 

 

 

 

 

Hazardous Materials Questionnaire

 

 

 

Business Name

Contact Person

 

Telephone

 

 

 

 

 

 

Mailing Address

City

State

Zip

Plan File ###

 

 

 

 

 

Site Address

City

State

Zip

Permit ###

 

PART 1: COUNTY OF SAN DIEGO FIRE DEPARTMENT - HAZARDOUS MATERIALS MANAGEMENT
DIVISION: OCCUPANCY CLASSIFIC

 

Indicate, by circling the Item, whether your business will use, process or store
any of the following hazardous materials. If any of the Items are that applicant
must contact the Fire Department-Hazardous Materials Management Division, 525 B
Street, Suite 705, San Diego, CA 92101. Telephone (618) 533-4400 prior to plan
submittal.

 

1.                         Explosives or Blasting Agents

2.                         Compressed Gases

3.                         Flammable or Combustible Liquids

4.                         Flammable Solids

5.                         Organic Peroxides

6.                         Oxidizers

7.                         Pytophorics

8.                         Unstable (reactive) Materials

9.                         Water-Reactives

10.                   Cryogenics

11.                   Highly Toxic or Toxic Materials

12.                   Radioactives

13.                   Corrosives

14.                   Other Health Hazards

 

PART II: COUNTY OF SAN DIEGO HEALTH DEPARTMENT - HAZARDOUS MATERIALS MANAGEMENT
DIVISION; CONTINGENCY PLAN F

 

If the answer to any of the question is Yes, applicant must contact the County
of San Diego  Health Department Hazardous Materials Management 1255 Imperial
Avenue, 3rd floor, San Diego, CA 92138, Telephone (619) 338-2222 prior to the
Issuance of a building permit.

 

(FEE MAY BE REQUIRED)

 

YES

 

NO

 

 

1.

o

 

o

 

Is your business type listed on the reverse side of this form?

2.

o

 

o

 

Will your business dispose of Hazardous Substances or Medical Wastes in any
amount?

3.

o

 

o

 

Will your business store, or handle Hazardous Substances in quantities equal to
or greater than 55 gallons, 500 pounds or 200 cubic compressed gas?

4.

o

 

o

 

Will your business use an existing, or Install an underground storage tank?

5.

o

 

o

 

Will your business store, use or handle carcinogens, reproductive toxins, or
Acutely Hazardous Materials?

6.

o

 

o

 

Will your business be located within 1,000 feet from the outer boundary of a
school and handle Acutely Hazardous Materials?

 

 

PART III: SAN DIEGO AIR POLLUTION CONTROL DISTRICT

 

If the answer to any of the questions is yes, applicant must contact the Air
Pollution Control District, 9150 Chesapeake Drive, San Diego, CA Telephone (519)
694-3307 prior to the issuance of a building permit.

 

 

YES

 

NO

 

 

1.

o

 

o

 

Will the intended occupant install or use any of the equipment listed on the
Listing of Air Pollution Control District Permit Categories reverse side of this
form.

2.

o

 

o

 

(ANSWER ONLY IF THE ANSWER TO QUESTION 1 IS YES.) Will the subject facility be
located within 1,000 feet of the outer bound school (K thru 12) as listed in the
current Directory of School and Community College Districts, published by the
San Diego County C Education and the current California Private School
Directory, compiled in accordance with provisions of Education Code Section

 

 

 

Briefly Describe Nature of the intended Business Activity:

 

 

Name of Owner or Authorized Agent:

 

 

Signature of Owner or Authorized Agent: I declare under penalty of perjury that
to the best of my knowledge and belief the responses made herein ? and correct.

 

  Date:

 

 

 

DO NOT WRITE BELOW THIS LINE

 

FIRE DEPARTMENT OCCUPANCY CLASSIFICATION:

 

BY:

 

  Date:

 

 

 

EXEMPT FROM PERMIT REQUIREMENTS

 

APPROVED FOR BUILDING PERMIT BUT NOT FOR OCCUPANCY

 

APPROVED FOR OCCUPANCY

 

COUNTY HMMD

 

APCD

 

COUNTY HMMD

 

APCD

 

COUNTY HMMD

 

APCD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

LIST OF BUSINESSES WHICH REQUIRE REVIEW AND APPROVAL FROM COUNTY OF SAN DIEGO
HEALTH DEPT - THE HAZARDOUS MATERIALS MANAGEMENT DIVISION

 

AUTOMOTIVE

 

Battery Manufacturing/Recycling

Boat Yard

Car Wash

Dealership Maintenance and Paint

Machine Shop

Painting

Radiator Shop

Rental Yard Equipment

Repair, Preventive Maintenance

Repair, Major Overhaul

Transportation Services

Wrecking and Recycling

 

METAL WORKING

 

Anodizing

Chemical Milling/Etching

Finish-Coating, Painting

Flame Spraying

Foundry

Machine Shop-Drilling, Lathes, Mills

Metal Plotting

Metal Prepping/Chemical Coating

Precious Metal Recovery

San Blasting, Grinding

Steel Fabricator

Wrought Iron Manufacturing

 

CHEMICAL HANDLING

 

Agricultural Suppliers/Distributors

Chemical Suppliers/Distributors

Chemical Manufacturer

Coatings/Adhesives

Compressed Gas Supplier/Distributor

Dry Cleaning

Fiberglass/Resin Applications

Gas Station

Industrial Laundry

Laboratories

Laboratory Supplies/Distributors

Oil and Fuel Bulk Supply

Pesticide Operator/Distributor

Photographic Processing

Pool Supplies/Maintenance

Printing/Blue Printing

Road Coatings

Swimming Pool (Gas Chlorination Systems Only)

Toxic Gas Handler

Toxic Gas Mfg.

 

ELECTRONICS

 

Electronics Components Mfg.

Electronics Assembly and Sub Assembly

Printed Circuit Board Mfg.

 

OTHER AND MISCELLANEOUS

 

Asphalt Plant

Co-Generation Plant

Dialysis Centers

Frozen Food Processing Facilities

Government Agencies (Using Hazardous Materials)

Hazardous Waste Haulers

Hospitals/Convalescent Homes

Laboratories, Biological Laboratories

Medical Clinics/Offices

Public Utilities

Rocky Quarry

Wood/Furniture Manufacturer/Refinishing

 

AEROSPACE

 

Aerospace Industry

Aircraft Manufacturing

Aircraft Maintenance

 

NOTE: THE ABOVE LIST INCLUDES BUSINESSES WHICH TYPICALLY USE, STORE, HANDLE, AND
DISPOSE OF HAZARDOUS SUBSTANCE ANY BUSINESS NOT INCLUDED ON THIS LIST WHICH
HANDLES, USES OR DISPOSES OF HAZARDOUS SUBSTANCES MAY STILL REQUIRE HAZARDOUS
MATERIALS MANAGEMENT DIVISION (HMMD) REVIEW OF BUSINESS PLANS. FOR MORE
INFORMATION CALL (619) 338-222[ILLEGIBLE]

 

LISTING OF AIR POLLUTION CONTROL DISTRICT PERMIT CATEGORIES

 

Businesses which include any of the following operations or equipment will
require clearance from the Air Pollution Control District.

 

CHEMICAL

 

47-Organic Gas Sterilizers

32-Acid Chemical Milling

33-Can & Coil Manufacturing

44-Evaporators, Dryers & Stills Processing Organic Materials

24-Dry Chemist Mixing & Detergent Spray Towers

35-Bulk Dry Chemical Storage

 

COATINGS & SURFACE PREPARATION

 

01-Abrasive Biasing Equipment

27-Coating & Painting

37-Plasma Arc & Ceramic Deposition Spray Booths

38-Paint, Stain & Ink Mfg.

 

METALS

 

18-Metal Melting Devices

19-Oil Quenching & Salt Baths

32-Hot Dip Galvanizing

39-Precious Metals Refining

 

ORGANIC COMPOUND MARKETING (GASOLINE, ETC.)

 

25-Gasoline & Alcohol Bulk Plants & Terminals

25-Intermediate Refuelers

26-Gasoline & Alcohol Fuel Dispensing

 

COMBUSTION

 

34-Piston Internal-Combustion Engines

13-Boilers & Heaters (1 Million Blu/Hr or Larger)

13-Gas Turbines, and Turbine Test Cells & Stands

14-Incinerators & Crematories

15-Burn Out Ovens

16-Core Ovens

 

ELECTRONICS

 

29-Solder Levelers

29-Hydrosqueegees

42-Electronic Component Manufacturing

 

FOOD

 

12-Fish Canneries

12-Smoke Houses

50-Coffee Roasters

35-Dulk Flour & Powdered Sugar Storage

 

ROCK AND MINERAL

 

04-Hot Asphalt Batch Plant

05-Rocky Drills

07-Sand Rock & Aggregate Plants

08-Concrete Batch, CTB, Concrete Mixers, Mixers & Sllos

10-Brick Manufacturing

 

SOLVENT USE

 

28-Vapor & Cold Decreasing

30-Solvent & Extract Driers

31-Dry Cleaning

 

OTHER

 

03-Asphalt Roofing kilties and Tankers

46-Reverse Osmosis Membrane Mfr.

51-Aqueous Waste Neutralization

11-Tire Buffers

17-Brake Debonders

23-Bulk Grain & Dry Chemical Transfer & Storage

45-Rubber Mixers

45-Landfill Gas Flare or Recovery Systems

21-Waste Disposal & Reclamation units

36-Grinding Booths & Rooms

40-Asphalt Pavement Heaters

43-Ceramic Slip Casting

41-Portfolio Processing

 

NOTE: OTHER EQUIPMENT NOT LISTED HERE THAT IS CAPABLE OF EMITTING AIR
CONTAMINANTS MAY REQUIRE AN AIR POLLUTION CONTROL DISTRICT PERMIT, IF THERE ARE
ANY QUESTIONS. CONTACT THE AIR POLLUTION CONTROL DISTRICT AT (619) 694-3307.

 

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SCHEDULE 50

 

PROPOSED ROOF SCREENING REQUIREMENTS

 

[ATTACHED]

 

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LEASING AND NEW DEVELOPMENT CO.

 

ROLAND A. CHILDS

 

ALLAN J. GARDNER

 

May 8, 1977

 

Mr Steve Erenyi

Union Pacific Realty Co

2945 Harding Street Suite 211

Carlsbad, CA 92008

 

re:  Lot 58 Carlsbad Research Center / roof screens

 

Dear Steve:

 

I am one of the owners of lot 58. We are presently waiting for various approvals
to start the construction of a tilt-up building.

 

We believe it will be in keeping with the first rate level of quality the Center
represents and in that spirit, will do everything we can to maintain or exceed
the quality level of buildings now in place.

 

Tom Lamore, of Smith Consulting Architects, has suggested roof screening that we
believe will effectively screen the roof located HVAC units. While the exact
location is not known at this time, the 4 foot galv channel metal with 4” rib
steel panels, painted as our building, as more fully detailed on his drawings
recently sent to you, will provide a tastful method of screening and will be
used where needed.

 

In that regard, I do guarantee as an owner of the project, that we will provide
the screening as detailed so that the roof mounted HVAC units will be screened
from both the South and East elevations, as well as the North and West.

 

Your consideration is appreciated.

 

 

Sincerely,

 

 

 

 

 

/s/ Allan Gardner

 

 

Allan Gardner

 

 

 

 

 

cc: Tom Lamore

 

 

 

 

 

10534 West Pico Boulevard

 

•

 

Los Angeles, California 90064

 

•

 

FAX (310) 839-2242 (213) 870-1188

 

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[GRAPHIC]

 

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[GRAPHIC]

 

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[GRAPHIC]

 

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SCHEDULE 56

 

MARKET RENTAL VALUE CALCULATION

 

[ATTACHED]

 

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

 

Determination of minimum rent for the eleventh (11th) year if the 1st Option to
Extend is exercised and sixteenth (16th) year if the 2nd Option to Extend is
exercised.  If Lessee adds additional 2nd floor office space, the total area and
total building area will change.

 

 

5,100

 

SF 2nd Floor Office

 

5,100

 

SF First Floor Office

 

10,200

 

 

 

X

30.00

 

SF

 

$306,000

 

 

 

 

 

 

 

21,000

 

SF Warehouse

 

X

5.00

 

SF

 

$105,000

 

 

 

 

 

 

$411,000 @ 12% @ 120 months (constant 14.35) =$5,897.85 per month

 

$5,897.85 ÷ 31,200 SF = $.19/SF

 

 

 

 

$

.59

 

SF Shell

 

$

.19

 

SF

 

 

$

.78

 

SF NNN

 

 

 

 

 

 

3% Annual Increases

 

 

Year

2:

 

$0.80

 

Year

3:

 

$0.82

 

Year

4:

 

$0.84

 

Year

5:

 

$0.87

 

Year

6:

 

$0.90

 

Year

7:

 

$0.93

 

Year

8:

 

$0.96

 

Year

9:

 

$0.99

 

Year

10:

 

$1.02

*

Year

11:

 

$1.05

 

Year

12:

 

$1.08

 

Year

13:

 

$1.11

 

Year

14:

 

$1.14

 

Year

15:

 

$1.17

*

Year

16:

 

$1.21

 

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