Exhibit 10.34

SUBLEASE AGREEMENT

THIS SUBLEASE AGREEMENT (this “Sublease”) dated as of November 8, 2013 (the
“Effective Date”), is made by and between VALEANT PHARMACEUTICALS INTERNATIONAL,
INC., a British Columbia corporation (“Sublandlord”), and AVANIR
PHARMACEUTICALS, INC., a Delaware corporation (“Subtenant”).

1. Subleased Premises. Sublandlord hereby subleases to Subtenant and Subtenant
hereby subleases from Sublandlord for the term, at the rental, and upon all of
the conditions set forth herein, that certain improved office space (the
“Subleased Premises”) defined as the “Premises” in the Master Lease (as defined
in Section 2 below) consisting of approximately 60,583 rentable square feet,
commonly known as Suites 350 and 450 located on the third and fourth floors of
that certain office building (the “Building”) located at 30 Enterprise, Aliso
Viejo, California.

2. Master Lease. Sublandlord is the tenant of the Subleased Premises by virtue
of that certain Amended and Restated Summit Office Lease dated May 10, 2010 (the
“Master Lease”), between Aliso Viejo RP-VI, LLC, a Delaware limited liability
company, as “Landlord” (“Master Landlord”) and Sublandlord (as
successor-in-interest to Bausch & Lomb Incorporated), as “Tenant,” a copy of
which lease is attached hereto as Exhibit “A.” Capitalized terms not otherwise
defined herein shall have the meaning ascribed to such terms in the Master
Lease.

3. Term. The term (the “Term”) of this Sublease shall commence on the
“Commencement Date” (as defined below) and expire on December 31, 2020 (but
shall in no event exceed the Term of the Master Lease) (the “Expiration Date”),
unless sooner terminated pursuant to any provision hereof. The “Commencement
Date” shall be the date which is the later to occur of: (a) the date that
Sublandlord tenders possession of the Subleased Premises to Subtenant the
condition required by this Sublease which Sublandlord estimates will occur on or
about November 8, 2013 (the “Estimated Commencement Date”); or (b) the date that
Master Landlord grants consent pursuant to Section 7 below. Sublandlord shall
use its commercially reasonable efforts to tender possession of the Subleased
Premises to Subtenant as soon after November 8, 2013 as possible. Prior to the
Commencement Date, Sublandlord shall remove all of the lab equipment currently
in the Subleased Premises. On the Commencement Date, Sublandlord shall deliver
to Subtenant the Subleased Premises free and clear of all tenants and occupants
and otherwise in the condition required by this Sublease. Notwithstanding the
foregoing, subject to Master Landlord’s consent to this Sublease, Sublandlord
shall as soon after November 8, 2013 as it is available, tender possession to
Subtenant of the fourth floor of the Subleased Premises and Subtenant may, but
shall not be obligated to, accept possession of the fourth floor. If Subtenant
elects to accept possession of the fourth floor before possession of the
remainder of the Subleased Premises is tendered to Subtenant, the Term and the
Base Rent and Additional Rent (prorated based on the ratio that the rentable
square feet in the fourth floor, as reasonably

 

1

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

determined by Sublandlord, bears to the rentable square feet in the entire
Subleased Premises) shall commence as to the fourth floor only, on the date that
Subtenant takes possession of the fourth floor. At such time as possession of
all of the Subleased Premises is tendered to Subtenant, the Term and Base Rent
and Additional Rent shall commence as to the entire Subleased Premises. If
Sublandlord is unable to deliver possession of the Subleased Premises by the
Estimated Commencement Date, this Sublease shall not be void or voidable, and
Sublandlord shall have no liability for loss or damage resulting therefrom;
provided, however, that if Sublandlord is unable to deliver possession of the
Subleased Premises to Subtenant free and clear of all tenants and occupants and
otherwise in the condition required herein by January 1, 2014 (the “Outside
Delivery Date”), then Subtenant may terminate this Sublease by delivery of
written notice thereof to Sublandlord (the “Termination Notice”) within ten
(10) days after the Outside Delivery Date. If the Termination Notice is not
received by Sublandlord within such ten (10) day period, Subtenant’s right to
terminate this Sublease shall be deemed waived and of no further force and
effect. If the Termination Notice is timely delivered to Sublandlord, then this
Sublease shall terminate effective as of the date which is twenty (20) days
after the Outside Delivery Date, unless Sublandlord delivers possession of the
Subleased Premises within such twenty (20) day period (in which event this
Sublease shall continue in full force and effect). The foregoing termination
right shall be Subtenant’s sole remedy and Sublandlord’s sole liability for
delays in delivery of possession of the Subleased Premises.

4. Rent.

(a) Base Rent. Effective on the Commencement Date, Subtenant shall pay to
Sublandlord in advance, on the first (1st) day of each month of the Term hereof
base rent (“Base Rent”) for the Subleased Premises as follows:

 

Period/Months of Term

   Monthly Rate per
Rentable Square Foot      Monthly Base Rent  

Commencement Date through 10/31/14

   $ 2.500       $ 151,457.50   

11/1/14 – 10/31/15

   $ 2.5750       $ 156,001.23   

11/1/15 – 10/31/16

   $ 2.6523       $ 160,681.26   

11/1/16 – 10/31/17

   $ 2.7318       $ 165,501.70   

11/1/17 – 10/31/18

   $ 2.8138       $ 170,466.75   

11/1/18 – 10/31/19

   $ 2.8982       $ 175,580.75   

11/1/19 – 10/31/20

   $ 2.9851       $ 180,848.18   

11/1/20 – end of Term

   $ 3.0747       $ 186,273.62   

In the event this Sublease commences on a day other than the first day of a
calendar month or expires on a day other than the last day of a calendar month,
the Base Rent shall be likewise prorated. Rent (as defined below) shall be
payable without any setoff or deduction in lawful money of the United States to
Sublandlord at the address stated herein or to such other persons or at such
other places as Sublandlord may designate in writing.

 

2

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

(b) Additional Rent. In addition to the Base Rent specified in Section 4(a)
above, commencing on the first day of the first month following the Base Year
(as defined below) Subtenant shall pay as Additional Rent Subtenant’s Pro Rata
Share (as defined below) of the Operating Expenses (as defined in Section 5.2 of
the Master Lease) and Real Estate Taxes (as defined in Section 5.3 of the Master
Lease), which are in excess of the amount of Operating Expenses and Real Estate
Taxes applicable to the Base Year pursuant to the terms and conditions of
Section 5 of the Master Lease; provided, however, that in no event shall any
decrease in Operating Expenses and Real Estate Taxes for any calendar year
during the Term below Operating Expenses and Real Estate Taxes for the Base Year
entitle Subtenant to any decrease in Base Rent or any credit against any sums
due under this Sublease. The “Base Year” for Operating Expenses and Real Estate
Taxes shall be the calendar year 2013. For purposes of this Sublease,
“Subtenant’s Pro Rata Share” of Operating Expenses and Real Estate Taxes,
pursuant to Section 1.7 of the Master Lease, shall be as follows as of the
Effective Date: (i) 44.92% with respect to the Building; and (ii) 24.13% with
respect to the Project. Notwithstanding the foregoing, to the extent Subtenant
requires any item replaced or requires extraordinary services or utilities in
excess of what Master Landlord is required to provide pursuant to Section 7 of
the Master Lease, including, without limitation, after hours HVAC, replacement
security cards or keys, nonstandard light bulbs and nonstandard janitorial
services (“Extraordinary Services”), Subtenant shall pay as Additional Rent all
additional charges (without additional markup by Sublandlord) for such
Extraordinary Services imposed by Master Landlord under the Master Lease. Such
Additional Rent shall be paid to Sublandlord within five (5) days after
Subtenant receives a statement or invoice from Sublandlord with such supporting
documentation therefor as may be provided by Master Landlord (if any). Subtenant
shall be responsible for all after hours HVAC charges (without additional markup
by Sublandlord) ordered by Subtenant. Base Rent and Additional Rent are
sometimes collectively referred to in this Sublease as “Rent”.

(c) Rent Abatement. Notwithstanding anything in this Section 4 to the contrary,
Sublandlord hereby agrees to abate Subtenant’s obligation to pay Base Rent and
Additional Rent during the first two (2) months of the Term following the
Commencement Date.

5. Security Deposit.

(a) Cash Security Deposit. Upon execution of this Sublease by Subtenant and
receipt of Master Landlord’s consent to this Sublease pursuant to Section 7
below, Subtenant shall pay to Sublandlord the amount of One Hundred Eighty-Six
Thousand Two Hundred Seventy-Three and 62/100 Dollars ($186,273.62) as a
non-interest bearing security deposit (“Security Deposit”) for the performance
of Subtenant’s obligations under this Sublease. Subtenant is not entitled to any
interest on the Security Deposit. If a default beyond any applicable notice and
cure periods occurs, Sublandlord may use,

 

3

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

apply or retain the whole or any part of the Security Deposit for the payment of
any Rent due or any other sum which Sublandlord expends by reason of such
default. No application of the Security Deposit by Sublandlord will be deemed to
have cured Subtenant’s default. If Sublandlord uses or applies all or any
portion of the Security Deposit to the payment of any obligation of Subtenant
hereunder, Subtenant shall, within ten (10) days of written demand therefor,
deposit cash with Sublandlord in an amount sufficient to restore the Security
Deposit to the full amount stated herein and Subtenant’s failure shall
constitute a default by Subtenant under this Sublease. It is expressly agreed
that the Security Deposit is not an advance rental deposit or a measure of
Sublandlord’s damages in the case of Subtenant’s default. Subtenant waives all
provisions of laws, now or hereinafter in force, which restrict the amount or
types of claim that a landlord may make upon a security deposit or imposes upon
a landlord (or its successors) any obligation with respect to the handling or
return of security deposits, including, without limitation, California Civil
Code Section 1950.7. In the event Subtenant is not then in default under the
terms and conditions of this Sublease, within thirty (30) days after the
expiration of the Term of this Sublease and Subtenant’s delivery of the
Subleased Premises to Sublandlord, the remaining portion of the Security Deposit
shall be returned to Subtenant after first deducting any sums owed to
Sublandlord.

(b) Letter of Credit.

(i) Subtenant may, at any time during the Term, by delivery of at least thirty
(30) days prior written notice to Sublandlord (the “Security Deposit
Substitution Notice”), substitute the “Letter of Credit” as defined below for
the Security Deposit. Upon the delivery of the Security Deposit Substitution
Notice to Sublandlord, Sublandlord shall within such thirty (30) day period,
electronically transfer the Security Deposit to Subtenant pursuant to
instructions from Subtenant, which transfer shall occur concurrently with
Sublandlord’s receipt of the Letter of Credit. The Letter of Credit shall serve
as protection for the full and faithful performance by Subtenant of all of the
obligations under this Sublease and for all damages Sublandlord actually suffers
as a result of any default beyond any applicable notice and cure periods by
Subtenant under this Sublease and shall be an irrevocable and unconditional,
negotiable standby letter of credit (“Letter of Credit”) in the amount of One
Hundred Eighty-Six Thousand Two Hundred Seventy-Three and 62/100 Dollars
($186,273.62), subject to the terms and conditions of this Section 5(b). The
Letter of Credit shall be issued by a solvent, nationally recognized bank having
its principal office within the United States of America (the “Bank”) and shall
be capable of being drawn upon at a location in the City of Los Angeles via
facsimile or otherwise. The Letter of Credit shall reflect Sublandlord as
beneficiary. The form and terms of the Letter of Credit and the issuer issuing
same shall be subject to the review and approval of Sublandlord, in its sole
discretion. Sublandlord hereby pre-approves Bank of America as an acceptable
Bank to issue the Letter of Credit. Sublandlord, or its managing agent, shall
have the right to draw down an amount up to the face amount of the Letter of
Credit upon presentation to the issuer of Sublandlord’s written statement that
Sublandlord is entitled to the funds represented by such Letter of Credit if any
of the following shall have occurred or are applicable: (A) such amount is due
to Sublandlord under the terms and conditions of this Sublease after a default
by Subtenant and the expiration of all applicable notice and cure periods

 

4

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

expressly set forth in this Sublease; provided that if Sublandlord is prevented
from delivering a notice of default to Subtenant for any reason, including,
without limitation, because Subtenant has filed a voluntary petition, or an
involuntary petition has been filed against Subtenant, under the U.S. Bankruptcy
Code or any state bankruptcy code (collectively, “Bankruptcy Code”), then no
such notice and cure period shall be required; (B) Subtenant has filed a
voluntary petition under the Bankruptcy Code; (C) an involuntary petition has
been filed against Subtenant under the Bankruptcy Code; or (D) the Bank has
notified Sublandlord that it intends to revoke the Letter of Credit or the
Letter of Credit will not be renewed or extended beyond and after the final
expiration date of this Sublease. The Letter of Credit shall provide that the
issuer of the Letter of Credit shall deliver to Sublandlord at least thirty
(30) days written notice prior to revoking, terminating or failing to renew the
Letter of Credit. The issuer will honor the Letter of Credit regardless of
whether Subtenant disputes Sublandlord’s right to draw on the Letter of Credit.
Sublandlord shall not be required to give Subtenant written notice prior to any
drawing upon the Letter of Credit. The Letter of Credit must permit multiple
presentations or drawings and partial drawings. In the event Sublandlord makes a
draw on the Letter of Credit, Subtenant shall within ten (10) days after the
date of such draw cause the amount of the Letter or Credit to be increased to
its original amount.

(ii) Subtenant acknowledges and agrees that Sublandlord is entering into this
Sublease in material reliance on the ability of Sublandlord to draw on the
Letter of Credit on the occurrence of any breach or default on the part of
Subtenant under this Sublease in accordance with the terms of this Section 5(b).
If Subtenant shall breach any provision of this Sublease or otherwise be in
default under this Sublease beyond all applicable notice and cure periods,
Sublandlord may, but without obligation to do so, and without notice to
Subtenant, draw on the Letter of Credit, in part or in whole, to cure any such
breach or default of Subtenant and to compensate Sublandlord for any and all
damages of any kind or nature sustained or which Sublandlord reasonably
estimates that it will sustain resulting from Subtenant’s breach or default. The
use, application, or retention of the Letter of Credit, or any portion of it, by
Sublandlord shall not prevent Sublandlord from exercising any other right or
remedy provided by this Sublease or by any applicable law, it being intended
that Sublandlord shall not first be required to proceed against the Letter of
Credit, and shall not operate as a limitation on any recovery to which
Sublandlord may otherwise be entitled. Subtenant agrees not to interfere in any
way with payment to Sublandlord of the proceeds of the Letter of Credit, either
before or following a draw by Sublandlord of any portion of the Letter of
Credit, regardless of whether any dispute exists between Subtenant and
Sublandlord as to Sublandlord’s right to draw on the Letter of Credit. No
condition or term of this Sublease shall be deemed to render the Letter of
Credit conditional to justify the issuer of the Letter of Credit in failing to
honor a drawing on such Letter of Credit in a timely manner. Subtenant agrees
and acknowledges that: (1) the Letter of Credit constitutes a separate and
independent contract between Sublandlord and the Bank; (2) Subtenant is not a
third party beneficiary of such contract; and (3) if Subtenant becomes a debtor
under any chapter of the Bankruptcy Code, neither Subtenant, any trustee, nor
Subtenant’s bankruptcy estate shall have any right to restrict or limit
Sublandlord’s claim or rights to the Letter of Credit or the proceeds of it by
application of Section 502(b)(6) of the U.S. Bankruptcy Code or otherwise, and
Subtenant acknowledges and agrees that the Letter of Credit and the proceeds
thereof are not and shall not be a part of the Subtenant’s bankruptcy estate.

 

5

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

(iii) Sublandlord and Subtenant acknowledge and agree that in no event or
circumstance shall the Letter of Credit or any renewal of it or any proceeds of
it be (A) deemed to be or treated as a “security deposit” within the meaning of
California Civil Code Section 1950.7, (B) subject to the terms of
Section 1950.7, or (C) intended to serve as a “security deposit” within the
meaning of Section 1950.7. Sublandlord and Subtenant further acknowledge and
agree that the Letter of Credit is not intended to serve as a security deposit
and Section 1950.7 and any and all other laws, rules, and regulations applicable
to security deposits in the commercial context (“Security Deposit Laws”) shall
have no applicability or relevancy to the Letter of Credit, and waive any and
all rights, duties, and obligations either party may now or in the future have
relating to or arising from the Security Deposit Laws.

(iv) If Sublandlord transfers its interest in the Subleased Premises (by virtue
of a merger, corporate reorganization or otherwise), Sublandlord may
(A) transfer (one or more times) all or any portion of its interest in and to
the Letter of Credit to another party, person or entity regardless of whether
such transfer is separate from or a part of the assignment by Sublandlord of its
rights and interests in and to this Sublease, or (B) may require that Subtenant
furnish to Sublandlord’s transferee a substitute or amended Letter of Credit,
naming such transferee as the beneficiary and otherwise in compliance with this
Section 5(b), provided such transferee reimburses Subtenant for the nominal
administrative fee charged by the issuer of the Letter of Credit for issuing a
substitute or amended Letter of Credit in the name of the transferee. In the
event of a transfer of Sublandlord’s interest in the Subleased Premises and the
transfer (or substitution or amendment) of the Letter of Credit to Sublandlord’s
transferee, Sublandlord shall be released by Subtenant from all liability
therefor.

6. Use. Subject to the use prohibitions and the Occupancy Threshold provisions
described in Section 9 of the Master Lease, the Subleased Premises shall not be
used or occupied for any use other than general office, administrative and
training facility uses and other legally permitted uses compatible with first
class office buildings, including, but not limited to, an engineering lab.
Throughout the Term, Subtenant’s business shall be conducted in a first-class
manner and so as not to violate any term, provision or condition of the Master
Lease or this Sublease. Subtenant shall comply with all applicable statutes,
ordinances, rules, regulations, orders, restrictions of record and requirements
in effect during the Term hereof regulating the use by Subtenant of the
Subleased Premises; provided however, Subtenant shall not be responsible for
violations of applicable law relating to the Subleased Premises (a) occurring
prior to Subtenant’s occupancy of the Subleased Premises, or (b) caused by
Sublandlord or its agents. Subtenant shall not use or permit the use of the
Subleased Premises in any manner that will create waste or create a nuisance or
disturb other tenants of the Building. Subtenant shall not do or suffer anything
to be done upon the Subleased Premises which will cause structural injury to the
Subleased Premises or the Building. Subtenant shall not use or permit the use of
the Subleased Premises or any part thereof for any purpose which will increase
the existing rate of insurance upon the Building or any part thereof, or cause a

 

6

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

cancellation of any insurance policy covering the Building or any part thereof.
In the event any act on the part of Subtenant or use of the Subleased Premises
by Subtenant shall cause, directly or indirectly, any increase of Sublandlord’s
insurance expense, said additional expense shall be paid by Subtenant to
Sublandlord within ten (10) days of demand. No such payment by Subtenant shall
limit Sublandlord in the exercise of any other rights or remedies, or constitute
a waiver of Sublandlord’s right to require Subtenant to discontinue such act or
use. Notwithstanding the foregoing, Subtenant shall not be liable for any
increase in the Sublandlord’s insurance expense as a result of Subtenant’s use
of the Subleased Premises in compliance with this Section 6.

7. Consent of Master Landlord. The parties hereto acknowledge that Section 13.1
of the Master Lease requires that Sublandlord obtain the prior written consent
of Master Landlord to any subletting of the Subleased Premises. Provided
Subtenant has delivered to Sublandlord an executed copy of this Sublease and all
of the information and documentation required under the provisions of Section 13
of the Master Lease, Sublandlord shall act promptly to request the consent of
Master Landlord for the subletting of the Subleased Premises to Subtenant. The
form of the Master Landlord’s consent shall be in a form reasonably acceptable
to both Sublandlord and Subtenant. Sublandlord and Subtenant agree that either
party may terminate this Sublease pursuant to Section 34 below unless, within
thirty (30) days after the Effective Date hereof (the “Approval Period”), Master
Landlord grants its consent to this Sublease. Notwithstanding the foregoing, the
parties may agree in writing to extend the Approval Period.

8. Condition of Subleased Premises and Alterations. Subtenant agrees to accept
the Subleased Premises and sublease the Subleased Premises in their “as is”
condition existing as of the Effective Date. Subtenant acknowledges that
Sublandlord has made no representation or warranty regarding the condition of
the Subleased Premises. Subtenant shall not make or suffer to be made any
alterations, additions, improvements or changes (“Alterations”) to or of the
Subleased Premises or any part thereof without first obtaining the prior written
consent of Master Landlord and Sublandlord. Sublandlord’s consent to such
Alterations shall not be unreasonably withheld, conditioned or delayed;
provided, however, that any withholding of consent by Master Landlord in
accordance with the provisions of the Master Lease shall be considered a
reasonable withholding of consent by Sublandlord. Provided Subtenant has
complied with the provisions of Section 10.3 of the Master Lease, including,
without limitation, delivering to Sublandlord all documents and information
required to be submitted thereunder, Sublandlord shall act promptly to request
the consent of Master Landlord for any Alterations required by Subtenant. In the
event Sublandlord and Master Landlord consent to the making of any Alterations
to the Subleased Premises by Subtenant the same shall be made by Subtenant
pursuant to the terms and provisions of Section 10.3 of the Master Lease and at
Subtenant’s sole cost and expense. In addition to the cost of the Alterations,
Subtenant shall also be responsible for all overhead, general conditions, fees
and other costs and expenses of the Alterations, including, without limitation,
the payment or reimbursement to Master Landlord, within twenty (20) days after
receipt of an invoice from Sublandlord or Master Landlord, of any costs, sums or
fees (without additional markup by Sublandlord) incurred by Master Landlord and
any oversight, coordination or supervision fees required to be

 

7

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

paid to Master Landlord under the Master Lease. Notwithstanding anything in this
Sublease to the contrary, neither Master Landlord’s nor Sublandlord’s consent
shall be required for any Minor Alteration that Subtenant proposes to make in
the Subleased Premises; provided, however, that (a) prior to starting work for
any Minor Alteration, Subtenant shall deliver written notice to Sublandlord and
Master Landlord, and (b) the performance of Minor Alterations by Subtenant shall
be subject to all of the other provisions of this Section 8 and Section 10.3 of
the Master Lease. Any Alterations installed in the Subleased Premises may remain
in the Subleased Premises upon the expiration or sooner termination of the Term
hereof, except in the event that Master Landlord requires the removal of such
Alteration in accordance with Section 10.3 of the Master Lease. If Master
Landlord requires the removal of any Alteration in accordance with Section 10.3
of the Master Lease, Subtenant shall forthwith and with all due diligence, at
its sole cost and expense, remove such Alteration and repair any damage to the
Subleased Premises caused by such removal. In such event, Sublandlord shall be
entitled to all of the rights of “Landlord,” and Subtenant shall be subject to
all of the obligations of “Tenant” under Section 23.1 and Section 23.2 of the
Master Lease to the extent such apply to any Alterations made by Subtenant.
Notwithstanding anything in this Sublease to the contrary, Subtenant shall not
be responsible for removing any Alterations (including any “Required Removables”
as defined in the Work Letter attached to the Master Lease) installed in the
Subleased Premises prior to the Commencement Date.

9. Existing Furniture and Equipment. During the Term of this Sublease, Subtenant
shall have the right to use, at no additional cost to Subtenant and on an “as
is” basis, all of the office furniture and equipment that presently exists in
the Subleased Premises and that belongs to Sublandlord (the “Sublandlord
Furniture and Equipment”). A list of the Sublandlord Furniture and Equipment is
set forth on Exhibit “B” attached hereto. Sublandlord makes no representations
or warranties regarding the Sublandlord Furniture and Equipment and shall have
no obligations or liabilities with respect thereto. Subtenant agrees that
Sublandlord shall not be responsible or liable for any damages caused by
Subtenant’s use, repair, maintenance or removal of the Sublandlord Furniture and
Equipment by Subtenant. Upon the expiration of the Term, Subtenant shall be
deemed to own the Sublandlord Furniture and Equipment, and Sublandlord shall be
entitled to all of the rights of “Landlord,” and Subtenant shall be subject to
all of the obligations of “Tenant” under Section 23.1 and Section 23.2 of the
Master Lease with respect to the removal of the Sublandlord Furniture and
Equipment.

10. Liens. Subtenant shall keep the Subleased Premises free from any liens
arising out of any work performed or obligations incurred by or for Subtenant or
materials furnished to Subtenant. Subtenant shall give Sublandlord notice at
least ten (10) days prior to the commencement of any such work on the Subleased
Premises (or such additional time as may be necessary under applicable laws) to
afford Sublandlord the opportunity to post notices of nonresponsibility with
respect to any work performed or obligations incurred by or for Subtenant or
materials furnished to Subtenant. If Subtenant fails to keep the Subleased
Premises free from any such liens and does not, within five (5) days following
the imposition of any such lien, cause the same to be released of record by
payment or posting of a proper bond, Sublandlord shall have, in addition to all

 

8

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

other remedies provided herein and by law, the right but not the obligation, to
cause the same to be released by such means as it shall deem proper, including
payment of or defense against the claim giving rise to such lien. All sums paid
by Sublandlord and all expenses incurred by it in connection therewith
(including, without limitation, reasonable attorneys’ fees) shall create
automatically an obligation of Subtenant to pay an equivalent amount as
Additional Rent, which Additional Rent shall be payable by Subtenant on
Sublandlord’s demand. Nothing herein shall imply any consent by Sublandlord to
subject Sublandlord’s assets to liability under any mechanic’s lien law. Any
claim to a lien or encumbrance upon the Building or the Subleased Premises
arising in connection with any such work or respecting the Subleased Premises
not performed by or at the request of Sublandlord or Master Landlord shall be
null and void, or at Sublandlord’s or Master Landlord’s option shall attach only
against Subtenant’s interest in the Subleased Premises and shall in all respects
be subordinate to Master Landlord’s title to the Project, Building and the
Subleased Premises. Subtenant may contest the validity and/or amount of any lien
imposed on the Subleased Premises, provided that Subtenant has caused such lien
to be released of record by the payment or posting of the proper bond.

11. Repairs; Maintenance. Subtenant shall, at Subtenant’s sole expense, promptly
make all repairs to the Subleased Premises not required to be made by Master
Landlord pursuant to the Master Lease and shall keep the Subleased Premises,
including without limitation all improvements, fixtures and furnishings therein,
in the condition required by the Master Lease. Subtenant shall also pay for any
repairs to the Building or Project required by Master Landlord and made
necessary by any act, neglect, misuse or omission of duty by Subtenant or its
assignees, subtenants, employees, invitees or their respective agents or other
persons permitted in the Subleased Premises or on any other portion of the
Building or Project by Subtenant, or any of them. Subtenant shall maintain the
Subleased Premises, and will leave the Subleased Premises upon the expiration or
earlier termination of this Sublease, in the condition required by the Master
Lease. If Subtenant fails to maintain the Subleased Premises as required herein,
Sublandlord shall give Subtenant notice to do such acts as are reasonably
required to so maintain the Subleased Premises. If Subtenant fails to promptly
commence such work and diligently prosecute it to completion, Sublandlord shall
have the right to do such acts and expend such funds at the expense of Subtenant
as are reasonably required to perform such work. All amounts payable by
Subtenant to Sublandlord pursuant to this Section 11 shall be paid to
Sublandlord as Additional Rent within ten (10) days after Sublandlord delivers
to Subtenant invoices or cancelled checks evidencing such payment obligations,
together with an administrative charge in an amount equal to 5% of the cost of
such repairs (without additional markup by Sublandlord). Notwithstanding the
foregoing, the parties hereto acknowledge and agree that Master Landlord shall
remain responsible for the performance of all repairs expressly required to be
performed by Master Landlord pursuant to the terms and conditions of the Master
Lease (“Landlord’s Repair Obligations”). Subtenant shall notify both Master
Landlord and Sublandlord in the event that Master Landlord shall fail to perform
Landlord’s Repair Obligations. Upon such notification and in addition to such
other rights and remedies Sublandlord shall have under the Master Lease,
Sublandlord shall either (i) take reasonable action under the Master Lease to
require Master Landlord to perform its obligations thereunder, or (ii) permit
Subtenant, with Sublandlord’s reasonable cooperation, to enforce Master
Landlord’s repair obligations under the Master Lease.

 

9

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

12. Damage or Destruction.

(a) Damage or Destruction. In the event of damage or destruction to the Building
or any part thereof, the Master Lease shall either continue or terminate
pursuant to Section 17 of the Master Lease. If the Master Lease terminates, this
Sublease shall also terminate. Sublandlord shall have no responsibility
whatsoever for the repair or restoration of the Subleased Premises, it being
acknowledged by Subtenant that any repairs must be performed, if at all, by
Master Landlord. Upon the occurrence of any damage to the Subleased Premises, if
this Sublease is not terminated, Subtenant shall, at its sole cost and expense,
repair any injury or damage to Tenant’s Property (as defined in Section 14 of
the Master Lease) and shall return such Tenant’s Property to substantially the
same condition as existed immediately prior to the casualty. Master Landlord or
Sublandlord shall not be liable for any inconvenience or annoyance to Subtenant
or any of its members, principals, beneficiaries, partners, officers, directors,
employees and agents (collectively, “Subtenant Parties”) or any of Subtenant’s
contractors, visitors, patrons, guests, invitees, licensees or subtenants, or
injury to Subtenant’s business resulting in any way from such damage or the
repair thereof. There shall be no reduction or abatement of Rent for any period
during which Subtenant is unable to use the Subleased Premises, in whole or in
part, due to the repairs or restoration required under this paragraph or the
provisions of the Master Lease, unless Sublandlord actually receives a reduction
or abatement in rent under the terms of the Master Lease. In any event,
Subtenant shall not be entitled to any insurance proceeds or other remuneration
except for insurance proceeds from insurance policies it purchased for its own
personal property.

(b) Waiver of Statutory Provisions. The provisions of this Sublease, including
this Section 12, constitute an express agreement between Sublandlord and
Subtenant with respect to any and all damage to, or destruction of, all or any
part of the Subleased Premises, the Building or the Project, and any statute or
regulation of the State of California, including, without limitation, Sections
1932(2) and 1933(4) of the California Civil Code, with respect to any rights or
obligations concerning damage or destruction in the absence of an express
agreement between the parties, and any other statute or regulation, now or
hereafter in effect, shall have no application to this Sublease or any damage or
destruction to all or any part of the Subleased Premises, the Building or the
Project.

13. Eminent Domain or Condemnation. In the event a proceeding in eminent domain
or condemnation is instituted against the Building, the Project, or any part
thereof, the Master Lease shall either continue or terminate pursuant to
Section 18 of the Master Lease. If the Master Lease terminates, this Sublease
shall also terminate. If the Master Lease does not terminate and the Subleased
Premises have not been materially affected, then the Sublease shall continue in
full force and effect except that the Rent payable hereunder shall be reduced to
the extent that Rent is equitably reduced under the Master Lease. In any event,
Subtenant shall not be entitled to any award of damages for Subtenant’s interest
in the Subleased Premises. Notwithstanding the foregoing, nothing

 

10

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

contained herein shall prevent Subtenant from seeking an award against a taking
authority for the taking of personal property and fixtures owned by Subtenant or
for moving expenses as a result of such taking; provided however, the award
sought and received by Subtenant shall not diminish or affect, in whole or in
part the award sought by Master Landlord or Sublandlord.

14. Waiver of Liability; Indemnification. Without limiting in any way the effect
or generality of all indemnification and waiver provisions contained as part of
the terms of the Master Lease, which are incorporated herein pursuant to
Section 16 below, Subtenant hereby agrees that:

(a) Sublandlord Not Liable. Sublandlord shall not be liable to Subtenant, and
Subtenant hereby waives all claims against Sublandlord, for any injury or damage
to any person or property in or about the Subleased Premises by or from any
cause whatsoever, it being agreed that Subtenant shall insure itself against
such losses under Section 19 below.

(b) Indemnity of Sublandlord. Subtenant shall defend (with attorneys reasonably
acceptable to Master Landlord and Sublandlord), indemnify, protect, save and
hold harmless Master Landlord, the Landlord Related Parties (as defined in
Section 16.1 of the Master Lease) and Sublandlord, its members, principals,
beneficiaries, partners, officers, directors, employees and agents
(collectively, “Sublandlord Parties”) (Master Landlord, the Landlord Related
Parties, Sublandlord and the Sublandlord Parties are all collectively referred
to herein as the “Indemnified Parties”) from and against any and all Losses and
Expenses (as defined in Section 16.1 of the Master Lease) which may be imposed
upon, incurred by or asserted against the Indemnified Parties and arising out of
or in connection with any damage or injury occurring in the Subleased Premises
or any acts or omissions (including violations of applicable laws) of Subtenant
or any Subtenant Parties or any of Subtenant’s transferees, contractors or
licensees; provided, however (and though Subtenant shall in all cases accept any
tender of defense of any action or proceeding in which any of the Indemnified
Parties are named or made a party and shall, notwithstanding any allegations of
negligence or misconduct on the part of Master Landlord or Sublandlord, defend
such parties as provided herein), Subtenant shall not be liable, and subject to
the provisions of this Section 14, Sublandlord shall indemnify Subtenant and the
Subtenant Parties for such Losses and Expenses to the extent and in proportion
that the same is ultimately determined to be attributable to the negligence or
misconduct of Sublandlord or the Sublandlord Parties. Further, Subtenant shall
not be liable for any Losses and Expenses that are caused by the negligence or
misconduct of the Master Landlord or the Landlord Related Parties.

(c) Mutual Waiver of Subrogation. Notwithstanding anything in this Sublease to
the contrary, Subtenant and Sublandlord each hereby, on behalf of itself and all
persons and parties claiming under or through it, including without limitation
its insurance carrier(s), waives any and all rights of recovery, claim, action
or cause of action against the other, its agents, officers, servants, partners,
shareholders, contractors or employees for any loss or damage that may occur to
the Premises or Subleased Premises, or any improvements thereto, or any personal
property of such party therein, by

 

11

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

reason of fire, the elements, or any other cause or origin, which is insured
against under any property insurance policy actually being maintained from time
to time, even if not required hereunder, or which would be insured against under
the terms of any so-called “all risk” or “broad form” policy of property
insurance, whether or not such insurance coverage is actually being maintained
and regardless of the cause or origin, including, in every instance, negligence
by the other party hereto, its agents, officers, partners or employees.

(d) Mutual Waiver of Consequential Damages. No director, officer, shareholder,
employee, adviser or agent of Sublandlord or Subtenant shall be personally
liable in any manner or to any extent under or in connection with this Sublease.
Except as set forth in Section 25 below, in no event shall Sublandlord,
Subtenant or any of their directors, officers, shareholders, employees, advisers
or agents be responsible for interruption or loss of business, income or
profits, or any other consequential, indirect or special damages.

(e) Survival. The indemnification obligations set forth in this Section 14 shall
survive the expiration or earlier termination of this Sublease.

15. Assignment and Subletting.

(a) Subtenant shall not sell, assign, encumber or otherwise transfer by
operation of law or otherwise this Sublease or any interest herein, sub-sublet
the Subleased Premises, or allow any other person to occupy or use the Subleased
Premises or any portion thereof, without the prior written consent of
Sublandlord and Master Landlord as provided herein, nor shall Subtenant permit
any lien to be placed on the Subtenant’s interest by operation of law or
otherwise. Subtenant shall, by written notice, advise Sublandlord of its desire
from and after a stated date (which shall not be less than ten (10) days after
the date of delivery of Subtenant’s notice), to assign this Sublease or
sub-sublet the Subleased Premises or any portion thereof for any part of the
Term hereof. Said notice by Subtenant shall state the name and address of the
proposed transferee, together with such proposed transferee’s financial
statements (or certified financial statements if required by Master Landlord),
and Subtenant shall deliver to Sublandlord a true and complete copy of the
proposed sub-sublease (or other occupancy agreement) with said notice, a
calculation of the Transfer Premium (as defined in Section 15(c) below), and a
copy of all existing executed and/or proposed documentation pertaining to the
proposed transfer, including all existing operative documents to be executed to
evidence such transfer or the agreements incidental or related to such transfer
and any other information reasonably required by Master Landlord and/or
Sublandlord which will enable Master Landlord and/or Sublandlord to determine
the financial responsibility, character and reputation of the proposed
transferee, nature of such transferee’s business and proposed use of the space
to be occupied or used by such transferee. Provided Subtenant has complied with
and has delivered all of the required documents pursuant to Section 13 of the
Master Lease and this Section 15, Sublandlord shall act promptly to request the
consent of Master Landlord for the proposed transfer. Sublandlord shall not
unreasonably withhold its own consent to such assignment or sub-sublease,
provided Master Landlord shall also give its consent. Any withholding of consent
by Master Landlord in accordance with the terms of the Master Lease shall be
considered a reasonable withholding of consent by Sublandlord.

 

12

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

(b) Any assignment of this Sublease or sub-subletting hereunder by Subtenant
(“Transfer”) shall not result in Subtenant being released or discharged from any
liability under this Sublease. Any consent by Sublandlord to any Transfer of the
Subleased Premises or any part thereof by Subtenant shall not be deemed to be a
consent to any other Transfer and shall not constitute a waiver of the
requirements of Sublandlord’s consent to any other Transfer of the Subleased
Premises as such requirement is stated herein. Any sale, assignment,
encumbrance, sub-subletting, occupation, use, lien or other transfer of this
Sublease which does not comply with the provisions of this Section 15 shall be
voidable and at Sublandlord’s election shall constitute a default hereunder.

(c) Subtenant shall pay to Sublandlord fifty percent (50%) of all rent received
by Subtenant from any Transfer hereunder in excess of the rent payable by
Subtenant to Sublandlord under this Sublease, and any sums paid to Subtenant by
any proposed transferee hereunder in consideration for the Transfer
(collectively, “Transfer Premium”). Subtenant may deduct all reasonable and
customary expenses directly incurred by Subtenant attributable to the Transfer
(other than Master Landlord’s review fee), including attorneys’ fees, brokerage
commissions, advertising expenses, tenant improvements, free rent and any other
rental concessions. Subtenant hereby irrevocably assigns to Sublandlord, as
security for Subtenant’s obligations under this Sublease, all rent from any
Transfer; provided however, that until the occurrence of a default beyond any
applicable notice and cure periods by Subtenant hereunder, Subtenant shall have
the right to collect such rent. Any rent collected by Sublandlord in accordance
with the immediate previous sentence (but excluding any Transfer Premium) shall
be credited against amounts due under this Sublease.

(d) Notwithstanding anything to the contrary contained in this Sublease, an
assignment of this Sublease or a sub-subletting of the Subleased Premises or any
portion thereof (i) to a successor to Subtenant by consolidation, merger, stock
transfer or purchase (a “Successor”), or (ii) to any parent company, subsidiary
or affiliate of Subtenant (an entity which is controlled by, controls, or is
under common control with, Subtenant) (an “Affiliate”), shall not require
Sublandlord’s consent (and shall not be subject to the Transfer Premium)
provided that Subtenant obtains Master Landlord’s consent if required under the
Master Lease, Subtenant notifies Sublandlord of any such assignment or
sub-subletting and reasonably promptly supplies Sublandlord with any documents
or information reasonably requested by Sublandlord regarding such assignment or
sub-subletting or such entity, and further provided that (1) Subtenant is not in
default under this Sublease, and (2) in the case of a Successor by purchase, the
Successor shall acquire all or substantially all of the stock or assets of
Subtenant’s business or, in the case of a Successor by merger, consolidation or
stock transfer, the continuing or surviving entity shall own all or
substantially all of the assets of Subtenant. If requested by Sublandlord and/or
Master Landlord, Subtenant’s Successor shall sign a commercially reasonable form
of assumption agreement. “Control,” as used in this Section 15(d), shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity, whether by the
ownership of voting securities, by contract or otherwise.

 

13

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

(e) Whether or not Master Landlord or Sublandlord consents to any proposed
Transfer, Subtenant shall pay all review fees and legal fees incurred by Master
Landlord or Sublandlord pursuant to the terms of Section 13 of the Master Lease,
excluding any review and legal fees related to Master Landlord’s or
Sublandlord’s review and approval of this Sublease.

16. Incorporation of Terms of Master Lease.

(a) From and after the Effective Date, except as otherwise expressly set forth
in this Sublease, this Sublease shall be subject to all of the terms, conditions
and covenants of the Master Lease as if Subtenant were an original party
thereto, and Subtenant agrees and covenants that, except for the “Excluded
Obligations” as defined below and those provisions specifically excluded in
Section 16(c) below, Subtenant shall, at its sole cost and expense, promptly
perform and be bound by and comply with the Master Lease with respect to the
Subleased Premises and satisfy all applicable terms and conditions of the Master
Lease for the benefit of Sublandlord and Master Landlord. Upon the breach of any
of said terms, conditions or covenants of the Master Lease by Subtenant or upon
the failure of the Subtenant to pay Rent or comply with any of the provisions of
this Sublease, Sublandlord may exercise any and all rights and remedies granted
to Master Landlord by the Master Lease, as well as any and all rights and
remedies granted to Sublandlord by this Sublease. Whenever the provisions of the
Master Lease which have been incorporated as provisions of this Sublease require
the written consent of the Master Landlord, said provisions shall be construed
to require the written consent of the Master Landlord and the Sublandlord.
Sublandlord’s consent shall not be unreasonably withheld or delayed; provided
that any withholding of consent by Master Landlord in accordance with the terms
of the Master Lease shall be considered a reasonable withholding of consent by
Sublandlord. Subtenant hereby acknowledges that it has read and is familiar with
the terms of the Master Lease and agrees that this Sublease is subordinate and
subject to the Master Lease and that any termination of the Master Lease shall
likewise terminate this Sublease, except in the event that Master Landlord has
agreed in its sole and absolute discretion to recognize this Sublease as a
direct lease between Master Landlord and Subtenant. Subtenant further agrees
that, in executing this Sublease and assuming the obligations of “Tenant” under
the Master Lease (to the extent applicable pursuant to the terms of this
Section 16), it has not been granted any of the rights of Sublandlord under the
Master Lease, such rights being specifically reserved by Sublandlord, except to
the extent expressly granted to Subtenant hereunder. In the event of any
inconsistencies between any of the provisions of this Sublease and the Master
Lease, the terms of this Sublease shall govern as between Sublandlord and
Subtenant. Notwithstanding anything to the contrary contained in this Sublease,
Subtenant shall have no obligation to (i) cure any default of Sublandlord under
the Master Lease, (ii) repair any damage to the Subleased Premises caused by
Sublandlord, (iii) remove any alterations or additions installed within the
Subleased Premises by Sublandlord, (iv) indemnify Sublandlord or Master Landlord
with respect to any negligence or willful misconduct of Sublandlord or
Sublandlord Parties or other

 

14

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

subtenants of the Building other than Subtenant, or (v) discharge any liens on
the Subleased Premises or the Building which arise out of any work performed, or
claimed to be performed, by or at the direction of Sublandlord. Notwithstanding
the foregoing, for purposes of this Sublease, as to such incorporated terms,
covenants and conditions, references in the Master Lease to “Landlord” and to
“Tenant” shall be deemed to refer to “Sublandlord” and “Subtenant” hereunder,
respectively, except that where the term “Landlord” is used in the context of
ownership or management of the entire Building or Project, such term shall be
deemed to mean only “Master Landlord.”

(b) For purposes of this Sublease, “Excluded Obligations” shall mean: (i) any
duties and obligations of Sublandlord arising under the Master Lease prior to
the Commencement Date; and (ii) Sublandlord’s obligations pursuant to the
following provisions of the Master Lease: (A) Section 4 (Rent), (B) Section 5
(Operating Expenses and Real Estate Taxes), subject to Section 4(b) of this
Sublease; (C) Section 16.1 (Tenant Indemnity), to the extent arising or
resulting solely from, or caused solely by the acts or omissions of Sublandlord
or its agents or employees; and (D) Section 27.15 (Signage) with respect to the
removal of any signage erected by or on behalf of Sublandlord, and any repair
obligations related thereto.

(c) Without limiting the generality of the foregoing, Subtenant acknowledges and
agrees that all of the following rights granted to Sublandlord pursuant to the
provisions of the Master Lease are personal to Sublandlord and shall not be
exercisable by Subtenant or any assignee, sub-subtenant or other transferee of
Subtenant: (i) Sections 3.3 and 3.4 (Pre-Term Occupancy and Early Entry);
(ii) Section 3.5 (Renewal Options); Section 5.6 (Tenant Audit Rights); and
(iii) Section 28 (Right of First Refusal to Lease Expansion Space). In addition
to the foregoing, the following provisions of the Master Lease and Exhibits and
Schedules annexed thereto are not incorporated herein by reference and shall not
have any applicability to this Sublease: Sections: 1.1(2) (Original Tenant and
Tenant Address), 1.5 (Term) (provided that the Term of this Sublease shall not
exceed the term of the Master Lease), 1.6 (Base Rent), 1.8 (Base Year), 1.9
(Tenant Improvement Allowance), 1.10 (Security Deposit), 1.12 (Brokers), 1.17
(Existing Lease), 3.1 (Substantial Completion of Premises), 3.2 (Turnover of
Expansion Space and Existing Premises; Delay in Turnover of Expansion Space),
27.8 (Brokers), 27.12 (Financial Statements) and 29 (Moving Expenses).

(d) Sublandlord has no duty or obligation to Subtenant under the Master Lease
except as follows: whenever the consent of Master Landlord (including without
limitation Master Landlord’s consent to this Sublease, subject to the provisions
of Section 7 above) is required or Master Landlord shall fail to perform its
obligations under the Master Lease, Sublandlord agrees to use its best efforts
to obtain such consent and/or performance on behalf of Subtenant (provided,
however, that Sublandlord shall have no obligation to file a lawsuit or any
other action against Master Landlord to compel performance). Sublandlord
covenants: (i) that Sublandlord shall take all actions reasonably necessary to
maintain the Master Lease in full force and effect during the Sublease Term
(provided, however, that Sublandlord shall not be liable to Subtenant for any
earlier termination of the Master Lease which is not due to the fault of
Sublandlord); (ii) that Sublandlord shall not voluntarily terminate the Master
Lease, except in

 

15

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

accordance with rights expressly reserved to Sublandlord as “Tenant” under
Sections 17 and 18 of the Master Lease in the event of a casualty or taking;
(iii) to use commercially reasonable efforts to obtain a non-disturbance
agreement reasonably acceptable to Subtenant whereby Master Landlord agrees not
to disturb Subtenant’s possession of the Subleased Premises in the event that
the Master Lease is terminated (provided, however, that Sublandlord shall not be
liable to Subtenant in the event Master Landlord refuses to sign such an
agreement despite Sublandlord’s request); and (iv) that Sublandlord shall not
enter into any modification or amendment to the Master Lease which would
adversely affect Subtenant’s rights and obligations with respect to the
Subleased Premises without Subtenant’s prior approval.

17. Personal Property Taxes, Taxes and Other Charges. To the extent applicable
to the Subleased Premises, Subtenant shall pay or cause to be paid, before
delinquency, any and all taxes levied or assessed and which become payable
during the Term hereof upon all of Subtenant’s leasehold improvements,
equipment, furniture, fixtures and personal property located in or about the
Subleased Premises (including without limitation the Sublandlord Furniture and
Equipment).

18. Default and Remedies.

(a) The occurrence of any one or more of the following events shall constitute a
default and breach of this Sublease by Subtenant:

(i) The failure by Subtenant to make any payment of Rent or any other payment
required to be made by Subtenant hereunder, as and when due, where such failure
shall continue for a period of three (3) days after written notice thereof by
Sublandlord to Subtenant (it being agreed, however, that such notice shall be in
lieu of, and not in addition to, any notice required under Section 1161 of the
California Code of Civil Procedure, or any successor statute thereto);

(ii) The failure by Subtenant to observe or perform any of the covenants,
conditions or provisions of this Sublease to be observed or performed by
Subtenant, where such failure shall continue for a period of twenty (20) days
after written notice thereof by Sublandlord to Subtenant. If the nature of such
default is such that the same cannot be reasonably cured within such twenty
(20) day period, Subtenant shall not be deemed to be in default hereunder if
Subtenant shall within such period commence such cure and thereafter diligently
prosecute the same to completion, provided Master Landlord has not declared a
default and breach of the Master Lease as a result of Subtenant’s failure to
cure such default;

(iii) The making by Subtenant of any general assignment or general arrangement
for the benefit of creditors; or the filing by or against Subtenant of a
petition to have Subtenant adjudged a bankrupt, or a petition for reorganization
or arrangement under any law, now existing or hereafter amended or enacted,
relating to bankruptcy or insolvency (unless, in the case of a petition filed
against Subtenant, Subtenant has not consented to, or admitted the material
allegations of such petition and such petition is dismissed within sixty
(60) days); or the appointment of a trustee or a receiver to take

 

16

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

possession of substantially all of Subtenant’s assets located at the Subleased
Premises or of Subtenant’s interest in this Sublease, where possession is not
restored to Subtenant within thirty (30) days; or substantially all of
Subtenant’s assets or Subtenant’s interest in this Sublease is subjected to
attachment, execution or other judicial seizure which is not discharged within
thirty (30) days; or

(iv) Subtenant causes a default and breach under the Master Lease and does not
cure such default or breach no less than ten (10) days prior to the expiration
of any applicable notice and cure period set forth in the Master Lease.

(b) Upon the occurrence of a default or breach by Subtenant, Sublandlord shall
have all rights and remedies set forth in Section 20 of the Master Lease.

19. Insurance. Subtenant shall, during the entire Term of this Sublease,
maintain all insurance policies required by Sublandlord to be maintained under
the Master Lease in accordance with the terms of the Master Lease. Subtenant
shall name Sublandlord as an additional insured on all such policies in which
Master Landlord is also named as an additional insured.

20. Parking. During the Term, Subtenant shall be entitled to use (but shall not
be obligated to use) sixty-one (61) of the non-reserved and reserved parking
spaces in the Parking Facility in accordance with and subject to all of the
terms, conditions and provisions of the Parking Agreement attached as Exhibit
“E” to the Master Lease. Subtenant shall pay to Sublandlord the monthly charge
set forth in the Parking Agreement for Subtenant’s use of any of the reserved
parking spaces that Subtenant actually uses. Sublandlord shall have no duty,
liability or obligation to Subtenant with respect to Subtenant’s parking rights
hereunder, and Sublandlord shall not be liable to Subtenant as a result of any
of Master Landlord’s actions under the Parking Agreement.

21. Signage. Subject to the express approval of Master Landlord, Subtenant shall
be entitled, at its sole cost and expense, to install interior and exterior
identification signage in accordance with and subject to all of the terms,
conditions and provisions of Section 27.15 of the Master Lease. Sublandlord
shall remove, at its sole cost and expense, all of Sublandlord’s existing
signage promptly after the Commencement Date and Sublandlord shall repair any
damage caused by such removal.

22. Recordation. Subtenant shall not record this Sublease or any memorandum
thereof.

23. Work Letter/Allowances. The Work Letter attached to the Master Lease as
Exhibit “D” does not apply to the Subleased Premises, except with respect to
Subtenant’s obligation to remove any improvements, including, without
limitation, any Required Removables (as defined in Section 2.5 of the Work
Letter) that relate to the Subleased Premises, were installed in the Subleased
Premises by Subtenant and that Master Landlord requires to be removed from the
Subleased Premises in accordance with Section 10.3 of the Master Lease. In
addition, Subtenant shall not have any rights whatsoever to any portion of the
Tenant Improvement Allowance or Architect Allowance referenced in the Master
Lease and/or the Work Letter.

 

17

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

24. Notices. All notices and demands which may or are required to be given by
either party to the other hereunder shall be in writing and shall be personally
delivered or sent by United States certified or registered mail, postage
prepaid, return receipt requested, or sent by reputable overnight courier (such
as Federal Express, UPS or DHL with delivery confirmation) and addressed as
follows:

 

TO SUBLANDLORD:    Valeant Pharmaceuticals International, Inc.    700 Route
202/206    Bridgewater, NJ 08807    Attention: Robert Brabandt, Corporate
Services With a copy to:    Valeant Pharmaceuticals International, Inc.    700
Route 202/206    Bridgewater, NJ 08807    Attention: General Counsel TO
SUBTENANT:    Avanir Pharmaceuticals, Inc.    20 Enterprise, Suite 200    Aliso
Viejo, CA 92656    Attention: Michael Cruse With a copy to:    Avanir
Pharmaceuticals, Inc.    20 Enterprise, Suite 200    Aliso Viejo, CA 92656   
Attention: Vice President of Legal Affairs

All notices shall be deemed to have been received at the time of delivery, if
personally delivered, or three (3) business days after deposit in the United
States mail as specified above, if mailed or one (1) business day if sent by
overnight courier for next business day delivery; provided, however, that no
notice shall be deemed to have been received by either party unless notices (and
copies of notices) are delivered to all required parties set forth in this
Section 24. Either party may from time to time change the address for delivery
of notices and demands by giving notice of such change as specified above.
Sublandlord shall promptly provide Subtenant with a copy of any notice of
default under the Master Lease and any notice relating to the Subleased Premises
received by Sublandlord from Master Landlord. Subtenant shall forward
concurrently to Sublandlord any notices sent to or received from Master Landlord
relating to the Subleased Premises.

25. Holdover. If Subtenant holds over after the expiration of the Sublease Term
or earlier termination thereof, such tenancy shall be that of a tenancy at
sufferance and shall not constitute a renewal hereof or an extension for any
further term. In such case Rent

 

18

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

shall be payable at a monthly rate equal to the greater of one hundred fifty
percent (150%) of the Rent applicable during the last rental period of the Term
under this Sublease, or such amount as is due to Master Landlord pursuant to
Section 22 of the Master Lease as a result of Subtenant’s holdover. Such tenancy
at sufferance shall be subject to every other applicable term, covenant and
agreement contained herein. Nothing contained in this Section 25 shall be
construed as consent by Sublandlord to any holding over by Subtenant, and
Sublandlord expressly reserves the right to require Subtenant to surrender
possession of the Subleased Premises to Sublandlord as provided in this Sublease
upon the expiration or earlier termination of this Sublease. The provisions of
this Section 25 shall not be deemed to limit or constitute a waiver of any other
rights or remedies of Sublandlord provided herein or at law. If Subtenant fails
to surrender the Subleased Premises upon the termination or expiration of this
Sublease, in addition to any other liabilities to Sublandlord accruing
therefrom, Subtenant shall protect, defend, indemnify and hold Sublandlord
harmless from all loss, costs (including reasonable attorneys’ fees) and
liability resulting from such failure, including, without limiting the
generality of the foregoing, any claims made by Master Landlord and/or any
succeeding tenant founded upon such failure to surrender and any consequential
damages to Sublandlord and/or Master Landlord resulting therefrom. In addition
to the foregoing, Subtenant shall promptly reimburse to Sublandlord all losses,
costs and expenses incurred by Sublandlord under Section 22 of the Master Lease.
Subtenant shall not be responsible for reimbursing Sublandlord for any such
losses, costs or expenses in the event that Sublandlord is holding over in the
Premises; provided, however, that Subtenant shall grant Sublandlord access to
the Subleased Premises prior to the expiration or earlier termination of the
Master Lease for the purpose of removing any property of Sublandlord or Required
Removables which are Sublandlord’s obligation to remove pursuant to the terms of
this Sublease. The obligations of Subtenant set forth in this Section 25 shall
survive the expiration or earlier termination of this Sublease.

26. Captions. The captions of sections of this Sublease are not a part of this
Sublease and shall have no effect upon the construction or interpretation of any
part hereof.

27. Successors and Assigns. The covenants and conditions herein contained,
subject to the provisions of Section 15 above, apply to and bind the heirs,
successors, executors, administrators, legal representatives and assigns of the
parties hereto.

28. Attorneys’ Fees. In the event of any legal action or proceeding brought by
either party against the other arising out of this Sublease (an “Action”), the
prevailing party shall be entitled to the payment by the losing party of its
reasonable attorneys’ fees, court costs and litigation expenses, as determined
by the court.

29. Post-Judgment Attorneys’ Fees. The prevailing party in any Action shall be
entitled, in addition to and separately from the amounts receivable under
Section 28 above, to the payment by the losing party of the prevailing party’s
reasonable attorneys’ fees, court costs and litigation expenses incurred in
connection with (a) any appellate review of the judgment rendered in such Action
or of any other ruling in such Action, and (b) any proceeding to enforce a
judgment in such Action. It is the intent of the parties that the provisions of
this Section 29 be distinct and severable from the other rights of the parties
under this Sublease, shall survive the entry of judgment in any Action and shall
not be merged into such judgment.

 

19

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

30. Brokerage Commission. Sublandlord and Subtenant represent and warrant to
each other that neither has dealt with any broker in connection with this
Sublease, except Cushman & Wakefield of California, Inc. (“Sublandlord’s
Broker”) and Newmark Grubb Knight Frank (“Subtenant’s Broker”) (collectively,
the “Brokers”). Sublandlord and Subtenant shall indemnify the other against, and
hold each other harmless from any claim of, or liability to, any broker or any
party with whom Sublandlord or Subtenant shall have dealt in connection with
this transaction or Sublease other than the Brokers. Sublandlord shall be
responsible for paying a brokerage commission to Sublandlord’s Broker relating
to this Sublease pursuant to a separate written agreement, and Sublandlord’s
Broker shall pay a commission to Subtenant’s Broker pursuant to a separate
written agreement.

31. Gender and Number. Wherever the context so requires, each gender shall
include any other gender, and the singular number shall include the plural and
vice-versa.

32. 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.

33. Severability. Any provision of this Sublease which shall prove to be
invalid, void or illegal shall in no way affect, impair, or invalidate any other
provision hereof and all such other provisions shall remain in full force and
effect.

34. Effectiveness. This Sublease shall become effective when executed by all the
parties hereto; provided, however, in the event Master Landlord fails to consent
to the subletting of the Subleased Premises to Subtenant within the Approval
Period, either party may terminate this Sublease by providing written notice to
the other party. In such event, the parties hereto shall have no further
obligation or liability to the other, except that the Security Deposit and any
Rent or other funds paid hereunder by Subtenant shall be promptly refunded by
Sublandlord.

35. Sublandlord Representations. Sublandlord represents and warrants, to
Sublandlord’s actual knowledge (without duty of investigation or inquiry), that:
(i) it is the holder of the interest of the “Tenant” under the Master Lease and
said interest is not the subject of any lien, assignment, sublease, or other
hypothecation or pledge by Sublandlord; (ii) the Master Lease is in full force
and effect unmodified, except as set forth above, and constitutes the entire
agreement between the Master Landlord and Sublandlord in respect of the
Subleased Premises; (iii) no notices of default have been served on Sublandlord
under the Master Lease which have not been cured; (iv) neither Sublandlord nor
Master Landlord is in default under the Master Lease; (v) there are no financing
statements outstanding with respect to the Subleased Premises or any fixtures
therein or improvements or alterations thereto under which Sublandlord is the
debtor; (vi) there are no Hazardous Materials in, on or about the Subleased
Premises (other than those materials customarily used in the business or
activity expressly permitted to be

 

20

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

undertaken in the Subleased Premises under Section 1.9 of the Master Lease);
(vii) there are currently no uncured violations of any federal, state or local
laws, regulations, codes, executive orders, guidelines or requirements affecting
the Subleased Premises.

36. Quiet Enjoyment. Upon Subtenant paying all Rent and other charges due
hereunder and observing and performing all of the covenants, conditions and
provisions to be performed by Subtenant hereunder, Subtenant shall have quiet
possession of the Subleased Premises for the entire term hereof, subject to all
of the provisions of this Sublease.

37. Time of the Essence. Time is of the essence of each provision of this
Sublease where time is an element.

38. Counterparts. This Sublease may be executed in any number of counterparts,
each of which shall be an original but all of which shall constitute one and the
same instrument.

39. Governing Law. This Agreement shall be construed, interpreted and governed
by the laws of the State of California and the laws of the United States of
America prevailing in California.

[Signatures on following page]

 

21

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

IN WITNESS WHEREOF, the parties have executed this Sublease on the Effective
Date.

 

SUBLANDLORD:

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.,

a British Columbia corporation

By:  

/s/ Robert A. Brabandt

  Name:  

Robert A. Brabandt

  Title:  

Director-Corp Sales

SUBTENANT:

AVANIR PHARMACEUTICALS, INC.,

a Delaware corporation

By:  

/s/ Christine G. Ocampo

  Name:  

Christine G. Ocampo

  Title:  

Vice President of Finance

 

22

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

EXHIBIT “A”

Master Lease

[To be attached]

 

EXHIBIT “A”

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

EXHIBIT “B”

Sublandlord Furniture and Equipment

 

EXHIBIT “B”

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

1. Security card readers and hardware.

 

2. UPS as currently configured.

 

3. Network patch panel and racks as exist. No patch cables.

 

4. All structured cable as exists to all workstations and offices, etc.

 

5. All flat screens, video conference units, projectors, AV equipment as
installed in 4 conference rooms and the training room. This includes all ceiling
mounted speakers and microphones plus all cable as installed.

 

6. All flat screens in the break rooms and lobbies.

 

EXHIBIT “B-5”