EXHIBIT 10.40
LEASE
(Multi-Tenant; Net)
BETWEEN
THE IRVINE COMPANY LLC
AND
ILLUMINA, INC.

 

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INDEX TO LEASE

         
ARTICLE I. BASIC LEASE PROVISIONS
    1  
 
       
ARTICLE II. PREMISES
    3  
SECTION 2.1. LEASED PREMISES
    3  
SECTION 2.2. ACCEPTANCE OF PREMISES
    3  
SECTION 2.3. BUILDING NAME AND ADDRESS
    3  
 
       
ARTICLE III. TERM
    3  
SECTION 3.1. GENERAL
    3  
SECTION 3.2. EARLY OCCUPANCY
    3  
SECTION 3.3. TENANT’S RIGHT TO TERMINATE
    4  
 
       
ARTICLE IV. RENT AND OPERATING EXPENSES
    4  
SECTION 4.1. BASIC RENT
    4  
SECTION 4.2. OPERATING EXPENSES
    4  
SECTION 4.3. SECURITY DEPOSIT
    7  
 
       
ARTICLE V. USES
    8  
SECTION 5.1. USE
    8  
SECTION 5.2. SIGNS
    8  
SECTION 5.3. HAZARDOUS MATERIALS
    8  
 
       
ARTICLE VI. COMMON AREAS; SERVICES
    10  
SECTION 6.1. UTILITIES AND SERVICES
    10  
SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS
    10  
SECTION 6.3. USE OF COMMON AREAS
    10  
SECTION 6.4. PARKING
    11  
SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD
    11  
 
       
ARTICLE VII. MAINTAINING THE PREMISES
    11  
SECTION 7.1. TENANT’S MAINTENANCE AND REPAIR
    11  
SECTION 7.2. LANDLORD’S MAINTENANCE AND REPAIR
    12  
SECTION 7.3. ALTERATIONS
    12  
SECTION 7.4. MECHANIC’S LIENS
    13  
SECTION 7.5. ENTRY AND INSPECTION
    13  
SECTION 7.6. COMMUNICATIONS EQUIPMENT
    13  
 
       
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT’S PROPERTY
    14  
 
       
ARTICLE IX. ASSIGNMENT AND SUBLETTING
    14  
SECTION 9.1. RIGHTS OF PARTIES
    14  
SECTION 9.2. EFFECT OF TRANSFER
    16  
SECTION 9.3. SUBLEASE REQUIREMENTS
    16  
SECTION 9.4. CERTAIN TRANSFERS
    16  
 
       
ARTICLE X. INSURANCE AND INDEMNITY
    17  
SECTION 10.1. TENANT’S INSURANCE
    17  
SECTION 10.2. LANDLORD’S INSURANCE
    17  
SECTION 10.3. TENANT’S INDEMNITY
    17  
SECTION 10.4. LANDLORD’S NONLIABILITY
    17  
SECTION 10.5. WAIVER OF SUBROGATION
    17  
 
       
ARTICLE XI. DAMAGE OR DESTRUCTION
    18  
SECTION 11.1. RESTORATION
    18  
SECTION 11.2. LEASE GOVERNS
    19  
 
       
ARTICLE XII. EMINENT DOMAIN
    19  
SECTION 12.1. TOTAL OR PARTIAL TAKING
    19  
SECTION 12.2. TEMPORARY TAKING
    19  
SECTION 12.3. TAKING OF PARKING AREA
    19  
 
       
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
    19  
SECTION 13.1. SUBORDINATION
    19  
SECTION 13.2. ESTOPPEL CERTIFICATE
    19  
SECTION 13.3. FINANCIALS
    20  
 
       
ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES
    20  
SECTION 14.1. TENANT’S DEFAULTS
    20  
SECTION 14.2. LANDLORD’S REMEDIES
    21  

 

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SECTION 14.3. LATE PAYMENTS
    22  
SECTION 14.4. RIGHT OF LANDLORD TO PERFORM
    22  
SECTION 14.5. DEFAULT BY LANDLORD
    22  
SECTION 14.6. EXPENSES AND LEGAL FEES
    22  
SECTION 14.7. WAIVER OF JURY TRIAL/JUDICIAL REFERENCE
    22  
SECTION 14.8. SATISFACTION OF JUDGMENT
    24  
 
       
ARTICLE XV. END OF TERM
    24  
SECTION 15.1. HOLDING OVER
    24  
SECTION 15.2. MERGER ON TERMINATION
    24  
SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY
    24  
 
       
ARTICLE XVI. PAYMENTS AND NOTICES
    24  
 
       
ARTICLE XVII. RULES AND REGULATIONS
    25  
 
       
ARTICLE XVIII. BROKER’S COMMISSION
    25  
 
       
ARTICLE XIX. TRANSFER OF LANDLORD’S INTEREST
    25  
 
       
ARTICLE XX. INTERPRETATION
    25  
SECTION 20.1. GENDER AND NUMBER
    25  
SECTION 20.2. HEADINGS
    25  
SECTION 20.3. JOINT AND SEVERAL LIABILITY
    25  
SECTION 20.4. SUCCESSORS
    25  
SECTION 20.5. TIME OF ESSENCE
    25  
SECTION 20.6. CONTROLLING LAW/VENUE
    25  
SECTION 20.7. SEVERABILITY
    25  
SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES
    25  
SECTION 20.9. INABILITY TO PERFORM
    26  
SECTION 20.10. ENTIRE AGREEMENT
    26  
SECTION 20.11. QUIET ENJOYMENT
    26  
SECTION 20.12. SURVIVAL
    26  
SECTION 20.13. INTERPRETATION
    26  
 
       
ARTICLE XXI. EXECUTION AND RECORDING
    26  
SECTION 21.1. COUNTERPARTS
    26  
SECTION 21.2. CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP AUTHORITY
    26  
SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER
    26  
SECTION 21.4. RECORDING
    26  
SECTION 21.5. AMENDMENTS
    26  
SECTION 21.6. EXECUTED COPY
    26  
SECTION 21.7. ATTACHMENTS
    26  
 
       
ARTICLE XXII. MISCELLANEOUS
    27  
SECTION 22.1. NONDISCLOSURE OF LEASE TERMS
    27  
SECTION 22.2. GUARANTEE
    27  
SECTION 22.3. CHANGES REQUESTED BY LENDER
    27  
SECTION 22.4. MORTGAGEE PROTECTION
    27  
SECTION 22.5. COVENANTS AND CONDITIONS
    27  
SECTION 22.6. SECURITY MEASURES
    27  
EXHIBITS
       

      Exhibit A  
Description of Premises
Exhibit B  
Environmental Questionnaire
Exhibit C  
Landlord’s Disclosures
Exhibit D  
Insurance Requirements
Exhibit E  
Rules and Regulations
Exhibit X  
Work Letter
Exhibit Y  
Project Site Plan

 

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LEASE
(Multi-Tenant; Net)
     THIS LEASE is made as of the 29th day of September, 2006 by and between THE
IRVINE COMPANY LLC, a Delaware limited liability company hereafter called
“Landlord,” and ILLUMINA, INC., a Delaware corporation, hereinafter called
“Tenant.”
ARTICLE I. BASIC LEASE PROVISIONS
     Each reference in this Lease to the “Basic Lease Provisions” shall mean and
refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.

1.   Premises: Suite No. 200 (the Premises are more particularly described in
Section 2.1).       Address of Building: 9530 Towne Center Drive, San Diego, CA
  2.   Project Description (if applicable): Eastgate Technology Park   3.   Use
of Premises: General office, research & development, and all uses permitted by
zoning restrictions.   4.   Commencement Date: January 15, 2007   5.   Term:
Thirty Six (36) months, plus such additional days as may be required to cause
this Lease to terminate on the final day of the calendar month.   6.   Basic
Rent: Commencing on the Commencement Date, the Basic Rent shall be Thirty Six
Thousand Three Hundred Forty-Three Dollars ($36,343.00) per month, based on
$2.10 per rentable square foot.       Basic Rent is subject to adjustment as
follows:       Commencing twelve (12) months following the Commencement Date,
the Basic Rent shall be Thirty Seven Thousand Five Hundred Fifty-Four Dollars
($37,554.00) per month, based on $2.17 per rentable square foot.      
Commencing twenty-four (24) months following the Commencement Date, the Basic
Rent shall be Thirty Eight Thousand Nine Hundred Thirty-Nine Dollars
($38,939.00) per month, based on $2.25 per rentable square foot.   7.  
Guarantor(s): None   8.   Floor Area: Approximately 17,306 rentable square feet
  9.   Security Deposit: $42,824.00   10.   Broker(s): “Landlord’s Broker”:
Irvine Realty Company “Tenant’s Broker”: Real Estate Advisors, Inc.   11.  
Additional Insureds: None   12.   Address for Notices:

     
LANDLORD
  TENANT
 
   
THE IRVINE COMPANY LLC
  ILLUMINA, INC.
550 Newport Center Drive
  9530 Towne Center Drive, Suite 200
Newport Beach, CA 92660
  San Diego, CA 92121
Attn: Senior Vice President, Operations
   
               Irvine Office Properties
   
 
   
THE IRVINE COMPANY LLC
   
550 Newport Center Drive
   
Newport Beach, CA 92660
   
Attn: Vice President, Operations
   
               Irvine Office Properties, Technology Portfolio
   

13.   Address for Payments: All payments due under this Lease shall be made to
the address shown on the invoice for the payment due, or if no address is shown,
to Landlord’s notice address above.   14.   Tenant’s Liability Insurance
Requirement: $2,000,000.00   15.   Vehicle Parking Spaces: Sixty Nine (69)

 

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ARTICLE II. PREMISES
     SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases
from Landlord the premises shown in Exhibit A (the “Premises”), containing
approximately the rentable square footage set forth as the “Floor Area” in
Item 8 of the Basic Lease Provisions and known by the suite number identified in
Item 1 of the Basic Lease Provisions. The Premises are located in the building
identified in Item 1 of the Basic Lease Provisions (the Premises together with
such building and the underlying real property, are called the “Building”), and
is a portion of the project identified in Item 2 of the Basic Lease Provisions
and shown in Exhibit Y, if any (the “Project”). If the Project is not already
completed, Landlord makes no representation that the Project, if any, as shown
on Exhibit Y, (a) will be completed or that it will be constructed as shown on
Exhibit Y without change, or (b) to the extent the Project is constructed, it
will not be changed from the Project as shown on Exhibit Y. All references to
“Floor Area” in this Lease shall mean the rentable square footage set forth in
Item 8 of the Basic Lease Provisions. The rentable square footage set forth in
Item 8 may include or have been adjusted by various factors, including, without
limitation, a load factor to allocate a proportionate share of any vertical
penetrations, stairwells, common lobby or common features or areas of the
Building. Tenant agrees that the Floor Area set forth in Item 8 shall be binding
on Landlord and Tenant for purposes of this Lease regardless of whether any
future or differing measurements of the Premises or the Building are consistent
or inconsistent with the Floor Area set forth in Item 8.
     SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither
Landlord nor any representative of Landlord has made any representation or
warranty with respect to the Premises, the Building or the Project or their
respective suitability or fitness for any purpose, including without limitation
any representations or warranties regarding the compliance of Tenant’s use of
the Premises with the applicable zoning or regarding any other land use matters,
and Tenant shall be solely responsible as to such matters. Further, neither
Landlord nor any representative of Landlord has made any representations or
warranties regarding (i) what other tenants or uses may be permitted or intended
in the Building or the Project, (ii) any exclusivity of use by Tenant with
respect to its permitted use of the Premises as set forth in Item 3 of the Basic
Lease Provisions, or (iii) any construction of portions of the Project not yet
completed. Tenant further acknowledges that neither Landlord nor any
representative of Landlord has agreed to undertake any alterations or additions
or to construct any improvements to the Premises except as expressly provided in
this Lease, and that the flooring materials which may be installed within
portions of the Premises located on the ground floor of the Building may be
limited by the moisture content of the Building slab and underlying soils.
Subject to the provisions of Section 3.2 below, from and after the full
execution and delivery of this Lease, Tenant shall be permitted to enter upon
the Premises (the “Early Occupancy Date”) for the construction of those certain
tenant improvements (the “Tenant Improvements”) pursuant to the terms and
conditions of the Work Letter attached as Exhibit X hereto (the “Work Letter”).
Subject to the provisions of Section 2.4 below, as of the Early Occupancy Date,
Tenant shall be conclusively deemed to have accepted the Premises and those
portions of the Building and Project in which Tenant has any rights under this
Lease, which acceptance shall mean that it is conclusively established that the
Premises and those portions of the Building and Project in which Tenant has any
rights under this Lease were in satisfactory condition and in conformity with
the provisions of this Lease. Nothing contained in this Section 2.2 shall affect
the commencement of the Term or the obligation of Tenant to pay rent.
     SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any name
selected by Landlord from time to time for the Building and/or the Project as
any part of Tenant’s corporate or trade name. Landlord shall have the right to
change the name, address, number or designation of the Building or Project
without liability to Tenant.
     SECTION 2.4. LANDLORD’S RESPONSIBILITIES. Landlord warrants to Tenant that
the fire sprinkler system, lighting, heating, ventilation and air conditioning
systems and electrical systems serving the Premises shall be in good operating
condition on the Commencement Date of this Lease. Provided that Tenant shall
notify Landlord of a non-compliance with the foregoing warranty not later than
thirty (30) days following the Commencement Date, then Landlord shall, except as
otherwise provided in this Lease, promptly after receipt of written notice from
Tenant setting forth the nature and extent of such non-compliance, rectify same
at Landlord’s sole cost and expense (and not as a Project Cost).
ARTICLE III. TERM
     SECTION 3.1. GENERAL. The term of this Lease (“Term”) shall be for the
period shown in Item 5 of the Basic Lease Provisions, and shall commence on that
date (“Commencement Date” ) which is the earlier of (a) the date Tenant
commences its business operations from the Premises, or (b) the date set forth
in Item 4 of the Basic Lease Provisions. The date on which this Lease is
scheduled to terminate is referred to as the “Expiration Date.” The parties
shall memorialize on a form provided by Landlord (the “Commencement Date
Memorandum”) the actual Commencement Date and the Expiration Date of this Lease.
Should Tenant fail to execute and return the Commencement Date Memorandum to
Landlord within five (5) business days (or provide specific written objections
thereto within that period), then Landlord’s determination of the Commencement
and Expiration Dates as set forth in the Commencement Date Memorandum shall be
conclusive.
     SECTION 3.2. EARLY OCCUPANCY.. Tenant’s occupancy of the Premises prior to
the Commencement Date for purposes of construction of the Tenant Improvements
shall be subject to the following terms and conditions: (a) concurrently with
the execution and delivery of this Lease, and prior to any such early occupancy
by Tenant, Tenant shall deliver to Landlord (i) the first installment of Basic
Rent and Operating Expenses due under the Lease (ii) the Security Deposit set
forth in Item 9 of the Basic Lease Provisions, and (iii) the

 

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required certificate(s) of insurance and a completed Hazardous Material Survey
Form (see Exhibit C attached hereto); and (b) Tenant’s occupancy of the Premises
during the Early Occupancy Period shall be subject to all of the covenants and
conditions on Tenant’s part contained in this Lease (including, without
limitation, the covenants contained in Sections 5.3, 6.1, 7.1, 7.3, 7.4, 10.1
and 10.3 of the Lease), except for the obligation to pay Basic Rent and
Operating Expenses.
     SECTION 3.3. TENANT’S RIGHT TO TERMINATE. Provided that no Event of Default
has occurred under any provision of this Lease beyond any applicable notice and
cure period, either at the time of Tenant’s election of its right to terminate
granted herein or as of the effective Termination Date, Tenant shall have the
one-time right to terminate this Lease effective as of the expiration of the
twenty-fourth (24th) month of the initial Term of this Lease (the “Termination
Date”), provided Tenant has delivered its irrevocable written notice of such
election to terminate (the “Termination Notice”) to Landlord not later than
twelve (12) months prior to the Termination Date. All rental and other costs due
under this Lease for the Premises shall be due and payable by Tenant to Landlord
through the Termination Date. In addition to the foregoing, Tenant shall pay to
Landlord, concurrently with its delivery of the Termination Notice, a separate
termination fee in the amount of One Hundred Ninety One Thousand One Hundred
Twenty-Two Dollars ($191,122.00). Any such termination by Tenant shall not
abrogate any obligation existing under the Lease as of the Termination Date or
otherwise attributable to Tenant’s occupancy thereof.
ARTICLE IV. RENT AND OPERATING EXPENSES
     SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant shall
pay to Landlord without deduction or offset, the rental amount for the Premises
shown in Item 6 of the Basic Lease Provisions (the “Basic Rent”), including
subsequent adjustments, if any. If the Commencement Date is other than the first
day of the calendar month, any rental adjustments shown in Item 6 occurring with
reference to the monthly anniversary of the Commencement Date, shall be deemed
to occur on the first day of the next calendar month following the specified
monthly anniversary of the Commencement Date. The rent shall be due and payable
in advance commencing on the Commencement Date (as prorated for any partial
month) and continuing thereafter on the first day of each successive calendar
month of the Term. No demand, notice or invoice shall be required for the
payment of Basic Rent. An installment of rent in the amount of one (1) full
month’s Basic Rent at the initial rate specified in Item 6 of the Basic Lease
Provisions and one (1) month’s estimated Tenant’s Share of Operating Expenses
(as defined in Section 4.2) shall be delivered to Landlord concurrently with
Tenant’s execution of this Lease and shall be applied against the Basic Rent and
Operating Expenses first due hereunder.
     SECTION 4.2. OPERATING EXPENSES.
     (a) From and after Commencement Date, Tenant shall pay to Landlord, as
additional rent, Tenant’s Share of all Operating Expenses, as defined in
Section 4.2(f), incurred by Landlord in the operation of the Building and the
Project. The term “Tenant’s Share” means that portion of any Operating Expenses
determined by multiplying the cost of such item by a fraction, the numerator of
which is the Floor Area and the denominator of which is the total rentable
square footage, as determined from time to time by Landlord, of (i) the
Building, for expenses determined by Landlord to benefit or relate substantially
to the Building rather than the entire Project, (ii) all or some of the
buildings in the Project, for expenses determined by Landlord to benefit or
relate substantially to all or some of the buildings in the Project rather than
any specific building, or (iii) all or some of the buildings within the Project
as well as all or a portion of other property owned by Landlord and/or its
affiliates, for expenses determined by Landlord to benefit or relate
substantially to such buildings within the Project and such other property.
Landlord reserves the right to allocate to the entire Project any Operating
Expenses which may benefit or substantially relate to a particular building
within the Project in order to maintain greater consistency of Operating
Expenses among buildings within the Project. In the event that Landlord
determines in its sole and absolute discretion that the Premises or the Building
incur a non-proportional benefit from any expense, or is the non-proportional
cause of any such expense, Landlord may allocate a greater percentage of such
Operating Expense to the Premises or the Building. In the event that any
management and/or overhead fee payable or imposed by Landlord for the management
of Tenant’s Premises is calculated as a percentage of the rent payable by Tenant
and other tenants of Landlord, then the full amount of such management and/or
overhead fee which is attributable to the rent paid by Tenant shall be
additional rent payable by Tenant, in full, provided, however, that Landlord may
elect to include such full amount as part of Tenant’s Share of Operating
Expenses.
     (b) Prior to the start of each full Expense Recovery Period (as defined in
this Section 4.2), Landlord shall give Tenant a written estimate of the amount
of Tenant’s Share of Operating Expenses for the applicable Expense Recovery
Period. Any delay or failure by Landlord in providing such estimate shall not
relieve Tenant from its obligation to pay Tenant’s Share of Operating Expenses
or estimated amounts thereof, if and when Landlord provides such estimate or
final payment amount. Tenant shall pay the estimated amounts to Landlord in
equal monthly installments, in advance concurrently with payments of Basic Rent.
If Landlord has not furnished its written estimate for any Expense Recovery
Period by the time set forth above, Tenant shall continue to pay monthly the
estimated Tenant’s Share of Operating Expenses in effect during the prior
Expense Recovery Period; provided that when the new estimate is delivered to
Tenant, Tenant shall, at the next monthly payment date, pay any accrued
estimated Tenant’s Share of Operating Expenses based upon the new estimate. For
purposes hereof, “Expense Recovery Period” shall mean every twelve month period
during the Term (or portion thereof for the first and last lease years)
commencing July 1 and ending June 30, provided that Landlord shall have the
right to change the date on which an Expense Recovery Period commences in which
event appropriate reasonable adjustments shall be made to Tenant’s Share of
Operating Expenses so that the amount payable by Tenant shall not materially
vary as a result of such change.

 

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     (c) Within one hundred twenty (120) days after the end of each Expense
Recovery Period, Landlord shall furnish to Tenant a statement (a “Reconciliation
Statement”) showing in reasonable detail the actual or prorated Tenant’s Share
of Operating Expenses incurred by Landlord during such Expense Recovery Period,
and the parties shall within thirty (30) days thereafter make any payment or
allowance necessary to adjust Tenant’s estimated payments of Tenant’s Share of
Operating Expenses, if any, to the actual Tenant’s Share of Operating Expenses
as shown by the Reconciliation Statement. Any delay or failure by Landlord in
delivering any Reconciliation Statement shall not constitute a waiver of
Landlord’s right to require Tenant to pay Tenant’s Share of Operating Expenses
pursuant hereto. Any amount due Tenant shall be credited against installments
next coming due under this Section 4.2, and any deficiency shall be paid by
Tenant together with the next installment. Should Tenant fail to object in
writing to Landlord’s determination of Tenant’s Share of Operating Expenses, or
fail to give written notice of its intent to audit Landlord’s Operating Expenses
pursuant to the provisions of the next succeeding paragraph, within sixty
(60) days following delivery of Landlord’s Reconciliation Statement, Landlord’s
determination of Tenant’s Share of Operating Expenses for the applicable Expense
Recovery Period shall be conclusive and binding on the parties for all purposes
and any future claims to the contrary shall be barred.
     Provided no Event of Default has occurred, Tenant shall have the right to
cause a certified public accountant, engaged on a non-contingency fee basis, to
audit Operating Expenses by inspecting Landlord’s general ledger of expenses not
more than once during any Expense Recovery Period. However, to the extent that
insurance premiums or any other component of Operating Expenses is determined by
Landlord on the basis of an internal allocation of costs utilizing information
Landlord in good faith deems proprietary, such expense component shall not be
subject to audit so long as it does not exceed the amount per square foot
typically imposed by landlords of other first class business parks in San Diego
County, California. Tenant shall give notice to Landlord of Tenant’s intent to
audit within sixty (60) days after Tenant’s receipt of Landlord’s expense
statement which sets forth Tenant’s Share of Landlord’s actual Operating
Expenses. Such audit shall be conducted at a mutually agreeable time during
normal business hours at the office of Landlord or its management agent where
such accounts are maintained. If Tenant’s audit determines that actual Operating
Expenses have been overstated by more than five percent (5%), then subject to
Landlord’s right to review and/or contest the audit results, Landlord shall
reimburse Tenant for the reasonable out-of-pocket costs of such audit. Tenant’s
rent shall be appropriately adjusted to reflect any overstatement in Operating
Expenses. All of the information obtained by Tenant and/or its auditor in
connection with such audit, as well as any compromise, settlement, or adjustment
reached between Landlord and Tenant as a result thereof, shall be held in strict
confidence and, except as may be required pursuant to litigation, shall not be
disclosed to any third party, directly or indirectly, by Tenant or its auditor
or any of their officers, agents or employees. Landlord may require Tenant’s
auditor to execute a separate confidentiality agreement affirming the foregoing
as a condition precedent to any audit. In the event of a violation of this
confidentiality covenant in connection with any audit, then in addition to any
other legal or equitable remedy available to Landlord, Tenant shall forfeit its
right to any reconciliation or cost reimbursement payment from Landlord due to
said audit (and any such payment theretofore made by Landlord shall be promptly
returned by Tenant), and Tenant shall have no further audit rights under this
Lease. Notwithstanding the foregoing, Tenant shall have no right of audit with
respect to any Expense Recovery Period unless the total Operating Expenses per
square foot for such Expense Recovery Period, as set forth in Landlord’s annual
expense reconciliation, exceed the total Operating Expenses per square foot
during the initial Expense Recovery Period during the Term, as increased by the
percentage change in the United States Department of Labor, Bureau of Labor
Statistics, Consumer Price Index for all Urban Consumers, Los Angeles –
Riverside – Orange County Area Average, all items (1982-84 = 100) (the “Index”),
which change in the Index shall be measured by comparing the Index published for
January of the initial Expense Recovery Period during the Term with the Index
published for January of the applicable Expense Recovery Period.
     (d) Even though this Lease has terminated and the Tenant has vacated the
Premises, when the final determination is made of Tenant’s Share of Operating
Expenses for the Expense Recovery Period in which this Lease terminates, Tenant
shall within thirty (30) days of written notice pay the entire increase over the
estimated Tenant’s Share of Operating Expenses already paid. Conversely, any
overpayment by Tenant shall be rebated by Landlord to Tenant not later than
thirty (30) days after such final determination.
     (e) If, at any time during any Expense Recovery Period, any one or more of
the Operating Expenses are increased to a rate(s) or amount(s) in excess of the
rate(s) or amount(s) used in calculating the estimated Tenant’s Share of
Operating Expenses for the year, then the estimate of Tenant’s Share of
Operating Expenses may be increased by written notice from Landlord for the
month in which such rate(s) or amount(s) becomes effective and for all
succeeding months by an amount equal to the estimated amount of Tenant’s Share
of the increase. If Landlord gives Tenant written notice of the amount or
estimated amount of the increase and the month in which the increase will or has
become effective, then Tenant shall pay the increase to Landlord as a part of
Tenant’s monthly payments of the estimated Tenant’s Share of Operating Expenses
as provided in Section 4.2(b), commencing with the month following Tenant’s
receipt of Landlord’s notice. In addition, Tenant shall pay upon written request
any such increases which were incurred prior to the Tenant commencing to pay
such monthly increase.
     (f) The term “Operating Expenses” shall mean and include all Project Costs,
as defined in subsection (g), and Property Taxes, as defined in subsection (h).
     (g) The term “Project Costs” shall include all expenses of operation,
management, repair, replacement and maintenance of the Building and the Project,
including without limitation all appurtenant Common Areas (as defined in
Section 6.2), and shall include the following charges by way of illustration but
not limitation: water and sewer charges; insurance premiums and deductibles
and/or reasonable premium and deductible equivalents should Landlord elect to
self-insure all or any portion of any risk that Landlord is authorized to insure
hereunder; license, permit, and inspection fees; light; power; window washing;
trash pickup; janitorial services to any interior Common Areas; heating,
ventilating and air conditioning; supplies; materials; equipment; tools; the
cost of any environmental, insurance, tax, legal or other consultant utilized by
Landlord in connection with the Building and/or Project; establishment of
reasonable reserves for replacements and/or repairs; costs incurred in
connection

 

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with compliance with any laws or changes in laws applicable to the Building or
the Project; the cost of any capital improvements or replacements (other than
tenant improvements for specific tenants) to the extent of the amortized amount
thereof over the useful life of such capital improvements or replacements (or,
if such capital improvements or replacements are anticipated to achieve a cost
savings as to the Operating Expenses, any shorter estimated period of time over
which the cost of the capital improvements or replacements would be recovered
from the estimated cost savings) calculated at a market cost of funds, all as
determined by Landlord, for each year of useful life or shorter recovery period
of such capital expenditure whether such capital expenditure occurs during or
prior to the Term; costs associated with the maintenance of an air conditioning,
heating and ventilation service agreement, and maintenance of an intrabuilding
network cable service agreement for any intrabuilding network cable
telecommunications lines within the Project, and any other maintenance, repair
and replacement costs associated with such lines; capital costs associated with
a requirement related to demands on utilities by Project tenants, including
without limitation the cost to obtain additional phone connections; labor;
reasonably allocated wages and salaries, fringe benefits, and payroll taxes for
administrative and other personnel directly applicable to the Building and/or
Project, including both Landlord’s personnel and outside personnel; any expense
incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and 10.2; and reasonable
overhead and/or management fees for the professional operation of the Project.
It is understood and agreed that Project Costs may include competitive charges
for direct services (including, without limitation, management and/or operations
services) provided by any subsidiary, division or affiliate of Landlord.
     (h) The term “Property Taxes” as used herein shall include any form of
federal, state, county or local government or municipal taxes, fees, charges or
other impositions of every kind (whether general, special, ordinary or
extraordinary) related to the ownership, leasing or operation of the Premises,
Building or Project, including without limitation, the following: (i) all real
estate taxes or personal property taxes, as such property taxes may be
reassessed from time to time; and (ii) other taxes, charges and assessments
which are levied with respect to this Lease or to the Building and/or the
Project, and any improvements, fixtures and equipment and other property of
Landlord located in the Building and/or the Project, (iii) all assessments and
fees for public improvements, services, and facilities and impacts thereon,
including without limitation arising out of any Community Facilities Districts,
“Mello Roos” districts, similar assessment districts, and any traffic impact
mitigation assessments or fees; (iv) any tax, surcharge or assessment which
shall be levied in addition to or in lieu of real estate or personal property
taxes, other than taxes covered by Article VIII; and (v) taxes based on the
receipt of rent (including gross receipts or sales taxes applicable to the
receipt of rent), and (vi) costs and expenses incurred in contesting the amount
or validity of any Property Tax by appropriate proceedings. Notwithstanding the
foregoing, general net income or franchise taxes imposed against Landlord shall
be excluded.

  (i)   Notwithstanding anything to the contrary contained in this Section 4.2,
“Operating Expenses” shall not include any of the following:           (1)   Any
ground lease rental;     (2)   Except to the extent provided in Section 4.2(g)
above, costs of items considered capital repairs, replacements, improvements and
equipment (“Capital Items”);     (3)   Costs incurred by Landlord for the repair
of damage to the Building, to the extent that Landlord is actually reimbursed by
insurance proceeds, and costs of earthquake repairs in excess of twenty-five
thousand dollars ($25,000) per earthquake (for this purpose, an earthquake is
defined collectively as the initial earthquake and the aftershocks that relate
to such initial earthquake);     (4)   Costs, including permit, license and
inspection costs, incurred with respect to the installation of tenants’ or other
occupants’ improvements in the Project or incurred in renovating or otherwise
improving, decorating, painting or redecorating vacant space for tenants or
other occupants of the Project;     (5)   Marketing costs, including without
limitation, leasing commissions, attorneys’ fees in connection with the
negotiation and preparation of letters, deal memos, letters of intent, leases,
subleases and/or assignments, space planning costs and other costs and expenses
incurred in connection with lese, sublease and/or assignment negotiations and
transactions with present or prospective tenants or other occupants of the
Project;     (6)   Expenses in connection with services or other benefits that
are not made available to Tenant or for which Tenant is charged directly but
which are provided to other tenants or occupants of the Project;     (7)  
Overhead and profit increment paid to Landlord or to subsidiaries or affiliates
of Landlord for goods and/or services in the Project to the extent the same
exceeds the costs of such goods and/or services rendered by unaffiliated third
parties;     (8)   Interest, principal, points and fees on non-operating debts
or amortization on any mortgage or mortgages or any other debt instrument
encumbering the Project or the real property underlying the Project;     (9)  
Landlord’s general corporate overhead and general and administrative expenses
associated with the operation of the entity which constitutes Landlord, as the
same are distinguished from the costs of the operation, management, repair,
replacement and maintenance of the Project;

 

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  (10)   Any compensation paid to clerks, attendants or other persons engaged in
commercial concessions operated by Landlord (other than compensation paid to any
parking facility operator);     (11)   Advertising and promotional expenditures
and costs of signs in or on the Project identifying other tenants;     (12)  
Tax penalties incurred as a result of Landlord’s negligence, inability or
unwillingness to made payments and/or to file any tax or informational returns
when due;     (13)   Except to the extent provided in Section 5.3 of this Lease,
costs incurred to remove, remediate or take other action with respect to
Hazardous Materials;     (14)   Costs arising from Landlord’s charitable or
political contributions;     (15)   Costs arising during the contractual
warranty period from construction defects in the base, shell or core of the
Building;     (16)   Acquisition costs (not including those incurred in ordinary
maintenance and repair) for sculpture, paintings, fountains or other objects of
art;     (17)   Costs of defending any lawsuits with any mortgagee (except as
the actions of Tenant may be in issue), and costs incurred in connection with
any disputes between Landlord and its employees, between Landlord and Project
management, or between Landlord and other tenants or occupants (except as the
actions of Tenant may be in issue);     (18)   Costs of selling, syndicating,
financing, mortgaging or hypothecating any of Landlord’s interest in the Project
(but excluding any increased Property Taxes resulting from any such sale or
other transactions);     (19)   Costs of any “tap fees” or any sewer or water
connection fees for the benefit of any particular tenant in the Project;    
(20)   Any expenses incurred by Landlord for use of any portions of the Project
to accommodate special events for particular tenants, including, but not limited
to shows, promotions, kiosks, displays, filming, photography, private events or
parties, ceremonies and advertising beyond the normal expenses otherwise
attributable to providing Project services, such as lighting and HVAC to such
public portions of the Building in normal operations during standard Building
hours of operation;     (21)   Any entertainment, dining or travel expenses of
Landlord for any purpose;     (22)   Any flowers, gifts, balloons or other gifts
provided to any entity whatsoever, including, but not limited to, Tenant, other
tenants, employees, vendors, contractors, prospective tenants and agents;    
(23)   Any “validated” parking for any entity;     (24)   The cost of any
“tenant relations” parties, events or promotion not consented to by an
authorized representative of Tenant in writing; and     (25)   “In-house” legal
and/or accounting fees.

     To the extent that an expense included in Operating Expenses includes an
expense related to the Project and not the Building, then the word “Building”
utilized in these exclusions shall mean, and be extended to include the Project.
     SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant’s delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions, to be held by Landlord as security for the full and
faithful performance of all of Tenant’s obligations under this Lease (the
“Security Deposit”). Landlord shall not be required to keep this Security
Deposit separate from its general funds, and Tenant shall not be entitled to
interest on the Security Deposit. Subject to the last sentence of this Section,
the Security Deposit shall be understood and agreed to be the property of
Landlord upon Landlord’s receipt thereof, and may be utilized by Landlord in its
sole and absolute discretion towards the payment of all expenses by Landlord for
which Tenant would be required to reimburse Landlord under this Lease, including
without limitation brokerage commissions and Tenant Improvement costs. Upon any
Event of Default beyond any applicable notice and cure period by Tenant (as
defined in Section 14.1), Landlord may, in its sole and absolute discretion and
notwithstanding any contrary provision of Civil Code Section 1950.7, retain, use
or apply the whole or any part of the Security Deposit to pay any sum which
Tenant is obligated to pay under this Lease including, without limitation,
amounts estimated by Landlord as the amounts due it for prospective rent and for
damages pursuant to Section 14.2(a)(i) of this Lease and/or Civil Code
Section 1951.2, sums that Landlord may expend or be required to expend by reason
of the Event of Default by Tenant or any loss or damage that Landlord may suffer
by reason of the Event of Default, or costs incurred by Landlord in connection
with the repair or restoration of the Premises pursuant to Section 15.3 of this
Lease upon expiration or earlier termination of this Lease. In no event shall
Landlord be obligated to apply the Security Deposit upon an Event of Default and
Landlord’s rights and remedies resulting from an Event of Default, including
without limitation, Tenant’s failure to pay Basic Rent, Tenant’s Share of
Operating Expenses or any other amount due to Landlord pursuant to this Lease,
shall not be diminished or altered in any respect due to the fact that

 

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Landlord is holding the Security Deposit. If any portion of the Security Deposit
is applied by Landlord as permitted by this Section, Tenant shall within five
(5) days after written demand by Landlord deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount. If
Tenant fully performs its obligations under this Lease, the Security Deposit
shall be returned to Tenant (or, at Landlord’s option, to the last assignee of
Tenant’s interest in this Lease) within thirty (30) days after the expiration of
the Term, provided that Tenant agrees that Landlord may retain the Security
Deposit to the extent and until such time as all amounts due from Tenant in
accordance with this Lease have been determined and paid in full and Tenant
agrees that Tenant shall have no claim against Landlord for Landlord’s retaining
such Security Deposit to the extent provided in this Section.
ARTICLE V. USES
     SECTION 5.1. USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions, all in accordance with
applicable laws and restrictions and pursuant to approvals to be obtained by
Tenant from all relevant and required governmental agencies and authorities. The
parties agree that any contrary use shall be deemed to cause material and
irreparable harm to Landlord and shall entitle Landlord to injunctive relief in
addition to any other available remedy. Tenant, at its expense, shall procure,
maintain and make available for Landlord’s inspection throughout the Term, all
governmental approvals, licenses and permits required for the proper and lawful
conduct of Tenant’s permitted use of the Premises. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way interfere
with the rights of other occupants of the Building or the Project, or use or
allow the Premises to be used for any unlawful purpose, nor shall Tenant permit
any nuisance or commit any waste in the Premises or the Project. Tenant shall
not perform any work or conduct any business whatsoever in the Project other
than inside the Premises. Tenant shall not do or permit to be done anything
which will invalidate or increase the cost of any insurance policy(ies) covering
the Building, the Project and/or their contents, and shall comply with all
applicable insurance underwriters rules. Tenant shall comply at its expense with
all present and future laws, ordinances, restrictions, regulations, orders,
rules and requirements of all governmental authorities that pertain to Tenant or
its use of the Premises, including without limitation all federal and state
occupational health and safety requirements, whether or not Tenant’s compliance
will necessitate expenditures or interfere with its use and enjoyment of the
Premises. Tenant shall comply at its expense with all present and future
covenants, conditions, easements or restrictions now or hereafter affecting or
encumbering the Building and/or Project, and any amendments or modifications
thereto, including without limitation the payment by Tenant of any periodic or
special dues or assessments charged against the Premises or Tenant which may be
allocated to the Premises or Tenant in accordance with the provisions thereof.
Tenant shall promptly upon demand reimburse Landlord for any additional
insurance premium charged by reason of Tenant’s failure to comply with the
provisions of this Section, and shall indemnify Landlord from any liability
and/or expense resulting from Tenant’s noncompliance.
     SECTION 5.2. SIGNS. Provided Tenant continues to occupy the entire
Premises, Tenant shall have the non-exclusive right to one (1) exterior
“building top” sign on the Building for Tenant’s name and graphics in a location
designated by Landlord, subject to Landlord’s right of prior approval that such
exterior signage is in compliance with the Signage Criteria (defined below).
Except as provided in the foregoing, and except for Landlord’s standard suite
signage identifying Tenant’s name and/or logo and installed at a location
designated by Landlord, and except for any additional signage expressly
specified in this Section 5.2, Tenant shall have no right to maintain signs in
any location in, on or about the Premises, the Building or the Project and shall
not place or erect any signs that are visible from the exterior of the Building.
The size, design, graphics, material, style, color and other physical aspects of
any permitted sign shall be subject to Landlord’s written determination, as
determined solely by Landlord, prior to installation, that signage is in
compliance with any covenants, conditions or restrictions encumbering the
Premises and Landlord’s signage program for the Project, as in effect from time
to time and approved by the City in which the Premises are located (“Signage
Criteria”). Prior to placing or erecting any such signs, Tenant shall obtain and
deliver to Landlord a copy of any applicable municipal or other governmental
permits and approvals and comply with any applicable insurance requirements for
such signage. Tenant shall be responsible for all costs of any permitted sign,
including, without limitation, the fabrication, installation, maintenance and
removal thereof and the cost of any permits therefor. If Tenant fails to
maintain its sign in good condition, or if Tenant fails to remove same upon
termination of this Lease and repair and restore any damage caused by the sign
or its removal, Landlord may do so at Tenant’s expense. Landlord shall have the
right to temporarily remove any signs in connection with any repairs or
maintenance in or upon the Building. The term “sign” as used in this Section
shall include all signs, designs, monuments, displays, advertising materials,
logos, banners, projected images, pennants, decals, pictures, notices,
lettering, numerals or graphics. Tenant’s exterior signage rights under this
Section 5.2 belong solely to Illumina, Inc., a Delaware corporation, and any
attempted assignment or transfer of such rights shall be void and of no force
and effect.
     SECTION 5.3. HAZARDOUS MATERIALS.
     (a) For purposes of this Lease, the term “Hazardous Materials” includes
(i) any “hazardous material” as defined in Section 25501(o) of the California
Health and Safety Code, (ii) hydrocarbons, polychlorinated biphenyls or
asbestos, (iii) any toxic or hazardous materials, substances, wastes or
materials as defined pursuant to any other applicable state, federal or local
law or regulation, and (iv) any other substance or matter which may result in
liability to any person or entity as a result of such person’s possession, use,
storage, release or distribution of such substance or matter under any statutory
or common law theory.
     (b) Tenant shall not cause or permit any Hazardous Materials to be brought
upon, stored, used, generated, released or disposed of on, under, from or about
the Premises (including without limitation the soil and groundwater thereunder)
without the prior written consent of Landlord, which consent may be given or
withheld in Landlord’s sole and absolute discretion. Notwithstanding the
foregoing, Tenant shall have the right, without obtaining prior written consent
of Landlord, to utilize within the Premises a reasonable quantity of standard
office

 

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products that may contain Hazardous Materials (such as photocopy toner, “White
Out”, and the like), provided however, that (i) Tenant shall maintain such
products in their original retail packaging, shall follow all instructions on
such packaging with respect to the storage, use and disposal of such products,
and shall otherwise comply with all applicable laws with respect to such
products, and (ii) all of the other terms and provisions of this Section 5.3
shall apply with respect to Tenant’s storage, use and disposal of all such
products. Landlord may, in its sole and absolute discretion, place such
conditions as Landlord deems appropriate with respect to Tenant’s use, storage
and/or disposal of any Hazardous Materials requiring Landlord’s consent. Tenant
understands that Landlord may utilize an environmental consultant to assist in
determining conditions of approval in connection with the storage, use, release,
and/or disposal of Hazardous Materials by Tenant on or about the Premises,
and/or to conduct periodic inspections of the storage, generation, use, release
and/or disposal of such Hazardous Materials by Tenant on and from the Premises,
and Tenant agrees that any costs incurred by Landlord in connection therewith
shall be reimbursed by Tenant to Landlord as additional rent hereunder upon
demand.
     (c) Prior to the execution of this Lease, Tenant shall complete, execute
and deliver to Landlord an Environmental Questionnaire and Disclosure Statement
(the “Environmental Questionnaire”) in the form of Exhibit B attached hereto.
The completed Environmental Questionnaire shall be deemed incorporated into this
Lease for all purposes, and Landlord shall be entitled to rely fully on the
information contained therein. On each anniversary of the Commencement Date
until the expiration or sooner termination of this Lease, Tenant shall disclose
to Landlord in writing the names and amounts of all Hazardous Materials which
were stored, generated, used, released and/or disposed of on, under or about the
Premises for the twelve-month period prior thereto, and which Tenant desires to
store, generate, use, release and/or dispose of on, under or about the Premises
for the succeeding twelve-month period. In addition, to the extent Tenant is
permitted to utilize Hazardous Materials upon the Premises, Tenant shall
promptly provide Landlord with complete and legible copies of all the following
environmental documents relating thereto: reports filed pursuant to any
self-reporting requirements; permit applications, permits, monitoring reports,
emergency response or action plans, workplace exposure and community exposure
warnings or notices and all other reports, disclosures, plans or documents (even
those which may be characterized as confidential) relating to water discharges,
air pollution, waste generation or disposal, and underground storage tanks for
Hazardous Materials; orders, reports, notices, listings and correspondence (even
those which may be considered confidential) of or concerning the release,
investigation, compliance, cleanup, remedial and corrective actions, and
abatement of Hazardous Materials; and all complaints, pleadings and other legal
documents filed by or against Tenant related to Tenant’s storage, generation,
use, release and/or disposal of Hazardous Materials.
     (d) Landlord and its agents shall have the right, but not the obligation,
to inspect, sample and/or monitor the Premises and/or the soil or groundwater
thereunder at any time to determine whether Tenant is complying with the terms
of this Section 5.3, and in connection therewith Tenant shall provide Landlord
with full access to all facilities, records and personnel related thereto. If
Tenant is not in compliance with any of the provisions of this Section 5.3, or
in the event of a release of any Hazardous Material on, under, from or about the
Premises caused or permitted by Tenant, its agents, employees, contractors,
licensees or invitees, Landlord and its agents shall have the right, but not the
obligation, without limitation upon any of Landlord’s other rights and remedies
under this Lease, to immediately enter upon the Premises without notice and to
discharge Tenant’s obligations under this Section 5.3 at Tenant’s expense,
including without limitation the taking of emergency or long-term remedial
action. Landlord and its agents shall endeavor to minimize interference with
Tenant’s business in connection therewith, but shall not be liable for any such
interference. In addition, Landlord, at Tenant’s expense, shall have the right,
but not the obligation, to join and participate in any legal proceedings or
actions initiated in connection with any claims arising out of the storage,
generation, use, release and/or disposal by Tenant or its agents, employees,
contractors, licensees or invitees of Hazardous Materials on, under, from or
about the Premises.
     (e) If the presence of any Hazardous Materials on, under, from or about the
Premises or the Project caused or permitted by Tenant or its agents, employees,
contractors, licensees or invitees results in (i) injury to any person,
(ii) injury to or any contamination of the Premises or the Project, or
(iii) injury to or contamination of any real or personal property wherever
situated, Tenant, at its expense, shall promptly take all actions necessary to
return the Premises and the Project and any other affected real or personal
property owned by Landlord to the condition existing prior to the introduction
of such Hazardous Materials and to remedy or repair any such injury or
contamination, including without limitation, any cleanup, remediation, removal,
disposal, neutralization or other treatment of any such Hazardous Materials.
Notwithstanding the foregoing, Tenant shall not, without Landlord’s prior
written consent, which consent may be given or withheld in Landlord’s sole and
absolute discretion, take any remedial action in response to the presence of any
Hazardous Materials on, under, from or about the Premises or the Project or any
other affected real or personal property owned by Landlord or enter into any
similar agreement, consent, decree or other compromise with any governmental
agency with respect to any Hazardous Materials claims; provided however,
Landlord’s prior written consent shall not be necessary in the event that the
presence of Hazardous Materials on, under, from or about the Premises or the
Project or any other affected real or personal property owned by Landlord
(i) imposes an immediate threat to the health, safety or welfare of any
individual and (ii) is of such a nature that an immediate remedial response is
necessary and it is not possible to obtain Landlord’s consent before taking such
action. To the fullest extent permitted by law, Tenant shall indemnify, hold
harmless, protect and defend (with attorneys acceptable to Landlord) Landlord
and any successors to all or any portion of Landlord’s interest in the Premises
and the Project and any other real or personal property owned by Landlord from
and against any and all liabilities, losses, damages, diminution in value,
judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses
(including without limitation attorneys’ fees, court costs and other
professional expenses), whether foreseeable or unforeseeable, arising directly
or indirectly out of the use, generation, storage, treatment, release, on- or
off-site disposal or transportation of Hazardous Materials (A) on, into, from,
under or about the Premises during the Term regardless of the source of such
Hazardous Materials unless caused solely by Landlord or (B) on, into, from,
under or about the Premises, the Building or the Project and any other real or
personal property owned by Landlord caused or permitted by Tenant, its agents,
employees, contractors, licensees or invitees. Such indemnity obligation shall
specifically include, without limitation, the cost

 

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of any required or necessary repair, restoration, cleanup or detoxification of
the Premises, the Building and the Project and any other real or personal
property owned by Landlord, the preparation of any closure or other required
plans, whether such action is required or necessary during the Term or after the
expiration of this Lease and any loss of rental due to the inability to lease
the Premises or any portion of the Building or Project as a result of such
Hazardous Materials, the remediation thereof or any repair, restoration or
cleanup related thereto. If it is at any time discovered that Hazardous
Materials have been released on, into, from, under or about the Premises during
the Term, or that Tenant or its agents, employees, contractors, licensees or
invitees may have caused or permitted the release of any Hazardous Materials on,
under, from or about the Premises, the Building or the Project or any other real
or personal property owned by Landlord, Tenant shall, at Landlord’s request,
immediately prepare and submit to Landlord a comprehensive plan, subject to
Landlord’s approval, specifying the actions to be taken by Tenant to return the
Premises, the Building or the Project or any other real or personal property
owned by Landlord to the condition existing prior to the introduction of such
Hazardous Materials. Upon Landlord’s approval of such plan, Tenant shall, at its
expense, and without limitation of any rights and remedies of Landlord under
this Lease or at law or in equity, immediately implement such plan and proceed
to cleanup, remediate and/or remove all such Hazardous Materials in accordance
with all applicable laws and as required by such plan and this Lease. The
provisions of this Section 5.3(e) shall expressly survive the expiration or
sooner termination of this Lease.
     (f) Landlord hereby discloses to Tenant, and Tenant hereby acknowledges,
certain facts relating to Hazardous Materials at the Project known by Landlord
to exist as of the date of this Lease, as more particularly described in
Exhibit C attached hereto. Tenant shall have no liability or responsibility with
respect to the Hazardous Materials facts described in Exhibit C, nor with
respect to any Hazardous Materials which Tenant proves were neither released on
the Premises during the Term nor caused or permitted by Tenant, its agents,
employees, contractors, licensees or invitees. Notwithstanding the preceding two
sentences, Tenant agrees to notify its agents, employees, contractors,
licensees, and invitees of any exposure or potential exposure to Hazardous
Materials at the Premises that Landlord brings to Tenant’s attention. Tenant
hereby acknowledges that this disclosure satisfies any obligation of Landlord to
Tenant pursuant to California Health & Safety Code Section 25359.7, or any
amendment or substitute thereto or any other disclosure obligations of Landlord.
ARTICLE VI. COMMON AREAS; SERVICES
     SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for and
shall pay promptly, directly to the appropriate supplier, all charges for water,
gas, electricity, sewer, heat, light, power, telephone, telecommunications
service, refuse pickup, janitorial service, interior landscape maintenance and
all other utilities, materials and services furnished directly to Tenant or the
Premises or used by Tenant in, on or about the Premises during the Term,
together with any taxes thereon. If any utilities or services are not separately
metered or assessed to Tenant, Landlord shall make a reasonable determination of
Tenant’s proportionate share of the cost of such utilities and services, and
Tenant shall pay such amount to Landlord, as an item of additional rent, within
ten (10) days after receipt of Landlord’s statement or invoice therefor.
Alternatively, Landlord may elect to include such cost in the definition of
Project Costs in which event Tenant shall pay Tenant’s proportionate share of
such costs in the manner set forth in Section 4.2. Tenant shall also pay to
Landlord as an item of additional rent, within ten (10) days after receipt of
Landlord’s statement or invoice therefor, Landlord’s “standard charges” (as
hereinafter defined, which shall be in addition to the electricity charge paid
to the utility provider) for “after hours” usage by Tenant of each HVAC unit
servicing the Premises. If the HVAC unit(s) servicing the Premises also serve
other leased premises in the Building, “after hours” shall mean usage of said
unit(s) before 6:00 A.M. or after 6:00 P.M. on Mondays through Fridays, and
before 9:00 A.M. or after 1:00 P.M. on Saturdays, subject to reasonable
adjustment of said hours by Landlord. If the HVAC unit(s) serve only the
Premises, “after hours” shall mean more than sixty-six (66) hours of usage
during any week during the Term. “After hours” usage shall be determined based
upon the operation of the applicable HVAC unit during each of the foregoing
periods on a “non-cumulative” basis (that is, without regard to Tenant’s usage
or nonusage of other unit(s) serving the Premises, or of the applicable unit
during other periods of the Term). As used herein, “standard charges” shall mean
the following charges for each hour of “after hours” use (in addition to the
applicable electricity charges paid to the utility provider) of the following
described HVAC units: (i) $5.00 per hour for 1-5 ton HVAC units, (ii) $7.50 per
hour for 6-30 ton HVAC units and (iii) $10.00 per hour for HVAC units of greater
than 30 tons. Landlord shall not be liable for damages or otherwise for any
failure or interruption of any utility or other service furnished to the
Premises, and no such failure or interruption shall be deemed an eviction or
entitle Tenant to terminate this Lease or withhold or abate any rent due
hereunder. Landlord shall at all reasonable times have free access to the
Building and Premises to install, maintain, repair, replace or remove all
electrical and mechanical installations of Landlord. Tenant acknowledges that
the costs incurred by Landlord related to providing above-standard utilities and
services to Tenant, including, without limitation, telephone lines, may be
charged to Tenant.
     SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate and maintain all Common Areas within the Building and the
Project in the manner Landlord may reasonably determine to be appropriate. All
costs incurred by Landlord for the maintenance and operation of the Common Areas
shall be included in Project Costs except to the extent any particular cost
incurred is related to or associated with a specific tenant and can be charged
to such tenant of the Project. The term “Common Areas” shall mean all areas
within the exterior boundaries of the Building and other buildings in the
Project which are not held for exclusive use by persons entitled to occupy
space, and all other appurtenant areas and improvements within the Project
provided by Landlord for the common use of Landlord and tenants and their
respective employees and invitees, including without limitation parking areas
and structures, driveways, sidewalks, landscaped and planted areas, hallways and
interior stairwells not located within the premises of any tenant, common
electrical rooms and roof access entries, common entrances and lobbies,
elevators, and restrooms not located within the premises of any tenant.

 

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     SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the Premises
shall include the use of the Common Areas in common with Landlord and with all
others for whose convenience and use the Common Areas may be provided by
Landlord, subject, however, to compliance with all rules and regulations as are
prescribed from time to time by Landlord. Landlord shall at all times during the
Term have exclusive control of the Common Areas, and may restrain or permit any
use or occupancy, except as authorized by Landlord’s rules and regulations.
Tenant shall keep the Common Areas clear of any obstruction or unauthorized use
related to Tenant’s operations or use of Premises, including without limitation,
planters and furniture. Except to the extent caused solely by the active
negligence or willful misconduct of Landlord, nothing in this Lease shall be
deemed to impose liability upon Landlord for any damage to or loss of the
property of, or for any injury to, Tenant, its invitees or employees. Landlord
may temporarily close any portion of the Common Areas for repairs, remodeling
and/or alterations, to prevent a public dedication or the accrual of
prescriptive rights, or for any other reason deemed sufficient by Landlord,
without liability to Tenant. Landlord’s temporary closure of any portion of the
Common Areas for such purposes shall not deprive Tenant of reasonable access to
the Premises.
     SECTION 6.4. PARKING. Tenant shall be entitled to the number of vehicle
parking spaces set forth in Item 15 of the Basic Lease Provisions, which spaces
shall be unreserved and unassigned, on those portions of the Common Areas
designated by Landlord for parking. Tenant shall not use more parking spaces
than such number. All parking spaces shall be used only for parking of vehicles
no larger than full size passenger automobiles, sport utility vehicles or pickup
trucks. Tenant shall not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant’s employees, suppliers, shippers, customers or
invitees to be loaded, unloaded or parked in areas other than those designated
by Landlord for such activities. If Tenant permits or allows any of the
prohibited activities described above, then Landlord shall have the right,
without notice, in addition to such other rights and remedies that Landlord may
have, to remove or tow away the vehicle involved and charge the costs to Tenant.
Parking within the Common Areas shall be limited to striped parking stalls, and
no parking shall be permitted in any driveways, access ways or in any area which
would prohibit or impede the free flow of traffic within the Common Areas. There
shall be no parking of any vehicles for longer than a forty-eight (48) hour
period unless otherwise authorized by Landlord, and vehicles which have been
abandoned or parked in violation of the terms hereof may be towed away at the
owner’s expense. Nothing contained in this Lease shall be deemed to create
liability upon Landlord for any damage to motor vehicles of visitors or
employees, for any loss of property from within those motor vehicles, or for any
injury to Tenant, its visitors or employees, unless ultimately determined to be
caused by the sole active negligence or willful misconduct of Landlord. Landlord
shall have the right to establish, and from time to time amend, and to enforce
against all users all reasonable rules and regulations (including the
designation of areas for employee parking) that Landlord may deem necessary and
advisable for the proper and efficient operation and maintenance of parking
within the Common Areas. Landlord shall have the right to construct, maintain
and operate lighting facilities within the parking areas; to change the area,
level, location and arrangement of the parking areas and improvements therein;
to restrict parking by tenants, their officers, agents and employees to employee
parking areas; after the expiration of the initial 36-month Term of this Lease,
to enforce parking charges (by operation of meters or otherwise); and to do and
perform such other acts in and to the parking areas and improvements therein as,
in the use of good business judgment, Landlord shall determine to be advisable.
Any person using the parking area shall observe all directional signs and arrows
and any posted speed limits. In no event shall Tenant interfere with the use and
enjoyment of the parking area by other tenants of the Project or their employees
or invitees. Parking areas shall be used only for parking vehicles. Washing,
waxing, cleaning or servicing of vehicles, or the storage of vehicles for longer
than 48-hours, is prohibited unless otherwise authorized by Landlord. Tenant
shall be liable for any damage to the parking areas caused by Tenant or Tenant’s
employees, suppliers, shippers, customers or invitees, including without
limitation damage from excess oil leakage. Tenant shall have no right to install
any fixtures, equipment or personal property in the parking areas.
     SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the right
to make alterations or additions to the Building or the Project, or to the
attendant fixtures, equipment and Common Areas. Landlord may at any time
relocate or remove any of the various buildings, parking areas, and other Common
Areas, and may add buildings and areas to the Project from time to time. No
change shall entitle Tenant to any abatement of rent or other claim against
Landlord. No such change shall deprive Tenant of reasonable access to or use of
the Premises.
ARTICLE VII. MAINTAINING THE PREMISES
     SECTION 7.1. TENANT’S MAINTENANCE AND REPAIR. Tenant at its sole expense
shall maintain and make all repairs and replacements necessary to keep the
Premises in the condition as existed on the Commencement Date (or on any later
date that the improvements may have been installed), excepting ordinary wear and
tear and damage by casualty, including without limitation all interior glass,
doors, door closures, hardware, fixtures, electrical, plumbing, fire
extinguisher equipment and other equipment installed in the Premises and all
Alterations constructed by Tenant pursuant to Section 7.3 below. Any damage or
deterioration of the Premises shall not be deemed ordinary wear and tear if the
same could have been prevented by good maintenance practices by Tenant. As part
of its maintenance obligations hereunder, Tenant shall assure that the Premises
remain free of moisture conditions which could cause mold and promptly repair
any moisture conditions occurring within the Premises, and Tenant shall, at
Landlord’s request, provide Landlord with copies of all maintenance schedules,
reports and notices prepared by, for or on behalf of Tenant. All repairs and
replacements shall be at least equal in quality to the original work, shall be
made only by a licensed contractor approved in writing in advance by Landlord
and shall be made only at the time or times approved by Landlord. Any contractor
utilized by Tenant shall be subject to Landlord’s standard requirements for
contractors, as modified from time to time. Landlord may impose reasonable
restrictions and requirements with respect to repairs and replacements, as
provided in Section 7.3, and the provisions of Section 7.4 shall apply to all
repairs and replacements. Alternatively, Landlord may elect to perform any
repair and maintenance of the electrical and mechanical systems and any air
conditioning, ventilating or heating equipment serving the Premises and include
the cost thereof as part of Tenant’s Share of Operating Expenses. If Tenant
fails to properly maintain and/or repair the Premises as herein provided
following Landlord’s notice and the expiration of the applicable cure period (or
earlier if Landlord determines that such work must be performed prior to such
time in order to avoid damage to the Premises or Building or other detriment),
then Landlord may elect, but shall have no obligation, to perform any repair or
maintenance required hereunder on behalf of Tenant and at Tenant’s expense, and
Tenant shall reimburse Landlord upon demand for all costs incurred.

 

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     SECTION 7.2. LANDLORD’S MAINTENANCE AND REPAIR. Subject to Section 7.1 and
Article XI, Landlord shall provide service, maintenance and repair with respect
to any air conditioning, ventilating or heating equipment which serves the
Premises (exclusive, however, of supplemental HVAC equipment serving only the
Premises), and shall maintain in good repair the roof, foundations, footings,
the exterior surfaces of the exterior walls of the Building (including exterior
glass), the structural, electrical and mechanical systems (including elevators,
if any, serving the Building), except that Tenant at its expense shall make all
repairs which Landlord deems reasonably necessary as a result of the act or
negligence of Tenant, its agents, employees, invitees, subtenants or
contractors. Landlord shall have the right to employ or designate any reputable
person or firm, including any employee or agent of Landlord or any of Landlord’s
affiliates or divisions, to perform any service, repair or maintenance function.
Landlord need not make any other improvements or repairs except as specifically
required under this Lease, and nothing contained in this Section shall limit
Landlord’s right to reimbursement from Tenant for maintenance, repair costs and
replacement costs as provided elsewhere in this Lease. Tenant understands that
it shall not perform any maintenance or make any repairs or replacements at
Landlord’s expense and shall have no right to any rental offset for any
maintenance, repairs or replacements performed by Tenant. Tenant further
understands that Landlord shall not be required to make any repairs to the roof,
foundations, footings, the exterior surfaces of the exterior walls of the
Building (excluding exterior glass), or structural, electrical or mechanical
systems unless and until Tenant has notified Landlord in writing of the need for
such repair, and Landlord shall have a reasonable period of time thereafter to
commence and complete said repair, if warranted. All costs of any maintenance,
repairs and replacements on the part of Landlord provided hereunder shall be
considered part of Project Costs.
     SECTION 7.3. ALTERATIONS. Except as otherwise provided in this Section,
Tenant shall make no alterations, additions, fixtures or improvements
(“Alterations”) to the Premises or the Building without the prior written
consent of Landlord, which consent may be granted or withheld in Landlord’s sole
and absolute discretion. In the event that any requested Alteration would result
in a change from Landlord’s building standard materials and specifications for
the Project (“Standard Improvements”), Landlord may withhold consent to such
Alteration in its sole and absolute discretion. In the event Landlord so
consents to a change from the Standard Improvements (such change being referred
to as a “Non-Standard Improvement”), Tenant shall be responsible for the cost of
replacing such Non-Standard Improvement with the applicable Standard Improvement
(“Replacements”), which Replacements shall be completed prior to the Expiration
Date or earlier termination of this Lease. Landlord shall not unreasonably
withhold its consent to any Alterations which cost less than Two Dollar ($2.00)
per square foot of the improved portions of the Premises (excluding warehouse
square footage) and do not (i) affect the exterior of the Building or outside
areas (or be visible from adjoining sites), or (ii) affect or penetrate any of
the structural portions of the Building, including but not limited to the roof,
or (iii) require any change to the basic floor plan of the Premises (including,
without limitation, the adding of any additional “office” square footage) or any
change to any structural or mechanical systems of the Premises, or (iv) fail to
comply with any applicable governmental requirements or require any governmental
permit as a prerequisite to the construction thereof, or (v) result in the
Premises requiring building services beyond the level normally provided to other
tenants, or (vi) interfere in any manner with the proper functioning of, or
Landlord’s access to, any mechanical, electrical, plumbing, elevator or HVAC
systems, facilities or equipment located in or serving the Building, or
(vii) diminish the value of the Premises including, without limitation, using
lesser quality materials than those existing in the Premises, or (viii) alter or
replace Standard Improvements. Landlord may impose any condition to its consent,
including but not limited to a requirement that the installation and/or removal
of all Alterations and Replacements be covered by a lien and completion bond
satisfactory to Landlord in its sole and absolute discretion and requirements as
to the manner and time of performance of such work. Landlord shall in all
events, whether or not Landlord’s consent is required, have the right to approve
prior to the commencement of any work the contractor performing the installation
and removal of Alterations and Replacements and Tenant shall not permit any
contractor not approved by Landlord to perform any work on the Premises or on
the Building. Tenant shall obtain all required permits for the installation and
removal of Alterations and Replacements and shall perform the installation and
removal of Alterations and Replacements in compliance with all applicable laws,
regulations and ordinances, including without limitation the Americans with
Disabilities Act, all covenants, conditions and restrictions affecting the
Project, and the Rules and Regulations as described in Article XVII. Tenant
understands and agrees that Landlord shall be entitled to a supervision fee in
the amount of five percent (5%) of the cost of such Alterations either requiring
a permit from the City of San Diego or affecting any mechanical, electrical,
plumbing or HVAC systems, facilities or equipment located in or serving the
Building. Under no circumstances shall Tenant make any Alterations or
Replacements which incorporate any Hazardous Materials, including without
limitation asbestos-containing construction materials into the Premises, the
Building or the Common Area. In no event shall Tenant prosecute any Alterations
that result in picketing or labor demonstrations in or about the Building or
Project. If any governmental entity requires, as a condition to any proposed
Alterations or Replacements by Tenant, that improvements be made to the Common
Areas, and if Landlord consents to such improvements to the Common Areas (which
consent may be withheld in the sole and absolute discretion of Landlord), then
Tenant shall, at Tenant’s sole expense, make such required improvements to the
Common Areas in such manner, utilizing such materials, and with such
contractors, architects and engineers as Landlord may require in its sole and
absolute discretion. Landlord shall have the right, but not the obligation, to
elect to make any such improvements to be made to the Common Areas at Tenant’s
expense, in which case Tenant shall reimburse Landlord upon demand for all costs
incurred in making such improvements. Any request for Landlord’s consent to any
proposed Alterations shall be made in writing and shall contain architectural
plans describing the work in detail reasonably satisfactory to Landlord.
Landlord may elect to cause its architect to review Tenant’s architectural
plans, and the reasonable cost of that review shall be reimbursed by Tenant.
Should the work proposed by Tenant and consented to by Landlord modify the basic
floor plan of the Premises, then Tenant shall, at its expense, furnish Landlord
with as-built drawings and CAD disks compatible with Landlord’s systems and
standards. Unless Landlord otherwise agrees in writing, all Alterations made or
affixed to the Premises, the Building or to the Common Area (excluding moveable
trade fixtures and furniture), including without limitation all

 

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Tenant Improvements constructed pursuant to the Work Letter (except as otherwise
provided in the Work Letter) and all telephone and data cabling, shall become
the property of Landlord and shall be surrendered with the Premises at the end
of the Term; except that Landlord may, as provided in the next succeeding
paragraph of this Section 7.3, require Tenant to remove by the Expiration Date
or sooner termination date of this Lease, all or any of the Alterations
installed either by Tenant or by Landlord at Tenant’s request, including without
limitation all Tenant Improvements constructed pursuant to the Work Letter
(except as otherwise provided in the Work Letter) and all telephone and data
cabling, and to repair any damage to the Premises, the Building or the Common
Area arising from that removal and restore the Premises to their condition prior
to making such Alterations.
     As of the Expiration Date or earlier termination date of this Lease,
Landlord shall have the right to require Tenant to remove any Alterations made
by Tenant to the Premises and to replace same with the applicable Replacements,
whether or not Landlord’s consent was required. Notwithstanding the foregoing,
if at the time of requesting Landlord’s consent to any such Alterations, Tenant
shall request in writing whether or not Landlord shall require such Alterations
to be removed and replaced as of the Expiration Date or earlier termination date
of this Lease, then Landlord’s right to require Tenant to remove and replace
such Alterations shall be exercised, if at all, at the time of Landlord’s
consent thereto.
     SECTION 7.4. MECHANIC’S LIENS. Tenant shall keep the Premises free from any
liens arising out of any services or work performed, materials furnished, or
obligations incurred by or for Tenant. Upon request by Landlord, Tenant shall
promptly (but in no event later than ten (10) business days following such
request) cause any such lien to be released by posting a bond in accordance with
California Civil Code Section 3143 or any successor statute. In the event that
Tenant shall not, within thirty (30) days following the imposition of any lien,
cause the lien to be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other available remedies, the right to
cause the lien to be released by any means it deems proper, including payment of
or defense against the claim giving rise to the lien. All expenses so incurred
by Landlord, including Landlord’s attorneys’ fees, and any other damages
incurred by Landlord arising out of such lien, shall be reimbursed by Tenant
upon demand, together with interest from the date of payment by Landlord at the
maximum rate permitted by law until paid. Tenant shall give Landlord no less
than twenty (20) days’ prior notice in writing before commencing construction of
any kind on the Premises or Common Area and shall again notify Landlord that
construction has commenced, such notice to be given on the actual date on which
construction commences, so that Landlord may post and maintain notices of
nonresponsibility on the Premises or Common Area, as applicable, which notices
Landlord shall have the right to post and which Tenant agrees it shall not
disturb. Tenant shall also provide Landlord notice in writing within ten (10)
days following the date on which such work is substantially completed. The
provisions of this Section shall expressly survive the expiration or sooner
termination of this Lease.
     SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times,
upon at least 24 hours prior written or oral notice (except in emergencies, when
no notice shall be required) have the right to enter the Premises to inspect
them, to supply services in accordance with this Lease, to perform any work
required or permitted to be performed by Landlord within the Premises, to have
access to install, repair, maintain, replace or remove all electrical and
mechanical installations of Landlord and to protect the interests of Landlord in
the Premises, and to submit the Premises to prospective or actual purchasers or
encumbrance holders (or, during the last one hundred and eighty (180) days of
the Term or when an Event of Default exists, to prospective tenants), all
without being deemed to have caused an eviction of Tenant and without abatement
of rent except as provided elsewhere in this Lease. Landlord shall have the
right, if desired, to retain a key which unlocks all of the doors in the
Premises, excluding Tenant’s vaults and safes, and Landlord shall have the right
to use any and all means which Landlord may deem proper to open the doors in an
emergency in order to obtain entry to the Premises, and any entry to the
Premises obtained by Landlord as provided in this Section 7.5 shall not be
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or any eviction of Tenant from the Premises.
     SECTION 7.6. COMMUNICATIONS EQUIPMENT. Landlord hereby grants to Tenant a
non-exclusive license (the “License”) to install, maintain and operate on the
roof of the Building a single antenna or satellite dish not exceeding
forty-eight inches (48”) in height or thirty-six inches (36”) in diameter (the
“Antenna”) in accordance with and subject to the terms and conditions set forth
below. The Antenna shall be installed at a location designated by Landlord and
reasonably acceptable to Tenant (“Licensed Area”). The Licensed Area shall be
considered to be a part of the Premises for all purposes under the Lease, and
except as otherwise expressly provided in this Section 7.6 all provisions
applicable to the use of the Premises under the Lease shall apply to the
Licensed Area and its use by Tenant.
          (1) The Term of the License shall be coterminous with this Lease;
          (2) Tenant shall not be obligated to pay any license fee for the use
of the Licensed Area pursuant to this Section 7.6 during the Term of this Lease.
          (3) Tenant shall use the Licensed Area only for the installation,
operation, repair, replacement and maintenance of the Antenna and the necessary
mechanical and electrical equipment to service said Antenna and for no other use
or purpose. The installation of the Antenna and all equipment and facilities
related thereto, including any required conduit from the Premises to the
Antenna, shall be deemed to constitute an alteration subject to the provisions
of Section 7.3 of the Lease, provided that Landlord shall not unreasonably
withhold its approval of the same. Landlord may require appropriate screening
for the Antenna as a condition of Landlord’s approval of the installation of the
Antenna. Tenant may have access to the Licensed Area for such uses during normal
business hours and at times upon reasonably prior notice to Landlord and shall
reimburse Landlord for any reasonably out-of-pocket expenses incurred by
Landlord in connection therewith;

 

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          (4) The Antenna shall be used only for transmitting and/or receiving
data, audio and/or video signals to and from Tenant’s facilities within the
Premises for Tenant’s use, and shall not be used or permitted to be used by
Tenant for purposes of broadcasting signals to the public or to provide
telecommunications or other communications transmitting or receiving services to
any third parties;
          (5) Landlord reserves the right upon reasonable prior written notice
to Tenant to require either (a) the relocation of all equipment installed by
Tenant to another location on the roof of the Building reasonably designated by
Landlord, or (b) the removal of any and all of such equipment should Landlord
reasonably determine that its presence results in material damage to the
Building unless Tenant makes satisfactory arrangements to protect Landlord
therefrom;
          (6) Tenant shall require its employees, when using the Licensed Area,
to stay within the immediate vicinity thereof. In addition, in the event any
communications system or broadcast or receiving facilities are operating in the
area, Tenant shall at all times during the term of the License conduct its
operations so as to ensure that such system or facilities shall not be subjected
to harmful interference as a result of such operations by Tenant. Upon
notification from Landlord of any such interference, Tenant agrees to
immediately take the necessary steps to correct such situation, and Tenant’s
failure to do so shall be deemed a default under the terms of this Lease.
          (7) During the term of the License, Tenant shall comply with any
standards promulgated by applicable governmental authorities or otherwise
reasonably established by Landlord regarding the generation of electromagnetic
fields. Should Landlord determine in good faith at any time that the Antenna
poses a health or safety hazard to occupants of the Building, Landlord may
require Tenant to make arrangements satisfactory to Landlord to mitigate such
hazard or, if Tenant either fails or is unable to make such satisfactory
arrangements, to remove the Antenna. Any claim or liability resulting from the
use of the Antenna or the Licensed Area shall be subject to the indemnification
provisions of this Lease applicable to Tenant’s use of the Premises;
          (8) During the term of the License, Tenant shall pay all taxes
attributable to the Antenna and other equipment owned and installed by Tenant,
and Tenant shall assure and provide Landlord with evidence that the Licensed
Area and Tenant’s use thereof are subject to the insurance coverages otherwise
required to be maintained by Tenant as to the Premises pursuant to Exhibit D;
          (9) Upon the expiration or sooner termination of the Lease, Tenant
shall remove the Antenna and all related equipment and facilities, including any
conduit from the Premises to the Antenna, from the Licensed Area and any other
portions of the Building within or upon which the same may be installed, and
shall restore the Licensed Area and all other areas affected by such removal to
their original condition, reasonable wear and tear excepted, all at its sole
cost and expense; and
          (10) Tenant’s rights under this Section 7.6 belong solely to Illumina,
Inc., a Delaware corporation, and any attempted assignment or transfer of such
rights shall be void and of no force and effect.
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT’S PROPERTY
     Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises, and, if required by Landlord, against all
Non-Standard Improvements to the Premises (as defined in Section 7.3) made by
Landlord or Tenant, and against any Alterations (as defined in Section 7.3) made
to the Premises or the Building by or on behalf of Tenant. If requested by
Landlord, Tenant shall cause its personal property, Non-Standard Improvements
and Alterations to be assessed and billed separately from the real property of
which the Premises form a part. If any taxes required to be paid by Tenant on
Tenant’s personal property, Non-Standard Improvements and/or Alterations are
levied against Landlord or Landlord’s property and if Landlord pays the same, or
if the assessed value of Landlord’s property is increased by the inclusion of a
value placed upon Tenant’s personal property, Non-Standard Improvements and/or
Alterations and if Landlord pays the taxes based upon the increased assessment,
Landlord shall have the right to require that Tenant pay to Landlord the taxes
so levied against Landlord or the proportion of the taxes resulting from the
increase in the assessment. In calculating what portion of any tax bill which is
assessed against Landlord separately, or Landlord and Tenant jointly, is
attributable to Tenant’s Non-Standard Improvements, Alterations and personal
property, Landlord’s reasonable determination shall be conclusive.
ARTICLE IX. ASSIGNMENT AND SUBLETTING
     SECTION 9.1. RIGHTS OF PARTIES.
     (a) Notwithstanding any provision of this Lease to the contrary, and except
as to transfers expressly permitted without Landlord’s consent pursuant to
Section 9.4, Tenant will not, either voluntarily or by operation of law, assign,
sublet, encumber, or otherwise transfer all or any part of Tenant’s interest in
this Lease or the Premises, or permit the Premises to be occupied by anyone
other than Tenant, without Landlord’s prior written consent, which consent shall
not unreasonably be withheld in accordance with the provisions of
Section 9.1(b). No assignment (whether voluntary, involuntary or by operation of
law), subletting or other transfer shall be valid or effective without
Landlord’s prior written consent and, at Landlord’s election, any such
assignment, subletting or other transfer shall be void and of no force and
effect and any such attempted assignment, subletting or other transfer shall
constitute an Event of Default of this Lease. Landlord shall not be deemed to
have given its consent to any assignment, subletting or other transfer by any
course of action, including without limitation its acceptance of rent or any
other payment due under this Lease from any person or entity other than Tenant
or its acceptance of any name for listing in the Building directory, other than
Landlord’s written consent. To the extent not prohibited by

 

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provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq., (the
“Bankruptcy Code”), including Section 365(f)(1), Tenant on behalf of itself and
its creditors, administrators and assigns waives the applicability of Section
365(e) of the Bankruptcy Code unless the proposed assignee of the Trustee for
the estate of the bankrupt meets Landlord’s standard for consent as set forth in
Section 9.1(b) of this Lease. If this Lease is assigned to any person or entity
pursuant to the provisions of the Bankruptcy Code, any and all monies or other
considerations to be delivered in connection with the assignment shall be
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to
have assumed all of the obligations arising under this Lease on and after the
date of the assignment, and shall upon demand execute and deliver to Landlord an
instrument confirming that assumption.
     (b) If Tenant desires to assign, sublease or otherwise transfer an interest
in this Lease or the Premises, it shall first notify Landlord of its desire and
shall submit in writing to Landlord: (i) the name and address of the proposed
assignee, subtenant or transferee; (ii) the nature of any proposed assignee’s,
subtenant’s or transferee’s business to be carried on in the Premises; (iii) the
terms and provisions of any proposed assignment, sublease or other transfer,
including a copy of the proposed assignment, sublease or transfer form;
(iv) evidence that the proposed assignee, subtenant or transferee will comply
with the requirements of Exhibit D hereto; (v) a completed Environmental
Questionnaire from the proposed assignee, subtenant or transferee; (vi) any
other information requested by Landlord and reasonably related to the transfer
and (vii) the fee described in Section 9.1(e). Except as provided in
Section 9.1(c), Landlord shall not unreasonably withhold its consent, provided
that the parties agree that it shall be reasonable for Landlord to withhold its
consent if: (1) the use of the Premises will not be consistent with the
provisions of this Lease or with Landlord’s commitment to other tenants of the
Building and Project; (2) the proposed assignee, subtenant or transferee has
been required by any prior landlord, lender or governmental authority to take
remedial action in connection with Hazardous Materials contaminating a property
arising out of the proposed assignee’s, subtenant’s or transferee’s actions or
use of the property in question, or is subject to any enforcement order issued
by any governmental authority in connection with the use, disposal or storage of
a Hazardous Material; (3) insurance requirements of the proposed assignee or
subtenant may not be brought into conformity with Landlord’s then current
leasing practice; (4) the proposed assignee, subtenant or transferee has not
demonstrated to the reasonable satisfaction of Landlord that it is financially
responsible or has failed to submit to Landlord all reasonable information as
requested by Landlord concerning the proposed assignee, subtenant or transferee,
including, but not limited to, current statements of income or profit and loss
of the proposed assignee, subtenant or transferees; (5) the proposed subtenant,
assignee or transferee is an existing tenant of the Building or Project with
whom Landlord is negotiating to expand or relocate within the Building or
Project, or a prospect with whom Landlord is negotiating to become a tenant at
the Building or Project; or (6) the proposed assignment, sublease or transfer
will impose additional burdens or adverse tax effects on Landlord. If Tenant has
any exterior sign rights under this Lease, such rights are personal to Tenant
and may not be assigned or transferred to any assignee of this Lease or
subtenant of the Premises without Landlord’s prior written consent, which
consent may be withheld in Landlord’s sole and absolute discretion.
     If Landlord consents to the proposed transfer, Tenant may within ninety
(90) days after the date of the consent effect the transfer upon the terms
described in the information furnished to Landlord; provided that any material
change in the terms shall be subject to Landlord’s consent as set forth in this
Section 9.1. Landlord shall approve or disapprove any requested transfer within
thirty (30) days following receipt of Tenant’s written request, the information
set forth above, and the fee set forth below.
     (c) Notwithstanding the provisions of Section 9.1(b) above, in lieu of
consenting to a proposed assignment of this Lease or to a subletting of all or
substantially all of the Floor Area of the Premises, Landlord may elect, within
the thirty (30) day period permitted for Landlord to approve or disapprove a
requested transfer, to (i) sublease the Premises (or the portion proposed to be
so subleased), or take an assignment of Tenant’s interest in this Lease, upon
substantially the same terms as offered to the proposed subtenant or assignee
(excluding terms relating to the purchase of personal property, the use of
Tenant’s name or the continuation of Tenant’s business), respectively, or
(ii) terminate this Lease as to the portion of the Premises proposed to be so
subleased or assigned with a proportionate abatement in the rent payable under
this Lease, and the sublease, assignment or termination elected by Landlord
shall be effective thirty (30) days following written notice by Landlord of its
election. Landlord may thereafter, at its option, assign, sublet or re-let any
space so sublet, obtained by assignment or obtained by termination to any third
party, including without limitation the proposed transferee of Tenant.
     (d) In the event that Landlord approves the requested assignment,
subletting or other transfer, Landlord shall be entitled to receive fifty
percent (50%) of any amounts paid by the assignee or subtenant, however
described, in excess of (i) the Basic Rent payable by Tenant hereunder, or in
the case of a sublease of a portion of the Premises, in excess of the Basic Rent
reasonably allocable to such portion as determined by Landlord, plus
(ii) Tenant’s direct out-of-pocket costs which Tenant certifies to Landlord have
been paid to provide occupancy related services to such assignee or subtenant of
a nature commonly provided by landlords of similar space, with such costs to be
amortized on a straight-line basis over the then remaining term of this Lease or
any shorter term of any sublease of the Premises or a portion thereof. The
amounts due Landlord under this Section 9.1(d), shall be payable directly to
Landlord by the assignee or subtenant concurrently with such assignee’s or
subtenant’s payment(s) to Tenant, or, at Landlord’s option, by Tenant within ten
(10) days of Tenant’s receipt thereof. Landlord shall have the right to review
or audit the books and records of Tenant, or have such books and records
reviewed or audited by an outside accountant, to confirm any such direct
out-of-pocket costs. In the event that such direct out-of-pocket costs claimed
by Tenant are overstated by more than five percent (5%), Tenant shall reimburse
Landlord for any of Landlord’s costs related to such review or audit. At
Landlord’s request, a written agreement shall be entered into by and among
Tenant, Landlord and the proposed assignee or subtenant confirming the
requirements of this Section 9.1(d).

 

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     (e) Tenant shall pay to Landlord a fee equal to the greater of
(i) Landlord’s actual and reasonable costs related to such assignment,
subletting or other transfer or (ii) Five Hundred Dollars ($500.00), to process
any request by Tenant for an assignment, subletting or other transfer under this
Lease. Tenant shall pay Landlord the sum of Five Hundred Dollars ($500.00)
concurrently with Tenant’s request for consent to any assignment, subletting or
other transfer, and Landlord shall have no obligation to consider such request
unless accompanied by such payment. Tenant shall pay Landlord upon demand any
costs in excess of such payment to the extent Landlord’s actual and reasonable
costs related to such request exceeds $500.00. Such fee is hereby acknowledged
as a reasonable amount to reimburse Landlord for its costs of review and
evaluation of a proposed transfer.
     SECTION 9.2. EFFECT OF TRANSFER. No assignment, subletting or other
transfer, even with the consent of Landlord, shall relieve Tenant of its
obligation to pay rent and to perform all its other obligations under this
Lease. Moreover, Tenant shall indemnify and hold Landlord harmless, as provided
in Section 10.3, for any act or omission by an assignee, subtenant or
transferee. Each assignee, other than Landlord, shall assume all obligations of
Tenant under this Lease and shall be liable jointly and severally with Tenant
for the payment of all rent, and for the due performance of all of Tenant’s
obligations, under this Lease. No assignment, subletting or transfer shall be
effective or binding on Landlord unless documentation in form and substance
satisfactory to Landlord in its reasonable discretion evidencing the transfer,
and in the case of an assignment, the assignee’s assumption of the obligations
of Tenant under this Lease, is delivered to Landlord, and both the
assignee/subtenant and Tenant deliver to Landlord an executed consent to
transfer instrument prepared by Landlord and consistent with the requirements of
this Article. Consent by Landlord to one or more transfers shall not operate as
a waiver or estoppel to the future enforcement by Landlord of its rights under
this Lease or as a consent to any subsequent transfer.
     SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions
shall apply to any subletting by Tenant of all or any part of the Premises and
shall be deemed included in each sublease:
     (a) Each and every provision contained in this Lease (other than with
respect to the payment of rent hereunder) is incorporated by reference into and
made a part of such sublease, with “Landlord” hereunder meaning the sublandlord
therein and “Tenant” hereunder meaning the subtenant therein.
     (b) Tenant hereby irrevocably assigns to Landlord all of Tenant’s interest
in all rentals and income arising from any sublease of the Premises, and
Landlord may collect such rent and income and apply the same toward Tenant’s
obligations under this Lease; provided, however, that until there is an Event of
Default by Tenant, Tenant shall have the right to receive and collect the
sublease rentals. Landlord shall not, by reason of this assignment or the
collection of sublease rentals, be deemed liable to the subtenant for the
performance of any of Tenant’s obligations under the sublease. Tenant hereby
irrevocably authorizes and directs any subtenant, upon receipt of a written
notice from Landlord stating that an Event of Default exists in the performance
of Tenant’s obligations under this Lease, to pay to Landlord all sums then and
thereafter due under the sublease. Tenant agrees that the subtenant may rely on
that notice without any duty of further inquiry and notwithstanding any notice
or claim by Tenant to the contrary. Tenant shall have no right or claim against
the subtenant or Landlord for any rentals so paid to Landlord.
     (c) In the event of the termination of this Lease for any reason, including
without limitation as the result of an Event of Default by Tenant or by the
mutual agreement of Landlord and Tenant, Landlord may, at its sole option, take
over Tenant’s entire interest in any sublease and, upon notice from Landlord,
the subtenant shall attorn to Landlord. In no event, however, shall Landlord be
liable for any previous act or omission by Tenant under the sublease or for the
return of any advance rental payments or deposits under the sublease that have
not been actually delivered to Landlord, nor shall Landlord be bound by any
sublease modification executed without Landlord’s consent or for any advance
rental payment by the subtenant in excess of one month’s rent. The provisions of
this Lease (other than with respect to the payment of rent), including without
limitation those pertaining to insurance and indemnification, shall be deemed
incorporated by reference into the sublease despite the termination of this
Lease. In the event Landlord does not elect to take over Tenant’s interest in a
sublease in the event of any such termination of this Lease, such sublease shall
terminate concurrently with the termination of this Lease and such subtenant
shall have no further rights under such sublease and Landlord shall have no
obligations to such subtenant.
     SECTION 9.4. CERTAIN TRANSFERS. The following shall be deemed to constitute
an assignment of this Lease; (a) the sale of all or substantially all of
Tenant’s assets (other than bulk sales in the ordinary course of business),
(b) if Tenant is a corporation, an unincorporated association, a limited
liability company or a partnership, the transfer, assignment or hypothecation of
any stock or interest in such corporation, association, limited liability
company or partnership in the aggregate of twenty-five percent (25%) (except for
publicly traded shares of stock constituting a transfer of twenty-five percent
(25%) or more in the aggregate, so long as no change in the controlling interest
of Tenant occurs as a result thereof), or (c) any other direct or indirect
change of control of Tenant, including, without limitation, change of control of
Tenant’s parent company or a merger by Tenant or its parent company.
Notwithstanding the foregoing, Landlord’s consent shall not be required for the
assignment of this Lease as a result of a merger by Tenant with or into another
entity or a reorganization of Tenant, so long as (i) the net worth of the
successor or reorganized entity after such merger is at least equal to the
greater of the net worth of Tenant as of the execution of this Lease by Landlord
or the net worth of Tenant immediately prior to the date of such merger or
reorganization, evidence of which, satisfactory to Landlord, shall be presented
to Landlord prior to such merger or reorganization, (ii) Tenant shall provide to
Landlord, prior to such merger or reorganization, written notice of such merger
or reorganization and such assignment documentation and other information as
Landlord may require in connection therewith, and (iii) all of the terms and
requirements of Section 9.2 and 9.3 shall apply with respect to such assignment.

 

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ARTICLE X. INSURANCE AND INDEMNITY
     SECTION 10.1. TENANT’S INSURANCE. Tenant, at its sole cost and expense,
shall provide and maintain in effect the insurance described in Exhibit D.
Evidence of that insurance must be delivered to Landlord prior to the Early
Occupancy Date or any earlier date on which Tenant may enter upon or take
possession of the Premises for any reason whatsoever.
     SECTION 10.2. LANDLORD’S INSURANCE. Landlord may, at its election, provide
any or all of the following types of insurance, with or without deductible and
in amounts and coverages as may be determined by Landlord in its sole and
absolute discretion: property insurance, subject to standard exclusions,
covering the Building and/or Project, and such other risks as Landlord or its
mortgagees may from time to time deem appropriate, including coverage for the
Tenant Improvements constructed by Landlord pursuant to the Work Letter (if any)
attached hereto, and commercial general liability coverage. Landlord shall not
be required to carry insurance of any kind on Tenant’s Alterations or on
Tenant’s other property, including, without limitation, Tenant’s trade fixtures,
furnishings, equipment, signs and all other items of personal property, and
Landlord shall not be obligated to repair or replace that property should damage
occur. All proceeds of insurance maintained by Landlord upon the Building and/or
Project shall be the property of Landlord, whether or not Landlord is obligated
to or elects to make any repairs. At Landlord’s option, Landlord may self-insure
all or any portion of the risks for which Landlord may elect to provide
insurance hereunder.
     SECTION 10.3. TENANT’S INDEMNITY. To the fullest extent permitted by law,
Tenant shall defend, indemnify, protect, save and hold harmless Landlord, its
agents, and any and all affiliates of Landlord, including, without limitation,
any corporations or other entities controlling, controlled by or under common
control with Landlord, from and against any and all claims, demands, actions,
losses, liabilities, costs or expenses arising either before or after the Early
Occupancy Date from: Tenant’s use or occupancy of the Premises, the Building or
the Common Areas, including, without limitation, the use by Tenant, its agents,
employees, invitees or licensees of any recreational facilities within the
Common Areas; the conduct of Tenant’s business; any activity, work, or thing
done, permitted or suffered by Tenant or its agents, employees, invitees or
licensees in or about the Premises, the Building or the Common Areas; any Event
of Default in the performance of any obligation on Tenant’s part to be performed
under this Lease; or any act or negligence of Tenant or its agents, employees,
visitors, patrons, guests, invitees or licensees. Landlord may, at its option,
require Tenant to assume Landlord’s defense in any claim, action or proceeding
covered by this Section through counsel satisfactory to Landlord. The provisions
of this Section shall expressly survive the expiration or sooner termination of
this Lease. Tenant’s obligations under this Section shall not apply in the event
that the claim, demand, action, loss, liability, cost or expense is caused
solely by the active negligence or willful misconduct of Landlord.
     SECTION 10.4. LANDLORD’S NONLIABILITY. Landlord, its agents, and any and
all affiliates of Landlord, shall not be liable to Tenant, its employees, agents
and/or invitees, and Tenant hereby waives all claims against Landlord, its
agents, and any and all affiliates of Landlord, for and knowingly assumes the
risk of loss of or damage to any property, or loss or interruption of business
or income, or any other loss, cost, damage, injury or liability whatsoever
(including without limitation any consequential damages and lost profit or
opportunity costs), resulting from, but not limited to, Acts of God, acts of
civil disobedience or insurrection, acts or omissions of third parties and/or of
other tenants within the Project or their agents, employees, contractors, guests
or invitees, fire, explosion, falling plaster, steam, gas, electricity, water or
rain which may leak or flow from or into any part of the Premises, mold, or from
the breakage, leakage, obstruction or other defects of the pipes, sprinklers,
wires, appliances, plumbing, air conditioning, electrical works, roof, windows
or other fixtures in the Building (whether the damage or injury results from
conditions arising in the Premises or in other portions of the Building),
regardless of the negligence of Landlord, its agents or any and all affiliates
of Landlord in connection with any of the foregoing. It is understood that any
such condition may require the temporary evacuation or closure of all or a
portion of the Building. Landlord shall have no liability whatsoever (including
without limitation consequential damages and lost profit or opportunity costs)
and, except as provided in Sections 11.1 and 12.1 below, there shall be no
abatement of rent, by reason of any injury to or interference with Tenant’s
business arising from the making of any repairs, alterations or improvements to
any portion of the Building, including repairs to the Premises, nor shall any
related activity by Landlord constitute an actual or constructive eviction. In
making repairs, alterations or improvements, however, Landlord shall interfere
as little as reasonably practicable with the conduct of Tenant’s business in the
Premises. Should Tenant elect to receive any service or products from a
concessionaire, licensee or third party tenant of Landlord, Landlord shall have
no liability for any services or products so provided or for any breach of
contract by such third party provider. Neither Landlord nor its agents shall be
liable for interference with light or other similar intangible interests. Tenant
shall immediately notify Landlord in case of fire or accident in the Premises,
the Building or the Project and of defects in any improvements or equipment.
     SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby waives
all rights of recovery against the other and the other’s agents on account of
loss and damage occasioned to the property of such waiving party to the extent
that the waiving party is entitled to proceeds for such loss or damage under any
property insurance policies carried or required to be carried by the provisions
of this Lease; provided however, that the foregoing waiver shall not apply to
the extent of Tenant’s obligations to pay deductibles under any such policies
and this Lease. By this waiver it is the intent of the parties that neither
Landlord nor Tenant shall be liable to any insurance company (by way of
subrogation or otherwise) insuring the other party for any loss or damage
insured against under any property insurance policies contemplated by this
Lease, even though such loss or damage might be occasioned by the negligence of
such party, its agents, employees, contractors, guests or invitees.

 

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ARTICLE XI. DAMAGE OR DESTRUCTION
     SECTION 11.1. RESTORATION.
     (a) If the Premises or the Building or a part thereof are materially
damaged by any fire, flood, earthquake or other casualty, Landlord shall have
the right to terminate this Lease upon written notice to Tenant if: (i) Landlord
reasonably determines that proceeds necessary to pay the full cost of repair are
not available from Landlord’s insurance, including without limitation earthquake
insurance, plus such additional amounts Tenant elects, at its option, to
contribute, excluding however the deductible (for which Tenant shall be
responsible for Tenant’s Share); (ii) Landlord reasonably determines that the
Premises cannot, with reasonable diligence, be fully repaired by Landlord (or
cannot be safely repaired because of the presence of hazardous factors,
including without limitation Hazardous Materials, earthquake faults, and other
similar dangers) within two hundred seventy (270) days after the date of the
damage; (iii) an Event of Default by Tenant has occurred; or (iv) the material
damage occurs during the final twelve (12) months of the Term. Landlord shall
notify Tenant in writing (“Landlord’s Notice”) within sixty (60) days after the
damage occurs as to (A) whether Landlord is terminating this Lease as a result
of such material damage and (B) if Landlord is not terminating this Lease, the
number of days within which Landlord estimates that the Premises, with
reasonable diligence, are likely to be fully repaired. In the event Landlord
elects to terminate this Lease, this Lease shall terminate as of the date
specified for termination by Landlord’s Notice (which termination date shall in
no event be later than sixty (60) days following the date of the damage, or, if
no such date is specified, such termination shall be the date of Landlord’s
Notice).
     (b) If Landlord has the right to terminate this Lease pursuant to
Section 11.1(a) and does not elect to so terminate this Lease, and provided that
at the time of Landlord’s Notice neither an Event of Default exists nor has
Landlord delivered to Tenant a notice of any failure by Tenant to fulfill an
obligation under this Lease which, unless cured by Tenant within the applicable
grace period, would constitute an Event of Default, then within ten (10) days
following delivery of Landlord’s Notice pursuant to Section 11.1(a), Tenant may
elect to terminate this Lease by written notice to Landlord, but only if
(i) Landlord’s Notice specifies that Landlord has determined that the Premises
cannot be repaired, with reasonable diligence, within two hundred seventy
(270) days after the date of damage or (ii) the casualty has occurred within the
final twelve (12) months of the Term and such material damage has a materially
adverse impact on Tenant’s continued use of the Premises. If Tenant fails to
provide such termination notice within such ten (10) day period, Tenant shall be
deemed to have waived any termination right under this Section 1l.1(b) or any
other applicable law.
     (c) In the event that neither Landlord nor Tenant terminates this Lease
pursuant to this Section 11.1 as a result of material damage to the Building or
Premises resulting from a casualty, Landlord shall repair all material damage to
the Premises or the Building as soon as reasonably possible and this Lease shall
continue in effect for the remainder of the Term. Subject to any provision to
the contrary in the Work Letter, such repair by Landlord shall include repair of
material damage to the Tenant Improvements constructed pursuant to the Work
Letter. Landlord’s repair of material damage shall be at Landlord’s sole cost
and expense except for any insurance deductible (for which Tenant shall be
responsible for Tenant’s Share). Landlord shall have the right, but not the
obligation, to repair or replace any other leasehold improvements made by Tenant
or any Alterations (as defined in Section 7.3) constructed by Tenant as part of
Landlord’s repair of material damage, in which case Tenant shall make available
to Landlord upon demand insurance proceeds from insurance required to be
maintained by Tenant. If Landlord elects to repair or replace such leasehold
improvements and/or Alterations, all insurance proceeds available for such
repair or replacement shall be made available to Landlord. Landlord shall have
no liability to Tenant in the event that the Premises or the Building has not
been fully repaired within the time period specified by Landlord in Landlord’s
Notice to Tenant as described in Section 11.1(a). Notwithstanding the provisions
of this Article XI, the repair of damage to the Premises to the extent such
damage is not material shall be governed by Sections 7.1 and 7.2.
     (d) Commencing on the date of such material damage to the Building, and
ending on the sooner of the date the damage is repaired or the date this Lease
is terminated, the rental to be paid under this Lease shall be abated in the
same proportion that the Floor Area of the Premises that is rendered unusable by
the damage from time to time bears to the total Floor Area of the Premises, as
determined by Landlord, but only to the extent that Landlord is entitled to
reimbursement from the proceeds of the business interruption insurance required
to be maintained by Tenant pursuant to Exhibit D.
     (e) Landlord shall not be required to repair or replace any improvements or
fixtures that Tenant is obligated to repair or replace pursuant to Section 7.1
or any other provision of this Lease and Tenant shall continue to be obligated
to so repair or replace any such improvements or fixtures, notwithstanding any
provisions to the contrary in this Article XI. In addition, but subject to the
provisions of Section 10.5, in the event the damage or destruction to the
Premises or Building are due in substantial part to the fault or neglect of
Tenant or its employees, subtenants, invitees or representatives, the costs of
such repairs or replacement to the Premises or Building shall be borne by
Tenant, and in addition, Tenant shall not be entitled to terminate this Lease as
a result, notwithstanding the provisions of Section 11.1(b).
     (f) Tenant shall fully cooperate with Landlord in removing Tenant’s
personal property and any debris from the Premises to facilitate all inspections
of the Premises and the making of any repairs. Notwithstanding anything to the
contrary contained in this Lease, if Landlord in good faith believes there is a
risk of injury to persons or damage to property from entry into the Building or
Premises following any damage or destruction thereto, Landlord may restrict
entry into the Building or the Premises by Tenant, its employees, agents and
contractors in a non-discriminatory manner, without being deemed to have
violated Tenant’s rights of quiet enjoyment to, or made an unlawful detainer of,
or evicted Tenant from, the Premises. Upon request, Landlord shall consult with
Tenant to determine if there are safe methods of entry into the Building or the
Premises solely in order to allow Tenant to retrieve files, data in computers,
and necessary inventory, subject however to all indemnities and waivers of
liability from Tenant to Landlord contained in this Lease and any additional
indemnities and waivers of liability which Landlord may require.

 

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     SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall, accordingly, supersede any contrary statute or rule of
law.
ARTICLE XII. EMINENT DOMAIN
     SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the
Premises is taken by any lawful authority by exercise of the right of eminent
domain, or sold to prevent a taking, either Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
the authority. In the event title to a portion of the Building or Project,
whether or not including a portion of the Premises, is taken or sold to prevent
a taking, and if Landlord elects to restore the Building in such a way as to
alter the Premises materially, either party may terminate this Lease, by written
notice to the other party, effective on the date of vesting of title. In the
event neither party has elected to terminate this Lease as provided above, then
Landlord shall promptly, after receipt of a sufficient condemnation award,
proceed to restore the Premises to substantially their condition prior to the
taking, and a proportionate allowance shall be made to Tenant for the rent
corresponding to the time during which, and to the part of the Premises of
which, Tenant is deprived on account of the taking and restoration. In the event
of a taking, Landlord shall be entitled to the entire amount of the condemnation
award without deduction for any estate or interest of Tenant; provided that
nothing in this Section shall be deemed to give Landlord any interest in, or
prevent Tenant from seeking any award against the taking authority for, the
taking of personal property and fixtures belonging to Tenant or for relocation
or business interruption expenses recoverable from the taking authority.
     SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed ninety
(90) days.
     SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a taking
of the parking area such that Landlord can no longer provide sufficient parking
to comply with this Lease, Landlord may substitute reasonably equivalent parking
in a location reasonably close to the Building; provided that if Landlord fails
to make that substitution within ninety (90) days following the taking and if
the taking materially impairs Tenant’s use and enjoyment of the Premises, Tenant
may, at its option, terminate this Lease by written notice to Landlord. If this
Lease is not so terminated by Tenant, there shall be no abatement of rent and
this Lease shall continue in effect.
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
     SECTION 13.1. SUBORDINATION. At the option of Landlord or any lender of
Landlord’s that obtains a security interest in the Building, this Lease shall be
either superior or subordinate to all ground or underlying leases, mortgages and
deeds of trust, if any, which may hereafter affect the Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as no Event of Default exists under this Lease beyond any
applicable notice and cure period, Tenant’s possession and quiet enjoyment of
the Premises shall not be disturbed and this Lease shall not terminate in the
event of termination of any such ground or underlying lease, or the foreclosure
of any such mortgage or deed of trust, to which this Lease has been subordinated
pursuant to this Section. Tenant shall execute and deliver any documents or
agreements requested by Landlord or such lessor or lender which provide Tenant
with the non-disturbance protections set forth in this Section. In the event of
a termination or foreclosure, Tenant shall become a tenant of and attorn to the
successor-in-interest to Landlord upon the same terms and conditions as are
contained in this Lease, and shall execute any instrument reasonably required by
Landlord’s successor for that purpose. Tenant shall also, upon written request
of Landlord, execute and deliver all instruments as may be required from time to
time to subordinate the rights of Tenant under this Lease to any ground or
underlying lease or to the lien of any mortgage or deed of trust (provided that
such instruments include the nondisturbance and attornment provisions set forth
above), or, if requested by Landlord, to subordinate, in whole or in part, any
ground or underlying lease or the lien of any mortgage or deed of trust to this
Lease. Tenant agrees that any purchaser at a foreclosure sale or lender taking
title under a deed-in-lieu of foreclosure shall not be responsible for any act
or omission of a prior landlord, shall not be subject to any offsets or defenses
Tenant may have against a prior landlord, and shall not be liable for the return
of the security deposit to the extent it is not actually received by such
purchaser or bound by any rent paid for more than the current month in which the
foreclosure occurred.
     SECTION 13.2. ESTOPPEL CERTIFICATE.
     (a) Tenant shall within ten (10) days following written request from
Landlord, execute, acknowledge and deliver to Landlord, in any form that
Landlord may reasonably require, a statement in writing (i) certifying that this
Lease is unmodified and in full force and effect (or, if modified, stating the
nature of the modification and certifying that this Lease, as modified, is in
full force and effect) and the dates to which the rental, additional rent and
other charges have been paid in advance, if any, and (ii) acknowledging that, to
Tenant’s knowledge, there are no uncured defaults on the part of Landlord, or
specifying each default if any are claimed, and (iii) setting forth all further
information that Landlord or any prospective purchaser or encumbrancer may
reasonably require. Tenant’s statement may be relied upon by any prospective
purchaser or encumbrancer of all or any portion of the Building or Project.
     (b) Notwithstanding any other rights and remedies of Landlord, Tenant’s
failure to deliver any estoppel statement within the provided time shall be
conclusive upon Tenant that (i) this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) there are no uncured
Events of Default in Landlord’s performance, and (iii) not more than one month’s
rental has been paid in advance.

 

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     SECTION 13.3. FINANCIALS.
     (a) Tenant shall deliver to Landlord, prior to the execution of this Lease
and thereafter at any time and from time to time within ten (10) days following
Landlord’s written request, Tenant’s current tax returns and financial
statements, certified to be true, accurate and complete by the chief financial
officer of Tenant, including a balance sheet and profit and loss statement for
the most recent prior year, or, in the event Tenant is a publicly traded
corporation on a nationally recognized stock exchange, Tenant’s current
financial reports filed with the Securities and Exchange Commission
(collectively, the “Statements”), which Statements shall accurately and
completely reflect the financial condition of Tenant. Landlord agrees that it
will keep the Statements confidential, except that Landlord shall have the right
to deliver the same to any proposed purchaser of the Building or Project, and to
any encumbrancer or proposed encumbrancer of all or any portion of the Building
or Project.
     (b) Tenant acknowledges that Landlord is relying on the Statements in its
determination to enter into this Lease, and Tenant represents to Landlord, which
representation shall be deemed made on the date of this Lease and again on the
Commencement Date, that no material change in the financial condition of Tenant,
as reflected in the Statements, has occurred since the date Tenant delivered the
Statements to Landlord. The Statements are represented and warranted by Tenant
to be correct and to accurately and fully reflect Tenant’s true financial
condition as of the date of submission of any Statements to Landlord.
ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES
     SECTION 14.1. TENANT’S DEFAULTS. The occurrence of any one or more of the
following events (following the expiration of any cure period set forth below,
if any is provided) shall constitute an “Event of Default” by Tenant:
     (a) The failure by Tenant to make any payment of Basic Rent or additional
rent required to be made by Tenant, as and when due, where the failure continues
for a period of five (5) days after written notice from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure Section 1161
and 1161(a) as amended. For purposes of these Events of Default and remedies
provisions, the term “additional rent” shall be deemed to include all amounts of
any type whatsoever other than Basic Rent to be paid by Tenant pursuant to the
terms of this Lease and the Work Letter.
     (b) The assignment, sublease, encumbrance or other transfer of this Lease
by Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy, or other means, without the prior
written consent of Landlord when consent is required by this Lease.
     (c) The discovery by Landlord that any financial statement provided by
Tenant, or by any affiliate, successor or guarantor of Tenant, was materially
false.
     (d) The failure of Tenant to timely and fully provide any subordination
agreement, estoppel certificate or financial statements in accordance with the
requirements of Article XIII.
     (e) The abandonment of the Premises by Tenant.
     (f) The failure or inability by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in this Section 14.1, where the
failure continues for a period of thirty (30) days after written notice from
Landlord to Tenant or such shorter period as is specified in any other provision
of this Lease; provided, however, that any such notice shall be in lieu of, and
not in addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended. However, if the nature of the failure is
such that more than thirty (30) days are reasonably required for its cure, then
an Event of Default shall not be deemed to have occurred if Tenant commences the
cure within thirty (30) days, and thereafter diligently pursues the cure to
completion.
     (g) (i) The making by Tenant of any general assignment for the benefit of
creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a Chapter 7 debtor under the Bankruptcy Code, to have debts discharged
or for reorganization or arrangement under any law relating to bankruptcy
(unless, in the case of a petition filed against Tenant, the same is dismissed
within thirty (30) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant’s assets located at the Premises or of
Tenant’s interest in this Lease, if possession is not restored to Tenant within
thirty (30) days; (iv) the attachment, execution or other judicial seizure of
substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease, where the seizure is not discharged within thirty
(30) days; (v) Tenant’s convening of a meeting of its creditors for the purpose
of effecting a moratorium upon or composition of its debts; or (vi) the failure
of Tenant to pay its material obligations to creditors as and when they become
due and payable, other than as a result of a good faith dispute by Tenant as to
the amount due to such creditors. Landlord shall not be deemed to have knowledge
of any event described in this Section 14.1(g) unless notification in writing is
received by Landlord, nor shall there be any presumption attributable to
Landlord of Tenant’s insolvency. In the event that any provision of this
Section 14.1(g) is contrary to applicable law, the provision shall be of no
force or effect.
     (h) Any other breach of this Lease which this Lease provides is an Event of
Default.

 

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     SECTION 14.2. LANDLORD’S REMEDIES.
     (a) If an Event of Default by Tenant occurs, then in addition to any other
remedies available to Landlord, Landlord may exercise the following remedies:
          (i) Landlord may terminate Tenant’s right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. Such
termination shall not affect any accrued obligations of Tenant under this Lease.
Upon termination, Landlord shall have the right to reenter the Premises and
remove all persons and property. Landlord shall also be entitled to recover from
Tenant (and to retain, use or apply any Security Deposit held by Landlord
towards amounts estimated by Landlord as):
               (1) The worth at the time of award of the unpaid Basic Rent and
additional rent which had been earned at the time of termination;
               (2) The worth at the time of award of the amount by which the
unpaid Basic Rent and additional rent which would have been earned after
termination until the time of award exceeds the amount of such loss that Tenant
proves could have been reasonably avoided;
               (3) The worth at the time of award of the amount by which the
unpaid Basic Rent and additional rent for the balance of the Term after the time
of award exceeds the amount of such loss that Tenant proves could be reasonably
avoided;
               (4) Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant’s failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result from Tenant’s Event of Default, including, but not limited to, the cost
of recovering possession of the Premises, refurbishment of the Premises,
marketing costs, commissions and other expenses of reletting, including
necessary repair, the unamortized portion of any tenant improvements and
brokerage commissions funded by Landlord in connection with this Lease,
reasonable attorneys’ fees, and any other reasonable costs; and
               (5) At Landlord’s election, all other amounts in addition to or
in lieu of the foregoing as may be permitted by law. The term “rent” as used in
the Lease shall be deemed to mean the Basic Rent, Tenant’s Share of Operating
Expenses and any other sums required to be paid by Tenant to Landlord pursuant
to the terms of this Lease whether or not designated as additional rent
hereunder, including, without limitation, any sums that may be owing from Tenant
pursuant to Section 4.3 of this Lease. Any sum, other than Basic Rent, shall be
computed on the basis of the average monthly amount accruing during the
twenty-four (24) month period immediately prior to the Event of Default, except
that if it becomes necessary to compute such rental before the twenty-four
(24) month period has occurred, then the computation shall be on the basis of
the average monthly amount during the shorter period. As used in
Sections 14.2(a)(i) (1) and (2) above, the “worth at the time of award” shall be
computed by allowing interest at the rate of ten percent (10%) per annum. As
used in Section 14.2(a)(i)(3) above, the “worth at the time of award” shall be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).
          (ii) Landlord may elect not to terminate Tenant’s right to possession
of the Premises and to continue to enforce all of its rights and remedies under
this Lease, including the right to collect all rent as it becomes due as
provided in Civil Code Section 1951.4. Efforts by the Landlord to maintain,
preserve or relet the Premises, or the appointment of a receiver to protect the
Landlord’s interests under this Lease, shall not constitute a termination of the
Tenant’s right to possession of the Premises. In the event that Landlord elects
to avail itself of the remedy provided by this Section 14.2(a)(ii), Landlord
shall not unreasonably withhold its consent to an assignment or subletting of
the Premises subject to the reasonable standards for Landlord’s consent as are
contained in this Lease.
     (b) Landlord shall be under no obligation to observe or perform any
covenant of this Lease on its part to be observed or performed which accrues
after the date of any Event of Default by Tenant unless and until the Event of
Default is cured by Tenant, it being understood and agreed that the performance
by Landlord of its obligations under this Lease are expressly conditioned upon
Tenant’s full and timely performance of its obligations under this Lease. The
various rights and remedies reserved to Landlord in this Lease or otherwise
shall be cumulative and, except as otherwise provided by California law,
Landlord may pursue any or all of its rights and remedies at the same time.
     (c) No delay or omission of Landlord to exercise any right or remedy shall
be construed as a waiver of the right or remedy or of any breach or Event of
Default by Tenant. The acceptance by Landlord of rent shall not be a (i) waiver
of any preceding breach or Event of Default by Tenant of any provision of this
Lease, other than the failure of Tenant to pay the particular rent accepted,
regardless of Landlord’s knowledge of the preceding breach or Event of Default
at the time of acceptance of rent, or (ii) a waiver of Landlord’s right to
exercise any remedy available to Landlord by virtue of the breach or Event of
Default. The acceptance of any payment from a debtor in possession, a trustee, a
receiver or any other person acting on behalf of Tenant or Tenant’s estate shall
not waive or cure a breach or Event of Default under Section 14.1. No payment by
Tenant or receipt by Landlord of a lesser amount than the rent required by this
Lease shall be deemed to be other than a partial payment on account of the
earliest due stipulated rent, nor shall any endorsement or statement on any
check or letter be deemed an accord and satisfaction and Landlord shall accept
the check or payment without prejudice to Landlord’s right to recover the
balance of the rent or pursue any other remedy available to it. No act or thing
done by Landlord or Landlord’s agents during the Term shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept a
surrender shall be valid unless in writing and signed by Landlord. No employee
of Landlord or of Landlord’s agents shall have any power to accept the keys to
the Premises prior to the termination of this Lease, and the delivery of the
keys to any employee shall not operate as a termination of this Lease or a
surrender of the Premises.

 

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     SECTION 14.3. LATE PAYMENTS.
     (a) Any payment due to Landlord under this Lease, including without
limitation Basic Rent, Tenant’s Share of Operating Expenses or any other payment
due to Landlord under this Lease whether or not designated as additional rent
hereunder, that is not received by Landlord within five (5) days following the
date due shall bear interest at the maximum rate permitted by law from the date
due until fully paid. The payment of interest shall not cure any breach or Event
of Default by Tenant under this Lease. In addition, Tenant acknowledges that the
late payment by Tenant to Landlord of Basic Rent and Tenant’s Share of Operating
Expenses will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult and impracticable to
ascertain. Those costs may include, but are not limited to, administrative,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any ground lease, mortgage or trust deed covering the
Premises. Accordingly, if any Basic Rent or Tenant’s Share of Operating Expenses
due from Tenant shall not be received by Landlord or Landlord’s designee within
five (5) days following the date due, then Tenant shall pay to Landlord, in
addition to the interest provided above, a late charge, which the Tenant agrees
is reasonable, in a sum equal to the greater of five percent (5%) of the amount
overdue or One Hundred Dollars ($100.00) for each delinquent payment. Acceptance
of a late charge by Landlord shall not constitute a waiver of Tenant’s breach or
Event of Default with respect to the overdue amount, nor shall it prevent
Landlord from exercising any of its other rights and remedies.
     (b) Following each second installment of Basic Rent and/or the payment of
Tenant’s Share of Operating Expenses within any twelve (12) month period that is
not paid within five (5) days following the date due, Landlord shall have the
option (i) to require that beginning with the first payment of Basic Rent next
due, Basic Rent and the Tenant’s Share of Operating Expenses shall no longer be
paid in monthly installments but shall be payable quarterly three (3) months in
advance and/or (ii) to require that Tenant increase the amount, if any, of the
Security Deposit by one hundred percent (100%). Should Tenant deliver to
Landlord, at any time during the Term, two (2) or more insufficient checks, the
Landlord may require that all monies then and thereafter due from Tenant be paid
to Landlord by cashier’s check. If any check for any payment to Landlord
hereunder is returned by the bank for any reason, such payment shall not be
deemed to have been received by Landlord and Tenant shall be responsible for any
applicable late charge, interest payment and the charge to Landlord by its bank
for such returned check. Nothing in this Section shall be construed to compel
Landlord to accept Basic Rent, Tenant’s Share of Operating Expenses or any other
payment from Tenant if there exists an Event of Default unless such payment
fully cures any and all such Events of Default. Any acceptance of any such
payment shall not be deemed to waive any other right of Landlord under this
Lease. Any payment by Tenant to Landlord may be applied by Landlord, in its sole
and absolute discretion, in any order determined by Landlord to any amounts then
due to Landlord.
     SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to
be performed by Tenant under this Lease shall be performed at Tenant’s sole cost
and expense and without any abatement of rent or right of set-off. If Tenant
fails to pay any sum of money, other than rent payable to Landlord, or fails to
perform any other act on its part to be performed under this Lease, and the
failure continues beyond any applicable grace period set forth in Section 14.1,
then in addition to any other available remedies, Landlord may, at its election
make the payment or perform the other act on Tenant’s part and Tenant hereby
grants Landlord the right to enter onto the Premises in order to carry out such
performance. Landlord’s election to make the payment or perform the act on
Tenant’s part shall not give rise to any responsibility of Landlord to continue
making the same or similar payments or performing the same or similar acts nor
shall Landlord be responsible to Tenant for any damage caused to Tenant as the
result of such performance by Landlord. Tenant shall, promptly upon demand by
Landlord, reimburse Landlord for all sums paid by Landlord and all necessary
incidental costs, together with interest at the maximum rate permitted by law
from the date of the payment by Landlord.
     SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease, and Tenant shall
have no rights to take any action against Landlord, unless and until Landlord
has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord’s
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion. In the event of Landlord’s default under this Lease,
Tenant’s sole remedies shall be to seek damages or specific performance from
Landlord, provided that any damages shall be limited to Tenant’s actual
out-of-pocket expenses and shall in no event include any consequential damages,
lost profits or opportunity costs.
     SECTION 14.6. EXPENSES AND LEGAL FEES. All sums reasonably incurred by
Landlord in connection with any Event of Default by Tenant under this Lease or
holding over of possession by Tenant after the expiration or earlier termination
of this Lease, or any action related to a filing for bankruptcy or
reorganization by Tenant, including without limitation all costs, expenses and
actual accountants, appraisers, attorneys and other professional fees, and any
collection agency or other collection charges, shall be due and payable to
Landlord on demand, and shall bear interest at the rate of ten percent (10%) per
annum. Should either Landlord or Tenant bring any action in connection with this
Lease, the prevailing party shall be entitled to recover as a part of the action
its reasonable attorneys’ fees, and all other reasonable costs. The prevailing
party for the purpose of this Section shall be determined by the trier of the
facts.

 

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SECTION 14.7. WAIVER OF JURY TRIAL/JUDICIAL REFERENCE.
     (a) LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD
THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY,
AND, TO THE EXTENT ENFORCEABLE UNDER CALIFORNIA LAW, EACH PARTY DOES HEREBY
EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST
THE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR
SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR
IN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES
AND/OR ANY CLAIM OF INJURY OR DAMAGE. FURTHERMORE, THIS WAIVER AND RELEASE OF
ALL RIGHTS TO A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF EACH AND EVERY OTHER
PROVISION, COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE.
     (b) IN THE EVENT THAT THE JURY WAIVER PROVISIONS OF SECTION 14.7(a) ARE NOT
ENFORCEABLE UNDER CALIFORNIA LAW, THEN THE PROVISIONS OF THIS SECTION 14.7(b)
SHALL APPLY. IT IS THE DESIRE AND INTENTION OF THE PARTIES TO AGREE UPON A
MECHANISM AND PROCEDURE UNDER WHICH CONTROVERSIES AND DISPUTES ARISING OUT OF
THIS LEASE OR RELATED TO THE PREMISES WILL BE RESOLVED IN A PROMPT AND
EXPEDITIOUS MANNER. ACCORDINGLY, EXCEPT WITH RESPECT TO ACTIONS FOR UNLAWFUL OR
FORCIBLE DETAINER OR WITH RESPECT TO THE PREJUDGMENT REMEDY OF ATTACHMENT, ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE
OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR SUBSIDIARY
OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY
CLAIM OF INJURY OR DAMAGE, SHALL BE HEARD AND RESOLVED BY A REFEREE UNDER THE
PROVISIONS OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, SECTIONS 638 – 645.1,
INCLUSIVE (AS SAME MAY BE AMENDED, OR ANY SUCCESSOR STATUTE(S) THERETO) (THE
“REFEREE SECTIONS”). ANY FEE TO INITIATE THE JUDICIAL REFERENCE PROCEEDINGS
SHALL BE PAID BY THE PARTY INITIATING SUCH PROCEDURE; PROVIDED HOWEVER, THAT THE
COSTS AND FEES, INCLUDING ANY INITIATION FEE, OF SUCH PROCEEDING SHALL
ULTIMATELY BE BORNE IN ACCORDANCE WITH SECTION 14.6 ABOVE. THE VENUE OF THE
PROCEEDINGS SHALL BE IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED. WITHIN TEN
(10) DAYS OF RECEIPT BY ANY PARTY OF A WRITTEN REQUEST TO RESOLVE ANY DISPUTE OR
CONTROVERSY PURSUANT TO THIS SECTION 14.7(b), THE PARTIES SHALL AGREE UPON A
SINGLE REFEREE WHO SHALL TRY ALL ISSUES, WHETHER OF FACT OR LAW, AND REPORT A
FINDING AND JUDGMENT ON SUCH ISSUES AS REQUIRED BY THE REFEREE SECTIONS. IF THE
PARTIES ARE UNABLE TO AGREE UPON A REFEREE WITHIN SUCH TEN (10) DAY PERIOD, THEN
ANY PARTY MAY THEREAFTER FILE A LAWSUIT IN THE COUNTY IN WHICH THE PREMISES ARE
LOCATED FOR THE PURPOSE OF APPOINTMENT OF A REFEREE UNDER CALIFORNIA CODE OF
CIVIL PROCEDURE SECTIONS 638 AND 640, AS SAME MAY BE AMENDED OF ANY SUCCESSOR
STATUTE(S) THERETO. IF THE REFEREE IS APPOINTED BY THE COURT, THE REFEREE SHALL
BE A NEUTRAL AND IMPARTIAL RETIRED JUDGE WITH SUBSTANTIAL EXPERIENCE IN THE
RELEVANT MATTERS TO BE DETERMINED, FROM JAMS/ENDISPUTE, INC., THE AMERICAN
ARBITRATION ASSOCIATION OR SIMILAR MEDIATION/ARBITRATION ENTITY. THE PROPOSED
REFEREE MAY BE CHALLENGED BY ANY PARTY FOR ANY OF THE GROUNDS LISTED IN SECTION
641 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, AS SAME MAY BE AMENDED OR ANY
SUCCESSOR STATUTE(S) THERETO. THE REFEREE SHALL HAVE THE POWER TO DECIDE ALL
ISSUES OF FACT AND LAW AND REPORT HIS OR HER DECISION ON SUCH ISSUES, AND TO
ISSUE ALL RECOGNIZED REMEDIES AVAILABLE AT LAW OR IN EQUITY FOR ANY CAUSE OF
ACTION THAT IS BEFORE THE REFEREE, INCLUDING AN AWARD OF ATTORNEYS’ FEES AND
COSTS IN ACCORDANCE WITH CALIFORNIA LAW. THE REFEREE SHALL NOT, HOWEVER, HAVE
THE POWER TO AWARD PUNITIVE DAMAGES, NOR ANY OTHER DAMAGES WHICH ARE NOT
PERMITTED BY THE EXPRESS PROVISIONS OF THIS LEASE, AND THE PARTIES HEREBY WAIVE
ANY RIGHT TO RECOVER ANY SUCH DAMAGES. THE PARTIES SHALL BE ENTITLED TO CONDUCT
ALL DISCOVERY AS PROVIDED IN THE CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE
REFEREE SHALL OVERSEE DISCOVERY AND MAY ENFORCE ALL DISCOVERY ORDERS IN THE SAME
MANNER AS ANY TRIAL COURT JUDGE, WITH RIGHTS TO REGULATE DISCOVERY AND TO ISSUE
AND ENFORCE SUBPOENAS, PROTECTIVE ORDERS AND OTHER LIMITATIONS ON DISCOVERY
AVAILABLE UNDER CALIFORNIA LAW. THE REFERENCE PROCEEDING SHALL BE CONDUCTED IN
ACCORDANCE WITH CALIFORNIA LAW (INCLUDING THE RULES OF EVIDENCE), AND IN ALL
REGARDS, THE REFEREE SHALL FOLLOW CALIFORNIA LAW APPLICABLE AT THE TIME OF THE
REFERENCE PROCEEDING. IN ACCORDANCE WITH SECTION 644 OF THE CALIFORNIA CODE OF
CIVIL PROCEDURE, THE DECISION OF THE REFEREE UPON THE WHOLE ISSUE MUST STAND AS
THE DECISION OF THE COURT, AND UPON THE FILING OF THE STATEMENT OF DECISION WITH
THE CLERK OF THE COURT, OR WITH THE JUDGE IF THERE IS NO CLERK, JUDGMENT MAY BE
ENTERED THEREON IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT.
THE PARTIES SHALL PROMPTLY AND DILIGENTLY COOPERATE WITH ONE ANOTHER AND THE
REFEREE, AND SHALL PERFORM SUCH ACTS AS MAY BE NECESSARY TO OBTAIN A PROMPT AND
EXPEDITIOUS RESOLUTION OF THE DISPUTE OR CONTROVERSY IN ACCORDANCE WITH THE
TERMS OF THIS SECTION 14.7(b). TO THE EXTENT THAT NO PENDING LAWSUIT HAS BEEN
FILED TO OBTAIN THE APPOINTMENT OF A REFEREE, ANY PARTY, AFTER THE ISSUANCE OF
THE DECISION OF THE REFEREE, MAY APPLY TO THE COURT OF THE COUNTY IN WHICH THE
PREMISES ARE LOCATED FOR CONFIRMATION BY THE COURT OF THE DECISION OF THE
REFEREE IN THE SAME MANNER AS A PETITION FOR CONFIRMATION OF AN ARBITRATION
AWARD PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 1285 ET SEQ. (AS SAME MAY BE
AMENDED OR ANY SUCCESSOR STATUTE(S) THERETO).

 

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     SECTION 14.8. SATISFACTION OF JUDGMENT. The obligations of Landlord do not
constitute the personal obligations of the individual partners, trustees,
directors, officers, members or shareholders of Landlord or its constituent
partners or members. Should Tenant recover a money judgment against Landlord,
such judgment shall be satisfied only from the interest of Landlord in the
Project and out of the rent or other income from such property receivable by
Landlord or out of consideration received by Landlord from the sale or other
disposition of all or any part of Landlord’s right, title or interest in the
Project, and no action for any deficiency may be sought or obtained by Tenant.
ARTICLE XV. END OF TERM
     SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. Any period of time following the Expiration Date or earlier termination
of this Lease required for Tenant to remove its property or to place the
Premises in the condition required pursuant to Section 15.3 (or for Landlord to
do so if Tenant fails to do so) shall be deemed a holding over by Tenant. If
Tenant holds over for any period after the Expiration Date (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only and an Event of Default
under this Lease; such holding over with the prior written consent of Landlord
shall constitute a month-to-month tenancy commencing on the first (1st) day
following the termination of this Lease and terminating thirty (30) days
following delivery of written notice of termination by either Landlord or Tenant
to the other. In either of such events, possession shall be subject to all of
the terms of this Lease, except that the monthly Basic Rent shall be the greater
of (a) one hundred fifty percent (150%) of the Basic Rent for the month
immediately preceding the date of termination or (b) the then currently
scheduled Basic Rent for comparable space in the Project. The acceptance by
Landlord of monthly holdover rental in a lesser amount shall not constitute a
waiver of Landlord’s right to recover the full amount due for any holdover by
Tenant, unless otherwise agreed in writing by Landlord. If Tenant fails to
surrender the Premises upon the expiration of this Lease despite demand to do so
by Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or
liability, including without limitation, any claims made by any succeeding
tenant relating to such failure to surrender. The foregoing provisions of this
Section are in addition to and do not affect Landlord’s right of re-entry or any
other rights of Landlord under this Lease or at law.
     SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of
this Lease by Tenant, or a mutual termination of this Lease, shall terminate any
or all existing subleases unless Landlord, at its option, elects in writing to
treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.
     SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Subject to the
provisions of Section 7.3 of this Lease and of the Work Letter, if any, attached
hereto, upon the Expiration Date or upon any earlier termination of this Lease,
Tenant shall quit and surrender possession of the Premises to Landlord in as
good order, condition and repair as when received or as hereafter may be
improved by Landlord or Tenant, reasonable wear and tear, damage by casualty,
and repairs which are Landlord’s obligation excepted, and shall, without expense
to Landlord, remove or cause to be removed from the Premises all personal
property, removable trade fixtures, and equipment and debris and perform all
work required under Section 7.3 of this Lease and/or the Work Letter, if any,
attached hereto, as to Replacements of Non-Standard Improvements and removal of
Alterations, except for any items that Landlord may by written authorization
allow to remain. Tenant shall repair all damage to the Premises resulting from
the removal, which repair shall include the patching and filling of holes and
repair of structural damage, provided that Landlord may instead elect to repair
any structural damage at Tenant’s expense. If Tenant shall fail to comply with
the provisions of this Section, Landlord may effect the removal and/or make any
repairs, and the cost to Landlord shall be additional rent payable by Tenant
upon demand. If Tenant fails to remove Tenant’s personal property from the
Premises upon the expiration of the Term, Landlord may remove, store, dispose of
and/or retain such personal property, at Landlord’s option, in accordance with
then applicable laws, all at the expense of Tenant. If requested by Landlord,
Tenant shall execute, acknowledge and deliver to Landlord an instrument in
writing releasing and quitclaiming to Landlord all right, title and interest of
Tenant in the Premises.
ARTICLE XVI. PAYMENTS AND NOTICES
     All sums payable by Tenant to Landlord shall be deemed to be rent under
this Lease and shall be paid, without deduction or offset, in lawful money of
the United States to Landlord at the address specified in Item 13 of the Basic
Lease Provisions, or at any other place as Landlord may designate in writing.
Unless this Lease expressly provides otherwise, as for example in the payment of
Basic Rent and the Tenant’s Share of Operating Costs pursuant to Sections 4.1
and 4.2, all payments shall be due and payable within five (5) days after
demand. All payments requiring proration shall be prorated on the basis of the
number of days in the pertinent calendar month or year, as applicable. Any
notice, election, demand, consent, approval or other communication to be given
or other document to be delivered by either party to the other may be delivered
in person or by courier or overnight delivery service to the other party, or may
be deposited in the United States mail, duly registered or certified, postage
prepaid, return receipt requested, and addressed to the other party at the
address set forth in Item 12 of the Basic Lease Provisions, or if to Tenant, at
that address or, from and after the Commencement Date, at the Premises (whether
or not Tenant has departed from, abandoned or vacated the Premises). Either
party may, by written notice to the other, served in the manner provided in this
Article, designate a different address. If any notice or other document is sent
by mail, duly registered or certified, it shall be deemed served or delivered
seventy-two (72) hours after mailing. If more than one person or entity is named
as Tenant under this Lease, service of any notice upon any one of them shall be
deemed as service upon all of them.

 

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ARTICLE XVII. RULES AND REGULATIONS
     Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit E, and any reasonable and nondiscriminatory
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good
order, or cleanliness of the Premises, Building, Project and Common Areas.
Landlord shall not be liable to Tenant for any violation of the Rules and
Regulations or the breach of any covenant or condition in any lease by any other
tenant or such tenant’s agents, employees, contractors, guests or invitees. One
or more waivers by Landlord of any breach of the Rules and Regulations by Tenant
or by any other tenant(s) shall not be a waiver of any subsequent breach of that
rule or any other. Tenant’s failure to keep and observe the Rules and
Regulations shall constitute a breach of this Lease. In the case of any conflict
between the Rules and Regulations and this Lease, this Lease shall be
controlling.
ARTICLE XVIII. BROKER’S COMMISSION
     The parties recognize as the broker(s) who negotiated this Lease the
firm(s), whose name(s) is (are) stated in Item 10 of the Basic Lease Provisions,
and agree that Landlord shall be responsible for the payment of brokerage
commissions to those broker(s) unless otherwise provided in this Lease. It is
understood and agreed that Landlord’s Broker represents only Landlord in this
transaction and that Tenant’s Broker (if any) represents only Tenant. Each party
warrants that it has had no dealings with any other real estate broker or agent
in connection with the negotiation of this Lease, and agrees to indemnify and
hold the other party harmless from any cost, expense or liability (including
reasonable attorneys’ fees) for any compensation, commissions or charges claimed
by any other real estate broker or agent employed by the indemnifying party in
connection with the negotiation of this Lease. The foregoing agreement shall
survive the termination of this Lease.
ARTICLE XIX. TRANSFER OF LANDLORD’S INTEREST
     In the event of any transfer of Landlord’s interest in the Premises, the
transferor shall be automatically relieved of all further obligations on the
part of Landlord, and the transferor shall be relieved of any obligation to pay
any funds in which Tenant has an interest to the extent that such funds have
been turned over, subject to that interest, to the transferee and Tenant is
notified of the transfer as required by law. No beneficiary of a deed of trust
to which this Lease is or may be subordinate, and no landlord under a so-called
sale-leaseback, shall be responsible in connection with the Security Deposit,
unless the mortgagee or beneficiary under the deed of trust or the landlord
actually receives the Security Deposit. It is intended that the covenants and
obligations contained in this Lease on the part of Landlord shall, subject to
the foregoing, be binding on Landlord, its successors and assigns, only during
and in respect to their respective successive periods of ownership.
ARTICLE XX. INTERPRETATION
     SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease
requires, the words “Landlord” and “Tenant” shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.
     SECTION 20.2. HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only, are not a part of this Lease
and shall have no effect upon its construction or interpretation.
     SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several and the act of or notice from, or notice or refund to, or the signature
of, any one or more of them shall be binding on all of them with respect to the
tenancy of this Lease, including, but not limited to, any renewal, extension,
termination or modification of this Lease.
     SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended, or shall be construed, to grant
to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.
     SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease.
     SECTION 20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California. Any
litigation commenced concerning any matters whatsoever arising out of or in any
way connected to this Lease shall be initiated in the Superior Court of the
county in which the Project is located.
     SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.
     SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, covenant or condition contained in
this Lease shall not be a waiver of any

 

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subsequent breach of the same or any other term, covenant or condition. Consent
to any act by one of the parties shall not be deemed to render unnecessary the
obtaining of that party’s consent to any subsequent act. No breach by Tenant of
this Lease shall be deemed to have been waived by Landlord unless the waiver is
in a writing signed by Landlord. The rights and remedies of Landlord under this
Lease shall be cumulative and in addition to any and all other rights and
remedies which Landlord may have.
     SECTION 20.9. INABILITY TO PERFORM. In the event that either party shall be
delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, other than financial inability, then the
performance of the work or the doing of the act shall be excused for the period
of the delay and the time for performance shall be extended for a period
equivalent to the period of the delay. The provisions of this Section shall not
operate to excuse Tenant from the prompt payment of rent, nor excuse Landlord or
Tenant from the timely performance of any of their respective obligations under
this Lease within such party’s reasonable control.
     SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further effect.
Tenant waives its rights to rely on any representations or promises made by
Landlord or others which are not contained in this Lease. No verbal agreement or
implied covenant shall be held to modify the provisions of this Lease, any
statute, law, or custom to the contrary notwithstanding.
     SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance of all
the covenants, terms and conditions on Tenant’s part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall have
the right of quiet enjoyment and use of the Premises for the Term without
hindrance or interruption by Landlord or any other person claiming by or through
Landlord.
     SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.
     SECTION 20.13. INTERPRETATION. This Lease shall not be construed in favor
of or against either party, but shall be construed as if both parties prepared
this Lease.
ARTICLE XXI. EXECUTION AND RECORDING
     SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.
     SECTION 21.2. CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP
AUTHORITY. If Tenant is a corporation, limited liability company or partnership,
each individual executing this Lease on behalf of the corporation, limited
liability company or partnership represents and warrants that he or she is duly
authorized to execute and deliver this Lease on behalf of the corporation,
limited liability company or partnership, and that this Lease is binding upon
the corporation, limited liability company or partnership in accordance with its
terms. Tenant shall, at Landlord’s request, deliver a certified copy of its
board of directors’ resolution, operating agreement or partnership agreement or
certificate authorizing or evidencing the execution of this Lease.
     SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of
this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution of
this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact executed
and delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.
     SECTION 21.4. RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord, shall
execute and acknowledge a “short form” memorandum of this Lease for recording
purposes.
     SECTION 21.5. AMENDMENTS. No amendment or termination of this Lease shall
be effective unless in writing signed by authorized signatories of Tenant and
Landlord, or by their respective successors in interest. No actions, policies,
oral or informal arrangements, business dealings or other course of conduct by
or between the parties shall be deemed to modify this Lease in any respect.
     SECTION 21.6. EXECUTED COPY. Any fully executed photocopy or similar
reproduction of this Lease shall be deemed an original for all purposes.
     SECTION 21.7. ATTACHMENTS. All exhibits, amendments, riders and addenda
attached to this Lease are hereby incorporated into and made a part of this
Lease.

 

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ARTICLE XXII. MISCELLANEOUS
     SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees
that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord’s relationship
with other tenants. Accordingly, Tenant agrees that it, and its partners,
members, shareholders, officers, directors, employees and attorneys, shall not
intentionally and voluntarily disclose, by public filings or otherwise, the
terms and conditions of this Lease (“Confidential Information”) to any third
party, either directly or indirectly, without the prior written consent of
Landlord, which consent may be given or withheld in Landlord’s sole and absolute
discretion. The foregoing restriction shall not apply if either: (i) Tenant is
required to disclose the Confidential Information in response to a subpoena or
other regulatory, administrative or court order, (ii) independent legal counsel
to Tenant delivers a written opinion to Landlord that Tenant is required to
disclose the Confidential Information to, or file a copy of this Lease with, any
governmental agency or any stock exchange; provided however, that in such event,
Tenant shall, before making any such disclosure (A) provide Landlord with prompt
written notice of such required disclosure, (B) at Tenant’s sole cost, take all
reasonable legally available steps to resist or narrow such requirement,
including without limitation preparing and filing a request for confidential
treatment of the Confidential Information and (C) if disclosure of the
Confidential Information is required by subpoena or other regulatory,
administrative or court order, Tenant shall provide Landlord with as much
advance notice of the possibility of such disclosure as practical so that
Landlord may attempt to stop such disclosure or obtain an order concerning such
disclosure. The form and content of a request by Tenant for confidential
treatment of the Confidential Information shall be provided to Landlord at least
five (5) business days before its submission to the applicable governmental
agency or stock exchange and is subject to the prior written approval of
Landlord. In addition, Tenant may disclose the terms of this Lease to
prospective assignees of this Lease and prospective subtenants under this Lease
with whom Tenant is actively negotiating such an assignment or sublease.
     SECTION 22.2. GUARANTEE. [INTENTIONALLY DELETED]
     SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with obtaining
financing for the Project, the lender shall request reasonable modifications in
this Lease as a condition to the financing, Tenant will not unreasonably
withhold or delay its consent, provided that the modifications do not materially
increase the obligations of Tenant or materially and adversely affect the
leasehold interest created by this Lease.
     SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the part of
Landlord which would otherwise entitle Tenant to be relieved of its obligations
hereunder shall result in such a release or termination unless (a) Tenant has
given notice by registered or certified mail to any beneficiary of a deed of
trust or mortgage covering the Building whose address has been furnished to
Tenant and (b) such beneficiary is afforded a reasonable opportunity to cure the
default by Landlord (which in no event shall be less than sixty (60) days),
including, if necessary to effect the cure, time to obtain possession of the
Building by power of sale or judicial foreclosure provided that such foreclosure
remedy is diligently pursued. Tenant agrees that each beneficiary of a deed of
trust or mortgage covering the Building is an express third party beneficiary
hereof, Tenant shall have no right or claim for the collection of any deposit
from such beneficiary or from any purchaser at a foreclosure sale unless such
beneficiary or purchaser shall have actually received and not refunded the
deposit, and Tenant shall comply with any written directions by any beneficiary
to pay rent due hereunder directly to such beneficiary without determining
whether a default exists under such beneficiary’s deed of trust.
     SECTION 22.5. COVENANTS AND CONDITIONS. All of the provisions of this Lease
shall be construed to be conditions as well as covenants as though the words
specifically expressing or imparting covenants and conditions were used in each
separate provision.
     SECTION 22.6. SECURITY MEASURES. Tenant hereby acknowledges that Landlord
shall have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Project. Tenant assumes all
responsibility for the protection of Tenant, its employees, agents, invitees and
property from acts of third parties. Nothing herein contained shall prevent
Landlord, at its sole option, from providing security protection for the Project
or any part thereof, in which event the cost thereof shall be included within
the definition of Project Costs.

                      LANDLORD:       TENANT:
 
                    THE IRVINE COMPANY LLC,       ILLUMINA, INC., a Delaware
limited liability company       a Delaware corporation
 
                   
By:
  /s/ Steven M. Case       By:   /s/ Christian O. Henry                  
 
  Steven M. Case, Senior Vice President           Name (Print):   Christian O.
Henry
 
                   
 
  Leasing, Office Properties           Title (Print):   Vice President, Chief
Financial Officer
 
                   

                     
By:
  /s/ Christopher J. Popma       By:                          
 
  Christopher J. Popma, Vice President           Name:    
 
                   
 
  Operations, Office Properties           Title:    
 
                   

 

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EXHIBIT B
THE IRVINE COMPANY – INVESTMENT PROPERTIES GROUP
HAZARDOUS MATERIAL SURVEY FORM
     The purpose of this form is to obtain information regarding the use of
hazardous substances on Investment Properties Group (“IPG”) property.
Prospective tenants and contractors should answer the questions in light of
their proposed activities on the premises. Existing tenants and contractors
should answer the questions as they relate to ongoing activities on the premises
and should update any information previously submitted.
     If additional space is needed to answer the questions, you may attach
separate sheets of paper to this form. When completed, the form should be sent
to the following address:
THE IRVINE COMPANY MANAGEMENT OFFICE
111 Innovation Drive
Irvine, CA 92617
     Your cooperation in this matter is appreciated. If you have any questions,
please call your property manager at (949) 720-4400 for assistance.

1.   GENERAL INFORMATION.

     
Name of Responding Company:
   
 
   

                 
Check all that apply:
  Tenant   ( )   Contractor   ( )
 
  Prospective   ( )   Existing   ( )

     
Mailing Address:
   
 
   

     
Contact person & Title:
   
 
   

     
Telephone Number: ( )
   
 
   

    Current TIC Tenant(s):

     
Address of Lease Premises:
   
 
   

     
Length of Lease or Contract Term:
   
 
   

    Prospective TIC Tenant(s):

     
Address of Leased Premises:
   
 
   

     
Address of Current Operations:
   
 
   

    Describe the proposed operations to take place on the property, including
principal products manufactured or services to be conducted. Existing tenants
and contractors should describe any proposed changes to ongoing operations.    
 
 
     
 
     
 

2.   HAZARDOUS MATERIALS. For the purposes of this Survey Form, the term
“hazardous material” means any raw material, product or agent considered
hazardous under any state or federal law. The term does not include wastes which
are intended to be discarded.

  2.1   Will any hazardous materials be used or stored on site?

                 
Chemical Products
  Yes   ( )   No   ( )
Biological Hazards/
               
Infectious Wastes
  Yes   ( )   No   ( )
Radioactive Materials
  Yes   ( )   No   ( )
Petroleum Products
  Yes   ( )   No   ( )

 

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  2.2   List any hazardous materials to be used or stored, the quantities that
will be on-site at any given time, and the location and method of storage (e.g.,
bottles in storage closet on the premises).

              Location and Method     Hazardous Materials   of Storage  
Quantity          
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  2.3   Is any underground storage of hazardous materials proposed or currently
conducted on the premises? Yes ( ) No ( )         If yes, describe the materials
to be stored, and the size and construction of the tank. Attach copies of any
permits obtained for the underground storage of such substances.        
 
       
 
       
 

3.   HAZARDOUS WASTE. For the purposes of this Survey Form, the term “hazardous
waste” means any waste (including biological, infectious or radioactive waste)
considered hazardous under any state or federal law, and which is intended to be
discarded.

  3.1   List any hazardous waste generated or to be generated on the premises,
and indicate the quantity generated on a monthly basis.

              Location and Method     Hazardous Materials   of Storage  
Quantity          
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  3.2   Describe the method(s) of disposal (including recycling) for each waste.
Indicate where and how often disposal will take place.

              Location and Method     Hazardous Materials   of Storage  
Disposal Method          
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  3.3   Is any treatment or processing of hazardous, infectious or radioactive
wastes currently conducted or proposed to be conducted on the premise? Yes ( )
No ( )         If yes, please describe any existing or proposed treatment
methods.        
 
       
 
       
 

      3.4 Attach copies of any hazardous waste permits or licenses issued to
your company with respect to its operations on the premises.

4.   SPILLS

      4.1 During the past year, have any spills or releases of hazardous
materials occurred on the premises? Yes ( ) No ( )              If so, please
describe the spill and attach the results of any testing conducted to determine
the extent of such spills.        
 
       
 
       
 

 

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      4.2 Were any agencies notified in connection with such spills? Yes ( ) No
( )

       If so, attach copies of any spill reports or other correspondence with
regulatory agencies.

      4.3 Were any clean-up actions undertaken in connection with the spills?
Yes ( ) No ( )

       If so, briefly describe the actions taken. Attach copies of any clearance
letters obtained from any regulatory agencies involved and the results of any
final soil or groundwater sampling done upon completion of the clean-up work.

     
 
       
 
       
 

5.   WASTEWATER TREATMENT/DISCHARGE

      5.1 Do you discharge industrial wastewater to:

     
___storm drain?
  ___sewer?
___surface water?
  ___no industrial discharge

      5.2 Is your industrial wastewater treated before discharge? Yes ( ) No ( )
        If yes, describe the type of treatment conducted.

     
 
       
 
       
 

      5.3 Attach copies of any wastewater discharge permits issued to your
company with respect to its operations on the premises.

6.   AIR DISCHARGES.

  6.1   Do you have any air filtration systems or stacks that discharge into the
air?
Yes ( ) No ( )     6.2   Do you operate any equipment that requires air
emissions permits?
Yes ( ) No ( )     6.3   Attach copies of any air discharge permits pertaining
to these operations.

7.   HAZARDOUS MATERIALS DISCLOSURES.

      7.1 Does your company handle an aggregate of at least 500 pounds, 55
gallons or 200 cubic feet of hazardous material at any given time? Yes ( ) No (
)         7.2 Has your company prepared a Hazardous Materials Disclosure –
Chemical Inventory and Business Emergency Plan or similar disclosure document
pursuant to state or county requirements? Yes ( ) No ( )              If so,
attach a copy.         7.3 Are any of the chemicals used in your operations
regulated under Proposition 65?              If so, describe the procedures
followed to comply with these requirements.

     
 
       
 
       
 

 

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    7.4  Is your company subject to OSHA Hazard Communication Standard
Requirements? Yes ( ) No ( )

    If so, describe the procedures followed to comply with these requirements.

 
 
   
 
   
 

8.   ANIMAL TESTING.

    8.1 Does your company bring or intend to bring live animals onto the
premises for research or development purposes? Yes ( ) No ( )             If so,
describe the activity.

   
 
     
 
     
 

    8.2 Does your company bring or intend to bring animal body parts or bodily
fluids onto the premises for research or development purposes? Yes ( ) No ( )  
         If so, describe the activity.

   
 
     
 
     
 

9.   ENFORCEMENT ACTIONS, COMPLAINTS.

    9.1 Has your company ever been subject to any agency enforcement actions,
administrative orders, lawsuits, or consent orders/decrees regarding
environmental compliance or health and safety? Yes ( ) No ( )            If so,
describe the actions and any continuing obligations imposed as a result of these
actions.      
 
     
 
     
 

    9.2 Has your company ever received any request for information, notice of
violation or demand letter, complaint, or inquiry regarding environmental
compliance or health and safety? Yes ( ) No ( )       9.3 Has an environmental
audit ever been conducted which concerned operations or activities on premises
occupied by you? Yes ( ) No ( )       9.4 If you answered “yes” to any questions
in this section, describe the environmental action or complaint and any
continuing compliance obligation imposed as a result of the same.      
 
     
 
     
 
     
 
     
 

                   
 
                 
 
           
 
  By:                  
 
      Name:    
 
           
 
      Title:    
 
           
 
      Date:    
 
           

 

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EXHIBIT C
LANDLORD’S DISCLOSURES
Landlord’s latest Phase I Environmental Site Assessment covering the leased
Premises does not disclose any recognized environmental condition on the subject
site, and reports that there appears to be a low potential for environmental
impairment to the subject site due to current or past land usage or from
surrounding properties.

 

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EXHIBIT D
TENANT’S INSURANCE
     The following requirements for Tenant’s insurance shall be in effect at the
Building, and Tenant shall also cause any subtenant to comply with these
requirements. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to these insurance requirements. Tenant agrees to
obtain and present evidence to Landlord that it has fully complied with the
insurance requirements.
     1. Tenant shall, at its sole cost and expense, commencing on the date
Tenant is given access to the Premises for any purpose and during the entire
Term, procure, pay for and keep in full force and effect: (i) commercial general
liability insurance with respect to the Premises and the operations of or on
behalf of Tenant in, on or about the Premises, including but not limited to
coverage for personal injury, independent contractors, broad form property
damage, fire and water legal liability, products liability (if a product is sold
from the Premises), and liquor law liability (if alcoholic beverages are sold,
served or consumed within the Premises), which policy(ies) shall be written on
an “occurrence” basis and for not less than the amount set forth in Item 14 of
the Basic Lease Provisions, with a combined single limit (with a $50,000 minimum
limit on fire legal liability) per occurrence for bodily injury, death, and
property damage liability, or the current limit of liability carried by Tenant,
whichever is greater, and subject to such increases in amounts as Landlord may
determine from time to time; (ii) workers’ compensation insurance coverage as
required by law, together with employers’ liability insurance of at least One
Million Dollars ($1,000,000.00); (iii) with respect to Alterations and the like
required or permitted to be made by Tenant under this Lease, builder’s risk
insurance, in an amount equal to the replacement cost of the work;
(iv) insurance against fire, vandalism, malicious mischief and such other
additional perils as may be included in a standard “special form” policy,
insuring Tenant’s Alterations, trade fixtures, furnishings, equipment and items
of personal property of Tenant located in the Premises, in an amount equal to
not less than ninety percent (90%) of their actual replacement cost (with
replacement cost endorsement); and (v) business interruption insurance in
amounts satisfactory to cover one (1) year of loss. In no event shall the limits
of any policy be considered as limiting the liability of Tenant under this
Lease.
     2. In the event Landlord consents to Tenant’s use, generation or storage of
Hazardous Materials on, under or about the Premises pursuant to Section 5.3 of
this Lease, Landlord shall have the continuing right to require Tenant, at
Tenant’s sole cost and expense (provided the same is available for purchase upon
commercially reasonable terms), to purchase insurance specified and approved by
Landlord, with coverage not less than Five Million Dollars ($5,000,000.00),
insuring (i) any Hazardous Materials shall be removed from the Premises,
(ii) the Premises shall be restored to a clean, healthy, safe and sanitary
condition, and (iii) any liability of Tenant, Landlord and Landlord’s officers,
directors, shareholders, agents, employees and representatives, arising from
such Hazardous Materials.
     3. All policies of insurance required to be carried by Tenant pursuant to
this Exhibit D containing a deductible exceeding Ten Thousand Dollars
($10,000.00) per occurrence must be approved in writing by Landlord prior to the
issuance of such policy. Tenant shall be solely responsible for the payment of
all deductibles.
     4. All policies of insurance required to be carried by Tenant pursuant to
this Exhibit D shall be written by responsible insurance companies authorized to
do business in the State of California and with a general policyholder rating of
not less than “A-” and financial rating of not less than “VIII” in the most
current Best’s Insurance Report. Any insurance required of Tenant may be
furnished by Tenant under any blanket policy carried by it or under a separate
policy. A true and exact copy of each paid up policy evidencing the insurance
(appropriately authenticated by the insurer) or a certificate of insurance,
certifying that the policy has been issued, provides the coverage required by
this Exhibit D and contains the required provisions, together with endorsements
acceptable to Landlord evidencing the waiver of subrogation and additional
insured provisions required below, shall be delivered to Landlord prior to the
date Tenant is given the right of possession of the Premises. Proper evidence of
the renewal of any insurance coverage shall also be delivered to Landlord not
less than ten (10) business days prior to the expiration of the coverage.
Landlord may at any time, and from time to time, inspect and/or copy any and all
insurance policies required by this Lease.
     5. Each policy evidencing insurance required to be carried by Tenant
pursuant to this Exhibit D shall contain the following provisions and/or clauses
satisfactory to Landlord: (i) with respect to Tenant’s commercial general
liability insurance, a provision that the policy and the coverage provided shall
be primary and that any coverage carried by Landlord shall be noncontributory
with respect to any policies carried by Tenant, together with a provision
including Landlord, the Additional Insureds identified in Item 11 of the Basic
Lease Provisions, and any other parties in interest designated by Landlord, as
additional insureds; (ii) except with respect to Tenant’s commercial general
liability insurance, a waiver by the insurer of any right to subrogation against
Landlord, its agents, employees, contractors and representatives which arises or
might arise by reason of any payment under the policy or by reason of any act or
omission of Landlord, its agents, employees, contractors or representatives; and
(iii) a provision that the insurer will not cancel or change the coverage
provided by the policy without first giving Landlord thirty (30) days prior
written notice.
     6. In the event that Tenant fails to procure, maintain and/or pay for, at
the times and for the durations specified in this Exhibit D, any insurance
required by this Exhibit D, or fails to carry insurance required by any
governmental authority, Landlord may at its election procure that insurance and
pay the premiums, in which event Tenant shall repay Landlord all sums paid by
Landlord, together with interest at the maximum rate permitted by law and any
related costs or expenses incurred by Landlord, within ten (10) days following
Landlord’s written demand to Tenant.

 

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     NOTICE TO TENANT: IN ACCORDANCE WITH THE TERMS OF THIS LEASE, TENANT MUST
PROVIDE EVIDENCE OF THE REQUIRED INSURANCE TO LANDLORD’S MANAGEMENT AGENT PRIOR
TO BEING AFFORDED ACCESS TO THE PREMISES.

 

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EXHIBIT E
RULES AND REGULATIONS
     This Exhibit sets forth the rules and regulations governing Tenant’s use of
the Premises leased to Tenant pursuant to the terms, covenants and conditions of
the Lease to which this Exhibit is attached and therein made part thereof. In
the event of any conflict or inconsistency between this Exhibit and the Lease,
the Lease shall control.
     1. Tenant shall not place anything or allow anything to be placed near the
glass of any window, door, partition or wall, which may appear unsightly from
outside the Premises.
     2. The walls, walkways, sidewalks, entrance passages, elevators,
stairwells, courts and vestibules shall not be obstructed or used for any
purpose other than ingress and egress of pedestrian travel to and from the
Premises, and shall not be used for smoking, loitering or gathering, or to
display, store or place any merchandise, equipment or devices, or for any other
purpose. The walkways, sidewalks, entrance passageways, courts, vestibules and
roof are not for the use of the general public and Landlord shall in all cases
retain the right to control and prevent access thereto by all persons whose
presence in the judgment of the Landlord shall be prejudicial to the safety,
character, reputation and interests of the Building and its tenants, provided
that nothing herein contained shall be construed to prevent such access to
persons with whom Tenant normally deals in the ordinary course of Tenant’s
business unless such persons are engaged in illegal activities. Smoking is
permitted outside the building and within the project only in areas designated
by Landlord. No tenant or employee or invitee or agent of any tenant shall be
permitted upon the roof of the Building without prior written approval from
Landlord.
     3. No awnings or other projection shall be attached to the outside walls of
the Building. No security bars or gates, curtains, blinds, shades or screens
shall be attached to or hung in, or used in connection with, any window or door
of the Premises without the prior written consent of Landlord. Neither the
interior nor exterior of any windows shall be coated or otherwise sunscreened
without the express written consent of Landlord.
     4. Tenant shall not mark, nail, paint, drill into, or in any way deface any
part of the Premises or the Building except to affix standard pictures or other
wall hangings on the interior walls of the premises so long as they are not
visible from the exterior of the building. Tenant shall not lay linoleum, tile,
carpet or other similar floor covering so that the same shall be affixed to the
floor of the Premises in any manner except as approved by Landlord in writing.
The expense of repairing any damage resulting from a violation of this rule or
removal of any floor covering shall be borne by Tenant.
     5. The toilet rooms, urinals, wash bowls and other plumbing apparatus shall
not be used for any purpose other than that for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown therein. Any pipes
or tubing used by Tenant to transmit water to an appliance or device in the
Premises must be made of copper or stainless steel, and in no event shall
plastic tubing be used for that purpose. The expense of any breakage, stoppage
or damage resulting from the violation of this rule shall be borne by the tenant
who, or whose employees or invitees, caused it.
     6. Landlord shall direct electricians as to the manner and location of any
future telephone wiring. No boring or cutting for wires will be allowed without
the prior consent of Landlord. The locations of the telephones, call boxes and
other office equipment affixed to the Premises shall be subject to the prior
written approval of Landlord.
     7. The Premises shall not be used for manufacturing or for the storage of
merchandise except as such storage may be incidental to the permitted use of the
Premises. No exterior storage shall be allowed at any time without the prior
written approval of Landlord. The Premises shall not be used for cooking or
washing clothes without the prior written consent of Landlord, or for lodging or
sleeping or for any immoral or illegal purposes.
     8. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of this or neighboring buildings
or premises or those having business with them, whether by the use of any
musical instrument, radio, phonograph, noise, or otherwise. Tenant shall not
use, keep or permit to be used, or kept, any foul or obnoxious gas or substance
in the Premises or permit or suffer the Premises to be used or occupied in any
manner offensive or objectionable to Landlord or other occupants of this or
neighboring buildings or premises by reason of any odors, fumes or gases.
     9. No animals, except for seeing eye dogs, shall be permitted at any time
within the Premises.
     10. Tenant shall not use the name of the Building or the Project in
connection with or in promoting or advertising the business of Tenant, except as
Tenant’s address, without the written consent of Landlord. Landlord shall have
the right to prohibit any advertising by any Tenant which, in Landlord’s
reasonable opinion, tends to impair the reputation of the Project or its
desirability for its intended uses, and upon written notice from Landlord any
Tenant shall refrain from or discontinue such advertising.
     11. Canvassing, soliciting, peddling, parading, picketing, demonstrating or
otherwise engaging in any conduct that unreasonably impairs the value or use of
the Premises or the Project are prohibited and each Tenant shall cooperate to
prevent the same. Landlord shall have full and absolute authority to regulate or
prohibit the entrance to the Premises of any vendor, supplier, purveyor,
petitioner, proselytizer or other similar person if, in the good faith judgment
of Landlord, such person will be involved in general solicitation activities, or
the proselytizing,

 

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petitioning, or disturbance of other tenants or their customers or invitees, or
engaged or likely to engage in conduct which may in Landlord’s opinion distract
from the use of the Premises for its intended purpose. Notwithstanding the
foregoing, Landlord reserves the absolute right and discretion to limit or
prevent access to the Buildings by any food or beverage vendor, whether or not
invited by Tenant, and Landlord may condition such access upon the vendor’s
execution of an entry permit agreement which may contain provisions for
insurance coverage and/or the payment of a fee to Landlord.
     12. No equipment of any type shall be placed on the Premises which in
Landlord’s opinion exceeds the load limits of the floor or otherwise threatens
the soundness of the structure or improvements of the Building.
     13. Regular building hours of operation are from 6:00 AM to 6:00 PM Monday
through Friday and 9:00 AM to 1:00 PM on Saturday. No air conditioning unit or
other similar apparatus shall be installed or used by any Tenant without the
prior written consent of Landlord.
     14. The entire Premises, including vestibules, entrances, parking areas,
doors, fixtures, windows and plate glass, shall at all times be maintained in a
safe, neat and clean condition by Tenant. All trash, refuse and waste materials
shall be regularly removed from the Premises by Tenant and placed in the
containers at the locations designated by Landlord for refuse collection. All
cardboard boxes must be “broken down” prior to being placed in the trash
container. All styrofoam chips must be bagged or otherwise contained prior to
placement in the trash container, so as not to constitute a nuisance. Pallets
must be immediately disposed of by tenant and may not be disposed of in the
Landlord provided trash container or enclosures. Pallets may be neatly stacked
in an exterior location on a temporary basis (no longer than 5 days) so long as
Landlord has provided prior written approval. The burning of trash, refuse or
waste materials is prohibited.
     15. Tenant shall use at Tenant’s cost such pest extermination contractor as
Landlord may direct and at such intervals as Landlord may require.
     16. All keys for the Premises shall be provided to Tenant by Landlord and
Tenant shall return to Landlord any of such keys so provided upon the
termination of the Lease. Tenant shall not change locks or install other locks
on doors of the Premises, without the prior written consent of Landlord. In the
event of loss of any keys furnished by Landlord for Tenant, Tenant shall pay to
Landlord the costs thereof. Upon the termination of its tenancy, Tenant shall
deliver to Landlord all the keys to lobby(s), suite(s) and telephone &
electrical room(s) which have been furnished to Tenant or which Tenant shall
have had made.
     17. No person shall enter or remain within the Project while intoxicated or
under the influence of liquor or drugs. Landlord shall have the right to exclude
or expel from the Project any person who, in the absolute discretion of
Landlord, is under the influence of liquor or drugs.
     18. The moving of large or heavy objects shall occur only between those
hours as may be designated by, and only upon previous written notice to,
Landlord, and the persons employed to move those objects in or out of the
Building must be reasonably acceptable to Landlord. Without limiting the
generality of the foregoing, no freight, furniture or bulky matter of any
description shall be received into or moved out of the lobby of the Building or
carried in the elevator.
     19. Tenant shall not install equipment, such as but not limited to
electronic tabulating or computer equipment, requiring electrical or air
conditioning service in excess of that to be provided by Landlord under the
Lease without prior written consent of Landlord.
     20. Landlord may from time to time grant other tenants of the project
individual and temporary variances from these Rules, provided that any variance
does not have a material adverse effect on the use and enjoyment of the Premises
by Tenant.
     21. Landlord reserves the right to amend or supplement the foregoing Rules
and Regulations and to adopt and promulgate additional rules and regulations
applicable to the Premises. Notice of such rules and regulations and amendments
and supplements thereto, if any, shall be given to the Tenant.

 

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EXHIBIT X
WORK LETTER
(Tenant Buildout with Landlord’s Contribution)

I.   TENANT IMPROVEMENTS       The tenant improvement work (“Tenant
Improvements”) shall consist of the work required to complete certain
improvements to the Premises pursuant to approved “Working Drawings and
Specifications” (as defined below). Tenant shall employ a licensed architect
reasonably acceptable to Landlord (the “Architect”) for preparation of the
Preliminary Plan and Working Drawings and Specifications (as hereinafter
defined), and shall cause the Architect to inspect the Premises to become
acquainted with all existing conditions. Tenant shall contract with a general
contractor chosen as the result of a competitive bid process described below, to
construct the Tenant Improvements at Tenant’s sole const and expense. The Tenant
Improvements work shall be undertaken and prosecuted in accordance with the
following requirements:

  A.   Tenant shall submit the following to Landlord: (i) a detailed preliminary
space plan for the Tenant Improvements prepared by the Architect, which shall
include interior partitions, ceilings, interior finishes, interior doors, suite
entrance, floor coverings, window coverings, lighting, electrical and telephone
outlets, plumbing connections, heavy floor loads and other special requirements
(“Preliminary Plan”), (ii) working drawings and specifications prepared by the
Architect based on the approved Preliminary Plan (the “Working Drawings and
Specifications”), and (iii) any change proposed by Tenant to the approved
Working Drawings and Specifications (“Change”). Within ten (10) business days
following its submission to Landlord, Landlord shall approve (by signing a copy
thereof) or shall disapprove the Preliminary Plan, the Working Drawings and
Specifications and/or the Change. If Landlord disapproves the Preliminary Plan,
Working Drawings and Specifications or Change, Landlord shall specify in detail
the reasons for disapproval and Tenant shall cause the Architect to modify the
Preliminary Plan, Working Drawings and Specifications or Change to incorporate
Landlord’s suggested revisions in a mutually satisfactory manner. Tenant agrees
and acknowledges that Landlord will not check the Preliminary Plan, the Working
Drawings and Specifications and/or any Change for building code compliance (or
other federal, state or local law, ordinance or regulations compliance), and
that Tenant and its Architect shall be solely responsible for such matters.    
B.   It is understood that except as provided below, the Tenant Improvements
shall only include actual improvements to the Premises approved by Landlord as
provided above, and shall exclude (but not by way of limitation) Tenant’s
furniture, trade fixtures, partitions, equipment and signage improvements, if
any. Further, the Tenant Improvements shall incorporate Landlord’s building
standard materials and specifications (“Standards”). No deviations from the
Standards may be required by Tenant with respect to doors and frames, finish
hardware, entry graphics, the ceiling system, light fixtures and switches,
mechanical systems, life and safety systems, and/or window coverings; provided
that Landlord may, in its sole discretion, authorize in writing one or more of
such deviations, in which event Tenant shall be solely responsible for the cost
of replacing same with the applicable Standard item(s) upon the expiration or
termination of this Lease. All other non-standard items (“Non-Standard
Improvements”) shall be subject to the prior approval of Landlord, which may be
withheld in Landlord’s sole discretion. Landlord shall in no event be required
to approve any Non-Standard Improvement if Landlord determines that such
improvements (i) is of a lesser quality than the corresponding Standard,
(ii) fails to conform to applicable governmental requirements, (iii) requires
building services beyond the level Landlord has agreed to provide Tenant under
this Lease, or (iv) would have an adverse aesthetic impact from the exterior of
the Premises.     C.   Tenant shall submit the approved Working Drawings and
Specifications to a competitive bidding process involving at least the following
three (3) licensed general contractors approved by Landlord. Each general
contractor shall solicit bids from at least three (3) subcontractors for each
major trade. If required by Landlord, Tenant shall use the electrical,
mechanical, plumbing and fire/life safety engineers and subcontractors
designated by Landlord. All other subcontractors shall be subject to Landlord’s
reasonable approval, and Landlord may require that one or more designated
subtrades be union contractors. Tenant shall provide copies of the bid responses
to Landlord. Upon selection of the lowest qualified bidder (the “TI
Contractor”), Tenant shall enter into a “lump sum” construction contract (the
“TI Contract”) with the TI Contractor for construction of the Tenant
Improvements. If requested by Landlord, Tenant shall deliver a copy of the TI
Contract to Landlord. Tenant shall cause the Tenant Improvements work to be
constructed in a good and workmanlike manner in accordance with the approved
Working Drawings and Specifications.

 

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  D.   Prior to commencement of construction of the Tenant Improvements, Tenant
shall provide a payment and performance bond naming Landlord as insured, in an
amount and issued by a licensed surety acceptable to Landlord, to insure the
faithful performance of the Tenant Improvements work in accordance with the
approved Working Drawings and Specifications.     E.   Prior to the commencement
of the Tenant Improvements work, Tenant shall deliver to Landlord a copy of the
final application for permit and issued permit for the work.     F.   The TI
Contractor and each of its subcontractors shall comply with Landlord’s
requirements as generally imposed on third party contractors, including without
limitation all insurance coverage requirements and the obligation to furnish
appropriate certificates of insurance to Landlord, prior to commencement of
construction or the Tenant Improvements work.     G.   A construction schedule
shall be provided to Landlord prior to commencement of the construction of the
Tenant Improvements work, and weekly updates shall be supplied during the
progress of the work; provided however, that the completion of the Tenant
Improvements shall not be a condition of, or affect, the Commencement Date of
this Lease.     H.   Tenant shall give Landlord ten (10) days prior written
notice of the commencement of construction of the Tenant Improvements work so
that Landlord may cause an appropriate notice of non-responsibility to be
posted.     I.   The Tenant Improvements work shall be subject to inspection at
all times by Landlord and its construction manager, and Landlord and/or its
construction manager shall be permitted to attend weekly job meetings with the
TI Contractor.     J.   Tenant shall apply and pay for all utility services
required for the Tenant Improvements work.     K.   Upon completion of the work,
Tenant shall cause to be provided to Landlord (i) as-built drawings of the
Tenant Improvements work signed by the Architect, (ii) CADD disks of the
improved space compatible with Landlord’s CADD system, (iii) a final punch list
signed by Tenant, (iv) final and unconditional lien waivers from the TI
Contractor and all subcontractors, (v) a duly recorded notice of completion of
the improvement work, and (vi) a certificate of occupancy for the Premises
(collectively, the “Close-Out Package”).     L.   The Tenant Improvements work
shall be prosecuted at all times in accordance with all state, federal and local
laws, regulations and ordinances, including without limitation all OSHA and
other safety laws, the Americans with Disabilities Act (“ADA”) and all
applicable governmental permit and code requirements.     M.   All of the
provisions of this Lease (including, without limitation, the provisions of
Sections 7.4, 10.1 and 10.3) shall apply to, and shall be binding on Tenant with
respect to, the construction of the Tenant Improvements.     N.   Landlord shall
permit Tenant and its contractors to enter the Premises prior to the
Commencement Date of the Lease in order that Tenant may construct the Tenant
Improvements in the Premises through Tenant’s own contractors prior to the
Commencement Date. The foregoing license to enter the Premises prior to the
Commencement Date is, however, conditioned upon the compliance by Tenant’s
contractors with all requirements imposed by Landlord on third party
contractors, including without limitation the maintenance by Tenant and its
contractors and subcontractors of workers’ compensation and public liability and
property damage insurance in amounts and with companies and on forms
satisfactory to Landlord, with certificates of such insurance being furnished to
landlord prior to proceeding with any such entry. The entry shall be deemed to
be under all of the provisions of the Lease except as to the covenants to pay
rent. Landlord shall not be liable in any way for any injury, loss or damage
which may occur to any such work being performed by Tenant, the same being
solely at Tenant’s risk.     O.   Tenant hereby designates Jeff Hughson,
Telephone No. (858) 202-4500, as its representative, agent and attorney-in-fact
for the purpose of receiving notices, approveing submittals and issuing requests
for Changes, and Landlord shall be entitled to rely upon authorizations and
directives of such persons) as if given directly by Tenant. Tenant may amend the
designation of its construction representative(s) at any time upon delivery of
written notice to Landlord.

 

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II.   COST OF THE TENANT IMPROVEMENTS WORK

  A.   Landlord shall provide to Tenant a tenant improvement allowance in the
amount of Five Hundred Nineteen Thousand One Hundred Ninety Three Dollars
($519,193.00) (the “Landlord’s Contribution”) based on $34.37 per usable square
foot of the Premises, with any excess cost of the Tenant Improvements in
accordance with the approved Working Drawings and Specifications, to be borne
solely by Tenant. It is further understood and agreed that Landlord’s
construction manager shall be entitled to a supervision/administrative fee equal
to Nineteen Thousand Thirty Six Dollars ($19,036.00), which fee shall be paid
from the Landlord’s Contribution. The Landlord’s Contribution shall be funded
solely towards the cost of completing the approved Tenant Improvements in the
Premises and no portion thereof shall be funded towards Tenant’s personal
property, fixtures and/or equipment installed in the Premises, provided that a
portion of the Landlord’s Contribution not to exceed the amount of Thirty
Thousand Two Hundred Twelve Dollars ($30,212.00) may be funded, at Tenant’s
election, towards Tenant’s “out of pocket” expenses reasonably incurred in
connection with Tenant’s move to the Premises, including, without limitation,
moving and telephone and cabling relocation charges, upon the submission by
Tenant of a reasonably-detailed invoice for such expenses and charges. Subject
to the foregoing provisions for funding Tenant’s moving expenses and charges, if
the actual cost of completion of the Tenant Improvements is less than the
maximum amount provided for the Landlord’s Contribution, such savings shall
inure to the benefit of Landlord and Tenant shall not be entitled to any credit
or payment     B.   One hundred percent (100%) of the Landlord’s Contribution
shall be paid to Tenant within thirty (30) days following substantial completion
of the Tenant Improvements in accordance with this Work Letter and submission of
the Close-Out Package to Landlord. Tenant shall utilize the Landlord’s
Contribution prior to October 1, 2007, and unless the Landlord’s Contribution is
paid to Tenant prior to such date, Landlord shall have no further obligation to
fund the Landlord’s Contribution.

III.   DISPUTE RESOLUTION

  A.   All claims or disputes between Landlord and Tenant arising out of, or
relating to, this Work Letter shall be decided by the JAMS/ENDISPUTE (“JAMS”),
or its successor, with such arbitration to be held in Orange County, California,
unless the parties mutually agree otherwise. Within ten (10) business days
following submission to JAMS, JAMS shall designate three arbitrators and each
party may, within five (5) business days thereafter, veto one of the three
persons so designated. If two different designated arbitrators have been vetoed,
the third arbitrator shall hear and decide the matter. If less than two
(2) arbitrators are timely vetoed, JAMS shall select a single arbitrator from
the non-vetoed arbitrators originally designated by JAMS, who shall hear and
decide the matter. Any arbitration pursuant to this section shall be decided
within thirty (30) days of submission to JAMS. The decision of the arbitrator
shall be final and binding on the parties. All costs associated with the
arbitration shall be awarded to the prevailing party as determined by the
arbitrator.     B.   Notice of the demand for arbitration by either party to the
Work Letter shall be filed in writing with the other party to the Work Letter
and with JAMS and shall be made within a reasonable time after the dispute has
arisen. The award rendered by the arbitrator shall be final, and judgment may be
entered upon it in accordance with applicable law in any court having
jurisdiction thereof. Except by written consent of the person or entity sought
to be joined, no arbitration arising out of or relating to this Work Letter
shall include, by consolidation, joinder or in any other manner, any person or
entity not a party to the Work Letter unless (1) such person or entity is
substantially involved in a common question of fact or law, (2) the presence of
such person or entity is required if complete relief is to be accorded in the
arbitration, or (3) the interest or responsibility of such person or entity in
the matter is not insubstantial.     C.   The agreement herein among the parties
to arbitrate shall be specifically enforceable under prevailing law. The
agreement to arbitrate hereunder shall apply only to disputes arising out of, or
relating to, this Work Letter, and shall not apply to other matters of dispute
under the Lease except as may be expressly provided in the Lease.