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Exhibit 10.16    
    



	    	 	 
	    	 	 
	    	 	 
	STANDARD INDUSTRIAL NET LEASE
	    	 	 
	    	 	 
	CENTER NAME:	 	SORRENTO CENTRE
	    	 	 
	

LANDLORD:	
 	

SORRENTO CENTRE TENANCY IN COMMON
	    	 	 
	

TENANT:	
 	

GENETRONICS BIOMEDICAL CORPORATION,

a Delaware corporation
	    	 	 
	    	 	 
	    	 	 












 
 

STANDARD INDUSTRIAL NET LEASE
  (Genetronics Biomedical Corporation)    




        This
STANDARD INDUSTRIAL NET LEASE ("Lease"), dated for reference purposes only November 29, 2004, is entered into by SORRENTO
CENTRE TENANCY IN COMMON ("Landlord"), and GENETRONICS BIOMEDICAL CORPORATION, a Delaware corporation
("Tenant"). 


1.     BASIC LEASE TERMS.  


        The basic terms of the Lease set forth in this Article 1 shall be read in conjunction with the other Articles of this Lease, which define and explain the
basic terms. 



	1.1
	Address for Notice (see Section 24.19): 







	             	 	Landlord:	 	11750 Sorrento Valley Road, Suite 209

San Diego, California 92121

Attention: Sorrento Centre Property Management
	

 	
 	

Tenant;	
 	

At the Premises





	1.2
	Description of Premises:







	             	 	Center Name:	 	Sorrento Center
	

 	
 	

Address:	
 	

11494 Sorrento Valley Road

San Diego, California 92121
	

 	
 	

Suite/Unit:	
 	

A
	

 	
 	

Approximate Rentable Square Footage (see Exhibit "A"); 22,867







	1.3
	Commencement Date: March 1, 2005.



	1.4
	Lease Term (see Article 3): Five (5) years and -0- months, beginning on the Commencement Date and
ending on February 28, 2010 (the "Expiration Date"). Tenant has one, 5 year Option at Fair Market Rental Value, as set forth in
Section 3.4 below.



	1.5
	Minimum Monthly Rent: $37,730,55 per month for the first through fourth Lease Years, as provided in Article 4 and $40,017.25 per
month for the fifth Lease Year.



	1.6
	Security Deposit: $132,000 (see Article 5).



	1.7
	Tenant's Pro Rata Share (see Article 6): 74.1%.



	1.8
	Permitted Use (see Article 11): Laboratory, light manufacturing, and general office uses, and for no other use.



	1.9
	Tenant's Guarantor (If none, so state): None



	1.10
	Tenant's Parking Spaces (Unassigned) (see Section 11.6): 69



	1.11
	Landlord's Brokers (If none, so state): Asset Management Group; Burnham Real Estate Services 





Tenant's Broker (If none, so state): Phase 3 Properties, Inc. 



	1.12
	Tenant Improvement Allowance: $300,000 (the "Allowance"), in accordance with the
Construction Addendum to Standard Industrial Net Lease attached hereto and made a part hereof. 








 



	1.13
	Exhibits: The following Exhibits and Addendum are attached to and made a part of this Lease: 







	     	 	     	 	Exhibit "A"	—	Description of Premises
	 	 	 	 	Exhibit "B"	—	Rules and Regulations
	 	 	 	 	Exhibit "C"	—	Sign Criteria
	 	 	 	 	Exhibit "D"	—	List of Hazardous Materials Used by Tenant (Section 14.2)
	 	 	 	 	Exhibit "E"	—	List of Modular Work Stations, Equipment And Furniture
	 	 	 	 	Addendum	—	Construction Addendum to Standard Industrial Net Lease





2.     LEASE OF PREMISES.  


        2.1    The Premises.    Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the premises (the "Premises") described in Section 1.2, which Premises are indicated on the site/floor plan attached as  Exhibit "A". The
Premises are part of the office or industrial center identified in Section 1.2 (the  "Center"). The approximate Rentable Square Footage identified in Section 1.2 is a measurement of the
leaseable floor area of the Premises, as
determined by Landlord and applied on a consistent basis throughout the Center. As used herein, the term "Building" means the building of which the
Premises are a part; if the Premises encompasses the entire Building, then the terms "Premises" and "Building" shall have the same meanings. 


        2.2    Modular Furniture.    In connection with its use of the Premises, Tenant shall have the
right to use the modular work stations, equipment and furniture currently located in the Premises (collectively, the "Modular Furniture"). An inventory
of the Modular Furniture is attached hereto as Exhibit "E". Notwithstanding anything to the contrary contained here, all of the Modular Furniture shall remain the Property of Landlord and shall be
surrendered to Landlord with the Premises upon expiration or earlier termination of this Lease in the same condition as received, reasonable wear and tear excepted.
Tenant shall accept such Furniture in its "as-is" condition without any representation or warranty by Landlord. 


3.     LEASE TERM.  


        3.1    Commencement.    The term of this Lease (the "Lease
Term") shall commence on the Commencement Date stated in Section 1.3 and shall continue for the period stated in Section 1.4, unless sooner terminated pursuant to
any provision of this Lease. 


        3.2    Delay In Commencement.    If Landlord cannot deliver possession of the Premises to
Tenant on the Commencement Date specified in Section 1.3 for any reason, Landlord shall not be subject to any liability therefor. Such nondelivery shall not affect the validity of this Lease
nor the obligations of Tenant hereunder. However: (a) Tenant shall not be obligated to pay rent until possession of the Premises is delivered to Tenant, (b) if possession of the Premises
is not delivered to Tenant within thirty (30) days of the Commencement Date, the last day of the Lease Term shall be extended by the total number of days that possession is so delayed, plus the
minimum number of additional days necessary to make the Expiration Date the last day of a calendar month, and (c) if Landlord has not delivered possession of the Premises within ninety
(90) days after the Commencement Date, Tenant may elect to terminate this Lease by delivering written notice to Landlord within ten (10) days 


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thereafter,
in which event the parties shall be discharged from all further obligations hereunder, provided that Landlord shall return to Tenant any security deposit and prepaid rent paid by Tenant. 


        3.3    Early Occupancy.    Tenant shall be entitled to immediate occupancy of the Premises
upon mutual execution of this Lease, prior to the Commencement Date; provided however, such occupancy shall be subject to all provisions of this Lease, other than the payment of Minimum Monthly Rent
or Additional Rent. Such early occupancy shall not advance the Expiration Date. Tenant shall pay for any utilities actually consumed during such early occupancy period. 



        3.4    Option to Extend.    



        (a)   Tenant
shall have the option (the "Option") to extend the term of this Lease for one (1) additional period
("Option Term") of five (5) years upon all of the terms and conditions of this Lease, other than the Minimum Monthly Rent, which shall be
determined as described below. The Option must be
exercised, if at all, by Tenant giving Landlord written notice of the exercise thereof no more than twelve (12) and no less than eight (8) months prior to the expiration of this Lease
Term (as extended by any previously duly exercised Option). Any failure of Tenant to give due notice of its exercise of the Option within the required time shall constitute an irrevocable election on
the part of Tenant not to exercise the Option, and this Lease shall expire at the end of the Term. Tenant shall have no other right to extend this Lease Term beyond the Option Term described herein.
Notwithstanding anything set forth herein to the contrary, if on the date of giving the notice, there exists any Event of Default on the part of Tenant under this Lease, this Section shall be void.
Tenant's notice shall be ineffective, the Option Term shall not commence and this Lease shall expire as scheduled. In addition, any due exercise of the Option hereunder shall be voidable by Landlord
if, at the time of such exercise, there existed any condition of default on the part of Tenant that Tenant thereafter fails to cure within any applicable notice and/or cure period. 



        (b)   The
Minimum Monthly Rent during the Option Term initially shall be the "Fair Market Rental Value" of the Premises, as defined below, as of the first day of the Option
Term; provided, however, that in no event shall the Minimum Monthly Rent for any portion of the Option Term be less than the Minimum Monthly Rent in effect for the last month of the Term immediately
preceding the commencement of the Option Term, regardless of any determination of a Fair Market Rental Value pursuant to the other provisions of this Section that would result in a lower Minimum
Monthly Rent. 


        (c)   Upon
exercise of the Option, Landlord and Tenant shall, in good faith, attempt to reach a mutually acceptable Fair Market Rental Value of the Premises and consequent
Minimum Monthly Rent for the Option Term. If Landlord and Tenant cannot agree upon the Fair Market Rental Value within thirty (30) days of Tenant's exercise of the Option, then, each party
shall make a separate determination of the Fair Market Rental Value within five (5) business days thereafter and, concurrently exchange such determinations and such determinations shall be
submitted to arbitration as set forth below, Within ten (10) days thereafter, Landlord and Tenant shall each select and notify the other of the name of an
"Evaluator," who, for purposes of this Section, shall be an independent and impartial real estate professional (such as a licensed real estate agent)
having more than ten years' experience in the leasing of space comparable to the Premises. The determination of the Evaluators shall be limited solely to the issue of whether Landlord's or Tenant's
submitted Fair Market Rental Value is the closest to the actual Fair Market Rental Value, as determined by the Evaluators, taking into account the requirements of this Section 3.4 (i.e., the
arbitrators may only select Landlord's or Tenant's determination and shall not be entitled to make a compromise determination). In the event the Evaluators cannot agree on the actual Fair Market
Rental Value, each Evaluator shall promptly proceed to select a third Evaluator, who shall have the aforesaid qualifications of an Evaluator. The three Evaluators shall determine the Fair Market
Rental Value of the Premises and shall deliver to both Landlord and Tenant a copy of such 



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determination
within thirty (30) days after the appointment of the third Evaluator. The parties agree that the Evaluators' determination as aforesaid shall be considered as the Fair Market
Rental Value of the Premises and shall be conclusive and binding upon Landlord and Tenant. If the original two Evaluators shall fail to agree upon the selection of a third Evaluator, the same shall be
designated by the president of the San Diego Board of Realtors, or any successor organization thereto. Landlord and Tenant shall each pay any fees of their own Evaluator and shall share equally the
fees of the third Evaluator, if As used herein, the term "Fair Market Rental Value" shall mean the then-prevailing rental for space comparable to the Premises in the Sorrento Valley area
of the City of San Diego that a willing, comparable Tenant would pay to a willing Landlord, neither of whom is compelled to rent, at arms length on all of the terms and conditions of the Lease (other
than the Minimum Monthly Rent, which is to be determined pursuant to this Section). The determination of Fair Market Rental Value shall also include any appropriate adjustments over the term of the
Option Term in the Minimum Monthly Rent based on the cost of living, fixed rate, or otherwise. 


        (d)   No
brokerage commissions or fees shall be payable by Landlord in connection with any extension of the Lease Term pursuant to the Option contained in this Section. 




        3.5    Right of First Offer on Remainder of Building.    Provided that, at the time Tenant is
entitled to any benefit under this Section, there exists no Event of Default on the part of Tenant under this Lease nor any condition that with the giving of notice or the passage of time or both
would constitute an Event of Default on the part of Tenant under this Lease, Landlord agrees that it will offer to lease any unleased portion of the Building adjacent to the Premises (the  "Additional Space") to Tenant prior to offering the Additional Space to any other person. Such offer shall be in writing and shall specify all of the
economic terms upon which Landlord is willing to Lease the Additional Space to Tenant. Tenant shall have ten (10) days after receipt of such offer to accept or reject the same. Tenant's failure
to accept the same in writing unconditionally and without change within such 10-day period shall constitute a rejection of such offer. The rental rate and term of occupancy applicable to
the Additional
Space shall be as determined by Landlord in its sole discretion. If Landlord's offer is rejected or deemed rejected, then Landlord shall be free to let the Additional Space to any person, on terms and
conditions determined by Landlord (which shall not be more economically advantageous than those offered to Tenant unless Landlord re-offers such more economically advantageous terms to
Tenant). If Landlord has not received a proposal from a potential tenant that leads to the consummation of a lease for the Additional Space within six (6) months of the date Tenant rejects or
is deemed to have rejected Landlord's offer, then Landlord shall not let the Additional Space without re-offering the same to Tenant pursuant to the terms of this Section. No brokerage
commissions or fees shall be payable by Landlord in connection with any such expansion. This Section shall not apply (i) to any use or leasing of the Additional Space by Landlord or any
affiliate of Landlord, (ii) to the renewal or modification of the lease of any then-existing tenant, or (iii) the exercise of any option to extend the term of any lease or
the exercise of or any other right held by any other tenant of the Center as of the date of this Lease. 



4.     RENT.  


        4.1    Minimum Monthly Rent.    



        (a)    Minimum Monthly Rent.    Tenant shall pay minimum monthly rent
("Minimum Monthly Rent") in the initial amount stated in Section 1.5. The Minimum Monthly Rent shall be increased as set forth in
Section 1.5 and/or elsewhere in this Lease. Tenant shall pay the Minimum Monthly Rent on or before the first day of each calendar month, in advance, at the office of Landlord or at such other
place designated by Landlord, without deduction, offset or prior demand. If the Commencement Date is not the first day of a calendar month, the rent for the partial month at the beginning of the Lease
Term shall be prorated on a per diem basis and shall be due on the 



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first
day of such partial month. Upon execution of this Lease, and before the Commencement Date, Tenant shall pay to Landlord the aggregate of the first month's Minimum Monthly Rent, the first month's
Monthly Impound Payment (see Section 4.4), and the Security Deposit (see Article 5). 



        (b)    Abated Rent.    One-half of the Minimum Monthly Rent for the Last Month of
the First Lease Year and the Last Month of the second Lease Year shall be abated, provided Tenant is not in default under any of the terms of this Lease. During such rental concession periods (i.e.,
the months during which the Minimum Month Rent is partially abated), Tenant shall pay its full share of Additional Rent and other charges hereunder. 


        (c)    Conditional Abatement.    The abated rental described in subsection (b) above,
together with the cost of any unamortized tenant improvements made to the Premises pursuant to this Lease are collectively referred to herein as the "rent concession." The rent concession is granted
to Tenant on the condition that Tenant complete the term of the Lease, and perform all of its obligations throughout the entire term of the Lease, including timely payment of all rent and other
charges due hereunder. The full amount of the rent concession (or so much thereof as Tenant may have received the benefit at the time) shall become immediately due and payable upon the occurrence of
any Event of Default on the part of Tenant which results in a termination of this Lease. In addition to all other remedies of Landlord, Landlord shall have the right to include the full amount of the
rent concession (or so much thereof as Tenant may have received the benefit at that time) in its demand in any Three-Day Notice to Pay Rent or Quit that Landlord may give Tenant hereunder. 




        4.2    Lease Year.    As used in this Lease, the term "Lease
Year" means (i) the first period of twelve (12) full calendar months following the Commencement Date (including, if the Commencement Date is not the first day of
a calendar month, the period between the Commencement Date and the next first day of the month), (ii) each period of twelve (12) full calendar months thereafter, and (iii) any
remaining period at the end of the Lease Term of less than twelve (12) full calendar months. 


        4.3    Additional Rent.    All charges payable by Tenant for Operating Costs
(Article 6), Maintenance and Repairs (Article 7), Real Property Taxes (Article 8), Insurance Costs (Article 9), and Utilities (Article 10) are hereinafter referred
to herein as "Additional Rent." All Minimum Monthly Rent, Additional Rent, and all other charges and monetary amounts due Landlord from Tenant under
this Lease or otherwise shall constitute "rent." Unless this Lease provides otherwise, all Additional Rent shall be paid by Tenant, without limitation
or offset, within thirty (30) days after Tenant's receipt of a statement from Landlord. If any Minimum Monthly Rent is abated or waived pursuant to another specific term of this Lease or in any
separate agreement, it is understood that such abatement or waiver shall apply only to the Minimum Monthly Rent, and Tenant shall be obligated to pay all Additional Rent and other charges (including
the applicable impounds thereof) during such periods of abatement or waiver of Minimum Monthly Rent. 


        4.4    Impounds.    Landlord shall have the right, but not the obligation, to collect and
impound, in advance, any or all components of Additional Rent based upon Landlord's reasonable estimate of Tenant's future liability for such amounts under this Lease. Landlord shall initially
establish the monthly amount of such impound ("Monthly Impound Payments"), based upon its estimate of one-twelfth of Tenant's annual
liability therefor. Landlord shall have the right at any time to adjust the amount of the Monthly Impound Payment upon notice to Tenant. The Monthly Impound Payment shall be due and payable on the
first day of each month throughout the Lease Term. Any failure to pay the Monthly Impound Payment when due shall be considered a failure to pay rent when due under Section 21(a) and
other relevant provisions of this Lease, and shall entitle Landlord to exercise any or all of its remedies available in the same manner as for the failure to pay rent. Upon the occurrence of any Event
of Default by Tenant hereunder, Landlord shall have the right to apply all unapplied 


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amounts
of Monthly Impound Payments to Tenant's default. Within ninety (90) days after the end of each calendar year, Landlord shall deliver to Tenant an accounting of Tenant's actual Share of
Additional Rent and the estimated amounts previously paid by Tenant. Any overpayment by Tenant shall be credited against next Monthly Impound Payments due hereunder, or, if the Term has expired, shall
be remitted to Tenant. Tenant shall pay the amount of any underpayment within thirty (30) days after receipt of the accounting. Tenant acknowledges that the Monthly Impound Payments are
estimates only and not a representation of the amount of Tenant's ultimate liability for Additional Rent. 


        4.5    Payment by EFT or ACH.    At Landlord's election, and upon at least thirty
(30) days' notice to Tenant, Landlord may require that all payments of Minimum Monthly Rent, Additional Rent and other amounts due hereunder be made in immediately available funds or by wire
transfer by electronic fund transfer through the Automated Clearing House network or any similar system designated by Landlord ("ACH"). Such payments
shall be initiated by Tenant or Landlord, at Landlord's election, to an account designated from time to time by Landlord at an ACH member bank for settlement not later than 12:00 o'clock noon, San
Diego, California time, on the dates such sums or payments are respectively due. Any payment received after such time shall be deemed to have been made after the due date. 


5.    SECURITY DEPOSIT.    Upon execution of this Lease, Tenant shall deposit with
Landlord the amount specified in Section 1.6 (the "Security Deposit"), to be held by Landlord, without liability for interest, as security for Tenant's performance of its obligations under this
Lease. Landlord shall not be required to keep the Security Deposit separate from its other accounts. Landlord may apply all or a part of the Security Deposit to any unpaid rent (including unpaid
Additional Rent or Monthly Impound Payments) or other monetary payments due from Tenant after expiration of all applicable notice and cure periods or to cure any other default of Tenant hereunder and
to compensate Landlord for all damage and expense sustained as a result of such default. If all or any portion of the Security Deposit is so applied, Tenant shall deposit cash sufficient to restore
the Security Deposit to its original amount within fifteen (15) days after receipt of Landlord's written demand. If Tenant is not then in default upon the termination of this Lease, the
Security Deposit or any balance thereof shall be returned to Tenant within thirty (30) days of the later of the expiration or earlier termination of this Lease or the vacation of the Premises
by Tenant. At Landlord's request, Tenant shall accompany Landlord or Landlord's representative on a "walk-through" of the Premises prior to Landlord's return of the Security Deposit. 


6.     OPERATING COSTS.  


        6.1    Payment of Operating Costs by Tenant.    Tenant shall pay its Share of Operating Costs
to Landlord on a monthly or other periodic basis selected by Landlord. Tenant shall pay the amount of such Share to Landlord, to the extent such obligation exceeds any amount thereof impounded under
Section 4.4, within thirty (30) days after receipt of a statement from Landlord. 


        6.2    Tenant's Share.    Tenant's "Share" is
the percentage or proportion of the various components of Additional Rent and certain other charges for which Tenant is responsible under this Lease. Tenant's Share for each such component shall be
Tenant's Pro Rata Share as stated in Section 1.7, unless Landlord determines that another percentage or proportion would be equitable based on factors such as Tenant's use of such in excess of
its Pro Rata Share, such component of Additional Rent applies to some but not all of the Center, or factors set forth elsewhere in this Lease. Tenant's Pro Rata Share represents the approximate
current ratio of the Rentable Square Footage of the Premises (identified in Section 1.2) to the total Rentable Square Footage of the Center, as determined by Landlord from time to time. Changes
in Rentable Square Footage shall be effective on the first day of the first calendar month following the change. 


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        6.3    Operating Costs.    "Operating Costs"
includes all costs of operating, managing, repairing and maintaining the Common Facilities, including without limitation: gardening and landscaping; the cost of public liability, property damage and
other insurance applicable to the Common Facilities, including any deductibles thereunder; Real Property Taxes applicable to the Common Facilities; utilities; line painting and parking lot repairs;
roof repairs; lighting; trash and refuse removal; supplies; equipment; exterior painting; capital improvements (including without limitation the costs of roof, parking lot and underground utilities
replacements) (subject to phrase (xv) below); reasonable reserves for repairs and replacements; the costs of altering, improving, renovating, upgrading or retrofitting any portion of the Common
Facilities to comply with all laws, regulations and governmental requirements applicable to the Center (including without limitation those related to disabled persons, hazardous materials, lighting
upgrades, sprinkler and energy-saving retrofits); security service; property management costs and administrative fees; bookkeeping services; labor; and the cost of personnel to implement such services
and to direct parking. In lieu of including the entire amount of any such expense in Operating Costs in any one period, Landlord, at its election, may spread the inclusion of, or may amortize, any
such expenses, or a reasonable reserve for anticipated expenses, in Operating Costs over such multiple periods as Landlord shall determine. Notwithstanding the foregoing, Operating Costs shall not
include: (i) any ground lease rental; (ii) capital expenditures required by Landlord's failure to comply with laws prior to the Commencement Date; (iii) costs incurred by Landlord
with respect to goods and services (including utilities sold and supplied to tenants of the Center) to the extent that Landlord is entitled to full reimbursement for such costs from others;
(iv) costs incurred by Landlord for the repair of damage
to the Center to the extent that Landlord is reimbursed by insurance proceeds; (v) costs, including permit, license and inspection costs, incurred with respect to the installation of tenant
improvements made for other tenants in the Center or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for other tenants of the Center;
(vi) depreciation and amortization (except as described herein); (vii) leasing commissions, attorneys' fees, and other costs and expenses incurred in connection with negotiations or
disputes with other present or prospective tenants of the Center; (viii) expenses in connection with services or other benefits for which another tenant of the Center is charged directly in
full; (ix) costs incurred by Landlord due to the violation by Landlord or any other tenant of the terms and conditions of any lease of space in the Center or any violation by Landlord of the
terms of any ground lease or mortgage affecting the Center; (x) overhead and profit increments paid to Landlord or to subsidiaries or affiliates of Landlord for services in the Center to the
extent the same exceeds the costs of such services rendered by unaffiliated third parties on a competitive basis; (xi) interest, points and fees on debt or amortization on any mortgage or
mortgages encumbering the Building; (xii) Landlord's general corporate overhead and general administrative expenses; (xiii) advertising and promotional expenditures;
(xiv) electric power costs for which any other tenant directly contracts with the local public service company; (xv) the cost of any capital item of expense the cost of which exceeds
$10,000, provided, however that Landlord may include in Operating Costs the amortized cost of such item spread over its useful life (no greater that the minimum number of years allowed pursuant to the
United States Revenue Code) over the Lease Term, starting in the calendar year or other accounting period in which the such cost is incurred; and (xvi) management fees in excess of t four
percent (4%) of the then-effective Minimum Monthly Rent. 


        6.4    Common Facilities.    "Common
Facilities" means all areas, facilities, utilities, equipment and services provided by Landlord for the common use or benefit of the occupants of the Center and their
employees, agents, customers and other invitees, including without limitation, if the same exist: building lobbies, common corridors and hallways, restrooms, pedestrian walkways, driveways and access
roads, access facilities for disabled persons (including elevators), truck serviceways, loading docks, garages, driveways, parking lots, landscaped areas, stairways, elevators, retaining walls, all
areas required to be maintained under the conditions of governmental approvals for the Center, and other generally understood public or common areas. Landlord reserves the right to relocate, alter,
improve, or adjust the size and location of any Common Facilities from time to time without liability to Tenant. 


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        6.5    Tenant's Limited Audit Rights.    Provided that no Event of Default then exists on the
part of Tenant, Tenant shall have the right to perform, or to have its authorized representatives or accountants perform, at Tenant's sole cost an audit of Landlord's books and records that reflect
Additional Rent to verify Landlord's calculation of Additional Rent for the prior calendar year or other relevant accounting period. Landlord shall maintain its books and records with respect to such
accounting period for a period of at least one (1) year following the date it gives its annual statement or reconciliation of Additional Rent for such period. Such audit shall not be conducted
by any person or firm whose fees are based, directly or indirectly, in whole or in part, upon a percentage of recovery or other contingency fee calculation. A complete copy of Tenant's auditor's
report and the determinations set forth therein ("Tenant's Auditor's Report") shall be delivered to Landlord within fifteen (15) days of receipt by Tenant. Any such audit shall be commenced, if
at all, (i) within six (6) months after the receipt of the annual statement or reconciliation of Additional Rent from Landlord, (ii) during Landlord's normal business hours,
(iii) at the place where Landlord maintains its records (or such other place as
Landlord shall choose to deliver the appropriate records), and (iv) only after Landlord has received fifteen (15) days' prior written notice. Tenant shall reimburse Landlord for any
costs incurred by Landlord as a result of complying with the requests of Tenant's auditor. All information obtained by Tenant or Tenant's auditors as a result of any audit shall be treated as
confidential except in any litigation or proceeding between Landlord and Tenant. Tenant's Auditor's Report shall be binding on Tenant. Tenant's Auditor's Report shall be binding on Landlord only if
Landlord agrees with such audit; if Landlord disagrees with such audit, Landlord shall notify Tenant of such disagreement, and the matter shall thereafter be submitted to binding arbitration under
Section 24.2. If Tenant's Auditor's Report reflects that Tenant paid less Additional Rent than was due for the audited calendar year, Tenant shall within twenty (20) days after receipt
of such report pay to Landlord the amount of such underpayment. If Tenant's Auditor's Report is binding on Landlord and reflects that Tenant paid excess Additional Rent for the audited calendar year,
Landlord shall allow Tenant a credit against the next accruing installment of Additional Rent in the amount of such overpayment (or if such credit will not be fully utilized within six months,
Landlord shall refund to Tenant the amount of the adjustment that would not be so utilized). No subtenant shall have any right to conduct an audit and no assignee shall conduct an audit for any period
during which such assignee was not in possession of the Premises. Notwithstanding the foregoing, no such audit shall be conducted if any other tenant has conducted an audit with respect to the time
period Tenant intends to audit and Landlord furnishes to Tenant a copy of the results of such audit. Notwithstanding the foregoing, if Tenant's audit reveals that Landlord's calculation of Additional
Rent for the prior calendar year exceeds, by more than five percent (5%), the actual calculation of such Additional Rent for such year or other relevant accounting period, Landlord shall pay the cost
of such audit. 


7.     MAINTENANCE AND REPAIRS.  



        7.1    Tenant's Obligations.    Except as provided in Section 7.2, Tenant, at its sole
cost, shall keep the Premises in good order, condition and repair during the Lease Term, including without limitation: all nonstructural, interior and exterior areas; all heating, ventilation and air
conditioning systems and equipment within the Premises or exclusively serving the Premises; all glass, glazing, windows, window moldings, partitions, doors and door hardware; all interior painting;
all fixtures and appurtenances in the Premises or exclusively serving the Premises including electrical, lighting and plumbing fixtures; and all other portions of the Premises seen or unseen. If any
portion or element of the Premises, or the other systems or equipment for which Tenant is responsible hereunder cannot be fully repaired, Tenant shall promptly replace the same at its sole cost and
expense regardless of whether the benefit of such replacement extends beyond the Lease Term. It is the intention of Landlord and Tenant that Tenant shall maintain the Premises, at all times during the
Lease Term, in an attractive, first-class and fully operative condition, at Tenant's expense. If any heating and air conditioning system or equipment exclusively serves the Premises, Tenant shall
additionally obtain and keep in force a preventive 


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maintenance
contract providing for the regular (at least quarterly) inspection and maintenance of the heating and air conditioning system (including leaks around ducts, pipes, vents, and other parts
of the air conditioning) by a reputable licensed heating and air conditioning contractor acceptable to Landlord. Prior to April 1 of each calendar year, Tenant shall deliver Landlord written
confirmation from such contractor verifying that such a contract has been entered into and that the required service will be provided. Notwithstanding the foregoing, Landlord shall have the right,
upon written notice to Tenant, to undertake the responsibility for preventive maintenance and repair of the heating and air conditioning system, at Tenant's sole cost and expense should Tenant fail to
do so. 


        7.2    Landlord's Obligations.    Landlord shall repair, replace and maintain the Common
Facilities, the roof, the foundations and structural portions of the Premises and the Building. Tenant shall pay (a) its Share of the costs of such maintenance, (b) the full amount of
any maintenance and repairs necessitated by any act, omission, conduct or activity of, or breach of this lease by, Tenant or any of Tenant's officers, agents, customers or invitees other than normal
wear and tear (plus fifteen percent (15%) of the cost thereof to reimburse Landlord for overhead), provided that Landlord shall have first notified Tenant of the need for the maintenance and repair
and provided Tenant with a reasonable time to remedy the same; and (c) any maintenance and repairs necessitated by breaking and entering of the Premises. Tenant shall pay its Share of such
maintenance and repair costs incurred by Landlord, to the extent such obligation exceeds any amount thereof impounded under Section 4.4, within thirty (30) days after receipt of a
statement from Landlord. There shall be no abatement of rent, and no liability of Landlord, 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 Premises or the Center, except to the extent arising from Landlord's gross negligence or willful misconduct. Except as provided in Article 16
(Damage and Destruction) and Article 17 (Condemnation), Landlord shall have absolutely no other responsibility to repair, maintain or replace any portion of the Premises at any time. Tenant
waives the right to make repairs at Landlord's expense under California Civil Code Section 1942, or under any other law, statute or ordinance now or hereafter in effect. Landlord's obligations
under this Section are not intended to alter or modify in any way the provisions of Article 12. 


        7.3    Performance By Landlord.    If Tenant refuses or neglects to perform its maintenance
obligations hereunder to the reasonable satisfaction of Landlord, Landlord shall have the right (but not the obligation), upon ten (10) business days' prior notice to Tenant, to enter the
Premises and perform such
repairs and maintenance on behalf of Tenant. In addition, Landlord shall have the right (but not the obligation), to shorten the notice period described in the preceding sentence to fewer than ten
(10) business days, or to no notice at all, if reasonable and necessary to prevent material damage or injury to persons or property, including entry to correct or remove any dangerous or
hazardous condition, to repair the heating, ventilation, air conditioning or plumbing systems, to correct, repair or bring into legal compliance any fire or other life safety systems of the Premises,
and to repair or replace any broken glass or glazing. Landlord shall not be liable to Tenant for any loss or damage to Tenant's merchandise, fixtures, or other property or to Tenant's business in
connection with Landlord's performance hereunder, and Tenant shall pay Landlord's costs plus fifteen percent (15%) of such amount for overhead within thirty (30) days of presentation of a
statement therefor. 


8.     REAL PROPERTY TAXES.  


        8.1    Payment of Real Property Taxes by Tenant.    Tenant shall pay all Real Property Taxes
applicable to the Premises during the Lease Term. If the Premises are not separately assessed, Tenant shall pay its Share thereof as equitably determined by Landlord based upon the Rentable Square
Footage of the Premises compared to the total Rentable Square Footage covered by the tax bill, the respective valuations assigned in the assessor's worksheet, and/or or other relevant factors. Tenant
shall pay its Share of Real Property Taxes to Landlord, to the extent such obligation exceeds any amount 


9







 

thereof
impounded under Section 4.4, within thirty (30) days after receipt of a statement from Landlord. 


        8.2    Real Property Taxes Defined.    "Real Property
Taxes" means all taxes, assessments, levies, fees and other governmental charges levied on or attributable to the Premises or any part thereof, including without limitation:
(a) real property taxes and assessments levied with respect to all or a portion of the Premises, (b) assessments, charges and fees charged by governmental agencies or districts for
services or facilities provided to the Premises, (c) transfer, transaction, rental, gross receipts, license or similar taxes or charges measured by rent received by Landlord, excluding any
federal or state income, franchise, estate or inheritance taxes of Landlord, (d) taxes based upon a reassessment of the Premises due to a transfer or change of ownership, and (e) any
assessment, charge or fee that is a substitute in whole or in part for any tax now or previously included within the definition of Real Property Taxes. If Landlord elects to contest an assessment of
any Real Property Taxes, Landlord shall have the right to recover its actual costs of such contest (including attorneys' fees and costs) as part of Real Property Taxes, but only to the extent such
contest has resulted in a reduction of Real Property Taxes. Tenant shall not be entitled to the benefit of any reduction, refund, rebate or credit accruing or payable to Landlord prior to the
commencement of or after the expiration or other termination of the Lease Term. 


        8.3    Personal Property Taxes.    Tenant shall pay prior to delinquency all taxes charged
against trade fixtures, furnishings, equipment or any other personal property belonging to Tenant. Tenant shall attempt to have such personal property taxed separately from the Premises. If any such
taxes on Tenant's personal property are levied against Landlord or the Premises, or if the assessed value of the Premises is increased by inclusion of a value placed upon such personal property of
Tenant, then: (a) Landlord, after written notice to Tenant, shall have the right to pay the taxes levied against Landlord, or the taxes based upon such increased valuation, but under protest if
so requested by Tenant in writing, and (b) Tenant shall pay to Landlord the taxes levied against Landlord, or the taxes resulting from such increased valuation, within fifteen (15) days
after Tenant's receipt of a written statement from Landlord. 


9.     INSURANCE.  


        9.1    Landlord's Insurance.    During the Lease Term, Landlord shall maintain insurance
covering loss or damage to the Premises (excluding Tenant's Alterations, fixtures, equipment and personal property), insuring against any or all risks of physical loss (and including, at Landlord's
option, flood and earthquake coverage), with the scope and amounts of such coverage as determined by Landlord. Said insurance shall provide for payment of loss thereunder to Landlord or to the holder
of a first mortgage or deed of trust on the Premises. Landlord may also maintain during the Lease Term, as part of its casualty insurance, a policy of rental income insurance covering a period of one
(1) year, with loss payable to Landlord. Landlord may also maintain (but shall not be required to maintain) liability and other insurance (including environmental insurance) as Landlord may, at
its sole option, elect to maintain. 


        9.2    Tenant's Insurance.    



        (a)   Tenant
shall carry, at Tenant's sole expense, insurance against any or all risks of physical loss in an amount adequate to cover the cost of replacement of all of
Tenant's Alterations, trade fixtures, equipment and personal property. Tenant acknowledges that Landlord's insurance is not intended to cover Tenant's Alterations, trade fixtures, equipment, and
personal property. At Landlord's request, Tenant shall carry boiler and machinery broad form insurance in such reasonable amount as Landlord may require based upon Tenant's use of the Premises. If the
Premises contains any plate glass, Tenant shall carry plate-glass insurance covering all plate glass on the Premises at full replacement cost. Any policy proceeds shall be used by Tenant for the 



10







 

repair
or replacement of the property damaged or destroyed unless this Lease shall cease and terminate under the provisions of Article 16, in which case any insurance proceeds covering any of
Tenant's Alterations, and fixtures, that Tenant is required to leave in the Premises at the expiration or earlier termination of the Lease Term under Article 20 shall be paid to Landlord. At
Landlord's sole election, if Tenant fails to carry any or all of the insurance required of it under this Section, Landlord may obtain at Tenant's expense any or all of the insurance described in this
Section that Tenant fails to obtain. 


        (b)   Tenant
shall carry, at Tenant's sole expense, comprehensive or commercial general liability insurance, fully covering any and all claims arising from personal injury,
death, and/or property damage occurring in or about the Premises or the Center. Such liability insurance shall include without limitation bodily injury (including wrongful death), property damage,
advertising injury, personal injury and contractual liability coverages (including Tenant's indemnification obligations under Article 13), independent contractors, owned, nonowned, and hired
vehicle liability and, if alcoholic beverages are served, sold, consumed or obtained in the Premises, liquor-law liability. The initial limit of such insurance shall be at least $2,000,000
combined single liability limit. Such liability insurance limit shall be subject to periodic increase, at Landlord's election, based upon inflation, increased liability awards, lender requirements,
the recommendations of Landlord's professional insurance advisors, and other relevant factors. Tenant shall also, at its sole cost and expense, obtain worker's compensation coverage in an amount
adequate to comply with law, and employer's liability coverage with a limit of not less than $2,000,000. If Tenant's use of the Premises involves any use, generation, manufacturing, storage or
disposal of any Hazardous Materials, or if any of Tenant's activities increases any risk of any liability to Tenant or Landlord under Hazardous Materials Laws, Tenant shall carry such environmental
insurance as may be required by Landlord or Landlord's lender. Tenant shall, at Tenant's sole expense, maintain such other liability insurance as Tenant deems necessary to protect Tenant. 


        (c)   Each
policy of insurance required to be carried by Tenant hereunder shall (i) name Landlord, Landlord's lender and Landlord's property manager (if any) as
additional insureds, (ii) contain cross-liability and contractual liability provisions, (iii) provide that no cancellation or reduction in coverage shall be effective until thirty
(30) days after written notice to Landlord and Landlord's lender, (iv) be issued by an insurer licensed in California and reasonably approved by Landlord, (v) include without
limitation coverage for acts of terrorism, and (vi) be primary and noncontributory to any insurance carried by Landlord, regardless of the absence of negligence or other fault of Tenant for
alleged injury, death and/or property damage. The deductible or self-insured retention on any insurance required to be carried by Tenant hereunder shall not exceed, without the prior
written consent of Landlord, Five Thousand Dollars ($5,000) per occurrence. Tenant shall be responsible for the payment of the full amount of any deductible or self-insured retention on
its
insurance. No insurance carried or required to be carried by Tenant, nor the amount or limits thereof, shall limit Tenant's liability nor relieve Tenant of any obligation under this Lease. 



        (d)   Each
policy of insurance required to be carried by Tenant hereunder shall be obtained by Tenant and maintained in full force and effect during throughout the Lease Term
and any other period of Tenant's actual or constructive possession of the Premises. Prior to the Commencement Date or any earlier taking of possession of any part of the Premises, Tenant shall deliver
a certificate evidencing all such insurance to Landlord, together with additional insured endorsements in favor of Landlord's lender. Tenant shall deliver a renewal or binder of each required policy,
together with all required insured endorsements, at least thirty (30) days prior to expiration thereof. Tenant shall permit Landlord at all reasonable times to inspect the policies of insurance
and required endorsements, and to deliver copies thereof to Landlord within ten (10) days after Landlord's request therefor. Tenant shall be in material breach of this Lease if Tenant fails to
obtain the insurance required under this Section, or if Tenant obtains insurance with terms, conditions and/or exclusions that are inconsistent with the requirements and terms of this Lease. 



11









   
        9.3    Payment of Insurance Costs.    Tenant shall pay directly all premiums for its liability
insurance required under Section 9.2 and for all other insurance Tenant elects to carry. Tenant shall pay the insurance premiums, or, where applicable, its Share thereof, for the insurance
policies carried by Landlord described in this Article ("Insurance Costs"). If the Lease Term expires before the expiration of any such insurance
policy, Tenant's liability for premiums shall be prorated on an annual basis. Tenant shall pay its Share of Insurance Costs to Landlord, to the extent such obligation exceeds any amount thereof
impounded under Section 4.4, within fifteen (15) days after receipt of a statement from Landlord. If any insurance policy maintained by
Landlord covers property other than the Center (under a so-called "blanket" policy or otherwise), Landlord shall reasonably apportion the premium therefor among the properties so covered.
In addition, Landlord may include in Insurance Costs any deductible amount under Landlord's insurance policies, provided that if such deductible is payable in connection with a capital repair or
capital replacement to the Premises, Landlord shall only include in Insurance Costs the amortized cost of such repair or replacement spread over its useful life (no greater that the minimum number of
years allowed pursuant to the United States Revenue Code) over the Lease Term, starting in the calendar year or other accounting period in which the such repair or replacement is made. Tenant's Share
of any such deductible shall be equitably determined by Landlord based upon, among other factors, the Rentable Square Footage of the Premises affected compared to the Rentable Square Footage of all
other affected areas in the Center, and the Replacement Costs applicable to the damage to the Premises compared to that applicable to all other affected areas. 


        9.4    Waiver of Subrogation.    Each party waives all rights of recovery against the other
party and its officers, directors, shareholders, partners, members, principals, employees, agents, representatives, and other related entities and individuals, and their respective successors and
assigns, for any claims for loss, damage or injury to person or property caused by or arising from any liability, loss, damage or injury caused by fire or other casualty for which property insurance
is carried or required to be carried pursuant to this Lease. Each party shall cause each insurance policy obtained by it to provide that the insurer waives all rights of recovery by way of subrogation
against the other party in connection with any damage covered by such policy. If Landlord has contracted with a third party for the management of the Center, the waiver of subrogation by Tenant herein
shall also run in favor of such third party. 


        9.5    Tenant's Use Not to Increase Premium.    Tenant shall not keep, use, manufacture,
assemble, sell or offer for sale in or upon the Premises any article that may be prohibited by, or that might invalidate, in whole or in part, the coverage afforded by, a standard form of fire or all
risk insurance policy, provided that Landlord acknowledges and agrees that Tenant may use hazardous materials in the Premises in accordance with Article 14 of this Lease. Tenant shall pay the
entire amount of any increase in premiums that may be charged during the Lease Term for the insurance that may be maintained by Landlord on the Premises or the Center resulting from the type of
materials or products stored, manufactured, assembled or sold by Tenant in the Premises, whether or not Landlord has consented to the same. In determining whether increased premiums are the result of
Tenant's use of the Premises, a schedule issued by the entity making the insurance rate on the Premises showing the various
components of such rate shall be conclusive evidence of the items and charges that make up the fire insurance rate on the Premises. 


10.    UTILITIES.    Tenant shall pay the cost of alt water, gas, heat, light,
power, sewer, telephone, refuse disposal, and all other utilities and services supplied to the Premises. Tenant shall make payments for all separately metered utilities, when due, directly to the
appropriate supplier. Landlord shall have the right to require Tenant to install, at Tenant's sole expense, separate meters (or other submeter, device or monitor for the measurement of utility usage)
for any utility for which a separate meter is not installed as of the Commencement Date. If any utilities or services are not separately metered or monitored with respect to the Premises, Tenant shall
pay its Share thereof to Landlord, to the extent such obligation exceeds any amount thereof impounded under Section 4,4, within thirty (30) days after receipt of a statement from
Landlord. If at any time during the Lease Term, electrical 


12







 



power
or any other utility is available to the Premises from multiple sources, Landlord shall have the right at any time and from time to time to contract for service from any company or companies
providing electrical, telecommunication, or other utility service to the Building. Tenant shall cooperate with Landlord and all providers of electrical, telecommunication, or other utility service
and, as reasonably necessary, allow Landlord and such providers reasonable access to the Premises and to the electric lines, feeders, risers, wiring and any other machinery or equipment within the
Premises. Landlord shall in no way be liable or responsible for any loss, damage or expense that Tenant may sustain or incur by reason of any change, failure, interruption, interference or defect in
the supply or character of the electricity or other utilities supplied to the Premises. Landlord makes no representation or warranty as the suitability of the utility service for Tenant's
requirements, and no such change, failure, defect, unavailability or unsuitability shall constitute any actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement or
diminution of rent, or relieve Tenant of any of its obligations under the Lease. Landlord shall not be liable in damages or otherwise for any failure or interruption of any utility service, and no
such failure or interruption shall entitle Tenant to terminate this Lease or abate the rent due hereunder. 



11.   USE.  


        11.1    Permitted Use.    The Premises shall be used and occupied only for the permitted uses
specified in Section 1.8, and shall not be used or occupied for any other purposes without the prior written consent of Landlord. Should Tenant desire to change its use, Tenant shall request
Landlord's consent to such change in writing, and shall provide in writing such reasonably detailed information about the proposed new use as may be requested by Landlord. Landlord shall not
unreasonably withhold its consent to any requested change of use, and shall have the right to impose reasonable restrictions on such new use. Factors that Landlord may take into account in granting or
withholding its consent shall include, without limitation: (i) whether the proposed use is compatible with the character and tenant mix of the Center, (ii) whether the proposed use poses
any increased risk to Landlord or any other occupant of the
Center, (iii) whether any proposed Alterations to accommodate such proposed use might decrease the rental or sale value of the Premises or the Center, and (iv) whether Tenant has the
requisite expertise and financial ability to successfully operate in the Premises with the proposed new use. 


        11.2    Compliance with Legal Requirements.    Subject to Landlord's obligations set forth in
Section 25.8 below, Tenant shall at all times and at its sole expense comply with all federal, state, local and other laws, ordinances, rules, regulations, orders, requirements, and recorded
covenants and restrictions applicable to the Premises and its use of the Center whether now in force or hereafter in effect (including without limitation those related to disabled persons, access,
hazardous materials, lighting upgrades, energy saving, and sprinkler and seismic retrofits, and those required because of Tenant's occupancy or the conduct of Tenant's business) (collectively,  "Legal
Requirements"). Tenant shall not do or permit anything to be done in or about the Premises in conflict with any Legal Requirement. Without
limiting the generality of the foregoing, Tenant shall at its sole cost take all actions, make all alterations, install all additional facilities, and perform all work required to cause the Premises
(under the control of Tenant) to comply with all Legal Requirements. 


        11.3    Waste, Quiet Conduct.    Tenant shall not use or permit the use of the Premises in any
manner that tends to create waste or a nuisance, that will cause objectionable noise or odors, or that may disturb the quiet enjoyment of any other tenant in the Center. 



        11.4    Rules and Regulations.    Tenant shall comply with the Rules and Regulations for the
Center attached as Exhibit "B", as the same may be amended by Landlord from time to time, upon notice to Tenant. 


13







 



        11.5    Signs.    Tenant shall have the right to monument, building and lobby signage. Any
such signage shall be installed at Tenant's sole expense in strict conformance with Landlord's sign criteria attached hereto as Exhibit "C". Tenant
shall maintain all approved signs and other items described herein in good condition and repair at all times. All signs must be fabricated by a contractor selected by Landlord. Prior to construction
of any such sign, a detailed drawing of the proposed sign shall be prepared by Landlord's contractor, at the sole expense of Tenant, and submitted to Landlord and Tenant for written approval. No sign,
placard, pennant, flag, awning, canopy, or advertising matter of any kind shall be placed or maintained on any exterior door, wall or window of the Premises or in any area outside the Premises, and no
decoration, lettering or advertising matter shall be placed or maintained on the glass of any window or door, or that can be seen through the glass, of the Premises without first obtaining Landlord's
written approval. All signs and sign cases shall be considered fixtures and improvements and shall become the property of Landlord upon expiration or termination of this Lease. Tenant has no rights to
signage at the Center except as set forth in this Section. Landlord shall have the right from time to time to revise the sign criteria. Within sixty (60) days after Tenant's receipt of written
notice of any new sign criteria, Tenant shall, at Tenant's expense, remove all existing exterior signs and replace the same with new signs conforming to the new sign criteria (provided, however that
this sentence shall not apply during the first five (5) Lease Years). 


        11.6    Parking.    Tenant shall have the nonexclusive right, in common with others, to use
the parking areas of the Center; provided, however, that Tenant shall not use more than the number of parking spaces designated in Section 1.10, or if no number of such spaces is so indicated,
Tenant shall not use more than its reasonable share of parking spaces, as Landlord shall determine. Landlord reserves the right, without liability to Tenant, to modify the parking areas, to designate
the specific location of the parking for Tenant and Tenant's customers and employees, and to adopt reasonable rules and regulations for use of the parking areas. 


        11.7    Entry by Landlord.    Tenant shall permit Landlord and Landlord's agents to enter the
Premises at all reasonable times for any of the following purposes: (a) to inspect the Premises, (b) to supply any services or to perform any maintenance obligations of Landlord,
including the erection and maintenance of such scaffolding, canopies, fences, and props as may be required, (c) to make such improvements, replacements or additions to the Premises or the
Center as Landlord deems necessary or desirable, (d) to post notices of nonresponsibility, (e) to place any usual or ordinary "for sale" signs, or (f) within six (6) months
prior to the expiration of this Lease, to place any usual or ordinary "for lease" signs. No such entry shall result in any rebate of rent or any liability to Tenant for any loss of occupation or quiet
enjoyment of the Premises. Landlord shall give reasonable notice to Tenant prior to any entry except in an emergency or unless Tenant consents at the time of entry. If Tenant is not personally present
to open and permit an entry into the Premises (after applicable prior notice to Tenant), at any time when for any reason an entry therein shall be necessary or permissible, Landlord or Landlord's
agents may enter the same by a master key, or may forcibly enter the same without rendering Landlord or such agents liable therefor, and without in any manner affecting the obligations and covenants
of this Lease. Nothing herein contained, however, shall be deemed or construed to impose upon Landlord any obligation, responsibility or liability whatsoever for the care, maintenance or repair of the
Premises or any part thereof, except as otherwise specifically provided herein. 


        11.8    Roof Penetrations and Equipment.    



        (a)   Tenant
shall have the right, at its sole cost and expense and subject to Landlord's reasonable approval and any approvals required by the City of San Diego, to place
telecommunications equipment, satellite dish(es) and antenna(e) together with all wiring or other connections therefor (collectively, the "Roof Items"), on the roof of the Building in a location
reasonably designated by Landlord. If any such installation interferes with the operations or installations of any other tenant or of Landlord installed prior to the installation of Tenant's 



14







 

equipment,
Tenant shall, at its sole cost and expense, at Landlord's request relocate or modify its installation to eliminate any such interference. 


        (b)   Landlord
shall, at Tenant's cost, cooperate with Tenant in the procurement of necessary permits or zoning variances for the Roof Items and execute all documents required
to obtain necessary permits or zoning variances. 


        (c)   Tenant
shall follow any reasonable recommendations of Landlord's roofing contractor with respect to the installation of the Roof Items. Following the installation of the
Roof Items, Landlord's roofing contractor shall inspect the same and Tenant shall conduct such repairs, maintenance or other installations as may be recommended by Landlord's roofing contractor
related to such installation. All such repairs as well as the costs of Landlord's roofing contractor in conducting such inspections, shall be borne by Tenant. 


        (d)   In
the event Landlord contemplates roof repair or requires access that requires temporary removal or relocation of the Roof Items, or which may result in an interruption
in Tenant's telecommunication services, Landlord shall, if practicable, notify Tenant at least thirty (30) days prior to such contemplated work in order to allow Tenant to make other
arrangements for such services. The cost or removal and re-installation of any Roof Items affected thereby shall be borne by Tenant. Tenant shall not be required to relocate any of its
Roof Items to accommodate the needs of any other tenant or occupant of the Building. 


        (e)   Tenant
or its agents or representatives shall be permitted use of and access to the roof for the purposes stated herein. Tenant shall give Landlord at least ten
(10) days prior notice of its intention to install any additional Roof Items and shall afford Landlord a reasonable opportunity to have its representative present during such installation. 



        (f)    Upon
termination of the Lease, Tenant shall disconnect and remove such Roof Items, and fully repair and restore the roof to the same condition than prior to installation
of the Roof Items, normal wear and tear excepted. Tenant's obligations with respect to the Roof Items are identical to Tenant's obligations with respect to the Premises pursuant to the Lease,
including without limitation maintenance, insurance and indemnification. Provided, however, that at the sole discretion of Landlord, Tenant may leave some or all of its Roof Items in place after the
expiration or earlier termination of the Lease. 


        (g)   The
Roof Items may be used solely by Tenant in connection with Tenant's own business. Tenant acknowledges and agrees that the rooftop access for antenna(e) and
communications devices is a valuable asset of Landlord's, and Landlord's ability to rent such rooftop access to other companies providing telecommunications services would be severely curtailed or
impaired should Tenant offer the same rooftop access to persons or entities providing the same or similar services to others. Accordingly, the Roof Items shall not be in any way used, leased or made
available to anyone other than Tenant, whether for free or at a charge, except (i) in connection with Tenant's business conducted in the Premises, (ii) in the instance of other companies
transmitting information in common with information being transmitted as part of Tenant's own business. 



        (h)   All
Roof Items shall be placed a sufficient distance from the front of the Center parapet such that no Roof Items are visible from pedestrians or vehicles on any public
street. 




12.   ACCEPTANCE OF PREMISES; NONLIABILITY OF LANDLORD; DISCLAIMER.  


        12.1    Acceptance of Premises.    By taking possession hereunder, Tenant acknowledges that it
has examined the Premises and accepts the condition thereof, subject to the provisions of Section 25.8 below. Tenant acknowledges and agrees that, subject to the provisions of
Section 25.8 below, Landlord has no obligation to improve the Premises other than as set forth specifically in this Lease, if at all. In 


15







 

particular,
Tenant acknowledges that any additional improvements or alterations needed to accommodate Tenant's intended use shall be made solely at Tenant's sole cost and expense, and strictly in
accordance with the requirements of this Lease (including the requirement to obtain Landlord's consent thereto), unless such improvements and alterations are specifically required of Landlord.
Landlord shall have no responsibility to do any work required under any building codes or other governmental requirements not in effect or applicable at the time the Premises were constructed,
including without limitation any requirements related to sprinkler retrofitting, seismic structural requirements, accommodation of disabled persons, or hazardous materials. Notwithstanding anything to
the contrary contained herein, Landlord hereby represents that it shall deliver the Premises and the Center to Tenant, in good condition and repair with all building systems in good working order.
Landlord shall be under no obligation to provide utility, telephone or other service or access beyond that which exists at the Premises as of the date of this Lease, unless Landlord specifically
agrees in writing to provide the same. If it is anticipated that Tenant will be doing any Alterations or installations prior to taking occupancy, any delays encountered by Tenant in accomplishing such
work or obtaining any required permits therefor shall not delay the Commencement Date or the date that Tenant becomes liable to pay rent, or the date that Landlord may effectively deliver possession
of the Premises to Tenant. By taking possession hereunder, Tenant acknowledges that it accepts the square footage of the Premises as delivered and as stated in this Lease. No discovery or alleged
discovery after such acceptance of any variance in such square footage as set forth in this Lease (or in any proposal, advertisement or other description thereof) shall be grounds for any adjustment
in any component of the rent payable hereunder. 


        12.2    Landlord's Exemption From Liability.    Landlord shall not be liable for injury to
Tenant's business or loss of income therefrom, or for personal injury or property damage that may be sustained by Tenant or any subtenant of Tenant, or their respective employees, invitees, customers,
agents or contractors or any other person in or about the Premises, caused by or resulting from fire, flood, earthquake or other natural disaster, or from steam, electricity, gas, water or rain, that
may leak or flow from or into any part of the Premises, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air-conditioning,
lighting fixtures or computer equipment or software, whether such damage or injury results from conditions arising upon the Premises or upon
other portions of the Building, or from other sources, and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to Tenant. Landlord shall not be
liable for any damages to property or for personal injury or loss of life arising from any use, act or failure to act of any third parties (including other occupants of the Center) occurring in, or
about the Premises or in or about the Center (including without limitation the criminal acts of any third parties). Landlord shall not be liable for any latent defect in the Premises or in the
Building. All property of Tenant kept or stored on the Premises shall be so kept or stored at the risk of Tenant only, and Tenant shall indemnify, protect, hold harmless and defend Landlord and
Landlord's officers, directors, shareholders, partners, members, principals, employees, agents, representatives, and other related entities and individuals, and their respective successors and
assigns, from and against any claims arising out of damage to the same, including subrogation claims by Tenant's insurance carriers. Provided, however, that the indemnifications and waivers of Tenant
set forth in this Section shall not apply to damage and liability caused (i) by the gross negligence or willful misconduct of Landlord, and (ii) through no fault of Tenant, its assignees
or subtenants, or their respective agents, contractors, employees, customers, invitees or licensees. 


        12.3    No Warranties or Representations.    



        (a)   Neither
Landlord nor Landlord's agents make any warranty or representation with respect to the suitability or fitness of the space for the conduct of Tenant's business,
or for any other purpose. 



16







 

        (b)   Neither
Landlord nor Landlord's agents make any warranty or representation with respect to any other tenants or users that may or may not construct improvements, occupy
space or conduct business within the Center, and Tenant hereby acknowledges and agrees that it is not relying on any warranty or representation relating thereto in entering into this Lease. 


        (c)   Landlord
specifically disavows any oral representations made by or on behalf of its employees, agents and independent contractors, and Tenant hereby acknowledges and
agrees that it is not relying and has not relied on any oral representations in entering into this Lease. 


        (d)   Landlord
has not made any promises or representations, expressed or implied, that it will renew, extend or modify this Lease in favor of Tenant or any permitted
transferee of Tenant, except as may be specifically set forth herein or in a written instrument signed by both parties amending this Lease. 


        (e)   Notwithstanding
that the rent payable to Landlord hereunder may at times include the cost of guard service or other security measures, it is specifically understood that
Landlord does not represent, guarantee or assume responsibility that Tenant will be secure from any damage, injury or loss of life because of such guard service. Landlord shall have no obligation to
hire, maintain or provide such
services, which may be withdrawn or changed at any time with or without notice to Tenant or any other person and without liability to Landlord. To induce Landlord to provide such service if Landlord
elects in its sole discretion to do so, Tenant agrees that (i) Landlord shall not be liable for any damage, injury or loss of life related to the provision or nonprovision of such service, and
(ii) Landlord shall have no responsibility to protect Tenant, or its employees or agents, from the acts of any third parties (including other occupants of the Center) occurring in or about the
Premises or in or about the Center (including without limitation the criminal acts of any third parties), whether or not the same could have been prevented by any such guard service or other security
measures. 




        12.4    Keys.    Tenant shall re-key the Premises at its sole cost upon taking
possession thereof. Tenant hereby acknowledges that various persons have had access to the keys to the Premises as keyed prior to Tenant's possession, and that Landlord disclaims all liability and
responsibility for any unauthorized distribution or possession of such prior keys. 



13.   INDEMNIFICATION.  


        Tenant shall indemnify, protect, hold harmless and defend Landlord and Landlord's officers, directors, shareholders, partners, members, principals, employees,
agents, representatives, and other related entities and individuals, and their respective successors and assigns (collectively, "Landlord's Related
Entities"), from and against any and all claims, actions, damages, liability, costs, and expenses, including attorneys' fees and costs, arising from personal injury, death,
and/or property damage and arising from: (a) Tenant's use or occupation of the Premises or any work or activity done or permitted by Tenant in or about the Premises (including without
limitation any storage or display of materials or merchandise, or other activity by Tenant in the Common Facilities), (b) any activity, condition or occurrence in the Premises or other area
under the control of Tenant, (c) any breach or failure to perform any obligation imposed on Tenant under this Lease, (d) any breach or failure by Tenant to cause the Premises (and any
and all other areas of the Center that Tenant is required to maintain pursuant to the terms of this Lease) to comply with all Legal Requirements related to disabled persons or access, or
(e) any other act or omission of Tenant or its assignees or subtenants or their respective agents, contractors, employees, customers, invitees or licensees. Tenant's obligation to indemnify,
protect, hold harmless and defend shall include, but not be limited to, claims based on duties, obligations, or liabilities imposed on Landlord or Landlord's Related Entities by statute, ordinance,
regulation, or other law, such as claims based on theories of peculiar risk and nondelegable duty, and to any and all other claims based on the negligent act or omission of Landlord or Landlord's
Related Entities. The parties intend that this provision be interpreted as the broadest Type I indemnity 


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provision
as defined in McDonald & Kruse, Inc. v. San Jose Steel Co., 29 Cal. App. 3rd 413 (1972), and as allowed by law
between a landlord and a tenant. Upon notice from Landlord, Tenant shall, at Tenant's sole expense and by counsel satisfactory to Landlord, defend any action or proceeding brought against Landlord or
Landlord's Related Entities by reason of any such claim. If Landlord or any of Landlord's Related Entities is made a party to any litigation commenced by or against Tenant, then Tenant shall
indemnify, protect, hold harmless and defend Landlord and Landlord's Related Entities from and against any and all claims, actions, damages, liability, costs, expenses and attorneys' fees and costs
incurred or paid in connection with such litigation. Tenant, as a material part of the consideration to Landlord hereunder, assumes all risk of, and waives all claims against Landlord for, personal
injury or property damage in, upon or about the Premises, from any cause whatsoever. Provided, however, that the indemnifications and waivers of Tenant set forth in this Section shall not apply to
damage and liability caused (i) by the gross negligence or willful misconduct of Landlord, and (ii) through no fault of Tenant, its assignees or subtenants, or their respective agents,
contractors, employees, customers, invitees or licensees. 


14.   HAZARDOUS MATERIALS.  


        14.1    Definitions.    "Hazardous Materials
Laws" means any and all federal, state or local laws, ordinances, rules, decrees, orders, regulations or court decisions relating to hazardous substances, hazardous materials,
hazardous waste, toxic substances, environmental conditions on, under or about the Premises, or soil and ground water conditions, including, but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq,, the Hazardous Materials Transportation Act, 49 U.S.C.
§ 1801, et seq., the California Hazardous Waste Control Act, Cal. Health and Safety Code § 25100, et
seq., the Carpenter-Presley-Tanner Hazardous Substances Account Act, Cal. Health and Safety Code § 25300, et seq.,
the Safe Drinking Water and Toxic Enforcement Act, Cal. Health and Safety Code § 25249.5, et seq., the Porter-Cologne Water Quality Control
Act, Cal. Water Code § 13000, et seq., any amendments to the foregoing, and any similar federal, state or local laws, ordinances, rules,
decrees, orders or regulations. "Hazardous Materials" means any chemical, compound, material, substance or other matter that: (a) is defined as a
hazardous substance, hazardous material, hazardous waste or toxic substance under any Hazardous Materials Law, (b) is controlled or governed by any Hazardous Materials Law or gives rise to any
reporting, notice or publication requirements hereunder, or gives rise to any liability, responsibility or duty on the part of Tenant or Landlord with respect to any third person hereunder; or
(c) is flammable or explosive material, oil, asbestos, urea formaldehyde, radioactive material, nuclear medicine material, drug, vaccine, bacteria, virus, mold, hazardous waste, toxic
substance, or related injurious or potentially injurious material (by itself or in combination with other materials). 


        14.2    Use of Hazardous Materials.    Tenant shall not allow any Hazardous Material to be
used, generated, manufactured, released, stored or disposed of on, under or about, or transported from, the Premises, unless: (a) such use is specifically disclosed to and approved by Landlord
in writing prior to such use, and (b) such use is conducted in compliance with the provisions of this Article. Attached hereto as Exhibit "D" is a list of Hazardous Materials Tenant intends to
use in the Premises, the use of which Landlord hereby approves subject to the other terms and conditions of this Lease. Landlord agrees not to unreasonably withhold, delay or condition any consent to
any request by Tenant for consent to use additional Hazardous Materials so long as such additional Hazardous Materials are necessary for Tenant to conduct the business described in Section 1.8,
and Landlord shall not unreasonably withdraw such consent to such materials. In all other cases, Landlord's consent may be withheld in Landlord's sole discretion and, if granted, may be revoked at any
time. Landlord may approve such use subject to reasonable conditions to protect the Premises and Landlord's interests. Landlord may withhold approval if Landlord determines that such proposed use
involves a material risk of a release or discharge of Hazardous Materials or a violation of any Hazardous Materials Laws or 


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that
Tenant has not provided reasonably sufficient assurances of its ability to remedy such a violation and fulfill its obligations under this Article. Notwithstanding the foregoing, Landlord hereby
consents to Tenant's use, storage or disposal of products containing small quantities of Hazardous Materials that are of a type customarily found in offices and households (such as aerosol cans
containing insecticides, toner for copies, paints, paint remover and the like) provided that Tenant shall handle, use, store and dispose of such Hazardous Materials in a safe and lawful manner and
shall not allow such Hazardous Materials to contaminate the Premises. 


        14.3    Compliance With Laws; Handling Hazardous Materials.    Tenant shall strictly comply
with, and shall maintain the Premises in compliance with, all Hazardous Materials Laws. Tenant shall obtain, maintain in effect and comply with the conditions of all permits, licenses and other
governmental approvals required for Tenant's operations on the Premises under any Hazardous Materials Laws, including, but not limited to, the discharge of appropriately treated Hazardous Materials
into or through any sanitary sewer serving the Premises. At Landlord's request, Tenant shall deliver copies of, or allow Landlord to
inspect, all such permits, licenses and approvals. All Hazardous Materials removed from the Premises shall be removed and transported by duly licensed haulers to duly licensed disposal facilities, in
compliance with all Hazardous Materials Laws. Tenant shall perform any monitoring, testing, investigation, clean-up, removal, detoxification, preparation of closure or other required plans
and any other remedial work required by any governmental agency or lender, or recommended by Landlord's environmental consultants, as a result of any release or discharge or threatened release or
discharge of Hazardous Materials affecting the Premises or the Center or any violation or threatened violation of Hazardous Materials Laws by Tenant or any assignee or subtenant of Tenant or their
respective agents, contractors, employees, licensees or invitees (collectively, "Remedial Work"). Landlord shall have the right to intervene in any
governmental action or proceeding involving any Remedial Work, and to approve performance of the work, in order to protect Landlord's interests. Tenant shall not enter into any settlement agreement,
consent decree or other compromise with respect to any claims relating to Hazardous Materials without notifying Landlord and providing ample opportunity for Landlord to intervene. Tenant shall
additionally comply with the recommendations of Landlord's and Tenant's insurers based upon National Fire Protection Association standards or other applicable guidelines regarding the management and
handling of Hazardous Materials. If any present or future law imposes any requirement of reporting, survey, investigation or other compliance upon Landlord, Tenant, or the Premises, and if such
requirement is precipitated by a transaction to which Tenant is a party, including without limitation any Transfer (as defined in Section 18.1) of this Lease by Tenant, then Tenant shall fully
comply with and pay all costs of compliance with such requirement, including Landlord's attorneys' fees and costs. 


        14.4    Notice; Reporting; Health and Safety Code Section 25359.7.    Tenant shall
notify Landlord, in writing, within three (3) days after any of the following: (a) Tenant has knowledge, or has reasonable cause to believe, that any Hazardous Material has been
released, discharged or is located on, under or about the Premises in violation of law or this Lease, whether or not the release or discharge is in quantities that would otherwise be reportable to a
public agency, (b) Tenant receives any order of a governmental agency requiring any Remedial Work pursuant to any Hazardous Materials Laws, (c) Tenant receives any warning, notice of
inspection, notice of violation or alleged violation or Tenant receives notice or knowledge of any proceeding, investigation or enforcement action, pursuant to any Hazardous Materials Laws; or
(d) Tenant receives notice or knowledge of any claims made or threatened by any third party against Tenant or the Premises relating to any loss or injury resulting from Hazardous Materials. If
the potential risk of any of the foregoing events is material, Tenant shall deliver immediate verbal notice to Landlord, in addition to written notice as set forth above. Tenant shall deliver to
Landlord copies of all test results, reports and business or management plans required to be filed with any governmental agency pursuant to any Hazardous Materials Laws. Landlord hereby notifies
Tenant, and Tenant hereby acknowledges that, prior to the leasing of the Premises pursuant to this Lease, Tenant has been notified, pursuant to California Health and Safety Code Section 25359.7 


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(or
any successor statue), that Landlord knows, or has reasonable cause to believe, that certain hazardous substances (as such term is used in such Section 25359.7) may have come to be located
in, on or beneath the Premises. Tenant acknowledges that the Premises were previously used under California Health and Human Services Agency, License No. 6288-37, issued by the
California Health and Human Services Agency, Radiologic Health Branch. Tenant acknowledges that it has reviewed Amendment No. 12 to such license (terminating the same), together with the
"Certificate of Disposition" with attachments dated April 20, 2004, referred to in such Amendment No. 12. 


        14.5    Indemnity.    Tenant shall indemnify, protect, hold harmless and defend Landlord and
Landlord's officers, directors, shareholders, partners, members, principals, employees, agents, representatives, and other related entities and individuals, and their respective successors and
assigns, from and against any and all liabilities, claims, suits, judgments, actions, investigations, proceedings, costs and expenses (including attorneys' fees and costs) arising out of or in
connection with any breach of any provisions of this Article by Tenant or directly or indirectly arising out of the use, generation, storage, release, disposal or transportation of Hazardous Materials
by Tenant, or any assignee or subtenant of Tenant, or their respective agents, contractors, employees, licensees, or invitees, on, under or about the Premises during the Lease Term or any other period
of Tenant's actual or constructive occupancy of the Premises, including, but not limited to, all foreseeable and unforeseeable consequential damages and the cost of any Remedial Work. Any defense of
Landlord pursuant to this Section shall be by counsel acceptable to Landlord. Neither the consent by Landlord to the use, generation, storage, release, disposal or transportation of Hazardous
Materials nor the strict compliance with all Hazardous Materials Laws shall excuse Tenant from Tenant's indemnification obligations pursuant to this Article. The foregoing indemnity shall be in
addition to and not a limitation of the indemnification provisions of Article 13 of this Lease. Tenant's obligations pursuant to this Article shall survive the termination or expiration of this
Lease. 


        14.6    Entry and Inspection; Cure.    Landlord and its agents, employees and contractors,
shall have the right (but not the obligation) to enter the Premises, upon ten (10) business days' prior notice to Tenant, to inspect the Premises and Tenant's compliance with the terms and
conditions of this Article, or to conduct investigations and tests. Landlord shall have the right (but not the obligation), to shorten the notice period described in the preceding sentence to fewer
than ten (10) business days, or to no notice at all, if reasonable and necessary, in the event of an emergency, or if Landlord has reasonable cause to believe that violations of this Article
have occurred, or if Tenant consents at the time of entry. Landlord shall have the right (but not the obligation) to remedy any violation by Tenant of the provisions of this Article pursuant to
Section 22.3 of this Lease or to perform any Remedial Work, provided that Landlord shall first notify Tenant of the need for Remedial Work and provide Tenant with a reasonable opportunity to
perform such Remedial Work prior to Landlord exercising its rights in accordance with the foregoing. Tenant shall pay, upon demand, all costs incurred by Landlord in investigating any such violations
or potential violations or performing Remedial Work, plus interest thereon at the rate specified in this Lease from the date of demand until the date paid by Tenant. 


        14.7    Termination; Expiration.    Upon termination or expiration of this Lease, Tenant
shall, at Tenant's cost, remove any equipment, improvements or storage facilities utilized in connection with any Hazardous Materials and shall clean up, detoxify, repair and otherwise restore the
Premises to either (i) a condition free of hazardous materials, or (ii) a condition that (A) under applicable Hazardous Materials laws, is sufficient to obtain relevant clearance,
no action or other approvals and permits from applicable government agencies, and (B) is such that the Premises is re-leaseable to the general public without further remediation. In
no event shall Tenant be liable for any Hazardous Materials in the Premises or the Center not caused by Tenant or any assignee or subtenant of Tenant or their respective agents, contractors,
employees, licensees or invitees. 


        14.8    Exit Assessment.    No later than ten (10) days after the expiration or earlier
termination of this Lease, Tenant shall cause to be performed, at its sole expense, an environmental assessment (the 


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 "Exit Assessment") of the Premises. Landlord agrees to allow Tenant access to the Premises for such purpose. The Exit Assessment must be performed by a qualified environmental
consultant acceptable to Landlord, and shall include without limitation the following, as applicable to the Premises and Tenant's activities: (a) inspection of all floors, walls, ceiling tiles,
benches, cabinet interiors, sinks, the roof and other surfaces for signs of contamination and/or deterioration related to Hazardous Materials, (b) inspection of any and all ducts, hoods and
exhaust systems for signs of contamination, deterioration and/or leakage related or potentially related to Hazardous Materials, (c) inspection of all readily accessible drain lines and other
discharge piping for signs of deterioration, loss of integrity and leakage, (d) Tenant interviews and review of appropriate Tenant records to determine the uses to which Tenant has put the
Premises that involve or may have involved Hazardous Materials, and to determine if any known discharges to the Premises or ground or soils from Tenant's activities have occurred,
(e) documentation in detail of all observations, including dated photographs, (f) if applicable a certification that all areas inspected are clean and free of any Hazardous Materials and
that the investigation conducted by the consultant does indicate that any release of any Hazardous Materials has occurred in the Premises or the Center as a result of Tenant's activities,
(g) if applicable, a detailed description of Hazardous Materials remaining in the Premises and of any contamination, deterioration and/or leakage observed, together with detailed
recommendations for the removal, repair or abatement of the same, and (h) if applicable, a detailed description of evidence of possible or past releases of Hazardous Materials, together with
detailed recommendations for the prevention of the same in the future. Landlord shall have the right to require additional evaluations or work in connection with the Exit Assessment based upon
Tenant's use of the Premises, any actual or suspected Hazardous Materials issues, or other reasonable factors. The original of the Exit Assessment shall be addressed to Landlord and shall be provided
to Landlord within twenty (20) days of the expiration or earlier termination of this Lease. In addition to Tenant's obligations under Section 14.7, Tenant agrees to fully implement and
address all recommended actions contained in the Exit Assessment, at its sole cost, within thirty (30) days of the date thereof, to the extent such recommended actions are to remedy conditions
caused by Tenant or any assignee or subtenant of Tenant or their respective agents, contractors, employees, licensees or invitees. 


        14.9    Event of Default.    The release or discharge of any Hazardous Material or the
violation of any Hazardous Materials Law by Tenant or any assignee or subtenant of Tenant shall be a material Event of Default by Tenant under this Lease. In addition to or in lieu of the remedies
available under this Lease as a result of such Event of Default, Landlord shall have the right, without terminating this Lease, to require Tenant to suspend its operations and activities on the
Premises until Landlord is satisfied that appropriate Remedial Work has been or is being adequately performed; Landlord's election of this remedy shall not constitute a waiver of Landlord's right
thereafter to declare an Event of Default and pursue any other available remedy. 


15.   ALTERATIONS; LIENS.  


        15.1    Alterations by Tenant.    Tenant shall not make any alterations, additions or
improvements ("Alterations") to the Premises without Landlord's prior written consent, except for nonstructural Alterations that cost $25,000 or less
and are not visible from the exterior of the Premises. All Alterations installed by Tenant shall be new or completely reconditioned. Landlord shall have the right to reasonably approve the contractor,
the method of payment of the contractor, and the plans and specifications for all proposed Alterations. Tenant shall obtain Landlord's consent to all proposed Alterations requiring Landlord's consent
prior to the commencement of any such Alterations. Tenant's request for consent shall be accompanied by information identifying the contractor and method of payment and two (2) copies of the
proposed plans and specifications. All Alterations of whatever kind and nature shall become at once a part of the realty and shall be surrendered with the Premises upon expiration or earlier
termination of the Lease Term, unless Landlord requires Tenant to remove the same as provided in Article 20. At the time Tenant requests Landlord's consent to any Alteration, 


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Tenant
shall have the right to request that Landlord waive its right to remove all or a portion of such requested Alterations under Article 20; provided, however, that if Landlord does not
waive the same, all of Landlord's rights under Article 20 shall remain unaffected. If Tenant demolishes or removes any then-existing tenant improvements or other portions of the
Premises or the Building (including without limitation any previously-installed Alterations), Tenant shall promptly commence and diligently pursue to completion all Alterations then underway;
provided, however, that if Tenant fails to do so, at the election of Landlord, Tenant shall restore the Premises and the Building to its condition and state of improvement prior to such demolition or
removal. During the Lease Term, Tenant agrees to provide, at Tenant's expense, a policy of insurance covering loss or damage to Alterations made by Tenant, in an amount adequate to repair or replace
the same, naming Landlord and Landlord's property manager (if any) as additional insureds. Provided, however, Tenant may install movable furniture, trade fixtures, machinery or equipment in
conformance with applicable governmental rules or ordinances and remove the same upon expiration or earlier termination of this Lease as provided in Article 20. 



        15.2    Permits and Governmental Requirements.    Tenant shall obtain, at Tenant's sole cost
and expense, all building permits and other permits of every kind and nature required by any governmental agency having jurisdiction in connection with the Alterations. Tenant shall indemnify,
protect, hold harmless and defend Landlord and Landlord's officers, directors, shareholders, partners, members, principals, employees, agents, representatives, and other related entities and
individuals, and their respective successors and assigns, from and against any and all claims, actions, damages, liability, costs, and expenses, including attorneys' fees and costs, arising out of any
failure by Tenant or Tenant's contractor or agents to obtain all required permits, regardless of when such failure is discovered. Subject to Landlord's representations and warranties set forth in this
Lease and except as set forth in the attached Construction Addendum to Standard Industrial Net Lease (in particular, Section 25.8), Tenant shall do any and all additional construction,
alterations, improvements and retrofittings required to be made to the Premises and/or the Center, as a result of, or as may be triggered by, Tenant's Alterations. Landlord shall have the right to do
such construction itself subject to Tenant's approval of the cost thereof; but in all instances Tenant shall pay all costs directly or indirectly related to such work and shall indemnify, protect,
hold harmless and defend Landlord and Landlord's officers, directors, shareholders, partners, members, principals, employees, agents, representatives, and other related entities and individuals, and
their respective successors and assigns, from and against any and all claims,
actions, damages, liability, costs, and expenses, including attorneys' fees and costs, arising out of any such additionally required work. An payment and indemnification obligations under this Section
shall survive the expiration or earlier termination of the Lease Term. 


        15.3    Liens.    Tenant shall pay when due all claims for any work performed, materials
furnished or obligations incurred by or for Tenant, and Tenant shall keep the Premises free from any liens arising with respect thereto. If Tenant fails to cause any such lien to be released within
fifteen (15) days after imposition, by payment or posting of a proper bond, Landlord shall have the right (but not the obligation) to cause such release by such means as Landlord deems proper.
Tenant shall pay Landlord upon demand for all costs incurred by Landlord in connection therewith (including attorneys' fees and costs), with interest at the rate specified in Section 22.4 from
the date of payment by Landlord to the date of payment by Tenant. Tenant will notify Landlord in writing thirty (30) days prior to commencing any alterations, additions, improvements or repairs
in order to allow Landlord time to file a notice of nonresponsibility. 


        15.4    Remodel.    Landlord may in the future remodel, renovate or refurbish
("remodel") all or any portion of the Center, outside of the Premises. The remodeling will be done in accordance with design specifications prepared by
the project architect and reviewed and approved by Landlord. Copies of such specifications will be made available to Tenant. Tenant shall not, through any act or omission on the part of Tenant, in any
way impede, delay or prevent the completion of such remodeling in a timely manner, provided that remodeling shall not unreasonably interfere with Tenant's use of the Premises and the parking areas. 


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   16.   DAMAGE AND DESTRUCTION.  


        16.1    Partial Damage.    If, during the Lease Term, the Premises are damaged or destroyed,
or if the Building is damaged or destroyed and such damage or destruction affects Tenant's use of the Premises (collectively, "Premises Damage"),
Landlord shall perform the necessary repairs (other than to Tenant's Alterations, trade fixtures, equipment, and personal property, the repair of which Tenant shall be solely responsible), and this
Lease shall continue in full force and effect. Provided, however, that Landlord may, at its option, elect to terminate this Lease if (i) Landlord's estimate is such that the required repairs
cannot reasonably be completed within one hundred eighty (180) days after the date of the Premises Damage in accordance with applicable laws and regulations, or (ii) the Replacement Cost
(defined below) exceeds six (6) months' Minimum Monthly Rent, or (iii) Landlord does not receive sufficient insurance proceeds to pay the full Replacement Cost and the shortfall exceeds
one (1) month's Minimum Monthly Rent. Provided, further, however, that Tenant may, at its option, elect to terminate this Lease if Landlord's estimate is such that the required repairs cannot
reasonably be completed within one hundred eighty (180) days after the date of the Premises Damage in accordance with applicable laws and regulations. As used herein,  "Replacement Cost"shall mean
the cost to repair or rebuild the Premises, Building or Center (other than Tenant's Alterations, equipment, trade fixtures,
and personal property) at the time of the damage or destruction to their condition existing immediately prior thereto, including without limitation all costs of demolition, debris removal, permits,
fees and other governmental requirements, and upgrading the Premises, Building or Center as required by law or other requirements, without deduction for depreciation. 



        16.2    Total Destruction.    Notwithstanding any other provisions of this Lease, a total
destruction (including any destruction required by any authorized public authority) of either the Premises or the Building shall, at the election of either Landlord or Tenant, terminate this Lease as
of the date of such destruction. 


        16.3    Partial Destruction of Center or Building.    Notwithstanding any other provision of
this Lease, if fifty percent (50%) or more of the rentable area of the Building or the Center is damaged or destroyed, notwithstanding that the Premises may be unaffected, Landlord shall have the
right to terminate this Lease. 


        16.4    Insurance Deductible.    If Landlord is required or elects to repair any Premises
Damage caused by an insured casualty as provided in Section 16.1, Landlord may include in Insurance Costs any deductible
amount under Landlord's insurance policies, provided that if such deductible is payable in connection with a capital repair or capital replacement to the Premises, Landlord shall only include in
Insurance Costs the amortized cost of such repair or replacement spread over its useful life (no greater that the minimum number of years allowed pursuant to the United States Revenue Code) over the
Lease Term, starting in the calendar year or other accounting period in which the such repair or replacement is made. 


        16.5    Damage Near End of Term.    If at any time during the last twelve (12) months
of the Lease Term there is Premises Damage for which Replacement Cost exceeds one (1) month's Minimum Monthly Rent, Landlord may, at its option, elect to terminate this Lease. 



        16.6    Landlord's Termination Notice; Effective Date; Relocation.    If Landlord elects to
terminate this Lease under any applicable provision of this Article 16, Landlord shall give notice of such election within forty-five (45) days of the date of the damage or
destruction. In the case of a total destruction (Section 16.2) or Premises Damage that prevents Tenant from occupying the Premises for its permitted use, the effective date of such termination
shall be the date of such Premises Damage; otherwise the effective date of termination shall be a date selected by Landlord not earlier than thirty (30) days from the date of Landlord's notice. 


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        16.7    Rent Abatement.    If Landlord repairs the Premises or the Building after a Premises
Damage as described in this Article 16, Minimum Monthly Rent and Additional Rent shall be equitably reduced from the date of the Premises Damage until the repairs are completed, based upon the
extent to which such repairs interfere with the business carried on by Tenant in the Premises, but only to the extent Landlord receives proceeds from the rental income insurance described in
Section 9.1. Landlord agrees to take reasonable steps to make a claim for and collect any rental income insurance proceeds that might be available. 


        16.8    Tenant's Obligations.    Landlord shall not be required to repair any injury or damage
by fire or other cause, or to make any restoration or replacement of, any of Alterations, equipment, trade fixtures, and personal property owned, placed or installed in or about the Premises by or on
behalf of Tenant. Unless this Lease is terminated pursuant to this Article, Tenant shall promptly repair, restore or replace the same in the event of any damage thereto. If all or any portion of the
Premises, Building or Center is damaged or destroyed by reason of any act or omission of Tenant, except as provided in Section 9.4 (Waiver of Subrogation), Tenant shall either make the
necessary repairs at Tenant's expense or pay to Landlord Replacement Cost, regardless of whether this Lease is terminated. Nothing contained in this Article shall be construed as a limitation on
Tenant's liability for any damage or destruction if such liability otherwise exists. 


        16.9    Waiver of Inconsistent Statutes.    The parties' rights and obligations in the event
of damage or destruction shall be governed by the provisions of this Lease; accordingly, Tenant waives the provisions of California Civil Code Sections 1932(2) and 1933(4), and any other statute, code
or judicial decisions that grants a tenant a right to terminate a lease in the event of damage or destruction of a leased premises. 


17.   CONDEMNATION.  


        17.1    Effect on Lease.    If all of the Premises, or so much thereof that the remaining
portion of the Premises is insufficient for Tenant to occupy for its permitted use, is taken under the power of eminent domain or sold under the threat of the exercise of such power (collectively  "Condemnation"), this Lease shall terminate as of the date title vests in the condemnor. In all other cases, Landlord may terminate this Lease as of the
date title vests in the condemnor if (i) the Condemnation affects any material portion of the Premises or the Building, (ii) Landlord receives insufficient funds from the condemnor to
complete the restoration of the Premises described in this Section, or (iii) if the Condemnation affects such a substantial portion of the Center, the parking areas or Common Facilities that it
is no longer economically appropriate in Landlord's business judgment to lease the Premises on the terms and conditions of this Lease. Tenant may terminate this Lease in the event Tenant's use of the
Premises is permanently and materially impaired or reduced by more than 15%. Notwithstanding the foregoing, Landlord may prevent a termination of this Lease by exercising, within
forty-five days of the Condemnation, any right to relocate Tenant to new Premises in the Center provided in Section 24.24 of this Lease. If this Lease remains in effect,
(a) this Lease shall terminate as to the portion (if any) of the Premises taken as of the date title vests in the condemnor, (b) the Minimum Monthly Rent shall be equitably adjusted
based upon the value of the Premises remaining after the Condemnation compared to the value of the Premises prior to Condemnation, (c) Tenant's Pro Rata Share shall be adjusted based on any
changes in the Rentable Square Footage of the Premises and/or the Center, and (d) Landlord shall, within a reasonable period of time, undertake such construction or restoration as may be
reasonably necessary to place the remaining Premises in a useable condition (provided that the cost of such construction or restoration does not exceed the amount awarded to Landlord by the condemnor
for such purpose). Landlord shall not be responsible to restore or replace any of Tenant's Alterations, fixtures, equipment or personal property, except as provided in Section 24.24 if Landlord
exercises its rights thereunder. 


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        17.2    Condemnation Award.    All compensation awarded upon any partial or total Condemnation
shall be paid to Landlord, and Tenant shall have no claim thereto. Tenant hereby irrevocably assigns and transfers to Landlord any right to compensation or damages by reason of any such Condemnation;
provided, however, that Tenant shall have the right to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant
in Tenant's own right on account of any damage to Tenant's business by reason of the
Condemnation and on account of any cost that Tenant may incur in removing Tenant's merchandise, furniture, fixtures, leasehold improvements and equipment. If this Lease is terminated in whole or in
part in accordance with this Article, Tenant shall have no claim for the value of any unexpired term of this Lease. 


18.   ASSIGNMENT AND SUBLETTING.  


        18.1    Landlord's Consent Required.    



        (a)   Tenant
shall not voluntarily or involuntarily assign, sublease, mortgage, encumber, or otherwise transfer all or any portion of the Premises or its interest in this
Lease (collectively, "Transfer") without Landlord's prior written consent, which consent Landlord shall not unreasonably withhold or delay. Landlord may
withhold its consent until Tenant has complied with the provisions of Sections 18.2 and 18.3. Any attempted Transfer without Landlord's written consent shall be void and shall constitute a noncurable
Event of Default under this Lease. If Tenant is a corporation, any cumulative Transfer of more than twenty percent (20%) of the voting stock of such corporation shall constitute a Transfer requiring
Landlord's consent hereunder; provided, however, that this sentence shall not apply to any corporation whose stock is publicly traded. If Tenant is a partnership, limited liability company, trust or
other entity, any cumulative Transfer of more than twenty percent (20%) of the partnership, membership, beneficial or other ownership interests therein shall constitute a Transfer requiring Landlord's
consent hereunder. Tenant shall not have the right to consummate a Transfer or to request Landlord's consent to any Transfer if any Event of Default has occurred and is continuing or if Tenant or any
affiliate of Tenant is in default under any lease of any other real property owned or managed (in whole or in part) by Landlord or any affiliate of Landlord. 


        (b)   Notwithstanding
anything to the contrary set forth herein, so long as no Event of Default has occurred and is continuing, Tenant shall be entitled to sublease the
Premises without Landlord's consent, provided that (i) the space subject to the sublease shall not exceed twenty-five percent (25%) of the Rentable Square Footage of the Premises,
(ii) Tenant shall provide at least thirty (30) days advance written notice to Landlord of such sublease, which notice shall include the name and contact information for the sublessee and
a copy of the document memorializing the sublease agreement between the parties, and (iii) Tenant shall comply with the provisions of Sections 18.3 (other than the $500.00 transfer fee), 18.4
and 18.5 and such Sections as shall continue to apply notwithstanding such permitted sublease. 




        18.2    Landlord's Election.    Tenant's request for consent to any Transfer shall be
accompanied by a written statement setting forth the details of the proposed Transfer, including the name, business and financial condition of the prospective Transferee, financial details of the
proposed Transfer (e.g., the term and the rent and security deposit payable), and any other related information that Landlord may reasonably require. Landlord shall have the right: (a) to
withhold consent to the Transfer, if reasonable, (b) to grant consent, (c) if the Transfer is an assignment of the lease, or a sublease for substantially the remaining term of the Lease,
to terminate this Lease as to the portion of the Premises affected by any such proposed Transfer, in which event Landlord may enter into a lease directly with the proposed Transferee, or (d) to
consent on the condition that Landlord be paid fifty percent (50%) of all subrent or other consideration to be paid to Tenant under the terms of the Transfer (after deduction for all of Tenant's costs
in negotiating such Transfer, including leasing commissions, tenant improvements, and 


25







 

other
out-of-pocket concessions) in excess of the total rent due hereunder (including, if such Transfer is an assignment or if such Transfer is to occur directly or indirectly
in connection with the sale of any assets of Tenant, fifty percent (50%) of the amount of the consideration attributable to the Transfer, as reasonably determined by Landlord). Landlord may require
any permitted subtenant to make rental payments directly to Landlord, in the amount of rent due hereunder. The grounds on which Landlord may reasonably withhold its consent to any requested Transfer
include, without limitation, that: (i) the proposed Transferee's contemplated use of the Premises following the proposed Transfer is not reasonably similar to the use of the Premises permitted
hereunder, (ii) in Landlord's reasonable business judgment, the proposed Transferee lacks sufficient business reputation or experience to operate a successful business of the type and quality
permitted under this Lease, (iii) in Landlord's reasonable business judgment, the proposed Transferee lacks sufficient net worth, working capital, anticipated cash flow and other indications of
financial strength to meet all of its obligations under this Lease, (iv) the proposed Transfer would breach any covenant of Landlord respecting a radius restriction, location, use or
exclusivity in any other lease, financing agreement, or other agreement relating to the Center, and (v) in Landlord's reasonable business judgment, the possibility of a release of Hazardous
Materials is materially increased as a result of the Transfer or if Landlord does not receive sufficient assurances that the proposed Transferee has the experience and financial ability to remedy a
violation of Hazardous Materials and to fulfill its obligations under Articles 13 and 14. In connection with any such Transfer, Landlord shall have the right to require Tenant, at Tenant's sole cost,
to cause environmental testing meeting the requirements of an Exit Assessment described in Section 14.8 to be performed. Landlord need only respond to any request by Tenant hereunder within a
reasonable time of not less than ten (10) business days after receipt of all information and other submission required in connection with such request. 


        18.3    Costs; Transfer Fee.    Tenant shall pay all costs and expenses in connection with any
permitted Transfer, including any real estate brokerage commissions due with respect to the Transfer. Tenant shall pay all attorneys' fees and costs incurred by Landlord and a fee of $500 to reimburse
Landlord for costs and expenses incurred in connection with any request by Tenant for Landlord's consent to a Transfer. Such fee shall be delivered to Landlord concurrently with Tenant's request for
consent, and shall be earned by Landlord upon receipt, regardless of whether Landlord ultimately grants or denies Tenant's request. 


        18.4    Assumption; No Release of Tenant.    Any permitted assignee shall assume in writing
all obligations of Tenant under this Lease, utilizing a form of assumption agreement approved by Landlord, and an
executed copy of such assumption agreement shall be delivered to Landlord within fifteen (15) days after the effective date of the Transfer. The taking of possession of all or any part of the
Premises by any such permitted assignee or subtenant shall constitute an agreement by such person or entity to assume without limitation or qualification all of the obligations of Tenant under this
Lease, notwithstanding any failure by such person to execute the assumption agreement required in the immediately preceding sentence. No permitted Transfer shall release or change Tenant's primary
liability to pay the rent and to perform all other obligations of Tenant under this Lease. Landlord's acceptance of rent from any other person is not a waiver of any provision of this Article or a
consent to any Transfer. Consent to one Transfer shall not constitute a consent to any subsequent Transfer. If any transferee defaults under this Lease, Landlord may proceed directly against Tenant
without pursuing remedies against the transferee. Landlord may consent to subsequent Transfers or modifications of this Lease by Tenant's transferee, without notifying Tenant or obtaining its consent,
and such action shall not relieve Tenant of its liability under this Lease. 


        18.5    No Merger.    No merger shall result from any Transfer pursuant to this Article, any
surrender by Tenant of its interest under this Lease, or any termination hereof in any other manner. In any such event, Landlord may either terminate any or all subleases or succeed to the interest of
Tenant thereunder. 


26







 



        18.6    Reasonable Restriction.    Tenant acknowledges that the restrictions on Transfer
contained herein are reasonable restrictions for purposes of Section 22.2 of this Lease and California Civil Code Section 1951.4. 


19.   SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATE.  



        19.1    Subordination.    This Lease and al of its terms is and shall be unconditionally
junior and subordinate to the lien and terms of all ground leases, mortgages, deeds of trust, and other security instruments now or hereafter affecting the real property of which the Premises are a
part, and to all advances made on the security thereof, and to all renewals, modifications, consolidations, replacements and extensions thereof. If any mortgagee, beneficiary under deed of trust or
ground lessor shall elect to have this Lease prior to the lien of its mortgage, deed of trust or ground lease, and gives written notice thereof to Tenant, this Lease shall be deemed prior thereto.
Tenant agrees to execute any documents required to effectuate such subordination or to make this Lease prior to the lien of any such mortgage, deed of trust or ground lease, as the case may be, and if
Tenant fails to do so within ten (10) days after written demand, Tenant does hereby make, constitute and irrevocably appoint Landlord as Tenant's attorney-in-fact and in
Tenant's name, place and stead, to do so. 


        19.2    Attornment.    If Landlord sells, transfers, or conveys its interest in the Premises
or this Lease, or if the same is foreclosed judicially or nonjudicially, or is otherwise acquired, by a mortgagee, beneficiary under deed of trust or ground lessor, upon the request and at the sole
election of Landlord's lawful successor, Tenant shall attorn to said successor. Tenant shall, upon request of Landlord, execute an attornment agreement in form and substance acceptable to Landlord
agreeing in advance to such attornment to any such mortgagee, beneficiary, ground lessor or other successor. Such attornment agreement shall provide, among other things, that such mortgagee,
beneficiary or ground lessor shall not be (a) bound by any prepayment of more than one (1) month's rent, (b) liable for the return of any Security Deposit or other sums not
actually received by said successor, (c) bound by any act or omission of Landlord arising prior to the succession of such successor to the Landlord's interest in this lease, or be subject to
any offset, defense or counter-claim that Tenant may have previously accrued against Landlord, or (d) be bound by any material amendment of this Lease made after the later of the initial
effective date of this Lease, or the date that such successor's lien or interest first arose, unless the original entity to which Tenant subordinated shall have consented to such amendment in writing. 


        19.3    Estoppel Certificates.    Within ten (10) days after written request from
Landlord, Tenant at Tenant's sole cost shall execute, acknowledge and deliver to Landlord a written certificate in favor of Landlord and any prospective lender on or purchaser of the Center or any
part thereof, (a) that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modifications and certifying that this Lease is in full force and
effect as so modified), (b) the amount of any rent paid in advance, and (c) that there are no uncured defaults on the part of Landlord, or specifying the nature of such defaults if any
are claimed. In addition to the foregoing, such certificate shall include Tenant's certification to such other matters of fact, and be on such form, as Landlord or such prospective lender or purchaser
shall reasonably require. Tenant's failure to deliver such certificate within said 10 day period shall constitute a conclusive acknowledgment by Tenant: (i) that this Lease is in full
force and effect without modification except as may be represented by Landlord, (ii) that not more than one month's rent has been paid in advance, and (iii) that there are no uncured
defaults in Landlord's performance. 


20.   SURRENDER OF PREMISES.  


        20.1    Condition of Premises.    Upon the expiration or earlier termination of this Lease,
Tenant shall surrender the Premises to Landlord, broom clean and in the same condition and state of repair as at the commencement of the Lease Term, except for ordinary wear and tear that Tenant is
not 


27







 

otherwise
obligated to remedy under the provisions of this Lease. Tenant shall deliver all keys to the Premises and the Building to Landlord. Upon Tenant's vacation of the Premises, Tenant shall
remove all portable furniture, trade fixtures, machinery, equipment, signs and other items of personal property (unless prohibited from doing so under Section 20.2), and shall remove any
Alterations (whether or not made with Landlord's consent) that Landlord may require Tenant to remove, subject to Section 15.1 above. Tenant shall repair all damage to the Premises caused by
such removal and shall restore the Premises to its prior condition, all at Tenant's expense. Such repairs shall be performed in a manner satisfactory to Landlord and shall include, but are not limited
to, the following: capping all plumbing, capping all electrical wiring, repairing all holes in walls, restoring damaged floor and/or ceiling tiles, and thorough cleaning of the Premises. If Tenant
fails to remove any items that Tenant has an obligation to remove under this Section when required by Landlord or otherwise, such items shall, at Landlord's option, become the property of Landlord and
Landlord shall have the right to remove and retain or dispose of the same in any manner, without any obligation to account to Tenant for the proceeds thereof. Tenant waives all claims against Landlord
for any damages to Tenant resulting from Landlord's retention or disposition of such Alterations or personal property. Tenant shall be liable to Landlord for Landlord's costs of removing, storing and
disposing of such items. 


        20.2    Removal of Certain Alterations, Fixtures and Equipment Prohibited.    



        (a)   Upon
termination of this Lease, all Alterations and fixtures (other than Tenant's trade fixtures), that Landlord has not required Tenant to remove under
Section 20.1 shall become Landlord's property and shall be surrendered to Landlord with the Premises, regardless of who paid for the same. In particular and without limiting the foregoing,
Tenant shall not remove any of the following materials or equipment without Landlord's prior written consent, regardless of who paid for the same and regardless of whether the same are permanently
attached to the Premises; power wiring and power panels; piping for industrial gasses or liquids installed in the walls or ceiling of the Premises; laboratory benches, sinks, cabinets and casework
(unless the same are movable or temporary items not attached to the floors or walls of the Premises); fume hoods or specialized air-handling and evacuation systems (unless the same are
movable or temporary items not attached to the floors or walls of the Premises); drains or other equipment for the handling of waste water or hazardous materials (unless the same are moveable or
temporary items not built into the floors or walls of the Premises); computer, telephone and telecommunications wiring in the walls or ceiling of the Premises; attached lighting fixtures; permanently
attached wall coverings (such as wallpaper); drapes, blinds and other window coverings; carpets and other floor coverings; heaters, air conditioners and other heating or air conditioning equipment
(unless the same are movable or temporary items not integrated into the Building systems); fencing; and tenant-owned security systems serving the Premises as a whole that are built into the Building.
In no event shall Tenant remove any personal property, equipment, alterations or fixtures (whether or not trade fixtures), existing in the Premises on the Commencement Date or date of earlier
occupancy of the Premises by Tenant under Section 3.3. 


        (b)   All
trade fixtures and personal property owned by Tenant that can be removed from the Building without causing significant damage thereto, or whose removal does not
render any Building system significantly unusable ("Tenant's Removable Property") shall be and remain the property of Tenant, and may be removed by
Tenant at any time. Landlord waives any and all rights, title and interest Landlord now has, or hereafter may have, whether statutory or otherwise, in Tenant's Removable Property. As used in this
Lease, "Tenant's Removable Property" includes, without limitation, all of Tenant's inventory, equipment, trade fixtures, furniture, furnishings, books and records and other personal property,
including without limitation any and all vacuum pumps, uninterruptible power systems, warehouse racks, parts racks, scientific research equipment, portable cold rooms, movable unattached lunch room
and office furnishings and equipment, telecommunications and data equipment (other than cabling), machine shop tools and portable 



28







 




equipment,
portable glass wash equipment, equipment monitoring systems, air compressors, emergency generators, and machines and equipment used to produce Tenant's products, unless any such items were
present on the Premises at the time of execution of this Lease, or were later installed by Landlord at other than Tenant's cost, so long as such items can be removed from the Building without causing
significant damage thereto and without rendering any Building system significantly unusable. 




        20.3    Holding Over.    Tenant shall vacate the Premises upon the expiration or earlier
termination of this Lease, and Tenant shall indemnify, protect, hold harmless and defend Landlord against all liabilities, damages and expenses incurred by Landlord as a result of any delay by Tenant
in vacating the Premises. If Tenant remains in possession of the Premises or any part thereof after the expiration of the Lease Term with Landlord's written permission, Tenant's occupancy shall be a
tenancy from month-to-month only, and not a renewal or extension hereof. All provisions of this Lease (other than those relating to the term) shall apply to such
month-to-month tenancy, except that the Minimum Monthly Rent shall be increased to 150% of the Minimum Monthly Rent in effect during the last month of the Lease Term. No
acceptance of rent, negotiation of rent checks or other act or omission of Landlord or its agents shall extend the Expiration Date of this Lease other than a writing executed by Landlord giving Tenant
permission to remain in occupancy beyond the Expiration Date under the terms of the immediately preceding sentence. 


21.   DEFAULT BY TENANT.  


        The occurrence of any of the following shall constitute an "Event of Default" under this Lease by Tenant: 



        (a)   Failure
to pay when due any Minimum Monthly Rent, Additional Rent or any other monetary sums required to be paid by Tenant under the terms of this Lease, within five
(5) business days after written notice from Landlord. Landlord's notice described herein is intended to satisfy, and is not in addition
to, any and all legal notices required prior to commencement of an unlawful detainer action, including without limitation the notice requirements of California Code of Civil Procedure Sections 1161  et seq.


        (b)   Failure
to perform any other agreement or obligation of Tenant hereunder, if such failure continues for thirty (30) days after written notice by Landlord to
Tenant, except if such default cannot reasonably be cured within thirty (30) days, Tenant shall have such longer time as reasonably necessary, provided Tenant commences to cure such default
with in such thirty (30) day period, diligently pursues such cure to completion, and in fact cures such within ninety (90) days of Landlord's notice. Landlord's notice described herein
is intended to satisfy, and is not in addition to, any and all legal notices required prior to commencement of an unlawful detainer action, including without limitation the notice requirements of
California Code of Civil Procedure Sections 1161 et seq.


        (c)   Abandonment
or vacation of the Premises by Tenant, or failure to occupy the Premises for a period of ten (10) consecutive days. 



        (d)   If
any of the following occurs: (i) a petition is filed for an order of relief under the federal Bankruptcy Code or for an order or decree of insolvency or
reorganization or rearrangement under any state or federal law, and such petition is not dismissed within thirty (30) days after the filing thereof; (ii) Tenant makes a general
assignment for the benefit of creditors; (iii) a receiver or trustee is appointed to take possession of any substantial part of Tenant's assets, unless such appointment is vacated within thirty
(30) days after the date thereof; (iv) Tenant consents to or suffers an attachment, execution or other judicial seizure of any substantial part of its assets or its interest under this
Lease, unless such process is released or satisfied within thirty (30) days after the occurrence thereof; or (v) Tenant's net worth, determined 



29







 




in
accordance with generally accepted accounting principles consistently applied, decreases, at any time during the Lease Term, below Tenant's net worth as of the date of execution of this Lease. If a
court of competent jurisdiction determines that any of the foregoing events is not a default under this Lease, and a trustee is appointed to take possession (or if Tenant remains a debtor in
possession), and such trustee or Tenant transfers Tenant's interest hereunder, then Landlord shall receive the difference between the rent (or other consideration) paid in connection with such
transfer and the rent payable by Tenant hereunder. Any assignee pursuant to the provisions of any bankruptcy law shall be deemed without further act to have assumed all of the obligations of the
Tenant hereunder arising on or after the date of such assignment. Any such assignee shall, upon demand, execute and deliver to Landlord an instrument confirming such assumption. 


        (e)   The
occurrence of any other event that is deemed to be an Event of Default under any other provision of this Lease, or any other lease to which Landlord (or any
affiliate of Landlord) and Tenant (or any affiliate of Tenant) are parties. 




22.   REMEDIES.  


        Upon the occurrence of any Event of Default by Tenant, Landlord shall have the following remedies, each of which shall be cumulative and in addition to any other
remedies now or hereafter available at law or in equity: 


        22.1    Termination of Lease.    Landlord can terminate this Lease and Tenant's right to
possession of the Premises by giving written notice of termination, and then re-enter the Premises and take possession thereof.    No act by Landlord other than giving written
notice to Tenant of such termination shall terminate this Lease. Upon termination, Landlord has the right to recover all damages incurred by Landlord as a result of Tenant's default, including: 



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


        (b)   The
worth at the time of award of the amount by which the unpaid rent that would have been earned after the date of termination until the time of award exceeds the
amount of the loss of rent that Tenant proves could have been reasonably avoided; plus 



        (c)   The
worth at the time of award of the amount by which the unpaid rent for the balance of the Lease Term after the time of award exceeds the amount of such rental loss
that Tenant proves could have been reasonably avoided; plus 


        (d)   Any
other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's default, including, but not limited to (i) expenses for
cleaning, repairing or restoring the Premises, (ii) expenses for altering, remodeling or otherwise improving the Premises for the purpose of reletting, (iii) brokers' fees and
commissions, advertising costs and other expenses of reletting the Premises, (iv) costs of carrying the Premises, such as taxes, insurance premiums, utilities and security precautions,
(v) expenses in retaking possession of the Premises, (vi) attorneys' fees and costs, (vii) any unearned brokerage commissions paid in connection with this Lease, and
(viii) reimbursement of any previously waived or abated Minimum Monthly Rent, Additional Rent or other charges; plus 


        (e)   At
Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time under applicable law. As used in paragraphs
(a) and (b) above, the "worth at the time of award" shall be computed by allowing interest at the maximum permissible legal rate. As used
in paragraph (c) above, the "worth at the time of award" shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus
one percent (1%). 



30







 





        22.2    Continuation of Lease.    Landlord has the remedy described in California Civil Code
Section 1951.4 (Landlord may continue this Lease in effect after Tenant's breach and abandonment and recover rent as it becomes due, if Tenant has the right to sublet or assign, subject only to
reasonable limitations), as follows: 



        (a)   Landlord
can continue this Lease in full force and effect without terminating Tenant's right of possession, and Landlord shall have the right to collect rent and other
monetary charges when due and to enforce all other obligations of Tenant hereunder. Landlord shall have the right to enter the Premises to do acts of maintenance and preservation of the Premises, to
make alterations and repairs in order to relet the Premises, and/or to undertake other efforts to relet the Premises. Landlord may also remove personal property from the Premises and store the same in
a public warehouse at Tenant's expense and risk. No act by Landlord permitted under this paragraph shall terminate this Lease unless a written notice of termination is given by Landlord to Tenant or
unless the termination is decreed by a court of competent jurisdiction. 


        (b)   In
furtherance of the remedy set forth in this Section, Landlord may relet the Premises or any part thereof for Tenant's account, for such term (which may extend beyond
the Lease Term), at such rent, and on such other terms and conditions as Landlord may deem advisable in its sole discretion. Tenant shall be liable immediately to Landlord for all costs Landlord
incurs in reletting the Premises. Any rents received by Landlord from such reletting shall be applied to the payment of: (i) any indebtedness other than rent due hereunder from Tenant to
Landlord, (ii) the costs of such reletting, including brokerage and attorneys' fees and costs, and the cost of any alterations and repairs to the Premises, and (iii) the payment of rent
due and unpaid hereunder, including any previously waived or abated rent. Any remainder shall be held by Landlord and applied in payment of future amounts as the same become due and payable hereunder.
In no event shall Tenant be entitled to any excess rent received by Landlord after an Event of Default by Tenant and the exercise of Landlord's remedies hereunder. If the rent from such reletting
during any month is less than the rent payable hereunder, Tenant shall pay such deficiency to Landlord upon demand. 


        (c)   Landlord
shall not, by any re-entry or other act, be deemed to have accepted any surrender by Tenant of the Premises or Tenant's interest therein, or be
deemed to have terminated this Lease or Tenant's right to possession of the Premises or the liability of Tenant to pay rent accruing thereafter or Tenant's liability for damages under any of the
provisions hereof, unless Landlord shall have given Tenant notice in writing that it has so elected to terminate this Lease. 


        (d)   Tenant
acknowledges and agrees that the restrictions on the Transfer of this Lease set forth in Article 18 of this Lease constitute reasonable restrictions on
such transfer for purposes of this Section and California Civil Code Section 1951.4. 




        22.3    Performance By Landlord.    If Tenant fails to pay any sum of money or perform any
other act to be performed by Tenant hereunder, and such failure continues for fifteen (15) days after notice by Landlord, Landlord shall have the right (but not the obligation) to make such
payment or perform such other act without waiving or releasing Tenant from its obligations. All sums so paid by Landlord and all necessary incidental costs, together with interest thereon at the rate
specified in Section 22.4, shall be payable to Landlord on demand. Landlord shall have the same rights and remedies in the event of nonpayment by Tenant as in the case of default by Tenant in
the payment of the rent. 


        22.4    Late Charge; Interest on Overdue
Payments.    The parties acknowledge that late payment by Tenant of Minimum Monthly Rent, Additional Rent or other charges hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be extremely difficult and impractical to determine, including, but not limited to, processing and accounting charges,
administrative expenses, and additional interest expenses or late charges that Landlord may be required to pay as a result of late payment on Landlord's obligations. Therefore, if any installment of
Minimum 


31







 



Monthly
Rent, Additional Rent or other charges is not received by Landlord on the date due, and without regard to whether Landlord gives Tenant notice of such failure or exercises any of its remedies
upon an Event of Default, Tenant shall pay a late charge equal to the greater of ten percent (10%) of the overdue amount or One Hundred Dollars ($100). The parties hereby agree that such late charge
represents a fair and reasonable estimate of the damages Landlord will incur by reason of late payment by Tenant. In addition, any amount due from Tenant that is not paid when due shall bear interest
at a rate equal to two percent (2%) over the then current Bank of America prime or reference rate or ten percent (10%) per annum, whichever is greater, but not in excess of the maximum permissible
legal rate, from the date such payment is due until the date paid by Tenant. Landlord's acceptance of any interest or late charge shall not constitute a waiver of Tenant's default or prevent Landlord
from exercising any other rights or remedies available to Landlord. 


        22.5    Landlord's Right to Require Advance Payment of Rent; Cashier's Checks.    If Tenant is
late in paying any component of rent more than three (3) times during the Lease Term, Landlord shall have the right, upon notice to Tenant, to require that all rent be paid three
(3) months in advance. Additionally, if any of Tenant's checks are returned for nonsufficient funds, or if Landlord at any time serves upon Tenant a Three Day Notice to Pay Rent or Quit
(pursuant to California Civil Code Sections 1161 et seq. or any successor or similar unlawful detainer statutes), Landlord may, at its option, require
that all future rent (including any sums demanded in any subsequent three (3) day notice) be paid exclusively by money order or cashier's check. 


23.   DEFAULT BY LANDLORD.  


        23.1    Notice to Landlord.    Landlord shall not be in default under this Lease unless
Landlord fails to perform an obligation required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to Landlord and to each
Mortgagee as provided in Section 23.2, specifying the nature of the alleged default; provided, however, that if the nature of the obligation is such that more than thirty (30) days are
required for performance, then Landlord shall not be in default if Landlord commences performance within such 30-day period and thereafter diligently prosecutes the same to completion. 


        23.2    Notice to Mortgagees.    Tenant agrees to give each mortgagee or trust deed holder on
the Premises or the Center ("Mortgagee"), by certified mail, a copy of any notice of default served upon Landlord, provided that Tenant has been
previously notified in writing of the address of such Mortgagee. Tenant further agrees that if Landlord fails to cure such default within the time provided for in this Lease, then the Mortgagees shall
have an additional thirty (30) days after Tenant's notice within which to cure such default, or if such default cannot reasonably be cured within that time, then such additional time as may be
necessary if, within said 30-day period, any Mortgagee has commenced and is diligently pursuing the remedies necessary to cure the default (including but not limited to commencement of
foreclosure proceedings if necessary to affect such cure), in which event this Lease shall not be terminated while such remedies are being so diligently pursued. 



        23.3    Limitations on Remedies Against Landlord.    In the event Tenant has any claim or
cause of action against Landlord: (a) Tenant's sole and exclusive remedy shall be against Landlord's interest in the Center, and neither Landlord nor any partner of Landlord nor any other
property of Landlord shall be liable for any deficiency, (b) no partner of Landlord shall be sued or named as a party in any suit or action (except as may be necessary to secure jurisdiction
over Landlord), (c) no service of process shall be made against any partner of Landlord (except as may be necessary to secure jurisdiction over the partnership), and no such partner shall be
required to answer or otherwise plead to any service of process, (d) no judgment shall be taken against any partner of Landlord and any judgment taken against any partner of Landlord may be
vacated and set aside at any time, and (e) no writ of execution will ever be levied against the assets of any partner of Landlord. The covenants and agreements set forth in this Section shall
be enforceable by Landlord and/or by any partner of Landlord. If Landlord 


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fails
to give any consent that a court later holds Landlord was required to give under the terms of this Lease, Tenant shall be entitled solely to specific performance and such other remedies as may
be specifically reserved to Tenant under this Lease, but in no event shall Landlord be responsible for monetary damages (including incidental and consequential damages) for such failure to give
consent. 


24.   GENERAL PROVISIONS.  


        24.1    [Intentionally omitted]    


        24.2    Arbitration and Mediation; Waiver of Jury
Trial.    Except as provided in this Section, if any dispute ensues between Landlord and Tenant arising out of or concerning this Lease, and if said dispute cannot be
settled through direct discussions between the parties, the parties shall first to attempt to settle the dispute through mediation before a mutually acceptable mediator. The cost of mediation shall be
divided equally between the parties. Thereafter, any remaining, unresolved disputes or claims shall be resolved by binding arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction. The prevailing party in any such arbitration shall be entitled to recover
reasonable costs and attorneys' fees and costs as determined by the arbitrator; provided, however, that the foregoing provisions regarding mediation and arbitration shall not apply to (a) any
issue or claim that might properly be adjudicated in an unlawful detainer proceeding, or (b) to any issue or claim that Landlord elects not to have resolved through arbitration and with respect
to which Landlord commences an action in law or equity to determine the same. Without limiting the foregoing, Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim
(including any claim of injury or damage and any emergency and other statutory remedy in respect thereof) brought by either against the other on any matter arising out of or in any way connected with
this Lease, the relationship of Landlord and Tenant, or Tenant's use or occupancy of the Premises. 


        24.3    Attorneys' Fees.    If either party brings any legal action or proceeding, declaratory
or otherwise, arising out of this Lease, including any suit by Landlord to recover rent or possession of the Premises or to otherwise enforce this Lease, the losing party shall pay the prevailing
party's costs and attorneys' fees and costs incurred in such proceeding. If Landlord issues notice(s) to pay rent, notice(s) to perform covenant, notice(s) of abandonment, or comparable documents as a
result of Tenant's default under this Lease, and if Tenant cures such default, Tenant shall pay to Landlord the reasonable costs incurred by Landlord, including Landlord's attorneys' fees and costs,
of preparation and delivery of same. 


        24.4    Authority of Parties.    



        (a)   Tenant
represents and warrants that it has full power and authority to execute and fully perform its obligations under this Lease pursuant to its governing instruments,
without the need for any further action, and that the person(s) executing this Agreement on behalf of Tenant are the duly designated agents of Tenant and are authorized to do so. Prior to execution of
this Lease, Tenant shall supply Landlord with such evidence as Landlord may request regarding the authority of Tenant to enter into
this Lease. Any actual or constructive taking of possession of the Premises by Tenant shall constitute a ratification of this Lease by Tenant. 


        (b)   Landlord
represents and warrants that it has full power and authority to execute and fully perform its obligations under this Lease pursuant to its governing
instruments, without the need for any further action, and that the person(s) executing this Agreement on behalf of Landlord are the duly designated agents of Landlord and are authorized to do so. 




        24.5    Binding Effect.    Subject to the provisions of Article 18 restricting
transfers by Tenant and subject to Section 24.28 regarding transfer of Landlord's interest, all of the provisions of this Lease 


33







 

shall
bind and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. 


        24.6    Brokers.    Each party warrants that it has had no dealings with any real estate
broker or agent in connection with the negotiation of this transaction except only the broker(s) set forth in Section 1.11 of the Basic Lease Provisions, and it knows of no other real estate
broker or agent who is entitled to a commission in connection with this transaction. Each party agrees to indemnify, protect, hold harmless and defend the other party from and against any obligation
or liability to pay any commission or compensation to any other party arising from the act or agreement of the indemnifying party. Tenant acknowledges that certain partners, affiliates or members of
Landlord, or their respective officers, directors, shareholders, members or employees, may hold real estate sales person or broker licenses, and additionally may be employees of Asset Management Group
and as such may have negotiated, or may have a financial interest in, this transaction. 


        24.7    Construction.    The headings and captions used in this Lease are for convenience only and are not a part of
the terms and provisions of this Lease. In any provision relating to the conduct, acts or omissions of Tenant, the term "Tenant" shall include Tenant,
its subtenants and assigns and their respective agents, employees, contractors, and invitees, and any others using the Premises with Tenant's express or implied permission. 


        24.8    Counterparts.    This Lease may be executed in multiple copies, each of which shall be
deemed an original, but all of which shall constitute one Lease binding on all parties after all parties have signed such a counterpart. 


        24.9    Covenants and Conditions.    Each provision to be performed by Tenant shall be deemed
to be both a covenant and a condition. 


        24.10    Entire Agreement.    This Lease, together with any and all exhibits, schedules,
riders and addenda attached or referred to herein, constitutes the entire agreement between the parties with respect to the subject matter hereof. There are no oral or written agreements or
representations between the parties hereto affecting this Lease, and this Lease supersedes, cancels and merges any and all previous verbal or written negotiations, arrangements, representations,
brochures, displays, models, photographs, renderings, floor plans, elevations, projections, estimates, agreements and understandings if any, made by or between Landlord and Tenant and their agents,
with respect to the subject matter, and none thereof shall be used to interpret, construe, supplement or contradict this Lease. This Lease and all amendments thereto is and shall be considered to be
the only agreement between the parties hereto and their representatives and agents. There are no other representations or warranties between the parties, and all reliance with respect to
representations is solely based upon the representations and agreements contained in this Lease. 


        24.11    Exhibits.    Any and all exhibits, schedules, riders and addenda attached or referred
to herein are hereby incorporated herein by reference. 


        24.12    Financial Statements.    Within ten (10) days after written request from
Landlord, Tenant shall deliver to Landlord such financial statements as are reasonably requested by Landlord to verify the net worth of Tenant, or any assignee, subtenant, or guarantor of Tenant. In
addition, Tenant shall deliver to any proposed or actual lender or purchaser of the Premises designated by Landlord any financial statements required by such party to facilitate the sale, financing or
refinancing of the Premises, including the past three (3) years' financial statements. Tenant represents and warrants to Landlord that: (a) each such financial statement is a true and
accurate statement as of the date of such statement; and (b) at all times during the Lease Term or any extension thereof, Tenant's net worth shall not be reduced below Tenant's net worth as of
the date of execution of this Lease. All such financial statements shall be received in confidence and shall be used only for the purposes set forth herein.    Tenant hereby irrevocably
authorizes Landlord to conduct credit checks and other investigations into 


34







 



Tenant's
financial affairs. Provided, however that this section shall not apply so long as Tenant regularly reports its financial condition pursuant to a publicly available report filed with the
Securities and Exchange Commission. 


        24.13    Force Majeure.    If Landlord is delayed in performing any of its obligations
hereunder due to strikes, labor problems, inability to procure utilities, materials, equipment or transportation, governmental regulations, weather conditions, riots, insurrection, or war, or other
events beyond Landlord's control, then the time for performance of such obligation shall be extended to the extent reasonably necessary as a result of such event. 



        24.14    Governing Law.    This Lease shall be governed, construed and enforced in accordance
with the laws of the State of California. 


        24.15    Joint and Several Liability.    If more than one person or entity executes this Lease
as Tenant, each of them is jointly and severally liable for all of the obligations of Tenant hereunder. 



        24.16    Modification.    The provisions of this Lease may not be modified or amended, except
by a written instrument signed by all parties. 


        24.17    Modification for Lender.    If, in connection with obtaining financing or refinancing
for the Premises or the Center, Landlord's lender requests reasonable modifications to this Lease, Tenant will not unreasonably withhold or delay its consent thereto, provided that such modifications
do not increase the obligations of Tenant hereunder or materially and adversely affect Tenant's rights hereunder. 



        24.18    Nondiscrimination.    Tenant for itself and its officers, directors, shareholders,
partners, members, principals, employees, agents, representatives, and other related entities and individuals, and their respective successors and assigns, agrees to comply fully with any and all laws
and other requirements prohibiting discrimination against any person or group of persons on account of race, color, religion, creed, sex, marital status, sexual orientation, national origin, ancestry,
age, physical handicap or medical condition, in the use occupancy or patronage of the Premises and/or of Tenant's business. Tenant shall indemnify, protect, hold harmless and defend Landlord and
Landlord's officers, directors, shareholders, partners, members, principals, employees, agents, representatives, and other related entities and individuals, and their respective successors and
assigns, from and against all damage and liability incurred by Landlord in the event of any violation of the foregoing covenant or because of any event of or practice of discrimination against any
such persons or group of persons by Tenant or its officers, directors, shareholders, partners, members, principals, employees, agents, representatives, and other related entities and individuals, and
their respective successors and assigns, in accordance with the indemnification provisions of Article 13. 


        24.19    Notice.    Any and all notices to either party shall be personally delivered, sent by
recognized courier service (such as Federal Express or United Parcel Service), or sent by certified mail, return receipt requested, postage prepaid, addressed to the party to be notified at the
address specified in Section 1.1, or at such other address as such party may from time to time designate in writing. Notice shall be deemed delivered on the date of personal delivery, one the
date scheduled for delivery by such courier service, or three (3) business days after deposit in the U.S. Mail, certified, return receipt requested. Provided, however, that any notice required
pursuant to California Code of Civil Procedure Sections 1161 et seq. may be given as provided in such sections. Any and all notices provided herein that
Landlord may give setting forth or alleging any default or breach of this lease, or of any failure of Tenant to perform its obligations hereunder shall be deemed to satisfy, and shall not be in
addition to, any and all legal notices required prior to the commencement of an unlawful detainer action, including without limitation the notices requirements of California Code of Civil Procedure
Sections 1161 et seq.


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        24.20    Partial Invalidity.    If any provision of this Lease is determined by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of this Lease shall not be affected thereby. Each provision shall be valid and enforceable to the fullest extent permitted by law. 


        24.21    Quiet Enjoyment.    Landlord agrees that Tenant, upon paying the rent and performing
the terms, covenants and conditions of this Lease, may quietly have, hold and enjoy the Premises from and after Landlord's delivery of the Premises to Tenant and until the end of the Lease Term;
subject, however, to the lien and provisions of any mortgage or deed of trust to which this Lease is or becomes subordinate. 



        24.22    Recording.    Tenant shall not record this Lease or any memorandum hereof without
Landlord's prior written consent. 


        24.23    Relationship of the Parties.    Nothing contained in this Lease shall be deemed or
construed as creating a partnership, joint venture, principal agent, or employer employee relationship between Landlord and any other person or entity (including, without limitation, Tenant) or as
causing Landlord to be responsible in any way for the debts or obligations of such other person or entity. 


        24.24    [Intentionally Omitted].    


        24.25    Time of the Essence.    Time is of the essence of each and every provision of this
Lease. 


        24.26    Transfer of Landlord's Interest.    In the event of a sale, assignment, exchange or
other disposition of Landlord's interest in the Premises, other than a transfer for security purposes only, Landlord shall be relieved of all obligations and liabilities accruing hereunder after the
effective date of said sale, assignment, exchange or other disposition, provided that any Security Deposit or other funds then held by Landlord in which Tenant has an interest are delivered to
Landlord's successor. The obligations to be performed by Landlord hereunder shall be binding on Landlord's successors and assigns only during their respective periods of ownership. 


        24.27    Waiver.    No provision of this Lease or the breach thereof shall be deemed waived,
except by written consent of the party against whom the waiver is claimed. A waiver of any such breach shall not be deemed a waiver of any preceding or succeeding breach of the same or any other
provision. No delay or omission by Landlord in exercising any of its remedies shall impair or be construed as a waiver thereof, unless such waiver is expressly set forth in a writing signed by
Landlord, The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant, other than the failure of Tenant to pay the particular rental so
accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. 




THE
SUBMISSION OF THIS LEASE FOR EXAMINATION AND/OR SIGNATURE BY TENANT IS NOT A COMMITMENT BY LANDLORD OR ITS AGENTS TO RESERVE THE PREMISES OR TO LEASE THE PREMISES TO TENANT. THIS LEASE SHALL
BECOME EFFECTIVE AND LEGALLY BINDING ONLY UPON FULL EXECUTION AND DELIVERY BY BOTH LANDLORD AND TENANT, UNTIL LANDLORD DELIVERS A FULLY EXECUTED COUNTERPART HEREOF TO TENANT, LANDLORD HAS THE RIGHT TO
OFFER AND TO LEASE THE PREMISES TO ANY OTHER PERSON TO THE EXCLUSION OF TENANT. 




36







 





        EXECUTED, by Landlord and Tenant as of the date first written above. 



	TENANT:    12/6/04	 	LANDLORD:
	

GENETRONICS, BIOMEDICAL CORPORATION

a Delaware Corporation	
 	

SORRENTO CENTER Tenancy in Common
	 	 	 	 	By:	 	Asset Management Group Authorized Signatory
	

By:	
 	

/s/  AVTAR DHILLON      
	
 	

By:	
 	

/s/  WILLIAM TRIBOLET      

	

Title:	
 	

PRESIDENT & CEO
	
 	

Title:	
 	

V.P.

	

By:	
 	

	
 	

By:	
 	

/s/  ROBERT PETERSON      

	

Title:	
 	

 	
 	

Title:	
 	

 
	 	 	
	 	 	 	





37









 
 

EXHIBIT "A"    
    
    FLOOR PLAN OF PREMISES    
    



	    
	    
	    
	[MAP]
	    
	    
	    











  



 
 

EXHIBIT "B"    
    
    RULES AND REGULATIONS    
    



        The following Rules and Regulations shall apply to the Center. Tenant agrees to comply with the same and to require its agents, employees, contractors, customers
and invitees to comply with the same. Landlord shall have the right from time to time to amend or supplement these Rules and Regulations, and Tenant agrees to comply, and to require its agents,
employees, contractors, customers and invitees to comply, with such amended or supplemented Rules and Regulations, provided that (a) notice of such amended or supplemental Rules and Regulations
is given to Tenant, and (b) such amended or supplemental Rules and Regulations apply uniformly to all tenants of the Center. If Tenant or its subtenants, employees, agents, or invitees violate
any of these Rules and Regulations, resulting in any damage to the Center or increased costs of maintenance of the Center, or causing Landlord to incur expenses to enforce the Rules and Regulations,
Tenant shall pay all such costs to Landlord. In the event of any conflict between the Lease and these or any amended or supplemental Rules and Regulations, the provisions of the Lease shall control. 


	1.
	Tenant
shall be responsible at its sole cost for the removal of all of Tenant's refuse or rubbish, All garbage and refuse shall be disposed of outside of the Premises, shall be placed
in the kind of container specified by Landlord, and shall be prepared for collection in the manner and at the times and places specified by Landlord. If Landlord provides or designates a service for
picking up refuse and garbage, Tenant shall use the same at Tenant's sole cost. Tenant shall not burn any trash or garbage of any kind in or about the Premises. If Landlord supplies janitorial
services to the Premises, Tenant shall not, without Landlord's prior written consent, employ any person or persons other than Landlord's janitorial service to clean the Premises.



	2.
	Intentionally
Omitted.



	3.
	No
loudspeakers, televisions, phonographs, radios, or other devices shall be used in a manner so as to be heard or seen outside of the Premises without Landlord's prior written
consent. Tenant shall conduct its business in a quiet and orderly manner so as not to create unnecessary or unreasonable noise. Tenant shall not cause or permit any obnoxious or foul odors that
disturb the public or other occupants of the Center: If Tenant operates any machinery or mechanical equipment that causes noise or vibration that is transmitted to the structure of the Building, or to
other parts of the Center, to such a degree as to be objectionable to Landlord or to any other occupant of the Center, Tenant shall install and maintain, at Tenant's expense, such vibration
eliminators or other devices sufficient to eliminate the objectionable noise or vibration.



	4.
	Tenant
shall keep the outside areas immediately adjoining the Premises clean and free from dirt, rubbish, pallets and other debris to the satisfaction of Landlord, If Tenant fails to
cause such outside areas to be maintained as required within twelve (12) hours after verbal notice that the same do not so comply, Tenant shall pay a fee equal to the greater of Fifty Dollars
($50.00) or the costs incurred by Landlord to clean up such outside areas.



	5.
	Tenant
shall not store any merchandise, inventory, equipment, supplies, finished or semi-finished products, raw materials, or other articles of any nature outside the
Premises (or the building constructed thereon if the Premises includes any outside areas) without Landlord's prior written consent.



	6.
	Tenant
and Tenant's subtenants, employees, agents, or invitees shall park only the number of cars allowed under the Lease and only in those portions of the parking area designated for
that purpose by Landlord. Upon request by Landlord, Tenant shall provide the license plate numbers of the cars of Tenant and Tenant's employees in order to facilitate enforcement of this regulation.
Tenant and Tenant's employees shall not store vehicles or equipment in the parking areas, or park in such a manner as to block any of the accessways serving the Center and its occupants. 


1







 
	7.
	The
Premises shall not be used for lodging, sleeping, cooking, or for any immoral or illegal purposes, or for any purpose that will damage the Premises or the reputation thereof.
Landlord reserves the right to expel from the Center any person who is intoxicated or under the influence of liquor or drugs or who shall act in violation of any of these Rules and Regulations. Tenant
shall not conduct or permit any sale by auction on the Premises. No video, pinball, or similar electronic game machines of any description shall be installed, maintained or operated upon the Premises
without the prior written consent of Landlord.



	8.
	Neither
Tenant nor Tenant's employees or agents shall disturb, solicit, or canvas any occupant of the Center, and Tenant shall take reasonable steps to discourage others from doing the
same.



	9.
	Tenant
shall not keep in, or allow to be brought into, the Premises or Center any pet, bird or other animal, other than "seeing-eye" dogs or other animals under the control
of and specifically assisting any disabled person.



	10.
	The
plumbing facilities shall not be used for any other purpose than that for which they are constructed, and no foreign substance of any kind shall be disposed of therein. The
expense of any breakage, stoppage, or damage resulting from a violation of this provision shall be borne by Tenant. Tenant shall not waste or use any excessive or unusual amount of water.



	11.
	Tenant
shall use, at Tenant's cost, such pest extermination contractor as Landlord may direct and at such intervals as Landlord may require.



	12.
	Tenant
will protect the carpeting from undue wear by providing carpet protectors under chairs with casters, and by providing protective covering in carpeted areas where spillage or
excessive wear may occur.



	13.
	Tenant
shall be responsible for repair of any damage caused by the moving of freight, furniture or other objects into, within, or out of the Premises or the Center. No heavy objects
(such as safes, furniture, equipment, freight, etc.) shall be placed upon any floor without Landlord's prior written approval as to the adequacy of the allowable floor loading at the point where the
objects are intended to be moved or stored. Landlord may specify the time of moving to minimize any inconvenience to other occupants of the Center.    If the Building is equipped with a
freight elevator, all deliveries to and from the Premises shall be made using the freight elevator during the time periods specified by Landlord, subject to such reasonable scheduling as Landlord in
its discretion shall deem appropriate.



	14.
	Without
Landlord's prior written consent, no drapes or sunscreens of any nature shall be installed in the Premises and the sash doors, sashes, windows, glass doors, lights and
skylights that reflect or admit light into the building shall not be covered or obstructed. Landlord shall have the right to specify the type of window coverings that may be installed, at Tenant's
expense. Tenant shall not mark, drive nails, screw or drill into, paint, or in any way deface any surface or part of the building. Notwithstanding the foregoing, Tenant may hang pictures, blackboards,
or similar objects, provided Tenant repairs and repaints any nail or screw holes, and otherwise returns the premises to the condition required under the Lease and the expiration or earlier termination
of the Lease Term. The expense of repairing any breakage, stoppage, or damage resulting from a violation of this rule shall be borne by Tenant.



	15.
	No
electrical wiring, electrical apparatus, or additional electrical outlets shall be installed in the Premises without Landlord's prior written approval. Any such installation not so
approved by Landlord may be removed by Landlord at Tenant's expense. Tenant may not alter any existing electrical outlets or overburden them beyond their designed capacity. Landlord reserves the right
to enter the Premises, with reasonable notice to Tenant, for the purpose of installing additional electrical wiring and other utilities for the benefit of Tenant or adjoining tenants. Landlord will
direct electricians as to where and how telephone and affixed wires are to be installed in the 


2







 

Premises.
The location of telephones, call boxes, and other equipment affixed to the Premises shall be subject to the prior written approval of Landlord. 



	16.
	If
Tenant's use of the Premises involves the sale and/or preparation of food, Tenant shall at all times maintain a health department rating of "A" (or such other highest health
department or similar rating as is available). Any failure by Tenant to maintain such "A" rating twice in any twelve (12) month period shall, at the election of Landlord, constitute a
noncurable Event of Default under the Lease.



	17.
	Tenant
shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.



	18.
	Tenant
assumes any and all responsibility for protecting its Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises
closed.



	19.
	If
Tenant occupies any air-conditioned space, Tenant shall keep entry doors opening onto corridors, lobby or courtyard closed at all times. All truck and loading doors
shall be closed at all times when not in use.



	20.
	Tenant
shall not paint any floor of the Premises without Landlord's prior written consent. Prior to surrendering the Premises upon expiration or termination of the Lease, Tenant shall
remove any paint or sealer therefrom (whether or not previously permitted by Landlord) and restore the floor to its original condition as of the Commencement Date, reasonable wear and tear excepted.
Tenant shall not affix any floor covering to the floor of the Premises in any manner except as approved by Landlord. 






	 	 	/s/  AD      
 Tenant's Initials

	 	 





3








  



 
 

EXHIBIT "C"    
    
    SIGN CRITERIA    
    


Such
signage as may be reasonably approved in advance by Landlord. 


1








  



 
 

CONSTRUCTION ADDENDUM
  TO STANDARD INDUSTRIAL NET LEASE
  (Genetronics Biomedical Corporation)    




        This
CONSTRUCTION ADDENDUM TO STANDARD INDUSTRIAL NET LEASE ("Addendum") is attached to and made a part of that certain Standard
Industrial Net Lease by and between SORRENTO CENTER ("Landlord"), and GENETRONICS BIOMEDICAL CORPORATION, a Delaware corporation
("Tenant"), dated November 12, 2004 (the "Lease"), for premises located at 11494 Sorrento Valley
Road, San Diego, California 92121 (the "Premises"). Landlord and Tenant hereby agree that notwithstanding anything contained in the Lease to the
contrary, the provisions set forth below shall be deemed to be a part of the Lease and shall supersede, to the extent appropriate, any contrary provision of the Lease. All references to the "Lease" in
this Addendum shall be construed to mean the Lease, and any and all exhibits and/or other addenda thereto, as amended and supplemented by this Addendum. All capitalized terms used in this Addendum,
unless specifically defined in this Addendum, shall have the same meaning as such terms have in the Lease. 


25.   INITIAL TENANT IMPROVEMENTS; TENANT IMPROVEMENT ALLOWANCE.  


        25.1    Tenant Improvement Allowance.    Tenant intends to construct certain initial
improvements in the Premises (the "Tenant Improvements"). Tenant shall be entitled to a one time tenant improvement allowance of up to $300,000 (the  "Allowance") for the costs relating to the design and construction of the Tenant Improvements.    In no event shall Landlord be obligated to
make disbursements pursuant to this Addendum in a total amount that exceeds the Allowance. 


        25.2    Allowance Items.    Except as otherwise set forth in this Addendum, the Allowance
shall be disbursed by Landlord only for the following items and costs (collectively the "Allowance Items"): 



        (a)   Payment
of the fees of the "Architect" and the "Engineers," as defined in Section 25.4 of this Addendum, which fees shall, notwithstanding anything to the
contrary contained in this Addendum, not exceed an aggregate amount equal to five percent (5%) of the Allowance, and payment of the fees incurred by, and the cost of documents and materials supplied
by, Landlord and Landlord's consultants
in connection with the preparation and review of the "Construction Drawings," as defined in Section 25.4 of this Addendum; 



        (b)   The
payment of plan check, building permit and license fees relating to construction of the Tenant Improvements; 


        (c)   The
cost of constructing the Tenant Improvements, including, without limitation, testing and inspection costs, freight elevator usage, utility usage, parking charges and
trash removal costs, and contractors' fees and general conditions; 


        (d)   The
cost of any changes in the Premises or the Building when such changes are required by the Construction Drawings; 



        (e)   The
cost of any changes to the Construction Drawings or Tenant Improvements required by applicable building code
("Code"); 


        (f)    Sales
and use taxes; 


        (g)   Title
24 fees; 


        (h)   Construction
of the building facade in accordance with Section 25.12 below by Landlord; and 



        (i)    Equipment,
furniture, telephone and data cabling, modular furniture, and any improvements to be for a subtenant's occupancy of the Premises. 



i







 





        25.3    Disbursement of Allowance.    During the construction of the Tenant Improvements, no
more frequently than monthly, Landlord shall make disbursements of the Allowance for Allowance Items and/or shall authorize the release of monies as follows: 



        (a)    Periodic Disbursements.    To obtain a disbursement of the Allowance, Tenant shall
deliver to Landlord: (i) a request for payment of the "Contractor," defined in Section 25.5 of this Addendum, approved by Tenant, in a form to be provided by Landlord, showing the
schedule, by trade, of percentage of completion of the Tenant Improvements in the Premises, detailing the portion of the work completed and the portion not completed, (ii) invoices from all of
"Tenant's Construction Agents," as defined in Section 25.5(b) of this Addendum, for labor rendered and materials delivered to the Premises, (iii) executed conditional mechanic's lien
releases from all of Tenant's Construction Agents; and (iv) all other information reasonably requested by Landlord. Tenant's request for payment shall be deemed Tenant's acceptance and approval
of the work furnished and/or the materials supplied as set forth in Tenant's payment request. Thereafter, Landlord shall deliver a check to Tenant made jointly payable to Contractor, any
subcontractor, and Tenant in payment of the lesser of:    (A) the amounts so requested by Tenant, as set forth in this Section, less a ten percent (10%) retention (the aggregate
amount of such retentions shall collectively referred to herein as the "Final Retention"), and (B) the balance of any remaining available portion
of the Allowance (not including the Final Retention), provided that Landlord does not dispute any request for payment based on non compliance of any work with the Approved Working Drawings (defined in
Section 3.4 below), or due to any substandard work, or for any other reason. Landlord's payment of such amounts shall not be deemed Landlord's approval or acceptance of the work furnished or
materials supplied as set forth in Tenant's payment request. 


        (b)    Final Retention.    Subject to the provisions of this Addendum, a check for the Final
Retention payable jointly to Contractor, any other applicable Tenants' Construction Agents, and Tenant shall be delivered by Landlord to Tenant following the completion of construction of the Tenant
Improvements, provided that (i) Tenant delivers to Landlord properly executed conditional mechanics lien releases, (ii) Landlord has determined that no substandard work exists that
adversely affects the mechanical, electrical, plumbing, heating, ventilating and air conditioning, life safety or other systems of the Building, the structure or exterior appearance of the Building,
or any other tenant's use of such other tenant's leased premises in the Building, and (iii) Architect delivers to Landlord a certificate, in a form reasonably acceptable to Landlord, certifying
that the construction of the Tenant Improvements in the Premises has been substantially completed. 



        (c)    Other Terms.    Landlord shall only be obligated to make disbursements from the
Allowance to the extent costs are incurred by Tenant for Allowance Items. 




        25.4    Construction Drawings.    



        (a)    Selection of Drawings.    Tenant shall retain an architect/space planner approved by
Landlord, which approval shall not be unreasonably withheld or delayed (the "Architect") to prepare the Construction Drawings. If appropriate, Tenant
shall retain engineering consultants approved by Landlord which approval shall not be unreasonably withheld or delayed (the "Engineers") to prepare all
plans and engineering working drawings relating to the structural, mechanical, electrical, plumbing, HVAC, life safety, and sprinkler work in the Premises. The plans and drawings to be prepared by the
Architect and the Engineers hereunder shall be referred to collectively herein as the "Construction Drawings." All Construction Drawings shall comply
with the drawing format and specifications determined by Landlord, and shall be subject to Landlord's approval, which approval shall not be unreasonably withheld or delayed. Landlord's review of the
Construction Drawings shall be for its sole purpose and shall not obligate Landlord to review the same for quality, design, Code compliance or other like matters. Accordingly, notwithstanding that any
Construction Drawings are reviewed by Landlord or its space planner, architect, engineers and 



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consultants,
and notwithstanding any advice or assistance that may be rendered to Tenant by Landlord or Landlord's space planner, architect, engineers, and consultants, Landlord shall have no
liability whatsoever in connection therewith and shall not be responsible for any omissions or errors contained in the Construction Drawings, and Tenant's waiver and indemnity set forth in Section of
the Lease shall specifically apply to the Construction Drawings. 


        (b)    Final Space Plan.    Tenant shall supply Landlord with four (4) copies signed by
Tenant of its final space plan for the Premises before any architectural working drawings or engineering drawings have been commenced. The final space plan (the "Final Space
Plan") shall include a layout and designation of all offices, rooms and other partitioning, their intended use, and equipment to be contained therein. Landlord may request
clarification or more specific drawings for special use items not included in the Final Space Plan. Landlord shall advise Tenant within five (5) days after Landlord's receipt of the Final Space
Plan for the Premises if the same is unsatisfactory or incomplete in any respect. If Tenant is so advised, Tenant shall promptly cause the Final Space Plan to be revised to correct any deficiencies or
other matters Landlord may reasonably require. 


        (c)    Final Working Drawings.    After the Final Space Plan has been approved by Landlord,
Tenant shall supply the Engineers with a complete listing of standard and non standard equipment and specifications, including, without limitation, BTU calculations, electrical requirements and
special electrical receptacle requirements for the Premises, to enable the Engineers and the Architect to complete the "Final Working Drawings" (as
defined below) in the manner as set forth below. Upon the approval of the Final Space Plan by Landlord and Tenant, Tenant shall promptly cause the Architect and the Engineers to complete the
architectural and engineering drawings for the Premises, and Architect shall compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings in a
form that is complete to allow subcontractors to bid on the work and to obtain all applicable permits (collectively, the "Final Working Drawings") and
shall submit the same to Landlord for Landlord's approval. Tenant shall supply Landlord with four (4) copies signed by Tenant of such Final Working Drawings. Landlord shall advise Tenant within
five (5) days after Landlord's receipt of the Final Working Drawings for the Premises if the same is unsatisfactory or incomplete in any respect. If Tenant is so advised, Tenant shall
immediately revise the Final Working Drawings in accordance with such review and any disapproval of Landlord in connection therewith. 


        (d)    Approved Working Drawings.    The Final Working Drawings shall be approved by Landlord
(the "Approved Working Drawings") prior to the commencement of construction of the Premises by Tenant. After approval by Landlord of the Final Working
Drawings, Tenant may submit the same to the city and other governmental agencies having jurisdiction for all applicable building permits. Tenant hereby agrees that neither Landlord nor Landlord's
consultants shall be responsible for obtaining any building permit or certificate of occupancy for the Premises and that obtaining the same shall be Tenant's responsibility; provided, however, that
Landlord shall cooperate with Tenant in executing permit applications and performing other ministerial acts reasonably necessary to enable Tenant to obtain any such permit or certificate of occupancy.
No changes, modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord, which consent may not be unreasonably withheld. 




        25.5    Tenant's Selection of Contractors.    



        (a)    The Contractor.    A licensed general contractor
("Contractor") selected by Tenant and approved by Landlord shall be retained by Tenant to construct the Tenant Improvements. 


        (b)    Tenant's Construction Agents.    All subcontractors, laborers, materialmen, and
suppliers used by Tenant (collectively, "Tenant's Construction Agents") must be approved in writing by Landlord, which approval shall not be
unreasonably withheld or delayed. The term "Tenants'  



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 Agents" shall include Contractor. If Landlord does not approve any proposed Tenants' Agents, Tenant shall submit other proposed Tenants' Agents for Landlord's written approval.
Notwithstanding the foregoing, Tenant shall retain subcontractors designated by Landlord, and reasonably approved by Tenant, in connection with any structural, roof, mechanical, electrical, plumbing
or heating, air conditioning or ventilation work to be performed in the Premises. 




        25.6    Construction of Tenant Improvements by Tenant's Construction Agents.    



        (a)    General Construction Contract; Cost Budget.    After Tenant's execution of the general
construction contract and general conditions with Contractor (the "General Contract"), Tenant shall submit a copy of the General Contract to Landlord
for its information. 


        (b)    Landlord's General Conditions.    Tenant's and Tenant's Construction Agents'
construction of the Tenant Improvements shall comply with the following: (i) the Tenant Improvements shall be constructed in strict accordance with the Approved Working Drawings,
(ii) Tenant's Construction Agents shall submit schedules of all work relating to the Tenant's Improvements to Contractor, and Contractor shall, within five (5) business days of receipt
thereof, inform Tenant's Construction Agents of any changes that
are necessary thereto, and Tenant's Construction Agents shall adhere to such corrected schedule, and (iii) Tenant shall abide by all rules made by Landlord with respect to the use of freight,
loading dock and service elevators, storage of materials, coordination of work with the contractors of other tenants, and any other matter in connection with this Addendum, including, without
limitation, the construction of the Tenant Improvements. 


        (c)    Indemnity.    Tenant's indemnity of Landlord as set forth in Article 13 of the
Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or Tenant's Construction Agents, or anyone
directly or indirectly employed by any of them, or in connection with the Tenant Improvements. 


        (d)    Requirements of Tenant's Construction Agents.    Each of Tenant's Construction Agents
shall guarantee to Tenant and for the benefit of Landlord that the portion of the Tenant Improvements for which it is responsible shall be free from any defects in workmanship and materials for a
period of not less than one (1) year from the date of completion thereof. Each of Tenant's Construction Agents shall be responsible for the replacement or repair, without additional charge, of
all work done or furnished in accordance with its contract that shall become defective within one (1) year after the later to occur of (i) completion of the work performed by such
contractor or subcontractors and (ii) the Commencement Date of the Lease. The correction of such work shall include, without additional charge, all additional expenses and damage incurred in
connection with such removal or replacement of all or any part of the Tenant improvements and/or the Premises or the Center and/or Common Facilities. All such warranties or guarantees as to materials
or workmanship of or with respect to the Tenant Improvements shall be contained in the General Contract or subcontract and shall be written such that such guarantees or warranties shall inure to the
benefit of both Landlord and Tenant, as their respective interests may appear, and can be directly enforced by either. Tenant shall give Landlord any assignment or other assurances that may be
necessary to effect such right of direct enforcement. 




        25.7    Insurance Requirements.    



        (a)    General Coverages.    All of Tenant's Construction Agents shall carry worker's
compensation insurance covering all of their respective employees, and shall also carry public liability insurance, including property damage, all with limits, in form and with companies as are
required to be carried by Tenant under the Lease. 


        (b)    Special Coverages.    Tenant shall carry "Builder's All Risk" insurance in an amount
approved by Landlord covering the construction of the Tenant Improvements, and such other 



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insurance
as Landlord may require. Such insurance shall be in amounts and shall include such extended coverage endorsements as may be reasonably required by Landlord including, but not limited to, the
requirement that all of Tenant's Construction Agents shall carry excess liability and Products and Completed Operation Coverage insurance, each in amounts not less than $3,000,000 combined single
limit, and in form and with companies as are required to be carried by Tenant under the other provisions of the Lease. 


        (c)    General Terms.    Certificates for all insurance carried pursuant to this Section shall
be delivered to Landlord before the commencement of construction of the Tenant Improvements and before the Contractor's equipment is moved onto the site. All such policies of insurance must contain a
provision that the company writing said policy will give Landlord thirty (30) days' prior written notice of any cancellation or lapse of the effective date or any reduction in the amounts of
such insurance. In the event that the Tenant Improvements are damaged by any cause during the course of the construction thereof, Tenant shall immediately repair the same at Tenant's sole cost and
expense. Tenant's Construction Agents shall maintain all of the foregoing insurance coverage in force until the Tenant Improvements are fully completed and accepted by Landlord, except for any
Products and Completed Operation Coverage insurance required by Landlord, which is to be maintained for ten (10) years following completion of the work and acceptance by Landlord and Tenant.
All policies carried under this Section shall insure Landlord and Tenant, as their interests may appear, as well as Tenant's Construction Agents. All insurance, except Workers' Compensation,
maintained by Tenant's Construction Agents shall preclude subrogation claims by the insurer against anyone insured thereunder. Such insurance shall provide that it is primary insurance as respects the
Landlord and that any other insurance maintained by Landlord is excess and noncontributing with the insurance required hereunder. Landlord may, in its discretion, require Tenant to obtain a lien and
completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient to ensure the lien free completion of the Tenant Improvements and naming Landlord as a co obligee. 




        25.8    Governmental Compliance.    The Tenant Improvements shall comply in all respects with
the following: (i) the Code and other state, federal, city or quasi governmental laws, codes, ordinances and regulations, as each may apply according to the rulings of the controlling public
official, agent or other person; (ii) applicable standards of the American Insurance Association (formerly, the National Board of Fire Underwriters) and the National Electrical Code; and (iii)
building material manufacturer's specifications. Tenant shall be responsible for causing, at its cost (using the Allowance or Tenant's own funds), the Tenant Improvements to comply with all laws
relating to disabled persons, handicap access and similar issues (including any and all upgrades, retrofits or other construction therein). Tenant shall additionally be responsible, at its cost (using
the Allowance or Tenant's own funds), for any changes necessary to the Common Facilities (including the surrounding sidewalks, curbs, gutters and parking area) as may be required because of the Tenant
Improvements (including the addition of new entrances, relocation of entrances, or enlargement of entrances), it being the intent that Tenant shall only be required to bring areas into compliance
which are impacted or changed by the Tenant Improvements. In all other instances, Landlord shall be responsible for doing any alteration, construction, retrofitting or other work required in the
remainder of the Building or the Common Facilities (including the surrounding sidewalks, curbs, gutters and parking area) to comply governmental
requirements related to disabled persons, handicap access and the like (y) as a result of the Tenant Improvements is, or (z) as a result of Alterations undertaken by Tenant after the
date thirty (30) months from the Commencement Date. 


        25.9    Inspection by Landlord.    Landlord shall have the right to inspect the Tenant
Improvements at all times, provided however, that Landlord's failure to inspect the Tenant Improvements shall in no event constitute a waiver of any of Landlord's rights hereunder nor shall Landlord's
inspection of the Tenant Improvements constitute Landlord's approval of the same. Should Landlord disapprove any 


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portion
of the Tenant Improvements, Landlord shall notify Tenant in writing of such disapproval and shall specify the items disapproved and the reason for disapproval, which shall be limited to
failure to comply with laws or the Final Working Drawings. Any defects or deviations in, and/or disapproval by Landlord of, the Tenant Improvements shall be rectified by Tenant at no expense to
Landlord, provided however, that if Landlord determines that a defect or deviation exists or disapproves of any matter in connection with any portion of the Tenant Improvements and such defect,
deviation or matter might adversely affect the mechanical, electrical, plumbing, heating, ventilating and air conditioning or life safety systems of the Building, the structure or exterior appearance
of the Building or the use of the building or Center by any other occupant thereof, Landlord may take such action as Landlord deems necessary, at Tenant's expense and without incurring any liability
on Landlord's part, to correct any such defect, deviation and/or matter, including, without limitation, causing the cessation of performance of the construction of the Tenant Improvements until such
time as the defect, deviation and/or matter is corrected to Landlord's satisfaction. 


        25.10    Meetings.    During the design and construction of the Tenant Improvements, Landlord,
at Landlord's election, shall hold weekly meetings with the Tenant, Architect, the Contractor and such of Tenant's Construction Agents as Landlord may reasonably require regarding the progress of the
preparation of Construction Drawings and the construction of the Tenant Improvements. 


        25.11    Notice of Completion; Copy of Record Set of Plans.    Within ten (10) days
after completion of construction of the Tenant Improvements, Tenant shall cause a Notice of Completion to be recorded in the office of the Recorder of the county in which the Center is located, and
shall furnish a copy thereof to Landlord upon such recordation. If Tenant fails to do so, Landlord may execute and file the same on behalf of Tenant as Tenant's agent for such purpose, at Tenant's
sole cost and expense. At the conclusion of construction, (i) Tenant shall cause the Architect and Contractor (A) to update the Approved Working Drawings as necessary to reflect all
changes made to the Approved Working Drawings during the course of construction, (B) to certify to the best of their knowledge that the "record set" of mylar as built drawings are true and
correct, which certification shall survive the expiration or termination of the Lease, and (C) to deliver to Landlord two (2) sets of copies of such record set of drawings within ninety
(90) days following issuance of a certificate of occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy of all warranties, guaranties, and operating manuals and
information relating to the improvements, equipment, and systems in the Premises. 



        25.12    Construction of Building Exterior Facade.    Landlord shall, at its sole cost and
expense, re-construct the building facade within 6 months of the Lease Commencement Date, pursuant to [describe plan or drawing which depicts
facade]. A portion of the Allowance up to the amount of $37,500 shall be used for one-half of the cost of constructing the building exterior facade by
Landlord. Such half (up to $37,500) building exterior facade portion shall be withheld by Landlord from the Allowance and disbursed by Landlord to contractors of Landlord's choosing in connection with
the construction of the building exterior facade. Landlord shall be responsible for the other half of the construction costs for the building exterior facade, and for any amount by which the cost of
the building exterior facade exceed $75,000. 


        25.13    Miscellaneous.    



        (a)    Tenant's Representative.    Tenant has designated Peter Kies as its sole representative
with respect to the matters set forth in this Addendum, who shall have full authority and responsibility to act on behalf of the Tenant as required in this Addendum. 



        (b)    Landlord's Representative.    Landlord has designated E. Tyler Miller as its sole
representatives with respect to the matters set forth in this Addendum, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required
in this Addendum. 



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        (c)    Time of the Essence.    Unless otherwise indicated, all references herein to a  "number of days" shall mean and refer to
calendar days. If any item requiring approval is timely disapproved by Landlord, the procedure for preparation
of the document and approval thereof shall be repeated until the document is approved by Landlord. 


        (d)    Tenant's Lease Default.    Notwithstanding any provision to the contrary contained in
the Lease, if an Event of Default as described in Article 21 of the Lease has occurred at any time on or before the Substantial Completion of the Premises, then (i) in addition to all
other rights and remedies granted to Landlord pursuant to the Lease, Landlord shall have the right to withhold payment of all or any portion of the Allowance and/or Landlord may cause Contractor to
cease the construction of the Premises (in which case, Tenant shall be responsible for any delay in the substantial completion of the Premises caused by such work stoppage), and (ii) all other
obligations of Landlord under the terms of this Addendum shall be forgiven until such time as such default is cured pursuant to the terms of the Lease (in which case, Tenant shall be responsible for
any delay in the substantial completion of the Premises caused by such inaction by Landlord). 




        25.14    No Other Change.    Except as specifically set forth in this Addendum, all of the
terms and conditions of the Lease shall remain unchanged and in full force and effect. 



	TENANT:	 	LANDLORD:
	

GENETRONICS BIOMEDICAL	
 	

SORRENTO CENTER Tenancy in Common
	CORPORATION

a Delaware corporation	 	By:	Asset Management Group Authorized Signatory
	

By:	

/s/  AVTAR DHILLON      
	
 	

By:	

/s/  WILLIAM TRIBOLET      

	

Print Name:	

AVTAR DHILLON	
 	

Print Name:	

William Tribolet
	 	 	
	 	 	 	

	

Title:	

PRESIDENT & CEO
	
 	

Title:	

V.P.

	

 	

 	
 	

By:	

/s/  ROBERT PETERSON      

	

 	

 	
 	

Print Name:	

Robert Peterson

	

 	

 	

 	
 	

Title:	

 	

 
	 	 	 	 	





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QuickLinks



Exhibit 10.16



STANDARD INDUSTRIAL NET LEASE (Genetronics Biomedical Corporation)


EXHIBIT "A" FLOOR PLAN OF PREMISES


EXHIBIT "B" RULES AND REGULATIONS


EXHIBIT "C" SIGN CRITERIA


CONSTRUCTION ADDENDUM TO STANDARD INDUSTRIAL NET LEASE (Genetronics Biomedical Corporation)