Exhibit 10.3


 


SINGLE-TENANT
INDUSTRIAL LEASE


(TRIPLE
NET)


 


LANDLORD:


 


AEW/LBA
ACQUISITION CO. 11, LLC,


a
California limited liability company


 


TENANT:


CYMER,
INC.,


a
Nevada corporation


 


STANDARD
FORM SINGLE-TENANT INDUSTRIAL LEASE


 


TABLE
OF CONTENTS


 


	
  Section

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SUMMARY
  OF BASIC LEASE INFORMATION AND DEFINITIONS

  	
   

  
	
  1.

  	
   

  	
  Premises

  	
   

  
	
  2.

  	
   

  	
  Term

  	
   

  
	
  3.

  	
   

  	
  Rent

  	
   

  
	
  4.

  	
   

  	
  Triple Net
  Lease

  	
   

  
	
  5.

  	
   

  	
  Security
  Deposit

  	
   

  
	
  6.

  	
   

  	
  Use

  	
   

  
	
  7.

  	
   

  	
  Payments
  and Notices

  	
   

  
	
  8.

  	
   

  	
  Brokers

  	
   

  
	
  9.

  	
   

  	
  Surrender; Holding
  Over

  	
   

  
	
  10.

  	
   

  	
  Taxes

  	
   

  
	
  11.

  	
   

  	
  Repairs

  	
   

  
	
  12.

  	
   

  	
  Alterations

  	
   

  
	
  13.

  	
   

  	
  Liens

  	
   

  
	
  14.

  	
   

  	
  Assignment and Subletting

  	
   

  
	
  15.

  	
   

  	
  Entry by Landlord

  	
   

  
	
  16.

  	
   

  	
  Utilities and Services

  	
   

  
	
  17.

  	
   

  	
  Indemnification and
  Exculpation

  	
   

  
	
  18.

  	
   

  	
  Damage or Destruction

  	
   

  
	
  19.

  	
   

  	
  Eminent Domain

  	
   

  
	
  20.

  	
   

  	
  Tenant’s Insurance

  	
   

  
	
  21.

  	
   

  	
  Waiver of Subrogation

  	
   

  
	
  22.

  	
   

  	
  Tenant’s
  Default and Landlord’s Remedies

  	
   

  
	
  23.

  	
   

  	
  Landlord’s Default

  	
   

  
	
  24.

  	
   

  	
  Subordination

  	
   

  
	
  25.

  	
   

  	
  Estoppel Certificate

  	
   

  
	
  26.

  	
   

  	
  Easements

  	
   

  
	
  27.

  	
   

  	
  Modification
  and Cure Rights of Landlord’s Mortgagees and Lessors

  	
   

  
	
  28.

  	
   

  	
  Quiet Enjoyment

  	
   

  
	
  29.

  	
   

  	
  Transfer of Landlord’s
  Interest

  	
   

  
	
  30.

  	
   

  	
  Limitation on
  Landlord’s Liability

  	
   

  
	
  31.

  	
   

  	
  Miscellaneous

  	
   

  
	
  32.

  	
   

  	
  Lease Execution

  	
   

  



 





















 


	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT “A” 

  	
  Site Plan

  	
   

  
	
  EXHIBIT “B” 

  	
  Legal Description of
  Premises

  	
   

  
	
  EXHIBIT “C” 

  	
  Work Letter Agreement

  	
   

  
	
   

  	
  Schedule 1 Description
  of Conceptual Plans

  	
   

  
	
  EXHIBIT “D” 

  	
  Sample Form of Notice of
  Lease Term Dates

  	
   

  
	
  EXHIBIT “E” 

  	
  Environmental
  Questionnaire

  	
   

  
	
  EXHIBIT “F” 

  	
  Sample Form of Tenant
  Estoppel Certificate

  	
   

  
	
  EXHIBIT “G” 

  	
  Description of Parking
  Lot Improvements

  	
   

  
	
  EXHIBIT “H” 

  	
  Prior Occupant’s
  FF&E

  	
   

  



 





















 


STANDARD FORM
SINGLE-TENANT INDUSTRIAL LEASE


 


INDEX
OF DEFINED TERMS


 


	
  Abandonment

  	
   

  
	
  Acquisition Costs

  	
   

  
	
  Acquisition Date

  	
   

  
	
  Actual Commencement
  Date for Manufacturing Building 

  	
   

  
	
  Actual Commencement
  Date for Office Building 

  	
   

  
	
  Actual Commencement
  Date for Parking Lot

  	
   

  
	
  Basic Elements

  	
   

  
	
  Buildings

  	
   

  
	
  Business Day

  	
   

  
	
  Cap

  	
   

  
	
  Conceptual Plans

  	
   

  
	
  Depository

  	
   

  
	
  Early Occupancy Date

  	
   

  
	
  Effective Date

  	
   

  
	
  Event of Default

  	
   

  
	
  Extension Option

  	
   

  
	
  Extension Options

  	
   

  
	
  Fair Market Rental

  	
   

  
	
  Force Majeure Delays

  	
   

  
	
  Hazardous Materials

  	
   

  
	
  Indemnified Claims

  	
   

  
	
  Insurance Failure
  Notice

  	
   

  
	
  Landlord

  	
   

  
	
  Landlord Indemnified
  Parties

  	
   

  
	
  Landlord’s Parties

  	
   

  
	
  Laws

  	
   

  
	
  Lease

  	
   

  
	
  Losses

  	
   

  
	
  Manufacturing Building

  	
   

  
	
  Manufacturing Building
  Allowance

  	
   

  
	
  Office Building 

  	
   

  
	
  Office Building
  Allowance

  	
   

  
	
  Option Period

  	
   

  
	
  Parcel 1

  	
   

  
	
  Parcel 2

  	
   

  
	
  Parking Lot

  	
   

  
	
  Parking Lot
  Improvement Costs

  	
   

  
	
  Parking Lot
  Improvements

  	
   

  
	
  PCBs

  	
   

  
	
  Permitted Assignees

  	
   

  
	
  Permitted Business

  	
   

  
	
  Pre-Approved Change

  	
   

  
	
   

  	
   

  
	
  Premises

  	
   

  
	
  Proceeds

  	
   

  
	
  Property

  	
   

  
	
  Real Property Taxes

  	
   

  
	
  Respective
  Commencement Dates

  	
   

  



 





















 


	
  Restoration

  	
   

  
	
   

  	
   

  
	
  Restore

  	
   

  
	
  Substantial Completion

  	
   

  
	
  Substantially Complete

  	
   

  
	
  Summary

  	
   

  
	
  Tenant

  	
   

  
	
  Tenant Change

  	
   

  
	
  Tenant Changes

  	
   

  
	
  Tenant Improvement
  Allowance Items

  	
   

  
	
  Tenant Improvements

  	
   

  
	
  Tenant Indemnified
  Parties

  	
   

  
	
  Tenant’s Parties

  	
   

  
	
  Term

  	
   

  
	
  Transfer

  	
   

  
	
  Transfer Date

  	
   

  
	
  Transfer Notice

  	
   

  
	
  Transfer Fee

  	
   

  
	
  Vacation

  	
   

  
	
  Work Letter

  	
   

  



 





















 


SUMMARY
OF BASIC LEASE INFORMATION AND DEFINITIONS


 


This SUMMARY OF BASIC
LEASE INFORMATION AND DEFINITIONS (“Summary”) is hereby incorporated into and
made a part of the attached Single-Tenant Industrial Lease which pertains to
the Premises described in Section 1.3 below. All references in the Lease to the
“Lease” shall include this Summary. All references in the Lease to any term
defined in this Summary shall have the meaning set forth in this Summary for such
term. Any initially capitalized terms used in this Summary and any initially
capitalized terms in the Lease which are not otherwise defined in this Summary
shall have the meaning given to such terms in the Lease.


 


1.1           Landlord’s
Address:           AEW/LBA Acquisition Co. 11, LLC


 


c/o
Layton Belling Associates 10251 Vista


Sorrento
Parkway, Suite 100 San Diego,


California
92121


Attn:
Mr. David C. Thomas


Telephone:
(619) 597-8795


Facsimile:
(619) 597-0242


 


1.2           Tenant’s
Address:               Cymer, Inc.


 


16275
Technology Drive


San
Diego, California 92127-1815


Attn:
Chief Financial Officer


Telephone:
(619) 487-2442


Facsimile:
(619) 487-2441


 


1.3           Premises:
The industrial development located at 16750 Via Del Campo Court and an adjacent
undeveloped parcel, in the City of San Diego, County of San Diego State of
California, as shown on the site plan attached hereto as Exhibit “A”. The real
property (“Property”) which is a part of the Premises is more particularly
described in Exhibit “B” attached hereto. The Premises includes all buildings, improvements
and facilities, now or subsequently located on the Property from time to time,
including, without limitation, the one (1) building of approximately 36,959
square feet of space (the” Office Building”), the one (1) building of approximately
100,205 square feet of space (the “Manufacturing Building”) (the Office Building
and the Manufacturing Building are hereinafter sometimes collectively referred to
as the” Buildings” and the portion of the Property underlying the Buildings is
described, and defined herein, as “Parcel 1” on Exhibit “B” attached hereto),
both of which Buildings are currently located on the Property, as depicted on the
site plan attached hereto as Exhibit “A”. The aggregate rentable square feet of
the Buildings is 137,164 square feet. The Premises also
includes that certain lot (described, and defined herein, as “Parcel 2” on
Exhibit “B” attached hereto) which shall be improved by Landlord in accordance with
the terms of Section 1.2 of the Lease (the “Parking Lot”). 


 





















 


1.4           Estimated
Commencement Date for Office Building: December 16, 1996; Actual Commencement
Date for Office Building: Fifteen (15) calendar days after Landlord’s delivery
of the Office Building in the condition required by Section 2.3 of the Lease.


 


1.5           Actual Commencement
Date for Manufacturing Building: June 1, 1997


 


1.6           Estimated
Commencement Date for Parking Lot: March 1, 1997; Actual Commencement Date for
Parking Lot to be determined as provided in Section 1.2 of the Lease.


 


1.7           Lease Expiration
Date: January 1, 201 0, subject to two (2) extension options of five (5) years
each pursuant to Section 2.4 of the Lease.


 


1.8           Rent for
Office Building and Manufacturing Building:


 


	
  Year

  	
   

  	
  Monthly Rent

  Office Building/Manufacturing Building

  	
   

  	
  Annual Rent

  Office Building/Manufacturing Building

  	
   

  
	
  1

  	
   

  	
  $35,111.05/$95,194.75

  	
   

  	
  $421,332.60/$1,142,337.00

  	
   

  
	
  2

  	
   

  	
  $36,164.38/$98,050.59

  	
   

  	
  $433,972.58/$1,176,607.11

  	
   

  
	
  3

  	
   

  	
  $37,249.31/$100,992.11

  	
   

  	
  $446,991.76/$1,211,905.32

  	
   

  
	
  4

  	
   

  	
  $38,336.79/$104,021.87

  	
   

  	
  $460,401.51/$1,248,262.48

  	
   

  
	
  5

  	
   

  	
  $39,517.80/$107,142.53

  	
   

  	
  $474,213.55/$1,285,710.36

  	
   

  
	
  6

  	
   

  	
  $40,703.33/$110,356.81

  	
   

  	
  $488,439.96/$1,324,281.67

  	
   

  
	
  7

  	
   

  	
  $41,924.43/$113,667.51

  	
   

  	
  $503,093.16/$1,364,010.12

  	
   

  
	
  8

  	
   

  	
  $43,182.16/$117,077.54

  	
   

  	
  $518,185.95/$1,404,930.42

  	
   

  
	
  9

  	
   

  	
  $44,477.63/$120,589.86

  	
   

  	
  $533,731.53/$1,447,078.33

  	
   

  
	
  10

  	
   

  	
  $45,811.96/$124,207.56

  	
   

  	
  $549,743.48/$1,490,490.68

  	
   

  
	
  11

  	
   

  	
  $47,186.32/$127,933.78

  	
   

  	
  $566,235.78/$1,535,205.41

  	
   

  
	
  12

  	
   

  	
  $48,601.90/$131,771.80

  	
   

  	
  $583,222.86/$1,581,261.57

  	
   

  
	
  13

  	
   

  	
  $50,059.96/$135,724.95

  	
   

  	
  $600,719.54/$1,628,699.41

  	
   

  



 


For purposes of
calculating Rent for the Manufacturing Building, Year 1 shall be deemed to end
on the day prior to the first anniversary of the Actual Commencement Date for
Office Building, and Year 2 and all subsequent years of


 





















 


the Term as it relates to
the Manufacturing Building will commence on the respective anniversary dates of
the Actual Commencement Date for Office Building. Annual Rent is specified on
an annualized basis, and if any Year specified above does not contain twelve
(12) months, the Rent payable during such Year shall be appropriately prorated.



 


1.9           Rent for
Parking Lot: Tenant shall pay Landlord Annual Rent for the Parking Lot in an
initial amount equal to twelve percent (12%) of the sum of the (i) Acquisition Costs
(as defined in Section 1.2 of the Lease) and the (ii) Parking Lot Improvement Costs
(as defined in Section 1.2 of the Lease). Commencing on the first anniversary of
the Actual Commencement Date for Parking Lot, and on each anniversary date thereafter,
the Annual Rent for Parking Lot will be increased by three percent (3%) of the amount
payable immediately prior to such adjustment date.


 


1.10         Security
Deposit: $2,224,41 6.00, subject to return as set forth
in Section 5 of the Lease.


 


1.11         Permitted
Use: The Office Building may be used only for general office purposes and, to
the extent allowed by applicable law, research and development and laboratory
use. The Manufacturing Building may be used only for research, development,
design, fabrication, storage, light manufacturing and assembly and any other
use allowed by applicable law. The Parking Lot may be used only for the parking
of vehicles by Tenant’s employees, agents, contractors, invitees and visitors.


 


1.12         Brokers:
John Burnham & Company representing Landlord and The Irving Hughes Group
representing Tenant.


 


1.13         Interest Rate:
The lesser of: (a) the rate announced from time to time by Wells Fargo Bank or,
if Wells Fargo Bank ceases to exist or ceases to publish such rate, then the
rate announced from time to time by the largest (as measured by deposits) chartered
operating bank operating in California, as its “prime rate” or “reference rate”,
plus three percent (3%); or (b) the maximum rate permitted by law.


 


1.14         Tenant
Improvements: The tenant improvements installed or to be installed in the
Premises by Tenant, as described in the Work Letter Agreement attached hereto
as Exhibit “C”.


 


SINGLE-TENANT
INDUSTRIAL LEASE


 


This LEASE (“Lease”),
which includes the preceding Summary of Basic Lease Information and Definitions
(“Summary”) attached hereto and incorporated herein by this reference, is made
as of the 19th day of December, 1996, by and between AEW/LBA ACQUISITION CO.
11, LLC, a California limited liability company (“Landlord”), and CYMER, INC.,
a Nevada corporation (“Tenant”).


 





















 


1.             Premises.


 


1.1           Lease of
Premises. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Premises upon and subject to the terms, covenants and conditions
contained in this Lease to be performed by each party.


 


1.2           Parking Lot.
Promptly following the Acquisition Date (as defined in Section 2.5 below),
Landlord shall begin construction of facilities for parking on a portion of the
Parking Lot (the “Parking Lot Improvements”) as described on Exhibit “G”
attached hereto. Landlord shall cause the Parking Lot Improvements to be
constructed in accordance with all then-applicable laws. The “Actual
Commencement Date for the Parking Lot” shall occur upon Substantial Completion
of the Parking Lot Improvements. “Substantial Completion” or “Substantially
Complete” is herein defined as the date upon which all of the following have
been satisfied: (i) construction of the Parking Lot Improvements is complete,
as determined by Landlord’s construction contractor; (ii) Landlord has obtained
all permits or approvals from the City of San Diego as may be necessary for the
use of the Parking Lot Improvements as a parking lot and delivered evidence of
same to Tenant; and (iii) Tenant has accepted the Parking Lot Improvements
(Tenant may not accept the Parking Lot Improvements only if they are not
constructed substantially in accordance with the requirements of Exhibit “G”,
or if they do not comply with then-applicable laws, and Tenant’s failure to
give Landlord written notice of Tenant’s non-acceptance of the Parking Lot
Improvements within five (5) business days following the date of Tenant’s
receipt of written notice of the satisfaction of clause (i) above and clause
(ii) above (accompanied by materials to be delivered pursuant to clause (ii)
above) will be deemed Tenant’s acceptance of the Parking Lot Improvements). Upon
Substantial Completion of the Parking Lot Improvements, Landlord shall assign
to Tenant all warranties for the Parking Lot Improvements from Landlord’s
construction contractor and all warranties available at law or in equity and
Landlord shall have no further obligations or liabilities to Tenant concerning
the Parking Lot Improvements; however, Landlord shall cooperate with Tenant as necessary
to enforce such warranties. For purposes of calculating the Rent for the
Parking Lot, (a) “Acquisition Costs” is defined as all reasonable costs and
expenses incurred by Landlord in connection with or arising from the purchase
of the Parking Lot including, without limitation, the purchase price, escrow
and title charges and fees, documentary and transfer taxes, recording costs,
loan fees and costs, if any, attorneys fees and any and all other costs or
expenses of such purchase, and (b) “Parking Lot Improvement Costs” is defined
as all reasonable hard and soft costs incurred by Landlord in connection with
or arising from the design and construction of the Parking Lot Improvements,
including, without limitation, design, drafting, architecture and engineering
fees, permitting and other governmental fees and charges, and costs, contractor
and subcontractor charges and fees and any and all other costs or expenses of
construction. The Rent for the Parking Lot shall be paid in monthly
installments equal to one-twelfth (1/12th) of the Rent described in Section 1.9
of the Summary of Basic Lease Information and Definitions.


 


1.3           AS-IS. Tenant
acknowledges and agrees that, except to the extent specifically set forth in
Section 1.2 above with respect to the construction of the Parking Lot
Improvements by Landlord, Landlord has not made, does not make and specifically
negates and disclaims any representations, warranties, promises, covenants,
agreements or guarantees of any kind or character whatsoever concerning or with
respect to (a) the value, nature, quality or condition of the Premises; (b) the
suitability of the Premises for any and all activities and uses which Tenant
may conduct thereon; (c) the compliance of the Premises with any laws, rules,
ordinances or regulations of any


 





















 


applicable governmental authority
or body, including, without limitation, environmental laws (collectively, “Laws”);
(d) the habitability, merchantability, marketability, profitability or fitness
for a particular purpose of the Premises; (e) the manner or quality of the
construction or materials incorporated into the Premises; (f) the manner,
quality, state of repair or lack of repair of the Premises; or (g) any other
matter with respect to the Premises. Tenant further acknowledges and agrees
that having been given the opportunity to inspect the Premises, Tenant is
relying solely on its own investigation of the Premises and not on any
information provided or to be provided by Landlord. Tenant further acknowledges
and agrees that any information provided or to be provided by or on behalf of
Landlord with respect to the Premises, was obtained from a variety of sources
and that Landlord has not made any independent investigation or verification of
such information and makes no representations as to the accuracy or
completeness of such information. Tenant further acknowledges and agrees that,
except to the extent specifically set forth in Section 1.2 above with respect
to the Parking Lot Improvements, the leasing of the Premises as provided for
herein is made on an “AS-IS” condition and basis with all faults. Tenant and
anyone claiming by, through or under Tenant hereby fully and irrevocably
releases Landlord from any and all claims that it may now have or hereafter
acquire against Landlord for any cost, loss, liability, damage, expense, demand,
action or cause of action arising from or related to any construction defects,
errors, omissions or other conditions (excluding, however, environmental
matters, now or hereafter affecting the Premises), except as otherwise
specifically set forth herein (collectively, “Losses”), except to the extent
(i) such Losses arise from the negligence or misconduct or breach of this Lease
of or by Landlord or Landlord’s Parties or (ii) Landlord has indemnified Tenant
against such Losses. This release includes claims of which Tenant is presently unaware
or which Tenant does not presently suspect to exist in its favor which, if
known by Tenant, would materially affect Tenant’s release of Landlord. Tenant
specifically waives the provision of California Civil Code 1542, which provides
as follows: “A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor.”


 


2.             Term.


 


2.1           Term; Notice
of Lease Dates. This Lease shall be effective upon the date first above written
(the “Effective Date”). Subject to Section 2.4(a) below, the term of this Lease
(the “Term”) shall commence upon the Actual Commencement Date for Office
Building, the Actual Commencement Date for Manufacturing Building, and the
Actual Commencement Date for Parking Lot with respect to the Office Building,
Manufacturing Building and Parking Lot, respectively (hereinafter the Actual
Commencement Dates for the Office Building, the Manufacturing Building and the
Parking Lot may be collectively referred to as the “Respective Commencement Dates”).
Within ten (10) days after Landlord’s written request, Tenant and Landlord
shall execute a written confirmation of the Respective Commencement Dates in
the form of the Notice of Lease Term Dates attached hereto as Exhibit “D”. The
Notice of Lease Term Dates executed by Landlord shall be binding upon Tenant
unless Tenant objects thereto in writing within such ten (10) day period.


 


2.2           Estimated
Commencement Date for Parking Lot. It is estimated by the parties that Landlord
will deliver possession of the Parking Lot, and that the Term of this Lease
respecting the Parking Lot will commence on, the Estimated Commencement Date
for Parking Lot set forth in Section 1.6 of the


 





















 


Summary. The
Estimated Commencement Date for Parking Lot is merely an estimate of the Actual
Commencement Date for Parking Lot and, consequently, Tenant agrees that
Landlord shall have no liability to Tenant for any loss or damage, nor shall
Tenant be entitled to terminate or cancel this Lease (except as set forth in
Section 2.5 below) if the Term of this Lease respecting the Parking Lot does
not commence by the Estimated Commencement Date for Parking Lot for any reason
whatsoever, including any delays in Substantial Completion of the Parking Lot
Improvements.


 


If Landlord has not
delivered possession of the Parking Lot by June 1, 1997, due to Landlord’s
failure to Substantially Complete the Parking Lot Improvements (as such date is
subject to extension by one day for each day Landlord is delayed in
constructing the Parking Lot Improvements due to Force Majeure Delays), then
Tenant may, following delivery of written notice to Landlord, construct the
Parking Lot Improvements substantially in accordance with Exhibit “G”. In such
event, the Actual Commencement Date for Parking Lot shall be the earlier to
occur of (i) the date of Substantial Completion of the Parking Lot Improvements
or (ii) ninety (90) days following the date Tenant gives Landlord written
notice of its election to construct the Parking Lot Improvements. Within thirty
(30) days following Substantial Completion of the Parking Lot Improvements and
delivery to Landlord of evidence of the lien-free completion thereof and the
costs incurred by Tenant in connection therewith, Landlord will reimburse
Tenant the actual cost of construction of the Parking Lot Improvements. If
Landlord fails to so reimburse Tenant within said thirty (30) day period, then
the Rent for the Parking Lot will be calculated without the inclusion of the
Parking Lot Improvement Costs, notwithstanding Section 1.9 of the Summary to
the contrary.


 


2.3           Delivery;
Early Occupancy. Landlord shall deliver possession of all of Parcel 1 on the
first (lst) business day following the Acquisition Date (as that term is
defined in Section 2.5 below) (the “Early Occupancy Date”) for purposes of
construction of improvements to the Premises in accordance with the Work Letter
attached hereto as Exhibit “C” (“Work Letter”); provided, however, Tenant
acknowledges that approximately 30,000 square feet of the Manufacturing
Building (in the approximate location depicted on Exhibit “A”) and certain
areas outside of the Manufacturing Building (as described on Exhibit “A”) will
be occupied by ALCOA (the current owner of the Premises) pursuant to a license
for the purpose of removing certain trade fixtures, equipment and personal
property, which removal is expected to be completed by February 28, 1997. Landlord
represents and warrants to Tenant that such license will require ALCOA to
vacate such space by February 28, 1997 (with an extension right to March 31,
1997). Landlord will exercise good faith efforts to cause ALCOA to remove its
trade fixtures, equipment and personal property and vacate such portion of the
Manufacturing Building by February 28, 1997 (or March 31, 1997, as applicable)
and will exercise all remedies available under such license to cause such
vacation. Notwithstanding anything to the contrary contained in this Lease
(including, but not limited to, the Work Letter attached hereto), Tenant shall
not perform or cause to be performed any tests or studies affecting or relating
to the soils or subsurface areas below the Premises without prior written
notice to and approval of Landlord, which approval shall not be unreasonably
withheld or delayed. Such early occupancy shall be subject to all of the terms
and conditions of this Lease (including, without limitation, Sections 10, 17,
20 and 22) except that Tenant will not be obligated to pay Monthly Rent for the
Office Building or operating expenses for the Premises until the Actual
Commencement Date for Office Building, and Tenant will not be obligated to pay
Monthly Rent for the Manufacturing Building until the Actual Commencement Date
for Manufacturing


 





















 


Building (however,
Tenant will pay operating expenses associated with the entire Premises
commencing on the Actual Commencement Date for Office Building). Landlord shall
deliver the Office Building and Manufacturing Building in broom-clean condition
and without any of ALCOA’s trade fixtures, equipment or personal property other
than those items identified on Exhibit “H” attached hereto.


 


2.4           Options to Extend.
Tenant shall have two (2) options (individually, an “Extension Option” and
collectively, the “Extension Options”) to extend the Term for a period
(individually, an “Option Period”) of five (5) years, each commencing upon the
Lease Expiration Date and the expiration of the first (1st) Option Period, as
the case may be, upon the same terms and conditions previously applicable,
except for the grant of any exercised Extension Option and Annual Rent (which
shall be determined as set forth below). Each Extension Option may be validly
exercised only by notice in writing received by Landlord not later than twelve
(12) months prior to commencement of the Option Period; provided, however, that
the Extension Option may be validly exercised only if no material Event of
Default exists as of the date of exercise and, at Landlord’s option, as of the
commencement of the Option Period. If Tenant does not exercise an Extension
Option during the exercise period set forth above in strict accordance with the
provisions hereof, the Extension Options shall forever terminate and be of no
further force or effect. The Extension Options are personal to the original
Tenant and any Permitted Assignee, may not be exercised by any person or entity
other than the original Tenant or any Permitted Assignee, and shall become null
and void if the original Tenant assigns its interest in this Lease or sublets
any portion of the Premises to anyone other than a Permitted Assignee.


 


Annual Rent during each
Option Period shall be equal to Fair Market Rental as of the commencement of
such Option Period. For purposes hereof, “Fair Market Rental” shall mean the
base rent payable to a willing landlord by a willing tenant having a similar financial
responsibility, credit rating and capitalization as Tenant then has, taking
into account all other relevant factors for like and comparable space
including, without limitation, the uses permitted under this Lease, the lack of
obligation to construct Tenant Improvements, and the limited real estate
commission payable, improved with tenant improvements of like and comparable
quality to those then existing in the Premises in the Rancho Bernardo business
district of San Diego (or, if no comparable conditions exist in such area, then
in the 1-15 corridor area of San Diego). At least six (6) months prior to the Option
Period, Landlord shall notify Tenant of the Fair Market Rental as determined by
Landlord. Any dispute between the parties hereto with respect to the amount so
determined shall be resolved by appraisal, as set forth below; provided, however,
that there shall be deemed not to be such a dispute unless Tenant notifies Landlord
thereof in writing within one (1) month after Landlord so notifies Tenant of
the Fair Market Rental and Tenant sets forth in such notice Tenant’s
determination of Fair Market Rental. If, in the event of a dispute, the
appraisers have not determined the Fair Market Rental by commencement of the
Option Period, Tenant shall pay as Annual Rent the amount determined by Landlord
until such time as the Fair Market Rental has been determined by arbitration, whereupon
Tenant shall pay any additional amount due to Landlord based upon such subsequent
determination of Fair Market Rental. If the Annual Rent so paid by Tenant is
higher than that ultimately determined by the arbitration process, then Landlord
shall reimburse such difference to Tenant.


 





















 


If Tenant timely
notifies Landlord in writing of Tenant’s dispute regarding Landlord’s
determination of the Fair Market Rental, then Fair Market Rental shall be
determined as follows. Landlord and Tenant shall each appoint one appraiser who
shall by profession be a real estate appraiser active over the five (5) year period
ending on the date of such appointment in the appraisal of commercial
properties in San Diego County and who shall not have been employed or engaged
by either party during said five (5) year period. Each such appraiser shall be
appointed within fifteen (15) days after Tenant notifies Landlord of Tenant’s
dispute of Landlord’s determination of Fair Market Rental. The two appraisers
so appointed shall within fifteen (15) days of the date of the appointment of the
last appointed appraiser agree upon and appoint a third appraiser who shall be
qualified under the same criteria set forth above. The three appraisers shall, within
thirty (30) days of the appointment of the third appraiser, reach a decision as
to whether the parties shall use Landlord’s or Tenant’s submitted Fair Market Rental
for the Premises, and shall notify Landlord and Tenant thereof. Such decision
shall be based upon the criteria and variables set forth above. The new Annual
Rent shall thereafter be equal to the Fair Market Rental of the Premises so selected
by the appraisers. The decision of the majority of the three appraisers shall
be binding upon Landlord and Tenant. If either Landlord or Tenant fails to appoint
an appraiser within the time period specified hereinabove, the appraiser
appointed by one of them shall reach a decision, notify Landlord and Tenant
thereof, and such appraisers decision shall be binding
upon Landlord and Tenant. If the two appraisers fail to agree upon and appoint
a third appraiser, the two appraisers shall request the presiding judge of the
Superior Court of San Diego, acting in his private capacity, or the head of the
local chapter of the leading appraisal group, to appoint the third appraiser. Each
party shall pay for its own appraiser and one-half (1/2) of the cost of the
third appraiser.


 


Anything to the contrary
herein notwithstanding, Landlord and Tenant agree that in no event shall Fair
Market Rental for any full calendar month during an Option Period, whether determined
by Landlord, by Tenant or by appraisal, ever be less than the Monthly Rent payable
by Tenant for the full calendar month immediately preceding the Option Term for
which Fair Market Rental is to be determined.


 


2.5           Conditions
Precedent.


 


(a)           Tenant
acknowledges that Landlord is currently in escrow to acquire the Premises and Landlord
intends to deliver possession of Parcel 1 to Tenant within one (1) business day
following the date Landlord acquires the Premises (the “Acquisition Date”). Landlord’s
and Tenant’s obligations under this Lease are conditioned upon Landlord’s acquisition
of the Premises on or before March 1, 1997. If Landlord has not acquired the
Premises by March 1, 1997, then Landlord shall return the first month’s Monthly
Rent and the Security Deposit to Tenant and this Lease shall terminate and neither
party shall have any further obligations to the other hereunder.


 


(b)           Landlord
will not be obligated to deliver possession of the Premises to Tenant (but
Tenant will be liable for Rent if Landlord can otherwise deliver the Premises, or
the applicable portion thereof, to Tenant as required hereunder)


 





















 


until
Landlord has received from Tenant all of the following:(i) a copy of this Lease
fully executed by Tenant; (ii) evidence satisfactory to Landlord of the deposit
of the Security Deposit in accordance with Section 5 below, and the first installment
of Monthly Rent in accordance with Section 3.1 below; and (iii) copies of
policies of insurance or certificates thereof as required under Section 21 of this
Lease.


 


(c)           If, as of the
delivery of possession of the Parcel 1, Landlord’s interest in the Premises is
subject to a mortgage or deed of trust, then Tenant’s obligations hereunder shall
be subject to Landlord’s delivery to Tenant of a commercially reasonable non-disturbance
agreement (which agreement shall recognize Tenant’s offset rights under the
Work Letter). If such non-disturbance agreement has not been delivered to
Tenant by the Actual Commencement Date for Office Building, Tenant may terminate
this Lease by giving Landlord written notice thereof within ten (10) days
thereafter, but prior to Landlord’s delivery of such non-disturbance agreement.


 


3.             Rent.


 


3.1           Annual Rent.
Tenant agrees to pay Landlord, as rent for the Premises, the Annual Rent
designated in Sections 1.8 and 1.9 of the Summary. The Annual Rent shall be
paid by Tenant in twelve (12) equal monthly installments of Monthly Rent in the
amounts designated in Sections 1.8 and 1.9 of the Summary in advance on the
first day of each and every calendar month commencing upon the Respective
Commencement Dates, except that the first full month’s Monthly Rent for the
Office Building and the Manufacturing Building shall, upon execution of this
Lease by Tenant, be delivered into the escrow referred to in Section 2.5(a)
above with instructions for disbursement to Landlord upon (i) Landlord’s
acquisition of the Premises and (ii) the determination of the escrow holder
that it is in a position, without the requirement for Landlord to satisfy any additional
conditions, to deliver to Landlord (and deliver a copy to Tenant) an owner’s
policy of title insurance insuring Landlord as the fee owner of the Property
subject to Tenant’s leasehold estate (as evidenced by a recorded memorandum of
lease) in (a) first priority position or (b) second position, provided that the
policy also evidences the recording of a nondisturbance, recognition and
attornment agreement satisfying the requirements of Section 2.5(c) above
executed by Tenant, Landlord and the holder of the lien shown on the title
report as having priority over Tenant’s leasehold estate. Monthly Rent for any partial
month shall be prorated in the proportion that the number of days this Lease is
in effect during such month bears to the actual number of days in such month.


 


3.2           Additional
Rent; Management Fee. All amounts and charges payable by Tenant under this
Lease in addition to the Annual Rent described in Section 3.1 above shall be
considered additional rent for the purposes of this Lease, and the word “Rent”
in this Lease shall include such additional rent unless the context
specifically or clearly implies that only the Annual Rent is referenced. The
Annual Rent and additional rent shall be paid to Landlord as provided in
Section 7, without any prior demand therefor and without any deduction or
offset, in lawful money of the United States of America. Tenant shall pay to
Landlord as additional rent an annual management fee equal to two percent (2%)
of Annual Rent for the Premises. Such fee shall be payable


 





















 


in twelve (12) equal
monthly installments together with Monthly Rent.


 


3.3           Late
Payments. Late payments of Monthly Rent and/or any item of additional rent will
be subject to interest and a late charge as provided in Sections 22.6 and 22.7
below.


 


4.             Triple-Net Lease. All Rent
shall be absolutely net to Landlord so that this Lease shall yield net to
Landlord, the Rent to be paid each month during the Term of this Lease.
Accordingly, except as specifically set forth herein, all costs, expenses and
obligations of every kind or nature whatsoever relating to the Premises
(excepting the Acquisition Costs) which may arise or become due during the Term
of this Lease with respect to the Premises shall be paid by Tenant. Nothing
herein contained shall be deemed to require Tenant to pay or discharge any
liens or mortgages of any character whatsoever which may exist or hereafter be
placed upon the Premises by an affirmative act or omission of Landlord.


 


5.             Security Deposit. Concurrently
with the execution of this Lease, Tenant shall deposit the Security Deposit
designated in Section 1.10 of the Summary into an investment escrow account
with Morgan Stanley or Montgomery Securities or such other investment company
as is reasonably acceptable to both Landlord and Tenant. The escrow
instructions for such account shall be subject to Landlord’s prior approval and
must provide the following: (i) Landlord will not acquire any rights to the
monies in such account until Landlord’s acquisition of the Premises and
delivery of possession of Parcel 1 as contemplated in Section 2.3 (unless such
delivery does not occur by reason of the failure of Tenant’s obligations
described in Section 2.5(b) above) and Landlord has satisfied the conditions to
disbursement of the first full month’s Monthly Rent set forth in Section 3.1 of
this Lease; (ii) that Landlord shall have a first priority security interest in
the monies in such account, (iii) Landlord will have access to the monies in
such account upon Landlord’s delivery of a certificate to the escrow holder
certifying that (A) there exists an Event of Default, and (B) Landlord is
entitled to receive such payment(s) in the specified amount pursuant to the
terms and conditions of the Lease; (iv) that Tenant shall have the right to
direct the investment decisions for the account provided that all such
investments shall be limited to those customarily utilized in a conservative
pension fund investment portfolio; (v) that escrow shall distribute all
earnings from the account in excess of the then-required Security Deposit
directly to Tenant; and (vi) any funds remaining in the account after thirty
(30) days following the expiration or earlier termination of this Lease for
which Landlord has not requested disbursement pursuant to clause (iii) above
within said thirty (30) day period shall be returned to Tenant. If Landlord
withdraws more funds from the escrow account than necessary to cure an Event of
Default, Landlord shall promptly re-deposit such excess funds into the escrow
account. If Landlord fails to re-deposit such funds into the escrow account
within five (5) Business Days after Landlord realizes or reasonably should have
realized that Landlord had withdrawn excess funds, Landlord shall also be
obligated to pay to Tenant interest on such amount at the Interest Rate from
the expiration of such five (5) Business Day period until the date of
re-deposit. Landlord may not request a withdrawal from the escrow account after
thirty (30) days following the expiration or sooner termination of this Lease.
Tenant hereby acknowledges and agrees that Landlord shall have no liability or responsibility
for any loss of principal or interest not caused by Landlord


 





















 


from such account and
that Tenant shall, within ten (10) days from the date of any such loss, deposit
cash into the account sufficient to restore the Security Deposit to its
then-required amount. The Security Deposit shall be held as security for the full
and faithful performance by Tenant of all of the terms, covenants and
conditions of this Lease to be performed by Tenant during the Term. The
Security Deposit is not, and may not be construed by Tenant to constitute, rent
for the last month or any portion thereof. If Tenant defaults with respect to
any of its obligations under this Lease, Landlord may (but shall not be
required to) use, apply or retain all or any part of the Security Deposit for
the payment of any rent or any other sum in default, or for the payment of any
other amount, loss or damage which Landlord may spend, incur or suffer by
reason of Tenant’s default. If any portion of the Security Deposit is so used
or applied, Tenant shall, within ten (10) days after demand therefor, deposit
cash with Landlord in an amount sufficient to restore the Security Deposit to
its original amount. The Security Deposit (or any balance thereof remaining following
Landlord’s use of the Security Deposit [or portion thereof as permitted by this
Lease] which has not been restored by Tenant) shall be returned to Tenant
within thirty (30) days following the expiration of the Lease Term. If Landlord
sells its interest in the Premises during the Lease Term and if Landlord transfers
to the purchaser the Security Deposit (or balance thereof,
and such purchaser acknowledges receipt thereof, then, upon such sale, Landlord
shall be discharged from any further liability with respect to the Security
Deposit. So long as no Event of Default under this Lease has occurred prior to
the reduction dates set forth below, the required Security Deposit shall be
reduced in accordance with the following schedule if, on or before the date for
any scheduled reduction in the required Security Deposit, Landlord has not
delivered a request for a withdrawal from such account, accompanied by the required
certificate described above : 


 


	
  Month of

  Lease Term respecting the

  Office Building

  	
   

  	
  Required Security Deposit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1-12

  	
   

  	
  $

  	
  2,224,416.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13-24

  	
   

  	
  $

  	
  1,516,277.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  25-36

  	
   

  	
  $

  	
  808,138.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  37-end

  	
   

  	
  $

  	
  100,000.00

  	
   

  



 


Landlord will waive the
requirement to maintain the Security Deposit upon the satisfaction of the
following conditions: (i) at the time of Tenant’s request for such waiver, Tenant
has a tangible net worth of at least Seventy-Five Million Dollars
($75,000,000.00) and no Event of Default exists and (ii) during the immediately
preceding six (6) month period, there has been no Event of Default and Tenant
has maintained a tangible net worth of at least Seventy-Five Million Dollars
($75,000,000.00).


 


6.             Use.


 


6.1           General. Tenant
shall use the Premises solely for the Permitted Use specified in Section 1.1 I
of the Summary, and shall not use or permit the Premises to be used for any
other use or purpose whatsoever.


 





















 


Tenant shall, at its sole
cost and expense, observe and comply with all requirements of any board of fire
underwriters or similar body relating to the Premises, and all laws, statutes,
codes, rules and regulations now or hereafter in force relating to or affecting
the use, occupancy, alteration or improvement (whether structural or non-structural)
of the Premises, including, without limitation, the provisions of Title III of
the Americans with Disabilities Act of 1990 as it pertains to Tenant’s use,
occupancy, improvement and alteration (whether structural or non-structural) of
the Premises. Tenant shall not use or allow the Premises to be used (a) in violation
of any recorded covenants, conditions and restrictions affecting the Premises
or of any law or governmental rule or regulation, or of any certificate of
occupancy issued for the Premises, or (b) for any unlawful purpose. Tenant
shall not cause, maintain or permit any nuisance in, on or about the Premises,
nor commit or suffer to be committed any waste in, on or about the Premises.
Notwithstanding any provision to the contrary herein, Tenant’s obligations to
comply with laws, ordinances, regulations and the like shall not include the obligation
to comply with environmental laws, ordinances, regulations and the like except to
the extent applicable to Hazardous Materials introduced to the Premises by Tenant
or Tenant’s Parties, and Landlord releases Tenant from, and waives any and all
claims against, Tenant for any liability resulting from any Hazardous Materials
not introduced to the Premises by Tenant or Tenant’s Parties.


 


6.2           Signs, Awnings
and Canopies. Tenant shall have the exclusive right to install upon the
Premises such signage as Tenant deems appropriate provided Tenant obtains
approval from all governmental authorities having jurisdiction over the
Premises and from Landlord, which approval shall not be unreasonably withheld
or delayed. Tenant agrees to maintain any such sign, awning, canopy,
decoration, lettering or advertising matter as may be approved by Landlord in
good condition and repair at all times. At the expiration or earlier
termination of this Lease, at Landlord’s election, Tenant shall remove all
signs, awnings, canopies, decorations, lettering and advertising and shall
repair any damage to the Premises resulting therefrom all at Tenant’s sole cost
and expense. If Tenant fails to maintain any such approved sign, awning,
decoration, lettering, or advertising, Landlord may do so following thirty (30)
days’ prior written notice to Tenant and Tenant shall reimburse Landlord for such
cost. If, without Landlord’s prior written consent, Tenant installs any sign,
awning, decoration, lettering or advertising, or fails to remove any such item(s)
at the expiration or earlier termination of this Lease, Landlord may have such
item(s) removed and stored and may repair any damage to the Premises at Tenant’s
expense. The removal, repair and/or storage costs shall bear interest until
paid at the Interest Rate.


 


6.3           Hazardous
Materials. Except for ordinary and general office supplies, such as copier
toner, liquid paper, glue, ink and commo household cleaning materials (some or
all of which may constitute “Hazardous Materials” as defined in this Lease),
neither Tenant nor its agents, employees, subtenants, assignees, licensees,
contractors or invitees (collectively, “Tenant’s Parties”) shall cause any
Hazardous Materials to be brought upon, stored, used, handled, generated,
released or disposed of on, in, under or about the Premises without the prior
written consent of Landlord, which consent Landlord may withhold in its sole but
reasonable discretion. Concurrently with the execution of this Lease, Tenant
agrees to complete and deliver to Landlord an Environmental Questionnaire in
the form of


 





















 


Exhibit “E” attached
hereto. Upon the expiration or earlier termination of this Lease, Tenant agrees
to promptly remove from the Premises, at its sole cost and expense, any and all
Hazardous Materials, including any equipment or systems containing Hazardous
Materials which are installed, brought upon, stored, used, generated or released
upon, in, under or about the Premises by Tenant or any of Tenant’s Parties.


 


To the fullest extent
permitted by law, Tenant agrees to promptly indemnify, protect, defend and hold
harmless Landlord and Landlord’s partners, officers, directors, employees, agents,
successors and assigns (collectively, “Landlord Indemnified Parties”) from and
against any and all claims, damages, judgments, suits, causes of action,
losses, liabilities, penalties, fines, expenses and costs (including, without
limitation, clean-up, removal, remediation and restoration costs, sums paid in
settlement of claims, attorneys’ fees, consultant fees and expert fees and
court costs) which arise or result from the presence of Hazardous Materials on,
in, under or about the Premises and which are caused by Tenant or any of Tenant’s
Parties. Tenant agrees to promptly notify Landlord of any release of Hazardous
Materials which Tenant becomes aware of during the Term of this Lease, whether
caused by Tenant or any other persons or entities. In the event of any release of
Hazardous Materials caused by Tenant or any of Tenant’s Parties, Landlord shall
have the right, but not the obligation, to cause Tenant to immediately take all
steps Landlord deems necessary or appropriate to remediate such release and
prevent any similar future release to the satisfaction of Landlord and Landlord’s
mortgagee(s). At all times during the Term of this Lease, Landlord will have
the right, but not the obligation, to enter upon the Premises to inspect,
investigate, sample and/or monitor the Premises to determine if Tenant is in
compliance with the terms of this Lease regarding Hazardous Materials. As used in
this Lease, the term “Hazardous Materials” shall mean and include any hazardous
or toxic materials, substances or wastes as now or hereafter designated under
any law, statute, ordinance, rule, regulation, order or ruling of any agency of
the State, the United States Government or any local governmental authority, including,
without limitation, asbestos, petroleum, petroleum hydrocarbons and petroleum
based products, urea formaldehyde foam insulation, polychlorinated biphenyis (“PCBs”),
and freon and other chlorofluorocarbons. The provisions of this Section 6.3
will survive the expiration or earlier termination of this Lease.


 


To the fullest extent permitted
by law, Landlord agrees to promptly indemnify, protect, defend and hold
harmless Tenant and Tenant’s partners, officers, directors, employees, agents,
successors and assigns (collectively, “Tenant Indemnified Parties”) from and
against any and all claims, damages, judgments, suits, causes of action,
losses, liabilities, penalties, fines, expenses and costs (including, without
limitation, clean-up, removal, remediation and restoration costs, sums paid in settlement
of claims, attorneys’ fees, consultant fees and expert fees and court costs)
which arise or result from the presence of Hazardous Materials on, in, under or
about the Premises and which are caused by Landlord or any of Landlord’s
employees, agents or contractor (collectively, “Landlord’s Parties”). Notwithstanding
any provision to the contrary in this Lease, if any environmental condition
arises with respect to the Premises for which Tenant has been released from liability
hereunder, and for which Tenant is therefore not responsible under this Lease,
and Landlord does not remediate such environmental condition (which Landlord
shall have the right but not the obligation hereunder to do, unless caused by
Landlord or Landlord’s Parties) as and to the extent required by applicable law
and adequately


 





















 


protect the health and
safety of Tenant and Tenant’s Parties during such remediation activity, and such
environmental condition would pose a material threat to the health and safety
of Tenant’s Parties if unremediated, then (i) Tenant shall have the right to
terminate this Lease, effective upon the date stated in Tenant’s written notice
to Landlord (and Landlord’s Lender) exercising such right to terminate; provided,
however, Landlord (or Landlord’s lender) may rescind such termination by
commencing such remediation and providing for such adequate protection within
ninety (90) days following receipt of such termination notice, and thereafter diligently
pursuing such remediation to completion, and (ii) if such environmental
condition was not caused by Landlord or Landlord’s Parties, then neither Landlord
nor Landlord’s Parties shall have, and Tenant, on behalf of itself only,
releases Landlord and Landlord’s Parties from, any liability arising from such environmental
condition. Notwithstanding the foregoing, Tenant’s termination right under
clause (i) of the preceding sentence shall not apply with respect to the
environmental condition of the Premises disclosed by that certain AEPI Permit By
Rule/Conditionally Authorized Facility Closure Plan amended as of December 11,
1996 and those certain Specifications for Decontamination and Demolition, provided
such environmental condition is remediated in accordance with said plans and specifications.


 


Notwithstanding the
foregoing, Landlord consents to the storage and use at the Premises, and
disposal from the Premises, of certain Hazardous Materials upon the following
conditions:


 


(a)           The Hazardous
Materials are only those materials that are necessary for Tenant’s manufacture
of semiconductor capital equipment at the Premises;


 


(b)           The storage,
use and disposal of the Hazardous Materials complies with all applicable laws,
and no disposal of the Hazardous Materials shall be through the drains of the
Premises or the trash receptacles at the Premises without Landlord’s prior
written consent;


 


(c)           The storage,
use and disposal of the Hazardous Materials does not result
in objectionable odors or health hazards to adjacent owners;


 


(d)           Tenant obtains
and maintains all permits and approvals necessary for the storage, use and
disposal of the Hazardous Materials;


 


(e)           On the first
day of each calendar year during the Term (and, in addition, promptly following
the date Tenant uses, stores or disposes new Hazardous Materials that have not been
previously disclosed to Landlord), Tenant shall deliver to Landlord a
disclosure statement containing the following:


 


(i)            A list
containing, to the best knowledge of Tenant, all Hazardous Materials and the
quantities thereof stored, used or disposed from the Premises during the preceding
calendar year;


 


(ii)           A statement
that (A) the use, storage and disposal of


 





















 


such
Hazardous Materials complies with all applicable laws, (B) Tenant has all
necessary permits and approvals for the use, storage and disposal thereof, and
(C) identifies the method of disposal of such Hazardous Materials; and


 


(iii)          Copies of all
necessary permits and approvals relating to the use, storage and disposal of such
Hazardous Materials to the extent not previously delivered to Landlord;


 


(f)            Tenant shall
immediately advise Landlord in writing of, and provide Landlord a copy of:


 


(i)            Any notice of
violation or potential or alleged violation of any law concerning Hazardous Materials
received by Tenant from any governmental agency;


 


(ii)           Any and all
inquiry, investigation, enforcement, clean-up, removal or governmental or regulatory
actions instituted or threatened relating to Tenant or the Premises; and


 


(iii)          All claims
made or threatened by any third party against Tenant or the Premises relating
to any Hazardous Materials.


 


In the event any of the
preceding conditions are not satisfied, Tenant shall immediately cease the use,
storage and disposal of Hazardous Materials until all such conditions are satisfied.
Landlord’s consent to the use, storage and disposal of such Hazardous Materials
shall not constitute an assumption of the risk respecting the same and Tenant
shall indemnify, protect, defend and hold the Landlord Indemnified Parties
harmless from and against the same as required by this Section 6.3.


 


6.4           Refuse and
Sewage. Tenant agrees not to keep any trash, garbage, waste or other refuse on
the Premises except in sanitary containers and agrees to regularly and
frequently remove same from the Premises. Tenant shall keep all containers or other
equipment used for storage of such materials in a clean and sanitary condition.
Tenant shall, at Tenant’s sole cost and expense, properly dispose of all
sanitary sewage and shall not use the sewage disposal system for the disposal of
anything except sanitary sewage. Tenant shall keep the sewage disposal system free
of all obstructions and in good operating condition. Tenant shall contract
directly for all trash disposal services at Tenant’s sole cost and expense.


 


7.             Payments and Notices. All Rent
and other sums payable by Tenant to Landlord hereunder shall be paid to
Landlord at the address designated in Section 1.1 of the Summary, or to such
other persons and/or at such other places as Landlord may hereafter designate
in writing. Any notice required or permitted to be given hereunder must be in
writing and may be given by personal delivery (including delivery by nationally
recognized overnight courier or express mailing service), facsimile transmission,
or by registered or certified mail, postage prepaid, return receipt requested, addressed
to Tenant at the address(es) designated in Section 1.2
of the Summary, or to Landlord at the address(es) designated in Section 1.1 of the
Summary. Any notice or report addressed to Tenant or to Landlord shall be
deemed to have been given (i) when delivered if given by personal


 





















 


delivery, (ii)
instantaneously upon confirmation of receipt of facsimile if such confirmation
is on or before 5:00 p.m. (recipient’s time) on a Business Day, otherwise on
the next Business Day, (iii) on the date the U.S. Post office certifies
delivery, nondeliverability or refusal of delivery if such notice or report was
deposited in the United States mail, certified, postage prepaid, and (iv) in
all other cases when actually received. Either party may change its address by
giving notice of the same in accordance with this Paragraph. The term “Business
Day”) as used in this Lease shall mean Monday through Friday, excepting those
holidays observed by the U.S. PostalService.


 


8.             Brokers. The parties recognize that the
broker(s) who negotiated this Lease are stated in Section 1.12 of the Summary.
Each party represents and warrants to the other, that, to its
knowledge, no other broker, agent or finder (a) negotiated or was instrumental
in negotiating or consummating this Lease on its behalf, and (b) is or might be
entitled to a commission or compensation in connection with this Lease.
Any broker, agent or finder of Tenant whom Tenant has failed to disclose herein
shall be paid by Tenant. Tenant shall indemnify, protect, defend (by counsel
reasonably approved in writing by Landlord) and hold Landlord harmless from and
against any and all claims, judgments, suits, causes of action, damages, losses,
liabilities and expenses (including attorneys’ fees and court costs) resulting
from any breach by Tenant of the foregoing representation, including, without
limitation, any claims that may be asserted against Landlord by any broker,
agent or finder undisclosed by Tenant herein. Landlord shall indemnify,
protect, defend (by counsel reasonably approved in writing by Tenant) and hold
Tenant harmless from and against any and all claims, judgments, suits, causes
of action, damages, losses, liabilities and expenses (including attorneys’ fees
and court costs) resulting from any breach by Landlord of the foregoing
representation, including, without limitation, any claims that may be asserted
against Tenant by any broker, agent or finder undisclosed by Landlord herein.
The foregoing indemnities shall survive the expiration or earlier termination
of this Lease.


 


9.             Surrender; Holding Over.


 


9.1           Surrender of
Premises. Upon the expiration or sooner termination of this Lease, Tenant shall
surrender all keys for the Premises to Landlord, and Tenant shall deliver exclusive
possession of the Premises to Landlord broom clean and in the same condition and
repair as existed on the date the initial Tenant Improvements were completed,
reasonable wear and tear excepted (and casualty damage excepted if this Lease is
terminated as a result thereof pursuant to Section 18), condemnation excepted
and Hazardous Materials not caused to be present in, on , under or about the Premises
by Tenant or Tenant’s Parties excepted, with all of Tenant’s personal property (and
those items, if any, of Tenant Improvements and Tenant Changes identified by
Landlord pursuant to Section 12.2 below) removed therefrom and all damage
caused by such removal repaired, as required pursuant to Sections 12.2 and 12.3
below. If, for any reason, Tenant fails to surrender the Premises on the expiration
or earlier termination of this Lease, with such


 





















 


removal and repair
obligations completed in the time required by Sections 12.2 and 12.3 below,
then, in addition to the provisions of Section 9.3 below and Landlord’s rights
and remedies under Section 12.4 and the other provisions of this Lease, Tenant
shall indemnify, protect, defend (by counsel reasonably approved in writing by
Landlord) and hold Landlord harmless from and against any and all claims,
judgments, suits, causes of action, damages, losses, liabilities and expenses
(including attorneys’ fees and court costs) resulting from such failure to
surrender, including, without limitation, any claim made by any succeeding
tenant based thereon. The foregoing indemnity shall survive the expiration or earlier
termination of this Lease.


 


9.2           Holding
Over. If Tenant holds over after the expiration or earlier termination of the
Lease Term, then, without waiver of any right on the part of Landlord as a
result of Tenant’s failure to timely surrender possession of the Premises to Landlord,
Tenant shall become a tenant at sufferance only, upon the terms and conditions set
forth in this Lease so far as applicable (including Tenant’s obligation to pay
all costs, expenses and any other additional rent under this Lease), but at a Monthly
Rent equal to: one hundred twenty-five percent (125%) of the Monthly Rent
applicable to the Premises immediately prior to the date of such expiration or
earlier termination. Acceptance by Landlord of rent after such expiration or
earlier termination shall not constitute a consent to
a hold over hereunder or result in an extension of this Lease.


 


10.           Taxes.


 


10.1         Real Property
Taxes. Tenant shall pay all general and special real property taxes,
assessments (including, without limitation, change in ownership taxes or assessments),
liens, bond obligations, license fees or taxes and any similar impositions
in-lieu of other impositions now or previously within the definition of real
property taxes or assessments and any and all assessments under any covenants,
conditions and restrictions affecting the Premises (collectively “Real Property
Taxes”) which may be levied or assessed against the Premises applicable to the period
from the Early Occupancy Date with respect to Parcel 1, and the Actual
Commencement Date for Parking Lot with respect to Parcel 2, until the
expiration or sooner termination of this Lease. Notwithstanding the foregoing
provisions, if the Real Property Taxes are not levied and assessed against the Premises
as separate tax parcels, then Tenant shall pay Tenant’s pro rata share of all
Real Property Taxes which may be levied or assessed by any lawful authority
against the land and improvements of the separate tax parcel on which the
Premises are located. Tenant’s pro rata share under such circumstances shall be
apportioned according to the floor area of the Premises as it relates to the total
leasable floor area of all of the buildings (including the Premises) situated in
the separate tax parcel in which the Premises is located.


 


Tenant reserves the
right to approve any assessment of public improvements that may affect the
Premises to the extent Landlord has such night. Any future assessments for
public improvements


 





















 


may be paid by Landlord
in full or in installments, but Tenant’s contribution will be determined and payable
based on the assumption that such assessments were allowed to go to bond and became
payable in installments.


 


All Real Property Taxes
for the tax year in which the Early Occupancy Date and the Actual Commencement
Date for Parking Lot occur and for the tax year in which this Lease terminates shall
be apportioned and adjusted so that Tenant shall not be responsible for any Real
Property Taxes for a period of time occurring prior to the Early Occupancy Date
and the Actual Commencement Date for Parking Lot or subsequent to the
expiration of the Lease term.


 


Tenant agrees to pay to
the taxing authority entitled thereto the total Real Property Taxes due. Any of
said payments to be made directly to the taxing authority shall be made prior to
the delinquency date established by the taxing authority, and Tenant shall, concurrently
with such payment, deliver evidence of such payment to Landlord. Failure of
Tenant to pay said Real Property Taxes as and when herein specified shall, in
addition to all other rights and remedies of Landlord hereunder, subject Tenant
to any fine, penalty, interest, or cost which Landlord may incur as a result
thereof. Tenant shall, within thirty (30) days after demand, reimburse Landlord
for any such fine, penalty, interest, or cost, together with interest thereon
at the Interest Rate.


 


If at any time during
the Term under the laws of the United States, or the state, county,
municipality, or any political subdivision thereof in which the Premises is
located, a tax or excise on rent or any other tax however described is levied or
assessed by any such political body against Landlord on account of rent payable
to Landlord hereunder or any tax based on or measured by expenditures made by
Tenant on behalf of Landlord, such tax or excise shall be considered “Real
Property Taxes” for purposes of this Section 10.1, and shall be payable in full
by Tenant. Such taxes or excises shall be payable within ten (IO) days after Tenant’s
receipt of the tax bill therefor from Landlord.


 


10.2         Personal
Property Taxes. Tenant shall be liable for, and shall pay before delinquency,
all taxes and assessments (real and personal) levied against (a) any personal
property or trade fixtures placed by Tenant in or about the Premises (including
any increase in the assessed value of the Premises based upon the value of any
such personal property or trade fixtures); and (b) any Tenant Improvements or
alterations in the Premises (whether installed and/or paid for by Landlord or
Tenant). If any such taxes or assessments are levied against Landlord or
Landlord’s property, Landlord may, after written notice to Tenant (and under proper
protest if requested by Tenant) pay such taxes and assessments, and Tenant
shall reimburse Landlord therefor within ten (10) business days after demand by
Landlord; provided, however, Tenant, at its sole cost and expense, shall have
the right, with Landlord’s cooperation, to bring suit in any court of competent
jurisdiction to recover the amount of any such taxes and assessments so paid
under protest.


 





















 


11.           Repairs.


 


11.1         Tenant’s
Repair Obligations. Tenant shall at all times and at Tenant’s sole cost and
expense, keep, maintain, clean, repair, replace and preserve the Premises and
all parts thereof, both structural and non-structural, including, without limitation,
utility meters, plumbing, pipes and conduits, all heating, ventilating and air conditioning
systems located within the Premises, all fixtures, furniture and equipment,
Tenant’s signs, if any, locks, closing devices, security devices, windows,
window sashes, casements and frames, floors and floor coverings, shelving,
restrooms, ceilings, interior and exterior walls, roof, foundations, skylights,
interior and demising walls, doors, electrical and lighting equipment,
sprinkler systems, parking areas, driveways, walkways, parking lots, loading
dock areas and doors, rail spur areas, fences, signs, lawns and landscaping, if
any, and any Tenant Improvements, Tenant Changes or other alterations,
additions and other property and/or fixtures located within the Premises in
good condition and repair, except for reasonable wear and tear, casualty damage
(if Tenant is not obligated to repair hereunder), condemnation and Hazardous Materials
not introduced to, in, on, under or about the Premises by Tenant or Tenant’s
Parties. Tenant’s repair and maintenance obligations shall include, but not be
limited to, slurry coating the parking areas of Parcel 1 and the Parking Lot
every thirty (30) months; parking area and driveway sweeping and repairing; and
responsibility for painting. Tenant agrees to procure and maintain maintenance
contracts for all heating, ventilating and air conditioning systems with
reputable contractors reasonably approved by Landlord. Such maintenance and repairs
shall be performed with due diligence, lien-free and in a good and workmanlike
manner, by licensed contractor(s) which are selected by Tenant and approved by
Landlord, which approval Landlord shall not unreasonably withhold or delay. Except
to the extent provided in Section 1.2 above with respect to the construction of
the Parking Lot Improvements, Landlord shall have no obligation to alter,
remodel, improve, repair, renovate, redecorate or paint all or any part of the
Premises.


 


11.2         Landlord’s
Repair Rights. Tenant waives the right to make repairs at Landlord’s expense
under any law, statute or ordinance now or hereafter in effect (including the provisions
of California Civil Code Section 1942 and any successive sections or statutes of
a similar nature). If Tenant fails to perform Tenant’s obligations under
Section 11.1 hereof, or under any other provision of this Lease, then Landlord shall
have the option (but not the obligation) to enter upon the Premises after ten
(10) days’ prior written notice to Tenant, or in the case of an emergency immediately
without prior notice, to perform such obligations on Tenant’s behalf necessary
to return the Premises to good order, condition and repair. The costs incurred by
Landlord pursuant to this Section 11.2 shall become due and payable to
Landlord, upon demand.


 


11.3         Landlord’s Contribution
to Certain Expenditures. If any


 





















 


replacement obligation
of Tenant under Section 11.1 with respect to a Basic Element would normally be
capitalized under normal accounting practice and is in excess of Twenty-Five Thousand
Dollars ($25,000.00), and if as a result of such expenditure the useful life of
the Basic Element (as such useful life is based on the estimated actual life pursuant
to generally accepted accounting practices) will extend beyond the Term, then, subject
to the requirements set forth in this Section 11.3, Landlord will reimburse Tenant
for Landlord’s prorata share thereof within thirty (30) days following the
expiration or sooner termination of this Lease; provided, however, Landlord
will have no such reimbursement obligation if this Lease terminates as a result
of an Event of Default. Landlord’s prorata share of such expenditure shall be a
fraction, the numerator of which is the number of months remaining on the
useful life of the Basic Element after the expiration or sooner termination of
this Lease, and the denominator of which is the total number of months of the useful
life of the Basic Element. As a condition precedent to Landlord’s obligation to
reimburse Tenant for a prorata share of any such expenditure, Tenant shall
first obtain Landlord’s prior written approval of the contractor, the plans and
specifications, the amount of any such expenditure and the useful life
resulting from such expenditure, which approval shall not be unreasonably withheld
or delayed. Upon such approval, either party shall, at the other party’s
request, enter into an amendment of this Lease identifying the amount subject
to reimbursement by Landlord. The “Basic Elements” are the foundations and
structural walls of the Premises, HVAC equipment and the roof.


 


12.           Alterations.


 


12.1         Tenant
Changes; Conditions.


 


(a)           Tenant shall
not make any alterations, additions, improvements or decorations to the
Premises (collectively, “Tenant Changes,” and individually, a “Tenant Change”) unless
Tenant first obtains Landlord’s prior written approval thereof, which approval Landlord
shall not unreasonably withhold or delayed. Notwithstanding the foregoing,
Landlord’s prior approval shall not be required for any Tenant Change which
satisfies all of the following conditions (hereinafter a “Pre-Approved Change”):
(i) the costs of such Tenant Change does not exceed Fifty Thousand Dollars ($50,000.00);
(iii) Tenant delivers to Landlord final plans, specifications and working
drawings for such Tenant Change at least ten (1 0) days prior to commencement of
the work thereof; (iv) Tenant and such Tenant Change otherwise satisfy all other
conditions set forth in this Section 12.1; and (v) the Tenant Change does not
affect the structural, mechanical, life-safety or exterior elements of the
Premises.


 


(b)           All Tenant
Changes shall be performed: (i) in accordance with the approved plans,
specifications and working drawings; (ii) lien-free and in a good and
workmanlike manner; (iii) in compliance with all applicable laws, rules and
regulations of all governmental agencies and authorities including, without
limitation, the provisions of Title III of the Americans with


 





















 


Disabilities
Act of 1990; and (iv) at such times, in such manner and subject to such rules
and regulations as Landlord may from time to time reasonably designate.


 


(c)           Throughout
the performance of the Tenant Changes, Tenant shall obtain, or cause its
contractors to obtain, workers compensation insurance and commercial general liability
insurance in reasonable amounts.


 


12.2         Removal of Tenant
Changes and Tenant Improvements. All Tenant Changes and the initial Tenant Improvements
in the Premises (whether installed or paid for by Landlord or Tenant), shall become
the property of Landlord and shall remain upon and be surrendered with the
Premises at the end of the Term of this Lease; provided, however, (i) Tenant shall
remove those items of the initial Tenant Improvements, if any, designated for removal
pursuant to the Work Letter and (ii) Landlord may, by written notice delivered to
Tenant on or before the expiration of the Lease Term (or upon any sooner
termination of this Lease) identify those items of Tenant Changes which Landlord
shall require Tenant to remove at the end of the Term of this Lease (however, if
Tenant, prior to the installation of any Tenant Changes, requested in writing
that Landlord identify whether the proposed Tenant Changes must be removed at the
expiration or termination of this Lease [which notice further informed Landlord
that Landlord’s failure to respond within ten (1 0) days would result in Landlord’s
waiver of the right to require removal of the Tenant Changes], and Landlord did
not give Tenant written notice within ten (1 0) days thereafter that Landlord would
require the removal of any such items, then Tenant will not be required to
remove the same at the expiration or termination of this Lease). If Landlord
requires Tenant to remove any such items as described above, Tenant shall, at
its sole cost, remove the identified items on or before the later to occur of
(i) the expiration or sooner termination of this Lease or (ii) thirty (30) days
following Tenant’s receipt of written notice of such requirement, and repair
any damage to the Premises caused by such removal (or, at Landlord’s option,
shall pay to Landlord all of Landlord’s reasonable costs of such removal and
repair provided that Landlord provides Tenant with reasonable evidence that Landlord
incurred such costs). Notwithstanding the thirty (30) day time period for
Tenant’s removal specified above, if such removal cannot be completed without
incurring overtime charge, such time period shall be extended by the period reasonably
required to permit Tenant to complete such removal and repair (if any repair is
required).


 


12.3         Removal of Personal
Property. All articles of personal property owned by Tenant or installed by
Tenant at its expense in the Premises (including business and trade fixtures, furniture
and movable partitions) shall be, and remain, the property of Tenant, and shall
be removed by Tenant from the Premises, at Tenant’s sole cost and expense, on
or before the expiration or sooner termination of this Lease. Tenant shall
repair any damage caused by such removal.


 


12.4         Tenant’s
Failure to Remove. If Tenant fails to remove by


 





















 


the expiration or sooner
termination of this Lease all of its personal property, or if Tenant fails to
remove any items of Tenant Improvements or Tenant Changes identified by
Landlord for removal pursuant to, and within the time required by, Section 12.2
above, Landlord may, (without liability to Tenant for loss thereof), at Tenant’s
sole cost and in addition to Landlord’s other rights and remedies under this
Lease, at law or in equity: (a) remove and store such items in accordance with applicable
law; and/or (b) upon ten (1 0) days’ prior notice to Tenant, sell all or any
such items at private or public sale for such price as Landlord may obtain as
permitted under applicable law. Landlord shall apply the proceeds of any such
sale to any amounts due to Landlord under this Lease from Tenant (including Landlord’s
attorneys’ fees and other costs incurred in the removal, storage and/or sale of
such items), with any remainder to be paid to Tenant.


 


13.           Liens. Tenant shall
not permit any mechanic’s, materialmen’s or other liens to be filed against all
or any part of the Premises, nor against Tenant’s leasehold interest in the Premises,
by reason of or in connection with any repairs, alterations, improvements or other
work contracted for or undertaken by Tenant or any other act or omission of Tenant
or Tenant’s agents, employees, contractors, licensees or invitees. Tenant shall,
at Landlord’s request, provide Landlord with enforceable, conditional and final
lien releases (and other reasonable evidence reasonably requested by Landlord to
demonstrate protection from liens) from all persons furnishing labor and/or materials
with respect to the Premises. Landlord shall have the right at all reasonable
times to post on the Premises and record any notices of non-responsibility which
it deems necessary for protection from such liens. If any such liens are filed,
Tenant shall, at its sole cost, immediately cause such lien to be released of
record or bonded so that it no longer affects title to the Premises. If Tenant
fails to cause such lien to be so released or bonded within the earlier to
occur of (i) five (5) days prior to the date the lien may be foreclosed upon or
(ii) twenty (20) days after Tenant has actual notice of the filing thereof,
Landlord may, without waiving its rights and remedies based on such breach, and
without releasing Tenant from any of its obligations, cause such lien to be
released by any means it shall deem proper, including payment in satisfaction of
the claim giving rise to such lien. If Landlord acquires knowledge that any
such lien has been filed against the Premises, Landlord will promptly give Tenant
written notice thereof. Tenant shall pay to Landlord within five (5) days after
receipt of invoice from Landlord, any sum paid by Landlord to remove such liens,
together with interest at the Interest Rate from the date of such payment by
Landlord.


 


14.           Assignment and Subletting.


 


14.1         Restriction
on Transfer. Tenant will not assign or encumber this Lease in whole or in part,
nor sublet all or any part of the Premises, without the prior written consent
of Landlord, which consent Landlord will not unreasonably withhold or delay, except
as provided in this Section 14. The consent by Landlord to any


 





















 


assignment, encumbrance
or subletting shall not constitute a waiver of the necessity for such consent to
any subsequent assignment or subletting. This prohibition against assigning or subletting
shall be construed to include a prohibition against any assignment or
subletting by operation of law. If this Lease is assigned by Tenant, or if the
Premises or any part thereof are sublet or occupied by any person or entity
other than Tenant, Landlord may collect rent from the assignee, and apply the net
amount collected to the rent herein reserved, but no such assignment,
subletting, occupancy or collection shall be deemed a waiver on the part of Landlord,
or the acceptance of the assignee, subtenant or occupant as Tenant, or a
release of Tenant from the further performance by Tenant of covenants on the part
of Tenant herein contained unless expressly made in writing by Landlord. Irrespective
of any assignment or sublease, Tenant shall remain fully liable under this
Lease and shall not be released from performing any of the terms, covenants and
conditions of this Lease. Without limiting in any way Landlord’s right to
withhold its consent on any reasonable grounds, it is agreed that Landlord will
not be acting unreasonably in refusing to consent to an assignment or sublease if,
in Landlord’s opinion, (i) the net worth or financial capabilities of such assignee
or subtenant is less than that of Tenant at the date hereof, (ii) the proposed
assignee does not have the financial capability to fulfill the obligations
imposed by the assignment, (iii) the proposed assignment or sublease involves a
change of use of the Premises from that specified herein, or (iv) the proposed assignee
is not, in Landlord’s reasonable opinion, of reputable or good character. Any
proposed assignee or subtenant which Landlord does not disapprove shall be
deemed a “Permitted Business.” If Tenant assigns this Lease or sublets the Premises
to a third party who is not in any way affiliated or connected with Tenant by
way of a merger, reorganization, consolidation or otherwise, fifty percent
(50%) of any rent, additional rent or other compensation paid to Tenant in
addition to the Rent payable to Landlord as set forth in this Lease shall be
paid by Tenant to Landlord as additional rent. In calculating excess rent or
other consideration which may be payable to Landlord under this Section, Tenant
will be entitled to deduct commercially reasonable third party brokerage
commissions and attorneys’ fees and other amounts reasonably and actually
expended by Tenant in connection with such assignment or subletting if acceptable
written evidence of such expenditures is provided to Landlord. If Tenant is a
corporation, or is an unincorporated association or partnership, the transfer,
assignment or hypothecation of any stock or interest in such corporation,
association or partnership in the aggregate in excess of forty-nine percent
(49%) shall be deemed an assignment within the meaning and provisions of this Section
14.1. Notwithstanding any provision to the contrary in this Lease, Tenant may,
without Landlord’s prior written consent and without any participation by
Landlord in assignment and subletting proceeds, sublet the Premises or assign
this Lease to: (i) a subsidiary, affiliate, division or corporation controlled or
under common control with Tenant-, (ii) a successor corporation related to Tenant
by merger, consolidation, nonbankruptcy reorganization, or government action; or
(iii) a purchaser of substantially all of Tenant’s assets (collectively,


 





















 


“Permitted Assignees”), provided
that, within ten (10) days following the effective date of such transaction, Tenant
gives Landlord written notice of the transaction and sufficient information to evidence
that the transaction satisfies the foregoing requirements, together with the Permitted
Assignee’s assumption of Tenant’s obligations hereunder in the case of an assignment.
For the purpose of this Lease, sale or transfer of Tenant’s capital stock
through any public exchange shall not be deemed an assignment, subletting, or
any other transfer of the Lease or the Premises. Landlord’s consent to any proposed
assignment or subletting shall not be unreasonably withheld and, if not given or
withheld within fifteen (1 5) days following Landlord’s receipt of the Transfer
Notice, shall be deemed given, provided that the Transfer Notice informs Landlord
that the failure to respond within fifteen (15) days will be deemed Landlord’s
consent.


 


14.2         Transfer
Notice. If Tenant desires to effect an assignment, encumbrance or subletting (a
“Transfer”), then at least thirty (30) days prior to the date when Tenant
desires the Transfer to be effective (the “Transfer Date”), Tenant agrees to give
Landlord a notice (the “Transfer Notice”), stating the name, address and
business of the proposed assignee, sublessee or other transferee (sometimes
referred to hereinafter as “Transferee”), reasonable information (including references)
concerning the character, ownership, and financial condition of the proposed Transferee,
the Transfer Date, any ownership or commercial relationship between Tenant and
the proposed Transferee, and the consideration and all other material terms and
conditions of the proposed Transfer, all in such detail as Landlord may
reasonably require.


 


14.3         Landlord’s
Options. Within fifteen (15) days of Landlord’s receipt of any Transfer Notice,
and any additional information requested by Landlord concerning the proposed Transferee’s
financial responsibility, Landlord will notify Tenant of its election to do one
of the following: (i) consent to the proposed Transfer; or (ii) refuse such consent,
which refusal shall be on reasonable grounds.


 


14.4         Additional
Conditions. Within ten (10) days following any Transfer, Tenant shall deliver
to Landlord of a true copy of the fully executed instrument of assignment,
sublease, transfer or hypothecation, in form and substance reasonably
satisfactory to Landlord. No Transfer will release Tenant of Tenant’s obligations
under this Lease or alter the primary liability of Tenant to pay the Rent and
to perform all other obligations to be performed by Tenant hereunder. Consent by
Landlord to one Transfer will not be deemed consent to any subsequent Transfer.
In the event of default by any Transferee of Tenant or any successor of Tenant in
the performance of any of the terms hereof, Landlord may proceed directly
against Tenant without the necessity of exhausting remedies against such Transferee
or successor. If Tenant effects a Transfer or requests the consent of Landlord to
any Transfer (whether or not such Transfer is consummated), then, upon demand,
and as a condition precedent to Landlord’s consideration of the proposed
assignment or sublease,


 





















 


Tenant agrees to pay
Landlord a non-refundable administrative fee of Five Hundred Dollars ($500.00),
plus Landlord’s reasonable attorneys’ fees and costs incurred by Landlord in
reviewing such proposed assignment or sublease.


 


15.           Entry by Landlord. Landlord
and its employees and agents shall at all reasonable times have the right to enter
the Premises to inspect the same, to exhibit the Premises to prospective lenders
or purchasers (or during the last year of the Term, to prospective tenants), to
post notices of non- responsibility, and/or to alter, improve or repair the Premises
as contemplated by Section 11.2 in the event Tenant fails to perform its obligations
under Section 11.1, all without being deemed guilty of or liable for any breach
of Landlord’s covenant of quiet enjoyment or any eviction of Tenant, and without
abatement of rent. In exercising such entry rights, Landlord shall endeavor to minimize,
as reasonably practicable, the interference with Tenant’s business, and shall provide
Tenant with reasonable advance written notice of such entry (except in emergency
situations). Any entry to the Premises obtained by Landlord by any of said
means or otherwise shall not under any circumstances be construed or deemed to
be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction
of Tenant from the Premises or any portion thereof, or grounds for any abatement
or reduction of Rent and Landlord shall not have any liability to Tenant for
any damages or losses on account of any such entry by Landlord except, subject
to the provisions of Sections 21.1 and 23, to the extent of Landlord’s
negligence or willful misconduct.


 


16.           Utilities and Services. Tenant
shall be solely responsible for and shall promptly pay all charges for heat, air
conditioning, water, gas, electricity or any other utility used, consumed or provided
in, furnished to or attributable to the Premises directly to the supplying
utility companies. Tenant shall reimburse Landlord within ten (10) days of billing
for fixture charges and/or water tariffs, if applicable, which are charged to Landlord
by local utility companies. Landlord will notify Tenant of this charge as soon
as it becomes known. This charge will increase or decrease with current charges
being levied against Landlord or the Premises by the local utility company, and
will be due as additional rent. In no event shall Rent abate or shall Landlord
be liable for any interruption or failure in the supply of any such utility
services to Tenant.


 


17.           Indemnification and Exculpation.


 


17.1         Tenant’s
Assumption of Risk and Waiver. Except to the extent such matter is attributable
to the breach of this Lease or the negligence or willful misconduct of Landlord
or Landlord’s Parties (but subject to the waivers and releases in Section 21), Landlord
shall not be liable to Tenant, Tenant’s employees, agents or invitees for: (i)
any damage to property of Tenant, or of others, located in, on or about the
Premises, (ii) the loss of or damage to any property of Tenant or of others by theft
or otherwise, (iii) any injury or damage to persons or property


 





















 


resulting from fire, explosion,
falling plaster, steam, gas, electricity, water, rain or leaks from any part of
the Premises or from the pipes, appliance of plumbing works or from the roof, street
or subsurface or from any other places or by dampness or by any other cause of
whatsoever nature, or (iv) any such damage caused by other persons in the
Premises, occupants of adjacent property, or the public, or caused by
operations in construction of any private, public or quasi-public work. Landlord
shall in no event be liable for any consequential damages or loss of business or
profits and Tenant hereby waives any and all claims for any such damages. All
property of Tenant kept or stored on the Premises shall be so kept or stored at
the sole risk of Tenant and Tenant shall hold Landlord harmless from any claims
arising out of damage to the same, including subrogation claims by Tenant’s insurance
carriers, unless such damage shall be caused by the breach of this Lease or the
negligence or willful misconduct of Landlord or Landlord’s Parties and such damage
is not covered by the insurance required to be maintained by Tenant under this
Lease. Landlord or its agents shall not be liable for interference with the
light or other intangible rights.


 


17.2         Tenant’s
Indemnification of Landlord. Except to the extent such matter is caused by the
breach of this Lease or the negligence or misconduct of Landlord or Landlord’s
Parties (but subject to the waivers and releases in Section 21), Tenant shall be
liable for, and shall indemnify, defend, protect and hold Landlord and Landlord’s
partners, officers, directors, employees, agents, successors and assigns (collectively,
“Landlord Indemnified Parties”) harmless from and against, any and all claims, damages,
judgments, suits, causes of action, losses, liabilities and expenses, including
attorneys’ fees and court costs (collectively, “Indemnified Claims”), arising
or resulting from (a) any act or omission of Tenant or any of Tenant’s Parties;
(b) the use of the Premises and conduct of Tenant’s business by Tenant or any
Tenant Parties, or any other activity, work or thing done, permitted or
suffered by Tenant or any Tenant Parties, in or about the Premises; and/or (c)
any default by Tenant of any obligations on Tenant’s part to be performed under
the terms of this Lease. In case any action or proceeding is brought against
Landlord or any Landlord Indemnified Parties by reason of any such Indemnified
Claims, Tenant, upon notice from Landlord, shall defend the same at Tenant’s
expense by counsel reasonably approved in writing by Landlord, which approval shall
not be unreasonably withheld.


 


17.3         Survival; No
Release of Insurers. Tenant’s indemnification obligation under Section 17.2,
shall survive the expiration or earlier termination of this Lease. Tenant’s covenants,
agreements and indemnification in Sections 17.1 and 17.2 above, are not intended
to and shall not relieve any insurance carrier of its obligations under
policies required to be carried by Tenant, pursuant to the provisions of this
Lease.


 


18.           Damage or Destruction.


 


18.1         Obligation
to Restore. Except as set forth below, in case


 





















 


of damage to or
destruction of the Premises, whether or not by a risk required to be covered by
insurance as set forth in Section 20 of this Lease, this Lease shall not
terminate and Tenant shall promptly restore, rebuild, replace or repair (hereinafter
referred to as “Restore” or “Restoration”) the Premises to substantially the
same condition as existed immediately prior to such damage or destruction. Such
Restoration shall be commenced promptly but in no event later than ninety (90)
days after the casualty and shall thereafter be prosecuted with due diligence.


 


Notwithstanding the
foregoing or any provision to the contrary in this Lease, the following shall
apply to and modify Tenant’s obligations to Restore the Premises and/or any
trade fixtures or equipment thereon or therein owned by Tenant, provided that Tenant,
at Tenant’s option may exercise any right to terminate pursuant to the last
grammatical paragraph of Section 18.1:


 


(a)           If Tenant
has carried insurance in the amounts, types and with insurance companies
required by this Lease, and the insurance company(ies) issuing such policy(ies)
fail(s) (through no fault of Tenant) to make the appropriate insurance proceeds
available within ninety (90) days following a casualty to which such insurance
applies (or if Landlord has elected to maintain the All Risks insurance for the
Premises pursuant to Section 20.4 and either fails to so maintain such insurance
or if the insurance company fails, through no fault of Tenant, to make the
appropriate insurance proceeds available within ninety (90) days following a
casualty to which such insurance applies), and there is no reasonable expectation
that such proceeds will be made available in a timely manner, then Tenant shall
have no obligation to Restore and Tenant shall have the right to terminate this
Lease (i) if Landlord (or Landlord’s lender) does not notify Tenant, within
sixty (60) days following the date Tenant gives Landlord (and Landlord’s
lender) written notice of such failure on the part of the insurance company(ies)
(the “Insurance Failure Notice”), that Landlord (or Landlord’s lender) will
Restore the Premises within three hundred (300) days following the Insurance
Failure Notice or (ii) if Landlord (or Landlord’s lender) undertakes Restoration
but fails to complete such Restoration within three hundred (300) days
following the Insurance Failure Notice. If Landlord (or Landlord’s lender) does
so Restore the Premises and Tenant does not terminate this Lease, then Tenant will
Restore its trade fixtures and equipment. Notwithstanding any provision to the
contrary in this Lease, if Landlord has elected to carry the All-Risk insurance
under Section 20.4 and the deductible exceeds the deductible Tenant is permitted
to maintain hereunder, Tenant shall not be required to pay all or any portion
of such excess deductible.


 


(b)           If casualty damage
Restored by Tenant is uninsured (any” deductible” amount applicable to any insurance
policy covering the casualty in question shall be deemed to mean that the casualty
damage is uninsured to the extent of the deductible) to the extent of ten
percent (1 0%) or more of the full replacement cost of the building or buildings
in


 





















 


question,
and Tenant Restores (or intends to Restore) such casualty damage, then Tenant shall
have the onetime option, upon written notice to Landlord given within one hundred
twenty (120) days following such casualty event, to elect to extend the
then-current Term for an additional ten (10) year period upon all of the terms
and conditions of this Lease (including the right to exercise any options to
extend then remaining and to occupy the Premises pursuant to any previously
exercised options), provided that the Monthly Rent for any such extended Term
shall be equal to the Monthly Rent in effect during the year immediately
preceding such extended Term, increased by an amount equal to three percent
(3%) of such previous year’s Monthly Rent, and Monthly Rent for each subsequent
year of said extended Term shall be increased by an amount equal to three
percent (3%) of the preceding year’s Monthly Rent. There shall be no adjustment
to fair market rent in connection with any such extended Term.


 


Notwithstanding the
foregoing, however, in the case of damage to or destruction of the Premises
during the last eighteen (18) months of the Term that will render the Premises,
in Tenant’s reasonable opinion, inaccessible or unusable for purposes of conducting
Tenant’s business for more than ninety (90) days, Tenant may elect to terminate
this Lease by giving Landlord written notice of such election within thirty
(30) days following the casualty, in which event Tenant shall have no
obligation to Restore the Premises; provided, however, Tenant shall deliver any
insurance proceeds to Landlord in accordance with Section 18.5 below.


 


18 2         Reconstruction
and Repair Requirements. Tenant shall obtain Landlord’s prior
approval of all plans for Restoration work performed by Tenant, which approval
shall not be unreasonably withheld or delayed.


 


18.3         No Rent
Abatement During Reconstruction. There shall be no Rent abatement during
Restoration of the Premises or during that period after any casualty and prior
to commencement of Restoration.


 


Notwithstanding the
foregoing, in the event Landlord elects to maintain rental loss insurance
pursuant to Section 20.4, then the following shall apply: In the event that as a
result of any casualty damage to the Premises, Tenant is prevented from using, and
does not use, the Premises or does not use some portion thereof, then the Rent
shall be abated or reduced, as the case may be, during the period that Tenant continues
to be so prevented from using and does not use the Premises or does not use some
portion thereof, in the proportion that the rentable square feet of the portion
of the Premises that Tenant is prevented from using, and does not use, bears to
the total rentable square feet of the Premises; ‘provided, however, Tenant shall
only be entitled to such abatement so long as Tenant is complying with its
Restoration obligations under Section 1 B. 1 and in no event may such abatement
continue beyond the later to occur of (i) twelve (12) months following the
casualty or (ii)


 





















 


the expiration date
of coverage under Landlord’s rental loss insurance policy. Notwithstanding the
foregoing to the contrary, if the damage is due to the willful or intentional
misconduct of Tenant or any Tenant Parties, there shall be no abatement of Rent
unless such abatement (i) is covered by the rental loss insurance maintained by
Landlord or (ii) would have been covered by the rental insurance loss insurance
required to be maintained under Section 20.4 in the event Landlord has failed
to maintain such insurance.


 


18.4         Adjustment of
Loss and Disbursement of Insurance Proceeds upon Restoration. Except for
Restoration that is reasonably expected to cost less than Fifty Thousand
Dollars ($50,000), any adjustment of the loss with the insurance company(ies) by Tenant must be made with Landlord’s consent,
which will not be unreasonably withheld or delayed. If Landlord elects to
maintain All Risk insurance pursuant to Section 20.4, then Landlord shall adjust
any loss covered thereby subject to Tenant’s consent, which will not be
unreasonably withheld or delayed. All proceeds of the insurance policies
maintained pursuant to Section 20.1 (a) and/or Section 20.4 (“Proceeds”) shall be
deposited with a depository acceptable to Landlord and Tenant (the “Depository”).
If the Proceeds are insufficient to cover the anticipated cost of Restoration, Tenant
shall deposit with the Depository prior to the commencement of Restoration
funds in the amount of such deficiency. The Depository shall disburse the Proceeds
and Tenant’s funds, if applicable, during the course of Restoration in accordance
with customary construction disbursements, including a ten percent (10%) retention.
If, after the Restoration has been completed in accordance
with the terms of this Lease, there are remaining funds held by the Depository,
then such funds (after first deducting from such funds the fees and expenses of
the Depository) shall be delivered to Tenant. If there are not sufficient
funds remaining to pay for the Depository’s fees and expenses, Tenant shall be
responsible for the payment of same.


 


18.5         Disbursement
of Insurance Proceeds upon Termination. Upon any termination of this Lease
under the provisions of this Article 18, all proceeds from insurance policies
maintained under Section 20 shall be disbursed and paid to Landlord, except to
the extent such proceeds are paid by one or more insurers with respect to
Tenant’s furniture, equipment trade fixtures and other personal property and
those items of Tenant Changes and Tenant Improvements that must be removed from
the Premises at the expiration or earlier termination of this Lease pursuant to
Section 12.2.


 


18.6         Waiver of
Termination. The agreements contained in this Article 10 provide a material
part of the consideration for this Lease and in bargaining for and obtaining
its rights under this Article 18, Tenant waives any right to terminate this
Lease under Section 1932 and/or 1933 of the Civil Code of California, or any similar
statute or law now or hereafter in force.


 





















 


19.           Eminent Domain.


 


19.1         Total or Partial
Taking. In case all of the Premises, or such part thereof as shall materially
and substantially interfere with Tenant’s ability to conduct its business upon
the Premises, shall be taken for any public or quasi-public purpose by any lawful
power or authority by exercise of the right of appropriation, condemnation or
eminent domain, or sold to prevent such taking, Tenant shall have the right to
terminate this Lease effective as of the date possession is required to be
surrendered to said authority. Tenant shall not assert any claim against Landlord
or the taking authority for any compensation because of such taking, and
Landlord shall be entitled to receive the entire amount of any award without
deduction for any estate or interest of Tenant; provided, however, in the event
of such a taking, Tenant shall be entitled to such portion of the award as shall
be attributable to the loss of the unamortized cost of the improvements to the
Premises made and paid for by Tenant pursuant to Exhibit “C” (such amortization
being the same as that used by Tenant for federal income tax purposes), relocation
costs, goodwill and for damage to, or the cost of removal of, Tenant’s personal
property. In the event the amount of property or the type of estate taken shall
not materially and substantially interfere with the ability of Tenant to
conduct its business upon the Premises, Landlord shall be entitled to the
entire amount of the award without deduction for any estate or interest of
Tenant, Landlord shall restore the Premises to substantially their same condition
prior to such partial taking to the extent of any award proceeds received by
Landlord, and a fair and equitable abatement shall be made to Tenant for the
Annual Rent corresponding to the time during which, an (i to the part of the
Premises of which, Tenant shall be so deprived on account of such taking and restoration.


 


19.2         Temporary
Taking. In the event of taking of the Premises or any part thereof for
temporary use, (i) this Lease shall be and remain unaffected thereby and Rent
shall not abate, and (ii) Tenant shall be entitled to receive for itself such portion
or portions of any award made for such use with respect to the period of the taking
which is within the Lease Term. For purposes of this Section 19.2, a temporary taking
shall be defined as a taking for a period of one (1) year or less.


 


19.3         Waiver of Termination.
Tenant and Landlord waive any right to terminate this Lease under Section
1265.130 of the California Code of Civil Procedure, or any similar statute or
law now or hereafter in force.


 


20.           Tenant’s Insurance.


 


20.1         Types of
Insurance. On or before the earlier of the Early Occupancy Date (for Parcel 1),
the Actual Commencement Date for Parking Lot (for Parcel 2) or the date Tenant
commences or causes to be commenced any work of any type in or on any portion
of the Premises, and continuing during the entire Term, Tenant shall obtain and
keep in full force and effect respecting Parcel 1 or Parcel 2 or both, as
applicable, the following insurance:


 





















 


(a)           All Risk insurance,
including fire and extended coverage, sprinkler leakage, vandalism, malicious
mischief, flood (if the Premises are in a flood zone) and earthquake coverage
upon property of every description and kind located on the Premises, without
limitation, furniture, equipment and any other personal property, any Tenant
Changes, the Buildings, the Tenant Improvements, and the Parking Lot
Improvements in an amount not less than the full replacement cost thereof. In the
event that there shall be a dispute as to the amount which comprises full replacement
cost, the decision of Landlord or the mortgagees of Landlord shall be presumptive.
No co-insurance provision shall apply under such insurance policy or, in the alternative, the insurance policy shall contain an agreed amount
endorsement. All references to earthquake coverage herein shall be deemed to include
earthquake sprinkler leakage coverage. 


 


Notwithstanding
the foregoing, if earthquake coverage is not available from an insurer
satisfying the requirements of Section 20.2 below with a deductible satisfying the
requirements of Section 20.2 below, or if such earthquake coverage is available
from an insurer satisfying the requirements of Section 20.2 but the premium for
such insurance is in excess of Thirty Thousand Dollars ($30,000.00) per year
(the “Cap”), then Tenant, following at least thirty (30) days’ prior written
notice thereof to Landlord, shall have no obligation to maintain earthquake
insurance so long as such insurance is not available for less than or equal to the
Cap; provided, however, if Landlord gives Tenant written notice that Landlord will
reimburse Tenant one-half (1/2) of the amount of the earthquake insurance
premium in excess of the Cap and if the insurance policy will satisfy the
requirements of Section 20.2, Tenant shall be obligated to obtain such earthquake
insurance until Landlord gives Tenant written notice of its rescission of such
election. If Landlord has agreed to reimburse Tenant one-half (1/2) of the amount
of such excess, Landlord shall do so within thirty (30) days following receipt
of an invoice therefor, and if Landlord fails to so reimburse Tenant, Tenant
may deduct one-half (%) of such excess against Rent. The Cap shall be subject to
annual increases in the same proportion as increases, if any, in the Consumer
Price Index-Urban Wage Earners and Clerical Workers (Los
Angeles-Anaheim-Riverside) All-items Base 1982-84=1 00, or successor index,
using the month in which this Lease is executed as the base month.


 


(b)           Commercial general
liability insurance coverage, including personal injury, bodily injury
(including wrongful death), property damage, operations hazard, owners protective
coverage, contractual liability (including Tenant’s indemnification obligations
under this Lease, including Section 17 hereof, but only to the extent such
indemnification obligations are covered under a commercial general liability
policy), liquor liability (if Tenant serves or stores alcohol on the Premises),
products and completed


 





















 


operations liability, and
owned/non-owned auto liability, with a general aggregate of not less than Five Million
Dollars ($5,000,000). The general aggregate amount of such commercial general liability
insurance shall be increased every five (5) years during the Term of this Lease
to an amount reasonably required by Landlord but in no event greater than that
commonly required of similar tenants of similar buildings in the Rancho
Bernardo area of San Diego County.


 


(c)           Workers
compensation and employees liability insurance, in statutory amounts and
limits.


 


(d)           Loss of income,
extra expense and business interruption insurance covering a minimum of twelve (12)
months of Tenant’s Rent and such additional amounts as will reimburse Tenant for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent tenants or attributable to prevention of access to the Premises
or Tenant’s parking areas as a result of such perils.


 


(e)           Any other
form or forms of insurance as Tenant or Landlord or the mortgagees of Landlord
may reasonably require from time to time, in form, amounts and for insurance
risks against which a prudent tenant would protect itself, but only to the
extent such risks and amounts are available in the insurance market at
commercially reasonable costs.


 


20.2         Requirements.
Each policy required to be obtained by Tenant hereunder shall: (a) be issued by
insurers authorized to do business in the state in which the Premises is
located and rated not less than financial class VII, and not less than
policyholder rating A- in the most recent version of Best’s Key Rating Guide (provided
that, in any event, the same insurance company shall provide the coverages
described in Sections 20.1 (a) and 20.1(d) above); (b) be in then-standard
form; (c) name Tenant as named insured thereunder and shall name Landlord and, at
Landlord’s request, Landlord’s mortgagees and ground lessors of which Tenant has
been informed in writing, as additional insureds (and with respect to the
insurance described in Sections 20.1 (a) and (d) above, as loss-payees thereunder),
all as their respective interests may appear (however, as to the insurance
described in Section 20.1 (d) above, the loss-payees’ interest in the insurance
proceeds will be limited only to those amounts allocable to Tenant’s rental
obligations hereunder following a casualty at the Premises and shall be further
limited to as and when such rental obligations become due and payable); (d) shall
not have a deductible amount exceeding Ten Thousand Dollars ($10,000.00) (or
such higher amount as Landlord may permit in its reasonable discretion, but in no
event may the All-Risk insurance deductible be greater than five percent (5%)
of the replacement cost), except that with respect to earthquake coverage, the deductible
amount shall not exceed ten percent (10%) of the total insured value (however,
the deductible shall be, at Landlord’s option, five percent (5%) during all
times Tenant has a net worth of less than Twenty-Five Million Dollars
($25,000,000), as such net worth amount is subject to increase in the same
manner as the


 





















 


Cap pursuant to Section
20.1 (a) above); (e) specifically provide that the insurance afforded by such
policy for the benefit of Landlord and Landlord’s mortgagees and ground lessors
shall be primary, and any insurance carried by Landlord or Landlord’s mortgagees
and ground lessors shall be excess and non- contributing; (o except for worker’s
compensation insurance, contain an endorsement that the insurer (only with
respect to the policy required by Section 20.1 (a) above) waives its right to subrogation
as described in Section 22 below; and (g) contain an undertaking by the insurer
to notify Landlord (and the mortgagees and ground lessors of Landlord who are named
as additional insureds) in writing not less than thirty (30) days prior to any change,
reduction in coverage, cancellation or other termination thereof. Tenant agrees
to deliver to Landlord, as soon as practicable after the placing of the
required insurance, but in no event later than ten (1 0) days after the date
Tenant takes possession of all or any part of the Premises, certificates from the
insurance company evidencing the existence of such insurance and Tenant’s compliance
with the foregoing provisions of this Section 20). Tenant shall cause
replacement certificates to be delivered to Landlord not less than five (5) days
prior to the expiration of any such policy or policies. If any such initial or replacement
certificates are not furnished within the time(s) specified herein, Tenant shall
be deemed to be in material default under this Lease without the benefit of any
additional notice or cure period provided in Section 22.1 below, and Landlord
shall have the right, but not the obligation, to procure such policies and
certificates at Tenant’s expense.


 


20.3         Effect on
Insurance. Tenant shall not do or permit to be done anything which will violate
or invalidate any insurance policy maintained by Tenant hereunder. If Tenant’s
occupancy or conduct of its business in or on the Premises results in any increase
in premiums for any insurance carried by Landlord, Tenant shall pay such
increase as additional rent within ten (1 0) days after being billed therefor by
Landlord. If any insurance coverage carried by Landlord shall be canceled or reduced
(or cancellation or reduction thereof shall be threatened) by reason of the use
or occupancy of the Premises by Tenant or by anyone permitted by Tenant to be
upon the Premises, and if Tenant fails to remedy such condition within five (5)
days after notice thereof, Tenant shall be deemed to be in default under this
Lease, without the benefit of any additional notice or cure period specified in
Section 22.1 below, and Landlord shall have all remedies provided in this
Lease, at law or in equity, including, without limitation, the right (but not
the obligation) to enter upon the Premises and attempt to remedy such condition
at Tenant’s cost.


 


20.4         Landlord’s
Option to Insure. Landlord shall have the option from time to time to maintain
the All Risk insurance referred to in Section 20.1(a) above covering the
property described therein (other than Tenant’s personal property, furniture
and equipment, which Tenant shall continue to insure) and/or rental loss insurance
covering Tenant’s rental obligations hereunder for a period of at least twelve
(12) months (or such longer period of


 





















 


time as Tenant may request)
by giving Tenant written notice thereof. If Landlord elects to maintain such
insurance, Tenant shall have no obligation to maintain such insurance on the property
or obligations covered thereby until Landlord elects not to maintain such insurance
by giving Tenant at least sixty (60) days’ prior written notice thereof. Tenant
shall reimburse Landlord, as additional rent, the cost of such insurance within
thirty (30) days following receipt of an invoice therefor; however, Tenant’s
obligation to reimburse the cost of earthquake coverage in excess of the Cap
shall be limited to one-half of such excess.


 


21.           Waiver of Subrogation.


 


21.1         Waiver. Notwithstanding
any provision to the contrary herein, the parties release each other and their respective
agents, employees, successors, assignees and subtenants from any claims or damages
or losses which are caused by or result from (a) property damage insured
against under any property insurance policy carried by Tenant pursuant to the
provisions of this Lease and enforceable at the time of such damage or loss or which
is actually carried by either party, or (b) property damage which would have been
covered under any insurance required to be obtained and maintained by Tenant
under Section 20 of this Lease (or which Landlord has elected to carry under
Section 20.4 above) had such insurance been obtained and maintained as required
therein. The foregoing waiver shall be in addition to, and not a limitation of,
any other waivers or releases contained in this Lease.


 


21.2         Waiver of
Insurers. Each party shall cause any property insurance policy obtained by it
with respect to the Premises to provide that the insurer waives all rights of
recovery by way of subrogation in connection with any claims, losses and damages
covered by such policy. If Tenant fails to maintain property insurance required
hereunder (or if Landlord elects to carry the All-Risk insurance pursuant to
Section 20.4 and fails to so maintain such insurance), such insurance shall be
deemed to be self-insured with a deemed full waiver of subrogation as set forth
in the immediately preceding sentence.


 


22.           Tenant’s Default and Landlord’s Remedies.


 


22.1         Tenant’s
Default, The occurrence of any one or more of the following events shall
constitute an “Event of Default” under this Lease by Tenant:


 


(a)           the vacation
or abandonment of the Premises by Tenant.” Abandonment”
is herein defined to mean any absence by Tenant from the Premises for five (5)
Business Days or longer while in default of any other provision of this Lease. “Vacation”
shall mean vacating the Premises without providing a reasonable level of
security to minimize the potential for vandalism, or where the coverage of the
property insurance under Section 20.1 (a) is jeopardized as a result thereof;


 


(b)           the failure by
Tenant to make any payment of Rent or any


 





















 


other
payment required to be made by Tenant hereunder, within three (3) Business Days
after Tenant’s receipt of notice from Landlord that such payment is past due;


 


(c)           the failure
by Tenant to observe or perform any of the express or implied covenants or
provisions of this Lease to be observed or performed by Tenant, other than as specified
in Sections 22.1 (a) or . (b) above, where such failure shall continue for a period
of thirty (30) days after written notice thereof from Landlord to Tenant;
provided, however, that, if the nature of Tenant’s default is such that more
than thirty (30) days are reasonably required for its cure, then Tenant shall
not be deemed to be in default if Tenant shall commence such cure within said
thirty (30) day period and thereafter diligently prosecute such cure to completion;
or


 


(d)           (i) the
making by Tenant of any general assignment for the benefit of creditors, (ii)
the filing by or against Tenant of a petition to have Tenant adjudged a
bankrupt or a petition for reorganization or arrangement under any law relating
to bankruptcy (unless, in the case of a petition filed against the Tenant, the
same is dismissed within sixty (60) days), (iii) the appointment of a trustee
or receiver to take possession of substantially all of Tenant’s assets located at
the Premises or of Tenant’s interest in this Lease, where possession is not
restored to Tenant within sixty (60) days, or (iv) the attachment, execution or
other judicial seizure of substantially all of Tenant’s assets located at the
Premises or of Tenant’s interest in this Lease where such seizure is not
discharged within sixty (60) days.


 


Any notice under this
Section 22.1 shall be in lieu of, and not in addition to, any notice required
under California Code of Civil Procedure, Section 1161.


 


22.2 Landlord’s
Remedies; Termination. In the event of any such default by Tenant, in addition
to any other remedies available to Landlord under this Lease, at law or in
equity, Landlord shall have the immediate option to terminate this Lease and
all rights of Tenant hereunder. In the event that Landlord shall elect to so
terminate this Lease, then Landlord may recover from Tenant:


 


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


 


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


 





















 


(d)           any other
amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or
which, in the ordinary course of things, would be likely to result therefrom including,
but not limited to: unamortized Tenant Improvement costs; attorneys’ fees;
unamortized brokers’ commissions; the costs of refurbishment, alterations,
renovation and repair of the Premises; and removal (including the repair of any
damage caused by such removal) and storage (or disposal) of Tenant’s personal property,
equipment, fixtures, Tenant Changes, Tenant Improvements and any other items which
Tenant is required under this Lease to remove but does not remove,


 


As used in Sections 22.2(a)
and 22.2(b) above, the “worth at the time of award” is computed by allowing
interest at the Interest Rate set forth in Section 1.13 of the Summary. As used
in Section 22.2(c) above, the “worth at the time of award” is 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%).


 


22.3         Landlord’s
Remedies; Re-Entry Rights. In the event of any such default by Tenant, in
addition to any other remedies available to Landlord under this Lease, at law or
in equity, Landlord shall also have the right, with or without terminating this
Lease, to re-enter the Premises and remove all persons and property from the
Premises; such property may be removed, stored and/or disposed of pursuant to
Section 12.4 of this Lease or any other procedures permitted by applicable law.
No re-entry or taking possession of the Premises by Landlord pursuant to this Section
22.3, and no acceptance of surrender of the Premises or other action on Landlord’s
part, shall be construed as an election to terminate this Lease unless a
written notice of such intention be given to Tenant or unless the termination
thereof be decreed by a court of competent jurisdiction or unless Tenant’s right
to possession of the Premises is terminated.


 


22.4         Landlord’s
Remedies; Continuation of Lease. In the event of any such default by Tenant, in
addition to any other remedies available to Landlord under this Lease, at law or
in equity, Landlord shall have the right to continue this Lease in full force
and effect, whether or not Tenant shall have abandoned the Premises so long as
Landlord does not terminate Tenant’s right to possession of the Premises. The
foregoing remedy shall also be available to Landlord pursuant to California Civil
Code Section 1951.4 and any successor statute thereof in the event Tenant has abandoned
the Premises. In the event Landlord elects to continue this Lease in full force
and effect pursuant to this Section 22.4, then Landlord shall be entitled to enforce
all of its rights and remedies under this Lease, including the right to recover
rent as it becomes due. Landlord’s election not to terminate this Lease
pursuant to this Section 22.4 or pursuant to any other provision of this Lease,
at law or in equity, shall not preclude Landlord from subsequently electing to terminate
this Lease or pursuing any of its other remedies.


 





















 


22.5         Landlord’s Right
to Perform. Except as specifically provided otherwise in this Lease, all
covenants and agreements by Tenant under this Lease shall be performed by
Tenant at Tenant’s sole cost and expense and without any abatement or offset of
rent. If Tenant shall fail to pay any sum of money (other than Annual Rent) or
perform any other act on its part to be paid or performed hereunder and such
failure shall continue for three (3) Business Days with respect to monetary
obligations (or ten (1 0) days with respect to non-monetary obligations) after Tenant’s
receipt of written notice thereof from Landlord, Landlord may, without waiving or
releasing Tenant from any of Tenant’s obligations, make such payment or perform
such other act on behalf of Tenant. All sums so paid by Landlord and all
necessary incidental costs incurred by Landlord in performing such other acts shall
be payable by Tenant to Landlord within five (5) days after demand therefor as
additional rent.


 


22.6         Interest. If
any monthly installment of Annual Rent, or any other amount payable by Tenant
hereunder is not received by Landlord by the tenth (10th) day following the due
date, it shall bear interest at the Interest Rate set forth in Section 1.14 of the
Summary from the date due until paid. All interest, and any late charges
imposed pursuant to Section 22.7 below, shall be considered additional rent due
from Tenant to Landlord under the terms of this Lease.


 


22.7         Late
Charges. Tenant acknowledges that, in addition to interest costs, the late
payments by Tenant to Landlord of any Annual Rent or other sums due under this
Lease will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of such costs being extremely difficult and impractical to fix. Such
other costs include, without limitation, processing, administrative and
accounting charges and late charges that may be imposed on Landlord by the terms
of any mortgage, deed of trust or related loan documents encumbering the
Premises. Accordingly, if any monthly installment of Annual Rent or any other
amount payable by Tenant hereunder is not received by Landlord within five (5)
days after the due date thereof, Tenant shall pay to Landlord an additional sum
of four percent (4%) of the overdue amount as a late charge, but in no event
more than the maximum late charge allowed by law. The parties agree that such
late charge represents a fair and reasonable estimate of the costs that
Landlord will incur by reason of any late payment as hereinabove referred to by
Tenant, and the payment of late charges and interest are distinct and separate
in that the payment of interest is to compensate Landlord for the use of Landlord’s
money by Tenant, while the payment of late charges is to compensate Landlord
for Landlord’s processing, administrative and other costs incurred by Landlord
as a result of Tenant’s delinquent payments. Acceptance of a late charge or
interest shall not constitute a waiver of Tenant’s default with respect to the
overdue amount or prevent Landlord from exercising any of the other rights and
remedies available to Landlord under this Lease or at law or in equity now or
hereafter in effect.


 


22.8         Rights and
Remedies Cumulative. All rights, options and remedies of Landlord contained in
this Section 22 and elsewhere


 





















 


in this Lease shall be
construed and held to be cumulative, and no one of them shall be exclusive of
the other, and Landlord shall have the right to pursue any one or all of such
remedies or any other remedy or relief which may be provided by law or in equity,
whether or not stated in this Lease. Nothing in this Section 22 shall be deemed
to limit or otherwise affect Tenant’s indemnification of Landlord pursuant to
any provision of this Lease.


 


23.           Landlord’s Default. Landlord
shall not be in default in the performance of any obligation required to be performed
by Landlord under this Lease unless Landlord has failed to perform such obligation
within thirty (30) days after the receipt of written notice from Tenant specifying
in detail Landlord’s failure to perform; provided however, that if the nature of
Landlord’s obligation is such that more than thirty (30) days are required for
its performance, then Landlord shall not be deemed in default if it commences
such performance within such thirty (30) day period and thereafter diligently
pursues the same to completion. Upon any such uncured default by Landlord, Tenant
may exercise any of its rights provided in law or at equity; provided, however:
(a) Tenant shall have no right to offset or abate Rent in the event of any
default by Landlord under this Lease, except to the extent offset rights are specifically
provided to Tenant in this Lease; (b) Tenant’s rights and remedies hereunder
shall be limited to the extent (i) Tenant has expressly waived in this Lease
any of such rights or remedies, and/or (ii) this Lease otherwise expressly
limits Tenant’s rights or remedies, including the limitation on Landlord’s liability
contained in Section 30 hereof; and (c) Tenant shall not have the right to
terminate this Lease as a result of any such default.


 


24.           Subordination. At the
request of Landlord or any mortgagee of a mortgage or a beneficiary of a deed of
trust now or hereafter encumbering all or any portion of the Premises, or any lessor
of any ground or master lease now or hereafter affecting all or any portion of
the Premises, this Lease shall be subject and subordinate at all times to such
ground or master leases (and such extensions and modifications thereof, and to the
lien of such mortgages and deeds of trust (as well as to any advances made thereunder
and to all renewals, replacements, modifications and extensions thereof;
provided, however, no subordination of this Lease shall result in Tenant being disturbed
in its possession of the Premises or in the enjoyment of its rights under this
Lease so long as Tenant is not in default with respect to its obligations hereunder,
and any subordination agreement which Landlord, any mortgagee or ground lessor
requests Tenant to execute to effect or confirm such subordination shall so
provide and shall further provide that if the holder of any such lease or lien succeeds
to the position of Landlord under the Lease, whether by foreclosure or
termination of the ground or master lease, such successor-in-interest shall
recognize Tenant as its tenant and shall perform the obligations of Landlord under
the Lease accruing subsequent to the date such successor-in-interest succeeds
to the position of Landlord and shall recognize Tenant’s offset rights under the
Work Letter. Notwithstanding the foregoing, Landlord shall have the right to
subordinate or cause


 





















 


to be subordinated any
or all ground or master leases or the lien of any or all mortgages or deeds of
trust to this Lease. In the event that any ground or master lease terminates
for any reason or any mortgage or deed of trust is foreclosed or a conveyance
in lieu of foreclosure is made for any reason, Tenant shall attorn to and
become the tenant of such successor and such successor-in- interest shall
recognize Tenant as its tenant and shall perform the obligations of Landlord
under the Lease accruing subsequent to the date such successor-in-interest
succeeds to the position of Landlord. Tenant hereby waives its rights under any
current or future law which gives or purports to give Tenant any right to terminate
or otherwise adversely affect this Lease and the obligations of Tenant hereunder
in the event of any such foreclosure proceeding or sale. Subject to the
foregoing, Tenant covenants and agrees to execute and deliver to Landlord within
ten (1 0) days after receipt of written demand by Landlord and in the form reasonably
required by Landlord and reasonably acceptable to Tenant, any additional
documents evidencing the priority or subordination of this Lease with respect
to any such ground or master lease or the lien of any such mortgage or deed of trust
or Tenant’s agreement to attorn. Should Tenant fail to sign and return any such
documents within said ten (10) day period, and should such failure continue for
an additional ten (10) days following written notice thereof to Tenant, Tenant shall
be in default hereunder without the benefit of any additional notice or cure
periods specified in Section 22.1 above. Notwithstanding any provision to the contrary
in this Lease, insurance proceeds shall be used as set forth herein, and any subordination
agreement to be executed by Tenant shall so provide and shall provide that Tenant’s
offset rights under the Work Letter shall be recognized.


 


25.           Estoppel Certificate.


 


25.1         Tenant’s Obligations.
Within ten (1 0) Business Days following Landlord’s written request, Tenant
shall execute and deliver to Landlord an estoppel certificate, in a form substantially
similar to the form of Exhibit “F” attached hereto, certifying: (a) the
Respective Commencement Dates of this Lease; (b) that this Lease is unmodified
and in full force and effect (or, if modified, that this Lease is in full force
and effect as modified, and stating the date and nature of such modifications);
(c) the date to which the Rent and other sums payable under this Lease have been
paid; (d) that there are not, to the best of Tenant’s knowledge, any defaults
under this Lease by either Landlord or Tenant, except as specified in such
certificate; and (e) such other matters as are reasonably requested by
Landlord. Any such estoppel certificate delivered pursuant to this Section 25.1
may be relied upon by any mortgagee, beneficiary, purchaser or prospective
purchaser of any portion of the Premises, as well as their assignees.


 


25.2         Tenant’s
Failure to Deliver. Tenant’s failure to deliver such estoppel certificate within
such time, which failure continues for an additional ten (10) day period
following written notice thereof to Tenant, shall constitute a default hereunder
without the applicability of any additional notice and cure


 





















 


periods specified in
Section 22.1 above and shall be conclusive upon Tenant that: (a) this Lease is
in full force and effect without modification, except as may be represented by Landlord;
(b) there are no uncured defaults in Landlord’s or Tenant’s performance (other
than Tenant’s failure to deliver the estoppel certificate); and (c) not more
than one (1) month’s rental has been paid in advance. Tenant shall indemnify,
protect, defend (with counsel reasonably approved by Landlord in writing) and hold
Landlord harmless from and against any and all claims, judgments, suits, causes
of action, damages, losses, liabilities and expenses (including attorneys’ fees
and court costs) attributable to any failure by Tenant to timely deliver any such
estoppel certificate to Landlord pursuant to Section 25.1 above.


 


26.           Easements. Landlord reserves to itself the right,
from time to time, to grant such easements, rights and dedications that
Landlord deems necessary or desirable, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not interfere with the use and enjoyment of the Premises by
Tenant. Tenant shall sign any of the aforementioned documents promptly
following the request of Landlord.  


 


27.           Modification and Cure Rights of
Landlord’s Mortgagees and Lessors.


 


27.1         Modifications.
If, in connection with Landlord’s obtaining or entering into any financing or
ground lease for any portion of the Premises, the lender or ground lessor shall
request modifications to this Lease, Tenant shall, within ten (10) days after request
therefor, execute an amendment to this Lease including such modifications,
provided such modifications are reasonable, do not increase the obligations of
Tenant hereunder, do not decrease Tenant’s rights and benefits hereunder, and do
not otherwise adversely affect the leasehold estate created hereby or Tenant’s
rights hereunder.


 


27.2         Cure Rights.
In the event of any default on the part of Landlord, Tenant will give notice by
registered or certified mail to any beneficiary of a deed of trust or mortgagee
covering the Premises or ground lessor of Landlord whose address shall have been
furnished to Tenant in writing, and shall offer such beneficiary, mortgagee or
ground lessor a reasonable opportunity to cure the default (including with respect
to any such beneficiary or mortgagee, time to obtain possession of the Premises,
subject to this Lease and Tenant’s rights hereunder, by power of sale or judicial
foreclosure, if such should prove necessary to effect a-cure).


 


28.           Quiet Enjoyment. Landlord
covenants and agrees with Tenant that, upon Tenant performing all of the
covenants and provisions on Tenant’s part to be observed and performed under this
Lease (including payment of rent hereunder), Tenant shall
and may peaceably and quietly have, hold and enjoy the Premises in accordance
with and subject to the terms and conditions of this Lease.


 





















 


29.           Transfer of Landlord’s Interest. The term “Landlord”
as used in this Lease, so far as covenants or obligations on the part of the Landlord
are concerned, shall be limited to mean and include only the owner or owners,
at the time in question, of the fee title to, or a lessee’s interest in a
ground lease of, the Premises. In the event of any transfer or conveyance of
any such title or interest (other than a transfer for security purposes only), the
transferor shall be automatically relieved of all covenants and obligations on
the part of Landlord contained in this Lease accruing after the date of such
transfer or conveyance except that such transferor shall remain liable for any portion
of the Security Deposit held by such transferor and not returned to Tenant or delivered
to the transferee at the time of such transfer. Landlord and Landlord’s
transferees and assignees shall have the absolute right to transfer all or any
portion of their respective title and interest in the Premises and/or this Lease
without the consent of Tenant, and such transfer or subsequent transfer shall
not be deemed a violation on Landlord’s part of any of the terms and conditions
of this Lease.


 


30.           Limitation on Landlord’s Liability. Notwithstanding
anything contained in this Lease to the contrary, the obligations of Landlord under
this Lease (including any actual or alleged breach or default by Landlord) do not
constitute personal obligations of the individual partners, directors, officers
or shareholders of Landlord or Landlord’s partners, and Tenant shall not seek recourse
against the individual partners, directors, officers or shareholders of
Landlord or Landlord’s partners, or any of their personal assets for satisfaction
of any liability with respect to this Lease. In addition, in consideration of
the benefits accruing hereunder to Tenant and notwithstanding anything contained
in this Lease to the contrary, Tenant hereby covenants and agrees for itself
and all of its successors and assigns that the liability of Landlord for its
obligations under this Lease (including any liability as a result of any actual
or alleged failure, breach or default hereunder by Landlord), shall be limited solely
to, and Tenant’s and its successors’ and assigns’ sole and exclusive remedy
shall be against, Landlord’s interest in the Premises and proceeds therefrom,
and no other assets of Landlord.


 


31.           Miscellaneous.


 


31.1         Governing
Law. This Lease shall be governed by, and construed pursuant to, the laws of
the state in which the Premises is located.


 


31.2         Successors and
Assigns. Subject to the provisions of Section 29 above, and except as otherwise
provided in this Lease, all of the covenants, conditions and provisions of this
Lease shall be binding upon, and shall inure to the benefit of, the parties hereto
and their respective heirs, personal representatives and permitted successors
and assigns; provided, however, no rights shall inure to the benefit of any Transferee
of Tenant unless the Transfer to such Transferee is made in compliance with the
provisions of Section 14, and no options or


 





















 


other rights which are
expressly made personal to the original Tenant hereunder or in any rider attached
hereto shall be assignable to or exercisable by anyone other than the original Tenant
under this Lease except as expressly set forth herein.


 


31.3         No Merger. The
voluntary or other surrender of this Lease by Tenant or a mutual termination
thereof shall not work as a merger and shall, at the option of Landlord, either
(a) terminate all or any existing subleases, or (b) operate as an assignment to
Landlord of Tenant’s interest under any or all such subleases.


 


31.4         Professional
Fees. If either Landlord or Tenant should bring suit against the other with respect
to this Lease, including for unlawful detainer or any other relief against the other
hereunder (including arbitration proceedings pursuant to the Work Letter), then
all costs and expenses incurred by the prevailing party therein (including, without
limitation, its actual appraisers’, accountants’, attorneys’ and other professional
fees, expenses and court costs), shall be paid by the other party.


 


31.5         Waiver. The
waiver by either party of any breach by the other party of any term, covenant or
condition herein contained shall not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant and condition herein contained,
nor shall any custom or practice which may become established between the
parties in the administration of the terms hereof be deemed a waiver of, or in
any way affect, the right of any party to insist upon the performance by the
other in strict accordance with said terms. No waiver of any default of either
party hereunder shall be implied from any acceptance by Landlord or delivery by
Tenant (as the case may be) of any rent or other payments due hereunder or any
omission by the non- defaulting party to take any action on account of such
default if such default persists or is repeated, and no express waiver shall affect
defaults other than as specified in said waiver. The subsequent acceptance of
rent hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease other than the
failure of Tenant to pay the particular rent so accepted, regardless of Landlord’s
knowledge of such preceding breach at the time of acceptance of such rent.


 


31.6         Terms and
Headings. The words “Landlord” and “Tenant” as used herein shall include the plural
as well as the singular. Words used in any gender include other genders. The
Section headings of this Lease are not a part of this Lease and shall have no
effect upon the construction or interpretation of any part hereof.


 


31.7         Time. Time
is of the essence with respect to performance of every provision of this Lease
in which time or performance is a factor. All references in this Lease to “days”
shall mean calendar days unless specifically modified herein to be “business”
days.


 


31.8         Prior Agreements;
Amendments. This Lease, including the


 





















 


Summary and all Exhibits
and Riders attached hereto contains all of the covenants, provisions,
agreements, conditions and understandings between Landlord and Tenant concerning
the Premises and any other matter covered or mentioned in this Lease, and no
prior agreement or understanding, oral or written, express or implied,
pertaining to the Premises or any such other matter shall be effective for any
purpose. No provision of this Lease may be amended or added to except by an
agreement in writing signed by the parties hereto or their respective
successors in interest. The parties acknowledge that all prior agreements, representations
and negotiations are deemed superseded by the execution of this Lease to the
extent they are not expressly incorporated herein.


 


31.9         Separability.
The invalidity or unenforceability of any provision of this Lease (except for
Tenant’s obligation to pay Rent) shall in no way affect, impair or invalidate
any other provision hereof, and such other provisions shall remain valid and in
full force and effect to the fullest extent permitted by law.


 


31.10       Recording. Neither Landlord nor Tenant shall
record this Lease. In addition, neither party shall record a short form memorandum
of this Lease without the prior written consent (and signature on the memorandum)
of the other, and provided that prior to recordation Tenant executes and
delivers to Landlord, in recordable form, a properly acknowledged quitclaim
deed or other instrument extinguishing all of the Tenant’s rights and interest in
and to the Premises, and designating Landlord as the transferee, which deed or
other instrument shall be held by Landlord and may be recorded by Landlord once
this Lease terminates or expires (but not prior thereto). If such short form
memorandum is recorded in accordance with the foregoing, the party requesting
the recording shall pay for all costs of or related to such recording, including,
but not limited to, recording charges and documentary transfer taxes.


 


31.11       Exhibits and Riders. All Exhibits and
Riders attached to this Lease are hereby incorporated in this Lease for all purposes
as though set forth at length herein.


 


31.12       Auctions. Tenant shall have no right to
conduct any auction in, on or about the Premises.


 


31.13       Accord and Satisfaction. No payment by
Tenant or receipt by Landlord of a lesser amount than the rent payment herein
stipulated shall be deemed to be other than on account of the rent, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord’s right to recover the balance
of such rent or pursue any other remedy provided in this Lease. Tenant agrees
that each of the foregoing covenants and agreements shall be applicable to any
covenant or agreement either expressly contained in this Lease or imposed by any
statute or at common law.


 





















 


31.14       Financial Statements. Upon ten (10) days
prior written request from Landlord (which Landlord may make at any time during
the Term but no more often than once in any calendar year), Tenant shall deliver
to Landlord then current public financial statement of Tenant. At Landlord’s
request, Tenant will add Landlord to its mailing list to receive Tenant’s
public financial reports when published (three (3) quarterly reports and one (1)
annual report). If Tenant is not a publicly traded corporation, then the
financial statements to be delivered by Tenant shall be prepared in accordance with
generally acceptable accounting principles and certified as true in all material
respects by Tenant.


 


31.15       No Partnership. Landlord does not, in any
way or for any purpose, become a partner of Tenant in the conduct of its business,
or otherwise, or joint venturer or a member of a joint
enterprise with Tenant by reason of this Lease.


 


31.16       Force Majeure. In the event that either
party hereto shall be delayed or hindered in or prevented from the performance of
any act required hereunder by reason of strikes, lock-outs, labor troubles,
inability to procure materials, failure of power, governmental moratorium or
other governmental action or inaction (including failure, refusal or delay in issuing
permits, approvals and/or authorizations), injunction or court order, riots, insurrection,
war, fire, earthquake, flood or other natural disaster or other reason of a
like nature not the fault of the party delaying in performing work or doing
acts required under the terms of this Lease (but excluding delays due to financial
inability) (herein collectively, “Force Majeure Delays”), then performance of
such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the
period of such delay. The provisions of this Section 31.16 shall not apply to
nor operate to excuse Tenant from the payment of Monthly Rent, additional rent or
any other payments strictly in accordance with the terms of this Lease.


 


31.17       Counterparts. This Lease may be executed
in one or more counterparts, each of which shall constitute an original and all
of which shall be one and the same agreement. .1


 


31.18       Nondisclosure of Lease Terms. Tenant acknowledges
and agrees that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord’s
relationship with other tenants. Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees, agents and attorneys, shall not intentionally
and voluntarily disclose the terms and conditions of this Lease to any
newspaper or other publication or any other tenant or apparent prospective tenant
of the Building or other portion of the Premises, or real estate agent, either directly
or indirectly, without the prior written consent of Landlord, provided,
however, that Tenant may disclose the terms


 





















 


to prospective
subtenants or assignees under this Lease. Tenant shall have the right to make
any disclosures concerning this Lease and its terms which are required by law.


 


31.19       Non-Discrimination. Tenant acknowledges and
agrees that there shall be no discrimination against, or segregation of, any person,
group of persons, or entity on the basis of race, color, creed, religion, age, sex,
marital status, national origin, or ancestry in the leasing, subleasing, transferring,
assignment, occupancy, tenure, use, or enjoyment of the Premises, or any portion
thereof.


 


32.           Lease Execution.


 


32.1         Tenant’s Authority.
If Tenant executes this Lease as a partnership or corporation, then Tenant and
the persons and/or entities executing this Lease on behalf of Tenant represent and
warrant that: (a) Tenant is a duly authorized and existing partnership or
corporation, as the case may be, and is qualified to do business in the state
in which the Premises are located; (b) such persons and/or entities executing
this Lease are duly authorized to execute and deliver this Lease on Tenant’s behalf
in accordance with the Tenant’s partnership agreement (if Tenant is a
partnership), or a duly adopted resolution of Tenant’s board of directors and the
Tenant’s by-laws (if Tenant is a corporation); and (c) this Lease is binding upon
Tenant in accordance with its terms.


 


32.2         Joint and
Several Liability. If more than one person or entity executes
this Lease as Tenant: (a) each of them is and shall be jointly and severally liable
for the covenants, conditions, provisions and agreements of this Lease to be kept,
observed and performed by Tenant; and (b) the act or signature of, or notice
from or to, any one or more of them with respect to this Lease shall be binding
upon each and all of the persons and entities executing this Lease as Tenant
with the same force and effect as if each and all of them had so acted or signed,
or given or received such notice.


 


32.3         No Option. The
submission of this Lease for examination or execution by Tenant does not
constitute a reservation of or option for the Premises and this Lease shall not
become effective as a Lease until it has been executed by Landlord and
delivered to Tenant.


 





















 


32.4         Landlord’s
Authority. Landlord represents and warrants to Tenant that: (a) Landlord is a
duly authorized and existing limited partnership and is qualified to do business
in California; (b) the persons and entities executing this Lease are duly authorized
to execute and deliver this Lease on Landlord’s behalf in accordance with
Landlord’s partnership agreement; and (c) this Lease is binding upon Landlord
in accordance with its terms.


 


IN WITNESS WHEREOF, the
parties have executed this Lease as of the day and year first above written.


 


 


	
  “TENANT”

  	
   

  	
  CYMER, INC.,

  
	
   

  	
   

  	
  a Nevada corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William A. Angus,
  III

  	
   

  
	
   

  	
   

  	
  Name: William A.
  Angus, III

  
	
   

  	
   

  	
  Title:

  	
  Sr. Vice President and

  
	
   

  	
   

  	
   

  	
  Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “LANDLORD”

  	
   

  	
  AEW/LBA ACQUISITION
  CO. 11, LLC, a

  
	
   

  	
   

  	
  California limited
  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Eastrich No. 175, LLC,
  a

  
	
   

  	
   

  	
   

  	
  California limited
  liability

  
	
   

  	
   

  	
   

  	
  company, its
  member-manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Phil Belling

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Phil Belling

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Authorized Signatory

  	
   

  
										



 





















 


Exhibits:


 


Exhibit “A”            Site Plan


Exhibit “B”            Legal
Description of Premises


Exhibit “C”            Work Letter
Agreement Schedule 1 Description of Conceptual Plans


Exhibit “D”            Sample Form
of Notice of Lease Term Dates


Exhibit “E”             Environmental
Questionnaire


Exhibit “F”             Sample Form
of Tenant Estoppel Certificate


Exhibit “G”            Description
of Parking Lot Improvements


Exhibit “H”            Prior
Occupant’s FF&E


 


The Company will
undertake to supply any of the above documents upon request of the Securities
and Exchange Commission. 


 





















 


FIRST AMENDMENT


TO
SINGLE-TENANT INDUSTRIAL LEASE


 


THIS FIRST
AMENDMENT TO SINGLE-TENANT INDUSTRIAL LEASE (“Amendment”) is entered into as of
April 1, 1997, by and between AEW/LBA ACQUISITION CO. II, LLC, a California
limited liability company (“Landlord”), and CYMER, INC., a Nevada corporation (“Tenant”).


 


R E  C  I  T  A  L  S :


 


A.                                      Landlord and
Tenant entered into that certain Single-Tenant Industrial Lease dated December
19, 1996 (the “Lease”), for premises located at 16750 Via del Campo Court in San
Diego, California. All initially capitalized terms not otherwise defined herein
shall have the same meanings as set forth in the Lease.


 


B.                                        Pursuant to
Section 1.2 of the Lease, Landlord is obligated to
construct the Parking Lot Improvements on the Parking Lot. Tenant is currently
occupying a portion of the Parking
Lot with temporary office trailers. Therefore, the parties intend that Landlord
will construct the Parking Lot Improvements in two phases, the first phase
being the area of the Parking Lot not occupied by Tenant’s temporary office
trailers (“Phase 1 Area”). Upon Tenant’s removal of the temporary office
trailers from the Parking Lot, Landlord will construct the remaining Parking
Lot Improvements on such remaining portion of the Parking Lot (“Phase 2 Area”).


 


C.                                         Landlord and Tenant
desire to amend the Lease as hereinafter set forth in order to address the
phased construction of the Parking Lot Improvements as described in Rectial B
above:


 


A
G  R  E  E  M  E  N  T :


 


NOW, THEREFORE,
in consideration of the foregoing, the mutual covenants herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:


 


1.                                       Actual
Commencement Date for the Parking Lot. 
The
Actual Commencement
Date for the Parking Lot shall occur upon Substantial Completion of those Parking
Lot Improvements within the Phase 1 Area, notwithstanding that construction of
the Parking Lot Improvements within the Phase 2 Area may not have commenced or
been completed as of such date. Promptly following Tenant’s removal of the temporary
office trailers from the Phase 2 Area, Landlord shall commence and diligently
prosecute to completion the remaining Parking Lot Improvements for the Phase 2 Area.
Tenant shall remove the temporary office trailers from the Phase 2 Area no later
than August 29, 1997.


 





















 


2.                                       Annual Rent for
the Parking Lot.  Annual Rent for the Parking
Lot shall commence upon the Actual Commencement Date for the Parking Lot as
determined in accordance with Section 1 above, notwithstanding that
construction of the Parking Lot Improvements for the Phase 2 Area may not have commenced or been
completed by such date. The current estimate of the Annual Rent for the Parking
Lot is One Hundred Thirty-Two Thousand Two Hundred Thirty-Eight Dollars
($132,238.00), which, as calculated in accordance with Section 1.9 of the
Summary, is twelve percent (12%) of the sum of (i) Acquisition Costs of Seven
Hundred Sixty-Four Thousand Four Hundred Seventy-Eight Dollars ($764,478.00)
and (ii) Parking Lot Improvement Costs of Three Hundred Thirty-Seven Thousand
Five Hundred Nine Dollars ($337,509.00). Upon the Actual Commencement Date for
the Parking Lot, Tenant shall commence the payment of the foregoing estimate of
the Annual Rent for the Parking Lot. When Landlord completes the Parking Lot
Improvements for the Phase 2 Area, Landlord will make a final determination of
all Parking Lot Improvement Costs and increase or decrease the Annual Rent for
the Parking Lot as appropriate, in which event Landlord will promptly refund to
Tenant any excess, or Tenant will promptly pay to Landlord any deficiency, in
the payment of Annual Rent for the Parking Lot, as applicable, and the parties
shall enter into an amendment of the Lease reflecting the revised Annual Rent
for the Parking Lot.


 


3.                                       Self-Help Rights. The self-help
rights for Tenant described in the second paragraph of Section 2.2 of the Lease
will not apply (i) with respect to the Parking Lot Improvements for the Phase 1
Area unless such improvements are not Substantially Complete by July 1, 1997,
and (ii) with respect to the Parking Lot Improvements for the Phase 2 Area,
unless such improvements are not Substantially Complete within sixty (60) days
following the date Tenant removes its temporary office trailers from the Phase
2 Area, as each such date is subject to extension by one (1) day for each day
Landlord is delayed in constructing the applicable improvements due to Force
Majeure Delays.


 


4.                                       Except as amended
hereby, the Lease remains in full force and effect.


 


IN WITNESS WHEREOF, Landlord and Tenant have
executed this Amendment as of the date set forth
above.


 


	
  Landlord:

  	
  AEW/LBA
  ACQUISITION CO. II, LLC, a

  corporation limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  LBA, Inc., a California corporation, its agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Phil Belling

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Phil Belling

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Principal

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Tenant:

  	
  CYMER,
  INC., a Nevada corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William A. Angus, III

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William A. Angus, III

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and CFO

  	
   

  
											



 


2





















 


SECOND AMENDMENT TO SINGLE-TENANT INDUSTRIAL LEASE


 


This Second Amendment to
Single-Tenant Industrial Lease (“Amendment”) is
entered into as of DECEMBER 2, 1997, by and between AEW/LBA ACQUISITION CO. II,
LLC, a California limited liability company (“Landlord”),
and CYMER, INC., a Nevada corporation (‘Tenant”).


 


R
E  C  I  T  A  L  S :


 


A.                                   Landlord and Tenant entered into that
certain Single-Tenant Industrial Lease dated December 19, 1996, as amended by that
certain First Amendment to Single-Tenant Industrial Lease dated April 1, 1997,
for premises located at 16750 Via Campo Court in San Diego, California (the “Lease”).


 


B.                                     Concurrently herewith, Landlord, Tenant,
Rancho Bernardo Corporate Center Property Owners Association (“the Association”) and Rudolph & Sletten, Inc. have
entered into a Settlement Agreement and Release of Claims dated of even date herewith
(the “Settlement Agreement”). All initially
capitalized terms not otherwise defined herein shall have the same meanings as
set forth in the Lease or the Settlement Agreement, as applicable.


 


C.                                     Pursuant to Paragraph 3(a) of the
Settlement Agreement, Landlord is obligated to pay for all costs and expenses incurred
in (i) removing the Cymer Segment, (ii) designing, permitting and constructing
the New Segments, (iii) relocating existing landscape irrigation lines in the
Easement Abandonment Area and (iv) installing signage in the New Segments.  Pursuant to Paragraph 3(b) of the Settlement
Agreement, Landlord is obligated to pay for all costs and expenses incurred in
designing and installing signs advising joggers that the Cymer Segment has been
closed.    Pursuant to Paragraph 5 of the
Settlement Agreement, Landlord is obligated to pay for the Association’s legal
fees (the “Association Fees”). The work to be
performed by Landlord described in this Recital C is referred to herein as the “Work”.   The costs and
expenses to be paid by Landlord described in this Recital C, including the
Association Fees, are referred to herein as the “Work Costs.”  Specifically excluded from the definition of
Work Costs are any and all legal fees incurred by Landlord in connection with
the Settlement Agreement, the Action, the Work or the preparation of the
CC&Rs Amendment or the Easement Amendment.


 


D.                                    Landlord and Tenant desire to amend the
Lease to provide for Tenant’s reimbursement of the Work Costs.


 


A
G  R  E  E  M  E  N  T:


 


NOW, THEREFORE, in
consideration of the foregoing, the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant agree as follows:


 


1.                                       Approval of Budget.  
Landlord will submit to Tenant for Tenant’s approval a budget
identifying the Work Costs (the “Budget”).
Tenant shall not unreasonably withhold or delay its approval of the
Budget.  The Budget as approved by Tenant
is referred to herein as the “Approved Budget”.  If any item of the Work Costs will exceed the
amount designated therefor in the Approved Budget, Landlord will resubmit a
revised Budget for Tenant’s approval in the manner set forth above, and the
revised Budget as approved by Tenant will become the Approved Budget.


 


2.                                       Reimbursement of Work Costs. 
Landlord will, from time to time, submit invoices to Tenant for Work Costs
paid by Landlord. Provided the amount set forth in the invoice for a particular
item does not exceed the amount set forth in the Approved Budget for such item,
Tenant shall, within fifteen (15) days following receipt of the invoice, pay to
Landlord, as Rent, the amount set forth in the invoice for such item.


 


3.                                       Proposed Lease. 
Landlord and Tenant are currently negotiating a lease for premises
adjacent to the Premises as depicted on Exhibit A to the Lease as Lot 44 (the “Proposed Lease”). Nothing contained in this Amendment shall
be construed as obligating Landlord or Tenant to enter into the Proposed
Lease.   However, should Landlord and
Tenant enter into the Proposed Lease on or before December 12, 1997: (i) Tenant
shall have no further obligation under Section 2 above to reimburse Landlord
for the Work Costs, as Landlord will be responsible for the payment thereof;
(ii) Landlord shall, within fifteen (15) days following the full execution and
delivery of the Proposed Lease, reimburse Tenant for any Work Costs previously
paid by Tenant pursuant to Section 2 above; (iii) the Work Costs (other than
the Association Fees) shall be included within the definition of “Financed
Project Costs” under the Proposed Lease, but only to the extent set forth in
the Approved Budget; and (iv) Landlord will reimburse Tenant within fifteen
(15) days following receipt of an invoice therefor, one-half (1/2)
of the legal fees incurred by Tenant as of the date hereof in connection with
defending the Action and negotiating the Settlement Agreement.


 


4.                                       Counterparts.  This Amendment may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute the same agreement. Facsimile signatures
will have the same force as original signatures.


 


5.                                       Effect of Amendment. Except as amended hereby, the Lease
remains in full force and effect.


 


IN WITNESS WHEREOF, the
parties hereto have executed this Amendment as of the date set forth above.


 


	
  “TENANT”

  	
  CYMER, INC. a Nevada
  corporation

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ William A. Angus,
  III

  	
   

  
	
   

  	
   

  	
  William A. Angus, III

  
	
   

  	
   

  	
  Sr. Vice President and
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  “LANDLORD”

  	
  AEW/LBA
  ACQUISITION CO. II, LLC,

  
	
   

  	
  a
  California limited liability company

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  Eastrich
  No. 175, LLC, a California limited liability company,

  its member-manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  Steve Layton

  	
   

  
	
   

  	
   

  	
   

  	
  Name

  	
  Steve Layton

  	
   

  
	
   

  	
   

  	
   

  	
  Its:
  Authorized Signatory

  
						



 





















 


THIRD
AMENDMENT TO SINGLE-TENANT INDUSTRIAL LEASE


 


This
Third Amendment to Single-Tenant Industrial Lease (“Amendment”)
is entered into as of DECEMBER 12, 1997, by and between AEW/LBA ACQUISITION CO.
II, LLC, a California limited liability company (“Landlord”),
and CYMER, INC., a Nevada corporation (“Tenant”).


 


R E  C
I  T  A  L  S:


 


A.                                   Landlord and
Tenant entered into that certain Single-Tenant Industrial Lease dated December
19, 1996 (the “Original Lease”), as amended by
that certain First Amendment to Single-Tenant Industrial Lease dated April 1,
1997 (the “First Amendment”), and as further
amended by that certain Second Amendment to Single-Tenant Industrial Lease dated
December 2, 1997 (the “Second Amendment”),
for premises located at 16750 Via Campo Court in San Diego, California.   The Original Lease, the First Amendment and
the Second Amendment are collectively referred to as the “Lease.”


 


B.                                     Concurrently
herewith, Landlord has entered into a Single Tenant Industrial Lease (the “Adjacent Lease”) for premises adjacent to the Premises as
depicted on Exhibit “A” to the Original Lease as Lot 44 (the “Adjacent Premises”).


 


C.                                     Landlord and
Tenant desire to amend the Lease to (i) confirm the actual square footage of
the Manufacturing Building and certain other matters concerning the Lease, (ii)
revise Landlord’s and Tenant’s obligations concerning the Parking Lot, and
(iii) establish certain rights and obligations concerning the Adjacent Premises
and the Adjacent Lease.


 


A G  R  E  E  M
E  N  T :


 


NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Landlord and Tenant agree as follows:


 


1.                                       Manufacturing Building. The parties
acknowledge that the actual rentable square footage of the Manufacturing Building
is 118,653 square feet (as opposed to 100,205 square feet as set forth in
Section 1.3 of the Summary), resulting in a total rentable square footage of
the Buildings of 155,612 square feet (as opposed to 137,164 square feet as set
forth in Section 1.3 of the Summary). This increase in rentable square footage,
however, will not increase Rent, nor shall it be taken into account to
calculate the Annual Rent payable during each Option Period after the Fair
Market Rental applicable to each Option Period is determined.


 


2.                                       Hazardous Materials Closure Plan. Tenant
acknowledges that it has received the following closure reports (the “Closure Reports”) relating to the remediation described in
that certain AEPI Permit by Rule/Conditionally Authorized Facility Closure Plan
amended as of December 11, 1996 and in those certain Specifications for
Decontamination and Demolition (as referenced in Section 6.3 of the Lease):


 


(a)                                  Letter report
dated March 10,1997 from Woodward-Clyde Consultants re: Monitoring Well
Destruction Report;


 


(b)                                 Letter report
dated April 15,1997 from Woodward-Clyde Consultants re: Permit by Rule Closure
Certification;


 


(c)                                  Letter report
dated April 15, 1997 from Woodward-Clyde Consultants re: Decontamination and
Demolition Evaluation;


 


(d)                                 Letter report
dated May 27, 1997 from Dames & Moore re: Review of Alcoa Closure Plan;


 


(e)                                  Letter dated July
8, 1997 from EnviroPro re: Response to Dames & Moore Letter Report of Alcoa
Closure Documents.


 


The
Closure Reports state that the environmental clean-up of the Alcoa Electronic
Packaging facility located at 16750-16710 Via del Campo Court, San Diego,
California has been completed in accordance with all regulatory agency
requirements. Notwithstanding the Closure Reports and Tenant’s occupancy of the
Premises, Tenant shall not in any event be responsible for any contamination or
Hazardous Materials not introduced to the Premises by Tenant or Tenant’s
Parties.


 


3.                                       Actual Commencement Dates.   The parties acknowledge that the Actual
Commencement Date for Office Building is January 5,  1997, and the Actual Commencement Date for
Manufacturing Building is June 1, 1997.


 


4.                                       Vacation by ALCOA. Tenant
acknowledges that ALCOA has vacated the Buildings, and Landlord has delivered the
Buildings to Tenant, as required by Section 2.3 of the Lease.


 


5.                                       Parking Lot.


 


(a)                                  The Actual
Commencement Date for the Parking Lot shall occur on August 1, 1997,
notwithstanding that Substantial Completion of the Parking Lot Improvements may
not have been completed as of such date.


 


(b)                                 The date that
Tenant may exercise the self-help rights for the Phase 1 Areas set forth in
Paragraph 3 of the First Amendment is extended to December 1, 1997.


 





















 


(c)                                  Effective upon
the Commencement Date under the Adjacent Lease (as the Commencement Date is
defined in Section 1.6 of the Summary to the Adjacent Lease): (i) the Parking
Lot shall be deleted from the Premises and become a portion of the Adjacent
Premises, subject, however, to clause (vi) below of this Section 5(c); (ii)
Section 1.9 of the Summary to the Lease relating to Rent for the Parking Lot
shall be deleted from the Lease; (iii) Landlord shall grant to Tenant easements
for ingress and egress over, and parking upon, the Adjacent Premises in
accordance with the provisions of a Declaration of Parking and Access Easements
and Maintenance Agreement in the form and substance of Exhibit “A”
attached hereto (the “Declaration”),
which
Landlord will record against title to the Premises and the Adjacent Premises on
or before the Commencement Date under the Adjacent Lease; (iv) Landlord
delegates and assigns to Tenant all rights and obligations of the Owner of the
Benefited Parcel under the Declaration during the Term of the Lease, and Tenant
shall observe and perform all such obligations; (v) Tenant and Landlord shall
amend the memorandum of the Lease that has been recorded against title to the
Premises to memorialize the deletion from the Lease of the Parking Lot; (vi)
for purposes of Section 17 of the Lease, the Easement Area under the
Declaration will be deemed to constitute a portion of the Premises; and (vii)
in the event a prospective purchaser or lender for the Premises or Adjacent
Premises requests an amendment to the Declaration, Tenant shall consent to any
such amendment provided such amendment does not materially increase Tenant’s
obligations or materially decrease Tenant’s rights under the Lease or
Declaration. If a prospective purchaser or lender requests an amendment,
Landlord will reimburse Tenant for the reasonable attorneys’ fees incurred by
Tenant in reviewing and negotiating such amendment.


 


6.                                       Cross-Default.  The following is
added to the end of Section 22.1 of the Original Lease:


 


“(e)                            an Event of Default under the Adjacent
Lease.”


 


7.                                       Security Deposit.


 


(a)                                  The schedule for
reduction of the Security Deposit in Section 5 of the Original Lease is
deleted, and the following is substituted therefor:


 


	
  Period

  	
   

  	
  Required Security Deposit

  	
   

  
	
  Actual
  Commencement Date for Office Building through the first anniversary of the
  Commencement Date under the Adjacent Lease

  	
   

  	
  $

  	
  2,224,416.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Months 13-24 of
  the Adjacent Lease Term

  	
   

  	
  $

  	
  1,516,277.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Months 25-36 of
  the Adjacent Lease Term

  	
   

  	
  $

  	
  808,138.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Months 37 to end
  of the Adjacent Lease Term

  	
   

  	
  $

  	
  100,000.00

  	
   

  



 


(b)                                 As an additional
condition to Landlord’s waiver of the requirement to maintain the Security
Deposit under Section 5 of the Original Lease, Tenant shall have commenced
business operations in the entire Adjacent Premises.


 


(c)                                  Tenant
acknowledges that Landlord may use, apply or retain the Security Deposit for
the payment of rent or any other sum in default under the Adjacent Lease, or
for the payment of any other amount, loss or damage which Landlord may spend,
incur or suffer by reason of Tenant’s default under the Adjacent Lease.


 


8.                                       Effect of Amendment. Except as amended hereby, the Lease remains
in full force and effect.


 


9.                                       Interpretation.  Terms used in
this Amendment which begin with initial capital letters are defined terms which
shall have the meanings given them in the Lease, unless the context of this
Amendment requires otherwise. In the event of a conflict between the provisions
of this Amendment and those of the Lease, this Amendment shall control.


 


IN WITNESS WHEREOF, the parties hereto have
executed this Amendment as of the date set forth above.


 


	
  “TENANT”

  	
  CYMER, INC., a Nevada
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William A. Angus,
  III

  	
   

  
	
   

  	
   

  	
  William A. Angus, III

  
	
   

  	
   

  	
  Sr. Vice President and
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  “LANDLORD”

  	
  AEW/LBA
  ACQUISITION CO. II, LLC,

  
	
   

  	
  a
  California limited liability company

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  Eastrich
  No. 175, LLC, a California limited liability

  company, its member-manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  

  	
  /s/ Phil Belling

  	
   

  
	
   

  	
   

  	
   

  	
  Name

  	
  Phil Belling

  	
   

  
	
   

  	
   

  	
   

  	
  Its:
   Authorized Signatory

  
						



 


2





















 


AMENDMENT NO. 4 TO


SINGLE-TENANT INDUSTRIAL LEASE


 


(Via del Campo Court Premises)


 


This AMENDMENT NO. 4 TO
SINGLE-TENANT INDUSTRIAL LEASE (the
“Amendment”) is entered into as of this 21th day of January 1999 by and between
ARDEN REALTY
FINANCE III, LLC, a Delaware
limited liability company (“Arden” or “Landlord”), and CYMER, INC., a Nevada corporation (“Tenant”), with
reference to the facts set forth in the Recitals below.


 


RECITALS


 


A.                                  Landlord and
Tenant are parties to that certain Single-Tenant Industrial Lease dated
December 19, 1996 (the “Original Lease”) for certain premises (the “Premises”) located
at 16750 Via del Campo Court, San Diego, California 92127. The Original Lease has
been previously amended by:


 


(1)                                  First Amendment
to Single-Tenant Industrial Lease dated April 1, 1997 (the “First Amendment”);


 


(2)                                  Second Amendment
to Single-Tenant Industrial Lease dated December 2, 1997 (the “Second Amendment”);
and


 


(3)                                  Third Amendment
to Single-Tenant Industrial Lease dated December 12, 1997 (the “Third Amendment”).


 


B.                                     The Original
Lease, the First Amendment, the Second Amendment, and the Third Amendment are
hereafter collectively referred to as the “Lease.”


 


C.                                     The original
landlord under the Lease was AEW/LBA Acquisition Co., II, LLC, a California
limited liability company (“AEW/LBA”). AEW/LBA has previously sold the Premises
to Arden.  Concurrently with Arden’s
purchase of the Premises from AEW/LBA, AEW/LBA assigned its interest under the
Lease to Arden. Arden is the current landlord under the Lease.


 





















 


D.                                    The Third
Amendment contemplated that Landlord and Tenant would enter into the Adjacent
Lease for the Adjacent Premises. 
However, Tenant is purchasing the Adjacent Premises from AEW/LBA.   Tenant’s purchase of the Adjacent Premises
will terminate the Adjacent Lease, thereby requiring a further amendment of the
Lease to reflect the termination of the Adjacent Lease and certain other
matters set forth below.


 


E.                                      The parties
desire to further amend the Lease in order to memorialize their understanding
concerning the foregoing matters and other matters set forth below.


 


AGREEMENT


 


NOW,
THEREFORE, in consideration of
the Lease, the mutual covenants contained in this Agreement and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:


 


1.                                    Interpretation. Except as
amended by this Amendment, the Lease shall remain in full force and effect. In
the event of a conflict between the provisions of this Amendment and those of
the Lease, this Amendment shall control. Terms with initial capital letters are
defined terms which shall have the respective meanings given them in the Lease,
unless the context of this Amendment requires otherwise.


 


2.                                     Security Deposit. The current
amount of Tenant’s Security Deposit is $2,224,416.00. The Security Deposit is
being held by Montgomery Securities, as provided in Section 5 of the Original
Lease. Landlord hereby waives the requirement for the Security Deposit under
the Lease. Accordingly, it is agreed that (a) Tenant shall no longer be
required to maintain the Security Deposit, and (b) Landlord shall execute such
documents as may be reasonably required to release the Security Deposit from
such account so it can be returned to Tenant. Landlord shall execute such
documents within five (5) business days after receipt of a written request from
Tenant to do so. In addition, Section 1.10 of the Summary of Basic Lease
Information and Definitions in the Original Lease, Section 5 of the Original
Lease, and Section 7 of the Third Amendment are hereby deleted in their
entirety.


 


3.                                       Amendment of
Declaration.


 


(a)                                  Background.


 


(1)                                  At the time the
Lease was executed, the parties contemplated that the Premises would include
the Parking Lot. The Parking Lot is located on a portion of the Adjacent
Premises which is hereafter referred to as “Lot 43.” As of the date of this
Agreement, AEW/LBA is the owner of the Adjacent Premises.


 


2





















 


(2)                                  When Arden
purchased the Premises from AEW/LBA, AEW/LBA granted Arden certain easement rights
(the “Easements”) over Lot 43 pursuant to a certain Declaration of Parking and
Access Easements and Maintenance Agreement dated March 2, 1998 (the “Declaration”)
and recorded on March 5, 1998 as Instrument No. 98-0118053 in the Official
Records of San Diego County, California. The Declaration affects the Premises and
the Adjacent Premises.   The Premises are
referred to in the Declaration as the “Benefitted Parcels.”   The Adjacent Premises are referred to in the
Declaration as the “Burdened Parcels.”


 


(3)                                  The area on which
the Easements are located is referred to in the Declaration as the “Easement
Area.” The Easement Area is more particularly described in the Declaration.
AEW/LBA and Arden intended that the Easement Area would replace the Parking Lot
as part of the Premises.


 


(4)                                  Tenant is
negotiating to purchase the Adjacent Premises, i.e. the Burdened Parcels, from
AEW/LBA. Tenant’s purchase of the Burdened Parcels will require the Declaration
and the Lease to be amended.


 


(b)                                 Form of Amendment
to Declaration.  Notwithstanding anything in
this Amendment to the contrary, if Tenant purchases the Burdened Parcels from
AEW/LBA, Landlord and Tenant shall execute Amendment No. 1 to Declaration of
Parking and Access Easements and Maintenance Agreement (“Amendment No. 1 to
Declaration”) substantially in the form attached hereto as Exhibit “A.” The
parties shall execute Amendment No. 1 to Declaration in recordable form within
ten (10) business days after the Title Transfer Date. Tenant shall be
responsible for causing Amendment No. 1 to Declaration to be recorded.


 


(c)                                  Grant of Rights
and Obligations to Tenant.  Landlord
hereby grants to Tenant the right to use the Easements in accordance with the
provisions of the Declaration, as the same may be amended, during the term of
the Lease. Tenant hereby agrees to comply with the Declaration, as the same may
be amended, during the term of the Lease.


 


(d)                                 Further Amendment
of Declaration.  In the event that a
prospective purchaser of or lender for the Benefitted Parcels and/or the
Burdened Parcels requests an amendment to the Declaration, Landlord and Tenant
shall reasonably consent to any such amendment, provided such amendment does
not materially increase Tenant’s or Landlord’s respective obligations, or
materially decrease their respective rights, under the Lease and/or the
Declaration.   If a prospective purchaser
or lender of Landlord or Tenant requests an amendment of the Declaration,
Landlord or Tenant, as the case may be, shall reimburse the other for the
reasonable attorney’s fees incurred by the requesting party in reviewing and


 


3





















 


negotiating
such amendment, which fees shall not exceed One Thousand Five Hundred Dollars
($1,500) in each instance.


 


(e)                                  Clarification of
Certain Defined Terms.  The term “Easements”
as used in this Amendment shall have the same meaning as the term “Easements”
is given in Amendment No. 1 to Declaration. The parties hereby agree that the
term “Parking Lot” shall hereafter mean and include only the Easement Area. The
term “Parking Lot” shall, however, continue to be used in the Lease. The terms “Adjacent
Premises” and “Adjacent Lease” shall no longer have any effect and are hereby
deleted from the Lease.


 


(f)                                    Effectiveness of
Section 3.  Notwithstanding anything in
this Section 3 to the contrary, this Section 3 shall not become effective
unless and until Tenant purchases the Burdened Parcels from AEW/LBA.   If Tenant purchases the Burdened Parcels
from AEW/LBA, this Section 3 shall automatically become effective as of the
date (the “Title Transfer Date”) on which the Grant Deed conveying title to the
Burdened Parcels to Tenant is recorded in the Official Records of San Diego
County.


 


4.                                       Annual Rent for
Parking Lot.  Tenant shall no longer be obligated
to pay Annual Rent for the Parking Lot effective as of the first to occur: (a)
the Title Transfer Date, or (b) February 15, 1999. Any Annual Rent and other
charges for the Parking Lot which may have been paid in advance for the period
after the date on which Tenant ceases to be obligated to pay Annual Rent for
the Parking Lot shall be promptly refunded by Landlord to Tenant.


 


5.                                       Amendment of
Memorandum of Lease.  If Tenant
purchases the Burdened Parcels, Tenant and Landlord shall execute, acknowledge
and record an amendment to the Memorandum of Lease, as previously recorded, in
form mutually satisfactory to the parties for the purpose of memorializing the
deletion of the Parking Lot from the Premises and other appropriate
matters.  Landlord shall also execute, in
recordable form, a Quitclaim Deed, quitclaiming any interest which Landlord may
have acquired in the Adjacent Premises by virtue of the Lease and/or the
Memorandum of Lease, but not the Declaration. Both said amendment to the
Memorandum of Lease and said Quitclaim Deed shall be executed and recorded
concurrently with the close of escrow for the purchase of the Burdened Parcels
by Tenant.


 


6.                                       Counterparts.  This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same agreement. Facsimile signatures shall have
the same force and effect as original signatures.


 


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7.                                       Effectiveness of
Amendment.  Except as may be otherwise
provided above, this Amendment shall be effective when executed and delivered
by both parties.


 


IN WITNESS
WHEREOF, the parties
hereto have executed this Amendment No. 4 to Single-Tenant Industrial Lease as
of the date first set forth above.


 


	
  “TENANT”:

  	
  CYMER, INC.,

  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William A. Angus,
  III

  	
   

  
	
   

  	
   

  	
  William A. Angus, III

  
	
   

  	
   

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  B Scott Schellet

  	
   

  
	
   

  	
  Printed Name:

  	
    B Scott
  Schellet

  	
   

  
	
   

  	
  Title:

  	
     Senior VP Operations

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  “LANDLORD”:

  	
  ARDEN REALTY FINANCE III, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Victor J. Coleman

  	
   

  
	
   

  	
   

  	
  Victor J. Coleman

  
	
   

  	
   

  	
  President and Chief Operating

  Officer

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  Richard S. Ziman

  	
   

  
	
   

  	
  Printed
  Name:

  	
  Richard
  S. Ziman

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
														



 


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FIFTH AMENDMENT TO LEASE


(Cymer Technology Center)


 


THIS FIFTH
AMENDMENT TO LEASE (“Fifth Amendment”)
is made and entered into as of the 21st day of February, 2000, by and between ARDEN REALTY FINANCE III,
L.L.C., a Delaware limited liability company (“Landlord”)
and CYMER, INC., a Nevada corporation (“Tenant”).


 


R E  C  I  T  A
L  S :


 


A.                                   Landlord and
Tenant are parties to that certain Single-Tenant Industrial Lease dated
December 19, 1996 between Landlord’s predecessor-in-interest, AEW/LBA
Acquisition Co. II, LLC, and Tenant (the “Original Lease”),
for certain premises (the “Premises”)
located at and adjacent to 16750 Via del Campo Court, San Diego, California.
The Original Lease has been previously amended by that certain First Amendment
to Single-Tenant Industrial Lease dated April 1, 1997 (the “First
Amendment”), that certain Second Amendment to Single-Tenant Industrial
Lease dated December 2, 1997 (the “Second Amendment”),
that certain Third Amendment to Single-Tenant Industrial Lease dated December
12, 1997 (the “Third Amendment”), and that
certain Amendment No. 4 to Single-Tenant Industrial Lease dated January 21,
1999 (the “Fourth Amendment”). The Original
Lease, the First Amendment, the Second Amendment, the Third Amendment, and the
Fourth Amendment are hereinafter collectively referred to as the “Lease”.


 


B.                                     Unless otherwise
defined herein, capitalized terms as used herein shall have the same meanings
as given thereto in the Lease.


 


C.                                     Pursuant to the
Fourth Amendment, Landlord and Tenant executed that certain Amendment No. 1 to
Declaration of Parking and Access Easements and Maintenance dated January 21,
1999 and recorded on February 1, 1999 as Document No. 1999-0056829 in the Official
Records of San Diego County, California (the “Easement
Amendment”) amending that certain Declaration of Parking and Access
Easements and Maintenance Agreement dated March 2, 1998 (the “Parking Declaration”) and recorded on March 5, 1998 as
Instrument No. 98-0118053 in the Official Records of San Diego County,
California. The Easement Amendment contemplated the relocation of the “Easement
Area” from “Lot 43” to “Lot 44” (as these terms are defined in the Easement
Amendment).


 


D.                                    By this Fifth
Amendment, Landlord and Tenant desire to relocate the 109 parking spaces
located in the Easement Area to a parking structure (the “Parking
Structure”) to be constructed by Tenant on Lot 46, to terminate the “Parking
Easement” (as that term is defined in the Easement Amendment) and to otherwise
modify the Lease as provided herein.


 


NOW, THEREFORE,
in consideration of the foregoing recitals and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:


 


A G  R  E  E  M
E  N  T


 


1.                                       Construction of
Parking Structure.  During the first six (6)
months of the year 2000, Tenant shall construct the Parking Structure on Lot 46
to replace the 109 parking spaces located in the Easement Area. The Parking
Structure shall be built in conformance with all applicable state and local
codes and ordinances and in conformance with the following:


 


(a)                                  Selection of
Architect/Construction Drawings.  Tenant
shall retain an architect/space planner of Tenant’s own choosing (the “Architect”) to prepare the “Construction Drawings”, as that
term is defined below. Tenant shall also retain engineering consultants of
Tenant’s own choosing (the “Engineers”) to
prepare all plans and engineering drawings related to the structural,
mechanical, electrical, plumbing, HVAC and lifesafety work of the Parking
Structure. The plans and drawings to be prepared by Architect and the Engineers
hereunder shall


 


	
   

  	
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be
known collectively as the “Construction Drawings”.
Notwithstanding that any Construction Drawings may be reviewed by Landlord or
its architects, engineers and consultants, and notwithstanding any advice or
assistance which may be rendered to Tenant by Landlord or its architects,
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.


 


(b)                                 Permits.  Tenant shall cause the Architect to submit the
Construction Drawings to the appropriate authorities for all applicable
building permits necessary to allow “Contractor”, as that term is defined
below, to commence and fully complete the construction of the Parking
Structure.


 


(c)                                  Construction of
Parking Structure by Contractor.  Tenant
shall independently retain a general contractor (“Contractor”),
licensed by the State of California, to construct the Parking Structure on Lot
46 in accordance with the Construction Drawings. The Contractor, all
subcontractors, laborers, materialmen and suppliers used by Tenant or
Contractor in connection with the construction of the Parking Structure shall
be known collectively as “Tenant’s Agents”.


 


(d)                                 Indemnity.  Tenant shall indemnify, defend, protect and
hold Landlord harmless from any and all claims arising from or in connection
with Tenant’s construction of the Parking Structure or from any activity,
work or thing which may be permitted or suffered by Tenant or Tenant’s Agents
in or about the Premises and shall further indemnify, defend, protect and hold
Landlord harmless from and against any and all claims arising from any breach
or default in the performance of any obligation on Tenant’s part to be
performed under this Fifth Amendment or arising from any negligence or willful
misconduct of Tenant or any of its agents, contractors, employees or invitees,
patrons, customers or members in or about the Project and from any and all
costs, attorneys’ fees and costs, expenses and liabilities incurred in the
defense of any claim or any action or proceeding brought thereon, including
negotiations in connection therewith.


 


(e)                                  Requirements of
Tenant’s Agents.  The Contractor shall guarantee
to Tenant and for the benefit of Landlord that the Parking Structure shall be
free from any defects in workmanship and materials for a period of one (1) year
from the date of completion thereof. Such warranties and guarantees with
respect to the Parking Structure shall be contained in the contract with
Contractor 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 covenants to give
Landlord any assignment or other assurances which may be necessary to effect
such right of direct enforcement.


 


2.                                       Insurance
Requirements.  Tenant shall require that all
of Tenant’s Agents 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 as set forth in Section 20 of the Original
Lease. In addition to the insurance required under Section 20 of the Original
Lease, Tenant shall carry “Builder’s All Risk” insurance in an amount approved
by Landlord covering the construction of the Parking Structure, and such other
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.


 


3.                                       Construction
Costs.  Landlord shall disburse to
Tenant such funds as are necessary to pay the Construction Costs (as defined
below) as follows:


 


(a)                                  Disbursement of
Construction Costs.  During the construction of the
Parking Structure, Landlord shall make monthly disbursements of the
Construction Costs for the construction of the Parking Structure for the
benefit of Tenant and shall authorize the release of monies for the benefit of
Tenant as follows.


 


(i)                                     Monthly
Disbursements.  On or before the first day of
each calendar month (“Submittal Date”)
during the construction of the Parking Structure (or such other date as may be
agreed upon between Landlord and Tenant), Tenant shall deliver to Landlord: (i)
a request for payment of the Contractor approved by Tenant, in a form to be
provided by Landlord, showing the schedule, by trade, of percentage of
completion of the


 


	
   

  	
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  DC

  	
   

  



 


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Parking
Structure, detailing the portion of the work completed and the portion not
completed; (ii) invoices from all of “Tenant’s Agents,” as that term is defined
in Section l(c) of this Fifth Amendment, for labor rendered and materials delivered
to the Parking Structure; (iii) executed mechanic’s lien releases, which lien
releases shall be conditional with respect to the then-requested payment
amounts and unconditional with respect to payment amounts previously disbursed
by Landlord, from all of Tenant’s Agents which shall comply with the
appropriate provisions, as reasonably determined by Landlord, of California
Civil Code Section 3262(d); 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. After Landlord’s review of Tenant’s payment
request, on or before the date occurring thirty (30) days after the Submittal Date,
and assuming Landlord receives all of the information described in items (i)
through (iv), above, Landlord shall deliver a check to Tenant made jointly
payable to Contractor and Tenant in payment of the lesser of: (A) the amounts
so requested by Tenant, as set forth in this Section 3(a)(i), above, less a ten
percent (10%) retention (the aggregate amount of such retentions to be known as
the “Final Retention”), and (B) the balance
of any remaining available portion of the “Construction Cost Allowance” (as
that term is defined in Section 3(d) below) (not including the Final
Retention), provided that Landlord does not dispute any request for payment
based on non-compliance of any work with the Construction Drawings, 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.


 


(ii)                                  Final Retention.  Subject to the provisions of this Fifth Amendment,
a check for the Final Retention payable jointly to Tenant and Contractor shall
be delivered by Landlord to Tenant following the completion of construction of
the Parking Structure, provided that (i) Tenant delivers to Landlord (a)
properly executed mechanics lien releases from all of Tenant’s Agents in
compliance with both California Civil Code Section 3262(d)(2) and either
Section 3262(d)(3) or Section 3262(d)(4), which lien releases shall be
conditional with respect to the then-requested payment amounts and
unconditional with respect to payment amounts previously disbursed by Landlord,
(b) an application and certificate for payment (AIA form G702-1992 or
equivalent) signed by the Architect/Engineer, (c) a breakdown sheet (AIA form
G703-1992 or equivalent), (d) copies of the stamped building permit plans, (e)
copy of the building permit, (f) copies of the stamped building permit
inspection card with all final sign-offs, (g) a reproducible copy (in a form as
approved by Landlord) of the “as built” drawings of the Parking Structure, (h)
one year warranty letters from Tenant’s General Contractor, (i) final punchlist
completed and signed off by Tenant and the Architect/Engineer, and (j) an
acceptance of the Parking Structure signed by Landlord (collectively, the “Final
Closing Package”), and (ii) Landlord has determined that no substandard work
exists which adversely affects the mechanical, electrical, plumbing, heating,
ventilating and air conditioning, life-safety or other systems of the Parking
Structure, the structure or exterior appearance of the Parking Structure, as
applicable. Landlord shall have ten (10) business days from receipt of a
conformed copy of the Notice of Completion to conduct its final inspection.


 


(iii)                               Original
Documents.  Tenant may retain the original
stamped building permit plans and stamped building permit inspection card (“Original
Permits”) for the Parking Structure during the term of the Lease. Upon
expiration or earlier termination of the Lease, Tenant shall turn over the Original
Permits to Landlord. However, if Landlord requires access to the Original
Permits during the term of the Lease, Tenant shall make the Original Permits
available to Landlord.


 


(b)                                 Other Terms.  All items covered by Tenant’s payment requests
for which Landlord disburses funds shall be deemed to be Landlord’s property.
Landlord shall be obligated to make disbursements to Tenant for construction of
the Parking Structure only to the extent Tenant has actually incurred costs. In
other words, Tenant shall not be entitled to receive advance payment for
construction costs that may be incurred at a future date.


 


(c)                                  Certain
Definitions.  The Term “Construction Costs”
shall mean and include all hard and soft costs incurred in the construction of
the Parking Structure, including without limitation architectural fees, permit
fees, engineering fees, amounts paid to the Contractor under its construction
contract with Tenant, and all other costs for labor and materials incorporated
into the Parking Structure. The term “Landlord’s Financing Costs” shall mean
and include: (1) interest (at the rate of 10.7% per annum) accrued on
disbursements of Construction


 


	
   

  	
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3





















 


Costs
made to Tenant during the period beginning on the date of each disbursement and
ending on the Parking Rent Start Date and (2) a fee to cover Landlord’s cost of
administering the disbursement of funds during the construction period equal to
one percent (1.0%) of the amount disbursed to Tenant. Landlord shall not charge
any loan origination fees or loan processing fees. During the construction
period, interest shall accrue on such funds as are actually disbursed, from
time to time, to pay the Construction Costs at the same annual rate specified
in Section 4 below.


 


(d)                                 Ceiling on
Construction Costs.  Notwithstanding anything to
the contrary in this Section 3, in no event shall Landlord be required to
advance Construction Costs in excess of Two Million Two Hundred Thousand and
00/100 Dollars ($2,200,000.00), excluding Landlord’s Financing Costs and
administrative costs (the “Construction Cost
Allowance”).


 


4.                                       Parking Structure
Rent.  Commencing July 1, 2000 (“Parking Rent Start Date”), Tenant shall pay to Landlord, as
Additional Rent, the actual Construction Costs for the Parking Structure
(including financing costs and administrative expenses) amortized over one
hundred twenty-six (126) months at an interest rate often and 7/10th percent (10.7%) per annum. Said Additional
Rent amount shall be set forth as follows:


 


(a)                                  Prior to the
Parking Rent Start Date, Landlord shall deliver to Tenant a Notice of
Construction Costs and Amortization Schedule (the “Schedule”)
setting forth the amount of Additional Rent to be paid by Tenant in a form
substantially similar to that attached hereto as Exhibit “A”, which Tenant
shall execute and return to Landlord within five (5) days of receipt thereof.
Failure of Tenant to timely execute and deliver the Schedule shall constitute
an acknowledgment by Tenant that the statements included in such Schedule are
true and correct, without exception.


 


(b)                                 Notwithstanding
the foregoing, if the final amount of Construction Costs is not available prior
to the Parking Rent Start Date, Landlord will use its best estimate for purposes
of calculating the amount of Additional Rent to be set forth in the Schedule
and the Schedule shall be entitled “Notice of Estimated Construction Costs and
Amortization Schedule (“Estimated Schedule”)
and Tenant shall commence payments pursuant to the Estimated Schedule.


 


(c)                                  As soon after the
Parking Rent Start Date as the final Construction Costs can be determined,
Landlord shall deliver to Tenant an amended Schedule (“Amended Schedule”)
as outlined in paragraph 4(a), above. The Amended Schedule shall be submitted with
appropriate documentation supporting all adjustments made to the Estimated
Schedule. Upon receipt of the Amended Schedule Tenant shall continue its
payments pursuant to the Amended Schedule.


 


5.                                       Termination of
Parking Declaration.  The
parties agree that, once the Parking Structure is completed, the Parking
Declaration, as amended, will no longer be necessary. Therefore, it is agreed
that the parties will execute such documents (the “Termination
Documents”) as may be reasonably necessary to terminate the Parking
Declaration and all easements created thereunder or under the Easement
Agreement effective as of the Parking Rent Start Date. The Termination
Documents may include a Quitclaim Deed and such other documents or instruments
as Tenant’s title insurance company may reasonably require to confirm the
termination of the Parking Declaration and all easements created thereunder.


 


6.                                       Brokers.  Each party represents and warrants to the
other that no broker, agent or finder negotiated or was instrumental in
negotiating or consummating this Fifth Amendment. Each party further agrees to
defend, indemnify and hold harmless the other party from and against any claim
for commission or finder’s fee by any entity who claims or alleges that they were
retained or engaged by the first party or at the request of such party in
connection with this Fifth Amendment.


 


7.                                       Defaults.  Tenant hereby represents and warrants to
Landlord that, as of the date of this Fifth Amendment, Tenant is in full
compliance with all terms, covenants and conditions of the Lease and that there
are no breaches or defaults under the Lease by Landlord or Tenant, and that
Tenant knows of no events or circumstances which, given the passage of time,
would constitute a default under the Lease by either Landlord or Tenant.


 


	
   

  	
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8.                                      WAIVER OF JURY TRIAL.  EACH PARTY HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY IN ANY ACTION SEEKING SPECIFIC
PERFORMANCE OF ANY PROVISION OF THE LEASE, FOR DAMAGES FOR ANY BREACH UNDER THE
LEASE, OR OTHERWISE FOR ENFORCEMENT OF ANY RIGHT OR REMEDY UNDER THE LEASE.


 


9.                                       No Further
Modification.  Except as set forth in this
Fifth Amendment, all of the terms and provisions of the Lease shall remain
unmodified and in full force and effect. Effective as of the date hereof, all
references to the “Lease” shall refer to the Lease as amended by this Fifth
Amendment.


 


IN WITNESS
WHEREOF, this Fifth Amendment has been executed as of the day and year first
above written.


 


	
   

  	
  “Landlord”

  
	
   

  	
   

  
	
   

  	
  ARDEN
  REALTY FINANCE III, L.L.C.,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/ Victor J. Coleman

  	
   

  
	
   

  	
   

  	
  VICTOR J. COLEMAN

  
	
   

  	
   

  	
  Its: President and COO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/ Robert C. Peddicord

  	
   

  
	
   

  	
   

  	
   

  	
   Robert C. Peddicord

  	
   

  
	
   

  	
   

  	
  Its: 

  	
   Senior Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  “Tenant”:

  
	
   

  	
   

  
	
   

  	
  CYMER,
  INC.,

  
	
   

  	
  a
  Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/ William A. Angus, III

  	
   

  
	
   

  	
  Print
  Name:

  	
  William A. Angus, III

  	
   

  
	
   

  	
  Its: 

  	
  Sr.
  Vice President and Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
   

  
	
   

  	
  Print
  Name:

  	
   

  	
   

  
	
   

  	
  Its: 

  	
   

  	
   

  
											



 


 


	
   

  	
  Initials:

  	
  /s/
  VC

  	
   

  
	
   

  	
   

  	
  DC

  	
   

  



 


5