Exhibit 10.40



 





EXHIBIT 10.40




LEASE

(Multi-Tenant; Net)




BETWEEN




THE IRVINE COMPANY LLC




AND




ILLUMINA, INC.




 









 







INDEX TO LEASE




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






 









 








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






	 	 	 
	Exhibit A
	 	Description of Premises

	Exhibit B
	 	Environmental Questionnaire

	Exhibit C
	 	Landlord’s Disclosures

	Exhibit D
	 	Insurance Requirements

	Exhibit E
	 	Rules and Regulations

	Exhibit X
	 	Work Letter

	Exhibit Y
	 	Project Site Plan







 









 







LEASE

(Multi-Tenant; Net)




     THIS LEASE is made as of the 29th day of September, 2006 by and between THE IRVINE COMPANY LLC, a Delaware limited liability company
hereafter called “Landlord,” and ILLUMINA, INC., a Delaware corporation, hereinafter called
“Tenant.”



ARTICLE I. BASIC LEASE PROVISIONS




     Each reference in this Lease to the “Basic Lease Provisions” shall mean and refer to the
following collective terms, the application of which shall be governed by the provisions in the
remaining Articles of this Lease.




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





	 	 	 
	LANDLORD

	 	TENANT
	 
	 	 
	THE IRVINE COMPANY LLC
	 	ILLUMINA, INC.
	550 Newport Center Drive
	 	9530 Towne Center Drive, Suite 200
	Newport Beach, CA 92660

	 	San Diego, CA 92121
	Attn: Senior Vice President, Operations

	 	 
	               Irvine Office Properties

	 	 
	 
	 	 
	THE IRVINE COMPANY LLC
	 	 
	550 Newport Center Drive
	 	 
	Newport Beach, CA 92660
	 	 
	Attn: Vice President, Operations
	 	 
	               Irvine Office Properties,
Technology Portfolio
	 	 







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




 









 












ARTICLE II. PREMISES




     SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases from Landlord the
premises shown in Exhibit A (the “Premises”), containing approximately the rentable square
footage set forth as the “Floor Area” in Item 8 of the Basic Lease Provisions and known by the
suite number identified in Item 1 of the Basic Lease Provisions. The Premises are located in the
building identified in Item 1 of the Basic Lease Provisions (the Premises together with such
building and the underlying real property, are called the “Building”), and is a portion of the
project identified in Item 2 of the Basic Lease Provisions and shown in Exhibit Y, if any
(the “Project”). If the Project is not already completed, Landlord makes no representation that
the Project, if any, as shown on Exhibit Y, (a) will be completed or that it will be
constructed as shown on Exhibit Y without change, or (b) to the extent the Project is
constructed, it will not be changed from the Project as shown on Exhibit Y. All references
to “Floor Area” in this Lease shall mean the rentable square footage set forth in Item 8 of the
Basic Lease Provisions. The rentable square footage set forth in Item 8 may include or have been
adjusted by various factors, including, without limitation, a load factor to allocate a
proportionate share of any vertical penetrations, stairwells, common lobby or common features or
areas of the Building. Tenant agrees that the Floor Area set forth in Item 8 shall be binding on
Landlord and Tenant for purposes of this Lease regardless of whether any future or differing
measurements of the Premises or the Building are consistent or inconsistent with the Floor Area set
forth in Item 8.



     SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither Landlord nor any
representative of Landlord has made any representation or warranty with respect to the Premises,
the Building or the Project or their respective suitability or fitness for any purpose, including
without limitation any representations or warranties regarding the compliance of Tenant’s use of
the Premises with the applicable zoning or regarding any other land use matters, and Tenant shall
be solely responsible as to such matters. Further, neither Landlord nor any representative of
Landlord has made any representations or warranties regarding (i) what other tenants or uses may be
permitted or intended in the Building or the Project, (ii) any exclusivity of use by Tenant with
respect to its permitted use of the Premises as set forth in Item 3 of the Basic Lease Provisions,
or (iii) any construction of portions of the Project not yet completed. Tenant further
acknowledges that neither Landlord nor any representative of Landlord has agreed to undertake any
alterations or additions or to construct any improvements to the Premises except as expressly
provided in this Lease, and that the flooring materials which may be installed within portions of
the Premises located on the ground floor of the Building may be limited by the moisture content of
the Building slab and underlying soils. Subject to the provisions of Section 3.2 below, from and
after the full execution and delivery of this Lease, Tenant shall be permitted to enter upon the
Premises (the “Early Occupancy Date”) for the construction of those certain tenant improvements
(the “Tenant Improvements”) pursuant to the terms and conditions of the Work Letter attached as
Exhibit X hereto (the “Work Letter”). Subject to the provisions of Section 2.4 below, as
of the Early Occupancy Date, Tenant shall be conclusively deemed to have accepted the Premises and
those portions of the Building and Project in which Tenant has any rights under this Lease, which
acceptance shall mean that it is conclusively established that the Premises and those portions of
the Building and Project in which Tenant has any rights under this Lease were in satisfactory
condition and in conformity with the provisions of this Lease. Nothing contained in this Section
2.2 shall affect the commencement of the Term or the obligation of Tenant to pay rent.



     SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any name selected by
Landlord from time to time for the Building and/or the Project as any part of Tenant’s corporate or
trade name. Landlord shall have the right to change the name, address, number or designation of
the Building or Project without liability to Tenant.



     SECTION 2.4. LANDLORD’S RESPONSIBILITIES. Landlord warrants to Tenant that the fire
sprinkler system, lighting, heating, ventilation and air conditioning systems and electrical
systems serving the Premises shall be in good operating condition on the Commencement Date of this
Lease. Provided that Tenant shall notify Landlord of a non-compliance with the foregoing warranty
not later than thirty (30) days following the Commencement Date, then Landlord shall, except as
otherwise provided in this Lease, promptly after receipt of written notice from Tenant setting
forth the nature and extent of such non-compliance, rectify same at Landlord’s sole cost and
expense (and not as a Project Cost).



ARTICLE III. TERM




     SECTION
3.1. GENERAL. The term of this Lease (“Term”) shall be for the period shown in Item 5
of the Basic Lease Provisions, and shall commence on that date
(“Commencement Date” ) which is the
earlier of (a) the date Tenant commences its business operations from the Premises, or (b) the date
set forth in Item 4 of the Basic Lease Provisions. The date on which this Lease is scheduled to
terminate is referred to as the “Expiration Date.” The parties shall memorialize on a form
provided by Landlord (the “Commencement Date Memorandum”) the actual Commencement Date and the
Expiration Date of this Lease. Should Tenant fail to execute and return the Commencement Date
Memorandum to Landlord within five (5) business days (or provide specific written objections
thereto within that period), then Landlord’s determination of the Commencement and Expiration Dates
as set forth in the Commencement Date Memorandum shall be conclusive.



     SECTION 3.2. EARLY OCCUPANCY.. Tenant’s occupancy of the Premises prior to the Commencement
Date for purposes of construction of the Tenant Improvements shall be subject to the following
terms and conditions: (a) concurrently with the execution
and delivery of this Lease, and prior to any such early occupancy by Tenant, Tenant shall
deliver to Landlord (i) the first installment of Basic Rent and Operating Expenses due under the
Lease (ii) the Security Deposit set forth in Item 9 of the Basic Lease Provisions, and (iii) the



 









 







required certificate(s) of insurance and a completed Hazardous Material Survey Form (see
Exhibit C attached hereto); and (b) Tenant’s occupancy of the Premises during the Early
Occupancy Period shall be subject to all of the covenants and conditions on Tenant’s part contained
in this Lease (including, without limitation, the covenants contained in Sections 5.3, 6.1, 7.1,
7.3, 7.4, 10.1 and 10.3 of the Lease), except for the obligation to pay Basic Rent and Operating
Expenses.



     SECTION 3.3. TENANT’S RIGHT TO TERMINATE. Provided that no Event of Default has occurred
under any provision of this Lease beyond any applicable notice and cure period, either at the time
of Tenant’s election of its right to terminate granted herein or as of the effective Termination
Date, Tenant shall have the one-time right to terminate this Lease effective as of the expiration
of the twenty-fourth (24th) month of the initial Term of this Lease (the “Termination
Date”), provided Tenant has delivered its irrevocable written notice of such election to terminate
(the “Termination Notice”) to Landlord not later than twelve (12) months prior to the Termination
Date. All rental and other costs due under this Lease for the Premises shall be due and payable
by Tenant to Landlord through the Termination Date. In addition to the foregoing, Tenant shall pay
to Landlord, concurrently with its delivery of the Termination Notice, a separate termination fee
in the amount of One Hundred Ninety One Thousand One Hundred Twenty-Two Dollars ($191,122.00). Any
such termination by Tenant shall not abrogate any obligation existing under the Lease as of the
Termination Date or otherwise attributable to Tenant’s occupancy thereof.



ARTICLE IV. RENT AND OPERATING EXPENSES




     SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant shall pay to Landlord
without deduction or offset, the rental amount for the Premises shown in Item 6 of the Basic Lease
Provisions (the “Basic Rent”), including subsequent adjustments, if any. If the Commencement Date
is other than the first day of the calendar month, any rental adjustments shown in Item 6 occurring
with reference to the monthly anniversary of the Commencement Date, shall be deemed to occur on the
first day of the next calendar month following the specified monthly anniversary of the
Commencement Date. The rent shall be due and payable in advance commencing on the Commencement
Date (as prorated for any partial month) and continuing thereafter on the first day of each
successive calendar month of the Term. No demand, notice or invoice shall be required for the
payment of Basic Rent. An installment of rent in the amount of one (1) full month’s Basic Rent at
the initial rate specified in Item 6 of the Basic Lease Provisions and one (1) month’s estimated
Tenant’s Share of Operating Expenses (as defined in Section 4.2) shall be delivered to Landlord
concurrently with Tenant’s execution of this Lease and shall be applied against the Basic Rent and
Operating Expenses first due hereunder.



     SECTION 4.2. OPERATING EXPENSES.



     (a) From and after Commencement Date, Tenant shall pay to Landlord, as additional rent,
Tenant’s Share of all Operating Expenses, as defined in Section 4.2(f), incurred by Landlord in the
operation of the Building and the Project. The term “Tenant’s Share” means that portion of any
Operating Expenses determined by multiplying the cost of such item by a fraction, the numerator of
which is the Floor Area and the denominator of which is the total rentable square footage, as
determined from time to time by Landlord, of (i) the Building, for expenses determined by Landlord
to benefit or relate substantially to the Building rather than the entire Project, (ii) all or some
of the buildings in the Project, for expenses determined by Landlord to benefit or relate
substantially to all or some of the buildings in the Project rather than any specific building, or
(iii) all or some of the buildings within the Project as well as all or a portion of other property
owned by Landlord and/or its affiliates, for expenses determined by Landlord to benefit or relate
substantially to such buildings within the Project and such other property. Landlord reserves the
right to allocate to the entire Project any Operating Expenses which may benefit or substantially
relate to a particular building within the Project in order to maintain greater consistency of
Operating Expenses among buildings within the Project. In the event that Landlord determines in
its sole and absolute discretion that the Premises or the Building incur a non-proportional benefit
from any expense, or is the non-proportional cause of any such expense, Landlord may allocate a
greater percentage of such Operating Expense to the Premises or the Building. In the event that
any management and/or overhead fee payable or imposed by Landlord for the management of Tenant’s
Premises is calculated as a percentage of the rent payable by Tenant and other tenants of Landlord,
then the full amount of such management and/or overhead fee which is attributable to the rent paid
by Tenant shall be additional rent payable by Tenant, in full, provided, however, that Landlord may
elect to include such full amount as part of Tenant’s Share of Operating Expenses.



     (b) Prior to the start of each full Expense Recovery Period (as defined in this Section 4.2),
Landlord shall give Tenant a written estimate of the amount of Tenant’s Share of Operating Expenses
for the applicable Expense Recovery Period. Any delay or failure by Landlord in providing such
estimate shall not relieve Tenant from its obligation to pay Tenant’s Share of Operating Expenses
or estimated amounts thereof, if and when Landlord provides such estimate or final payment amount.
Tenant shall pay the estimated amounts to Landlord in equal monthly installments, in advance
concurrently with payments of Basic Rent. If Landlord has not furnished its written estimate for
any Expense Recovery Period by the time set forth above, Tenant shall continue to pay monthly the
estimated Tenant’s Share of Operating Expenses in effect during the prior Expense Recovery Period;
provided that when the new estimate is delivered to Tenant, Tenant shall, at the next monthly
payment date, pay any accrued estimated Tenant’s Share of Operating Expenses based upon the new
estimate. For purposes hereof, “Expense
Recovery Period” shall mean every twelve month period during the Term (or portion thereof for
the first and last lease years) commencing July 1 and ending June 30, provided that Landlord shall
have the right to change the date on which an Expense Recovery Period commences in which event
appropriate reasonable adjustments shall be made to Tenant’s Share of Operating Expenses so that
the amount payable by Tenant shall not materially vary as a result of such change.



 









 





     (c) Within one hundred twenty (120) days after the end of each Expense Recovery Period,
Landlord shall furnish to Tenant a statement (a “Reconciliation Statement”) showing in reasonable
detail the actual or prorated Tenant’s Share of Operating Expenses incurred by Landlord during such
Expense Recovery Period, and the parties shall within thirty (30) days thereafter make any payment
or allowance necessary to adjust Tenant’s estimated payments of Tenant’s Share of Operating
Expenses, if any, to the actual Tenant’s Share of Operating Expenses as shown by the Reconciliation
Statement. Any delay or failure by Landlord in delivering any Reconciliation Statement shall not
constitute a waiver of Landlord’s right to require Tenant to pay Tenant’s Share of Operating
Expenses pursuant hereto. Any amount due Tenant shall be credited against installments next coming
due under this Section 4.2, and any deficiency shall be paid by Tenant together with the next
installment. Should Tenant fail to object in writing to Landlord’s determination of Tenant’s Share
of Operating Expenses, or fail to give written notice of its intent to audit Landlord’s Operating
Expenses pursuant to the provisions of the next succeeding paragraph, within sixty (60) days
following delivery of Landlord’s Reconciliation Statement, Landlord’s determination of Tenant’s
Share of Operating Expenses for the applicable Expense Recovery Period shall be conclusive and
binding on the parties for all purposes and any future claims to the contrary shall be barred.



     Provided no Event of Default has occurred, Tenant shall have the right to cause a certified
public accountant, engaged on a non-contingency fee basis, to audit Operating Expenses by
inspecting Landlord’s general ledger of expenses not more than once during any Expense Recovery
Period. However, to the extent that insurance premiums or any other component of Operating
Expenses is determined by Landlord on the basis of an internal allocation of costs utilizing
information Landlord in good faith deems proprietary, such expense component shall not be subject
to audit so long as it does not exceed the amount per square foot typically imposed by landlords of
other first class business parks in San Diego County, California. Tenant shall give notice to
Landlord of Tenant’s intent to audit within sixty (60) days after Tenant’s receipt of Landlord’s
expense statement which sets forth Tenant’s Share of Landlord’s actual Operating Expenses. Such
audit shall be conducted at a mutually agreeable time during normal business hours at the office of
Landlord or its management agent where such accounts are maintained. If Tenant’s audit determines
that actual Operating Expenses have been overstated by more than five percent (5%), then subject to
Landlord’s right to review and/or contest the audit results, Landlord shall reimburse Tenant for
the reasonable out-of-pocket costs of such audit. Tenant’s rent shall be appropriately adjusted to
reflect any overstatement in Operating Expenses. All of the information obtained by Tenant and/or
its auditor in connection with such audit, as well as any compromise, settlement, or adjustment
reached between Landlord and Tenant as a result thereof, shall be held in strict confidence and,
except as may be required pursuant to litigation, shall not be disclosed to any third party,
directly or indirectly, by Tenant or its auditor or any of their officers, agents or employees.
Landlord may require Tenant’s auditor to execute a separate confidentiality agreement affirming the
foregoing as a condition precedent to any audit. In the event of a violation of this
confidentiality covenant in connection with any audit, then in addition to any other legal or
equitable remedy available to Landlord, Tenant shall forfeit its right to any reconciliation or
cost reimbursement payment from Landlord due to said audit (and any such payment theretofore made
by Landlord shall be promptly returned by Tenant), and Tenant shall have no further audit rights
under this Lease. Notwithstanding the foregoing, Tenant shall have no right of audit with respect
to any Expense Recovery Period unless the total Operating Expenses per square foot for such Expense
Recovery Period, as set forth in Landlord’s annual expense reconciliation, exceed the total
Operating Expenses per square foot during the initial Expense Recovery Period during the Term, as
increased by the percentage change in the United States Department of Labor, Bureau of Labor
Statistics, Consumer Price Index for all Urban Consumers, Los Angeles – Riverside – Orange County
Area Average, all items (1982-84 = 100) (the “Index”), which change in the Index shall be measured
by comparing the Index published for January of the initial Expense Recovery Period during the Term
with the Index published for January of the applicable Expense Recovery Period.



     (d) Even though this Lease has terminated and the Tenant has vacated the Premises, when the
final determination is made of Tenant’s Share of Operating Expenses for the Expense Recovery Period
in which this Lease terminates, Tenant shall within thirty (30) days of written notice pay the
entire increase over the estimated Tenant’s Share of Operating Expenses already paid. Conversely,
any overpayment by Tenant shall be rebated by Landlord to Tenant not later than thirty (30) days
after such final determination.



     (e) If, at any time during any Expense Recovery Period, any one or more of the Operating
Expenses are increased to a rate(s) or amount(s) in excess of the rate(s) or amount(s) used in
calculating the estimated Tenant’s Share of Operating Expenses for the year, then the estimate of
Tenant’s Share of Operating Expenses may be increased by written notice from Landlord for the month
in which such rate(s) or amount(s) becomes effective and for all succeeding months by an amount
equal to the estimated amount of Tenant’s Share of the increase. If Landlord gives Tenant written
notice of the amount or estimated amount of the increase and the month in which the increase will
or has become effective, then Tenant shall pay the increase to Landlord as a part of Tenant’s
monthly payments of the estimated Tenant’s Share of Operating Expenses as provided in Section
4.2(b), commencing with the month following Tenant’s receipt of Landlord’s notice. In addition,
Tenant shall pay upon written request any such increases which were incurred prior to the Tenant
commencing to pay such monthly increase.



     (f) The term “Operating Expenses” shall mean and include all Project Costs, as defined in
subsection (g), and Property Taxes, as defined in subsection (h).



     (g) The term “Project Costs” shall include all expenses of operation, management, repair,
replacement and maintenance of the Building and the Project, including without limitation all
appurtenant Common Areas (as defined in Section 6.2), and shall include the following charges by
way of illustration but not limitation:
water and sewer charges; insurance premiums and deductibles and/or reasonable premium and
deductible equivalents should Landlord elect to self-insure all or any portion of any risk that
Landlord is authorized to insure hereunder; license, permit, and inspection fees; light; power;
window washing; trash pickup; janitorial services to any interior Common Areas; heating,
ventilating and air conditioning; supplies; materials; equipment; tools; the cost of any
environmental, insurance, tax, legal or other consultant utilized by Landlord in connection with
the Building and/or Project; establishment of reasonable reserves for replacements and/or repairs;
costs incurred in connection



 









 







with compliance with any laws or changes in laws applicable to the
Building or the Project; the cost of any capital improvements or replacements (other than tenant
improvements for specific tenants) to the extent of the amortized amount thereof over the useful
life of such capital improvements or replacements (or, if such capital improvements or replacements
are anticipated to achieve a cost savings as to the Operating Expenses, any shorter estimated
period of time over which the cost of the capital improvements or replacements would be recovered
from the estimated cost savings) calculated at a market cost of funds, all as determined by
Landlord, for each year of useful life or shorter recovery period of such capital expenditure
whether such capital expenditure occurs during or prior to the Term; costs associated with the
maintenance of an air conditioning, heating and ventilation service agreement, and maintenance of
an intrabuilding network cable service agreement for any intrabuilding network cable
telecommunications lines within the Project, and any other maintenance, repair and replacement
costs associated with such lines; capital costs associated with a requirement related to demands on
utilities by Project tenants, including without limitation the cost to obtain additional phone
connections; labor; reasonably allocated wages and salaries, fringe benefits, and payroll taxes for
administrative and other personnel directly applicable to the Building and/or Project, including
both Landlord’s personnel and outside personnel; any expense incurred pursuant to Sections 6.1,
6.2, 6.4, 7.2, and 10.2; and reasonable overhead and/or management fees for the professional
operation of the Project. It is understood and agreed that Project Costs may include competitive
charges for direct services (including, without limitation, management and/or operations services)
provided by any subsidiary, division or affiliate of Landlord.



     (h) The term “Property Taxes” as used herein shall include any form of federal, state, county
or local government or municipal taxes, fees, charges or other impositions of every kind (whether
general, special, ordinary or extraordinary) related to the ownership, leasing or operation of the
Premises, Building or Project, including without limitation, the following: (i) all real estate
taxes or personal property taxes, as such property taxes may be reassessed from time to time; and
(ii) other taxes, charges and assessments which are levied with respect to this Lease or to the
Building and/or the Project, and any improvements, fixtures and equipment and other property of
Landlord located in the Building and/or the Project, (iii) all assessments and fees for public
improvements, services, and facilities and impacts thereon, including without limitation arising
out of any Community Facilities Districts, “Mello Roos” districts, similar assessment districts,
and any traffic impact mitigation assessments or fees; (iv) any tax, surcharge or assessment which
shall be levied in addition to or in lieu of real estate or personal property taxes, other than
taxes covered by Article VIII; and (v) taxes based on the receipt of rent (including gross receipts
or sales taxes applicable to the receipt of rent), and (vi) costs and expenses incurred in
contesting the amount or validity of any Property Tax by appropriate proceedings. Notwithstanding
the foregoing, general net income or franchise taxes imposed against Landlord shall be excluded.





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




 









 






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





     To the extent that an expense included in Operating Expenses includes an expense related to
the Project and not the Building, then the word “Building” utilized in these exclusions shall mean,
and be extended to include the Project.



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



 









 







Landlord is holding the Security Deposit. If any
portion of the Security Deposit is applied by Landlord as permitted by this Section, Tenant shall
within five (5) days after written demand by Landlord deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to its original amount. If Tenant fully performs its
obligations under this Lease, the Security Deposit shall be returned to Tenant (or, at Landlord’s
option, to the last assignee of Tenant’s interest in this Lease) within thirty (30) days after the
expiration of the Term, provided that Tenant agrees that Landlord may retain the Security Deposit
to the extent and until such time as all amounts due from Tenant in accordance with this Lease have
been determined and paid in full and Tenant agrees that Tenant shall have no claim against Landlord
for Landlord’s retaining such Security Deposit to the extent provided in this Section.



ARTICLE V. USES




     SECTION 5.1. USE. Tenant shall use the Premises only for the purposes stated in Item 3 of the
Basic Lease Provisions, all in accordance with applicable laws and restrictions and pursuant to
approvals to be obtained by Tenant from all relevant and required governmental agencies and
authorities. The parties agree that any contrary use shall be deemed to cause material and
irreparable harm to Landlord and shall entitle Landlord to injunctive relief in addition to any
other available remedy. Tenant, at its expense, shall procure, maintain and make available for
Landlord’s inspection throughout the Term, all governmental approvals, licenses and permits
required for the proper and lawful conduct of Tenant’s permitted use of the Premises. Tenant shall
not do or permit anything to be done in or about the Premises which will in any way interfere with
the rights of other occupants of the Building or the Project, or use or allow the Premises to be
used for any unlawful purpose, nor shall Tenant permit any nuisance or commit any waste in the
Premises or the Project. Tenant shall not perform any work or conduct any business whatsoever in
the Project other than inside the Premises. Tenant shall not do or permit to be done anything
which will invalidate or increase the cost of any insurance policy(ies) covering the Building, the
Project and/or their contents, and shall comply with all applicable insurance underwriters rules.
Tenant shall comply at its expense with all present and future laws, ordinances, restrictions,
regulations, orders, rules and requirements of all governmental authorities that pertain to Tenant
or its use of the Premises, including without limitation all federal and state occupational health
and safety requirements, whether or not Tenant’s compliance will necessitate expenditures or
interfere with its use and enjoyment of the Premises. Tenant shall comply at its expense with all
present and future covenants, conditions, easements or restrictions now or hereafter affecting or
encumbering the Building and/or Project, and any amendments or modifications thereto, including
without limitation the payment by Tenant of any periodic or special dues or assessments charged
against the Premises or Tenant which may be allocated to the Premises or Tenant in accordance with
the provisions thereof. Tenant shall promptly upon demand reimburse Landlord for any additional
insurance premium charged by reason of Tenant’s failure to comply with the provisions of this
Section, and shall indemnify Landlord from any liability and/or expense resulting from Tenant’s
noncompliance.



     SECTION 5.2. SIGNS. Provided Tenant continues to occupy the entire Premises, Tenant shall have
the non-exclusive right to one (1) exterior “building top” sign on the Building for Tenant’s name
and graphics in a location designated by Landlord, subject to Landlord’s right of prior approval
that such exterior signage is in compliance with the Signage Criteria (defined below). Except as
provided in the foregoing, and except for Landlord’s standard suite signage identifying Tenant’s
name and/or logo and installed at a location designated by Landlord, and except for any additional
signage expressly specified in this Section 5.2, Tenant shall have no right to maintain signs in
any location in, on or about the Premises, the Building or the Project and shall not place or erect
any signs that are visible from the exterior of the Building. The size, design, graphics,
material, style, color and other physical aspects of any permitted sign shall be subject to
Landlord’s written determination, as determined solely by Landlord, prior to installation, that
signage is in compliance with any covenants, conditions or restrictions encumbering the Premises
and Landlord’s signage program for the Project, as in effect from time to time and approved by the
City in which the Premises are located (“Signage Criteria”). Prior to placing or erecting any such
signs, Tenant shall obtain and deliver to Landlord a copy of any applicable municipal or other
governmental permits and approvals and comply with any applicable insurance requirements for such
signage. Tenant shall be responsible for all costs of any permitted sign, including, without
limitation, the fabrication, installation, maintenance and removal thereof and the cost of any
permits therefor. If Tenant fails to maintain its sign in good condition, or if Tenant fails to
remove same upon termination of this Lease and repair and restore any damage caused by the sign or
its removal, Landlord may do so at Tenant’s expense. Landlord shall have the right to temporarily
remove any signs in connection with any repairs or maintenance in or upon the Building. The term
“sign” as used in this Section shall include all signs, designs, monuments, displays, advertising
materials, logos, banners, projected images, pennants, decals, pictures, notices, lettering,
numerals or graphics. Tenant’s exterior signage rights under this Section 5.2 belong solely to
Illumina, Inc., a Delaware corporation, and any attempted assignment or transfer of such rights
shall be void and of no force and effect.



     SECTION 5.3. HAZARDOUS MATERIALS.



     (a) For purposes of this Lease, the term “Hazardous Materials” includes (i) any “hazardous
material” as defined in Section 25501(o) of the California Health and Safety Code, (ii)
hydrocarbons, polychlorinated biphenyls or asbestos, (iii) any toxic or hazardous materials,
substances, wastes or materials as defined pursuant to any other applicable state, federal or local
law or regulation, and (iv) any other substance or matter which may result in liability to any
person or entity as a result of such person’s possession, use, storage, release or distribution of
such substance or matter under any statutory or common law theory.



     (b) Tenant shall not cause or permit any Hazardous Materials to be brought upon, stored, used,
generated, released or disposed of on, under, from or about the Premises (including without
limitation the soil and groundwater thereunder) without the prior written consent of Landlord,
which consent may be given or withheld in Landlord’s sole and absolute discretion. Notwithstanding
the foregoing, Tenant shall have the right, without obtaining prior written consent of Landlord, to
utilize within the Premises a reasonable quantity of standard office



 









 







products that may contain
Hazardous Materials (such as photocopy toner, “White Out”, and the like), provided
however, that (i) Tenant shall maintain such products in their original retail packaging,
shall follow all instructions on such packaging with respect to the storage, use and disposal of
such products, and shall otherwise comply with all applicable laws with respect to such products,
and (ii) all of the other terms and provisions of this Section 5.3 shall apply with respect to
Tenant’s storage, use and disposal of all such products. Landlord may, in its sole and absolute
discretion, place such conditions as Landlord deems appropriate with respect to Tenant’s use,
storage and/or disposal of any Hazardous Materials requiring Landlord’s consent. Tenant
understands that Landlord may utilize an environmental consultant to assist in determining
conditions of approval in connection with the storage, use, release, and/or disposal of Hazardous
Materials by Tenant on or about the Premises, and/or to conduct periodic inspections of the
storage, generation, use, release and/or disposal of such Hazardous Materials by Tenant on and from
the Premises, and Tenant agrees that any costs incurred by Landlord in connection therewith shall
be reimbursed by Tenant to Landlord as additional rent hereunder upon demand.



     (c) Prior to the execution of this Lease, Tenant shall complete, execute and deliver to
Landlord an Environmental Questionnaire and Disclosure Statement (the “Environmental
Questionnaire”) in the form of Exhibit B attached hereto. The completed Environmental
Questionnaire shall be deemed incorporated into this Lease for all purposes, and Landlord shall be
entitled to rely fully on the information contained therein. On each anniversary of the
Commencement Date until the expiration or sooner termination of this Lease, Tenant shall disclose
to Landlord in writing the names and amounts of all Hazardous Materials which were stored,
generated, used, released and/or disposed of on, under or about the Premises for the twelve-month
period prior thereto, and which Tenant desires to store, generate, use, release and/or dispose of
on, under or about the Premises for the succeeding twelve-month period. In addition, to the extent
Tenant is permitted to utilize Hazardous Materials upon the Premises, Tenant shall promptly provide
Landlord with complete and legible copies of all the following environmental documents relating
thereto: reports filed pursuant to any self-reporting requirements; permit applications, permits,
monitoring reports, emergency response or action plans, workplace exposure and community exposure
warnings or notices and all other reports, disclosures, plans or documents (even those which may be
characterized as confidential) relating to water discharges, air pollution, waste generation or
disposal, and underground storage tanks for Hazardous Materials; orders, reports, notices, listings
and correspondence (even those which may be considered confidential) of or concerning the release,
investigation, compliance, cleanup, remedial and corrective actions, and abatement of Hazardous
Materials; and all complaints, pleadings and other legal documents filed by or against Tenant
related to Tenant’s storage, generation, use, release and/or disposal of Hazardous Materials.



     (d) Landlord and its agents shall have the right, but not the obligation, to inspect, sample
and/or monitor the Premises and/or the soil or groundwater thereunder at any time to determine
whether Tenant is complying with the terms of this Section 5.3, and in connection therewith Tenant
shall provide Landlord with full access to all facilities, records and personnel related thereto.
If Tenant is not in compliance with any of the provisions of this Section 5.3, or in the event of a
release of any Hazardous Material on, under, from or about the Premises caused or permitted by
Tenant, its agents, employees, contractors, licensees or invitees, Landlord and its agents shall
have the right, but not the obligation, without limitation upon any of Landlord’s other rights and
remedies under this Lease, to immediately enter upon the Premises without notice and to discharge
Tenant’s obligations under this Section 5.3 at Tenant’s expense, including without limitation the
taking of emergency or long-term remedial action. Landlord and its agents shall endeavor to
minimize interference with Tenant’s business in connection therewith, but shall not be liable for
any such interference. In addition, Landlord, at Tenant’s expense, shall have the right, but not
the obligation, to join and participate in any legal proceedings or actions initiated in connection
with any claims arising out of the storage, generation, use, release and/or disposal by Tenant or
its agents, employees, contractors, licensees or invitees of Hazardous Materials on, under, from or
about the Premises.



     (e) If the presence of any Hazardous Materials on, under, from or about the Premises or the
Project caused or permitted by Tenant or its agents, employees, contractors, licensees or invitees
results in (i) injury to any person, (ii) injury to or any contamination of the Premises or the
Project, or (iii) injury to or contamination of any real or personal property wherever situated,
Tenant, at its expense, shall promptly take all actions necessary to return the Premises and the
Project and any other affected real or personal property owned by Landlord to the condition
existing prior to the introduction of such Hazardous Materials and to remedy or repair any such
injury or contamination, including without limitation, any cleanup, remediation, removal, disposal,
neutralization or other treatment of any such Hazardous Materials. Notwithstanding the foregoing,
Tenant shall not, without Landlord’s prior written consent, which consent may be given or withheld
in Landlord’s sole and absolute discretion, take any remedial action in response to the presence of
any Hazardous Materials on, under, from or about the Premises or the Project or any other affected
real or personal property owned by Landlord or enter into any similar agreement, consent, decree or
other compromise with any governmental agency with respect to any Hazardous Materials claims;
provided however, Landlord’s prior written consent shall not be necessary in the event that the
presence of Hazardous Materials on, under, from or about the Premises or the Project or any other
affected real or personal property owned by Landlord (i) imposes an immediate threat to the health,
safety or welfare of any individual and (ii) is of such a nature that an immediate remedial
response is necessary and it is not possible to obtain Landlord’s consent before taking such
action. To the fullest extent permitted by law, Tenant shall indemnify, hold harmless, protect and
defend (with attorneys acceptable to Landlord) Landlord and any successors to all or any portion of
Landlord’s interest in the Premises and the Project and any other real or personal property owned
by Landlord from and against any and all liabilities, losses, damages, diminution in value,
judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses (including without
limitation attorneys’ fees, court costs and other professional expenses), whether foreseeable or
unforeseeable, arising directly or indirectly out of the use,
generation, storage, treatment, release, on- or off-site disposal or transportation of
Hazardous Materials (A) on, into, from, under or about the Premises during the Term regardless of
the source of such Hazardous Materials unless caused solely by Landlord or (B) on, into, from,
under or about the Premises, the Building or the Project and any other real or personal property
owned by Landlord caused or permitted by Tenant, its agents, employees, contractors, licensees or
invitees. Such indemnity obligation shall specifically include, without limitation, the cost



 









 







of
any required or necessary repair, restoration, cleanup or detoxification of the Premises, the
Building and the Project and any other real or personal property owned by Landlord, the preparation
of any closure or other required plans, whether such action is required or necessary during the
Term or after the expiration of this Lease and any loss of rental due to the inability to lease the
Premises or any portion of the Building or Project as a result of such Hazardous Materials, the
remediation thereof or any repair, restoration or cleanup related thereto. If it is at any time
discovered that Hazardous Materials have been released on, into, from, under or about the Premises
during the Term, or that Tenant or its agents, employees, contractors, licensees or invitees may
have caused or permitted the release of any Hazardous Materials on, under, from or about the
Premises, the Building or the Project or any other real or personal property owned by Landlord,
Tenant shall, at Landlord’s request, immediately prepare and submit to Landlord a comprehensive
plan, subject to Landlord’s approval, specifying the actions to be taken by Tenant to return the
Premises, the Building or the Project or any other real or personal property owned by Landlord to
the condition existing prior to the introduction of such Hazardous Materials. Upon Landlord’s
approval of such plan, Tenant shall, at its expense, and without limitation of any rights and
remedies of Landlord under this Lease or at law or in equity, immediately implement such plan and
proceed to cleanup, remediate and/or remove all such Hazardous Materials in accordance with all
applicable laws and as required by such plan and this Lease. The provisions of this Section 5.3(e)
shall expressly survive the expiration or sooner termination of this Lease.



     (f) Landlord hereby discloses to Tenant, and Tenant hereby acknowledges, certain facts
relating to Hazardous Materials at the Project known by Landlord to exist as of the date of this
Lease, as more particularly described in Exhibit C attached hereto. Tenant shall have no
liability or responsibility with respect to the Hazardous Materials facts described in Exhibit
C, nor with respect to any Hazardous Materials which Tenant proves were neither released on the
Premises during the Term nor caused or permitted by Tenant, its agents, employees, contractors,
licensees or invitees. Notwithstanding the preceding two sentences, Tenant agrees to notify its
agents, employees, contractors, licensees, and invitees of any exposure or potential exposure to
Hazardous Materials at the Premises that Landlord brings to Tenant’s attention. Tenant hereby
acknowledges that this disclosure satisfies any obligation of Landlord to Tenant pursuant to
California Health & Safety Code Section 25359.7, or any amendment or substitute thereto or any
other disclosure obligations of Landlord.



ARTICLE VI. COMMON AREAS; SERVICES




     SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for and shall pay promptly,
directly to the appropriate supplier, all charges for water, gas, electricity, sewer, heat, light,
power, telephone, telecommunications service, refuse pickup, janitorial service, interior landscape
maintenance and all other utilities, materials and services furnished directly to Tenant or the
Premises or used by Tenant in, on or about the Premises during the Term, together with any taxes
thereon. If any utilities or services are not separately metered or assessed to Tenant, Landlord
shall make a reasonable determination of Tenant’s proportionate share of the cost of such utilities
and services, and Tenant shall pay such amount to Landlord, as an item of additional rent, within
ten (10) days after receipt of Landlord’s statement or invoice therefor. Alternatively, Landlord
may elect to include such cost in the definition of Project Costs in which event Tenant shall pay
Tenant’s proportionate share of such costs in the manner set forth in Section 4.2. Tenant shall
also pay to Landlord as an item of additional rent, within ten (10) days after receipt of
Landlord’s statement or invoice therefor, Landlord’s “standard charges” (as hereinafter defined,
which shall be in addition to the electricity charge paid to the utility provider) for “after
hours” usage by Tenant of each HVAC unit servicing the Premises. If the HVAC unit(s) servicing the
Premises also serve other leased premises in the Building, “after hours” shall mean usage of said
unit(s) before 6:00 A.M. or after 6:00 P.M. on Mondays through Fridays, and before 9:00 A.M. or
after 1:00 P.M. on Saturdays, subject to reasonable adjustment of said hours by Landlord. If the
HVAC unit(s) serve only the Premises, “after hours” shall mean more than sixty-six (66) hours of
usage during any week during the Term. “After hours” usage shall be determined based upon the
operation of the applicable HVAC unit during each of the foregoing periods on a “non-cumulative”
basis (that is, without regard to Tenant’s usage or nonusage of other unit(s) serving the Premises,
or of the applicable unit during other periods of the Term). As used herein, “standard charges”
shall mean the following charges for each hour of “after hours” use (in addition to the applicable
electricity charges paid to the utility provider) of the following described HVAC units: (i) $5.00
per hour for 1-5 ton HVAC units, (ii) $7.50 per hour for 6-30 ton HVAC units and (iii) $10.00 per
hour for HVAC units of greater than 30 tons. Landlord shall not be liable for damages or otherwise
for any failure or interruption of any utility or other service furnished to the Premises, and no
such failure or interruption shall be deemed an eviction or entitle Tenant to terminate this Lease
or withhold or abate any rent due hereunder. Landlord shall at all reasonable times have free
access to the Building and Premises to install, maintain, repair, replace or remove all electrical
and mechanical installations of Landlord. Tenant acknowledges that the costs incurred by Landlord
related to providing above-standard utilities and services to Tenant, including, without
limitation, telephone lines, may be charged to Tenant.



     SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term, Landlord shall
operate and maintain all Common Areas within the Building and the Project in the manner Landlord
may reasonably determine to be appropriate. All costs incurred by Landlord for the maintenance and
operation of the Common Areas shall be included in Project Costs except to the extent any
particular cost incurred is related to or associated with a specific tenant and can be charged to
such tenant of the Project. The term “Common Areas” shall mean all areas within the exterior
boundaries of the Building and other buildings in the Project which are not held for exclusive use
by persons entitled to occupy space, and all other appurtenant areas and improvements within the
Project provided by Landlord for the common use of Landlord and tenants and their respective
employees and invitees, including without limitation parking areas and structures, driveways,
sidewalks, landscaped and planted areas, hallways and interior stairwells not located within the
premises of any tenant, common electrical rooms and roof access entries, common entrances and
lobbies, elevators, and restrooms not located within the premises of any tenant.



 









 





     SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the Premises shall include the
use of the Common Areas in common with Landlord and with all others for whose convenience and use
the Common Areas may be provided by Landlord, subject, however, to compliance with all rules and
regulations as are prescribed from time to time by Landlord. Landlord shall at all times during
the Term have exclusive control of the Common Areas, and may restrain or permit any use or
occupancy, except as authorized by Landlord’s rules and regulations. Tenant shall keep the Common
Areas clear of any obstruction or unauthorized use related to Tenant’s operations or use of
Premises, including without limitation, planters and furniture. Except to the extent caused solely
by the active negligence or willful misconduct of Landlord, nothing in this Lease shall be deemed
to impose liability upon Landlord for any damage to or loss of the property of, or for any injury
to, Tenant, its invitees or employees. Landlord may temporarily close any portion of the Common
Areas for repairs, remodeling and/or alterations, to prevent a public dedication or the accrual of
prescriptive rights, or for any other reason deemed sufficient by Landlord, without liability to
Tenant. Landlord’s temporary closure of any portion of the Common Areas for such purposes shall
not deprive Tenant of reasonable access to the Premises.



     SECTION 6.4. PARKING. Tenant shall be entitled to the number of vehicle parking spaces set
forth in Item 15 of the Basic Lease Provisions, which spaces shall be unreserved and unassigned, on
those portions of the Common Areas designated by Landlord for parking. Tenant shall not use more
parking spaces than such number. All parking spaces shall be used only for parking of vehicles no
larger than full size passenger automobiles, sport utility vehicles or pickup trucks. Tenant shall
not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant’s employees,
suppliers, shippers, customers or invitees to be loaded, unloaded or parked in areas other than
those designated by Landlord for such activities. If Tenant permits or allows any of the
prohibited activities described above, then Landlord shall have the right, without notice, in
addition to such other rights and remedies that Landlord may have, to remove or tow away the
vehicle involved and charge the costs to Tenant. Parking within the Common Areas shall be limited
to striped parking stalls, and no parking shall be permitted in any driveways, access ways or in
any area which would prohibit or impede the free flow of traffic within the Common Areas. There
shall be no parking of any vehicles for longer than a forty-eight (48) hour period unless otherwise
authorized by Landlord, and vehicles which have been abandoned or parked in violation of the terms
hereof may be towed away at the owner’s expense. Nothing contained in this Lease shall be deemed
to create liability upon Landlord for any damage to motor vehicles of visitors or employees, for
any loss of property from within those motor vehicles, or for any injury to Tenant, its visitors or
employees, unless ultimately determined to be caused by the sole active negligence or willful
misconduct of Landlord. Landlord shall have the right to establish, and from time to time amend,
and to enforce against all users all reasonable rules and regulations (including the designation of
areas for employee parking) that Landlord may deem necessary and advisable for the proper and
efficient operation and maintenance of parking within the Common Areas. Landlord shall have the
right to construct, maintain and operate lighting facilities within the parking areas; to change
the area, level, location and arrangement of the parking areas and improvements therein; to
restrict parking by tenants, their officers, agents and employees to employee parking areas; after
the expiration of the initial 36-month Term of this Lease, to enforce parking charges (by
operation of meters or otherwise); and to do and perform such other acts in and to the parking
areas and improvements therein as, in the use of good business judgment, Landlord shall determine
to be advisable. Any person using the parking area shall observe all directional signs and arrows
and any posted speed limits. In no event shall Tenant interfere with the use and enjoyment of the
parking area by other tenants of the Project or their employees or invitees. Parking areas shall
be used only for parking vehicles. Washing, waxing, cleaning or servicing of vehicles, or the
storage of vehicles for longer than 48-hours, is prohibited unless otherwise authorized by
Landlord. Tenant shall be liable for any damage to the parking areas caused by Tenant or Tenant’s
employees, suppliers, shippers, customers or invitees, including without limitation damage from
excess oil leakage. Tenant shall have no right to install any fixtures, equipment or personal
property in the parking areas.



     SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the right to make
alterations or additions to the Building or the Project, or to the attendant fixtures, equipment
and Common Areas. Landlord may at any time relocate or remove any of the various buildings,
parking areas, and other Common Areas, and may add buildings and areas to the Project from time to
time. No change shall entitle Tenant to any abatement of rent or other claim against Landlord. No
such change shall deprive Tenant of reasonable access to or use of the Premises.



ARTICLE VII. MAINTAINING THE PREMISES




     SECTION 7.1. TENANT’S MAINTENANCE AND REPAIR. Tenant at its sole expense shall maintain and
make all repairs and replacements necessary to keep the Premises in the condition as existed on the
Commencement Date (or on any later date that the improvements may have been installed), excepting
ordinary wear and tear and damage by casualty, including without limitation all interior glass,
doors, door closures, hardware, fixtures, electrical, plumbing, fire extinguisher equipment and
other equipment installed in the Premises and all Alterations constructed by Tenant pursuant to
Section 7.3 below. Any damage or deterioration of the Premises shall not be deemed ordinary wear
and tear if the same could have been prevented by good maintenance practices by Tenant. As part of
its maintenance obligations hereunder, Tenant shall assure that the Premises remain free of
moisture conditions which could cause
mold and promptly repair any moisture conditions occurring within the Premises, and Tenant
shall, at Landlord’s request, provide Landlord with copies of all maintenance schedules, reports
and notices prepared by, for or on behalf of Tenant. All repairs and replacements shall be at
least equal in quality to the original work, shall be made only by a licensed contractor approved
in writing in advance by Landlord and shall be made only at the time or times approved by Landlord.
Any contractor utilized by Tenant shall be subject to Landlord’s standard requirements for
contractors, as modified from time to time. Landlord may impose reasonable restrictions and
requirements with respect to repairs and replacements, as provided in Section 7.3, and the
provisions of Section 7.4 shall apply to all repairs and replacements. Alternatively, Landlord may
elect to perform any repair and maintenance of the electrical and mechanical systems and any air
conditioning, ventilating or heating equipment serving the Premises and include the cost thereof as
part of Tenant’s Share of Operating Expenses. If Tenant fails to properly maintain and/or repair
the Premises as herein provided following Landlord’s notice and the expiration of the applicable
cure period (or earlier if Landlord determines that such work must be performed prior to such time
in order to avoid damage to the Premises or Building or other detriment), then Landlord may elect,
but
shall have no obligation, to perform any repair or maintenance required hereunder on behalf of
Tenant and at Tenant’s expense, and Tenant shall reimburse Landlord upon demand for all costs
incurred.



 









 





     SECTION 7.2. LANDLORD’S MAINTENANCE AND REPAIR. Subject to Section 7.1 and Article XI,
Landlord shall provide service, maintenance and repair with respect to any air conditioning,
ventilating or heating equipment which serves the Premises (exclusive, however, of supplemental
HVAC equipment serving only the Premises), and shall maintain in good repair the roof, foundations,
footings, the exterior surfaces of the exterior walls of the Building (including exterior glass),
the structural, electrical and mechanical systems (including elevators, if any, serving the
Building), except that Tenant at its expense shall make all repairs which Landlord deems reasonably
necessary as a result of the act or negligence of Tenant, its agents, employees, invitees,
subtenants or contractors. Landlord shall have the right to employ or designate any reputable
person or firm, including any employee or agent of Landlord or any of Landlord’s affiliates or
divisions, to perform any service, repair or maintenance function. Landlord need not make any
other improvements or repairs except as specifically required under this Lease, and nothing
contained in this Section shall limit Landlord’s right to reimbursement from Tenant for
maintenance, repair costs and replacement costs as provided elsewhere in this Lease. Tenant
understands that it shall not perform any maintenance or make any repairs or replacements at
Landlord’s expense and shall have no right to any rental offset for any maintenance, repairs or
replacements performed by Tenant. Tenant further understands that Landlord shall not be required
to make any repairs to the roof, foundations, footings, the exterior surfaces of the exterior walls
of the Building (excluding exterior glass), or structural, electrical or mechanical systems unless
and until Tenant has notified Landlord in writing of the need for such repair, and Landlord shall
have a reasonable period of time thereafter to commence and complete said repair, if warranted.
All costs of any maintenance, repairs and replacements on the part of Landlord provided hereunder
shall be considered part of Project Costs.



     SECTION 7.3. ALTERATIONS. Except as otherwise provided in this Section, Tenant shall make no
alterations, additions, fixtures or improvements (“Alterations”) to the Premises or the Building
without the prior written consent of Landlord, which consent may be granted or withheld in
Landlord’s sole and absolute discretion. In the event that any requested Alteration would result
in a change from Landlord’s building standard materials and specifications for the Project
(“Standard Improvements”), Landlord may withhold consent to such Alteration in its sole and
absolute discretion. In the event Landlord so consents to a change from the Standard Improvements
(such change being referred to as a “Non-Standard Improvement”), Tenant shall be responsible for
the cost of replacing such Non-Standard Improvement with the applicable Standard Improvement
(“Replacements”), which Replacements shall be completed prior to the Expiration Date or earlier
termination of this Lease. Landlord shall not unreasonably withhold its consent to any Alterations
which cost less than Two Dollar ($2.00) per square foot of the improved portions of the Premises
(excluding warehouse square footage) and do not (i) affect the exterior of the Building or outside
areas (or be visible from adjoining sites), or (ii) affect or penetrate any of the structural
portions of the Building, including but not limited to the roof, or (iii) require any change to the
basic floor plan of the Premises (including, without limitation, the adding of any additional
“office” square footage) or any change to any structural or mechanical systems of the Premises, or
(iv) fail to comply with any applicable governmental requirements or require any governmental
permit as a prerequisite to the construction thereof, or (v) result in the Premises requiring
building services beyond the level normally provided to other tenants, or (vi) interfere in any
manner with the proper functioning of, or Landlord’s access to, any mechanical, electrical,
plumbing, elevator or HVAC systems, facilities or equipment located in or serving the Building, or
(vii) diminish the value of the Premises including, without limitation, using lesser quality
materials than those existing in the Premises, or (viii) alter or replace Standard Improvements.
Landlord may impose any condition to its consent, including but not limited to a requirement that
the installation and/or removal of all Alterations and Replacements be covered by a lien and
completion bond satisfactory to Landlord in its sole and absolute discretion and requirements as to
the manner and time of performance of such work. Landlord shall in all events, whether or not
Landlord’s consent is required, have the right to approve prior to the commencement of any work the
contractor performing the installation and removal of Alterations and Replacements and Tenant shall
not permit any contractor not approved by Landlord to perform any work on the Premises or on the
Building. Tenant shall obtain all required permits for the installation and removal of Alterations
and Replacements and shall perform the installation and removal of Alterations and Replacements in
compliance with all applicable laws, regulations and ordinances, including without limitation the
Americans with Disabilities Act, all covenants, conditions and restrictions affecting the Project,
and the Rules and Regulations as described in Article XVII. Tenant understands and agrees that
Landlord shall be entitled to a supervision fee in the amount of five percent (5%) of the cost of
such Alterations either requiring a permit from the City of San Diego or affecting any mechanical,
electrical, plumbing or HVAC systems, facilities or equipment located in or serving the Building.
Under no circumstances shall Tenant make any Alterations or Replacements which incorporate any
Hazardous Materials, including without limitation asbestos-containing construction materials into
the Premises, the Building or the Common Area. In no event shall Tenant prosecute any Alterations
that result in picketing or labor demonstrations in or about the Building or Project.
If any governmental entity requires, as a condition to any proposed Alterations or
Replacements by Tenant, that improvements be made to the Common Areas, and if Landlord consents to
such improvements to the Common Areas (which consent may be withheld in the sole and absolute
discretion of Landlord), then Tenant shall, at Tenant’s sole expense, make such required
improvements to the Common Areas in such manner, utilizing such materials, and with such
contractors, architects and engineers as Landlord may require in its sole and absolute discretion.
Landlord shall have the right, but not the obligation, to elect to make any such improvements to be
made to the Common Areas at Tenant’s expense, in which case Tenant shall reimburse Landlord upon
demand for all costs incurred in making such improvements. Any request for Landlord’s consent to
any proposed Alterations shall be made in writing and shall contain architectural plans describing
the work in detail reasonably satisfactory to Landlord. Landlord may elect to cause its architect
to review Tenant’s architectural plans, and the reasonable cost of that review shall be reimbursed
by Tenant. Should the work proposed by Tenant and consented to by Landlord modify the basic floor
plan of the Premises, then Tenant shall, at its expense, furnish Landlord with as-built drawings
and CAD disks compatible with Landlord’s systems and standards. Unless Landlord otherwise agrees
in writing, all Alterations made or affixed to the Premises, the Building or to the Common Area
(excluding moveable trade fixtures and furniture),
including without limitation all



 









 







Tenant
Improvements constructed pursuant to the Work Letter (except as otherwise provided in the Work
Letter) and all telephone and data cabling, shall become the property of Landlord and shall be
surrendered with the Premises at the end of the Term; except that Landlord may, as provided in the
next succeeding paragraph of this Section 7.3, require Tenant to remove by the Expiration Date or
sooner termination date of this Lease, all or any of the Alterations installed either by Tenant or
by Landlord at Tenant’s request, including without limitation all Tenant Improvements constructed
pursuant to the Work Letter (except as otherwise provided in the Work Letter) and all telephone and
data cabling, and to repair any damage to the Premises, the Building or the Common Area arising
from that removal and restore the Premises to their condition prior to making such Alterations.



     As of the Expiration Date or earlier termination date of this Lease, Landlord shall have the
right to require Tenant to remove any Alterations made by Tenant to the Premises and to replace
same with the applicable Replacements, whether or not Landlord’s consent was required.
Notwithstanding the foregoing, if at the time of requesting Landlord’s consent to any such
Alterations, Tenant shall request in writing whether or not Landlord shall require such Alterations
to be removed and replaced as of the Expiration Date or earlier termination date of this Lease,
then Landlord’s right to require Tenant to remove and replace such Alterations shall be exercised,
if at all, at the time of Landlord’s consent thereto.



     SECTION 7.4. MECHANIC’S LIENS. Tenant shall keep the Premises free from any liens arising out
of any services or work performed, materials furnished, or obligations incurred by or for Tenant.
Upon request by Landlord, Tenant shall promptly (but in no event later than ten (10) business days
following such request) cause any such lien to be released by posting a bond in accordance with
California Civil Code Section 3143 or any successor statute. In the event that Tenant shall not,
within thirty (30) days following the imposition of any lien, cause the lien to be released of
record by payment or posting of a proper bond, Landlord shall have, in addition to all other
available remedies, the right to cause the lien to be released by any means it deems proper,
including payment of or defense against the claim giving rise to the lien. All expenses so
incurred by Landlord, including Landlord’s attorneys’ fees, and any other damages incurred by
Landlord arising out of such lien, shall be reimbursed by Tenant upon demand, together with
interest from the date of payment by Landlord at the maximum rate permitted by law until paid.
Tenant shall give Landlord no less than twenty (20) days’ prior notice in writing before commencing
construction of any kind on the Premises or Common Area and shall again notify Landlord that
construction has commenced, such notice to be given on the actual date on which construction
commences, so that Landlord may post and maintain notices of nonresponsibility on the Premises or
Common Area, as applicable, which notices Landlord shall have the right to post and which Tenant
agrees it shall not disturb. Tenant shall also provide Landlord notice in writing within ten (10)
days following the date on which such work is substantially completed. The provisions of this
Section shall expressly survive the expiration or sooner termination of this Lease.



     SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times, upon at least 24
hours prior written or oral notice (except in emergencies, when no notice shall be required) have
the right to enter the Premises to inspect them, to supply services in accordance with this Lease,
to perform any work required or permitted to be performed by Landlord within the Premises, to have
access to install, repair, maintain, replace or remove all electrical and mechanical installations
of Landlord and to protect the interests of Landlord in the Premises, and to submit the Premises to
prospective or actual purchasers or encumbrance holders (or, during the last one hundred and eighty
(180) days of the Term or when an Event of Default exists, to prospective tenants), all without
being deemed to have caused an eviction of Tenant and without abatement of rent except as provided
elsewhere in this Lease. Landlord shall have the right, if desired, to retain a key which unlocks
all of the doors in the Premises, excluding Tenant’s vaults and safes, and Landlord shall have the
right to use any and all means which Landlord may deem proper to open the doors in an emergency in
order to obtain entry to the Premises, and any entry to the Premises obtained by Landlord as
provided in this Section 7.5 shall not be deemed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or any eviction of Tenant from the Premises.



     SECTION 7.6. COMMUNICATIONS EQUIPMENT. Landlord hereby grants to Tenant a non-exclusive
license (the “License”) to install, maintain and operate on the roof of the Building a single
antenna or satellite dish not exceeding forty-eight inches (48”) in height or thirty-six inches
(36”) in diameter (the “Antenna”) in accordance with and subject to the terms and conditions set
forth below. The Antenna shall be installed at a location designated by Landlord and reasonably
acceptable to Tenant (“Licensed Area”). The Licensed Area shall be considered to be
a part of the Premises for all purposes under the Lease, and except as otherwise expressly
provided in this Section 7.6 all provisions applicable to the use of the Premises under the Lease
shall apply to the Licensed Area and its use by Tenant.



          (1) The Term of the License shall be coterminous with this Lease;




          (2) Tenant shall not be obligated to pay any license fee for the use of the Licensed Area
pursuant to this Section 7.6 during the Term of this Lease.




          (3) Tenant shall use the Licensed Area only for the installation, operation, repair,
replacement and maintenance of the Antenna and the necessary mechanical and electrical equipment to
service said Antenna and for no other use or purpose. The installation of the Antenna and all
equipment and facilities related thereto, including any required conduit from the Premises to the
Antenna, shall be deemed to constitute an alteration subject to the provisions of Section 7.3 of
the Lease, provided that Landlord shall not unreasonably withhold its approval of the same.
Landlord may require appropriate screening for the Antenna as a condition of Landlord’s approval of
the installation of the Antenna. Tenant may have access to the Licensed Area for such uses during
normal business hours and at times upon reasonably prior notice to Landlord and shall reimburse
Landlord for any reasonably out-of-pocket expenses incurred by Landlord in connection therewith;




 









 








          (4) The Antenna shall be used only for transmitting and/or receiving data, audio and/or video
signals to and from Tenant’s facilities within the Premises for Tenant’s use, and shall not be used
or permitted to be used by Tenant for purposes of broadcasting signals to the public or to provide
telecommunications or other communications transmitting or receiving services to any third parties;




          (5) Landlord reserves the right upon reasonable prior written notice to Tenant to require
either (a) the relocation of all equipment installed by Tenant to another location on the roof of
the Building reasonably designated by Landlord, or (b) the removal of any and all of such equipment
should Landlord reasonably determine that its presence results in material damage to the Building
unless Tenant makes satisfactory arrangements to protect Landlord therefrom;




          (6) Tenant shall require its employees, when using the Licensed Area, to stay within the
immediate vicinity thereof. In addition, in the event any communications system or broadcast or
receiving facilities are operating in the area, Tenant shall at all times during the term of the
License conduct its operations so as to ensure that such system or facilities shall not be
subjected to harmful interference as a result of such operations by Tenant. Upon notification from
Landlord of any such interference, Tenant agrees to immediately take the necessary steps to correct
such situation, and Tenant’s failure to do so shall be deemed a default under the terms of this
Lease.




          (7) During the term of the License, Tenant shall comply with any standards promulgated by
applicable governmental authorities or otherwise reasonably established by Landlord regarding the
generation of electromagnetic fields. Should Landlord determine in good faith at any time that the
Antenna poses a health or safety hazard to occupants of the Building, Landlord may require Tenant
to make arrangements satisfactory to Landlord to mitigate such hazard or, if Tenant either fails or
is unable to make such satisfactory arrangements, to remove the Antenna. Any claim or liability
resulting from the use of the Antenna or the Licensed Area shall be subject to the indemnification
provisions of this Lease applicable to Tenant’s use of the Premises;




          (8) During the term of the License, Tenant shall pay all taxes attributable to the Antenna and
other equipment owned and installed by Tenant, and Tenant shall assure and provide Landlord with
evidence that the Licensed Area and Tenant’s use thereof are subject to the insurance coverages
otherwise required to be maintained by Tenant as to the Premises pursuant to Exhibit D;




          (9) Upon the expiration or sooner termination of the Lease, Tenant shall remove the Antenna
and all related equipment and facilities, including any conduit from the Premises to the Antenna,
from the Licensed Area and any other portions of the Building within or upon which the same may be
installed, and shall restore the Licensed Area and all other areas affected by such removal to
their original condition, reasonable wear and tear excepted, all at its sole cost and expense; and




          (10) Tenant’s rights under this Section 7.6 belong solely to Illumina, Inc., a Delaware
corporation, and any attempted assignment or transfer of such rights shall be void and of no force
and effect.




ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT’S PROPERTY




     Tenant shall be liable for and shall pay, at least ten (10) days before delinquency, all taxes
and assessments levied against all personal property of Tenant located in the Premises, and, if
required by Landlord, against all Non-Standard Improvements to the Premises (as defined in Section
7.3) made by Landlord or Tenant, and against any Alterations (as defined in Section 7.3) made to
the Premises or the Building by or on behalf of Tenant. If requested by Landlord, Tenant shall
cause its personal property, Non-Standard Improvements and Alterations to be assessed and billed
separately from the real property of which the Premises form a part. If any taxes required to be
paid by Tenant on Tenant’s personal property, Non-Standard Improvements and/or Alterations are
levied against Landlord or Landlord’s property and if Landlord pays the same, or if the assessed
value of Landlord’s property is increased by the inclusion of a value placed upon Tenant’s personal
property, Non-Standard Improvements and/or Alterations and if Landlord pays the taxes based upon
the increased assessment, Landlord shall have the right to require that Tenant
pay to Landlord the taxes so levied against Landlord or the proportion of the taxes resulting
from the increase in the assessment. In calculating what portion of any tax bill which is assessed
against Landlord separately, or Landlord and Tenant jointly, is attributable to Tenant’s
Non-Standard Improvements, Alterations and personal property, Landlord’s reasonable determination
shall be conclusive.



ARTICLE IX. ASSIGNMENT AND SUBLETTING




     SECTION 9.1. RIGHTS OF PARTIES.



     (a) Notwithstanding any provision of this Lease to the contrary, and except as to transfers
expressly permitted without Landlord’s consent pursuant to Section 9.4, Tenant will not, either
voluntarily or by operation of law, assign, sublet, encumber, or otherwise transfer all or any part
of Tenant’s interest in this Lease or the Premises, or permit the Premises to be occupied by anyone
other than Tenant, without Landlord’s prior written consent, which consent shall not unreasonably
be withheld in accordance with the provisions of Section 9.1(b). No assignment (whether voluntary,
involuntary or by operation of law), subletting or other transfer shall be valid or effective
without Landlord’s prior written consent and, at Landlord’s election, any such assignment,
subletting or other transfer shall be void and of no force and effect and any such attempted
assignment, subletting or other transfer shall constitute an Event of Default of this Lease.
Landlord shall not be deemed to have given its consent to any assignment, subletting or other
transfer by any course of action, including without limitation its acceptance of rent or any other
payment due under this Lease from any person or entity other than Tenant or its acceptance of any
name for listing in the Building directory, other than Landlord’s written consent. To the extent
not prohibited by



 









 







provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq., (the
“Bankruptcy Code”), including Section 365(f)(1), Tenant on behalf of itself and its creditors,
administrators and assigns waives the applicability of Section 365(e) of the Bankruptcy Code unless
the proposed assignee of the Trustee for the estate of the bankrupt meets Landlord’s standard for
consent as set forth in Section 9.1(b) of this Lease. If this Lease is assigned to any person or
entity pursuant to the provisions of the Bankruptcy Code, any and all monies or other
considerations to be delivered in connection with the assignment shall be delivered to Landlord,
shall be and remain the exclusive property of Landlord and shall not constitute property of Tenant
or of the estate of Tenant within the meaning of the Bankruptcy Code. Any person or entity to
which this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to
have assumed all of the obligations arising under this Lease on and after the date of the
assignment, and shall upon demand execute and deliver to Landlord an instrument confirming that
assumption.



     (b) If Tenant desires to assign, sublease or otherwise transfer an interest in this Lease or
the Premises, it shall first notify Landlord of its desire and shall submit in writing to Landlord:
(i) the name and address of the proposed assignee, subtenant or transferee; (ii) the nature of any
proposed assignee’s, subtenant’s or transferee’s business to be carried on in the Premises; (iii)
the terms and provisions of any proposed assignment, sublease or other transfer, including a copy
of the proposed assignment, sublease or transfer form; (iv) evidence that the proposed assignee,
subtenant or transferee will comply with the requirements of Exhibit D hereto; (v) a
completed Environmental Questionnaire from the proposed assignee, subtenant or transferee; (vi) any
other information requested by Landlord and reasonably related to the transfer and (vii) the fee
described in Section 9.1(e). Except as provided in Section 9.1(c), Landlord shall not unreasonably
withhold its consent, provided that the parties agree that it shall be reasonable for Landlord to
withhold its consent if: (1) the use of the Premises will not be consistent with the provisions of
this Lease or with Landlord’s commitment to other tenants of the Building and Project; (2) the
proposed assignee, subtenant or transferee has been required by any prior landlord, lender or
governmental authority to take remedial action in connection with Hazardous Materials contaminating
a property arising out of the proposed assignee’s, subtenant’s or transferee’s actions or use of
the property in question, or is subject to any enforcement order issued by any governmental
authority in connection with the use, disposal or storage of a Hazardous Material; (3) insurance
requirements of the proposed assignee or subtenant may not be brought into conformity with
Landlord’s then current leasing practice; (4) the proposed assignee, subtenant or transferee has
not demonstrated to the reasonable satisfaction of Landlord that it is financially responsible or
has failed to submit to Landlord all reasonable information as requested by Landlord concerning the
proposed assignee, subtenant or transferee, including, but not limited to, current statements of
income or profit and loss of the proposed assignee, subtenant or transferees; (5) the proposed
subtenant, assignee or transferee is an existing tenant of the Building or Project with whom
Landlord is negotiating to expand or relocate within the Building or Project, or a prospect with
whom Landlord is negotiating to become a tenant at the Building or Project; or (6) the proposed
assignment, sublease or transfer will impose additional burdens or adverse tax effects on Landlord.
If Tenant has any exterior sign rights under this Lease, such rights are personal to Tenant and
may not be assigned or transferred to any assignee of this Lease or subtenant of the Premises
without Landlord’s prior written consent, which consent may be withheld in Landlord’s sole and
absolute discretion.



     If Landlord consents to the proposed transfer, Tenant may within ninety (90) days after the
date of the consent effect the transfer upon the terms described in the information furnished to
Landlord; provided that any material change in the terms shall be subject to Landlord’s consent as
set forth in this Section 9.1. Landlord shall approve or disapprove any requested transfer within
thirty (30) days following receipt of Tenant’s written request, the information set forth above,
and the fee set forth below.



     (c) Notwithstanding the provisions of Section 9.1(b) above, in lieu of consenting to a
proposed assignment of this Lease or to a subletting of all or substantially all of the Floor Area
of the Premises, Landlord may elect, within the thirty (30) day period permitted for Landlord to
approve or disapprove a requested transfer, to (i) sublease the Premises (or the portion proposed
to be so subleased), or take an assignment of Tenant’s interest in this Lease, upon substantially
the same terms as offered to the proposed subtenant or assignee (excluding terms relating to the
purchase of personal property, the use of Tenant’s name or the continuation of Tenant’s business),
respectively, or (ii) terminate this Lease as to the portion of the Premises proposed to be so
subleased or assigned
with a proportionate abatement in the rent payable under this Lease, and the sublease,
assignment or termination elected by Landlord shall be effective thirty (30) days following written
notice by Landlord of its election. Landlord may thereafter, at its option, assign, sublet or
re-let any space so sublet, obtained by assignment or obtained by termination to any third party,
including without limitation the proposed transferee of Tenant.



     (d) In the event that Landlord approves the requested assignment, subletting or other
transfer, Landlord shall be entitled to receive fifty percent (50%) of any amounts paid by the
assignee or subtenant, however described, in excess of (i) the Basic Rent payable by Tenant
hereunder, or in the case of a sublease of a portion of the Premises, in excess of the Basic Rent
reasonably allocable to such portion as determined by Landlord, plus (ii) Tenant’s direct
out-of-pocket costs which Tenant certifies to Landlord have been paid to provide occupancy related
services to such assignee or subtenant of a nature commonly provided by landlords of similar space,
with such costs to be amortized on a straight-line basis over the then remaining term of this Lease
or any shorter term of any sublease of the Premises or a portion thereof. The amounts due Landlord
under this Section 9.1(d), shall be payable directly to Landlord by the assignee or subtenant
concurrently with such assignee’s or subtenant’s payment(s) to Tenant, or, at Landlord’s option, by
Tenant within ten (10) days of Tenant’s receipt thereof. Landlord shall have the right to review
or audit the books and records of Tenant, or have such books and records reviewed or audited by an
outside accountant, to confirm any such direct out-of-pocket costs. In the event that such direct
out-of-pocket costs claimed by Tenant are overstated by more than five percent (5%), Tenant shall
reimburse Landlord for any of Landlord’s costs related to such review or audit. At Landlord’s
request, a written agreement shall be entered into by and among Tenant, Landlord and the proposed
assignee or subtenant confirming the requirements of this Section 9.1(d).



 









 





     (e) Tenant shall pay to Landlord a fee equal to the greater of (i) Landlord’s actual and
reasonable costs related to such assignment, subletting or other transfer or (ii) Five Hundred
Dollars ($500.00), to process any request by Tenant for an assignment, subletting or other transfer
under this Lease. Tenant shall pay Landlord the sum of Five Hundred Dollars ($500.00) concurrently
with Tenant’s request for consent to any assignment, subletting or other transfer, and Landlord
shall have no obligation to consider such request unless accompanied by such payment. Tenant shall
pay Landlord upon demand any costs in excess of such payment to the extent Landlord’s actual and
reasonable costs related to such request exceeds $500.00. Such fee is hereby acknowledged as a
reasonable amount to reimburse Landlord for its costs of review and evaluation of a proposed
transfer.



     SECTION 9.2. EFFECT OF TRANSFER. No assignment, subletting or other transfer, even with the
consent of Landlord, shall relieve Tenant of its obligation to pay rent and to perform all its
other obligations under this Lease. Moreover, Tenant shall indemnify and hold Landlord harmless,
as provided in Section 10.3, for any act or omission by an assignee, subtenant or transferee. Each
assignee, other than Landlord, shall assume all obligations of Tenant under this Lease and shall be
liable jointly and severally with Tenant for the payment of all rent, and for the due performance
of all of Tenant’s obligations, under this Lease. No assignment, subletting or transfer shall be
effective or binding on Landlord unless documentation in form and substance satisfactory to
Landlord in its reasonable discretion evidencing the transfer, and in the case of an assignment,
the assignee’s assumption of the obligations of Tenant under this Lease, is delivered to Landlord,
and both the assignee/subtenant and Tenant deliver to Landlord an executed consent to transfer
instrument prepared by Landlord and consistent with the requirements of this Article. Consent by
Landlord to one or more transfers shall not operate as a waiver or estoppel to the future
enforcement by Landlord of its rights under this Lease or as a consent to any subsequent transfer.



     SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions shall apply to any
subletting by Tenant of all or any part of the Premises and shall be deemed included in each
sublease:



     (a) Each and every provision contained in this Lease (other than with respect to the payment
of rent hereunder) is incorporated by reference into and made a part of such sublease, with
“Landlord” hereunder meaning the sublandlord therein and “Tenant” hereunder meaning the subtenant
therein.



     (b) Tenant hereby irrevocably assigns to Landlord all of Tenant’s interest in all rentals and
income arising from any sublease of the Premises, and Landlord may collect such rent and income and
apply the same toward Tenant’s obligations under this Lease; provided, however, that until there is
an Event of Default by Tenant, Tenant shall have the right to receive and collect the sublease
rentals. Landlord shall not, by reason of this assignment or the collection of sublease rentals,
be deemed liable to the subtenant for the performance of any of Tenant’s obligations under the
sublease. Tenant hereby irrevocably authorizes and directs any subtenant, upon receipt of a
written notice from Landlord stating that an Event of Default exists in the performance of Tenant’s
obligations under this Lease, to pay to Landlord all sums then and thereafter due under the
sublease. Tenant agrees that the subtenant may rely on that notice without any duty of further
inquiry and notwithstanding any notice or claim by Tenant to the contrary. Tenant shall have no
right or claim against the subtenant or Landlord for any rentals so paid to Landlord.



     (c) In the event of the termination of this Lease for any reason, including without limitation
as the result of an Event of Default by Tenant or by the mutual agreement of Landlord and Tenant,
Landlord may, at its sole option, take over Tenant’s entire interest in any sublease and, upon
notice from Landlord, the subtenant shall attorn to Landlord. In no event, however, shall Landlord
be liable for any previous act or omission by Tenant under the sublease or for the return of any
advance rental payments or deposits under the sublease that have not been actually delivered to
Landlord, nor shall Landlord be bound by any sublease modification executed without Landlord’s
consent or for any advance rental payment by the subtenant in excess of one month’s rent. The
provisions of this Lease (other than with respect to the payment of rent), including without
limitation those pertaining to insurance and indemnification, shall be deemed incorporated by
reference into the sublease despite the termination of this Lease. In the event Landlord does not
elect to take over Tenant’s interest in a sublease in the
event of any such termination of this Lease, such sublease shall terminate concurrently with
the termination of this Lease and such subtenant shall have no further rights under such sublease
and Landlord shall have no obligations to such subtenant.



     SECTION 9.4. CERTAIN TRANSFERS. The following shall be deemed to constitute an assignment of
this Lease; (a) the sale of all or substantially all of Tenant’s assets (other than bulk sales in
the ordinary course of business), (b) if Tenant is a corporation, an unincorporated association, a
limited liability company or a partnership, the transfer, assignment or hypothecation of any stock
or interest in such corporation, association, limited liability company or partnership in the
aggregate of twenty-five percent (25%) (except for publicly traded shares of stock constituting a
transfer of twenty-five percent (25%) or more in the aggregate, so long as no change in the
controlling interest of Tenant occurs as a result thereof), or (c) any other direct or indirect
change of control of Tenant, including, without limitation, change of control of Tenant’s parent
company or a merger by Tenant or its parent company. Notwithstanding the foregoing, Landlord’s
consent shall not be required for the assignment of this Lease as a result of a merger by Tenant
with or into another entity or a reorganization of Tenant, so long as (i) the net worth of the
successor or reorganized entity after such merger is at least equal to the greater of the net worth
of Tenant as of the execution of this Lease by Landlord or the net worth of Tenant immediately
prior to the date of such merger or reorganization, evidence of which, satisfactory to Landlord,
shall be presented to Landlord prior to such merger or reorganization, (ii) Tenant shall provide to
Landlord, prior to such merger or reorganization, written notice of such merger or reorganization
and such assignment documentation and other information as Landlord may require in connection
therewith, and (iii) all of the terms and requirements of Section 9.2 and 9.3 shall apply with
respect to such assignment.



 









 





ARTICLE X. INSURANCE AND INDEMNITY




     SECTION 10.1. TENANT’S INSURANCE. Tenant, at its sole cost and expense, shall provide and
maintain in effect the insurance described in Exhibit D. Evidence of that insurance must
be delivered to Landlord prior to the Early Occupancy Date or any earlier date on which Tenant may
enter upon or take possession of the Premises for any reason whatsoever.



     SECTION 10.2. LANDLORD’S INSURANCE. Landlord may, at its election, provide any or all of the
following types of insurance, with or without deductible and in amounts and coverages as may be
determined by Landlord in its sole and absolute discretion: property insurance, subject to
standard exclusions, covering the Building and/or Project, and such other risks as Landlord or its
mortgagees may from time to time deem appropriate, including coverage for the Tenant Improvements
constructed by Landlord pursuant to the Work Letter (if any) attached hereto, and commercial
general liability coverage. Landlord shall not be required to carry insurance of any kind on
Tenant’s Alterations or on Tenant’s other property, including, without limitation, Tenant’s trade
fixtures, furnishings, equipment, signs and all other items of personal property, and Landlord
shall not be obligated to repair or replace that property should damage occur. All proceeds of
insurance maintained by Landlord upon the Building and/or Project shall be the property of
Landlord, whether or not Landlord is obligated to or elects to make any repairs. At Landlord’s
option, Landlord may self-insure all or any portion of the risks for which Landlord may elect to
provide insurance hereunder.



     SECTION 10.3. TENANT’S INDEMNITY. To the fullest extent permitted by law, Tenant shall
defend, indemnify, protect, save and hold harmless Landlord, its agents, and any and all affiliates
of Landlord, including, without limitation, any corporations or other entities controlling,
controlled by or under common control with Landlord, from and against any and all claims, demands,
actions, losses, liabilities, costs or expenses arising either before or after the Early Occupancy
Date from: Tenant’s use or occupancy of the Premises, the Building or the Common Areas, including,
without limitation, the use by Tenant, its agents, employees, invitees or licensees of any
recreational facilities within the Common Areas; the conduct of Tenant’s business; any activity,
work, or thing done, permitted or suffered by Tenant or its agents, employees, invitees or
licensees in or about the Premises, the Building or the Common Areas; any Event of Default in the
performance of any obligation on Tenant’s part to be performed under this Lease; or any act or
negligence of Tenant or its agents, employees, visitors, patrons, guests, invitees or licensees.
Landlord may, at its option, require Tenant to assume Landlord’s defense in any claim, action or
proceeding covered by this Section through counsel satisfactory to Landlord. The provisions of
this Section shall expressly survive the expiration or sooner termination of this Lease. Tenant’s
obligations under this Section shall not apply in the event that the claim, demand, action, loss,
liability, cost or expense is caused solely by the active negligence or willful misconduct of
Landlord.



     SECTION 10.4. LANDLORD’S NONLIABILITY. Landlord, its agents, and any and all affiliates of
Landlord, shall not be liable to Tenant, its employees, agents and/or invitees, and Tenant hereby
waives all claims against Landlord, its agents, and any and all affiliates of Landlord, for and
knowingly assumes the risk of loss of or damage to any property, or loss or interruption of
business or income, or any other loss, cost, damage, injury or liability whatsoever (including
without limitation any consequential damages and lost profit or opportunity costs), resulting from,
but not limited to, Acts of God, acts of civil disobedience or insurrection, acts or omissions of
third parties and/or of other tenants within the Project or their agents, employees, contractors,
guests or invitees, fire, explosion, falling plaster, steam, gas, electricity, water or rain which
may leak or flow from or into any part of the Premises, mold, or from the breakage, leakage,
obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, electrical works, roof, windows or other fixtures in the Building (whether the damage
or injury results from conditions arising in the Premises or in other portions of the Building),
regardless of the negligence of Landlord, its agents or any and all affiliates of Landlord in
connection with any of the foregoing. It is understood that any such condition may require the
temporary evacuation or closure of all or a portion of the Building. Landlord shall have no
liability whatsoever (including without limitation consequential damages and lost profit or
opportunity costs) and, except as provided in Sections 11.1 and 12.1 below, there shall be no
abatement of rent, by reason of any injury to or interference with Tenant’s business arising from
the making of any repairs, alterations or improvements to any portion of the Building, including
repairs to the Premises, nor shall any related activity by Landlord constitute an actual or
constructive eviction. In making repairs, alterations or improvements, however, Landlord shall
interfere as little as reasonably practicable with the conduct of Tenant’s business in the
Premises. Should Tenant elect to receive any service or products from a concessionaire, licensee
or third party tenant of Landlord, Landlord shall have no liability for any services or products so
provided or for any breach of contract by such third party provider. Neither Landlord nor its
agents shall be liable for interference with light or other similar intangible interests. Tenant
shall immediately notify Landlord in case of fire or accident in the Premises, the Building or the
Project and of defects in any improvements or equipment.



     SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby waives all rights of
recovery against the other and the other’s agents on account of loss and damage occasioned to the
property of such waiving party to the extent that the waiving party is entitled to proceeds for
such loss or damage under any property insurance policies carried or required to be carried by the
provisions of this Lease; provided however, that the foregoing waiver shall not apply to the extent
of Tenant’s obligations to pay deductibles under any such policies and this Lease. By this waiver
it is the intent of the parties that neither Landlord nor Tenant shall be liable to any insurance
company (by way of subrogation or otherwise) insuring the other party for any loss or damage
insured against under any property insurance policies contemplated by this Lease, even though such
loss or damage might be occasioned by the negligence of such party, its agents, employees,
contractors, guests or invitees.



 









 





ARTICLE XI. DAMAGE OR DESTRUCTION




     SECTION 11.1. RESTORATION.



     (a) If the Premises or the Building or a part thereof are materially damaged by any fire,
flood, earthquake or other casualty, Landlord shall have the right to terminate this Lease upon
written notice to Tenant if: (i) Landlord reasonably determines that proceeds necessary to pay the
full cost of repair are not available from Landlord’s insurance, including without limitation
earthquake insurance, plus such additional amounts Tenant elects, at its option, to contribute,
excluding however the deductible (for which Tenant shall be responsible for Tenant’s Share); (ii)
Landlord reasonably determines that the Premises cannot, with reasonable diligence, be fully
repaired by Landlord (or cannot be safely repaired because of the presence of hazardous factors,
including without limitation Hazardous Materials, earthquake faults, and other similar dangers)
within two hundred seventy (270) days after the date of the damage; (iii) an Event of Default by
Tenant has occurred; or (iv) the material damage occurs during the final twelve (12) months of the
Term. Landlord shall notify Tenant in writing (“Landlord’s Notice”) within sixty (60) days after
the damage occurs as to (A) whether Landlord is terminating this Lease as a result of such material
damage and (B) if Landlord is not terminating this Lease, the number of days within which Landlord
estimates that the Premises, with reasonable diligence, are likely to be fully repaired. In the
event Landlord elects to terminate this Lease, this Lease shall terminate as of the date specified
for termination by Landlord’s Notice (which termination date shall in no event be later than sixty
(60) days following the date of the damage, or, if no such date is specified, such termination
shall be the date of Landlord’s Notice).



     (b) If Landlord has the right to terminate this Lease pursuant to Section 11.1(a) and does not
elect to so terminate this Lease, and provided that at the time of Landlord’s Notice neither an
Event of Default exists nor has Landlord delivered to Tenant a notice of any failure by Tenant to
fulfill an obligation under this Lease which, unless cured by Tenant within the applicable grace
period, would constitute an Event of Default, then within ten (10) days following delivery of
Landlord’s Notice pursuant to Section 11.1(a), Tenant may elect to terminate this Lease by written
notice to Landlord, but only if (i) Landlord’s Notice specifies that Landlord has determined that
the Premises cannot be repaired, with reasonable diligence, within two hundred seventy (270) days
after the date of damage or (ii) the casualty has occurred within the final twelve (12) months of
the Term and such material damage has a materially adverse impact on Tenant’s continued use of the
Premises. If Tenant fails to provide such termination notice within such ten (10) day period,
Tenant shall be deemed to have waived any termination right under this Section 1l.1(b) or any other
applicable law.



     (c) In the event that neither Landlord nor Tenant terminates this Lease pursuant to this
Section 11.1 as a result of material damage to the Building or Premises resulting from a casualty,
Landlord shall repair all material damage to the Premises or the Building as soon as reasonably
possible and this Lease shall continue in effect for the remainder of the Term. Subject to any
provision to the contrary in the Work Letter, such repair by Landlord shall include repair of
material damage to the Tenant Improvements constructed pursuant to the Work Letter. Landlord’s
repair of material damage shall be at Landlord’s sole cost and expense except for any insurance
deductible (for which Tenant shall be responsible for Tenant’s Share). Landlord shall have the
right, but not the obligation, to repair or replace any other leasehold improvements made by Tenant
or any Alterations (as defined in Section 7.3) constructed by Tenant as part of Landlord’s repair
of material damage, in which case Tenant shall make available to Landlord upon demand insurance
proceeds from insurance required to be maintained by Tenant. If Landlord elects to repair or
replace such leasehold improvements and/or Alterations, all insurance proceeds available for such
repair or replacement shall be made available to Landlord. Landlord shall have no liability to
Tenant in the event that the Premises or the Building has not been fully repaired within the time
period specified by Landlord in Landlord’s Notice to Tenant as described in Section 11.1(a).
Notwithstanding the provisions of this Article XI, the repair of damage to the Premises to the
extent such damage is not material shall be governed by Sections 7.1 and 7.2.



     (d) Commencing on the date of such material damage to the Building, and ending on the sooner
of the date the damage is repaired or the date this Lease is terminated, the rental to be paid
under this Lease shall be abated in the same proportion that the Floor Area of the Premises that is
rendered unusable by the damage from time to
time bears to the total Floor Area of the Premises, as determined by Landlord, but only to the
extent that Landlord is entitled to reimbursement from the proceeds of the business interruption
insurance required to be maintained by Tenant pursuant to Exhibit D.



     (e) Landlord shall not be required to repair or replace any improvements or fixtures that
Tenant is obligated to repair or replace pursuant to Section 7.1 or any other provision of this
Lease and Tenant shall continue to be obligated to so repair or replace any such improvements or
fixtures, notwithstanding any provisions to the contrary in this Article XI. In addition, but
subject to the provisions of Section 10.5, in the event the damage or destruction to the Premises
or Building are due in substantial part to the fault or neglect of Tenant or its employees,
subtenants, invitees or representatives, the costs of such repairs or replacement to the Premises
or Building shall be borne by Tenant, and in addition, Tenant shall not be entitled to terminate
this Lease as a result, notwithstanding the provisions of Section 11.1(b).



     (f) Tenant shall fully cooperate with Landlord in removing Tenant’s personal property and any
debris from the Premises to facilitate all inspections of the Premises and the making of any
repairs. Notwithstanding anything to the contrary contained in this Lease, if Landlord in good
faith believes there is a risk of injury to persons or damage to property from entry into the
Building or Premises following any damage or destruction thereto, Landlord may restrict entry into
the Building or the Premises by Tenant, its employees, agents and contractors in a
non-discriminatory manner, without being deemed to have violated Tenant’s rights of quiet enjoyment
to, or made an unlawful detainer of, or evicted Tenant from, the Premises. Upon request, Landlord
shall consult with Tenant to determine if there are safe methods of entry into the Building or the
Premises solely in order to allow Tenant to retrieve files, data in computers, and necessary
inventory, subject however to all indemnities and waivers of liability
from Tenant to Landlord
contained in this Lease and any additional indemnities and waivers of liability which Landlord may
require.



 









 





     SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this Lease, including
without limitation Section 11.1, shall govern any damage or destruction and shall, accordingly,
supersede any contrary statute or rule of law.



ARTICLE XII. EMINENT DOMAIN




     SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the Premises is taken
by any lawful authority by exercise of the right of eminent domain, or sold to prevent a taking,
either Tenant or Landlord may terminate this Lease effective as of the date possession is required
to be surrendered to the authority. In the event title to a portion of the Building or Project,
whether or not including a portion of the Premises, is taken or sold to prevent a taking, and if
Landlord elects to restore the Building in such a way as to alter the Premises materially, either
party may terminate this Lease, by written notice to the other party, effective on the date of
vesting of title. In the event neither party has elected to terminate this Lease as provided
above, then Landlord shall promptly, after receipt of a sufficient condemnation award, proceed to
restore the Premises to substantially their condition prior to the taking, and a proportionate
allowance shall be made to Tenant for the rent corresponding to the time during which, and to the
part of the Premises of which, Tenant is deprived on account of the taking and restoration. In the
event of a taking, Landlord shall be entitled to the entire amount of the condemnation award
without deduction for any estate or interest of Tenant; provided that nothing in this Section shall
be deemed to give Landlord any interest in, or prevent Tenant from seeking any award against the
taking authority for, the taking of personal property and fixtures belonging to Tenant or for
relocation or business interruption expenses recoverable from the taking authority.



     SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises shall terminate this
Lease or give Tenant any right to abatement of rent, and any award specifically attributable to a
temporary taking of the Premises shall belong entirely to Tenant. A temporary taking shall be
deemed to be a taking of the use or occupancy of the Premises for a period of not to exceed ninety
(90) days.



     SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a taking of the parking
area such that Landlord can no longer provide sufficient parking to comply with this Lease,
Landlord may substitute reasonably equivalent parking in a location reasonably close to the
Building; provided that if Landlord fails to make that substitution within ninety (90) days
following the taking and if the taking materially impairs Tenant’s use and enjoyment of the
Premises, Tenant may, at its option, terminate this Lease by written notice to Landlord. If this
Lease is not so terminated by Tenant, there shall be no abatement of rent and this Lease shall
continue in effect.



ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS




     SECTION 13.1. SUBORDINATION. At the option of Landlord or any lender of Landlord’s that
obtains a security interest in the Building, this Lease shall be either superior or subordinate to
all ground or underlying leases, mortgages and deeds of trust, if any, which may hereafter affect
the Building, and to all renewals, modifications, consolidations, replacements and extensions
thereof; provided, that so long as no Event of Default exists under this Lease beyond any
applicable notice and cure period, Tenant’s possession and quiet enjoyment of the Premises shall
not be disturbed and this Lease shall not terminate in the event of termination of any such ground
or underlying lease, or the foreclosure of any such mortgage or deed of trust, to which this Lease
has been subordinated pursuant to this Section. Tenant shall execute and deliver any documents or
agreements requested by Landlord or such lessor or lender which provide Tenant with
the non-disturbance protections set forth in this Section. In the event of a termination or
foreclosure, Tenant shall become a tenant of and attorn to the successor-in-interest to Landlord
upon the same terms and conditions as are contained in this Lease, and shall execute any instrument
reasonably required by Landlord’s successor for that purpose. Tenant shall also, upon written
request of Landlord, execute and deliver all instruments as may be required from time to time to
subordinate the rights of Tenant under this Lease to any ground or underlying lease or to the lien
of any mortgage or deed of trust (provided that such instruments include the nondisturbance and
attornment provisions set forth above), or, if requested by Landlord, to subordinate, in whole or
in part, any ground or underlying lease or the lien of any mortgage or deed of trust to this Lease.
Tenant agrees that any purchaser at a foreclosure sale or lender taking title under a deed-in-lieu
of foreclosure shall not be responsible for any act or omission of a prior landlord, shall not be
subject to any offsets or defenses Tenant may have against a prior landlord, and shall not be
liable for the return of the security deposit to the extent it is not actually received by such
purchaser or bound by any rent paid for more than the current month in which the foreclosure
occurred.



     SECTION 13.2. ESTOPPEL CERTIFICATE.



     (a) Tenant shall within ten (10) days following written request from Landlord, execute,
acknowledge and deliver to Landlord, in any form that Landlord may reasonably require, a statement
in writing (i) certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of the modification and certifying that this Lease, as modified, is in
full force and effect) and the dates to which the rental, additional rent and other charges have
been paid in advance, if any, and (ii) acknowledging that, to Tenant’s knowledge, there are no
uncured defaults on the part of Landlord, or specifying each default if any are claimed, and (iii)
setting forth all further information that Landlord or any prospective purchaser or encumbrancer
may reasonably require. Tenant’s statement may be relied upon by any prospective purchaser or
encumbrancer of all or any portion of the Building or Project.



     (b) Notwithstanding any other rights and remedies of Landlord, Tenant’s failure to deliver any
estoppel statement within the provided time shall be conclusive upon Tenant that (i) this Lease is
in full force and effect, without modification except as may be represented by Landlord, (ii) there
are no uncured Events of Default in Landlord’s performance, and (iii) not more than one month’s
rental has been paid in advance.



 









 





     SECTION 13.3. FINANCIALS.



     (a) Tenant shall deliver to Landlord, prior to the execution of this Lease and thereafter at
any time and from time to time within ten (10) days following Landlord’s written request, Tenant’s
current tax returns and financial statements, certified to be true, accurate and complete by the
chief financial officer of Tenant, including a balance sheet and profit and loss statement for the
most recent prior year, or, in the event Tenant is a publicly traded corporation on a nationally
recognized stock exchange, Tenant’s current financial reports filed with the Securities and
Exchange Commission (collectively, the “Statements”), which Statements shall accurately and
completely reflect the financial condition of Tenant. Landlord agrees that it will keep the
Statements confidential, except that Landlord shall have the right to deliver the same to any
proposed purchaser of the Building or Project, and to any encumbrancer or proposed encumbrancer of
all or any portion of the Building or Project.



     (b) Tenant acknowledges that Landlord is relying on the Statements in its determination to
enter into this Lease, and Tenant represents to Landlord, which representation shall be deemed made
on the date of this Lease and again on the Commencement Date, that no material change in the
financial condition of Tenant, as reflected in the Statements, has occurred since the date Tenant
delivered the Statements to Landlord. The Statements are represented and warranted by Tenant to be
correct and to accurately and fully reflect Tenant’s true financial condition as of the date of
submission of any Statements to Landlord.



ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES




     SECTION 14.1. TENANT’S DEFAULTS. The occurrence of any one or more of the following events
(following the expiration of any cure period set forth below, if any is provided) shall constitute
an “Event of Default” by Tenant:



     (a) The failure by Tenant to make any payment of Basic Rent or additional rent required to be
made by Tenant, as and when due, where the failure continues for a period of five (5) days after
written notice from Landlord to Tenant; provided, however, that any such notice shall be in lieu
of, and not in addition to, any notice required under California Code of Civil Procedure Section
1161 and 1161(a) as amended. For purposes of these Events of Default and remedies provisions, the
term “additional rent” shall be deemed to include all amounts of any type whatsoever other than
Basic Rent to be paid by Tenant pursuant to the terms of this Lease and the Work Letter.



     (b) The assignment, sublease, encumbrance or other transfer of this Lease by Tenant, either
voluntarily or by operation of law, whether by judgment, execution, transfer by intestacy or
testacy, or other means, without the prior written consent of Landlord when consent is required by
this Lease.



     (c) The discovery by Landlord that any financial statement provided by Tenant, or by any
affiliate, successor or guarantor of Tenant, was materially false.



     (d) The failure of Tenant to timely and fully provide any subordination agreement, estoppel
certificate or financial statements in accordance with the requirements of Article XIII.



     (e) The abandonment of the Premises by Tenant.



     (f) The failure or inability by Tenant to observe or perform any of the express or implied
covenants or provisions of this Lease to be observed or performed by Tenant, other than as
specified in this Section 14.1, where the failure continues for a period of thirty (30) days after
written notice from Landlord to Tenant or such shorter period as is specified in any other
provision of this Lease; provided, however, that any such notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil Procedure Section 1161 and 1161(a)
as amended. However, if the nature of the failure is such that more than thirty (30) days are
reasonably required for its cure, then an Event of Default shall not be deemed to have occurred if
Tenant commences the cure within thirty (30) days, and thereafter diligently pursues the cure to
completion.



     (g) (i) The making by Tenant of any general assignment for the benefit of creditors; (ii) the
filing by or against Tenant of a petition to have Tenant adjudged a Chapter 7 debtor under the
Bankruptcy Code, to have debts discharged or for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is
dismissed within thirty (30) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest
in this Lease, if possession is not restored to Tenant within thirty (30) days; (iv) the
attachment, execution or other judicial seizure of substantially all of Tenant’s assets located at
the Premises or of Tenant’s interest in this Lease, where the seizure is not discharged within
thirty (30) days; (v) Tenant’s convening of a meeting of its creditors for the purpose of effecting
a moratorium upon or composition of its debts; or (vi) the failure of Tenant to pay its material
obligations to creditors as and when they become due and payable, other than as a result of a good
faith dispute by Tenant as to the amount due to such creditors. Landlord shall not be deemed to
have knowledge of any event described in this Section 14.1(g) unless notification in writing is
received by Landlord, nor shall there be any presumption attributable to Landlord of Tenant’s
insolvency. In the event that any provision of this Section 14.1(g) is contrary to applicable law,
the provision shall be of no force or effect.



     (h) Any other breach of this Lease which this Lease provides is an Event of Default.



 









 





     SECTION 14.2. LANDLORD’S REMEDIES.



     (a) If an Event of Default by Tenant occurs, then in addition to any other remedies available
to Landlord, Landlord may exercise the following remedies:



          (i) Landlord may terminate Tenant’s right to possession of the Premises by any lawful means,
in which case this Lease shall terminate and Tenant shall immediately surrender possession of the
Premises to Landlord. Such termination shall not affect any accrued obligations of Tenant under
this Lease. Upon termination, Landlord shall have the right to reenter the Premises and remove all
persons and property. Landlord shall also be entitled to recover from Tenant (and to retain, use
or apply any Security Deposit held by Landlord towards amounts estimated by Landlord as):




               (1) The worth at the time of award of the unpaid Basic Rent and additional rent which had been
earned at the time of termination;



               (2) The worth at the time of award of the amount by which the unpaid Basic Rent and additional
rent which would have been earned after termination until the time of award exceeds the amount of
such loss that Tenant proves could have been reasonably avoided;



               (3) The worth at the time of award of the amount by which the unpaid Basic Rent and additional
rent for the balance of the Term after the time of award exceeds the amount of such loss that
Tenant proves could be reasonably avoided;



               (4) Any other amount necessary to compensate Landlord for all the detriment proximately caused
by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result from Tenant’s Event of Default, including, but not limited to, the
cost of recovering possession of the Premises, refurbishment of the Premises, marketing costs,
commissions and other expenses of reletting, including necessary repair, the unamortized portion of
any tenant improvements and brokerage commissions funded by Landlord in connection with this Lease,
reasonable attorneys’ fees, and any other reasonable costs; and



               (5) At Landlord’s election, all other amounts in addition to or in lieu of the foregoing as
may be permitted by law. The term “rent” as used in the Lease shall be deemed to mean the Basic
Rent, Tenant’s Share of Operating Expenses and any other sums required to be paid by Tenant to
Landlord pursuant to the terms of this Lease whether or not designated as additional rent
hereunder, including, without limitation, any sums that may be owing from Tenant pursuant to
Section 4.3 of this Lease. Any sum, other than Basic Rent, shall be computed on the basis of the
average monthly amount accruing during the twenty-four (24) month period immediately prior to the
Event of Default, except that if it becomes necessary to compute such rental before the twenty-four
(24) month period has occurred, then the computation shall be on the basis of the average monthly
amount during the shorter period. As used in Sections 14.2(a)(i) (1) and (2) above, the “worth at
the time of award” shall be computed by allowing interest at the rate of ten percent (10%) per
annum. As used in Section 14.2(a)(i)(3) above, the “worth at the time of award” shall be computed
by discounting the amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).



          (ii) Landlord may elect not to terminate Tenant’s right to possession of the Premises and to
continue to enforce all of its rights and remedies under this Lease, including the right to collect
all rent as it becomes due as provided in Civil Code Section 1951.4. Efforts by the Landlord to
maintain, preserve or relet the Premises, or the appointment of a receiver to protect the
Landlord’s interests under this Lease, shall not constitute a termination of the Tenant’s right to
possession of the Premises. In the event that Landlord elects to avail itself of the remedy
provided by this Section 14.2(a)(ii), Landlord shall not unreasonably withhold its consent to an
assignment or subletting of the Premises subject to the reasonable standards for Landlord’s consent
as are contained in this Lease.




     (b) Landlord shall be under no obligation to observe or perform any covenant of this Lease on
its part to be observed or performed which accrues after the date of any Event of Default by Tenant
unless and until the Event of Default is cured by Tenant, it being understood and agreed that the
performance by Landlord of its obligations under this Lease are expressly conditioned upon Tenant’s
full and timely performance of its obligations under this Lease. The various rights and remedies
reserved to Landlord in this Lease or otherwise shall be cumulative and, except as otherwise
provided by California law, Landlord may pursue any or all of its rights and remedies at the same
time.



     (c) No delay or omission of Landlord to exercise any right or remedy shall be construed as a
waiver of the right or remedy or of any breach or Event of Default by Tenant. The acceptance by
Landlord of rent shall not be a (i) waiver of any preceding breach or Event of Default by Tenant of
any provision of this Lease, other than the failure of Tenant to pay the particular rent accepted,
regardless of Landlord’s knowledge of the preceding breach or Event of Default at the time of
acceptance of rent, or (ii) a waiver of Landlord’s right to exercise any remedy available to
Landlord by virtue of the breach or Event of Default. The acceptance of any payment from a debtor
in possession, a trustee, a receiver or any other person acting on behalf of Tenant or Tenant’s
estate shall not waive or cure a breach or Event of Default under Section 14.1. No payment by
Tenant or receipt by Landlord of a lesser amount than the rent required by this Lease shall be
deemed to be other than a partial payment on account of the earliest due stipulated rent, nor shall
any endorsement or statement on any check or letter be deemed an accord and satisfaction and
Landlord shall accept the check or payment without prejudice to Landlord’s right to recover the
balance of the rent or pursue any other remedy available to it. No act or thing done by Landlord
or Landlord’s agents
during the Term shall be deemed an acceptance of a surrender of the Premises,
and no agreement to accept a surrender shall be valid unless in writing and signed by Landlord. No
employee of Landlord or of Landlord’s agents shall have any power to accept the keys to the
Premises prior to the termination of this Lease, and the delivery of the keys to any employee shall
not operate as a termination of this Lease or a surrender of the Premises.



 









 





     SECTION 14.3. LATE PAYMENTS.



     (a) Any payment due to Landlord under this Lease, including without limitation Basic Rent,
Tenant’s Share of Operating Expenses or any other payment due to Landlord under this Lease whether
or not designated as additional rent hereunder, that is not received by Landlord within five (5)
days following the date due shall bear interest at the maximum rate permitted by law from the date
due until fully paid. The payment of interest shall not cure any breach or Event of Default by
Tenant under this Lease. In addition, Tenant acknowledges that the late payment by Tenant to
Landlord of Basic Rent and Tenant’s Share of Operating Expenses will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of which will be extremely difficult and
impracticable to ascertain. Those costs may include, but are not limited to, administrative,
processing and accounting charges, and late charges which may be imposed on Landlord by the terms
of any ground lease, mortgage or trust deed covering the Premises. Accordingly, if any Basic Rent
or Tenant’s Share of Operating Expenses due from Tenant shall not be received by Landlord or
Landlord’s designee within five (5) days following the date due, then Tenant shall pay to Landlord,
in addition to the interest provided above, a late charge, which the Tenant agrees is reasonable,
in a sum equal to the greater of five percent (5%) of the amount overdue or One Hundred Dollars
($100.00) for each delinquent payment. Acceptance of a late charge by Landlord shall not
constitute a waiver of Tenant’s breach or Event of Default with respect to the overdue amount, nor
shall it prevent Landlord from exercising any of its other rights and remedies.



     (b) Following each second installment of Basic Rent and/or the payment of Tenant’s Share of
Operating Expenses within any twelve (12) month period that is not paid within five (5) days
following the date due, Landlord shall have the option (i) to require that beginning with the first
payment of Basic Rent next due, Basic Rent and the Tenant’s Share of Operating Expenses shall no
longer be paid in monthly installments but shall be payable quarterly three (3) months in advance
and/or (ii) to require that Tenant increase the amount, if any, of the Security Deposit by one
hundred percent (100%). Should Tenant deliver to Landlord, at any time during the Term, two (2) or
more insufficient checks, the Landlord may require that all monies then and thereafter due from
Tenant be paid to Landlord by cashier’s check. If any check for any payment to Landlord hereunder
is returned by the bank for any reason, such payment shall not be deemed to have been received by
Landlord and Tenant shall be responsible for any applicable late charge, interest payment and the
charge to Landlord by its bank for such returned check. Nothing in this Section shall be construed
to compel Landlord to accept Basic Rent, Tenant’s Share of Operating Expenses or any other payment
from Tenant if there exists an Event of Default unless such payment fully cures any and all such
Events of Default. Any acceptance of any such payment shall not be deemed to waive any other right
of Landlord under this Lease. Any payment by Tenant to Landlord may be applied by Landlord, in its
sole and absolute discretion, in any order determined by Landlord to any amounts then due to
Landlord.



     SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be performed by
Tenant under this Lease shall be performed at Tenant’s sole cost and expense and without any
abatement of rent or right of set-off. If Tenant fails to pay any sum of money, other than rent
payable to Landlord, or fails to perform any other act on its part to be performed under this
Lease, and the failure continues beyond any applicable grace period set forth in
Section 14.1, then in addition to any other available remedies, Landlord may, at its election
make the payment or perform the other act on Tenant’s part and Tenant hereby grants Landlord the
right to enter onto the Premises in order to carry out such performance. Landlord’s election to
make the payment or perform the act on Tenant’s part shall not give rise to any responsibility of
Landlord to continue making the same or similar payments or performing the same or similar acts nor
shall Landlord be responsible to Tenant for any damage caused to Tenant as the result of such
performance by Landlord. Tenant shall, promptly upon demand by Landlord, reimburse Landlord for
all sums paid by Landlord and all necessary incidental costs, together with interest at the maximum
rate permitted by law from the date of the payment by Landlord.



     SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in default in the
performance of any obligation under this Lease, and Tenant shall have no rights to take any action
against Landlord, unless and until Landlord has failed to perform the obligation within thirty (30)
days after written notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord’s obligation is such that
more than thirty (30) days are required for its performance, then Landlord shall not be deemed to
be in default if it commences performance within the thirty (30) day period and thereafter
diligently pursues the cure to completion. In the event of Landlord’s default under this Lease,
Tenant’s sole remedies shall be to seek damages or specific performance from Landlord, provided
that any damages shall be limited to Tenant’s actual out-of-pocket expenses and shall in no event
include any consequential damages, lost profits or opportunity costs.



     SECTION 14.6. EXPENSES AND LEGAL FEES. All sums reasonably incurred by Landlord in connection
with any Event of Default by Tenant under this Lease or holding over of possession by Tenant after
the expiration or earlier termination of this Lease, or any action related to a filing for
bankruptcy or reorganization by Tenant, including without limitation all costs, expenses and actual
accountants, appraisers, attorneys and other professional fees, and any collection agency or other
collection charges, shall be due and payable to Landlord on demand, and shall bear interest at the
rate of ten percent (10%) per annum. Should either Landlord or Tenant bring any action in
connection with this Lease, the prevailing party shall be entitled to recover as a part of the
action its reasonable attorneys’ fees, and all other reasonable costs. The prevailing party for
the purpose of this Section shall be determined by the trier of the facts.



 









 





SECTION 14.7. WAIVER OF JURY TRIAL/JUDICIAL REFERENCE.




     (a) LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF
COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY, AND, TO THE EXTENT ENFORCEABLE
UNDER CALIFORNIA LAW, EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO
AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR
AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE.
FURTHERMORE, THIS WAIVER AND RELEASE OF ALL RIGHTS TO A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF
EACH AND EVERY OTHER PROVISION, COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE.



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



 









 





     SECTION 14.8. SATISFACTION OF JUDGMENT. The obligations of Landlord do not constitute the
personal obligations of the individual partners, trustees, directors, officers, members or
shareholders of Landlord or its constituent partners or members. Should Tenant recover a money
judgment against Landlord, such judgment shall be satisfied only from the interest of Landlord in
the Project and out of the rent or other income from such property receivable by Landlord or out of
consideration received by Landlord from the sale or other disposition of all or any part of
Landlord’s right, title or interest in the Project, and no action for any deficiency may be sought
or obtained by Tenant.



ARTICLE XV. END OF TERM




     SECTION 15.1. HOLDING OVER. This Lease shall terminate without further notice upon the
expiration of the Term, and any holding over by Tenant after the expiration shall not constitute a
renewal or extension of this Lease, or give Tenant any rights under this Lease, except when in
writing signed by both parties. Any period of time following the Expiration Date or earlier
termination of this Lease required for Tenant to remove its property or to place the Premises in
the condition required pursuant to Section 15.3 (or for Landlord to do so if Tenant fails to do so)
shall be deemed a holding over by Tenant. If Tenant holds over for any period after the Expiration
Date (or earlier termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only and an Event of Default under this Lease;
such holding over with the prior written consent of Landlord shall constitute a month-to-month
tenancy commencing on the first (1st) day following the termination of this Lease and terminating
thirty (30) days following delivery of written notice of termination by either Landlord or Tenant
to the other. In either of such events, possession shall be subject to all of the terms of this
Lease, except that the monthly Basic Rent shall be the greater of (a) one hundred fifty percent
(150%) of the Basic Rent for the month immediately preceding the date of termination or (b) the
then currently scheduled Basic Rent for comparable space in the Project. The acceptance by
Landlord of monthly holdover rental in a lesser amount shall not constitute a waiver of Landlord’s
right to recover the full amount due for any holdover by Tenant, unless otherwise agreed in writing
by Landlord. If Tenant fails to surrender the Premises upon the expiration of this Lease despite
demand to do so by Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or
liability, including without limitation, any claims made by any succeeding tenant relating to such
failure to surrender. The foregoing provisions of this Section are in addition to and do not
affect Landlord’s right of re-entry or any other rights of Landlord under this Lease or at law.



     SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of this Lease by
Tenant, or a mutual termination of this Lease, shall terminate any or all existing subleases unless
Landlord, at its option, elects in writing to treat the surrender or termination as an assignment
to it of any or all subleases affecting the Premises.



     SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Subject to the provisions
of Section 7.3 of this Lease and of the Work Letter, if any, attached hereto, upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall quit and surrender
possession of the Premises to Landlord in as good order, condition and repair as when received or
as hereafter may be improved by Landlord or Tenant, reasonable wear and tear, damage by casualty,
and repairs which are Landlord’s obligation excepted, and shall, without expense to Landlord,
remove or cause to be removed from the Premises all personal property, removable trade fixtures,
and equipment and debris and perform all work required under Section 7.3 of this Lease and/or the
Work Letter, if any, attached hereto, as to Replacements of Non-Standard Improvements and removal
of Alterations, except for any items that Landlord may by written authorization allow to remain.
Tenant shall repair all damage to the Premises resulting from the removal, which repair shall
include the patching and filling of holes and repair of structural damage, provided that Landlord
may instead elect to repair any structural damage at Tenant’s expense. If Tenant shall fail to
comply with the provisions of this Section, Landlord may effect the removal and/or make any
repairs, and the cost to Landlord shall be additional rent payable by Tenant upon demand. If
Tenant fails to remove Tenant’s personal property from the Premises upon the expiration of the
Term, Landlord may remove, store, dispose of and/or retain such personal property, at Landlord’s
option, in accordance with then applicable laws, all at the expense of Tenant. If requested by
Landlord, Tenant shall execute, acknowledge and deliver to Landlord an instrument in writing
releasing and quitclaiming to Landlord all right, title and interest of Tenant in the Premises.



ARTICLE XVI. PAYMENTS AND NOTICES




     All sums payable by Tenant to Landlord shall be deemed to be rent under this Lease and shall
be paid, without deduction or offset, in lawful money of the United States to Landlord at the
address specified in Item 13 of the Basic Lease Provisions, or at any other place as Landlord may
designate in writing. Unless this Lease expressly provides otherwise, as for example in the
payment of Basic Rent and the Tenant’s Share of Operating Costs pursuant to Sections 4.1 and 4.2,
all payments shall be due and payable within five (5) days after demand. All payments requiring
proration shall be prorated on the basis of the number of days in the pertinent calendar month or
year, as applicable. Any notice, election, demand, consent, approval or other communication to be
given or other document to be delivered by either party to the other may be delivered in person or
by courier or overnight delivery service to the other party, or may be deposited in the United
States mail, duly registered or certified, postage prepaid, return receipt requested, and addressed
to the other party at the address set forth in Item 12 of the Basic Lease Provisions, or if to
Tenant, at that address or, from and after the Commencement Date, at the Premises (whether or not
Tenant has departed from, abandoned or vacated the Premises). Either party may, by written notice
to the other, served in the manner provided in this Article, designate a different address. If any
notice or other document is sent by mail, duly registered or certified, it shall be deemed served
or delivered seventy-two (72) hours after mailing. If more than one person or entity is named as
Tenant under this Lease, service of any notice upon any one of them shall be deemed as service upon
all of them.



 









 





ARTICLE XVII. RULES AND REGULATIONS




     Tenant agrees to observe faithfully and comply strictly with the Rules and Regulations,
attached as Exhibit E, and any reasonable and nondiscriminatory amendments, modifications
and/or additions as may be adopted and published by written notice to tenants by Landlord for the
safety, care, security, good order, or cleanliness of the Premises, Building, Project and Common
Areas. Landlord shall not be liable to Tenant for any violation of the Rules and Regulations or
the breach of any covenant or condition in any lease by any other tenant or such tenant’s agents,
employees, contractors, guests or invitees. One or more waivers by Landlord of any breach of the
Rules and Regulations by Tenant or by any other tenant(s) shall not be a waiver of any subsequent
breach of that rule or any other. Tenant’s failure to keep and observe the Rules and Regulations
shall constitute a breach of this Lease. In the case of any conflict between the Rules and
Regulations and this Lease, this Lease shall be controlling.



ARTICLE XVIII. BROKER’S COMMISSION




     The parties recognize as the broker(s) who negotiated this Lease the firm(s), whose name(s) is
(are) stated in Item 10 of the Basic Lease Provisions, and agree that Landlord shall be responsible
for the payment of brokerage commissions to those broker(s) unless otherwise provided in this
Lease. It is understood and agreed that Landlord’s Broker represents only Landlord in this
transaction and that Tenant’s Broker (if any) represents only Tenant. Each party warrants that it
has had no dealings with any other real estate broker or agent in connection with the negotiation
of this Lease, and agrees to indemnify and hold the other party harmless from any cost, expense or
liability (including reasonable attorneys’ fees) for any compensation, commissions or charges
claimed by any other real estate broker or agent employed by the indemnifying party in connection
with the negotiation of this Lease. The foregoing agreement shall survive the termination of this
Lease.



ARTICLE XIX. TRANSFER OF LANDLORD’S INTEREST




     In the event of any transfer of Landlord’s interest in the Premises, the transferor shall be
automatically relieved of all further obligations on the part of Landlord, and the transferor shall
be relieved of any obligation to pay any funds in which Tenant has an interest to the extent that
such funds have been turned over, subject to that interest, to the transferee and Tenant is
notified of the transfer as required by law. No beneficiary of a deed of trust to which this Lease
is or may be subordinate, and no landlord under a so-called sale-leaseback, shall be responsible in
connection with the Security Deposit, unless the mortgagee or beneficiary under the deed of trust
or the landlord actually receives the Security Deposit. It is intended that the covenants and
obligations contained in this Lease on the part of Landlord shall, subject to the foregoing, be
binding on Landlord, its successors and assigns, only during and in respect to their respective
successive periods of ownership.



ARTICLE XX. INTERPRETATION




     SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease requires, the words
“Landlord” and “Tenant” shall include the plural as well as the singular, and words used in neuter,
masculine or feminine genders shall include the others.



     SECTION 20.2. HEADINGS. The captions and headings of the articles and sections of this Lease
are for convenience only, are not a part of this Lease and shall have no effect upon its
construction or interpretation.



     SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or entity is named as
Tenant, the obligations imposed upon each shall be joint and several and the act of or notice from,
or notice or refund to, or the signature of, any one or more of them shall be binding on all of
them with respect to the tenancy of this Lease, including, but not limited to, any renewal,
extension, termination or modification of this Lease.



     SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights and liabilities given to
or imposed upon Landlord and Tenant shall extend to and bind their respective heirs, executors,
administrators, successors and assigns. Nothing contained in this Section is intended, or shall be
construed, to grant to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.



     SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to the performance of
every provision of this Lease.



     SECTION 20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by and interpreted in
accordance with the laws of the State of California. Any litigation commenced concerning any
matters whatsoever arising out of or in any way connected to this Lease shall be initiated in the
Superior Court of the county in which the Project is located.



     SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the deletion of which
would not adversely affect the receipt of any material benefit by either party or the deletion of
which is consented to by the party adversely affected, shall be held invalid or unenforceable to
any extent, the remainder of this Lease shall not be affected and each term and provision of this
Lease shall be valid and enforceable to the fullest extent permitted by law.



     SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES. One or more waivers by Landlord or Tenant of
any breach of any term, covenant or condition contained in this Lease shall not be a waiver of any



 









 







subsequent breach of the same or any other term, covenant or condition. Consent to any act by one
of the parties shall not be deemed to render unnecessary the obtaining of that party’s consent to
any subsequent act. No breach by Tenant of this Lease shall be deemed to have been waived by
Landlord unless the waiver is in a writing signed by Landlord. The rights and remedies of Landlord
under this Lease shall be cumulative and in addition to any and all other rights and remedies which
Landlord may have.



     SECTION 20.9. INABILITY TO PERFORM. In the event that either party shall be delayed or
hindered in or prevented from the performance of any work or in performing any act required under
this Lease by reason of any cause beyond the reasonable control of that party, other than financial
inability, then the performance of the work or the doing of the act shall be excused for the period
of the delay and the time for performance shall be extended for a period equivalent to the period
of the delay. The provisions of this Section shall not operate to excuse Tenant from the prompt
payment of rent, nor excuse Landlord or Tenant from the timely performance of any of their
respective obligations under this Lease within such party’s reasonable control.



     SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other attachments cover in
full each and every agreement of every kind between the parties concerning the Premises, the
Building, and the Project, and all preliminary negotiations, oral agreements, understandings and/or
practices, except those contained in this Lease, are superseded and of no further effect. Tenant
waives its rights to rely on any representations or promises made by Landlord or others which are
not contained in this Lease. No verbal agreement or implied covenant shall be held to modify the
provisions of this Lease, any statute, law, or custom to the contrary notwithstanding.



     SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance of all the covenants,
terms and conditions on Tenant’s part to be observed and performed, and subject to the other
provisions of this Lease, Tenant shall have the right of quiet enjoyment and use of the Premises
for the Term without hindrance or interruption by Landlord or any other person claiming by or
through Landlord.



     SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which reasonably would be
intended to survive the expiration or sooner termination of this Lease, including without
limitation any warranty or indemnity hereunder, shall so survive and continue to be binding upon
and inure to the benefit of the respective parties and their successors and assigns.



     SECTION 20.13. INTERPRETATION. This Lease shall not be construed in favor of or against
either party, but shall be construed as if both parties prepared this Lease.



ARTICLE XXI. EXECUTION AND RECORDING




     SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more counterparts, each of
which shall constitute an original and all of which shall be one and the same agreement.



     SECTION 21.2. CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP AUTHORITY. If Tenant is a
corporation, limited liability company or partnership, each individual executing this Lease on
behalf of the corporation, limited liability company or partnership represents and warrants that he
or she is duly authorized to execute and deliver this Lease on behalf of the corporation, limited
liability company or partnership, and that this Lease is binding upon the corporation, limited
liability company or partnership in accordance with its terms. Tenant shall, at Landlord’s
request, deliver a certified copy of its board of directors’ resolution, operating agreement or
partnership agreement or certificate authorizing or evidencing the execution of this Lease.



     SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of this Lease to Tenant
shall be for examination purposes only, and shall not constitute an offer to or option for Tenant
to lease the Premises. Execution of this Lease by Tenant and its return to Landlord shall not be
binding upon Landlord, notwithstanding any time interval, until Landlord has in fact executed and
delivered this Lease to Tenant, it being intended that this Lease shall only become effective upon
execution by Landlord and delivery of a fully executed counterpart to Tenant.



     SECTION 21.4. RECORDING. Tenant shall not record this Lease without the prior written consent
of Landlord. Tenant, upon the request of Landlord, shall execute and acknowledge a “short form”
memorandum of this Lease for recording purposes.



     SECTION 21.5. AMENDMENTS. No amendment or termination of this Lease shall be effective unless
in writing signed by authorized signatories of Tenant and Landlord, or by their respective
successors in interest. No actions, policies, oral or informal arrangements, business dealings or
other course of conduct by or between the parties shall be deemed to modify this Lease in any
respect.



     SECTION 21.6. EXECUTED COPY. Any fully executed photocopy or similar reproduction of this
Lease shall be deemed an original for all purposes.



     SECTION 21.7. ATTACHMENTS. All exhibits, amendments, riders and addenda attached to this
Lease are hereby incorporated into and made a part of this Lease.



 









 





ARTICLE XXII. MISCELLANEOUS




     SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees that the terms of
this Lease are confidential and constitute proprietary information of Landlord. Disclosure of the
terms could adversely affect the ability of Landlord to negotiate other leases and impair
Landlord’s relationship with other tenants. Accordingly, Tenant agrees that it, and its partners,
members, shareholders, officers, directors, employees and attorneys, shall not intentionally and
voluntarily disclose, by public filings or otherwise, the terms and conditions of this Lease
(“Confidential Information”) to any third party, either directly or indirectly, without the prior
written consent of Landlord, which consent may be given or withheld in Landlord’s sole and absolute
discretion. The foregoing restriction shall not apply if either: (i) Tenant is required to
disclose the Confidential Information in response to a subpoena or other regulatory, administrative
or court order, (ii) independent legal counsel to Tenant delivers a written opinion to Landlord
that Tenant is required to disclose the Confidential Information to, or file a copy of this Lease
with, any governmental agency or any stock exchange; provided however, that in such event, Tenant
shall, before making any such disclosure (A) provide Landlord with prompt written notice of such
required disclosure, (B) at Tenant’s sole cost, take all reasonable legally available steps to
resist or narrow such requirement, including without limitation preparing and filing a request for
confidential treatment of the Confidential Information and (C) if disclosure of the Confidential
Information is required by subpoena or other regulatory, administrative or court order, Tenant
shall provide Landlord with as much advance notice of the possibility of such disclosure as
practical so that Landlord may attempt to stop such disclosure or obtain an order concerning such
disclosure. The form and content of a request by Tenant for confidential treatment of the
Confidential Information shall be provided to Landlord at least five (5) business days before its
submission to the applicable governmental agency or stock exchange and is subject to the prior
written approval of Landlord. In addition, Tenant may disclose the terms of this Lease to
prospective assignees of this Lease and prospective subtenants under this Lease with whom Tenant is
actively negotiating such an assignment or sublease.



     SECTION 22.2. GUARANTEE. [INTENTIONALLY DELETED]




     SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with obtaining financing for the
Project, the lender shall request reasonable modifications in this Lease as a condition to the
financing, Tenant will not unreasonably withhold or delay its consent, provided that the
modifications do not materially increase the obligations of Tenant or materially and adversely
affect the leasehold interest created by this Lease.



     SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the part of Landlord which
would otherwise entitle Tenant to be relieved of its obligations hereunder shall result in such a
release or termination unless (a) Tenant has given notice by registered or certified mail to any
beneficiary of a deed of trust or mortgage covering the Building whose address has been furnished
to Tenant and (b) such beneficiary is afforded a reasonable opportunity to cure the default by
Landlord (which in no event shall be less than sixty (60) days), including, if necessary to effect
the cure, time to obtain possession of the Building by power of sale or judicial foreclosure
provided that such foreclosure remedy is diligently pursued. Tenant agrees that each beneficiary
of a deed of trust or mortgage covering the Building is an express third party beneficiary hereof,
Tenant shall have no right or claim for the collection of any deposit from such beneficiary or from
any purchaser at a foreclosure sale unless such beneficiary or purchaser shall have actually
received and not refunded the deposit, and Tenant shall comply with any written directions by any
beneficiary to pay rent due hereunder directly to such beneficiary without determining whether a
default exists under such beneficiary’s deed of trust.



     SECTION 22.5. COVENANTS AND CONDITIONS. All of the provisions of this Lease shall be
construed to be conditions as well as covenants as though the words specifically expressing or
imparting covenants and conditions were used in each separate provision.



     SECTION 22.6. SECURITY MEASURES. Tenant hereby acknowledges that Landlord shall have no
obligation whatsoever to provide guard service or other security measures for the benefit of the
Premises or the Project. Tenant assumes all responsibility for the protection of Tenant, its
employees, agents, invitees and property from acts of third parties. Nothing herein contained
shall prevent Landlord, at its sole option, from providing security protection for the Project or
any part thereof, in which event the cost thereof shall be included within the definition of
Project Costs.




	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:
	 
	 	 	 	 	 	 	 	 	 	 
	THE IRVINE COMPANY LLC,	 	 	 	ILLUMINA, INC.,
	a Delaware limited liability company	 	 	 	a Delaware corporation
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Steven M. Case	 	 	 	By:	 	/s/ Christian O. Henry
	 	 	 	 	 	 	 	 	 
	 

	 	Steven M. Case, Senior Vice President
	 	 	 	 	 	Name (Print):	 	Christian O. Henry
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Leasing, Office Properties
	 	 	 	 	 	Title (Print):	 	Vice President, Chief Financial Officer
	 

	 	 	 	 	 	 	 	 	 	 











	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Christopher J. Popma	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Christopher J. Popma, Vice President
	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Operations, Office Properties
	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 






 









 








EXHIBIT B




THE IRVINE COMPANY – INVESTMENT PROPERTIES GROUP




HAZARDOUS MATERIAL SURVEY FORM




     The purpose of this form is to obtain information regarding the use of hazardous substances on
Investment Properties Group (“IPG”) property. Prospective tenants and contractors should answer
the questions in light of their proposed activities on the premises. Existing tenants and
contractors should answer the questions as they relate to ongoing activities on the premises and
should update any information previously submitted.



     If additional space is needed to answer the questions, you may attach separate sheets of paper
to this form. When completed, the form should be sent to the following address:



THE IRVINE COMPANY MANAGEMENT OFFICE

111 Innovation Drive

Irvine, CA 92617




     Your cooperation in this matter is appreciated. If you have any questions, please call your
property manager at (949) 720-4400 for assistance.




	1.	 	GENERAL INFORMATION.





	 	 	 
	Name of Responding Company:
	 	 
	 

	 	 





	 	 	 	 	 	 	 	 	 
	Check all that apply:

	 	Tenant
	 	( )
	 	Contractor
	 	( )
	 

	 	Prospective
	 	( )
	 	Existing
	 	( )






	 	 	 
	Mailing Address: 
	 	 
	 

	 	 





	 	 	 
	Contact person & Title: 
	 	 
	 

	 	 





	 	 	 
	Telephone Number: ( ) 
	 	 
	 

	 	 






	 	 	Current TIC Tenant(s):





	 	 	 
	Address of Lease Premises: 
	 	 
	 

	 	 





	 	 	 
	Length of Lease or Contract Term: 
	 	 
	 

	 	 






	 	 	Prospective TIC Tenant(s):





	 	 	 
	Address of Leased Premises: 
	 	 
	 

	 	 





	 	 	 
	Address of Current Operations: 
	 	 
	 

	 	 






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

	 
	 	 	 

	 
	 	 	 







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






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





	 	 	 	 	 	 	 	 	 
	Chemical Products

	 	Yes
	 	( )
	 	No
	 	( )
	Biological Hazards/
	 	 	 	 	 	 	 	 
	Infectious Wastes

	 	Yes
	 	( )
	 	No
	 	( )
	Radioactive Materials

	 	Yes
	 	( )
	 	No
	 	( )
	Petroleum Products

	 	Yes
	 	( )
	 	No
	 	( )






 









 







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





	 	 	 	 	 
	 	 	Location and Method	 	 
	Hazardous Materials	 	of Storage	 	Quantity
	 	 	 	 	 
	 

	 	 

	 	 


	 

	 	 

	 	 

	 

	 	 

	 	 

	 

	 	 

	 	 








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

	 
	 	 	 	 

	 
	 	 	 	 







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






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





	 	 	 	 	 
	 	 	Location and Method	 	 
	Hazardous Materials	 	of Storage	 	Quantity
	 	 	 	 	 
	 

	 	 

	 	 

	 

	 	 

	 	 

	 

	 	 

	 	 

	 

	 	 

	 	 








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





	 	 	 	 	 
	 	 	Location and Method	 	 
	Hazardous Materials	 	of Storage	 	Disposal Method
	 	 	 	 	 
	 

	 	 

	 	 

	 

	 	 

	 	 

	 

	 	 

	 	 

	 

	 	 

	 	 








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

	 
	 	 	 	 

	 
	 	 	 	 







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






	4.	 	SPILLS






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

	 
	 	 	 	 

	 
	 	 	 	 





 









 












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






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




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






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




	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 







	5.	 	WASTEWATER TREATMENT/DISCHARGE






	 	 	 	5.1 Do you discharge industrial wastewater to:





	 	 	 
	___storm drain?

	 	___sewer?
	___surface water?

	 	___no industrial discharge







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






	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 







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






	6.	 	AIR DISCHARGES.






	 	6.1	 	Do you have any air filtration systems or stacks that discharge into the air?

Yes ( ) No ( )
	 
	 	6.2	 	Do you operate any equipment that requires air emissions permits?

Yes ( ) No ( )
	 
	 	6.3	 	Attach copies of any air discharge permits pertaining to these operations.






	7.	 	HAZARDOUS MATERIALS DISCLOSURES.






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






	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 





 









 














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






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






	 	 

	 
	 	 

	 
	 	 







	8.	 	ANIMAL TESTING.






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






	 	 	 

	 
	 	 	 

	 
	 	 	 







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






	 	 	 

	 
	 	 	 

	 
	 	 	 







	9.	 	ENFORCEMENT ACTIONS, COMPLAINTS.






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

	 
	 	 	 

	 
	 	 	 







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

	 
	 	 	 

	 
	 	 	 

	 
	 	 	 

	 
	 	 	 






	 	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Date:	 	 
	 

	 	 	 	 	 	 





 









 






EXHIBIT C




LANDLORD’S DISCLOSURES



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





 









 








EXHIBIT D




TENANT’S INSURANCE




     The following requirements for Tenant’s insurance shall be in effect at the Building, and
Tenant shall also cause any subtenant to comply with these requirements. Landlord reserves the
right to adopt reasonable nondiscriminatory modifications and additions to these insurance
requirements. Tenant agrees to obtain and present evidence to Landlord that it has fully complied
with the insurance requirements.



     1. Tenant shall, at its sole cost and expense, commencing on the date Tenant is given access
to the Premises for any purpose and during the entire Term, procure, pay for and keep in full force
and effect: (i) commercial general liability insurance with respect to the Premises and the
operations of or on behalf of Tenant in, on or about the Premises, including but not limited to
coverage for personal injury, independent contractors, broad form property damage, fire and water
legal liability, products liability (if a product is sold from the Premises), and liquor law
liability (if alcoholic beverages are sold, served or consumed within the Premises), which
policy(ies) shall be written on an “occurrence” basis and for not less than the amount set forth in
Item 14 of the Basic Lease Provisions, with a combined single limit (with a $50,000 minimum limit
on fire legal liability) per occurrence for bodily injury, death, and property damage liability, or
the current limit of liability carried by Tenant, whichever is greater, and subject to such
increases in amounts as Landlord may determine from time to time; (ii) workers’ compensation
insurance coverage as required by law, together with employers’ liability insurance of at least One
Million Dollars ($1,000,000.00); (iii) with respect to Alterations and the like required or
permitted to be made by Tenant under this Lease, builder’s risk insurance, in an amount equal to
the replacement cost of the work; (iv) insurance against fire, vandalism, malicious mischief and
such other additional perils as may be included in a standard “special form” policy, insuring
Tenant’s Alterations, trade fixtures, furnishings, equipment and items of personal property of
Tenant located in the Premises, in an amount equal to not less than ninety percent (90%) of their
actual replacement cost (with replacement cost endorsement); and (v) business interruption
insurance in amounts satisfactory to cover one (1) year of loss. In no event shall the limits of
any policy be considered as limiting the liability of Tenant under this Lease.



     2. In the event Landlord consents to Tenant’s use, generation or storage of Hazardous
Materials on, under or about the Premises pursuant to Section 5.3 of this Lease, Landlord shall
have the continuing right to require Tenant, at Tenant’s sole cost and expense (provided the same
is available for purchase upon commercially reasonable terms), to purchase insurance specified and
approved by Landlord, with coverage not less than Five Million Dollars ($5,000,000.00), insuring
(i) any Hazardous Materials shall be removed from the Premises, (ii) the Premises shall be restored
to a clean, healthy, safe and sanitary condition, and (iii) any liability of Tenant, Landlord and
Landlord’s officers, directors, shareholders, agents, employees and representatives, arising from
such Hazardous Materials.



     3. All policies of insurance required to be carried by Tenant pursuant to this Exhibit
D containing a deductible exceeding Ten Thousand Dollars ($10,000.00) per occurrence must be
approved in writing by Landlord prior to the issuance of such policy. Tenant shall be solely
responsible for the payment of all deductibles.



     4. All policies of insurance required to be carried by Tenant pursuant to this Exhibit
D shall be written by responsible insurance companies authorized to do business in the State of
California and with a general policyholder rating of not less than “A-” and financial rating of not
less than “VIII” in the most current Best’s Insurance Report. Any insurance required of Tenant may
be furnished by Tenant under any blanket policy carried by it or under a separate policy. A true
and exact copy of each paid up policy evidencing the insurance (appropriately authenticated by the
insurer) or a certificate of insurance, certifying that the policy has been issued, provides the
coverage required by this Exhibit D and contains the required provisions, together with
endorsements acceptable to Landlord evidencing the waiver of subrogation and additional insured
provisions required below, shall be delivered to Landlord prior to the date Tenant is given the
right of possession of the Premises. Proper evidence of the renewal of any insurance coverage
shall also be delivered to Landlord not less than ten (10) business days prior to the expiration of
the coverage. Landlord may at any time, and from time to time, inspect and/or copy any and all
insurance policies required by this Lease.



     5. Each policy evidencing insurance required to be carried by Tenant pursuant to this
Exhibit D shall contain the following provisions and/or clauses satisfactory to Landlord:
(i) with respect to Tenant’s commercial general liability insurance, a provision that the policy
and the coverage provided shall be primary and that any coverage carried by Landlord shall be
noncontributory with respect to any policies carried by Tenant, together with a provision including
Landlord, the Additional Insureds identified in Item 11 of the Basic Lease Provisions, and any
other parties in interest designated by Landlord, as additional insureds; (ii) except with respect
to Tenant’s commercial general liability insurance, a waiver by the insurer of any right to
subrogation against Landlord, its agents, employees, contractors and representatives which arises
or might arise by reason of any payment under the policy or by reason of any act or omission of
Landlord, its agents, employees, contractors or representatives; and (iii) a provision that the
insurer will not cancel or change the coverage provided by the policy without first giving Landlord
thirty (30) days prior written notice.



     6. In the event that Tenant fails to procure, maintain and/or pay for, at the times and for
the durations specified in this Exhibit D, any insurance required by this Exhibit
D, or fails to carry insurance required by any governmental authority, Landlord may at its
election procure that insurance and pay the premiums, in which event Tenant shall repay Landlord
all sums paid by Landlord, together with interest at the maximum rate permitted by law and any
related costs or expenses incurred by Landlord, within ten (10) days following Landlord’s written
demand to Tenant.



 









 





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




 









 








EXHIBIT E




RULES AND REGULATIONS




     This Exhibit sets forth the rules and regulations governing Tenant’s use of the Premises
leased to Tenant pursuant to the terms, covenants and conditions of the Lease to which this Exhibit
is attached and therein made part thereof. In the event of any conflict or inconsistency between
this Exhibit and the Lease, the Lease shall control.



     1. Tenant shall not place anything or allow anything to be placed near the glass of any
window, door, partition or wall, which may appear unsightly from outside the Premises.



     2. The walls, walkways, sidewalks, entrance passages, elevators, stairwells, courts and
vestibules shall not be obstructed or used for any purpose other than ingress and egress of
pedestrian travel to and from the Premises, and shall not be used for smoking, loitering or
gathering, or to display, store or place any merchandise, equipment or devices, or for any other
purpose. The walkways, sidewalks, entrance passageways, courts, vestibules and roof are not for
the use of the general public and Landlord shall in all cases retain the right to control and
prevent access thereto by all persons whose presence in the judgment of the Landlord shall be
prejudicial to the safety, character, reputation and interests of the Building and its tenants,
provided that nothing herein contained shall be construed to prevent such access to persons with
whom Tenant normally deals in the ordinary course of Tenant’s business unless such persons are
engaged in illegal activities. Smoking is permitted outside the building and within the project
only in areas designated by Landlord. No tenant or employee or invitee or agent of any tenant
shall be permitted upon the roof of the Building without prior written approval from Landlord.



     3. No awnings or other projection shall be attached to the outside walls of the Building. No
security bars or gates, curtains, blinds, shades or screens shall be attached to or hung in, or
used in connection with, any window or door of the Premises without the prior written consent of
Landlord. Neither the interior nor exterior of any windows shall be coated or otherwise
sunscreened without the express written consent of Landlord.



     4. Tenant shall not mark, nail, paint, drill into, or in any way deface any part of the
Premises or the Building except to affix standard pictures or other wall hangings on the interior
walls of the premises so long as they are not visible from the exterior of the building. Tenant
shall not lay linoleum, tile, carpet or other similar floor covering so that the same shall be
affixed to the floor of the Premises in any manner except as approved by Landlord in writing. The
expense of repairing any damage resulting from a violation of this rule or removal of any floor
covering shall be borne by Tenant.



     5. The toilet rooms, urinals, wash bowls and other plumbing apparatus shall not be used for
any purpose other than that for which they were constructed and no foreign substance of any kind
whatsoever shall be thrown therein. Any pipes or tubing used by Tenant to transmit water to an
appliance or device in the Premises must be made of copper or stainless steel, and in no event
shall plastic tubing be used for that purpose. The expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by the tenant who, or whose employees or
invitees, caused it.



     6. Landlord shall direct electricians as to the manner and location of any future telephone
wiring. No boring or cutting for wires will be allowed without the prior consent of Landlord. The
locations of the telephones, call boxes and other office equipment affixed to the Premises shall be
subject to the prior written approval of Landlord.



     7. The Premises shall not be used for manufacturing or for the storage of merchandise except
as such storage may be incidental to the permitted use of the Premises. No exterior storage shall
be allowed at any time without the prior written approval of Landlord. The Premises shall not be
used for cooking or washing clothes without the prior written consent of Landlord, or for lodging
or sleeping or for any immoral or illegal purposes.



     8. Tenant shall not make, or permit to be made, any unseemly or disturbing noises or disturb
or interfere with occupants of this or neighboring buildings or premises or those having business
with them, whether by the use of any musical instrument, radio, phonograph, noise, or otherwise.
Tenant shall not use, keep or permit to be used, or kept, any foul or obnoxious gas or substance in
the Premises or permit or suffer the Premises to be used or occupied in any manner offensive or
objectionable to Landlord or other occupants of this or neighboring buildings or premises by reason
of any odors, fumes or gases.



     9. No animals, except for seeing eye dogs, shall be permitted at any time within the Premises.



     10. Tenant shall not use the name of the Building or the Project in connection with or in
promoting or advertising the business of Tenant, except as Tenant’s address, without the written
consent of Landlord. Landlord shall have the right to prohibit any advertising by any Tenant
which, in Landlord’s reasonable opinion, tends to impair the reputation of the Project or its
desirability for its intended uses, and upon written notice from Landlord any Tenant shall refrain
from or discontinue such advertising.



     11. Canvassing, soliciting, peddling, parading, picketing, demonstrating or otherwise engaging
in any conduct that unreasonably impairs the value or use of the Premises or the Project are
prohibited and each Tenant shall cooperate to prevent the same. Landlord shall have full and
absolute authority to regulate or prohibit the entrance to the Premises of any vendor, supplier,
purveyor, petitioner, proselytizer or other similar person if, in the good faith judgment of
Landlord, such person will be involved in general solicitation activities, or the proselytizing,



 









 







petitioning, or disturbance of other tenants or their customers or invitees, or engaged or
likely to engage in conduct which may in Landlord’s opinion distract from the use of the Premises
for its intended purpose. Notwithstanding the foregoing, Landlord reserves the absolute right and
discretion to limit or prevent access to the Buildings by any food or beverage vendor, whether or
not invited by Tenant, and Landlord may condition such access upon the vendor’s execution of an
entry permit agreement which may contain provisions for insurance coverage and/or the payment of a
fee to Landlord.



     12. No equipment of any type shall be placed on the Premises which in Landlord’s opinion
exceeds the load limits of the floor or otherwise threatens the soundness of the structure or
improvements of the Building.



     13. Regular building hours of operation are from 6:00 AM to 6:00 PM Monday through Friday and
9:00 AM to 1:00 PM on Saturday. No air conditioning unit or other similar apparatus shall be
installed or used by any Tenant without the prior written consent of Landlord.



     14. The entire Premises, including vestibules, entrances, parking areas, doors, fixtures,
windows and plate glass, shall at all times be maintained in a safe, neat and clean condition by
Tenant. All trash, refuse and waste materials shall be regularly removed from the Premises by
Tenant and placed in the containers at the locations designated by Landlord for refuse collection.
All cardboard boxes must be “broken down” prior to being placed in the trash container. All
styrofoam chips must be bagged or otherwise contained prior to placement in the trash container, so
as not to constitute a nuisance. Pallets must be immediately disposed of by tenant and may not be
disposed of in the Landlord provided trash container or enclosures. Pallets may be neatly stacked
in an exterior location on a temporary basis (no longer than 5 days) so long as Landlord has
provided prior written approval. The burning of trash, refuse or waste materials is prohibited.



     15. Tenant shall use at Tenant’s cost such pest extermination contractor as Landlord may
direct and at such intervals as Landlord may require.



     16. All keys for the Premises shall be provided to Tenant by Landlord and Tenant shall return
to Landlord any of such keys so provided upon the termination of the Lease. Tenant shall not
change locks or install other locks on doors of the Premises, without the prior written consent of
Landlord. In the event of loss of any keys furnished by Landlord for Tenant, Tenant shall pay to
Landlord the costs thereof. Upon the termination of its tenancy, Tenant shall deliver to Landlord
all the keys to lobby(s), suite(s) and telephone & electrical room(s) which have been furnished to
Tenant or which Tenant shall have had made.



     17. No person shall enter or remain within the Project while intoxicated or under the
influence of liquor or drugs. Landlord shall have the right to exclude or expel from the Project
any person who, in the absolute discretion of Landlord, is under the influence of liquor or drugs.



     18. The moving of large or heavy objects shall occur only between those hours as may be
designated by, and only upon previous written notice to, Landlord, and the persons employed to move
those objects in or out of the Building must be reasonably acceptable to Landlord. Without
limiting the generality of the foregoing, no freight, furniture or bulky matter of any description
shall be received into or moved out of the lobby of the Building or carried in the elevator.



     19. Tenant shall not install equipment, such as but not limited to electronic tabulating or
computer equipment, requiring electrical or air conditioning service in excess of that to be
provided by Landlord under the Lease without prior written consent of Landlord.



     20. Landlord may from time to time grant other tenants of the project individual and temporary
variances from these Rules, provided that any variance does not have a material adverse effect on
the use and enjoyment of the Premises by Tenant.



     21. Landlord reserves the right to amend or supplement the foregoing Rules and Regulations and
to adopt and promulgate additional rules and regulations applicable to the Premises. Notice of
such rules and regulations and amendments and supplements thereto, if any, shall be given to the
Tenant.



 









 





EXHIBIT X




WORK LETTER

(Tenant Buildout with Landlord’s Contribution)





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






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




 









 






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




 









 












	II.	 	COST OF THE TENANT IMPROVEMENTS WORK






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






	III.	 	DISPUTE RESOLUTION






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