Exhibit 10.1


 


SINGLE-TENANT INDUSTRIAL LEASE


(TRIPLE NET)


 


LANDLORD:


 


WHAMC REAL ESTATE LIMITED PARTNERSHIP,

a Delaware limited partnership


 


TENANT:


 


ALLIANCE PHARMACEUTICAL CORP.,

a New York corporation


 

















 


SUMMARY OF BASIC LEASE INFORMATION AND
DEFINITIONS


 


This SUMMARY
OF BASIC LEASE INFORMATION AND DEFINITIONS (“Summary”) is hereby incorporated
into and made a part of the attached Single-Tenant Industrial Lease which
pertains to the Premises described in Section 14 below  All references in the Lease to the “Lease”
shall include this Summary. All references in the Lease to any term defined in
this Summary shall have the meaning set forth in this Summary for such
term  Any initially capitalized terms
used in this Summary and any initially capitalized terms in the Lease which are
not otherwise defined in this Summary shall have the meaning given to such
terms in the Lease


 


	
  1 1  Landlord’s
  Address:

  	
  WHAMC REAL ESTATE LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  c/o
  WCB Properties

  
	
   

  	
  450
  Newport Center Drive, Suite 304

  
	
   

  	
  Newport
  Beach, California 92660

  
	
   

  	
  Attn:
  Mr Ronald Lack

  
	
   

  	
  Telephone
  (714) 640-6900

  
	
   

  	
  Facsimile.
  (714) 640-8399

  
	
   

  	
   

  
	
  1 2  Tenant’s
  Address:

  	
  ALLIANCE PHARMACEUTICAL CORP

  
	
   

  	
   

  
	
   

  	
  3040
  Science Park Road

  
	
   

  	
  San
  Diego, California 92121

  
	
   

  	
  Attn:  Mr Duane Roth

  
	
   

  	
  Telephone.
  (619) 558-4300

  
	
   

  	
  Facsimile
  (819) 558-3825

  



 


1
3  Project:  The
industrial development known as Pacific Corporate Plaza in the City of San
Diego, County of San Diego, State of California, as shown on the project site
plan attached hereto as Exhibit “A-1” and the legal description of which
s attached hereto as Exhibit “A-2” 
The Project includes all buildings, improvements and facilities now or
subsequently located within such development, including, without limitation,
the Building constituting the Premises


 


1
4  Premises:  That
certain 58,799 rentable square foot building (“Building”) located within the
Project known as 6175 Lusk Boulevard, San Diego, California and more
particularly described in Exhibit “A-1” and Exhibit “B” attached
hereto


 


1
5  Term: Ten (10) years


 


1
6  Commencement Date: The earlier of (i) that date which is one
hundred twenty (120) days after the date of the full execution and delivery of
this Lease by Landlord and Tenant, (ii) the date Tenant commences business
operations from the Premises, or (iii) March 1, 1998.


 


1
7  Lease Expiration Date: The last day of the tenth (10th)
annual anniversary of the Commencement Date, subject to two (2) extension
options of three (3) years pursuant to Section 2.4 of the Lease


 


1 8  Rent


 

















 


	
  Period

  	
   

  	
  Annual Rent

  	
   

  	
  Monthly
  Rent

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1-12

  	
   

  	
  $

  	
  647,508.60

  	
   

  	
  $

  	
  53,959.05

  
	
  13-24

  	
   

  	
  $

  	
  670,171.39

  	
   

  	
  $

  	
  55,847 61

  
	
  25-36

  	
   

  	
  $

  	
  693,627.31

  	
   

  	
  $

  	
  57,802.28

  
	
  37-48

  	
   

  	
  $

  	
  717,904 26

  	
   

  	
  $

  	
  59,825 35

  
	
  49-60

  	
   

  	
  $

  	
  743,030.84

  	
   

  	
  $

  	
  61,919 24

  
	
  61-72

  	
   

  	
  $

  	
  769,036 91

  	
   

  	
  $

  	
  64,086 41

  
	
  73.84

  	
   

  	
  $

  	
  795,953 20

  	
   

  	
  $

  	
  68,329 43

  
	
  85.98

  	
   

  	
  $

  	
  823,811 52

  	
   

  	
  $

  	
  88,650 96

  
	
  97-108

  	
   

  	
  $

  	
  852,644 92

  	
   

  	
  $

  	
  71.053 74

  
	
  109-120

  	
   

  	
  $

  	
  882,487.45

  	
   

  	
  $

  	
  73,540 62

  



 


1
9  Security Deposit. 
$297,330 00 subject to the terms of Section 5 below


 


1
10   Permitted Use.  The
Premises may be used only for general office and biomedical manufacturing and
any other legally permitted use consistent with the character of the Project
and approved by Landlord in Landlord’s reasonable discretion


 


1
11   Brokers.  CB
Commercial Real Estate Group, Inc representing Landlord and The Irving Hughes
Group, Inc representing Tenant


 


1
12   Interest Rate.  The
lesser of: (a) the rate announced from time to time by Wells Fargo Bank or, if
Wells Fargo Bank ceases to exist or ceases to publish such rate, then the rate
announced from time to time by the largest (as measured by deposits) chartered
operating bank operating in California, as its “prime rate” or “reference
rate”, plus three percent (3%), or (b) the maximum rate permitted by law


 


1
13   Tenant Improvements. The tenant improvements installed or to
be installed in the Premises by Tenant, as described in the Work Letter
Agreement attached hereto as Exhibit “C”.


 


1
14   Parking Passes.  One
hundred sixty eight (168) parking privileges consisting of (i) one hundred and
sixty (160) unreserved, uncovered parking privileges, and (ii) eight (8)
unreserved, uncovered guest parking privileges (which guest parking shall be
identified as such and located in front of the main entrance to the Building)


 

















 


SINGLE-TENANT INDUSTRIAL LEASE


 


This LEASE
(“Lease”), which includes the preceding Summary of Basic Lease Information and
Definitions (“Summary”) attached hereto and incorporated herein by this
reference, is made as of the 7th day of November, 1997, by and
between WHAMC REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership
(“Landlord”), and ALLIANCE PHARMACEUTICAL CORP , a New York corporation
(“Tenant”)


 


1         Premises


 


1 1          Lease of Premises.  Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord the Premises upon and subject to the terms,
covenants and conditions contained in this Lease to be performed by each party
Throughout the Term of this Lease, Tenant shall have the right to the exclusive
use of that portion of that certain building in the Project commonly known as
6173 Lusk Boulevard, San Diego, California (the “Other Building”) where the
existing HVAC system serving the Premises is situated only so long as such
Other Building contains the HVAC system servicing the Premises, provided,
however, that Tenants exclusive use is limited to such portion of the Other
Building (where the existing HVAC system servicing the Premises is situated)
and Tenant’s use is further limited for the express purposes of Tenant’s
access, maintenance and repair of such HVAC system and for no other purpose
Such Other Building shall be deemed to be part of the Premises for all purposes
under this Lease except that Tenant will not be obligated to pay Monthly Rent
for such Other Building


 


1 2          Measurement of Premises and/or Project  At Landlord’s discretion, the number of
rentable square feet of the Premises and/or the Project shall be subject to
verification from time to time by Landlord’s space measurement consultant, and
such verification shall be made in accordance with the provisions of this
Section 1 2 Tenant’s architect may consult with Landlord’s space measurement
consultant regarding verification of the number of rentable square feet of the
Premises, however, the reasonable determination of Landlord’s space measurement
consultant shall be conclusive and binding upon the parties In the event that
Landlord’s space measurement consultant determines that the amounts thereof
shall be different from those set forth in this Lease, Landlord shall modify
all amounts, percentages and figures appearing or referred to in this Lease to
conform to such corrected rentable square footage (including, without
limitation, the amount of the “Rent,” as that term is defined in Section 3 of
this Lease) If such modification is made, it will be confirmed in writing by
Landlord to Tenant As used in this Lease, the following terms have the meanings
indicated


 


(a)                                  The
term “usable area” or “usable square footage” means the usable area as
determined in accordance with the Standard Method for Measuring Floor Area in
Office Buildings, ANSI/BOMA Z65 1 - 1996 (the “BOMA Standard”); and


 


(b)                                 The
term rentable area” or “rentable square footage” means the rentable area
measured in accordance with the BOMA Standard


 


2         Term


 


2 1          Term; Notice of Lease Dates. This Lease shall be effective upon
the date first above written (the “Effective Date”) Subject to Section 2.4
below, the term of this Lease (the “Term”) shall commence upon the Commencement
Date and shall expire on the Lease Expiration Date, unless sooner terminated or
extended as permitted herein, and if extended, the “Term” will Include the
applicable Option Period


 


2 2          Early Occupancy.   Subject to Section 2 4 below, Landlord shall deliver possession
of the Premises but not the Occupied Portion (as such term is defined in
Section 2 4 below) within three (3) days following the full execution and
delivery of this Lease (the “Early Occupancy Date”) for purposes of
construction of improvements to the Premises (but not the Occupied Portion) in
accordance with the Work letter attached hereto as Exhibit “C” (“Work
Letter”) Such early occupancy shall be subject to all of the terms and
conditions of this Lease, including, without limitation, those provisions
requiring that Tenant shall be responsible for all costs, expenses and
obligations relating to the Premises (including, without limitation, Sections 3
2, 3 3, 4, 6, 10, 11, 17, 20 and 22) except that Tenant will not be obligated
to pay


 

















 


Monthly Rent during the period of such early
occupancy end Tenant will not, unless and until Tenant enters or occupies such
Occupied Portion, be subject to any of the terms and conditions of this Lease
for the Occupied Portion until Landlord delivers possession of the Occupied
Portion to Tenant, which delivery date is anticipated to occur on or about January
1, 1998, subject to the surrender of such Occupied Portion by the existing
tenant thereof.


 


2 3          Options to Extend. 
Tenant shell have two (2) options (each, an “Extension Option” to extend
the Term (for the entire Premises only) for a period (each, an “Option Period”)
of three (3) years, commencing upon the Lease Expiration Date or, as
applicable, the second Option Period, upon the same terms and conditions
previously applicable, except for the grant of any exercised Extension Option
and Annual Rent (which shall be determined as set forth below) Each Extension
Option may be validly exercised only by notice in writing received by Landlord
not later than three hundred sixty (360) calendar days prior to commencement of
the applicable Option Period, provided, however, that each such Extension
Option may the validly exercised only if no uncured material Tenant default
exists as of the date of exercise and, at Landlord’s option, as of the
commencement of the applicable Option Period If Tenant does not exercise the
applicable Extension Option during the exercise period set forth above in
strict accordance with the provisions hereof, the Extension Option and any
unexercised Extension Option (if any) shall forever terminate and be of no
further force or effect Each such Extension Option is personal to the original
Tenant, may not be exercised by any person or entity other than the original
Tenant and shall become null and void if the original Tenant assigns its
interest in this Lease unless such assignment is to an Affiliate of Tenant (as
that term is defined in Section 14 5) or to a Transferee who is a Permitted
Business (as defined in Section 14 1) but only to the extent such Transferee is
conducting the biomedical manufacturing portion of Tenant’s Permitted Use (“Special
Transferee”) For purposes of this Section 2 3 and Section 33, the term
“material” relative to a Tenant default shall mean any monetary default and any
material non-monetary default


 


Annual Rent
during the applicable Option Period shall be equal to ninety-five percent (95%)
of the Fair Market Rental as of the commencement of the applicable Option
Period, but in no event less than Annual Rent payable immediately prior to the
applicable Option Period  For purposes
hereof, “Fair Market Rental” shall mean the base rent then being charged to
renewal tenants by Landlord in the Project (or, if not enough comparable
transactions exist In the Project, then the base rent payable during the
applicable Option Period to a willing landlord by a willing renewal tenant for
comparable space in comparable buildings in the vicinity of the Building) with
tenants having a similar financial responsibility, credit rating and
capitalization as Tenant then has, taking into account all other relevant
factors for like and comparable space, improved with tenant Improvements of
like and comparable quality to those then existing In the Premises  At least four (4) months prior to the
applicable Option Period, Landlord shall notify Tenant of the Fair Market
Rental as determined by Landlord  Any
dispute between the parties hereto with respect to the amount so determined
shall be resolved by arbitration, as set forth below; provided, however, that
there shall be deemed not to be such a dispute unless Tenant notifies Landlord
thereof in writing within one (1) month after Landlord so notifies Tenant of
the Fair Market Rental and Tenant sets forth in such notice Tenant’s
determination of Fair Market Rental If, in the event of a dispute, the
arbitrators have not determined the Fair Market Rental by commencement of the
applicable Option Period, Tenant shall pay as Annual Rent the amount determined
by Landlord until such time as the Fair Market Rental has been determined by
arbitration, whereupon Tenant shall pay any additional amount due to Landlord
based upon such subsequent determination of Fair Market Rental. If the Annual
Rent so paid by Tenant is higher than that ultimately determined by the
arbitration process, then Landlord shall reimburse such difference to Tenant.


 


If Tenant
timely notifies Landlord in writing of Tenant’s dispute regarding Landlord’s
determination of the Fair Market Rental, then Fair Market Rental shall be
determined as follows. Landlord and Tenant shall each appoint one arbitrator
who shall by profession be a real estate appraiser active over the five (5)
year period ending on the date of such appointment in the appraisal of
commercial properties in San Diego County and who shall not have been employed
or engaged by either party during said five (5) year period Each such arbitrator
shall be appointed within fifteen (15) days after Tenant notifies Landlord of
Tenant’s dispute of Landlord’s determination of Fair Market Rental The two
arbitrators so appointed shall within fifteen (15) days of the date of the
appointment of the last appointed arbitrator agree upon and appoint a


 

















 


third
arbitrator who shall be qualified under the same criteria set forth above The
three arbitrators shall, within thirty (30) days of the appointment of the
third arbitrator, reach a decision as to whether the parties shall use
Landlord’s or Tenant’s submitted Fair Market Rental for the Premises, and shall
notify Landlord and Tenant thereof Such decision shall be based upon the
criteria and variables set forth above The new Annual Rent shall thereafter be
equal to the Fair Market Rental of the Premises so selected by the arbitrators.
The decision of the majority of the three arbitrators shall be binding upon
Landlord and Tenant. If either Landlord or Tenant fails to appoint an
arbitrator within the time period specified hereinabove, the arbitrator
appointed by one of them shall reach a decision, notify Landlord and Tenant
thereof, and such arbitrator’s decision shall be binding upon Landlord and
Tenant If the two arbitrators fail to agree upon and appoint a third
arbitrator, both arbitrators shall be dismissed and the matter to be decided
shall be forthwith submitted to arbitration under the provisions of the
American Arbitration Association in accordance with the method described above
The cost of arbitration shall be paid by Landlord and Tenant equally.


 


2 4          Conditions Precedent. Landlord will not be obligated to
deliver possession of the Premises to Tenant (but Tenant will be liable,
subject to Section 2 2 hereof and the occurrence of the Commencement Date, for
Rent if Landlord can otherwise deliver the Premises, or the applicable portion
thereof, to Tenant as required hereunder) until (A) Landlord has received from
Tenant all of the following: (i) a copy of this Lease fully executed by Tenant;
(ii) evidence satisfactory to Landlord of the deposit of the Security Deposit
in accordance with Section 5 below, and the first installment of Monthly Rent
in accordance with Section 3 1 below; and (iii) copies of policies of insurance
or certificates thereof as required under Section 21 of this Lease and (B)
NextLevel Systems, Inc., the existing tenant (“Existing Tenant”) in a portion
(the “Occupied Portion”) of the Premises as of the date hereof has vacated the
Premises; provided, however, that Landlord and Tenant acknowledge and agree
that, subject to the other condition precedents set forth in this Section 2 4,
Landlord shall deliver possession of the Premises (but not the Occupied
Portion) to Tenant in accordance with Section 2 2 and Tenant shall accept possession
of such portion of the Premises on the date of Landlord’s delivery thereof
Notwithstanding anything above to the contrary, the Commencement Date of this
Lease shall occur in the event that Landlord is unable to deliver possession of
the Occupied Portion to Tenant by the Commencement Date of the Lease with
respect to the other portion of the Premises (not including the Occupied
Portion), provided, however, that (i) Tenant’s obligation to pay Monthly Rent
with respect to the Occupied Portion of the Premises will, on a per diem basis,
be waived by Landlord (in the proportion that the rentable square feet of the
Occupied Portion bears to the total rentable square feet of the Premises), for
each day past March 1, 1998 (“Outside Date”) that Landlord so fails to deliver
possession of the Occupied Portion of the Premises to Tenant and (ii) in
accordance with, and subject to, Section 2 2 of this Lease, Tenant will not be
subject to any of the other terms and conditions of this Lease until Landlord
delivers possession of the Occupied Portion to Tenant (unless Tenant enters or
occupies such Occupied Portion)


 


3         Rent


 


3 1          Annual Rent   Tenant
agrees to pay Landlord, as rent for the Premises, the Annual Rent designated in
Section 1 8 of the Summary. The Annual Rent shall be paid by Tenant in twelve
(12) equal monthly installments of Monthly Rent in the amounts designated in
Section 1 8 of the Summary in advance on the first day of each and every
calendar month commencing upon the Commencement Date, except that the first
full month’s Monthly Rent for the Premises shall be paid upon execution of this
Lease by Tenant  Monthly Rent for any
partial month shall be prorated in the proportion that the number of days this
Lease is in effect during such month bears to the actual number of days in such
month


 


3 2          Additional Rent.  All
amounts and charges payable by Tenant under this Lease in addition to the
Annual Rent described in Section 3 1 above shall be considered additional rent
for the purposes of this Lease, and the word “Rent” in this Lease shall include
such additional rent unless the context specifically or clearly implies that
only the Annual Rent is referenced The Annual Rent and additional rent shall be
paid to landlord as provided in Section 7, without any prior demand therefor
and without any deduction or offset except as specified elsewhere in the Lease,
in lawful money of the United States of America.


 

















 


3 3          Late Payments.  Late payments of Monthly Rent and/or any
item of additional rent will be subject to Interest and a late charge as
provided in Sections 22 6 and 22 7 below


 


3 4          Tenant’s Obligations  Except as otherwise provided herein, all
Rent shall be absolutely net to Landlord so that this Lease shall yield net to
Landlord, the Rent to be paid each month during the Term of this Lease Nothing
herein contained shall be deemed to require Tenant to pay or discharge any
liens or mortgages of any character whatsoever which may exist or hereafter be
placed upon the Premises by an affirmative act or omission of Landlord


 


4         Common Areas: Operating Expenses


 


4 1          Definition of Common Area. 
The term “Common Area,” as used in this Lease means all areas and the
improvements thereon within the exterior boundaries of the Project now or later
made available for the general use of Landlord, Tenant and other persons
entitled to occupy floor area in the Project and their customers, including,
without limitation, the parking facilities of the Project, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways, landscaped areas, and similar areas and facilities situated within
the Project which are not reserved for the exclusive use of any Project
occupants and the exterior surfaces and roofs of all buildings (including the
Building) located within the Project Without limiting this definition, Landlord
may include in  the Common Area those portions
of the Project presently or later sold or leased to purchasers or tenants, as
the case may be, until the commencement of construction of the building(s) thereon,
at which time there shall be withdrawn from the Common Area those areas not
provided by such owner or lessee for common use. Common Area shall not Include
(i) the entryway to a tenant’s premises, (ii) any improvements Installed by a
tenant outside of its premises, whether with or without Landlord’s knowledge or
consent, or (iii) any areas or facilities that are included in the description
of premises leased to a tenant


 


4 2          Maintenance and Use of
Common Area.  The manner in
which the Common Area shall be maintained shall be solely determined by
Landlord in Landlord’s reasonable discretion If any owner or tenant of any
portion of the Project maintains Common Area located upon its parcel or demised
premises (Landlord shall have the right in its sole discretion to allow any
purchaser or tenant to so maintain Common Area located upon its parcel or
demised premises and to be excluded from participation in the payment of Common
Area Expenses as provided below), Landlord shall not have any responsibility for
the maintenance of that portion of the Common Area and Tenant shall have no
claims against Landlord arising out of any failure of such owner or tenant to
so maintain its portion of the Common Area The use and occupancy by Tenant of
the Premises shall include the right to use the Common Area (except areas used
in the maintenance or operation of the Project), in common with Landlord and
other tenants of the Project and their customers and invitees, subject to (i)
any covenants, conditions and restrictions now or hereafter of record (the
“Declaration”), and (ii) such reasonable, non-discriminatory rules and
regulations concerning the Project as may be established by Landlord from time
to time Tenant agrees to promptly comply with all such rules and regulations and
any reasonable, non-discriminatory amendments thereto upon receipt of written
notice from Landlord.


 


4 3          Control of and Changes to Common Area.  Landlord shall have the sole and exclusive
control of the Common Area, as well as the right to make reasonable changes to
the Common Area. Provided Landlord does not materially interfere with Tenant’s
use of and access to the Premises, Landlord’s rights shall include, but not be
limited to, the right to (a) restrain the use of the Common Area by
unauthorized persons; (b) cause Tenant to remove or restrain persons from any
unauthorized use of the Common Area if they are using the Common Area by reason
of Tenant’s presence in the Project, (c) utilize from time to time any portion
of the Common Area for promotional, entertainment, and related matters, (d)
temporarily close any portion of the Common Area for repairs, improvements or
alterations, to discourage non-customer use, to prevent public dedication or an
easement by prescription from arising, or for any other reason deemed
appropriate in Landlord’s judgment, and (e) reasonably change the shape and
size of the Common Area, add, eliminate or change the location of improvements
to the Common Area, including, without limitation, buildings, lighting, parking
areas, landscaped areas, roadways, walkways, drive aisles and curb cuts


 

















 


4 4          Operating Expenses.  
As used in this Section 4 4, the term “Building’s Share” shall mean a
fraction, the numerator of which is the rentable square footage of the
Building, and the denominator of which is the rentable square footage of the
Project Throughout the Term of this Lease, commencing on the Commencement Date,
and in addition to Tenant’s obligations set forth in Section 3 4 hereof, Tenant
agrees to pay Landlord, as additional rent in accordance with the terms of this
Section 4, the Building’s Share of Operating Expenses for the operation,
maintenance, repair, and replacement of the Project and the Common Area
including, without limitation: (i) any form of real property tax, assessment
(including, without limitation, change in ownership taxes and assessments),
license fee, license tax, business license fee, commercial rental tax, levy,
charge, improvement bond or similar imposition of any kind or nature imposed by
any authority having the direct power to tax, including any city, county, state
or federal government, or any school, agricultural, lighting, drainage or other
improvement or special assessment district thereof, (ii) any and all
assessments under any covenants, conditions and restrictions affecting the
Project, (iii) water, sewer and other utility charges for the Common Area, (iv)
costs of commercially reasonable insurance obtained by landlord, (v) waste
disposal and janitorial services, (vi) security (if any), (vii) labor, (viii)
commercially reasonable management costs including, without limitation (A)
wages and salaries (and payroll taxes and similar charges) of property
management employees for the Common Area, (B) management office rental,
supplies, equipment and related operating expenses for the Common Area, (C)
commercially reasonable management/administrative fees, and (D) association
fees and assessments, (ix) supplies, materials, equipment and tools including
rental of personal property, (x) repair and maintenance of the structural
portions of the buildings within the Project, including the plumbing, heating,
ventilating, air-conditioning and electrical systems installed or furnished by
Landlord; (xi) maintenance, sweeping, repairs, resurfacing, and upkeep of all parting
and other Common Areas; (xii) amortization on a straight line basis over the
useful life together with interest at the Interest Rate on the unamortized
balance of all capitalized expenditures to the Project, (xiii) gardening and
landscaping, (xiv) maintenance of signs (other than signs of tenants of the
Project), (xv) personal property taxes levied on or attributable to personal
property used in connection with the Common Areas; (xvi) reasonable accounting,
audit, verification, legal and other consulting fees, and (xvii) any other
costs and expenses of repairs, maintenance, painting, fighting, cleaning, and
similar items, including commercially reasonable reserves. Notwithstanding
anything above to the contrary, the term “Operating Expenses” shall not include
costs to correct latent defects in the base, shell and core of the Premises to
the extent not caused by Tenant or Tenant’s Improvements to the Premises.


 


4 5          Tenant’s Monthly Operating Expense Charge.  From and after the Commencement Date, Tenant
shall pay to Landlord, on the first day of each calendar month during the Term
of this Lease, the Building’s Share of an amount estimated by Landlord to be
the Monthly Operating Expenses for the Project for that month (“Tenants Monthly
Operating Expanse Charge”) Notwithstanding anything in this Section 4 to the
contrary, in no event will Tenant be liable, in any calendar year of this
Lease, for Operating Expense increases in excess of ten percent (10%) over the
Operating Expenses for the immediately preceding calendar year (the “Cap”);
provided, however, that for purposes of the Cap, costs of commercially
reasonable insurance maintained by Landlord, Real Property Taxes and the costs
of capital expenditures, shall not be deemed to be part of Operating Expenses


 


4 6          Estimate Statement. 
Prior to the Commencement Date and on or about May 1st of each
subsequent calendar year  during the
Term of this Lease, Landlord will endeavor to deliver to Tenant a statement
(“Estimate Statement”) wherein Landlord will estimate Tenant’s Monthly
Operating Expense Charge for the then currant calendar year Tenant agrees to
pay Landlord, as additional rent, Tenant’s estimated Monthly Operating Expense
Charge each month thereafter, beginning with the next installment of rent due, until
such time as Landlord issues a revised Estimate Statement or the Estimate
Statement for the succeeding calendar year; except that, concurrently with the
regular monthly rent payment next due following the receipt of each such
Estimate Statement, Tenant agrees to pay Landlord an amount equal to one
monthly installment of Tenant’s estimated Monthly Operating Expense Charge
(less any applicable Operating Expenses already paid) multiplied by the number
of months from January, in the current calendar year, to the month of such rent
payment next due, all months inclusive 
If at any time during the Term of this Lease, but not more often than
quarterly, Landlord reasonably determines that the Building’s Share of
Operating Expenses for the current calendar year will be greeter than the
amount set forth in the then current Estimate Statement, Landlord may issue a
revised Estimate Statement and


 

















 


Tenant agrees to pay Landlord, within thirty
(30) days of receipt of the revised Estimate Statement, the difference between
the amount owed by Tenant under such revised Estimate Statement and the amount
owed by Tenant under the original Estimate Statement for the portion of the
then current calendar year which has expired Thereafter Tenant agrees to pay
Tenant’s Monthly Operating Expense Charge based on such revised Estimate
Statement until Tenant receives the next calendar year’s Estimate Statement or
a new revised Estimate Statement for the current calendar year


 


4 7          Actual Statement.  
By May 1st of each calendar year during the Term of this Lease, Landlord
will also endeavor to deliver to Tenant a statement (“Actual Statement”) which
states the Building’s Share of the actual Operating Expenses for the preceding
calendar year. If the Actual Statement reveals that the Building’s Share of the
actual Operating Expenses is more than the total Additional Rent paid by Tenant
for Operating Expenses on account of the preceding calendar year,  Tenant agrees to pay Landlord the difference in a lump sum
within thirty (30) days of receipt of the Actual Statement. If the Actual
Statement reveals that the Building’s Share of the actual Operating
Expenses is less than the Additional Rent paid by Tenant for Operating Expenses
on account of the preceding calendar year, Landlord will
credit any overpayment toward the next monthly Installment(s) of the Building’s
Share of the Operating Expenses due under this Lease Such obligation will be a
continuing one which will survive the expiration or earlier termination of this
Lease Prior to the expiration or sooner termination of the Lease Term and
Landlord’s acceptance of Tenant’s surrender of the Premises, Landlord will have
the right to estimate the actual Operating Expenses for the then current Lease
Year and to collect from Tenant prior to Tenant’s surrender of the Premises,
the Building’s Share of any excess of such actual Operating Expenses over the
estimated Operating Expenses paid by Tenant in such Lease Year.


 


4 8          Miscellaneous.  Any
delay or failure by Landlord in delivering any Estimate Statement or Actual
Statement pursuant to this Section 4 will not constitute a waiver of its right
to require an increase in additional rent for Operating Expenses nor will it
relieve Tenant of its obligations pursuant to this Section 4, except that
Tenant will not be obligated to make any payments based on such Estimate
Statement or Actual Statement until thirty (30) days after receipt of such
Estimate Statement or Actual Statement. If Tenant does not object to any
Estimate Statement or Actual Statement within ninety (90) days after Tenant
receives any such statement, such statement will be deemed final and binding on
Tenant Even though the Term has expired and Tenant has vacated the Premises,
when the final determination is made of the Building’s Share of the actual
Operating Expenses for the year in which this Lease terminates, Tenant agrees
to promptly pay any increase due over the estimated expenses paid and,
conversely, any overpayment made in the event said expenses decrease shall
promptly be rebated by Landlord to Tenant Such obligation will be a continuing
one which will survive the expiration or termination of this Lease


 


4 9          Books and Records. 
Landlord shall maintain books and records in accordance with sound
accounting and management practices, reflecting the Operating Expenses If
Tenant wishes to review or audit the amount of the Building’s Share of
Operating Expenses, Tenant must deliver to Landlord a written notice of
Tenant’s desire to review or audit Landlord’s books and records (“Audit Notice”)
within three (3) months following Tenant’s receipt of Landlord’s first annual
reconciliation. Thereafter, if Tenant wishes to review or audit the Building’s
Share of Operating Expenses as to any subsequent Lease Year, Tenant and its
duly authorized representatives (which representatives (including Tenant’s
auditors, if any) shall be subject to Landlord’s approval) shall have the right
to do so with respect to any calendar year within six (6) months following
receipt of the applicable Actual Statement for such calendar year, upon thirty
(30) days’ prior delivery of an Audit Notice Such audit will be conducted (i)
during normal business hours at Landlord’s California business offices or at
the management office of the Building, (ii) on consecutive business days until
completed, and (iii) in an expeditious manner so as to minimize interference
with Landlord’s operations Landlord agrees that Tenant or its auditors shall
have the right to photocopy Landlord’s books and records at Tenant’s sole cost
and expense Tenant shall pay in a timely manner as required by this Lease any
amounts stated as due on the Actual Statement, provided that such payment shall
not waive any right to audit and/or dispute by Tenant as set forth herein In no
event will Landlord or its property manager be required to (i) photocopy any
accounting records or other items or contracts (provided however, that Tenant
or its auditors shall have the right to photocopy Landlord’s books and records
at Tenant’s sole cost and expense as provided above), (ii) create any ledgers
or schedules not already In existence, (iii) incur any costs or expenses
relative to such inspection, or (iv)


 

















 


perform any other tasks other than making
available such accounting records as are described in this paragraph. Tenant
agrees to deliver to Landlord the results of any such audit within thirty (30)
days of completion of the audit. If Tenant does not deliver an Audit Notice as
to any annual reconciliation within the time frames set forth hereinabove, then
Tenant acknowledges and agrees that such annual reconciliation, and the Actual
Statement and/or any Estimate Statement for such Lease Year, will be
conclusively binding on Tenant


 


If Tenant’s
audit or review reveals that Landlord has overcharged Tenant and Landlord
agrees with the results of such audit or the results of such audit are
confirmed in an arbitration between the parties pursuant to Section 34, then
within thirty (30) days after the results of such audit are made available to
Landlord, Landlord agrees to reimburse Tenant the amount of such overcharge
plus interest at the Interest Rate stated in Section 1 12 of the Summary If the
audit reveals that Tenant was undercharged, then within thirty (30) days after
the results of the audit are made available to Tenant, Tenant agrees to
reimburse Landlord the amount of such undercharge plus interest thereon at the
Interest Rate stated in Section 1 12 of the Summary within thirty (30) days of
demand by Landlord Tenant agrees to pay the cost of such audit, provided that
if the audit reveals that Landlord’s determination of the Building’s Share of
Operating Expenses as set forth in a certified statement sent to Tenant was in
error in Landlord’s favor by more than six percent (6%) of the amount paid by
Tenant prior to delivering the Audit Notice and Landlord agrees with the
results of such audit or the results of such audit are confirmed In an
arbitration between the parties pursuant to Section 34, then Landlord agrees to
pay the reasonable, third-party cost of such audit incurred by Tenant within
thirty (30) days of demand by Tenant. To the extent Landlord must pay the cost
of such audit, such cost shall not exceed a reasonable hourly charge for a
reasonable amount of hours spent by such third-party in connection with the
audit Landlord shall not be liable for any contingency fee payments to any
auditors or consultants of Tenant Tenant agrees to keep the results of the
audit (and any settlement. if any, resulting therefrom) confidential and will
cause its agents, employees and contractors to keep such results (and any
settlement, if any, resulting therefrom) confidential. If Landlord disputes the
results of Tenant’s audit of Operating Expenses, Landlord shall have the right
to initiate an arbitration of the dispute as provided In Section 34


 


5         Security Deposit


 


5 1          Delivery of Letter of Credit.  On or before December 10, 1997, Tenant shall deliver to Landlord
the Security Deposit in the form of an unconditional, irrevocable and renewable
letter of credit (“Letter of Credit”) In favor of Landlord in form and issued
by a bank with an office (capable of honoring a demand on the Letter of Credit)
located in San Diego County, California, reasonably satisfactory to Landlord.
In the initial principal amount specified in Section 1 9 of the Summary, as
security for the faithful performance and observance by Tenant of the terms,
provisions and conditions of this Lease The Letter of Credit shall state that
an authorized officer or other representative of Landlord may make demand on
Landlord’s behalf for the amount owed by Tenant to Landlord, and that the
issuing bank must immediately honor such demand, without qualification or
satisfaction of any conditions, except the proper identification of the party
making such demand and a certification that Tenant is in default under this
Lease, which default is continuing after notice and expiration of any
applicable notice and cure period required by this Lease. In addition, the
Letter of Credit shall indicate that it is transferable in its entirety by Landlord
as beneficiary and that upon receiving written notice of transfer, and upon
presentation to the issuer of the original Letter of Credit, the issuer will
reissue the Letter of Credit naming such transferee as the beneficiary. If the
term of the Letter of Credit held by Landlord will expire prior to thirty (30)
days following the last day of the Term and It Is not extended, or a new litter
of Credit for an extended period of time is not substituted, within thirty (30)
days prior to the expiration of the Letter of Credit, then Landlord may deliver
written notice of such fact to Tenant and if Tenant does not extend the Letter
of Credit or substitute a new Letter of Credit within ten (10) business days
after Tenant’s receipt of such notice from Landlord, Landlord shall be entitled
to make demand for the principal amount of said Letter of Credit and,
thereafter, to hold such funds in accordance with Section 5.3 below In the
event Tenant fails to deliver such  Letter of
Credit to Landlord on or before December 10, 1997 then Landlord, in addition to
any of its other rights and remedies, shall have the right to immediately
terminate this Lease or cause Tenant to cease construction of its Tenant
Improvements until such Letter of Credit is furnished to Landlord


 

















 


5 2          Principal Amount of Letter of Credit.  The principal amount of the Letter of Credit
shall be as follows


 




	
  Months of Tem

  	
   

  	
  Required

  Principal Amount

  
	
  1.60

  	
   

  	
  $297,330 00

  
	
   

  	
   

  	
   

  
	
  61-120

  	
   

  	
  To
  be equal to the Monthly Rent due and payable by Tenant for the sixty-first
  (61st) month of the Lease Term

  






 


Notwithstanding the foregoing,
if as of the applicable reduction date set forth above, (i) Tenant is in
default under this Lease, or (ii) circumstances exist that would, with notice
or lapse of time, or both, constitute a default, then the principal amount
shall not be reduced, unless and until such default or circumstances shall have
been fully cured, at which time the principal amount may be reduced as
hereinabove described Further notwithstanding the foregoing, the reduction of
the Security Deposit after the sixtieth (60th) month shall also be conditioned
upon (i) Landlord’s not having given Tenant written notice of a failure to pay
Rent pursuant to Section 22.1(b) more than three (3) times during the preceding
sixty (60) month period and (ii) Tenant not exercising its Termination Option
(as defined In Section 33 hereof)


 


5 3          Application of Letter of Credit. The Letter of Credit shall
be held by Landlord as security for the faithful performance by Tenant of all
of the terms, covenants and conditions of this Lease If Tenant commits a
default with respect to any provision of this Lease, Landlord may (but shall
not be required to) draw upon the Letter of Credit and use, apply or retain all
or any part of the proceeds for the payment of any sum which is in default, or
for the payment of any other amount which Landlord may spend or become
obligated to spend by reason of Tenants default or to compensate Landlord for
any loss or damage which Landlord may suffer by reason of Tenant’s default. If
any portion of the Letter of Credit is so used or applied, Tenant shall, within
ten (10) business days after demand therefor, post an additional Letter of
Credit in an amount sufficient to restore the Letter of Credit to the principal
amount required under Section 5 2 above Landlord shall not be required to keep
any proceeds from the Letter of Credit separate from its general funds and
Tenant shall not be entitled to any interest on such proceeds Should Landlord
sell its interest in the Premises during the Term and if Landlord deposits with
the purchaser thereof the Letter of Credit or any proceeds of the Letter of
Credit, thereupon Landlord shall be discharged from any further liability with
respect to the Letter of Credit and said proceeds


 


6         Use


 


6 1          General.  Tenant
shall use the Premises solely for the Permitted Use specified in Section 1 10
of the Summary, and shall not use or permit the Premises to be used for any
other use or purpose whatsoever Except for Landlord’s obligations under Section
11 2 of this Lease, Tenant shall, at its sole cost and expense, observe and
comply with all requirements of any board of fire underwriters or similar body
relating to the Premises, and all laws, statutes, codes, rules and regulations
now or hereafter in force relating to or affecting the use, occupancy,
alteration or improvement (whether structural or non-structural, including
unforeseen and/or extraordinary alterations or Improvements, and regardless of
the period of time remaining in the Term) of the Premises, including, without
limitation, the provisions of the Americans with Disabilities Act (“ADA”) as it
pertains to Tenants use, occupancy, Improvement and alteration (whether
structural or non-structural, including unforeseen and/or extraordinary
alterations or Improvements, and regardless of the period of time remaining in
the Term) of the Premises. Tenant shall not use or allow the Premises to be
used (a) in violation of any recorded covenants, conditions and restrictions
effecting the Premises or of any law or governmental rule or regulation, or of
any certificate of occupancy issued for the Premises, or (b) for any improper,
immoral, unlawful or reasonably objectionable purpose Tenant shall not cause,
maintain or permit any nuisance in, on or about the Premises, nor commit or
suffer to be committed any waste in, on or about the Premises


 

















 


6 2          Signs, Awnings and Canopies. Tenant shall have the right. at
Tenants sole cost and expense to install a sign on the Building constituting
the Premises, provided Tenant complies with any covenants of record and obtains
approval from all governmental authorities having jurisdiction over the
Premises and from Landlord, which approval shall not be unreasonably withheld
To the extent Landlord installs a signage monument adjacent to the Premises,
Tenant shall have the right, at Tenant’s sole cost and expense, to install its
name on such signage monument if and when such signage monument is installed by
Landlord. The exact location, dimensions, color, illumination and other
features of all of Tenant’s signage shall be subject to Landlord’s prior
written approval and otherwise In accordance with the Project’s signage
program. All of Tenant’s exterior sign rights are personal to the original
Tenant executing this Lease, to any Affiliate of the original Tenant, and to
any Special Transferee, only so long as the original Tenant and/or any
Affiliate of the original Tenant and/or any Special Transferee is occupying at
least seventy-five percent (75%) of the total rental square feet comprising the
Premises. Tenant agrees, at Tenant’s sole cost and expense, to maintain any
such sign, awning, canopy, decoration, lettering or advertising matter as may
be approved by Landlord in good condition and repair at all times At the expiration
or earlier termination of this Lease, at landlord’s election, Tenant shall
remove all signs, awnings, canopies, decorations, lettering and advertising
installed by or at the direction of Tenant and shall repair any damage to the
Premises resulting therefrom all at Tenant’s sole cost and expense. If Tenant
falls to maintain any such approved sign, awning, decoration, lettering, or
advertising, Landlord may do so and Tenant shall reimburse Landlord for such
cost plus a twenty percent (20%) overhead fee If, without Landlord’s prior
written consent, Tenant installs any sign, awning, decoration, lettering or
advertising, or fails to remove any such item(s) at the expiration or earlier
termination of this Lease, Landlord may have such item(s) removed and stored
and may repair any damage to the Premises at Tenants expense The removal,
repair and/or storage costs shall bear interest until paid at the Interest Rate
specified in Section 1 12 of the Summary


 


6 3          Hazardous Materials. 
Except for ordinary and general office supplies, such as copier toner,
liquid paper, glue, ink and common household cleaning materials and, to the
extent approved in writing by Landlord (which shall not be unreasonably
withheld), materials reasonably necessary for the conduct of Tenants business
that are used and stored In compliance with all applicable laws (some or all of
which may constitute “Hazardous Materials” as defined in this Lease), Tenant
agrees not to cause or permit any Hazardous Materials to be brought upon,
stored, used, handled, generated, released or disposed of on, in, under or
about the Premises by Tenant, its agents, employees, subtenants, assignees,
licensees, contractors or invitees (collectively, “Tenant’s Parties”), without
the prior written consent of Landlord, which consent Landlord may, except as
otherwise expressly provided above (with respect to materials reasonably
necessary for the conduct of Tenant’s business that are used and stored in
compliance with all applicable laws), withhold in its sole and absolute
discretion. Concurrently with the execution of this Lease, Tenant agrees to
complete and deliver to Landlord an Environmental Questionnaire in the form of Exhibit
“E” attached hereto Upon the expiration or earlier termination of this
Lease, Tenant agrees to promptly remove from the Premises, at its sole cost and
expense, any and all Hazardous Materials, including any equipment or systems
containing Hazardous Materials which are installed, brought upon, stored, used,
generated or released upon, In, under or about the Premises by Tenant or any of
Tenant’s Parties To the fullest extent permitted by law, Tenant agrees to
promptly indemnify, protect, defend and hold harmless Landlord and Landlord’s
partners, officers, directors, employees, agents, successors and assigns
(collectively, “Landlord Indemnified Parties”) from and against any and all
claims, damages, judgments, suits, causes of action, losses, liabilities,
penalties, fines, expenses and costs including, without limitation, clean-up,
removal, remediation and restoration costs, sums paid in settlement of claims,
attorneys’ fees, consultant fees and expert fees and court costs) which arise
or result from the presence of Hazardous Materials on, In, under or about the
Premises and which are caused or permitted by Tenant or any of Tenant’s Panics.
Tenant agrees to promptly notify Landlord of any release of Hazardous Materials
which Tenant becomes aware of during the Term of this Lease, whether caused by
Tenant or any other persons or entities In the event of any release of
Hazardous Materials caused or permitted by Tenant or any of Tenant’s Parties or
any other persons or entitles, Landlord shall have the right, but not the
obligation, to cause Tenant to immediately take all steps Landlord deems
necessary or appropriate to remediate such release and prevent any similar
future release to the satisfaction of Landlord and Landlord’s mortgagee(s) At
all times during the Term of this Lease and in accordance with Section 15
hereof, Landlord will have the right, but not the obligation, to enter upon the
Premises to inspect,


 

















 


investigate, sample and/or monitor the
Premises to determine if Tenant is in compliance with the terms of this Lease
regarding Hazardous Materials Tenant will, upon the reasonable request of Landlord
(which request shall not, unless Tenant has failed to comply with the terms and
provisions of this Section 6 3 or except in cases of emergency, be made more
than once every six (6) months throughout the Term of this Lease, cause to be
performed an environmental audit of the Premises at Tenant’s expense by an
environmental consulting firm reasonably acceptable to Landlord As used in this
Lease, the term “Hazardous Materials” shall mean and include any hazardous or
toxic materials, substances or wastes as now or hereafter designated under any
law, statute, ordinance, rule, regulation, order or ruling of any agency of the
State, the United States Government or any local governmental authority,
including, without limitation, asbestos, petroleum, petroleum hydrocarbons and
petroleum based products, was formaldehyde foam insulation, polychlorinated
biphenyls (“PCBs”), freon and other chlorofluorocarbons, and any material
defined as a “biohazardous waste” or “medical waste” or other waste under
California Health and Safety Code, Division 20, Chapter 81 (Medical Waste
Management Act) The provisions of this Section 6 3 will survive the expiration
or earlier termination of this Lease Tenant shall immediately advise Landlord
in writing of, and provide Landlord a copy of:


 


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


 


(2)          Any
and all inquiry, investigation, enforcement, clean-up, removal or governmental or
regulatory actions Instituted or threatened relating to the Premises.


 


Landlord shall
indemnify, defend and hold harmless Tenant from and against any and all claims,
judgments, damages, penalties, fines, costs, liabilities and losses (including,
without limitation, sums paid In settlement of claims and for reasonable
attorneys’ fees, consultant fees and expert fees, (but specifically excluding
special, indirect or consequential damages including but not limited to claims
for loss of use, anticipated profit or business opportunity, market-based
stigma damages or business interruption, or mental or emotional distress or
fear of injury or disease) to the extent arising as a result of any Hazardous
Materials (1) located in, on or under the Building as of the commencement of
Tenant’s occupancy of the Premises, or (2) hereafter caused to be located in,
on or under the Building by Landlord and/or any of Landlord’s employees, agents
or representatives or any other persons or entitles (except Tenant or Tenant’s
Parties) This indemnification of Tenant by Landlord includes, without
limitation, costs incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work. The
provisions of this paragraph shall survive the expiration of the Term or
earlier termination of this Lease. Notwithstanding anything above to the
contrary, the foregoing indemnity shall not extend to Hazardous Materials
caused to be located in, on or under the Building by Tenant or any of Tenant’s
Parties


 


6 4          Refuse and Sewage. Tenant agrees not to keep any trash,
garbage, waste or other refuse on the Premises except in sanitary containers
and agrees to regularly and frequently remove same from the Premises Tenant
shall keep all containers or other equipment used for storage of such materials
in a clean and unitary condition. Tenant shall, at Tenant’s sole cost and
expense, properly dispose of all sanitary sewage and shall not use the sewage
disposal system for the disposal of anything except sanitary sewage Tenant
shall keep the sewage disposal system free of all obstructions and in good
operating condition. Tenant shall contract directly for all trash disposal
services at Tenant’s sole cost and expense


 


6 5          Parking.


 


(a)                                  Tenant’s
Parking Privileges. During the Term of this Lease, Landlord shall lease to
Tenant, and Tenant shall lease from Landlord, the number of parking privileges
specified In Section 1.14 of the Summary hereof for use by Tenant’s employees
in the common parking areas for the Premises within the Project, as designated
by Landlord from time to time. Landlord shall at all times have the right to
reasonably establish and modify the nature and extent of the parking areas for
the Premises and Project (including whether such areas shall be surface,
underground and/or other structures) as long as Tenant is provided the number
of parking privileges designated in Section 1 14 of the Summary In


 

















 


addition,
Landlord may, in its sole discretion, assign any unreserved and unassigned
parking privileges, and/or make all or a portion of such privileges reserved or
unreserved so long as Tenant Is provided the total number of parking privileges
in Section 1 14 of the Summary


 


(b)                                 Parking
Privileges. Loss of Privileges. Each of Tenant’s parking privileges set
forth in Section 1 14 of the Summary hereof shall not be subject to any
additional charge to Tenant. In addition to such parking privileges for use by
Tenant’s employees, Landlord shall permit access to the parking areas for
Tenant’s visitors, subject to availability of spaces


 


(c)                                  Parking
Rules The use of the parking areas shall be subject to any reasonable,
non-discriminatory rules and regulations adopted by Landlord and/or Landlord’s
parking operators from time to time, including any system for controlled
ingress and egress and charging visitors and invitees, with appropriate
provision for validation of such charges Tenant shall not use more parking
privileges than its allotment and shall not use any parking spaces specifically
assigned by Landlord to other tenants of the Project or for such other uses as
visitor parking Tenant’s parking privileges shall be used only for parking by
vehicles no larger than normally sized passenger automobiles or pick-up 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 herein, then Landlord shall have the right, without
notice, in addition to such other rights and remedies that it may have, to
remove or tow away the vehicle involved and charge the cost thereof to Tenant,
which cost shall be immediately payable by Tenant upon demand by Landlord


 


7         Payments and Notices. All Rent and
other sums payable by Tenant to Landlord hereunder shall be paid to Landlord at
the address designated in Section 1 1 of the Summary, or to such other persons
and/or at such other places as Landlord may hereafter designate in writing. Any
notice required or permitted to be given hereunder must be in writing and may
be given by personal delivery (including delivery by nationally recognized
overnight courier or express mailing service), facsimile transmission, or by
registered or certified mail postage prepaid, return receipt requested,
addressed to Tenant at the address(es) designated in Section 1 2 of the
Summary, or to Landlord at the address(es) designated in Section 1 1 of the
Summary Either party may, by written notice to the other, specify a different
address for notice purposes Any such notice shall be deemed duly served or
given when actually (i) delivered or refused, if personally delivered or sent
by registered or certified mail or (ii) recorded as transmitted, if by
facsimile transmission


 


8         Brokers. The parties recognize that
the broker(s) who negotiated this Lease are stated in Section 1 11 of the
Summary. Each party represents and warrants to the other, that, to its
knowledge, no other broker, agent or finder (a) negotiated or was Instrumental
in negotiating or consummating this Lease on its behalf, and (b) is or might he
entitled to a commission or compensation in connection with this Lease. Any
broker, agent or finder of Tenant whom Tenant has failed to disclose herein
shall be paid by Tenant. Tenant shall Indemnify, protect, defend (by counsel
reasonably approved in writing by Landlord) and hold Landlord harmless from and
against any and all claims, judgments, suits, causes of action, damages,
losses, liabilities and expenses (including attorneys’ fees and court costs)
resulting from any breach by Tenant of the foregoing representation, including,
without limitation, any claims that may be asserted against Landlord by any
broker, agent or finder undisclosed by Tenant herein Landlord shall Indemnify,
protect, defend (by counsel reasonably approved in writing by Tenant) and hold
Tenant harmless from and against any and all claims, judgments, suits, causes of
action, damages, losses, liabilities and expenses (including attorneys’ fees
and court costs) resulting from any breach by Landlord of the foregoing
representation, including, without limitation. any claims that may be asserted
against Tenant by any broker, agent or finder undisclosed by Landlord herein.
The foregoing indemnities shall survive the expiration or earlier termination
of this Lease


 

















 


9         Surrender: Holding Over


 


9 1          Surrender of Premises. 
Upon the expiration or sooner termination of this Lease, Tenant shall
surrender all keys for the Premises to Landlord, and Tenant shall deliver
exclusive possession of the Premises to Landlord broom clean and in first-class
condition and repair, reasonable wear and tear excepted (and casualty damage
excepted if this Lease is terminated as a result thereof pursuant to Section
16), with all of Tenants personal property (and those items, if any, of Tenant
improvements and Tenant Changes identified by Landlord pursuant to Section 12 2
below) removed therefrom and all damage caused by such removal repaired, as
required pursuant to Sections 12 2 and 12 3 below If, for any reason, Tenant
fails to surrender the Premises on the expiration or earlier termination of
this Lease, with such removal and repair obligations completed, then, in
addition to the provisions of Section 9 3 below and Landlord’s rights and
remedies under Section 12 4 and the other provisions of this Lease, Tenant
shall indemnify, protect, defend (by counsel reasonably approved in writing by
Landlord) and hold Landlord harmless from and against any and all claims,
judgments, suits, causes of action, damages, losses, liabilities and expenses
(including attorneys’ fees and court costs) resulting from such failure to
surrender, including, without limitation, any claim made by any succeeding
tenant based thereon The foregoing indemnity shall survive the expiration or
earlier termination of this Lease


 


9 2          Holding Over.  If
Tenant holds over after the expiration or earlier termination of the Lease
Term, then, without waiver of any right on the part of Landlord as a result of
Tenants failure to timely surrender possession of the Premises to Landlord,
Tenant shall become a tenant at sufferance only, upon the terms and conditions
set forth in this Lease so far as applicable (including Tenants obligation to
pay all costs, expenses and any other additional rent under this Lease), but at
a Monthly Rent equal to one hundred fifty percent (150%) of the Monthly Rent
applicable to the Premises immediately prior to the date of such expiration or
earlier termination. Acceptance by Landlord of rent after such expiration or
earlier termination shall not constitute a consent to a hold over hereunder or
result in an extension of this Lease. Tenant shall pay an entire month’s Monthly
Rent calculated in accordance with this Section 9 2 for any portion of a month
it holds over and remains in possession of the Premises pursuant to this
Section 9.2


 


9 3          No Effect on Landlord’s Rights. The foregoing provisions of
this Section 9 are in addition to, and do not affect, Landlord’s right of
re-entry or any other rights of Landlord hereunder or otherwise provided at law
or in equity


 


10       Taxes.


 


10 1        Real Property Taxes. 
Tenant agrees to pay the
Building’s Share of all general and special real property taxes, assessments
(including, without limitation, change in ownership taxes or assessments),
liens, bond obligations, license fees or taxes and any similar impositions
in-lieu of other impositions now or previously within the definition of real
property taxes or assessments and any and all assessments under any covenants,
conditions and restrictions affecting the Project (collectively “Real Property
Taxes”) which may be now or hereafter levied or assessed against the Project
applicable to the period from the Early Occupancy Date , until the expiration
or sooner termination of this Lease Notwithstanding the foregoing provisions,
if the Real Property Taxes are not levied and assessed against the entire
Project by means of a single tax bill (i e , if the Project is separated into
two (2) or more separate tax parcels for purposes of levying and assessing the
Real Property Taxes), then, at Landlord’s option, Tenant shall pay Tenant’s pro
rata share of all Real Property Taxes which may be levied or assessed by any
lawful authority against the land and improvements of the separate tax parcel
on which the Premises are located Tenant’s pro rata share under such
circumstances shall be apportioned according to the floor area of the Premises
as it relates to the total leasable floor area of all of the buildings
(including the Premises) situated in the separate tax parcel In which the
Premises is located Notwithstanding anything in this Section 10 1 to the
contrary, “Real Property Taxes” shall not include Landlord’s federal or state
income, franchise, Inheritance or estate taxes Upon Tenant’s request, Landlord
shall, at Tenant’s sole cost and expense, contest the amount of Real Property
Taxes for the Project, which contest shall be undertaken in a manner to be reasonably
determined by Landlord.


 


All Real
Property Taxes for the tax year in which the Early Occupancy Date occurs and
for the tax year In


 

















 


which this
Lease terminates shall be apportioned and adjusted so that Tenant shall not be
responsible for any Real Property Taxes for a period of time occurring prior to
the Early Occupancy Date or subsequent to the expiration of the Lease term.


 


The amount to
be paid pursuant to the provisions of this Section 10.1 shall be paid monthly
in advance as part of Tenant’s Monthly Operating Expense Charge as estimated by
Landlord based on the most recent tax bills and estimates of reappraised values
(if reappraisal is to occur), commencing with the month (or partial month on a
prorated basis If such be the case) that the Commencement Date occurs The
initial estimated monthly charge for the Building’s Share of Real Property
Taxes is included in the Monthly Operating Expense Charge as provided in
Section 4


 


Notwithstanding
anything in this Lease to the contrary, Tenant shall be solely responsible for,
and shall pay directly to Landlord (in addition to Tenant’s Monthly Operating
Expense Charge pertaining to Real Property Taxes), any increase in Real
Property Taxes on account of any Improvements made to the Premises by Tenant including,
but not limited to, the Tenant Improvements


 


If at any time
during the Term under the laws of the United States, or the state, county,
municipality, or any political subdivision thereof In which the Premises is
located, a tax or excise on rent or any other tax however described is levied
or assessed by any such political body against Landlord on account of rent
payable to Landlord hereunder or any tax based on or measured by expenditures
made by Tenant on behalf of landlord, such tax or excise shall be considered
“Real Property Taxes” for purposes of this Section 10.1, and shall be payable
in full by Tenant. Such taxes or excises shall be payable within thirty (30)
days after Tenant’s receipt of the tax bill therefor from Landlord


 


10 2        Personal Property Taxes. 
Tenant shall be liable for, and shall pay before delinquency, all taxes
and assessments (real and personal) levied against (a) any personal property or
trade fixtures placed by Tenant in or about the Premises (including any
increase in the assessed value of the Premises based upon the value of any such
personal property or trade fixtures); and (b) any Tenant Improvements or
alterations in the Premises (whether installed and/or paid for by Landlord or
Tenant). If any such taxes or assessments are levied against Landlord or
landlord’s property, Landlord may, after written notice to Tenant (and under
proper protest if requested by Tenant) pay such taxes and assessments, and
Tenant shad reimburse Landlord therefor within thirty (30) days after demand by
Landlord; provided, however, Tenant, at Its sole cost and expense, shall have
the right, with Landlord’s cooperation, to bring suit in any court of competent
jurisdiction to recover the amount of any such
taxes and assessments so paid under protest


 


11       Repairs


 


11 1        Tenant’s Repair Obligations.  Except for Landlord’s obligations under Section 11 2 and except
for latent defects in the Premises not caused by Tenant or Tenant’s
improvements to the Premises, Tenant shall at all times and at Tenant’s sole
cost and expense, keep, maintain, clean, repair, renovate, retrofit, replace
and preserve the Premises and all parts thereof, structural and non-structural,
including, without limitation, utility meters, plumbing, pipes and conduits,
all heating, ventilating and air conditioning systems located within the
Premises, all fixtures, furniture and equipment. Tenant’s signs, if any, locks,
closing devices, security devices, windows, window sashes, casements and
frames, floors and floor coverings, shelving, restrooms, ceilings, interior
walls, roof, skylights, interior and demising walls, doors, electrical and
lighting equipment, sprinkler systems, walkways, loading dock areas and doors,
rail spur areas, fences, signs, and any Tenant improvements, Tenant Changes or
other alterations, additions and other property and/or fixtures located within
the Premises in good condition and repair, reasonable wear and tear excepted
Tenant shall at all times during the Term make all structural and
non-structural changes, repairs and improvements to the Premises of every kind
and nature, whether ordinary or extraordinary, foreseen or unforeseen, which
may be required by any Laws or for the safety of the Premises Tenant agrees to
procure and maintain maintenance contracts for all heating, ventilating and air
conditioning systems with reputable contractors reasonably approved by Landlord
Tenant agrees, at Tenant’s sole cost and expense, to use contractors designated
or otherwise approved by Landlord for any repairs to, or that will adversely
affect, the Building’s systems and equipment Such maintenance and repairs shall
be performed with due diligence, lien-free and in a good and workmanlike
manner, by


 

















 


licensed contractor(s) which are selected by
Tenant and approved by Landlord, which approval Landlord shall not unreasonably
withhold or delay


 


11 2        Landlord’s Repair Rights and Obligations.  Except as provided in this Section 11 2,
Landlord has no obligation whatsoever to alter, remodel, improve, repair,
renovate, retrofit, replace, redecorate or paint all or any part of the
Premises Tenant waives the right to make repairs at Landlord’s expense under
any law, statute or ordinance now or  hereafter in
effect (including the provisions of California Civil Code Section 1942 and any
successive sections or statutes of a similar nature). If Tenant falls to
perform Tenant’s obligations under Section 11 1 hereof, or under any other
provision of this Lease, then Landlord shall have the option (but not the
obligation) to enter upon the Premises after ten (10) days’ prior written
notice to Tenant, or in the case of an emergency immediately without prior
notice, to perform such obligations on Tenant’s behalf necessary to return the
Premises to good order, condition and repair, whereupon the costs incurred by
Landlord shall become due and payable to Landlord, upon demand. together with a
fee of ten percent (10%) of the costs of such work for Landlord’s managing
agent In addition, Landlord shall, as part of Operating Expenses (but subject,
to the extent applicable, Section 4 4(xii) hereof) for the Project, repair and
maintain the Building shell, exterior walls, foundations and structural
portions of the roof; provided, however, to the extent such maintenance or
repairs are required as a result of any act, neglect, fault or omission of
Tenant or any of Tenant’s Parties or otherwise made necessary due to Tenant’s
use or occupancy of the Premises, Tenant shall pay to Landlord upon demand, as
additional rent, the costs of such maintenance and repairs, together with a fee
of ten percent (10%) of said costs


 


11 3        AS-IS Tenant acknowledges and agrees that, except to the
extent specifically set forth in this Lease and except for latent defects in
the Premises not caused by Tenant or Tenant’s improvements to the Premises,
Landlord has not made, does not make and specifically negates and disclaims any
representations, warranties, promises, covenants, agreements or guarantees of
any kind or character whatsoever concerning or with respect to (a) the value,
nature, quality or condition of the Premises, (b) the suitability of the
Premises for any and all activities and uses which Tenant may conduct thereon;
(c) tie compliance of the Premises with any laws, rules, ordinances or
regulations of any applicable governmental authority or body, including,
without limitation, environmental laws (collectively, “Laws”), (d) the
habitability, merchantability, marketability, profitability or fitness for a
particular purpose of the Premises, (e) the manner or quality of the construction
or materials incorporated into the Premises, (f) the manner, quality, state of
repair or lack of repair of the Premises; or (g) any other matter with respect
to the Premises Tenant further acknowledges and agrees that having been given
the opportunity to inspect the Premises, Tenant is retying solely on its own
Investigation of the Premises and not on any information provided or to be
provided by Landlord Tenant further acknowledges and agrees that any
information provided or to be provided by or on behalf of Landlord with respect
to the Premises, was obtained from a variety of sources and that Landlord has
not made any independent investigation or verification of such information and
makes no representations as to the accuracy or completeness of such information
Tenant further acknowledges and agrees that, except to the extent specifically
set forth In this Lease, the leasing of the Premises as provided for herein is
made on an “AS-IS” condition and basis with all faults Except as otherwise
expressly provided in this Lease, Landlord shall have no liability or
responsibility for any latent or patent defects in the Premises Tenant and
anyone claiming by, through or under Tenant hereby fully and irrevocably
releases Landlord from any and all claims that it may now have or hereafter
acquire against Landlord for any cost, loss, liability, damage, expense,
demand, action or cause of action arising from or related to any construction
defects, errors, omissions or other conditions, including, but not limited to,
environmental matters (but subject to Landlord’s indemnity set forth In Section
6 3 hereof), now or hereafter affecting the Premises. This release Includes
claims of which Tenant Is presently unaware or which Tenant does not presently
suspect to exist in its favor which, if known by Tenant, would materially
affect Tenant’s release of Landlord Tenant specifically waives the provision of
California Civil Code § 1542, which provides as follows: “A general release
does not extend to claims which the creditor does not know or suspect to exist
in his favor at the time of executing the release, which If known by him must
have materially affected his settlement with the debtor”


 

















 


12       Alterations.


 


12 1        Tenant
Changes; Conditions


 


(a)                                  Tenant
shall not make any alterations, additions, improvements or decorations to the
Premises (collectively, “Tenant Changes,” and individually, a “Tenant Change”)
unless Tenant first obtains Landlord’s prior written approval thereof, which
approval Landlord shall not unreasonably withhold or delay Notwithstanding the
foregoing, Landlord’s prior approval shall not be required for any Tenant
Change which satisfies all of the following conditions (hereinafter a
“Pre-Approved Change”): (i) the costs of such Tenant Change does not exceed Twenty-Five
Thousand Dollars ($25,000 00) individually, (ii) the costs of such Tenant
Change when aggregated with the costs of all other Tenant Changes made by
Tenant do not exceed One Hundred Thousand Dollars ($100,000 00) In any one (1)
year period, (iii) Tenant delivers to Landlord final plans, specifications and
working drawings for such Tenant Change at least ten (10) days prior to
commencement of the work thereof, (iv) Tenant and such Tenant Change otherwise
satisfy all other conditions set forth in this Section 12 1, and (v) the Tenant
Change does not affect the structural, mechanical, life-safety, the roof or the
exterior of the Premises


 


(b)                                 All
Tenant Changes shall be performed: (i) in accordance with the approved plans,
specifications and working drawings; (ii) lien-free and In a good and
workmanlike manner, (iii) In compliance with all laws, rules and regulations of
all governmental agendas and authorities including, without limitation, the
provisions of Title Ill of the ADA, and (iv) at such times, In such manner and
subject to such rules and regulations as Landlord may from time to time
reasonably designate


 


(c)                                  Throughout
the performance of the Tenant Changes, Tenant shall obtain, or cause its
contractors to obtain, workers compensation insurance and commercial general
liability insurance in compliance with the provisions of Section 20 of this
Lease


 


12 2        Removal of Tenant Changes and Tenant Improvements. All
Tenant Changes and the initial Tenant Improvements in the Premises (whether
installed or paid for by Landlord or Tenant), shall become the property of
Landlord and shall remain upon and be surrendered with the Premises at the end
of the Term of this Lease, provided, however, Landlord may, by written notice
delivered to Tenant on or before the expiration of the Lease Term (or upon any
sooner termination of this Lease) identify those items of the Initial Tenant
Improvements and Tenant Changes which Landlord shall require Tenant to remove
at the end of the Term of this Lease Landlord shall notify Tenant nine (9)
months before the expiration of the Lease Term of any Tenant Changes and Tenant
Improvements that Landlord shall require Tenant to remove at the end of the
Term of this Lease If Landlord requires Tenant to remove any such items as
described above, Tenant shall, at its sole cost, remove the identified items on
or before the expiration or sooner termination of this Lease and repair any
damage to the Premises caused by such removal (or, at Landlord’s option, shall
pay to Landlord all of Landlord’s costs of such removal and repair).
Notwithstanding anything above to the contrary, Tenant shall have the right, at
Tenant’s sole cost and expense, to remove any Tenant Improvements in the
Premises that constitute Tenant’s biomedical manufacturing use improvements (as
opposed to those Tenant Improvements that are general office type improvements)
(the “Special Improvements”), which Special Improvements are more particularly
described on Exhibit “C-3” attached hereto, provided, however that
Tenant shall remove such Special Improvements on or before the expiration or
sooner termination of this Lease and repair any damage to the Premises caused
by the removal of such Special Improvements (or, at Landlord’s option, shall
pay to Landlord all of Landlord’s costs of such removal and repair)


 


12 3        Removal of Personal Property.  All articles of personal property owned by Tenant or installed by
Tenant at its expense in the Premises (including business and trade fixtures,
furniture and movable partitions) shall be, and remain the property of Tenant,
and shall be removed by Tenant from the Premises, at Tenant’s sole cost and
expense, on or before the expiration or sooner termination of this Lease Tenant
shall repair any damage caused by such removal


 

















 


12 4        Tenant’s Failure to Remove. 
If Tenant falls to remove by the expiration or sooner termination of
this Lease all of its personal property, or any Items of Tenant Improvements or
Tenant Changes identified by Landlord for removal pursuant to Section 12 2
above, Landlord may, (without liability to Tenant for loss thereof), at
Tenant’s sole cost and in addition to Landlord’s other rights and remedies
under this Lease, at law or in equity (a) remove and store such items in
accordance with applicable law, and/or (b) upon ten (10) days’ prior notice to
Tenant sell all or any such items at private or public sale for such price as
Landlord may obtain as permitted under applicable law Landlord shall apply the
proceeds of any such sale to any amounts due to Landlord under this Lease from
Tenant (including Landlord’s attorneys’ fees  and other
costs incurred in the removal, storage and/or sale of such items), with any
remainder to be paid to Tenant


 


13       Liens.  Tenant shall not permit any mechanic’s, materialmen’s or other
liens to be filed against all or any part of the Premises, nor against Tenant’s
leasehold interest in the Premises, by reason of or in connection with any
repairs, alterations, improvements or other work contracted for or undertaken
by Tenant or any other act or omission of Tenant or Tenant’s agents, employees,
contractors, licensees or Invitees. Tenant shall, at Landlord’s request,
provide Landlord with enforceable, conditional and final lien releases (and
other reasonable evidence reasonably requested by Landlord to demonstrate
protection from liens) from all persons furnishing labor and/or materials with
respect to the Premises Landlord shall have the right at all reasonable times
to post on the Premises and record any notices of non-responsibility which it
deems necessary for protection from such liens If any such liens are filed,
Tenant shall, at its sole cost, immediately cause such lien to be released of
record or bonded so that it no longer affects title to the Premises If Tenant
falls to cause such lien to be so released or bonded within thirty (30) days
after filing thereof, Landlord may, without waiving its rights and remedies
based on such breach, and without releasing Tenant from any of its obligations,
cause such lien to be released by any means it shall deem proper, including
payment in satisfaction of the claim giving rise to such lien Tenant shall pay
to Landlord within thirty (30) days alter receipt of invoice from Landlord, any
sum paid by Landlord to remove such liens, together with interest at the Interest
Rate from the date of such payment by Landlord


 


14       Assignment and Subletting.


 


14 1        Restriction on Transfer. 
Tenant will not assign or encumber this Lease in whole or in part, nor
sublet all or any part of the Premises, without the prior mitten consent of
Landlord, which consent Landlord will not unreasonably withhold, except as
provided in this Section 14 The consent by Landlord to any assignment,
encumbrance or subletting shall not constitute a waiver of the necessity for
such consent to any subsequent assignment or subletting This prohibition
against assigning or subletting shall be construed to include a prohibition
against any assignment or subletting by operation of law If this Lease is
assigned by Tenant, or it the Premises or any part thereof are sublet or
occupied by any person or entity other than Tenant, Landlord may collect rent
from the assignee, subtenant or occupant, and apply the net amount collected to
the rent herein reserved, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver on the part of Landlord, or the acceptance
of the assignee, subtenant or occupant as Tenant, or a release of Tenant from
the further performance by Tenant of covenants on the pan of Tenant herein
contained unless expressly made in writing by Landlord irrespective of any
assignment or sublease, Tenant shall remain fully liable under this Lease and
shall not be released from performing any of the terms, covenants and
conditions of this Lease. Without limiting In any way Landlord’s right to
withhold its consent on any reasonable grounds, it is agreed that Landlord will
not be acting unreasonably in refusing to consent to an assignment or sublease
if, in Landlord’s opinion, (i) the net worth or financial capabilities of such
assignee is less than that of Tenant at the date
hereof, (ii) the proposed assignee or subtenant does not have the financial
capability to fulfill the obligations imposed by the assignment, (iii) the
proposed assignment or sublease involves a change of use of the Premises from
that specified herein, or (iv) the proposed assignee or subtenant is not, in
Landlord’s reasonable opinion, of reputable or good character Any proposed
assignee or subtenant which Landlord does not disapprove shall be deemed a
“Permitted Business.” Except with respect to a transfer of stock of Tenant if
Tenant is a publicly-held corporation and such stock is transferred publicly or
through a recognized security exchange or over-the-counter market, if Tenant is
a corporation, or is an unincorporated association or partnership, the
transfer, assignment or hypothecation of any stock or interest in such
corporation,


 

















 


association or partnership in the aggregate
in excess of forty-nine percent (49%) shall be deemed an assignment within the
meaning and provisions of this Section 14 1


 


14 2        Transfer Notice.  If
Tenant desires to effect an assignment, encumbrance or subletting (a
“Transfer”), then at least thirty (30) days prior to the date when Tenant
desires the Transfer to be effective (the “Transfer Date”), Tenant agrees to
give Landlord a notice (the “Transfer Notice”), stating the name, address and
business of the proposed assignee, sublessee or other transferee (sometimes
referred to hereinafter as “Transferee”), reasonable information (including
references) concerning the character, ownership, and financial condition of the
proposed Transferee, the Transfer Date, any ownership or commercial
relationship between Tenant and the proposed Transferee, and the consideration
and all other material terms and conditions of the proposed Transfer, all in
such detail as Landlord may reasonably require


 


14 3        Landlord’s Options. 
Within fifteen (15) days of Landlord’s receipt of any Transfer Notice,
and any additional information requested by Landlord concerning the proposed
Transferee’s financial responsibility, Landlord will notify Tenant of Its
election to do one of the following (i) consent to the proposed Transfer
subject to such reasonable conditions as Landlord may impose in providing such
consent; or (ii) refuse such consent, which refusal shall be on reasonable
grounds, or (iii) with respect to a Transfer (but not including a Transfer to
an Affiliate or to a Special Transferee) of more than fifty-one percent (51%)
of the Premises, terminate this Lease as to all of the Premises or, in
Landlord’s sole and absolute discretion, such portion of the Premises which is
proposed to be sublet or assigned and recapture all or such portion of the
Premises for reletting by Landlord


 


14 4        Additional Conditions. 
A condition to Landlord’s consent to any Transfer of this Lease will be
the delivery to Landlord of a true copy of the fully executed instrument of
assignment, sublease, transfer or hypothecation, in form and substance
reasonably satisfactory to Landlord Tenant agrees to pay to Landlord, as
additional rent, fifty percent (50%) of all sums and other consideration
payable to and for the benefit of Tenant by the assignee or sublessee in excess
of the rent payable under this Lease for the same period and portion of the
Premises In calculating excess rent or other consideration which may be payable
to Landlord under this Section, Tenant will be entitled to deduct commercially
reasonable third party brokerage commissions and attorneys’ fees and other
amounts reasonably and actually expended by Tenant in connection with such
assignment or subletting if acceptable written evidence of such expenditures is
provided to Landlord No Transfer will release Tenant of Tenant’s obligations
under this Lease or alter the primary liability of Tenant to pay the Rent and
to perform all other obligations to be performed by Tenant hereunder landlord
may require that any Transferee remit directly to Landlord on a monthly basis,
all monies due Tenant by said Transferee, and each sublease shall provide that
if Landlord gives said sublessee written notice that Tenant is in default under
this Lease, said sublessee will thereafter make all payments due under the
sublease directly to or as directed by Landlord, which payments will be
credited against any payments due under this Lease. Tenant hereby irrevocably
and unconditionally assigns to Landlord all rents and other sums payable under
any sublease of the Premises, provided, however, that Landlord hereby grants
Tenant a license to collect all such rents and other sums so long as Tenant is
not In default under this Lease Tenant shall, within ten (10) days after the
execution and delivery of any assignment or sublease, deliver a duplicate
original copy thereof to Landlord. Consent by Landlord to one Transfer will not
be deemed consent to any subsequent Transfer. In the event of default by any
Transferee of Tenant or any successor of Tenant in the performance of any of
the terms hereof, Landlord may proceed directly against Tenant without the
necessity of exhausting remedies against such Transferee or successor If Tenant
effects a Transfer or requests the consent of Landlord to any Transfer (whether
or not such Transfer is consummated), then, upon demand, and as a condition
precedent to Landlord’s consideration of the proposed assignment or sublease,
Tenant agrees to pay Landlord a non-refundable administrative fee of Five
Hundred Dollars ($500.00), plus Landlord’s reasonable attorneys’ fees and costs
and other costs incurred by Landlord in reviewing such proposed assignment or
sublease Notwithstanding any contrary provision cleft Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or delayed
its consent to a proposed Transfer or otherwise has breathed its obligations
under this Section 14, Tenants and such Transferee’s only remedy shall be to
seek a declaratory judgment and/or injunctive relief, and Tenant, on behalf of
itself and, to the extent permitted by law, such proposed Transferee waives,
unless Landlord’s consent was


 

















 


withheld in bad faith, all other remedies
against Landlord, including without limitation, the right to seek monetary
damages or to terminate this Lease


 


14 5        Permitted Transfers. 
Notwithstanding anything to the contrary contained in this Article 14,
Landlord consents to the Transfer of the Premises to an adequately capitalized
entity which is controlled by, controls, or is under common control with,
Tenant (an “Affiliate”), provided that Tenant notifies Landlord of any such
Transfer prior to the effective date thereof and promptly supplies Landlord
with any documents or information requested by Landlord regarding such Transfer
or such Affiliate (Including an assumption of Tenant’s obligations under this
Lease), and further provided that such Transfer is not a subterfuge by Tenant
to avoid its obligations under this Lease. “Control,” as used in this Section
14 5, shall mean the ownership, directly or indirectly, of greater than fifty
percent (50%) of the voting interest in an entity


 


15       Entry by Landlord. Landlord and its
employees and agents shall at all reasonable times following prior notice to
Tenant (which notice, except in the case of emergencies and except with  respect to ordinary services to be
provided by Landlord within the Premises, shall be no less than twenty-four
(24) hours prior notice), have the right to enter the Premises to inspect the
same, to exhibit the Premises to prospective lenders or purchasers (or during
the last twelve (12) months of the Term, to prospective tenants), to post
notices of non-responsibility, and/or to alter, improve or repair the Premises
as contemplated by Section 11 2 In the event Tenant fails to perform its
obligations under Section 11 1, all without being deemed guilty of or liable
for any breach of Landlord’s covenant of quiet enjoyment or any eviction of
Tenant, and without abatement of rent. In exercising such entry rights,
Landlord shall endeavor to minimize, as reasonably practicable, the
interference with Tenant’s business, and shall provide Tenant with reasonable
advance written notice of such entry (except In emergency situations) Landlord
shall have the means which Landlord may deem proper to open Tenant’s doors in
an emergency in order to obtain entry to the Premises. Any such entry (in accordance
with the terms hereof) to the Premises obtained by Landlord by any of said
means or otherwise shall not under any circumstances be construed or deemed to
be a forcible or unlawful entry into, or a detainer of, the Premises, or an
eviction of Tenant from the Premises or any portion thereof, or grounds for any
abatement or reduction of Rent and Landlord shall not have any liability to
Tenant for any damages or losses on account of any such entry by Landlord
except, subject to the provisions of Sections 21.1 and 23, to the extent of
Landlord’s gross negligence or willful misconduct Except for services (if any)
required to be provided by Landlord to the Premises under this Lease and except
in the case of emergencies, Landlord’s entry rights are conditioned upon a
representative of Tenant (but only to the extent a representative is available)
accompanying Landlord during any other entry into the Premises


 


16       Utilities and Services.  Except for Landlord’s Work (as
such term is defined in Exhibit “C”), Tenant shall be solely responsible
for obtaining and shall promptly pay all charges for heat, air conditioning,
water, gas, electricity or any other utility used, consumed or provided in,
furnished to or attributable to the Premises directly to the supplying utility
companies Tenant shall reimburse Landlord within thirty (30) days of billing
for fixture charges and/or water tariffs, if applicable, which are charged to
Landlord by utility companies Landlord will notify Tenant of this charge as
soon as it becomes known This charge will increase or decrease with current
charges being levied against Landlord or the Premises by the local utility
company, and will be due as additional rent In no event shall Rent abate or
shall Landlord be liable for any interruption or failure in the supply of any
such utility services to Tenant.  Tenant
acknowledges and agrees that Tenant shall be solely responsible for providing
security for the Premises and that Landlord shall not be liable for, and
Landlord is hereby released from any responsibility for, any damage either to
persons or property sustained by Tenant or any Tenant Parties on account of any
acts of third parties Tenant may, at its own expense, install its own security
system (“Tenant’s Security System”) in the Premises, provided, however, that
Tenant shall coordinate the installation and operation of Tenant’s Security
System with Landlord to assure that Tenant’s Security System is compatible with
the Building’s systems and equipment and to the extent that Tenant’s Security System
is not compatible with the Building’s systems and equipment. Tenant shall not
be entitled to install or operate it. 
Tenant shall  be solely
responsible, at Tenant’s sole cost and expense, for the monitoring, operation
and removal of Tenant’s Security System


 

















 


17       Indemnification and Exculpation


 


17 1        Tenants Assumption of Risk and Waiver.  Except to the extent such matter is not
covered by the insurance required to be maintained by Tenant under this Lease
and such matter is attributable to the gross negligence or willful misconduct
of Landlord or Landlord’s agent(s), Landlord shall not be liable to Tenant.
Tenant’s employees, agents or Invitees for (i) any damage to property of
Tenant, or of others, located in, on or about the Premises, (ii) the loss of or
damage to any property of Tenant or of others by theft or otherwise, (iii) any
injury or damage to persons or properly resulting from fire, explosion, falling
plaster, steam, gas, electricity, water, rain or leaks from any part of the
Premises or from the pipes, appliance of plumbing works or from the roof,
street or subsurface or from any other places or by dampness or by any other
cause of whatsoever nature, or (iv) any such damage caused by other persons in
the Premises, occupants of adjacent property, or the public, or caused by
operations in construction of any private, public or quasi-public work Landlord
shall in no event be liable for any consequential damages or loss of business
or profits and Tenant hereby waives any and all claims for any  such damages All property of Tenant kept or stored on the
Premises shall be so kept or stored at the sole risk of Tenant and Tenant shall
hold Landlord harmless from any claims arising out of damage to the same,
including subrogation claims by Tenant’s insurance carriers, unless such damage
shall be caused by the gross negligence or willful misconduct of Landlord or
Landlord’s agent(s) Landlord or its agents shall not be liable for interference
with the light or other intangible rights.


 


17 2        Indemnification. 
Tenant shall be liable for, and shall indemnify, defend, protect and
hold Landlord and Landlord’s partners, officers, directors, employees, agents,
successors and assigns (collectively, “Landlord indemnified Parties”) harmless
from and against, any and all claims, damages, judgments, suits, causes of
action, losses, liabilities and expenses, including attorneys’ fees and court
costs (collectively, “Indemnified Claims”), arising or resulting from (a) any
ad or omission of Tenant or any of Tenant’s agents, employees, contractors,
subtenants, assignees, licensees or Tenant’s invitees (collectively, “Tenant
Parties”), (b) the use of the Premises and conduct of Tenant’s business by
Tenant or any Tenant Parties, or any other activity, work or thing done, permitted
or suffered by Tenant or any Tenant Parties, in or about the Premises, and/or
(c) any default by Tenant of any obligations on Tenant’s part to be performed
under the terms of this Lease In case any action or proceeding is brought
against Landlord or any Landlord Indemnified Parties by reason of any such
Indemnified Claims, Tenant, upon notice from Landlord, shall defend the same at
Tenant’s expense by counsel approved in writing by Landlord, which approval
shall not be unreasonably withheld.


 


17 3        Landlord’s Indemnification of Tenant.  Notwithstanding anything to the contrary
contained In Section 17 2 above, subject to the limitation on Landlord’s
liability contained in Section 30 below and the mutual waivers contained in
Section 21 1 below, Landlord will be liable for, and agrees to indemnify,
protect, defend and hold harmless Tenant and Tenant’s agents, successors and
assigns (collectively, “Tenant Indemnified Parties”), from and against, any
Indemnified Claims (as defined in Section 17 2 above) (but not for injury to,
or interference with, Tenant’s or any Tenant Indemnified Parties’ business or
for consequential damages), to the extent any such Indemnified Claim arises or
results from (a) any negligent or willful act or omission of Landlord, (b) any
default by Landlord of any obligations on Landlord’s part to be performed under
the terms of this Lease; and (c) to the extent covered by the insurance
required to be maintained by Landlord under this Lease (or which would have
been covered if Landlord had carried such required insurance), any acts or
omissions of any third parties occurring in the Common Areas other than the
gross negligence or willful misconduct of Tenant or any Tenant’s Parties,
provided, however, that Landlord’s indemnity shall not apply or extend to any
such damage or injury which occurs within the Premises which is covered by any
insurance maintained by Tenant or any Tenant indemnified Parties (or which
would have been covered had Tenant obtained the Insurance required under this
Lease) In case any action or proceeding Is brought against Tenant or any Tenant
indemnified Parties by reason of any such injury or damage indemnified by
Landlord as set forth hereinabove, Landlord, upon notice from Tenant, agrees to
defend the same at Landlord’s expense by counsel approved in writing by Tenant,
which approval Tenant will not unreasonably withhold.


 


17 4        Survival; No Release of Insurers. Tenant’s indemnification
obligation under Section 17 2, shall survive the expiration or earlier
termination of this Lease Tenant’s covenants, agreements and


 

















 


indemnification in Sections 17.1 and 17.2
above, are not intended to and shall not relieve any insurance carrier of Its
obligations under policies required to be carried by Tenant, pursuant to the
provisions of this Lease


 


18       Damage or Destruction.


 


18 1        Landlord’s Rights and Obligations.  In the event the Premises are damaged by fire or other casualty
to an extent not exceeding forty percent (40%) of the full replacement cost
thereof, and Landlord’s contractor estimates in a writing delivered to the
parties that the damage thereto is such that the Premises may be repaired,
reconstructed or restored to substantially its condition immediately prior to
such damage within two hundred ten (210) days from the date of such casualty,
an Landlord will receive insurance proceeds sufficient to cover the costs of
such repairs, reconstruction and restoration (including proceeds from Tenant
and/or Tenant’s Insurance which Tenant is required to deliver to Landlord
pursuant to Section 18 2 below), then Landlord shall commence and proceed
diligently with the work of repair, reconstruction and restoration and this
Lease shall continue in full force and effect If, however, the Premises are
damaged to an extent exceeding forty percent (40%) of the full replacement cost
thereof, or Landlord’s contractor estimates that such work of repair,
reconstruction and restoration will require longer than two hundred ten (210)
days to complete, or Landlord will not receive insurance proceeds (and/or
proceeds from Tenant, as applicable) sufficient to cover the costs of such
repairs, reconstruction and restoration, then Landlord may elect to either


 


(a)                                  repair,
reconstruct and restore the portion of the Premises damaged by such casualty
(including the Tenant Improvements and Tenant Changes to the extent of
insurance proceeds received from Tenant) to substantially the same condition as
existed before the damage or destruction, except for modifications required by
building codes and other laws and except for any reasonable modifications to
the common areas, in which case this Lease shall continue In full force and
effect, or


 


(b)                                 terminate
this Lease effective as of the date which is thirty (30) days after Tenant’s
receipt of Landlord’s election to so terminate.


 


Under any of
the conditions of this Section 18 1, Landlord shall give written notice
(“Election Notice”) to Tenant of its intention to repair or terminate within
the later of sixty (80) days Martha occurrence of such casualty, or fifteen
(I5) days after Landlord’s receipt of the estimate from Landlord’s contractor
Notwithstanding anything above to the contrary, in the event of a damage or
destruction of the Premises where Landlord has made the election In Section 18
1(a) above, Tenant shall have the right to elect to perform the reconstruction
and restoration of the Tenant Improvements, which reconstruction and
restoration shall be performed In a diligent manner and In accordance with the
Work Letter Agreement attached hereto and otherwise In accordance with Section
12 hereof


 


18 2        Tenant’s Costs and Insurance Proceeds.  In the event of any damage or destruction of
all or any part of the Premises, Tenant shall immediately: (a) notify Landlord
thereof; and (b) deliver to Landlord all insurance proceeds received by Tenant
with respect to the Tenant Improvements and Tenant Changes in the Premises
(excluding proceeds for Tenants furniture and other personal property), whether
or not this Lease is terminated as permitted in this Section 18, and Tenant
hereby assigns to Landlord all rights to receive such insurance proceeds. In
the event Tenant has elected to reconstruct and restore the Tenant Improvements
pursuant to Section 18 1 above, than Landlord shall disburse such insurance
proceeds to Tenant on a progress payment basis during Tenant’s reconstruction
and restoration of the Tenant Improvements. If, for any reason (including
Tenant’s failure to obtain Insurance for the full replacement cost of any
Tenant Changes which Tenant is required to insure pursuant to Sections 12.1
and/or 20 1(a) hereof). Tenant fails to receive insurance proceeds covering the
full replacement cost of such Tenant Improvements and Tenant Changes which are
damaged, Tenant shall be deemed to have self-Insured the replacement cost of
such Tenant Improvements and Tenant Changes, and upon any damage or destruction
thereto, Tenant shall immediately pay to Landlord the full replacement cost of
such Items, less any insurance proceeds actually received by Landlord from
Landlord’s or Tenant’s insurance with respect to such items.


 

















 


18 3        Abatement of Rent. 
In the event that as a result of any such damage, repair, reconstruction
and/or restoration of the Premises, Tenant is prevented from using, and does
not use, the Premises or any portion thereof, than the rent shell be abated or
reduced, as the case may be, during the period that Tenant continues to be so
prevented from using and does not use the Premises or portion thereof, in the
proportion that the rentable square feet  of the portion
of the Premises that Tenant is prevented from using, and does not use, bears to
the total rentable square feet of the Premises. Notwithstanding the foregoing
to the contrary, if the damage is due to the negligence or willful misconduct
of Tenant or any Tenant Parties, there shall be no abatement of rent. Except
for abatement of rent as provided hereinabove, Tenant shall not be entitled to
any compensation or damages for loss of, or Interference with, Tenant’s
business or use or access of all or any part of the Premises resulting from any
such damage, repair, reconstruction or restoration.


 


18 4        Inability to Complete. Notwithstanding anything to the
contrary contained in this Section 18, If Landlord is obligated or elects to
repair, reconstruct and/or restore the damaged portion of the Premises pursuant
to Section 18.1 above, but is delayed from completing such repair,
reconstruction and/or restoration beyond the date which is two hundred ten
(210) days after the date of the damage or destruction or the date specified in
Landlord’s Election Notice, whichever is later, then any party who has not
caused such delay may elect to terminate this Lease upon thirty (30) days’
prior written notice sent to the other, provided, however, if Tenant terminates
this Lease, Landlord may rescind such termination by completing such work
within twenty (20) days following Landlord’s receipt of Tenants written notice
to terminate. In no event will Tenant have the right to terminate this Lease
pursuant to this Section 18 4 to the extent Tenant has elected to perform the
reconstruction and restoration of the Tenant Improvements pursuant to Section
18 1 above


 


18 5        Damage to the Project. 
If there is a total destruction of the Project or a partial destruction
of the Project, the cost of restoration of which would exceed one-third (1/3)
of the then replacement value of the Project, by any cause whatsoever, whether
or not insured against and whether or not the Premises are partially or totally
destroyed, Landlord may within a period of one hundred eighty (180) days after
the occurrence of such destruction, notify Tenant in writing that it elects not
to so reconstruct or restore the Project, in which event this Lease shall cease
and terminate as of the date of such destruction


 


18 6        Damage Near End of Term.  In
addition to its termination rights in Sections 18.1 and 18.4 above, Landlord
shall have the right to terminate this Lease if any damage to the Premises
occurs during the last twelve (12) months of the Term of this Lease and
Landlord’s contractor estimates in a writing delivered to the parties that the
repair, reconstruction or restoration of such damage cannot be completed within
the earlier of (a) the scheduled expiration date of the Lease Term, or (b)
sixty (60) days after the date of such casualty


 


18 7        Waiver of Termination Right.  This Lease sets forth the terms and conditions upon which this
Lease may terminate In the event of any damage or destruction Accordingly, the
parties hereby waive the provisions of California Civil Code Section 1932,
Subsection 2, and Section 1933, Subsection 4 (and any successor statutes
thereof permitting the parties to terminate this Lease as a result of any
damage or destruction)


 


19       Eminent Domain


 


19 1        Total or Partial Taking. In case all of the Premises, or
such part thereof as shall materially and substantially interfere with Tenant’s
ability to conduct its business upon the Premises, shall be taken for any
public or quasi-public purpose by any lawful power or authority by exercise of
the right of appropriation, condemnation or eminent domain, or sold to prevent
such taking, Tenant shall have the right to terminate this Lease effective as
of the date possession is required to be surrendered to said authority Tenant
shall not assert any claim against Landlord or the taking authority for any
compensation because of such taking, and Landlord shall be entitled to receive
the entire amount of any award without deduction for any estate or interest of
Tenant, provided, however, in the event of such a
taking, Tenant shall be entitled to such portion of the award as shall be
attributable to the loss of the unamortized cost of the Improvements to the
Premises made and paid for by Tenant pursuant to Exhibit “C” (such


 

















 


amortization being the same as that used by
Tenant for federal income tax purposes), goodwill and for damage to, or the
cost of removal of, Tenant’s personal property In the event the amount of
property or the type of  estate taken
shall not materially and substantially interfere with the ability of Tenant to
conduct its business upon the Promises, Landlord shall be entitled to the
entire amount of the award without deduction for any estate or interest of
Tenant, Landlord shall restore the Premises to substantially their same
condition prior to such partial taking to the extent of any award proceeds
received by Landlord, and a fair and equitable abatement shall be made to
Tenant for the Annual Rent corresponding to the time during which, and to the
part of the Premises of which, Tenant shall be so deprived on account of such
taking and restoration if  the award
proceeds from the taking are insufficient to restore the Premises as required
by the preceding sentence and Landlord does not provide its own funds to so
restore the Premises, and if as a result thereof Tenant’s ability to use the
Premises as contemplated by this Lease is materially and substantially
Impaired, then Tenant may elect to terminate this Lease by giving Landlord
written notice thereof; provided. however, Landlord may rescind such termination
by giving Tenant written notice within ten (10) business days following
Landlord’s receipt of such termination notice from Tenant that Landlord will
provide the necessary funds to so restore the Premises Notwithstanding anything
above to the contrary, if  any part of
the Project shall be taken (whether or not such taking substantially Interferes
with Tenant’s use of the Premises), Landlord may terminate this Lease upon
thirty (30) days’ prior written notice to Tenant as long as Landlord also
terminates leases of all other tenants leasing comparably sized space within
the Project for comparable lease terms


 


19 2        Temporary Taking.  In
the event of taking of the Premises or any part thereof for temporary use, (i)
this Lease shall be and remain unaffected thereby and Rent shall not abate, and
(ii) Tenant shall be entitled to receive for itself such portion or portions of
any award made for such use with respect to the period of the taking which is
within the Lease Term For purposes of this Section 19 2, a temporary taking
shall be defined as a taking for a period of one (1) year or less


 


19 3        Waiver of Termination. Tenant and Landlord waive any right
to terminate this Lease under Section 1265 130 of the California Code of Civil
Procedure, or any similar statute or law now or hereafter in force.


 


20       Insurance.


 


20 1        Types of Tenant’s Insurance.  On or before the earlier of the Early Occupancy Date or the date
Tenant commences or causes to be commenced any work of any type in or on any
portion of the Premises, and continuing during the entire Term, Tenant shall
obtain and keep In full force and effect respecting the Premises, the following
insurance


 


(a)                                  All
Risk insurance. including fire and extended coverage, sprinkler leakage
(including earthquake sprinkler leakage), vandalism and malicious mischief upon
property of every description and kind located on the premises, including,
without limitation, furniture, equipment and any other personal property, any
Tenant Changes and the Tenant Improvements (but excluding any improvements
previously existing in the Premises) in an amount not less then the full
replacement cost thereof. In the event that there shall be a dispute as to the
amount which comprises full replacement cost, the decision of Landlord or the
mortgagees of Landlord shall be presumptive


 


(b)                                 Commercial
general liability insurance coverage, including personal injury, bodily injury
(including wrongful death), broad form property damage, operations hazard,
owner’s protective coverage, contractual liability, liquor liability (if Tenant
serves or stores alcohol on the Premises), products and completed operations
liability, and owned/non-owned auto liability, with a general aggregate of not
less than Two Million Dollars ($2,000,000 00) The general aggregate amount of
such commercial general liability insurance shall be increased every three (3)
years during the Term of this Lease to an amount reasonably required by
Landlord but only to the extent such increase is required of tenants comparable
to Tenant by landlords of buildings comparable to the Building


 

















 


(c)                                  Workers
compensation and employer’s liability insurance, in statutory amounts and
limits, covering all persons employed in connection with any work done in, on
or about the Premises for which claims for death or bodily injury could be
asserted against Landlord, Tenant or the Premises.


 


(d)                                 Any
other form or forms of Insurance as Tenant or Landlord or the mortgagees of
Landlord may reasonably require from time to time, in form, amounts and for
Insurance risks against which a prudent tenant would protect itself, but only
to the extent such risks and amounts are available in the Insurance market at
commercially reasonable costs and Is required of tenants comparable to Tenant
by landlords of buildings comparable to the Building.


 


20 2        Requirements.  Each
policy required to be obtained by Tenant hereunder shall. (a) be
issued by insurers authorized to do business in the state in which  the Premises is located and rated not less than financial
class VII, and not less than policyholder rating A- in the most recent version
of Best’s Key Rating Guide (provided that, in any event, the same insurance
company shall provide the coverages described in Section 20.1(a) above), (b) be
in form reasonably satisfactory from time to time to Landlord, (c) name Tenant
as named insured thereunder and shall name Landlord and, at Landlord’s request,
Landlord’s mortgagees and ground lessors of which Tenant has been informed in
writing, as additional insureds (and with respect to the insurance described in
Section 20 1(a) above, as loss-payees) thereunder, all as their respective
interests may appear, (d) shall not have a property insurance deductible amount
exceeding Twenty-Five Thousand Dollars ($25,000.00), (e) specifically provide
that the insurance afforded by such policy for the benefit of Landlord and
Landlord’s mortgagees and ground lessors shall be primary, and any insurance
carried by Landlord or Landlord’s mortgagees and ground lessors shall be excess
and non-contributing, (i) except for worker’s compensation insurance, contain
an endorsement that the insurer waives its right to subrogation as described in
Section 22 below, and (g) contain an undertaking by the Insurer to notify
Landlord (and the mortgagees and ground lessors of Landlord who are named as
additional Insureds) in writing not less than thirty (30) days prior to any
change, reduction in coverage, cancellation or other termination thereof Tenant
agrees to deliver to Landlord, as soon as practicable after the placing of the
required insurance, but in no event later than ten (10) days after the data
Tenant takes possession of all or any part of the Premises, certificates from
the insurance company evidencing the existence of such Insurance and Tenant’s
compliance with the foregoing provisions of this Section 20) Tenant shall cause
replacement certificates to be delivered to Landlord not less than thirty (30)
days prior to the expiration of any such policy or policies If any such Initial
or replacement certificates are not furnished within the times) specified
herein, Tenant shall be deemed to be In material default under this Lease
without the benefit of any additional notice or cure period provided in Section
22 1 below, and Landlord shall have the right, but not the obligation, to
procure such policies and certificates at Tenant’s expense


 


20 3        Effect on Insurance. Tenant shall not do or permit to be
done anything which (a) will violate or invalidate any insurance policy
maintained by Tenant or Landlord hereunder or (b) increase the costs of any
insurance policy maintained by Landlord pursuant to Section 20.4 below. If
Tenant’s occupancy or conduct of its business in or on the Premises results In
any increase in premiums for any insurance carried by Landlord with respect to
the Building and/or the Project, Tenant shall pay such increase as additional
rent within thirty (30) days after being billed therefor by Landlord. If any
insurance coverage canted by Landlord shall be cancelled or reduced (or
cancellation or reduction thereof shall be threatened) by reason of the use or
occupancy of the Premises by Tenant or by anyone permitted by Tenant to be upon
the Premises, and if Tenant fails to remedy such condition within five (5)
business days after notice thereof, Tenant shall be deemed to be in default
under this Lease, without the benefit of any additional notice or cure period
specified In Section 22 1 below, and Landlord shall have all remedies provided
in this Lease, at law or in equity, including, without limitation, the right
(but not the obligation) to enter upon the Premises and attempt to remedy such
condition at Tenant’s cost.


 


20 4        Landlord’s Insurance. 
During the Term, Landlord shall insure the Common Area Improvements and
the Premises (excluding, however, Tenant’s furniture, equipment, personal
property, the Tenant Improvements and Tenant Changes) against damage by fire
and standard extended coverage perils and


 

















 


with vandalism and malicious mischief
endorsements, rental loss coverage, at Landlord’s option, earthquake damage
coverage, and such additional coverage as Landlord deems appropriate Landlord
shall also carry commercial general liability Insurance, in such reasonable
amounts and with such reasonable deductibles as would be carried by a prudent
owner of a similar building in the state in which the Bulking is located. At
Landlord’s option, all such insurance may be carried under any blanket or
umbrella policies which Landlord has in force for other buildings and projects
In addition, at Landlord’s option, Landlord may elect to self-insure all or any
part of such required Insurance coverage. Landlord may, but shall not be
obligated to, carry any other form or foam of insurance as Landlord or the
mortgagees or ground lessors of Landlord may reasonably determine is advisable
The cost of Insurance obtained by Landlord pursuant to this Section 20 4
(Including self-insured amounts and deductibles) shall be included in Operating
Expenses


 


21       Waiver of Subrogation


 


21 1        Waiver.  Tenant and
Landlord hereby waive their rights against each other with respect to any
claims or damages or losses which are caused by or result from (a) damage
insured against under any insurance policy carried by Tenant or Landlord (as
the case may be) pursuant to the provisions of this Lease and enforceable at
the time of such damage or loss, or (b) damage which would have been covered
under any insurance required to be obtained and maintained by Tenant or
Landlord (as the case may be) under Section 20 of this Lease had such insurance
been obtained and maintained as required therein The foregoing waiver shall be
in addition to, and not a limitation of, any other waivers or releases
contained in this Lease


 


21 2        Waiver of Insurers.  Tenant shall cause each insurance policy required to be obtained
by it pursuant to Section 20 to provide that the insurer waives all rights of
recovery by way of subrogation against Landlord in connection with any claims,
losses and damages covered by such policy. If Tenant fails to maintain property
insurance required hereunder, such insurance shall be deemed to be self-Insured
with a deemed full waiver of subrogation as set forth in the immediately
preceding sentence


 


22       Tenant’s Default and Landlord’s
Remedies


 


22 1        Tenants Default.  The
occurrence of any one or more of the following events shall constitute a
default under this Lease by Tenant


 


(a)                                  the
vacation or abandonment of the Premises by Tenant.  “Abandonment” is herein defined to include, but is not limited
to, any absence by Tenant from the Premises for eight (8) business days or
longer while in default in the payment of Rent “Vacation” shall mean vacating
the Premises without providing a reasonable level of security to minimize the
potential for vandalism, or where the coverage of the property Insurance under
Section 20.1(a) is jeopardized as a result thereof,


 


(b)                                 the
failure by Tenant to make any payment of Rent or any other payment required to
be made by Tenant hereunder, within ten (10) days of written notice from
Landlord that such payment was not received;


 


(c)                                  the
failure by Tenant to observe or perform any of the express or Implied covenants
or provisions of this Lease to be observed or performed by Tenant, other than
as specified in Sections 22 1(a) or (b) above, where such failure shall
continue for a period of thirty (30) days alter written notice thereof from
Landlord to Tenant, provided, however, that if the nature of Tenant’s default
is such that more than thirty (30) days are reasonably required for its cure,
then Tenant shall not be deemed to be In default if Tenant shall commence such
cure within said thirty (30) day period and thereafter diligently prosecute
such cure to completion, and


 


(d)                                 (i)
the making by Tenant of any general assignment for the benefit of creditors,
(ii) the


 

















 


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


 


(e)                                  Any
notice given under this Section 22 1 shall be in lieu of, and not In addition
to, any notice required under California Code of Civil Procedure, Section 1181


 


22 2        Landlord’s Remedies; Termination.  In the event of any such default by Tenant, in addition to any
other remedies available to Landlord under this Lease, at law or in equity,
Landlord shall have the immediate option to terminate this Lease and any rights
of Tenant hereunder. In the event that Landlord shall elect to so terminate
this Lease, then Landlord may recover from Tenant


 


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


 


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


 


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


 


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


 


As used in
Sections 22 2(a) and 22 2(b) above, the “worth at the time of award” Is
computed by allowing interest at the Interest Rate set forth in Section 1 12 of
the Summary As used in Section 22 2(c) above, the “worth at the time of award” is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%)


 


22 3        Landlord’s Remedies; Re-Entry Rights. In the event of any
such default by Tenant (with all applicable notice and cure periods having
expired), in addition to any other remedies available to Landlord under this
Lease, at law or In equity, Landlord shall also have the right as permitted by
applicable law, with or without terminating this Lease, to re-enter the
Premises and remove all persons and property from the Premises; such property
may be removed, stored and/or disposed of pursuant to Section 12.4 of this
Lease or any other procedures permitted by applicable law. No re-entry or
taking possession of the Premises by Landlord pursuant to this Section 22 3,
and no acceptance of surrender of the Premises or other action on Landlord’s
part, shall be construed as an election to terminate this Lease unless a
written notice of such intention be given to Tenant or unless the termination
thereof be decreed by a court of competent jurisdiction


 

















 


22 4        Landlord’s Remedies; Continuation of Lease.  In the event of any such default by Tenant,
in addition to any other remedies available to Landlord under this Lease, at law
or in equity, Landlord shall have the right to continue this Lease in full
force and effect, whether or not Tenant shall have abandoned the Premises. The
foregoing remedy shall also be available to Landlord pursuant to California
Civil Code Section 1951 4 and any successor statute thereof in the event Tenant
has abandoned the Premises. In the event Landlord elects to continue this Lease
in full force and effect pursuant to this Section 22.4, then Landlord shall be
entitled to enforce all of its rights and remedies under this Lease, including
the right to recover rent as it becomes due Landlord’s election not to
terminate this Lease pursuant to this Section 22 4 or pursuant to any other
provision of this Lease, at law or in equity, shall not preclude Landlord from
subsequently electing to terminate this Lease or pursuing any of its other
remedies


 


22 5        Landlord’s Right to Perform.  Except as specifically provided otherwise to this Lease, all
covenants and agreements by Tenant under this Lease shall be performed by
Tenant at Tenants sole cost and expense and without any abatement or offset of
rent If Tenant shall fail to pay any sum of money (other than Annual Rent) or
perform any other act on its part to be paid or performed hereunder and such
failure shall continue for ten (10) days with respect to monetary obligations
(or thirty (30) days with respect to non-monetary obligations) after Tenant’s
receipt of written notice thereof from Landlord, Landlord may, without waiving
or releasing Tenant from any of Tenant’s obligations, make such payment or
perform such other act on behalf of Tenant All sums so paid by Landlord and all
necessary incidental costs incurred by Landlord in performing such other acts
shall be payable by Tenant to Landlord within five (5) days after demand
therefor as additional rent


 


22 6        Interest.  If any
monthly installment of Annual Rent, or any other amount payable by Tenant
hereunder is not received by Landlord by the date which is ten (10) days from
the date when due, it shall bear interest at the interest Rate set forth in
Section 1 12 of the Summary from the date due until paid All interest, and any
late charges Imposed pursuant to Section 22 7 below, shall be considered
additional rent due from Tenant to Landlord under the terms of this Lease


 


22 7        Late Charges.  Tenant
acknowledges that, in addition to interest costs, the late payments by Tenant
to Landlord of any Annual Rent or other sums due under this Lease will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
such costs being extremely difficult and impractical to fix Such other costs
include, without limitation, processing, administrative and accounting charges
and late charges that may be imposed on Landlord by the terms of any mortgage,
deed of trust or related loan documents encumbering the Premises Accordingly,
if any monthly Installment of Annual Rent or any other amount payable by Tenant
hereunder is not received by Landlord by that date which is ten (10) days from
the due date thereof, Tenant shall pay to Landlord an additional sum of six
percent (6%) of the overdue amount as a late charge, but in no event more than
the maximum late charge allowed by law The parties agree that such late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of any late payment as hereinabove referred to by Tenant, and the
payment or late charges and interest are distinct and separate in that the
payment of interest is to compensate Landlord for the use of Landlord’s money
by Tenant, while the payment of late charges is to compensate Landlord for
Landlord’s processing, administrative and other costs incurred by Landlord as a
result of Tenant’s delinquent payments Acceptance of a late charge or interest
shall not constitute a waiver of Tenant’s default with respect to the overdue
amount or prevent Landlord from exercising any of the other rights and remedies
available to Landlord under this Lease or at law or in equity now or hereafter
in effect


 


22 8        [Intentionally
Deleted].


 


22 9        Rights and Remedies Cumulative.  All rights, options and remedies of landlord contained in this
Section 22 and elsewhere in this Lease shall be construed and held to be
cumulative, and no one of them shall be exclusive of the other, and Landlord shall
have the right to pursue any one or all of such remedies or any other remedy or
relief which may be provided by law or in equity, whether or not stated in this
Lease Nothing in this Section 22 shall be deemed to limit or otherwise affect
Tenant’s indemnification of Landlord pursuant to any provision of this Lease


 

















 


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


 


24       Subordination.  Without the necessity of any additional
document being executed by Tenant for the purpose of effecting a subordination,
this Lease shall be subject and subordinate at all times to (a) all ground
leases or underlying leases which may now exist or hereafter be executed
affecting the Premises and/or the land upon which the Premises and Project are
situated, or both and (b) any mortgage or deed of trust which may now exist or
be placed upon the Building, the Project and/or the land upon which the
Premises or the Project are situated and (c) any ground lease or underlying
leases, or Landlord’s interest or estate in any of said items, which is
specified as security Notwithstanding the foregoing, Landlord shall have the
right to subordinate or cause to be subordinated any such ground leases or
underlying leases or any such liens to this Lease. In the event that any ground
lease or underlying lease terminates for any reason, or any mortgage or deed of
trust is foreclosed or a conveyance in lieu of foreclosure is made for any
reason, Tenant shall, notwithstanding any subordination, attorn and become the
Tenant of the successor in interest to Landlord and Tenant shall not be
disturbed in its possession under this Lease by such successor in interest so
long as Tenant is not In default under this Lease. Within ten (10) days after
request by Landlord, Tenant shall execute and deliver any additional documents
evidencing Tenant’s attornment or the subordination of this Lease with respect
to any such ground leases or underlying leases or any such mortgage or deed of
trust, in the form requested by Landlord or by any ground landlord, mortgagee,
or beneficiary under a deed of trust, subject to such nondisturbance
requirement Notwithstanding anything above to the contrary, any subordination
of this Lease to any such future mortgage, ground lease or deed of trust is
conditioned upon any such future mortgagee, lessor or beneficiary providing
Tenant with a commercially reasonable form of non-disturbance agreement Tenant
hereby waives its rights under any current or future law which gives or
purports to give Tenant any right to terminate or otherwise adversely affect
this Lease and the obligations of Tenant hereunder in the event of any such
foreclosure proceeding or sale. Should Tenant fail to sign and return any such
additional documents within the ten (10) day period referred to above, Tenant
shall be in default hereunder without the benefit of any additional notice or
cure periods specified in Section 22 1 above Landlord agrees to cause the
mortgagees existing as of the date hereof to provide Tenant with a commercially
reasonable non-disturbance agreement within a commercially reasonable period of
time after Tenant’s request therefor


 


25       Estoppel Certificate.


 


25 1        Tenant’s Obligations. 
Within ten (10) business days following Landlord’s written request,
Tenant shall execute and deliver to Landlord an estoppel certificate, in a form
substantially similar to the form of Exhibit “F” attached hereto,
certifying (a) the Commencement Dale of this Lease, (b) that this Lease is
unmodified and in full force and effect (or, if modified, that this Lease Is in
full force and effect as modified, and stating the data and nature of such
modifications), (c) the date to which the Rent and other sums payable under
this Lease have been paid; (d) that there are not, to the best of Tenant’s
knowledge, any defaults under this Lease by either landlord or Tenant, except
as specified In such certificate, and (e) such other matters as are set forth
to Exhibit “F” or are reasonably requested by Landlord. Any such
estoppel certificate delivered pursuant to this Section 25 1 may be relied upon
by any mortgagee, beneficiary, purchaser or prospective purchaser of any
portion of the Premises, as well as their assignees


 

















 


25 2        Tenant’s Failure to Deliver.  Tenant’s failure to deliver such estoppel certificate within such
time shall constitute a default hereunder without the applicability of notice
and cure periods specified in Section 22 1 above and shall be  conclusive upon Tenant that (a) this Lease
is in full force and effect without modification, except as may be represented
by Landlord, (b) there are no uncured defaults in Landlord’s or Tenant’s
performance (other than Tenant’s failure to deliver the estoppel certificate);
and (c) not more than one (1) month’s rental has been paid in advance


 


26       Intentionally Omitted.


 


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


 


27 1        Modifications.  If,
in connection with Landlord’s obtaining or entering into any financing or
ground lease for any portion of the Premises, the lender or ground lessor shall
request modifications to this Lease, Tenant shall, within ten (10) days after
request therefor, execute an amendment to this Lease including such modifications,
provided such modifications are reasonable, do not increase the obligations of  Tenant hereunder, or adversely affect the leasehold estate
created hereby or Tenant’s rights hereunder


 


27 2        Cure Rights.   In the
event of any default on the part of Landlord, Tenant will give notice by
registered or certified mail to any beneficiary of a deed of trust or mortgagee
covering the Premises or ground lessor of Landlord whose address shall have
been furnished to Tenant, and shall offer such beneficiary, mortgagee or ground
lessor a reasonable opportunity to cure the default (including with rasped to
any such beneficiary or mortgagee, time to obtain possession of the Premises,
subject to this Lease and Tenant’s rights hereunder, by power of  sale or judicial foreclosure, if such should prove
necessary to effect a cure).


 


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


 


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


 


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


 

















 


31       Miscellaneous


 


31 1        Governing Law.  This
Lease shall be governed by, and construed pursuant to, the laws of the state in
which the Premises is located


 


31 2        Successors and Assigns. 
Subject to the provisions of Section 29 above, and except as otherwise
provided in this Lease, all of the covenants, conditions and provisions of this
Lease shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective heirs, personal representatives and permitted
successors and assigns, provided, however, no rights shall inure to the benefit
of any Transferee of Tenant unless the Transfer to such Transferee is made In compliance
with the provisions of Section 14, and no options or other rights which are
expressly made personal to the original Tenant or an Affiliate of Tenant or in
any rider attached hereto shall be assignable to or exercisable by anyone other
than the original Tenant or an Affiliate of Tenant


 


31 3        No Merger. The voluntary or other surrender of this Lease by
Tenant or a mutual termination thereof shall not work as a merger and shall, at
the option of Landlord, either (a) terminate all or any existing subleases, or
(b) operate as an assignment to Landlord of Tenant’s Interest under any or all
such subleases


 


31 4        Professional Fees. 
If either Landlord or Tenant should bring suit against the other with
respect to this Lease, including for unlawful detainer or any other relief
against the other hereunder, then all costs and expenses incurred by the
prevailing party therein (including, without limitation, its actual
appraisers’, accountants’, attorneys’ and other professional fees, expenses and
court costs), shall be paid by the other party


 


31 5        Waiver.  The waiver
by either party of any breach by the other party of any term, covenant or
condition herein contained shall not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant and condition herein contained,
nor shall any custom or practice which may become established between the
parties in the administration of the terms hereof be deemed a waiver of, or in
any way affect, the right of any party to insist upon the performance by the
other in strict accordance with said terms. No waiver of any default of either
party hereunder shall be Implied from any acceptance by Landlord or delivery by
Tenant (as the case may be) of any rent or other payments due hereunder or any
omission by the non-defaulting party to take any action on account of such
default if such default persists or is repeated, and no express waiver shall
affect defaults other than as specified in said waiver The subsequent
acceptance of real hereunder by Landlord shall not be deemed to be a waiver of
any preceding breath by Tenant of any term, covenant or condition of this Lease
other than the failure of Tenant to pay the particular rent so accepted,
regardless of Landlord’s knowledge of such preceding breech at the time of
acceptance of such rent


 


31 6        Terms and Headings; Interpretation.  The words “Landlord” and “Tenant” as used
herein shall include the plural as well as the singular. Words used in any
gender include other genders. The Section headings of this Lease are not a part
of this Lease and shall have no effect upon the construction or Interpretation
of any part hereof Any deletion of language from this Lease prior to its
execution by Landlord and Tenant shall not be construed to raise any
presumption. canon of constriction or implication, including, without
limitation, any implication that the parties intended thereby to state the
converse of the deleted language.


 


31 7        Time.   Time is of
the essence with respect to performance of every provision of this Lease In
which time or performance is a factor All references in this Lease to “days”
shall mean calendar days unless specifically modified herein to be “business”
days.


 


31 8        Prior Agreements; Amendments.  This Lease, including the Summary and all Exhibits and Riders
attached hereto contains all of the covenants, provisions, agreements,
conditions and understandings between Landlord and Tenant concerning the
Premises and any other matter covered or mentioned in this tease, and no prior
agreement or understanding, oral or written, express or implied, pertaining to
the Premises or any such other matter shall be effective for any purpose No
provision of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors In
interest. The parties acknowledge that all prior agreements,


 

















 


representations and negotiations are deemed
superseded by the execution of this Lease to the extent they are not expressly
Incorporated herein.


 


31 9        Separability.  The
invalidity or unenforceability of any provision of this Lease (except for
Tenant’s obligation to pay Rent) shall in no way affect, impair or invalidate
any other provision hereof, and such other provisions shall remain valid and in
full forth and effect to the fullest extent permitted by law.


 


31 10      Recording.  Neither
Landlord nor Tenant shall record this Lease. In addition, neither party shall
record a short form memorandum of this Lease without
the prior written consent (and signature on the memorandum) of the other, and provided that prior to recordation Tenant
executes and delivers to Landlord, in recordable form, a properly acknowledged
quitclaim deed or other instrument extinguishing all of the Tenant’s rights and
interest in and to the Premises, and designating Landlord as the transferee,
which deed or other instrument shall be held by Landlord and may be recorded by
Landlord once this Lease terminates or expires (but not prior thereto). If such
short form memorandum is recorded In accordance with the foregoing, the party
requesting the recording shall pay for all costs of or related to such
recording, including, but not limited to, recording charges and documentary
transfer taxes


 


31 11      Exhibits and Riders. 
All Exhibits attached to this Lease are hereby incorporated in this
Lease for all purposes as though set forth at length herein.


 


31 12      Auctions.  Tenant
shall have no right to conduct any auction in, on or about the Premises


 


31 13      Accord and Satisfaction.   No
payment by Tenant or receipt by Landlord of a lesser amount than the rent payment
herein stipulated shall be deemed to be other than on account of the rent, nor
shall any endorsement or statement on any check or any letter accompanying any
check or payment as rent be deemed an accord and satisfaction, end Landlord may
accept such check or payment without prejudice to Landlord’s right to recover
the balance of such rent or pursue any other remedy provided In this Lease.
Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this
Lease or imposed by any statute or at common law.


 


31 14      Financial Statements. 
Upon ten (10) days prior written request from Landlord (which Landlord
may make at any time during the Term but no more often than once In any
calendar year), Tenant shall deliver to Landlord a current 10-Q quarterly
report and/or 10-K annual report (“Statements” of Tenant and any guarantor of
this Lease Such Statements shall be prepared in accordance with generally
acceptable accounting principles and certified as true in all material respects
by Tenant (if Tenant is an Individual) or by an authorized officer or general
partner of Tenant (if Tenant is a corporation or partnership, respectively)


 


31 15      No Partnership.  
Landlord does not, In any way or for any purpose, become a partner of
Tenant in the conduct of its business, or otherwise, or joint venturer or a
member of a joint enterprise with Tenant by reason of this Lease


 


31 16      Force Majeure. In the event that either party hereto shall
be delayed or hindered in or prevented from the performance of any act required
hereunder by reason of strikes, lock-outs, labor troubles, inability to procure
materials, failure of power, governmental moratorium or other governmental
action or inaction (including failure, refusal or delay in Issuing permits,
approvals and/or authorizations), Injunction or court order, riots,
insurrection, war, fire, earthquake, flood or other natural disaster or other
reason of a like nature not the fault of the party delaying in performing work
or doing acts required under the terms of this Lease (but excluding delays due
to financial Inability) (herein collectively, “Force Majeure Delays”, then
performance of such act shall be excused for the period of the delay and the
period for the performance of any such act shall be extended for a period
equivalent to the period of such delay The provisions of this Section 31 18
shall not apply to nor operate to excuse Tenant from the payment of Rent
strictly in accordance with the terms of this Lease


 

















 


31 17      Counterparts. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement


 


31 18      Nondisclosure of Lease Terms. Tenant acknowledges and agrees
that the terms of this Lease are confidential and constitute proprietary
information of Landlord Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord’s
relationship with other tenants Accordingly, Tenant agrees that it, and its
partners, officers, directors, employees, agents and attorneys, shall not
intentionally and voluntarily disclose the terms and conditions of this Lease
to any newspaper or other publication or any other tenant or apparent
prospective tenant of the Building or other portion of the Premises, or real
estate agent, either directly or indirectly, without the prior written consent
of Landlord, provided, however, that Tenant may disclose the terms to
prospective subtenants or assignees under this Lease


 


31 19      Non-Discrimination. 
Tenant acknowledges and agrees that there shall be no discrimination
against, or segregation of, any person, group of persons, or entity on the
basis of race, color, creed, religion, age, sex, marital status, national
origin, or ancestry In the leasing, subleasing, transferring, assignment,
occupancy, tenure, use, or enjoyment of the Premises, or any portion thereof


 


32       Lease Execution.


 


32 1        Tenant’s Authority. 
If Tenant executes this Lease as a partnership or corporation, then
Tenant and the persons and/or entities executing this Lease on behalf of Tenant
represent and warrant that: (a) Tenant is a duly authorized and existing
partnership or corporation, as the case may be, and is qualified to do business
in the state In which the Premises are located; (b) such persons and/or
entities executing this Lease are duly authorized to execute and deliver this
Lease on Tenant’s behalf in accordance with the Tenants partnership agreement
(if Tenant is a partnership), or a duly adopted resolution of Tenant’s board of
directors and the Tenant’s by-laws (if Tenant is a corporation), and (c) this
Lease Is binding upon Tenant in accordance with its terms.


 


32 2        Joint and Several Liability.   If more than one person or entity executes this Lease as Tenant
(a) each of them is and shall be jointly and severally liable for the
covenants, conditions, provisions and agreements of this Lease to be kept, observed
and performed by Tenant; and (b) the act or signature of, or notice iron or to,
any one or more of them with reaped to this Lease shall be binding upon each
and all of the persons and entitles executing this Lease as Tenant with the
same force and effect as if each and all of them had so acted or signed, or
given or received such notice


 


32 3        No Option.  The
submission of this Lease for examination or execution by Tenant does not
constitute a reservation of or option for the Premises and this Lease shall not
become effective as a Lease until It has been executed by Landlord and
delivered to Tenant.


 


33           Cancellation Option.  Provided Tenant fully and completely
satisfies each of the conditions set forth in this Section 33, Tenant shall
have a one-time option (“Cancellation Option”) to terminate this Lease
effective between the period (“Cancellation Period”) commencing on January 1,
2003 to March 31, 2003, with the exact cancellation date (“Cancellation Date”)
to be the date within the Cancellation Period specified by Tenant in Tenant’s
Cancellation Notice (as defined below) but in no event earlier than nine (9)
months after the date of Tenant’s Cancellation Notice. In older to exercise the
Cancellation Option, Tenant must fully and completely satisfy each and every
one of the following conditions (a) Tenant must give Landlord written notice
(“Cancellation Notice”) of its intention to terminate this Lease, which
Cancellation Notice must be delivered to Landlord at least nine (9) months
prior to the expiration of the Cancellation Period, (b) at the time of the
Cancellation Notice, Tenant shall not be in material default under this Lease
after expiration of applicable notice and cure periods, (c) concurrently with
Tenant’s delivery of the Cancellation Notice to Landlord, Tenant shall pay to
Landlord a cancellation fee (“Cancellation Fee”) equal to the sum of (i) the
unamortized balance, as of the Cancellation Data, of the brokerage commissions
paid by Landlord in connection with this Lease, plus (ii) an amount equal to
four (4) months’ Monthly Rent calculated at the rate payable at the
time of the Cancellation Date and (d) Tenant shall have satisfied all of
Tenant’s surrender obligations under Section 9 1 of the Lease. On the


 

















 


Cancellation Data, the parties shall be
relieved of any further obligations under this Lease except for those
obligations in the Lease which survive the termination or expiration thereof
Amortization pursuant to this Section 33 shall be calculated on a ten (10) year
amortization schedule commencing as of the Commencement Date based upon equal
monthly payments of principal and interest, with interest imputed on the
outstanding principal balance at the rate of ten percent (10%) per annum


 


34       Arbitration.  In the eventof any dispute by Landlord of Tenant’s audit of the Building’s Share
of Operating Expenses as set forth in Section 4 9, such dispute shall be
resolved through binding arbitration pursuant to this Section 34. if demand for
arbitration is timely made as provided in Subsection (a) below, such arbitration
shall be conducted in accordance with Title 9 of the California Code of Civil
Procedure, Section 1280, et seq„ unless otherwise specified herein The
arbitrator shall be selected from the Commercial Arbitration panel of the
American Arbitration Association and shall have commercial real estate leasing
and, with respect to a dispute under Section 4 9 hereof, accounting expertise
Any such arbitration shall be held and conducted, within thirty (30) days after
the selection of an arbitrator, in San Diego County, California. The provisions
of the Commercial Arbitration Rules of the American Arbitration Association
shall apply and govern such arbitration, subject, however, to the following


 


(a)                                  Any
demand for arbitration shall be in writing and must be made and served on
Tenant within a reasonable time after the claim, dispute or other matter in
questions has arisen and in no event shall the demand for arbitration be made
after the date that institution of legal or equitable proceedings based on such
claim, dispute, or other matter would be barred by the applicable statute or
limitations


 


(b)                                 All
proceedings Involving the parties shall be reported by a certified shorthand
court reporter and written transcripts of the proceedings shall be prepared and
made available to the parties


 


(c)                                  A
party can require the arbitrator to make specific rulings on specific Items or
questions of fact The arbitrator shall be bound by the provisions of this
Lease, and shall not add to, subtract from or otherwise modify such provisions


 


(d)                                 Final
decision by the arbitrator must be provided to the parties within thirty (30)
days from the date on which the matter is submitted to the arbitrator


 


(e)                                  The
prevailing party (as defined below) shall be awarded reasonable attorneys’
fees, expert and nonexpert witness costs and expenses (including without
limitation the fees and costs of the court reporter described in Subsection (c)
above), and other costs and expenses incurred in connection with the
arbitration, unless the arbitrator for good cause determines otherwise


 


(f)                                    As
used herein, the term “prevailing party” shall mean the party, if any, that the
arbitrator determines is “clearly the prevailing party”


 


(g)                                 Costs
and fees of the arbitrator shall be borne by the nonprevailng party, unless the
arbitrator for good cause determines otherwise. If there is no prevailing
party, the parties shall bear their own fees and costs and split the fees and
costs of the arbitrator and court reporter.


 


(h)                                 The
award or decision of the arbitrator, which may include equitable relief, shall
be final and judgment may be entered on it in accordance with applicable law in
any court having jurisdiction over the matter. The provisions of this Section
34 are not intended to alter the applicable provisions of law which provide the
grounds on which a court may vacate an arbitration award


 


(i)                                     The
provisions of this Section 34 are not intended to require (1) Landlord to
arbitrate any


 

















 


matters
relating to any monetary default by Tenant under this Lease, which matters shall,
at the election of landlord, be governed by the applicable provisions of this
Lease and/or applicable law, or (2) either party to arbitrate any matters
arising under this Lease which are not described in the first sentence of this
Section 34


 


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


 


	
  “TENANT”

  	
  ALLIANCE PHARMACEUTICAL CORP.

  
	
   

  	
  a New York corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  “LANDLORD”

  	
  WHAMC REAL ESTATE LIMITED

  PARTNERSHIP,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By: WHAMC Gen-Par, Inc., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Brad E. Baker

  
	
   

  	
   

  	
  Its:  Senor Vice
  President-Southern California