**Exhibit 10.3**

 

SINGLE-TENANTINDUSTRIAL LEASE

(TRIPLENET)

 

LANDLORD:

 

AEW/LBAACQUISITION CO. 11, LLC,

aCalifornia limited liability company

 

TENANT:

CYMER,INC.,

aNevada corporation

 

STANDARDFORM SINGLE-TENANT INDUSTRIAL LEASE

 

TABLEOF CONTENTS

 
| **Section** | ** ** | **Title**                                                               | ** ** |
|-------------|------------|-------------------------------------------------------------------------|------------|
| ** **  | ** ** | ** **                                                              | ** ** |
|        |       | SUMMARY  OF BASIC LEASE INFORMATION AND DEFINITIONS                     |       |
| 1.          |       | Premises                                                                |       |
| 2.          |       | Term                                                                    |       |
| 3.          |       | Rent                                                                    |       |
| 4.          |       | Triple Net  Lease                                                       |       |
| 5.          |       | Security  Deposit                                                       |       |
| 6.          |       | Use                                                                     |       |
| 7.          |       | Payments  and Notices                                                   |       |
| 8.          |       | Brokers                                                                 |       |
| 9.          |       | Surrender; Holding  Over                                                |       |
| 10.         |       | Taxes                                                                   |       |
| 11.         |       | Repairs                                                                 |       |
| 12.         |       | Alterations                                                             |       |
| 13.         |       | Liens                                                                   |       |
| 14.         |       | Assignment and Subletting                                               |       |
| 15.         |       | Entry by Landlord                                                       |       |
| 16.         |       | Utilities and Services                                                  |       |
| 17.         |       | Indemnification and  Exculpation                                        |       |
| 18.         |       | Damage or Destruction                                                   |       |
| 19.         |       | Eminent Domain                                                          |       |
| 20.         |       | Tenant’s Insurance                                                 |       |
| 21.         |       | Waiver of Subrogation                                                   |       |
| 22.         |       | Tenant’s  Default and Landlord’s Remedies                     |       |
| 23.         |       | Landlord’s Default                                                 |       |
| 24.         |       | Subordination                                                           |       |
| 25.         |       | Estoppel Certificate                                                    |       |
| 26.         |       | Easements                                                               |       |
| 27.         |       | Modification  and Cure Rights of Landlord’s Mortgagees and Lessors |       |
| 28.         |       | Quiet Enjoyment                                                         |       |
| 29.         |       | Transfer of Landlord’s  Interest                                   |       |
| 30.         |       | Limitation on  Landlord’s Liability                                |       |
| 31.         |       | Miscellaneous                                                           |       |
| 32.         |       | Lease Execution                                                         |       |

 

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| EXHIBITS              |                                        |   |
|-----------------------|---------------------------------------------|--------|
|                  |                                        |   |
| EXHIBIT “A” | Site Plan                                   |   |
| EXHIBIT “B” | Legal Description of  Premises              |   |
| EXHIBIT “C” | Work Letter Agreement                       |   |
|                  | Schedule 1 Description  of Conceptual Plans |   |
| EXHIBIT “D” | Sample Form of Notice of  Lease Term Dates  |   |
| EXHIBIT “E” | Environmental  Questionnaire                |   |
| EXHIBIT “F” | Sample Form of Tenant  Estoppel Certificate |   |
| EXHIBIT “G” | Description of Parking  Lot Improvements    |   |
| EXHIBIT “H” | Prior Occupant’s  FF&E             |   |

 

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STANDARD FORMSINGLE-TENANT INDUSTRIAL LEASE

 

INDEXOF DEFINED TERMS

 
| Abandonment                                          |   |
|------------------------------------------------------|--------|
| Acquisition Costs                                    |   |
| Acquisition Date                                     |   |
| Actual Commencement  Date for Manufacturing Building |   |
| Actual Commencement  Date for Office Building        |   |
| Actual Commencement  Date for Parking Lot            |   |
| Basic Elements                                       |   |
| Buildings                                            |   |
| Business Day                                         |   |
| Cap                                                  |   |
| Conceptual Plans                                     |   |
| Depository                                           |   |
| Early Occupancy Date                                 |   |
| Effective Date                                       |   |
| Event of Default                                     |   |
| Extension Option                                     |   |
| Extension Options                                    |   |
| Fair Market Rental                                   |   |
| Force Majeure Delays                                 |   |
| Hazardous Materials                                  |   |
| Indemnified Claims                                   |   |
| Insurance Failure  Notice                            |   |
| Landlord                                             |   |
| Landlord Indemnified  Parties                        |   |
| Landlord’s Parties                              |   |
| Laws                                                 |   |
| Lease                                                |   |
| Losses                                               |   |
| Manufacturing Building                               |   |
| Manufacturing Building  Allowance                    |   |
| Office Building                                      |   |
| Office Building  Allowance                           |   |
| Option Period                                        |   |
| Parcel 1                                             |   |
| Parcel 2                                             |   |
| Parking Lot                                          |   |
| Parking Lot  Improvement Costs                       |   |
| Parking Lot  Improvements                            |   |
| PCBs                                                 |   |
| Permitted Assignees                                  |   |
| Permitted Business                                   |   |
| Pre-Approved Change                                  |   |
|                                                 |   |
| Premises                                             |   |
| Proceeds                                             |   |
| Property                                             |   |
| Real Property Taxes                                  |   |
| Respective  Commencement Dates                       |   |

 

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| Restoration                         |   |
|-------------------------------------|--------|
|                                |   |
| Restore                             |   |
| Substantial Completion              |   |
| Substantially Complete              |   |
| Summary                             |   |
| Tenant                              |   |
| Tenant Change                       |   |
| Tenant Changes                      |   |
| Tenant Improvement  Allowance Items |   |
| Tenant Improvements                 |   |
| Tenant Indemnified  Parties         |   |
| Tenant’s Parties               |   |
| Term                                |   |
| Transfer                            |   |
| Transfer Date                       |   |
| Transfer Notice                     |   |
| Transfer Fee                        |   |
| Vacation                            |   |
| Work Letter                         |   |

 

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SUMMARYOF BASIC LEASE INFORMATION AND DEFINITIONS

 

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

 

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

 

c/oLayton Belling Associates 10251 Vista

SorrentoParkway, Suite 100 San Diego,

California92121

Attn:Mr. David C. Thomas

Telephone:(619) 597-8795

Facsimile:(619) 597-0242

 

1.2           Tenant’sAddress:               Cymer, Inc.

 

16275Technology Drive

SanDiego, California 92127-1815

Attn:Chief Financial Officer

Telephone:(619) 487-2442

Facsimile:(619) 487-2441

 

1.3           Premises:The industrial development located at 16750 Via Del Campo Court and an adjacentundeveloped parcel, in the City of San Diego, County of San Diego State ofCalifornia, as shown on the site plan attached hereto as Exhibit “A”. The realproperty (“Property”) which is a part of the Premises is more particularlydescribed in Exhibit “B” attached hereto. The Premises includes all buildings, improvementsand facilities, now or subsequently located on the Property from time to time,including, without limitation, the one (1) building of approximately 36,959square feet of space (the” Office Building”), the one (1) building of approximately100,205 square feet of space (the “Manufacturing Building”) (the Office Buildingand the Manufacturing Building are hereinafter sometimes collectively referred toas the” Buildings” and the portion of the Property underlying the Buildings isdescribed, and defined herein, as “Parcel 1” on Exhibit “B” attached hereto),both of which Buildings are currently located on the Property, as depicted on thesite plan attached hereto as Exhibit “A”. The aggregate rentable square feet ofthe Buildings is 137,164 square feet. The Premises alsoincludes that certain lot (described, and defined herein, as “Parcel 2” onExhibit “B” attached hereto) which shall be improved by Landlord in accordance withthe terms of Section 1.2 of the Lease (the “Parking Lot”). 

 

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

 

1.5           Actual CommencementDate for Manufacturing Building: June 1, 1997

 

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

 

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

 

1.8           Rent forOffice Building and Manufacturing Building:

 
| **Year** | ** ** | **Monthly Rent  Office Building/Manufacturing Building** | ** ** | **Annual Rent  Office Building/Manufacturing Building** | ** ** |
|----------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| 1        |       | $35,111.05/$95,194.75                                    |       | $421,332.60/$1,142,337.00                               |       |
| 2        |       | $36,164.38/$98,050.59                                    |       | $433,972.58/$1,176,607.11                               |       |
| 3        |       | $37,249.31/$100,992.11                                   |       | $446,991.76/$1,211,905.32                               |       |
| 4        |       | $38,336.79/$104,021.87                                   |       | $460,401.51/$1,248,262.48                               |       |
| 5        |       | $39,517.80/$107,142.53                                   |       | $474,213.55/$1,285,710.36                               |       |
| 6        |       | $40,703.33/$110,356.81                                   |       | $488,439.96/$1,324,281.67                               |       |
| 7        |       | $41,924.43/$113,667.51                                   |       | $503,093.16/$1,364,010.12                               |       |
| 8        |       | $43,182.16/$117,077.54                                   |       | $518,185.95/$1,404,930.42                               |       |
| 9        |       | $44,477.63/$120,589.86                                   |       | $533,731.53/$1,447,078.33                               |       |
| 10       |       | $45,811.96/$124,207.56                                   |       | $549,743.48/$1,490,490.68                               |       |
| 11       |       | $47,186.32/$127,933.78                                   |       | $566,235.78/$1,535,205.41                               |       |
| 12       |       | $48,601.90/$131,771.80                                   |       | $583,222.86/$1,581,261.57                               |       |
| 13       |       | $50,059.96/$135,724.95                                   |       | $600,719.54/$1,628,699.41                               |       |

 

For purposes ofcalculating Rent for the Manufacturing Building, Year 1 shall be deemed to endon the day prior to the first anniversary of the Actual Commencement Date forOffice Building, and Year 2 and all subsequent years of

 

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

 

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

 

1.10         SecurityDeposit: $2,224,41 6.00, subject to return as set forthin Section 5 of the Lease.

 

1.11         PermittedUse: The Office Building may be used only for general office purposes and, tothe extent allowed by applicable law, research and development and laboratoryuse. The Manufacturing Building may be used only for research, development,design, fabrication, storage, light manufacturing and assembly and any otheruse allowed by applicable law. The Parking Lot may be used only for the parkingof vehicles by Tenant’s employees, agents, contractors, invitees and visitors.

 

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

 

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

 

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

 

SINGLE-TENANTINDUSTRIAL 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 madeas of the 19th day of December, 1996, by and between AEW/LBA ACQUISITION CO.11, LLC, a California limited liability company (“Landlord”), and CYMER, INC.,a Nevada corporation (“Tenant”).

 

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1.             Premises.

 

1.1           Lease ofPremises. Landlord hereby leases to Tenant and Tenant hereby leases fromLandlord the Premises upon and subject to the terms, covenants and conditionscontained in this Lease to be performed by each party.

 

1.2           Parking Lot.Promptly following the Acquisition Date (as defined in Section 2.5 below),Landlord shall begin construction of facilities for parking on a portion of theParking Lot (the “Parking Lot Improvements”) as described on Exhibit “G”attached hereto. Landlord shall cause the Parking Lot Improvements to beconstructed in accordance with all then-applicable laws. The “ActualCommencement Date for the Parking Lot” shall occur upon Substantial Completionof the Parking Lot Improvements. “Substantial Completion” or “SubstantiallyComplete” is herein defined as the date upon which all of the following havebeen satisfied: (i) construction of the Parking Lot Improvements is complete,as determined by Landlord’s construction contractor; (ii) Landlord has obtainedall permits or approvals from the City of San Diego as may be necessary for theuse of the Parking Lot Improvements as a parking lot and delivered evidence ofsame to Tenant; and (iii) Tenant has accepted the Parking Lot Improvements(Tenant may not accept the Parking Lot Improvements only if they are notconstructed substantially in accordance with the requirements of Exhibit “G”,or if they do not comply with then-applicable laws, and Tenant’s failure togive Landlord written notice of Tenant’s non-acceptance of the Parking LotImprovements within five (5) business days following the date of Tenant’sreceipt of written notice of the satisfaction of clause (i) above and clause(ii) above (accompanied by materials to be delivered pursuant to clause (ii)above) will be deemed Tenant’s acceptance of the Parking Lot Improvements). UponSubstantial Completion of the Parking Lot Improvements, Landlord shall assignto Tenant all warranties for the Parking Lot Improvements from Landlord’sconstruction contractor and all warranties available at law or in equity andLandlord shall have no further obligations or liabilities to Tenant concerningthe Parking Lot Improvements; however, Landlord shall cooperate with Tenant as necessaryto enforce such warranties. For purposes of calculating the Rent for theParking Lot, (a) “Acquisition Costs” is defined as all reasonable costs andexpenses incurred by Landlord in connection with or arising from the purchaseof the Parking Lot including, without limitation, the purchase price, escrowand title charges and fees, documentary and transfer taxes, recording costs,loan fees and costs, if any, attorneys fees and any and all other costs orexpenses of such purchase, and (b) “Parking Lot Improvement Costs” is definedas all reasonable hard and soft costs incurred by Landlord in connection withor arising from the design and construction of the Parking Lot Improvements,including, without limitation, design, drafting, architecture and engineeringfees, permitting and other governmental fees and charges, and costs, contractorand subcontractor charges and fees and any and all other costs or expenses ofconstruction. The Rent for the Parking Lot shall be paid in monthlyinstallments equal to one-twelfth (1/12th) of the Rent described in Section 1.9of the Summary of Basic Lease Information and Definitions.

 

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

 

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

 

2.             Term.

 

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

 

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

 

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Summary. TheEstimated Commencement Date for Parking Lot is merely an estimate of the ActualCommencement Date for Parking Lot and, consequently, Tenant agrees thatLandlord shall have no liability to Tenant for any loss or damage, nor shallTenant be entitled to terminate or cancel this Lease (except as set forth inSection 2.5 below) if the Term of this Lease respecting the Parking Lot doesnot commence by the Estimated Commencement Date for Parking Lot for any reasonwhatsoever, including any delays in Substantial Completion of the Parking LotImprovements.

 

If Landlord has notdelivered possession of the Parking Lot by June 1, 1997, due to Landlord’sfailure to Substantially Complete the Parking Lot Improvements (as such date issubject to extension by one day for each day Landlord is delayed inconstructing the Parking Lot Improvements due to Force Majeure Delays), thenTenant may, following delivery of written notice to Landlord, construct theParking Lot Improvements substantially in accordance with Exhibit “G”. In suchevent, the Actual Commencement Date for Parking Lot shall be the earlier tooccur of (i) the date of Substantial Completion of the Parking Lot Improvementsor (ii) ninety (90) days following the date Tenant gives Landlord writtennotice of its election to construct the Parking Lot Improvements. Within thirty(30) days following Substantial Completion of the Parking Lot Improvements anddelivery to Landlord of evidence of the lien-free completion thereof and thecosts incurred by Tenant in connection therewith, Landlord will reimburseTenant the actual cost of construction of the Parking Lot Improvements. IfLandlord fails to so reimburse Tenant within said thirty (30) day period, thenthe Rent for the Parking Lot will be calculated without the inclusion of theParking Lot Improvement Costs, notwithstanding Section 1.9 of the Summary tothe contrary.

 

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

 

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

 

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

 

Annual Rent during eachOption Period shall be equal to Fair Market Rental as of the commencement ofsuch Option Period. For purposes hereof, “Fair Market Rental” shall mean thebase rent payable to a willing landlord by a willing tenant having a similar financialresponsibility, credit rating and capitalization as Tenant then has, takinginto account all other relevant factors for like and comparable spaceincluding, without limitation, the uses permitted under this Lease, the lack ofobligation to construct Tenant Improvements, and the limited real estatecommission payable, improved with tenant improvements of like and comparablequality to those then existing in the Premises in the Rancho Bernardo businessdistrict of San Diego (or, if no comparable conditions exist in such area, thenin the 1-15 corridor area of San Diego). At least six (6) months prior to the OptionPeriod, Landlord shall notify Tenant of the Fair Market Rental as determined byLandlord. Any dispute between the parties hereto with respect to the amount sodetermined shall be resolved by appraisal, as set forth below; provided, however,that there shall be deemed not to be such a dispute unless Tenant notifies Landlordthereof in writing within one (1) month after Landlord so notifies Tenant ofthe Fair Market Rental and Tenant sets forth in such notice Tenant’sdetermination of Fair Market Rental. If, in the event of a dispute, theappraisers have not determined the Fair Market Rental by commencement of theOption Period, Tenant shall pay as Annual Rent the amount determined by Landlorduntil such time as the Fair Market Rental has been determined by arbitration, whereuponTenant shall pay any additional amount due to Landlord based upon such subsequentdetermination of Fair Market Rental. If the Annual Rent so paid by Tenant ishigher than that ultimately determined by the arbitration process, then Landlordshall reimburse such difference to Tenant.

 

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If Tenant timelynotifies Landlord in writing of Tenant’s dispute regarding Landlord’sdetermination of the Fair Market Rental, then Fair Market Rental shall bedetermined as follows. Landlord and Tenant shall each appoint one appraiser whoshall by profession be a real estate appraiser active over the five (5) year periodending on the date of such appointment in the appraisal of commercialproperties in San Diego County and who shall not have been employed or engagedby either party during said five (5) year period. Each such appraiser shall beappointed within fifteen (15) days after Tenant notifies Landlord of Tenant’sdispute of Landlord’s determination of Fair Market Rental. The two appraisersso appointed shall within fifteen (15) days of the date of the appointment of thelast appointed appraiser agree upon and appoint a third appraiser who shall bequalified under the same criteria set forth above. The three appraisers shall, withinthirty (30) days of the appointment of the third appraiser, reach a decision asto whether the parties shall use Landlord’s or Tenant’s submitted Fair Market Rentalfor the Premises, and shall notify Landlord and Tenant thereof. Such decisionshall be based upon the criteria and variables set forth above. The new AnnualRent shall thereafter be equal to the Fair Market Rental of the Premises so selectedby the appraisers. The decision of the majority of the three appraisers shallbe binding upon Landlord and Tenant. If either Landlord or Tenant fails to appointan appraiser within the time period specified hereinabove, the appraiserappointed by one of them shall reach a decision, notify Landlord and Tenantthereof, and such appraisers decision shall be bindingupon Landlord and Tenant. If the two appraisers fail to agree upon and appointa third appraiser, the two appraisers shall request the presiding judge of theSuperior Court of San Diego, acting in his private capacity, or the head of thelocal chapter of the leading appraisal group, to appoint the third appraiser. Eachparty shall pay for its own appraiser and one-half (1/2) of the cost of thethird appraiser.

 

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

 

2.5           ConditionsPrecedent.

 

(a)           Tenantacknowledges that Landlord is currently in escrow to acquire the Premises and Landlordintends to deliver possession of Parcel 1 to Tenant within one (1) business dayfollowing the date Landlord acquires the Premises (the “Acquisition Date”). Landlord’sand Tenant’s obligations under this Lease are conditioned upon Landlord’s acquisitionof the Premises on or before March 1, 1997. If Landlord has not acquired thePremises by March 1, 1997, then Landlord shall return the first month’s MonthlyRent and the Security Deposit to Tenant and this Lease shall terminate and neitherparty shall have any further obligations to the other hereunder.

 

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

 

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

 

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

 

3.             Rent.

 

3.1           Annual Rent.Tenant agrees to pay Landlord, as rent for the Premises, the Annual Rentdesignated in Sections 1.8 and 1.9 of the Summary. The Annual Rent shall bepaid by Tenant in twelve (12) equal monthly installments of Monthly Rent in theamounts designated in Sections 1.8 and 1.9 of the Summary in advance on thefirst day of each and every calendar month commencing upon the RespectiveCommencement Dates, except that the first full month’s Monthly Rent for theOffice Building and the Manufacturing Building shall, upon execution of thisLease by Tenant, be delivered into the escrow referred to in Section 2.5(a)above with instructions for disbursement to Landlord upon (i) Landlord’sacquisition of the Premises and (ii) the determination of the escrow holderthat it is in a position, without the requirement for Landlord to satisfy any additionalconditions, to deliver to Landlord (and deliver a copy to Tenant) an owner’spolicy of title insurance insuring Landlord as the fee owner of the Propertysubject to Tenant’s leasehold estate (as evidenced by a recorded memorandum oflease) in (a) first priority position or (b) second position, provided that thepolicy also evidences the recording of a nondisturbance, recognition andattornment agreement satisfying the requirements of Section 2.5(c) aboveexecuted by Tenant, Landlord and the holder of the lien shown on the titlereport as having priority over Tenant’s leasehold estate. Monthly Rent for any partialmonth shall be prorated in the proportion that the number of days this Lease isin effect during such month bears to the actual number of days in such month.

 

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

 

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in twelve (12) equalmonthly installments together with Monthly Rent.

 

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

 

4.             Triple-Net Lease. All Rentshall be absolutely net to Landlord so that this Lease shall yield net toLandlord, the Rent to be paid each month during the Term of this Lease.Accordingly, except as specifically set forth herein, all costs, expenses andobligations of every kind or nature whatsoever relating to the Premises(excepting the Acquisition Costs) which may arise or become due during the Termof this Lease with respect to the Premises shall be paid by Tenant. Nothingherein contained shall be deemed to require Tenant to pay or discharge anyliens or mortgages of any character whatsoever which may exist or hereafter beplaced upon the Premises by an affirmative act or omission of Landlord.

 

5.             Security Deposit. Concurrentlywith the execution of this Lease, Tenant shall deposit the Security Depositdesignated in Section 1.10 of the Summary into an investment escrow accountwith Morgan Stanley or Montgomery Securities or such other investment companyas is reasonably acceptable to both Landlord and Tenant. The escrowinstructions for such account shall be subject to Landlord’s prior approval andmust provide the following: (i) Landlord will not acquire any rights to themonies in such account until Landlord’s acquisition of the Premises anddelivery of possession of Parcel 1 as contemplated in Section 2.3 (unless suchdelivery does not occur by reason of the failure of Tenant’s obligationsdescribed in Section 2.5(b) above) and Landlord has satisfied the conditions todisbursement of the first full month’s Monthly Rent set forth in Section 3.1 ofthis Lease; (ii) that Landlord shall have a first priority security interest inthe monies in such account, (iii) Landlord will have access to the monies insuch account upon Landlord’s delivery of a certificate to the escrow holdercertifying that (A) there exists an Event of Default, and (B) Landlord isentitled to receive such payment(s) in the specified amount pursuant to theterms and conditions of the Lease; (iv) that Tenant shall have the right todirect the investment decisions for the account provided that all suchinvestments shall be limited to those customarily utilized in a conservativepension fund investment portfolio; (v) that escrow shall distribute allearnings from the account in excess of the then-required Security Depositdirectly to Tenant; and (vi) any funds remaining in the account after thirty(30) days following the expiration or earlier termination of this Lease forwhich Landlord has not requested disbursement pursuant to clause (iii) abovewithin said thirty (30) day period shall be returned to Tenant. If Landlordwithdraws more funds from the escrow account than necessary to cure an Event ofDefault, Landlord shall promptly re-deposit such excess funds into the escrowaccount. If Landlord fails to re-deposit such funds into the escrow accountwithin five (5) Business Days after Landlord realizes or reasonably should haverealized that Landlord had withdrawn excess funds, Landlord shall also beobligated to pay to Tenant interest on such amount at the Interest Rate fromthe expiration of such five (5) Business Day period until the date ofre-deposit. Landlord may not request a withdrawal from the escrow account afterthirty (30) days following the expiration or sooner termination of this Lease.Tenant hereby acknowledges and agrees that Landlord shall have no liability or responsibilityfor any loss of principal or interest not caused by Landlord

 

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from such account andthat Tenant shall, within ten (10) days from the date of any such loss, depositcash into the account sufficient to restore the Security Deposit to itsthen-required amount. The Security Deposit shall be held as security for the fulland faithful performance by Tenant of all of the terms, covenants andconditions of this Lease to be performed by Tenant during the Term. TheSecurity Deposit is not, and may not be construed by Tenant to constitute, rentfor the last month or any portion thereof. If Tenant defaults with respect toany of its obligations under this Lease, Landlord may (but shall not berequired to) use, apply or retain all or any part of the Security Deposit forthe payment of any rent or any other sum in default, or for the payment of anyother amount, loss or damage which Landlord may spend, incur or suffer byreason of Tenant’s default. If any portion of the Security Deposit is so usedor applied, Tenant shall, within ten (10) days after demand therefor, depositcash with Landlord in an amount sufficient to restore the Security Deposit toits original amount. The Security Deposit (or any balance thereof remaining followingLandlord’s use of the Security Deposit [or portion thereof as permitted by thisLease] which has not been restored by Tenant) shall be returned to Tenantwithin thirty (30) days following the expiration of the Lease Term. If Landlordsells its interest in the Premises during the Lease Term and if Landlord transfersto the purchaser the Security Deposit (or balance thereof,and such purchaser acknowledges receipt thereof, then, upon such sale, Landlordshall be discharged from any further liability with respect to the SecurityDeposit. So long as no Event of Default under this Lease has occurred prior tothe reduction dates set forth below, the required Security Deposit shall bereduced in accordance with the following schedule if, on or before the date forany scheduled reduction in the required Security Deposit, Landlord has notdelivered a request for a withdrawal from such account, accompanied by the requiredcertificate described above : 

 
| **Month of  Lease Term respecting the  Office Building** | ** ** | **Required Security Deposit** | ** **   |
|----------------------------------------------------------|------------|-------------------------------|--------------|
|                                                     |       |                          |         |   |
| 1-12                                                     |       | $                             | 2,224,416.00 |   |
|                                                     |       |                          |         |
| 13-24                                                    |       | $                             | 1,516,277.00 |   |
|                                                     |       |                          |         |
| 25-36                                                    |       | $                             | 808,138.00   |   |
|                                                     |       |                          |         |
| 37-end                                                   |       | $                             | 100,000.00   |   |

 

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

 

6.             Use.

 

6.1           General. Tenantshall use the Premises solely for the Permitted Use specified in Section 1.1 Iof the Summary, and shall not use or permit the Premises to be used for anyother use or purpose whatsoever.

 

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

 

6.2           Signs, Awningsand Canopies. Tenant shall have the exclusive right to install upon thePremises such signage as Tenant deems appropriate provided Tenant obtainsapproval from all governmental authorities having jurisdiction over thePremises and from Landlord, which approval shall not be unreasonably withheldor delayed. Tenant agrees to maintain any such sign, awning, canopy,decoration, lettering or advertising matter as may be approved by Landlord ingood condition and repair at all times. At the expiration or earliertermination of this Lease, at Landlord’s election, Tenant shall remove allsigns, awnings, canopies, decorations, lettering and advertising and shallrepair any damage to the Premises resulting therefrom all at Tenant’s sole costand expense. If Tenant fails to maintain any such approved sign, awning,decoration, lettering, or advertising, Landlord may do so following thirty (30)days’ prior written notice to Tenant and Tenant shall reimburse Landlord for suchcost. 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 suchitem(s) removed and stored and may repair any damage to the Premises at Tenant’sexpense. The removal, repair and/or storage costs shall bear interest untilpaid at the Interest Rate.

 

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

 

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Exhibit “E” attachedhereto. Upon the expiration or earlier termination of this Lease, Tenant agreesto promptly remove from the Premises, at its sole cost and expense, any and allHazardous Materials, including any equipment or systems containing HazardousMaterials which are installed, brought upon, stored, used, generated or releasedupon, in, under or about the Premises by Tenant or any of Tenant’s Parties.

 

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

 

To the fullest extent permittedby law, Landlord agrees to promptly indemnify, protect, defend and holdharmless Tenant and Tenant’s partners, officers, directors, employees, agents,successors and assigns (collectively, “Tenant Indemnified Parties”) from andagainst any and all claims, damages, judgments, suits, causes of action,losses, liabilities, penalties, fines, expenses and costs (including, withoutlimitation, clean-up, removal, remediation and restoration costs, sums paid in settlementof claims, attorneys’ fees, consultant fees and expert fees and court costs)which arise or result from the presence of Hazardous Materials on, in, under orabout the Premises and which are caused by Landlord or any of Landlord’semployees, agents or contractor (collectively, “Landlord’s Parties”). Notwithstandingany provision to the contrary in this Lease, if any environmental conditionarises with respect to the Premises for which Tenant has been released from liabilityhereunder, and for which Tenant is therefore not responsible under this Lease,and Landlord does not remediate such environmental condition (which Landlordshall have the right but not the obligation hereunder to do, unless caused byLandlord or Landlord’s Parties) as and to the extent required by applicable lawand adequately

 

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protect the health andsafety of Tenant and Tenant’s Parties during such remediation activity, and suchenvironmental condition would pose a material threat to the health and safetyof Tenant’s Parties if unremediated, then (i) Tenant shall have the right toterminate this Lease, effective upon the date stated in Tenant’s written noticeto Landlord (and Landlord’s Lender) exercising such right to terminate; provided,however, Landlord (or Landlord’s lender) may rescind such termination bycommencing such remediation and providing for such adequate protection withinninety (90) days following receipt of such termination notice, and thereafter diligentlypursuing such remediation to completion, and (ii) if such environmentalcondition was not caused by Landlord or Landlord’s Parties, then neither Landlordnor Landlord’s Parties shall have, and Tenant, on behalf of itself only,releases Landlord and Landlord’s Parties from, any liability arising from such environmentalcondition. Notwithstanding the foregoing, Tenant’s termination right underclause (i) of the preceding sentence shall not apply with respect to theenvironmental condition of the Premises disclosed by that certain AEPI Permit ByRule/Conditionally Authorized Facility Closure Plan amended as of December 11,1996 and those certain Specifications for Decontamination and Demolition, providedsuch environmental condition is remediated in accordance with said plans and specifications.

 

Notwithstanding theforegoing, Landlord consents to the storage and use at the Premises, anddisposal from the Premises, of certain Hazardous Materials upon the followingconditions:

 

(a)           The HazardousMaterials are only those materials that are necessary for Tenant’s manufactureof semiconductor capital equipment at the Premises;

 

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

 

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

 

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

 

(e)           On the firstday of each calendar year during the Term (and, in addition, promptly followingthe date Tenant uses, stores or disposes new Hazardous Materials that have not beenpreviously disclosed to Landlord), Tenant shall deliver to Landlord adisclosure statement containing the following:

 

(i)            A listcontaining, to the best knowledge of Tenant, all Hazardous Materials and thequantities thereof stored, used or disposed from the Premises during the precedingcalendar year;

 

(ii)           A statementthat (A) the use, storage and disposal of

 

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

 

(iii)          Copies of allnecessary permits and approvals relating to the use, storage and disposal of suchHazardous Materials to the extent not previously delivered to Landlord;

 

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

 

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

 

(ii)           Any and allinquiry, investigation, enforcement, clean-up, removal or governmental or regulatoryactions instituted or threatened relating to Tenant or the Premises; and

 

(iii)          All claimsmade or threatened by any third party against Tenant or the Premises relatingto any Hazardous Materials.

 

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

 

6.4           Refuse andSewage. Tenant agrees not to keep any trash, garbage, waste or other refuse onthe Premises except in sanitary containers and agrees to regularly andfrequently remove same from the Premises. Tenant shall keep all containers or otherequipment used for storage of such materials in a clean and sanitary condition.Tenant shall, at Tenant’s sole cost and expense, properly dispose of allsanitary sewage and shall not use the sewage disposal system for the disposal ofanything except sanitary sewage. Tenant shall keep the sewage disposal system freeof all obstructions and in good operating condition. Tenant shall contractdirectly for all trash disposal services at Tenant’s sole cost and expense.

 

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

 

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

 

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

 

9.             Surrender; Holding Over.

 

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

 

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removal and repairobligations completed in the time required by Sections 12.2 and 12.3 below,then, in addition to the provisions of Section 9.3 below and Landlord’s rightsand remedies under Section 12.4 and the other provisions of this Lease, Tenantshall indemnify, protect, defend (by counsel reasonably approved in writing byLandlord) 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 tosurrender, including, without limitation, any claim made by any succeedingtenant based thereon. The foregoing indemnity shall survive the expiration or earliertermination of this Lease.

 

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

 

10.           Taxes.

 

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

 

Tenant reserves theright to approve any assessment of public improvements that may affect thePremises to the extent Landlord has such night. Any future assessments forpublic improvements

 

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

 

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

 

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

 

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

 

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

 

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11.           Repairs.

 

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

 

11.2         Landlord’sRepair Rights. Tenant waives the right to make repairs at Landlord’s expenseunder any law, statute or ordinance now or hereafter in effect (including the provisionsof California Civil Code Section 1942 and any successive sections or statutes ofa similar nature). If Tenant fails to perform Tenant’s obligations underSection 11.1 hereof, or under any other provision of this Lease, then Landlord shallhave 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 immediatelywithout prior notice, to perform such obligations on Tenant’s behalf necessaryto return the Premises to good order, condition and repair. The costs incurred byLandlord pursuant to this Section 11.2 shall become due and payable toLandlord, upon demand.

 

11.3         Landlord’s Contributionto Certain Expenditures. If any

 

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replacement obligationof Tenant under Section 11.1 with respect to a Basic Element would normally becapitalized under normal accounting practice and is in excess of Twenty-Five ThousandDollars ($25,000.00), and if as a result of such expenditure the useful life ofthe Basic Element (as such useful life is based on the estimated actual life pursuantto generally accepted accounting practices) will extend beyond the Term, then, subjectto the requirements set forth in this Section 11.3, Landlord will reimburse Tenantfor Landlord’s prorata share thereof within thirty (30) days following theexpiration or sooner termination of this Lease; provided, however, Landlordwill have no such reimbursement obligation if this Lease terminates as a resultof an Event of Default. Landlord’s prorata share of such expenditure shall be afraction, the numerator of which is the number of months remaining on theuseful life of the Basic Element after the expiration or sooner termination ofthis Lease, and the denominator of which is the total number of months of the usefullife of the Basic Element. As a condition precedent to Landlord’s obligation toreimburse Tenant for a prorata share of any such expenditure, Tenant shallfirst obtain Landlord’s prior written approval of the contractor, the plans andspecifications, the amount of any such expenditure and the useful liferesulting from such expenditure, which approval shall not be unreasonably withheldor delayed. Upon such approval, either party shall, at the other party’srequest, enter into an amendment of this Lease identifying the amount subjectto reimbursement by Landlord. The “Basic Elements” are the foundations andstructural walls of the Premises, HVAC equipment and the roof.

 

12.           Alterations.

 

12.1         TenantChanges; Conditions.

 

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

 

(b)           All TenantChanges shall be performed: (i) in accordance with the approved plans,specifications and working drawings; (ii) lien-free and in a good andworkmanlike manner; (iii) in compliance with all applicable laws, rules andregulations of all governmental agencies and authorities including, withoutlimitation, the provisions of Title III of the Americans with

 

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

 

(c)           Throughoutthe performance of the Tenant Changes, Tenant shall obtain, or cause itscontractors to obtain, workers compensation insurance and commercial general liabilityinsurance in reasonable amounts.

 

12.2         Removal of TenantChanges and Tenant Improvements. All Tenant Changes and the initial Tenant Improvementsin the Premises (whether installed or paid for by Landlord or Tenant), shall becomethe property of Landlord and shall remain upon and be surrendered with thePremises at the end of the Term of this Lease; provided, however, (i) Tenant shallremove those items of the initial Tenant Improvements, if any, designated for removalpursuant to the Work Letter and (ii) Landlord may, by written notice delivered toTenant on or before the expiration of the Lease Term (or upon any soonertermination of this Lease) identify those items of Tenant Changes which Landlordshall require Tenant to remove at the end of the Term of this Lease (however, ifTenant, prior to the installation of any Tenant Changes, requested in writingthat Landlord identify whether the proposed Tenant Changes must be removed at theexpiration or termination of this Lease [which notice further informed Landlordthat Landlord’s failure to respond within ten (1 0) days would result in Landlord’swaiver of the right to require removal of the Tenant Changes], and Landlord didnot give Tenant written notice within ten (1 0) days thereafter that Landlord wouldrequire the removal of any such items, then Tenant will not be required toremove the same at the expiration or termination of this Lease). If Landlordrequires Tenant to remove any such items as described above, Tenant shall, atits sole cost, remove the identified items on or before the later to occur of(i) the expiration or sooner termination of this Lease or (ii) thirty (30) daysfollowing Tenant’s receipt of written notice of such requirement, and repairany damage to the Premises caused by such removal (or, at Landlord’s option,shall pay to Landlord all of Landlord’s reasonable costs of such removal andrepair provided that Landlord provides Tenant with reasonable evidence that Landlordincurred such costs). Notwithstanding the thirty (30) day time period forTenant’s removal specified above, if such removal cannot be completed withoutincurring overtime charge, such time period shall be extended by the period reasonablyrequired to permit Tenant to complete such removal and repair (if any repair isrequired).

 

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

 

12.4         Tenant’sFailure to Remove. If Tenant fails to remove by

 

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

 

13.           Liens. Tenant shallnot permit any mechanic’s, materialmen’s or other liens to be filed against allor 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 otherwork contracted for or undertaken by Tenant or any other act or omission of Tenantor Tenant’s agents, employees, contractors, licensees or invitees. Tenant shall,at Landlord’s request, provide Landlord with enforceable, conditional and finallien releases (and other reasonable evidence reasonably requested by Landlord todemonstrate protection from liens) from all persons furnishing labor and/or materialswith respect to the Premises. Landlord shall have the right at all reasonabletimes to post on the Premises and record any notices of non-responsibility whichit 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 ofrecord or bonded so that it no longer affects title to the Premises. If Tenantfails to cause such lien to be so released or bonded within the earlier tooccur of (i) five (5) days prior to the date the lien may be foreclosed upon or(ii) twenty (20) days after Tenant has actual notice of the filing thereof,Landlord may, without waiving its rights and remedies based on such breach, andwithout releasing Tenant from any of its obligations, cause such lien to bereleased by any means it shall deem proper, including payment in satisfaction ofthe claim giving rise to such lien. If Landlord acquires knowledge that anysuch lien has been filed against the Premises, Landlord will promptly give Tenantwritten notice thereof. Tenant shall pay to Landlord within five (5) days afterreceipt 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 byLandlord.

 

14.           Assignment and Subletting.

 

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

 

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assignment, encumbranceor subletting shall not constitute a waiver of the necessity for such consent toany subsequent assignment or subletting. This prohibition against assigning or sublettingshall be construed to include a prohibition against any assignment orsubletting by operation of law. If this Lease is assigned by Tenant, or if thePremises or any part thereof are sublet or occupied by any person or entityother than Tenant, Landlord may collect rent from the assignee, and apply the netamount 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 arelease of Tenant from the further performance by Tenant of covenants on the partof Tenant herein contained unless expressly made in writing by Landlord. Irrespectiveof any assignment or sublease, Tenant shall remain fully liable under thisLease and shall not be released from performing any of the terms, covenants andconditions of this Lease. Without limiting in any way Landlord’s right towithhold its consent on any reasonable grounds, it is agreed that Landlord willnot 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 assigneeor subtenant is less than that of Tenant at the date hereof, (ii) the proposedassignee does not have the financial capability to fulfill the obligationsimposed by the assignment, (iii) the proposed assignment or sublease involves achange of use of the Premises from that specified herein, or (iv) the proposed assigneeis not, in Landlord’s reasonable opinion, of reputable or good character. Anyproposed assignee or subtenant which Landlord does not disapprove shall bedeemed a “Permitted Business.” If Tenant assigns this Lease or sublets the Premisesto a third party who is not in any way affiliated or connected with Tenant byway of a merger, reorganization, consolidation or otherwise, fifty percent(50%) of any rent, additional rent or other compensation paid to Tenant inaddition to the Rent payable to Landlord as set forth in this Lease shall bepaid by Tenant to Landlord as additional rent. In calculating excess rent orother consideration which may be payable to Landlord under this Section, Tenantwill be entitled to deduct commercially reasonable third party brokeragecommissions and attorneys’ fees and other amounts reasonably and actuallyexpended by Tenant in connection with such assignment or subletting if acceptablewritten evidence of such expenditures is provided to Landlord. If Tenant is acorporation, 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 Section14.1. Notwithstanding any provision to the contrary in this Lease, Tenant may,without Landlord’s prior written consent and without any participation byLandlord in assignment and subletting proceeds, sublet the Premises or assignthis Lease to: (i) a subsidiary, affiliate, division or corporation controlled orunder common control with Tenant-, (ii) a successor corporation related to Tenantby merger, consolidation, nonbankruptcy reorganization, or government action; or(iii) a purchaser of substantially all of Tenant’s assets (collectively,

 

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

 

14.2         TransferNotice. If Tenant desires to effect an assignment, encumbrance or subletting (a“Transfer”), then at least thirty (30) days prior to the date when Tenantdesires the Transfer to be effective (the “Transfer Date”), Tenant agrees to giveLandlord a notice (the “Transfer Notice”), stating the name, address andbusiness of the proposed assignee, sublessee or other transferee (sometimesreferred 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 andthe proposed Transferee, and the consideration and all other material terms andconditions of the proposed Transfer, all in such detail as Landlord mayreasonably require.

 

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

 

14.4         AdditionalConditions. Within ten (10) days following any Transfer, Tenant shall deliverto Landlord of a true copy of the fully executed instrument of assignment,sublease, transfer or hypothecation, in form and substance reasonablysatisfactory to Landlord. No Transfer will release Tenant of Tenant’s obligationsunder this Lease or alter the primary liability of Tenant to pay the Rent andto perform all other obligations to be performed by Tenant hereunder. Consent byLandlord 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 inthe performance of any of the terms hereof, Landlord may proceed directlyagainst Tenant without the necessity of exhausting remedies against such Transfereeor successor. If Tenant effects a Transfer or requests the consent of Landlord toany Transfer (whether or not such Transfer is consummated), then, upon demand,and as a condition precedent to Landlord’s consideration of the proposedassignment or sublease,

 

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

 

15.           Entry by Landlord. Landlordand its employees and agents shall at all reasonable times have the right to enterthe Premises to inspect the same, to exhibit the Premises to prospective lendersor purchasers (or during the last year of the Term, to prospective tenants), topost notices of non- responsibility, and/or to alter, improve or repair the Premisesas contemplated by Section 11.2 in the event Tenant fails to perform its obligationsunder Section 11.1, all without being deemed guilty of or liable for any breachof Landlord’s covenant of quiet enjoyment or any eviction of Tenant, and withoutabatement of rent. In exercising such entry rights, Landlord shall endeavor to minimize,as reasonably practicable, the interference with Tenant’s business, and shall provideTenant with reasonable advance written notice of such entry (except in emergencysituations). Any entry to the Premises obtained by Landlord by any of saidmeans or otherwise shall not under any circumstances be construed or deemed tobe a forcible or unlawful entry into, or a detainer of, the Premises, or an evictionof Tenant from the Premises or any portion thereof, or grounds for any abatementor reduction of Rent and Landlord shall not have any liability to Tenant forany damages or losses on account of any such entry by Landlord except, subjectto the provisions of Sections 21.1 and 23, to the extent of Landlord’snegligence or willful misconduct.

 

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

 

17.           Indemnification and Exculpation.

 

17.1         Tenant’sAssumption of Risk and Waiver. Except to the extent such matter is attributableto the breach of this Lease or the negligence or willful misconduct of Landlordor Landlord’s Parties (but subject to the waivers and releases in Section 21), Landlordshall 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 thePremises, (ii) the loss of or damage to any property of Tenant or of others by theftor otherwise, (iii) any injury or damage to persons or property

 

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resulting from fire, explosion,falling plaster, steam, gas, electricity, water, rain or leaks from any part ofthe Premises or from the pipes, appliance of plumbing works or from the roof, streetor subsurface or from any other places or by dampness or by any other cause ofwhatsoever nature, or (iv) any such damage caused by other persons in thePremises, occupants of adjacent property, or the public, or caused byoperations in construction of any private, public or quasi-public work. Landlordshall in no event be liable for any consequential damages or loss of business orprofits and Tenant hereby waives any and all claims for any such damages. Allproperty of Tenant kept or stored on the Premises shall be so kept or stored atthe sole risk of Tenant and Tenant shall hold Landlord harmless from any claimsarising out of damage to the same, including subrogation claims by Tenant’s insurancecarriers, unless such damage shall be caused by the breach of this Lease or thenegligence or willful misconduct of Landlord or Landlord’s Parties and such damageis not covered by the insurance required to be maintained by Tenant under thisLease. Landlord or its agents shall not be liable for interference with thelight or other intangible rights.

 

17.2         Tenant’sIndemnification of Landlord. Except to the extent such matter is caused by thebreach of this Lease or the negligence or misconduct of Landlord or Landlord’sParties (but subject to the waivers and releases in Section 21), Tenant shall beliable for, and shall indemnify, defend, protect and hold Landlord and Landlord’spartners, 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, includingattorneys’ fees and court costs (collectively, “Indemnified Claims”), arisingor resulting from (a) any act or omission of Tenant or any of Tenant’s Parties;(b) the use of the Premises and conduct of Tenant’s business by Tenant or anyTenant Parties, or any other activity, work or thing done, permitted orsuffered 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 underthe terms of this Lease. In case any action or proceeding is brought againstLandlord or any Landlord Indemnified Parties by reason of any such IndemnifiedClaims, Tenant, upon notice from Landlord, shall defend the same at Tenant’sexpense by counsel reasonably approved in writing by Landlord, which approval shallnot be unreasonably withheld.

 

17.3         Survival; NoRelease 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 intendedto and shall not relieve any insurance carrier of its obligations underpolicies required to be carried by Tenant, pursuant to the provisions of thisLease.

 

18.           Damage or Destruction.

 

18.1         Obligationto Restore. Except as set forth below, in case

 

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

 

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

 

(a)           If Tenanthas carried insurance in the amounts, types and with insurance companiesrequired by this Lease, and the insurance company(ies) issuing such policy(ies)fail(s) (through no fault of Tenant) to make the appropriate insurance proceedsavailable within ninety (90) days following a casualty to which such insuranceapplies (or if Landlord has elected to maintain the All Risks insurance for thePremises pursuant to Section 20.4 and either fails to so maintain such insuranceor if the insurance company fails, through no fault of Tenant, to make theappropriate insurance proceeds available within ninety (90) days following acasualty to which such insurance applies), and there is no reasonable expectationthat such proceeds will be made available in a timely manner, then Tenant shallhave no obligation to Restore and Tenant shall have the right to terminate thisLease (i) if Landlord (or Landlord’s lender) does not notify Tenant, withinsixty (60) days following the date Tenant gives Landlord (and Landlord’slender) written notice of such failure on the part of the insurance company(ies)(the “Insurance Failure Notice”), that Landlord (or Landlord’s lender) willRestore the Premises within three hundred (300) days following the InsuranceFailure Notice or (ii) if Landlord (or Landlord’s lender) undertakes Restorationbut fails to complete such Restoration within three hundred (300) daysfollowing the Insurance Failure Notice. If Landlord (or Landlord’s lender) doesso Restore the Premises and Tenant does not terminate this Lease, then Tenant willRestore its trade fixtures and equipment. Notwithstanding any provision to thecontrary in this Lease, if Landlord has elected to carry the All-Risk insuranceunder Section 20.4 and the deductible exceeds the deductible Tenant is permittedto maintain hereunder, Tenant shall not be required to pay all or any portionof such excess deductible.

 

(b)           If casualty damageRestored by Tenant is uninsured (any” deductible” amount applicable to any insurancepolicy covering the casualty in question shall be deemed to mean that the casualtydamage is uninsured to the extent of the deductible) to the extent of tenpercent (1 0%) or more of the full replacement cost of the building or buildingsin

 

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

 

Notwithstanding theforegoing, however, in the case of damage to or destruction of the Premisesduring the last eighteen (18) months of the Term that will render the Premises,in Tenant’s reasonable opinion, inaccessible or unusable for purposes of conductingTenant’s business for more than ninety (90) days, Tenant may elect to terminatethis Lease by giving Landlord written notice of such election within thirty(30) days following the casualty, in which event Tenant shall have noobligation to Restore the Premises; provided, however, Tenant shall deliver anyinsurance proceeds to Landlord in accordance with Section 18.5 below.

 

18 2         Reconstructionand Repair Requirements. Tenant shall obtain Landlord’s priorapproval of all plans for Restoration work performed by Tenant, which approvalshall not be unreasonably withheld or delayed.

 

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

 

Notwithstanding theforegoing, in the event Landlord elects to maintain rental loss insurancepursuant to Section 20.4, then the following shall apply: In the event that as aresult of any casualty damage to the Premises, Tenant is prevented from using, anddoes not use, the Premises or does not use some portion thereof, then the Rentshall be abated or reduced, as the case may be, during the period that Tenant continuesto be so prevented from using and does not use the Premises or does not use someportion thereof, in the proportion that the rentable square feet of the portionof the Premises that Tenant is prevented from using, and does not use, bears tothe total rentable square feet of the Premises; ‘provided, however, Tenant shallonly be entitled to such abatement so long as Tenant is complying with itsRestoration obligations under Section 1 B. 1 and in no event may such abatementcontinue beyond the later to occur of (i) twelve (12) months following thecasualty or (ii)

 

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the expiration dateof coverage under Landlord’s rental loss insurance policy. Notwithstanding theforegoing to the contrary, if the damage is due to the willful or intentionalmisconduct of Tenant or any Tenant Parties, there shall be no abatement of Rentunless such abatement (i) is covered by the rental loss insurance maintained byLandlord or (ii) would have been covered by the rental insurance loss insurancerequired to be maintained under Section 20.4 in the event Landlord has failedto maintain such insurance.

 

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

 

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

 

18.6         Waiver ofTermination. The agreements contained in this Article 10 provide a materialpart of the consideration for this Lease and in bargaining for and obtainingits rights under this Article 18, Tenant waives any right to terminate thisLease under Section 1932 and/or 1933 of the Civil Code of California, or any similarstatute or law now or hereafter in force.

 

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19.           Eminent Domain.

 

19.1         Total or PartialTaking. In case all of the Premises, or such part thereof as shall materiallyand substantially interfere with Tenant’s ability to conduct its business uponthe Premises, shall be taken for any public or quasi-public purpose by any lawfulpower or authority by exercise of the right of appropriation, condemnation oreminent domain, or sold to prevent such taking, Tenant shall have the right toterminate this Lease effective as of the date possession is required to besurrendered to said authority. Tenant shall not assert any claim against Landlordor the taking authority for any compensation because of such taking, andLandlord shall be entitled to receive the entire amount of any award withoutdeduction for any estate or interest of Tenant; provided, however, in the eventof such a taking, Tenant shall be entitled to such portion of the award as shallbe attributable to the loss of the unamortized cost of the improvements to thePremises made and paid for by Tenant pursuant to Exhibit “C” (such amortizationbeing the same as that used by Tenant for federal income tax purposes), relocationcosts, goodwill and for damage to, or the cost of removal of, Tenant’s personalproperty. In the event the amount of property or the type of estate taken shallnot materially and substantially interfere with the ability of Tenant toconduct its business upon the Premises, Landlord shall be entitled to theentire amount of the award without deduction for any estate or interest ofTenant, Landlord shall restore the Premises to substantially their same conditionprior to such partial taking to the extent of any award proceeds received byLandlord, and a fair and equitable abatement shall be made to Tenant for theAnnual Rent corresponding to the time during which, an (i to the part of thePremises of which, Tenant shall be so deprived on account of such taking and restoration.

 

19.2         TemporaryTaking. In the event of taking of the Premises or any part thereof fortemporary use, (i) this Lease shall be and remain unaffected thereby and Rentshall not abate, and (ii) Tenant shall be entitled to receive for itself such portionor portions of any award made for such use with respect to the period of the takingwhich is within the Lease Term. For purposes of this Section 19.2, a temporary takingshall 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 Section1265.130 of the California Code of Civil Procedure, or any similar statute orlaw now or hereafter in force.

 

20.           Tenant’s Insurance.

 

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

 

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(a)           All Risk insurance,including fire and extended coverage, sprinkler leakage, vandalism, maliciousmischief, flood (if the Premises are in a flood zone) and earthquake coverageupon property of every description and kind located on the Premises, withoutlimitation, furniture, equipment and any other personal property, any TenantChanges, the Buildings, the Tenant Improvements, and the Parking LotImprovements in an amount not less than the full replacement cost thereof. In theevent that there shall be a dispute as to the amount which comprises full replacementcost, the decision of Landlord or the mortgagees of Landlord shall be presumptive.No co-insurance provision shall apply under such insurance policy or, in the alternative, the insurance policy shall contain an agreed amountendorsement. All references to earthquake coverage herein shall be deemed to includeearthquake sprinkler leakage coverage. 

 

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

 

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

 

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operations liability, andowned/non-owned auto liability, with a general aggregate of not less than Five MillionDollars ($5,000,000). The general aggregate amount of such commercial general liabilityinsurance shall be increased every five (5) years during the Term of this Leaseto an amount reasonably required by Landlord but in no event greater than thatcommonly required of similar tenants of similar buildings in the RanchoBernardo area of San Diego County.

 

(c)           Workerscompensation and employees liability insurance, in statutory amounts andlimits.

 

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

 

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

 

20.2         Requirements.Each policy required to be obtained by Tenant hereunder shall: (a) be issued byinsurers authorized to do business in the state in which the Premises islocated and rated not less than financial class VII, and not less thanpolicyholder rating A- in the most recent version of Best’s Key Rating Guide (providedthat, in any event, the same insurance company shall provide the coveragesdescribed in Sections 20.1 (a) and 20.1(d) above); (b) be in then-standardform; (c) name Tenant as named insured thereunder and shall name Landlord and, atLandlord’s request, Landlord’s mortgagees and ground lessors of which Tenant hasbeen informed in writing, as additional insureds (and with respect to theinsurance described in Sections 20.1 (a) and (d) above, as loss-payees thereunder),all as their respective interests may appear (however, as to the insurancedescribed in Section 20.1 (d) above, the loss-payees’ interest in the insuranceproceeds will be limited only to those amounts allocable to Tenant’s rentalobligations hereunder following a casualty at the Premises and shall be furtherlimited to as and when such rental obligations become due and payable); (d) shallnot have a deductible amount exceeding Ten Thousand Dollars ($10,000.00) (orsuch higher amount as Landlord may permit in its reasonable discretion, but in noevent may the All-Risk insurance deductible be greater than five percent (5%)of the replacement cost), except that with respect to earthquake coverage, the deductibleamount shall not exceed ten percent (10%) of the total insured value (however,the deductible shall be, at Landlord’s option, five percent (5%) during alltimes Tenant has a net worth of less than Twenty-Five Million Dollars($25,000,000), as such net worth amount is subject to increase in the samemanner as the

 

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Cap pursuant to Section20.1 (a) above); (e) specifically provide that the insurance afforded by suchpolicy for the benefit of Landlord and Landlord’s mortgagees and ground lessorsshall be primary, and any insurance carried by Landlord or Landlord’s mortgageesand ground lessors shall be excess and non- contributing; (o except for worker’scompensation insurance, contain an endorsement that the insurer (only withrespect to the policy required by Section 20.1 (a) above) waives its right to subrogationas described in Section 22 below; and (g) contain an undertaking by the insurerto notify Landlord (and the mortgagees and ground lessors of Landlord who are namedas additional insureds) in writing not less than thirty (30) days prior to any change,reduction in coverage, cancellation or other termination thereof. Tenant agreesto deliver to Landlord, as soon as practicable after the placing of therequired insurance, but in no event later than ten (1 0) days after the dateTenant takes possession of all or any part of the Premises, certificates from theinsurance company evidencing the existence of such insurance and Tenant’s compliancewith the foregoing provisions of this Section 20). Tenant shall causereplacement certificates to be delivered to Landlord not less than five (5) daysprior to the expiration of any such policy or policies. If any such initial or replacementcertificates are not furnished within the time(s) specified herein, Tenant shallbe deemed to be in material default under this Lease without the benefit of anyadditional notice or cure period provided in Section 22.1 below, and Landlordshall have the right, but not the obligation, to procure such policies andcertificates at Tenant’s expense.

 

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

 

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

 

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

 

21.           Waiver of Subrogation.

 

21.1         Waiver. Notwithstandingany provision to the contrary herein, the parties release each other and their respectiveagents, employees, successors, assignees and subtenants from any claims or damagesor losses which are caused by or result from (a) property damage insuredagainst under any property insurance policy carried by Tenant pursuant to theprovisions of this Lease and enforceable at the time of such damage or loss or whichis actually carried by either party, or (b) property damage which would have beencovered under any insurance required to be obtained and maintained by Tenantunder Section 20 of this Lease (or which Landlord has elected to carry underSection 20.4 above) had such insurance been obtained and maintained as requiredtherein. 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 ofInsurers. Each party shall cause any property insurance policy obtained by itwith respect to the Premises to provide that the insurer waives all rights ofrecovery by way of subrogation in connection with any claims, losses and damagescovered by such policy. If Tenant fails to maintain property insurance requiredhereunder (or if Landlord elects to carry the All-Risk insurance pursuant toSection 20.4 and fails to so maintain such insurance), such insurance shall bedeemed to be self-insured with a deemed full waiver of subrogation as set forthin the immediately preceding sentence.

 

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

 

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

 

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

 

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

 

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

 

(c)           the failureby Tenant to observe or perform any of the express or implied covenants orprovisions of this Lease to be observed or performed by Tenant, other than as specifiedin Sections 22.1 (a) or . (b) above, where such failure shall continue for a periodof thirty (30) days after written notice thereof from Landlord to Tenant;provided, however, that, if the nature of Tenant’s default is such that morethan thirty (30) days are reasonably required for its cure, then Tenant shallnot be deemed to be in default if Tenant shall commence such cure within saidthirty (30) day period and thereafter diligently prosecute such cure to completion;or

 

(d)           (i) themaking 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 abankrupt or a petition for reorganization or arrangement under any law relatingto bankruptcy (unless, in the case of a petition filed against the Tenant, thesame is dismissed within sixty (60) days), (iii) the appointment of a trusteeor receiver to take possession of substantially all of Tenant’s assets located atthe Premises or of Tenant’s interest in this Lease, where possession is notrestored to Tenant within sixty (60) days, or (iv) the attachment, execution orother judicial seizure of substantially all of Tenant’s assets located at thePremises or of Tenant’s interest in this Lease where such seizure is notdischarged within sixty (60) days.

 

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

 

22.2 Landlord’sRemedies; Termination. In the event of any such default by Tenant, in additionto any other remedies available to Landlord under this Lease, at law or inequity, Landlord shall have the immediate option to terminate this Lease andall rights of Tenant hereunder. In the event that Landlord shall elect to soterminate this Lease, then Landlord may recover from Tenant:

 

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

 

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

 

(c)           the worth at the timeof award of the amount by which the unpaid rent for the balance of the termafter the time of award exceeds the amount of such rental loss that Tenantproves could be reasonably avoided; plus

 

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(d)           any otheramount necessary to compensate Landlord for all the detriment proximatelycaused by Tenant’s failure to perform its obligations under this Lease orwhich, 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 anydamage caused by such removal) and storage (or disposal) of Tenant’s personal property,equipment, fixtures, Tenant Changes, Tenant Improvements and any other items whichTenant 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 allowinginterest at the Interest Rate set forth in Section 1.13 of the Summary. As usedin Section 22.2(c) above, the “worth at the time of award” is computed bydiscounting such amount at the discount rate of the Federal Reserve Bank of SanFrancisco at the time of award plus one percent (1%).

 

22.3         Landlord’sRemedies; Re-Entry Rights. In the event of any such default by Tenant, inaddition to any other remedies available to Landlord under this Lease, at law orin equity, Landlord shall also have the right, with or without terminating thisLease, to re-enter the Premises and remove all persons and property from thePremises; such property may be removed, stored and/or disposed of pursuant toSection 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 Section22.3, and no acceptance of surrender of the Premises or other action on Landlord’spart, shall be construed as an election to terminate this Lease unless awritten notice of such intention be given to Tenant or unless the terminationthereof be decreed by a court of competent jurisdiction or unless Tenant’s rightto possession of the Premises is terminated.

 

22.4         Landlord’sRemedies; Continuation of Lease. In the event of any such default by Tenant, inaddition to any other remedies available to Landlord under this Lease, at law orin equity, Landlord shall have the right to continue this Lease in full forceand effect, whether or not Tenant shall have abandoned the Premises so long asLandlord does not terminate Tenant’s right to possession of the Premises. Theforegoing remedy shall also be available to Landlord pursuant to California CivilCode Section 1951.4 and any successor statute thereof in the event Tenant has abandonedthe Premises. In the event Landlord elects to continue this Lease in full forceand effect pursuant to this Section 22.4, then Landlord shall be entitled to enforceall of its rights and remedies under this Lease, including the right to recoverrent as it becomes due. Landlord’s election not to terminate this Leasepursuant 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 terminatethis Lease or pursuing any of its other remedies.

 

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

 

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

 

22.7         LateCharges. Tenant acknowledges that, in addition to interest costs, the latepayments by Tenant to Landlord of any Annual Rent or other sums due under thisLease will cause Landlord to incur costs not contemplated by this Lease, theexact amount of such costs being extremely difficult and impractical to fix. Suchother costs include, without limitation, processing, administrative andaccounting charges and late charges that may be imposed on Landlord by the termsof any mortgage, deed of trust or related loan documents encumbering thePremises. Accordingly, if any monthly installment of Annual Rent or any otheramount payable by Tenant hereunder is not received by Landlord within five (5)days after the due date thereof, Tenant shall pay to Landlord an additional sumof four percent (4%) of the overdue amount as a late charge, but in no eventmore than the maximum late charge allowed by law. The parties agree that suchlate charge represents a fair and reasonable estimate of the costs thatLandlord will incur by reason of any late payment as hereinabove referred to byTenant, and the payment of late charges and interest are distinct and separatein that the payment of interest is to compensate Landlord for the use of Landlord’smoney by Tenant, while the payment of late charges is to compensate Landlordfor Landlord’s processing, administrative and other costs incurred by Landlordas a result of Tenant’s delinquent payments. Acceptance of a late charge orinterest shall not constitute a waiver of Tenant’s default with respect to theoverdue amount or prevent Landlord from exercising any of the other rights andremedies available to Landlord under this Lease or at law or in equity now orhereafter in effect.

 

22.8         Rights andRemedies Cumulative. All rights, options and remedies of Landlord contained inthis Section 22 and elsewhere

 

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in this Lease shall beconstrued and held to be cumulative, and no one of them shall be exclusive ofthe other, and Landlord shall have the right to pursue any one or all of suchremedies 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 deemedto limit or otherwise affect Tenant’s indemnification of Landlord pursuant toany provision of this Lease.

 

23.           Landlord’s Default. Landlordshall not be in default in the performance of any obligation required to be performedby Landlord under this Lease unless Landlord has failed to perform such obligationwithin thirty (30) days after the receipt of written notice from Tenant specifyingin detail Landlord’s failure to perform; provided however, that if the nature ofLandlord’s obligation is such that more than thirty (30) days are required forits performance, then Landlord shall not be deemed in default if it commencessuch performance within such thirty (30) day period and thereafter diligentlypursues the same to completion. Upon any such uncured default by Landlord, Tenantmay 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 anydefault by Landlord under this Lease, except to the extent offset rights are specificallyprovided to Tenant in this Lease; (b) Tenant’s rights and remedies hereundershall be limited to the extent (i) Tenant has expressly waived in this Leaseany of such rights or remedies, and/or (ii) this Lease otherwise expresslylimits Tenant’s rights or remedies, including the limitation on Landlord’s liabilitycontained in Section 30 hereof; and (c) Tenant shall not have the right toterminate this Lease as a result of any such default.

 

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

 

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to be subordinated anyor all ground or master leases or the lien of any or all mortgages or deeds oftrust to this Lease. In the event that any ground or master lease terminatesfor any reason or any mortgage or deed of trust is foreclosed or a conveyancein lieu of foreclosure is made for any reason, Tenant shall attorn to andbecome the tenant of such successor and such successor-in- interest shallrecognize Tenant as its tenant and shall perform the obligations of Landlordunder the Lease accruing subsequent to the date such successor-in-interestsucceeds to the position of Landlord. Tenant hereby waives its rights under anycurrent or future law which gives or purports to give Tenant any right to terminateor otherwise adversely affect this Lease and the obligations of Tenant hereunderin the event of any such foreclosure proceeding or sale. Subject to theforegoing, Tenant covenants and agrees to execute and deliver to Landlord withinten (1 0) days after receipt of written demand by Landlord and in the form reasonablyrequired by Landlord and reasonably acceptable to Tenant, any additionaldocuments evidencing the priority or subordination of this Lease with respectto any such ground or master lease or the lien of any such mortgage or deed of trustor Tenant’s agreement to attorn. Should Tenant fail to sign and return any suchdocuments within said ten (10) day period, and should such failure continue foran additional ten (10) days following written notice thereof to Tenant, Tenant shallbe in default hereunder without the benefit of any additional notice or cureperiods specified in Section 22.1 above. Notwithstanding any provision to the contraryin this Lease, insurance proceeds shall be used as set forth herein, and any subordinationagreement to be executed by Tenant shall so provide and shall provide that Tenant’soffset rights under the Work Letter shall be recognized.

 

25.           Estoppel Certificate.

 

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

 

25.2         Tenant’sFailure to Deliver. Tenant’s failure to deliver such estoppel certificate withinsuch time, which failure continues for an additional ten (10) day periodfollowing written notice thereof to Tenant, shall constitute a default hereunderwithout the applicability of any additional notice and cure

 

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periods specified inSection 22.1 above and shall be conclusive upon Tenant that: (a) this Lease isin 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 (otherthan Tenant’s failure to deliver the estoppel certificate); and (c) not morethan one (1) month’s rental has been paid in advance. Tenant shall indemnify,protect, defend (with counsel reasonably approved by Landlord in writing) and holdLandlord harmless from and against any and all claims, judgments, suits, causesof action, damages, losses, liabilities and expenses (including attorneys’ feesand court costs) attributable to any failure by Tenant to timely deliver any suchestoppel certificate to Landlord pursuant to Section 25.1 above.

 

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

 

27.           Modification and Cure Rights ofLandlord’s Mortgagees and Lessors.

 

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

 

27.2         Cure Rights.In the event of any default on the part of Landlord, Tenant will give notice byregistered or certified mail to any beneficiary of a deed of trust or mortgageecovering the Premises or ground lessor of Landlord whose address shall have beenfurnished to Tenant in writing, and shall offer such beneficiary, mortgagee orground lessor a reasonable opportunity to cure the default (including with respectto 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 judicialforeclosure, if such should prove necessary to effect a-cure).

 

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

 

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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 Landlordare 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 aground lease of, the Premises. In the event of any transfer or conveyance ofany such title or interest (other than a transfer for security purposes only), thetransferor shall be automatically relieved of all covenants and obligations onthe part of Landlord contained in this Lease accruing after the date of suchtransfer or conveyance except that such transferor shall remain liable for any portionof the Security Deposit held by such transferor and not returned to Tenant or deliveredto the transferee at the time of such transfer. Landlord and Landlord’stransferees and assignees shall have the absolute right to transfer all or anyportion of their respective title and interest in the Premises and/or this Leasewithout the consent of Tenant, and such transfer or subsequent transfer shallnot be deemed a violation on Landlord’s part of any of the terms and conditionsof this Lease.

 

30.           Limitation on Landlord’s Liability. Notwithstandinganything contained in this Lease to the contrary, the obligations of Landlord underthis Lease (including any actual or alleged breach or default by Landlord) do notconstitute personal obligations of the individual partners, directors, officersor shareholders of Landlord or Landlord’s partners, and Tenant shall not seek recourseagainst the individual partners, directors, officers or shareholders ofLandlord or Landlord’s partners, or any of their personal assets for satisfactionof any liability with respect to this Lease. In addition, in consideration ofthe benefits accruing hereunder to Tenant and notwithstanding anything containedin this Lease to the contrary, Tenant hereby covenants and agrees for itselfand all of its successors and assigns that the liability of Landlord for itsobligations under this Lease (including any liability as a result of any actualor alleged failure, breach or default hereunder by Landlord), shall be limited solelyto, and Tenant’s and its successors’ and assigns’ sole and exclusive remedyshall be against, Landlord’s interest in the Premises and proceeds therefrom,and no other assets of Landlord.

 

31.           Miscellaneous.

 

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

 

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

 

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

 

31.3         No Merger. Thevoluntary or other surrender of this Lease by Tenant or a mutual terminationthereof 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 toLandlord of Tenant’s interest under any or all such subleases.

 

31.4         ProfessionalFees. If either Landlord or Tenant should bring suit against the other with respectto this Lease, including for unlawful detainer or any other relief against the otherhereunder (including arbitration proceedings pursuant to the Work Letter), thenall costs and expenses incurred by the prevailing party therein (including, withoutlimitation, its actual appraisers’, accountants’, attorneys’ and other professionalfees, expenses and court costs), shall be paid by the other party.

 

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

 

31.6         Terms andHeadings. The words “Landlord” and “Tenant” as used herein shall include the pluralas well as the singular. Words used in any gender include other genders. TheSection headings of this Lease are not a part of this Lease and shall have noeffect upon the construction or interpretation of any part hereof.

 

31.7         Time. Timeis of the essence with respect to performance of every provision of this Leasein 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

 

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

 

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

 

31.10       Recording. Neither Landlord nor Tenant shallrecord this Lease. In addition, neither party shall record a short form memorandumof this Lease without the prior written consent (and signature on the memorandum)of the other, and provided that prior to recordation Tenant executes anddelivers to Landlord, in recordable form, a properly acknowledged quitclaimdeed or other instrument extinguishing all of the Tenant’s rights and interest inand to the Premises, and designating Landlord as the transferee, which deed orother instrument shall be held by Landlord and may be recorded by Landlord oncethis Lease terminates or expires (but not prior thereto). If such short formmemorandum is recorded in accordance with the foregoing, the party requestingthe 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 andRiders attached to this Lease are hereby incorporated in this Lease for all purposesas though set forth at length herein.

 

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

 

31.13       Accord and Satisfaction. No payment byTenant or receipt by Landlord of a lesser amount than the rent payment hereinstipulated shall be deemed to be other than on account of the rent, nor shallany endorsement or statement on any check or any letter accompanying any checkor payment as rent be deemed an accord and satisfaction, and Landlord may acceptsuch check or payment without prejudice to Landlord’s right to recover the balanceof such rent or pursue any other remedy provided in this Lease. Tenant agreesthat each of the foregoing covenants and agreements shall be applicable to anycovenant or agreement either expressly contained in this Lease or imposed by anystatute or at common law.

 

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

 

31.15       No Partnership. Landlord does not, in anyway 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 jointenterprise with Tenant by reason of this Lease.

 

31.16       Force Majeure. In the event that eitherparty hereto shall be delayed or hindered in or prevented from the performance ofany act required hereunder by reason of strikes, lock-outs, labor troubles,inability to procure materials, failure of power, governmental moratorium orother governmental action or inaction (including failure, refusal or delay in issuingpermits, approvals and/or authorizations), injunction or court order, riots, insurrection,war, fire, earthquake, flood or other natural disaster or other reason of alike nature not the fault of the party delaying in performing work or doingacts required under the terms of this Lease (but excluding delays due to financialinability) (herein collectively, “Force Majeure Delays”), then performance ofsuch act shall be excused for the period of the delay and the period for theperformance of any such act shall be extended for a period equivalent to theperiod of such delay. The provisions of this Section 31.16 shall not apply tonor operate to excuse Tenant from the payment of Monthly Rent, additional rent orany other payments strictly in accordance with the terms of this Lease.

 

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

 

31.18       Nondisclosure of Lease Terms. Tenant acknowledgesand agrees that the terms of this Lease are confidential and constitute proprietaryinformation of Landlord. Disclosure of the terms could adversely affect theability of Landlord to negotiate other leases and impair Landlord’srelationship with other tenants. Accordingly, Tenant agrees that it, and its partners,officers, directors, employees, agents and attorneys, shall not intentionallyand voluntarily disclose the terms and conditions of this Lease to anynewspaper or other publication or any other tenant or apparent prospective tenantof the Building or other portion of the Premises, or real estate agent, either directlyor indirectly, without the prior written consent of Landlord, provided,however, that Tenant may disclose the terms

 

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to prospectivesubtenants or assignees under this Lease. Tenant shall have the right to makeany disclosures concerning this Lease and its terms which are required by law.

 

31.19       Non-Discrimination. Tenant acknowledges andagrees 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 portionthereof.

 

32.           Lease Execution.

 

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

 

32.2         Joint andSeveral Liability. If more than one person or entity executesthis Lease as Tenant: (a) each of them is and shall be jointly and severally liablefor 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 noticefrom or to, any one or more of them with respect to this Lease shall be bindingupon each and all of the persons and entities executing this Lease as Tenantwith 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. Thesubmission of this Lease for examination or execution by Tenant does notconstitute a reservation of or option for the Premises and this Lease shall notbecome effective as a Lease until it has been executed by Landlord anddelivered to Tenant.

 

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

 

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

 

 
| “TENANT”   |   | CYMER, INC.,                          |
|----------------------|--------|---------------------------------------|
|                 |   | a Nevada corporation                  |
|                 |   |                                  |
|                 |   |                                  |
|                 |   | By:                                   | /s/ William A. Angus,  III |   |
|                 |   | Name: William A.  Angus, III          |
|                 |   | Title:                                | Sr. Vice President and |
|                 |   |                                  | Chief Financial  Officer |
|                 |   |                                  |
|                 |   |                                  |
| “LANDLORD” |   | AEW/LBA ACQUISITION  CO. 11, LLC, a   |
|                 |   | California limited  liability company |
|                 |   |                                  |
|                 |   | By:                                   | Eastrich No. 175, LLC,  a |
|                 |   |                                  | California limited  liability |
|                 |   |                                  | company, its  member-manager |
|                 |   |                                  |
|                 |   |                                  |
|                 |   | By:                                   | /s/ Phil Belling |   |
|                 |   | Name:                                 | Phil Belling |   |
|                 |   | Its:                                  | Authorized Signatory |   |
|                      |        |                                       |  |  |  |  |  |  |  |

 

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Exhibits:

 

Exhibit “A”            Site Plan

Exhibit “B”            LegalDescription of Premises

Exhibit “C”            Work LetterAgreement Schedule 1 Description of Conceptual Plans

Exhibit “D”            Sample Formof Notice of Lease Term Dates

Exhibit “E”             EnvironmentalQuestionnaire

Exhibit “F”             Sample Formof Tenant Estoppel Certificate

Exhibit “G”            Descriptionof Parking Lot Improvements

Exhibit “H”            PriorOccupant’s FF&E

 

The Company willundertake to supply any of the above documents upon request of the Securitiesand Exchange Commission. 

 

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**FIRST AMENDMENT**

**TOSINGLE-TENANT INDUSTRIAL LEASE**

 

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

 

**R****ECITALS :**

 

A.                                      Landlord andTenant entered into that certain Single-Tenant Industrial Lease dated December19, 1996 (the “Lease”), for premises located at 16750 Via del Campo Court in SanDiego, California. All initially capitalized terms not otherwise defined hereinshall have the same meanings as set forth in the Lease.

 

B.                                        Pursuant toSection 1.2**of**the Lease, Landlord is obligated toconstruct the Parking Lot Improvements on the Parking Lot. Tenant is currentlyoccupying a**portion of the ParkingLot with temporary office trailers. Therefore, the parties intend that Landlordwill construct the Parking Lot Improvements in two phases, the first phasebeing the area of the Parking Lot not occupied by Tenant’s temporary officetrailers (“Phase 1 Area”). Upon Tenant’s removal of the temporary officetrailers from the Parking Lot, Landlord will construct the remaining ParkingLot Improvements on such remaining portion of the Parking Lot (“Phase 2 Area”).

 

C.                                         Landlord and Tenantdesire to amend the Lease as hereinafter set forth in order to address thephased construction of the Parking Lot Improvements as described in Rectial Babove:

** **

**AGREEMENT :**

 

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

 

1.                                       ActualCommencement Date for the Parking Lot. TheActual CommencementDate for the Parking Lot shall occur upon Substantial Completion of those ParkingLot Improvements within the Phase 1 Area, notwithstanding that construction ofthe Parking Lot Improvements within the Phase 2 Area may not have commenced orbeen completed as of such date. Promptly following Tenant’s removal of the temporaryoffice trailers from the Phase 2 Area, Landlord shall commence and diligentlyprosecute to completion the remaining Parking Lot Improvements for the Phase 2**Area.Tenant shall remove the temporary office trailers from the Phase 2 Area no laterthan August 29, 1997.

 

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

 

3.                                       Self-Help Rights. The self-helprights for Tenant described in the second paragraph of Section 2.2 of the Leasewill not apply (i) with respect to the Parking Lot Improvements for the Phase 1Area unless such improvements are not Substantially Complete by July 1, 1997,and (ii) with respect to the Parking Lot Improvements for the Phase 2 Area,unless such improvements are not Substantially Complete within sixty (60) daysfollowing the date Tenant removes its temporary office trailers from the Phase2 Area, as each such date is subject to extension by one (1) day for each dayLandlord is delayed in constructing the applicable improvements due to ForceMajeure Delays.

 

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

 

IN WITNESS WHEREOF, Landlord and Tenant haveexecuted this Amendment as of the date set**forthabove.

 
| Landlord: | AEW/LBA  ACQUISITION CO. II, LLC, a  corporation limited liability company |
|-----------|----------------------------------------------------------------------------|
|      |                                                                       |
|      | By:                                                                        | LBA, Inc., a California corporation, its agent |
|      |                                                                       |
|      | By:                                                                        | /s/ Phil Belling |   |
|      |                                                                       | Name: | Phil Belling |   |
|      |                                                                       | Title: | Principal |   |
|      |                                                                       |
|      |                                                                       |
|      |                                                                       |
| Tenant:   | CYMER,  INC., a Nevada corporation                                         |
|      |                                                                       |
|      | By:                                                                        | /s/ William A. Angus, III |   |
|      |                                                                       | Name: | William A. Angus, III |   |
|      |                                                                       | Title: | Senior Vice President  and CFO |   |
|           |                                                                            |  |  |  |  |  |  |  |  |  |

 

2

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**SECOND AMENDMENT TO SINGLE-TENANT INDUSTRIAL LEASE**

 

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

 

**RECITALS :**

 

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

 

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

 

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

 

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

 

**AGREEMENT:**

 

NOW, THEREFORE, inconsideration of the foregoing, the mutual covenants contained herein and othergood and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, Landlord and Tenant agree as follows:

 

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

 

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

 

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

 

4.                                       **Counterparts**.  This Amendment may be executedin one or more counterparts, each of which shall be deemed an original, but allof which together shall constitute the same agreement. Facsimile signatureswill have the same force as original signatures.

 

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

 

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

 
| “TENANT”   | CYMER, INC. a Nevada  corporation       |
|----------------------|-----------------------------------------|
|                 |                                    |
|                 | By:                                     | /s/ William A. Angus,  III |   |
|                 |                                    | William A. Angus, III |
|                 |                                    | Sr. Vice President and  Chief Financial Officer |
|                 |                                    |
|                 |                                    |
| “LANDLORD” | AEW/LBA  ACQUISITION CO. II, LLC,       |
|                 | a  California limited liability company |
|                 |                                    |
|                 | By:                                     | Eastrich  No. 175, LLC, a California limited liability company,  its member-manager |
|                 |                                    |   |
|                 |                                    | By: |   /s/  Steve Layton |   |
|                 |                                    |   | Name | Steve Layton |   |
|                 |                                    |   | Its:  Authorized Signatory |
|                      |                                         |  |  |  |  |

 

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**THIRDAMENDMENT TO SINGLE-TENANT INDUSTRIAL LEASE**

 

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

 

RECITALS:

 

A.                                   Landlord andTenant entered into that certain Single-Tenant Industrial Lease dated December19, 1996 (the **“Original Lease”**), as amended bythat certain First Amendment to Single-Tenant Industrial Lease dated April 1,1997 (the “**First Amendment**”), and as furtheramended by that certain Second Amendment to Single-Tenant Industrial Lease datedDecember 2, 1997 (the **“Second Amendment”**),for premises located at 16750 Via Campo Court in San Diego, California.   The Original Lease, the First Amendment andthe Second Amendment are collectively referred to as the **“Lease.”**

 

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

 

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

 

AGREEMENT :

 

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

 

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

 

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

 

(a)                                  Letter reportdated March 10,1997 from Woodward-Clyde Consultants re: Monitoring WellDestruction Report;

 

(b)                                 Letter reportdated April 15,1997 from Woodward-Clyde Consultants re: Permit by Rule ClosureCertification;

 

(c)                                  Letter reportdated April 15, 1997 from Woodward-Clyde Consultants re: Decontamination andDemolition Evaluation;

 

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

 

(e)                                  Letter dated July8, 1997 from EnviroPro re: Response to Dames & Moore Letter Report of AlcoaClosure Documents.

 

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

 

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

 

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

 

5.                                       **Parking Lot**.

 

(a)                                  The ActualCommencement Date for the Parking Lot shall occur on August 1, 1997,notwithstanding that Substantial Completion of the Parking Lot Improvements maynot have been completed as of such date.

 

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

 

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(c)                                  Effective uponthe Commencement Date under the Adjacent Lease (as the Commencement Date isdefined in Section 1.6 of the Summary to the Adjacent Lease): (i) the ParkingLot shall be deleted from the Premises and become a portion of the AdjacentPremises, subject, however, to clause (vi) below of this Section 5(c); (ii)Section 1.9 of the Summary to the Lease relating to Rent for the Parking Lotshall be deleted from the Lease; (iii) Landlord shall grant to Tenant easementsfor ingress and egress over, and parking upon, the Adjacent Premises inaccordance with the provisions of a Declaration of Parking and Access Easementsand Maintenance Agreement in the form and substance of Exhibit “A”attached hereto (the **“Declaration”**),whichLandlord will record against title to the Premises and the Adjacent Premises onor before the Commencement Date under the Adjacent Lease; (iv) Landlorddelegates and assigns to Tenant all rights and obligations of the Owner of theBenefited Parcel under the Declaration during the Term of the Lease, and Tenantshall observe and perform all such obligations; (v) Tenant and Landlord shallamend the memorandum of the Lease that has been recorded against title to thePremises to memorialize the deletion from the Lease of the Parking Lot; (vi)for purposes of Section 17 of the Lease, the Easement Area under theDeclaration will be deemed to constitute a portion of the Premises; and (vii)in the event a prospective purchaser or lender for the Premises or AdjacentPremises requests an amendment to the Declaration, Tenant shall consent to anysuch amendment provided such amendment does not materially increase Tenant’sobligations or materially decrease Tenant’s rights under the Lease orDeclaration. If a prospective purchaser or lender requests an amendment,Landlord will reimburse Tenant for the reasonable attorneys’ fees incurred byTenant in reviewing and negotiating such amendment.

 

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

 

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

 

7.                                       **Security Deposit**.

 

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

 
| **Period**                                                                                                                     | ** ** | **Required Security Deposit** | ** **   |
|--------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------|--------------|
| Actual  Commencement Date for Office Building through the first anniversary of the  Commencement Date under the Adjacent Lease |       | $                             | 2,224,416.00 |   |
|                                                                                                                           |       |                          |         |
| Months 13-24 of  the Adjacent Lease Term                                                                                       |       | $                             | 1,516,277.00 |   |
|                                                                                                                           |       |                          |         |
| Months 25-36 of  the Adjacent Lease Term                                                                                       |       | $                             | 808,138.00   |   |
|                                                                                                                           |       |                          |         |
| Months 37 to end  of the Adjacent Lease Term                                                                                   |       | $                             | 100,000.00   |   |

 

(b)                                 As an additionalcondition to Landlord’s waiver of the requirement to maintain the SecurityDeposit under Section 5 of the Original Lease, Tenant shall have commencedbusiness operations in the entire Adjacent Premises.

 

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

 

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

 

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

 

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

 
| “TENANT”   | CYMER, INC., a Nevada  corporation      |
|----------------------|-----------------------------------------|
|                 |                                    |
|                 | By:                                     | /s/ William A. Angus,  III |   |
|                 |                                    | William A. Angus, III |
|                 |                                    | Sr. Vice President and  Chief Financial Officer |
|                 |                                    |
|                 |                                    |
| “LANDLORD” | AEW/LBA  ACQUISITION CO. II, LLC,       |
|                 | a  California limited liability company |
|                 |                                    |
|                 | By:                                     | Eastrich  No. 175, LLC, a California limited liability  company, its member-manager |
|                 |                                    |   |
|                 |                                    | By: | /s/ Phil Belling |   |
|                 |                                    |   | Name | Phil Belling |   |
|                 |                                    |   | Its:   Authorized Signatory |
|                      |                                         |  |  |  |  |

 

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**AMENDMENT NO. 4 TO**

**SINGLE-TENANT INDUSTRIAL LEASE**

 

**(Via del Campo Court Premises)**

 

This **AMENDMENT NO. 4 TOSINGLE-TENANT INDUSTRIAL LEASE** (the“Amendment”) is entered into as of this 21th day of January 1999 by and between**ARDEN REALTYFINANCE III, LLC**, a Delawarelimited liability company (“Arden” or “Landlord”), and **CYMER, INC**., a Nevada corporation (“Tenant”), withreference to the facts set forth in the Recitals below.

 

**RECITALS**

 

A.                                  Landlord andTenant are parties to that certain Single-Tenant Industrial Lease datedDecember 19, 1996 (the “Original Lease”) for certain premises (the “Premises”) locatedat 16750 Via del Campo Court, San Diego, California 92127. The Original Lease hasbeen previously amended by:

 

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

 

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

 

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

 

B.                                     The OriginalLease, the First Amendment, the Second Amendment, and the Third Amendment arehereafter collectively referred to as the “Lease.”

 

C.                                     The originallandlord under the Lease was AEW/LBA Acquisition Co., II, LLC, a Californialimited liability company (“AEW/LBA”). AEW/LBA has previously sold the Premisesto Arden.  Concurrently with Arden’spurchase of the Premises from AEW/LBA, AEW/LBA assigned its interest under theLease to Arden. Arden is the current landlord under the Lease.

 

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

 

E.                                      The partiesdesire to further amend the Lease in order to memorialize their understandingconcerning the foregoing matters and other matters set forth below.

 

**AGREEMENT**

 

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

 

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

 

2.                                     Security Deposit. The currentamount of Tenant’s Security Deposit is $2,224,416.00. The Security Deposit isbeing held by Montgomery Securities, as provided in Section 5 of the OriginalLease. Landlord hereby waives the requirement for the Security Deposit underthe Lease. Accordingly, it is agreed that (a) Tenant shall no longer berequired to maintain the Security Deposit, and (b) Landlord shall execute suchdocuments as may be reasonably required to release the Security Deposit fromsuch account so it can be returned to Tenant. Landlord shall execute suchdocuments within five (5) business days after receipt of a written request fromTenant to do so. In addition, Section 1.10 of the Summary of Basic LeaseInformation and Definitions in the Original Lease, Section 5 of the OriginalLease, and Section 7 of the Third Amendment are hereby deleted in theirentirety.

 

3.                                       Amendment ofDeclaration.

 

(a)                                  Background.

 

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

 

2

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

 

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

 

(4)                                  Tenant isnegotiating to purchase the Adjacent Premises, i.e. the Burdened Parcels, fromAEW/LBA. Tenant’s purchase of the Burdened Parcels will require the Declarationand the Lease to be amended.

 

(b)                                 Form of Amendmentto Declaration.  Notwithstanding anything inthis Amendment to the contrary, if Tenant purchases the Burdened Parcels fromAEW/LBA, Landlord and Tenant shall execute Amendment No. 1 to Declaration ofParking and Access Easements and Maintenance Agreement (“Amendment No. 1 toDeclaration”) substantially in the form attached hereto as Exhibit “A.” Theparties shall execute Amendment No. 1 to Declaration in recordable form withinten (10) business days after the Title Transfer Date. Tenant shall beresponsible for causing Amendment No. 1 to Declaration to be recorded.

 

(c)                                  Grant of Rightsand Obligations to Tenant.  Landlordhereby grants to Tenant the right to use the Easements in accordance with theprovisions of the Declaration, as the same may be amended, during the term ofthe Lease. Tenant hereby agrees to comply with the Declaration, as the same maybe amended, during the term of the Lease.

 

(d)                                 Further Amendmentof Declaration.  In the event that aprospective purchaser of or lender for the Benefitted Parcels and/or theBurdened Parcels requests an amendment to the Declaration, Landlord and Tenantshall reasonably consent to any such amendment, provided such amendment doesnot materially increase Tenant’s or Landlord’s respective obligations, ormaterially decrease their respective rights, under the Lease and/or theDeclaration.   If a prospective purchaseror lender of Landlord or Tenant requests an amendment of the Declaration,Landlord or Tenant, as the case may be, shall reimburse the other for thereasonable attorney’s fees incurred by the requesting party in reviewing and

 

3

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

 

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

 

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

 

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

 

5.                                       Amendment ofMemorandum of Lease.  If Tenantpurchases the Burdened Parcels, Tenant and Landlord shall execute, acknowledgeand record an amendment to the Memorandum of Lease, as previously recorded, inform mutually satisfactory to the parties for the purpose of memorializing thedeletion of the Parking Lot from the Premises and other appropriatematters.  Landlord shall also execute, inrecordable form, a Quitclaim Deed, quitclaiming any interest which Landlord mayhave acquired in the Adjacent Premises by virtue of the Lease and/or theMemorandum of Lease, but not the Declaration. Both said amendment to theMemorandum of Lease and said Quitclaim Deed shall be executed and recordedconcurrently with the close of escrow for the purchase of the Burdened Parcelsby Tenant.

 

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

 

4

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7.                                       Effectiveness ofAmendment.  Except as may be otherwiseprovided above, this Amendment shall be effective when executed and deliveredby both parties.

 

**IN WITNESSWHEREOF,** the partieshereto have executed this Amendment No. 4 to Single-Tenant Industrial Lease asof the date first set forth above.

 
| **“TENANT”:**   | **CYMER, INC.,**  a Nevada corporation |
|---------------------------|----------------------------------------|
|                      |                                   |
|                      |                                   |
|                      | By:                                    | /s/ William A. Angus,  III |   |
|                      |                                   | William A. Angus, III |
|                      |                                   | Senior Vice President  and Chief  Financial Officer |
|                      |                                   |
|                      | By:                                    | /s/  B Scott Schellet |   |
|                      | Printed Name:                          |   B Scott  Schellet |   |
|                      | Title:                                 |    Senior VP Operations |   |
|                      |                                   |
|                      |                                   |
| **“LANDLORD”:** | **ARDEN REALTY FINANCE III, LLC,**     |
|                      | a Delaware limited liability company   |
|                      |                                   |
|                      | By:                                    | /s/ Victor J. Coleman |   |
|                      |                                   | Victor J. Coleman |
|                      |                                   | President and Chief Operating  Officer |
|                      |                                   |
|                      |                                   |   |
|                      |                                   |
|                      | By:                                    |   | /s/  Richard S. Ziman |   |
|                      | Printed  Name:                         | Richard  S. Ziman |   |
|                      | Title:                                 | CEO |   |
|                           |                                        |  |  |  |  |  |  |  |  |  |  |  |  |

 

5

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**FIFTH AMENDMENT TO LEASE**

**(Cymer Technology Center)**

 

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

 

RECITALS :

 

A.                                   Landlord andTenant are parties to that certain Single-Tenant Industrial Lease datedDecember 19, 1996 between Landlord’s predecessor-in-interest, AEW/LBAAcquisition Co. II, LLC, and Tenant (the **“Original Lease”**),for certain premises (the **“Premises”**)located at and adjacent to 16750 Via del Campo Court, San Diego, California.The Original Lease has been previously amended by that certain First Amendmentto Single-Tenant Industrial Lease dated April 1, 1997 (the **“FirstAmendment”**), that certain Second Amendment to Single-Tenant IndustrialLease dated December 2, 1997 (the **“Second Amendment”**),that certain Third Amendment to Single-Tenant Industrial Lease dated December12, 1997 (the **“Third Amendment”**), and thatcertain Amendment No. 4 to Single-Tenant Industrial Lease dated January 21,1999 (the **“Fourth Amendment”**). The OriginalLease, the First Amendment, the Second Amendment, the Third Amendment, and theFourth Amendment are hereinafter collectively referred to as the “Lease”.

 

B.                                     Unless otherwisedefined herein, capitalized terms as used herein shall have the same meaningsas given thereto in the Lease.

 

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

 

D.                                    By this FifthAmendment, Landlord and Tenant desire to relocate the 109 parking spaceslocated in the Easement Area to a parking structure (the **“ParkingStructure”**) to be constructed by Tenant on Lot 46, to terminate the “ParkingEasement” (as that term is defined in the Easement Amendment) and to otherwisemodify the Lease as provided herein.

 

NOW, THEREFORE,in consideration of the foregoing recitals and the mutual covenants containedherein, and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties hereto hereby agreeas follows:

 

AGREEMENT

 

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

 

(a)                                  Selection ofArchitect/Construction Drawings.  Tenantshall retain an architect/space planner of Tenant’s own choosing (the **“Architect”**) to prepare the “Construction Drawings”, as thatterm is defined below. Tenant shall also retain engineering consultants ofTenant’s own choosing (the **“Engineers”**) toprepare all plans and engineering drawings related to the structural,mechanical, electrical, plumbing, HVAC and lifesafety work of the ParkingStructure. The plans and drawings to be prepared by Architect and the Engineershereunder shall

 
|   | Initials: | /s/  VC |   |
|--------|-----------|---------|--------|
|   |      | DC      |   |

 

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beknown collectively as the **“Construction Drawings”**.Notwithstanding that any Construction Drawings may be reviewed by Landlord orits architects, engineers and consultants, and notwithstanding any advice orassistance which may be rendered to Tenant by Landlord or its architects,engineers and consultants, Landlord shall have no liability whatsoever inconnection therewith and shall not be responsible for any omissions or errorscontained in the Construction Drawings.

 

(b)                                 Permits.  Tenant shall cause the Architect to submit theConstruction Drawings to the appropriate authorities for all applicablebuilding permits necessary to allow “Contractor”, as that term is definedbelow, to commence and fully complete the construction of the ParkingStructure.

 

(c)                                  Construction ofParking Structure by Contractor.  Tenantshall independently retain a general contractor (“**Contractor**”),licensed by the State of California, to construct the Parking Structure on Lot46 in accordance with the Construction Drawings. The Contractor, allsubcontractors, laborers, materialmen and suppliers used by Tenant orContractor in connection with the construction of the Parking Structure shallbe known collectively as **“Tenant’s Agents”**.

 

(d)                                 Indemnity.  Tenant shall indemnify, defend, protect andhold Landlord harmless from any and all claims arising from or in connectionwith Tenant’s construction of the Parking Structure or from any activity,work or thing which may be permitted or suffered by Tenant or Tenant’s Agentsin or about the Premises and shall further indemnify, defend, protect and holdLandlord harmless from and against any and all claims arising from any breachor default in the performance of any obligation on Tenant’s part to beperformed under this Fifth Amendment or arising from any negligence or willfulmisconduct of Tenant or any of its agents, contractors, employees or invitees,patrons, customers or members in or about the Project and from any and allcosts, attorneys’ fees and costs, expenses and liabilities incurred in thedefense of any claim or any action or proceeding brought thereon, includingnegotiations in connection therewith.

 

(e)                                  Requirements ofTenant’s Agents.  The Contractor shall guaranteeto Tenant and for the benefit of Landlord that the Parking Structure shall befree from any defects in workmanship and materials for a period of one (1) yearfrom the date of completion thereof. Such warranties and guarantees withrespect to the Parking Structure shall be contained in the contract withContractor and shall be written such that such guarantees or warranties shallinure to the benefit of both Landlord and Tenant, as their respective interestsmay appear, and can be directly enforced by either. Tenant covenants to giveLandlord any assignment or other assurances which may be necessary to effectsuch right of direct enforcement.

 

2.                                       InsuranceRequirements.  Tenant shall require that allof Tenant’s Agents carry worker’s compensation insurance covering all of theirrespective employees, and shall also carry public liability insurance,including property damage, all with limits, in form and with companies as arerequired to be carried by Tenant as set forth in Section 20 of the OriginalLease. In addition to the insurance required under Section 20 of the OriginalLease, Tenant shall carry “Builder’s All Risk” insurance in an amount approvedby Landlord covering the construction of the Parking Structure, and such otherinsurance as Landlord may require. Such insurance shall be in amounts and shallinclude such extended coverage endorsements as may be reasonably required byLandlord.

 

3.                                       ConstructionCosts.  Landlord shall disburse toTenant such funds as are necessary to pay the Construction Costs (as definedbelow) as follows:

 

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

 

(i)                                     MonthlyDisbursements.  On or before the first day ofeach calendar month (**“Submittal Date”**)during the construction of the Parking Structure (or such other date as may beagreed upon between Landlord and Tenant), Tenant shall deliver to Landlord: (i)a request for payment of the Contractor approved by Tenant, in a form to beprovided by Landlord, showing the schedule, by trade, of percentage ofcompletion of the

 
|   | Initials: | /s/  VC |   |
|--------|-----------|---------|--------|
|   |      | DC      |   |

 

2

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ParkingStructure, detailing the portion of the work completed and the portion notcompleted; (ii) invoices from all of “Tenant’s Agents,” as that term is definedin Section l(c) of this Fifth Amendment, for labor rendered and materials deliveredto the Parking Structure; (iii) executed mechanic’s lien releases, which lienreleases shall be conditional with respect to the then-requested paymentamounts and unconditional with respect to payment amounts previously disbursedby Landlord, from all of Tenant’s Agents which shall comply with theappropriate provisions, as reasonably determined by Landlord, of CaliforniaCivil Code Section 3262(d); and (iv) all other information reasonably requestedby Landlord. Tenant’s request for payment shall be deemed Tenant’s acceptanceand approval of the work furnished and/or the materials supplied as set forthin Tenant’s payment request. After Landlord’s review of Tenant’s paymentrequest, on or before the date occurring thirty (30) days after the Submittal Date,and assuming Landlord receives all of the information described in items (i)through (iv), above, Landlord shall deliver a check to Tenant made jointlypayable to Contractor and Tenant in payment of the lesser of: (A) the amountsso requested by Tenant, as set forth in this Section 3(a)(i), above, less a tenpercent (10%) retention (the aggregate amount of such retentions to be known asthe **“Final Retention”**), and (B) the balanceof any remaining available portion of the “Construction Cost Allowance” (asthat term is defined in Section 3(d) below) (not including the FinalRetention), provided that Landlord does not dispute any request for paymentbased on non-compliance of any work with the Construction Drawings, or due toany substandard work, or for any other reason. Landlord’s payment of suchamounts shall not be deemed Landlord’s approval or acceptance of the workfurnished or materials supplied as set forth in Tenant’s payment request.

 

(ii)                                  Final Retention.  Subject to the provisions of this Fifth Amendment,a check for the Final Retention payable jointly to Tenant and Contractor shallbe delivered by Landlord to Tenant following the completion of construction ofthe Parking Structure, provided that (i) Tenant delivers to Landlord (a)properly executed mechanics lien releases from all of Tenant’s Agents incompliance with both California Civil Code Section 3262(d)(2) and eitherSection 3262(d)(3) or Section 3262(d)(4), which lien releases shall beconditional with respect to the then-requested payment amounts andunconditional with respect to payment amounts previously disbursed by Landlord,(b) an application and certificate for payment (AIA form G702-1992 orequivalent) signed by the Architect/Engineer, (c) a breakdown sheet (AIA formG703-1992 or equivalent), (d) copies of the stamped building permit plans, (e)copy of the building permit, (f) copies of the stamped building permitinspection card with all final sign-offs, (g) a reproducible copy (in a form asapproved by Landlord) of the “as built” drawings of the Parking Structure, (h)one year warranty letters from Tenant’s General Contractor, (i) final punchlistcompleted and signed off by Tenant and the Architect/Engineer, and (j) anacceptance of the Parking Structure signed by Landlord (collectively, the “FinalClosing Package”), and (ii) Landlord has determined that no substandard workexists which adversely affects the mechanical, electrical, plumbing, heating,ventilating and air conditioning, life-safety or other systems of the ParkingStructure, the structure or exterior appearance of the Parking Structure, asapplicable. Landlord shall have ten (10) business days from receipt of aconformed copy of the Notice of Completion to conduct its final inspection.

 

(iii)                               OriginalDocuments.  Tenant may retain the originalstamped building permit plans and stamped building permit inspection card (“OriginalPermits”) for the Parking Structure during the term of the Lease. Uponexpiration or earlier termination of the Lease, Tenant shall turn over the OriginalPermits to Landlord. However, if Landlord requires access to the OriginalPermits during the term of the Lease, Tenant shall make the Original Permitsavailable to Landlord.

 

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

 

(c)                                  CertainDefinitions.  The Term “Construction Costs”shall mean and include all hard and soft costs incurred in the construction ofthe Parking Structure, including without limitation architectural fees, permitfees, engineering fees, amounts paid to the Contractor under its constructioncontract with Tenant, and all other costs for labor and materials incorporatedinto the Parking Structure. The term “Landlord’s Financing Costs” shall meanand include: (1) interest (at the rate of 10.7% per annum) accrued ondisbursements of Construction

 
|   | Initials: | /s/  VC |   |
|--------|-----------|---------|--------|
|   |      | DC      |   |

 

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Costsmade to Tenant during the period beginning on the date of each disbursement andending on the Parking Rent Start Date and (2) a fee to cover Landlord’s cost ofadministering the disbursement of funds during the construction period equal toone percent (1.0%) of the amount disbursed to Tenant. Landlord shall not chargeany loan origination fees or loan processing fees. During the constructionperiod, interest shall accrue on such funds as are actually disbursed, fromtime to time, to pay the Construction Costs at the same annual rate specifiedin Section 4 below.

 

(d)                                 Ceiling onConstruction Costs.  Notwithstanding anything tothe contrary in this Section 3, in no event shall Landlord be required toadvance Construction Costs in excess of Two Million Two Hundred Thousand and00/100 Dollars ($2,200,000.00), excluding Landlord’s Financing Costs andadministrative costs (the **“Construction CostAllowance”**).

 

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

 

(a)                                  Prior to theParking Rent Start Date, Landlord shall deliver to Tenant a Notice ofConstruction Costs and Amortization Schedule (the **“Schedule”**)setting forth the amount of Additional Rent to be paid by Tenant in a formsubstantially similar to that attached hereto as Exhibit “A”, which Tenantshall execute and return to Landlord within five (5) days of receipt thereof.Failure of Tenant to timely execute and deliver the Schedule shall constitutean acknowledgment by Tenant that the statements included in such Schedule aretrue and correct, without exception.

 

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

 

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

 

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

 

6.                                       Brokers.  Each party represents and warrants to theother that no broker, agent or finder negotiated or was instrumental innegotiating or consummating this Fifth Amendment. Each party further agrees todefend, indemnify and hold harmless the other party from and against any claimfor commission or finder’s fee by any entity who claims or alleges that they wereretained or engaged by the first party or at the request of such party inconnection with this Fifth Amendment.

 

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

 
|   | Initials: | /s/  VC |   |
|--------|-----------|---------|--------|
|   |      | DC      |   |

 

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

 

9.                                       No FurtherModification.  Except as set forth in thisFifth Amendment, all of the terms and provisions of the Lease shall remainunmodified and in full force and effect. Effective as of the date hereof, allreferences to the “Lease” shall refer to the Lease as amended by this FifthAmendment.

 

IN WITNESSWHEREOF, this Fifth Amendment has been executed as of the day and year firstabove written.

 
|   | “Landlord”                 |
|--------|--------------------------------------|
|   |                                 |
|   | ARDEN  REALTY FINANCE III, L.L.C.,   |
|   | a Delaware limited liability company |
|   |                                 |
|   |                                 |
|   | By:                                  | /s/ Victor J. Coleman |   |
|   |                                 | VICTOR J. COLEMAN |
|   |                                 | Its: President and COO |
|   |                                 |   |
|   |                                 |   |
|   | By:                                  | /s/ Robert C. Peddicord |   |
|   |                                 |   |  Robert C. Peddicord |   |
|   |                                 | Its: |  Senior Vice President |   |
|   |                                 |
|   | “Tenant”:                  |
|   |                                 |
|   | CYMER,  INC.,                        |
|   | a  Nevada corporation                |
|   |                                 |
|   |                                 |
|   | By:                                  | /s/ William A. Angus, III |   |
|   | Print  Name:                         | William A. Angus, III |   |
|   | Its:                            | Sr.  Vice President and Chief Financial Officer |   |
|   |                                 |
|   |                                 |
|   | By:                                  |   |   |
|   | Print  Name:                         |   |   |
|   | Its:                            |   |   |
|        |                                      |  |  |  |  |  |  |  |  |  |

 

 
|   | Initials: | /s/  VC |   |
|--------|-----------|---------|--------|
|   |      | DC      |   |

 

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