**Exhibit 10.4**

 

SUBLEASE AGREEMENT

 

 

by and between

 

 

CYMER INC.,

a Nevada corporation

 

(“Sublessor”)

 

 

and

 

NORTHROP GRUMMAN SYSTEMS CORPORATION,

a Delaware corporation

 

(“Sublessee”)

 

 

November 5, 2004

 

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**TABLE OF CONTENTS**

 
| 1.     | Demise of Subleased  Premises                              |                                                                        |   |   |
|--------|------------------------------------------------------------|-----------------------------------------------------------------------------|--------|--------|
|   | 1.1                                                        | First Floor of the Subject  Building                                        |   |   |
|   | 1.2                                                        | Second Floor                                                                |   |   |
|   | 1.3                                                        | The Parking Facilities                                                      |   |   |
|   | 1.4                                                        | The Project Common Areas                                                    |   |   |
|   | 1.5                                                        | Sublessor’s Assurances                                                 |   |   |
|   | 1.6                                                        | Alterations to Project Common  Areas and Parking Facilities                 |   |   |
|   | 1.7                                                        | Access to Subleased Premises,  Parking Facilities and Project Common Areas  |   |   |
|   |                                                       |                                                                        |   |   |
| 2.     | Term and Possession                                        |                                                                        |   |   |
|   | 2.1                                                        | Term                                                                        |   |   |   |
|   | 2.2                                                        | Option to Extend                                                            |   |   |   |
|   | 2.3                                                        | Holding Over                                                                |   |   |   |
|   | 2.4                                                        | Sublessee’s Option to Terminate                                        |   |   |   |
|   |                                                       |                                                                        |   |   |
| 3.     | Rent.                                                      |                                                                        |   |   |
|   | 3.1                                                        | Base Rent                                                                   |   |   |   |
|   | 3.2                                                        | Rent Abatement                                                              |   |   |   |
|   | 3.3                                                        | Additional Rent                                                             |   |   |   |
|   | 3.4                                                        | Exclusions from Project  Operating Expenses and Building Operating Expenses |   |   |   |
|   | 3.5                                                        | Procedure for Payment of  Operating Expenses                                |   |   |   |
|   | 3.6                                                        | Proposition 13 Protection                                                   |   |   |   |
|   | 3.7                                                        | Vacancy Credit                                                              |   |   |   |
|   | 3.8                                                        | Audit Right                                                                 |   |   |   |
|   | 3.9                                                        | Rent Payment Address                                                        |   |   |   |
|   |                                                       |                                                                        |   |   |
| 4.     | Sublessor’s  Work and Condition of Subleased Premises |                                                                        |   |   |
|   | 4.1                                                        | Performance of Sublessor’s Work                                        |   |   |   |
|   | 4.2                                                        | Approved Plans                                                              |   |   |   |
|   | 4.3                                                        | Failure to Substantially  Complete by Outside Completion Date               |   |   |   |
|   | 4.4                                                        | Punchlist                                                                   |   |   |   |
|   | 4.5                                                        | Sublessor Warranty                                                          |   |   |   |
|   | 4.6                                                        | Substantial Completion                                                      |   |   |   |
|   | 4.7                                                        | Delivery of As-Builts                                                       |   |   |   |
|   |                                                       |                                                                        |   |   |
| 5.     | Sublessee Alterations  and Additions                       |                                                                        |   |   |
|   |                                                       |                                                                        |   |   |
| 6.     | Disturbance  of Possession by Sublessor                    |                                                                        |   |   |
|   |                                                       |                                                                        |   |   |
| 7.     | Fire and Other Casualty                                    |                                                                        |   |   |
|   |                                                       |                                                                        |   |   |
| 8.     | Surrender  and Restoration                                 |                                                                        |   |   |
|   |                                                       |                                                                        |   |   |
| 9.     | Connection  to Other Facilities                            |                                                                        |   |   |

 

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| 10.    | U.S. Government Security  Regulations          |                              |   |
|--------|------------------------------------------------|-----------------------------------|--------|
|   |                                           |                              |   |
| 11.    | Miscellaneous  Charges                         |                              |   |
|   |                                           |                              |   |
| 12.    | Elevators                                      |                              |   |
|   |                                           |                              |   |
| 13.    | Use of Premises                                |                              |   |
|   |                                           |                              |   |
| 14.    | Assignment/Subletting                          |                              |   |
|   | 14.1                                           | Right to Assign or Sublease       |   |   |
|   | 14.2                                           | Transfer to Affiliates            |   |   |
|   | 14.3                                           | No Right to Recapture             |   |   |
|   | 14.4                                           | Permitted Occupants               |   |   |
|   |                                           |                              |   |
| 15.    | Maintenance  and Repair/Damage and Destruction |                              |   |
|   | 15.1                                           | Sublessor’s Responsibilities |   |   |
|   | 15.2                                           | Sublessee’s Responsibilities |   |   |
|   |                                           |                              |   |
| 16.    | Insurance                                      |                              |   |
|   |                                           |                              |   |
| 17.    | Utilities.                                     |                              |   |
|   | 17.1                                           | Background                        |   |   |
|   | 17.2                                           | Sublessor Provided Utilities      |   |   |
|   | 17.3                                           | Meters                            |   |   |
|   |                                           |                              |   |
| 18.    | Parking                                        |                              |   |
|   |                                           |                              |   |
| 19.    | Signage                                        |                              |   |
|   |                                           |                              |   |
| 20.    | Security                                       |                              |   |
|   |                                           |                              |   |
| 21.    | Nondisturbance                                 |                              |   |
|   |                                           |                              |   |
| 22.    | Roof  Rights                                   |                              |   |
|   |                                           |                              |   |
| 23.    | Secured Areas                                  |                              |   |
|   |                                           |                              |   |
| 24.    | Hazardous  Materials                           |                              |   |
|   |                                           |                              |   |
| 25.    | Right to Repair                                |                              |   |
|   |                                           |                              |   |
| 26.    | Indemnity                                      |                              |   |
|   |                                           |                              |   |
| 27.    | The Prime Lease                                |                              |   |
|   |                                           |                              |   |
| 28.    | Quiet Enjoyment                                |                              |   |

 

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| 29.    | Condemnation                 |             |   |
|--------|------------------------------|------------------|--------|
|   |                         |             |   |
| 30.    | Sublessee’s  Default    |             |   |
|   | 30.1                         | Event of Default |   |   |
|   | 30.2                         | Remedies         |   |   |
|   |                         |             |   |
| 31.    | Obligation  to Mitigate      |             |   |
|   |                         |             |   |
| 32.    | Brokerage  Commission        |             |   |
|   |                         |             |   |
| 33.    | Sublessor  Default           |             |   |
|   |                         |             |   |
| 34.    | Notices                      |             |   |
|   |                         |             |   |
| 35.    | Attorneys’  Fees        |             |   |
|   |                         |             |   |
| 36.    | Termination  of Prime Lease  |             |   |
|   |                         |             |   |
| 37.    | Entire Agreement             |             |   |
|   |                         |             |   |
| 38.    | Counterparts                 |             |   |
|   |                         |             |   |
| 39.    | Estoppel  Certificates       |             |   |
|   |                         |             |   |
| 40.    | Time is of the  Essence      |             |   |
|   |                         |             |   |
| 41.    | Miscellaneous                |             |   |
|   | 41.1                         | Severability     |   |   |
|   | 41.2                         | No Waiver        |   |   |
|   | 41.3                         | Amendments       |   |   |
|   | 41.4                         | Captions         |   |   |
|   | 41.5                         | Government Law   |   |   |
|   | 41.6                         | Construction     |   |   |
|   |                         |             |   |
| 42.    | Authority                    |             |   |
|   |                         |             |   |
| 43.    | Sublessor  Bankruptcy        |             |   |
|   |                         |             |   |
| 44.    | Sublessee’s  Fixtures   |             |   |
|   |                         |             |   |
| 45.    | Governmental  Requirements   |             |   |
|   |                         |             |   |
| 46.    | PRIME LESSOR’S  CONSENT |             |   |
|   |                         |             |   |
| 47.    | NONBINDING  DRAFTS           |             |   |

 

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**SUBLEASEAGREEMENT**

**(Entire Building)**

 

This SUBLEASE AGREEMENT (“Sublease” or “Agreement”),dated for reference purposes as of November 5, 2004, is made by andbetween CYMER, INC., a Nevada corporation (“Sublessor”), and NORTHROP GRUMMANSYSTEMS CORPORATION, a Delaware corporation (“Sublessee”).  The “Effective Date” of this Sublease shallbe the date of the later to occur of (i) the actual execution and delivery tothe other party of this Sublease by the latter of the Sublessor and Sublesseeand (ii) the execution and delivery by the “Prime Lessor” of the “MasterLandlord’s Consent” as such terms are hereinafter defined.

 

WHEREAS, Sublessor is the tenant under that certainSingle-Tenant Industrial Lease (Triple Net) between Sublessor and AEW/LBAAcquisition Co. II, LLC, a California limited liability company dated December 19,1996, as amended by that certain First Amendment to Single-Tenant IndustrialLease dated April 1, 1997, that certain Second Amendment to Single-TenantIndustrial Lease dated December 2, 1997, that certain Third Amendment toSingle-Tenant Industrial Lease dated December 12, 1997, that certainAmendment No. 4 to Single-Tenant Industrial Lease dated January 21, 1999,and that certain Fifth Amendment to Lease made and entered into as of the 21stday of February, 2000 by and between Arden Realty Finance III, LLC, a Delawarelimited liability company (“Prime Lessor”) and Sublessor (collectively, the “PrimeLease”, a copy of which is attached hereto and incorporated by reference as Exhibit ”A”),which affects all of the real property hereinafter described as the “Land.

 

WHEREAS, the Land consists of two (2) legal parcelsmore particularly described on Exhibit “B” attached hereto and made apart hereof.

 

WHEREAS, the Land is improved with two 2-storybuildings, including the building located at 16710 Via del Campo Court, SanDiego, California (the “Subject Building”), surface parking, a two (2) storyparking structure, an outdoor amphitheatre, an outdoor basketball court,exterior eating areas and two (2) buildings comprising a central plant fromwhich electricity and heating and air conditioning are provided by Sublessor(the “Central Plant”).  The Land and allof the improvements thereon are depicted on the site plan attached hereto as Exhibit“C” (the “Site Plan”) and are hereinafter sometimes collectively referredto as the “Project”.

 

WHEREAS, the Subject Building consists ofapproximately 108,290rentable square feet and the other building on the Landconsists of approximately 36,959 rentable square feet andis located at 16750 Via del Campo Court, San Diego, California, 92127 (the “AdjacentBuilding”).  The Subject Building and theAdjacent Building shall be collectively hereinafter referred to as the “Buildings.”

 

WHEREAS, Sublessee desires to sublet from Sublessorthe Subject Building, the surface of that certain portion of the Land legallydescribed as Parcel “A” on Exhibit “B” (the “Building Parcel”) and allof the parking areas shown on the Site Plan with the exception of 115 stallsreserved for the use of the occupant of the Adjacent Building and to obtain thenonexclusive

 

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right in common with the tenants and occupants of theAdjacent Building to use the handicapped parking spaces, outdoor amphitheatre,outdoor basketball court, and exterior eating areas on the Land (collectivelythe “Project Amenities”) from Sublessor in accordance with the terms andconditions contained herein;

 

WHEREAS, the Land is subject to the terms of thatcertain Declaration of Parking and Access Easements and Maintenance Agreementdated as of the March 2, 1998 and recorded on March 5, 1998 asInstrument No. 1998-0118053 in the Official Records of San Diego County,California, as amended by that certain Amendment No. 1 to Declaration ofParking and Access Easements and Maintenance Agreement dated as of January 21,1999 and recorded on February 1, 1999 as Document number 1999-0056829 inthe Official Records of San Diego County, California and the quitclaim deeddated January 26, 1999 and recorded in the Official Records of San DiegoCounty, California on  February 1,1999 as Document No 1999-0056828 (collectively the “Declaration”).

 

NOW, THEREFORE, in consideration of the mutualpromises and covenants set forth in this Sublease Agreement, the parties herebyagree as follows:

 

1.             Demise of Subleased Premises.  Sublessor hereby subleases to Sublessee, andSublessee agrees to sublease from Sublessor, the following premises (the“Subleased Premises”):

 

## 1.1                                 FirstFloor of the Subject Building.  The first(1st) floor (the “First Floor Subleased Premises” or “First Floor”) consistingof approximately 65,540 rentable square feet of office, lobby, and cafeteriaspace as outlined on the Space Plan with the most recent revision dated  December 10, 2004 (the “Space Plan”)attached hereto and incorporated by reference as Exhibit ”D” andgenerally referred to in the Space Plan as Areas H, I, J (the Main Lobby), K,L, M (including the cafeteria space therein contained and all of the existingcafeteria equipment), N, O-1, O-2, Q and S, together with approximately 7,375rentable square feet of warehouse space generally referred to in the Space Planas Areas O and P (the “First Floor Warehouse Space”), for an aggregate of72,915 rentable square feet of office and warehouse space combined.

##  

## 1.2                                 SecondFloor.  The second (2nd) floor of theSubject Building (the “Second Floor Subleased Premises” or “Second Floor”)consisting of approximately 30,385 rentable square feet of office space asoutlined on the Space Plan and generally referred to therein as Areas A, A-1,B, C, together with approximately 4,990 rentablesquare feet of warehouse space generally referred to in the Space Plan as AreaD, for an aggregate of 35,375 rentable square feet of office and warehousespace combined.  Areas E, F, and G,containing the mechanical room, the electrical closet, and certain spaceotherwise referred to as warehouse space, are excluded from the rentable areaof the Second Floor.

##  

## 1.3                                 TheParking Facilities.  All of theareas shown on the Site Plan for parking, including without limitation theParking Structure, but excluding the 115 stalls designated on the map as “G.A.Parking” and listed as “CSD-1 Tenant Parking Allocation” (the “AdjacentBuilding Parking Area”) and such other parking facilities as shall hereafter beprovided to Sublessor under the Declaration (collectively the “ParkingFacilities”); provided however in no event shall the number of parking stallsprovided to Sublessee for its exclusive use

 

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## on theLand be less than one hundred fifty-six (156) the parking stalls in the parkinggarage, one hundred seventy-three (173) existing surface parking stalls, andtwenty-five (25) new surface parking stalls which Sublessor shall cause to bestriped for parking on the surface area adjacent to the “Warehouse Area” (ashereinafter defined), for a total of not less than three hundred fifty-four(354) parking stalls.  In addition,eleven (11) handicapped parking stalls as shown on the Site Plan shall beavailable for Sublessee’s non-exclusive use shared with the tenant of theAdjacent Building.

##  

## 1.4                                 TheProject Common Areas.  Thenon-exclusive right in common with the other occupants of the Buildings to usethe improvements on the Land not within any Buildings that are intended for useby the occupants of the Buildings (the “Project Common Areas”), includingwithout limitation the Project Amenities, the CentralPlant, the trash storage area for the Project, all landscaping areas, drivewaysthrough the parking areas, and the driveways for ingress and egress to and fromVia del Campo Court and the parking areas located on the Adjacent Parcel.  The maintenance building shown on the SitePlan is not part of the Subleased Premises or the Project Common Areas.  Sublessor shall retain the exclusive right touse the Maintenance Building and shall be solely responsible for maintainingand repairing same.

##  

## 1.5                                 Sublessor’sAssurances.  Sublessor represents and warrants toSublessee each of the following:

##  

### (a)                                  thatSublessor holds all of the Tenant’s interest under the Prime Lease in and tothe Subleased Premises;

###  

### (b)                                 thatSublessor’s interest under the Prime Lease has not been assigned orhypothecated by Sublessor;

###  

### (c)                                  that to thebest of Sublessor’s knowledge, the Land, the Buildings and the Project are freeand clear of all exceptions to title except for the matters set forth on thatcertain Preliminary Title Report issued as of November 3, 2004 by FirstAmerican Title Insurance Company;

###  

### (d)                                 that theProject, including without limitation the Buildings, the Project Common Area,the Parking Facilities, the Project Amenities and the other improvements to theLand are in compliance with applicable laws, rules, ordinances, and restrictivecovenants now affecting the Land

###  

### (e)                                  that with theexception of the “Sublessor’s Work” (as hereinafter defined), and the approvalsrequired to be delivered to Sublessee under Section 2.1(f), Sublessor hasobtained and secured all consents, approvals and authorizations required topermit Sublessee to use and occupy the Subleased Premises for the purposespermitted by this Sublease;

###  

### (f)                                    that thePrime Lease attached hereto is a true and complete copy of the same; and

 

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### (g)                                 that thePrime Lease is free from default by Sublessor and the Prime Lessor as of thedate of this Sublease.

###  

## 1.6                                 Alterationsto Project Common Areas and Parking Facilities.  Sublessor and Sublessee each acknowledges andagrees that it shall not materially alter or reconfigure the Project CommonAreas and/or the Parking Facilities and/or restripe the parking stalls toreduce the number of parking stalls or grant any other party the right to usethe Parking Facilities except for the occupants of the Buildings.

##  

## 1.7                                 Accessto Subleased Premises, Parking Facilities and Project Common Areas.  Subject to the terms of this Sublease, Sublessor shallprovide Sublessee and its employees and invitees access to the SubleasedPremises and the Project Common Areas and Parking Facilities seven (7) days aweek, twenty-four (24) hours a day, three hundred sixty five (365) days a yearduring the term of this Sublease. Sublessor shall enforce the terms of the Prime Lease to maintainSublessee’s unrestricted access to the Subleased Premises, the Project, theProject Common Areas and the Parking Facilities.  Notwithstanding the forgoing, Sublessee’s useof the amphitheatre shall be scheduled and reserved in advance with Sublessorand shall be subject to any prior reservation previously scheduled by theoccupant of the Adjacent Building. Sublessee’s right to use the basketball court shall be on a first comefirst serve basis.

##  

# 2.                                       Term andPossession.

#  

## 2.1                                 Term.  Subject to all the terms and conditions ofthis Sublease, this Sublease shall be effective on the date of full executionand delivery of this Sublease by Sublessor and Sublessee.  The term (the “Initial****Sublease Term”)of this Sublease shall consist of two (2) staggered terms applicable as to two(2) different portions of the Subleased Premises (each a “Phase”), as providedin this Section 2.1.  The firstPhase of the Subleased Premises to be delivered to Sublessee (hereinafter “FirstPhase”) is comprised of the Second Floor, the Land and the ParkingFacilities.  The second Phase of theSubleased Premises to be delivered to Sublessee (hereinafter “Second Phase”) iscomprised of the First Floor Subleased Premises.  The Initial Sublease Term for each Phaseshall be:

##  

### (a)                                  FirstPhase.  The Initial Sublease Term withrespect to the First Phase (the “First Phase Initial Term”) shall be a periodcommencing on the date of delivery by Sublessor of the First Phase in the “RequiredCondition” (as hereinafter defined) and the acceptance by Sublessee of the same(the “First Phase Delivery Date”) and terminating on the Expiration Date (asdefined in Section 2.1(b) below), unless otherwise extended or soonerterminated in accordance with the provisions of this Sublease or by mutualwritten agreement of the parties. Sublessor shall deliver the First Phase to Sublessee in the Required Conditionso as to insure that the First Phase Delivery Date shall occur on or before adate which is twenty-five (25) calendar days following the Effective Date (the “FirstPhase Outside Delivery Date”).

###  

### (b)                                 SecondPhase.  The Initial Sublease Term with respectto the Second Phase (the “Second Phase Initial Term”) shall be for a period ofthirty six (36)

 

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### monthscommencing on the date of delivery by Sublessor of the Second Phase in theRequired Condition and acceptance of same by Sublessee (the “Second PhaseDelivery Date”), and terminating on the date that is thirty six (36) monthslater (the “Expiration Date”), unless otherwise extended or sooner terminatedin accordance with the provisions of this Sublease or by mutual writtenagreement of the parties; provided, however, that in the event the Second PhaseDelivery Date does not fall on the first day of a month, then the InitialSublease Term shall be extended so that the Expiration Date occurs on the lastday of the calendar month during which this Sublease would otherwiseexpire.  Sublessor shall deliver theSecond Phase to Sublessee in the Required Condition on or before a date whichis eighty-six (86) calendar days following the Effective Date (the “SecondPhase Outside Delivery Date”).

###  

### (c)                                  Confirmationof Sublease Dates.  Following thedetermination of the Effective Date, Sublessor and Sublessee shall confirm thesame in writing which confirmation shall occur no later than the date rentshall commence under this Sublease for any Phase.  Following the determination of the FirstPhase Delivery Date and the Second Phase Delivery Date, respectively, Sublessorand Sublessee shall confirm in writing the commencement dates for each Phase(which shall be such delivery dates and shall be the respective dates ofcommencement of rent for each Phase) and the Expiration Date applicable to thisSublease.

###  

### (d)                                 Failureto Timely Deliver one or more Phase. Sublessoracknowledges that the timely delivery to Sublessee of possession of each Phaseon or before the Outside Delivery Dates for same described in this Section inthe Required Condition is a critical element in connection with Sublessee’sbusiness operations.  Notwithstanding theforegoing, however, each Phase Outside Delivery Date shall be extended, for aperiod not to exceed thirty (30) days, to the extent Sublessor is delayed byreason of the occurrence of acts of God, man-made or natural disasters,earthquakes, fire, riots, flood, material shortages, or strikes, but solely tothe extent that such events or circumstances cannot reasonably be mitigatedwithin Sublessor’s reasonable control. The term “Required Condition” for each Phase shall mean that:(1) Substantial Completion of the Sublessor’s Work for such Phase shallhave occurred; (2) Sublessor shall have delivered possession of such Phaseto Sublessee, broom clean and ready for occupancy in good working order andrepair and in compliance with all Applicable Laws, Governmental Requirementsand other rules and regulations including without limitation the mechanical,electrical, lighting, plumbing and HVAC equipment.

###  

#### (i)                                     In the eventSublessor does not deliver to Sublessee any Phase in the Required Condition onor before the Outside Delivery Date for such Phase, or in the event Sublessordoes not deliver the “Prime Lease Approvals” (as hereinafter defined in 2.1(f)below) on or before a date which is fifteen (15) calendar days following theEffective Date, unless thereafter, not later than thirty (30) days followingthe delivery by Sublessee to Sublessor of written notice of Sublessor’s defaultwith respect thereto, Sublessor delivers such Phase in the Required Conditionand the Prime Lease Approvals, if and to the extent not previously delivered,then Sublessor shall be in material default of this Sublease

 

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#### andSublessee shall be entitled to exercise all remedies available at law or inequity by reason of such failure.  Suchremedies may include, without limitation, the right of Sublessee to terminatethis Sublease upon delivering written notice to Sublessor of Sublessor’selection to do so, either as part of or separate from the written noticeprovided for above in this Section 2.1(d)(i).  If Sublessee exercises this right oftermination, then this Sublease shall terminate and become of no further forceor effect effective on the date specified by Sublessor in the written notice,which date shall be no sooner than thirty (30 days following the delivery bySublessee to Sublessor of the written notice of its election to terminate thisSublease  With or without written noticefrom Sublessee to Sublessor as provided for in this Section 2.1(d)(i),Sublessee shall receive a credit against the Base Rent and Additional Rent payableunder this Sublease in the amount of two (2) days of free rent for(A) every day from the First Phase Outside Delivery Date until the laterto occur of the First Phase Delivery Date and the date the Prime LeaseApprovals are delivered for the First Phase, and (B) every day from the SecondPhase Outside Delivery Date until the Second Phase Delivery Date, with respectto the Second Phase.  Nothing hereinshall limit Sublessee’s right to be awarded its attorneys fees and costs inenforcing this provision.

####  

#### (ii)                                  Sublessorshall keep Sublessee promptly informed of all developments in connection withthe construction of the Sublessor’s Work for each Phase, including periodicupdates (written progress reports) as to the status of construction, cityinspections and developments relating to the build-out of the SubleasedPremises such that Sublessee will be able to accurately measure the progressand completion of such work.  Sublesseeshall be entitled to send a representative to attend all meetings regardingconstruction and scheduling.  Inaddition, Sublessor shall use all commercially reasonable efforts to provide toSublessee fifteen (15) days’ advance notice as to the expected delivery date ofthe First Phase and Second Phase, respectively.

####  

#### (iii)                               In the eventof a termination of this Sublease pursuant to this Section 2.1, Sublesseeshall surrender that portion of the Subleased Premises so terminated inaccordance with the provisions of this Section 2.1 and in accordance withthe terms and provisions of this Sublease with respect to vacation andsurrender of the Subleased Premises. This Sublease shall thereupon terminate with respect to such portions ofthe Subleased Premises included in the termination notice as of the effectivedate of such termination as if such date were the originally specifiedExpiration Date for such portion of the Subleased Premises, and Sublessor andSublessee shall each be released from any liability, responsibility orobligation accruing thereafter with respect to such terminated portions of theSubleased Premises.

####  

### (e)                                  Workby Sublessee.  Notwithstandinganything to the contrary contained herein, Sublessee shall have the right toenter the Subleased Premises at any time following the Effective Date toperform such work (“Sublessee’s Work”) as Sublessee deems necessary to installits furniture, fixtures and equipment and/or to

 

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### performthe alterations described on the Schedule of Sublessee’s Work attachedhereto as Exhibit “E”, including the “SCIF Work” (as hereinafterdefined).  In performing Sublessee’sWork, Sublessee shall use commercially reasonable efforts to avoid anyinterference with the performance by Sublessor of the Sublessor’s Work thenbeing conducted.  Sublessor and Sublesseeshall cooperate with each other to expedite and to avoid interfering with thework being performed by each of them. The parties acknowledge and agree that Sublessee shall have the right,notwithstanding any other provision of this Sublease and/or the Prime Lease tothe contrary, to cause certain improvements (the “SCIF Work”) to be made withinthose portions of the Subleased Premises depicted as “SCIF and “Secret SAR” onthe floor plan attached hereto and made a part hereof as Exhibit “G” (theSCIF Areas”) as necessary to complete within the SCIF Areas each of therequirements described on Exhibit “E” attached hereto and made a parthereof and hereinafter referred to as the “SCIF Scope of Work.” Sublesseeagrees to perform such work in a good and workmanlike manner.

###  

### (f)                                    Approvalsby Prime Lessor and its Lender.  As of theEffective Date, Sublessor represents and warrants to Sublessee that (a)Sublessor has obtained all approvals (including waivers of time periods forconsents, if applicable) required to be obtained by Sublessor (with respect tothis Sublease and its terms) under the terms of the Prime Lease, includingPrime Lessor’s written consent (the “Master Landlord Consent”) to this Subleaseand the terms hereof and the work permitted to be performed by Sublessor andSublessee pursuant to the terms of this Sublease and (b) the Prime Lease isfree from default by Sublessee and that no event has occurred with notice orthe passage of time that would constitute a default by Sublessee under the PrimeLease.  Upon request of Sublessee,Sublessor shall use its commercially reasonable best efforts to provide toSublessee, as soon as reasonably possible, the consent by Lehman BrothersRealty Corporation, or its successor as first trustee lender on the Land (“Lender”)  to this Sublease as and to the extentrequired by the terms of Lender’s agreements.

###  

## 2.2                                 Optionto Extend.  Provided Sublessee is not in default beyondthe expiration of any applicable notice or grace period, Sublessee shall havetwo (2) options to extend the term of this Sublease as to either or both of thePhases (each an “Extension Option”) for one (1) year each.  If Sublessee elects to exercise an ExtensionOption, Sublessee shall exercise such Extension Option by providing Sublessorwith prior written notice (the “Extension Notice”) specifying the Phase(s) forwhich Sublessee elects to extend the Initial Sublease Term or Extension Term,as applicable, and the expiration date of the term as so extended (the “ExtensionTerm”), as to each applicable Phase in the Extension Notice.  Such Extension Notice shall be given not lessthan six (6) months prior to the expiration of the Initial Sublease Term or, asapplicable, the first Extension Term. The Base Rent for the Extension Term of any Phase shall be equal to onehundred four percent (104%) of the Base Rent payable for such portion of theSubleased Premises during the immediately preceding term (Initial Sublease Termor first Extension Term, as applicable). Notwithstanding such right, in the event Sublessee elects to occupy lessthan all of the Subject Building, the parties shall agree upon such drywall andpaint work as may be required to demise and separate the First Floor from theSecond Floor in accordance with applicable laws and regulations to render thesame usable by more than one tenant.  Inthe event the parties reach agreement as to the scope of the work required toso demise

 

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## theSubject Building (the “Agreed Upon Demising Work”) within thirty (30) daysfollowing the delivery by Sublessee of its election to extend the Initial Termof the Sublease for less than the entire Subject Building, and Sublessee failsto complete the Agreed Upon Demising Work on or prior to the expiration of suchsix (6) month period, then Sublessee shall continue to pay Base Rent toSublessor for the entire Subject Building until the date the Agreed UponDemising Work has been substantially completed. If the Agreed Upon Demising Work is not determined prior to theexpiration of such thirty (30) day period, then Sublessor shall have the right,but not the obligation, at its sole cost and expense, to perform such demisingwork as Sublessor deems appropriate and, whether or not Sublessor elects to doso, Sublessee’s only obligation shall be to perform such work when and if it isdetermined provided such determination is made no later than 6 months prior tothe expiration of the Extension Term.

##  

## 2.3                                 HoldingOver.  Sublessee shall have the right to holdover inthe Subleased Premises provided Sublessee delivers to Sublessor a writtennotice of intent to do so (the “Holdover Notice”) not later than sixty (60)days prior to the Expiration Date or the expiration date of any ExtensionTerm.  The Holdover Notice shall specifythe length of time that Sublessee requires to remain in the Subleased Premises(the “Permitted Holdover Period”) which shall not extend beyond the lesser ofsix (6) months or the initial term of the Prime Lease (or the extended term, ifany, which Sublessor advises is not anticipated).  Any such holdover during the PermittedHoldover Period shall be upon the same terms and conditions as were applicableduring the last month of the Initial Sublease Term or Extension Term, asapplicable; provided, however, that the Base Rent shall be increased to onehundred twenty percent (120%) of the Base Rent in effect during the last monthof the Initial Sublease Term or Extension Term, as applicable.  Any holding over by Sublessee beyond thePermitted Holdover Period with the consent of Sublessor shall be deemed amonth-to-month tenancy at one hundred fifty percent (150%) of the Base Rent ineffect during the last month of the Initial Sublease Term or Extension Term, asapplicable.  Any holding over bySublessee beyond the Permitted Holdover Period without the consent of Sublessorshall be deemed a tenancy at sufferance at one hundred seventy-five percent(175%) of the Base Rent in effect during the last month of the Initial SubleaseTerm or Extension Term, as applicable. To the extent Sublessee holds over in the Subleased Premises beyond thePermitted Holdover Period without obtaining Sublessor’s consent, Sublesseeshall defend, indemnify and hold Sublessor harmless from and against all lossor liability resulting from or arising out of Sublessee’s failure to surrenderthe Subleased Premises by such date, including, but not limited to, any amountsrequired to be paid to any sublessee or prospective sublessee who was to haveoccupied the Subleased Premises after said termination or expiration and anyrelated attorneys’ fees and brokerage commissions incurred as a result ofSublessee’s failure to vacate the Subleased Premises on or before theexpiration of the Permitted Holdover Period. Notwithstanding the foregoing, in the event of a holdover not permittedor expressly authorized pursuant to the terms of this Section 2.2 above,which ends on or before the applicable term of the Prime Lease, Sublessee shallnot be liable to Sublessor for consequential damages for its failure to vacatethe applicable portion of the Subleased Premises.  Nothing herein shall be deemed to beSublessor’s consent to a holding over by Sublessee beyond the PermittedHoldover Period.

##  

## 2.4                                 Sublessee’sOption to Terminate.  Commencing onthe date that is (i) twenty-four (24) calendar months following the SecondPhase Delivery Date, Sublessee shall

 

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## have theright (the “Early Termination Right”) to elect to terminate this Sublease as toall or any of such Phases, if either of the following circumstances occur: (i)any contract entered into between Sublessee and the United States Governmentthat Sublessee is using the Subleased Premises to support is terminated, notrenewed, replaced by another government contract and/or modified so that thefunding by the United States Government of the sums required to be paidthereunder is reduced by fifty percent (50%) or more; or (ii) the United StatesGovernment expressly directs a relocation of the place of performance of thesuch contract which results in a reduction of the contract price performed atthe site of the Subleased Premises by an amount of fifty percent (50%) or more.

##  

### (a)                                  Sublessee’sEarly Termination Right shall be exercised by Sublessee by providing toSublessor at least one hundred eighty (180) days’ prior written notice toSublessor of Sublessee’s intent to exercise this right of early terminationaccompanied by reasonable evidence that one of the above referenced conditionshas occurred and designation of the effective date of such termination.

###  

### (b)                                 Sublessee mayexercise its Early Termination Right by reducing the Subleased Premises only inthe following combinations:  (i) allof the First Floor and Second Floor; (ii) all of the Second Floor or (iii)all of the First Floor.

###  

### (c)                                  To the extentthat the Early Termination Right is exercised with respect to the Second Floorprior to the Expiration Date, Sublessee shall pay to Sublessor an amount equalto the sum of the then unamortized portion of (i) the total cost, not to exceedFour Hundred Ninety-one Thousand Seven Hundred Seventy-five Dollars ($490,050.00), of theFirst Phase Sublessor’s Work plus (ii) the brokerage commissions for the SecondFloor.  (The brokerage commissions forthe Second Floor shall equal the product of the dollar amount of the brokeragecommissions for the Subleased Premises times 32.67.)  Such termination payment shall be made infull no later than thirty (30) business days after the effective date of suchtermination.  The unamortized portion ofthe First Phase Sublessor’s Work and brokerage commission shall be the dollaramount of the remaining principal balance which would be due as of the date oftermination of a loan in an original principal amount equal to the total dollaramount of the First Phase Sublessor’s Work and brokerage commission, amortizedon an even monthly payment basis (using a 30-day month, with interest at therate of 9% per annum) over the scheduled term of the First Phase Initial Term.

###  

### (d)                                 To the extentthat the Early Termination Right is exercised with respect to the First Floorprior to the Expiration Date, Sublessee shall pay to Sublessor (in addition tothe amount due under Section 2.4(c) above, if any) an amount equal to thesum of the then unamortized portion of (i) the total cost, not to exceed OneMillion Eight Thousand Two Hundred Twenty-five Dollars ($1,009,950.00), of theSecond Phase Sublessor’s Work plus (ii) the brokerage commissions for the FirstFloor.  (The brokerage commissions forthe First Floor shall equal the product of the dollar amount of the brokeragecommissions for the Subleased Premises times 67.33.)  The unamortized portion of the Second PhaseSublessor’s Work and brokerage commission shall be the dollar amount of theremaining principal balance which would be due as of the date of

 

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### terminationof a loan in an original principal amount equal to the total dollar amount ofthe Second Phase Sublessor’s Work and brokerage commission, amortized on aneven monthly payment basis (using a 30-day month, with interest at the rate of9% per annum) over the scheduled term of the Second Phase Initial Term;

###  

### (e)                                  No later thanthirty (30) days following the date Base Rent shall commence for each Phase,Sublessor shall give to Sublessee written notice of the actual total cost ofthe Sublessor’s Work for such Phase.

###  

### (f)                                    In the eventof any such termination, Sublessee shall surrender that portion of theSubleased Premises so terminated in accordance with the provisions of this Section 2.4and in accordance with the terms and provisions of this Sublease with respectto vacation and surrender of the Subleased Premises. This Sublease shallthereupon terminate with respect to such portions of the Subleased Premisesincluded in the termination notice as of the effective date of such terminationas if such date were the originally specified Expiration Date for such portionof the Subleased Premises, and Sublessor and Sublessee shall each be releasedfrom any liability, responsibility or obligation accruing thereafter withrespect to such terminated portions of the Subleased Premises.  Notwithstanding the forgoing, in the eventSublessee elects to partially terminate this Sublease, the parties shall agreeupon the work required to demise the Subject Building in accordance withapplicable laws and regulations to render the same usable by more than onetenant and in the event the parties reach agreement as to the scope of the workrequired to so demise the Subject Building (the “Agreed Upon Demising Work”)within thirty (30) days following the exercise of the Early Termination Right,and Sublessee fails to complete the Agreed Upon Demising Work on or prior tothe expiration of such six (6) month period, then Sublessee shall continue topay Base Rent to Sublessor for the entire Subject Building until the date theAgreed Upon Demising Work has been substantially completed.  If the Agreed Upon Demising Work is notdetermined prior to the expiration of such thirty (30) day period, thenSublessor shall have the right, but not the obligation, at its sole cost andexpense, to perform such demising work as Sublessor deems appropriate and,whether or not Sublessor elects to do so, Sublessee’s only obligation shall beto perform such work when and if it is determined provided such determinationis made no later than 6 months prior to the expiration of the Extension Term.

###  

# 3.                                       Rent.

#  

## 3.1                                 BaseRent.  From and after the Second Phase DeliveryDate, Sublessee shall pay to Sublessor base rent (“Base Rent”) based upon thefollowing schedule:

 

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| **Period**                                            | ** ** | **Class** | ** ** | **Square Feet** | ** ** | **Amt/sq. ft.  Per Month** | ** ** | **Aggregate  Amount** | ** ** | **Total Monthly  Amount** | ** ** |
|-------------------------------------------------------|------------|-----------|------------|-----------------|------------|----------------------------|------------|-----------------------|------------|---------------------------|------------|
| Interim Period (prior to Second  Phase Delivery Date) |       |      | Office     |            | 30,385     |                       | $          | 1.40                  |       | $                         | 42,539     |   | $ |   45,284 |   |
|                                                  | Warehouse  |      | 4,990      |            | $          | 0.55                       |       | $                     | 2,745      |                      |       |   |
|                                                  |       |      |       |            |       |                       |       |                  |       |                      |       |   |   |   |   |
| Months 1-12 (from Second Phase  Delivery Date)        |       |      | Office     |            | 95,925     |                       | $          | 1.40                  |       | $                         | 134,295    |   |   |   |
|                                                  | Warehouse  |      | 12,365     |            | $          | 0.55                       |       | $                     | 6,801      |                      | $          | 141,096 |   |
|                                                  |       |      |       |            |       |                       |       |                  |       |                      |       |   |   |   |   |
| Months 13-24                                          |       |      | Office     |            | 95,925     |                       | $          | 1.4490                |       | $                         | 138,995    |   |   |   |
|                                                  | Warehouse  |      | 12,365     |            | $          | 0.5693                     |       | $                     | 7,039      |                      | $          | 146,034 |   |
|                                                  |       |      |       |            |       |                       |       |                  |       |                      |       |   |   |   |   |
| Months 25-36                                          |       |      | Office     |            | 95,925     |                       | $          | 1.4997                |       | $                         | 143,860    |   |   |   |
|                                                  | Warehouse  |      | 12,365     |            | $          | 0.5892                     |       | $                     | 7,285      |                      | $          | 151,145 |   |

 

Except as provided below or in Section 2.1 above,Base Rent shall be payable monthly in advance on the first day of each calendarmonth and shall be sent to Sublessor at the rent payment address set forth in Section 3.9below, or such other address as may be designated by Sublessor.  For any month in which Sublessee’s obligationto pay Base Rent is for less than a full month, then such rent shall beprorated for such partial month.  On thefirst day of the Initial Term of each Phase, Sublessee shall pay to SublessorBase Rent in advance equal to the first full calendar month’s Base Rent due forsuch Phase, notwithstanding that the Base Rent for such Phase may commenceother than on the first day of the calendar month.  The installment of Base Rent so paid shall be creditedto the first full calendar month following the applicable Rent CommencementDate.  The Base Rent due for the partialmonth between the applicable Rent Commencement Date and the first day of firstfull calendar month thereafter shall be paid in arrears no later than thirty(30) days after the amount of Base Rent due for such partial month isdetermined and receipt by Sublessee of an invoice therefore fromSublessor.   The Base Rent for the third calendar month andeach month thereafter shall be paid on the first day of the month in the fullamount of the Base Rent due for such calendar month.  Base Rent and Additional Rent (as that termis defined in Section 3.3 below) shall sometimes herein be referred to as “Rent”.

 

## 3.2                                 RentAbatement.  If during the Initial Sublease Term, orduring the Extension Term, Sublessor’s Rent abates pursuant to the provisionsof the Prime Lease, then Sublessee’s Rent under this Sublease shall be abatedin accordance with the provisions of this Sublease and the Prime Lease.

 

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## 3.3                                 AdditionalRent.

##  

### (a)                                  Sublessee’sObligation.  In addition to Base Rent, Sublessee shall paySublessor as additional rent (“Additional Rent”) an amount equal to the sum of:(1) Sublessee’s pro rata share (“Project Expense Share”) of ProjectOperating Expenses for each Phase of the Subleased Premises as set forth belowand (2) Sublessee’s pro rata share (“Building Expense Share”) of BuildingOperating Expenses.  Sublessee’s ProjectExpense Share and Building Expense Share shall vary in accordance with the areaof the Subleased Premises.  Sublessee’sProject Expense Share shall be equal to the ratio of the rentable area of theSubleased Premises, as the same may change, to the total rentable area of theProject.  The total rentable area of theProject is agreed to be 145,249 sq. ft.  Sublessee’s Building Expense Share shall beequal to the ratio of the rentable area of the Subleased Premises, as the samemay change, to the total rentable area of the Subject Building.  The total rentable area of the SubjectBuilding is agreed to be 108,290 sq. ft. Initially, Sublessee’s Project Expense Share and Building Expense Shareshall be as set forth in Table 3.3(a) below:

###  

**TABLE 3.3(a)**

 

**SUBLESSEE’SINITIAL PROJECT AND BUILDING EXPENSE SHARES**

 
| ** ** | ** ** | **Period**                                                                                                             | ** ** | **Project Expense Share** | ** ** | **Building Expense  Share** | ** ** |
|------------|------------|------------------------------------------------------------------------------------------------------------------------|------------|---------------------------|------------|-----------------------------|------------|
| 1          |       | Interim Period (prior to Second  Phase Delivery Date)                                                                  |       | 24.4                      | %          | 32.7                        | %          |
|       |       |                                                                                                                   |       |                      |       |                        |       |
| 2          |       | Month 1 (from and after Second  Phase Delivery Date) and thereafter until rentable area of Subleased Premises  changes |       | 74.6                      | %          | 100.0                       | %          |

 

### (b)                                 ProjectOperating Expenses.  The term “ProjectOperating Expenses” means the costs and expenses incurred by Sublessor duringthe “Full Sublease Term” (consisting of the Initial Sublease Term, togetherwith any Extension Term, and otherwise as the same may be extended or renewed),that are shared by the occupants of the Project for Real Estate Taxes under Section 10.1of the Prime Lease (attributable to such Full Sublease Term), insurancepremiums payable by Sublessor under Section 20.1 of the Prime Lease(attributable to such Full Sublease Term and excluding premiums for earthquakeinsurance), utilities under Section 16 of the Prime Lease (attributable tosuch Full Sublease Term), costs incurred during the Full Sublease Term tomaintain and repair the Project Common Area including the Parking Facilitiesand landscaped areas in the manner required by Section 15.1 below, thecost of operating the Central Plant, exterior illumination in the ProjectCommon Area, trash removal for the Project, the maintenance

 

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### andrepair of the Project Common Area, including restriping, and the other lineitem expenses set forth in the 2004 Project Operating Expense Budget deliveredby Sublessor to Sublessee prior to the date of this Sublease, but excluding anyline item for work to be performed by Sublessee under this Sublease (includingthe Sublessee’s Obligations), the Building Operating Expenses, all expensesincurred in connection with or relating to the Adjacent Building, and theOperating Expense exclusions listed in Section 3.4 below.

###  

### (c)                                  BuildingOperating Expenses. ** **The term “Building OperatingExpenses” means the costs and expenses incurred by Sublessor during the “FullSublease Term” (consisting of the Initial Sublease Term, together with anyExtension Term, and otherwise as the same may be extended or renewed), that areshared by the occupants of the Subject Building costs to maintain and repairthe Subject Building in accordance with the terms of Section 15.1 belowand the other line item expenses set forth in the 2004 Building OperatingExpense Budget delivered by Sublessor to Sublessee prior to the date of thisSublease, but excluding any line item for work to be performed by Sublesseepursuant to the terms of this Sublease, all Project Operating Expenses, and theOperating Expense exclusions listed in Section 3.4 below.

###  

### (d)                                 Allocation.  Project Operating Expenses and BuildingOperating Expenses shall be allocated to the Subleased Premises as if theBuildings were each one hundred percent (100%) occupied and improved and as ifall sublessees and occupants were paying full rent, as contrasted with freerent, half rent and the like.  Sublessorestimates that the Project Operating Expenses and Building Operating Expensesinitially payable by Sublessee will be $.28 per rentable square foot per month,not including the cost of the Sublessor Provided Utilities as provided in Section 17.2below.

###  

## 3.4                                 Exclusionsfrom Project Operating Expenses and Building Operating Expenses.  Notwithstanding anything in the definition ofOperating Expenses in the Prime Lease or this Sublease to the contrary, neitherProject Operating Expenses or Building Operating Expenses shall include thefollowing, except to the extent specifically permitted by a specific exceptionto the following:

##  

### (a)                                  Any Rent orother sums payable under or as a result of a breach of the Prime Lease orground lease rental, except for the actual amount of the management fee payableto the Prime Lessor under the terms of the Prime Lease;

###  

### (b)                                 Costs ofitems considered capital repairs, replacements, improvements and equipmentunder generally accepted accounting principles consistently applied or otherwise(“Capital Items”);

###  

### (c)                                  Rentals foritems (except when needed in connection with normal repairs and maintenance ofpermanent systems) which if purchased, rather than rented, would constitute aCapital Item which is specifically excluded in subsection 3.4(b) above(excluding, however, equipment not affixed to the Buildings which is used inproviding janitorial or similar services for any Building);

 

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### (d)                                 Costsincurred by Sublessor for the repair of damage to the Buildings and ParkingFacilities to the extent that Sublessor is or should be reimbursed by insuranceproceeds and costs of all capital replacements, regardless of whether suchrepairs are covered by insurance and cost of earthquake repairs in excess ofTwenty Five Thousand Dollars ($25,000.00) per earthquake (which for thispurpose, an earthquake is defined collectively as the initial earthquake andthe aftershocks that relate to such initial earthquake);

###  

### (e)                                  Insurancedeductibles in excess of $10,000 per year for normal casualties and amountswhich are in excess of $1.00 per rentable square foot of the Subleased Premisesin any year for damage caused by floods, hurricanes, tornadoes, and/orterrorist acts;

###  

### (f)                                    Costs,including permit, license and inspection costs, incurred with respect to theinstallation of Sublessee’s or other occupants’ improvements in the Buildingsor incurred in renovating or otherwise improving, decorating, painting orredecorating vacant space for sublessees or other occupants of the Buildings;

###  

### (g)                                 Depreciation,amortization and interest payments, except as provided herein and except onmaterials, tools, supplies and vendor-type equipment purchased by Sublessor oncompetitive terms to enable Sublessor to supply services Sublessor mightotherwise contract for with a third party where such depreciation, amortizationand interest payments would otherwise have been included in the charge for suchthird party’s services, all as determined in accordance with generally acceptedaccounting principles, consistently applied, and when depreciation oramortization is permitted or required, the item shall be amortized over itsreasonably anticipated useful life;

###  

### (h)                                 Marketingcosts, including without limitation, leasing commissions, attorneys’ fees inconnection with the negotiation and preparation of letters, deal memos, lettersof intent, leases, subleases and/or assignments, space planning costs, andother costs and expenses incurred in connection with lease, sublease and/or assignmentnegotiations and transactions with Sublessee or present or prospectivesublessees, Sublessor or other occupants of the Buildings;

###  

### (i)                                     Expenses inconnection with services or other benefits which are not offered to Sublesseeor for which Sublessee is charged for directly or contracts for directly;

###  

### (j)                                     Overhead andprofit increment paid to Prime Lessor or Sublessor or to subsidiaries oraffiliates of Prime Lessor or Sublessor for goods and/or services in or to theto the extent the same exceeds the costs of such goods and/or services renderedby unaffiliated third parties on a competitive basis;

###  

### (k)                                  Interest,principal, points and fees on debts or amortization on any mortgage ormortgages or any other debt instrument encumbering the Buildings, the

 

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### Land,the Parking Facilities or any portion thereof (except as permitted in subsection 3.4(g)above);

 

### (l)                                     Prime Lessor’sand Sublessor’s general corporate overhead and general and administrative expenses;

###  

### (m)                               Anycompensation paid to clerks, attendants or other persons in commercialconcessions operated by Sublessor;

###  

### (n)                                 Rentals andother related expenses incurred in leasing HVAC systems, elevators or otherequipment ordinarily considered to be Capital Items, except for(1) expenses in connection with making minor repairs on or keepingBuilding Systems in operation while minor repairs are being made and(2) costs of equipment not affixed to the Subject Building which is usedin providing janitorial or similar services;

###  

### (o)                                 Advertisingand promotional expenditures, and costs of signs in or on the Buildings, theLand and/or the Parking Facilities identifying the owner of the same, Sublessoror other sublessees’ or other occupant’s signs;

###  

### (p)                                 The cost ofany electric power used by any sublessee or other occupant of all or anyportion of the Buildings in excess of the Building standard amount (or, priorto separate metering, otherwise shown to be unreasonably high), or electricpower costs for which any such sublessee or other occupant directly contractswith the local public service company or of which any Sublessee or otheroccupant is separately metered or sub-metered and pays directly; provided,however, that if any Sublessee in the Buildings contracts directly for electricpower service or is separately metered or sub-metered during any portion of therelevant period, the total electric power costs for the Buildings shall be “grossedup” to reflect what those costs would have been had each Sublessee in theBuildings used the Building standard amount of electric power;

###  

### (q)                                 Services andutilities provided, taxes attributable to, and costs incurred in connectionwith the operation of the retail, parking (to the extent same services theretail operations of the Buildings), and restaurant operations, if any, in theBuildings, except to the extent the square footage of such operations areincluded in the rentable square feet of the Buildings and do not exceed theservices, utility and tax costs which would have been incurred had the retailand/or restaurant space been used for general office purposes;

###  

### (r)                                    Costsincurred in connection with upgrading or modifying the Buildings, the Landand/or the Parking Facilities and/or to render the same in compliance withlife, fire and safety codes, ordinances, statutes or other laws in effect priorto the Second Phase Delivery Date, including, without limitation, the ADA,including penalties or damages incurred due to such non-compliance;

###  

### (s)                                  Tax penaltiesincurred as a result of Prime Lessor’s and/or Sublessor’s failure to makepayments and/or to file any tax or informational returns when due, includingwithout limitation those shown on the Preliminary Title Report;

 

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### (t)                                    Except forthe management fees payable to the Prime Lessor under the Prime Lease on theday of the this Sublease, any management fees computed by using a percentage ofgross revenue in excess of the lower of (a) one percent (1%) and(b) the percentage used during any Base Year;

###  

### (u)                                 Costs arisingfrom the negligence or fault of other sublessees or Sublessor or Prime Lessor;

###  

### (v)                                 Notwithstandingany contrary provision of the Prime Lease or this Sublease, including, withoutlimitation, any provision relating to capital expenditures, any and all costsarising from the presence of asbestos or any hazardous materials or substances(as defined by applicable laws in effect on the date this Sublease is executedand as subsequently modified) in or about the Subleased Premises or theBuildings or the Land including, without limitation, hazardous substances inthe ground water or soil, not placed in the Subleased Premises by Sublessee;

###  

### (w)                               Costs arisingfrom Sublessor’s charitable or political contributions;

###  

### (x)                                   Costs forSublessor’s Work and/or defects in the base, shell or core of the Buildings,the Project Common Area, the Parking Facilities, the Land and/or improvementsinstalled by Sublessor, its agents, contractors, employees, sublessees and/orinvitees and/or repairs thereof;

###  

### (y)                                 Costs forstructural defects, repairs or alterations to the Buildings, the ParkingFacilities and/or other improvements to the Land, except to the extent damageto the same is caused by Sublessee.

###  

### (z)                                   Costs arisingfrom any mandatory or voluntary special assessment on the Buildings, theParking Facilities or the Land by any transit district authority or any othergovernmental entity having the authority to impose such assessment inconnection with the initial construction of the Buildings;

###  

### (aa)                            Costs for theacquisition of (as contrasted with the incidental cleaning and maintenance of)sculpture, paintings or other objects of art;

###  

### (bb)                          Costs(including in connection therewith all attorneys’ fees and costs of settlementjudgments and payments in lieu thereof) arising from claims, disputes orpotential disputes in connection with potential or actual claims litigation orarbitrations pertaining to the Prime Lease, Sublessor and/or the Land (and notarising out of any breach of this Sublease by Sublessee), including withoutlimitation any sums payable under the Declaration and the Settlement Agreementdated as of November 21, 1997 by and among Sublessor, AEW/LBA AcquisitionCo. II, LLC., a California limited liability company, Rancho Bernardo CorporateCenter Property Owners Association and Rudolph & Sietten;

###  

### (cc)                            Costsassociated with the operation of the business of the partnership or entitywhich constitutes Prime Lessor and Sublessor as the same are

 

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### distinguishedfrom the costs of operation of the Buildings, including partnership accountingand legal matters, costs of defending any lawsuits with or claims by anymortgagee, costs of selling, syndicating, financing, mortgaging or hypothecatingany of Prime Lessor’s and/or Sublessor’s interest in the Land, the Buildingsand/or the Project, costs of any disputes between Prime Lessor, Sublessor andtheir employees (if any) not engaged in operation of the Subject Building,disputes of Prime Lessor and/or Sublessor and their employees with managementof the Buildings, or outside fees paid in connection with disputes with othersublessees or occupants of the Buildings;

###  

### (dd)                          Anysupplemental taxes arising from a Transfer occurring prior to the date of thisSublease and/or any increases of, or reassessment in, Real Property Taxes andassessments in excess of two percent (2%) of the taxes for the previous year(except as may result from Sublessor’s Work or Sublessee’s Work), and anyincrease in Real Property Tax resulting from a change in ownership of the Land,the Project and/or the Prime Lease other than by the Prime Lessor or from majoralterations, improvements, modifications or renovations to the Buildings,construction of the Parking Facilities or from major alterations, improvements,modifications or renovations to the same or the Land (collectively, “Transfers”);

###  

### (ee)                            Costs of any “tapfees” or any sewer or water connection fees for the benefit of any particularsublessee or other occupant of the Buildings;

###  

### (ff)                                Any expensesincurred by Sublessor for use of any portions of the Buildings to accommodateevents including, but not limited to shows, promotions, kiosks, displays,filming, photography, private events or parties, ceremonies and advertisingbeyond the normal expenses otherwise attributable to providing Buildingservices, such as lighting and HVAC to such public portions of the Buildings innormal operations during standard Building hours of operation;

###  

### (gg)                          Anyentertainment, dining or travel expenses of Sublessor for any purpose;

###  

### (hh)                          Any flowers,gifts, balloons, etc. provided to any entity whatsoever, including, but notlimited to Sublessee, other sublessees, Sublessees, employees, vendors,contractors, brokers, prospective sublessees and agents;

###  

### (ii)                                  Any “validated”parking for any entity;

###  

### (jj)                                  Any “findersfees,” brokerage commissions, job placement costs or job advertising cost.

###  

### (kk)                            Any “above-standard”cleaning, including, but not limited to construction cleanup or specialcleanings associated with parties/events and specific requirements ofsublessees or other Building occupants in excess of service provided toSublessee, including related trash collection, removal, hauling and dumping;

 

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### (ll)                                  The cost ofany “tenant relations” parties, events or promotion not consented to by anauthorized representative of Sublessee in writing;

###  

### (mm)                      “In-house”legal and/or accounting fees;

###  

### (nn)                          Any otherexpenses which, in accordance with generally accepted accounting principles,consistently applied, would not normally be treated as Operating Expenses bycomparable sublessors of comparable buildings.

###  

### (oo)                          Reserves forbad debts or for future improvements, repairs, additions, etc.;

###  

### (pp)                          Janitorialexpenses, electrical expenses and telephone expenses to any occupant’s premises(as contrasted with janitorial, electrical and telephone expenses to the commonareas of the Buildings);

###  

### (qq)                          Any expensesfor repairs or maintenance that are reimbursed through warranties or servicecontracts;

###  

### (rr)                                Costs andexpenses incurred in moving, storing or disposing of the personal property offormer Sublessees;

###  

### (ss)                            Costsincurred by Sublessor due to the violation by Sublessor of the Prime Lease,this Sublease, or any other sublessee of the terms and conditions of any leaseof space in the Buildings;

###  

### (tt)                                Costs payableunder the Declaration and/or any other recorded instrument affecting the Land;and

###  

### (uu)                          Rentsassociated with Areas E, F and G and the Central Plant.

###  

It is understood thatProject Operating Expenses and Building Operating Expenses shall be reduced byall cash discounts, trade discounts, quantity discounts, rebates or otheramounts received by Sublessor in the purchase of any goods, utilities, orservices in connection with the operation of the Buildings and theProject.  To the extent that an expenseincluded in Project Operating Expenses includes an expense related to theProject and not the Building, then the word “Building” utilized in theseexclusions shall mean and be extended to include the Project.

 

The cost of Sublessee’sperformance of its maintenance obligations under this Sublease shall not bedeemed to be a Project Operating Expense or a Building Operating Expense.

 

## 3.5                                 Procedurefor Payment of Operating Expenses.  Sublessee’sProject Expense Share and Sublessee’s Building Expense Share shall be payableby Sublessee monthly on an estimated basis concurrently with the payment ofBase Rent.  Said estimated amount forOperating Expenses items other than Sublessor Provided Utilities for the firstcalendar year shall

 

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## be equalto twenty-eight cents ($0.28) per square foot of rentable area within theSubleased Premises as the same shall be increased with the delivery of eachPhase or decreased in accordance with the terms of this Sublease.  The actual amount of Sublessor ProvidedUtilities, as provided for in Section 17.2 below, shall be paidseparately, in arrears, monthly upon receipt by Sublessee of Sublessor’sinvoice therefore.  Sublessor shalldeliver to Sublessee within sixty (60) days after the expiration of each leaseyear or as soon thereafter as reasonably possible a detailed statement of theactual Project Operating Expenses and Building Operating Expenses for thepreceding lease year.  If Sublessee’sestimated payments under this Section 3.5 for the preceding year were lessthan Sublessee’s Project Expense Share and Building Expense Share as indicatedon such statement, Sublessee shall pay Sublessor the amount of the deficiencywithin thirty (30) days after delivery by Sublessor of the statement.  If Sublessee’s estimated payments under this Section 3.5during the preceding year exceed Sublessee’s Project Expense Share and BuildingExpense Share  as indicated on suchstatement, Sublessor shall credit such overpayment against the Rent next dueand owing under this Sublease.  If thisSublease shall have terminated, Sublessor shall pay to Sublessee a refund ofthe difference within thirty (30) days after the delivery of the statement.

##  

## 3.6                                 Proposition13 Protection. Notwithstanding anything in this Sublease to the contrary, to the extentthere is a sale, transfer or other change of ownership by any party other thanthe Prime Lessor of the Land, of any of the Buildings, the Parking Facilityand/or the Subleased Premises (collectively, a “Transfer”) during the FullSublease Term, Project Operating Expenses shall not include any increase of, orreassessment in, real property taxes and assessments attributable to any suchTransfer occurring during the Full Sublease Term

##  

## 3.7                                 VacancyCredit.  In the event Sublessee ceases to occupy (butstill leases) the Subleased Premises, Sublessee shall receive a credit againstProject Operating Expenses and Building Operating Expenses equal to the cost ofthe Central Plant, the water, HVAC and any other variable expenses to theextent not incurred as a result of such vacancy, as reasonably determined bySublessor and Sublessee and Sublessee shall have no obligation to pay the sameto the extent otherwise required by the terms of this Sublease.

##  

## 3.8                                 AuditRight.  Sublessee shall have the right to audit andinspect Sublessor’s records with respect to Project Operating Expenses and/orBuilding Operating Expenses, as well as all other additional rent componentspayable by Sublessee hereunder for any year of this Sublease.  Sublessee shall give Sublessor not less thanthirty (30) days prior written notice of its intention to conduct any suchaudit.  Sublessor shall cooperate withSublessee during the course of such audit, which shall be conducted duringnormal business hours in Sublessor’s office. Sublessor agrees to make suchpersonnel available to Sublessee as is reasonably necessary for Sublessee, orfor Sublessee’s employees or agents, to conduct such audit. If such auditdiscloses that the amount paid by Sublessee as Project Operating Expenses orBuilding Operating Expenses for the lease year in question and, or any otheradditional rental payable by Sublessee hereunder, has been overstated by morethan two percent (2%), then, in addition to immediately repaying suchoverpayment to Sublessee with interest at the maximum legal rate, Sublessorshall also pay the reasonable costs incurred by Sublessee in connection withsuch audit.  If after Sublessee reviewsthe records for Operating Expenses, Sublessor and Sublessee fail to agree as tothe amount of Operating Expenses that should have been charged

 

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## with respectto a statement in dispute, Sublessee shall have the right to cause anotherreview of that portion of the statement to be made by a firm of independentcertified accountants of national standing selected by Sublessee which are notthen retained by Sublessee and (b) reasonably approved by Sublessor (“IndependentAccountant”).  The review of theIndependent Accountant shall be deemed to be correct and shall be conclusivelybinding on both Sublessor and Sublessee. In the event the results of the review by the Independent Accountantindicate that the actual dollar amount of Sublessee’s Project Expense Share andBuilding Expense Share  for the periodcovered by the statement in question have been overstated by more than twopercent (2%), then Sublessor shall be responsible for the fees and expenses ofthe Independent Accountant and Sublessor shall reimburse Sublessee for theactual fees and expenses of Sublessee’s accountant(s) and the amount of anyoverpayment by Sublessee of Project Operating Expenses and/or BuildingOperating Expenses for the period in question, which amount shall be creditedagainst Sublessee’s next succeeding installment of Rent.

##  

## 3.9                                 RentPayment Address.  All paymentsof Rent due under this Sublease shall be paid to:

##  

Cymer Inc.

17075 Thornmint Court

San Diego, CA 92127

Attention: Accounts Receivable

 

# 4.                                       Sublessor’sWork and Condition of Subleased Premises.

#  

## 4.1                                 Performanceof Sublessor’s Work.  Except asprovided to the contrary below, prior to the delivery of each Phase of theSubleased Premises to Sublessee, Sublessor shall perform the work in such Phaseof the Subleased Premises in a good and workmanlike manner at its sole cost andexpense and as more particularly described on the Space Plan and as more fullyrequired by this Section 4 (collectively, “Sublessor’s Work”).  The Sublessor’s Work shall insure thedelivery of each Phase to Sublessor on or before the Outside Delivery Datesprovided in Section 1 above in the Required Condition.  All of Sublessor’s Work identified on the SpacePlan, including without limitation the HVAC systems, the plumbing and lightingfixtures, the floor and ceiling tiles shall be constructed of and installedwith first class and new materials and parts and in compliance with all “GovernmentalRequirements” (as hereinafter defined), laws, rules and regulations. TheSublessor’s Work includes the turnkey leasehold improvements for the SubleasedPremises, except for the Sublessee’s Work under Section 2.1(e) above andSections 5, 9, 10, and 22 below.  Allinterior finishes, including carpet and paint color shall be  as set forth on the Space Plan, Exhibit “D”attached hereto, which is hereby approved.

##  

## 4.2                                 ApprovedPlans.  Sublessor shall submit to Sublessee anychanges to the Space Plans required by any governmental official or body as acondition for the issuance of building and/or occupancy permits.  If required for any requisite approval byPrime Lessor and/or its Lender and/or any governmental permit or approval,Sublessor shall prepare, at Sublessor’s sole cost and expense, and submit toSublessee a set of more detailed plans and specifications and/or constructiondrawings, including without limitation, if and to the extent

 

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## required,a fully coordinated set of architectural, structural, mechanical, electricaland plumbing working drawings in a form which is complete to allowsubcontractors to bid on the work and to obtain all applicable permits(collectively, the “Plans and Specifications”) for the Sublessor’s Work, basedon the Space Plan.  Such Plans andSpecifications will show, without limitation, each of the items described inthe Space Plan.  Sublessee shall havefive (5) business days after receipt of any such Plans and Specifications inwhich to review and to give to Sublessor written notice of Sublessee’s approvalof the same or its requested changes to the Plans and Specifications.  If Sublessee requests any changes to theSpace Plan and/or the Plans and Specifications, Sublessor shall make thosechanges which are reasonably requested by Sublessee and shall within ten (10)days of Sublessor’s receipt of such request submit the revised portion of theSpace Plan and/or the Plans and Specifications to Sublessee for its review andapproval.  Sublessor shall use reasonablespeed and diligence to “Substantially Complete” (as hereinafter defined) theSublessor’s Work in accordance with the Space Plan and any other Plans andSpecifications approved by Sublessee (the “Approved Plans”); in first classcondition at Sublessor’s sole cost and expense, (including, without limitation,the cost of all engineering, permits, licenses and fees of any governmentalauthority, the cost of any changes in the base, shell or core of the SubjectBuilding when such changes are required by the Space Plan and the otherApproved Plans or are otherwise required by law as a result of the constructionof the Sublessor’s Work, the cost of any changes to the Sublessor’s Workrequired by applicable building code or any other Governmental Requirement; andthe sales and use taxes and Title 24 fees), and deliver possession of the FirstPhase of the Subleased Premises to Sublessee in the Required Condition on orbefore a date which is twenty-five (25) calendar days following the EffectiveDate.

##  

## 4.3                                 Failureto Substantially Complete by Outside Completion Date.  Sublessor expressly acknowledges and agreesthat the failure of Sublessor to cause the Sublessor’s Work to be SubstantiallyComplete and to deliver each Phase to Sublessor in the Required Condition inthe manner required by this Section 4.3 will extend the First PhaseDelivery Date or Second Phase Delivery Date, as applicable, and the concomitantcommencement of payment of rent thereunder, for every day that Sublessor failsto deliver any Phase of the Subleased Premises to Sublessee for occupancy inthe manner required by this Article 4 and in accordance with the terms of Section 2.1above, Sublessee shall have the right to terminate this Sublease, by givingwritten notice of termination to Sublessor at any time following the FirstPhase Outside Delivery Date, with respect to the First Phase, and the SecondPhase Outside Delivery Date, with respect to the Second Phase (respectively the“Outside Completion Date”), until delivery of possession to Sublessee in thecondition required by this Article 4 and Article 1 above; provided,however, that the Outside Completion Date shall be extended one (1) day forevery day that the delay is caused by Sublessee’s failure to timely approve anyrequired Plans and Specifications within the time provided by Section 4.2above or by change orders requested by Sublessee after completion of the workin accordance with the Approved Plans that resulted in a delay of theSubstantial Completion and Sublessee was advised in writing by Sublessor ofsuch delay prior to the approval of such change order.

##  

## 4.4                                 Punchlist.  Upon Substantial Completion of the Sublessor’s Workfor each Phase, Sublessor will promptly give written notice to Sublessee andshall deliver the Subleased Premises to Sublessee in the Required Condition andclean and free of debris.  Sublessor

 

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## representsand warrants to Sublessee that on the First Phase Delivery Date and the SecondPhase Delivery Date the plumbing, electrical, fire sprinkler system, lighting,air conditioning, heating, and loading doors and elevators, if any, in theSubleased Premises, shall be in good operating condition and repair and incompliance with all Governmental Requirements and Applicable Laws, and that theroof, foundation, and all other Structural Components of the Subject Building,and the Project, storm drain and other drainage facilities in the ProjectCommon Areas and Project shall be in good operating condition and repair, thatSubstantial Completion of Sublessor’s Work for such Phase shall have occurredand that all permits required for Sublessee’s legal occupancy and use of suchPhase of the Subleased Premises shall have been issued.  Within five (5) business days after theoccurrence of Substantial Completion, a representative of Sublessor and arepresentative of Sublessee together shall inspect the Subleased Premises andgenerate a punchlist of defective or uncompleted items relating to thecompletion of construction of the Improvements (the “Punchlist”).  Sublessor shall, immediately after thePunchlist is prepared and agreed upon by Sublessor and Sublessee, complete suchincomplete work and remedy such defective work as is set forth on thePunchlist.

##  

## 4.5                                 SublessorWarranty.  Sublessor hereby warrants to Sublessee, whichwarranty (“Sublessor’s Warranty”) shall survive for the one (1) year periodfollowing the First Phase Delivery Date or Second Phase Delivery Date,respectively, for each Phase, that (i) the materials and equipmentfurnished by Sublessor’s contractors in the completion of the Sublessor’s Workwill be of good quality and new, and (ii) such materials and equipment andthe work of such contractors shall be free from defects not inherent in thequality required or permitted hereunder and (iii) the Sublessor’s Work complieswith Governmental Requirements and Applicable Laws and the Prime Lease.  This warranty shall exclude damages caused bySublessee or Sublessee’s Affiliates, improper or insufficient maintenance, andimproper operation.  Sublessor furtherwarrants that (1) as of the First Phase Delivery Date for the First Phase,and the Second Phase Delivery Date for the Second Phase, the Subleased Premisesand the Sublessor’s Work will be compliance with requirements of the Americanswith Disabilities Act of 1990 (2) the Sublessor’s Work will be constructedand installed by Sublessor in compliance with the Approved Plans and suchwarranty shall remain in effect throughout the Full Sublease Term. Sublessorshall, following written notice from Sublessee setting forth with specificitythe nature and extent of any noncompliance with this warranty, promptly rectifythe same at Sublessor’s expense.

##  

## 4.6                                 SubstantialCompletion.  For purposes of this Sublease, the terms “SubstantiallyComplete” and “Substantial Completion” (or any variation thereof) shall meancompletion of construction of the Sublessor’s Work in accordance with theApproved Plans as modified by any change orders approved by Sublessee, subjectonly to Punchlist items established pursuant to Section 4.4 above,evidence of payment by Sublessor of all costs in connection with suchconstruction, including without limitation final lien release and waivers fromeach contractor, subcontractor, material supplier and labor supplier providingservices and materials to the Subleased Premises for the Sublessor’s Work,final inspection of the Sublessor’s Work by the governmental authority havingjurisdiction; recordation of a Notice of Completion and the lapse ofthirty-five (35) days from the date of recording the Notice; issuance ofpermanent certificates of occupancy if required for Sublessee to legally occupythe Subleased Premises and each Phase thereof; and the delivery to Sublesseecopies of all construction

 

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## warrantiesand guarantees in connection with the Sublessor’s Work which Sublessee isrequired to maintain under the terms of this Sublease and the delivery bySublessor to Sublessee of a Certificate of Substantial Completion for theImprovements on Standard AIA Form G-704 certified by Sublessor’sarchitect.  In the event SubstantialCompletion is delayed because of a change order approved by Sublessee whichalso resulted in a delay of the date set for Substantial Completion as advisedby Sublessor prior to Sublessee’s approval of the change order (“SublesseeDelay”), then for the purpose of establishing the First Phase Delivery Date orSecond Phase Delivery Date and any other date tied to the date of SubstantialCompletion, Substantial Completion shall be deemed to mean the date whenSubstantial Completion would have been achieved but for such Sublessee Delay.

##  

## 4.7                                 Deliveryof As-Builts.  Sublessor shallcause a set of “as-built” plans and specifications to be delivered to Sublesseewithin one hundred twenty (120) days after Substantial Completion if Sublessoris required to prepare and deliver same to any of the Prime Lessor, the Lender,or by Governmental Requirement.

##  

# 5.                                       SublesseeAlterations and Additions.  Sublesseeshall not make or permit to be made any alterations, improvements, or additionsto the Subleased Premises (a “Sublessee’s Change”), without first obtaining oneach occasion (a) Sublessor’s prior written consent (which consent Sublessoragrees not to unreasonably withhold, delay or condition) and (b) Prime Lessor’sprior written consent (if such consent is required); provided, however, thatSublessee shall have the right, without the prior written consent of Sublessorand Prime Lessor (but otherwise subject to the provisions of this Section 5),to make Sublessee Changes that: (i)  are consistent with the SCIF Work tobe performed in the Subject Building; or (ii) qualify as “Pre-Approved Changes”within the meaning of Section 12.1(a) of the Prime Lease, i.e. the cost ofsuch a Sublessee Change is less than Fifty Thousand Dollars ($50,000).  Sublessor shall use its commerciallyreasonable best efforts to secure any consents from Prime Lessor to alterationsnot otherwise expressly permitted to be made by Sublessee in items (i) and (ii)above or as provided in this Section below with respect toTelecommunications Equipment.  Sublesseeshall have the right without Sublessor’s and Prime Lessor’s prior writtenconsent and without compliance with the other provisions of this Section 5to install, maintain and repair towers, antennas, satellite dishes and/or othercommunications equipment (“Telecommunications Equipment”) on the roof of theSubject Building as hereinafter provided in Section 22 of thisSublease.  All Sublessee’s Changes shallbe performed in accordance with all legal requirements applicable thereto andin a good and workmanlike manner with first-class materials.  Sublessee shall maintain insurance reasonablysatisfactory to Sublessor during the construction of all Sublessee’sChanges.  If Sublessor or Prime Lessor atthe time of giving its approval to any Sublessee’s Change not otherwiseexpressly permitted by the terms of this Section then notifies Sublesseein writing that approval is conditioned upon restoration, then Sublessee shall,at its sole cost and expense and at Sublessor’s option upon the termination orexpiration of this Lease, remove the same and restore the Subleased Premises toits condition prior to such Sublessee’s Change. Sublessee shall pay the full cost of any Sublessee’s Change.

#  

Exceptas otherwise provided herein, all Sublessee’s Changes and all repairs and allother property attached to or installed on the Subleased Premises by or on behalfof Sublessee (not including Sublessee’s personal property and removable tradefixtures, which will remain the

 

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propertyof Sublessee at all times during the Full Sublease Term) shall immediately uponcompletion or installation thereof be and become part of the Subleased Premisesand the property of Sublessor without payment therefor by Sublessor and shallbe surrendered to Sublessor upon the expiration or earlier termination of thisSublease.  Sublessee agrees to holdSublessor harmless against all liens, claims and liabilities of every kind,nature and description which may arise out of or in any way be connected withsuch work.  Sublessee shall not permitthe Subleased Premises to become subject to any mechanics’, laborers’ ormaterialmen’s lien on account of labor, material or services furnished toSublessee or claimed to have been furnished to Sublessee in connection withwork of any character performed or claimed to have been performed for the SubleasedPremises by, or at the direction or sufferance of Sublessee and if any suchliens are filed against the Subleased Premises, Sublessee shall promptlydischarge the same; provided, however, that Sublessee shall have the right tocontest, in good faith and with reasonable diligence, the validity of any suchlien or claimed lien.

 

# 6.                                       Disturbanceof Possession by Sublessor.  In the eventthat Sublessee is actually prevented from using, and does not use, theSubleased Premises or any portion thereof, or the same or any portion thereofis untenable for three (3) consecutive business days or ten (10) business daysin any twelve (12) month period or such lesser periods if covered by insurance,(the “Eligibility Period”) as a result of (1) any damage or destruction tothe Subleased Premises, any Project Common Areas, the Parking Facilities and/orthe Subject Building, (2) any repair, maintenance or alteration performedby Sublessor after the First Phase Delivery Date which interferes withSublessee’s use of the Subleased Premises, the Project Common Area, the ParkingFacilities or the Subject Building, (3) an eminent domain proceeding,(4) the presence of Hazardous Substances (from a source other than acts oromissions of Sublessee or its agents, employees or contractors) in, on oraround the Project, the Subleased Premises or the Subject Building which couldpose a health risk to occupants of the Subleased Premises, and those using theProject Common Areas, (5) any failure of Sublessor to provide access as requiredby Section 1.7, or (6) or if there is an interruption of utilities orother essential services to be provided by Sublessor under this Sublease, BaseRent shall be proportionately abated or reduced, as the case may be, afterexpiration of the Eligibility Period for such time that Sublessee continues tobe so actually prevented from using, and does not use, the Subleased Premisesor a portion thereof (including the Parking Facilities and/or the ProjectCommon Area), in the proportion that the area of the portion of the SubleasedPremises (including the Parking Facility and/or Building Project Area) thatSublessee is prevented from using, and does not use, bears to the totalSubleased Premises (including the Parking Facility and/or Project Common Area).However, in the event that Sublessee is prevented from conducting, and does notconduct, its business in any portion of the building area of the SubleasedPremises for a period of time in excess of the Eligibility Period, and theremaining portion of the building area of the Subleased Premises is notsufficient to allow Sublessee to effectively conduct its business therein, andif Sublessee does not conduct its business from such remaining portion, thenfor such time after expiration of the Eligibility Period during which Sublesseeis so prevented from effectively conducting its business therein, the Rent forthe entire Subleased Premises shall be abated; provided, however, if Sublesseereoccupies and conducts its business from any portion of the building area ofthe Subleased Premises during such period, the Base Rent allocable to suchreoccupied portion, based on the proportion that the rentable area of suchreoccupied portion of the Subleased Premises bears to the total SubleasedPremises, shall be payable by Sublessee from the date such

 

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# businessoperations commence.  If Sublessee’sright to abatement occurs because of an eminent domain taking or because ofdamage or destruction to the Subleased Premises, the Parking Facilities or theProject Common Area, Sublessee’s abatement period shall continue untilSublessor has either completed the reconstruction of the Subleased Premiseswithin the time and in the manner required by Sections 7 and 29.  To the extent Sublessee is entitled toabatement without regard to the Eligibility Period, because of an event coveredin either Sections 7 or 29 of this Sublease, then the abatement shall continueunder whichever provision provides for the greatest relief to Sublessee. To theextent Sublessee has prepaid rent (as it does each month since Base Rent is dueon the first day of each month) and Sublessee is subsequently entitled to anabatement, such prepaid, and subsequently abated, Base Rent should be refundedto, and paid by Sublessor to, Sublessee within thirty (30) days after the endof the appropriate month.

#  

Inaddition to anything in this Section 6 and/or any of the other provisionsof this Sublease, in the event that Sublessee is notified or becomes aware ofthe fact that as a result of:

 

### (a)                                  the inabilityof Sublessor to provide essential services as required under this Sublease tothe Subleased Premises, the Project Common Area, the Parking Facility and/orthe Subject Building so as to interfere substantially with Sublessee’s use ofall or a material portion of the Subleased Premises (“material” being definedas at least 20% of the rentable area of the Subleased Premises or the ProjectCommon Area for the purpose of this clause), the Parking Facilities, and/or theSubject Building; or

###  

### (b)                                 any discoveryof Hazardous Materials in, on or around the Subleased Premises, the SubjectBuilding and/or the Land not placed or permitted by applicable GovernmentalRequirements to be placed in, on or around the Subleased Premises, the SubjectBuilding and/or the Land by Sublessee, that may, in Sublessee’s opinion,considering the nature and amount of the substances involved, interfere withSublessee’s use of all or a portion of the Subleased Premises (or which maypresent a health risk to any occupants of the Subleased Premises); or thediscovery of any other hazardous condition with respect to the SubleasedPremises, the Parking Facility, the Building Common Area and/or the SubjectBuilding which would make it dangerous or unsafe for Sublessee and itsemployees to conduct their normal and customary business operations (each ofthe items set forth in provisions (a) and (b) being referred to herein as a “TriggerEvent”),

###  

### (c)                                  if Sublesseecannot, within eight (8) months (“Non-Use Period”) of the occurrence of theTrigger Event, be given reasonable use of, and access to, a fully repaired,restored, safe and healthful Subleased Premises, the Building Common Area andthe Subject Building, the Parking Facility and the utilities and servicespertaining to the Subleased Premises and the Subject Building, all suitable forthe conduct of Sublessee’s normal business operations therefrom (“FullRestoration to the Premises”), then Sublessee may thereafter elect at any timeto exercise an on-going right to terminate this Sublease upon ten (10) days’written notice sent to Sublessor at any time following the expiration of theNon-Use Period but before the Full Restoration to the Subleased Premises,whereupon such termination right shall lapse. Notwithstanding the foregoing, Sublessee may terminate this Subleaseprior to the expiration of the Non-Use Period in

 

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### theevent of an occurrence of a Trigger Event if it is apparent that Sublessee willnot have use of the entire Subleased Premises by the expiration of the Non-UsePeriod.

###  

In theevent of any Trigger Event occurring during the last six (6) months of theInitial Sublease Term or, if an applicable Extension Option has been exercised,during the last six (6) months of any Extension Term, should the Non-Use Periodcontinue for thirty (30) consecutive days, Sublessee may elect to exercise anon-going right to terminate this Sublease upon ten (10) days’ written noticesent to Sublessor at any time following the expiration of the thirty (30) dayNon-Use Period, but before the Full Restoration to the Subleased Premises.

 

# 7.                                       Fireand Other Casualty.  Subject tocompliance with terms and conditions of the Prime Lease relating to repairs,reconstruction, and restoration, in the event the Subleased Premises aredamaged by fire or other casualty insured by Sublessor, Sublessor agrees topromptly restore and repair the Subleased Premises at Sublessor’s expense,including the Sublessor’s Work and any other improvements to be insured bySublessor, but only to the extent Sublessor receives insurance proceedstherefor (plus the amount of any deductible in the insurance carried bySublessor, which deductible will be paid by Sublessor, in addition to availableinsurance proceeds, toward restoration costs), including the proceeds from boththe insurance required to be carried by Sublessor pursuant to the Prime Leaseand this Sublease.  Notwithstanding theforegoing, in the event that the Subleased Premises are (i) so destroyedthat they cannot be repaired or rebuilt within one hundred eighty (180) daysafter the date of such damage; or (ii) destroyed by a casualty which isnot covered by Sublessor’s insurance carried by Sublessor, or if such casualtyis covered by Sublessor’s insurance but Prime Lessor or other party entitled toinsurance proceeds fails to make such proceeds available to Sublessor in anamount sufficient for restoration of the Subleased Premises, then Sublessorshall give written notice to Sublessee of such determination (the “DeterminationNotice”) within sixty (60) days of such casualty.  Either Sublessor or Sublessee may terminateand cancel this Lease effective as of the date of such casualty by givingwritten notice to the other party within thirty (30) days after Sublessee’sreceipt of the Determination Notice. Upon the giving of such termination notice, all obligations hereunderwith respect to periods from and after the effective date of termination shallthereupon cease and terminate.  If nosuch termination notice is given, Sublessor shall, to the extent of theavailable insurance proceeds, make such repair or restoration of the SubleasedPremises to the approximate condition existing prior to such casualty, promptlyand in such manner as not to unreasonably interfere with Sublessee’s use andoccupancy of the Subleased Premises (if Sublessee is still occupying theSubleased Premises).  Base Rent andAdditional Rent shall proportionately abate during the time that the SubleasedPremises or any part thereof are unusable by reason of any such damagethereto.  In the event of any conflictbetween the terms of this Section 7 and the Prime Lease, the terms of thePrime Lease shall control notwithstanding the terms of Section 27 below tothe contrary.

#  

# 8.                                       Surrenderand Restoration.  Sublesseemay, at the expiration or earlier termination of this Sublease or any Phasethereof, surrender such Phase of the Subleased Premises to Sublessor in itsthen current “as is” condition.  Inaddition, Sublessee shall remove any of its personal property, furniture,fixtures and equipment, provided Sublessee promptly repairs any damage to suchphase of the Subleased Premises caused by such removal.  Notwithstanding the foregoing or anything tothe contrary in this Sublease and/or in the Prime Lease, and except as

 

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# expresslyprovided in Sections 19 and 22 below, Sublessor hereby agrees that Sublesseeshall not be required to remove any alterations or improvements unless Sublessorrequired such removal at the time consent was required and given by Sublessorto Sublessee at the time of Sublessee’s request of a Sublessee Change.

#  

# 9.                                       Connectionto Other Facilities.  Sublessor andSublessee hereby acknowledge that Sublessee does business or may be doingbusiness in more than one facility in close proximity to the SubleasedPremises.  As part of Sublessee’s Work orin connection with subsequent alterations to the Subleased Premises, Sublesseeshall have the right, at its sole cost and expense, to “connect” Sublessee’sother facilities to the Subleased Premises in order to provide voice/datacommunications, employee and visitor interaction and/or access to the SubleasedPremises from Sublessee’s other facilities.

#  

# 10.                                 U.S.Government Security Regulations. In addition to the SCIF Work, Sublessor hereby agrees to cooperate withSublessee and any governmental agency doing business either directly orindirectly with the Sublessee at the Subleased Premises to the extentalterations are necessary to separate and demise the Subleased Premises fromthe remainder of the Subject Building in order to conform to the U.S.Government Security Regulations and Sublessee’s internal securityrequirements.  Except as otherwisespecifically set forth in this Sublease, Sublessee shall be responsible for allcosts and expenses in connection with such alterations.  Upon reasonable request of Sublessor at theend of the Sublease Term, Sublessee will remove any such alternations whichinterfere with normal use of the premises.

#  

# 11.                                 MiscellaneousCharges.  Except to theextent payable as Project Operating Expenses and/or Building OperatingExpenses, neither Sublessee nor any of its contractors, subcontractors,employees, architects, designers and agents shall be charged for, and Sublessorshall provide, parking, electricity, water, toilet facilities, HVAC (from 6:30a.m. to 6:00 p.m., Monday through Friday, and 9:00 a.m. to 1:00 p.m. onSaturdays (“Normal Construction Hours”)), elevators and loading docks prior tothe date of delivery by Sublessor to Sublessee of each Phase.

#  

# 12.                                 Elevators.  At all times during the Full Sublease Term,Sublessee shall have the use of all building elevators for use by Sublessee andits employees, occupants, invitees, assignees and sublessees and if Sublesseedesires, Sublessee may install access devices so as to permit access to theelevators only by Sublessee and its employees. So long as the Subleased Premises include all of the Subject Building,Sublessee shall cause the elevators to be maintained in good working order andrepair, provided however, that Sublessee shall have no obligation to makecapital repairs to the elevators or to retrofit the same to comply withApplicable Laws and Sublessor shall make all such improvements following noticefrom Sublessee to insure the continuous operation of the elevators inaccordance with Applicable Laws and Governmental Requirements.

#  

# 13.                                 Useof Premises.  The SubleasedPremises shall be occupied and used for general office purposes, storage purposes,light industrial/lab purposes, assembly purposes, and purposes incidentalthereto, or any other lawful uses permitted under the Prime Lease andApplicable Law.  Except for therepresentations and covenants of Sublessor under this Sublease, Sublessee shall

 

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# satisfyitself as to any existing zoning and restrictive covenants.  Descriptions or identification herein ofspaces within the Subleased Premises as “office”, “warehouse”, or otherwise,shall not limit the manner in which Sublessee shall be the entitled to use thespace.

#  

# 14.                                 Assignment/Subletting.

#  

## 14.1                           Rightto Assign or Sublease.  Sublesseeshall have the right to assign this Sublease or sublease all or a portion ofthe Subleased Premises upon the receipt of Sublessor’s consent, which consentshall not be unreasonably withheld, conditioned or delayed except as providedin this Section 14.1.  Sublesseeshall advise Sublessor by notice of (i) Sublessee’s intent to assign thisSublease or sublease all or a portion of the Subleased Premises, (ii) thename of the proposed assignee or sublessee, and (iii) the terms of theproposed assignment or sublease.  Inaddition, Sublessee shall provide Sublessor with the necessary financialinformation for the assignee.  Sublessorshall, within fifteen (15) days of receipt of such notice, and any additionalinformation requested by Sublessor concerning the proposed assignee’s orsublessee’s financial responsibility, elect to: (a) consent to such proposed assignment or sublease; or(b) refuse such consent, which refusal shall be on reasonable grounds.

##  

## 14.2                           Transferto Affiliates. Notwithstanding anything to the contrary in the Prime Lease or this Article 14,Sublessee shall be entitled to assign or sublet the Subleased Premises withoutconsent by Prime Lessor or Sublessor to any entity controlling Sublessee or anyaffiliate or entity under common control or controlled in common by Sublesseeor any of its related entities. Sublessee may also assign this Sublease, without Prime Lessor’s andSublessor’s consent, to any successor entity, whether by merger, consolidationor otherwise, or to any person or entity who purchases all or substantially allof the assets of Sublessee.  Sublesseeshall send Sublessor a notice of any transfer pursuant to this Section 14.2.

##  

## 14.3                           NoRight to Recapture.  Sublessorshall have no right to recapture any portion of the Subleased Premises shouldSublessee contemplate an assignment or sublease of all or a portion of theSubleased Premises.

##  

## 14.4                           PermittedOccupants.  Sublessor hereby agrees that withoutSublessor’s consent, Sublessee may enter into occupancy agreements withclients, partners, governmental agencies and instrumentalities thereof, vendorsor affiliates of Sublessee (“Permitted Occupants”) allowing Permitted Occupantsto occupy portions of the Subleased Premises as long as such relationship wasnot created as a subterfuge to avoid the obligations set forth in this Article 14.  Sublessee shall provide Sublessor withreasonable prior notice of its intent to enter into any occupancy agreements,which notice shall identify the Permitted Occupant.

##  

# 15.                                 Maintenance andRepair/Damage and Destruction.

#  

## 15.1                           Sublessor’sResponsibilities.  Sublessorshall continue to retain responsibility and shall maintain, repair and restorethe Buildings, the Project Common Area, including without limitation theParking Facilities, the Central Plant and all lines and other building systemsconnected to the Central Plant, the Land, and the Subleased Premises, and shallcomply with all obligations under the Prime Lease, and this Sublease.  Except for Sublessee’s

 

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## obligationsunder (a) Section 3 of this Sublease for the payment of Project OperatingExpenses and Building Operating Expenses, and (b) Section 15.2 below,Sublessee shall have no responsibility for such maintenance and repair.  In carrying out Sublessor’s maintenance andrepair obligations hereunder, Sublessor hereby agrees to perform such obligationsin a manner at least equal to the level of performance of such obligationsprovided by comparable sublessors to other comparable office buildings in theCity of San Diego.  The obligations ofSublessor hereunder shall include the maintenance, repair and/or capitalreplacements of (a) the HVAC system, except as expressly provided in Section 15.2to the contrary; (b) all “Building Systems”(as hereinafter defined) and theCentral Plant, (c) imbedded plumbing and electrical (d) “Life Safety Systems”(as hereinafter defined), (e) the roof, the roof drainage systems and the roofmembrane, (f) exterior walls, (g) foundations, slabs, floors and retainingwalls (h) all structural portions of the Buildings (i) the Project Common Area,including without limitation the Parking Facilities, (j) curtain wall, exteriorglass and mullions, columns, beams, shafts (including elevator shafts except tothe extent Sublessee is obligated to do so under Section 12), elevatorcabs (except to the extent Sublessee is obligated to do so under Section 12),plazas, pavement, sidewalks, curbs, entrances, driveways, art work,landscaping, exterior signage other than Sublessee’s, electrical and telephoneclosets.  The term “Building Systems” asused herein shall mean and refer to the base building mechanical, electrical,life, safety, plumbing, sprinkler systems and HVAC which are not constructedsolely for the benefit of Sublessee.  Theterm “Life Safety Systems” shall mean all devices installed and/or required byApplicable Law to be installed in and around the Buildings to protect againstinjury to person and property resulting from fire, earthquake or othercasualty, including without limitation sprinkler systems.  Sublessor shall also maintain all of theProject Common Areas and the Parking Facilities in first class condition andrepair and promptly remove any graffiti. Sublessee hereby agrees that Sublessor shall have the right, onreasonable prior notice (subject to the provisions of this Sublease which limitand condition Sublessor’s rights of entry), to enter the Subleased Premises inorder to perform its obligations under this Sublease, but shall use allreasonable efforts to minimize disruption to Sublessee’s business in theperformance of any such work.

##  

## 15.2                           Sublessee’sResponsibilities.  Subject toSublessor’s obligations in Section 15.1 above, Sublessee shall, atSublessee’s sole cost and expense, keep the First Floor of the SubleasedPremises and the Second Floor of the Subleased Premises in good and sanitarycondition at all times during the Full Sublease Term.  So long as Sublessee is the sole occupant of theSubject Building, and thereafter, to the extent that the following exclusivelyservice the building space of the Subleased Premises in the Subject Building,Sublessee shall cause to maintained (a) the following portions of the HVACsystem: air handlers on the roof (repair and maintenance only) and ductingwithin the interior of the Subject Building (repair and maintenance only), (b)non-embedded electrical outlets and facilities servicing the rentable squarefootage of the Subleased Premises in the Subject Building, (c) interiorceilings and floor coverings of the rentable square footage of the SubleasedPremises in the Subject Building,(d) interior paint of the rentable squarefootage of the Subleased Premises in the Subject Building, (e) interior windowglass, (f) janitorial work customary for office and warehouse use, (g) lightsand lighting within the rentable area of the Subleased Premises in the SubjectBuilding, (h) Subject Building security systems, and Sublessee shall keep allof such in good operating condition and (i) the specific obligations ofSublessee in Section 12 pertaining to the elevators (collectively, “Sublessee’sObligations”).  All of Sublessee’s Obligationsshall be performed at

 

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## Sublessee’ssole cost and expense and shall be excluded from Building OperatingExpenses.  All damage, injury or breakageto any part or portion of the Subleased Premises (other than the BuildingStructure and Building Systems) caused by the negligence or willful misconductof Sublessee shall be promptly repaired by Sublessee, at Sublessee’s sole costand expense; provided, however, that Sublessee shall be entitled to reimbursementfor any portion of such repair or restoration expense to the extent that thecost of any such repair is or should be covered by insurance obtained orrequired to be obtained by Sublessor under this Sublease.  Under no circumstances shall Sublessee’sObligations include any obligation to repair any defects (latent or patent) inthe Buildings and/or in the Project Common Area, including without limitationParking Facilities and/or to make the Buildings, the Project Common Areasand/or the Parking Facilities in compliance with applicable laws, ordinances,rules and regulations and/or permits (“Applicable Laws”) (and through the FullSublease Term any change in Applicable Laws), unless and only to the extentthat such compliance becomes necessary solely due to Sublessee’s use of theSubleased Premises for other than general office use and warehouse use or for ause which is not permitted by the current applicable zoning regulations for theCity of San Diego.  A portion of theSubleased Premises consists of a cafeteria. During all portions of the Full Sublease Term during which Sublessee isin possession and control of the cafeteria, Sublessee shall maintain the greasetrap in the cafeteria.

##  

# 16.                                 Insurance.  During the Full Sublease Term, Sublessee agreesto provide the liability insurance required of Sublessor, as Tenant, under Section 20.1(b)of the Prime Lease (but excluding contractual liability for indemnificationunder the Prime Lease) and property insurance for Sublessee’s furniture,fixtures and personal property as required of Sublessor under Section 12.2(a)(ii)of the Prime Lease (which shall provide for a waiver of subrogation in favor ofSublessor and Prime Lessor) and shall name Sublessor and the Prime Lessor asadditional named insureds on such insurance policies.  Sublessee shall also be required to obtainworkers’ compensation insurance as required by law.  Sublessor shall continue to maintain allother coverages of insurance required by the Prime Lease.

#  

# 17.                                 Utilities.

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## 17.1                           Background. The Projectwas originally developed so that the Subject Building and the Adjacent Buildingwould be occupied by a single user. This means that the Project is served byonly one electric meter and one gas meter. The same is true of water consumed by the Central Plant.  Therefore, Sublessor has developed a costallocation model (the “Operating Expense Allocation Model”) attached hereto asExhibit “I” and incorporated herein by this reference, for the effectiveallocation of the cost of electricity, natural gas, and Central Plant Waterbetween the Subject Building and the Adjacent Building.

##  

## 17.2                           SublessorProvided Utilities.  Sublessorshall provide electric power and natural gas service to the Subject Buildingand Central Plant Water for the HVAC system in the Subleased Premises(collectively, the “Sublessor Provided Utilities”).  The cost of the Sublessor Provided Utilitiesshall be  excluded and paid separatelyfrom Project Operating Expenses, and shall be allocated between Sublessee andSublessor or other Building tenants according to the Operating ExpenseAllocation Model.  So long as Sublesseeis the sole tenant of the Subject Building, Sublessee shall pay to Sublessorfor the Sublessor Provided Utilities in accordance

 

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## with Section 3.5above, as illustrated on the Operating Expense Allocation Model.  Sublessee shall be responsible for obtainingand paying for, separate and apart from, and in addition to the OperatingExpenses, all costs of domestic water service, telephone service, and any otherutilities other than those specified above that Sublessee requires in theSubleased Premises.  No maintenanceand/or repair of the utilities serving the Subleased Premises and/or theSubject Building by Sublessor which could cause a disruption of such utilityservices shall be scheduled by Sublessor without obtaining Sublessee’s priorconsent as to the timing of such maintenance or repair.

##  

## 17.3                           Meters.  Sublessor shall use commercially reasonableefforts to cause sub-meters for electrical power and natural gas service to beinstalled in the Subject Building before the First Phase Delivery Date in orderto measure Sublessee’s consumption of electricity and natural gas; provided,however, that delays in installing such sub-meters shall not delay or excuseSublessee’s obligation to pay for electricity and natural gas effective as ofthe First Phase Delivery Date.  Uponinstallation of the sub-meters, the Operating Expense Allocation Model will bemodified to provide for direct payment by Sublessee of the utility or utilitiesfor which meters are installed.

##  

# 18.                                 Parking.  Sublessee shall be entitled to use all parking spacesin the “Parking Facilities” except for the 115 parking stalls within theAdjacent Building Parking Area. Sublessor represents and warrants to Sublessee that no occupant of theAdjacent Building has any right under its lease or other agreement to use anyportion of the Project Common Area for the parking of motor vehicles except forthe Adjacent Building Parking Area. Sublessee shall have no obligation to pay for the parking rightsprovided in this Sublease during the Full Sublease Term.  No later than the Commencement Date of theFirst Phase, Sublessor shall cause all of the parking stalls in the ParkingFacilities to be marked to indicate whether Sublessee or the occupant of theAdjacent Building is permitted to use the same for parking in accordance withthe Site Plan attached as Exhibit “C”. Sublessor shall enforce the terms of the lease and other agreementsaffecting the Adjacent Building to insure that Sublessee’s exclusive use of theParking Facilities other than the Adjacent Building Parking Area is notinterfered with or interrupted.  It isunderstood that Sublessee intends to block the driveway on the westerlyboundary of the Subject Parcel that connects the Land with property owned bySublessor abutting the westerly boundary of the Subject Parcel.  Sublessee shall not have any right of ingressor egress to use such driveway to travel across Sublessor’s adjoining propertyat any time during the Sublease Term.

#  

# 19.                                 Signage.  Subject to the approval by Prime Lessor underthe Prime Lease and to all Applicable Laws, Sublessee shall have the right toexclusive building top and other signage as Sublessee desires.  Such exclusive rights shall includemonumentsigns, exterior building entrance directional signage, lobby signage, includingSublessee’s logo and name, on the entrance doors, in the lobby and in theelevator lobby on any Floor comprising part of the Subleased Premises.  Sublessor shall have no right to maintainSublessor identification signs in any other location in, on, or about theSubject Building and the Parking Facilities shall remove all existing “Cymer”signage prior to the First Phase Delivery Date. The cost of all such signs, including the installation, maintenance andremoval thereof, shall be at Sublessee’s sole cost and expense.  In the event of an assignment of thisSublease or a sublease of all or a portion of the

 

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# SubleasedPremises by Sublessee (to other than a Section 14.2 Affiliate), thesignage rights granted to Sublessee herein may only be transferred to theextent Sublessee’s transferee has a reputation in the corporate community withrespect to image and reputation that would be generally acceptable to themainstream business community. Notwithstanding the foregoing, if there are other tenants in thebuilding, they shall be entitled to reasonable signage,

#  

# 20.                                 Security.  Sublessee may provide, at Sublessee’s solecost and expense, such security personnel as it determines to be necessary inthe Subleased Premises.

#  

# 21.                                 Nondisturbance.  Upon request of Sublessee, Sublessor shall use itscommercially reasonable best efforts to provide Sublessee with aNon-Disturbance Agreement acceptable to Sublessee from any current or futureground lessors, mortgage holders or lien holders of all or any portion of theLand, the Buildings and the Project Common Area.  Sublessee shall cooperate with Sublessor inobtaining any such agreement. Delays in obtaining such agreement shall notdelay or postpone the Effective Date or Sublessee’s obligation to payRent.  Such Non-Disturbance Agreementshall acknowledge Sublessee’s right of possession and Sublessee’s offset rightsand that, to the extent any of the concessions to be provided to Sublessee havenot been fully funded or performed by Sublessor or Prime Lessor at the time ofa foreclosure, deed in lieu of foreclosure or any other transfer of the SubjectBuilding as a result of a default of Prime Lessor or Sublessor under the termsof the applicable ground lease, loan documents, etc., subject to any lenderprotections set forth in the lease. Sublessee, to the extent Sublessee pays or has paid such unfundedamount, may deduct the unfunded amount or equivalent value thereof, togetherwith interest, from the any rent and other amounts owed by Sublessee toSublessor next becoming due and payable. The non-disturbance agreement from Prime Lessor will provide, amongother things, that in the event the Prime Lease terminates, this Sublease willbecome a direct lease between Sublessee and the successor to Prime Lessorand/or Prime Lessor’s interest in the Subject Building.  Prime Lessor agrees that Sublessee’spossession of the Subleased Premises shall not be disturbed, nor shall thisSublease be terminated in the event of Sublessor’s default under, and asubsequent termination of, the Prime Lease, and this Sublease shall continue infull force and effect with Prime Lessor undertaking the obligations ofSublessor hereunder, or Prime Lessor, at its option, may elect to enter into anew direct lease with Sublessee upon the same terms and conditions as set forthherein upon such a termination of the Prime Lease.  Sublessor agrees that it shall be a conditionprecedent to any subsequent loan that such lender agree that it will provide anon-disturbance agreement in form reasonable acceptable to Sublessee withrespect to this Sublease.

#  

# 22.                                 RoofRights.  At any timeduring the Full Sublease Term, subject to Applicable Laws Sublessee mayinstall, at Sublessee’s sole cost and expense, telecommunications antennas,microwave dishes and other communications equipment (“TelecommunicationsEquipment”) upon the roof of the Subleased Premises.  The physical appearance of theTelecommunications Equipment shall be subject to Sublessor’s reasonableapproval.  Such approval shall be deemedto have been granted unless prior to the expiration of the ten (10) day periodimmediately following Sublessor’s receipt of the request for approval, togetherwith plans depicting the location of same, Sublessor fails to deliver toSublessee written notice of its disapproval of same and provide reasons forsuch disapproval.  The designated locationshall provide for the proper functioning of Sublessee’s TelecommunicationsEquipment.  At the time of the requestfor

 

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# approval,Sublessor may require Sublessee to install screening around such TelecommunicationsEquipment, at Sublessee’s sole cost and expense, as reasonably designated bySublessor.  Sublessee shall beresponsible for securing the approval of all governmental authorities and allpermits required by governmental authorities having jurisdiction over suchapprovals and permits for the Telecommunications Equipment, and shall providecopies of such approvals and permits to Sublessor.  Sublessee shall maintain suchTelecommunications Equipment, at Sublessee’s sole cost and expense.  In addition, Sublessee shall, at Sublessee’ssole cost and expense, prior to the expiration or earlier termination of thisSublease, remove any Telecommunications Equipment and restore the affected areato the condition existing prior to Sublessee’s installation thereof, reasonablewear and tear and damage from casualty and condemnation, excepted.  Sublessor acknowledges that Sublessee may bestoring classified or confidential materials and information in connection withits business operations from the Subleased Premises.  Accordingly, from and after delivery ofpossession to Sublessee, neither Sublessor, Sublessor, or other occupant of theSubject Building, nor any of their respective agents, employees or contractorsshall go onto the roof without providing Sublessee at least five (5) businessdays’ prior written notice of the specific date and time of such intendedentry, which entry shall at all times be accompanied by a representative ofSublessee; provided, however, that Sublessee may also elect to reschedule suchinspection upon notice to Sublessor.  Inaddition, neither Prime Lessor, Sublessor, their respective agents andemployees, nor any other person shall install any equipment or make otheralterations to the roof without the prior written notice to Sublessee, whichapproval shall not be withheld if such installation and use will not interferewith the proper operation of Sublessee’s equipment on the roof and Sublessee’ssecurity considerations.  In connectionwith providing such consent, Sublessee shall have the right to review andapprove any such equipment or alterations desired to be installed or made tothe roof (including make and manufacturer), designate or approve the contractoror installer performing such work, and have a representative of Sublesseeaccompany such contractor or installer at any time such work on the roof isbeing performed.

#  

# 23.                                 SecuredAreas.  Sublessoracknowledges that Sublessee is engaged in activities relating to the nationaldefense of the United States requiring strict compliance with applicable U.S.Government security requirements and regulations.  Accordingly, Sublessor and Prime Lessor shallnot exercise any right in the Prime Lease or herein set forth to enter theSubleased Premises except in the case of emergency or in the event of aSublessor inspection, in which case Sublessor shall provide Sublessee with five(5) business days’ prior written notice of the specific date and time of suchSublessor inspection; provided, however, that Sublessee may elect to reschedule suchinspection upon notice to Sublessor.  Arepresentative of Sublessee shall be present upon any entry by Sublessor intothe Subleased Premises.  Sublessor agreesto cooperate with Sublessee in taking all such measures as may be necessary orappropriate to limit access to the Subleased Premises or otherwise to complywith applicable U.S. Government security standards and regulations and shallnot permit anyone to take pictures or videos of the Subleased Premises or anyportion thereof without the express written consent of Sublessee.  During the time Sublessee subleases theSubleased Premises, all of Sublessor’s and Prime Lessor’s employees may berequired to undergo background investigations and shall obtain a security badgefrom Sublessee to be allowed access into the Subject Building.  All Sublessor employees who do not have asecurity badge issued by Sublessee for the Subject Building, as well as theirvisitors, shall be required to notify Sublessee’s security personnel at leastforty-eight (48) hours

 

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# inadvance of their visit to the Subject Building to enable Sublessee or itssecurity personnel the time necessary to perform backgroundinvestigations.  Sublessee retains theright to exclude any person from entering the Subject Building, in itsreasonable discretion.  To the extentSublessor performs work on or leases any other portions of the SubjectBuilding, Sublessor shall notify Sublessee in advance of same and shallcoordinate the performance of any requisite work with Sublessee to maintain atall times the security of the Subleased Premises.  Sublessee shall have the right to installsuch security equipment, including without limitation, badge readers and key cardaccess devices, and other security related hardware and equipment, all of whichshall remain the property of Sublessee and shall be removed from the SubleasedPremises by Sublessee upon the termination or expiration of this Sublease.  Sublessee shall promptly repair any damage tothe Subleased Premises occasioned by the removal of such fixtures, hardware orequipment.

#  

# 24.                                 HazardousMaterials.  Sublessorhereby agrees that to the extent any Hazardous Materials are currently locatedin, on or around the Subleased Premises and to the extent any HazardousMaterials are found in, on or around the Subleased Premises and/or the Landafter the date of full execution and delivery of this Sublease and same werenot placed in the Subleased Premises by Sublessee, its agents, employees,contractors, invitees or licensees, Sublessor shall be responsible for allcosts in connection with same, which costs shall not be included in OperatingExpenses.  Sublessor agrees to promptlyremediate all such Hazardous Materials to the extent required by law (or anygovernmental agency with jurisdiction thereon) to be removed, shall keepSublessee informed as to the scheduling of any such remedial or related work,and shall indemnify, defend and hold Sublessee harmless in connectiontherewith.  Sublessor acknowledges that inconnection with this Sublease, Sublessee shall be performing a Phase 1environmental survey and conducting other environmental and relatedtesting.  Sublessor warrants, that exceptas provided by Exhibit “H” attached hereto and made a part hereof (the “DisclosureNotice”), neither Sublessor, the Prime Lessor nor any preceding owners, lesseesor sublessees of the Land or Subleased Premises have used all, or any portion,of same for the production, disposal or storage of any Hazardous Materials (asdefined below), and Sublessor is not aware of any such prior use or anyproceeding or inquiry by a governmental authority with respect to the presenceof such waste or substance on the property or the movement thereof from or toadjoining property. Sublessor warrants there is no asbestos in the SubjectBuilding and Parking Facility.  Sublessorwill not, at any time, use or permit the use of any portion of SubleasedPremises, the Buildings, Parking Facilities, the Land beneath any of them, orthe Site, to be used in violation of any Applicable Laws, including thoserelating to environmental conditions on, under or about the Site, including butnot limited to asbestos, soil and ground water conditions and HazardousMaterials.  Further, Sublessor’s cost forthe removal of Hazardous Materials from Sublessor’s Subleased Premises or theProject shall be excluded from Operating Expenses which would otherwise bepassed through to Sublessee inclusive of any material which is deemed toxicpresently or in the future. Sublessor shall defend, indemnify and holdSublessee harmless from and against any and all losses, costs (includingreasonable attorneys’ fees), liabilities and claims arising from any violationsof the Applicable Laws and/or the existence of Hazardous Materials that are nowor hereinafter become located in, on or under the Site, and shall assume fullresponsibility and cost to remedy such violations and/or the existence ofHazardous Materials, provided and to the extent that such violation or theexistence of Hazardous Materials is not caused by Sublessee.  Hazardous Materials shall include, but shallnot be limited to, substances requiring investigation, removal or remediationunder any federal,

 

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# state orlocal statute, regulation, ordinance or policy including substances defined as “hazardoussubstances” or “toxic substances” in the Comprehensive Environmental Response,Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 1802;the Resource Conservation Recovery Act, 42 U.S.C. Section 6901, et. seq.;or those substances defined as “hazardous wastes” in applicable codes in theState of California or the State where the Premises are located and in theregulations adopted and publications promulgated to such codes.  Sublessee shall have the right to use andstore Hazardous Materials (so long as such does not require a permit under theResource Conservation Recovery Act) in the Subleased Premises with concurrent noticeof such to Sublessor including any applicable Material Safety Data Sheets.  Sublessee shall not, at any time, use anyportion of the Subleased Premises or Project in violation of anyRegulations.  Sublessee shall defend,indemnify and hold Sublessor harmless from and against any and all losses,costs (including reasonable attorneys’ fees), liabilities and claims arisingfrom the existence of Hazardous Materials that hereinafter become located in,on or under the Project caused by Sublessee.

#  

# 25.                                 Rightto Repair.  Sublesseeshall have the right (but not the obligation) to fulfill Sublessor’sobligations with respect to the maintenance and repair of the SubleasedPremises and the Project(and Sublessee shall have access to utility systems andelements outside the Subleased Premises which service the Subleased Premises inorder to do so) in the event Sublessor fails to do same under this Subleaseand/or under the Prime Lease and after the expiration of appropriate noticefrom Sublessee and Sublessor’s failure to cure same within thirty (30) days. Insuch event, Sublessee shall have the right to deduct its actual cost soincurred from the next monthly installment(s) of Base Rent and Additional Rentdue.  Notwithstanding any provision setforth in this Sublease or the Prime Lease to the contrary, if Sublesseeprovides written notice (or oral notice in the event of an emergency such asdamage or destruction to or of any portion of the Building Structure and/or theBuilding Systems, the Parking Facilities and/or anything that could causematerial disruption to Sublessee’s business) to Sublessor of an event orcircumstance which requires the action of Sublessor with respect to repairand/or maintenance, and Sublessor fails to provide such action within areasonable period of time, given the circumstances, after the receipt of suchnotice, but in any event not later than seven (7) days after receipt of suchnotice, then Sublessee may proceed to take the required action upon delivery ofan additional three (3) business days’ notice to Sublessor specifying thatSublessee is taking such required action (provided, however, that neither ofthe notices shall be required in the event of an emergency which threatens lifeor where there is imminent danger to property or a possibility that a failureto take immediate action could cause a material disruption in Sublessee’snormal and customary business activities), and if such action was requiredunder the terms of this Sublease to be taken by Sublessor and was not taken bySublessor within such ten (10) day period (unless such notice was not requiredas provided above), then Sublessee shall be entitled to prompt reimbursement bySublessor of Sublessee’s costs and expenses in taking such action on acommercially reasonable basis plus interest thereon at the rate of ten percent(10%) plus rent abatement to the extent Sublessee would have otherwise beenentitled to rent abatement under the Sublease. Notwithstanding anything to the contrary in this Lease, if Sublessee hasnot received payment of any sums due from Sublessor as of the end of thethirtieth (30th) day following Sublessor’s receipt of a statement ornotice thereof, Sublessee shall have the right to offset said sums against eachmonth’s payment of Rent due under this Sublease until the total amount of suchsums due to Sublessee has been recaptured by Sublessee through suchoffset.  Sublessor agrees that Sublessee

 

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# willhave access to the Subleased Premises, the Building Systems and BuildingStructure and the other portions of the Project to the extent necessary toperform the work contemplated by this provision.

#  

# 26.                                 Indemnity.  Sublessee shall at its expense defend,indemnify, and hold Sublessor and Sublessor’s agents, contractors, licensees,employees, directors, officers, partners, trustees and invitees harmless fromand against any and all claims, costs, liability, damage or expense, includingbut not limited to, penalties, fines, reasonable attorneys’ fees or costs,resulting from Sublessee’s breach or failure to perform its obligations underthis Sublease.  Sublessor shall at itsexpense defend, indemnify, and hold Sublessee and Sublessee’s agents,contractors, licensees, employees, directors, officers, partners, trustees andinvitees harmless from and against any and all claims, costs, liability, damageor expense, including but not limited to, penalties, fines, reasonableattorneys’ fees or costs, resulting from Sublessor’s breach or failure toperform its obligations under this Sublease.

#  

# 27.                                 ThePrime Lease.  Sublessor,not Sublessee, shall be solely responsible for paying Rent and all otheramounts to be paid to Prime Lessor under the Prime Lease, and complying withall of the terms and provisions of the Prime Lease that relate to matters otherthan the use and occupancy of the Subject Premises by Sublessee.  Sublessor and Sublessee shall be jointlyresponsible for obtaining any requisite approvals from Prime Lessor to theextent required thereunder.  Sublesseeshall be responsible for complying with the terms and conditions of the PrimeLease arising out of or relating to the use and occupancy of the SubleasedPremises by Sublessee.  Sublessee agreesthat Sublessee shall not perform any tests or studies affecting the soils orsubsurface areas of the Premises Subleased by the Prime Lease except to theextent permitted by Section 2.3 of the Prime Lease.

#  

# 28.                                 QuietEnjoyment.  Sublessorcovenants and agrees that Sublessee shall peaceably and quietly have, hold andenjoy the Subleased Premises in accordance with the terms of this Sublease.

#  

# 29.                                 Condemnation.  Subject to the terms of the Prime Lease, ifall of the Subleased Premises (or any of the Parking Facilities or BuildingCommon Area) is taken or condemned for a public or quasi-public use, or if amaterial portion of the Subleased Premises (or any of the Subject Building, theParking Facilities or Building Common Area) is taken or condemned for a publicor quasi-public use and the remaining portion thereof is not usable bySublessee for the normal conduct of its business in the manner conductedimmediately prior to the taking, this Sublease shall terminate as of theearlier of the date title to the condemned real estate vests in the condemneror the date on which Sublessee is deprived of possession of the SubleasedPremises (or the applicable portion thereof or of the Parking Facilities orBuilding Common Area).  In such event,the Base Rent herein reserved and all Additional Rent and other sums payablehereunder shall be apportioned and paid in full by Sublessee to Sublessor tothat date, all Base Rent, Additional Rent and other sums payable hereunderprepaid for periods beyond that date shall forthwith be repaid by Sublessor toSublessee, and neither party shall thereafter have any liability hereunder,except that any obligation or liability of either party, actual or contingent,under this Sublease which has accrued on or prior to such termination dateshall survive.  If only part of theSubleased Premises is taken or condemned for a public or quasi-public use andthis

 

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# Subleasedoes not terminate, Sublessor shall, to the extent of the award it receives,restore the Subleased Premises to a condition and to a size as nearlycomparable as reasonably possible to the condition and size thereof immediatelyprior to the taking, and there shall be an equitable adjustment to the BaseRent and Additional Rent based on the actual loss of use of the SubleasedPremises including the applicable portion thereof or of the Parking Facilitiesor Building Common Area suffered by Sublessee from the taking.  Sublessor shall be entitled to receive theentire award in any proceeding with respect to any taking provided for in this Section 29,without deduction therefrom for any estate vested in Sublessee by this Lease,and Sublessee shall receive no part of such award.  Nothing herein contained shall be deemed toprohibit Sublessee from making a separate claim, against the condemner, to theextent permitted by law, for the value of Sublessee’s moveable trade fixtures,machinery and moving and relocation expenses.

#  

# 30.                                 Sublessee’sDefault.

#  

## 30.1                           Eventof Default.  The occurrence of any oneor more of the following events shall constitute an event of default (hereinreferred to as an “Event of Default”) of Sublessee under this Sublease:

##  

### (a)                                  if Sublesseefails to pay Base Rent or any Additional Rent hereunder as and when such rentbecomes due and such failure shall continue for more than ten (10) businessdays after receipt of written notice from Sublessor of such failure; provided,however, that any such notice will be in lieu of, and not in addition to, anynotice required under applicable law (including, without limitation, theprovisions of California Code of Civil Procedure Section 1161 regardingunlawful detainer actions or any successor statute or law of a similar nature);

###  

### (b)                                 if Sublesseefails to perform or observe any other term of this Sublease and such failureshall continue for more than thirty (30) days after Sublessor gives Sublesseenotice of such failure, or, if such failure cannot reasonably be correctedwithin such thirty (30) day period, if Sublessee does not commence to correctsuch default within said thirty (30) day period and thereafter diligentlyprosecute the correction of same to completion within a reasonable time and inany event prior to the time a failure to complete such correction could causeSublessor to be subject to criminal prosecution for violation of any law, rule,ordinance or regulation.

###  

## 30.2                           Remedies.  Upon the occurrence of any one or more Events ofDefault, Sublessor without any demand or notice whatsoever (except as expresslyrequired in this Section 30) shall have the immediate right to pursue thefollowing remedies (all of which shall be cumulative and in addition to anyother remedies available to Sublessor at law or in equity):

##  

### (a)                                  In additionto any other remedies available to Sublessor at law or in equity underApplicable Law (including, without limitation, the remedies of California CivilCode Section 1951.4 and any successor statute or similar law), Sublessorwill have the immediate right and option to terminate this Sublease and allrights of Sublessee hereunder.  IfSublessor elects to terminate this Sublease then, to the extent permitted underapplicable law, Sublessor may recover from Sublessee (a) the worth at thetime of

 

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### award ofany unpaid rent which had been earned at the time of such termination; plus(b) the worth at the time of award of the amount by which the unpaid rentwhich would have been earned after termination until the time of award exceedsthe amount of such rent loss that Sublessee proves could have been reasonablyavoided; plus (c) the worth at the time of award of the amount by whichthe unpaid rent for the balance of the term of the Sublease for which Sublesseeremains obligated hereunder after the time of award exceeds the amount of suchrent loss that Sublessee proves could be reasonably avoided; plus (d) any otheramount necessary to compensate Sublessor for all the detriment proximatelycaused by Sublessee’s failure to perform its obligations under this Sublease orwhich, in the ordinary course of things, results therefrom including but notlimited to, to the extent permitted under Applicable Law, attorneys’ fees andcosts; brokers’ commissions; the costs of refurbishment, alterations,renovation and repair of the Subleased Premises, and removal (including therepair of any damage caused by such removal) and storage (or disposal) ofSublessee’s personal property, equipment, fixtures, alterations and any otheritems which Sublessee is required under this Sublease to remove but does notremove.  As used in subsection 30.2(a)above, the “worth at the time of award” is computed by allowing interest at theInterest Rate by discounting such amount at the discount rate of the FederalReserve Bank of San Francisco at the time of award plus one percent (1%).

###  

### (b)                                 Sublessor hasthe remedy described in California Civil Code Section 1951.4 (lessor maycontinue lease in effect after lessee’s breach and abandonment and recover rentas it becomes due, if lessee has right to sublet or assign, subject only toreasonable limitations).  Accordingly,upon the occurrence of an Event of Default and abandonment of the SubleasedPremises by Sublessee or in the event that Sublessor elects to re-enter theSubleased Premises or takes possession of the Subleased Premises pursuant tolegal proceeding or pursuant to any notice provided by law, then if Sublessordoes not elect to terminate this Sublease, Sublessor may from time to time,without terminating this Sublease, either recover all rent as it becomes due orrelet the Subleased Premises or any part thereof on terms and conditions asSublessor in its sole and absolute discretion may deem advisable with the rightto make alterations and repairs to the Subleased Premises in connection withsuch reletting.  If Sublessor elects torelet the Subleased Premises, then rents received by Sublessor from suchreletting will be applied; first, to the payment of any indebtedness other thanrent due hereunder from Sublessee to Sublessor; second, to the payment of anycost of such reletting; third, to the payment of the reasonable cost of anyalterations and repairs to the Subleased Premises incurred in connection withsuch reletting; fourth, to the payment of rent due and unpaid hereunder and theresidue, if any, will be held by Sublessor and applied to payment of futurerent as the same may become due and payable hereunder.  Should that portion of such rents receivedfrom such reletting during any month, which is applied to the payment of renthereunder, be less than the rent payable during that month by Sublesseehereunder, then Sublessee agrees to pay such deficiency to Sublessorimmediately upon demand therefor by Sublessor. Such deficiency will be calculated and paid monthly.

###  

### (c)                                  Event ofDefault hereunder shall not be construed as a waiver of such Event of Default(except as to acceptance by Sublessor of payment in full of all

 

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### BaseRent and Additional Rent past due at the time of such acceptance or asotherwise indicated by Sublessor in writing).

###  

### (d)                                 The rightsgranted to Sublessor in this Section 30.2 shall be cumulative of everyother right or remedy provided in this Sublease or which Sublessor mayotherwise have at law or in equity or by statute, and the exercise of one ormore rights or remedies shall not prejudice or impair the concurrent or subsequentexercise of other rights or remedies or constitute a forfeiture or waiver ofBase Rent, Additional Rent or damages accruing to Sublessor by reason of anyEvent of Default.

###  

# 31.                                 Obligationto Mitigate.  Nothingcontained in this Sublease will relieve Sublessor of any obligation whichSublessor may have under the laws of the state of California to mitigate itsdamages resulting from an Event of Default.

#  

# 32.                                 BrokerageCommission.  Sublessorshall be responsible for the payment of a real estate brokerage commission toSublessee’s brokers Trammell Crow Services, Inc., doing business as TrammellCrow Company and to Sublessor’s brokers Colliers International (collectivelythe “Brokers”) pursuant to the terms of a separate written agreement, a copy ofwhich shall be provided to Sublessee (“Brokers Agreement”).  Sublessor and Sublessee represent and warrantto each other that, with the exception of Brokers, no brokers were involved inconnection with the negotiation or consummation of this Sublease.  Each party agrees to indemnify the other, andhold it harmless, from and against any and all claims, damages, losses,expenses and liabilities (including reasonable attorneys’ fees) incurred bysaid party as a result of a breach of this representation and warranty by theother party and Sublessor agrees to indemnify and hold harmless Sublessee fromand against any and all claims, damages, losses, expenses and liabilities(including reasonable attorneys’ fees) incurred by Sublessee as a result of abreach by Sublessors of its obligations under this Section 32.

#  

# 33.                                 SublessorDefault.  If Sublessorfails to pay to Sublessee when due any sum of money required to be paid bySublessor to Sublessee pursuant to the terms of this Sublease (a “SublessorMonetary Default”) and such failure continues for more than ten (10) businessdays after Sublessee gives Sublessor written notice of such failure, or ifSublessor fails to perform or observe or otherwise breaches any other term ofthis Sublease (each, a “Sublessor Performance Default”) and such failure shallcontinue for more than thirty (30) days after Sublessee gives Sublessor writtennotice of such failure, or, if such other failure cannot be corrected withinsuch thirty (30) day period, if Sublessor does not commence to correct suchdefault within such thirty (30) day period and thereafter diligently prosecutethe correction of same to completion within a reasonable time, a “SublessorEvent of Default” shall exist under this Sublease.  Upon the occurrence of a Sublessor Event of Default,Sublessee may at Sublessee’s option, exercise any rights provided in Section 25above.

#  

# 34.                                 Notices.  All notices and demands that may be requiredor permitted hereunder shall be in writing and shall be deemed given uponactual receipt with proof thereof (or proof of refusal of delivery) and shallbe sent by certified or registered United States Mail, postage prepaid, returnreceipt requested, or by a nationally recognized overnight courier, with proofof delivery, to the following addresses, unless otherwise designated by writtennotice:

 

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| To Sublessor:   |   | Cymer Inc.                                   |
|-----------------|--------|----------------------------------------------|
|            |   | 17075 Thornmint Court                        |
|            |   | Attn: Nancy Baker                            |
|            |   | San Diego, California 92127-1815             |
|            |   | Attn: Chief Financial Officer                |
|            |   |                                         |
| with a copy to: |   | Higgs, Fletcher &  Mack LLP              |
|            |   | First National Bank Building,                |
|            |   | 401 West “A” Street, Suite 2600    |
|            |   | San Diego, California 92101                  |
|            |   | Attn: William Reavey, Esq.                   |
|            |   |                                         |
| To Sublessee:   |   | Northrop Grumman System  Corporation         |
|            |   | Attn: Real Estate Department - Legal Notices |
|            |   | 1840 Century Park East                       |
|            |   | Los Angeles, California 90067                |
|            |   |                                         |
| with a copy to: |   | Northrop Grumman  Systems Corporation        |
|            |   | M/S 9900/P04-220                             |
|            |   | 2000 W. NASA Blvd.                           |
|            |   | Melbourne, FL 32904                          |
|            |   | Attn: Manager, Sector Real Estate            |
|            |   |                                         |
| And to:         |   | Rutan & Tucker, LLP                      |
|            |   | 611 Anton Blvd., 14th Floor                  |
|            |   | Costa Mesa,  California 92626                |
|            |   | Attn: Mary M.  Green, Esq.                   |

 

# 35.                                 Attorneys’ Fees.  If either party shall commence legal action tospecifically enforce or otherwise seek redress under or for breach of thisSublease, the prevailing party in such action shall be entitled to recover itscosts and reasonable attorneys’ fees therein, including costs and fees incurredin any appellate proceeding, in addition to any other relief.

#  

# 36.                                 Termination ofPrime Lease.  If for any reason the termof the Prime Lease shall terminate prior to the Expiration Date (other than inconnection with Sublessor’s Default), this Sublease shall automatically beterminated and Sublessor shall not be liable to Sublessee by reason thereofunless said termination shall have been caused by the default of Sublessorunder the Prime Lease, and said Sublessor default was not as a result of aSublessee default hereunder. Notwithstanding the foregoing, in no event shall Sublessor or Sublessoragree to a voluntary termination or cancellation of the Prime Lease without theprior written consent of Sublessee.

#  

# 37.                                 EntireAgreement.  It isunderstood and acknowledged that there are no oral agreements between theparties hereto affecting this Sublease and this Sublease supersedes and cancelsany and all previous negotiations, arrangements, brochures, agreements andunderstandings, if any, between the parties hereto or displayed by Sublessor toSublessee with respect to the subject matter thereof, and none thereof shall beused to interpret or construe this

 

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# Sublease.  This Sublease, and the exhibits and schedulesattached hereto, contain all of the terms, covenants, conditions, warrantiesand agreements of the parties relating in any manner to the rental, use andoccupancy of the Subleased Premises and shall be considered to be the onlyagreements between the parties hereto and their representatives andagents.  None of the terms, covenants,conditions or provisions of this Sublease can be modified, deleted or added toexcept in writing signed by the parties hereto. All negotiations and oral agreements acceptable to both parties havebeen merged into and are included herein. There are no other representations or warranties between the parties,and all reliance with respect to representations is based totally upon therepresentations and agreements contained in this Sublease.

#  

# 38.                                 Counterparts.  This Sublease may be executed in counterpartswith the same effect as if both parties hereto had executed the samedocument.  Both counterparts shall beconstrued together and shall constitute a single sublease.

#  

# 39.                                 EstoppelCertificates.  Sublesseeagrees, from time to time, within fifteen (15 business days after Sublessee’sreceipt of a request of Sublessor or Prime Lessor, to execute and deliver toSublessor, or Sublessor’s designee, an estoppel certificate stating, to thebest of Sublessee’s knowledge without inquiry, that this Sublease is in fullforce and effect, the date to which rent has been paid, that Sublessor is notin default thereunder (or specifying in detail the nature of Sublessor’sdefault), and the termination date of this Sublease.

#  

# 40.                                 Timeis of the Essence.  TIME IS OFTHE ESSENCE OF THIS SUBLEASE.

#  

# 41.                                 Miscellaneous.

#  

## 41.1                           Severability.  If any clause or provision of this Subleaseis determined to be illegal, invalid or unenforceable under present or futurelaws effective during the Full Sublease Term, then and in that event, it is theintention of the parties hereto that the remainder of this Sublease shall notbe affected thereby, and that in lieu of such illegal, invalid or unenforceableclause or provision there shall be substituted a clause or provision as similarin terms to such illegal, invalid or unenforceable clause or provision as maybe possible and be legal, valid and enforceable.

##  

## 41.2                           NoWaiver.  No failure of Sublessor or Sublesseeto exercise any power given Sublessor or Sublessee hereunder or to insist uponstrict compliance by Sublessor or Sublessee with its obligations hereunder, andno custom or practice of the parties at variance with the terms hereof shallconstitute a waiver of Sublessor’s or Sublessee’s rights to demand exactcompliance with the terms hereof.

##  

## 41.3                           Amendments.  This Sublease contains the entire agreementof the parties hereto as to the subject matter of this Sublease and no priorrepresentations, inducements, letters of intent, promises or agreements, oralor otherwise, between the parties not embodied herein shall be of any force andeffect.  Any future amendment to thisSublease must be in writing and signed by the parties hereto.  The masculine (or neuter) pronoun, singularnumber shall include the masculine, feminine and neuter gender and the singularand plural number.

 

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## 41.4                           Captions.  The captions of this Sublease are forconvenience only and are not a part of this Sublease, and do not in any waydefine, limit, describe or amplify the terms or provisions of this Sublease orthe scope or intent thereof.

##  

## 41.5                           GovernmentLaw.  This Sublease shall be interpretedunder the laws of the State of California.

##  

## 41.6                           Construction.  The parties acknowledge that this Sublease is theresult of negotiations between the parties, and in construing any ambiguityhereunder no presumption shall be made in favor of either party.  No inference shall be made from any itemwhich has been stricken from this Sublease other than the deletion of such item.

##  

# 42.                                 Authority.  Sublessee represents to Sublessor thatSublessee is authorized by all required corporate or partnership action toenter into this Sublease and the individual(s) signing this Sublease on behalfof Sublessee are each authorized to bind Sublessee to its terms and that theconsummation of this Sublease is not in conflict with any agreement, contractor order to which Sublessee is a party. Sublessor represents to Sublessee that Sublessor is authorized by allrequired corporate or partnership action to enter into this Sublease and theindividual(s) signing this Sublease on behalf of Sublessor are each authorizedto bind Sublessor to its terms and that the consummation of this Sublease isnot in conflict with any agreement, contract or order to which Sublessor is aparty.

#  

# 43.                                 SublessorBankruptcy.  If Sublessorfiles for bankruptcy protection, Sublessee may remain in the Subleased Premiseseven if the Sublease is rejected.  In theevent that the obligations of Sublessor under the Sublease are not performedduring the pendency of a bankruptcy or insolvency proceeding involving theSublessor as the debtor, or following the rejection of the Sublease inaccordance with Section 365 of the United States Bankruptcy Code, thennotwithstanding any provision of this Sublease to the contrary, Sublessee shallhave the right to set off against all Rent and other sums required to be paidunder this Sublease next due and owing (a) any and all damages caused by suchnon-performance of Sublessor’s obligations under the Sublease by Sublessor,debtor-in-possession, or the bankruptcy trustee, and (b) any and all damagescaused by the non-performance of Sublessor’s obligations under the Subleasefollowing any rejection of the Sublease in accordance with Section 365 ofthe United States Bankruptcy Code.

#  

# 44.                                 Sublessee’sFixtures.  Sublessor andPrime Lessor agree to execute a waiver, subordination and consent letter, infavor of any lender holding a security interest in property of Sublesseelocated at the Subleased Premises, acknowledging the security interest of thelender and confirming that Sublessor will not interfere with the exercise bythe lender of its rights under agreements with Sublessee, subject to theconditions that the lender must act in accordance with applicable laws, maynever undertake any form of forcible entry into the Subleased Premises and mustrepair any damage caused by entry and removal of property.  Sublessor and Prime Lessor waives any lienrights it may have in Sublessee’s trade fixtures and personal property.

#  

# 45.                                 Governmental Requirements.  Sublessee shall promptly comply throughout theFull Sublease Term, at Sublessee’s sole cost and expense, with all present andfuture laws,

 

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# ordinances,orders, rules, regulations or requirements of all federal, state and municipalgovernments and appropriate departments, commissions, boards and officersthereof (collectively, “Governmental Requirements”) relating to Sublessee’s useof all or any part of the Subleased Premises including the Subject Building andthe BuildingDecember 21, 2004 Common Area.  Notwithstanding the foregoing, Sublessor, atSublessor’s sole cost and expense, shall be responsible for compliance with allGovernmental Requirements relating to the Land, the Subject Building, theParking Facilities and the Project Common Area and shall make all improvementsand repairs required to render the same in compliance with all applicableGovernmental Requirements.  Sublesseeshall also observe and comply with the requirements of all policies of publicliability, fire and other policies of insurance at any time in force withrespect to the Subleased Premises.

#  

# 46.                                 PRIMELESSOR’S CONSENT.  As acondition to the effectiveness of this Sublease, the parties shall obtain fromthe Prime Lessor its consent to the terms and conditions of this Sublease andthe work and other activities contemplated by Sublessee hereunder, in form andsubstance acceptable to Sublessee, and including, without limitation, consentto Section 4 (Sublessor’s Work and Condition of Subleased Premises), Section 5(Alterations), Section 9 (Connection to Other Facilities), Section 10(U.S. Government Security Regulations), Section 14(Assignment/Subletting), Section 19 (Signage), Section 21(Non-Disturbance), Section 22 (Roof Rights), Section 23 (SecuredAreas), Section 24 (Hazardous Materials), Section 27 (The PrimeLease), and Section 44 (Sublessee’s Fixtures).

#  

# 47.                                 NONBINDINGDRAFTS.  ALL SUBLEASEDRAFTS ARE TO BE CONSTRUED ONLY AN INVITATION TO NEGOTIATE.  NEITHER THIS SUBLEASE DRAFT OR ANY PRIORLETTERS OF INTENT OR REQUESTS FOR PROPOSAL SHALL BE CONSTRUED OR INTERPRETED TOBE AN OFFER OR A CONTRACT OR OTHER AGREEMENT BINDING ON THE PARTIES.  SUBLESSEE RESERVES THE RIGHT TO NEGOTIATEWITH OTHER PARTIES.  NO PARTY SHALL HAVEANY LEGAL RIGHTS OR OBLIGATIONS WITH RESPECT TO ANY OTHER PARTY, AND NO PARTYSHOULD TAKE ANY ACTION OR FAIL TO TAKE ANY ACTION IN DETRIMENTAL RELIANCE UPONANY SUCH DRAFTS, OR STATEMENTS MADE BY ANY AGENT OR REPRESENTATIVE OF EITHERPARTY UNLESS AND UNTIL A SUBLEASE AGREEMENT IS FULLY EXECUTED AND DELIVERED BYALL PARTIES INVOLVED.

#  

| /s/ EPH                   |   |                      | /s/ AJP |   |
|---------------------------|--------|---------------------------|---------|--------|
| Sublessor’s Initials |   | Sublessee’s Initials |

 

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IN WITNESS WHEREOF, the parties through their dulyauthorized representatives have executed this Sublease on the dates writtenbelow:

 
|   | CYMER, INC.,                        |
|--------|-------------------------------------|
|   | a Nevada corporation                |
|   |                                |
|   |                                |
|   | By:                                 | /s/ Edward P. Holtaway |
|   |                                |   |
|   | Title:                              | EVP, CORP OPERATIONS |
|   |                                |   |
|   | Date:                               | 12/22/04 |
|   |                                |
|   | “Sublessor”               |
|   |                                |
|   |                                |
|   | NORTHROP GRUMMAN SYSTEMS            |
|   | CORPORATION, a Delaware corporation |
|   |                                |
|   |                                |
|   | By:                                 | /s/ A.J. Paz |
|   |                                |   |
|   | Title:                              | Corporate Director of  Real Estate |
|   |                                |
|   | Date:                               | 12/22/04 |
|   |                                |   |
|   | “Sublessee”               |
|        |                                     |  |  |  |  |  |

 

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