Exhibit 10.31


 


UNIVERSITY
PACIFIC CENTRE OFFICE LEASE


 


 


BETWEEN


 


ALECTA
PENSIONSFÖRSÄKRING, ÖMSESIDIGT,


a Swedish company


(“Landlord”)


 


 


and


 


 


MAXIM
PHARMACEUTICALS, INC.,


a Delaware corporation


(“Tenant”)


 

















 


UNIVERSITY PACIFIC CENTRE OFFICE LEASE


 


TENANT:


MAXIM PHARMACEUTICALS, INC.


 


TABLE OF
CONTENTS


 


	
  ARTICLE 1.

  	
  TERM

  
	
   

  	
   

  
	
  ARTICLE 2.

  	
  RENT

  
	
   

  	
   

  
	
  ARTICLE 3.

  	
  ADDITIONAL RENT

  
	
   

  	
   

  
	
  ARTICLE 4.

  	
  SERVICES AND FACILITIES

  
	
   

  	
   

  
	
  ARTICLE 5.

  	
  ACCEPTANCE OF PREMISES

  
	
   

  	
   

  
	
  ARTICLE 6.

  	
  ALTERATIONS AND REPAIRS

  
	
   

  	
   

  
	
  ARTICLE 7.

  	
  PREMISES

  
	
   

  	
   

  
	
  ARTICLE 8.

  	
  ASSIGNMENT AND SUBLETTING

  
	
   

  	
   

  
	
  ARTICLE 9.

  	
  NON-LIABILITY AND INDEMNIFICATION

  
	
   

  	
   

  
	
  ARTICLE 10.

  	
  INSURANCE

  
	
   

  	
   

  
	
  ARTICLE 11.

  	
  TRANSFER OF LANDLORD’S INTEREST

  
	
   

  	
   

  
	
  ARTICLE 12.

  	
  DAMAGE OR DESTRUCTION

  
	
   

  	
   

  
	
  ARTICLE 13.

  	
  DEFAULTS
  AND REMEDIES

  
	
   

  	
   

  
	
  ARTICLE 14.

  	
  EMINENT DOMAIN

  
	
   

  	
   

  
	
  ARTICLE 15.

  	
  SUBORDINATION

  
	
   

  	
   

  
	
  ARTICLE 16.

  	
  SURRENDER OF PREMISES; REMOVAL OF PROPERTY

  
	
   

  	
   

  
	
  ARTICLE 17.

  	
  MISCELLANEOUS

  



 


 


EXHIBITS:


 


	
  A.

  	
  Floor
  Plan of Premises

  
	
  B.

  	
  Work
  Letter Agreement

  
	
  C.

  	
  Rules
  and Regulations

  
	
  D.

  	
  Basic
  Monthly Rent Schedule

  
	
  E.

  	
  Option
  to Renew and Extend

  
	
  F.

  	
  Right
  of First Refusal

  
	
  G.

  	
  Right
  of First Offer

  



 


i

















 


STANDARD OFFICE LEASE


 


 


This Lease is made as
of July 31, 2003, between ALECTA PENSIONSFÖRSÄKRING,
ÖMSESIDIGT, a Swedish company (“Landlord”), and MAXIM PHARMACEUTICALS,
INC., a Delaware corporation (“Tenant”), who agree as follows:


 


LEASE OF PREMISES


 


Landlord leases to
Tenant and Tenant leases from Landlord, upon the provisions and conditions set
forth herein, those certain premises (“Premises”) described on Exhibit  “A”
attached hereto, which Premises are located in that certain building known as
University Pacific Centre, 8899 University Center Lane, San Diego, California
(“Building”), and situated upon that certain real property as more particularly
described on Exhibit “A” (“Real Property”). 
The Real Property and the Building are referred to collectively herein
as the “University Project.”


 


BASIC LEASE PROVISIONS


 


The following are the
Basic Lease Provisions of this Lease. 
Other Sections of this Lease explain and define the Basic Lease
Provisions in more detail and are to be read in conjunction herewith.  In the event of any conflict between the
Basic Lease Provisions and the other Sections of this Lease, the other Section
of the Lease shall control.


 


1.             BUILDING:  University Pacific Centre, 8899 University
Center Lane, San Diego, California 92122.


 


2.             PREMISES:


a.             Floor(s):  3rd and 4th Floors


b.             Suite(s):  330, 340, 350, 355 and 400


c.             Rentable area of the Premises:
approximately 37,651 BOMA rentable square feet.


d.             Usable area of the Premises:
approximately 35,491 BOMA usable square feet.


 


3.             TERM:   Seven (7) years, plus any partial month following
the Commencement Date if the Commencement Date does not occur on the first day
of a calendar month.


 


4.             COMMENCEMENT
DATE:  September 13, 2003.


 


5.             BASIC
MONTHLY RENT:  See Exhibit “D.”


 


6.             TENANT’S
PRO RATA SHARE; BASE YEAR:  39.02%;
such share is a fraction, the numerator of which is the total rentable area of
the Premises (37,651 sq. ft.) and the denominator of which is the total
rentable area of the Building (96,490 sq. ft.); Base Year:  2004.


 


7.             SECURITY
DEPOSIT: $69,731,56


 


8.             BROKERS:   Burnham Office Consulting Partners and The
Staubach Company - West.


 


9.             ADDRESSES:


 


	
  Landlord:

  	
   

  	
  Tenant:

  
	
   

  	
   

  	
   

  
	
  ALECTA
  PENSIONSFÖRSÄKRING,

  ÖMSESIDIGT, a Swedish company

  Alecta Real Estate (USA), Inc.

  10 Glenville Street

  Greenwich, CT 06831

  Attn:  Martin Van Ardenne

  	
   

  	
  MAXIM
  PHARMACEUTICALS, INC.

  8899 University Center Lane, Suite 400

  San Diego, CA  92122

  Attn:  Dale Sander

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  STEPSTONE
  REAL ESTATE SERVICES

  1660 Union Street, 4th floor

  San Diego CA 92101

  Attn: 
  Lisa Ledbetter

  	
   

  	
   

  



 


10.           PERMITTED
USES:  General office uses and other
related uses that are: (a) permitted under the zoning for the Building and
applicable law and (b) comparable with other first class office buildings in
San Diego, California.  Notwithstanding
the foregoing, the Premises shall not be used for any of the following uses:
treatment or evaluation of patients, whether human or animal; dispensing of
medication or medical equipment; or any other retail medical use.


 


11.           PARKING:  Tenant shall be entitled to, from time to
time, rent up to four (4) parking permits per 1,000 usable square feet leased,
all within the designated parking area, surface and structure.  At Tenant’s option, up to eighteen (18) of
these parking permits shall be for parking spaces that are covered and designated
reserved for Tenant’s executives.  In
addition, Landlord shall provide, pursuant to Tenant’s request, three (3)
reserved spaces in front of the Building designated specifically for Tenant’s
visitors and vendors.  Monthly parking
charges shall be at $25.00 per non


 


1

















 


reserved
space and $75.00 per reserved space throughout the initial Term.  All
non-reserved parking charges shall be waived during the first three (3) years
of the Term.  Landlord reserves the
right to separately charge Tenant’s guests and visitors for any additional
parking.


 


2

















 


ARTICLE 1.


 


TERM


 


1.1           Commencement Date. 
The Term shall commence on the Commencement Date and shall end on the
date specified in the Basic Lease Provisions.


 


1.2           Existing Leases. 
Tenant occupies the Premises under the following described leases (each
an “Existing Lease”):


 


(a)           The Lease dated as of September 21,
2000, between SPP Real Estate (Palm Court), Inc., a Delaware corporation, and
Maxim Pharmaceuticals, Inc., a Delaware corporation for Suite 330.


 


(b)           The Lease dated as of May 15, 2000,
between SPP Real Estate (Palm Court), Inc., a Delaware corporation, and Maxim
Pharmaceuticals, Inc., a Delaware corporation for Suites 340 and 350.


 


(c)           The Lease dated as of April 22, 2000,
between SPP Real Estate (Palm Court), Inc., a Delaware corporation, and Maxim
Pharmaceuticals, Inc., a Delaware corporation for Suite 355.


 


(d)           The Lease dated as of June 26, 1998,
between British Pacific Properties Corporation, a California corporation, and
Maxim Pharmaceuticals, Inc., a Delaware corporation for Suite 400 and the First
Amendment thereto dated as of November 30, 1998.


 


Each Existing Lease shall, notwithstanding any
provision set forth in such Existing Lease, terminate effective as of the
Commencement Date, and shall be supplanted in all respects by this Lease;
provided, however, that any claims that either party hereto may have against
the other party hereto with respect to any Existing Lease shall survive the
Commencement Date, any claim under any Existing Lease shall be deemed to be a
claim hereunder, and any default under any Existing Lease shall be deemed a
default hereunder.


 


ARTICLE 2.


 


RENT


 


2.1           Basic Monthly Rent.  Subject to Paragraph 2.6 and Paragraphs 5.3
and 5.4 of the Work Letter Agreement, Tenant shall pay to Landlord, as monthly
rent (“Basic Monthly Rent”), the amount set forth in Item 5 of the Basic Lease Provisions.


 


The Basic Monthly Rent and all other amounts
payable hereunder shall be paid to Landlord in advance on the first day of each
month during the Term, without deduction or offset, in lawful money of the
United States of America at the office of Landlord in the Building, or to such
place as Landlord may designate in writing.


 


If the Term commences on other than the first day
of a calendar month, then there shall be paid on the Commencement Date a pro
rata portion of the Basic Monthly Rent based upon the number of days remaining
in such month.


 


2.2           Past Due Rent.  Any amount payable hereunder, including
Basic Monthly Rent and any other charge (collectively, “Rent”), not paid when
due shall bear interest from the date due until the date paid at the Federal
Reserve Board Discount Rate, as of such due date, plus five percent (5%) per
annum (“Interest Rate”).  The payment of
such interest shall not excuse or cure any default or modify any obligation of
Tenant under this Lease.


 


2.3           Late Fee.  Tenant acknowledges that the late payment by
Tenant to Landlord of Rent will cause Landlord to incur costs not contemplated
by this Lease, the exact amount of which will be difficult to ascertain.  Such costs may include, without limitation,
administrative costs, processing and accounting charges, and late charges which
may be imposed on Landlord. 
Accordingly, if any installment of Rent shall not be received by Landlord
within five (5) days after the date that such amount is due and payable, then
Tenant shall pay to Landlord, in addition to the interest provided above, a
late charge in the amount of three percent (3%) of the amount due.  The parties agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of the late payment by Tenant. 
Acceptance of such late charge by Landlord shall not constitute a waiver
of Tenant’s default with respect to such overdue amount, nor prevent Landlord
from exercising any of its rights or remedies hereunder.  Notwithstanding anything to the contrary
contained in this Lease, Landlord will grant one (1) grace period for late rent
in each 24 month period, provided that Tenant remits the delinquent rental
payment within three (3) days of notice of such delinquency.


 


2.4           Security Deposit.  Concurrently with Tenant’s execution of this
Lease, Tenant shall deposit with Landlord the sum specified in Paragraph 7 of
the Basic Lease Provisions (the “Security Deposit”), except that Tenant may
offset against the amount payable as Security Deposit under the Lease the
security


 


3

















 


deposits in the
aggregate amount of the Security Deposit (the “Existing Deposits”) under the
Existing Leases, which Existing Deposits shall be retained by Landlord as the
Security Deposit upon the expiration of the Existing Leases in accordance with
Section 1.2; provided, however, that if any portion of the Existing Deposits is
applied to cure a default under any of the Existing Leases, then Tenant shall
also deposit with Landlord such portion of the Existing Deposits as is so
applied by Landlord.  The Security
Deposit shall be held by Landlord as security for the faithful performance by
Tenant of this Lease by Tenant.  If
Tenant defaults under this Lease, Landlord may (but shall not be required to)
use, apply or retain all or any part of the Security Deposit for the payment of
any Rent or to compensate Landlord for any other loss or damage which Landlord
may suffer thereby.  If any portion of
the Security Deposit is so used or applied, Tenant shall, within ten (10) days
after demand therefor, deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to the full amount thereof.  Landlord shall not be required to maintain
the Security Deposit separate from its general accounts.  If Tenant shall fully perform this Lease,
the Security Deposit, or any balance thereof that has not theretofore been
applied by Landlord, shall be returned to Tenant, without payment of interest,
within ten (10) days after the expiration of the Term and after Tenant has
vacated the Premises.  In the event of
termination of Landlord’s interest in this Lease, Landlord shall transfer the
Security Deposit to Landlord’s successor in interest whereupon Landlord shall
be released from all liability for the return or accounting therefor.  No trust relationship is created herein
between Landlord and Tenant with respect to the Security Deposit.


 


2.5           Rent.  For purposes hereof all amounts payable by
Tenant to Landlord, regardless of how described or denominated, shall be
considered Rent.


 


2.6           Rent Abatement.


 


(a)           Notwithstanding the provisions of
Article 2 of this Lease and subject to Paragraph 2.6(b), Tenant shall not be
obligated to pay Basic Monthly Rent for each of months two, (2), three (3),
four (4) and five (5) of the Term for the entire Premises (the “Abated Rent”)
until the expiration of the Term.  If
upon the expiration of the Term Tenant has not been in material or economic default
hereunder (following any applicable notice and cure periods), then Landlord
shall forgive Tenant’s obligation to pay the Abated Rent.


 


(b)           Tenant agrees that Landlord’s
agreement to forgive Basic Monthly Rent as provided in Paragraph 2.6(a) is
conditioned upon occurrence of no material or economic default on the part of
Tenant under this Lease (following any applicable notice and cure periods)
during the Term of this Lease.  If a
default shall occur during the Term of this Lease, then the aggregate amount of
the Abated Rent provided to Tenant prior to such default shall become
immediately due and payable as additional rent under this Lease.


 


ARTICLE 3.


 


ADDITIONAL
RENT


 


3.1           Operating Expenses.  With respect to each calendar year during
the Term, or any partial calendar year at the commencement or end of the Term,
Tenant shall pay, as additional Rent in addition to Basic Monthly Rent, an
amount equal to Tenant’s Pro Rata Share of any excess of the Operating Expenses
for such year over Base Year Operating Expenses; provided however, the amount
of controllable Operating Expenses for each calendar year after the Base Year
shall be limited so as not to exceed the product of (a) controllable Operating
Expenses for the Base Year and (b) 1.06N; where N equals the number
of complete calendar years that have elapsed between the Commencement Date and
the beginning of such calendar year. Operating Expenses shall be prorated for
any partial calendar year during the Term.


 


3.2           Definition of Operating Expenses.  The term “Operating Expenses” as used in
this Lease shall include all costs and expenses necessary to operate, repair,
replace and maintain the Building and “Common Facilities” (as defined herein)
in a manner deemed reasonable and appropriate by the Landlord for a first-class
development.  Operating Expenses shall include,
without limitation, the following:


 


(a)           Wages,
salaries and fringe benefits of all employees engaged in the operation of and
maintenance of the Building or Common Facilities, including, but not limited
to, a building superintendent and/or engineer and associate personnel;
employer’s Social Security taxes, unemployment taxes and/or insurance, and
other taxes to the extent levied upon such wages, salaries and fringe benefits;
the cost of disability and hospitalization insurance and pension or retirement
benefits for such employees.


 


(b)           The
cost of supplies, materials and tools used in operation, repair and maintenance
of the Building or Common Facilities.


 


(c)           The
cost of heating, ventilation and air-conditioning (collectively, “HVAC”) gas,
electricity, water, sewer usage, power and lighting, used in the Building or
Common Facilities and not separately metered to and payable by individual
tenants.


 


(d)           The
cost of replacement of any equipment which is a part of, or is used in
connection with, the operation of the Building or Common Facilities (including
alarm equipment, building mechanical equipment, window cleaning equipment and
elevators) and all maintenance and service agreements on all such equipment.


 


(e)           The
cost of insurance applicable to the Building or Common Facilities, Landlord’s
operation thereof, and Landlord’s personal property used in connection
therewith.  The form, content,


 


4

















 


coverages, exclusions, deductibles and requirements
of any such insurance, all of which matters ultimately dictate the premiums
payable for the same, shall be as determined by Landlord or its lenders.


 


(f)            The
cost of all companies or persons (including employment taxes and fringe
benefits) which perform regular or recurring duties connected with the
day-to-day operation, maintenance, repair or overhead of the Building or Common
Facilities, its equipment and the adjacent walks, landscaped areas, including,
without limitation, engineers, janitors, foremen, window washers, security
services, gardeners, and property managers or other staff engaged in the
management of the Building or Common Facilities.


 


(g)           The
cost of all capital improvements made to the Building or Common Facilities by
Landlord which have the intent or effect of reducing applicable operating
costs, provided that all such costs are to be amortized over such reasonable
periods as Landlord shall determine in accordance with generally accepted
accounting principles and practices in effect at the time of acquisition of the
capital items, together with a reasonable return on capital.


 


(h)           The
cost of all accounting, legal, and other professional fees incurred in
connection with the operation of the Building.


 


(i)            The
cost of all independent contractors, other than those employed for tenant
improvements.


 


(j)            A
reasonable management fee, which may be payable to Landlord or a management
agent employed by Landlord and which shall be three percent (3%) of gross
rents.


 


(k)           The
cost of all services furnished by Landlord pursuant to Article 4 below,
excepting only as to services which are charged separately to a particular
tenant.


 


(l)            The
cost of insured repairs to the Premises or the Building or the Common
Facilities, up to the amount of the deductible under the applicable policy of
insurance.


 


(m)          Real
property taxes and assessments (including supplemental) levied and assessed
against the Building and the Real Property (based on the current assessed value
of the Building and the Real Property). (including any increases to the same
caused by a change or deemed change of ownership in the Building and/or the
Real Property, and any substitutions in lieu of real property taxes or
additional taxes levied or assessed).


 


Notwithstanding anything in this Lease to the contrary,
Operating Expenses shall exclude:


 


(1)           Costs
of a capital nature, including, but not limited to,capital repairs,
replacements or improvements made to the Building or Common Facilities, except
as expressly permitted pursuant to clause (g) above.


 


(2)           Leasing
commissions, attorneys’ fees, costs, disbursements, and other expenses incurred
in connection with negotiations or disputes with tenants, or in connection with
leasing, renovating, or improving space for tenants or other occupants or
prospective tenants or other occupants of the Building.


 


(3)           The
cost of any service sold to any tenant (including Tenant) or other occupant for
which Landlord is entitled to be reimbursed as an additional charge or rental
over and above the basic rent and escalations payable under the lease with that
tenant.


 


(4)           Any
depreciation on the Building or Property.


 


(5)           Expenses
in connection with services or other benefits of a type that are not provided
to Tenant but which are provided another tenant or occupant of the Building or
Property.


 


(6)           Costs
proximately caused by Landlord’s violation of any terms or conditions of this
Lease or any other lease relating to the Building or Property.


 


(7)           Overhead
profit increments paid to Landlord’s subsidiaries or affiliates for management
or other services on or to the building or for supplies or other materials to
the extent that the cost of the services, supplies, or materials exceeds the
cost that would have been paid had the services, supplies, or materials been
provided by unaffiliated parties on a competitive basis.


 


(8)           All
interest, loan fees, and other carrying costs related to any mortgage or deed
of trust or related to any capital item, and all rental and other payable due
under any ground or underlying lease, or any lease for any equipment ordinarily
considered to be of a capital nature (except janitorial equipment or office
equipment which is not affixed to the Building).


 


(9)           Any
compensation paid to clerks, attendants, or other persons in commercial
concessions operated by Landlord other than in connection with the operation of
the University Project’s parking facilities.


 


5

















 


(10)         Advertising
and promotional expenditures.


 


(11)         Costs
of repairs and other work occasioned by fire, windstorm, or other casualty of
an insurable nature, but only to the extent and amount of insurance proceeds
actually received by Landlord with respect thereto.


 


(12)         Any
costs, fines, or penalties incurred due to violations by Landlord of any
governmental rule or authority, this Lease or any other lease in the Property.


 


(13)         Management
costs to the extent they exceed 3% of gross rents.


 


(14)         Costs
for the acquisition of sculpture, paintings or other objects of art.


 


(15)         Wages,
salaries, or other compensation paid to any executive employees above the grade
of building manager.


 


(16)         The
cost of correcting any building code or other violations which were violations
which were known to Landlord, and of which Landlord had received written notice
from a governmental agency with authority over such violations, prior to the
Commencement Date.


 


(17)         The
costs of containing, removing, or otherwise remediating any contamination of
the Property (including the underlying land and ground water) by any toxic or
hazardous materials (including, without limitation, asbestos and “PCB’s”) where
such contamination was not caused by Tenant, but was located at the University
Project on the Commencement Date.


 


All areas of the University Project which are made
available for use by persons entitled to occupy space in the Building,
including, parking areas, driveways, truckways, delivery passages, loading
docks, sidewalks, ramps, landscaped and planted areas, stairways, hallways and
interior stairwells not located within the premises of any tenant, lobbies,
elevators, elevator lobbies, restrooms not located within the premises of any
tenant, and all other areas and improvements provided by Landlord for the
common use of Landlord and tenants of the Building, and their respective
employees and invitees, shall be deemed to be the “Common Facilities” for
purposes hereof.


 


The term “Base Year Operating Expenses” as used in
this Lease shall mean the Operating Expenses for the Base Year described in
paragraph 6 of the Basic Lease Provisions.


 


3.3           Operating Expense Escalations.  If the occupancy of the Building during any
part of any calendar year during the Term (including the Base Year) is less
than ninety-five percent (95%), Landlord shall make an appropriate adjustment
of the variable components of Operating Expenses for that calendar year, as
reasonably determined by Landlord using sound accounting and management
principals, to determine the amount of Operating Expenses that would have been
incurred had the Building been ninety-five (95%) occupied.  This amount shall be considered to have been
the Operating Expenses for that calendar year. 
For purposes of this subsection 3.3, variable components (“Variable
Components”) include only those component expenses that are affected by
variations in occupancy levels.


 


3.4           Expense Statements.  Landlord shall provide to Tenant a written
estimate of Operating Expenses approximately thirty (30) days prior to the
commencement of the Term and each calendar year during the Term (which amount
may be reestimated from time to time during the calendar year).  With respect to each such calendar year,
Tenant shall pay to Landlord, monthly in advance, one-twelfth (1/12th) of
Tenant’s Pro Rata Share of any excess of the estimated Operating Expenses for
that calendar year over the actual Operating Expenses for the Base Year.  Similarly, for any partial calendar year at
the commencement or the end of the Term, Tenant shall pay monthly its Pro Rata
Share of any excess of the estimated Operating Expenses for the partial
calendar year over the actual Operating Expenses for the Base Year.  If for any reason Landlord is unable to
provide to Tenant the estimate of Operating Expenses at least thirty (30) days
prior to the commencement of any calendar year during the Term, then Tenant
shall continue to pay monthly the same amount of additional rent for Operating
Expenses as was applicable previously until thirty (30) days after receipt of
such estimate; but such delay shall not be a waiver of any such additional
amount which Tenant is otherwise obligated to pay for such preceding months
during the new calendar year, all of which shall be paid within thirty (30)
days after receipt of the estimate.


 


3.5           Year-End Adjustments.  Within one hundred twenty (120) days after
the end of each calendar year, Landlord shall provide Tenant with a written
compilation, certified by Landlord or its accountant, showing in reasonable
detail the actual Operating Expenses incurred by Landlord for such year and
Tenant’s Pro Rata Share thereof.  Landlord
and/or Tenant shall within thirty (30) days thereafter make any payment or
credit necessary to adjust Tenant’s previous payments on account of the
estimated Operating Expenses covered by such annual statement to the amount
shown as due from Tenant on such statement.


 


3.6           Audit Rights.


 


(a)           In
the event of any dispute as to any amount due hereunder by Tenant for Operating
Expenses, Tenant shall have the right upon reasonable advance written notice to
inspect Landlord’s accounting records relative to Operating Expenses at the
office in the Building in which Landlord


 


6

















 


maintains
its records during normal business hours at any time within ninety (90) days
following the furnishing by Landlord to Tenant of such statement.  If Tenant objects to Landlord’s calculation
by written notice delivered to Landlord within such ninety (90) day period,
then a certification as to the proper amount of Operating Expenses shall be
made by another independent Certified Public Accountant mutually agreed upon by
the parties, which certification shall be final and conclusive. Tenant agrees
to pay the cost of such certification unless it is determined that Landlord’s
original determination of Operating Expenses was in error by more than five
percent (5%) over Tenant’s actual obligation, in which event the costs of such
certification shall be the sole obligation of Landlord.


 


(b)           Tenant
shall keep any information from its review of Landlord’s records confidential
and shall not disclose it to any other party, except as required by law.  If requested by Landlord, Tenant shall
require its employees or agents reviewing Landlord’s records to sign a
confidentiality agreement as a condition of Landlord providing the Accountant’s
Statement to Tenant.


 


ARTICLE 4.


 


SERVICES
AND FACILITIES


 


4.1           Landlord’s Provision of Services.


 


(a)           Landlord shall furnish HVAC to the
Premises between the hours of approximately 6:30 a.m. and 6:30 p.m., Mondays
through Fridays, and between the hours of approximately 8:00 a.m. to 1:00 p.m.
on Saturdays except those holidays designated yearly by Landlord and except for
one day per year when Landlord conducts scheduled maintenance of the Building
electrical system.  Landlord shall have
the right to charge Tenant for any HVAC services furnished beyond such hourly periods
based on the actual cost of such services.


 


(b)           Landlord shall provide customary and
routine cleaning and janitorial service for the Premises; such services shall
be in accordance with the specifications delivered to Tenant by Landlord from
time to time and otherwise consistent with other similar low-rise, first-class
office buildings in San Diego county.


 


(c)           Landlord shall replace building
standard lighting in the Premises, as required, without charge to Tenant, other
than as a cost included in Operating Expenses.


 


(d)           Landlord shall provide sewer and
domestic water service to the Premises.


 


4.2           Electrical Current.  Tenant shall contract directly with the
appropriate electrical utility company for separately metered electrical
current to the Premises.  If any lights,
machines, or equipment are used by the Tenant in the Premises which materially
affect the temperature otherwise maintained by the air conditioning system,
then in the event Tenant fails to discontinue such use within a reasonable time
following Landlord’s notification of same, Landlord shall have the right to
install any machinery and equipment which Landlord reasonably deems necessary
to restore temperature balance and the cost thereof, including the costs of
installation, operation and maintenance occasioned thereby, shall be paid by
Tenant to Landlord upon demand.


 


4.3           Interruption of Standard Services.  Landlord shall not be liable for the
inadequacy, defect or failure in the supply of any service described in
Sections 4.1 and 4.2 above because of the happening of any occurrence beyond
the reasonable control of Landlord.


 


4.4           Common Facilities.  Landlord shall operate and maintain the
Common Facilities under its control consistent with other similar low-rise,
first-class office buildings in San Diego county and may make or permit changes
in the size, shape, location, number and extent of the Common Facilities
provided that such changes do not unreasonably and unnecessarily interfere with
Tenant’s use or enjoyment of the Premises.


 


4.5           Parking.  Tenant shall comply with the reasonable
rules and regulations imposed upon Tenant and Tenant’s employees and visitors
for any available parking in the University Project.  Except as expressly provided in Section 11 of the Basic Lease
Provisions, parking spaces provided to Tenant during the Term shall be
unassigned and non-reserved.


 


4.6           Telecommunications Facilities.


 


(a)           Telecommunications
Facilities.  Tenant shall have the right to maintain its
telecommunication and satellite equipment upon such portion of the rooftop of
the Building as is mutually agreed upon by Landlord and Tenant (not to exceed
sixty (60) square feet), and subject to Tenant’s compliance with the rules and
regulations reasonably promulgated by Landlord, from time to time, with respect
to use of, and access to, the rooftop of the Building.  Tenant shall pay Landlord a license fee of
$0 per year for the use of, and access to, the Building’s rooftop.  Tenant shall pay for the maintenance and repair
of all antennas, satellite dishes and/or other equipment placed upon such licensed
portion of the Building’s rooftop (collectively, “Telecommunication
Equipment”), as well as all utilities used to operate such Telecommunication
Equipment.  Except in the event of an
emergency, Tenant covenants to repair, maintain and remove its Telecommunication
Equipment only during Normal Business Hours. 
The installation of Tenant’s Telecommunication Equipment shall be
engineered by Landlord’s engineers with input from Tenant’s engineers at
Tenant’s sole cost and expense (provided that Tenant shall have the right to
apply such costs against the Improvement Allowance or Additional Improvement
Allowance, as


 


7

















 


and
to the extent provided in Exhibit B). 
Such installation of Tenant’s Telecommunication Equipment, including the
aesthetic compatibility of such Telecommunication Equipment with the design and
appearance of the Building and the height and weight of the Telecommunication
Equipment, shall be subject to Landlord’s written approval, which approval
shall not be unreasonably withheld or delayed so long as Tenant shall have
submitted to Landlord elevations and specifications for the Telecommunications
Equipment and Tenant has obtained all necessary governmental approvals in
connection with the Telecommunications Equipment.


 


(b)           Conditions.  Tenant’s rights to install, operate and
maintain Telecommunications Equipment are subject to the following
requirements, each of which is both a covenant by Tenant, and a condition to
Tenant’s right to install, operate and maintain Telecommunications Equipment:


 


i.              Tenant shall be responsible for
and shall timely pay all costs of repairs, operations (including utilities) and
improvements in connection with the Telecommunications Equipment, including,
without limitation, any screening, any patching or strengthening of the roof of
the Building, which may be necessary on account of, or be necessary for, the
installation of the Telecommunications Equipment.


 


ii.             Installation (including
installation of cable risers, wires, power sources and all related equipment
and materials), operation, use, repair, maintenance and removal must be in
accordance with all Regulations (as defined below), including all federal,
state and local licensing requirements and be in compliance with all applicable
building and fire codes, including any required conditional use permit.


 


iii.             Installation (including
installation of cable risers, wires, power sources and all related equipment
and materials), operation, use, repair, maintenance and removal must not
interfere with the telecommunications or other systems of the Building or of
any other tenant.


 


iv.            Installation (including installation
of cable risers, wires, power sources and all related equipment and materials),
operation, use, repair, maintenance and removal shall be conducted by licensed
contractors approved by Landlord, and if any roof penetration is required, a
licensed roofing contractor approved by Landlord shall perform such work.


 


v.             The Telecommunication Equipment may
not protrude above a height equal to the highest point of the Building
structure.


 


vi.            The Telecommunication Equipment
shall not interfere in any way with the Building’s engineering, window washing
or other maintenance functions.


 


vii.           The Telecommunication Equipment must
be properly secured and installed so as not to be affected by high winds or
other elements.


 


viii.          The Telecommunication Equipment must
be properly grounded.


 


ix.            The installed Telecommunication
Equipment must not be visible from street level at the Project.


 


x.             The color, size and aesthetics of
the Telecommunication Equipment shall be reasonably approved by Landlord.


 


xi.            The weight of the Telecommunication
Equipment shall not exceed the load limits of the Building.


 


xii.           In no event shall the
Telecommunication Equipment or any appurtenant wiring or cable adversely affect
any of the mechanical, electrical, life-safety, structural or other systems of
the Building.


 


xiii.          Tenant shall remove the
Telecommunications Equipment at the end of the Term, and shall repair any
damage to the University Project that is caused by the operation, use, repair,
maintenance and removal of the Telecommunications Equipment.


 


(c)           Government
Approvals.  If Tenant installs any Telecommunications
Equipment, Tenant shall obtain, at its sole cost and expense, any and all permits,
authorizations, and certificates, including, without limitation, zoning
variances or changes, as may be required with respect to such
Telecommunications Equipment from all governmental agencies.  Landlord agrees to reasonably cooperate with
Tenant to obtain same if required by applicable governmental agencies;
provided, however, that Landlord shall not be obligated to incur any costs  for which Tenant does not reimburse Landlord
or accept the imposition of any zoning change or use restrictions affecting the
Building.


 


4.7           Emergency Generator.


 


(a)           Emergency
Generator.  Subject to the provisions of this Section
4.7, Tenant shall have the right to install in the Building’s parking garage
(at a location to be determined by Landlord) an Emergency Generator (the
“Emergency Generator”), and such transfer switches, feeders, switchboards,


 


8

















 


appurtenances
and/or additional electrical equipment, as may be necessary to connect the
Emergency Generator through the existing bus duct riser to one point of connection
at the Premises for the provision of service to the Premises, consistent with
the specifications for the Emergency Generator (“Additional Electrical
Equipment”), all in accordance with plans approved under Exhibit “B” hereto and
all for the provision of electricity to the Premises in the event electricity
is not otherwise available to the Premises. 
All costs in connection with the installation, operation, use,
maintenance, repair and removal of the Emergency Generator shall be the sole
responsibility of, and shall be paid by, Tenant (provided that Tenant shall
have the right to apply such costs against the Improvement Allowance or
Additional Improvement Allowance, as and to the extent provided in Exhibit
B).  All costs of the distribution of
such service within the Premises shall be paid by Tenant.   The purpose of this Section 4.7 is to
permit Tenant, at its sole expense, to install, operate, use, maintain, repair
and remove the Emergency Generator and the Additional Electrical Equipment,
provided that the installation, operation, use, repair, maintenance and removal
of such Emergency Generator complies with the following requirements, each of
which is both a covenant by Tenant, and a condition to Tenant’s operation, use,
repair, maintenance and removal of the Emergency Generator and the Additional
Electrical Equipment:


 


i.              Installation, operation, use,
repair, maintenance and removal must meet all Regulations (as defined below),
including all federal, state and local licensing requirements and be in compliance
with all applicable building and fire codes, including any required conditional
use permit.


 


ii.             Installation, operation, use,
repair, maintenance and removal must not interfere with the Building systems or
any systems of other tenants.


 


iii.            Installation operation, use, repair,
maintenance and removal shall be conducted by licensed contractors approved by
Landlord.


 


iv.            The Emergency Generator must be
confined to the designated space in the parking area approved by Landlord and
may not interfere with any other parking spaces for the Building.


 


v.             The Emergency Generator shall not
interfere in any way with the Building’s engineering or other maintenance
functions.


 


vi.            The color, size and aesthetics of
the Emergency Generator shall be reasonably approved by Landlord.


 


vii.           In no event shall the Emergency
Generator or any appurtenant wiring or cable adversely affect any of the
mechanical, electrical, life-safety, structural or other systems of the
Building.


 


viii.          Tenant shall remove the Emergency Generator
at the end of the Term, and shall repair any damage to the University Project
that is caused by the operation, use, repair, maintenance and removal of the
Emergency Generator.


 


(b)           Government
Approvals.  If Tenant installs an
Emergency Generator, Tenant shall obtain, at its sole cost and expense
(provided that Tenant shall have the right to apply such costs against the
Improvement Allowance or Additional Improvement Allowance, as and to the extent
provided in Exhibit B), any and all permits, authorizations, and certificates,
including, without limitation, zoning variances or changes, as may be required
with respect to such Emergency Generator from all governmental agencies.  Landlord agrees to reasonably cooperate with
Tenant to obtain same if required by applicable governmental agencies;
provided, however, that Landlord shall not be obligated to incur any costs  for which Tenant does not reimburse Landlord
or accept the imposition of any zoning change or use restrictions affecting the
Building


 


ARTICLE 5.


 


ACCEPTANCE
OF PREMISES


 


Tenant acknowledges
that neither Landlord nor any agent of Landlord has made any representations or
warranties with respect to the suitability or fitness of the Premises for the
conduct of Tenant’s business or for any other purpose.  Tenant currently occupies the Premises under
the Existing Leases.  As such, Tenant
accepts the Premises in its current “as-is”, “where-is” condition with all
faults and deficiencies.  Any
modifications to the Premises that Tenant believes are necessary shall be
performed by Tenant pursuant to the Work Letter Agreement and, except as
provided in the Work Letter Agreement, Landlord shall have no obligation with
respect thereto.  Nothing contained in
this Article shall affect the commencement of the Term or the obligation of
Tenant to pay any Rent due under this Lease.


 


ARTICLE 6.


 


ALTERATIONS
AND REPAIRS


 


6.1           Tenant to Maintain.  Tenant shall, at its sole expense, keep the Premises in good
repair and tenantable condition during the Term.  All repairs performed by Tenant shall be of quality or class
equal to the original mode of construction.


 


9

















 


6.2           Landlord to Maintain.  Landlord shall repair and maintain the structural and mechanical
portions of the Building, including basic plumbing, HVAC, and electrical
systems (but specifically excluding any portions of such systems that are
located within the Premises or installed by Tenant before or after the date
hereof, which portions Tenant shall repair and maintain) and shall keep all
Common Areas in good, clean and sanitary order consistent with other similar
low rise, first class office buildings in San Diego county.


 


6.3           Alterations.  Tenant shall not, without the prior written
consent of Landlord, make any alterations, improvements or additions to the Premises
(“Alterations”).  Notwithstanding the
foregoing, Landlord notification, but not approval, shall be required for
Alterations which cost in the aggregate $50,000 or less; provided that such
alterations:


 


(a)           do
not require a permit;


 


(b)           do
not require common area changes;


 


(c)           do
not affect the structural or watertight integrity of the Building;


 


(d)           do
not place any unreasonable additional load on the Building system;


 


(e)           are
not visible from outside the Premises;


 


(f)            do
not detract from the exterior appearance of the Building (with the exception of
the Telecommunications Equipment); and


 


(g)           do
not affect the Building’s systems.


 


All
Alterations shall become Landlord’s property and remain upon the Premises at
the termination or expiration of the Lease (excepting only Tenant’s moveable
office furniture, trade fixtures (including, without limitation, any UPS
Systems, supplemental generators and supplemental HVAC installed by Tenant) and
office and professional equipment); provided, however, that Landlord shall have
the right to require Tenant to remove such Alterations at Tenant’s cost upon
the termination or expiration of this Lease, and the repair of any damage
caused to the Premises or the Building as a result of any such removal shall be
paid for by Tenant.  Notwithstanding the
foregoing, if Tenant obtains Landlord’s consent for any Alterations, then
Landlord shall notify Tenant, at the time Landlord gives its consent, whether
Tenant will be required to remove such Alterations.  If Tenant is not required to obtain Landlord’s consent to any
Alteration, then within ten (10) business days after Tenant notifies Landlord
that Tenant intends to make such Alterations, Landlord shall notify Tenant
whether Tenant must remove such Alterations at the termination or expiration of
this Lease.  All alterations,
improvements and additions shall be made in a good and first class workmanlike
manner using new materials, which shall be at least equal in quality to the
original installations.  Tenant shall
use contractors designated by Landlord to perform all Alterations the cost of
which is anticipated to exceed Two Thousand Dollars ($2,000.00), unless
Landlord provides written approval of Tenant’s contractor(s).  Such approval by Landlord shall not be
unreasonably withheld, conditioned or delayed so long as such contractor
satisfies Landlord’s standard requirements for contractors working in the
Building.  Upon request, Landlord will
advise Tenant of its pre-approved contractor(s).  Tenant shall provide Landlord with copies of all plans and
specifications for all such Alterations and “as built” plans if same are
customarily available.


 


6.4           Indemnity.  Tenant indemnifies, defends, protects and
holds Landlord, the Premises, the Building and the University Project
harmless from all costs, damages, liens for labor, services and materials
relating to work performed by Tenant or its agents, and shall defend and hold
Landlord harmless from all costs, damages, liens and expenses (including
attorney’s fees and court costs) related thereto.  Tenant hereby waives all rights under, and benefit of, Sections
1941 and 1942 of the California Civil Code or any successor statute thereto or
similar statute hereafter enacted.


 


6.5           Tenant.  If, at any time, Tenant fails to make any
repair required to the Premises, then Landlord shall have the right, if it so
elects, to make such repair and to immediately charge the costs of the same,
together with a fifteen percent (15%) overhead and administrative cost, to
Tenant as Rent.


 


6.6           Toxic Substances.  Tenant shall not maintain, create, use or
discharge any toxic or hazardous substances or materials upon the Premises or
the University
Project and indemnifies, defends, protects and
holds Landlord harmless from all costs, damages, liens and expenses (including
attorney’s fees and court costs) related thereto.


 


ARTICLE 7.


 


PREMISES


 


7.1           Permitted Use.  Tenant shall use and occupy the Premises only for the permitted uses set forth in paragraph 10 of the Basic Lease
Provisions.


 


7.2           Conduct of Business.


 


(a)           Tenant shall not do or permit
anything to be done in or about the University Project which will, in any way,
obstruct or interfere with the rights of other tenants or occupants of the
Building, or injure


 


10

















 


them, or allow the Premises to be used for any
immoral or unlawful purpose, nor shall Tenant cause, maintain, or permit any
nuisance or waste in, on, or about the University Project.


 


(b)           Tenant shall not use the Premises or
permit anything to be done in or about the Premises which shall:  (i) conflict with any law, statute,
ordinance, or governmental rule or regulation now or hereafter in effect,
including, without limitation, the Americans with Disabilities Act of 1990 and
any rules and regulations of the City of San Diego, the requirements of the Certificate
of Occupancy for the Building or with the requirements of any covenant,
condition or restriction affecting the Building (collectively, “Regulations”);
or (ii) increase the rate for fire insurance currently in effect for the
Building.  Tenant shall, at its sole
cost and expense, promptly comply with all Regulations in force or which may
hereafter be in force, and with the requirements of any fire insurance
underwriters or other similar body affecting the use and occupancy of the
Premises.


 


(c)           Notwithstanding
anything to the contrary contained in this Lease, throughout the term hereof,
Tenant shall be responsible for compliance with any laws, codes, or ordinances
only where such compliance is related specifically to the Tenant’s particular
use and occupancy of the Premises or common areas, or to any Alteration or any
other modifications to the Premises that are made by Tenant, its employees or
its invitees.  For example, if any
governmental authority should require buildings to be structurally strengthened
against earthquake, such compliance shall be performed by and at the sole cost
of Landlord.


 


7.3           Signs. 
Tenant shall have the right to maintain or modify its Building top
signage to display its name at the two (2) existing locations.  Landlord shall maintain the identification
of Tenant in the Building directories and the Building standard suite identity
signage.  Any such signage will be
designed, constructed, operated, maintained and modified in a manner complying
with all Regulations.  All costs
associated with the fabrication, installation, permitting, maintaining and
removing of said signage shall be the sole responsibility of, and shall be paid
by, Tenant.  The purpose of this Section
7.5 is to permit Tenant, at its sole expense, to install, operate, use, repair,
maintain and remove the signage, provided that the installation, operation,
use, repair, maintenance and removal of such signage complies with the
following requirements each of which is both a covenant by Tenant, and a
condition to Tenant’s operation, use, repair, maintenance and removal of the
signage:


 


i.              Installation, operation, use,
repair, maintenance and removal must be in accordance with all Regulations,
including all federal, state and local licensing requirements and be in compliance
with all applicable building and fire codes, including any required conditional
use permit.


 


ii.             Installation, operation, use,
repair, maintenance and removal must not interfere with the Building or any
other tenant.


 


iii.            Installation, operation, use,
repair, maintenance and removal shall be conducted by licensed contractors
approved by Landlord, and if any roof and/or curtain wall penetration is
required, a licensed roofing contractor or engineer or a structural contractor
or engineer, as appropriate, and as approved by Landlord, shall perform such
work.


 


iv.            The signage shall not interfere in
any way with the Building’s engineering, window washing or other maintenance
functions.


 


v.             The signage must be properly
secured and installed so as not to be affected by high winds or other elements.


 


vi.            The color, size and aesthetics of
the signage shall be reasonably approved by Landlord.


 


vii.           In no event shall the signage or any
appurtenant wiring or cable adversely affect any of the mechanical, electrical,
life-safety, structural or other systems of the Building.


 


viii.          Tenant
shall remove any signage at the end of the Term, and shall repair any damage to
the University Project that is caused by the operation, use, repair,
maintenance and removal of such signage.


 


7.4           Load and Equipment Limits.  Tenant shall not place a load upon any floor
of the Premises which exceeds the load per square foot which such floor was
designed to carry, as determined by Landlord or Landlord’s structural engineer.  The cost of any such determination made by
Landlord’s structural engineer shall be paid for by Tenant upon demand.  Tenant shall not install business machines
or mechanical equipment which cause noise or vibration to such a degree as to
be objectionable to Landlord or other Building tenants.


 


7.5           Notice.  Tenant shall give Landlord prompt notice of
any damage to or defective condition in any part or appurtenance of the
Building’s mechanical, electrical, plumbing, HVAC or other systems serving,
located in, or passing through the Premises.


 


11

















 


7.6           Personal Property Taxes.  Tenant shall pay before delinquency all
taxes, assessments, license fees, and other charges that are levied and
assessed against Tenant’s personal property installed or located in or on the
Premises, and that become payable during the Term.  On demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of these payments.


 


ARTICLE 8.


 


ASSIGNMENT
AND SUBLETTING


 


8.1           General.  Tenant shall not, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld (subject
to Tenant providing financial statements, current tax returns and company
background information, to the extent applicable, as well as any other
information reasonably deemed appropriate by Landlord):  (a) assign, mortgage, pledge, encumber or
otherwise transfer this Lease, the term or estate hereby granted, or any
interest hereunder; (b) permit the Premises or any part thereof to be utilized
by anyone other than Tenant (whether as concessionaire, franchisee, licensee,
permittee or otherwise); or (c) except as hereinafter provided, sublet or offer
or advertise for subletting the Premises or any part thereof.  Notwithstanding the foregoing, Landlord may withhold
its consent to a proposed assignment or sublease if the use of the Premises by
the proposed assignee or sublessee would not be permitted under Section 7.2
hereof, or the proposed assignee or sublessee is not of sound financial
condition, as reasonably determined by Landlord.  Any assignment, mortgage, pledge, encumbrance, transfer or
sublease without Landlord’s consent shall be voidable and, at Landlord’s
election, shall constitute a default. 
If Tenant is a corporation, any dissolution, merger, consolidation or
other reorganization of Tenant, or the sale or other transfer of stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of Tenant’s capital stock issued, outstanding, and entitled to vote
for the election of directors shall be deemed a voluntary assignment of this
Lease by Tenant.  The preceding sentence
shall not apply to corporations, the stock of which is traded through an
exchange or over the counter.  If Tenant
is a partnership or limited liability company, a withdrawal or change, voluntary,
involuntary, or by operation of law of any partner or partners, or member or
members, owning a total of fifty percent (50%) or more of the partnership or
limited liability company, or the dissolution of the partnership, shall be
deemed a voluntary assignment of this Lease by Tenant.  If Tenant consists of more than one person,
a purported assignment, voluntary, involuntary, or by operation of law, by any
one of the persons executing this Lease shall be deemed a voluntary assignment
of this Lease by Tenant.  Tenant shall
provide written notice to Landlord before Tenant offers or advertises the
Premises for subletting.


 


8.2           Affiliates.  Notwithstanding the foregoing Paragraph 8.1,
Tenant shall have the right, after notice thereof to Landlord (accompanied by
adequate substantiation that the transferee qualifies as an Affiliate or
Successor of Tenant as defined below), to transfer all or a portion of the
Premises, or the leasehold hereunder, to an Affiliate or Successor of Tenant.  For purposes hereof, an “Affiliate” or
“Successor” of Tenant means (i) Tenant’s parent corporation, any wholly owned
subsidiary of Tenant’s parent corporation, or (ii) an entity controlling, under
common control with or controlled by Tenant or Tenant’s parent corporation,
including (x) an entity in which at least seventy percent (70%) of Tenant’s
partners immediately before such assignment are partners or members or (y) an
entity resulting from a merger or consolidation with Tenant or Tenant’s parent
corporation provided such successor has a net worth and liquid assets that is
not materially less than that of Tenant on the date of the applicable Transfer,
or (iii) a transferee of substantially all of Tenant’s assets; but excluding,
in each case, any entity formed to avoid the restrictions on transfer by Tenant
hereunder and excluding any agency or department of the United States
Government.  For purposes of this
definition, the word “control,” as used above, means with respect to a Person
that is a corporation, the right to exercise, directly or indirectly, more than
fifty percent (50%) of the voting rights attributable to the shares of the
controlled corporation and, with respect to a Person that is not a corporation,
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the controlled Person.  The word “Person” means an individual,
partnership, trust, corporation, firm or other entity.  In the case of any voluntary assignment of
this Lease or an assignment of this Lease by operation of law, any such
Affiliate or Successor of Tenant must expressly assume in writing a pro rata
share of Tenant’s obligations hereunder in the proportion that the number of
square feet of Rentable Area of the Premises assigned to such Affiliate or
Successor of Tenant bears to the total number of square feet of Rentable Area
in the Premises, without relieving Tenant of any liability hereunder.  Paragraph 8.3 shall not be applicable to
Transfers covered by this Paragraph 8.2.


 


8.3           Notice and Procedure.  If at any time or from time to time during
the Term, Tenant desires to assign or sublet all or any part of the Premises,
then at least thirty (30) days, but not more than one hundred twenty (120)
days, prior to the date when Tenant desires the assignment or subletting to be
effective (the “Transfer Date”), Tenant shall give Landlord a notice (the
“Notice”) which shall set forth the name, address and business of the proposed
assignee or sublessee, information (including financial statements and references)
concerning the character of the proposed assignee or sublessee, a detailed
description of the space proposed to be assigned or sublet, which must be a
single, self-contained unit (the “Space”), any rights of the proposed assignee
or sublessee to use Tenant’s improvements and the like, the Transfer Date, and
the fixed rent and/or other consideration and all other material terms and
conditions of the proposed assignment or subletting, all in such detail as
Landlord may reasonably require.  If
Landlord requests additional detail, the Notice shall not be deemed to have
been received until Landlord receives such additional detail.  Landlord shall deliver written notice to
Tenant of Landlord’s consent or absence of consent to any assignment or
sublease within twenty (20) business days after Landlord’s receipt of the
Notice.  If Landlord fails to deliver
written notice of its consent to an assignment or sublease within twenty (20)
business days after Landlord’s receipt of the Notice, then Landlord shall be
deemed to have consented thereto. 
Notwithstanding the foregoing, in the event of an assignment or


 


12

















 


sublease for more
than fifty percent (50%) of the Premises, Landlord shall have the option,
exercisable by giving notice to Tenant at any time within twenty (20) days
after Landlord’s receipt of the Notice (a) in the case of an assignment or
sublease, to terminate this Lease as to the Space as of the Transfer Date, in
which event Tenant shall be relieved of all further obligations hereunder as to
the Space; or (b) in the case of a sublease, to sublease the Space from Tenant
upon the terms and conditions set forth in the Notice, except that the rent
shall be the lower of the per square foot Monthly Base Rent and additional Rent
described in Articles 2 and 3 payable under this Lease for the Space, or that
part of the rent and other consideration set forth in the Notice which is
applicable to the Space.  If Landlord
exercises its option to sublet the Space, then Tenant shall sublet the Space to
Landlord upon the terms and conditions set forth in clause (b) above; provided,
however, that:  (i) Landlord shall at
all times under such sublease have the right and option further to sublet the
Space without obtaining Tenant’s consent or sharing any of the economic consideration
received by Landlord; (ii) the provisions of Section 7.2 shall not be
applicable thereto; (iii) Landlord and its subtenants shall have the right to
use in common with Tenant all lavatories, corridors and lobbies which are
within the Premises and the use of which is reasonably required for the use of
the Space; (iv) Tenant shall have no right of set-off or abatement or any other
right to assert a default hereunder by reason of any default by Landlord under
such sublease; and (v) Landlord’s liability under such sublease shall not be
deemed assumed or taken subject to by any successor to Landlord’s interest
under this Lease.  No failure of
Landlord to exercise either option with respect to the Space shall be deemed to
be Landlord’s consent to the assignment or subletting of all or any portion of
the Space.  If Landlord does not
exercise either option, and Landlord shall have consented to the assignment or
sublease of the Space, then Tenant shall be free to assign or sublet the Space
to any third party subject to the following conditions:


 


(a)           The assignment or sublease shall be
on the same terms set forth in the Notice given to Landlord;


 


(b)           No assignment or sublease shall be
valid and no assignee or sublessee shall take possession of the Space until Landlord
has consented in writing to any such assignment or sublease and an executed
counterpart of the assignment or sublease has been delivered to Landlord;


 


(c)           Each sublessee (but no sublessee of
any sublessee) shall sublet to no more than one subtenant, and no sublessee of
any sublessee shall have the right to further sublet;


 


(d)           Any proposed subletting would not
result in more than one sublease of portions of the Premises located on the 4th
floor of the Building being in effect at any one time during the Term;


 


(e)           If the Lease shall be assigned, or
the Premises shall be sublet, Landlord may collect Rent directly from any such
assignee or sublessee, as the case may be, in the event of default by Tenant;
and


 


(f)            Tenant shall pay to Landlord, as
additional rent under this Lease, without affecting or reducing any other
obligation of Tenant hereunder, (a) fifty percent (50%) of any sums or other
economic consideration received by Tenant as a result of such assignment or
subletting whether denominated rent or otherwise, which exceed, in the
aggregate, the total sums which Tenant is obligated to pay Landlord under this
Lease (prorated as to any sublease to reflect obligations allocable to that
portion of the Premises subject to such sublease) as offset by (b) the sum of
the following costs to the extent they are reasonable and incurred by Tenant in
connection with the sublease or assignment: 
(i) any brokerage commissions; (ii) legal fees in connection with the
sublease or assignment; (iii) the cost of tenant improvements installed by the
Tenant in the Space in connection with the sublease or assignment and (iv) the
cost of any other concessions reasonably incurred to induce a subtenant or
assignee to enter into such sublease or assignment (but no amount shall be
deducted to reflect periods when any portion of the Premises is vacant).  Tenant shall deliver to Landlord a statement
within thirty (30) days after the end of each calendar year in which any part
of the Term occurs specifying as to such calendar year, and within thirty (30)
days after the expiration or earlier termination of the Term, specifying with
respect to the elapsed portion of the calendar year in which such expiration or
termination occurs, each sublease and assignment in effect during the period
covered by such statement and, the date of its execution and delivery, the
number of square feet of the rentable area demised thereby, and the term
thereof; and a computation in reasonable detail showing:  (x) the amounts (if any) paid and payable by
Tenant to Landlord pursuant to this Section 8 with respect to any such sublease
or assignment for the period covered by such statement and (y) the amounts (if
any) paid and payable by Tenant to Landlord pursuant to this Section 8 with
respect to any payments received from a sublessee or assignee during such
period but which relate to an earlier period.


 


8.4           Continuing Liability of Tenant.  Regardless of Landlord’s consent, no
subletting or assignment shall release Tenant’s obligation or alter the primary
liability of Tenant to pay the rent and to perform all other obligations to be
performed by Tenant hereunder; provided, however, if Tenant assigns this Lease
to an Affiliate of Tenant and, based on documentation provided by Tenant,
Landlord reasonably determines that the financial strength of such Affiliate of
Tenant immediately after such assignment is equal to or greater than the
financial strength of Tenant both as of the date hereof and immediately prior
to such assignment, then Tenant shall be released from its primary liability to
pay the rent and to perform all other obligations to be performed by Tenant
hereunder.  The acceptance of rent by
Landlord from any other person shall not be deemed to be a waiver by Landlord
of any provision hereof. Consent to one assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting.  If any assignee of Tenant or any successor
of Tenant defaults in the performance of any of the terms hereof, Landlord may
proceed directly against Tenant without the necessity of exhausting remedies
against such assignee or successor. 
Landlord may consent to subsequent assignments or subletting of this
Lease or amendments or modifications to this Lease with assignees of Tenant,
without notifying Tenant, or any


 


13

















 


successor of
Tenant, and without obtaining its or their consent thereto, and such action
shall not relieve Tenant of its liability under this Lease.  If Tenant assigns this Lease, or sublets all
or a portion of the Premises, or requests the consent of Landlord to any
assignment or subletting, or if Tenant requests the consent of Landlord for any
act that Tenant proposes to do, then Tenant shall pay Landlord’s reasonable
attorneys’ fees incurred in connection therewith.


 


8.5           Bankruptcy.  To the extent permitted under
then-applicable law, if a petition is filed by or against Tenant for relief
under Title 11 of the United States Code, as amended (the “Bankruptcy Code”),
and Tenant (including for purposes of this Section Tenant’s successor in
bankruptcy, whether a trustee or Tenant as debtor in possession) assumes and
proposes to assign, or proposes to assume and assign, this Lease pursuant to
the provisions of the Bankruptcy Code to any person or entity who has made or
accepted a bona fide offer to accept an assignment of this Lease on terms
acceptable to Tenant, then notice of the proposed assignment setting forth (a)
the name and address of the proposed assignee, (b) all of the terms and
conditions of the offer and proposed assignment, and (c) the adequate assurance
to be furnished by the proposed assignee of its future performance under the
Lease, shall be given to Landlord by Tenant no later than twenty (20) days
after the Tenant has made or received such offer, but in no event later than
ten (10) days prior to the date on which Tenant applies to a court of competent
jurisdiction for authority and approval to enter into the proposed
assignment.  Landlord shall have the
prior right and option, to be exercised by notice to Tenant given at any time
prior to the date on which the court order authorizing such assignment becomes
final and non-appealable, to receive an assignment of this Lease upon the same
terms and conditions, and for the same consideration, if any, as the proposed
assignee, less any brokerage commissions which may otherwise be payable out of
the consideration to be paid by the proposed assignee for the assignment of
this Lease.  If this Lease is assigned
pursuant to the provisions of the Bankruptcy Code, Landlord:  (i) may require from the assignee a deposit
or other security for the performance of its obligations under the Lease in an
amount substantially the same as would have been required by Landlord upon the
initial leasing to a tenant similar to the assignee; and (ii) shall receive, as
additional rent, the sums and economic consideration described in Section
8.  Any person or entity to which this
Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be
deemed, without further act or documentation, to have assumed all of the
Tenant’s obligations arising under this Lease on and after the date of such
assignment.  Any such assignee shall,
upon demand, execute and deliver to Landlord an instrument confirming such
assumption.  No provision of this Lease
shall be deemed a waiver of Landlord’s rights or remedies under the Bankruptcy
Code to oppose any assumption and/or assignment of this Lease, to require a
timely performance of Tenant’s obligations under this Lease, or to regain
possession of the Premises if this Lease has neither been assumed nor rejected
within sixty (60) days after the date of the order for relief or within such
additional time as a court of competent jurisdiction may have fixed.  Notwithstanding anything in this Lease to
the contrary, all amounts payable by Tenant to or on behalf of Landlord under
this Lease, whether or not expressly denominated as rent, shall constitute rent
for the purposes of Section 502(b)(6) of the Bankruptcy Code.


 


ARTICLE 9.


 


NON-LIABILITY
AND INDEMNIFICATION


 


9.1           Tenant’s Waiver of Claims and
Indemnity.  Tenant, to the extent
permitted by law, waives all claims for loss, theft or damage to property and
for injuries to persons, including death, in, upon or about the Premises, the
Building, the Common Facilities or the University Project, from any cause
whatsoever except loss, damage or injury caused solely by the gross negligence
or willful misconduct of Landlord. 
Tenant indemnifies, defends, protects and holds Landlord, its partners,
agents, servants and employees harmless from and against any loss, liability,
claim, damage or expense (including attorney’s fees and court costs) arising
out of or resulting from Tenant’s use or occupancy of the Premises, the
Building, the Common Areas or the University Project, other than that caused solely
by the gross negligence or willful misconduct of Landlord, its partners,
agents, servants or employees.


 


9.2           Negligence of Third Parties.  Neither Landlord nor its partners, agents,
servants or employees shall be liable to Tenant for any damage by or from any
act of negligence of any tenant or other occupant of the University
Project.  Tenant agrees to pay for all
damage to the Building, the Common Facilities, the Premises or the University
Project, as well as all damage to tenants or occupants thereof caused by
Tenant’s misuse or neglect of the University Project, its apparatus or
appurtenances, or caused by any licensee, contractor, agent or employee of
Tenant.


 


9.3           Landlord’s Indemnity.  Landlord shall indemnify and save harmless Tenant from and against
any and all liability, liens, claims, demands, expenses, fees, costs, fines,
penalties, suits, proceedings, actions and causes of action of any and every
kind and nature arising or growing out of or relating to a breach of Landlord
of its obligations to Tenant pursuant to this Lease, or the gross negligence or
willful misconduct of Landlord.


 


ARTICLE 10.


 


INSURANCE


 


10.1         Insurance to be Carried by Tenant.  Tenant shall during the Term, at its sole
cost  and expense, obtain and maintain
the following types of insurance:


 


(a)           Fire and extended coverage insurance,
including endorsements for vandalism, malicious mischief, theft, and sprinkler
leakage, covering all of Tenant’s property, including, but not limited to,


 


14

















 


furniture, additions, fixtures, and anything in the
nature of a leasehold improvement in an amount equal to the full replacement
cost of such property without deduction for depreciation;


 


(b)           Public liability insurance, including
bodily injury and property damage, personal injury and contractual liability
with respect to all claims, demands or actions by any person or entity, in any
way arising from, related to, or connected with the conduct and operation of
Tenant’s business in the Premises or Tenant’s use of the Premises.  Such policies shall be written on a
comprehensive basis, with no more than a $5,000 deductible, with a single
combined liability limit of not less than $2,000,000;


 


(c)           Worker’s Compensation insurance
coverage as required by law, together with employer’s liability insurance
coverage;


 


(d)           Business Interruption insurance in
such amounts as will reimburse Tenant for direct or indirect loss of earnings
attributable to all perils commonly insured against by prudent tenants or
attributable to prevention of access to the Premises or to the Building as a
result of such perils; and


 


(e)           Any other form or forms of insurance
as the trust deed beneficiaries of Landlord may reasonably require from time to
time in form, in amounts and for insurance risks against which a prudent tenant
would protect itself.


 


Each policy evidencing insurance required to be
carried by Tenant pursuant to this Article shall contain a provision showing
Alecta Pensionsförsäkring, Ömsesidigt.a Swedish company, and any other parties in
interest as designated by Landlord, as an additional named insureds.


 


10.2         Policy Forms and Delivery.  All policies shall be taken out from
insurers acceptable to Landlord and in form satisfactory to Landlord.  Tenant agrees that certificates of such
insurance shall be delivered to Landlord as soon as practicable after the
placing of the required insurance, but in no event later than ten (10) days
prior to the date Tenant takes possession of the Premises.  All policies shall require that at least ten
(10) days prior written notice to Landlord by the insurer prior to termination,
cancellation or material change in such insurance.  Upon failure of Tenant to procure, maintain and place such
insurance and pay all premiums and charges therefor, Landlord may, but shall
not be obligated to, purchase such insurance, and in such event, Tenant shall
pay all premiums and charges therefor to Landlord as Rent within five (5) days
after demand.


 


10.3         Use of Proceeds.  In the event of damage or destruction to the
leasehold improvements in the Premises covered by insurance required to be
taken out by Tenant pursuant to this Article, Tenant shall use the proceeds of
such insurance for the purposes of repairing or restoring such leasehold
improvements.  In the event of damage or
destruction of the Building entitling the Landlord or Tenant to terminate this
Lease pursuant to Article 12 hereof, then if the Premises have also been
damaged, Tenant will pay to Landlord that portion of its insurance proceeds
relating to the leasehold improvements in the Premises that were paid for by
Landlord.


 


10.4         Waiver of Subrogation.  Each party, as to insurance policies
maintained by them for the University Project
or the Premises, shall use their best good faith efforts to obtain and maintain
waivers of subrogation against the other party hereto.


 


ARTICLE 11.


 


TRANSFER
OF LANDLORD’S INTEREST


 


In the event of a
transfer of all of Landlord’s ownership interest in the Building, other than a
transfer for security purposes only, the transferor shall be automatically
relieved of all obligations and liabilities on the part of Landlord hereunder
accruing from and after closing of such transfer.


 


ARTICLE 12.


 


DAMAGE
OR DESTRUCTION


 


12.1         Repair or Termination.


 


(a)           If the Premises are damaged by fire
or other casualty of the type insured by Landlord the damage shall be repaired
by Landlord; provided such repairs can reasonably be made within one hundred
twenty (120) days after the commencement of repairs without the payment of
overtime or other premiums, that the insurance proceeds are sufficient to pay
the costs of such repairs and that the damage does not occur during the last
twelve (12) months of the Term. 
Landlord shall give written notice to Tenant within thirty (30) days
after the occurrence of the damage if Landlord concludes the damages can be so
repaired, which notice shall set forth Landlord’s good faith estimate of the
anticipated period for repairing the damage (the
“Repair Period Notice”).  Until such repairs are
completed, Basic Monthly Rent shall be abated in proportion to the part of the
Premises which is unusable by Tenant in the conduct of its business (but there
shall be no abatement of Rent by reason of any portion of the Premises being
unusable for a period of three (3) days or less).  If the damage is due to the fault or neglect of Tenant or its
employees, then there shall be no abatement of Rent.  If Landlord is required or elects to restore the Premises, then
Landlord shall not be required to restore Alterations made by Tenant, Tenant’s
improvements, trade fixtures and personal property, such items being the sole
responsibility of Tenant to restore.


 


15

















 


(b)           Landlord shall not be liable for any
failure to make any such repairs if such failure is caused by accidents,
strikes, lockouts or other conditions beyond the reasonable control of
Landlord.


 


(c)           If (i) such repairs cannot reasonably
be made within such one hundred twenty (120) days, (ii) such repairs will cost
more than the available insurance proceeds, or (iii) the
damage occurs within the last twelve (12) moths of the Term, then Landlord may, at its option, make such
repairs within a reasonable time and, in such event, this Lease shall continue
in effect and the Basic Monthly Rent shall be abated in the manner provided
above.  Landlord’s election to make such
repairs must be evidenced by written notice to Tenant advising Tenant within
thirty (30) days after the occurrence of the damage whether or not Landlord
will make such repairs.  If Landlord
does not so elect to make such repairs then either party may, by written notice
to the other given within sixty (60) days after the occurrence of the damage,
terminate this Lease as of the date of the occurrence of such damage.


 


(d)           If
(i) the Repair Period Notice provided by Landlord indicates that the
anticipated period for repairing the damage exceeds one hundred and eighty
(180) days or (ii) the damage occurs within the last twelve (12) moths of the
Term, then Tenant may elect to terminate this Lease by providing written notice
to Landlord within ten (10) days after Tenant receives the Repair Period
Notice.  If Tenant does not elect to
terminate within such ten (10) day period, Tenant shall be considered to have
waived the option to terminate.


 


(e)           With respect to any damage and
repairs, Tenant waives the provisions of Section 1932(2) and 1933(4) of the
Civil Code of California or any successor statute thereto or similar statute
hereinafter enacted.


 


(f)            All proceeds of any insurance
maintained by Tenant or Landlord upon the Premises (including insurance on
Tenant improvements) shall be used to pay for the repairs to the property
covered by said insurance, to the extent that repairs are made pursuant to this
Article.


 


(g)           If the Premises, the Building, or the
Common Facilities are damaged, and such damage is of the type insured against
under the insurance maintained by Landlord, then the cost of repairing said
damage up to the amount of the deductible, or any amount in excess of the
coverage under said insurance policy, shall be included as a part of the
Operating Expenses.


 


(h)           Landlord shall not have any
obligation whatsoever to repair, reconstruct, or restore the Premises or any
portion of the Building when the damage occurs during the last eighteen (18)
months of the Term.


 


12.2         Loss of Enjoyment.  No damages, compensation or claim shall be
payable by Landlord to Tenant for any inconvenience, loss of business or
annoyance of Tenant arising from any repair or restoration of any portion of
the Premises or any other portion of the Building or Common Facilities performed
by Landlord or its agents.  Landlord
shall use good faith efforts to effect such repair or restoration promptly and
in such manner as not unreasonably to interfere with Tenant’s use and occupancy
of the Premises.


 


12.3         Automatic Termination.  A total destruction of the Building shall
automatically terminate this Lease.


 


ARTICLE 13.


 


DEFAULTS
AND REMEDIES


 


13.1         Events of Default.  The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant:


 


(a)           Any failure by Tenant to pay Rent as
and when due, where such failure continues for three (3) days after written
notice thereof by Landlord to Tenant; provided, however, that any such notice
shall be in lieu of, and not in addition to, any notice required under Section
1161, et  seq. of the California Code of Civil Procedure or any
successor statute thereto or similar statute hereinafter enacted;


 


(b)           Intentionally deleted;


 


(c)           Any failure by Tenant to observe and
perform any other provision of this Lease or the Rules and Regulations
promulgated by Landlord hereunder where such failure continues for thirty (30)
days (or such longer period as is reasonably required to cure such item, so
long as the cure is commenced within said thirty (30) day period and thereafter
diligently pursued to completion) (except with respect to subsection (e) below)
after written notice thereof by Landlord to Tenant; provided, however, that any
such notice shall be in lieu of, and not in addition to, any notice required
under Section 1161, et  seq. of the California Code of Civil
Procedure or any successor statute thereto or similar statute hereinafter
enacted; or


 


(d)           The making by Tenant of any general
assignment for the benefit of creditors; the filing by or against Tenant of a
petition to have Tenant adjudged a Chapter 7 debtor or to have debts discharged
or of a petition for reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against Tenant, the same is
dismissed within sixty (60) days); the appointment of a trustee or receiver to
take possession of substantially all of Tenant’s assets located at the Premises
or of Tenant’s interest in this Lease, where possession is not restored to
Tenant within thirty (30) days; the


 


16

















 


attachment, execution or other judicial seizure of
substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease, where such seizure is not discharged within thirty (30)
days.


 


(e)           Any
failure by Tenant to observe and perform the requirements set forth in Section
4.6(b)(iii) of this Lease where such failure continues for fifteen (15) days
after written notice thereof by Landlord to Tenant; provided, however, that any
such notice shall be in lieu of, and not in addition to, any notice required
under Section 1161, et  seq. of the California Code of Civil
Procedure or any successor statute thereto or similar statute hereinafter
enacted


 


13.2         Landlord’s Remedies.


 


(a)           In the event of any default by
Tenant, as defined herein, then, in addition to any other remedies available to
Landlord at law or in equity, Landlord shall have the immediate option, but
shall not be obligated to do so, to terminate this Lease and all rights of
Tenant hereunder by giving Tenant written notice of such election to
terminate.  In the event that Landlord
shall elect to so terminate this Lease, then Landlord may recover from Tenant:


 


(i)            The
worth at the time of award of any unpaid Rent which had been earned at the time
of such termination; plus


 


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


 


(iii)          The
worth at the time of award of the amount by which the unpaid Rent for the
balance of the Term after the time of award exceeds the amount of such rental
loss which Tenant proves reasonably could be avoided; plus


 


(iv)          Any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or which
in the ordinary course of things would be likely to result therefrom including,
but not limited to, brokerage commissions and the cost of restoring said
Premises to the condition required under this Lease; plus


 


(v)           At
Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law.


 


(vi)          As
used in (i) and (ii) above, the “worth at the time of award” shall be computed
by allowing interest at the Interest Rate. 
As used in (iii) above, the “worth at the time of award” shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank at San Francisco at the time of award, plus one (1) percentage point.


 


(b)           In the event of any such default by
Tenant, Landlord shall also have the right, with or without terminating this
Lease, to reenter the Premises to remove all persons and property from the
Premises.  Such property may be removed
and stored in a public warehouse or elsewhere at the cost of and for the
account of Tenant.


 


(c)           In the event of the abandonment of
the Premises by Tenant or in the event of any default by Tenant, if Landlord
does not elect to terminate this Lease as provided in this Section,
then  Landlord may exercise the remedy
and shall be entitled to all the rights provided for in California Civil Code
Section 1951.4 or any successor statute thereto or similar statute hereinafter
enacted.


 


(d)           Landlord shall not, by any reentry or
other act, be deemed to have accepted any surrender by Tenant of the Premises
or Tenant’s interest therein, or be deemed to have terminated this Lease or
Tenant’s right to possession of the Premises, unless Landlord shall have
notified Tenant in writing that it has so elected to terminate this Lease.


 


(e)           Landlord may suspend or discontinue
all or any of the services specified in Article 4 during the continuance of any
material and undisputed default; and no such suspension or discontinuance will
be deemed or construed to be an eviction, constructive or actual, or an
ejection of Tenant.


 


(f)            If Landlord reenters the Premises,
Tenant shall have no claims for damages that may be caused by Landlord’s
reentering or removing and storing the property of Tenant, and indemnifies,
defends, protects and holds Landlord harmless from all losses, costs, expenses
(including attorney’s fees and court costs) or damages occasioned by
Landlord.  No such entry shall be
considered or deemed to be a forcible entry by Landlord.


 


(g)           All rights, options, and remedies of
Landlord contained in this Lease shall be construed and held to be cumulative,
and no one of them shall be exclusive of the other, and Landlord shall have the
right to pursue any one or all of such remedies or any other remedy or relief
which may be provided by law, whether or not stated in this Lease.


 


17

















 


13.3         Landlord’s Default.  Landlord shall not be deemed to be in
default under this Lease unless and until it has failed to perform any of its
obligations hereunder within thirty (30) days after written notice by Tenant to
Landlord specifying the manner in which Landlord has failed to perform such
obligation; provided, however, that if the nature of Landlord’s obligation is
such that more than thirty (30) days are required for its performance, then
Landlord shall not be deemed to be in default, if it shall commence such
performance within such thirty (30) day period and thereafter diligently
prosecute the same to completion.  In
the event of a default by Landlord hereunder, the extent of Landlord’s
liability shall be strictly limited to and shall not extend beyond Landlord’s
interest in the University Project.


 


ARTICLE 14.


 


EMINENT
DOMAIN


 


If forty percent
(40%) or more of the rentable space in the Building or if such portion of the
Premises as, in Tenant’s reasonable judgment, makes the balance of the Premises
after restoration being made untenantable or otherwise unsuitable for Tenant’s
use and requirements, shall be lawfully taken or condemned or conveyed under
threat of such taking or condemnation, for any public or quasi-public use or
purpose (such taking, condemnation or conveyance being referred to herein as a
“Taking”), the Term of this Lease shall end upon, and not before, the date of
the taking of possession by the condemning authority.  If the Lease is not so terminated, and the Premises has been
reduced in size, then Basic Monthly Rent shall be reduced in proportion to the
part of the Premises which is unusable by Tenant in the conduct of its
business.  Tenant hereby assigns to
Landlord the entire amount of any award/settlement made by reason of such
Taking.  If a material part of the Building
is condemned or taken or if a substantial alteration or reconstruction of the
Building shall, in Landlord’s opinion, be necessary or desirable as a result of
such Taking, Landlord may terminate this Lease by written notice to Tenant
within thirty (30) days after the date of the Taking.  Each party waives the provisions of Code of Civil Procedure
Section 1265.130 allowing either party to petition the superior court to
terminate the Lease in the event of a partial taking of the Premises.  Nothing herein contained shall be deemed or
construed to prevent Tenant from interposing and prosecuting in any Taking
proceedings a claim for the value of any fixtures or improvements installed in
or made to the Premises by Tenant, or for its costs of moving or loss of
business by reason of such Taking, so long as such claim does not interfere with
or restrict Landlord’s claims for, and does not reduce, any award or settlement
payable to Landlord.


 


ARTICLE 15.


 


SUBORDINATION


 


This Lease is subject
and subordinate to all declarations of restrictions, ground leases, deeds of
trust or other security interests of any kind now or hereafter encumbering or
affecting the University Project or any portion thereof; subject, however, to the
qualification that so long as Tenant is not in default under this Lease, its
peaceful use and occupancy of the Premises under this Lease shall not be
impaired, restricted or terminated by any such mortgagee, beneficiary, secured
party or ground lessor whose interest arises after the date hereof.  In the event of foreclosure or exercise of
any power of sale under any deed of trust superior to this Lease, Tenant, upon
demand, shall attorn to the purchaser at any foreclosure sale or sale pursuant
to the exercise of any power of sale, in which event this Lease shall not
terminate and Tenant shall automatically be and become the tenant of the
purchaser; provided, however, that no landlord or purchaser at any foreclosure
sale or sale pursuant to the exercise of any power of sale, or any successor
thereto shall be liable for any act or omission of any prior landlord
(including Landlord) or be subject to any offsets, counterclaims, or defenses
which Tenant might have against any prior landlord (including Landlord), or be
bound by any Rent which Tenant might have paid in advance to any prior landlord
(including Landlord) for a period in excess of one month or by any Security
Deposit or other prepaid charge which Tenant might have paid in advance to any
prior landlord (including Landlord), or be bound by an agreement or
modification of this Lease made after Tenant has written notice of the interest
of such party, without the prior written consent of such party, or be obligated
to repair the Premises in the event of total or substantial damage beyond that
which can reasonably be accomplished from the net proceeds of insurance made
available to such Landlord.  If
Landlord encumbers the Building as security for any loan, then Landlord shall
use its commercially reasonable efforts to provide Tenant with a
non-disturbance agreement on a commercially reasonable form.


 


ARTICLE 16.


 


SURRENDER
OF PREMISES; REMOVAL OF PROPERTY


 


16.1         Tenant’s Removal of Property.  Upon the expiration or termination of the
Term of this Lease, Tenant shall quit and surrender possession of the Premises
to Landlord in as good order, condition and repair as the same are now or
hereafter may be improved by Landlord or Tenant, reasonable wear and tear and
repairs which are Landlord’s obligation excepted, and in a reasonable state of
cleanliness.  In such event, Tenant
shall, without expense to Landlord, remove from the Premises all debris,
rubbish, furniture, equipment, business and trade fixtures (including any UPS
systems, supplemental generator and supplemental HVAC equipment installed by
Tenant), free-standing cabinet work, moveable partitions and other articles of
personal property owned by Tenant or installed or placed by Tenant at its
expense in the Premises and all similar articles of any other persons claiming
under Tenant.  Subject to the provisions
of Paragraph 6.3, Tenant shall not remove any additions or improvements to the
Premises, such as carpet, interior partition walls and doors, “built-ins”,
shelves, built-in fixtures or other similar items, it being understood and
agreed that such items are and shall remain the property of Landlord.  Tenant shall also repair, at its expense,
all damage to the Premises resulting from such removal.


 


18

















 


16.2         Abandoned Property.  Whenever Landlord shall reenter the Premises
as provided in this Lease, any property of Tenant not removed by Tenant upon
the expiration of the Term of this Lease shall be treated in accordance with
Section 1980 of the California Civil Code.


 


ARTICLE
17.


 


MISCELLANEOUS


 


17.1         Landlord’s Inspection and
Maintenance.  Subject to Tenant’s
reasonable security requirements, Tenant shall permit Landlord and its agents
at all reasonable times following no less than 24 hours prior notice (except in
case of emergency) to enter the Premises for the purpose of inspecting the same
and(or) for the purpose of protecting the interest therein of Landlord, and to
take all required materials and equipment into the Premises and perform all
required work therein.


 


17.2         Exhibition of Premises.  Subject to Tenant’s reasonable security
requirements, Tenant shall permit Landlord and its agents to enter and pass
through the Premises at all reasonable hours following no less than 24 hours
prior notice (except in case of emergency) to:


 


(a)           Post notices of nonresponsibility;
and


 


(b)          Exhibit the Premises to holders of
encumbrances and to prospective purchasers, mortgagees or lessees of the
Building.


 


If during the last month of the Term, if Tenant
shall have removed substantially all of Tenant’s property and personnel from
the Premises and has ceased all business operations therefrom, then, Landlord
may enter the Premises and repair, alter and redecorate the same, without
abatement of Rent and without liability to Tenant, and such acts shall have no
effect on this Lease.


 


17.3         Rights Reserved by Landlord.  Landlord reserves the following rights,
exercisable without liability to Tenant for (a) damage or injury to property,
person or business, (b) causing an actual or constructive eviction from the
Premises, or (c) disturbing Tenant’s use or possession of the Premises:


 


(a)           To name the University Project
and to change the name or street address of the University Project;


 


(b)          To install and maintain all signs on
the exterior and interior of the University Project;


 


(c)           To have pass keys to the Premises and
all doors within the Premises, excluding Tenant’s vaults and safes;


 


(d)          To enter the Premises for the purpose
of making inspections, repairs, alterations, additions or improvements to the
Premises or the University Project and to take all steps
as may be necessary or desirable for the safety, protection, maintenance or
preservation of the Premises or the University Project
or Landlord’s interest therein, or as may be necessary or desirable for the
operation or improvement of the University Project
or in order to comply with the laws, orders or requirements of governmental or
other authority.


 


17.4         Quiet Enjoyment.  Tenant, upon paying the Rent and performing
all of its obligations under this Lease, shall peaceably and quietly enjoy the
Premises, subject to the terms of this Lease and to any mortgage, lease, or
other agreement to which this Lease may be subordinate.


 


17.5         Compliance.  Landlord shall bear the responsibility that
the Building and Common Facilities are in compliance with all laws, rules,
regulations and ordinances, including all environmental laws and the American
with Disabilities Act of 1990 (the ADA). 
Tenant shall bear the responsibility of complying with all laws, rules,
regulations and ordinances, including all environmental laws and the ADA, in
the Premises.


 


17.6         Force Majeure.  Any prevention, delay or stoppage of work to
be performed by Landlord or Tenant which is due to strikes, labor disputes,
inability to obtain labor, materials, equipment or reasonable substitutes
therefor, acts of God, governmental restrictions or regulations or controls,
judicial orders, enemy or hostile government actions, civil commotion, fire or
other casualty, or other causes beyond the reasonable control of the party
obligated to perform hereunder, shall excuse performance of the work by that
party for a period equal to the duration of that prevention, delay or
stoppage.  Nothing in this section,
however, shall excuse or delay Tenant’s obligation to pay Rent or other charges
under this Lease.


 


17.7         Counterparts.  This Lease may be executed in multiple
counterparts, all of which shall constitute one and the same Lease.


 


17.8         Execution of Lease.  No Option.  The submission of this Lease to Tenant shall be for examination
purposes only, and does not and shall not constitute a reservation of or option
for Tenant to lease, or otherwise create any interest of Tenant in the Premises
or any other premises within the University Project.  Execution of this Lease by Tenant and its
return to Landlord shall not be binding on Landlord notwithstanding any time
interval, until Landlord has in fact signed and delivered this Lease to Tenant.


 


19

















 


17.9         Further Assurances.  The parties agree to promptly sign all
documents reasonably requested to give effect to the provisions of this Lease.


 


17.10       Mortgagee Protection.  Tenant agrees to send by certified or
registered mail to any first deed of trust beneficiary of Landlord whose
address has been furnished to Tenant, a copy of any notice of default served by
Tenant on Landlord.  If Landlord fails
to cure such default within the time provided for in this Lease, such beneficiary
shall have an additional thirty (30) days to cure such default; provided that
if such default cannot reasonably be cured within that thirty (30) day period,
then such beneficiary shall have such additional time to cure the default as is
reasonably necessary under the circumstances.


 


17.11       Expenses of Litigation.  If either party incurs any expense,
including reasonable attorney’s fees, in connection with any action instituted
by either party by reason of any dispute under this Lease or any default or
alleged default of the other party, the party prevailing in such action shall
be entitled to recover its reasonable expenses from the other party.


 


17.12       Tenant’s Certificates.  Tenant agrees at any time from time to time,
within twenty (20) days of receipt of written request from Landlord, to
execute, acknowledge and deliver to Landlord a statement in writing certifying:
(a) that this Lease is unmodified and in full force and effect or if there have
been modifications, that this Lease is in full force and effect as modified and
stating the modifications; (b) as to the Commencement Date and expiration date
of the Term; (c) as to the dates to which the Rent and other charges hereunder
have been paid in advance, if any; (d) as to the amount of the current Basic
Monthly Rent; (e) as to the subleases or assignments, if any, applicable to the
Lease; (f) whether or not, to the best knowledge of Tenant, Landlord is in
default in the performance of any covenant, agreement or condition contained in
this Lease, and if so, specifying each such Landlord default of which Tenant
may have knowledge; and (g) any other information reasonably requested by
Landlord.  Any such statement delivered
pursuant to this Section may be relied upon by any prospective purchaser of the
Building, or any mortgagee, ground lessor or other encumbrancer thereof, or by
an assignee of any such encumbrancer.


 


17.13       Holding Over.  Tenant shall have the right to extend the
Term for a period of up to two (2) months after the expiration of the Term upon
the same provisions and conditions as otherwise set forth herein (the “Holdover
Extension Period”) provided that Tenant gives Landlord at least six (6) months
prior written notice of its intent to so extend the Lease and the duration of
the extension.  Any holding over beyond
the Holdover Extension Period without the consent of the Landlord shall be
construed to be a tenancy from month to month upon the same provisions and
conditions as otherwise set forth herein except that the Rent shall equal 150%
of the Rent payable (without reduction) during the last month of the Term
hereof.  Tenant shall indemnify and hold
Landlord harmless from and against all liability, costs, damages and expenses
resulting from the delay by Tenant in surrendering the Premises, including any
claims made by any succeeding or prospective tenant based on any such delay.


 


17.14       Notices.  All notices, which Landlord or Tenant may be required or may
desire to serve on the other shall be in writing and shall be served by
personal delivery or by mailing the same by registered or certified mail,
postage prepaid, addressed as set forth in the Basic Lease Provisions or
addressed to such other address or addresses as either Landlord or Tenant may
from time to time designate to the other in writing in accordance with this
Article.  Any notice so given by mail as
provided above shall be deemed effectively given seventy-two (72) hours after
deposit in the mail as provided above, unless received earlier by the
addressee.  Any notice served by personal
delivery shall be deemed effectively given when delivered at the party’s
address.


 


17.15       Rules and Regulations.  Tenant agrees to abide by and comply with
the Rules and Regulations delivered to Tenant by Landlord from time to
time.  Landlord shall not be liable to
Tenant for any violation of such Rules and Regulations by any other
tenant.  In the event of any
inconsistencies between this Lease and the Rules and Regulations, the language
of this Lease shall prevail.  Landlord
shall have the right, from time to time, to reasonably amend and modify the
Rules and Regulations.  Landlord shall
use commercially reasonable efforts to enforce the Rules and Regulations
against other lessees of the Building, but shall have no liability for its
failure to enforce the Rules and Regulations against any other lessee in the
Building.


 


17.16       Governing Laws.  This Lease shall be governed by and
construed in accordance with the laws of the State of California.


 


17.17       Headings and Titles.  The marginal titles to the Articles of this
Lease are inserted for convenience of reference only and shall have no effect
upon the construction or interpretation of any part hereof.


 


17.18       Heirs and Assigns.  Subject to the limitations on assignment,
subletting and transfers, this Lease shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.


 


17.19       Time of Essence.  Time is of the essence with respect to the
performance of every provision of this Lease.


 


17.20       Severability.  If any condition or provision of this Lease
shall be held invalid or unenforceable to any extent under any applicable law
or by any court of competent jurisdiction, then the remainder of this Lease
shall not be affected thereby, and each condition and provision of this Lease
shall be valid and enforceable to the fullest extent permitted by law.


 


20

















 


17.21       Work Letter Agreement.  The Premises shall be finished in accordance
with the agreement of the parties entitled “Work Letter Agreement,” which
agreement is attached hereto as Exhibit B.


 


17.22       Authority.  Each individual executing this Lease on
behalf of a partnership or corporation represents and warrants that she or he
is duly authorized to execute and deliver this Lease on behalf of such
partnership or corporation and that this Lease is binding upon such partnership
or corporation in accordance with its terms.


 


17.23       Brokers.  Landlord shall be solely responsible for the payment of brokerage
commissions to the entity specified in Item 8 of the Basic Lease
Provisions.  If Tenant has dealt with
any other real estate broker or agent or any other person in connection with
the leasing or renting of space in the Building, or assignment of the Lease or
subletting of the Premises, then Tenant shall be solely responsible for the
payment of any fee due such person, and Tenant shall indemnify, defend, protect
and hold Landlord harmless from and against all liability, costs, and expenses
(including attorney’s fees and court costs) in respect thereto.


 


17.24       No Light, Air or View Easement.  Any diminution or shutting off of light, air
or view by any structure which may be erected on lands adjacent to the University Project
shall not in any way affect this Lease or impose any liability on Landlord.


 


17.25       Entire Agreement.  This Lease, along with any Exhibits affixed
hereto, constitutes the entire and exclusive agreement between Landlord and
Tenant relative to the Premises.  This
Lease may not be changed, modified, abandoned or discharged, in whole or in
part, nor any of its provisions waived, except by a written instrument which is
executed by both parties hereto.


 


17.26       Recording.  Tenant shall not record this Lease.


 


17.27       Joint and Several Liability.  If Tenant is comprised of more than one
person or entity, then the obligations hereunder imposed upon such persons and
entities shall be joint and several.


 


17.28       Exhibits.  Each of the following Exhibits are attached
hereto and incorporated herein by this reference.


 


Exhibit
A - Floor Plan of Premises.


 


Exhibit
B - Work Letter Agreement.


 


Exhibit
C - Rules and Regulations.


 


Exhibit
D - Basic Monthly Rent Schedule.


 


Exhibit
E - Option to Renew and Extend


 


Exhibit
F - Right of First Refusal


 


Exhibit
G - Right of First Offer


 


17.29       Confidentiality.  Landlord and Tenant acknowledge and agree to
keep the substance of this Lease confidential and not to disclose or discuss
the nature or substance of the discussions leading to the execution hereof, nor
the substance or detail of this Lease, with any individual or entity, except as
might be reasonably necessary to effect the intent hereof; provided, however,
Tenant may disclose this Lease and the terms and conditions herein to its
lawyers, accountants, investors, purchasers, potential assignees or sublessee
(or any brokers assisting in connection therewith) and otherwise as may be
required by law and Landlord may disclose this Lease and the terms and
conditions herein to its lawyers, accountants, potential investors, purchasers
and lenders and otherwise as may be required by law.  Subject to the foregoing, Tenant shall not disclose or discuss
any aspect of the negotiations or detail of this Lease with any other tenant or
prospective tenant of the Building or any real estate agent or broker.  Landlord and Tenant understand, acknowledge
and agree that in the event of a failure to comply with the reciprocal
confidentiality provisions detailed herein, that the non-breaching party will
suffer immediate, irreparable harm and that such party shall have the right to
enforce this confidentiality agreement by injunctive or other equitable
remedies.  Any violation of any of the
provisions of this confidentiality agreement shall be deemed to be an event of
default under this Lease.


 


17.30       No Representations or Warranties.  Neither Landlord nor Landlord’s agents or
attorneys have made any representations or warranties with respect to the
Premises, the Building or this Lease, except as expressly set forth herein, and
no rights, easements or licenses are or shall be acquired by Tenant by
implication or otherwise.


 


17.31       Limitation of Liability.  Landlord’s officers, directors and
shareholders shall not be liable for the performance of Landlord’s obligations
under this Lease.  Tenant shall look
solely to Landlord to enforce Landlord’s obligations hereunder and shall not
seek any damages against any of Landlord’s officers, directors and
shareholders.  The liability of Landlord
for Landlord’s obligations under this Lease shall not exceed and shall be
limited to Landlord’s interest in the Building, and Tenant shall not look to
any other property or assets of Landlord in seeking either to enforce
Landlord’s obligations under this Lease or to satisfy a judgment for Landlord’s
failure to perform such obligations.


 


21

















 


17.32       Consents.  Tenant hereby waives any monetary claim
against Landlord which it may have based upon any assertion that Landlord has
unreasonably withheld or unreasonably delayed any requested consent, and Tenant
agrees that its sole remedy shall be an action or proceeding to enforce any
such provision or for specific performance, injunction or declaratory
judgment.  In the event of such a
determination, the requested consent shall be deemed to have been granted;
however, Landlord shall have no liability to Tenant for its refusal to give
such consent.  The sole remedy for
Landlord’s unreasonably withholding or delaying of consent shall be as provided
in this Section.


 


17.33       Waiver.  The failure of Landlord to exercise its rights in connection with
any breach or violation of any term, covenant, or condition herein contained,
shall not be deemed to be a waiver of such term, covenant or condition or any
subsequent breach of the same or any other term, covenant or condition herein
contained.  The subsequent acceptances
of Rent hereunder by Landlord shall not be deemed to be a waiver of any
preceding breach by Tenant of any term, covenant or condition of this Lease
other than the failure of Tenant to pay the particular rent so accepted,
regardless of Landlord’s knowledge of such proceeding breach at the time of
acceptance of such rent.


 


17.34       No Merger.  The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and
shall, at the option of Landlord, terminate any and all existing subleases or
subtenancies, or operate as an assignment to Landlord of any or all of such
subleases or subtenancies.


 


17.35       Storage Premises.  Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, Tenant’s currently existing storage premises (the
“Storage Premises”), comprised of approximately one thousand one hundred
ninety-eight (1198) rentable square feet located in the parking garage.  Tenant leases the Storage Premises “as is,”
and Landlord makes no representation or warranty with respect to the Storage
Premises or the condition thereof.


 


(a)           Use.  The Storage Premises may be used solely for storage purposes in
compliance with Applicable Laws.  Tenant
agrees that Tenant shall not store any toxic or corrosive materials in the
Storage Premises, nor shall Tenant store any objects or groups of objects which
exceed the floor load capacity of the Storage Premises.


 


(b)           Term.  The term of the lease for the Storage
Premises shall commence as of the Commencement Date and shall continue for a
period coterminous with Term of this Lease, unless sooner terminated pursuant
hereto, and subject to renewal pursuant to Exhibit E attached hereto; provided
that rent for the Storage Premises during any renewal or extension term shall
be determined by Landlord.


 


(c)           Rent.  Tenant shall pay a monthly rent for the
Storage Premises in the amount of one thousand one hundred ninety-eight Dollars
($1198), based on the existing storage premises, payable in advance on or
before the first day of each calendar month during the term of the lease for
the Storage Premises.  Rent payments for
partial months during the term hereof shall be prorated on the basis of the
actual number of days in said months.


 


(d)           Other Expenses.  Any costs or expenses for services or
utilities which are attributable directly to Tenant’s use or occupancy of the
Storage Premises shall be paid in full by Tenant as additional rent when such
costs are incurred or, if Landlord makes such payments, within ten (10) days
after being billed therefor by Landlord.


 


(e)           Relocation of Storage Premises.  Landlord shall have the right, at its option
and from time to time, upon not less than thirty (30) days prior written notice
to Tenant, to relocate all or any portion of the Storage Premises and to
substitute for all or any portion of the Storage Premises other space in the
Building or in the parking garage that comprises approximately as much space as
the Storage Premises being relocated. 
Such substitute Storage Premises shall be rented at the same rate
applicable to the Storage Premises being relocated.


 


22

















 


IN WITNESS WHEREOF,
Landlord and Tenant have executed this Lease, intending to be bound by it as of
the date first above written.


 


	
  “LANDLORD”

  	
   

  	
  “TENANT”

  
	
   

  	
   

  	
   

  
	
  ALECTA PENSIONSFÖRSÄKRING, ÖMSESIDIGT,

  a Swedish company

  	
  MAXIM PHARMACEUTICALS,
  INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Alecta Investment Management U.S.A.,

  	
   

  	
  By:

  	
  /s/ Dale A. Sander

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  	
   

  	
  Name: Dale A. Sander

  
	
   

  	
  its Manager

  	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin Van Ardenne

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 
  Martin Van Ardenne

  	
   

  	
  By:

  	
  /s/ Larry G. Stambaugh

  	
   

  
	
   

  	
   

  	
  Title: 
  Asset Manager

  	
   

  	
   

  	
  Name: Larry G. Stambaugh

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Laura Sundquist Brom

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Laura Sundquist Brom

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: CFO

  	
   

  	
   

  	
   

  
										



 


23

















 


EXHIBIT “A”


 


Floor Plan of Premises


 





 


THIRD FLOOR


 





 


FOURTH FLOOR


 


1

















 


EXHIBIT “B”


 


Work Letter Agreement


 


This Work Letter Agreement (“Work Letter
Agreement”) is dated for reference purposes only as July 31, 2003 and is
made by and between ALECTA PENSIONSFÖRSÄKRING,
ÖMSESIDIGT, a Swedish company (“Landlord”), and MAXIM PHARMACEUTICALS,
INC., a Delaware corporation (“Tenant”), as part of that certain Lease dated
the same date as this Work Letter Agreement between them, affecting that real
property commonly known as University Pacific Center, located at 8899
University Center Lane in the City of San Diego, County of San Diego, State of
California. Capitalized terms used, but not otherwise defined, in this Work
Letter Agreement shall have meanings ascribed to those terms in the Lease. The
following provisions are added to the Lease and, in the event of conflict
between this Work Letter Agreement and the Lease, this Work Letter Agreement
shall prevail.


 


Tenant
hereby acknowledges that Tenant has inspected the Premises, knows the condition
thereof and agrees to accept the same in “as is” condition.  It is understood and agreed that Landlord is
not obligated to install any equipment, or make any repairs, improvements or
alterations to the Premises.


 


ARTICLE I


DEFINITIONS


 


1.1.  Definitions.
Wherever used in this Work Letter Agreement, the following terms are defined as
follows:


 


1.2.  Construction Costs
means the following costs to the extent incurred to complete the Leasehold
Improvements (including the costs of security systems, cabling and signage):


 


a.
Payments to Contractors for labor, material, equipment, and fixtures supplied
pursuant to any construction contract entered into in accordance with this Work
Letter Agreement;


 


b.
Fees paid to Designers for services required for construction of the Leasehold
Improvements;


 


c.
Taxes, fees, charges, and levies by governmental and quasi-governmental
agencies for Permits or for inspections of the Leasehold Improvements work;


 


d.
Utilities incurred in the course of the construction of the Leasehold
Improvements;


 


e.
Premiums for builder’s risk insurance and other insurance required by this Work
Letter to be carried by Tenant in connection with construction of the Leasehold
Improvements; and


 


f.
Costs incurred for the management and administration of the construction of the
Leasehold Improvements, including, without limitation, subject to clause (iv)
below, amounts paid to Tenant’s construction consultants other than Designers,
wages, labor burden, and expediting, procurement, and administrative expenses.


 


In no event,
however, shall Construction Costs for the Leasehold Improvements include:


 


(i)
The cost of work that is not authorized by the approved Final Plans for
Leasehold Improvements;


 


(ii)
Costs resulting from any default by Tenant of its obligations under this Work
Letter Agreement;


 


(iii)
Costs resulting from any default by any Designer or Contractor;


 


(iv)
Amounts paid Tenant’s construction consultants (other than Designers) in excess
of two percent (2%) of the amount of the costs described in clause (a) above;


 


(v)
Costs that are recovered or are reasonably recoverable by Tenant from a third
party (e.g., insurers, warrantors, or tortfeasors).


 


1.3.  Contractors
means all general contractors, design build contractors, subcontractors, and
material suppliers who provide labor and materials for construction of the
Leasehold Improvements. To the extent required by Applicable Laws and
Restrictions, each Contractor shall be duly licensed by the State of California
and in good professional standing.


 


1.4.  Designers
means all architects, structural engineers, mechanical engineers, the Architect
and all other design professionals that are needed to design any portion of the
Leasehold Improvements, each of whom shall be duly licensed by the State of
California and in good professional standing.


 


1.5.  Final Plans
for Leasehold Improvements are those working drawings, plans, specifications,
elevations, lighting design, interior finish design, for the Leasehold
Improvements prepared by the Designers and approved by the parties in
accordance with this Work Letter Agreement.


 


1

















 


1.6.  Improvement Allowance
means the Initial Improvement Allowance and any Additional Improvement
Allowance.


 


1.7.  Initial Improvement Allowance
means the amount of ten dollars ($10.00) per usable square foot of the
Premises.


 


1.8.   Landlord’s Representative
means Lisa Ledbetter or such other person as Landlord shall designate in
writing to Tenant as its authorized representative for the purposes of administering
this Work Letter Agreement.


 


1.9.  Leasehold Improvements
means the improvements, modifications, and alteration of the existing Premises
to be constructed in or about the Premises by Tenant in accordance with this
Work Letter Agreement.


 


1.10.  Tenant’s Representative means
[                  ]
or such other person as Tenant shall designate in writing to Landlord as its
authorized representative for the purposes of administering this Work Letter
Agreement.


 


ARTICLE II


DESIGNATION OF REPRESENTATIVES


 


2.1.  Designation of Representatives.
Landlord and Tenant respectively appoint Landlord’s Representative and Tenant’s
Representative as their sole representatives for the purposes of administering
this Work Letter Agreement. Until replaced upon by written notice, Landlord’s
Representative and Tenant’s Representative will have the full authority and
responsibility to act on behalf Landlord and Tenant, respectively, as required
in this Work Letter Agreement, but shall have no right to modify this Work
Letter Agreement or the Lease or to waive any material right of his or her
principal under this Work Letter Agreement.


 


ARTICLE III


PERFORMANCE OF THE WORK


 


3.1.  Administrative Fee.  Tenant shall pay an administrative fee (the
“Administrative Fee”) to Landlord for Landlord’s administration of the
architectural and general contracting contracts and billing in the amount of
one-half of one percent (.5%) of the Construction Costs described in clauses
(a) and (b) of the definition of Construction Costs.  Landlord may withhold, and apply against the Administrative Fee,
any portion of the Improvement Allowance up to the amount of the Administrative
Fee.


 


3.2.  Construction of Leasehold Improvements. Tenant shall cause the Leasehold Improvements to be constructed subject
to, and in full compliance with, Section 6.3 of the Lease.


 


ARTICLE IV


PAYMENT OF CONSTRUCTION COSTS


 


4.1.  Duty To Pay Construction Costs of Leasehold Improvements and
Improvement Allowance. Subject to
payment by Landlord to Tenant of the Improvement Allowance, the Leasehold
Improvements shall be completed at the sole expense of Tenant. Landlord shall
disburse the Improvement Allowance to Tenant as follows:


 


Landlord shall
disburse to Tenant an amount equal to the lesser of the Construction Costs or
the Improvement Allowance when the Leasehold Improvements have been
substantially completed in accordance with Section 6.3 of the Lease.


 


4.2.  Additional Improvement Allowance.  Tenant may, by written notice
to Landlord delivered prior to the Commencement Date, increase the Improvement
Allowance by up to five dollars ($5.00) per rentable square foot of the
Premises (the “Additional Improvement Allowance”).  If Tenant uses all or part of the Additional Improvement Allowance,
then Basic Monthly Rent for each month of the Term shall increase by $0.02125
per rentable square foot of the Premises for each additional one dollar ($1.00)
of the Additional Improvement Allowance that Landlord disburses to or on behalf
of Tenant, or otherwise disburses in connection with the Leasehold
Improvements.


 


4.3.  Characterization  of Additional Improvement Allowance
and Initial Improvement Allowance.  Any disbursement by Landlord of any portion
of the Improvement Allowance shall be deemed to be a distribution of the
Initial Improvement Allowance until the full amount of the Initial Improvement
Allowance has been disbursed, and thereafter, any disbursement by Landlord of
any portion of the Improvement Allowance shall be deemed to be a disbursement
of the Additional Improvement Allowance.


 


4.4  Unused Improvement Allowance.  Notwithstanding Section 4.1 above, if
Landlord disburses less than all of the Initial Improvement Allowance to Tenant
by the beginning of the thirteenth (13th) full month of the Term,
then, the unused portion of the Initial Improvement Allowance, up to five
dollars ($5.00) per usable square foot, in the aggregate, shall automatically
be applied to reduce the Basic Monthly Rent first ensuing in the thirteenth (13th),
fourteenth (14th) and fifteenth (15th) full months of the
Term.


 


2

















 


4.5  Expiration of Tenant Allowance.  Tenant’s rights with respect to the
Improvement Allowance shall expire on January 1, 2005.  If Tenant has failed to request the
disbursement of any portion of the Improvement Allowance by January 1, 2005,
then Tenant shall be deemed to have forfeited and lost its right to the
remaining portion of the Improvement Allowance.


 


4.6  Notice of Nonresponsibility.
Tenant shall provide Landlord with at least ten (10) days’ prior written notice
before the date for its commencement of construction of the Leasehold
Improvements, in order to permit Landlord to post, file, and record such
Notices of Nonresponsibility and other instruments as may be necessary to
protect Landlord and its property from claims by Contractors for Construction
Costs that are to be paid by Tenant.


 


4.7  Liens.  Tenant shall not permit the filing of any
mechanic’s lien or other lien in connection with any Leasehold Improvements,
unless such mechanic’s lien or other lien results from Landlord’s failure to
make payments when required hereby.  If
a mechanic’s lien or other lien is filed against the Building or Real Property,
Tenant shall post a statutory release bond or discharge or cause to be
discharged such lien within ten (10) days after Tenant receives notice of the
filing thereof.


 


ARTICLE V


MISCELLANEOUS


 


5.1  Time of the
Essence.  Time is of the essence with respect to
Tenant’s obligations hereunder and with respect to the expiration of the
Improvement Allowance under Paragraph 5.5.


 


5.2  Remedies.  All
rights and remedies of Landlord under the Lease shall apply in the event of a
breach of any of the covenants contained herein.  In the event Tenant fails to make timely payment of any amounts
due hereunder, Landlord shall have all the rights and remedies provided for in
the Lease for nonpayment or late payment of Rent including, but not limited to,
the right to late fees and interest as set forth in Article 2 and all other
rights and remedies as set forth in Article 13.


 


IN WITNESS WHEREOF,
Landlord and Tenant have executed this Work Letter Agreement, intending to be
bound by it as of the date first above written.


 


	
  “LANDLORD”

  	
   

  	
  “TENANT”

  
	
   

  	
   

  	
   

  
	
  ALECTA PENSIONSFÖRSÄKRING, ÖMSESIDIGT,

  a Swedish company

  	
  MAXIM PHARMACEUTICALS,
  INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Alecta Investment Management U.S.A.,

  	
   

  	
  By:

  	
  /s/ Dale A. Sander

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  	
   

  	
  Name: Dale A. Sander

  
	
   

  	
  its Manager

  	
   

  	
   

  	
  Title: Vice President, Corporate
  Development

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin Van Ardenne

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 
  Martin Van Ardenne

  	
   

  	
  By:

  	
  /s/ Larry G. Stambaugh

  	
   

  
	
   

  	
   

  	
  Title: 
  Asset Manager

  	
   

  	
   

  	
  Name: Larry G. Stambaugh

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Laura Sundquist Brom

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Laura Sundquist Brom

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: CFO

  	
   

  	
   

  	
   

  
									



 


3

















 


EXHIBIT “C”


 


RULES AND REGULATIONS


 


1.             ALL REFERENCES IN THESE RULES AND REGULATIONS SHALL
REFER TO LANDLORD AND TENANT UNDER THIS LEASE. 
IT IS UNDERSTOOD, HOWEVER, THAT THESE SAME RULES AND REGULATIONS SHALL
BE ADOPTED AND OTHERWISE APPLIED TO OTHER TENANTS IN THIS BUILDING.


 


2.             Except as otherwise provided in the
Lease or any Exhibits thereto, no sign, placard, picture, advertisement, name
or notice shall be inscribed, displayed, printed or affixed on or to any part
of the outside or inside of the Building or the University Project without the written consent of Landlord
first had and obtained.  Landlord shall
have the right to remove any such sign, placard, picture, advertisement, name
or notice, unless Landlord has given written consent, without notice to and at
the expense of Tenant.  Landlord shall
not be liable in damages for such removal unless the written consent of
Landlord has been obtained.


 


All approved signs or
lettering on doors and walls to the Premises shall be printed, painted, affixed
or inscribed at the expense of Tenant by Landlord or by a person approved by
Landlord in a manner and style acceptable to Landlord.


 


Tenant shall not use any
blinds, shades, awnings, or screens in connection with any window or door of
the Premises unless approved in writing by Landlord.  Tenant shall not use any drape or window covering facing any
exterior glass surface other than the standard drape issued by Landlord.


 


3.             Except as to tenants who occupy entire floors of the
Building: (a) no tenant shall obtain for use upon its Premises ice, drinking
water, waxing, cleaning, interior glass polishing, rubbish removal, towel and
other similar services or accept barbering or bootblacking or coffee cart
services, milk, soft drinks or other like services on the Premises, except from
persons authorized by Landlord and at the hours and consented to in advance by
Landlord; and (b) no vending machines or machines of any description shall be
installed, maintained or operated upon the Premises without the prior written
consent of Landlord.


 


4.             Except as otherwise provided in the Lease or any
Exhibits thereto, the bulletin board or directory of the Building shall be
provided exclusively for the display of the name and location of tenants only
and Landlord reserves the right to exclude any other names therefrom and
otherwise limit the number of listings thereon.


 


5.             The sidewalks, halls, passages,
exits, entrances, elevators and stairways shall not be obstructed by any of the
tenants or used by them for any purpose other than for ingress to and egress
from their respective premises.  The
halls, passages, exits, entrances, elevators, stairways, balconies and roof are
not for the use of the general public and Landlord shall in all cases retain
the right to control and prevent access thereto by all persons whose presence
in the judgment of Landlord shall be prejudicial to the safety, character,
reputation and interests of the Building or the University Project and its tenants, providing that nothing
herein contained shall be construed to prevent such access to persons whom
Tenant normally deals in the ordinary course of Tenant’s business unless such
persons are engaged in illegal activities. 
Except as may be otherwise provided in the Lease with respect to the
proposed heliport facility on the roof of the Building, no tenant and no
employees or invitees of any tenant shall go upon the roof of the Building.


 


6.             Each tenant, upon the termination of the tenancy, shall
deliver to Landlord the keys of offices, rooms and toilet rooms which shall
have been furnished to Tenant or which Tenant shall have made, and in the event
of loss of any keys so furnished, shall pay Landlord therefor.  Tenant shall not alter any lock nor install
any new or additional lock or any bolts on any door of the Premises without the
written consent of Landlord.


 


7.             The toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than that for which they were
constructed and no foreign substances of any kind whatsoever shall be thrown
therein and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by Tenant who, or whose employees or
invitees, shall have caused it.


 


8.             Tenant shall not overload the floor of the Premises or
deface the Premises or any part thereof.


 


9.             No furniture or freight shall be brought into the
Building without the consent of Landlord. 
All moving of the same into or out of the Building shall be via the
Building’s freight handling facilities, unless otherwise directed by Landlord,
at such time and in such manner as Landlord shall reasonably prescribe.  No hand trucks or vehicles (other than a
wheelchair for an individual) shall be used in passenger elevators.  Any hand trucks permitted in the Building
must be equipped with soft rubber tires and side guards


 


10.           Except for safes and vaults installed as part of the
Tenant Improvements pursuant to the Work Letter attached to the Lease, Landlord
shall have the right to prescribe the weight, size and position of all safes
and other heavy equipment brought into the Building and also the times and
manner of


 


1

















 


moving the same in and out of the
Building.  Safes or other heavy objects
shall, if considered necessary by Landlord, stand on a platform of such
thickness as is necessary to properly distribute the weight.  Landlord will not be responsible for loss of
or damage done to the Building by moving or maintaining any such safe or other
property and any such damage shall be repaired at the expense of Tenant.


 


11.           Except as otherwise provided in the Lease or any Exhibits
thereto, Tenant shall not employ any person or persons other than the janitor
of Landlord for the purpose of cleaning the Premises unless otherwise agreed to
by Landlord.  Except with the written
consent of Landlord no person or persons other than those approved by Landlord
shall be permitted to enter the Building for the purpose of cleaning the same.


 


Tenant shall not cause any
unnecessary labor by reason of Tenant’s carelessness or indifference in the
preservation of good order and cleanliness. 
Landlord shall in nowise be responsible to any Tenant for any loss of
property on the Premises, however occurring, or for any damage done to the
effects of any tenant by the janitor or another employee or any other
person.  Except as otherwise provided in
the Lease or any Exhibit thereto, janitor service shall include ordinary
dusting and cleaning by the janitor or any assigned to such work and shall not
include shampooing of carpets or rugs or moving of furniture or other special
services.  Janitor service will not be
furnished on nights when rooms are occupied after 10:00 p.m.  Window cleaning shall be done only by
Landlord.


 


12.           Tenant shall not use, keep or permit to be used or kept
any foul or noxious gas or substance in the Premises, or permit or suffer the
Premises to be occupied or used in any manner offensive or objectionable to
Landlord or other occupants of the Building by reason of any noise, odors
and(or) vibrations, or interfere in any way with other tenants or those having
business therein, nor shall any animals or birds be brought in or kept in or
about the Premises of the Building.


 


13.           Except for tenants who occupy entire floors of the
Building, no cooking shall be done or permitted by any tenant on the
Premises.  No tenant shall allow the
Premises to be used for the manufacture or storage of merchandise, for washing
clothes, for lodging, or for any improper, objectionable or immoral purpose.


 


14.           Tenant shall not use or keep in the Premises or the
Building any kerosene, gasoline or flammable, explosive or combustible fluid or
material, or use any method of heating or air conditioning other than that
supplied by Landlord.


 


15.           Landlord will direct electricians as to where and how
telephone and telegraph wires are to be introduced.  No boring or cutting for wires or stringing of wires will be
allowed without written consent of Landlord. 
The location of telephones, call boxes and other office equipment
affixed to the Premises shall be subject to the approval of Landlord.


 


16.           No tenant shall lay linoleum, tile, carpet or other
similar floor covering so that the same shall be affixed to the floor of the
Premises in any manner except as approved by Landlord.  The expenses of repairing any damage
resulting from a violation of this rule or removal of any floor covering shall
be borne by Tenant by whom, or by whose contractors, employees or invitees, the
damage shall have been caused.


 


17.           Landlord reserves the right to close
and keep locked all entrance and exit doors and otherwise regulate access of
all persons to the halls, corridors, elevators and stairways in the Building on
Sundays and legal holidays and on other days between the hours of 7:00 p.m. and
7:00 a.m., and at such other times as Landlord may deem advisable for the
adequate protection and safety of the Building or the University Project, its tenants and property
in the Building or the University
Project.  Access to the Premises may be
refused unless the person seeking access is known to the employee of the
Building or the University Project in charge, and
has a pass or is otherwise properly identified.  Landlord shall in no case be liable for damages for any error
with regard to the admission or exclusion from the Building or the University Project of any person.


 


18.           Tenant shall see that the doors of the Premises are closed
and securely locked before leaving the Building and must observe strict care
and caution that all water apparatus are entirely shut off before Tenant or
Tenant’s employees leave the Building, and that all electricity, gas or air
shall likewise be carefully shut off, so as to prevent waste or damage, and for
any default or carelessness Tenant shall make good all injuries sustained by
other tenants or occupants of the Building.


 


19.           Landlord may refuse admission to the Building outside of
ordinary business hours to any person not known to the watchman in charge or
not having a pass issued by Landlord or not properly identified, and may
require all persons admitted to or leaving the Building outside of ordinary
business hours to register.  Any person
whose presence in the Building at any time shall in the sole judgment of
Landlord, be prejudicial to the safety, character, reputation and interests of
the Building or its tenants may be denied access to the Building or may be
ejected therefrom.  Landlord may require
any person leaving the Building with any package or other object to exhibit a
pass from Tenant from whose Premises the package or object is being removed,
but the establishment and enforcement of such requirement shall not impose any
responsibility on Landlord for the protection of any tenant against the removal
of property from the Premises of the Tenant.


 


2

















 


20.           The requirements of Tenant shall be attended to only upon
application at the office of the Building. 
Employees of Landlord shall not perform any work or do anything outside
of their regular duties unless under special instructions from Landlord.


 


21.           Tenant shall use its best efforts to assure that no person
shall be allowed to transport or carry beverages, food, containers, etc. on any
passenger elevators.  The transportation
of such items shall be via the service elevators in such manner as prescribed
by Landlord.


 


22.           Tenant shall cooperate with Landlord in obtaining maximum
effectiveness of the cooling system by closing drapes when the sun’s rays fall
directly on windows of the Premises. 
Tenant shall not obstruct, alter or in any way impair the efficient
operation of Landlord’s HVAC system and shall not place bottles, machines,
parcels or any other articles on the induction unit enclosure so as to
interfere with air flow.


 


23.           Landlord shall have the right to
prohibit any advertising by any Tenant which, in Landlord’s opinion, tends to
impair the reputation of the Building or the University Project or its desirability as a location for
offices, and upon written notice from Landlord, any Tenant shall refrain from
or discontinue such advertising.


 


24.           Canvassing, soliciting and peddling
within the entire University
Project is prohibited unless specifically approved by Landlord and each tenant
shall cooperate to prevent such activity.


 


25.           Except as otherwise provided in the
Lease, all parking ramps and areas plus other public areas forming a part of
the University Project shall be under
the sole and absolute control of Landlord with the exclusive right to regulate
and control these areas.  Tenant agrees
to conform to the rules and regulations that may be established by Landlord for
these areas from time to time.


 


26.           Whenever the consent or approval of Landlord is required
under these Rules and Regulations, Landlord agrees that such consent shall not
be unreasonably withheld or delayed.


 


27.           There shall be no smoking permitted at any time in the
Building.


 


28.           In the event of any conflict between these Rules and Regulations
and the Lease, the Lease shall prevail.


 


3

















 


EXHIBIT “D”


 


BASIC MONTHLY RENT SCHEDULE


 


1.             BASIC
MONTHLY RENT


 


a)             Beginning on the Commencement Date of the Lease, the
Basic Monthly Rent to be paid by the Tenant to the Landlord, which includes
full service, net of separately metered utilities, shall be as follows:


 


Months   0 through 12 - $90,362.40   ($2.40 per BOMA rentable square foot) per
month


Months 13 through 24 -
$90,362.40   ($2.40 per BOMA rentable
square foot) per month


Months 25 through 36 -
$90,362.40   ($2.40 per BOMA rentable
square foot) per month


Months 37 through 48 -
$100,904.68 ($2.68 per BOMA rentable square foot) per month


Months 49 through 60 -
$103,916.76 ($2.76 per BOMA rentable square foot) per month


Months 61 through 72 - $106,928.84
($2.84 per BOMA rentable square foot) per month


Months 73 through 84 -
$109,940.92 ($2.92 per BOMA rentable square foot) per month


 


b)            Tenant agrees to pay to Landlord the monthly rental
(Basic Monthly Rent) according to the terms and conditions as specified in
Article 2 of the Lease.


 


1

















 


EXHIBIT “E”


 


OPTION TO RENEW AND EXTEND


 


1.             Provided Tenant is not in material or economic  default under the terms and conditions of
this Lease (following any applicable notice and cure periods), Landlord hereby
grants to the Tenant and/or any Affiliate the option to renew and extend the
Term of this Lease for two (2) successive terms of three (3) years (“Renewal
Option”). In order to exercise a Renewal Option, Tenant shall provide written
notice to Landlord designating the size and location of the portion of the
Premises that will be subject to the Renewal Option (the “Proposed Renewal
Premises”), which shall include, at a minimum, the entire (4th)
floor of the Premises.  If the Proposed
Renewal Space includes less than all of the Premises, but more than all of the
fourth (4th) floor of the Premises, then the designation of the
Proposed Renewal Space shall be subject to Landlord’s approval, which approval
may be withheld for any commercially reasonable basis, including, without
limitation, that (a) the remainder of the Premises will be unduly difficult to
lease to third party tenants, to maintain or to use; or (b) the costs to
maintain the remainder of the Premises or the Proposed Renewal Space would
exceed the average cost to maintain space in the Building.  The term “Renewal Premises” shall mean and
refer to the Proposed Renewal Space approved by Landlord.  If the Renewal Premises includes less than
all of the Premises but more than the fourth (4th) floor, then Tenant
shall be solely responsible for all costs that arise out of Tenant’s
designation of less than all of the Premises as the Renewal Premises, including
costs associated with the construction of any demising walls.  The renewal and extension of the Term of
this Lease shall be upon the same terms, conditions and provisions as contained
in this Lease, except that the new Premises shall be the Renewal Premises and
the new Basic Monthly Rent shall be adjusted to equal ninety-five percent (95%)
of the Market Rental Rate for comparable space in the so-called “University
Town Center” submarket in San Diego at the commencement of the extension term.


 


2.             Tenant shall give Landlord written notice of its
intention to exercise an extension option not less than nine (9) months and not
more than eighteen (18) months prior to the commencement date of each renewal
option term.  Within the thirty (30)
days after receiving notification from the Tenant of its intention to exercise
such option to extend, Landlord shall provide Tenant with Landlord’s
calculation of the new Basic Monthly Rent and escalations, as determined
pursuant to paragraph 1 above, for the extension term.  Tenant shall within thrity (30) day after
receipt thereof: (i) accept Landlord’s calculations or (ii) rejects Landlord’s
calculation and provide Landlord with Tenant’s own calculation of Basic Monthly
Rent and escalations.  Thereafter, the
parties shall seek to settle the dispute by way of good faith negotiations concluded
within sixty (60) days of Tenant’s delivery of Tenant’s calculation of Basic
Monthly Rent and escalations to Landlord. 
If, after such good faith negotiations, the parties are still not able
or willing to agree upon the Basic Monthly Rent and escalations for that
extension term, then the matter shall be settled by arbitration in accordance
with the following procedures:


 


a)             Each party shall designate an M.A.I. appraiser qualified
to evaluate downtown San Diego office space;


 


b)            The two (2) appraisers shall select a similarly qualified
appraiser;


 


c)             The three (3) appraisers shall, after soliciting,
accepting and reviewing such information and documentation as they may deem
necessary and appropriate, including that submitted by either party, within
thirty (30) days after appointment and taking into account (i) the unique
nature and high class quality of the Building (including, particularly, its
height, construction, quality, ambiance and amenities), and (ii) the prevailing
market rental for similar (equivalent) space in other buildings in the
so-called “University Town Center” submarket in San Diego;


 


d)            Determine by a simple majority which of the Basic Monthly
Rent and escalations calculations is closest to their own calculation or
valuation.  Whichever of Landlord’s or
Tenant’s Basic Monthly Rent and escalations calculation is closer to that of
the majority of the arbitrators shall become binding; and


 


e)             Landlord and Tenant shall each pay one-half of the fees
for the arbitrators.


 


If either party fails,
within ten (10) days, to designate their appraiser as set forth in Paragraph
2(a) above, then the appraiser selected by the other party shall act alone and
his or her determination shall be binding.


 


3.             The “Market Rental Rate” shall be established by
averaging the annual rental rates (the “Comparable Rate”) then being paid under
leases then being entered into in the so-called “University Town Center”
submarket in San Diego for non-sublease, non-encumbered, non-equity, office
space comparable to the Renewal Premises, taking into consideration all
pertinent factors, including but not limited to the face rental rates, rental
increase, parking rights, new or renewal tenant improvement allowances, length
of term, use, quality of services provided, whether operating expenses are
determined on a base year or a triple net basis, location and/or floor level
within the applicable building, definition of net rentable areas, leasehold
improvements provided (except any leasehold improvements within the Renewal
Premises which were constructed solely at Tenant’s expense shall be deemed to
be building standard improvements) quality, age and location of the applicable
building, tenant clientele of the building, financial strength of the
applicable tenant, rental concessions and inducements being offered to


 


1

















 


new or renewal tenants (such as abatements or
tenant improvement allowances), the time the particular rate under
consideration became effective, and parking (availability and cost).


 


In the event a Comparable Rate used for
comparison is a “gross rate” (i.e. the rate includes an allowance for operating
expenses), then the Building’s share of operating expenses for the calendar
year immediately preceding the year in which the Market Rental Rate is being
determined shall be deducted (on the applicable per square foot basis), to the
end said rate is net of all operating expenses.  Further, in the event a Comparable Rate is a “net” rate (i.e. the
rate does not include an allowance for operating expenses), any difference between
operating expenses payable under this Lease and operating expenses payable by
tenants in the comparable space shall be taken into account to the same extent
and in the same manner as the rental marketplace takes such differences into
account.


 


4.             This option to renew and extend (i) shall be personal to
the original Tenant and any Affiliate under the Lease and appurtenant to the
Lease, and (ii) may not be assigned, pledged or otherwise transferred, either
separately from the Lease or to an assignee of the Lease permitted or approved
by Landlord pursuant to the Lease, without Landlord’s prior written consent,
which Landlord may grant or withhold in its sole discretion.


 


2

















 


EXHIBIT “F”


 


Right of First Refusal


 


Provided Tenant is not in
material or economic  default under
the terms and conditions of this Lease (following any applicable notice and
cure periods), if at any time within months one (1) through sixty-six (66) of
the Term of the Lease, Landlord has the opportunity to offer for lease all or
any portion of the second (2nd), third (3rd) or fourth (4th)
floors of the Building (the “First Refusal Space”), and to the extent Landlord
receives a bona-fide third party offer for such First Refusal Space pursuant to
which Landlord would be willing to so lease such space, then Landlord shall
give written notice of such offer to Tenant or any Affiliate.  The Tenant or any Affiliate may within five
(5) business days after receipt of such written notice, elect to lease all of
the space described in Landlord’s written notice on the same terms and conditions
described in Landlord’s written notice by delivery of written notice to
Landlord, and the parties then shall execute an amendment to this Lease
incorporating into this Lease the terms applicable to such space.  In the event Tenant fails to elect within
the five (5) business day period to lease the applicable First Refusal Space,
then Landlord shall be free to lease such space to any third party on terms and
conditions acceptable to Landlord, and if Landlord so leases such space to a
third party, then the right of first refusal shall terminate as to such
space.  Notwithstanding the foregoing,
(i) such first refusal right shall commence only following the expiration or
earlier termination of (A) any lease pertaining to the First Refusal Space, and
(B) as to any First Refusal Space which is vacant as of the date of this Lease,
each lease pertaining to any portion of such First Refusal Space entered into
by Landlord after the date of this Lease (collectively, the “Superior Leases”),
including any renewal or extension of such existing or future lease, whether or
not such renewal or extension is pursuant to an express written provision in
such lease, and regardless of whether any such renewal or extension is
consummated pursuant to a lease amendment or a new lease, and (ii) such first
refusal right shall be subordinate and secondary to all rights of expansion,
first refusal, first offer or similar rights in existence as of the date of
this Lease granted to the tenant(s) of the Superior Leases or any other leases
(the rights described in items (i) and (ii), above to be known collectively, as
“Superior Rights”).


 


1

















 


EXHIBIT “G”


 


Right of First Offer


 


Subject to any currently
existing commitments and rights of other tenants in the Building that currently
lease space as of the date of execution of this Lease, during the first
eighteen (18) months of the initial Term of this Lease (the “Right of First
Offer Period”), tenant shall have a right of first offer, personal to Tenant,
to lease additional vacant space on floors two (2), three (3) and four (4) of
the Building that becomes vacant during the Right of First Offer Period (the
“Available Space”).  Tenant shall be
entitled, from time to time, to give Landlord notice of Tenant’s interest in
leasing Available Space (an “Interest Notice”), and Landlord shall provide
Tenant with a notice in writing (the “Available Space Notice) of Available
Space, if any, which will become vacant during the Right of First Offer
Period.  Tenant shall have fifteen (15)
business days after receipt of the Available Space Notice to elect in a written
notice to Landlord to lease all of the Available Space, or any portion of the
Available Space that is a separately demised leaseable unit, as set forth
therein.  If Tenant does not elect to
lease the Available Space set forth in the Available Space Notice within
fifteen (15) business days after receipt of the Available Space Notice, then
Landlord shall be free to lease such Available Space to any other Person and
Tenant shall not have any rights with respect to such Available Space for a
period of one hundred fifty (150) days after expiration of said fifteen (15)
business day period, and Tenant shall have such rights only if Tenant gives
Landlord another Interest Notice after expiration of such one hundred fifty
(150) day period.  If Tenant elects to
lease any portion of the Available Space, then Tenant shall lease such portion
of the Available Space on the same terms and conditions that are set forth in
this Lease, except that the tenant improvement allowance and all other
concessions including free rent shall be prorated based on the actual number of
months Tenant leases said expansion space; the term with respect to such
portion of the Available Space will expire at the end of the Term; and Tenant
shall pay Basic Monthly Rent based on the Term of the Lease with respect to the
remainder of the Premises.  If Tenant
exercises the right of first offer, then the parties shall execute an amendment
to this Lease incorporating into this Lease the terms applicable to such
space.  Notwithstanding the foregoing,
(i) such right of first offer shall commence only following the expiration or
earlier termination of (A) any lease pertaining to the Available Space, and (B)
as to any Available Space which is vacant as of the date of this Lease, each
lease pertaining to any portion of such Available Space entered into by
Landlord after the date of this Lease (collectively, the “Superior Leases”),
including any renewal or extension of such existing or future lease, whether or
not such renewal or extension is pursuant to an express written provision in
such lease, and regardless of whether any such renewal or extension is
consummated pursuant to a lease amendment or a new lease, and (ii) such right
of first offer shall be subordinate and secondary to all rights of expansion,
first refusal, first offer or similar rights in existence as of the date of
this Lease granted to the tenant(s) of the Superior Leases or any other leases
(the rights described in items (i) and (ii), above to be known collectively, as
“Superior Rights”).


 


No such First Right of First
Offer may be exercised, and if exercised, the option shall be deemed canceled
and shall be of no force or effect, if at the time of such exercise, the Tenant
is then in material or economic default (beyond applicable notice and cure
periods) under this Lease or this Lease is not then in full force and effect.


 


The right of first refusal
described in this Exhibit “G” shall terminate at the expiration of the Right of
First Offer Period.


 


1