Exhibit 10.1


 


Lease
Agreement dated August 12, 2005

between Lpath Therapeutics Inc.

and Pointe Camino Windell LLC


 





















 


LEASE AGREEMENT


 


BETWEEN


 


POINTE CAMINO WINDELL LLC


 


(“LANDLORD”)


 


AND


 


LPATH THERAPEUTICS INC.


 


(“TENANT”)


 




	
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LEASE AGREEMENT



TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  TERMS AND DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  PREMISES AND COMMON AREAS

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.

  	
  TERM

  	
  4

  
	
   

  	
   

  	
   

  
	
  4.

  	
  POSSESSION

  	
  4

  
	
   

  	
   

  	
   

  
	
  5.

  	
  MONTHLY BASIC RENT

  	
  4

  
	
   

  	
   

  	
   

  
	
  6.

  	
  OPERATING EXPENSES

  	
  5

  
	
   

  	
   

  	
   

  
	
  7.

  	
  SECURITY DEPOSIT

  	
  7

  
	
   

  	
   

  	
   

  
	
  8.

  	
  USE

  	
  8

  
	
   

  	
   

  	
   

  
	
  9.

  	
  NOTICES

  	
  9

  
	
   

  	
   

  	
   

  
	
  10.

  	
  BROKERS

  	
  9

  
	
   

  	
   

  	
   

  
	
  11.

  	
  HOLDING OVER

  	
  9

  
	
   

  	
   

  	
   

  
	
  12.

  	
  TAXES ON TENANT’S PROPERTY

  	
  9

  
	
   

  	
   

  	
   

  
	
  13.

  	
  CONDITION OF PREMISES

  	
  10

  
	
   

  	
   

  	
   

  
	
  14.

  	
  ALTERATIONS

  	
  10

  
	
   

  	
   

  	
   

  
	
  15.

  	
  REPAIRS

  	
  11

  
	
   

  	
   

  	
   

  
	
  16.

  	
  LIENS

  	
  12

  
	
   

  	
   

  	
   

  
	
  17.

  	
  ENTRY BY LANDLORD

  	
  12

  
	
   

  	
   

  	
   

  
	
  18.

  	
  UTILITIES AND SERVICES

  	
  13

  
	
   

  	
   

  	
   

  
	
  19.

  	
  BANKRUPTCY

  	
  13

  
	
   

  	
   

  	
   

  
	
  20.

  	
  INDEMNIFICATION AND
  EXCULPATION OF LANDLORD

  	
  13

  
	
   

  	
   

  	
   

  
	
  21.

  	
  DAMAGE TO TENANT’S
  PROPERTY

  	
  14

  
	
   

  	
   

  	
   

  
	
  22.

  	
  TENANT’S INSURANCE

  	
  14

  
	
   

  	
   

  	
   

  
	
  23.

  	
  DAMAGE OR DESTRUCTION

  	
  16

  
	
   

  	
   

  	
   

  
	
  24.

  	
  EMINENT DOMAIN

  	
  17

  
	
   

  	
   

  	
   

  
	
  25.

  	
  DEFAULTS AND REMEDIES

  	
  18

  
	
   

  	
   

  	
   

  
	
  26.

  	
  ASSIGNMENT AND SUBLETTING

  	
  20

  
	
   

  	
   

  	
   

  
	
  27.

  	
  SUBORDINATION

  	
  23

  
	
   

  	
   

  	
   

  
	
  28.

  	
  ESTOPPEL CERTIFICATE

  	
  23

  
	
   

  	
   

  	
   

  
	
  29.

  	
  HAZARDOUS MATERIALS

  	
  24

  
	
   

  	
   

  	
   

  
	
  30.

  	
  RULES AND REGULATIONS

  	
  27

  



 




	
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  31.

  	
  CONFLICT OF LAWS

  	
  27

  
	
   

  	
   

  	
   

  
	
  32.

  	
  SUCCESSORS AND ASSIGNS

  	
  27

  
	
   

  	
   

  	
   

  
	
  33.

  	
  SURRENDER OF PREMISES

  	
  27

  
	
   

  	
   

  	
   

  
	
  34.

  	
  ATTORNEYS’ FEES

  	
  27

  
	
   

  	
   

  	
   

  
	
  35.

  	
  PERFORMANCE BY TENANT

  	
  27

  
	
   

  	
   

  	
   

  
	
  36.

  	
  MORTGAGEE PROTECTION

  	
  28

  
	
   

  	
   

  	
   

  
	
  37.

  	
  DEFINITION OF LANDLORD

  	
  28

  
	
   

  	
   

  	
   

  
	
  38.

  	
  WAIVER

  	
  28

  
	
   

  	
   

  	
   

  
	
  39.

  	
  IDENTIFICATION OF TENANT

  	
  28

  
	
   

  	
   

  	
   

  
	
  40.

  	
  PARKING

  	
  28

  
	
   

  	
   

  	
   

  
	
  41.

  	
  FORCE MAJEURE

  	
  29

  
	
   

  	
   

  	
   

  
	
  42.

  	
  TERMS, HEADINGS AND
  CONSTRUCTION

  	
  29

  
	
   

  	
   

  	
   

  
	
  43.

  	
  TIME

  	
  29

  
	
   

  	
   

  	
   

  
	
  44.

  	
  PRIOR AGREEMENT;
  AMENDMENTS

  	
  29

  
	
   

  	
   

  	
   

  
	
  45.

  	
  SEVERABIL1TY

  	
  29

  
	
   

  	
   

  	
   

  
	
  46.

  	
  RECORDING

  	
  29

  
	
   

  	
   

  	
   

  
	
  47.

  	
  LIMITATION ON LIABILITY
  AND TIME

  	
  29

  
	
   

  	
   

  	
   

  
	
  48.

  	
  TRAFFIC IMPACT

  	
  30

  
	
   

  	
   

  	
   

  
	
  49.

  	
  SUBSTITUTED PREMISES

  	
  30

  
	
   

  	
   

  	
   

  
	
  50.

  	
  MODIFICATION FOR LENDER OR
  GOVERNMENT

  	
  30

  
	
   

  	
   

  	
   

  
	
  51.

  	
  FINANCIAL STATEMENTS

  	
  30

  
	
   

  	
   

  	
   

  
	
  52.

  	
  QUIET ENJOYMENT

  	
  30

  
	
   

  	
   

  	
   

  
	
  53.

  	
  TENANT’S SIGNS

  	
  30

  
	
   

  	
   

  	
   

  
	
  54.

  	
  NO LIGHT, AIR OR VIEW
  EASEMENT

  	
  31

  
	
   

  	
   

  	
   

  
	
  55.

  	
  TENANT AS CORPORATION,
  PARTNERSHIP, OR LIMITED LIABILITY COMPANY

  	
  31

  
	
   

  	
   

  	
   

  
	
  56.

  	
  GUARANTY

  	
  31

  
	
   

  	
   

  	
   

  
	
  57.

  	
  COUNTERPARTS

  	
  31

  
	
   

  	
   

  	
   

  
	
  58.

  	
  JOINT AND SEVERAL
  LIABILITY

  	
  31

  
	
   

  	
   

  	
   

  
	
  59.

  	
  NO OFFER

  	
  31

  



 




	
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  EXHIBITS:

  
	
   

  	
   

  
	
  A-1

  	
  Outline of Floor Plan of
  Premises

  
	
  A-2

  	
  Site Plan

  
	
  B

  	
  Work Letter Agreement

  
	
  C

  	
  Notice of Lease Term Dates

  
	
  D

  	
  Standards for Utilities and
  Services

  
	
  E

  	
  Sample Form of Tenant
  Estoppel Certificate

  
	
  F

  	
  Rules and Regulations

  
	
  G

  	
  Traffic and Parking
  Rules and Regulations

  
	
  H

  	
  Guaranty of Lease

  
	
   

  	
   

  
	
  RIDERS:

  
	
   

  	
   

  
	
  1.

  	
  Right of First Notice to
  Lease Additional Space

  
	
  2.

  	
  Option to Extend Term

  



 




	
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LEASE AGREEMENT


 


THIS LEASE AGREEMENT (“Lease”) is
made as of August 12, 2005, between POINTE CAMINO WINDELL LLC,
a California limited liability company (“Landlord”),
and LPATH THERAPEUTICS INC., a Delaware
corporation (“Tenant”), for the space outlined
on attached Exhibit A-1 (the “Premises”) and
contained within Suite(s) A on the first and second floor(s) of a building
located at 6335 Ferris Square, San Diego, California (the “Building”).
The Building is part of the Building site, which includes the parking areas and
other improvements depicted on attached Exhibit A-2 (collectively,
the “Project”).


 


1.             TERMS AND DEFINITIONS. For the purposes of this Lease, the
following terms shall have the following definitions:


 


(a)           Addresses:


 


Landlord’s Address: 3525 Hyland Ave., Costa Mesa, CA 92626; Attn:
Michael S. Martin, President & CEO; michael.martin@windell-investments.com.


 


Tenant’s address until the commencement of the Term only: 9191 Towne
Centre Drive, Suite 310, San Diego, CA 92122, and thereafter all notices
hereunder shall be delivered to the Premises.


 


(b)           Approximate Rentable Square Feet: 6,182 square feet (“Rentable Square
Foot/Feet”); Tenant and Landlord agree that the Rentable Square Feet
shall be conclusive for all purposes as contained in the Lease. The
calculations (“Rentable Square Foot/Feet”) have
been made substantially in accordance with the guidelines for measuring
rentable area of office space specified in the American National Standard
Institute Publication ANSI Z65.1-1996 (the “BOMA Standard”).


 


(c)           Broker(s): Voit
Commercial - Brain Mulvaney (Landlord’s Broker) and Irving Hughes - Shaun
Burnett (Tenant’s Broker).


 


(d)           Commencement Date:
The date on which the Term of this Lease begins as determined in accordance
with Paragraph 8 of the Work Letter Agreement.


 


(e)           Exhibits and Riders: “A-1”
through “H” and Riders 1-2, inclusive, all of which are attached to this Lease
and are incorporated herein by this reference. Defined or initially capitalized
terms in the attached documents have the same meaning as in this Lease unless
otherwise expressly provided in those documents.


 




	
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(f)            Monthly Basic Rent:


 


	
  Months

  	
   

  	
  Rent Per Rentable

  Square Foot*

  	
   

  	
  Monthly Basic Rent

  	
   

  
	
  Months 1-12

  	
   

  	
  $

  	
  2.05 NNN

  	
   

  	
  $

  	
  12,673.10

  	
   

  
	
  Months 13-24

  	
   

  	
  $

  	
  2.11 NNN

  	
   

  	
  $

  	
  13,053.29

  	
   

  
	
  Months 25-36

  	
   

  	
  $

  	
  2.17 NNN

  	
   

  	
  $

  	
  13,444.89

  	
   

  
	
  Months 37-48

  	
   

  	
  $

  	
  2.24 NNN

  	
   

  	
  $

  	
  13,848.24

  	
   

  
	
  Months 49-60

  	
   

  	
  $

  	
  2.31 NNN

  	
   

  	
  $

  	
  14,263.69

  	
   

  



 










*(rounded to the nearest two decimal points)


 


$7,255.38 shall be paid concurrently with the execution of the Lease
(Monthly Basic Rent and Operating Expenses for the period August 20, 2005
through September 30, 2005); and $12,673.10 shall be paid January 1,
2006 for rent due for the month of January 2006.


 


Notwithstanding
the foregoing, Tenant’s obligation to pay Monthly Basic Rent shall be abated
for the months of November 2005, December 2005, April 2007, and August 2007
of the Term (collectively, the “Abated Rent”).


 


(g)           Parking: Not more
than 3.5 vehicle parking spaces per one thousand Rentable Square Feet of the
Premises.


 


(h)           Security Deposit: $28,527.38 [($14,263.69 x 2 (Base Rent) plus $1,607.32 x 2 (Operating
Expenses)] shall be paid concurrently with the execution of the Lease.


 


(i)            Tenant Improvement Allowance: Build to suit; see Work Letter Agreement.


 


(j)            Tenant Improvements: As defined in Paragraph 2 of the Work Letter
Agreement.


 


(k)           Tenant’s Percentage: 4.32%, based on the Rentable Square Feet contained in the Premises set
forth in Subparagraph 1(b) and the Rentable Square Feet contained in the
Project of 143,125 (“Project Rentable Square Feet”).


 


(l)            Term: Sixty (60) calendar months (plus the
applicable fraction of a month if the actual Commencement Date is other than
the first day of a calendar month).


 


(m)          Use: Biotechnology
research and development and general office use.


 


2.             PREMISES AND COMMON AREAS.


 


(a)           Subject to all the provisions of this Lease, Landlord leases to Tenant
and Tenant leases from Landlord the Premises, which Premises are improved or to
be improved by Landlord with the Tenant Improvements described in the Work
Letter Agreement, those Premises being agreed to have the Approximate Rentable
Square Feet designated in Subparagraph 1(b) (the exact number of which
shall be determined in accordance with that subparagraph). Beginning on the
Must Take Date (defined below), the Premises shall be expanded to include the
area contained in Suite B in the Building (conclusively agreed by Landlord
and Tenant to


 




	
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contain 1,093 rentable square feet) which is depicted on Exhibit A-1
(“Must Take Space”). All of the
terms and provisions of the Lease, including, without limitation, the Work
Letter Agreement shall apply to the Must Take Space and the Must Take Space
shall be part of the Premises for all purposes under the Lease so that an
appropriate adjustment shall be made to the Monthly Basic Rent, Tenant’s
Percentage, and the number of vehicle parking spaces Tenant is entitled to use.
The “Must Take Date” shall occur twelve
(12) months from the Commencement Date of the Lease or upon occupancy by
Tenant, whichever is earlier, and subject to acceleration of the Must Take Date
as the result of Tenant Delays (as defined in the Work Letter Agreement).


 


(b)           Tenant shall have the nonexclusive right to use, in common with other
present and future tenants in the Building, the following areas (“Common Areas”) appurtenant to the Premises, subject to the Rules and
Regulations referred to in Paragraph 30 and to other reasonable rules and
regulations which Landlord may deem advisable for the Common Areas (including
without limitation the hours during which they are open for use):


 


(i)            The Building’s common entrances, lobbies, rest
rooms not within a suite, stairways and accessways, loading docks, ramps,
drives and platforms and any passageways and serviceways thereto, and the
common pipes, conduits, wires and appurtenant equipment serving the Premises;


 


(ii)           Loading and unloading areas, trash areas, parking areas, and similar
areas and facilities appurtenant to the Building;


 


(iii)          The roadways, sidewalks, walkways, parkways, driveways and landscaped
areas and similar areas and facilities within the Project which are made
available for the use or benefit of all Project tenants and their invitees and
other visitors; and


 


(iv)          The parking areas, including driveways and alleys and other
improvements, as depicted on attached Exhibit A-2.


 


(c)           Landlord reserves the right from time to time without unreasonable
interference with Tenant’s use:


 


(i)            To install, use, maintain, repair and replace
pipes, ducts, conduits, wires and appurtenant meters and equipment for service
to other parts of the Building above the ceiling surfaces, below the floor
surfaces, within the walls and in the central core areas, and to relocate any
pipes, ducts, conduits, wires and appurtenant meters and equipment included in
the Premises which are located in the Premises or located elsewhere outside the
Premises, and to expand the Building and the Project;


 


(ii)           To make changes to the Common Areas, including, without limitation,
changes in the location, size, shape and number of driveways, entrances,
parking spaces, parking areas, loading and unloading areas, ingress, egress,
direction of traffic, landscaped areas and walkways;


 


(iii)          To temporarily close or designate for other uses any of the Common Areas
for purposes of improvement, maintenance or repair, so long as reasonable
access to the Premises remains available;


 


(iv)          To designate other land outside the boundaries of the Building to be a
part of the Common Areas;


 


(v)           To add additional buildings and improvements to the Common Areas or the
Project;


 


(vi)          To use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Building or the Project, or any portion thereof;
and


 




	
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(vii)         To do and perform such other acts and make such other changes in, to or
with respect to the Common Areas as Landlord may deem to be appropriate.


 


The preceding reservation of rights to use the Common Areas shall not
impose on Landlord any obligation to maintain or repair the Common Areas or any
other portion of the Premises except as expressly set forth in this Lease.


 


3.             TERM. The Term shall be for the period designated in Subparagraph 1(l),
beginning on the Commencement Date under Subparagraph 1(d) and ending on
the expiration of that period, unless the Lease shall be terminated sooner as
hereinafter provided. The Commencement Date and the date the Term ends will be
as specified in Landlord’s Notice of Lease Term Dates (“Notice”),
substantially in the form of attached Exhibit C, which Landlord
shall serve on Tenant when Landlord tenders possession of the Premises to
Tenant under Paragraph 8 of the Work Letter Agreement.


 


4.             POSSESSION.


 


(a)           Landlord shall tender possession of the Premises to Tenant on the
earlier of the execution of the Lease or August 13, 2005. During the
period of tenant’s possession of the Premises and the scheduled Commencement
Date of the Term as set forth in the Work Schedule (as defined in the
attached Work Letter Agreement), Tenant shall pay to Landlord Partial Basic
Monthly Rent and Operating Expenses (“Partial Rent”).
The payment of Partial Rent prior to the Commencement Date of the Term shall be
$4,752.41 (Monthly Basic Rent) and $602.75 (Operating Expenses) per month,
prorated for partial months, and will begin on August 20, 2005.


 


(b)           During the period of possession and the commencement of the Lease,
Landlord will be performing work to the space pursuant to the Work Letter
Agreement. Tenant is aware that there may be noise, vibration, odors,
disruption and inconvenience in order to complete the Tenant Improvements and
Tenant will hold Landlord harmless for any and all losses or claims from any
inconvenience or disruption that Tenant may incur resulting from Landlord work,
unless caused by Landlord’s gross active negligence.


 


(c)           If the Term has not commenced within one hundred eighty (180) days after
the scheduled term commencement date contained in the Work Schedule, either
Landlord or Tenant may terminate this Lease by delivering written notice
thereof to the other within fifteen (15) days after the end of that 180-day
period, without prejudice to any rights either party may have against the
other. However, to the extent Landlord’s inability to tender possession of the
Premises to Tenant in accordance with (or earlier than provided for in) the
Work Schedule is caused by Tenant’s negligence or breach of this Lease or
of the Work Letter Agreement, or by other delays (including without limitation
those listed in Subparagraphs 8(a) through 8(e) of the Work Letter
Agreement) caused by Tenant or its agents or contractors (collectively, “Tenant Delays”), the commencement of the Term for all
purposes under this Lease shall be accelerated by the number of days of those
Tenant Delays.


 


5.             MONTHLY BASIC RENT.


 


(a)           Tenant agrees to pay Landlord as Monthly Basic Rent for the Premises the
Monthly Basic Rent designated in Subparagraph 1(f) in advance on the first
day of each calendar month during the Term. If the Term commences or ends on a
day other than the first day of a calendar month, then the rent for such period
shall be prorated in the proportion that the number of days this Lease is in
effect during such period bears to thirty (30). In addition to the Monthly
Basic Rent, Tenant agrees to pay as additional rental the amount of rental
adjustments and other charges required by this Lease. In no event shall Monthly
Basic Rent ever be less than the initial Monthly Basic Rent. All rental shall
be paid to Landlord, without prior demand and without any deduction or offset,
in lawful money of the United States of America, at the address of Landlord
designated in Subparagraph 1(a) or to such other person or at such other
place as Landlord may from time to time designate in writing.


 




	
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(b)           Rent and all other payments required to be made by Tenant to Landlord
under this Lease shall be deemed to be and treated as rent and payable and
recoverable as “rent”, and Landlord shall have the same rights against Tenant
for default in any such payment as in the case of nonpayment of Monthly Basic
Rent.


 


(c)           If Tenant fails to pay any installment of rent within ten (10) days
following the date due (which ten days is not intended to be a grace period) or
if Tenant fails to make any other payment for which Tenant is obligated under
this Lease when due, then Tenant shall pay to Landlord as additional rent a
late charge equal to six percent (6%) of the amount due to compensate Landlord
for the extra costs incurred as a result of such late payment. The parties
agree that such late charge represents a fair and reasonable estimate of the
costs that Landlord will incur by reason of late payment by Tenant. Acceptance
of any late charge shall not constitute a waiver of the Tenant’s default with
respect to the overdue amount, or prevent Landlord from exercising any other
rights and remedies available to Landlord.


 


(d)           If the amount of rent or any other payment due under this Lease now or
in the future violates the terms of any governmental restrictions on such rent
or payment, then the rent or payment due during the period of such restrictions
shall be the maximum amount allowable under those restrictions. Upon
termination of the restrictions, Landlord shall, to the extent it is legally
permitted, recover from Tenant the difference between the amounts received
during the period of the restrictions and the amounts Landlord would have
received had there been no restrictions.


 


6.             OPERATING EXPENSES.


 


(a)           For purposes of this Lease, the following terms are defined as follows:


 


(i)            “Tenant’s Percentage”
shall have the meaning set forth in Subparagraph 1(k).


 


(ii)           “HVAC Costs” means
all costs incurred in the operation, repair and maintenance and replacement of
the systems for heating, ventilating and air conditioning the buildings in the
Project including, without limitation, supplies, materials, equipment, tools,
and contracted services.


 


(iii)          “Taxes and Assessments”
shall mean: (1) Real property taxes and fees and expenses incurred in
contesting the amount or validity of any real property tax; (2) Any
assessment, fee, tax, levy, charge, penalty or similar imposition imposed by
any authority, improvement district or special assessment district upon or in
respect of the Premises, Building, Project, or Common Areas, or any portion
thereof, including any such charges imposed for the use or occupancy of the
Building, Project, or Premises, or upon this transaction or any document to
which Tenant is a party; (3) Any new or increased assessment, tax, fee,
levy or charge in substitution, partially or totally, of any assessment, tax,
fee, levy or charge previously included under Subparagraphs 6(a)(iii)(1) and
(2), including, without limitation, increases due to tax rate increases or
reassessment of the Premises, Building, Common Areas, or Project, or any
portion thereof, for any reason; (4) Any assessment Landlord must pay as
owner of the Building, Project, or Common Areas pursuant to any present or
future covenants, conditions or restrictions, easement agreements, tenancy in common
agreements or similar restrictions affecting the Building, Premises, Project,
or Common Areas, or any portion thereof; (5) Any tax or fee on personal
property used in connection with the Building, Project, or Common Areas.


 


(iv)          “Insurance Costs” means
all costs of premiums for insurance that Landlord procures under this Lease or
for or in connection with the Project, including, without limitation, any
insurance which any beneficiary or mortgagee with a lien affecting the Premises
deems necessary or requires in connection with the ownership or operation of
the Building, Common Areas, or Project.


 


(v)           “Capital Costs” means
all costs incurred to make any capital improvements, repairs or replacements to
the Building, Project, or Common Areas, or any portion thereof, including,
without limitation, structural additions or repairs, which; (1) are now or
may hereafter be required by any statute, ordinance or regulation of any
governmental or enforcement agency; or (2) are needed to operate and
maintain the Building,


 




	
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Project, or Common Areas, or any portion thereof, at the same quality
levels as prior to the improvement or repair or to provide substantially the
same level of services to tenants of the Project as are provided to tenants of
comparable buildings. All Capital Costs shall be amortized over the useful life
of the improvement, repair or replacement as such useful life is determined by
Landlord in its commercially reasonable judgment at an imputed interest rate of
eight percent (8%) per annum.


 


(b)           “Operating Expenses”
shall consist of all direct costs of ownership, operation, repair or
maintenance (including necessary supplies, material, tools and equipment) of
the Building, Project, or Common Areas, including any expansions of the
Building, Project, or Common Areas by Landlord, or any portion thereof, and all
indirect costs that are reasonably attributable to the operation, repair and
maintenance of the Building, Project, and Common Areas, or any portion thereof,
for any calendar year (and if the Project is less than ninety-five percent
(95%) occupied, then the Operating Expenses will be calculated assuming the
Project is ninety-fine percent (95%) occupied for a full calendar year),
including costs for the following by way of illustration, but not limitation:


 


HVAC Costs; Taxes and Assessments; Insurance Costs; Capital Costs; costs
connected with providing electrical, telephone, cable and other electronic data
transmission services (including, without limitation, any costs (whether or not
Capital Costs) arising from the maintenance, repair and/or replacement of all
or any component of electrical, plumbing, mechanical, lighting, HVAC or other building
systems, and/or the maintenance, repair and/or replacement of lighting
fixtures, light bulbs, air filtration or distribution devices (provided that
Landlord shall have no obligation to provide any utilities), window panes,
window coating and/or other energy-saving measures); janitorial service and
window cleaning; waste disposal; parking facilities; Common Areas signage;
landscaping and gardening; security; and accounting, legal, administrative and
consulting fees.


 


Operating Expenses shall also include costs incurred in the management
of the Building, Project, and Common Areas (including, without limitation,
wages and salaries and related benefits for personnel to the extent used in the
management, operation and maintenance of the Building, Project, or Common
Areas, and Project management office rental and supplies) and a management fee
equal to five percent (5%) of all sources of Landlord’s gross revenue generated
at the Project for the calendar year, including, without limitation, Monthly
Basic Rent and Operating Expenses. For purposes of this Subparagraph 6(b), if
the Project is less than ninety-five percent (95%) occupied, Operating Expenses
shall be deemed to have been paid for ninety-five percent (95%) of the Rentable
Square Feet in the Project for a full calendar year


 


(c)           Except only for (i) any interest, points and fees on debts or
amortization on any mortgage or mortgages or other debt instrument evidencing
indebtedness of Landlord and (ii) costs arising from the payment of any
claims against Landlord (for which Tenant is not responsible) secured by
judgments or liens against the Premises, this Lease is and shall be construed
as a “triple net” lease arrangement, the Basic Monthly Rent shall be completely
net to the Landlord, and Tenant shall be directly responsible for and pay
Tenant’s Percentage of all Operating Expenses as set forth in clauses (i) through
(v), below:


 


(i)            Beginning with the Commencement Date and on or
before the expiration of each one (1) year period thereafter (each, a “Lease Year”), Landlord shall deliver to Tenant an estimate
of Tenant’s Percentage of annual Operating Expenses payable in twelve (12)
equal monthly installments on the first day of every month as additional rent
together with Tenant’s payment of Monthly Basic Rent. Landlord may from time to
time during the Lease Year revise Landlord’s estimate of annual Operating
Expenses and Tenant’s monthly estimated payments. If after the first Lease Year
Landlord has not furnished Tenant with a written estimate for any Lease Year,
Tenant shall continue to pay monthly installments of Tenant’s Percentage of
Operating Expenses at the rate established for the immediately preceding Lease
Year (if applicable), provided that, when a written estimate of Operating
Expenses for the current Lease Year is delivered to Tenant, Tenant shall, on or
before the next monthly payment date, pay all accrued and unpaid monthly
estimates based on the new estimate.


 


(ii)           On or before May 1 of each Lease Year after the first Lease Year
(or as soon thereafter as is practical) Landlord shall deliver to Tenant a
statement (the “Statement”) setting out Tenant’s 


 




	
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Percentage
of actual Operating Expenses for the immediately preceding Lease Year. If
Tenant’s Percentage of actual Operating Expenses for the previous Lease Year
differs from the total estimated monthly payments of Tenant’s Percentage of
Operating Expenses made by Tenant for such Lease Year, Tenant shall pay the
amount of the deficiency within ten (10) days of receipt of the Statement
or Landlord shall credit the difference, as the case may be; in the case of a
credit due, Landlord shall credit against Tenant’s next ensuing installment(s) of
Monthly Basic Rent an amount equal to the difference until the credit is
exhausted. If a credit is due from Landlord on the last day of the Term,
Landlord shall credit against any payments due from Tenant under this Lease an
amount equal to the credit or, if no payments are due, or may become due from
Tenant, Landlord shall pay Tenant the amount of the credit. The obligations of
Tenant and Landlord to make payments required under this Paragraph 6 shall
survive the termination of this Lease.


 


(iii)          If any dispute arises as to the accuracy of Operating Expenses as set
forth in the Statement, Tenant shall nevertheless make the payment in
accordance with any notice given by Landlord, but Tenant shall have the right,
after reasonable notice and at reasonable times, to inspect Landlord’s
accounting records at Landlord’s accounting office and, if after such
inspection, Tenant still disputes the amount of Operating Expenses owed,
Landlord shall immediately refer the matter for prompt certification by
Landlord’s certified public accountants, who shall be reasonably acceptable to
Tenant, who shall be deemed to be acting as experts and not arbitrators, which
certification shall be conclusive and binding on both parties. Any adjustment
required to any previous payment made by Tenant or Landlord by reason of any
such decision shall be made within ten (10) days of such certification.
Tenant agrees to pay the cost of such certification unless it is determined
that Landlord’s original Statement overstated Operating Expenses by more than
five percent (5%).


 


(iv)          Operating Expenses due from Tenant in any Lease Year which has less than
365 days because the Term expires on other than the last day of that Lease Year
shall be prorated on a per-day basis.


 


(v)           Without limiting the foregoing, including Landlord’s right to adjust the
estimate of Operating Expenses from time to time, should Landlord incur any
Capital Costs, Landlord shall amortize the Capital Costs over the useful life
of the improvement, repair or replacement as such useful life is determined by
Landlord in its commercially reasonable judgment at an imputed interest rate of
eight percent (8%) per annum.


 


(d)           Notwithstanding anything to the contrary contained immediately above, as
to each specific category of expense which one or more tenants of the Project
either pays directly to third parties or actually reimburses Landlord (for
example, separately metered utilities, property taxes directly reimbursed to
Landlord, etc.) then each such expense which is actually paid or reimbursed
shall not be included in “Operating Expenses” for purposes of this Paragraph 6.
Tenant’s Percentage for each such category of expense shall be adjusted by
excluding from the denominator thereof the Rentable Square Feet of all such
tenants paying such category of expense directly to third parties or actually
reimbursing same directly to Landlord. Moreover, if Tenant directly pays a
third party or actually reimburses Landlord for any such category of expense,
each such category of expenses which is paid or actually reimbursed by Tenant
shall be excluded from the determination of Operating Expenses for Tenant to
the extent such expense (after deduction of that portion paid or directly
reimbursed by Tenant) was incurred with respect to space in the Project
actually leased to other tenants.


 


7.             SECURITY DEPOSIT. The Security Deposit designated in
Subparagraph 1(h) shall be held by Landlord as security for the faithful
performance by Tenant of all of Tenant’s obligations under this Lease. If
Tenant breaches any obligation under this Lease, including, without limitation,
under provisions relating to the payment of rent, 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 any other sum in default, or for the payment of
any other amount which Landlord may spend or become obligated to spend by
reason of Tenant’s default or to help to compensate Landlord for any other loss
or damage which Landlord may suffer by reason of Tenant’s default. If any
portion of the Security Deposit is so used or applied, Tenant shall, upon
demand, deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount. Tenant’s failure to do so shall be a
material breach of this Lease. Upon any increase in Monthly Basic Rent, Tenant
shall, upon written notice from Landlord, deposit with Landlord such additional
funds to be added to the security deposit in an amount equal to the
proportionate increase in Monthly Basic Rent.


 




	
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Landlord shall not be required to keep the Security Deposit separate
from its general funds, and Tenant shall not be entitled to interest on the
Security Deposit. If Tenant shall fully and faithfully perform all of its
obligations under this Lease, the Security Deposit or any balance thereof shall
be returned to Tenant (or, at Landlord’s option, to the last permitted assignee
of Tenant’s interests under this Lease) at the expiration of the Term, provided
that Landlord may retain the Security Deposit until such time as any amount due
from Tenant-in accordance with Paragraph 6 has been determined and paid in
full. If Landlord sells its interest in the Premises during the Term and if
Landlord deposits with the purchaser of the Premises the then unappropriated
portion of the Security Deposit, Landlord shall be discharged from any further
liability with respect to the Security Deposit.


 


8.             USE.


 


(a)           Tenant shall use the Premises only for the use set forth in Subparagraph
1(n), and shall not use or permit the Premises to be used for any other purpose
without Landlord’s prior written consent, which may be withheld in Landlord’s
sole and absolute discretion. Nothing contained herein shall be deemed to give
Tenant any exclusive right to such use in the Building or Project or shall be
deemed to be a warranty by Landlord that the Premises are suitable for a
particular use. Tenant shall not use or occupy the Premises in violation of any
present or future applicable law, and shall, upon written notice from Landlord,
discontinue any use of the Premises which is declared by any applicable
governmental authority to be a violation of law. Tenant shall comply with any
direction of any such governmental authority which shall, by reason of the
nature of Tenant’s use or occupancy of the Premises, impose any duty upon
Tenant or Landlord with respect to the Premises or with respect to the use or
occupation thereof. Notwithstanding any circumstantial factors judicially
developed as a means of allocating the obligation to make alterations to the
Premises in order to comply with present or future laws, it is the intention of
the parties that such obligations with respect to the Premises are those of the
Tenant and are accordingly reflected in rental payments and other consideration
under this Lease. Tenant shall comply with all rules, orders, regulations and
requirements of such generally recognized fire rating organization(s) as
Landlord may specify from time to time. Tenant shall promptly, upon demand,
reimburse Landlord for any additional insurance premium charged by reason of
Tenant’s failure to comply with the provisions of this Paragraph 8. Tenant
shall take all steps required to ensure that neither Tenant nor its contractors
or invitees (i) violate any governmental regulations, ordinances, or laws
applicable to the Premises, (ii) do or permit anything to be done in or
about the Premises which will in any way obstruct or interfere with the rights
of other tenants or occupants of the Building or Project, or injure or annoy
them, (iii) use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, or (iv) cause, maintain or
permit any nuisance in, on or about the Premises. Tenant shall comply with all
present and future covenants, conditions, and restrictions or other restrictive
covenants and obligations, whether or not of record, which affect the use and
operation of the Premises, the Building, the Common Areas or the Project, or
any portion thereof. Tenant shall not commit or suffer to be committed any
waste in or upon the Premises and shall keep the Premises in first-class repair
and appearance. Tenant shall not place a load upon the Premises exceeding the
average pounds of live load per square foot of floor area specified for the
Building by Landlord’s architect, with partitions to be considered a part of
the live load. Landlord reserves the right to prescribe the weight and position
of all files, safes and heavy equipment which Tenant desires to place in the
Premises so as to properly distribute the weight thereof. Further, Tenant’s
business machines and mechanical equipment which cause vibration or noise that
may be transmitted to the Building structure or to any other space in the
Building or Project shall be so installed, maintained and used by Tenant as to
eliminate such vibration or noise. Tenant shall be responsible for all
structural engineering required to determine structural load in the Premises.


 


(b)           Landlord and Tenant acknowledge that the Americans With Disabilities Act
of 1990 (42 U.S.C. Section 12101 et seq.) and regulations and guidelines
promulgated thereunder, as all of the same may be amended and supplemented from
time to time (collectively, “ADA”)
establish requirements for business operations, accessibility and barrier
removal, and that such requirements may or may not apply to the Premises, the
Building and the Project depending on, among other things: (1) whether Tenant’s
business is deemed a “public accommodation” or “commercial facility”, (2) whether
such requirements are “readily achievable”, and (3) whether a given
alteration affects a “primary function area” or triggers “path of travel”
requirements. Landlord represents and warrants to Tenant that as of the
substantial completion of the Tenant Improvements, the Premises shall be
compliant with the ADA. The parties hereby agree that: (a) Tenant shall be
responsible for ADA Title III


 




	
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compliance in the Premises, triggered by Tenant Alterations in the
Premises, (b) Landlord may perform or require that Tenant perform, and
Tenant shall be responsible for the cost of, ADA Title III “path of travel”
requirements triggered by Tenant Alterations in the Premises, and (c) Landlord
may perform, or require Tenant to perform, and Tenant shall be responsible for
the cost of, ADA Title III compliance in the Common Areas necessitated by the Building
being deemed to be a “public accommodation” instead of “commercial facility” as
a result of Tenant’s use of the Premises. Tenant shall be solely responsible
for requirements under Title I of the ADA relating to Tenant’s employees.


 


9.             NOTICES. Any notice, consent, or approval required or permitted to be given
under this Lease must be in writing and may be given by personal delivery or by
mail, and shall be deemed sufficiently given when actually received by the
intended party, whether personally delivered or mailed by registered or
certified mail, if to Tenant at the address designated in Subparagraph 1(a) until
the commencement of the Term only, and thereafter at the Premises, and if to
Landlord at the addresses designated in Subparagraph 1(a). Either party may
specify a different address for notice purposes by written notice to the other,
except that Landlord may in any event use the Premises as Tenant’s address for
notice purposes.


 


10.           BROKERS. Tenant warrants that it has had no dealings with any real estate
broker or agent in connection with the negotiation of this Lease, except the
Broker(s) (named in Subparagraph 1(c)). Tenant agrees to indemnify and defend
Landlord from any cost, expense or liability for any compensation, fee,
commission or charge claimed by any other party claiming by, through or on
behalf of Tenant with respect to this Lease.


 


11.           HOLDING OVER. Tenant shall vacate the Premises upon the
expiration or earlier termination of this Lease. Tenant shall reimburse
Landlord for and indemnify Landlord against all damages and liability which Landlord
incurs from Tenant’s delay in vacating the Premises, including, without
limitation, claims by and liability to any succeeding tenant founded on such
delay and any attorneys’ fees and costs. If Tenant does not vacate the Premises
upon the expiration or earlier termination of the Lease and Landlord thereafter
accepts rent from Tenant, Tenant’s occupancy of the Premises shall be a “month-to-month”
tenancy, subject to all of the terms of this Lease applicable to a
month-to-month tenancy, except that the Monthly Basic Rent then in effect shall
be increased by one hundred percent (100%).


 


12.           TAXES ON TENANT’S PROPERTY.


 


(a)           Tenant shall be liable for and shall pay, at least ten (10) days
before delinquency, all taxes levied against any personal property or trade
fixtures placed by Tenant in or about the Premises. If any such taxes on Tenant’s
personal property or trade fixtures are levied against Landlord or Landlord’s
property or if the assessed value of the Premises is increased by the inclusion
therein of a value placed upon such personal property or trade fixtures of
Tenant and if Landlord, after written notice to Tenant, pays the taxes based
upon such increased assessment, which Landlord shall have the right to do
regardless of the validity thereof, but only under proper protest if requested
by Tenant, Tenant shall, upon demand, repay to Landlord the taxes so levied
against Landlord, or the portion of such taxes resulting from such increase in
the assessment.


 


(b)           If the Tenant Improvements in the Premises, whether installed by
Landlord or Tenant, or paid for by Landlord or Tenant and whether or not
affixed to the real property so as to become a part thereof, are assessed for real
property tax purposes at a valuation higher than the valuation at which tenant
improvements conforming to Landlord’s Standards (as defined in the Work Letter
Agreement) for other space in the Building are assessed, then the real property
taxes and assessments levied against the Building by reason of such higher
assessed valuation shall be deemed to be taxes levied against personal property
of Tenant and shall be governed by the provisions of Subparagraph 12(a), If the
records of the County Assessor are not available or sufficiently detailed to
serve as a basis for determining whether the Tenant Improvements are subject to
a higher valuation than improvements conforming to Landlord’s Standards, the
actual cost of construction shall be used.


 


(c)           Any assessment, tax, fee, levy or charge allocable to or measured by
the area of the Premises or by any payments to be made by Tenant under this
Lease, including, without limitation, any gross 


 




	
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income tax or excise tax levied by any governmental agency or political
subdivision thereof with respect to the receipt of rent or other payments under
a lease, or upon or with respect to the possession, leasing, operating,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises, or any portion thereof, shall be deemed to be taxes levied against
personal property of Tenant and shall be governed by the provisions of
Subparagraph 12(a).


 


13.           CONDITION OF PREMISES.


 


(a)           Except as expressly set forth in this Lease (including construction of
the Tenant Improvements in accordance with the terms and conditions of the Work
Letter Agreement), Landlord’s lease of the Premises to Tenant shall be on an “AS IS” basis
without representations or warranties express or implied, and Tenant’s taking
of possession of the Premises shall conclusively establish that the Premises
and the Building were in satisfactory condition at the time of that possession (excluding
latent defects and those items normally associated with a “punch list”). Tenant
accepts that from time to time there may be construction and improvement work
by Landlord on other space in the Building and to the Common Areas and other
portions of the Project, and that such work may cause intermittent noise,
vibrations, or other temporary inconveniences; provided, however, Landlord will
take steps reasonably necessary and feasible to minimize inconveniences to
Tenant and Tenant’s employees and visitors.


 


(b)           Landlord warrants to Tenant that the Premises, the Tenant Improvements
to be completed pursuant to the Work Letter Agreement, the major building
systems serving the Premises including but not limited to the electrical,
lighting, plumbing and HVAC, shall be in good working order, for a period of
six months from the Commencement Date, and that Tenant will not incur any
costs, other than Landlord’s normal and routine maintenance activities, for
repair, replacement or modification of the major building systems. Landlord
further warrants that the second floor HVAC has adequate capacity to cool and
heat the second floor subsequent to the completion of the Tenant Improvements
on that floor. If a non-compliance with said warranty exists as of the delivery
of possession of Premises to Tenant, Landlord shall, except as otherwise
provided in this Lease, promptly after receipt of written notice from Tenant
setting forth with specificity the nature and extent of such non-compliance,
rectify same at Landlord’s expense. If Tenant does not give Landlord written
notice of a non-compliance with this warranty within one hundred eighty (180)
days after the Commencement Date, correction of that non-compliance shall be
the obligation of Tenant at Tenant’s sole cost and expense.


 


14.           ALTERATIONS.


 


(a)           Tenant shall make no alterations, additions, repairs or improvements to
the Premises (collectively, “Alteration(s)”)
except as expressly permitted by this Paragraph 14. Tenant shall have no right
to make any Alterations to the structural portions of the Building, which shall
include the foundation, floor/ceiling slabs, roof, curtain walls, exterior
glass and mullions, columns, beams, shafts, stairs, stairwells, escalators,
plazas, artwork, sculptures, washrooms, mechanical, electrical and telephone
closets and all Common Areas and public areas and the mechanical, electrical,
life safety, plumbing, sprinkler systems and HVAC systems (collectively, “Building Structure and Systems”).   Landlord’s consent to any other Alteration (i.e.,
other than to an Alteration to any portion or component of the Building
Structure and Systems or that, in Landlord’s sole and absolute discretion,
could adversely affect any portion of the Building Structure and Systems) shall
not be unreasonably withheld. Notwithstanding the other provisions of this
Paragraph 14, Tenant may install normal office decorations (e.g., paintings) in
the Premises without obtaining Landlord’s consent.


 


(b)           Landlord may condition its consent to any type of Alteration (including
any Alterations Tenant shall make, or shall cause to be made, under the Work
Letter Agreement) on such requirements as Landlord may deem necessary in its
subjective, good faith discretion, including without limitation; (i) the
manner in which the work is to be done, (ii) the right of approval over
the entity which shall perform, or contract to perform, the work (which
approval may be withheld if, among other things, that entity is not properly
licensed under all applicable laws or if Landlord deems the insurance carried
by that entity to be inadequate), (iii) the times during which the work is
to be accomplished, (iv) the issuance at Tenant’s sole cost of a
performance or labor and material payment 


 




	
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bond ensuring lien-free completion of the proposed Alterations, (v) delivery
to Landlord of preliminary and final sets of plans for the proposed
Alterations, or (vi) modification of the proposed Alterations to conform
to Landlord’s subjective opinion about the appearance of the proposed
Alterations. Tenant shall give Landlord at least ten (10) business days
prior written notice of the expected commencement date of any work related to
the Premises. Tenant shall be responsible for obtaining all permits required by
law for all work done by Tenant under this Lease (including work Tenant
performs, or shall cause to be performed, under the Work Letter Agreement) and
Tenant warrants that such work shall comply with all applicable governmental
laws, codes, or ordinances, including, without limitation, the ADA).


 


(c)           Upon the expiration or earlier termination of this Lease, (i) all
or any part of the Alterations to or in connection with the Premises under the
Work Letter Agreement shall become the property of Landlord and remain on and
be surrendered with the Premises, and (ii) all or any part of any
Alterations to or in connection with the Premises under this Paragraph 14 other
than those Alterations performed under the Work Letter Agreement shall, at the
option of Landlord, either (a) become the property of Landlord and remain
and be surrendered with the Premises, or (b) be removed from the Premises
and the Premises restored to their condition immediately before those
Alterations were made, all by and at the expense of Tenant.


 


(d)           All articles of personal property and all business and trade fixtures,
machinery and equipment, furniture and movable partitions owned by Tenant (“Tenant’s Effects”) shall be and remain the property of
Tenant and may be removed by Tenant at any time during the Term when Tenant is
not in default under this Lease. If Tenant fails to remove all of Tenant’s
Effects from the Premises upon termination of this Lease, Landlord may, at its
option, remove Tenant’s Effects and store Tenant’s Effects without liability to
Tenant for loss of Tenant’s Effects. Tenant agrees to pay Landlord upon demand
any and all expenses incurred by Landlord in removing Tenant’s Effects,
including court costs, attorneys’ fees and storage charges on Tenant’s Effects,
for any length of time that Tenant’s Effects shall be in Landlord’s possession.
Landlord may, at its option, without notice, sell Tenant’s Effects, or any of
the same, at a private sale and without legal process, for such price as
Landlord may obtain, and apply the proceeds of such sale to any amounts due
under this Lease from Tenant to Landlord and to the expenses incident to the
removal and sale of Tenant’s Effects. Tenant waives the provisions of California
Civil Code sections 1980-1991.


 


15.           REPAIRS.


 


(a)           Except as provided in Paragraph 13(b), Tenant shall keep, maintain and
preserve the Premises in first-class condition and repair, and shall, when and
if needed, at Tenant’s sole cost and expense, make all repairs to the Premises
and every part thereof, including, without limitation, the interior surfaces of
the ceilings, walls and floors, all doors, all interior windows, all
non-Standard (as defined in the Work Letter Agreement) plumbing, pipes, electrical
wiring, light fixtures and bulbs, switches, furnishings, signs and special
items and equipment installed by or at the expense of Tenant. Landlord shall
have no obligation to alter, remodel, improve, repair, decorate or paint the
Premises or any part thereof. Tenant and Landlord affirm that Landlord has made
no representations to Tenant respecting the condition of the Premises, the
Building, the Common Areas, or the Project except as specifically set forth in
this Lease.


 


(b)           Anything contained in Paragraph 15(a) to the contrary
notwithstanding, Landlord shall repair and maintain the structural portions of
the Building and the Building Standard plumbing, heating, ventilating, air
conditioning and electrical systems, unless such maintenance and repairs are
required in part or in whole by the act, neglect or omission of Tenant, its
agents, servants, employees or invitees, in which case Tenant shall pay to
Landlord, as additional rent, the reasonable cost of such maintenance and
repairs. Landlord shall not be liable for any failure to make any such repairs
or to perform any maintenance unless such failure shall persist for an
unreasonable time after written notice of the need of such repairs or
maintenance is given to Landlord by Tenant, Except as provided in Paragraph 23,
there shall be no abatement of rent and no liability of Landlord by reason of
any injury to or interference with Tenant’s business arising from the making of
any repairs, alterations or improvements in or to any portion of the Building,
the Premises, the Common Areas, or the Project or in or to fixtures,
appurtenances and equipment therein. Tenant waives the right to make repairs at
Landlord’s expense under any law,


 




	
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statute or ordinance now or hereafter in effect. No provision of this
Lease shall be construed as obligating Landlord to perform any repairs,
alterations or decorations except as otherwise expressly provided under this
Lease.


 


(c)           As between Landlord and Tenant, Landlord is recognized as the owner of
all data, telephone, cable, and any fiber optic wiring serving the Premises
(collectively, the “Building Cable”)
whether installed as of or following the Commencement Date. Tenant shall be
responsible for the maintenance of all Building Cable. Tenant’s access to the
Common Areas for the purposes of installing and maintaining the Building Cable
is conditioned upon Landlord’s approval of Tenant’s service contract and
appropriate insurance policies being obtained by the entity installing the
Building Cable. Landlord shall not be responsible and shall have no liability
for interruption in or failures of telephone or electronic data transmission
services. Tenant shall abide by all reasonable, written and nondiscriminatory rules and
regulations hereafter promulgated by Landlord regarding access to the Building
Cable. Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all claims, losses, liabilities, costs and expenses, including,
without limitation, actual attorneys’ fees, incurred by Landlord and related to
Tenant’s access to or work performed in connection with the Building Cable.
Upon the expiration or earlier termination of this Lease, Tenant shall remove
all Building Cable unless Landlord requires Tenant to leave all or any portion
of such Building Cable in place, in which event, Tenant shall leave such
Building Cable clearly labeled with all connectors intact and operable.


 


(d)           At Landlord’s election as part of Operating Expenses, Landlord may elect
from time to time to procure and keep in effect, as part of Operating Expenses,
the following maintenance and service contracts: (i) landscaping, (ii) heating,
ventilation and air conditioning equipment, (iii) boiler, fired or unfired
pressure vessels, (iv) fire sprinkler and/or standpipe and hose or other
automatic fire extinguishing systems, including fire alarm and/or smoke
detection systems, (v) roof covering and drain maintenance, (vii) asphalt
and parking lot maintenance, and (viii) janitorial service for the Project
and the Premises.


 


16.           LIENS. Tenant shall not permit any mechanics’, materialmens’ or other liens
to be filed against any portion of the Building or the Project or against
Tenant’s leasehold interest in the Premises. Landlord shall have the right at
all reasonable times to post and keep posted on the Premises any notices which
it deems necessary for protection from such liens. If any such liens are filed,
Landlord may, without waiving its rights and remedies based on such breach of
Tenant and without releasing Tenant from any of its obligations, cause such
liens to be released by any means it shall deem proper, including payments in
satisfaction of the claim giving rise to such lien. Tenant shall pay to
Landlord at once, upon notice by Landlord, any sum paid by Landlord to remove
such liens, together with interest on that sum at (a) the maximum rate
permitted by then-existing usury law, if applicable, or (b) if the then-
existing usury law is not applicable, one and one-half percent (1-1/2%) per
month (“Lease Interest Rate”) from the date of
Landlord’s payment.


 


17.           ENTRY BY LANDLORD. Landlord reserves and shall at all times
have the right, with Landlord making commercially reasonable efforts to provide
Tenant at least 24 hour notice, to enter the Premises to inspect the same, to
supply janitor service and any other service to be provided by Landlord to
Tenant under this Lease, to show the Premises to prospective purchasers or
tenants, to post notices of non-responsibility, to alter, improve or repair the
Premises or any other portion of the Building, without any such act being
deemed an eviction of Tenant and without abatement of rent. Landlord shall have
the right, but not the obligation, to enter upon the Premises and into the
Building for the purpose of performing any obligation on Tenant’s part to be
performed following a Tenant default pursuant to Paragraph 25, below, and
Tenant shall pay all costs incurred by Landlord at the Lease Interest Rate.
Landlord may, in order to carry out all such purposes, erect scaffolding and
other necessary structures where reasonably required by the character of the
work to be performed. Tenant waives any claim for damages for any injury or
inconvenience to or interference with Tenant’s business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss in, upon and about the
Premises resulting from any entry permitted under this paragraph. Landlord
shall at all times have and retain a key with which to unlock all doors in the
Premises, excluding Tenant’s vaults and safes. Landlord shall have the right to
use any and all means which Landlord may deem proper to open any door in an
emergency in order to obtain entry to or within the Premises. Any entry to the
Premises obtained by Landlord by any means shall not be deemed to be a forcible
or unlawful entry into the


 




	
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Premises, or an eviction of Tenant from the Premises or any portion
thereof, and any damages caused on account thereof shall be paid by Tenant if
that entry was caused by the acts or omissions of Tenant, its agents or
contractors.


 


18.           UTILITIES AND SERVICES. Tenant represents that it is familiar with
the standards for all utilities servicing the Premises, including, without
limitation, the capacity of the feeders to the Building and the risers and
wiring installations and standards set forth in attached Exhibit D.
Tenant shall contract directly with all utility companies and similar providers
for utilities and services to the Premises and pay directly for all such
services (which shall include, without limitation, electrical, cable and other
electronic data transmission services), and Landlord shall have no obligation
to provide any such services. Notwithstanding the foregoing, any installation
of utility lines, including, without limitation, Building Cable whether or not
through any existing conduits or risers, and any trenching over the Premises to
install wiring or cable, whether or not over existing utility easements, shall
be considered an alteration to the Building Structure and Systems. Unless
directly caused by the gross active negligence or the intentional misconduct of
Landlord, the interruption of any utilities or services to the Building shall
not result in any liability of Landlord, Tenant shall not be entitled to any
abatement or reduction of rent by reason of such failure (whether such failure
affects HVAC services or otherwise), no eviction of Tenant shall result from
such failure, and Tenant shall not be relieved from the performance of any
covenant or agreement in this Lease because of such failure. Any such
interruption shall include, without limitation, failure of services caused by
(i) accident, breakage or repairs; (ii) strikes, lockouts or other
labor disturbance or labor dispute of any character; (iii) governmental
regulation, moratorium or other governmental action; (iv) inability
despite the exercise of reasonable diligence to obtain electricity, water or
fuel; or (v) any other cause beyond Landlord’s reasonable control.


 


19.           BANKRUPTCY. If Tenant shall file a petition in bankruptcy under any provision of
the Bankruptcy Code as then in effect, or if Tenant shall be adjudicated a
bankrupt in involuntary bankruptcy proceedings and such adjudication shall not
have been vacated within thirty (30) days from the date thereof, or if a
receiver or trustee of Tenant’s property shall be appointed and the order appointing
such receiver or trustee shall not be set aside or vacated within thirty (30)
days after the entry thereof, or if Tenant shall assign Tenant’s estate or
effects for the benefit of creditors (collectively, “Acts of
Insolvency”), or if this Lease shall, by operation of law or
otherwise, pass to any person or persons other than Tenant, then in any such
event Landlord may terminate this Lease, if Landlord so elects, with or without
notice of such election and with or without entry or action by Landlord. In
such case, notwithstanding any other provisions of this Lease, Landlord, in
addition to any and all rights and remedies allowed by law or equity, shall,
upon such termination, be entitled to recover damages in the amount provided in
Subparagraph 25(b), and neither Tenant nor any person claiming through or under
Tenant or by virtue of any statute or order of any court shall be entitled to
possession of the Premises but shall immediately surrender the Premises to
Landlord. Nothing contained herein shall limit or prejudice the right of
Landlord to recover, by reason of any such termination, damages equal to the
maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such damages are greater, equal to or less than the amount of damages
otherwise recoverable under the provisions of this Paragraph 19.


 


20.           INDEMNIFICATION AND EXCULPATION OF LANDLORD.


 


(a)           Tenant shall indemnify, defend and hold Landlord and its officers,
directors, shareholders, agents, employees, and contractors (the “Landlord Parties” or, individually, a “Landlord
Party”) harmless from all damages, costs and expenses (including
attorneys’ fees), judgments, loss, damage, injury, liability, claims and losses
(collectively, “Claims”) arising from Tenant’s
use of the Premises or the conduct of its business or from any activity, work
or thing done, permitted or suffered by Tenant in or about the Premises, the
Building, the Common Areas, any portion thereof, or any other part of the
Project, Tenant shall further indemnify, defend and hold the Landlord Parties
harmless from all Claims arising from any breach or default in the performance
of any obligation to be performed by Tenant under this Lease, or arising from
any act, neglect, fault or omission of Tenant or of its agents, employees, or
contractors, and from and against all Claims incurred in, or arising out of,
such claim or any action or proceeding brought thereon. In case any action or
proceeding shall be brought against the Landlord Parties or any of them by
reason of any such Claim, Tenant, upon notice from Landlord, shall defend the
same at Tenant’s expense by counsel approved in writing by Landlord, Tenant, as
a material part of the consideration to


 




	
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Landlord, hereby assumes all risk of damage to property or injury to
persons in, upon or about the Premises from any cause whatsoever except that
which is caused by the gross active negligence or willful misconduct of the
Landlord Parties or any of them or Landlord’s breach of this Lease. Tenant
hereby waives all its Claims in respect thereof against Landlord.


 


(b)           Neither Landlord nor any Landlord Party shall be liable to Tenant or its
partners, directors, officers, contractors, agents, employees, invitees,
sublessees or licensees for any loss, injury or damage to Tenant or to any
other person, or to its or their property, including, without limitation, if
such loss, injury or damage arises out of or in connection with Landlord’s
active or passive negligence except to the extent such loss, injury or damage
is caused by the gross active negligence or willful misconduct of Landlord or a
Landlord Party in the operation or maintenance of the Premises or the Building.
Further, neither Landlord nor any Landlord Party shall be liable (i) for
any such damage caused by other tenants or persons in or about the Building; or
(ii) for consequential or punitive damages arising out of any loss of the
use of the Premises or any equipment or facilities therein by Tenant or any
person claiming through or under Tenant.


 


21.           DAMAGE TO TENANT’S PROPERTY. Subject to the provisions of Paragraph 20,
neither Landlord nor any Landlord Party shall be liable for (i) any damage
to any property entrusted to employees of the Building, (ii) loss or
damage to any property by theft or otherwise, or (iii) any injury or
damage to persons or property resulting from fire, explosion, falling plaster
or other improvements, steam, gas, electricity, water or rain which may leak
from any part of the Building or from any latent defect in the Premises or in
the Building or any portion thereof, including, without limitation, from the pipes,
appliances or plumbing work in the Building or from the roof, street or
subsurface or from any other place or resulting from dampness or any other
cause whatsoever. Except as expressly provided otherwise in this Lease, neither
Landlord nor any Landlord Party shall be liable for interference with light or
other property rights. Tenant shall give prompt notice to Landlord in case of
fire or accidents in the Premises or in the Building or of defects in the
Premises or the Building or in any fixtures or equipment.


 


22.           TENANT’S INSURANCE.


 


(a)           Tenant shall, during the Term and any other period of occupancy, at its
sole cost and expense, keep in full force the following insurance;


 


(i)            Standard form property insurance insuring
against all-risk perils (“All-Risk”) and
sprinkler leakage. This insurance policy shall be upon all property owned by
Tenant, for which Tenant is legally liable or that was installed at Tenant’s
expense, and which is located in the Building including, without limitation,
furniture, fittings, installations, fixtures (other than tenant improvements
installed by Landlord), and any other personal property, in an amount not less
than the full replacement cost thereof. If there is a dispute as to the amount
which comprises full replacement cost, the decision of Landlord or any
mortgagees of Landlord shall be conclusive. This insurance policy shall also
cover direct or indirect loss of Tenant’s earnings attributable to Tenant’s
inability to use fully or obtain access to the Premises or Building in an
amount which will properly reimburse Tenant. Such policy shall name Landlord
and any mortgagees of Landlord as insured parties, as their respective
interests may appear.


 


(ii)           Commercial General Liability Insurance insuring Tenant against any liability
arising out of the lease, use, occupancy or maintenance of the Premises and all
areas appurtenant thereto. Such insurance shall be in the amount of $2,000,000
Combined Single Limit for injury to, or death of one or more persons in an
occurrence, and for damage to tangible property in an occurrence. The policy
shall insure the hazards of the Premises and Tenant’s operations thereon,
independent contractors, and contractual liability (covering the indemnity
contained in Paragraph 20), and shall (1) name Landlord and Landlord’s
lender(s) and mortgagee(s) as additional insureds, (2) contain a
cross-liability provision, and (3) contain a provision that the insurance
provided Landlord under this Subparagraph 22(a)(ii) shall be primary and
non-contributing with any other insurance available to Landlord.


 




	
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(iii)          Workers’ Compensation and Employer’s Liability insurance as required by
state law.


 


(iv)          Business interruption insurance coverage for all Basic Monthly Rent and
Operating Expenses for a period of at least twelve (12) months.


 


(v)           Any other form or forms of insurance which Tenant or Landlord or any mortgagees
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.


 


(b)           All policies to be procured by Tenant shall be written in a form
satisfactory to Landlord and shall be maintained with insurance companies
holding a General Policyholders Rating of “A” and a Financial Rating of “X” or
better, as set forth in the most current issue of Best’s Insurance Guide.
Within ten (10) days after the execution of this Lease and before
occupying the Premises, Tenant shall deliver to Landlord copies of policies or
certificates evidencing the existence of the amounts and forms of coverage
satisfactory to Landlord. No such policy shall be cancelable or reducible in
coverage without at least thirty (30) days prior written notice to Landlord.
Tenant shall, at least ten (10) days before the expiration of such
policies, furnish Landlord with renewals or “binders” thereof, or Landlord may
order such insurance and charge the cost thereof to Tenant as additional rent.
If Landlord obtains any insurance that is the responsibility of Tenant under
this Paragraph 22, Landlord shall deliver to Tenant a written statement setting
forth the cost of any such insurance and showing in reasonable detail the
manner in which it has been computed, and Tenant shall reimburse Landlord such
amount at the Lease Interest Rate until paid.


 


(c)           During the Term, Landlord shall insure the Building (excluding any
property which Tenant is obligated to insure under Subparagraphs 22(a)) against
damage with All-Risk insurance and public liability insurance, all in such
amounts and with such deductibles as Landlord considers appropriate. Landlord
may, but shall not be obligated to, obtain and carry earthquake insurance,
flood insurance, rental interruption insurance, or any other form or forms of
insurance as it or Landlord’s mortgagees may determine advisable. Tenant
acknowledges that Tenant’s insurance shall in any event provide primary
coverage and that it has no right to receive any proceeds from any insurance policies
carried by Landlord.


 


(d)           Tenant will not keep, use, sell or offer for sale in or upon the
Premises any article which may be prohibited by any insurance policy
periodically in force covering the Building. If Tenant’s use of the Premises,
whether or not Landlord has consented to the same, results in any increase in
premiums for the insurance periodically carried by Landlord with respect to the
Building, Tenant shall pay any such increase in premiums as additional rent
within ten (10) days after being billed therefor by Landlord. In
determining whether increased premiums are a result of Tenant’s use of the
Premises, a schedule issued by the organization computing the insurance
rate on the Building or the Tenant Improvements showing the various components
of such rate shall be conclusive evidence of the several items and charges
which make up such rate. Tenant shall promptly comply with all reasonable
requirements of the insurance authority or any present or future insurer
relating to the Premises.


 


(e)           If any of Landlord’s insurance policies shall be canceled or
cancellation shall be threatened or the premium or coverage thereunder changed
or threatened to be changed in any way because of the use of the Premises or
any part thereof by Tenant or any assignee or subtenant of Tenant or by anyone
Tenant permits on the Premises and, if Tenant fails to remedy the condition
giving rise to such threatened or actual cancellation, or threatened or actual
change in coverage or premiums, then, within forty-eight (48) hours after
notice thereof, Landlord may, at its option, either terminate this Lease or
enter upon the Premises and attempt to remedy such condition, and Tenant shall
promptly pay the cost thereof to Landlord as additional rent. Landlord shall
not be liable for any damage or injury caused to any property of Tenant or of
others located on the Premises resulting from such entry. If Landlord is unable
or elects not to remedy such condition, then Landlord shall have all of the
remedies for a Tenant default provided for in this Lease.


 


(f)            All policies of insurance required hereunder
shall include a clause or endorsement denying the insurer any rights of
subrogation against the other party to the extent rights have been waived by
the 


 




	
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insured before the occurrence of injury or loss. Landlord and Tenant
waive any rights of recovery against the other for injury or loss due to
hazards covered by policies of insurance containing such a waiver of
subrogation clause or endorsement to the extent of the injury or loss covered
thereby.


 


23.           DAMAGE OR DESTRUCTION.


 


(a)           If the Project, Building, or the Premises is damaged by fire or other
perils, Landlord shall:


 


(i)            In the event of total destruction, at Landlord’s
option, (x) as soon as reasonably possible after receipt of all insurance
proceeds, approval by local authorities of any and all required final building
plans and specifications and issuance of all required building permits and
licenses, commence repair, reconstruction and restoration of the Project,
Building, or the Premises and prosecute the same diligently to completion, in
which event this Lease shall remain in full force, or (y) within the later of (a) the
date of final insurance adjustment or (b) ninety (90) days after such
damage, elect not to so repair, reconstruct or restore the Project, Building,
or the Premises, in which latter event this Lease shall be deemed to have
terminated as of the date of such total destruction. However, if the time to
repair, reconstruct and restore the Project, Building, or Premises, as
reasonably determined by Landlord or Landlord’s contractor, is greater than
fifty (50%) percent of the time remaining in the Term of the Lease, then the
Lease shall be deemed to have terminated as of the date of such total
destruction. In any event, Landlord shall give Tenant written notice of its
intention within ninety (90) days after the date of total destruction.


 


(ii)           In the event of a partial destruction of the Project or Building to an
extent not exceeding twenty-five percent (25%) of the full insurable value of
the Project or Building or the Premises, and if the damage thereto is such that
the Project, Building, or the Premises may be repaired, reconstructed or
restored within a period of ninety (90) days from the date of such casualty,
and if Landlord has received insurance proceeds sufficient to cover the cost of
such repairs, then Landlord shall commence and proceed diligently with the work
of repair, reconstruction and restoration of the Building or Premises and this
Lease shall continue in full force (it being understood and agreed that
Landlord shall not be required to repair, reconstruct, or restore the other
portions of the Project unless Tenant’s use of or access to the Premises will
be materially affected by Landlord’s election to not repair, reconstruct or
restore the damaged portion of the Project). If (i) such work of repair,
reconstruction and restoration shall require a period longer than ninety (90)
days after the date of the casualty or exceeds twenty-five percent (25%) of the
full insurable value of the Building, (ii) such partial destruction is not
insured, or (iii) insurance proceeds will not be sufficient to cover the
entire cost of such repairs, then Landlord either may elect to so repair,
reconstruct or restore and the Lease shall continue in full force or Landlord
may elect not to repair, reconstruct or restore and the Lease shall be deemed
to have terminated as of the date of such partial destruction. Under any of the
conditions of this Subparagraph 23(a)(ii), Landlord shall give written notice
to Tenant of its intention within the later of (a) the date of final
insurance adjustment or (b) ninety (90) days after the date of partial
destruction of the Project, Building, or Premises.


 


(b)           Except as provided otherwise in this Lease, upon any termination of this
Lease under any of the provisions of this Paragraph 23, the parties shall be
released without further obligation to the other from the date possession of
the Premises is surrendered to Landlord except for items which have previously
accrued and are then unpaid.


 


(c)           In the event of repair, reconstruction or restoration by Landlord as
provided in this Paragraph 23, the rent payable under this Lease shall be
abated proportionately to the degree to which Tenant’s use of the Premises is
impaired during the period of such repair, reconstruction or restoration;
provided that there shall be no abatement of rent if such damage is the result
of the negligence or intentional wrongdoing of Tenant or its agents, employees,
contractors or invitees. Tenant shall not be entitled to any compensation or
damages for (i) loss in the use of the whole or any part of the Premises
or (ii) any inconvenience or annoyance occasioned by such damage, repair,
reconstruction or restoration.


 


(d)           Tenant shall not be released from any of its obligations under this
Lease except to the extent and upon the conditions expressly stated in this
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contained in this Paragraph 23, if Landlord is delayed or prevented
from repairing or restoring the damaged Premises more than one (1) year
after the occurrence of such damage or destruction by reason of acts of God,
war, governmental restrictions, inability to procure the necessary labor or
materials, or other cause beyond the control of Landlord, Landlord, at its
option, may terminate this Lease, whereupon Landlord shall be relieved of its
obligation to make such repairs or restoration and Tenant shall be released
from its obligations under this Lease as of the end of the one-year period.


 


(e)           If Landlord is obligated to or elects to repair or restore as herein
provided, Landlord shall be obligated to make repair or restoration only of
those portions of the Building or the Premises which were originally provided
at Landlord’s expense including all Tenant Improvements as contained in the
Work Letter Agreement, and the repair and restoration of items, excluding the
Tenant Improvements as contained in the Work Letter Agreement, not provided at
Landlord’s expense shall be the obligation of Tenant.


 


(f)            Notwithstanding anything to the contrary
contained in this Paragraph 23, Landlord shall not have any obligation
whatsoever to repair, reconstruct or restore the Premises when the damage
resulting from any casualty covered under this Paragraph 23 occurs during the
last twelve (12) months of the Term. In the event Landlord elects not to repair
any such damage or destruction occurring during the last twelve (12) months of
the Term, then this Lease and the parties’ respective obligations hereunder
(other than those that by their nature survive Lease termination) shall
terminate.


 


(g)           The provisions of Civil Code Section 1932, Subsection 2, and Section 1933,
Subsection 4, which permit termination of a lease upon destruction of the
leased premises, are hereby waived by Tenant, and the provisions of this Lease
shall govern in case of such destruction. Except as provided otherwise in this
Lease, Tenant shall not be released from any of its obligations under this
Lease, the rent and other expenses payable by Tenant under this Lease shall not
abate, and Landlord shall have no liability to Tenant for any damage or destruction
to the Premises or the Building or any inconvenience or injury to Tenant by
reason of any maintenance, repairs, alterations, decoration, additions or
improvements to the Premises, Building, or Project.


 


24.           EMINENT DOMAIN.


 


(a)           If all of the Project, Building, or Premises, or such part thereof as
shall materially and adversely interfere with Tenant’s use and occupancy
thereof, shall be taken for any public or quasi-public purpose by any lawful
power or authority by exercise of the right of appropriation, condemnation or
eminent domain, or sold to prevent such taking, either party shall have the
right to terminate this Lease effective as of the date possession is required
to be surrendered to such authority. In addition, if such part of the Project
as shall, in Landlord’s sole discretion, materially affect the continuing
viability of the Project as an industrial project shall be taken for any public
or quasi-public purpose by any lawful power or authority by exercise of the
right of appropriation, condemnation or eminent domain, or sold to prevent such
taking, the Landlord shall have the right to terminate this Lease effective as
of the date possession is required to be surrendered to such authority. Tenant
shall not assert any claim against Landlord or the taking authority for any
compensation because of such taking, and Landlord shall be entitled to receive
the entire amount of any award without deduction for any estate or interest of
Tenant. If the amount of property or the type of estate taken does not
substantially interfere with the conduct of Tenant’s business, Landlord shall
be entitled to the entire amount of the award without deduction for any estate
or interest of Tenant, Landlord shall restore the Premises to substantially
their same condition before the partial taking to the extent Landlord receives
condemnation proceeds (with any deficiency to be paid by Tenant as a condition
to Landlord’s obligation to restore). Notwithstanding the foregoing, Tenant
shall have the right to proceed against the condemning authority for any
damages, including rent paid to Landlord, during the time Tenant is deprived of
the use of the Premises on account of such taking and restoration, and nothing
contained in this Paragraph shall be deemed to give Landlord any interest in
any award made to Tenant for the taking of personal property and fixtures
belonging to Tenant. Rent during any such taking and restoration shall abate
only to the proportionate extent of Tenant’s inability to use the Premises.


 




	
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(b)           In the event of taking of the Premises or any part thereof for temporary
use, (i) this Lease shall be and remain unaffected thereby and rent shall
not abate except to the proportionate extent of Tenant’s inability to use the
Premises, and (ii) Tenant shall be entitled to receive for itself such
portion or portions of any award made for such use with respect to the period
of the taking which is within the Term, provided that if such taking shall
remain in force at the expiration or earlier termination of this Lease, Tenant
shall then pay to Landlord a sum equal to the reasonable cost of performing
Tenant’s obligations under Subparagraph 14(c) with respect to surrender of
the Premises and upon such payment shall be excused from such obligations. For
purpose of this Subparagraph 24(b), a temporary taking shall be defined as a
taking for a period of 270 days or less. Tenant expressly waives the benefits
of any statute now or hereafter in effect which would permit Tenant to
terminate or seek termination of this Lease in the event of condemnation,
including, without limitation, California Code of Civil Procedure sections
1265.110, 1265.120, and 1265.130.


 


25.           DEFAULTS AND REMEDIES.


 


(a)           The occurrence of any one or more of the following events shall
constitute a default hereunder by Tenant:


 


(i)            Abandonment of the Premises by Tenant.
Notwithstanding the provisions of Civil Code Section 1951.3, “abandonment” means any absence by Tenant from the Premises
for seven (7) days or longer while in default of any provision of this
Lease.


 


(ii)           The failure by Tenant to make any payment of rent or additional rent or
any other payment required to be made by Tenant under this Lease, as and when
due, provided that Tenant may cure such default by making such payment to
Landlord within three (3) days after written notice thereof from Landlord
to Tenant; provided, however, that any such notice shall be in lieu of, and not
in addition to, any notice required under Code of Civil Procedure Section 1161
regarding unlawful detainer actions.


 


(iii)          The failure by Tenant to observe or perform any of the express or
implied covenants or provisions of this Lease to be observed or performed by
Tenant, other than as specified in Subparagraphs 25(a)(i) or (ii),
provided that Tenant may cure such default by curing such failure within ten (10) business
days after written notice thereof from Landlord to Tenant. Any such notice
shall be in lieu of, and not in addition to, any notice required under Code of
Civil Procedure Section 1161 regarding unlawful detainer actions. If the
nature of Tenant’s default is such that it is reasonably capable of being cured
but more than ten (10) days are required for its cure, then Tenant shall
be deemed to have cured such default if Tenant shall commence such cure within
the ten (10) day period and thereafter diligently prosecutes such cure to
completion, provided further that such completion shall occur not later than
sixty (60) days from the date of such notice from Landlord.


 


(iv)          (1) Acts of Insolvency; or (2) the attachment, execution or
other judicial seizure of substantially all of Tenant’s assets located at the
Premises or of Tenant’s interest in this Lease, provided that such default
shall be deemed to be cured where such seizure is discharged within thirty (30)
days.


 


(v)           The death, incapacity or Act of Insolvency of any Guarantor (as defined
in Paragraph 56 below) or the termination, cancellation or anticipatory breach
or repudiation in whole or in part of any Guaranty (as also defined in
Paragraph 56, below).


 


(vi)          The discovery by Landlord that any financial statement given to Landlord
by Tenant, or its successor in interest, or by any Transferee (defined below)
or sublessee pursuant to a Transfer or sublease, or by any Guarantor, is
materially false.


 


(vii)         Any breach or repudiation by any Guarantor of the provisions of, or
obligations of such Guarantor under, any guaranty of this Lease.


 




	
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(b)           If any such default by Tenant occurs, in addition to any other remedies
now or later available to Landlord at law or in equity, Landlord can terminate
Tenant’s right to possession of the Premises and terminate this Lease and all
rights of Tenant under this Lease. No act by Landlord other than giving notice
thereof to Tenant shall terminate this Lease, Upon termination, 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
the amount of such rental loss that 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 that Tenant proves could be reasonably avoided; plus


 


(iv)          any other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform Tenant’s obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom.


 


As used in Subparagraphs 25(b)(i) and (ii), the “worth at the time of award” is computed by allowing
interest at the Lease Interest Rate. As used in Subparagraph 25(b)(iii), the “worth at the time of award” is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).


 


(c)           If any such default by Tenant occurs, Landlord may utilize the remedy
described in California Civil Code Section 1951.4 (which says landlord may
continue the lease in effect after a tenant’s breach and abandonment and
recover rent as it becomes due, if tenant has the right to sublet or assign
subject to reasonable limitations).


 


(d)           If an abandonment of the Premises by Tenant occurs or if Landlord elects
to reenter as provided above or shall take possession of the Premises pursuant
to legal proceeding or pursuant to any notice provided by law, then if Landlord
does not elect to terminate this Lease as provided above, Landlord may from
time to time, without terminating this Lease, either recover all rent as it
becomes due or relet the Premises or any part thereof for the Term on terms and
conditions as Landlord in its sole discretion may deem advisable with the right
to make alterations and repairs to the Premises.


 


If Landlord elects to so relet, then rentals received by Landlord from
that reletting shall be applied: first, to the payment of any indebtedness
other than rent due under this Lease from Tenant to Landlord; second, to the
payment of any cost of such reletting; third, to the payment of the cost of any
alterations and repairs to the Premises; fourth, to the payment of rent due and
unpaid under this Lease; and the residue, if any, shall be held by Landlord and
applied to payment of future rent as the same may become due and payable under
this Lease. Should that portion of such rentals received from such reletting
during any month, which is applied to the payment of rent under this Lease, be
less than the rent payable during that month by Tenant under this Lease, then
Tenant shall pay such deficiency to Landlord immediately upon demand therefor
by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as ascertained, any costs and expenses incurred
by Landlord in such reletting or in making such alterations and repairs not
covered by the rentals received from such reletting.


 


(e)           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. Without limitation, Tenant
acknowledges that Tenant’s failure to timely comply with the requirements of
Paragraphs 27, 28, 50 and 51 may result in a lender refusing to loan Landlord
funds or a buyer


 




	
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refusing to purchase the Building on favorable terms (or at all),
causing Landlord substantial monetary damages. No waiver of any default of
Tenant under this Lease shall be implied from any acceptance by Landlord of any
rent or other payments due under this Lease (whether that acceptance occurs
before or after (i) a default has occurred or (ii) a three-day or
other notice of default has been given) or from any omission by Landlord to
take any action on account of such default if such default persists or is
repeated, and no express waiver shall affect defaults other than as specified
in the waiver. The consent or approval of Landlord to or of any act by Tenant
requiring Landlord’s consent or approval shall not be deemed to waive or render
unnecessary Landlord’s consent or approval to or of any subsequent similar acts
by Tenant.


 


(f)            Landlord shall be in default in the
performance of any obligation required to be performed by Landlord under the
Lease if Landlord has failed to perform such obligation within thirty (30) days
after actual receipt of written notice from Tenant specifying in detail
Landlord’s failure to perform; provided, however, that if the nature of
Landlord’s obligation is such that more than thirty (30) days are required for
Landlord’s performance, Landlord shall not be deemed in default if Landlord
commences such performance within such thirty (30) day period and thereafter
diligently pursues the same to completion. Upon any such default by Landlord,
Tenant may exercise any of its rights provided at law for a default by a
landlord under a commercial lease; provided, however, in no event shall Tenant
have the right to terminate this Lease as a result of Landlord’s default, and
Tenant’s remedies shall be limited to damages and/or injunctive relief.


 


(g)           If this Lease provides for postponement or suspension of monthly rental
payments or for one or more periods of “free” rent or other rent concessions
(collectively, “Abated Rent”), Tenant shall be
credited with having paid all of the Abated Rent on the expiration of the Term
only if Tenant has (i) occupied all or substantially all of the Premises
for the entire Term, and (ii) fully, faithfully and punctually performed
all of Tenant’s obligations, including without limitation the payment of all
rent (other than the Abated Rent) and all other monetary obligations, and has
surrendered the Premises in the condition required by this Lease. Upon the
occurrence of a Tenant default (as set forth in this Paragraph 25), the Abated
Rent shall immediately become due and payable in full, and the Lease shall be
enforced as if there were no Abated Rent or other rent concession. In such
case, Abated Rent shall be calculated based on the full initial rent payable
under the Lease.


 


(h)           Landlord and Tenant waive all rights to a jury trial and agree that any
action or proceeding arising out of this Lease shall be heard by a court
sitting without a jury.


 


LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF
COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY UNDER THE
CONSTITUTIONS OF THE UNITED STATES AND THE STATE OF CALIFORNIA. EACH PARTY
EXPRESSLY AND KNOWINGLY WAIVES AND RELEASES ALL SUCH RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE
OTHER ON ANY MATTERS ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE,
TENANT’S USE OR OCCUPANCY OF THE PREMISES, OR ANY CLAIM FOR INJURY OR DAMAGE.


 


26.           ASSIGNMENT AND SUBLETTING.


 


(a)           Tenant shall not assign, encumber, or otherwise transfer (collectively, “Transfer”) all or any part of its interest in this Lease or
in the Premises or sublease all or any part of the Premises, or allow any other
person or entity to occupy or use all or any part of the Premises, without
obtaining Landlord’s prior written consent, which shall not be unreasonably
withheld, conditioned or delayed, as set forth below. Any Transfer or sublease
without Landlord’s prior written consent shall be voidable at Landlord’s
election and shall constitute a default. Notwithstanding the foregoing, Tenant
may sublease, but not Transfer its interest in this Lease, to any person or
entity that subleases less than ten (10%) percent of the Premises without first
obtaining Landlord’s written consent as contained herein. However, Tenant shall
not be entitled to sublease, in aggregate, more than the ten (10%) percent to
any multiple persons or entities, without first obtaining Landlord’s written
consent as contained herein.


 




	
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(b)           If Tenant is a partnership or a limited liability company, a withdrawal
or change, in one or more transactions, of partners or members owning in the
aggregate a fifty percent (50%) or more interest in the profits of the
partnership or limited liability company, or any transaction or event which
results in a change in control of the partnership or limited liability company,
or if Tenant is a corporation, any change or transfer in the aggregate of fifty
percent (50%) or more of its voting stock or beneficial interest to a single
entity or a group of affiliated entities, whether in one or more transactions,
shall constitute a Transfer and shall be subject to these provisions. If Tenant
is a corporation, partnership, or limited liability company a sale, encumbrance
or other transfer of fifty percent (50%) or more of its assets in the
aggregate, in one or more transactions, shall also be a Transfer under this
Lease and in addition shall be void as to Landlord without Landlord’s prior
written consent. No consent to a Transfer or sublease shall constitute a future
waiver of the provisions of this Paragraph 26.


 


(c)           Tenant shall notify Landlord in writing of Tenant’s intent to Transfer
or sublease all or part of this Lease or the Premises, the name of the proposed
assignee or sublessee, information concerning the financial responsibility of
the proposed assignee or sublessee and all the terms of the proposed Transfer
or subletting; within thirty (30) days after receipt of all such information
and all additional information requested by Landlord concerning the proposed
Transfer or sublease, Landlord shall elect by notice to Tenant (“Landlord’s Election”) to do one of the following: (a) consent
to such proposed Transfer or sublease; (b) refuse such consent, which
refusal shall be on reasonable grounds; or, (c) effective within sixty
(60) days after the date Landlord gives its notice, terminate this Lease, or in
the case of a partial sublease, terminate this Lease as to the portion of the
Premises proposed to be sublet. However, if within thirty (30) days after
Landlord gives Landlord’s Election of the alternative in clause “(C)” Landlord
receives written notice from Tenant that Tenant has rescinded its proposed
Transfer or sublease, this Lease shall continue in effect.


 


(d)           Each request for consent to a Transfer or subletting shall be in
writing, accompanied by information relevant to Landlord’s determination as to
the financial and operational responsibility and appropriateness of the
proposed assignee or sublessee including, but not limited to, the intended use
and/or required modification of the Premises, if any, together with a
non-refundable deposit of $1,000 or ten percent (10%) of the Monthly Basic Rent
applicable to the portion of the Premises which is the subject of the proposed
Transfer or sublease, whichever is greater, as reasonable consideration for
Landlord’s considering and processing the request for consent. Such fee shall
be applicable to Landlord’s processing fees and attorney’s fees pursuant to
subparagraph (f) below.


 


As conditions to granting its consent to any Transfer or sublease,
Landlord may require:


 


(i)            delivery to and approval by Landlord of a true
copy of the fully executed instrument of Transfer or sublease, and the delivery
to Landlord of an agreement executed by the transferee or sublessee in form and
substance satisfactory to Landlord and expressly enforceable by Landlord,
whereby the transferee or sublessee assumes and agrees to be bound by all of
the terms and provisions of this Lease and to perform all of the obligations of
Tenant under this Lease;


 


(ii)           that any sublease provide that it is subject and subordinate to this
Lease and to all mortgages, that Landlord may enforce the provisions of the
sublease, including collection of rent, and that in the event of termination of
this Lease for any reason, including without limitation a voluntary surrender
by Tenant, or in the event of any reentry or repossession of the Premises by
Landlord, Landlord may, at its option, either (x) terminate the sublease or (y)
take over all of the right, title and interest of Tenant, as sublessor, under
such sublease, in which latter case such sublessee shall attorn to Landlord,
but that nevertheless Landlord shall not (1) be liable for any previous act
or omission of Tenant under such sublease, (2) be subject to any defense
or offset previously accrued in favor of the sublessee against Tenant, or (3) be
bound by any previous modification of any sublease made without Landlord’s
written consent, or by any previous prepayment by sublessee of any rent or
other payments.


 


(e)           Landlord shall have the right to approve or disapprove any proposed
assignee or subtenant. In exercising such right of approval or disapproval,
Landlord shall be entitled to take into account any 


 




	
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fact or factor which Landlord reasonably deems relevant to such
decision, including but not necessarily limited to the following, all of which
are agreed to be reasonable factors for Landlord’s consideration:


 


(i)            The financial strength of the proposed
assignee or subtenant, including the adequacy of its working capital to pay all
expenses anticipated in connection with any proposed remodeling of the
Premises.


 


(ii)           The proposed use of the Premises by such proposed assignee or subtenant
and the compatibility of such proposed use within the quality and nature of the
other uses in the Project.


 


(iii)          Any violation which the proposed use by such proposed assignee or
subtenant would cause of any other rights granted by Landlord to other tenants
of the Project.


 


(iv)          Any adverse impact of the proposed use of the Premises by such proposed
assignee or subtenant upon the parking or other services provided for Project
tenants generally.


 


(v)           Whether there then exists any default by Tenant pursuant to this Lease
or any non-payment or non-performance by Tenant under this Lease which, with
the passage of time or the giving of notice, would constitute a default under
this Lease.


 


(vi)          The business reputation, character, history and nature of the business
of the proposed assignee or subtenant.


 


(vii)         Whether the proposed assignee or subtenant is a tenant or existing
subtenant, or is an affiliate of or associated with any tenant or existing
subtenant of the Project or is a person with whom Landlord has negotiated for
space in the Project during the twelve (12) month period ending with the date
Landlord receives notice of such proposed assignment or subletting.


 


(viii)        Whether the proposed assignee or subtenant is a governmental entity or
agency.


 


Moreover,
Landlord shall be entitled to be reasonably satisfied that each and every
covenant, condition or obligation imposed upon Tenant by this Lease and each
and every right, remedy or benefit afforded Landlord by this Lease is not
impaired or diminished by such assignment or subletting. Landlord and Tenant
acknowledge that the express standards and provisions set forth in this Lease
dealing with assignment and subletting, including those set forth in this
subparagraph (d) have been freely negotiated and are reasonable at the
date hereof taking into account Tenant’s proposed use of the Premises and the
nature and quality of the Building and Project. No withholding of consent by
Landlord for any reason deemed sufficient by Landlord shall give rise to any
claim by Tenant or any proposed assignee or subtenant or entitle Tenant to
terminate this Lease, to recover contract damages or to any abatement of rent.
In this connection, Tenant hereby expressly waives its rights under California
Civil Code Section 1995.310.


 


(f)            Whether or not Landlord shall consent to a
Transfer or sublease under the provisions of this Paragraph 26, (i) Tenant
shall pay Landlord’s processing fees and attorneys’ fees incurred in
determining whether or not to so consent, of which such costs and fees shall
not exceed Two Thousand Five Hundred Dollars ($2500.00) in total, per
occurrence, and (ii) Tenant shall not be relieved of any responsibility
under this Lease without Landlord’s express written release, which Landlord may
grant or withhold in its sole, subjective discretion. If Landlord shall consent
to any Transfer, Tenant shall pay to Landlord, as additional rent, one hundred
percent (100%) of all net sums or other consideration payable to and for the
benefit of Tenant by the transferee on account of the Transfer, as and when
such sums and other consideration are due and payable to or for the benefit of
Tenant (or, if Landlord so requires, and without any release of Tenant’s
liability for the same, Tenant shall instruct the transferee to pay such sums
and other consideration directly to Landlord). If in connection with any
proposed sublease Tenant receives net sums or other consideration, either
initially or over the term of the sublease, in excess of the rent called for
under this Lease or, in case of the sublease of a portion of the Premises, in
excess of such rent fairly allocable to such portion, after appropriate
adjustments to assure that all other payments called for under this 


 




	
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Lease are taken into account, Tenant shall pay to Landlord as additional
rent one hundred percent (100%) of the net sums or other consideration received
by Tenant promptly after its receipt. As used in this paragraph, “net sums or other consideration” shall include without
limitation the then fair value of any non-cash consideration and shall be
calculated after first deducting reasonable costs incurred by Tenant in
connection with the Transfer or sublease, including without limitation
commissions payable to a broker not affiliated with Tenant, space modification
costs in connection with the Transfer or sublease, reasonable legal costs, free
rent concessions to the transferee or sublessee, and lease take-over costs.
Landlord’s waiver of or consent to any Transfer or subletting shall not relieve
Tenant or any transferee or sublessee from any obligation under this Lease
whether or not accrued.


 


27.           SUBORDINATION. Unless Landlord or any beneficiary or
mortgagee with a lien on the Building or any ground lessor with respect to the
Building elects otherwise as provided below in this Paragraph 27, this Lease
shall be subject and subordinate at all times to the following without the
necessity of any additional document being executed by Tenant for the purpose
of effecting a subordination:


 


(a)           the lien and provisions of any mortgage, deed of trust, or declaration of
covenants, conditions and restrictions which may now exist or hereafter be
executed by which the Building, Project, any ground lease, or Landlord’s
interest or estate in any of those items, is encumbered; and


 


(b)           all ground leases which may now exist or hereafter be executed affecting
the Building.


 


Landlord, any such beneficiary or mortgagee, or any such ground lessor,
shall at any time have the right to elect to subordinate or cause to be
subordinated to this Lease any such liens and provisions or ground lease. Any
election under this Paragraph 27 may be made by giving notice thereof to Tenant
at least sixty (60) days before the election is to become effective. If any
ground lease terminates for any reason or any mortgage or deed of trust is
foreclosed or a conveyance in lieu of foreclosure is made for any reason,
Tenant shall, at the election of any successor-in-interest to Landlord and
regardless of any subordination, attorn to and become the Tenant of the
successor-in-interest to Landlord. Tenant waives any right to declare this
Lease terminated or otherwise ineffectual because of any such foreclosure,
conveyance or ground lease termination. Tenant shall execute and deliver, upon
demand by Landlord and in the form and content requested by Landlord, any
additional documents evidencing the priority or subordination of this Lease and
Tenant’s obligation to attorn to and become the Tenant of any
successor-in-interest to Landlord as provided for under this Paragraph 27.
Tenant’s failure to sign and return any such documents within ten (10) days
of request shall constitute a material default by Tenant under this Lease and
Landlord may, at Landlord’s option, terminate the Lease provided written notice
of such termination (which shall be in lieu of and not in addition to the
notice and cure period otherwise provided for under Subparagraph 25(a)(iii)) is
received by Tenant prior to Landlord’s receipt of such documents. Tenant hereby
irrevocably appoints Landlord as attorney-in-fact of Tenant to execute, deliver
and record any such document in the name and on behalf of Tenant.


 


28.           ESTOPPEL CERTIFICATE.


 


(a)           Within ten (10) days following any written request which Landlord
may make from time to time, Tenant shall execute and deliver to Landlord a “Tenant Estoppel Certificate”, in a form substantially
similar to the form of attached Exhibit E or in any other form reasonably
required by Landlord. Landlord and Tenant intend that any statement delivered
pursuant to this Paragraph 28 may be relied upon by any mortgagee, beneficiary,
purchaser or prospective purchaser of the Building or any interest therein.


 


(b)           Tenant’s failure to deliver such Tenant Estoppel Certificate within such
time shall be conclusive upon Tenant (i) that this Lease is in full force,
without modification except as may be represented by Landlord, (ii) that
there are no uncured defaults in Landlord’s performance, and (iii) that
not more than one (1) month’s rental has been paid in advance. Tenant’s
failure to deliver the Tenant Estoppel Certificate to Landlord within ten (10) days
of receipt shall constitute a material default under this Lease and Landlord
may, at Landlord’s option, terminate the Lease, provided written notice of such
termination (which shall be in lieu of and not in addition to the notice and
cure period otherwise provided for under Subparagraph 25(a)(iii)) is received
by Tenant prior to Landlord’s receipt of the Tenant Estoppel Certificate. 


 




	
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29.           HAZARDOUS MATERIALS.


 


(a)           As used in this Lease, the following words or phrases shall have the
following meanings:


 


(i)            “Agents” means Tenant’s
partners, officers, directors, shareholders, employees, agents, contractors and
any other third parties entering upon the Project at the request or invitation
of Tenant.


 


(ii)           “Claims” means
claims, liabilities, losses, actions, environmental suits, causes of action,
legal or administrative proceedings, damages, fines, penalties, loss of rents,
liens, judgments, costs and expenses (including, without limitation, attorneys’
fees and costs of defense, and consultants’, engineers’ and other professionals’
fees and costs).


 


(iii)          “Hazardous” means: (a) hazardous;
(b) toxic; (c) reactive; (d) corrosive; (e) ignitable; (f) carcinogenic;
(g) reproductive toxic; (h) any other attribute of a Substance now or
in the future referred to in, or regulated by, any Hazardous Materials Laws;
and (i) potentially injurious to health, safety or welfare, the environment,
the Premises, the Building, the Project, or any portion thereof.


 


(iv)          “Hazardous Materials”
means any: (a) Substance which is Hazardous, regardless of whether that
Substance is Hazardous by itself or in combination with any other Substance; (b) Substance
which is regulated by any Hazardous Material Laws; (c) asbestos and
asbestos-containing materials; (d) urea formaldehyde; (e) radioactive
substance; (f) flammable explosives; (g) petroleum, including crude
oil or any fraction thereof; (h) polychlorinated biphenyls; and (i) “hazardous
substances,” “hazardous substances,” “hazardous materials” or “hazardous wastes”
under any Hazardous Materials Laws.


 


(v)           “Hazardous Materials Laws” means: (a) any existing or future federal, state or local law,
ordinance, regulation or code which protects health, safety or welfare, or the
environment; (b) any existing or future administrative or legal decision
interpreting any such law, ordinance, regulation or code; and (c) any
common law theory which may result in Claims against Landlord, the Premises or
any portion thereof.


 


(vi)          “Permits” means any
permit, authorization, license or approval required by any applicable
governmental agency.


 


(vii)         “Premises” for
purposes of this Paragraph 29 only, shall mean the Premises, the air about the
Premises and the soil, surface water and ground water under the surface of the
Project.


 


(viii)        “Substance” means any
substance, material, product, chemical, waste, contaminant or pollutant.


 


(ix)           “Use” means use,
generate, manufacture, produce, store, release or discharge.


 


(b)           (i)            Without limiting the generality of Paragraph 8
of this Lease, and except as provided in Paragraphs 29(b)(ii) and
29(b)(iii), Tenant covenants and agrees that Tenant and its Agents shall not
bring into, maintain upon, engage in any activity involving the Use of, or Use
in or about the Project, or transport to or from the Project, any Hazardous
Materials. Notwithstanding the provisions of Paragraphs 29(b)(ii) or
29(b)(iii), in no event shall Tenant or its Agents release or dispose of any
Hazardous Materials in, on, under or about the Project.


 


(ii)           Notwithstanding the provisions of Paragraph 29(b)(i), if Tenant or its
Agents proposes to Use any Hazardous Materials, or to install or operate any
equipment which will or may Use Hazardous Materials (“Equipment”),
then Tenant shall first obtain Landlord’s prior written consent, which consent
may be given or withheld by Landlord in its subjective, good faith judgment,
within thirty (30) days of Landlord’s receipt of the last of documents or
information requested by Landlord as set forth in this Paragraph. Tenant’s
failure to receive Landlord’s consent within such thirty (30) day period shall
be conclusively deemed Landlord’s withholding of 


 




	
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consent.
Tenant’s request for Landlord’s consent shall include the following documents
or information: (a) a Hazardous Materials list pursuant to Paragraph 29(c) regarding
the Hazardous Materials Tenant proposes to Use or Equipment Tenant proposes to
install and operate; (b) reasonably satisfactory evidence that Tenant has
obtained all necessary Permits to Use those Hazardous Materials or to install
and operate the proposed Equipment; (c) reasonably satisfactory evidence
that Tenant’s Use of the Hazardous Materials or installation and operation of
the Equipment shall comply with all applicable Hazardous Materials Laws, Tenant’s
permitted use under this Lease and all restrictive covenants encumbering the
Project; (d) reasonably satisfactory evidence of Tenant’s financial
capability and responsibility for potential Claims associated with the Use of
the Hazardous Materials or installation and operation of the Equipment; and (e) such
other documents or information as Landlord may reasonably request. Landlord
may, at its option, condition its consent upon any terms that Landlord, in its
subjective, good faith judgment, deems necessary to protect itself, the public
and the Project against potential problems, Claims arising out of Tenant’s Use
of Hazardous Materials or installation and operation of Equipment including,
without limitation, (i) changes in the insurance provisions of the Lease, (ii) installation
of equipment, fixtures or personal property or alteration of the Premises (all
at Tenant’s sole cost) to minimize the likelihood of a violation of Hazardous
Materials Laws as a result of Tenant’s Use of the Hazardous Materials or
installation and operation of Equipment, or (iii) increasing the amount of
the security deposit. Neither Landlord’s consent nor Tenant’s obtaining any
Permits shall relieve Tenant of any of its obligations pursuant to this
Paragraph 29. Landlord’s granting of consent to one request to Use Hazardous
Materials or install and operate Equipment shall not be deemed Landlord’s
consent to any other such request. If Landlord grants its consent to Tenant’s
request, no subtenant, assignee or successor of Tenant shall have the right to
Use those Hazardous Materials or install or operate that Equipment without
again complying with the provisions of this Paragraph 29(b)(ii).


 


(iii)          Notwithstanding the provisions of Paragraphs 29(b)(i) and
29(b)(ii), Tenant may Use any Substance typically found or used in applications
of the type permitted by this Lease so long as: (a) any such Substance is
typically found only in such quantity as is reasonably necessary for Tenant’s
permitted use under Paragraph 8 of this Lease; (b) any such Substance and
all equipment necessary in connection with the Substance are Used strictly in
accordance with the manufacturers’ instructions therefor; (c) no such
Substance is released or disposed of in or about the Project; (d) any such
Substance and all equipment necessary in connection with the Substance are
removed from the Project and transported for Use or disposal by Tenant in
compliance with any applicable Hazardous Materials Laws upon the expiration or
earlier termination of this Lease; and (e) Tenant and its Agents comply
with all applicable Hazardous Materials Laws.


 


(iv)          Tenant shall not use or install in or about the Premises any asbestos or
asbestos-containing materials.


 


(c)           Tenant shall deliver to Landlord, within thirty (30) days after Tenant’s
receipt of Landlord’s written request, a written list identifying any Hazardous
Materials that Tenant or its Agents then Uses or has Used within the last
twelve (12) month period in the Project. Each such list shall state: (i) the
use or purpose of each such Hazardous Material; (ii) the approximate quantity
of each such Hazardous Material Used by Tenant; (iii) such other
information as Landlord may reasonably require; and (iv) Tenant’s written
certification that neither Tenant nor its Agents have released, discharged or
disposed of any Hazardous Materials in or about the Project, or transported any
Hazardous Materials to or from the Project, in violation of any applicable
Hazardous Materials Laws. Landlord shall not request Tenant to deliver a
Hazardous Materials list more often than once during each twelve (12) month
period, unless Landlord reasonably believes that Tenant or its Agents have
violated the provisions of this Paragraph 29 (in which case (a) Landlord
may request such lists as often as Landlord determines is necessary until such
violation is cured, and (b) Tenant shall provide such lists within ten (10) days
of each of Landlord’s requests, or if an emergency exists, such lists shall be
immediately provided).


 


(d)           Tenant shall furnish to Landlord copies of all notices, claims, reports,
complaints, warnings, asserted violations, documents or other communications
received or delivered by Tenant, as soon as possible and in any event within
five (5) days of such receipt or delivery, with respect to any actual or
alleged Use, disposal or transportation of Hazardous Materials in or about the
Premises, the Building or the Project, Whether or not Tenant receives any such
notice, claim, report, complaint, warning, asserted violation, document or


 




	
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communication, Tenant shall immediately notify Landlord, orally and in
writing, if Tenant or any of its Agents knows or has reasonable cause to
believe that any Hazardous Materials, or a condition involving or resulting
from the same, is present, in Use, has been disposed of, or transported to or
from the Premises, the Building or the Project other than as previously
consented to by Landlord in strict accordance with Paragraph 29(b).


 


(e)           Tenant acknowledges that it, and not Landlord, is in possession and
control of the Premises for purposes of all reporting requirements under any
Hazardous Materials Laws. If Tenant or its Agents violate any provision of this
Paragraph 29, then Tenant shall immediately notify Landlord in writing and
shall be obligated, at Tenant’s sole cost, to abate, remediate, clean-up or
remove from the Project, and dispose of, all in compliance with all applicable
Hazardous Materials Laws, all Hazardous Materials Used by Tenant or its Agents.
Such work shall include, but not be limited to, all testing and investigation
required by Landlord, Landlord’s lender or ground lessor, if any, and any
governmental authorities having jurisdiction, and preparation and
implementation of any remedial action plan required by any governmental
authorities having jurisdiction. All such work shall, in each instance, be
conducted to the satisfaction of Landlord and all governmental authorities
having jurisdiction. If at any time Landlord determines that Tenant is not
complying with the provisions of this Paragraph 29(e), then Landlord may,
without prejudicing, limiting, releasing or waiving Landlord’s rights under
this Paragraph 29, separately undertake such work, and Tenant shall reimburse
all costs incurred by Landlord upon demand.


 


(f)            Landlord’s right of entry pursuant to
Paragraph 17 shall include the right to enter and inspect the Premises, and the
right to inspect Tenant’s books and records, to verify Tenant’s compliance
with, or violations of, the provisions of this Paragraph 29. Furthermore,
Landlord may conduct such investigations and tests as Landlord or Landlord’s
lender or ground lessor may require. If Landlord determines that Tenant has
violated the provisions of this Paragraph 29, or if any applicable governmental
agency requires any such inspection, investigation or testing, then Tenant, in
addition to its other obligations set forth in this Paragraph 29, shall
immediately reimburse Landlord for all costs incurred therewith.


 


(g)           (i)            Tenant shall indemnify, protect, defend (with
legal counsel acceptable to Landlord in its subjective, good faith judgment)
and hold harmless Landlord, its partners and its and their respective
successors, assigns, partners, directors, officers, shareholders, employees,
agents, lenders, ground lessors and attorneys, and the Project, from and
against any and all Claims incurred by such indemnified persons, or any of
them, in connection with, or as the result of: (a) the presence, Use or
disposal of any Hazardous Materials into or about the Project, or the
transportation of any Hazardous Materials to or from the Project, by Tenant or
its Agents; (b) any injury to or death of persons or damage to or
destruction of property resulting from the presence, Use or disposal of any
Hazardous Materials into or about the Project, or the transportation of any
Hazardous Materials to or from the Project, by Tenant or its Agents; (c) any
violation of any Hazardous Materials Laws by Tenant or Tenant’s Agents; and (d) any
failure of Tenant or its Agents to observe the provisions of this Paragraph 29.
Payment shall not be a condition precedent to enforcement of the foregoing
indemnification provision. Tenant’s obligations hereunder shall include,
without limitation, and whether foreseeable or unforeseeable, all costs of any
required or necessary testing, investigation, studies, reports, repair,
clean-up, detoxification or decontamination of the Project, and the preparation
and implementation of any closure, removal, remedial action or other required
plans in connection therewith, and shall survive the expiration or earlier
termination of the term of this Lease. For purposes of these indemnity
provisions, any acts or omissions of Tenant, its assignees, sublessees, Agents
or others acting for or on behalf of Tenant (regardless of whether they are
negligent, intentional, willful, or unlawful) shall be strictly attributable to
Tenant.


 


(ii)           If at any time after the initiation of any suit, action, investigation
or other proceeding which could create a right of indemnification under
Paragraph 29(g)(i) Landlord determines that Tenant is not complying with
the provisions of Paragraph 29(g)(i), then Landlord may, without prejudicing,
limiting, releasing or waiving the right of indemnification provided herein,
separately defend or retain separate counsel to represent and control the
defense as to Landlord’s interest in such suit, action, investigation or other
proceeding. Tenant shall pay all costs of Landlord’s separate defense or
counsel upon demand.


 




	
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(h)           Upon any violation of the provisions of this Paragraph 29, Landlord
shall be entitled to exercise any or all remedies available to a landlord
against a defaulting tenant including, but not limited to, those set forth in
Paragraph 25.


 


(i)            By its signature to this Lease, Tenant
confirms that: (i) Landlord has not made any representation or warranty
regarding the environmental condition of the Premises, the Building or the
Project; and (ii) Tenant has conducted its own examination of the
Premises, the Building and the Project with respect to Hazardous Materials and
accepts the same “AS IS”.


 


(j)            No termination, cancellation or release
agreement entered into by Landlord and Tenant shall release Tenant from its
obligations under this Paragraph 29 unless specifically agreed to by Landlord
in writing at the time of such agreement.


 


(k)           Tenant’s covenants and obligations under this Paragraph 29 shall also
apply to any assignee or sublessee of Tenant, and to any such assignee’s or
sublessee’s partners, officers, directors, shareholders, employees, agents,
contractors and any other third parties entering upon the Project at the
request or invitation of such assignee or sublessee.


 


30.           RULES AND REGULATIONS. Tenant shall faithfully observe and comply
with the “Rules and Regulations” attached
hereto as Exhibit F, and all reasonable and nondiscriminatory
modifications thereof and additions thereto from time to time put into effect
by Landlord. Landlord shall not be responsible to Tenant for the violation or
nonperformance by any other tenant or occupant of the Building or Project of
any of the Rules and Regulations.


 


31.           CONFLICT OF LAWS. This Lease shall be governed by and
construed pursuant to the laws of the State of California.


 


32.           SUCCESSORS AND ASSIGNS. Except as otherwise provided in this Lease,
all of the covenants, conditions and provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties to this Lease and their
respective heirs, personal representatives, successors and assigns.


 


33.           SURRENDER OF PREMISES. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation of this Lease, shall not work a
merger, and shall, at the option of Landlord, operate as an assignment to it of
any or all subleases or subtenancies. Upon the expiration or termination of
this Lease, Tenant shall peaceably surrender the Premises and all Tenant
Improvements, alterations and additions to the Premises, broom clean the
Premises, leave the Premises in good order, repair and condition (including the
due completion by that expiration or termination of all repairs which Tenant is
responsible for making under this Lease), reasonable wear and tear excepted,
and comply with the provisions of Paragraph 14(c). The delivery of keys to any
employee of Landlord or to Landlord’s agent or any employee thereof shall not
be sufficient to constitute a termination of this Lease or a surrender of the
Premises.


 


34.           ATTORNEYS’ FEES. If any legal proceeding arises in connection
with this Lease, in addition to any other remedy at law or in equity sought or
obtained by the prevailing party, the losing party shall pay the reasonable
legal and other fees and all costs of the prevailing party incurred in
connection with those proceedings.


 


35.           PERFORMANCE BY TENANT. All covenants and agreements to be performed
by Tenant under any of the terms of this Lease shall be performed by Tenant at
Tenant’s sole cost and expense and without any abatement of rent. If Tenant
shall fail to pay any sum of money owed to any party other than Landlord, for
which it is liable under this Lease, or if Tenant shall fail to perform any
other act on its part to be performed under this Lease, Landlord may, without
waiving or releasing Tenant from Tenant’s obligations, but shall not be
obligated to, make any such payment or perform any such other act to be made or
performed by Tenant. All sums so paid by Landlord and all necessary incidental
costs incurred by Landlord together with interest thereon at the Lease Interest
Rate, from the date of such payment by Landlord, shall be payable to Landlord
on demand. Landlord shall have (in 


 




	
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addition
to any other right or remedy of Landlord) all rights and remedies in the event
of the nonpayment thereof by Tenant as are set forth in Paragraph 25.


 


36.           MORTGAGEE PROTECTION. In the event of any default on the part of
Landlord, Tenant will give notice by registered or certified mail to any
beneficiary of a deed of trust or mortgage covering the Premises whose address
shall have been furnished to Tenant, and shall offer such beneficiary or
mortgagee a reasonable opportunity to cure the default, including time to
obtain possession of the Premises by power of sale or a judicial foreclosure,
if such should prove necessary to effect a cure.


 


37.           DEFINITION OF LANDLORD. The term “Landlord,”
as used in this Lease, so far as covenants or obligations on the
part of Landlord are concerned, shall be limited to mean and include only the
owner or owners, at the time in question, of the fee title of the Building or
the lessees under any ground lease, if any. In the event of any transfer,
assignment or other conveyance or transfers of any such title, Landlord (and in
case of any subsequent transfers or conveyances, the then-grantor) shall be
automatically freed and relieved from and after the date of such transfer,
assignment or conveyance of all liability as respects the performance of any
covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed. The transferee of such title shall be deemed to
have assumed and agreed to observe and perform any and all obligations of
Landlord under this Lease during its ownership of the Premises. Landlord may
transfer its interest in the Premises without the consent of Tenant and such
transfer or subsequent transfer shall not be deemed a violation on Landlord’s
part of any of the terms and conditions of this Lease. With respect to any
indemnity by Tenant of Landlord under this Lease, “Landlord” shall include, and the indemnity shall run to,
Landlord and its respective partners, affiliates, shareholders, directors,
officers, agents, lenders, employees, partners, successors and assigns.


 


38.           WAIVER. The waiver by Landlord of any breach of any term, covenant or
condition contained in this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or any other term, covenant or condition
contained in this Lease, nor shall any custom or practice to which the parties
may have adhered in the administration of the terms of this Lease be deemed a
waiver of or in any way affect the right of Landlord to insist upon the
performance by Tenant in strict accordance with the terms of this Lease. The
subsequent acceptance of rent under this Lease 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 preceding breach
at the time of acceptance of such rent. No acceptance by Landlord of a lesser
sum than the sum then due shall be deemed to be other than on account of the
earliest installment of such rent or other amount due, nor shall any
endorsement or statement on any check or any letter accompanying any check be
deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord’s right to recover the balance of such
installment or other amount or pursue any other remedy available to Landlord.


 


39.           IDENTIFICATION OF TENANT. If more than one person signs this Lease as
Tenant, the act of or notice from, or notice or refund to, or the signature of,
any one or more of them with respect to this Lease shall be binding upon
Tenant.


 


40.           PARKING. Unless Tenant is in default under this Lease, Tenant shall be entitled
to use the number of vehicle parking spaces designated in Subparagraph 1(g).
Tenant’s use of its vehicle parking spaces shall be free for the Term of the
Lease. Neither Tenant nor its employees or invitees shall use more parking
spaces than designated in Subparagraph 1(g). If Landlord determines in its sole
discretion that it is necessary for orderly and efficient parking, all or any
portion of any unreserved or unassigned parking spaces may be assigned to, made
available to or reserved by Landlord for other tenants or users of the
Building. If Landlord has not assigned specific spaces to Tenant, neither
Tenant nor its employees shall use any spaces which have been so specifically
assigned by Landlord to other tenants or for other uses such as visitor parking
or which have been designated by Landlord or governmental entities as being
restricted to certain uses.


 




	
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(a)           Tenant shall not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant’s employees, suppliers, shippers, contractors,
customers or invitees to be loaded, unloaded or parked in areas other than
those designated by Landlord for such activities.


 


(b)           If Tenant permits or allows any of the prohibited activities described
in this Paragraph 40, then Landlord shall have the right, without notice, in
addition to such other rights and remedies that it may have, to remove, tow
away, or impound the vehicle involved and charge the cost to Tenant, which cost
shall be immediately payable upon demand by Landlord with interest thereon at
the Lease Interest Rate from the date Landlord incurs that cost.


 


(c)           Intentionally deleted.


 


(d)           The use by Tenant, its employees and invitees, of the parking facilities
of the Building shall be on the additional terms and conditions set forth in
attached Exhibit G, and shall be subject to such other agreement
between Landlord and Tenant as may hereinafter be established.


 


41.           FORCE MAJEURE. Landlord shall have no liability whatsoever
to Tenant on account of (a) the inability of Landlord to fulfill, or delay
in fulfilling, any of Landlord’s obligations under this Lease, the Work Letter
Agreement, or any other Lease attachment by reason of strike, other labor
trouble, governmental preemption or priorities or other controls in connection
with a national or other public emergency, or shortages of fuel, supplies or
labor resulting therefrom, governmental permitting, or any other cause, whether
similar or dissimilar to the above, beyond Landlord’s reasonable control; or (b) any
failure or defect in the supply, quantity or character of electricity or water
furnished to the Premises, by reason of any requirement, act or omission of the
public utility or others furnishing the Building with electricity or water, or
for any other reason, whether similar or dissimilar to the above, beyond
Landlord’s reasonable control. If this Lease or any Exhibit, Rider or Work
Letter Agreement specifies a time period for performance of an obligation of
Landlord, that time period shall be extended by the period of any delay in
Landlord’s performance caused by any of the events of force majeure described
above.


 


42.           TERMS, HEADINGS AND CONSTRUCTION. The title and paragraph headings are not a
part of this Lease and shall have no effect upon the construction or
interpretation of any part of this Lease. “Or” is not exclusive. Unless stated
otherwise, references to paragraphs and subparagraphs are to those in this
Lease. This Lease shall be strictly construed neither against Landlord nor
Tenant.


 


43.           TIME. Time is of the essence with respect to the performance of every
provision of this Lease in which time of performance is a factor, including
specifically and without limitation, Tenant’s obligation to make any payments,
give any notices and timely perform under the Work Letter Agreement.


 


44.           PRIOR AGREEMENT; AMENDMENTS. This Lease contains all of the agreements of
the parties hereto with respect to any matter covered or mentioned in this
Lease, and no prior agreements or understanding or letter or proposal
pertaining to any such matters shall be effective for any purpose. No
provisions of this Lease may be amended or added to, whether by conduct, oral
or written communication, or otherwise, except by an agreement in writing
signed by the parties hereto or their respective successors-in-interest. No
other provision of this Lease shall modify the effect of this paragraph.


 


45.           SEVERABILITY. Any provision of this Lease which shall prove to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provision of
this Lease, and such other provisions shall remain in full force.


 


46.           RECORDING. Neither this Lease nor a short form memorandum of this Lease shall be
recorded.


 


47.           LIMITATION ON LIABILITY AND TIME. In consideration of the benefits accruing
under this Lease, Tenant and all successors and assigns agree that, in the
event of any actual or alleged failure, breach or default under this Lease by
Landlord: (a) the sole and exclusive remedy shall be against the Landlord’s
interest in 


 




	
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the Building; (b) no partner of Landlord shall be named as a party
in any suit or proceeding (except as may be necessary to secure jurisdiction of
the partnership, if applicable); (c) no partner of Landlord shall be
required to answer or otherwise plead to any service of process; (d) no
judgment will be taken against any partner of Landlord (if applicable); (e) no
writ of execution will ever be levied against the assets of any partner of
Landlord; (f) the obligations of Landlord under this Lease do not
constitute personal obligations of the individual partners, directors, officers
or shareholders of Landlord, and Tenant shall not seek recourse against the
individual partners, directors, officers or shareholders of Landlord or any of
their personal assets for satisfaction of any liability in respect to this
Lease; and (g) any claim, defense, or other right of Tenant arising in
connection with this Lease or negotiations before this Lease was signed shall
be barred unless Tenant files an action or interposes a defense based thereon
within one hundred eighty (180) days after the
date of the alleged event on which Tenant is basing its claim, defense or
right. In the event of a breach or default by Landlord under this Lease, in no
event shall Tenant have the right to terminate this Lease as a result of such
breach or default, and Tenant’s remedies (subject to the provisions of this
Paragraph 47) shall be limited to damages and/or an injunction.


 


48.           TRAFFIC IMPACT. Tenant agrees that Tenant and its employees,
invitees, and contractors shall comply with the provisions of Exhibit G
(Traffic and Parking Rules and Regulations).


 


49.           SUBSTITUTED PREMISES. Intentionally deleted.


 


50.           MODIFICATION FOR LENDER OR GOVERNMENT. If, in connection with obtaining
construction, interim or permanent financing or refinancing for the Building or
all or part of the Project, a lender shall request reasonable modifications in
this Lease as a condition to such financing, Tenant will not unreasonably
withhold, delay or defer its consent thereto, provided that such modifications
do not increase the obligations of Tenant under this Lease or materially
adversely affect the leasehold interest hereby created or Tenant’s rights under
this Lease. In addition, the parties agree to promptly sign all documents
reasonably required by any governmental agency from time to time in connection
with the Premises, provided that those documents do not materially adversely
affect the rights or obligations of the parties under this Lease.


 


51.           FINANCIAL STATEMENTS. When reasonably requested by Landlord,
Tenant shall, upon ten (10) business days notice from Landlord, provide
Landlord with a current financial statement and financial statements of the two
(2) years prior to the current financial statement year. Such statement(s)
shall be safeguarded by Landlord and shall be prepared in accordance with
generally accepted accounting principles and, if such is the normal practice of
Tenant, shall be audited by an independent certified public accountant. The
above ten-day notice is the only notice Landlord is required to give Tenant in
connection with Tenant’s financial statements and shall be in lieu of and not
in addition to the notice and cure period otherwise provided for under
Subparagraph 25(a)(iii). Tenant’s failure to comply with its obligations under
this Paragraph 51 shall constitute a material default under this Lease.


 


52.           QUIET ENJOYMENT. Landlord covenants that upon Tenant paying
the rent required under this Lease and paying all other charges and performing
all of the covenants and provisions on Tenant’s part to be observed and
performed under this Lease, Tenant shall and may peaceably and quietly have,
hold and enjoy the Premises in accordance with this Lease.


 


53.           TENANT’S SIGNS.


 


(a)           Tenant may, at its sole cost and expense, place its signs displaying its
logo and graphics on the entrance doors to the Premises and in Landlord
designated locations in the hallways on floors wholly leased by Tenant. On
partial floors leased by Tenant, Tenant, at its sole cost and expense, may
place its signs on entrance doors to the Premises, provided the number, size,
color, style, material and location of such signs conform to Landlord’s
graphics program for the Building and Landlord shall place directional signs to
the Premises, at Tenant’s expense, at a location determined by Landlord.


 


 




	
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(b)           Unless specifically set forth to the contrary in an addendum to this
Lease, Tenant shall not place any sign on the exterior of the Building, or
within the Building if such sign may be seen from outside of the Building or on
any Building sign monument or other device constructed for the placement of
tenant signs.


 


(c)           All Tenant signs installed by Landlord or Tenant shall comply with all applicable
requirements of all governmental authorities having jurisdiction and shall be
installed in a good and workmanlike manner. Such signs shall be maintained and
kept in good repair at Tenant’s sole cost and expense, and, on expiration or
earlier termination of the Term, removed at Tenant’s sole cost and expense.


 


54.           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 Project
shall in no way affect this Lease, abate any payment owed by Tenant under the
Lease, or otherwise impose any liability on Landlord.


 


55.           TENANT AS CORPORATION, PARTNERSHIP, OR LIMITED
LIABILITY COMPANY. If Tenant
executes this Lease as a corporation or limited liability company, then Tenant
and the persons executing this Lease on behalf of Tenant represent and warrant
that the individuals executing this Lease on Tenant’s behalf are duly
authorized to execute and deliver this Lease on its behalf. If tenant is a
corporation, Tenant further represents and warrants that this Lease has been
authorized in accordance with a duly adopted resolution of the board of
directors of Tenant, a copy of which is to be delivered to Landlord on
execution of this Lease, and in accordance with the by-laws of Tenant and that
this Lease is binding upon Tenant in accordance with its terms. If Tenant
executes this Lease as a partnership, (a) each general partner shall be
jointly and severally liable for keeping, observing and performing all the
provisions of this Lease to be kept, observed or performed by Tenant and (b) the
term “Tenant” shall mean and include each
general partner jointly and severally and the act of or notice from, or notice
or refund to, or the signature of, any one or more of them with respect to this
Lease shall be binding on Tenant and each and all of the general partners of
Tenant with the same effect as if each of them had so acted or so given or
received such notice or refund or so signed. Dissolution of any partnership
which is a Tenant under this Lease shall be deemed to be an assignment jointly
to all of the partners, who shall thereafter be subject to the terms of this
Lease as if each such former partners had initially signed this Lease as
individuals.


 


56.           GUARANTY. Landlord and Tenant acknowledge and agree that the concurrent delivery
by Tenant to Landlord of a guaranty of Tenant’s obligations pursuant to this
Lease executed by the person(s) or entity(ies) identified in Exhibit H
(“Guarantor”) is a material
consideration for Landlord’s execution of this Lease and that Landlord would
not execute and deliver this Lease but for such guaranty. Accordingly,
concurrently with the execution and delivery of this Lease by Tenant, Tenant
shall deliver to Landlord a written guaranty executed by Guarantor in the form
of Exhibit H hereto (“Guaranty”).


 


57.           COUNTERPARTS. This Lease may be executed in several counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument.


 


58.           JOINT AND SEVERAL LIABILITY. This Lease and the obligations set forth
herein shall be the joint and several obligations of all persons, entities or
parties to this Lease and shall be binding upon them and their heirs, personal
representatives, and permitted successors and assigns, if any.


 


59.           NO OFFER. The submission of this Lease and any ancillary documents to Tenant
shall not constitute an offer to Lease, and Landlord shall have no obligation
of any kind, express or implied, to lease the Premises to Tenant until Landlord
has approved, executed and returned to Tenant a fully signed copy of this Lease
together with any ancillary documents Landlord may require.


 




	
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THEREFORE, the parties have executed this Lease as of the date first
written above.


 


	
  LANDLORD:
  Pointe Camino Windell LLC, a

  California limited liability company

  	
  TENANT:
  Lpath Therapeutics, Inc., a Delaware

  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Michael
  S. Martin

  	
   

  	
  By:

  	
  /s/ Scott
  Pancoast

  
	
  Name:

  	
  MICHAEL S.
  MARTIN

  	
   

  	
  Name:

  	
  SCOTT
  PANCOAST

  
	
  Its:

  	
  PRESIDENT

  	
   

  	
  Its:

  	
  President
  & CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  



 




	
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  ROBERTS
  & BENNETT

  COMMERCIAL INTERIOR DESIGN

  	
  LPATH THERAPEUTICS

  Pointe Camino Business Centre

  6335 Ferris Square, Suite A

  San Diego, CA 92122

  5,383 RSF

  08.12.05

  
	
   

  
	
  1010 UNIVERSITY AVENUE,
  SUITE C203

  
	
  SAN DIEGO, CA 92103

  
	
  (619) 297-1011  FAX (619)
  297-3832

  	
   

  
	
  WWW.RBCID.COM

  	
   

  



 





 


FIRST FLOOR EXHIBIT A-1


SCALED TO FIT


 




	
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  ROBERTS
  & BENNETT

  COMMERCIAL INTERIOR DESIGN

  	
  LPATH THERAPEUTICS

  Pointe Camino Business Centre

  6335 Ferris Square, Suite A

  San Diego, CA 92122

  1,892 RSF
08.12.05

  
	
   

  
	
  1010 UNIVERSITY AVENUE,
  SUITE C203

  
	
  SAN DIEGO, CA 92103

  
	
  (619) 297-1011  FAX (619)
  297-3832

  
	
  WWW.RBCID.COM

  	
   

  



 


1.       Provide
new stain-grade Oak single light doors - four (4) single, one (1) pair.


 


2.       Relocate
existing building standard paint-grade door.


 


3.       Provide
new 4’-6” W floor-to-ceiling glazing.


 


4.       Provide
new undercounter dishwasher.


 


5.       Provide
new plastic laminate countertop.


 





 


SECOND FLOOR EXHIBIT A-1


SCALE: 1/8” = 1’-0”


 




	
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  SITE PLAN -
  EXHIBIT A-2

  	
   

  	
  

  
	
  SCALED TO FIT

  	
   

  



NORTH


 




	
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WORK LETTER AGREEMENT


 


In connection with the lease to which this Work Letter Agreement is
attached (the “Lease”), and in consideration of
the mutual covenants hereinafter contained, Landlord and Tenant agree as
follows:


 


1.             COMPLETION SCHEDULE. Within five (5) business days after its
execution of the Lease, Landlord shall deliver to Tenant, for Tenant’s review
and approval, a schedule (the “Work
Schedule”) setting forth a timetable for the planning and completion
of the installation of the Tenant Improvements (as defined in Paragraph 2
below) to be constructed in the Premises, and the scheduled Commencement Date
for the Term. The Work Schedule shall set forth each of the various items
of work to be done by or approval to be given by Landlord and Tenant in
connection with the completion of the Tenant Improvements. The Work Schedule shall
be submitted to Tenant for its approval and, upon approval by both Landlord and
Tenant, Landlord and Tenant agree to comply with that Schedule, and it shall
become the basis for the parties’ performance under this Agreement. If Tenant
shall fail to deliver to Landlord Tenant’s written disapproval of the Work
Schedule, as it may be modified after discussions between Landlord and Tenant,
within three (3) business days after the date the Work Schedule is
first received by Tenant, Landlord’s space planner for the Building shall
determine the final Work Schedule in its sole, good faith judgment within
five (5) business days after request by either Landlord or Tenant, which
determination shall be final and binding on all parties.


 


2.             TENANT IMPROVEMENTS. “Tenant Improvements”
shall include all work to be done and improvements installed in the Premises by
Landlord pursuant to the Tenant Improvement Plans (defined in Paragraph 3
below), including, but not limited to, partitioning, doors, ceilings, floor
coverings, wall finishes (including paint and wallcovering), electrical
(including lighting, switching, telephone wiring (including outlets), outlets,
etc.), plumbing, heating, ventilating and air conditioning, fire protection,
cabinets and other millwork. Subject to Paragraphs 14(c) and 33 of the
Lease, all Tenant Improvements and components thereof shall at all times be and
remain the sole property of Landlord.


 


3.             TENANT IMPROVEMENT PLANS. Prior to the Lease execution, Tenant shall
have met with Landlord’s architect or space planner for the purpose of
preparing a space plan (“Space Plan”).
The Space Plan will provide a partition layout and quantitative specifications for
other building components, including but not limited to partitioning, doors,
ceilings, electrical outlets, etc., plumbing, heating, ventilating and air
conditioning, cabinets and other millwork depicting the configuration of the
Premises and the Space Plan as attached as “Exhibit A-1” and shall be
deemed approved by Tenant upon execution of the Lease. Upon execution of the
Lease, Landlord’s architect or space planner will prepare a design/development
plan (“D/D Plan”). If Tenant fails to deliver to Landlord, Tenant’s written
disapproval of the D/D Plan within three (3) business days after the date
the D/D Plan, or any revised D/D Plan, is first received by Tenant, the D/D
Plan shall be deemed approved by Tenant. If the Space Plan or D/D Plan, or any
revised Space Plan or D/D Plan, is timely disapproved by Tenant pursuant to
this Paragraph, Tenant shall provide to Landlord a written explanation of the
reason(s) for such disapproval concurrently with that disapproval, and the
Space Plan or D/D Plan, as appropriate, shall be promptly revised and
resubmitted to Tenant for approval. If Tenant fails to provide a written
explanation as and when required by this Paragraph, the Space Plan and D/D Plan
shall be deemed approved by Tenant.  
After the D/D Plan is approved by Tenant pursuant to this Paragraph,
Landlord’s architect or space planner shall promptly prepare final working
drawings and specifications for the Tenant Improvements. Those working drawings
and specifications are referred to herein as the “Tenant Improvement
Plans” and shall be approved by Landlord and Tenant pursuant to
Paragraph 5 below. The Tenant Improvement Plans must be consistent with
Landlord’s standard specifications (the “Standards”)
for tenant improvements for the Building, as the same may be changed from time
to time by Landlord.


 


4.             NON-STANDARD TENANT IMPROVEMENTS. Landlord shall permit Tenant to deviate from
the Standards for the Tenant Improvements provided that (a) the deviations
shall not be of a lesser quality than the Standards; (b) the total
lighting for the Premises shall comply with the provisions of Title 24 of the
California Administrative Code; (c) the deviations conform to applicable
governmental regulations, and necessary governmental permits and approvals have
been secured; (d) the deviations do not require building service beyond


 




	
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Exhibit B


 


1





















 


the level normally provided to other tenants in the Building and do not
overload the weight-bearing capacity of the floors; and (e) Landlord has
determined in its sole discretion that the deviations are of a nature and
quality that are consistent with the overall objectives of the Landlord for the
Building.


 


5.             FINAL APPROVAL OF TENANT IMPROVEMENT PLANS. After preparation by Landlord’s architect or
space planner, the Tenant Improvement Plans shall be submitted to Tenant for
approval, which shall not be unreasonably withheld. If Tenant fails to deliver
to Landlord Tenant’s written disapproval of the Tenant Improvement Plans, or
any revised Tenant Improvements Plans, within five (5) days after the date
the Tenant Improvement Plans, or any revised Tenant Improvement Plans, are
received by Tenant, the Tenant Improvement Plans shall be deemed approved by
Tenant. If the Tenant Improvement Plans, or any revised Tenant Improvement
Plans, are timely disapproved by Tenant pursuant to this Paragraph, Tenant
shall provide to Landlord a written explanation of the reason(s) for such disapproval
concurrently with that disapproval, and the Tenant Improvement Plans shall be
revised and resubmitted to Tenant for approval. If Tenant fails to provide a
written explanation as and when required by this Paragraph, the Tenant
Improvement Plans shall be deemed approved by Tenant. After the Tenant
Improvement Plans are so approved by Tenant, the Tenant Improvement Plans shall
be submitted to the appropriate governmental body by Landlord for plan checking
and the issuance of a building permit. Landlord reserves the right to
disapprove any proposed Tenant Improvements which Landlord reasonably believes
will adversely affect the Building or any Building Structure and Systems.
Landlord, with Tenant’s cooperation, shall cause to be made to the Tenant
Improvement Plans any changes necessary to obtain the building permit and to
comply with the requirements of local agencies.


 


6.             CONSTRUCTION OF TENANT IMPROVEMENTS. After a building permit for the Tenant
Improvements has been issued, Landlord shall cause its contractor to begin
installation of the Tenant Improvements in accordance with the Tenant
Improvement Plans. Landlord shall supervise the completion of such work and
shall use its best efforts to secure substantial completion of the work in
accordance with the Work Schedule. The cost of such work shall be paid as
provided in Paragraph 7 below. Landlord shall not be liable for any direct or
indirect damages as a result of delays in construction beyond Landlord’s
reasonable control, including, but not limited to, acts of God, inability to
secure governmental approvals or permits, governmental restrictions, strikes,
lack of availability of materials or labor, or delays by Tenant (or its
architect or anyone performing services on behalf of Tenant).


 


7.             PAYMENT FOR THE TENANT IMPROVEMENTS.


 


(a)           Landlord and Tenant agree to share the costs for Tenant Improvements to
be constructed in the Premises. Landlord will build for Tenant’s benefit all
Tenant Improvements in the Premises, including all improvements located in the
lab area on the first floor, the office area on the first floor and the office
area on the second floor, all pursuant to the Space Plan attached hereto as Exhibit “A-1”.
The cost of Tenant Improvements shall be allocated between Landlord and Tenant
on the following basis: (x) Landlord shall pay for the Tenant Improvements to
be constructed in the Lab Area in Suite A; and (y) Landlord shall pay for
the first $20.00 per rentable square foot for the Tenant Improvements to be
constructed in the Lab Area of the Must Take Space in Suite B, and
one-half of the amount in excess of $20.00 per rentable square foot of the Must
Take Space in Suite B; and, (z) Tenant shall pay for the Tenant
Improvements to be constructed in the Office Areas located on the second floor and
one-half of the amount in excess of $20.00 per rentable square foot of the Must
Take Space in Suite B, of which such amount shall be amortized over the
remaining Lease Term at an interest rate of eight (8%) percent and payable by
Tenant on a monthly basis. The amortization period shall commence upon the Must
Take Date and terminate on the expiration of the Lease Term; all of the
preceding (x), (y), and (z) as shown on “Exhibit A-1”. All of the Tenant
Improvement costs for Suite A shall include a prorata share of all
incidental costs for construction for costs and expenses such as building
permits, architectural fees and any other cost or expense not specifically
designated as a cost to a particular area (i.e. the Lab Area or the Office
Areas). Such incidental costs will be allocated between Landlord and Tenant on
a prorata basis, based on the relative costs borne by each in connection with
the Tenant Improvements (pari passu). All costs included for Tenant
Improvements include the following:


 




	
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(i)            Payment of the cost of preparing the Space
Plan, the D/D Plan and the Tenant Improvement Plans, including mechanical,
electrical, plumbing and structural drawings, and of all other aspects
necessary to complete the Tenant Improvement Plans. The Tenant Improvement
Allowance will not be used for the payment of extraordinary design work not
included within the scope of Landlord’s Standards or for payments to any other
consultants, designers or architects other than Landlord’s architect, space
planner or Space Accountant, all of which other costs shall be paid for by
Tenant.


 


(ii)           Payment of plan check, permit and license fees relating to construction
of the Tenant Improvements.


 


(iii)          Payment to Landlord of a space improvement fee (“Improvement
Fee”) to, among other things, pay Landlord’s space improvement costs
for the Premises, including without limitation costs for the following: plan
check and permits; utilities, including electrical and water consumption; and a
tenant supervision fee. The Improvement Fee shall be determined as follows:


 


(aa)         The Improvement Fee shall be five percent (5)% of the Tenant Improvement
Allowance; and


 


(iv)          Construction of the Tenant Improvements, including, without limitation,
the following:


 


(aa)         Installation within the Premises of all partitioning, doors, floor
coverings, ceilings, wallcoverings and painting, millwork and similar items;


 


(bb)         All electrical wiring, lighting fixtures, outlets and switches, and
other electrical work to be installed within the Premises, excluding however
computer cable and wiring;


 


(cc)         The furnishing and installation of all duct work, terminal boxes, diffusers
and accessories required for the completion of the heating, ventilation and air
conditioning systems within the Premises, including the cost of meter and key
control for after-hour air conditioning;


 


(dd)         Any additional tenant requirements including, but not limited to, air quality
control, special heating, ventilation and air conditioning, noise or vibration
control or other special systems;


 


(ee)         All fire and life safety control systems such as fire walls, sprinklers,
fire alarms, including piping and wiring, installed within the Premises;


 


(ff)           All plumbing, including fixtures and pipes, to be installed within the
Premises;


 


(gg)         Testing and inspection costs; and


 


(hh)         Contractors’ fees, including, but not limited to, any fees based on general
conditions.


 


(v)           All other costs to be expended by Landlord in the construction of the
Tenant Improvements, including those costs incurred by Landlord for
construction of elements of the Tenant Improvements in the Premises, which
construction was performed by Landlord prior to the execution of the Lease and
which construction is for the benefit of tenants and is customarily performed
by Landlord prior to the execution of leases for space in the Building for
reasons of economics (examples of such construction would include, but not be
limited to, the extension of mechanical, HVAC and electrical distribution
systems outside of the core of the Building, wall 


 




	
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construction, column enclosures and painting outside of the core of the
Building, ceiling hanger wires and window treatment).


 


(b)           Intentionally deleted.


 


(c)           If, after the Tenant Improvement Plans have been prepared and a price
therefor has been established by Landlord, Tenant shall require any changes or
substitutions to the Tenant Improvement Plans, any additional costs related
thereto shall be paid by Tenant to Landlord prior to the commencement of
construction of the Tenant Improvements. Landlord shall have the right to
decline Tenant’s request for a change to the Tenant Improvement Plans if such
changes are inconsistent with the provisions of Paragraphs 3 or 4 above, or if
the change would, in Landlord’s subjective good faith opinion, unreasonably
delay construction of the Tenant Improvements.


 


(d)           Intentionally deleted.


 


(e)           Intentionally deleted.


 


(f)            As used in this Work Letter Agreement, the
terms “Premises Usable Area” means the area
of the Premises as determined by the Space Accountant by measuring the area
within the bounds of the inside surface of the glass in the outer wall of the
Building, the surface facing the Premises of all partitions separating the
Premises from the Building core and public corridors or other Common Areas, and
from the center of partitions separating the Premises from adjoining tenant
spaces. The exact amount of Premises Usable Area within the Premises shall be
determined by the Space Accountant upon completion of the Tenant Improvements.
No deductions shall be made for space occupied by structural or functional
columns or other projections within the Premises.


 


(g)           The Tenant Improvement Allowance has been agreed on by Landlord as part
of the total consideration flowing from Landlord to Tenant under the Lease and
on the assumption that Tenant will not be in default under the Lease during the
Term. If Tenant commits a default under the Lease which remains uncured and
Landlord institutes one or more of its legal remedies under the Lease, Landlord
shall be entitled to recover the percentage portion of the Tenant Improvement
Allowance which the number of full calendar months remaining in the Term as of
the date of Tenant’s default bears to the total number of full calendar months
in the Term.


 


8.             COMPLETION AND RENTAL COMMENCEMENT DATE. The Term, and Tenant’s obligation for the
payment of rent under the Lease, shall commence on the date on which the Tenant
Improvements have been substantially completed as determined by a certificate
from Landlord’s architect; provided that, if there shall be a delay in
substantial completion of the Tenant Improvements as a result of:


 


(a)           Tenant’s failure to approve any item or perform any other obligation in
accordance with and by the date specified in the Work Schedule;


 


(b)           Tenant’s request for materials, finishes or installations other than
those readily available; 


 


(c)           Tenant’s changes in the Tenant Improvement Plans after Tenant approves
the Tenant Improvement Plans;


 


(d)           Tenant’s request to deviate from the Standards for the Building; or


 


(e)           Tenant’s failure to timely make any payment due from Tenant under this
Work Letter Agreement or the Lease;


 


then,
as provided for in the Lease, the commencement of the Term shall be accelerated
by the number of days of such delay. The Tenant Improvements shall be deemed
substantially complete notwithstanding the fact that minor 


 




	
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items of the Tenant Improvements (such as construction, mechanical
adjustments, or decorations) which do not materially interfere with Tenant’s
use of the Premises remain to be performed (items normally referred to as “punch
list” items), which items Landlord shall promptly complete or correct.


 


9.             APPROVAL AND NOTICE PROCEDURE. In all circumstances where Landlord or
Tenant must provide an approval or notice as contained in this Work Letter
Agreement, Landlord and Tenant agree that such approval or notice shall
adequately given by telephonic means, followed by either an email or facsimile
confirmation.


 




	
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NOTICE OF LEASE TERM DATES


 


	
  To:

  	
   

  	
   

  	
  Date:

  	
                        , 20  

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


 


Re:                               Lease dated                           ,
20   , between                                                                         ,
a                                                            (“Landlord”) and                     (“Tenant”)(the “Lease”)
concerning Suite(s)      on floor(s)                    
located at                                                              ,
California (the “Premises”).


 


Tenant:


 


In accordance with Paragraph 3 of the Lease, we wish to confirm as
follows:


 


1.             That the Premises have been tendered herewith
to Tenant as being substantially complete in accordance with the Lease and that
the construction of the Premises is not deficient in any way except for punch
list items.


 


2.             That Tenant has been delivered possession of
the Premises and acknowledges that under the provisions of the Lease the Term
commenced on                                                      
and will end on                                       .


 


3.             That in accordance with the Lease Monthly
Basic Rent commenced to accrue on                                                      .


 


4.             Under Subparagraph l(b) and 1(1) of
the Lease, the exact number of Rentable Square Feet within the Premises is                            square
feet and Tenant’s Percentage is                                                              .


 


5.             Except as otherwise set forth in the Lease,
rent is due and payable in advance every month during the Term of the Lease.
Your rent checks should be made payable to                                                                    at                                                      .


 


                                         , a

                                                     


 


 


	
   

  	
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Exhibit C


 


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STANDARDS FOR UTILITIES AND SERVICES


 


The following standards for utilities and services are in effect.
Landlord reserves the right to adopt nondiscriminatory modifications and
additions hereto.


 


1.             The air conditioning system achieves maximum
cooling when the window coverings are extended to the full width of the window
opening. Landlord shall not be responsible for room temperatures if Tenant does
not keep all window coverings in the Premises fully extended whenever the
system is in operation. Tenant agrees to cooperate fully at all times with
Landlord, and to abide by all reasonable regulations and requirements which
Landlord may prescribe for the proper functioning and protection of the air
conditioning system. Tenant agrees not to connect any apparatus, device,
conduit or pipe to any Building system without Landlord’s prior written
approval. Tenant further agrees that neither Tenant nor its servants,
employees, agents, visitors, licensees or contractors shall at any time enter,
adjust, tamper with, touch or otherwise in any manner affect the mechanical
installations or facilities of the Building or the Project. The cost of
maintenance and service calls to adjust and regulate the air conditioning
system shall be charged to Tenant if the need for maintenance work results from
either Tenant’s adjustment of room thermostats or Tenant’s failure to comply
with its obligations under this Exhibit, including keeping window coverings
fully extended.


 


2.             Tenant’s use of electric current shall never
exceed the capacity of the feeders to the Building, or the risers or wiring
installation.


 


3.             Tenant shall keep the meter and installation
equipment in good working order and repair at Tenant’s sole cost and expense,
in default of which Landlord may cause such meter and equipment to be replaced
or repaired and collect the cost thereof from Tenant. Tenant agrees to pay for
water consumed, as shown on the meter, as and when bills are rendered, and on
default in making such payment, Landlord may pay such charges and collect the
charges from Tenant. Any such costs or expenses incurred, or payments made by
Landlord for any of the reasons or purposes set forth in this Paragraph, shall
be deemed to be additional rent payable by Tenant and collectible by Landlord
as such.


 


4.             Tenant shall pay to Landlord the cost of
removal of any of Tenant’s refuse and rubbish to the extent that the amount of
Tenant’s refuse and rubbish exceeds that usually generated by other offices in
the Building.


 


5.             Landlord reserves the right to stop service of
the plumbing, ventilation, air conditioning, telephone and electrical systems,
when necessary, by reason of accident or emergency, or for repairs, alterations
or improvements, when in the judgment of Landlord such actions are desirable or
necessary to be made, until the repairs, alterations or improvements shall have
been completed, and Landlord shall have no responsibility or liability for
failure to supply plumbing, ventilating, air conditioning, telephone or
electric service, when prevented from so doing by strike or accident or by any
cause beyond Landlord’s reasonable control, or by laws, rules, orders,
ordinances, directions, regulations or by reason of the requirements of any
federal, state, county or municipal authority or failure of gas, oil or other
suitable fuel supply or inability by exercise of reasonable diligence to obtain
gas, oil or other suitable fuel supply. Any obligations of Landlord to furnish
any services pursuant to any of the provisions of this Lease, or to perform any
act or thing for the benefit of Tenant, shall not be deemed breached if
Landlord is unable to furnish or perform the same by virtue of a strike or
labor trouble or any other cause whatsoever beyond Landlord’s control.


 




	
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Exhibit D


 


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SAMPLE FORM OF



TENANT ESTOPPEL CERTIFICATE


 


TO:                                                        ,
a                                        (“Landlord”) and                                            ,
a                    .


 


The
undersigned,                                     (“Tenant”), hereby certify to                                                a                                      ,
as follows:


 


1.             Attached hereto is a true, correct and
complete copy of that certain lease dated                      ,
20   , between Landlord and Tenant (the “Lease”), which demises premises located at Suite           ,                                                                      California (the “Premises”).
The Lease is now in full force and has not been amended, modified or
supplemented, except as set forth in Paragraph 4 below.


 


2.             The term of the Lease commenced on                                   ,
20   .


 


3.             The term of the Lease shall expire on                      ,
20   . There are                options
to extend the Lease term for a total period of        years,
none of which has been exercised. There are no options to expand the Premises.


 


4.             The Lease has: (Initial one)


 


	
   

  	
  (              )

  	
  not been amended, modified,
  supplemented, extended, renewed or assigned.

  
	
   

  	
   

  	
   

  
	
   

  	
  (              )

  	
  been amended, modified,
  supplemented, extended, renewed or assigned by the following described
  agreements, copies of which are attached hereto:

  



 


                                                                                                

                                                                                                


 


5.             Tenant has accepted and is now in possession
of the Premises.


 


6.                                       Tenant acknowledges that Landlord’s interest
in the Lease will be assigned to                                                  and
that no modification, adjustment, revision or cancellation of the Lease or
amendments thereto shall be effective unless the prior written consent of                                        is
obtained.


 


7.              The amount of fixed monthly rent is $                                      .


 


8.                                       The amount of security deposits (if any) is $                        .
 No other security deposits have been
made.


 


9.             Tenant is paying the full lease rental, which
has been paid in full as of the date of this Certificate. No rent or other
amount under the Lease has been paid for more than thirty (30) days in advance
of its due date.


 


10.           All work required to be performed by Landlord under the Lease and the
Work Letter Agreement (as defined in the Lease) has been completed.


 


11.           There are no defaults on the part of the Landlord or Tenant under the
Lease.


 




	
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Exhibit E


 


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12.           Tenant has no defense as to its obligations under the Lease and claims
no set-off or counterclaim against Landlord.


 


13.           Tenant has no right to any concession (rental or otherwise) or similar
compensation in connection with renting the space it occupies except as
provided in the Lease.


 


All provisions of the Lease and the amendments thereto (if any) referred
to above are hereby ratified.


 


The foregoing certification is made with the knowledge that Landlord is
about to sell the Property to                                    
or that                                              is
about to fund a loan to Landlord, which sale/loan Tenant understands is
scheduled to close on                                                               ,
and that in either case the named party is relying upon the representations
herein made in proceeding with that execution. Tenant shall take all steps
reasonably necessary to keep the transaction and party described in this
Certificate confidential. If there is any change in the information provided in
this Certificate between now and the closing described above, Tenant shall
immediately inform you of that change.


 


This Certificate has been duly executed and delivered by the authorized
officers of the undersigned as of                        ,
20   .


 


	
   

  	
   

  	
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RULES AND REGULATIONS


 


1.             Except as specifically provided in the Lease
to which these Rules and Regulations are attached, no sign, placard,
picture, advertisement, name or notice shall be installed or displayed on any
part of the outside or inside of the Building or the Project without the prior
written consent of Landlord. Landlord shall have the right to remove, at Tenant’s
expense and without notice, any sign installed or displayed in violation of
this rule. All approved signs or lettering on doors and walls shall comply with
all then-applicable governmental requirements and shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person or company designated
by Landlord.


 


2.             Tenant shall not place anything against or
near glass partitions or doors or windows, other than the Building Standard
window covering, which is visible from outside the Premises.


 


3.             Tenant shall not obstruct any sidewalks,
halls, passages, exits, entrances, escalators, or stairways of the Building or
the Project. The halls, passages, exits, entrances, escalators and stairways
are not open to the general public, but are open, subject to reasonable
regulations, to Tenant’s business invitees. Landlord shall in all cases retain
the right to control and prevent access thereto of all persons whose presence
in the judgment of Landlord would be prejudicial to the safety, character,
reputation and interest of the Project and its tenants; provided that nothing
contained in these Rules and Regulations shall be construed to prevent
such access to persons with whom any tenant normally deals in the ordinary
course of its business, unless such persons are engaged in illegal or unlawful
activities. No tenant and no employee or invitee of any tenant shall go upon
the roof(s) of the Project.


 


4.             The directory of the Building, if any, will 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.


 


5.             Landlord will furnish Tenant, free of charge,
with two keys to each door lock in the Premises. Landlord may make a reasonable
charge for any additional keys. Tenant shall not make or have made additional
keys, and Tenant shall not alter any lock or install any new additional lock or
bolt on any door of the Premises. Tenant, upon the termination of its tenancy,
shall deliver to Landlord the keys to all doors which have been furnished to
Tenant, and in the event of loss of any keys so furnished, shall pay Landlord
the cost of the key(s).


 


6.             If Tenant requires telegraphic, telephonic,
burglar alarm, satellite dishes, antennae or similar services, it shall first
obtain Landlord’s written approval (which Landlord may give or withhold in its
sole discretion), and shall comply with Landlord’s instructions in their
installation.


 


7.             Tenant’s initial move in and subsequent
deliveries of bulky items, such as furniture, safes and similar items, shall,
unless otherwise agreed in writing by Landlord, be made during the hours of
6:00 p.m. to 6:00 a.m. or on Saturday or Sunday. Deliveries during
normal office hours shall be limited to normal office supplies and other small
items. No deliveries shall be made which impede or interfere with other tenants
or the operation of the Building.


 


8.             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 and which is allowed by law. Landlord shall have the right to
prescribe the weight, size and position of all equipment, materials, furniture
or other property brought into the Building. Heavy objects shall, if considered
necessary by Landlord, stand on such platforms as determined by Landlord to be
necessary to properly distribute the weight, which platforms shall be provided
at Tenant’s expense. Business machines and mechanical equipment belonging to
Tenant, which cause noise or vibration that may be transmitted to the structure
of the building or to any space therein to such a degree as to be objectionable
to Landlord or to any tenants in the Building, shall be placed and maintained
by Tenant, at Tenant’s expense, on vibration eliminators or other devises
sufficient to eliminate noise or vibration. The persons employed to move such
equipment in or out of the Building must be acceptable to Landlord. Landlord
will not be responsible for loss of, or damage to, any such


 




	
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Exhibit F


 


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equipment or other property from any cause, and all damage done to the
Building or Project by maintaining or moving such equipment or other property
shall be repaired at the expense of Tenant.


 


9.             Tenant shall not use or keep in the Premises
any firearms, explosives, kerosene, gasoline or inflammable or combustible
fluid or material other than those limited quantities necessary for the
operation or maintenance of office equipment. Tenant shall not use or permit to
be used in the Premises any foul or noxious gas or substance, or permit or
allow the Premises to be occupied or used in a manner offensive or objectionable
to Landlord or other occupants of the Building by reason of noise, odors or
vibrations, nor shall Tenant bring into or keep in or about the Premises any
birds or animals.


 


10.           Tenant shall not use any method of heating or air conditioning other
than that supplied by Landlord.


 


11.           Tenant shall not waste electricity, water or air conditioning and agrees
to cooperate fully with Landlord to assure the most effective operation of the
Building’s heating and air conditioning and to comply with any governmental
energy saving rules, laws or regulations of which Tenant has actual notice, and
shall refrain from attempting to adjust controls. Tenant shall keep corridor
doors closed, and shall keep all window coverings pulled down.


 


12.           Landlord reserves the right, exercisable after thirty (30) days written
notice to Tenant and without liability to Tenant, to change the name and street
address of the Building.


 


13.           Landlord shall not be liable for damages for any error with regard to
the admission to or exclusion from the Building of any person. Landlord
reserves the right to prevent access to the Building in case of invasion, mob,
riot, public excitement or other commotion by closing and locking the doors or
by other appropriate action.


 


14.           Tenant shall close and lock the doors of its Premises and entirely shut
off all water faucets or other water apparatus, and all lights, electricity,
gas or air outlets before Tenant and its employees leave the Premises. Tenant
shall be responsible for any damage or injuries sustained by other tenants or
occupants of the Building or by Landlord for noncompliance with this rule.


 


15.           Tenant shall not obtain for use on the Premises ice, drinking water,
food, beverage, towel or other similar services or accept upon the Premises
sandwich or other food services, barbering or shoeshine service, or similar
non-office related or business vendors if such service or use will cause damage
or disruption to the Premises or the Common Areas. In such event, Landlord’s
prior written approval (which may be withheld in Landlord’s subjective good
faith discretion) will be required, and Landlord may govern the hours, rules and
regulations as Landlord deems reasonable.


 


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


 


17.           Tenant shall not sell, or permit the sale at retail of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise to
the general public in or on the Premises.  
Tenant shall not make any room-to-room solicitation of business from
other tenants in the Project. Tenant shall not use the Premises for any
business or activity other than that specifically provided for in this Lease.


 


18.           Tenant shall not install any radio or television antenna, loudspeaker,
satellite dishes or other devices on the roof(s) or exterior walls of the
Building or the Project. Tenant shall not interfere with radio or television
broadcasting or reception from or in the Project or elsewhere.


 




	
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19.           Except for minor and incidental decorative improvements to the Premises,
Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork or plaster or in any way deface the Premises or any part of the
Premises, except in accordance with the provisions of the Lease pertaining to
alterations. Landlord reserves the right to direct electricians as to where and
how telephone and telegraph wires are to be introduced to the Premises. Tenant
shall not cut or bore holes in partitions, floors or ceilings for wires or any
other purpose. Tenant shall not affix any floor covering to the floor of the
Premises in any manner except as approved by Landlord. Tenant shall, at its
sole cost, repair any damage resulting from noncompliance with this rule,


 


20.           Tenant shall not install, maintain or operate upon the Premises any
vending machines without the prior written consent of Landlord.


 


21.           Canvassing, soliciting and distribution of handbills or any other
written material, and peddling in the Project are prohibited, and Tenant shall
cooperate with Landlord to prevent such activities.


 


22.           Landlord reserves the right to exclude or expel from the Project any
person who, in Landlord’s judgment, is intoxicated or under the influence of
liquor or drugs or who is in violation of any of these Rules and
Regulations or any other rules and regulations of the Building.


 


23.           Tenant shall store all its trash and garbage within its Premises or in
other facilities provided by Landlord. Tenant shall not place in any trash box
or receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse disposal
shall be made in accordance with directions issued from time to time by
Landlord.


 


24.           The Premises shall not be used for the storage of merchandise held for
sale to the general public, or for lodging or for manufacturing of any kind,
nor shall the Premises be used for any improper, immoral or objectionable
purpose. No cooking shall be done or permitted on the Premises without Landlord’s
consent, except the use by Tenant of Underwriters’ Laboratory approved
equipment for brewing coffee, tea, hot chocolate and similar beverages shall be
permitted, and the use of a microwave oven for employees use shall be
permitted, provided that such equipment and use is in accordance with all
applicable federal, state, county and city laws, codes, ordinances, rules and
regulations.


 


25.           Tenant shall not use in any space of the Project any hand truck except
those equipped with rubber tires and side guards or such other
material-handling equipment as Landlord may approve. Tenant shall not bring any
other vehicles of any kind into the Building.


 


26.           Without the written consent of Landlord, Tenant shall not use the name
of the Building or the Project in connection with or in promoting or
advertising the business of Tenant except as Tenant’s address.


 


27.           Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.


 


28.           Tenant assumes any and all responsibility for protecting its Premises
from theft, robbery and pilferage, which includes keeping doors locked and
other means of entry to the Premises closed.


 


29.           To the extent Landlord reasonably deems it necessary (i) to provide
to third parties access to portions of the Common Areas in order to comply with
any applicable law, Landlord may do so without breaching this Lease, and (ii) to
exercise exclusive control over any portions of the Common Areas for the mutual
benefit of the tenants in the Project, Landlord may do so subject to
nondiscriminatory additional Rules and Regulations.


 


30.           Tenant’s requirements will be attended to only upon appropriate
application to Landlord’s asset management office for the Project by an
authorized individual. Employees of Landlord shall not perform any work


 




	
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or do anything outside of their regular duties unless under special
instructions from Landlord, and no employee of Landlord will admit any person
(Tenant or otherwise) to any office without specific instructions from
Landlord.


 


31.           Tenant shall abide by all restrictions Landlord places on smoking within
the Building. Notwithstanding the foregoing, Landlord shall not be required to
impose any restrictions on smoking within the Building for the benefit of
Tenant. No decision of Landlord to permit or prohibit smoking shall be
construed as a breach of this Lease by Landlord.


 


32.           Tenant shall comply with all (a) crime prevention programs, (b) hazardous
materials disclosure and control programs, and (c) water conservation
programs which Landlord is required to participate in under (i) any
restrictive covenants which may now or hereafter exist or (ii) any other
agreements which may now exist or hereafter be executed which affect the use and
operation of the Premises or Project.


 


33.           Tenant shall promptly provide Landlord with any information Landlord,
any mortgagee or beneficiary with a lien on the Building, any ground lessor
with respect to the Building, or any governmental agency may reasonably
request.


 


34.           Landlord may waive any one or more of these Rules and Regulations
for the benefit of Tenant or any other tenant, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of
Tenant or any other tenant, nor prevent Landlord from thereafter enforcing any
such Rules and Regulations against Tenant or any other tenant of the
Project.


 


35.           These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of the Lease.


 


36.           Landlord reserves the right to modify these Rules and Regulations
and adopt such other reasonable and non-discriminatory rules and
regulations as, in its judgment, may from time to time be needed for safety and
security, for care and cleanliness of the Project and for the preservation of
good order in the Project. Tenant agrees to abide by all the Rules and
Regulations stated herein and any additional rules and regulations which
are adopted. All changes to these Rules and Regulations shall be
communicated in writing to Tenant.


 


37.           Tenant shall be responsible for the observance of all of the foregoing rules by
Tenant’s employees, agents, contractors, clients, customers, invitees, guests
and other users of the Premises.


 




	
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TRAFFIC AND PARKING RULES AND
REGULATIONS


 


The following rules and regulations shall govern the use of the
parking facilities designated on Exhibit A-2 of the Lease in
connection with the use of the Premises.


 


1.             Landlord assumes no responsibility for any
damage to any vehicle parked in the parking areas or for any goods left in any
such vehicle. All such liability is specifically assumed by the operator of any
such vehicle as a condition of parking.


 


2.             Tenant shall not (a) park or permit its
employees to park in any parking areas designated by Landlord as areas for
parking by visitors to the Project, (b) park or permit its employees,
guests, invitees or visitors to park in the residential or commercial
neighborhoods contiguous to the Project, (c) leave vehicles in the parking
areas overnight, or (d) park any vehicles in the parking areas other than
automobiles, motorcycles, motor driven or non-motor driven bicycles or four
wheeled trucks. No propane or natural gas powered vehicles shall be allowed to
park in the parking areas.


 


3.             Parking cards, stickers, or any other devices
or forms of identification supplied by Landlord as a condition of use of the
parking facilities shall remain the property of Landlord. Such parking
identification device must be displayed as requested and may not be mutilated
in any manner. The serial number of the parking identification device may not
be obliterated. Devices are not transferable and any device in the possession
of an unauthorized holder will be void. Landlord reserves the right to (a) require
that a reasonable security deposit be paid to Landlord for each parking area or
Building access card issued to Tenant, and (b) change the location of
Tenant’s reserved parking spaces, if any, from time to time.


 


4.             No overnight or extended term storage of
vehicles shall be permitted.


 


5.             Vehicles must be parked entirely within painted
stall lines of a single parking stall.


 


6.             All directional signs and arrows must be
observed.


 


7.             The speed limit within all parking areas shall
be five (5) miles per hour.


 


8.             Parking is prohibited in any area other than
those specifically designated for parking.


 


9.             All parkers are required to park and lock
their own vehicles. All responsibility for damage to vehicles is assumed by the
parker.


 


10.           Loss or theft of parking identification devices must be reported to
Landlord’s asset management office for the Project immediately, and a lost or
stolen report must be filed by the Tenant or user of such parking
identification device at the time. Landlord has the right to exclude any
vehicle from the parking facilities that does not have an identification
device.


 


11.           Any parking identification devices reported lost or stolen found on any
unauthorized vehicle will be confiscated and the illegal holder will be subject
to prosecution.


 


12.           Washing, waxing, cleaning or servicing of any vehicle in any area not
specifically reserved for such purpose is prohibited. Landlord will not
unreasonably withhold its approval to permit the washing, waxing, or cleaning
of any vehicle.


 




	
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Exhibit G


 


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13.           The parking operators, managers or attendants are not authorized to make
or allow any exceptions to these rules and regulations.


 


14.           Tenant’s continued right to use any parking spaces in the parking
facilities is conditioned upon Tenant abiding by these rules and
regulations and those contained in this Lease. Further, if this Lease
terminates for any reason whatsoever, Tenant’s right to use the parking spaces
in the parking facilities shall terminate concurrently with the Lease.


 


15.           Tenant agrees to sign a parking agreement with Landlord or Landlord’s
parking operator within five (5) days of request, which agreement shall be
consistent with this Lease and these rules and regulations.


 


16.           Landlord reserves the right to refuse the sale of parking cards,
stickers or other parking identification devices to any tenant or person or
their respective agents or representatives who willfully refuse to comply with
these rules and regulations and all posted or unposted city, state or
federal ordinances, laws or agreements.


 


17.           Tenant and its employees shall comply with any traffic management and/or
environmental regulation program now or hereafter in effect, whether imposed by
local, regional, state or federal governmental or quasi-governmental agencies
(collectively, “TDM Program”) which has been or
may hereafter be applicable to Tenant, the Building or the Project. Tenant
acknowledges that such a TDM Program may cause Tenant inconvenience, but
nonetheless agrees to cooperate in the formation of, and comply with the
provisions of, any such TDM Program. Additionally, Tenant shall (a) participate
in any employee commute transportation surveys reasonably required by Landlord,
and (b) adhere to measures that Landlord may reasonably enact in order to
comply with existing and future laws relating to traffic control or flow
applicable to the Project. Any breach by Tenant of any of its covenants in this
Paragraph 17 may result in penalty fees being assessed against Landlord;
therefore, Tenant shall be liable to Landlord for all such fees, plus interest
thereon, assessed on account of any such breach, and that breach shall also
constitute a material default under this Lease.


 


18.           Landlord reserves the right to modify these rules and regulations
or adopt such other reasonable and nondiscriminatory rules and regulations
for the parking facilities as it deems necessary for the operation of the
parking facilities. Landlord may refuse to permit any person who violates these
rules to park in the parking facilities, and any violation of the rules shall
subject the vehicle to removal at such vehicle owner’s expense.


 




	
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GUARANTY


 


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GUARANTY OF LEASE


 


THIS GUARANTY OF LEASE (“Guaranty”) is
made on August 12, 2005, by WESTERN STATES INVESTMENT
CORPORATION, a California corporation (“Guarantor”),
for the benefit of POINTE CAMINO WINDELL LLC,
a California limited liability company (“Landlord”),
with reference to the following facts:


 


A.            A certain Lease Agreement (“Lease”), dated August 12, 2005 has been, or will be,
executed between Landlord and LPATH THERAPEUTICS INC.,
a Delaware corporation (“Tenant”),
covering certain premises located at 6335 Ferris Square, Suite A, San
Diego, California;


 


B.            Under the Lease, Landlord requires as a
condition to entering into the Lease that Guarantor guaranty Tenant’s full and
timely performance under the Lease; and


 


C.            Guarantor desires that Landlord enter into the
Lease with Tenant.


 


NOW, THEREFORE, in consideration of Landlord entering into the Lease,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties agree as follows:


 


(1)           Guarantor unconditionally and absolutely guaranties to Landlord the
punctual payment of all rents and monies due and to become due to Landlord from
Tenant under the Lease in the amounts and at the times set out in the Lease
(the “Indebtedness”) up to a maximum
aggregate amount of Three Hundred Sixty Thousand Dollars ($360,000) (the “Guaranteed Amount”). The Indebtedness, up to the Guaranteed
Amount, shall be payable by Guarantor to Landlord, or order, immediately on
demand in the event of any default by Tenant with respect to the Indebtedness
or any part thereof. All payments shall be made to Landlord in lawful money of
the United States without setoff or deduction. Time is of the essence in the performance
by Guarantor under this Guaranty. The Guaranteed Amount shall be reduced dollar
for dollar by all amounts paid by Tenant under the Lease for Rent or Operating
Expenses (but not by any payments for Security Deposits). Once Landlord has
received Rent and Operating Expenses on behalf of Tenant equal to the
Guaranteed Amount, then the obligations of Guarantor under this Guaranty shall
be terminated, and thereafter Landlord shall not seek to recover against
Guarantor from any amounts guaranteed hereunder.


 


(2)           Guarantor assumes the full responsibility for being and keeping itself
informed of the financial condition and assets of Tenant and of all other
circumstances bearing upon the risk of nonpayment of the Indebtedness which
diligent inquiry would reveal. Landlord shall have no duty to advise Guarantor
of information known to Landlord regarding such condition or any such
circumstances, regardless of whether Landlord has reason to believe that (i) any
such information materially increases the risk beyond that which Guarantor
intends to assume or (ii) such information is unknown to Guarantor, and
regardless of whether Landlord has a reasonable opportunity to communicate such
information to Guarantor. By executing this Guaranty, Guarantor knowingly
accepts the full range of risks encompassed within a contract of continuing
guaranty.


 


(3)           Guarantor waives: (a) all presentments, demands for performance,
notices of nonperformance, protests, and all other notices, including notices
of all of the following: protest, dishonor, acceptance of this Guaranty, any
default, partial payment or nonpayment of all or any part of the Indebtedness
and the existence, creation or incurring of new or additional Indebtedness; (b) any
right to require Landlord to proceed against Tenant or any other person, to
proceed against or exhaust any security held from Tenant or any other person
for the Indebtedness, to proceed against or exhaust any security held from
Guarantor or any other person for this Guaranty or to pursue any other remedy
in Landlord’s power whatsoever at any time; (c) the benefits of any laws
which provide that the obligation of a guarantor must neither be larger in
amount nor in other respects more burdensome than that of the principal or
which reduce a guarantor’s obligation in proportion to the principal
obligation; (d) any defense arising by reason of the invalidity,
illegality or lack of enforceability of the Indebtedness or any part thereof, (e) any
defense based upon: (i) any failure of Landlord to give Tenant or
Guarantor notice of any sale or other disposition of any property securing any
or all of the Indebtedness or any guaranty thereof, (ii) any defect in any


 




	
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notice that may be given in connection with any sale or other
disposition of any such property, (iii) any failure of Landlord to comply
with any provision of applicable law in enforcing any security interest in or
lien upon any such property, including any failure by Landlord to dispose of
any such property in a commercially reasonable manner, or (iv) any
modifications or amendments to the Lease (regardless of how extensive and
regardless of whether those modifications or amendments materially increase
Tenant’s rent or other obligations) or extension of the Lease or change in the
size or location of the space leased; (f) any defense based upon or
arising out of any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
against Tenant or any other person, including any discharge of, or bar against
collecting, any of the Indebtedness (including any interest thereon), in or as
a result of any such proceeding; (g) any defense based upon termination of
the Lease; (h) any defense based upon an election of remedies by Landlord
(which defense would claim that Landlord was required by law to choose to
pursue one among multiple available legal remedies and did not timely do so); (i) any
rights of subrogation (i.e., the right to succeed to Landlord’s rights against
Tenant upon Guarantor performing its obligations to Landlord under this
Guaranty), reimbursement from Tenant or others, exoneration (i.e.,
extinguishment of this Guaranty because of the acts of Landlord or others),
contribution and indemnity (i.e., a shifting of the Guarantor’s obligations
hereunder to another party) and any rights or claims of any kind or nature
against Tenant which arise out of or are caused by this Guaranty, and any
rights to enforce any remedy which Landlord now has or may hereafter have
against Tenant and any benefit of, and any right to participate in, any
security now or hereafter held by Landlord, until all of the Indebtedness has
been fully paid and performed; and (j) any right to revoke all or any part of
this Guaranty if it is ever construed as a continuing guaranty.


 


(4)           Guarantor understands that the exercise by Landlord of certain rights
and remedies may affect or eliminate Guarantor’s right of subrogation
(described in Section (4), clause (i), above) against Tenant or any other
guarantor and that Guarantor may therefore incur liability hereunder for which
Guarantor may in whole or part be unable to be reimbursed by Tenant.
Nevertheless, Guarantor hereby authorizes and empowers Landlord, its successors,
endorsees and/or assigns, to exercise in its or their sole discretion, any
rights and remedies, or any combination thereof, which may then be available,
it being the purpose and intent of Guarantor that the obligations hereunder
shall be absolute, continuing, independent and unconditional under any and all
circumstances.


 


(5)           Landlord may, at its election, but without obligation to do so, exercise
any right or remedy it may have against Tenant or any other person or any real
or personal property security it holds for the Indebtedness or any part thereof
or any guaranty thereof, including foreclosing a trust deed, mortgage or other
instrument judicially or nonjudicially or taking a deed, assignment or transfer
in lieu of foreclosure as to any such property, without affecting or impairing
in any way the liability of Guarantor hereunder except to the extent the
Indebtedness has been paid, even if the effect of such action is to destroy or
diminish Guarantor’s subrogation rights, Guarantor’s right to proceed against
Tenant for reimbursement, Guarantor’s right to recover contribution from any
other guarantor or any other right or remedy or any such security, and
Guarantor waives any defense arising out of the absence, impairment or loss of
any right of subrogation, reimbursement or contribution or of any other right
or remedy of Guarantor against Tenant or any other person or any such security,
whether resulting from an election of remedies by Landlord or any act or
omission by Landlord or otherwise.


 


(6)           Until all Indebtedness of Tenant to Landlord shall have been paid in
full, even though such Indebtedness may be in excess of Guarantor’s liability
hereunder, and all periods within which any amount paid on account of the
Indebtedness may be required to be restored or returned by Landlord upon the
bankruptcy, insolvency or reorganization of Tenant, any other guarantor or any
other person have expired, Guarantor shall have no right of subrogation, and
waives any right to enforce any remedy which Landlord now has or may hereafter
have against Tenant, and waives any benefit of, and any right to participate
in, any security now or hereafter held by Landlord.


 


(7)           Without in any manner limiting the generality of any other provision of
this Guaranty, Guarantor waives all benefits and defenses under the provisions
of Civil Code sections 2809 (which provides generally that the liability of a
surety must be neither larger in amount nor more burdensome than that of the
principal), 2810 (which provides generally that a surety is not liable if the
principal had no liability at the time of the execution of a contract or
thereafter ceases to be liable), 2819 (which provides generally that a surety
is exonerated if the original obligation of the principal is altered in any respect,
or the remedies or rights of a creditor against the principal are in any way


 




	
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impaired or suspended without the consent of the surety), 2839 (which
provides generally that performance of the principal obligation, or an offer of
such performance, exonerates a surety), 2845 (which provides generally that a
surety may require a creditor to proceed against the principal, or to pursue
any other remedy in the creditor’s power which the surety cannot pursue; and if
the creditor neglects to do so, the surety is exonerated to the extent the
surety is thereby prejudiced), 2847, 2848 and 2849 (which generally provide a
surety with rights of subrogation or reimbursement against a principal, rights of
subrogation or reimbursement against any collateral or security provided to
secure the obligations of the principal, and rights of contribution against any
other guarantor or pledgor), 2850 (which provides generally that whenever
property of a surety is hypothecated with property of the principal, the surety
is entitled to have the property of the principal first applied to the
discharge of the obligation), 2899 and 3433 (which relate generally to
marshalling assets and the order in which liens may be foreclosed), and any
similar or analogous statutes of this or any other jurisdiction.


 


(8)           The obligations of Guarantor hereunder are independent of the
obligations of Tenant. A separate action or actions may be brought and
prosecuted against Guarantor without first proceeding against Tenant or any
other person or any security held by Landlord and without pursuing any other
remedy and without joining Tenant or any other person in any such action or
actions.


 


(9)           If any legal proceeding arises in connection with this Guarnaty, in
addition to any other remedy at law or in equity sought or obtained by the
prevailing party, the losing party shall pay the reasonable legal and other
fees and all costs of the prevailing party incurred in connection with those
proceedings.


 


(10)         The liability of Guarantor hereunder shall be reinstated and revived,
and the rights of Landlord shall continue, with respect to any amount at any
time paid on account of the Indebtedness which shall thereafter be required to
be restored or returned by Landlord upon the bankruptcy, insolvency or
reorganization of Tenant, or otherwise, all as though such amount had not been
paid.


 


(11)         On Landlord’s request, Guarantor will provide complete and current tax
returns and financial statements, in a form reasonably satisfactory to
Landlord, and such other financial information about Guarantor as Landlord may
reasonably require.


 


(12)         This Guaranty shall inure to the benefit of Landlord, its successors and
assigns, and shall bind the heirs, executors, administrators, successors and
assigns of Guarantor. Any married person who signs this Guaranty agrees that
recourse may be had against his or her separate property for all of his or her
obligations hereunder. This Guaranty is assignable by Landlord without notice
with respect to all or any portion of the Indebtedness hereby guarantied, and
when so assigned, Guarantor shall be liable to the assignees under this
Guaranty without in any manner affecting the liability of Guarantor hereunder
with respect to any Indebtedness retained by Landlord.


 


(13)         This Guaranty shall be governed by and construed according to the laws
of the State of California. Whenever the context so requires, the masculine
gender includes the feminine or neuter, and the singular includes the plural.
As used herein, “any other person” shall include, without limitation, any other
guarantor of the Indebtedness or any part thereof, any endorser thereof or any
co-maker thereof, “including” shall not be limiting, and “or” shall not be
exclusive. If this Guaranty is executed by more than one Guarantor, their
obligations hereunder shall be joint and several. The invalidity or
unenforceability of any one or more provisions of this Guaranty will not affect
any other provision. Any legal action with respect to this Guaranty may be
brought in the courts of the State of California, with venue in the County of
San Diego, or in the United States District Court in California, with venue in
the County of San Diego, as Landlord may elect. Guarantor submits to each such
jurisdiction and waives any and all objections which it may have as to
jurisdiction or venue in either of the above courts.


 


(14)         This Guaranty constitutes the entire agreement of Guarantor and Landlord
with respect to the subject matter hereof and there are no promises, statements
or representations of any kind or nature whatsoever other than those herein
contained. No delay or failure by Landlord to exercise any right or remedy
against Guarantor will be construed as a waiver of that right or remedy. The
terms and provisions of this Guaranty may not


 




	
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be waived, altered, modified or amended except by written instrument
executed by Guarantor and Landlord. All rights and remedies of Landlord against
Guarantor are cumulative and not exclusive and may be exercised successively or
concurrently. No exercise of any right or remedy shall be deemed to be an
election of remedies and preclude exercise of any other right or remedy.


 


(15)         Any notice, demand or request to Guarantor shall be given in writing and
shall be deemed given when personally served on Guarantor or mailed (first
class U.S. mail postage prepaid) to Guarantor’s Address for Notice set forth
below. Any notice, demand or request to Landlord shall be in writing and be
deemed given when received by Landlord.


 


(16)         No person executing this Guaranty is doing so in consideration of or in
reliance on any other person executing this Guaranty or any other guaranty of
the Indebtedness.


 


	
   

  	
  “Guarantor”

  
	
   

  	
  WESTERN STATES INVESTMENT
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Scott R.
  Pancoast

  	
   

  
	
   

  	
  SCOTT R.
  PANCOAST

  
	
   

  	
  EXECUTIVE VP

  
	
   

  	
   

  
	
   

  	
  Guarantor’s Address for
  Notice:

  
	
   

  	
   

  
	
   

  	
  Western States Investment
  Corporation

  
	
   

  	
  6335 Ferris Square,
  Suite “A”

  
	
   

  	
  San Diego, CA 92121

  



 




	
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Index of Lease Riders


 


1.             Right of First Notice to Lease Additional
Space


 


2.             Option(s) to Extend Term


 




	
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LEASE RIDER NO. 1


 


RIGHT OF FIRST NOTICE TO

LEASE ADDITIONAL SPACE


 


This Rider is attached to and made a part of that certain Lease (the “Lease”), dated August 12, 2005 between POINTE CAMINO WINDELL LLC, a California
limited liability company (“Landlord”) and
a LPATH THERAPEUTICS INC., a
Delaware corporation (“Tenant”) for
the premises known as Suite(s) A, 6335 Ferris Square, San Diego, California
(the “Premises”). Defined or initially
capitalized terms used in this Rider shall have the same meanings as in the
Lease. The provisions of this Rider shall supersede any inconsistent provisions
of the Lease to the extent of the inconsistency.


 


Provided Tenant is not then in default under the Lease, if Landlord
decides to lease the space adjacent to the Premises consisting of approximately
17,479 square feet and designated as Suite(s) B, C, D (the “Additional
Space”) to the general public, Landlord shall first give written
notice to Tenant of the material terms and conditions upon which Landlord is
willing to offer to lease the Additional Space to the general public (“Landlord’s Notice”). Tenant shall have five (5) days
after Landlord’s Notice is given within which to give written unconditional
notice to Landlord that Tenant agrees to lease all (and not less than all) of
the Additional Space on all the terms and conditions set forth in Landlord’s
Notice (“Tenant’s Notice”). If Tenant duly
exercises its rights under this Rider, the Additional Space shall become part
of the Premises as of the date on which Tenant shall first have the right to
occupy all or any part of that Additional Space under the terms of Landlord’s
Notice or the Lease amendment resulting therefrom.


 


This Right of First Notice is a one-time right only. If Landlord fails
to receive Tenant’s Notice within the above five-day period, then all rights of
Tenant to lease the Additional Space under this Rider shall automatically
terminate, and Landlord shall thereafter have no further obligation to notify
Tenant of any proposal to lease the Additional Space. Landlord shall thereafter
have the unconditional right to lease all or any part of the Additional Space
to third parties on the terms and conditions as contained in Landlord’s Notice
or on any other terms and conditions that Landlord thereafter negotiates,
without further obligation to Tenant.


 


If Tenant duly exercises this Right of First Notice within the above
five-day period, then Tenant shall enter into an amendment to the Lease (i) incorporating
the Additional Space into the Lease on the terms and conditions contained in
Landlord’s Notice and (ii) adjusting Tenant’s Percentage and rent
accordingly. All other terms and conditions of the Lease (except as specified
in the immediately preceding sentence, this Rider, Exhibit(s) A-l and Lease
paragraphs 3, 4, and 10) shall remain the same and in full effect. If Tenant
fails to duly execute and return the Lease amendment to Landlord within five (5) days
after it is delivered to Tenant for signature, this Right of First Notice and
Tenant’s acceptance of Landlord’s Notice shall automatically be void, any right
accrued under this Right of First Notice shall be of no effect, and Landlord
shall thereafter be free to unconditionally lease the Additional Space to one
or more third parties as set forth above.


 


This Right of First Notice shall not apply to (a) offers from any
third parties to lease the Additional Space, (b) leases or transfers among
entities or persons related to Landlord (including, but not limited to,
partners if Landlord is a partnership, and shareholders if Landlord is a
corporation), and (c) any proposed sale or purchase of the Building,
including, without limitation, a proposed sale-and-leaseback of the Building.
This Right of First Notice is personal to Tenant. If Tenant Transfers any of
Tenant’s interest in the Lease before the permitted exercise of Tenant’s rights
under this Right of First Notice, those rights shall not be transferred to any
transferee but shall instead automatically lapse, and Landlord’s obligations
under this Right of First Notice shall automatically terminate. This Right of
First Notice shall automatically expire without notice on the expiration of the
original Term or sooner termination of the Lease or upon any Transfer or
sublease by Tenant of all or any part of the Premises.


 


Landlord agrees to give to Tenant, an expressed covenant to act, at all
times, in good faith and due consideration, to accommodate Tenant’s Right of
First Notice and Tenant’s continuing need throughout the Term


 




	
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for Additional Space. Landlord will only give a Right of First Notice to
Tenant if Landlord reasonably deems that a bona fide third party, or subsequent
bona fide third party, is ready, willing and able to lease the Additional
Space.


 




	
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LEASE RIDER NO. 2


 


OPTION TO EXTEND TERM


 


This Rider is attached to and made a part of that certain Lease (the “Lease”), dated August 12, 2005 between POINTE CAMINO WINDELL LLC, a California limited liability
company (“Landlord”) and a LPATH
THERAPEUTICS INC., a Delaware corporation (“Tenant”)
for the premises known as Suite(s) A, 6335 Ferris Square, San Diego, California
(the “Premises”). Defined or initially
capitalized terms used in this Rider shall have the same meanings as in the
Lease. The provisions of this Rider shall supersede any inconsistent provisions
of the Lease to the extent of the inconsistency.


 


Landlord grants to Tenant an option (the “Option”)
to extend the Term for five (5) additional year(s) (the “Extension”) on the same terms and conditions as set forth
in the Lease, except that the Monthly Basic Rent shall be adjusted on the first
day of the Extension (the “Adjustment Date”)
to the “fair rental value” of the Premises on the Adjustment Date as follows:


 


(a)           At least one hundred eighty (180) days before the Adjustment Date,
Landlord and Tenant shall meet in an effort to negotiate, in good faith, the
fair rental value of the Premises as of the Adjustment Date. If Landlord and
Tenant have not agreed upon the fair rental value of the Premises at least one
hundred (100) days before the Adjustment Date, Landlord and Tenant shall
attempt to agree in good faith upon a single appraiser not later than
seventy-five (75) days before the Adjustment Date. If Landlord and Tenant are
unable to agree upon a single appraiser within this time period, then Landlord
and Tenant shall each appoint one (1) appraiser not later than sixty-five
(65) days before the Adjustment Date. Within ten (10) days thereafter, the
two appointed appraisers shall appoint a third appraiser. If either Landlord or
Tenant fails to appoint its appraiser within the prescribed time period, the
single appraiser appointed shall determine the fair rental value of the
Premises. If both parties fail to appoint appraisers within the prescribed time
periods, then the first appraiser thereafter selected by a party shall
determine the fair rental value of the Premises. Each party shall bear the cost
of its own appraiser, and the parties shall share equally the cost of a single
or a third appraiser, if applicable. Each appraiser shall have at least five (5) years
experience in the appraisal of Class A industrial buildings in San Diego
County, California and shall be a member of one or more professional
organizations such as MAI or an equivalent.


 


(b)           For purposes of such appraisal, “fair rental value”
shall mean the price that a ready and willing tenant would pay, as of the
Adjustment Date, as monthly rent to a ready and willing landlord of comparable,
first-class industrial buildings in the San Diego County area for space
comparable to the Premises if that property were exposed for lease on the open
market for a reasonable period of time with a lease comparable to the Lease and
with tenant improvements comparable to those in the Premises. If a single
appraiser is chosen, then such appraisal shall determine the fair rental value
of the Premises. Otherwise, the fair rental value of the Premises shall be the
arithmetic average of the two of the three appraisals which are closest in
amount, and the third appraisal shall be disregarded. In no event, however,
shall the then-existing monthly rent ever be reduced by reason of such
computation, nor shall there be any rent concession or additional tenant
improvement allowance for the Extension term. Landlord and Tenant shall
instruct the appraiser(s) to complete their determination of the fair rental
value not later than thirty (30) days before the Adjustment Date. If the fair
rental value is not determined before the Adjustment Date, then Tenant shall
continue to pay to Landlord the monthly rent in effect immediately prior to
such Extension, until the fair rental value is determined. When the fair rental
value of the Premises is determined, Landlord shall deliver notice of that amount
to Tenant, and Tenant shall pay to Landlord, within ten (10) days after
receipt of such notice, the difference between the monthly rent actually paid
by Tenant to Landlord and the new monthly rent determined under this Rider.


 


The Option shall be exercised only by written unconditional notice
received by Landlord at least one (1) year before expiration of the Term.
If Landlord does not timely receive Tenant’s written unconditional notice of
the exercise of the Option, the Option under this Rider shall immediately
lapse, and there shall be no further right to extend the Term or to the
Extension. The Option shall be exercisable by Tenant on the express condition
for Landlord’s benefit that Tenant shall not be in default either at the time
of the exercise of the Option or at the


 




	
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commencement of the Extension. If Tenant timely exercises the Option
under this Rider, “Term” shall
mean, for all purposes under the Lease, the sum of (a) the Term, as defined
under Subparagraph l(m) of the Lease, plus (b) the term of the Extension
for which the Option has been exercised.


 


The Option is personal to Tenant. In the event of any sublease or
Transfer of Tenant’s interest in the Lease before the permitted exercise of the
Option, the Option shall not be transferred to any transferee but shall instead
automatically lapse, and the Term shall be as provided for in Paragraph 3 of
the Lease.


 




	
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