Document:

EXHIBIT
10.9

 

SECOND AMENDMENT TO LEASE

 

THIS SECOND AMENDMENT TO LEASE is dated for
reference purposes only as August 7, 1998, and is part of that Lease dated
October 27, 1993, together with First Amendment to Lease dated July 8, 1995,
(collectively, the “Lease”) by and between AMB PROPERTY, L.P., a Delaware limited
partnership, Successor-in-Interest to The Equitable Life Assurance Society of
the United States, a New York corporation (“Landlord”), and COLLAGEN
CORPORATION, a Delaware corporation (“Tenant”), and is made with
reference to the following facts:

 

A.            The Premises currently leased by Tenant pursuant to the
Lease consists of 11,200 rentable square feet commonly known as 48340 Milmont
Drive, City of Fremont, California.

 

B.            The Lease Term for said Premises
currently expires on January 3, 1999.

 

C.            Tenant and Landlord have agreed to
extend the Term of the Lease.

 

NOW, THEREFORE, Landlord and Tenant hereby
agree that the Summary of Basic Lease Terms is amended as follows:

 

1.             Landlord’s Name:  The Lease is hereby amended to reflect
change in ownership of the above-referenced Premises to AMB PROPERTY, L.P., a
Delaware limited partnership.

 

2.             Lease Term:  Paragraph 2 is hereby amended to provide
that the Lease Term shall be extended through and including December 31, 2003.
The Commencement Date of the new term shall be January 1, 1999.

 

3              Landlord’s Address:  Landlord’s address for notices is amended to
read:

 

AMB PROPERTY, L.P.

505 Montgomery
Street

6th Floor

San Francisco, CA
94111

 

4.             Base Monthly Rent:  Commencing January 1, 1999, Paragraph 3 is
hereby amended to provide for the Base Monthly Rent as follows:

 

	
  January 1, 1999, through and including January 31,
  1999:

  	
  $8,999.74 per month

  
	
  February 1, 1999, through and including December 31,
  1999:

  	
  $9,520.00 per month

  
	
  January 1, 2000, through and including December 31,
  2000:

  	
  $10,080.00 per month

  
	
  January 1, 2001, through and including December 31,
  2001:

  	
  $10,640.00 per month

  
	
  January 1, 2002, through and including December 31,
  2002:

  	
  $11,200.00 per month

  
	
  January 1, 2003, through and including December 31,
  2003:

  	
  $11,760.00 per month

  

 

5.             Security Deposit:  Paragraph 48 is hereby amended to provide
for an increase in the Security Deposit of $ 6,608.00 which Tenant has
provided Landlord upon signature hereon, for a total of $11,760. 00.

 

6.             Delivery and Acceptance of
Premises:  Delivery and acceptance
of the Premises as provided for in Paragraph A above shall be “as is”.

 

7.             Surrender of Premises:  Article 16 of the Lease is modified to add
the following:

 

Notwithstanding
the foregoing, Tenant has installed and shall remove the QA Inspection Lab,
quarantine storage cage and the additional fire line installed to support
Tenant’s racking system. Removal of the fire line shall include all piping and
connections up to the riser. The racking system riser shall be capped.

 

Tenant has
installed the following improvements which shall remain a part of the Premises:
air conditioning replacement (AC-8), storage and receiving offices in the front
office area and the modified building sprinkler system.

 

 

8.             Extended Term: Paragraphs 2
and 3 of Addendum I are deleted and substited with the following:

 

Landlord hereby grants to
Tenant one option to extend the Lease Term for a five (5) year term on the
following terms and conditions:

 

A.            Tenant must give Landlord notice in writing of its
exercise of the option in question no earlier than one hundred eight (180) days
and no later than one hundred twenty (120) days before the date the Lease Term
would end but for said exercise.

 

B.            Tenant may not extend the Lease Term pursuant to any
option granted by this paragraph if Tenant is materially in default beyond any
applicable cure period as of the date of exercise of the option in question or
as of the date this Lease would have been terminated but for said exercise.

 

C.            All terms and conditions of this Lease shall apply during
the option period, except that the Base Monthly Rent for the option period
shall be determined as provided in Paragraph D.

 

D.            The Base Monthly Rent for the Option Period shall be the
greater of (i) one hundred percent (100%) of the Base Monthly Rent due the last
month of the previous Lease Term, or (ii) one hundred percent (100%) of the
then fair market monthly rent determined as of the commencement of the option period
in question based upon like buildings with like improvements in the Fremont
area within the boundaries of Highways 680 and 880. If the parties are unable
to agree upon the fair market monthly rent for the Premises for the option
period in question at least seventy-five (75) days prior to the commencement of
the option period in question, then the fair market monthly rent shall be
determined by appraisal conducted pursuant to subparagraph E.

 

E.             In the event it becomes necessary to determine by appraisal
the fair market rent of the Premises for the purpose of establishing the Base
Monthly Rent during the Option Period, then such fair market monthly rent shall
be determined by three (3) real estate appraisers, all of whom shall be members
of the American Institute of Real Estate Appraisers with not less than five (5)
years experience appraising real property (other than residential or
agricultural property) located in Alameda County, California, in accordance
with the following procedures:

 

(1)           The party demanding an appraisal (the
“Notifying Party”) shall notify the other party (the “Non-Notifying Party”)
thereof by delivering a written demand for appraisal, which demand, to be
effective, must give the name, address, and qualifications of an appraiser selected
by the Notifying Party. Within ten (10) days of receipt of said demand, the
Non-Notifying Party shall select its appraiser and notify the Notifying Party,
in writing, of the name, address, and qualifications of an appraiser selected
by it. Failure by the Non-Notifying Party to select a qualified appraiser
within said ten (10) day period shall be deemed a waiver of its right to select
a second appraiser on its own behalf and the Notifying Party shall select a
second appraiser on behalf of the Non-Notifying Party within five (5) days
after the expiration of said ten (10) day period. Within ten (10) days from the
date the second appraiser shall have been appointed, the two (2) appraisers so
selected shall appoint a third appraiser. If the two appraisers fail to select
a third qualified appraiser, the third appraiser shall be selected by the
American Arbitrations Association or if it shall refuse to perform this
function, then at the request of either Landlord or Tenant, such third
appraiser shall be promptly appointed by the then Presiding Judge of the
Superior Court of the State of California for the County of Alameda.

 

(2)           The three (3) appraisers so selected
shall meet in Fremont, California, not later than twenty (20) days following
the selection of the third appraiser. At said meeting the appraisers so
selected shall attempt to determine the fair market monthly rent of the
Premises for the option period in question (including the timing and amount of
periodic increases).

 

(3)           If the appraisers so selected are
unable to complete their determinations in one meeting, they may continue to
consult at such times as they deem necessary for a fifteen (15) day period from
the date of the first meeting, in an attempt to have at least two (2) of them
agree. If, at the initial meeting or at any time during said fifteen (15) day
period, two (2) or more of the appraisers so selected agree on the fair market
rent of the Leased Premises, such agreement shall be determinative and binding
on the parties hereto, and the agreeing appraisers shall, in simple letter form
executed by the agreeing appraisers, forthwith notify both Landlord and Tenant
of the amount set by such agreement.

 

2

 

(4)           If two (2) or more appraisers do not
so agree within said fifteen (15) day period, then each appraiser shall, within
five (5) days after the expiration of said fifteen (15) day period, submit his
independent appraisal in simple letter form to Landlord and Tenant stating his
determination of the fair market rent of the Premises for the option period in
question. The parties shall then determine the fair market rent for the
Premises by determining the average of the fair market rent set by each of the
appraisers. However, if the lowest appraisal is less than eighty-five percent
(85%) of the middle appraisal then such lowest appraisal shall be disregarded
and/or if the highest appraisal is greater than one hundred fifteen percent
(115%) of the middle appraisal then such highest appraisal shall be
disregarded. If the fair market rent set by any appraisal is so disregarded,
then the average shall be determined by computing the average set by the other
appraisals that have not been disregarded.

 

(5)           Nothing contained herein shall
prevent Landlord and Tenant from jointly selecting a single appraiser to
determine the fair market rent of the Premises, in which event the
determination of such appraisal shall be conclusively deemed the fair market
rent of the Premises.

 

(6)           Each party shall bear the fees and
expenses of the appraiser selected by or for it, and the fees and expenses of
the third appraiser (or the joint appraiser if one joint appraiser is used)
shall be borne fifty percent (50%) by Landlord and fifty percent (50%) by
Tenant.

 

9.             Except as expressly set forth in this Amendment, all
terms and conditions of the Lease remain in full force and effect.

 

IN
WITNESS WHEREOF, Landlord and Tenant have executed this
Second Amendment to be effective as of the date first set forth above.

 

	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  
	
  AMB
  PROPERTY, L.P.

  	
  COLLAGEN
  CORPORATION

  
	
  a
  Delaware limited partnership

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  AMB
  Property Corporation

  	
  By:

  	
  /s/ Michael Bates

  	
   

  
	
   

  	
  a
  Maryland corporation, its general partner

  	
   

  	
  Michael Bates

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John L. Rossi

  	
   

  	
  Its:

  	
  VP and General Counsel

  	
   

  
	
   

  	
  John
  L. Rossi

  	
   

  	
  [Title]

  
	
  Its:

  	
  Vice
  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  8/18/98

  	
   

  	
  Dated:

  	
  8/7/98

  	
   

  
										

 

3

 

STANDARD
INDUSTRIAL LEASE–MULTI-TENANT, FULL NET

 

THIS LEASE, dated October
27, 1993,  for purposes
of reference only, is made and entered into by and between The Equitable
Life Assurance Society of the United States  ("Landlord") and Collagen Corporation a Delaware
Corporation  ("Tenant").

 

WITNESSETH:

 

Landlord hereby leases to
Tenant, and Tenant hereby leases from Landlord the Premises described in
paragraph 1(c) below for the term and subject to matters of record and to the
terms, covenants, agreements and conditions hereinafter set forth, to each and
all of which Landlord and Tenant hereby mutually agree.

 

1.             Definitions.  Unless the context otherwise specifies or
requires, the following terms shall have the meanings herein specified:

 

(a)           The term “Industrial Center” shall
mean the parcel and other real property described with precision in Exhibit B,
as well as any property interest in the area of the streets bounding the parcel
described in Exhibit B, and all other improvements on or appurtenances
to said parcel or said streets.

 

(b)           The term “Building” shall mean the
building(s) in which the Premises are located.

 

(c)           The term “Premises” shall mean the
portion of the Building which is crosshatched on the plan(s) included as part
of Exhibit A.

 

(d)           The term “Operating Expenses” shall
mean all of the following costs, if any, incurred by Landlord with respect to
the Industrial Center and allocable to the Building for:

 

(i)            the operation, repair, and maintenance,
in neat, clean, and good order and condition, of the Industrial Center,
including without limitation: (A) all buildings and improvements located
thereon, (B) all parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, driveways, landscaped areas, striping, bumpers,
irrigation systems, lighting facilities, fences, and gates; (C) trash disposal
services; (D) tenant directories; (E) fire detection systems, including
sprinkler system maintenance and repair; (F) security services; and (G) any
other services to be provided by Landlord described elsewhere in this Lease as
an Operating Expense;

 

(ii)           any deductible portion of an insured
loss concerning any of the items or matters described in this subparagraph (d);

 

(iii)          the cost of the premiums for the insurance  policies to be maintained by
Landlord under this Lease;

 

 

(iv)          the cost of heat, water, sewer, gas,
electricity, and any other utilities and services furnished to the Industrial
Center, limited to the Common Areas (as defined in paragraph 9 below) (collectively, “Utilities”);
and

 

(v)           such other items as are now or
hereafter customarily included in the costs of managing, operating,
maintaining, overhauling, and repairing comparable multi-tenant industrial
centers in accordance with now or hereafter accepted accounting or management
principles or practices, including without limitation reasonable reserves for
replacements.

 

Actual Operating Expenses
for each year shall be adjusted to equal Landlord’s reasonable estimate of
Operating Expenses had the total rentable area of the Industrial Center been
occupied. Landlord and Tenant acknowledge that certain of the costs of
management, operation and maintenance  of  the
Industrial Center may be allocated by Landlord exclusively to a single
component of the Industrial Center (e.g. to the Building, another building
located in the Industrial Center or a parking facility) and certain of such
costs may be allocated by Landlord among such components. The determination of
such costs and their allocation shall not be inconsistent with generally
accepted accounting principles applied on a consistent basis.  Audit Provision – See Addendum I, Item
8

 

(e)           The term “Property Taxes” shall mean
any form of real property tax or assessment and any license fee, commercial
rental tax, improvement bond or bonds, levy, or other tax (other than
inheritance, personal income, or estate taxes) , general and special, ordinary
and extraordinary, foreseen as well as unforeseen, and of any kind or nature
whatsoever, imposed on the Industrial Center or applicable tax assessor’s
parcel by any authority having the direct or indirect power to tax (including
any city, state, or federal government, or any school, agricultural, sanitary,
water, fire, street, drainage, or other improvement district thereof) against
any legal or equitable interest of Landlord in the industrial Center, the
Building, or the Premises, against Landlord’s right to rent or other income
therefrom, and against Landlord’s business of leasing the Industrial Center,
the Building, or the Premises. The term “real property tax(es)” shall also
include any tax, fee, levy, assessment, or charge:  (i) in substitution of, partially or totally, any tax, fee, levy,
assessment, or charge: included above within the definition of “real property
tax(es),” (ii) that is imposed, added, or increased as a result of a transfer,
either partial or total, of Landlord’s interest in the Industrial Center, the
Building, or the Premises, or (iii) that is imposed by reason of this
transaction, any modifications or changes hereto, or any transfers hereof.

 

(f)            The term “Tenant’s percentage share”
shall mean the percentage figure specified in the Basic Lease information.
Tenant acknowledges that the Basic Lease information may set forth different
percentage shares of Operating Expenses and Property Taxes or a single
percentage share applicable to both.

 

(g)           The term “Laws” shall mean any
federal, state, local and other laws, codes, orders, ordinances, rules,  regulations and
statutes

 

2.             Term. The
term of this Lease shall commence on the Commencement Date and, unless sooner
terminated as hereinafter

 

2

 

provided shall end on the
Expiration Date, as specified in the Basic Lease Information. Unless otherwise
agreed by Landlord and Tenant in this Lease, Tenant agrees to accept the
Premises in its “as is” condition on the Commencement Date. If Landlord, for
any reason whatsoever, cannot deliver the Premises to Tenant on the
Commencement Date, this Lease shall not be void or voidable, nor shall Landlord
be liable to Tenant for any loss or damage resulting therefrom, but in that
event rental shall be waived for the period between the Commencement Date and
the time when Landlord delivers the Premises to Tenant; provided, however,
that, if tenant improvements referenced in Addendum I, Paragraph 5 have not
been substantially completed by February 15, 1994 this Lease shall be void.

 

3.             Rental.

 

(a)           Tenant shall pay to Landlord
throughout the term of this Lease as rental for the Premises the sum specified
in the Basic Lease Information as the Basic Rent, together with all charges and
other amounts required under this Lease as additional rent (“Additional
Charges”), including, without limitation, Tenant’s percentage share of the
total amount of Operating Expenses paid or incurred by Landlord in each year
and Tenant’s percentage share of the total dollar amount of Property Taxes paid
by Landlord in each year.

 

(b)           Notwithstanding the provisions of
subparagraph (a) above, Tenant shall not be responsible for paying any portion
of any increase in real property tax that is specified in the tax assessor’s
records and worksheets as being caused by additional improvements placed upon
the Industrial Center by tenants of other premises in the Industrial Center or
by Landlord for the exclusive enjoyment of such other tenants. Tenant shall,
however, pay to Landlord at the time payments on account of Tenant’s percentage
share of Property Taxes are payable under paragraph 4 below the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Tenant or at Tenant's request.

 

(c)           Rental shall  be paid to Landlord on or
before the Commencement Date and on or before the first day of each and every
successive calendar month thereafter during the term of this Lease. In the
event the term of this Lease commences on a day other than the first day of a
calendar month or ends on a day other than the last day of a calendar month,
the monthly rental for the first and last fractional months of the term hereof
shall be appropriately prorated.

 

(d)           All
sums of money due from Tenant hereunder not specifically characterized as
rental shall constitute additional rent, and if, any such sum is not paid when
due it shall nonetheless be collectible as additional rent with the next
installment of rental thereafter falling due, but nothing contained herein
shall be deemed to suspend or delay the payment of any sum of money at the time
it becomes due and payable hereunder, or to limit any other remedy of Landlord.

 

(e)           The
term “rent” as used in this Lease shall refer collectively to the Basic Rent
and to all additional rent, Additional Charges and other sums payable
hereunder. Tenant hereby acknowledges
that late payment by Tenant to Landlord of rent  and other sums due hereunder after the expiration of any  applicable
grace period will cause Landlord to incur costs not contemplated by this Lease,
the exact amount of which will be

 

3

 

difficult to ascertain.
Such costs include, but are not limited to, processing and accounting charges,
and late charges which may be imposed on Landlord by the terms of any trust
deed covering the Premises. Accordingly, if any installment of rent or any
other sums due from Tenant shall not be received by Landlord when due or if a
grace period is applicable, prior to the expiration of the grace period, Tenant
shall pay to Landlord a late charge equal to 5% of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate  of
the costs Landlord will incur by reason of late payment by Tenant based upon
the circumstances existing as of the date of this Lease.

 

4.             Additional Charges for Operating
Expenses and Property Taxes.

 

(a)           This Lease is intended to be a
completely net lease. The Basic Rent owing hereunder is to be paid by Tenant
absolutely net of all costs and expenses relating to Landlord’s ownership and
operation of the Building. The provisions of this paragraph 4  for the payment of Tenant’s percentage
share of Property Taxes and Tenant’s percentage share of Operating Expenses are
intended to pass on to Tenant its share of all such costs and expenses.

 

(b)           With respect to each calendar year
during the term of this Lease, Tenant shall pay to Landlord as Additional
Charges, at the times hereinafter set forth, an amount equal to Tenant’s
percentage share of Operating Expenses and Property Taxes. Prior to or anytime
after the commencement of any calendar year Landlord may, but shall not be
required to, notify Tenant of Landlord’s estimate of the amount of Operating
Expenses and Property Taxes for such current calendar year (“Estimated Taxes
and Expenses”). Tenant  shall pay to Landlord on
the first day of each calendar month during such current calendar year
one-twelfth (1/12) of the amount of any such Estimated Taxes and Expenses for
such current calendar year. If at any time or times Landlord determines that
the amount of Tenant’s percentage share of Operating Expenses or Property Taxes
payable by Tenant for the current year will vary from its estimate by more than
5%, Landlord may, by notice to Tenant, revise Landlord’s estimate for such
year, and subsequent payments by Tenant for such  year shall be based on such
revised estimate. Following the close of each calendar year, Landlord shall
deliver to Tenant a statement of the actual amount of Tenant’s percentage share
of Operating Expenses and Property Taxes for the immediately preceding year,
accompanied by a statement made by an accounting or auditing officer designated
by Landlord showing the Operating Expenses and Property Taxes for such year.
The statement of such accounting or auditing officer shall be final and binding
upon Landlord and Tenant. All amounts payable by Tenant as shown on such
statement, less any amounts theretofore paid by Tenant on account of Estimated
Taxes and Expenses for such  calendar
year made pursuant to this paragraph 4, shall be paid by or, if Tenant
theretofore shall have paid more than such amounts, reimbursed to Tenant within
ten (10) days after delivery of such statement to Tenant.

 

(c)           If the Expiration Date of this Lease
is a day other than the last day of a calendar year, the amount of any
Operating Expenses and Property Taxes payable by Tenant for the calendar year
in which the Expiration Date occurs shall be prorated on the basis by which the
number of days from the commencement of such calendar year to and including the

 

4

 

Expiration Date bears to
365 and shall be due and payable when rendered notwithstanding termination of
this Lease. Tenant’s percentage share of Operating Expenses and Property Taxes
allocable to the calendar year in which the Expiration Date occurs shall be
deemed to have been incurred evenly over the entire twelve-month period of that
calendar year.

 

5.             Use. The
Premises shall be used and occupied only for the use described in the Basic
Lease Information and for no other use or purpose without obtaining the prior
written consent of Landlord which may be granted or denied in Landlord’s sole
discretion.

 

6.             Quiet
Enjoyment. Provided Tenant performs its obligations hereunder, Tenant
shall lawfully and quietly occupy the Premises during the term of this Lease
without hindrance or molestation by Landlord, subject, however, to applicable Laws,  matters of record and the provisions of
this Lease.

 

7.             Personal
Property Taxes. Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment, and
all other personal property of Tenant contained in  the Premises or elsewhere.

 

8.

 

9.             Common
Areas.

 

(a)           The term “Common Areas” shall mean
all areas and facilities outside the Premises and within the exterior boundary
line of the Industrial Center that are provided and designated by Landlord from
time to time for the general non-exclusive use of Landlord, Tenant, and other tenants of  the Industrial Center and
their respective employees, suppliers, shippers, customers, and invitees,
including parking areas, loading and unloading areas, trash areas, roadways,
sidewalks, walkways, parkways, driveways, and landscaped areas.

 

(b)           During the term of this Lease, Tenant
and its employees, agents, suppliers, shippers, customers, and invitees shall
have the non-exclusive right to use, in common with others entitled to such use,
the Common Areas as they exist from time to time, subject to any rights,
powers, and privileges reserved by Landlord under the terms hereof. Under no
circumstances shall Tenant’s right  to use the Common Areas be deemed to
include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written
consent of Landlord or Landlord’s designated agent, which consent may be revoked at any time.
In the event that any unauthorized storage shall occur, Landlord shall have the
right, without notice, in addition to such other rights and remedies it may
have, to remove the property and charge the cost to Tenant, which cost shall be
immediately payable upon demand.

 

(c)           Landlord, or such other persons as
Landlord may appoint, shall have the exclusive control and management of the
Common Areas.

 

(d)           Landlord shall have the right, in its
sole discretion, from time to time: (i) to make changes to the

 

5

 

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, (ii)
to close temporarily any of the Common Areas for maintenance purposes so long
as reasonable access to the Premises remains available, (iii) to designate
other land outside the boundaries of the Industrial Center to be a part of the
Common Areas, (iv) to add additional buildings and improvements to the Common Areas, (v) to use the Common Areas
while engaged in making additional improvements, repairs, or alterations to the
Industrial Center, or any portion thereof, and (vi) to do and perform such acts
and make such other change in, to, or with respect to the Common Areas and
Industrial Center as Landlord may, in the exercise of sound business judgment,
deem to be appropriate.

 

10.           Property
Insurance. Landlord shall, at Tenant’s sole cost and expense, keep the
Premises insured for the benefit of Landlord and Tenant in such amounts and
with such coverages as Landlord may reasonably determine to be adequate.

 

11.           Liability
Insurance. Tenant shall, at its sole cost and expense, maintain during
the term of this Lease for the mutual benefit of Landlord (its agents and
employees) and Tenant, general public liability insurance with combined single
limits of protection of not less than $2,000,000.00. Such policy of
insurance shall be in form and substance (and written by a company)
satisfactory to Landlord.  Tenant shall
deliver promptly to Landlord a copy of such policy, or, at Landlord’s option, a
certificate evidencing the existence of such insurance. Tenant shall cause to be
delivered to Landlord a notice of renewal not less than thirty (30) days prior
to the expiration of the policy, and, not less than five (5) days after any
premium on such policy shall be due and payable, evidence of such payment. This
insurance shall  be primary insurance to any other insurance that may be
available to Landlord. Any other insurance available to Landlord shall be
non-contributing with and excess to this insurance.

 

12.           Loss
Payable Requirements. All policies of insurance required hereunder
shall provide that the proceeds thereof shall be payable to Tenant and
Landlord, as their respective interests may appear, and, if Landlord so elects,
the policies referenced in paragraph 10 may be payable also to the holder of
any of Landlord’s mortgages or deeds of trust on the Premises as the interest
of such holder may appear, pursuant to a standard mortgagee clause or a loss
payable clause.

 

13.           Waiver
of Subrogation. Landlord and Tenant each hereby releases the other from
any and all claims, and waives its entire right of recovery against the other,
for loss or damage arising out of or incident to the perils insured against
under paragraphs 10 and 11 above to the extent such loss or damage is insured
against under such policies, whether due to the negligence of Landlord or
Tenant or the agents, employees, contractors, or invitees of either of them.

 

14.           Landlord’s Right to Perform Tenant’s
Covenants. Tenant agrees that, if Tenant shall at any time fail to make
any payment or perform any other act to be made or performed by it under this Lease, Landlord may, but shall
not be obligated to, make such payment or perform such other act to the extent  Landlord may deem desirable,
with full right of offset, and

 

* but in no event will
the common areas be altered as to interfere with access to the loading dock
area of the Premises

 

 

6

 

without waiving or
releasing Tenant from any obligation under this Lease. All sums so paid by
Landlord and all expenses paid in connection therewith, including without limitation
attorneys’ fees, together with interest thereon at the Default Interest Rate
(defined in paragraph 50) from the date of such payment, shall be paid by
Tenant to Landlord on demand.

 

15.           Maintenance
and Repair.

 

(a)           Landlord’s Obligations.
Subject to the provisions of subparagraph(b) and paragraphs 23 and 24 below,
and except for damage caused by any negligent or intentional act or omission of
Tenant or any of Tenant’s employees, suppliers, shippers, customers, or
invitees, in which event Tenant shall repair the damage, Landlord, at
Landlord’s expense, subject to reimbursement pursuant to paragraph 4 above,
shall keep in good condition and repair the foundations, exterior walls,
structural condition of interior bearing walls, and roof of the Premises, as
well as the parking lots, walkways, driveways, landscaping, fences, signs, and utility installations of the Common
Areas, and shall provide the services for which Operating Expenses are
payable pursuant to paragraph 3. Except for obligations specifically undertaken
by Landlord in this subparagraph (a), Landlord shall have no obligation, in any
manner whatsoever, to repair or maintain the Premises. Landlord shall have no
obligation to make repairs under this subparagraph (a) until a reasonable time
after receipt of written notice from Tenant of the need for such repairs. In no
event shall Landlord be liable for damages or loss of any kind or nature by
reason of Landlord’s failure to furnish any Common Area services when such
failure is caused by accident, breakage, repairs, strikes, lockout, or other
labor disturbances or disputes of any character, or by any other cause beyond
the reasonable control of Landlord.

 

(b)           Tenant’s Obligations. Except
for those areas that are Landlord’s responsibility pursuant to subparagraph (a)
above, Tenant shall, at Tenant’s sole cost and expense, keep the entire
Premises secure, clean and in good order, condition, and repair, and shall make
promptly all necessary repairs, interior and exterior, ordinary as well as
extraordinary, foreseen as well as unforeseen. When used in this paragraph, the
term “repair(s)” shall include alterations, replacements, and renewals. All
repairs shall be equal in quality and class to the original work.

 

16.           Surrender of Premises.  Upon expiration or any sooner termination
of this Lease, Tenant shall surrender to Landlord the entire Premises, together
with all Alterations (defined in paragraph 24 below), in the same condition as when received or installed*, ordinary wear
and tear excepted, and clean and free of debris and free of any liens created
or suffered to be created by Tenant. Tenant may, and upon Landlord’s request
shall, remove any trade fixtures or personal property belonging to Tenant,
provided that Tenant shall perform prior to the expiration of the term of this
Lease all restoration made necessary by such removal. Landlord may, at Tenant’s
expense, retain or dispose of in any manner any Trade Fixtures or personal
property of Tenant that Tenant does not remove from the Premises upon expiration
or termination of the Lease term, in which case title thereto shall vest in
Landlord. The term “Trade Fixtures” as used herein shall mean all fixtures,
equipment, and personal property owned by Tenant and used in connection with
the operation of any business on the Premises, whether or not affixed to the
Building.

 

*  Tenant
shall have no obligation to remove demising wall

 

7

 

17.           Service
Contracts. Tenant shall, at Tenant’s sole cost and expense, enter into
a regularly scheduled preventive maintenance/service contract with a
maintenance contractor for servicing all hot water, heating, and air
conditioning systems, elevators (if there be any) and equipment within the
Premises. The maintenance contractor and the contract shall be subject to the
approval of Landlord. The contract shall include all services suggested by the
equipment manufacturers and shall become effective, and a copy thereof shall be
delivered to Landlord, within thirty (30) days of the date Tenant takes
possession of the Premises.

 

18.           Waste.
Tenant shall not do or suffer any waste or damage, disfigurement, or injury to
the Premises or permit or suffer any overloading of the floors of the Building.

 

19.

 

20.           Waiver
of Repair and Deduct. Tenant hereby waives any and all rights it may
have to make repairs at Landlord’s expense or in lieu thereof to vacate the
Premises as provided in California Civil Code Section 1942 or any other law, statute, or ordinance now or hereafter in
effect.

 

21.           Compliance
With Laws. Tenant shall, at Tenant's sole cost and expense, comply
promptly with all Laws and with the recommendations of any insurer under any
policies required under this Lease, that may be applicable to the Premises or
the use thereof.

 

22.           Hazardous
Materials.          See Addendum
I, Item 9

 

 

8

 

23.           Alterations.  Expect for non-structural alterations
costing less than $5,000, Tenant shall not alter the Premises without the prior
written consent of Landlord, which consent may not be unreasonably withheld or
delayed.

 

24.           Property
of Landlord. All repairs, improvements, changes, alterations, made or
installed by Tenant (collectively, "Alterations") shall immediately
upon completion or installation thereof be and become the property of Landlord
without payment therefor by Landlord.

 

25.           Damage
or Destruction. Subject to the other provisions of this paragraph, if
the Premises or any portion thereof becomes damaged or wholly or partially
untenantable because of fire, earthquake, act of God, the elements or other casualty,
Landlord shall repair such damage with and to the extent of the insurance
proceeds made available to Landlord for such purpose. However, if in Landlord’s
opinion such repairs cannot be made within one hundred eighty (180) days,
Landlord shall so notify Tenant in writing within sixty (60) days of the date
of such damage. In such event, either Tenant or Landlord may terminate this
Lease within thirty (30) days after Landlord's notice. Termination shall be
effected by written notice delivered to the other party within said thirty (30)
day period. If this Lease is not so terminated, it shall remain in full force
and effect except that if such damage is not the result of the negligence or
willful misconduct of Tenant or Tenant’s employees or invitees, an abatement of
Basic Rent shall be allowed Tenant for such part of the Premises as shall be rendered
unusable by Tenant in the conduct of its business during the time such part is
so unusable.

 

26.           Waiver.
Tenant hereby waives California Civil Code Sections 1932, 1933, 1941 and 1942
and the provisions of any other law now or hereafter in effect that would
relieve Tenant from any obligation to pay rent under this Lease except to the
extent expressly provided in this Lease.

 

27.           Condemnation.

 

(a)           If the Premises or any portion
thereof are taken under the power of eminent domain (hereinafter referred to as
“Condemnation”), this Lease shall terminate as to the part so taken as of the
date the condemning authority takes title or possession, whichever occurs
first. If more than 50% of the floor area of the Premises is taken by
Condemnation, then at Tenant’s option, exercisable only in writing and within
ten (10) days after Landlord shall have given Tenant written notice of such
taking (or, in the absence of such notice, within ten (10) days after the
condemning authority shall have taken possession), and provided that Tenant is
not in default under this Lease, Tenant may terminate this Lease as of the date
the condemning authority takes possession. If Tenant does not terminate this
Lease in accordance with the foregoing, this Lease shall remain in full force
and effect as to the portion of

 

9

 

the Premises remaining,
except  that
the rent shall be reduced in the proportion that the floor area of the portions
of the Premises taken bears to the total floor area of the Premises at the time
of the taking. No reduction of rent shall occur if no portion of the area taken
contains any portion of the Premises.

 

(b)           In
the event any portion of the Premises is taken by Condemnation, Landlord shall
be entitled to and shall receive the total award made in such Condemnation,
which award Tenant hereby assigns to Landlord, except that Tenant shall be entitled to receive
such portion of the award as may be specifically allocated in such proceedings
to compensation for Tenant’s Trade Fixtures and Tenant’s relocation expenses.

 

(c)           If
less than the entire Premises shall be taken by Condemnation,  and this Lease is not terminated
pursuant to subparagraph (a) above, with the net amount of any award received
by landlord in any proceeding for physical damage to the Building after
deducting all of Landlord’s costs and expenses of collection, including without
limitation attorneys’ fees, Landlord shall promptly restore that portion of the
Building not so taken to a complete architectural unit.

 

28.           Tenant’s Work.
All work done by Tenant in or about the Premises (hereinafter called the
“Work”) shall be done in all cases subject to the following conditions, each of
which Tenant covenants to observe and perform:

 

(a)           No Work involving any structural
change and no Work involving any alteration, restoration, or rebuilding costing
more than $5,000 shall be undertaken until detailed plans and specifications
have first been submitted to and approved in writing by Landlord;

 

(b)           No Work involving a cost, as reasonably estimated by Tenant, of more
than $5,000 shall be undertaken except under the supervision of an architect or
engineer approved  in writing by Landlord (unless such requirement is waived
by Landlord in writing), which approval shall not be unreasonably withheld; and

 

(c)            All Work shall be (i) commenced only
after reasonable notice to Landlord and only after all required local and other
governmental permits  and authorizations have been obtained,
(ii) done in a good and workmanlike manner, (iii) performed in compliance with
the building and zoning laws and with all other applicable Laws and in accordance
with the recommendations of any insurer under any policies required by this
Lease, and (iv) completed promptly and free of liens.

 

29.           Mechanic’s
Liens.   Tenant shall not suffer
or permit any mechanics or other liens (or claims thereof) to be filed against
the Premises or Tenant’s leasehold interest therein or hereunder by reason of
work, labor, services, or materials supplied or claimed to have been supplied
to Tenant or anyone  holding the Premises or any part thereof
through or under Tenant. Landlord shall have the right at all reasonable times
to post and keep posted on the Premises any notices that Landlord may deem
necessary or advisable for the protection of Landlord and the Premises from
mechanics’ liens. If any such liens (or claims thereof) shall at any time be
filed against the Premises, Tenant shall cause the same to be discharged of
record within forty-five (45) days after the date of filing.

 

30.           Financial
Statements. Upon the request of Landlord, Tenant shall provide to
Landlord from time to time, at no

 

10

 

expense to Landlord,
copies of such financial statements with respect to Tenant as may have been
prepared by or for Tenant.

 

31.           Landlord’s
Entry. Tenant agrees to permit Landlord and any authorized
representatives of Landlord to enter the Premises with reasonable frequency
during usual business hours* or at any other time in case of emergency, (a) to
inspect the Premises and, if Landlord so desires, but without implying any
obligation of Landlord to do so, to make any repairs deemed necessary or
desirable by Landlord and to perform any work in the Premises deemed necessary
by Landlord to comply with any,. Laws or the recommendations of any insurer,
and (b) during the final year of the term of this Lease, for the purpose of
leasing the Premises, during which one-year period Landlord may display on the
Premises, in such manner as not to interfere unreasonably with Tenant’s
business, usual “For Sale” or “To Let” signs.

 

*provided Landlord gives
24 hour telephone notice of entry

 

32.           Assignment
and Subletting.

 

(a)             Tenant shall not, without the prior
consent of Landlord, which consent
shall not be unreasonably withheld by Landlord, transfer, assign or
hypothecate this Lease or any interest herein, sublet the Premises or any part
thereof, or permit the use of the Premises by any party other than Tenant. This
Lease shall not, nor shall any interest herein, be assignable as to the
interest of Tenant by operation of law without the consent of Landlord, which
consent shall not be unreasonably withheld. Any of the foregoing acts without
such consent shall be void and shall, at the option of Landlord, terminate this
Lease. In connection with each consent requested by Tenant, Tenant shall submit
to Landlord the terms of the proposed transaction, the identity of the parties
to the transaction, the proposed documentation for the transaction, and all
other information reasonably requested by Landlord concerning the proposed
transaction and the parties involved.

 

(b)             If the Tenant is a privately held
corporation, or is an unincorporated association or partnership, the transfer
(except pursuant to a public offering), assignment, or hypothecation of any
stock or interest in such corporation, association, or partnership in excess of
fifty percent (50%) in the aggregate shall be deemed an assignment or  transfer within the meaning and
provisions of this paragraph. If Tenant is a publicly held corporation, the
public offering or trading of stock in Tenant
shallnot be deemed an assignment or transfer within the meaning of this
paragraph.

 

(c)             Without limiting the other
instances in which it may be reasonable for Landlord to withhold its consent to
an assignment or subletting, Landlord and Tenant acknowledge that it shall be
reasonable for Landlord to withhold its consent in the following instances:

 

(1)      if at the time consent is requested or at
any time prior to the granting of consent, Tenant is  in default under this Lease or would be
in default under this Lease but for the pendency of any grace or cure period
specified in this Lease;

 

(2)      if the proposed assignee or sublessee is a
governmental agency;

 

(3)      if, in Landlord’s reasonable judgment, the
use of the Premises by the proposed assignee or sublessee would involve
occupancy in violation of this Lease;
or

 

11

 

(4)      if, in Landlord’s reasonable judgment, the
financial worth of the proposed assignee or sublessee does not meet the current
credit standards applied by Landlord or its investment advisors for a new
tenant of the Premises.

 

(d)             If at any time during the term of
this Lease Tenant desires to assign its interest in this Lease or sublet all or
any part of the Premises, Tenant shall give notice to Landlord setting forth
the terms of the proposed assignment or subletting (“Tenant’s Notice”).
Landlord shall have the option, exercisable by notice given to Tenant within
thirty (30) days after Tenant’s Notice is given (“Landlord’s Option Period”),
either (1) to consent to the assignment in which event the  provisions of subparagraph (g) shall be
applicable, or to consent to  the
subletting in which event the provisions of subparagraph (h) shall be
applicable; (2) to become the assignee or sublessee of Tenant (instead of the
entity specified in Tenant’s Notice) upon the terms set forth in Tenant’s
Notice; (3) in the event of (A) a proposed assignment, or (B) a proposed
subletting of the entire Premises, or a portion of the Premises for all or
substantially all of the remainder of the term, to terminate this Lease with
respect to, and to retake possession of, the space in question, together with,
if only a portion of the Premises is involved, such rights of access to and
from such portion as may be reasonably required for its use and enjoyment. If
Landlord does not exercise one of such options, Tenant shall be free for a
period of one hundred twenty (120) days after Landlord’s Option Period, to
assign its entire interest in this Lease or to sublet such space to the entity
specified in Tenant’s Notice upon the terms set forth therein or to any third
party upon the same terms set forth in Tenant’s Notice, subject to obtaining
Landlord’s prior consent as hereinabove provided.

 

(e)             Notwithstanding the provisions of
subparagraphs (a) and (b) above, Tenant may assign this Lease or sublet the
Premises or any portion thereof, with prior notice to Landlord but without the
necessity of Landlord’s consent and without extending any option to Landlord
pursuant to subparagraph (d) above, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger or consolidation with Tenant.

 

(f)              No sublessee (other than Landlord
if it exercises its option pursuant to subparagraph (d) above) shall have a
right further to sublet without Landlord’s prior consent, which Tenant
acknowledges may be withheld in Landlord’s absolute discretion, and any
assignment by a sublessee of its sublease shall be subject to Landlord’s prior
consent in the same mariner as if Tenant were entering into a new sublease. No
sublease, once consented to by Landlord, shall be modified or terminated by
Tenant without Landlord’s prior consent, which consent shall not be
unreasonably withheld.

 

(g)             In the case of an assignment to an
entity other than Landlord, any sums or other economic consideration received
by Tenant as a result of such assignment
shall be split 50/50 with Landlord after first deducting the unamortized
cost of leasehold improvements made to the Premises at Tenant’s sole cost, and
the cost of any real estate commissions incurred by Tenant in connection with such assignment.

 

(h)             In the case of a subletting to an
entity other than Landlord, any sums or economic consideration received by

 

12

 

Tenant as a result of such subletting shall be split 50/50  with Landlord after first deducting (1)  the
rental due hereunder, prorated to reflect only rental allocable to the sublet
portion of the Premises, (2)  the cost of leasehold improvements made
to the sublet portion of the Premises at Tenant’s sole cost, amortized over the
term of this Lease except for leasehold improvements made by Tenant for the
specific benefit of the sublessee, which shall be amortized over the term of
the sublease, and (3) the cost of any real estate commissions incurred by
Tenant in connection with such subletting, amortized over the term of the sublease,
(4)  legal fees in connection with such
subletting, (5)  advertising fees
related to subletting

 

(i)              Regardless of Landlord’s consent,
no subletting or assignment (except to Landlord pursuant to the provisions of
subparagraph (d) above) shall release Tenant of Tenant’s obligation or alter
the primary liability of Tenant to pay the rent and to perform all other
obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from any other person shall not be deemed to be a waiver by Landlord
of any provision hereof. Consent to one assignment or subletting shall not be deemed
consent to any subsequent assignment  or subletting. In the event of
default by any assignee of Tenant or any successor of Tenant in the performance
of any of the terms hereof, Landlord may proceed directly against Tenant
without the necessity of exhausting remedies against such assignee or
successor. Landlord may consent to subsequent assignments or subletting of this
Lease or amendments or modifications to this Lease with assignees of Tenant,
without notifying Tenant, or any successor of Tenant, and without obtaining its
or their consent thereto, and such action shall not relieve Tenant of liability
under this Lease.

 

(j)              In the event Tenant shall assign
this Lease or sublet the Premises or request the consent of Landlord to any
assignment, subletting, hypothecation or other action requiring Landlord’s
consent hereunder, then Tenant shall pay Landlord’s then reasonable and
standard processing fee and Landlord’s reasonable attorneys’ fees incurred in
connection therewith, which shall not exceed $500.

 

33.             Subordination.
At Landlord’s option, this Lease shall be subordinate to any ground lease,
mortgage, deed of trust, or any other
hypothecation or security now or hereafter placed upon the Premises and
to any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements, and extensions thereof.
Notwithstanding such subordination, Tenant’s right to a quiet possession of the
Premises shall not be disturbed if Tenant  is
not in default and so long as Tenant shall pay the rent and observe and
perform all of the provisions of this Lease, unless this Lease is otherwise
terminated pursuant to its terms. If any mortgagee, trustee, or ground lesser
shall elect to have this Lease prior to the lien of its mortgage, deed of
trust, or ground lease, and shall give written notice thereof to Tenant, this  Lease shall be deemed prior
to such mortgage, deed of trust, or ground lease, whether this Lease is dated
prior or subsequent to the date of such mortgage, deed of trust, or ground
lease or the date of the recording thereof.

 

34.            Attornment.
In the event any proceedings are brought for the foreclosure of, or in the
event of exercise of the power of sale under, any mortgage or deed of trust now
or hereafter on the Premises or any part thereof, Tenant shall, if so requested
by the purchaser upon such foreclosure or sale or the grantee

 

13

 

under a deed in lieu of
foreclosure, attorn to such purchaser or grantee and recognize such purchaser
or grantee as the Landlord under this Lease.

 

35.           Indemnification.
Tenant agrees to indemnify, defend, and save Landlord harmless from and to
reimburse Landlord for any and all claims arising from (a) the conduct or
management of, or any work or thing whatsoever done in or about, the Premises
during the term of this Lease, (b) any condition existing during the term of
this Lease of (i) the Premises, (ii) any street, curb, or sidewalk adjoining
the Premises, or (iii) any vaults, passageways, or spaces therein or
appurtenant thereto, (b) any breach or default on the part of Tenant in the
performance of any covenant or agreement on the part of Tenant to be performed
pursuant to the terms of this Lease, (c) any act or negligence of Tenant or any
of its agents, contractors, servants, employees, or licensees, (d) any
accident, injury, or damage whatsoever caused to any person, firm, or
corporation occurring during the term of this Lease in or about the Premises or
upon or under the sidewalks or the land adjacent thereto, and (e) any and all
costs, counsel fees, expenses, and liabilities incurred in connection with the
such claim or action or proceeding brought thereon, except to the extent that
any of the above–described claims arise out of any gross negligence or
wilful misconduct of Landlord. In case any action or proceeding be brought
against Landlord by reason of any such claim, Tenant, upon notice from
Landlord, covenants to resist or defend such action or proceeding by counsel
satisfactory to Landlord.

 

36.           Attorneys’
Fees. If any action arising out of this Lease is brought by either
party hereto against the other, then and in that event the unsuccessful party
to such action shall pay to the prevailing party all costs and expenses,
including reasonable attorneys’ fees, incurred by such prevailing party, and if
the prevailing party shall recover judgment in such action, such costs,
expenses and attorneys’ fees shall be included in and as part of such judgment.

 

37.           No
Representations. Landlord has made no representations of any nature
whatsoever in connection with the condition of the Premises or any part
thereof, and Landlord shall not be liable for any defects therein, except as
herein expressly provided.

 

38.           Events
of Default. The following events shall be deemed to be events of
default by Tenant under this Lease:

 

(a)           The
failure of Tenant to pay any installments of Basic  Rent or additional rent when due, or any
other payment or reimbursement to Landlord required herein when due, where such
failure shall continue  for
a period of five (5) days after written notice of such failure;

 

(b)           (i)  The application by Tenant for consent to the
appointment of a receiver, trustee, or liquidator of Tenant or of all or a
substantial part of Tenant’s assets, (ii) Tenant's insolvency or admission in
writing of its inability to pay its debts as they come due, (iii) the making by
Tenant of any general arrangement or assignment for the benefit of creditors,
(iv) Tenant becomes a “debtor” as defined in 11 U.S.C. Section 101 or any
successor statute thereto (unless, in the case of a petition filed against
Tenant, the same is dismissed within sixty (60) days), (v) the appointment of a
trustee or receiver to take possession of all or substantially all of

 

14

 

Tenant’s assets located
at the Premises or of Tenant’s interest in this Lease (unless possession is
restored to Tenant within thirty (30) days), (vi) the attachment, execution or
other judicial seizure of all or substantially all of Tenant’s assets located
at the Premises or of Tenant’s interest in this Lease (unless such seizure is
discharged within thirty (30) days), or (vii) any transfer of Tenant’s assets
in fraud of its creditors;

 

(c)             The failure of Tenant to comply
with any other term, provision, or covenant of this Lease, where such failure
shall continue for a period of twenty (20) days after written notice thereof to
Tenant, provided, however, that if such failure cannot reasonably be cured
within twenty (20) days, Tenant shall not be deemed in default with respect to
such failure if Tenant commences to cure such default within said twenty (20)
day period and thereafter diligently and continuously prosecutes such cure to a
prompt completion. In the event Landlord serves Tenant with a “Notice to
Perform or Quit” pursuant to applicable unlawful detainer statutes, such notice
shall also constitute the notice required by this subsection, provided that
such notice gives Tenant at least twenty (20) days in which to perform or quit;
or

 

(d)             Tenant shall have been served with
three or more notices of default hereunder, or
under any applicable statute, within any twelve–month period,
whether or not the defaults in question were cured.

 

39.           Landlord’s
Remedies. Upon the occurrence of any event of default by Tenant,
Landlord may, at its option and without any further notice or demand (in
addition to any other rights and remedies under this Lease, at law or in
equity) do any of the following:

 

(a)             Landlord shall have the right, so
long as such default continues, to give notice of termination to Tenant. On the
date specified in such notice (which shall not be less than three (3) days
after the giving of such notice) this Lease shall terminate; 

 

(b)             In the event of any such
termination of this Lease, Landlord may then or at any time thereafter re–enter
the Premises and remove therefrom all persons and property and again repossess
and enjoy the Premises, without prejudice to any other remedies that Landlord
may have by reason of Tenant’s default or of such termination;

 

(c)             In the event of any such termination
of  this
Lease, Landlord may recover damages which shall include, without limitation:
(1) the amount at the time of award (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) of (A) unpaid rent earned at the time of termination,
(B) the amount by which the unpaid rent that would have been earned during the
period from termination until the award
exceeds  the amount of such rental loss that Tenant proves could have
been reasonably avoided, and (C) 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; (2) all legal expenses and
other related costs incurred by Landlord following Tenant’s default; (3) all
costs incurred by Landlord in restoring the Premises to good order and
condition, or, to the extent reasonably necessary to accomplish such reletting,
in remodeling, renovating, or

 

15

 

otherwise preparing the
Premises for reletting; and (4) all other costs (including without limitation
any brokerage commissions) incurred by Landlord in reletting the Premises;

 

(d)             Following the termination of this
Lease (or upon Tenant’s failure to remove its personal property from the
Premises after the expiration of the term of this Lease), Landlord may remove
any and all personal property located in the Premises and sell or place such
property in a public or private warehouse or elsewhere at the sole cost and
expense of Tenant in accordance with applicable Laws. Tenant waives all claims
for damages that may be caused by Landlord’s removing, storing or selling the
property as herein provided;

 

(e)             Landlord shall have the right to
cause a receiver to be appointed in any action against Tenant to take
possession of the Premises and to collect the rents or profits derived
therefrom. The appointment of such receiver shall not constitute an election on
the part of Landlord to terminate this Lease unless notice of such intention is
given to Tenant; or

 

(f)              Landlord shall have the remedy
described in California Civil Code Section 1951.4 (i.e. Landlord may continue
this Lease in effect after Tenant’s abandonment and recover rent as it becomes
due, because Tenant has the right to sublet or assign, subject only to
reasonable limitations). Even though Tenant has breached this Lease and
abandoned the Premises, this Lease shall continue in effect for so long as
Landlord does not terminate Tenant’s right to possession, and Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover rent in periodic actions as it becomes due under this Lease. In such
event, Landlord may re-enter the Premises and remove all persons and property
if the Premises have not been vacated, using any available summary proceedings,
without such re-entry or removal being deemed a termination or acceptance of
surrender of this Lease. Landlord may then elect to relet the Premises for the
account of Tenant for a period that may extend beyond the term hereof, and upon
such other terms as Landlord may reasonably deem appropriate. Tenant shall
reimburse Landlord upon demand for all costs incurred by Landlord in connection
with such reletting, including without limitation necessary restoration,
renovation, or improvement costs, attorneys’ fees, and brokerage commissions.
The proceeds of such reletting shall be applied first to any sums then due and
payable to Landlord from Tenant, including the reimbursement described above.
The balance, if any, shall be applied to the payment of future rent as it
becomes due hereunder.

 

40.           Cumulative
Remedies. The specified remedies to which Landlord may resort under the
terms of this Lease are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which Landlord may be entitled, either at
law or in equity, in case of any breach or threatened breach by Tenant of any
covenant, agreement, or condition of this Lease.

 

41.           No Waivers.
The failure of Landlord to insist in any one or more instances upon the strict
performance or observance of any of the covenants, agreements, or conditions of
this Lease or to exercise any option herein contained shall not be construed as
a waiver or a relinquishment of future performance or observance of such
covenant, agreement, or condition or exercise of such option.

 

42.           Application of Tenant Deposits. In the event of any default
by Tenant under this Lease, Landlord may, at its option,

 

16

 

apply on account of such
default any monies (and the proceeds of any and all other security) deposited
by or for the account of Tenant under any provision of this Lease. Tenant shall
not be entitled to interest on any monies so deposited.

 

43.           Holding
Over. Tenant covenants that it will vacate the Premises immediately
upon the expiration or sooner termination of this Lease. If, with Landlord’s
consent, Tenant retains possession of the Premises or any part thereof after
the expiration or termination hereof, Tenant shall pay Landlord rent at 150% of
the monthly rate specified in paragraph 3 for the time Tenant thus remains in
possession. The provisions of this paragraph do not exclude Landlord’s rights
of re–entry or any other right hereunder, including without limitation
the right to refuse triple the monthly rent and instead to remove Tenant
through summary proceedings for holding over beyond the expiration of the term
of this Lease.

 

44.           Notices.
All notices, demands, and requests that may or are required to be given by
either party to the other shall be in writing and shall be deemed given when
sent by United States Certified Mail, postage prepaid, and addressed as
follows: (a) to Tenant at the address specified in the Basic Lease Information,
or at such other place as Tenant may from time to time designate by written
notice to Landlord, or (b) to Landlord at the address specified in the Basic
Lease Information, or at such other places as Landlord may from time to time
designate by written notice to Tenant.

 

45.           Limitation of Landlord’s Liability.
In the event of a sale or transfer by Landlord of its interest in the Premises
or this Lease, such sale or transfer shall operate to release the transferor
from all liability for the performance of the obligations of Landlord hereunder, expressed or implied, from
and after the date of such transfer, and Tenant agrees thereafter to look
solely to the successor in interest of Landlord in and to this Lease for the
performance thereafter of Landlord’s obligations hereunder. Landlord may
transfer to its successor in interest the Security Deposit (and all other forms
of security) given by or for Tenant  to Landlord and thereupon Landlord
shall be discharged from any further liability with respect thereto.

 

46.           Estoppel
Certificates. At any time and from time to time upon not less than ten
(10) days prior request by Landlord, Tenant agrees to execute, acknowledge, and
deliver to Landlord a statement in writing certifying that (a) this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as modified and identifying the
modifications), (b) the dates to which Basic Rent, additional rent, and other
charges have been paid, and (6) whether there is then existing any claim by
Tenant of default hereunder by Landlord and, if so, specifying the nature
thereof. It is intended that any such statement may be relied upon by any
person proposing to acquire Landlord’s interest in this Lease or any
prospective mortgagee of, or assignee of any mortgage upon, such interest.

 

47.           Brokerage.
Tenant represents and warrants that it has dealt with no broker, agent, or
other person in connection with this transaction and that no other broker,
agent, or other person brought about this transaction, other than the Brokers
listed in the Basic Lease Information, and Tenant agrees to indemnify and hold
Landlord harmless from and to reimburse

 

17

 

Landlord for any and all claims by any other broker, agent, or person
claiming a commission or other form of compensation by virtue of having dealt
with Tenant with respect to this leasing transaction. The provisions of this
paragraph shall survive the termination of this Lease.

 

48.           Security
Deposit. Tenant shall, upon execution of this Lease, deposit with
Landlord the sum specified in the Basic Lease Information as security for the
full and faithful performance of every provision of this Lease to be performed
by Tenant (the “Security Deposit”). If Tenant defaults  with respect to any
provision of this Lease, Landlord may use, apply, or retain all or any part of
the Security Deposit for the payment of Basic Rent or any other sum in default,
for the payment of any other amount that Landlord may spend or become obligated
to spend by reason of Tenant’s default, or to compensate Landlord for any other
loss, cost, or damage that Landlord may suffer by reason of Tenant’s default.
If any portion of the Security Deposit is so used or applied, Tenant shall,
within five (5) days after written demand therefor, deposit cash with Landlord
in an amount sufficient to restore the Security Deposit to its original amount.
Landlord shall not be required to keep the security Deposit separate from its
general funds and Tenant shall not be entitled to interest on such deposit.

 

49.           Signage.  Tenant shall not place or permit on the
outside of the Premises any sign, advertisement, illumination, projection, or
similar thing (a “Sign”), unless (a) Landlord has given its prior written consent thereto,  which shall not be unreasonably withheld,  and
(b) such Sign complies with applicable law.

 

50.           Miscellaneous.
This Lease cannot be changed orally, but only by agreement in writing
signed by the party against whom, or against whose successors and assigns,
enforcement of the change is sought. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger as
to any existing subtenancies and shall, at the option of Landlord, terminate
any and all such existing subtenancies or, at Landlord’s option, operate as an
assignment to it of any and all such subtenancies,  The  words “Landlord” and
“Tenant” as used herein shall include the plural as well as the singular. If
there is  more
than one tenant, the obligations hereunder imposed upon the tenant shall be
joint and several. This Lease shall be construed and enforced in accordance
with the laws of the State in which the Premises are situated. The term
“Default Interest Rate” shall mean an annual rate equal to 4% over the annual
prime rate of interest announced publicly by Citibank, N.A. in New York, New
York from time to time or the maximum intexest rate permitted by law, whichever
is less. Any amount due from Tenant, if not paid when first due, shall bear
interest at the Default Interest Rate from the date due until paid. If any
covenant, agreement, or condition of this Lease or the application thereof to
any person, firm, corporation, or circumstance is or becomes to any extent
invalid or unenforceable, the remainder of this Lease, or the application of
such covenant, agreement, or condition to persons, firms, corporations, or circumstances
other than those as to which it is invalid or unenforceable,  shall not be affected thereby, and in
lieu of each clause or provision of this Lease that is illegal, invalid, or
unenforceable, there shall be added as a part of this Lease a clause or
provision as similar’ in terms to such clause or provision as is possible and
as may be legal,

 

18

 

valid, and enforceable.
If any excavation or other building operation shall be made, or about to be
made, upon any adjoining property or streets, upon the request of Landlord,
Tenant shall permit the owner or lessee of such adjoining property and their
respective representatives to enter the Premises and shore the foundations and
walls thereof, and to do any other act or thing reasonably necessary, in
Landlord’s opinion, for the safety or preservation of the Building and
Premises. Landlord’s acceptance of a partial rent payment shall not constitute
a waiver of any rights of Tenant or Landlord, including, without limitation,
any right Landlord may have to recover possession of the Premises, in unlawful
detainer, or otherwise. The parties agree that the covenants and agreements
herein contained shall bind and inure to the benefit of Landlord and its successors and assigns, and shall bind and
inure to the benefit of Tenant and its successors and assigns, subject to the
provisions of paragraph 32, and provided that any consent required to any
assignment hereof shall be had and obtained as specified in this Lease.

 

 

 

Exhibits A
& B and Addendums I and II, consisting of 7 pages are
attached hereto and become part of this Lease.

 

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

 

	
   

  	
  LANDLORD:

  	
  THE EQUITABLE LIFE ASSURANCE

  
	
   

  	
  SOCIETY OF THE 
  UNITED STATES

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher C. Curtis

  
	
   

  	
  Its:

  	
  Christopher C. Curtis Attorney-in-fact

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
  TENANT:

  	
  COLLAGEN CORPORATION

  
	
   

  	
   

  	
  A Delaware Corporation

  
	
   

  	
  By.

  	
  /s/ Joan M. Trampenau

  
	
   

  	
  Its:

  	
  Joan M. Trampenau

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
   

  
					

 

19

 

BASIC LEASE
INFORMATION

 

	
  1.

  	
  Definitions 

  
	
  2.

  	
  Term 

  
	
  3.

  	
  Rental

  
	
  4.

  	
  Additional
  Charges for Operating Expenses and Property Taxes

  
	
  5.

  	
  Use

  
	
  6.

  	
  Quiet Enjoyment

  
	
  7.

  	
  Personal Property Taxes

  
	
  8.

  	
  Utilities

  
	
  9.

  	
  Common Areas

  
	
  10.

  	
  Property Insurance

  
	
  11.

  	
  Liability Insurance

  
	
  12.

  	
  Loss Payable Requirements

  
	
  13.

  	
  Waiver of Subrogation

  
	
  14.

  	
  Landlord’s
  Right to Perform Tenant’s Covenants

  
	
  15.

  	
  Maintenance and Repair

  
	
  16.

  	
  Surrender of Premises

  
	
  17.

  	
  Service Contracts

  
	
  18.

  	
  Waste

  
	
  19.

  	
  Maintenance
  of Rail Siding

  
	
  20.

  	
  Waiver of Repair and
  Deduct

  
	
  21.

  	
  Complaince With Laws

  
	
  22.

  	
  Hazardous Materials

  
	
  23.

  	
  Alterations

  
	
  24.

  	
  Property of Landlord

  
	
  25.

  	
  Damage or Destruction

  
	
  26.

  	
  Waiver

  
	
  27.

  	
  Condemnation

  
	
  28.

  	
  Tenant’s Work

  
	
  29.

  	
  Mechanic’s Liens

  
	
  30.

  	
  Financial Statements

  
	
  31.

  	
  Landlord’s Entry 

  
	
  32.

  	
  Assignment and Subletting

  
	
  33.

  	
  Subordination

  
	
  34.

  	
  Attornment

  
	
  35.

  	
  Indemnification

  
	
  36.

  	
  Attorneys’ Fees

  
	
  37.

  	
  No Representations

  
	
  38.

  	
  Events of Default

  
	
  39.

  	
  Landlord’s Remedies

  
	
  40.

  	
  Cumulative Remedies

  
	
  41.

  	
  No Waivers

  
	
  42.

  	
  Application of Tenant
  Deposits

  
	
  43.

  	
  Holding Over

  
	
  44.

  	
  Notices

  
	
  45.

  	
  Limitation of
  Landlord’s Liability

  
	
  46.

  	
  Estoppel Certificates

  
	
  47.

  	
  Brokerage

  
	
  48.

  	
  Security Deposit

  
	
  49.

  	
  Signage

  
	
  50.

  	
  Miscellaneous

  

 

 

AMENDMENT NUMBER
ONE

 

This Amendment Number One
is made this 8th day of July, 1995, by and between THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES, as Landlord and COLLAGEN CORPORATION, a Delaware
Corporation, as Tenant.

 

WITNESSETH

 

WHEREAS, the parties
hereto have entered into a certain Indenture of Lease (the “Lease”) dated the
27th of October, 1993 demising certain Premises in the building at 48340 Milmont
Drive, Fremont, California 94538.

 

WHEREAS, it is the desire
of the parties to amend said Lease,

 

NOW THEREFORE, the
parties hereto agree as follows:

 

1.             TERM: Effective January 4, 1996, the Lease term shall be
extended for the term commencing on January 4, 1996 and expiring January 3,
1999, upon all of the terms and conditions set forth in said Lease, except that
with regard to any provisions that have been complied with by the Landlord and
Tenant and are not carried over and made a part of said Lease as extended.

 

2.             RENT: Effective January 4, 1996 and continuing through
January 3, 1997, the base monthly rental shall be Five Thousand One Hundred
Fifty Two Dollars ($5,152.00). Effective January 4, 1997 and continuing through
January 3, 1998, the base monthly rental shall be Five Thousand Three Hundred
Six and Fifty Six Hundredths Dollars ($5,306.56). Effective January 4, 1998 and
continuing through January 3, 1999, the base monthly rental shall be Five
Thousand Four Hundred Sixty Five and Seventy Six Hundredths Dollars
($5,465.76).

 

3.             TENANT ALLOWANCE: Landlord shall furnish to Tenant the
sum of Four Thousand Four Hundred Forty Dollars ($4,440.00) as an allowance to
Tenant for certain refurbishments to Tenant’s space, Tenant’s consultant fee,
and other costs incurred by Tenant in connection with this Amendment.

 

It is understood and
agreed between the parties hereto that said Lease, as hereby amended, shall
have the same effect as though made a part of the original term, and all
covenants, conditions, remedies, and terms of the original Lease shall remain
in full force and effect, except as aforesaid.

 

IN WITNESS WHEREOF, the
parties hereto, being duly authorized, have executed this Amendment Number One
as of the date and year first hereinabove written.

 

	
   

  	
  THE EQUITABLE LIFE ASSURANCE

  
	
   

  	
  SOCIETY OF THE UNITED STATES,

  
	
   

  	
  a New York corporation

  
	
   

  	
  Lessor

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Nancy B. Gille

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date

  	
  Nancy B. Gille 

  Investment Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COLLAGEN CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
  Lessee

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Gary S. Peterson

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date

  	
  14 July '95

  	
   

  
									

 

 

COMMENCEMENT OF
TERM AGREEMENT

Dated January 6,
1994

 

WHEREAS, by lease dated
October 27, 1993, as same may have been amended, The Equitable Life Assurance
Society of the United States (Landlord) leased to Collagen Corporation, a
Delaware Corporation (Tenant) the area described therein as 11,200 square feet
located at 48340 Milmont Drive, Fremont, California 94538;. and

 

WHEREAS, said lease’s
term is to commence when the Landlord has substantially completed the work required
to be performed by it under the lease; and

 

WHEREAS, Landlord’s work
has been substantially completed;

 

NOW, THEREFORE, in
accordance with the above, the parties hereto agree that the term of said lease
shall commence on January 4, 1994 and expire on January 3, 1996.

 

All other terms and
conditions of said lease are hereby reaffirmed as being in full force and
effect.

 

	
   

  	
  THE EQUITABLE LIFE ASSURANCE

  
	
   

  	
  SOCIETY OF THE UNITED STATES

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher C. Curtis

  	
   

  
	
   

  	
   

  	
  Landlord 

  	
  CHRISTOPHER C. CURTIS

  
	
   

  	
   

  	
  ATTORNEY-IN-FACT

  
	
   

  	
   

  
	
   

  	
  COLLAGEN CORPORATION,

  
	
   

  	
  a Delaware Corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joan M. Trampena

  	
   

  
	
   

  	
   

  	
  Tenant

  
						

 

 

EXHIBIT A

 

[GRAPHIC]

 

 

EXHIBIT B

 

[GRAPHIC]

 

 

ADDENDUM I

 

Miscellaneous
Provisions

Page 1 of 4

Lease Dated
October 27, 1993, Between

Collagen
Corporation,

a Delaware
Corporation

(Tenant)

and

The Equitable Life
Assurance Society of the United States

(Landlord)

 

1.                                       Delivery
of Premises: Landlord shall deliver the Premises to Tenant clean and free
of debris with the plumbing, lighting, air conditioning, roof, electrical
outlets, heating, fire sprinklers, loading doors, all other doors, including
personnel, grade level and dock high doors, and all improvements described in
Paragraph 5 of this Addendum, in good operating condition on the Lease
Commencement Date.” In the event that it is determined that this warranty has
been violated, then it shall be the obligation of Landlord, after receipt of
written notice from Tenant setting forth specifically the nature of the
violation, to promptly, at Landlord’s sole cost, rectify such violation.
Tenant’s failure to give such written notice to Landlord within forty-five (45)
days after the Lease Commencement Date shall cause the conclusive presumption
that Landlord has complied with all of Landlord’s obligations hereunder.
Additionally, Landlord shall repair any defective or malfunctioning component
of the roof for which Landlord has received written notice from Tenant
describing the failure or malfunctioning thereof within ninety (90) days
following the Lease Commencement Date.

 

2.                                       Extended
Term: Subject to the provisions of this paragraph, Tenant shall have the  right to extend the term of the Lease for a
period of twelve-(12) months, and shall be henceforth referred to as the
(“Extended Term”). Tenant may exercise such right  only by giving Landlord written notice of exercise of such right
on or before July 1, 1995 and only if no default by Tenant under the Lease
exists when Tenant exercises such right. If Tenant fails to exercise such right
in accordance with this  paragraph, such
right shall terminate. If Tenant exercises such right in accordance  with this paragraph, the term of the Lease
shall be extended for the Extended Term.

 

The Extended Term shall
be on and subject to all of the agreements, covenants and conditions in the
Lease, except the basic rent shall be the amount determined pursuant to
paragraph 2.(a) of this Addendum. References in the Lease to the term of the
Lease shall mean and include the term of the Lease as extended for the Extended
Term in accordance with this paragraph. If Tenant exercises the right to extend
the term of the Lease for the Extended Term in accordance with this paragraph,
Landlord and Tenant each shall, promptly after Tenant exercises such right,
execute and deliver to the other a written amendment to the Lease which sets
forth the extension of the term of the Lease for the Extended Term as defined,
but the term of the Lease shall be extended for the Extended Term whether or
not such amendment is executed.

 

a.                                       If
Tenant exercises the right to extend the term of the Lease for the Extended Term
in accordance with paragraph 3 of this Amendment, the net annual  basic rental during the Extended Term shall
be at one hundred percent (100%) of the prevailing fair market rental value of
the premises, on and subject to the covenants (except the amount of net annual
basic rental) in the Lease. based on then current rent for comparable space in
comparable buildings in the area in which the premises are located, leased on
terms comparable to the Lease. however, in no event less than the rate payable
by Tenant to Landlord during the final month of the initial term. Such fair market
rental value shall be determined between July 1, 1995 and July 30, 1995 by
written agreement between Landlord and Tenant. If Landlord and

 

Page 2 of 4

 

Tenant do not agree in writing on such fair market
rental value on or before July 30, 1995, such fair market rental value shall be
determined by appraisal in accordance with paragraph 3 of this Amendment.
Landlord and Tenant each shall, promptly after any determination of the net
annual basic rental pursuant to this paragraph or paragraph 3 of this
Amendment. execute and deliver to the other a written amendment to the Lease
which sets forth the net annual basic rental during the Extended Term, but such
net annual basic rental shall become effective whether or not such amendment is
executed. Such net annual basic rental shall be payable in advance in equal
monthly installments on the first day of every month during the Extended Term.

 

3.                                       Appraisal
Procedure: If Landlord and Tenant do not agree on the fair market rental value
of the premises by the date set forth in paragraph 2(a) of this Addendum, as applicable,
such fair market rental value shall be determined as follows: Landlord and
Tenant each shall appoint one (1) appraiser within fifteen (15) days after a written
request for appointment of appraisers has been given by either Landlord or Tenant
to the other. If either Landlord or Tenant fails to appoint its appraiser within
such period of fifteen (15) days, such appraiser shall be appointed by the Superior
Court of the State of California in and for Alameda County upon application of
the other. Each such appraiser shall appraise the premises and submit his or
her written report setting forth the appraised fair market rental value to Landlord
and Tenant within thirty (30) days after the appointment of both such appraisers.
If the higher appraised value in such two (2) appraisals is not more than one
hundred ten percent (110%) of the lower appraised value, the fair market rental
value of the premises shall be the average of the two (2) appraised values. If
the higher appraised value is more than one hundred ten percent (110%) of the
lower appraised value, Landlord and Tenant shall agree upon and appoint a
neutral third appraiser within fifteen (15) days after both of the first two
(2) appraisals have been submitted to Landlord and Tenant. If Landlord and
Tenant do not agree and fail to appoint such neutral third appraiser within
such period of fifteen (15) days, such neutral third appraiser shall be
appointed by the Superior Court of the State of California in and for Alameda
County upon application of either Landlord or Tenant. The neutral third
appraiser shall appraise the premises and submit his or her written report
setting forth the appraised fair market rental value to Landlord and Tenant
within thirty (30) days after his or her appointment (or as soon thereafter as
practicable). ‘The fair market rental value of the premises shall be the average
of the two (2) appraised values in such three (3) appraisals that are closest to
each other (unless the differences are equal, in which case the three (3)
appraised values shall be averaged). The fair market rental value of the
premises, determined in accordance with this paragraph, shall be conclusive and
binding upon Landlord and Tenant. Any proceedings in connection with the
determination of the fair market rental value of the premises shall be
conducted in Alameda County in accordance with California Code of Civil
Procedure sections 1280 to 1294.2 (including section 1283.05) or successor
California laws then in effect relating to arbitration, All appraisers
appointed by Landlord or Tenant, or both of them, shall be members of the
American Institute of Real Estate Appraisers of the National Association of
Realtors (or its successor), or commercial real estate professionals qualified
by appropriate training or experience, and have at least ten (10) year of experience
dealing with commercial real estate. The appraiser shall have no power or
authority to amend or modify this Lease in any respect and their jurisdiction
is limited accordingly. Landlord and Tenant each shall pay the fee and expenses
charged by its appraiser plus one-half of the fee and expenses charged by the neutral
third appraiser. If the fair market rental value of the premises has not been determined
in accordance with this paragraph by the effective date set forth in paragraph
3(a) of this Amendment. as applicable. Tenant shall continue to pay the basic
rent then in effect until the fair market rental value of the premises has been
determined. Within ten (10) days after such determination. Tenant shall pay to Landlord
any deficiency and Landlord shall so credit any surplus in the amount of basic
rent which arose between the effective date in question and such determination.

 

 

Page 3 of 4

 

4.                                       In
the event Tenant stores any property in the common areas, as defined in Paragraph
9(a. 1), temporarily or permanently and without prior written consent from
Landlord, Landlord can issue a written notice to have Tenant remove such property
within three (3) days. In the event Tenant fails to remove such property, Landlord,
at its sole discretion, can remove such property at Tenant’s sole cost. In the
event Tenant does not reimburse Landlord for such cost within seven (7) days, Tenant
shall be deemed to be in default of the lease and subject to Landlord’s unilateral
cancellation of lease. 

 

5.                                       TENANT IMPROVEMENTS: Landlord, at
Landlord’s cost, shall construct a new full height sheet-rocked demising wall,
provide separately metered gas and electric to the Premises, remove the mastic
coat currently on the floor, remove or grind bolts protruding from the floor,
fill cratered areas of floor, provide control of existing lighting within
Premises, replace all burned out bulbs, and wash windows inside and out.
Provided Tenant fully executes Lease by December 13, 1993, Landlord will
deliver Premises (inclusive of above referenced improvements) upon substantial completion
of said improvements which are expected to be completed by January 1, 1994.

 

6.                                       EARLY
OCCUPANCY: Once a lease document has been fully executed and Tenant has
tendered to Landlord the first month’s base rent of Five Thousand One Hundred Fifty-Two
Dollars ($5,152.00) along with a security deposit of Five Thousand One Hundred
Fifty-Two Dollars ($5,152.00) and has provided proof of liability insurance of
at least Two Million Dollars ($2,000,000.00) naming Lessor as an additional
insured, Landlord will grant Tenant early occupancy for the installation of
phones and general fit-up, as long as Tenant does not interfere with the completion
of tenant improvements.

 

7.                                       MODIFICATIONS
TO BUILDING EXTERIOR: Landlord will, where required by any applicable
authority including, but not limited to the Americans with Disabilities Act of
1993, State, local, or municipal ordinances, cause to be constructed all necessary
modifications to the exterior of the present premises required-to secure a Certificate
of Occupancy for Tenant.

 

8.                                       OPERATING
EXPENSES AUDIT PROVISION: Tenant may audit Landlord’s common area operating
costs in order to verify accuracy of CAM charges provided that:

 

a.             Tenant specifically designates the
year Tenant intends to audit which must be within the term of this lease.

 

b.             Such audit will be conducted only
during regular business hours at the office where Landlord maintains CAM
expense records and only after Tenant gives Landlord fourteen (14) days notice.

 

c.             Copy of Audit. Tenant shall deliver
to Landlord a copy of the results of such audit within fifteen (15) days of its
receipt by Tenant. No such audit shall be conducted if any other tenant has
conducted an audit for the time period Tenant intends to audit and Landlord
furnishes to Tenant a copy of the results of such audit.

 

d.             Tenant Not in Default. No audit
shall be conducted at any time that Tenant is in default of any of the terms of
the Lease.

 

e.             Limits for Subtenants and
Assignees. No subtenant shall have any right to conduct an audit and no
assignee shall conduct an audit for any period during which assignee was not in
possession of the Premises.

 

Page 4 of 4

 

9.                                       HAZARDOUS
MATERIALS: Except for Hazardous Materials (as defined below) which were
upon the Premises through no act or failure of Tenant before the date of this
Lease, Tenant agrees not to cause or permit the presence, use, generation,
release, discharge, storage, disposal, or transportation of any Hazardous
Materials on, under, in, above, to, or from the Premises other than presence,
use, storage and transportation which is both (i) required for and solely
incidental to Tenant’s principal use and operation of the Premises, and (ii) in
strict compliance with all applicable Laws. Tenant’s obligations under the preceding
sentence shall not be applicable to Hazardous Materials that (i) migrate to the
Premises from beyond the Premises, or (ii) exist on, under, in, or above the Premises
on or before the date on which the Tenant takes occupancy of the Premises. For
the purposes of this Lease the term “Hazardous Materials” shall refer to any
substances, materials, and wastes that are or become regulated as hazardous or
toxic substances under any applicable Laws. Tenant shall indemnify, defend, and
hold Landlord harmless from and against and reimburse Landlord for any breach
of the foregoing obligations and all of the following which may result from
such a breach: (a) any loss, cost, expense, claim, or liability arising out of any
investigation, reporting, monitoring, clean-up, containment, removal, storage, or
restoration work (“Remedial Work”) required by any Law, governmental agency, or
political subdivision or prudent standards of real estate ownership and management
that other Landlords with similar condition or situations would adhere to,
and (b) any claims of third parties for loss, injury, expense, or damage
arising out of the presence, release, or discharge of any Hazardous Materials
on, under, in, above, to, or from the Premises during the term of this Lease.

 

 

ADDENDUM II

 

Adjustment to Rent

Page 1 of 1

Lease Dated
October 27, 1993, Between

Collagen
Corporation,

a Delaware
Corporation

(Tenant)

and

The Equitable Life
Assurance Society of the United States

(Landlord)

 

1.             Landlord and Tenant agree that the basic rent referenced
in Paragraph 3, Page 3 and 4 of the Lease shall be as follows:

 

	
  Monthly
  Amount Due

  	
   

  	
  Monthly Payable

  	
   

  
	
  $

  	
  5,152.00

  	
   

  	
  From the commencement date, on or before January 15,
  1994, through January 14, 1996 or as adjusted by Expiration Date contained in
  the Basic Lease Information.

  	
   

  
					

 

 

 

STANDARD
INDUSTRIAL LEASE – MULTI–TENANT, FULL NET

 

 

between

 

THE EQUITABLE LIFE
ASSURANCE

SOCIETY OF THE
UNITED STATES

 

 

as Landlord

 

 

and

 

COLLAGEN
CORPORATION

(A DELAWARE
CORPORATION)

 

as Tenant

 

 

STANDARD
INDUSTRIAL LEASE – MULTI–TENANT, FULL NET

BASIC LEASE
INFORMATION

 

Date:  October 27, 1993

 

Landlord:  The Equitable Life Assurance Society of the
United States

 

Tenant:  Collagen Corporation, a Delaware Corporation

 

Premises
(Paragraph 1(c)): 
11,200 square feet located at 48340 Milmont Drive, Fremont, California
94538

 

Commencement
Date (Paragraph 2): 
Upon substantial completion of tenant improvements referenced in
Paragraph 5 of Addendum I, which are expected to be completed by January 1,
1994.

 

Expiration
Date (Paragraph 2): 
Twenty four (24) months from Commencement Date.

 

Use
(Paragraph 5):   Distribution.
warehouse, and other legal uses conforming to the municipal zoning requirements
and the CC&Rs applicable to this development as recorded March 30, 197 and
modified by the Supplemental Declaration recorded May 7, 1980 and amended by
the First Amendment to CC&Rs recorded July 6, 1981.

 

Basic
Rent (Paragraph 3): 
Five Thousand One Hundred Fifty-Two Dollars ($5.152.00)

 

PARKING:   Tenant shall have the unrestricted use of 45
parking stalls.

 

Tenant’s
Percentage Share (Paragraph 1(f)):  16.67% of Building B&C which costs are 44% of the total
project (199,680 SF) 

Operating
Expenses:

 

Property
Taxes:

 

Security
Deposit (Paragraph 48): 
Five Thousand One Hundred Fifty-Two Dollars ($5,152.00)

 

 

	
  Tenant’s Address

  	
   

  	
   

  
	
  for Notices (Paragraph 44):

  	
   

  	
  Ms. Joan Trampenau

  
	
   

  	
   

  	
  Collagen Corporation

  
	
   

  	
   

  	
  2500 Faber Place

  
	
   

  	
   

  	
  Palo Alto, CA 94303

  

 

 

	
  Landlord’s Address

  	
   

  	
   

  
	
  for Notices (Paragraph 44):

  	
   

  	
  One Bush Street, Suite 1200

  
	
   

  	
   

  	
  San Francisco, CA 94104

  
	
   

  	
   

  	
  ATTN: Vice President of Asset Management

  

 

	
  Brokers (Paragraph 47):

  	
   

  	
  MacMillan, Moore & Buchanan, Inc.: Jean Haynee

  
	
   

  	
   

  	
  J.R. Parrish, Inc. - Colliers International

  
	
   

  	
   

  	
  Rob Shannan & Don Reimann

  

 

Exhibit(s)
and Addendum (Paragraph 50):         See
Page 19

 

The provisions of the Lease identified above in parentheses are those
provisions where references to particular Basic Lease Information appear. Each
such reference shall incorporate the applicable Basic Lease Information. In the
event of any conflict between any Basic Lease Information and the Lease, the
latter shall control.

 

	
  TENANT

  	
   

  	
  LANDLORD

  	 

	
   

  	
   

  	
   

  	 

	
  Collagen Corporation

  	
   

  	
   

  	
  The Equitable Life Assurance Society of the

  	
   

  
	
  a Delaware Corporation

  	
   

  	
   

  	
  United States

  	
   

  
	
   

  	
   

  	
   

  	 

	
  By

  	
  /s/ Gary S. Petersmeyer

  	
   

  	
  By

  	
  /s/ Christopher C. Curtis

  	
   

  
	
  Its

  	
  President

  	
   

  	
  Its

  	
  CHRISTOPHER C.CURTIS

  	
   

  
	
   

  	
   

  	
  Attorney-in-Fact

  	 

	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
  ItsEXHIBIT 10.10

 

SECOND
AMENDMENT OF LEASE

 

THIS SECOND AMENDMENT OF
LEASE is made and entered into on May    
, 1996, between EKWILL PARTNERS, Ltd., a California limited Partnership
(“Lessor”) and McGHAN MEDICAL CORPORATION, a California corporation (“Lessee”).

 

RECITALS:

 

A.    Lessor and Lessee entered into a Lease dated
for reference May 23, 1989 (the “Lease”) pursuant to which Lessor leased to
Lessee and Lessee hired from Lessor 27,992 sq.ft (the “Premises”) on the first
and second floors of the building commonly known as 5540 Ekwill Street, Santa
Barbara, California (the “Building”).

 

B.    The Lease was amended by a First Amendment
of Lease dated for reference August 20, 1992 (the “First Amendment”).

 

C.    The term of the Lease, as amended, expires
July 31, 1996.

 

D.    The Lease grants Lessee an option to extend
the term for an additional period of 7 years. The parties have agreed to delete
this option right in consideration of Lessee’s agreement to lease the Premises
for an additional period of 10 years commencing August 1, 1996.

 

E.    The parties desire to memorialize the
extension of the term of the Lease, as amended.

 

NOW, THEREFORE, in consideration of the premises described above, and
other good and valuable consideration, the parties agree as follows:

 

1.             INCORPORATION OF RECITALS

 

The recitals set forth above are incorporated herein as if fully set
forth at this point.

 

CONFIDENTIAL

[SEAL OF McGHAN MEDICAL CORPORATION

PROPRIETARY INFORMATION]

 

 

1

 

2.             EXTENSION
OF TERM

 

Lessee agrees to lease the
Premises for a 10-year period commencing August 1, 1996, and expiring July 31,
2005. Lessee acknowledges that it has accepted and currently is in possession
of the Premises.

 

3.             RENT

 

The Initial Annual Rent for
the Premises during the extended term shall be $ 382,930.56, payable in equal
monthly installments of $31,910.88 commencing August 1, 1996, and commencing
monthly thereafter.

 

Effective January 1, 1997,
and effective January 1 of each subsequent year during the extended term, the
Initial Annual Rent shall be adjusted as provided in Section 3.5 of the
Lease.  The rental adjustment effective
January 1, 1997, shall be based upon the change in the Index for the full prior
12 months.

 

4.             ADDITIONAL
RENT

 

In addition to the Initial
Annual Rent, Lessee shall pay the Additional Rent as provided in Section 3.2 of
the Lease. For purposes of Article 3 of the Lease, Lessee’s Building Percentage
is 66.12% and Lessee’s Common Area Percentage is 33.06%. Lessee shall continue
to pay 49% of the electrical charges for common meter shared by Lessee and
EG&G.

 

5.             SECURITY
DEPOSIT

 

On or before August 1, 1996,
Lessee shall deliver to Lessor cash in an amount sufficient to increase the
total security deposit held by Lessor to $31,910.88. The increased security
deposit shall be used, applied, and retained by Lessor on the terms and
conditions described in the Lease.

 

6.             FURTHER
AMENDMENTS TO LEASE

 

Article 20 of the Lease is
deleted in its entirety.

 

Paragraphs 1, 2.1, 2.3, 3.1,
3.4(a), 3.4(c), 3.5,4, 20.5.1, 20.6, and 
20.7 of the Addenda to the Lease are deleted in their entirety.

 

2

 

7.             FIRST
RIGHT TO LEASE ADDITIONAL SPACE

 

In the event that additional
space within the Building (the “Additional Space”) shall become available
during the term of this Lease and Lessee is not then in default under the terms
of this Lease or the 5520 Lease (described below), Lessor shall give Lessee
written notice of Lessee’s first right to lease such Additional Space. The
Notice from Lessor shall describe the Additional Space, including any unique
features thereof, and the date upon which the lease for the Additional Space
will commence. The lease for the Additional Space shall commence upon the date
that the Additional Space is first available for occupancy and shall continue
for a term coincidental with the term of this Lease. The terms and conditions
of the lease for the Additional Space shall be the same as the terms of this
Lease, including without limitation the per square foot rental payable
hereunder and the obligation of the Lessee to pay Additional Rent. Rental
adjustments for the lease for the Additional Space shall be made to coincide
with rental adjustments under this Lease. The lease of the Additional Space
shall be strictly on an “AS IS” basis, and Lessor shall have no obligation to
make any changes, alterations, modifications or repairs whatsoever to the
Additional Space.

 

Lessee shall have 10
business days from the date of receipt of Lessor’s written notice to agree to
lease the Additional Space.  Lessee’s
election to lease the Additional Space shall only be effective if its written
agreement to lease is received by Lessor within said time period and is accompanied
by a check in an amount equal to the full first month’s rent plus a security
deposit of one month’s rent (collectively the “Additional Space Deposit”). In
the event Lessee fails to give timely written notice to Lessor of its agreement
to lease the Additional Space together with the required Additional Space
Deposit, Lessee’s rights hereunder shall terminate and Lessor shall be free to
lease or otherwise treat the Additional Space as it sees fit. Upon receipt of
Lessee’s agreement to lease the Additional Space and the Additional Space Deposit,
Lessor shall prepare an amendment to this Lease and deliver it to Lessee.
Lessee shall execute and return the amendment to Lessor within 10 business days
of receipt.

 

3

 

8.             5520
LEASE

 

Concurrently with execution
of this Second Amendment to Lease, Lessee has executed a Lease with Lessor for
certain space in an adjacent building at 5520 Ekwill Street, Santa Barbara,
California (the “5520 Lease”). Any default by the Lessee under the 5520 Lease
shall constitute a default under the terms of this Lease, as amended.

 

9.             NO
FURTHER CHANGES

 

Except as expressly modified
and amended herein, all of the terms and provisions of the Lease, as modified
by the First Amendment, are hereby ratified and approved.

 

IN WITNESS WHEREOF, the
parties have executed this Second Amendment as of the date first written above.

 

	
   

  	
  LESSOR:

  	
  EKWILL PARTNERS, LTD., a
  California

  	 

	
   

  	
   

  	
  limited partnership

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By

  	
  /s/ Jeffrey C. Bermant

  	
   

  	 

	
   

  	
   

  	
   

  	
  Jeffrey C. Bermant,

  	 

	
   

  	
   

  	
   

  	
  General Partner

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  130 Cremona Drive, Suite D

  	 

	
   

  	
   

  	
   

  	
  Goleta, CA 93117

  	 

	
   

  	 

	
   

  	
  LESSEE:

  	
  McGHAN MEDICAL CORPORATION

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By

  	
  /s/ Donald K. McGhan

  	
   

  	 

	
   

  	
   

  	
   

  	
  Donald K. McGhan,

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  5540 Ekwill Street

  
	
   

  	
   

  	
   

  	
  Santa Barbara, CA 93111

  
											

 

4

 

	
  9.

  	
   

  	
  Broker(s):

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Parking
  Spaces Provided: 

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Address
  for Payments

  and Notices (if different

  from below:

  	
   

  	
  None

  

 

12.                                 Submission of
this instrument for examination or signature by the Lessee does not constitute
a reservation of or option for space and it is not effective as a lease or
otherwise until execution by both the Lessee and the Lessor. This document will
be deemed withdrawn by the Lessor if not executed by the Lessee and delivered
to the Lessor by                         .

 

IN WITNESS WHEREOF, the parties hereto have
executed this Lease, consisting of the foregoing Basic Lease Provisions,
Articles 1 through 17 which follow, and any attached Exhibits or Addendums, as
of the date first above written.

 

	
   

  	
  LESSOR:

  
	
   

  	
   

  
	
  Date:                    , 1996

  	
   

  	
   

  	
  EKWILL
  PARTNETS, LTD., a California

  
	
   

  	
   

  	
   

  	
  limited
  partnership

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jeffrey C. Bermant

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Jeffrey C. Bermant,

  
	
   

  	
   

  	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  130 Cremona Drive, Suite D

  
	
   

  	
   

  	
   

  	
   

  	
  Goleta, CA 93117

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  
	
   

  	
  LESSEE:

  
	
   

  	
   

  
	
  Date:                      , 1996

  	
   

  	
   

  	
  McGHAN
  MEDICAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Donald C. McGhan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Donald C. McGhan

  
	
   

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  5540 Ekwill Street

  
	
   

  	
   

  	
   

  	
   

  	
  Santa Barbara, CA 93111

  
											

 

5

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