Document:

Exh 10.58 eBioscience Lease Assignment

Exhibit 10.58
ASSIGNMENT AND ASSUMPTION OF LEASE 
This Assignment and Assumption of Lease (this "Agreement"), dated as of January 11, 2013 is by and between eBioscience, Inc., a California corporation having a place of business at 10255 Science Center Drive, San Diego, California 92121 ("Assignor"), and Sequenom, Inc., a Delaware corporation having a place of business at 3595 John Hopkins Court, San Diego, California 92121 ("Assignee").
RECITALS
A.Assignor is the tenant under that certain Lease Agreement dated as of April 27, 2009 (the "Lease"), between BMR-10240 Science Center Drive LP, a Delaware limited partnership ("Landlord," formerly known as BMR-10240 Science Center Drive LLC), as landlord and successor-in-interest to TC Torrey Pines, LLC, a Delaware limited liability company; and Assignor, as tenant, for the building with a  street address of 10240 Science Center Drive, San Diego, California 92121, and the land on which the building is located (the "Premises").
B.Assignor desires to assign its right, title and interest in, to and under the Lease and the Premises to Assignee, and Assignee desires to accept such assignment upon and subject to all of the terms and conditions hereinafter set forth.
C.Landlord is willing to consent to the Assignment on the terms and conditions contained herein. 
D.All defined terms not otherwise expressly defined herein shall have the respective meanings given in the Lease. 
AGREEMENT
1.Assignment and Assumption.  Effective as of the Effective Date (as defined below), Assignor hereby assigns to Assignee all of its right, title and interest in, to and under the Lease and the Premises (including all of Assignor's right, title, and interest in and to any prepaid rents and security deposits as have been paid by Assignor pursuant to the Lease), and Assignee hereby accepts such assignment, assumes all of Assignor's obligations under the Lease which arise on or after the Effective Date, agrees to be bound by all of the provisions thereof and to perform all of the obligations of the tenant thereunder on and after the Effective Date hereof.  Such assignment and assumption is made upon, and is subject to, all of the terms, conditions and provisions of this Agreement.
 The assignment of the Lease will take effect on the date (“Effective Date”) which is the later of (i) the date upon which Assignor surrenders and delivers the Premises to Assignee in the condition required by this Agreement and (ii) February 1, 2013.  In the event the Effective Date does not occur on or before February 15, 2013, for any reason other than a delay caused by Assignee, then Assignor will pay to Assignee an amount equal to the daily Basic Rent for

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the Premises for each day beyond February 15, 2013 that the Effective Date is delayed.  In addition, in the event the Effective Date does not occur on or before March 15, 2013, for any reason other than a delay caused by Assignee, Assignee will have the right to terminate this Agreement by delivery of written notice to Assignor, in which event this Agreement will terminate and be of no further force and effect and neither party will have any further liability to the other, except that Assignor will promptly refund to Assignee any monies paid to Assignor pursuant to this Agreement.  In the event Assignee does not terminate this Agreement pursuant to the foregoing, then after March 15, 2013, Assignor will pay to Assignee an amount equal to 1.25 times the daily Basic Rent for the Premises for each day beyond March 15, 2013 that the Effective Date is delayed.  The parties acknowledge that the foregoing amounts are a fair and reasonable estimate of damages likely to be suffered by Assignee in the event of a late delivery of the Premises, the exact amount of which will be extremely difficult to ascertain.

2.Rental Payment.  Promptly after the Effective Date, Assignee will reimburse Assignor an amount equal to the pro rata Basic Rental previously paid by Assignor to Landlord which is attributable to the period from the Effective Date through the end of the calendar month in which the Effective Date occurs.
3.Effectiveness Contingencies. Assignor and Assignee expressly acknowledge and agree that this Agreement is subject to: 
i.Assignor entering into that certain lease agreement for approximately 20,000 square feet of space in San Diego prior to January 15, 2013;
ii.Assignor and Assignee delivering to Landlord written notification of the completion of (i) above, which notice will also confirm the date which is the Effective Date, within five (5) business days after the Effective Date; and 
iii.Landlord's signature evidencing its consent to this Agreement as set forth at the end of this Agreement and Landlord's execution and delivery to Assignee of a Landlord Estoppel in a form reasonably acceptable to Assignee stating that the Lease is in full force and effect and there are no existing defaults by either party and confirming factual matters, which Landlord signatures must be delivered within ten (10) days after the date of execution of this Agreement.
In the event any of the foregoing contingencies are not satisfied by the dates set forth above, then either party may terminate this Agreement by providing written notice to the other at any time prior to the satisfaction of such contingencies, and in the event this Agreement is so terminated, Assignor will return to Assignee any funds paid to Assignor on account of this Agreement.
4.Condition of Premises. The Premises shall be delivered by Assignor to Assignee broom clean and free of Assignor's personal property (other than the “FF&E” as defined below) and otherwise in "As Is" condition with all built in cabinets, book shelves, appliances, and all other leasehold improvements located thereon remaining in place.  Notwithstanding the foregoing, Assignor will ensure that all Building Systems and the Leased

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Personal Property are in good working order as of the Effective Date.  Assignor will remove all of Assignor's Signage and repair any damage caused by such removal within a reasonable time after the Effective Date (not to exceed 30 days, and Assignee will cooperate with Assignor in such removal).  As of the Effective Date, Assignor will have satisfied its obligations under Section 24(w) of the Lease relating to the surrender of the Premises free of Hazardous Materials and represents and warrants to Assignee that Assignor has not caused or allowed any Hazardous Materials to be released or otherwise placed on or under the Premises in violation of the Lease and the Premises were not used for laboratory purposes at any time during Assignor's occupancy.
5.Operating Expenses.  Assignor will promptly pay to Landlord (or Assignee, as applicable) the amount of any Additional Rent charged by Landlord and attributable to the period prior to the Effective Date (e.g., any amounts billed due to the Operating Cost reconciliation for the calendar year 2012).  Assignee may elect to pay such Additional Rent and seek reimbursement from Assignor for such amounts, and if such Additional Rent is not reimbursed within thirty (30) days after invoicing, such amount will bear interest at the Default Rate until paid.
6.Estoppel Agreement.  Assignor hereby represents and warrants to Assignee that:
i.The Lease is in full force and effect and has not been modified, supplemented or amended in any way.
ii.It is not aware of any defaults under the Lease that have not been cured, and knows of no events or circumstances which, with notice or the passage of time or both, would constitute a default under the Lease.
iii.The Term of the Lease is currently scheduled to expire on July 31, 2015.
iv.Monthly Basic Rent is currently payable at the rate of $123,861 and is paid through the end of the calendar month in which this Agreement is executed.
v.Landlord currently holds a Security Deposit in the amount of $129,783.
vi.Assignor has not previously assigned, sublet or otherwise transferred its interest in the Lease.
vii.Landlord has not provided notice to Assignee that it will require the removal of any alteration or improvement installed in the Premises prior to the date of this Agreement.
viii.Assignor represents that it has not performed any alterations or improvements in the Premises without first obtaining Landlord's prior consent (except for cosmetic improvements for which no consent was required pursuant to the terms of the Lease).

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7.Furniture, Fixtures and Equipment.  As part of the consideration for Assignee's agreement to enter into this Agreement, Assignor and Assignee have agreed that Assignor will transfer to Assignee certain furniture, fixtures and equipment (“FF&E”) as of the Effective Date of this Agreement.  Such FF&E is outlined on Schedule 1 to the Bill of Sale attached hereto as Exhibit A and Assignor will execute and deliver the Bill of Sale to Assignee on or before the Effective Date.  All FF&E is located in the Premises except for the items listed under the Miscellaneous category of Schedule 1 to Exhibit A attached hereto, starting with “Cubicle Walls,” all of which is currently located in the garage of the building occupied by Assignor at 10255 Science Center Drive, and Assignee will move such items to the Premises within thirty (30) days after the Effective Date.  In the event this Agreement is terminated prior to Assignee's occupancy of the Premises (e.g., by failure of a condition precedent), Assignee will reconvey the FF&E to Assignee.  Assignor will obtain a written statement signed by an authorized representative of General Electric Capital Corporation (“GE”) waiving and releasing any interest GE has or may have in the FF&E, which statement will be delivered to Assignee within ten (10) business days after the date of full execution and delivery of this Agreement.  Within five (5) days after receipt of the GE release, Assignee will deliver to Assignor a check for $129,783 representing reimbursement of the security deposits paid by Assignor pursuant to the Lease.  In addition to the FF&E, Assignee will have the right to use throughout the remaining Term of the Lease certain FF&E located within the Premises, as outlined in Exhibit B, which is the property of Landlord and will be surrendered to Landlord upon the expiration of the Lease.  
8.Assignee as Tenant.  Assignee by this Agreement becomes entitled to and assumes all right, title, interest and obligations of Assignor in and to the Lease arising on and after the Effective Date. Assignee shall be liable to Landlord for performing all of Tenant's obligations pursuant to the Lease to the extent arising on or after the Effective Date.  As of the Effective Date of this Agreement, the term “Tenant,” as used in the Lease, shall refer to Assignee.  Nothing herein will be deemed a release of Assignor from its obligations under the Lease.
9.Indemnification. 
i.Assignor shall indemnify and hold Assignee harmless from any and all claims, demands, causes of action, losses, costs (including, without limitation, reasonable court costs and attorneys' fees), liabilities and damages of any kind or nature whatsoever that Assignee may sustain by reason of Assignor's breach or non-fulfillment (whether by action or inaction) at any time of any covenant or obligation under the Lease to be performed by Assignor at any time prior to the Effective Date or under this Agreement.
ii.Assignee shall indemnify and hold Assignor harmless from any and all claims, demands, causes of action, losses, costs (including, without limitation, reasonable court costs and attorneys' fees), liabilities and damages of any kind or nature whatsoever that Assignor may sustain by reason of Assignee's breach or non-fulfillment (whether by action or inaction) at any time of any covenant or obligation under the Lease or this Agreement to be performed by Assignee at any time on and after the Effective Date.
iii.The indemnification obligation under this Section shall be conditioned upon the indemnified party giving notice to the indemnifying party promptly after 

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the indemnified party receives notice of the claim and shall survive the expiration or termination of the Lease.
10.Default By Landlord.  Assignor shall not be liable to Assignee for Landlord's failure to perform any of Landlord's obligations under the Lease, nor shall Assignor have any obligation to perform the same or to bring legal proceedings or take any other action against Landlord to assure performance of Landlord's obligations under the Lease.  Assignee's enforcement of the Lease against Landlord shall be at the sole expense of Assignee, and Assignee shall indemnify Assignor against all costs and expenses, including, but not limited to, reasonable attorneys' fees, which may be incurred by Assignor in connection with any claim, action or proceeding so undertaken by Assignee and arising solely out of an act or omission of Landlord.  Any amount of recovery obtained by Assignee in such an action shall be the property of Assignee, except that Assignor shall be compensated therefrom for any damages sustained by Assignor as a consequence of such default or breach on the part of Landlord (provided Assignor's damages were not caused or contributed to by any act or omission of Assignor).
11.Landlord's Consent Fees.  Subject to Section 10(c) of the Lease, Assignor and Assignee agree to split any fees charged by Landlord in granting its consent to this Agreement, if any.
12.Brokers.  Assignor covenants and agrees that under no circumstances shall Landlord or Assignee be liable for any brokerage commission or other charge or expense in connection with the Assignment and Assignor agrees to protect, defend, indemnify and hold Landlord and Assignee harmless from the same and from any cost or expense (including, but not limited to, attorney's fees) incurred by Landlord or Assignee in resisting any claim for any such brokerage commission.  The parties acknowledge that Studley, Inc. represented Assignee and CB Richard Ellis, Inc., represented Assignor in connection with this Agreement, and any fee to be paid to the brokers listed above shall be paid by Assignor pursuant to a separate agreement (provided that the fees payable to Studley, Inc. are agreed to be 2% of the gross rental payments for the Term of the Lease).  Landlord's broker will not be entitled to any commission in connection with this Agreement.
13.Further Assurances.  Assignor and Assignee hereby covenant that each will, at any time and from time to time upon request by the other, and without the assumption of any additional liability thereby, execute and deliver such further documents and do such further acts as such party may reasonably request in order to fully effect the purpose of this Agreement.
14.Enforcement by Landlord.  The provisions of this Agreement shall inure to the benefit of and be enforceable by Landlord.
15.Successors.  The provisions of this Agreement shall be binding upon, and shall inure to the benefit of, each of the parties hereto and to their respective successors, transferees and permitted assigns pursuant to the Lease.
16.Construction.  The parties agree that they have participated equally in the formation of this Agreement and that the language and terms of this Agreement shall not be 

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construed against either party by reason of the extent to which such party or its professional advisors participated in the preparation of this Agreement.
17.    Headings.  The headings of the paragraphs of this Agreement are inserted solely for convenience of reference and are not a part of and are not intended to govern, limit or aid in the construction of any terms or provision hereof.
18.Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute but one and the same agreement.
19.Governing Law.  This Agreement will in all respects be governed by and interpreted in accordance with the laws of the State of California, without reference to its conflict of law provisions.  The parties hereby agree that all disputes arising out of this Agreement will be subject to the exclusive jurisdiction of and venue in the federal and state courts located in the County of San Diego, State of California.  Each party hereby consents to the personal and exclusive jurisdiction and venue of these courts.
20.Attorneys' Fees.  If any action or proceeding shall be commenced to enforce this Agreement or any right arising in connection with this Agreement, the prevailing party in such action or proceeding shall be entitled to recover reasonable attorneys' fees, costs and expenses incurred by such prevailing Party in connection with such action or proceeding.
21.Entire Agreement.  This Agreement is the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements between the parties hereto with respect thereto.  This Assignment may not be altered, amended, changed, terminated or modified in any respect or particular, unless the same shall be in writing and signed by the party to be charged and unless such amendment has been approved in writing by Landlord.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, Assignor and Assignee have caused their duly authorized representatives to execute this Agreement as of the date first above written.
"Assignor":
eBioscience, Inc.,
a California corporation

By:    /s/ Don Tartre
Don Tartre, SVP & General Manager

"Assignee":
Sequenom, Inc.,
a Delaware corporation

By: /s/ Paul Maier

Landlord hereby consents to the Assignment; provided, however, such consent is granted by Landlord only upon the terms and conditions set forth in this Agreement.  This Agreement shall not be construed to waive any of Landlord's rights or remedies under the Lease or to enlarge or increase any obligations of Landlord under the Lease.
"Landlord":
BMR-10240 Science Center Drive LP,
a Delaware limited partnership

By:    /s/ Kevin Simonsen

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Exhibit A

BILL OF SALE
FOR VALUE RECEIVED, eBioscience, Inc., a California corporation ("Seller"), hereby sells, assigns, transfers and delivers to Sequenom, Inc., a Delaware corporation ("Buyer"), effective as of 11:59 p.m. (Pacific Time) on February 1, 2013 (the "Effective Date"), all of the personal property described in Schedule 1 attached hereto and incorporated herein by this reference (the "Personal Property").
Seller hereby represents and warrants that (i) it is the owner of the Personal Property, and the Personal Property is not subject to any liens, encumbrances or claims of any kind, (ii) the transfer of the Personal Property to Buyer does not, and shall not, require the consent of any third party, and (iii) Seller has the legal power, right and authority to transfer the Personal Property to Buyer.  
Except as set forth above, this Bill of Sale is made without any covenant, warranty or representation by, or recourse against, Seller, and Buyer hereby releases Seller from and against any liability or claim therefor relating to the Personal Property transferred hereby except as a result of the breach of any representation and warranty expressly set forth above.  By acceptance of this Bill of Sale, Buyer specifically acknowledges that Buyer is not relying on any representations or warranties of any kind or nature whatsoever, whether oral or written, express, implied, statutory or otherwise, from Seller, including, without limitation, any covenant, representation or warranty regarding or relating to (a) the operation of the Personal Property; (b) the merchantability or fitness of any item of the Personal Property for a particular purpose; or (c) the physical condition of the Personal Property.
This Bill of Sale shall be governed by, interpreted under, construed under, and enforceable in accordance with the laws of the State of California.  
IN WITNESS WHEREOF, Seller has executed and delivered this Bill of Sale to Buyer as of the date set forth below, which Bill of Sale (and the transfer of the Personal Property to Buyer) shall be effective as of the Effective Date.
		
	SELLER:
	eBioscience, Inc., 

a California corporation 

By: /s/ Don Tartre
Name: Don Tartre
Title: SVP and General Manager
Date: January 11, 2013

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SCHEDULE 1 
PERSONAL PROPERTY

Desk Chairs: 51
Desks for Private Offices:  44
Private Office Work/Guest Tables:  12
Private Office Bookshelves: 17
Private Office Guest Chairs: 42
Private Office Credenzas: 5
Private Office Filing Cabinets: 2
2 - Drawer Lateral File Cabinets: 20
3 - Drawer Lateral File Cabinets: 2
Small Conference Tables:  3
Medium Conference Tables 1
Large Conference Table:  1
Conference Room Chairs: 47
Lunch Room:  3 tables, 4 chairs
Reception Area:   1 reception desk and chair
Secretarial Work Station: 1
Computer/IT Room:   8 server racks, 24 batteries
Workstations: 24
Workstation Drawer File Cabinets: 52
Miscellaneous: 
		
	•
	Card Access/Security System

		
	•
	Trash Cans (~55)

		
	•
	Cubical Walls

		
	◦
	5' x 3': 110                                                                  

		
	◦
	5' x 2': 30                                                                     

		
	◦
	5' x 4': 3                                                                       

		
	◦
	5' x 5': 17

		
	•
	Drawers/Filing Cabinet/Overhead Storage

		
	◦
	(2 drawer)  Under desk mounted: 10

		
	◦
	(2 drawer) Under desk self-standing: 2

		
	•
	Overhead storage:  3

		
	•
	Cubical Desks

		
	◦
	2' X 3' (center): 8

		
	◦
	2' x 3' (return): 10

		
	◦
	2' x 2' (return): 5

		
	◦
	2' x 4' (return): 3

		
	•
	Wall Mounted Desk Parts

		
	◦
	2 1⁄2' x 3 1⁄2  (center): 5

		
	◦
	2 1/2 x 2 1⁄2 (return): 8

		
	◦
	2 1/2 x 3 1⁄2 (return): 8

		
	•
	Arms: 2 boxes

		
	•
	Connecting rods, corners , middle attachments, electrical: 7, 32 gallon trash cans

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Exhibit B

Landlord FF&E
LEASED PERSONAL PROPERTY

		
	1)
	All security computers located in room #1000A

		
	2)
	All tables in ground floor conference room #1020

		
	3)
	All computer racks located in room #1038

		
	4)
	All communication racks located in room #1028, 1013, 2009

		
	5)
	UPS unit located in room #1012

		
	6)
	Refrigerators located in rooms #1011, 1083, 2038

		
	7)
	Two Conference room screens located in room #2001

		
	8)
	All white boards and cork boards located throughout the building in various offices

7744458v.8

10

LEASE AGREEMENT BETWEEN 

TC TORREY PINES, LLC,

AS LANDLORD 

AND

eBIOSCIENCE, INC.

AS TENANT

10240 SCIENCE  CENTER DRIVE
SAN DIEGO,  CALIFORNIA

BASIC LEASE NFORMATION

	
			
	Lease Date:
	April 27, 2009

	Landlord:
	TC TORREY  PINES, LLC, a Delaware limited liability company

	Tenant:
	eBIOSCIENCE,  INC., a California  corporation

	Premises:
	An approximately 49,347 Rentable square foot building (although Landlord makes no representation as to the actual size of the Building or the Land) with a street address of 10240 Science Center Drive, San Diego, California (the "Building"), including approximately 1.5 acres of land on which the Building is located (the "Land”) and including both surface and subterranean parking areas (all of the foregoing constitutes the "Premises").  The Premises are outlined on the plan attached to this Lease as Exhibit A.

	Term:
	Seventy-three (73) full calendar months, starting on the Commencement Date and ending at 11:59 p.m. Pacific Time on the Expiration Date, subject to extension  or earlier termination as provided in this Lease (the "Term").   As used herein, a "Lease Year" means each consecutive twelve (12) month period commencing on July 1 and ending on the succeeding June 30, except that the last Lease Year shall end on July 31, 2015.

	Commencement Date:
	July 1, 2009 (the "Commencement Date")

	Expiration Date:
	July 31, 2015 (the "Expiration Date")

	Basic Rent:
	"Basic Rent" shall be the following amounts for the following periods of time:

	 
	Lease Year
	Monthly Basic Rent

	 
	July 1, 2009
	$-0-

	 
	July 1, 2010
	$114,979

	 
	July 1, 2011
	$120,407

	 
	July 1, 2012
	$123,861

	 
	July 1, 2013
	$127,315

	 
	July 1, 2014
	$129,783

	 
	Tenant shall pre-pay  Landlord an amount totaling One Hundred Fourteen Thousand Nine Hundred Seventy-Nine Dollars ($114,979) upon full execution of this Lease, which shall be applied towards the Monthly Basic Rent payment for the thirteenth (13th) month of the Term

	Security Deposit:
	One  Hundred  Twenty-Nine  Thousand  Seven Hundred  Eighty-Three  Dollars  ($129,783), payable upon full execution of this Lease (the "Security Deposit").

	Rent:
	Basic Rent, Additional Rent (as defined in this Lease), and all other sums that Tenant may owe to Landlord or otherwise be required to pay under this Lease (collectively or individually "Rent")

i

	
			
	Permitted  Use:
	General office and laboratory use (such laboratory use to be limited to Tenant's business operations as they exist on the date of full execution of this Lease or any reasonably comparable uses, and for no other purpose without the Landlord's consent, which may not be unreasonably withheld or delayed.

	Liability  Insurance  Amount
	Two Million Dollars ($2,000,000)

	Tenant's Address for Notices:
	Prior to the Commencement Date:
eBIOSCIENCE, INC.
10255 Science Center Drive
San Diego, CA 92121
Attention:  Todd R. Nelson
Telephone:  858-784-5012
Facsimile :  858-642-2046
Email:  todd.nelson@ebioscience.com
	After the Commencement Date:
eBIOSCIENCE, INC.
10240 Science Center Drive
San Diego, CA 92121
Attention:  Todd R. Nelson
Telephone:  858-784-5012
Facsimile :  858-642-2046
Email:  todd.nelson@ebioscience.com

	 
	With Copy To:
	With Copy To:

	 
	Richard M. Wirtz
Wirtz Hellen Kamp LLP
12760 High Bluff Drive, Suite 300
San Diego, California 92130
Telephone:     858.259.5009
Facsimile:       858.259.6008
E-Mail:  rwirtz@wirtzlaw.com
	Richard M. Wirtz
Wirtz Hellen Kamp LLP
12760 High Bluff Drive, Suite 300
San Diego, California 92130
Telephone:     858.259.5009
Facsimile:       858.259.6008
E-Mail:  rwirtz@wirtzlaw.com

	Landlord's Address for Notices:
	TC Torrey Pines, LLC
c/o Trammell Crow Company
2001 Ross Avenue, Suite 3400
Dallas, Texas 75201
Attention:       Asset Manager
Telephone:     214.979.6100
Facsimile:       214.863.4100
E-Mail:    mhill2@trammellcrow.com
	 

	Landlord's Address for Payments:
	TC Torrey Pines, LLC
c/o Trammell Crow Company
2001 Ross Avenue, Suite 3400
Dallas, Texas 75201
Attention: Asset Manager
Telephone:     214.979.6100
Facsimile:       214.863.4100
E-Mail:    mhill2@trammellcrow.com
	 

ii

The foregoing Basic Lease Information (the “Basic Lease Information”) is incorporated into and made a part of this Lease.  If any conflict exists between any Basic Lease Information and the other provisions of this Lease, then the other provisions of this Lease shall control.

iii

TABLE OF CONTENTS

Page No.
		
	1.
	Definitions and Basic Provisions    1

		
	2.
	Lease Grant    1

		
	3.
	Tender of Possession; Early Occupancy    1

		
	4.
	Rent    1

		
	(a)
	Payment    1

		
	(b)
	Operating Costs; Taxes    2

		
	(c)
	Taxes    3

		
	5.
	Delinquent Payments; Late Charges    3

		
	6.
	Security Deposit    3

		
	7.
	Services and Utilities    4

		
	(a)
	Landlord Obligations    4

		
	(b)
	Tenant Obligations    4

		
	(c)
	Security    4

		
	(d)
	Interruption of Utilities or Services    4

		
	8.
	Improvements; Alterations; Repairs; Maintenance    4

		
	(a)
	Improvements; Alterations    4

		
	(b)
	Repairs; Maintenance    5

		
	(c)
	Performance of Work    6

		
	(d)
	Mechanic's Liens    6

		
	9.
	Use    6

		
	10.
	Assignment and Subletting    7

		
	(a)
	Transfers    7

		
	(b)
	Consent Standards    7

		
	(c)
	Request for Consent    7

		
	(d)
	Conditions to Consent    7

		
	(e)
	Attornment by Subtenants    7

		
	(f)
	Cancellation    8

		
	(g)
	Additional Compensation    8

		
	(h)
	Permitted Transfers    8

		
	11.
	Insurance; Waivers; Subrogation; Indemnity    9

		
	(a)
	Tenant's Insurance    9

		
	(b)
	Landlord's Insurance    9

		
	(c)
	No Subrogation; Waiver of Property Claims    9

		
	(d)
	Indemnity    10

		
	12.
	Subordination; Attornment; Notice to Landlord's Mortgagee    10

		
	(a)
	Subordination    10

		
	(b)
	Attornment    10

		
	(c)
	Notice to Landlord's Mortgagee    11

		
	(d)
	Landlord's Mortgagee's Protection Provisions    11

		
	13.
	Condemnation    11

		
	(a)
	Total Taking    11

		
	(b)
	Partial Taking - Tenant's Rights    11

		
	(c)
	Partial Taking - Landlord's Rights    11

iv

		
	(d)
	Temporary Taking    11

		
	(e)
	Award    12

		
	14.
	Fire or Other Casualty    12

		
	(a)
	Repair Estimate    12

		
	(b)
	Tenant's Rights    12

		
	(c)
	Landlord's Rights    12

		
	(d)
	Repair Obligation    12

		
	(e)
	Abatement of Rent    13

		
	15.
	Personal Property Taxes    13

		
	16.
	Events of Default    13

		
	(a)
	Default    13

		
	(b)
	Intentionally Omitted    13

		
	(c)
	Estoppel    13

		
	(d)
	Insurance    13

		
	(e)
	Mechanic's Liens    13

		
	(f)
	Other Defaults    13

		
	(g)
	Insolvency    14

		
	17.
	Remedies    14

		
	18.
	Payment by Tenant; Non-Waiver; Cumulative Remedies    15

		
	(a)
	Payment by Tenant    15

		
	(b)
	No Waiver    15

		
	(c)
	Cumulative Remedies    15

		
	(d)
	Landlord's Cure    15

		
	19.
	Intentionally Omitted    16

		
	20.
	Surrender of Premises    16

		
	21.
	Holding Over    16

		
	22.
	Certain Rights Reserved by Landlord    16

		
	(a)
	Building Operations    16

		
	(b)
	Prospective Purchasers and Lenders    16

		
	(c)
	Prospective Tenants    16

		
	23.
	Landlord Representations and Warranties    16

		
	24.
	Miscellaneous    17

		
	(a)
	Landlord Transfer    17

		
	(b)
	Landlord's Liability    17

		
	(c)
	Force Majeure    17

		
	(d)
	Brokerage    17

		
	(e)
	Estoppel Certificates    17

		
	(f)
	Notices    18

		
	(g)
	Separability    18

		
	(h)
	Amendments; Binding Effect    18

		
	(i)
	Quiet Enjoyment    18

		
	(j)
	No Merger    18

		
	(k)
	No Offer    18

		
	(l)
	Entire Agreement    18

		
	(m)
	Intentionally Omitted    18

v

		
	(n)
	Governing Law    18

		
	(o)
	Recording    19

		
	(p)
	Water or Mold Notification    19

		
	(q)
	Joint and Several Liability    19

		
	(r)
	Financial Reports    19

		
	(s)
	Intentionally Omitted    19

		
	(t)
	Attorneys' Fees    19

		
	(u)
	Intentionally Omitted    19

		
	(v)
	Authority    19

		
	(w)
	Hazardous Materials    19

		
	(x)
	Prohibited Persons and Transactions    22

		
	(y)
	Time is of the Essence    22

		
	25.
	Other Provisions    22

		
	(a)
	Renewal Option    22

		
	(b)
	Signage    22

		
	(c)
	Access    22

		
	(d)
	Parking    22

		
	(e)
	Transportation Management    22

		
	(f)
	Modification of Lease for Landlord's Mortgagee    23

		
	(g)
	Exhibits    23

Exhibit A - Outline of Premises
Exhibit B - Confirmation of Commencement Date
Exhibit C - Form of Tenant Estoppel Certificate
Exhibit D - Renewal Option
Exhibit E - Approved Vendors List
Exhibit F - Leased Personal Property

vi

LIST OF DEFINED TERMS

Page No.
Additional Rent    2
Advocate Arbitrators    2
Affiliate    1
Arbitration Agreement    2
Award    2
Basic Lease Information    iii
Basic Rent    i
Briefs    2
Building    i
Building's Structure    1
Building's System    1
Casualty    12
Commencement Date    i
Comparable Area    3
Comparable Buildings    3
Damage Notice    12
Default Rate    3
Disabilities Acts    6
Environmental Laws    19
Event of Default    13
Exercise Conditions    1
Exercise Notice    1
First Rebuttals    2
GAAP    9
Haz Mat Documents    21
Hazardous Material(s)    19
Hazardous Materials List    21
Including    1
Initial Liability Insurance Amount    ii
Intention to Transfer Notice    8
Land    i
Landlord    1
Landlord's Initial Statements    2
Landlord's Mortgagee    10
Landlord's Option Rent Calculation    1
Landlord's Rebuttal Statement    2
Law    1
Laws    1
Lease    1
Lease Year    i
Leased Personal Property    1
Loss    10
Market Rent    1
Mortgage    10
Neutral Appraiser    2
Neutral Arbitrator    2
OFAC    22
Operating Costs    2
Option    1
Option Rent    1
Option Term    1
Outside Agreement Date    1

vii

Permitted Transfer    8
Permitted Transferee    8
Permitted Use    ii
Premises    i
Proposition 13    3
Rent    i
Repair Period    12
Review Period    2
Second Rebuttals    2
Security Deposit    i
Taking    11
Tangible Net Worth    9
Taxes    3
Tenant    1
Tenant Party    1
Tenant Response Date    1
Tenant Response Notice    1
Tenant's Initial Statements    2
Tenant's Option Rent Calculation    1
Tenant's Rebuttal Statement    2
Term    i
Transfer    7

viii

LEASE

This Lease Agreement (this "Lease") is entered into as of the date set forth in the Basic Lease Information between TC TORREY PINES, LLC, a Delaware limited liability company (''Landlord''), and eBIOSCIENCE, INC., a California corporation ("Tenant").

1.Definitions and Basic Provisions.  The  definitions and other provisions set forth  in  the Basic Lease  Information are incorporated herein by reference for  all purposes.  Additionally, the  following terms  shall have the  following meanings when used in this Lease:  "Affiliate" means  any  person  or entity which, directly or indirectly, through one or more  intermediaries, controls,  is controlled  by,  or is under common control with the party in question;  "Building's Structure" means the Building's (including the subterranean parking structure's) exterior walls (excluding plate glass windows), roof,  elevator shafts, footings, foundations, structural portions of load­bearing walls, structural floors and sub floors,  and  structural columns and beams; "Building's Systems" means the Building's HVAC, fire  and  life-safety, plumbing, electrical, and mechanical systems and the elevator(s);  "Leased Personal Property" means the personal property identified on Exhibit F hereto; "including" means including, without  limitation; "Laws" means all federal, state, and local laws, ordinances, rules and regulations, all court orders, governmental directives, and governmental orders and all interpretations of the foregoing, and all restrictive covenants of record affecting the Premises, and "Law" means any of the foregoing; and "Tenant  Party"  means any of the following persons:  Tenant; any assignees claiming by, through, or under Tenant; any subtenants claiming by, through, or under Tenant; and any of their respective agents, contractors, employees, licensees, guests and invitees.

2.Lease Grant.  Subject to the terms of this Lease, Landlord leases to Tenant, and Tenant leases from Landlord, the Premises and the Leased Personal Property, for the Term.

3.Tender of Possession; Early Occupancy.

(a)     Landlord and Tenant presently anticipate that possession of the Premises will be tendered to Tenant in the condition required by  this Lease on the Commencement Date.   If Landlord is unable to tender possession of the Premises in such condition to Tenant by the Commencement Date, then (a) the validity of this Lease shall not be affected or impaired thereby, (b) Landlord shall not be in default hereunder or be liable for damages therefor, and (c) Tenant shall accept possession of the Premises when Landlord tenders possession thereof to Tenant.  Prior to occupying the Premises, Tenant shall execute and deliver to Landlord a letter substantially in the form of Exhibit  B hereto confirming (i) the Commencement Date and the Expiration Date, (ii) that Tenant has accepted the Premises, and (iii)  that Landlord has performed all of its obligations with respect to the Premises to be performed as of the Commencement Date; however, the failure of Tenant to-execute such letter shall not defer the Commencement Date or otherwise invalidate this Lease.      Notwithstanding the foregoing, if Landlord fails to deliver  possession  of  the  Premises  in  the  condition required by  this  Lease within  sixty  (60) days  after the Commencement  Date,  Tenant may  immediately  cancel this  Lease by  giving Landlord  notice  of cancellation, provided that such notice is given within ten (10) business days after the expiration of such sixty (60) day period, and if such notice is not given within such period, Tenant's  right to cancel this Lease as a result of a delay in the Commencement Date shall lapse.  In the event of such cancellation, any Security Deposit and prepaid Basic Rent shall be returned to Tenant within fifteen (15) days after receipt of Tenant's notice of cancellation, and neither party shall have further rights or obligations hereunder.

(b)    At any time after the full execution of this Lease, provided that Tenant has satisfied the provisions of Section 11(a) regarding insurance coverage, Tenant shall, upon request, be afforded access to the Premises to commence its initial construction of improvements (which construction shall be subject to the provisions of this Lease).  Such early occupancy shall not affect the Term or advance the Commencement Date, but shall be subject to all of the provisions of this Lease (as if the date of early possession were the Commencement Date) other than those requiring the payment of Basic Rent or Additional Rent.

4.Rent.

(a)     Payment.  Tenant  shall timely pay  Rent to Landlord, without notice or demand, and without deduction, abatement, counterclaim or set off unless related to uncured non-performance under Sections 8(b) and 23, by good and sufficient check at Landlord's address provided for in this Lease, or in another reasonable 

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manner  (such  as wire  transfer  into  a lock-box   required   by Landlord's   Mortgagee   (as defined  herein)) or to  another address  specified  by Landlord,   and shall  be accompanied   by all applicable   state  and  local  sales  or use taxes,  if any. The  obligations   of Tenant  to pay  Basic  Rent  and other  sums  to Landlord  and the  obligations   of Landlord  under  this Lease  are  independent   obligations.    Basic  Rent  shall  be payable   monthly  in advance.    The  monthly   installment   of Basic  Rent  for the thirteenth  (13th) month of the Term shall be payable contemporaneously with the execution of this Lease; thereafter, Basic Rent shall be payable on the first (1st)  day of each month beginning on the first (1st  day of the fourteenth (14th) month of the Term.  The monthly Basic Rent for any partial month at the beginning of the Term shall equal the product of 1/365 of the annual Basic Rent in effect during the partial month and the number of days in the partial month and shall be due on the Commencement Date.  Payments of Basic Rent for any partial calendar month at the end of the Term shall be similarly prorated.  Tenant shall pay Additional Rent (as defined below) at the same time and in the same manner as Basic Rent.

(b) Operating  Costs; Taxes.

(i)     Tenant shall pay to Landlord all Operating Costs (as such term is defined herein) which  accrue  during the  Term  ("Additional   Rent",   which  term  also  includes  Taxes,  as  defined in Subparagraph (c)), commencing with the seventh (7th) month after the Commencement Date.  Payments of Additional Rent shall be due and payable within ten (10) business days after receipt of an invoice from Landlord.

(ii)     The term "Operating   Costs" means (a) capital improvements made in order to comply with any Law promulgated after the Commencement Date by any governmental authority or any interpretation hereafter rendered  with respect to any existing Law, as amortized using  a commercially reasonable interest rate over the useful economic life of such improvements as determined by Landlord in its reasonable discretion; and (b) costs of insurance maintained by Landlord under this Lease.

Operating Costs shall not include costs for (i) capital improvements, other than capital improvements described in Section 4(b)(ii); (ii) repair and replacements reimbursed by proceeds of insurance  or  by  Tenant;  (iii)  interest,  amortization  or  other  payments  on  loans  to  Landlord;  (iv) depreciation; (v) leasing commissions; (vi) legal expenses for services, other than those which directly benefit Tenant (e.g., disputes involving Taxes); (vii) federal income taxes imposed on or measured by the income of Landlord from the operation of the Premises; (viii) Landlord's general corporate overhead and general and administrative expenses;  (ix)  costs incurred in  connection with upgrading the Premises to comply with any Laws in effect prior to the Commencement Date, including, without limitation, Disability Laws; or (x) costs arising from the presence of Hazardous Materials in or about the Premises as of the Commencement Date.

(iii)     The obligations of Tenant to pay Operating Costs (for any period which is prior to the expiration of the Term) shall survive the expiration or termination of this Lease.

(iv)     In the  event of any dispute regarding the amount due as Additional Rent, Tenant shall have the right, after reasonable notice and at reasonable times, to inspect and photocopy Landlord's accounting records at  Landlord's  office  (or the office of Landlord's  property manager, wherever such records are located).  If, after such inspection and photocopying, Tenant continues to dispute the amount of Additional Rent,  Tenant,  or an agent  designated  by  Tenant,  shall be  entitled  to  audit and/or  review Landlord's records to determine the proper amount of Additional Rent due and payable by Tenant.  If such audit or review reveals that Landlord has overcharged Tenant, then within twenty (20) days after the results of  such audit  are  made  available  to  Landlord, Landlord  shall reimburse Tenant  the  amount of  such overcharge, together with any reasonable costs incurred by Tenant in determining the overcharge.  If the audit reveals that Tenant was undercharged, then within twenty (20) days after the results of the audit are made available to Tenant, Tenant shall reimburse Landlord the amount of such undercharge.  If Landlord desires to contest such audit results, Landlord may do so by submitting the results of the audit to arbitration pursuant to the terms and procedures of the American Arbitration Association (in San Diego, California), within twenty (20) days of receipt of the results of the audit, and the arbitration shall be final and binding upon Landlord and Tenant.  Landlord shall be required to maintain records of all Operating Costs for the entirety of the two (2) year period  (''Review  Period")  following Landlord's  delivery to Tenant of each 

2

invoice  for  Operating   Costs.    The  payment   by  Tenant  of  any amounts  pursuant   to  Section  4(b)  shall  not preclude  Tenant  from questioning   the correctness   of any invoice  for Operating  Costs provided  by Landlord at any  time  during  the Review   Period,  but the  failure  of Tenant  to object  thereto  prior  to the  expiration   of the applicable   Review  Period  shall be conclusively   deemed  Tenant's   approval  of such Operating  Costs.

(c)     Taxes.   Tenant  shall pay  all Taxes each Lease  Year  and partial  Lease  Year  falling  within the  Term.   Tenant  shall  pay  Taxes  no  later  than  their  due date (being  the last date of payment   before  any penalties are  imposed)   and  may  pay  such  Taxes  in  installments    if  allowed   by  the  taxing   authority.     Tenant  will  provide Landlord  with  evidence   of payment  concurrently   with  such payment.    Tenant  will be responsible   for  any penalties assessed  for a late payment.    Landlord  will  provide  Tenant  with  copies  of all bills  for Taxes  sufficiently   in advance of the  due  dates  for payments   so that  Tenant  can make  the payments   timely.   Landlord  may,  at its option,  pay  the Taxes,  in which  case  Tenant  shall  reimburse   Landlord  for  the  cost thereof  within  ten  (10) days  after  receipt  of an invoice.    Also,  if Tenant   shall  default  in  its obligation   to pay  Taxes  prior  to  any  due  date  (regardless   of  whether Tenant  pays  any associated   penalties)   then  Landlord  shall  have  the right  thereafter  to collect  one-twelfth   (1/12th)   of the estimated  annual  Taxes  in advance,  which  payments   of estimated  Taxes will  be made  along  with the payment   of Basic  Rent  and adjusted   annually.    (In such event, Landlord will pay the Taxes to the extent that estimated Taxes were paid by  Tenant.)   "Taxes"  means taxes, assessments, service payments and governmental charges or fees whether federal, state, county or municipal, and whether they be by taxing districts or authorities presently taxing or by others, subsequently created or otherwise, and any other taxes and assessments (including  non-governmental assessments for common charges under a restrictive covenant or other private agreement that are hot treated as part of Operating Costs) now or hereafter attributable to the Premises (or its operation), excluding, however, penalties and interest thereon and federal and state taxes on income (if the present method of taxation changes so that in lieu of or in addition to the whole or any part of any Taxes, there is levied on Landlord a capital tax directly on the Rents received therefrom or a franchise tax, assessment, or charge based, in whole or in part, upon such Rents for the Premises, then all such taxes, assessments, or charges, or the part thereof so based, shall be deemed to be included within the term "Taxes"  for purposes hereof).  Tenant and Landlord acknowledge that Proposition 13 was adopted by the voters of the State of California in the June 1978 election ("Proposition  13") and that assessments, taxes, fees, levies and charges may be imposed by governmental agencies for such services as fire protection, street, sidewalk and road maintenance, refuse removal and for other governmental services formerly provided without charge to property owners or occupants.  In recognition of the decrease in the level and quality of governmental services and  amenities as  a result  of  Proposition 13, "Taxes"  shall also include  any  governmental or private assessments or the Premises' contribution towards a governmental or private cost-sharing agreement for the purpose of augmenting or improving the quality of services and amenities normally provided by governmental agencies, and any Taxes (or increases in Taxes) which result from a change in ownership of the Premises.  Taxes shall include the costs of consultants retained in an effort to lower taxes and all costs incurred in disputing any taxes or in seeking to lower the tax valuation of the Premises.  If Tenant desires to protest or appeal the appraised Premises, or otherwise desire to seek to lower the amount of Taxes assessed, it shall give notice to Landlord.   Landlord may either (i) pursue such protest, appeal or otherwise seek to lower the amount of Taxes, or (ii) permit Tenant to  do so.   If Landlord fails to give Tenant notice of its election under clause (i) within thirty (30) days after receipt of Tenant's notice, it will be deemed to have made an election under clause (ii).   If Tenant proceeds with any such protest, appeal or other action seeking to lower Taxes, it shall keep Landlord timely informed as to all  developments. Tenant acknowledges the possibility that any protest, appeal or other action seeking to lower the amount of Taxes may result in an increase in the amount of Taxes, for which Tenant will be liable hereunder.

5.Delinquent  Payments;  Late Charges.   All past due payments required of Tenant hereunder shall bear interest from the date due until paid at the lesser of the Prime Rate (as defined in Section 17(b)) plus four percent (4%) per annum, or the maximum lawful rate of interest (such lesser amount is referred to herein as the "Default  Rate");  additionally, Landlord, in addition to all other rights and remedies available to it, may charge Tenant a late charge equal to five percent (5%) of the delinquent payment to reimburse Landlord for its cost and inconvenience incurred  as a  consequence  of Tenant's  delinquency, it being  agreed  that  the  exact amount  of Landlord's damages resulting from a delinquent payment would be difficult and impractical to ascertain and that the amount of the delinquent charge represents a good faith estimate thereof.  In no event, however, shall late charges permitted under this  Section 5 or elsewhere in this Lease, to the extent they are considered to be interest under applicable  Law, exceed the maximum  lawful rate of interest.   Notwithstanding the foregoing, the late  charges referenced above shall not be charged with respect to the first occurrence per Lease Year (but not any subsequent occurrence per Lease Year) during any Lease Year that Tenant fails to make any payment when due, and thereafter, 

3

late  charges  shall  not  be charged   until  five  (5)  days  after  Landlord   delivers  written  notice  of  such  delinquency to Tenant.

6.Security Deposit.  Contemporaneously  with  the  execution   of  this  Lease,  Tenant   shall  pay  to Landlord   the  Security  Deposit,   which  shall  be  held  by  Landlord   to  secure  Tenant's   performance   of  its obligations under  this Lease.   Unless  Landlord's   Mortgagee   (as defined  herein)  requires  otherwise,  Landlord  may  comingle  the Security   Deposit   with  its  own  funds  and  shall  not  be deemed   to  be  holding  the  Security  Deposit   in  trust  or  in  a fiduciary   capacity.    No  interest  shall  be payable  with  respect  to any  Security  Deposit  unless  otherwise  required  by Law.   The Security  Deposit  is not an advance  payment  of Rent  or a measure  or limit of Landlord's   damages  upon  an Event  of Default   (as defined  herein).    Landlord   may,  from time  to time  following   an Event  of Default  and without prejudice   to  any  other  remedy,   use  all  or  a part  of the  Security  Deposit  to perform   any  obligation   Tenant  fails  to perform   hereunder.      Following    any  such  application    of  the  Security   Deposit,   Tenant  shall  pay  to  Landlord   on demand  the amount  so applied  in order  to restore  the  Security  Deposit  to its original  amount.   Provided  that Tenant has performed   all of its obligations   hereunder,   Landlord  shall,  within  thirty  (30) days  after the Term  ends,  return  to Tenant the  portion   of  the  Security   Deposit   which   was  not  applied   to  satisfy  Tenant's    obligations. If Landlord transfers its interest in the Premises and the transferee assumes Landlord's obligations under this Lease as provided in Section 24(a), then in conformity with the provisions of Section 1950.7 of the California Civil Code, Landlord may assign the Security Deposit to the transferee and Landlord thereafter shall have no further liability for the return of the  Security Deposit.   Tenant  specifically  grants to  Landlord  (and Tenant hereby waives the provisions of California Civil Code Section 1950.7 to the contrary) a period of thirty (30) days following a surrender of the Leased Premises by Tenant to Landlord within which to inspect the Leased Premises, make required restorations and repairs, receive and verify workmen's billings therefor, cure any other defaults, deduct any damages, and prepare a final accounting with respect to the Security Deposit.

7.Services and Utilities.

(a)     Landlord   Obligations.     Landlord  shall provide the  Premises with  electrical, water, natural gas, and sewer.

(b)     Tenant  Obligations.   Tenant shall arrange for all of its own utility services directly with the providers thereof, including electricity, water, natural gas, sewer, telephone, internet, security, trash removal, window washing, landscaping, and janitorial.   Tenant shall pay the providers of such services and utilities directly and shall indemnify and hold Landlord harmless from any liability with respect thereto.

(c)     Security.  Tenant hereby acknowledges that Landlord shall have no obligation to provide guard service or other security measures for the benefit of the Premises.  Tenant may utilize the existing security facilities within the Premises, but Tenant assumes all liability with respect thereto.  Any security measures desired by Tenant for the benefit of the Premises shall be provided by Tenant, at Tenant's sole cost and expense.  Tenant hereby assumes all responsibility for the protection of Tenant and its agents, employees, contractors, invitees and guests, and the property thereof, from acts of third parties.  Tenant shall have the right to install security systems within and without the Premises subject to Landlord's  prior approval, which approval shall not be unreasonably withheld, conditioned or delayed.

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(d)     Interruption of Utilities or Services.  Landlord   shall  not  be  liable  for  damages,   by abatement   of Rent  or otherwise,   for  failure  to  furnish  or delay  in furnishing   any utility  or  other  service,  or for any diminution   in the quality  or quantity  thereof,  when  such  failure  or delay  or diminution   is occasioned,  in whole  or in part,  by breakage,  repairs,  replacements,   or improvements,   by  any strike,  lockout  or other  labor  trouble,  by  inability to secure  electricity,   gas, water,  or other  fuel  at the  Premises   after  reasonable   effort  to  do  so, by  any riot  or other dangerous   condition,   emergency,   accident   or casualty   whatsoever,   by  act  or default  of Tenant,   any  utility  service provider,   or  other  parties,   or  by  any  other  cause  beyond   Landlord's    reasonable    control;   and  unless   Landlord   is grossly  negligent   or engages  in willful  misconduct,   such  failures  or delays  or diminution   shall  never  be deemed  to constitute  an eviction  or disturbance   of Tenant's   use  and possession   of the  Premises  or relieve  Tenant  from paying Rent  or performing   any  of its obligations   under  this  Lease.    Furthermore,   Landlord   shall  not be  liable,  under  any circumstances   for a loss of, or injury  to, property  or for injury  to, or interference   with, Tenant's   business,   including, without  limitation,   loss  of profits,   however   occurring,   through   or  in  connection   with  or  incidental   to  a failure  to furnish  any of the services  or utilities  as set forth in this  Section  7.

8.Improvements;  Alterations; Repairs;  Maintenance.

(a)     Improvements; Alterations.  Except  as  expressly   set forth in this Lease, the Premises and the Leased Personal Property will be delivered to Tenant and accepted by Tenant in an "as-is" condition on the Commencement Date, and Tenant acknowledges that except as expressly set forth in this Lease, neither Landlord nor any representative of Landlord has made any representation or warranty regarding the condition of the Premises, or the suitability of the Premises for the conduct of Tenant's business.  Any improvements, alterations or additions to the Premises desired by Tenant  shall be installed  at Tenant's  expense only in accordance  with plans  and specifications which shall be submitted to and approved in writing by Landlord,  which approval shall be governed by the provisions set forth in this Section 8(a). No improvements, alterations or additions in or to  the Premises may be made without Landlord's prior written consent, which shall not be unreasonably withheld or delayed; however, Landlord may withhold its consent to any improvement, alteration or addition that would adversely affect (in the discretion of Landlord applying commercially reasonable standards) the (i) Building's  Structure or the Building's Systems (including the Building's  restrooms, elevators, or mechanical rooms), or (ii) exterior appearance of the Building.  Notwithstanding the foregoing, any improvements, alterations or additions which do not adversely affect the portions of the Premises described in clause (i) or (ii) above and which cost less than Ten Thousand Dollars ($10,000) in any instance, or Fifty  Thousand Dollars  ($50,000) cumulatively over the Term,  shall not  require Landlord's consent; but prior notice shall be given to Landlord in accordance with Section 8(c).  Without limiting the generality of the foregoing, Tenant shall not paint  or install lighting or decorations, signs, window or door lettering, or advertising media of any type visible from the exterior of the Premises without the prior written consent of Landlord, which consent will not be unreasonably withheld.  All improvements, alterations or additions shall be constructed, maintained, and used by Tenant, at its risk and expense, in accordance with  all Laws; Landlord's consent to or approval of any improvements, alterations or additions (or the plans therefor) shall not constitute a representation or warranty by Landlord, nor Landlord's acceptance, that the same comply with sound architectural and/or engineering practices or with all applicable Laws, and Tenant shall be solely responsible for ensuring all such compliance.

(b)     Repairs;  Maintenance.  Landlord shall, at its sole expense, but subject to the right to pass-through to Tenant those expenses which constitute Operating Costs, be responsible for the maintenance, repair and replacement (if required) of the Building's  Structure and, as set forth below, for any replacements of Building Systems which constitute capital expenditures under GAAP (as defined herein).  Tenant shall, at its sole expense, be responsible for the maintenance, repair and replacement (as required) of all other aspects of the Premises and the Leased Personal Property, including the exterior of the Premises (including landscaping, and exterior painting, as required, and including window washing), all parking  areas and the Building  Systems.   Tenant  shall keep the Premises in a clean, safe, and operable condition for the conduct of Tenant's business in accordance with all Laws and any equipment manufacturer's suggested service programs.  Tenant shall repair or replace, subject to Landlord's direction  and  supervision, any  damage  to the Premises  (including the  Building's  Structure or  the  Building's Systems) caused by a Tenant Party.  Damage does not include normal wear and tear and deterioration.  Tenant shall obtain and maintain during the Term, at Tenant's expense, service or maintenance contracts with outside vendors for those Building  Systems for which  service or maintenance  contracts are customarily obtained  and maintained, including the HVAC and elevator, and upon written request of Landlord Tenant shall provide Landlord with copies of such service or maintenance contracts for approval, which approval will not be unreasonably withheld.  Exhibit  E 

5

is a list  of pre-approved   vendors   which  Tenant  may  use  to provide   maintenance,   but  Landlord  may  disapprove   of any  of  such  vendors   in  the  future  if  Landlord has  a reasonable   basis  to  do  so.  For  clarification,   Tenant   shall  be responsible for the maintenance and repair of the Building  Systems  regardless  of whether  or not it maintains service and  maintenance  contracts therefor.  Notwithstanding  the  foregoing,   if  any  of  the  Building   Systems   cannot   be properly   repaired   and  require  replacement,    and  such  replacement   is considered   a capital  expenditure   under  GAAP (as  defined   herein),   then  the  cost  of  such  replacement    shall  be  borne  by  Landlord   (and  such  cost  will  not  be considered   an Operating   Cost). If Tenant fails to undertake any required maintenance or to perform any required repair or replacement work within thirty (30) days after the date that Landlord gives notice to Tenant that any required maintenance, or any required repair or replacement work, needs to be performed (or such longer period as is reasonably necessary to undertake such maintenance or to perform such repair or replacement work provided that Tenant shall continuously and diligently pursue such maintenance, or repair or replacement work until substantially completed), then Landlord may make the same at Tenant's cost.  The cost of any maintenance, repair or replacement work performed by Landlord under this Section 8 shall be paid by Tenant to Landlord within thirty (30) days after Landlord has invoiced Tenant therefore (except to the extent covered by insurance maintained by Landlord).  As a material inducement to Landlord entering into this Lease, Tenant waives any right to terminate this Lease under Section 1932(1) and 1941 of the California Civil Code.

(c)      Performance of Work.  All  alterations,  improvements  and  additions  described  in Section 8(a) which require Landlord's  consent, and all repair and maintenance described in Section 8(b) which involves the Building Structure or Building Systems to be performed by Tenant shall be performed only by licensed contractors and subcontractors approved in writing by Landlord, which approval will not be unreasonably withheld or delayed.   Tenant  shall cause all contractors  and subcontractors to procure and maintain insurance coverage naming Landlord, Landlord's property management company (if any), Landlord's asset management company and Landlord's  Mortgagee as additional insureds  against such risks, in such amounts, and with such companies as Landlord  may  reasonably  require.   Tenant  shall provide  Landlord with  the  identities, mailing  addresses  and telephone numbers of all persons performing work or supplying materials at least ten (10) days prior to beginning such construction so that Landlord may post on and about the Premises notices of non-responsibility pursuant to applicable Laws.  All such work shall be performed in accordance with all Laws and in a good and workmanlike manner so as not to damage the Premises (including the Building's Structure and the Building's Systems). All such work which may affect the Building's  Structure or the Building's  Systems must be approved by the Building's engineer  of record,  at  Tenant's  expense and,  at  Landlord's  election, shall be performed by Landlord's  usual contractor for such work.   All work affecting the roof of the Building shall be performed by Landlord's  roofing contractor and no such work will be permitted if it would void or reduce the warranty on the roof.

(d)      Mechanic's Liens.   All work performed, materials furnished, or obligations incurred by or at the request of a Tenant Party shall be deemed authorized and ordered by Tenant only, and Tenant shall use its best efforts to prohibit any mechanic's liens from being filed against the Premises in connection therewith.  Upon completion of any such work, Tenant shall use its best efforts to deliver to Landlord final and unconditional lien waivers from all contractors, subcontractors and materialmen who performed such work (in California statutory forms).  If any mechanic's  lien is filed, Tenant will not be in default hereunder if Tenant shall, within ten (10) days after Landlord has delivered notice of the filing thereof to Tenant (or such earlier time period as may be necessary to prevent the forfeiture of the Premises or any interest of Landlord therein or the imposition of a civil or criminal fine with  respect  thereto),   either  (i) pay  the  amount  of the  lien  and cause  the lien  to be released  of record,  or (ii) diligently contest such lien and deliver to Landlord a bond or other security reasonably satisfactory to Landlord in accordance with California Civil Code Section 3143.   If Tenant fails to timely take either such action, then Landlord may pay the lien claim, and any amounts so paid, including expenses and interest, shall be paid by Tenant to Landlord within ten (10) days after Landlord has invoiced Tenant therefor.  Landlord and Tenant acknowledge and agree that their relationship is and shall be solely that of "landlord-tenant" (thereby excluding a relationship of "owner-contractor,"  "owner-agent"  or  other  similar  relationships).    Accordingly, all materialmen, contractors, artisans, mechanics, laborers and any other persons now or hereafter contracting with Tenant, any contractor or subcontractor of Tenant or any other Tenant Party for the furnishing of any labor, services, materials, supplies or equipment with respect to any portion of the Premises, at any time from the date hereof until the end of the Term, are hereby charged with notice that they look exclusively to Tenant to obtain payment for same.  Nothing herein shall be deemed a consent by Landlord to any liens being placed upon the Premises or Landlord's interest therein due to any work performed by or for Tenant or deemed to give any contractor or subcontractor or materialman any right or interest in any funds held by Landlord to reimburse Tenant for any portion of the cost of such work.  Tenant 

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shall  defend,  indemnify   and hold  harmless   Landlord  and  its agents  and representatives   from  and against  all claims, demands,   causes  of  action,  suits, judgments,    damages   and  expenses   (including   attorneys'    fees)  in  any way  arising from or relating  to the failure  by any Tenant  Party  to pay  for  any work performed,   materials  furnished,  or obligations incurred  by or at the request  of a Tenant  Party.   This  indemnity  provision   shall  survive  termination   or expiration   of this Lease.

9.Use.  Tenant  shall  occupy  and use the Premises   only for the Permitted  Use and in compliance  with all  Laws  relating   to the  use,  condition,   access  to,  and  occupancy   of  the  Premises   (including   zoning  ordinances) Tenant  will  not commit  waste,  overload   the Building's    Structure  or the Building's   Systems  or subject  the Premises to  any  use  that  would   damage  the  Premises,   normal   wear  and  tear  and  deterioration    excepted.    Notwithstanding anything  in  this  Lease  to  the  contrary,   as between   Landlord   and  Tenant,  subsequent   to the  Commencement    Date, Tenant  shall bear  the risk  of complying   with  Title III of the Americans  With  Disabilities   Act of 1990, any state laws governing  handicapped   access  or architectural   barriers,  and all rules,  regulations,   and guidelines  promulgated   under such  laws,  as  amended   from  time  to  time  (the  "Disabilities    Acts").     The  Premises   shall  not  be used  for  any use which  is disreputable,   creates  extraordinary    fire hazards,   or for the  storage  of any  Hazardous   Materials   (other  than typical  office  supplies  [e.g., photocopier    toner]  or laboratory   chemicals   and  supplies  which  are incident  to Tenant's business  operations,   and then only  in compliance   with all Laws  and the provisions   of Section  24(w)).

10.Assignment  and Subletting.

(a)     Transfers. Except as  provided in Section 10(h),Tenant shall not, without the prior written consent of Landlord, (i) assign, transfer, or encumber this Lease or any estate or interest herein:, whether directly or by operation of law,  (ii) permit any other entity to become Tenant hereunder by merger, consolidation, or other reorganization, (iii) if Tenant is an entity other than a corporation whose stock is publicly traded, permit the transfer of an ownership interest in Tenant so as to result in a change in the current control of Tenant, (iv) sublet any portion of the Premises, or (v) grant any license, concession, or other right of occupancy of any portion of the Premises (any of the events listed in Section 10(a)(i) through 10(a)(v) being a "Transfer").

(b)     Consent  Standards.    Landlord shall not unreasonably withhold or delay its consent to any Transfer of the Premises, provided that the proposed transferee (i) is creditworthy, (ii) has a good reputation in the business  community, (iii) will use the Premises for the Permitted Use, (iv) is not a governmental entity, or subdivision  or  agency  thereof. (it  being  agreed  that  the  University  of California  is  not  considered  to  be  a governmental  entity, or  subdivision  or  agency  thereof  for purposes  of  the  restriction  in this  Section  10(b)). Additionally, Landlord may withhold its consent in its sole discretion to any proposed Transfer if any Event of Default by Tenant then exists.

(c)      Request  for Consent.   If Tenant requests Landlord's consent to a Transfer, then, at least fifteen (15) business days prior to the effective date of the proposed Transfer, Tenant shall provide Landlord with a written description of all terms and conditions of the proposed Transfer, copies of the proposed documentation, and the following information about the proposed transferee: name and address; reasonably satisfactory information about its business  and business  history;  its proposed  use  of the  Premises; banking, financial, and other credit information; and general references sufficient to enable Landlord to determine the proposed transferee's creditworthiness and character.   Tenant  shall reimburse  Landlord immediately upon request  for its reasonable attorneys' fees incurred in connection with considering any request for consent to a Transfer, not to exceed Two Thousand Five Hundred Dollars ($2,500).

(d)     Conditions  to Consent.   If Landlord consents to a proposed Transfer, then the proposed transferee  shall  deliver  to  Landlord  a  written  agreement  whereby  it  expressly  assumes  Tenant's  obligations hereunder; however, any transferee of less than all of the space in the Premises shall be liable only for obligations under this Lease that are properly allocable to the space subject to the Transfer for the period of the Transfer.  No Transfer shall release Tenant from its obligations under this Lease, but rather Tenant and its transferee shall be jointly and severally liable therefor.  Landlord's consent to any Transfer shall not waive Landlord's rights as to any subsequent Transfers. If an Event of Default occurs while the Premises or any part thereof are subject to a Transfer, then Landlord, in addition to its other remedies, may collect directly from such transferee all Rents becoming due to Tenant and apply such Rents against Rent.  Tenant authorizes its transferees to make payments of Rent directly to Landlord upon receipt of notice from Landlord to do so following the occurrence of an Event of Default hereunder, 

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Tenant  shall  pay  for the cost of any demising walls or other improvements necessitated by a proposed  subletting   or assignment.

(e)     Attornment by Subtenants.    Each sublease by Tenant hereunder shall be subject and subordinate to this Lease and to the matters to which this Lease is or shall be subordinate, and each subtenant by entering into a sublease is deemed to have agreed that in the event of termination, re-entry or dispossession by Landlord under this Lease, Landlord may, at its option, take over all of the right, title and interest of Tenant, as sublandlord, under such sublease, and such subtenant shall, at Landlord's option, attorn to Landlord pursuant to the then executory provisions of such sublease, except that Landlord shall not be (i) liable for any previous act or omission of Tenant under such sublease, (ii) subject to any counterclaim, offset or defense that such subtenant might have against Tenant, (iii) bound by any previous modification of such sublease not approved by Landlord in writing or by any Rent or additional Rent or advance Rent which such subtenant might have paid for more than the current month to Tenant, and all such Rent shall remain due and owing, notwithstanding such advance payment, (iv) bound by any security or advance Rental deposit made by such subtenant which is not delivered or paid over to Landlord and with respect to which such subtenant shall look solely to Tenant for refund or reimbursement, or (v) obligated to perform any work in the subleased space or to prepare it for occupancy, and in connection with such attornment, the subtenant shall execute and deliver to Landlord any instruments Landlord may reasonably request to evidence and confirm such attornment.   Each subtenant or licensee of Tenant shall be deemed, automatically upon  and as a condition of its occupying or using the Premises or any part thereof, to have agreed to be bound by the terms and conditions set forth in this Section 10(e). The provisions of this Section 10(e) shall be self-operative, and no further instrument shall be required to give effect to this provision.

(f)     Cancellation.  In the event that Tenant intends to Transfer all or substantially all of its interest in this Lease, Tenant shall give Landlord notice (the "Intention  to Transfer   Notice") of such intended Transfer (whether or not a potential transferee has been identified or the terms and conditions of such Transfer have been determined),  Landlord shall have the right and option, by giving notice to Tenant within thirty (30) days after receipt of the Intent to Transfer Notice, to cancel this Lease as of the date the intended Transfer is to be effective (or, if no date is set forth in the Intention to Transfer Notice, as of a date which is sixty (60) days after the date of receipt of such Intention to Transfer Notice).  Thereafter, Landlord may lease such portion of the Premises to an identified prospective transferee (or to any other person) without liability to Tenant.  Landlord's  election not to cancel the Lease does not relieve Tenant from complying with other provisions of this Section 10 with respect to Transfers.

(g)     Additional  Compensation.  Tenant shall pay  to Landlord, immediately upon receipt thereof, fifty percent (50%) of the excess of (i) all compensation received by Tenant for a Transfer less the actual out-of-pocket costs reasonably incurred by Tenant with unaffiliated third parties (i.e., brokerage commissions and tenant finish work) in connection with such Transfer (such costs shall be amortized on a straight-line basis over the term of the Transfer in question) over (ii) the Rent allocable to the portion of the Premises covered thereby.

(h)     Permitted  Transfers.  Notwithstanding Section 10(a), Tenant may Transfer all or part of its interest in this Lease or all or part of the Premises (a "Permitted   Transfer)  to the following types of entities (a "Permitted   Transferee")  without the written consent of Landlord, provided that such Transfer is bona fide and not an attempt to circumvent the restrictions in this Section 10:

(i)     an Affiliate of Tenant;

(ii)      any corporation,  limited  partnership,  limited  liability  partnership,  limited liability company or other business entity in which or with which Tenant, or its corporate successors or assigns, is merged, reversed merged, or consolidated, in accordance with applicable statutory provisions governing merger and consolidation of business entities, so long as (A) Tenant's obligations hereunder are assumed by the entity surviving such merger or created by such consolidation; and (B) the Tangible Net Worth of the surviving or created entity is not less  than the Tangible Net Worth of Tenant as of the date of this Lease; or

(iii)      any   corporation,  limited  partnership,  limited  liability  partnership,  limited liability company or other business entity acquiring all or substantially all of Tenant's  assets, so long as (A) Tenant's  obligations hereunder are assumed by the entity surviving such merger or created by such 

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consolidation;   and (B) such  entity's   Tangible  Net  Worth  after such acquisition   is not less than  the Tangible Net Worth  of Tenant as of the date of this Lease.

Tenant shall promptly notify  Landlord of  any such  Permitted Transfer.  Tenant  shall  remain  liable  for the performance  of  all of the obligations of Tenant  hereunder, or  if  Tenant  no  longer  exists  because of a merger, reverse merger, consolidation, or  acquisition, the surviving or  acquiring entity shall  expressly assume in writing the obligations of Tenant hereunder.  Additionally,  the Permitted Transferee  shall comply  with  all of the terms  and  conditions   of this  Lease, including  the Permitted Use, and the use of the Premises by the Permitted Transferee   may  not  violate  any  other  agreements affecting the Premises.  No later  than  thirty   (30)  days  after  the  effective   date  of  any  Permitted   Transfer,   Tenant  agrees  to  furnish Landlord   with  (i) copies  of the  instrument effecting any of the  foregoing Transfers (with  any information which Tenant reasonably deems to be confidential redacted), (ii) documentation establishing Tenant's satisfaction of  the  requirements  set forth above  applicable to any such Transfer, and  (iii) evidence of insurance as  required under this Lease with  respect to the  Permitted Transferee.  The  occurrence of a Permitted   Transfer shall  not waive Landlord's rights   as  to  any  subsequent   Transfers.  "Tangible Net Worth" means  the excess  of total  assets  over  total liabilities,  in each case  as determined in accordance with generally accepted accounting principles consistently applied ("GAAP"), excluding, however, from the determination of total assets  all assets which  would  be classified  as intangible  assets under GAAP including goodwill, licenses, patents, trademarks, trade names, copyrights, and franchises.  Any subsequent Transfer by a Permitted Transferee shall be subject to the terms of this Section 10.

11.Insurance; Waivers;  Subrogation;  Indemnity.

(a)     Tenant's Insurance.  Effective  as  of  the  Commencement  Date,  and  continuing throughout  the  Term,  Tenant  shall maintain  the  following  insurance policies:  (i) commercial  general liability insurance in  amounts  of Two Million  Dollars  ($2,000,000) per occurrence, or  such increased sum as may be required by Landlord if commercially reasonable and consistent with other leases in the geographic vicinity of the Premises, but  the  increase may not  exceed the  corresponding percentage increase in the  consumer price  index (CPI-U Los Angeles-Riverside-Orange County Area) from the date of this Lease through the date of the requested increase in coverage (and, if the use and occupancy of the Premises include any activity or matter that is or may be excluded  from coverage under a commercial  general  liability policy [e.g., the  sale,  service or consumption of alcoholic beverages], Tenant shall obtain such endorsements to the commercial general liability policy or otherwise obtain insurance to insure all liability arising from such activity or matter [including liquor liability, if applicable] in such amounts as Landlord may reasonably require), insuring Tenant, Landlord, Landlord's  property management company, Landlord's  asset management company, and, if requested in writing by Landlord, Landlord's Mortgagee, against all liability for injury to or death of a person or persons or damage to property arising from the use and occupancy of the Premises, (ii) insurance covering the full value of all alterations and improvements and betterments in the Premises, naming Landlord and Landlord's Mortgagee as additional loss payees as their interests may appear, (iii) insurance covering the full value of all furniture, trade fixtures and personal property  (including property of Tenant  or  others)  in  the  Premises,  (iv) contractual  liability  insurance sufficient to  cover  Tenant's  indemnity obligations hereunder (but only if such contractual liability insurance is not already included in Tenant's commercial general liability insurance policy), (v) worker's compensation insurance, and (vi) business interruption insurance for a period of at least eighteen (18) months.  Tenant's insurance shall provide primary coverage to Landlord when any policy issued to Landlord provides duplicate or similar coverage, and in such circumstance Landlord's policy will be excess over Tenant's policy.  Tenant shall furnish to Landlord certificates of such insurance and such other evidence satisfactory to Landlord of the maintenance of all insurance coverages required hereunder at least ten (10) days prior to the Commencement Date, and at least fifteen (15) days prior to each renewal of said insurance, and Tenant shall obtain a written obligation (which may be in  the form of ACORD 25 certificate of insurance) on the part of each insurance company to endeavor to notify Landlord at least ten (10) days before cancellation or a material change of any such insurance policies.  All such insurance policies shall be in form, and issued by companies with an A.M. Best rating of A+:VII or better, reasonably satisfactory to Landlord.  If Tenant fails to comply with the foregoing insurance requirements or to deliver to Landlord the certificates or evidence of coverage required herein, Landlord, in addition to any other remedy available pursuant to this Lease or otherwise, may, but shall not be obligated to, obtain such insurance and Tenant shall pay to Landlord on demand the premium costs thereof.

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(b)      Landlord's Insurance. Throughout the Term  of this  Lease,  Landlord  shall  maintain,  as a minimum,  the following insurance policies:  (i) property  insurance  for the Building's   replacement   value  (excluding property required to be insured by Tenant), less a commercially-reasonable deductible if Landlord so  chooses, (ii) commercial general liability  insurance  in an amount  of not less  than Two Million  Dollars  ($2,000,000), (iii) Rent loss insurance for a period  of at least  eighteen (18) months, and  (iv) insurance covering the Leased Personal Property.  Landlord may, but is not obligated to, maintain such other insurance and additional coverages as it may deem necessary or as required by any Landlord's Mortgagee.  The cost of all insurance carried by Landlord with respect  to the Premises shall be included in Operating Costs.   The foregoing insurance policies and any other insurance carried by Landlord shall be. for the sole benefit  of Landlord and under Landlord's  sale control, and Tenant shall have no right or claim to any proceeds thereof or any other rights thereunder, provided however, that notwithstanding anything to the contrary in this Lease, Tenant shall not be required to reimburse Landlord for any Loss (as defined in Subparagraph (d)) to the extent of any insurance proceeds actually collected by Landlord from its  insurance policies.    Although  Tenant  is not  obligated  under  this  Lease  to  occupy  the  Premises,  Tenant acknowledges that the cost of insurance may increase significantly if the Premises are vacant.

(c)     No Subrogation; Waiver  of Property  Claims.   Landlord and Tenant each waives any claim it might have against the other for any damage to or theft, destruction, loss, or loss of use of any property, to the extent the same is insured against under any insurance policy of the types described in this Section 11 that covers the Premises, Landlord's or Tenant's fixtures, personal property, leasehold improvements, or business, or is required to be insured against under the terms hereof, REGARDLESS OF WHETHER  THE  NEGLIGENCE  OF  THE OTHER  PARTY CAUSED SUCH LOSS (DEFINED BELOW).   Each party shall cause its insurance carrier to endorse all applicable policies waiving the carrier's rights of recovery under subrogation or otherwise against the other party.   Notwithstanding  any provision in this Lease to the contrary, Landlord, its agents, employees and contractors shall not be liable to Tenant or to any party claiming by, through or under Tenant for (and Tenant hereby releases Landlord and its servants, agents, contractors, employees and invitees from any claim or responsibility for) any damage to or destruction, loss, or loss of use, or theft of any property of any Tenant party located in or about the Premises,  caused  by  casualty,  theft,  fire,  third parties  or  any  other  matter  or  cause,  REGARDLESS   OF WHETHER   THE  NEGLIGENCE   OF ANY PARTY  CAUSED  SUCH LOSS  IN WHOLE   OR IN PART. Tenant acknowledges that Landlord shall not carry insurance on, and shall not be responsible for damage to, any property of any Tenant Party located in or about the Premises.

(d)     Indemnity.  Subject to Section 11(c), Tenant shall defend, indemnify, and hold harmless Landlord and its representatives and agents from and against all claims, demands, liabilities, causes of action, suits, judgments, damages, and expenses (including reasonable attorneys' fees) arising from any injury to or death of any person or the damage to or theft, destruction, loss, or loss of use of, any property (a ''Loss'') (i)  to the extent caused by the negligence or willful misconduct of any Tenant Party, (ii) occurring at the Premises or resulting from the use or occupancy of the Premises by Tenant, or (iii) arising out of the installation, operation, maintenance, repair or removal of any property of any Tenant Party located at the Premises.  Only to the extent Tenant maintains insurance for the act, Landlord and Tenant agree that clauses (ii) and (iii) of this indemnity are intended to indemnify Landlord and its agents against the consequences of their own negligence or fault, even when Landlord or its agents are jointly, comparatively, contributively, or concurrently negligent with Tenant; and even though any such claim, cause of action or suit is based upon or alleged to be based upon the strict liability of Landlord or its agents; however, such indemnity shall not apply to the sale or gross negligence or willful misconduct of Landlord or its agents.  Subject to Section 11(c), Landlord  shall defend, indemnify, and hold harmless Tenant and its agents from and against all claims, demands, liabilities,  causes of  action, suits, judgments,  damages,  and  expenses  (including reasonable attorneys' fees) for any Loss arising from any occurrence at the Premises to the extent caused by the sole or gross negligence, or willful misconduct of Landlord or its agents.  The indemnities set forth in this Lease shall survive termination or expiration of this Lease and shall not terminate or be waived, diminished or affected in any manner by any abatement or apportionment of Rent under any provision of this Lease.  If any proceeding is filed for which indemnity is required hereunder, the indemnifying party agrees, upon request therefor, to defend the indemnified party in such proceeding at its sole cost utilizing counsel satisfactory to the indemnified party.

12.Subordination; Attornment; Notice to Landlord's Mortgagee.

(a)     Subordination.  This Lease shall be subordinate to any deed of trust, mortgage, or other security instrument (each, a "Mortgage"), or any ground lease, master lease, or primary lease (each, a "Primary 

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Lease"), that now or hereafter covers  all  or  any  part  of  the  Premises   (the  mortgagee   under  any  such  Mortgage, beneficiary under any such deed of trust, or  the  lessor  under   any  such  Primary   Lease  is referred to  herein as  a "Landlord's Mortgagee").  Any  Landlord's  Mortgagee may  elect,  at  any  time,  unilaterally,   to  make  this  Lease superior  to  its Mortgage, Primary Lease,  or other  interest in the Premises by so notifying Tenant in writing.  The provisions  of this  Section shall be self-operative and no further instrument of subordination shall be required; however, in confirmation of such subordination, Tenant shall execute and return to Landlord (or such other party designated by Landlord) within ten (10) days after written request therefor such documentation, in recordable form if required, as a Landlord's  Mortgagee may reasonably request to evidence the subordination of this Lease to such Landlord's  Mortgagee's   Mortgage  or  Primary  Lease,  provided  that  such  Landlord's  Mortgagee  agrees  to  a commercially reasonable non-disturbance agreement, or, if the Landlord's Mortgagee so elects, the subordination of such Landlord's Mortgagee's Mortgage or Primary Lease to this Lease.

(b)     Attornment.  Tenant shall attorn to any party succeeding to Landlord's interest in the Premises, whether by purchase,  foreclosure, deed in lieu of foreclosure, power of sale, termination of lease, or otherwise, upon such party's request, and shall execute such agreements confirming such attornment as such party may reasonably request, but subject to the provisions of any non-disturbance agreement which was provided to the Tenant by Landlord's Mortgagee.

(c)     Notice to Landlord's Mortgagee.  Tenant shall not seek to enforce any remedy it may have for any default on the part of Landlord without first giving written notice (by any of the means of giving notice set forth in this Lease), specifying the default or alleged default in reasonable detail, to any Landlord's Mortgagee whose address has been given to Tenant,   and affording such Landlord's  Mortgagee a reasonable opportunity to perform Landlord's  obligations hereunder or to otherwise initiate any dispute resolution procedures set forth herein or which Tenant and Landlord's Mortgagee shall mutually agree upon.

(d)      Landlord's Mortgagee's Protection  Provisions.  If Landlord's Mortgagee shall succeed to the interest of Landlord under this Lease, Landlord's Mortgagee shall not be: (i) liable for any act or omission of any prior lessor (including Landlord); (ii) bound by any Rent or additional Rent or advance Rent which Tenant might have paid for more than the current month to any prior lessor (including Landlord), and all such Rent shall remain  due and  owing, notwithstanding  such advance payment;  (iii) bound by  any  security or advance Rental deposit made by Tenant which is not delivered or paid over to Landlord's Mortgagee and with respect to which Tenant shill  look solely to Landlord for refund or reimbursement; (iv) bound by any termination, amendment or modification of this Lease made without Landlord's  Mortgagee's  consent and written approval, except for those terminations, amendments and modifications permitted to be made by Landlord without Landlord's Mortgagee's consent pursuant to the terms of the loan documents between Landlord and Landlord's Mortgagee; (v) subject to the defenses which Tenant might have against any prior  lessor (including Landlord); and (vi) subject to the offsets which Tenant might have against any prior lessor (including Landlord) except for those offset rights which (vii) are expressly provided  in this Lease, (viii) relate to periods  of time  following the  acquisition  of the Premises by Landlord's.  Mortgagee,   and  (ix) Tenant  has  provided  written  notice  to  Landlord's  Mortgagee  and  provided Landlord's  Mortgagee a reasonable opportunity to cure the event giving rise to such offset event.   Landlord's Mortgagee shall have no liability or responsibility under or pursuant to the terms of this Lease or otherwise after it ceases to own an interest in the Premises.  Nothing in this Lease shall be construed to require Landlord's Mortgagee to see to the application of the proceeds of any loan, and Tenant's agreements set forth herein shall not be impaired on account of any modification of the documents evidencing and securing any loan.

13.Condemnation.

(a)     Total Taking.   If the entire Premises is taken by right of eminent domain or conveyed in lieu thereof (a "Taking"),  this Lease shall terminate as of the date of the Taking.

(b)     Partial  Taking  - Tenant's   Rights.    If any part of the Premises becomes subject to a Taking and such Taking will prevent Tenant from conducting on a permanent basis its business in the Premises in a manner substantially comparable to that conducted immediately before such Taking, then Tenant may terminate this Lease as of the date of such Taking by giving written notice to Landlord within thirty (30) days after the Taking, and Basic Rent and Additional Rent shall be apportioned as of the date of such Taking.  If Tenant does not terminate this Lease, then Rent shall be abated on a reasonable basis as to that portion of the Premises rendered untenantable by 

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the  Taking.  Tenant  hereby  waives  any  and  all rights it might otherwise have pursuant to Section  1265.130  of the California  Code  of Civil Procedure.

(c)      Partial Taking - Landlord's  Rights.  If  any material  portion, but less than  all, of the Premises  becomes  subject  to a Taking,  or if Landlord  is required  to pay any of the proceeds  arising from  a Taking  to a Landlord's  Mortgagee, then Landlord may terminate   this  Lease  by  delivering written notice  thereof to Tenant within  thirty  (30) days after  such Taking, and Basic  Rent  and Additional Rent shall be apportioned as of the date  of such  Taking.    If Landlord  does  not so terminate this  Lease,  then  this Lease  will  continue,  but  if any portion  of the Premises  has been  taken, Rent  shall  abate  as provided   in the penultimate   sentence  of Section  13(b).

(d)     Temporary Taking. If all  or any portion  of the Premises becomes  subject  to  a Taking for less than  ninety  (90)  days,  this Lease  shall  remain  in full  force  and effect  and Tenant  shall  continue  to perform all of the terms,  conditions   and covenants   of this Lease,  including  the payment  of Basic  Rent  and all other  amounts required   hereunder.     If  any  such  temporary    Taking   terminates   prior  to  the  expiration   of  the  Term,  Tenant   shall restore  the Premises   as nearly  as possible  to the condition  prior  to such temporary   Taking,  at Tenant's   sole cost  and expense.    Landlord  shall  be entitled  to receive   the entire  award  for any  such temporary   Taking,   except  that  Tenant shall  be entitled  to receive  the portion  of such award  which  (i) compensates   Tenant  for its loss of use of the Premises within  the  Term  and  (ii) reimburses   Tenant  for  the  reasonable   out-of-pocket   costs  actually   incurred   by  Tenant  to restore  the Premises  as required  by this Section.

(e)     Award. If  any Taking occurs, then Landlord shall receive the entire award  or  other compensation for the Taking  of the Premises, including  any improvements, alterations  or additions  thereto; however, Tenant  may separately  pursue  a claim  (to the  extent  it will  not reduce  Landlord's   award) against the condemnor for the value of  Tenant's personal property (including trade  fixtures)   which  Tenant  is  entitled   to  remove  under  this Lease,  in addition  to other  damages  for moving  and relocation   costs, loss of business,  and goodwill.

14.Fire or Other Casualty.

(a)      Repair Estimate. If the Premises is damaged by fire or other  casualty  (a "Casualty"), Landlord shall, as soon as practicable, but not later than forty-five  (45) days  after such Casualty,  deliver  to Tenant a good faith estimate (the "Damage Notice") of the cost of the repair, the time needed to repair the damage caused by such Casualty, and whether Landlord's  anticipated insurance proceeds will be sufficient to cover the costs of the repair.

(b)     Tenant's  Rights.  If a material portion of the Premises is damaged by Casualty such that Tenant is prevented  from conducting its business  in the Premises in a manner substantially comparable to that conducted immediately before such Casualty and Landlord estimates that the damage caused thereby cannot be repaired within one hundred eighty (180)  days after the commencement of repairs (the "Repair  Period"),  then Tenant may terminate this Lease by delivering written notice to Landlord of its election to terminate within thirty (30) days after the Damage Notice has been delivered to Tenant.   The provisions of this  Section constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part   of  the  Premises,  any  statute  or  regulation  of  the  State  of  California,  including,  without  limitation, Sections 1932(2) and 1933(4) of the California Civil Code, With respect to any rights or obligations concerning damage or destruction in  the  absence  of an express  agreement between the  parties, and  any other  statute or regulation, now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises.

(c)     Landlord's Rights. If a Casualty damages the Premises and (i) Landlord estimates that the damage to the Premises cannot be repaired  within the Repair Period, (ii) the damage to the Premises exceeds fifty percent (50%) of the replacement cost thereof (excluding foundations and footings), as estimated by Landlord, and such damage occurs during the last two (2) years of the Term, (iii) regardless of the extent of damage to the Premises, the damage is not fully covered by Landlord's insurance policies required by this Lease to be maintained by Landlord, or (iv) Landlord is required to pay any insurance proceeds arising out of the Casualty to a Landlord's Mortgagee, then Landlord may terminate this Lease by giving written notice of its election to terminate within thirty (30) days after the Damage Notice has been delivered to Tenant.

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(d)      Repair Obligation.  If neither party elects to terminate this Lease following a Casualty, then  Landlord  shall, as soon  as commercially   practicable   after such  Casualty,  begin  to repair  the Premises  and shall proceed   with  reasonable    diligence   to  restore   the  Premises   to  substantially    the  same  condition   as  they  existed immediately   before  such  Casualty;  however,   Landlord  shall not be required  to repair  or replace  any improvements, alterations   or additions   to the Premises   made  by  Tenant  (which  shall  be promptly   and with  due  diligence  repaired and  restored   by Tenant  at Tenant's   sole  cost  and  expense)   or any  furniture,  equipment,   trade  fixtures   or personal property   of Tenant  or  others  in the  Premises,   and  Landlord's   obligation   to repair  or restore  the  Premises   shall  be limited   to  the  extent   of  the  insurance    proceeds    actually   received   by  Landlord    for  the  Casualty   in  question. Notwithstanding    the  foregoing,   if  any  insurance   policy  taken  out  by  Landlord   covers  any  of  the  improvements, alterations   or  additions   to  the  Premises   made  by  Tenant  (it  being  understood   and  agreed   that  Landlord   has  no obligation   to obtain or maintain such insurance coverage), then to the extent that Landlord actually collects the proceeds of insurance for the repair or replacement of the foregoing, Landlord will make such proceeds available to Tenant for the repair or replacement thereof.   If this Lease is terminated under the provisions of this Section 14, Landlord shall be entitled to the full proceeds of the insurance policies providing coverage for all improvements, alterations or additions in the Premises.  Nothing herein is intended to prohibit Tenant from separately insuring, at Tenant's  expense, any improvements, alterations or additions to the Premises made by Tenant and in such event, Tenant may retain the proceeds of any such insurance payable with respect thereto as a result of a Casualty, as long as the  amounts payable  to Landlord under  its policy  of insurance covering such improvements, alterations or additions are not reduced.  If, at the time that Tenant makes any improvements, alterations or additions, Landlord agrees, in writing, that such improvements, alterations or improvements will belong solely to Tenant and shall be removed at the end of the Term by Tenant, then Landlord shall not insure same and Tenant may, if it so desires, insure same.

(e)     Abatement  of Rent.  If the Premises are damaged by Casualty, Rent for the portion of the Premises rendered untenantable by the damage shall be abated on a reasonable basis from the date of damage until the completion of Landlord's repairs (or until the date of termination of this Lease by Landlord or Tenant as provided above, as the case may be), unless a Tenant Party caused such damage, in which  case, Tenant shall continue to pay Rent without abatement.

15.Personal  Property  Taxes.  Tenant shall be liable for all taxes levied or assessed against personal property, furniture, or fixtures placed by Tenant in the Premises and the Leased Personal Property.  If any taxes for which Tenant is liable are levied or assessed against Landlord or Landlord's property and Landlord elects to pay the same, or if the assessed value of Landlord's property is increased by inclusion of such personal property, furniture or fixtures and Landlord elects to pay the taxes based on such increase, then Tenant shall pay to Landlord, within thirty (30) days following written request therefor, the part of such taxes for which Tenant is primarily liable hereunder; however, Landlord shall not pay such amount if Tenant notifies Landlord that it will contest the validity or amount of  such taxes  before  Landlord  makes  such payment,  and  thereafter diligently proceeds  with  such  contest in accordance with Law and if the non-payment thereof does not pose a threat of loss or seizure of the Premises or interest of Landlord therein or impose any fee or penalty against Landlord.

16.Events of Default.  Each of the following occurrences shall be an "Event of Default”:

(a)     Default.   Tenant's  failure to pay Rent within five (5) days after Landlord has delivered notice to Tenant that the same is due; however, an Event of Default shall occur hereunder without any obligation of Landlord to give any notice if Tenant fails to pay Rent when due and, during the twelve  (12) month interval preceding such failure, Landlord has given Tenant notice of failure to pay Rent on two or more occasions.  Such notice shall be in lieu of and not in addition to any notice required under Section 1161 of the California Code of Civil Procedure;

(b)      Intentionally  Omitted.

(c)      Estoppel.  Tenant  fails  to provide  any  estoppel certificate  after Landlord's  request therefor pursuant to Section 24(e) and such failure shall continue for five (5) days after Landlord's  second written notice  thereof to  Tenant.    Such notice  shall be in  lieu  of and  not in  addition  to  any notice  required under Section 1161 of the California Code of Civil Procedure;

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(d)      Insurance.  Tenant  fails  to procure, maintain and deliver to Landlord evidence of the insurance  policies  and coverages  as required  under  Section  11(a);

(e)     Mechanic's  Liens. Tenant  fails  to pay  and release of record, or diligently contest  and bond around, any mechanic's lien filed against the Premises for any work performed, materials furnished, or obligation incurred  by or at the request  of Tenant, within  the time  and in the manner  required  by Section 8(d);

(f)      Other  Defaults.   Tenant's  failure to perform, comply with, or observe or breach of any other agreement or obligation of Tenant under this Lease and the continuance of such failure for a period of more than thirty (30) days after Landlord has delivered to Tenant notice thereof or such longer period as is reasonably necessary to remedy such failure, provided that Tenant has commenced the cure of such failure within the foregoing thirty (30) day period and shall continuously and diligently pursue such remedy until such failure is cured, but in no event such failure shall remain uncured for more than ninety (90) days.  Such notice shall be in lieu of and not in addition to any notice required under Section 1161 of the California Code of Civil Procedure; and

(g)      Insolvency.  The filing of a petition by or  against Tenant  (the term "Tenant"  shall include, for the purpose of this Section 16(g), any guarantor of Tenant's obligations hereunder) (i) in any bankruptcy or other insolvency proceeding;  (ii) seeking any relief under any state or federal debtor relief law; (iii) for the appointment of a liquidator or receiver for all or substantially all of Tenant's property or for Tenant's interest in this Lease; (iv) for the reorganization or modification  of Tenant's  capital structure; or (v) in any assignment for the benefit of creditors proceeding; however, if such a petition is filed against Tenant, then such filing shall not be an Event of Default unless Tenant fails to have the proceedings initiated by such petition dismissed within ninety (90) days after the filing thereof.

17.Remedies.

(a)     If an Event of Default shall occur, then, in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder by giving Tenant written notice of such election to terminate.  In the event Landlord shall elect to so terminate this Lease, Landlord may recover from Tenant

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

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

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

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

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

(b)      All "Rent" shall be computed on the basis of the monthly amount thereof payable on the date of Tenant's  default, as the  same are to be adjusted thereafter as contemplated by this Lease.   As used in Subparagraphs (i) and (ii) above, the "worth at the time of award" is computed by allowing interest in the per annum amount equal to the "Prime Rate" as published on the date this Lease is terminated by The Wall Street Journal, Northeast  Edition, in its listing of "Money  Rates"  minus  one percent (1%), but  in no  event in excess of the maximum interest rate permitted by law.  As used in Subparagraph (iii) above, the "worth at the time of award" is 

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computed  by discounting   such amount  at the discount  rate  of the Federal  Reserve  Bank  of San Francisco   at the time of award plus  one percent  (1%).

(c)     If Landlord  elects  to terminate  this  Lease  as a result  of an Event  of Default  by Tenant,  on the  expiration   of the time  stated  in Landlord's    notice  to Tenant  given  under  Section  17(a),  this Lease  and the Term hereof,  as well  as all of the right,  title and interest of Tenant hereunder, shall wholly cease and expire and become void in the same manner and with the same force and effect (except as to Tenant's liability) as if the date fixed in such notice were  the date herein specified for expiration of the term of this Lease.   Thereupon, Tenant shall immediately quit and surrender to Landlord the Premises, and Landlord may enter into and repossess the Premises by summary proceedings, detainer, ejectment or otherwise, and remove all occupants thereof and, at Landlord's option, any property thereon without being liable for any damages therefor.

(d)      If an Event of Default shall occur, in addition, Landlord shall have the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's breach and abandonment and recover Rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Therefore, if Landlord does not elect to terminate this Lease on account of any Event of Default by Tenant, Landlord may; from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all Rent as it becomes due.

(e)     Landlord shall also have the right to deem the Premises abandoned by Tenant provided that Landlord follows the procedures set forth in California Civil Code §1951.3.

(f)     In the event that Landlord terminates this Lease and takes possession of the Premises, then Landlord may from time to time, in an effort to mitigate its damages resulting from Tenant's breach or default, relet the Premises or any part thereof for such term or terms and at such Rent and upon such other terms and conditions as Landlord, in its sale discretion, may deem advisable, with the right to make alterations and repairs  to the Premises.   No such mitigation efforts shall constitute a waiver of Landlord's  right to recover damages from Tenant as provided herein.  However, to the extent that Landlord receives any proceeds from the reletting of the Premises, after the deduction of all costs incurred by Landlord in connection with such reletting, such excess shall be applied in reduction of any damages owed by Tenant    Tenant reserves the right to contest the commercial reasonableness of any expenditures made by Landlord in connection with any such reletting.

18.Payment  by Tenant;  Non-Waiver;  Cumulative  Remedies.

(a)     Payment by Tenant.  Upon  any  Event of Default by  Tenant,  Tenant  shall pay  to Landlord all costs incurred by Landlord (including court costs and reasonable attorneys'  fees and expenses) in (i) obtaining possession  of  the Premises,  (ii) removing and storing Tenant's  or  any  other occupant's  property, (iii) repairing, or restoring the Premises into the condition required under Section 20, (iv) performing Tenant's obligations which Tenant failed to perform, and (v) enforcing, or advising Landlord of, its rights, remedies, and recourses arising out of the Event of Default.

(b)      No Waiver.   Landlord's  acceptance of Rent following an Event of Default shall not waive Landlord's rights regarding such Event of Default.  No waiver by Landlord of any violation or breach of any of the terms contained herein shall waive Landlord's rights regarding any future violation of such term.  Landlord's acceptance of any partial payment of Rent shall not waive Landlord's rights with regard to the remaining portion of the Rent that is due, regardless of any endorsement or other statement on any instrument delivered in payment of Rent or any writing delivered in connection therewith; accordingly, Landlord's acceptance of a partial payment of Rent shall not constitute an accord and satisfaction of the full amount of the Rent that is due.

(c)     Cumulative  Remedies.  Any and all remedies set forth in this Lease:   (i) shall be in addition to any and all other remedies Landlord may have at law or in equity, (ii) shill be cumulative, and (iii) may be pursued successively or concurrently as Landlord may elect.  The exercise of any remedy by Landlord shall not be  deemed an  election  of  remedies  or  preclude  Landlord  from  exercising  any  other  remedies  in the  future. Additionally,  Tenant  shall  defend,  indemnify  and  hold  harmless  Landlord,  Landlord's  Mortgagee  and  their respective representatives and agents from  and  against all claims, demands, liabilities,  causes of action, suits, 

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judgments,   damages  and expenses   (including  reasonable   attorneys'   fees) arising  from Tenant's   failure  to perform  its obligations   under  this Lease.

(d)     Landlord's Cure.  All  covenants and agreements to be kept or performed by Tenant under  this Lease  shall  be performed   by Tenant  at Tenant's sole cost and expense  and without  any reduction of Rent, except  to the extent,  if any, otherwise   expressly  provided  herein.   If Tenant  shall  fail to perform any obligation  under this  Lease,  and  such failure  shall  continue  in  excess  of the time  allowed  under Section  16, above,  unless  a specific time period  is otherwise   stated  in this Lease,  Landlord  may, but shall not be obligated  to, make  any such payment  or perform   any  such  act  on  Tenant's part without  waiving   its rights  based  upon  any  default  of Tenant  and  without releasing   Tenant  from  any  obligations hereunder.  Except  as  may be  specifically   provided   to the  contrary   in this Lease, Tenant  shall  pay  to  Landlord,   upon  delivery by  Landlord   to Tenant  of  statements   therefor sums equal to expenditures reasonably made and obligations incurred  by Landlord  in connection with  the remedying   by Landlord of Ten ant's  defaults  pursuant  to the provisions   of this Paragraph   (d).

19.Intentionally Omitted.

20.Surrender of Premises.  No act by Landlord  shall be deemed  an acceptance  of a surrender  of the Premises, and no agreement to accept  a surrender  of the Premises  shall be valid unless  it is in writing  and signed  by Landlord.  At the  expiration or termination  of  this  Lease,  Tenant  shall  deliver  to  Landlord  the Premises with  all improvements,    alterations    and  additions   located   therein   and  the  Leased   Personal   Property   in  good  repair   and condition,   free  of Hazardous   Materials   placed   on  the  Premises   by  Tenant  or any  Tenant  Party  during   the  Term, broom-clean,    reasonable   wear  and tear  (and  condemnation   and Casualty  damage  not  caused  by Tenant,  as to which Sections   13 and  14 shall  control)  excepted,   and shall  deliver  to Landlord  all keys  to the Premises.    Upon  expiration or termination   of this  Lease,  Tenant   shall  remove  all trade  fixtures,  furniture,  and  personal  property  placed  in the Premises   by  Tenant.     Tenant   shall  not  be  required   to  remove   any  improvement,    alterations   or  additions   to  the Premises   installed  by  Tenant  as prot  of Tenant's   initial  construction   work,  and  Tenant  shall  not remove  any  other improvement,    alteration   or addition   to the  Premises   installed  by  Tenant  unless  Landlord  required  in writing  (at the time  that  Landlord  consented   to the installation)   that the improvement,   alteration  or addition  in question  be removed or  if Landlord otherwise permits Tenant to remove  same.   Tenant shall repair all damage caused by any such removal  required or agreed  to  by Landlord.    All items required to be removed but not  so removed shall, at Landlord's  option, be deemed to have been abandoned by Tenant and may be appropriated, sold, stored, destroyed, or otherwise disposed of by Landlord in accordance with California Civil Code §1983, et seq.  The provisions of this Section 20 shall survive the expiration of the Term.

21.Holding Over. If Tenant fails to vacate the Premises at the end of the Term, then Tenant shall be a tenant at sufferance and, in addition to all other damages and remedies to which Landlord may be entitled for such holding over, (i) Tenant shall pay, in addition to the other Rent, Basic Rent equal to one hundred twenty-five percent (125%) of the Basic Rent payable during the last month of the Term, and (ii) Tenant shall otherwise continue to be subject to all of Tenant's obligations under this Lease.  The provisions of this Section shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant  fails to surrender the Premises upon the  termination  or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from all loss, costs (including reasonable attorneys' fees) and liability resulting from such failure, including any claims made by any actual or prospective succeeding tenant founded upon such failure to surrender, and any lost profits to Landlord resulting therefrom.

22.Certain Rights Reserved by Landlord.   Provided that the  exercise of  such rights  does not unreasonably interfere with Tenant's use or occupancy of the Premises, Landlord shall have the following rights:

(a)      Building  Operations. To enter upon the Premises (at reasonable times after giving Tenant reasonable advance notice thereof, except in cases of real or apparent emergency, in which case no notice shall be required) for the purpose of making inspections of the Building, and to make repairs, alterations, additions, changes, or improvements to the Building's  Structure and/or the Building's Systems; and during the continuance of any such work, to temporarily close doors, entryways, public space, and corridors in the Building; to interrupt or temporarily suspend Building  services  and facilities;  to change the name  of the Building; and  to  change the 

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arrangement and location of entrances or passageways, doors,  and doorways,   corridors,  elevators,   stairs,  restrooms, or other public  parts  of the Building;

(b)     Prospective Purchasers and  Lenders. To enter the Premises at all reasonable times upon reasonable advance notice to Tenant to show the Premises to prospective purchasers or lenders;  and

(c)      Prospective Tenants.  At any time during  the  last  twelve  (12) months  of the  Term  (or earlier  if Tenant  has  notified  Landlord   in writing  that  it does  not  desire  to  renew  the  Term  or if Tenant's   renewal option  has  terminated)   or at any  time  following   the  occurrence   of  an Event  of Default,  to  enter the  Premises  at all reasonable   hours upon  reasonable   advance  notice  to Tenant  to show  the Premises  to prospective   tenants.

23.Landlord  Representations and Warranties. Landlord  represents  that  as of the Commencement Date,  the  Building's  Structure   (including   the  roof  and  floor  system   (but  not  floor  covering))  and  the  Building's Systems  (including  mechanical,   electrical,  HVAC,   lighting  and plumbing) will be operational   and  in good working condition   and  that  the  Premises   (including  restrooms and  exterior   ramps)  will  be  in  compliance   with  all  Laws (including   the Disabilities Acts,  but without  reference to any  improvements   made by  Tenant  or Tenant's   use  of the Premises).  Landlord shall  repair  or  replace, at  its  sale   expense   (and  not  as  part  of  Operating   Expenses), any deficiencies in  the  Building's  Structure or  the  Building's    Systems,   of  which  Tenant  gives  notice  within  the  first twelve   (12) months  of the Term.   Landlord   represents   that  it has  no knowledge  that  any Hazardous Materials  have been released in, on or  under   the  Premises, except  to the extent,   if  any, set forth in  that  certain Phase I Environmental Site Assessment prepared  by Tetra  Tech dated  April  11, 2008,  a copy  of which  has been  delivered  to Tenant  prior  to the execution of this Lease  (which  Tenant  agrees  to keep  confidential, and which  Tenant  agrees  not to disclose  to any other persons  or entities,  except  for Tenant's professional advisors on a "need  to know" basis, and as otherwise  required  by Law).

No representation   or warranty  is made  with respect  to the Leased  Personal  Property.

Except as represented in Paragraph 23 above, Landlord and Tenant expressly disclaim any implied warranty that  the  Premises  are  suitable for  Tenant's intended purpose (e.g.,  zoned,  licensed,  or otherwise  properly authorized  by a law  or government   agency), and Tenant's obligation  to pay  rent  hereunder   is not  dependent   upon such suitability  of the Premises.

24.Miscellaneous.

(a)     Landlord Transfer. Landlord  may  sell  or otherwise   transfer   all  or any portion   of the Premises,  and in connection   therewith   Landlord  may assign  its rights  under  this Lease  to the transferee.  If Landlord assigns  its rights  under  this  Lease,  then  Landlord   shall  thereby  be released  from  any  further  obligations   hereunder arising   after  the  date  of  the  assignment,   provided   that  the  transferee assumes in  writing   Landlord's    obligations, covenants,  and warranties   hereunder  arising  from and after the assignment   date.

(b)     Landlord's Liability.  The liability of Landlord (and its partners, shareholders  or members) to  Tenant  (or  any  person or  entity  claiming  by,  through or under  Tenant) for  any  default  by  Landlord under  the terms  of this Lease  or any matter  relating  to or arising  out of the occupancy  or use of the Premises  shall  be limited to Tenant's  actual  direct,  but  not  consequential, damages   therefor   and  shall  be  recoverable only  from  the interest  of  Landlord in  the  Premises, and  Landlord   (and   its  partners,  shareholders or  members)  shall not  be personally  liable  for any deficiency.

(c)     Force  Majeure.  Other than for Tenant's obligations under  this Lease  that  can  be performed by  the payment of money  (e.g.,  payment  of Rent  and maintenance  of insurance),   whenever   a period  of time  is herein  prescribed   for  action  to be taken  by  either party  hereto,  such party  shall  not be liable  or responsible for,  and there  shall  be excluded   from  the  computation   of  any  such period  of time,  any  delays  due to  strikes,  riots, acts  of  God,  shortages   of  labor  or materials,    war,  terrorist   acts  or  activities,   governmental    laws,  regulations,   or restrictions,   or any  other  causes  of a similar  nature  which  are not reasonably   foreseeable   and which  are beyond  the reasonable   control  of such party.   Failure or inability  to obtain  financing  shall not be an event  of force majeure.

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(d)     Brokerage.  Neither Landlord nor Tenant has dealt with any broker or agent  in connection  with  the  negotiation  or  execution   of this  Lease,  other  than  CB  Richard Ellis,  Inc.  Brokerage   Services (representing   Landlord) and Cushman and Wakefield of San Diego, Inc, (representing Tenant), whose commissions shall be paid by Landlord pursuant to a separate written agreement.  Tenant and Landlord shall each indemnify the other against all costs, expenses, attorneys'  fees, liens and other liability for commissions or other compensation claimed by any other broker or agent claiming the same by, through, or under the indemnifying party.

(e)      Estoppel  Certificates.  From time to time, Tenant shall furnish to any party designated by  Landlord, within  ten  (10) days  after Landlord has made  a request therefor, a certificate  signed by  Tenant confirming  and  containing  such  factual  certifications  and  representations  as  to  this  Lease  as  Landlord  may reasonably request.  Unless otherwise required by Landlord's Mortgagee or a prospective purchaser or mortgagee of the Premises, the initial form of estoppel certificate to be signed by Tenant is attached hereto as Exhibit  C.   If Tenant does not deliver to Landlord the certificate signed by Tenant within such required time period, Landlord, Landlord's  Mortgagee and any prospective purchaser or mortgagee, may conclusively presume and rely upon the following facts: (i) this Lease is in full force and effect; (ii) the terms and provisions of this Lease have not been changed except as otherwise represented by Landlord; (iii) not more than one monthly installment of Basic Rent and other charges have been paid in advance; (iv) there are no claims against Landlord nor any defenses or rights of offset against collection of Rent or other charges; and (v) Landlord is not in default under this Lease.  In such event, Tenant shall be estopped from denying the truth of the presumed facts.

(f)     Notices.  All notices and other communications given pursuant to this Lease shall be in writing and shall be (i) mailed by first class, United States Mail, postage prepaid,  certified, with return receipt requested, and addressed to the parties hereto at the address specified in the Basic Lease Information, (ii) hand­ delivered to the intended addressee, (iii) sent by a nationally recognized overnight courier service, or (iv) sent by facsimile transmission or e-mail during normal business hours to the facsimile number or e-mail address set forth in the Basic Lease Information followed by a confirmatory notice sent in another manner permitted hereunder.  Mailed notices shall be deemed given on the third (3rd)  business day after deposit in the U.S. mail. Notices which are hand­ delivered or sent by overnight courier service shall be deemed given upon delivery to the addressee (or upon refusal of delivery by the addressee).  Notices sent by facsimile or e-mail shall be deemed given when sent, provided that it is during regular business hours of the addressee.  The parties hereto may change their addresses by giving notice thereof to the other in conformity with this Section 24(f).

(g)     Separability.  If any clause or provision of this Lease is illegal, invalid, or unenforceable under present or future laws, then the remainder of this Lease shall not be affected thereby and in lieu of such clause or provision, there shall be added as a part of this Lease a clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible and be legal, valid, and enforceable.

(h)     Amendments; Binding Effect.  This Lease may not be amended except by instrument in writing Signed by Landlord and Tenant.   No provision of this Lease shall be deemed to have been waived by Landlord unless such waiver is in writing signed by Landlord.  The terms and conditions contained in this Lease shall inure to the benefit of and be binding upon the parties hereto, and upon their respective successors in interest and legal representatives, except as otherwise herein expressly provided.   This Lease is for the sole benefit of Landlord and Tenant, and, other than Landlord's Mortgagee, no third party shall be deemed a third party beneficiary hereof.

(i)      Quiet  Enjoyment. Provided Tenant has performed all of its obligations hereunder, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term, without hindrance or disturbance from Landlord  or any party  claiming by,  through, or under  Landlord, but not  otherwise, subject  to  the terms  and conditions of this Lease.

(j)     No Merger.  There shall be no merger of the leasehold estate hereby created with the fee estate in the Premises or any part thereof if the same person acquires or holds, directly or indirectly, this Lease or any interest in this Lease and the fee estate in the leasehold Premises or any interest in such fee estate.

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(k)      No Offer.  The  submission of this Lease to Tenant  shall not be construed  as an offer,  and Tenant  shall  not have  any rights  under   this Lease  unless  Landlord  executes  a copy  of this  Lease  and  delivers  it to Tenant

(1)      Entire Agreement.   This  Lease  constitutes the entire agreement between Landlord and Tenant regarding the subject matter hereof and supersedes all  oral  statements and prior  writings   relating  thereto. Except  for those  set forth  in this Lease,  no representations,  warranties,  or agreements   have  been  made  by Landlord or Tenant  to the  other  with  respect  to this  Lease  or the  obligations   of Landlord   or Tenant in connection   therewith. The  normal  rule  of  construction   that  any  ambiguities   be resolved   against  the  drafting  party  shall  not  apply  to the interpretation   of this Lease  or any exhibits  or amendments   hereto.

(m)     Intentionally Omitted.

(n)      Governing  Law.  This  Lease  shall  be governed by and construed  in accordance  with  the laws of the  State of California.  All references   to California  statutes  shall be deemed  to include  successor  statutes.  IN ANY ACTION OR PROCEEDING  ARISING HEREFROM,    LANDLORD AND TENANT HEREBY CONSENT TO  (I) THE  JURISDICTION  OF ANY  COMPETENT  COURT WITHIN THE STATE OF CALIFORNIA, AND (II) SERVICE OF PROCESS   BY ANY  MEANS  AUTHORIZED   BY CALIFORNIA   LAW.

(o)     Recording.  Tenant  shall not record  this Lease  or any memorandum   of this Lease  without the prior  written  consent  of Landlord,   which  consent  may  be withheld  or granted  in the sole  and absolute  discretion of Landlord,  and any recordation   by Tenant  shall be a material  default  under  this Lease.   Tenant  grants  to Landlord  a power  of attorney  to execute  and record  a release  releasing  any such recorded  instrument  of record  that was recorded without  the prior  written  consent  of Landlord.

(p)      Water or  Mold  Notification.  To the extent  Tenant  or its agents  or employees   discover any water  leakage,  water  damage  or mold  in or about  the Premises,  Tenant  shall promptly  notify  Landlord  thereof.

(q)     Joint and Several Liability.  If Tenant  is comprised of more than one party,  each  such party shall be jointly and severally  liable for Tenant's obligations under this Lease. All unperformed obligations  of Tenant  hereunder   not fully  performed   at the end  of the Term  shall  survive  the end of the Term,  including  payment obligations   with respect  to Rent  and all obligations   concerning   the condition  and repair  of the Premises.

(r)      Financial  Reports.   Within  fifteen  (15) days after Landlord's   written  request  Tenant  will furnish  to Landlord  Tenant's   most recent   quarterly  and annual  financial  statements  (at a minimum to include  a profit and loss  statement   and balance   sheet),  which  are prepared  by Tenant's   independent,   certified  public  accountant   (or, if there  are none  at the time,  financial  statements   which  are internally  prepared  by Tenant  (and certified  by Tenant's chief  financial  officer)   or, if audited  statements   have  been  prepared,   such  audited  financial  statements.    Provided, however,   that  at least  once  each year,  within  thirty  (30) days  after Landlord's   written  request,  Tenant  shall  provide financial  statements   which  are prepared  by Tenant's   independent   certified  public  accountant.    If Tenant  is a publicly traded   corporation,   Tenant  may  satisfy   its  obligations   hereunder   by providing   to  Landlord   Tenant's   most  recent annual  and  quarterly   reports.    Tenant  shall  not  be required   to  deliver  the  financial  statements   required   under  this Section  24(r)  more  than   once  in  any  twelve   (12)  month  period   unless  requested   by  Landlord's    Mortgagee   or  a prospective   buyer  or lender  of the Premises   or an Event  of Default  occurs.

(s)      Intentionally Omitted.

(t)      Attorneys' Fees.  In the event that either Landlord  or Tenant  should  bring  suit  for  the possession  of the Premises,  for the recovery   of any sum due under  this Lease,  for the breach  of any provision  of this Lease,  or for  any  other  relief  against  the  other  relating to this  Lease  or the use and occupancy  of the Premises  by Tenant,  then all costs  and  expenses, including reasonable attorneys' fees,  incurred  by  the prevailing   party  therein shall  be paid by the  other  party,  which  obligation on the part  of the  other party  shall  be deemed  to have  accrued  on the  date  of the commencement of such  action  and  shall  be  enforceable whether  or not  the  action  is prosecuted to judgment. Attorneys'  fees  includes any  attorneys'   fees  incurred  in connection  with  a bankruptcy proceeding or on appeal.

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(u)     Intentionally Omitted.

(v)     Authority.  Tenant (if a corporation, partnership  or other business entity) hereby represents   and warrants  to Landlord  that  Tenant is a duly formed  and existing entity qualified  to  do business  in the state in which  the Premises  are located,  that  Tenant  has full right  and authority  to execute  and deliver  this Lease,  and that  each person  signing  on behalf  of Tenant  is authorized   to do  so, and that  Tenant's organizational identification number assigned  by  the  California   Secretary   of  State  is C2167323.  Landlord hereby represents and  warrants   to Tenant  that  Landlord  is a duly  formed  and  existing  entity  in the  State of California,  that  Landlord  has  full right  and authority  to  execute  and deliver  this Lease,  and that  each person  signing  on behalf  of Landlord is authorized to do so.

(w)     Hazardous  Materials.

(i)      Definitions.   For purposes of this Lease, the following definitions shall apply: "Hazardous  Material(s)"  shall mean any solid, liquid or gaseous substance or material that is described or characterized as a toxic or hazardous substance, waste, material, pollutant, contaminant or infectious waste, or any matter that in certain specified quantities would be injurious to the public health or welfare, or words of similar import, in any of the "Environmental   Laws", as that term is defined below, or any other words which  are  intended to  define, list  or  classify  substances by  reason of  deleterious properties  such as ignitability, corrosivity, reactivity,  carcinogenicity,  toxicity  or reproductive toxicity,  which  Hazardous Material(s)    shall include, without  limitation, asbestos,  petroleum (including  crude  oil  or  any  fraction thereof, natural gas, natural gas liquids, liquefied natural  gas, or synthetic gas usable for fuel, or any mixture thereof), petroleum products, polychlorinated biphenyls, urea formaldehyde, radon gas, nuclear or radioactive matter, medical waste, soot, vapors, fumes, acids, alkalis, chemicals, microbial matters (such as molds, fungi or other bacterial matters), biological agents and chemicals which may cause adverse health effects, including but not limited to, cancers and/or toxicity.  "Environmental Laws" shall mean any and all federal, state,  local    or  quasi-governmental laws  (whether under  common law,  statute or  otherwise), ordinances, decrees, codes, rulings, awards, rules, regulations or guidance or policy documents now or hereafter   enacted or promulgated and  as amended from time to time, in any way relating to (A) the protection of the environment, the health  and safety of persons (including employees), property  or the public welfare from actual or potential release, discharge, escape or emission (whether past or present) of any Hazardous Materials or (B) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of any Hazardous Materials.

(ii)      Compliance with Environmental Laws.  "Landlord and Tenant covenant that during the Lease Term, Landlord and Tenant, respectively, shall comply with all Environmental Laws in accordance with, and as required by  this Lease.   Tenant shall not sell, use, or store in  or around the Premises any Hazardous Materials, except if stored, properly packaged and labeled, disposed of and/or used in accordance with applicable Environmental Laws. In addition, Tenant agrees that it:  (A) shall not cause or suffer to occur, the release,  discharge, escape or emission of any Hazardous Materials at, upon, under or within the Premises or any contiguous or adjacent premises; (B)  shall not engage in activities at the Premises that could result in, give rise to, or lead to the imposition of liability upon Tenant or Landlord or the creation of a lien upon the Premises or the Land; (C)shall notify Landlord promptly  following receipt of any knowledge with respect to any actual release, discharge, escape or emission (whether past or present) of any Hazardous Materials at, upon, under or within the Premises; and (D) shall promptly forward to  Landlord copies of all orders, notices, permits, applications and other communications and reports in connection with any release, discharge, escape or emission of any Hazardous Materials at, upon, under or within the Premises or any contiguous or adjacent premises.

(iii)    Special Provisions  re Laboratory  Use. In the event that Tenant uses any part of the Premises for laboratory purposes, which involves the use of Hazardous Materials, then in connection with Tenant's  surrender of the Premises upon the expiration or earlier termination of this Lease, Tenant shall deliver the same free of Hazardous Materials brought upon, kept or used in or about the Premises by any persons, and shall obtain and provide to Landlord (A) all Hazardous Materials clearances, (B) evidence from the applicable governmental entities of "closure" of all permits which had been required for Tenant's use of the Premises, together with "no further action letters" from such applicable governmental entities 

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and a "no  further  action letter"  for unrestricted future use of the Premises,  and (C) a Phase  I report  (and,  if reasonably required, a Phase  IT report)  with  regard  to the Premises  (specifically including, but not limited to, the Premises' ceiling  tiles, mechanical duct work, air-filters  and all related Building's Systems, as well as the soils and groundwater under and about the Premises).  Such Phase I report (and, if applicable, such Phase II report) shall be (1) performed by an environmental assessment or engineering firm and on a scope of work acceptable to Landlord in its sole discretion, (2) shall identify Landlord as a beneficiary or such report, and (3) completed no earlier than six (6) months prior to the expiration of this Lease and no later than the Lease Expiration Date; provided, however, in the event this Lease is terminated early for any reason, Tenant shall complete such Phase I report within a commercially reasonable time immediately following such early termination  of this Lease.   Such Phase I report shall either (x) indicate that the property shows no evidence of reasonably possible hazardous materials contamination of the building, soil or  groundwater;  or  (y) recommend  further  investigation  of the  site,  in  which  event, if  such  further investigation  relates to Tenant's or the Tenant Parties' use of the Premises, then it shall be performed by an environmental assessment or engineering fum and on a scope of work acceptable to Landlord in its sole discretion and at the Tenant's sole expense. Such additional investigation, if any, shall be completed within sixty (60) days of such recommendation.  Landlord  and Tenant  hereby  agree  that  for purposes  of establishing a baseline, Landlord shall, promptly following the date of this Lease, obtain and provide to Tenant  an updated Phase I report,  the scope of which shall be mutually and reasonably acceptable to Landlord and Tenant, with regard to the Premises; provided, however, the cost of such updated Phase I report shall be paid by Landlord and Tenant equally.

(iv)     List of Documents  and  Operations.   In the event that Tenant uses any part of the Premises for laboratory purposes, which involves the use of Hazardous Materials, then Tenant agrees to deliver to Landlord, at least sixty (60) days prior to the date of such first use for laboratory purposes, a list identifying each type of Hazardous Materials to be present on the Premises and setting forth any and all governmental approvals or permits required in connection with the presence of such Hazardous Materials on the  Premises  (the  "Hazardous Materials List").  Tenant shall deliver to  Landlord  an  updated Hazardous Materials List before any new Hazardous Material(s) is brought onto the Premises or upon Landlord's request (but not more frequently than once every Lease Year).  Tenant shall deliver to Landlord true and correct copies of the following documents (the "Haz Mat Documents")  related to the handling, use, storage, disposal and emission of Hazardous Materials prior to the date of such first use for laboratory purposes, or if unavailable at that time, concurrent with the receipt from, .or submission to, a governmental agency: permits; approvals; reports and correspondences; storage and manufacturing plans; notice  of violations of any laws; plans relating to the installation of any storage tanks to be installed in or under the Premises (provided, said installation of tanks shall only be permitted after Landlord has given Tenant its written consent to do so, which consent may be withheld in Landlord's sole and absolute discretion); and all closure plans or any other documents required by any and all federal, state, and local governmental agencies and authorities for any storage tanks installed in, on or under the Premises for the closure of any such tanks.   Tenant is not required, however, to provide Landlord with any portion(s) of the Haz Mat Documents containing information of a proprietary nature which, in and of themselves, do not contain a reference to any Hazardous Materials or hazardous activities.  It is not the intent of this Subparagraph (iv) to  provide  Landlord  with  information  which  could  be detrimental to  Tenant's  business  should  such information become possessed by Tenant's competitors. In connection with the foregoing, Tenant hereby represents and warrants to Landlord that neither Tenant, or any of its legal predecessors, have been required by  any prior  landlord, lender or governmental authority at any time during the immediately preceding thirty-six (36) months to take remedial action in connection with Hazardous Materials contaminating a property  which contamination was permitted by Tenant or resulting from Tenant's  action or use of the property in question, and Tenant  is not subject to  any enforcement order issued by any governmental authority in connection with the use, disposal or storage of a Hazardous Materials. If Landlord determines that this representation and warranty was not true as of the date of this Lease, Landlord shall have the right to terminate this Lease in Landlord's sole and absolute discretion.

(v)      Landlord's  Right of Environmental Audit.  In the event that Tenant uses any part of the Premises for laboratory purposes, which involves the use of Hazardous Materials, then Landlord may, upon reasonable notice to Tenant, be granted access to and enter the Premises no more than once annually to perform or cause to have performed an environmental inspection, site assessment or audit 

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Such  environmental inspector or auditor may be chosen by Landlord,  in  its  sole  discretion, and be performed at  Landlord's sole expense.  To the extent that  the  report  prepared upon such inspection, assessment or audit,  indicates  the presence of Hazardous Materials   in violation  of Environmental  Laws,  or provides recommendations or  suggestions to prohibit  the release, discharge, escape or emission of any Hazardous Materials   at, upon,  under or within the Premises, or to comply with any Environmental Laws, Tenant shall   promptly,   at  Tenant's  sole  expense,   comply   with  such  recommendations  or  suggestions, including, but  not limited to performing  such  additional investigative  or subsurface investigations or remediations) as recommended by such inspector  or auditor  (taking  into account  all legal requirements  and applicable governmental agency recommendations).   However, if Tenant in good faith disputes the findings in any such report prepared by Landlord's  environmental inspector or auditor, and provides a report from its own independent, qualified environmental inspector or auditor which confirms such dispute, then Tenant shall be excused from performance or compliance until the matter has been resolved by mutual agreement, or by a court or at the election of either party, by binding arbitration to be conducted generally in the manner set forth in Exhibit D attached hereto (but the issue for arbitration will be the determination as to which environmental report is accurate,  and the persons  selected as  the Advocate Arbitrators and the Neutral Arbitrator shall be attorneys  (or retired judges)  who have at least ten (10) years' experience in environmental  matters).  Notwithstanding the  above,  if  at  any  time,  Landlord has actual  notice  or reasonable cause to believe that Tenant has violated, or permitted any violations of any Environmental Law, then Landlord will be entitled to perform its environmental inspection, assessment or audit at any time, notwithstanding the above mentioned annual limitation, and Tenant must reimburse Landlord for the cost or fees incurred for such as Additional Rent.

(vi)     Indemnification.  In addition to all other indemnity's provided under this Lease and not in limitation thereof, Tenant agrees to indemnify, defend, protect and hold harmless the Landlord Parties from and against any liability, obligation, damage or costs, including without limitation, attorneys' fees and costs, resulting directly or indirectly from any use, presence, removal or disposal of any Hazardous Materials or breach of any provision of this Subparagraph (vi), in either case resulting from actions caused or permitted by Tenant or a Tenant Party.

(x)     Prohibited Persons and  Transactions. Tenant represents and warrants that neither Tenant nor any of its affiliates, nor  any of their respective partners, members, shareholders or other equity owners, and to the best of Tenant's  knowledge, none of their respective employees, officers, directors, representatives or agents is, nor will they become, a person or entity with whom U.S. persons or entitles are restricted from doing business under regulations of the Office of Foreign Asset Control ("OFAC")  of the Department of the Treasury (including those named on OFAC's Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action and is not and will not Transfer this  Lease to, contract with or  otherwise engage in any dealings or transactions or be  otherwise associated with such persons or entities.

(y)     Time is of the Essence.  Time is of the essence with respect to the performance of every provision of this Lease in which performance is a factor.

25.Other  Provisions,

(a)     Renewal  Option. Tenant shall have the right to renew the Term of this Lease on the terms and conditions set forth in Exhibit D attached hereto.  

(b)      Signage.  Tenant may install and maintain signage on the exterior of the Building, at its sole cost and expense, subject to Landlord's reasonable consent as to size, materials and location.   Such signage must also be approved by all applicable governmental agencies.  Any signage installed by Tenant will be removed by Tenant upon expiration of the Term, at Tenant's expense, and any damages to the Building will be repaired by Tenant.

(c)     Access.  Subject to the provisions of this Lease, Tenant shall have access to the Premises twenty-four (24) hours per day, seven (7) days per week, three hundred sixty-five (365) days per year.

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(d)      Parking. Tenant shall  have the exclusive right  to use the entire above-ground and  the entire  subterranean parking area of the Premises, without additional charge.  For clarification, the parking  areas are part of the Premises and accordingly the maintenance and repair obligations of the Lease,  among  other  provisions, apply  to the parking  areas  as well.  All motor  vehicles (including  all contents  thereof)  shall  be parked in the parking areas  at the sole risk of Tenant  and each  other  Tenant  Party,  it being  expressly  agreed  and understood landlord  has no duty to insure any of said  motor vehicles (or  the  contents thereof), and Landlord is  not  responsible for the protection and security of such vehicles. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, LANDLORD SHALL HAVE NO LIABILITY WHATSOEVER  FOR ANY PROPERTY DAMAGE.0R LOSS WHICH MIGHT OCCUR ON THE PARKING AREAS OR AS A RESULT OF OR IN CONNECTION WITH THE PARKING OF MOTOR VEHICLESIN ANY OF THE PARKING AREAS.

(e)      Transportation Management.  Tenant shall fully comply with all present   or  future programs   intended  to  manage  parking, transportation or  traffic   in  and  around  the  Premises,  and  in  connection therewith,  Tenant  shall  take  responsible  action  for  the  transportation  planning   and  management  of  all employees located at  the Premises  by  working directly with  Landlord,  any   governmental transportation  management organization   or any other  transportation-related  committees   or entities.

(f)      Modification of  Lease for Landlord's Mortgagee. Should Landlord's Mortgagee require  a modification   of this Lease,  which  modification   will not cause  an increased  cost  or expense  to Tenant  or in any other way materially  and adversely  change  the rights  or obligations   of Tenant  hereunder,  then  and in such event, Tenant  agrees  that this Lease may  be so modified  and agrees to execute  whatever  documents   are reasonably  required therefor and to  deliver the  same  to  Landlord within  ten (10) days  following  a request  therefor.  In addition, Tenant agrees  that  unless otherwise set forth  in  a  subordination,  nondisturbance and attornment agreement executed by Tenant,  Landlord  and Landlord's Mortgagee (i) Tenant will comply  with any reasonable requirements of Landlord's Mortgagee with respect to the insurance requirements of this Lease, and any  conflicting provisions with  respect  to insurance  proceeds   in  the  Mortgage or  other  loan  documents   shall  control  over  the  provisions of this  Lease,  (ii) Landlord's Mortgagee will  be considered a Landlord  Party for the purposes   of Tenant's  indemnification   obligations under  this  Lease,   (iii)  if,  pursuant to any Mortgage   or other  loan  documents   affecting   the  Premises   the  Landlord Mortgagee's  approval  or consent  to any action  proposed  to be taken  by Tenant  under  this Lease  which  also requires Landlord's  consent   is  required,  then  Landlord   will  promptly   seek  to  obtain   Landlord's  Mortgagee's   consent   or approval,   but  if  Landlord   Mortgagee   does  not  give  its  consent   or  approval,   Landlord   shall  be  deemed  to  have reasonably   withheld  its consent  or approval  to any such proposed  action,  and (iv) if any default  notices  are delivered. to Landlord  by Tenant,  copies  thereof  will  simultaneously   be delivered  to Landlord  Mortgagee,   provided  that  Tenant is  given  notice of  the  address   and  identity of  Landlord's    Mortgagee. As  of  the  date  of  this  Lease,  Landlord's Mortgagee   is Prudential  Mortgage   Capital  Funding,  LLC,  whose  address  is 100 Mulberry   Street,  8th Floor,  Gateway Center  Four,  Newark,  New  Jersey  07102, Attention:   Structured  Loan Program.

(g)      Exhibits. All exhibits and attachments attached hereto, and all rights, duties and obligations of the parties thereunder, are incorporated herein  by this reference.

This  Lease is executed on the respective dates  set forth below,  but  for reference  purposes, this Lease shall be dated as of the date first above written.

LANDLORD:

TC TORREY PINES, LLC, a Delaware limited liability company

		
	By:
	TC Torrey Pines Manager, LLC, a Delaware limited liability company, its sole Member

		
	By: 
	Trammell Crow Company Acquisitions II, L.P., a Delaware limited partnership, its sole Member

		
	By:
	Trammell Crow Acquisitions I-II GP, L.P., a Delaware limited partnership, its General Partner

23

		
	By:
	Trammell  Crow Acquisitions I-II, Inc., a Delaware corporation, its General Partner

By:  /s/ JD Dell                                        
Name: JD Dell                                         
Its:                                                            
Dated: 4/27/09                                         

TENANT:

eBIOSCIENCE, INC., a California corporation

By: /s/ Todd R. Nelson                                                       
Todd R. Nelson, Chief Executive Officer
Dated: 4-23-09       

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EXHIBIT A

PLAN OF PREMISES

Exhibit A-1

EXHIBIT B

CONFIRMATION   OF COMMENCEMENT  DATE

____________________, 2009

1.                                                     
                
                
                        
                

Re:  Lease Agreement (the "Lease") dated ____________ 2009, between TC TORREY  PINES, LLC,   a  Delaware  limited  liability  company  ("Landlord"),  and eBIOSCIENCE, INC., a California corporation ("Tenant").    Capitalized terms used herein but not defined shall be given the meanings assigned to them in the Lease.

Ladies and Gentlemen:

Pursuant to Section 3(a) of the above-referenced Lease, Landlord and Tenant agree as follows:

1.Condition of Premises.   Subject to all terms and conditions of the Lease, including Sections 1 and 23, Tenant has accepted possession of the Premises pursuant to the Lease. Any improvements required by the terms of the Lease (if any) to be made by Landlord have been completed to the full and complete satisfaction of Tenant in all  respects, and  Landlord" has  fulfilled  all  of  its duties under  the Lease with respect  to such improvements. Furthermore, Tenant acknowledges that Landlord has performed  all of its obligations to be performed as of the Commencement Date.

2.Commencement  Date.  The Commencement Date of the Lease is ____________

3.Expiration Date.  The Expiration Date of the Lease is _____________

4.Contact Person.  Tenant's contact person in the Premises is:

                
                
                
                
Attention                
Telephone:                 
Telecopy:                 

5.Ratification. Tenant hereby ratifies and confirms its obligations under the Lease, and represents and warrants to Landlord that it has no defenses thereto.  Additionally, Tenant further confirms and ratifies that, as of the date hereof, (a) the Lease is and remains in full force and effect, and (b) Tenant has no claims, counterclaims, set-offs or defenses against Landlord arising out of the Lease or in any way relating thereto or arising out of any other transaction between Landlord and Tenant.

6.Binding Effect; Governing  Law.  Except as modified hereby, the Lease shall remain in  full effect and this letter shall be binding upon Landlord  and Tenant and their respective successors and assigns.   If any inconsistency exists or arises between the terms of this letter and the terms of the Lease, the terms of this letter shall prevail.  This letter shall be governed by the laws of the State of California.

Exhibit B-1

Please indicate your agreement to the above matters by signing this letter in the space indicated below and returning an executed  original  to us.

Sincerely,

LANDLORD:

TC TORREY PINES, LLC, a Delaware limited liability company

By:    TC Torrey Pines Manager, LLC, a Delaware limited liability company, its sole Member

By:     Trammell Crow Company Acquisitions II, L.P., a Delaware limited partnership, its sole Member

By:    Trammell Crow Acquisitions I-II GP, L.P., a
Delaware limited partnership, its General Partner

By:    Trammell  Crow Acquisitions I-II, Inc., a Delaware corporation, its General Partner

By:                     
Name:                     
Its:                     
Dated:                     

Agreed and accepted:

TENANT:

eBIOSCIENCE, INC., a California corporation

By:                         
Todd R. Nelson, Chief Executive Officer

Exhibit B-2

EXHIBIT C

FORM OF TENANT ESTOPPEL CERTIFICATE

The  undersigned    is the  Tenant  under  the  Lease  (defined   below)  between   TC  TORREY    PINES,   LLC,   a Delaware   limited  liability  company,   as Landlord,   and  eBIOSCIENCE,     INC.,   a California   corporation,   as Tenant, for the Premises  known  as 10240 Science Center Drive, San Diego, California, and hereby certifies as follows:

1.The Lease  consists of the original Lease Agreement dated as of __________,  2009, between Tenant" and Landlord and the following amendments or modifications thereto (if none, please state "none"):

                                                                                                                    

The documents listed above are herein collectively referred to as the "Lease"  and represent the entire agreement between the parties with respect to the Premises.  All capitalized terms used herein but not defined shall be given the meaning assigned to them in the Lease.

2.The Lease is in full force and effect and has not been modified, supplemented or amended in any way except as provided in Section 1 above.

3.The Term  commenced on  _______________ and the Term  expires,  excluding any renewal options, on ______________ Tenant has _______ options to renew  the Term for period of ______________ as set forth in the Lease.  Tenant has no option to purchase all or any part of the Premises or the Building or, except as expressly set forth in the Lease, any option to terminate  or cancel the Lease.

4.Tenant currently occupies the Premises described in the Lease and Tenant has not transferred, assigned, or sublet any portion of the Premises nor entered into any license or concession agreements with respect thereto except as follows (if none, please state "none"):

                                                                                                                    

5.All monthly installments of Basic Rent and all Additional Rent have been paid when due through _______________.  The current monthly installment of Basic Rent is _____________ Dollars ($____________)

6.All conditions of the Lease to be performed by Landlord necessary to the enforceability of the Lease have been satisfied and Landlord is not in default thereunder. In addition, Tenant has not delivered any notice to Landlord regarding a default by Landlord thereunder.

7.As of the date hereof, there are no existing defenses or offsets, or, to Tenant's knowledge, claims or any basis for a claim, that the undersigned has against Landlord and no event has occurred and no condition exists, which, with the giving of notice or the passage of time, or both, will constitute a default under the Lease.
8.No Basic Rent or Additional Rent has been paid more than thirty (30) days in advance (except as and no security deposit has been delivered to Landlord except the sum of Dollars ($____________).  

9.If tenant is a corporation, partnership or other business entity, each individual executing this Estoppel Certificate on behalf of Tenant hereby represents and warrants that Tenant is a duly formed and existing entity in the State of California and that Tenant has full right and authority to execute and deliver this Estoppel Certificate and that each person signing on behalf of Tenant is authorized to do so.

Exhibit C-1

10.There are no actions pending against Tenant under any bankruptcy or similar laws of the United States or any state.

11.Other than in compliance with all applicable Laws and incidental to the ordinary course of the use of the Premises  and in  full compliance with the provisions  of this Lease, Tenant has not used or  stored any Hazardous Materials in the Premises.

12.All tenant improvement work to be performed by Landlord under the Lease has been completed in accordance with the Lease and has been accepted by the undersigned and all reimbursements and allowances due to the undersigned under the Lease in connection with any tenant improvement work (if any) have been paid in full.

Tenant acknowledges that this Estoppel Certificate may be delivered to Landlord, Landlord's Mortgagee or to a prospective mortgagee or prospective purchaser, and their respective successors and assigns, and acknowledges that Landlord, Landlord's  Mortgagee and/or such prospective mortgagee or prospective purchaser will be relying upon the statements contained herein in disbursing loan advances or making a new loan or acquiring the Premises and that receipt by it of this certificate is a condition of disbursing loan advances or making such loan or acquiring the Premises.

Executed as of _______________________, 200_.

TENANT:

eBIOSCIENCE, INC., a California corporation

By:                         
Todd R. Nelson, Chief Executive Officer

Exhibit C-2

EXHIBIT D

RENEWAL OPTION

1.Option  Right.   Landlord hereby grants the Tenant one (1) option (the "Option")  to extend the Term for a period of five (5) years (the "Option  Term"),  on the terms and conditions set forth in this Exhibit  D. The Option shall be exercisable only by notice delivered by Tenant to Landlord as provided below, provided that, as of the date of delivery of such Notice, (i) no Event of Default (on the part of Tenant) exists under this Lease, (ii) Tenant has not subleased more than fifty percent (50%) of the Premises and is in possession of the Premises (to the extent not subleased), and (iii) there has been no material adverse change in Tenant's financial condition during the prior  twelve  (12) month  period  (the  foregoing  items  (i) through  (iii) collectively  constituting  the  "Exercise Conditions").   Upon the proper exercise of such Option, and provided that, as of the end of the Term, the Exercise Conditions have all been satisfied, the Term shall be extended for the time period set forth above.

2.Option Rent.  The Basic Rent payable by Tenant during the Option Term (the "Option  Rent") shall be equal to ninety-five percent (95%) of the "Market  Rent"  as such Market Rent is determined pursuant to Section 5 below. The calculation of the Market Rent shall be derived from a review of, and comparison to, the ''Net Equivalent Lease Rates" of the "Comparable Transactions", as provided for in Section 5 below, and thereafter, the Market Rent fot the first (1st) Lease Year of the Option Term shall be stated as a "Net Equivalent Lease Rate" for each Lease Year during the Option Term.  Notwithstanding the foregoing, the Market Rent shall not be less than the Basic Rent payable during the last month of the initial Term.

3.Exercise  of Option.   The Option shall be exercised by Tenant, if at all, only in the manner set forth in this Exhibit D.  Tenant shall deliver notice (the ''Exercise  Notice") to Landlord not more than fifteen (15) months nor less than twelve (12) months prior to the· expiration of the Term, stating that Tenant is exercising its Option.  Within ten (10) business days after receipt by Landlord of the Exercise. Notice, Landlord shall deliver to Tenant Notice of Landlord's calculation of the Market Rent (the "Landlord's   Option Rent Calculation").   Tenant shall deliver notice (the "Tenant Response Notice") to Landlord on or before the date which is thirty (30) days after Tenant's receipt of Landlord's Option Notice Calculation (the "Tenant  Response Date"), stating that (A) Tenant is accepting  Landlord's  Option  Rent  Calculation  as  the  Market Rent,  or (B) rejecting  Landlord's  Option  Rent Calculation and setting forth Tenant's  calculation of the Market Rent (the "Tenant's   Option  Rent Calculation"). If Tenant does not give notice to Landlord of its election of option (A) or (B) by the Tenant Response Date, Tenant will conclusively be deemed to have elected option (A).  Within ten (10) business days of its receipt of the Tenant Response Notice,  Landlord may, at its option,  accept the Market Rent contained in the Tenant's  Option Rent Calculation.  If within such time period, Landlord does not affirmatively accept or Landlord rejects the Market Rent specified in the Tenant's Option Rent Calculation, the parties shall follow the procedure, and the Market Rent shall be determined as set forth in Section 4 below.

4.Determination of Market  Rent.   In the event that neither the Tenant's Option Rent Calculation or the Landlord's Option Rent Calculation are accepted by both Landlord and Tenant, Landlord and Tenant shall attempt to agree upon the Market Rent using reasonable good-faith efforts.  If Landlord and Tenant fail to reach agreement within thirty (30) days following Landlord's  objection or deemed objection to the Tenant's Option Rent Calculation (the "Outside  Agreement  Date"),  then (i) in connection with the Option Rent, Landlord's Option Rent Calculation  and  Tenant's  Option Rent  Calculation,  each as  previously  delivered to  the  other party,  shall  be submitted to the arbitrators pursuant to this Section 4, and (ii) in connection with any other contested calculation of Market Rent, the parties shall each make a separate determination of the Market Rent and shall submit the same to the  arbitrators pursuant to this Section 4.   The submittals shall be made concurrently with the selection of the arbitrators pursuant to this Section 4 and shall be submitted to arbitration in accordance with Section 4(a) through 4(f) below, but subject to the conditions, when appropriate, of Section 3 above.

(a)Landlord and Tenant shall each appoint one arbitrator who shall by profession be a real estate broker, appraiser or attorney who shall have been active over the five (5) year period ending on the date of such appointment in the leasing (or appraisal, as the case may be) of the Comparable Buildings (as defined herein). The determination of the arbitrators shall be limited solely to the issue of whether Landlord's or Tenant's submitted Market Rent, is the  closest to the actual Market Rent as determined by the arbitrators, taking into account the requirements  

Exhibit D-1

of  Section 2  above.   Each such  arbitrator  shall be  appointed within  fifteen  (15) days  after the applicable    Outside   Agreement    Date.    Landlord   and  Tenant   may   consult  with  their  selected   arbitrators   prior  to appointment   and may  select  an arbitrator  who  is favorable  to  their respective   positions.    The  arbitrators   so selected by Landlord  and Tenant  are referred  to herein  as the "Advocate   Arbitrators".

(b)The two Advocate Arbitrators so appointed shall be specifically required within ten (10) days of the date of the appointment of the last appointed Advocate Arbitrator to agree upon and appoint a third arbitrator  ("Neutral   Arbitrator")    who  shall  be  qualified  under  the  same  criteria  set  forth  hereinabove  for qualification of the two Advocate Arbitrators except that neither the Landlord or Tenant or either party's Advocate Arbitrator  may, directly  or indirectly, consult with the Neutral  Arbitrator prior to or subsequent to  his or her appearance; provided, however, the Neutral Arbitrator shall be an attorney or a retired judge (as opposed to a real estate broker or appraiser), and such attorney or retired judge shall retain an appraiser (the "Neutral  Appraiser")  to assist such Neutral Arbitrator (which Neutral Appraiser shall be selected by the Advocate Arbitrators).  The Neutral Appraiser shall be retained for the sole purpose of advising and assisting the Neutral Arbitrator, and such Neutral Appraiser shall not have an independent vote as to whether Landlord's or Tenant's submitted Market Rent is closest to the Market Rent.  The Neutral Arbitrator shall be retained via an engagement letter jointly prepared by Landlord's counsel and Tenant's counsel.

(c)The parties shall, in connection with the determination of the Market Rent, enter into an arbitration agreement (the "Arbitration Agreement")  which shall set forth the following:  (i) each party's final and binding Market Rent determination, (ii) an agreement to be signed by the Neutral Arbitrator, the form of which agreement shall be attached as an Exhibit to the Arbitration Agreement, whereby the Neutral Arbitrator shall agree to undertake the arbitration and render a decision in accordance with the terms of this Lease, as modified by the Arbitration Agreement, (iii) instructions to be followed by the Neutral Arbitrator when conducting such arbitration, which instructions shall be mutually and reasonably prepared by Landlord and Tenant and which instructions shall be consistent with the terms and conditions of this Lease, (iv) that Landlord and Tenant shall each have the right to submit to the Advocate Arbitrator (with a copy to the other party), on or before a date agreed upon by Landlord and Tenant, an advocate   statement (and any other information such party deems. relevant) prepared by or on behalf of Landlord and Tenant, as the case may be, in support of Landlord's or Tenant's respective Market Rent determination (the "Briefs"),  (v) that  within three (3)  business  days following Landlord's  and Tenant's  exchange of Briefs, Landlord and Tenant shall each have the right to provide the Neutral Arbitrator (with a copy to the other party) with a written rebuttal to the other party's Brief (the "First Rebuttals");  provided, however, such First Rebuttals shall be limited to the facts and arguments raised in the other party's Brief and shall identify clearly which argument or fact of the other party's  Brief is intended to he rebutted, (vi) that within three (3) business days following Landlord's and/or Tenant's receipt of the other party's First Rebuttal, Landlord and Tenant, as applicable, shall have the right to provide the Neutral Arbitrator (with a copy to the other party) with a written rebuttal to the other party's  First Rebuttal  (the "Second  Rebuttals");   provided, however, such Second Rebuttals shall be limited to the facts and arguments raised in the other party's  First Rebuttal and shall identify clearly which argument or fact of the other party's  First Rebuttal is intended to be rebutted, (vii) the date: time and location of the arbitration, which shall be mutually and reasonably agreed upon by Landlord and Tenant, taking into consideration the schedules of the Neutral Arbitrator, the Neutral Appraiser, and the Advocate Appraisers, which date shall in any event be within fifteen (15) business  days following the  appointment of  the Neutral  Arbitrator, (viii) that no discovery shall take place  in connection with the arbitration without the prior approval of the Neutral Arbitrator, (ix) that neither the Neutral Arbitrator nor the Neutral  Appraiser shall be allowed to undertake an independent investigation or consider any factual information other than presented by Landlord or Tenant (except that the Neutral Arbitrator and the Neutral Appraiser, with representatives  from each of Landlord and Tenant, shall have the right to visit the Comparable Buildings), (x) the specific persons that shall be allowed to attend the arbitration, (xi) Tenant shall have the right to present oral arguments to the Neutral Arbitrator at the arbitration for a period of time not to exceed three (3) hours ("Tenant's Initial Statements"),  (xii) following Tenant's Initial Statement, Landlord shall have the right to present oral  arguments to the  Neutral Arbitrator  at the  arbitration for a period of time not to  exceed three  (3)  hours ("Landlord's Initial Statements"),  (xiii) following Landlord's  Initial Statements, Tenant shall have up to two (2) additional hours to present additional arguments and/or to rebut the arguments of Landlord (“Tenant's Rebuttal Statement"),   (xiv) following Tenant's Rebuttal Statement, Landlord shall have up to two (2)  additional hours to present additional arguments and/or to rebut the arguments of Tenant ("Landlord's Rebuttal Statement"),  (xv) that the Neutral Arbitrator  shall render a decision ("Award")  indicating whether Landlord's  or Tenant's  submitted Market Rent is closest to the Market Rent as determined by the 

Exhibit D-2

Neutral Arbitrator, (xvi) that following notification of the Award, the Landlord's or Tenant's submitted Market Rent determination, whichever is selected by the Neutral Arbitrator   as being  closest  to  the  Market   Rent,  shall  become  the  then  applicable   Market  Rent,  and  (xvii)  that  the decision  of the Neutral  Arbitrator  shall  be binding  on Landlord  and Tenant.

(d)If either Landlord or Tenant fail to appoint an Advocate Arbitrator within fifteen (15) days  after the  applicable Outside  Agreement Date,  either party  may  file a petition  with  any  court of proper jurisdiction in San Diego County, California, to appoint such Advocate Arbitrator subject to the criteria in Section 4 of this Lease, or if he or she refuses to act, either party may petition any judge having jurisdiction over the parties to appoint such Advocate Arbitrator.

(e)If the two Advocate Arbitrators fail to agree upon and appoint the Neutral Arbitrator, then either party may file a petition in any court of proper jurisdiction in San Diego County, California, to appoint the Neutral Arbitrator, subject to criteria in Section 4(a) above, or if he or she refuses to act, either party may petition any judge having jurisdiction over the parties to appoint such arbitrator.

(f)The costs of arbitration shall be shared by Landlord and Tenant equally.

5.Market Rent Analysis.  When determining Market Rent, the following rules and instructions shall be followed.

(a)Relevant  Factors.   The "Comparable Transactions" shall be the "Net Equivalent Lease Rates" per Rentable square foot, at which tenants, are, pursuant to transactions consummated within the period occurring between twenty-four (24) months and twelve (12) months prior to the commencement of the Option Term (provided that if there are not enough Comparable Transactions to make a determination of Market Rent, then such period shall be extended to the period occurring between twenty-four (24) months. and six (6) months prior to the commencement of the Option Term), leasing non-sublease,  non-encumbered space comparable  in location and quality to the Premises and consisting of not less than 40,000 Rentable square feet for a term of between five (5) and ten  (10) years for office/laboratory use,  in an arm's-length  transaction, which comparable  space is located  in "Comparable Buildings".  The terms of the Comparable Transactions shall be calculated as a "Net Equivalent Lease Rate"  pursuant  to the terms of this  Section 5, and  shall take into  consideration only the  following terms and concessions:  (i) the Rental rate and escalations for the Comparable Transactions, (ii) the amount of parking Rent per parking space (if any or the fact that parking is provided without charge) paid in the Comparable Transactions, (iii) Operating Costs and Tax Expense protection  granted in such Comparable Transactions such as a base year or expense stop (although for each such Comparable Transaction the base Rent shall be adjusted to a triple net base Rent using reasonable estimates of operating costs and taxes as determined by Landlord for each such Comparable Transaction);  (iv) Rental  abatement  concessions,  if  any, being  granted  such tenants  in  connection with  such comparable space, and (v) any all other monetary concessions (including the value of any signage), if any, being granted such tenants in connection with such Comparable Transactions.

(b)Tenant Security.  The Market  Rent  shall additionally include a determination as to whether, and if so to what extent, Tenant must provide Landlord with financial security, such as a letter of credit or guaranty, for Tenant's Rent obligations during the Option Term.  Such determination shall be made by reviewing the extent of financial security then generally being imposed in Comparable Transactions from tenants of comparable financial condition and credit history to the then existing financial condition and credit history of Tenant (with appropriate adjustments to account for differences in the then-existing financial condition of Tenant and such other tenants, and giving reasonable consideration to Tenant's prior performance history during the Lease Term).

(c)Comparable  Buildings.   For purposes of this Lease, the term "Comparable   Buildings" shall mean  first-class, single-tenant buildings  comparable  to the Premises in terms of  (based upon the date of completion of construction or major renovation), design characteristics, quality of construction, level of services and amenities, size and appearance, availability to lease the entire building and parking areas and are located in the San Diego, California area (the "Comparable   Area").

Exhibit D-3

(d)Methodology For Reviewing And Comparing The  Comparable  Transactions. In order to analyze the Comparable Transactions based on the factors to be considered in calculating Market Rent, and given that the Comparable Transactions may vary in terms of length or term, Rental rate, concessions, etc., the following  steps shall be taken  into consideration to "adjust"  the  objective data from each of the Comparable Transactions.  By taking this approach, a "Net  Equivalent Lease  Rate" for each of the Comparable Transactions shall be determined using the  following steps to adjust the Comparable Transactions, which will allow for an "apples to apples" comparison of the Comparable Transactions.

(i)    The contractual Rent payments for each of the  Comparable Transactions should be arrayed monthly or annually over the lease term. All Comparable  Transactions should  be adjusted to simulate a net Rent structure, wherein the tenant is responsible for the payment of all property operating expenses in a manner consistent with this Lease. This  results in the estimate  of Net  Equivalent Rent received by each landlord for each  Comparable  Transaction being expressed as a  periodic  net Rent payment.

(ii)     Any free Rent  or similar  inducements   received  over  time  should  be deducted in the time period in which they occur, resulting in the net cash flow arrayed over the lease term.

(iii)     The resultant net cash flow from the lease should be then discounted (using a reasonable discount rate that is reflective of market conditions at the time) to the lease commencement date, resulting in a net present value estimate.

(iv)     From the net present value, up front inducements (improvements allowances and other concessions) and leasing commissions should be deducted.  These items should be deducted directly, on a "dollar for dollar" basis, without discounting since they are typically incurred at lease commencement, while Rent (which is discounted) is a future receipt.

(v)     The net present value should then be amortized back over the lease term as a level monthly or annual net Rent payment using the same annual discount rate used in the present value analysis. This calculation will result in a hypothetical level or even payment over the option period, termed the ''Net Equivalent Lease Rate" (or constant equivalent in general financial terms).

(e)Use Of Net Equivalent Lease Rates For Comparable Transactions.  The  Net Equivalent Lease Rates for the Comparable Transactions shall then be used to reconcile, in a manner usual and customary for a real  estate appraisal process,  to a conclusion of Market Rent which  shall be stated as a Net Equivalent Lease Rate applicable to each Lease Year of the Option Term.

Exhibit D-4

EXHIBIT E

APPROVED   VENDORS   LIST

1.   Sundown Lighting & Electrical
2.    JJJ Enterprises
3.    Reliable Elevator
4.    Universal Protection Service
5.    Water Systems Services Company
6.    eBioscience Facilities Department
7.    Pacific Rim
8.    PureTec
9.    Tridnet
10. X Controls
11. Amtech
12. Qualtec
13.  Cintas
14.  ISS: Janitorial Service
15. CCS California Commercial Services
16. Valley Power
17. Miguel Perez: Landscaping
18. County Burner
19. Schmidt Fire Protection
20.  Waste Management
21.  DenCoy, Inc. dba A+ Window Cleaning
22.  Pestgon Inc.
23.  Paragon Services
24.  Cannon Pacific
25.  The Brickman Group
26.  Lot Management

Exhibit E-1

EXHIBIT F

LEASED PERSONAL PROPERTY

1)   All security  computers  located in room #1000A

2)   All tables in ground floor  conference  room #1020

3)   All computer  racks located in room  # 103 8

4)   All communication   racks  located in room #1028, 1013,2009

5)   UPS unit  located in room #1012

6)   Refrigerators  located  in rooms  #1011, 1083,2038

7)   Two Conference room screens  located  in room #2001*

8)   All white boards and cork boards  located  throughout  the building  in various  offices

* Note:  There is one missing conference room screen (in a different room) which will be replaced by Landlord, at its sole expense, prior to the Commencement Date.

Exhibit F-1ex10x1.htm

Exhibit 10.1

 

	
 

PRIOR

OBLIGATION

INFORMATION

 

	
LOAN NUMBER

	
ACCT. NUMBER

	
NOTE DATE

	
NOTE AMOUNT

	
MATURITY DATE

	  	  	  	  	  
	
8925542

	
111133238

	
07/05/02

	
$3,250,000.00

	
07/16/13

 

	  	
LOAN NUMBER

	
ACCT. NUMBER

	
MODIFICATION DATE

	
NOTE AMOUNT

	
 

AMENDED

	
8925542

	
102648535

	
April 8, 2013

	
$1,584,443.28

 

	
OBLIGATION

INFORMATION

	
MATURITY DATE

	
INDEX (w/margin)

	
INTEREST RATE

	
INITIALS

 

	  	
04/16/18

	
Not Applicable

	
3.950%

	
ALJ

	  	  	  	  	  
	  	  	
Creditor Use Only

	  	  

 

	
DEBT MODIFICATION AGREEMENT

 

DATE AND PARTIES.  The date of this Debt Modification Agreement (Modification) is April 8, 2013. The parties and their addresses are:

 

LENDER:

FIRSTBANK

10403 West Colfax Avenue

Lakewood, CO 80215

Telephone: (303) 232-2000

 

BORROWER:

VENAXIS, INC., F/K/A ASPENBIO, INC.

a Colorado Corporation

1585 South Perry Street

Castle Rock, CO 80104

 

1.  DEFINITIONS. In this Modification, these terms have the following meanings:

 

A.  Pronouns.  The pronouns “I,” “me,” and “my” refer to each Borrower signing this Modification, individually and together with their heirs, executors, administrators, successors, and assigns, and each other person or legal entity (including guarantors, endorsers, and sureties) who agrees to pay this Loan. “You” and “your” refer to the Lender, with its participants or syndicators, successors and assigns, or any person or entity that acquires an interest in the Modification or the Prior Obligation.

 

B.  Amended Obligation.  Amended Obligation is the resulting agreement that is created when the Modification amends the Prior Obligation.  It is described above in the AMENDED OBLIGATION INFORMATION section.

 

C.  Loan.  Loan refers to this transaction generally. It includes the obligations and duties arising from the terms of all documents prepared or submitted in association with the Prior Obligation and this modification, such as applications, security agreements, disclosures, notes, agreements, and this Modification.

 

D.  Modification.  Modification refers to this Debt Modification Agreement.

 

E.  Prior Obligation.  Prior Obligation refers to my original agreement described above in the PRIOR OBLIGATION INFORMATION section, and any subsequent extensions, renewals, modifications or substitutions of it.

 

2.  BACKGROUND.  You and I have previously entered into a Prior Obligation.  As of the date of this Modification, the outstanding, unpaid balance of the Prior Obligation is $1,584,443.28.  Conditions have changed since the execution of the Prior Obligation instruments.  In response, and for value received, you and I agree to modify the terms of the Prior Obligation, as provided for in this Modification.

 

3.  CONTINUATION OF TERMS.  I agree and understand that all other terms and provisions in the Prior Obligation survive and continue in full force and effect, except to the extent that they are specifically and expressly amended by this Modification.  The express amendment of a term does not amend related or other terms - even if the related or other terms are contained in the same section or paragraph of the Prior Obligation.  For illustration purposes only, a modification of the interest rate to be paid during the term of the loan would not modify the default rate of interest even though both of those terms are described in the Prior Obligation in a common section titled “Interest”.  The term “Prior Obligation” includes the original instrument and any modifications prior to this Modification.

 

4.  TERMS.  The Prior Obligation is modified as follows:

 

A.  Interest.  Our agreement for the payment of interest is modified to read:

 

(1)  INTEREST.  Interest will accrue on the unpaid Principal balance of the Loan at the rate of 3.950 percent (Interest Rate).

 

(a)  Interest After Default.  If you declare a default under the terms of the Loan, including for failure to pay in full at maturity, you may increase the Interest Rate otherwise payable as described in this section.  In such event, interest will accrue on the unpaid Principal balance of the Loan at 36.000 percent until paid in full.

 

B.  Maturity and Payments.  The maturity and payment provisions are modified to read:

 

(1)  PAYMENT.  I agree to pay the Loan in 60 payments.  The Loan is amortized over 180 payments.  I will make 59 payments of $11,736.51 beginning on May 16, 2013, and on the 16th day of each month thereafter.  A single “balloon payment” of the entire unpaid balance of Principal and interest will be due April 16, 2018.

Payments will be rounded to the nearest $.01.  With the final payment I also agree to pay any additional fees or charges owing and the amount of any advances you have made to others on my behalf.  Payments scheduled to be paid on the 29th, 30th or 31st day of a month that contains no such day will, instead, be made on the last day of such month.

 

	
Venaxis, Inc., F/K/A Aspenbio, Inc.

Debt Modification Agreement

CO/4ALDOUGHE00000000000654011050613N

	Wolters Kluwer Financial Services ©1996, 2013 Bankers SystemsTM	
  Page 1

 

  

  

  

 

 

 

 

C.  Fees and Charges.  As additional consideration for your consent to enter into this Modification, I agree to pay, or have paid these additional fees and charges:

 

(1)  Nonrefundable Fees and Charges.  The following fees are earned when collected and will not be refunded if I prepay the Loan before the scheduled maturity date.

 

Loan Origination.  A(n) Loan Origination fee of $7,922.22 payable from separate funds on or before today’s date.

Environmental.  A(n) Environmental fee of $400.00 payable from separate funds on or before today’s date.

Recording - Mortgage.  A(n) Recording - Mortgage fee of $16.00 payable from separate funds on or before today’s date.

Flood Certification.  A(n) Flood Certification fee of $7.00 payable from separate funds on or before today’s date.

Appraisal.  A(n) Appraisal fee of $3,200.00 payable from separate funds on or before today’s date.

Abstract or Title Search.  A(n) Abstract or Title Search fee of $25.00 payable from separate funds on or before today’s date.

 

(2)  Late Charge.  If a payment is more than 10 days late, I will be charged 5.000 percent of the Unpaid Portion of Payment or $100.00, whichever is less.  I will pay this late charge promptly but only once for each late payment.

 

D.  Prepayment Change.  Conditions for the prepayment of the Loan are modified to read:

 

(1)  I may prepay the Loan under the following terms and conditions.  If the principal balance of this note is reduced by more than thirty three percent (33%) of the original loan amount above and beyond the regularly scheduled principal payments in any calendar year, I will pay a prepayment premium.  The prepayment premium will be equal to 1% of the amount of such excess principal paid.  The prepayment premium shall be paid simultaneously with the prepayment.  Any prepayment shall be applied, first, to the prepayment premium; second, to fees and costs of Lender; third, to default interest and late charges; fourth, to accrued and unpaid interest; and fifth, to the principal amount outstanding.  This penalty will only be assessed if refinanced with another lender.  Any partial prepayment will not excuse any later scheduled payments until I pay in full.

 

E.  Insurance.  I understand and agree that any insurance premiums paid to insurance companies as part of this Amended Obligation will involve money retained or paid to you as commissions or other remuneration.

 

(1)  Flood Insurance.  Flood insurance is not required at this time.  It may be required in the future should the property be included in an updated flood plain map.  If required in the future, I may obtain flood insurance from anyone I want that is reasonably acceptable to you.

 

5.  RELEASE OF PARTY.  The parties named below have been released from all obligations and duties arising under the Loan:

A.  Guarantor

(1)  Roger D. Hurst , under the guaranty between guarantor and Lender, dated July 5, 2002.

(2)  Cambridge Holdings, LTD, a Colorado Corporation, under the guaranty between guarantor and Lender, dated June 13, 2003.

 

6.  WAIVER.  I waive all claims, defenses, setoffs, or counterclaims relating to the Prior Obligation, or any document securing the Prior Obligation, that I may have.  Any party to the Prior Obligation that does not sign this Modification, shall remain liable under the terms of the Prior Obligation unless released in writing by you.

 

7.  REASON(S) FOR MODIFICATION.  Refinance balloon payment.

 

8.  SIGNATURES.  By signing, I agree to the terms contained in this Modification. I also acknowledge receipt of a copy of this Modification.

 

 

BORROWER:

 

Venaxis, Inc., F/K/A Aspenbio, Inc.

 

 

 

By   /s/ Stephen T. Lundy

Stephen T. Lundy, CEO

 

 

	
Venaxis, Inc., F/K/A Aspenbio, Inc.

Debt Modification Agreement

CO/4ALDOUGHE00000000000654011050613N

	Wolters Kluwer Financial Services ©1996, 2013 Bankers SystemsTM	
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