Document:

Exhibit 10. 4

 

Confidential Materials omitted and filed
separately with the

Securities and Exchange Commission. 
Asterisks denote omissions.

 

FIRST AMENDMENT TO DISTRIBUTION AGREEMENT

 

This FIRST AMENDMENT TO DISTRIBUTION AGREEMENT, is made and entered into
as of February 24, 2004 (this “Amendment”), by and among Edwards
Lifesciences LLC, a Delaware limited liability company (“Edwards”), PLC Systems
Inc., a Yukon Territory corporation (“PLC Parent”), and PLC Medical Systems,
Inc., a Delaware corporation (“PLC”).  Certain capitalized terms used herein have the
meanings ascribed to them in the Agreement (defined below).

 

RECITALS

 

WHEREAS, the parties hereto have previously entered into a Distribution
Agreement, dated as of January 9, 2001, by and among Edwards, PLC Parent
and PLC (the “Agreement”); and

 

WHEREAS, the parties hereto desire to amend certain provisions of the
Agreement pursuant to Section 11.11 thereof.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

1.                                       AMENDMENT
OF AGREEMENT.  The Agreement is hereby
amended as follows:

 

1.1.                              Section 7.1(a) of
the Agreement is hereby amended and restated in its entirety to read as
follows:

 

“Edwards shall purchase the TMR Disposable Kits from PLC at 36.5% of
the Average End User Price.  The
“Average End User Price” shall mean the average of the actual sales price for
each TMR Disposable Kit sold during a calendar quarter.  Edwards shall calculate the Average End User
Price and deliver such calculation to PLC within 15 days after the end of each
quarter.”

 

1.2.                              The first sentence of
Section 7.1(b) of the Agreement is hereby amended and restated in its
entirety to read as follows:

 

 

“PLC shall bill TMR Disposable Kits to Edwards on a preliminary basis
at 36.5% of the Estimated End User Price.”

 

1.3                                 Section 8.1 of
the Agreement is hereby deleted in its entirety and restated to read as
follows:

 

“Term and Renewal.  This Agreement shall commence on the date
hereof (the “Effective Date”) and shall continue for the enforceable life of
the last to expire of the United States patents held by PLC related to the
Products.”

 

2.                                       PAYMENT
OF CONSIDERATION FOR AMENDMENT.  In
consideration of the amendments to the Agreement contained in Section 1
above, concurrently with execution of this Amendment, Edwards will pay to PLC
the sum of four million five hundred thirty-three thousand three hundred
thirty-three dollars ($4,533,333) by wire transfer of immediately available and
non-refundable funds.

 

3.                                       MISCELLANEOUS.

 

3.1                                 Governing Law.  This Amendment shall be governed by,
interpreted under, and construed in accordance with the internal laws of the
State of New York, including, without limitation, Sections 5-1401, 5-1402 of
the New York General Obligations Law and New York Civil Practice Laws and Rules
327(b).

 

3.2                                 Counterparts.  This Amendment may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
shall, taken together, be considered one and the same amendment, it being
understood that the parties need not sign the same counterpart.

 

3.3                                 Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
parties shall negotiate in good faith with a view to the substitution therefore
of a suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision; provided, however, that the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.

 

3.4                                 Ratification and
Reaffirmation.  Except as otherwise
expressly provided herein, the Agreement remains in full force and effect
unamended, and all of the terms and provisions of the Agreement, as modified by
this Amendment, are hereby ratified and reaffirmed by Edwards, PLC Parent and
PLC.  All references to the Agreement
contained in the Agreement shall mean the Agreement as modified hereby.

 

2

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and delivered, all as of the date first set forth above.

 

	
   

  	
  EDWARDS LIFESCIENCES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/John H. Kehl, Jr.

  	
   

  
	
   

  	
  Name:

  	
  John H. Kehl, Jr.

  
	
   

  	
  Title:

  	
  Corporate Vice President,

  Strategy and Business Development

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PLC SYSTEMS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/James G. Thomasch

  	
   

  
	
   

  	
  Name:

  	
  James G. Thomasch

  
	
   

  	
  Title:

  	
  Senior Vice President &

  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PLC MEDICAL SYSTEMS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/James G. Thomasch

  	
   

  
	
   

  	
  Name:

  	
  James G. Thomasch

  
	
   

  	
  Title:

  	
  Senior Vice President &

  Chief Financial Officer

  
							

 

3Exhibit
10.155

 

AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE – NET

(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

 

1.                                       Basic Provisions (“Basic Provisions”)

 

1.1                                 Parties: This Lease (“Lease”), dated for reference purposes
only, December 15, 1997, is made by and between The Childs Family
Investment Partnership, L.P. and The A.J. Gardner Family Trust, U/T/A 3/5/81 (“Lessor”) and The Immune Response
Corporation, a Delaware Corporation (“Lessee”),
(collectively the “Parties,” or
individually a “Party”).

 

1.2                                 Premises: That certain real property,
including all improvements therein or to be provided by Lessor under the terms
of this Lease, and commonly known as 5931, Darwin Court, Carlsbad, California
92008 located in the County of San Diego, State of California and generally
described as (describe briefly the nature of the property and, if applicable,
the “Project”, if the property is
located within a Project) An approximately 31,200 square foot concrete tilt up freestanding
building and appurtances located in the Carlsbad Research Center. (See
Addendum) (“Premises”). (See also
Paragraph 2)

 

1.3.                              Term: Ten (10) years and Zero (0) months (“Original Term”) commencing See Addendum (“Commencement Date”) and ending one
hundred twenty (120) months there after (“Expiration
Date”). (See also Paragraph 3)

 

1.4                                 Early Possession: See Addendum (“Early Possession Date”). (See also
Paragraphs 3.2 and 3.3)

 

1.5                                 Base Rent: $18,408.00 (See Addendum) per
month (“Base Rent”), payable on
the first (1st) day of each month commencing on the Commencement Date (See also
Paragraph 4)

 

ý  If this box is checked, there are provisions
in this Lease for the Base Rent to be adjusted.

 

1.6                                 Base Rent Paid Upon Execution: $18,408.00
(Eighteen Thousand Four Hundred Eight and no/100ths Dollars) as Base Rent for
the period first month following the Commencement Date.

 

1.7                                 Security Deposit: $24,024.00 (“Security Deposit”). (See also Paragraph
5)

 

1.8                                 Agreed Use: See Addendum (See also
Paragraph 6)

 

1.9                                 Insuring Party. Lessor is the “Insuring Party” unless otherwise stated
herein. (See also Paragraph 8)

 

1.10                           Real Estate Brokers: (See also Paragraph
15)

 

(a) Representation: The following real estate
brokers (collectively, the “Brokers”)
and brokerage relationships exist in this transaction (check applicable boxes):

 

ý                                    David
Onosko, CB Commercial Real Estate Group, Inc represents Lessor exclusively (“Lessor’s Broker”);

 

ý                                    William
Driscoll, CB Commercial Real Estate Group, Inc represents Lessee exclusively (“Lessee’s Broker”); or

 

o                                    represents
both Lessor and Lessee (“Dual Agency”).

 

(b)  Payment to
Brokers: Upon execution and delivery of this Lease by both Parties,
Lessor shall pay to the Broker the fee agreed to in their separate written
agreement (or if there is no such agreement, the sum of    % of the total Base Rent for the brokerage
services rendered by said Broker).

 

1.11  Guarantor.
The obligations of the Lessee under this Lease are to be guaranteed by N/A (“Guarantor”). (See also Paragraph 37).

 

1.12  Addenda
and Exhibits. Attached hereto is an Addendum or Addenda consisting
of 15 pgs through      and Exhibits 1.2, 5, 6.2, 50
and 56, all of which constitute a part of this Lease.

 

2.  Premises.

 

2.1  Letting.
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all of the terms, covenants and
conditions set forth in this Lease. 
Unless otherwise provided herein, any statement of size set forth in
this Lease, or that may have been used in calculating rental, is an
approximation which the Parties agree is reasonable and the rental based
thereon is not subject to revision whether or not the actual size is more or
less.

 

2.2  Condition.
Lessor shall deliver the Premises to Lessee broom clean and free of debris on
the Commencement Date or the Early Possession Date, whichever first occurs (“Start Date”), and, so long as the
required service contracts described in Paragraph 7.1(b) below are obtained by
Lessee within thirty (30) days following the Start Date, warrants that the
existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating
and air conditioning systems (“HVAC”), loading doors, if any, and all other
such elements in the Premises, other than those constructed by Lessee, shall be
in good operating condition on said date and that the structural elements of
the roof, bearing walls and foundation of any buildings on the Premises (the
“Building”) shall be free of material defects. If a non-compliance with said
warranty exists as of the Start Date, Lessor shall, as Lessor’s sole obligation
with respect to such matter, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Lessor’s expense. If, after the Start Date, Lessee does not give Lessor written
notice of any non-compliance with this warranty within: (i) one year* as to the
surface of the roof and the structural portions of the roof, foundations and
bearing walls, (ii) six (6) months as to the HVAC systems, (iii) thirty (30)
days as to the remaining systems and other elements of the Building, correction
of such non-compliance shall be the obligation of Lessee at Lessee’s sole cost
and expense. * as to patent defects and three (3) years as to latent defects

 

2.3  Compliance.
Lessor warrants that the improvements on the Premises comply with all
applicable laws, covenants or restrictions or record, building codes,
regulations and ordinances (“Applicable
Requirements”) in effect on the Start Date. Said warranty does not
apply to the use to which Lessee will put the Premises or to any Alterations or
Utility Installations (as defined in Paragraph 7.3 (a)) made or to be made by
Lessee. NOTE: Lessee is responsible for determining whether or not the zoning
is appropriate for Lessee’s intended use, and acknowledges that past uses of
the Premises may no longer be allowed. If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor’s expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within
six (6) months following the Start Date, correction of that non-compliance
shall be the obligation of Lessee at Lessee’s sole cost and expense. If the
Applicable Requirements are hereafter changed (as opposed to being in existence
at the Start Date, which is addressed in Paragraph 6.2(e) below) so as to
require during the term of this Lease the construction of an addition to or an
alteration of the Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Building (“Capital Expenditure”), Lessor and Lessee
shall allocate the cost of such work as follows:

 

1

 

(a) Subject to Paragraph
2.3(c) below, if such Capital Expenditures are required as a result of the
specific and unique use of the Premises by Lessee as compared with uses by
tenants in general, Lessee shall be fully responsible for the cost thereof,
provided, however that such Capital Expenditure is required during the last two
(2) years of this Lease and the cost thereof exceeds six (6) months’ Base Rent.
Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within ten (10) days after receipt of Lessee’s termination notice that
Lessor has elected to pay the difference between the actual cost thereof and
the amount equal to six (6) months’ Base Rent. If Lessee elects Termination,
Lessee shall immediately cease the use of the Premises which requires such
Capital Expenditure and deliver to Lessor written notice specifying a
termination date at least ninety (90) days thereafter. Such termination date
shall, however, in no event be earlier than the last day that Lessee could
legally utilize the Premises without commencing such Capital Expenditure.

 

(b) If such Capital
Expenditure is not the result of the specific and unique use of the Premises by
Lessee (such as, governmentally mandated seismic modifications), then Lessor
and Lessee shall allocate the obligation to pay for such costs pursuant to the
provisions of Paragraph 7.1 (c): provided, however, that if such Capital
Expenditure is required during the last two years of this Lease or if Lessor
reasonably determines that it is not economically feasible to pay its share
thereof, Lessor shall have the option to terminate this Lease upon ninety (90)
days prior written notice to Lessee unless Lessee notifies Lessor, in writing,
within ten (10) days after receipt of Lessor’s termination notice that Lessee
will pay for such Capital Expenditure. If Lessor does not elect to terminate,
and fails to tender its share of any such Capital Expenditure, Lessee may
advance such funds and deduct same, with Interest, from Rent until Lessor’s
share of such costs have been fully paid. If Lessee is unable to finance
Lessor’s share, or if the balance of the Rent due and payable for the remainder
of this Lease is not sufficient to fully reimburse Lessee on an offset basis,
Lessee shall have the right to terminate this Lease upon thirty (30) days
written notice to Lessor.

 

(c) Notwithstanding the
above, the provisions concerning Capital Expenditures are intended to apply
only to non-voluntary, unexpected, and new Applicable Requirements. If the
Capital Expenditures are instead triggered by Lessee as a result of an actual
or proposed change in use, change in intensity of use, or modification to the
Premises then, and in that event, Lessee shall be fully responsible for the
cost thereof, and Lessee shall not have any right to terminate this Lease.

 

2.4.                            Acknowledgements.
Lessee acknowledges that: (a) it has been advised by Lessor and/or Brokers
to satisfy itself with respect to the condition of the Premises (including but
not limited to the electrical, HVAC and fire sprinkler systems, security,
environmental aspects, and compliance with Applicable Requirements), and their
suitability for Lessee’s intended use, (b) Lessee has made such investigation
as it deems necessary with reference to such matters and assumes all
responsibility therefore as the same relate to its occupancy of the Premises, and
(c) neither Lessor, Lessor’s agents, nor any Broker has made any oral or
written representations or warranties with respect to said matters other than
as set forth in this Lease. In addition, Lessor acknowledges that: (a) Broker
has made no representations, promises or warranties concerning Lessee’s ability
to honor the Lease or suitability to occupy the Premises, and (b) it is
Lessor’s sole responsibility to investigate the financial capability and/or
suitability of all proposed tenants.

 

2.5.                            Lessee
as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall
be of no force or effect if immediately prior to the Start Date Lessee was the
owner or occupant of the Premises. In such event, Lessee shall be responsible
for any necessary corrective work.

 

3.                                      Term.

 

3.1                               Term.  The Commencement Date, Expiration Date and
Original Term of this Lease are as specified in Paragraph 1.3.

 

3.2.                            Early
Possession.  If Lessee totally or
partially occupies the Premises prior to the Commencement Date, the obligation
to pay Base Rent shall be abated for the period of such early possession. All
other terms of this Lease (including but not limited to the obligations to pay
Real Property Taxes and insurance premiums and to maintain the Premises) shall,
however, be in effect during such period. Any such early possession shall not
effect the Expiration Date.

 

3.3.                            Delay
in Possession. Lessor agrees to use its best commercially reasonable
efforts to deliver possession of the Premises to Lessee by December 31,
1997. If, despite said efforts, Lessor is unable to deliver possession as
agreed, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within sixty (60)
days after the Commencement Date, Lessee may, at its option, by notice in
writing within ten (10) days after the end of such sixty (60) day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said ten
(10) day period, Lessee’s  right to
cancel shall terminate. Except as otherwise provided, if possession is not
tendered to Lessee*. but minus any days of delay caused by the acts or
omissions of Lessee. If possession of the Premises is not delivered within four
(4) months after December 31, 1997, this Lease shall terminate unless
other agreements are reached between Lessor and Lessee, in writing.

 

3.4.                            Lessee
Compliance. Lessor shall not be required to tender possession of the
Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence,
Lessee shall be required to perform all of its obligations under this Lease
from and after the Start Date. including the Payment of Rent, notwithstanding
Lessor’s election to withhold possession pending receipt of such evidence of insurance.
Further, if Lessee is required to perform any other conditions prior to or
concurrent with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied.

 

4.                                       Rent.

 

4.1                                 Rent Defined.  All monetary obligations of Lessee to Lessor under the terms of
this Lease (except for the Security Deposit) are deemed to be rent (“Rent”).

 

4.2                                 Payment. 
Lessee shall cause payment of Rent to be received by Lessor in lawful
money of the Unites States, without offset or deduction, on or before the day
on which it is due.  Rent for any period
during the term hereof which is for less than one (1) full calendar month shall
be prorated based upon the actual number of days of said month.  Payment of Rent shall be made to Lessor at
its address stated herein or to such other persons or place as Lessor may from
time to time designate in writing. 
Acceptance of a payment which is less than the amount then due shall not
be a waiver of Lessor’s rights to the balance of such Rent, regardless of
Lessor’s endorsement of any check so stating.

Rent shall be payable to
LANDCO and mailed to 432 So.  Bentley
Ave Los Angeles, CA 90049-3513.

 

5.                                       Security Deposit.  Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee’s faithful performance of its
obligations under this Lease.  If Lessee
fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use,
apply or retain all or any portion of said Security Deposit for the payment of
any amount due Lessor or to reimburse or compensate Lessor for any liability,
expense, loss or damage which Lessor may suffer or incur by reason
thereof.  If Lessor uses or applies all
or any portion of said Security Deposit, Lessee shall within ten (10) days
after written request therefor deposit monies with Lessor sufficient to restore
said Security Deposit to the full amount required by this Lease. If the Base
Rent increases during the term of this Lease, Lessee shall, upon written
request from Lessor, deposit additional moneys with Lessor so that the total
amount of the Security Deposit shall at all times bear the same proportion to
the increased Base Rent as the initial Security Deposit born to the initial
Base Rent.  Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase
the Security Deposit to the extent necessary, in Lessor’s reasonable judgment,
to account for any increased wear and tear that the Premises may suffer as a
result thereof.  If a change in control
of Lessee occurs during this Lease and following such change the financial
condition of Lessee is, in Lessor’s reasonable judgment, significantly reduced,
Lessee shall deposit such additional monies with Lessor as shall be sufficient
to cause the Security Deposit to be at a commercially reasonable level based on
said change in financial condition. 
Lessor shall not be required to keep the Security Deposit separate from
its general accounts.  Within fourteen
(14) days after the expiration or termination of this Lease, if Lessor elects
to apply the Security Deposit only to unpaid Rent and otherwise within thirty
(30) days after the Premises have been vacated pursuant to Paragraph 7.4(c)
below, Lessor shall return that portion of the Security Deposit not used or
applied by Lessor.  No part of the
Security Deposit shall be considered to be held in trust, to bear interest or
to be prepayment for any monies to be paid by Lessee under this Lease.

 

6.                                       Use.

 

6.1                                 Use. 
Lessee shall use and occupy the Premises only for the Agreed use, or any
other legal use which is reasonably comparable thereto, and for no other
purpose.  Lessee shall not use or permit
the use of the Premises in a manner that is unlawful, creates damage, waste or
a nuisance or that disturbs owners and/or occupants of, or causes damage to
neighboring properties.  Lessor shall
not unreasonably withhold

 

by December 31, 1997
the April 1, 1998 date in 1.3 shall be extended by the number of days
beyond December 31, 1997 that the Lessor delivered possession.

 

2

 

or delay its consent to
any written request for a modification of the Agreed Use, so long as the same
will not impair the structural integrity of the improvements on the Premises or
the mechanical or electrical systems therein, is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall
with five (5) business days after such request give written notification of
same, which notice shall include an explanation of Lessors objections to the
change in use.

 

6.2.                              Hazardous Substances.
      (See Addendum)

 

(a)  Reportable Uses Require Consent.  The term “Hazardous Substance” as used in this
Lease shall mean any product, substance or waste whose presence, use,
manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either: (i)
potentially injurious to the public health, safety or welfare, the environment
or the Premises, (ii) regulated or monitored by any governmental authority, or
(iii) a basis for potential liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products by-products or fractions
thereof.  Lessee shall not engage in any
activity in or on the Premises which constitutes a Reportable Use of Hazardous
Substances without the express prior written consent of Lessor and timely
compliance (at Lessee’s expense) with all Applicable Requirements.  “Reportable
Use” shall mean (i) the installation or use of any above or below
ground storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and/or (iii) the
presence at the Premises of a Hazardous Substance with respect to which any
Applicable Requirements requires that a notice be given to persons entering or
occupying the Premises or neighboring properties.  Notwithstanding the foregoing, Lessee may use any ordinary and
customary materials reasonably required to be used in the normal course of the
Agreed Use, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor. 
In addition, Lessor may condition its consent to any Reportable Use upon
receiving such additional assurances as Lessor reasonably deems necessary to
protect itself, the public, the Premises and/or the environment against damage,
contamination, injury and/or liability, including, but not limited to, the
installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the
Security Deposit.

 

(b)  Duty to Inform Lessor.  If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide
Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.

 

(c)  Lessee
Remediation.  Lessee
shall not cause or permit any Hazardous Substance to be spilled or released in,
on, under, or about the Premises (including through the plumbing or sanitary
sewer system) and shall promptly at Lessee’s expense, take all investigatory
and/or remedial action reasonably recommended, whether or not formally ordered
or required, for the cleanup of any contamination of , and for the maintenance,
security and/or monitoring of the Premises or neighboring properties, that was
caused or materially contributed to by Lessee, or pertaining to or involving
any Hazardous Substance brought onto the Premises during the term of this
Lease, by or for Lessee, or any third party.

 

(d)  Lessee Indemnification.
Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders
and ground lessor, if any, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expenses, penalties, and
attorneys and consultants’ fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee, or any third party
(provided, however, that Lessee shall have no liability under this Lease with
respect to underground migration of any Hazardous Substance under the Premises
from adjacent properties unless migration is from an affiliated company).
Lessee’s obligations shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive  the expiration or termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release Lessee from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Lessor in writing at the time of
such agreement.

 

(e)  Lessor Indemnification.  Lessor and its successors and assigns shall
indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages which existed as a
result of Hazardous Substances on the Premises prior to Start Date or which are
caused by the gross negligence, or intentional acts of Lessor, its agents or
employees. Lessor’s obligations, as and when required by the Applicable
Requirements, shall include, but not be limited to, the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the expiration
or termination of this Lease.

 

(f)  Investigations and Remediations.  Lessor shall retain the responsibility and
pay for any investigations or remediation measures required by governmental
entities having jurisdiction with respect to the existence of Hazardous
Substances on the Premises prior to the Start Date. Lessee shall cooperate
fully in any such activities at the request of Lessor, including allowing
Lessor and Lessor’s agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor’s investigative and remedial
responsibilities.

 

(g)  Landlord Termination Option.  If a Hazardous Substance Condition occurs
during the term of this Lease, unless Lessee is legally responsible therefor
(in which case Lessee shall make the investigation and remediation thereof
required by the Applicable Requirements and this Lease shall continue in full
force and effect, but subject to Lessor’s rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessor’s expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to remediate
such condition exceeds twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within thirty
(30) days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition, of Lessor’s desire to terminate this Lease as of
the date sixty (60) days following the date of such notice. In the event Lessor
elects to give a termination notice, Lessee may, within ten (10) days
thereafter, give written notice to Lessor of Lessee’s commitment to pay the
amount by which the cost of the remediation of such Hazardous Substance
Condition exceeds an amount equal to twelve (12) times the then monthly Base
Rent or $100,000, whichever is greater. 
Lessee shall provide Lessor with said funds or satisfactory assurance thereof
within thirty (30) days following such commitment.  In such event, this Lease shall continue in full force and
effect, and Lessor shall proceed to make such remediation as soon as reasonably
possible after the required funds are available. If Lessee does not give such
notice and provide the required funds or assurance thereof within the time
provided, this Lease shall terminate as of the date specified in Lessor’s
notice of termination.

 

6.3                                 Lessee’s Compliance with Applicable Requirements.  Except as otherwise provided in this Lease,
Lessee, shall, at Lessee’s sole expense, fully, diligently and in a timely
manner, materially comply with all Applicable Requirements, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor’s engineers and/or consultants which relate in any
manner to the Premises, without regard to whether said requirements are now in
effect or become effective after the Start Date. Lessee shall, within ten (10)
days after receipt of Lessor’s written request, provide Lessor with copies of
all permits and other documents, and other information evidencing Lessee’s
compliance with any Applicable Requirements specified by Lessor, and shall
immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving the failure of Lessee
or the Premises to comply with any Applicable Requirements.

 

6.4                                 Inspection; Compliance.  Lessor and Lessor’s Lender and consultants
shall have the right to enter into Premises at any time, in the case of an
emergency, and otherwise at reasonable times, for the purpose of inspecting the
condition of the Premises and for verifying compliance by Lessee with this
Lease. The cost of any such inspections shall be paid by Lessor, unless a
violation of Applicable Requirements, or a contamination is found to exist or
be imminent, or the inspection is requested or ordered by a governmental authority.
In such case, Lessee shall upon request reimburse Lessor for the cost of such
inspections, so long as such inspection is reasonably related to the violation
or contamination.

 

7.                                      Maintenance;
Repairs, Utility Installations; Trade Fixtures and Alterations.

 

7.1                                 Lessee’s Obligations.

 

(a) In General.  Subject to the provisions of Paragraph 2.2 (Condition), 2.3
(Compliance), 6.3 (Lessee’s Compliance with Applicable Requirements), 7.2
(Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation),
Lessee shall, at Lessee’s sole expense, keep

 

3

 

the Premises, Utility
Installations, and Alterations in good order, condition and repair (whether or
not the portion of the Premises requiring repairs, or the means of repairing
the same, are reasonably or readily accessible to Lessee, and whether or not
the need for such repairs occurs as a result of Lessee’s use, any prior use,
the elements or the age of such portions of the Premises), including, but not
limited to, all equipment or facilities, such as plumbing, HVAC, electrical,
lighting facilities, boilers, pressure vessels, fire protection system,
fixtures, walls (interior and exterior), foundations, ceilings, roofs, floors,
windows, doors, plate glass, skylights, landscaping, driveways, parking lots,
fences, retaining walls, signs, sidewalks and parkways located in, on, or
adjacent to the Premises. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices,
specifically including the procurement and maintenance of the service contracts
required by Paragraph 7.1(b) below. Lessee’s obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state
of repair. Lessee shall, during the term of this Lease, keep the exterior
appearance of the Building in a first-class condition consistent with the
exterior appearance of other similar facilities of comparable age and size in
the vicinity, including, when necessary, the exterior repainting of the
Building.

 

(b)  Service Contracts. Lessee shall, at
Lessee’s sole expense, procure and maintain contracts, with copies to Lessor,
in customary form and substance for, and with contractors specializing and
experienced in the maintenance of the following equipment and
improvements.  (“Basic Elements”), if any, as and when
installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure vessels,
(iii) fire protection systems, (iv) landscaping and irrigation systems, (v)
roof covering and drains, and (vi) asphalt and parking lots, (vii) clarifiers
and (viii) any other equipment, if reasonably required by Lessor.  Lessee may use its own qualified personnel
with Lessor’s approval which shall not be unreasonably withheld.

 

(c)  Replacement. Subject to Lessee’s
indemnification of Lessor as set forth in Paragraph 8.7 below, and without
relieving Lessee of liability resulting from Lessee’s failure to exercise and
perform good maintenance practices, if the Basic Elements described in
Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of
50% of the cost of replacing such Basic Elements, then such Basic Elements
shall be replaced by Lessor, and the cost thereof shall be prorated between the
Parties and Lessee shall only be obligated to pay, each month during the
remainder of the term of this Lease, on the date on which Base Rent is due, an
amount equal to the product of multiplying the cost of such replacement as such
useful life is specified pursuant to Federal income tax regulations or
guidelines for depreciation thereof (including interest on the unamortized
balance as is then commercially reasonable in the judgment of Lessor’s
accountants), with Lessee reserving the right to prepay its obligation at any
time.

 

7.2                                 Lessor’s Obligations. Subject to the
provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 9 (Damage or
Destruction) and 14 (Condemnation), it is intended by the Parties hereto that
Lessor have no obligation, in any manner whatsoever, to repair and maintain the
Premises, or the equipment therein , all of which obligations are intended to
be that of the Lessee. It is the intention of the Parties that the terms of this
Lease govern the respective obligations of the Parties as to maintenance and
repair of the Premises, and they expressly waive the benefit of any statute now
or hereafter in effect to the extent it is inconsistent with the terms of this
Lease.

 

7.3                                 Utility Installations; Trade Fixtures; Alterations.
(See Addendum)

 

(a)  Definitions; Consent Required. The term “Utility Installations” refers to all floor
and window coverings, air lines, power panels, electrical distribution,
security and fire protection systems, communication systems, lighting fixtures,
HVAC equipment, plumbing, and fencing in or on the Premises. The term “Alterations” shall mean any modification of
the improvements, other than Utility Installations or Trade Fixtures, whether
by addition or deletion.  “Lessee Owned Alterations and/or Utility Installations”
are defined as Alterations and/or Utility Installations made by Lessee that are
not yet owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any
Alterations or Utility Installations to the Premises without Lessor’s prior
written consent. Lessee may, however, make non-structural Utility Installations
to the interior of the Premises (excluding the roof) without such consent but
upon notice to Lessor, as long as they are not visible from the outside, do not
involve puncturing, relocating or removing the roof or any existing walls, and
the cumulative cost thereof during this Lease as extended does not exceed
$50,000 in the aggregate or $10,000 in any one year.

 

(b)  Consent. Any Alterations or Utility
Installations that Lessee shall desire to make and which require the consent of
the Lessor shall be presented to Lessor in written form with detailed plans.
Consent shall be deemed conditioned upon Lessee’s: (i) acquiring all applicable
governmental permits, (ii) furnishing Lessor with copies of both the permits
and the plans and specifications prior to commencement of the work, and (iii)
compliance with all conditions of said permits and other Applicable
Requirements in a prompt and expeditious manner. Any Alterations or Utility
Installations shall be performed in a workmanlike manner with good and
sufficient materials. Lessee shall promptly upon completion furnish Lessor with
as-built plans and specifications. For work which costs an amount equal to the
greater of one month’s Base Rent, or $10,000, Lessor may condition its consent
upon Lessee providing a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such Alteration or Utility Installation and/or
upon Lessee’s posting an additional Security Deposit with Lessor.

 

(c)  Indemnification. Lessee shall pay, when
due, all claims for labor or materials furnished or alleged to have been
furnished to or for Lessee at or for use on the Premises, which claims are or
may be secured by any mechanic’s or materialmen’s lien against the Premises or
any interest therein.  Lessee shall give
Lessor not less than ten (10) days’ notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility.  If
Lessee shall contest the validity of any such lien, claim or demand, then
Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises
against the same and shall pay and satisfy any such adverse judgment that may
be rendered thereon before the enforcement thereof. If Lessor shall require,
Lessee shall furnish a surety bond in an amount equal to one and one-half times
the amount of such contested lien, claim or demand, indemnifying Lessor against
liability for the same. If Lessor elects to participate in any such action,
Lessee shall pay Lessor’s attorney’s fees and costs.

 

7.4                               Ownership;
Removal; Surrender; and Restoration.

 

(a)  Ownership. Subject to Lessor’s right to require
removal or elect ownership as hereinafter provided, all Alterations and Utility
Installations, made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per Paragraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises.

 

(b)  Removal. By delivery to Lessee of written
notice from Lessor not later than ninety (90) days prior to the end of the term
of this Lease, Lessor may require that any or all Lessee Owned Alterations or
Utility Installations be removed by the expiration or termination of this
Lease. Lessor may require the removal at any time of all or any part of any
Lessee Owned Alterations or Utility Installations made without the required
consent.

 

(c)  Surrender/Restoration. Lessee shall
surrender the Premises by the Expiration Date or any earlier termination date,
with all of the improvements, parts and surfaces thereof broom clean and free
of debris, and in good operating order, condition and state of repair, ordinary
wear and tear excepted. “Ordinary wear and tear” shall not include any damage
or deterioration that would have been prevented by good maintenance practice.
Lessee shall repair any damage occasioned by the installation, maintenance or removal
of Trade Fixtures, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee, and the removal , replacement, or
remediation of any soil, material or groundwater contaminated by Lessee. Trade
Fixtures shall remain the property of Lessee and shall be removed by Lessee.
The failure by Lessee to timely vacate the Premises pursuant to this Paragraph
7.4(c) without the express written consent of Lessor shall constitute a
holdover under the provisions of Paragraph 26 below.

 

8.                                      Insurance;
Indemnity.

 

8.1                               Payment for Insurance. Lessee shall pay for
all insurance required under paragraph 8 except to the extent of the cost
attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in
excess of $2,000,000 per occurrence. Premiums for policy periods commencing
prior to or extending beyond the Lease term shall be prorated to correspond to
the Lease term. Payment shall be made by Lessee to Lessor on a monthly basis
along with other estimated Triple Net Expenses.

 

8.2                               Liability
Insurance.

 

(a) Carried by Lessee. Lessee shall obtain and
keep in force a Commercial General Liability Policy of Insurance protecting
Lessee

 

4

 

and Lessor against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto.  Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an “Additional Insured-Managers or Lessors of Premises
Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement”
for damage caused by heat, smoke or fumes from a hostile fire.  The Policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an “insured
contract” for the performance of Lessee indemnity obligations under this Lease.  The limits of said insurance shall not,
however, limit the liability of Lessee nor relieve lessee of any obligation
hereunder.  All insurance carried by
Lessee shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance only.

 

(b)  Carried by
Lessor.  Lessor may maintain
liability insurance as described in Paragraph 8.2(a), in addition to, and not
in lieu of the insurance required to be maintained by Lessee.  Lessee shall not be named as an additional
insured therein.

 

8.3                                 Property Insurance – Building, Improvements and Rental
Value.

 

(a)  Building
and Improvements.  The
insuring Party shall obtain and keep in force a policy or policies in the name
of Lessor, with loss payable to Lessor and to any Lender insuring loss of
damage to the Premises.  The amount of
such insurance shall be equal to the full replacement cost of the Premises, as
the same shall exist from time to time, or the amount required by any Lenders,
but in no event more than the commercially reasonable and available insurable
value thereof.  If Lessor is the
Insuring Party, however, Lessee Owned Alterations and Utility installations,
Trade Fixtures, and Lessee’s personal property shall be insured by Lessee under
Paragraph 8.4 rather than by Lessor.  If
the coverage is available and commercially appropriate, such policy or policies
shall insure against all risks of direct physical loss or damage including
earthquake (except the perils of Flood), including coverage for debris removal
and the enforcement of any Applicable Requirements requiring the upgrading,
demolition, reconstruction or replacement of any portion of the Premises as the
result of a covered loss.  Said policy
or policies shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a
factor of not less than the adjusted U.S. Department of Labor Consumer Price
Index for All Urban Consumers for the city nearest to where the Premises are
located.  If such insurance coverage has
a deductible clause, the deductible amount shall not exceed $1,000 per
occurrence, and Lessee shall be liable for such deductible amount in the event
of an Insured Loss.

 

(b)  Rental
Value.  The Insuring Party
shall obtain and keep in force a policy or policies in the name of Lessor with
loss payable to Lessor and any Lender, insuring the loss of the full Rent for
one (1) year.  Said insurance shall
provide that in the event the Lease is terminated by reason of an insured loss,
the period of indemnity for such coverage shall be extended beyond the date of
the completion of repairs or replacement of the Premises, to provide for one
full year’s loss of Rent from the date of any such loss.  Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected Rent otherwise
payable by Lessee, for the next twelve (12) month period.  Lessee shall be liable for any deductible
amount in the event of such loss.

 

(c)  Adjacent
Premises.  If the Premises
are part of a larger building, or of a group of buildings owned by Lessor which
are adjacent to the Premises, the Lessee shall pay for any increase in the
premiums for the property insurance of such building or buildings if said
increase is caused by Lessee’s acts, omissions, use or occupancy of the
Premises.

 

8.4                                 Lessee’s Property/Business Interruption Insurance.

 

(a)  Property
Damage.  Lessee shall obtain
and maintain insurance coverage on all of Lessee’s personal property, Trade
Fixtures, and Lessee Owned Alterations and Utility Installations.  Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $1,000 per occurrence.  The proceeds from any such insurance shall
be used by Lessee for the replacement of personal property, Trade Fixtures and
Lessee Owned Alterations and Utility Installations.  Lessee shall provide Lessor with written evidence that such
insurance is in force.

 

(b)  Business
Interruption.  If reasonably
available, and if Lessor requests Lessee to do so in writing, Lessee shall
obtain and maintain loss of income and extra expense insurance in amounts as
will reimburse Lessee for direct or indirect loss of earnings attributable to
all perils commonly insured against by prudent lessees in the business of
Lessee or attributable to prevention of access to the Premises as a result of
such perils.

 

(c)  No
Representation of Adequate Coverage.  Lessor makes no representation that the limits or forms of
coverage of insurance specified herein are adequate to cover Lessee’s property,
business operations or obligations under this Lease.

 

8.5                                 Insurance Policies.  Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a “General
Policyholders Rating” of at least B+, V, as set forth in the most current issue
of “Best’s Insurance Guide”, or such other rating as may be required by a
Lender.  Lessee shall not do or permit
to be done anything which invalidates the required insurance policies.  Lessee shall, prior to the Start Date,
deliver to Lessor certified copies of polices of such insurance or certificates
evidencing the existence and amounts of the required insurance.  No such policy shall be cancelable or
subject to modification except after thirty (30) days prior written notice to
Lessor.  Lessee shall, at least thirty
(30) days prior to the expiration of such policies, furnish Lessor with
evidence of renewals or “insurance binders” evidencing renewal thereof, or
Lessor may order such insurance and charge the cost thereof to Lessee, which
amount shall be payable by Lessee to Lessor upon demand.  Such policies shall be for a term of at
least one year, or the length of the remaining term of this Lease, whichever is
less.  If either Party shall fail to
procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.

 

8.6                                 Waiver of Subrogation.  Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages against the other, for loss of or
damage to its property arising out of or incident to the perils required to be
insured against herein.  The effect of
such releases and waivers is not limited by the amount of insurance carried or
required, or by any deductibles applicable hereto.  The Parties agree to have their respective property damage
insurance carriers waive any right to subrogation that such companies may have
against Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

 

8.7                                 Indemnity. 
Except for Lessor’s sole negligence, Lessee shall indemnify, protect,
defend and hold harmless the Premises, Lessor and its agents, Lessor’s master
or ground lessor, partners and Lenders, from and against any and all claims,
loss of rents and/or damages, liens, judgments, penalties, attorneys’ and
consultants’ fees, expenses and/or liabilities arising out of, involving, or in
connection with, the use and/or occupancy of the Premises by Lessee.  If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee’s expense by counsel reasonably satisfactory
to Lessor and Lessor shall cooperate with Lessee in such defense.  Lessor need not have first paid any such
claim in order to be defended or indemnified.

 

8.8                                 Exemption of Lessor from Liability.  Lessor shall not be liable for injury or
damage to the person or goods, wares, merchandise or other property of Lessee,
Lessee’s employees, contractors, invitees, customers, or any other person in or
about the Premises, whether such damage or injury is caused by or results from
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, HVAC or lighting fixtures, or from any other cause, whether the said
injury or damage results from conditions arising upon the Premises or upon
other portions of the Building of which the Premises are a part, or from other
sources or places.  Lessor shall not be
liable for any damages arising from any act or neglect of any other tenant of
Lessor.  Notwithstanding Lessor’s
negligence or breach of this Lease, Lessor shall under no circumstances be
liable for injury to Lessee’s business or for any loss of income or profit
therefrom.

 

9.                                       Damage or Destruction.

 

9.1                                 Definitions.

 

(a)  “Premises
Partial Damage” shall mean damage or destruction to the improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations,
which can reasonably be repaired in six (6) months or less from the date of the
damage or destruction.  Lessor shall
notify Lessee in writing within thirty (30) days from the date of the damage or
destruction as to whether or not the damage is Partial or Total.

 

(b)  “Premises
Total Destruction” shall mean damage or destruction to the Premises,
other than Lessee Owned Alterations and Utility Installations, which cannot
reasonably be repaired in six (6) months or less from the date of the damage or
destruction.  Lessor shall notify Lessee
in writing within thirty (30) days from the date of the damage or destruction
as to whether or not the damage is Partial or Total.

 

5

 

(c) “Insured Loss” shall mean damage or
destruction to improvements on the Premises, other than Lessee Owned
Alterations and Utility Installations and Trade Fixtures, which was caused by
an event required to be covered by the insurance described in Paragraph 8.3(a),
irrespective of any deductible amounts or coverage limits involved.

 

(d) “Replacement Cost” shall mean the cost to
repair or rebuild the improvements owned by Lessor at the time of the
occurrence to their condition existing immediately prior thereto, including
demolition, debris removal and upgrading required by the operation of
Applicable Requirements, and without deduction for depreciation.

 

(e) “Hazardous Substance Condition” shall mean
the occurrence or discovery of a condition involving the presence of, or a contamination
by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

 

9.2                                 Partial Damage - Insured Loss. If a
Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at
Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee
Owned Alterations and Utility Installations) as soon as reasonably possible and
this Lease shall continue in full force and effect; provided, however, that
Lessee shall, at Lessor’s election, make the repair of any damage or
destruction the total cost to repair of which is $10,000 or less, and, in such
event, Lessor shall make any applicable insurance proceeds available to Lessee
on a reasonable basis for that purpose. Notwithstanding the foregoing, if the
required insurance was not in force or the insurance proceeds are not
sufficient to effect such repair, the Insuring Party shall promptly contribute
the shortage in proceeds (except as to the deductible which is Lessee’s
responsibility) as and when required to complete said repairs. In the event,
however, such shortage was due to the fact that, by reason of the unique nature
of the improvements, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the unique aspects
of the Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within ten (10) days following receipt of written
notice of such shortage and request therefor. If Lessor receives said funds or
adequate assurance thereof within ten (10) day period, the party responsible
for making the repairs shall complete them as soon as reasonably possible and
this Lease shall remain in full force and effect. If such funds or assurance
are not received, Lessor may nevertheless elect by written notice to Lessee
within ten (10) days thereafter to: (i) make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds, in which
case this Lease shall remain in full force and effect, or have this Lease
terminate thirty (30) days thereafter. Lessee shall not be entitled to
reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be
subject to Paragraph 9.3, notwithstanding that there may be some insurance
coverage, but the net proceeds of any such insurance shall be made available
for the repairs if made by either Party.

 

9.3                                 Partial Damage - Uninsured Loss. If a
Premises Partial Damage that is not an Insured Loss occurs, unless caused by a
negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon
as reasonably possible at Lessor’s expense, in which event this Lease shall
continue in full force and effect, or (ii) terminate this Lease by giving
written notice to Lessee within thirty (30) days after receipt by Lessor of
knowledge of the occurrence of such damage. Such termination shall be effective
sixty (60) days following the date of such notice. In the event Lessor elects
to terminate this Lease. Lessee shall have the right within ten (10) days after
receipt of the termination notice to give written notice to Lessor of Lessee’s
commitment to pay for the repair of such damage without reimbursement from
Lessor.  Lessee shall provide Lessor
with said funds or satisfactory assurance thereof within thirty (30) days after
making such commitment. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not make the
required commitment, this Lease shall terminate as of the date specified in the
termination notice.

 

9.4                                 Total Destruction.  Notwithstanding any other provision hereof,
if a Premises Total Destruction occurs, this Lease shall terminate sixty (60)
days following such Destruction. If the damage or destruction was caused by the
gross negligence or willful misconduct of Lessee, Lessor shall have the right
to recover Lessor’s damages from Lessee except as provided in Paragraph 8.6.

 

9.5                                 Damage Near End of Term. If at any time
during the last six (6) months of this Lease there is damage for which the cost
to repair exceeds one (1) month’s Base Rent, whether or not an Insured Loss,
Lessor may terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving a written termination notice to Lessee
within thirty (30) days after the date of occurrence of such damage.
Notwithstanding the foregoing, if Lessee at that time has an exercisable option
to extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, (a) exercising such option and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the
repairs on or before the earlier of (i) the date which is ten days after
Lessee’s receipt of Lessor’s written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee
duly exercises such option during such period and provides Lessor with funds
(or adequate assurance thereof) to cover any shortage in insurance proceeds,
Lessor shall, at Lessor’s commercially reasonable expense, repair such damage
as soon as reasonably possible and this Lease shall continue in full force and
effect. If Lessee fails to exercise such option and provide such funds or
assurance during such period, then this Lease shall terminate on the date
specified in the termination notice and Lessee’s option shall be extinguished.

 

9.6                                 Abatement of Rent; Lessee’s Remedies.

 

(a) Abatement. 
In the event of Premises Partial Damage or Premises Total Destruction or
a Hazardous Substance Condition for which Lessee is not responsible under this
Lease, the Rent payable by Lessee for the period required for the repair,
remediation or restoration of such damage shall be abated in proportion to the
degree to which Lessee’s use of the Premises is impaired, but not to exceed the
proceeds received from the Rental Value insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no
liability for any such damage, destruction, remediation, repair or restoration
except as provided herein.

 

(b) Remedies. If Lessor shall be obligated to
repair or restore the Premises and does not commence, in a substantial and
meaningful way, such repair or restoration within ninety (90) days after such
obligation shall accrue, Lessee may, at any time prior to the commencement of
such repair or restoration, give written notice to Lessor and to any Lenders of
which Lessee has actual notice, of Lessee’s election to terminate this Lease on
a date not less than sixty (60) days following the giving of such notice. If
Lessee gives such notice and such repair or restoration is not commenced within
thirty (30) days thereafter, this Lease shall terminate as of the date
specified in said notice. If the repair or restoration is commenced within said
thirty (30) days, this Lease shall continue in full force and effect. “Commence” shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.

 

9.7                                 Termination-Advance Payments. Upon
termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an
equitable adjustment shall be made concerning advance Base Rent and any other
advance payments made by Lessee to Lessor. Lessor shall, in addition, return to
Lessee so much of Lessee’s Security Deposit as has not been, or is not then
required to be, used by Lessor.

 

9.8                                 Waive Statutes. Lessor and lessee agree
that the terms of this Lease shall govern the effect of any damage to or
destruction of the Premises with respect to the termination of this Lease and
hereby waive the provisions of any present or future statute to the extent
inconsistent herewith.

 

10.                                 Real Property Taxes.

 

10.1                           Definition of “Real Property Taxes.” As
used herein, the term “Real Property Taxes”
shall include any form of assessment; real estate, general, special, ordinary
or extraordinary, or rental levy or tax (other than inheritance, personal
income or estate taxes); improvement bond; and/or license fee imposed upon or
levied against any legal or equitable interest of Lessor in the Premises.
Lessor’s right to other income therefrom, and/or Lessor’s business of leasing,
by any authority having the direct or indirect power to tax and where the funds
are generated with reference to the Building address and where the proceeds so
generated are to be applied by the city, county or other local taxing authority
of a jurisdiction within which which the Premises are located. The term “Real Property Taxes” shall also include
any tax, fee, levy, assessment or charge, or any increase therein, imposed by
reason of events occurring during the term of this Lease, including but not
limited to, a change in the ownership of the Premises. Not withstanding the
foregoing, Lessee shall not be responsible for any increase in Real Property
Taxes during the first five (5) years following the Start Date.

 

10.2

 

(a) Payment of Taxes. Lessee shall pay the Real
Property Taxes applicable to the Premises during the term of this Lease*.
Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid. If any such taxes shall cover any period of time prior to or
after the expiration or 

 

*on a monthly basis along
with other estimated Triple Net charge paid to Lessor.

 

6

 

termination of this Lease, Lessee’s share of
such taxes shall be prorated to cover only that portion of the tax bill
applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any overpayment. If Lessee shall fail to pay any required
Real Property Taxes, Lessor shall have the right to pay the same, and Lessee
shall reimburse Lessor therefor upon demand.

 

(b) Advance Payment. In the event Lessee incurs
a late charge on any Rent payment, Lessor may, at Lessor’s option, estimate the
current Real Property Taxes, and require that such taxes be paid in advance to
Lessor by Lessee, either: (i) in a lump sum amount equal to the installment
due, at least twenty (20) days prior to the applicable delinquency date, or
(ii) monthly in advance with the payment of the Base Rent. If Lessor elects to
require payment monthly in advance, the monthly payment shall be an amount
equal to the amount of the estimated installment of taxes divided by the number
of months remaining before the month in which said installment becomes
delinquent. When the actual amount of the applicable tax bill is known, the
amount of such equal monthly advance payments shall be adjusted as required to
provide the funds needed to pay the applicable taxes. If the amount collected
by Lessor is insufficient to pay such Real Property Taxes when due, Lessee
shall pay Lessor, upon demand, such additional sums as are necessary to pay
such obligations. All moneys paid to Lessor under this Paragraph may be
intermingled with other moneys of Lessor and shall not bear interest. In the
event of a Breach by Lessee in the performance of its obligations under this
Lease, then any balance of funds paid to Lessor under the provisions of this
Paragraph may at the option of Lessor, be treated as an additional Security
Deposit.

 

10.3                           Joint
Assessment. If the Premises are not separately assessed,
Lessee’s liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor’s work sheets or such other information as
may be reasonably available.

 

10.4                           Personal
Property Taxes. Lessee shall pay, prior to delinquency, all taxes
assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee’s said
personal property shall be assessed with Lessor’s real property, Lessee shall
pay Lessor the taxes attributable to Lessee’s property within ten (10) days
after receipt of a written statement.

 

11.                                 Utilities. Lessee shall pay for all water, gas, heat, light,
power, telephone, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.

 

12.           Assignment and Subletting.

 

12.1                           Lessor’s
Consent Required.      -     
See Addendum

 

(d) An assignment or subletting without
consent shall, at Lessor’s option, be a Default curable after notice per
Paragraph 13.1(c), or a noncurable Breach without the necessity of any notice
and grace period. If Lessor elects to treat such unapproved assignment or
subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease,
or (ii) upon thirty (30) days written notice, increase the monthly Base Rent to
one hundred ten percent (110%) of the Base Rent then in effect. Further, in the
event of such Breach and rental adjustment, (i) the purchase price of any
option to purchase the Premises held by Lessee shall be subject to similar
adjustment to one hundred ten percent (110%) of the price previously in effect,
and (ii) all fixed and non-fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased to One Hundred Ten Percent
(110%) of the scheduled adjusted rent.

 

(e) Lessee’s remedy for any breach of
Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or
injunctive relief.

 

12.2         Terms and Conditions Applicable to
Assignment and Subletting.

 

(a) Regardless of Lessor’s consent, any
assignment or subletting shall not: (i) be effective without the express
written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease (ii) release Lessee of any obligations hereunder, or (iii)
alter the primary liability of Lessee for the payment of Rent or for the
performance of any other obligations to be performed by Lesse.

 

(b) Lessor may accept Rent or performance of
Lessee’s obligations from any person other than Lessee pending approval or
disapproval of an assignment. Neither a delay in the approval or disapproval of
such assignment nor the acceptance of Rent or performance shall constitute a
waiver or estoppel of Lessor’s right to exercise its remedies for Lessee’s
Default or Breach.

 

(c) Lessor’s consent to any assignment or
subletting shall not constitute a consent to any subsequent assignment or
subletting.

 

(d) In the event of any Default or Breach by
Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone
else responsible for the performance of Lessee’s obligations under this Lease,
including any assignee or sublessee, without first exhausting  Lessor’s remedies against any other person
or entity responsible therefore to Lessor, or any security held by Lessor.

 

(e) Each request for consent to an assignment
or subletting shall be in writing, accompanied by information relevant to
Lessor’s determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not
limited to the intended use and/or required modification of the Premises, if
any, together with a fee of $1,000 or ten percent (10%) of the current monthly
Base Rent applicable to the portion of the Premises which is the subject of the
proposed assignment or sublease, whichever is greater, as consideration for
Lessor’s considering and processing said request. Lessee agrees to provide
Lessor with such other or additional information and/or documentation as may be
reasonably requested.

 

(f) Any assignee of, or sublessee under, this
Lease shall, by reason of accepting such assignment or entering into such
sublease, be deemed to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented to in
writing.

 

12.3         Additional Terms and Conditions
Applicable to Subletting. The following terms and
conditions shall apply to any subletting by Lessee of all or any part of the
Premises and shall be deemed included in all subleases under this Lease whether
or not expressly incorporated therein:

 

(a) Lessee hereby assigns and transfers to
Lessor all of Lessee’s interest in all Rent payable on any sublease, and Lessor
may collect such Rent and apply same toward Lessee’s obligations under this
Lease; provided, however, that until a Breach shall occur in the performance of
Lessee’s obligations, Lessee may collect said Rent. Lessor shall not, by reason
of the foregoing or any assignment of such sublease, nor by reason of the
collection of Rent, be deemed liable to the sublessee for any failure of Lessee
to perform and comply with any of Lessee’s obligations to such sublessee.  Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor
stating that a Breach exists in the performance of Lessee’s obligations under
this Lease, to pay to Lessor all Rent due and to become due under the sublease.
Sublessee shall rely upon any such notice from Lessor and shall pay all Rents
to Lessor without any obligation or right to inquire as to whether such Breach
exists, notwithstanding any claim from Lessee to the contrary.

 

(b) In the event of a Breach by Lessee,
Lessor may, at its option, require sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents
or security deposit paid by such sublessee to such sublessor or for any prior
Defaults or Breaches of such sublessor.

 

7

 

(c) Any matter requiring the consent of the
sublessor under a sublease shall also require the consent of Lessor.

 

(d) No sublessee shall further assign or
sublet all or any part of the Premises without Lessor’s prior written consent.

 

(e) Lessor shall deliver a copy of any notice
of Default or Breach by Lessee to the sublessee, who shall have the right to
cure the Default of Lessee within the grace period, if any, specified in such
notice. The sublessee shall have a right of reimbursement and offset from and
against Lessee for any such Defaults cured by the sublessee.

 

13.                                 Default; Breach; Remedies.

 

13.1                           Default;
Breach.   A “Default” is defined as a failure by the Lessee to comply with
or perform any of the terms, covenants, conditions or rules under this
Lease.  A “Breach” is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:

 

(a) The abandonment of the Premises; or the
vacating of the Premises without providing a commercially reasonable level of
security, or where the coverage of the property insurance described in
Paragraph 8.3 is jeopardized as a result thereof, or without providing
reasonable assurances to minimize potential vandalism.

 

(b) The failure of Lessee to make any payment
of Rent or any other monetary payment required to be made by Lessee hereunder,
whether to Lessor or to a third party, when due, to provide reasonable evidence
of insurance or surety bond, or to fulfill any obligation under this Lease
which endangers or threatens life or property, where such failure continues for
a period of three (3) business days following written notice to Lessee.

 

(c) The failure by Lessee to provide (i)
reasonable written evidence of compliance with Applicable Requirements, (ii)
the service contracts, (iii) the rescission of an unauthorized assignment or
subletting, (iv) a Tenancy Statement, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested
under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of ten (10) days
following written notice to Lessee.

 

(d) A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules adopted under Paragraph
40 hereof, other than those described in subparagraphs 13.1(a), (b) or (c),
above, where such Default continues for a period of thirty (30) days after
written notice; provided, however, that if the nature of Lessee’s Default is
such that more than thirty (30) days are reasonably required for its cure, then
it shall not be deemed to be a Breach if Lessee commences such cure within said
thirty (30) day period and thereafter diligently prosecutes such cure to
completion.

 

(e) The occurrence of any of the following
events: (i) the making of any general arrangement or assignment for the benefit
of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. § 101 or
any successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of
a trustee or receiver to take possession of substantially all of Lessee’s
assets located at the Premises or of Lessee’s interest in this Lease, where
possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee’s assets located at the Premises or of Lessee’s interest in this Lease,
where such seizure is not discharged within thirty (30) days; provided,
however, in the event that any provision of this subparagraph (e) is contrary
to any applicable law, such provision shall be of no force or effect, and not
affect the validity of the remaining provisions.

 

(f) The discovery that any financial
statement of Lessee or of any Guarantor given to Lessor was materially false.

 

(g) If the performance of Lessee’s
obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii)
the termination of a Guarantor’s liability with respect to this Lease other
than in accordance with the terms of such guaranty, (iii) a Guarantor’s
becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor’s
refusal to honor the guaranty, or (v) a Guarantor’s breach of its guaranty
obligation on an anticipatory basis, and Lessee’s failure, within sixty (60)
days following written notice of any such event, to provide written alternative
assurance or security, which, when coupled with the then existing resources of
Lessee, equals or exceeds the combined financial resources of Lessee and the
Guarantors that existed at the time of execution of this Lease.

 

13.2                           Remedies. If Lessee fails
to perform any of its affirmative duties or obligations, within ten (10) days
after written notice (or in case of an emergency, without notice), Lessor may,
at its option, perform such duty or obligation on Lessee’s behalf, including
but not limited to the obtaining of reasonably required bonds, insurance policies,
or governmental licenses, permits or approvals. The costs and expenses of any
such performance by Lessor shall be due and payable by Lessee upon receipt of
invoice therefor. If any check given to Lessor by Lessee shall not be honored
by the bank upon which it is drawn, Lessor, at its option, may require all
future payments to be made by Lessee to be by cashier’s check. In the event of
a Breach, Lessor may, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach:

 

(a) Terminate Lessee’s right to possession of
the Premises by any lawful means, in which case this Lease shall terminate and
Lessee shall immediately surrender possession to Lessor. In such event Lessor
shall be entitled to recover from Lessee: (i) the unpaid Rent which had been
earned at the time of termination; (ii) the worth at the time of award of the
amount by which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that the Lessee
proves could have been reasonably avoided; (iii) the worth at the time of award
of the amount by which the unpaid rent for the balance of the term after the
time of award exceeds the amount of such rental loss that the Lessee proves
could be reasonably avoided; and (iv) any other amount necessary to compensate
Lessor for all the detriment proximately caused by the Lessee’s failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including but not limited to the
cost of recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorney’s fees,
and that portion of any leasing commission paid by Lessor in connection with
this Lease applicable to the unexpired term of this Lease. The worth at the
time of award of the amount referred to in provision (iii) of the immediately
preceding sentence shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of the District within which the Premises are
located at the time of award plus one percent (1%). Efforts by Lessor to
mitigate damages caused by Lessee’s Breach of this Lease shall not waive
Lessor’s right to recover damages under Paragraph 12. If termination of this
Lease is obtained through the provisional remedy of unlawful detainer, Lessor
shall have the right to recover in such proceeding any unpaid Rent and damages
as are recoverable therein, or Lessor may reserve the right to recover all or
any part thereof in a separate suit. If a notice and grace period required
under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or
to perform or quit given to Lessee under the unlawful detainer statute shall
also constitute the notice required by Paragraph 13.1. In such case, the
applicable grace period required by Paragraph 13.1 and the unlawful detainer
statute shall run concurrently, and the failure of Lessee to cure the Default
within the greater of the two such grace periods shall constitute both an
unlawful detainer and a Breach of this Lease entitling Lessor to the remedies
provided for in this Lease and/or by said statute.

 

(b) Continue the Lease and Lessee’s right to
possession and recover the Rent as it becomes due, in which event Lessee may
sublet or assign, subject only to reasonable limitations. Acts of maintenance,
efforts to relet, and/or the appointment of a receiver to protect the Lessor’s
interests, shall not constitute a termination of the Lessee’s right to
possession.

 

(c) Pursue any other remedy now or hereafter
available under the laws or judicial decisions of the state wherein the
Premises are located. The expiration or termination of this Lease and/or the
termination of Lessee’s right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee’s occupancy of the Premises.

 

13.3                           Inducement
Recapture. Any agreement for free or abated rent or other
charges, or for the giving or paying by Lessor to or for Lessee of any cash or
other bonus, inducement or consideration for Lessee’s entering into this Lease,
all of which concessions are hereinafter referred to as “Inducement Provisions,” shall be deemed
conditioned upon Lessee’s full and faithful performance of all of the terms,
covenants and conditions of this Lease. Upon Breach of this Lease by Lessee,
any such inducement Provision shall automatically be deemed deleted from this
Lease and of no further force or effect, and any rent, other charge, bonus,
inducement or consideration theretofore abated, given or paid by Lessor under
such an inducement Provision shall be immediately due and payable by Lessee to
Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The
acceptance by Lessor of rent or the cure of the Breach which initiated the
operation of this paragraph shall not

 

8

 

be deemed a waiver by
Lessor of the provisions of this paragraph unless specifically so stated in
writing by Lesser at the time of such acceptance.

 

13.4                           Late Charges. Lessee hereby acknowledges
that late payment by Lessee of Rent will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by
any Lender.  Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to ten percent (10%) of each such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute
a waiver of Lessor’s Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor’s option,
become due and payable quarterly in advance.

 

13.5                           Interest. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due. The interest (“Interest”) charged
shall be equal to the prime rate charged by the largest state chartered bank in
the state in which the Premises are located plus 4%, but shall not exceed the
maximum rate allowed by law. Interest is payable in addition to the potential
late charge provided for in Paragraph 13.4.

 

13.6                           Breach by Lessor.

 

(a)                                  Notice of Breach. Lessor shall not be
deemed in breach of this Lease unless Lessor fails within a reasonable time to
perform an obligation required to be performed by Lessor. For purposes of this
Paragraph, a reasonable time shall in no event be less than thirty (30) days
after receipt by Lessor, and any Lender whose name and address shall have been
furnished Lessee in writing for such purpose, of written notice specifying
wherein such obligation of Lessor has not been performed; provided, however,
that if the nature of Lessor’s obligation is such that more than thirty (30)
days are reasonably required for its performance, then Lessor shall not be in
breach if performance is commenced within such thirty (30) day period and
thereafter diligently pursued to completion.

 

(b)                                 Performance by Lessee on Behalf of Lessor.
In the event that neither Lessor nor Lender 
cures said breach within thirty (30) days after receipt of said notice,
or if having commenced said cure they do not diligently pursue it to
completion, then Lessee may elect to cure said breach at Lessee’s expense and
offset from Rent an amount equal to the greater of one month’s Base Rent or the
Security Deposit, and to pay an excess of such expense under protest, reserving
Lessee’s right to reimbursement from Lessor. Lessee shall document the cost of
said cure and supply said documentation to Lessor.

 

14.                                 Condemnation.  If the Premises or any portion thereof are taken under the power
of eminent domain or sold under the threat of the exercise of said power (collectively
“Condemnation”), this Lease shall
terminate as to the part taken as of the date the condemning authority takes
title or possession, whichever first occurs. If more than ten percent (10%) of
any building, or more than twenty-five percent (25%) of the land area not
occupied by any building, is taken by Condemnation, Lessee may, at Lessee’s
option, to be exercised in writing within ten (10) days after Lessor shall have
given Lessee written notice of such taking (or in the absence of such notice, within
ten (10) days after the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this lease shall remain in full force and effect as to the portion
of the Premises remaining, except that the Base Rent shall be reduced in
proportion to the reduction in utility of the Premises caused by such
Condemnation. Condemnation awards and/or payments shall be the property of
Lessor, whether such award shall be made as compensation for diminution in
value of the leasehold, the value of the part taken, or for severance damages;
provided, however, that Lessee shall be entitled to any compensation for
Lessee’s relocation expenses, loss of business goodwill and/or Trade Fixtures,
without regard to whether or not this Lease is terminated pursuant to the
provisions of this Paragraph. All Alterations and Utility Installations made to
the Premises by Lessee, for purposes of Condemnation only, shall be considered
the property of the Lessee and Lessee shall be entitled to any and all
compensation which is payable therefor. In the event that this Lease is not
terminated by reason of the Condemnation, Lessor shall repair any damage to the
Premises caused by such Condemnation.

 

15.           Broker’s Fee.

 

15.3                           Representations and Indemnities of Broker
Relationships. Lessee and Lessor each represent and warrant to the
other that it has had no dealings with any person, firm, broker or finder (other
than the Brokers, if any) in connection with this lease, and that no one other
than said named Brokers is entitled to any commission or finder’s fee in
connection herewith. Lessee and lessor do each hereby agree to indemnify,
protect, defend or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, attorneys’ fees
reasonably incurred with respect thereto.

 

16.                                 Tenancy Statement/Estoppel Certificate.

 

16.1                           Each
Party (as “Responding Party”) shall
within ten (10) days after written notice from the other Party (the “Requesting Party”) execute, acknowledge and
deliver to the Requesting Party an estoppel certificate in writing, in form
similar to the then most current “Tenancy Statement” form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.

 

16.2                           If
Lessor desires to finance, refinance, or sell the Premises, or any part
thereof, Lessee and all Guarantors shall deliver to any potential lender or
purchaser designated by Lessor such financial statements as may be reasonably
required by such lender or purchaser, including but not limited to Lessee’s
financial statements for the past three (3) years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

 

17.                                 Definition of Lessor. The term “Lessor” as
used herein shall mean the owner or owners at the time in question of the fee
title to the Premises, or, if this is a sublease, of the Lessee’s interest in
the prior lease. In the event of a transfer of Lessor’s title or interest in
the Premises or this Lease. Lessor shall deliver to the transferee or assignee
(in cash or by credit) any unused Security Deposit held by Lessor. Upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the
Lessor.  Subject to the foregoing, the
obligations and/or covenants in this Lease to be performed by the Lessor shall
be binding only upon the Lessor  as
hereinabove defined. Notwithstanding the above, the original Lessor under this
Lease, and all subsequent holders of the Lessor’s interest in this Lease shall
remain liable and responsible with regard to the potential duties and
liabilities of Lessor pertaining to Hazardous Substances as outlined in
Paragraph 6 above.

 

18.                                 Severability. The invalidity of any
provision of this Lease, as determined by a court of competent jurisdiction,
shall in no way affect the validity of any other provision hereof.

 

9

 

19.                                 Days. 
Unless otherwise specifically indicated to the contrary, the word “days”
as used in this Lease shall mean and refer to calendar days.

 

20.                                 Limitation on Liability. 
Except with respect to Lessor’s fraud, gross negligence or willful
misconduct, the obligations of Lessor under this Lease shall not constitute
personal obligations of Lessor, the individual partners of Lessor or its or
their individual partners, directors, officers or shareholders, and Lessee
shall look to the Premises, and to no other assets of Lessor, for the
satisfaction of any liability of Lessor with respect to this Lease, and shall
not seek recourse against the individual partners of Lessor, or its or their
individual partners, directors, officers or shareholders, or any of their
personal assets for such satisfaction.

 

21.                                 Time of Essence. 
Time is of the essence with respect to the performance of all
obligations to be performed or observed by the Parties under the Lease.

 

22.                                 No Prior or Other Agreements;  Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be
effective. Lessor and Lessee each represents and warrants to the Brokers that
it has made, and is relying solely upon, its own investigation as to the
nature, quality, character and financial responsibility of the other Party to
this Lease and as to the nature, quality and character of the Premises. Brokers
have no responsibility with respect thereto or with respect to any default or
breach hereof by either Party. The liability (including court costs and
Attorney’s fees), of any Broker with respect to negotiation, execution,
delivery or performance by either Lessor or Lessee under this Lease or any
amendment or modification hereto shall be limited to an amount up to the fee
received by such Broker pursuant to this Lease: provided, however, that the
foregoing limitation on each Broker’s liability shall not be applicable to any
gross negligence or willful misconduct of such Broker.

 

23.                                 Notices.

 

23.1  Notice
Requirements. All notices required or permitted by this Lease shall
be in writing and may be delivered in person (by hand or by courier) or may be
sent by regular, certified or registered mail or U.S. Postal Service Express
Mail, with postage prepaid, or by facsimile transmission, and shall be deemed
sufficiently given if served in a manner specified in this Paragraph 23. The
addresses noted adjacent to a Party’s signature on this Lease shall be that
Party’s address for delivery of mailing of notices. Either Party may by written
notice to the other specify a different address for notice, except that upon
Lessee’s taking possession of the Premises, the Premises shall constitute
Lessee’s address for notice.  A copy of
all notices to Lessor shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter designate
in writing.

 

23.2  Date of
Notice. Any notice sent by registered or certified mail, return
receipt requested, shall be deemed given on the date of delivery shown on the
receipt card, or if no delivery date is shown, the postmark thereon. If sent by
regular mail the notice shall be deemed given forty-eight (48) hours after the
same is addressed as required herein and mailed with postage prepaid. Notices
delivered by United States Express Mail or overnight courier that guarantee
next day delivery shall be deemed given twenty-four (24) hours after delivery
of the same to the Postal Service or courier. Notices transmitted by facsimile
transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or
mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be
deemed received on the next business day.

 

24.                                 Waivers. No waiver by Lessor of the Default or
Breach of any term, covenant or condition hereof by Lessee, shall be deemed a
waiver of any other term, covenant or condition hereof, or of any subsequent
Default or Breach by Lessee of the same or of any other term, covenant or
condition hereof. Lessor’s consent to, or approval of, any act shall not be
deemed to render unnecessary the obtaining of Lessor’s consent to, or approval
of, any subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. The acceptance of Rent by Lessor shall not be a waiver of any Default
or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account
of moneys or damages due Lessor, notwithstanding any qualifying statements or
conditions made by Lessee in connection therewith, which such statements and/or
conditions shall be of no force or effect whatsoever unless specifically agreed
to in writing by Lessor at or before the time of deposit of such payment.

 

25.                                 Recording. 
Either Lessor or Lessee shall, upon request of the other, execute,
acknowledge and deliver to the other a short form memorandum of this Lease for
recording purposes. The Party requesting recordation shall be responsible for
payment of any fees applicable thereto.

 

26.                                 No Right   To Holdover.  Lessee has no right to retain possession of
the Premises or any part thereof beyond the expiration or termination of this
Lease.  In the event that Lessee holds
over, then the Base Rent shall be increased to one hundred fifty percent (150%)
of the Base Rent applicable during the month immediately preceding the
expiration or termination.  Nothing
contained herein shall be construed as consent by Lessor to any holding over by
Lessee.

 

27.                                 Cumulative Remedies.  No
remedy or election hereunder shall be deemed exclusive but shall, wherever
possible, be cumulative with all other remedies at law or in equity.

 

28.                                 Covenants and Conditions;  Construction of Agreement.  All provisions of this Lease to be observed
or performed by Lessee are both covenants and conditions.  In construing this Lease, all headings and
titles are for the convenience of the parties only and shall not be considered
a part of this Lease.  Whenever required
by the context, the singular shall include the plural and vice versa.  This Lease shall not be construed as if
prepared by one of the parties, but rather according to its fair meaning as a
whole, as if both parties had prepared it.

 

29.                                 Binding Effect;  Choice of Law.  This Lease shall be binding upon the parties, their personal
representatives, successors and assigns and be governed by the laws of the
State in which the Premises are located. 
Any litigation between the Parties hereto concerning this Lease shall be
initiated in the county in which the Premises are located.

 

30.                                 Subordination;  Attornment; 
Non-Disturbance.

 

30.1  Subordination.  This Lease and any Option granted hereby
shall be subject and subordinate to any ground lease, mortgage, deed of trust,
or other hypothecation or security device (collectively, “Security Device”),
now or hereafter placed upon the Premises, to any and all advances made on the
security thereof, and to all renewals, modifications, and extensions
thereof.  Lessee agrees that the holders
of any such Security Devices shall have no liability or obligation to perform
any of the obligations of Lessor under this Lease.  Any Lender may elect to have this Lease and/or any Option granted
hereby superior to the lien of its Security Device by giving written notice
thereof to Lessee, the Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.

 

30.2  Attornment.  Subject to the non-disturbance provision of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not:
(i) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership; (ii) be subject to any
offsets or defenses which Lessee might have against any prior lessor, or (iii)
be bound by prepayment of more than one (1) month’s rent.

 

30.3  Non-Disturbance.  With respect to Security Devices entered
into by Lessor after the execution of this Lease, Lessee’s subordination of this
Lease shall be subject to receiving a commercially reasonable non-disturbance
agreement (a “Non-Disturbance Agreement”) from the Lender which Non-Disturbance
Agreement provides that Lessee’s possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises.  Further, within sixty (60)
days after the execution of this Lease, Lessor shall use its commercially
reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any
pre-existing Security Device which is secured by the Premises.  In the event that Lessor is unable to
provide the Non-Disturbance Agreement within said sixty (60) days, then Lessee
may, at Lessee’s option, directly contact Lessor’s lender and attempt to
negotiate for the execution and delivery of a Non-Disturbance Agreement.

 

30.4  Self-Executing.  The agreements contained in this Paragraph
30 shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with
a sale, financing or refinancing of the Premises, Lessee and Lessor shall
execute such further writings as may be reasonably required to separately
document any subordination, attornment and/or Non-Disturbance Agreement
provided for herein.

 

31.                                 Attorneys’ Fees.  If
any Party brings an action or proceeding to enforce the terms hereof or declare
rights hereunder, the Prevailing Party (as hereafter defined) in any such
proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys’ fees.  Such fees may be
awarded in the same suit or recovered in a separate suit, whether or not such
action or proceeding is pursued to decision or

 

10

 

judgment. The term, “Prevailing Party” shall include, without
limitation, a Party who substantially contains or defeats the relief sought, as
the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party of its claim or defense. The attorneys’ fees
award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all attorneys’ fees reasonably incurred. In
addition, Lessor shall be entitled to attorneys’ fees, costs and expenses
incurred in the preparation and service of notices of Default and consultations
in connection therewith, whether or not a legal action is subsequently
commenced in connection with such Default or resulting Breach.

 

32.                                 Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem
necessary. All such activities shall be without abatement of rent or liability
to Lessee. Lessor may at any time place on the Premises any ordinary “For Sale”
signs and Lessor may during the last six (6) months of the term hereof place on
the Premises any ordinary “For Lease” signs. Lessee may at any time place on or
about the Premises any ordinary “For Sublease” sign.

 

33.                                 Auctions. Lessee shall not conduct, nor
permit to be conducted, any auction upon the Premises without Lessor’s prior
written consent. Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to permit an auction.

 

34.                                 Signs. Except for ordinary “For Sublease”
signs, Lessee shall not place any sign upon the Premises without Lessor’s prior
written consent. All signs must comply with all Applicable Requirements.

 

35.                                 Termination; Merger.  Unless
specifically stated otherwise in writing by Lessor, the voluntary or other
surrender of this Lease by Lessee, the mutual termination or cancellation
hereof, or a termination hereof by Lessor for Breach by Lessee, shall
automatically terminate any sublease or lessor estate in the Premises;
provided, however, that Lessor may elect to continue any one or all existing
subtenancies. Lessor’s failure within ten (10) days following any such event to
elect to the contrary by written notice to the holder of any such lesser
interest, shall constitute Lessor’s election to have such event constitute the
termination of such interest.

 

36.                                 Consents. Except as otherwise provided
herein, wherever in this Lease the consent of 
a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor’s actual reasonable costs
and expenses (including but not limited to architects’, attorneys’, engineers’,
and other consultants’ fees) incurred in the consideration of, or response to,
a request by Lessee for any Lessor consent, including but not limited to
consents to an assignment, a subletting or the presence or use of a Hazardous
Substance, shall be paid by Lessee upon receipt of an invoice and supporting
documentation therefor. Lessor’s consent to any act, assignment or subletting
shall not constitute an acknowledgement that no Default or Breach by Lessee of
this Lease exists, nor shall such consent be deemed a waiver of any then
existing Default or Breach, except as may be otherwise specifically stated in
writing by Lessor at the time of such consent. The failure to specify herein
any particular condition to Lessor’s consent shall not preclude the imposition
by Lessor at the time of consent of such further or other conditions as are
then reasonable with reference to the particular matter for which consent is
being given. In the event that either Party disagrees with any determination
made by the other hereunder and reasonably requests the reasons for such
determination, the determining party shall furnish its reasons in writing and
in reasonable detail within ten (10) business days following such request.

 

37.                                 Guarantor.

 

37.1  Execution.
The Guarantors, if any, shall each execute a guaranty in the form most recently
published by the American Industrial Real Estate Association, and each such
Guarantor shall have the same obligations as Lessee under this Lease.

 

37.2  Default.
It shall constitute a Default of the Lessee if any Guarantor fails or refuses,
upon request to provide: (a) evidence of the execution of the guaranty,
including the authority of the party signing on Guarantor’s behalf to obligate
Guarantor, and in the case of a corporate Guarantor, a certified copy of a
resolution of its board of directors authorizing the making of such guaranty,
(b) current financial statements, (c) a Tenancy Statement, or (d) written
confirmation that the guaranty is still in effect.

 

38.                                 Quiet Possession. Subject to payment by
Lessee of the Rent and performance of all of the covenants, conditions and
provisions on Lessee’s part to be observed and performed under this Lease,
Lessee shall have quiet possession and quiet enjoyment of the Premises during
the term hereof.

 

39.                                 Options.

 

39.1  Definition.
“Option” shall mean: (a) the right
to extend the term of or renew this Lease or to extend or renew any lease that
Lessee has on other property of Lessor; (b) the right of first refusal or first
offer to lease either the Premises or other property of Lessor; (c) the right
to purchase or the right of first refusal to purchase the Premises or other
property of Lessor.

 

39.2  Options
Personal  To Original Lessee.
Each Option granted to Lessee in this Lease is personal to the original Lessee,
and cannot be assigned or exercised by anyone other than said original Lessee
and only while the original Lessee is in full possession of the Premises and,
if requested by Lessor, with Lessee certifying that Lessee has no intention of
thereafter assigning of subletting.

 

39.3  Multiple
Options. In the event that Lessee
has any multiple Options to extend or renew this Lease, a later Option cannot
be exercised unless the prior Options have been validly exercised.

 

39.4  Effect of
Default on Options.

 

(a)  Lessee shall have no right to exercise an
Option: (i) during the period commencing with the giving of any notice of
Default and continuing until said Default is cured, (ii) during the period of
time any Rent is unpaid (without regard to whether notice thereof is given
Lessee), (iii) during the time Lessee is in Breach of this Lease, or (iv) in the
event that Lessee has been given three (3) or more notices of Default, whether
or not the Defaults are cured, during the twelve (12) month period immediately
preceding the exercise of the Option.

 

(b)  The period of time within which an Option
may be exercised shall not be extended or enlarged by reason of Lessee’s
inability to exercise an Option because of the provisions of Paragraph 39.4(a).

 

(c)  An Option shall terminate and be of no
further force or effect, notwithstanding Lessee’s due and timely exercise of
the Option, if, after such exercise and prior to the commencement of the
extended term, (i) Lessee fails to pay Rent for a period of thirty (30) days
after such Rent becomes due (without any necessity of Lessor to give notice
thereof), (ii) Lessor gives to Lessee three (3) or more notices of separate
Default during any twelve (12) month period, whether do not the Defaults are
cured, or (iii) if Lessee commits a Breach of this Lease.

 

40.                                 Multiple Buildings. If the Premises are a
part of a group of buildings controlled by Lessor, Lessee agrees that it will
observe all reasonable rules and regulations which Lessor may make from time to
time for the management, safety, and care of said properties, including the
care and cleanliness of the grounds and including the parking, loading and
unloading of vehicles, and that Lessee will pay its fair share of common
expenses incurred in connection therewith.

 

41.                                 Security Measures. Lessee hereby
acknowledges that the rental payable to Lessor hereunder does not include the
cost of guard service or other security measures, and that Lessor shall have no
obligation whatsoever to provide same. Lessee assumes all responsibility for
the protection of the Premises, Lessee, its agents and invitees and their
property from the acts of third parties.

 

42.                                 Reservations. Lessor reserves to itself the
right, from time to time, to grant, without the consent or joinder of  Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.

 

43.                                 Performance Under Protest. If at any time a
dispute shall arise as to any amount or sum of money to be paid by one Party to
the other under the provisions hereof, the Party against whom the obligation to
pay the money is asserted shall have the right to make payment “under protest”
and such payment shall not be regarded as a voluntary payment and there shall
survive the right on the part of said Party to institute suit for recovery of
such sum. If it shall be adjudged that there was no legal obligation on the
part of said Party to pay such sum or any part thereof, said Party shall be
entitled to recover such sum or so much thereof as it was not legally required
to pay.

 

44.                                 Authority. If either Party hereto is a
corporation, trust, limited liability company, partnership, or similar entity,
each individual executing this Lease on behalf of such entity represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
its behalf. Each party shall, within thirty (30) days after request, deliver to
the other party satisfactory evidence of such authority.

 

11

 

45.                                 Conflict. Any conflict between the printed
provisions of this Lease and the typewritten or handwritten provisions shall be
controlled by the typewritten or handwritten provisions.

 

46.                                 Offer. Preparation of this Lease by either
Party or their agent and submission of same to the other Party shall not be
deemed an offer to lease to the other Party. This Lease is not intended to be
binding until executed and delivered by all Parties hereto.

 

47.                                 Amendments. This Lease may be modified only
in writing, signed by the Parties in interest at the time of the modification.
As long as they do not materially change Lessee’s obligations hereunder, Lessee
agrees to make such reasonable non-monetary modifications to this Lease as may
be reasonably required by a Lender in connection with the obtaining of normal
financing or refinancing of the Premises.

 

48.                                 Multiple  Parties.
If more than one person or entity is named herein as either Lessor or Lessee,
such multiple Parties shall have joint and several responsibility to comply
with the terms of this Lease.

 

49.                                 Mediation and Arbitration of Disputes. An
Addendum requiring the Mediation and/or the Arbitration of all disputes between
the Parties and/or Brokers arising out of this Lease ý
is  o
is not attached to this Lease.

 

LESSOR AND LESSEE HAVE
CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED
HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY
CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS
EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE
INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

 

ATTENTION:
NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL
ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT,
OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE
PARTIES ARE URGED TO:

 

1.                                       SEEK
ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2.                                       RETAIN
APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES.  SAID INVESTIGATION SHOULD
INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,
THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF
AND OPERATING SYSTEMS AND THIS SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED
USE.

 

WARNING:
IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS
OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN
WHICH THE PREMISES IS LOCATED.

 

The parties hereto have
executed this Lease at the place and on the dates specified above their
respective signatures.

 

	
  Executed at:

  	
   

  	
   

  	
  Executed at:

  	
   

  
	
  on:

  	
   

  	
   

  	
  on:

  	
   

  
	
  By LESSOR:

  	
   

  	
  By LESSEE:

  
	
  The Childs Family
  Investment Partnership, L.P.

  	
   

  	
  The Immune Response
  Corporation,

  
	
  and The A.J. Gardner
  Family Trust, U/T/A 3/5/81

  	
   

  	
  a Delaware Corporation

  
	
   

  	
   

  	
   

  
	
  By:  

  	
  /s/ Roland A. Childs

  	
   

  	
  By:

  	
  /s/ Paula Baxter Atkins

  
	
  Name Printed: 

  	
  Roland A. Childs

  	
   

  	
  Name Printed: 

  	
  Dennis J. Carlo, Ph. D.

  
	
  Title:

  	
   

  	
   

  	
  Title: 

  	
   

  	
  President Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Allan J. Gardner

  	
   

  	
  By: 

  	
  /s/ Dennis J. Carlo,
  Ph. D.

  
	
  Name Printed: 

  	
  Allan J. Gardner

  	
   

  	
  Name Printed:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Address: c/o LANDCO –
  432 South Bentley Avenue 

  	
   

  	
  Address:

  	
   

  
	
   

  	
  Los
  Angeles, California 90049-3513

  	
   

  	
   

  
	
  Telephone: (310)

  	
  476-3209

  	
   

  	
  Telephone:
  (      )

  	
   

  
	
  Facsimile: (310)

  	
  476-0111

  	
   

  	
  Facsimile:(       )

  	
   

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  
	
  BROKER:

  	
   

  	
  BROKER:

  
	
   

  	
   

  	
   

  
	
  Executed at

  	
   

  	
   

  	
  Executed at

  	
   

  
	
  on:

  	
   

  	
   

  	
  on:

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
  Telephone:
  (         )

  	
   

  	
   

  	
  Telephone:
  (         )

  	
   

  
	
  Facsimile:
  (        )

  	
   

  	
   

  	
  Facsimile:
  (         )

  	
   

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  	
   

  
																																							

 

NOTE:            These forms are often
modified to meet changing requirements of law and industry needs. Always write
or call to make sure you are utilizing the most current form: AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So. Flower Street, Suite 600 Los
Angeles, California 90017. (213) 687-8777. Fax No. (213) 687-8616

 

12

 

ADDENDUM TO
LEASE

 

This
Addendum to Lease (“Addendum”) is made by and between The Childs Family
Partnership, L.P. and The A. J. Gardner Family Trust u/t/a 3/5/81, general
partners doing business as “Darwin Court” but holding title as
tenants-in-common (collectively, “Lessor”) and The Immune Response Corporation,
a Delaware corporation (“Lessee”) and shall supplement that certain Standard
Industrial/Commercial Single-Tenant Lease Net between Lessor and Lessee dated
as of December 15, 1997 and Exhibits thereto (collectively, the “Lease”).  Where appropriate the numbering used in the
Addendum shall refer to the same numbered paragraphs in the Lease.  Notwithstanding anything contained in the
Lease to the contrary, the provisions set forth below will be deemed to be part
of the Lease and if there is any inconsistency between this Addendum and the
Lease, the terms of this Addendum shall supersede and control.  All references in the Lease and in this
Addendum shall be construed to mean the Lease and the Exhibits thereto, as
amended and supplemented by this Addendum. 
All defined terms used in this Addendum, unless specifically defined in
this Addendum, shall have the same meaning as such terms have in the
Lease.  References to “Paragraph” shall
refer to the pre-printed Lease form and references to “Section” shall refer to
this Addendum.

 

1.1           Parties. The phrase “, general partners doing
business as “Darwin Court” but holding title as tenants-in-common” is inserted
after the names of the entities comprising Lessor.

 

1.2           Premises. Lessor at its expense shall construct a
Building Shell of approximately 31,200 square feet. The phrase “Building Shell”
means the Building improvements and related site improvements as shown on those
certain plans and specifications (collectively, “Lessor’s Plans”) prepared by Smith
Consulting Architects (“Lessor’s Architect”), dated on the various sheets
between April 3, 1997 and April 18, 1997 an entire set of which has
been delivered to Lessee by Lessor’s contractor, Riggins Construction &
Management, Inc. as listed on the attached Schedule 1.2. Lessee has the
right to expand the second floor office space at its cost in which case the
total leasable area will be correspondingly increased. Lessor shall not amend
or modify Lessor’s Plans in any material respect without the prior consent of
Lessee.

 

Lessor represents and warrants that no part of the
Building Shell will contain asbestos, asbestos-containing material or other
Hazardous Substances (collectively “ACHM”). 
If Lessor does employ ACHM, the ACHM will be promptly removed in a
manner required by the appropriate government agency and in accordance with
Applicable Requirements.

 

Lessor will be fully responsible for making all
alterations and repairs to the Premises and the Building Shell at its cost
required to remove any and all ACHM discovered at any time to have existed in
the Premises or Building Shell as of the Start Date, or resulting from or
necessitated by the failure by Lessor and/or Lessor’s contractor to comply with
Applicable Requirements regarding ACHM, or from Lessor’s and/or Lessor’s
contractor’s utilization of Hazardous Substances as defined by Applicable
Requirements at the time the Lease is executed, in violation of such Applicable
Requirements or which could pose a health risk to occupants of the Premises.

 

1.3           Term. The Commencement Date shall be the earliest
of the completion of Lessee’s completion of Lessee’s Tenant Improvements (as
defined in Addendum Section 50.1 below) or April 1, 1998. Lessor will
confirm in writing the exact Commencement Date and Lease expiration date both
of which will be acknowledged in writing by Lessee upon Lessee’s confirmation
of the accuracy thereof. For purposes of this Section 1.3, completion of
Lessee’s Tenant Improvements shall be deemed to have occurred on the date on which
(i) Lessee’s architect, with no undue delay, issues a certificate to Lessee
stating that all Tenant Improvements have, in all material respects, been
completed in accordance with drawings approved by Lessee therefor and are
operable, (ii) all Utility Installations which are identified as part of
Lessee’s Tenant Improvements are operational at the Premises, (iii) adequate
access to the Premises for Lessee’s uses under the Lease has been completed,
and (iv) the government agency having appropriate jurisdiction thereover issues
a “right to occupy” designation (or such similar designation) in the inspection
record for Lessee’s Tenant Improvements.

 

 

1.4           Early Possession. 
Early Possession will start when the Lessor has completed the Building
Shell in accordance with Lessor’s Plans and shall end at the earliest of
Lessee’s completion of the Tenant Improvements as described in Section 1.3
above or April 1, 1998. In the event of the imposition of a water
moratorium by local governmental agencies with authority thereover such that
establishment of exterior landscaping to be installed by Lessor would be
adversely affected, Lessor may delay completion of such landscaping without
affecting the Start Date otherwise applicable, provided such landscaping is
completed as soon as practicable thereafter, and in all events not later than
the Commencement Date.

 

1.5           Base Rent.  Base Rent is calculated on the basis of $.59 per square foot of the
Premises per month on a “triple net” basis. The Base Rent shall be subject to
adjustment during the ninety (90) day period following the Commencement Date by
$.59/ft. if Lessor’s Architect determines the Building is more or less than
31,200 sq. ft. based on Building “as-builts” filed with the City of Carlsbad.  All square footage measurements shall be
from the roof “drip line” and in accordance with the Building Owners and
Managers Association International standards for industrial/commercial projects
(the “BOMA Standard”).  Lessor’s
Architect shall complete such calculations within said 90-day period at
Lessor’s expense. Lessee shall have the right, exercisable within ninety (90)
days after the later of (a) the date Lessor gives Lessee written notice of the
final calculation of the Premises and the Building as contemplated above, or
(b) the date Lessee commences business operations from the Premises (or, when
appropriate, any additional space leased by Lessee pursuant to the Lease), to
remeasure the Premises and the Building within such ninety (90) day period.  In the event that subsequent remeasurement
of the Premises and/or the Building by Lessee, within the time period specified
above, indicates that the square footage measurement prepared by Lessor
produces a square footage number in excess of or lower than the square footage
number which would have resulted had the BOMA Standard been properly utilized,
any payments due to Lessor from Lessee based upon the amount of square feet
contained in the Premises shall be proportionally, retroactively and
prospectively reduced or increased, as appropriate, to reflect the actual
number of square feet as properly remeasured under the BOMA Standard.  If Lessor disagrees with Lessee’s
remeasurement and if a dispute occurs regarding the final accuracy of the
measurement of the Premises and the Building in accordance with the BOMA
Standard, such dispute will be resolved pursuant to binding arbitration
pursuant to this Addendum.  Operating
Expenses (defined below) other than the Administration Fee (defined below) shall
commence on the Start Date.  Base Rent and
the Administration Fee shall not commence prior to the Commencement Date; provided,
however, to the extent Lessee commences business operations on, and
utilizes therefor, any portion of the Premises from and after the Start Date,
Lessee shall be responsible for payment of Base Rent and the Administration Fee
prorated with respect to the portion of the Premises so used.  In no event shall use of the Premises for
Lessee’s construction activities prior to the Commencement Date be deemed to
constitute a use of the Premises for Lessee’s business operations.

 

1.8            Agreed Use. Lessee will use the Premises for general
medical, office use and biopharmaceutical use, research and development,
product production, manufacture and distribution and any other like use in
keeping with the class and character of the building and permitted uses within
the Carlsbad Research Center.

 

1.9            Insuring Party. 
Lessee may opt to be the Insuring Party for all leasehold improvements
which are for biopharmaceutical uses as opposed to industrial/office uses upon
thirty (30) days prior written notice to Lessor.  Lessee shall also have the option of insuring the Building Shell
in the event Lessee can obtain the insurance coverages required under the Lease
with respect thereto at a premium cost of at least ten percent (10%) less than
the premium cost obtained by Lessor provided Lessee’s carriers for such
insurance are substantially comparable in all material respects to
Lessor’s.  Notwithstanding the foregoing,
Lessor may opt to remain the Insuring Party and retain its insurance carrier if
it pays the amounts in excess of such ten percent (10%) premium differential at
its sole cost and expense.

 

2.2           Condition. 
Lessor’s delivery of the Premises shall include the Building Shell fully
completed in accordance with the Plans and ready for Lessee’s construction of
its Tenant Improvements. There shall be no requirement that service contracts
under Paragraph 7.1(b) of the Lease be obtained by Lessee as a condition to
Lessor’s warranty regarding the HVAC as the HVAC systems are the responsibility
of Lessee as part of the Tenant Improvements

 

2

 

(defined
below). Written notices to be given to Lessor regarding non-compliance with the
warranties given under Paragraph 2.2 of the Lease shall be given with
reasonable promptness by Lessee following discovery of the condition giving
rise to such notice and the period during which such notices may be given is
modified to one (1) year as to all systems and elements of the Building which
are part of the Building Shell, however, Lessee shall have the benefit of any
longer warranty periods otherwise accruing to Lessor from contractors and
suppliers providing services or materials to Lessor as part of the Building Shell
construction. The acknowledgements set forth in Paragraph 2.4 of the Lease
shall not affect this Section.

 

2.3            Compliance. Lessor shall be responsible for the
compliance of the Building Shell with all Applicable Requirements in effect as
of the Start Date throughout the Term of the Lease and shall effect such
compliance promptly following notice from any party, including Lessee, thereof
at any time during the Term or any extensions thereof.  Lessee shall not be required to comply with
the six month notification period stated in Paragraph 2.3 with respect to such
non-compliance.  All costs incurred by
Lessor to comply with Applicable Requirements in effect on the Start Date shall
be born by Lessor solely and shall not be part of the Base Rent or otherwise payable
by Lessee. The acknowledgements set forth in Paragraph 2.4 of the Lease shall
not affect this Section.

 

2.4            Acknowledgements.  All
references to Brokers are hereby deleted from Paragraph 2.4.

 

2.5            Lessee as Prior
Owner/Occupant.  Paragraph 2.5 of the Lease is hereby
deleted.

 

3.3            Delay in Possession. In the event possession of the Premises is
not delivered by Lessor to Lessee by April 1, 1998, Lessee shall have the
right to terminate the Lease.

 

3.4            Lessee Compliance. The last sentence of Paragraph 3.4 is hereby
deleted.

 

5.             Security Deposit.  In
the event Lessor utilizes the Security Deposit as permitted under the Lease,
Lessee shall have thirty (30) days after request therefore to replenish the
amount of the Security Deposit with the required amount under the Lease.  Lessee shall have no obligation to increase
the amount of the Security Deposit, for any reason, so long as the L/C (as
defined below) is in place.  Any application
by Lessor of the Security Deposit shall cure the default to which such portion
of the Security Deposit is applied, to the extent thereof.  As additional security for monetary
defaults, Lessee shall deliver to Lessor no later than the Start Date an
irrevocable Letter of Credit for $600,000 from Union Bank of California or
other comparable financial institution having substantially the same net worth,
substantially in the form attached as Schedule 5 (excluding any terms
which are found to be commercially unreasonable by the issuer thereof), or
otherwise on terms and conditions mutually acceptable to Lessor, Lessee and
such issuer (“L/C”).  If Lessee fails to
timely deliver the L/C, and such failure continues for a period of thirty (30)
days following the Start Date, Lessor shall have the right to immediately
terminate the Lease by giving Lessee written notice of such election, and such
termination shall be effective immediately upon Lessor’s delivery of such
notice. Lessee shall also have the option of maintaining the L/C amount as a
cash deposit with Lessor as contemplated under Section 5.2(i) below.

 

5.1           Lessor shall not resort to the L/C without
first exhausting the proceeds of the monetary portion of the Security Deposit.
Fifteen (15) days before each anniversary of the issuance of the L/C, Lessee
shall obtain a commitment of renewal and if the L/C is not renewed within ten
(10) days, the failure to renew will permit Lessor to draw down the L/C in full
and maintain it in lieu of the L/C as contemplated under Section 5.2(i)
below.

 

5.2           Notwithstanding any other provision of the Lease
and so long as no uncured material Breach exists, Lessor agrees to release the
L/C under any one of the following independent conditions:

 

(i)            Lessee substitutes cash with Lessor which
Lessor agrees to keep in interest bearing accounts in the name of Lessor with
Lessee entitled to an offset against rental obligations for the amount of
interest income earned (the financial institutions with which such deposit, or
portions thereof, is maintained, and the rate of interest accruing thereon,
shall be reasonably acceptable to Lessee), or

 

3

 

(ii)           Lessee reports net income of at least
$50,000,000 for three years in a row, or 

 

(iii)          Lessee’s audited Balance Sheet indicates a
Net Worth of at least $100,000,000.

 

6.2           Hazardous Substances.  The word “potentially” is hereby deleted from Paragraph 6.2(a)(i).  Paragraph 6.2(b) is hereby modified to
provide that such notice from Lessee to Lessor regarding the presence of
Hazardous Substances with respect to the Premises shall only be required if
such presence of Hazardous Substances is in violation of Applicable
Requirements. Paragraph 6.2(c) is modified to require that Lessee shall not be
responsible for any Hazardous Substances brought on to the Premises by Lessor,
its employees, agents or representatives. 
Paragraph 6.2(d) is modified to provide that Lessee shall not be
required to indemnify Lessor or its employees, agents or representatives
against such party’s own actions, negligence or omissions. Without limiting Lessee’s
obligations under this section regarding reporting requirements with
respect to Hazardous Substances, Lessee shall, within ten (10) business days
following Lessee’s first use of a Hazardous Substance required to be reported
thereon, complete and deliver to applicable government authorities a Hazardous
Materials Questionnaire in the form as set forth in Schedule 6.2 annexed
to this Addendum, with a copy to Lessor.

 

6.3           Lessee’s  Compliance
With Applicable Requirements.  Lessee
shall be entitled to satisfy its requirements regarding evidencing its
compliance with Applicable Requirements by providing Lessor with copies of
permits filed with applicable government authorities by Lessee on an annual
basis other than building permits, copies of which shall be provided to Lessor
by Lessee as soon as practicable following Lessee’s receipt of same.  Lessee shall only be required to comply with
reasonable recommendations of Lessor’s engineers and/or consultants.

 

7.1           Lessee’s  Obligations.  Lessor shall assign all warranties
and guarantees in connection with the Building Shell and the Premises for work
completed by or on behalf of Lessor, to Lessee and shall extend all reasonable
assistance to Lessee in the enforcement thereof. Lessor shall also provide a
list of all subcontractors and vendors supplying services or materials in
connection with the construction and completion of the Building Shell and the
Premises to Lessee promptly following the Commencement Date.

 

7.3           Alterations; Trade
Fixtures.  Lessee is granted the right to make
non-structural alterations and improvements to the Premises costing less than
$100,000 per year without any consent required of Lessor, as long as (a) Lessee
pays for the entire cost of such alterations and improvements, (b) Lessee agrees
to remove said alterations and improvements upon the expiration or termination
of the Lease, if requested by Lessor, and (c) such alterations and improvements
will not adversely affect the structural integrity of the Premises and/or the
Building.  Any time Lessee proposes to
make such alterations and/or improvements for which Lessor has a right of
approval hereunder, Lessee shall provide Lessor with ten (10) business days’
notice of such proposed alterations and/or improvements, together with the
plans and specifications therefor and a list of all vendors and subcontractors
supplying services or materials with respect to such alterations, and Lessor
shall grant its approval within such ten (10) day period, unless Lessor
reasonably determines that such alterations and/or improvements would adversely
affect the structural integrity of the Premises and/or the Building or would
adversely affect the exterior appearance of the Building.  Lessee shall not be required to provide any
completion bonds with respect to alterations installed by Lessee. Lessee shall
provide “as-builts” for all alterations.

 

Notwithstanding
anything to the contrary in the Lease, all articles of personal property and
all Trade Fixtures, machinery and equipment, furniture and movable partitions
owned by Lessee or installed by or on behalf of Lessee in the Premises shall
remain the property of Lessee, and may be removed by Lessee at any time during
the Term of the Lease as long as Lessee is not in Breach hereunder with any
applicable cure period having expired. 
If Lessee fails to remove all of its effects from the Premises upon the
expiration or earlier termination of the Lease for any cause whatsoever, Lessor
may, at its option, any time after five (5) days’ written notice to Lessee of
its intention to remove such effects, remove same in any manner that Lessor
shall choose and store such effects without liability to Lessee for loss
thereof, and Lessee shall pay Lessor upon demand any and all reasonable
expenses incurred in connection with such removal, including court costs,
attorneys’ fees, and reasonable storage charges

 

4

 

incurred
while such effects were in Lessor’s possession. The term “Trade Fixtures” shall
mean Lessee’s machinery and equipment that has been installed without
penetrating the roof membrane and can be removed without doing material damage
to the Premises (unless repaired by Lessee) whether or not the item is plugged
into an electrical outlet or hot wired.

 

7.4(b)      Removal.  Lessee shall receive not less than one
hundred twenty (120) days prior written notice from Lessor to remove
alterations required by Lessor to be removed due to the expiration of the Lease
Term, such removal to be completed within said 120-day period or as soon as
practicable thereafter with due and diligent effort.  Such 120-day notice from Lessor may be given at any time during
the period commencing on the date which is six (6) months prior to the
expiration of the Term of the Lease and ending on the date which is six (6)
months after the expiration of the Term of the Lease.

 

8.1            Payment for Insurance.  To the extent Lessor is the Insuring Party, payments for premiums shall
be made by Lessee to Lessor annually not less than fifteen (15) business days
following Lessee’s receipt of notification from Lessor of such premium amount
based on the actual due date for Lessor’s annual payment of such premiums.

 

8.3(a)      Property Insurance-Building and Improvements.  Notwithstanding language to the contrary, deductibles for policies of
insurance required to be maintained hereunder may be $25,000 per occurrence.

 

8.3(b)      Rental Value.  Rental Value insurance
required to be maintained under the Lease shall not extend beyond the date of
completion of repairs or replacements with respect to any such loss giving rise
to a claim thereunder, or beyond the date of any termination of the Lease.

 

8.3(c)      Adjacent Premises. 
Paragraph 8.3(c) is
hereby deleted.

 

8.4            Lessee’s  Property/Business
Interruption Insurance.  Paragraph
8.4 is hereby deleted from the Lease.

 

8.5            Insurance Policies.  Lessor shall not do or permit to be done anything which invalidates
required insurance policies under the Lease.

 

8.8           Exemption of Lessor from
Liability.  Lessor shall not be exempted from liability
for Lessor’s (or anyone acting through or on behalf of Lessor) intentional
misconduct.

 

9.2            Partial Damage - Insured
Loss. The reference to a
total cost of repair of $10,000 shall be replaced with a reference to
$100,000,  Lessee shall have the right
to effect any repairs to the Premises which Lessor elects not to effect. To the
extent any amounts contributed by Lessee to repair damage or destruction are in
excess of the actual cost thereof, or cost savings are realized with respect
thereto, the full amount of such excess proceeds or cost savings shall be paid
to Lessee.

 

9.4           Total Destruction.  Lessee shall not be liable for payment of any rent under the Lease
after the date of Lease termination (subject to any abatement occurring from
the date of Premises Total Destruction).

 

9.5           Damage Near End of  Term.  Lessee shall be entitled to a
reciprocal right to terminate the Lease in the event of such damage.  Lessee is also granted the following
additional rights to terminate.

 

A.            Notwithstanding anything in the Lease to the
contrary, and except as expressly set forth in Subsection (B) below, in
the event that Lessee is notified or becomes aware of the occurrence of the
following:

 

(i)            damage or destruction to the Premises, and/or
the Building or any part thereof so as to interfere substantially with Lessee’s
use of the Premises, Premises parking, and/or the Building;

 

5

 

(ii)           a taking by eminent domain or exercise of other governmental authority
of the Premises, and/or the Building or any part thereof so as to interfere
substantially with Lessee’s use of the Premises, Premises parking, and/or the
Building; or

 

(iii)          any discovery of Hazardous Substances in, on or around the Premises,
the Building and/or the Building site not placed in, on or around the Premises,
the Building and/or the site by Lessee, that, considering the nature and amount
of the substances involved, interferes with Lessee’s use of the Premises or
which presents a health risk to any occupants of the Premises (each of the
items set forth in provision (A)(i), (ii) and (iii) being referred to herein as
a “Trigger Event”); and

 

Lessee
cannot, within nine (9) months (“Non-Use Period”) of the occurrence of the
Trigger Event, be given reasonable use of, and access to, a fully repaired,
restored, safe and healthful Premises, Premises parking and Building (except
for minor “punch-list” items which will be repaired promptly thereafter), and
the utilities and services pertaining to the Premises, the Premises parking and
the Building, all suitable for the efficient conduct of Lessee’s business
therefrom, then Lessee may elect to exercise a right to terminate the Lease
upon thirty (30) days’ written notice sent to Lessor upon the expiration of the
Non-Use Period.

 

B.            In the event of any Trigger Event occurring
during the last year of the Lease Term or, if an applicable renewal option has
been exercised, during the last year of any renewal term, should the Non-Use
Period continue for ninety (90) days, Lessee may elect to exercise a right to
terminate the Lease upon thirty (30) days’ written notice sent to Lessor at any
time following the expiration of the Non-Use Period.

 

9.6           Abatement of Rent; Lessee’s
Remedies.  Paragraph 9.6 of the Lease is hereby deleted
and replaced with the following:

 

In the event that Lessee is prevented from using, and does not use, the
Premises or any portion thereof, for five (5) consecutive business days or ten
(10) business days in any twelve (12) month period (the “Eligibility Period”)
as a result of (a) any damage or destruction to the Premises, the Premises
parking and/or the Building (other than due to Premises Total Destruction when
abatement of Lessee’s rent shall commence as of the date of such destruction,
(b) any repair, maintenance or alteration performed by Lessor after the
Commencement Date and required or permitted by the Lease, which substantially
interferes with Lessee’s use of the Premises, the Premises parking and/or the
Building, (c) any failure by Lessor to provide Lessee with services or access
to the Premises, the Premises parking and/or the Building, (d) because of an
eminent domain proceeding, or (e) because of the presence of Hazardous
Substances in, on or around the Premises, the Building or the Site which could
pose a health risk to occupants of the Premises, then Lessee’s Base Rent shall
be abated or reduced, as the case may be, after expiration of the Eligibility
Period for such time that Lessee continues to be so prevented from using, and
does not use, the Premises or a portion thereof, in the proportion that the
rentable area of the portion of the Premises that Lessee is prevented from
using, and does not use, bears to the total rentable area of the Premises.  However, in the event that any portion of
the Premises comprising seventy-five percent (75%) of the rentable area of the
Premises is rendered unusable as described hereinabove, then for such time
after expiration of the Eligibility Period during which such portion of the
Premises is so rendered unusable, the Base Rent for the entire Premises shall
be abated; provided, however, if Lessee reoccupies and conducts its business
from any portion of the Premises during such period, the rent allocable to such
reoccupied portion, based on the proportion that the rentable area of such
reoccupied portion of the Premises bears to the total rentable area of the
Premises, shall be payable by Lessee from the date such business operations
commence. If Lessee’s right to abatement occurs because of an eminent domain
taking and/or because of damage or destruction to the Premises, the Premises
parking, the Building, or Lessee’s property, provided rental value insurance
proceeds are available to

 

6

 

Lessor therefor, Lessee’s abatement period shall continue until Lessee
has been given sufficient time and sufficient access to the Premises, the
Premises parking facility and/or the Building, to rebuild such portion it is
required to rebuild, to install its property, furniture, fixtures, and equipment
to the extent the same shall have been removed and/or damaged as a result of
such damage or destruction and/or eminent domain taking and to move in over one
(1) weekend. To the extent Lessee is entitled to abatement without regard to
the Eligibility Period, because of an event covered by Lease Articles 9 or 14,
then the Eligibility Period shall not be applicable.

 

10.1          Definition of “Real Property
Taxes”.  Real Property Taxes shall not include any
tax based on any net income of Lessor with respect to the Building for state or
federal income tax purposes and shall not include any tax penalties incurred as
a result of Lessor’s negligence or failure to file any tax or informational
returns when due.

 

10.2          Payment of Taxes.  Paragraph 10.2 is hereby deleted.  Lessee shall pay all Real Property Taxes to Lessor who shall pay
such amounts directly to the taxing authorities prior to delinquency
thereof.  Such payment shall be made
only at such time as payment of Real Property Taxes is actually due to the
taxing authorities to prevent imposition of penalties for delinquent payment.
Real Property Taxes shall also include reimbursement to Lessor for its
prepayment of amounts assessed against the Premises under City of Carlsbad
Community Facilities District #1, provided such reimbursement is made in such
amounts and at such times as such assessment would have been payable by Lessor
in the ordinary course absent such prepayment.

 

10.3          Joint Assessment. Paragraph 10.3 of the Lease is hereby
deleted.

 

10.4          Personal Property
Taxes.  All of Paragraph 10.4 of the Lease except for
the first sentence thereof is hereby deleted.

 

12.1         Assignment and Subletting. Lessor’s Consent required.  All of Paragraph 12.1 of the Lease is hereby
deleted and replaced with the following:

 

Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage or encumber (collectively, “assign or assignment”) or sublet all or
any part of Lessee’s interest in this Lease or in the Premises without Lessor’s
prior written consent. Notwithstanding the foregoing, Lessee may assign the
Lease or may sublet the Premises or any part thereof without Lessor’s consent
to any subsidiary, parent, affiliate or control corporation or to any
corporation which acquires all of Lessee’s assets or with which it may merge
providing Lessee remains liable and the use does not substantially change.

 

Notwithstanding any other provision in Paragraph 12 of the Lease,
Lessor’s consent to a sublease shall not be required and Lessor shall not have
the right to adjust the rental so long as all of the following conditions are
and remain satisfied: (a) the sublease is for a portion of the Premises
constituting less than fifty percent (50%) of the total rentable square feet of
the Premises; (b) Lessee continues to occupy the remaining portions of the
Premises; (c) the sublessee does not employ on the Premises Hazardous
Substances in violation of Applicable Requirements and its use is not otherwise
in violation of the Lease; and (d) Lessee is not otherwise in Breach of this
Lease.

 

For any other assignment or subletting, Lessor agrees it will not
unreasonably withhold, condition or delay its consent to any such assignment or
subletting.  Rental amounts in excess of
the Base Rent payable to Lessor by Lessee under the Lease (the “Excess Rental”)
on account of such assignment or subletting will be shared between the Lessor
and Lessee. Lessor shall be entitled to that portion of the Excess Rental
arising by virtue of the value of the Premises as a warehouse (offices,
distribution of electrical, bathrooms etc.) and Lessee shall be entitled to
that portion of the Excess Rental arising by virtue of the improvements
installed by Lessee having a biopharmaceutical use and character as opposed to
an industrial/office use and character; provided, however, Excess
Rental shall be calculated net of all expenses incurred by Lessee in any
assignment or subleasing of the Premises, including, without limitation, any
amounts paid to Lessor by Lessee during periods where the assigned or subleased
portion of the Premises was vacant; any improvement allowance or other

 

7

 

economic
concession paid by Lessee to any sublessee or assignee; broker’s commissions;
attorneys’ fees; lease take-over payments; costs of advertising the space for
sublease or assignment; and any other costs actually paid in assigning or
subletting the Premises.  Lessor shall
not be paid any Excess Rental amounts until Lessee has recovered all such costs
incurred in connection with such subleasing or assignment.

 

12.2(e)    The amount which Lessor may receive for consideration of any request
for assignment or subletting shall not exceed $500 in any instance.

 

12.3(c)    Paragraph 12.3(c) is hereby modified to provide that for any action by
a sublessee with respect to the Premises that would trigger a requirement for
Lessor’s consent under the Lease if such action were taken by Lessee under the
Lease, such subtenant shall be required to seek Lessor’s consent to such
action.

 

12.3(e)    The last sentence of Paragraph 12.3(e) is hereby deleted.

 

13.1(b)    Paragraph 13.1(b) is hereby deleted and replaced with the following:

 

The failure to pay any installment of base rent, or any other monetary
payment required to be made by Lessee under the Lease, when due and payable
hereunder, upon the date when payment is due, such failure continuing for a
period of five (5) business days after written notice of such failure; or

 

13.1(c)    Paragraph 13.1(c) is hereby modified to replace the reference to “ten
(10) days” with a reference to “thirty (30) days.”

 

13.l(f)      Paragraph 13.1(f) is hereby deleted and replaced with the
following:   “All notices to be given
pursuant to this Section 13.1 shall be in addition to, and not in lieu of,
the notice requirements of California Code of Civil Procedure
Section 1161.”

 

13.1(g)    Paragraph 13.1(g) is hereby deleted from the Lease.

 

13.4         Late Charges. The late charge of 10% is deleted and
replaced with a late charge of six percent (6%).

 

13.5         Interest.  The reference to 4% for purposes of calculating Interest on the Lease
is deleted and replaced with two percent (2%).

 

15.           Brokers’ Fees. 
Lessor shall be responsible for payment of all fees owed to the Brokers
with respect to the Lease.

 

16.2         Lessee shall have no obligation to deliver any financial statements to
Lessor so long as Lessee is required to report to the United States Securities
and Exchange Commission with respect to its financial status and such filings
are publicly available.

 

26.           No  Right to
Holdover.  The amount of 150%
as an increase in the Base Rent for a holdover by Lessee shall not apply if
Lessee has notified Lessor not less than three (3) months prior to the
expiration of the Term of the Lease that Lessee intends to hold over in the
Premises, subject to Lessor’s written consent, not to be unreasonably withheld,
conditioned or delayed, in which event such holdover by Lessee shall be on all
the terms and provisions of the Lease, at a Base Rent adjusted pursuant to
Section 55 below. The duration of such holdover shall be specified by
Lessee at the time notice of such holdover is given to Lessor and shall not
exceed three (3) months.

 

30.2         Attornment.  As a condition to any requirement of attornment hereunder, the
beneficiary of a Security Device shall have elected that this Lease shall be
prior and superior to such Security Device prior to any event of foreclosure
thereunder.

 

31.           Attorneys’ Fees.  The provisions of Paragraph 31 of the Lease shall apply to arbitration.

 

8

 

32.           Lessor’s Access. 
Lessor shall only enter the Premises to the extent reasonably required
by Lessor and not “as Lessor may deem necessary.”

 

37.           Guarantor.  Paragraph 37 is hereby deleted from the Lease.

 

39.2         Options Personal to Original
Lessee.  Notwithstanding the provisions of Paragraph
39.2, Lessee may assign its Options under the Lease to any permitted assignee
under the Lease provided Lessee remains liable for full performance of the
Lease by such assignee.

 

40.           Multiple Buildings.  Paragraph 40 is hereby deleted from the Lease.

 

50.           Tenant Improvements.  Lessee at its sole cost shall be responsible for the Tenant
Improvements including space plans, building plans, and for all costs of
construction including, but not by way of limitation, permit fees for its
Tenant Improvements.  Office
improvements shall be constructed of a quality comparable to the quality
existing at 5935 Darwin Court or otherwise reasonably acceptable to Lessor and
consist of a minimum of 5,100 square feet on the second floor and 5,100 square
feet directly below on the first floor. A minimum of 5,100 square feet of such
office improvements shall be completed within twelve (12) months of the
Commencement Date, with the remainder to be completed not later than eighteen
(18) months from the Commencement Date. 
Lessee’s plans for construction of the Tenant Improvements (“Lessee’s
Plans”) and its general contractor for such construction shall be subject to
the Lessor’s prior approval to be given not later than ten (10) business days
after submittal to Lessor, with Lessor’s approval not to be unreasonably
withheld, conditioned or delayed.  In
the event Lessor disapproves Lessee’s Plans, Lessor shall specify the reasons
for such disapproval and Lessee shall have ten (10) business days to revise and
re-submit Lessee’s Plans for Lessor’s approval.  Lessor shall respond thereto within five (5) business days and if
the revised Lessee’s Plans are again disapproved by Lessor, the foregoing
procedure shall be re-instituted until Lessor’s approval is obtained. Lessee
warrants that the Tenant Improvements will comply with all Applicable
Requirements in effect at the time of such construction.  Lessee shall construct as part of the Tenant
Improvements, screening of the HVAC units on the roof of the Building in
accordance with the requirements of the covenants, conditions and restrictions
(“CC&Rs”) applicable to the project of which the Building is a part.  Lessee acknowledges that Lessor has notified
those individuals responsible for administering the CC&Rs that such
screening will be completed in accordance with the attached
Schedule 50.  Unless Lessee is
successful in obtaining such individual’s consent to a deviation from the
screening requirements set forth in the attached Schedule 50, Lessee shall
complete such screening to the satisfaction of such individuals in accordance
with the attached Schedule 50.

 

50.1         The phrase “Tenant Improvements” means all interior and exterior
(including HVAC systems) improvements which will not be part of the Building
Shell constructed by Lessor and shall include but not by way of limitation (a)
partitions, walls, doors, (b) all surface finishes, including wall coverings,
paint, floor coverings, suspended ceilings and other similar items, (c) duct
work, heat pumps, vents filters, diffusers, terminal boxes and accessories for
completion of heating, ventilation and air conditioning systems within the
Premises, (d) electrical distribution systems (including panels, subpanels,
wires and outlets), lighting fixtures, outlets, switches and other electrical
work to be installed in the Premises, (e) plumbing lines, fixtures and
accessories, and all fire and life safety control systems such as fire walls
and fire alarms (including piping, wiring and accessories) to be located in the
Premises , (f) improvements required for compliance with Title 24, and other
governmental agencies, and (g) all the construction specific for Lessee’s
biopharmaceutical needs, to the extent the foregoing are included in the Plans.

 

Lessee represents and warrants that no part of its Tenant Improvements
will contain ACHM in violation of Applicable Requirements in effect at the time
of such construction.  If Lessee does
employ ACHM, the ACHM will be promptly removed in a manner required by the
appropriate government agency in accordance with Applicable Requirements.

 

Lessee shall be fully
responsible for making all alterations and repairs to the Tenant Improvements
at its cost to remove any and all ACHM resulting from or necessitated by the
failure of Lessee and/or Lessee’s contractor to comply with Applicable
Requirements

 

9

regarding ACHM’s in effect at the time of such construction, or from
Lessee’s and/or Lessee’s contractor’s utilization of Hazardous Substances as
defined by Applicable Requirements, in violation of such Applicable
Requirements or which could pose a health risk to occupants of the Premises.

 

51            Operating Expenses. 
In addition to payment of the Base Rent, Lessee shall, from
and after the Start Date, be responsible for payment of all “Operating
Expenses.”  The term “Operating
Expenses” means all direct expenses and costs attributable to Lessee’s use,
occupancy and operation of the Premises which are customary in a “triple net”
lease.  Other than payments of Real
Property Taxes, the Administration Fee and premiums for insurance policies
maintained by Lessor as the Insuring Party, all Operating Expenses shall be
paid directly by Lessee to the appropriate third party provider of services,
utilities or items of operating expense prior to delinquency.  Lessor shall promptly forward to Lessee any
and all invoices received by Lessor with respect to Operating Expenses, and in
all events in sufficient time to permit timely payment thereof by Lessee.  Operating Expenses shall also include a fee
payable to Lessor (the “Administration Fee”) for the due and punctual performance
of all administrative responsibilities of Lessor under the Lease. The
Administration Fee shall be payable concurrently with Base Rent in an amount
equal to two percent (2%) of the monthly Base Rent then payable with respect to
the Premises.  In the event of any
abatement of rent permitted Lessee pursuant to the provisions of the Lease, the
Administration Fee shall also be abated in the same proportion as the Base
Rent.

 

52.           Services.  At the time of completion of the Building
Shell, Lessor and its contractors shall, at no cost to Lessee, provide
“as-builts” for the Building Shell and shall conduct a thorough inspection of
the Building’s systems in order to certify that the equipment and systems are
in full working order.  At the same
time, Lessor will supply a written certification of the results of its
mechanical contractor’s inspection. 
Lessee will be given all certifications that Lessor receives from its
contractors, subcontractors and vendors for construction of the Building Shell.

 

53.           Non-Disturbance.  Lessor warrants and represents
that in the event Lessor introduces any lien or mortgage holder to the
Premises, then Lessor will obtain nondisturbance agreements in a form
reasonably acceptable to Lessee from any and all of such mortgage or lien holders,
ground lessors, etc., which agreements shall provide that as long as Lessee is
not in default of the Lease beyond any applicable grace period, Lessee’s
occupancy of the Premises shall not be disturbed, its rights under the Lease
will continue to be recognized and all of the Lessor’s future obligations under
the Lease will continue to be performed.

 

54.           Real
Estate Licenses.  California
law requires that Lessee be informed that Roland A. Childs, a general partner
of the Childs Family Investment Partnership, L.P. and Allan J. Gardner, a
trustee of the A. J. Gardner Family Trust are each State of California Real
Estate Licensees.

 

55.           Rent
Adjustments. The monthly rent for each month of the adjustment
periods specified below shall be increased using the cost of living adjustment.

 

(a)            On the month of the
first anniversary of the Commencement Date and each twelve months thereafter,
the monthly rent payable under paragraph 1.5 (“Base Rent”) of the Lease shall
be adjusted by the change, if any, from the Base Month specified below, in the
Consumer Price Index of the Bureau of Labor Statistics of the US Department of
Labor for CPI U (All Urban Consumers), for Los Angeles-Anaheim-Riverside, All
Items (1982- 1984=100), herein referred to as “CPI.”

 

(b)           The monthly rent
payable in accordance with subparagraph (a) of this Section 55 shall be
calculated as follows:  the Base Rent
set forth in Paragraph 1.5 of the Lease, shall be multiplied by a fraction the
numerator of which shall be the CPI of the calendar month 2 (two) months prior
to the month specified in (a) during which the adjustment is to take effect,
and the denominator of which shall be the CPI of the calendar month which is
two (2) months prior to the month containing the Commencement Date. The sum so
calculated shall constitute the new monthly rent hereunder, but in no event,
shall any such new monthly rent be less than the rent payable for the month
immediately preceding the date for rent adjustment nor shall it be less than
three (3) percent or more than six (6) percent during the

 

10

 

first five (5) years unless the CPI exceeds twelve (12) percent in
which case the overage over twelve (12) percent will be added to the maximum
six (6) percent as additional rent. Thereafter, during the remainder of the
initial term and any extension if one or both of the two options to extend are
exercised, the Base Rent will be adjusted utilizing the same CPI in the same
manner with an annual minimum of three (3) percent increase and a maximum seven
(7) percent increase unless the CPI exceeds thirteen (13) percent in which case
the overage over thirteen (13) percent will be added to the maximum seven (7)
percent as additional rent.

 

56.           Options to Extend. 
Lessor hereby grants to Lessee two (2) options (each, an
“Option”) to extend the Term of this Lease for an additional sixty (60) month
period for each Option, commencing when the prior term expires upon each and
all of the following terms and conditions:

 

(i)            Lessee gives to Lessor and Lessor actually
receives (which receipt may be independently confirmed by Lessee) on a date
which is prior to the date that the option period would commence (if exercised)
by at least six (6) and not more than nine (9) months, a written notice in
accordance with the Lease of the exercise of the options to extend this Lease
for said additional terms, time being of the essence. If said notification of
the exercise of said Options are not so given and received, the Options shall
automatically expire; said Options may only be exercised consecutively;

 

(ii)           The provisions of Paragraph 39, including
the provision relating to default of Lessee set forth in Paragraph 39.4 of this
Lease are conditions of the Options;

 

(iii)          All of the terms and conditions of this Lease
except where specifically modified by these Options shall apply;

 

(iv)          The monthly Base Rent for each month of the
applicable Option period shall be calculated as follows, using the methods
indicated below:

 

Market Rental Value Adjustments (MRV)

 

(a)           On the 10th anniversary of the Commencement
Date if the first Option to extend is timely exercised and again five (5) years
later if the second Option to extend is timely exercised, Base Rent shall be
adjusted to the “Market Rental Value” of the Premises as follows:

 

1.             Four months prior to
the Market Rental Value (MRV) Adjustment Dates described above, Lessor and
Lessee shall meet to establish an agreed upon new MRV for comparable space in
the Carlsbad Research Center for the specified term. In determining MRV, the
comparable space will be limited to an industrial building with offices,
electrical distribution and other typical warehouse space such as but not
limited to bath rooms but specifically excluding the peculiar attributes
required by a biopharmaceutical firm such as refrigeration, and required
plumbing and piping.  If agreement
cannot be reached, then:

 

(i)            Lessor and Lessee shall immediately appoint
a mutually acceptable appraiser or broker to establish the new MRV within the
next thirty (30) days. Any associated costs will be split equally between the
parties, or

 

(ii)           Both Lessor and Lessee shall each
immediately select and pay the appraiser or broker of their choice to establish
a MRV within the next thirty (30) days. If, for any reason, either one of the
appraisals is not completed within the next thirty (30) days, as stipulated,
then the appraisal that is completed at that time shall automatically become
the new MRV.  If both appraisals are completed
and the two appraisers/brokers cannot agree on a reasonable average MRV then
they shall immediately select a third mutually acceptable appraiser/broker to
establish a third MRV within the next thirty (30) days.  The average of the two appraisals closest in
value shall then become the new MRV. 
The costs of the third appraisal will be split equally between the
parties.

 

2.              If Lessee does not
add additional mezzanine to the existing 5,100 sq. ft., the minimum MRV will be
One and Five One-Hundredths Dollars ($1.05) per ft, for the

 

11

 

eleventh (11th) year and One and Twenty-One One-Hundredths Dollars
($1.21) for the sixteenth (16th) year. If Lessee adds additional mezzanine
during the Term of the Lease, the minimum MRV will be computed in the same
manner as the stated minimums were determined, the example of which is shown on
the attached Schedule 56. In any event, the new MRV shall not be less than
the Base Rent payable for the month immediately preceding the date for rent
adjustment.

 

(b)           Upon the establishment of each new MRV:

 

1.              The monthly Base
Rent so calculated for each Term as specified in subsection (a) above will
become the new “Base Rent” for the purpose of calculating any further CPI
adjustments as specified in Section 55 above; and

 

2.              the first month of
each Market Rental Value term as specified in subsection (a) above shall
become the new “Base Month” for the purpose of calculating any further Cost of
Living Adjustments as specified in Paragraph 55.

 

57.           Arbitration.  This
Addendum provision contains the sole and exclusive method, means and procedure
to resolve any and all disputes or disagreements, including whether any
particular matter constitutes, or with the passage of time would constitute, a
Default or Breach under the Lease.  The
parties hereby irrevocably waive any and all rights to the contrary and shall
at all times conduct themselves in strict, full, complete and timely accordance
with the provisions of this Addendum provision.  Any and all attempts to circumvent the provisions of this
Addendum provision shall be absolutely null and void and of no force or effect
whatsoever.  As to any matter submitted
to arbitration to determine whether it would, with the passage of time,
constitute a Default or Breach, such passage of time shall not commence to run
until any such affirmative determination, so long as it is simultaneously
determined that the challenge of such matter as a potential Default or Breach
was made in good faith, except with respect to the payment of money.  With respect to the payment of money, such
passage of time shall not commence to run only if the party which is obligated
to make the payment does in fact make the payment to the other party. Such
payment can be made “under protest,” which shall occur when such payment is
accompanied by a good-faith notice stating why the party has elected to make a
payment under protest.  This
Section shall not prevent Lessor’s recourse to the L/C or to cash held in
lieu thereof for Breaches under the Lease, however, if Lessee disputes the
existence of such Breach any draw down of the L/C or cash held in lieu thereof,
as the case may be, shall be deemed made “under protest” pending resolution of
such dispute hereunder.  Such protest
will be deemed waived unless the subject matter identified in the protest is
submitted to arbitration as set forth in the following:

 

(a)           Arbitration Panel.  Within ninety (90) days after delivery of
written notice (“Notice of Dispute”) of the existence and nature of any dispute
given by any party to the other party, and unless otherwise provided herein in
any specific instance, the parties shall each: (i) appoint one (1) lawyer
actively engaged in the licensed and full-time practice of law, specializing in
real estate, in the County of San Diego for a continuous period immediately
preceding the date of delivery (“Dispute Date”) of the Notice of Dispute of not
less than ten (10) years, but who has at no time ever represented or acted on
behalf of any of the parties, and (ii) deliver written notice of the identity
of such lawyer and a copy of his or her written acceptance of such appointment
and acknowledgment of and agreement to be bound by the time constraints and
other provisions of this Addendum provision (“Acceptance”) to the other parties
hereto. The party who selects the lawyer may not consult with such lawyer,
directly or indirectly, to determine the lawyer’s position on the issue which
is the subject of the dispute.  In the
event that any party fails to so act, such arbitrator shall be appointed pursuant
to the same procedure that is followed when agreement cannot be reached as to
the third arbitrator.  Within ten (10)
days after such appointment and notice, such lawyers shall appoint a third
lawyer (together with the first two (2) lawyers, “Arbitration Panel”) of the
same qualification and background and shall deliver written notice of the
identity of such lawyer and a copy of his or her written Acceptance of such
appointment to each of the parties.  In
the event that agreement cannot be reached on the appointment of a third lawyer
within such period, such appointment and notification shall be made as quickly
as possible by any court of competent jurisdiction, by any licensing authority,
agency or organization having jurisdiction over such lawyers, by any
professional association of lawyers in existence for not less than ten (10)
years at the time of such dispute or disagreement and the geographical

 

12

 

membership boundaries of which extend to the County of San Diego or by
any arbitration association or organization in existence for not less than ten
(10) years at the time of such dispute or disagreement and the geographical
boundaries of which extend to the County of San Diego, as determined by the party
giving such Notice of Dispute and simultaneously confirmed in writing delivered
by such party to the other party.  Any
such court, authority, agency, association or organization shall be entitled
either to directly select such third lawyer or to designate in writing,
delivered to each of the parties, an individual who shall do so.  In the event of any subsequent vacancies or
inabilities to perform among the Arbitration Panel, the lawyer or lawyers
involved shall be replaced in accordance with the provisions of this Addendum
provision as if such replacement was an initial appointment to be made under
this Addendum provision within the time constraints set forth in this Addendum
provision, measured from the date of notice of such vacancy or inability, to the
person or persons required to make such appointment, with all the attendant
consequences of failure to act timely if such appointed person is a party
hereto.

 

(b)            Duty.  Consistent with the provisions of this
Addendum provision, the members of the Arbitration Panel shall utilize their
utmost skill and shall apply themselves diligently so as to hear and decide, by
majority vote, the outcome and resolution of any dispute or disagreement
submitted to the Arbitration Panel as promptly as possible, but in any event on
or before the expiration of thirty (30) days after the appointment of the
members of the Arbitration Panel.  None
of the members of the Arbitration Panel shall have any liability whatsoever for
any acts or omissions performed or omitted in good faith pursuant to the
provisions of this Addendum provision.

 

(c)            Authority.  The Arbitration Panel shall (i) enforce and
interpret the rights and obligations set forth in the Lease to the extent not
prohibited by law, (ii) fix and establish any and all rules as it shall
consider appropriate in its sole and absolute discretion to govern the
proceedings before it, including any and all rules of discovery, procedure
and/or evidence, and (iii) make and issue any and all orders, final or
otherwise, and any and all awards, as a court of competent jurisdiction sitting
at law or in equity could make and issue, and as it shall consider appropriate
in its sole and absolute discretion, including the awarding of monetary damages
(but shall not award consequential damages to either party and shall not award
punitive damages except in situations involving knowing fraud or egregious
conduct condoned by, or performed by, the person who, in essence, occupies the
position which is the equivalent of the chief executive officer of the party
against whom damages are to be awarded), the awarding of reasonable attorneys’
fees and costs to the prevailing party as determined by the Arbitration Panel
and the issuance of injunctive relief. If the party against whom the award is
issued complies with the award, within the time period established by the
Arbitration Panel, then no Default or Breach will be deemed to have occurred,
unless the Default or Breach pertained to the non-payment of money by Lessee or
Lessor, and Lessee or Lessor failed to make such payment under protest.

 

(d)            Appeal. The
decision of the Arbitration Panel shall be final and binding, may be confirmed
and entered by any court of competent jurisdiction at the request of any party
and may not be appealed to any court of competent jurisdiction or otherwise
except upon a claim of fraud on the part of the Arbitration Panel, or on the
basis of a mistake as to the applicable law. 
The Arbitration Panel shall retain jurisdiction over any dispute until
its award has been implemented, and judgment on any such award may be entered
in any court having appropriate jurisdiction.

 

(e)            Compensation.
Each member of the Arbitration Panel (i) shall be compensated for any and all
services rendered under this Addendum provision at a rate of compensation not
to exceed the sum of (a) Two Hundred Fifty Dollars ($250.00) per hour and (b)
the sum of Ten Dollars ($10.00) per hour multiplied by the number of full years
of the expired Term under the Lease, plus reimbursement for any and all
expenses incurred in connection with the rendering of such services, payable in
full promptly upon conclusion of the proceedings before the Arbitration Panel.
Such compensation and reimbursement shall be borne by the nonprevailing party
as determined by the Arbitration Panel in its sole and absolute discretion

 

13

 

58.           Access;
Parking. 
Lessee shall have full and uninterrupted access to the
Premises twenty-four (24) hours per day, seven (7) days per week, every day of
the year. All parking allocated to the Building under Applicable Requirements
shall be for Lessee’s sole and exclusive use at no additional cost or rent
during the entire Lease Term or any extensions thereof.  Lessee’s parking privileges shall be
available to Lessee twenty-four (24) hours per day, seven (7) days per week,
every day of the year.

 

59.           Entry by
Lessor. Notwithstanding anything to the contrary set forth in the
Lease to the contrary, Lessor and/or those acting on Lessor’s behalf may only
enter the Premises upon not less than two (2) business days prior notice to
Lessee acknowledged by Lessee, except in cases of emergency, in which case only
telephone notice shall be required. In any event, any such entry shall be
accomplished as expeditiously as reasonably possible, in a manner so as to
cause as little interference to Lessee as reasonably possible and in accordance
with Lessee’s security requirements. 
Lessor shall be accompanied by an employee of Lessee at all times.
Lessee may designate certain areas of the Premises as “Secured Areas” should
Lessee require such areas for the purpose of securing certain valuable properly
or confidential information or operations. 
Lessor may not enter such Secured Areas except in the case of emergency
or in the event of a permitted Lessor inspection, in which case Lessor shall
provide Lessee with five (5) business days’ prior written notice of the
specific date and time of such Lessor inspection and be accompanied by an
employee of Lessee on all such inspections.

 

60.           When
Payment Is Due.  Other than
payment of Base Rent, whenever in the Lease a payment is required to be made by
one party to the other, but a specific date for payment is not set forth or a
specific number of days within which payment is to be made is not set forth, or
the words “immediately,” “promptly” and/or “on demand,” or their equivalent,
are used to specify when such payment is due, then such payment shall be due
thirty (30) days after the party which is entitled to such payment sends
written notice to the other party demanding such payment.

 

61.           Lessor Bankruptcy
Proceeding. In the event that the obligations of Lessor under the Lease are
not performed during the pendency of a bankruptcy or insolvency proceeding
involving the Lessor as the debtor, or following the rejection of this Lease in
accordance with Section 365 of the United States Bankruptcy Code, then
notwithstanding any provision of this Lease to the contrary, Lessee shall have
the right to set off against rents next due and owing under this Lease (a) any
and all damages caused by such non-performance of Lessor’s obligations under
the Lease by Lessor, debtor-in-possession, or the bankruptcy trustee, and (b)
any and all damages caused by the non-performance of Lessor’s obligations under
the Lease following any rejection of the Lease in accordance with
Section 365 of the United States Bankruptcy Code.

 

62.           Consent/Duty
to Act Reasonably.  Regardless
of any reference to the words “sole” or “absolute” (but except for matters
which (a) would have an adverse effect on the structural integrity of the
Building Shell, (b) could have an adverse effect on the Building HVAC systems,
or (c) could have an effect on the exterior appearance of the Building,
whereupon in each such case Lessor’s duty is to act in good faith and in
compliance with the Lease), any time the consent of Lessor or Lessee is
required, such consent shall not be unreasonably withheld, conditioned or
delayed. Whenever the Lease grants Lessor or Lessee the right to take action,
exercise discretion, establish rules and regulations or make allocations or
other determinations (other than decisions to exercise expansion, contraction,
cancellation, termination or renewal options), Lessor and Lessee shall act
reasonably and in good faith and take no action which might result in the
frustration of the reasonable expectations of a sophisticated lessee or lessor
concerning the benefits to be enjoyed under the Lease.

 

63.           Covenants
and Agreements.  The failure
of Lessor or Lessee to insist in any instance on the strict keeping, observance
or performance of any covenant or agreement contained in the Lease, or the
exercise of any election contained in the Lease, shall not be construed as a
waiver or relinquishment for the future of such covenant or agreement, but the
same shall continue and remain in full force and effect.

 

64.           Days.  All references in the Lease to
“days” involving less than “ten (10) days” shall mean business days, and all
references to “notice” shall mean written notice.

 

14

 

65.           Joint and
Several Obligations.  The
obligations of Lessor under the Lease shall be joint and several obligations of
the entities comprising Lessor.

 

66.           Definition
of Applicable Requirements.  The
use of the term “Applicable Requirements” in the Lease and this Addendum shall
mean those laws, statutes, codes, ordinances, regulations, covenants and
restrictions applicable to the matter to which such Applicable Requirements are
stated to apply in the Lease and this Addendum.

 

15

 

SCHEDULE 1.2

 

LIST OF
LESSOR’S PLANS

 

[ATTACHED]

 

 

	
  RIGGINS

  
	
  CONSTRUCTION &

  
	
  MANAGEMENT, INC.

  	
  TRANSMITTAL

  
	
   

  	
   

  
	
   

  	
   

  
	
  TO:

  	
  IMMUNE RESPONSE CORPORATION

  	
   

  	
  FROM:

  	
   RIGGINS CONSTRUCTION &
  MANAGEMENT, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5935 DARWIN COURT

  	
   

  	
   

  	
  1816 N. OLD TUSTIN AVE., STE. A

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CARLSBAD CA 92008

  	
   

  	
   

  	
  SANTA ANA, CA 92705

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATE:  December 2, 1997

  	
   

  	
  JOB/EST.   #:  155

  	
  RECORD NUMBER:  2249

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ATTN:  PAULA ATKINS

  	
   

  	
  SENT BY: TOM RIGGINS

  
						

 

REFERENCE:  Job #:  155 CARLSBAD RESEARCH CENTER LOT #58 TILT-UP

 

WE ARE SENDING HEREWITH 1 COPY EACH OF:

 

At your request, enclosed please find a full set of Construction
Drawing sheets as follows:

 

Title sheets T1-T2, A5-A7 and A9 all dated 3/21/97 and sheets A1-A4,
delta one version, dated 4/30/97 and AB, A10-A13 also delta one version, dated
4/30/97, all as prepared by Smith Consulting Architects, and Civil sheets C1
& C5. both undated, C3 and C4 both dated 2-20-97, and C2 and C6, delta one
version, dated 4/30/97 as prepared by Spear & Associates, structural sheets
S1.0, S1.1, S1.2, S1.3, S3.0, S3.1, S4.0, S4.1, S4.2, S4.3 and S6.1, all delta
one versions, dated 4/30/97 and sheets S2.0, S3.2, S5.0 and S8.0, all delta 2
versions, all dated 5/30/97 as prepared by Flores Consulting Group and
Landscape plans L1 and L4-L6 all dated 4/2/97 and L2, L3 and L7, all delta one
versions, dated 5/9/97 as prepared by Steven Ahles Landscape Architect,
Plumbing sheets P1-P2, both dated 3/13/97 as prepared by Custom Plumbing. Inc.,
Electrical sheets E1 dated 4-18-97, E2 dated 1-31-97, both delta four versions,
dated 6/13/97 as prepared by Shepherd Electric.

 

 

	
  PLEASE RETURN 0 COPY TO THIS OFFICE.

  
	
   

  
	
  THESE ARE:  (checked below)

  
	
  ý FOR YOUR INFORMATION

  	
  o APPROVED WITH
  CORRECTIONS AS NOTED

  	
  o COPY PREVIOUSLY
  FAXED

  
	
  ý AS REQUESTED

  	
  o APPROVED FOR
  FABRICATION AS NOTED

  	
  ý COPY HAND DELIVERED

  
	
  o FOR APPROVAL OR
  CORRECTIONS

  	
  o FOR USE ON JOB

  	
  ý PLEASE REVIEW

  
	
  o APPROVED

  	
  o FOR YOUR FILES

  	
   

  

 

 

	
  BY:

  	
  /s/ Tom B. Riggins

  	
   

  
	
   

  	
  Tom B. Riggins - Project Manager

  	
   

  

 

 

1616 N. OLD TUSTIN AVE. - SUITE A - SANTA
ANA, CA 92705 - PH (714) 953-6333 - FAX (714) 543-7601

 

 

SCHEDULE 5

 

FORM OF LETTER OF CREDIT

 

[ATTACHED]

 

 

EXHIBIT FOR STANDBY L/C APPLICATION:  THE IMMUNE RESPONSE CORPORATION

(SUPPORTING LEASE)

 

Irrevocable Standby Letter of Credit No.
          

 

SOUTHERN CALIFORNIA

INTERNATIONAL OPERATIONS CENTER

1980 [Saturn] Street,  VO1-519

Monterey Park,  California
91755-7417

Attention:  Standby Letter of
Credit Section

 

Date:

	
  BENEFICIARY

  	
  APPLICANT

  
	
  Darwin Court, a California general partnership

  	
  The Immune Response Corporation,

  
	
  [Insert Address]

  	
  a Delaware corporation

  
	
  [City, State, Zip Code]

  	
  [Insert Address]

  
	
   

  	
  [City, State, Zip Code]

  

 

	
  Currency

  	
   

  	
  USD

  
	
  Amount

  	
   

  	
  600,000.00 [SIX HUNDRED THOUSAND AND NO/100 U.S.  DOLLARS]

  
	
  Available by

  	
   

  	
  Payment at this office.

  
	
  Final Expiry Date

  	
   

  	
                  ,
  1998 or any automatically extended date or any alternative date as herein set
  forth at the close of business of this office in Monterey Park, California.

  

 

 

Ladies/Gentlemen:

We hereby issue our Irrevocable Standby Letter of Credit (“Letter of
Credit”) in your favor.  This Letter of
Credit is available by sight payment with ourselves only against presentation
at this office of the following documentation:

1.                                       Your sight draft
drawn on us marked:  “Drawn under Union
Bank of California, N.A., Irrevocable Standby Letter of Credit No.
              ,
dated                            ,
       .”

 

2.                                       A statement
purportedly signed by an authorized representative of Darwin Court, a
California general partnership stating:

“The undersigned being a duly authorized representative or officer of
Darwin Court, a California general partnership hereby represents and warrants
that the amount of the accompanying draft represents and covers moneys owing to
Darwin Court, a California general partnership, (the “Lessor”) by The Immune
Response Corporation, a Delaware corporation (the “Lessee”) as a result of
default by Lessee with respect to any provision of that certain Lease dated
October 27, 1997 (the “Lease”), by and between the Lessor and the Lessee.”

 

Partial Drawings are permitted.

This Letter of Credit shall be deemed automatically extended without an
amendment for a one year period beginning on the present expiration date hereof
           , 1998, and
upon each anniversary of such date, unless at least fifteen (15) days prior to
any such expiration date we

 

	
  EXHIBIT TO APPLICATION.

  
	
   

  
	
   

  	
  CLIENT’S SIGNATURE:

  	
   

  
	
   

  	
  DATE: 

  	
   

  
				

 

1

 

have sent you written notice by courier
service or overnight mail (or by teletransmission through the Advising Bank)
that we elect not to permit this Letter of Credit to be so extended beyond its
then current expiration date.

 

The Letter of Credit shall finally expire on
                     ,
           if it has not
previously expired in accordance with the preceding sentence.

 

This date this Letter of Credit expires in
accordance with the above provision is the “Final Expiry Date”. Upon the
occurrence of the Final Expiry Date this Letter of Credit shall fully and
finally expire and no presentations made under this Letter of Credit after such
date will be honored.

 

This Letter of Credit sets forth in full the
terms of our undertaking, and such terms shall not be modified, amended or
amplified by any document, instrument or agreement referred to in this Letter
of Credit, in which this Letter of Credit is referred to or to which this
Letter of Credit relates.

 

Except as stated herein, this Letter of
Credit is not subject to any condition or qualification and is our individual
obligation which is in no way contingent upon reimbursement.

 

SPECIAL INSTRUCTIONS:

The original of this Letter of Credit must be
presented together with the above documents in order to endorse the amount of
each drawing on the reverse side.

 

All banking charges under this Letter of
Credit, except as noted herein, are for the account of the Applicant.

 

An interbank transfer fee of USD20.00 will be
deducted from the proceeds if settlement is to be remitted to an account at another
bank.

 

We hereby agree with you that drafts drawn
under and in compliance with the terms of this credit will be duly honored upon
presentation and delivery to Union Bank of California, N.A., at the address
above. Documents are to be sent in one lot by courier service, overnight mail
or hand delivery.

 

This Letter of Credit is subject to the
“Uniform Customs and Practice for Documentary Credits (1993 Revision)” -
International Chamber of Commerce Publication No. 500.

 

 

	
  EXHIBIT TO APPLICATION.

  
	
   

  
	
   

  	
  CLIENT’S SIGNATURE:

  	
   

  
	
   

  	
  DATE: 

  	
   

  
				

 

2

 

SCHEDULE 6.2

 

FORM OF HAZARDOUS MATERIALS
QUESTIONAIRE

 

[ATTACHED]

 

 

	
  [SEAL]

  	
  County of San Diego

  	
   

  
	
   

  	
  Building Inspection Department

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Hazardous
  Materials Questionnaire

  	
   

  

 

 

	
  Business Name

  	
  Contact Person

  	
   

  	
  Telephone

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mailing Address

  	
  City

  	
  State

  	
  Zip

  	
  Plan File ###

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Site Address

  	
  City

  	
  State 

  	
  Zip

  	
  Permit ###

  

 

PART 1: COUNTY OF SAN DIEGO FIRE DEPARTMENT -
HAZARDOUS MATERIALS MANAGEMENT DIVISION: OCCUPANCY CLASSIFIC

 

Indicate, by circling the Item, whether your
business will use, process or store any of the following hazardous materials.
If any of the Items are that applicant must contact the Fire
Department-Hazardous Materials Management Division, 525 B Street, Suite 705,
San Diego, CA 92101. Telephone (618) 533-4400 prior to plan submittal.

 

1.                         Explosives or Blasting Agents

2.                         Compressed Gases

3.                         Flammable or Combustible Liquids

4.                         Flammable Solids

5.                         Organic Peroxides

6.                         Oxidizers

7.                         Pytophorics

8.                         Unstable (reactive) Materials

9.                         Water-Reactives

10.                   Cryogenics

11.                   Highly Toxic or Toxic Materials

12.                   Radioactives

13.                   Corrosives

14.                   Other Health Hazards

 

PART II: COUNTY OF SAN DIEGO HEALTH
DEPARTMENT - HAZARDOUS MATERIALS MANAGEMENT DIVISION; CONTINGENCY PLAN F

 

If the answer to any of the question is Yes,
applicant must contact the County of San Diego 
Health Department Hazardous Materials Management 1255 Imperial Avenue, 3rd floor, San Diego, CA 92138, Telephone (619)
338-2222 prior to the Issuance of a building permit.

 

(FEE MAY BE REQUIRED)

	
   

  	
  YES

  	
   

  	
  NO

  	
   

  	
   

  
	
  1.

  	
  o

  	
   

  	
  o

  	
   

  	
  Is your business type listed
  on the reverse side of this form?

  
	
  2.

  	
  o

  	
   

  	
  o

  	
   

  	
  Will your business dispose of
  Hazardous Substances or Medical Wastes in any amount?

  
	
  3.

  	
  o

  	
   

  	
  o

  	
   

  	
  Will your business store, or
  handle Hazardous Substances in quantities equal to or greater than 55
  gallons, 500 pounds or 200 cubic compressed gas?

  
	
  4.

  	
  o

  	
   

  	
  o

  	
   

  	
  Will your business use an
  existing, or Install an underground storage tank?

  
	
  5.

  	
  o

  	
   

  	
  o

  	
   

  	
  Will your business store, use
  or handle carcinogens, reproductive toxins, or Acutely Hazardous Materials?

  
	
  6.

  	
  o

  	
   

  	
  o

  	
   

  	
  Will your business be located
  within 1,000 feet from the outer boundary of a school and handle Acutely
  Hazardous Materials?

  

 

 

PART III:
SAN DIEGO AIR POLLUTION CONTROL DISTRICT

 

If the answer to any of the questions is yes,
applicant must contact the Air Pollution Control District, 9150 Chesapeake
Drive, San Diego, CA Telephone (519) 694-3307 prior to the issuance of a
building permit.

 

	
   

  	
  YES

  	
   

  	
  NO

  	
   

  	
   

  
	
  1.

  	
  o

  	
   

  	
  o

  	
   

  	
  Will the intended occupant
  install or use any of the equipment listed on the Listing of Air Pollution
  Control District Permit Categories reverse side of this form.

  
	
  2.

  	
  o

  	
   

  	
  o

  	
   

  	
  (ANSWER ONLY IF THE ANSWER TO
  QUESTION 1 IS YES.) Will the subject facility be located within 1,000 feet of
  the outer bound school (K thru 12) as listed in the current Directory of
  School and Community College Districts, published by the San Diego County C
  Education and the current California Private School Directory, compiled in
  accordance with provisions of Education Code Section

  

 

 

	
   

  
	
  Briefly Describe Nature of the
  intended Business Activity:

  
	
   

  
	
   

  
	
  Name of Owner or Authorized
  Agent:

  
	
   

  
	
   

  
	
  Signature of Owner or
  Authorized Agent: I declare under penalty of perjury that to the best of my
  knowledge and belief the responses made herein ? and correct.

  
	
   

  	
    Date:

  	
   

  	
   

  
	
   

  
	
  DO NOT WRITE BELOW THIS LINE

  
	
   

  
	
  FIRE DEPARTMENT OCCUPANCY
  CLASSIFICATION:

  
	
   

  
	
  BY:

  	
   

  	
    Date:

  	
   

  	
   

  
					

 

	
  EXEMPT
  FROM PERMIT REQUIREMENTS

  	
   

  	
  APPROVED
  FOR BUILDING PERMIT BUT NOT FOR OCCUPANCY

  	
   

  	
  APPROVED
  FOR OCCUPANCY

  	
   

  
	
  COUNTY
  HMMD

  	
   

  	
  APCD

  	
   

  	
  COUNTY
  HMMD

  	
   

  	
  APCD

  	
   

  	
  COUNTY
  HMMD

  	
   

  	
  APCD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

LIST OF BUSINESSES WHICH REQUIRE REVIEW AND
APPROVAL FROM COUNTY OF SAN DIEGO HEALTH DEPT - THE HAZARDOUS MATERIALS
MANAGEMENT DIVISION

 

AUTOMOTIVE

 

Battery Manufacturing/Recycling

Boat Yard

Car Wash

Dealership Maintenance and Paint

Machine Shop

Painting

Radiator Shop

Rental Yard Equipment

Repair, Preventive Maintenance

Repair, Major Overhaul

Transportation Services

Wrecking and Recycling

 

METAL WORKING

 

Anodizing

Chemical Milling/Etching

Finish-Coating, Painting

Flame Spraying

Foundry

Machine Shop-Drilling, Lathes, Mills

Metal Plotting

Metal Prepping/Chemical Coating

Precious Metal Recovery

San Blasting, Grinding

Steel Fabricator

Wrought Iron Manufacturing

 

CHEMICAL HANDLING

 

Agricultural Suppliers/Distributors

Chemical Suppliers/Distributors

Chemical Manufacturer

Coatings/Adhesives

Compressed Gas Supplier/Distributor

Dry Cleaning

Fiberglass/Resin Applications

Gas Station

Industrial Laundry

Laboratories

Laboratory Supplies/Distributors

Oil and Fuel Bulk Supply

Pesticide Operator/Distributor

Photographic Processing

Pool Supplies/Maintenance

Printing/Blue Printing

Road Coatings

Swimming Pool (Gas Chlorination Systems Only)

Toxic Gas Handler

Toxic Gas Mfg.

 

ELECTRONICS

 

Electronics Components Mfg.

Electronics Assembly and Sub Assembly

Printed Circuit Board Mfg.

 

OTHER AND MISCELLANEOUS

 

Asphalt Plant

Co-Generation Plant

Dialysis Centers

Frozen Food Processing Facilities

Government Agencies (Using Hazardous Materials)

Hazardous Waste Haulers

Hospitals/Convalescent Homes

Laboratories, Biological Laboratories

Medical Clinics/Offices

Public Utilities

Rocky Quarry

Wood/Furniture Manufacturer/Refinishing

 

AEROSPACE

 

Aerospace Industry

Aircraft Manufacturing

Aircraft Maintenance

 

NOTE: THE ABOVE LIST INCLUDES BUSINESSES WHICH TYPICALLY USE, STORE,
HANDLE, AND DISPOSE OF HAZARDOUS SUBSTANCE ANY BUSINESS NOT INCLUDED ON THIS
LIST WHICH HANDLES, USES OR DISPOSES OF HAZARDOUS SUBSTANCES MAY STILL REQUIRE
HAZARDOUS MATERIALS MANAGEMENT DIVISION (HMMD) REVIEW OF BUSINESS PLANS. FOR
MORE INFORMATION CALL (619) 338-222[ILLEGIBLE]

 

LISTING OF AIR POLLUTION CONTROL DISTRICT
PERMIT CATEGORIES

 

Businesses which include any of the following
operations or equipment will require clearance from the Air Pollution Control
District.

 

CHEMICAL

 

47-Organic Gas Sterilizers

32-Acid Chemical Milling

33-Can & Coil Manufacturing

44-Evaporators, Dryers & Stills Processing Organic Materials

24-Dry Chemist Mixing & Detergent Spray Towers

35-Bulk Dry Chemical Storage

 

COATINGS & SURFACE PREPARATION

 

01-Abrasive Biasing Equipment

27-Coating & Painting

37-Plasma Arc & Ceramic Deposition Spray Booths

38-Paint, Stain & Ink Mfg.

 

METALS

 

18-Metal Melting Devices

19-Oil Quenching & Salt Baths

32-Hot Dip Galvanizing

39-Precious Metals Refining

 

ORGANIC COMPOUND MARKETING (GASOLINE, ETC.)

 

25-Gasoline & Alcohol Bulk Plants & Terminals

25-Intermediate Refuelers

26-Gasoline & Alcohol Fuel Dispensing

 

COMBUSTION

 

34-Piston Internal-Combustion Engines

13-Boilers & Heaters (1 Million Blu/Hr or Larger)

13-Gas Turbines, and Turbine Test Cells & Stands

14-Incinerators & Crematories

15-Burn Out Ovens

16-Core Ovens

 

ELECTRONICS

 

29-Solder Levelers

29-Hydrosqueegees

42-Electronic Component Manufacturing

 

FOOD

 

12-Fish Canneries

12-Smoke Houses

50-Coffee Roasters

35-Dulk Flour & Powdered Sugar Storage

 

ROCK AND MINERAL

 

04-Hot Asphalt Batch Plant

05-Rocky Drills

07-Sand Rock & Aggregate Plants

08-Concrete Batch, CTB, Concrete Mixers, Mixers & Sllos

10-Brick Manufacturing

 

SOLVENT USE

 

28-Vapor & Cold Decreasing

30-Solvent & Extract Driers

31-Dry Cleaning

 

OTHER

 

03-Asphalt Roofing kilties and Tankers

46-Reverse Osmosis Membrane Mfr.

51-Aqueous Waste Neutralization

11-Tire Buffers

17-Brake Debonders

23-Bulk Grain & Dry Chemical Transfer & Storage

45-Rubber Mixers

45-Landfill Gas Flare or Recovery Systems

21-Waste Disposal & Reclamation units

36-Grinding Booths & Rooms

40-Asphalt Pavement Heaters

43-Ceramic Slip Casting

41-Portfolio Processing

 

NOTE: OTHER EQUIPMENT NOT LISTED HERE THAT IS CAPABLE OF EMITTING AIR
CONTAMINANTS MAY REQUIRE AN AIR POLLUTION CONTROL DISTRICT PERMIT, IF THERE ARE
ANY QUESTIONS. CONTACT THE AIR POLLUTION CONTROL DISTRICT AT (619) 694-3307.

 

 

SCHEDULE 50

 

PROPOSED ROOF SCREENING REQUIREMENTS

 

[ATTACHED]

 

 

LEASING AND NEW DEVELOPMENT CO.

 

	
  ROLAND A. CHILDS

  	
   

  	
  ALLAN J. GARDNER

  

 

May 8, 1977

 

Mr Steve Erenyi

Union Pacific Realty Co

2945 Harding Street Suite 211

Carlsbad, CA 92008

 

re:  Lot 58 Carlsbad Research
Center / roof screens

 

Dear Steve:

 

I am one of the owners of lot 58. We are presently waiting for various
approvals to start the construction of a tilt-up building.

 

We believe it will be in keeping with the first rate level of quality
the Center represents and in that spirit, will do everything we can to maintain
or exceed the quality level of buildings now in place.

 

Tom Lamore, of Smith Consulting Architects, has suggested roof
screening that we believe will effectively screen the roof located HVAC units.
While the exact location is not known at this time, the 4 foot galv channel
metal with 4” rib steel panels, painted as our building, as more fully detailed
on his drawings recently sent to you, will provide a tastful method of
screening and will be used where needed.

 

In that regard, I do guarantee as an owner of the project, that we will
provide the screening as detailed so that the roof mounted HVAC units will be
screened from both the South and East elevations, as well as the North and
West.

 

Your consideration is appreciated.

 

	
   

  	
  Sincerely,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Allan Gardner

  	
   

  
	
   

  	
  Allan Gardner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  cc: Tom Lamore

  	
   

  
	
   

  	
   

  	
   

  

 

	
  10534 West Pico Boulevard

  	
   

  	
  •

  	
   

  	
  Los Angeles, California 90064

  	
   

  	
  •

  	
   

  	
  FAX (310) 839-2242 (213) 870-1188

  

 

 

[GRAPHIC]

 

 

[GRAPHIC]

 

 

[GRAPHIC]

 

 

[GRAPHIC]

 

 

SCHEDULE 56

 

MARKET RENTAL VALUE CALCULATION

 

[ATTACHED]

 

 

Determination of minimum rent for the eleventh (11th) year if the 1st
Option to Extend is exercised and sixteenth (16th) year if the 2nd Option to
Extend is exercised.  If Lessee adds
additional 2nd floor office space, the total area and total building area will
change.

 

	
   

  	
  5,100

  	
   

  	
  SF 2nd Floor Office

  
	
   

  	
  5,100

  	
   

  	
  SF First Floor Office

  
	
   

  	
  10,200

  	
   

  	
   

  
	
   

  	
  X

  	
  30.00

  	
   

  	
  SF

  
	
   

  	
  $306,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  21,000

  	
   

  	
  SF Warehouse

  
	
   

  	
  X

  	
  5.00

  	
   

  	
  SF

  
	
   

  	
  $105,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  $411,000 @ 12% @ 120 months (constant 14.35) =$5,897.85 per month

  
	
   

  	
  $5,897.85 ÷ 31,200 SF = $.19/SF

  
	
   

  	
   

  	
   

  
	
   

  	
  $

  	
  .59

  	
   

  	
  SF Shell

  
	
   

  	
  $

  	
  .19

  	
   

  	
  SF

  	
   

  
	
   

  	
  $

  	
  .78

  	
   

  	
  SF NNN

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3% Annual Increases

  
								

 

	
   

  	
  Year 

  	
  2:

  	
   

  	
  $0.80

  
	
   

  	
  Year 

  	
  3:

  	
   

  	
  $0.82

  
	
   

  	
  Year 

  	
  4:

  	
   

  	
  $0.84

  
	
   

  	
  Year

  	
  5:

  	
   

  	
  $0.87

  
	
   

  	
  Year 

  	
  6:

  	
   

  	
  $0.90

  
	
   

  	
  Year

  	
  7:

  	
   

  	
  $0.93

  
	
   

  	
  Year

  	
  8:

  	
   

  	
  $0.96

  
	
   

  	
  Year

  	
  9:

  	
   

  	
  $0.99

  
	
   

  	
  Year

  	
  10:

  	
   

  	
  $1.02

  
	
  *

  	
  Year

  	
  11:

  	
   

  	
  $1.05

  
	
   

  	
  Year

  	
  12:

  	
   

  	
  $1.08

  
	
   

  	
  Year 

  	
  13:

  	
   

  	
  $1.11

  
	
   

  	
  Year

  	
  14:

  	
   

  	
  $1.14

  
	
   

  	
  Year

  	
  15:

  	
   

  	
  $1.17

  
	
  *

  	
  Year

  	
  16:

  	
   

  	
  $1.21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}]]