Document:

Exhibit
10.20

SUBLEASE

 

THIS SUBLEASE (this “Sublease”) is dated for
reference purposes as of January 27, 2005, and is made by and between Accelrys,
Inc., a Delaware corporation (“Sublessor”), and QUALCOMM Incorporated, a
Delaware corporation (“Sublessee”). 
Sublessor and Sublessee hereby agree as follows:

1.     Recitals:  This Sublease is made with reference to the
fact that San Diego Tech Center, LLC, predecessor in interest to Calwest
Industrial Holdings, LLC, a Delaware limited liability company, as landlord (“Master
Lessor”), and Sublessor, formerly known as Molecular Simulations Inc., as
tenant, entered into that certain Office Building Lease, dated as of October
23, 1998, as amended by that certain First Amendment to Lease dated as of
August 31, 1999 and that certain Second Amendment to Lease dated as of June 14,
2002 (as amended, the “Master Lease”), with respect to premises consisting of
approximately 76,635 square feet of space, located at 9685 and 9725 Scranton
Road, San Diego, California (the “Premises”). 
A copy of the Master Lease is attached hereto as Exhibit A.

2.     Premises:  Sublessor hereby subleases to Sublessee, and
Sublessee hereby subleases from Sublessor, all of the Premises.  Sublessee hereby acknowledges and agrees that
Sublessee shall remove from the Premises, prior to delivery of the Premises to
Sublessee, the furniture and cubicles located therein, and that such furniture
and cubicles will not be part of the Premises. 
The effectiveness of this Sublease shall be subject to Sublessor obtaining
the written consent of the Master Lessor to this Sublease as set forth in
Section 18 below.  Pursuant to this
Sublease, Sublessee also shall have the right to use the Building Common Areas
and the Project Common Areas as provided in the Master Lease, including,
without limitation, not less than 3.1 spaces per thousand square feet of
rentable area in the Premises.  All
parking shall be free throughout the Sublease Term.

3.     Term:

A.          Term.  Sublessor shall deliver the Premises to
Sublessee in the condition described in Section 6 below upon full execution of
this Sublease and receipt of Master Lessor’s consent to this Sublease.  The term (the “Term”) of this Sublease shall
be for the period commencing on the last to occur of (a) February 1, 2005,
(b) the date Sublessor delivers possession of the Premises as required above
and (c) the date Master Lessor’s consent to this Sublease is received as
provided in Section 18 below (the “Commencement Date”) and ending on
December 31, 2006 (the “Expiration Date”), unless this Sublease is sooner
terminated pursuant to its terms or the Master Lease is sooner terminated
pursuant to its terms.  So long as
Sublessee is not in default under this Sublease beyond any applicable cure period,
Sublessor shall not exercise any right of Sublessor to terminate the Master
Lease or otherwise voluntarily terminate the Master Lease.

B.            Early Entry.

(i)            Commencing upon execution and delivery of this Sublease
by both Sublessor and Sublessee, Sublessee’s representatives may enter the
Premises at times reasonably scheduled in advance with Sublessor to inspect the
Premises and to make plans for Sublessor’s alterations to and occupancy of the
Premises.  Such entry shall be subject to
Sublessor’s reasonable security and insurance requirements.  Sublessee shall indemnify, defend, protect
and hold harmless Sublessor and Master Lessor from any losses, costs, claims,
liabilities or damages due to such entry.

 

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(ii)           Sublessee shall also have the right to enter the Premises
following Sublessor’s delivery of the Premises to Sublessee and receipt of
Master Lessor’s consent thereto to install tenant improvements, cabling,
security systems, furniture, fixtures and equipment therein and thereon.  Sublessee may not make any such improvements,
alterations or installations without the prior written consent of Sublessor and
Master Lessor and except in compliance with the terms of Section 10
hereof.  Such occupancy shall be subject
to all of the provisions of this Sublease, except for the obligation to pay
Base Rent, Building Expenses and Project Expenses (as defined below); and shall
not advance the Expiration Date of this Sublease.

C.            No Option to Extend.  The parties hereby acknowledge that the
expiration date of the Master Lease is December 31, 2006 and that Sublessee has
no option to extend the Term of this Sublease.

4.     Rent:

A.            Base Rent. 
Sublessee shall pay to Sublessor as base rent for the Premises for each
month during the Term the amount of Fifty-Seven Thousand Four Hundred
Seventy-Six and 25/100 Dollars ($57,476.25) per month (“Base Rent”).  Base Rent shall be paid on or before the
first (1st) day of each month.  Base Rent
and “Tenant’s Building Share” of “Building Expenses” and “Tenant’s Project
Share” of “Project Expenses”, as defined in the Master Lease, for any period
during the Term hereof which is for less than one (1) month of the Term shall
be a pro rata portion of the monthly installment based on a thirty (30) day
month.  Except as expressly set forth in
this Sublease or the Master Lease, as incorporated herein, Base Rent shall be
payable without notice or demand and, except as expressly set forth in this
Sublease or the provisions of the Master Lease, as incorporated herein, without
any deduction, offset, or abatement, in lawful money of the United States of
America.  Base Rent and Additional Rent
shall be paid directly to Sublessor at 10188 Telesis Court, Suite 100, San
Diego, California  92121, Attention:  Accounts Receivable, or such other address as
may be designated in writing by Sublessor.

B.            Additional Rent. 
All monies other than Base Rent required to be paid by Sublessee to
Sublessor under this Sublease shall be deemed “Additional Rent”.  Except as provided below, and provided that
Sublessor has provided to Sublessee at least thirty (30) days prior written
notice of such amounts so due (which notice may be given one time for recurring
payments, provided such notice specifies the recurring nature of the payments),
Sublessee shall pay to Sublessor as and when due under the Master Lease “Tenant’s
Building Share” of “Building Expenses” and “Tenant’s Project Share” of “Project
Expenses” (as such terms are defined in the Master Lease) to the extent such
Building Expenses and Project Expenses actually accrued and were so paid by
Sublessor during the Term of this Sublease. 
In addition, within thirty (30) days of the date Sublessor has provided
to Sublessee written notice of such amounts so due (and prior to delinquency as
to bills Sublessee receives directly from the taxing authority or utility
company), Sublessee will be responsible for the payment of “Tenant’s Taxes” (as
described in Section 28.1 of the Master Lease) attributable to the Term and
Sublessee’s share of charges for the consumption of electricity and other
utilities supplied to the Building, to the extent not included within Building
Expenses under the Master Lease.  Upon
written request by Sublessee, and provided Sublessee reimburses Sublessor for any
costs required to be paid to Master Lessor under Section 5.5 of the Master
Lease, Sublessor shall request copies of Master Lessor’s records relating to
Building Expenses and Project Expenses and shall permit Sublessee to audit the
records of Sublessor and, subject to Master Lessor’s consent (which consent must
be included in Master Lessor’s consent to this Sublease, unless waived by
Sublessee under Section 18 below), of Master Lessor to the extent permitted
under Section 5.5 of the Master Lease with respect to the same.  Upon written request of Sublessee, Sublessor
shall provide to Sublessee copies of all statements and other materials
received from Master Lessor with respect to the payment of any Building
Expenses or Project Expenses or other similar sums due under the Master
Lease.  Notwithstanding anything herein
to the 

 

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contrary, in no event shall Sublessee be required to
pay as part of Building Expenses or Project Expenses for any costs for capital
improvements or repairs except to the extent expressly required under the
Master Lease and then only to the extent of the amortization of the cost of
such capital improvement over its useful life. 
Base Rent and Additional Rent hereinafter collectively shall be referred
to as “Rent”.

C.            Payment of First Month’s Rent.  On or prior to the Commencement Date,
Sublessee shall pay to Sublessor the sum of Fifty-Seven Thousand Four Hundred
Seventy-Six and 25/100 Dollars ($57,476.25), which shall constitute Base Rent
for the first month of the Term.  No security
deposit shall be required from Sublessee under this Sublease.

5.     Holdover:  The parties hereby acknowledge that the
expiration date of the Master Lease is December 31, 2006, and that it is
therefore critical that Sublessee surrender the Premises to Sublessor no later
than the Expiration Date in accordance with the terms of this Sublease.  In the event that Sublessee does not
surrender the Premises by the Expiration Date in accordance with Section 14
hereof, Sublessee shall indemnify, defend, protect and hold harmless Sublessor
from and against all losses, costs, claims, liabilities and damages resulting
from Sublessee’s delay in surrendering the Premises and pay Sublessor holdover
rent as provided in Section 30.10 of the Master Lease.  Notwithstanding the foregoing, if, prior to
the Expiration Date, Sublessee enters into an agreement with Master Lessor to
occupy the Premises immediately following the Expiration Date, then (i)
Sublessee shall not be required to vacate the Premises on the Expiration Date,
and (ii) Sublessor shall be deemed to have waived its right and option under
the Master Lease to extend the term of the Master Lease beyond the Expiration
Date.

6.     Condition/Repairs:  Sublessor shall deliver the Premises to
Sublessee in “broom clean”, vacant condition. 
Except as provided below, the parties acknowledge and agree that
Sublessee is subleasing the Premises on an “as is” basis, and that Sublessor
has made no representations or warranties with respect to the condition of the
Premises as of the Commencement Date except as set forth in this
paragraph.  Master Lessor shall be solely
responsible for performance of any repairs required to be performed by Master
Lessor under the terms of the Master Lease. 
Sublessor represents that it has no actual knowledge of (i) any Building
mechanical, HVAC, plumbing, electrical and other utility system that is not in good
operating condition, nor (ii) the presence or existence of Hazardous Materials
(as defined in the Master Lease) in or about the Building or Premises, except
as specifically disclosed in Section 23 below. 
Sublessor hereby assigns to Sublessee, and agrees to cooperate with
Sublessee in the enforcement of, any rights of Sublessor in and to any and all
warranties and guarantees relating to the Master Lease, the Premises or the
equipment or improvements therein. 
Sublessee shall comply with all laws and regulations relating to
Sublessee’s use of the Premises, except that Sublessee shall not be required to
make or pay for any improvements to the Premises or the Project required by
applicable laws (i) other than to improvements installed by Sublessee following
the date of this Sublease and (ii) except as may be related to or triggered by
Sublessee’s particular use of the Premises, including any use other than
general office use and including any alterations performed by or at the request
of Sublessee or any governmental permits or approvals requested by
Sublessee.  Sublessor hereby agrees to
indemnify, defend and hold Sublessee harmless from and against any loss, cost,
damage, liability, claim or expense (including reasonable attorneys’ fees and
court costs) arising from or relating to any Hazardous Materials located in, on
or below the Premises as of the date of delivery of physical possession of the
Premises to Sublessee that were released or emitted by Sublessor or its agents,
employees or contractors.

7.     Assignment and Subletting:  Sublessee may not assign this Sublease,
sublet the Premises, transfer any interest of Sublessee therein or permit any
use of the Premises by another party (collectively, “Transfer”), without the
prior written consent of Sublessor and Master Lessor, which consent of
Sublessor and Master Lessor shall not be unreasonably withheld or delayed.  Notwithstanding the foregoing, Sublessee 

 

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may, without Sublessor’s
consent (but with notice to Sublessor and Master Lessor), Transfer all or a
portion of the Premises to an affiliate or subsidiary of Sublessee, or any
successor to substantially all of the assets of any of QUALCOMM’s business
divisions.  Any Transfer shall be subject
to the terms of Section 18 of the Master Lease, as incorporated into this
Sublease and as modified by the terms of this Section 7.  No transfer of shares or interests in
Sublessee shall require Sublessor’s consent under this Sublease.  Provided Master Lessor has agreed to the same
(which agreement must be included in Master Lessor’s consent to this Sublease,
unless waived by Sublessee under Section 18 below), no transfer of shares or
interests in Sublessee shall constitute a Transfer for purposes of this
Sublease.

8.     Use:

A.            Permitted Use; Utilities.  Sublessee may use the Premises only for
general office use and, with the prior written consent of Master Lessor (which
consent must be included in Master Lessor’s consent to this Sublease, unless
waived by Sublessee under Section 18 below), software research and design
engineering, light assembly and computer labs and other uses permitted under
applicable zoning.  Sublessee shall have
access to the Premises seven (7) days per week, twenty-four (24) hours per day,
subject to the terms of the Master Lease. 
Subject to Master Lessor’s consent (which consent must be included in
Master Lessor’s consent to this Sublease, unless waived by Sublessee under
Section 18 below), Sublessee shall have control over the HVAC system, without
any additional charge (other than additional utility service charged by a third
party provider) for after-hours HVAC or other utility services, except to the
extent Master Lessor assesses such charge under the Master Lease (which charge must
be waived in Master Lessor’s consent to this Sublease, unless waived by
Sublessee under Section 18 below). 
Subject to the prior written consent of Master Lessor (which consent may
be included in Master Lessor’s consent to this Sublease), Sublessee may
reasonably select its own energy service provider for electrical or other
utility service to the Premises.

B.            Hazardous Materials.  Without the prior written consent of Master
Lessor (which consent must be included in Master Lessor’s consent to this
Sublease, unless waived by Sublessee under Section 18 below), Sublessee shall
not use, store, transport or dispose of any Hazardous Material in or about the
Premises except to the extent such Hazardous Materials are customarily kept or
used by typical office tenants and are kept, used and disposed of in strict
compliance with applicable laws. 
Sublessee shall indemnify, defend, protect and hold Sublessor and Master
Lessor harmless from and against all claims, losses, costs, damages and
liabilities, to the extent caused by the release, disposal, discharge or
emission of Hazardous Materials on or about the Premises by Sublessee or its
agents, contractors, or employees.

9.     Delivery:  If, within thirty (30) days of the execution
of this Sublease by Sublessee, Sublessor fails, for any reason whatsoever, to
either (i) deliver possession of the Premises to Sublessee in the condition
described in Section 6 above or (ii) obtain and deliver to Sublessee Master
Lessor’s written consent to this Sublease as described in and subject to the
terms of Section 18 below, then Sublessee may elect to terminate this Sublease
by delivering written notice thereof to Sublessor within thirty (30) days after
the expiration of such thirty (30) day period and Sublessor shall return all
deposits paid by Sublessee.

10.   Improvements:  No alteration or improvements shall be made
to the Premises, except in accordance with the terms of the Master Lease, as
modified by Master Lessor’s consent to this Sublease, and, except as expressly
set forth below to the contrary, with the prior written consent of both Master
Lessor and Sublessor, which consent of Sublessor shall not be unreasonably
withheld.

(a)           Sublessee intends to install tenant
improvements, cabling, communications equipment, security systems, and
equipment within the Premises, subject to Master Lessor’s and Sublessor’s 

 

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consent, which consent shall
not be unreasonably withheld or delayed except as provided in Section 10.1 of
the Master Lease.

(b)           Except as permitted above, and except for painting,
carpeting and other cosmetic alterations (provided Master Lessor has waived its
right to consent to the same), no alteration or improvements shall be made to
the Premises, except with the prior written consent of both Master Lessor and
Sublessor, which consent of Sublessor and Master Lessor shall not be
unreasonably withheld or delayed except as provided in Section 10.1 of the
Master Lease.  All alterations and
improvements must be made in accordance with laws.  The architect, contractor and project manager
used by Sublessee shall also be subject to the prior written of Master Lessor,
which consent shall not be unreasonably withheld or delayed.   Sublessee shall not be required to pay
Sublessor any supervisory fee (except any such fee required by Master Lessor
under the Master Lease, which fee may be waived in Master Lessor’s consent to
this Sublease) relating to Sublessee’s alterations or improvements.  Sublessor shall cooperate with Sublessee (at
Sublessee’s cost) in Sublessee’s efforts to obtain the approval of Master
Lessor and any required approval of any governmental agency or entity in
connection with any alterations or installations proposed by Sublessee.  If Master Lessor desires that any alteration
or improvement by Sublessee be removed by Sublessee on the Expiration Date,
then Master Lessor shall so notify Sublessee at the time Master Lessor grants
its approval for such alteration or improvement.  Unless required by Master Lessor (which
requirement must be waived in Master Lessor’s consent to this Sublease, unless
waived by Sublessee under Section 18 below), in no event shall Sublessee be
required to remove or change cosmetic alterations to the Premises.

11.   Insurance:  During the Term, Sublessee shall obtain and
keep in full force and effect, at Sublessee’s sole cost and expense, the
insurance required under Sections 16.1-16.3 of the Master Lease, as incorporated
herein.  Notwithstanding anything in
Section 16.3 of the Master Lease to the contrary, provided Master Lessor
consents to the same (which consent must be included in Master Lessor’s consent
to this Sublease, unless waived by Sublessee under Section 18 below), such
insurance shall be issued by such companies as are customarily carried by
Sublessee with respect to other properties leased by Sublessee.  Sublessee shall name Master Lessor and
Sublessor as additional insureds under its liability insurance policy.

12.   Default:  Sublessee shall be in default of its
obligations under this Sublease if Sublessee fails to perform any of its
obligations under this Sublease within the notice and cure periods set forth in
Section 20.1 of the Master Lease, as incorporated herein.

13.   Remedies:  In the event of any default by Sublessee,
Sublessor shall have all remedies provided pursuant to Section 20.2 of the
Master Lease, or incorporated herein, and by applicable law.  Similarly, any remedy granted to Sublessor
under the Master Lease, as incorporated herein,
may be exercised by Sublessee under this Sublease.  Upon the occurrence of any damage,
destruction or other circumstance in which the rent paid by Sublessor under the
Master Lease is abated or reduced pursuant to the terms thereof, the rent
payable by Sublessee hereunder also shall be similarly, proportionately
abated.  In the event of any litigation
between Sublessee and Sublessor to enforce any provision of this Sublease or otherwise
with respect to the subject matter hereof, the unsuccessful party in such
litigation shall pay to the successful party all costs and expenses, including
reasonable attorneys’ fees and court costs, incurred therein by the successful
party.  Such fees shall include, without
limitation, any fees and costs incurred in connection with any bankruptcy or
other similar proceeding.

14.   Surrender:  Prior to expiration or early termination of
this Sublease, Sublessee shall remove all of its trade fixtures and shall
surrender the Premises to Sublessor in the condition received by Sublessee, except
for ordinary wear and tear, cosmetic alterations and other alterations approved
by Master Lessor that Master Lessor has not properly required be removed.  If the Premises are not so surrendered, then
Sublessee 

 

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shall
be liable to Sublessor for all costs incurred by Sublessor in returning the
Premises to the required condition.  In
no event shall Sublessee be required to remove any alterations or improvements
not installed or made by Sublessee.

15.   Broker:  Sublessor and Sublessee each represent to the
other that they have dealt with no real estate brokers, finders, agents or
salesmen other than The Staubach Company-San Diego, Inc., representing
Sublessee, and CB Richard Ellis, representing Sublessor, in connection with
this transaction.  Sublessor shall be
responsible for the payment of commissions due Sublessor’s broker, pursuant to
a separate written agreement between Sublessor and Sublessor’s broker, and due
The Staubach Company-San Diego, Inc., pursuant to that certain commission
agreement dated as of September 24, 2004 between Sublessor and The Staubach
Company-San Diego, Inc.  Except for the
commissions provided above, which shall be the responsibility of Sublessor,
each party agrees to hold the other party harmless from and against all claims
for brokerage commissions, finder’s fees or other compen­sation made by any
other agent, broker, salesman or finder as a consequence of such party’s
actions or dealings with such other agent, broker, salesman, or finder.

16.   Notices:  Unless at least five (5) days’ prior written
notice is given in the manner set forth in this paragraph, the address of each
party for all purposes connected with this Sublease shall be that address set
forth below their signatures at the end of this Sublease.  All notices, demands or communications in
connection with this Sublease shall be (a) personally delivered; or (b)
properly addressed and (i) submitted to an overnight courier service, charges
prepaid, or (ii) deposited in the mail (certified, return receipt requested,
and postage prepaid).  Notices shall be
deemed delivered upon receipt, if personally delivered, one (1) business day
after being submitted to an overnight courier service and three (3) business
days after mailing, if mailed as set forth above. All notices given to Master
Lessor under the Master Lease shall be considered received only when delivered
in accordance with the Master Lease.

17.   Other Sublease Terms:

A.            Incorporation by Reference.  Except as set forth below, the terms and
conditions of this Sublease shall include all of the terms of the Master Lease
and such terms are incorporated into this Sublease as if fully set forth
herein, except that: (i) each reference in such incorporated sections to “Lease”
shall be deemed a reference to “Sublease”; (ii) each
reference to “Landlord” and “Tenant” shall be deemed a reference to “Sublessor”
and “Sublessee”, respectively, except as otherwise expressly set forth herein;
(iii) with respect to work, services, repairs, restoration, insurance,
indemnities, representations, warranties or the performance of any other
obligation of Master Lessor under the Master Lease, the sole obligation of
Sublessor shall be to request the same in writing from Master Lessor as and
when requested to do so by Sublessee, and to use Sublessor’s reasonable efforts
(without requiring Sublessor to spend more than a nominal sum) to obtain Master
Lessor’s performance; (iv) with respect to any obligation of Sublessee to be
performed under this Sublease, wherever the Master Lease grants to Sublessor a
specified number of days to perform its obligations under the Lease, except as
otherwise provided herein, Sublessee shall have one (1) business day less to
perform the obligation, including, without limitation, curing any defaults;
(v)  in any case where “Tenant” is to indemnify, release or waive claims
against “Landlord”, such indemnity, release or waiver shall be deemed to run
from Sublessee to both Master Lessor and Sublessor; (vi) all payments
shall be made to Sublessor; (vii) all “profit” under subleases and
assignments shall be paid to Sublessor; (x) references to “Alterations” in
Sections 16.1 and 28 shall refer to alterations constructed by Sublessor or Sublessee;
and (xi) the reference in Section 30.10 to “Rent” shall mean Rent
under the Master Lease.

Notwithstanding the foregoing, any provisions
of the Master Lease that conflict with the terms or provisions otherwise set
forth in this Sublease shall not apply as between Sublessor and Sublessee.  Without 

 

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limitation of the foregoing
sentence or the foregoing paragraph, (a) the following provisions of the Master
Lease shall not be incorporated herein: 
Basic Lease Terms, Introductory Paragraph, Sections 1, 2.1 (the first
two sentences), 2.5 (after the first reference to “feet” through the last reference
to “feet”), 3, 4, 5.1(e) and (f) (the first three sentences of each), 5.3
(after the first reference to “Commencement Date” through the first reference
to “respectively”), 6, 7, 9.1 (the first sentence), 9.4 (the first sentence),
20.1 (the last sentence), 20.4, 20.5 (the last sentence), 24, 29, 30.2, 30.4
(after the first reference to “assigns”), 30.8 (the first sentence), 30.12,
30.17 (the second paragraph), 31-34 and 35 (the first two sentences),
Exhibit D, First Amendment to Lease and Second Amendment to Lease (except
Section 3); (b) references in the following provisions to “Landlord” shall mean
Master Lessor only:  Sections 2.1-2.4,
5.1-5.3, 8, 9.2, 9.4 (references in parenthesis), 11.1 (the second and third
sentences), 11.2, 15.1-15.5, 16.5, 17, 19.1-19.4, 27 (the first sentence), 35
and 36; (c) references in the following provisions to “Landlord” shall mean
Master Lessor and/or Sublessor:  Section
12-14 and 30.17; (d) references in Section 16.3 (except the two
references in the fourth sentence) shall mean Master Lessor and Sublessor; and
(e) references in Section 5.1(c)(iv) and (d)(ix) to “Lease” shall
mean the Master Lease.

B.            No Violation of Master Lease.  This Sublease is and at all times shall be
subject and subordinate to the Master Lease and the rights of Master Lessor
thereunder.  The right of Sublessee to
occupy and use Premises under this Sublease is subject to the restrictions and
limitations on use set forth in the Master Lease, as modified hereby or by
Master Lessor’s consent hereto. 
Sublessee agrees that it shall not take any action, or use the Premises
in any way, that will constitute a default under the applicable terms of the
Master Lease.  Sublessor agrees to
perform all of its obligations under the Master Lease to the extent the same
are not the responsibility of Sublessee under this Sublease and not to modify
or terminate the Master Lease, throughout the term of this Sublease.  Sublessor will exercise due diligence (at
Sublessee’s cost) to cause the Master Lessor to perform its obligations under
the Master Lease for the benefit of Sublessee. 
To the extent any approval or consent is required to be obtained by
Sublessee from Master Lessor, Sublessor shall promptly cooperate with Sublessee
in obtaining such approval or consent from Master Lessor.

C.            Early Termination. 
In the event the Master Lease is terminated pursuant to the terms
thereof, this Sublease shall terminate simultaneously with such
termination.  In the event of a conflict
between the provisions of this Sublease and the Master Lease, as between
Sublessor and Sublessee, the provisions of this Sublease shall control.  In the event of a conflict between the
express provisions of this Sublease and the provisions of the Master Lease, as
incorporated herein, the express provisions of the Sublease shall prevail.

18.   Conditions Precedent:  This Sublease and Sublessor’s and Sublessee’s
obligations hereunder are conditioned upon the written consent of Master
Lessor, which consent must contain the elements set forth in Exhibit B
attached hereto.  If Sublessor fails to
obtain such Master Lessor’s consent within thirty (30) days after execution of
this Sublease by Sublessee, then Sublessor or Sublessee may terminate this
Sublease by giving the other party written notice thereof, and Sublessor shall
return to Sublessee any deposit previously received by Sublessor from Sublessee
under this Sublease; provided, however, that Sublessee may waive the
requirement that Master Lessor’s consent contain all or some of the elements
set forth in Exhibit B attached hereto. 
In addition, Sublessor shall use commercially reasonable efforts to
cause Master Lessor and Master Lessor’s lender to provide Sublessee with a
commercially reasonable nondisturbance agreement.  If Sublessor fails to obtain such
commercially reasonable nondisturbance agreement from Master Lessor and Master
Lessor’s lender within thirty (30) days after execution of this Sublease by
Sublessee, then Sublessee may terminate this Sublease by giving Sublessor
written notice thereof, and Sublessor shall return to Sublessee any deposit
previously received by Sublessor from Sublessee under this Sublease.  The conditions and termination rights in this
Section 18 shall be deemed waived by Sublessee upon (i) Sublessee’s
execution or written approval of Master Lessor’s consent (which consent does
not include all of the items 

 

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described
in this section) or (ii) Sublessee’s failure to terminate this Sublease within
sixty (60) days after Sublessee’s execution of this Sublease if Sublessor fails
to obtain Master Lessor’s consent with all the elements described herein or the
required nondisturbance agreements within thirty (30) days after Sublessee’s
execution of this Sublease.

19.   Authority to Execute:  Sublessee and Sublessor each represent and
warrant to the other that each person executing this Sublease on behalf of each
party is duly authorized to execute and deliver this Sublease on behalf of that
party.

20.   Indemnity:  Sublessee agrees to indemnify and save the
Sublessor harmless from all claims (including costs and expenses of defending
against such claims) arising from any act or omission of Sublessee or Sublessee’s
agents, employees, contractors, or invitees occurring during the Term, in, on
or about the Premises, unless such claims are caused by, or are the result of,
the intentional misconduct or negligence of Sublessor or Master Lessor or any
of Sublessor’s or Master Lessor’s agents, employees, contractors or
invitees.  Sublessor in turn agrees to
indemnify and save Sublessee harmless from all claims (including costs and
expenses of defending against such claims) arising from any act or omission of
Sublessor or Sublessor’s agents, employees, contractors or invitees, occurring
during the Term, in, on or about the Premises unless such claims are caused by,
or are the result of, the intentional misconduct or negligence of Sublessee or
any of Sublessee’s agents, employees, contractors or invitees.

21.   Signage:  Subject to Master Lessor’s prior written
approval thereof, and Sublessee’s compliance with all laws and all of Master
Lessor’s requirements in connection therewith pursuant to the terms of the
Master Lease, Sublessee shall be entitled to install, at Sublessee’s sole cost,
signage in all of the locations in which Sublessor is entitled to signage under
the Master Lease.  Subject to Master
Lessor’s prior written approval thereof, and Sublessee’s compliance with all
laws and all of Master Lessor’s requirements in connection therewith pursuant
to the terms of the Master Lease, Sublessee may also install, at Sublessee’s
sole cost, building-top signage. 
Sublessee shall be solely responsible for all costs to fabricate,
permit, install, maintain and remove all such signage installed by Sublessee.

22.   Roof Rights; Generator:  Subject to Master Lessor’s prior written
approval thereof, and Sublessee’s prompt compliance with all laws and all of
Master Lessor’s conditions and requirements in connection therewith, Sublessee
may install and maintain, at Sublessee’s sole cost, Sublessee’s
telecommunications, satellite and antenna equipment on the roof of the Building
above the Premises and a back-up generator (approximately 400 KW with an
outdoor pad of 15’ W by 20’ L) adjacent to the Premises, both in locations and
in accordance with specifications approved by Master Lessor.  Sublessee shall indemnify, defend, protect
and hold harmless Sublessor and Master Lessor from all losses, costs, claims,
liabilities and damages in connection with such roof equipment or generator.

23.   Asbestos Disclosure:  Sublessee acknowledges that it has been
informed of the presence of asbestos in the project in which the Premises are
located as set forth in Sections 30.1 and 37 of the Master Lease.

24.   Counterparts:  This Sublease may be executed in one or more
counterparts, each of which shall be an original but all of which, taken
together, shall constitute one and the same Sublease.

 

8

IN WITNESS WHEREOF, the parties have executed this
Sublease as of the day and year first above written.

 

	
  SUBLESSOR:

  	
   

  	
  SUBLESSEE:

  
	
   

  	
   

  	
   

  
	
  ACCELRYS,
  INC.,

  	
   

  	
  QUALCOMM
  INCORPORATED,

  
	
  a
  Delaware corporation

  	
   

  	
  a
  Delaware corporation

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Its:
  

  	
   

  	
   

  	
  Its:
  

  	
   

  
	
  Address:

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  10188
  Telesis Court, Suite 100

  	
   

  	
  QUALCOMM
  Incorporated

  
	
  San
  Diego, CA 92121

  	
   

  	
  Attn:
  VP Real Estate and Facilities

  
	
  Attn.:
  Chief Financial Officer

  	
   

  	
  5775
  Morehouse Road

  
	
  And

  	
   

  	
  San
  Diego, CA 92121

  
	
  Attn.:
  Facilities Director

  	
   

  	
   

  

 

 

9

EXHIBIT A

 

MASTER LEASE

 

 

10

EXHIBIT B

ITEMS TO BE INCLUDED IN MASTER LESSOR’S CONSENT

Master Lessor hereby
acknowledges receipt of a copy of this Sublease, and consents to the subleasing
of the Premises to QUALCOMM Incorporated. 
Except as consented to below, the terms and provisions of the Sublease
shall be subject and subordinate to the terms of the Master Lease and nothing
herein shall be construed to release Accelrys, Inc. from any of its obligations
or liabilities under the Master Lease. 
In connection with the foregoing, Master Lessor specifically consents
and agrees that:

1.             Sublessee may install tenant improvements, cabling,
communications equipment, security systems, and equipment within the Premises,
subject to Master Lessor’s consent, which consent shall not be unreasonably
withheld or delayed, except as provided in Section 10.1 of the Master
Lease.  In addition, Sublessee may elect
to install telecommunications, satellite and antenna equipment on the roof of
the building, as well as one or more UPS/Backup generators outside the building
to serve the Premises.  Master Lessor
shall have the right to approve the location(s) of such installations, which
consent shall not be unreasonably withheld or delayed.  Master Lessor’s consent shall not be required
for painting, carpeting and other cosmetic alterations by Sublessee and Master
Lessor shall not require the removal of any alterations unless Master Lessor
has so advised Sublessee and Sublessor in writing at the time Master Lessor
approves the same.  Delawie Wilkes
Rodrigues Barker, Mr. Chuck Nichols and Roel Construction are hereby deemed
approved by Master Lessor as architect, project manager and contractor,
respectively, for any such installations. 
Sublessee shall not be required to pay Master Lessor a supervisory fee
relating to Sublessee’s alterations or improvements in the Premises.  In no event shall Sublessee or Sublessor be
required to remove or change cosmetic alterations to the Premises.

2.             Sublessee may use the Premises for general office use,
software research and design engineering, light assembly and computer labs and
other uses permitted under applicable zoning. 
Sublessee may use Hazardous Materials in the Premises in the ordinary
course of Sublessee’s business and consistent with such use; provided, however,
that (i) Sublessee shall comply with all applicable laws and regulations in
connection with such use and shall not release or dispose of any such Hazardous
Materials in or about the Premises, and (ii) Sublessee shall indemnify, defend,
protect and hold Master Lessor harmless from and against all claims, losses,
costs, damages and liabilities, to the extent caused by the release, disposal,
discharge or emission of Hazardous Materials on or about the Premises by
Sublessee or its agents, contractors, or employees.

3.             Master Lessor represents and warrants that all Building
mechanical, HVAC, plumbing, electrical and other utility systems are in good
operating condition; provided that the term of such warranty shall expire on
May 31, 2005.  If Sublessee does not give
Sublessor notice within such warranty period setting forth with specificity the
nature and extent of such malfunction or failure, correction of such
malfunction or failure shall be the obligation of Sublessee at Sublessee’s sole
cost and expense.

4.             Sublessee may, without Master Lessor’s consent (but with
notice to Master Lessor), transfer all or a portion of the Premises to an
affiliate or subsidiary of Sublessee, or any successor to substantially all of
the assets of any of QUALCOMM’s business divisions, and no transfer of shares
or interests in Sublessee shall constitute a transfer or assignment for
purposes of the Master Lease.

5.             Sublessee shall have control over the regulation of the
HVAC system serving the Premises, without any additional charge for after-hours
HVAC or other utility services (other than actual utility costs charged by
third party providers), and may select its own energy service provider for
electrical and other utility services to the Premises.

 

11

 

6.             Sublessee shall have the right, at its own expense, to
utilize its own employees to provide janitorial services to the Premises in
lieu of janitorial services provided by Master Lessor.

7.             Master Lessor has reviewed and approved Sublessee’s
proposed insurance coverage and such insurance, including, without limitation,
the identity of the insurance company and the deductibles carried by Sublessee,
is acceptable to Master Lessor, notwithstanding any provisions in the Master
Lease to the contrary.

8.             Sublessee shall have the right to audit Master Lessor’s
records as to Building Expenses and Project Expenses as permitted under Section
5.5 of the Master Lease.

9.             Master Lessor confirms that fiber optic facilities,
conduit and services are available to and from the Premises and that Sublessee
shall have access to and the right to use such facilities without additional
cost or expense other than the cost incurred installing Sublessee’s facilities
or costs incurred to third-party service providers.

10.           Master Lessor shall permit Sublessee to install, at
Sublessee’s sole cost and expense, two (2) building top exterior, back-lit,
building signs (the “Building Signs”) containing Sublessee’s name on the
Building:

(a)           The
Building Signs shall be consistent with the design and specifications as depicted
on Exhibit B-1 attached hereto and incorporated herein by reference and may be located (i) on
the southeast corner of the Building, and (ii) above the Building entrance on
the east side of the Building;

(b)           The
cost of designing, fabricating, installing and obtaining governmental approvals
for the Building Signs shall be paid by Sublessee, at Sublessee’s sole cost and
expense.  Master Lessor shall have the
right to approve the contractor that installs the Building Signs and the
contractor shall comply with all of Master Lessor’s policies and procedures
relating to construction performed at the Building (e.g., insurance, safety
etc.);

(c)           Sublessee
shall maintain the Building Signs in good order and repair, at Sublessee’s sole
cost and expense;

(d)           Sublessee’s
right to install the Building Signs is subject to the issuance by the City of
San Diego (the “City”) of any required approvals and permits for the
installation of the Building Signs. 
Master Lessor makes no representation or warranty that the City will
permit the installation of the Building Signs;

(e)           Sublessee
shall remove the Building Signs and repair any damage to the Building, at
Sublessee’s sole cost and expense, upon the termination or expiration of the
Sublease term;

(f)            Sublessee
shall have the exclusive right to place exterior building signage on the
Building.

11.           Sublessee shall have the right, at its sole cost and
expense, to place its name on any monument signs that identify the occupant of
the Premises or to construct a monument sign on or adjacent to the Premises and
to place Sublessee’s name on such monument sign.  In addition, Sublessee shall have the right,
at its sole cost and expense, to replace the name of Sublessor with its own
name on any monument signs on which Sublessee’s name currently appears.  Master Lessor shall have the right to approve
the size, design and location of any future monument signs constructed by
Sublessee, in Master Lessor’s reasonable discretion, and all such signs shall
be constructed at Sublessee’s sole cost and expense.

 

12

 

12.           Master Lessor hereby acknowledges that notices to Tenant
under the Master Lease should be sent to 10188 Telesis Court, San Diego,
CA  92121, Attn.:  General Counsel and Attn.:  Facilities Director.

 

MASTER LESSOR:

 

	
  CALWEST
  INDUSTRIAL HOLDINGS, LLC,

  	
  Dated:

  	
   

  
	
  a
  Delaware limited liability company

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
					

 

13

 

EXHIBIT B-1

SUBLESSEE’S SIGN SPECIFICATIONS

 

 

 

14Exhibit 10.1

 

NOTE: 
CONFIDENTIAL TREATMENT HAS BEEN OBTAINED OR REQUESTED AS TO CERTAIN
PORTIONS OF THIS DOCUMENT.  WHENEVER
CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED BY AN
ASTERISK), SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

1/28/05

 

 

DISTRIBUTOR AGREEMENT

 

DANISH DERMATOLOGIC DEVELOPMENT

 

Territory: USA

 

 

 

TABLE OF CONTENTS

 

	
  SECTION I:

  	
   

  
	
   

  	
  APPOINTMENT, TERRITORY, TERM AND SCOPE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Appointment of Distributor

  	
   

  
	
   

  	
  B.

  	
  Territory

  	
   

  
	
   

  	
  C.

  	
  Term and Scope

  	
   

  
	
   

  	
  D.

  	
  Previous Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION II:

  	
   

  
	
   

  	
  DISTRIBUTOR RESPONSIBILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION III:

  	
   

  
	
   

  	
  PRINCIPAL’S RESPONSIBILITY

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION IV:

  	
   

  
	
   

  	
  TERMS AND CONDITIONS OF SALE AND PRODUCT
  WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION V:

  	
   

  
	
   

  	
  PRODUCT, PRICES AND PAYMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION VI:

  	
   

  
	
   

  	
  GENERAL CONDITIONS AND DISTRIBUTION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Principal Trade Names and Trademarks

  	
   

  
	
   

  	
  B.

  	
  Product Changes

  	
   

  
	
   

  	
  C.

  	
  Private Information

  	
   

  
	
   

  	
  D.

  	
  Export Controls

  	
   

  
	
   

  	
  E.

  	
  Relationship of Parties and Controlling
  Laws

  	
   

  
	
   

  	
  F.

  	
  Limitation of Liability

  	
   

  
	
   

  	
  G.

  	
  Termination

  	
   

  
	
   

  	
  H.

  	
  Renewal

  	
   

  
	
   

  	
  I.

  	
  Failure to Enforce

  	
   

  
	
   

  	
  J.

  	
  Notices

  	
   

  
	
   

  	
  K.

  	
  Execution and Modification

  	
   

  

 

2

 

INTERNATIONAL DISTRIBUTOR AGREEMENT

FOR PRODUCTS OF DDD

 

SECTION I

APPOINTMENT, TERRITORY, TERM AND SCOPE

 

A.            Appointment of Distributor

 

DDD, Danish Dermatologic Development A/S, a
corporation organized and existing under the laws of Denmark (hereinafter
called “Principal”), having a principal place of business at Agern Alle 11,
DK-2970 Hoersholm, Denmark, hereby appoints Candela Corporation, having its
principal office and place of business and situated at 530 Boston Post Road,
Wayland, MA 01778-1886, USA , (hereinafter called the “Distributor”) an
authorized exclusive Distributor for the Principal’s Products (hereinafter
called the “Products”) described in Appendix A. All other products of Principal
not described in Appendix A are not a part of this Agreement and may be
distributed by Principal in Territory by whatever means or manner Principal, in
its sole discretion, considers in its best interest.

 

B.            Territory

 

The geographical area (hereinafter called the
“Territory”) in which the Distributor is authorized to resell on an exclusive
basis is the USA.

 

C.            Term and Scope

 

This Agreement is effective from 28 January
2005 to 31 January 2008, unless sooner terminated as hereafter provided. This
Agreement consists of this document and attached Appendices and constitutes the
agreement in its entirety.

 

D.            Previous Agreements

 

This agreement replaces all previous
agreements and contracts between Distributor and Principal regarding the above
mentioned Territory.

 

3

 

SECTION II

DISTRIBUTOR RESPONSIBILITIES

 

The Distributor hereby agrees to:

 

1.                                       Use commercially reasonable efforts to promote and sell Principal’s
Products (“Products”) in the Territory and to achieve the sales goal mutually
agreed to in Appendix D.

 

2.                                       Not manufacture nor deal in any IPL products in the territory which
Principal may reasonably consider to be competitive with the Products during
the term of this Agreement.

 

3.                                       Establish an organizational structure and method of operation which
Principal will accept as being adequate for the maintenance and further
expansion of its market position.

 

4.                                       Establish or sub-contract a service organization adequate and
competent to furnish technical advice, service and service contracts

 

5.                                       Principal will place a consignment stock of spare parts at
Distributor and the Distributor FSE’s trunk stock to adequately service
Products.  Parts used for repair of
out-of-warranty products will be invoiced by Principal. Distributor will ship
back all defective in-warranty parts to Principal unless otherwise agreed on a
case by case basis. Principal agrees to waive the requirement for returns for
re-curring problems on non-refurb warranty parts. Distributor may return to
Principal parts that have been purchased and replaced out of warranty.
Distributor may purchase such repaired parts at reduced prices. Appendix F to
this agreement lists the critical parts to be returned to Prinicipal for
repair. The timing and minimum quantities of these parts that must be returned
must be agreed to minimize shipping costs.

 

6.                                       Exhibit at and provide personnel for trade shows in the Territory
that relate to the Products. Trade shows exclusive to Territory are Distributor
responsibility.

 

7.                                       Use commercially reasonable efforts to:

 

a.                                       Maintain and repair, at competitive service rates charged to end
users, Products in the Territory (whether or not sold by Distributor), as
requested by such end users, and

 

b.                                      Generally provide adequate customer service to keep users of
Products in the Territory satisfied.

 

8.                                       At Principal’s request, provide Principal a complete list of IPL
products distributed by Distributor.

 

9.                                       Notify Principal promptly, if unable to perform maintenance or
repair service on any of Principal’s Products in the Territory.  Principal shall have have the right to carry
out service if prior agreement is reached with Distributor and documented in

 

4

 

writing.   The services must be completed
while in the company of Distributor’s service rep.

 

10.                                 Advise Principal of the end user on each order placed.

 

11.                                 Submit names of competitors’ customers as discovered.

 

12.                                 Maintain adequate technical level of personnel by attending, at Distributor’s
cost, product training sessions conducted by Principal. Minimum technical
personnel requirements are specified in Appendix C. Distributor shall complete
and return to Principal every 90 days, a system generated summary installation
report from the Candela ISR system that lists every new system installed by
Distributor.

 

13.                                 Distributor will submit to Principal changes in original advertising
and promotional material for review by Principal. Principal will furnish the
operators manual in English language.

 

14.                                 Distributor will not, without the prior written consent of
Principal, appoint a sub-distributor or service contractor.

 

15.                                 The Distributor shall not seek customers for the Products, nor
establish any branch or maintain any distribution depot in relation to the
Products, outside the Territory. Furthermore, the Distributor is not allowed to
offer, sell or install products outside the Territory.

 

16.                                 Distributor will, at Principal ́s request, provide sales forecasts.
(See Appendix D.)

 

5

 

SECTION III

PRINCIPAL’S RESPONSIBILITY

 

The Principal hereby agrees to:

 

1.                                       Use reasonable efforts to furnish to Distributor, on terms to be
agreed upon by both parties, sales promotion materials such as catalogs,
specification sheets, suggested price lists and demonstration software which
shall be used by Distributor only for purposes of this Agreement. All such
materials shall remain Principal’s property, unless otherwise agreed.

 

2.                                       Provide replacement spare parts for Principal’s Products at no
charge to Distributor in connection with any repair or maintenance service
performed by Distributor during the manufacturer’s warranty period.

 

3.                                       Not appoint any other Distributor in the Territory.

 

4.                                       For twelve (12) months from its date of installation by
Distributor,  Principal warrants each
respective product and all other parts (for example service spare parts)
delivered by Principal to be free from defects. 
The installation date of record will be the quarterly ISR report from
the distributor to the Principal.

 

During the warranty period specified above,
in-warranty defective product(s) listed in Appendix F will be returned to
Principal ́s facility with transportation charges paid by Distributor. Items
under warranty will be repaired or replaced at no cost to Distributor.
Transportation charges for repaired or replacement items that are returned to
Distributor will be paid by Principal.

 

6

 

SECTION IV

TERMS AND CONDITIONS OF SALE AND PRODUCT
WARRANTIES

 

A.                                   All orders placed by Distributor hereunder shall be in writing, and
shall be subject to approval and acceptance in writing by Principal within 24
hours of receipt.

 

B.                                     All sales by Principal to Distributor hereunder shall be subject to
the provisions of this Agreement and to the provisions of the applicable “Product
Warranties” attached (Appendix E) hereto and made a part hereof, and any
subsequent modification of said Product Warranties provided, however, that such
modifications shall not be inconsistent with the other provisions of this
Agreement, and shall be effective only upon thirty (30) days’ notice to
Distributor; and any provisions of any purchase order placed by the Distributor
which is inconsistent hereafter shall be null and void unless accepted by the
Principal in writing.

 

C.            Delivery
terms from Principal to Distributor are Ex Works (FOB Plant).

 

7

 

SECTION V

PRODUCT, PRICES AND PAYMENTS

 

A.                                   Except as otherwise agreed to by the parties in writing, the price
to Distributor for all Principal’s Products, spare parts and installation
equipment sold by Principal to Distributor hereunder shall be as described in
Appendices A and B attached hereto and made part hereof. Principal shall
provide Distributor six (6) months advance notice of any change in list prices
and shall honor old prices for orders already placed up to sixty (60) days from
such notice.

 

For any Products, spare parts or installation
equipment ordered by Distributor, Distributor shall make payment to Principal
in EURO by means of wire transfer 68 days from the invoice date.

 

8

 

SECTION VI

GENERAL CONDITIONS AND DISTRIBUTION

 

A.            Principal
Trade Names and Trademarks

 

The Distributor acknowledges that the words
Ellipse and  DDD are the dominant
features of the trade names of the Principal and that the marks Ellipse and DDD
(“the Trademarks”) are the Principal trademarks for the Products manufactured
and/or sold by the Principal. The Distributor acknowledges that the Trademarks
are owned exclusively by Principal. Distributor agrees that it will not, in any
manner, use the word DDD, or any imitation or variant thereof, as a part of the
Distributor’s trade name, company or firm name, nor will it grant such use to
any subsidiary or affiliate or to dealers, if any, appointed by the
Distributor. The Distributor shall use the Trademarks on or in relation to the
Products, but shall ensure that each reference to, and use of any of, the
Trademarks by it is in the manner from time to time approved in writing by the
Principal and, where required by the Principal, is accompanied by an
acknowledgement in a form approved by the Principal that the Trademarks are
trademarks of the Principal.

 

The Distributor shall not:

 

1.                                       Alter, remove, tamper with or obscure any trademarks, numbers, or
any other means of identification used on or in relation to the Products.

 

2.                                       Use any of the Trademarks in any way which might prejudice their
distinctiveness or validity or the goodwill of the Principal in them.

 

3.                                       Use any trademark other than the Trademarks in relation to the
Products or spare parts for the products without obtaining the Principal’s
prior written consent, or

 

4.                                       Use any marks in the Territory which so resemble any of the
Trademarks as to be likely to cause confusion in the marketplace.

 

5.                                       Market the Ellipse systems under any other Principal name than
Danish Dermatologic Development A/S (DDD).

 

Except for the right to use the Trademarks
expressly granted under this clause, the Distributor acknowledges that it shall
not acquire any rights in respect to the Trademarks and that all and any rights
and goodwill which accrue in the Territory arising out of the use of the
Trademarks shall vest in the Principal.

 

The Distributor shall, at the request of the
Principal:

 

1.                                       Execute such registered user agreements or licenses in respect of
the use of the Trademark in the Territory as the Principal may reasonably
require.

 

2.                                      At principal’s expense, take such steps as the Principal may
reasonably require to assist in maintaining the validity and enforceability of
the Trademarks in the territory. The Distributor shall promptly and fully
notify the Principal of any actual

 

9

 

infringement in the Territory or any
intellectual property of the Principal which comes to the Distributor’s notice,
and of any claim by any third party that the sale of Products in the Territory
may infringe the rights of any other person; and the Distributor shall, at the
request and expense of the Principal, do all such things as may be reasonably
required to assist the Principal in taking or resisting any proceedings in
relation to such an infringement or claim.

 

B.            Product Changes

 

The Principal reserves the right from time to
time in its absolute discretion, without thereby incurring any liability to the
Distributor with respect to any purchase order theretofore transmitted or
placed by the Distributor or otherwise, to discontinue or to limit its
production of any Product(s) of model(s) thereof, to terminate or to limit
deliveries of any such Product(s) or model(s), the production of which is so
discontinued or limited, to alter the design or construction of any such
Product(s) or model(s).

 

C.            Private Information

 

The Distributor shall keep confidential,
during the term of this Agreement and for three years thereafter, all trade
secrets and proprietary, and confidential information pertaining to Product(s)
furnished to it by the Principal and shall return all copies of all documents
containing this information to the Principal on expiration or termination of
this Agreement. The provisions of this clause shall not apply to any
information which was or becomes known to the public or which is contained in
any printed publications made available to customers.

 

D.            Export Controls

 

The Principal’s obligation hereunder shall be
at all times subject to the export administration and control laws and
regulations of the Danish Government, and any amendment thereof. The
Distributor agrees that, with respect to the resale or any other disposition of
products and any printed commercial and technical data and information supplied
by the Principal, the Distributor shall, where necessary, comply fully with the
export administration and control laws and regulations of Denmark, and any
amendments of such laws and regulations, to the extent those laws and
regulations apply in and/or are not in conflict with the laws and regulations
of the Territory.

 

E.             Regulatory
Compliance and Approvals

 

The parties hereto agree that it will be the
responsibility of the Principal to obtain and maintain required FDA clearances.
It is the responsibility of the Distributor to obtain  other local regulatory approvals and required
registrations with respect to the sale of Products in Territory. Distributor
will be responsible for filling out and sending standard forms needed for CE
compliance to Principal. Principal agrees to provide such information and
assistance as is reasonable and necessary, including forms to be used for
reporting.

 

Principal sells the Products to Distributor
under the assumption that Distributor adheres to relevant legislation,  rules and regulations for the sale and use
of  the Products in the Territory.

 

10

 

Distributor agrees to defend and hold
Principal harmless from and against any and all claims, liabilities, penalties,
damages, demands and expenses which may arise because the Products have been
sold to and used by persons who may not use the Products, according to relevant
legislation, rules and regulations in the Territory.

 

F.             Relationship
of Parties and Controlling Laws

 

1.                                       This Agreement is non-assignable. The Distributor is an independent
contractor to the Principal. It is understood that the Distributor and/or its
agents, subsidiaries, affiliates and employees are in no way the legal
representative, agent or employees of the Principal for any purposes whatsoever
and the Distributor shall not hold them out as such, and they shall have no
right or authority to assume or create, in writing, or otherwise, any
obligation of any kind, expressed or implied, in the name of or on behalf of
the Principal. The Principal reserves the right to determine in its sole
discretion the acceptability of any order or contract provision proposed by the
Distributor.

 

2.                                       Any dispute arising out of or in connection with this contract,
including any question regarding its existence, validity, or termination, shall
be referred to and finally resolved by arbitration under the Rules of the
London Court of International Arbitration, which Rules are deemed to be
incorporated by reference into this clause. The tribunal shall consist of three
arbitrators. The place of arbitration shall be London, England. The language of
the arbitration shall be the English language. The result of the arbitration
and the award shall be final and binding on all parties and each agrees not to
seek judicial review or bring suit except for the purpose of enforcement of the
arbitration award. The prevailing party in any arbitration proceeding brought
by one party against the other shall be entitled, in addition to any other
rights and remedies it may have, to reimbursement for its expenses, including
arbitration fees and reasonable attorney’s fees.

 

Principal stipulates and represents that, to
its knowledge and information, this Agreement is in compliance with all laws
and regulations of Denmark.  Distributor
stipulates and represents that, to its knowledge and information, this
Agreement is in compliance with all laws and regulations of the USA. In the
event any clause or any part of any clause contained in this Agreement shall be
determined to be invalid or unenforceable, but which clause or part of the clause
would be valid if it were modified in some way, the parties shall agree to such
reasonable modification as may be necessary to make it valid and effective.

 

The governing law of this contract shall be
the substantive law (both statutory law and common law, but without regard to
principles of conflicts of law) of the United Kingdom.

 

G.            Limitation
of Liability & Product Liability

 

In no event shall the Principal be liable to
Distributor for consequential or special damages, and the Principal’s liability
to Distributor on any claim, whether in contract tort (including negligence and
strict liability) or otherwise (including indirect or incidental), for any loss
or damage arising out of, connected with, or resulting from this Agreement,

 

11

 

shall in no case exceed the price allocable
to the Product(s), or parts thereof, to which the claim relates.

 

The limitation
of liability described above does not apply if a product liability
claim for damages is lodged by a third party against one of the parties of this
Agreement.

 

If such a claim is
instituted by a third party, the parties of this Agreement shall in good faith
:

 

•        investigate or research the causes of the accidents,
occurrences, injuries or losses affecting any person or property as a result of
the manner in which the Products are designed, manufactured, treated,
fabricated, constructed, packaged, delivered, sold or used, and use its best
effort to correct or eliminate such causes within a reasonable period;

 

•            provide the accused
party reasonable assistance which is necessary for the accused party’s defense
to such claim, suit or action in relation to the Products sold by Principal to
Distributor.

 

•            discuss and agree on
the continuation or discontinuation of the sales and marketing of the Product
in the Territory.

 

If one of the parties
incurs liability towards any third party for damages, to body or property, the
liability between Principal and Distributor shall be settled by arbitration in
accordance with Section VI, Article F of the Distribution Agreement.

 

Subject to the articles
and limitations set out in this section G, the Principal shall be liable for
such product liability to the extent that it is proven that the loss, death or
injury is caused by failure or negligence committed by the Principal.

 

The Principal will not be responsible for
indemnifying the Distributor to the extent that product liability arises out of
failure or negligence committed by the Distributor.

 

The Distributor will not be responsible for
indemnifying the Principal to the extent that product liability arises out of
failure or negligence committed by the Prinicpal.

 

The parties shall obtain and maintain, at
their own expense, product liability insurance to cover any and all losses,
damages, liabilities, penalties, claims, demands, suits or actions, and related
costs and expenses of any kind for injury to body or property, suffered by any
person or entity, arising out of the Products.

 

Principal cannot take
any responsibility for the safe and efficient function of the product(s) if the
service of the products have been performed by use of spare parts or
refurbishments not provided by Principal – or if the service has been performed
by personnel who has not been trained by Principal.

 

12

 

H.            Patent Infringement Claims

 

*

 

To the best knowledge
of the Parties, none of the intellectual property rights related to the
products infringe any third party rights. 
However neither of the Parties make any warranty or representation to
that effect.

 

Should a patent
infringement claim be lodged against one or both of the Parties to this
Agreement, the Parties agree to:

 

•        Immediately inform the
other Party of such claim

•        In good faith discuss continuing
or stopping marketing and sales of the Product in the Territory

•        In good faith discuss
obtaining a patent license agreement for the Product in the Territory

•        Principal will pay the
legal costs of such possible litigation and consequently Principal has the
final say with respect to the response to such possible patent infringement claims.

 

*

 

As it relates to
patent infringements claims, it is agreed that neither party will indemnify the
other.

 

I.              Termination

 

1.                                       After the initial 36 months of this Agreement, either party shall
have the right to terminate the Agreement for any reason by giving six months
written notice.

 

2.                                       Either party shall have the right to terminate this Agreement
immediately in the event that the other fails to cure a material breach of any
of the terms or conditions of this Agreement to the satisfaction of the first
party within 30 days after service of written notice regarding remedy of that
breach.

 

3.                                       Either party shall have the right to terminate this Agreement
immediately, at any time, by notice to the other, in the event of insolvency or
bankruptcy or the like of the other party, without the need to resort to formal
legal proceedings.

 

4.                                       Either party shall have the right to terminate upon 90 days’ advance
written notice if there occurs a material change in legal or beneficial
ownership, control or management of the other party, including acquisition or
merger by the other party. For purposes of this Agreement, a change in majority
share ownership or control shall be deemed material.

Principal shall also have the option to
terminate the Agreement with ninety (90) days’ advance written notice to
Distributor if a third party obtains control of more than 50% of the shares of
Principal.

 

5.                                       Failure of the Distributor to meet mutually agreed upon sales goals
shall provide Principal with the option to terminate the Agreement with ninety
(90) days’ notice. Sales goals for this Agreement are described in Appendix D,
attached hereto and

 

13

 

made part hereof, and shall be established on
an annual basis thereafter upon renewal, if any, of this Agreement.

 

6.                                       Upon Termination of this Agreement for any cause:

 

a.                                       Distributor shall immediately cease to use Principal’s name and logo
or the trade names in connection with its business;

 

b.                                      Distributor shall not be entitled to any separation compensation.

 

7.                                       Termination of this Agreement shall not relieve Distributor from any
obligations to pay sums due Principal and vice versa.

 

8.                                       Distributor agrees that it shall not be entitled to any payments for
development of clientele distribution/service network, loss of anticipated
profit nor any associated business costs.

 

9.                                       Upon termination by either party, all sales and service records and
literature, customer lists, and unpaid demonstration equipment and, at the sole
discretion of Principal, Products which have not been paid for in full, shall
be turned over to the Principal free of charge. Principal will designate
disposition of its property and assume responsibility for transportation
charges.

 

10.                                 Upon termination by either party, Principal is obliged to repurchase
from Distributor Products owned by Distributor and used by Distributor for
demonstration purposes. The repurchase price is as follows: less than 6 months
old: 100% of purchase price; 6-12 months: 75%; 12-18 months: 50%; 18-24 months:
25%; more than 24 months: Free of charge.

 

11.                                In the event Distributor is unable to perform service to the
satisfaction of     customers as reported
to Principal, Principal reserves the right to cancel service responsibility of
this Agreement. Such cancellation would result in change in distribution net
prices to reflect distribution responsibilities limited to sales and
application support.

 

12.                                Upon termination of this Agreement, by either party, Distributor and
Principal agrees to find solutions, acceptable to the customers, for continued
service and maintenance of the products sold and installed by Distributor in
the Territory. Principal is committed to take over the service and maintenance
responsibility in the Territory. Distributor is committed to provide Principal
with complete service records, including list of customers, no later than one
week after termination.

 

13.                                Conditions beyond control of parties. Neither party to the Agreement
shall be held liable for failure to comply with any of the terms of this
Agreement when such failure has been caused solely by fire, labor dispute,
strike, war, insurrection, government restrictions, force majeure, or act of
God beyond the control and without fault on the part of the party involved,
provided such party uses due diligence to remedy such default.

 

14

 

J.             Renewal

 

Prior to ninety (90) days from expiration of
the Agreement, a renewal of this Agreement shall be negotiated, including
defining mutually acceptable sales goals for the new period of the Agreement.

 

K.            Failure to Enforce

 

The failure of either party to enforce at any
time, or for any period of time, the provisions hereof in accordance with its
terms shall not be construed to be a waiver of such provision or of the rights
of such party thereafter to enforce each and every such provision.

 

L.             Notices

 

Except as provided in Paragraph G of this
Section VI, notices between parties shall be in the English language and shall
be deemed to be validly given if transmitted by telegraph, telex, facsimile,
electronic mail or in writing to the other party at the address indicated in
Section I of this Agreement and after confirmation of the receipt thereof by
the other party. Notwithstanding the foregoing, confirmation is not a necessary
requirement for the validity of notice, if such notice or other communication
were sent by registered mail. Either party may change its address by giving
notice thereof to the other party. Nothing in this paragraph shall be deemed to
modify in any way the notice requirements set forth in Paragraph G of this
Section VI.

 

M.           Execution and Modification

 

This Agreement contains the entire and only
Agreement between the parties respecting sale to and the purchase, distribution
and servicing by the Distributor of any product(s), and any representations,
terms or conditions relating thereto or in connection therewith not
incorporated herein shall not be binding upon either party.

 

 

	
  Danish Dermatologic Development A/S

  	
   

  	
  Candela Corporation, Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  (Authorized Signature)

  	
   

  	
   

  	
  (Authorized Signature)

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Sales Director

  	
   

  	
   

  	
  Title:

  	
  President & CEO

  	
   

  
	
   

  	
   

  	
   

  
	
  Printed Name:

  	
   Gunnar Hallsson

  	
   

  	
   

  	
  Printed Name:

  	
  Gerard Puorro

  	
   

  
	
  Date:

  	
       January 28,
  2005

  	
   

  	
   

  	
  Date: 

  	
       January 28,
  2005

  	
   

  
																		

 

15

 

Appendices to this Agreement:

 

A: Description of Products and Transfer
Prices to Distributor

B: Accessories, Service Spare Parts and
Refurbishment

C: Minimum Technical Personnel Requirements

D: Sales Goals Mutually Agreed

E: Product Warranties

F: Spare Parts 

 

16

 

Appendix A: Description of
Products and Transfer price to Distributor:

 

*

 

	
  Qty

  	
   

  	
  Description

  	
   

  	
  EURO

  	
   

  
	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  

 

The transfer price, * Euro, is based on a
USD/Euro exchange rate of 1,3. As long as the exchange rate remains in the 1,2
– 1,4 range the transfer price remains unchanged. If the exchange rate moves
outside the above band, the following transfer price adjustment, based on 50/50
“pain/gain share”, will apply (also beyond the lower and upper limit examples
given in the table below):

 

	
  Rate

  	
   

  	
  TP €

  	
   

  	
  TP US $equiv.

  	
   

  
	
  1,00-1,04

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,05-1,09

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,10-1,14

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,15-1,19

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,20

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,25

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,30

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,35

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,40

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,41-1,45

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,46-1,50

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,51-1,55

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  1,56-1,60

  	
   

  	
   

  	
  *

  	
   

  	
  *

  	
   

  

 

All systems will be invoiced @ * Euro. At the
end of each calendar quarter the average USD/Euro exchange rate for the quarter
is calculated based on http://www.x-rates.com. If the average rate was outside
the 1,20-1,40 band the appropriate adjustment is applied to all system invoices
for the quarter. Principal issues a credit note to Distributor if the rate was
1,41 or more. If the rate was 1,19 or less Principal invoices Distributor for
the difference.

 

Options to *

 

	
  Qty

  	
   

  	
  Description

  	
   

  	
  EURO

  	
   

  
	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  

 

17

 

Appendix B: Accessories, Service
Spare Parts and Refurbishment.

 

The warranty for the system is only valid if
spare parts, accessories and consumables used are original parts and
consumables delivered from DDD.

 

Prices of Accessories, Consumables and Spare
Parts are according to current pricelist.

 

Refurbishment of applicators:

 

The Applicator is not covered by a warranty. The light source and filter
in the applicator are consumables that wear down during use (depending on the
settings) and have a limited lifetime. Therefore the applicator needs to be
refurbished. Refurbishments are charged as follows:

 

*

 

When an applicator is returned for
refurbishment, it must be accompanied by a written order stating the applicator
serial number. A floppy disc containing the number of shots released by the
applicator must be enclosed with the order. If the diskette is not enclosed,
the refurbishment will be charged at EURO * transfer price.

 

The Parties agree that refurbishments will be
performed by Distributor soonest possible. Principal will supply, at cost plus
a * handling fee, all tools and instruments required for performing said
refurbishments. Distributor will send technical personnel for training at
Principal’s facilities.

 

Distributor will purchase all
consumables/parts needed for the refurbishments from Principal as per Principal’s
distributor price list.

 

18

 

Appendix C: Minimum Technical
Personnel Requirements.

 

Distributor must have technical personnel
employed - alternatively have external engineers contractually engaged - to
perform systems installation, post installation training, software upgrades and
field service on the products.

 

Systems installation, post installation
training, software upgrades and field service on the products can only be
performed by Technical Personal trained by DDD or duly authorized trainers from
Candela’s Tech Support group.

 

The number of technically skilled persons
available must at all times be sufficient to respond to customer requests for
support and / or service as well as any problem affecting safety of use no
later than 24 hours after a customer call. In case of injuries and / or
operational problems affecting safety, which have caused or could have caused
injury, Distributor must notify DDD within 24 hours. The reporting must be
according to the PMS and Vigilance requirements specified in the Council
Directive 93/42/EEC of 14 June 1993 concerning medical devices. For this reporting
the distributor must use the DDD Customer Complaint Report and the DDD Initial
Incident Report procedures. DDD will train Distributor and provide these
procedures during service training sessions. Distributor must be able to offer
service contracts to the customers.

 

The technical personnel must attend service
training sessions scheduled by Principal - typically once per year or duly
authorized trainers from Candela’s Tech Support group.   In addition Distributor can request
unscheduled training sessions for personnel at Principal ́s site which will be
carried out at Principal ́s sole discretion. Travel costs are borne by
Distributor while accommodation and meal costs are borne by Principal.

 

The Distributor Technical Personnel will need
the following basic skills / education:

 

•             Thorough understanding of analog and digital electronic hardware.

•             Software expertise - at minimum on PC software “super user” level.

•             Ability to understand, read and communicate in English language.

•             Based on the above basic skills and after having participated in
service training classes the technical personnel must be capable of identifying
and correcting system failures on a module level.

 

Neither sales staff nor technical staffs from
the Distributor are allowed to take responsibility for patient treatments and
no modifications to the product hardware or software must be made without
written consent from Principal.

 

19

 

Appendix D: Sales Goals mutually
agreed to.

 

*

 

Appendix E: Product Warranties

 

For twelve (12) months from its date of
installation by Distributor, Principal warrants each respective product and all
other parts (for example service spare parts) delivered by Principal to be free
from defects in manufacture, performance, material and workmanship.

 

The warranty is only valid if the products
have been transported, installed, handled, operated, maintained and serviced
according to the instructions and the operators and service manuals provided by
Principal.

 

The twelve months warranty does not cover
wear of the Applicators. The light source and the filters in the Applicators
are consumables which are known to have a limited lifetime which depends on
energy levels and pulse times selected for the individual treatment options.

 

The warranties described above are only valid
if spare parts and consumables which may have been used before the end of the
warranty period are original parts and consumables delivered from Principal.

 

Distributor will provide quarterly summary installation
report with serial number and installation date.

 

Terms and conditions for credit relating to
repair products under this warranty is given in Section II, 5 of this
agreement.

 

Appendix F: Spare Parts

 

(to be specified).

 

20

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