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Exhibit 10.9    
    

OFFICE LEASE  

 DEL MAR CORPORATE PLAZA  

R.B. INCOME PROPERTIES,

a California limited partnership 

as
Landlord, 

and 

NOVACARDIA, INC.,

a Delaware corporation 

as
Tenant 

July 29,
2004 

BASIC LEASE INFORMATION

OFFICE LEASE  

	Lease Date:	 	July 29, 2004
	

Landlord:	
 	

R.B. Income Properties, a California limited partnership
	

Managing Agent:	
 	

Coast Income Properties, Inc., a California corporation
	

Landlord's Address:	
 	

c/o Coast Income Properties, Inc.

4350 La Jolla Village Drive, Suite 150

San Diego, California 92122
	

Tenant:	
 	

Novacardia, Inc., a Delaware corporation
	

Tenant's Address:	
 	

12230 El Camino Real, Suite 300

San Diego, CA 92130
	

Legal Description of Land:	
 	

See Exhibit "A"
	

Premises:	
 	

A portion of the second floor of a three-story building located at 12651 High Bluff Drive, San Diego, California (the "Building"), in that development commonly known Del Mar Corporate Plaza (the "Project"). The Building is sometimes herein
referred to as Building A of the Project. The Premises are shown on Exhibit B, attached hereto.
	

Rentable Area of the Premises:	
 	

Approximately 3,873 rentable square feet.
	

Rentable Area of the Building:	
 	

Approximately 34,053 rentable square feet.
	

Rentable Area of the Project:	
 	

Approximately 73,492 rentable square feet.
	

Usable Area of the Premises:	
 	

Approximately 3,282 usable square feet.
	

Usable Area of the Building:	
 	

Approximately 30,698 usable square feet.
	

Permitted Uses:	
 	

General business office purposes, and other legally permitted uses consistent with the character of the Building.
	

Term:	
 	

Three (3) years and two (2) months, subject to an option to extend pursuant to the provisions of Section 3.04.
	

Term Commencement Date:	
 	

August 1, 2004, subject to adjustment as provided in Section 3.01.
	

Base Rent:	
 	

 

	Lease Year
 
	 	Base Rent
	 	Annual Base Rent

	1	 	$2.60 per rentable sq. ft./month*	 	$31.20 per rentable sq. ft./month*
	2	 	$2.68 per rentable sq. ft./month	 	$32.16 per rentable sq. ft./month
	3	 	$2.76 per rentable sq. ft./month	 	$33.12 per rentable sq. ft./month
	4	 	$2.84 per rentable sq. ft./month	 	$34.11 per rentable sq. ft./month**

	*
	Base
Rent for Lease Year 1 is subject to the rental abatement provisions of Section 19.01 of Exhibit G. 
	**
	Base
Rent for Lease Year 4 is subject to the proration provisions of Section 4.01. 

	Tenant's Project Share of Project Operating Expenses:	 	5.27%
	

Tenant's Building Share of Building Operating Expenses:	
 	

11.37%
	

Base Calendar Year:	
 	

2004
	

Security Deposit:	
 	

Ten Thousand Seventy Dollars ($10,070) and Section 19.02, Exhibit G.
	

Broker(s):	
 	

Grubb & Ellis, representing Landlord, and Corporate Real Estate Advisors, representing Tenant.
	

Broker's Fee or Commission, if any, paid by:	
 	

R.B. Income Properties, a California limited partnership, pursuant to a separate agreement.
	

Business Hours:	
 	

7:00 a.m. to 6:00 p.m., Monday through Friday, and 9:00 a.m. to 1:00 p.m. Saturdays, excluding certain holidays, being those days designated as Federal Holidays pursuant to 5 U.S.C. §6103 ("Holidays").

        The
foregoing Basic Lease Information is hereby incorporated into and made a part of this Lease. Each reference in this Lease to any of the terms above shall mean the respective
information hereinabove set forth and shall be construed to incorporated all of the terms provided under the particular paragraph pertaining to such information. In the event of any conflict between
any Basic Lease Information and the Lease, the latter shall control. 

	LANDLORD:	 	TENANT:
	R. B. INCOME PROPERTIES, a California limited partnership	 	NOVACARDIA, INC, a Delaware corporation
	

By:	
 	

THOMAS G. BLAKE, Trustee of the Thomas G. Blake and Kathleen B. Blake Family Trust u/d/t dated July 27, 1987, as amended, its General Partner	
 	

By:

Name:

Its:	
 	

/s/ Randall E. Woods
 Randall E. Woods

CEO
	

 	
 	

 	
 	

By:

Name:

Its:	
 	

/s/ Lynne R. Rollins
 Lynne R. Rollins

CFO

   Table of Contents  

	 
	 	 
	 	 
	 	Page

	1.	 	PREMISES	 	1
	 	 	1.01	 	Premises	 	1
	 	 	1.02	 	Exhibits	 	1
	 	 	1.03	 	Common Areas	 	1
	 	 	1.04	 	Landlord's Reserved Rights in Common Areas and Project	 	1
	 	 	1.05	 	Rentable/Useable Area	 	2
	 	 	1.06	 	Tenant's Parking Entitlements	 	2
	 	 	1.07	 	Condition of Premises	 	2
	2.	 	TENANT'S IMPROVEMENTS	 	2
	 	 	2.01	 	Plans	 	2
	 	 	2.02	 	Construction	 	3
	 	 	2.03	 	Failure to Complete Construction	 	3
	3.	 	TERM	 	3
	 	 	3.01	 	Commencement of Term	 	3
	 	 	3.02	 	Early Occupancy	 	3
	 	 	3.03	 	Notice of Lease Dates	 	3
	 	 	3.04	 	Option to Extend Term	 	4
	 	 	3.05	 	Days	 	4
	4.	 	RENT	 	4
	 	 	4.01	 	Base Rent	 	4
	 	 	4.02	 	Additional Rent	 	6
	 	 	4.03	 	Escalation	 	6
	 	 	4.04	 	Late Payment	 	6
	 	 	4.05	 	Security Deposit	 	6
	5.	 	INSURANCE	 	6
	 	 	5.01	 	Special Form Coverage	 	6
	 	 	5.02	 	Liability Coverage	 	7
	 	 	5.03	 	Worker's Compensation Insurance	 	7
	 	 	5.04	 	Business Interruption/Rental Abatement Insurance	 	8
	 	 	5.05	 	Insurance Certificates	 	8
	 	 	5.06	 	Tenant's Failure	 	8
	 	 	5.07	 	Waiver of Subrogation	 	8
	 	 	5.08	 	Tenant's Property and Fixtures	 	8
	 	 	5.09	 	Indemnification	 	8
	 	 	5.10	 	Earthquake and Flood Insurance	 	9
	6.	 	OPERATING EXPENSES	 	9
	 	 	6.01	 	Tenant's Share	 	9
	 	 	6.02	 	Definition of Operating Expenses	 	9
	 	 	6.03	 	Proration	 	12
	 	 	6.04	 	Survival	 	12
	 	 	6.05	 	Estimated Payments	 	12
	 	 	6.06	 	Adjustment	 	13
	 	 	6.07	 	Impositions	 	13
	 	 	6.08	 	Services and Utilities	 	14
	 	 	6.09	 	Special Services	 	14
	7.	 	REPAIRS AND MAINTENANCE	 	14
	 	 	7.01	 	Tenant Repairs and Maintenance	 	14
	 	 	 	 	 	 	 

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	 	 	7.02	 	Inspection of Premises	 	15
	 	 	7.03	 	Liens	 	15
	8.	 	FIXTURES, PERSONAL PROPERTY AND ALTERATIONS	 	15
	 	 	8.01	 	Fixtures and Personal Property	 	15
	 	 	8.02	 	Alterations	 	15
	 	 	8.03	 	Removal of Alterations	 	16
	9.	 	USE AND COMPLIANCE WITH LAWS	 	16
	 	 	9.01	 	General Use and Compliance with Laws	 	16
	 	 	9.02	 	Signs	 	16
	 	 	9.03	 	Parking Access	 	17
	 	 	9.04	 	Floor Load	 	17
	 	 	9.05	 	Deliveries	 	17
	10.	 	DAMAGE AND DESTRUCTION	 	17
	 	 	10.01	 	Reconstruction	 	17
	 	 	10.02	 	Rent Abatement	 	17
	 	 	10.03	 	Excessive Damage or Destruction	 	18
	 	 	10.04	 	Uninsured Casualties	 	18
	 	 	10.05	 	Waiver	 	18
	11.	 	EMINENT DOMAIN	 	18
	 	 	11.01	 	Total Condemnation	 	18
	 	 	11.02	 	Partial Condemnation	 	18
	 	 	11.03	 	Landlord's Award	 	18
	 	 	11.04	 	Tenant's Award	 	19
	 	 	11.05	 	Temporary Condemnation	 	19
	 	 	11.06	 	Notice and Execution	 	19
	12.	 	DEFAULT	 	19
	 	 	12.01	 	Events of Default	 	19
	 	 	12.02	 	Landlord's Remedies	 	20
	13.	 	ASSIGNMENT AND SUBLETTING	 	22
	 	 	13.01	 	Assignment and Subletting; Prohibition	 	22
	 	 	13.02	 	Bonus Rental	 	22
	 	 	13.03	 	Scope	 	23
	 	 	13.04	 	Waiver	 	23
	 	 	13.05	 	Release	 	23
	 	 	13.06	 	Recapture of Premises	 	23
	14.	 	HAZARDOUS MATERIALS	 	24
	 	 	14.01	 	Definitions	 	24
	 	 	14.02	 	Use	 	25
	 	 	14.03	 	Compliance With Laws; Handling of Hazardous Materials	 	25
	 	 	14.04	 	Compliance With Insurance Requirements	 	25
	 	 	14.05	 	Indemnity	 	25
	 	 	14.06	 	Notice	 	26
	 	 	14.07	 	Default	 	26
	 	 	14.08	 	Landlord's Disclosure	 	26
	15.	 	OFFSET STATEMENT, ATTORNMENT AND SUBORDINATION	 	27
	 	 	15.01	 	Estoppel Certificate	 	27
	 	 	15.02	 	Attornment	 	27
	 	 	15.03	 	Subordination	 	27
	16.	 	NOTICES	 	27
	 	 	16.01	 	Notices	 	27
	 	 	 	 	 	 	 

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	17.	 	SUCCESSORS BOUND	 	27
	 	 	17.01	 	Successors Bound	 	27
	18.	 	MISCELLANEOUS	 	28
	 	 	18.01	 	Waiver	 	28
	 	 	18.02	 	Easements	 	28
	 	 	18.03	 	Relocation	 	28
	 	 	18.04	 	No Light, Air or View Easement	 	28
	 	 	18.05	 	Corporate Authority	 	28
	 	 	18.06	 	Accord and Satisfaction	 	28
	 	 	18.07	 	Limitation of Landlord's Liability	 	28
	 	 	18.08	 	Time	 	29
	 	 	18.09	 	Attorneys' Fees	 	29
	 	 	18.10	 	Captions and Article Numbers	 	29
	 	 	18.11	 	Severability	 	29
	 	 	18.12	 	Applicable Law	 	29
	 	 	18.13	 	Submission of Lease	 	29
	 	 	18.14	 	Holding Over	 	29
	 	 	18.15	 	Surrender	 	29
	 	 	18.16	 	Rules and Regulations	 	29
	 	 	18.17	 	No Nuisance	 	29
	 	 	18.18	 	Broker	 	30
	 	 	18.19	 	Landlord's Right to Perform	 	30
	 	 	18.20	 	Mortgage Protection	 	30
	 	 	18.21	 	Nonliability	 	30
	 	 	18.22	 	Quiet Enjoyment	 	31
	 	 	18.23	 	Modification for Lender	 	31
	 	 	18.24	 	Recording	 	31
	 	 	18.25	 	Entire Agreement	 	31
	 	 	18.26	 	Reasonableness	 	31
	 	 	18.27	 	Additional Lease Provisions	 	31
	19.	 	ADDITIONAL LEASE PROVISIONS	 	 
	 	 	19.01	 	Rental Abatement	 	 
	 	 	19.02	 	Letter of Credit	 	 
	EXHIBITS	 	 
	 	 	Exhibit A—Legal Description	 	 
	 	 	Exhibit B—Building Floor Plans	 	 
	 	 	Exhibit C—Preliminary Plans	 	 
	 	 	Exhibit D—Work Letter	 	 
	 	 	Exhibit E—Rules and Regulations	 	 
	 	 	Exhibit F—Letter of Credit	 	 
	 	 	Exhibit G—Additional Lease Provisions	 	 

iii

   OFFICE LEASE  

        THIS LEASE ("Lease"), dated for reference and effective as of the 29th day of July, 2004, by and between R.B. INCOME PROPERTIES, a California limited partnership
("Landlord") and NOVACARDIA, INC., a Delaware corporation ("Tenant") for space in the building located at 12651 High Bluff Drive (the "Building") located in the City of San Diego, County of San
Diego, State of California, in that development commonly known as Del Mar Corporate Plaza (the "Project"); described more particularly on the Legal Description, attached hereto as Exhibit A,
shall be upon the terms and conditions contained hereinafter. 

1.     PREMISES  

        1.01    Premises.    Landlord leases to Tenant, subject to the provisions of this Lease, the Premises in the Building
as set forth in the Basic Lease Information, the usable space of which is shown on the Building Floor Plans, attached hereto as Exhibit B. The rentable square feet of the Premises, Building and
Project shall be as set forth in the Basic Lease Information. By entering the Premises, Tenant shall be deemed to accept the same in their condition existing as of the date of such entry and subject
to all applicable municipal, county, state and federal statutes, laws, ordinances, including zoning ordinances, and regulations governing and relating to the Tenant's use, occupancy or possession of
the Premises. Tenant acknowledges that the only warranties and representations Landlord has made in connection with the physical condition of the Premises or Tenant's use of the same upon which Tenant
has relied directly or indirectly for any purpose are those expressly provided in this Lease. 

        1.02    Exhibits.    The following Exhibits are attached to this Lease after the signatures and by reference thereto
are incorporated herein: 

Exhibit A—Legal
Description

Exhibit B—Building Floor Plans and Site Plan

Exhibit C—Preliminary Plans

Exhibit D—Work Letter

Exhibit E—Rules and Regulations

Exhibit F—Letter of Credit

Exhibit G—Additional Lease Provisions 

        1.03    Common Areas.    Tenant shall have, as appurtenant to the Premises and subject to reasonable rules and
regulations from time to time made by Landlord of which Tenant is given notice, the right to the use of the following in common: 

        (a)    Building Common Area.    The common stairways and accessways,
lobbies, entrances, stairs, elevators, maintenance and utility service areas and any passageways thereto, and the common pipes, ducts, conduits, wires and appurtenant equipment serving the Premises; 

        (b)    Project Common Area.    The common walkways, sidewalks,
landscape areas, parking spaces and driveways necessary for access to the Project and parking spaces, as well as the fitness center and locker room facilities; and 

        (c)    Parking Area.    The common Project parking lot area ("Parking
Area"). 

        1.04    Landlord's Reserved Rights in Common Areas and Project.    Landlord reserves full control over the Building
and Project to the extent not inconsistent with Tenant's quiet enjoyment and use of the Premises. This reservation includes but is not limited to right of Landlord, to grant easements and licenses to
others and the right to maintain or establish ownerships of the Building separate from fee title to the land and other improvement in the Project. Tenant shall, should Landlord so request, promptly
join with Landlord in execution of such documents as may be appropriate to assist Landlord to implement any such action provided Tenant need not execute any document which is of a nature 

1

 

wherein
liability is created in Tenant or if, by reason of the terms of such document, Tenant may be deprived of the quiet enjoyment and use of the Premises as granted by this Lease. Landlord reserves
the right from time to time: (a) to install, use, maintain, repair, relocate and replace any pipes, ducts, conduits, wires and appurtenant meters and equipment for service to the Building above
the ceiling surfaces, below the floor surfaces, within the walls and in the central core areas; (b) to change the lines of the lot on which the Project stands ("Lot") and to redesign and
restripe the parking facilities around the Building and make other reasonable changes and grant other rights thereto, including without limitation, the granting of easements, rights of way and rights
of ingress and egress and similar rights to users of parcels in or adjacent to the parcel on which the Building is situated; and (c) to alter or relocate any common areas or other facilities.
Landlord reserves the right to grant exclusive use to portions of the Parking Area to specific tenants. 

        1.05    Rentable/Useable Area.    As used in this Lease, the terms "Rentable Area" and "Useable Area" shall mean the
rentable area and useable area of the Premises, Building and Project and shall be the square footage designated in the Basic Lease Information. The Annual Base Rent and Operating Expenses for the
Premises are not solely and directly attributable to the actual rentable or useable area of the Premises, Building or Project and in the event that it is determined that the actual rentable or useable
area of the Premises, Building or Project is different from the square footages set forth in the Basic Lease Information, no modification shall be made to the Base Rent or Operating Expenses set forth
in the Basic Lease Information. 

        1.06    Tenant's Parking Entitlements.    Tenant shall be entitled to the non-exclusive use, without
charge, during the Term and any extension thereof, of a pro rata number of parking spaces in the area of the Project designated as the Parking Area for the Project as shown on Exhibit B
attached hereto. Landlord shall have no responsibility for policing or otherwise enforcing parking rights in the Project. 

        1.07    Condition of Premises.    Landlord warrants that, as of the Lease Date, the electrical, plumbing or mechanical
systems in the Building are in good working order. Tenant shall have the right to notify Landlord of any such deferred maintenance of the electrical, plumbing and mechanical systems within thirty
(30) days following the Term Commencement Date and Landlord will be responsible for repairs thereof within fifteen (15) days following Tenant's timely delivery to Landlord of such
notice. Landlord warrants that, as of the Lease Date, the improvements in the Building constructed by Landlord and the Common Areas in the Project comply with the requirements of the American With
Disabilities Act as of such date. Tenant shall have the right to notify Landlord of any such non-compliance and Landlord will be responsible for bringing such facilities into compliance.
Except as otherwise set forth in this Section 1.07, Landlord makes no representations and warranties regarding the condition of the improvements in the Premises or their fitness for Tenant's
intended use. Except as provided in Section 2 below, Landlord shall have no obligation to make any improvements to the Premises and, to the maximum extent permitted by law, Tenant hereby agrees
to accept the Premises in their "as-is" condition. 

2.     TENANT'S IMPROVEMENTS  

        2.01    Plans.    For the purposes of this Article 2, capitalized terms not otherwise defined elsewhere in this
Lease shall have the meanings set forth in Exhibit "D" attached hereto (the "Work Letter"). 

        (a)    Preliminary Plans.    Landlord and Tenant have approved the
preliminary plans and outline specifications identified in Exhibit C ("Preliminary Plans"), for the construction by Landlord of Tenant's Improvement Work (as defined in the Work Letter). 

        (b)    Final Plans.    Landlord shall have final plans and
specifications ("Final Plans") prepared by Facility Solutions, which Final Plans shall be substantially in conformity with the Preliminary Plans. "Plans" shall hereinafter mean Preliminary Plans and,
when prepared and approved by 

2

 

Landlord
and Tenant, Final Plans. Preparation and approval of the Final Plans and any changes requested by Tenant thereto shall be made only in accordance with the Work Letter. 

        2.02    Construction.    Landlord shall cause the Tenant's Improvement Work in the Premises to be constructed
substantially in accordance with the Final Plans and the Work Letter. 

        2.03    Failure to Complete Construction.    Tenant's only remedies for Landlord's failure to cause Substantial
Completion (as defined in the Work Letter) of the Tenant's Improvement Work and the Landlord's Work (as each term is defined in the Work Letter, and collectively, the "Improvements") to occur on or
before the Estimated Improvement Completion Date, as extended pursuant to the Work Letter, shall be as set forth in this Section 2.03. If Substantial Completion of the Improvements has not
occurred on or before the date which is three (3) months following the Scheduled Improvement Completion Date, as hereinafter defined (the "Termination Option Date"), Tenant shall have the
option to terminate this Lease by the delivery to Landlord of written notice within ten (10) days after the Termination Option Date or any one month anniversary of the Termination Option Date
until Substantial Completion of the Improvements occurs. Tenant shall not be entitled to terminate the Lease for any delay in completion of the Premises prior to the Termination Option Date. If it
appears that Substantial Completion of the Improvements may not occur on or before the Estimated Improvement Completion Date, as extended pursuant to the Work Letter (the "Scheduled Improvement
Completion Date"), Landlord shall be entitled to incur overtime charges ("Overtime Charges") with Landlord's Contractor and shall use commercially reasonable efforts to accelerate the completion of
Tenant's Improvement Work to meet the Scheduled Improvement Completion Date. 

3.     TERM. 

        3.01    Commencement of Term.    The Lease shall be for the Term set forth in the Basic Lease Information, commencing
upon Term Commencement Date. The Term Commencement Date shall be the later of; (i) the date set forth in the Basic Lease Provisions, (ii) the date Landlord delivers to Tenant written
notice that the Premises are ready for occupancy by Tenant, or (iii) the date the Premises would have been ready for occupancy had there been no Tenant Delays as set forth in the Work Letter. 

        3.02    Early Occupancy.    Subject to the availability of the Premises, Tenant shall be permitted to move its
furniture, trade fixtures, equipment, machinery, goods and supplies into the Premises ten (10) days prior to the Term Commencement Date, the period between the date Tenant commences to occupy
the Premises being hereinafter referred to as the "Early Occupancy Period". Such occupancy of the Premises shall be subject to all the provisions of this Lease, except that Tenant shall not be
required to pay Monthly Base Rent for the Early Occupancy Period; provided, however, that Tenant shall have provided Landlord proof of Tenant's insurance as set forth in Section 5.05; and
provided further that Tenant shall pay or reimburse Landlord for all utilities and services to the Premises during the Early Occupancy Period. All furniture, materials, work, installations, equipment
and decorations of any nature brought upon or installed in the Premises prior to the Term Commencement Date shall be at Tenant's sole risk. Neither Landlord nor any party acting on Landlord's behalf
shall be responsible for any damage or loss or destruction of such items brought to or installed in the Premises prior to the Term Commencement Date. Prior to the Term Commencement Date, Landlord will
provide Tenant access to any floor that Tenant may reasonably require in order to core drill and pull cable in accordance with plans approved by Landlord. 

        3.03    Notice of Lease Dates.    Within ten (10) days after Landlord's written request, Tenant shall execute a
written confirmation of the commencement of the Term and expiration date of the Term in a form provided by Landlord. Such a notice shall be binding upon Tenant unless Tenant objects thereto in writing
within such ten (10) day period. 

3

 

        3.04    Option to Extend Term.    Tenant shall have the option to extend the Term of this Lease for one
(1) additional period of three (3) years (the "Premises Option"). The period of the Premises Option is referred to herein as the "Option Term". Tenant shall have no right or interest to
exercise the Premises Option unless: (a) Tenant gives the Landlord written notice of its intent to exercise the Premises Option no later than two hundred seventy (270) days prior to the
end of the Term (the "Extension Notice"); (b) Tenant is not in default of any of the terms or conditions under this Lease as of the date of the Extension Notice or the date of the commencement
of the Option Term, Tenant has not been in default of any of the terms or conditions under this Lease more than three (3) times prior to the commencement of the Option Term, nor are there any
conditions which with the passage of time could result in a default by Tenant at any time; and (c) (i) Tenant has not filed for or sought protection under any bankruptcy statute, and
(ii) Tenant has not failed to obtain a vacation from any involuntary bankruptcy proceeding within sixty (60) days of such filing. Annual Base Rent during the Option Term shall be as set
forth in Section 4.01(b) below. Time is of the essence with respect to Tenant's exercise of the Premises Option. Tenant's failure to exactly comply with any of the time or other requirements
herein, shall cause the Premises Option to automatically expire and, in such event, this Lease shall terminate upon the expiration of the Term. The option to extend the Term pursuant hereto for the
Option Term shall be personal to Tenant and shall not be exercisable by or for the benefit of any assignee, subtenant or other transferee of Tenant. Landlord shall have the right during the Option
Term to relocate the Premises to another part of the Project in accordance with the following: (a) the new Premises shall be substantially the same in size, decor and nature as the Premises
described in this Lease and shall be placed in that condition by Landlord at its costs (b) the physical relocation of the Premises shall be accomplished by Landlord at its cost,
(c) Landlord shall give Tenant at least thirty (30) days' notice of Landlord's intention to relocate the Premises, (d) Landlord shall diligently pursue the relocation of the
Premises, and (e) all incidental costs incurred by Tenant as a result of the
relocation including, without limitation, costs incurred by changing addresses on stationery, business cars, directories, advertising and other such items shall be paid by Landlord in a sum not to
exceed Two Thousand Five Hundred Dollars ($2,500.00). 

        3.05    Days.    Except for the Rent payment requirements of Articles 4.01 and 4.02, when time periods of three
(3) days or less are provided in this Lease, unless "calendar days" is expressly stated, such time periods are to be calculated such that "days" shall mean business days, regardless of whether
"business days" is expressly stated. 

4.     RENT  

        4.01    Base Rent.    

        (a)    Initial Term.    The Annual Base Rent shall be the amount set forth in the Basic Lease Information payable in
equal monthly installments of Monthly Base Rent as set forth in the Basic Lease Information. Tenant shall pay the Monthly Base Rent to Landlord in advance upon the first day of each calendar month of
the Term, at Landlord's address or at such other place designated by Landlord in a notice to Tenant, without any prior demand therefor and without any deduction, abatement or setoff whatsoever, in
lawful money of the United States of America. If the Term shall commence or end on a day other than the first day of a calendar month, then Tenant shall pay, upon the commencement date of the Term and
the first day of the last calendar month, a pro rata portion of the Monthly Base Rent, prorated on a per diem basis, with respect to the portions of the fractional calendar month included in the Term.
Upon executing this Lease, Tenant shall pay the first full month's installment of the Monthly Base Rent owing hereunder along with Tenant's Security Deposit as provided in Article 4.05 below. 

        (b)    Option Term.    During the first year of the Option Term, if it occurs, Tenant shall pay to Landlord Base Rent
equal to "Market Rent" (as defined below) for the Premises determined as of the commencement date of the Option Term as such Base Rent shall be adjusted annually as set forth in 

4

 

Section 4.03
below. As used herein, "Market Rent" shall mean the price that a ready and willing tenant would pay, at commencement of the Option Term, as monthly base rent to a ready and willing
landlord of similar space in the geographical area of San Diego County known as Del Mar Heights if such office space were offered for lease on the open market for a reasonable period of time and be
the sum of the fair market annual rental rate per rentable square foot multiplied by the Rentable Area of the Premises (as set forth in the Basic Lease Information), determined as follows:
(a) as mutually agreed by Landlord and Tenant within ten (10) days of Landlord's delivery to Tenant of Landlord's opinion of the Market Rent for the first year of the Option Term
("Landlord Rent Notice", which shall be delivered to Tenant within ten (10) days of receipt of Tenant's written Notice to Extend); or (b) in the event that Landlord and Tenant are unable
to so agree, the Market Rent shall be determined by concurrent appraisals pursuant to Section 4.01(c) below. In determining Market Rent, appraisers shall take into account the duration of the
Option Term, the quality and prestige of the Building and Premises (as tenant improvements are maintained as required by the terms and conditions of this Lease), recent monthly rental rates and annual
rental escalations for buildings of similar size and location imputed to the commencement of the Option Term, condition and quality of comparable tenant improvements in buildings of similar quality
and location and all relevant economic terms of this Lease, it being the intent that Market Rent, as so determined, should reflect the total economic package which would be offered at the time of
commencement of the Option Term to a new tenant for the Premises, or substantially similar space in a building of similar quality tenant improvements and location under a lease with substantially the
same terms and provisions as the applicable terms and provisions of this Lease ("Market for Similar Space") without discounting the rent for the creditworthiness of the Tenant or for the cost of real
estate leasing commissions. 

        (c)    Market Rent Appraisal Procedure.    

          (i)  If Tenant rejects the Market Rent proposed by Landlord in Landlord's Rent Notice, Landlord and Tenant shall attempt to
agree in good faith upon a single appraiser not later than five (5) days after the Landlord receives notice of Tenant's rejection of Landlord's proposed Market Rent ("Tenant's Rejection
Notice"), which date of receipt shall be within ten (10) days of Landlord's delivery of Landlord's Rent Notice. If Landlord and Tenant are unable to agree upon a single appraiser within such
time period, then Landlord and Tenant shall each appoint one appraiser not later than ten (10) days after Landlord's receipt of Tenant's Rejection Notice. Within five (5) days
thereafter, the two appointed appraisers shall appoint a third appraiser. Landlord and Tenant shall instruct the appraiser(s) to complete the determination of the Market Rent not later than fifteen
(15) days after all appraisers have been appointed. 

         (ii)  If either Landlord or Tenant fails to appoint its appraiser within the prescribed time period, the single appraiser
appointed shall determine the Market Rent of the Premises for the first year of the Option Term. If both parties fail to appoint appraisers within the prescribed time periods, then the first
appraiser thereafter selected by a party shall determine the Market Rent of the Premises for the first year of the Option Term. 

       (iii)  Landlord and tenant shall each bear the cost of its own appraiser and the parties shall share equally the cost of the
single or third appraiser, if applicable. All appraisers so designated herein shall have at least five (5) years' experience in the appraisal of similar office buildings in the San Diego area
and shall be members of professional organizations such as MAI or equivalent. 

        (iv)  If a single appraiser is chosen, then such appraiser shall determine the Market Rent of the Premises for the first year
of the Option Term. Otherwise, the Market Rent of the Premises for the first year of the Option Term shall be the arithmetic average of two (2) of the three (3) appraisals which are
closest in amount, and the third appraisal shall be disregarded. Notwithstanding anything else contained herein, the Market Rent as so determined shall not be less than the Basic Annual Rent payable
during the year preceding the Option Term. 

5

 

        4.02    Additional Rent.    All charges required to be paid by Tenant hereunder, including without limitation,
payments for Operating Expenses and any other amounts payable under this Lease, shall be considered additional rent for the purposes of this Lease ("Additional Rent"), and Tenant shall pay Additional
Rent as provided in Article 6.05. "Rent" shall mean Base Rent and Additional Rent. 

        4.03    Escalation.    The Base Rent shall be adjusted during the initial Term as provided in the Basic Lease
Information. The Base Rent shall be adjusted annually during any Option Term as determined as a function of the Market Rent determination pursuant to Section 4.01(b). 

        4.04    Late Payment.    If any installment of Rent is not paid promptly on the first of the month or otherwise when
due, the unpaid amounts shall bear interest at the interest rate set forth in Article 12.02(e) from the date due to the date of payment. In addition, Tenant acknowledges that the late payment
of any installment of Rent will cause Landlord to incur certain costs and expenses not contemplated under this Lease, the exact amount of which are extremely difficult or impractical to fix. These
costs and expenses will include, without limitation, administrative and collection costs and processing and accounting expenses. Therefore, if any installment of rent is not received by Landlord from
Tenant when the installment is due, Tenant shall immediately pay to Landlord a charge for administration, collection and accounting expenses equal to ten percent (10%) of the amount of such delinquent
amounts due in addition to the installment of Rent then owing with interest at the interest rate set forth in Article 12.02(e), regardless of whether or not a notice of default or notice of
termination has been given by Landlord. Landlord and Tenant agree that the late payment charge represents a reasonable estimate of Landlord's costs and expenses and is fair compensation to Landlord
for its loss suffered by Tenant's nonpayment of any amounts when due and payable pursuant to this Lease. This
provision shall not relieve Tenant from payment of Rent at the time and in the manner herein specified. 

        4.05    Security Deposit.    Upon executing this Lease, Tenant shall deposit with Landlord a Security Deposit in the
amount set forth in the Basic Lease Information. The Security Deposit shall secure Tenant's obligations under this Lease to pay rent and other monetary amounts, to maintain the Premises and repair
damages thereto, to surrender the Premises to Landlord in clean and sanitary condition and repair upon termination of this Lease as required pursuant to Article 18.15 below and to discharge
Tenant's other obligations hereunder. Landlord may use and commingle the Security Deposit with other funds of Landlord. If Tenant fails to perform Tenant's obligations hereunder, Landlord may, but
without any obligation to do so, apply all or any portion of the Security Deposit towards fulfillment of Tenant's unperformed obligations. If Landlord does so apply any portion of the Security
Deposit, Tenant, shall immediately pay Landlord a sufficient amount in cash to restore the Security Deposit to the full original amount. In the event that Landlord shall expend the same in order to
cure Tenant's default hereunder, Tenant's failure to forthwith remit to Landlord a sufficient amount in cash to restore the Security Deposit to the original sum deposited within five (5) days
after Tenant's receipt of notice from Landlord that such amounts have been so expended shall constitute an Event of Default. The Security Deposit shall be held by Landlord without liability for
interest on the same. Upon termination of this Lease, if Tenant has then performed all of Tenant's obligations hereunder, Landlord shall return the Security Deposit to Tenant. If Landlord sells or
otherwise transfers Landlord's rights or interest under this Lease, Landlord may deliver the Security Deposit to the transferee, whereupon Landlord shall be released from any further liability to
Tenant with respect to the Security Deposit. 

5.     INSURANCE  

        5.01    Special Form Coverage.    At all times during the Term, Landlord shall procure and maintain in full force and
effect with respect to the Project (including, but not limited to, the Building and the Tenant's Improvements Work paid for by Landlord), a policy or policies of special form risk insurance (with
extended coverage endorsement attached, including sprinkler, vandalism and malicious mischief coverage, and any other endorsements required by the holder of any fee or leasehold mortgage), 

6

 

naming
Tenant as a loss payee, as its interest may appear, in an amount equal to one hundred percent (100%) of the full insurance replacement value (replacement cost new, including debris removal, and
demolition) thereof and any other insurance Landlord reasonably deems necessary, including, but not limited to, boiler and machinery insurance. If the annual premiums charged Landlord for such
casualty insurance exceed the standard premium rates because the nature of Tenant's operations results in increased exposure, then Tenant shall, upon receipt of appropriate premium invoices, reimburse
Landlord for such increased amount. Landlord shall also, to the extent same is available on commercially reasonable terms and at commercially reasonable rates, keep and maintain, by endorsement to its
special form insurance or by a separate policy, rental abatement insurance insuring against abatement or loss of Rent in case of fire or other casualty insured against by a standard "special form"
policy, in an amount at least equal to the amount of the Rent payable by Tenant during one (1) year next ensuing, as reasonably determined by Landlord. At all times during the Term, Tenant
shall procure, pay for and maintain in full force and effect a similar policy of insurance, naming Landlord as a loss payee as to tenant improvements only, as its interest may appear, with respect to
property of every description and kind owned by Tenant upon the Premises or the Building, or for which Tenant is legally liable, including, without limitation, trade fixtures, furniture, equipment and
other personal property, and all tenant improvements owned or installed by or on behalf of Tenant (but not with respect to those owned constructed by and owned by Landlord and defined in the Work
Letter as Tenant's Improvement Work) insuring one hundred percent (100%) of the full replacement value of said property and tenant improvements. Any policy proceeds shall be used for the repair and
replacement of the property damaged or destroyed unless this Lease shall cease and terminate under the provisions on excessive damage or destruction set forth in Section 10.04 below.
Notwithstanding anything to the contrary contained in this Section 5.01, Tenant shall reimburse Landlord within fifteen (15) days after receipt by Tenant of an invoice therefor, for the
cost of the insurance provided in this Section 5.01 on any of Tenant's Improvements in excess of Building standard improvements. 

        5.02    Liability Coverage.    Within fifteen (15) days after the execution of this Lease, Tenant shall provide
Landlord with certificates of insurance for all of Tenant's insurance policies required hereunder so that Landlord may determine whether Tenant's insurance policies are in such forms, amounts and are
written by such insurance companies as required by Landlord. Tenant shall, at its own cost and expense, keep and maintain in full force during the Term, a policy or policies of broad form commercial
general liability insurance with and cross-liability endorsements (insuring Tenant's indemnification obligations under this Lease, including Article 5.09 hereof) written by an insurance company
approved by Landlord in the form customary to the locality, insuring Tenant's activities with respect to the Premises and/or Building against loss, damage or liability for personal and bodily injury
(including wrongful death) of any person and loss or damage to property occurring in, upon or about the Premises covering personal and bodily injury in the amounts of not less than Two Million Dollars
($2,000,000) per person and Two Million Dollars ($2,000,000) per occurrence and covering property damage in the amount of not less than Two Million Dollars ($2,000,000) per occurrence. Landlord and
Managing Agent shall be named as an additional insured under such policies. Such insurance shall be with insurance companies with a Best rating classification of not less than XI and a financial
rating classification not less than XII and approved to do business in California. Such insurance shall have a deductible of no greater than Five
Thousand Dollars ($5,000). Tenant's obligations to carry the insurance set forth herein may be satisfied by coverage under a so-called blanket policy of broad form commercial general
liability insurance with the same endorsements and coverage for the Premises as described above, as well as coverage of other premises and properties of Tenant, or in which Tenant has some interest;
provided, however, that Landlord and Managing Agent shall be named as an additional insured, the coverage afforded Landlord shall not be reduced or diminished, and the requirements set forth in this
Lease are otherwise satisfied. 

        5.03    Worker's Compensation Insurance.    Tenant shall, at its own cost and expense, keep and maintain in full force
during the Term, a policy or policies of worker's compensation insurance, in 

7

 

statutory
amounts and limits, and employer's liability insurance with limits as follows: bodily injury each accident in the amount of not less than One Million Dollars ($1,000,000), bodily
injury/disease each employee in an amount not less than One Million Dollars ($1,000,000), and a bodily injury/disease policy limit of not less than One Million Dollars ($1,000,000). 

        5.04    Business Interruption/Rental Abatement Insurance.    Intentionally Left Blank. 

        5.05    Insurance Certificates.    Tenant shall furnish to Landlord, no more than ten (10) days prior to the
earlier of Tenant's occupancy of the Premises (as permitted by Section 3.02) or the Term Commencement Date of this Lease and thereafter no more than thirty (30) days prior to the
expiration of each such policy, a certificate of insurance issued by the insurance carrier of each policy of insurance carried by Tenant pursuant hereto. Said certificates shall expressly provide that
such policies shall not be calculable or subject to reduction of coverage or otherwise be subject to modification except after thirty (30) days' prior written notice to the parties named as
additional insureds in this Article 5. Landlord, its successors and assigns, and any nominee of Landlord holding any interest in the Premises, including without limitation, any ground lessor
and the holder of any fee or leasehold mortgage, shall be named as additional insureds under each such policy of insurance maintained by Tenant pursuant to this Lease (to be evidenced by the attached
of an appropriate endorsement to the certificate of insurance delivered by Tenant to Landlord pursuant to this Section). 

        5.06    Tenant's Failure.    If Tenant fails to maintain any insurance required in this Lease, Tenant shall be liable
for any loss or cost resulting from said failure. Notwithstanding the foregoing, Landlord may at Landlord's sole discretion, but shall not be required to, procure said insurance on Tenant's behalf and
charge Tenant the premium for such policies, together with an administration surcharge of fifteen percent (15%) of the premium for such policies paid by Landlord. This Article 5.06 shall not be
deemed to be a waiver of any of Landlord's rights and remedies under any other section of this Lease. 

        5.07    Waiver of Subrogation.    Any policy or policies of fire, extended coverage or similar casualty insurance,
which either party obtains in connection with the Premises, or Tenant's personal property
therein, shall, to the extent the same can be obtained without unreasonable expense, include a clause or endorsement denying the insurer any rights of subrogation against the other party to the extent
rights have been waived by the insured prior to the occurrence of injury or loss. Landlord and Tenant waive any rights of recovery against the other for injury or loss due to hazards covered by
insurance containing such a waiver of subrogation clause or endorsement to the extent of the injury or loss covered thereby. 

        5.08    Tenant's Property and Fixtures.    Tenant shall assume the risk of damage to any furniture, equipment,
machinery, goods, supplies or fixtures which are or remain the property of Tenant or as to which Tenant retains the right of removal from the Premises. 

        5.09    Indemnification.    

        (a)   To the fullest extent permitted by law, Tenant covenants with Landlord that Landlord, Landlord's agents and employees
shall not be liable for any damage or liability of any kind or for any injury to or death of persons, or damage to property of Tenant or any other person occurring from any cause whatsoever related to
the use, improvement, occupancy or enjoyment of the Premises by Tenant or any person thereon or holding under Tenant, and Tenant shall indemnify protect, defend and hold Landlord, Landlord's agents
and employees, the Premises, Building and Project and Landlord's related property, harmless from and against (i) any and all liability, fines, penalties, losses, damages, costs and expenses,
demands, causes of action, claims or judgments ("Claims") arising from or growing out of any injury to any person or persons or any damage to any property as a result of any accident or other
occurrence during the Term occasioned in any way as a result of Tenant's or Tenant's officers, employees, agents, servants, subtenants, concessionaires, licensees, contractors or invitees use,
maintenance, occupation or operation of the Premises during the Term, (ii) all liens, claims and 

8

 

demands
related to the use of the Premises and its facilities during the Term, or any repairs, alterations or improvements which Tenant may make or cause to be made upon the Premises, and
(iii) from and against all legal costs and charges, including attorneys' fees, incurred in and about any of such matters and the defense of any action arising out of the same or in discharging
the Building, Project, Lot and Landlord's related property or any part thereof from any and all liens, charges or judgments which may accrue or be placed thereon by reason of any act or omission of
the Tenant; provided, however, that Tenant shall not be required to indemnify Landlord for any damage or injury arising as a result of the gross negligence or willful misconduct of Landlord,
Landlord's agents or employees. 

        (b)   Landlord shall indemnify, defend and hold harmless Tenant, Tenant's agents and employees from and against all Claims for
damage to property outside the Premises to the extent that such Claims result from the gross negligence or willful misconduct of Landlord and its agents and employees in connection with their
activities in, on or about the Project or the Building, except to the extent that such Claim (i) is for damage to Tenant's Improvements or Tenant's personal property, fixtures, furniture and
equipment in the Premises and is covered by insurance that Tenant is required to obtain under this Lease (or would have been covered had Tenant carried the insurance required under this Lease) or
(ii) results from the negligent acts, omissions or willful misconduct of Tenant Parties. 

        5.10    Earthquake and Flood Insurance.    In addition to any other insurance policies carried by Landlord in
connection with the Project, Landlord may elect to procure and maintain in full force and effect during the Term, with respect to the Project, a policy of earthquake/volcanic action and flood and/or
surface water insurance, including rental value insurance against abatement or loss of rent in the case of damage or loss covered under such earthquake/volcanic and flood and/or surface water
insurance, in an amount up to one hundred percent (100%) of the full insurance replacement value (including debris removal and demolition) of the Project improvements. 

6.     OPERATING EXPENSES  

        6.01    Tenant's Share.    

        (a)   Tenant's share of Building Operating Expenses ("Tenant's Building Share") is hereby mutually agreed to be that percentage
set forth in the Basic Lease Information. Tenant shall pay as Additional Rent Tenant's Building Share of Building Operating Expenses for any calendar year after the Base Calendar Year to the extent
that Building Operating Expenses for such calendar year exceed the Building Operating Expenses for the Base Calendar Year. 

        (b)   Tenant's share of Project Operating Expenses ("Tenant's Project Share") is hereby mutually agreed to be that percentage
set forth in the Basic Lease Information. Tenant shall pay as Additional Rent Tenant's Project Share of Project Operating Expenses for any calendar year after the Base Calendar Year to the extent that
Project Operating Expenses for such calendar year exceed the Project Operating Expenses for the Base Calendar Year. 

        6.02    Definition of Operating Expenses.    

        (a)   "Building Operating Expenses" shall include all expenses and costs of every kind and nature which Landlord shall pay or
become obligated to pay because of or in connection with the ownership and operation of the Building, including, without limitation: (i) all Impositions as set forth in Article 6;
(ii) premiums for insurance maintained by Landlord pursuant to Article 5; (iii) wages, salaries and related expenses and benefits of all on-site employees, if any, and
off-site employees, if any, engaged in operation, maintenance and security of the Building; (iv) all supplies, materials, tool and equipment rental used in operation of the
Building; (v) all maintenance and repair, waste disposal, janitorial, security and service costs incurred in connection with the Building; (vi) a property management fee equal to 3.5% of
the Base Rent of all tenants of the Building (the "Management Fee"); (vii) legal and accounting expenses, including the cost of audits by certified public accountants; (viii) repairs, 

9

 

replacements
and general maintenance of the Building (excluding those paid for by proceeds of insurance or other parties and alterations attributable solely to tenants of the Building other than
Tenant); (ix) all interior and exterior maintenance, repair and replacement costs, including; without limitation, service areas, elevators, mechanical rooms, plumbing, heating, ventilating and
air conditioning ("HVAC") equipment and non-structural roof (all to the extent related to the interior or exterior of the Building); (x) all other reasonable operating, management
and other expenses incurred by Landlord in connection with operation of the Building; and (xi) all charges for water and sewer services not separately metered by Tenant and used or consumed in
the Building; (xii) any other costs, levies or assessments resulting from statutes or regulations promulgated by any governmental authority in connection with the use or occupancy of the
Building or the Premises; (xiii) personal property taxes levied on or attributable to personal property used in connection with the Building; (xiv) freight charges and transportation
services attributable to the operation and/or management of the Building; and (xv) reasonable accounting, audit, verification and other reasonable consulting fees. Building Operating Expenses
do not include electricity and gas, if any, delivered to the Building, as well as Tenant's Premises, which costs are Tenant's proportionate or sole responsibility as further defined in
Section 6.08. Notwithstanding the provisions of this Section 6.02, the following shall not be included within Building Operating Expenses: 

          (i)  Any depreciation on the Building; 

         (ii)  Costs incurred due to Landlord's violation of any terms or conditions of this Lease or any other lease relating to the
Building; 

       (iii)  All principal, interest, loan fees, and other carrying costs related to any mortgage or deed of trust and all rental
and other payable due under any ground or underlying lease related to the Building, unless such costs are directly attributable to a Tenant's breach or default under this Lease; 

        (iv)  Any compensation paid to clerks, attendants, or other persons in commercial concessions operated by Landlord; 

         (v)  Real estate brokers' leasing commissions. 

        (vi)  Initial improvements or alterations to tenant spaces. 

       (vii)  The cost of providing any service directly to and paid directly by any tenant. 

      (viii)  Costs associated with: 

        (A)  Operation of the business of the ownership of the Building or the Project or entity that constitutes Landlord or
Landlord's property manager, as distinguished from the cost of Building operations, including the costs of partnership or corporate accounting and legal matters; defending or prosecuting any lawsuit
with any mortgagee, lender, ground lessor, broker, tenant, occupant, or prospective tenant or occupant; selling or syndicating any of Landlord's interest in the Building or the Project; and disputes
between Landlord and Landlord's property manager; 

        (B)  Landlord's general corporate or partnership overhead and general administrative expenses, including the salaries of
management personnel other than those who are primarily engaged in the operation, maintenance, and repair of the Building, except to the extent that those costs and expenses are included in the
Management Fees. 

        (ix)  Costs of: 

        (A)  Initial construction of the Building; or 

        (B)  Reconstruction of the Building pursuant to Article 10. 

10

 

         (x)  Capital improvement related to the Building ("Capital Costs"). 

        (xi)  All expenses and costs of every kind and nature which Landlord shall pay or become obligated to pay because of or in
connection with the ownership and operation of the other buildings in the Project or any surrounding property and supporting facilities, which are included in Project Operating Expenses. 

       (xii)  Legal, accounting, audit, verification and other consulting fees relating to the ownership, as opposed to the
operation, of the Building and the Project. 

     (xiii)  Costs incurred in connection with upgrading the Building to comply with disability, life, fire and safety codes,
ordinances, statues or laws in effect as of the Lease Date, including, without limitation, the American With Disabilities Act, including any penalties or damages incurred due to such
non-compliance as of such date; or 

        (b)   "Project Operating Expenses" shall include all expenses and costs of every kind and nature which Landlord shall pay or
become obligated to pay because of or in connection with the ownership and operation of the Project Common Areas and Parking Area, including, without limitation: (i) all Impositions as set
forth in Article 6; (ii) premiums for insurance maintained by Landlord pursuant to Article 5; (iii) wages, salaries and related expenses and benefits of all
on-site employees, if any, and off-site employees, if any, engaged in operation, maintenance and security of the Project Common Areas and Parking Area; (iv) all
supplies, materials, tool and equipment rental used in operation of the Project Common Areas and Parking Area; (v) all maintenance and repair, waste disposal, janitorial, security and service
costs incurred in connection with the Project Common Areas and Parking Areas; (vi) all maintenance and repair, waste disposal, janitorial, security and service costs incurred in connection with
the Parking Area and the Project Common Area, including, without limitation, locker rooms and exercise facilities; (vii) repairs, replacements and general maintenance of the Parking Area and
the Project Common Area (excluding those paid for by proceeds of insurance or other parties and alterations attributable solely to tenants of the Project other than Tenant); (viii) all other
reasonable operating, management and other expenses incurred by Landlord in connection with operation of the Parking Area and the Project Common Areas; (ix) all charges for water, electrical,
and sewer services not separately metered by any tenant of the Project and used or consumed in the Parking Area or the Project Common Area; (x) any other costs, levies or assessments resulting
from statutes or regulations promulgated by any governmental authority in connection with the use or occupancy of the Project; (xi) personal property taxes levied on or attributable to personal
property used in connection with the Project Common Areas and Parking Area; (xii) freight charges and transportation services attributable to the operation and/or management of the Project; and
(xiii) reasonable accounting, audit, verification and other reasonable consulting fees. Project Operating Expenses do not include electricity and gas, if any, delivered to the Project, which
costs are the responsibility of any tenant of the Project as further defined in Section 6.08. Notwithstanding the provisions of this Section 6.02, the following shall not be included
within Project Operating Expenses: 

          (i)  Any depreciation on the Project Common Areas or Parking Area; 

         (ii)  Costs incurred due to Landlord's violation of any terms or conditions of this Lease or any other lease relating to the
Project; 

       (iii)  All principal, interest, loan fees, and other carrying costs related to any mortgage or deed of trust and all rental
and other payable due under any ground or underlying lease related to the Project, unless such costs are directly attributable to a Tenant's breach or default under this Lease; 

        (iv)  Any compensation paid to clerks, attendants, or other persons in commercial concessions operated by Landlord; 

         (v)  Real estate brokers' leasing commissions. 

11

 

        (vi)  Initial improvements or alterations to tenant spaces. 

       (vii)  The cost of providing any service directly to and paid directly by any tenant. 

      (viii)  Costs associated with: 

        (A)  Operation of the business of the ownership of the Project or the Project or entity that constitutes Landlord or
Landlord's property manager, as distinguished from the cost of Project operations, including the costs of partnership or corporate accounting and legal matters; defending or prosecuting any lawsuit
with any mortgagee, lender, ground lessor, broker, tenant, occupant, or prospective tenant or occupant; selling or syndicating any of Landlord's interest in the Project Common Areas or Parking Area;
and disputes between Landlord and Landlord's property manager; 

        (B)  Landlord's general corporate or partnership overhead and general administrative expenses, including the salaries of
management personnel other than those who are primarily engaged in the operation, maintenance, and repair of the Project Common Areas or Parking Area, except to the extent that those costs and
expenses are included in the Management Fees. 

        (ix)  Costs of: 

        (A)  Initial construction of the Project Common Areas or Parking Area; or 

        (B)  Reconstruction of the Project Common Areas or Parking Area pursuant to Article 10; 

         (x)  Capital improvement or capital replacement related to the Project Common Areas or Parking Area ("Capital Costs"); 

        (xi)  All expenses and costs of every kind and nature which Landlord shall pay or become obligated to pay because of or in
connection with the ownership and operation of the other buildings in the Project, which are included in Building Operating Expenses; and 

       (xii)  Legal, accounting, audit, verification and other consulting fees relating to the ownership, as opposed to the
operation, of the Project. 

     (xiii)  Costs incurred in connection with upgrading the Project to comply with disability, life, fire and safety codes,
ordinances, statues or laws in effect as of the Lease Date, including, without limitation, the American With Disabilities Act, including any penalties or damages incurred due to such
non-compliance as of such date; or 

        (c)   As used herein, "Operating Expenses" shall mean Building Operating Expenses or Project Operating Expenses, as applicable. 

        6.03    Proration.    Any Operating Expenses attributable to a period which falls only partially within the Term shall
be prorated between Landlord and Tenant so that Tenant shall pay only that proportion thereof which the part of such period within the Term bears to the entire period. 

        6.04    Survival.    Any such sum payable by Tenant which would not otherwise be due until after the date of the
termination of this Lease, shall, if the exact amount is uncertain at the time that this Lease terminates, be paid by Tenant to Landlord upon such termination in an amount to be determined by Landlord
with an adjustment to be made once the exact amount is known. 

        6.05    Estimated Payments.    Prior to the commencement of each calendar year of the Term, Landlord shall estimate
the Additional Rent payable by Tenant pursuant to this provision and Tenant shall pay to Landlord on the first of each month in advance, one-twelfth (1/12) of Landlord's
estimated amount. After the end of each calendar year there shall be an adjustment made to account for any 

12

 

difference
between the actual and the estimated Operating Expenses for the previous year. If Tenant has overpaid the amount of Additional Rent owing pursuant to this provision, Landlord shall credit
Tenant the amount of such overpayment when determining Tenant's estimated operating expense payments for the following calendar year, provided, that in the case of an overpayment for the final lease
year of the Term, Landlord shall refund such overpayment to Tenant within ninety (90) days after the end of Tenant's Lease Term. If Tenant has underpaid the amount of Additional Rent owing
pursuant to this provision, Tenant shall pay the amount of such underpayment to Landlord, as Additional Rent, within ten (10) days after receipt of notice from Landlord of such underpayment. 

        6.06    Adjustment.    Notwithstanding any provision herein to the contrary, in the event the Project and/or Building
is not fully occupied (including because it is not yet constructed) during the Base Calendar Year or any subsequent calendar year, an adjustment shall be made in computing Operating Expenses for such
calendar year so that the same shall be computed for such calendar year as though the Building and/or Project had been ninety five percent (95%) occupied and fully tax assessed during such year.
Additionally, if all capital improvement made by Landlord to the Common Area in calendar year 2004 are not included in the real property tax assessment for the Base Year, an adjustment for such
improvements which are not Included shall be made for the Base Year to reflect the increase in real tax assessment that would have been included in the real property tax assessment for Base Year if
such improvements had been so included. 

        6.07    Impositions.    "Impositions" shall collectively refer to all forms of: (i) real estate taxes,
assessments, impact fees, transit charges, housing fund assessments, assessment bonds, license fees, license taxes, business license fees, commercial rental taxes and improvement bonds in connection
with the Project and/or the Building; (ii) governmental taxes, levies, fees and charges imposed by any authority having the direct power to tax, including but not limited to any city, county,
state or federal government or any school, agricultural, lighting, drainage or other improvement or special assessment district thereof, and all other taxes relating to any legal or equitable interest
in the Premises, Project and/or the Building; (iii) taxes which may be levied in lieu of real estate taxes; and (iv) other governmental charges (including, but not limited to, charges
for traffic facilities improvements, water service studies and improvements, and fire service studies and improvements) or amounts necessary to be expended because of governmental orders.
"Impositions" shall include all such governmental obligations, whether general or special, ordinary or extraordinary, unforeseen as well as foreseen, of any kind and nature for public improvements,
services, benefits, or any other purpose which are assessed, levied, confirmed, imposed or become a lien upon the Premises, Project and/or Building or become payable during the Term. 

        (a)    Installment Election.    In the case of
any Impositions which may be evidenced by improvement or other bonds or which may be paid in annual- or other periodic installments, Landlord shall cause such
bonds to be issued or cause such assessment to be paid in installments over the maximum period permitted by law. 

        (b)    Limitation.    Nothing contained in this Lease shall require
Tenant to pay any franchise, estate, inheritance or succession transfer tax of Landlord, or any income, profits or revenue tax or charge, upon the net income of Landlord from all sources; provided,
however, that if at any time during the Term under the laws of the United States Government or the State of California, or any political subdivision thereof, a tax or excise on rent, or any other tax
however described, is levied or assessed by any such political body against Landlord on account of Rent, or a portion thereof, Tenant shall pay one hundred percent (100%) of any said tax or excise as
Additional Rent. 

        (c)    Personal Property Taxes.    Tenant shall pay or cause to be
paid, prior to delinquency, any and all taxes and assessments levied upon all trade fixtures, inventories and other personal property placed in and upon the Premises by Tenant. 

13

  

        (d)    Impositions on Tenant Improvements in Excess of Building Standard
Allowance.    Tenant shall, within fifteen (15) days after receipt by Tenant of an invoice therefor, reimburse Landlord, and not as a part of Operating
Expense, any and all Impositions levied upon the Tenant's Improvements in the Premises to the extent the cost of such Tenant Improvements exceed are in excess of building standard improvements. 

        6.08    Services and Utilities.    Tenant shall contract directly with the appropriate utility company for the supply
of electricity to the Premises, which shall be separately metered. Landlord shall use its best reasonable efforts to provide during Business Hours, as promulgated by Landlord pursuant to the Rules and
Regulations, HVAC services to the Building. Said HVAC services will be rebilled to Tenant as Additional Rent with Tenant's share hereby mutually agreed to be that percentage set forth in the Basic
Lease Information. Landlord shall also use its best reasonable efforts to provide during the Business Hours, as promulgated by Landlord pursuant to the Rules and Regulations, as an Operating Expense:
(i) utilities and maintenance to the common areas; and (ii) janitorial service to Premises. Landlord shall not be liable for any failure or interruption of any utility or service, and
Tenant shall not be entitled to any reduction or abatement of Rent on account of any such failure or interruption, unless such failure or interruption is shown by Tenant to be directly attributable to
the gross negligence or intentional acts of Landlord, its agents or employees. In the event of any such interruption or failure of any services or utilities provided in this Lease resulting from the
gross negligence or intentional acts of Landlord, Landlord's agents or employees, Tenant's sole remedy shall be the equitable abatement of Base Rent for the duration of the interruption or failure,
which abatement shall not commence until Tenant has first provided notice to Landlord and given ten (10) days to cure such interruption or failure. 

        6.09    Special Services.    

        (a)    Additional Services.    In the event Landlord provides any utilities or services to Tenant beyond the standard
services set forth in Section 6.08 of this Lease, Tenant shall pay Landlord for such special services, together with an administration surcharge of ten percent (10%) of the cost of such special
services, as Additional Rent. 

        (b)    Utility Consumption.    As part of the Improvements of the Work Letter attached hereto as Exhibit D,
Landlord shall install an HVAC override timer with an hourly counter attachment on each floor of the Premises. Tenant's activating said override timer to obtain HVAC services after normal Business
Hours (as set forth in the Basic Lease Information) will engage the Building's package, condensing and fan coil units. Each quarter, Landlord shall determine the operating hours that Tenant has
obtained HVAC services in excess of normal Business Hours ("Excess Operating Hours"). The total number of Excess Operating Hours derived will be multiplied by Thirty-five Dollars ($35.00)
per hour and said resulting amount will reflect the HVAC utilities usage, as well as the increased maintenance and
repair costs and accelerated reduction of the useful life of the equipment associated with such Excess Operating Hours for the applicable quarter and will be billed by Landlord to Tenant and shall be
promptly paid by Tenant to Landlord as Additional Rent. 

7.    REPAIRS AND MAINTENANCE    

        7.01    Tenant Repairs and Maintenance.    Tenant shall, at Tenant's
own expense, maintain the Premises in a clean, sanitary and safe condition and keep and maintain integrity and quality of the Premises, all walls, ceilings, lights, fixtures, and floor coverings
thereof, in first-class repair. Tenant shall be responsible for the cost of any repairs due to damage caused by Tenant's active negligence or willful misconduct. Tenant waives the right to make
repairs at Landlord's expense under any law, statute or ordinance now or hereafter in effect (including the provisions of California Civil Code Section 1942 and any successive sections or
statutes of a similar nature). Tenant waives all rights to recover any losses or damages (including interference with or injury to Tenant's business) resulting from Landlord's performing or failure to
perform any such repairs or maintenance, it being expressly understood and 

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agreed
that Tenant shall be solely responsible for and look solely to its insurance for any such damage and losses. 

        7.02    Inspection of Premises.    Landlord, at reasonable times and
upon twenty four (24) hours notice (except in the case of an emergency when no notice shall be required), may enter the Premises to complete construction undertaken by Landlord on the Premises
or Building, to inspect, improve, dean or repair the same, to inspect the performance by Tenant of the terms and conditions hereof and to affix reasonable signs and displays, show the Premises to
prospective purchasers, tenants and lenders and for all other purposes as Landlord shall reasonably deem necessary. 

        7.03    Liens.    Tenant shall promptly pay and discharge all claims
for work or labor done, supplies furnished or services rendered at the request of Tenant and shall keep the Premises and Building free and clear of all mechanics' and materialmen's liens in connection
therewith. Landlord shall have the right to post or keep posted on the Premises, or in the immediate vicinity thereof, any notices of non-responsibility for any construction, alteration or
repair of the Premises by Tenant. If any such lien is filed, Landlord may, after Landlord has first provided notice to Tenant and given Tenant three (3) days to remove such lien, but shall not
be required to, take such action or pay such amount as may be necessary to remove such lien; and, Tenant shall pay Ito Landlord as Additional Rent any such amounts expended by Landlord, together with
an administration charge of fifteen percent (15%) of any such amounts, within five (5) days after notice is received from Landlord of the amount expended by Landlord. 

8.    FIXTURES, PERSONAL PROPERTY AND ALTERATIONS    

        8.01    Fixtures and Personal Property.    Tenant, at Tenant's
expense, may install any necessary trade fixtures, equipment and furniture in the Premises; provided, that such items are installed and are removable without damage to the structure or improvements of
the Building. Landlord reserves the right to approve or disapprove of curtains, draperies, shades, paint or other interior improvements visible from outside the Premises on wholly aesthetic grounds.
Such improvements must be submitted for Landlord's written approval prior to installation, or Landlord may remove or replace such items at Tenant's sole expense. Said trade fixtures, equipment and
furniture shall remain Tenant's property and shall be removed by Tenant upon expiration of the Term, or earlier termination of this Lease. At Landlord's option, Landlord may notify Tenant in writing
not to remove said improvements. Tenant shall repair, at Tenant's sole expense, all damage caused by the installation or removal of trade fixtures, equipment, furniture or temporary improvements. If
Tenant fails to remove the foregoing items within ten (10) days of the termination of this Lease, Landlord may (i) keep and use them, wherein Tenant surrenders possession of title and
waives all rights of possession, or (ii) remove any or all of them and cause them to be stored or sold in accordance with applicable law. 

        8.02    Alterations.    Tenant shall not make or allow to be made any
alterations, additions or improvements to the Premises, either at the inception of this Lease or subsequently during the Term, without obtaining the prior written consent of Landlord. Tenant shall
deliver to Landlord full and complete plans and specifications of all such alterations, additions or improvements, and no such work shall be commenced by Tenant until Landlord has given its written
approval thereof. Landlord does not expressly or implicitly covenant or warrant that any plans or specifications submitted by Tenant are safe or that the same comply with any applicable laws, lawful
ordinances, etc. Further, Tenant shall indemnify and hold Landlord harmless from any loss, cost or expense, including attorneys' fees and costs, incurred by Landlord as a result of any defects in
design, materials or workmanship resulting from Tenant's alterations, additions or improvements to the Premises. All repairs, alterations, additions, and restoration by Tenant hereinafter required or
permitted shall be done in a good and workmanlike manner and in compliance with all applicable laws and lawful ordinances, by-laws, regulations and orders of any federal, state, county,
municipal or other public authority and of the insurers of the Building. Tenant shall not permit liens of any kind to be imposed upon the Premises or Building and 

15

 

Tenant
shall discharge of record any such liens or post adequate security or bond within five (5) days after written notice thereof. Tenant shall reimburse Landlord for Landlord's reasonable
charges for reviewing and approving or disapproving plans and specifications for any alterations proposed by Tenant, provided that Tenant's reimbursement obligation shall not exceed Two Thousand
Dollars ($2,000), and as a deposit against such obligation Tenant shall submit to Landlord with each request to make any alteration, additions or improvements to the Premises a deposit of Five Hundred
Dollars ($500). Tenant shall also reimburse Landlord for the costs of any increased insurance premiums incurred by Landlord to include such alterations in the Landlord's all risk insurance coverage
requirements set forth in Article 5.01; provided, however, that Landlord shall be required to include the Tenant's alterations under Landlord's all risk insurance only to the extent such
insurance is actually obtained by Landlord and such alterations are insurable under Landlord's insurance. If such Tenant alterations are not or cannot be included in the coverage of Landlord's
insurance, Tenant shall insure the alterations under Tenant's all risk insurance policy or policies as set forth in Article 5.01. Tenant shall require that any contractors used by Tenant carry
a comprehensive liability insurance policy covering bodily injury in the amounts of Two Million Dollars ($2,000,000) per person and Two Million Dollars ($2,000,000) per occurrence and covering
property damage in the amount of Two Million Dollars ($2,000,000). Tenant shall obtain, on behalf of Tenant and at Tenant's sole cost and expense, before proceeding with any alteration the cost of
which exceeds Two Thousand Dollars ($2,000) a completion and lien indemnity bond, or other surety, reasonably satisfactory to Landlord for such alteration. Landlord may require proof of such insurance
prior to commencement of any work on the Premises. 

        8.03    Removal of Alterations.    All alterations, additions and
improvements shall remain the property of Tenant until termination of this Lease, at which time they shall be and become the property of Landlord; provided, however, Landlord may, by written notice at
any time prior to the date which is thirty (30) days before the expiration of the Term (or immediately upon any sooner termination of the Lease) identify those items of Tenant's alterations,
additions or improvements which Landlord shall require Tenant to remove at the termination of this Lease. If Landlord requires Tenant to remove any such alterations, additions or improvements, Tenant
shall at its sole cost, remove the identified items on or before the expiration or sooner termination of this Lease and repair any damage to the Premises and/or the Building caused by such removal. 

9.    USE AND COMPLIANCE WITH LAWS    

        9.01    General Use and Compliance with Laws.    Tenant shall only use
the Premises for the Permitted Uses specified in the Basic Lease Information and for no other use without the prior written consent of Landlord. Tenant shall, at Tenant's sole cost and expense, comply
with all of the requirements of municipal, county, state, federal and other applicable governmental authorities now in force, or which may hereafter be in force, pertaining to the Premises, Project,
Building, Lot and Parking Area and secure any necessary permits therefor and shall faithfully observe, in the use of the Premises, Project, Building, Lot and Parking Area, all municipal, county,
state, federal and other applicable governmental entities' requirements which are now in force, or which may hereafter be in force. Tenant, in Tenant's use and occupancy of the Premises, shall not
subject the Premises to any use which would tend to damage any portion thereof or which shall in any way increase the existing rate of any insurance on the Building or any portion thereof or cause any
cancellation of any insurance policy covering the Building or portion thereof. Tenant shall not do or permit to be done anything which would unreasonably obstruct or unreasonably interfere with the
rights of or injure other Tenants or occupants of the Project. 

        9.02    Signs.    Tenant shall not install any sign on the Premises or
Building unless Tenant receives prior written approval from Landlord for such sign, which shall not be unreasonably withheld; provided, however, that Tenant may install signage in the Premises in
conformance with the Work Letter. Except as provided below in this Section 9.02, any sign placed by Tenant on the Premises shall be installed at 

16

 

Tenant's
sole cost and expense and shall contain only Tenant's name, or the name of any affiliate of Tenant actually occupying the Premises, and no advertising matter. Tenant shall remove any such
sign upon termination of this Lease and shall return the Premises to their condition prior to the placement or erection of said sign. Tenant shall be entitled to lobby directory and entry door signage
in accordance with the Building standard sign criteria adopted by Landlord the cost of the initial signage to be paid by Landlord. 

        9.03    Parking Access.    In addition to the general obligation of
Tenant to comply with laws and without limitation thereof, Landlord shall not be liable to Tenant nor shall this Lease be affected if any parking privileges appurtenant to the Premises are impaired by
reason of any moratorium, initiative, referendum, statute, regulation, or other governmental decree or action which could in any manner prevent or limit the parking rights of Tenant hereunder. My
governmental charges or surcharges or other monetary obligations imposed relative to parking rights with respect to the Premises, Project, Building and Lot shall be considered as Impositions and shall
be payable by Tenant under the provisions of Article 6 hereinabove. Tenant hereby acknowledges that Tenant shall not use in excess of Tenant's pro rata share of the Project's total parking
spaces. 

        9.04    Floor Load.    Tenant shall not place a load upon any floor of
the Premises which exceeds the load per square foot which such floor is designed to carry and which is then allowed by law. 

        9.05    Deliveries.    All deliveries to and from the Premises shall
be made in such a manner and during the time periods reasonably specified by Landlord so as to cause the minimum amount of interference with the business of other tenants. 

10.    DAMAGE AND DESTRUCTION    

        10.01    Reconstruction.    If the Premises are damaged or destroyed
during the Term by any cause not attributable to Tenant, its agents, employees or invitees, Landlord shall, to the extent that insurance proceeds are available therefor and are not applied by any
lender against payment of an existing loan on the Project, Building or Lot, except as hereinafter provided, diligently repair or rebuild them to substantially the condition in which they existed
immediately prior to such damage or destruction. If, however, insurance proceeds are not sufficient to pay the full cost of reconstruction of the Premises, or if the damage or destruction is due to
the acts or omissions of Tenant, its agents, employees or contractors, Landlord may either terminate this Lease or promptly and diligently reconstruct the Premises to the extent necessary to restore
Landlord's Work in the Premises as described in Exhibit D, and Tenant shall be obligated for the restoration of all of the items specified as Tenant's Work in said Exhibit D in the event
of such reconstruction, as well as Tenant's other leasehold improvements (but not with respect to those improvements owned by Landlord), trade fixtures and other personal property on the Premises. 

        10.02    Rent Abatement.    If any portion of the Premises is damaged
or destroyed during the Term to the extent that such portion is rendered unusable by Tenant, it is agreed that Tenant shall look solely to Tenant's business interruption insurance for any damages or
losses arising from substantial interference with the operation of Tenant's business by reason of such damage or destruction. Rent shall not abate during the first twelve (12) months following
the date of such damage or destruction. Thereafter, if Landlord has obtained rental abatement insurance as permitted by Article 5.04 hereinabove, and only to the extent of any proceeds received
by Landlord from rental abatement insurance, Rent shall be abated proportionately. Such abatement shall continue for the period commencing with the date which is one (1) year after the date of
such damage and ending upon substantial completion by Landlord of the work of repair or reconstruction which Landlord is obligated or undertakes. In the event Landlord decides not to purchase rental
abatement insurance, then no Rent shall be abated. 

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        10.03    Excessive Damage or Destruction.    If the Building is
damaged or destroyed to the extent that Landlord determines that it cannot, with reasonable diligence, be fully repaired or restored by Landlord within one hundred eighty (180) days after the
date of the damage or destruction, Landlord may terminate this Lease. Notwithstanding the fact that the Premises have been damaged or destroyed, Landlord shall determine whether the Building can be
fully repaired or restored within the one hundred eighty (180) day period, and Landlord's determination shall be binding upon Tenant. Landlord shall notify Tenant of its determination, in
writing, within forty-five (45) days after the
date of the damage or destruction whether it elects to fully repair or restore the Building. If Landlord determines that the Building can be fully repaired or restored within the one hundred eighty
(180) day period, or if Landlord determines that such repair or restoration cannot be made within said period, but Landlord does not elect to terminate within forty-five
(45) days from the date of Landlord's determination, this Lease shall remain in full force and effect and Landlord shall diligently repair and restore the damage as soon as reasonably possible. 

        10.04    Uninsured Casualties.    Notwithstanding anything contained
herein to the contrary, in the event of damage to or destruction of all or any portion of the Building which is not fully covered by the insurance proceeds received by Landlord under the insurance
policies required under Article 5.01 hereinabove (without regard to Landlord's deductible for such policies), Landlord may terminate this Lease by written notice to Tenant, given within
forty-five (45) days after the date of notice to Landlord that said damage or destruction is not so covered. If Landlord does not elect to terminate this Lease, the Lease shall
remain in full force and effect and Landlord shall commence reconstruction and restoration of Landlord's Work in the Premises as described in Exhibit D and shall diligently repair or rebuild
Landlord's Work to substantially the condition in which it existed immediately prior to such damage or destruction. 

        10.05    Waiver.    With respect to any destruction which Landlord is
obligated to repair or may elect to repair under the terms of this Article 10, Tenant hereby waives all rights to terminate this Lease pursuant to rights otherwise presently or hereafter
accorded by law to tenants, except as expressly otherwise provided herein. 

11.    EMINENT DOMAIN    

        11.01    Total Condemnation.    If the whole of the Premises is
acquired or condemned by eminent domain, inversely condemned or sold in lieu of condemnation, for any public or quasi-public use or purpose ("Condemned"), then the Term shall terminate as of the date
of title vesting in such proceeding, and Rent shall be adjusted as of the date of such termination. Tenant shall immediately notify Landlord of any such occurrence. 

        11.02    Partial Condemnation.    If any part of the Premises is
partially Condemned, and such partial condemnation renders the Premises unusable for the business of the Tenant, as reasonably determined by Landlord, or in the event a substantial portion of the
Building is Condemned, as reasonably determined by Landlord, then the Term shall terminate as of the date of title vesting in such proceeding and Rent shall be adjusted to the date of termination. If
such condemnation is not sufficiently extensive to render the Premises unusable for the business of Tenant, as reasonably determined by Landlord, or less than a substantial portion of the Building is
Condemned, then Landlord shall promptly restore the Premises to a condition comparable to its condition immediately prior to such condemnation less the portion thereof lost in such condemnation, and
this Lease shall continue in full force and effect except that after the date of such title vesting the Base Rent shall be appropriately reduced based on the proportion of the Premises rendered
unuseable for the business of Tenant, as reasonably determined by Landlord. 

        11.03    Landlord's Award.    If the Premises are wholly or partially
Condemned, then, subject to the provision of Article 11.04 below, Landlord shall be entitled to the entire award paid for such 

18

 

condemnation,
and Tenant waives any right or claim to any part thereof from Landlord or the condemning authority. 

        11.04    Tenant's Award.    Tenant shall have the right to claim and
recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant's own right on account of any and all costs or loss
incurred by Tenant including, without limitation, removing Tenant's merchandise, furniture, fixtures, leasehold improvements and equipment to a new location. 

        11.05    Temporary Condemnation.    If the whole or any part of the
Premises shall be Condemned for any temporary public or quasi-public use or purpose, this Lease shall remain in effect and Tenant shall be entitled to receive for itself such portion or portions of
any award made for such use with respect to the period of the taking which is within the Term. If a temporary condemnation remains in force at the expiration or earlier termination of this Lease,
Tenant shall pay to Landlord a sum equal to the reasonable cost of performing any obligations required of Tenant by this Lease with respect to the surrender of the Premises, including without
limitation, repairs and maintenance, and upon such payment such obligations shall be deemed satisfied. If a temporary condemnation is for an established period which extends beyond the Term, the Lease
shall terminate as of the date of occupancy by the condemning authority, and the damages shall be as provided in Articles 11.03 and 11.04 hereinabove and Rent shall be adjusted to the date of
occupancy. 

        11.06    Notice and Execution.    Landlord shall, immediately upon
service of process in connection with any condemnation or potential condemnation, give Tenant notice in writing thereof. Tenant shall immediately execute and deliver to the Landlord all instruments
that may be required to effectuate the provisions of this Article. 

12.    DEFAULT    

        12.01    Events of Default.    The occurrence of any of the following
events shall constitute an "Event of Default" on the part of Tenant: 

        (a)    Vacation or Abandonment.    Vacation or abandonment of the
Premises (absence from the Premises for sixty (60) consecutive days or more, without a Landlord-approved assignee or sublessee, shall
conclusively be deemed an abandonment or vacation of the Premises, except for renovation, or remodeling and provided Landlord has written notice thereof; 

        (b)    Payment.    Failure to pay any installment of Base Rent due and
payable hereunder upon the date when said payment is due, continuing for a period of three (3) days, or failure to pay any installment of Additional Rent or other monies due and payable
hereunder upon the date when said payment Is due, continuing for a period of three (3) days after written notice of such failure; 

        (c)    Performance.    Default in the performance of any of Tenant's
covenants, agreements or obligations hereunder (except default in the payment of Rent, Additional Rent or other monies), where such failure is curable and continues uncured for ten (10) days
after notice by Landlord to Tenant, provided that if the nature of the default cannot be reasonably cured within ten (10) days, Tenant shall not be deemed in default if it shall commence curing
the default within such ten (10) day period and diligently prosecutes same to completion; 

        (d)    Assignment.    A general assignment by Tenant for the benefit
of creditors or any Unauthorized Assignment as defined below in Article 13; 

        (e)    Bankruptcy.    The filing of a voluntary petition by Tenant, or
the filing of an involuntary petition by any of Tenant's creditors seeking the rehabilitation, liquidation or reorganization of Tenant under any law relating to bankruptcy, insolvency or other relief
of debtors; 

19

 

        (f)    Receivership.    The appointment of a receiver or other
custodian to take possession of substantially all of Tenant's assets or of this leasehold; 

        (g)    Insolvency, Dissolution, Etc.    Tenant shall become insolvent
or unable to pay its debts, or shall fail generally to pay its debts as they become due; or any court shall enter a decree or order directing the winding up or liquidation of Tenant or of
substantially all of its assets; or Tenant shall take any action toward the dissolution or winding up of its affairs or the cessation or suspension of its use of the Premises; 

        (h)    Attachment.    Attachment, execution or other judicial seizure
of substantially all of Tenant's assets or this leasehold; or 

        (i)    Hazardous Materials Release.    Any on-site or
off-site contamination or violation of any Health and Safety Laws as set forth in Article 14. 

        12.02    Landlord's Remedies.    

        (a)    Vacation or Abandonment.    If Tenant vacates or abandons the
Premises (as set forth in Article 12.01(a)), this Lease shall continue in effect, Landlord shall not be deemed to have terminated this Lease other than by written notice of termination from
Landlord, and Landlord shall have all of the remedies of a landlord provided by Article 1951.4 of the Civil Code of the State of California. At any time subsequent to vacation or abandonment of
the Premises by Tenant, Landlord may give notice of termination and shall thereafter have all of the rights hereinafter set forth. 

        (b)    Termination.    Following the occurrence of any Event of
Default, Landlord shall have the right, so long as the default continues, to terminate this Lease by written notice to Tenant setting forth: (i) the default; (ii) the requirements to
cure it; and (iii) a demand for possession, which shall be effective three (3) days after it is given or upon expiration of the times specified in Article 12.01 hereinabove,
whichever is later. 

        (c)    Possession.    Following termination under subsection (b),
without prejudice to any other remedies Landlord may have by reason of Tenant's default or of such termination, Landlord may then or at anytime thereafter, (i) peaceably re-enter
the Premises, or any part thereof, upon voluntary surrender by Tenant or expel or remove Tenant therefrom and any other persons occupying them, using such legal proceedings as are then available;
(ii) repossess and enjoy the Premises, or relet the Premises or any part thereof for such term or terms (which may be for a term extending beyond the Term) at such rental or rentals and upon
such other terms and conditions as Landlord in its sole discretion shall determine, with the right to make reasonable alterations and repairs to the Premises; and (iii) remove all personal
property therefrom and, at Landlord's option, retain all or any of such personal property (and title thereto shall thereupon vest in Landlord without compensation to Tenant) or dispose of all or any
of such personal property, in any manner, without compensation to Tenant. In the event Landlord removes all or any of Tenant's personal property pursuant to the foregoing provisions, Tenant shall pay
to Landlord, upon demand, the actual expense of such removal and disposition and the cost of repairing any damage to the Premises resulting from such removal. 

        (d)    Recovery.    Following termination under subsection (b),
Landlord shall have all the rights and remedies of a landlord provided by Article 1951.2 of the Civil Code of the State of California. The amount of damages which Landlord may recover following
termination under subsection (b) shall include: (i) the worth at the time of the award of the unpaid rent and other amounts which had been earned at the time of termination;
(ii) the worth at the time of the award of the amount by which the unpaid rent which would have been earned after termination until the time of the award exceeds the amount of such rental loss
that Tenant proves could have been reasonably avoided; (iii) the worth at the time of the award of the amount by which the unpaid 

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Rent
for the balance of the Term after the time of award exceeds the amount of rental loss Tenant proves could be reasonably avoided; and (iv) any other amount necessary to compensate Landlord
for all detriment proximately caused by Tenant's failure to perform its obligations under this Lease. The "worth at the time of the award" of the amount referred to in (i) and (ii) above
shall be computed by allowing interest thereon at the Default Rate (as set forth below). The "worth at the time of the award" of the amount referred to in (iii) above shall be computed by
discounting such amount at the Default Rate (as set forth below). Tenant hereby covenants and agrees that the Rent Abatement granted by Landlord to Tenant pursuant to this Lease is granted by Landlord
upon Landlord's and Tenant's presumption that Tenant shall remain on the Premises for the entire five (5) years duration of the Term and, therefore, in the event of termination under
Article 12.02(b), such abatement of Base Rent shall be forfeited by Tenant, and the "worth at the time of award" of the Base Rent unpaid by Tenant pursuant to the Lease, shall include damages
in the amount of any and all Base Rent previously abated plus interest thereon as otherwise provided in the Lease. 

        (e)    Additional Remedies.    In addition to the foregoing remedies,
Landlord shall, so long as this Lease is not terminated, have the right to remedy any default of Tenant to maintain or improve the Premises without terminating this Lease, to incur expenses on behalf
of Tenant in seeking a new subtenant, or to cause a receiver to be appointed to administer the Premises and new or existing subleases, and to add to the Rent payable hereunder all of Landlord's
reasonable costs in so doing, with interest at the lower of the prime rate of interest at the time of said default charged by Bank of America N.A. plus three percent (3%) or the maximum lawful rate. 

        (f)    Other.    If Tenant causes or threatens to cause a breach of
any of the covenants, agreements, terms or conditions contained in this Lease, Landlord shall be entitled to retain all sums held by Landlord by any trustee or in any account provided for herein, to
enjoin such breach or threatened breach, and to invoke any right and remedy allowed at law or in equity or by statute or otherwise as though re-entry, summary proceedings and other
remedies were not provided for in this Lease. As used in this Article, the term "threatens" is limited to delivery to Landlord of a written statement by Tenant indicating Tenant's intent to cause a
breach or Tenant's anticipation of its uncured default in the performance of, any of the covenants, agreements, terms or conditions contained in this Lease. 

        (g)    Cumulative.    Each right and remedy of Landlord provided for
in this Lease shall be cumulative and shall be in addition to every other right or remedy provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise. The
exercise or beginning of the exercise by Landlord of any one or more of the rights or remedies provided for in this Lease, or now or hereafter
existing at law or in equity or by statute or otherwise, shall not preclude the simultaneous or later exercise by Landlord of any or all other rights or remedies provided for in this Lease or now or
hereafter existing at law or in equity or by statute or otherwise. 

        (h)    No Waiver.    No failure by Landlord to insist upon the strict
performance of any term hereof or to exercise any right or remedy consequent upon a breach thereof, and no acceptance of full or partial payment of Rent during the continuance of any such breach shall
constitute a waiver of any such breach or of any such term. Efforts by Landlord to mitigate the damages caused by Tenant's breach of this Lease shall not be construed to be a waiver of Landlord's
right to recover damages under this Article 12. Nothing in this Article 12 affects the right of Landlord to indemnification by Tenant in accordance with Article 5.08 hereinabove
for liability arising prior to the termination of this Lease for personal injuries or property damage. 

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13.    ASSIGNMENT AND SUBLETTING    

        13.01    Assignment and Subletting; Prohibition.    Tenant shall not
assign, mortgage, pledge, hypothecate or otherwise transfer, this Lease, in whole or in part, or any interest therein, nor sublet or permit occupancy by any party other than Tenant of all or any part
of the Premises (each of the foregoing is hereinafter sometimes referred to as a "Transfer"), without the prior written consent of Landlord in each instance, which consent Landlord shall not
unreasonably withhold, condition or delay. As material consideration for this Lease, Tenant hereby agrees to provide the following written materials to Landlord regarding any proposed Transfer for
Landlord's approval: (i) the proposed Transfer agreement to Landlord for Landlord's approval; (ii) the audited financial statements of the transferee for the three (3) years prior
to the proposed Transfer; (iii) detailed summaries of the transferee's business operations; (iv) a detailed credit report of the transferee; and (v) banking references for the
transferee. Landlord shall have the right to review the written material submitted by Tenant regarding such Transfer for a period of fifteen (15) business days following Landlord's receipt of
such material to consent or decline to consent to such Transfer. No Transfer by Tenant shall relieve Tenant of any obligation under this Lease, including Tenant's obligation to pay Base Rent and
Additional Rent hereunder. Any purported Transfer contrary to the provisions hereof without Landlord's consent ("Unauthorized Transfer") shall be void. The consent by Landlord to any Transfer shall
not constitute a waiver of the necessity for such consent to any subsequent Transfer. As Additional Rent hereunder, Tenant shall reimburse Landlord for actual legal and other expenses incurred by
Landlord in connection with any request by Tenant for Landlord's consent to the Transfer and, as a deposit against such obligation, Tenant shall submit to Landlord with each request for consent to a
Transfer a deposit of One Thousand ($1,000). Such amount shall be reimbursed by Tenant to Landlord within ten (10) days following the submission to Tenant of a written invoice from Landlord's
counsel for such costs and fees payable by Landlord with respect to any request by Tenant for Landlord's consent to such a Transfer, whether or not Landlord ultimately approves such Transfer. Tenant
shall have the right, subject to the foregoing obligations to deliver the relevant written materials to Landlord to enter into an assignment of this Lease to any subsidiary corporation of Tenant,
Tenant's parent corporation, to any corporation or other entity that controls, is controlled by or under common control with Tenant or to any corporation, partnership or other entity succeeding to
substantially all of the assets of Tenant as a result of a consolidation or
merger, or to a corporation, partnership or other entity to which all or substantially all of the assets of Tenant have been sold ("Affiliate Transferee"), provided any Affiliate Transferee that is an
assignee (but not any sublessee) executes an instrument in form and content reasonably acceptable to Landlord assuming all of Tenant's obligation under the Lease. No Transfer by Tenant to an Affiliate
Transferee shall relieve Tenant of any obligation under this Lease, including Tenant's obligation to pay Base Rent and Additional Rent hereunder. 

        13.02    Bonus Rental.    If for any assignment or sublease (other
than with an Affiliate Transferee), Tenant receives rent or other consideration, either initially or over the term of the assignment or sublease, in excess of the Rent called for hereunder, or in case
of the sublease of a portion of the Premises, in excess of such Rent fairly allocable to such portion, after appropriate adjustments to assure that all other payments called for hereunder are
appropriately taken into account, Tenant shall pay to Landlord, as Additional Rent hereunder, fifty percent (50%) of the excess of each such payment of rent or other consideration received by Tenant,
which shall be due and payable by Tenant to Landlord promptly after its receipt by Tenant. Whenever Landlord is entitled to share in any excess income resulting from an assignment or sublease of the
Premises, the following shall constitute the definition of "Profits": the gross revenue received from the assignee or sublessee during the sublease term or during the assignment, with respect to the
space covered by the sublease or the assignment ("Transferred Space") less: (a) the gross revenue paid to Landlord by Tenant during the period of the sublease term or during the assignment with
respect to the Transferred Space; (b) the gross revenue as to the Transferred Space paid to Landlord by Tenant for all days the Transferred space was vacated from the date that Tenant first
vacated the Transferred Space until the date the assignee or sublessee 

22

 

was
to pay Rent; (c) any improvement allowance for the Premises paid by Tenant to sublessee or assignee; (d) brokers' commissions; (e) attorneys' fees; (f) lease takeover
payments; (g) costs of advertising the space for sublease or assignment and (h) unamortized cost of initial and subsequent improvements to the Premises made by Tenant; provided however,
under no circumstance shall Landlord be paid any Profits until Tenant has recovered all the items set forth in subparts (a) through (h) for such Transferred Space, it being understood
that if in any year the gross revenues, less the deductions set forth in subparts (a) through (h) above (the "Net Revenues"), are less than any and all costs actually paid in assigning
or subletting the affected space (collectively, "Transaction Costs"), the amount of the excess Transaction Costs shall be carried over to the next year and then deducted from Net Revenues with the
procedure repeated until a Profit is achieved. 

        13.03    Scope.    The prohibition against Unauthorized Transfers
contained in this Article shall be construed to include a prohibition against any Transfer by operation of law. If this Lease or any interest therein be assigned, or if the underlying beneficial
interest of Tenant is transferred, or if the Premises or any part thereof be sublet or occupied by anybody other than Tenant, Landlord may collect rent from the assignee, subtenant or occupant and
apply the net amount collected to the Rent herein reserved and apportion any excess rent so collected in accordance with the terms of the immediately preceding paragraph, but no such assignment,
subletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, subtenant or occupant as tenant, or a release of Tenant from the further performance
by Tenant of covenants on the part of Tenant herein contained. No assignment or subletting shall affect the continuing primary liability of Tenant (which, following assignment, shall be joint and
several with the assignee), and Tenant shall not be released from performing any of the terms, covenants and conditions of this Lease. 

        13.04    Waiver.    Notwithstanding any Transfer, or any indulgences,
waivers or extensions of time granted by Landlord to any transferee, or failure by Landlord to take action against any transferee, Tenant waives notice of any default of any transferee and agrees that
Landlord may, at its option, proceed against Tenant without having taken action against or joined such transferee, except that Tenant shall have the benefit of any indulgences, waivers and extensions
of time granted to any such transferee. Tenant further waives monetary damages, of whatever kind or nature, from Landlord as a result of, or in any way related to any proposed Transfer, whether
Landlord consented to such Transfer or withholds its consent to such Transfer. 

        13.05    Release.    Whenever Landlord conveys its interest in the
Project, Parking Area, Lot and/or Building, Landlord shall be automatically released from the further performance of covenants on the part of Landlord herein contained, and from any and all further
liability, obligations, costs and expenses, demands, causes of action, claims or judgments arising from or growing out of, or connected with this Lease after the effective date of said release. The
effective date of said release shall be the date Landlord transfers title of the Project to the new owner. If requested, Tenant shall execute a form of release and such other documentation as may be
required to further effect the provisions of this Article 13. 

        13.06    Recapture of Premises.    In the event Tenant proposes to
enter into a Transfer (other than a Transfer with an Affiliate Transferee), which Transfer, when taken together with all previous transfers, relates to more than forty nine percent (49%) of the
rentable square feet of the Premises (the "Subject Space") and is for the entire then remaining balance of the Term, or substantially all of the remaining balance of the Term, then Tenant shall notify
Landlord in writing (the "Availability Notice") if Tenant wishes to Transfer the Subject Space. Landlord shall have the option, by written notice to Tenant (the "Recapture Notice") within ten
(10) days after receiving any Availability Notice, to recapture the Subject Space as described below. A timely Recapture Notice terminates this Lease and Tenant's obligations regarding the
Subject Space for the remaining term of the Lease and as of the date sixty (60) days after Landlord delivers the Recapture Notice to Tenant. If Landlord declines to or fails timely to elect to
recapture the Subject Space, Landlord shall have no further right under this Section 13.06 to 

23

 

the
Subject Space unless Tenant fails to Transfer the Subject Space within one hundred fifty (150) days after Landlord receives the Availability Notice or it becomes available again after
Transfer by Tenant. To determine the new Base Rent under the Lease if Landlord recaptures the Subject Space, the original Base Rent under the Lease shall be multiplied by a fraction, the numerator of
which is the square feet of Rentable Area of the Premises retained by Tenant after Landlord's recapture and the denominator of which is the total square feet of Rentable Area of the Premises before
Landlord's recapture. The Additional Rent, to the extent that it is calculated on the basis of the square feet of Rentable Area within the Premises, shall be reduced to reflect Tenant's proportionate
share based upon the square feet of Rentable Area of the Premises retained by Tenant after Landlord's recapture. 

14.    HAZARDOUS MATERIALS    

        14.01    Definitions.    

        (a)    Health and Safety Laws.    "Health and Safety Laws" means any
and all federal, state or local laws, ordinances, rules, decrees, orders, regulations, court decisions and other authority relating to hazardous substances, hazardous materials, hazardous waste, toxic
substances, materials or wastes, environmental conditions on, under or about the Premises, or soil and ground water conditions, including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), as amended, 42 U.S.C. § 9601, et seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §6901, et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. §1801, et seq., the Federal Water Pollution Control Act of 1972, 33 U.S.C. § 1251, et. seq., the Safe Drinking Water Act, 42
U.S.C. § 300f, et seq., the Toxic Substances Control Act ("TSCA"), 15 U.S.C. § 2601, et seq., the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C.
§136, et seq., the Federal Hazardous Substances Control Act, 15 U.S.C. § 1261, et seq., the Noise Control Act of 1972, 42 U.S.C. § 4901, et seq., the Occupational
Safety and Health Act ("OSHA"), 29 U.S.C. § 651, et seq., the California Hazardous Waste Control Act, Cal. Health and Safety Code § 25100, et seq., the Carpenter-Presley-Tanner
Hazardous Substances Account Act, Cal. Health and Safety Code § 25300, et seq., the Safe Drinking Water and Toxic Enforcement Act of 1986 ("California Proposition 65"), Cal. Health and
Safety Code § 25249.5, et seq., the Porter-Cologne Water Quality Control Act, Cal. Water Code §13000, et. seq., any amendments to the foregoing, and any similar federal, state
or local laws, ordinances, rules, decrees, orders or regulations. 

        (b)    Hazardous Materials.    "Hazardous Materials" means any
chemical, compound, material, substance or other matter that: (I) is defined as a hazardous substance, hazardous material, hazardous waste or toxic substance, material or waste under any Health
and Safety Law, including, but not limited to, those substances, materials or wastes regulated now or in the future under any statutes or regulations; (ii) is controlled or governed by any
Health and Safety Law or gives rise to any reporting, notice or publication requirements thereunder, or gives rise to any liability, responsibility or duty on the part of Tenant or Landlord with
respect to any third person hereunder; or (iii) is flammable or explosive material, oil or any other petroleum-based substance, freon, asbestos, urea formaldehyde, radioactive material, nuclear
medicine material, drug, vaccine, bacteria, virus, hazardous waste, toxic substance, or related injurious or potentially injurious material (by itself or in combination with other materials). 

        (c)    Off-Site Contamination.    The term
"Off-Site Contamination" shall mean the presence of any Hazardous Materials, associated in any way with Tenant's, its successors' or assigns' use or occupation of the Premises,
transported, arranged for disposal of, or disposed of by Tenant or any third party on behalf of Tenant or its agents, employees or officers to any site or location other than the Premises. 

        (d)    On-Site Contamination.    The term
"On-Site Contamination" shall mean the presence of any Hazardous Materials in, on or under any portion of the Premises. 

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        14.02    Use.    Tenant shall not allow any Hazardous Material to be
used, generated, manufactured, released, stored or disposed of on, under or about, or transported from, the Premises, unless: (a) such use is specifically disclosed to and approved by Landlord
in writing prior to such use; and (b) such use is conducted in compliance with the provisions of this Article 14. Landlord's consent may be withheld in Landlord's sole discretion, and,
if granted, may be revoked at any time. Landlord may approve such use subject to reasonable conditions to protect the Premises and Landlord's interests. Landlord may withhold approval if Landlord
determines that such proposed use involves a material risk of a release or discharge of Hazardous Materials or a violation of any Health and Safety Laws or that Tenant has not provided reasonable
assurances of its ability to remedy such a violation and fulfill its obligations under this Article 14. Notwithstanding the foregoing, Landlord hereby consents to Tenant's use, storage or
disposal of products containing small quantities of Hazardous Materials, which products are of a type customarily found in offices and households (such as aerosol cans containing insecticides, toner
for copies, paints, paint remover and the like), provided that Tenant shall handle, use, store and dispose of such Hazardous Materials in a safe and lawful manner and shall not allow such Hazardous
Materials to contaminate the Premises. 

        14.03    Compliance With Laws; Handling of Hazardous
Materials.    Tenant shall strictly comply with, and shall maintain the Premises in compliance with, all Health and Safety Laws. Tenant shall obtain, maintain in
effect and comply with the conditions of all permits, licenses and other governmental approvals required for Tenant's operations on the Premises under any Health and Safety Laws, including, but not
limited to, the discharge of appropriately treated Hazardous Materials into or through any sanitary sewer serving the Premises. At Landlord's request, Tenant shall deliver copies of, or allow Landlord
to inspect, all such permits, licenses and approvals. All Hazardous Materials removed from the Premises shall be removed and transported by duly licensed haulers to duly licensed disposal facilities,
in compliance with all Health and safety Laws. Tenant shall be responsible for the proper disposal of any mercury-containing fluorescent lighting fixtures. Tenant shall perform any monitoring,
testing, investigation, clean-up, removal, detoxification, preparation of closure or other required plans and any other remedial work required by any governmental agency or lender or
reasonably recommended by Landlord's environmental consultants as a result of any release or discharge or potential release or discharge of Hazardous Materials and resulting in On-Site
Contamination or Off-Site Contamination or any violation or potential violation of Health and Safety Laws by Tenant or any successor or sublessee of Tenant or their respective agents,
contractors, employees, licensees or invitees (collectively, "Remedial Work"). Landlord shall have the right to intervene in any governmental action or proceeding involving any Remedial Work, and to
approve performance of the work, in order to protect Landlord's interests. Landlord shall have the right to require Tenant to provide an Standard ASTM E 1527-93 Phase I (cost not to exceed
$3,000.00) Environmental Clearance Report prepared for Landlord's approval at the time Tenant vacates the Premises. Tenant shall not enter into any settlement agreement, consent decree or other
compromise with respect to any claims relating to Hazardous Materials without notifying Landlord and providing ample opportunity for Landlord to intervene. 

        14.04    Compliance With Insurance Requirements.    Tenant shall
comply with the requirements of Landlord's and Tenant's insurers regarding Hazardous Materials and with such insurers' recommendations based upon prudent industry practices regarding management of
Hazardous Materials. 

        14.05    Indemnity.    Tenant shall indemnify, protect, defend and
hold Landlord (and its partners and their respective officers, directors, employees and agents), the Premises, Building, Lot Parking Areas, and all other areas of the Project harmless from and against
any and all liabilities, demands, penalties, fines, claims, suits, judgments, actions, investigations, proceedings, costs and expenses (including attorneys' fees and court costs) arising out of or in
connection with any breach of any provisions of this Article 14, directly or indirectly arising out of any liability of Tenant under any Health 

25

 

and
Safety Law or associated with any On-Site Contamination or any Off-Site Contamination which is caused, suffered or permitted to be brought upon, kept, used, discharged,
deposited or leaked in or about the Premises or any other portion of the Project by Tenant or any of Tenant's assigns, agents, employees, contractors or invitees or by anyone in the Premises other
than Landlord, Landlord's agents, employees or contractors, including, but not limited to, the use, generation, storage, release, disposal or transportation of Hazardous Materials by Tenant, or any
successor or sublessee of Tenant, or their respective agents, contractors, employees, licensees, or invitees, on, under or about the Premises during the Term, and including, but not limited to, all
consequential damages and the cost of any Remedial Work. Any defense by Tenant pursuant to this Article shall be by counsel reasonably acceptable to Landlord. Neither the consent by Landlord to the
use, generation, storage, release, disposal or transportation of Hazardous Materials nor the strict compliance with all Health and Safety Laws shall excuse Tenant from Tenant's indemnification
obligations pursuant to this Article 14.05. The foregoing indemnity shall be in addition to and not a limitation of the indemnification provisions of Article 5.09 of this Lease. Tenant's
obligations pursuant to this Article 14.05 shall survive the termination or expiration of the Lease. Notwithstanding anything in this Lease to the contrary, the liability of Tenant, and any
indemnities provided by Tenant, shall not extend to Hazardous Materials that are not placed on the Premises, the Building or the Project, or on the land upon which the Building and Project is situated
by Landlord, or by any of Landlord's agents, contractors and employees. In addition, Landlord shall not include in operating expenses, or pass on to Tenant directly or indirectly, the cost incurred by
Landlord in monitoring, reporting, testing, abating and/or removing Hazardous Materials that were contained in the Premises, the Building, the Project and/or on the land upon which the Building is
situated as of the Lease Date. 

        14.06    Notice.    Each party to this Lease shall notify the other
party, in writing, as soon as reasonably possible, and in any event within five (5) business days after, any of the following: (a) a party has knowledge, or it has reasonable cause to
believe, that any Hazardous Material has been released, discharged or is located on, under or about the Premises, whether or not the release or discharge is in quantities that would otherwise be
reportable to a public agency, (b) a party receives any order of a governmental agency requiring any Remedial Work pursuant to any Health and Safety Laws; (c) a party receives any
warning, notice of inspection, notice of violation or alleged violation, or a party receives notice or knowledge of any proceeding, investigation of enforcement action, pursuant to any Health and
Safety Laws; or (d) a party receives notice or knowledge of any claims made or threatened by any third party against that party or the Premises relating to any loss or injury resulting from
Hazardous
Materials or from violation of any Health and Safety Law. If the potential risk of any of the foregoing events is material, the party having notice of such event shall deliver immediate verbal notice
to the other party, in addition to written notice as set forth above. Landlord and Tenant agree to deliver to one another copies of all test results, reports and business or management plans required
to be filed with any governmental agency pursuant to any Health and Safety Laws. 

        14.07    Default.    The release or discharge of any Hazardous
Material or the violation of any Hazardous Materials Law by Tenant or any successor or sublessee of Tenant shall be a material default by Tenant under the Lease. In addition to or in lieu of the
remedies available under the Lease as a result of such default, Landlord shall have the right, without terminating the Lease, to require Tenant to suspend its operations and activities on the Premises
until Landlord is satisfied that appropriate Remedial Work has been or is being adequately performed; Landlord's election of this remedy shall not constitute a waiver of Landlord's right thereafter to
declare a default and pursue other remedies set forth in the Lease. 

        14.08    Landlord's Disclosure.    Pursuant to the requirements of
California Health and Safety Code Section 25359.7, Landlord hereby notifies Tenant that Landlord does not know, and does not have reasonable cause to believe, that any release of any Hazardous
Material has come to be located on or beneath the Premises, Building or Project. 

26

   15.    OFFSET STATEMENT, ATTORNMENT AND SUBORDINATION    

        15.01    Estoppel Certificate.    Within ten (10) days after
request therefor by Landlord, or if on any sale, assignment or hypothecation by Landlord of Landlord's interest in the Project, Building, Lot and/or Parking Area, or any part thereof, an Estoppel
certificate shall be required from Tenant, Tenant shall deliver, in recordable form, such a certificate to any proposed mortgagee or purchaser, and to Landlord, certifying (if such be the case) that
(i) this Lease is in full force and effect; (ii) the date of Tenant's most recent payment of Rent, and that Tenant has no defenses or offsets outstanding, or stating those offsets or
defenses claimed by Tenant; (iii) and any other information reasonably requested. Tenant's failure to deliver said certificate in time shall be conclusive upon Tenant that: (i) this
Lease is in full force and effect, without modification except as may be represented by Landlord; (ii) there are no uncured defaults in Landlord's performance and Tenant has no right of offset,
counterclaim or deduction against Rent hereunder; and (iii) no more than one period's Base Rent has been paid in advance. Failure of Tenant to deliver such a certificate to Landlord or any
proposed mortgagee or purchaser within ten (10) days following Landlord's request therefor shall be deemed Tenant's acknowledgment of the correctness of the statements made in the foregoing
sentence and that the aforementioned mortgagee(s) and/or purchaser(s) may rely on said statements. 

        15.02    Attornment.    Tenant shall, in the event any proceedings are
brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage or deed of trust made by the Landlord, its successors or assigns, encumbering the Premises, or any
part thereof, or in the event of termination of a ground lease, if any, and if so requested, attorn to the purchaser upon such foreclosure or sale or upon any grant of a deed in lieu of foreclosure
and recognize such purchaser as the Landlord under this Lease. 

        15.03    Subordination.    The rights of Tenant hereunder are and
shall be, at the election of the mortgagee, subject and subordinate to the lien of such mortgage, or the lien resulting from any other method of financing or refinancing, now or hereafter in force
against the Project, Building, Lot and/or Parking Area, and to all advances made or hereafter to be made upon the security thereof; provided, however, that notwithstanding such subordination, so long
as Tenant is not in default under any of the terms, covenants and conditions of this Lease, neither this Lease nor any of the rights of Tenant hereunder upon Tenant's covenanting that Tenant is not in
default hereunder, shall be terminated or subject to termination by any trustee's sale, any action to enforce the security, or by any proceeding or action in foreclosure. If requested, Tenant agrees
to execute whatever documentation may be required to further effect the provisions of this Article. 

16.    NOTICES    

        16.01    Notices.    All notices required to be given hereunder shall
be in writing (except for notice required pursuant to Section 12.01(b)) and shall be (i) personally delivered, in which even they shall be deemed received on the date of delivery,
(ii) sent by certified mail, postage prepaid, return receipt requested, or by a professional courier company which provides a receipt evidencing delivery, in which event they shall be deemed
received on the date of delivery as evidenced by the receipt; or (iii) sent by telecopy. Any notice, request, demand, direction or other communication sent by cable, telex or telecopy must be
confirmed within forty-eight (48) hours by letter mailed or delivered in accordance with the foregoing. The Landlord's and Tenant's addresses for written notices required to be given hereunder
shall be the addresses set forth in the Basic Lease Information, or at such other place designated by advance written notice delivered in accordance with the foregoing. 

17.    SUCCESSORS BOUND    

        17.01    Successors Bound.    This Lease and each of its covenants and
conditions shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, successors and legal representatives and their respective assigns, subject to the
provisions hereof. Whenever in this Lease a 

27

 

reference
is made to the Landlord, such reference shall be deemed to refer to the person in whom the interest of the Landlord shall be vested and Landlord shall have no obligation hereunder as to any
claim arising after the transfer of its interest in the Premises. Any successor or assignee of the Tenant who accepts an assignment or the benefit of this Lease and enters into possession or enjoyment
hereunder shall thereby assume and agree to perform and be bound by the covenants and conditions thereof. Nothing herein contained shall be deemed in any manner to give a right of assignment to Tenant
without the written consent of Landlord. 

18.    MISCELLANEOUS    

        18.01    Waiver.    No waiver of any default or breach of any covenant
by either party hereunder shall be implied from any omission by either party to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any
default other than the default specified in the waiver, and then said waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant, term or condition contained
herein by either party shall not be construed as a waiver of any subsequent breach of the same covenant, term or condition. The consent or approval by either party to or of any act by either party
requiring further consent or approval shall not be deemed to waive or render unnecessary their consent or approval to or of any subsequent similar acts. 

        18.02    Easements.    Landlord reserves the right to
(i) subdivide or alter the boundaries of the Lot and (ii) grant easements on the Lot and dedicate for public use portions thereof without Tenant's consent;
provided, however, that no such grant or dedication shall materially interfere with Tenant's use of the Premises. From time to time, and upon Landlord's demand, Tenant shall execute, acknowledge and
deliver to Landlord, in accordance with Landlord's instructions, any and all documents, instruments, maps or plats necessary to effectuate Tenant's covenants hereunder. 

        18.03    Relocation.    Intentionally deleted. 

        18.04    No Light, Air or View Easement.    Any diminution or shutting
off of light, air or view by any structure which may be erected on lands adjacent to or in the vicinity of the Building shall in no way affect this Lease or impose any liability on Landlord. 

        18.05    Corporate Authority.    If Tenant executes this Lease as a
corporation, each of the persons executing this Lease on behalf of Tenant hereby covenants and warrants that: (i) Tenant is a duly authorized and existing corporation; (ii) Tenant is
qualified to do business in the State of California; (iii) Tenant has full right and authority to enter into this Lease; and (iv) each of the persons executing on behalf of Tenant is
authorized to do so. 

        18.06    Accord and Satisfaction.    No payment by Tenant or receipt
by Landlord of a lesser amount than the Rent herein stipulated shall be deemed to be other than on account of the Rent, nor shall any endorsement or statement on any check or any letter accompanying
any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such Rent or pursue any
other remedy provided in this Lease. 

        18.07    Limitation of Landlord's Liability.    The obligations of
Landlord under this Lease shall not constitute personal obligations of the individual members, partners, directors, officers, or shareholders of Landlord or any member of Landlord, and in
consideration of the benefits accruing hereunder to Tenant and notwithstanding anything contained in this Lease to the contrary, Tenant hereby covenants and agrees for itself and all of its successors
and assigns that the liability of Landlord for its obligations under this Lease shall be limited solely to, and Tenant's and its successors' and assigns' sole and exclusive remedy shall be against the
real estate that is the subject of this Lease and Tenant, its successors and assigns shall not seek recourse against the individual member, partners, directors, 

28

 

officers
or shareholders of Landlord or any member of Landlord, or any of their personal assets for such satisfaction. 

        18.08    Time.    Time is of the essence of every provision hereof. 

        18.09    Attorneys' Fees.    In any arbitration, mediation, action or
proceeding which the Landlord or the Tenant may be required to prosecute to enforce its respective rights hereunder, the less prevailing party therein agrees to pay all costs incurred by the more
prevailing party therein, including reasonable attorneys' fees, to be fixed by the court, and said costs and attorneys' fees shall be made a part of the judgment in said action. 

        18.10    Captions and Article Numbers.    The captions, article
numbers and table of contents appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent or such sections or articles of
this Lease nor in any way affect this Lease. 

        18.11    Severability.    If any term, covenant, condition or
provision of this Lease, or the application thereof to any person or circumstance, Shall to any extent be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, covenants, conditions or provisions of this Lease, or the application thereof to any person or circumstance, shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. 

        18.12    Applicable Law.    This Lease, and the rights and obligations
of the parties hereto, shall be construed and enforced in accordance with the laws of the State of California. 

        18.13    Submission of Lease.    The submission of this document for
examination and negotiation does not constitute an offer to lease, or a reservation of, or option for leasing the Premises. This document shall become effective and binding only upon execution and
delivery hereof by Landlord. No act or omission of any employee or agent of Landlord or of Landlord's broker or managing agent shall alter, change, or modify any of the provisions hereof. 

        18.14    Holding Over.    Should Tenant, or any of its successors in
interest, hold over the Premises, or any part thereof, after the expiration of the term of this Lease, unless otherwise agreed to in writing, such holding over shall constitute and be construed as
tenancy from month-to-month only, at a monthly rent equal to one hundred fifty percent (150%) of the Base Rent owed during the final year of the Term of this Lease as the same
may be extended from time to time. This inclusion of the preceding sentence shall not be construed as Landlord's permission for Tenant to hold over. 

        18.15    Surrender.    Upon the expiration or earlier termination of
this Lease, Tenant shall surrender the Premises to Landlord in good order, condition and repair, except for reasonable wear and tear or as otherwise provided in Articles 8, 10 and 11. Tenant shall not
commit or allow any waste or damage to be committed on any portion of the Premises, Building or Project. All property that Tenant is required to surrender shall become Landlord's property upon the
termination of this Lease. Landlord may cause any of said personal property that is not removed from the Premises within thirty (30) days after the date of any termination of this Lease to be
removed from the Premises and stored at Tenant's expense, or, at Landlord's election said personal property thereafter shall belong to Landlord without the
payment of any consideration, subject to the rights of any person holding a perfected security interest therein. 

        18.16    Rules and Regulations.    At all times during the Term,
Tenant shall comply with rules and regulations ("Rules and Regulations") for the Project, as set forth in Exhibit E (and such amendments as Landlord may reasonably adopt), attached hereto and
by this reference made a part hereof. 

        18.17    No Nuisance.    Tenant shall conduct its business and control
its agents, employees, invitees and visitors in such a manner as not to create any nuisance, or interfere with, annoy or disturb any other tenant or Landlord in its operation of the Project. 

29

 

        18.18    Broker.    Tenant warrants that it has had no dealings with
any real estate broker or agent, other than the Broker set forth in the Basic Lease Information, in connection with the negotiation of this Lease, and that it knows of no other real estate broker or
agent who is entitled to any commission or finder's fee in connection with this Lease. Tenant agrees to indemnify and hold harmless Landlord from and against any and all claims, demands, losses,
liabilities, lawsuits, judgments, costs and expenses (including, without limitation, attorneys' fees and costs) with respect to any leasing commission or equivalent compensation alleged to be owing on
account of Tenant's dealings with any real estate broker or agent other than Broker. 

        18.19    Landlord's Right to Perform.    Upon Tenant's failure to
perform any obligation of Tenant hereunder, including without limitation, payment of Tenant's insurance premiums, charges of contractors who have supplied materials or labor to the Premises, etc.,
Landlord shall have the right to perform such obligation of Tenant on behalf of Tenant and/or to make payment on behalf of Tenant to such parties, provided Landlord has first provided written notice
to Tenant and given Tenant ten (10) days to perform such obligation (unless another cure period is provided herein). Tenant shall reimburse Landlord the reasonable cost of Landlord's performing
such obligation on Tenant's behalf, including reimbursement of any amounts that may be expended by Landlord, plus interest at the rate of three percent (3%) over the prime rate as announced, from time
to time, by Bank of America, N.A. per annum, as Additional Rent. 

        18.20    Mortgage Protection.    Landlord shall not be in default
under the terms of this Lease, or by law, unless Landlord fails to perform the obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after
written notice by Tenant to Landlord and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Tenant in writing
specifying wherein Landlord has failed to perform such obligation. If, however, the nature of Landlord's obligation is such that more than thirty (30) days are required for performance,
Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and diligently prosecutes the same to completion. Should Landlord be deemed to be in
material default of this Lease, then Landlord shall be liable to Tenant for all damages sustained by Tenant as a direct result of Landlord's breach. If any such default materially interferes with
Tenant's business operation in the Premises, Tenant may give Landlord and the holder of any first mortgage or deed of trust covering the Premises a second written notice specifying exactly the nature
of the Landlord's failure and its impact on Tenant's business operation in the Premises and the further remedial action deemed necessary by Tenant. If such remedial action is not undertaken within
thirty (30) days of such second written notice, Tenant shall be entitled to terminate this Lease, but in no event earlier than thirty (30) days after the second notice to Landlord and
the holder of any first mortgage or deed of trust covering the Premises. Notwithstanding the foregoing, Tenant shall not be entitled to terminate this Lease as a result of Landlord's default if
Landlord is making diligent efforts to perform the obligations required of Landlord under this Lease. Nothing herein contained shall be interpreted to mean that Tenant is excused from paying any rent
due hereunder as a result of any default by Landlord. 

        18.21    Nonliability.    Landlord shall not be in default hereunder
or be liable for any damages directly or indirectly resulting from, nor shall the rental herein reserved be abated by reason (unless otherwise provided herein) of (i) the interruption of use of
the Premises as a result of the installation of any equipment in connection with the Premises or Building or (ii) any failure to furnish or delay in furnishing any services required to be
provided by Landlord when such failure or delay is caused by accident or any condition beyond the reasonable control of Landlord or by the making of necessary repairs or improvements to the Premises
or to the Building, or the limitation, curtailment, rationing or restriction on use of water or electricity, gas or any other form of energy or any other service or utility whatsoever serving the
Premises or the Building. Landlord shall use reasonable efforts to remedy any interruption in the furnishing of such services. 

30

 

        18.22    Quiet Enjoyment.    So long as the Tenant shall fully and
faithfully perform all of its obligations under this Lease when and as required under the terms of this Lease, Tenant shall enjoy peaceful and quiet possession of the Premises against any party
claiming through Landlord. 

        18.23    Modification for Lender.    If, in connection with obtaining
construction, interim or permanent financing for the Project or the Building, the lender shall require reasonable modifications in this Lease as a condition to such financing, Tenant will not
unreasonably withhold, delay or defer its consent thereto, provided that such modifications do not Increase the obligations of Tenant hereunder or materially adversely affect the leasehold interest
hereby created or Tenant's rights hereunder. 

        18.24    Recording.    Neither Landlord nor Tenant shall record this
Lease without the consent of the other. Either party may, at its sole cost and expense, record a short form memorandum of this Lease in a form reasonably acceptable to the other party. 

        18.25    Entire Agreement.    This Lease sets forth all covenants,
promises, agreements, conditions and understandings between Landlord and Tenant concerning the Premises, Project, Building and Lot, and there are no covenants, promises, agreements, conditions or
understandings, either oral or written, between Landlord and Tenant other than as are herein set forth. Except as herein otherwise provided no subsequent alteration, amendment, change or addition to
this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by Landlord and Tenant. 

        18.26    Reasonableness.    Except where reference in the Lease is
made to sole and absolute discretion, or words to that effect, Landlord and Tenant agree to act reasonably and in good faith to carry out the terms and provisions of this Lease as written. 

        18.27    Additional Lease Provisions.    Additional Lease Provisions,
if any, are set forth on Exhibit G, attached hereto. 

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

	LANDLORD:	 	TENANT:
	R. B. INCOME PROPERTIES, a California limited partnership	 	NOVACARDIA, INC., a Delaware corporation
	

By:

THOMAS G. BLAKE, Trustee of the Thomas G. Blake and Kathleen B. Blake Family Trust u/d/t dated July 27, 1987, as amended, its General Partner	
 	

By:

Name:

 

Its:	
 	

/s/ Randall E. Woods
 Randall E. Woods

  

President and CEO
	

 	
 	

By:	
 	

/s/ Lynne R. Rollins
	 	 	 	 	

	 	 	Name:	 	Lynne R. Rollins
	

 	
 	

Its:	
 	

CFO

IF
TENANT SHALL BE A CORPORATION, THE AUTHORIZED OFFICERS MUST SIGN ON BEHALF OF THE CORPORATION. THE LEASE MUST BE EXECUTED BY THE PRESIDENT OR VICE-PRESIDENT AND THE SECRETARY OR
ASSISTANT SECRETARY, UNLESS THE BY-LAWS OR A RESOLUTION OF THE BOARD OF DIRECTORS SHALL OTHERWISE PROVIDE, IN WHICH EVENT, THE BY-LAWS OR A CERTIFIED COPY OF THE RESOLUTION, AS
THE CASE MAY BE, MUST BE FURNISHED. ALSO THE APPROPRIATE CORPORATE SEAL MUST BE AFFIXED. 

31

EXHIBIT A  

 LEGAL DESCRIPTION  

[TO
BE ATTACHED] 

EXHIBIT "A"  

PARCEL
A: 

Lot
14 of EMPLOYMENT CENTER DEVELOPMENT UNIT NO. 2A, in the City of San Diego, County of San Diego, State of California, according to Map thereof No. 10394, filed in the Office of the County
Recorder of San Diego County, May 26, 1982. 

EXCEPT
all oil, asphaltum, petroleum, natural gas and other hydrocarbons and other valuable mineral substances and products and all other minerals, whether or not of the same character hereinbefore
generally described, in or under said land and lying and being at a vertical depth of 500 or more feet below the present natural surface of the ground, but without right of entry on the surface or
within a vertical depth of 500 feet below the present natural surface of the ground, as reserved by Pardee Construction Company, a corporation, in deed recorded December 27, 1983 as File
No. 83-470862 of Official Records. 

PARCEL
B: 

All
easements in common with others lawfully entitled thereto, appurtenant to the land referred to in Parcel A, as shown in Declaration of Covenants, Conditions and Restrictions of the Retention Basin
Area, recorded in the Office of the County Recorder of San Diego County as File/Page No. 83-054132 of Official Records, and as shown in Declaration of Covenants, Conditions and
Restrictions of San Diego Corporate Center, recorded in the Office of the County Recorder of San Diego County as File/Page No. 83-054133 of Official Records. 

APN:
304-101-02-00 

EXHIBIT B  

 BUILDING PLANS AND SITE PLAN  

[TO
BE ATTACHED] 

[Picture
of Site Plan] 

[Floorplan
of the Office Suites] 

EXHIBIT C  

 PRELIMINARY PLANS  

[TO
BE ATTACHED] 

[Diagram
of Floor Plan] 

[Diagram
of Ceiling Plan] 

  

	12651 & 12671 High Bluff	 	FACILITY SOLUTIONS
	BUILDING STANDARDS FOR TENANT IMPROVEMENTS	 	April 2004

PARTITIONS  

 TWO-HOUR RATED PARTITION  

        WALLS:

	1.
	35/8"—20
gauge metal studs—16" on center as req'd by code for walls and ceiling.

	2.
	5/8"
thick type "X" gypsum wallboard—two layers each side of studs.

	3.
	Drywall
taped smooth and sanded to receive paint or vinyl wallcovering, per plans.

	4.
	Batt
insulation as per ICBO assembly number—between studs. 

 ONE-HOUR RATED-TUNNEL CORRIDOR  

        WALLS:

	1.
	35/8"—20
gauge metal studs—16" or 24" on center as req'd by code for walls and ceiling.

	2.
	5/8"
thick type "X" gypsum wallboard—one layer each side of studs.

	3.
	Drywall
taped smooth and sanded to receive paint or vinyl wallcovering, per plans.

	4.
	Batt
insulation as per ICBO assembly number—between studs. 

        CEILINGS:

	4.
	21/2",
25 gauge metal shaftwall studs

	5.
	1"
liner on one side & (2) 1/2 layers type "X" gypsum board on the other side.

	6.
	Drywall
taped smooth and sanded to receive paint or vinyl wallcovering, per plans.

	7.
	Batt
insulation as per ICBO assembly number—between studs. 

        GENERAL:

	8.
	All
exterior corners with corner beads. All exposed edges finished with metal trim. 

 ONE-HOUR RATED-FULL HEIGHT PARTITION  

	1.
	35/8"—20
g metal studs—16" on center max from floor to underside of structure

	2.
	35/8"—20
g metal studs—16" on center max from floor to underside of structure

	3.
	5/8"
thick type "X" gypsum wallboard—one layer each side of stud.

	4.
	Partition
taped smooth and sanded to receive paint or vinyl wallcovering, per plans. 

 DEMISING PARTITIONS  

	1.
	35/8"—25
g metal studs—16" on center max from floor to underside of structure

	2.
	5/8"
gypsum wallboard one layer each side of studs.

	3.
	Seismic
bracing per code.

	4.
	Continuous
acoustical sealant—top and bottom tracks.

	5.
	R-11
batt type fiberglass insulation between studs. Acoustical sealant at bottom track. 

1

 

	6.
	Partition
taped smooth and sanded to receive paint or wallcovering. 

 TYPICAL INTERIOR PARTITION (Non rated)  

	1.
	35/8"—25
gauge metal studs 24" oc to 6" above ceiling grid

	2.
	5/8"
gypsum wallboard one layer each side of studs.

	3.
	Seismic
bracing per code.

	4.
	Partition
taped smooth and sanded to receive paint or wallcovering.

	5.
	All
exterior corners with corner beads. All exposed edges finished with metal trim. 

 COLUMN FURRING  

	1.
	5/8"
gypsum wallboard, one layer on 21/2"-25 gauge metal studs or tube steel sanded smooth & painted, UNO.

	2.
	Height—floor
slab to 6" above ceiling grid.

	3.
	Gypsum
wallboard taped smooth and sanded to receive paint or wallcovering, all exterior corners with corner beads. 

DOORS, FRAMES AND HARDWARE  

 CORRIDOR DOOR ASSEMBLIES  

	1.
	Plain
Sliced maple veneer face by Weyerhaeuser/Marshfield

Solid core 20 minute rated or 60 minute rated as req'd by location, compliant with Positive Pressure requirements, concealed in tumescent.

Size: 3'-0" × 8'-0" × 13/4" doors, or 6'-0" × 8'-0"x
13/4" pair

	2.
	Rated
frames are prefinished Timely TA-8 Frame and Trim Color: Alumatone (SC108)

	3.
	Hardware:

20 minute rated single doors (Office Lock)

Falcon B Series, Quantum Lever, 26 D finish (confirm this matches existing spec suites)

Various assembly components to match standard established at spec suites and to comply with fire codes.

	4.
	Key
System: New Keyway systems to be confirmed with property manager. 

 INTERIOR TENANT DOOR ASSEMBLY (non-rated doors within office suites)  

	1.
	Plain
Sliced maple veneer face by Weyerhaeuser/Marshfield

Solid core, non-rated, 3'-0" × 8'-0" × 13/4" doors

Certification of applicable ratings and warranties to be provided. Doors shall be finished to match corridor doors in finish, material and appearance. Finish all edges.

	2.
	Non-rated
frames are prefinished Timely TA-8 Frame and Trim Color: Alumatone (SC108)

	3.
	Hardware:

Falcon B Series, Quantum Lever, 26 D finish (confirm this matches existing spec suites)

Various assembly components to match standard established at spec suites and to comply with fire codes.

	4.
	Key
System: New Keyway systems to be confirmed with property manager. 

2

 

INTERIOR GLAZING  

	A.
	(a)
1/4" thick clear glass in non-rated, prefinished Timely frames, color to match door frames

(b) 1/4" thick clear glass in non-rated, M-121 glass stop Color: Clear Aluminum.

	B.
	1/4"
thick tempered safety glass where required per code.

	C.
	Return
gypsum board into opening at both sides, provide metal corner bead all around opening. 

SUSPENDED ACOUSTICAL CEILING  

	A.
	Grid:
15/16" Armstrong Exposed T-Grid Suspension System Color: White

	B.
	Tile:
Armstrong Dune 1775, 24"x24"x3/4" Fine Textured, Angled Tegular Edge Color: White

	C.
	Seismic
bracing per code.

	D.
	Seismic
wires for lighting and electrical to be provided by Acoustical Ceiling Contractor. 

WINDOW COVERING  

	A.
	Vertical
blinds:

	1.
	31/2"
perforated PVC vanes Color: White

-or- 31/2" solid PVC flat vanes, Color: White

	2.
	Heavy
duty Head rail System with EZ Auto Rotate Feature, Color: Clear aluminum 

CABINETRY  

	A.
	Plastic
laminate horizontal and vertical surfaces.

	B.
	Color:
varies from Tenant to Tenant (see finish plan).

	C.
	Cabinetry
Construction: Designation, APA C-D plugged with exterior glue, 3/4" thick or 3/4" high pressure particle board.

	D.
	Cabinetry:
Plastic laminate finish, countertops and splashes shall be constructed in accordance with WIC Manual of Millwork, "Custom" grade.

	E.
	Pulls:
5/16" diameter wire pulls with 4" c. to c. spacing and brushed chrome finish. U.N.O. 

3

 

TENANT SUITE FINISH MATERIALS  

	 	PAINT
	 	A.	One coat: Basecoat Int Latex Wall Primer, Two coats: Int Flat Latex Wall Finish.

Uniform smooth finish. Paint by ICl/Dulux (or equal)
	

 	
STANDARD FIELD CARPET
	 	 	1.	 	Manufacturer:	 	Shaw
	 	 	2.	 	Type:	 	Metro
	 	 	3.	 	Installation:	 	Direct glue down
	 	 	4.	 	Color:	 	Varies per tenant.
	

 	
RESILIENT FLOORING
	 	 	1.	 	Manufacturer:	 	Armstrong
	 	 	2.	 	Style Name:	 	Excelon Imperial Texture
	 	 	3.	 	Color:	 	Varies from tenant to tenant (see finish plan)
	

 	
BASE
	 	 	1.	 	Manufacturer:	 	Burke or Roppe, Color varies per tenant (see finish plan).
	 	 	2.	 	Material:	 	Rubber
	 	 	3.	 	Size:	 	4" cove base at resilient flooring and straight base at glue down carpet
	 	 	4.	 	Transition:	 	Rubber transition strip between carpet and resilient flooring. Color to match base.

FIRE PROTECTION SYSTEMS  

 GENERAL  

All
work shall be in strict conformance with but not limited to the current editions of: 

Uniform
Plumbing Code

Uniform Building Code

Uniform Fire Code

Local Fire Department Regulations

National Fire Protection Association

All other Authorities Having Jurisdiction 

Work
Included: All components and work necessary for a complete automatic fire sprinkler system. 

 SYSTEM REQUIREMENTS  

	1.
	The
entire building shall be provided with a hydraulically calculated automatic fire sprinkler system for each occupancy classification.

	2.
	Minimum
densities for areas of coverage shall be determined by the City of San Diego Fire Department.

	3.
	Tenant
spaces are sized as a min for Ordinary Hazard Group 1, unless higher classification is req'd due to tenant usage and occupancy.

	4.
	The
Contractor shall contact the City of San Diego Fire Department for scheduling of a water flow test to determine available water supply information to be used as a basis for
hydraulic calculations. 

4

 

	5.
	Sprinkler
Heads Ceiling Mounted: Pendant, natural brass with chrome finish, semi-recessed with matching adjustable metal escutcheon. 

 FIRE EXTINGUISHER CABINETS  

	1.
	Semi-recessed
fire extinguisher cabinet. Larsen 11/4" square semi-recessed stainless steel cabinet
#SS-2409-R1-VDUO with Sentry Dry Chemical Fire Extinguisher bottle: Sentry5 or equal. 

HVAC  

        A water source heat pump system with ducted return air 

ELECTRICAL  

 LIGHT FIXTURES  

The
standard light fixture shall be a 2'x4'x6" deep, Indirect/Direct Lay-in (3) Lamp—Columbia STR24-332G-MPO-EB8-voltage
with F32T8 TL35 lamps and high frequency electronic ballasts. 

 RECEPTACLES  

White
outlets, switches and coverplates 

 EXIT SIGNS  

The
standard exit sign shall be an edge-lit green, ceiling mount, recessed, housing with arrows as required, powered by LEDs with a 90 min. emergency battery pack. Dual Lite LECXGXWE
(verify faces and arrows) 

5

   EXHIBIT "D"  

 WORK LETTER AGREEMENT  

        This Work Letter Agreement ("Work Letter") supplements that certain Office Lease (the "Lease), dated and executed concurrently herewith, by and between R.B.
Income Properties, a California limited partnership, as "Landlord", and NovaCardia, Inc., a Delaware corporation, as "Tenant", covering certain premises described in the Lease (the "Premises").
All terms not defined herein shall have the same meaning set forth in the Lease. All notices required to be given hereunder shall be delivered in accordance with the requirements of
Section 16.01 of the Lease. 

1.    Construction of Tenant's Improvement Work.    Landlord shall furnish and
install within the Premises those items shown on the plans, drawings and specifications finally approved by Landlord and Tenant pursuant to Paragraph 2 below (the "Tenant's Improvement Work")
in compliance with all applicable codes, laws and regulations. Tenant's Improvement Work shall conform to building standard specifications for the Project, a copy of which is attached hereto as
Attachment I. 

2.    Construction Plans for Tenant's Improvement Work.    Final plans and drawings
required by this Work Letter shall be prepared by Facility Solutions and shall be subject to the approval of Landlord and Tenant, which approval shall not be unreasonably withheld, conditioned or
delayed. 

        2.1    Preparation of Final Plans.    Based on the previously-approved
Preliminary Plans, Landlord shall have Facility Solutions ("Space Planner") prepare complete construction plans, drawings and specifications for all of the improvements to be constructed by Landlord
in the Premises (collectively, the "Final Plans"). Within five (5) days after receipt by Tenant of the Final Plans, Tenant shall deliver notice to Landlord of approval or reasonable disapproval
of the Final Plans. The failure of Tenant to deliver notice of disapproval within five (5) days shall be deemed to be Tenant's approval. If Tenant reasonably disapproves of any portion of such
Final Plans, Tenant shall specify the reason for its disapproval, and the parties shall meet within five (5) days of Landlord's receipt of Tenant's notice and resolve any disagreement. Landlord
shall cause the Space Planner to redesign the Final Plans, incorporating those reasonable revisions required by Tenant. 

        2.2    Changes or Additions to Final Plans.    Tenant shall have the
right from time to time, but no later than the earlier of (a) the date Tenant approves the Final Plans; or (b) the date the Final Plans are submitted to the City for building permits to
submit requests to Landlord for changes or additions to the Final
Plans ("Change Order"). If Landlord approves any such Change Order, the Final Plans shall be revised and, to the extent that such Change Order results in a cost to Tenant in excess of the Improvement
Allowance set forth in Subparagraph 3.1, Tenant shall pay for the cost of such Change Order. 

3.    Allowance for Improvements.    

        3.1    Improvement Allowance.    Except for Change Orders (which shall
be made at Tenant's expense as set forth in Section 2.3), Landlord agrees to pay the "Work Costs" of the-Improvements (as defined in Paragraph 5) ("Improvement Allowance"),
as defined below; provided, however, Tenant shall pay to Landlord the sum of Four Thousand Eighty-two Dollars ($4,082.00) as Tenant's contribution to Work Costs ("Tenant's Work Cost
Contribution"). Tenant shall pay Tenant's Work Cost Contribution to Landlord upon execution of the Lease. Tenant shall pay to Landlord, upon Tenant's receipt from Landlord of an invoice therefore, for
Work Costs in excess of the Tenant Improvement Allowance. All items of improvements, whether or not the cost thereof is covered by the Improvement Allowance, shall become the property of Landlord upon
expiration or earlier termination of the Lease and shall remain on the Premises at all times during the Term of this Lease, except as otherwise provided in Section 11.04 of the Lease. 

        3.2    Changes to Shell of Building.    If any amendment to the Final
Plans or supplement thereto shall require modifications to the Building shell or common areas, or removal, alteration or 

D-1

 

modification
of any existing improvements in the Premises the cost of the work caused by any such change, removal, alteration or modification shall be charged as a Change Order. 

4.    Construction of Improvements.    Following the approval by Landlord and Tenant
of the Final Plans and the issuance of building permits, Landlord shall commence and diligently proceed to have constructed the Improvements in a good and workmanlike manner. Landlord shall have no
liability to Tenant for damages or losses and, except as provided in Section 2.03 of the Lease, Tenant shall have no right to terminate or cancel this Lease, as a result of any failure or delay
in meeting such schedule or substantially completing the Improvements. 

5.    Work Costs.    "Work Costs" means: (a) the reasonable cost of space
planning, architectural and engineering services, including, but not limited to reimbursable costs; (b) costs of permits, fees and taxes (exclusive of real property taxes);
(c) inspecting costs; (d) the actual costs and charges for material and labor in constructing the Improvements; (e) Landlord's Contractor's fee for profit, overhead and general
conditions (including utilities, insurance, construction supervision, trash removal and clean-up). 

6.    Intentionally Left Blank.    

7.    Commencement Date and Substantial Completion.    

        7.1    Substantial Completion.    Landlord shall select a contractor
to construct the Improvements ("Landlord Contractor"). Landlord's Contractor shall be responsible for the construction of the Improvements substantially in accordance with the approved Final Plans.
The Improvements shall be deemed to be "Substantially Completed", and "Substantial Completion" shall be deemed to occur when Landlord's Contractor certifies in writing to Landlord and Tenant that
(a) Tenant has reasonable access to the Premises; and (b) Tenant's Contractor has substantially performed all of the Improvements work required to be performed under this Work Letter,
other than decoration and minor "punch list" items and adjustments which do not materially interfere with Tenant's access to or use of the Premises for Tenant's permitted business purposes. Landlord's
Contractor shall be responsible for remedying promptly all punch list items. 

        7.2    Commencement Date.    The Term of the Lease shall commence as
provided in Section 3.01 of the Lease. 

8.    Inspections.    Tenant and its employees and contractors shall have the right
during construction of the Improvements to enter the Premises during normal business hours to inspect the Improvements to determine if they conform to the Final Plans and this Work Letter. Tenant
shall not interfere with the performance of Landlord's Contractor. Tenant shall give Landlord prior written notice of Tenant's desire to enter the Premises for such purposes. 

9.    Tenant Work.    

        9.1    Performance of Tenant Work.    All finish work and decoration
and other work desired by Tenant and not included within the scope of the Improvements as set forth in the approved Final Plans, including, without imitation, computer systems, telephone systems,
telecommunications systems, Tenant's security systems, furniture and fixtures and other items (the "Tenant Work") shall be furnished and installed by Tenant. Tenant shall provide Landlord with the
certificate of insurance required by Section 5.05 of the Lease prior to entry in the Premises for the purpose of performing Tenant Work. 

        9.2    Risk of Loss.    All materials, work, installations and
decorations of any nature brought upon or installed in the Premises before the Term Commencement Date shall be at the risk of the party who introduces such materials or items onto the Premises.
Neither Landlord nor any party acting on Landlord's behalf shall be responsible for any damage or loss or destruction of such items brought to or installed in the Premises by Tenant or any employees,
agent, subcontractor or other party acting on 

D-2

 

behalf
of Tenant prior to such date, except in the event of active negligence or willful misconduct of Landlord, or any employee, agent, contractor or other party acting on behalf of Landlord. 

10.    Arbitration.    

        10.1    Dispute Resolution.    If any dispute arises in connection
with this Work Letter, such dispute shall be resolved in accordance with the arbitration provisions contained in the Lease. 

11.    Protection Against Liens.    Landlord agrees to fully pay and discharge all
claims for labor done and materials supplied in construction with the Improvements pursuant to the approved Final Plans. Landlord, at Landlord's sole cost and expense, shall defend, indemnify and hold
Tenant harmless from and against all claims, liabilities, demands, losses, expenses, damages, causes of action arising out of Landlords's failure to perform such obligation. 

D-3

   EXHIBIT E  

 RULES AND REGULATIONS  

        1.     The
sidewalks, entrances, lobby, elevators, stairways and public corridors shall be used only as a means of ingress and egress and shall remain unobstructed at all times.
The entrance and exit doors of all suites are to be kept closed at all times except as required for orderly passage to and from a suite. Loitering in any part of the Building or obstruction of any
means of ingress or egress shall not be permitted. Doors and windows shall not be covered or obstructed. 

        2.     Plumbing
fixtures shall not be used for any purposes other than those for which they were constructed, and no rubbish, newspapers, trash or other substances of any kind
shall be thrown into them. Walls, floors and ceilings shall not be defaced in any way and no one shall be permitted to mark, drive nails, screws or drill into, paint, or in any way mar any Building
surface, except that pictures, certificates, licenses and similar items normally used in Tenant's business may be carefully attached to the walls by Tenant in a manner to be prescribed by Landlord.
Upon removal of such items by Tenant any damage to the walls or other surfaces, except minor nail holes, shall be repaired by Tenant. 

        3.     No
awning, shade, sign, advertisement or notice shall be inscribed, painted, displayed or affixed on, in or to any window, door or balcony or any other part of the
outside or inside of the Building or the demised premises unless provided by Landlord or approved by Landlord in writing. No window displays or other public displays shall be permitted without the
prior written consent of Landlord. All tenant identification on public corridor doors beyond building standard will be installed by Landlord for Tenant but the cost shall be paid by Tenant. No
lettering or signs other than the name of Tenant will be permitted on public corridor doors with the size and type of letters to be prescribed by Landlord. The directory of the Building will be
provided exclusively for the display and location of Tenant only and Landlord reserves the right to exclude all other names therefrom. All requests for listing on the Building directory shall be
submitted to the office of Landlord in writing. Landlord reserves the right to approve all listing requests. Any change requested by Tenant of Landlord of the name or names posted on directory, after
initial posting, will be charged to Tenant. 

        4.     The
cost of any special electrical circuits for items such as copying machines, computers, microwaves, etc., shall be borne by Tenant unless the same are part of the
building standard improvements. Prior to installation of equipment Tenant must receive written approval from Landlord. 

        5.     The
weight, size and position of all safes and other unusually heavy objects used or placed in the Building shall be prescribed by Landlord and shall, in all cases, stand
on metal-plates of such size as shall be prescribed by Landlord. The repair of any damage done to the Building or property therein by putting in or taking out or maintaining such safes or other
unusually heavy objects shall be paid for by Tenant 

        6.     All
freight, furniture, fixtures and other personal property shall be moved into, within and out of the Building at times designated by and under the supervision of
Landlord and in accordance with such regulations as may be delivered from the Landlord's property manager and shall not interfere with any other tenant's conduct of business or quiet enjoyment of the
Project. In no event will Landlord be responsible for any loss or damage to such freight, furniture, fixtures or personal property from any cause. 

        7.     No
improper noises, vibrations or odors will be permitted in the Building. No person will be permitted to bring or keep within the Building any animal, bird or bicycle or
any toxic or flammable substances without Landlord's prior permission. No person shall throw trash, refuse, cigarettes or other substances of any kind any place within or out of the Building except in
the refuse containers provided therefor. Tenant shall not be permitted to interfere in any way with tenants or those having business with them. Landlord reserves the right to exclude or expel from the
Building any person who, in the 

1

 

judgment
of Landlord, is intoxicated or under the influence of liquor or drugs or who shall in any manner do any act in violation of the rules and regulations of the Project. 

        8.     All
re-keying of office doors or changes to the card access system, after occupancy, will be at the expense of Tenant. Tenant shall not re-key any
doors or change the card access system in any way without making prior arrangements with Landlord. 

        9.     Tenant
will not use the balconies, if any, for storage, barbecues, drying of laundry or any other activity which would detract from the appearance of the Building or
Project or interfere in any way with the use of the Building or Project by other tenants. 

        10.   If
Tenant uses the Premises after regular business hours or on non-business days, Tenant shall lock any entrance doors to the Building used by Tenant or take
such other steps as are necessary to secure the Building's doors immediately after entering or leaving the Building. 

        11.   Tenant
shall provide and cause all Tenant's employees to use protective floor mats under all desk chairs used in the Premises. 

        12.   If
Tenant requires telegraphic, telephonic, burglar or of similar services, it shall first obtain, and comply with, Landlord's instructions in their installation. 

        13.   Tenant
shall not waste electricity, water or air-conditioning and agrees to cooperate fully with Landlord to assure the most effective operation of the
Building's heating and air-conditioning. 

        14.   Landlord
reserves the right, exercisable without notice and without liability to Tenant, to change the name and street address of the Building. 

        15.   Tenant
shall not retail any goods on the Premises. 

        16.   Tenant
shall not install any radio or television antenna, loudspeaker or other device on the roof or exterior walls of the Building. Tenant shall not interfere with
radio or television broadcasting or reception from or in the Building, elsewhere. Tenant shall not install, maintain or operate upon the Premises any rending machine without the written consent of
Landlord. Canvassing, soliciting and distribution of handbills or any other written material, and peddling in the Building are prohibited, and each tenant shall cooperate to prevent same. 

        17.   Tenant
shall not use in any space or in the public hails of the Building any hand trucks except those equipped with rubber fires and side guards or such other
material-handling equipment as Landlord may approve. Tenant shall not bring any other vehicles of any kind into the Building. 

        18.   Tenant
shall not use in excess of Tenant's pro rata share of the Project's total parking spaces. Tenant shall not park its vehicles in any parking areas designated by
Landlord as areas for parking by visitors to the Project or in any other undesignated areas or parking areas assigned to other tenants. Tenant shall not leave vehicles in the Project parking areas
overnight nor park any vehicles in the Project parking areas other than automobiles, motorcycles, motor driven or non-motor driven bicycles or four-wheeled trucks. Landlord
may, in its sole discretion, designate separate areas for bicycles and motorcycles. 

        19.   Tenant
shall not use Project's or Building's interior or exterior common areas to conduct its business or as a waiting room. 

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

2

 

        21.   Tenant
shall be deemed to have read these Rules and Regulations and to have agreed to abide by them as a condition to his occupancy of the Premises and shall be
responsible for the observance of all the rules by Tenant's employees, agents, clients, customers, invitees and guests. 

3

   EXHIBIT F  

 LETTER OF CREDIT  

        
IRREVOCABLE STANDBY LETTER OF CREDIT 

	Number:	 	 
	 	 	

	Date:	 	 
	 	 	

	Amount:	 	 
	 	 	

	Expiration:	 	 
	 	 	

	Beneficiary:	 	Account Party:
	

R.B. INCOME PROPERTIES	
 	

	4350 La Jolla Village Drive, Suite 150	 	

	San Diego, CA 92111	 	

        We
issue our Irrevocable Letter of Credit No.    in favor of R.B. INCOME PROPERTIES, a California limited partnership its successors and assigns for the amount of
                        Dollars
($                        ). We undertake to honor your draft for any sum or sums not to exceed a total
of                        Dollars
($                        ) in favor of said beneficiary when
accompanied by the following: a letter from the general partner of R.B. INCOME PROPERTIES stating that R.B. INCOME PROPERTIES is authorized to draw upon this Letter of Credit according to the terms of
the lease agreement with the Account Party as "Tenant". 

        It
is a condition of this Letter of Credit that it shall remain enforceable against us for a period of sixty (60) months without amendment. 

        The
draft must be marked "Drawn under                        Letter of Credit
No.                        dated                
        , 200    .
 

        There
are no conditions of this Letter of Credit. Except so far as otherwise stated, this Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (1983
Revision, International Chamber of Commerce, Publication No. 400). 

	 	 	

	 	 	

	 	 	By:	 	 
	 	 	 	 	

	 	 	By:	 	 
	 	 	 	 	

1

   EXHIBIT G  

 ADDITIONAL LEASE PROVISIONS  

19.    ADDITIONAL LEASE PROVISIONS.    

        19.01    Rental Abatement.    Provided Tenant is not in default in the
performance of any of it's obligations under this Lease on any date a payment of Monthly Base Rent or Additional Rent is due, the Monthly Base Rent for the second through the fifth month of the Term
of the Lease shall be abated in an amount equal to one-half (1/2) of the Monthly Base Rent for such month. 

        19.02    Letter of Credit.    In addition to the Security Deposit and
as additional security hereunder, in the event Tenant fails, at any time during the Term (including any Extensions) to maintain cash or cash equivalent reserves of at least Seven Million Dollars
($7,000,000) (the "Cash Requirement"), then Tenant shall, within three (3) days after the date the Cash Requirement fails to be satisfied, deliver to Landlord written notice thereof ("Tenant's
Cash Requirement Notice") and Tenant shall, within ten (10) days of Tenant failing to meet the Cash Requirement, either (a) deliver to Landlord a letter of credit in an amount equal to
one half of the Annual Base Rent for the first Lease Year, or (b) provide notice to Landlord and evidence satisfactory to Landlord that the Cash Requirement has been reestablished as of the
date of such notice. The letter of credit shall be substantially in the form and of the substance of Exhibit F attached hereto, and issued by a financial institution reasonably acceptable to
Landlord. In the event that Tenant is not in default under this Lease and Tenant can demonstrate by the delivery to Landlord of its audited financial statements prepared in accordance with generally
accepted accounting principles, consistently applied, that Tenant has cash or cash equivalent reserves of not less than Ten Million Dollars ($10,000,000), the letter of credit will be surrendered by
Landlord. Tenant shall be entitled to replace any such letter of credit with a new letter of credit that satisfies such conditions, and upon delivery of such replacement letter of credit by Tenant to
Landlord, Landlord shall deliver the old letter of credit to Tenant and cooperate with Tenant in terminating the old letter of credit, including by authorizing a full exoneration and release of the
letter of credit. Landlord shall be entitled to draw on the letter of credit if Tenant has not replaced the letter of credit and the letter of credit is due to expire within ten (10) clays and
before the end of the term of the letter of credit. If Landlord so draws on the letter of credit, then Landlord shall hold the letter of credit proceeds as an additional security deposit; provided,
however, that if Tenant subsequently delivers a letter of credit meeting the requirements set forth above, then Landlord shall immediately release such proceeds to Tenant. Upon any default by Tenant
which has not been cured within the applicable time period after
any notice required by this Lease, including specifically but without limitation Tenant's obligation to pay rent or abide by any of its obligations under this Lease, Landlord shall be entitled to draw
upon said letter of credit in the amount of the default(s) by the issuance of Landlord's sole written demand to the issuing financial institution. Any such draw shall be without waiver of any rights
Landlord may have under this Lease or at law or in equity as a result of the default. Tenant shall submit to Landlord annually during the Term (including any Extension) on or before the first day of
the fourth (4th) calendar month of Tenant's fiscal year, Tenant's audited financial statements for the preceding fiscal year prepared in accordance with generally accepted accounting principles,
consistently applied, or if such audited statement are not available, copies of complete financial statements of Tenant certified by the president and chief financial officer of Tenant to be true and
complete. Tenant shall also submit to Landlord monthly during the Term (including any Extension) on or before the fifteenth (15th) day of the each calendar month of copies of complete financial
statements of Tenant certified by the chief financial officer of Tenant to be true and complete. 

1

   ESTOPPEL CERTIFICATE  

	As of Date:	 	May 16, 2005
	Landlord:	 	R.B. Income Properties, L.P.
	Address:	 	4350 La Jolla Village Drive, Suite 150, San Diego, CA 92122
	Tenant:	 	NovaCardia, Inc., a Delaware corporation
	Address:	 	12651 High Bluff Drive, Suite 200, San Diego, CA 92130
	Lender:	 	Allianz Life Insurance Company of North America, a Minnesota corporation
	Address:	 	c/o Allianz of America, Inc., 55 Greens Farms Road, P.O. Box 5160, Westport, CT 06881 Attn: Real Estate Dept.
	Mortgaged Property:        Del Mar Corporate Plaza
	Premises:	 	12651 High Bluff Drive, Suite 200, San Diego, CA 92130

        It
is understood the below referenced Lease is collaterally assigned to Lender by Landlord, by Assignment of Rents and Leases ("Assignment"), as additional security for a mortgage loan
("Mortgage") secured by the above referenced Mortgaged Property. Accordingly, Tenant as lessee of the above referenced Premises under the Lease, hereby certifies and confirms to Lender, Landlord, and
their assigns, the following: 

	1.
	Lease
Date: July 29, 2004 Lease Amendment Date(s): None

Date of Commencement: August 1, 2004 Date of Expiration: September 30, 2007

Renewal Options: One (1) Three (3) year

Security Deposit: $10,070.00 Square Feet: 3,873 

        2.     A
true and correct copy of the Lease and all amendments currently in effect ("Lease") are attached hereto. The Lease constitutes the entire understanding between Tenant
and the Landlord and is currently in full force and effect. Tenant is the only party having any right to possession or use of the Premises and no other party is in possession thereof. No sublease
agreement, pursuant to which any sublessee may now or hereafter have any right to possession or use of the Premises or any part thereof, presently exists. 

        3.     Tenant
is currently paying the full rental payable under the Lease and no payment of rents or other charges due or to become due under the Lease has been made more than
one month in advance of its due date. If any rent credit or free rent is applicable with respect to the Lease, such rent credit or free rent will expire
on                                         
       ,                (if blank,
none). Tenant agrees it will not pay any rent under the Lease more than one month in advance of its due date. 

        4.     On
and as of the date hereof, neither Tenant, nor to the best of the Tenant's knowledge, Landlord, is in default in the performance of its obligations under the Lease,
and Tenant has no claim of breach, counterclaim, lien or offset under the Lease against the Landlord. 

        5.     Tenant
is solvent and free from bankruptcy and other reorganization proceedings and assignments for the benefit of creditors. 

        6.     Tenant
acknowledges the assignment of the Landlord's rights under the Lease to the Lender pursuant to the Assignment, and agrees that Tenant will pay rent under the Lease
directly to the Lender upon receipt of notice from the Lender stating that the Lender has exercised its option to require that payments under the Lease be made directly to the Lender. The Tenant
acknowledges that the Lender shall have no obligation to assume any obligations or duties of the Landlord under the Lease except arising after Lender obtains title to the Mortgaged Property. 

        7.     Tenant
has taken possession of the Premises and affirms that such property, in its present condition, is satisfactory for the Tenant's use and complies fully with the
terms of the Lease. 

        8.     Tenant
has no option to purchase the Premises pursuant to the Lease or otherwise. 

1

 

        9.     Tenant
acknowledges the Lease is subordinate to Lender's Mortgage and Assignment and the Lease may be amended or altered only with the written consent of Lender. Neither
Landlord nor Tenant shall permit the Lease to become subordinate to the lien of any mortgage or security agreement, other than Lender's lien. 

        10.   Tenant
agrees to not seek to terminate the Lease by reason of any act or omission of the Landlord until Tenant shall have given written notice of such act or omission to
Lender and a reasonable period to remedy such act or omission (Lender having the right but not the obligation to remedy such act or omission). 

        11.   If
Lender or its assigns shall obtain title to the Mortgaged Property, Lender agrees to not disturb Tenant in its occupancy and use of the Premises provided Tenant is
not in default under the Lease and Lender shall not be liable for any prior act or omission of Landlord; nor bound by any rent or additional rent which Tenant may have paid more than one month in
advance; nor be bound by any amendment or modification of the Lease made without Lender's consent; nor be liable for the return of any security deposit or other deposits unless actually received by
Lender; nor be bound by any offsets or defenses which Tenant may have against Landlord. 

        12.   Any
notices which any party hereto may desire or may be required to give to any other party shall be in writing and the mailing thereof by certified mail, or equivalent,
to the addresses as set forth above, or to such other places as any party hereto may by notice in writing designate shall constitute service of notice hereunder. 

        IN
WITNESS WHEREOF, the undersigned has caused this Estoppel Certificate to be executed by a duly authorized official as of the date first above written. 

	 	 	NOVACARDIA, INC. Tenant
	

 	
 	

By:	
 	

/s/ Randall E. Woods

	

 	
 	

 	
 	

Its:	
 	

CEO

2

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Exhibit 10.9QuickLinks
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Exhibit 10.10    
    

        ***Text Omitted and Filed Separately

Pursuant to a Confidential Treatment Request

Under C.F.R. §§ 200.80(b)(4) and Rule 406

of the Securities Act of 1933, as amended.  

 MASTER CLINICAL RESEARCH AGREEMENT  

        This Master Clinical Research Agreement ("Agreement") is entered into this 1st day of June, 2006 and is effective
as of the 5th day of January, 2006, ("Effective Date") by and between NovaCardia, Inc. ("Sponsor"), a Delaware corporation with its principal place of
business located at 12651 High Bluff Drive, Suite 200, San Diego, CA 92130, and Duke University, for and on behalf of its Duke Clinical Research Institute
("Duke"), a nonprofit, research, education and healthcare institution with offices at 2400 Pratt Street, Durham, North Carolina 27705 (individually,
each a "Party" and together, the "Parties"). 

R E C I T A L S  

        WHEREAS, Sponsor is engaged in the business of clinical research and development and may from time to time desire
to engage other parties to participate in its clinical research; and 

        WHEREAS, Duke may from time to time desire to participate in clinical research designed to determine the safety and/or efficacy of a drug
or device in human subjects thereby advancing medical care (a "Study"); and 

        WHEREAS, Duke has the facilities and the personnel with the requisite skills, experience and knowledge as an Academic Research
Organization to undertake such research as a Coordinating Center for its Studies; and 

        WHEREAS, Sponsor and Duke desire to enter into this Agreement to provide the terms and conditions upon which Sponsor may engage Duke to
participate in Studies as may be mutually agreed between Duke and Sponsor; and 

        WHEREAS, the Studies contemplated by this Agreement shall be of mutual interest and benefit to Sponsor and Duke, and shall further the
instructional and research objectives of Duke in a manner consistent with its status as a nonprofit research, education and healthcare institution. 

        NOW, THEREFORE, in consideration of the foregoing facts and the mutual covenants set forth herein, the Parties hereto agree as follows: 

1.     Scope of Work.  

        1.1.    Study Addenda.    The research to be conducted by Duke under this Agreement shall be mutually agreed by the
Parties and set forth in one or more Study Addenda (each a "Study Addendum"). Each Study Addendum shall be in a form substantially like that attached
hereto as Exhibit A and shall include detailed information concerning the given Study, including a description of the specific research to be conducted, 

 

project
milestones and target completion dates (collectively, the "Scope of Work"), a detailed budget
("Budget"), and a schedule of payments related to the Scope of Work and Budget ("Payment Schedule").
Except as otherwise stated therein, each Study Addendum shall be subject to the terms and conditions of this Agreement. Each Study Addendum shall be signed by an authorized representative of each
Party prior to initiation of any work under that Study Addendum. Nothing in this Agreement shall obligate either Party to enter into any Study Addendum. Duke agrees to use commercially reasonable
efforts to perform its obligations as set forth in this Agreement and as set forth in each Study Addenda. 

        1.2.    Transfer of Obligations.    Pursuant to 21 CFR § 312.52, this Agreement, the Study Addenda
and the Appendices annexed hereto shall serve as the written description of the obligations of Sponsor being transferred to Duke under the terms and conditions hereof. 

        1.3.    Study Chair(s)    The Studies governed by this Agreement shall each be under the direction of a"Study Chair"
or "Co- Chairs", who will be named in the applicable Study Addendum. The Study Addendum shall also name a faculty member at Duke who will coordinate the clinical activities. 

        1.4.    Principal Investigators and Participating Institutions.    Duke shall coordinate the Study at clinical sites
conducting the Study ("Participating Institutions"). Duke shall enter into an agreement with each Participating Institution containing terms consistent
with those in this Agreement and the applicable Study Addendum. Each such agreement shall name the investigator at such site with principal responsibility for the Study at such site (the
"Principal Investigator"). Duke shall exercise all reasonable efforts to ensure that the data generated by the Participating Institutions shall be
coordinated, analyzed and reported in an efficient and effective manner and in a format fully usable by Sponsor. Prior written approval by Sponsor of each Principal Investigator (and any replacement
thereof) shall be required. 

        1.5.    Supply and Use of the Study Material.    Sponsor shall provide Duke with sufficient amounts of any drug,
device, placebo, or comparator drug or device to be investigated in a Study ("Study Material") to perform each Study on a timely basis. Duke agrees that
the Study Materials shall be used only for the Study. Any unused Study Material remaining at the end of a Study shall be disposed of or returned to Sponsor, at Sponsor's expense and in accordance with
Sponsor instructions. 

        1.6.    Adverse Experience.    Duke shall promptly, in accordance with applicable laws and regulations, advise Sponsor
of any adverse reactions or side 

2

 

effects
occurring during the conduct of any Study that become known to Duke. 

        1.7.    Approval of Subcontractors.    Duke may not subcontract any of the services under a Study Addendum without
first obtaining NovaCardia's proper written consent. Duke will at all times be responsible for the compliance of its permitted subcontractors with the terms and conditions of an agreement between Duke
and each subcontractor, which shall be consistent with the terms of this Agreement, and for timely fulfilling its obligations to such subcontractor. 

2.     Inspections and Audits; Records.  

        2.1    Regulatory Inspections.    Authorized representatives of Sponsor may, upon reasonable advance notice, and
representatives of the U.S. Food and Drug Administration (the "FDA") or any other international health agency having regulatory authority over the
subject matter of a Study Addendum may, at reasonable times, examine and inspect the facilities being used to conduct a Study, including the Participating Institutions, and review all records,
procedures and other materials (including Case Report Forms ("CRFs")and subject medical records to the extent allowed by the informed consent document
or other legal disclosure authorization) related to a Study, and have access to the Principal Investigator and the Participating Institutions to discuss a Study. If a Participating Institution is
found deficient in any manner by Sponsor or Duke and reasonable efforts to correct the deficiency are ineffectual, Duke shall either terminate that Participating Institution's continued participation
in the Study or take such corrective actions as may be agreed between Sponsor and Duke. It is further agreed that if Duke is notified that a Study is to be the subject of an audit, Duke shall promptly
inform Sponsor. If a formal response to any audit is required, Duke agrees to permit representatives of Sponsor to review and comment on such response. Duke will promptly provide Sponsor with a copy
of the results of any regulatory inspection involving the facilities being used to conduct a Study. 

        2.2.    Compliance Audits.    Sponsor has the right to conduct on-site Study compliance audits of Duke and
Participating Institutions, which such audits may be monitored by Duke, at mutually agreed upon times. Audits shall be at no additional cost to Sponsor, provided such audits are at mutually agreed
intervals and do not significantly alter Duke's ability to meet any deadlines delineated in this Agreement or any Study Addendum. Sponsor may only request records or documents that are within the
scope of the documents Duke or the Participating Institution are required to maintain under the obligations of this Agreement or Study Addendum. 

3

 

        2.3    Review by Sponsor.    In addition to Sponsor's rights to review financial records under Section 4.7, Sponsor or
Sponsor's representatives shall, upon reasonable notice to Duke, have access to and be permitted to review all documents, information, data and materials in the possession or control of Duke relating
to the research conducted under any Study Addendum. 

        2.4    Maintenance of Records.    Duke shall maintain all records for each Study, other than the financial records
referenced in Section 2.3, until the later of: (a) [. . .***. . .] years
following the date a New Drug Application or Biologics License Application is approved for the Study Drug that is the subject of any Study; or (b)
[. . .***. . .] years after the Investigational New Drug Application for such Study Drug is terminated or withdrawn, but in
any case no longer than [. . .***. . .] years after the end of a Study, at which time Duke will notify Sponsor to direct
Duke to either destroy the records or return the records to Sponsor at Sponsor's expense. Duke shall not destroy any such records until it has obtained Sponsor's prior written permission to do so. 

3.     Debarment.  

        Duke hereby certifies that it has not been debarred under Article 306 of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §335a(a) or (b). In the
event that Duke becomes debarred, Duke agrees to notify Sponsor immediately. Duke hereby certifies that it has not and shall not use in any capacity related to a Study the services of any individual,
corporation, partnership, or association which has been debarred under Article 306 of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §335a(a) or (b). In the event that Duke becomes
aware of or receives notice of the debarment of any individual, corporation, partnership, or association providing services to Duke which relate to the research conducted under this Agreement, Duke
agrees to notify Sponsor immediately. 

4.     Payment.  

        4.1.    Amount.    Sponsor shall compensate Duke according to the Budget and Payment Schedule attached to each Study
Addendum. Duke agrees its fees with respect to any Study will not exceed the corresponding Budget without prior written approval of Sponsor. 

        4.2.    Payee.    Any payment due from Sponsor set forth in the Study Addendum shall be tendered in the form of a
check payable to Duke University at one of the following addresses, or such alternative address as may be stated in a Study Addendum: 

	 
	United States Postal Service:
 
	 	express service:

	 	Attn: Accounts Receivable

General Accounting—9th Floor	 	Attn: Accounts Receivable

General Accounting—9th Floor

***Confidential Treatment Requested  

4

 

	 	Duke Clinical Research Institute

P.O. Box 17969

Durham, North Carolina 27715	 	Duke Clinical Research Institute

2400 Pratt Street

Room 0311 Terrace Level

Durham, North Carolina 27705

Duke
University's Tax ID Number is 56-0532129. 

        4.3.    Delays.    In the event of Force Majeure (as defined in Section 21 herein) the Parties will negotiate in good
faith with respect to cost increases or decreases to the Budget and Payment Schedule resulting from said Force Majeure. 

        4.4.    Pass Through Expenses.    Any expenses listed as a pass through cost in the Budget or Payment Schedule
attached to each Study Addendum shall be reimbursed at actual cost plus a [. . .***. . .]-percent
([. . .***. . .]%) pass through cost.

        4.5.    Payment of Invoices.    Unless otherwise set forth in a Study Addendum or Payment Schedule, Duke shall invoice
Sponsor on a monthly basis for activities set forth in the applicable Budget. Sponsor shall be responsible for paying undisputed invoices within thirty (30) calendar days of receipt. Sponsor shall
notify Duke of any disputed invoices within twenty (20) calendar days of receiving such invoice. Provided that Sponsor pays undisputed amounts as set forth above, Duke shall continue to conduct
research during which time the Parties shall use commercially reasonable efforts to resolve the disputed amount. In the event that the Parties cannot resolve the disputed amount within twenty (20)
calendar days of Duke receiving the invoice dispute notice from Sponsor, the matter shall be handled pursuant to Section 19 herein. Both Parties agree to continue good faith efforts to resolve the
dispute prior to such stoppage of work. 

        4.6.    Default.    Should Sponsor default on any of its payment obligations, other than with respect to amounts for
which Sponsor has a bonafide dispute handled pursuant to Section 4.5, Sponsor shall pay to Duke reasonable attorneys fees plus all other reasonable expenses incurred by Duke in exercising any of its
rights and remedies upon default. 

        4.7.    Records Audit.    Duke will maintain true and complete financial records relating to the services provided
hereunder. Sponsor and/or an independent accounting firm appointed by Sponsor, at Sponsor's sole expense, shall have the right to audit Duke's financial records relating to each Study during the time
such Study is ongoing under this Agreement and for [. . .***. . .] years thereafter, provided, that any such audits shall be
conducted upon reasonable advance notice to Duke and during Duke's normal business hours. 

***Confidential Treatment Requested  

5

 

 5.     Modifications and Amendments.  

        This Agreement or a Study Addendum may be amended from time to time upon the written agreement of the Parties. The Parties agree to exert good faith efforts to
incorporate any revisions required by law, FDA or other international health authorities. Any changes to a Scope of Work or Budget and/or Payment Schedule in a Study Addendum after a Study Addendum is
executed shall be incorporated into the Study Addendum by means of a change order ("Change Order"). Duke shall be under no obligation to commence work
on any change to the Scope of Work until the Change Order is executed. 

6.     Data.  

        6.1    Clinical Data.    All clinical data, including CRFs and other information generated during a Study (the
"Study Data") shall be recorded in a timely, accurate, complete and legible manner as further described in the applicable Study Addendum and shall be
promptly and fully disclosed to Sponsor. Sponsor shall own all Study Data, which shall be freely usable by Sponsor. Sponsor shall ensure that Duke receives data transfers and/or a final data set of
any Study Data developed and/or maintained by Sponsor or any third party in privity of contract with Sponsor, including but not limited to a pharmacy and/or randomization vendor, as required for Duke
to fulfill its obligations and exercise its rights hereunder. Duke shall be free to maintain copies of all such materials and to use such materials for its own teaching, research, education, clinical
and, subject to Section 9 of this Agreement, publication purposes, including the incorporation of such data into its common data registry of pooled data from multiple sources. 

        6.2    Regulatory Filings.    Any and all findings and Study Data obtained as a result of a Study shall be
communicated to Sponsor which shall be free to incorporate such findings in any regulatory filing concerning the Study Materials. Duke understands and agrees that it shall have no ownership, license
or access rights in, or to, such regulatory filings solely based upon the inclusion of such findings and/or Study Data therein, nor shall Duke acquire any interest whatsoever in the Study Materials as
a result of performing a Study. 

7.     Inventions.  

        7.1    Prior Inventions.    It is recognized and understood that certain existing inventions and technologies are the
separate property of Sponsor or Duke and are not affected by this Agreement or any Study Addendum, and neither Party shall have any claims to or rights in such prior, separate inventions and
technologies, or improvements thereto, except only to the extent required for the conduct of the Study. 

6

 

        7.2    Title.    Inventorship of new inventions, developments, or discoveries arising out of the Study (hereinafter
"Invention") shall be determined in accordance with U.S. patent law or by mutual agreement if the invention is not patentable. All rights, title and
interest in and to any Invention that is not a Sponsor Invention, as defined below, shall be based upon inventorship, with Sponsor holding sole title to any Invention made solely by Sponsor personnel,
Duke holding sole title to any Invention made solely by Duke personnel, and the Parties holding joint title to any Invention made jointly by their personnel during the conduct of a Study conducted
under a Study Addendum. Duke shall promptly disclose to Sponsor in writing on a confidential basis any Invention made solely by Duke personnel or jointly with Sponsor personnel. Sponsor shall promptly
disclose to Duke on a confidential basis any Invention jointly made by Sponsor personnel together with Duke personnel. 

        7.3    Sponsor Inventions.    All rights, title and interest in and to any Invention arising out of the Study and
representing a reduction to practice of Sponsor's documented prior conception shall be owned solely by Sponsor ("Sponsor Invention"). Sponsor shall
reimburse Duke for any reasonable expenses incurred at Sponsor's request to secure title in Sponsor's favor, and/or legal protection for Sponsor, with respect to any such Sponsor Invention. 

        7.4    Grant of Option.    Duke hereby grants Sponsor, without option fee other than the consideration of the Study
sponsored herein and the reimbursement of all patent expenses related to the Invention incurred by Duke prior to and during the option period, an option to acquire an exclusive, worldwide, royalty-
bearing license to Duke's rights to any Duke-owned Invention, or Duke's interest in any jointly developed Invention, which option shall extend for
[. . .***. . .] after Sponsor's receipt of the applicable Invention disclosure. If Sponsor notifies Duke in writing of its
exercise of the option within the option period, then the Parties will have [. . .***. . .] after such notice to negotiate
in good faith a license agreement on commercially reasonable terms. If Sponsor does not exercise this option, or notifies Duke that it will not exercise this option, or if the Parties fail to sign a
license agreement within said [. . .***. . .] negotiation period, then Sponsor shall no longer have any claim or interest in
Duke's rights in the subject Invention, except that if the Parties are unable to reach agreement on licensing terms, then for a period of
[. . .***. . .] after the negotiation period, Duke will not offer to license the Duke Invention to a third party on terms
more favorable to the licensee than those last offered to Sponsor without first giving Sponsor [. . .***. . .] to accept
such terms. 

***Confidential Treatment Requested  

7

 

        7.5    Reserved Rights.    Duke shall reserve the right to use any Invention licensed by Duke
to Sponsor for Duke's research, educational, clinical and publication purposes. 

8.     Confidential Information.  

        8.1    Confidential Information.    Confidential Information shall mean all information provided by one Party to the
other and clearly identified as "Confidential" by the transmitting Party at the time of disclosure. If such transmittal occurs orally, the transmitting Party shall promptly summarize such transmittal
in writing, mark and identify it as confidential, and provide such record to the other Party within thirty (30) days after the date of disclosure. Specifically excepted from Confidential Information
is all information that: (a) was previously known by the receiving Party; (b) is publicly disclosed except by breach of this Agreement either prior to or subsequent to the receiving Party's receipt of
such information; (c) is rightfully received by the receiving Party from a third party without an express obligation of confidence; or (d) is independently developed by personnel of the receiving
Party without use of or reliance upon Confidential Information of the other Party. 

        8.2    Nondisclosure.    Subject to Section 9 of this Agreement, the receiving Party shall not disclose Confidential
Information of the Disclosing Party to any third party without prior written authorization from the disclosing Party. This provision shall remain in effect for
[. . .***. . .] years following the termination of the Study Addendum under which the Confidential Information was
disclosed. 

        8.3    Subject Information.    Each Party shall be provided with subject information as allowed by law and the subject
consent and authorization documents and shall maintain the confidentiality of all such subject information, unless specifically required to disclose such information by law. 

        8.4    Legally Required Disclosure.    Nothing set forth herein shall operate to prohibit or prevent a Party from
disclosing Confidential Information pursuant to any judicial or government request, requirement or order, provided that the disclosing Party (a) takes reasonable steps to provide the other Party with
sufficient prior notice in order to allow the other Party to contest such request, requirement or order and (b) reasonably cooperates with such efforts of the other Party. 

        8.5    Use of Name.    No Party shall use the name, trademarks, logos, physical likeness or other symbol of any other
Party, or its employees, for any marketing, advertising or public relations purposes without the prior written consent of the affected Party. 

***Confidential Treatment Requested  

8

 

 9.     Publications.  

        Sponsor recognizes the importance of communicating medical research and scientific data and its obligations to subjects enrolled in a Study. Upon initiation of
any Study hereunder, Sponsor will appoint a publications committee (the "Publications Committee") in accordance with the Publications Committee charter example attached hereto as  Exhibit C. Sponsor
shall register any Study conducted under this Agreement, if applicable, with www.clinicaltrials.gov, or an equivalent registry
compliant with the requirements of the International Committee of Medical Journal Editors. 

10.   Certifications.  

        10.1.    No Inconsistent Obligations or Constraints Upon Duke.    Duke certifies that it is qualified and permitted to
enter into this Agreement and that the terms of this Agreement are not inconsistent with its other contractual arrangements. Duke further certifies that it is not constrained by any existing agreement
in providing complete disclosures to Sponsor concerning obligations to be performed under this Agreement. 

        10.2.    Due Authorization.    Each Party certifies that (a) it has full power and authority to enter into this
Agreement, (b) this Agreement has been duly authorized, and (c) this Agreement is binding upon it. 

        10.3.    No Pending Litigation; FDA Warnings.    Duke certifies that: (a) to Duke's knowledge (after reasonable
inquiry), the Duke Clinical Research Institute is not currently involved in any litigation, and Duke is not aware of any pending litigation proceedings, in either case relating to Duke Clinical
Research Institute's role in the conduct of any clinical trial for any third party; and (b) to Duke's knowledge (after reasonable inquiry), the Duke Clinical Research Institute has not received any
warnings from the FDA (or any equivalent oversight body in any country other than the United States) relating to services it has provided to third parties during the conduct of a clinical trial. 

11.   Medical Care Costs.  

        Sponsor shall be responsible for any emergent subject medical care costs that are a direct result of a subject's participation in a Study that are not covered by
third party payers and that are not the result of negligence, recklessness, failure to follow the applicable Study Addendum or any willful malfeasance by Duke or any Principal Investigator or
Participating Institution. 

12.   Indemnification.  

9

   
        12.1    Indemnification by Sponsor.    Sponsor agrees to indemnify, hold harmless and defend Duke, its trustees,
officers, employees, and agents (collectively, "Duke Indemnitees"), from and against any and all claims, suits, losses, damages, costs, fees, expenses
(including reasonable attorneys' fees), and other liabilities (the "Liabilities") suffered as a result of third party claims, both government and non
government, to the extent resulting from or arising out of this Agreement or any Study Addendum carried out pursuant to this Agreement. Notwithstanding the forgoing, Sponsor shall not be liable to the
extent the Liabilities result from (i) Duke's failure to obtain applicable prior approvals, including without limitation prior approval of an Institutional Review Board
("IRB") in accordance with the IRB's approved procedures; (ii) a failure by any of the Duke Indemnitees to follow the Study Addendum, or any other
written instructions from Sponsor in any material respect, or to comply with federal, state, local or international health authority law or regulation in connection with the applicable Study; or (iii)
negligence or willful misconduct in connection with a Study on the part of any Duke Indemnitee. For the avoidance of doubt, it is expressly understood that Principal Investigators and Participating
Institutions are not Duke Indemnitees as defined herein. 

        12.2    Indemnification by Duke.    Duke agrees to indemnify, hold harmless and defend Sponsor, its directors,
officers, employees, and agents (collectively, the "Sponsor Indemnitees"), from and against any and all Liabilities suffered as a result of third party
claims, both government and non-government, to the extent the Liabilities result from (i) Duke's failure to obtain applicable prior approvals; (ii) a failure by any Duke Indemnitees to follow the
Study Addendum, or any other written instructions from Sponsor in any material respect, or to comply with federal, state, local or international health authority law or regulation in connection with
the applicable Study; or (iii) negligence or willful misconduct in connection with a Study on the part of any Duke Indemnitee. Notwithstanding the forgoing, Duke shall not be liable to Sponsor under
this Section 12.2 in the event of Sponsor's breach of this Agreement or a Study Addendum, or the negligence, or willful misconduct in connection with a Study on the part of any Sponsor Indemnitee. 

        12.3    Indemnification Process.    Each Party's agreement to indemnify, hold harmless and defend under this Article
12 is conditioned upon the indemnified party: (a) providing written notice to the indemnifying Party of any claim, demand or action arising out of the indemnified activities promptly after the
indemnified party has knowledge of such claim, demand or action, (b) permitting the indemnifying Party to assume full responsibility and authority to investigate, prepare for and defend against such
claim, demand or action, (c) assisting the indemnifying Party, at the indemnifying Party's reasonable expense, in the investigation or, 

10

 

preparation
for and defense of any such claim and demand, and (d) not compromising or settling such claim, demand or action without the indemnifying Party's prior written consent. The indemnifying
Party shall not enter into a settlement agreement that admits fault on the part of any indemnified party without prior written permission, such permission not to be unreasonably withheld.
Notwithstanding the foregoing, the payment of cash shall not in and of itself constitute an admission of fault. 

        12.4    Indemnification for Participating Institutions and Principal Investigators.    Sponsor agrees to indemnify,
defend and hold harmless Participating Institutions and Principal Investigators, and their employees, officers, directors and agents from any claims, demands, losses, costs or expenses (including
reasonable attorneys' expenses) arising as a direct result of a Study. The form of that indemnification shall, if requested by the Participating Institution, be in a document addressed from Sponsor to
each Participating Institution participating in a Study. Any such form shall be approved in advance by Sponsor, and must be executed by Sponsor. 

        12.5    Disclaimer of Warranty.    Duke and Sponsor understand and agree that the conduct of a Study is experimental
in nature and that no warranty, either expressed or implied, is made regarding the results of any research conducted under a Study Addendum. 

13.   Insurance.  

        The Parties hereto warrant that they shall maintain during the term hereof policies of liability insurance with minimum coverage as follows: 

        13.1    As to Sponsor:    Sponsor represents that it carries Commercial General Liability Insurance of not less than
three million dollars ($3,000,000) per occurrence combined single limit and three million dollars ($3,000,000) annual aggregate. Sponsor represents that it carries Products and Completed Operations
Liability Insurance of not less than five million dollars ($5,000,000) per occurrence combined single limit and five million dollars ($5,000,000) annual aggregate. If such insurance or program of
self-insurance is written on a claim-made form, coverage shall survive for a period of not less than three (3) years following termination of this Agreement. Coverage shall provide for a retroactive
date of placement coinciding with or prior to the Effective Date. Sponsor agrees to furnish to Duke a certificate of insurance or evidence of self-insurance reasonably acceptable to Duke indicating
the required coverage upon receipt of written request therefor from Duke. 

        13.2    As to Duke:    Duke represents that it carries Comprehensive Form General and Professional Liability Insurance
with limits of not less than three million dollars ($3,000,000) per occurrence combined single limit and ten 

11

 

million
dollars ($10,000,000) annual aggregate. If such insurance or program of self-insurance is written on a claim-made form, coverage shall survive for a period of not less than three (3) years
following termination of this Agreement. Coverage shall provide for a retroactive date of placement coinciding with or prior to the Effective Date. Duke agrees to furnish to Sponsor a certificate of
insurance or evidence of self-insurance reasonably acceptable to Sponsor indicating the required coverage. 

14.   Compliance with Law.  

        Each Study shall be conducted in compliance with all applicable federal, state, local, international health authority and institutional laws, regulations and
guidelines, including, without limitation, the Health Insurance Portability and Accountability Act ("HIPAA") of 1996, FDA regulations, International
Conference on Harmonization guidelines, and all requirements imposed by legally constituted IRBs. The Parties agree to collect, use and disclose information with respect to any Study subject only in
accordance with the informed consents and legal disclosure authorizations obtained from such Study subject as part of the Study, unless otherwise required by law. 

15.   Term.  

        Term.    The term of this Agreement shall commence as of the Effective Date and terminate upon the later of five (5) years from
the Effective Date or completion of all research pursuant to all Study Addenda hereto, unless terminated sooner in accordance with the terms herein. 

16.   Termination.  

        16.1    Termination of Study Addendum by Sponsor.    Any Study Addendum may be terminated by Sponsor for good cause
upon ninety (90) days written notice to Duke. Good cause shall include, without
limitation, identification of any medical risk to Study subjects, a showing that the Study Drug is not effective, receipt of notice of regulatory action by the FDA (or any equivalent oversight body in
a country other than the United States) terminating or suspending a Study. 

        16.2    Suspension of Work.    Any Study may be suspended at any time by Sponsor or any governmental agency if, in the
good medical judgment of Sponsor or any governmental agency, it is determined to be medically appropriate to do so. 

        16.3    Termination for Breach.    This Agreement or any Study Addendum may be terminated by either Party if the other
Party materially breaches this Agreement and fails to cure the breach within thirty (30) days after receipt 

12

 

of
written notice from the non-breaching Party, specifying in detail the nature of such breach. 

        16.4    Effects of Early Termination of Agreement or Study.    

        (i)    The
Parties' Transition Obligations on Early Termination. Both Duke and Sponsor recognize that early termination of this Agreement or any Study Addendum requires
coordination between the Parties to ensure subject safety, continuity of treatment if appropriate, compensation for activities conducted and expenses incurred by Duke in furtherance of this Agreement
or the Study Addendum, and compliance with all applicable regulations. Upon notice of early termination of this Master Agreement or any Study Addendum hereto, the Parties shall cooperate to provide
for an orderly cessation of the Study upon the effective date of termination stated in the notice of termination (the "Termination Date"). Each Party
further agrees to take no action or forego taking action if such action or forbearance would in any manner jeopardize subject safety or violate or cause the other Party to violate any applicable laws.
In addition, Duke shall conduct such research activities as are reasonably necessary, and requested by Sponsor, in connection with the orderly wind-down of the Study or the transfer of Duke's
responsibilities to Sponsor or its designee. 

        (ii)   Wind-down
Plan Upon Early Termination. As soon as possible after its notice of termination is delivered to Duke or received by Sponsor, as applicable, Sponsor shall
submit to Duke written instructions regarding the scope of research activities to be conducted by Duke in connection with termination of the Study. As soon as possible after receiving such
instructions, Duke shall submit to Sponsor a wind-down, close out, or transfer plan (the "Plan") to accomplish the remaining tasks and activities
identified by Sponsor's written instructions, and a budget for the remaining tasks and activities relating to the wind-down (the "Termination Budget"),
with the final Plan and Termination Budget to be mutually agreed in writing. In no event shall the Termination Budget, together will amounts otherwise paid by Sponsor pursuant to the Budget, exceed
the total amount payable to Duke under the Budget. Upon delivery or receipt of notice of termination, as applicable, Duke shall use commercially reasonable efforts to minimize the extent of expenses
that will be incurred with respect to this Agreement or any Study Addendum, as applicable, including notification to Participating Institutions to suspend the enrollment of any further subjects in the
applicable Study or Studies. 

        16.5    Handling Data Upon Termination.    The Parties agree that the transfer of the Study Data and outstanding
reports are critically important to both Parties. The Plan shall include the procedures and responsibilities of each Party including but not limited to the orderly collection of all subject data 

13

 

outstanding
at participating sites and data analysis and entry of such data into the Study database and any manuscript resulting therefrom. 

        16.6    Compensation Upon Termination.    Upon early termination of this Agreement or any Study Addendum hereto,
Sponsor shall compensate Duke as follows: 

	(a)
	Sponsor
shall compensate Duke for activities and research actually conducted through the Termination Date at the per-unit compensation rates stated in the Study Addendum, including
the number of whole and partial units completed by Duke through the Termination Date. If partial units have been completed, compensation shall be pro rata based upon the proportion of the
activities/unit(s) actually completed by Duke prior to the Termination Date, as compared with the activities/units that would have been completed had the Study continued through its originally
scheduled date of completion.

	(b)
	Reimbursement
of foreseeable and customary expenses associated specifically with early termination shall be paid to Duke at the rate specified in the Study Addendum. Reimbursement of
such expenses includes, but is not limited to: any irrevocable commitments, contemplated in the Budget, by Duke made in reliance upon timely completion of the Study and expenses associated with
winding down the Study.

	(c)
	In
the event of early termination hereunder, Sponsor shall compensate Duke for the cost of processing of any outstanding data collected, analyzed, and entered into the applicable
database in accordance with the Plan and the Termination Budget ("Data Processing Costs"), provided, any such Data Processing Costs shall be at the same rate that Sponsor would have paid for such
services had the Agreement not been terminated early. 

        16.7    Termination Survival.    Notwithstanding any termination or expiration of this Agreement, or any Study
Addendum hereto, Sections 2, 4, 6, 7, 8, 9, 11, 12, 13,14, 16, 17, 19, 25, 26 and 27 shall survive any termination of this Agreement. 

17.   Notices.  

        Any notice or other communication required or permitted under the Agreement shall be in writing and shall be given to the Parties at the addresses listed below,
or such alternative address as may be provided by one Party to the other in writing: 

14

 

	 	If to Duke:	 	 
	

 	

 	

Office of Grants and Contracts

Duke University Medical Center

107 Seeley G. Mudd Building—Box 3001

Durham, North Carolina 27710	
 	

 
	

 	
with a copy to:	
 	

 
	

 
	

 
	

United States Postal Service:
 
	
 	

Express overnight courier:

	 	 	Contracts Group—9th Floor

Duke Clinical Research Institute

P.O. Box 17969

Durham, North Carolina 27715	 	Contracts Group—9th Floor

Duke Clinical Research Institute

2400 Pratt Street

Room 0311 Terrace Level

Durham, North Carolina 27705

Phone (919) 668 8700
	

 	
If to Sponsor:	
 	

 
	

 	

 	

NovaCardia, Inc.

Attention:

12651 High Bluff Drive, Suite 200

San Diego, CA 92130

tel: (858) 509-0455

fax: (858) 509-0456	
 	

 

Such
notices shall be deemed given upon personal delivery, or, three (3) days after the date of mailing, when sent by certified or registered mail, postage prepaid, or by overnight carrier. 

18.   Relationship of the Parties.  

        Duke's relationship to Sponsor under this Agreement, and any Study Addendum, shall be that of independent contractors and not agents, joint ventures, or partners
of Sponsor. Neither Party hereto shall have, or shall represent that it has, any power, right or authority to bind the other Party hereto to any obligation or liability without express authorization
from such other Party. 

19.   Arbitration.  

        The Parties agree to attempt to resolve promptly any dispute arising out of or relating to this Agreement by good faith negotiation; provided, however, if such
attempts at dispute resolution shall fail, disputes relating to the terms and conditions of this Agreement shall be exclusively resolved, upon written request by either Party, by final and binding
arbitration in a mutually agreed location, or a location chosen by the chair of the arbitration panel if the Parties cannot agree, 

15

 

pursuant
to the commercial arbitration rules of the American Arbitration Association, in accordance with the following procedures: 

	(a)
	The
arbitration tribunal shall consist of three arbitrators. The Parties shall respectively nominate one arbitrator in the request for arbitration and one arbitrator in the answer
thereto, and the two arbitrators so named will then jointly appoint a third arbitrator as chairperson of the arbitration tribunal.

	(b)
	The
decision of the arbitration tribunal shall be final and binding upon the Parties hereto, and judgment upon such decision may be entered in any competent court for juridical
acceptance of such an award and order of enforcement. Each Party hereby submits itself to the courts of the place of arbitration, but only for the entry of judgment with respect to the decision of the
arbitrators hereunder. 

20.   Similar Research.  

        Nothing in this Agreement or a Study Addendum shall be construed to limit the freedom of Duke or its researchers who are participants under this Agreement, from
engaging in similar research made under other grants, contracts or agreements with parties other than the Sponsor. 

21.   Force Majeure.  

        If either Party hereto shall be delayed or hindered in, or prevented from, the performance of any act required hereunder for any reason beyond such Party's direct
control, including but not limited to, strike, lockouts, labor troubles, governmental or judicial actions or orders, riots, insurrections, war, acts of God, inclement weather or other reason beyond
the Party's control (a "Disability") then such Party's performance shall be excused for the period of the Disability. Any Study timelines affected by a
Disability may be extended for a period equal to the delay and any affected Budget may be adjusted to account for cost increases or decreases resulting from the Disability by mutual agreement of the
Parties. The Party affected by the Disability shall notify the other Party of such Disability as provided for herein. 

22.   Entire Agreement.  

        This Agreement and Study Addenda attached hereto, if any, constitute the full and complete understanding of the Parties hereto with respect to the subject matter
hereof and supersedes all prior understandings and agreements with respect to such subject matter. In the event of a conflict between a Study Addendum and the terms in this Agreement, the provisions
of the Study Addendum shall govern regarding that particular Study to the extent such conflict is explicitly referenced in such Study Addendum and the Study Addendum is said therein to govern. Any 

16

 

handwritten
modifications to this Agreement or a Study Addendum shall be null and void unless such modifications are initialed by both Parties. 

23.   No Waivers.  

        No delay or omission by a Party hereto to exercise any right under this Agreement or a Study Addendum shall impair any such right or power or be construed to be a
waiver thereof. A waiver by any of the Parties hereto of any of the covenants, conditions or agreements herein contained shall not be construed to be a waiver of any succeeding breach thereof or of
any covenant, condition or agreement herein contained. No waiver or discharge of any provisions of this Agreement or a Study Addendum shall be valid unless it is in writing and is executed by the
Party against whom such change or discharge is sought to be enforced. 

24.   Severability.  

        If a judicial determination is made that any of the provisions contained in this Agreement or a Study Addendum constitute an unreasonable restriction against a
Party or are otherwise unenforceable, such provision or provisions shall be rendered void or invalid only to the extent that such judicial determination finds such provision or provisions to be
unreasonable or otherwise unenforceable, and the remainder of this Agreement or a Study Addendum shall remain operative and in full force and effect. 

25.   Headings.  

        The headings contained in this Agreement do not form a substantive part of this Agreement and shall not be construed to limit or otherwise modify its provisions. 

25.   Governing Law.  

        The validity, interpretation and performance of this Agreement and Study Addenda shall be governed and construed in accordance with the laws of the State of New
York without regard to choice of law rules. 

26.   Financial Disclosure.  

        Duke shall require the Principal Investigators and the other investigators engaged in the Study each individually to complete and return to Sponsor the Disclosure
of Financial Interests and Arrangements attached hereto as Exhibit B ("Disclosure"). Each such Disclosure shall be executed by each Principal
Investigator and any sub-investigators. Sponsor shall hold such Disclosures in confidence and shall only use such Disclosures as necessary to comply with FDA regulatory requirements set forth in 21
C.F.R. § 54. By completing the Disclosures, each Principal Investigator and the other investigators shall certify 

17

 

that
the Disclosures supplied are truthful and accurate. Duke's failure to obtain Disclosures from any Principal Investigator or investigator engaged in a Study and return the Disclosure(s) to Sponsor
shall be considered a material breach of this Agreement. Duke's agreement with each Participating Institution shall provide that if circumstances change during the Study, and the Disclosures submitted
by the Principal Investigator and the other investigators engaged in the Study are no longer truthful and accurate, the Principal Investigator and/or the other investigators shall promptly submit to
Sponsor updated Disclosure(s) reflecting the new circumstances. 

27.   Assignment.  

        Neither Party may assign this Agreement without the prior written consent of the other Party; provided, that
Sponsor may assign this Agreement without Duke's consent in connection with the transfer or sale of all or substantially all of the business of Sponsor to which this Agreement relates, whether by
merger, sale of stock, sale of assets or otherwise. Any attempted assignment of this Agreement not in compliance with this Section 27 shall be null and void. No assignment shall relieve either Party
of the performance of any accrued obligation that such party may then have under this Agreement. This Agreement shall inure to the benefit of and be binding upon each Party signatory hereto, its
successors and permitted assigns, subsidiaries and affiliates. 

28.   Counterparts.  

        This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 

        IN
WITNESS WHEREOF, this Agreement is entered into as of the date first written above. 

	 NovaCardia, Inc.	 	Duke University:
	

By:	

/s/ illegible signature
	
 	

By:	

/s/ R. Sanders Williams

	

Title:	

Sr. VP CLIN REG

 	
 	

 	

R. Sanders Williams, MD
Dean, School of Medicine

	Date:	1 JUNE 2006
	 	Date:	6/20/06

18

   Exhibit A

Study Addendum #             

	Study Title:	 	 
	

Director of the Coordinating Center:	
 	

Protocol Number:

        This
Agreement is entered into by and between Duke University ("Duke") and NovaCardia, Inc.
("Sponsor" or "NovaCardia") as an Addendum to the Master Clinical Research Agreement which was entered
into by the parties effective            and to establish specific terms for the conduct of the above referenced study (the "Study").

1.     Scope of Work.  

Duke
shall coordinate the Study at Duke, and at the other clinical sites participating in the Study in accordance with the Protocol (Appendix 1) and the
Scope of Work (Appendix 2) which fully detail the research activities and responsibilities to be undertaken. 

The
Director of the Coordinating Center at Duke shall direct and be responsible for Duke's activities in the Study. The Director of the Coordinating Center shall complete the  Disclosure of Financial Interests form attached hereto as Appendix 5. The Director of the Coordinating Center at Duke for this Study shall be              , who by signing
below acknowledges the terms and conditions of the Master Research Agreement and this Addendum.
 

2.     Study Materials.  

Sponsor
shall provide such supplies for use in the Study as the parties may agree in writing. Sponsor represents that use of the material under the Study Protocol has been approved by the U.S. Food
and Drug Administration for investigational use. 

3.     Publications Committee.  

Publications
arising from the Study shall be coordinated by a Publications Committee in accordance with Article 9 of the Master Clinical Research Agreement and the Publications Committee Charter
attached hereto as Appendix 6. 

4.     Payments.  

Sponsor
agrees to reimburse Duke for expenses incurred in the conduct of the Study in accordance with the Budget and Payment Schedule (Appendix 3 and  Appendix 4
respectively). 

19

 

Sponsor
agrees to fund the research and pay Duke for all pass through expenses incurred in the conduct of the Study in accordance with the Budget and Payment Schedule. Sponsor agrees to pay all
undisputed invoices received from Duke within thirty (30) days of receipt thereof in accordance with the terms of the Master Clinical Research Agreement. 

5.     Transfer of Obligations.  

In
accordance with 21 CFR § 312.52, Sponsor hereby transfers to Duke those obligations set forth in Exhibit B. Sponsor or its
representative retains the responsibilities for IND safety reports pursuant to 21 CFR § 312.32, the responsibility for annual reports pursuant to 21 CFR § 312.33,
the responsibility for discontinuing investigations pursuant to 21 CFR § 312.56(d) and the responsibility for informing investigators pursuant to 21 CFR § 312.55. 

6.     Term.  

This
Addendum shall become effective on                    (the "Effective Date") and shall continue in
effect until completion of the Study or its earlier
termination in accordance with the Master Clinical Research Agreement. The research shall be conducted during a            (    ) year period commencing on the effective
date and
concluding on or before            . 

7.     Other:  

(As may be applicable to a particular Study including any necessary variations on the terms of the Master Research Agreement).

AGREED: 

	DUKE UNIVERSITY	 	NOVACARDIA, Inc.
	

By:	
 	

By:	

 
	

R. Sanders Williams, MD	
 	

Printed Name:	

 
	Dean, School of Medicine	 	 	

	 	 	Title:	 
	

Date executed:	
 	

Date executed:	

 

20

   EXHIBIT C  

 DISCLOSURE OF FINANCIAL INTERESTS AND ARRANGEMENTS  

        As a condition of participating as a clinical investigator in the protocol entitled, "            " (the "Study") sponsored by
NovaCardia, Inc. ("NovaCardia"),
please provide the appropriate information and responses to the following statements. 

	Name:	

	Title:	

	Organization/CRO:	
	 	Date:	

Please
mark the applicable checkboxes. 

	[    ]	None.
	

o	

I have financial arrangement(s) with NovaCardia in which the value of the compensation for conducting the Study could be influenced by the outcome of the Study.
	

o	

I have received or will receive from NovaCardia, previously and during the time of the Study and for one year after its completion, payment(s) of other sorts (e.g., grants to fund other ongoing research, compensation in the form of equipment not for
the Study, retainer for ongoing consultation, or honoraria) that have a monetary value of more than $25,000. Such payment(s) exclude the costs of conducting the Study or other clinical studies.
	

o	

I have any proprietary interest(s) in the product tested in the Study.
	

o	

During the time of the Study and for one year after its completion, I will hold significant equity interest in NovaCardia. "Significant equity interest" means any (1) ownership interest, stock options or other financial interest whose value cannot be
readily determined through reference to public prices; or (2) equity interest in a publicly traded corporation that exceeds $50,000.

        For
those statements I have checked, details of the individual financial arrangements (if any) and interests are attached, along with a description of steps taken to minimize the
potential bias of Study results by any of the disclosed arrangements or interests. 

        NovaCardia
agrees to treat as confidential all financial arrangements and interests attached to this Exhibit and to use such disclosure to meet the requirements placed on NovaCardia
under 21 C.F.R. Part 54. Investigator acknowledges and agrees that NovaCardia may use such disclosure for this purpose. During the time of the Study and for one year after its completion, Investigator
shall notify NovaCardia in writing of any change to the information provided in this Exhibit. 

	Signature:	 	
	 	Date:	 	

21

   EXHIBIT C  

 PUBLICATIONS COMMITTEE CHARTER  

        The purpose of the Publications Committee pertaining to the Study shall be to further the communication of medical research and scientific data gathered in the
Study. 

        The
composition of the Publications Committee shall be as follows, with NovaCardia selecting its representatives, Duke selecting its representatives and NovaCardia selecting all other
representatives: 

	•
	The
two pivotal study co-chairs

	•
	Two
representatives from Duke University

	•
	The
European principal investigator

	•
	Two
at-large investigators

	•
	Two
representatives from NovaCardia

	•
	Duke
University Statistician (non-voting) 

        Notwithstanding
the foregoing, if the nature of the Study so requires, NovaCardia and Duke may agree to change the composition of the Publications Committee. The co-chairs of the
Publications Committee shall be one pivotal study co-chair and one representative of NovaCardia. NovaCardia may, in consultation with the Study co-chairs, fill any vacancies on the Publications
Committee due to resignations or the removal of members by NovaCardia "for cause". Any replacement will retain the relative academic balance of the Committee. 

        Decisions
of the Publications Committee shall be made by consensus, and there shall be no restrictions on the topics or analytical approaches used in developing manuscripts, other than
those imposed by the Publication Committee. 

        The
Publications Committee will act as an independent body of scientific and medical experts with the following responsibilities: 

        1)    The
Publications Committee shall review and approve analyses suggested by the investigators and participating institutions in the study. 

        2)    The
Publications Committee shall read and constructively critique all manuscripts that result from an approved analysis regarding the Study prior to submission for
presentation or publication. 

        3)    The
Publications Committee shall consider each such manuscript proposal with due regard for the scientific merit of the proposed publication with the aim of promoting the
dissemination of scientific and medical knowledge, and shall vote as to whether each such manuscript is appropriate for publication. 

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        4)    The
Publications Committee shall require that all manuscripts approved by the Publication Committee conform to the Uniform Requirements for Manuscripts Submitted to
Biomedical Journals guidelines of the International Committee of Medical Journal Editors (http://www.icmje.org) (the "Uniform Requirements"). The Publications Committee shall require that all
publications give NovaCardia and NovaCardia's personnel appropriate credit for any direct contribution made by them, and shall acknowledge NovaCardia's support in all publications and presentations. 

        The
Publications Committee shall submit to NovaCardia, at least thirty (30) calendar days prior to submission for publication, each publication which has been approved by the
Publications Committee. If NovaCardia determines that the proposed publication contains patentable subject matter which requires protection, NovaCardia may require the delay of such publication for an
additional period of time not to exceed sixty (60) calendar days for the purpose of filing patent applications. 

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QuickLinks

Exhibit 10.10

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