Exhibit 10.2
LEASE
by and between
BMR-3030 BUNKER HILL STREET LLC,
a Delaware limited liability company
and
CYTRX CORPORATION,
a Delaware corporation

 

--------------------------------------------------------------------------------

 

LEASE
     THIS LEASE (this “Lease”) is entered into as of this 20th day of July, 2007
(the “Execution Date”), by and between BMR-3030 BUNKER HILL STREET LLC, a
Delaware limited liability company (“Landlord”), and CYTRX CORPORATION, a
Delaware corporation (“Tenant”).
RECITALS
     A. WHEREAS, Landlord owns certain real property (the “Property”) and the
improvements thereon located at 3030 Bunker Hill Street in San Diego,
California, including the building located thereon (the “Building”) in which the
Premises (as defined below) are located; and
     B. WHEREAS, Landlord wishes to lease to Tenant, and Tenant desires to lease
from Landlord, certain premises (the “Premises”) located in the Building,
pursuant to the terms and conditions of this Lease, as detailed below.
AGREEMENT
     NOW, THEREFORE, Landlord and Tenant, in consideration of the mutual
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, agree as follows:
1. Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, the Premises, as shown on Exhibit A attached hereto for use by
Tenant in accordance with the Permitted Use (as defined below) and no other
uses. The Property and all landscaping, parking facilities and other
improvements and appurtenances related thereto, including, without limitation,
the Building, are hereinafter collectively referred to as the “Project.” All
portions of the Project that are for the non-exclusive use of tenants of the
Building, including, without limitation, driveways, sidewalks, parking areas,
landscaped areas, service corridors, stairways, elevators, public restrooms and
public lobbies, are hereinafter referred to as “Common Area.”
2. Basic Lease Provisions. For convenience of the parties, certain basic
provisions of this Lease are set forth herein. The provisions set forth herein
are subject to the remaining terms and conditions of this Lease and are to be
interpreted in light of such remaining terms and conditions.
     2.1. This Lease shall take effect upon the date of execution and delivery
hereof by all parties hereto and, except as specifically otherwise provided
within this Lease, each of the provisions hereof shall be binding upon and inure
to the benefit of Landlord and Tenant from the date of execution and delivery
hereof by all parties hereto.
     2.2. In the definitions below, each current Rentable Area (as defined
below) is expressed in rentable square footage. Rentable Area and Tenant’s Pro
Rata Share are all subject to adjustment as provided in this Lease.

                                Means the Following (As of the Term    
Definition or Provision     Commencement Date)                 Rentable Area of
Premises     10,152 square feet                 Rentable Area of Building    
105,364 square feet                 Tenant’s Pro Rata Share of Building    
9.64%              

     2.3. Initial monthly and annual installments of Basic Annual Rent for the
Premises (“Basic Annual Rent”) as of the Term Commencement Date, subject to
adjustment under this Lease:

 

--------------------------------------------------------------------------------

 

                                                  Rentable S.F.     Per Rentable
S.F.     Total Annual     Total Monthly                             10,152    
$1.80 monthly     $219,283.20     $18,273.60                          

     2.4. Estimated Term Commencement Date: August 1, 2007
     2.5. Estimated Term Expiration Date: July 31, 2010
     2.6. Security Deposit: $36,547.20, subject to increase in accordance with
the terms hereof
     2.7. Permitted Use: General office and laboratory use in conformity with
Applicable Laws (as defined below)

     2.8. Address for Rent Payment:   BMR-3030 Bunker Hill Street LLC
Unit K
P.O. Box 51918
Los Angeles, California 90051-6218

     2.9. Address for Notices to Landlord:   BMR-3030 Bunker Hill Street LLC
17140 Bernardo Center Drive, Suite 222
San Diego, California 92128
Attn: General Counsel/Real Estate

     2.10. Address for Notices to Tenant:   CytRx Corporation
11726 San Vicente Boulevard, Suite 650
Los Angeles, California 90049
Attn: General Counsel

     2.11. The following Exhibits are attached hereto and incorporated herein by
reference:
Exhibit A            Premises
Exhibit B            Acknowledgement of Term Commencement Date and Term
Expiration Date
Exhibit C            Tenant’s Personal Property
Exhibit D            Rules and Regulations
Exhibit E            Form of Estoppel Certificate
Exhibit F            [Intentionally omitted]
Exhibit G            Landlord’s Work
Exhibit H            Form of Letter of Credit
3. Term.
     3.1. The actual term of this Lease (the “Term”) shall be that period from
the actual Term Commencement Date (as defined in Section 4.2 below) through the
Term Expiration Date, subject to earlier termination of this Lease as provided
herein.
4. Possession and Commencement Date.
     4.1. Landlord shall tender possession of the Premises to Tenant on the
Estimated Term Commencement Date, with the work required of Landlord described
in Exhibit G attached hereto as (“Landlord’s Work”) substantially complete.
Tenant agrees that in the event such work is not substantially complete on or
before the Estimated Term Commencement Date for any reason, then (a) this Lease
shall not be void or voidable, (b) Landlord shall not be liable to Tenant for
any loss or damage resulting therefrom, (c) the Term Expiration Date shall be
extended accordingly and (d) Tenant shall not be responsible for the payment of
any Rent (as defined below) until the actual Term Commencement Date as described
in Section 4.2 occurs.
     4.2. The “Term Commencement Date” shall be the later of (a) the day
Landlord tenders possession of the Premises to Tenant with all Landlord’s Work
substantially completed and (b) August 1, 2007. If possession is delayed by
action of Tenant, then the Term Commencement Date shall be the date Landlord’s
Work is substantially complete. Tenant shall

2

--------------------------------------------------------------------------------

 

execute and deliver to Landlord written acknowledgment of the actual Term
Commencement Date and the Term Expiration Date within ten (10) days after Tenant
takes occupancy of the Premises, in the form attached as Exhibit B hereto.
Failure to execute and deliver such acknowledgment, however, shall not affect
the Term Commencement Date or Landlord’s or Tenant’s liability hereunder.
Failure by Tenant to obtain validation by any medical review board or other
similar governmental licensing of the Premises required for the Permitted Use by
Tenant shall not serve to extend the Term Commencement Date.
     4.3. In the event that Landlord permits (in Landlord’s sole and absolute
discretion) Tenant to enter upon the Premises prior to the Term Commencement
Date for the purpose of installing improvements or the placement of personal
property, Tenant shall furnish to Landlord evidence satisfactory to Landlord
that insurance coverages required of Tenant under the provisions of Article 21
are in effect, and such entry shall be subject to all the terms and conditions
of this Lease.
     4.4. Possession of areas of the Premises necessary for utilities, services,
safety and operation of the Building is reserved to Landlord.
     4.5. Landlord shall cause Landlord’s Work to be performed at Landlord’s
sole cost and expense, including the costs of (a) construction, (b) project
management by Landlord (which fee shall equal three percent (3%) of the cost of
Landlord’s Work), (c) space planning, architect, engineering and other related
services performed by third parties unaffiliated with Tenant, (d) building
permits and other planning and inspection fees, (e) costs and expenses for
labor, material, equipment and fixtures and (f) building permits and other
taxes, fees, charges and levies by Governmental Authorities for permits or for
inspections of Landlord’s Work. In no event shall Landlord be liable for
(v) expenses related to the existing fume hood in Suite 101 of the Building, (w)
payments to Tenant or any affiliates of Tenant, (x) the purchase of any
furniture, personal property or other non-building system equipment, (y) costs
resulting from any default by Tenant of its obligations under this Lease or
(z) costs that are recoverable or reasonably recoverable by Tenant from a third
party (e.g., insurers, warrantors, or tortfeasors).
     4.6. Landlord shall select the architect, engineer, general contractor and
major subcontractors to perform Landlord’s Work.
     4.7. So long as Tenant does not (in Landlord’s reasonable judgment)
unreasonably or unnecessarily interfere with the construction of Landlord’s
Work, upon reasonable prior written notice to Landlord, Tenant may enter the
office portion of the Premises prior to the Term Commencement Date; provided,
however, that Tenant shall furnish to Landlord evidence satisfactory to Landlord
that insurance coverages required of Tenant under the provisions of Article 22
are in effect, and such entry shall be subject to all the terms and conditions
of this Lease other than the payment of Basic Annual Rent (but shall be subject
to Additional Rent (as defined below), including, without limitation, Tenant’s
Pro Rata Share of Operating Expenses). Tenant shall reimburse Landlord for all
actual documented incremental costs that Landlord incurs because of such entry
and indemnify, defend and hold harmless Landlord from and against any loss,
cost, claim, lawsuit, liability or expense (including reasonable attorneys’ fees
and disbursements) arising out of any entry and/or activities upon the Premises
by Tenant or Tenant’s agents.
5. Rent.
     5.1. Tenant shall pay to Landlord as Basic Annual Rent for the Premises,
commencing on the Term Commencement Date, the sums set forth in Section 2.3,
subject to the rental adjustments provided in Article 6 hereof. Basic Annual
Rent shall be paid in equal monthly installments as set forth in Section 2.3,
subject to the rental adjustments provided in Article 6 hereof, each in advance
on the first day of each and every calendar month during the Term.
     5.2. In addition to Basic Annual Rent, Tenant shall pay to Landlord as
additional rent (“Additional Rent”) at times hereinafter specified in this Lease
(a) Tenant’s pro rata share, as set forth in Section 2.2 (“Tenant’s Pro Rata
Share”), of Operating Expenses as provided in Article 7 and (b) any other
amounts that Tenant assumes or agrees to pay under the provisions of this Lease
that are owed to Landlord, including, without limitation, any and all other sums
that may become due by reason of any default of Tenant or failure on Tenant’s
part to comply with the

3

--------------------------------------------------------------------------------

 

agreements, terms, covenants and conditions of this Lease to be performed by
Tenant, after notice and the lapse of any applicable cure periods.
     5.3. Basic Annual Rent and Additional Rent shall together be denominated
“Rent.” Rent shall be paid to Landlord, without abatement, deduction or offset,
in lawful money of the United States of America at the office of Landlord as set
forth in Section 2.9 or to such other person or at such other place as Landlord
may from time designate in writing. In the event the Term commences or ends on a
day other than the first day of a calendar month, then the Rent for such
fraction of a month shall be prorated for such period on the basis of a thirty
(30) day month and shall be paid at the then-current rate for such fractional
month.
6. Rent Adjustments. The Basic Annual Rent shall be subject to an annual upward
adjustment of three percent (3%) of the then-current Basic Annual Rent. The
first such adjustment shall become effective commencing with that monthly rental
installment that is due on or after the first (1st) annual anniversary of the
Term Commencement Date, and subsequent adjustments shall become effective on
every successive annual anniversary for so long as this Lease continues in
effect.
7. Operating Expenses.
     7.1. As used herein, the term “Operating Expenses” shall include:
          (a) Government impositions including, without limitation, property tax
costs consisting of real and personal property taxes and assessments, including
amounts due under any improvement bond upon the Building or the Project,
including the parcel or parcels of real property upon which the Building and
areas serving such Building are located or assessments in lieu thereof imposed
by any federal, state, regional, local or municipal governmental authority,
agency or subdivision (each, a “Governmental Authority”) are levied; taxes on or
measured by gross rentals received from the rental of space in the Building;
taxes based on the square footage of the Premises, the Building or the Project,
as well as any parking charges, utilities surcharges or any other costs levied,
assessed or imposed by, or at the direction of, or resulting from Applicable
Laws (as defined below) or interpretations thereof, promulgated by any
Governmental Authority in connection with the use or occupancy of the Building
or the parking facilities serving the Building; taxes on this transaction or any
document to which Tenant is a party creating or transferring an interest in the
Premises; any fee for a business license to operate an office building; and any
expenses, including the reasonable cost of attorneys or experts, reasonably
incurred by Landlord in seeking reduction by the taxing authority of the
applicable taxes, less tax refunds obtained as a result of an application for
review thereof. Operating Expenses shall not include any net income, franchise,
capital stock, estate or inheritance taxes, or taxes that are the personal
obligation of Tenant or of another tenant of the Project; and
          (b) All other costs of any kind paid or incurred by Landlord in
connection with the operation or maintenance of the Building and the Project
including, by way of example and not of limitation, costs of repairs and
replacements to improvements within the Project as appropriate to maintain the
Project as required hereunder, including costs of funding such reasonable
reserves as Landlord, consistent with good business practice, may establish to
provide for future repairs and replacements; costs of utilities furnished to the
Common Areas; sewer fees; cable television; trash collection; cleaning,
including windows; heating; ventilation; air-conditioning; maintenance of
landscaping and grounds; maintenance of drives and parking areas; maintenance of
the roof; security services and devices; building supplies; maintenance or
replacement of equipment utilized for operation and maintenance of the Project;
license, permit and inspection fees; sales, use and excise taxes on goods and
services purchased by Landlord in connection with the operation, maintenance or
repair of the Project or Building systems and equipment; telephone, postage,
stationery supplies and other expenses incurred in connection with the
operation, maintenance or repair of the Project; accounting, legal and other
professional fees and expenses incurred in connection with the Project; costs of
furniture, draperies, carpeting, landscaping and other customary and ordinary
items of personal property provided by Landlord for use in Common Areas or in
the Building office; Building office rent or rental value for a commercially
reasonable amount of space, to the extent an office used for Building operations
is maintained at the Building; capital expenditures (amortized over their useful
life, but in no event greater that seven (7) years); costs of complying with all
federal, state, municipal and local laws, codes, ordinances, rules and
regulations of Governmental Authorities,

4

--------------------------------------------------------------------------------

 

committees, associations, or other regulatory committees, agencies or governing
bodies having jurisdiction over the Property, the Project, the Building, the
Premises, Landlord or Tenant, including both statutory and common law and hazard
waste rules and regulations (“Applicable Laws”); insurance premiums, including
premiums for public liability, property casualty, earthquake, terrorism and
environmental coverages; portions of insured losses paid by Landlord as part of
the deductible portion of a loss pursuant to the terms of insurance policies;
service contracts; costs of services of independent contractors retained to do
work of a nature referenced above; and costs of compensation (including
employment taxes and fringe benefits) of all persons who perform regular and
recurring duties connected with the day-to-day operation and maintenance of the
Project, its equipment, the adjacent walks, landscaped areas, drives and parking
areas, including, without limitation, janitors, floor waxers, window washers,
watchmen, gardeners, sweepers and handymen.
          Notwithstanding the foregoing, Operating Expenses shall not include
any leasing commissions; expenses that relate to preparation of rental space for
a tenant; expenses of initial development and construction, including, but not
limited to, grading, paving, landscaping and decorating (as distinguished from
maintenance, repair and replacement of the foregoing); legal expenses relating
to other tenants; costs of repairs to the extent reimbursed by payment of
insurance proceeds received by Landlord; interest upon loans to Landlord or
secured by a mortgage or deed of trust covering the Project or a portion thereof
(provided that interest upon a government assessment or improvement bond payable
in installments shall constitute an Operating Expense under Subsection 7.1(a));
salaries of executive officers of Landlord; depreciation claimed by Landlord for
tax purposes (provided that this exclusion of depreciation is not intended to
delete from Operating Expenses actual costs of repairs and replacements and
reasonable reserves in regard thereto that are provided for in Subsection
7.1(b)); and taxes of the types set forth in Subsection 7.1(a). In addition,
Tenant shall not be responsible for Operating Expenses related to repairs and
replacements of the Building systems for the first (1st) year of the Term;
provided, however, that Tenant shall be responsible during such period for
Operating Expenses related to routine maintenance of such systems.
     7.2. Tenant shall pay to Landlord on the first day of each calendar month
of the Term, as Additional Rent, (a) the Property Management Fee (as defined
below) and (b) Landlord’s estimate of Tenant’s Pro Rata Share of Operating
Expenses with respect to the Building and the Project, as applicable, for such
month.
          (x) The “Property Management Fee” shall equal two percent (2%) of the
Rent due from Tenant.
          (y) Within ninety (90) days after the conclusion of each calendar year
(or such longer period as may be reasonably required by Landlord), Landlord
shall furnish to Tenant a statement showing in reasonable detail the actual
Operating Expenses and Tenant’s Pro Rata Share of Operating Expenses for the
previous calendar year. Any additional sum due from Tenant to Landlord shall be
immediately due and payable. If the amounts paid by Tenant pursuant to this
Section 7.2 exceed Tenant’s Pro Rata Share of Operating Expenses for the
previous calendar year, then Landlord shall credit the difference against the
Rent next due and owing from Tenant; provided that, if the Lease term has
expired, Landlord shall accompany said statement with payment for the amount of
such difference.
          (z) Any amount due under this Section 7.2 for any period that is less
than a full month shall be prorated (based on a thirty (30)-day month) for such
fractional month.
     7.3. Landlord’s annual statement shall be final and binding upon Tenant
unless Tenant, within sixty (60) days after Tenant’s receipt thereof, shall
contest any item therein by giving written notice to Landlord, specifying each
item contested and the reasons therefor. If, during such sixty (60)-day period,
Tenant reasonably and in good faith questions or contests the correctness of
Landlord’s statement of Tenant’s Pro Rata Share of Operating Expenses, Landlord
shall provide Tenant with reasonable access to Landlord’s books and records to
the extent relevant to determination of Operating Expenses, and such information
as Landlord reasonably determines to be responsive to Tenant’s written
inquiries. In the event that, after Tenant’s review of such information,
Landlord and Tenant cannot agree upon the amount of Tenant’s Pro Rata Share of
Operating Expenses, then Tenant shall have the right to have an independent
public accounting firm hired by Tenant on an hourly basis and not on a
contingent-fee basis (at

5

--------------------------------------------------------------------------------

 

Tenant’s sole cost and expense) and approved by Landlord (which approval
Landlord shall not unreasonably withhold or delay) audit and review such of
Landlord’s books and records for the year in question as directly relate to the
determination of Operating Expenses for such year (the “Independent Review”).
Landlord shall make such books and records available at the location where
Landlord maintains them in the ordinary course of its business. Landlord need
not provide copies of any books or records. Tenant shall commence the
Independent Review within thirty (30) days after the date Landlord has given
Tenant access to Landlord’s books and records for the Independent Review. Tenant
shall complete the Independent Review and notify Landlord in writing of Tenant’s
specific objections to Landlord’s calculation of Operating Expenses (including
Tenant’s accounting firm’s written statement of the basis, nature and amount of
each proposed adjustment) no later than sixty (60) days after Landlord has first
given Tenant access to Landlord’s books and records for the Independent Review.
Landlord shall review the results of any such Independent Review. The parties
shall endeavor to agree promptly and reasonably upon Operating Expenses taking
into account the results of such Independent Review. If, as of sixty (60) days
after Tenant has submitted the Independent Review to Landlord, the parties have
not agreed on the appropriate adjustments to Operating Expenses, then the
parties shall engage a mutually agreeable independent third party accountant
with at least ten (10) years’ experience in commercial real estate accounting in
the San Diego, California, area (the “Accountant”). If the parties cannot agree
on the Accountant, each shall within ten (10) days after such impasse appoint an
Accountant (different from the accountant and accounting firm that conducted the
Independent Review) and, within ten (10) days after the appointment of both such
Accountants, those two Accountants shall select a third (which cannot be the
accountant and accounting firm that conducted the Independent Review). If either
party fails to timely appoint an Accountant, then the Accountant the other party
appoints shall be the sole Accountant. Within ten (10) days after appointment of
the Accountant(s), Landlord and Tenant shall each simultaneously give the
Accountants (with a copy to the other party) its determination of Operating
Expenses, with such supporting data or information as each submitting party
determines appropriate. Within ten (10) days after such submissions, the
Accountants shall by majority vote select either Landlord’s or Tenant’s
determination of Operating Expenses. The Accountants may not select or designate
any other determination of Operating Expenses. The determination of the
Accountant(s) shall bind the parties. If the parties agree or the Accountant(s)
determine that Tenant’s Pro Rata Share of Operating Expenses actually paid for
the calendar year in question exceeded Tenant’s obligations for such calendar
year, then Landlord shall, at Tenant’s option, either (a) credit the excess to
the next succeeding installments of estimated Additional Rent or (b) pay the
excess to Tenant within thirty (30) days after delivery of such results. If the
parties agree or the Accountant(s) determine that Tenant’s payments of Tenant’s
Pro Rata Share of Operating Expenses for such calendar year were less than
Tenant’s obligation for the calendar year, then Tenant shall pay the deficiency
to Landlord within thirty (30) days after delivery of such results.
     7.4. Tenant shall not be responsible for Operating Expenses attributable to
the time period prior to the Term Commencement Date; provided, however, that if
Landlord shall permit Tenant possession of the Premises prior to the Term
Commencement Date, Tenant shall be responsible for Operating Expenses from such
earlier date of possession. Tenant’s responsibility for Tenant’s Pro Rata Share
of Operating Expenses shall continue to the latest of (a) the date of
termination of the Lease, (b) the date Tenant has fully vacated the Premises or
(c) if termination of the Lease is due to a default by Tenant, the date of
rental commencement of a replacement tenant.
     7.5. Operating Expenses for the calendar year in which Tenant’s obligation
to share therein commences and for the calendar year in which such obligation
ceases shall be prorated on a basis reasonably determined by Landlord. Expenses
such as taxes, assessments and insurance premiums that are incurred for an
extended time period shall be prorated based upon the time periods to which they
apply so that the amounts attributed to the Premises relate in a reasonable
manner to the time period wherein Tenant has an obligation to share in Operating
Expenses.
     7.6. Within three (3) business days after the end of each calendar month,
Tenant shall submit to Landlord an invoice, or, in the event an invoice is not
available, an itemized list, of all costs and expenses that (a) Tenant has
incurred (either internally or by employing third parties) during the prior
month and (b) for which Tenant reasonably believes it is entitled to
reimbursements from Landlord pursuant to the terms of this Lease or that Tenant
reasonably believes is the responsibility of Landlord pursuant to this Lease.

6

--------------------------------------------------------------------------------

 

8. Rentable Area.
     8.1. The term “Rentable Area” as set forth in Article 2 and as may
otherwise be referenced within this Lease, shall reflect such areas as
reasonably calculated by Landlord’s architect.
     8.2. The “Rentable Area” of the Building is generally determined by making
separate calculations of Rentable Area applicable to each floor within the
Building and totaling the Rentable Area of all floors within the Building. The
Rentable Area of a floor is computed by measuring to the outside finished
surface of the permanent outer Building walls. The full area calculated as
previously set forth is included as Rentable Area, without deduction for columns
and projections or vertical penetrations, including stairs, elevator shafts,
flues, pipe shafts, vertical ducts and the like, as well as such items’
enclosing walls.
     8.3. [Intentionally omitted]
     8.4. The term “Rentable Area,” when applied to the Premises, is that area
equal to the usable area of the Premises, plus an equitable allocation of
Rentable Area within the Building that is not then utilized or expected to be
utilized as usable area, including, but not limited to, that portion of the
Building devoted to corridors, equipment rooms, restrooms, elevator lobby,
atrium and mailroom. In making such allocations, consideration shall be given to
tenants benefited by space allocated such that the area that primarily serves
tenants of only one floor, such as corridors and restrooms upon such floor,
shall be allocated to usable area of the Building as a whole.
     8.5. Review of allocations of Rentable Areas as between tenants of the
Building and the Project shall be made as frequently as Landlord deems
appropriate in order to facilitate an equitable apportionment of Operating
Expenses. If such review is by a licensed architect and allocations are
certified by such licensed architect as being correct, then Tenant shall be
bound by such certifications.
9. Security Deposit.
     9.1. Tenant has deposited with Landlord the sum set forth in Section 2.6
(the “Security Deposit”), which sum shall be held by Landlord as security for
the faithful performance by Tenant of all of the terms, covenants and conditions
of this Lease to be kept and performed by Tenant during the period commencing on
the Execution Date and ending upon the expiration or termination of this Lease.
If Tenant defaults with respect to any provision of this Lease, including, but
not limited to, any provision relating to the payment of Rent, then Landlord may
(but shall not be required to) use, apply or retain all or any part of the
Security Deposit for the payment of any Rent or any other sum in default, or to
compensate Landlord for any other loss or damage that Landlord may suffer by
reason of Tenant’s default. If any portion of the Security Deposit is so used or
applied, then Tenant shall, within ten (10) days following demand therefor,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its original amount, and Tenant’s failure to do so shall be a
material breach of this Lease. The provisions of this Article 9 shall survive
the expiration or earlier termination of this Lease. TENANT HEREBY WAIVES THE
REQUIREMENTS OF SECTION 1950.7 OF THE CALIFORNIA CIVIL CODE, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME.
     9.2. In the event of bankruptcy or other debtor-creditor proceedings
against Tenant, the Security Deposit shall be deemed to be applied first to the
payment of Rent and other charges due Landlord for all periods prior to the
filing of such proceedings.
     9.3. Landlord may deliver to any purchaser of Landlord’s interest in the
Premises the funds deposited hereunder by Tenant, and thereupon Landlord shall
be discharged from any further liability with respect to such deposit. This
provision shall also apply to any subsequent transfers.
     9.4. If Tenant shall fully and faithfully perform every provision of this
Lease to be performed by it, then the Security Deposit, or any balance thereof,
shall be returned to Tenant (or, at Landlord’s option, to the last assignee of
Tenant’s interest hereunder) within thirty (30) days after the expiration or
earlier termination of this Lease.

7

--------------------------------------------------------------------------------

 

     9.5. [Intentionally omitted]
     9.6. If the Security Deposit shall be in cash, Landlord shall deposit the
Security Deposit into an interest-bearing account at a banking organization
selected by Landlord. All interest and/or dividends, if any, accruing on the
Security Deposit, less a one percent (1%) per annum charge on the Security
Deposit for administrative expenses, shall be added to, held and included within
the term Security Deposit and, provided that no Default shall have occurred and
be continuing, shall accrue to the account of Tenant. Landlord shall not be
required to credit Tenant with any interest for any period during which Landlord
does not receive interest on the Security Deposit.
     9.7. The Security Deposit may be in the form of cash, a letter of credit or
any other security instrument acceptable to Landlord in its sole discretion.
Tenant may at any time, except during Default, deliver a letter of credit (the
“L/C Security”) as the entire Security Deposit, as follows.
          (a) If Tenant elects to deliver L/C Security, then Tenant shall
provide Landlord, and maintain in full force and effect throughout the Term, a
letter of credit in the form of Exhibit H issued by an issuer reasonably
satisfactory to Landlord, in the amount of the Security Deposit, with an initial
term of at least one year. If, at the Term Expiration Date, any Rent remains
uncalculated or unpaid, then: (i) Landlord shall with reasonable diligence
complete any necessary calculations; (ii) Tenant shall extend the expiry date of
such L/C Security from time to time as Landlord reasonably requires; and
(iii) in such extended period, Landlord shall not unreasonably refuse to consent
to an appropriate reduction of the L/C Security. Tenant shall reimburse
Landlord’s legal costs (as estimated by Landlord’s counsel) in handling
Landlord’s acceptance of L/C Security or its replacement or extension.
          (b) If Tenant delivers to Landlord satisfactory L/C Security in place
of the entire Security Deposit, Landlord shall remit to Tenant any cash Security
Deposit Landlord previously held.
          (c) Landlord may draw upon the L/C Security, and hold and apply the
proceeds in the same manner and for the same purposes as the Security Deposit,
if: (i) an uncured Default exists; (ii) as of the date 45 days before any L/C
Security expires (even if such scheduled expiry date is after the Term
Expiration Date) Tenant has not delivered to Landlord an amendment or
replacement for such L/C Security, reasonably satisfactory to Landlord,
extending the expiry date to the earlier of (1) six (6) months after the
then-current Term Expiration Date or (2) the date one year after the
then-current expiry date of the L/C Security; (iii) the L/C Security provides
for automatic renewals, Landlord asks the issuer to confirm the current L/C
Security expiry date, and the issuer fails to do so within ten (10) business
days; (iv) Tenant fails to pay (when and as Landlord reasonably requires) any
bank charges for Landlord’s transfer of the L/C Security; or (v) the issuer of
the L/C Security ceases, or announces that it will cease, to maintain an office
in the city where Landlord may present drafts under the L/C Security. This
paragraph does not limit any other provisions of this Lease allowing Landlord to
draw the L/C Security under specified circumstances.
          (d) Tenant shall not seek to enjoin, prevent, or otherwise interfere
with Landlord’s draw under L/C Security, even if it violates this Lease. Tenant
acknowledges that the only effect of a wrongful draw would be to substitute a
cash Security Deposit for L/C Security, causing Tenant no legally recognizable
damage. Landlord shall hold the proceeds of any draw in the same manner and for
the same purposes as a cash Security Deposit. In the event of a wrongful draw,
the parties shall cooperate to allow Tenant to post replacement L/C Security
simultaneously with the return to Tenant of the wrongfully drawn sums, and
Landlord shall upon request confirm in writing to the issuer of the L/C Security
that Landlord’s draw was erroneous.
          (e) If Landlord transfers its interest in the Premises, then Tenant
shall at Tenant’s expense, within five Business Days after receiving a request
from Landlord, deliver (and, if the issuer requires, Landlord shall consent to)
an amendment to the L/C Security naming Landlord’s grantee as substitute
beneficiary. If the required Security changes while L/C Security is in force,
then Tenant shall deliver (and, if the issuer requires, Landlord shall consent
to) a corresponding amendment to the L/C Security.

8

--------------------------------------------------------------------------------

 

10. Use.
     10.1. Tenant shall use the Premises for the purpose set forth in
Section 2.7, and shall not use the Premises, or permit or suffer the Premises to
be used, for any other purpose without Landlord’s prior written consent, which
consent Landlord may withhold in its sole and absolute discretion.
     10.2. Tenant shall not use or occupy the Premises in violation of
Applicable Laws; zoning ordinances; or the certificate of occupancy issued for
the Building, and shall, upon five (5) days’ written notice from Landlord,
discontinue any use of the Premises that is declared or claimed by any
Governmental Authority having jurisdiction to be a violation of any of the
above, or that in Landlord’s reasonable opinion violates any of the above.
Tenant shall comply with any direction of any Governmental Authority having
jurisdiction that shall, by reason of the nature of Tenant’s use or occupancy of
the Premises, impose any duty upon Tenant or Landlord with respect to the
Premises or with respect to the use or occupation thereof.
     10.3. Tenant shall not do or permit to be done anything that will
invalidate or increase the cost of any fire, environmental, extended coverage or
any other insurance policy covering the Building and the Project, and shall
comply with all rules, orders, regulations and requirements of the insurers of
the Building and the Project, and Tenant shall promptly, upon demand, reimburse
Landlord for any additional premium charged for such policy by reason of
Tenant’s failure to comply with the provisions of this Article.
     10.4. Tenant shall keep all doors opening onto public corridors closed,
except when in use for ingress and egress.
     10.5. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by Tenant, nor shall any changes be made to existing locks
or the mechanisms thereof without Landlord’s prior written consent. Tenant
shall, upon termination of this Lease, return to Landlord all keys to offices
and restrooms either furnished to or otherwise procured by Tenant. In the event
any key so furnished to Tenant is lost, Tenant shall pay to Landlord the cost of
replacing the same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such change.
     10.6. No awnings or other projections shall be attached to any outside wall
of the Building. No curtains, blinds, shades or screens shall be attached to or
hung in, or used in connection with, any window or door of the Premises other
than Landlord’s standard window coverings. Neither the interior nor exterior of
any windows shall be coated or otherwise sunscreened without Landlord’s prior
written consent, nor shall any bottles, parcels or other articles be placed on
the windowsills. No equipment, furniture or other items of personal property
shall be placed on any exterior balcony without Landlord’s prior written
consent.
     10.7. No sign, advertisement or notice (“Signage”) shall be exhibited,
painted or affixed by Tenant on any part of the Premises or the Building without
Landlord’s prior written consent. Interior signs on doors and the directory
tablet shall be inscribed, painted or affixed for Tenant by Landlord at Tenant’s
sole cost and expense, and shall be of a size, color and type and be located in
a place acceptable to Landlord. The directory tablet shall be provided
exclusively for the display of the name and location of tenants only. Tenant
shall not place anything on the exterior of the corridor walls or corridor doors
other than Landlord’s standard lettering. Tenant shall have Signage rights for
the Premises substantially consistent with the Signage permitted for other
comparable Tenants in the Project, as Landlord reasonably determines. At
Landlord’s option, Landlord may install any such Signage, and Tenant shall pay
all costs associated with such installation within five (5) days after demand
therefor.
     10.8. Tenant shall cause any office equipment or machinery to be installed
in the Premises so as to reasonably prevent sounds or vibrations therefrom from
extending into the Common Areas or other offices in the Building. Further,
Tenant shall only place equipment within the Premises with floor loading
consistent with the structural design of the Building without Landlord’s prior
written approval, and such equipment shall be placed in a location designed to
carry the weight of such equipment.
     10.9. Tenant shall not (a) do or permit anything to be done in or about the
Premises that shall in any way obstruct or interfere with the rights of other
tenants or occupants of the Building

9

--------------------------------------------------------------------------------

 

or the Project, or injure or annoy them, (b) use or allow the Premises to be
used for immoral, unlawful or objectionable purposes, (c) cause, maintain or
permit any nuisance or waste in, on or about the Premises, the Building or the
Project or (d) take any other action that would in Landlord’s reasonable
determination in any manner adversely affect other tenants’ quiet use and
enjoyment of their space or adversely impact their ability to conduct business
in a professional and suitable work environment.
     10.10. (a) When Landlord delivers the Premises to Tenant, the Premises
shall be in compliance with the Americans with Disabilities Act, 42 U.S.C. §
12101, et seq. (together with regulations promulgated pursuant thereto, the
“ADA”), in effect at such time. Landlord shall indemnify, defend and hold
harmless Tenant from and against any loss, cost, liability or expense (including
reasonable attorneys’ fees and disbursements) arising out of Landlord’s failure
to comply with the preceding sentence.
          (b) Notwithstanding any other provision herein to the contrary, but
subject to Section 10.10(a) above, Tenant shall be responsible for all
liabilities, costs and expenses arising out of or in connection with the
compliance of the Premises with the ADA other than as of the date of delivery of
the Premises to Tenant, and Tenant shall indemnify, defend and hold harmless
Landlord from and against any loss, cost, liability or expense (including
reasonable attorneys’ fees and disbursements) arising out of any such failure of
the Premises to comply with the ADA.
          (c) The provisions of this Section 10.10 shall survive the expiration
or earlier termination of this Lease.
11. Brokers.
     11.1. Tenant represents and warrants that it has had no dealings with any
real estate broker or agent in connection with the negotiation of this Lease
other than CB Richard Ellis (“Tenant’s Broker”) and Grubb & Ellis (together with
Tenant’s Broker, “Brokers”), and that it knows of no other real estate broker or
agent that is or might be entitled to a commission in connection with this
Lease. Landlord shall compensate Brokers in relation to this Lease pursuant to
separate agreements between Landlord and Brokers.
     11.2. Tenant represents and warrants that no broker or agent has made any
representation or warranty relied upon by Tenant in Tenant’s decision to enter
into this Lease, other than as contained in this Lease.
     11.3. Tenant acknowledges and agrees that the employment of brokers by
Landlord is for the purpose of solicitation of offers of leases from prospective
tenants and that no authority is granted to any broker to furnish any
representation (written or oral) or warranty from Landlord unless expressly
contained within this Lease. Landlord is executing this Lease in reliance upon
Tenant’s representations, warranties and agreements contained within
Sections 11.1 and 11.2.
     11.4. Tenant agrees to indemnify, defend and hold Landlord harmless from
any and all cost or liability for compensation claimed by any other broker or
agent, other than Broker, employed or engaged by it or claiming to have been
employed or engaged by it.
12. Holding Over.
     12.1. If, with Landlord’s prior written consent, Tenant holds possession of
all or any part of the Premises after the Term, Tenant shall become a tenant
from month to month after the expiration or earlier termination of the Term, and
in such case Tenant shall continue to pay (a) the Basic Annual Rent in
accordance with Article 5, as adjusted in accordance with Article 6, and
(b) Tenant’s Pro Rata Share of Operating Expenses. Any such month-to-month
tenancy shall be subject to every other term, covenant and agreement contained
herein.
     12.2. Notwithstanding the foregoing, if Tenant remains in possession of the
Premises after the expiration or earlier termination of the Term without
Landlord’s prior written consent, Tenant shall become a tenant at sufferance
subject to the terms and conditions of this Lease, except that the monthly rent
shall be equal to one hundred fifty percent (150%) of the Rent in effect during
the last thirty (30) days of the Term.

10

--------------------------------------------------------------------------------

 

     12.3. Acceptance by Landlord of Rent after the expiration or earlier
termination of the Term shall not result in an extension, renewal or
reinstatement of this Lease.
     12.4. The foregoing provisions of this Article 12 are in addition to and do
not affect Landlord’s right of reentry or any other rights of Landlord hereunder
or as otherwise provided by Applicable Laws.
13. Taxes on Tenant’s Property.
     13.1. Tenant shall pay prior to delinquency any and all taxes levied
against any personal property or trade fixtures placed by Tenant in or about the
Premises.
     13.2. If any such taxes on Tenant’s personal property or trade fixtures are
levied against Landlord or Landlord’s property or, if the assessed valuation of
the Building or the Property is increased by inclusion therein of a value
attributable to Tenant’s personal property or trade fixtures, and if Landlord,
after written notice to Tenant, pays the taxes based upon any such increase in
the assessed valued of the Building or the Project, then Tenant shall, upon
demand, repay to Landlord the taxes so paid by Landlord.
     13.3. If any improvements in or alterations to the Premises, whether owned
by Landlord or Tenant and whether or not affixed to the real property so as to
become a part thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which improvements conforming to
Landlord’s building standards (the “Building Standard”) in other spaces in the
Building are assessed, then the real property taxes and assessments levied
against Landlord or the Building by reason of such excess assessed valuation
shall be deemed to be taxes levied against personal property of Tenant and shall
be governed by the provisions of Section 13.2 above. Any such excess assessed
valuation due to improvements in or alterations to space in the Building leased
by other tenants of Landlord shall not be included in the Operating Expenses
defined in Article 7, but shall be treated, as to such other tenants, as
provided in this Section 13.3. If the records of the County Assessor are
available and sufficiently detailed to serve as a basis for determining whether
said alterations are assessed at a higher valuation than the Building Standard,
then such records shall be binding on both Landlord and Tenant.
14. Condition of Premises. Tenant acknowledges that neither Landlord nor any
agent of Landlord has made any representation or warranty with respect to the
condition of the Premises, the Building or the Project, or with respect to the
suitability of the Premises, the Building or the Project for the conduct of
Tenant’s business. Tenant acknowledges that (a) it is fully familiar with the
condition of the Premises and agrees to take the same in its condition “as is”
as of the Term Commencement Date and (b) Landlord shall have no obligation to
alter, repair or otherwise prepare the Premises for Tenant’s occupancy or to pay
for or construct any improvements to the Premises, other than Landlord’s Work.
Tenant’s taking of possession of the Premises shall, except as otherwise agreed
to in writing by Landlord and Tenant, conclusively establish that the Premises,
the Building and the Project were at such time in good, sanitary and
satisfactory condition and repair.
15. Common Areas and Parking Facilities.
     15.1. Tenant shall have the non-exclusive right, in common with others, to
use the Common Areas, subject to the rules and regulations adopted by Landlord
and attached hereto as Exhibit D, together with such other reasonable and
nondiscriminatory rules and regulations as are hereafter promulgated by Landlord
in its sole and absolute discretion (the “Rules and Regulations”). Tenant shall
faithfully observe and comply with the Rules and Regulations. Landlord shall not
be responsible to Tenant for the violation or non-performance by any other
tenant or any agent, employee or invitee thereof of any of the Rules and
Regulations.
     15.2. Tenant shall have a non-exclusive, revocable license to use Tenant’s
Pro Rata Share of parking facilities serving the Building in common on an
unreserved basis with other tenants of the Building and the Project.
     15.3. Tenant agrees not to unreasonably overburden the parking facilities
and agrees to cooperate with Landlord and other tenants in the use of the
parking facilities. Landlord reserves the right to determine that parking
facilities are becoming overcrowded and to limit Tenant’s use thereof. Upon such
determination, Landlord may reasonably allocate parking spaces among

11

--------------------------------------------------------------------------------

 

Tenant and other tenants of the Building or the Project. Nothing in this
Section, however, is intended to create an affirmative duty on Landlord’s part
to monitor parking.
     15.4. Landlord reserves the right to modify the Common Areas, including the
right to add or remove exterior and interior landscaping and to subdivide real
property. Tenant acknowledges that Landlord specifically reserves the right to
allow the exclusive use of corridors and restroom facilities located on specific
floors to one or more tenants occupying such floors; provided, however, that
Tenant shall not be deprived of the use of the corridors reasonably required to
serve the Premises or of restroom facilities serving the floor upon which the
Premises are located.
16. Utilities and Services.
     16.1. Tenant shall pay for all water (including the cost to service, repair
and replace reverse osmosis, de-ionized and other treated water), gas, heat,
light, power, telephone, internet service, cable television, other
telecommunications and other utilities supplied to the Premises, together with
any fees, surcharges and taxes thereon. If any such utility is not separately
metered to Tenant, Tenant shall pay a reasonable proportion (to be determined by
Landlord) of all charges of such utility jointly metered with other premises as
part of Tenant’s Pro Rata Share of Operating Expenses or, in the alternative,
Landlord may, at its option, monitor the usage of such utilities by Tenant and
charge Tenant with the cost of purchasing, installing and monitoring such
metering equipment, which cost shall be paid by Tenant as Additional Rent.
     16.2. Landlord shall not be liable for, nor shall any eviction of Tenant
result from the failure to furnish any such utility or service, whether or not
such failure is caused by accident; breakage; repair; strike, lockout or other
labor disturbance or labor dispute of any character; act of terrorism; shortage
of materials, which shortage is not unique to Landlord or Tenant, as the case
may be; governmental regulation, moratorium or other governmental action; or
Landlord’s inability, despite the exercise of reasonable diligence or by any
other cause, including Landlord’s gross negligence, to furnish any such utility
or service (collectively, “Force Majeure”). In the event of such failure, Tenant
shall not be entitled to any abatement or reduction of Rent, nor shall Tenant be
relieved from the operation of any covenant or agreement of this Lease.
     16.3. Tenant shall pay for, prior to delinquency of payment therefor, any
utilities and services that may be furnished to the Premises during or, if
Tenant occupies the Premises after the expiration or earlier termination of the
Term, after the Term.
     16.4. Tenant shall not, without Landlord’s prior written consent, use any
device in the Premises (including, without limitation, data processing machines)
that will in any way (a) increase the amount of ventilation, air exchange, gas,
steam, electricity or water beyond the existing capacity of the Building as
proportionately allocated to the Premises based upon Tenant’s Pro Rata Share as
usually furnished or supplied for the use set forth in Section 2.7 or (b) exceed
Tenant’s Pro Rata Share of the Building’s capacity to provide such utilities or
services.
     16.5. If Tenant shall require utilities or services in excess of those
usually furnished or supplied for tenants in similar spaces in the Building by
reason of Tenant’s equipment or extended hours of business operations, then
Tenant shall first procure Landlord’s consent for the use thereof, which consent
Landlord may condition upon the availability of such excess utilities or
services, and Tenant shall pay as Additional Rent an amount equal to the cost of
providing such excess utilities and services.
     16.6. Utilities and services provided by Landlord to the Premises that are
separately metered shall be paid by Tenant directly to the supplier of such
utility or service.
     16.7. Landlord shall provide water in Common Areas for lavatory purposes
only; provided, however, that if Landlord determines that Tenant requires, uses
or consumes water for any purpose other than ordinary lavatory purposes,
Landlord may install a water meter and thereby measure Tenant’s water
consumption for all purposes. Tenant shall pay Landlord for the costs of such
meter and the installation thereof and, throughout the duration of Tenant’s
occupancy of the Premises, Tenant shall keep said meter and installation
equipment in good working order and repair at Tenant’s sole cost and expense. If
Tenant fails to so maintain such meter and equipment, Landlord may repair or
replace the same and shall collect the costs

12

--------------------------------------------------------------------------------

 

therefor from Tenant. Tenant agrees to pay for water consumed, as shown on said
meter, as and when bills are rendered. If Tenant fails to timely make such
payments, Landlord may pay such charges and collect the same from Tenant. Any
such costs or expenses incurred, or payments made by Landlord for any of the
reasons or purposes hereinabove stated, shall be deemed to be Additional Rent
payment by Tenant and collectible by Landlord as such.
     16.8. Landlord reserves the right to stop service of the elevator,
plumbing, ventilation, air conditioning and electric systems, when Landlord
deems necessary or desirable, due to accident, emergency or the need to make
repairs, alterations or improvements, until such repairs, alterations or
improvements shall have been completed, and Landlord shall further have no
responsibility or liability for failure to supply elevator facilities, plumbing,
ventilation, air conditioning or electric service when prevented from doing so
by Force Majeure or a failure by a third party to deliver gas, oil or another
suitable fuel supply, or Landlord’s inability by exercise of reasonable
diligence to obtain gas, oil or another suitable fuel. Without limiting the
foregoing, it is expressly understood and agreed that any covenants on
Landlord’s part to furnish any service pursuant to any of the terms, covenants,
conditions, provisions or agreements of this Lease, or to perform any act or
thing for the benefit of Tenant, shall not be deemed breached if Landlord is
unable to furnish or perform the same by virtue of Force Majeure.
Notwithstanding the foregoing, if all or a portion of the Premises is rendered
untenantable due to the failure of any Building systems during the Term due to
Landlord’s gross negligence or willful misconduct, Tenant shall not be
responsible for payment of Basic Annual Rent for any period after the first
(1st) five (5) business days of such untenantability until such systems return
to functionality; provided, however, that Tenant shall promptly provide Landlord
with written notice of the failure of any such Building systems.
17. Alterations.
     17.1. Tenant shall make no alterations, additions or improvements in or to
the Premises or engage in any construction, demolition, reconstruction,
renovation, or other work (whether major or minor) of any kind in, at, or
serving the Premises (“Alterations”) without Landlord’s prior written approval,
which approval Landlord shall not unreasonably withhold; provided, however, that
in the event any proposed Alteration affects (a) any structural portions of the
Building, including exterior walls, roof, foundation or core of the Building,
(b) the exterior of the Building or (c) any Building systems, including
elevator, plumbing, air conditioning, heating, electrical, security, life safety
and power, then Landlord may withhold its approval with respect thereto in its
sole and absolute discretion. Tenant shall, in making any such Alterations, use
only those architects, contractors, suppliers and mechanics of which Landlord
has given prior written approval, which approval shall be in Landlord’s sole and
absolute discretion. In seeking Landlord’s approval, Tenant shall provide
Landlord, at least fourteen (14) days in advance of any proposed construction,
with plans, specifications, bid proposals, work contracts, requests for laydown
areas and such other information concerning the nature and cost of the
Alterations as Landlord may reasonably request.
     17.2. Tenant shall not construct or permit to be constructed partitions or
other obstructions that might interfere with free access to mechanical
installation or service facilities of the Building, or interfere with the moving
of Landlord’s equipment to or from the enclosures containing such installations
or facilities.
     17.3. Tenant shall accomplish any work performed on the Premises or the
Building in such a manner as to permit any fire sprinkler system and fire water
supply lines to remain fully operable at all times.
     17.4. Any work performed on the Premises or the Building by Tenant or
Tenant’s contractors shall be done at such times and in such manner as Landlord
may from time to time designate. Tenant covenants and agrees that all work done
by Tenant or Tenant’s contractors shall be performed in full compliance with
Applicable Laws. Within thirty (30) days after completion of any Alterations,
Tenant shall provide Landlord with complete “as-built” drawing print sets and
electronic CADD files on disc (or files in such other current format in common
use as Landlord reasonably approves or requires) showing any changes in the
Premises.
     17.5. Before commencing any work, Tenant shall give Landlord at least
fourteen (14) days’ prior written notice of the proposed commencement of such
work and shall, if required by

13

--------------------------------------------------------------------------------

 

Landlord, secure, at Tenant’s own cost and expense, a completion and lien
indemnity bond satisfactory to Landlord for said work.
     17.6. All Alterations, attached equipment, decorations, fixtures, trade
fixtures, additions and improvements, subject to Section 17.8, attached to or
built into the Premises, made by either of the Parties, including, without
limitation, all floor and wall coverings, built-in cabinet work and paneling,
sinks and related plumbing fixtures, laboratory benches, exterior venting fume
hoods and walk-in freezers and refrigerators, ductwork, conduits, electrical
panels and circuits, shall (unless, prior to such construction or installation,
Landlord elects otherwise) become the property of Landlord upon the expiration
or earlier termination of the Term, and shall remain upon and be surrendered
with the Premises as a part thereof. The Premises shall at all times remain the
property of Landlord and shall be surrendered to Landlord upon the expiration or
earlier termination of this Lease. All trade fixtures, equipment, tenant
improvements, Alterations and Signage installed by or under Tenant shall be the
property of Landlord.
     17.7. Tenant shall repair any damage to the Premises caused by Tenant’s
removal of any property from the Premises. During any such restoration period,
Tenant shall pay Rent to Landlord as provided herein as if said space were
otherwise occupied by Tenant. The provisions of this Section shall survive the
expiration or earlier termination of this Lease.
     17.8. Except as to those items listed on Exhibit C attached hereto, all
business and trade fixtures, machinery and equipment, built-in furniture and
cabinets, together with all additions and accessories thereto, installed in and
upon the Premises shall be and remain the property of Landlord and shall not be
moved by Tenant at any time during the Term. If Tenant shall fail to remove any
of its effects from the Premises prior to termination of this Lease, then
Landlord may, at its option, remove the same in any manner that Landlord shall
choose and store said effects without liability to Tenant for loss thereof or
damage thereto, and Tenant shall pay Landlord, upon demand, any costs and
expenses incurred due to such removal and storage or Landlord may, at its sole
option and without notice to Tenant, sell such property or any portion thereof
at private sale and without legal process for such price as Landlord may obtain
and apply the proceeds of such sale against any (a) amounts due by Tenant to
Landlord under this Lease and (b) any expenses incident to the removal, storage
and sale of said personal property.
     17.9. Notwithstanding any other provision of this Article 17 to the
contrary, in no event shall Tenant remove any improvement from the Premises as
to which Landlord contributed payment, including, without limitation, Landlord’s
Work, without Landlord’s prior written consent, which consent Landlord may
withhold in its sole and absolute discretion.
     17.10. Tenant shall pay to Landlord an amount equal to five percent (5%) of
the cost to Tenant of all changes installed by Tenant or its contractors or
agents to cover Landlord’s overhead and expenses for plan review, coordination,
scheduling and supervision thereof. For purposes of payment of such sum, Tenant
shall submit to Landlord copies of all bills, invoices and statements covering
the costs of such charges, accompanied by payment to Landlord of the fee set
forth in this Section. Tenant shall reimburse Landlord for any extra expenses
incurred by Landlord by reason of faulty work done by Tenant or its contractors,
or by reason of delays caused by such work, or by reason of inadequate clean-up.
     17.11. Within sixty (60) days after final completion of any Alterations
performed by Tenant with respect to the Premises, Tenant shall submit to
Landlord documentation showing the amounts expended by Tenant with respect to
such Alterations, together with supporting documentation reasonably acceptable
to Landlord.
     17.12. Tenant shall require its contractors and subcontractors performing
work on the Premises to name Landlord and its affiliates and lenders as
additional insureds on their respective insurance policies.
18. Repairs and Maintenance.
     18.1. Landlord shall repair and maintain the structural and exterior
portions and Common Areas of the Building and the Project, including, without
limitation, roofing and covering materials, foundations, exterior walls,
plumbing, fire sprinkler systems (if any), heating, ventilating, air
conditioning, elevators, and electrical systems installed or furnished by

14

--------------------------------------------------------------------------------

 

Landlord. Any costs related to the repair or maintenance activities specified in
this Section 18.1 shall be included as a part of Operating Expenses, unless such
repairs or maintenance is required in whole or in part because of any act,
neglect, fault or omissions of Tenant, its agents, servants, employees or
invitees, in which case Tenant shall pay to Landlord the cost of such repairs
and maintenance.
     18.2. Except for services of Landlord, if any, required by Section 18.1,
Tenant shall at Tenant’s sole cost and expense maintain and keep the Premises
and every part thereof in good condition and repair, damage thereto from
ordinary wear and tear excepted. Tenant shall, upon the expiration or sooner
termination of the Term, surrender the Premises to Landlord in as good of a
condition as when received, ordinary wear and tear excepted. Landlord shall have
no obligation to alter, remodel, improve, repair, decorate or paint the Premises
or any part thereof, other than Landlord’s Work.
     18.3. Landlord shall not be liable for any failure to make any repairs or
to perform any maintenance that is an obligation of Landlord unless such failure
shall persist for an unreasonable time after Tenant provides Landlord with
written notice of the need of such repairs or maintenance. Tenant waives its
rights under Applicable Laws now or hereafter in effect to make repairs at
Landlord’s expense.
     18.4. Repairs under this Article 18 that are obligations of Landlord are
subject to allocation among Tenant and other tenants as Operating Expenses,
except as otherwise provided in this Article 18.
     18.5. This Article 18 relates to repairs and maintenance arising in the
ordinary course of operation of the Building and the Project and any related
facilities. In the event of fire, earthquake, flood, vandalism, war, terrorism,
natural disaster or similar cause of damage or destruction, Article 22 shall
apply in lieu of this Article 18.
19. Liens.
     19.1. Subject to the immediately succeeding sentence, Tenant shall keep the
Premises, the Building and the Project free from any liens arising out of work
performed, materials furnished or obligations incurred by Tenant. Tenant further
covenants and agrees that any mechanic’s lien filed against the Premises, the
Building or the Project for work claimed to have been done for, or materials
claimed to have been furnished to, shall be discharged or bonded by Tenant
within twenty (20) days after the filing thereof, at Tenant’s sole cost and
expense.
     19.2. Should Tenant fail to discharge or bond against any lien of the
nature described in Section 19.1, Landlord may, at Landlord’s election, pay such
claim or post a bond or otherwise provide security to eliminate the lien as a
claim against title, and Tenant shall immediately reimburse Landlord for the
costs thereof as Additional Rent.
     19.3. In the event that Tenant leases or finances the acquisition of office
equipment, furnishings or other personal property of a removable nature utilized
by Tenant in the operation of Tenant’s business, Tenant warrants that any
Uniform Commercial Code financing statement executed by Tenant shall, upon its
face or by exhibit thereto, indicate that such financing statement is applicable
only to removable personal property of Tenant located within the Premises. In no
event shall the address of the Building be furnished on a financing statement
without qualifying language as to applicability of the lien only to removable
personal property located in an identified suite leased by Tenant. Should any
holder of a financing statement executed by Tenant record or place of record a
financing statement that appears to constitute a lien against any interest of
Landlord or against equipment that may be located other than within an
identified suite leased by Tenant, Tenant shall, within ten (10) days after
filing such financing statement, cause (a) a copy of the lender security
agreement or other documents to which the financing statement pertains to be
furnished to Landlord to facilitate Landlord’s ability to demonstrate that the
lien of such financing statement is not applicable to Landlord’s interest and
(b) Tenant’s lender to amend such financing statement and any other documents of
record to clarify that any liens imposed thereby are not applicable to any
interest of Landlord in the Premises, the Building or the Project.

15

--------------------------------------------------------------------------------

 

20. Indemnification and Exculpation.
     20.1. Tenant agrees to indemnify, defend and save Landlord harmless from
and against any and all demands, claims, liabilities, losses, costs, expenses,
actions, causes of action, damages or judgments, and all reasonable expenses
(including, without limitation, reasonable attorneys’ fees, charges and
disbursements) incurred in investigating or resisting the same (collectively,
“Claims”) arising from injury or death to any person or damage to any property
occurring within or about the Premises, the Building or the Property arising
directly or indirectly out of Tenant’s or Tenant’s employees’, agents’ or
guests’ use or occupancy of the Premises or a breach or default by Tenant in the
performance of any of its obligations hereunder, unless caused solely by
Landlord’s willful misconduct or negligence.
     20.2. Notwithstanding any provision of Section 20.1 to the contrary,
Landlord shall not be liable to Tenant for, and Tenant assumes all risk of,
damage to personal property or scientific research, including, without
limitation, loss of records kept by Tenant within the Premises and damage or
losses caused by fire, electrical malfunction, gas explosion or water damage of
any type (including, without limitation, broken water lines, malfunctioning fire
sprinkler systems, roof leaks or stoppages of lines), unless any such loss is
due to Landlord’s willful disregard of written notice by Tenant of need for a
repair that Landlord is responsible to make for an unreasonable period of time.
Tenant further waives any claim for injury to Tenant’s business or loss of
income relating to any such damage or destruction of personal property as
described in this Section 20.2.
     20.3. Landlord shall not be liable for any damages arising from any act,
omission or neglect of any other tenant in the Building or the Project, or of
any other third party.
     20.4. Tenant acknowledges that security devices and services, if any, while
intended to deter crime, may not in given instances prevent theft or other
criminal acts. Landlord shall not be liable for injuries or losses caused by
criminal acts of third parties, and Tenant assumes the risk that any security
device or service may malfunction or otherwise be circumvented by a criminal. If
Tenant desires protection against such criminal acts, then Tenant shall, at
Tenant’s sole cost and expense, obtain appropriate insurance coverage.
     20.5. The provisions of this Article 20 shall survive the expiration or
earlier termination of this Lease.
21. Insurance; Waiver of Subrogation.
     21.1. Landlord shall maintain insurance for the Building and the Project in
amounts equal to full replacement cost (exclusive of the costs of excavation,
foundations and footings, and without reference to depreciation taken by
Landlord upon its books or tax returns) or such lesser coverage as Landlord may
elect, provided that such coverage shall not be less than ninety percent (90%)
of such full replacement cost or the amount of such insurance Landlord’s lender,
mortgagee or beneficiary (each, a “Lender”), if any, requires Landlord to
maintain, providing protection against any peril generally included within the
classification “Fire and Extended Coverage,” together with insurance against
sprinkler damage (if applicable), vandalism and malicious mischief. Landlord,
subject to availability thereof, shall further insure, if Landlord deems it
appropriate, coverage against flood, environmental hazard, earthquake, loss or
failure of building equipment, rental loss during the period of repairs or
rebuilding, workmen’s compensation insurance and fidelity bonds for employees
employed to perform services. Notwithstanding the foregoing, Landlord may, but
shall not be deemed required to, provide insurance for any improvements
installed by Tenant or that are in addition to the standard improvements
customarily furnished by Landlord, without regard to whether or not such are
made a part of or are affixed to the Building. Any costs incurred by Landlord
pursuant to this Section 21.1 shall constitute a portion of Operating Expenses.
     21.2. In addition, Landlord shall carry public liability insurance with a
single limit of not less than One Million Dollars ($1,000,000) for death or
bodily injury, or property damage with respect to the Project. Any costs
incurred by Landlord pursuant to this Section 21.2 shall constitute a portion of
Operating Expenses.
     21.3. Tenant shall, at its own cost and expense, procure and maintain in
effect, beginning on the Term Commencement Date or the date of occupancy,
whichever occurs first,

16

--------------------------------------------------------------------------------

 

and continuing throughout the Term (and occupancy by Tenant, if any, after
termination of this Lease) comprehensive public liability insurance with limits
of not less than Two Million Dollars ($2,000,000) per occurrence for death or
bodily injury and not less than Two Million Dollars ($2,000,000) for property
damage with respect to the Premises (including $100,000 fire legal liability
(each loss)).
     21.4. The insurance required to be purchased and maintained by Tenant
pursuant to this Lease shall name Landlord, BioMed Realty, L.P., BioMed Realty
Trust, Inc., and their respective officers, employees, agents, general partners,
members, subsidiaries, affiliates and Lenders (“Landlord Parties”) as additional
insureds. Said insurance shall be with companies having a rating of not less
than policyholder rating of A and financial category rating of at least
Class XII in “Best’s Insurance Guide.” Tenant shall obtain for Landlord from the
insurance companies or cause the insurance companies to furnish certificates of
coverage to Landlord. No such policy shall be cancelable or subject to reduction
of coverage or other modification or cancellation except after thirty (30) days’
prior written notice to Landlord from the insurer (except in the event of
non-payment of premium, in which case ten (10) days written notice shall be
given). All such policies shall be written as primary policies, not contributing
with and not in excess of the coverage that Landlord may carry. Tenant’s policy
may be a “blanket policy” that specifically provides that the amount of
insurance shall not be prejudiced by other losses covered by the policy. Tenant
shall, at least twenty (20) days prior to the expiration of such policies,
furnish Landlord with renewals or binders. Tenant agrees that if Tenant does not
take out and maintain such insurance, Landlord may (but shall not be required
to) procure said insurance on Tenant’s behalf and at its cost to be paid by
Tenant as Additional Rent.
     21.5. Tenant assumes the risk of damage to any fixtures, goods, inventory,
merchandise, equipment and leasehold improvements, and Landlord shall not be
liable for injury to Tenant’s business or any loss of income therefrom, relative
to such damage, all as more particularly set forth within this Lease. Tenant
shall, at Tenant’s sole cost and expense, carry such insurance as Tenant desires
for Tenant’s protection with respect to personal property of Tenant or business
interruption.
     21.6. In each instance where insurance is to name Landlord Parties as
additional insureds, Tenant shall, upon Landlord’s written request, also
designate and furnish certificates evidencing such Landlord Parties as
additional insureds to (a) any Lender of Landlord holding a security interest in
the Building or the Project, (b) the landlord under any lease whereunder
Landlord is a tenant of the real property upon which the Building is located if
the interest of Landlord is or shall become that of a tenant under a ground
lease rather than that of a fee owner, and (c) any management company retained
by Landlord to manage the Project.
     21.7. Landlord and Tenant each hereby waive any and all rights of recovery
against the other or against the officers, directors, employees, agents and
representatives of the other on account of loss or damage occasioned by such
waiving party or its property or the property of others under such waiving
party’s control, in each case to the extent that such loss or damage is insured
against under any fire and extended coverage insurance policy that either
Landlord or Tenant may have in force at the time of such loss or damage. Such
waivers shall continue so long as their respective insurers so permit. Any
termination of such a waiver shall be by written notice to the other party,
containing a description of the circumstances hereinafter set forth in this
Section 21.7. Landlord and Tenant, upon obtaining the policies of insurance
required or permitted under this Lease, shall give notice to the insurance
carrier or carriers that the foregoing mutual waiver of subrogation is contained
in this Lease. If such policies shall not be obtainable with such waiver or
shall be so obtainable only at a premium over that chargeable without such
waiver, then the party seeking such policy shall notify the other of such
conditions, and the party so notified shall have ten (10) days thereafter to
either (a) procure such insurance with companies reasonably satisfactory to the
other party or (b) agree to pay such additional premium (in Tenant’s case, in
the proportion that the area of the Premises bears to the insured area). If the
parties do not accomplish either (a) or (b), then this Section 21.7 shall have
no effect during such time as such policies shall not be obtainable or the party
in whose favor a waiver of subrogation is desired refuses to pay the additional
premium. If such policies shall at any time be unobtainable, but shall be
subsequently obtainable, then neither party shall be subsequently liable for a
failure to obtain such insurance until a reasonable time after notification
thereof by the other party. If the release of either Landlord or Tenant, as set
forth in the first sentence of

17

--------------------------------------------------------------------------------

 

this Section 21.7, shall contravene Applicable Laws, then the liability of the
party in question shall be deemed not released but shall be secondary to the
other party’s insurer.
     21.8. Landlord may require insurance policy limits required under this
Lease to be raised to conform with requirements of Landlord’s Lender or to bring
coverage limits to levels then being required of new tenants within the Project.
22. Damage or Destruction.
     22.1. In the event of a partial destruction of the Building or the Project
by fire or other perils covered by extended coverage insurance not exceeding
twenty-five percent (25%) of the full insurable value thereof, and provided that
(a) the damage thereto is such that the Building or the Project may be repaired,
reconstructed or restored within a period of six (6) months from the date of the
happening of such casualty and (b) Landlord shall receive insurance proceeds
sufficient to cover the cost of such repairs (except for any deductible amount
provided by Landlord’s policy, which deductible amount, if paid by Landlord,
shall constitute an Operating Expense), Landlord shall commence and proceed
diligently with the work of repair, reconstruction and restoration of the
Building or the Project, as applicable, and this Lease shall continue in full
force and effect.
     22.2. In the event of any damage to or destruction of the Building or the
Project other than as described in Section 22.1, Landlord may elect to repair,
reconstruct and restore the Building or the Project, as applicable, in which
case this Lease shall continue in full force and effect, and Landlord shall
notify Tenant in writing of such election, specifying the estimated time to
completion such repairs, reconstruction and restoration. If Landlord estimates
that the repairs, reconstruction and restoration will not be completed with six
(6) months from the date of the happening of such casualty, Tenant shall have
the right to terminate this Lease upon written notice to Landlord delivered
within ten (10) business days after receipt of Landlord’s notice of Landlord’s
election to repair. If Landlord elects not to repair the Building or the
Project, as applicable, then this Lease shall terminate as of the date of such
damage or destruction.
     22.3. Landlord shall give written notice to Tenant within thirty (30) days
following the date of damage or destruction of its election not to repair,
reconstruct or restore the Building or the Project, as applicable.
     22.4. Upon any termination of this Lease under any of the provisions of
this Article 22, the parties shall be released thereby without further
obligation to the other from the date possession of the Premises is surrendered
to Landlord, except with regard to (a) items occurring prior to the damage or
destruction and (b) provisions of this Lease that, by their express terms,
survive the expiration or earlier termination hereof.
     22.5. In the event of repair, reconstruction and restoration as provided in
this Article 22, all Rent to be paid by Tenant under this Lease shall be abated
proportionately based on the extent to which Tenant’s use of the Premises is
impaired during the period of such repair, reconstruction or restoration, unless
Landlord provides Tenant with other space during the period of repair that, in
Tenant’s reasonable opinion, is suitable for the temporary conduct of Tenant’s
business; provided, however, that the amount of such abatement shall be reduced
by the proceeds of lost rental income insurance actually received by Tenant with
respect to the Premises.
     22.6. Notwithstanding anything to the contrary contained in this
Article 22, should Landlord be delayed or prevented from completing the repair,
reconstruction or restoration of the damage or destruction to the Premises after
the occurrence of such damage or destruction by Force Majeure, then the time for
Landlord to commence or complete repairs shall be extended on a day-for-day
basis; provided, however, that, at Landlord’s election, Landlord shall be
relieved of its obligation to make such repair, reconstruction or restoration.
     22.7. If Landlord is obligated to or elects to repair, reconstruct or
restore as herein provided, then Landlord shall be obligated to make such
repair, reconstruction or restoration only with regard to those portions of the
Premises, the Building or the Project that were originally provided at
Landlord’s expense. The repair, reconstruction or restoration of improvements
not originally provided by Landlord or at Landlord’s expense shall be the
obligation of Tenant. In the event Tenant has elected to upgrade certain
improvements from the Building Standard, Landlord shall, upon the need for
replacement due to an insured loss, provide

18

--------------------------------------------------------------------------------

 

only the Building Standard, unless Tenant again elects to upgrade such
improvements and pay any incremental costs related thereto, except to the extent
that excess insurance proceeds, if received, are adequate to provide such
upgrades, in addition to providing for basic repair, reconstruction and
restoration of the Premises, the Building and the Project.
     22.8. Notwithstanding anything to the contrary contained in this
Article 22, Landlord shall not have any obligation whatsoever to repair,
reconstruct or restore the Premises if the damage resulting from any casualty
covered under this Article 22 occurs during the last twelve (12) months of the
Term or any extension hereof, or to the extent that insurance proceeds are not
available therefor.
     22.9. Landlord’s obligation, should it elect or be obligated to repair or
rebuild, shall be limited to the Property and the Building; provided that Tenant
shall, at its expense, replace or fully repair all of Tenant’s personal property
and any Alterations installed by Tenant existing at the time of such damage or
destruction. If the Property or the Building is to be repaired in accordance
with the foregoing, Landlord shall make available to Tenant any portion of
insurance proceeds it receives that are allocable to the Alterations constructed
by Tenant pursuant to this Lease, provided Tenant is not then in default under
this Lease.
23. Eminent Domain.
     23.1. In the event the whole of the Premises, or such part thereof as shall
substantially interfere with Tenant’s use and occupancy thereof, shall be taken
for any public or quasi-public purpose by any lawful power or authority by
exercise of the right of appropriation, condemnation or eminent domain, or sold
to prevent such taking, Tenant or Landlord may terminate this Lease effective as
of the date possession is required to be surrendered to said authority.
     23.2. In the event of a partial taking of the Building or the Project, or
of drives, walkways or parking areas serving the Building or the Project for any
public or quasi-public purpose by any lawful power or authority by exercise of
right of appropriation, condemnation, or eminent domain, or sold to prevent such
taking, then, without regard to whether any portion of the Premises occupied by
Tenant was so taken, Landlord may elect to terminate this Lease as of such
taking if such taking is, in Landlord’s sole opinion, of a material nature such
as to make it uneconomical to continue use of the unappropriated portion for
purposes of renting office or laboratory space.
     23.3. Tenant shall be entitled to any award that is specifically awarded as
compensation for (a) the taking of Tenant’s personal property that was installed
at Tenant’s expense and (b) the costs of Tenant moving to a new location. Except
as set forth in the previous sentence, any award for such taking shall be the
property of Landlord.
     23.4. If, upon any taking of the nature described in this Article 23, this
Lease continues in effect, then Landlord shall promptly proceed to restore the
Premises, the Building and the Project, as applicable, to substantially their
same condition prior to such partial taking. To the extent such restoration is
feasible, as determined by Landlord in its sole and absolute discretion, the
Rent shall be decreased proportionately to reflect the loss of any portion of
the Premises no longer available to Tenant.
24. Defaults and Remedies.
     24.1. Late payment by Tenant to Landlord of Rent and other sums due shall
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which shall be extremely difficult and impracticable to ascertain. Such costs
include, but are not limited to, processing and accounting charges and late
charges that may be imposed on Landlord by the terms of any mortgage or trust
deed covering the Premises. Therefore, if any installment of Rent due from
Tenant is not received by Landlord within five (5) business days after the date
such payment is due, Tenant shall pay to Landlord an additional sum of six
percent (6%) of the overdue Rent as a late charge. The parties agree that this
late charge represents a fair and reasonable estimate of the costs that Landlord
shall incur by reason of late payment by Tenant.
     24.2. No payment by Tenant or receipt by Landlord of a lesser amount than
the Rent payment herein stipulated shall be deemed to be other than on account
of the Rent, nor shall any

19

--------------------------------------------------------------------------------

 

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 or in
equity or at law. If a dispute shall arise as to any amount or sum of money to
be paid by Tenant to Landlord hereunder, Tenant shall have the right to make
payment “under protest,” such payment shall not be regarded as a voluntary
payment, and there shall survive the right on the part of Tenant to institute
suit for recovery of the payment paid under protest.
     24.3. If Tenant fails to pay any sum of money required to be paid by it
hereunder, or shall fail to perform any other act on its part to be performed
hereunder, Landlord may, without waiving or releasing Tenant from any
obligations of Tenant, but shall not be obligated to, make such payment or
perform such act; provided that such failure by Tenant continues for three (3)
days after Landlord delivers notice to Tenant demanding performance by Tenant;
or provided that such failure by Tenant unreasonably interfered with the use of
the Building by any other tenant or with the efficient operation of the
Building, or resulted or could have resulted in a violation of Applicable Laws
or the cancellation of an insurance policy maintained by Landlord.
Notwithstanding the foregoing, in the event of an emergency, Landlord shall have
the right to enter the Premises and act in accordance with its rights as
provided elsewhere in this Lease. In addition to the late charge described in
Section 24.1, Tenant shall pay to Landlord as Additional Rent all sums so paid
or incurred by Landlord, together with interest thereon, from the date such sums
were paid or incurred, at the annual rate equal to twelve percent (12%) per
annum or the highest rate permitted by Applicable Laws, whichever is less.
     24.4. The occurrence of any one or more of the following events shall
constitute a “Default” hereunder by Tenant:
          (a) The abandonment or vacation of the Premises by Tenant if Tenant
fails to maintain the Premises in accordance with the Lease;
          (b) The failure by Tenant to make any payment of Rent, as and when
due, where such failure shall continue for a period of three (3) days after
written notice thereof from Landlord to Tenant;
          (c) The failure by Tenant to observe or perform any obligation or
covenant contained herein (other than described in Subsections 24.4(a) and
24.4(b)) to be performed by Tenant, where such failure shall continue for a
period of thirty (30) days after written notice thereof from Landlord to Tenant;
provided that, if the nature of Tenant’s default is such that it reasonably
requires more than thirty (30) days to cure, Tenant shall not be deemed to be in
default if Tenant shall commence such cure within said thirty (30) day period
and thereafter diligently prosecute the same to completion; and provided,
further, that such cure is completed no later than ninety (90) days from the
date of Tenant’s receipt of written notice from Landlord;
          (d) Tenant makes an assignment for the benefit of creditors;
          (e) A receiver, trustee or custodian is appointed to or does take
title, possession or control of all or substantially all of Tenant’s assets;
          (f) Tenant files a voluntary petition under the United States
Bankruptcy Code or any successor statute (the “Bankruptcy Code”);
          (g) Any involuntary petition if filed against Tenant under any chapter
of the Bankruptcy Code and is not dismissed within one hundred twenty
(120) days;
          (h) Failure to deliver an estoppel certificate in accordance with
Article 29; or
          (i) Tenant’s interest in this Lease is attached, executed upon or
otherwise judicially seized and such action is not released within one hundred
twenty (120) days of the action.
          Notices given under this Section 24.4 shall specify the alleged
default and shall demand that Tenant perform the provisions of this Lease or pay
the Rent that is in arrears, as the case may be, within the applicable period of
time, or quit the Premises. No such notice shall be

20

--------------------------------------------------------------------------------

 

deemed a forfeiture or a termination of this Lease unless Landlord elects
otherwise in such notice.
     24.5. In the event of a Default by Tenant, and at any time thereafter, with
or without notice or demand and without limiting Landlord in the exercise of any
right or remedy that Landlord may have, Landlord shall be entitled to terminate
Tenant’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Tenant shall immediately surrender possession of
the Premises to Landlord. In such event, Landlord shall have the immediate right
to re-enter and remove all persons and property, and such property may be
removed and stored in a public warehouse or elsewhere at the cost and for the
account of Tenant, all without service of notice or resort to legal process and
without being deemed guilty of trespass or becoming liable for any loss or
damage that may be occasioned thereby. In the event that Landlord shall elect to
so terminate this Lease, then Landlord shall be entitled to recover from Tenant
all damages incurred by Landlord by reason of Tenant’s default, including,
without limitation:
          (a) The worth at the time of award of any unpaid Rent that had accrued
at the time of such termination; plus
          (b) The worth at the time of award of the amount by which the unpaid
Rent that would have accrued during the period commencing with termination of
the Lease and ending at the time of award exceeds that portion of the loss of
Landlord’s rental income from the Premises that Tenant proves to Landlord’s
reasonable satisfaction could have been reasonably avoided; plus
          (c) The worth at the time of award of the amount by which the unpaid
Rent for the balance of the Term after the time of award exceeds that portion of
the loss of Landlord’s rental income from the Premises that Tenant proves to
Landlord’s reasonable satisfaction could have been reasonably avoided; plus
          (d) Any other amount necessary to compensate Landlord for all the
detriment caused by Tenant’s failure to perform its obligations under this Lease
or that in the ordinary course of things would be likely to result therefrom,
including, without limitation, the cost of restoring the Premises to the
condition required under the terms of this Lease; plus
          (e) At Landlord’s election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by Applicable Laws.
As used in Subsections 24.5(a) and 24.5(b), “worth at the time of award” shall
be computed by allowing interest at the rate specified in Section 24.1. As used
in Subsection 24.5(c) above, the “worth at the time of the award” shall be
computed by taking the present value of such amount, using the discount rate of
the Federal Reserve Bank of San Francisco at the time of the award plus one
(1) percentage point.
     24.6. In addition to any other remedies available to Landlord at law or in
equity and under this Lease, Landlord shall have the remedy described in
California Civil Code Section 1951.4 (Landlord may continue this Lease in effect
after Tenant’s Default and abandonment and recover Rent as it becomes due,
provided Tenant has the right to sublet or assign, subject only to reasonable
limitations). In addition, Landlord shall not be liable in any way whatsoever
for its failure or refusal to relet the Premises. For purposes of this
Section 24.6, the following acts by Landlord will not constitute the termination
of Tenant’s right to possession of the Premises:
          (a) Acts of maintenance or preservation or efforts to relet the
Premises, including, but not limited to, alterations, remodeling, redecorating,
repairs, replacements or painting as Landlord shall consider advisable for the
purpose of reletting the Premises or any part thereof; or
          (b) The appointment of a receiver upon the initiative of Landlord to
protect Landlord’s interest under this Lease or in the Premises.
Notwithstanding the foregoing, in the event of a Default by Tenant, Landlord may
elect at any time to terminate this Lease and to recover damages to which
Landlord is entitled. If Landlord

21

--------------------------------------------------------------------------------

 

does not elect to terminate this Lease as provided in Section 24.5, then
Landlord may, from time to time, recover all Rent as it becomes due under this
Lease.
     24.7. In the event Landlord elects to terminate this Lease and relet the
Premises, Landlord may execute any new lease in its own name. Tenant hereunder
shall have no right or authority whatsoever to collect any Rent from such
tenant. The proceeds of any such reletting shall be applied as follows:
          (a) First, to the payment of any indebtedness other than Rent due
hereunder from Tenant to Landlord, including, without limitation, storage
charges or brokerage commissions owing from Tenant to Landlord as the result of
such reletting;
          (b) Second, to the payment of the costs and expenses of reletting the
Premises, including (i) alterations and repairs that Landlord deems reasonably
necessary and advisable and (ii) reasonable attorneys’ fees, charges and
disbursements incurred by Landlord in connection with the retaking of the
Premises and such reletting;
          (c) Third, to the payment of Rent and other charges due and unpaid
hereunder; and
          (d) Fourth, to the payment of future Rent and other damages payable by
Tenant under this Lease.
     24.8. All of Landlord’s rights, options and remedies hereunder shall be
construed and held to be nonexclusive and cumulative. Landlord shall have the
right to pursue any one or all of such remedies, or any other remedy or relief
that may be provided by Applicable Laws, whether or not stated in this Lease. No
waiver of any default of Tenant hereunder shall be implied from any acceptance
by Landlord of any Rent or other payments due hereunder or any omission by
Landlord to take any action on account of such default if such default persists
or is repeated, and no express waiver shall affect defaults other than as
specified in said waiver.
     24.9. Landlord’s termination of (a) this Lease or (b) Tenant’s right to
possession of the Premises shall not relieve Tenant of any liability to Landlord
that has previously accrued or that shall arise based upon events that occurred
prior to the later to occur of (i) the date of Lease termination or (ii) the
date Tenant surrenders possession of the Premises.
     24.10. To the extent permitted by Applicable Laws, Tenant waives any and
all rights of redemption granted by or under any present or future Applicable
Laws if Tenant is evicted or dispossessed for any cause, or if Landlord obtains
possession of the Premises due to Tenant’s default hereunder or otherwise.
     24.11. Landlord shall not be in default under this Lease unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but
in no event shall such failure continue for more than thirty (30) days after
written notice from Tenant specifying the nature of Landlord’s failure;
provided, however, that if the nature of Landlord’s obligation is such that more
than thirty (30) days are required for its performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
     24.12. In the event of any default by Landlord, Tenant shall give notice by
registered or certified mail to any (a) beneficiary of a deed of trust or
(b) mortgagee under a mortgage covering the Premises, the Building or the
Project and to any landlord of any lease of land upon or within which the
Premises, the Building or the Project is located, and shall offer such
beneficiary, mortgagee or landlord a reasonable opportunity to cure the default,
including time to obtain possession of the Building by power of sale or a
judicial action if such should prove necessary to effect a cure; provided that
Landlord shall furnish to Tenant in writing, upon written request by Tenant, the
names and addresses of all such persons who are to receive such notices.
25. Assignment or Subletting.
     25.1. Except as hereinafter expressly permitted, Tenant shall not, either
voluntarily or by operation of Applicable Laws, directly or indirectly sell,
hypothecate, assign, pledge, encumber or otherwise transfer this Lease, or
sublet the Premises (each, a “Transfer”), without

22

--------------------------------------------------------------------------------

 

Landlord’s prior written consent, which consent Landlord may not unreasonably
delay. Tenant shall have the right to Transfer without Landlord’s prior written
consent the Premises or any part hereof to any person that as of the date of
determination and at all times thereafter directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control with
Tenant (“Tenant’s Affiliate”), provided Tenant shall notify Landlord in writing
at least ten (10) days prior to the effectiveness of such Transfer to Tenant’s
Affiliate (an “Exempt Transfer”) and otherwise comply with the requirements of
this Lease regarding such Transfer. For purposes of Exempt Transfers, “control”
requires both (a) owning (directly or indirectly) more than fifty percent (50%)
of the stock or other equity interests of another person and (b) possessing,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such person.
     25.2. In the event Tenant desires to effect a Transfer, then, at least
forty-five (45) but not more than ninety (90) days prior to the date when Tenant
desires the assignment or sublease to be effective (the “Transfer Date”), Tenant
shall provide written notice to Landlord (the “Transfer Notice”) containing
information (including references) concerning the character of the proposed
transferee, assignee or sublessee; the Transfer Date; any ownership or
commercial relationship between Tenant and the proposed transferee, assignee or
sublessee; and the consideration and all other material terms and conditions of
the proposed Transfer, all in such detail as Landlord shall reasonably require.
Tenant shall also tender to Landlord reasonable attorneys’ fees and other costs
or overhead expenses incurred by Landlord in reviewing Tenant’s request for such
Transfer.
     25.3. Landlord, in determining whether consent should be given to a
proposed Transfer, may give consideration to (a) the financial strength of such
transferee, assignee or sublessee (notwithstanding Tenant remaining liable for
Tenant’s performance), (b) any change in use that such transferee, assignee or
sublessee proposes to make in the use of the Premises and (c) Landlord’s desire
to exercise its rights under Section 25.8 to cancel this Lease. In no event
shall Landlord be deemed to be unreasonable for declining to consent to a
Transfer to a transferee, assignee or sublessee of poor reputation, lacking
financial qualifications or seeking a change in the Permitted Use, or
jeopardizing directly or indirectly the status of Landlord or any of Landlord’s
affiliates as a Real Estate Investment Trust under the Internal Revenue Code of
1986. Notwithstanding anything contained in this Lease to the contrary, (w) no
Transfer shall be consummated on any basis such that the rental or other amounts
to be paid by the occupant, assignee, manager or other transferee thereunder
would be based, in whole or in part, on the income or profits derived by the
business activities of such occupant, assignee, manager or other transferee;
(x) Tenant shall not furnish or render any services to an occupant, assignee,
manager or other transferee with respect to whom transfer consideration is
required to be paid, or manage or operate the Premises or any capital additions
so transferred, with respect to which transfer consideration is being paid;
(y) Tenant shall not consummate a Transfer with any person in which Landlord
owns an interest, directly or indirectly (by applying constructive ownership
rules set forth in Section 856(d)(5) of the Internal Revenue Code (“Revenue
Code”); and (z) Tenant shall not consummate a Transfer with any person or in any
manner that could cause any portion of the amounts received by Landlord pursuant
to this Lease or any sublease, license or other arrangement for the right to
use, occupy or possess any portion of the Premises to fail to qualify as “rents
from real property” within the meaning of Section 856(d) of the Revenue Code, or
any similar or successor provision thereto or which could cause any other income
of Landlord to fail to qualify as income described in Section 856(c)(2) of the
Revenue Code.
     25.4. As conditions precedent to Tenant subleasing the Premises or to
Landlord considering a request by Tenant to Tenant’s transfer of rights or
sharing of the Premises, Landlord may require any or all of the following:
          (a) Tenant shall remain fully liable under this Lease during the
unexpired Term;
          (b) Tenant shall provide Landlord with evidence reasonably
satisfactory to Landlord that the value of Landlord’s interest under this Lease
shall not be diminished or reduced by the proposed Transfer. Such evidence shall
include, without limitation, evidence respecting the relevant business
experience and financial responsibility and status of the proposed transferee,
assignee or sublessee;

23

--------------------------------------------------------------------------------

 

          (c) Tenant shall reimburse Landlord for Landlord’s actual costs and
expenses, including, without limitation, reasonable attorneys’ fees, charges and
disbursements incurred in connection with the review, processing and
documentation of such request;
          (d) If Tenant’s transfer of rights or sharing of the Premises provides
for the receipt by, on behalf of or on account of Tenant of any consideration of
any kind whatsoever (including, without limitation, a premium rental for a
sublease or lump sum payment for an assignment, but excluding Tenant’s
reasonable costs in marketing and subleasing the Premises) in excess of the
rental and other charges due to Landlord under this Lease, Tenant shall pay
fifty percent (50%) of all of such excess to Landlord, prior to deductions for
any transaction costs incurred by Tenant, including marketing expenses, tenant
improvement allowances actually provided by Tenant, alterations, cash
concessions, brokerage commissions, attorneys’ fees and free rent. If said
consideration consists of cash paid to Tenant, payment to Landlord shall be made
upon receipt by Tenant of such cash payment;
          (e) The proposed transferee, assignee or sublessee shall agree that,
in the event Landlord gives such proposed transferee, assignee or sublessee
notice that Tenant is in default under this Lease, such proposed transferee,
assignee or sublessee shall thereafter make all payments otherwise due Tenant
directly to Landlord, which payments shall be received by Landlord without any
liability being incurred by Landlord, except to credit such payment against
those due by Tenant under this Lease, and any such proposed transferee, assignee
or sublessee shall agree to attorn to Landlord or its successors and assigns
should this Lease be terminated for any reason; provided, however, that in no
event shall Landlord or its Lenders, successors or assigns be obligated to
accept such attornment;
          (f) Landlord’s consent to any such Transfer shall be effected on
Landlord’s forms;
          (g) Tenant shall not then be in default hereunder in any respect;
          (h) Such proposed transferee, assignee or sublessee’s use of the
Premises shall be the same as the Permitted Use;
          (i) Landlord shall not be bound by any provision of any agreement
pertaining to the Transfer, except for Landlord’s written consent to the same;
          (j) Tenant shall pay all transfer and other taxes (including interest
and penalties) assessed or payable for any Transfer;
          (k) Landlord’s consent (or waiver of its rights) for any Transfer
shall not waive Landlord’s right to consent to any later Transfer;
          (l) Tenant shall deliver to Landlord one executed copy of any and all
written instruments evidencing or relating to the Transfer; and
          (m) A list of Hazardous Materials (as defined in Section 39.7 below),
certified by the proposed transferee, assignee or sublessee to be true and
correct, that the proposed transferee, assignee or sublessee intends to use or
store in the Premises. Additionally, Tenant shall deliver to Landlord, on or
before the date any proposed transferee, assignee or sublessee takes occupancy
of the Premises, all of the items relating to Hazardous Materials of such
proposed transferee, assignee or sublessee as described in Section 39.2.
     25.5. Any Transfer that is not in compliance with the provisions of this
Article 25 shall be void and shall, at the option of Landlord, terminate this
Lease.
     25.6. The consent by Landlord to a Transfer shall not relieve Tenant or
proposed transferee, assignee or sublessee from obtaining Landlord’s consent to
any further Transfer, nor shall it release Tenant or any proposed transferee,
assignee or sublessee of Tenant from full and primary liability under this
Lease.
     25.7. Notwithstanding any Transfer, Tenant shall remain fully and primarily
liable for the payment of all Rent and other sums due or to become due
hereunder, and for the full performance of all other terms, conditions and
covenants to be kept and performed by Tenant.

24

--------------------------------------------------------------------------------

 

The acceptance of Rent or any other sum due hereunder, or the acceptance of
performance of any other term, covenant or condition thereof, from any person or
entity other than Tenant shall not be deemed a waiver of any of the provisions
of this Lease or a consent to any Transfer.
     25.8. If Tenant delivers to Landlord a Transfer Notice indicating a desire
to transfer this Lease to a proposed transferee, assignee or sublessee other
than as provided within Section 25.4, then Landlord shall have the option,
exercisable by giving notice to Tenant at any time within ten (10) days after
Landlord’s receipt of such Transfer Notice, to terminate this Lease as of the
date specified in the Transfer Notice as the Transfer Date, except for those
provisions that, by their express terms, survive the expiration or earlier
termination hereof. If Landlord exercises such option, then Tenant shall have
the right to withdraw such Transfer Notice by delivering to Landlord written
notice of such election within five (5) days after Landlord’s delivery of notice
electing to exercise Landlord’s option to terminate this Lease. In the event
Tenant withdraws the Transfer Notice as provided in this Section 25.8, this
Lease shall continue in full force and effect. No failure of Landlord to
exercise its option to terminate this Lease shall be deemed to be Landlord’s
consent to a proposed Transfer.
     25.9. If Tenant sublets the Premises or any portion thereof, Tenant hereby
immediately and irrevocably assigns to Landlord, as security for Tenant’s
obligations under this Lease, all rent from any such subletting, and appoints
Landlord as assignee and attorney-in-fact for Tenant, and Landlord (or a
receiver for Tenant appointed on Landlord’s application) may collect such rent
and apply it toward Tenant’s obligations under this Lease; provided that, until
the occurrence of a Default by Tenant, Tenant shall have the right to collect
such rent.
26. Attorneys’ Fees. If either party commences an action against the other party
arising out of or in connection with this Lease, then the substantially
prevailing party shall be entitled to have and recover from the other party
reasonable attorneys’ fees, charges and disbursements and costs of suit.
27. Bankruptcy. In the event a debtor, trustee or debtor in possession under the
Bankruptcy Code, or another person with similar rights, duties and powers under
any other Applicable Laws, proposes to cure any default under this Lease or to
assume or assign this Lease and is obliged to provide adequate assurance to
Landlord that (a) a default shall be cured, (b) Landlord shall be compensated
for its damages arising from any breach of this Lease and (c) future performance
of Tenant’s obligations under this Lease shall occur, then such adequate
assurances shall include any or all of the following, as designated by Landlord
in its sole and absolute discretion:
     27.1. Those acts specified in the Bankruptcy Code or other Applicable Laws
as included within the meaning of “adequate assurance,” even if this Lease does
not concern a shopping center or other facility described in such Applicable
Laws;
     27.2. A prompt cash payment to compensate Landlord for any monetary
defaults or actual damages arising directly from a breach of this Lease;
     27.3. A cash deposit in an amount at least equal to the then-current amount
of the Security Deposit; or
     27.4. The assumption or assignment of all of Tenant’s interest and
obligations under this Lease.
28. Definition of Landlord. With regard to obligations imposed upon Landlord
pursuant to this Lease, the term “Landlord,” as used in this Lease, shall refer
only to Landlord or Landlord’s then-current successor-in-interest. In the event
of any transfer, assignment or conveyance of Landlord’s interest in this Lease
or in Landlord’s fee title to or leasehold interest in the Property, as
applicable, Landlord herein named (and in case of any subsequent transfers or
conveyances, the subsequent Landlord) shall be automatically freed and relieved,
from and after the date of such transfer, assignment or conveyance, from all
liability for the performance of any covenants or obligations contained in this
Lease thereafter to be performed by Landlord and, without further agreement, the
transferee, assignee or conveyee of Landlord’s in this Lease or in Landlord’s
fee title to or leasehold interest in the Property, as applicable, shall be
deemed to have assumed and agreed to observe and perform any and all covenants
and obligations of Landlord hereunder during the tenure of its interest in the
Lease or the Property. Landlord or

25

--------------------------------------------------------------------------------

 

any subsequent Landlord may transfer its interest in the Premises or this Lease
without Tenant’s consent.
29. Estoppel Certificate. Tenant shall, within ten (10) days of receipt of
written notice from Landlord, execute, acknowledge and deliver a statement in
writing substantially in the form attached to this Lease as Exhibit E, or on any
other form reasonably requested by a proposed Lender or purchaser,
(a) certifying that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this
Lease as so modified is in full force and effect) and the dates to which rental
and other charges are paid in advance, if any, (b) acknowledging that there are
not, to Tenant’s knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed, and (c) setting forth
such further information with respect to this Lease or the Premises as may be
requested thereon. Any such statement may be relied upon by any prospective
purchaser or encumbrancer of all or any portion of the real property of which
the Premises are a part. Tenant’s failure to deliver such statement within such
the prescribed time shall, at Landlord’s option, constitute a Default under this
Lease, and, in any event, shall be binding upon Tenant that the Lease is in full
force and effect and without modification except as may be represented by
Landlord in any certificate prepared by Landlord and delivered to Tenant for
execution.
30. Joint and Several Obligations. If more than one person or entity executes
this Lease as Tenant, then:
     30.1. Each of them is jointly and severally liable for the keeping,
observing and performing of all of the terms, covenants, conditions, provisions
and agreements of this Lease to be kept, observed or performed by Tenant; and
     30.2. The term “Tenant” as used in this Lease shall mean and include each
of them, jointly and severally. The act of, notice from, notice to, refund to,
or signature of any one or more of them with respect to the tenancy under this
Lease, including, without limitation, any renewal, extension, expiration,
termination or modification of this Lease, shall be binding upon each and all of
the persons executing this Lease as Tenant with the same force and effect as if
each and all of them had so acted, so given or received such notice or refund,
or so signed.
31. Limitation of Landlord’s Liability.
     31.1. If Landlord is in default under this Lease and, as a consequence,
Tenant recovers a monetary judgment against Landlord, the judgment shall be
satisfied only out of (a) the proceeds of sale received on execution of the
judgment and levy against the right, title and interest of Landlord in the
Building and the Project of which the Premises are a part, (b) rent or other
income from such real property receivable by Landlord or (c) the consideration
received by Landlord from the sale, financing, refinancing or other disposition
of all or any part of Landlord’s right, title or interest in the Building or the
Project of which the Premises are a part.
     31.2. Landlord shall not be personally liable for any deficiency under this
Lease. If Landlord is a partnership or joint venture, then the partners of such
partnership shall not be personally liable for Landlord’s obligations under this
Lease, and no partner of Landlord shall be sued or named as a party in any suit
or action, and service of process shall not be made against any partner of
Landlord except as may be necessary to secure jurisdiction of the partnership or
joint venture. If Landlord is a corporation, then the shareholders, directors,
officers, employees and agents of such corporation shall not be personally
liable for Landlord’s obligations under this Lease, and no shareholder,
director, officer, employee or agent of Landlord shall be sued or named as a
party in any suit or action, and service of process shall not be made against
any shareholder, director, officer, employee or agent of Landlord. If Landlord
is a limited liability company, then the members of such limited liability
company shall not be personally liable for Landlord’s obligations under this
Lease, and no member of Landlord shall be sued or named as a party in any suit
or action, and service of process shall not be made against any member of
Landlord except as may be necessary to secure jurisdiction of the limited
liability company. No partner, shareholder, director, employee, member or agent
of Landlord shall be required to answer or otherwise plead to any service of
process, and no judgment shall be taken or writ of execution levied against any
partner, shareholder, director, employee or agent of Landlord.

26

--------------------------------------------------------------------------------

 

     31.3. Each of the covenants and agreements of this Article 31 shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by Applicable Laws and shall survive the expiration or earlier
termination of this Lease.
32. Project Control by Landlord.
     32.1. Landlord reserves full control over the Building and the Project to
the extent not inconsistent with Tenant’s enjoyment of the Premises as provided
by this Lease. This reservation includes, without limitation, Landlord’s right
to subdivide the Project, convert the Building to condominium units, grant
easements and licenses to third parties, and maintain or establish ownership of
the Building separate from fee title to the Property.
     32.2. Tenant shall, at Landlord’s request, promptly execute such further
documents as may be reasonably appropriate to assist Landlord in the performance
of its obligations hereunder; provided that Tenant need not execute any document
that creates additional liability for Tenant or that deprives Tenant of the
quiet enjoyment and use of the Premises as provided by this Lease.
     32.3. Landlord may, at any and all reasonable times during non-business
hours (or during business hours if Tenant so requests), and upon twenty-four
(24) hours’ prior notice (provided that no time restrictions shall apply or
advance notice be required if an emergency necessitates immediate entry), enter
the Premises to (a) inspect the same and to determine whether Tenant is in
compliance with its obligations hereunder, (b) supply any service Landlord is
required to provide hereunder, (c) show the Premises to prospective purchasers
or tenants during the final year of the Term, (d) post notices of
nonresponsibility, (e) access the telephone equipment, electrical substation and
fire risers and (f) alter, improve or repair any portion of the Building other
than the Premises for which access to the Premises is reasonably necessary. In
connection with any such alteration, improvement or repair as described in
Subsection 32.3(f) above, Landlord may erect in the Premises or elsewhere in the
Project scaffolding and other structures reasonably required for the alteration,
improvement or repair work to be performed. In no event shall Tenant’s Rent
abate as a result of Landlord’s activities pursuant to this Section 32.3;
provided, however, that all such activities shall be conducted in such a manner
so as to cause as little interference to Tenant as is reasonably possible.
Landlord shall at all times retain a key with which to unlock all of the doors
in the Premises. If an emergency necessitates immediate access to the Premises,
Landlord may use whatever force is necessary to enter the Premises, and any such
entry to the Premises shall not constitute a forcible or unlawful entry to the
Premises, a detainer of the Premises, or an eviction of Tenant from the Premises
or any portion thereof.
33. Quiet Enjoyment. So long as Tenant is not in default under this Lease,
Landlord or anyone acting through or under Landlord shall not disturb Tenant’s
occupancy of the Premises, except as permitted by this Lease.
34. Subordination and Attornment.
     34.1. This Lease shall be subject and subordinate to the lien of any
mortgage, deed of trust, or lease in which Landlord is tenant now or hereafter
in force against the Building or the Project and to all advances made or
hereafter to be made upon the security thereof without the necessity of the
execution and delivery of any further instruments on the part of Tenant to
effectuate such subordination.
     34.2. Notwithstanding the foregoing, Tenant shall execute and deliver upon
demand such further instrument or instruments evidencing such subordination of
this Lease to the lien of any such mortgage or mortgages or deeds of trust or
lease in which Landlord is tenant as may be required by Landlord. However, if
any such mortgagee, beneficiary or Landlord under lease wherein Landlord is
tenant so elects, this Lease shall be deemed prior in lien to any such lease,
mortgage, or deed of trust upon or including the Premises regardless of date and
Tenant shall execute a statement in writing to such effect at Landlord’s
request. If Tenant fails to execute any document required from Tenant under this
Section within ten (10) days after written request therefor, Tenant hereby
constitutes and appoints Landlord or its special attorney-in-fact to execute and
deliver any such document or documents in the name of Tenant. Such power is
coupled with an interest and is irrevocable.

27

--------------------------------------------------------------------------------

 

     34.3. Upon written request of Landlord and opportunity for Tenant to
review, Tenant agrees to execute any Lease amendments not materially altering
the terms of this Lease, if required by a mortgagee or beneficiary of a deed of
trust encumbering real property of which the Premises constitute a part incident
to the financing of the real property of which the Premises constitute a part.
Any change affecting the amount or timing of the consideration to be paid by
Tenant or modifying the Term of this Lease shall be deemed as materially
altering the terms hereof.
     34.4. In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deed of trust
made by Landlord covering the Premises, Tenant shall at the election of the
purchaser at such foreclosure or sale attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as Landlord under this Lease.
35. Surrender.
     35.1. At lease ten (10) days prior to Tenant’s surrender of possession of
any part of the Premises, Tenant shall provide Landlord with (a) a facility
decommissioning and Hazardous Materials closure plan for the Premises (“Exit
Survey”), and (b) written evidence of all appropriate governmental releases
obtained by Tenant in accordance with Applicable Laws, including, without
limitation, laws pertaining to the surrender of the Premises. In addition,
Tenant agrees to remain responsible after the surrender of the Premises for the
remediation of any recognized environmental conditions set forth in the Exit
Survey and compliance with any recommendations set forth in the Exit Survey.
Tenant’s obligations under this Section 35.1 shall survive the expiration or
earlier termination of the Lease.
     35.2. No surrender of possession of any part of the Premises shall release
Tenant from any of its obligations hereunder, unless such surrender is accepted
in writing by Landlord.
     35.3. The voluntary or other surrender of this Lease by Tenant shall not
effect a merger with Landlord’s fee title or leasehold interest in the Premises,
the Building or the Property, unless Landlord consents in writing, and shall, at
Landlord’s option, operate as an assignment to Landlord of any or all subleases.
     35.4. The voluntary or other surrender of any ground or other underlying
lease that now exists or may hereafter be executed affecting the Building or the
Project, or a mutual cancellation thereof or of Landlord’s interest therein by
Landlord and its lessor shall not effect a merger with Landlord’s fee title or
leasehold interest in the Premises, the Building or the Property and shall, at
the option of the successor to Landlord’s interest in the Building or the
Project, as applicable, operate as an assignment of this Lease.
36. Waiver and Modification. No provision of this Lease may be modified, amended
or supplemented except by an agreement in writing signed by Landlord and Tenant.
The waiver by Landlord of any breach by Tenant of any term, covenant or
condition herein contained shall not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant or condition herein contained.
37. Waiver of Jury Trial and Counterclaims. The parties waive trial by jury in
any action, proceeding or counterclaim brought by the other party hereto related
to matters arising out of or in any way connected with this Lease; the
relationship between Landlord and Tenant; Tenant’s use or occupancy of the
Premises, the Building or the Project; or any claim of injury or damage related
to this Lease or the Premises, the Building or the Project.
38. [Intentionally omitted]
39. Hazardous Materials.
     39.1. Tenant shall not cause or permit any Hazardous Materials (as
hereinafter defined) to be brought upon, kept or used in or about the Premises,
the Building or the Project in violation of Applicable Laws by Tenant, its
agents, employees, contractors or invitees. If Tenant breaches such obligation,
or if the presence of Hazardous Materials as a result of such a breach results
in contamination of the Premises, the Building, the Project or any adjacent
property, or if contamination of the Premises, the Building, the Project or any
adjacent property by Hazardous

28

--------------------------------------------------------------------------------

 

Materials otherwise occurs during the Term of this Lease or any extension or
renewal hereof or holding over hereunder, then Tenant shall indemnify, save,
defend and hold Landlord, its agents and contractors harmless from and against
any and all claims, judgments, damages, penalties, fines, costs, liabilities and
losses (including, without limitation, diminution in value of the Premises, the
Building, the Project or any portion thereof; damages for the loss or
restriction on use of rentable or usable space or of any amenity of the Premises
or Project; damages arising from any adverse impact on marketing of space in the
Premises, the Building or the Project; and sums paid in settlement of claims,
attorneys’ fees, consultants’ fees and experts’ fees) that arise during or after
the Term as a result of such breach or contamination. This indemnification of
Landlord by Tenant includes, without limitation, costs incurred in connection
with any investigation of site conditions or any cleanup, remedial, removal or
restoration work required by any Governmental Authority because of Hazardous
Materials present in the air, soil or groundwater above, on or under the
Premises. Without limiting the foregoing, if the presence of any Hazardous
Materials in, on, under or about the Premises, the Building, the Project or any
adjacent property caused or permitted by Tenant results in any contamination of
the Premises, the Building, the Project or any adjacent property, then Tenant
shall promptly take all actions at its sole cost and expense as are necessary to
return the Premises, the Building, the Project and any adjacent property to
their respective condition existing prior to the time of such contamination;
provided that Landlord’s written approval of such action shall first be
obtained, which approval Landlord shall not unreasonably withhold; and provided,
further, that it shall be reasonable for Landlord to withhold its consent if
such actions could have a material adverse long-term or short-term effect on the
Premises, the Building or the Project.
     39.2. Landlord acknowledges that it is not the intent of this Article 39 to
prohibit Tenant from operating its business as described in Section 2.7 above.
Tenant may operate its business according to the custom of Tenant’s industry so
long as the use or presence of Hazardous Materials is strictly and properly
monitored according to Applicable Laws. As a material inducement to Landlord to
allow Tenant to use Hazardous Materials in connection with its business, Tenant
agrees to deliver to Landlord prior to the Term Commencement Date a list
identifying each type of Hazardous Material to be present on the Premises and
setting forth any and all governmental approvals or permits required in
connection with the presence of such Hazardous Material on the Premises (the
“Hazardous Materials List”). Tenant shall deliver to Landlord an updated
Hazardous Materials List on or prior to each annual anniversary of the Term
Commencement Date and shall also deliver an updated Hazardous Materials List
before any new Hazardous Materials are brought onto the Premises. Tenant shall
deliver to Landlord true and correct copies of the following documents
(hereinafter referred to as the “Documents”) relating to the handling, storage,
disposal and emission of Hazardous Materials prior to the Term Commencement Date
or, if unavailable at that time, concurrent with the receipt from or submission
to any Governmental Authority: permits; approvals; reports and correspondence;
storage and management plans; notices of violations of Applicable Laws; plans
relating to the installation of any storage tanks to be installed in or under
the Premises, the Building or the Project (provided that installation of storage
tanks shall only be permitted after Landlord has given Tenant its written
consent to do so, which consent Landlord may withhold in its sole and absolute
discretion); and all closure plans or any other documents required by any and
all Governmental Authorities for any storage tanks installed in, on or under the
Premises, the Building or the Project for the closure of any such storage tanks.
Tenant shall not be required, however, to provide Landlord with any portion of
the Documents containing information of a proprietary nature that, in and of
themselves, do not contain a reference to any Hazardous Materials or activities
related to Hazardous Materials. Upon Landlord’s written request, Tenant agrees
that it shall enter into a written agreement with other tenants of the Building
and the Project concerning the equitable allocation of fire control areas (as
defined in the Uniform Building Code as adopted by the city or municipality(ies)
in which the Project is located (the “UBC”)) within the Building and the Project
for the storage of Hazardous Materials. In the event that Tenant’s use of
Hazardous Materials is such that it utilizes fire control areas in the Building
or the Project in excess of Tenant’s Pro Rata Share of the Building or the
Project, as applicable, as set forth in Section 2.2, Tenant agrees that it
shall, at its sole cost and expense and upon Landlord’s written request,
establish and maintain a separate area of the Premises classified by the UBC as
an “H” occupancy area for the use and storage of Hazardous Materials or take
such other action as is necessary to ensure that its share of the fire control
areas of the Building and the Project is not greater than Tenant’s Pro Rata
Share of the Building or the Project, as applicable.

29

--------------------------------------------------------------------------------

 

     39.3. Notwithstanding the provisions of Section 39.1 above, if (a) Tenant
or any proposed transferee, assignee or sublessee of Tenant has been required by
any prior landlord, Lender or Governmental Authority to take remedial action in
connection with Hazardous Materials contaminating a property if the
contamination resulted from such party’s action or omission or use of the
property in question or (ii) Tenant or any proposed transferee, assignee or
sublessee is subject to an enforcement order issued by any Governmental
Authority in connection with the use, disposal or storage of Hazardous
Materials, then Landlord shall have the right to terminate this Lease in
Landlord’s sole and absolute discretion (with respect to any such matter
involving Tenant), and it shall not be unreasonable for Landlord to withhold its
consent to any proposed transfer, assignment or subletting (with respect to any
such matter involving a proposed transferee, assignee or sublessee).
     39.4. At any time, and from time to time, prior to the expiration of the
Term, Landlord shall have the right to conduct appropriate tests of the
Premises, the Building and the Project to demonstrate that Hazardous Materials
are present or that contamination has occurred due to Tenant or Tenant’s agents,
employees or invitees. Tenant shall pay all reasonable costs of such tests of
the Premises.
     39.5. If underground or other storage tanks storing Hazardous Materials are
located on the Premises or are hereafter placed on the Premises by any party,
Tenant shall monitor the storage tanks, maintain appropriate records, implement
reporting procedures, properly close any underground storage tanks, and take or
cause to be taken all other steps necessary or required under the Applicable
Laws.
     39.6. Tenant’s obligations under this Article 39 shall survive the
expiration or earlier termination of the Lease. During any period of time needed
by Tenant or Landlord after the termination of this Lease to complete the
removal from the Premises of any such Hazardous Materials, Tenant shall continue
to pay Rent in accordance with this Lease, which Rent shall be prorated daily.
     39.7. As used herein, the term “Hazardous Material” means any hazardous or
toxic substance, material or waste that is or becomes regulated by any
Governmental Authority.
40. [Intentionally omitted]
41. Miscellaneous.
     41.1. Where applicable in this Lease, the singular includes the plural and
the masculine or neuter includes the masculine, feminine and neuter. The section
headings of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any part hereof.
     41.2. Submission of this instrument for examination or signature by Tenant
does not constitute a reservation of or option for a lease, and shall not be
effective as a lease or otherwise until execution by and delivery to both
Landlord and Tenant.
     41.3. Time is of the essence with respect to the performance of every
provision of this Lease in which time of performance is a factor.
     41.4. Each provision of this Lease performable by Tenant shall be deemed
both a covenant and a condition.
     41.5. Whenever consent or approval of either party is required, that party
shall not unreasonably withhold such consent or approval, except as may be
expressly set forth to the contrary.
     41.6. The terms of this Lease are intended by the parties as a final
expression of their agreement with respect to the terms as are included herein,
and may not be contradicted by evidence of any prior or contemporaneous
agreement.
     41.7. Any provision of this Lease that shall prove to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provision hereof,
and all other provisions of this

30

--------------------------------------------------------------------------------

 

Lease shall remain in full force and effect and shall be interpreted as if the
invalid, void or illegal provision did not exist.
     41.8. Landlord may, but shall not be obligated to, record this Lease or a
short form memorandum hereof without Tenant’s consent. Neither party shall
record this Lease. Tenant shall be responsible for the cost of recording any
memorandum of this Lease, including any transfer or other taxes incurred in
connection with said recordation.
     41.9. The language in all parts of this Lease shall be in all cases
construed as a whole according to its fair meaning and not strictly for or
against either Landlord or Tenant.
     41.10. Each of the covenants, conditions and agreements herein contained
shall inure to the benefit of and shall apply to and be binding upon the parties
hereto and their respective heirs; legatees; devisees; executors;
administrators; and permitted successors, assigns, sublessees. Nothing in this
Section 41.10 shall in any way alter the provisions of this Lease restricting
assignment or subletting.
     41.11. Any notice, consent, demand, bill, statement or other communication
required or permitted to be given hereunder shall be in writing and shall be
given by personal delivery, overnight delivery with a reputable nationwide
overnight delivery service, or certified mail (return receipt requested), and if
given by personal delivery, shall be deemed delivered upon receipt; if given by
overnight delivery, shall be deemed delivered one (1) day after deposit with a
reputable nationwide overnight delivery service; and, if given by certified mail
(return receipt requested), shall be deemed delivered three (3) business days
after the time the notifying party deposits the notice with the United States
Postal Service. Any notices given pursuant to this Lease shall be addressed to
Tenant at the Premises, or to Landlord or Tenant at the addresses shown in
Sections 2.9 and 2.10, respectively. Either party may, by notice to the other
given pursuant to this Section, specify additional or different addresses for
notice purposes.
     41.12. This Lease shall be governed by, construed and enforced in
accordance with the laws of the State in which the Premises are located, without
regard to such State’s conflict of law principles.
     41.13. That individual or those individuals signing this Lease guarantee,
warrant and represent that said individual or individuals have the power,
authority and legal capacity to sign this Lease on behalf of and to bind all
entities, corporations, partnerships, limited liability companies, joint
venturers or other organizations and entities on whose behalf said individual or
individuals have signed.
     41.14. To induce Landlord to enter into this Lease, Tenant agrees that it
shall promptly furnish to Landlord, from time to time, upon Landlord’s written
request, the most recent audited year-end financial statements reflecting
Tenant’s current financial condition. Tenant shall, within ninety (90) days
after the end of Tenant’s financial year, furnish Landlord with a certified copy
of Tenant’s audited year-end financial statements for the previous year. Tenant
represents and warrants that all financial statements, records and information
furnished by Tenant to Landlord in connection with this Lease are true, correct
and complete in all respects.
     41.15. This Lease may be executed in one or more counterparts, each of
which, when taken together, shall constitute one and the same document.
     41.16. [Intentionally omitted]
     41.17. This Lease is subject to any recorded covenants, conditions or
restrictions on the Project or Property (the “CC&Rs”). Tenant shall comply with
the CC&Rs.
42. Options to Extend Term. Tenant shall have two (2) options (each, an
“Option”) to extend the Term of this Lease by three (3) years as to the entire
Premises (and no less than the entire Premises) upon the following terms and
conditions. Any extension of the Term pursuant to an Option shall be on all the
same terms and conditions as this Lease, except as follows:
     42.1. Basic Annual Rent shall be adjusted on the first (1st) day of the
extension term and each annual anniversary date thereof in accordance with
Article 6.

31

--------------------------------------------------------------------------------

 

     42.2. Neither Option is assignable separate and apart from this Lease.
     42.3. An Option is conditional upon Tenant giving Landlord written notice
of its election to exercise such Option at least six (6) months prior to the end
of the expiration of the initial Term of this Lease. Time shall be of the
essence as to Tenant’s exercise of an Option. Tenant assumes full responsibility
for maintaining a record of the deadlines to exercise an Option. Tenant
acknowledges that it would be inequitable to require Landlord to accept any
exercise of an Option after the date provided for in this paragraph.
     42.4. Notwithstanding anything contained in this Article 42, Tenant shall
not have the right to exercise an Option:
          (a) During the time commencing from the date Landlord delivers to
Tenant a written notice that Tenant is in default under any provisions of this
Lease and continuing until Tenant has cured the specified default to Landlord’s
reasonable satisfaction; or
          (b) At any time after any Default as described in Article 24 of the
Lease (provided, however, that, for purposes of this Subsection 42.4(b),
Landlord shall not be required to provide Tenant with notice of such Default)
and continuing until Tenant cures any such Default, if such Default is
susceptible to being cured; or
          (c) In the event that Tenant has defaulted in the performance of its
obligations under this Lease two (2) or more times and a service or late charge
has become payable under Section 24.1 for each of such defaults during the
twelve (12)-month period immediately prior to the date that Tenant intends to
exercise an Option, whether or not Tenant has cured such defaults.
     42.5. The period of time within which Tenant may exercise an Option shall
not be extended or enlarged by reason of Tenant’s inability to exercise such
Option because of the provisions of Section 42.4.
     42.6. All of Tenant’s rights under the provisions of an Option shall
terminate and be of no further force or effect even after Tenant’s due and
timely exercise of such Option if, after such exercise, but prior to the
commencement date of the new term, (a) Tenant fails to pay to Landlord a
monetary obligation of Tenant for a period of twenty (20) days after written
notice from Landlord to Tenant, (b) Tenant fails to commence to cure a default
(other than a monetary default) within thirty (30) days after the date Landlord
gives notice to Tenant of such default or (c) Tenant has defaulted under this
Lease two (2) or more times and a service or late charge under Section 24.1 has
become payable for any such default, whether or not Tenant has cured such
defaults.]
43. [Intentionally omitted]
44. Authority. Tenant and each person executing this Lease on behalf of Tenant
hereby covenants and warrants that (a) Tenant is duly incorporated or otherwise
established or formed and validly existing under the laws of its state of
incorporation, establishment or formation, (b) Tenant has and is duly qualified
to do business in the state in which the Property is located, (c) Tenant has
full corporate, partnership, trust, association or other appropriate power and
authority to enter into this Lease and to perform all Tenant’s obligations
hereunder and (d) each person (and all of the persons if more than one signs)
signing this Lease on behalf of Tenant is duly and validly authorized to do so.
45. Confidentiality. Tenant shall not disclose any terms or conditions of this
Lease (including Rent) or give a copy of this Lease to any third party, and
Landlord shall not release to any third party any nonpublic financial
information or nonpublic information about Tenant’s ownership structure that
Tenant gives Landlord, except (a) if required by Applicable Laws or in any
judicial proceeding, provided that the releasing party has given the other party
reasonable notice of such requirement, if feasible, (b) to a party’s attorneys,
accountants, brokers and other bona fide consultants or advisers, provided such
third parties agree to be bound by this paragraph or (c) to bona fide
prospective assignees or subtenants of this Lease, provided they agree in
writing to be bound by this paragraph.

32

--------------------------------------------------------------------------------

 

46. Odors and Exhaust. Tenant acknowledges that Landlord would not enter into
this Lease with Tenant unless Tenant assured Landlord that under no
circumstances will any other occupants of the Building or Project (including
persons legally present in any outdoor areas of the Project) be subjected to
odors or fumes (whether or not noxious), and that the Building and Project will
not be damaged by any exhaust, in each case from Tenant’s operations. Landlord
and Tenant therefore agree as follows:
     46.1. Tenant shall not cause or permit (or conduct any activities that
would cause) any release of any odors or fumes of any kind from the Premises.
     46.2. If the Building has a ventilation system that in Landlord’s judgment
is adequate, suitable, and appropriate to vent the Premises in a manner that
does not release odors affecting any indoor or outdoor part of the Project,
Tenant shall vent the Premises through such system. If Landlord at any time
determines that any existing ventilation system is inadequate, or if no
ventilation system exists, Tenant shall in compliance with Applicable Laws vent
all fumes and odors from the Premises (and remove odors from Tenant’s exhaust
stream) as Landlord requires. The placement and configuration of all ventilation
exhaust pipes, louvers and other equipment shall be subject to Landlord’s
approval. Tenant acknowledges Landlord’s legitimate desire to maintain the
Project (indoor and outdoor areas) in an odor-free manner, and Landlord may
require Tenant to abate and remove all odors in a manner that goes beyond the
requirements of Applicable Laws.
     46.3. Tenant shall, at Tenant’s sole cost and expense, provide odor
eliminators and other devices (such as filters, air cleaners, scrubbers and
whatever other equipment may in Landlord’s judgment be necessary or appropriate
from time to time) to completely remove, eliminate and abate any odors, fumes or
other substances in Tenant’s exhaust stream that, in Landlord’s judgment,
emanate from Tenant’s Premises. Any work Tenant performs under this paragraph
shall constitute Alterations.
     46.4. Tenant’s responsibility to remove, eliminate and abate odors, fumes
and exhaust shall continue throughout the Term. Tenant shall install additional
equipment as Landlord requires from time to time under the preceding sentence.
Such installations shall constitute Alterations.
     46.5. If Tenant fails to install satisfactory odor control equipment within
ten (10) business days after Landlord’s demand made at any time, then Landlord
may, without limiting Landlord’s other rights and remedies, require Tenant to
cease and suspend any operations in the Premises that, in Landlord’s
determination, cause odors, fumes or exhaust. For example, if Landlord
determines that Tenant’s production of a certain type of product causes odors,
fumes or exhaust, and Tenant does not install satisfactory odor control
equipment within ten (10) business days after Landlord’s request, then Landlord
may require Tenant to stop producing such type of product in the Premises unless
and until Tenant has installed odor control equipment satisfactory to Landlord.
47. HVAC. For the Premises, Landlord shall (a) maintain and operate the heating,
ventilating and air conditioning systems (“HVAC”); and (b) furnish HVAC as
reasonably required (except as this Lease otherwise provides or as to any
special requirements that arise from Tenant’s particular use of the Premises)
for reasonably comfortable occupancy of the Premises twenty-four (24) hours a
day, 365 or 366 days a year. Notwithstanding anything to the contrary in this
paragraph, Landlord shall have no liability, and Tenant shall have no right or
remedy, on account of any interruption or impairment in HVAC services, provided
that Landlord diligently endeavors to cure any such interruption or impairment.
48. Excavation. If any excavation shall be made upon land adjacent to or under
the Building, or shall be authorized to be made, Tenant shall afford to the
person causing or authorized to cause such excavation, license to enter the
Premises for the purpose of performing such work as said person shall deem
necessary or desirable to preserve and protect the Building from injury or
damage and to support the same by proper foundations, without any claim for
damages or liability against Landlord and without reducing or otherwise
affecting Tenant’s obligations under this Lease.

33

--------------------------------------------------------------------------------

 

49. Names. Landlord reserves the right to change the name of the Project or the
Building in its sole discretion.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

34

--------------------------------------------------------------------------------

 

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

          LANDLORD:

BMR-3030 BUNKER HILL STREET LLC,
a Delaware limited liability company
      By:           Name:           Title:           TENANT:

CYTRX CORPORATION,
a Delaware corporation
      By:           Name:          Title: