Exhibit 10.4

EXECUTION VERSION

ASSIGNMENT AND ASSUMPTION OF LEASE

PARTIES:

THIS AGREEMENT is executed as of this 6th day of August, 2004, by and between
GENTA SALUS LLC, a Delaware limited liability company, (hereinafter “Assignor”)
and LIPOCINE INCORPORATED, a Utah corporation (hereinafter “Assignee”).

WHEREAS, Paradigm Resources, L.C., a Utah limited liability company,
(hereinafter the “Landlord”) and Salus Therapeutics, Inc. entered into a written
Lease Agreement dated August 11, 2003, a copy of which is attached hereto as
Exhibit “A” (hereinafter referred to as the “Lease”), for certain premises
described in the Lease and commonly known as Suite 202, 675 Arapeen Drive, Salt
Lake City, Utah (the “Premises”); and

WHEREAS, Assignor is the successor by merger to Salus Therapeutics, Inc; and

WHEREAS, Pursuant to that certain Asset Purchase and Sale Agreement dated
August 6, 2004 by and between Assignor, Genta Incorporated, a Delaware
corporation, and Assignee (the “Asset Purchase Agreement”), Assignor desires by
this Agreement to assign all of their right, title and interest in and to the
Lease, with the consent of the Landlord, and Assignee desires to assume
Assignor’s position as Lessee under the terms of the Lease from 11:59 p.m. on
August 6, 2004 for the residue of the term of the Lease, subject to the
covenants, agreements, provisions and terms set forth in the Lease.

TERMS:

NOW THEREFORE, in consideration of the covenants herein contained and other
valuable consideration, which is hereby acknowledged, the parties hereby agree
as follows:

 

  1. Assignor hereby assigns, transfers and sets over all of its right, title
and interest in the Lease and the Premises to Assignee effective as of 11:59
p.m. on August 6, 2004 (the “Effective Time”).

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  2. Effective as of the Effective Time, Assignee hereby agrees to assume all
duties, obligations and liabilities of the “Tenant” under said Lease to the
extent such duties, obligations and liabilities are required to be paid or
performed after the Effective Time and agrees to be bound and to perform all of
the obligations, duties, covenants and conditions of the “Tenant” therein
contained, commencing at 11:59 p.m. on August 6, 2004, to the extent such
obligations, duties, covenants and conditions are required to be paid or
performed after the Effective Time.

 

  3. Assignor agrees to and shall remain obligated to Landlord for the full
performance of all covenants, conditions and obligations and duties required of
Tenant under said Lease and shall not be relieved of any performance of
obligation thereunder as the result of this assignment.

 

  4.

Assignor hereby represents and warrants to Assignee that: (a) attached to,
incorporated into, and made a part of this Agreement as Exhibit A is a true,
correct and complete copy of the Lease, and the Lease is the only agreement
between the Landlord and Assignor with respect to the Premises; (b) the Lease is
presently in full force and effect and is a binding obligation of Assignor;
(c) there are no modifications, amendments or supplements to the Lease, except
as the same shall be included in Exhibit A; (d) Assignor’s interest in and to
the Lease is free and clear of any liens and encumbrances; (e) Assignor is not
presently in default in the performance of the Lease or any of its obligations
under the Lease, and, to the knowledge of Assignor, no event has occurred which,
with the passage of time, the giving of notice or both, would constitute a
default by Assignor under the Lease; (f) Assignor is not aware of, and has not
received any notice of, any violation of any law, ordinance, statute, rule,
regulation or other governmental enactment or legislation, including, but not
limited to, any environmental law, ordinance, statute, rule,

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  regulation or other governmental enactment or legislation relating to
hazardous wastes or substances, in connection with the Premises, or the
operation of the Premises, or in any other way affecting the Premises; and
(g) the consent and approval by the Landlord is required to be obtained in
connection with this Agreement pursuant to the terms of the Lease, and such
Landlord’s consent shall be substantially in the form attached hereto. Assignor
has obtained any consents or approvals of Landlord’s lender or any ground lessor
of the Premises that may be required in connection with this Agreement.

 

  5. Effective as of the Effective Time, Assignee hereby agrees to pay the
Landlord all items required of it by the Lease promptly when due and to perform
all covenants, conditions and stipulations in said Lease to be performed by the
“Tenant” to the extent such covenants, conditions and stipulations are required
to be paid or performed after the Effective Time. Notwithstanding the foregoing,
as between Assignor and Assignee, (i) Assignor shall remain liable for, and
subject to the terms and conditions of the Asset Purchase Agreement, Assignor
shall indemnify, defend and hold harmless Assignee from and against, any and all
claims, causes of actions, losses, damages, liabilities, obligations, costs or
expenses of any nature whatsoever, including reasonable attorneys’ fees and
disbursements (collectively, “Liability”), that was required to be paid or
performed, by Assignor on or before the Effective Time or that arises from or
relates to any event or condition that shall have occurred or existed on or with
respect to the Lease and/or the Premises prior to the Effective Time, and
(ii) except as otherwise provided in clause (i) above, Assignee shall be liable
for, and subject to the terms and conditions of the Asset Purchase Agreement,
Assignee shall indemnify, defend and hold harmless Assignor from and against,
any Liability that is required to be paid or performed by Assignee after the
Effective Time or that arises from or relates to any event or condition that
occurs or exits on or with respect to the Lease and/or the Premises after the
Effective Time.

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  6. Nothing herein shall be deemed to waive nor modify the prohibition against
assignments stated in the Lease, as to any proposed later assignments.

 

  7. This Assignment of Lease applies to, inures to the benefit of, and binds
all parties hereto, their heirs, legatees, devisees, administrators, executors,
successors and assigns.

 

  8. In the event of default under any of the terms of this Agreement,
defaulting party agrees to pay all costs incurred in enforcing this Agreement or
any right arising out of such breach, and including reasonable attorney’s fees.

 

  9. All notices to be given under this Assignment shall be in writing and sent
by United States certified mail, return receipt requested with postage prepaid,
and addressed as follows:

 

If to Assignee at:   

Lipocine, Incorporated

350 West 800 North, Suite 314

Salt Lake City, Utah 84103

Attn: President

If to Assignor at:   

Genta Salus LLC

Two Connell Drive

Berkley Heights, NJ 07922

Attn: President

If Landlord at:   

c/o Woodbury Corporation

Attn: W. Richards Woodbury

2733 East Parleys Way, Suite 300

Salt Lake City, Utah 84109

 

  10. This Assignment shall be governed by and construed in accordance with the
laws of the State of Utah.

 

  11. The parties to this Assignment each personally represent and warrant that
the persons who have executed this Agreement on behalf of such party are duly
authorized to execute and enter into this Assignment in their individual or
representative capacity, as indicated, and to bind the entity they represent.

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  12. Except as specifically modified, altered, or changed by this Assignment,
the Lease and any amendments and/or extensions shall remain unchanged and in
full force and effect throughout the term of the Lease.

 

  13. Assignor acknowledges that Landlord currently holds the sum of $6,475 as a
security deposit to be applied in accordance with the provisions of the Lease;
however, the Lease requires $45,000 to be posted with Landlord as a security
deposit (the “Deposit”). In consideration of the terms and conditions of this
Agreement and the Asset Purchase Agreement, (i) Assignee agrees to pay to
Landlord on or prior to the Effective Time the amount of $45,000 to be held as
the Deposit under the Lease, (ii) by its consent hereto, Landlord agrees to
return to Assignor the sum of $6,475 upon receipt of the $45,000 Deposit from
Assignee and to hold the Deposit paid by Assignee hereunder for the benefit of
Assignee, subject to the provisions of the Lease and (iii) Assignor hereby
assigns all of its right, title and interest to the Deposit to Assignee.

 

  14. In consideration of the terms and conditions of this Agreement and the
Asset Purchase Agreement, Assignee hereby agrees to pay to Landlord on or prior
to the Effective Time August 2004 base rent in the amount of $16,767 and August
2004 additional rent in the amount of $5,483, and, by its consent hereto,
Landlord agrees to accept such sums from Assignee as payment in full of such
August 2004 base rent and additional rent.

 

  15. This Assignment may be executed in any number of counterparts, each of
which shall be deemed to be an original hereof, but all of which, taken
together, shall constitute one and the same instrument. For purposes of the
execution of this Assignment by the Parties, a facsimile signature for and on
behalf of any party shall deemed an original signature of such party.

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IN WITNESS WHEREOF, the parties hereto have set their hand and seals on this 6th
day of August, 2004.

 

ASSIGNOR: GENTA SALUS LLC By:   /s/ William Keane   William Keane   Vice
President

 

ASSIGNEE: LIPOCINE INCORPORATED By:   /s/ Jerry Simmons   Jerry Simmons  
Corporate Business Development Officer

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ASSIGNOR’S ACKNOWLEDGMENT

(L.L.C.)

 

STATE OF NEW JERSEY    )    : ss. COUNTY OF UNION    )

On this 4th day of August, 2004, before me personally appeared William Keane, to
me personally known to be the Vice President of Genta Salus, LLC, the company
that executed the within instrument, known to me to be the persons who executed
the within instrument on behalf of said company therein named, and acknowledged
to me that such company executed the within instrument pursuant to its articles
of organization and governing documents.

 

  /s/ illegible   Notary Public

ASSIGNEE’ S ACKNOWLEDGMENT

(CORPORATE)

 

STATE OF UTAH    )    : ss. COUNTY OF SALT LAKE    )

On this 4th day of August, 2004, before me personally appeared. Jerry Simmons to
me personally known to be the Corporate Business Development Officer of Lipocine
Incorporated, the corporation that executed the within instrument, known to me
to be the persons who executed the within instrument on behalf of said
corporation therein named, and acknowledged to me that such corporation executed
the within instrument pursuant to its by-laws or a resolution of its board of
directors.

 

  /s/ Charlotte Hager   Notary Public

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LANDLORD’S CONSENT

Paradigm Resources, L.C., a Utah limited liability company, (hereinafter the
“Landlord”), hereby acknowledges the foregoing Assignment of Lease (the
“Assignment”) and does consent to the same in consideration of the foregoing
agreement with the understanding that this is not a novation, and in no way
releases Assignor from any responsibilities or obligations under the Lease.
Capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the Assignment.

Notwithstanding anything to the contrary in the Lease, including, without
limitation, Section 14.03(a) thereof, Landlord hereby acknowledges that Assignee
shall only be liable under the Lease from and after the Effective Time.

In addition, notwithstanding anything to the contrary in the Lease, (i) Landlord
hereby terminates the lien granted to it pursuant to Section 22.01 of the Lease
and (ii) Landlord agrees that Section 22.01 of the Lease is hereby deleted in
its entirety and replaced with the following:

“Section 22.01. LANDLORD’S LIEN. Tenant is advised that Utah Code Section 38-3-1
and following grants Landlord (Lessor) a lien in regard to unpaid rents.”

Landlord hereby authorizes Assignee to file and/or record with the appropriate
public officials and in the appropriate public offices such instruments and
documents as Assignee shall deem reasonably necessary to evidence the
termination described in clause (i) of the foregoing sentence and Landlord
further agrees to execute such further instruments, documents and agreements and
do such other acts and things as Assignee may reasonably request to effectuate
the termination described in clause (i) of the foregoing sentence.

Landlord acknowledges the provisions of Sections 13 and 14 of the Assignment and
agrees to (i) accept the Deposit from the Assignee and hold such Deposit for the
benefit of Assignee, subject to the provisions of the Lease, (ii) upon receipt
of such Deposit, pay to Assignor the amount of $6,475 and (iii) accept from
Assignee the payments of base rent and additional rent for August 2004 specified
in Section 14 of the Assignment.

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DATED the 6th day of August, 2004.

 

Paradigm Resources, L.C., a Utah limited liability company By:   /s/ W. Richards
Woodbury   W. Richards Woodbury   Manager

 

By:   /s/ Don R. Brown   Don R. Brown   Manager

ACKNOWLEDGED AND AGREED:

LIPOCINE INCORPORATED

 

By:   /s/ Jerry Simmons   Jerry Simmons   Corporate Business Development Officer

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LANDLORD’S ACKNOWLEDGMENT

(L.L.C.)

 

STATE OF UTAH    )    : ss. COUNTY OF SALT LAKE    )

On this 5 day of August, 2004, before me personally appeared W. Richards
Woodbury and Don R. Brown, to me personally known to be the Managers of Paradigm
Resources, L.C., the company that executed the within instrument, known to me to
be the persons who executed the within instrument on behalf of said company
therein named, and acknowledged to me that such company executed the within
instrument pursuant to its articles of organization.

 

  /s/ Julie Wismar   Notary Public

ASSIGNEE’S ACKNOWLEDGMENT

(CORPORATE)

 

STATE OF    )    : ss. COUNTY OF    )

On this 4th day of August, 2004, before me personally appeared Jerry Simmons to
me personally known to be the Corporate Business Development Officer of Lipocine
Incorporated, the corporation that executed the within instrument, known to me
to be the persons who executed the within instrument on behalf of said
corporation therein named, and acknowledged to me that such corporation executed
the within instrument pursuant to its by-laws or a resolution of its board of
directors.

 

  /s/ Charlotte Hager   Notary Public

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LEASE

by and between

PARADIGM RESOURCES, L.C.

a Utah limited liability company

as Landlord

and

SALUS THERAPEUTICS, INC.,

a Utah corporation

as Tenant

for

Suite 202

675 ARAPEEN DRIVE

SALT LAKE CITY, UTAH

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INDEX OF LEASE AGREEMENT; PARADIGM RESOURCES, L.C.

SALT LAKE CITY, UTAH

 

ARTICLE I. BASIC LEASE PROVISIONS; ENUMERATION OF EXHIBITS

     1   

SECTION 1.01 BASIC LEASE PROVISIONS

     1   

SECTION 1.02 SIGNIFICANCE OF A BASIC LEASE PROVISION

     3   

SECTION 1.03 ENUMERATION OF EXHIBITS

     3   

ARTICLE II. GRANT AND PREMISES

     3   

SECTION 2.01 PREMISES

     3   

ARTICLE III. RENT

     3   

SECTION 3.01 BASE MONTHLY RENT

     3   

SECTION 3.02 ESCALATION

     3   

SECTION 3.03 TENANT’S SHARE OF LANDLORD’S EXPENSES

     4   

SECTION 3.04 REPORT OF COSTS AND STATEMENT OF ESTIMATED COSTS

     4   

SECTION 3.05 PAYMENT OF ADDITIONAL RENT

     5   

SECTION 3.06 TAXES

     5   

SECTION 3.07 PAYMENTS

     5   

ARTICLE IV. RENTAL TERM, COMMENCEMENT DATE & PRELIMINARY TERM

     5   

SECTION 4.01 RENTAL TERM

     5   

SECTION 4.02 RENTAL COMMENCEMENT DATE

     5   

SECTION 4.03 PRELIMINARY TERM

     5   

ARTICLE V. CONSTRUCTION OF PREMISES

     6   

SECTION 5.01 CONSTRUCTION BY LANDLORD

     6   

SECTION 5.02 CHANGES AND ADDITIONS BY LANDLORD

     6   

SECTION 5.03 DELIVERY OF POSSESSION

     6   

ARTICLE VI. TENANT’S WORK & LANDLORD’S CONTRIBUTION

     6   

SECTION 6.01 TENANT’S WORK

     6   

SECTION 6.02 LANDLORD CONTRIBUTION TO TENANT’S WORK

     6   

ARTICLE VII. USE

     6   

SECTION 7.01 USE OF PREMISES

     6   

SECTION 7.02 HAZARDOUS SUBSTANCES

     7   

ARTICLE VIII. OPERATION AND MAINTENANCE OF COMMON AREAS

     7   

SECTION 8.01 CONSTRUCTION AND CONTROL OF COMMON AREAS

     7   

SECTION 8.02 LICENSE

     8   

ARTICLE IX. ALTERATIONS, SIGNS, LOCKS & KEYS

     8   

SECTION 9.01 ALTERATIONS

     8   

SECTION 9.02 SIGNS

     8   

SECTION 9.03 LOCKS AND KEYS

     8   

ARTICLE X. MAINTENANCE AND REPAIRS; ALTERATIONS; ACCESS

     8   

SECTION 10.01 LANDLORD’S OBLIGATION FOR MAINTENANCE

     8   

SECTION 10.02 TENANT’S OBLIGATION FOR MAINTENANCE

     8   

SECTION 10.03 SURRENDER AND RIGHTS UPON TERMINATION

     9   

ARTICLE XI. INSURANCE AND INDEMNITY

     9   

SECTION 11.01 LIABILITY INSURANCE AND INDEMNITY

     9   

SECTION 11.02 FIRE AND CASUALTY INSURANCE

     9   

SECTION 11.03 WAIVER OF SUBROGATION

     10   

ARTICLE XII. UTILITY CHARGES

     10   

SECTION 12.01 OBLIGATION OF LANDLORD

     10   

SECTION 12.02 OBLIGATIONS OF TENANT

     10   

SECTION 12.03 LIMITATIONS ON LANDLORDS LIABILITY

     11   

ARTICLE XIII. OFF-SET STATEMENT, ATTORNMENT AND SUBORDINATION

     11   

SECTION 13.01 OFF-SET STATEMENT

     11   

SECTION 13.02 ATTORNMENT

     11   

SECTION 13.03 SUBORDINATION

     11   

SECTION 13.04 MORTGAGEE SUBORDINATION

     11   

SECTION 13.05 REMEDIES

     11   

 

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ARTICLE XIV. ASSIGNMENT

     12   

SECTION 14.01 CONSENT REQUIRED

     12   

SECTION 14.02 LANDLORD OPTION TO TERMINATE

     12   

SECTION 14.03 CONDITIONS OF CONSENT

     12   

SECTION 14.04 STANDARDS OF REASONABLENESS IN WITHHOLDING CONSENT

     12   

SECTION 14.05 CONTINUING LIABILITY OF TENANT AND GUARANTORS

     12   

SECTION 14.06 DOCUMENTATION OF ASSIGNMENT

     12   

ARTICLE XV. WASTE OR NUISANCE

     12   

SECTION 15.01 WASTE OR NUISANCE

     12   

ARTICLE XVI. NOTICES

     13   

SECTION 16.01 NOTICES

     13   

ARTICLE XVII. DESTRUCTION OF THE PREMISES

     13   

SECTION 17.01 DESTRUCTION

     13   

ARTICLE XVIII. CONDEMNATION

     13   

SECTION 18.01 CONDEMNATION

     13   

ARTICLE XIX. DEFAULT OF TENANT

     14   

SECTION 19.01 DEFAULT—RIGHT TO RE-ENTER

     14   

SECTION 19.02 DEFAULT—RIGHT TO RE-LET

     14   

SECTION 19.03 LEGAL EXPENSES

     14   

ARTICLE XX. BANKRUPTCY, INSOLVENCY OR RECEIVERSHIP

     14   

SECTION 20.01 ACT OF INSOLVENCY, GUARDIANSHIP, ETC.

     14   

ARTICLE XXI. LANDLORD ACCESS

     15   

SECTION 21.01 LANDLORD ACCESS

     15   

ARTICLE XXII. LANDLORD’S LIEN

     15   

SECTION 22.01 LANDLORD’S LIEN

     15   

ARTICLE XXIII. HOLDING OVER

     15   

SECTION 23.01 HOLDING OVER

     15   

SECTION 23.02 SUCCESSORS

     15   

ARTICLE XXIV. RULES AND REGULATIONS

     15   

SECTION 24.01 RULES AND REGULATIONS

     15   

ARTICLE XXV. QUIET ENJOYMENT

     15   

SECTION 25.01 QUIET ENJOYMENT

     15   

ARTICLE XXVI. SECURITY DEPOSIT

     15   

SECTION 26.01 SECURITY DEPOSIT

     15   

ARTICLE XXVII MISCELLANEOUS PROVISIONS

     16   

SECTION 27.01 WAIVER

     16   

SECTION 27.02 ENTIRE AGREEMENT

     16   

SECTION 27.03 FORCE MAJEURE

     16   

SECTION 27.04 LOSS AND DAMAGE

     16   

SECTION 27.05 ACCORD AND SATISFACTION

     16   

SECTION 27.06 NO OPTION

     16   

SECTION 27.07 ANTI-DISCRIMINATION

     16   

SECTION 27.08 SEVERABILITY

     16   

SECTION 27.09 OTHER MISCELLANEOUS PROVISIONS

     17   

SECTION 27.10 REPRESENTATION REGARDING AUTHORITY

     17   

SECTION 27.11 UNUSED CONSTRUCTION CONTRIBUTION

     17   

ADDITIONAL PROVISIONS

     17   

SIGNATURES

     18   

LANDLORD ACKNOWLEDGMENT

     18   

TENANT ACKNOWLEDGMENT

     18   

 

ii

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LEASE AGREEMENT

ARTICLE I. BASIC LEASE PROVISIONS; ENUMERATION OF EXHIBITS

SECTION 1.01 BASIC LEASE PROVISIONS

 

(A) DATE: August 11, 2003

 

(B) LANDLORD: PARADIGM RESOURCES, L.C., a Utah limited liability company

 

(C) ADDRESS OF LANDLORD FOR NOTICES (Section 16.01): 2733 East Parleys Way Suite
300, Salt Lake City, UT 84109.

 

(D) TENANT: Salus Therapeutics, Inc., a Utah corporation Tax ID#: 87-0636452.

 

(E) ADDRESS OF TENANT FOR NOTICES (Section 16.01): 615 Arapeen Drive, Salt Lake
City, Utah 84108 until such time that Tenant opens for business at the Leased
Premises at which time address for notices will be 675 Arapeen Drive, Salt Lake
City, Utah 84108.

 

(F) PERMITTED USES (Section 7.01): Research and development lab and offices for
pharmaceuticals, nutritional and biotech products.

 

(G) TENANTS TRADE NAME (Exhibit “D”—Sign Criteria): Salus Therapeutics.

 

(H) BUILDING (Section 2.01): Situated at 675 Arapeen Drive, in the City of Salt
Lake, County of Salt Lake, State of Utah.

 

(I) PREMISES (Section 2.01): That portion of the building at the approximate
location outlined on Exhibit “A” known as Suite 202 consisting of approximately
11,178 square feet of gross rentable area. Approximately 15.46% of such area is
Tenant’s proportionate share of common area hallways, restrooms, etc. in the
building.

 

(J) DELIVERY OF POSSESSION (Section 5.03): Upon execution of Lease. Preliminary
Term begins on Delivery of Possession (Section 4.03).

 

(K) RENTAL TERM, COMMENCEMENT AND EXPIRATION DATE (Sections 4.01 & 4.02): The
Rental Term shall commence on the earlier of (a) one hundred twenty (120) days
after execution or (b) opening of Tenant for business at the Premises, and shall
be for a period of five (5) full Lease Years ending November 30, 2008.

 

(L) BASE MONTHLY RENT (Section 3.01): Sixteen Thousand Seven Hundred Sixty Seven
and 00/100ths Dollars ($16,767.00). Any partial month shall be pro-rated based
on the number of days in that month.

 

(M) ESCALATIONS IN BASE MONTHLY RENT (Section 3.02): $17,270.00 monthly,
commencing December 1, 2004; $17,788.11 monthly, commencing December 1, 2005;
$18,321.75 monthly, commencing December 1, 2006; $18,871.41 monthly, commencing
December 1, 2007.

 

(N) LANDLORD’S SHARE OF OPERATING EXPENSES (Section 3.03): The Base Monthly Rent
shall be absolutely net to the Landlord as provided in Section 3.03.

 

(O) TENANT’S PRO RATA SHARE OF OPERATING EXPENSES (Section 3.03): Tenant shall
be responsible for all operating expenses as defined in Section 3.03. Tenant’s
proportionate share of Basic Costs shall be 11.63%. Said operating expenses
include Basic Costs, Direct Costs, and Metered Costs as define in Section 3.03
and are currently estimated to be $5.25 per square foot or $ 5,483.19 monthly.
Furthermore, said Operating Expenses shall not exceed $51483.19 monthly average
during the First Lease Year.

 

(P) UTILITIES AND SERVICES. Subject to the provisions of Section 3.03, 12.01 and
12.02, this Lease provides that the utilities and services shall be paid or
reimbursed by Tenant

 

(Q) LANDLORD’S CONTRIBUTION TO TENANT’S WORK (Section 6.02): Three Hundred
Thirty five thousand Three Hundred forty and 00/100ths Dollars ($335,340.00).
See also Additional Provisions, Section 27.11, UNUSED CONSTRUCTION
CONTRIBUTIONS.

 

(R) PREPAID RENT: None.

 

(S)

EXCESS HOUR UTILITY CHARGES AND STANDARD OPERATING HOURS (Section 12.02): Tenant
shall have access to the Premises 24 hours, 7 days per week, however, the
Standard Operating Hours for the Building shall be 7:00 a.m. to 6:00 p.m. Monday
through Friday and 8:00 a.m. to 12:00 noon

 

1

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  on Saturday, excluding holidays. To the extent Tenant operates during any time
in excess of the Standard Operating Hours specified above, Tenant shall pay an
extra hourly utility charge of $0.20 per hour per 1,000 square feet for lighting
and electricity and $3.00 per hour per 1,000 square feet for mechanical/HVAC
system for each full or partial hour during which Tenant operates. Furthermore,
Landlord shall not be required to provide snow removal or other common area
services to accomodate Tenant other than during Standard Operating Hours.

 

(T) ADJUSTMENTS BASED ON FINAL AREA DETERMINATION: Upon final completion of
Tenant Improvements, the actual rentable area of the Premises shall be
determined in accordance with standards of Section 2.01. The sums set forth in
Sections 1.01(L), (M), (O), (P) and (U) shall then be proportionately adjusted
to reflect the actual area of the Premises.

 

(U) SECURITY DEPOSIT (Section 26.01): Forty Five Thousand and no/100ths Dollars
($45,000.00) payable on or before October 1, 2003.

 

(V) TENANT’S RIGHT TO TERMINATE: Notwithstanding anything to the contrary
herein, Tenant may elect to terminate this lease effective after December 1,
2006 by giving Landlord written notice on or before October 1, 2006 of Tenant’s
election to terminate. If Tenant elects to terminate, the Tenant shall pay
Landlord a termination fee of $55,000.00 on or before November 30, 2006.

 

(W) TERMINATION OF EXISTING LEASE. Tenant’s lease for premises situated at 615
Arapeen Drive shall terminate effective on the Rent Commencement Date of the
Leased Premises herein. This Lease is a substitute for the lease dated June 16,
2003 for space on the third floor of 675 Arapeen Way and said lease shall
terminate upon full execution of this Lease and all obligations which shall have
otherwise accrued thereunder shall be void and have no force and effect.

 

(X) OPTION TO LEASE SUITE 200. As further consideration for Tenant’s agreement
to enter into this Lease, Landlord hereby grants to Tenant, until October 1,
2003, the option to lease Space 200 (approximately 6,700 sf GRA) on the second
floor as shown on Exhibit A. The Base Monthly Rent shall be One Hundred Thirteen
Thousand Nine Hundred and no/100ths Dollars ($113,900.00) payable in equal
monthly installments of $9,491.67 which is approximately $17.00 per square foot.
Tenant’s pro-rata share of expenses shall be adjusted to 20.01%. Landlord’s
Contribution to Tenant Work for Space 200 shall be $167,500.00 ($25.00 per sf of
gross rentable area) rather than the $30.00 per sf applicable to Suite 202. Said
option shall be exercised on or before October 1, 2003 by written notice of such
exercise to Landlord and the rental term on Space 200 shall commence not later
than February 1, 2004.

 

2

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SECTION 1.02 SIGNIFICANCE OF A BASIC LEASE PROVISION. The foregoing provisions
of Section 1.01 summarize for convenience only certain fundamental terms of the
Lease delineated more fully in the Articles and Sections referenced therein. In
the event of a conflict between the provisions of Section 1.01 and the balance
of the Lease, the latter shall control.

SECTION 1.03 ENUMERATION OF EXHIBITS. The exhibits enumerated In this Section
and attached to this Lease are incorporated in the Lease by this reference and
are to be construed as a part of the Lease.

EXHIBIT “A”—LEASING PLAN SHOWING THE PREMISES

EXHIBIT “B”—LEGAL DESCRIPTION(S)

EXHIBIT “C”—LANDLORD’S WORK

EXHIBIT “D”—TENANT’S WORK

ARTICLE II. GRANT AND PREMISES

SECTION 2.01 PREMISES. Landlord has heretofore obtained a long-term ground lease
covering that certain tract of real property situated in the University of Utah
Research Park in Salt Lake City, State of Utah, more particularly described in
Exhibit “B” attached hereto, together with certain easement for access rights.
(Said tract is hereinafter referred to as the “Property”).

Landlord has constructed, a building on the Property referred to in Section 1.01
(H) (hereinafter the “Building”) suitable for use as office/research and limited
complementary retail space, together with related parking facilities and other
improvements necessary to enable to the Building to be so used (the Building and
related facilities and improvements are hereinafter collectively referred to as
the “Improvements).

In consideration for the rent to be paid and covenants to be performed by
Tenant, Landlord hereby leases to Tenant, and Tenant leases from Landlord for
the Term and upon the terms and conditions herein set forth premises described
in Section 1.01(I) (hereinafter referred to as the “Premises” or “Leased
Premises”), located in the Building. Gross rentable area measurements herein
specified are from the exterior of the perimeter walls of the building to the
center of the interior walls. In addition, the factor set forth in
Section 1.01(1) has been added to the area as measured above to adjust for
Tenant’s proportionate share of common hallways, restrooms, elevators,
stairways, etc. in the building.

The exterior walls and roof of the Premises and the areas beneath said Premises
are not demised hereunder, and the use thereof together with the right to
install, maintain, use, repair, and replace pipes, ducts, conduits, and wires
leading through the Premises in locations which will not materially interfere
with Tenant’s use thereof and serving other parts of the building or buildings
are hereby reserved to Landlord. Landlord reserves (a) such access rights
through the Premises as may be reasonably necessary to enable access by Landlord
to the balance of the building and reserved areas and elements as set forth
above; and (b) the right to install or maintain meters on the Premises to
monitor use of utilities. In exercising such rights, Landlord will use
reasonable efforts so as to not commit waste upon the Premises and as far as
practicable to minimize annoyance, interference or damage to Tenant when making
modifications, additions or repairs.

Subject to the provisions of Article VIII and Section 27.07, Tenant and its
customers, agents and invitees have the right to the non-exclusive use, in
common with others of such unreserved automobile parking spaces, driveways,
footways, and other facilities designated for common use within the Building,
except that with respect to non-exclusive areas, Tenant shall cause its
employees to park their cars only in areas specifically designated from time to
time by Landlord for that purpose. Landlord shall have the right to designate,
in its sole business judgment, certain spaces as “visitor’ parking spaces and
Tenant shall use its best efforts to cause its employees not to park in said
visitor parking.

ARTICLE III. RENT

SECTION 3.01 BASE MONTHLY RENT. Tenant agrees to pay to Landlord the Base
Monthly Rent set forth in Section 1.01(L) at such place as Landlord may
designate, without prior demand therefor, without offset or deduction and in
advance on or before the first day of each calendar month during the Rental
Term, commencing on the Rental Commencement Date. In the event the Rental
Commencement Date occurs on a day other than the first day of a calendar month,
then the Base Monthly Rent to be paid on the Rental Commencement Date shall
include both the Base Monthly Rent for the first full calendar month occurring
after the Rental Commencement Date, plus the Base Monthly Rent for the initial
fractional calendar month prorated on a per-diem basis (based upon a thirty
(30) day month).

SECTION 3.02 ESCALATION. As set forth in Section 1.01(M).

 

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SECTION 3.03 TENANT’S SHARE OF LANDLORD’S EXPENSES.

(a) “Basic Costs” shall mean all reasonable actual costs and expense incurred by
Landlord in connection with the ownership, operation, management and maintenance
of the Building and Property and related improvements located thereon (the
“Improvements”, including, but not limited to, all reasonable expenses incurred
by Landlord as a result of Landlord’s compliance with any and all of its
obligations under this Lease (or under similar leases with other tenants). In
explanation of the foregoing, and not in limitation thereof, Basic Costs shall
include: all real and personal property taxes and assessments (whether general
or special, known or unknown, foreseen or unforeseen) and any tax or assessment
levied or charged in lieu thereof, whether assessed against Landlord and/or
Tenant and whether collected from Landlord and/of Tenant; snow removal, trash
removal, common area, utilities, cost of equipment or devices used to conserve
or monitor energy consumption, supplies, liability and building, fire, and
casualty insurance, license, permit and inspection fees, cost of services of
independent contractors, cost or compensation (including employment taxes and
fringe benefits) of all persons who perform regular and recurring duties
connected with day-to-day operation, maintenance, repair, and replacement of the
Building, its equipment and the adjacent walk, and landscaped area (including,
but not limited to janitorial, scavenger, gardening, security, parking,
elevator, painting, plumbing, electrical, mechanical, carpentry, window washing,
structural and roof repairs and reserves, signing and advertising), but
excluding persons performing services not uniformly available to or performed
for substantially all Building tenants; and rental expense or a reasonable
allowance for depreciation of personal property used in the maintenance,
operation and repair of the Building. The foregoing notwithstanding, Basic Costs
shall not include depreciation on the Building and Improvements; amounts paid
toward principal or interest of loans of Landlord; nor “Direct Costs” as defined
in Section 3.03 (b). Tenant shall pay its Proportionate Share of Basic Costs.
“Tenant’s Proportionate Share of Basic Costs” shall mean the percentage derived
from a fraction, the numerator of which is the gross rentable area of the
Premises as set forth in Section 1.01(1) and the denominator of which is the
gross rentable square footage of the Building (96,134 s.f.). Tenant’s
Proportionate Share of Basic Costs initially is set forth in Section 1.01(0),
subject to increase or decrease due to increases or decreases in the gross
rentable square footage of the Premises and/or the Building.

(b) “Direct Costs” shall mean all actual costs and expenses incurred by Landlord
in connection with the operation, management, maintenance, replacement, and
repair of the Premises, including but not limited to janitorial services, (if
any), maintenance, repairs, supplies, utilities, heating, ventilation, air
conditioning, and property management fees, which property management fees shall
not exceed standard fees for agency management of similar buildings. If any
category of Directs Costs can only be determined on a Building wide basis,
Tenant’s proportionate share of any such category of Direct Costs will be based
on the same percentage established for Tenant’s Proportionate Share of Basic
Costs.

(c) Landlord may cause meters or monitors to be installed to measure actual
electrical and ventilation/air conditioning usage in the Premises by Tenant.
“Metered Costs” shall mean the actual cost of such usage. If such meters are
installed, Tenant shall pay Landlord monthly, as Additional Rent, the estimated
costs of such metered electrical and ventilation/air conditioning usage in lieu
of a pro-rata share of such items included in Direct Costs. If the costs of
ventilation/air conditioning usage are not separately metered for tenants in the
Building said costs shall be considered Direct Costs and shall be calculated as
set forth in 3.03(a).

(d) “Estimated Costs” shall mean the projected amount of Direct Costs, Metered
Costs and Proportionate Share of Basic Costs. The Estimated Costs for the
calendar year in which the Lease commences are set forth in Section 1.01(O), and
are not included in the Base Monthly Rent. If the Estimated Costs as of the date
Tenant takes occupancy are greater than the Estimated Costs at the time this
Lease is executed, the Estimated Costs shall be increased to equal the Estimated
Costs as of the date of Tenant’s occupancy.

SECTION 3.04 REPORT OF COSTS AND STATEMENT OF ESTIMATED COSTS.

(a) After the expiration of each calendar year occurring during the term of this
Lease, Landlord shall furnish Tenant a written statement (“Annual Report of
Costs”) of the Tenant’s actual Direct Costs, Metered Costs and Proportionate
Share of Basic Costs occurring during the previous calendar year. The Direct
Costs and Proportionate Share of Basic costs shall in no event exceed $5.25 per
square-foot in the First Year. The Annual Report of Costs shall specify the
amount by which said actual costs for the previous year exceeds or is less than
the amounts paid by Tenant as Estimated Costs during the previous calendar year.

(b) At the same time specified in Section 3.04 (a), Landlord shall furnish
Tenant a written statement of the Estimated Costs for the then current calendar
year (“Annual Statement of Estimated Costs.”)

 

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SECTION 3.05 PAYMENT OF ADDITIONAL RENT. Tenant shall pay additional rent
(“Additional Rent”) as follows:

(a) With each monthly payment of Base Monthly Rent pursuant to Section 3.01
above, Tenant shall pay to Landlord, without offset or deduction, one-twelfth
(1/12th) of the Annual Statement of Estimated Costs. If at any time Landlord
obtains information that indicates that any of the categories of cost comprising
Estimated Costs are significantly different than as calculated in the Annual
Statement of Estimated Costs then in effect, Landlord may amend said Statement
in order to reflect a more accurate prediction of the actual costs that will be
incurred during the calendar year, and Tenant will pay amended Additional Rent
consistent with said amended Statement.

(b) Within thirty (30) days after delivery of the Annual Report of Costs, Tenant
shall pay to Landlord the amount by which Direct Costs, Metered Costs and
Proportionate Share of Basic Costs, as specified in the Report, exceed the
aggregate of Estimated Costs actually paid by Tenant as Additional Rent for the
year at issue.

(c) If the Annual Report of Costs indicates that the Estimated Costs paid by
Tenant exceeded the actual Direct Costs, Metered Costs and Proportionate Share
of Basic Costs for the same year, Landlord, at its sole election, shall either
(i) pay the amount of such excess to Tenant, or (ii) apply such excess against
the next installment(s) of Base Monthly Rent and/or Additional Rent due
hereunder and so notify Tenant.

SECTION 3.06 TAXES.

(a) Landlord shall pay all real property taxes and assessments (all of which are
hereinafter collectively referred to as “Taxes”) which are levied against or
which apply with respect to the Premises to be reimbursed by Tenant as a part of
Basic Costs.

(b) Tenant shall prior to delinquency pay all taxes, assessments, charges, and
fees which during the Rental Term hereof may be imposed, assessed, or levied by
any governmental or public authority against or upon Tenant’s use of the
Premises or any inventory, personal property, fixtures or equipment kept or
installed, or permitted to be located therein by Tenant.

SECTION 3.07 PAYMENTS. All payments of Base Monthly Rent, Additional Rent and
other payments to be made to Landlord shall be made on a timely basis and shall
be payable to Landlord or as Landlord may otherwise designate. All such payments
shall be mailed, wired or delivered to Landlord’s principal office set forth In
Section 1.01(C), or at such other place as Landlord may designate from time to
time in writing. If mailed, all payments shall be mailed in sufficient time and
with adequate postage thereon to be received in Landlord’s account by no later
than the due date for such payment. If Tenant shall fail to pay any Base Monthly
Rent or any additional rent or any other amounts or charges when due, Tenant
shall pay interest from the due date of such past due amounts to the date of
payment, both before and after judgment at a rate equal to the greater of
fourteen (14%) percent per annum or two (2%) percent over the “prime” or “base”
rate charged by Zions First National Bank of Utah at the due date of such
payment; provided however, that in any case the maximum amount or rate of
interest to be charged shall not exceed the maximum non-usurious rate in
accordance with applicable law.

ARTICLE IV. RENTAL TERM, COMMENCEMENT DATE & PRELIMINARY TERM

SECTION 4.01 RENTAL TERM. The initial term of this Lease shall be for the period
defined as the Rental Term in Section 1.01(K), plus the partial calendar month,
if any, occurring after the Rental Commencement Date (as hereinafter defined) if
the Rental Commencement Date occurs other than on the first day of a calendar
month. “Lease Year’ shall include twelve (12) calendar months, except that first
Lease Year will also include any partial calendar month beginning on the Rental
Commencement Date.

SECTION 4.02 RENTAL COMMENCEMENT DATE. The Rental Term of this Lease and
Tenant’s obligation to pay rent hereunder shall commence as set forth in
Section 1.01(K) (the “Rental Commencement Date”). Within five (5) days after
Landlord’s request to do so, Landlord and Tenant shall execute a written
affidavit, in recordable form, expressing the Rental Commencement Date and the
termination date, which affidavit shall be deemed to be part of this Lease.

SECTION 4.03 PRELIMINARY TERM. The period between the date Tenant enters upon
the Premises and the commencement of the Rental Term will be designated as the
“Preliminary Term” during which no Base Monthly or Additional Rent shall accrue;
however, other covenants and obligations of Tenant shall be in full force and
effect. Delivery of Possession of the Premises to Tenant as provided in
Section 5.03 shall be considered “entry” by Tenant and commencement of
“Preliminary Term”.

 

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ARTICLE V. CONSTRUCTION OF PREMISES

SECTION 5.01 CONSTRUCTION BY LANDLORD. Landlord has constructed the Building in
which the Premises are located. The Premises are constructed substantially in
accordance with Outline Specifications entitled “Landlord’s Work” marked Exhibit
“C” attached hereto and made a part hereof. It is understood and agreed by
Tenant that no minor changes from any plans or from said Outline Specifications
Made necessary during construction of the Premises or the Building shall affect
or change this Lease or invalidate same.

SECTION 5.02 CHANGES AND ADDITIONS BY LANDLORD. Landlord hereby reserves the
right at any time, and from time to time, to make alterations or additions to,
and to build additional stories on the Building in which the Premises are
contained and to build adjoining the same and to modify the existing parking or
other common areas to accommodate additional buildings. Landlord also reserves
the right to construct other buildings or improvements in the Building area from
time to time; on condition that if the Building area is expanded so as to
include any additional buildings, Landlord agrees to create or maintain a
parking ratio adequate to meet local laws and ordinances, including the right to
add land to the Building or to erect parking structures thereon.

SECTION 5.03 DELIVERY OF POSSESSION. Except as hereinafter provided, Landlord
shall deliver the Premises to Tenant ready for Tenant’s Work on or before the
date set forth in Section 1.01(J). The Premises shall be deemed as ready for
delivery when Landlord shall have substantially completed construction of the
portion of the said Premises to be occupied exclusively by Tenant, in accordance
with Landlord’s obligations set forth in Exhibit “C”. Landlord shall, from time
to time during the course of construction, provide information to Tenant
concerning the progress of construction of said Premises, and will give written
notice to Tenant when said Premises are in fact ready for Tenant’s Work.
Notwithstanding the foregoing, Landlord shall have the right to extend the date
for Delivery of Possession of the Premises for a period of three one (1) month
periods by notice in writing given to Tenant any time prior to said delivery
date. If any disputes shall arise as to the Premises being ready for Delivery of
Possession, a certificate furnished by Landlord’s architect in charge so
certifying shall be conclusive and binding of that fact and date upon the
parties. It is agreed that by occupying the Premises as a tenant, Tenant
formally accepts the same and acknowledges that the Premise’s are in the
condition called for hereunder, except for items specifically excepted in
writing at date of occupancy as “incomplete”.

ARTICLE VI. TENANT’S WORK & LANDLORD’S CONTRIBUTION

SECTION 6.01 TENANT’S WORK. Tenant agrees to provide all work of whatsoever
nature in accordance with its obligations set forth in Exhibit “D”. Tenant
agrees to furnish Landlord, within the time periods required in Exhibit “D”,
with a complete and detailed set of plans and specifications drawn by some
qualified person reasonably acceptable to Landlord setting forth and describing
Tenant’s Work in such detail as Landlord may require and in compliance with
Exhibit “D”, unless this requirement be waived in writing by Landlord. If said
plans and specifications are not so furnished by Tenant within the required time
periods, then Landlord may, at its option, in addition to other remedies
Landlord may enjoy, cancel this Lease at any time thereafter while such plans
and specifications have not been so furnished. No material deviation from the
final set of plans and specifications once submitted to and approved by
Landlord, shall be made by Tenant without Landlord’s prior written consent.
Landlord shall have the right to approve Tenant’s architect and contractor to be
used in performing Tenant’s Work, and the right to require and approve insurance
or bonds provided by Tenant or such contractors which approval shall not be
reasonably withheld. In due course after completion of Tenant’s Work, Tenant
shall certify to Landlord the itemized cost of Tenant improvements and fixtures
located upon the Premises.

SECTION 6.02 LANDLORD CONTRIBUTION TO TENANT’S WORK. In addition to Landlord
Work to be completed pursuant to Exhibit “C”, Landlord shall contribute the
amount set forth in Section 1.01(Q) toward Tenant’s Work set forth in Exhibit
“D”. Landlord shall pay 1/2 of Landlord’s Contribution within ten (10) after
receipt of certification from Landlord’s architect that Tenant’s Work is 50%
completed. The remaining portion of Landlord’s Contribution shall be paid within
ten (10) days after the later of 1) Completion of Tenant’s Work and receipt by
Landlord from Tenant of evidence of payments and appropriate lien waivers from
all contractors and others who have supplied labor or materials toward Tenant’s
Work and 2) the Rent Commencement Date.

ARTICLE VII. USE

SECTION 7.01 USE OF PREMISES. Tenant shall use the Premises solely for the
purpose of conducting the business indicated in Section 1.01(F) and for purposes
ordinarily incidental to such use and only for such purposes and in such manner
as are permitted both by the Protective Covenants relating to the University of
Utah Research Park and by any existing legislation concerning the Research Park.
Tenant shall not make any use of the Premises which might cause cancellation or
an increase in the cost of any insurance policy covering the same. Tenant shall
not make any use of the Leased Premises any article, item, or thing which is
prohibited by the standard form of fire insurance policy. Tenant shall not
commit any waste upon the Leased Premises and shall not conduct or allow any
business activity, or thing on the Leased Premises which

 

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is an annoyance or causes damage to Landlord, to other sub-tenants, occupants,
or users of the Improvements, or to occupants of the vicinity. Tenant shall
comply with and abide by all laws, ordinances, and regulations of all municipal,
county, state, and federal authorities which are now in force or which may
hereafter become effective with respect to use and occupancy of the Premises.
Landlord represents that to the best of Its knowledge and understanding, that
upon delivery of possession as set forth in Section 5.03, the Building will
comply with all currently applicable laws, ordinances and regulations of
municipal, county, state and federal authorities.

SECTION 7.02 HAZARDOUS SUBSTANCES.

(a) Landlord shall be responsible for removal of any Hazardous Substances that
existed at the Project prior to construction or any that Landlord has or does
Install at the Premises or Building. After reasonable inquiry, Landlord is not
aware of any existing Hazardous Substances within the Project areas.

(b) Tenant shall not use, produce, store, release, dispose or handle in or about
the Leased Premises or transfer to or from the Leased Premises (or permit any
other party to do such acts) any Hazardous Substance except in compliance with
all applicable Environmental Laws. Tenant shall not construct or use any
improvements, fixtures or equipment or engage in any act on or about the Leased
Premises that would require the procurement of any license or permit pursuant to
any Environmental Law. Tenant shall immediately notify Landlord of (I) the
existence of any Hazardous Substance on or about the Leased Premises that may be
in violation of any Environmental Law (regardless of whether Tenant is
responsible for the existence of such Hazardous Substance), (ii) any proceeding
or investigation by any governmental authority regarding the presence of any
Hazardous Substance on the Leased Premises or the migration thereof to or from
any other property, (iii) all claims made or threatened by any third party
against Tenant relating to any loss or injury resulting from any Hazardous
Substance, or (iv) Tenant’s notification of the National Response Center of any
release of a reportable quantity of a Hazardous Substance in or about the Leased
Premises. “Environmental Laws” shall mean any federal, state or local statute,
ordinance, rule, regulation or guideline pertaining to health, industrial
hygiene, or the environment, including without limitation, the federal
Comprehensive Environmental Response, Compensation, and Liability Act;
“Hazardous Substance” shall mean all substances, materials and wastes that are
or become regulated, or classified as hazardous or toxic, under any
Environmental Law. If it is determined that any Hazardous Substance exists on
the Leased Premises resulting from any act of Tenant or its employees, agents,
contractors, licensees, subtenants or customers, then Tenant shall immediately
take necessary action to cause the removal of said substance and shall remove
such within ten (10) days after discovery. Notwithstanding the above, if the
Hazardous Substance is of a nature that can not be reasonably removed within ten
(10) days Tenant shall not be in default if Tenant has commenced to cause such
removal and proceeds diligently thereafter to complete removal, except that in
all cases, any Hazardous Substance must be removed within sixty (60) days after
discovery thereof. Furthermore, notwithstanding the above, if in the good faith
judgment of Landlord, the existence of such Hazardous Substance creates an
emergency or is of a nature which may result in immediate physical danger to
persons at the Property, Landlord may enter upon the Leased Premises and remove
such Hazardous Substances and charge the cost thereof to Tenant as Additional
Rent.

ARTICLE VIII. OPERATION AND MAINTENANCE OF COMMON AREAS

SECTION 8.01 CONSTRUCTION AND CONTROL OF COMMON AREAS. All automobile parking
areas, driveways, entrances and exits thereto, and other facilities furnished by
Landlord in or neat the buildings or Building, including if any, employee
parking areas, truck ways, loading docks, mail rooms or mail pickup areas,
pedestrian sidewalks and hallways, landscaped areas, retaining walls, stairways,
elevators, utility rooms, restrooms and other areas and Improvements provided by
Landlord for the general use in common tenants, their officers, agents,
employees and customers, shall at all times be subject to the exclusive control
and management of Landlord which shall have the right from time to time to
establish, modify and enforce reasonable Rules and Regulations with respect to
all facilities and areas mentioned in this Section. Landlord shall have the
right to construct, maintain and operate lighting and drainage facilities on or
in all said areas and improvements; to police the same, from time to time to
change the area, level, location and arrangement of parking areas and other
facilities hereinabove referred to; to restrict parking by tenants, their
officers, agents and employees to employee parking areas; to close temporarily
all or any portion of said areas or facilities to such extent as may, in the
opinion of counsel, be legally sufficient to prevent a dedication thereof or the
accrual of any rights to any person or the public therein; to assign “reserved”
parking spaces for exclusive use of certain tenants or for customer parking, to
discourage non-employee and non-customer parking; and to do and perform such
other acts in and to said areas and improvements as, in the exercise of good
business judgment, the Landlord shall determine to be advisable with a view
toward maintaining of appropriate convenience uses, amenities, and for permitted
uses by tenants, their officers, agents, employees and customers. Landlord will
operate and maintain the common facilities referred to above in such a manner as
It, in its sole discretion, shall determine from time to time. Without limiting
the scope of such discretion, Landlord shall have the full right and authority
to employ all personnel and to make all Rules and Regulations pertaining to and
necessary for the

 

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proper operation, security and maintenance of the common areas and facilities.
Building and/or project signs, traffic control signs and other signs determined
by Landlord to be in best interest of the Building, will be considered part of
common area and common facilities.

SECTION 8.02 LICENSE. All common areas and facilities not within the Premises,
which Tenant may be permitted to use and occupy, are to be used and occupied
under a revocable license, and if the amount of such areas be diminished,
Landlord shall not be subject to any liabilities nor shall Tenant be entitled to
any compensation or diminution or abatement of rent, nor shall such diminution
of such areas be deemed constructive or actual eviction, so long as such
revocations or diminutions are deemed by Landlord to serve the best interests of
the Building.

ARTICLE IX. ALTERATIONS, SIGNS, LOCKS & KEYS

SECTION 9.01 ALTERATIONS. Tenant shall not make or suffer to be made any
alterations or additions to the Premises or any part thereof without the prior
written consent of Landlord, Any additions to, or alterations of the Premises
except movable furniture, equipment and trade fixtures shall become a part of
the realty and belong to Landlord upon the termination of Tenant’s lease or
renewal term or other termination or surrender of the Premises to Landlord.

SECTION 9.02 SIGNS. Tenant shall not place or suffer to be placed or maintained
on any exterior door, wall or window of the Premises, or elsewhere in the
Building, any sign, awning, marquee, decoration, lettering, attachment, canopy,
advertising matter or other thing of any kind, and will not place or maintain
any decoration, lettering or advertising matter on the glass of any window or
door of the Premise without first obtaining Landlord’s written approval. Tenant
shall maintain such sign, awning, canopy, decoration, lettering, advertising
matter or other things as may be approved in good condition and repair at all
times. Landlord may, at Tenant’s cost, and without liability to Tenant, enter
the Premises and remove any item erected in violation of the Section 9.02.
Landlord may establish rules and regulations governing the size, type and design
of all signs, decorations, etc., and Tenant agrees to abide by same.

SECTION 9.03 LOCKS AND KEYS.

(a) The building shall be equipped with an electronic card access system at
entrance to building as well as primary doors of the Leased Premises. Landlord
shall issue, monitor, and program key cards for Tenant and Tenant’s employees,
as reasonably needed. When employment relationships change, Tenant shall
cooperate to attempt to retrieve said key cards from employees leaving Tenant.

(b) Where key access exists, Tenant may change locks or install other locks on
doors, but if Tenant does, Tenant must provide Landlord with duplicate keys
within twenty four hours after said change or installation.

(c) Upon termination of this Lease Tenant shall deliver to Landlord all cards
and keys to the Premises including any interior offices, toilet rooms,
combinations to built-in- safes, etc. which shall have been furnished to or by
the Tenant or are in the possession of the Tenant.

ARTICLE X. MAINTENANCE AND REPAIRS; ALTERATIONS; ACCESS

SECTION 10.01 LANDLORD’S OBLIGATION FOR MAINTENANCE. Landlord shall maintain and
repair: (1) the areas outside the Premises including hallways, stairways,
elevators, public restrooms, if any, general landscaping, parking areas,
driveways and walkways; (2) the Building structure including roof, exterior
walls, and foundation; and (3) all plumbing, electrical, heating, and air
conditioning systems. However, if the need for such repairs or maintenance
results from any careless, wrongful or negligent act or omission of Tenant,
Tenant shall pay the entire cost of any such repair or maintenance including a
reasonable charge to cover Landlord’s supervisory overhead. Landlord shall not
be obligated to repair any damage or defect until receipt of written notice from
Tenant of the need of such repair and Landlord shall have a reasonable time
after receipt of such notice in which to make such repairs. Tenant shall give
immediate notice to Landlord in case of fire or accidents in the Premises or in
the building of which the Premises are a part or of defects therein or in any
fixtures or equipment provided by Landlord.

SECTION 10.02 TENANT’S OBLIGATION FOR MAINTENANCE.

(a) Tenant shall provide its own janitorial service and keep and maintain the
Premises including the interior wall surfaces and windows, floors, floor
coverings and ceilings in a clean, sanitary and safe condition in accordance
with the laws of the State and in accordance with all directions, rules and
regulations of the health officer, fire marshall, building inspector, or other
proper officials of the governmental agencies having jurisdiction, at the sole
cost and expense of Tenant, and Tenant shall comply with all requirements of
law, ordinance and otherwise, affecting said Premises.

 

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(b) Tenant shall pay, when due, all claims for labor or material furnished, for
work under Sections 9.01, 9.02 and 10.02 hereof, to or for Tenant at or for use
in the Premises, and shall bond such work if reasonably required by Landlord to
prevent assertion of claims against Landlord.

(c) Tenant agrees to be responsible for all furnishings, fixtures and equipment
located upon the Premises from time to time and shall replace carpeting within
the Premises if same shall be damaged by tearing, burning, or stains resulting
from spilling anything on said carpet, reasonable wear and tear accepted. Tenant
further agrees to use chairmats or floor protectors wherever it uses chairs with
wheels or casters on carpeted areas.

SECTION 10.03 SURRENDER AND RIGHTS UPON TERMINATION.

(a) This Lease and the tenancy hereby created shall cease and terminate at the
end of the Rental Term hereof, or any extension or renewal thereof, without the
necessity of any notice from either Landlord or Tenant to terminate the same,
and Tenant hereby waives notice to vacate the Premises and agrees that Landlord
shall be entitled to the benefit of all provisions of law respecting summary
recovery of possession of Premises from a Tenant holding over to the same extent
as if statutory notice has been given.

(b) Upon termination of this Lease at any time and for any reason whatsoever,
Tenant shall surrender and deliver up the Premises to Landlord in the same
condition as when the Premises were delivered to Tenant or as altered as
provided in Section 9.01, ordinary wear and tear excepted. Upon request of
Landlord, Tenant shall promptly remove all personal property from the Premises
and repair any damage caused by such removal. Obligations under this Lease
relating to events occurring or circumstances existing prior to the date of
termination shall survive the expiration or other termination of the Rental Term
of this Lease. Liabilities accruing after data of termination are set forth in
Sections 13.05, 19.01 and 19.02.

ARTICLE XI. INSURANCE AND INDEMNITY

SECTION 11.01 LIABILITY INSURANCE AND INDEMNITY. Tenant shall, during all terms
hereof, keep in full force and effect a policy of public bodily injury and
property damage liability insurance with respect to the Premises, with a
combined single limit of not less than Two Million Dollars ($2,000,000.00) per
occurrence. The policy shall name Landlord, Property Manager (i.e., Woodbury
Corporation) and any other persons, firms or corporations designated by Landlord
and Tenant as insured, and shall contain a clause that the insurer will not
cancel or change the insurance without first giving the Landlord and Property
Manager twenty (20) days prior written notice. Such insurance shall include an
endorsement permitting Landlord and Property Manager to recover damage suffered
due to act or omission of Tenant, notwithstanding being named as an additional
“Insured party” in such policies. Such insurance may be furnished by Tenant
under any blanket policy carried by it or under a separate policy therefor. The
insurance shall be with an insurance company reasonably approved by Landlord,
which approval shall not unreasonably be withheld, and a copy of the paid-up
policy evidencing such insurance or a certificate of insurer certifying to the
issuance of such policy shall be delivered to Landlord. If Tenant fails to
provide such insurance, Landlord may do so and charge same to Tenant.

Tenant will indemnify, defend and hold Landlord harmless from and against any
and all claims, actions, damages, liability and expense in connection with loss
of life, personal injury and/or damage to property arising from or out of any
occurrence in, upon or at the Premises or from the occupancy or use by Tenant of
the Premises or any part thereof, or occasioned wholly or in part by any act or
omission of Tenant, its agents, contractors, employees, servants, sublessees,
concessionaires or business invitees unless caused by the negligence of Landlord
and to the extent not covered by its fire, casualty and liability insurance. In
case Landlord shall, without fault of its part, be made a party to any
litigation commenced by or against Tenant, then Tenant shall protect and hold
Landlord harmless and shall pay all costs, expenses and reasonable attorney fees
incurred or paid by either in defending itself or enforcing the covenants and
agreements of this Lease.

SECTION 11.02 FIRE AND CASUALTY INSURANCE.

(a) Subject to the provisions of this Section 11.02, Landlord shall secure, pay
for, and at all times during the terms hereof maintain, such available “All
Risk” insurance providing coverage upon the building improvements in an amount
equal to the full insurable value thereof (as determined by Landlord) together
with such other casualty insurance coverage as Landlord deems advisable with
regard to the Office Complex, including at its option, but not limited to,
average clauses; boiler insurance, elevator insurance, automatic sprinkler
damage insurance, and rental income insurance sufficient to pay to Landlord not
less than twelve (12) months Base Monthly Rent and Additional Rent. Landlord may
require appropriate endorsements suitable to Landlord. Landlord’s fire and
casualty insurance on building need not cover items such as Tenant’s murals,
works of art, abnormal decorative treatments or items listed in Section 11.02
included within such policy coverage. All insurance required hereunder shall be
written by reputable, responsible companies licensed in the State of Utah.

 

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Tenant shall have the right, at its request at any reasonable time, to be
furnished with copies of the insurance policies then in force pursuant to this
Section, together with evidence that the premiums therefor have been paid.

(b) Tenant agrees to maintain at its own expense such fire and casualty
insurance coverage as Tenant may desire or require in respect to Tenant’s
personal property, equipment, furniture, fixtures or inventory and Landlord
shall have no obligation in respect to such insurance or losses. All property
kept or stored on the Premises by Tenant or with Tenant’s permission shall be so
done at Tenant’s sole risk and Tenant shall indemnify Landlord against and hold
it harmless from any claims arising out of loss or damage to same.

(c) Tenant will not permit said Premises to be used for any purpose which would
render the insurance thereon void or cause cancellation thereof or Increase the
insurance risk or increase the insurance premiums In effect just prior to the
commencement of this Lease. Tenant agrees to pay as additional rent the total
amount of any increase in the insurance premium of Landlord over that in effect
prior to the commencement of this lease resulting from Tenant use of the
Premises. If Tenant installs any electrical or other equipment which overloads
the lines in the Premises, Tenant shall at its own expense make whatever changes
are necessary to comply with the requirements of Landlord’s insurance.

(d) Tenant shall be responsible for all glass breakage caused by Tenant or its
invitees and agrees to immediately replace all glass broken or damaged during
the terms hereof with glass of the same quality as that broken or damaged.
Landlord may replace, at Tenant’s expense, any broken or damaged glass if not
replaced by Tenant within five (5) days after such damage.

SECTION 11.03 WAIVER OF SUBROGATION. Each party hereto does hereby release and
discharge the other party hereto and any officer, agent, employee or
representative of such party, of and from any liability whatsoever hereafter
arising from loss, damage or injury caused by fire or other casualty for which
insurance (permitting waiver of liability and containing a waiver of
subrogation) is carried by the injured party at the time of such loss, damage or
injury to the extent of any recovery by the injured party under such insurance.

ARTICLE XII. UTILITY CHARGES

SECTION 12.01 OBLIGATION OF LANDLORD. Subject to the terms of Section 3.03 and
unless otherwise agreed in writing by the parties, during the term of this Lease
the Landlord shall cause to be furnished to the Premises during Standard
Operating Hours (7:00 a.m. to 6:00 p.m. Monday through Friday and 8:00 a.m. to
12:00 noon on Saturday), except Holidays, the following utilities and services,
the cost and expense of which shall be included in Direct Costs, Metered Costs
and/or Basic Costs as appropriately categorized by the Landlord:

(a) Electricity, water, gas and sewer service.

(b) Telephone connection, but not including telephone stations and equipment (it
being expressly understood and agreed that Tenant shall be responsible for the
ordering and installation of telephone lines and equipment which pertain to the
Premises).

(c) Heat and air-conditioning to such extent and to such levels as, in
Landlord’s judgment, is reasonably required for the comfortable use and
occupancy of the Premises subject however to any limitations imposed by
University Research Park or any government agency. The parties agree and
understand that the above heat and air-conditioning will be provided Monday
through Friday from 7:00 a.m. to 6:00 p.m. and Saturday from 8:00 a.m. to 12:00
p.m.

(d) Snow removal and parking lot sweeping services.

(e) Elevator service.

SECTION 12.02 OBLIGATIONS OF TENANT. Tenant shall arrange for and shall pay the
entire cost and expense of all telephone stations, equipment and use charges,
electric light bulbs (but not fluorescent bulbs used in fixtures originally
installed in the Premises) and all other materials and services not expressly
required to be provided and paid for pursuant to the provisions of Section 12.01
above. Tenant covenants to use good faith efforts to reasonably conserve
utilities by turning off lights and equipment when not in use and taking such
other reasonable actions in accordance with sound standards for energy
conservation. Landlord reserves the right to separately meter or otherwise
monitor any utility usage and to separately charge Tenants for its own
utilities, in which case an equitable adjustment shall be made to Base Rental
and Tenant’s share of Operating Expenses as set forth in this Lease. Additional
limitations of Tenant are as follows:

(a) Tenant will not, without the written consent of Landlord, which consent
shall not be unreasonably withheld, use any apparatus or device on the Premises
(including but without limitation

 

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thereto, electronic data processing machines, punch card machines or machines
using current in excess of 208 volts) which will in any way or to any extent
increase the amount of electricity or water usually furnished or supplied for
use on the Premises for the use designated in Section 7.01 above, nor connect
with electrical current, except through existing electrical outlets in the
Premises, or water pipes, any apparatus or device, for the purposes of using
electric current or water.

(b) If Tenant shall require water or electric current in excess of that usually
furnished or supplied for use of the Premises, or for purposes other than those
designated in Section 7.01 above, Tenant shall first procure the written consent
of Landlord for the use thereof, which consent Landlord may refuse and/or
Landlord may cause a water meter or electric current meter to be installed in
the Leased Premises, so as to measure the amount of water and/or electric
current consumed for any such use. The cost of such meters and of Installation
maintenance, and repair thereof shall be paid for by Tenant and Tenant agrees to
pay Landlord promptly upon demand by Landlord for all such water and electric
current consumed as shown by said meters, at the rates charged for such service
by the City in which the Building is located or the local public utility, as the
case may be, furnishing the same, plus any additional expense incurred in
keeping account of the water and electric current so consumed.

(c) If and where heat generating machines devices are used in the Premises which
affect the temperature otherwise maintained by the air conditioning system,
Landlord reserves the right to install additional or supplementary air
conditioning units for the Premises, and the entire cost of Installing,
operating, maintaining and repairing the same shall be paid by Tenant to
Landlord promptly after demand by Landlord.

To the extent that Tenant operates hours in excess of the stated Standard
Operating Hours, Tenant may cause Landlord to provide services set forth in
Section 12.01 (a), (b), (c) and (e) above; however, Tenant shall pay extra
hourly utility charges as set forth in Section 1.01(S) herein. If electricity Is
metered pursuant to Section 3.03(c), then Tenant shall not be required to extra
electrical charges as electrical usage during “excess hours” will be metered and
charged to Tenant in any case.

SECTION 12.03 LIMITATIONS ON LANDLORDS LIABILITY. Landlord shall not be liable
for and Tenant shall not be entitled to terminate this Lease or to effectuate
any abatement or reduction of rent by reason of Landlord’s failure to provide or
furnish any of the foregoing utilities or services if such failure was
reasonably beyond the control of Landlord. In no event shall Landlord be liable
for loss or injury to persons or property, however, arising or occurring in
connection with or attributable to any failure to furnish such utilities or
services even if within the control of Landlord.

ARTICLE XIII. OFF-SET STATEMENT, ATTORNMENT AND SUBORDINATION

SECTION 13.01 OFF-SET STATEMENT. Tenant agrees within ten (10) days after
request therefor by Landlord to execute in recordable form and deliver to
Landlord a statement in writing, certifying

 

  (a) that this Lease is in full force and effect,

 

  (b) the date of commencement of the Rental Term of this Lease,

 

  (c) that rent is paid currently without any off-set or defense thereto,

 

  (d) the amount of rent, if any paid in advance, and

 

  (e) that there are no uncured defaults by Landlord or stating those claimed by
Tenant.

SECTION 13.02 ATTORNMENT. Tenant shall, in the event any proceedings are brought
for the foreclosure of, or in the event of exercise of the power of sale under
any mortgage or deed of trust made by Landlord covering the Premises, attorn to
the purchaser upon any such foreclosure or sale and recognize such purchaser as
the Landlord under this Lease.

SECTION 13.03 SUBORDINATION. Tenant agrees that this Lease shall, at the request
of Landlord, be subordinate to any first mortgages or deeds of trust that may
hereafter be placed upon said Premises and to any and all advances to be made
thereunder, and to the interest thereon, and all renewals, replacements and
extensions thereof, provided the mortgagees or trustees named in said mortgages
or deeds of trust shall agree to recognize the Lease of Tenant in the event of
foreclosure, if Tenant is not in default.

SECTION 13.04 MORTGAGEE SUBORDINATION. Tenant hereby agrees that this Lease
shall, if at any time requested by Landlord or any lender in respect to
Landlord’s financing of the building or project in which the Premises are
located or any portion hereof, be made superior to any mortgage or deed of trust
that may-have preceded such Lease.

SECTION 13.05 REMEDIES. Tenant hereby irrevocably appoints Landlord as
attorney-in-fact for the Tenant with full power and authority to execute and
deliver in the name of the Tenant any such instruments described in this Article
XIII upon failure of the Tenant to execute and deliver any of the above
instruments within fifteen (15) days after written request so to do by Landlord;
and such failure shall constitute a breach of this Lease entitling the Landlord,
at its option, to cancel this Lease and terminate the Tenant’s interest therein.

 

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ARTICLE XIV. ASSIGNMENT

SECTION 14.01 CONSENT REQUIRED. Tenant agrees not to assign this Lease in whole
or in part, nor sublet all or any part of Leased Premises, nor mortgage nor
encumber this Lease or any part of the Leased Premises, nor enter into licenses
or concession agreements or in other manner permit the occupation of or Sharing
of possession of any part of Leased Premises, or any assignment of this Lease or
any estate or interest therein (all of the foregoing being hereafter referred to
as “Assignment”) without the prior written consent of Landlord, which consent
may not be withheld unreasonably. Any Assignment by operation of law or if the
Tenant be a corporation, unincorporated association or partnership, the
transfer, assignment or hypothecation of any stock or interest in such
corporation, association or partnership in the aggregate in excess of 50% shall
be deemed an Assignment within the meaning of this Article XIV. An Assignment
consummated in violation of the provisions of this Article XIV shall be null and
void and of no force or effect. Notwithstanding the above, 1) Tenant may sublet
a portion of the Leased Premises to Ashni Nutraceuticals or up to a total of
3,000 SF of combined subtenants without Landlord’s approval provided that Tenant
shall maintain continuing liability for all obligations of Tenant under this
Lease and 2) Landlord will consent to any Assignment to a parent company,
subsidiary, or successor entity acquiring substantially all of the assets of
Tenant and intending to operate Tenant’s business under the same trade name or
assignment pursuant to completing necessary capital funding.

SECTION 14.02 LANDLORD OPTION TO TERMINATE. Not Applicable.

SECTION 14.03 CONDITIONS OF CONSENT.

(a) Should consent be granted, such consent shall be subject to Tenant causing
the Assignee to execute an agreement directly with Landlord undertaking to be
bound by all the terms, covenants and conditions contained in the Lease as
though Assignee had originally executed this Lease as Tenant;

(b) At no time when Tenant is in default in the performance of any covenant of
this Lease or in payment of rent or any other matured sums payable hereunder
shall any Assignment be approved or permitted, nor shall the notice provision of
Section 14.03 limit the right to declare default and pursue other remedies
provided for in this Lease or under the laws of the State of Utah.

SECTION 14.04 STANDARDS OF REASONABLENESS IN WITHHOLDING CONSENT. In determining
whether to grant consent, Landlord may consider any statutory or common law
tests as well as the following tests, each of which if applicable in Landlord’s
sole business judgment, shall be deemed a reasonable ground for rejection:

(a) Any Assignment disapproved by Landlord’s lender;

(b) Any Assignment resulting in a change of use from that specified in
Section 1.01(F) which is not in harmony with other businesses in the building;

(c) Any Assignment to an Assignee who lacks good reputation, successful business
experience in Tenant’s type of business and substantial means and financial
capacity adequate to conduct such a business;

Consent by Landlord to one or more Assignments shall not constitute a waiver or
consent to any subsequent Assignment nor exhaust Landlord’s rights under this
Article; nor shall acceptance of rents or any other payment from Assignee be
deemed a waiver or consent by Landlord or an acceptance of such Assignment.

SECTION 14.05 CONTINUING LIABILITY OF TENANT. Neither the consent of Landlord
nor any otherwise permitted Assignment or Subletting shall relieve Tenant from
continuing liability under this Lease.

SECTION 14.06 DOCUMENTATION OF ASSIGNMENT. Whether the documentation of any such
Assignment shall be prepared by Tenant or by Landlord or it’s attorneys, all
costs and reasonable attorneys’ fees related to considering such Assignment
shall be paid by Tenant, Which fees payable to Landlord shall in no case be less
than $300.00 per Assignment considered, payable by Tenant upon demand as
Additional Rent.

ARTICLE XV. WASTE OR NUISANCE

SECTION 15.01 WASTE OR NUISANCE. Tenant shall not commit or suffer to be
committed any waste upon the Premises, or any nuisance or other act or thing
which may disturb the quite enjoyment of any other tenant in the building in
which the Premises may be located, or elsewhere within the Building.

 

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ARTICLE XVI. NOTICES

SECTION 16.01 NOTICES. Except as provided in Section 19.01, any notice required
or permitted hereunder to be given or transmitted between the parties shall be
either personally delivered, or mailed postage prepaid by registered mall,
return receipt requested, addressed if to Tenant at the address set forth in
Section 1.01(E), and if to Landlord at the address set forth in Section 1.01(C).
Either party may, by notice to the other given as prescribed in this
Section 16.01, change its above address for any future notices which are mailed
under this Lease.

ARTICLE XVII. DESTRUCTION OF THE PREMISES

SECTION 17.01 DESTRUCTION.

(a) If the Premises are partially or totally destroyed by fire or other casualty
insurable under insurance required to be maintained by Landlord pursuant to
section 11.02 (a) so as to become partially or totally untenantable, the same
shall be repaired or rebuilt as speedily as practical under the circumstances at
the expense of the Landlord, unless Landlord elects not to repair or rebuild as
provided in Subsection (b) of this Section 17.01. During the period required for
restoration, a just and proportionate part of Base Rent, Additional Rent and
other charges payable by Tenant hereunder shall be abated until the Premises are
repaired or rebuilt.

(b) If the Premises are (I) rendered totally untenantable by reason of an
occurrence described in Subsection (a), or (II) damaged or destroyed as a result
of a risk which is not insured under Landlord’s fire insurance policies, or
(III) at least twenty percent (20%) damaged or destroyed during the last two
years of the Rental Term, or (IV) if the Building is damaged in whole or in part
(whether or not the Premises are damaged), to such an extent that Tenant cannot
practically use the Premises for its intended purpose, and in any such events
then Landlord may at its option terminate this Lease Agreement by notice in
writing to the Tenant within sixty (60) days after the date of such occurrence.
Unless Landlord gives such notice, this Lease Agreement will remain in full
force and effect and Landlord shall repair such damage at its expense as
expeditiously as possible under the circumstances and a just and proportionate
part of the Base Rent, Additional Rent, and other charges, shall be abated until
the Premises are repaired or rebuilt.

(c) If Landlord should elect or be obligated pursuant to Subsection (a) above to
repair or rebuild because of any damage or destruction, Landlord’s obligation
shall be limited to the original Building any other work or improvements which
may have been originally performed or installed at Landlord’s expense. If the
cost of performing Landlord’s obligation exceeds the actual proceeds of
insurance paid or payable to Landlord on account of such casualty, Landlord may
terminate this Lease Agreement unless Tenant, within fifteen (15) days after
demand therefor, deposits with Landlord a sum of money sufficient to pay the
difference between the cost of repair and the proceeds of the insurance
available for such purpose. Tenant shall replace all work and improvements not
originally installed or performed by Landlord at its expense.

(d) Except as stated in this Article XVII, Landlord shall not be liable for any
loss or damage sustained by Tenant by reason of casualties mentioned hereinabove
or any other accidental • casualty.

ARTICLE XVIII. CONDEMNATION

SECTION 18.01 CONDEMNATION. As used in this Section the term “Condemnation
Proceeding” means any action or proceeding in which any interest in the Premises
or Building is taken for any public or quasi-public purpose by any lawful
authority through exercise of the power of eminent domain or right of
condemnation or by purchase or otherwise in lieu thereof. If the whole of the
Premises is taken through Condemnation Proceedings, this Lease shall
automatically terminate as of the date possession is taken by fie condemning
authority. If in excess of twenty-five (25%) percent of the Premises is taken,
either party hereto shall have the option to terminate this Lease by giving the
other written notice of such election at any time within thirty (30) days after
the date of taking. If less than twenty-five (25%) percent of the space is taken
and Landlord determines, in Landlord’s sole discretion, that a reasonable amount
of reconstruction thereof will not result in the Premises or the Building
becoming a practical improvement reasonably suitable for use for the purpose for
which it is designed, then Landlord may elect to terminate this Lease Agreement
by giving thirty (30) days written notice as provided hereinabove. In all other
cases, or if neither party exercises its option to terminate, this Lease shall
remain in effect and the rent payable hereunder from and after the date of
taking shall be proportionately reduced in proportion to the ratio of: (1) the
area contained in the Premises which is capable of occupancy after the taking;
to (II) the total area contained in the Premises which was capable of occupancy
prior to the taking. In the event of any termination or rental reduction
provided for in this Section, there shall be a proration of the rent payable
under this Lease and Landlord shall refund any excess theretofore

 

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paid by Tenant. Whether or not this Lease is terminated as a consequence of
Condemnation Proceedings, all damages or compensation awarded for a partial or
total taking, including any sums compensating Tenant for diminution in the value
of or deprivation of its leasehold estate, shall be the sole and exclusive
property of Landlord, except that Tenant will be entitled to any awards intended
to compensate Tenant for expenses of locating and moving Tenant’s operations to
a new space.

ARTICLE XIX. DEFAULT OF TENANT

SECTION 19.01 DEFAULT—RIGHT TO RE-ENTER. In the event of any failure of Tenant
to pay any rental due hereunder within ten (10) days after written notice that
the same is past due shall have been mailed to Tenant, or any failure by Tenant
to perform any other of the terms, conditions or covenants required of Tenant by
this Lease within thirty (30) days after written notice of such default shall
have been mailed to Tenant, or if Tenant shall abandon said Premises, or permit
this Lease to be taken under any writ of execution, then Landlord, besides other
rights or remedies it may have, shall have the right to declare this Lease
terminated and shall have the immediate right of re-entry and may remove all
persons and property from the Premises. Such property may be removed and stored
in a public warehouse or elsewhere at the cost of and for the account of Tenant,
without evidence of notice or resort to legal process and without being deemed
guilty of trespass, or becoming liable for any loss or damage which may be
occasioned thereby. Tenant hereby waives all compensation for the forfeiture of
the term or its loss of possession of the Premises in the event of the
forfeiture of this Lease as provided for above. Any notice that Landlord may
desire or is required to give Tenant with reference to the foregoing provision
may, in lieu of mailing, at the option of Landlord, be conspicuously posted for
ten (10) consecutive days at the main entrance to or in front of the Premises,
and such notice shall constitute a good, sufficient, and lawful notice for the
purpose of declaring a forfeiture of this Lease and for terminating all of the
rights of the Tenant hereunder.

SECTION 19.02 DEFAULT—RIGHT TO RE-LET. Should Landlord elect to re-enter, as
herein provided, or should it take possession pursuant to legal proceedings or
pursuant to any notice provided for by law, it may either terminate this Lease
or it may from time to time, without terminating this Lease, make such
alterations and repairs as may be necessary in order to relet the Premises, and
may relet said Premises or any part thereof for such term or terms (which may be
for a term extending beyond the term of this Lease) and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable. Upon each such reletting, all rentals received by
Landlord from such reletting shall be applied first to the payment of any costs
and expenses of such reletting, including brokerage fees and attorney’s fees and
costs of such alterations and repairs; second, to the payment of rent or other
unpaid obligations due hereunder; and the residue, if any’, shall be held by
Landlord and applied in payment of future rent as the same may become due and
payable hereunder. If such rental received from such reletting during any month
be less than that to be paid during that month by Tenant hereunder, Tenant shall
pay any such deficiency to Landlord. Such deficiency shall be calculated and
paid monthly. No such re-entry or taking possession of said Premises by Landlord
shall be construed as an election on its part to terminate this Lease unless a
written notice of such intention be given to Tenant or unless the termination
thereof be decreed by a court or competent jurisdiction. Notwithstanding any
such reletting without termination, Landlord may at any time elect to terminate
this Lease for such previous default. Should Landlord at any time terminate this
Lease for any default, in addition to any other remedies it may have, it may
recover from Tenant all damages it may incur by reason of such default,
including the cost of recovering the Premises, reasonable attorney’s fees, and
including the worth at the time of such termination of the excess, if any, of
the amount of rent and charges equivalent to rent reserved in this Lease for the
remainder of the stated term over the then reasonable rental value of the
Premises for the remainder of the stated term, all of which amounts shall be
immediately due and payable.

SECTION 19.03 LEGAL EXPENSES. In case of default by either party in the
performance and obligations under this Lease, the defaulting party shall pay all
costs incurred in enforcing this Lease, or any right arising out of such
default, whether by suit or otherwise, including a reasonable attorney’s fee.

ARTICLE XX. BANKRUPTCY, INSOLVENCY OR RECEIVERSHIP

SECTION 20.01 ACT OF INSOLVENCY, GUARDIANSHIP, ETC. The following shall
constitute a default of this Lease by the Tenant for which Landlord, at
Landlord’s option, may immediately terminate this Lease.

(a) The appointment of a receiver to take possession of all or substantially all
of the assets of the Tenant.

(b) A general assignment by the Tenant of his assets for the benefit of
creditors.

(c) Any action taken or suffered by or against the Tenant under any federal or
state insolvency or bankruptcy act.

(d) The appointment of a guardian, conservator, trustee, or other similar
officer to take charge of all or any substantial part of the Tenant’s property.

 

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Neither this Lease, nor any interest therein nor any estate thereby created
shall pass to any trustee, guardian; receiver or assignee for the benefit of
creditors or otherwise by operation of law.

ARTICLE XXI. LANDLORD ACCESS

SECTION 21.01 LANDLORD ACCESS. Landlord or Landlord’s agent shall have the right
to enter the Premises at all reasonable times to examine the same; or to show
them to prospective purchasers or lessees of the Building, or to make all
repairs, alterations, improvements or additions as Landlord may deem necessary
or desirable, and Landlord shall be allowed to take all material into and upon
said Premises that may be required therefor without the same constituting an
eviction of Tenant in whole or in part, and rent shall not abate while said
repairs, alterations, improvements, or additions are being made, by reason of
loss or interruption of business of Tenant, or otherwise provided that such
repairs, alterations, improvements, or additions do not substantially interfere
with Tenant’s use of Premises. During the ninety days prior to the expiration of
the Rental Term of this Lease or any renewal term, Landlord may exhibit the
Premises to prospective tenants and place upon the Premises the usual notices
“To Let” or “For Rent” which notices Tenant shall permit to remain thereon
without molestation.

ARTICLE XXII. LANDLORD’S LIEN .

SECTION 22.01 LANDLORD’S LIEN. Tenant hereby grants to Landlord a lien upon the
improvements, trade fixtures and furnishings of Tenant to secure full and
faithful performance of all of the terms of this Lease.

ARTICLE XXIII. HOLDING OVER

SECTION 23.01 HOLDING OVER. Any holding over after the expiration of • the
Rental Term hereof shall be construed to be a tenancy at sufferance and all
provisions of this Lease Agreement shall be and remain in effect except that the
monthly rental shall be double the amount of rent (including any adjustments as
provided herein) payable for the last full calendar month of the Rental Term
including renewals or extensions.

SECTION 23.02 SUCCESSORS. All rights and liabilities herein given to, or imposed
upon, the respective parties hereto shall extend to and bind the several
respective heirs, executors, administrators, successors and assigns of the said
parties; and if there shall be more than one tenant, they shall all be bound
jointly and severally by the terms, covenants and agreements herein. No rights,
however, shall inure to the benefit of any assignee of Tenant unless the
assignment to such assignee has been approved by Landlord in writing.

ARTICLE XXIV. RULES AND REGULATIONS

SECTION 24.01 RULES AND REGULATIONS. Tenant shall comply with all reasonable
rules and regulations which are now or which may be hereafter prescribed by the
Landlord and posted in or about said Premises or otherwise brought to the notice
of the Tenant, both with regard to the Premises and to the project as a whole
including common facilities.

ARTICLE XXV. QUIET ENJOYMENT

SECTION 25.01 QUIET ENJOYMENT. Upon payment by the Tenant of the rents herein
provided, and upon the observance and performance of all the covenants, terms
and conditions on Tenant’s part to be observed and performed, Tenant shall
peaceably and quietly hold and enjoy the Premises for the term hereby demised
without hindrance or interruption by Landlord or any other person or persons
lawfully or equitably claiming by, through or under the Landlord, subject,
nevertheless, to the terms and conditions of this Lease and actions of
governmental regulatory entities and casualty losses.

ARTICLE XXVI. SECURITY DEPOSIT

SECTION 26.01 SECURITY DEPOSIT. The Landlord herewith acknowledges receipt of
the amount set forth in Section 1.01 (U) which it is to retain as security for
the faithful performance of all the covenants, conditions and agreements of this
Lease, but in no event shall the Landlord be obliged to apply the same upon
rents or other charges in arrears or upon damages for the Tenant’s failure to
perform the said covenants, conditions and agreements; the Landlord may so apply
the Security Deposit, at its option; and the Landlord’s

 

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right to the possession of the Leased Premises for non-payment of rents or for
other reasons shall not in any event be affected by reason of the fact that the
Landlord holds this Security Deposit. The said sum, if not applied toward the
payment of rents in arrears or toward the payment of damages suffered by the
Landlord by reason of the Tenant’s breach of the covenants, conditions and
agreements of this Lease, is to be returned to Tenant without interest when this
Lease is terminated, according to these terms, and in no event is the said
Security Deposit to be returned until Tenant has vacated the Leased Premises and
delivered possession to the Landlord.

In the event that the Landlord repossesses Leased Premises because of the
Tenant’s default or because of the Tenant’s failure to carry out the covenants,
conditions and agreements of this Lease, Landlord may apply the said Security
Deposit toward damages as may be suffered or shall accrue thereafter by reason
of the Tenant’s default or breach. In the event of bankruptcy or other
debtor-creditor proceedings against Tenant as specified in Article XX, the
Security Deposit shall be deemed to be applied first to the payment of Rents and
other charges due Landlord for the earliest possible periods prior to the filing
of such proceedings. The Landlord shall not be obliged to keep the said Security
Deposit as a separate fund, but may mix the same with its own funds.

ARTICLE XXVII. MISCELLANEOUS PROVISIONS

SECTION 27.01 WAIVER. No failure on the part of Landlord to enforce any covenant
or provision of this Lease shall discharge or invalidate such covenant or
provision or affect the right of Landlord to enforce the same in the event of
any subsequent breach. One or more waivers of any covenant or condition by
Landlord shall not be construed as a waiver of a subsequent breach of the same
covenant or condition and the consent to or approval of any subsequent similar
act by Tenant. No breach of a covenant or condition of this Lease shall be
deemed to have been waived by Landlord, unless such waiver be in writing signed
by Landlord.

SECTION 27.02 ENTIRE AGREEMENT. This Lease constitutes the entire Agreement and
understanding between the parties hereto and supersedes all prior discussions,
understandings and agreements. This Lease may not be altered or amended except
by a subsequent written agreement executed by all parties.

SECTION 27.03 FORCE MAJEURE. Any failure to perform or delay in performance by
either party of any obligation under this Lease, other than Tenant’s obligation
to pay rent, shall be excused if such failure or delay is caused by any strike,
lockout, governmental restriction or any similar cause beyond the control of the
party so falling to perform, to the extent and for the period that such
continues.

SECTION 27.04 LOSS AND DAMAGE. The Landlord shall not be responsible or liable
to the Tenant for any loss or damage that may be occasioned by or through the
acts or omissions of persons occupying all or any part of the premises adjacent
to or connected with the Premises or any part of the building of which the
Premises are a part, or for any loss or damage resulting to the Tenant or his
property from bursting, stoppage or leaking of water, gas sewer or steam pipes
or for any damage or loss of property within the Premises from any cause
whatsoever.

SECTION 27.05 ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of a lesser amount than the amount owing hereunder shall be deemed to
be other than on account of the earliest stipulated amount receivable from
Tenant, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as rent be deemed an accord and satisfaction,
and Landlord may accept such check or payment without prejudice to Landlord’s
right to recover the balance of such rent or receivable or pursue any other
remedy available under this Lease or the law of the state where the Premises are
located.

SECTION 27.06 NO OPTION. The submission of this Lease for examination does not
constitute a reservation of or option for the Premises and this Lease becomes
effective as a lease only upon full execution and delivery thereof by Landlord
and Tenant.

SECTION 27.07 ANTI-DISCRIMINATION. Tenant herein covenants by and for itself,
its heirs, executors, administrators and assigns and all persons claiming under
or through it, and this Lease is made and accepted upon and subject to the
following conditions: That there shall be no discrimination against or
segregation of any person or group of persons on account of race, sex, marital
status, color, creed, national origin or ancestry, in the leasing, subleasing,
assigning, use, occupancy, tenure or enjoyment of the Premises, nor shall the
Tenant itself, or any person claiming under or through it, establish or permit
any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees,
sublessees, or subtenants in the Premises.

SECTION 27.08 SEVERABILITY. If any term, covenant or condition of this Lease or
the application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Lease, or the application of
such term, covenant or condition to persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected thereby and
each term, covenant or condition of this Lease shall be valid and be enforced to
the fullest extent permitted by law.

 

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SECTION 27.09 OTHER MISCELLANEOUS PROVISIONS. This instrument shall not be
recorded without the prior written consent of Landlord; however, upon the
request of either party hereto, the other party shall join in the execution of a
memorandum or “short form” lease for recording purposes which memorandum shall
describe the parties, the Premises, the Rental Term and shall incorporate this
Lease by reference, and may include other special provisions. The captions which
precede the Sections of this Lease are for convenience only and shall in no way
affect the manner in which any provisions hereof is construed. In the event
there is more than one Tenant hereunder, the liability of each shall be joint
and several. This instrument shall be governed by and construed in accordance
with the laws of the State wherein the Premises are located. Words of any gender
used in this Lease shall be held to include any other gender, and words in the
singular number shall be held to include the plural when the sense requires.
Time is of the essence of this Lease and every term, covenant and condition
herein contained.

SECTION 27.10 REPRESENTATION REGARDING AUTHORITY. The persons who have executed
this Agreement represent and warrant that they are duly authorized to execute
this Agreement in their individual or representative capacity as indicated.

ADDITIONAL PROVISIONS:

SECTION 27.11 UNUSED CONSTRUCTION CONTRIBUTION. If the Landlord Construction
Contribution exceeds the construction cost including design/space planning
costs, then Tenant may elect to apply the excess toward moving costs or security
deposit or Tenant can receive a rent credit equal to $0.12 per square foot per
year ($0.01 per square foot per month) for each $1.00 of construction
contribution which is not used. In such case Landlord and Tenant agree to
execute an Amendment to Lease evidencing the Adjusted Base Monthly Rental.

[Balance of this page left blank intentionally.]

 

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IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this Lease
as of the day and year first above written.

SIGNATURES:

 

LANDLORD PARADIGM RESOURCES, L.C., a Utah limited liability company By:   /s/ W.
Richards Woodbury   W. Richards Woodbury, Manager   By:   /s/ Don R. Brown   Don
R. Brown, Manager

 

TENANT SALUS THERAPEUTICS, INC., a Utah corporation By:   /s/ Richard Koehn  
Richard Koehn, President and CEO

LANDLORD ACKNOWLEDGEMENT

 

STATE OF UTAH    )    : ss. COUNTY OF SALT LAKE    )

On this 11 day of August, 2003 before me personally appeared W. RICHARDS
WOODBURY and DON R. BROWN to me personally known, who being by me duly sworn did
each for himself say that he is a Manager of that certain limited liability
company known as PARADIGM RESOURCES, L.C., and that the within instrument was
executed on behalf of said company by authority granted in said companies
operating agreement.

 

  /s/ Martine Herbst   Notary Public

TENANT ACKNOWLEDGEMENT

(Corporate)

 

STATE OF UTAH    )    : ss. COUNTY OF SALT LAKE    )

On this 11 day of August, 2003, before me personally appeared Richard Koehn,
known to me to be the President of Salus Therapeutics, Inc., the corporation
that executed the within instrument, known to me to be the persons who executed
the within instrument on behalf of the corporate therein named, and acknowledged
to me that such corporation executed the within instrument pursuant to its
bylaws or a resolution of its board of directors.

 

  /s/ Martine Herbst   Notary Public

 

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