EXHIBIT 10.1
LEASE AGREEMENT
          THIS LEASE, made this 23rd day of July, 2001, is by and between BIV
Group, a California general partnership, hereinafter called “Landlord,” and
Cholestech Corporation, a California corporation, hereinafter called “Tenant.”
WITNESSETH:
          Landlord hereby leases to Tenant and Tenant hereby hires and takes
from Landlord those certain premises (the “Premises”) in bold outline on Exhibit
“A” attached hereto and incorporated herein by this reference and more
particularly described as that certain improved real property in Alameda County,
California commonly known as 3233 Investment Blvd., Hayward CA 94545-3808, an
industrial building containing approximately 68,816 sq. ft. (the “Building”);
provided, however, during the period from April 1, 2002 to and including
June 30, 2002 (i.e., the first three months of the Term of this Lease), the
Premises shall include only that portion of the Building at 3233 Investment
Blvd. which is outlined in bold black on Exhibit “A” attached hereto, said
portion containing approximately 40,317 sq. ft. and identified thereon as
“LEASED 40,317 S.F. CHOLESTECH CORP.” (the “Currently Occupied Premises”). The
remaining portion of the Premises, being that portion outlined in bold black on
Exhibit “A” attached hereto and identified thereon as “LEASED OZ TECHNOLOGIES”
and “LEASED WAINGARTH CORP” shall be referred to as the “Additional Premises”
herein. As used herein the “Complex” shall mean and include all of the land
outlined in Exhibit “A” attached hereto, and all of the buildings, improvements,
fixtures and equipment now or hereafter situated on said land as well as the
land identified as Assessor’s Parcel Number 461-0001-037-02.
          Landlord and Tenant agree and acknowledge that for the purposes of
this Lease the square footage of the Currently Occupied Premises is 40,317
square feet and that the square footage of the Premises is 68,816 square feet
regardless of the actual square footage.
          Said letting and hiring is upon and subject to the terms, covenants
and conditions hereinafter set forth and Tenant covenants as a material part of
the consideration for this Lease to perform and observe each and all of said
terms, covenants and conditions. This Lease is made upon the conditions of such
performance and observance.
1. USE Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances for general office,
manufacturing and laboratory purposes, and for other reasonably comparable uses,
but for no other purpose. Tenant shall not do or permit to be done in or about
the Premises or the Complex nor bring or keep or permit to be brought or kept in
or about the Premises or the Complex anything which is prohibited by or will in
any way increase the existing rate of (or otherwise affect) fire or any
insurance covering the Complex or any part thereof, or any of its contents, or
will cause a cancellation of any insurance covering the Complex or any part
thereof, or any of its contents. Tenant shall not do or permit to be done
anything in, on or about the Premises or the Complex which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Complex or injure or annoy them, or use or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises or the Complex. No
sale by auction shall be permitted on the Premises. Tenant shall not place any
loads upon the

 

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floors, walls, or ceiling, which endanger the structure, or place any harmful
fluids or other materials in the drainage system of the Building, or overload
existing electrical or other mechanical systems. No waste materials or refuse
shall be dumped upon or permitted to remain upon any part of the Premises or
outside of the Building in which the Premises are a part, except in trash
containers placed inside exterior enclosures designated by Landlord for that
purpose or inside of the Building proper where designated by Landlord. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature shall be stored upon or permitted to remain
outside the Premises or on any portion of common area of the Complex without
prior written permission from Landlord. Tenant shall not commit or suffer to be
committed any waste in or upon the Premises. Tenant shall indemnify, defend and
hold Landlord harmless against any loss, expense, damage, attorneys’ fees, or
liability arising out of failure of Tenant to comply with any applicable law.
Tenant shall comply with any covenant, condition, or restriction (“CC&R’s”)
affecting the Premises. The provisions of this paragraph are for the benefit of
Landlord only and shall not be construed to be for the benefit of any tenant or
occupant of the Complex.
2. TERM The term of this Lease (the “Term”) shall be for a period of 60 months,
or five (5) years (unless sooner terminated as hereinafter provided) and,
subject to Paragraph 3 of this Lease, shall commence on the 1st day of April,
2002, and end on the 31st day of March, 2007. Landlord hereby grants Tenant one
(1) Option to extend the Term of this Lease. The Option will be for a term of
thirty six (36) months or three (3) years. Tenant may exercise such Option by
giving Landlord written notice of its exercise of such Option not less than one
hundred eighty (180) days prior to the expiration of the original Term of this
Lease nor more than two hundred seventy (270) days prior to the expiration of
the original Term of this Lease.
3. POSSESSION On the commencement date of this Lease Tenant shall be leasing and
occupying the Currently Occupied Premises. The parties anticipate that on
July 1, 2002, Tenant shall be leasing and occupying the Currently Occupied
Premises and the Additional Premises. If Landlord for any reason whatsoever
cannot deliver possession of the Additional Premises to Tenant by July 1, 2002,
this Lease shall not be void or voidable, no obligation of Tenant shall be
affected thereby; and neither Landlord nor Landlord’s agents shall be liable to
Tenant for any loss or damage resulting therefrom; but in that event Tenant’s
obligations hereunder regarding the Additional Premises and all dates affected
thereby shall be made to conform to the date Landlord actually delivers
possession of the Additional Premises to Tenant except that the termination date
of the Lease shall remain the 31st day of March, 2007. Landlord shall make all
reasonable efforts to deliver possession of the Additional Premises to Tenant on
or before July 1, 2002.
          If Landlord has not delivered possession of the Additional Premises to
Tenant by August 1, 2002, Landlord shall pay Tenant $250 per day beginning on
August 1, 2002 and continuing until the earlier of the following two dates:
(a) the day Landlord actually delivers possession of the Additional Premises to
Tenant or (b) January 31, 2003. Any such payments shall be made at the end of
any applicable month.
4. RENT

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          A. Basic Rent. Tenant agrees to pay to Landlord at such place as
Landlord may designate without deduction, offset, prior notice, or demand, and
Landlord agrees to accept as Basic Rent for the leased Premises, the total sum
of Five Million, Sixty-two Thousand, Eight Hundred Seventy-eight Dollars and
Forty-five cents ($5,062,878.45) in lawful money of the United States of
America, payable as follows:

                      Monthly   Annual     Rent   Rent
 
               
Year 1, from April 1, 2002 to June 30, 2002 40,317
sq. ft. @ $1.15 per sq. ft.
  $ 46,364.55     $ 139,093.65  
 
               
Year 1, from July 1, 2002 to March 31, 2003 68,816
sq. ft. @ $1.15
  $ 79,138.40     $ 712,245.60  
 
               
Year 2, from April 1, 2003 to March 31, 2004 68,816
sq. ft. @ $1.200 per sq. ft.
  $ 82,579.20     $ 990,950.40  
 
               
Year 3, from April 1, 2004 to March 31, 2005 68,816
sq. ft. @ $1.250 per sq. ft.
  $ 86,820.00     $ 1,032,240.00  
 
               
Year 4, from April 1 2005, to March 31, 2006 68,816
sq. ft. @ $1.300 per sq. ft.
  $ 89,460.80     $ 1,073,529.60  
 
               
Year 5, from April 1, 2006, to March 31, 2007 68,816
sq. ft. @ $1.350 per sq. ft.
  $ 92,901.60     $ 1,114,819.20  

          It is agreed that upon exercising the Option (see Paragraph 2 of this
Lease), the Basic Rent provided for herein is adjusted for the term of the
Option according to Paragraph 38 of this Lease, the total Basic Rent and
schedule of payments described above shall be adjusted accordingly.
     B. Time for Payments. Rent shall be paid monthly in advance on the first
day of the month commencing April 1, 2002. In the event that the Term of this
Lease commences on a date other than the first day of a calendar month, on the
date of commencement of the Term hereof Tenant shall pay to Landlord as rent for
the period from such date of commencement to the first day of the next
succeeding calendar month that proportion of the monthly rent hereunder which
the number of days between such date of commencement and the first day of the
next succeeding calendar month bears to thirty (30). In the event that the Term
of this Lease for any reason ends on a date other than the last day of a
calendar month, on the first day of the last calendar month of the Term hereof
Tenant shall pay to Landlord as rent for the period from said first day of said
last calendar month to and including the last day of the Term hereof that
proportion of the monthly rent hereunder which the number of days between said
first day of said last calendar month and the last day of the Term hereof bears
to thirty (30).

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     C. Late Charge. Notwithstanding any other provision of this Lease, if
Tenant is in default in the payment of rent as set forth in this Paragraph 4 of
this Lease when due, or any part thereof, Tenant agrees to pay Landlord, in
addition to the delinquent rental due, a late charge for each rental payment in
default fifteen (15) days. Said late charge shall equal three (3%) percent of
each rental payment so in default.
     D. Additional Rent (also known as Triple NNN). “Tenant’s Proportional
Share” is defined as follows:
          (i) At such time that the Premises include only the Currently Occupied
Premises, the “Tenant’s Proportional Share” shall equal 58.597% (40,317/68,816);
and,
          (ii) At such time that the Premises include all of the Building at
3233 Investment Blvd. that consists of the Currently Occupied Premises and the
Additional Premises, the “Tenant’s Proportional Share” shall equal 100.00%
     Beginning with the commencement date of the Term of this Lease and the term
of the Option, Tenant shall pay the following to Landlord as “Additional Rent”
(i.e., in addition to the Basic Rent described in Paragraph 4 A of this Lease);
provided, however, that notwithstanding any other provision of this Lease,
Tenant’s liability for Additional Rent shall commence on April 1, 2002 and not
exceed $0.20 per rented square foot per month for the duration of the Lease:
               (1) Tenant’s Proportionate Share of all utilities relating to the
Complex as set forth in Paragraph 11 of this Lease, and
               (2) Tenant’s Proportionate Share of all Taxes relating to the
Complex as set forth in Paragraph 12 of this Lease, and
               (3) Tenant’s Proportionate Share of all insurance premiums
relating to the Complex, as set forth in Paragraph 15 of this Lease, and
               (4) Tenant’s Proportionate Share of expenses for the operation,
management, maintenance and repair of the Building (including common areas of
the Building) and Common Areas of the Complex in which the Premises are located
as set forth in Paragraph 7 of this Lease, and
          In the event of nonpayment by Tenant of Additional Rent, Landlord
shall have all the rights and remedies with respect thereto as Landlord has for
nonpayment of rent.
          Tenant shall pay to Landlord monthly, in advance, Tenant’s prorata
share of an amount estimated by Landlord to be Landlord’s approximate average
monthly expenditure for such Additional Rent items, which estimated amount shall
be reconciled at the end of each calendar year as compared to Landlord’s actual
expenditure for said Additional Rent items, with Tenant paying to Landlord, upon
demand, any amount of actual expenses expended by Landlord in excess of said
estimated amount, or Landlord refunding to Tenant (providing Tenant is not in
default in the performance of any of the terms, covenants and conditions of this
Lease) any amount of estimated payments made by Tenant in excess of Landlord’s
actual expenditures for

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said Additional Rent items. Landlord shall provide Tenant with a schedule every
year showing Landlord’s estimated and actual Additional Rent items.
          Tenant’s Additional Rent payment at the commencement of the Term of
this Lease shall initiate at a rate of Six Thousand, Five Hundred Dollars
($6,500.00) per month (the approximate average monthly expenditure) and be
increased per the rate calculation described in Paragraph 4 D of this Lease, not
to exceed a maximum of Thirteen Thousand, Seven Hundred and Sixty Three Dollars,
and Twenty Cents ($13,763.20) per month (i.e. 68,816 sq. ft. @ $0.20 =
$13,763.20) over the Term of the Lease. Tenant’s Additional Rent payments in
subsequent years shall not exceed $0.20 per rentable square foot per month, for
Landlord’s costs and expenses of operating, managing, and maintaining the common
areas as described in Paragraph 7 of this Lease, and shall reflect any changes
in the size of the Premises leased and occupied by Tenant.
          The respective obligations of Landlord and Tenant under this paragraph
shall survive the expiration or other termination of the Term of this Lease, and
if the Term hereof shall expire or shall otherwise terminate on a day other than
the last day of a calendar year, the actual Additional Rent incurred for the
calendar year in which the Term hereof expires or otherwise terminates shall be
determined and settled on the basis of the statement of actual Additional Rent
for such calendar year and shall be prorated in the proportion which the number
of days in such calendar year preceding such expiration or termination bears to
365.
     E. Place of payment of Rent and Additional Rent. All Basic Rent hereunder
and all payments hereunder for Additional Rent shall be paid to Landlord at the
office of Landlord at BIV Group, P.O. Box 1567, Danville, CA, 94526-6567, or to
such other person or to such other place as Landlord may from time to time
designate in writing.
     F. Security Deposit. Tenant shall deposit with Landlord upon execution
hereof Seventy Five Thousand Dollars ($75,000) as security for Tenants faithful
performance of Tenant’s obligation hereunder. If Tenant fails to pay rent or
other charges due hereunder, or otherwise defaults with respect to any provision
of this Lease, the Landlord may use, apply, or retain all or any portion of said
deposit for the payment of any rent or other charge in default, or for the
payment of any other sum to which the Tenant may become obligated by reasons of
Tenant default, or to compensate Landlord for any loss or damage which Landlord
may suffer thereby. If Landlord so uses or applies all or a portion of said
deposit, Tenant shall within thirty (30) days after written demand, heretofore,
deposit cash with Landlord in an amount sufficient to restore said deposit to
the full amount then required of Tenant. Landlord shall not be required to keep
said security deposit separate from its general accounts. If Tenant performs all
of Landlords obligation hereunder, said deposit, or so much thereof as has not
theretofore been applied to by Landlord, shall be returned without payment of
interest or other increment of it’s use, to Tenant (or at Landlord’s option, to
the last assignee, if any, of Tenants interest hereunder) at the expiration of
the Term hereof, and after Tenant has vacated the Premises. No “Trust”
relationship is created herein between Landlord and Tenant with respect to said
Security Deposit.
5. RULES AND REGULATIONS AND COMMON AREA Subject to the terms and conditions of
this Lease and such Rules and Regulations as Landlord may from time to time
prescribe, Tenant and Tenant’s employees, invitees and customers shall, in
common with other occupants of the Complex in which the Premises are located,
and their respective employees, invitees and

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customers, and others entitled to the use thereof, have the non-exclusive right
to use the access roads, parking areas, and facilities provided and designated
by Landlord for the general use and convenience of the occupants of the Complex
in which the Premises are located, which areas and facilities are referred to
herein as “Common Area”. This right shall terminate upon the termination of this
Lease. Landlord reserves the right from time to time to make changes in the
shape, size, location, amount and extent of Common Area. Landlord farther
reserves the right to promulgate such reasonable rules and regulations relating
to the use of the Common Area, and any part or parts thereof, as Landlord may
deem appropriate for the best interests of the occupants of the Complex. The
Rules and Regulations shall be binding upon Tenant upon delivery of a copy of
them to Tenant, and Tenant shall abide by them and cooperate in their
observance. Such Rules and Regulations may be amended by Landlord from time to
time, with or without advance notice, and all amendments shall be effective upon
delivery of a copy to Tenant. Landlord shall not be responsible to Tenant for
the non-performance by any other tenant or occupant of the Complex of any of
said Rules and Regulations.
          Landlord shall operate, manage and maintain the Common Area. The
manner in which the Common Area shall be maintained and the expenditures for
such maintenance shall be at the discretion of the Landlord.
6. PARKING During any period while this Lease is in effect and while Tenant
occupies less than 100% of the Building, Tenant shall be entitled to use the
percentage of all parking spaces that is equal to the percentage of the Building
occupied by Tenant which percentage is 58.57%. During such period Landlord shall
have the right to enforce all parking disputes in accordance with Building
occupancy percentages. For the remaining period of the Lease during which Tenant
occupies the entire Building, Tenant will control the designated parking areas
with accommodation made for Landlord service and maintenance activity for the
Premises.
7. EXPENSES OF OPERATION, MANAGEMENT AND MAINTENANCE OF THE COMMON AREAS OF THE
COMPLEX, PREMISES AND BUILDING IN WHICH THE PREMISES ARE LOCATED As Additional
Rent and in accordance with Paragraph 4 D of this Lease, Tenant shall pay to
Landlord Tenant’s Proportionate Share (as defined in Paragraph 4 D of this
Lease) of all expenses of operation, management, maintenance and repair of the
Common Areas of the Complex including, but not limited to, license, permit and
inspection fees; security; utility charges associated with exterior landscaping
and lighting (including water and sewer charges); all charges incurred in the
maintenance of landscaped areas, lakes, parking lots, sidewalks, driveways;
maintenance, repair and replacement of all fixtures and electrical, mechanical
and plumbing systems; supplies and materials. All capital repairs and
improvements costs will be paid by the Landlord, but the cost thereof (together
with interest at the rate of eight (8%) percent per annum) may be amortized as
an operating expense. All operating expenses shall be determined in accordance
with generally accepted accounting practices consistently applied.
     As Additional Rent and in accordance with Paragraph 4 D of this Lease,
Tenant shall pay Tenant’s Proportionate Share (as defined in Paragraph 4 D of
this Lease) of the cost of operation (including common utilities), management,
maintenance and repair of the Premises and the Building (including common areas
such as lobbies, restrooms, janitor’s closets, hallways, elevators, mechanical
and telephone rooms, stairwells, entrances, spaces above the ceilings) in

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which the Premises are located. The non-Capital maintenance items herein
referred to include, but are not limited to, janitorization, electrical systems
(such as outlets, lighting fixtures, lamps, bulbs, tubes, ballasts), heating and
air conditioning controls (such as mixing boxes, thermostats, time clocks,
supply and return grills), all interior improvements within the Premises
including but not limited to: wall coverings, window coverings, acoustical
ceilings, vinyl tile, carpeting, partitioning, doors (both interior and
exterior, including closing mechanisms, latches, locks), and all other interior
improvements of any nature whatsoever, all windows, window frames, plate glass,
glazing, truck doors, main plumbing systems of the Building (such as water and
drain lines, sinks, toilets, faucets, drains, showers and water fountains), main
electrical systems (such as panels and conduits), heating and air conditioning
systems (with the exception of main control consoles, compressors, fans, air
handlers, ducts, boilers, heaters), store fronts, roofs, downspouts, building
common area interiors (such as wall coverings, window coverings, floor coverings
and partitioning), ceilings, building exterior doors, skylights (if any),
automatic fire extinguishing systems and elevators; license, permit, and
inspection fees; security; salaries and employee benefits of personnel and
payroll taxes applicable thereto; supplies, materials, equipment and tools.
Tenant hereby waives all rights under, and benefits of, subsection I of
Section 1932 and Sections 1941 and 1942 of the California Civil Code and under
any similar law, statute or ordinance now or hereafter in effect. Tenant agrees
to provide carpet shields under all rolling chairs or to otherwise be
responsible for wear and tear of the carpet caused by such rolling chairs if
such wear and tear exceeds that caused by normal foot traffic in surrounding
areas. Areas of excessive wear shall be replaced at Tenant’s sole expense upon
Lease termination.
     Additional Rent as used herein shall not include Landlord’s debt
repayments; interest on charges; expenses directly or indirectly incurred by
Landlord for the benefit of any other tenant; cost for the installation of
partitioning or any other tenant improvements; cost of attracting tenants;
depreciation; interest, or executive salaries.
          Tenant agrees to provide for appropriate janitorial service for the
leased Premises and to maintain the Complex in good condition.
8. ACCEPTANCE AND SURRENDER OF PREMISES Tenant is currently in possession of the
Currently Occupied Premises and Tenant accepts the Currently Occupied Premises
“AS IS”. By entry into the Additional Premises, Tenant accepts the Additional
Premises as being in good and sanitary order, condition and repair, Tenant
accepts the Additional Premises in their present condition and without
representation or warranty by Landlord as to the condition of the Additional
Premises or as to the use or occupancy which may be made thereof, and Tenant
accepts “AS IS” the Additional Premises. However, prior to entry into the
Additional Premises, Landlord and Tenant shall perform a walk-through inspection
and make a list of all items not in good and sanitary order, condition and
repair. Tenant shall not be required to accept the Additional Premises if the
Additional Premises are not in good and sanitary order, condition and repair. If
the Additional Premises are not in good and sanitary order, condition and
repair, Landlord agrees that Landlord (or the prior tenant of Additional
Premises) shall immediately cause the Additional Premises to be in good and
sanitary order, condition and repair except as follows: if it is determined
during the walk-through that the Additional Premises may be affected by a
“Hazardous Material” as defined in Section 43 of this Lease, then Tenant shall
have 30 days to make a final determination that Hazardous Material(s) exists
within the Additional Premises. If it is determined with reasonable certainty
that a Hazardous Material(s) exists within the

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Additional Premises, then Landlord shall be obligated to eliminate the Hazardous
Material only if the Hazardous Material can reasonably be removed from the
Additional Premises with 60 days thereafter. If Landlord is not required to
remove the Hazardous Material(s) due to the 60-day limitation, then Tenant shall
have no obligation to accept the Additional Premises. Also, if Landlord (or the
prior tenant) is required to perform work to cause the Additional Premises to be
in good and sanitary order, condition and repair, then Tenant is not required to
accept the Additional Premises until the work has been completed. Tenant agrees
that Landlord is not otherwise responsible for any tenant improvements. Any
exceptions to the foregoing must be by written agreement executed by Landlord
and Tenant. Tenant agrees on the last day of the Lease Term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (damage by Acts of God, fire or normal
wear and tear excepted), with all interior walls cleaned and repaired, if
damaged; all floors cleaned and waxed; all carpets cleaned and shampooed; the
air conditioning and heating equipment serviced by a reputable and licensed
service firm and in good operating condition (provided the maintenance of such
equipment has been Tenant’s responsibility during the Term of this Lease)
together with all alterations, additions and improvements which may have been
made in, to, or on the Premises (except movable trade fixtures installed at the
expense of Tenant) except that Tenant shall ascertain from Landlord within
ninety (90) days before the end of the Term of this Lease whether Landlord
desires to have the Premises or any part or parts thereof restored to their
condition and configuration as when the Premises were delivered to Tenant and if
Landlord shall so desire, then Tenant shall restore said Premises or such part
or parts thereof before the end of this Lease at Tenant’s sole cost and expense.
Tenant, on or before the end of the Term or sooner termination of this Lease,
shall remove all of Tenant’s personal property and trade fixtures from the
Premises and repair any and all damage to the Building that results from such
removal. Tenant’s personal property and trade fixtures shall include, without
limitation, the property described on Exhibit “B” attached hereto and by this
reference incorporated herein. All of Tenant’s property not so removed from the
Premises on or before the end of the Term or sooner termination of this Lease
shall be deemed abandoned by Tenant and title to same shall thereupon pass to
Landlord without compensation to Tenant. Landlord may, upon termination of this
Lease, remove all moveable furniture and equipment so abandoned by Tenant, at
Tenant’s sole cost, and repair any damage caused by such removal at Tenant’s
sole cost. If the Premises be not surrendered at the end of the Term or sooner
termination of this Lease, Tenant shall indemnify Landlord against loss or
liability resulting from the delay by Tenant in so surrendering the Premises
including, without limitation, any claims made by any succeeding tenant founded
on such delay. Nothing contained herein shall be construed as an extension of
the Term hereof or as a consent of Landlord to any holding over by Tenant. The
voluntary or other surrender of this Lease or the Premises by Tenant or a mutual
cancellation of this Lease shall not work as a merger and, at the option of
Landlord, shall either terminate all or any existing subleases or subtenancies
or operate as an assignment to Landlord of all or any such subleases or
subtenancies.
9. ALTERATIONS AND ADDITIONS Tenant shall not make, or suffer to be made, any
alteration or addition to the Premises, or any part thereof, without the written
consent of Landlord first had and obtained by Tenant, but at the cost of Tenant,
and any addition to, or alteration of, the Premises, except moveable furniture
and trade fixtures shall at once become a part of the Premises and belong to
Landlord. If Landlord consents to the making of any alteration, addition, or
improvement to or of the Premises by Tenant, the same shall be made by

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Landlord at Tenant’s sole cost and expense. Any modifications to the Building or
building systems required by governmental code or otherwise as a result of
Tenant’s alterations, additions or improvements shall be made at Tenant’s sole
cost and expense. Tenant shall retain title to all moveable furniture and trade
fixtures placed in the Premises. All heating, lighting, electrical, air
conditioning, partitioning, drapery, carpeting and floor installations made by
Tenant, together with all property that has become an integral part of the
Premises, shall not be deemed trade fixtures unless otherwise noted in a written
document signed by Landlord and Tenant. Tenant agrees that it will not proceed
to make any alterations or additions, without having obtained consent from
Landlord to do so, and until five (5) days from the receipt of such consent, in
order that Landlord may post appropriate notices to avoid any liability to
contractors or material suppliers for payment for Tenant’s improvements. Tenant
will at all times permit such notices to be posted and to remain posted until
the completion of work. Tenant shall, if required by Landlord, secure at
Tenant’s own cost and expense, a completion and lien indemnity bond,
satisfactory to Landlord, for such work. Tenant further covenants and agrees
that any “mechanic’s lien”, filed against the Premises or against the Complex
for work claimed to have been done for, or materials claimed to have been
furnished to Tenant, will be discharged by Tenant, by bond or otherwise, within
thirty (30) days after the filing thereof, at the cost and expense of Tenant.
Any exceptions to the foregoing must be made in writing and executed by both
Landlord and Tenant. Tenant shall obtain all required governmental permits and
provide a copy to Landlord within five days of obtaining such permits.
10. BUILDING PLANNING [Omitted.]
11. UTILITIES OF THE BUILDING IN WHICH THE PREMISES ARE LOCATED As Additional
Rent and in accordance with Paragraph 4 D of this Lease, Tenant shall pay
Tenant’s Proportionate Share (as defined in Paragraph 4 D of this Lease) of the
cost of all utility charges such as water, gas, electricity, telephone, telex
and other electronic communications service, sewer service, waste pick-up and
any other utilities, materials or services furnished directly to the Building in
which the Premises are located, including, without limitation, any temporary or
permanent utility surcharge or other exactions whether or not hereinafter
imposed.
          Landlord shall not be liable for and Tenant shall not be entitled to
any abatement or reduction of rent by reason of any interruption or failure of
utility services to the Premises when such interruption or failure is caused by
accident, breakage, repair, “rolling blackouts”, strikes, lockouts, or other
labor disputes of any nature, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord.
          Provided that Tenant is not in default in the performance or
observance of any of the terms, covenants or conditions of this Lease to be
performed or observed by it, Landlord shall furnish to the Premises reasonable
quantities of water, gas and electricity suitable for the intended use of the
Premises and heat and air conditioning required in Landlord’s judgment for the
comfortable use and occupation of the Premises for such purposes. Tenant agrees
that at all times it will cooperate fully with Landlord and abide by all
regulations and requirements that Landlord may prescribe for the proper
functioning and protection of the building heating, ventilating and air
conditioning systems. Whenever heat generating machines, equipment, or any other
devices (including exhaust fans) are used in the Premises by Tenant which affect
the temperature or otherwise maintained by the air conditioning system, Landlord
shall have the

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right to install supplementary air conditioning units on the Premises and the
costs thereof, including the cost of installation and the cost of operation and
maintenance thereof, shall be paid by Tenant to Landlord upon demand by
Landlord. If Tenant shall require water, gas or electric current in excess of
that usually furnished or supplied to the Premises being used as general office
space, Tenant shall first obtain the written consent of Landlord, which consent
shall not be unreasonably withheld and Landlord may cause an electric current,
gas, or water meter to be installed in the Premises in order to measure the
amount of electric current, gas or water consumed for any such excess use. The
cost of any such meter and of the installation, maintenance and repair thereof,
all charges for such excess water, gas and electric current consumed (as shown
by such meters and at the rates then charged by the furnishing public utility);
and any additional expense incurred by Landlord in keeping account of electric
current, gas, or water so consumed shall be paid by Tenant and Tenant agrees to
pay Landlord therefore promptly upon demand by Landlord. However, any charges
that are the result of such uses contained in the last three sentences above
shall not be applied towards the calculation of the cap on Additional Rent.
          Landlord and Tenant agree that utility charges such as water, gas,
electricity, telephone, telex and other electronic communication services that
are used solely by Tenant within the Premises are the responsibility of Tenant,
that such charges are not Additional Rent and Tenant agrees to pay such charges.
12. TAXES
     A. As Additional Rent and in accordance with Paragraph 4 D of this Lease,
Tenant shall pay to Landlord Tenant’s Proportionate Share (as defined in
Paragraph 4 D of this Lease) of all Real Property Taxes. The term “Real Property
Taxes,” as used herein, shall mean (i) all taxes, assessments, levies and other
charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all installments of principal and interest required to pay
any general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership of the Complex)
now or hereafter imposed by any governmental or quasi-governmental authority or
special district having the direct or indirect power to tax or levy assessments,
which are levied or assessed against, or with respect to the value, occupancy or
use of, all or any portion of the Complex (as now constructed or as may at any
time hereafter be constructed, altered, or otherwise changed) or Landlord’s
interest therein: any improvements located within the Complex (regardless of
ownership); the fixtures, equipment and other property of Landlord, real or
personal, that are an integral part of and located in the Complex; or parking
areas, public utilities, or energy within the Complex; (ii) all charges, levies
or fees imposed by reason of environmental regulation or other governmental
control of the Complex; and (iii) all costs and fees (including attorneys’ fees)
incurred by Landlord in contesting any Real Property Tax and in negotiating with
public authorities as to any Real Property Tax. If at any time during the Term
of this Lease the taxation or assessment of the Complex prevailing as of the
commencement date of this Lease shall be altered so that in lieu of or in
addition to any Real Property Tax described above there shall be levied,
assessed or imposed (whether by reason of a change in the method of taxation or
assessment, creation of a new tax or charge, or any other cause) an alternate or
additional tax or charge (i) on the value, use or occupancy of the Complex or
Landlord’s interest therein or (ii) on or measured by the gross receipts, income
or rentals from the Complex, on Landlord’s business of leasing the

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Complex, or computed in any manner with respect to the operation of the Complex,
then any such tax or charge, however designated, shall be included within the
meaning of the term “Real Property Taxes” for purposes of this Lease. If any
Real Property Tax is based upon property or rents unrelated to the Complex, then
only that part of such Real Property Tax that is fairly allocable to the Complex
shall be included within the meaning of the term “Real Property Taxes”.
          Notwithstanding the foregoing, the term “Real Property Taxes” shall
not include estate, inheritance, gift or franchise taxes of Landlord or the
federal or state net income tax imposed on Landlord’s income from all sources.
     B. Taxes on Tenant’s Property
                    (1) Tenant shall be liable for and shall pay before
delinquency, taxes levied against any personal property or trade fixtures placed
by Tenant in or about the Premises. If any such taxes on Tenant’s personal
property or trade fixtures are levied against Landlord or Landlord’s property or
if the assessed value of the Premises is increased by the inclusion therein of a
value placed upon such personal property or trade fixtures of Tenant and if
Landlord, after written notice to Tenant, pays the taxes based on such increased
assessment, which Landlord shall have the right to do regardless of the validity
thereof, but only under proper protest if requested by Tenant, Tenant shall upon
demand, as the case may be, repay to Landlord the taxes so levied against
Landlord, or the proportion of such taxes resulting from such increase in the
assessment; provided that in any such event Tenant shall have the right, in the
name of Landlord and with Landlord’s full cooperation, to bring suit in any
court of competent jurisdiction to recover the amount of any such taxes so paid
under protest, and any amount so recovered shall belong to Tenant.
                    (2) If the Tenant improvements in the Premises, whether
installed, and/or paid for by Landlord or Tenant and whether or not affixed to
the real property so as to become a part thereof, are assessed for Real Property
Tax purposes at a valuation higher than the valuation at which standard office
improvements in other space in the Complex are assessed, then the Real Property
Taxes and assessments levied against Landlord or the Complex by reason of such
excess assessed valuation shall be deemed to be taxes levied against personal
property of Tenant and shall be governed by the provisions of 12A(i), above. If
the records of the County Assessor are available and sufficiently detailed to
serve as a basis for determining whether said Tenant improvements are assessed
at a higher valuation than standard office improvements in other space in the
Complex, such records shall be binding on both the Landlord and the Tenant. If
the records of the County Assessor are not available or sufficiently detailed to
serve as a basis for making said determination, the actual cost of construction
shall be used.
13. LIABILITY INSURANCE Tenant, at Tenant’s expense, agrees to keep in force
during the Term of this Lease a policy of comprehensive public liability
insurance with limits in the amount of $1,000,000/$3,000,000 for injuries to or
death of persons occurring in, on or about the Premises, and property damage
insurance with limits of $1,000,000. The policy or policies affecting such
insurance, certificates of which shall be furnished to Landlord, shall name
Landlord as an additional insured, and shall provide that the insurance effected
thereby shall not be canceled, except upon thirty (30) days’ prior written
notice to Landlord. If, during the Term of

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this Lease, in the considered opinion of Landlord’s Lender, insurance advisor or
counsel, the amount of insurance described in this Paragraph 13 of this Lease is
not adequate, Tenant agrees to increase said coverage to such reasonable amount
as Landlord’s Lender, insurance advisor or counsel shall deem adequate.
14. TENANT’S PERSONAL PROPERTY INSURANCE AND WORKER’S COMPENSATION INSURANCE
Tenant shall maintain a policy or policies of fire and property damage insurance
in “all risk” form with a sprinkler leakage endorsement ensuring the personal
property, inventory, trade fixtures and leasehold improvements within the leased
Premises for the full replacement value thereof. The proceeds from any of such
policies shall be used for the repair or replacement of such items so insured.
          Tenant shall also maintain a policy or policies of worker’s
compensation insurance and any other employee benefit insurance sufficient to
comply with all laws.
15. PROPERTY INSURANCE Landlord shall purchase and keep in force, and as
Additional Rent and in accordance with Paragraph 4 D of this Lease, Tenant shall
pay to Landlord Tenant’s Proportionate Share (as defined in Paragraph 4 D of
this Lease) of the cost of, a policy or policies of insurance covering loss or
damage to the Premises in the amount of the full replacement value thereof,
providing protection against those perils included within the classification of
“all risks” insurance and, at the option of Landlord, flood insurance and
business interruption insurance. If such insurance cost is increased due to
Tenant’s use of the Premises or the Complex, Tenant agrees to pay to Landlord
the full cost of such increased and such increase shall not be applied towards
the cap on Additional Rent. Tenant shall have no interest in nor any right to
the proceeds of any insurance procured by Landlord for the Complex.
          Landlord and Tenant do each hereby respectively release the other, to
the extent of insurance coverage of the releasing party, from any liability for
loss or damage caused by fire or any of the extended coverage casualties
included in the releasing party’s insurance policies, irrespective of the cause
of such fire or casualty; provided, however, that if the insurance policy of
either releasing party prohibits such waiver, then this waiver shall not take
effect until consent to such waiver is obtained. If such waiver is so
prohibited, the insured party affected shall promptly notify the other party
thereof.
16. INDEMNIFICATION Landlord shall not be liable to Tenant and Tenant hereby
waives all claims against Landlord for any injury to or death of any person or
damage to or destruction of property in or about the Premises or the Complex by
or from any cause whatsoever, including, without limitation, gas, fire, oil,
electricity or leakage of any character from the roof, walls, basement or other
portion of the Premises or the Complex but excluding, however, the negligence of
Landlord, its agents, servants, employees, invitees, or contractors of which
negligence Landlord has knowledge and reasonable time to correct. Except as to
injury to persons or damage to property the principal cause of which is the
willful act(s) or gross negligence of Landlord, Tenant shall hold Landlord
harmless from and defend Landlord against any and all expenses, including
reasonable attorneys’ fees, in connection therewith, arising out of any injury
to or death of any person or damage to or destruction of property occurring, in,
on or about the Premises, or any part thereof, from any cause whatsoever.

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17. COMPLIANCE Tenant, at its sole cost and expense, shall promptly comply with
all laws, statutes, ordinances and governmental rules, regulations or
requirements now or hereafter in effect; with the requirements of any board of
fire underwriters or other similar body now or hereafter constituted; and with
any direction or occupancy certificate issued pursuant to law by any public
officer; provided, however, that no such failure shall be deemed a breach of the
provisions if Tenant, immediately upon notification, commences to remedy or
rectify said failure. The judgment of any court of competent jurisdiction or the
admission of Tenant in any action against Tenant, whether Landlord be a party
thereto or not, that Tenant has violated any such law, statute, ordinance or
governmental rule, regulation, requirement, direction or provision, shall be
conclusive of that fact as between Landlord and Tenant. This paragraph shall not
be interpreted as requiring Tenant to make structural changes or improvements,
except to the extent such changes or improvements are required as a result of
Tenant’s use of the Premises. Tenant shall, at its sole cost and expense, comply
with any and all requirements pertaining to said Premises, of any insurance
organization or company, necessary for the maintenance of reasonable fire and
public liability insurance covering the Premises.
18. LIENS Tenant shall keep the Premises and the Complex free from any liens
arising out of any work performed, materials furnished or obligation incurred by
Tenant. In the event that Tenant shall not, within thirty (30) days following
the imposition of such lien, cause the same to be released of record, Landlord
shall have, in addition to all other remedies provided herein and by law, the
right, but no obligation, to cause the same to be released by such means as it
shall deem proper, including payment of the claim giving rise to such lien. All
substantiated and agreed upon sums, paid by Landlord for such purpose, and all
expenses incurred by it in connection therewith, shall be payable to Landlord by
Tenant upon request within thirty (30) days, with interest from the date of the
lien’s expiration date, at the prime rate of interest as quoted by a Federally
regulated and insured Banking institution.
19. ASSIGNMENT AND SUBLETTING Tenant shall not assign, transfer or hypothecate
the leasehold estate under this Lease, or any interest therein, and shall not
sublet the Premises, or any part thereof, or any right or privilege appurtenant
thereto, or suffer any other person or entity to occupy or use the Premises, or
any portion thereof, without, in each case, the prior written consent of
Landlord which consent will not be unreasonably withheld. Tenant agrees to pay
to Landlord, as Additional Rent, fifty percent (50%) of all additional rents or
additional consideration received by Tenant from its assignees, transferees, or
subtenants, in excess over the Tenant’s current Basic Rent and Additional Rent
(such additional rents or additional consideration to be referred to as “Bonus
Rent”), based upon square footage subletted, of the rent payable by Tenant to
Landlord hereunder. Tenant shall, by one hundred twenty (120) days’ written
notice, advise Landlord of its intent to assign or transfer Tenant’s interest in
the Lease or sublet the Premises or any portion thereof for any part of the Term
hereof. In the event Tenant is allowed to assign, transfer or sublet the whole
or any part of the Premises, with the prior written consent of Landlord, no
assignee, transferee or subtenant shall assign or transfer this Lease, either in
whole or in part, or sublet the whole or any part of the Premises, without also
having obtained the prior written consent of primary Tenant and Landlord. A
consent of Landlord to one assignment, transfer, hypothecation, subletting,
occupation or use by any other person shall not release Tenant from any of
Tenant’s obligations hereunder or be deemed to be a consent to any subsequent
similar or dissimilar assignment, transfer, hypothecation, subletting,
occupation or use by any other person. Any such assignment, transfer,
hypothecation, subletting, occupation or

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use without such consent shall be void and shall constitute a breach of this
Lease by Tenant and shall, at the option of Landlord exercised by written notice
to Tenant, terminate this Lease. The leasehold estate under this Lease shall
not, nor shall any interest therein, be assignable for any purpose by operation
of law without the written consent of Landlord. As a condition to its consent,
Landlord may require Tenant to pay all expenses in connection with the
assignment and Landlord may require Tenant’s assignee or transferee (or other
assignees or transferees) to assume in writing all of the obligations under this
Lease and for Tenant to remain liable to Landlord under the Lease.
     Without in any way limiting Landlord’s right to refuse to give such consent
for any other reason or reasons, Landlord reserves the right to refuse to give
such consent, and Tenant agrees that it would not be commercially unreasonable
to withhold consent, if in Landlord’s reasonable business judgment (a) the
transferee is not of a character or is not engaged in a business which is in
keeping with the standards of Landlord for the Premises, (b) the purpose for
which the transferee intends to use the Premises is in violation of the Lease,
or (c) the sublease or assignment does not provide for Landlord’s right, at its
discretion, to require any such transferee to perform its obligations under the
sublease or assignment agreement directly to Landlord upon the termination of
the Lease due to an Event of Default by Tenant.
     Tenant agrees to pay Landlord’s reasonable attorneys’ fees and costs
incurred in connection with the assignment or subletting of the Premises by
Tenant, but not more than $1000 for each assignment or subletting. Tenant shall
have no responsibility for Landlord’s legal expenses if Landlord withholds its
consent to an assignment or subletting.
20. SUBORDINATION AND MORTGAGES In the event Landlord’s title or leasehold
interest is now or hereafter encumbered by a deed of trust, upon the interest of
Landlord in the land and Building in which the demised Premises are located, to
secure a loan from a lender (hereinafter referred to as “Lender”) to Landlord,
Tenant shall, at the request of Landlord or Lender, execute in writing an
agreement subordinating its rights under this Lease to the lien of such deed of
trust, or, if so requested, agreeing that the lien of Lender’s deed of trust
shall be or remain subject and subordinate to the rights of Tenant under this
Lease. Tenant hereby irrevocably appoints Landlord the attorney in fact of
Tenant to execute, deliver and record any such instrument or instruments for and
in the name and on behalf of Tenant. Notwithstanding any such subordination,
Tenant’s possession under this Lease shall not be disturbed if Tenant is not in
default and so long as Tenant shall pay all rent and observe and perform all of
the provisions set forth in this Lease. Tenant agrees to send to any mortgagees
and/or deed of trust holders, a copy of any notice of default served by Tenant
upon the Landlord, provided that prior to such notice, Tenant has been notified,
in writing (by way of notice of assignment of rents or otherwise) of the
addresses of such mortgagees and/or deed of trust holders. Tenant further agrees
that if Landlord shall have failed to cure such default within the time provided
for in this Lease, any such mortgagees and/or deed of trust holders shall have
an additional thirty (30) days within which to cure such default, or if such
default is not reasonably susceptible of cure within that time, then such
additional time as may be reasonably necessary if within such (30) days, any
mortgagee and/or deed of trust holder has commenced and is diligently pursuing
the remedies necessary to cure such default, (including but not limited to
commencement of foreclosure proceedings), in which event this Lease shall not be
terminated when such remedies are being diligently pursued.

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21. ENTRY BY LANDLORD Landlord reserves, and shall at all reasonable times have,
the right to enter the Premises to inspect them; to perform any services to be
provided by Landlord hereunder; to submit the Premises to prospective
purchasers, mortgagers or tenants; to post notice of nonresponsibility; and to
alter, improve or repair the Premises and any portion of the Complex, all
without abatement of rent; and may erect scaffolding and other necessary
structures in or through the Premises where reasonably required by the character
of the work to be performed; provided, however, that the business of Tenant
shall be interfered with to the least extent that is reasonably practical. For
nonemergency matters, Landlord will give Tenant twenty-four (24) hours advance
notice of entry onto the Premises. For each of the foregoing purposes, Landlord
shall at all times have and retain a key with which to unlock all of the doors
in an emergency in order to obtain entry to the Premises, and any entry to the
Premises obtained by Landlord by any of said means, or otherwise, shall not
under any circumstances be construed or deemed to be a forcible or unlawful
entry into or a detainer of the Premises or an eviction, actual or constructive,
of Tenant from the Premises or any portion thereof. Landlord shall also have the
right at any time to change the arrangement or location of entrances or
passageways, doors and doorways, and corridors, elevators, stairs, toilets or
other public parts of the Complex and to change the name, number or designation
by which the Complex is commonly known and none of the foregoing shall be deemed
an actual or constructive eviction of Tenant, or shall entitle Tenant to any
reduction of rent hereunder.
22. BANKRUPTCY AND DEFAULT The commencement of a bankruptcy action or
liquidation action or reorganization action or insolvency action or an
assignment of or by Tenant for the benefit of creditors, or any similar action
undertaken by Tenant, or the insolvency of Tenant, shall, at Landlord’s option,
constitute a breach of this Lease by Tenant.
     If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, U.S.C. Section 101 et al (the “Bankruptcy
Code”), any and all monies or other consideration payable or otherwise to be
delivered in connection with such assignment shall be paid or delivered to
Landlord, shall be the exclusive property of Landlord and shall not constitute
property of Tenant or of the estate of Tenant within the meaning of the
Bankruptcy Code. Any and all monies or other consideration constituting
Landlord’s property under the preceding sentence not paid or delivered to
Landlord shall be held in trust for the benefit of Landlord and be promptly paid
or delivered to Landlord.
     Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed without further act or deed to
have assumed all of the obligations arising under this Lease on and after the
date of such assignment. Any such assignee shall upon demand execute and deliver
to Landlord an instrument confirming such assumption.
     This is a lease of real property within the meaning of Subsection 365(b)(3)
of the Bankruptcy Code.
     The occurrence of any of the following shall constitute a breach and
material default of this Lease by Tenant if such occurrence shall remain uncured
beyond the applicable cure period specified herein (an “Event of Default”):

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(a) The failure of Tenant to pay or cause to be paid when due any rent, monies,
or charges required by this Lease to be paid by Tenant when such failure
continues for a period of five (5) days after written notice thereof from
Landlord to Tenant; or
(b) The vacation or abandonment of the Premises by Tenant in violation of
Paragraph 23 of this Lease; or
(c) The violation of Paragraph 1 of this Lease; or
(d) The failure of Tenant to comply with Paragraphs 20, 27, 29 and 42 of this
Lease when such failure continues for a period of five (5) business days after
the second written notice thereof from Landlord to Tenant; or
(e) The failure of Tenant to do or cause to be done any material act, other than
payment of rent, monies or charges, required by this Lease when such failure
continues for a period of thirty (30) days after written notice thereof from
Landlord to Tenant; provided that, in the event that if such cure cannot
reasonably be cured within such thirty (30) day period, the failure of Tenant to
within such thirty (30) day period commence with due diligence and dispatch the
curing of such default, or, having so commenced, the failure thereafter to
prosecute or complete with due diligence and dispatch the curing of such
default; or
(f) Tenant causing, permitting, or suffering, without the prior written consent
of Landlord, any material act when this Lease requires Landlord’s prior written
consent or prohibits such act; or
(g) The occurrence of any event of insolvency or bankruptcy with respect to
Tenant, including any of the following by way of illustration:
(1) Any general assignment or general arrangement for the benefit of creditors;
(2) The filing of any petition by or against Tenant to have Tenant adjudged a
bankrupt or a petition for reorganization or arrangement under any law relating
to bankruptcy, unless such petition is filed against Tenant and the same is
dismissed within sixty (60) days;
(3) The appointment of a trustee or receiver to take possession of substantially
all of Tenant’s assets located in the Premises or of Tenant’s interest in this
Lease; or
(4) The attachment, execution or other judicial seizure of substantially all of
Tenant’s assets located at the Premises or of Tenant’s interest in this Lease.
     (h) The falsification of any material written report or statement required
to be given by Tenant to Landlord under this Lease.
     In the Event of Default by Tenant, in addition to other rights or remedies
of Landlord at law or in equity, Landlord shall have the right to exercise any
one or more of the following remedies:

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     (a) Collect Rent Without Terminating Lease. Landlord may recover from
Tenant the rent as it becomes due and any other amount reasonably necessary to
compensate Landlord for all detriment proximately caused by Tenant’s failure to
perform its obligations under this Lease. Landlord may sue monthly, annually or
after such equal or unequal periods as Landlord desires for amounts due under
this subparagraph (a). The right to collect rent as it becomes due shall
terminate upon the termination by Landlord of Tenant’s right to possession of
the Premises. Tenant’s right to possession shall not be terminated unless and
until Landlord delivers to Tenant written notice thereof or the Lease Term
expires.
     (b) Terminate Lease. Landlord, either as an alternative or subsequent to
exercising the remedies set forth in subparagraph (a), may terminate Tenant’s
right to possession of the Premises by and upon delivery to Tenant of written
notice of termination. Landlord may then immediately reenter the Premises and
take possession thereof pursuant to legal proceedings and 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. No notice
of termination shall be necessary in the event that Tenant has abandoned the
Premises in violation of Paragraph 23 of this Lease. In the event that Landlord
elects to terminate Tenant’s night of possession, Landlord may recover all of
the following:
(1) The worth at the time of award of the unpaid rent which had been earned at
the time of termination. “Worth at the time of award” shall be computed by
allowing interest at the Interest Rate from the first day the breach occurs;
(2) The worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that the Tenant proves could have been reasonably
avoided. “Worth at the time of award” shall be determined by allowing interest
at the Interest Rate from the first day a breach occurs;
(3) The worth at the time of award by which the unpaid rent for the balance of
the Term after the time of award exceeds the amount of such rental loss that the
Tenant proves could be reasonably avoided. “Worth at the time of award” shall be
computed by discounting such amount at time Interest Rate;
(4) Any other amount necessary to compensate Landlord for the detriment
proximately caused by Tenant’s failure to perform its obligations under the
Lease or which in the ordinary course of events would be likely to result
therefrom including, but not limited to, reasonable expenses of reletting,
attorneys’ fees, costs of alterations and repairs, recording fees, filing fees
and any other expenses customarily resulting from obtaining possession of leased
Premises and releasing.
23. ABANDONMENT Actual abandonment of the Premises by Tenant is prohibited.
Tenant shall not vacate the Premises at any time during the Term of this Lease
for more than twenty-five (25) days without prior written notice to Landlord and
Landlord’s written approval thereof, which approval shall not be unreasonably
withheld. In the event that Landlord approves the vacation of the Premises by
Tenant, Tenant shall continue to pay rent as due, maintain the Premises as
provided hereunder, and provide adequate onsite security for the Premises. If
Tenant

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shall abandon, vacate or surrender the Premises in violation hereof, or be
dispossessed by process of law, or otherwise, any personal property or trade
fixtures belonging to Tenant and left on the Premises shall, at the option of
Landlord, be deemed abandoned. In such case, Landlord may dispose of said
personal property in any manner and is hereby relieved of all liability for
doing so. These provisions shall not apply if the Premises should be closed and
business temporarily discontinued therein on account of strikes, lockouts, or
similar causes (other than those of a financial nature) beyond the reasonable
control of Tenant.
24. DESTRUCTION In the event the Premises are destroyed in whole or in part from
any cause, Landlord may, at its option:
(a) Rebuild or restore the Premises to their condition prior to the damage or
destruction, or
(b) Terminate this Lease.
     If Landlord does not give Tenant notice in writing within thirty (30) days
from the destruction of the Premises of its election to either rebuild and
restore them, or to terminate this Lease, Landlord shall be deemed to have
elected to rebuild or restore them, in which event Landlord agrees, at its
expense, promptly to rebuild or restore the Premises to their condition prior to
the damage or destruction. Tenant shall be entitled to a reduction in rent while
such repair is being made in the proportion that the area of the Premises
rendered untenantable by such damage bears to the total area of the Premises. If
Landlord does not complete the rebuilding or restoration within one hundred
eighty (180) days following the date of destruction (such period of time to be
extended for delays caused by the fault or neglect of Tenant or because of Acts
of God, acts of public agencies, labor disputes, strikes, fires, freight
embargoes, rainy or stormy weather, inability to obtain materials, supplies or
fuels, acts of contractors or subcontractors, or delay of the contractors or
subcontractors due to such causes or other contingencies beyond the control of
Landlord), then Tenant shall have the right to terminate this Lease by giving
fifteen (15) days prior written notice to Landlord. Notwithstanding anything
herein to the contrary, Landlord’s obligation to rebuild or restore shall be
limited to the Building and interior improvements constructed by Landlord as
they existed as of the commencement date of the Lease and shall not include
restoration of Tenant’s trade fixtures, equipment, merchandise or any
improvements, alterations or additions made by Tenant to the Premises, which
Tenant shall forthwith replace or fully repair at Tenant’s sole cost and expense
provided this Lease is not cancelled according to the provisions above.
     Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect. Tenant hereby expressly waives the
provisions of Section 1932, Subdivision 2, and Section 1933, Subdivision 4 of
the California Civil Code.
     In the event that the Building in which the Premises are situated is
damaged or destroyed to the extent of not less than 33 1/3 % of the replacement
cost thereof, Landlord may elect to terminate this Lease, whether the Premises
be injured or not. In the event the destruction of the Premises is caused by
Tenant, Tenant shall pay the deductible portion of Landlord’s insurance
proceeds.

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25. EMINENT DOMAIN If all or any part of the Premises shall be taken by any
public or quasi-public authority under the power of eminent domain or conveyance
in lieu thereof, this Lease shall terminate as to any portion of the Premises so
taken or conveyed on the date when title vests in the condemnor, and Landlord
shall be entitled to any and all payment, income, rent, award or any interest
therein whatsoever which may be paid or made in connection with such taking or
conveyance, and Tenant shall have no claim against Landlord or otherwise for the
value of any unexpired Term of this Lease. Notwithstanding the foregoing
paragraph, any compensation specifically awarded Tenant for loss of business,
Tenant’s personal property, moving cost or loss of goodwill, shall be and remain
the property of Tenant.
     If (i) any action or proceeding is commenced for such taking of the
Premises or any part thereof, or if Landlord is advised in writing by any entity
or body having the right or power of condemnation of its intention to condemn
the Premises or any portion thereof, or (ii) any of the foregoing events occur
with respect to the taking of any space in the Complex not leased hereby, or if
any such spaces so taken or conveyed in lieu of such taking and Landlord shall
decide to discontinue the use and operation of the Complex, or decide to
demolish, alter or rebuild the Complex, then, in any of such events Landlord
shall have the right to terminate this Lease by giving Tenant written notice
thereof within sixty (60) days of the date of receipt of said written advice, or
commencement of said action or proceeding, or taking conveyance, which
termination shall take place as of the first to occur of the last day of the
calendar month next following the month in which such notice is given or the
date on which title to the Premises shall vest in the condemnor.
     In the event of such a partial taking or conveyance of the Premises, if the
portion of the Premises taken or conveyed is so substantial that the Tenant can
no longer reasonably conduct its business. Tenant shall have the privilege of
terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intention so to do, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month next following the month in which such notice is given, upon payment by
Tenant of the rent from the date of such taking or conveyance to the date of
termination.
     If a portion of the Premises be taken by condemnation or conveyance in lieu
thereof and neither Landlord nor Tenant shall terminate this Lease as provided
herein, this Lease shall continue in full force and effect as to the part of the
Premises not so taken or conveyed, and the rent herein shall be apportioned as
of the date of such taking or conveyance so that thereafter the rent to be paid
by Tenant shall be in the ratio that the area of the portion of the Premises not
so taken or conveyed bears to the total area of the Premises prior to such
taking.
26. SALE OR CONVEYANCE BY LANDLORD In the event of a sale or conveyance of the
Complex or any interest therein, by any owner of the reversion then constituting
Landlord, the transferor shall thereby be released from any further liability
upon any of the terms, covenants or conditions (express or implied) herein
contained in favor of Tenant, and in such event, insofar as such transfer is
concerned, Tenant agrees to look solely to the responsibility of the successor
in interest of such transferor in and to the Complex and this Lease. This Lease
shall not be affected by any such sale or conveyance, and Tenant agrees to
attorn to the successor in interest of such transferor.

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27. ATTORNMENT TO LENDER OR THIRD PARTY In the event the interest of Landlord in
the land and Building in which the leased Premises are located (whether such
interest of Landlord is a fee title interest or a leasehold interest) is
encumbered by deed of trust, and such interest is acquired by the lender or any
third party through judicial foreclosure or by exercise of a power of sale at
private trustee’s foreclosure sale, Tenant hereby agrees to attorn to the
purchaser at any such foreclosure sale and to recognize such purchaser as the
Landlord under this Lease. In the event the lien of the deed of trust securing
the loan from a Lender to Landlord is prior and paramount to the lease, this
Lease shall nonetheless continue in full force and effect for the remainder of
the unexpired Term hereof, at the same rental herein reserved and upon all the
other terms, conditions and covenants herein contained.
28. HOLDING OVER Any holding over by Tenant after expiration or other
termination of the Term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the leased Premises except as expressly provided
in this Lease Any holding over after the expiration or other termination of the
Term of this Lease, with the consent of Landlord, shall be construed to be a
tenancy from month to month, on the same terms and conditions herein specified
insofar as applicable. The Basic Rent payable during any such period of holding
over shall be equal to the Basic Rent payable during the period immediately
preceding Tenant’s holding over increased by one hundred twenty-five percent
(125%) of the Monthly Basic Rent. Tenant shall pay all Additional Rent payments
as specified within this Lease. Notwithstanding the foregoing, Landlord
expressly reserves the right to require Tenant to surrender possession of the
Premises upon the expiration of the Term hereof or upon the earlier termination
hereof and the right to assert any remedy at law or in equity to evict Tenant
and/or collect damages in connection with any such holding over. Tenant shall
indemnify, defend and hold Landlord harmless from and against any and all
claims, demands, actions, losses, damages, obligations, costs and expenses,
including, without limitation, attorneys’ fees incurred or suffered by Landlord
by reason of Tenant’s failure to surrender the Premises on the expiration or
earlier termination of this Lease in accordance with the provisions of this
Lease.
29. CERTIFICATE OF ESTOPPEL Tenant shall at any time upon not less than ten
(10) days’ prior written notice from Landlord execute, acknowledge and deliver
to Landlord a statement in writing (i) certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not, to Tenant’s
knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such defaults, if any, are claimed. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises.
Tenant’s failure to deliver such statement within such time shall be conclusive
upon Tenant that this Lease is in full force and effect, without modification
except as may be represented by Landlord; that there are no uncured defaults in
Landlord’s performance, and that not more than one month’s rent has been paid in
advance.
30. CONSTRUCTION CHANGES [Omitted.]
31. RIGHT OF LANDLORD TO PERFORM All terms, covenants and conditions of this
Lease to be performed or observed by Tenant shall be performed or observed by
Tenant at Tenant’s sole

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cost and expense and without any reduction of rent. If Tenant shall fail to pay
any sum of money, or other rent, required to be paid by it hereunder or shall
fail to perform any other term or covenant hereunder on its part to be
performed, and such failure shall continue for seven (7) calendar days after
written notice thereof by Landlord, Landlord, without waiving or releasing
Tenant from any obligation of Tenant hereunder, may, but shall not be obligated
to, make any such payment or perform any such other term or covenant on Tenant’s
part to be performed. All sums so paid by Landlord and all necessary costs of
such performance by Landlord together with interest thereon at the rate of the
prime rate of interest per annum as quoted by the Bank of America from the date
of such payment of performance by Landlord, shall be paid (and Tenant covenants
to make such payment) to Landlord on demand by Landlord, and Landlord shall have
(in addition to any other right or remedy of Landlord) the same rights and
remedies in the event of nonpayment by Tenant as in the case of failure by
Tenant in the payment of rent hereunder.
32. ATTORNEYS’ FEES
     (A) In the event that Landlord should bring suit for the possession of the
Premises, for the recovery of any sum due under this Lease, or because of the
breach of any provision of this Lease, or for any other relief against Tenant
hereunder, then all costs and expenses, including reasonable attorneys’ fees,
incurred by the prevailing party therein shall be paid by the other party, which
obligation on the part of the other party shall be deemed to have accrued on the
date of the commencement of such action and shall be enforceable whether or not
the action is prosecuted to judgment.
     (B) Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant’s occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including a
reasonable attorney’s fee.
33. WAIVER The waiver by either party of the other party’s failure to perform or
observe any term, covenant or condition herein contained to be performed or
observed by such waiving party shall not be deemed to be a waiver of such term,
covenant or condition or of any subsequent failure of the party failing to
perform or observe the same or any other such term, covenant or condition
therein contained, and no custom or practice which may develop between the
parties hereto during the Term hereof shall be deemed a waiver of, or in any way
affect, the right of either party to insist upon performance and observance by
the other party in strict accordance with the terms hereof.
34. NOTICES All notices, demands, requests, advices or designations which may be
or are required to be given by either party to the other hereunder shall be in
writing. All notices, demands, requests, advices or designations by Landlord to
Tenant shall be sufficiently given, made or delivered if personally served on
Tenant by leaving the same at the Premises or if sent by United States certified
or registered mail, postage prepaid, addressed to Tenant at the Premises. All
notices, demands, requests, advices or designations by Tenant to Landlord shall
be sent by United States certified or registered mail, postage prepaid,
addressed to Landlord at its offices at BIV Group, P.O. Box 1567, Danville, CA,
94526-6567. Each notice, request, demand, advice or designation referred to in
this paragraph shall be deemed received on the date of the personal service or
mailing thereof in the manner herein provided, as the case may be.

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35. EXAMINATION OF LEASE Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or otherwise until its execution
and delivery by both Landlord and Tenant. Landlord and Tenant mutually intend
that neither shall have any binding contractual obligations to the other with
respect to the matters referred to herein unless and until this instrument has
been fully executed by both parties.
36. DEFAULT BY LANDLORD Landlord shall not be in default unless Landlord fails
to perform obligations required of Landlord within a reasonable time, but in no
event earlier than thirty (30) days after written notice by Tenant to Landlord
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have heretofore been furnished to Tenant in
writing, specifying wherein Landlord has failed to perform such obligations;
provided, however, that if the nature of Landlord’s obligations is such that
more than thirty (30) days are required for performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
37. CORPORATE AUTHORITY If Tenant is a corporation (or a partnership) each
individual executing this Lease on behalf of said corporation (or partnership)
represents and warrants that he is duly authorized to execute and deliver this
Lease on behalf of said corporation (or partnership) in accordance with the
by-laws of said corporation (or partnership in accordance with the partnership
agreement) and that this Lease is binding upon said corporation (or partnership)
in accordance with its terms. If Tenant is a corporation, Tenant shall, within
thirty (30) days after execution of this Lease, deliver to Landlord a certified
copy of the resolution of the Board of Directors of said corporation authorizing
or ratifying the execution of this Lease.
38. BASIC RENT ADJUSTMENT It is understood and agreed that upon the exercise of
the Option (see Paragraph 2 of this Lease) the Basic Rent and Additional Rent
for the Premises as of the relevant Option period commencement date, the Basic
Rent provided for in Paragraph 4 A of the Lease shall be analyzed to establish
current fair market rate and new Basic Rent. The new Basic Rent will be at 100%
of the fair market value. If it becomes necessary to determine fair market value
for the Premises by appraisal, real estate appraiser(s) all of who shall be
members of the American Institute of Real Estate Appraisers, and who have at
least 5 years experience appraising “R&D - Flexible type” space in the vicinity
of the Premises shall be appointed and shall act in accordance with the
following procedure:
(i) If the parties are unable to agree on the Fair Market Rent within the
allowed time, either party may demand an appraisal by giving written notice to
the other party, which to be effective must state the name, address, and
qualifications of an appraiser selected by the notifying party demanding an
appraisal (the “Notifying Party”). Within ten (10) days following the Notifying
Party’s Appraisal demand, the other party (the “Non-Notifying Party”) shall
either approve the appraiser selected by the notifying party, or select a second
properly qualified appraiser by giving written notice of the name, address, and
qualification of said appraiser to the Notifying Party. If the Non-Notifying
party fails to select and appraiser within the ten (10) day period, the
appraiser selected by the Notifying Party shall be deemed selected by both
parties and no other appraiser shall be selected. If two

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appraisers are selected, they shall select a third appropriately qualified
appraiser. If the two appraisers fail to select a third qualified appraiser, the
third appraiser shall be appointed by the then presiding judge of the county
where the Premises are located upon application by either party.
(ii) If only one appraiser is selected, that appraiser shall notify the parties
in simple letter form of its determination of the Fair Market Rent for the
Premises within fifteen (15) days following his selection, which appraisal shall
be conclusively determination and binding on the parties as the appraised Fair
Market Rent.
(iii) If multiple appraisers are selected, the appraisers shall meet not later
than ten (10) days following the selection of the last appraiser. At such
meeting the appraisers shall attempt to determine the Fair Market Rent for the
Premises as of the commencement date of the Option period by the agreement of at
least two (2) of the appraisers.
(iv) If two (2) or more of the appraisers agree on the Fair Market Rent for the
Premises at the initial meeting, such agreement shall be determinative and
binding upon the parties hereto and the agreeing appraisers shall, in simple
letter form executed by the agreeing appraisers, forthwith notifying both
Landlord and Tenant of the amount set by such agreement. If multiple appraisers
are selected and two (2) appraisers are unable to agree on the Fair Market Rent
for the Premises, all appraisers shall submit to Landlord and Tenant an
independent appraisal of the Fair Market Rent for the Premises in simple letter
from within twenty (20) days following appointment of the final appraiser. The
parties shall then determine the Fair Market Rent for the Premises by averaging
the appraisals; provided that any high or low appraisal, differing from the
middle appraisal by more than ten percent (10%) of the middle appraisal, shall
be deemed to be exactly 10% higher (if the high appraisal differs by more than
10% from the middle appraisal) or 10% lower than the middle appraisal (if the
low appraisal differs by more than 10% from the middle appraisal) in calculating
the average.
(v) The appraisers’ determination of Fair Market Rent shall be based on rental
of space of the same age, construction, size and location as the Premises with
the improvements installed therein at Landlord’s expense and shall take into
account Tenant’s obligations to pay Additional Rent under this Lease. In
determining Fair Market Rent, the appraisers shall not consider any alterations
installed in the Premises at Tenant’s expense.
(vi) If only one appraiser is selected, then each party shall pay one-half of
the fees and expenses of that appraiser. If three appraisers are selected, each
party shall bear the fees and expenses of the appraiser it selects and one-half
of the fees and expenses of the third appraiser.
     Notwithstanding anything to the contrary contained in this Paragraph 38 of
this Lease, the Basic Rent for the Option Term may be no less than the Basic
Rent during the third year of the

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Term of this Lease unless Landlord agrees in writing. If the establishment of a
new Basic Rent for the Option Term is determined by appraisal as set forth
above, and if Tenant does not, in its sole discretion, approve the Basic Rent
established by such appraisal, then Tenant may by written notice to Landlord no
later than September 30, 2006, rescind the exercise of its Option to extend the
Term of this Lease for three (3) years. If Tenant properly rescinds the exercise
of its Option to extend the Term of this Lease for three (3) years, then
Landlord agrees that Tenant has the right to extend the term of this Lease for
one additional period of up to six (6) months upon the same terms and provisions
of this Lease at the same Basic Rent as the last month of the Term of this
Lease. Tenant shall notify Landlord of the exact number of full months (not to
exceed six (6) months) that Tenant elects to extend the Term of this Lease by
written notice to Landlord no later than September 30, 2006.
39. LIMITATION OF LIABILITY In consideration of the benefits accruing hereunder,
Tenant and all successors and assigns covenant and agree that, in the event of
any actual or alleged failure, breach or default hereunder by Landlord:
(i) the sole and exclusive remedy shall be against Landlord and Landlord’s
assets;
(ii) no partner of Landlord shall be sued or named as a party in any suit or
action (except as may be necessary to secure jurisdiction of the partnership);
(iii) no service of process shall be made against any partner of Landlord
(except as may be necessary to secure jurisdiction of the partnership);
(iv) no partner of Landlord shall be required to answer or otherwise plead to
any service of process;
(v) no judgment shall be taken against any partner of Landlord;
(vi) any judgment taken against any partner of Landlord may be vacated and set
aside at any time without hearing;
(vii) no writ of execution will ever be levied against the assets of any partner
of Landlord;
(viii) these covenants and agreements are enforceable both by Landlord and also
by any partner of Landlord.
(ix) The term “Landlord,” as used in this section, shall mean only the owner or
owners from time to time of the fee title of the land described in Exhibit “B,”
and in the event of any transfer of such title or interest, Landlord herein
named (and in case of any subsequent transfers the then grantor) shall be
relieved from and after the date of such transfer of all liability as respects
Landlord’s obligations thereafter to be performed, provided that any funds in
the hands of Landlord or the then grantor at the time of such transfer in which
Tenant has an interest shall be delivered to the grantee. Similarly, the
obligations contained in this Lease to be performed by Landlord shall be binding
on Landlord’s successors and assigns only during their respective periods of
ownership. Tenant agrees that each of the foregoing covenants and agreements
shall be applicable to

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any covenant or agreement either expressly contained in this Lease or imposed by
statute or at common law.
(x) Landlord has no obligation to provide any security measures for the benefit
of the Premises or the Common Areas or the Complex except that Landlord shall
maintain in good working order the existing exterior lighting system.
40. BROKERS Tenant warrants that it knows of no real estate broker or agent who
is entitled to a commission in connection with this Lease.
41. SIGNS No new sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed or affixed on or to any part of the outside of the
Premises or any exterior windows of the Premises without the written consent of
Landlord first had and obtained, and Landlord shall have the right to remove any
such sign, placard, picture, advertisement, name or notice with seventy-two
(72) hour notice and at the expense of Tenant. If Tenant is allowed to print or
affix or in any way place a sign in, on, or about the Premises, then upon
expiration or other sooner termination of this Lease, Tenant at Tenant’s sole
cost and expense shall both remove such sign and repair all damage in such a
manner as to restore all aspects of the appearance of the Premises to the
condition prior to the placement of said sign.
          All approved signs or lettering on outside doors shall be printed,
painted, affixed or inscribed at the expense of Tenant by a person approved of
by Landlord.
          Tenant shall not place anything or allow anything to be placed near
the glass of any window, door partition or wall which may appear unsightly from
outside the Premises.
42. FINANCIAL STATEMENTS In the event Tenant tenders to Landlord any information
on the financial stability, creditworthiness or ability of the Tenant to pay the
rent due and owing under the Lease, then Landlord shall be entitled to rely upon
the information provided in determining whether or not to enter into this Lease
Agreement with Tenant and Tenant hereby represents and warrants to Landlord the
following: (i) That all documents provided by Tenant to Landlord are true and
correct copies of the original; and (ii) Tenant has not withheld any information
from Landlord which is material to Tenant’s creditworthiness, financial
condition or ability to pay the rent; and (iii) all information supplied by
Tenant to Landlord is true, correct and accurate; and (iv) no part of the
information supplied by Tenant to Landlord contains misleading or fraudulent
statements.
          A default under this paragraph shall be a non-curable default on
behalf of Tenant and Landlord shall be entitled to pursue any right or remedy
available to Landlord under the terms of this Lease or available to Landlord
under the laws of the State of California.
43. HAZARDOUS MATERIALS
          A. As used herein, the term “Hazardous Material” shall mean any
substance or material which has been determined by any state, federal or local
governmental authority to be capable of posing a risk of injury to health,
safety or property including all of those materials and substances designated or
defined as “hazardous” or toxic by (i) the Environmental Protection Agency, the
California Water Quality Control Board, the Department of Labor, the California

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Department of Industrial Relations, the Department of Transportation, the
Department of Agriculture, the Consumer Product Safety Commission, the
Department of Health and Human Services, the Food and Drug Agency or any other
governmental agency now or hereafter authorized to regulate materials and
substances in the environment, or by (ii) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601 et seq., as
amended; the Hazardous Materials Transportation Act, 49 U.S.C. 1801, et seq., as
amended; the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq., as
amended; the Hazardous Waste Control Law, California Health & Safety Code 25100
et seq., as amended; Sections 66680 through 66685 of Title 22 of the California
Administration Code, Division 4, Chapter 30, as amended; and in the regulations
adopted and publications promulgated pursuant to said laws.
     B. Tenant shall not cause or permit any Hazardous Material to be improperly
or illegally used, stored, discharged, released or disposed of in, from, under
or about the Premises or the Complex, or any other land or improvements in the
vicinity of the Premises or the Complex. Without limiting the generality of the
foregoing, Tenant, at its sole cost, shall comply with all laws relating to
Hazardous Materials. If the presence of Hazardous Materials on the Premises or
the Complex caused or permitted by Tenant results in contamination of the
Premises or the Complex or any soil in or about the Premises or the Complex,
Tenant, at its expense shall promptly take all actions necessary to return the
Premises or the Complex to the condition existing prior to the appearance of
such Hazardous Material. The termination of this Lease shall not terminate or
reduce the liability or obligations of Tenant under this Section, or as may be
required by law, to clean up, monitor or remove any Hazardous Materials from the
Premises or the Complex.
     Tenant shall defend, hold harmless and indemnify Landlord and its agents
and employees with respect to all claims, damages and liabilities arising out of
or in connection with any Hazardous Material used, stored, discharged, released
or disposed of in, from, under or about the Premises or the Complex, where said
Hazardous Material is or was attributable to the activities of Tenant, its
agents or contractors during the Lease Term and whether or not Tenant had
knowledge of such Hazardous Material, including, without limitation, any cost of
monitoring or removal, any reduction in the fair market value or fair rental
value of the Premises or the Complex and any loss, claim or demand by any third
person or entity relating to bodily injury or damage to real or personal
property.
     Tenant shall not suffer any lien to be recorded against the Premises or the
Complex as a consequence of a Hazardous Material, including any so called state,
federal or local “super fund” lien related to the “clean up” of a Hazardous
Material in or about the Premises, where said Hazardous Material is or was
attributable to the activities of Tenant.
     C. In the event Hazardous Materials are discovered in or about the Premises
or the Complex, and Landlord has substantial reason to believe that Tenant was
responsible for the presence of the Hazardous Material, then Landlord shall have
the right to appoint a consultant, at Tenant’s expense, to conduct an
investigation to determine whether Hazardous Materials are located in or about
the Premises or the Complex and to determine the corrective measures, if any,
required to remove such Hazardous Materials. Tenant, at its expense, shall
comply with all recommendations of the consultant, as required by law. To the
extent it is determined that Tenant was not responsible for the presence of the
Hazardous Materials, then Landlord shall reimburse

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Tenant for any costs incurred by Landlord and paid by Tenant under the terms of
this Paragraph 45 C of this Lease.
     Tenant shall immediately notify Landlord of any inquiry, test,
investigation or enforcement proceeding by or against Tenant or the Premises or
the Complex concerning a Hazardous Material. Tenant acknowledges that Landlord,
as the owner of the Property, at its election, shall have the sole right, at
Tenant’s expense, to negotiate, defend, approve and appeal any action taken or
order issued with regard to a Hazardous Material by an applicable governmental
authority. Provided Tenant is not in default under the terms of this Lease,
Tenant shall likewise have the right to participate in any negotiations,
approvals or appeals of any actions taken or orders issued with regard to the
Hazardous Material and Landlord shall not have the right to bind Tenant in said
actions or orders.
     D. It shall not be unreasonable for Landlord to withhold its consent to any
proposed assignment or subletting if (i) the proposed assignee’s or subtenant’s
anticipated use of the Premises involves the storage, use or disposal of
Hazardous Material; (ii) if the proposed assignee or subtenant has been required
by any prior landlord, lender or governmental authority to “clean up” Hazardous
Material; (iii) if the proposed assignee or subtenant is subject to
investigation or enforcement order or proceeding by any governmental authority
in connection with the use, disposal or storage of a Hazardous Material.
     E. Tenant shall surrender the Premises to Landlord, upon the expiration or
earlier termination of the Lease, free of Hazardous Materials which are or were
attributable to Tenant. If Tenant fails to so surrender the Premises, Tenant
shall indemnify and hold Landlord harmless from all damages resulting from
Tenant’s failure to surrender the Premises as required by this paragraph,
including, without limitation, any claims or damages in connection with the
condition of the Premises including, without limitation, damages occasioned by
the inability to relet the Premises or a reduction in the fair market and/or
rental value of the Premises or the Complex by reason of the existence of any
Hazardous Materials, which are or were attributable to the activities of Tenant,
in or around the Premises or the Complex.
     Notwithstanding any provision to the contrary in this Lease, if any action
is required to be taken by a governmental authority to clean-up, monitor or
remove any Hazardous Materials, which are or were attributable to the activities
of Tenant, from the Premises or the Complex and such action is not completed
prior to the expiration or earlier termination of the Lease, then at Landlord’s
election (i) this Lease shall be deemed renewed for a term commencing on the
expiration date of this Lease and ending on the date the clean-up, monitoring or
removal procedure is completed (provided, however, that the total Term of this
Lease shall not be longer than 34 years and 11 months); or (ii) Tenant shall be
deemed to have impermissibly held over and Landlord shall be entitled to all
damages directly or indirectly incurred in connection with such holding over,
including without limitation damages occasioned by the inability to relet the
Premises or a reduction in the fair market and/or fair rental value of the
Premises or the Complex by reason of the existence of the Hazardous Material.
     F. Upon the Lease Commencement Date, Tenant shall provide to Landlord a
complete list of all chemicals, toxic waste or Hazardous Materials employed by
Tenant within the

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Premises. Throughout the Term of the Lease, Tenant shall continue to update this
list of chemicals, contaminants and Hazardous Materials.
44. MISCELLANEOUS AND GENERAL PROVISIONS
     a. Tenant shall not, without the written consent of Landlord, use the name
of the Building for any purpose other than as the address of the business
conducted by Tenant in the Premises.
     b. This Lease shall in all respects be governed by and construed in
accordance with the laws of the State of California. If any provision of this
Lease shall be invalid, unenforceable or ineffective for any reason whatsoever,
all other provisions hereof shall be and remain in full force and effect.
     c. The term “Premises” includes the space leased hereby and any
improvements now or hereafter installed therein or attached thereto. The term
“Landlord” or any pronoun used in place thereof includes the plural as well as
the singular and the successors and assigns of Landlord. The term “Tenant” or
any pronoun used in place thereof includes the plural as well as the singular
and individuals, firms, associations, partnerships and corporations, and their
and each of their respective heirs, executors, administrators, successors and
permitted assigns, according to the context hereof, and the provisions of this
Lease shall inure to the benefit of and bind such heirs, executors,
administrators, successors and permitted assigns. The term “person” includes the
plural as well as the singular and individuals, firms, associations,
partnerships and corporations. Words used in any gender include other genders.
If there be more than one Tenant the obligations of Tenant hereunder are joint
and several. The paragraph headings of this Lease are for convenience of
reference only and shall have no effect upon the construction or interpretation
of any provision hereof.
     d. Time is of the essence of this Lease and of each and all of its
provisions.
     e. At the expiration or earlier termination of this Lease, Tenant shall
execute, acknowledge and deliver to Landlord, within ten (10) days after written
demand from Landlord to Tenant, any quitclaim deed or other document required by
any reputable title company, licensed to operate in the State of California, to
remove the cloud or encumbrance created by this Lease from the real property of
which Tenant’s Premises are a part.
     f. This instrument along with any exhibits and attachments hereto
constitutes the entire agreement between Landlord and Tenant relative to the
Premises and this agreement and the exhibits and attachments may be altered,
amended or revoked only by an instrument in writing signed by both Landlord and
Tenant. Landlord and Tenant hereby agree that all prior or contemporaneous oral
agreements between and among themselves and their agents or representatives
relative to the leasing of the Premises are merged in or revoked by this
agreement.
     g. Neither Landlord nor Tenant shall record this Lease or a short form
memorandum hereof without the consent of the other.
     h. Tenant further agrees to execute any amendments required by a lender to
enable Landlord to obtain financing, so long as Tenant’s rights hereunder are
not substantially affected.

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     i. Clauses, plats and riders, if any, signed by Landlord and Tenant and
endorsed on or affixed to this Lease are a part hereof.
     j. Tenant covenants and agrees that no diminution or shutting off of light,
air or view by any structure which may be hereafter erected (whether or not by
Landlord) shall in any way affect this Lease, entitle Tenant to any reduction of
rent hereunder or result in any liability of Landlord to Tenant.

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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.

                              LANDLORD:       TENANT:  
 
                            BIV Group       Cholestech Corporation
 
                           
By:
  (Signature Illegible)       By:   /s/ Robert J. Dominici            
 
                           
 
                           
Title:
  Managing Partner       Title:   Executive Vice President - COO            
 
                           
Date:
  July 23, 2001       Date:   July 23, 2001            

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EXHIBIT “A”
[floor plan of premises]

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EXHIBIT “B”
TENANT’S REMOVABLE PROPERTY
     Upon termination of the Lease the following items shall not be considered a
part of the Premises and, in addition to Tenant’s moveable furniture and trade
fixtures, may be removed by Tenant upon vacating the Premises.

1.   Air and nitrogen compressor equipment, hardware, systems, venting, support
structures, and piping used for factory compressed air and nitrogen.   2.  
De-ionized water system and piping used in production and laboratory processing.
  3.   Humidity Controlled Environment system including desiccators, HVAC, and
support equipment integral to the function of the humidity controlled room.
Include specially sealed light fixtures (upon vacating: they will be replaced
with conventional functioning non-sealed light fixtures)   4.   Production line
equipment and electrical supply hardware.   5.   Refrigerated storage rooms and
equipment.   6.   Fencing, gating, and partitioning fixtures used throughout
facility.   7.   Racking, shelving, and conveyors used in and around warehousing
operation.   8.   Electric “rafter hung” heating panels used for zone heating in
non-conditioned environment.   9.   Office hardware, marker boards, overhead
screens and other office fixtures.   10.   Communication hardware, racking, and
cabling.   11.   Laboratory furniture, vent hood systems, shelving, hardware,
and plumbing.   12.   Electricity Generating equipment including 600 kilowatt
diesel powered generator system, interior and exterior switches, power
transmission wire, and conduit.   13.   Trade fixtures not listed above.

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