Exhibit 10.11


 


LEASE


 


THIS LEASE (this “Lease”) is entered into as of April 27,
2006, by and between BMR-BAYSHORE BOULEVARD LLC, a Delaware limited liability
company (“Landlord”), and EXPRESSION DIAGNOSTICS, INC., a Delaware
corporation (“Tenant”). The date on which this Lease has been executed
by both parties hereto is referred to herein as the “Effective Date.”


 


RECITALS


 


A.                      WHEREAS,
Landlord owns certain real property (the “Property”) and the buildings
improvements thereon located at 3260 Bayshore Boulevard in Brisbane,
California, including the building located thereon (the “Building”) in
which the Premises (as defined below) are located; and


 


B.                        WHEREAS,
Landlord wishes to lease to Tenant, and Tenant desires to lease from Landlord,
certain premises (the “Premises”) located in the Building, pursuant to
the terms and conditions of this Lease, as detailed below.


 


AGREEMENT


 


NOW, THEREFORE, Landlord and Tenant, in consideration of the mutual
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, agree as follows:


 


1.                          Lease
of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, the Premises, which consist of (a) the portion of the first
(1st) floor of the Building shown on Exhibit A attached
hereto and (b) the second (2nd) floor of the Building. The
Property and all landscaping, parking facilities and other improvements and
appurtenances related thereto, including, without limitation, the Building (but
excluding other buildings), are hereinafter collectively referred to as the “Project.”
All portions of the Project that are for the non-exclusive use of tenants of
the Building, including, without limitation, driveways, sidewalks, parking
areas, landscaped areas, service corridors, stairways, elevators, public
restrooms and Building lobbies, are hereinafter referred to as “Common Area.”


 


2.                          Basic
Lease Provisions. For convenience of the parties, certain basic provisions of
this Lease are set forth herein. The provisions set forth herein are subject to
the remaining terms and conditions of this Lease and are to be interpreted in
light of such remaining terms and conditions.


 


2.1.                 This
Lease shall take effect upon the date of execution and delivery hereof by all
parties hereto and, except as specifically otherwise provided within this
Lease, each of the provisions hereof shall be binding upon and inure to the
benefit of Landlord and Tenant from the date of execution and delivery hereof
by all parties hereto.


 


2.2.                 Rentable
Area of Premises: 46,034 sq. ft.


 


2.3.                 Rentable
Area of Building: 61,444 sq. ft.


 

















 


2.4.                 [Intentionally
omitted]


 


2.5.                 [Intentionally
omitted]


 


2.6.                 Basic
Annual Rent:


 


	
  Months

  	
   

  	
  Square Feet

  	
   

  	
  Lease Rate/Per Month

  	
   

  
	
  1-3

  	
   

  	
  30,000

  	
   

  	
  Free

  	
   

  
	
  4-12

  	
   

  	
  35,000

  	
   

  	
  $

  	
  2.15 NNN

  	
   

  	
  75,250

  	
   

  
	
  13-24

  	
   

  	
  40,000

  	
   

  	
  $

  	
  2.15 NNN

  	
   

  	
  86,000

  	
   

  
	
  25-36

  	
   

  	
  46,034

  	
   

  	
  $

  	
  2.20 NNN

  	
   

  	
  101,274.80

  	
   

  
	
  37-48

  	
   

  	
  46,034

  	
   

  	
  $

  	
  2.30 NNN

  	
   

  	
  105,878.20

  	
   

  
	
  49-60

  	
   

  	
  46,034

  	
   

  	
  $

  	
  2.35 NNN

  	
   

  	
  108,179.90

  	
   

  
	
  61-72

  	
   

  	
  46,034

  	
   

  	
  $

  	
  2.40 NNN

  	
   

  	
  110,481.60

  	
   

  
	
  73-84

  	
   

  	
  46,034

  	
   

  	
  $

  	
  2.45 NNN

  	
   

  	
  112,783.30

  	
   

  



 


2.7.                 [Intentionally
omitted]


 


2.8.                 Tenant’s
Pro Rata Share: 74.92% of the Building


 


2.9.                 Estimated
Term Commencement Date: November 1, 2006


 


2.10.           Estimated
Term Expiration Date: October 31, 2013


 


2.11.           Security
Deposit: $197,946, subject to decrease in accordance with the terms hereof


 


2.12.           Permitted
Use: General office and laboratory, research and development and all related
uses in conformity with Applicable Laws (as defined below)


 


	
  2.13.           Address for Rent
  Payment:

  	
  BMR-Bayshore Boulevard LLC

  Unit D

  P.O. Box 51918

  Los Angeles, California 90051-6218

  
	
   

  	
   

  	
   

  
	
  2.14.           Address for Notices
  to Landlord:

  	
  BMR-Bayshore Boulevard LLC

  17140 Bernardo Center Drive, Suite 222

  San Diego, California 92128

  Attn: General Counsel

  
	
   

  	
   

  	
   

  
	
  2.15.           Address for Notices
  to Tenant:

  	
  Prior to the Term Commencement Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Expression Diagnostics, Inc.

  750 Gateway Blvd., Suite H

  South San Francisco, CA 94080

  Attn: Chief Financial Officer

  
					



 


2

















 


	
   

  	
  After the Term Commencement Date:

  
	
   

  	
   

  
	
   

  	
  Expression Diagnostics, Inc.

  3260 Bayshore Blvd. 

  Brisbane, CA 94005 

  Attn: Chief Financial Officer

  



 


2.16.           The
following Exhibits are attached hereto and incorporated herein by reference:


 


	
   

  	
  Exhibit A

  	
  Premises

  
	
   

  	
  Exhibit B

  	
  Acknowledgement of Term Commencement Date and Term
  Expiration Date

  
	
   

  	
  Exhibit C

  	
  [Intentionally omitted]

  
	
   

  	
  Exhibit D

  	
  Rules and Regulations

  
	
   

  	
  Exhibit E

  	
  Form of Estoppel Certificate

  
	
   

  	
  Exhibit F

  	
  Form of Subordination, Non-Disturbance and
  Attornment Agreement

  
	
   

  	
  Exhibit G

  	
  Work Letter

  



 


3.                          Term.


 


3.1.                 This
Lease shall take effect upon the date of execution and delivery hereof by all
parties hereto and, except as specifically otherwise provided within this
Lease, each of the provisions hereof shall be binding upon and inure to the
benefit of Landlord and Tenant from the date of execution and delivery hereof
by all parties hereto.


 


3.2.                 The
actual term of this Lease (the “Term”) shall be that period from the
actual Term Commencement Date as defined in Section 4.2 below
through the Term Expiration Date, subject to earlier termination of this Lease
as provided herein.


 


3.3.                 Tenant
shall have the right to terminate this Lease at any time after the fifth (5th)
anniversary of the Term Commencement Date upon twelve (12) months’ prior
written notice to Landlord; provided that Tenant shall pay to Landlord
on or before the termination date (a) an early termination fee equal to
six (6) months of the then-current Basic Annual Rent and (b) the
unamortized portion of (i) any leasing commissions and (ii) any
Tenant Improvements financed with the Additional TI Allowance (as defined
below).


 


4.                          Possession
and Commencement Date.


 


4.1.                 Landlord
shall tender possession of the Premises within one (1) business day after
the Effective Date. Landlord agrees to use commercially reasonable efforts to
complete Landlord’s Work (as defined below) within one hundred twenty (120)
days after building permits are obtained for the improvements to be made to the
Premises in accordance with this Lease. Tenant agrees that in the event
Landlord’s Work is not Substantially Complete (as defined below) within such
one hundred twenty (120) day period after the Effective Date, then this Lease
shall not be void or voidable and Landlord shall not be liable to Tenant for
any loss or damage resulting therefrom. If Landlord fails to timely achieve
Substantial Completion of Landlord’s Work for any reason whatsoever, then
Landlord shall have no liability to Tenant for such failure,


 


3

















 


but the Term
Commencement Date and the Term Expiration Date shall be extended accordingly;
provided, however, that the Term Commencement Date and the Term Expiration Date
shall not be extended to the extent that any delay in achieving Substantial
Completion of Landlord’s Work is caused by (a) the failure of Tenant or
Tenant’s architect to timely deliver any item in the Work Letter, (b) the
actions or omissions of Tenant or its employees, agents, contractors or
architects, or (c) a default by Tenant of its obligations under this Lease
(each, a “Tenant Delay”). Landlord’s Work shall be deemed “Substantially
Complete” if Landlord has completed all of Landlord’s Work, subject only to a
punchlist of items that do not materially and substantially interfere with
Tenant’s construction of the Tenant Improvements (as defined below). Tenant
shall deliver to Landlord promptly after Tenant’s receipt thereof (y) a
certificate of occupancy for the Premises suitable for the Permitted Use and
(z) a Certificate of Substantial Completion in the form of the American
Institute of Architects document G704, executed by the project architect and
the general contractor. “Landlord’s Work” means (a) installation of
a sliding or roll-up glass door (the “Door”) to be used for shipping and
receiving purposes in accordance with plans and specifications provided by
Tenant, subject to Landlord’s approval, (b) installation of demising walls
to separate the Premises from the balance of the Building, (c) installation
of separate meters or submeters for water and electricity provided to the
Premises (provided that (i) Tenant shall have dedicated space in an
electrical room in the Premises for any such meter or submeter, (ii) Landlord
shall be responsible for reading any such meters and submeters and quantifying
Tenant’s use of such utilities for purposes of Tenant’s reimbursement of the
cost of such utilities to Landlord and (iii) Tenant shall provide to
Landlord reasonable access to such meters and submeters for the purpose of
Landlord’s reading thereof), (d) installation of direct digital controls
to measure air flow to the Premises from the HVAC system and (e) any work
required to cause the Building heating, ventilation and air conditioning
system, plumbing system and electrical system (collectively, the “Relevant
Systems”) to be in good working order and repair as of the Term
Commencement Date. In the event that the Relevant Systems are not in good
working order and repair as of the Term Commencement Date, Landlord shall make
any repairs and material capital replacements to such Relevant Systems at
Landlord’s sole cost and expense; provided that such obligation shall
not extend to customary maintenance or capital improvements. Landlord shall use
commercially reasonable efforts to order the Door once Landlord and Tenant have
approved the specifications therefor. Notwithstanding anything in this Lease or
the Work Letter to the contrary, in the event that, despite such efforts by
Landlord, the timing of delivery of the Door prevents Landlord from timely
completing Landlord’s Work, Tenant shall not be entitled to any remedies for
such delay, including, without limitation, abatement of Rent, and Landlord
shall, on or before the Term Commencement Date, install a temporary alternative
to the Door that is reasonably satisfactory to Landlord and Tenant.


 


4.2.                 The
“Term Commencement Date” shall be the later of (i) November 1,
2006 or (ii) the date on which Landlord’s Work is Substantially Complete
(or the date on which Landlord’s Work would have been Substantially Complete
absent Tenant Delay or Force Majeure (as defined below)); provided, however,
that if the Term Commencement Date is not the first day of a calendar month,
then the first lease year shall be extended through the last day of the
calendar month in which the first 12-month period expires, and Rent for the
additional period at the end of the first lease year shall be payable at the
rate for the 12th month of the Term. “Force Majeure” means
accident; breakage; repair; governmental regulation, moratorium or other
governmental action. The “Term Expiration Date” shall be the day
immediately preceding the seventh (7th) anniversary of the Term
Commencement Date, provided that if such preceding


 


4

















 


day is not the
last day of a calendar month, then the Term Expiration Date shall be the last
date of the calendar month in which such preceding day occurs. Landlord and
Tenant shall each execute and deliver to the other written acknowledgment of
the actual Term Commencement Date and the Term Expiration Date when such are
established, and shall attach it to this Lease as Exhibit B.
Failure to execute and deliver such acknowledgment, however, shall not affect
the Term Commencement Date or Landlord’s or Tenant’s liability hereunder.
Failure by Tenant to obtain validation by any medical review board or other
similar governmental licensing of the Premises required for the Permitted Use
by Tenant shall not serve to extend the Term Commencement Date.


 


4.3.                 Prior
to entering upon the Premises, Tenant shall furnish to Landlord evidence
satisfactory to Landlord that insurance coverages required of Tenant under the
provisions of Section 21 are in effect, and such entry shall be
subject to all the terms and conditions of this Lease other than the payment of
Basic Annual Rent or Additional Rent (as defined below).


 


4.4.                 Possession
of areas of the Premises necessary for utilities, services, safety and
operation of the Building is reserved to Landlord.


 


4.5.                 Tenant
shall cause to be constructed the tenant improvements in the Premises (the “Tenant
Improvements”) pursuant to the Work Letter at a cost to Landlord (the “Tenant
Improvement Allowance”) not to exceed Three Million Four Hundred Fifty-Two
Thousand Five Hundred Fifty Dollars ($3,452,550) (based upon Seventy-Five
Dollars ($75) per rentable square foot), which amount shall include the costs
of (a) construction, (b) project management by Landlord (which fee
shall equal Four Thousand Dollars ($4,000) per month, not to exceed Forty
Thousand Dollars ($40,000) total), (c) space planning, architect,
engineering and other related services and (d) building permits and other
planning and inspection fees. If the total cost of the Tenant Improvements
exceeds Seventy-Five Dollars ($75) per square foot of Rentable Area of the
Premises, then the overage shall be paid by Tenant prior to the Term
Commencement Date; provided, however that Tenant may withhold any
retainage properly withheld by Tenant pursuant to its contract(s) with
contractors and any other amounts to which Landlord approves in advance in
writing, which approval Landlord shall not unreasonably withhold, condition or
delay (collectively, the “Excluded Amounts”); provided, further,
that Tenant shall pay the Excluded Amounts when required by such contract(s) or
by Applicable Laws (as defined below). Tenant shall have until December 31,
2007, to expend the unused portion of the Tenant Improvement Allowance, after
which date Landlord’s obligation to fund such costs shall expire. Any unused
portion of the Tenant Improvement Allowance shall be credited against Tenant’s
obligation to pay Rent, with such unused amount amortized over the Initial Term
of this Lease and resulting in corresponding reductions in Tenant’s obligation
to pay monthly installments of Basic Annual Rent. As used herein, the term “Initial
Term” shall mean the period commencing on the Term Commencement Date and
expiring on the Term Expiration Date.


 


4.6.                 The
selection of the architect, engineer, general contractor and major
subcontractors shall be in accordance with the terms of the Work Letter.


 


4.7.                 In
addition to the Tenant Improvement Allowance, Landlord shall make available to
Tenant Nine Hundred Twenty Thousand Six Hundred Eighty Dollars ($920,680),
based upon Twenty Dollars ($20) per rentable square foot (the “Additional TI
Allowance”) for construction


 


5

















of the initial
Tenant Improvements. Tenant shall repay to Landlord, in equal monthly installments
as Additional Rent (as defined below), the Additional TI Allowance amortized
over the Initial Term of the Lease at an interest rate of nine percent (9%).


 


5.                          Rent.


 


5.1.                 Tenant
shall pay to Landlord as Basic Annual Rent for the Premises, commencing on the
Term Commencement Date, the sum set forth in Section 2.6. Basic
Annual Rent shall be paid in equal monthly installments, each in advance on the
first day of each and every calendar month during the Term.


 


5.2.                 In
addition to Basic Annual Rent, Tenant shall pay to Landlord as additional rent
(“Additional Rent”) at times hereinafter specified in this Lease (a) Tenant’s
pro rata share, as set forth in Section 2.8 (“Tenant’s Pro Rata
Share”), of Operating Expenses as provided in Section 7 and (b) any
other amounts that Tenant assumes or agrees to pay under the provisions of this
Lease that are owed to Landlord, including, without limitation, any and all
other sums that may become due by reason of any default of Tenant or
failure on Tenant’s part to comply with the agreements, terms, covenants
and conditions of this Lease to be performed by Tenant, after notice and the
lapse of any applicable cure periods.


 


5.3.                 Basic
Annual Rent and Additional Rent shall together be denominated “Rent.”
Rent shall be paid to Landlord, without abatement, deduction or offset, in
lawful money of the United States of America at the office of Landlord as set
forth in Section 2.13 or to such other person or at such other
place as Landlord may from time designate in writing. In the event the
Term commences or ends on a day other than the first day of a calendar month,
then the Rent for such fraction of a month shall be prorated for such period on
the basis of a thirty (30) day month and shall be paid at the then-current rate
for such fractional month.


 


6.                          [Intentionally
omitted]


 


7.                          Operating
Expenses.


 


7.1.                 As
used herein, the term “Operating Expenses” shall include:


 


(a)                      Government
impositions including, without limitation, property tax costs consisting of
real and personal property taxes and assessments, including amounts due under
any improvement bond upon the Building or the Project, including the parcel or
parcels of real property upon which the Building and areas serving such
Building are located or assessments in lieu thereof imposed by any federal,
state, regional, local or municipal governmental authority, agency or
subdivision (each, a “Governmental Authority”) are levied; taxes on or
measured by gross rentals received from the rental of space in the Building;
taxes based on the square footage of the Premises, the Building or the Project,
as well as any parking charges, utilities surcharges or any other costs levied,
assessed or imposed by, or at the direction of, or resulting from Applicable
Laws (as defined below) or interpretations thereof, promulgated by any
Governmental Authority in connection with the use or occupancy of the Building
or the parking facilities serving the Building; taxes on this transaction or
any document to which Tenant is a party creating or transferring an interest in
the Premises; any fee for a business license to operate an office building; and
any expenses, including the reasonable cost of attorneys or experts,


 


6

















 


reasonably
incurred by Landlord in seeking reduction by the taxing authority of the
applicable taxes, less tax refunds obtained as a result of an application for
review thereof. Operating Expenses shall not include any net income, franchise,
capital stock, estate or inheritance taxes, or taxes that are the personal
obligation of Tenant or of another tenant of the Project; and


 


(b)                     All
other costs of any kind paid or incurred by Landlord in connection with the
operation or maintenance of the Building and the Project including, by way of
example and not of limitation, costs of repairs and replacements to
improvements within the Project as appropriate to maintain the Project as
required hereunder; costs of utilities furnished to the Common Areas; sewer
fees; cable television; trash collection; cleaning, including windows; heating;
ventilation; air-conditioning; maintenance of landscaping and grounds;
maintenance of drives and parking areas; maintenance of the roof; security
services and devices; building supplies; maintenance or replacement of equipment
utilized for operation and maintenance of the Project; license, permit and
inspection fees; sales, use and excise taxes on goods and services purchased by
Landlord in connection with the operation, maintenance or repair of the Project
or Building systems and equipment; telephone, postage, stationary supplies and
other expenses incurred in connection with the operation, maintenance or repair
of the Project; accounting, legal and other professional fees and expenses
incurred in connection with the Project; costs of furniture, draperies,
carpeting, landscaping and other customary and ordinary items of personal
property provided by Landlord for use in Common Areas; the cost of any
Allowable Capital Improvements (as defined below), the cost of which is less
than or equal to Twenty-Five Thousand Dollars ($25,000); the cost of any
Allowable Capital Improvements (as defined below), the cost of which is greater
than Twenty-Five Thousand Dollars ($25,000), amortized over their useful lives
as Landlord shall reasonably determine; costs of complying with any federal,
state, municipal or local laws and regulations, including both statutory and
common law and hazard waste rules and regulations (“Applicable Laws”);
insurance premiums, including premiums for public liability, property casualty,
earthquake and environmental coverages; portions of insured losses paid by
Landlord as part of the deductible portion of a loss pursuant to the terms
of insurance policies (provided, however, that Landlord shall maintain
commercially reasonable insurance deductibles, which, as of the date hereof, do
not exceed Ten Thousand Dollars ($10,000) per incident); service contracts;
costs of services of independent contractors retained to do work of a nature
referenced above; and costs of compensation (including employment taxes and
fringe benefits) of all persons who perform regular and recurring duties
connected with the day-to-day operation and maintenance of the Project, its
equipment, the adjacent walks, landscaped areas, drives and parking areas,
including, without limitation, janitors, floor waxers, window washers,
watchmen, gardeners, sweepers and handymen. As used herein, the term “Allowable
Capital Improvements” shall mean capital improvements that are reasonably
required to keep the Building or the Project (excluding any other buildings) in
good condition and repair or to comply with any Applicable Laws enacted or
otherwise first effective after the Term Commencement Date; provided,
however, that Allowable Capital Improvements shall exclude any capital
improvements to the extent that they exceed both (i) the standard of
construction used for the Building or the Project, as applicable, when
originally built and (ii) the standard of construction that is consistent
with then-existing prudent industry practices, in each case except to the
extent that upgrades are required by any Applicable Laws.


 


Notwithstanding the foregoing, Operating Expenses shall not include any
leasing commissions or finders’ fees; attorneys’ fees, advertising costs, space
planning costs and other


 


7

















 


costs incurred by
Landlord in leasing or attempting to lease space in the Building or the
Project; expenses that relate to preparation of rental space for a tenant; expenses
of initial development and construction, including, but not limited to,
grading, paving, landscaping and decorating (as distinguished from maintenance,
repair and replacement of the foregoing); legal expenses, accountants’ fees and
other costs and expenses incurred in connection with negotiations or disputes
with past, present or prospective tenants; costs of repairs to the extent
reimbursed by tenants (other than as their pro rata share of operating expenses
pursuant to their respective leases), warrantors or other third parties or by
payment of insurance or condemnation proceeds received by Landlord or to the
extent such costs would have been reimbursed had Landlord obtained the
insurance policies that Landlord is required to carry pursuant to this Lease;
interest and principal upon loans to Landlord or secured by a mortgage or deed
of trust covering the Project or a portion thereof and other debt costs (provided
that interest upon a government assessment or improvement bond payable in
installments shall constitute an Operating Expense under Subsection 7.1(a));
rental under any ground or underlying lease; depreciation on the Building;
salaries of executive officers of Landlord; depreciation claimed by Landlord
for tax purposes and other “non cash” items (provided that this
exclusion of depreciation is not intended to delete from Operating Expenses
actual costs of repairs and replacements and reasonable reserves in regard
thereto that are provided for in Subsection 7.1(a)); taxes of the
types set forth in Subsection 7.1(a); costs, fines, interest and
penalties incurred due to the late payment of taxes of the types set forth in Subsection 7.1(a);
any bad debt loss or rent loss; the cost of any services in the Building or the
Project provided by Landlord or any Landlord affiliate to the extent the same
materially exceeds the costs of such services rendered by qualified,
unaffiliated third parties on a competitive basis in the Brisbane area; costs
arising from the presence of Hazardous Materials in or about the Building or
the Project that were present at the Building or the Project prior to the Term
Commencement Date (other than those present as a result of the acts or
omissions of Tenant or its employees, agents, consultants or contractors) or
costs arising from the use, disposal or release of Hazardous Materials by other
tenants in the Building; and costs incurred in connection with the sale,
financing or refinancing of the Building or the Project. Notwithstanding the
foregoing, to the extent that any Common Area expenses benefit buildings in
addition to the Building, Landlord agrees to include in Operating Expenses only
that portion of such Common Area expenses that is reasonably allocated to the
Building.


 


7.2.                 Tenant
shall pay to Landlord on the first day of each calendar month of the Term, as
Additional Rent, (a) the Property Management Fee (as defined below) and (b) Landlord’s
estimate of Tenant’s Pro Rata Share of Operating Expenses with respect to the
Building and the Project, as applicable, for such month.


 


(a)                      The
“Property Management Fee” shall equal two percent (2%) of the Basic
Annual Rent due from Tenant.


 


(b)                     Within
ninety (90) days after the conclusion of each calendar year (or such longer
period as may be reasonably required by Landlord), Landlord shall furnish
to Tenant a statement showing in reasonable detail the actual Operating
Expenses and Tenant’s Pro Rata Share of Operating Expenses for the previous
calendar year. Any additional sum due from Tenant to Landlord shall be
immediately due and payable. If the amounts paid by Tenant pursuant to this Section 7.2
exceed Tenant’s Pro Rata Share of Operating Expenses for the previous calendar
year, then Landlord shall credit the difference against the Rent next due and


 


8

















 


owing from Tenant;
provided that, if the Lease term has expired, Landlord shall accompany
said statement with payment for the amount of such difference.


 


(c)                      Any
amount due under this Section 7.2 for any period that is less than
a full month shall be prorated (based on a thirty (30)-day month) for such
fractional month.


 


7.3.                 Landlord’s
annual statement shall be final and binding upon Tenant unless Tenant, within
ninety (90) days after Tenant’s receipt thereof, shall contest any item therein
by giving written notice to Landlord, specifying each item contested and the
reasons therefor. If, during such ninety (90)-day period, Tenant reasonably and
in good faith questions or contests the correctness of Landlord’s statement of
Tenant’s Pro Rata Share of Operating Expenses, Landlord shall provide Tenant
with access to Landlord’s books and records and such information as Landlord
reasonably determines to be responsive to Tenant’s questions. In the event
that, after Tenant’s review of such information, Landlord and Tenant cannot
agree upon the amount of Tenant’s Pro Rata Share of Operating Expenses, then
Tenant shall have the right to have an independent public accounting firm hired
by Tenant (at Tenant’s sole cost and expense, unless the Independent Review
indicates that Landlord overstated the Operating Expenses by more than five
percent (5%) of the actual Operating Expenses, in which event Landlord shall
reimburse Tenant for the fees and costs of the Independent Review) and approved
by Landlord (which approval Landlord shall not unreasonably withhold or delay)
audit and review such of Landlord’s books and records for the year in question
(the “Independent Review”). The results of any such Independent Review
shall be binding on Landlord and Tenant. If the Independent Review shows that
Tenant’s Pro Rata Share of Operating Expenses actually paid for the calendar
year in question exceeded Tenant’s obligations for such calendar year, then
Landlord shall, at Tenant’s option, either (a) credit the excess to the
next succeeding installments of estimated Additional Rent or (b) pay the
excess to Tenant within thirty (30) days after delivery of such results. If the
Independent Review shows that Tenant’s payments of Tenant’s Pro Rata Share of
Operating Expenses for such calendar year were less than Tenant’s obligation
for the calendar year, then Tenant shall pay the deficiency to the Landlord
within thirty (30) days after delivery of such results.


 


7.4.                 Tenant
shall not be responsible for Operating Expenses attributable to the time period
prior to the Term Commencement Date; provided, however, that if
Landlord shall permit Tenant possession of the Premises prior to the Term
Commencement Date, Tenant shall be responsible for Operating Expenses from such
earlier date of possession. Tenant’s responsibility for Tenant’s Pro Rata Share
of Operating Expenses shall continue to the latest of (a) the date of
termination of the Lease, (b) the date Tenant has fully vacated the
Premises or (c) if termination of the Lease is due to a default by Tenant,
the date of rental commencement of a replacement tenant.


 


7.5.                 Operating
Expenses for the calendar year in which Tenant’s obligation to share therein
commences and for the calendar year in which such obligation ceases shall be
prorated on a basis reasonably determined by Landlord. Expenses such as taxes,
assessments and insurance premiums that are incurred for an extended time
period shall be prorated based upon the time periods to which they apply so
that the amounts attributed to the Premises relate in a reasonable manner to
the time period wherein Tenant has an obligation to share in Operating
Expenses.


 


9

















 


8.                          Rentable
Area.


 


8.1.                 The
term “Rentable Area” as set forth in Section 2 and as may otherwise
be referenced within this Lease reflects such areas as have been reasonably
calculated by Landlord’s architect.


 


8.2.                 The
“Rentable Area” of the Building has generally been determined by making
separate calculations of Rentable Area applicable to each floor within the
Building and totaling the Rentable Area of all floors within the Building. The
Rentable Area of a floor has been computed by measuring to the outside finished
surface of the permanent outer Building walls. The full area calculated as
previously set forth is included as Rentable Area, without deduction for
columns and projections or vertical penetrations, including stairs, elevator
shafts, flues, pipe shafts, vertical ducts and the like, as well as such items’
enclosing walls.


 


8.3.                 The
Rentable Area of the Project is the total Rentable Area of all buildings within
the Project.


 


8.4.                 The
term “Rentable Area,” when applied to the Premises, is that area equal to the
usable area of the Premises, plus an equitable allocation of Rentable Area
within the Building that is not then utilized or expected to be utilized as
usable area, including, but not limited to, that portion of the Building
devoted to corridors, equipment rooms, restrooms, elevator lobby, atrium and
mailroom. In making such allocations, consideration has been given to tenants
benefited by space allocated such that the area that primarily serves tenants
of only one floor, such as corridors and restrooms upon such floor, has been
allocated to usable area of the Building as a whole.


 


8.5.                 The
Rentable Areas set forth Section 2 have been agreed to by Landlord and
Tenant and shall not be subject to adjustment, unless Tenant exercises its
right to expand the Premises pursuant to Section 43 below.


 


9.                          Security
Deposit.


 


9.1.                 No
later than thirty (30) days after the Effective Date (time being of the
essence), Tenant shall deposit with Landlord either a letter of credit (the “Letter
of Credit”) or immediately available funds (the “Cash Deposit”) in
the amount set forth in Section 2.11, which Letter of Credit or
Cash Deposit shall be held by Landlord as security for the faithful performance
by Tenant of all of the terms, covenants and conditions of this Lease to be
kept and performed by Tenant during the period beginning on the Effective Date
and ending upon the expiration or earlier termination of the Lease; provided,
however, that if Tenant deposits with Landlord the Cash Deposit, then Landlord
agrees to return the Cash Deposit to Tenant within two (2) business days
after Landlord’s receipt of the Letter of Credit. Landlord shall be entitled to
use the Cash Deposit in any circumstance where Landlord would be entitled to
draw upon the Letter of Credit under this Lease. The Letter of Credit shall be (a) in
a form reasonably acceptable to Landlord, (b) issued by a financial
institution selected by Tenant and reasonably acceptable to Landlord, (c) for
the benefit of Landlord, but assignable by Landlord to any subsequent purchaser
or encumbrancer of the Building or the Project, (d) automatically
renewable from year to year throughout the Term, (e) payable by sight
draft in a location reasonably acceptable to Landlord


 


10

















 


upon presentation
of a certification signed by an officer of Landlord stating that a Default
under this Lease has occurred and has not been cured within any applicable cure
period and (f) payable in the event such Letter of Credit is not renewed
on or before the date that is thirty (30) days prior to its expiration. If there
is a Default by Tenant with respect to any provision of this Lease, including,
but not limited to, any provision relating to the payment of Rent, then
Landlord may (but shall not be required to) draw upon the Letter of Credit
and use, apply or retain any amount drawn for the payment of any Rent or any
other sum in default, or to compensate Landlord for any other loss or damage
that Landlord may suffer by reason of Tenant’s Default. If the Letter of
Credit is so drawn, then Tenant shall, within ten (10) days after such
draw, replace the Letter of Credit with a new letter of credit conforming to
the requirements of this Section 9.1, at Tenant’s sole cost and
expense. Tenant’s failure to do so shall be a material breach of this Lease.


 


9.2.                 In
the event of bankruptcy or other debtor-creditor proceedings against Tenant,
the Security Deposit shall be deemed to be applied first to the payment of Rent
and other charges due Landlord for all periods prior to the filing of such
proceedings.


 


9.3.                 Landlord
may deliver to any purchaser of Landlord’s interest in the Premises the
funds deposited hereunder by Tenant, and thereupon Landlord shall be discharged
from any further liability with respect to such deposit. This provision shall
also apply to any subsequent transfers.


 


9.4.                 If
no Default or Imminent Default (as defined below) by Tenant has occurred on or
before the date that is three (3) years after the Term Commencement Date,
then Tenant may reduce the amount of the Letter of Credit to Ninety-Eight
Thousand Nine Hundred Seventy-Three Dollars ($98,973), at no cost to Landlord;
provided, however, that if Landlord does not allow the Letter of Credit to be
so reduced as the result of an Imminent Default by Tenant, then Landlord agrees
to notify Tenant of such Imminent Default and if Tenant cures such Imminent
Default within the cure period provided in Section 24.4 below, if any,
then immediately upon completion of such cure Tenant may reduce the amount
of the Letter of Credit to Ninety-Eight Thousand Nine Hundred Seventy-Three
Dollars ($98,973), at no cost to Landlord. If there is no uncured Default or
Imminent Default by Tenant as of the expiration or earlier termination of this
Lease, then the Letter of Credit shall be returned to Tenant (or, at Landlord’s
option, to the last assignee of Tenant’s interest hereunder) within thirty (30)
days after the expiration or earlier termination of this Lease; provided,
however, that if Landlord does not so return the Letter of Credit as the result
of an Imminent Default by Tenant, then Landlord agrees to notify Tenant of such
Imminent Default and, if Tenant cures such Imminent Default within the cure
period provided in Section 24.4 below, if any, then Landlord shall return
the Letter of Credit to Tenant (or, at Landlord’s option, to the last assignee
of Tenant’s interest hereunder) within thirty (30) days after the completion of
such cure. As used in this Lease, the term “Imminent Default” shall mean
the occurrence of an event that with the giving of notice or the passage of
time or both would constitute a Default.


 


10.                    Use.


 


10.1.           Tenant
shall use the Premises for the purpose set forth in Section 2.12,
and shall not use the Premises, or permit or suffer the Premises to be used,
for any other purpose without


 


11

















 


Landlord’s prior
written consent, which consent Landlord may withhold in its sole and
absolute discretion.


 


10.2.           Tenant
shall not use or occupy the Premises in violation of Applicable Laws; zoning
ordinances; or the certificate of occupancy issued for the Building, and shall,
upon five (5) days’ written notice from Landlord, discontinue any use of
the Premises that is declared or claimed by any Governmental Authority having
jurisdiction to be a violation of any of the above, or that in Landlord’s
reasonable opinion violates any of the above. Tenant shall comply with any
direction of any Governmental Authority having jurisdiction that shall, by
reason of the nature of Tenant’s use or occupancy of the Premises, impose any
duty upon Tenant or Landlord with respect to the Premises or with respect to
the use or occupation thereof.


 


10.3.           Tenant
shall not do or permit to be done anything that will invalidate or increase the
cost of any fire, environmental, extended coverage or any other insurance
policy covering the Building and the Project, and shall comply with all rules,
orders, regulations and requirements of the insurers of the Building and the
Project, and Tenant shall promptly, upon demand, reimburse Landlord for any
additional premium charged for such policy by reason of Tenant’s failure to
comply with the provisions of this Section.


 


10.4.           Tenant
shall keep all doors opening onto public corridors closed, except when in use
for ingress and egress.


 


10.5.           No
additional locks or bolts of any kind shall be placed upon any of the doors or
windows by Tenant, nor shall any changes be made to existing locks or the
mechanisms thereof without Landlord’s prior written consent. Tenant shall, upon
termination of this Lease, return to Landlord all keys to offices and restrooms
either furnished to or otherwise procured by Tenant. In the event any key so
furnished to Tenant is lost, Tenant shall pay to Landlord the cost of replacing
the same or of changing the lock or locks opened by such lost key if Landlord
shall deem it necessary to make such change.


 


10.6.           No
awnings or other projections shall be attached to any outside wall of the
Building. No curtains, blinds, shades or screens shall be attached to or hung
in, or used in connection with, any window or door of the Premises other than
Landlord’s standard window coverings. Neither the interior nor exterior of any
windows shall be coated or otherwise sunscreened without Landlord’s prior
written consent, nor shall any bottles, parcels or other articles be placed on
the windowsills. No equipment, furniture or other items of personal property
shall be placed on any exterior balcony without Landlord’s prior written
consent.


 


10.7.           No
sign, advertisement or notice shall be exhibited, painted or affixed by Tenant
on any part of the Premises or the Building without Landlord’s prior
written consent; provided that Tenant shall have the right to install a
sign with its name and corporate logo on the exterior of the Building, the
size, appearance and characteristics of which shall be subject to Landlord’s
prior written consent. Interior signs on doors and the directory tablet shall
be inscribed, painted or affixed for Tenant by Landlord at Tenant’s sole cost
and expense, and shall be of a size, color and type acceptable to Landlord. The
directory tablet shall be provided exclusively for the display of the name and
location of tenants only. Tenant shall not place anything on the exterior of
the corridor walls or corridor doors other than Landlord’s standard lettering.


 


12

















 


10.8.           Tenant
shall cause any office equipment or machinery to be installed in the Premises
so as to reasonably prevent sounds or vibrations therefrom from extending into
the Common Areas or other offices in the Building. Further, Tenant shall not
place any equipment weighing five hundred (500) pounds or greater within the
Premises without Landlord’s prior written approval, and such equipment shall be
placed in a location designed to carry the weight of such equipment.


 


10.9.           Tenant
shall not (a) do or permit anything to be done in or about the Premises
that shall in any way obstruct or interfere with the rights of other tenants or
occupants of the Building or the Project, or injure or unreasonably annoy them,
or (b) use or allow the Premises to be used for immoral or unlawful
purposes, nor shall Tenant knowingly cause, maintain or permit any nuisance or
waste in, on or about the Premises, the Building or the Project.


 


10.10.     Notwithstanding
any other provision herein to the contrary, Tenant shall be responsible for all
liabilities, costs and expenses arising out of or in connection with the
compliance of the Premises with the Americans with Disabilities Act, 42 U.S.C. § 12101,
et seq. (together with regulations promulgated pursuant thereto, the “ADA”),
and Tenant shall indemnify, defend and hold harmless Landlord from and against
any loss, cost, liability or expense (including reasonable attorneys’ fees and
disbursements) arising out of any failure of such improvements to comply with
the ADA. Notwithstanding the foregoing, Landlord shall be responsible for all
liabilities, costs and expenses arising out of or in connection with the
compliance of the existing structural portions and tenant improvements of the
Premises as of the date of this Lease, the “path of travel” into and within the
Building (but not within the Premises, except as specifically described in this
sentence) and the Project’s parking lots, walkways and landscaping areas with
the ADA, and Landlord shall indemnify, defend and hold harmless Tenant from and
against any loss, cost, liability or expense (including reasonable attorneys’
fees and disbursements) arising out of any failure of Landlord to make such
aspects of the Project comply with the ADA. The provisions of this Section 10.10
shall survive the expiration or earlier termination of this Lease.


 


11.                    Brokers.


 


11.1.           Tenant
represents and warrants that it has had no dealings with any real estate broker
or agent in connection with the negotiation of this Lease, other than CRESA
Partners (“Broker”), and that it knows of no other real estate broker or
agent that is or might be entitled to a commission in connection with this
Lease. Landlord shall compensate Broker in relation to this Lease pursuant to a
separate agreement between Landlord and Broker.


 


11.2.           Tenant
represents and warrants that no broker or agent has made any representation or
warranty relied upon by Tenant in Tenant’s decision to enter into this Lease,
other than as contained in this Lease.


 


11.3.           Tenant
acknowledges and agrees that the employment of brokers by Landlord is for the
purpose of solicitation of offers of leases from prospective tenants and that
no authority is granted to any broker to furnish any representation (written or
oral) or warranty from Landlord unless expressly contained within this Lease.
Landlord is executing this Lease in reliance upon Tenant’s representations and
warranties contained within Sections 11.1 and 11.2.


 


13

















 


12.                    Holding
Over.


 


12.1.           If,
with Landlord’s prior written consent, Tenant holds possession of all or any part of
the Premises after the Term, Tenant shall become a tenant from month to month
after the expiration or earlier termination of the Term, and in such case
Tenant shall continue to pay (a) the Basic Annual Rent in accordance with Section 5,
and (b) Tenant’s Pro Rata Share of Operating Expenses. Any such
month-to-month tenancy shall be subject to every other term, covenant and
agreement contained herein.


 


12.2.           Notwithstanding
the foregoing, if Tenant remains in possession of the Premises after the
expiration or earlier termination of the Term without Landlord’s prior written
consent, Tenant shall become a tenant at sufferance subject to the terms and
conditions of this Lease, except that the monthly rent shall be equal to (i) for
the first two months of holdover, one hundred twenty-five percent (125%) of the
Rent in effect during the last thirty (30) days of the Term, and (ii) thereafter,
one hundred fifty percent (150%) of the Rent in effect during the last thirty
(30) days of the Term.


 


12.3.           Acceptance
by Landlord of Rent after the expiration or earlier termination of the Term
shall not result in an extension, renewal or reinstatement of this Lease.


 


12.4.           The
foregoing provisions of this Section 12 are in addition to and do
not affect Landlord’s right of reentry or any other rights of Landlord
hereunder or as otherwise provided by Applicable Laws.


 


13.                    Taxes on
Tenant’s Property.


 


13.1.           Tenant
shall pay prior to delinquency any and all taxes levied against any personal
property or trade fixtures placed by Tenant in or about the Premises.


 


13.2.           If
any such taxes on Tenant’s personal property or trade fixtures are levied
against Landlord or Landlord’s property or, if the assessed valuation of the
Building or the Property is increased by inclusion therein of a value
attributable to Tenant’s personal property or trade fixtures, and if Landlord,
after written notice to Tenant, pays the taxes based upon any such increase in
the assessed valued of the Building or the Project, then Tenant shall, upon
demand, repay to Landlord the taxes so paid by Landlord.


 


13.3.           If
any improvements in or alterations to the Premises, whether owned by Landlord or
Tenant and whether or not affixed to the real property so as to become a part thereof,
are assessed for real property tax purposes at a valuation higher than the
valuation at which improvements conforming to Landlord’s building standards
(the “Building Standard”) in other spaces in the Building are assessed,
then the real property taxes and assessments levied against Landlord or the
Building by reason of such excess assessed valuation shall be deemed to be
taxes levied against personal property of Tenant and shall be governed by the
provisions of Section 13.2 above. Any such excess assessed
valuation due to improvements in or alterations to space in the Building leased
by other tenants of Landlord shall not be included in the Operating Expenses
defined in Section 7, but shall be treated, as to such other
tenants, as provided in this Section 13.3. If the records of the
County Assessor are available and sufficiently detailed to serve as a basis for
determining whether said Tenant improvements or alterations are assessed at


 


14

















 


a higher valuation
than the Building Standard, then such records shall be binding on both Landlord
and Tenant.


 


14.                    Condition
of Premises. Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty with respect to the condition
of the Premises, the Building or the Project, or with respect to the
suitability of the Premises, the Building or the Project for the conduct of
Tenant’s business, except as otherwise provided in Section 4.1
above. Tenant’s taking of possession of the Premises shall, except as otherwise
agreed to in writing by Landlord and Tenant, conclusively establish that the
Premises, the Building and the Project were at such time in good, sanitary and
satisfactory condition and repair.


 


15.                    Common
Areas and Parking Facilities.


 


15.1.           Tenant
shall have the non-exclusive right, in common with others, to use the Common
Areas, subject to the rules and regulations adopted by Landlord and
attached hereto as Exhibit D, together with such other reasonable
and nondiscriminatory rules and regulations as are hereafter promulgated
by Landlord in its sole and absolute discretion (the “Rules and
Regulations”). Tenant shall faithfully observe and comply with the Rules and
Regulations. Landlord shall not be responsible to Tenant for the violation or
non-performance by any other tenant or any agent, employee or invitee thereof
of any of the Rules and Regulations.


 


15.2.           Tenant
shall have a non-exclusive license to use parking facilities serving the
Building in common on an unreserved basis with other tenants of the Building
and the Project at no additional cost to Tenant, at a ratio of three and three
tenths (3.3) parking spaces per one thousand (1,000) square feet of Rentable
Area of the Premises, which amounts to 152 parking spaces as of the Term
Commencement Date, which number shall include eight (8) reserved parking
spaces (the “Reserved Spaces”) for Tenant’s exclusive use on the side of
the Building that faces Guadalupe Canyon Parkway (provided that (a) Tenant
shall only have the right to have the Reserved Spaces on an exclusive basis for
so long as Tenant provides services at the Premises to patients with heart
conditions, (b) Tenant shall have the right to install signage marking the
Reserved Spaces, subject to Landlord’s prior written approval, which approval
Landlord shall not unreasonably withhold, condition or delay, (c) Tenant
shall maintain any such signage at its sole cost and expense and (d) Tenant
shall remove any such signage at its sole cost and expense and repair any
damage caused by such removal if Tenant is no longer entitled to exclusive use
of the Reserved Spaces pursuant to the terms of this Section 15.2).


 


15.3.           Subject
to Tenant’s rights under Section 15.2 above, Tenant agrees to
comply with all reasonable rules and regulations adopted by Landlord with
respect to the use of the parking facilities. Nothing in this Section, however,
is intended to create an affirmative duty on Landlord’s part to monitor
parking.


 


15.4.           Landlord
reserves the right to modify the Common Areas, including the right to add or
remove exterior and interior landscaping and to subdivide real property,
provided that no such modifications may have a material adverse impact on
Tenant’s access to or use and enjoyment of the Premises. Tenant acknowledges
that Landlord specifically reserves the right to allow the exclusive use of
corridors and restroom facilities located on specific floors to one or
more tenants occupying such floors; provided, however, that
Tenant shall not be deprived of the


 


15

















 


use of the
corridors reasonably required to serve the Premises or of restroom facilities
serving the floor upon which the Premises are located.


 


16.                    Utilities
and Services.


 


16.1.           Tenant
shall pay for all water (including the cost to service, repair and replace
reverse osmosis, de-ionized and other treated water), gas, heat, light, power,
telephone and other utilities supplied to the Premises, together with any fees,
surcharges and taxes thereon. If any such utility is not separately metered to
Tenant, Tenant shall pay a reasonable proportion (to be determined by Landlord)
of all charges of such utility jointly metered with other premises as part of
Tenant’s Pro Rata Share of Operating Expenses or, in the alternative, Landlord
may, at its option, monitor the usage of such utilities by Tenant and charge
Tenant with the cost of purchasing, installing and monitoring such metering equipment,
which cost shall be paid by Tenant as Additional Rent.


 


16.2.           Landlord
shall not be liable for, nor shall any eviction of Tenant result from the
failure to furnish any such utility or service due to Force Majeure. In the
event of such failure, Tenant shall not be entitled to any abatement or
reduction of Rent, nor shall Tenant be relieved from the operation of any
covenant or agreement of this Lease.


 


16.3.           Tenant
shall pay for, prior to delinquency of payment therefor, any utilities and
services that may be furnished to the Premises during or, if Tenant
occupies the Premises after the expiration or earlier termination of the Term,
after the Term.


 


16.4.           Tenant
shall not, without Landlord’s prior written consent, use any device in the
Premises (including, without limitation, data processing machines) that will in
any way (a) increase the amount of ventilation, air exchange, gas, steam,
electricity or water beyond the existing capacity of the Building as
proportionately allocated to the Premises based upon Tenant’s Pro Rata Share as
usually furnished or supplied for the use set forth in Section 2.12
or (b) exceed Tenant’s Pro Rata Share of the Building’s capacity to
provide such utilities or services.


 


16.5.           If
Tenant shall require utilities or services in excess of those usually furnished
or supplied for tenants in similar spaces in the Building by reason of Tenant’s
equipment or extended hours of business operations, then Tenant shall first
procure Landlord’s consent of Landlord for the use thereof, which consent
Landlord may condition upon the availability of such excess utilities or
services, and Tenant shall pay as Additional Rent an amount equal to the cost
of providing such excess utilities and services.


 


16.6.           Utilities
and services provided by Landlord to the Premises shall be paid by Tenant
directly to the supplier of such utility or service.


 


16.7.           Landlord
shall provide water in Common Areas for drinking and lavatory purposes only; provided,
however, that if Landlord determines that Tenant requires, uses or
consumes water for any purpose other than ordinary drinking and lavatory
purposes, Landlord may install a water meter and thereby measure Tenant’s
water consumption for all purposes. Tenant shall pay Landlord for the costs of
such meter and the installation thereof and, throughout the duration of Tenant’s
occupancy of the Premises, Tenant shall keep said meter and installation
equipment in good working order and repair at Tenant’s sole cost and expense.
If Tenant fails to


 


16

















 


so maintain such
meter and equipment, Landlord may repair or replace the same and shall
collect the costs therefor from Tenant. Tenant agrees to pay for water
consumed, as shown on said meter, as and when bills are rendered. If Tenant
fails to timely make such payments, Landlord may pay such charges and
collect the same from Tenant. Any such costs or expenses incurred, or payments
made by Landlord for any of the reasons or purposes hereinabove stated, shall
be deemed to be Additional Rent payment by Tenant and collectible by Landlord
as such.


 


16.8.           Landlord
reserves the right to stop service of the elevator, plumbing, ventilation, air
conditioning and electric systems, when Landlord deems necessary or desirable,
due to accident, emergency or the need to make repairs, alterations or
improvements, until such repairs, alterations or improvements shall have been
completed, and Landlord shall further have no responsibility or liability for
failure to supply elevator facilities, plumbing, ventilation, air conditioning
or electric service when prevented from doing so by Force Majeure or a failure
by a third party to deliver gas, oil or another suitable fuel supply, or
Landlord’s inability by exercise of reasonable diligence to obtain gas, oil or
another suitable fuel. Without limiting the foregoing, it is expressly
understood and agreed that any covenants on Landlord’s part to furnish any
service pursuant to any of the terms, covenants, conditions, provisions or
agreements of this Lease, or to perform any act or thing for the benefit
of Tenant, shall not be deemed breached if Landlord is unable to furnish or perform the
same by virtue of Force Majeure.


 


16.9.           Notwithstanding
the provisions of Sections 16.2 or 16.8 to the contrary, in the event that
Tenant is prevented from using, and does not use, the Premises or any portion
thereof, for more than one (1) business day as a result of an interruption
of, or failure to provide, any utilities or services as described in Sections
16.2 and 16.4 (“Interruption of Service”) caused by the grossly
negligent or intentionally wrongful acts or omissions of Landlord or any agent,
contractor or employee of Landlord, the Basic Annual Rent and Additional Rent
shall be abated proportionately with the degree to which Tenant’s use of the
Premises is impaired commencing from the day immediately following such one (1) business
day period and continuing until the Interruption of Service has been remedied.


 


17.                    Alterations.


 


17.1.           Tenant
shall make no alterations, additions or improvements in or to the Premises
without Landlord’s prior written approval, which approval Landlord shall not
unreasonably withhold; provided, however, that in the event any
proposed alteration, addition or improvement affects (a) any structural
portions of the Building, including exterior walls, roof, foundation or core of
the Building, (b) the exterior of the Building or (iii) any Building
systems, including elevator, plumbing, air conditioning, heating, electrical,
security, life safety and power, then Landlord may withhold its approval
with respect thereto in its sole and absolute discretion. Tenant shall, in
making any such alterations, additions or improvements, use only those
architects, contractors, suppliers and mechanics of which Landlord has given
prior written approval, which approval shall be in Landlord’s sole and absolute
discretion. In seeking Landlord’s approval, Tenant shall provide Landlord, at
least fourteen (14) days in advance of any proposed construction, with plans,
specifications, bid proposals, work contracts, requests for laydown areas and
such other information concerning the nature and cost of the alterations as
Landlord may reasonably request. Notwithstanding the foregoing, Tenant
may, without Landlord’s consent but upon prior written notice to Landlord, make
non-structural alterations


 


17

















 


and improvements
to the interior of the Premises that do not affect the Building systems,
provided that the cost does not exceed Fifty Thousand Dollars ($50,000) per
each such alteration or improvement.


 


17.2.           Tenant
shall not construct or permit to be constructed partitions or other
obstructions that might interfere with free access to mechanical installation
or service facilities of the Building, or interfere with the moving of Landlord’s
equipment to or from the enclosures containing such installations or
facilities.


 


17.3.           Tenant
shall accomplish any work performed on the Premises or the Building in such a
manner as to permit any fire sprinkler system and fire water supply lines to
remain fully operable at all times.


 


17.4.           Any
work performed on the Premises or the Building by Tenant or Tenant’s
contractors shall be done at such times and in such manner as Landlord may from
time to time reasonably designate. Tenant covenants and agrees that all work
done by Tenant or Tenant’s contractors shall be performed in full compliance
with Applicable Laws. Tenant shall provide Landlord with complete “as-built”
drawing print sets and electronic CADD files on disc showing any changes in the
Premises.


 


17.5.           Before
commencing any work, Tenant shall give Landlord at least fourteen (14) days’
prior written notice of the proposed commencement of such work.


 


17.6.           All
alterations, permanently attached equipment, fixtures, additions and
improvements, subject to Section 17.8, attached to or built into
the Premises, made by either of the Parties, including, without limitation, all
floor and wall coverings, built-in cabinet work and paneling, sinks and related
plumbing fixtures, exterior venting fume hoods and walk-in freezers and
refrigerators, ductwork, conduits, electrical panels and circuits, and all
items paid for with the Tenant Improvement Allowance, shall, unless, prior to
such construction or installation, Landlord elects otherwise at the time
Landlord gives its approval of such alterations, additions or improvements,
become the property of Landlord upon the expiration or earlier termination of
the Term, and shall remain upon and be surrendered with the Premises as a part thereof.


 


17.7.           Tenant
shall repair any damage to the Premises caused by Tenant’s removal of any
property from the Premises. During any such restoration period, Tenant shall
pay Rent to Landlord as provided herein as if said space were otherwise
occupied by Tenant.


 


17.8.           Tenant
shall remove all of its personal property and trade fixtures (excluding any
items paid for with the Tenant Improvement Allowance) from the Premises prior
to the expiration of this Lease or promptly after the earlier termination of
this Lease. If Tenant shall fail to remove any of such personal property or
trade fixtures from the Premises prior to termination of this Lease (or, in the
event of a termination pursuant to Section 22 or Section 23 hereof,
within three (3) months following such termination), then Landlord may, at
its option, remove the same in any manner that Landlord shall choose and store
said property without liability to Tenant for loss thereof or damage thereto,
and Tenant shall pay Landlord, upon demand, any costs and expenses incurred due
to such removal and storage or Landlord may, at its sole option and without
notice to Tenant, sell such property or any portion thereof at private


 


18

















 


sale and without
legal process for such price as Landlord may obtain and apply the proceeds
of such sale against any (a) amounts due by Tenant to Landlord under this
Lease and (b) any expenses incident to the removal, storage and sale of
said personal property. In the event of a termination of this Lease pursuant to
Section 22 or Section 23 hereof, if Tenant has any personal property
or trade fixtures (excluding any items paid for with the Tenant Improvement
Allowance) in the Premises more than thirty (30) days after such termination,
then commencing on the thirty-first (31st) day after such termination, Tenant
shall pay a pro rata share of the Basic Annual Rent for that portion of the
Premises containing such personal property or trade fixtures, which Basic Annual
Rent shall be prorated for any partial months. Notwithstanding any other
provision of this Section 17 to the contrary, in no event shall Tenant
remove any improvement from the Premises as to which Landlord contributed
payment, including, without limitation, the Tenant Improvements made pursuant
to the Work Letter, without Landlord’s prior written consent, which consent
Landlord may withhold in its sole and absolute discretion.


 


17.9.           Tenant
shall pay to Landlord One Thousand Five Hundred Dollars ($1,500) plus Landlord’s
reasonable out-of-pocket expenses to cover Landlord’s overhead and expenses for
plan review, coordination, scheduling and supervision of all changes installed
by Tenant or its contractors or agents, other than the initial Tenant
Improvements. For purposes of payment of such sum, Tenant shall submit to
Landlord copies of all bills, invoices and statements covering the costs of
such charges, accompanied by payment to Landlord of the fee set forth in this
Section. Tenant shall reimburse Landlord for any extra expenses incurred by
Landlord by reason of faulty work done by Tenant or its contractors, or by
reason of delays caused by such work, or by reason of inadequate clean-up.


 


17.10.     Within
sixty (60) days after final completion of the Tenant Improvements (or any other
alterations, improvement or additions performed by Tenant with respect to the
Premises), Tenant shall submit to Landlord documentation showing the amounts
expended by Tenant (other than funds that constitute the Tenant Improvement Allowance
or Additional TI Allowance) with respect to such Tenant Improvements (or any
other alterations, improvement or additions performed by Tenant with respect to
the Premises), together with supporting documentation reasonably acceptable to
Landlord.


 


18.                    Repairs and
Maintenance.


 


18.1.           Landlord
shall repair and maintain the structural and exterior portions and Common Areas
of the Building and the Project, including, without limitation, roofing and
covering materials, foundations, exterior walls, plumbing, fire sprinkler
systems (if any), heating, ventilating, air conditioning, elevators, and
electrical systems installed or furnished by Landlord. Any costs related to the
repair or maintenance activities specified in this Section 18.1
shall be included as a part of Operating Expenses, unless such repairs or
maintenance is required in whole or in part because of any negligent or
wrongful act or omissions of Tenant, its agents, servants, employees or
invitees, in which case Tenant shall pay to Landlord the cost of such repairs
and maintenance.


 


18.2.           Except
for services of Landlord, if any, required by Section 18.1, Tenant
shall at Tenant’s sole cost and expense keep the Premises and every part thereof
in good condition and repair, damage thereto from ordinary wear and tear
excepted. Tenant shall, upon the expiration


 


19

















 


or sooner
termination of the Term, surrender the Premises to Landlord in as good of a
condition as when received, ordinary wear and tear excepted. Landlord shall
have no obligation to alter, remodel, improve, repair, decorate or paint the
Premises or any part thereof, other than pursuant to the terms and
provisions of Section 4 hereof.


 


18.3.           Landlord
shall not be liable for any failure to make any repairs or to perform any
maintenance that is an obligation of Landlord unless such failure shall persist
for an unreasonable time after Tenant provides Landlord with written notice of
the need of such repairs or maintenance. Tenant waives its rights under
Applicable Laws now or hereafter in effect to make repairs at Landlord’s
expense.


 


18.4.           Repairs
under this Section 18 that are obligations of Landlord are subject
to allocation among Tenant and other tenants as Operating Expenses, except as
otherwise provided in this Section 18.


 


18.5.           This
Section 18 relates to repairs and maintenance arising in the
ordinary course of operation of the Building and the Project and any related
facilities. In the event of fire, earthquake, flood, vandalism, war or similar
cause of damage or destruction, Section 22 shall apply in lieu of
this Section 18.


 


19.                    Liens.


 


19.1.           Subject
to the immediately succeeding sentence, Tenant shall keep the Premises, the
Building and the Project free from any liens arising out of work performed,
materials furnished or obligations incurred by Tenant. Tenant further covenants
and agrees that any mechanic’s lien filed against the Premises, the Building or
the Project for work claimed to have been done for, or materials claimed to
have been furnished to, shall be discharged or bonded by Tenant within twenty
(20) days after the filing thereof, at Tenant’s sole cost and expense.


 


19.2.           Should
Tenant fail to discharge or bond against any lien of the nature described in Section 19.1,
Landlord may, at Landlord’s election, pay such claim or post a bond or
otherwise provide security to eliminate the lien as a claim against title, and
Tenant shall immediately reimburse Landlord for the costs thereof as Additional
Rent.


 


19.3.           In
the event that Tenant leases or finances the acquisition of office equipment,
furnishings or other personal property of a removable nature utilized by Tenant
in the operation of Tenant’s business, Tenant warrants that any Uniform Commercial
Code financing statement executed by Tenant shall, upon its face or by exhibit thereto,
indicate that such financing statement is applicable only to removable personal
property of Tenant located within the Premises. In no event shall the address
of the Building be furnished on a financing statement without qualifying
language as to applicability of the lien only to removable personal property
located in an identified suite leased by Tenant. Should any holder of a
financing statement executed by Tenant record or place of record a financing
statement that appears to constitute a lien against any interest of Landlord or
against equipment that may be located other than within an identified suite leased
by Tenant, Tenant shall, within ten (10) days after filing such financing
statement, cause (a) a copy of the lender security agreement or other
documents to which the financing statement pertains to be furnished to Landlord
to facilitate Landlord’s ability to


 


20

















 


demonstrate that
the lien of such financing statement is not applicable to Landlord’s interest
and (b) Tenant’s lender to amend such financing statement and any other
documents of record to clarify that any liens imposed thereby are not
applicable to any interest of Landlord in the Premises, the Building or the
Project.


 


20.                    Indemnification
and Exculpation.


 


20.1.           Tenant
agrees to indemnify, defend and save Landlord harmless from and against any and
all demands, claims, liabilities, losses, costs, expenses, actions, causes of
action, damages or judgments, and all reasonable expenses (including, without
limitation, reasonable attorneys’ fees, charges and disbursements) incurred in
investigating or resisting the same (collectively, “Claims”) arising
from injury or death to any person or injury to any property occurring within
or about the Premises, the Building or the Property arising directly or
indirectly out of Tenant’s or Tenant’s employees’, agents’ or guests’ use or
occupancy of the Premises or a breach or default by Tenant in the performance
of any of its obligations hereunder, except to the extent caused by the willful
misconduct or gross negligence of Landlord or any employee, agent or contractor
of Landlord.


 


20.2.           Notwithstanding
any provision of Section 20.1 to the contrary, Landlord shall not
be liable to Tenant for, and Tenant assumes all risk of, damage to personal
property or scientific research, including, without limitation, loss of records
kept by Tenant within the Premises and damage or losses caused by fire,
electrical malfunction, gas explosion or water damage of any type (including,
without limitation, broken water lines, malfunctioning fire sprinkler systems,
roof leaks or stoppages of lines), unless any such loss is due to Landlord’s
willful disregard of written notice by Tenant of need for a repair that
Landlord is responsible to make for an unreasonable period of time. Tenant
further waives any claim for injury to Tenant’s business or loss of income
relating to any such damage or destruction of personal property as described in
this Section 20.2.


 


20.3.           Landlord
shall not be liable for any damages arising from any act, omission or neglect
of any other tenant in the Building or the Project, or of any other third
party, except to the extent caused by the willful misconduct or gross
negligence of Landlord or any employee, agent or contractor of Landlord.


 


20.4.           Tenant
acknowledges that security devices and services, if any, while intended to
deter crime, may not in given instances prevent theft or other criminal
acts. Landlord shall not be liable for injuries or losses caused by criminal
acts of third parties, and Tenant assumes the risk that any security device or
service may malfunction or otherwise be circumvented by a criminal. If
Tenant desires protection against such criminal acts, then Tenant shall, at
Tenant’s sole cost and expense, obtain appropriate insurance coverage.


 


20.5.           The
provisions of this Section 20 shall survive the expiration or
earlier termination of this Lease.


 


21.                    Insurance;
Waiver of Subrogation.


 


21.1.           Landlord
shall maintain insurance for the Building and the Project in amounts equal to
full replacement cost (exclusive of the costs of excavation, foundations and
footings,


 


21

















 


and without
reference to depreciation taken by Landlord upon its books or tax returns) or
such lesser coverage as Landlord may elect, provided that such
coverage shall not be less than ninety percent (90%) of such full replacement
cost or the amount of such insurance Landlord’s lender, mortgagee or
beneficiary (each, a “Lender”), if any, requires Landlord to maintain,
providing protection against any peril generally included within the
classification “Fire and Extended Coverage,” together with insurance against
sprinkler damage (if applicable), vandalism and malicious mischief. Landlord,
subject to availability thereof, shall further insure, if Landlord deems it
appropriate, coverage against flood, environmental hazard, earthquake, loss or
failure of building equipment, rental loss during the period of repairs or
rebuilding, workmen’s compensation insurance and fidelity bonds for employees
employed to perform services. Notwithstanding the foregoing, Landlord may,
but shall not be deemed required to, provide insurance for any improvements
installed by Tenant or that are in addition to the standard improvements
customarily furnished by Landlord, without regard to whether or not such are
made a part of or are affixed to the Building. Any costs incurred by
Landlord pursuant to this Section 21.1 shall constitute a portion
of Operating Expenses.


 


21.2.           In
addition, Landlord shall carry commercial general liability insurance with a
single limit of not less than One Million Dollars ($1,000,000) for death or
bodily injury, or property damage with respect to the Project. Any costs
incurred by Landlord pursuant to this Section 21.2 shall constitute
a portion of Operating Expenses.


 


21.3.           Tenant
shall, at its own cost and expense, procure and maintain in effect, beginning
on the Term Commencement Date or the date of occupancy, whichever occurs first,
and continuing throughout the Term (and occupancy by Tenant, if any, after
termination of this Lease) commercial general liability insurance with limits
of not less than Two Million Dollars ($2,000,000) per occurrence for death or
bodily injury and not less than One Million Dollars ($1,000,000) for property
damage with respect to the Premises.


 


21.4.           The
insurance required to be purchased and maintained by Tenant pursuant to this
Lease shall name Landlord, BioMed Realty, L.P., BioMed Realty Trust, Inc.,
and their respective officers, employees, agents, general partners, members and
Lenders (“Landlord Parties”) as additional insureds. Said insurance
shall be with companies having a rating of not less than policyholder rating of
A- and financial category rating of at least Class VIII in “Best’s
Insurance Guide.” Tenant shall obtain for Landlord from the insurance companies
or cause the insurance companies to furnish certificates of coverage to
Landlord. No such policy shall be subject to cancellation or reduction or
diminishment except after thirty (30) days’ prior written notice to Landlord
from the insurer. All such policies shall be written as primary policies, not
contributing with and not in excess of the coverage that Landlord may carry.
Tenant’s policy may be a “blanket policy” that specifically provides that
the amount of insurance shall not be prejudiced by other losses covered by the
policy. Tenant shall, at least twenty (20) days prior to the expiration of such
policies, furnish Landlord with renewals or binders. Tenant agrees that if
Tenant does not take out and maintain such insurance, Landlord may (but
shall not be required to) procure said insurance on Tenant’s behalf and at its
cost to be paid by Tenant as Additional Rent.


 


21.5.           Tenant
assumes the risk of damage to any fixtures, goods, inventory, merchandise,
equipment and leasehold improvements, and Landlord shall not be liable for
injury


 


22

















 


to Tenant’s business
or any loss of income therefrom, relative to such damage, all as more
particularly set forth within this Lease. Tenant shall, at Tenant’s sole cost
and expense, carry (a) insurance on Tenant’s leasehold improvements
providing protection against all risks of physical damage or loss and (b) such
insurance as Tenant desires for Tenant’s protection with respect to personal
property of Tenant or business interruption.


 


21.6.           In
each instance where insurance is to name Landlord Parties as additional insureds,
Tenant shall, upon Landlord’s written request, also designate and furnish
certificates evidencing such Landlord Parties as additional insureds to (a) any
Lender of Landlord holding a security interest in the Building or the Project, (b) the
landlord under any lease whereunder Landlord is a tenant of the real property
upon which the Building is located if the interest of Landlord is or shall
become that of a tenant under a ground lease rather than that of a fee owner,
and (c) any management company retained by Landlord to manage the Project.


 


21.7.           Landlord
and Tenant each hereby waive any and all rights of recovery against the other
or against the officers, directors, employees, agents and representatives of
the other on account of loss or damage occasioned by such waiving party or its
property or the property of others under such waiving party’s control, in each
case to the extent that such loss or damage is insured against under any fire
and extended coverage insurance policy that either Landlord or Tenant may have
in force at the time of such loss or damage. Such waivers shall continue so
long as their respective insurers so permit. Any termination of such a waiver
shall be by written notice to the other party, containing a description of the
circumstances hereinafter set forth in this Section 21.7. Landlord
and Tenant, upon obtaining the policies of insurance required or permitted
under this Lease, shall give notice to the insurance carrier or carriers that
the foregoing mutual waiver of subrogation is contained in this Lease. If such
policies shall not be obtainable with such waiver or shall be so obtainable
only at a premium over that chargeable without such waiver, then the party
seeking such policy shall notify the other of such conditions, and the party so
notified shall have ten (10) days thereafter to either (a) procure
such insurance with companies reasonably satisfactory to the other party or (b) agree
to pay such additional premium (in Tenant’s case, in the proportion that the
area of the Premises bears to the insured area). If the parties do not
accomplish either (a) or (b), then this Section 21.7 shall
have no effect during such time as such policies shall not be obtainable or the
party in whose favor a waiver of subrogation is desired refuses to pay the
additional premium. If such policies shall at any time be unobtainable, but
shall be subsequently obtainable, then neither party shall be subsequently
liable for a failure to obtain such insurance until a reasonable time after
notification thereof by the other party. If the release of either Landlord or
Tenant, as set forth in the first sentence of this Section 21.7,
shall contravene Applicable Laws, then the liability of the party in question
shall be deemed not released but shall be secondary to the other party’s
insurer.


 


21.8.           Landlord
may require insurance policy limits required under this Lease to be raised
to conform with requirements of Landlord’s Lender or to bring coverage
limits to levels then being required of new tenants within the Project.


 


22.                    Damage or
Destruction.


 


22.1.           In
the event of a partial destruction of the Building or the Project by fire or
other perils covered by extended coverage insurance not exceeding twenty-five
percent (25%) of the


 


23

















 


full insurable
value thereof, and provided that (a) the damage thereto is such
that the Building or the Project may be repaired, reconstructed or
restored within a period of eight (8) months from the date of the
happening of such casualty and (b) Landlord shall receive insurance
proceeds sufficient to cover the cost of such repairs (except for any
deductible amount provided by Landlord’s policy, which deductible amount, if
paid by Landlord, shall constitute an Operating Expense), Landlord shall
commence and proceed diligently with the work of repair, reconstruction and
restoration of the Building or the Project, as applicable, and this Lease shall
continue in full force and effect. Notwithstanding the foregoing, Landlord may not
terminate this Lease pursuant to clause (b) of this Section 22.1
unless the cost of such repairs in excess of any deductible amount and any
available insurance proceeds to restore the Building and other improvements on
the Property exceeds Two Hundred Fifty Thousand Dollars ($250,000).


 


22.2.           In
the event of any damage to or destruction of the Building or the Project other
than as described in Section 22.1, Landlord may elect to
repair, reconstruct and restore the Building or the Project, as applicable, in
which case this Lease shall continue in full force and effect. If Landlord
elects not to repair the Building or the Project, as applicable, then this
Lease shall terminate as of the date of such damage or destruction.


 


22.3.           Within
sixty (60) days following the date of damage or destruction, Landlord shall
give written notice to Tenant either (a) of its election not to repair,
reconstruct or restore the Building or the Project, as applicable, or (b) of
the amount of time reasonably anticipated to be required to complete the
repair, reconstruction and/or restoration of the Premises and the parking
facilities of the Project.


 


22.4.           Upon
any termination of this Lease under any of the provisions of this Section 22,
the parties shall be released thereby without further obligation to the other
from the date possession of the Premises is surrendered to the Landlord, except
with regard to (a) items occurring prior to the damage or destruction and (b) provisions
of this Lease that, by their express terms, survive the expiration or earlier
termination hereof.


 


22.5.           In
the event of repair, reconstruction and restoration as provided in this Section 22,
all Rent to be paid by Tenant under this Lease shall be abated proportionately
based on the extent to which Tenant’s use of the Premises is impaired during
the period of such repair, reconstruction or restoration, unless Landlord
provides Tenant with other space during the period of repair that, in Tenant’s
reasonable opinion, is suitable for the temporary conduct of Tenant’s business.


 


22.6.           Notwithstanding
anything to the contrary contained in this Section 22, if the time
required to complete the repair, reconstruction and/or restoration of the
Premises and the parking facilities of the Project exceeds eight (8) months
from the date of damage or destruction, then Tenant may terminate this
Lease by written notice of termination given no later than sixty (60) days
after Landlord notifies Tenant as to how much time will be required to complete
the repair, reconstruction and/or restoration of the Premises and the parking
facilities of the Project.


 


22.7.           If
Landlord is obligated to or elects to repair, reconstruct or restore as herein
provided, then Landlord shall be obligated to make such repair, reconstruction
or restoration only with regard to those portions of the Premises, the Building
or the Project that were originally


 


24

















 


provided at
Landlord’s expense. The repair, reconstruction or restoration of improvements
not originally provided by Landlord or at Landlord’s expense shall be the
obligation of Tenant. In the event Tenant has elected to upgrade certain
improvements from the Building Standard, Landlord shall, upon the need for
replacement due to an insured loss, provide only the Building Standard, unless
Tenant again elects to upgrade such improvements and pay any incremental costs
related thereto, except to the extent that excess insurance proceeds, if
received, are adequate to provide such upgrades, in addition to providing for basic
repair, reconstruction and restoration of the Premises, the Building and the
Project.


 


22.8.           Notwithstanding
anything to the contrary contained in this Section 22, Landlord
shall not have any obligation whatsoever to repair, reconstruct or restore the
Premises if the damage resulting from any casualty covered under this Section 22
occurs during the last twelve (12) months of the Term or any extension hereof.


 


23.                    Eminent
Domain.


 


23.1.           In
the event the whole of the Premises, or such part thereof as shall
substantially interfere with the Tenant’s use and occupancy thereof, shall be
taken for any public or quasi-public purpose by any lawful power or authority
by exercise of the right of appropriation, condemnation or eminent domain, or
sold to prevent such taking, Tenant or Landlord may terminate this Lease
effective as of the date possession is required to be surrendered to said
authority.


 


23.2.           In
the event of a partial taking of the Building or the Project, or of drives,
walkways or parking areas serving the Building or the Project for any public or
quasi-public purpose by any lawful power or authority by exercise of right of
appropriation, condemnation, or eminent domain, or sold to prevent such taking,
then, without regard to whether any portion of the Premises occupied by Tenant
was so taken, (a) Landlord may elect to terminate this Lease as of
such taking if such taking is, in Landlord’s sole opinion, of a material nature
such as to make it uneconomical to continue use of the unappropriated portion
for purposes of renting office or laboratory space and (b) Tenant may elect
to terminate this Lease as of such taking if such taking has a material adverse
effect on Tenant’s use and enjoyment of or access to the Premises or on Tenant’s
use and enjoyment of the parking spaces allocated to Tenant under Section 15.2
above; provided that Landlord shall have thirty (30) days after receipt
of written notice from Tenant stating Tenant’s election to termination this
Lease to remedy any such material adverse effect; provided, further,
that Landlord shall not be deemed to have remedied such material adverse effect
by providing parking other than on the Property or adjoining property owned by
Landlord or its affiliates.


 


23.3.           Tenant
shall be entitled to any award that is specifically awarded as compensation for
(a) the taking of Tenant’s personal property that was installed at Tenant’s
expense and (b) the costs of Tenant moving to a new location. Except as
set forth in the previous sentence, any award for such taking shall be the
property of Landlord.


 


23.4.           If,
upon any taking of the nature described in this Section 23, this
Lease continues in effect, then Landlord shall promptly proceed to restore the
Premises, the Building and the Project, as applicable, to substantially their
same condition prior to such partial taking. To the


 


25

















 


extent such
restoration is feasible, as determined by Landlord in its sole and absolute
discretion, the Rent shall be decreased by a number, the numerator of which is
the rental value of the Premises prior to such taking, and the denominator of
which is the value of the Premises after such taking.


 


24.                    Defaults
and Remedies.


 


24.1.           Late
payment by Tenant to Landlord of Rent and other sums due shall cause Landlord
to incur costs not contemplated by this Lease, the exact amount of which shall
be extremely difficult and impracticable to ascertain. Such costs include, but
are not limited to, processing and accounting charges and late charges that may be
imposed on Landlord by the terms of any mortgage or trust deed covering the
Premises. Therefore, if any installment of Rent due from Tenant is not received
by Landlord within five (5) days after the date such payment is due,
Tenant shall pay to Landlord an additional sum of six percent (6%) of the
overdue Rent as a late charge. The parties agree that this late charge
represents a fair and reasonable estimate of the costs that Landlord shall
incur by reason of late payment by Tenant. In addition to the late charge, Rent
not paid when due shall bear interest from the fifth (5th) day after the date
due until paid at the lesser of (a) twelve percent (12%) per annum or (b) the
maximum rate permitted by Applicable Laws. Notwithstanding the foregoing, the
first occurrence of any delinquency in Tenant’s payment of Rent in any twelve
(12) month period shall give rise to a late charge and interest only if Tenant
fails to cure such delinquency within three (3) business days after
written notice from Landlord thereof.


 


24.2.           No
payment by Tenant or receipt by Landlord of a lesser amount than the Rent
payment herein stipulated shall be deemed to be other than on account of the
Rent, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as Rent be deemed an accord and satisfaction,
and Landlord may accept such check or payment without prejudice to
Landlord’s right to recover the balance of such Rent or pursue any other remedy
provided in this Lease or in equity or at law. If a dispute shall arise as to
any amount or sum of money to be paid by Tenant to Landlord hereunder, Tenant
shall have the right to make payment “under protest,” such payment shall not be
regarded as a voluntary payment, and there shall survive the right on the part of
Tenant to institute suit for recovery of the payment paid under protest.


 


24.3.           If
Tenant fails to pay any sum of money (other than Basic Annual Rent or Rental
Adjustments) required to be paid by it hereunder, or shall fail to perform any
other act on its part to be performed hereunder, Landlord may, without
waiving or releasing Tenant from any obligations of Tenant, but shall not be
obligated to, make such payment or perform such act; provided that
such failure by Tenant continues for three (3) business days (with respect
to a failure to pay money) or ten (10) business days (with respect to a
failure to perform any other obligation) in each case after Landlord
delivers notice to Tenant demanding performance by Tenant; or that such failure
by Tenant unreasonably interfered with the use of the Building by any other
tenant or with the efficient operation of the Building, or resulted or could
have resulted in a violation of Applicable Laws or the cancellation of an
insurance policy maintained by Landlord. Tenant shall pay to Landlord as
Additional Rent all sums so paid or incurred by Landlord, together with
interest thereon, from the date such sums were paid or incurred, at the


 


26

















 


annual rate equal
to twelve percent (12%) per annum or highest rate permitted by Applicable Laws,
whichever is less.


 


24.4.           The
occurrence of any one or more of the following events shall constitute a “Default”
hereunder by Tenant:


 


(a)                      The
abandonment or vacation of the Premises by Tenant;


 


(b)                     The
failure by Tenant to make any payment of Rent, as and when due, where such
failure shall continue for a period of three (3) business days after
written notice thereof from Landlord to Tenant;


 


(c)                      The
failure by Tenant to observe or perform any obligation or covenant
contained herein (other than described in Subsections 24.4(a) and 24.4(b))
to be performed by Tenant, where such failure shall continue for a period of
ten (10) business days after written notice thereof from Landlord to
Tenant; provided that, if the nature of Tenant’s default is such that it
reasonably requires more than ten (10) business days to cure, Tenant shall
not be deemed to be in default if Tenant shall commence such cure within said
ten (10) business day period and thereafter diligently prosecute the same
to completion; and provided, further, that such cure is completed no
later than ninety (90) days from the date of Tenant’s receipt of written notice
from Landlord;


 


(d)                     Tenant
makes an assignment for the benefit of creditors;


 


(e)                      A
receiver, trustee or custodian is appointed to or does take title, possession
or control of all or substantially all of Tenant’s assets;


 


(f)                        Tenant
files a voluntary petition under the United States Bankruptcy Code or any
successor statute (the “Code”);


 


(g)                     Any
involuntary petition if filed against Tenant under any chapter of the Code and
is not dismissed within one hundred twenty (120) days;


 


(h)                     Failure
to deliver an estoppel certificate in accordance with Section 29,
which failure is not remedied within five (5) business days after Landlord
gives Tenant a second written request to deliver such estoppel certificate; or


 


(i)                         Tenant’s
interest in this Lease is attached, executed upon or otherwise judicially
seized and such action is not released within one hundred twenty (120) days of
the action.


 


Notices given under this Section 24.4 shall specify the
alleged default and shall demand that Tenant perform the provisions of
this Lease or pay the Rent that is in arrears, as the case may be, within
the applicable period of time, or quit the Premises. No such notice shall be
deemed a forfeiture or a termination of this Lease unless Landlord elects
otherwise in such notice.


 


27

















 


24.5.           In
the event of a Default by Tenant, and at any time thereafter, with or without
notice or demand and without limiting Landlord in the exercise of any right or
remedy that Landlord may have, Landlord shall be entitled to terminate
Tenant’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Tenant shall immediately surrender possession of
the Premises to Landlord. In such event, Landlord shall have the immediate
right to re-enter and remove all persons and property, and such property may be
removed and stored in a public warehouse or elsewhere at the cost and for the
account of Tenant, all without service of notice or resort to legal process and
without being deemed guilty of trespass or becoming liable for any loss or
damage that may be occasioned thereby. In the event that Landlord shall
elect to so terminate this Lease, then Landlord shall be entitled to recover
from Tenant all damages incurred by Landlord by reason of Tenant’s default,
including, without limitation:


 


(a)                      The
worth at the time of award of any unpaid Rent that had accrued at the time of
such termination; plus


 


(b)                     The
worth at the time of award of the amount by which the unpaid Rent that would
have accrued during the period commencing with termination of the Lease and
ending at the time of award exceeds that portion of the loss of Landlord’s
rental income from the Premises that Tenant proves to Landlord’s reasonable
satisfaction could have been reasonably avoided; plus


 


(c)                      The
worth at the time of award of the amount by which the unpaid Rent for the
balance of the Term after the time of award exceeds that portion of the loss of
Landlord’s rental income from the Premises that Tenant proves to Landlord’s
reasonable satisfaction could have been reasonably avoided; plus


 


(d)                     Any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or
that in the ordinary course of things would be likely to result therefrom, including,
without limitation, the cost of restoring the Premises to the condition
required under the terms of this Lease; plus


 


(e)                      At
Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by Applicable Laws.


 


As used in Subsections 24.5(a) and 24.5(b), “worth
at the time of award” shall be computed by allowing interest at the rate
specified in Section 24.1. As used in Subsection 24.5(c) above,
the “worth at the time of the award” shall be computed by taking the present
value of such amount, using the discount rate of the Federal Reserve Bank of
San Francisco at the time of the award plus six (6) percentage points.


 


24.6.           If
Landlord does not elect to terminate this Lease as provided in Section 24.5,
then Landlord may, from time to time, recover all Rent as it becomes due under
this Lease. At any time thereafter, Landlord may elect to terminate this
Lease and to recover damages to which Landlord is entitled.


 


24.7.           In
the event Landlord elects to terminate this Lease and relet the Premises,
Landlord may execute any new lease in its own name. Tenant hereunder shall
have no right or


 


28

















 


authority
whatsoever to collect any Rent from such tenant. The proceeds of any such
reletting shall be applied as follows:


 


(a)                      First,
to the payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord, including, without limitation, storage charges or brokerage
commissions owing from Tenant to Landlord as the result of such reletting;


 


(b)                     Second,
to the payment of the costs and expenses of reletting the Premises, including (a) alterations
and repairs that Landlord deems reasonably necessary and advisable and (b) reasonable
attorneys’ fees, charges and disbursements incurred by Landlord in connection
with the retaking of the Premises and such reletting;


 


(c)                      Third,
to the payment of Rent and other charges due and unpaid hereunder; and


 


(d)                     Fourth,
to the payment of future Rent and other damages payable by Tenant under this
Lease.


 


24.8.           All
of Landlord’s rights, options and remedies hereunder shall be construed and
held to be nonexclusive and cumulative. Landlord shall have the right to pursue
any one or all of such remedies, or any other remedy or relief that may be
provided by Applicable Laws, whether or not stated in this Lease. No waiver of
any default of Tenant hereunder shall be implied from any acceptance by
Landlord of any Rent or other payments due hereunder or any omission by
Landlord to take any action on account of such default if such default persists
or is repeated, and no express waiver shall affect defaults other than as
specified in said waiver.


 


24.9.           Landlord’s
termination of (a) this Lease or (b) Tenant’s right to possession of
the Premises shall not relieve Tenant of any liability to Landlord that has
previously accrued or that shall arise based upon events that occurred prior to
the later to occur of (i) the date of Lease termination or (ii) the
date Tenant surrenders possession of the Premises.


 


24.10.     To
the extent permitted by Applicable Laws, Tenant waives any and all rights of
redemption granted by or under any present or future Applicable Laws if Tenant
is evicted or dispossessed for any cause, or if Landlord obtains possession of
the Premises due to Tenant’s default hereunder or otherwise.


 


24.11.     Landlord
shall not be in default under this Lease unless Landlord fails to perform obligations
required of Landlord within a reasonable time, but in no event shall such
failure to continue for more than thirty (30) days after written notice from
Tenant specifying the nature of Landlord’s failure; provided, however,
that if the nature of Landlord’s obligation is such that more than thirty (30)
days are required for its performance, then Landlord shall not be in default if
Landlord commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion.


 


24.12.     In
the event of any default by Landlord, Tenant shall give notice by registered or
certified mail or by a reputable overnight courier (e.g., FedEx) to any (a) beneficiary
of a deed of trust or (b) mortgagee under a mortgage covering the
Premises, the Building or the Project and to any landlord of any lease of land
upon or within which the Premises, the Building or the Project


 


29

















 


is located, and
shall offer such beneficiary, mortgagee or landlord a reasonable opportunity to
cure the default, including time to obtain possession of the Building by power
of sale or a judicial action if such should prove necessary to effect a cure; provided
that Landlord shall furnish to Tenant in writing, upon written request by
Tenant, the names and addresses of all such persons who are to receive such
notices.


 


25.                    Assignment
or Subletting.


 


25.1.           Except
as hereinafter provided, Tenant shall not, either voluntarily or by operation
of Applicable Laws, directly or indirectly sell, hypothecate, assign, pledge,
encumber or otherwise transfer this Lease, or sublet the Premises or any part hereof
(each, a “Transfer”), without Landlord’s prior written consent, which
consent Landlord may not unreasonably withhold; provided, however,
that Tenant shall have the right to assign all or any portion of its interest
under this Lease or sublet all or any portion of the Premises without Landlord’s
consent to any parent, subsidiary or affiliate of Tenant; or any party that
results from a merger or consolidation of Tenant; or any party that acquires
all or substantially all of the assets or stock of Tenant (an “Allowable
Transfer”). Any Transfer other than an Allowable Transfer shall be referred
to herein as a “Subject Transfer”). Notwithstanding the foregoing, in no
event shall Tenant be released from any of its obligations under this Lease.


 


25.2.           In
the event Tenant desires to effect a Transfer, then, at least twenty (20) days
with respect to a sublease and at least thirty (30) days with respect to any
other Transfer, but not more than ninety (90) days in any event, prior to the date
when Tenant desires the Transfer to be effective (the “Assignment Date”),
Tenant shall provide written notice to Landlord (the “Assignment Notice”)
containing information (including references) concerning the character of the
proposed transferee, assignee or sublessee; the Assignment Date; any ownership
or commercial relationship between Tenant and the proposed transferee, assignee
or sublessee; and the consideration and all other material terms and conditions
of the proposed Transfer, all in such detail as Landlord shall reasonably
require. Tenant shall reimburse Landlord for all reasonable attorneys’ fees and
other reasonable out-of-pocket costs incurred by Landlord in reviewing Tenant’s
request for such Transfer.


 


25.3.           Landlord,
in determining whether consent should be given to a proposed Subject Transfer, may give
consideration to the financial strength of such transferee, assignee or
sublessee (notwithstanding Tenant remaining liable for Tenant’s performance),
and any change in use that such transferee, assignee or sublessee proposes to
make in the use of the Premises. In no event shall Landlord be deemed to be
unreasonable for declining to consent to a Transfer to a transferee, assignee
or sublessee of poor reputation, lacking financial qualifications, seeking a
change in the Permitted Use, or jeopardizing directly or indirectly the status
of Landlord or any of Landlord’s affiliates as a Real Estate Investment Trust
under the Code; provided that (a) Landlord agrees to reasonably
evaluate any proposed transferee’s, assignee’s or sublessee’s financial
qualifications and (b) Landlord may only consider such financial
qualifications in the event that, were the transfer, assignment or sublease to
occur, Tenant would no longer occupy any portion of the Premises.


 


25.4.           As
conditions precedent to Landlord’s consent to a Subject Transfer, Landlord may require
any or all of the following:


 


30

















 


 


(a)       Tenant shall remain fully
liable under this Lease during the unexpired Term;


 


(b)       Tenant shall provide
Landlord with evidence reasonably satisfactory to Landlord that the value of
Landlord’s interest under this Lease shall not be diminished or reduced by the
proposed Subject Transfer. Such evidence shall include, without limitation,
evidence respecting the relevant business experience and financial
responsibility and status of the proposed transferee, assignee or sublessee;


 


(c)       Tenant shall reimburse
Landlord for Landlord’s actual costs and expenses, including, without limitation,
reasonable attorneys’ fees, charges and disbursements incurred in connection
with the review, processing and documentation of such request;


 


(d)       If a Transfer of the
Premises provides for the receipt by, on behalf of or on account of Tenant of any
consideration of any kind whatsoever (including, without limitation, a premium
rental for a sublease or lump sum payment for an assignment, but excluding
Tenant’s reasonable costs in marketing and subleasing the Premises) in excess
of the rental and other charges due to Landlord under this Lease, Tenant shall
pay twenty-five percent (25%) of all of such excess to Landlord, prior to
deductions for any transaction costs incurred by Tenant, including marketing
expenses, tenant improvement allowances, alterations, cash concessions,
brokerage commissions, attorneys’ fees and free rent. If said consideration
consists of cash paid to Tenant, payment to Landlord shall be made upon receipt
by Tenant of such cash payment;


 


(e)       The proposed transferee,
assignee or sublessee shall agree that, in the event Landlord gives such
proposed transferee, assignee or sublessee notice that Tenant is in Default
under this Lease, such proposed transferee, assignee or sublessee shall
thereafter make all payments otherwise due Tenant directly to Landlord, which
payments shall be received by Landlord without any liability being incurred by
Landlord, except to credit such payment against those due by Tenant under this
Lease, and any such proposed transferee, assignee or sublessee shall agree to
attorn to Landlord or its successors and assigns should this Lease be
terminated for any reason; provided, however, that in no event
shall Landlord or its Lenders, successors or assigns be obligated to accept
such attornment;


 


(f)        Any consent to such
Transfer shall be effected on Landlord’s forms;


 


(g)       There shall exist no
uncured Default or Imminent Default hereunder of which Tenant has been given
notice by Landlord.


 


(h)       Such proposed transferee,
assignee or sublessee’s use of the Premises shall not require any change to the
Permitted Use;


 


(i)        Landlord shall not be
bound by any provision of any agreement pertaining to the Transfer, except for
Landlord’s written consent to the same;


 


(j)        Tenant shall deliver to
Landlord one executed copy of any and all written instruments evidencing or
relating to the Transfer; and


 


31

















 


(k)       A list of Hazardous
Materials (as defined in Section 39.7 below), certified by the proposed
transferee, assignee or sublessee to be true and correct, that the proposed
transferee, assignee or sublessee intends to use or store in the Premises.
Additionally, Tenant shall deliver to Landlord, on or before the date any
proposed transferee, assignee or sublessee takes occupancy of the Premises, all
of the items relating to Hazardous Materials of such proposed transferee,
assignee or sublessee as described in Section 39.2.


 


25.5.    Any Transfer that is not in
compliance with the provisions of this Section 25 shall be void.


 


25.6.    The consent by Landlord to a
Transfer shall not relieve Tenant or proposed transferee, assignee or sublessee
from obtaining Landlord’s consent to any further Subject Transfer, nor shall it
release Tenant or any proposed transferee, assignee or sublessee of Tenant from
full and primary liability under this Lease.


 


25.7.    Notwithstanding any Transfer,
Tenant shall remain fully and primarily liable for the payment of all Rent and
other sums due or to become due hereunder, and for the full performance of all
other terms, conditions and covenants to be kept and performed by Tenant. The
acceptance of Rent or any other sum due hereunder, or the acceptance of
performance of any other term, covenant or condition thereof, from any person
or entity other than Tenant shall not be deemed a waiver of any of the
provisions of this Lease or a consent to any Transfer.


 


25.8.    [Intentionally omitted]


 


25.9.    If Tenant sublets the Premises
or any potion thereof, Tenant hereby immediately and irrevocably assigns to
Landlord, as security for Tenant’s obligations under this Lease, all rent from
any such subletting, and appoints Landlord as assignee and attorney-in-fact for
Tenant, and Landlord (or a receiver for Tenant appointed on Landlord’s
application) may collect such rent and apply it toward Tenant’s obligations
under this Lease; provided that, until the occurrence of a Default by
Tenant, Tenant shall have the right to collect such rent.


 


26.       Attorneys’ Fees.  If either party commences an action against
the other party arising out of or in connection with this Lease, then the
prevailing party shall be entitled to have and recover from the non-prevailing
party reasonable attorneys’ fees, charges and disbursements and costs of suit.


 


27.       Bankruptcy.  In the event a debtor, trustee or debtor in
possession under the Code, or another person with similar rights, duties and
powers under any other Applicable Laws, proposes to cure any default under this
Lease or to assume or assign this Lease and is obliged to provide adequate
assurance to Landlord that (a) a default shall be cured, (b) Landlord shall be
compensated for its damages arising from any breach of this Lease and (c)
future performance of Tenant’s obligations under this Lease shall occur, then
such adequate assurances shall include any or all of the following, as
designated by Landlord in its sole and absolute discretion:


 


27.1.    Those acts specified in the
Code or other Applicable Laws as included within the meaning of “adequate
assurance,” even if this Lease does not concern a shopping center or other
facility described in such Applicable Laws;


 


32














 


27.2.    A prompt cash payment to
compensate Landlord for any monetary defaults or actual damages arising
directly from a breach of this Lease;


 


27.3.    A cash deposit in an amount at
least equal to the then-current amount of the Security Deposit; or


 


27.4.    The assumption or assignment
of all of Tenant’s interest and obligations under this Lease.


 


28.       Definition of Landlord.
 With regard to obligations imposed upon
Landlord pursuant to this Lease, the term “Landlord,” as used in this
Lease, shall refer only to Landlord or Landlord’s then-current
successor-in-interest. In the event of any transfer, assignment or conveyance
of Landlord’s interest in this Lease or in Landlord’s fee title to or leasehold
interest in the Property, as applicable, Landlord herein named (and in case of
any subsequent transfers or conveyances, the subsequent Landlord) shall be
automatically freed and relieved, from and after the date of such transfer,
assignment or conveyance, from all liability for the performance of any
covenants or obligations contained in this Lease thereafter to be performed by
Landlord and, without further agreement, the transferee, assignee or conveyee
of Landlord’s in this Lease or in Landlord’s fee title to or leasehold interest
in the Property, as applicable, shall be deemed to have assumed and agreed to
observe and perform any and all covenants and obligations of Landlord hereunder
during the tenure of its interest in the Lease or the Property, in each case to
the extent that the transferee, assignee or conveyee assumes in writing such
covenants and obligations. Landlord or any subsequent Landlord may transfer its
interest in the Premises or this Lease without Tenant’s consent.


 


29.       Estoppel Certificate.
 Tenant shall, within ten (10) business
days of receipt of written notice from Landlord, execute, acknowledge and
deliver a statement in writing substantially in the form attached to this Lease
as Exhibit E, or on any other form reasonably requested by a proposed
Lender or purchaser, (a) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease as so modified is in full force and effect) and the
dates to which rental and other charges are paid in advance, if any, (b)
acknowledging that there are not, to Tenant’s knowledge, any uncured defaults
on the part of Landlord hereunder, or specifying such defaults if any are
claimed, and (c) setting forth such further information with respect to this
Lease or the Premises as may be requested thereon. Any such statement may be
relied upon by any prospective purchaser or encumbrancer of all or any portion
of the real property of which the Premises are a part. Tenant’s failure to
deliver such statement within such the prescribed time shall be binding upon
Tenant that the Lease is in full force and effect and without modification
except as may be represented by Landlord in any certificate prepared by
Landlord and delivered to Tenant for execution.


 


30.       Joint and Several
Obligations.  If more than one person
or entity executes this Lease as Tenant, then:


 


30.1.    Each of them is jointly and
severally liable for the keeping, observing and performing of all of the terms,
covenants, conditions, provisions and agreements of this Lease to be kept,
observed or performed by Tenant; and


 


33

















 


30.2.    The term “Tenant” as
used in this Lease shall mean and include each of them, jointly and severally.
The act of, notice from, notice to, refund to, or signature of any one or more
of them with respect to the tenancy under this Lease, including, without
limitation, any renewal, extension, expiration, termination or modification of
this Lease, shall be binding upon each and all of the persons executing this
Lease as Tenant with the same force and effect as if each and all of them had
so acted, so given or received such notice or refund, or so signed.


 


31.       Limitation of Landlord’s
Liability.


 


31.1.    If Landlord is in default
under this Lease and, as a consequence, Tenant recovers a monetary judgment
against Landlord, the judgment shall be satisfied only out of (a) the proceeds
of sale received on execution of the judgment and levy against the right, title
and interest of Landlord in the Building and the Project of which the Premises
are a part, (b) rent or other income from such real property receivable by
Landlord or (c) the consideration received by Landlord from the sale,
financing, refinancing or other disposition of all or any part of Landlord’s
right, title or interest in the Building or the Project of which the Premises
are a part.


 


31.2.    Landlord shall not be personally liable for
any deficiency under this Lease. If Landlord is a partnership or joint venture,
then the partners of such partnership shall not be personally liable for
Landlord’s obligations under this Lease, and no partner of Landlord shall be
sued or named as a party in any suit or action, and service of process shall
not be made against any partner of Landlord except as may be necessary to
secure jurisdiction of the partnership or joint venture. If Landlord is a
corporation, then the shareholders, directors, officers, employees and agents
of such corporation shall not be personally liable for Landlord’s obligations
under this Lease, and no shareholder, director, officer, employee or agent of
Landlord shall be sued or named as a party in any suit or action, and service
of process shall not be made against any shareholder, director, officer,
employee or agent of Landlord. If Landlord is a limited liability company, then
the members of such limited liability company shall not be personally liable
for Landlord’s obligations under this Lease, and no member of Landlord shall be
sued or named as a party in any suit or action, and service of process shall
not be made against any member of Landlord except as may be necessary to secure
jurisdiction of the limited liability company. No partner, shareholder,
director, employee, member or agent of Landlord shall be required to answer or
otherwise plead to any service of process, and no judgment shall be taken or
writ of execution levied against any partner, shareholder, director, employee
or agent of Landlord.


 


31.3.    Each of the covenants and agreements of this Section
31 shall be applicable to any covenant or agreement either expressly
contained in this Lease or imposed by Applicable Laws and shall survive the
expiration or earlier termination of this Lease.


 


32.       Project Control by
Landlord.


 


32.1.    Landlord reserves full control over the
Building and the Project to the extent not inconsistent with Tenant’s enjoyment
of the Premises as provided by this Lease. This reservation includes, without
limitation, Landlord’s right to subdivide the Project, convert the Building and
other buildings within the Project to condominium units, grant easements and
licenses to third parties, and maintain or establish ownership of the Building
separate from fee title to the Property.


 


34

















 


32.2.    Tenant shall, at Landlord’s request, promptly
execute such further documents as may be reasonably appropriate to assist
Landlord in the performance of its obligations hereunder; provided that
Tenant need not execute any document that creates additional liability for
Tenant or that deprives Tenant of the quiet enjoyment and use of the Premises
as provided by this Lease.


 


32.3.    Landlord may, at any and all reasonable times
during non-business hours (or during business hours if Tenant so requests), and
upon twenty-four (24) hours’ prior notice (provided that no time restrictions
shall apply or advance notice be required if an emergency necessitates
immediate entry), enter the Premises to (a) inspect the same and to determine
whether Tenant is in compliance with its obligations hereunder, (b) supply any
service Landlord is required to provide hereunder, (c) show the Premises to
prospective purchasers or tenants during the last nine (9) months of the Term,
(d) post notices of nonresponsibility, (e) access the telephone equipment,
electrical substation and fire risers and (f) alter, improve or repair any
portion of the Building other than the Premises for which access to the
Premises is reasonably necessary. In connection with any such alteration,
improvement or repair as described in Subsection 32.3(f) above, Landlord may
erect in the Premises or elsewhere in the Project scaffolding and other
structures reasonably required for the alteration, improvement or repair work
to be performed. In no event shall Tenant’s Rent abate as a result of Landlord’s
activities pursuant to this Section 32.3; provided, however, that all such
activities shall be conducted in such a manner so as to cause as little
interference to Tenant as is reasonably possible. Landlord shall at all times
retain a key with which to unlock all of the doors in the Premises. If an
emergency involving risk of serious injury or damage to persons or property
necessitates immediate access to the Premises, Landlord may use whatever force
is necessary to enter the Premises, and any such entry to the Premises shall
not constitute a forcible or unlawful entry to the Premises, a detainer of the
Premises, or an eviction of Tenant from the Premises or any portion thereof.
Except in the event of an emergency involving the risk of serious injury or
damage to persons or property, any entry of the Premises pursuant to this Section
32.3 (other than for routine janitorial service) shall be arranged in
advance with Tenant, and all such entries shall be guided by a Tenant
representative; provided that Tenant shall make such a representative
reasonably available. Under no circumstances shall any party be allowed to
enter the reference lab located in the Premises, but parties shall be permitted
to view the reference lab through an open door while standing outside the
reference lab.


 


33.       Quiet Enjoyment. So
long as Tenant is not in default under this Lease, Landlord or anyone acting
through or under Landlord shall not disturb Tenant’s occupancy of the Premises,
except as permitted by this Lease.


 


34.       Subordination and Attornment.


 


34.1.    This Lease shall be subject
and subordinate to the lien of any mortgage, deed of trust, or lease in which
Landlord is tenant now or hereafter in force against the Building or the
Project and to all advances made or hereafter to be made upon the security
thereof without the necessity of the execution and delivery of any further
instruments on the part of Tenant to effectuate such subordination.


 


34.2.    Notwithstanding the foregoing,
Tenant shall execute and deliver upon demand such further instrument or
instruments evidencing such subordination of this Lease to the lien of


 


35

















 


any such mortgage or
mortgages or deeds of trust or lease in which Landlord is tenant as may be
required by Landlord, subject to the delivery to Tenant, at no cost to
Landlord, of a subordination, non-disturbance and attornment agreement from the
holder of each such mortgage deed of trust or from such lessor substantially in
the form attached as Exhibit F hereto, which requires such holder or
lessor to accept this Lease, and not to disturb Tenant’s possession, so long as
Tenant is not in default under this Lease (a “Subordination, Non-Disturbance
and Attornment Agreement”). However, if any such mortgagee, beneficiary or
landlord under lease wherein Landlord is tenant so elects, this Lease shall be
deemed prior in lien to any such lease, mortgage, or deed of trust upon or
including the Premises regardless of date and Tenant shall execute a statement
in writing to such effect at Landlord’s request. If Tenant fails to execute any
document required from Tenant under this Section within ten (10) business days
after written request therefor, Tenant hereby constitutes and appoints Landlord
as its special attorney-in-fact to execute and deliver any such document or
documents in the name of Tenant. Such power is coupled with an interest and is
irrevocable.


 


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


 


34.4.    Within thirty (30) days after the execution
of this Lease by both parties, Landlord shall deliver to Tenant a
Subordination, Non-Disturbance and Attornment Agreement in a form reasonably
acceptable to Tenant executed by each holder of a mortgage or deed of trust
covering the Premises. The execution and/or delivery by any such holder of such
a Subordination, Non-Disturbance and Attornment Agreement is a condition
precedent to Tenant’s obligations under this Lease, and Tenant shall have the
right to terminate this Lease by written notice provided to Landlord within ten
(10) days after the expiration of such initial thirty (30) day period, if such
condition precedent is not satisfied in a timely manner; provided that
Landlord shall have ten (10) business days after receipt of such written notice
from Tenant to provide such Subordination, Non-Disturbance and Attornment
Agreement to Tenant. If Tenant fails to timely terminate this Lease as set
forth in the preceding sentence, Tenant shall be deemed to have waived its
right to terminate this Lease pursuant to this Section 34.4. Landlord
represents and warrants to Tenant that there is currently no ground lease to
which Landlord is a party affecting the Premises.


 


35.       Surrender.


 


35.1.    No surrender of possession of any part of the
Premises shall release Tenant from any of its obligations hereunder, unless
such surrender is accepted in writing by Landlord.


 


35.2.    The voluntary or other surrender of this
Lease by Tenant shall not effect a merger with Landlord’s fee title or
leasehold interest in the Premises, the Building or the Property, unless
Landlord consents in writing, and shall, at Landlord’s option, operate as an
assignment to Landlord of any or all subleases.


 


36

















 


35.3.    The voluntary or other surrender of any
ground or other underlying lease that now exists or may hereafter be executed
affecting the Building or the Project, or a mutual cancellation thereof or of
Landlord’s interest therein by Landlord and its lessor shall not effect a
merger with Landlord’s fee title or leasehold interest in the Premises, the
Building or the Property and shall, at the option of the successor to Landlord’s
interest in the Building or the Project, as applicable, operate as an
assignment of this Lease.


 


36.       Waiver and Modification.
No provision of this Lease may be modified, amended or supplemented except by
an agreement in writing signed by Landlord and Tenant. The waiver by Landlord
of any breach by Tenant of any term, covenant or condition herein contained
shall not be deemed to be a waiver of any subsequent breach of the same or any
other term, covenant or condition herein contained.


 


37.       Waiver of Jury Trial and
Counterclaims. The parties waive trial by jury in any action, proceeding or
counterclaim brought by the other party hereto related to matters arising out
of or in any way connected with this Lease; the relationship between Landlord
and Tenant; Tenant’s use or occupancy of the Premises, the Building or the Project;
or any claim of injury or damage related to this Lease or the Premises, the
Building or the Project.


 


38.       [Intentionally omitted]


 


39.       Hazardous Materials.


 


39.1.    Tenant shall not cause or permit any
Hazardous Materials (as hereinafter defined) to be brought upon, kept or used
in or about the Premises, the Building or the Project in violation of
Applicable Laws by Tenant, its agents, employees, contractors or invitees. If
(a) Tenant breaches such obligation, or if the presence of Hazardous Materials
as a result of such a breach results in contamination of the Premises, the
Building, the Project or any adjacent property, or (b) contamination of the
Premises, the Building, the Project or any adjacent property by Hazardous
Materials caused by Tenant or its agents, consultants, employees or invitees
otherwise occurs during the term of this Lease or any extension or renewal
hereof or holding over hereunder, then Tenant shall indemnify, save, defend and
hold Landlord, its agents and contractors harmless from and against any and all
claims, judgments, damages, penalties, fines, costs, liabilities and losses
(including, without limitation, diminution in value of the Premises, the
Building, the Project or any portion thereof; damages for the loss or
restriction on use of rentable or usable space or of any amenity of the
Premises or Project; damages arising from any adverse impact on marketing of
space in the Premises, the Building or the Project; and sums paid in settlement
of claims, attorneys’ fees, consultants’ fees and experts’ fees) that arise
during or after the Term as a result of such breach or contamination. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any
cleanup, remedial, removal or restoration work required by any Governmental
Authority because of Hazardous Materials present in the air, soil or
groundwater above, on or under the Premises. Without limiting the foregoing, if
the presence of any Hazardous Materials in, on, under or about the Premises,
the Building, the Project or any adjacent property caused or permitted by
Tenant results in any contamination of the Premises, the Building, the Project
or any adjacent property, then Tenant shall promptly take all actions at its
sole cost and expense as are necessary to return the Premises, the Building,
the Project and any adjacent property to their


 


37

















 


respective condition
existing prior to the time of such contamination; provided that Landlord’s
written approval of such action shall first be obtained, which approval
Landlord shall not unreasonably withhold; and provided, further, that it
shall be reasonable for Landlord to withhold its consent if such actions could
have a material adverse long-term or short-term effect on the Premises, the
Building or the Project.


 


39.2.    Landlord acknowledges that it is not the
intent of this Section 39 to prohibit Tenant from operating its business
as described in Section 2.12 above. Tenant may operate its business
according to the custom of Tenant’s industry so long as the use or presence of
Hazardous Materials is strictly and properly monitored according to Applicable
Laws. As a material inducement to Landlord to allow Tenant to use Hazardous
Materials in connection with its business, Tenant agrees to deliver to Landlord
prior to the Term Commencement Date a list identifying each type of Hazardous
Material to be present on the Premises and setting forth any and all governmental
approvals or permits required in connection with the presence of such Hazardous
Material on the Premises (the “Hazardous Materials List”). Tenant shall
deliver to Landlord an updated Hazardous Materials List on or prior to each
annual anniversary of the Term Commencement Date and shall also deliver an
updated Hazardous Materials List before any new Hazardous Materials are brought
onto the Premises. Tenant shall deliver to Landlord true and correct copies of
the following documents (hereinafter referred to as the “Documents”)
relating to the handling, storage, disposal and emission of Hazardous Materials
prior to the Term Commencement Date or, if unavailable at that time, concurrent
with the receipt from or submission to any Governmental Authority: permits;
approvals; reports and correspondence; storage and management plans; notices of
violations of Applicable Laws; plans relating to the installation of any
storage tanks to be installed in or under the Premises, the Building or the
Project (provided that installation of storage tanks shall only be
permitted after Landlord has given Tenant its written consent to do so, which
consent Landlord may withhold in its sole and absolute discretion); and all
closure plans or any other documents required by any and all Governmental
Authority for any storage tanks installed in, on or under the Premises, the
Building or the Project for the closure of any such storage tanks. Tenant shall
not be required, however, to provide Landlord with any portion of the Documents
containing information of a proprietary nature that, in and of themselves, do
not contain a reference to any Hazardous Materials or activities related to
Hazardous Materials. Upon Landlord’s written request, Tenant agrees that it
shall enter into a written agreement with other tenants of the Building and the
Project concerning the equitable allocation of fire control areas (as defined
in the Uniform Building Code as adopted by the City of Brisbane (the “UBC”))
within the Building and the Project for the storage of Hazardous Materials. In
the event that Tenant’s use of Hazardous Materials is such that it utilizes
fire control areas in the Building or the Project in excess of Tenant’s Pro
Rata Share of the Building or the Project, as applicable, as set forth in Section
2.8, Tenant agrees that it shall, at its sole cost and expense and upon
Landlord’s written request, establish and maintain a separate area of the
Premises classified by the UBC as an “H” occupancy area for the use and storage
of Hazardous Materials or take such other action as is necessary to ensure that
its share of the fire control areas of the Building and the Project is not
greater than Tenant’s Pro Rata Share of the Building or the Project, as
applicable.


 


39.3.    Notwithstanding the provisions of Section
39.1 above, if (a) Tenant or any proposed transferee, assignee or sublessee
of Tenant has been required by any prior landlord, Lender or Governmental
Authority to take remedial action in connection with Hazardous


 


38

















 


Materials contaminating a
property if the contamination resulted from such party’s action or omission or
use of the property in question or (ii) Tenant or any proposed transferee,
assignee or sublessee is subject to an enforcement order issued by any
Governmental Authority in connection with the use, disposal or storage of
Hazardous Materials, then Landlord shall have the right to terminate this Lease
in Landlord’s sole and absolute discretion (with respect to any such matter
involving Tenant), and it shall not be unreasonable for Landlord to withhold
its consent to any proposed transfer, assignment or subletting (with respect to
any such matter involving a proposed transferee, assignee or sublessee).


 


39.4.    At any time, and from time to
time, prior to the expiration of the Term, Landlord shall have the right to
conduct appropriate tests of the Premises, the Building and the Project to
demonstrate that Hazardous Materials are present or that contamination has
occurred due to Tenant or Tenant’s agents, employees or invitees. Tenant shall
pay all reasonable costs of such tests of the Premises.


 


39.5.    If underground or other
storage tanks storing Hazardous Materials are hereafter placed on the Premises
by Tenant, Tenant shall monitor the storage tanks, maintain appropriate
records, implement reporting procedures, properly close any underground storage
tanks, and take or cause to be taken all other steps necessary or required
under the Applicable Laws.


 


39.6.    Tenant’s obligations under
this Section 39 shall survive the expiration or earlier termination of
the Lease. During any period of time needed by Tenant or Landlord after the
termination of this Lease to complete the removal from the Premises of any such
Hazardous Materials, Tenant shall continue to pay Rent in accordance with this
Lease, which Rent shall be prorated daily.


 


39.7.    As used herein, the term “Hazardous
Material” means any hazardous or toxic substance, material or waste that is
or becomes regulated by any Governmental Authority.


 


39.8.    Notwithstanding anything in
this Section 39 to the contrary, Landlord shall indemnify Tenant for any
pre-existing environmental conditions present at the Building upon the date
Tenant takes possession of any portion of the Premises, whether to conduct Tenant’s
normal business or to begin construction of tenant improvements. Tenant may
engage, at its sole cost, an environmental consultant to conduct an
environmental study in order to obtain a baseline of any pre-existing
environmental conditions of the Premises; provided that Landlord shall
not be deemed to have affirmed any data or conclusions reported in such study.


 


40.       [Intentionally omitted]


 


41.       Miscellaneous.


 


41.1.    Where applicable in this
Lease, the singular includes the plural and the masculine or neuter includes
the masculine, feminine and neuter. The section headings of this Lease are not
a part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.


 


39

















 


41.2.    Submission of this instrument
for examination or signature by Tenant does not constitute a reservation of or
option for a lease, and shall not be effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant.


 


41.3.    Time is of the essence with
respect to the performance of every provision of this Lease in which time of
performance is a factor.


 


41.4.    Each provision of this Lease
performable by Tenant shall be deemed both a covenant and a condition.


 


41.5.    Whenever consent or approval
of either party is required, that party shall not unreasonably withhold,
condition or delay such consent or approval, except as may be expressly set
forth to the contrary.


 


41.6.    The terms of this Lease are
intended by the parties as a final expression of their agreement with respect
to the terms as are included herein, and may not be contradicted by evidence of
any prior or contemporaneous agreement.


 


41.7.    Any provision of this Lease
that shall prove to be invalid, void or illegal shall in no way affect, impair
or invalidate any other provision hereof, and all other provisions of this
Lease shall remain in full force and effect and shall be interpreted as if the
invalid, void or illegal provision did not exist.


 


41.8.    Landlord may, but shall not be
obligated to, record this Lease or a short form memorandum hereof without
Tenant’s consent. Neither party shall record this Lease. Tenant shall be
responsible for the cost of recording any memorandum of this Lease, including
any transfer or other taxes incurred in connection with said recordation.


 


41.9.    The language in all parts of
this Lease shall be in all cases construed as a whole according to its fair
meaning and not strictly for or against either Landlord or Tenant.


 


41.10.  Each of the covenants,
conditions and agreements herein contained shall inure to the benefit of and
shall apply to and be binding upon the parties hereto and their respective
heirs; legatees; devisees; executors; administrators; and permitted successors,
assigns, sublessees. Nothing in this Section 41.10 shall in any way
alter the provisions of this Lease restricting assignment or subletting.


 


41.11.  Any notice, consent, demand,
bill, statement or other communication required or permitted to be given
hereunder shall be in writing and shall be given by personal delivery,
overnight delivery with a reputable nationwide overnight delivery service, or
certified mail (return receipt requested), and shall be deemed delivered upon
receipt or refusal of receipt. Any notices given pursuant to this Lease shall
be addressed to Tenant at the Premises, or to Landlord or Tenant at the
addresses shown in Sections 2.14 and 2.15, respectively. Either
party may, by notice to the other given pursuant to this Section, specify
additional or different addresses for notice purposes.


 


40

















 


41.12.  This Lease shall be governed by,
construed and enforced in accordance with the laws of the State in which the
Premises are located, without regard to such State’s conflict of law
principles.


 


41.13.  That individual or those
individuals signing this Lease guarantee, warrant and represent that said
individual or individuals have the power, authority and legal capacity to sign
this Lease on behalf of and to bind all entities, corporations, partnerships,
limited liability companies, joint venturers or other organizations and
entities on whose behalf said individual or individuals have signed.


 


41.14.  To induce Landlord to enter into
this Lease, Tenant agrees that it shall promptly furnish to Landlord, from time
to time, upon Landlord’s written request, the most recent audited year-end
financial statements reflecting Tenant’s current financial condition. Tenant
represents and warrants that all financial statements, records and information
furnished by Tenant to Landlord in connection with this Lease are true, correct
and complete in all respects. Landlord agrees to keep all of the foregoing
financial statements and the information contained therein confidential and not
to such disclose such documents or information to any person or entity, except
to any purchasers of the Building or the Project, any lenders on the Building
or the Project, any investors in Landlord, and to the respective accountants,
attorneys and advisors of Landlord and of each of the foregoing parties, and
except as may be required by law or by court order.


 


41.15.  This Lease may be executed in
one or more counterparts, each of which, when taken together, shall constitute
one and the same document.


 


42.         Options to Extend Term.
Tenant shall have options (each, an “Option”) to extend the Term of this
Lease upon the following terms and conditions:


 


42.1.    Tenant shall have two (2)
consecutive Options to extend the Term of this Lease by three (3) years each on
the same terms and conditions as this Lease. Basic Annual Rent shall equal
ninety-five percent (95%) of the fair market value (“FMV”) for
comparable office/research and development projects in the Brisbane/Peninsula
market as of the date Tenant exercises the respective Option, increased on each
annual anniversary of the commencement of each extended term by such
percentage, if any, that constitutes a market rate annual increase for such
market. In the event that Landlord and Tenant disagree as to the FMV, they
shall hire an appraiser reasonably acceptable to both parties, the cost of
which shall be split equally by Landlord and Tenant, which appraiser’s decision
as to the FMV shall be binding on both parties.


 


42.2.    Notwithstanding anything in
this Lease to the contrary, Tenant shall not assign or transfer an Option,
either separately or in conjunction with an assignment or transfer of Tenant’s
interest in this Lease, without Landlord’s prior written consent, which consent
Landlord may withhold in its sole and absolute discretion.


 


42.3.    The Options are conditional
upon Tenant giving Landlord written notice of its election to exercise the
applicable Option at least nine (9) months prior to the end of the expiration
of the then-current Term of this Lease.


 


41

















 


42.4.    Notwithstanding anything
contained in this Section 42, Tenant shall not have the right to
exercise an Option:


 


(a)       During the time commencing
from the date Landlord delivers to Tenant a written notice that Tenant is in
default under any provisions of this Lease and continuing until Tenant has
cured the specified default to Landlord’s reasonable satisfaction; or


 


(b)       At any time after an event
of Default as described in Section 24 of the Lease (provided, however,
that, for purposes of this Subsection 42.4(b), Landlord shall not be
required to provide Tenant with notice of such Default) and continuing until
Tenant cures any such Default, if such Default is susceptible to being cured;
or


 


(c)       In the event that Tenant
has committed a Default two (2) or more times and a service or late charge has
become payable under Section 24.1 for each of such Defaults during the
twelve (12)-month period immediately prior to the date that Tenant intends to
exercise the Option, whether or not Tenant cures such Defaults within any
applicable cure period.


 


42.5.    The period of time within
which Tenant may exercise an Option shall not be extended or enlarged by reason
of Tenant’s inability to exercise such Option because of the provisions of Section
42.4.


 


42.6.    All of Tenant’s rights under
the provisions of the Option shall terminate and be of no further force or
effect even after Tenant’s due and timely exercise of an Option if, after such
exercise, but prior to the commencement date of the new term, (a) Tenant fails
to pay to Landlord a monetary obligation of Tenant for a period of twenty (20)
days after written notice from Landlord to Tenant, (b) Tenant fails to commence
to cure a default (other than a monetary default) within thirty (30) days after
the date Landlord gives notice to Tenant of such default or (c) Tenant has
defaulted under this Lease three (3) or more times and a service or late charge
under Section 24.1 has become payable for any such default, whether or
not Tenant has cured such defaults.


 


43.       Right of First Refusal.
During the first (1st) three (3) years after the Term Commencement Date, Tenant
shall have a right of first refusal (“ROFR”) as to any rentable premises
in the Building for which Landlord is seeking a tenant (“Available Premises”).
In the event Landlord receives a bonafide offer to lease from a third party
tenant the Available Premises, which offer is acceptable to Landlord in its
sole and absolute discretion, Landlord shall provide written notice thereof to
Tenant (the “Notice of Offer”), specifying the material terms and
conditions of a proposed lease to Tenant of the Available Premises, which shall
be the same as the terms of the bonafide offer, except that the term of any
lease entered into by Tenant with respect to the Available Premises shall be
coterminous with the Term.


 


43.1.    Within five (5) business days
following its receipt of a Notice of Offer, Tenant shall advise Landlord in
writing whether Tenant elects to lease the Available Premises on the terms and
conditions set forth in the Notice of Offer. If Tenant fails to notify Landlord
of Tenant’s election within said five (5) business day period, then Tenant
shall be deemed to have elected not to lease the Available Premises.


 


42

















 


43.2.    If Tenant timely notifies
Landlord that Tenant elects to lease the Available Premises on the terms and
conditions set forth in the Notice of Offer, then Landlord shall lease the
Available Premises to Tenant upon the terms and conditions set forth in the
Notice of Offer.


 


43.3.    If Tenant notifies Landlord
that Tenant elects not to lease the Available Premises on the terms and
conditions set forth in the Notice of Offer, or if Tenant fails to notify
Landlord of Tenant’s election within the five (5) business day period described
above, then Landlord shall have the right to consummate the lease of the
Available Premises on the same terms as set forth in the Notice of Offer to a
third party tenant.


 


43.4.    Notwithstanding anything in
this Section 43 to the contrary, Tenant shall not exercise the ROFR
during such period of time that Tenant is in default under any provision of
this Lease. Any attempted exercise of the ROFR during a period of time in which
Tenant is so in Default shall be void and of no effect. In addition, Tenant
shall not be entitled to exercise the ROFR if Tenant has committed a Default
two (2) or more times during the twelve (12) month period prior to the date on
which Tenant seeks to exercise the ROFR, whether or not Tenant cures such
Defaults within any applicable cure period.


 


43.5.    Notwithstanding anything in
this Lease to the contrary, Tenant shall not assign or transfer the ROFR,
either separately or in conjunction with an assignment or transfer of Tenant’s
interest in the Lease, without Landlord’s prior written consent, which consent
Landlord may withhold in its sole and absolute discretion; provided, however,
that Landlord’s consent shall not be required for Tenant’s assignment of the
ROFR in connection with an Allowed Transfer.


 


[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


 


43

















 


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


 


LANDLORD:


 


BMR-BAYSHORE BOULEVARD
LLC,


a Delaware limited
liability company


 


 


	
  By:

  	
  /s/ Gary A. Kreitzer

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Gary A.
  Kreitzer

  	
   

  	
   

  	
   

  
	
   

  	
  Title: Executive
  Vice President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:
  5-1-2006

  	
   

  	
   

  	
   

  



 


TENANT:


 


EXPRESSION DIAGNOSTICS,
INC.,


a Delaware corporation


 


	
  By:

  	
  /s/ Pierre E. Cassigneul

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Pierre E. Cassigneul

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:
  5/2/2006

  	
   

  	
   

  	
   

  



 


44

















 


Exhibit A


 


[GRAPHIC]


 


1





















 


[GRAPHIC]


 


2





















 


EXHIBIT B


 


ACKNOWLEDGEMENT OF TERM COMMENCEMENT
DATE 

AND TERM EXPIRATION DATE


 


THIS
ACKNOWLEDGEMENT OF TERM COMMENCEMENT DATE AND TERM EXPIRATION DATE is entered
into as of [               ],
20[   ], with reference to that certain Lease (the “Lease”)
dated as of [               ],
2006, by EXPRESSION DIAGNOSTICS, INC., a Delaware corporation (“Tenant”),
in favor of BMR-BAYSHORE BOULEVARD LLC, a Delaware limited liability company (“Landlord”).
All capitalized terms used herein without definition shall have the meanings
ascribed to them in the Lease.


 


Tenant hereby
confirms the following:


 


1.         Tenant accepted
possession of the Premises on [               ],
2006.


 


2.         The Premises are in good
order, condition and repair.


 


3.         The Tenant Improvements
required to be constructed by Landlord under the Lease have been substantially
completed.


 


4.         All conditions of the
Lease to be performed by Landlord as a condition to the full effectiveness of
the Lease have been satisfied, and Landlord has fulfilled all of its duties in
the nature of inducements offered to Tenant to lease the Premises.


 


5.         In accordance with the
provisions of Section 4.2 of the Lease, the Term Commencement Date is [               ],
20[   ], and, unless the Lease is terminated prior to the Term
Expiration Date pursuant to its terms, the Lease Expiration Date shall be [               ],
20[   ].


 


6.         The Lease is in full
force and effect, and the same represents the entire agreement between Landlord
and Tenant concerning the Premises[, except [               ]].


 


7.         Tenant has no existing
defenses against the enforcement of the Lease by Landlord, and there exist no
offsets or credits against Rent owed or to be owed by Tenant.


 


8.         The obligation to pay
Rent is presently in effect and all Rent obligations on the part of Tenant
under the Lease commenced to accrue on [               ],
20 [   ].


 


9.         The undersigned Tenant
has not made any prior assignment, transfer, hypothecation or pledge of the
Lease or of the rents thereunder or sublease of the Premises or any portion
thereof.


 


[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


 


1

















 


IN WITNESS
WHEREOF, the parties hereto have executed this Acknowledgment of Term
Commencement Date and Term Expiration Date as of [               ],
20 [   ].


 


	
  TENANT:

  	
   

  
	
   

  	
   

  
	
  EXPRESSION DIAGNOSTICS,
  INC., 

  a Delaware corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  



 


2

















 


EXHIBIT C


 


[Intentionally omitted]


 


1

















 


EXHlBIT D


 


RULES AND REGULATIONS


 


NOTHING IN THESE RULES
AND REGULATIONS (“RULES AND REGULATIONS”) SHALL SUPPLANT ANY PROVISION
OF THE LEASE. IN THE EVENT OF A CONFLICT OR INCONSISTENCY BETWEEN THESE RULES
AND REGULATIONS AND THE LEASE, THE LEASE SHALL PREVAIL.


 


1.         Except as specifically
provided in the Lease to which these Rules and Regulations are attached, no
sign, placard, picture, advertisement, name or notice shall be installed or
displayed on any part of the outside of the Premises or the Building without
Landlord’s prior written consent. Landlord shall have the right to remove, at
Tenant’s sole cost and expense and without notice, any sign installed or
displayed in violation of this rule.


 


2.         If Landlord objects in
writing to any curtains, blinds, shades, screens or hanging plants or other
similar objects attached to or used in connection with any window or door of
the Premises or placed on any windowsill, which window, door or windowsill is
(a) visible from the exterior of the Premises and (b) not included in plans
approved by Landlord, then Tenant shall promptly remove said curtains, blinds,
shades, screens or hanging plants or other similar objects at its sole cost and
expense.


 


3.         Tenant shall not obstruct
any sidewalks or entrances to the Building, or any halls, passages, exits,
entrances or stairways within the Premises, in any case that are required to be
kept clear for health and safety reasons.


 


4.         No deliveries shall be
made that impede or interfere with other tenants in or the operation of the
Project.


 


5.         Tenant shall not place a
load upon any floor of the Premises that exceeds the load per square foot that
(a) such floor was designed to carry or (b) that is allowed by Applicable Laws.
Fixtures and equipment that cause noises or vibrations that may be transmitted
to the structure of the Building to such a degree as to be objectionable to
other tenants shall be placed and maintained by Tenant, at Tenant’s sole cost
and expense, on vibration eliminators or other devices sufficient to eliminate
such noises and vibrations to levels reasonably acceptable to Landlord and
other tenants of the Building.


 


6.         Tenant shall not use any
method of heating or air conditioning other than that shown in the Tenant
Improvement plans.


 


7.         Tenant shall not install
any radio, television or other antenna, cell or other communications equipment,
or any other devices on the roof or exterior walls of the Premises except to
the extent shown on approved Tenant Improvements plans. Tenant shall not
interfere with radio, television or other communications from or in the
Premises or elsewhere.


 


1

















 


8.         Canvassing, peddling,
soliciting and distributing handbills or any other written material within, on
or around the Project (other than within the Premises) are prohibited, and
Tenant shall cooperate to prevent such activities.


 


9.         Tenant shall store all of
its trash, garbage and Hazardous Materials within its Premises or in designated
receptacles outside of the Premises. Tenant shall not place in any such
receptacle any material that cannot be disposed of in the ordinary and
customary manner of trash, garbage and Hazardous Materials disposal.


 


10.       The Premises shall not be
used for any improper or immoral purpose. No cooking shall be done or permitted
on the Premises, except in accordance with (a) the requirements of insurance
policies that Landlord or Tenant is required to purchase and maintain pursuant
to the Lease and (b) Applicable Laws.


 


11.       Tenant shall not, without
Landlord’s prior written consent, use the name of the Project, if any, in
connection with or in promoting or advertising Tenant’s business except as
Tenant’s address.


 


12.       Tenant shall comply with
all safety, fire protection and evacuation procedures and regulations
established by Landlord or any Governmental Authority.


 


13.       Tenant assumes any and all
responsibility for protecting the Premises from theft, robbery and pilferage,
which responsibility includes keeping doors locked and other means of entry to
the Premises closed.


 


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


 


15.       These Rules and Regulations
are in addition to, and shall not be construed to in any way modify or amend,
in whole or in part, the terms covenants, agreements and conditions of the
Lease.


 


16.       Landlord reserves the right
to make such other and reasonable rules and regulations as, in its judgment,
may from time to time be needed for safety and security, the care and
cleanliness of the Project, or the preservation of good order therein; provided,
however, that Landlord shall provide written notice to Tenant of such
rules and regulations prior to them taking effect. Tenant agrees to abide by
these Rules and Regulations and any additional rules and regulations issued or
adopted by Landlord.


 


17.       Tenant shall be responsible
for the observance of these Rules and Regulations by Tenant’s employees,
agents, clients, customers, invitees and guests.


 


2

















 


EXHIBIT E


 


FORM OF ESTOPPEL CERTIFICATE


 


	
  To:

  	
   

  	
  BMR-BAYSHORE BOULEVARD LLC

  
	
   

  	
   

  	
  17140 Bernardo Center Drive, Suite 222

  
	
   

  	
   

  	
  San Diego, CA 92128

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BioMed Realty, L.P.

  
	
   

  	
   

  	
  c/o BioMed Realty
  Trust, Inc.

  
	
   

  	
   

  	
  17140 Bernardo Center
  Drive, Suite 222

  
	
   

  	
   

  	
  San Diego, CA 92128

  
	
   

  	
   

  	
   

  
	
  Re:

  	
   

  	
  The Premises (the “Premises”)
  at 3260 Bayshore Boulevard, Brisbane, California (the “Property”)

  



 


The undersigned tenant (“Tenant”) hereby
certifies to you as follows:


 


1.         Tenant is a tenant at the
Property under a lease (the “Lease”) for the Premises dated as of [             ],
2006. The Lease has not been cancelled, modified, assigned, extended or amended
[except as follows: [             ]],
and there are no other agreements, written or oral, affecting or relating to
Tenant’s lease of the Premises or any other space at the Property. The lease
term expires on [             ],
20[   ].


 


2.         Tenant took possession of
the Premises, currently consisting of [             ]
square feet, on [             ],
20[   ], and commenced to pay rent on [             ],
20 [   ]. Tenant has full possession of the Premises, has not
assigned the Lease or sublet any part of the Premises, and does not hold the
Premises under an assignment or sublease [, except as follows: [             ]].


 


3.         All base rent, rent
escalations and additional rent under the Lease have been paid through [             ],
20[   ]. There is no prepaid rent[, except $[             ]],
and the amount of security deposit is $[             ]
in the form of a letter of credit. Tenant currently has no right to any future
rent abatement under the Lease.


 


4.         Base rent is currently
payable in the amount of $[             ]
per month.


 


5.         Tenant is currently
paying estimated payments of additional rent of $[             ]
per month on account of real estate taxes, insurance, management fees and
common area maintenance expenses.


 


6.         All work to be performed
for Tenant under the Lease has been performed as required under the Lease and
has been accepted by Tenant[, except [             ]],
and all allowances to be paid to Tenant, including allowances for tenant
improvements, moving expenses or other items, have been paid.


 


1

















 


7.         The Lease is in full
force and effect, free from default and free from any event that could become a
default under the Lease, and Tenant has no claims against the landlord or
offsets or defenses against rent, and there are no disputes with the landlord.
Tenant has received no notice of prior sale, transfer, assignment,
hypothecation or pledge of the Lease or of the rents payable thereunder[,
except [             ]].


 


8.         [Tenant has the following
expansion rights or options for the Property: [             ].]
[Tenant has no rights or options to purchase the Property.]


 


9.         To Tenant’s knowledge, no
hazardous wastes have been generated, treated, stored or disposed of by or on
behalf of the Tenant in, on or around the Premises or the Project in violation
of any environmental laws.


 


10.       The undersigned has
executed this Estoppel Certificate with the knowledge and understanding that
[INSERT NAME OF LANDLORD, PURCHASER OR LENDER, AS APPROPRIATE] or its assignee
is acquiring the Property in reliance on this certificate and that the
undersigned shall be bound by this certificate. The statements contained herein
may be relied upon by [INSERT NAME OF PURCHASER OR LENDER, AS APPROPRIATE],
BMR- Bayshore Boulevard LLC, BioMed Realty, L.P., BioMed Realty Trust, Inc.,
and any mortgagee of the Property and their respective successors and assigns.


 


Any capitalized
terms not defined herein shall have the respective meanings given in the Lease.


 


Dated this [             ]
day of [             ],
20[   ].


 


	
   

  	
  [             ],
  

  a [             ]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  



 


2

















 


EXHIBIT F


 


FORM OF SUBORDINATION,
NON-DISTURBANCE AND ATTORNMENT


AGREEMENT


 


RECORDING REQUESTED BY


 


 


WHEN RECORDED MAIL TO


 


The Northwestern Mutual
Life Ins. Co.

720 East Wisconsin Ave. - Rm N16WC

Milwaukee, WI 53202

Attn:


	
  Loan
  No.                             SPACE
  ABOVE THIS LINE FOR RECORDER’S USE

  	
   

  



 


NON-DISTURBANCE AND
ATTORNMENT AGREEMENT


 


THIS AGREEMENT is
entered into as of             ,
20   , between             ,
whose mailing address is             ,
(“Tenant”),              ,
whose mailing address is             ,
(“Borrower”), and THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a Wisconsin
corporation (“Lender”), whose address for notices is 720 East Wisconsin Avenue,
Milwaukee, WI 53202, Attention: Real Estate Investment Department, Reference
Loan No.             .


 


RECITALS


 


A.       Tenant is the lessee or
successor to the lessee, and Borrower is the lessor or successor to the lessor
under a certain lease dated              ,
20   (the “Lease”).


 


B.        Lender has made, or will
make, a mortgage loan to be secured by a mortgage, deed to secure a debt or
deed of trust from Borrower for the benefit of Lender (as it may be amended,
restated or otherwise modified from time to time, the “Lien Instrument”)
encumbering the fee title to and/or leasehold interest in the land described in
Exhibit A attached hereto and the improvements thereon (collectively, the “Property”),
wherein the premises covered by the Lease (the “Demised Premises”) are located.


 


C.        Borrower and Lender have
executed, or will execute, an Absolute Assignment of Leases and Rents (the “Absolute
Assignment”), pursuant to which (i) the Lease is assigned to Lender and (ii)
Lender grants a license back to Borrower permitting Borrower to collect all
rents, income and other sums payable under the Lease until the revocation by
Lender of such license, at which time all rents, income and other sums payable
under the Lease are to be paid to Lender.


 


1

















 


D.        Lender has required the
execution of this Agreement by Borrower and Tenant as a condition to Lender
making the requested mortgage loan or consenting to the Lease.


 


E.        Tenant acknowledges that,
as its consideration for entering into this Agreement, Tenant will benefit by
entering into an agreement with Lender concerning Tenant’s relationship with
any purchaser or transferee of the Property (including Lender) in the event of
foreclosure of the Lien Instrument or a transfer of the Property by deed in
lieu of foreclosure (any such purchaser or transferee and each of their
respective successors or assigns is hereinafter referred to as “Successor
Landlord”).


 


AGREEMENT


 


NOW, THEREFORE, in
consideration of the foregoing, the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Tenant, Borrower and Lender agree as follows:


 


1.         Tenant and Borrower agree
for the benefit of Lender that:


 


(a)       Tenant shall not pay, and
Borrower shall not accept, any rent or additional rent more than one month in
advance;


 


(b)      Except as specifically
provided in the Lease, Tenant and Borrower will not enter into any agreement
for the cancellation of the Lease or the surrender of the Demised Premises
without Lender’s prior written consent;


 


(c)       Tenant and Borrower will
not enter into any agreement amending or modifying the Lease without Lender’s
prior written consent, except for amendments or modifications specifically
contemplated in the Lease for confirming the lease commencement date, the rent
commencement date, the term, the square footage leased, the renewal or
extension of the Lease, or the leasing of additional space at the Property;


 


(d)      Tenant will not terminate
the Lease because of a default thereunder by Borrower unless Tenant shall have
first given Lender written notice and a reasonable opportunity to cure such
default;


 


(e)       Tenant, upon receipt of
notice from Lender that it has exercised its rights under the Absolute
Assignment and revoked the license granted to Borrower to collect all rents,
income and other sums payable under the Lease, shall pay to Lender all rent and
other payments then or thereafter due under the Lease, and any such payments to
Lender shall be credited against the rent or other obligations due under the
Lease as if made to Borrower;


 


(f)       Tenant will not conduct any
dry cleaning operations on the Demised Premises using chlorinated solvents nor
will Tenant use any chlorinated solvents in the operation of their business on
the Demised Premises. Notwithstanding the


 


2

















 


above, Tenant’s use and
storage of a product which contains no more than sixteen (16) ounces of
chlorinated solvents, in solution or in pure form, shall not violate this
prohibition if, and only if, (i) Tenant’s use, storage, and the ultimate
disposal, of said solvents is at all times in compliance with applicable law;
(ii) said solvents are acquired and kept in prepackaged containers; and (iii)
tenant keeps no more than one (1) prepackaged container of said solvents on the
Property; and


 


(g)      Tenant shall pay any and all
termination fees due and payable under the Lease directly to Lender.


 


2.         The Lease is hereby subordinated in all
respects to the Lien Instrument and to all renewals, modifications and
extensions thereof, subject to the terms and conditions hereinafter set forth
in this Agreement, but Tenant waives, to the fullest extent it may lawfully do
so, the provisions of any statute or rule of law now or hereafter in effect
that may give or purport to give it any right or election to terminate or
otherwise adversely affect the Lease or the obligations of Tenant thereunder by
reason of any foreclosure proceeding.


 


3.         Borrower, Tenant and
Lender agree that, unless Lender shall otherwise consent in writing, the fee
title to, or any leasehold interest in, the Property and the leasehold estate
created by the Lease shall not merge but shall remain separate and distinct,
notwithstanding the union of said estates either in Borrower or Tenant or any
third party by purchase, assignment or otherwise.


 


4.         If the interests of
Borrower in the Property are acquired by a Successor Landlord:


 


(a)       If Tenant shall not then be
in default in the payment of rent or other sums due under the Lease or be
otherwise in material default under the Lease, the Lease shall not terminate or
be terminated and the rights of Tenant thereunder shall continue in full force
and effect except as provided in this Agreement;


 


(b)      Tenant agrees to attorn to
Successor Landlord as its lessor; Tenant shall be bound under all of the terms,
covenants and conditions of the Lease for the balance of the term thereof,
including any renewal options which are exercised in accordance with the terms
of the Lease;


 


(c)       The interests so acquired
shall not merge with any other interests of Successor Landlord in the Property
if such merger would result in the termination of the Lease;


 


(d)      If, notwithstanding any
other provisions of this Agreement, the acquisition by Successor Landlord of
the interests of Borrower in the Property results, in whole or part, in the
termination of the Lease, there shall be deemed to have been created a lease
between Successor Landlord and Tenant on the same terms and conditions as the
Lease, except as modified by this Agreement, for the remainder of the term of
the Lease with renewal options, if any; and


 


3

















 


(e)       Successor Landlord shall be
bound to Tenant under all of the terms, covenants and conditions of the Lease,
and Tenant shall, from and after Successor Landlord’s acquisition of the
interests of Borrower in the real estate, have the same remedies against
Successor Landlord for the breach of the Lease that Tenant would have had under
the Lease against Borrower if the Successor Landlord had not succeeded to the
interests of Borrower; provided, however, that Successor Landlord shall not be:


 


(i)        Liable for the breach of any representations or warranties set forth in
the Lease or for any act, omission or obligation of any landlord (including
Borrower) or any other party occurring or accruing prior to the date of
Successor Landlord’s acquisition of the interests of Borrower in the Demised
Premises, except for any repair and maintenance obligations of a continuing
nature as of the date of such acquisition;


 


(ii)       Liable for any obligation to construct any improvements in, or make any
alterations to, the Demised Premises, or to reimburse Tenant by way of
allowance or otherwise for any such improvements or alterations constructed or
made, or to be constructed or made, by or on behalf of Tenant in the Demised
Premises;


 


(iii)      Subject to any offsets or defenses which Tenant might have against any
landlord (including Borrower) prior to the date of Successor Landlord’s
acquisition of the interests of Borrower in the Demised Premises;


 


(iv)      Liable for the return of any security deposit under the Lease unless
such security deposit shall have been actually deposited with Successor
Landlord;


 


(v)       Bound to Tenant subsequent to the date upon which Successor Landlord
transfers its interest in the Demised Premises to any third party;


 


(vi)      Liable to Tenant under any indemnification provisions set forth in the
Lease; or


 


(vii)     Liable for any damages in excess of Successor Landlord’s equity in the
Property.


 


The provisions of this
paragraph shall be effective and self-operative immediately upon Successor
Landlord succeeding to the interests of Borrower without the execution of any
other instrument.


 


4

















 


5.         Tenant represents and
warrants that Tenant, all persons and entities owning (directly or indirectly)
an ownership interest in Tenant and all guarantors of all or any portion of the
Lease: (i) are not, and shall not become, a person or entity with whom Lender
is restricted from doing business with under regulations of the Office of
Foreign Asset Control (“OFAC”) of the Department of the Treasury (including,
but not limited to, those named on OFAC’s Specially Designated and Blocked
Persons list) or under any statute, executive order (including, but not limited
to, the September 24, 2001 Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism), or other governmental action; (ii) are not knowingly engaged in,
and shall not engage in, any dealings or transaction or be otherwise associated
with such persons or entities described in (i) above; and (iii) are not, and
shall not become, a person or entity whose activities are regulated by the
International Money Laundering Abatement and Financial Anti-Terrorism Act of
2001 or the regulations or orders thereunder.


 


6.         This Agreement may not be
modified orally or in any other manner except by an agreement in writing signed
by the parties hereto or their respective successors in interest. In the event
of any conflict between the terms of this Agreement and the terms of the Lease,
the terms of this Agreement shall prevail. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their respective heirs,
successors and assigns, and shall remain in full force and effect
notwithstanding any renewal, extension, increase, or refinance of the
indebtedness secured by the Lien Instrument, without further confirmation. Upon
recorded satisfaction of the Lien Instrument, this Agreement shall become null
and void and be of no further effect.


 


5

















 


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


 


 


	
   

  	
  TENANT:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Secretary       

  
						



 


	
  STATE
  OF

  	
  )

  	
   

  
	
   

  	
  )ss.

  	
   

  
	
  COUNTY
  OF

  	
  )

  	
   

  
				



 


On                                                                            , before me,
                                                                            , personally appeared                                            ,
personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.


 


	
  WITNESS
  my hand and official seal.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name (typed or printed)        

  	
   

  	
   

  	
   

  
					



 


(Signatures of Borrower and Lender
continued on following pages)


 


6

















 


(Signatures continued)


 


	
   

  	
  BORROWER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Secretary       

  
						



 


 


	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  )ss.

  	
   

  
	
  COUNTY OF

  	
  )

  	
   

  
				



 


On
                                                                            ,
before me,
                                                                            ,
personally appeared                                           ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.


 


WITNESS my hand and
official seal.


 


 


	
  Signature

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name (typed or printed)

  	
   

  	
   

  	
   

  



 


(Signature of Lender continued on
following pages)


 


7

















 


(Signatures continued)


 


	
   

  	
  LENDER:

  	
  THE NORTHWESTERN MUTUAL
  LIFE INSURANCE COMPANY, a Wisconsin corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: Northwestern
  Investment Management Company, LLC, a Delaware limited liability company, its
  wholly-owned affiliate and authorized representative

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  , Managing Director     

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  , Assistant Secretary     

  



 


	
  STATE OF WISCONSIN

  	
  )

  	
   

  
	
   

  	
  )ss.

  	
   

  
	
  COUNTY OF MILWAUKEE)

  	
   

  	
   

  



 


The foregoing instrument
was acknowledged before me this         day
of                  ,
200  , by                         
and                              
the Managing Director and Assistant Secretary respectively, of Northwestern
Investment Management Company, LLC, on behalf of THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY and acknowledged the execution of the foregoing instrument as
the act and deed of said corporation.


 


My commission expires:


 


	
   

  	
   

  
	
   

  	
  Notary Public     

  



 


 


This instrument was
prepared by                                 ,
Attorney, for The Northwestern Mutual Life Insurance Company, 720 East
Wisconsin Avenue, Milwaukee, WI 53202.


 


8

















 


EXHIBIT “A”


 


(Description of Property)


 


9

















 


EXHIBIT G


 


WORK LETTER


 


This Work Letter
(the “Work Letter”) is made and entered into as of April 27, 2006, by
and between BMR-BAYSHORE BOULEVARD LLC, a Delaware limited liability company (“Landlord”),
and EXPRESSION DIAGNOSTICS, INC., a Delaware corporation (“Tenant”), and
is attached to and made a part of that certain Lease dated as of April 27, 2006
(the “Lease”), by and between Landlord and Tenant for the Premises
located at 3260 Bayshore Boulevard Brisbane, California. All capitalized terms
used but not otherwise defined herein shall have the meanings given them in the
Lease.


 


1.         General Requirements.


 


1.1.      Tenant’s Authorized
Representative. Tenant designates Vikram Jog, Steve Langford and Avi
Kulkarni (each, “Tenant’s Authorized Representative”) as the persons
authorized to initial all plans, drawings, changes orders and approvals
pursuant to this Work Letter. Landlord shall not be obligated to respond to or
act upon any such item until such item has been initialed by any Tenant’s
Authorized Representative.


 


1.2.      Schedule. The schedule
for design and development of Tenant’s Work (as hereinafter defined),
including, without limitation, the time periods for preparation and review of
construction documents, approvals and performance, shall be in accordance with
a schedule prepared by Tenant (the “Schedule”), which Schedule shall be
subject to Landlord’s reasonable approval. The Schedule shall be subject to
adjustment as mutually agreed upon in writing by the parties, or as provided in
this Work Letter.


 


1.3.      Architects and
Consultants. The architect, engineering consultants, design team, general
contractor and subcontractors responsible for the construction of Tenant’s Work
shall be selected by Tenant and approved by Landlord. Landlord’s approval of
the same shall not be unreasonably withheld. Tenant agrees that it shall obtain
bids from, among others, ACCO as its HVAC design/build contractor, KDS Plumbing
as the plumbing design/build contractor and Cupertino Electric as its
electrical design/build contractor.


 


2.         Tenant’s Work.


 


2.1.      Tenant Work Plans.
All work to be performed on the Premises shall be performed by Tenant (“Tenant’s
Work”) at Tenant’s sole cost and expense and without cost to Landlord
(except for the Total TI Allowance) and in accordance with the Approved Plans
(as defined below). The quality of Tenant’s Work shall be of a nature and
character not less than (a) the quality of the tenant improvements in place at
the Building and the Project as of the date of the Lease and (b) Landlord’s
building standards. Tenant shall submit such design drawings, plans and
specifications as Landlord may reasonably request (the “Tenant Work Plans”).
Tenant shall prepare and submit to Landlord for approval schematics covering
Tenant’s Work prepared in conformity with the applicable provisions of this
Work Letter (the “Draft Plans”). The Draft Plans shall contain
sufficient information and detail to accurately describe Tenant’s proposed
design to Landlord and such other information as Landlord may reasonably
request. Tenant shall


 


1

















 


be solely responsible for
ensuring that the Tenant Work Plans and the Draft Plans satisfy Tenant’s
obligations for Tenant’s Work.


 


2.2.      Landlord Approval of
Plans. Landlord shall notify Tenant in writing within ten (10) business
days after receipt of the Draft Plans whether Landlord approves or objects to
the Draft Plans and of the manner, if any, in which the Draft Plans are
unacceptable. Landlord shall not object to any Draft Plans that satisfy the
requirements set forth in Section 2.1. If Landlord objects to the Draft
Plans, then Tenant shall revise the Draft Plans and cause Landlord’s objections
to be remedied in the revised Draft Plans. Tenant shall then resubmit the
revised Draft Plans to Landlord for approval. Landlord’s approval of or
objection to revised Draft Plans and Tenant’s correction of the same shall be
in accordance with this Section 2.2. until Landlord has approved the
Draft Plans in writing. The iteration of the Draft Plans that is approved by
Landlord without objection shall be referred to herein as the “Approved
Plans.”


 


2.3.      Completion of Tenant’s
Work. Tenant shall perform and complete Tenant’s Work (a) in strict
conformance with the Approved Plans, (b) otherwise in compliance with the Lease
and (c) in accordance with Applicable Laws, Landlord’s insurance carriers and
the board of fire underwriters having jurisdiction over the Project and the
Premises. Completion of Tenant’s Work shall be subject to Landlord’s reasonable
approval.


 


2.4.      Conditions to Performance
of Tenant’s Work. Prior to the commencement of Tenant’s Work, Tenant shall
submit to Landlord for Landlord’s approval (which approval Landlord shall not
unreasonably withhold) a list (the “Contractor List”) of project
managers, contractors and subcontractors that will perform Tenant’s Work.
Landlord shall give Tenant notice in writing of its approval or disapproval of
the Contractor List with five (5) business days after Landlord’s receipt of the
same. If Landlord disapproves of one or more parties on the Contractor List,
Tenant shall revise the Contractor List and resubmit the same to Landlord for
Landlord’s approval in accordance with the preceding two sentences. For all
subcontracts in excess of One Hundred Thousand Dollars ($100,000), Tenant shall
require its general contractor to provide Tenant with at least three (3)
competitive bids.


 


2.5.      Requests for Consent.
Landlord shall respond to all requests for consents, approvals or directions
made by Tenant pursuant to this Work Letter within five (5) business days
following Landlord’s receipt of such request. Landlord’s failure to respond
within such five (5) business day period shall be deemed approval by Landlord.


 


3.         Tenant’s Construction
Obligations Shall Not Delay Commencement of the Term. Notwithstanding any
Tenant Work to be performed by Tenant, the commencement of the Term and Tenant’s
obligation to pay Rent shall not, under any circumstance, be extended or
delayed, except to the extent that completion of the Tenant Work is delayed
caused by Force Majeure or by Landlord’s failure to comply in a timely manner
with its obligations under the Lease or this Work Letter. Tenant shall perform
promptly such of its obligations contained in this Work Letter as are to be
performed by it. Tenant shall also observe and perform all of its obligations
under this Lease from the Term Commencement Date.


 


4.         Completion of Tenant’s
Construction Obligations. Tenant, at its sole cost and expense (except for
the Tenant Improvement Allowance), shall complete Tenant’s Work described in
this


 


2

















 


Work Letter in all
respects in accordance with the provisions of the Lease and this Work Letter.
Tenant’s Work shall be deemed completed at such time as Tenant, at its sole cost
and expense (except for the Tenant Improvement Allowance) shall furnish to
Landlord (a) evidence satisfactory to Landlord that (i) all Tenant’s Work has
been completed and paid for in full (which shall be evidenced by the architect’s
certificate of completion and the general contractor’s and each Major
Subcontractor’s and Major Supplier’s final waivers and releases of liens), (ii)
all Tenant’s Work has been accepted by Landlord, (iii) any and all liens
related to Tenant’s Work have either been discharged of record (by payment,
bond, order of a court of competent jurisdiction or otherwise) or waived by the
party filing such lien and (iv) no security interests relating to Tenant’s Work
are outstanding, (b) all certifications and approvals with respect to Tenant’s
Work that may be required from any Governmental Authority and any board of fire
underwriters or similar body for the use and occupancy of the Premises, (c)
certificates of insurance required by the Lease to be purchased and maintained
by Tenant, (d) a certificate from Tenant’s architect certifying that all work
described in the Approved Plans is substantially complete, which certificate
may be in the form of AIA Document G704, and (e) complete drawing print sets
and electronic CADD files on disc of all contract documents for work performed
by their architect and engineers in relation to Tenant’s Work. As used herein,
the term “Major Subcontractor” shall mean any subcontractor who performs work
in connection with Tenant’s Work for compensation in excess of $10,000, and the
term “Major Supplier” shall mean any material supplier who supplies
materials in connection with Tenant’s Work for a purchase price in excess of
$25,000.


 


5.         Insurance. Prior
to commencing Tenant’s Work, Tenant shall provide, or shall cause Tenant’s
contractors and subcontractors to provide, to Landlord, in addition to the
insurance required of Tenant pursuant to the Lease, the following types of
insurance in the following amounts, upon the following terms and conditions:


 


5.1.      Builders’ All-Risk
Insurance. At all times during the period beginning with commencement of
construction of Tenant’s Work and ending with final completion of Tenant’s
Work, Tenant shall maintain, or cause to be maintained, casualty insurance in
Builder’s All-Risk Form, insuring the Landlord Parties and Tenant’s
contractors, as their interests may appear. Such policy shall, on a completed
values basis for the full insurable value at all times, insure against loss or
damage by fire, vandalism and malicious mischief and other such risks as are
customarily covered by the so-called “broad form extended coverage endorsement”
upon all Tenant’s Work and the general contractor’s and any subcontractors’
machinery, tools and equipment, all while each forms a part of, or is contained
in, Tenant’s Work or any temporary structures on the Premises, or is adjacent
thereto. Said Builder’s All-Risk Insurance shall contain an express waiver of
any right of subrogation by the insurer against Landlord and its affiliates,
agents and employees.


 


5.2.      Workers’ Compensation.
At all times during the period of construction of Tenant’s Work, Tenant shall,
or shall cause its contractors or subcontractors to, maintain statutory Workers’
Compensation insurance as required by Applicable Laws.


 


6.         Liability.  Tenant assumes sole responsibility and
liability for any and all injuries or the death of any persons, including
Tenant’s contractors and subcontractors and their respective employees, and for
any and all damages to property caused by, resulting from or arising out of


 


3

















 


any act or omission on
the part of Tenant, Tenant’s contractors or subcontractors, or their respective
employees in the prosecution of Tenant’s Work. Tenant agrees to indemnify, defend,
protect and save free and harmless Landlord and Landlord’s affiliates, agents
and employees from and against all losses and expenses, including reasonable
attorneys’ fees and expenses, that Landlord may incur as the result of claims
or lawsuits due to, because of, or arising out of any and all such injuries,
death or damage, whether real or alleged, and Tenant and Tenant’s contractors
and subcontractors shall assume and defend at their sole cost and expense all
such claims or lawsuits; provided, however, that nothing
contained in this Work Letter shall be deemed to indemnify or otherwise hold
Landlord harmless from or against liability caused by the gross negligence or
willful misconduct of Landlord or any agent, contractor or employee of
Landlord. Any deficiency in design or construction of Tenant’s Work shall be
solely the responsibility of Tenant, notwithstanding the fact that Landlord may
have approved of the same in writing. All material and equipment furnished by
Tenant as Tenant’s Work shall be new or “like new” and Tenant’s Work shall be
performed in a first-class, workmanlike manner.


 


7.         Tenant Improvement
Allowance.


 


7.1.      Application of Tenant
Improvement Allowance and Additional TI Allowance. Landlord shall
contribute the Tenant Improvement Allowance (and, if requested by Tenant, the
Additional TI Allowance) toward the costs and expenses incurred in connection
with the performance of Tenant’s Work, in accordance with the terms and
provisions of the Lease.


 


7.2.      Approval of Budget for
Tenant’s Work. Notwithstanding anything to the contrary set forth elsewhere
in this Work Letter or the Lease, Landlord shall not have any obligation to
advance to Tenant any portion of the Tenant Improvement Allowance or the
Additional TI Allowance until Landlord shall have approved in writing the
budget for the Tenant’s Work (the “Approved Budget”), which approval
Landlord shall not unreasonably withhold. Tenant shall have the right to modify
the Approved Budget at any time and from time to time, subject to Landlord’s
prior written approval, which approval Landlord shall not unreasonably
withhold; thereafter the modified Approved Budget shall be deemed to be the “Approved
Budget.” Prior to Landlord’s approval of the initial Approved Budget, Tenant
shall pay all of the costs and expenses incurred in connection with Tenant’s
Work as they become due. Landlord shall not be obligated to reimburse Tenant
for costs or expenses relating to Tenant’s Work that exceed either (a) the
amount of the Tenant Improvement Allowance (and, if requested by Tenant, the
Additional TI Allowance), other than pursuant to Section 8.2, or (b) the
Approved Budget, either on a line item or overall basis, provided, however,
that Tenant shall have the right to apply cost savings in any one or more line
items (not to exceed ten percent (10%) of any such line item) to any other line
item(s).


 


7.3.      Advance Requests.
Upon submission by Tenant to Landlord of (a) a statement (an “Advance
Request”) setting forth the total amount requested, (b) a detailed summary
of the Tenant’s Work performed using AIA standard form Application for Payment
(G 702) executed by the general contractor and by the architect), (c) lien
releases from the general contractor and each Major Subcontractor and Major
Supplier with respect to the portion of Tenant’s Work corresponding to the
Advance Request, then Landlord shall, within five (5) business days following
receipt by Landlord of an Advance Request and the accompanying materials
required by this Section 7.3, advance to Tenant the amount set forth in
such Advance Request; provided,


 


4

















 


however,
that, with respect to any Advance Requests subject to the limits set forth in Section
7.2, Landlord shall advance to Tenant the requested amount as limited by Section
7.2.


 


7.4.      Application of the Tenant
Improvement Allowance and Additional TI Allowance. Tenant may apply the
Tenant Improvement Allowance (and, if requested by Tenant, the Additional TI
Allowance) for the payment of construction and other costs (including, without
limitation, standard laboratory improvements; finishes; building fixtures;
building permits; project management fees; installation costs for Tenant’s
electrical, telephone and data cabling and wiring, and related connect charges;
and architectural, engineering, design and consulting fees), in each case as
reflected in the Approved Plans. In no event shall the Tenant Improvement
Allowance or the Additional TI Allowance be applied to the purchase of any
furniture, personal property or other non-building system equipment.


 


8.         Changes. Any
changes to Tenant’s Work (each, a “Change”) requested by Landlord or
Tenant after Landlord approves the Approved Plans in writing shall be requested
and instituted in accordance with the provisions of this Section 8 and
shall be subject to the reasonable written approval of the other party.


 


8.1.      Changes Requested by
Tenant.


 


(a)       Tenant may request Changes
after Landlord approves the Approved Plans by notifying Landlord thereof in
writing in substantially the same form as the AIA standard change order form (a
“Tenant Change Order Request”), which Tenant Change Order Request shall
detail the nature and extent of any requested Changes. Landlord agrees to
either approve or disapprove with specific reasons for such disapproval within
five (5) business days after receipt of such Change. If the nature of a Change
requires revisions to the Approved Plans, then Tenant shall be solely
responsible for the cost and expense of such revisions. Tenant Change Order
Requests shall be signed by any Tenant’s Authorized Representative.


 


(b)       Landlord shall approve or
reject any Tenant Change Order Requests in accordance with to the procedures
established pursuant to Section 2. If Landlord does not approve in
writing a Tenant Change Order Request, then such Tenant Change Order Request
shall be deemed rejected by Landlord, and Tenant shall not be permitted to
alter Tenant’s Work as contemplated by such Tenant Change Order Request.


 


8.2.      Changes Requested by
Landlord. Landlord may request Changes after Landlord approves the Approved
Plans by notifying Tenant thereof in writing landlord shall request such
landlord changes by notifying tenant in writing in substantially the same form
as the AIA standard change order form (a “Landlord Change Order Request”),
which Landlord Change Order Request shall detail the nature and extent of any
requested Changes. If the nature of a Change requires revisions to the Approved
Plans, then Landlord shall be solely responsible for the cost and expense of
such revisions. Landlord shall reimburse Tenant for all additional costs and
expenses payable by Tenant to complete Tenant’s Work due to a
Landlord-requested Change in accordance with the payment provisions of this
Work Letter. Notwithstanding the foregoing, Tenant shall not be required to
make any Changes pursuant to this Section 8.2 that would have a material
adverse impact on the construction schedule for Tenant’s Work or on the layout,
quality or functionality (for Tenant’s purposes) of the Tenant Improvements.


 


5

















 


8.3.      Preparation of Estimates.
Tenant shall, before proceeding with any Change, using commercially reasonable
efforts, prepare as soon as is reasonably practicable (but in no event more
than five (5) business days after delivering a Tenant Change Order Request to
Landlord or receipt of a Landlord Change Order Request) an estimate of the
increased costs or savings that would result from such Change, as well as an
estimate of such Change’s effects on the Schedule. Landlord shall have five (5)
business days after receipt of such information from Tenant to (a) in the case
of a Tenant Change Order Request, approve or reject such Tenant Change Order
Request in writing, or (b) in the case of a Landlord Change Order Request,
notify Tenant in writing of Landlord’s decision either to proceed with or
abandon the Landlord-requested Change.


 


9.         Miscellaneous.


 


9.1.      Headings, Etc. Where
applicable in this Work Letter, the singular includes the plural and the
masculine or neuter includes the masculine, feminine and neuter. The section
headings of this Work Letter are not a part of this Work Letter and shall have
no effect upon the construction or interpretation of any part hereof.


 


9.2.      Time of the Essence.
Time is of the essence with respect to the performance of every provision of
this Work Letter in which time of performance is a factor.


 


9.3.      Covenants. Each
provision of this Work Letter performable by Tenant shall be deemed both a
covenant and a condition.


 


9.4.      Consent. Whenever
consent or approval of either party is required, that party shall not
unreasonably withhold, condition or delay such consent or approval, except as
may be expressly set forth to the contrary.


 


9.5.      Entire Agreement. The
terms of this Work Letter are intended by the parties as a final expression of
their agreement with respect to the terms as are included herein, and may not
be contradicted by evidence of any prior or contemporaneous agreement, other
than the Lease.


 


9.6.      Invalid Provisions.
Any provision of this Work Letter that shall prove to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provision
hereof, and all other provisions of this Work Letter shall remain in full force
and effect and shall be interpreted as if the invalid, void or illegal
provision did not exist.


 


9.7.      Construction. The
language in all parts of this Work Letter shall be in all cases construed as a
whole according to its fair meaning and not strictly for or against either
Landlord or Tenant.


 


9.8.      Assigns. Each of the
covenants, conditions and agreements herein contained shall inure to the
benefit of and shall apply to and be binding upon the parties hereto and their
respective heirs; legatees; devisees; executors; administrators; and permitted
successors, assigns, sublessees. Nothing in this Section 9.8 shall in
any way alter the provisions of the Lease restricting assignment or subletting.


 


9.9.      Authority. That
individual or those individuals signing this Work Letter guarantee, warrant and
represent that said individual or individuals have the power, authority and


 


6

















 


legal capacity to sign
this Work Letter on behalf of and to bind all entities, corporations,
partnerships, limited liability companies, joint venturers or other
organizations and entities on whose behalf said individual or individuals have
signed.


 


9.10.    Counterparts. This Work
Letter may be executed in one or more counterparts, each of which, when taken
together, shall constitute one and the same document.


 


[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


 


7

















 


IN WITNESS
WHEREOF, Landlord and Tenant have executed this Work Letter to be effective on
the date first above written.


 


	
  LANDLORD:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BMR-BAYSHORE BOULEVARD
  LLC,  

  a Delaware limited liability company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Gary A. Kreitzer

  	
   

  	
   

  	
   

  
	
   

  	
  Title: Executive Vice
  President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TENANT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXPRESSION DIAGNOSTICS,
  INC.,  

  a Delaware corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  



 


8