exv10w25



 




Exhibit 10.25




LEASE AGREEMENT




     THIS LEASE AGREEMENT is made as of this 28th day of September 2001, between
Alexandria Real Estate Equities, Inc., a Maryland corporation (“Landlord”), and PRIMAL, INC., a
Washington corporation (“Tenant”).



	 	 	 
	Address:

	 	1124 Columbia Street, Seattle, WA
	 
	 	 
	Premises:

	 	That portion of the Project, containing approximately 12,923
rentable square feet, as determined by Landlord, located on
Level B of the annex to the Project as shown on Exhibit A.
	 
	 	 
	Project:

	 	The real property on which the building (the “Building”) in
which the Premises are located, together with all improvements
thereon and appurtenances thereto as described on Exhibit B.






	 	 	 	 	 	 	 	 	 	 	 
	Base Rent:

	 	$32,307.50 per month
	 	Rentable Area of Premises:
	 	12,923 sq. ft.

	 
	 	 	 	 	 	 	 	 	 	 
	Rentable Area of
Project:

	 	168,819 sq. ft.
	 	Tenant’s Share of
Operating Expenses:
	 	 	7.65	%
	 
	 	 	 	 	 	 	 	 	 	 
	Security Deposit:

	 	$	96,922.50	 	 	Commencement Date:
	 	October 1, 2001







	 	 	 
	Rent Adjustment 

Percentage:

	 	Greater of 3.5% or the CPI Adjustment Percentage not to exceed 7.0%
	 
	 	 
	Base Term:

	 	Beginning on the Commencement Date and ending 10 years from the
Rent Commencement Date (as herein defined)
	 
	 	 
	Permitted Use:

	 	Vivarium and related uses consistent with the character of the
Project and otherwise in compliance with the provisions of Section
7 hereof.






	 	 	 
	Address for Rent Payment:

	 	Landlord’s Notice Address:
	135 N. Los Robles Avenue, Suite 250

	 	135 N. Los Robles Avenue, Suite 250
	Pasadena, CA 91101

	 	Pasadena, CA 91101
	Attention: Accounts Receivable

	 	Attention: Corporate Secretary
	 
	 	 
	Tenant’s Notice Address:
	 	 
	1124 Columbia Street
	 	 
	Suite 650
	 	 
	Seattle, WA 98104
	 	 
	Attention: Leslie Deitz Kaplan
	 	 






 









 






     The following Exhibits and Addenda are attached hereto and incorporated herein by this
reference:



	 	 	 
	ý   EXHIBIT A — PREMISES DESCRIPTION

	 	ý   EXHIBIT B — DESCRIPTION OF PROJECT
	ý   EXHIBIT C — WORK LETTER

	 	ý   EXHIBIT D — COMMENCEMENT DATE
	ý   EXHIBIT E — RULES AND REGULATIONS

	 	o   EXHIBIT F — TENANTS PERSONAL
PROPERTY






     1. Lease of Premises. Upon and subject to all of the terms and conditions hereof, Landlord
hereby leases the Premises to Tenant and Tenant hereby leases the Premises from Landlord. The
portions of the Project, which are for the non-exclusive use of tenants of the Project, are
collectively referred to herein as the “Common Areas.” Landlord reserves the right to modify
Common Areas, provided that such modifications do not materially adversely affect Tenant’s use of
the Premises for the Permitted Use. Tenant shall have the right to use the loading area in the
annex level of the Project leased by Corixa Corporation, a Delaware corporation (“Corixa”) under
that certain Columbia Building Lease dated October 28, 1994, as amended (the “Corixa Lease”) and
the portion of the bio-hazards waste cabinets assigned to Tenant and located on the basement level
of the Building.



     2. Delivery; Acceptance of Premises; Commencement Date. Landlord shall use reasonable efforts
to make the Premises available to Tenant for Tenant’s Work under the Work Letter upon full
execution of this Lease and Tenant’s delivery of evidence of the insurance required hereby and by
the Work Letter (“Delivery” or “Deliver”). If Landlord fails to timely deliver the Premises,
Landlord shall not be liable to Tenant for any loss or damage resulting therefrom, and this Lease
shall not be void or voidable except as provided herein. If Landlord does not Deliver the Premises
within 60 days of the Target Commencement Date for any reason other than Force Majeure, this Lease
may be terminated by Landlord or Tenant by written notice to the other, and if so terminated by
either: (a) the Security Deposit, or any balance thereof (i.e., after deducting therefrom all
amounts to which Landlord is entitled under the provisions of this Lease), shall be returned to
Tenant, and (b) neither Landlord nor Tenant shall have any further rights, duties or obligations
under this Lease, except with respect to provisions which expressly survive termination of this
Lease. If neither Landlord nor Tenant elects to void this Lease within 5 business days of the
lapse of such 60-day period, such right to void this Lease shall be waived and this Lease shall
remain in full force and effect.



     The “Commencement Date” shall be October 1, 2001. Rent shall commence on the Commencement
Date as to 6,215 rentable square feet of the Premises, and shall commence on the earlier of: (i) 90
days after the Commencement Date, and (ii) the date Tenant conducts any business in the Premises or
any part thereof (the “Rent Commencement Date”), with respect to the balance of the Premises. Upon
request of Landlord, Tenant shall execute and deliver a written acknowledgment of the Commencement
Date, the Rent Commencement Data and the expiration date of the Term when such are established in
the form attached to this Lease as Exhibit D; provided, however, Tenant’s failure
to execute and deliver such acknowledgment shall not affect Landlord’s rights hereunder. The
"Term” of this Lease shall be the Base Term.



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     Except as set forth in the Work Letter, if applicable: (i) Tenant shall accept the Premises in
their condition as of the Commencement Date, subject to all applicable Legal Requirements (as
defined in Section 7 hereof); (ii) Landlord shall have no obligation for any defects in the
Premises; and (iii) Tenant’s taking possession of the Premises shall be conclusive evidence that
Tenant accepts the Premises and that the Premises were in good condition at the time possession was
taken. Any occupancy of the Premises by Tenant before the Commencement Date shall be subject to
all of the terms and conditions of this Lease.



     Tenant agrees and acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the condition of all or any portion of the Premises or
the Project, and/or the suitability of the Premises or the Project for the conduct of Tenant’s
business, and Tenant waives any implied warranty that the Premises or the Project are suitable for
the Permitted Use. This Lease constitutes the complete agreement of Landlord and Tenant with
respect to the subject matter hereof and supersedes any and all prior representations, inducements,
promises, agreements, understandings and negotiations that are not contained herein. Landlord in
executing this Lease does so in reliance upon Tenant’s representations, warranties, acknowledgments
and agreements contained herein.



     3. Rent.



          (a) Base Rent. The first month’s Base Rent and the Security Deposit shall be due and payable
on delivery of an executed copy of this Lease to Landlord. Tenant shall pay to Landlord in
advance, without demand, abatement, deduction or set-off, monthly installments of Base Rent on or
before the first day of each calendar month during the Term hereof, in lawful money of the United
States of America, at the office of Landlord for payment of Rent set forth above, or to such other
person or at such other place as Landlord may from time to time designate in writing. Payments of
Base Rent for any fractional calendar month shall be prorated. The obligation of Tenant to pay
Base Rent and other sums to Landlord and the obligations of Landlord under this Lease are
independent obligations. Tenant shall have no right at any time to abate, reduce, or set-off any
Rent (as defined in Section 5) due hereunder except for any abatement as may be expressly
provided in this Lease.




          (b) Additional Rent. In addition to Base Rent, Tenant agrees to pay to Landlord as additional
rent (“Additional Rent”): (i) Tenant’s Share of “Operating Expenses” (as defined in Section
5), and (ii) any and all other amounts Tenant assumes or agrees to pay under the provisions of
this Lease, including, without limitation, any and all other sums that may become due by reason of
any default of Tenant or failure to comply with the agreements, terms, covenants and conditions of
this Lease to be performed by Tenant, after any applicable notice and cure period.




     4. Base Rent Adjustments. Base Rent shall be increased on each annual anniversary of the
first day of the first full month during the Term of this Lease (each an “Adjustment Date”) by
multiplying the Base Rent payable immediately before such Adjustment Date by the Rent Adjustment
Percentage and adding the resulting amount to the Base Rent payable immediately before such
Adjustment Date. Base Rent, as so adjusted, shall thereafter be due as provided herein. Base Rent
adjustments for any fractional calendar month shall be prorated. “CPI Adjustment Percentage” means
(i) a fraction, stated as a percentage, the numerator of which shall be the Index for the calendar
month 3 months before the month in which the Adjustment Date occurs, and the



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denominator of which shall be the Index for the calendar month 3 months before the last
Adjustment Date or, if no prior Base Rent adjustment has been made, 3 months before the first day
of the first full month during the Term of this Lease, less (ii) 1.00. “Index” means the “Consumer
Price Index-All Urban Consumers-Seattle-Tacoma-Bremerton Metropolitan Area, All Items” compiled by
the U.S. Department of Labor, Bureau of Labor Statistics, (1982-84 = 100). If a substantial change
is made in the Index, the revised Index shall be used, subject to such adjustments as Landlord may
reasonably deem appropriate in order to make the revised Index comparable to the prior Index. If
the Bureau of Labor Statistics ceases to publish the Index, then the successor or most nearly
comparable index, as reasonably determined by Landlord, shall be used, subject to such adjustments
as Landlord may reasonably deem appropriate in order to make the new index comparable to the Index.
Landlord shall give Tenant written notice indicating the Base Rent, as adjusted pursuant to this
Section, and the method of computation and Tenant shall pay to Landlord an amount equal to any
underpayment of Base Rent by Tenant within 15 days of Landlord’s notice to Tenant. Failure to
deliver such notice shall not reduce, abate, waive or diminish Tenant’s obligation to pay the
adjusted Base Rent.




     5. Operating Expense Payments. Landlord shall deliver to Tenant a written estimate of
Operating Expenses for each calendar year during the Term (the “Annual Estimate”), which may be
revised by Landlord from time to time during such calendar year. During each month of the Term, on
the same date that Base Rent is due, Tenant shall pay Landlord an amount equal to 1/12 of Tenant’s
Share of the Annual Estimate. Payments for any fractional calendar month shall be prorated.



     The term “Operating Expenses” means all costs and expenses of any kind or description
whatsoever incurred or accrued each calendar year by Landlord with respect to the Project
(including, without duplication, Taxes (as defined in Section 9), reasonable reserves
consistent with good business practice for future repairs and replacements, capital repairs and
improvements amortized over the lesser of 7 years and the useful life of such capital items, and
the costs of Landlord’s third party property manager or, if there is no third party property
manager, administration rent in the amount of 3.0% of Base Rent), excluding only:



          (a) the original construction costs of the Project and renovation prior to the date of the
Lease and costs of correcting defects in such original construction or renovation;




          (b) capital expenditures for expansion or redevelopment of all or any portion of the Project;




          (c) interest, principal payments of Mortgage (as defined in Section 27) debts of
Landlord, financing costs and amortization of funds borrowed by Landlord, whether secured or
unsecured and all payments of base rent (but not taxes or operating expenses) under any ground
lease or other underlying lease of all or any portion of the Project;




          (d) depreciation of the Project (except for capital improvements, the cost of which are
includable in Operating Expenses);




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          (e) advertising, legal and space planning expenses and leasing commissions and other costs and
expenses incurred in procuring and leasing space to tenants for the Project, including any leasing
office maintained in the Project, free rent and construction allowances and other lease incentives
for tenants;




          (f) legal and other expenses incurred in the negotiation or enforcement of leases;




          (g) completing, fixturing, improving, renovating, painting, redecorating or other work, which
Landlord pays for or performs for specific tenants within their premises, and costs of correcting
defects in such work;




          (h) costs of utilities outside normal business hours sold to tenants of the Project;




          (i) costs to be reimbursed by other tenants of the Project or Taxes to be paid directly by
Tenant or other tenants of the Project, whether or not actually paid;




          (j) salaries, wages, benefits and other compensation paid to officers and employees of
Landlord who are not assigned in whole or in part to the operation, management, maintenance or
repair of the Project;




          (k) general organizational, administrative and overhead costs relating to maintaining
Landlord’s existence, either as a corporation, partnership, or other entity, including general
corporate, legal and accounting expenses;




          (l) costs (including attorneys’ fees and costs of settlement, judgments and payments in lieu
thereof) incurred in connection with disputes with tenants, other occupants, or prospective
tenants, and costs and expenses, including legal fees, incurred in connection with negotiations or
disputes with employees, consultants, management agents, leasing agents, purchasers or mortgagees
of the Building;




          (m) costs incurred by Landlord due to the violation by Landlord, its employees, agents or
contractors or any tenant of the terms and conditions of any lease of space in the Project or any
Legal Requirement (as defined in Section 7);




          (n) tax penalties, fines or interest incurred as a result of Landlord’s negligence, inability
or unwillingness to make payment and/or to file any tax or informational returns when due, or from
Landlord’s failure to make any payment required to be made by Landlord hereunder before
delinquency;




          (o) overhead and profit increment paid to Landlord or to subsidiaries or affiliates of
Landlord for goods and/or services in or to the Project to the extent the same exceeds the costs of
such goods and/or services rendered by unaffiliated third parties on a competitive basis;




          (p) costs arising from Landlord’s charitable or political contributions or fine art maintained
at the Project;




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          (q) costs in connection with services (including electricity), items or other benefits of a
type which are not standard for the Project and which are not available to Tenant without specific
charges therefor, but which are provided to another tenant or occupant of the Project, whether or
not such other tenant or occupant is specifically charged therefor by Landlord;




          (r) costs incurred in the sale or refinancing of the Project;




          (s) net income taxes of Landlord or the owner of any interest in the Project, franchise,
capital stock, gift, estate or inheritance taxes or any federal, state or local documentary taxes
imposed against the Project or any portion thereof or interest therein; and




          (t) costs incurred by reason of the remediation or other environmental response regarding any
contamination of the Premises or the Project or soils or groundwater thereunder, by Hazardous
Materials other than as described in Section 30 hereof;




          (u) costs of repairs or other work occasioned by fire, windstorm, earthquake or other casualty
or loss in excess of the deductible under the casualty insurance maintained by Landlord pursuant to
Section 17 hereof; and




          (v) any expenses otherwise includable within Operating Expenses to the extent actually
reimbursed by persons other than tenants of the Project under leases for space in the Project.




     Within 90 days after the end of each calendar year (or such longer period as may be reasonably
required), Landlord shall furnish to Tenant a statement (an “Annual Statement”) showing in
reasonable detail: (a) the total and Tenant’s Share of actual Operating Expenses for the previous
calendar year, and (b) the total of Tenant’s payments in respect of Operating Expenses for such
year. If Tenant’s Share of actual Operating Expenses for such year exceeds Tenant’s payments of
Operating Expenses for such year, the excess shall be due and payable by Tenant as Rent within 30
days after delivery of such Annual Statement to Tenant. If Tenant’s payments of Operating Expenses
for such year exceed Tenant’s Share of actual Operating Expenses for such year Landlord shall pay
the excess to Tenant within 30 days after delivery of such Annual Statement, except that after the
expiration, or earlier termination of the Term or if Tenant is delinquent in its obligation to pay
Rent, Landlord shall pay the excess to Tenant after deducting all other amounts due Landlord.



     The Annual Statement shall be final and binding upon Tenant unless Tenant, within 30 days
after Tenant’s receipt thereof, shall contest any item therein by giving written notice to
Landlord, specifying each item contested and the reason therefor. If, during such 30 day period,
Tenant reasonably and in good faith questions or contests the correctness of Landlord’s statement
of Tenant’s Share of Operating Expenses, Landlord will provide Tenant with access to Landlord’s
books and records relating to the operation of the Project and such information as Landlord
reasonably determines to be responsive to Tenant’s questions (the “Expense Information”). If after
Tenant’s review of such Expense Information, Landlord and Tenant cannot agree upon the amount of
Tenant’s Share of Operating Expenses, then Tenant shall have the right to have an independent
public accounting firm selected by Tenant from among the 5 largest in the United States, working
pursuant to a fee arrangement other than a contingent fee (at Tenant’s sole cost and expense) and
approved by Landlord (which approval shall not be unreasonably withheld or delayed), audit and/or



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review the Expense Information 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 the payments actually made by Tenant with respect to Operating Expenses for the
calendar year in question exceeded Tenant’s Share of Operating Expenses for such calendar year,
Landlord shall at Landlord’s option either (i) credit the excess amount to the next succeeding
installments of estimated Operating Expenses or (ii) pay the excess to Tenant within 30 days after
delivery of such statement, except that after the expiration or earlier termination of the Term or
if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the excess to Tenant
after deducting all other amounts due Landlord. If the independent Review shows that Tenant’s
payments with respect to Operating Expenses for such calendar year were less than Tenant’s Share of
Operating Expenses for the calendar year, Tenant shall pay the deficiency to Landlord within 30
days after delivery of such statement. If the Independent Review shows that Tenant has overpaid
with respect to Operating Expenses by more than 5% then Landlord shall reimburse Tenant for all
costs incurred by Tenant for the Independent Review. Operating Expenses for the calendar years in
which Tenant’s obligation to share therein begins and ends shall be prorated. Notwithstanding
anything set forth herein to the contrary, if the Project is not at least 95% occupied on average
during any year of the Term, Tenant’s Share of Operating Expenses for such year shall be computed
as though the Project had been 95% occupied on average during such year.




     “Tenant’s Share” shall be the percentage set forth on the first page of this Lease as Tenant’s
Share as reasonably adjusted by Landlord following a measurement of the rentable square footage of
the Project and the Premises to be done by Landlord within 90 days of the Commencement Date, or as
soon as reasonably possible thereafter, and shall be subject to further adjustment for changes in
the physical size of the Premises or the Project occurring thereafter. Any such measurement shall
be performed in accordance with the 1996 Standard Method of Measuring Floor Area in Office
Buildings as adopted by the Building Owners and Managers Association (ANSI/BOMA Z65.1-1996).
Landlord may equitably increase Tenant’s Share for any item of expense or cost reimbursable by
Tenant that relates to a repair, replacement, or service that benefits only the Premises or only a
portion of the Project that includes the Premises or that varies with occupancy or use. Base Rent,
Tenant’s Share of Operating Expenses and all other amounts payable by Tenant to Landlord hereunder
are collectively referred to herein as “Rent.”



     6. Security Deposit. Tenant shall deposit with Landlord upon delivery of an executed copy of
this Lease to Landlord security (the “Security Deposit”) for the performance of all of its
obligations in the amount set forth in the Basic Lease Provisions, which security shall be in the
form of either cash or an unconditional and irrevocable letter of credit (the “Letter of Credit”):
(i) in form and substance satisfactory to Landlord, (ii) naming Landlord as beneficiary, (iii)
expressly allowing Landlord to draw upon it at any time from time to time by delivering to the
issuer notice that Landlord is entitled to draw thereunder, (iv) drawable on an FDIC-insured
financial institution satisfactory to Landlord, and (v) redeemable in the state of Landlord’s
choice. If Tenant does not provide Landlord with a substitute Letter of Credit complying with all
of the requirements hereof at least 10 days before the stated expiration date of the then current
Letter of Credit, Landlord shall have the right to draw upon the current Letter of Credit and hold
the funds drawn as the Security Deposit. The Security Deposit shall be held by Landlord as
security for the performance of Tenant’s obligations under this Lease. The Security Deposit is not
an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default. Upon
each occurrence of a Default (as defined in



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Section 20), Landlord may use all or any part of the Security Deposit to pay
delinquent payments due under this Lease, and the cost of any damage, injury, expense or liability
caused by such Default, without prejudice to any other remedy provided herein or provided by law.
Upon any such use of all or any portion of the Security Deposit, Tenant shall pay Landlord on
demand the amount that will restore the Security Deposit to its original amount. Tenant hereby
waives the provisions of any law, now or hereafter in force, which provide that Landlord may claim
from a security deposit only those sums reasonably necessary to remedy defaults in the payment of
Rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord
may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss
or damage, foreseeable or unforeseeable, caused by the act or omission of Tenant or any officer,
employee, agent or invitee of Tenant. Upon 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 periods prior to the filing of such proceedings. Upon any such use of all
or any portion of the Security Deposit, Tenant shall, within 5 days after demand from Landlord,
restore the Security Deposit to its original amount. If Tenant shall fully perform every provision
of this Lease to be performed by Tenant, the Security Deposit, or any balance thereof (i.e., after
deducting therefrom all amounts to which Landlord is entitled under the provisions of this Lease),
shall be returned to Tenant (or, at Landlord’s option, to the last assignee of Tenant’s interest
hereunder) within 90 days after the expiration or earlier termination of this Lease.




     If Landlord transfers its interest in the Project or this Lease, Landlord shall either (a)
transfer any Security Deposit then held by Landlord to a person or entity assuming Landlord’s
obligations under this Section 6, or (b) return to Tenant any Security Deposit then held by
Landlord and remaining after the deductions permitted herein. Upon such transfer to such
transferee or the return of the Security Deposit to Tenant, Landlord shall have no further
obligation with respect to the Security Deposit, and Tenant’s right to the return of the Security
Deposit shall apply solely against Landlord’s transferee. The Security Deposit is not an advance
rental deposit or a measure of Landlord’s damages in case of Tenant’s default. Landlord’s
obligation respecting the Security Deposit is that of a debtor, not a trustee and; no interest
shall accrue thereon.



     7. Use. The Premises shall be used solely for the Permitted Use set forth in the Basic Lease
Provisions, in compliance with all laws, orders, judgments, ordinances, regulations, codes,
directives, permits, licenses, covenants and restrictions now or hereafter applicable to the
Premises, and the use and occupancy thereof, including, without limitation, the Americans With
Disabilities Act, 42 U.S.C. § 12101, et seq. (together with the regulations promulgated pursuant
thereto, “ADA”) (collectively, “Legal Requirements”). Tenant shall, upon 5 days’ written notice
from Landlord, discontinue any use of the Premises which is declared by any Governmental Authority
(as defined in Section 9) having jurisdiction to be a violation of any Legal Requirement.
Tenant will not use or permit the Premises to be used for any purpose or in any manner that would
void Tenant’s or Landlord’s insurance, increase the insurance risk, or cause the disallowance of
any sprinkler or other credits. Tenant shall reimburse Landlord promptly upon demand for any
additional premium charged for any such insurance policy by reason of Tenant’s failure to comply
with the provisions of this Section or otherwise caused by Tenant’s use and/or occupancy of the
Premises. Tenant will use the Premises in a careful, safe and proper manner and will not commit
waste, overload the floor or structure of the Premises, subject the Premises to use that would
damage the Premises or obstruct or interfere with the rights of Landlord or other tenants or
occupants of the Project, including



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conducting or giving notice of any auction, liquidation, or going out of business sale on the
Premises, or using or allowing the Premises to be used for any unlawful purpose. Tenant shall
cause any equipment or machinery to be installed in the Premises so as to reasonably prevent sounds
or vibrations from the Premises from extending into Common Areas, or other space in the Project.
Tenant shall not place any machinery or equipment weighing 500 pounds or more in or upon the
Premises or transport or move such items through the Common Areas of the Project or in the Project
elevators without the prior written consent of Landlord, which consent shall be granted or refused
within 10 business days of any written request from Tenant. Except as may be provided under the
Work Letter, Tenant shall not, without the prior written consent of Landlord, use the Premises in
any manner which will require ventilation, air exchange, heating, gas, steam, electricity or water
beyond the existing capacity of the Project as proportionately allocated to the Premises based upon
Tenant’s Share as usually furnished for the Permitted Use.




     Tenant, at its sole expense, shall make any alterations or modifications to the interior or
the exterior of the Premises or the Project that are required by Legal Requirements (including,
without limitation, compliance of the Premises with the Americans With Disabilities Act, 42 U.S.C.
§ 12101, et seq. (together with regulations promulgated pursuant thereto, “ADA”)) related to
Tenant’s use or occupancy of the Premises. Notwithstanding any other provision herein to the
contrary, Tenant shall be responsible for any and all demands, claims, liabilities, losses, costs,
expenses, actions, causes of action, damages or judgments, and all reasonable expenses incurred in
investigating or resisting the same (including, without limitation, reasonable attorneys’ fees,
charges and disbursements and costs of suit) (collectively, “Claims”) arising out of or in
connection with Legal Requirements, and Tenant shall indemnify, defend, hold and save Landlord
harmless from and against any and all Claims arising out of or in connection with any failure of
the Premises to comply with any Legal Requirement.



     8. Holding Over. If, with Landlord’s express written consent, Tenant retains possession of
the Premises after the termination of the Term, (i) unless otherwise agreed in such written
consent, such possession shall be subject to immediate termination by Landlord at any time, (ii)
all of the other terms and provisions of this Lease (including, without limitation, the adjustment
of Base Rent pursuant to Section 4 hereof) shall remain in full force and effect (excluding
any expansion or renewal option or other similar right or option) during such holdover period,
(iii) Tenant shall continue to pay Base Rent in the amount payable upon the date of the expiration
or earlier termination of this Lease or such other amount as Landlord may indicate, in Landlord’s
sole and absolute discretion, in such written consent, and (iv) all other payments shall continue
under the terms of this Lease. If Tenant remains in possession of the Premises after the
expiration or earlier termination of the Term without the express written consent of Landlord, (A)
Tenant shall become a tenant at sufferance upon the terms of this Lease except that the monthly
rental shall be equal to 150% of the Rent in effect during the last 30 days of the Term, and (B)
Tenant shall be responsible for all damages suffered by Landlord resulting from or occasioned by
Tenant’s holding over, including consequential damages. No holding over by Tenant, whether with or
without consent of Landlord, shall operate to extend this Lease except as otherwise expressly
provided, and this Section 8 shall not be construed as consent for Tenant to retain
possession of the Premises. Acceptance by Landlord of Rent after the expiration of the Term or
earlier termination of this Lease shall not result in a renewal or reinstatement of this Lease.



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     9. Taxes. Landlord shall pay, as part of Operating Expenses, alt taxes, levies, assessments
and governmental charges of any kind (collectively referred to as “Taxes”) imposed by any federal,
state, regional, municipal, local or other governmental authority or agency, including, without
limitation, quasi-public agencies (collectively, “Governmental Authority”) during the Term,
including, without limitation, all Taxes: (i) Imposed on or measured by or based, in whole or in
part, on rent payable to Landlord under this Lease and/or from the rental by Landlord of the
Project or any portion thereof, or (ii) based on the square footage, assessed value or other
measure or evaluation of any kind of the Premises or the Project, or (iii) assessed or imposed by
or on the operation or maintenance of any portion of the Premises or the Project, including
parking, or (iv) assessed or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by, any Governmental Authority, or (v) imposed
as a license or other fee on Landlord’s business of leasing space in the Project. Landlord may
contest by appropriate legal proceedings the amount, validity, or application of any Taxes or liens
securing Taxes. Taxes shall not include any net income taxes imposed on Landlord unless such net
income taxes are in substitution for any Taxes payable hereunder. If any such Tax is levied or
assessed directly against Tenant, then Tenant shall be responsible for and shall pay the same at
such times and in such manner as the taxing authority shall require. Tenant shall pay, prior to
delinquency, any and all Taxes levied or assessed against any personal property or trade fixtures
placed by Tenant in the Premises, whether levied or assessed against Landlord or Tenant. If any
Taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s
property, or if the assessed valuation of the Project is increased by a value attributable to
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, higher than the base valuation on
which Landlord from time-to-time allocates Taxes to all tenants in the Project, Landlord shall have
the right, but not the obligation, to pay such Taxes. Landlord’s determination of any excess
assessed valuation shall be binding and conclusive, absent manifest error. The amount of any such
payment by Landlord shall constitute Additional Rent due from Tenant to Landlord immediately upon
demand.



     10. Parking. Tenant shall not have the right to park in any parking areas owned or operated
by Landlord for tenants of the Project under this Lease. Nothing herein alters or in any way
affects Tenant’s parking rights under any other lease by and between Tenant and Landlord with
respect to any portion of the Project.



     11. Utilities, Services. Landlord shall provide, subject to the terms of this Section 11,
potable water, steam, compressed air, vacuum, electricity, heat, ventilation, air conditioning,
light, power, telephone, sewer, and other utilities (including gas and fire sprinklers to the
extent the Project is plumbed for such services), refuse and trash collection and janitorial
services (collectively, “Utilities”). Landlord shall pay, as Operating Expenses or subject to
Tenant’s reimbursement obligation, for all Utilities used on the Premises, all maintenance charges
for Utilities, and any storm sewer charges or other similar charges for Utilities imposed by any
Governmental Authority or Utility provider, and any taxes, penalties, surcharges or similar charges
thereon. Landlord may cause, at Tenant’s expense, any Utilities to be separately metered or
charged directly to Tenant by the provider. Tenant shall pay directly to the Utility provider,
prior to delinquency, any separately metered Utilities and services that may be furnished to Tenant
or the Premises during the Term. Tenant shall pay, as part of Operating Expenses, its share of all
charges for jointly metered Utilities based upon consumption, as reasonably determined by Landlord.
No interruption or failure of



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Utilities, from any cause whatsoever other than Landlord’s willful misconduct, shall result in
eviction or constructive eviction of Tenant, termination of this Lease or the abatement of Rent.
Tenant agrees to limit use of water and sewer with respect to Common Areas to normal restroom use.




     Landlord’s sole obligation for either providing emergency generators or providing emergency
back-up power to Tenant shall be: (i) to provide emergency generators with not less than the stated
capacity of the emergency generators located in the Building as of the Commencement Date, and (ii)
to contract with a third party to maintain the emergency generators as per the manufacturer’s
standard maintenance guidelines. Landlord shall have no obligation to provide Tenant with
operational emergency generators or back-up power or to supervise, oversee or confirm that the
third party maintaining the emergency generators is maintaining the generators as per the
manufacturer’s standard guidelines or otherwise. During any period of replacement, repair or
maintenance of the emergency generators when the emergency generators are not operational,
including any delays thereto due to the inability to obtain parts or replacement equipment,
Landlord shall have no obligation to provide Tenant with an alternative back-up generator or
generators or alternative sources of back-up power. Tenant expressly acknowledges and agrees that
Landlord does not guaranty that such emergency generators will be operational at all times or that
emergency power will be available to the Premises when needed.



     12. Alterations and Tenant’s Property. Any alterations, additions, or improvements made to
the Premises by or on behalf of Tenant, including additional locks or bolts of any kind or nature
upon any doors or windows in the Premises, but excluding installation, removal or realignment of
furniture systems (other than removal of furniture systems owned or paid for by Landlord) not
involving any modifications to the structure or connections (other then by ordinary plugs or jacks)
to Building Systems (as defined in Section 13) (“Alterations”) shall be subject to
Landlord’s prior written consent, which may be given or withheld in Landlord’s sole discretion if
any such Alteration affects the structure or Building Systems. Tenant may construct nonstructural
Alterations in the Premises without Landlord’s prior approval if the aggregate cost of all such
work in any 12 month period does not exceed $25,000 (a “Notice-Only Alteration”), provided Tenant
notifies Landlord in writing of such intended Notice-Only Alteration, and such notice shall be
accompanied by plans, specifications, work contracts and such other information concerning the
nature and cost of the Notice-Only Alteration as may be reasonably requested by Landlord, which
notice and accompanying materials shall be delivered to Landlord not less than 15 business days in
advance of any proposed construction. If Landlord approves any Alterations, Landlord may impose
such conditions on Tenant in connection with the commencement, performance and completion of such
Alterations as Landlord may deem appropriate in Landlord’s sole and absolute discretion. Any
request for approval shall be in writing, delivered not less than 15 business days in advance of
any proposed construction, and accompanied by plans, specifications, bid proposals, work contracts
and such other information concerning the nature and cost of the alterations as may be reasonably
requested by Landlord, including the identities and mailing addresses of all persons performing
work or supplying materials. Landlord’s right to review plans and specifications and to monitor
construction shall be solely for its own benefit, and Landlord shall have no duty to ensure that
such plans and specifications or construction comply with applicable Legal Requirements. Tenant
shall cause, at its sole cost and expense, all Alterations to comply with insurance requirements
and with Legal Requirements and shall implement at its sole cost and expense any alteration or
modification



-11-









 




required by Legal Requirements as a result of any Alterations. Tenant shall pay to Landlord,
as Additional Rent, on demand an amount equal to 5% of all charges incurred by Tenant or its
contractors or agents in connection with any Alteration to cover Landlord’s overhead and expenses
for plan review, coordination, scheduling and supervision. Before Tenant begins any Alteration,
Landlord may post on and about the Premises notices of non-responsibility pursuant to applicable
law. Tenant shall reimburse Landlord for, and indemnify and hold Landlord harmless from, any
expense incurred by Landlord by reason of faulty work done by Tenant or its contractors, delays
caused by such work, or inadequate cleanup.




     Tenant shall furnish security or make other arrangements satisfactory to Landlord to assure
payment for the completion of all Alterations work free and clear of liens, and shall provide (and
cause each contractor or subcontractor to provide) certificates of insurance for workers’
compensation and other coverage in amounts and from an insurance company satisfactory to Landlord
protecting Landlord against liability for personal injury or property damage during construction.
Upon completion of any Alterations, Tenant shall deliver to Landlord: (i) sworn statements setting
forth the names of all contractors and subcontractors who did the work and final lien waivers from
all such contractors and subcontractors; and (ii) “as built” plans for any such Alteration.



     Other than (i) the items, if any, listed on Exhibit F attached hereto, (ii) any items agreed
by Landlord in writing to be included on Exhibit F in the future, and (iii) any trade fixtures,
machinery, equipment and other personal property not paid for out of the TI Fund (as defined in the
Work Letter) which may be removed without material damage to the Premises, which damage shall be
repaired (including capping or terminating utility hook-ups behind walls) by Tenant during the Term
(collectively, “Tenant’s Property”), all property of any kind paid for with the TI Fund, all
Alterations, real property fixtures, built-in machinery and equipment, built-in casework and
cabinets and other similar additions and improvements built into the Premises so as to become an
integral part of the Premises such as fume hoods which penetrate the roof or plenum area, built-in
cold rooms, built-in warm rooms, walk-in cold rooms, walk-in warm rooms, deionized water systems,
glass washing equipment, autoclaves, chillers, built-in plumbing, electrical and mechanical
equipment and systems, and any power generator and transfer switch (collectively, “Installations”)
shall be and shall remain the property of Landlord during the Term and following the expiration or
earlier termination of the Term, shall not be removed by Tenant at any time during the Term and
shall remain upon and be surrendered with the Premises as a part thereof in accordance with
Section 28 following the expiration or earlier termination of this Lease; provided,
however, that Landlord shall, at the time its approval of such Installation is requested or
at the time it receives notice of a Notice-Only Alteration notify Tenant if it has elected to cause
Tenant to remove such Installation upon the expiration or earlier termination of this Lease. If
Landlord so elects, Tenant shall remove such Installation upon the expiration or earlier
termination of this Lease and restore any damage caused by or occasioned as a result of such
removal, including, when removing any of Tenant’s Property which was plumbed, wired or otherwise
connected to any of the Building Systems, capping off all such connections behind the walls of the
Premises and repairing any holes. During any such restoration period, Tenant shall pay Rent to
Landlord as provided herein as if said space were otherwise occupied by Tenant.



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     13. Landlord’s Repairs. Landlord, as an Operating Expense, shall maintain all of the
structural, exterior, parking and other Common Areas of the Project, including HVAC, plumbing, fire
sprinklers, elevators and all other building systems serving the Premises and other portions of the
Project (“Building Systems”), in good repair, reasonable wear and tear and uninsured losses and
damages caused by Tenant, or by any of Tenant’s agents, servants, employees, invitees and
contractors (collectively, “Tenant Parties”) excluded. Losses and damages caused by Tenant or any
Tenant Party shall be repaired by Landlord, to the extent not covered by insurance, at Tenant’s
sole cost and expense. Landlord reserves the right to stop Building System services when necessary
(i) by reason of accident or emergency, or (ii) for planned repairs, alterations or improvements,
which are, in the judgment of Landlord, desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed. Landlord shall have no responsibility or
liability for failure to supply Building System services during any such period of interruption;
provided, however, that Landlord shall give Tenant 48 hours advance notice of any
planned stoppage of Building System services for routine maintenance, repairs, alterations or
improvements. Tenant shall promptly give Landlord written notice of any repair required by
Landlord pursuant to this Section, after which Landlord shall have a reasonable opportunity to
effect such repair. Landlord shall not be liable for any failure to make any repairs or to perform
any maintenance unless such failure shall persist for an unreasonable time after Tenant’s written
notice of the need for such repairs or maintenance. Tenant waives its rights under any state or
local law to terminate this Lease or to make such repairs at Landlord’s expense and agrees that the
parties’ respective rights with respect to such matters shall be solely as set forth herein.
Repairs required as the result of fire, earthquake, flood, vandalism, war, or similar cause of
damage or destruction shall be controlled by Section 18.



     14. Tenant’s Repairs. Subject to Section 13 hereof, Tenant, at its expense, shall
repair, replace and maintain in good condition all portions of the Premises, including, without
limitation, entries, doors, ceilings, interior windows, interior walls, and the interior side of
demising walls. Such repair and replacements may include capital expenditures and repairs whose
benefit may extend beyond the Term. Should Tenant fail to make any such repair or replacement or
fail to maintain the Premises, Landlord shall give Tenant notice of such failure. If Tenant fails
to commence cure of such default within 10 days of Landlord’s notice, and thereafter diligently
prosecute such cure to completion, Landlord may perform such work and shall be reimbursed by Tenant
within 10 days after demand therefor; provided, however, that if such default by Tenant creates or
could create an emergency, Landlord may immediately commence cure of such default and shall
thereafter be entitled to recover the costs of such cure from Tenant. Subject to Sections
17 and 18, Tenant shall bear the full uninsured cost of any repair or replacement to
any part of the Project that results from damage caused by Tenant or any Tenant Party and any
repair that benefits only the Premises.



     15. Mechanic’s Liens. Tenant shall discharge, by bond or otherwise, any mechanic’s lien filed
against the Premises or against the Project for work claimed to have been done for, or materials
claimed to have been furnished to, Tenant within 10 days after the filing thereof, at Tenant’s sole
cost and shall otherwise keep the Premises and the Project free from any liens arising out of work
performed, materials furnished or obligations incurred by Tenant. Should Tenant fail to discharge
any lien described herein, Landlord shall have the right, but not the obligation, to pay such claim
or post a bond or otherwise provide security to eliminate the lien as a claim against title to the
Project and the cost thereof shall be immediately due from Tenant as Additional Rent. If Tenant
shall lease



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or finance 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 will 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 Project be furnished on
the statement without qualifying language as to applicability of the lien only to removable
personal property, located in an identified suite held by Tenant.




     16. Indemnification. Tenant hereby indemnifies and agrees to defend, save and hold Landlord
harmless from and against any and all Claims for injury or death to persons or damage to property
occurring within or about the Premises, arising directly or indirectly out of use or occupancy of
the Premises or a breach or default by Tenant in the performance of any of its obligations
hereunder, unless caused solely by the willful misconduct or gross negligence of Landlord.
Landlord shall not be liable to Tenant for, and Tenant assumes all risk of damage to, personal
property (including, without limitation, loss of records kept within the Premises). Tenant further
waives any and all Claims for injury to Tenant’s business or loss of income relating to any such
damage or destruction of personal property (including, without limitation, any loss of records).
Landlord shall not be liable for any damages arising from any act, omission or neglect of any
tenant in the Project or of any other third party.



     17. Insurance. Landlord shall maintain all risk property and, if applicable, sprinkler damage
insurance covering the full replacement cost of the Project. Landlord shall further procure and
maintain commercial general liability insurance with a single loss limit of not less than
$2,000,000 for bodily injury and property damage with respect to the Project. Landlord may, but is
not obligated to, maintain such other insurance and additional coverages as it may deem necessary,
including, but not limited to, flood, environmental hazard and earthquake, loss or failure of
building equipment, errors and omissions, rental loss during the period of repair or rebuilding,
workers’ compensation insurance and fidelity bonds for employees employed to perform services and
insurance for any improvements installed by Tenant or which are in addition to the standard
improvements customarily furnished by Landlord without regard to whether or not such are made a
part of the Project. All such insurance shall be included as part of the Operating Expenses. The
Project may be included in a blanket policy (in which case the cost of such insurance allocable to
the Project will be determined by Landlord based upon the insurer’s cost calculations).



     Tenant, at its sole cost and expense, shall maintain during the Term: all risk property
insurance with business interruption and extra expense coverage, covering the full replacement cost
of all property and improvements installed or placed in the Premises by Tenant at Tenant’s expense;
workers’ compensation insurance with no less than the minimum limits required by law; employer’s
liability insurance with such limits as required by law; commercial general liability insurance,
with a minimum limit of not less than $2,000,000 per occurrence for bodily injury and property
damage with respect to the Premises and pollution legal liability insurance with a minimum limit of
not less than $2,000,000 per occurrence. The commercial general liability insurance policy shall
name Landlord, its officers, directors, employees, managers, agents, invitees and contractors
(collectively, “Landlord Parties”), as additional insureds. The commercial general liability and
any pollution legal liability insurance policies shall insure on an occurrence and not a
claims-made basis; shall be issued by insurance companies which have a rating of not less than
policyholder rating of A and



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financial category rating of at least Class X in “Best’s Insurance Guide”; shall not be
cancelable for nonpayment of premium unless 30 days prior written notice shall have been given to
Landlord from the insurer; contain a hostile fire endorsement and a contractual liability
endorsement; and provide primary coverage to Landlord (any policy issued to Landlord providing
duplicate or similar coverage shall be deemed excess over Tenant’s policies). Such policies or
certificates thereof shall be delivered to Landlord by Tenant upon commencement of the Term and
upon each renewal of said insurance. Tenant’s policy may be a “blanket policy” with an aggregate
per location endorsement which specifically provides that the amount of insurance shall not be
prejudiced by other losses covered by the policy. Tenant shall, at least 5 days prior to the
expiration of such policies, furnish Landlord with renewal certificates.




     In each instance where insurance is to name Landlord as an additional insured, Tenant shall
upon written request of Landlord also designate and furnish certificates so evidencing Landlord as
additional insured to: (i) any lender of Landlord holding a security interest in the Project or any
portion thereof, (ii) the landlord under any lease wherein Landlord is tenant of the real property
on which the Project is located, if the interest of Landlord is or shall become that of a tenant
under a ground or other underlying lease rather than that of a fee owner, and/or (iii) any
management company retained by Landlord to manage the Project.



     The property insurance obtained by Landlord and Tenant shall include a waiver of subrogation
by the insurers and all rights based upon an assignment from its insured, against Landlord or
Tenant, and their respective officers, directors, employees, managers, agents, invitees and
contractors (“Related Parties”), in connection with any loss or damage thereby insured against.
Neither party nor its respective Related Parties shall be liable to the other for loss or damage
caused by any risk insured against under property insurance required to be maintained hereunder,
and each party waives any claims against the other party, and its respective Related Parties, for
such loss or damage. The failure of a party to insure its property shall not void this waiver.
Landlord and its respective Related Parties shall not be liable for, and Tenant hereby waives all
claims against such parties for, business interruption and losses occasioned thereby sustained by
Tenant or any person claiming through Tenant resulting from any accident or occurrence in or upon
the Premises or the Project from any cause whatsoever. If the foregoing waivers shall contravene
any law with respect to exculpatory agreements, the liability of Landlord or Tenant shall be deemed
not released but shall be secondary to the other’s insurer.



     Landlord may require insurance policy limits to be raised to conform with requirements of
Landlord’s lender and/or to bring coverage limits to levels then being generally required of new
tenants within the Project.



     18. Restoration. If at any time during the Term the Project or the Premises are damaged or
destroyed by a fire or other insured casualty, Landlord shall notify Tenant within 60 days after
discovery of such damage as to the amount of time Landlord reasonably estimates it will take to
restore the Project or the Premises, as applicable (the “Restoration Period”). If the Restoration
Period is estimated to exceed 12 months (the “Maximum Restoration Period”), Landlord may, in such
notice, elect to terminate this Lease as of the date that is 75 days after the data of discovery of
such damage or destruction; provided, however, that notwithstanding Landlord’s
election to restore, Tenant may elect to terminate this Lease by written notice to Landlord
delivered within 5 business



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days of receipt of a notice from Landlord estimating a Restoration Period for the Premises
longer than the Maximum Restoration Period. Unless either Landlord or Tenant so elects to
terminate this Lease, Landlord shall, subject to receipt of sufficient insurance proceeds (with any
deductible to be treated as a current Operating Expense), promptly restore the Premises (excluding
the improvements installed by Tenant or by Landlord and paid for by Tenant, subject to delays
arising from the collection of insurance proceeds, from Force Majeure events or as needed to obtain
any license, clearance or other authorization of any kind required to enter into and restore the
Premises issued by any Governmental Authority having jurisdiction over the use, storage, handling,
treatment, generation, release, disposal, removal or remediation of Hazardous Materials (as defined
in Section 30) in, on or about the Premises (collectively referred to herein as “Hazardous
Materials Clearances”); provided, however, that if repair or restoration of the
Premises is not substantially complete as of the end of the Maximum Restoration Period or, if
longer, the Restoration Period, Landlord may, in its sole and absolute discretion, elect not to
proceed with such repair and restoration, or Tenant may by written notice to Landlord delivered
within 5 business days of the expiration of the Maximum Restoration Period or, if longer, the
Restoration Period, elect to terminate this Lease, in which event Landlord shall be relieved of its
obligation to make such repairs or restoration and this Lease shall terminate as of the date that
is 75 days after the later of: (i) discovery of such damage or destruction, or (ii) the date all
required Hazardous Materials Clearances are obtained, but Landlord shall retain any Rent paid and
the right to any Rent payable by Tenant prior to such election by Landlord or Tenant.




     Tenant, at its expense, shall promptly perform, subject to delays arising from the collection
of insurance proceeds, from Force Majeure (as defined in Section 34) events or to obtain
Hazardous Material Clearances, all repairs or restoration not required to be done by Landlord and
shall promptly re-enter the Premises and commence doing business in accordance with this Lease.
Notwithstanding the foregoing, Landlord may terminate this Lease if the Premises are damaged during
the last year of the Term and Landlord reasonably estimates that it will take more than 2 months to
repair such damage, or if insurance proceeds are not available for such restoration. Rent shall be
abated from the date all required Hazardous Material Clearances are obtained until the Premises are
repaired and restored, in the proportion which the area of the Premises, if any, which is not
usable by Tenant bears to the total area of the Premises, unless Landlord provides Tenant with
other space during the period of repair that is suitable for the temporary conduct of Tenant’s
business. Such abatement shall be the sole remedy of Tenant, and except as provided herein, Tenant
waives any right to terminate the Lease by reason of damage or casualty loss.



     The provisions of this Lease, including this Section 18, constitute an express
agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all
or any part of the Premises, or any other portion of the Project, and any statute or regulation
which is now or may hereafter be in effect shall have no application to this Lease or any damage or
destruction to all or any part of the Premises or any other portion of the Project, the parties
hereto expressly agreeing that this Section 18 sets forth their entire understanding and
agreement with respect to such matters.



     19. Condemnation. If the whole or any material part of the Premises or the Project is taken
for any public or quasi-public use under governmental law, ordinance, or regulation, or by right of
eminent domain, or by private purchase in lieu thereof (a “Taking” or “Taken”), and the Taking
would in Landlord’s reasonable judgment either prevent or materially interfere with Tenant’s



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use of the Premises or materially interfere with or impair Landlord’s ownership or operation
of the Project, then upon written notice by Landlord this Lease shall terminate and Rent shall be
apportioned as of said date. If part of the Premises shall be Taken, and this Lease is not
terminated as provided above, Landlord shall promptly restore the Premises and the Project as
nearly as is commercially reasonable under the circumstances to their condition prior to such
partial Taking and the rentable square footage of the Building, the rentable square footage of the
Premises, Tenant’s Share of Operating Expenses and the Rent payable hereunder during the unexpired
Term shall be reduced to such extent as may be fair and reasonable under the circumstances. Upon
any such Taking, Landlord shall be entitled to receive the entire price or award from any such
Taking without any payment to Tenant, and Tenant hereby assigns to Landlord Tenant’s interest, if
any, in such award. Tenant shall have the right, to the extent that same shall not diminish
Landlord’s award, to make a separate claim against the condemning authority (but not Landlord) for
such compensation as may be separately awarded or recoverable by Tenant for moving expenses and
damage to Tenant’s trade fixtures, if a separate award for such items is made to Tenant. Tenant
hereby waives any and all rights it might otherwise have pursuant to any provision of state law to
terminate this Lease upon a partial Taking of the Premises or the Project.




     20. Events of Default. Each of the following events shall be a default (“Default”) by Tenant
under this Lease:



          (a) Payment Defaults. Tenant shall fail to pay any installment of Rent or any other payment
hereunder when due; provided, however, that Landlord will give Tenant notice and an opportunity to
cure any failure to pay Rent within 3 days of any such notice not more than once in any 12 month
period and Tenant agrees that such notice shall be in lieu of and not in addition to, or shall be
deemed to be, any notice required by law.




          (b) Insurance. Any insurance required to be maintained by Tenant pursuant to this Lease shall
be canceled or terminated or shall expire or shall be reduced or materially changed, or Landlord
shall receive a notice of nonrenewal of any such insurance and Tenant shall fail to obtain
replacement insurance at least 20 days before the expiration of the current coverage.




          (c) Other Default. An uncured default occurs under any other lease by and between Landlord
and Tenant after the lapse of all applicable notice and cure periods thereunder.




          (d) Improper Transfer. Tenant shall assign, sublease or otherwise transfer or attempt to
transfer all or any portion of Tenant’s interest in this Lease or the Premises except as expressly
permitted herein, or Tenant’s interest in this Lease shall be attached, executed upon, or otherwise
judicially seized and such action is not released within 90 days of the action.




          (e) Liens. Tenant shall fail to discharge or otherwise obtain the release of any lien placed
upon the Premises in violation of this Lease within 10 days after any such lien is filed against
the Premises.




          (f) Insolvency Events. Tenant or any guarantor or surety of Tenant’s obligations hereunder
shall: (A) make a general assignment for the benefit of creditors; (B) commence any case,
proceeding or other action seeking to have an order for relief entered on its behalf as a debtor or
to



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adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or of any substantial part of its
property (collectively a “Proceeding for Relief”); (C) become the subject of any Proceeding for
Relief which is not dismissed within 90 days of its filing or entry; or (D) die or suffer a legal
disability (if Tenant, guarantor, or surety is an individual) or be dissolved or otherwise fail to
maintain its legal existence (if Tenant, guarantor or surety is a corporation, partnership or other
entity).




          (g) Estoppel Certificate or Subordination Agreement. Tenant fails to execute any document
required from Tenant under Sections 23 or 27 within 5 days after a second notice
requesting such document.




          (h) Other Defaults. Tenant shall fail to comply with any provision of this Lease other than
those specifically referred to in this Section 20, and, except as otherwise expressly
provided herein, such failure shall continue for a period of 30 days after written notice thereof
from Landlord to Tenant.



Any notice given under Section 20(h) hereof shall: (i) specify the alleged default, (ii)
demand that Tenant cure such default, (iii) be in lieu of, and not in addition to, or shall be
deemed to be, any notice required under any provision of applicable law, and (iv) not be deemed a
forfeiture or a termination of this Lease unless Landlord elects otherwise in such notice;
provided that if the nature of Tenant’s default pursuant to Section 20(h) is such
that it cannot be cured by the payment of money and reasonably requires more than 30 days to cure,
then Tenant shall not be deemed to be in default if Tenant commences such cure within said 30 day
period and thereafter diligently prosecutes the same to completion; provided,
however, that such cure shall be completed no later than 150 days from the date of
Landlord’s notice.




     21. Landlord’s Remedies.



          (a) Payment By Landlord; Interest. Upon a Default by Tenant hereunder, Landlord may, without
waiving or releasing any obligation of Tenant hereunder, make such payment or perform such act.
All sums so paid or incurred by Landlord, together with interest thereon, from the date such sums
were paid or incurred, at the annual rate equal to 12% per annum or the highest rate permitted by
law (the “Default Rate”), whichever is less, shall be payable to Landlord on demand as Additional
Rent. Nothing herein shall be construed to create or impose a duty on Landlord to mitigate any
damages resulting from Tenant’s Default hereunder.




          (b) Late Payment Rent. Late payment by Tenant to Landlord of Rent and other sums due will
cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impracticable to ascertain. Such costs include, but are not limited to,
processing and accounting charges and late charges which may be imposed on Landlord under any
Mortgage covering the Premises. Therefore, if any installment of Rent due from Tenant is not
received by Landlord within 5 days after the date such payment is due, Tenant shall pay to Landlord
an additional sum equal to 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 Landlord will incur by reason



-18-









 






of late payment by Tenant. In addition to the late charge, Rent not paid when due shall bear
interest at the Default Rate from the 5th day after the date due until paid.




          (c) Remedies. Upon the occurrence of a Default, Landlord, at its option, without further
notice or demand to Tenant, shall have in addition to all other rights and remedies provided in
this Lease, at law or in equity, the option to pursue any one or more of the following remedies,
each and all of which shall be cumulative and nonexclusive, without any notice or demand
whatsoever.




               (i) Terminate this Lease, or at Landlord’s option; Tenant’s right to possession only, in which
event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for possession or arrearages
in rent, enter upon and take possession of the Premises and expel or remove Tenant and any other
person who may be occupying the Premises or any part thereof, without being liable for prosecution
or any claim or damages therefor;



               (ii) Upon any termination of this Lease, whether pursuant to the foregoing Section
21(c)(i) or otherwise, Landlord may recover from Tenant the following:



                    (A) The worth at the time of award of any unpaid rent which has been earned at the time of
such termination; plus



                    (B) The worth at the time of award of the amount by which the unpaid rent which would have
been earned after termination until the time of award exceeds the amount of such rental loss that
Tenant proves 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 the amount of such rental loss that Tenant proves 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 which in the ordinary course of
things would be likely to result therefrom, specifically including, but not limited to, brokerage
commissions and advertising expenses incurred, expenses of remodeling the Premises or any portion
thereof for a new tenant, whether for the same or a different use, and any special concessions made
to obtain a new tenant; and



                    (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 law.


The term “rent” as used in this Section 21 shall be deemed to be and to mean all sums of
every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord
or to others. As used in Sections 21(c)(ii)(A) and (B), above, the “worth at the
time of award” shall be computed by allowing interest at the Default Rate. As used in Section
21(c)(ii)(C) above, the “worth at the time of award” shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus
1%.




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               (iii) Landlord may continue this Lease in effect after Tenant’s Default and recover rent as it
becomes due (Landlord and Tenant hereby agreeing that Tenant has the right to sublet or assign
hereunder, subject only to reasonable limitations). Accordingly, if Landlord does not elect to
terminate this Lease following a Default by Tenant, Landlord may, from time to time, without
terminating this Lease, enforce all of its rights and remedies hereunder, including the right to
recover all Rent as it becomes due.



               (iv) Whether or not Landlord elects to terminate this Lease following a Default by Tenant,
Landlord shall have the right to terminate any and all subleases, licenses, concessions or other
consensual arrangements for possession entered into by Tenant and affecting the Premises or may, in
Landlord’s sole discretion, succeed to Tenant’s interest in such subleases, licenses, concessions
or arrangements. Upon Landlord’s election to succeed to Tenant’s interest in any such subleases,
licenses, concessions or arrangements, Tenant shall, as of the date of notice by Landlord, of such
election, have no further right to or interest in the rent or other consideration receivable
thereunder.



               (v) Independent of the exercise of any other remedy of Landlord hereunder or under applicable
law, Landlord may conduct an environmental test of the Premises as generally described in
Section 30(d) hereof, at Tenant’s expense.



          (d) Effect of Exercise. Exercise by Landlord of any remedies hereunder or otherwise available
shall not be deemed to be an acceptance of surrender of the Premises and/or a termination of this
Lease by Landlord, it being understood that such surrender and/or termination can be effected only
by the express written agreement of Landlord and Tenant. Any law, usage, or custom to the contrary
notwithstanding, Landlord shall have the right at all times to enforce the provisions of this Lease
in strict accordance with the terms hereof; and the failure of Landlord at any time to enforce its
rights under this Lease strictly in accordance with same shall not be construed as having created a
custom in any way or manner contrary to the specific terms, provisions, and covenants of this Lease
or as having modified the same and shall not be deemed a waiver of Landlord’s right to enforce one
or more of its rights in connection with any subsequent default. A receipt by Landlord of Rent or
other payment with knowledge of the breach of any covenant hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be deemed to have been
made unless expressed in writing and signed by Landlord. To the greatest extent permitted by taw,
Tenant waives the service of notice of Landlord’s intention to re-enter, re-take or otherwise
obtain possession of the Premises as provided in any statute, or to institute legal proceedings to
that end, and also waives all right of redemption in case Tenant shall be dispossessed by a
judgment or by warrant of any court or judge. Any reletting of the Premises or any portion thereof
shall be on such terms and conditions as Landlord in its sole discretion may determine. Landlord
shall not be liable for, nor shall Tenant’s obligations hereunder be diminished because of,
Landlord’s failure to relet the Premises or collect rent due in respect of such reletting or
otherwise to mitigate any damages arising by reason of Tenant’s Default.




     22. Assignment and Subletting.



          (a) General Prohibition. Without Landlord’s prior written consent subject to and on the
conditions described in this Section 22, Tenant shall not, directly or indirectly,
voluntarily or



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by operation of law, assign this Lease or sublease the Premises or any part thereof or
mortgage, pledge, or hypothecate its leasehold interest or grant any concession or license within
the Premises, and any attempt to do any of the foregoing shall be void and of no effect. If Tenant
is a corporation, partnership or limited liability company, the shares or other ownership interests
thereof which are not actively traded upon a stock exchange or in the over-the-counter market, a
transfer or series of transfers whereby 25% or more of the issued and outstanding shares or other
ownership interests of such corporation are, or voting control is, transferred (but excepting
transfers upon deaths of individual owners) from a person or persons or entity or entities which
were owners thereof at time of execution of this Lease to persons or entities who were not owners
of shares or other ownership interests of the corporation, partnership or limited liability company
at time of execution of this Lease, shall be deemed an assignment of this Lease requiring the
consent of Landlord as provided in this Section 22.




          (b) Permitted Transfers. If Tenant desires to assign, sublease, hypothecate or otherwise
transfer this Lease or sublet the Premises other than pursuant to a Permitted Assignment (as
defined below), then at least 15 business days, but not more than 45 business days, before the date
Tenant desires the assignment or sublease to be effective (the “Assignment Date”), Tenant shall
give Landlord a notice (the “Assignment Notice”) containing such information about the proposed
assignee or sublessee, including the proposed use of the Premises and any Hazardous Materials
proposed to be used, stored handled, treated, generated in or released or disposed of from the
Premises, the Assignment Date, any relationship between Tenant and the proposed assignee or
sublessee, and all material terms and conditions of the proposed assignment or sublease, including
a copy of any proposed assignment or sublease in its final form, and such other information as
Landlord may deem reasonably necessary or appropriate to its consideration whether to grant its
consent. Landlord may, by giving written notice to Tenant within 15 business days after receipt of
the Assignment Notice: (i) grant or refuse such consent, in its sole discretion with respect to a
proposed assignment, hypothecation or other transfer or subletting of more than (together with all
other then effective subleases) 50% of the Premises, or grant or refuse such consent, in its
reasonable discretion with respect to a proposed subletting of up to (together with all other then
effective subleases) 50% of the Premises (provided that Landlord shall further have the right to
review and approve or disapprove the proposed form of sublease prior to the effective date of any
such subletting), or (ii) terminate this Lease with respect to the space described in the
Assignment Notice as of the Assignment Date (an “Assignment Termination”). If Landlord elects an
Assignment Termination, Tenant shall have the right to withdraw such Assignment Notice by written
notice to Landlord of such election within 5 days after Landlord’s notice electing to exercise the
Assignment Termination. If Tenant withdraws such Assignment Notice, this Lease shall continue in
full force and effect. If Tenant does not withdraw such Assignment Notice, this Lease, and the
term and estate herein granted, shall terminate as of the Assignment Date with respect to the space
described in such Assignment Notice. No failure of Landlord to exercise any such option to
terminate this Lease shall be deemed to be Landlord’s consent to the proposed assignment, sublease
or other transfer. Tenant shall reimburse Landlord for all of Landlord’s reasonable out-of-pocket
expenses in connection with its consideration of any Assignment Notice not to exceed $5,000 in
connection with any single Assignment Notice.




     Notwithstanding the foregoing, Landlord’s consent to an assignment of this Lease or a
subletting of any portion of the Premises to any entity controlled by Tenant shall not be required,



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provided that Landlord shall have the right to approve the form of any such sublease or
assignment. In addition, Tenant shall have the right to assign this Lease, upon 30 days prior
written notice to Landlord but without obtaining Landlord’s prior written consent, to a corporation
or other entity which is a successor-in-interest to Tenant, by way of merger, consolidation or
corporate reorganization, or by the purchase of all or substantially all of the assets or the
ownership interests of Tenant provided that (i) such merger or consolidation, or such acquisition
or assumption, as the case may be, is for a good business purpose and not principally for the
purpose of transferring the Lease, and (ii) the net worth (as determined in accordance with
generally accepted accounting principles (“GAAP”)) of the assignee is not less than the net worth
(as determined in accordance with GAAP) of Tenant as of the date of Tenant’s most current quarterly
or annual financial statements, and (iii) such assignee shall agree in writing to assume all of the
terms, covenants and conditions of this Lease arising after the effective date of the assignment (a
“Permitted Assignment”).




          (c) Additional Conditions. As a condition to any such assignment or subletting, whether or
not Landlord’s consent is required, Landlord may require:




               (i) that any assignee or subtenant agree, in writing at the time of such assignment or
subletting, that if Landlord gives such party notice that Tenant is in default under this Lease,
such party shall thereafter make all payments otherwise due Tenant directly to Landlord, which
payments will be received by Landlord without any liability except to credit such payment against
those due under the Lease, and any such third party shall agree to attorn to Landlord or its
successors and assigns should this Lease be terminated for any reason; provided,
however, in no event shall Landlord or its successors or assigns be obligated to accept
such attornment; and



               (ii) A list of Hazardous Materials, certified by the proposed assignee or sublessee to be true
and correct, which the proposed assignee or sublessee intends to use, store, handle, treat,
generate in or release or dispose of from the Premises, together with copies of all documents
relating to such use, storage, handling, treatment, generation, release or disposal of Hazardous
Materials by the proposed assignee or subtenant in the Premises or on the Project, prior to the
proposed assignment or subletting, including, without limitation: permits; approvals; reports and
correspondence; storage and management plans; plans relating to the installation of any storage
tanks to be installed in or under the Project (provided, said Installation of tanks shall
only be permitted after Landlord has given its written consent to do so, which consent may be
withheld in Landlord’s sole and absolute discretion); and all closure plans or any other documents
required by any and all federal, state and local Governmental Authorities for any storage tanks
installed in, on or under the Project for the closure of any such tanks. Neither Tenant nor any
such proposed assignee or subtenant is required, however, to provide Landlord with any portion(s)
of the such documents containing information of a proprietary nature which, in and of themselves,
do not contain a reference to any Hazardous Materials or hazardous activities.



          (d) No Release of Tenant, Sharing of Excess Rents. Notwithstanding any assignment or
subletting, Tenant and any guarantor or surety of Tenant’s obligations under this Lease shall at
all times remain fully and primarily responsible and liable for the payment of Rent and for
compliance with all of Tenant’s other obligations under this Lease. If the Rent due and payable by
a sublessee or assignee (or a combination of the rental payable under such sublease or assignment
plus any bonus or other consideration therefor or incident thereto in any form) exceeds the rental
payable



-22-









 






under this Lease, (excluding however, any Rent payable under this Section) (“Excess Rent”),
then Tenant shall be bound and obligated to pay Landlord as Additional Rent hereunder 50% of such
Excess Rent within 10 days following receipt thereof by Tenant. If Tenant shall sublet the
Premises or any part 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 Landlord
as assignee and as attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord’s
application, may collect such rent and apply it toward Tenant’s obligations under this Lease;
except that, until the occurrence of a Default, Tenant shall have the right to collect such rent.




          (e) No Waiver. The consent by Landlord to an assignment or subletting shall not relieve
Tenant or any assignees of this Lease or any sublessees of the Premises from obtaining the consent
of Landlord to any further assignment or subletting nor shall it release Tenant or any assignee or
sublessee of Tenant from full and primary liability under the Lease. The acceptance of Rent
hereunder, or the acceptance of performance of any other term, covenant, or condition thereof, from
any other person or entity shall not be deemed to be a waiver of any of the provisions of this
Lease or a consent to any subletting, assignment or other transfer of the Premises.




          (f) Prior Conduct of Proposed Transferee. Notwithstanding any other provision of this
Section 22, if (i) the proposed assignee or sublessee of Tenant has been required by any
prior landlord, lender or Governmental Authority to take remedial action in connection with
Hazardous Materials contaminating a property, where the contamination resulted from such party’s
action or use of the property in question, (ii) the proposed assignee or sublessee is subject to an
enforcement order issued by any Governmental Authority in connection with the use, storage,
handling, treatment, generation, release or disposal of Hazardous Materials (including, without
limitation, any order related to the failure to make a required reporting to any Governmental
Authority), or (iii) because of the existence of a pre-existing environmental condition in the
vicinity of or underlying the Project, the risk that Landlord would be targeted as a responsible
party in connection with the remediation of such pre-existing environmental condition would be
materially increased or exacerbated by the proposed use of Hazardous Materials by such proposed
assignee or sublessee, Landlord shall have the absolute right to refuse to consent to any
assignment or subletting to any such party.




     23. Estoppel Certificate. Tenant shall, within 10 business days of written notice from
Landlord, execute, acknowledge and deliver a statement in writing in any form reasonably requested
by a proposed lender or purchaser, (i) certifying that this Lease is unmodified and in full force
and effect (or, if modified, stating the nature of such modification and certifying that this Lease
as so modified is in full force end affect) and the dates to which the rental and other charges are
paid in advance, if any, (ii) acknowledging that there are not any uncured defaults on the part of
Landlord hereunder, or specifying such defaults if any are claimed, and (iii) setting forth such
further information with respect to the status of 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 time shall, at the option of Landlord, constitute a Default under this
Lease, and, in any event, shall be conclusive 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.



-23-









 





     24. Quiet Enjoyment. So long as Tenant shall perform all of the covenants and agreements
herein required to be performed by Tenant, Tenant shall, subject to the terms of this Lease, at all
times during the Term, have peaceful and quiet enjoyment of the Premises against any person
claiming by, through or under Landlord.



     25. Prorations. All prorations required or permitted to be made hereunder shall be made on
the basis of a 360 day year and 30 day months.



     26. Rules and Regulations. Tenant shall, at all times during the Term, comply with all
reasonable rules and regulations at any time or from time to time established by Landlord covering
use of the Premises and the Project. The current rules and regulations are attached hereto as
Exhibit E. If there is any conflict between said rules and regulations and other provisions of
this Lease, the terms and provisions of this Lease shall control. Landlord shall not have any
liability or obligation for the breach of any rules or regulations by other tenants in the Project
and shall not enforce such rules and regulations in a discriminatory manner.



     27. Subordination. This Lease and Tenant’s interest and rights hereunder are and shall be
subject and subordinate at all times to the lien of any Mortgage now existing or hereafter created
on or against the Project or the Premises, and all amendments, restatements, renewals,
modifications, consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant; provided, however
that so long as there is no Default hereunder, Tenant’s right to possession of the Premises shall
not be disturbed by the Holder of any such Mortgage. Tenant agrees, at the election of the Holder
of any such Mortgage, to attorn to any such Holder. Tenant agrees upon demand to execute,
acknowledge and deliver such instruments, confirming such subordination, and such instruments of
attornment as shall be requested by any such Holder, provided any such instruments contain
appropriate non-disturbance provisions assuring Tenant’s quiet enjoyment of the Premises as set
forth in Section 24 hereof. Notwithstanding the foregoing, any such Holder may at any time
subordinate its Mortgage to this Lease, without Tenant’s consent, by notice in writing to Tenant,
and thereupon this Lease shall be deemed prior to such Mortgage without regard to their respective
dates of execution, delivery or recording and in that event such Holder shall have the same rights
with respect to this Lease as though this Lease had been executed prior to the execution, delivery
and recording of such Mortgage and had been assigned to such Holder. The term “Mortgage” whenever
used in this Lease shall be deemed to include deeds of trust, security assignments and any other
encumbrances, and any reference to the “Holder” of a Mortgage shall be deemed to include the
beneficiary under a deed of trust.



     28. Surrender. Upon the expiration of the Term or earlier termination of Tenant’s right of
possession, Tenant shall surrender the Premises to Landlord in the same condition as received,
subject to any Alterations or Installations permitted by Landlord to remain in the Premises, free
of Hazardous Materials brought upon, kept, used, stored, handled, treated, generated in, or
released or disposed of from, the Premises by any person other than a Landlord Party (collectively,
"Tenant HazMat Operations”) and released of all Hazardous Materials Clearances, broom clean,
ordinary wear and tear and casualty loss and condemnation covered by Sections 18 and
19 excepted. At least 3 months prior to the surrender of the Premises, Tenant shall
deliver to Landlord a narrative description of the actions proposed (or required by any
Governmental Authority) to be taken by Tenant in order to surrender the Premises (including any
Installations permitted by Landlord to




-24-











 




remain in the Premises) at the expiration or earlier termination of the Term, free from any
residual impact from the Tenant HazMat Operations and otherwise released for unrestricted use and
occupancy (the “Surrender Plan”). Such Surrender Plan shall be accompanied by a current listing of
(i) all Hazardous Materials licenses and permits held by or on behalf of any Tenant Party with
respect to the Premises, and (ii) all Hazardous Materials used, stored, handled, treated,
generated, released or disposed of from the Premises, and shall be subject to the review and
approval of Landlord’s environmental consultant. In connection with the review and approval of the
Surrender Plan, upon the request of Landlord, Tenant shall deliver to Landlord or its consultant
such additional non-proprietary information concerning Tenant HazMat Operations as Landlord shall
request. On or before such surrender, Tenant shall deliver to Landlord evidence that the approved
Surrender Plan shall have been satisfactorily completed and Landlord shall have the right, subject
to reimbursement at Tenant’s expense as set forth below, to cause Landlord’s environmental
consultant to inspect the Premises and perform such additional procedures as may be deemed
reasonably necessary to confirm that the Premises are, as of the effective date of such surrender
or early termination of the Lease, free from any residual impact from Tenant HazMat Operations.
Tenant shall reimburse Landlord, as Additional Rent, for the actual out-of pocket expense incurred
by Landlord for Landlord’s environmental consultant to review and approve the Surrender Plan and to
visit the Premises and verify satisfactory completion of the same, which cost shall not exceed
$5,000. Landlord shall have the unrestricted right to deliver such Surrender Plan and any report
by Landlord’s environmental consultant with respect to the surrender of the Premises to third
parties.




     If Tenant shall fail to prepare or submit a Surrender Plan approved by Landlord, or if Tenant
shall fail to complete the approved Surrender Plan, or if such Surrender Plan, whether or not
approved by Landlord, shall fail to adequately address any residual effect of Tenant HazMat
Operations in, on or about the Premises, Landlord shall have the right to take such actions as
Landlord may deem reasonable or appropriate to assure that the Premises and the Project are
surrendered free from any residual impact from Tenant HazMat Operations, the cost of which actions
shall be reimbursed by Tenant as Additional Rent, without regard to the limitation set forth in the
first paragraph of this Section 28.



     Tenant shall immediately return to Landlord all keys and/or access cards to parking, the
Project, restrooms or all or any portion of the Premises furnished to or otherwise procured by
Tenant. If any such access card or key is lost, Tenant shall pay to Landlord, at Landlord’s
election, either the cost of replacing such lost access card or key or the cost of reprogramming
the access security system in which such access card was used or changing the lock or locks opened
by such lost key. Any Tenant’s Property, Alterations and property not so removed by Tenant as
permitted or required herein shall be deemed abandoned and may be stored, removed, and disposed of
by Landlord at Tenant’s expense, and Tenant waives all claims against Landlord for any damages
resulting from Landlord’s retention and/or disposition of such property. All obligations of Tenant
hereunder not fully performed as of the termination of the Term, including the obligations of
Tenant under Section 30 hereof, shall survive the expiration or earlier termination of the
Term, including, without limitation, indemnity obligations, payment obligations with respect to
Rent and obligations concerning the condition and repair of the Premises.



     29. Waiver of Jury Trial. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY JURY OR TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE,



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WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE,
BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.




     30. Environmental Requirements.



          (a) Prohibition/Compliance/Indemnity. Tenant shall not cause or permit any Hazardous
Materials (as hereinafter defined) to be brought upon, kept, used, stored, handled, treated,
generated in or about, or released or disposed of from, the Premises or the Project in violation of
applicable Environmental Requirements (as hereinafter defined) by Tenant or any Tenant Party. If
Tenant breaches the obligation stated in the preceding sentence, or if the presence of Hazardous
Materials in the Premises during the Term or any holding over results in contamination of the
Premises, the Project or any adjacent property or if contamination of the Premises, the Project or
any adjacent property by Hazardous Materials brought into, kept, used, stored, handled, treated,
generated in or about, or released or disposed of from, the Premises by anyone other than Landlord
and Landlord’s employees, agents and contractors otherwise occurs during the Term or any holding
over, Tenant hereby indemnifies and shall defend and hold Landlord, its officers, directors,
employees, agents and contractors harmless from any and all actions (including, without limitation,
remedial or enforcement actions of any kind, administrative or judicial proceedings, and orders or
judgments arising out of or resulting therefrom), costs, claims, damages (including, without
limitation, punitive damages and damages based upon diminution in value of the Premises or the
Project, or the loss of, or restriction on, use of the Premises or any portion of the Project),
expenses (including, without limitation, attorneys’, consultants’ and experts’ fees, court costs
and amounts paid in settlement of any claims or actions), fines, forfeitures or other civil,
administrative or criminal penalties, injunctive or other relief (whether or not based upon
personal injury, property damage, or contamination of, or adverse effects upon, the environment,
water tables or natural resources), liabilities or losses (collectively, “Environmental Claims”)
which arise during or after the Term as a result of such contamination. This indemnification of
Landlord by Tenant includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, treatment, remedial, removal, or restoration work
required by any federal, state or local Governmental Authority because of Hazardous Materials
present in the air, soil or ground water above, on, or under the Premises. Without limiting the
foregoing, if the presence of any Hazardous Materials on the Premises, the Project or any adjacent
property caused or permitted by Tenant or any Tenant Party results in any contamination of the
Premises, the Project or any adjacent property, Tenant shall promptly take all actions at its sole
expense and in accordance with applicable Environmental Requirements as are necessary to return the
Premises, the Project or any adjacent property to the condition existing prior to the time of such
contamination, provided that Landlord’s approval of such action shall first be obtained, which
approval shall not unreasonably be withheld so long as such actions would not potentially have any
material adverse long-term or short-term effect on the Premises or the Project




          (b) Business. Landlord acknowledges that it is not the intent of this Section 30 to
prohibit Tenant from using the Premises for the Permitted Use. Tenant may operate its business
according to prudent industry practices so long as the use or presence of Hazardous Materials is
strictly and properly monitored according to all then applicable Environmental Requirements. As a




-26-









 







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 Commencement Date a list identifying
each type of Hazardous Materials to be brought upon, kept, used, stored, handled, treated,
generated on, or released or disposed of from, the Premises and setting forth any and all
governmental approvals or permits required in connection with the presence, use, storage, handling,
treatment, generation, release or disposal of such Hazardous Materials on or from the Premises
(“Hazardous Materials List”). Tenant shall deliver to Landlord an updated Hazardous Materials List
at least once a year and shall also deliver an updated list before any new Hazardous Material is
brought onto, kept, used, stored, handled, treated, generated on, or released or disposed of from,
the Premises. Tenant shall deliver to Landlord true and correct copies of the following documents
(the “Haz Mat Documents”) relating to the use, storage, handling, treatment, generation, release or
disposal of Hazardous Materials prior to the Commencement Date, or if unavailable at that time,
concurrent with the receipt from or submission to a Governmental Authority: permits; approvals;
reports and correspondence; storage and management plans, notice of violations of any Legal
Requirements; plans relating to the installation of any storage tanks to be installed in or under
the Project (provided, said installation of tanks shall only be permitted after Landlord
has given Tenant its written consent to do so, which consent may be withheld in Landlord’s sole and
absolute discretion); all closure plans or any other documents required by any and all federal,
state and local Governmental Authorities for any storage tanks installed in, on or under the
Project for the closure of any such tanks; and a Surrender Plan (to the extent surrender in
accordance with Section 28 cannot be accomplished in 3 months). Tenant is not required,
however, to provide Landlord with any portion(s) of the Haz Mat Documents containing information of
a proprietary nature which, in and of themselves, do not contain a reference to any Hazardous
Materials or hazardous activities. It is not the intent of this Section to provide Landlord with
information which could be detrimental to Tenant’s business should such information become
possessed by Tenant’s competitors.




          (c) Tenant Representation and Warranty. Tenant hereby represents and warrants to Landlord
that (i) neither Tenant nor any of its legal predecessors has been required by any prior landlord,
lender or Governmental Authority at any time to take remedial action in connection with Hazardous
Materials contaminating a property which contamination was permitted by Tenant of such predecessor
or resulted from Tenant’s or such predecessor’s action or use of the property in question, and (ii)
Tenant is not subject to any enforcement order issued by any Governmental Authority in connection
with the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials
(including, without limitation, any order related to the failure to make a required reporting to
any Governmental Authority). If Landlord determines that this representation and warranty was not
true as of the date of this lease, Landlord shall have the right to terminate this Lease in
Landlord’s sole and absolute discretion.




          (d) Testing. Landlord shall have the right to conduct annual tests of the Premises to
determine whether any contamination of the Premises or the Project has occurred as a result of
Tenant’s use. Tenant shall be required to pay the cost of such annual test of the Premises;
provided, however, that if Tenant conducts its own tests of the Premises using third party
contractors and test procedures acceptable to Landlord which tests are certified to Landlord,
Landlord shall accept such tests in lieu of the annual tests to be paid for by Tenant. In
addition, at any time, and from time to time, prior to the expiration or earlier termination of the
Term, Landlord shall have the right to conduct appropriate tests of the Premises and the Project to
determine if contamination has occurred




-27-









 







as a result of Tenant’s use of the Premises. In connection
with such testing, upon the request of Landlord, Tenant shall deliver to Landlord or its consultant
such non-proprietary information concerning the use of Hazardous Materials in or about the Premises
by Tenant or any Tenant Party. If contamination has occurred for which Tenant is liable under this
Section 30, Tenant shall pay all costs to conduct such tests. If no such contamination is
found, Landlord shall pay the costs of such tests (which shall not constitute an Operating
Expense). Landlord shall provide Tenant with a copy of all third party, non-confidential reports
and tests of the Premises made by or on behalf of Landlord during the Term without representation
or warranty and subject to a confidentiality agreement. Tenant shall, at its sole cost and
expense, promptly and satisfactorily remediate any environmental conditions identified by such
testing in accordance with all Environmental Requirements. Landlord’s receipt of or satisfaction
with any environmental assessment in no way waives any rights which Landlord may have against
Tenant.




          (e) Underground Tanks. If underground or other storage tanks storing Hazardous Materials
located on the Premises or the Project are used by Tenant or are hereafter placed on the Premises
or the Project by Tenant, Tenant shall install, use, monitor, operate, maintain, upgrade and manage
such storage tanks, maintain appropriate records, obtain and maintain appropriate insurance,
implement reporting procedures, properly close any underground storage tanks, and take or cause to
be taken all other actions necessary or required under applicable state and federal Legal
Requirements, as such now exists or may hereafter be adopted or amended in connection with the
installation, use, maintenance, management, operation, upgrading and closure of such storage tanks.




          (f) Tenant’s Obligations. Tenant’s obligations under this Section 30 shall survive
the expiration or earlier termination of the Lease. During any period of time after the expiration
or earlier termination of this Lease required by Tenant or Landlord to complete the removal from
the Premises of any Hazardous Materials (including, without limitation, the release and termination
of any licenses or permits restricting the use of the Premises and the completion of the approved
Surrender Plan), Tenant shall continue to pay the full Rent in accordance with this Lease for any
portion of the Premises not relet by Landlord in Landlord’s sole discretion, which Rent shall be
prorated dally.




          (g) Definitions. As used herein, the term “Environmental Requirements” means all applicable
present and future statutes, regulations, ordinances, rules, codes, judgments, orders or other
similar enactments of any Governmental Authority regulating or relating to health, safety, or
environmental conditions on, under, or about the Premises or the Project, or the environment,
including without limitation, the following: the Comprehensive Environmental Response, Compensation
and Liability Act; the Resource Conservation and Recovery Act; and all state and local counterparts
thereto, and any regulations or policies promulgated or issued thereunder. As used herein, the
term “Hazardous Materials” means and includes any substance, material, waste, pollutant, or contaminant listed or defined as hazardous or toxic, or
regulated by reason of its impact or potential impact on humans, animals and/or the environment
under any Environmental Requirements, asbestos and petroleum, including crude oil or any fraction
thereof, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures
of natural gas and such synthetic gas). As defined in Environmental Requirements, Tenant is and
shall be deemed to be the “operator” of Tenant’s “facility” and the “owner” of all Hazardous
Materials brought on




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the Premises by Tenant or any Tenant Party, and the wastes, by-products, or
residues generated, resulting, or produced therefrom.




     31. Tenant’s Remedies/Limitation of Liability. Landlord shall not be in default hereunder
unless Landlord fails to perform any of its obligations hereunder within 30 days after written
notice from Tenant specifying such failure (unless such performance will, due to the nature of the
obligation, require a period of time in excess of 30 days, then after such period of time as is
reasonably necessary). Upon any default by Landlord, Tenant shall give notice by registered or
certified mail to any Holder of a Mortgage covering the Premises and to any landlord of any lease
of property in or on which the Premises are located and Tenant shall offer such Holder and/or
landlord a reasonable opportunity to cure the default, including time to obtain possession of the
Project by power of sale or a judicial action if such should prove necessary to effect a cure;
provided Landlord shall have furnished to Tenant in writing the names and addresses of all
such persons who are to receive such notices. All obligations of Landlord hereunder shall be
construed as covenants, not conditions; and, except as may be otherwise expressly provided in this
Lease, Tenant may not terminate this Lease for breach of Landlord’s oblations hereunder.



     All obligations of Landlord under this Lease will be binding upon Landlord only during the
period of its ownership of the Premises and not thereafter. The term “Landlord” in this Lease
shall mean only the owner for the time being of the Premises. Upon the transfer by such owner of
its interest in the Premises, such owner shall thereupon be released and discharged from all
obligations of Landlord thereafter accruing, but such obligations shall be binding during the Term
upon each new owner for the duration of such owner’s ownership.



     32. Inspection and Access. Landlord and its agents, representatives, and contractors may
enter the Premises at any reasonable time to inspect the Premises and to make such repairs as may
be required or permitted pursuant to this Lease and for any other business purpose. Landlord and
Landlord’s representatives may enter the Premises during business hours on not less than 48 hours
advance written notice (except in the case of emergencies in which case no such notice shall be
required and such entry may be at any time) for the purpose of effecting any such repairs,
inspecting the Premises, showing the Premises to prospective purchasers and, during the last year
of the Term, to prospective tenants or for any other business purpose. Landlord may erect a
suitable sign on the premises stating the Premises are available to let or that the Project is
available for sale. Landlord may grant easements, make public dedications, designate Common Areas
and create restrictions on or about the Premises, provided that no such easement,
dedication, designation or restriction materially, adversely affects Tenant’s use or occupancy of
the Premises for the Permitted Use. At Landlord’s request, Tenant shall execute such instruments
as may be necessary for such easements, dedications or restrictions. Tenant shall at all times,
except in the case of emergencies, have the right to escort Landlord or its agents,
representatives, contractors or guests while the same are in the Premises, provided such escort does not materially and adversely affect Landlord’s
access rights hereunder.



     33. Security. Tenant acknowledges and agrees that security devices and services, if any,
while intended to deter crime may not in given instances prevent theft or other criminal acts and
that Landlord is not providing any security services with respect to the Premises. Tenant agrees
that Landlord shall not be liable to Tenant for, and Tenant waives any claim against Landlord with



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respect to, any loss by theft or any other damage suffered or incurred by Tenant in connection with
any unauthorized entry into the Premises or any other breach of security with respect to the
Premises. Tenant shall be solely responsible for the personal safety of Tenant’s officers,
employees, agents, contractors, guests and invitees while any such person is in, on or about the
Premises and/or the Project. Tenant shall at Tenant’s cost obtain insurance coverage to the extent
Tenant desires protection against such criminal acts.




     34. Force Majeure. Landlord shall not be held responsible for delays in the performance of
its obligations hereunder when caused by strikes, lockouts, labor disputes, weather, natural
disasters, inability to obtain labor or materials or reasonable substitutes therefor, governmental
restrictions, governmental regulations, governmental controls, delay in issuance of permits, enemy
or hostile governmental action, civil commotion, fire or other casualty, and other causes beyond
the reasonable control of Landlord (“Force Majeure”).



     35. Brokers, Entire Agreement, Amendment. Landlord and Tenant each represents and warrants
that it has not dealt with any broker, agent or other person (collectively, “Broker”) in connection
with this transaction and that no Broker brought about this transaction. Landlord and Tenant each
hereby agree to indemnify and hold the other harmless from and against any claims by any Broker,
other than the broker, if any named in this Section 35, claiming a commission or other form
of compensation by virtue of having dealt with Tenant or Landlord, as applicable, with regard to
this leasing transaction.



     36. Limitation on Landlord’s Liability. NOTWITHSTANDING ANYTHING SET FORTH HEREIN OR IN ANY
OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE CONTRARY: (A) LANDLORD SHALL NOT BE LIABLE TO
TENANT OR ANY OTHER PERSON FOR (AND TENANT AND EACH SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS,
DAMAGE OR INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO: TENANT’S PERSONAL PROPERTY OF EVERY KIND AND
DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT, INVENTORY, SCIENTIFIC
RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS, PRODUCT, SPECIMENS, SAMPLES, AND/OR
SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER RECORDS OF EVERY KIND AND DESCRIPTION KEPT AT THE
PREMISES AND ANY AND ALL INCOME DERIVED OR DERIVABLE THEREFROM; (B) THERE SHALL BE NO PERSONAL
RECOURSE TO LANDLORD FOR ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN ANY WAY
UNDER THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND ANY LIABILITY OF LANDLORD HEREUNDER SHALL BE STRICTLY LIMITED SOLELY TO
LANDLORD’S INTEREST IN THE PROJECT OR ANY PROCEEDS FROM SALE OR CONDEMNATION THEREOF AND ANY
INSURANCE PROCEEDS PAYABLE IN RESPECT OF LANDLORD’S INTEREST IN THE PROJECT OR IN CONNECTION WITH ANY
SUCH LOSS; AND (C) IN NO EVENT SHALL ANY PERSONAL LIABILITY BE ASSERTED AGAINST LANDLORD IN
CONNECTION WITH THIS LEASE NOR SHALL ANY RECOURSE BE HAD TO ANY OTHER PROPERTY OR ASSETS OF
LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS. UNDER NO
CIRCUMSTANCES SHALL LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
CONTRACTORS BE



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LIABLE FOR INJURY TO TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT
THEREFROM.




     37. Severability. If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws, than and in that event, it is the intention of the
parties hereto that the remainder of this Lease shall not be affected thereby. It is also the
intention of the parties to this Lease that in lieu of each clause or provision of this Lease that
is illegal, invalid or unenforceable, there be added, as a part of this Lease, a clause or
provision as similar in effect to such illegal, invalid or unenforceable clause or provision as
shall be legal, valid and enforceable.



     38. Signs; Exterior Appearance. Tenant shall not, without the prior written consent of
Landlord, which may be granted or withheld in Landlord’s sole discretion: (i) attach any awnings,
exterior lights, decorations, balloons, flags, pennants, banners, painting or other projection to
any outside wall of the Project, (ii) use any curtains, blinds, shades or screens other than
Landlord’s standard window coverings, (iii) coat or otherwise sunscreen the interior or exterior of
any windows, (iv) place any bottles, parcels, or other articles on the window sills, (v) place any
equipment, furniture or other items of personal property on any exterior balcony, or (vi) paint,
affix or exhibit on any part of the Premises or the Project any signs, notices, window or door
lettering, placards, decorations, or advertising media of any type which can be viewed from the
exterior of the Premises. Interior signs on doors and the directory tablet shall be inscribed,
painted or affixed for Tenant by Landlord at the sole cost and expense of Tenant, and shall be of a
size, color and type acceptable to Landlord. Nothing may be placed on the exterior of corridor
walls or corridor doors other than Landlord’s standard lettering. The directory tablet shall be
provided exclusively for the display of the name and location of tenants.



     39. Miscellaneous.



          (a) Notices. All notices or other communications between the parties shall be in writing and
shall be deemed duly given upon delivery or refusal to accept delivery by the addressee thereof if
delivered in person, or upon actual receipt if delivered by reputable overnight guaranty courier,
addressed and sent to the parties at their addresses set forth above. Landlord and Tenant may from
time to time by written notice to the other designate another address for receipt of future
notices.




          (b) Joint and Several Liability. If and when included within the term “Tenant,” as used in
this instrument, there is more than one person or entity, each shall be jointly and severally
liable for the obligations of Tenant




          (c) Recordation. Neither this Lease nor a memorandum of lease shall be filed by or on behalf
of Tenant in any public record. Landlord may prepare and file, and upon request by Landlord Tenant
will execute, a memorandum of lease.




          (d) Interpretation. The normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be employed in the interpretation of this Lease or
any exhibits or amendments hereto. Words of any gender used in this Lease shall be held and
construed to include any other gender, and words in the singular number shall be held to




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include
the plural, unless the context otherwise requires. The captions inserted in this Lease are for
convenience only and in no way define, limit or otherwise describe the scope or intent of this
Lease, or any provision hereof, or in any way affect the interpretation of this Lease.




          (e) Not Binding Until Executed. The submission by Landlord to Tenant of this Lease shall have
no binding force or effect, shall not constitute an option for the leasing of the Premises, nor
confer any right or impose any obligations upon either party until execution of this Lease by both
parties.




          (f) Limitations on Interest. It is expressly the intent of Landlord and Tenant at all times
to comply with applicable law governing the maximum rate or amount of any interest payable on or in
connection with this Lease. If applicable law is ever judicially interpreted so as to render
usurious any interest called for under this Lease, or contracted for, charged, taken, reserved, or
received with respect to this Lease, then it is Landlord’s and Tenant’s express intent that all
excess amounts theretofore collected by Landlord be credited on the applicable obligation (or, if
the obligation has been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter collectible hereunder
reduced, without the necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise called for
hereunder.




          (g) Choice of Law. Construction and interpretation of this Lease shall be governed by the
internal laws of the state in which the Premises are located, excluding any principles of conflicts
of laws.




          (h) Time. Time is of the essence as to the performance of Tenant’s obligations under this
Lease.




          (i) Incorporation by Reference. All exhibits and addenda attached hereto are hereby
incorporated into this Lease and made a part hereof. If there is any conflict between such
exhibits or addenda and the terms of this Lease, such exhibits or addenda shall control.




          (j) Notwithstanding any other provision of this Lease, Landlord, for itself and its employees,
agents and contractors, reserves the right to refuse to perform any repairs or services in any
portion of the Premises which, pursuant to Tenant’s routine safety guidelines, practices or custom
or prudent industry practices, require any form of protective clothing or equipment other than
safety glasses. In any such case, Tenant shall contract with parties who are acceptable to
Landlord, in Landlord’s reasonable discretion, for all such repairs and services, and Landlord
shall, to the extent required, equitably adjust Tenant’s Share of Operating Expenses in respect of
such repairs or services to reflect that Landlord is not providing such repairs or services to
Tenant.





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



	 	 	 	 	 
	 	TENANT:



Primal, Inc.,

a Washington corporation

 	 
	 	By:  	
/s/ Leslie Dietz Kaplan
 	 
	 	Its: 	COO 	 
	 	 	 	 



	 	 	 	 	 
	 	LANDLORD:



Alexandria Real Estate Equities, Inc.,

a Maryland corporation

 	 
	 	By:  	/s/ Laurie A. Allen
 	 
	 	Its: 	Senior Vice President, Business 	 
	 	 	Development & Legal Affairs 	 



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EXHIBIT A TO LEASE




DESCRIPTION OF PREMISES




(followed by a map of the project)





 









 










 









 








EXHIBIT B TO LEASE




DESCRIPTION OF PROJECT




(followed by a description and drawing)





 









 







EXHIBIT “B”








 











 








EXHIBIT C TO LEASE




[Tenant Build]




WORK LETTER





     THIS WORK LETTER dated as of September 28, 2001 (this “Work Letter”) is made and entered into
by and between Alexandria Real Estate Equities, Inc., a Maryland corporation (“Landlord”), and
Primal, Inc., a Washington corporation (“Tenant”), and is attached to and made a part of the Lease
dated as of September 28, 2001 (the “Lease”), by and between Landlord and Tenant. Any initially
capitalized terms used but not defined herein shall have the meanings given them in the Lease.



     1. General Requirements




          (a) Tenant’s Authorized Representative. Tenant designates Leslie Dietz Kaplan and Marcia
Strackhouse (either such individual acting alone, “Tenant’s Representative”) as the only persons
authorized to act for Tenant pursuant to this Work Letter. Landlord shall not be obligated to
respond to or act upon any request, approval, inquiry or other communication (“Communication”) from
or on behalf of Tenant in connection with this Work Letter unless such Communication is in writing
from Tenant’s Representative. Tenant may change either Tenant’s Representative at any time upon
not less than 5 business days advance written notice to Landlord. No period set forth herein for
any approval of any matter by Tenant’s Representative shall be extended by reason of any change in
Tenant’s Representative. Neither Tenant nor Tenant’s Representative shall be authorized to direct
Landlord’s contractors in the performance of Landlord’s Work (as hereinafter defined).




          (b) Landlord’s Authorized Representative. Landlord designates Radika Ratna and Vin Ciruzzi
(either such individual acting alone, “Landlord’s Representative”) as the only persons authorized
to act for Landlord pursuant to this Work Letter. Tenant shall not be obligated to respond to or
act upon any request, approval, inquiry or other Communication from or on behalf of Landlord in
connection with this Work Letter unless such Communication is in writing from Landlord’s
Representative. Landlord may change either Landlord’s Representative at any time upon not less
than 5 business days advance written notice to Tenant. No period set forth herein for any approval
of any matter by Landlord’s Representative shall be extended by reason of any change in Landlord’s
Representative. Landlord’s Representative shall be the sole persons authorized to direct
Landlord’s contractors in the performance of Landlord’s Work.




          (c) Architects, Consultants and Contractors. Landlord and Tenant hereby acknowledge and agree
that the architect (the “Architect”) for the Tenant Improvements, the general contractor and any
subcontractors for the Tenant Improvements shall be selected by Tenant, subject to Landlord’s
approval, which approval shall not be unreasonably withheld, conditioned or delayed.




          (d) Development Schedule. The schedule for design and development of the Tenant Improvements
(as defined below), including without limitation the time periods for delivery of construction
documents and performance, shall be in accordance with the Development Schedule




 









 







attached hereto as Schedule A, subject to adjustment as mutually agreed by the parties in
writing or as provided in this Work Letter (the “Development Schedule”).




          (e) Landlord’s Obligations. Other than funding the TI Allowance and the Base Building
Allowance (as such terms are defined below) and reviewing and approving or disapproving Tenant’s
submittals as provided herein, Landlord shall not have any obligation whatsoever with respect to
the finishing of the Premises or the Project for Tenant’s use and occupancy.




     2. Tenant Improvements.




          (a) Definitions. As used herein: “Tenant Improvements” shall mean all improvements to the
Premises desired by Tenant of a fixed and permanent nature. “Base Building Improvements” shall
mean those improvements to the Project generally described on Schedule B attached hereto.




          (b) Base Building Improvements. Tenant acknowledges and agrees that:




               (i) Landlord has contracted with Corixa Corporation, a Delaware corporation (“Corixa”), for
the construction of the Base Building Improvements pursuant to that certain Work Letter dated as of
September 17, 2001, by and between Landlord and Corixa (the “Corixa Work Letter”), and



               (ii) Except for Landlord’s obligation to fund the Base Building Allowance (as defined below)
to Corixa as described in the Corixa Work Letter, Landlord shall have no obligation of any kind
with respect to the design, construction or completion of the Base Building Improvements.



          (c) Tenant’s Space Plans. Tenant shall deliver to Landlord schematic drawings and outline
specifications (the “TI Design Drawings”) detailing Tenant’s requirements for the Tenant
Improvements within 30 business days of the date hereof. Not more than 10 business days
thereafter, Landlord shall deliver to Tenant the written objections, questions or comments of
Landlord with regard to the TI Design Drawings. Tenant shall cause the TI Design Drawings to be
revised to address such written comments and shall resubmit said drawings to Landlord for approval
within 10 business days thereafter. Such process shall continue until Landlord has approved the TI
Design Drawings.




          (d) Working Drawings. Not later than 45 business days following the approval of the Design
Drawings by Landlord, Tenant shall cause the Architect to prepare and deliver to Landlord for
review and comment construction plans, specifications and drawings for the Tenant Improvements (the
"TI Construction Drawings”), which TI Construction Drawings shall be prepared substantially in
accordance with the TI Design Drawings. Tenant shall be solely responsible for ensuring that the
TI Construction Drawings reflect Tenant’s requirements for the Tenant Improvements. Landlord shall
deliver its written comments on the TI Construction Drawings to Tenant not later than 10 business
days after Landlord’s receipt of the same; provided, however, that Landlord may not
disapprove any matter that is consistent with the TI Design Drawings. Tenant and the Architect
shall consider all such comments in good faith and shall, within 10 business days




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after receipt, notify Landlord how Tenant proposes to respond to such comments. Any disputes
in connection with such comments shall be resolved in accordance with Section 2(d) hereof.
Provided that the design reflected in the TI Construction Drawings is consistent with the TI Design
Drawings, Landlord shall approve the TI Construction Drawings submitted by Tenant. Once approved
by Landlord, subject to the provisions of Section 2(d) below, Tenant shall not materially
modify the TI Construction Drawings except as may be reasonably required in connection with the
issuance of the Building Permit (as defined in Section 3(b) below).




          (e) Approval and Completion. Upon any dispute regarding the design of the Tenant
Improvements, which is not settled within 10 business days after notice of such dispute is
delivered by one party to the other, Tenant shall make the final decision regarding the design of
the Tenant Improvements, provided Tenant acts reasonably and such final decision is either
consistent with or a compromise between Landlord’s and Tenant’s positions with respect to such
dispute, provided further that all costs and expenses resulting from any such decision by Tenant
shall be payable out of the TI Fund (as defined in Section 5(d) below). Any changes to the
TI Construction Drawings following Landlord’s and Tenant’s approval of same requested by Tenant
shall be processed as provided in Section 4 hereof.




     3. Performance of Tenant’s Work.




          (a) Definition of Tenant’s Work. As used herein, “Tenant’s Work” shall mean the work of
constructing the Tenant Improvements.




          (b) Commencement and Permitting of Tenant’s Work. Tenant shall commence construction of the
Tenant Improvements upon obtaining a building permit (the “Building Permit”) authorizing the
construction of the Tenant Improvements consistent with the TI Construction Drawings approved by
Landlord. The cost of obtaining the Building Permit shall be payable from the TI Fund. Landlord
shall assist Tenant in obtaining the Building Permit.




          (c) Selection of Materials, Etc. Where more than one type of material or structure is
indicated on the TI Construction Drawings approved by Tenant and Landlord, the option will be
within Tenant’s reasonable discretion.




     4. Changes. Any changes requested by Tenant to the Tenant Improvements after the delivery and
approval by Landlord of the TI Design Drawings, shall be requested and instituted in accordance
with the provisions of this Section 4 and shall be subject to the written approval of
Landlord, such approval not to be unreasonably withheld, conditioned or delayed.



          (a) Tenant’s Right to Request Changes. If Tenant shall request changes (“Changes”), Tenant
shall request such Changes by notifying Landlord in writing in substantially the same form as the
AIA standard change order form (a “Change Request”), which Change Request shall detail the nature
and extent of any such Change. Tenant’s Representative must sign such Change Request. Landlord
shall review and approve or disapprove such Change Request within 10 business days thereafter,
provided that Landlord’s approval shall not be unreasonably withheld, conditioned or delayed.




-3-









 








          (b) Implementation of Changes. If Landlord approves such Change and Tenant funds any Excess
TI Costs (as defined in Section 5(d) below) required in connection with such Charge, Tenant
may cause the approved Change to be instituted.




     5. Costs.




          (a) Budget For Tenant Improvements. Before the commencement of construction of the Tenant
Improvements, Tenant shall obtain detailed breakdowns, by trade, of the costs incurred or which
will be incurred, in connection with the design and construction of the Tenant Improvements (the
“Budget”). The Budget shall be based upon the TI Construction Drawings approved by Landlord and
shall include a payment to Landlord of administrative rent (“Administrative Rent”) equal to 1.50%
of the Costs (as hereinafter defined) for monitoring and inspecting the construction of Tenant’s
Work, which sum shall be payable from the TI Fund. Such Administrative Rent shall include, without
limitation, all out-of-pocket costs, expenses and fees incurred by or on behalf of Landlord arising
from, out of, or in connection with, such monitoring of the construction of the Tenant
Improvements, and shall be payable out of the TI Fund.




          (b) TI Allowance. Landlord shall provide to Tenant a tenant improvement allowance (“TI
Allowance”) of $15.00 per rentable square foot of the Premises. The TI Allowance shall be
disbursed in accordance with this Work Letter. Tenant shall have no right to the use or benefit
(including any reduction to Base Rent) of any portion of the TI Allowance not required for the
construction of (i) the Tenant Improvements described in the TI Construction Drawings approved
pursuant to Section 2(d) or (ii) any Changes to the Tenant Improvements pursuant to
Section 4.




          (c) Base Building Allowance. Tenant acknowledges and agrees that the Base Building
Improvements will benefit primarily Level B of the Annex to the Project, where the Premises are
located, and Level C, which Corixa proposes to lease. On condition that Landlord and Corixa enter
into a binding lease (the “Corixa Lease”) for Level C on substantially the terms proposed in that
certain letter dated June 5, 2001, from Landlord to Corixa, Landlord shall provide to Corixa an
allowance for the cost of the Base Building Improvements in an amount not to exceed $750,000 (the
“Base Building Allowance”). The Base Building Allowance shall be disbursed in accordance with the
Corixa Work Letter. Tenant shall have no right to the use or benefit (including any reduction to
Base Rent) of any portion of the Base Building Allowance not required for the construction of (i)
the Base Building Improvements described in the TI Construction Drawings approved pursuant to
Section 2(d) of the Corixa Work Letter or (ii) any Changes to the Base Building
Improvements pursuant to Section 4 of the Corixa Work Letter.




          (d) Costs Includable in TI Fund. The TI Fund shall be used solely for the payment of design
and construction costs in connection with the construction of the Tenant Improvements, including,
without limitation, the cost of preparing the TI Design Drawings and the TI Construction Drawings,
all costs set forth in the Budget, including Landlord’s Administrative Rent, and the cost of
Changes (collectively, “TI Costs”). Notwithstanding anything to the contrary contained herein, the
TI Fund shall not be used to purchase any furniture, personal property or other non-Building System
materials or equipment, including, but not be limited to, biological safety cabinets and other
scientific equipment not incorporated into the Tenant Improvements.




-4-









 








          (e) Excess Costs. It is understood and agreed that Landlord is under no obligation to bear
any portion of the cost of any of the Tenant Improvements except to the extent of the TI Allowance.
If at any time and from time-to-time, the remaining TI Costs under the Budget exceed the remaining
unexpended TI Allowance (“Excess Costs”), Tenant shall thereafter pay directly all TI Costs until
the remaining TI Costs under the Budget are equal to or less than the remaining unexpended TI
Allowance. If Tenant fails to make any such payment (i) Landlord shall have no obligation to fund
any additional amounts of the TI Allowance unless and until the remaining TI Costs under the Budget
is equal to or less than the remaining unexpended TI Allowance and (ii) Landlord shall have all of
the rights and remedies set forth in the Lease for nonpayment of Rent, and for purposes of any
litigation instituted with regard to such amounts the same will be considered Rent. Such Excess
Costs, together with the remaining TI Allowance, are herein referred to as the “TI Fund.”
Notwithstanding anything to the contrary set forth in this Section 5(e), Tenant shall be
fully and solely liable for TI Costs and the cost of Minor Variations (as defined below) in excess
of the TI Allowance. If upon Substantial Completion (as defined below) of the Tenant Improvements
and the payment of all sums due in connection therewith there remains any undisbursed TI Fund,
Tenant shall be entitled to such undisbursed TI Fund solely to the extent of any Excess Costs
funded directly by Tenant. The term “Substantial Completion” shall mean the substantial completion
of Tenant’s Work in a good and workmanlike manner, in accordance with the Building Permit subject
to Minor Variations and normal “punch list” items of a non-material nature which do not interfere
with the use of the common areas or the Premises. Upon the Substantial Completion of Tenant’s
Work, the Architect and the general contractor shall execute and deliver, for the benefit of Tenant
and Landlord, a Certificate of Substantial Completion in the form of the American Institute of
Architects document G704. The term “Minor Variations” shall mean any modifications reasonably
required: (i) to comply with all applicable Legal Requirements and/or to obtain or to comply with
any required permit (including the Building Permit); (ii) to comply with any request by Tenant for
modifications to Tenant’s Work; (iii) to comport with good design, engineering, and construction
practices which are not material; or (iv) to make reasonable adjustments for field deviations or
conditions encountered during the construction of Tenant’s Work.




          (f) Excess Base Building Costs Funding Obligation. Tenant hereby agrees to fund 48% of any
Base Building Costs in excess of the Base Building Allowance, within 5 days of any notice from
Landlord that such excess Base Building Costs are due and payable. If upon Substantial Completion
(as defined below) of the Base Building Improvements and the payment of all sums due in connection
therewith there remains any undisbursed Base Building Allowance, Tenant shall be entitled to such
undisbursed Base Building Allowance solely to the extent of any excess Base Building Costs actually
funded by Tenant.




          (g) Payment for TI Costs. Landlord shall once a month no later than 30 days following receipt
a draw request on Landlord’s standard form containing such certifications, lien waivers, inspection
reports and other matters as Landlord customarily obtains, to the extent of (a) Landlord’s approval
thereof for payment and (b) Landlord’s obligation to pay TI Costs as herein provided reimburse
Tenant for TI Costs paid by Tenant. Upon completion of the Tenant Improvements, Tenant shall
deliver to Landlord: (i) final lien waivers from all such contractors and subcontractors; and (ii)
“as built” plans for such Tenant Improvements, including plans in electronic format.




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     6. Miscellaneous.




          (a) Consents. Whenever consent or approval of either party is required under this Work
Letter, that party shall not unreasonably withhold, condition or delay such consent or approval,
except as may be expressly set forth herein to the contrary.




          (b) Modification. No modification, waiver or amendment of this Work Letter or of any of its
conditions or provisions shall be binding upon Landlord or Tenant unless in writing signed by
Landlord and Tenant.




          (c) Counterparts. This Work Letter may be executed in any number of counterparts but all
counterparts taken together shall constitute a single document.




          (d) Governing Law. This Work Letter shall be governed by, construed and enforced in
accordance with the internal laws of the state in which the Premises are located, without regard to
choice of law principles of such State.




          (e) Time of the Essence. Time is of the essence of this Work Letter and of each and all
provisions thereof.




          (f) Default. Notwithstanding anything set forth herein or in the Lease to the contrary,
Landlord shall not have any obligation to perform any work hereunder or to fund any portion of the
TI Fund during any period Tenant is in Default under the Lease.




          (g) Severability. If any term or provision of this Work Letter is declared invalid or
unenforceable, the remainder of this Work Letter shall not be affected by such determination and
shall continue to be valid and enforceable.




          (h) Merger. All understandings and agreements, oral or written, heretofore made between the
parties hereto and relating to Tenant’s Work are merged in this Work Letter, which alone (but
inclusive of provisions of the Lease incorporated herein and the final approved constructions
drawings and specifications prepared pursuant hereto) fully and completely expresses the agreement
between Landlord and Tenant with regard to the matters set forth in this Work Letter.




          (i) Entire Agreement. This Work Letter is made as a part of and pursuant to the Lease and,
together with the Lease, constitutes the entire agreement of the parties with respect to the
subject matter hereof. This Work Letter is subject to all of the terms and limitation set forth in
the Lease, and neither party shall have any rights or remedies under this Work Letter separate and
apart from their respective remedies pursuant to the Lease.




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



	 	 	 	 	 
	 	TENANT:



Primal, Inc.,

a Washington corporation

 	 
	 	By:  	/s/ Leslie Dietz Kaplan 	 
	 	Its: 	COO 	 
	 



	 	 	 	 	 
	 	LANDLORD:



Alexandria Real Estate Equities, Inc.,

a Maryland corporation

 	 
	 	By:  	/s/ Laurie A. Allen
 	 
	 	Its: 	Senior Vice President, Business 	 
	 	 	Development & Legal Affairs 	 



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SCHEDULE A TO WORK LETTER




Development Schedule




	 	 	 
	Event	 	Date
	Execution of lease
	 	10/19/01
	Naming of Tenant’s Representatives
	 	10/11/01
	Delivery of
space plans for Design Drawings pursuant to Section 2(b) of the Work Letter
	 	9/14/01
	Delivery of
Preliminary TI Plans for pursuant to Section 2(c) of the Work Letter
	 	9/28/01
	Delivery of
Construction Drawings pursuant to Section 2(d) of the Work Letter
	 	10/12/01
	Commence construction of Tenant Improvements
	 	10/15/01
	Substantial Completion of Tenant Improvements
	 	2/15/02
	Issuance of Temporary Certificate of Occupancy
	 	2/15/02






 









 






SCHEDULE B TO WORK LETTER




Base Building Work




     The installation of an approximately 5,000 pound capacity roped hydraulic, hospital style
elevator serving Levels A, B and C of the Annex to the Project. The cab will incorporate front and
rear openings allowing direct access from lower levels to the basement level. The clear cab will
have larger than standard openings to accommodate oversized deliveries, supply carts and other
oversized equipment. Approximate dimensions of the cab should be 95” long, 66” wide and 96” high,
with door openings 48” wide and 84” high.



     The installation of new multi-stall, men’s and women’s toilets and housekeeping facilities on
Level B as required per local codes for support to the entire floor.



 









 





EXHIBIT D TO LEASE




ACKNOWLEDGMENT OF COMMENCEMENT DATE




     This ACKNOWLEDGMENT OF COMMENCEMENT DATE is made as of September 28, 2001, between Alexandria
Real Estate Equities, Inc., a Maryland corporation (“Landlord”), and Primal, Inc., a Washington
corporation (“Tenant”), and is attached to and made a part of the Lease dated as of September 28,
2001 (the “Lease”), by and between Landlord and Tenant. Any initially capitalized terms used but
not defined herein shall have the meanings given them in the Lease.



     Landlord and Tenant hereby acknowledge and agree, for all purposes of the Lease, that the
Commencement Date of the Base Term of the Lease is October 1, 2001, the Rent Commencement Date is
December 17, 2001, and the termination date of the Base Term of the Lease shall be midnight on
April 30, 2005.



     IN WITNESS WHEREOF, Landlord and Tenant have executed this ACKNOWLEDGMENT OF COMMENCEMENT DATE
to be effective on the data first above written.



	 	 	 	 	 
	 	TENANT:



Primal, Inc.,

a Washington corporation

 	 
	 	By:  	/s/ Leslie Dietz Kaplan 	 
	 	Its: 	COO 	 
	 



	 	 	 	 	 
	 	LANDLORD:



Alexandria Real Estate Equities, Inc.,

a Maryland corporation

 	 
	 	By:  	/s/ Laurie A. Allen
 	 
	 	Its: 	Senior Vice President, Business 	 
	 	 	Development & Legal Affairs 	 



 









 






	 	 	 	 	 



EXHIBIT E TO LEASE




Rules and Regulations





     1. The sidewalk, entries, and driveways of the Project shall not be obstructed by Tenant, or
any Tenant Party, or used by them for any purpose other than ingress and egress to and from the
Premises.



     2. Tenant shall not place any objects, including antennas, outdoor furniture, etc., in the
parking areas, landscaped areas or other areas outside of its Premises, or on the roof of the
Project.



     3. Except for animals assisting the disabled or animals necessary to Tenant’s research and
development activities, no animals shall be allowed in the offices, halls, or corridors in the
Project



     4. Tenant shall not disturb the occupants of the Project or adjoining buildings by the use of
any radio or musical instrument or by the making of loud or improper noises.



     5. If Tenant desires telegraphic, telephonic or other electric connections in the Premises,
Landlord or its agent will direct the electrician as to where and how the wires may be introduced;
and, without such direction, no boring or cutting of wires will be permitted. Any such
installation or connection shall be made at Tenant’s expense.



     6. Tenant shall not install or operate any steam or gas engine or boiler, or other mechanical
apparatus in the Premises, except as specifically approved in the Lease. The use of oil, gas or
inflammable liquids for heating, lighting or any other purpose is expressly prohibited. Explosives
or other articles deemed extra hazardous shall not be brought into the Project.



     7. Parking any type of recreational vehicles is specifically prohibited on or about the
Project. Except for the overnight parking of operative vehicles, no vehicle of any type shall be
stored in the parking areas at any time. In the event that a vehicle is disabled, it shall be
removed within 48 hours. There shall be no “For Sale” or other advertising signs on or about any
parked vehicle. All vehicles shall be parked in the designated parking areas in conformity with
all signs and other markings. All parking will be open parking, and no reserved parking, numbering
or lettering of individual spaces will be permitted except as specified by Landlord.



     8. Tenant shall maintain the Premises free from rodents, insects and other pests.



     9. Landlord reserves the right to exclude or expel from the Project any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or drugs or who shall in any
manner do any act in violation of the Rules and Regulations of the Project.



     10. Tenant shall not cause any unnecessary labor by reason of Tenant’s carelessness or
indifference in the preservation of good order and cleanliness. Landlord shall not be responsible
to Tenant for any loss of properly on the Premises, however occurring, or for any damage done to
the effects of Tenant by the janitors or any other employee or person.



 









 





     11. Tenant shall give Landlord prompt notice of any defects in the water, lawn sprinkler,
sewage, gas pipes, electrical lights and fixtures, heating apparatus, or any other service
equipment affecting the Premises.



     12. Tenant shall not permit storage outside the Premises, including without limitation,
outside storage of trucks and other vehicles, or dumping of waste or refuse or permit any harmful
materials to be placed in any drainage system or sanitary system in or about the Premises.



     13. All moveable trash receptacles provided by the trash disposal firm for the Premises must
be kept in the trash enclosure areas, if any, provided for that purpose.



     14. No auction, public or private, will be permitted on the Premises or the Project.



     15. No awnings shall be placed over the windows in the Premises except with the prior written
consent of Landlord.



     16. The Premises shall not be used for lodging, sleeping or cooking or for any immoral or
illegal purposes or for any purpose other than that specified in the Lease. No gaming devices
shall be operated in the Premises.



     17. Tenant shall ascertain from Landlord the maximum amount of electrical current which can
safely be used in the Premises, taking into account the capacity of the electrical wiring in the
Project and the Premises and the needs of other tenants, and shall not use more than such safe
capacity. Landlord’s consent to the installation of electric equipment shall not relieve Tenant
from the obligation not to use more electricity than such safe capacity.



     18. Tenant assumes full responsibility for protecting the Premises from theft, robbery and
pilferage.



     19. Tenant shall not install or operate on the Premises any machinery or mechanical devices of
a nature not directly related to Tenant’s ordinary use of the Premises and shall keep all such
machinery free of vibration, noise and air waves which may be transmitted beyond the Premises.



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EXHIBIT F TO LEASE




TENANT’S PERSONAL PROPERTY




None except as set forth below: