Exhibit 10.1


 





 


STANDARD
INDUSTRIAL/COMMERCIAL


MULTI-TENANT LEASE - GROSS


AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION


 


1.                                         Basic Provisions (“Basic Provisions”).


 


1.1


 


Parties: This Lease (“Lease”), dated for reference purposes only March 21, 2005,
is made by and between 7-L NorthCreek, LLC (“Lessor”) and Lipid Sciences, Inc., a Delaware corporation (“Lessee”), (collectively the “Parties”,
or individually a “Party”). 


 


1 .2(a)     Premises:  That
certain portion of the Project (as defined below), including all improvements
therein or to be provided by Lessor under the terms of this Lease, commonly
known by the street address of 7068 Koll Center Parkway, Suite 401, located in
the City of Pleasanton, County of Alameda, State of California, with zip code
94566, as outlined on Exhibit A attached hereto (“Premises”)
and generally described as (describe briefly the nature of the Premises):
approximately 12,330 square feet within a 133,920 square foot
industrial/commercial project. In addition to Lessee’s rights to use and occupy
the Premises as hereinafter specified. Lessee shall have non-exclusive rights
to the Common Areas (as defined in Paragraph 2.7 below) as hereinafter
specified, but shall not have any rights to the roof, exterior walls or utility
raceways of the building containing the Premises (“Building”)
or to any other buildings in the Project. The Premises, the Building, the
Common Areas, the land upon which they are located, along with all other
buildings and improvements thereon, are herein collectively referred to as the “Project.” (See also Paragraph 2.) 


 


1.2(b)     Parking: 43 unreserved vehicle parking spaces (“Unreserved Parking Spaces”); and 0 reserved vehicle parking spaces (“Reserved
Parking Spaces”). (See also Paragraph 2.6.)


 


1.3     Term: 5 years
and 0 months (“Original
Term”) commencing April 1, 2005 (“Commencement Date”) and
ending March 31, 2010  (“Expiration Date”).
(See also Paragraph 3.)


 


1.3(a)     Option to Renew:
One option at 5 years and 0 months at the then Market Rent, upon 90 days prior
written notice to Lessor.


 


1.4     Early Possession: N/A  (“Early
Possession Date”). (See also
Paragraphs 3.2 and 3.3.)


 


1.5    
Base Rent:  $16,792.30 per month (“Base
Rent”), payable on the first day of each month commencing April 1, 2005.
(See also Paragraph 4.)


 


ý         If this box is checked, there are provisions in
this Lease for the Base Rent to be adjusted.


 


l.5(a)    
Base Rent Adjustments:


 


$17,254.68 per month, payable on the first day of each month commencing
April 1, 2006 through March 31, 2007;


$17,730.92 per month, payable
on the first day of each month commencing April 1, 2007 through March 31, 2008;


$18,221.45 per month, payable on the first day of each month commencing
April 1, 2008 through March 31, 2009;


$18,726.70 per month, payable on the first day of each month commencing
April 1, 2009 through March 31, 2010.


 


1.5 (b)    
Common Area Operating Expenses Base Year: 2005


 


1.6      Lessee’s Share of Common
Area Operating Expenses: nine
point two one percent (9.21%) (“Lessee’s Share”).


 


1.7      Base Rent and Other Monies Paid Upon Execution:


(a)                    Base Rent $ 16,792.30 for the period April 1, 2005 - April
30, 2005.


(b)                   Common Area Operating Expenses: $ N/A for the period N/A.


(c)                    Security Deposit: $18,726.70 (“Security
Deposit”). (See also Paragraph
5.)


(d)                   Other: $ 370.00 for
Trash and water.


(e)                    Total Due Upon Execution of this
Lease: $ 35,889.00.


 


1.8     Agreed Use: General
office use and analytical laboratory use. (See also Paragraph 6.)


 


1.9     Insuring Party. Lessor is the “Insuring Party”. (See also Paragraph 8.)


 


1.10     Real
Estate Brokers:  (See also Paragraph 15.)


(a) Representation:   The following real estate brokers (the “Brokers”) and brokerage relationships exist in this
transaction (check applicable boxes):


 


ý  Colliers International represents Lessor exclusively (“Lessor’s
Broker”);


 


ý  CB Richard Ellis represents Lessee exclusively (“Lessee’s
Broker”); or


 


o                                                                                          represents both Lessor and Lessee (“Dual Agency”).


 


(b)  Payment to Brokers: Upon execution and delivery of this Lease by both
Parties, Lessor shall pay to the
Brokers the brokerage fee agreed to in a separate written agreement (or if there
is no such agreement, the sum of N/A or
N/A % of the total Base Rent for the
brokerage services rendered by the Brokers).


 


1.11     Guarantor. The obligations of the Lessee under this Lease
are to be guaranteed by N/A (“Guarantor”).
(See also Paragraph 37.)


 


1.12     Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs N/A through N/A
and Exhibits A through G, all of
which constitute a part of this Lease.


 


2.           Premises.


 


2.1     Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
the Premises, for the term, at the rental and upon all 


 


	
  

  	
  

  



 


	
  © 1998 - American Industrial
  Real Estate Association

  	
  REVISED

  	
  FORM
  MTG-2-11/98E

  



 


1





















 


of the terms, covenants and
conditions set forth in this Lease. Unless otherwise provided herein, any
statement of size set forth in this Lease, or that may have been used in
calculating Rent, is an approximation which the Parties agree is reasonable and
any payments based thereon are not subject to revision whether or not the
actual size is more or less.


2.2                                                Condition. Lessor shall deliver that portion of the
Premises contained within the Building (“Unit”) to Lessee broom clean and
free of debris on the Commencement Date or the Early Possession Date, whichever
first occurs (“Start Date”), and, so long as the required service contracts
described in Paragraph 7.1(b) below are obtained by Lessee and in effect within
thirty days following the Start Date, warrants that the existing electrical,
plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning
systems (“HVAC”),
loading doors, if any, and all other such elements in the Unit, other than
those constructed by Lessee, shall be in good operating condition on said date
and that the structural elements of the roof, bearing walls and foundation of
the Unit shall be free of material defects. If a non-compliance with such
warranty exists as of the Start Date, or if one of such systems or elements
should malfunction or fail within the appropriate warranty period, Lessor
shall, as Lessor’s sole obligation with respect to such matter, except as
otherwise provided in this Lease, promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such
non-compliance, malfunction or failure, rectify same at Lessor’s expense. The
warranty periods shall be as follows: (i) 6 months as to the HVAC systems, and
(ii) 30 days as to the remaining systems and other elements of the Unit. If
Lessee does not give Lessor the required notice within the appropriate warranty
period, correction of any such non-compliance, malfunction or failure shall be
the obligation of Lessee at Lessee’s sole cost and expense (except for the
repairs to the fire sprinkler systems, roof, foundations, and/or bearing walls
- see Paragraph 7).


2.3                                                Compliance. Lessor warrants that the improvements on the
Premises and the Common Areas comply with the building codes that were in
effect at the time that each such improvement, or portion thereof, was
constructed, and also with all applicable laws, covenants or restrictions of
record, regulations, and ordinances in effect on the Start Date (“Applicable
Requirements”). Said warranty does not apply to the use to which
Lessee will put the Premises or to any Alterations or Utility Installations (as
defined in Paragraph 7.3(a).) made or to be made by Lessee. NOTE: Lessee is responsible for determining whether or
not the zoning is appropriate for Lessee’s  intended use, and acknowledges that past uses of the
Premises may no longer be allowed. If the Premises do not comply
with said warranty, Lessor shall, except as otherwise provided, promptly after
receipt of written notice from Lessee setting forth with specificity the nature
and extent of such non-compliance, rectify the same at Lessor’s expense. If
Lessee does not give Lessor written notice of a non-compliance with this
warranty within 6 months following the Start Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee’s sole cost and
expense. If the Applicable Requirements are hereafter changed so as to require
during the term of this Lease the construction of an addition to or an
alteration of the Unit, Premises and/or Building, the remediation of any
Hazardous Substance, or the reinforcement or other physical modification of the
Unit, Premises and/or Building (“Capital Expenditure”), Lessor and
Lessee shall allocate the cost of such work as follows:


(a)  Subject to Paragraph 2.3(c) below, if
such Capital Expenditures are required as a result of the specific and unique
use of the Premises by Lessee as compared with uses by tenants in general,
Lessee shall be fully responsible for the cost thereof, provided, however, that
if such Capital Expenditure is required during the last 2 years of this Lease
and the cost thereof exceeds 6 months’ Base Rent, Lessee may instead terminate
this Lease unless Lessor notifies Lessee, in writing, within 10 days after
receipt of Lessee’s termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to 6 months’
Base Rent. If Lessee elects termination, Lessee shall immediately cease the use
of the Premises which requires such Capital Expenditure and deliver to Lessor
written notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.


(b)  If such Capital Expenditure is not
the result of the specific and unique use of the Premises by Lessee (such as,
governmentally mandated seismic modifications), then Lessor and Lessee shall
allocate the obligation to pay for the portion of such costs reasonably
attributable to the Premises pursuant to the formula set out in Paragraph
7.1(d); provided, however, that if such Capital Expenditure is required during
the last 2 years of this Lease or if Lessor reasonably determines that it is
not economically feasible to pay its share thereof, Lessor shall have the option
to terminate this Lease upon 90 days prior written notice to Lessee unless
Lessee notifies Lessor, in writing, within 10 days after receipt of Lessor’s
termination notice that Lessee will pay for such Capital Expenditure. If Lessor
does not elect to terminate, and fails to tender its share of any such Capital
Expenditure, Lessee may advance such funds and deduct same, with interest, from
Rent until Lessor’s share of such costs have been fully paid. If Lessee is
unable to finance Lessor’s share, or if the balance of the Rent due and payable
for the remainder of this Lease is not sufficient to fully reimburse Lessee on
an offset basis, Lessee shall have the right to terminate this Lease upon 30
days written notice to Lessor.


(c)  Notwithstanding the above, the
provisions concerning Capital Expenditures are intended to apply only to non-
voluntary, unexpected, and new Applicable Requirements. If the Capital
Expenditures are instead triggered by Lessee as a result of an actual or
proposed change in use, change in intensity of use, or modification to the
Premises then, and in that event, Lessee shall be fully responsible for the
cost thereof, and Lessee shall not have any right to terminate this Lease.


2.4                                                Acknowledgements. Subject to Section 50 hereof, Lessee acknowledges that: (a) it has been
advised by Lessor and/or Brokers to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical, HVAC
and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements and the Americans with Disabilities Act), and
their suitability for Lessee’s intended use, (b) Lessee has made such
investigation as it deems necessary with reference to such matters and assumes
all responsibility therefor as the same relate to its occupancy of the
Premises, and (c) neither Lessor, Lessor’s agents, nor Brokers have made any
oral or written representations or warranties with respect to said matters
other than as set forth in this Lease. In addition, Lessor acknowledges that:
(i) Brokers have made no representations, promises or warranties concerning
Lessee’s ability to honor the Lease or suitability to occupy the Premises, and
(ii) it is Lessor’s sole responsibility to investigate the financial capability
and/or suitability of all proposed tenants.


2.5                                                Lessee as Prior
Owner/Occupant. Subject to Section 50 hereof, the warranties
made by Lessor in Paragraph 2 shall be of no force or effect if immediately
prior to the Start Date Lessee was the owner or occupant of the Premises. In
such event, Lessee shall be responsible for any necessary corrective work.


2.6                                                Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called “Permitted Size Vehicles.” Lessor
may regulate the loading and unloading of vehicles by adopting Rules and
Regulations as provided in Paragraph 2.9. No vehicles other than Permitted Size
Vehicles may be parked in the Common Area without the prior written permission
of Lessor.


(a)                                                 Lessee shall not permit or allow any vehicles
that belong to or are controlled by Lessee or Lessee’s employees, suppliers,
shippers, customers, contractors or invitees to be loaded, unloaded, or parked
in areas other than those designated by Lessor for such activities.


(b)                                                Lessee shall not service or store any
vehicles in the Common Areas.


(c)                                                 If Lessee permits or allows any of the
prohibited activities described in this Paragraph 2.6, then Lessor shall have
the right, without notice, in addition to such other rights and remedies that
it may have, to remove or tow away the vehicle involved and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.


2.7                                                Common Areas - Definition. The term “Common Areas” is defined as all areas and facilities outside
the Premises and within the exterior boundary line of the Project and interior
utility raceways and installations within the Unit that are provided and
designated by the Lessor from time to time for the general non-exclusive use of
Lessor, Lessee and other tenants of the Project and their respective employees,
suppliers, shippers, customers, contractors and invitees, including parking
areas, loading and unloading areas, trash areas, roadways, walkways, driveways
and landscaped areas.


2.8                                                Common Areas - Lessee’s
Rights. Lessor grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Project. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written
consent of Lessor or Lessor’s designated agent, which consent may be revoked at
any time. In the event that any unauthorized storage shall occur, then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.


2.9                                                Common Areas - Rules and
Regulations. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable rules and regulations (“Rules and Regulations”) for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Project and
their invitees. Lessee agrees to abide by and conform to all such Rules and
Regulations, and to cause its employees, suppliers, shippers, customers,
contractors and invitees to so abide and conform.  Lessor shall not be responsible to Lessee for
the non-compliance with said Rules and Regulations by other tenants of the
Project.


2.10                                          Common Areas - Changes. Lessor shall have the right, in Lessor’s sole discretion, from time to
time:


(a)                To make changes to the Common Areas, including,
without limitation, changes in the location, size, shape and number of
driveways, entrances, parking spaces, parking areas, loading and unloading
areas, ingress, egress, direction of traffic, landscaped areas, walkways and
utility raceways;


(b)                To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available;


(c)                To designate other land outside the boundaries of the
Project to be a part of the Common Areas;


(d)                To add additional buildings and improvements to the
Common Areas;


(e)                To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Project, or any portion
thereof; and


(f)                 To do and perform such other acts and make such
other changes in, to or with respect to the Common Areas and Project as Lessor
may, in the exercise of sound business judgment, deem to be appropriate.


 


2





















 


3.                                       Term.


3.1           Term.
The Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph 1.3.


3.2           Early
Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease
(including but not limited to the obligations to pay Lessee’s Share of Common
Area Operating Expenses, Real Property Taxes and insurance premiums and to
maintain the Premises) shall, however, be in effect during such period. Any
such early possession shall not affect the Expiration Date.


3.3           Delay In
Possession. Lessor agrees to use its best commercially reasonable
efforts to deliver possession of the Premises to Lessee by the Commencement
Date. If, despite said efforts, Lessor is unable to deliver possession as
agreed, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within 60 days after
the Commencement Date, Lessee may, at its option, by notice in writing within
10 days after the end of such 60 day period, cancel this Lease, in which event
the Parties shall be discharged from all obligations hereunder. If such written
notice is not received by Lessor within said 10 day period, Lessee’s right to
cancel shall terminate. Except as otherwise provided, if possession is not
tendered to Lessee by the Start Date and Lessee does not terminate this Lease,
as aforesaid, any period of rent abatement that Lessee would otherwise have
enjoyed shall run from the date of delivery of possession and continue for a
period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts or omissions of Lessee.
If possession of the Premises is not delivered within 4 months after the
Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.


3.4           Lessee
Compliance. Lessor shall not be required to tender possession of the
Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence,
Lessee shall be required to perform all of its obligations under this Lease
from and after the Start Date, including the payment of Rent, notwithstanding
Lessor’s election to withhold possession pending receipt of such evidence of
insurance. Further, if Lessee is required to perform any other conditions prior
to or concurrent with the Start Date, the Start Date shall occur but Lessor may
elect to withhold possession until such conditions are satisfied.


 


4.                                       Rent.


4.1           Rent Defined.
All monetary obligations of Lessee to Lessor under the terms of this Lease
(except for the Security Deposit) are deemed to be rent (“Rent”).


4.2                                 Common
Area Operating Expenses. Lessee shall pay to Lessor during the term hereof,
in addition to the Base Rent, Lessee’s Share (as specified in Paragraph 1.6.)
of any increase over the Base Year, as specified in Paragraph 1.5(b), of all
Common Area Operating Expenses, as hereinafter defined, during each calendar
year of the term of this Lease, in accordance with the following provisions:


(a)                                  “Common Area Operating Expenses” are defined, for purposes of
this Lease, as all costs incurred by Lessor relating to the ownership and
operation of the Project, including, but not limited to, the following:


(i)                                     The
operation, repair and maintenance, in neat, clean, good order and condition,
but not the replacement (see subparagraph (e)), of the following:


(aa)                            The
Common Areas and Common Area improvements, including parking areas, loading and
unloading areas, trash areas, roadways, parkways, walkways, driveways,
landscaped areas, bumpers, irrigation systems. Common Area lighting facilities,
fences and gates, elevators, roofs, and roof drainage systems.


(bb)                          Exterior
signs and any tenant directories.


(cc)                            Any
fire sprinkler systems.


(ii)                                                                                  The
cost of water, gas, electricity and telephone to service the Common Areas and
any utilities not separately metered.


(iii)                               Trash disposal, pest
control services, property management, security services, and the costs of any
environmental inspections.


(iv)                                                                              Reserves
set aside for maintenance and repair of Common Areas.


(v)                                                                                 Any
increase above the Base Real Property Taxes (as defined in Paragraph 10).


(vi)                                                                              Any
“Insurance Cost Increase” (as defined in Paragraph 8).


(vii)                                                                           Any deductible portion of an insured loss
concerning the Building or the Common Areas.


(viii)                                                                        The cost of any Capital Expenditure to the
Building or the Project not covered under the provisions of Paragraph 2.3 provided;
however, that Lessor shall allocate the cost of any such Capital Expenditure
over a 12 year period and Lessee shall not be required to pay more than Lessee’s
Share of 1/144th of the cost of such Capital Expenditure in any given month.


(ix)                                                                                Any other services to be provided by Lessor
that are stated elsewhere in this Lease to be a Common Area Operating Expense.


(b)                                 Any Common Area Operating Expenses and Real
Property Taxes that are specifically attributable to the Unit, the Building or
to any other building in the Project or to the operation, repair and
maintenance thereof, shall be allocated entirely to such Unit, Building, or
other building. However, any Common Area Operating Expenses and Real Property Taxes
that are not specifically attributable to the Building or to any other building
or to the operation, repair and maintenance thereof, shall be equitably
allocated by Lessor to all buildings in the Project.


(c)                                  The inclusion of the improvements, facilities
and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an
obligation upon Lessor to either have said improvements or facilities or to
provide those services unless the Project already has the same, Lessor already
provides the services, or Lessor has agreed elsewhere in this Lease to provide
the same or some of them.


(d)                                 Lessee’s
Share of Common Area Operating Expenses shall be payable by Lessee within 10
days after a reasonably detailed statement of actual expenses is presented to Lessee.
At Lessor’s option, however, an amount may be estimated by Lessor from time to
time of Lessee’s Share of annual Common Area Operating Expenses and the same
shall be payable monthly or quarterly, as Lessor shall designate, during each
12 month period of the Lease term, on the same day as the Base Rent is due
hereunder.   Lessor shall deliver to
Lessee within 60 days after the expiration of each calendar year a reasonably
detailed statement showing Lessee’s Share of the actual Common Area Operating
Expenses incurred during the preceding year,  
If Lessee’s payments under this Paragraph 4.2(d) during the preceding
year exceed Lessee’s Share as indicated on such statement, Lessor shall credit
the amount of such over-payment against Lessee’s Share of Common Area Operating
Expenses next becoming due.   If Lessee’s
payments under this Paragraph 4.2(d) during the preceding year were less than
Lessee’s Share as indicated on such statement, Lessee shall pay to Lessor the
amount of the deficiency within 10 days after delivery by Lessor to Lessee of
the statement.


(e)                                  When a capital component such as the roof,
foundations, exterior walls or a Common Area capital improvement, such as the
parking lot paving, elevators, fences, etc. requires replacement, rather than repair
or maintenance, Lessor shall, at Lessor’s expense, be responsible for such replacement.
Such expenses and/or costs are not Common Area Operating Expenses.


4.3                                 Payment. Lessee shall cause payment of Rent to be
received by Lessor in lawful money of the United States, without offset or
deduction (except as specifically permitted in this Lease), on or before the
day on which it is due. Rent for any period during the term hereof which is for
less than one full calendar month shall be prorated based upon the actual
number of days of said month. Payment of Rent shall be made to Lessor at its
address stated herein or to such other persons or place as Lessor may from time
to time designate in writing. Acceptance of a payment which is less than the
amount then due shall not be a waiver of Lessor’s rights to the balance of such
Rent, regardless of Lessor’s endorsement of any check so stating. In the event
that any check, draft, or other instrument of payment given by Lessee to Lessor
is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25.


 


5.                                       Security Deposit. Lessee shall deposit with Lessor upon
execution hereof the Security Deposit as security for Lessee’s faithful
performance of its obligations under this Lease. If Lessee fails to pay Rent,
or otherwise Defaults under this Lease, Lessor may use, apply or retain all or
any portion of said Security Deposit for the payment of any amount due Lessor
or to reimburse or compensate Lessor for any liability, expense, loss or damage
which Lessor may suffer or incur by reason thereof. If Lessor uses or applies
all or any portion of the Security Deposit, Lessee shall within 10 days after
written request therefor deposit monies with Lessor sufficient to restore said
Security Deposit to the full amount required by this Lease. If the Base Rent
increases during the term of this Lease, Lessee shall, upon written request
from Lessor, deposit additional monies with Lessor so that the total amount of
the Security Deposit shall at all times bear the same proportion to the
increased Base Rent as the initial Security Deposit bore to the initial Base
Rent. Should the Agreed Use be amended to accommodate a material change in the
business of Lessee or to accommodate a sublessee or assignee, Lessor shall have
the right to increase the Security Deposit to the extent necessary, in Lessor’s
reasonable judgment, to account for any increased wear and tear that the
Premises may suffer as a result thereof. If a change in control of Lessee
occurs during this Lease and following such change the financial condition of
Lessee is, in Lessor’s reasonable judgment, significantly reduced, Lessee shall
deposit such additional monies with Lessor as shall be sufficient to cause the
Security Deposit to be at a commercially reasonable level based on such change
in financial condition. Lessor shall not be required to keep the Security
Deposit separate from its general accounts. Within 14 days after the expiration
or termination of this Lease, if Lessor elects to apply the Security Deposit only
to unpaid Rent, and otherwise within 30 days after the Premises have been
vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of
the Security Deposit not used or applied by Lessor. No part of the Security
Deposit shall be considered to be held in trust, to bear interest or to be
prepayment for any monies to be paid by Lessee under this Lease.


 


6.                                       Use.


 


6.1           Use. Lessee shall use and occupy the Premises only for the
Agreed Use, or any other legal use which is reasonably comparable thereto, and for
no other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
occupants of or causes damage to neighboring premises or properties.  Lessor shall not unreasonably withhold or
delay its consent to any written


 


3





















 


request for a modification of the Agreed Use, so long as the same will
not impair the structural integrity of the improvements on the Premises or the
mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall
within 7 days after such request give written notification of same, which
notice shall include an explanation of Lessor’s objections to the change in the
Agreed Use.


 


6.2                                                Hazardous Substances.


(a)                                  Reportable Uses Require
Consent. The term “Hazardous Substance” as used in this Lease
shall mean any product, substance, or waste whose presence, use, manufacture,
disposal, transportation, or release, either by itself or in combination with
other materials expected to be on the Premises, is either: (i) potentially
injurious to the public health, safety or welfare, the environment or the
Premises, (ii) regulated or monitored by any governmental authority, or (iii) a
basis for potential liability of Lessor to any governmental agency or third
party under any applicable statute or common law theory. Hazardous Substances
shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or
crude oil or any products, by-products or fractions thereof. Lessee shall not
engage in any activity in or on the Premises which constitutes a Reportable Use
of Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee’s expense) with all Applicable Requirements. “Reportable Use” shall mean (i) the
installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a
Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with, any
governmental authority, and/or (iii) the presence at the Premises of a
Hazardous Substance with respect to which any Applicable Requirements requires
that a notice be given to persons entering or occupying the Premises or
neighboring properties. Notwithstanding the foregoing, Lessee may use any
ordinary and customary materials reasonably required to be used in the normal
course of the Agreed Use, so long as such use is in compliance with all
Applicable Requirements, is not a Reportable Use, and does not expose the
Premises or neighboring property to any meaningful risk of contamination or
damage or expose Lessor to any liability therefor. In addition, Lessor may
condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public,
the Premises and/or the environment against damage, contamination, injury
and/or liability, including, but not limited to, the installation (and removal
on or before Lease expiration or termination) of protective modifications (such
as concrete encasements) and/or increasing the Security Deposit.


(b)                                 Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide
Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.


(c)                                  Lessee Remediation. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly,
at Lessee’s expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of
any contamination of, and for the maintenance, security and/or monitoring of
the Premises or neighboring properties, that was caused or materially
contributed to by Lessee, or pertaining to or involving any Hazardous Substance
brought onto the Premises during the term of this Lease, by or for Lessee, or
any third party.


(d)                                 Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and reasonable attorneys’ and consultants’ fees
arising out of or involving any Hazardous Substance brought onto the Premises
by or for Lessee, or by any third party upon instruction of Lessee (provided,
however, that Lessee shall have no liability under this Lease with respect to
underground migration of any Hazardous Substance under the Premises from areas
outside of the Project). Lessee’s obligations shall include, but not be limited
to, the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease. No termination, cancellation or
release agreement entered into by Lessor and Lessee shall release Lessee from
its obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.


(e)                                  Lessor Indemnification. Lessor and its successors and assigns shall
indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which existed as a result of Hazardous Substances on the
Premises prior to the Start Date or which are caused by the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessor’s obligations, as
and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.


(f)                                    Investigations and
Remediations. Lessor shall
retain the responsibility and pay for any investigations or remediation
measures required by governmental entities having jurisdiction with respect to
the existence of Hazardous Substances on the Premises prior to the Start Date,
unless such remediation measure is required as a result of Lessee’s use
(including “Alterations”, as defined in paragraph 7.3(a) below) of the
Premises, in which event Lessee shall be responsible for such payment. Lessee
shall cooperate fully in any such activities at the request of Lessor,
including allowing Lessor and Lessor’s agents to have reasonable access to the
Premises at reasonable times in order to carry out Lessor’s investigative and
remedial responsibilities.


(g)                                 Lessor Termination Option. If a Hazardous Substance Condition (see
Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is
legally responsible therefor (in which case Lessee shall make the investigation
and remediation thereof required by the Applicable Requirements and this Lease
shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i)
investigate and remediate such Hazardous Substance Condition, if required, as
soon as reasonably possible at Lessor’s expense, in which event this Lease
shall continue in full force and effect, or (ii) if the estimated cost to
remediate such condition exceeds 12 times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within 30 days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition, of Lessor’s desire to terminate this Lease as of the date
60 days following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within 10 days thereafter, give written notice
to Lessor of Lessee’s commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to 12
times the then monthly Base Rent or $100,000, whichever is greater. Lessee
shall provide Lessor with said funds or satisfactory assurance thereof within
30 days following such commitment. In such event, this Lease shall continue in
full force and effect, and Lessor shall proceed to make such remediation as
soon as reasonably possible after the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof
within the time provided, this Lease shall terminate as of the date specified
in Lessor’s notice of termination.


6.3                                 Lessee’s Compliance with
Applicable Requirements.
Except as otherwise provided in this Lease, Lessee shall, at Lessee’s sole
expense, fully, diligently and in a timely manner, materially comply with all
Applicable Requirements, the requirements of any applicable fire insurance
underwriter or rating bureau, and the recommendations of Lessor’s engineers
and/or consultants which relate in any manner to the Premises, without regard
to whether said requirements are now in effect or become effective after the
Start Date. Lessee shall, within 10 days after receipt of Lessor’s written
request, provide Lessor with copies of all permits and other documents, and
other information evidencing Lessee’s compliance with any Applicable
Requirements specified by Lessor, and shall immediately upon receipt, notify
Lessor in writing (with copies of any documents involved) of any threatened or
actual claim, notice, citation, warning, complaint or report pertaining to or
involving the failure of Lessee or the Premises to comply with any Applicable
Requirements.


6.4                                 Inspection; Compliance.
Lessor and Lessor’s “Lender” (as
defined in Paragraph 30) and consultants shall have the right to enter into
Premises at any time, in the case of an emergency, and otherwise with twenty
four hour notice, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease. The cost of any such
inspections shall be paid by Lessor, unless a violation of Applicable
Requirements, or a contamination is found to exist or be imminent, or the
inspection is requested or ordered by a governmental authority. In such case,
Lessee shall upon request reimburse Lessor for the cost of such inspection, so
long as such inspection is reasonably related to the violation or
contamination.


 


7.                                       Maintenance; Repairs;
Utility Installations; Trade Fixtures and Alterations.


 


7.1                                 Lessee’s Obligations.


(a)                                  In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee’s Compliance with Applicable
Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises, Utility
installations (intended for Lessee’s exclusive use, no matter where located), and
Alterations in good order, condition and repair (whether or not the portion
of the Premises requiring repairs, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for
such repairs occurs as a result of Lessee’s use, any prior use, the elements or
the age of such portion of the Premises),
including, but not limited to, all equipment or facilities, such as plumbing,
HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fixtures,
interior walls, interior surfaces of exterior walls, ceilings, floors, windows,
doors, plate glass, and skylights but excluding any items which are the
responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the
Premises in good order, condition and repair, shall exercise and perform good
maintenance practices, specifically including the procurement and maintenance
of the service contracts required by Paragraph 7.1(b) below. Lessee’s obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order,
condition and state of repair.


 


(b)           Service Contracts. Lessee shall, at Lessee’s
sole expense, procure and maintain contracts, with copies to Lessor, in
customary form and substance for, and with contractors specializing and
experienced in the maintenance of the following equipment and improvements, if
any, if and when installed on the Premises: (i) HVAC equipment (ii) boiler and
pressure vessels, (iii) clarifiers, and (iv) any other equipment, if reasonably
required by Lessor. However, Lessor reserves the night, upon notice to Lessee,
to procure and maintain any or all of such service contracts, and if Lessor so
elects. Lessee shall reimburse Lessor, upon demand, for the cost thereof.


 


(c)                                  Failure to Perform. If Lessee
fails to perform Lessee’s obligations under this Paragraph 7.1, Lessor may
enter upon the Premises after 10 days’ prior written notice to Lessee (except
in the case of an emergency, in which case no notice shall be required),
perform such obligations on Lessee’s behalf, and put the Premises in good
order, condition and repair, and Lessee shall promptly reimburse Lessor for the
cost thereof.


 


4





















 


(d)                                 Replacement. Subject
to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7 below, and
without relieving Lessee of liability resulting from Lessee’s failure to
exercise and perform good maintenance practices, if an item described in
Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of
50% of the cost of replacing such item, then such item shall be replaced by
Lessor, and the cost thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the remainder of the term of
this Lease, on the date on which Base Rent is due, an amount equal to the
product of multiplying the cost of such replacement by a fraction, the numerator
of which is one, and the denominator of which is 144 (ie. 1/144th of the cost
per month). Lessee shall pay interest on the unamortized balance at a rate that
is commercially reasonable in the judgment of Lessor’s accountants. Lessee may,
however, prepay its obligation at any time.


7.2                                 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use),
7.1 (Lessee’s Obligations), 9 (Damage or Destruction) and 14 (Condemnation),
Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good
order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system,
Common Area fire alarm and/or smoke detection systems, fire hydrants, parking
lots, walkways, parkways, driveways, landscaping, fences, signs and utility
systems serving the Common Areas and all parts thereof, as well as providing
the services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. Lessee expressly waives the
benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease.


7.3                                 Utility Installations; Trade
Fixtures; Alterations.


(a)                                  Definitions. The term “Utility Installations” refers to all floor and window coverings,
air lines, power panels, electrical distribution, security and fire protection
systems, communication systems, lighting fixtures, HVAC equipment, plumbing,
and fencing in or on the Premises. The term “Trade
Fixtures” shall mean Lessee’s machinery and equipment that can be
removed without doing material damage to the Premises. The term “Alterations” shall mean any modification
of the improvements, other than Utility Installations or Trade Fixtures,
whether by addition or deletion. “Lessee
Owned Alterations and/or Utility Installations” are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a).


(b)                                 Consent. Lessee shall not make any Alterations or
Utility Installations to the Premises without Lessor’s prior written consent.
Lessee may, however, make non-structural Utility Installations to the interior
of the Premises (excluding the roof) without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls, and the
cumulative cost thereof during this Lease as extended does not exceed a sum
equal to 3 month’s Base Rent in the aggregate or a sum equal to one month’s
Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not make
or permit any roof penetrations and/or install anything on the roof without the
prior written approval of Lessor. Lessor may, as a precondition to granting
such approval, require Lessee to utilize a contractor chosen and/or approved by
Lessor. Any Alterations or Utility Installations that Lessee shall desire to
make and which require the consent of the Lessor shall be presented to Lessor
in written form with detailed plans. Consent shall be deemed conditioned upon
Lessee’s: (i) acquiring all applicable governmental permits, (ii) furnishing
Lessor with copies of both the permits and the plans and specifications prior
to commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon
completion furnish Lessor with as-built plans and specifications. For work
which costs an amount in excess of one month’s Base Rent, Lessor may condition
its consent upon Lessee providing a lien and completion bond in an amount equal
to 150% of the estimated cost of such Alteration or Utility Installation and/or
upon Lessee’s posting an additional Security Deposit with Lessor.


(c)                                  Indemnification. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic’s or materialmen’s lien against the Premises or any interest therein.
Lessee shall give Lessor not less than 10 days notice prior to the commencement
of any work in, on or about the Premises, and Lessor shall have the right to
post notices of non-responsibility. If Lessee shall contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety
bond in an amount equal to 150% of the amount of such contested lien, claim or
demand, indemnifying Lessor against liability for the same. If Lessor elects to
participate in any such action, Lessee shall pay Lessor’s attorneys’ fees and
costs.


7.4                                                Ownership; Removal;
Surrender; and Restoration.


(a)                                  Ownership. Subject to Lessor’s right to require removal
or elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises.


(b)                                 Removal. By delivery to Lessee of written notice from
Lessor not earlier than 90 and not later than 30 days prior to the end of the
term of this Lease, Lessor may require that any or all Lessee Owned Alterations
or Utility Installations be removed by the expiration or termination of this
Lease, including but not limited to the lab areas constructed during the
Original Lease Term. Lessor may require the removal at any time of all or any
part of any Lessee Owned Alterations or Utility installations made without the
required consent. Without notice from Lessor, Lessee must remove all wiring
and/or cabling that was installed and/or added by Lessee, its contractors, or
agents, including but not limited to voice and/or data cabling and electrical
wiring.  Additionally, Lessee must remove
any communications cable that is not terminated at both ends at a connector or
other equipment and not identified “For Future Use” with a tag.


(c)                                  Surrender; Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good
operating order, condition and state of repair, ordinary wear and tear
excepted. “Ordinary wear and tear” shall not include any damage or
deterioration that would have been prevented by good maintenance practice.
Notwithstanding the foregoing, if this Lease is for 12 months or less, then
Lessee shall surrender the Premises in the same condition as delivered to
Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee
shall repair any damage occasioned by the installation, maintenance or removal
of Trade Fixtures, Lessee owned Alterations and/or Utility Installations,
furnishings, and equipment as well as the removal of any storage tank installed
by or for Lessee. Lessee shall also completely remove from the Premises any and
all Hazardous Substances brought onto the Premises by or for Lessee, or any
third party instructed by Lessee (except Hazardous Substances which were
deposited via underground migration from areas outside of the Project) even if
such removal would require Lessee to perform or pay for work that exceeds
statutory requirements. Trade Fixtures shall remain the property of Lessee and
shall be removed by Lessee. The failure by Lessee to timely vacate the Premises
pursuant to this Paragraph 7.4(c) without the express written consent of Lessor
shall constitute a holdover under the provisions of Paragraph 26 below.


 


8.                                       Insurance; Indemnity.


8.1           Payment of Premium Increases.


                                (a)           As used herein, the term “Insurance Cost Increase” is defined as any increase in the
actual cost of the insurance applicable to the Building and/or the Project and
required to be carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and
8.3(b), (“Required Insurance”), over and above the Base Premium, as hereinafter
defined, calculated on an annual basis. Insurance Cost Increase shall include,
but not be limited to, requirements of the holder of a mortgage or deed of
trust covering the Premises, Building and/or Project, increased valuation of
the Premises, Building and/or Project, and/or a general premium rate increase.
The term insurance Cost Increase shall not, however, include any premium
increases resulting from the nature of the occupancy of any other tenant of the
Building. If the parties insert a dollar amount in Paragraph 1.9, such amount
shall be considered the “Base Premium.”
The Base Premium shall be the annual premium applicable to the 12 month period
immediately preceding the Start Date. If, however, the Project was not insured for the entirety
of such 12 month period, then the Base Premium shall be the lowest annual
premium reasonably obtainable for the Required Insurance as of the Start Date,
assuming the most nominal use possible of the Building. In no event, however,
shall Lessee be responsible for any portion of the premium cost attributable to
liability insurance coverage in excess of $2,000,000 procured under Paragraph 8.2(b).


(b)           Lessee
shall pay any Insurance Cost Increases to Lessor pursuant to Paragraph 4.2.
Premiums for policy periods commencing prior to, or extending beyond, the term
of this Lease shall be prorated to coincide with the corresponding Start Date
or Expiration Date.


8.2                                 Liability Insurance.


(a)                                  Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor
as an additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount
not less than $1,000,000 per occurrence with an annual aggregate of not less
than $2,000,000, an “Additional Insured-Managers or Lessors of Premises
Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement”
for damage caused by heat, smoke or fumes from a hostile fire. The policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this
Lease as an “insured contract” for
the performance of Lessee’s indemnity obligations under this Lease. The limits
of said insurance shall not, however, limit the liability of Lessee nor relieve
Lessee of any obligation hereunder. All insurance carried by Lessee shall be
primary to and not contributory with any similar insurance carried by Lessor,
whose insurance shall be considered excess insurance only.


(b)                                 Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.


 


5





















 


8.3                                 Property Insurance -
Building, Improvements and Rental Value.


(a)                                  Building and Improvements. Lessor shall obtain and keep in force a
policy or policies of insurance in the name of Lessor, with loss payable to
Lessor, any ground-lessor, and to any Lender insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement cost
of the Premises, as the same shall exist from time to time, or the amount
required by any Lender, but in no event more than the commercially reasonable
and available insurable value thereof. Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee’s personal property shall be insured
by Lessee under Paragraph 8.4. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris removal and the
enforcement of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to
where the Premises are located. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $1,000 per occurrence.


(b)                                 Rental Value. Lessor shall also obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one year with an extended period
of indemnity for an additional 180 days (“Rental Value insurance”).
Said insurance shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted annually to
reflect the projected Rent otherwise payable by Lessee, for the next 12 month
period.


(c)                                  Adjacent Premises. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Project if said increase is caused by Lessee’s acts,
omissions, use or occupancy of the Premises.


(d)                                 Lessee’s Improvements. Since Lessor is the Insuring Party, Lessor
shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor under
the terms of this Lease.


8.4                                 Lessee’s Property; Business
Interruption Insurance.


(a)                                  Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee’s personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $5,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.


(b)                                 Business Interruption. Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.


(c)                                  No Representation of
Adequate Coverage. Lessor
makes no representation that the limits or forms of coverage of insurance
specified herein are adequate to cover Lessee’s property, business operations
or obligations under this Lease.


8.5                                 Insurance Policies. Insurance required herein shall be by
companies authorized to transact business in the state where the Premises are
located, and maintaining during the policy term a “General Policyholders Rating”
of at least B+, V, as set forth in the most current issue of “Best’s Insurance Guide”,
or such other rating as may be required by a Lender. Lessee shall not do or
permit to be done anything which invalidates the required insurance policies.
Lessee shall, prior to the Start Date, deliver to Lessor certified or
certificates evidencing the existence and amounts of the required insurance.
Lessee shall, at least 30 days prior to the expiration of such policies,
furnish Lessor with evidence of renewals or “insurance binders” evidencing
renewal thereof, or Lessor may order such insurance and charge the cost thereof
to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such
policies shall be for a term of at least one year, or the length of the
remaining term of this Lease, whichever is less. If either Party shall fail to
procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.


8.6                               Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages against the other, for loss of or
damage to its property arising out of or incident to the perils required to be
insured against herein. The effect of such releases and waivers is not limited
by the amount of insurance carried or required, or by any deductibles
applicable hereto. The Parties agree to have their respective property damage
insurance carriers waive any right to subrogation that such companies may have
against Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.


8.7                                 Indemnity. Except for Lessor’s, Lessor’s agents,
consulants and representatives gross negligence or willful misconduct, Lessee
shall indemnify, protect, defend and hold harmless the Premises, Lessor and its
agents, Lessor’s master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys’ and consultants’ fees, expenses and/or liabilities
arising out of, involving, or in connection with, the use and/or occupancy of
the Premises by Lessee. If any action or proceeding is brought against Lessor
by reason of any of the foregoing matters, Lessee shall upon notice defend the
same at Lessee’s expense by counsel reasonably satisfactory to Lessor and
Lessor shall cooperate with Lessee in such defense. Lessor need not have first
paid any such claim in order to be defended or indemnified.


8.8                                 Exemption of Lessor from
Liability. Lessor shall not
be liable for injury or damage to the person or goods, wares, merchandise or
other property of Lessee, Lessee’s employees, contractors, invitees, customers,
or any other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, HVAC or lighting fixtures, or from any other
cause, whether the said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building, or from other sources or
places. Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant of Lessor nor from the failure of Lessor to enforce
the provisions of any other lease in the Project. Notwithstanding Lessor’s
negligence or breach of this Lease, Lessor shall under no circumstances be
liable for injury to Lessee’s business or for any loss of income or profit
therefrom.


 


9.                                       Damage or Destruction.


 


9.1                                 Definitions.


(a)                                  “Premises Partial Damage” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in 3 months or less from the
date of the damage or destruction, and the cost thereof does not exceed a sum
equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing within 30
days from the date of the damage or destruction as to whether or not the damage
is Partial or Total.


(b)                                 “Premises Total Destruction”
shall mean damage or
destruction to the improvements on the Premises, other than Lessee Owned
Alterations and Utility Installations and Trade Fixtures, which cannot
reasonably be repaired in 3 months or less from the date of the damage or
destruction and/or the cost thereof exceeds a sum equal to 6 month’s Base Rent.
Lessor shall notify Lessee in writing within 30 days from the date of the
damage or destruction as to whether or not the damage is Partial or Total.


(c)                                  “Insured Loss” shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.


(d)                                 “Replacement Cost” shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.


(e)                                  “Hazardous Substance
Condition” shall mean the
occurrence or discovery of a condition involving the presence of, or a
contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on,
or under the Premises.


9.2                                 Partial Damage - Insured
Loss. If a Premises Partial
Damage that is an Insured Loss occurs, then Lessor shall, at Lessor’s expense,
repair such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations
and Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect; provided, however, that Lessee shall, at
Lessor’s election, make the repair of any damage or destruction the total cost
to repair of which is $5,000 or less, and, in such event.  Lessor shall make any applicable insurance
proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or
the insurance proceeds are not sufficient to effect such repair, the Insuring
Party shall promptly contribute the shortage in proceeds as and when required
to complete said repairs. In the event, however, such shortage was due to the
fact that, by reason of the unique nature of the improvements, full replacement
cost insurance coverage was not commercially reasonable and available, Lessor
shall have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days
following receipt of written notice of such shortage and request therefor. If
Lessor receives said funds or adequate assurance thereof within said 10 day
period, the party responsible for making the repairs shall complete them as
soon as reasonably possible and this Lease shall remain in full force and
effect. If such funds or assurance are not received, Lessor may nevertheless
elect by written notice to Lessee within 10 days thereafter to: (i) make such
restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and effect,
or (ii) have this Lease terminate 30 days thereafter. Lessee shall not be
entitled to reimbursement of any funds contributed by Lessee to repair any such
damage or destruction. Premises Partial Damage due to flood or earthquake shall
be subject to Paragraph 9.3, notwithstanding that there may be some insurance
coverage, but the net proceeds of any such insurance shall be made available
for the repairs if made by either Party.


9.3                                 Partial Damage - Uninsured
Loss. If a Premises Partial
Damage that is not an Insured Loss occurs, unless caused by a negligent or
willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s
expense), Lessor may either: (i) repair such damage as soon as reasonably
possible at Lessor’s expense, in which event this Lease shall continue in full
force and effect, or (ii) terminate this Lease by giving written notice to
Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of
such damage. Such termination shall be effective 60 days following the date of
such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within 10 days after receipt of the termination notice to give
written notice to Lessor of Lessee’s commitment to pay for the repair of such
damage without reimbursement from Lessor. Lessee shall provide Lessor with said



 


6





















 


funds or satisfactory
assurance thereof within 30 days after making such commitment. In such event
this Lease shall continue in full force and effect, and Lessor shall proceed to
make such repairs as soon as reasonably possible after the required funds are
available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.


9.4                                 Total Destruction. Notwithstanding any other provision hereof,
if a Premises Total Destruction occurs, this Lease shall terminate 60 days
following such Destruction. If the damage or destruction was caused by the
gross negligence or willful misconduct of Lessee, Lessor shall have the right
to recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.


9.5                                 Damage Near End of Term. If at any time during the last 6 months of
this Lease there is damage for which the cost to repair exceeds one month’s
Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease
effective 60 days following the date of occurrence of such damage by giving a
written termination notice to Lessee within 30 days after the date of
occurrence of such damage. Notwithstanding the foregoing, if Lessee at that
time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option
and (b) providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is 10 days after Lessee’s receipt of Lessor’s written notice
purporting to terminate this Lease, or (ii) the day prior to the date upon
which such option expires. If Lessee duly exercises such option during such
period and provides Lessor with funds (or adequate assurance thereof) to cover
any shortage in insurance proceeds, Lessor shall, at Lessor’s commercially
reasonable expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Lessee fails to exercise such
option and provide such funds or assurance during such period, then this Lease
shall terminate on the date specified in the termination notice and Lessee’s
option shall be extinguished.


9.6                                 Abatement of Rent; Lessee’s
Remedies.


(a)                                  Abatement. In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee’s use of the Premises is
impaired, but not to exceed the proceeds received from the Rental Value
insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.


(b)                                 Remedies. If Lessor shall be obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful
way, such repair or restoration within 90 days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee’s election to terminate this Lease on a date not
less than 60 days following the giving of such notice. If Lessee gives such
notice and such repair or restoration is not commenced within 30 days
thereafter, this Lease shall terminate as of the date specified in said notice.
If the repair or restoration is commenced within such 30 days, this Lease shall
continue in full force and effect. “Commence” shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.


9.7                                 Termination; Advance
Payments. Upon termination
of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable
adjustment shall be made concerning advance Base Rent and any other advance
payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee
so much of Lessee’s Security Deposit as has not been, or is not then required
to be, used by Lessor.


9.8                                 Waive Statutes. Lessor
and Lessee agree that the terms of this Lease shall govern the effect of any
damage to or destruction of the Premises with respect to the termination of
this Lease and hereby waive the provisions of any present or future statute to
the extent inconsistent herewith.


 


10.                                 Real Property Taxes.


10.1                           Definitions.


(a)                                  “Real Property Taxes.” As used herein, the term “Real Property Taxes” shall include any
form of assessment, real estate, general, special, ordinary or extraordinary,
or rental levy or tax (other than inheritance, personal income or estate
taxes); improvement bond; and/or license fee imposed upon or levied against any
legal or equitable interest of Lessor in the Project, Lessor’s right to other
income therefrom, and/or Lessor’s business of leasing, by any authority having
the direct or indirect power to tax and where the funds are generated with
reference to the Project address and where the proceeds so generated are to be applied
by the city, county or other local taxing authority of a jurisdiction within
which the Project is located. The term “Real Property Taxes” shall also include
any tax, fee, levy, assessment or charge, or any increase therein, imposed by
reason of events occurring during the term of this Lease, including but not
limited to, a change in the ownership of the Project or any portion thereof or
a change in the improvements thereon.


(b)                                 “Base Real Property Taxes.” As used herein, the term “Base Real Property Taxes” shall be the
amount of Real Property Taxes, which are assessed against the Premises,
Building, Project or Common Areas in the calendar year during which the Lease
is executed. In calculating Real Property Taxes for any calendar year, the Real
Property Taxes for any real estate tax year shall be included in the
calculation of Real Property Taxes for such calendar year based upon the number
of days which such calendar year and tax year have in common.


10.2                           Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Project,
and except as otherwise provided in Paragraph 10.3, any increases in such
amounts over the Base Real Property Taxes shall be included in the calculation
of Common Area Operating Expenses in accordance with the provisions of
Paragraph 4.2.


10.3                           Additional Improvements. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor’s records and work
sheets as being caused by additional improvements placed upon the Project by
other lessees or by Lessor for the exclusive enjoyment of such other lessees.
Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at
the time Common Area Operating Expenses are payable under Paragraph 4.2, the
entirety of any increase in Real Property Taxes if assessed solely by reason of
Alterations, Trade Fixtures or Utility Installations placed upon the Premises
by Lessee or at Lessee’s request.


10.4                           Joint Assessment. If the Building is not separately assessed, Real Property Taxes allocated
to the Building shall be an equitable proportion of the Real Property Taxes for
all of the land and improvements included within the tax parcel assessed, such
proportion to be determined by Lessor from the respective valuations assigned
in the assessor’s work sheets or such other information as may be reasonably
available. Lessor’s reasonable determination thereof, in good faith, shall be
conclusive.


10.5                           Personal Property Taxes. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises. When possible, Lessee shall cause its
Lessee Owned Alterations and Utility Installations, Trade Fixtures,
furnishings, equipment and all other personal property to be assessed and
billed separately from the real property of Lessor. If any of Lessee’s said
property shall be assessed with Lessor’s real property, Lessee shall pay Lessor
the taxes attributable to Lessee’s properly within 10 days after receipt of a
written statement setting forth the taxes applicable to Lessee’s property.


 


11.                                 Utilities. Lessee shall pay for all water, gas, heat,
light, power, telephone, trash disposal and other utilities and services
supplied to the Premises, together with any taxes thereon. Notwithstanding the
provisions of Paragraph 4.2, if at any time in Lessor’s sole judgment, Lessor
determines that Lessee is using a disproportionate amount of water, electricity
or other commonly metered utilities, or that Lessee is generating such a large
volume of trash as to require an increase in the size of the dumpster and/or an
increase in the number of times per month that the dumpster is emptied, then
Lessor may increase Lessee’s Base Rent by an amount equal to such increased
costs.


 


12.                                 Assignment and Subletting.


 


12.1.                        Lessor’s Consent Required.


(a)                                  Lessee shall not voluntarily or by operation
of law assign, transfer, mortgage or encumber (collectively, “assign or assignment”) or
sublet all or any part of Lessee’s interest in this Lease or in the Premises
without Lessor’s prior written consent.


(b)                                 A change in the control of Lessee shall
constitute an assignment requiring consent. The transfer, on a cumulative
basis, of 50% or more of the voting control of Lessee shall constitute a change
in control for this purpose.


(c)                                  The involvement of Lessee or its assets in
any transaction, or series of transactions (by way of merger, sale,
acquisition, financing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee’s assets
occurs, which results or will result in a reduction of the Net Worth of Lessee
by an amount greater than 50% of such Net Worth as it was represented at the
time of the execution of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to
said transaction or transactions constituting such reduction, whichever was or
is greater, shall be considered an assignment of this Lease to which Lessor may
withhold its consent. “Net Worth of Lessee” shall
mean the net worth of Lessee (excluding any guarantors) established under
generally accepted accounting principles.


(d)                                 An assignment or subletting without consent
shall, at Lessor’s option, be a Default curable after notice per Paragraph
13.1(c), or a noncurable Breach without the necessity of any notice and grace
period. If Lessor elects to treat such unapproved assignment or subletting as a
noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30
days written notice, increase the monthly Base Rent to 110% of the Base Rent
then in effect. Further, in the event of such Breach and rental adjustment, (i)
the purchase price of any option to purchase the Premises held by Lessee shall
be subject to similar adjustment to 110% of the price previously in effect, and
(ii) all fixed and non-fixed rental adjustments scheduled during the remainder
of the Lease term shall be increased to 110% of the scheduled adjusted rent.


(e)                                  Lessee’s remedy for any breach of Paragraph
12.1 by Lessor shall be limited to compensatory damages and/or injunctive
relief.


12.2                           Terms and Conditions
Applicable to Assignment and Subletting.


(a)                                  Regardless of Lessor’s consent, any
assignment or subletting shall not: (i) be effective without the express
written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, or (iii)
alter the primary liability of Lessee for the payment of Rent or for the
performance of any other obligations to be performed by Lessee.


(b)                                 Lessor may accept Rent or performance of
Lessee’s obligations from any person other than Lessee pending approval or
disapproval of an assignment. Neither a delay in the approval or disapproval of
such assignment nor the acceptance of Rent or performance shall constitute a
waiver or 


 


7





















 


estoppel of Lessor’s right
to exercise its remedies for Lessee’s Default or Breach.


(c)                                  Lessor’s consent to any assignment or
subletting shall not constitute a consent to any subsequent assignment or
subletting.


(d)                                 In the event of any Default or Breach by
Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone
else responsible for the performance of Lessee’s obligations under this Lease,
including any assignee or sublessee, without first exhausting Lessor’s remedies
against any other person or entity responsible therefore to Lessor, or any
security held by Lessor.


(e)                                  Each request for consent to an assignment or
subletting shall be in writing, accompanied by information relevant to Lessor’s
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not
limited to the intended use and/or required modification of the Premises, if
any, together with a fee of $1,000 or 10% of the current monthly Base Rent
applicable to the portion of the Premises which is the subject of the proposed
assignment or sublease, whichever is greater, as consideration for Lessor’s
considering and processing said request. Lessee agrees to provide Lessor with
such other or additional information and/or documentation as may be reasonably
requested.


(f)                                    Any assignee of, or sublessee under, this
Lease shall, by reason of accepting such assignment or entering into such
sublease, be deemed to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented to in writing.


12.3                           Additional Terms and
Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by
Lessee of all or any part of the Premises and shall be deemed included in all
subleases under this Lease whether or not expressly incorporated therein:


(a)                                  Lessee hereby assigns and transfers to Lessor
all of Lessee’s interest in all Rent payable on any sublease, and Lessor may
collect such Rent and apply same toward Lessee’s obligations under this Lease;
provided, however, that until a Breach shall occur in the performance of Lessee’s
obligations, Lessee may collect said Rent. Lessor shall not, by reason of the
foregoing or any assignment of such sublease, nor by reason of the collection
of Rent, be deemed liable to the sublessee for any failure of Lessee to perform
and comply with any of Lessee’s obligations to such sublessee. Lessee hereby
irrevocably authorizes and directs any such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance of
Lessee’s obligations under this Lease, to pay to Lessor all Rent due and to
become due under the sublease. Sublessee shall rely upon any such notice from
Lessor and shall pay all Rents to Lessor without any obligation or right to
inquire as to whether such Breach exists, notwithstanding any claim from Lessee
to the contrary.


(b)                                 In the event of a Breach by Lessee, Lessor
may, at its option, require sublessee to attorn to Lessor, in which event
Lessor shall undertake the obligations of the sublessor under such sublease
from the time of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents
or security deposit paid by such sublessee to such sublessor or for any prior Defaults
or Breaches of such sublessor.


(c)                                  Any matter requiring the consent of the
sublessor under a sublease shall also require the consent of Lessor.


(d)                                 No sublessee shall further assign or sublet
all or any part of the Premises without Lessor’s prior written consent.


(e)                                  Lessor shall deliver a copy of any notice of
Default or Breach by Lessee to the sublessee, who shall have the right to cure
the Default of Lessee within the grace period, if any, specified in such
notice. The sublessee shall have a right of reimbursement and offset from and
against Lessee for any such Defaults cured by the sublessee.


 


13.                                 Default; Breach; Remedies.


13.1                           Default; Breach. A “Default”
is defined as a failure by the Lessee to comply with or perform any of the
terms, covenants, conditions or Rules and Regulations under this Lease. A “Breach” is defined as the occurrence
of one or more of the following Defaults, and the failure of Lessee to cure
such Default within any applicable grace period:


(a)                                  The abandonment of the Premises; or the
vacating of the Premises without providing a commercially reasonable level of
security, or where the coverage of the property insurance described in
Paragraph 8.3 is jeopardized as a result thereof, or without providing
reasonable assurances to minimize potential vandalism.


(b)                                 The failure of Lessee to make any payment of
Rent or any Security Deposit required to be made by Lessee hereunder, whether
to Lessor or to a third party, when due, to provide reasonable evidence of
insurance or surety bond, or to fulfill any obligation under this Lease which
endangers or threatens life or property, where such failure continues for a
period of 3 business days following written notice to Lessee.


(c)                                  The failure by Lessee to provide (i)
reasonable written evidence of compliance with Applicable Requirements, (ii)
the service contracts, (iii) the rescission of an unauthorized assignment or
subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested
under Paragraph 41 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of 10 days following
written notice to Lessee.


(d)                                 A Default by Lessee as to the terms,
covenants, conditions or provisions of this Lease, or of the rules adopted
under Paragraph 2.9 hereof, other than those described in subparagraphs
13.1(a), (b) or (c), above, where such Default continues for a period of 30
days after written notice; provided, however, that if the nature of Lessee’s
Default is such that more than 30 days are reasonably required for its cure,
then it shall not be deemed to be a Breach if Lessee commences such cure within
said 30 day period and thereafter diligently prosecutes such cure to
completion.


(e)                                  The occurrence of any of the following
events: (i) the making of any general arrangement or assignment for the benefit
of creditors; (ii) becoming a “debtor”
as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the
case of a petition filed against Lessee, the same is dismissed within 60 days);
(iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where such seizure is not discharged within 30 days;
provided, however, in the event that any provision of this subparagraph (e) is
contrary to any applicable law, such provision shall be of no force or effect,
and not affect the validity of the remaining provisions.


(f)                                    The discovery that any financial statement of
Lessee or of any Guarantor given to Lessor was materially false.


(g)                                 If the performance of Lessee’s obligations
under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the
termination of a Guarantor’s liability with respect to this Lease other than in
accordance with the terms of such guaranty, (iii) a Guarantor’s becoming
insolvent or the subject of a bankruptcy filing, (iv) a Guarantor’s refusal to
honor the guaranty, or (v) a Guarantor’s breach of its guaranty obligation on
an anticipatory basis, and Lessee’s failure, within 60 days following written
notice of any such event, to provide written alternative assurance or security,
which, when coupled with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease.


13.2                           Remedies. If Lessee fails to perform any of its affirmative duties or obligations,
within 10 days after written notice (or in case of an emergency, without
notice), Lessor may, at its option, perform such duty or obligation on Lessee’s
behalf, including but not limited to the obtaining of reasonably required
bonds, insurance policies, or governmental licenses, permits or approvals. The
costs and expenses of any such performance by Lessor shall be due and payable
by Lessee upon receipt of invoice therefor. If any check given to Lessor by
Lessee shall not be honored by the bank upon which it is drawn, Lessor, at its
option, may require all future payments to be made by Lessee to be by cashier’s
check. In the event of a Breach, Lessor may, with or without further notice or
demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach:


(a)                                  Terminate Lessee’s right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Lessee shall immediately surrender possession to Lessor. In such event Lessor
shall be entitled to recover from Lessee: (i) the unpaid Rent which had been
earned at the time of termination; (ii) the worth at the time of award of the
amount by which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that the Lessee
proves could have been reasonably avoided; (iii) 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 the Lessee proves
could be reasonably avoided; and (iv) any other amount necessary to compensate
Lessor for all the detriment proximately caused by the Lessee’s failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including but not limited to the
cost of recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys’ fees,
and that portion of any leasing commission paid by Lessor in connection with
this Lease applicable to the unexpired term of this Lease. The worth at the
time of award of the amount referred to in provision (iii) of the immediately
preceding sentence shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of the District within which the Premises are
located at the time of award plus one percent. Efforts by Lessor to mitigate
damages caused by Lessee’s Breach of this Lease shall not waive Lessor’s right
to recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the
right to recover in such proceeding any unpaid Rent and damages as are
recoverable therein, or Lessor may reserve the right to recover all or any part
thereof in a separate suit. If a notice and grace period required under
Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to
perform or quit given to Lessee under the unlawful detainer statute shall also
constitute the notice required by Paragraph 13.1. In such case, the applicable
grace period required by Paragraph 13.1 and the unlawful detainer statute shall
run concurrently, and the failure of Lessee to cure the Default within the
greater of the two such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided
for in this Lease and/or by said statute.


(b)                                 Continue the Lease and Lessee’s right to
possession and recover the Rent as it becomes due, in which event Lessee may
sublet or assign, subject only to reasonable limitations. Acts of maintenance,
efforts to relet, and/or the appointment of a receiver to protect the Lessor’s
interests, shall not constitute a termination of the Lessee’s right to
possession.


(c)                                  Pursue any other remedy now or hereafter
available under the laws or judicial decisions of the state wherein the
Premises are located. The expiration or termination of this Lease and/or the
termination of Lessee’s right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee’s occupancy of the
Premises.


13.3                           Inducement Recapture. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus, inducement or consideration for Lessee’s entering into
this Lease, all of which concessions are hereinafter referred to as 


 


8





















 


“Inducement Provisions”, shall be deemed conditioned upon Lessee’s
full and faithful performance of all of the terms, covenants and conditions of
this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision
shall automatically be deemed deleted from this Lease and of no further force
or effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an Inducement Provision
shall be immediately due and payable by Lessee to Lessor, notwithstanding any
subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or
the cure of the Breach which initiated the operation of this paragraph shall
not be deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lessor at the time of such acceptance.


13.4                           Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will
cause Lessor to incur costs not contemplated by this Lease, the exact amount of
which will be extremely difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges, and late charges which may be
imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be
received by Lessor within 5 days after such amount shall be due, then, without
any requirement for notice to Lessee, Lessee shall pay to Lessor a one-time
late charge equal to 10% of each such overdue amount or $100, whichever is
greater. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute
a waiver of Lessee’s Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for 3 consecutive installments of Base Rent, then notwithstanding any provision
of this Lease to the contrary, Base Rent shall, at Lessor’s option, become due
and payable quarterly in advance.


13.5                           Interest. Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor, when due as to scheduled payments (such as Base Rent) or
within 30 days following the date on which it was due for non-scheduled
payment, shall bear interest from the date when due, as to scheduled payments,
or the 31st day after it was due as to non-scheduled payments. The interest (“Interest”) charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to
the date when due plus 4%, but shall not exceed the maximum rate allowed by
law. Interest is payable in addition to the potential late charge provided for
in Paragraph 13.4.


13.6                           Breach by Lessor.


(a)                                  Notice of Breach. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph, a reasonable time
shall in no event be less than 30 days after receipt by Lessor, and any Lender
whose name and address shall have been furnished Lessee in writing for such
purpose, of written notice specifying wherein such obligation of Lessor has not
been performed; provided, however, that if the nature of Lessor’s obligation is
such that more than 30 days are reasonably required for its performance, then
Lessor shall not be in breach if performance is commenced within such 30 day
period and thereafter diligently pursued to completion.


(b)                                 Performance by Lessee on
Behalf of Lessor. In the
event that neither Lessor nor Lender cures said breach within 30 days after
receipt of said notice, or if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee’s
expense and offset from Rent an amount equal to the greater of one month’s Base
Rent or the Security Deposit, and to pay an excess of such expense under
protest, reserving Lessee’s right to reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor.


 


14.                                 Condemnation. If the Premises or any portion thereof are
taken under the power of eminent domain or sold under the threat of the
exercise of said power (collectively “Condemnation”),
this Lease shall terminate as to the part taken as of the date the condemning
authority takes title or possession, whichever first occurs. If more than 10%
of the floor area of the Unit, or more than 25% of Lessee’s Reserved Parking
Spaces, is taken by Condemnation, Lessee may, at Lessee’s option, to be
exercised in writing within 10 days after Lessor shall have given Lessee
written notice of such taking (or in the absence of such notice, within 10 days
after the condemning authority shall have taken possession) terminate this
Lease as of the date the condemning authority takes such possession. If Lessee
does not terminate this Lease in accordance with the foregoing, this Lease
shall remain in full force and effect as to the portion of the Premises
remaining, except that the Base Rent shall be reduced in proportion to the
reduction in utility of the Premises caused by such Condemnation. Condemnation awards
and/or payments shall be the property of Lessor, whether such award shall be
made as compensation for diminution in value of the leasehold, the value of the
part taken, or for severance damages; provided, however, that Lessee shall be
entitled to any compensation for Lessee’s relocation expenses, loss of business
goodwill and/or Trade Fixtures, without regard to whether or not this Lease is
terminated pursuant to the provisions of this Paragraph. All Alterations and
Utility Installations made to the Premises by Lessee, for purposes of
Condemnation only, shall be considered the property of the Lessee and Lessee
shall be entitled to any and all compensation which is payable therefor. In the
event that this Lease is not terminated by reason of the Condemnation, Lessor
shall repair any damage to the Premises caused by such Condemnation.


 


15.                                 Brokerage Fees.


15.1                           Additional Commission.   In
addition to the payments owed pursuant to Paragraph 1.10 above, and unless
Lessor and the Brokers otherwise agree in writing, Lessor agrees that:  (a) if Lessee exercises any Option, (b) if
Lessee acquires from Lessor any rights to the Premises or other premises owned
by Lessor and located within the Project, (c) if Lessee remains in possession
of the Premises, with the consent of Lessor, after the expiration of this
Lease, or (d) if Base Rent is increased, whether by agreement or operation of
an escalation clause herein, then, Lessor shall pay Brokers a fee in accordance
with the schedule of the Brokers in effect at the time of the execution of this
Lease.


15.2                           Assumption of Obligations. Any buyer or transferee of Lessor’s interest
in this Lease shall be deemed to have assumed Lessor’s obligation hereunder.
Brokers shall be third party beneficiaries of the provisions of Paragraphs
1.10, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts due as and
for brokerage fees pertaining to this Lease when due, then such amounts shall
accrue interest. In addition, if Lessor fails to pay any amounts to Lessee’s
Broker when due, Lessee’s Broker may send written notice to Lessor and Lessee
of such failure and if Lessor fails to pay such amounts within 10 days after
said notice, Lessee shall pay said monies to its Broker and offset such amounts
against Rent. In addition, Lessee’s Broker shall be deemed to be a third party
beneficiary of any commission agreement entered into by and/or between Lessor
and Lessor’s Broker for the limited purpose of collecting any brokerage fee
owed.


15.3                           Representations and Indemnities of Broker Relationships.
Lessee and Lessor each
represent and warrant to the other that it has had no dealings with any person,
firm, broker or finder (other than the Brokers, if any) in connection with this
Lease, and that no one other than said named Brokers is entitled to any
commission or finder’s fee in connection herewith. Lessee and Lessor do each
hereby agree to indemnify, protect, defend and hold the other harmless from and
against liability for compensation or charges which may be claimed by any such
unnamed broker, finder or other similar party by reason of any dealings or
actions of the indemnifying Party, including any costs, expenses, attorneys’
fees reasonably incurred with respect thereto.


 


16.                                 Estoppel Certificates.


(a)                                  Each Party (as “Responding Party”) shall within 10 days after written notice
from the other Party (the “Requesting Party”)
execute, acknowledge and deliver to the Requesting Party a statement in writing
in form similar to the then most current “Estoppel
Certificate” form published by the American Industrial Real Estate
Association, plus such additional information, confirmation and/or statements
as may be reasonably requested by the Requesting Party.


                                (b)                                 If the Responding Party shall fail to execute
or deliver the Estoppel Certificate within such 10 day period, the Requesting
Party may execute an Estoppel Certificate stating that: (i) the Lease is in
full force and effect without modification except as may be represented by the
Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s
performance, and (iii) if Lessor is the Requesting Party, not more than one
month’s rent has been paid in advance. Prospective purchasers and encumbrances
may rely upon the Requesting Party’s Estoppel Certificate, and the Responding
Party shall be estoppel from denying the truth of the facts contained in said
Certificate.


(c)                                  If Lessor desires to finance, refinance, or
sell the Premises, or any part thereof, Lessee and all Guarantors shall deliver
to any potential lender or purchaser designated by Lessor such financial
statements as may be reasonably required by such lender or purchaser, including
but not limited to Lessee’s financial statements for the past 3 years. All such
financial statements shall be received by Lessor and such lender or purchaser
in confidence and shall be used only for the purposes herein set forth.


 


17.                                 Definition of Lessor. The term “Lessor”
as used herein shall mean the owner or owners at the time in
question of the fee title to the Premises, or, if this is a sublease, of the
Lessee’s interest in the prior lease. In the event of a transfer of Lessor’s
title or interest in the Premises or this Lease, Lessor shall deliver to the
transferee or assignee (in cash or by credit) any unused Security Deposit held
by Lessor. Except as provided in Paragraph 15, upon such transfer or assignment
and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants
under this Lease thereafter to be performed by the Lessor. Subject to the
foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.
Notwithstanding the above, and subject to the provisions of Paragraph 20 below,
the original Lessor under this Lease, and all subsequent holders of the Lessor’s
interest in this Lease shall remain liable and responsible with regard to the
potential duties and liabilities of Lessor pertaining to Hazardous Substances
as outlined in Paragraph 6.2 above.


 


18.                                 Severability. The invalidity of any provision of this
Lease, as determined by a court of competent jurisdiction, shall in no way
affect the validity of any other provision hereof.


 


19.                                 Days. Unless otherwise specifically indicated to
the contrary, the word “days” as
used in this Lease shall mean and refer to calendar days.


 


20.                                 Limitation on Liability. Subject to the provisions of Paragraph 17
above, the obligations of Lessor, and/or Lessee, under this Lease shall not
constitute personal obligations of Lessor, and/or Lessee, the individual
partners of Lessor, and/or Lessee, or its or their individual partners,
directors, officers or shareholders, and Lessee shall look to the Premises, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease,


 


9





















 


and
shall not seek recourse against the individual partners of Lessor, or its or
their individual partners, directors, officers or shareholders, or any of their
personal assets for such satisfaction.


 


21.                                 Time of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.


 


22.                                 No Prior or Other
Agreements; Broker Disclaimer. This
Lease contains all agreements between the Parties with respect to any matter
mentioned herein, and no other prior or contemporaneous agreement or
understanding shall be effective. Lessor and Lessee each represents and
warrants to the Brokers that it has made, and is relying solely upon, its own
investigation as to the nature, quality, character and financial responsibility
of the other Party to this Lease and as to the use, nature, quality and
character of the Premises. Brokers have no responsibility with respect thereto
or with respect to any default or breach hereof by either Party. The liability
(including court costs and attorneys’ fees), of any Broker with respect to
negotiation, execution, delivery or performance by either Lessor or Lessee
under this Lease or any amendment or modification hereto shall be limited to an
amount up to the fee received by such Broker pursuant to this Lease; provided,
however, that the foregoing limitation on each Broker’s liability shall not be
applicable to any gross negligence or willful misconduct of such Broker.


 


23.                                 Notices.


23.1                           Notice Requirements. All notices required
or permitted by this Lease or applicable law shall be in writing and may be
delivered in person (by hand or by courier) or may be sent by regular,
certified or registered mail or U.S. Postal Service Express Mail, with postage
prepaid, or by facsimile transmission, and shall be deemed sufficiently given
if served in a manner specified in this Paragraph 23. The addresses noted
adjacent to a Party’s signature on this Lease shall be that Party’s address for
delivery or mailing of notices. Either Party may by written notice to the other
specify a different address for notice, except that upon Lessee’s taking
possession of the Premises, the Premises shall constitute Lessee’s address for
notice. A copy of all notices to Lessor shall be concurrently transmitted to
such party or parties at such addresses as Lessor may from time to time
hereafter designate in writing.


23.2                       Date of Notice. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular
mail the notice shall be deemed given 48 hours after the same is addressed as
required herein and mailed with postage prepaid. Notices delivered by United
States Express Mail or overnight courier that guarantee next day delivery shall
be deemed given 24 hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means shall
be deemed delivered upon telephone confirmation of receipt (confirmation report
from fax machine is sufficient), provided a copy is also delivered via delivery
or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall
be deemed received on the next business day.


 


24.                                 Waivers. No waiver by Lessor of the Default or Breach
of any term, covenant or condition hereof by Lessee, shall be deemed a waiver
of any other term, covenant or condition hereof, or of any subsequent Default
or Breach by Lessee of the same or of any other term, covenant or condition
hereof. Lessor’s consent to, or approval of, any act shall not be deemed to
render unnecessary the obtaining of Lessor’s consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. The acceptance of Rent by Lessor shall not be a waiver of any Default
or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account
of monies or damages due Lessor, notwithstanding any qualifying statements or
conditions made by Lessee in connection therewith, which such statements and/or
conditions shall be of no force or effect whatsoever unless specifically agreed
to in writing by Lessor at or before the time of deposit of such payment.


 


25.                                 Disclosures Regarding The
Nature of a Real Estate Agency Relationship.


(a)                                  When entering into a discussion with a real
estate agent regarding a real estate transaction, a Lessor or Lessee should
from the outset understand what type of agency relationship or representation
it has with the agent or agents in the transaction. Lessor and Lessee acknowledge
being advised by the Brokers in this transaction, as follows:


(i)                                     Lessor’s Agent. A Lessor’s agent under a listing agreement
with the Lessor acts as the agent for the Lessor only. A Lessor’s agent or
subagent has the following affirmative obligations: To the Lessor: A
fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with
the Lessor. To the Lessee and the Lessor: a. Diligent exercise of
reasonable skills and care in performance of the agent’s duties. b. A duty of
honest and fair dealing and good faith. c. A duty to disclose all facts known
to the agent materially affecting the value or desirability of the property
that are not known to, or within the diligent attention and observation of, the
Parties. An agent is not obligated to reveal to either Party any confidential
information obtained from the other Party which does not involve the
affirmative duties set forth above.


(ii)                                  Lessee’s Agent. An agent can agree to act as agent for the
Lessee only. In these situations, the agent is not the Lessor’s agent, even if
by agreement the agent may receive compensation for services rendered, either
in full or in part from the Lessor. An agent acting only for a Lessee has the
following affirmative obligations. To the Lessee: A fiduciary duty of
utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To
the Lessee and the Lessor: a. Diligent exercise of reasonable skills and
care in performance of the agent’s duties. b. A duty of honest and fair dealing
and good faith. c. A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not known to, or
within the diligent attention and observation of, the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from
the other Party which does not involve the affirmative duties set forth above.


(iii)                               Agent Representing Both Lessor and Lessee. A real estate agent, either acting directly
or through one or more associate licenses, can legally be the agent of both the
Lessor and the Lessee in a transaction, but only with the knowledge and consent
of both the Lessor and the Lessee. In a dual agency situation, the agent has
the following affirmative obligations to both the Lessor and the Lessee: a. A
fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings
with either Lessor or the Lessee. b. Other duties to the Lessor and the Lessee
as stated above in subparagraphs (i) or (ii). In representing both Lessor and
Lessee, the agent may not without the express permission of the respective
Party, disclose to the other Party that the Lessor will accept rent in an
amount less than that indicated in the listing or that the Lessee is willing to
pay a higher rent than that offered. The above duties of the agent in a real
estate transaction do not relieve a Lessor or Lessee from the responsibility to
protect their own interests. Lessor and Lessee should carefully read all
agreements to assure that they adequately express their understanding of the
transaction. A real estate agent is a person qualified to advise about real
estate. If legal or tax advice is desired, consult a competent professional.


(b)                                 Brokers have no responsibility with respect
to any default or breach hereof by either Party. The liability (including court
costs and attorneys’ fees), of any Broker with respect to any breach of duty,
error or omission relating to this Lease shall not exceed the fee received by
such Broker pursuant to this Lease; provided, however, that the foregoing
limitation on each Broker’s liability shall not be applicable to any gross
negligence or willful misconduct of such Broker.


(c)                                  Buyer and Seller agree to identify to Brokers
as “Confidential” any communication or information given Brokers that is
considered by such Party to be confidential.


 


26.                                 No Right To Holdover. Lessee has no right to retain possession of
the Premises or any part thereof beyond the expiration or termination of this
Lease. In the event that Lessee holds over, then the Base Rent shall be
increased to 150% of the Base Rent applicable immediately preceding the
expiration or termination. Nothing contained herein shall be construed as
consent by Lessor to any holding over by Lessee.


 


27.                                 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.


 


28.                                 Covenants and Conditions;
Construction of Agreement. All
provisions of this Lease to be observed or performed by Lessee are both
covenants and conditions. In construing this Lease, all headings and titles are
for the convenience of the Parties only and shall not be considered a part of
this Lease. Whenever required by the context, the singular shall include the
plural and vice versa. This Lease shall not be construed as if prepared by one
of the Parties, but rather according to its fair meaning as a whole, as if both
Parties had prepared it.


 


29.                                 Binding Effect; Choice of
Law. This Lease shall be
binding upon the parties, their personal representatives, successors and
assigns and be governed by the laws of the State in which the Premises are
located. Any litigation between the Parties hereto concerning this Lease shall
be initiated in the county in which the Premises are located.


 


30.                                 Subordination; Attornment;
Non-Disturbance.


30.1                           Subordination. This Lease and any Option granted hereby shall be subject and
subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, “Security Device”), now or hereafter placed upon the Premises,
to any and all advances made on the security thereof, and to all renewals,
modifications, and extensions thereof. Lessee agrees that the holders of any
such Security Devices (in this Lease together referred to as “Lender”) shall have no liability or
obligation to perform any of the obligations of Lessor under this Lease. Any
Lender may elect to have this Lease and/or any Option granted hereby superior
to the lien of its Security Device by giving written notice thereof to Lessee,
whereupon this Lease and such Options shall be deemed prior to such Security
Device, notwithstanding the relative dates of the documentation or recordation
thereof.


30.2                           Attornment. Subject to the non-disturbance provisions of Paragraph 30.3, Lessee
agrees to attorn to a Lender or any other party who acquires ownership of the
Premises by reason of a foreclosure of a Security Device, and that in the event
of such foreclosure, such new owner shall not: (a) be liable for any act or omission
of any prior lessor or with respect to events occurring prior to acquisition of
ownership; (b) be subject to any offsets or 


 


10





















 


defenses which Lessee might
have against any prior lessor, (c) be bound by prepayment of more than one
month’s rent, or (d) be liable for the return of any security deposit paid to
any prior lessor.


30.3                           Non-Disturbance. With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee’s subordination of this Lease shall be subject
to receiving a commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”) from the
Lender which Non-Disturbance Agreement provides that Lessee’s possession of the
Premises, and this Lease, including any options to extend the term hereof, will
not be disturbed so long as Lessee is not in Breach hereof and attorns to the
record owner of the Premises. Further, within 60 days after the execution of
this Lease, Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any pre-existing Security Device
which is secured by the Premises. In the event that Lessor is unable to provide
the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.


30.4                           Self-Executing. The agreements contained in this Paragraph 30 shall be effective
without the execution of any further documents; provided, however, that, upon
written request from Lessor or a Lender in connection with a sale, financing or
refinancing of the Premises, Lessee and Lessor shall execute such further
writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.


 


31.                                 Attorneys’ Fees.  If
any Party or Broker brings an action or proceeding involving the Premises
whether founded in tort, contract or equity, or to declare rights hereunder,
the Prevailing Party (as hereafter defined) in any such proceeding, action, or
appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may
be awarded in the same suit or recovered in a separate suit, whether or not
such action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include, without
limitation, a Party or Broker who substantially obtains or defeats the relief
sought, as the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party or Broker of its claim or defense. The attorneys’
fees award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all reasonable attorneys’ fees. In
addition, Lessor shall be entitled to reasonable attorneys’ fees, costs and
expenses incurred in the preparation and service of notices of Default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach
($200 is a reasonable minimum per occurrence for such services and
consultation).


 


32.                                 Lessor’s Access;
Showing Premises; Repairs. Lessor and Lessor’s agents shall have the
right to enter the Premises at any time, in the case of an emergency, and
otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or tenants, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem
necessary. All such activities shall be without abatement of rent or liability
to Lessee. Lessor may at any time place on the Premises any ordinary “For Sale” signs and Lessor may during the
last 6 months of the term hereof place on the Premises any ordinary “For Lease” signs. Lessee may at any time
place on the Premises any ordinary “For
Sublease” sign.


 


33.                                 Auctions. Lessee shall not conduct, nor permit to be
conducted, any auction upon the Premises without Lessor’s prior written
consent. Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to permit an auction.


 


34.                                 Signs. Except for ordinary “For
Sublease” signs which may be placed only on the Premises, Lessee
shall not place any sign upon the Project without Lessor’s prior written
consent. All signs must comply with all Applicable Requirements.


 


35.                                 Termination; Merger. Unless specifically stated otherwise in
writing by Lessor, the voluntary or other surrender of this Lease by Lessee,
the mutual termination or cancellation hereof, or a termination hereof by
Lessor for Breach by Lessee, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, that Lessor may elect to
continue any one or all existing subtenancies. Lessor’s failure within 10 days
following any such event to elect to the contrary by written notice to the
holder of any such lesser interest, shall constitute Lessor’s election to have
such event constitute the termination of such interest.


 


36.                                 Consents. Except as otherwise provided herein,
wherever in this Lease the consent of a Party is required to an act by or for
the other Party, such consent shall not be unreasonably withheld or delayed.
Lessor’s actual reasonable costs and expenses (including but not limited to
architects’, attorneys’, engineers’ and other consultants’ fees) incurred in
the consideration of, or response to, a request by Lessee for any Lessor
consent, including but not limited to consents to an assignment, a subletting
or the presence or use of a Hazardous Substance, shall be paid by Lessee upon
receipt of an invoice and supporting documentation therefor. Lessor’s consent
to any act, assignment or subletting shall not constitute an acknowledgment
that no Default or Breach by Lessee of this Lease exists, nor shall such
consent be deemed a waiver of any then existing Default or Breach, except as
may be otherwise specifically stated in writing by Lessor at the time of such
consent. The failure to specify herein any particular condition to Lessor’s
consent shall not preclude the imposition by Lessor at the time of consent of
such further or other conditions as are then reasonable with reference to the
particular matter for which consent is being given. In the event that either
Party disagrees with any determination made by the other hereunder and
reasonably requests the reasons for such determination, the determining party
shall furnish its reasons in writing and in reasonable detail within 10
business days following such request.


 


37.                                 Guarantor.


37.1                           Execution. The Guarantors, if any, shall each execute a guaranty in the form most
recently published by the American Industrial Real Estate Association, and each
such Guarantor shall have the same obligations as Lessee under this Lease.


37.2                           Default. It shall constitute a Default of the Lessee if any Guarantor fails or
refuses, upon request to provide: (a) evidence of the execution of the
guaranty, including the authority of the party signing on Guarantor’s behalf to
obligate Guarantor, and in the case of a corporate Guarantor, a certified copy
of a resolution of its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d)
written confirmation that the guaranty is still in effect.


 


38.                                 Quiet Possession. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee’s part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.


 


39.                                 Options. If Lessee is granted an option, as defined
below, then the following provisions shall apply.


39.1                           Definition. “Option” shall mean: (a) the right to extend the term
of or renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of
Lessor.


39.2                           Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is
personal to the original Lessee, and cannot be assigned or exercised by anyone
other than said original Lessee and only while the original Lessee is in full
possession of the Premises and, if requested by Lessor, with Lessee certifying
that Lessee has no intention of thereafter assigning or subletting.


39.3                           Multiple Options. In the event that Lessee has any multiple Options to extend or renew
this Lease, a later Option cannot be exercised unless the prior Options have
been validly exercised.


39.4                           Effect of Default on Options.


                                (a)                                  Lessee shall have no right to exercise an
Option: (i) during the period commencing with the giving of any notice of
Default and continuing until said Default is cured, (ii) during the period of
time any Rent is unpaid (without regard to whether notice thereof is given
Lessee), (iii) during the time Lessee is in Breach of this Lease, or (iv) in
the event that Lessee has been given 3 or more notices of separate Default, whether
or not the Defaults are cured, during the 12 month period immediately preceding
the exercise of the Option.


(b)                                 The period of time within which an Option may
be exercised shall not be extended or enlarged by reason of Lessee’s inability
to exercise an Option because of the provisions of Paragraph 39.4(a).


(c)                                  An Option shall terminate and be of no
further force or effect, notwithstanding Lessee’s due and timely exercise of
the Option, if, after such exercise and prior to the commencement of the
extended term, (i) Lessee fails to pay Rent for a period of 30 days after such
Rent becomes due (without any necessity of Lessor to give notice thereof), (ii)
Lessor gives to Lessee 3 or more notices of separate Default during any 12
month period, whether or not the Defaults are cured, or (iii) if Lessee commits
a Breach of this Lease.


 


40.                                 Security Measures. Lessee hereby acknowledges that the Rent
payable to Lessor hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of
third parties.


 


41.                                 Reservations. Lessor reserves the right: (i) to grant,
without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, (ii) to cause the recordation of
parcel maps and restrictions, and (iii) to create and/or install new utility
raceways, so long as such easements, rights, dedications, maps, restrictions,
and utility raceways do not unreasonably interfere with the use of the Premises
by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor
to effectuate such rights.


 


42.                                 Performance Under Protest. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment “under protest” and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it 


 


11





















 


shall
be adjudged that there was no legal obligation on the part of said Party to pay
such sum or any part thereof, said Party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay.


 


43.           Authority. If either Party hereto is a corporation,
trust, limited liability company, partnership, or similar entity, each
individual executing this Lease on behalf of such entity represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
its behalf. Each party shall, within 30 days after request, deliver to the
other party satisfactory evidence of such authority.


 


44.           Conflict. Any conflict between the printed provisions
of this Lease and the typewritten or handwritten provisions shall be controlled
by the typewritten or handwritten provisions.


 


45.           Offer. Preparation of this Lease by either party or
their agent and submission of same to the other Party shall not be deemed an
offer to lease to the other Party. This Lease is not intended to be binding
until executed and delivered by all Parties hereto.


 


46.           Amendments. This Lease may be modified only in writing,
signed by the Parties in interest at the time of the modification. As long as
they do not materially change Lessee’s obligations hereunder, Lessee agrees to
make such reasonable non-monetary modifications to this Lease as may be
reasonably required by a Lender in connection with the obtaining of normal
financing or refinancing of the Premises.


 


47.           Multiple Parties. If more than one person or entity is named
herein as either Lessor or Lessee, such multiple Parties shall have joint and
several responsibility to comply with the terms of this Lease.


 


48.           Waiver of Jury Trial. The Parties hereby waive their respective
rights to trial by jury in any action or proceeding involving the Property or
arising out of this Agreement.


 


49.           Mediation and Arbitration of
Disputes. An Addendum
requiring the Mediation and/or the Arbitration of all disputes between the
Parties and/or Brokers arising out of this Lease o is ý is not attached to this Lease.


 


50.           Tenant improvements.
Lessor shall, at Lessor’s sole cost and expense:


General


(a)   Repair roof leaks
throughout the Premises


(b)   Replace broken or
stained ceiling tiles


(c)   Paint all walls
that are currently white (color TBD)


(d)   Professionally
clean the carpets throughout


(e)   Repair window
sills throughout premises


Main Conference Room


(e)   New paint
throughout (color TBD)


Restrooms (local
premises)


(f)    Professionally
clean VCT flooring in Men’s and Women’s restrooms


(g)   Paint Men’s and
Women’s restrooms


(h)   Install new
toilets in Women’s restroom


Open Area


(i)    Install new HVAC
return grille


Southerly Perimeter
Offices


(j)    Balance the HVAC
system


Kitchen (initial
premises)


(k)   Install new VCT
flooring, remove carpet


Kitchen (expansion
premises)


(l)    Extend existing
upper and lower millwork


(m)  Add dedicated power
at counter level for microwave and toaster


Reception Area


(n)   Move glass doors
by expansion premises, demo and carpet patch as required


Change
Order 1


Work described in Change Order 1, attached as Exhibit B1


 


In addition, Lessor shall credit $5,050.65 towards future improvments
only.


 


51.           Notice of Lease Term
Dates. Tenant agrees to execute “Notice of Lease Term Dates” within 10 days of
receipt of request from Landlord. The “Notice of Lease Term Dates” shall be in
the form of Exhibit G of this Lease.


 


52.           Fitness Center and
Conference Room.  The conference room and
fitness center are run by the Bernal Corporate Park Owners


Association and is managed by Parkway Properties. Any conference room
reservations should be coordinated with Parkway Properties. Parkway Properties
is located at 7011 Koll Center Parkway, Suite 210, Pleasanton, CA 94566. Their
phone number is (925) 426-0909.


 


53.           Prior Lease
Termination. Upon full execution of this lease by both Lessor and Lessee, the Lease
dated September 12, 2000 by and between Bernal Corporate Park and Lipid
Sciences, Inc. shall be terminated in it’s
entirety, including all amendments and the Letter of Credit that functioned as
security deposit under said Lease.


 


LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW
THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT
THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.


 


ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
TO WHICH IT RELATES. THE PARTIES ARE URGED TO:


1.             SEEK ADVICE OF COUNSEL AS TO THE
LEGAL AND TAX CONSEQUENCES OF THIS LEASE.


2.             RETAIN APPROPRIATE CONSULTANTS TO
REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD
INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,
THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF
AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND
THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE.


 


WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA,
CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS
OF THE STATE IN WHICH THE PREMISES ARE LOCATED.


The
parties hereto have executed this Lease at the place and on the dates specified
above their respective signatures.


 


12





















 


Under California Corporate Code, the Lessor requires that a signatory from each of the following
categories sign each document:


 


(A)          One
(1) signature is from either (1) Chairman of the Board, (2) President, or (3)
any Vice President; and 


(B)           Second
(2nd) signature is from either (1) Corporate Secretary, (2) Assistant Secretary, (3) Chief Financial
Officer, or (4) Assistant Treasurer.


 


Alternatively, a single signature is acceptable only if (i) the single
signatory holds titles from both categories (A) and (B) above, or (ii) we
receive satisfactory evidence of authority (such as a current board of director’s
resolution or certificate of corporate secretary) expressly authorizing
execution of documents on behalf of the corporation by the signing officer.


 


 


	
  Executed at:

  	
  Fremont, CA

  	
   

  	
  Executed at:

  	
  5:00 PM

  	
   

  
	
  on:

  	
  May 3 2005

  	
   

  	
  on:

  	
  April 26, 2005

  	
   

  
	
   

  	
   

  
	
  By LESSOR:

  	
  BY LESSEE:

  
	
  7-L NorthCreek, LLC

  	
   

  	
  Lipid Sciences, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Marc Barkdull

  	
   

  	
  By:

  	
  /s/ S. Lewis Meyer

  	
   

  
	
  Name Printed:

  	
  Marc
  Barkdull

  	
   

  	
  Name Printed:

  	
  S. Lewis Meyer

  	
   

  
	
  Title:

  	
   Manager

  	
   

  	
  Title:

  	
  President/CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ Sandra Gardiner

  	
   

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
  Sandra Gardiner

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  CFO

  	
   

  
	
  Address:

  	
  4175 Business Center Drive

  	
   

  	
  Address:

  	
   7068 Koll Center Parkway, Suite 401

  	
   

  
	
  Fremont, CA 94538

  	
   

  	
   

  	
  Pleasanton, CA 94566

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (510) 226-6957

  	
   

  	
  Telephone:

  	
   (925) 249-4045

  	
   

  
	
  Facsimile:

  	
  (510) 226-6905

  	
   

  	
  Facsimile:

  	
   (925) 249-4040

  	
   

  
	
  Federal ID No.

  	
  94-3341914

  	
   

  	
  Federal ID No.

  	
  43-0433090

  	
   

  
																				



 


These forms are often modified to meet changing
requirements of law and needs of the industry. Always write or call to make
sure you are utilizing the most current form: American Industrial Real Estate
Association, 700 South Flower Street, Suite 600, Los Angeles, CA 90017. (213)
687-8777.


 


(c)Copyright
1998 By American Industrial Real Estate Association.


All rights
reserved.


No part of
these works may be reproduced in any form without permission in writing.


 


13





















 


EXHIBIT A


SITE PLAN


 


	
  

  	
   

  	
  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  Premises

  

  

  

  

  

  

  

  

  


  
	
   

  	
   

  
	
   

  	
  North Creek I

  	
   

  
	
  Bernal
  Corporate Park

  
	
  7020,
  7026, 7060, and 7068 Koll Center Parkway

  
				



Pleasanton,
CA 94566


 





















 


EXHIBIT B


EXISTING
FLOOR PLAN


 







	
   

  	
  

  
	
   

  
	
  7068
  Koll Center Parkway

  
	
   

  	
  Suite 401

  
	
  Pleasanton,
  CA 94566

  	
   

  
				






 





















 


	
  EXHIBIT B1

  	
  Project 

  
	
   

  	
   

  	
  Lipid Sciences 

  
	
   

  	
   

  	
  North Creek I

  
	
   

  	
   

  	
  7068 Koll Center Parkway,
  Suite 401

  
	
   

  	
   

  	
  Pleasanton, CA 94566

  
	
   

  	
   

  	
   

  
	
  Distribution 

  	
   

  	
  Contractor 

  
	
  ý  Owner

  	
  ý  Tenant

  	
   

  	
  P.D. Larson 

  
	
  o  Architect

  	
  o  Subcontractor

  	
   

  	
  3711 Trenery Drive, Suite
  100

  
	
  o  Contractor

  	
  o  Other:

  	
   

  	
  Pleasanton, CA 94588

  
	
   

  	
   

  	
   

  
	
   

  	
  TO: 

  	
  7-L NorthCreek, LLC

  	
  Change
  Order No:

  	
   

  	
  1

  
	
   

  	
  4175 Business Center Drive

  	
  Date:

  	
   

  	
  March 24, 2005

  
	
   

  	
  Fremont, CA 94538

  	
  Project
  No:

  	
   

  	
  Lipid Sciences

  
	
   

  	
   

  	
  Contract
  Date:

  	
   

  	
  3/23/2005

  
	
   

  	
   

  	
  Contract
  For:

  	
   

  	
  General

  
								



 


	
  Original
  Contract Sum

  	
   

  	
  $

  	
  —

  	
   

  
	
  Net change by previous Change Orders

  	
   

  	
  $

  	
  —

  	
   

  
	
  Contract Sum prior to this Change Order was

  	
   

  	
  $

  	
  —

  	
   

  
	
  Amount of this Change Order

  	
   

  	
  $

  	
  14,917.35

  	
   

  
	
  Contract Sum including this Change Order will be

  	
   

  	
  $

  	
  14,917.35

  	
   

  
	
  Contract Time will be increased by

  	
   

  	
   

  	
   

  
	
  Date of Substantial Completion as of the date of this Change Order
  therefore is

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Description of Change Order:

  	
   

  	
   

  	
   

  
	
  Work as described on P.D. Larson Estimate # 99454PL (attached) for
  staging room and electrical under conference table

  	
   

  	
  $

  	
  14,207.00

  	
   

  
	
  P.J. Livingston Company overhead fee, equal to 5% of the Estimate
  Total

  	
   

  	
  $

  	
  710.35

  	
   

  
	
  Total

  	
   

  	
  $

  	
  14,917.35

  	
   

  



 


	
  Accepted By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Not Required

  	
   

  
	
  Contractor

  	
   

  	
  By:

  	
  Date

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tenant

  	
   

  	
  By:

  	
  Date

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7-L NorthCreek, LLC

  	
   

  	
   

  	
   

  
	
  Owner

  	
   

  	
  By: Marc Barkdull, Manager

  	
  Date

  



 





















 


	
  

  	
  EXHIBIT
  B1

  	
   

  	
  Estimate

  
	
  3711 Trenery Drive, Suite 100

  	
   

  	
  DATE

  	
  ESTIMATE #

  
	
  Pleasanton,
  CA 94588

  	
   

  	
  3/23/2005

  	
   

  	
  99454PL

  	
   

  
	
  CA License #774736

  	
   

  	
   

  	
   

  



 


NAME / ADDRESS


 


PJ Livingston Co.


4175 Business Center Dr. 


Fremont, CA 94538


 


	
   

  	
   

  	
  PROJECT

  	
   

  
	
   

  	
   

  	
  Lipid Sciences

  	
   

  
	
  DESCRIPTION

  	
   

  	
  TOTAL

  	
   

  
	
  Estimate based
  on lease exhibit dated 3/16/05

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  STAGING ROOM

  	
   

  	
   

  	
   

  
	
  Framing &
  Drywall (finish existing walls).

  	
   

  	
  1,100.00

  	
   

  
	
  Paint room.

  	
   

  	
  333.00

  	
   

  
	
  Electrical (6)
  lights, (1) switch, (5) outlets, (1) misc.

  	
   

  	
  2,000.00

  	
   

  
	
  HVAC (provide
  supply and return air).

  	
   

  	
  1,200.00

  	
   

  
	
  Fire Sprinkler (includes plan and
  permit).

  	
   

  	
  1,550.00

  	
   

  
	
  Flooring (VCT
  and base)

  	
   

  	
  1,058.00

  	
   

  
	
  Acoustical
  ceiling

  	
   

  	
  963.00

  	
   

  
	
  Clean up.

  	
   

  	
  250.00

  	
   

  
	
  Supervision,
  Profit & Overhead.

  	
   

  	
  1,268.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ELECTRICAL UNDER
  CONFERENCE TABLE

  	
   

  	
   

  	
   

  
	
  Electrical
  (install (2) conduit to center of room (1)
  power, (1) data conduit).

  	
   

  	
  550.00

  	
   

  
	
  Saw cut concrete
  and patch back.

  	
   

  	
  1,800.00

  	
   

  
	
  Drywall patch.

  	
   

  	
  350.00

  	
   

  
	
  Flooring (building
  carpet and base) at conference room.

  	
   

  	
  1,200.00

  	
   

  
	
  Supervision,
  Profit & Overhead.

  	
   

  	
  585.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exclusions:
  Permits, Plans, City required upgrades ie: ADA ramp, Items not included in estimate, Condition of
  existing lighting, Phone, data & security cabling, Window coverings,
  Note: because of market conditions materials ie; drywall, steel, etc. are
  subject to change daily.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thank You ! Paul Larson

  	
  TOTAL

  	
   

  	
  $

  	
  14,207.00

  	
   

  
						



 


	
   

  	
  SIGNATURE

  	
   

  



 





















 


EXHIBIT C


INITIAL
PREMISES


 





 




	
   

  	
  

  
	
   

  
	
  7068
  Koll Center Parkway

  
	
  Suite
  401

  	
   

  
	
  Pleasanton,
  CA 94566

  	
   

  
				






 





















 


EXHIBIT D


 


SIGN CRITERIA


 


1.             SIGN CRITERIA.


 


This
criteria establishes the uniform policies for Tenant sign identification for
lease space with North Creek Business Park. These criteria have been established
for the purpose of maintaining the overall appearance of the Project.
Conformance will be strictly enforced. Any sign installed which does not
conform to the sign criteria will be brought into conformity at the expense of
the Tenant.


 


a.             General Requirements.


 


i.              Lettering and installation of sign shall be
paid for by the Tenant.  All copy design
must be previously approved by Landlord.


 


ii.             Tenant shall be responsible for the
maintenance of its sign and the fulfillment of all sign requirements for these
criteria throughout the term of its lease.


 


b.             General Specifications.


 


i.              Measurements: To be determined.


 


ii.             Tenant shall be allowed one sign regardless of
size of occupancy.


 


iii.            No electrical or audible signs will be
allowed.


 


iv.            Upon removal of any sign by the Tenant, any
damage to the sign backing or the building will be repaired by Tenant. Tenant
will remove the lettering portion of the sign prior to lease termination. The
backing shall become the property of the Landlord and shall remain affixed to
the building.


 


v.             Except as provided herein, no advertising
placards, banners, pennants, names, insignia, trademarks, or other descriptive
material shall be affixed or maintained upon any automated machine, glass panes
of the building, building exterior, landscaped area, streets, or parking or
common area of the Project.


 


vi.            Sign criteria are subject to change as may be
determined by the Landlord’s reasonable judgment.


 


vii.           Current rules and regulations relating to
signs shall be established by Landlord in its sole and absolute discretion, and
when completed shall become part of this Lease and marked Exhibit “D1”.


 


viii.          Monument signage: If space is available on the monument signs,
Tenant may request signage thereon for an additional monthly charge. Monument
signs are controlled by Bernal Corporate Park Parcel Signage System guidelines
and the proposed design must be approved by the Owners Association in addition
to the Landlord. Logos are not allowed on monument signs, and lettering must
match existing lettering on the signs.


 





















 


EXHIBIT E


 


RULES AND REGULATIONS

North Creek I


 


1.              Except as specifically provided in the
Lease to which these Rules and Regulations are attached, no sign, placard,
picture, advertisement, name or notice shall be installed or displayed on any
part of the outside or inside of the Building without the prior written consent
of Landlord. Landlord shall have the right to remove, at Tenant’s expense and
without notice, any sign installed or displayed in violation of this rule. All
approved signs or lettering on doors and walls shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person approved by Landlord.


 


2.              If Landlord objects in writing to any
curtains, blinds, shades, screens or hanging plants or other similar objects
attached to or used in connection with any window or door of the Premises, or
placed on any windowsill, which is visible from the exterior of the Premises,
Tenant shall immediately discontinue such use. Tenant shall not place anything
against or near glass partitions or doors or windows which may appear unsightly
from outside the Premises.


 


3.              Tenant shall not obstruct any sidewalks,
halls, passages, exits, entrances, elevators, escalators, or stairways of the
Project. The halls, passages, exits, entrances, elevators, and stairways are
not open to the general public, but are open, subject to reasonable regulation,
to Tenant’s business invitees. Landlord shall in all cases retain the right to
control and prevent access thereto of all persons whose presence in the
judgment of Landlord would be prejudicial to the safety, character, reputation and interest of the Project and its
tenants; provided that nothing herein contained shall be construed to prevent
such access to persons with whom any tenant normally deals in the ordinary
course of its business, unless such persons are engaged in illegal or unlawful
activities. No tenant and no employee or invitee of any tenant shall go upon
the roof of any building of the Project.


 


4.               The directory of the building will be provided
exclusively for the display of the name and location of tenants only, and
Landlord reserves the right to exclude any other names therefrom.


 


5.               All cleaning and janitorial services for the
Project and the Premises shall be provided exclusively through Landlord, and
except with the written consent of Landlord, no person or persons other than
those approved by Landlord shall be employed by Tenant or permitted to enter
the Building for the purpose of cleaning the same. Tenant shall not cause any
unnecessary labor by carelessness or indifference to the good order and
cleanliness of the Premises.


 


6.              Landlord will furnish Tenant, free of charge,
with two keys to each door lock in the Premises. Landlord may make a reasonable
charge for any additional keys. Tenant shall not make or have made additional
keys, and Tenant shall not alter any lock or install a new additional lock or
bolt on any door of its Premises. Tenant, upon the termination of its tenancy,
shall deliver to Landlord the keys of all doors which have been furnished to
Tenant, and in the event of loss of any keys so furnished, shall pay Landlord
therefor.


 


7.              If Tenant requires telegraphic, telephonic,
burglar alarm or similar services, it shall first obtain, and comply with, Landlord’s
instructions in their installation.


 


8.              Tenant shall not place a load upon any floor
of the Premises which exceeds the load per square foot which such floor was
designed to carry and which is allowed by law. Landlord shall have the right to
prescribe the weight, size and position of all equipment, materials, furniture
or other property brought into the Project. Heavy objects shall, if considered
necessary by Landlord, stand on such platforms as determined by Landlord to be
necessary to properly distribute the weight, which platforms shall be provided
at Tenant’s expense. Business machines and mechanical equipment belonging to
Tenant, which cause noise or vibration that may be transmitted to the structure
of the Premises or to any space therein to such a degree to be objectionable to
Landlord or to any tenants in the Project, shall be placed and maintained by
Tenant, at Tenant’s expense, on vibration eliminators or other devices
sufficient to eliminate noise or vibration.  
The persons employed to move such equipment in or out of the Premises
must be acceptable to Landlord. Landlord will not be responsible for loss of,
or damage to, any such equipment or other property from any cause, and all
damage done to the Premises, by maintaining or moving such equipment or other
property shall be repaired at the expense of Tenant.


 


9.              Tenant shall not use or keep in the Premises
any kerosene, gasoline or inflammable or combustible fluid or material other
than those limited quantities necessary for the operation or maintenance of
office equipment. Tenant shall not use or permit to be used in the Premises any
foul or noxious gas or substance, or permit or allow the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Project by reason of noise, odors or vibrations, nor shall
Tenant bring into or keep in or about the Premises any birds or animals.


 


10.            Tenant shall not use any method of heating or
air-conditioning other than that supplied by Landlord.


 





















 


11.            Tenant shall not waste electricity, water or
air-conditioning and agrees to cooperate fully with Landlord to assure the most
effective operation of the Premises’ heating and air-conditioning and to comply
with any governmental energy-saving rules, laws or regulations of which Tenant
has actual notice, and shall refrain from attempting to adjust controls.  
Tenant shall keep corridor doors closed, and shall close window
coverings at the end of each business day.


 


12.            Landlord reserves the right, exercisable without
notice and without liability to Tenant, to change the name and street address
of the Premises.


 


13.            Landlord reserves the right to exclude from the
Project between the hours of 6 p.m. and 7 a.m. the following day, or such other
hours as may be established from time to time by Landlord, and on Sundays and legal
holidays, any person unless that person is known to the person or employee in
charge of the Project and has a pass or is properly identified. Tenant shall be
responsible for all persons for whom it requests passes and shall be liable to
Landlord for all acts of such persons. Landlord shall not be liable for damages
for any error with regard to the admission to or exclusion from the Project of
any person. Landlord reserves the right to prevent access to the Project in case
of invasion, mob, riot, public excitement or other commotion by closing the
doors or by other appropriate action.


 


14.            Tenant shall close and lock the doors of its
Premises and entirely shut off all water faucets or other water apparatus, and
electricity, gas or air outlets before tenant and its employees leave the Premises.
Tenant shall be responsible for any damage or injuries sustained by other
tenants or occupants of the Project or by Landlord for noncompliance with this
rule.


 


15.            Tenant shall not obtain for use on the
Premises ice, drinking water, food beverages, towel or other similar services
upon the Premises, except at such hours and under such regulations as may be fixed
by Landlord.


 


16.            The toilet rooms, toilets, urinals, wash bowls
and other apparatus shall not be used for any purpose other than that for which
they were constructed and no foreign substance of any kind whatsoever shall be
thrown therein. The expense of any breakage, stoppage of damage resulting from the
violation of this rule shall be borne by the tenant who, or whose employees or
invitees, shall have caused it.


 


17.            Tenant shall not sell, or permit the sale at
retail, of newspapers, magazines, periodicals, theater tickets or any other
goods or merchandise to the general public in or on the Premises. Tenant shall not
make any suite-to-suite solicitation of business from other tenants in the
Project. Tenant shall not use the Premises for any business or activity other
than that specifically provided for in Tenant’s Lease.


 


18.            Tenant shall not install any radio or
television antenna, loudspeaker or other devices on the roof or exterior walls
of the Premises. Tenant shall not interfere with radio or television
broadcasting or reception from or in the Project or elsewhere.


 


19.            Tenant shall not mark, drive nails, screw or
drill into the partitions, woodwork or plaster or in any way deface the
Premises or any part thereof, except in accordance with the provisions of the Lease
pertaining to alterations.   Landlord reserves
the right to direct electricians as to where and how telephone and telegraph
wires are to be introduced to the Premises. Tenant shall not cut or bore holes
for wires.   Tenant shall not affix any
floor covering to the floor of the Premises in any manner except as approved by
Landlord. Tenant shall repair any
damage resulting from noncompliance with this rule.


 


20.            Tenant shall not install, maintain or operate
upon the Premises any vending machines without the written consent of Landlord.


 


21.            Canvassing, soliciting and distributing of
handbills or any other written material, and peddling in the Project are
prohibited, and Tenant shall cooperate to prevent such activities.


 


22.            Landlord reserves the right to exclude or
expel from the Project any person who, in Landlord’s judgment, is intoxicated
or under the influence of liquor or drugs or who is in violation of any of the
Rules and Regulations of the Project.


 


23.            Tenant shall store all its trash and garbage
within its Premises or in other facilities provided by Landlord. Tenant shall
not place in any trash box or receptacle any material which cannot be disposed
of in the ordinary and customary manner of trash and garbage disposal.  All garbage and refuse disposal shall be made
in accordance with directions issued from time to time by Landlord.


 


24.            The Premises shall not be used for the storage
of merchandise held for sale to the general public, or for lodging or for
manufacturing of any kind, nor shall the Premises be used for any improper, immoral
or objectionable purpose.   No cooking
shall be done or permitted on the Premises without Landlord’s consent, except
that use by Tenant of Underwriter’s Laboratory approved equipment for brewing coffee,
tea, hot chocolate and similar beverages or use of microwave ovens for employee
use shall be permitted, provided that such equipment and use is in accordance with all applicable federal, state,
county and city laws, codes, ordinances, rules and regulations.


 


25.            Tenant shall not use in the Premises any hand
truck except those equipped with rubber tires and side guards or such other
material-handling equipment as Landlord may approve. Tenant shall not bring any
other vehicles of any kind into
the Premises.


 





















 


26.            Without the written consent of Landlord,
Tenant shall not use the name of the Project in connection with or in promoting
or advertising the business of Tenant except as Tenant’s address.


 


27.            Tenant shall comply with all safety, fire
protection and evacuation procedures and regulations established by Landlord or
any governmental agency.


 


28.            Tenant and its employees, guests and invitees
shall not enter into the waterways located in the Project. No object of any
kind may be floated or submerged in the waterways, and no foreign substance of
any kind may be thrown in the waterways. The expense of any breakage or damage
to any mechanical equipment related to the waterways resulting from violation
of this rule or any expense incurred restoring the waterways to their normal
condition shall be borne by the tenant who, or whose employees or invitees,
shall have caused such damage.


 


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


 


30.            Tenant’s requirements will be attended to only
upon appropriate application to the Project management office by an authorized
individual. Employees of Landlord shall not perform any work or do anything
outside of their regular duties unless under special instructions from
Landlord, and no employee of Landlord will admit any person (Tenant or
otherwise) to any office without specific instructions from Landlord.


 


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


 


32.            These Rules and Regulations are in addition
to, and shall not be construed to in any way modify or amend, in whole or in
part, the terms, covenants, agreements and conditions of Tenant’s lease of its
Premises in the Project.


 


33.            Landlord reserves the right to make such other
and reasonable Rules and Regulations as, in its judgment, may from time to time
be needed for safety and security, for care and cleanliness of the Project and
for the preservation of good order therein. Tenant agrees to abide by all such
Rules and Regulations hereinabove stated and any additional rules and
regulations which are adopted.  In
particular, tenant shall comply at all times with the City of Pleasanton’s
Transportation Systems Management Ordinance (TSM Ordinance, Chapter 17.24,
Pleasanton Municipal Code), as said Ordinance may be amended from time to time.”


 


34.            Tenant shall be responsible for the observance
of all of the foregoing rules by Tenant’s employees, agents, clients, customers,
invitees and guests.


 





















 


EXHIBIT F


 


PARKING RULES AND REGULATIONS


 


The following rules and
regulations shall govern use of the parking facilities which are appurtenant to
the Building.


 


1.        All claimed damage or loss must be reported
and itemized in writing delivered to the Landlord within ten business days
after any claimed damage or loss occurs. 
Any claim not so made is waived. Landlord has the option to make repairs
at its expense of any claimed damage within two business days after filing of
any claim. In all court actions the burden of proof to establish a claim
remains with Tenant. Court actions by Tenant for any claim must be filed in the
court of jurisdiction where a claimed loss occurred within ninety days after
date of damage or loss.   Landlord
is not responsible for damage by water, fire, or defective brakes, or parts, or
for the act of omissions of others, or for articles left in the car.   The total liability of Landlord is limited
to $250.00 for all damages or loss to any car. Landlord is not responsible for
loss of use.


 


2.        Tenant shall not park or permit the parking of
any vehicle under its control in any parking areas designated by Landlord as
areas for parking by visitors to the Building.  
Tenant shall not leave vehicles in the parking areas
overnight nor park any vehicles in the parking areas other than automobiles,
motorcycles, motor driven or non-motor driven bicycles or four-wheeled trucks.


 


3.        Parking stickers or any other device or form
of identification supplied by Landlord as a condition of use of the Parking
Facilities shall remain the property of Landlord.   Such parking identification device must be
displayed as requested and may not be mutilated in any manner.    The serial number of the parking
identification device may not be obliterated.   
Devices are not transferable and any device in the possession of an unauthorized
holder will be void.


 


4.        No overnight or extended term storage of
vehicles shall be permitted.


 


5.        Vehicles must be parked entirely within the
painted stall lines of a single parking stall.


 


6.        All directional signs and arrows must be
observed.


 


7.        The speed limit within all parking areas shall
be 5 miles per hour.


 


8.        Parking is prohibited:


 


(a)    in areas not striped for parking;


 


(b)    in aisles;


 


(e)    where “no parking” signs are posed;


 


(d)    on ramps;


 


(e)    in cross hatched areas; and


 


(f)     in such other areas as may be designated by
Landlord or Landlord’s Parking Operator.


 


9.        Every parker is required to park and lock his
own vehicle. All responsibility for damage to vehicles is assumed by the
parker.


 


10.      Loss of theft of parking identification
devices from automobiles must be reported immediately, and a lost or stolen
report must be filed by the customer at that time. Landlord has the right to
exclude any car from the parking facilities that does not have an identification.


 


11.      Any parking identification devices reported
lost or stolen found on any unauthorized car will be confiscated and the
illegal holder will be subject to prosecution.


 


12.      Lost or stolen devices found by the purchaser
must be reported immediately to avoid confusion.


 


13.      Washing, waxing, cleaning or servicing of any
vehicle in any area not specifically reserved for such purpose is prohibited.


 


14.      Landlord reserves the right to refuse the sale
of monthly stickers or other parking identification devices to any tenant or
person and/or his agents or representatives who willfully refuse to comply with
these Rules and Regulations and all unposted City, State or Federal ordinances,
laws or agreements.


 


15.      Landlord reserves the right to modify and/or
adopt such other reasonable and non-discriminatory rules and regulations for
the parking facilities as it deems necessary for the operation of the parking
facilities. Landlord may refuse to permit any person who violates these rules
to park in the parking facilities, and any violation of the rules shall subject
the car to removal.


 





















 


EXHIBIT G


 


NOTICE OF LEASE TERM DATES


 


	
  To:

  	
  Date:

  



 


Re:      The Lease dated                                                     between                                                                                                     ,
Lessor, and                                                                                ,
Lessee, concerning                                                        (“Premises”)
located at                                                          .


 


In accordance with the above-referenced Lease, we wish to advise and/or
confirm as follows:


 


1.             That the Premises have been accepted by Tenant
as being substantially complete in accordance with the Lease, and that there is
no deficiency in the construction.


 


2.             That Tenant has accepted and is in possession
of the Premises, and acknowledges that under the provisions of the Lease, the
Term of the Lease is for      years and commenced upon
the Commencement Date of                             and
is currently scheduled to expire on                                            ,
subject to earlier termination as provided in the Lease.


 


3.             That in accordance with the Lease, rental
payment has commenced (or shall commence) on                           .


 


4.             If the Commencement Date of the Lease is other
than the first day of the month, the first billing will contain a pro rata
adjustment. Each billing thereafter, with the exception of the final billing,
shall be for the full amount of the monthly installment as provided for in the
Lease.


 


a.   The
first rent payment shall be $                       for
the period of
                                  ,
payable                           .


 


5.             Rent is due and payable in advance on the
first day of each and every month during the Term of the Lease. Your rent
checks should be made payable to                                                                                 .


 


6.             Tenant’s Percentage within the Premises is      %.


 


7.             Basic Monthly Rent


 


	
   

  	
   

  	
   

  	
   

  	
  Other Lease

  	
   

  	
  Total Monthly Basic Rent

  	
   

  
	
  Months

  	
   

  	
  Monthly Basic Rent

  	
   

  	
  Consideration

  	
   

  	
  Plus Other Lease Consideration

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  



 


 


	
  AGREED AND ACCEPTED

  	
   

  
	
   

  	
   

  
	
  TENANT:

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  	
  Print
  Name:

  	
   

  	
   

  
	
  Print
  Title:

  	
   

  	
   

  	
  Print
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  	
  Print
  Name:

  	
   

  	
   

  
	
  Print
  Title:

  	
   

  	
   

  	
  Print
  Title: