exv10w14



 







Exhibit 10.14




STANDARD FORM

INDUSTRIAL BUILDING LEASE

(MULTI-TENANT)




     1. BASIC TERMS. This Section 1 contains the Basic Terms of this Lease between Landlord
and Tenant, named below. Other Sections of the Lease referred to in this Section 1 explain and
define the Basic Terms and are to be read in conjunction with the Basic Terms




	 	1.1	 	Date of Lease: May 29, 2003
	 
	 	1.2	 	Landlord: First Industrial, L.P., a Delaware Limited Partnership
	 
	 	1.3	 	Tenant: ZARS, Inc., a Utah corporation
	 
	 	1.4	 	Premises: Approximately 9,540 rentable square feet in the
building commonly known as 1142 West 2320 South, STE A, West Valley City, UT
84119 (the “Building”).
	 
	 	1.5	 	Property: See Exhibit A.
	 
	 	1.6	 	Lease Term: 3 years 3 months
(“Term”), commencing June 30, 2003 (“Commencement Date”) and ending September
30, 2006, subject to Section 2.3 below, (“Expiration Date”).
	 
	 	1.7	 	Permitted Uses: (See Section 4.1) General office along with
Pharmaceutical Development and warehousing.
	 
	 	1.8	 	Tenant’s Guarantor: NONE
	 
	 	1.9	 	Brokers: (See Section 23;






	 	(A)	 	Tenant’s Broker: Cottonwood
Realty Services
	 
	 	(B)	 	Landlord’s Broker: NAI Utah
Commercial Real Estate, Inc.






	 	1.10	 	Security/Damage Deposit: (See Section 4.4) $6,510.00
	 
	 	1.11	 	Initial Estimated Additional Rent Payable by Tenant: $1,653.00
per month
	 
	 	1.12	 	Tenant’s Proportionate Share: 54.51429% of Operating Expenses
directly related to the Building (approximately 17,500 square feet) and
3.982351%, subject to adjustment as set forth in the last sentence of this
Section 1.12, of all other Operating Expenses as defined below. The Property
currently measures 239,557 square feet. Tenant’s share of Operating Expenses
not directly relating to the Building shall be subject to adjustment to
proportionately reflect any increases or decreases in the rentable area of the
Property, whether resulting from re-measurement, new construction, acquisition
of additional premises or sale of premises constituting part of the Property,
or the inclusion of the Property in or exclusion of the Property from any
arrangement for joint common area maintenance with any adjacent properties.
	 
	 	1.13	 	Riders to Lease: The following riders are attached to and made
a part of this Lease. (If none, so state) NONE





     2. LEASE OF PREMISES: RENT.



          2.1 Lease of Premises for Lease Term. Landlord hereby leases the Premises to Tenant,
and Tenant hereby rents the Premises from Landlord, for the Term and subject to the conditions of
this Lease.




          2.2 Types of Rental Payments. Tenant shall pay net base rent to Landlord in monthly
installments, in advance, on the first day of each and every calendar month during the Term of this
Lease (the “Base Rent”) in the amounts and for the periods set forth below:




	 	 	 	 	 	 	 	 	 
	Lease Period	 	Annual Base Rent	 	Monthly Base Rent
	06/30/2003 – 12/31/2003
	 	$	29,142.00	 	 	$	2,428.50	 
	01/01/2004 – 06/30/2004
	 	$	58,284.00	 	 	$	4,857.00	 
	07/01/2004 – 06/30/2005
	 	$	60,036.00	 	 	$	5,003.00	 
	07/01/2005 – 06/30/2006
	 	$	61,860.00	 	 	$	5,155.00	 
	07/01/2006 – 09/30/2006
	 	$	63,924.00	 	 	$	5,327.00	 






1









 




Tenant shall also pay Tenant’s Proportionate Share (as set forth in Section 1.12) of Operating
Expenses (as hereinafter defined), Tenant’s Proportionate Share of any and all Reserve Expenses (as
hereinafter defined) and any other amounts owed by Tenant hereunder (collectively, “Additional
Rent”). In the event any monthly installment of Base Rent or Additional Rent, or both, is not paid
within 7 days of the date when due, a late charge in an amount equal to 5% of the then delinquent
installment of Base Rent and/or Additional Rent [the “Late Charge”; the Late Charge, Default
Interest (as defined in Section 22.3 below), Base Rent and Additional Rent shall collectively be
referred to as “Rent”] shall be paid by Tenant to Landlord, c/o First Industrial, L.P., 21129
Network Place, Chicago, IL 60673-1211, or if sent by overnight courier, Bank One of Chicago, 525
West Monroe, 7th Floor mailroom, Chicago, IL 60611, Attn Lockbox 21129 (or such other
entity designated as Landlord’s management agent, if any, and if Landlord so appoints such a
management agent, the “Agent”), or pursuant to such other directions as Landlord shall designate in
this Lease or otherwise in writing.




          2.3 Covenants Concerning Rental Payments. Tenant shall pay the Rent promptly when
due, without notice or demand, and without any abatement, deduction or setoff, except as may
otherwise be expressly and specifically provided in this lease. No payment by Tenant, or receipt
or acceptance by Agent or Landlord, of a lesser amount than the correct Rent shall be deemed to be
other than a payment on account, nor shall any endorsement or statement on any check or letter
accompanying any payment be deemed an accord or satisfaction, and Agent or Landlord may accept such
payment without prejudice to its right to recover the balance due or to pursue any other remedy
available to Landlord. If the Commencement Date occurs on a day other than the first day of a
calendar month, the Rent due for the first calendar month of the Term shall be prorated on a per
diem basis and paid to Landlord on the Commencement Date, and the Term will be extended to
terminate on the last day of the calendar month in which the Expiration Date stated in Section 1.6
occurs.




     3. OPERATING EXPENSES.



          3.1 Definitional Terms Relating to Additional Rent. For purposes of this Section and
other relevant provisions of the Lease:




               3.1.1 Operating Expenses. The term “Operating Expenses” shall mean all costs and
expenses paid or incurred with respect to the ownership, repair, replacement. restoration,
maintenance and operation of the Property, including, without limitation, the following: (i)
services provided directly by employees of Landlord or Agent in connection with the operation,
maintenance or rendition of other services to or for the Property; (ii) to the extent not
separately metered, billed, or furnished, all charges for utilities and services furnished to
either or both of the Property and the Premises (including, without limitation, the Common Areas
[as hereinafter defined]), together with any taxes on such utilities; (iii) all premiums for
casualty, workers’ compensation, liability, boiler, flood and all other types of insurance provided
by Landlord and relating to the Property, all third party administrative costs incurred in
connection with the procurement and implementation of such insurance policies, and all deductibles
paid by Landlord pursuant to insurance policies required to be maintained by Landlord under this
Lease; (iv) the cost of all supplies, tools, materials and equipment utilized in the ownership and
operation of the Property, and sales and other taxes thereon; (v) amounts charged (including,
without limitation, those costs and expenses set forth in Section 13.2(i) below) by any or alI of
contractors, materialmen and suppliers for services, materials and supplies furnished to Landlord
in connection with any or all of the operation, repair and maintenance of any part of the Property
(together with a reasonable overhead and administrative fee to Landlord), including, without
limitation, the structural elements of the Property and the Common Areas; (vi) reasonable
management fees to Landlord or Agent or other persons or management entities actually involved in
the management and operation of the Property; (vii) any capital improvements made by, or on behalf
of, Landlord to the Property that are either or both (a) designed to reduce Operating Expenses and
(b) required to keep the Property in compliance with all governmental laws, rules and regulations
applicable thereto, from time to time, the cost of which capital improvements shall be reasonably
amortized by Landlord over the useful life of the improvement, in accordance with generally
accepted accounting principles; (viii) all professional fees incurred in connection with the
operation, management and maintenance of the Property; and (ix) Taxes, as hereinafter defined in
Section 3.1.2.



               3.1.2 Taxes. The term “Taxes,” as referred to in Section 3.1.1(ix) above shall mean (i) all
governmental taxes, assessments, fees and charges of every kind or nature {other than Landlord’s
income taxes), whether general, special, ordinary or extraordinary, due at any time or from time to
time, during the Term and any extensions thereof, in connection with the ownership, leasing, or
operation of the Property, or of the personal property and equipment located therein or used in
connection therewith; and (ii) any reasonable expenses incurred by Landlord in contesting such
taxes or assessments and/or the assessed value of the Property. For



2









 







purposes hereof, Tenant shall be responsible for any Taxes that are assessed, become a lien,
or accrue during any Operating Year, which obligation shall survive the termination or expiration
of this Lease.



               3.1.3 Operating Year. The term “Operating Year” shall mean the calendar year
commencing January 1st of each year (including the calendar year within which the Commencement Date
occurs) during the Term,



          3.2 Payment of Operating Expenses. Tenant shall pay, as Additional Rent and in
accordance with the requirements of Section 3.3, Tenant’s Proportionate Share of the Operating
Expenses as set forth in Section 3.3. Additional Rent commences to accrue upon the Commencement
Date. The Tenant’s Proportionate Share of Operating Expenses payable hereunder for the Operating
Years in which the Term begins and ends shall be prorated to correspond to that portion of said
Operating Years occurring within the Term. Tenant’s Proportionate Share of Operating Expenses and
any other sums due and payable under this Lease shall be adjusted upon receipt of the actual bills
therefor, and the obligations of this Section 3 shall survive the termination or expiration of the
Lease.




          3.3 Payment of Additional Rent. Landlord shall have the right to reasonably estimate
the Operating Expenses for each Operating Year Upon Landlord’s or Agent’s notice to Tenant of such
estimated amount, Tenant shall pay, on the first day of each month during that Operating Year, an
amount (the “Estimated Additional Rent”) equal to the estimate of the Tenant’s Proportionate Share
of Operating Expenses divided by 12 (or the fractional portion of the Operating Year remaining at
the time Landlord delivers its notice of the estimated amounts due from Tenant for that Operating
Year). If the aggregate amount of Estimated Additional Rent actually paid by Tenant during any
Operating Year is less than Tenant’s actual ultimate liability for Operating Expenses for that
particular Operating Year, Tenant shall pay the deficiency within 30 days of Landlord’s written
demand therefor. If the aggregate amount of Estimated Additional Rent actually paid by Tenant
during a given Operating Year exceeds Tenant’s actual liability for such Operating Year, the excess
shall be credited against the Estimated Additional Rent next due from Tenant during the immediately
subsequent Operating Year, except that in the event that such excess is paid by Tenant during the
final Lease Year, then upon the expiration of the Term, Landlord or Agent shall pay Tenant the
then-applicable excess promptly after determination thereof. Landlord, for the purpose of paying
for repairs, maintenance and replacements to the Premises or the Property incurred on a periodic,
but less frequent than annual, basis (“Reserve Expenses”) will establish a reserve (the
“Maintenance Reserve”) to which Tenant, simultaneously with the payment of Estimated Additional
Rent each month, shall contribute a monthly deposit in an amount reasonably determined and budgeted
by Landlord, which amount shall not exceed Four percent (4%) of yearly estimated Operating
Expenses. Such deposits shall be applied on account of Reserve Expenses incurred by Landlord
during the Term; any deficit shall be paid by Tenant to Landlord upon demand. Upon the expiration
or sooner termination of the Lease, Landlord shall retain such deposits to fund Reserve Expenses
incurred after the Term. No interest shall be payable to Tenant on account of payments of
Estimated Additional Rent or deposits to the Maintenance Reserve, and such payments may be
commingled.




     4. USE OF PREMISES AND COMMON AREAS; SECURITY DEPOSIT.



          4.1 Use of Premises and Property. The Premises shall be used by the Tenant for the
purpose(s) set forth in Section 1.7 above and for no other purpose whatsoever. Tenant shall not,
at any time, use or occupy, or suffer or permit anyone to use or occupy, the Premises, or do or
permit anything to be done in the Premises or the Property, in any manner that may (a) violate any
Certificate of Occupancy for the Premises or the Property; (b) cause, or be liable to cause, injury
to, or in any way impair the value or proper utilization of, all or any portion of the Property
(including, but not limited to, the structural elements of the Property) or any equipment,
facilities or systems therein; (c) constitute a violation of the laws and requirements of any
public authority or the requirements of insurance bodies or the rules and regulations of the
Property, including any covenant, condition or restriction affecting the Property; (d) exceed the
load bearing capacity’ of the floor of the Premises; (e) impair or tend to impair the character,
reputation or appearance of the Property; or (e) unreasonably annoy, inconvenience or disrupt the
operations or tenancies of other tenants or users of the Property. On or prior to the date hereof,
Tenant has completed and delivered for the benefit of Landlord a “Tenant Operations Inquiry Form”
in the form attached hereto as Exhibit D describing the nature of Tenant’s proposed business
operations at the Premises, which form is intended to, and shall be, relied upon by Landlord.




          4.2 Use of Common Areas. As used herein, “Common Areas” shall mean all areas within
the Property that arc available for the common use of tenants of the Property and that are not
leased or held for the exclusive use of Tenant or other tenants or licensees, including, but not
limited to, parking areas, driveways, sidewalks, loading areas, access roads, corridors,
landscaping and planted areas. Tenant shall have the nonexclusive




3









 




right to use the Common Areas for the purposes intended, subject to such reasonable rules and
regulations as Landlord may uniformly establish from time to time. Tenant shall not interfere with
the rights of any or all of Landlord, other tenants or licensees, or any other person entitled to
use the Common Areas. Without limitation of the foregoing, Tenant shall not park or store any
vehicles or trailers on, or conduct truck loading and unloading activities in, the Common Areas in
a manner that unreasonably disturbs, disrupts or prevents the use of the Common Areas by Landlord,
other tenants or licensees or other persons entitled to use the Common Areas. Landlord, from time
to time, may change any or all of the size, location, nature and use of any of the Common Areas
although such changes may result in inconvenience to Tenant, so long as such changes do not
materially and adversely affect Tenant’s use of the Premises. In addition to the foregoing,
Landlord may, at any time, close or suspend access to any Common Areas to perform any acts in the
Common Areas as, in Landlord’s reasonable judgment, are desirable to improve or maintain either or
both of the Premises and the Property, or are required in order to satisfy Landlord’s obligations
under either or both of Sections 13.2 and 18; provided, however, that Landlord shall use reasonable
efforts to limit any disruption of Tenant’s use and operation of the Premises in connection
therewith.




          4.3 Signage. Tenant shall not affix any sign of any size or character to any portion
of the Property, without prior written approval of Landlord, which approval shall not be
unreasonably withheld or delayed. Tenant shall remove all signs of Tenant upon the expiration or
earlier termination of this Lease and immediately repair any damage to either or both of the
Property and the Premises caused by, or resulting from, such removal.




          4.4 Security/Damage Deposit. Simultaneously with the execution and delivery of this
Lease, Tenant shall deposit with Landlord or Agent the sum set forth in Section 1.10 above, in cash
(the “Security”), representing security for the performance by Tenant of the covenants and
obligations hereunder, the amount of which Security was determined by adding one month of Base Rent
of $4,857.00 and one month of Initial Estimated Additional Rent of $1,653.00. The Security shall
be held by Landlord or Agent, without interest, in favor of Tenant; provided, however, that no
trust relationship shall be deemed created thereby and the Security may be commingled with other
assets of Landlord. If Tenant defaults in the performance of any of its covenants hereunder,
Landlord or Agent may, without notice to Tenant, apply all or any part of the Security, to the
extent required for the payment of any Rent or other sums due from Tenant hereunder, in addition to
any other remedies available to Landlord. In the event the Security is so applied, Tenant shall,
upon demand, immediately deposit with Landlord or Agent a sum equal to the amount so used. If
Tenant fully and faithfully complies with all the covenants and obligations hereunder, the Security
(or any balance thereof) shall be returned to Tenant within 30 days after the last to occur of (i)
the date the Term expires or terminates or (ii) delivery to Landlord of possession of the Premises.
Landlord may deliver the Security to any purchaser of Landlord’s interest in the Premises [or any
Successor Landlord (defined below), if applicable], and thereupon Landlord and Agent shall be
discharged from any further liability with respect to the Security.




     5. CONDITION AND DELIVERY OF PREMISES.



          5.1 Condition of Premises. Tenant agrees that Tenant is familiar with the condition
of both the Premises and the Property, and Tenant hereby accepts the foregoing on an “AS-IS,”
“WHERE-IS” basis. Tenant acknowledges that neither Landlord nor Agent, nor any representative of
Landlord, has made any representation as to the condition of the foregoing or the suitability of
the foregoing for Tenant’s intended use, Tenant represents and warrants that Tenant has made its
own inspection of the foregoing. Neither Landlord nor Agent shall be obligated to make any
repairs, replacements or improvements (whether structural or otherwise) of any kind or nature to
the foregoing in connection with, or in consideration of, this Lease, except (a) as set forth in
Sections 13.2 and 18 and (b) with respect to all (if any) repairs and improvements expressly and
specifically described in Exhibit B attached hereto (“Landlord Work Items”). Landlord agrees to
make reasonable efforts to enforce, or cause Agent to enforce, upon Tenant’s request, all
manufacturer’s or contractor’s warranties, if any, issued in connection with any of the Landlord
Work Items.




          5.2 Delay in Commencement. Landlord shall not be liable to Tenant if Landlord does
not deliver possession of the Premises to Tenant on the Commencement Date. The obligations of
Tenant under the Lease shall not be affected thereby, except that the Commencement Date shall be
delayed until Landlord delivers possession of the Premises to Tenant, and the Lease Term shall be
extended by a period equal to the number of days of delay in delivery of possession of the Premises
to Tenant, plus the number of days necessary to end the Lease Term on the last day of a month.
Notwithstanding the foregoing, if Landlord does not substantially complete the Improvements per
Exhibit B and deliver the Premises to Tenant by June 30, 2003, then Tenant will have one day to
cancel this lease as of July 1, 2003 by delivering written notice to do so to Landlord no later
than 5 PM MST July 1, 2003. However, the immediately preceding sentence will not apply and have no
effect on the term of this Lease





4









 










should the delay be caused by any governmental agency actions or in-action which cause
Landlord to not be able to deliver the Premises on or before June 30, 2003 including governmental
delays in granting of any necessary building permits or inspections thereof.




     6. SUBORDINATION: NOTICES TO SUPERIOR LESSORS AND MORTGAGEES; ATTORNMENT.


          6.1 Subordination. Provided that Tenant is provided with a reasonable and customary
subordination, nondisturbance and attornment agreement duly executed by the holder of any mortgage
or deed of trust or the landlord pursuant to any ground lease, this Lease shall be subject and
subordinate at all times to (a) all ground leases or underlying leases that may now exist or
hereafter be executed affecting either or both of the Premises and the Property and (b) any
mortgage or deed of trust that may now exist or hereafter be placed upon, and encumber, any or all
of (x) the Property; (y) any ground leases or underlying leases for the benefit of the Property;
and (z) all or any portion of Landlord’s interest or estate in any of said items. Notwithstanding
the foregoing, Landlord shall have the right to subordinate or cause to be subordinated any such
ground leases or underlying leases that benefit the Property or any such mortgage or deed of trust
liens to this Lease. Tenant shall execute and deliver, upon demand by Landlord and in the form
reasonably requested by Landlord, any additional documents evidencing the priority of subordination
of this Lease with respect to any such ground leases or underlying leases for the benefit of the
Property or any such mortgage or deed of trust.



          6.2 Estoppel Certificates. Tenant agrees, from time to time and within 14 days after
request by Landlord, to deliver to Landlord, or Landlord’s designee, an estoppel certificate
stating such matters pertaining to this Lease as may be reasonably requested by Landlord. Failure
by Tenant to timely execute and deliver such certificate shall constitute an acceptance of the
Premises and acknowledgment by Tenant that the statements included therein are true and correct
without exception. Landlord and Tenant intend that any statement delivered pursuant to this
section may be relied upon by any prospective purchaser or mortgagee of the Property or of any
interest therein or any other Landlord designee.



          6.3 Transfer for Landlord. In the event of a sale or conveyance by Landlord of the
Property, and provided that Landlord’s successor shall assume Landlord’s duties and obligations
under this Lease, the same shall operate to release Landlord from any future liability for any of
the covenants or conditions, express or implied, herein contained in favor of Tenant, and in such
event Tenant agrees to look solely to Landlord’s successor in interest with respect thereto and
agrees to attorn to such successor.




     7. QUIET ENJOYMENT. Subject to the provisions of this Lease, so long as Tenant pays
all of the Rent and performs all of its other obligations hereunder, Tenant shall not be disturbed
in its possession of the Premises by Landlord. Agent or any other person lawfully claiming through
or under Landlord; provided, however, in addition to Landlord’s rights under Section 16 and
elsewhere in this Lease, Landlord and Landlord’s agents, employees, contractors and representatives
shall be provided reasonable access to the Premises such that Landlord and Landlord’s agents,
employees, contractors and representatives may perform the General Maintenance Services (as
hereinafter defined) without undue interruption, delay or hindrance. This covenant shall be
construed as a covenant running with the Property and is not a personal covenant of Landlord.
Tenant shall not unreasonably interrupt, delay, prevent or hinder the performance of the General
Maintenance Services by or on behalf of Landlord. Notwithstanding. the foregoing, however, Tenant
acknowledges and agrees that Landlord shall have the unfettered and unilateral right to use
portions of the Common Areas (inclusive of the roof of the Building) for such purposes and uses as
Landlord may desire; provided, however, that in all events and under all circumstances, Landlord’s
use of any portion of the Common Areas shall not interfere, in any material respect, with any or
all of (a) Tenant’s rights to occupy and use the Common Areas (in the manner and for the purposes
contemplated hereunder); (b) Tenant’s right to utilize the vehicular parking areas located on the
Common Areas; and (c) Tenant’s right of access, ingress and egress to and from the Common Areas.



     8. ASSIGNMENT, SUBLETTING AND MORTGAGING.



          8.1 Prohibition. Tenant acknowledges that this Lease and the Rent due under this
Lease have been agreed to by Landlord in reliance upon Tenant’s reputation and creditworthiness and
upon the continued operation of the Premises by Tenant for the particular use described in Section
4.1 above; therefore, Tenant shall not, whether voluntarily, or by operation of law, or otherwise:
(a) assign or otherwise transfer this Lease; (b) sublet the Premises or any part thereof, or allow
the same to be used or occupied by anyone other than Tenant; or (c) mortgage, pledge, encumber, or
otherwise hypothecate this Lease or the Premises, or any part thereof, in any manner whatsoever,
without in each instance obtaining the prior written consent of Landlord, which consent may be
given or





5









 








withheld in Landlord’s sole, but reasonable, discretion. Any purported assignment, mortgage,
transfer, pledge or sublease made without the prior written consent of Landlord shall be absolutely
null and void. No assignment of this Lease shall be effective and valid unless and until the
assignee executes and delivers to Landlord any and all documentation reasonably required by
Landlord in order to evidence assignee’s assumption of all obligations of Tenant hereunder. Any
consent by Landlord to a particular assignment, sublease or mortgage shall not constitute consent
or approval of any subsequent assignment, sublease or mortgage, and Landlord’s written approval
shall be required in all such instances. No consent by Landlord to any assignment or sublease
shall be deemed to release Tenant from its obligations hereunder and Tenant shall remain fully
liable for performance of all obligations under this Lease.




          8.2 Rights of Landlord. If this Lease is assigned, or if the Premises (or any part
thereof) are sublet or used or occupied by anyone other than Tenant, whether or not in violation of
this Lease, Landlord or Agent may (without prejudice to, or waiver of its rights), collect Rent
from the assignee, subtenant or occupant. Landlord or Agent may apply the net amount collected to
the Rent herein reserved, but no such assignment, subletting, occupancy or collection shall be
deemed a waiver of any of the provisions of this Section 8. With respect to the allocable portion
of the Premises sublet, in the event that the total rent and any other considerations received
under any sublease by Tenant is greater than the total Rent required to be paid, from time to time,
under this Lease, Tenant shall pay to Landlord one hundred percent (100%) of such excess as
received from any subtenant and such amount shall be deemed a component of the Additional Rent.




          8.3 Permitted Transfers. The provisions of Section 8.1(a) shall apply to a transfer,
other than an “Excluded Transfer” (as defined hereinafter), of a majority (i.e. greater
than 50% interest) of the voting stock of Tenant or to any other change in voting control of Tenant
(if Tenant is a corporation), or to a transfer of a majority of the general partnership or
membership interests in Tenant (if Tenant is a partnership or a limited liability company) or to a
change in the managerial control of Tenant, or to any comparable transaction involving any other
form of business entity, whether effectuated in one or more transactions, as if such transfer were
an assignment of this Lease; but said provisions shall not apply to such a transfer, provided, in
any of such events, the successor to Tenant (or any party remaining liable for the obligations of
Tenant hereunder): (i) has a net worth at least equal to the net worth of Tenant as of the
Commencement Date or (ii) is capable of satisfying Tenant’s obligations hereunder, in Landlord’s
reasonable judgment. Any such permitted transferee shall execute and deliver to Landlord any and
all documentation reasonably required by Landlord in order to evidence assignee’s assumption of all
obligations of Tenant hereunder. Notwithstanding anything to the contrary contained in this
Section 8.3, in no event may Tenant assign, mortgage, transfer, pledge or sublease this Lease to
any entity whatsoever if, at the time of such assignment, mortgage, transfer, pledge or sublease,
Tenant is in default under this Lease. For purposes of this Section 8.3, “Excluded Transfer” shall
mean any transfer of ownership interests in Tenant in connection with (a) any public sale of
ownership interests in Tenant in connection with an initial public offering or subsequent offering
of securities in Tenant; or (b) any private sale of ownership interests in Tenant in connection
with a venture capital or similar transaction; provided, however, in each case described in the
immediately preceding clauses (a) or (b), the owners of Tenant as of the date of this Lease
continue to collectively own at least 20 percent of the outstanding ownership interests of Tenant
and at least one such owner continues to be actively involved in the business affairs of Tenant.




     9. COMPLIANCE WITH LAWS.



          9.1 Compliance with Laws. Tenant shall, at its sole expense (regardless of the cost
thereof), comply with all local, state and federal laws, rules, regulations and requirements now or
hereafter in force and all judicial and administrative decisions in connection with the enforcement
thereof (collectively, “Laws”), pertaining to either or both of the Premises and Tenant’s use and
occupancy thereof. If any license or permit is required for the conduct of Tenant’s business in
the Premises, Tenant, at its expense, shall procure such license prior to the Commencement Date,
and shall maintain such license or permit in good standing throughout the Term. Tenant shall give
prompt notice to Landlord of any written notice it receives of the alleged violation of any Law or
requirement of any governmental or administrative authority with respect to either or both of the
Premises and the use or occupation thereof. The judgment of any court of competent jurisdiction,
or the admission of Tenant in any action or proceeding against Tenant, whether Landlord is a party
thereto or not, that any such Law pertaining to the Premises has been violated, shall be conclusive
of that fact as between Landlord and Tenant.




          9.2 Hazardous Materials. If, at any time or from time to time during the Term (or any
extension thereof), any Hazardous Material (defined below) is generated, transported, stored, used,
treated or disposed of at, to, from, on or in either or both of the Premises and the Property by,
or as a result of any act or





6









 







omission of, any or all of Tenant and any or all of Tenant’s Parties (defined below): (i)
Tenant shall, at its own cost, at all times comply (and cause all others to comply) with all laws
(federal, state or local) relating to Hazardous Materials, including, but not limited to, all
Environmental Laws (defined below), and Tenant shall further, at its own cost, obtain and maintain
in full force and effect at all times all permits and other approvals required in connection
therewith; (ii) Tenant shall promptly provide Landlord or Agent with complete copies of all
communications, permits or agreements with, from or issued by any governmental authority or agency
(federal, state or local) or any private entity relating in any way to the presence, release,
threat of release, or placement of Hazardous Materials on or in the Premises or any portion of the
Property, or the generation, transportation, storage, use, treatment, or disposal at, on, in or
from the Premises, of any Hazardous Materials; (iii) Landlord, Agent and their respective agents
and employees shall have the right to either or both (x) enter the Premises and (y) conduct
appropriate tests for the purposes of ascertaining Tenant’s compliance with all applicable laws
(including Environmental Laws), rules or permits relating in any way to the generation, transport,
storage, use, treatment, disposal or presence of Hazardous Materials on, at, in or from all or any
portion of either or both of the Premises and the Property; and (iv) upon written request by
Landlord or Agent. Tenant shall provide Landlord with the results of reasonably appropriate tests
of air, water or soil to demonstrate that Tenant complies with all applicable laws, rules or
permits relating in any way to the generation, transport, storage, use, treatment, disposal or
presence of Hazardous Materials on, at, in or from all or any portion of either or both of the
Premises and the Property. This Section 9.2 does not authorize the generation, transportation,
storage, use, treatment or disposal of any Hazardous Materials at, to, from, on or in the Premises
in contravention of this Section 9. Tenant covenants to investigate, clean up and otherwise
remediate, at Tenant’s sole expense, any release of Hazardous Materials caused, contributed to, or
created by any or all of (A) Tenant and (B) any or all of Tenant’s officers, directors, members,
managers. partners, invitees, agents, employees, contractors or representatives (“Tenant Parties”)
during the Term. Such investigation and remediation shall be performed only after Tenant has
obtained Landlord’s prior written consent; provided, however, that Tenant shall be entitled to
respond immediately to an emergency without first obtaining such consent. All remediation shall be
performed in strict compliance with Environmental Laws and to the reasonable satisfaction of
Landlord. Tenant shall be liable for any and all conditions covered hereby, and for all costs
relating thereto, that are caused or created by any or all of Tenant and any or all of Tenant’s
Parties. Tenant shall not enter into any settlement agreement, consent decree or other compromise
with respect to any claims relating to any Hazardous Materials in any way connected to the Premises
without first obtaining Landlord’s written consent (which consent may be given or withheld in
Landlord’s sole, but reasonable, discretion) and affording Landlord the reasonable opportunity to
participate in any such proceedings. As used herein, the term (x) “Environmental Laws” shall mean
any and all laws pertaining to Hazardous Materials or that otherwise deal with, or relate to, air
or water quality, air emissions, soil or ground conditions or other environmental matters of any
kind; and (y) “Hazardous Materials” shall mean any waste, material or substance (whether in the
form of liquids, solids or gases, and whether or not airborne) that is or may be deemed to be or
include a pesticide, petroleum, asbestos, polychlorinated biphenyl, radioactive material, urea
formaldehyde or any other pollutant or contaminant that is or may be deemed to be hazardous, toxic,
ignitable, reactive, corrosive, dangerous, harmful or injurious, or that presents a risk to public
health or to the environment, and that is or becomes regulated by any Environmental Law. The
undertakings, covenants and obligations imposed on Tenant under this Section 9.2 shall survive the
termination or expiration of this Lease.




     10. INSURANCE.



          10.1 Insurance to be Maintained by Landlord. Landlord shall maintain (a) “all-risk”
property insurance policy covering the Property (at its full replacement cost), but excluding
Tenant’s Property (defined below), and (b) commercial general public liability insurance covering
Landlord for claims arising out of liability for bodily injury, death, personal injury, advertising
injury and property damage occurring in and about the Property and otherwise resulting from any
acts and operations of Landlord, its agents and employees, and (c) rent loss insurance, all of the
above with limits that are required by any lender(s) of Landlord, or as are otherwise reasonably
determined by Landlord.




          10.2 Insurance to be Maintained by Tenant. Tenant shall purchase, at its own expense,
and keep in force at all times during this Lease the policies of insurance set forth below in
Sections 10.2.1 and 10.2.2 (collectively, “Tenant’s Policies”). All Tenant’s Policies shall (a) be
issued by an insurance company with a Best rating of A-X or better and otherwise reasonably
acceptable to Landlord and shall be licensed to do business in the state in which the Property is
located; (b) provide that said insurance shall not be canceled or materially modified unless 30
days’ prior written notice shall have been given to Landlord; and (c) otherwise be in such form,
and include such coverages, as Landlord may reasonably require. All Tenant’s Policies (or, at
Landlord’s option, Certificates of Insurance, in a form reasonably acceptable to Landlord,
evidencing said Tenant’s Policies), shall be





7









 








delivered to Landlord by Tenant upon commencement of the Lease and renewals thereof shall be
delivered at least 30 days prior to the expiration of each Tenant’s Policy. Tenant shall give
prompt notice to Landlord and Agent of any bodily injury, death, personal injury, advertising
injury or property damage occurring in and about the Property.




               10.2.1 General Liability and Auto Insurance. Tenant shall purchase and maintain,
throughout the Term, a Tenant’s Policy(ies) of (i) commercial general or excess liability
insurance, including personal injury and property damage, in the amount of not less than
$2,000,000.00 per occurrence, and $3,000,000.00 annual general aggregate, per location; (ii)
comprehensive automobile liability insurance covering Tenant against any losses arising out of
liability for personal injuries or deaths of persons and property damage occurring in or about the
Premises in the amount of not less than $1,000,000, combined single limit. The Tenant’s Policies
required by this Section 10.2.1 shall (a) name Landlord, Agent, and any party holding an interest
to which this Lease may be subordinated as additional insureds; (b) provide coverage on an
occurrence basis; (c) provide coverage for the indemnity obligations of Tenant under this Lease;
(d) contain a severability of insured parties provision and/or a cross liability endorsement; (e)
be primary, not contributing with, and not in excess of, coverage that Landlord may carry; and (f)
provide coverage with no exclusion for a pollution incident arising from a hostile fire.




               10.2.2 Property and Workers’ Compensation Insurance. Tenant shall purchase and
maintain, throughout the Term, a Tenant’s Policy or Policies of (i) “all-risk” property insurance
covering Tenant’s Property (at its full replacement cost), and damage to other property resulting
from any acts or operations of Tenant, and (ii) workers’ compensation insurance per the applicable
state statutes covering all employees of Tenant.



          10.3 Waiver of Subrogation. To the extent permitted by law, and without affecting the
coverage provided by insurance required to be maintained hereunder, Landlord and Tenant each waive
any right to recover against the other for (a) damages to property, (b) damages to all or any
portion of either or both of the Premises and the Property, (c) claims arising by reason of the
foregoing, to the extent such damages and claims are insured against, or required to be insured
against, by Landlord or Tenant under this Lease, or (d) claims paid by Tenant’s workers’
compensation carrier. This provision is intended to waive, fully and for the benefit of each
party, any rights and/or claims which might give rise to a right of subrogation by any insurance
carrier. The coverage obtained by each party pursuant to this Lease shall include, without
limitation, a waiver of subrogation by the carrier which conforms to the provisions of this section




     11. ALTERATIONS.



          11.1 Procedural Requirements. Tenant may, from time to time, at its expense, make
alterations or improvements in and to the Premises (hereinafter collectively referred to as
“Alterations”), provided that Tenant first obtains the written consent of Landlord in each
instance. Landlord’s consent to Alterations shall not be unreasonably withheld, provided that: (a)
the Alterations are non-structural and the structural integrity of the Property shall not be
affected; (b) the Alterations are to the interior of the Premises; (c) the proper functioning of
the mechanical, electrical, heating, ventilating, air-conditioning (“HVAC”), sanitary and other
service systems of the Property shall not be affected and the usage of such systems by Tenant shall
not be increased; (d) the Alterations have no adverse effect on other leased premises in the
Property; (e) Tenant shall have appropriate insurance coverage, reasonably satisfactory to
Landlord, regarding the performance and installation of the Alterations; (f) the Alterations shall
conform with all other requirements of this Lease; and (g) Tenant shall have provided Landlord with
reasonably detailed plans for such Alterations in advance of requesting Landlord’s consent.
Additionally, before proceeding with any Alterations, Tenant shall (i) at Tenant’s expense, obtain
all necessary governmental permits and certificates for the commencement and prosecution of
Alterations; (ii) submit to Agent, for Landlord’s written approval, working drawings, plans and
specifications and all permits for the work to be done and Tenant shall not proceed with such
Alterations until it has received said approval; and (iii) cause those contractors, materialmen and
suppliers engaged to perform the Alterations to deliver to Landlord certificates of insurance (in a
form reasonably acceptable to Landlord) evidencing policies of commercial general liability
insurance (providing the same coverages as required in Section 10.2.1 above) and workers’
compensation insurance. Such insurance policies shall satisfy the obligations imposed under
Section 10.2.1(a) through (d) and (f). After obtaining Landlord’s approval to the Alterations,
Tenant shall give Landlord at least five days’ prior written notice of the commencement of any
Alterations at the Premises, and Landlord may elect to record and post notices of
non-responsibility at the Premises. Notwithstanding anything to the contrary contained in this
Section 11.1, Landlord’s consent shall not be required for Alterations satisfying clauses (a)
through (f) above and costing $10,000.00 or less in any one instance (up to a maximum aggregate of
$25,000.00 over the Term) provided that Tenant notifies





8









 








Landlord of such Alterations prior to commencing thereon and obtains all approvals and permits
necessary for the commencement and prosecution of such Alterations.




          11.2. Performance of Alterations. Tenant shall cause the Alterations to be performed
in compliance with all applicable permits, laws and requirements of public authorities, and with
Landlord’s reasonable rules and regulations or any other restrictions that Landlord or Agent may
impose on the Alterations. Tenant shall cause the Alterations to be diligently performed in a good
and workmanlike manner, using new materials and equipment at least equal in quality and class to
the standards for the Property established by Landlord or Agent. Tenant shall obtain all necessary
permits and certificates for final governmental approval of the Alterations and shall provide
Landlord with “as built” plans, copies of all construction contracts, governmental permits and
certificates and proof of payment for all labor and materials, including, without limitation,
copies of paid invoices and final lien waivers.




          11.3. Lien Prohibition. Tenant shall pay when due all claims for labor and material
furnished to the Premises in connection with the Alterations. Tenant shall not permit any
mechanics or materialmen’s liens to attach to the Premises or the Property. Tenant, at its
expense, shall procure the satisfaction or discharge of record of all such liens and encumbrances
within 30 days after the filing thereof; or, within such thirty (30) day period, Tenant shall
provide Landlord, at Tenant’s sole expense, with endorsements (satisfactory, both in form and
substance, to Landlord and the holder of any mortgage or deed of trust) to the existing title
insurance policies of Landlord and the holder of any mortgage or deed of trust, insuring against
the existence of, and any attempted enforcement of, such lien or encumbrance. In the event Tenant
has not so performed, Landlord may, at its option, pay and discharge such liens and Tenant shall be
responsible to reimburse Landlord, on demand and as Additional Rent under this Lease, for all costs
and expenses incurred in connection therewith, together with interest thereon at the rate set forth
in Section 22.3, which expenses shall include reasonable fees of attorneys of Landlord’s choosing,
and any costs in posting bond to effect discharge or release of the lien as an encumbrance against
the Premises or the Property.




     12. LANDLORD’S AND TENANT’S PROPERTY.



          12.1. Landlord’s Property. Subject to Section 12.2, all fixtures, machinery,
equipment, improvements and appurtenances attached to, or built into, the Premises at the
commencement of, or during the Term, whether or not placed there by or at the expense of Tenant,
shall become and remain a part of the Premises; shall be deemed the property of Landlord (the
“Landlord’s Property”), without compensation or credit to Tenant; and shall not be removed by
Tenant at the Expiration Date unless Landlord requests their removal. Further, any personal
property in the Premises on the Commencement Date, movable or otherwise, unless installed and paid
for by Tenant, shall be and shall remain the property of Landlord and shall not be removed by
Tenant. In no event shall Tenant remove any of the following materials or equipment without
Landlord’s prior written consent (which consent may be given or withheld in Landlord’s sole
discretion): any power wiring or power panels, lighting or lighting fixtures, wall or window
coverings, carpets or other floor coverings, heaters, air conditioners or any other HVAC equipment,
fencing or security gates, or other similar building operating equipment and decorations.




          12.2. Tenant’s Property. All movable non-structural partitions, business and trade
fixtures, machinery and equipment, communications equipment and office equipment that are installed
in the Premises by, or for the account of, Tenant and without expense to Landlord and that can be
removed without structural damage to the Property, and all furniture, furnishings and other
articles of movable personal property owned by Tenant and located in the Premises (collectively,
the “Tenant’s Property”) shall be and shall remain the property of Tenant and may be removed by
Tenant at any time during the Term, provided Tenant repairs or pays the cost of repairing any
damage to the Premises or to the Property resulting from the installation and/or removal thereof.
At or before the Expiration Date, or the date of any earlier termination, Tenant, at its expense,
shall remove from the Premises all of Tenant’s Property and any Alterations (except such items
thereof as constitute Landlord’s Property; or as Landlord shall have expressly permitted, in
writing, to remain, which property shall become the property of Landlord), and Tenant shall repair
(to Landlord’s reasonable satisfaction) any damage to the Premises or the Property resulting from
any installation and/or removal of Tenant’s Property. Any other items of Tenant’s Property that
shall remain in the Premises after the Expiration Date, or following an earlier termination date,
may, at the option of Landlord, be deemed to have been abandoned, and in such case, such items may
be retained by Landlord as its property or be disposed of by Landlord, in Landlord’s sole and
absolute discretion and without accountability, at Tenant’s expense. Notwithstanding the
foregoing, if Tenant is in default under the terms of this Lease, Tenant may remove Tenant’s
Property from the Premises only upon the express written direction of Landlord.




9









 








     13. REPAIRS AND MAINTENANCE.



          13.1. Tenant Repairs and Maintenance. Tenant shall, at its expense, throughout the
Term, (i) maintain and preserve, in first-class condition (subject to normal and customary wear and
tear), the Premises and the fixtures and appurtenances therein (including, but not limited to, the
Premises’ plumbing and HVAC systems, all doors, overhead or otherwise, glass and levelers located
in the Premises including exterior glass or otherwise available in the Property for Tenant’s sole
use, outside lighting, snow removal and salting of the sidewalks and walkways serving the Premises;
and excluding, however, those components of the Premises for which Landlord is expressly
responsible under Section 13.2); and (ii) except to the extent Landlord elects to repair and
maintain the HVAC systems as part of General Maintenance Services (as hereinafter defined),
maintain, in full force and effect, a preventative maintenance and service contract with a
reputable service provider for maintenance of the HVAC systems of the Premises (a copy of which
service agreement shall be provided to Landlord within fifteen (15) days after the Commencement
Date). Tenant shall also be responsible for all cost and expenses incurred to perform any and all
repairs and replacements (whether structural or non-structural; interior or exterior; and ordinary
or extraordinary), in and to the Premises and the Property and the facilities and systems thereof,
if and to the extent that the need for such repairs or replacements arises directly or indirectly
from any or all of (a) the performance or existence of any Alterations, (b) the installation, use
or operation of Tenant’s Property in the Premises, (c) the moving of Tenant’s Property, in or out
of the Property, and (d) any act, omission, misuse, or neglect of Tenant, any of its subtenants, or
others entering into the Premises by act or omission of Tenant or any subtenant. Any repairs or
replacements required to be made by Tenant to any or all of the structural components of the
Property and the mechanical, electrical, sanitary, HVAC, or other systems of the Property or
Premises shall be performed by appropriately licensed contractors approved by Landlord, which
approval shall not be unreasonably withheld. All such repairs or replacements shall be subject to
the supervision and control of Landlord, and all repairs and replacements shall be made with
materials of equal or better quality than the items being repaired or replaced. Notwithstanding
any of the foregoing, however, from time to time during the Term, Landlord may elect, in its sole
discretion and by delivery of written notice to Tenant, to perform on behalf of Tenant, all or some
portion of the repairs, maintenance, restoration and replacement in and to the Premises required to
be performed by Tenant under this Lease (any such repairs, maintenance, restoration and/or
replacement activities that Landlord elects to perform on behalf of Tenant are herein collectively
referred to as “General Maintenance Services”). Tenant shall reimburse Landlord for the cost or
value of all General Maintenance Services provided by Landlord as Additional Rent simultaneously
with the payment of Operating Expenses as part of Estimated Additional Rent (on a monthly estimated
basis subject to annual reconciliation as described in Section 3.3 above). Unless and until
Landlord affirmatively elects to provide General Maintenance Services, nothing contained herein
shall be construed to obligate Landlord to perform any General Maintenance Services or, except as
otherwise expressly provided in Section 13.2, to repair, maintain, restore or replace any portion
of the Premises. Landlord may from time to time, in its sole discretion, (x) reduce or expand the
scope of the General Maintenance Services that Landlord has elected to provide or
 (y) revoke its
election to provide any or all of the General Maintenance Services, in either event, upon delivery
of not less than thirty (30) days’ prior written notice to Tenant. If Landlord does not elect to
repair, maintain and/or replace the HVAC systems as part of General Maintenance Services, or
revokes such election at any time after having made such election, Tenant shall enter into a
preventative maintenance and service contract with a reputable service provider for maintenance of
the HVAC systems of the Premises, a copy of which agreement shall be provided to Landlord.




          13.2. Landlord Repairs. Notwithstanding anything contrary herein, Landlord shall
repair, replace and restore the foundation, exterior and interior load-bearing walls, roof
structure and roof covering and tuckpointing of the Property; provided, however, that (i) all costs
and expenses so incurred by Landlord to repair, replace and restore the above items shall
constitute Operating Expenses; provided, however, that with respect to any costs incurred in the
replacement context, those costs shall not constitute an Operating Expense except to the extent
that such costs so qualify under Section 3.1.1(vii), and (ii) notwithstanding (i) above, in the
event that any such repair, replacement or restoration is necessitated by any or all of the matters
set forth in Sections 13.1(a) through (d) above (collectively, “Tenant Necessitated Repairs”), then
Tenant shall be required to reimburse Landlord for all costs and expenses that Landlord incurs in
order to perform such Tenant Necessitated Repairs, and such reimbursement shall be paid, in full,
within 10 days after Landlord’s delivery of demand therefor, Landlord agrees to commence the
repairs, replacements or restoration described in this Section 13.2 within a reasonable period of
time after receiving from Tenant written notice of the need for such repairs.




     14. UTILITIES. Tenant shall purchase all utility services and shall provide for
scavenger, cleaning and extermination services. As provided in Section 3.1.1. above, Common Area
utility charges are included within Operating Expenses; therefore, when and as Tenant pays

estimated Operating Expenses, those estimated monthly



10









 







payments shall include monthly estimated installments of Common Area utility charges; Tenant
will pay the utility charges for its Premises directly to the utility or municipality providing
such service, and: (a) all charges shall be paid by Tenant before they become delinquent; and (b)
utility charges for the Premises shall not be included in estimated Operating Expenses. Tenant
shall be solely responsible for the repair and maintenance of any meters necessary in connection
with such services. Tenant’s use of electrical energy in the Premises shall not, at any time,
exceed the capacity of either or both of (i) any of the electrical conductors and equipment in or
otherwise servicing the Premises; and (ii) the HVAC systems of either or both of the Premises and
the Property.



     15. INVOLUNTARY CESSATION OF SERVICES. Landlord reserves the right, without any
liability to Tenant and without affecting Tenant’s covenants and obligations hereunder, to stop
service of any or all of the HVAC, electric, sanitary, elevator (if any), and other systems serving
the Premises, or to stop any other services required by Landlord under this Lease, whenever and for
so long as may be necessary by reason of (i) accidents, emergencies, strikes, or the making of
repairs or changes which Landlord or Agent, in good faith, deems necessary or (ii) any other cause
beyond Landlord’s reasonable control. Further, it is also understood and agreed that Landlord or
Agent shall have no liability or responsibility for a cessation of services to the Premises or to
the Property that occurs as a result of causes beyond Landlord’s or Agent’s reasonable control. No
such interruption of service shall be deemed an eviction or disturbance of Tenant’s use and
possession of the Premises or any part thereof, or render Landlord or Agent liable to Tenant for
damages, or relieve Tenant from performance of Tenant’s obligations under this Lease, including,
but not limited to, the obligation to pay Rent; provided, however, that if any interruption of
services persists for a period in excess of five (5) consecutive business days Tenant shall, as
Tenant’s sole remedy, be entitled to a proportionate abatement of Rent to the extent, if any, of
any actual loss of use of the Premises by Tenant.



     16. LANDLORD’S RIGHTS. Landlord, Agent and their respective agents, employees and
representatives shall have the right to enter and/or pass through the Premises at any time or times
upon reasonable prior notice (except in the event of emergency): (a) to examine and inspect the
Premises and to show them to actual and prospective lenders, prospective purchasers or mortgagees
of the Property or providers of capital to Landlord and its affiliates; and (b) to make such
repairs, alterations, additions and improvements in or to all or any portion of either or both of
the Premises and the Property, or the Property’s facilities and equipment as Landlord is required
or desires to make. Landlord and Agent shall be allowed to take all materials into and upon the
Premises that may be required in connection with any repairs, alterations, additions or
improvements, without any liability to Tenant and without any reduction or modification of Tenant’s
covenants and obligations hereunder; provided, however, that Landlord shall use reasonable efforts
to limit interference with Tenant’s business operations and Tenant’s occupancy and use of the
Premises. During the period of six months prior to the Expiration Date (or at any time, if Tenant
has vacated or abandoned the Premises or is otherwise in default under this Lease), Landlord and
its agents may exhibit the Premises to prospective tenants. Additionally, Landlord and Agent shall
have the following rights with respect to the Premises, exercisable without notice to Tenant,
without liability to Tenant, and without being deemed an eviction or disturbance of Tenant’s use or
possession of the Premises or giving rise to any claim for setoff or abatement of Rent: (i) to
designate and approve, prior to installation, all types of signs; (ii) to have pass keys, access
cards, or both, to the Premises; and (iii) to decorate, remodel, repair, alter or otherwise prepare
the Premises for reoccupancy at any time after Tenant vacates or abandons the Premises for more
than 30 consecutive days or without notice to Landlord of Tenant’s intention to reoccupy the
Premises.



     17. NON-LIABILITY AND INDEMNIFICATION.



          17.1. Non-Liability. Except as provided in Section 17.2.2, none of Landlord, Agent,
any other managing agent, or their respective affiliates, owners, partners, directors, officers,
agents and employees shall be liable to Tenant for any loss, injury, or damage, to Tenant or to any
other person, or to its or their property, irrespective of the cause of such injury, damage or
loss. Further, except as provided in Section 17.2.2, none of Landlord, Agent, any other managing
agent, or their respective affiliates, owners, partners, directors, officers, agents and employees
shall be liable to Tenant (a) for any damage caused by other tenants or persons in, upon or about
the Property, or caused by operations in construction of any public or quasi-public work; (b) with
respect to matters for which Landlord is liable, for consequential or indirect damages purportedly
arising out of any loss of use of the Premises or any equipment or facilities therein by Tenant or
any person claiming through or under Tenant; (c) any defect in the Premises or the Property; (d)
injury or damage to person or property caused by fire, or theft, or resulting from the operation of
heating or air conditioning or lighting apparatus, or from falling plaster, or from





11









 







steam, gas, electricity, water, rain, snow, ice, or dampness, that may leak or flow from any
part of the Property, or from the pipes, appliances or plumbing work of the same.




          17.2. Indemnification.




               17.2.1. Tenant Indemnification. Tenant hereby indemnifies, defends, and holds
Landlord, Agent and their respective affiliates, owners, partners, directors, officers, agents and
employees (collectively, “Landlord Indemnified Parties”) harmless from and against any and all
Losses (defined below) arising from or in connection with any or all of: (a) the conduct or
management of either or both the Property and the Premises or any business therein, or any work or
Alterations done, or any condition created by any or all of Tenant and Tenant’s Parties in or about
the Premises during the Term or during the period of time, if any, prior to the Commencement Date
that Tenant is given access to the Premises; (b) any act, omission or negligence of any or all of
Tenant and Tenant’s Parties; (c) any accident, injury or damage whatsoever (unless caused by
Landlord’s negligence) occurring in, at or upon either or both of the Property and the Premises and
caused by any or all of Tenant and Tenant’s Parties; (d) any breach by Tenant of any of its
warranties and representations under this Lease; (e) any actions necessary to protect Landlord’s
interest under this Lease in a bankruptcy proceeding or other proceeding under the Bankruptcy Code;
(f) any violation or alleged violation by any or all of Tenant and Tenant’s Parties of any Law
including, without limitation, any Environmental Law; (g) any breach of the provisions of Section 9
by any or all of Tenant and Tenant’s Parties; (h) claims for work or labor performed or materials
supplies furnished to or at the request of any or all of Tenant and Tenant’s Parties; (i) claims
arising from any breach or default on the part of Tenant in the performance of any covenant
contained in this Lease; (j) any Hazardous Materials used, exposed, emitted, released, discharged,
generated, manufactured, sold, transported, handled, stored, treated, reused, presented, disposed
of or recycled in, at, near or under all or any portion of the Premises as a result of the acts or
omissions of any or all of Tenant and Tenant’s Parties; and (k) the violation of any Environmental
Law or any permit, application or consent required in connection with any Environmental Law by any
or all of Tenant and Tenant’s Parties with respect to the Premises during the Term, excluding,
however, any violation of any Environmental Law resulting directly from the acts or omissions of
Landlord and Landlord’s employees, agents and contractors (collectively, “Tenant’s Indemnified
Matters”). In case any action or proceeding is brought against any or all of Landlord and the
Landlord Indemnified Parties by reason of any of Tenant’s Indemnified Matters, Tenant, upon notice
from any or all of Landlord, Agent or any Superior Party (defined below), shall resist and defend
such action or proceeding by counsel reasonably satisfactory to, or selected by, Landlord. The
term “Losses” shall mean all claims, demands, expenses, actions, judgments. damages (actual, but
not consequential), penalties, fines, liabilities, losses of every kind and nature (including,
without limitation, property damage, diminution in value of Landlord’s interest in the Premises or
the Property, damages for the loss or restriction on use of any space or amenity within the
Premises or the Property, damages arising from any adverse impact on marketing space in the
Property, sums paid in settlement of claims and any costs and expenses associated with injury,
illness or death to or of any person), suits, administrative proceedings, costs and fees,
including, without limitation, attorneys’ and consultants’ reasonable fees and expenses, and the
costs of cleanup, remediation, removal and restoration, that are in any way related to any matter
covered by the foregoing indemnity. The provisions of this Section 17.2.1 shall survive the
expiration or termination of this Lease.



               17.2.2.
Landlord Indemnification. Landlord hereby indemnifies, defends and holds Tenant
harmless from and against any and all Losses actually suffered or incurred by Tenant as the sole
and direct result of any negligent, willful or intentional acts or omissions of any or all of
Landlord. Agent and any parties within the direct and sole control of either or both of Landlord
and Agent. In the event that any action or proceeding is brought against Tenant, and the foregoing
indemnity is applicable to such action or proceeding, then Landlord, upon notice from Tenant, shall
resist and defend such action or proceeding by counsel reasonably satisfactory to Tenant.
Notwithstanding anything to the contrary set forth in this Lease, however, in all events and under
all circumstances, the liability of Landlord to Tenant shall be limited to the interest of Landlord
in the Property, and Tenant agrees to look solely to Landlord’s interest in the Property for the
recovery of any judgment or award against Landlord, it being intended that Landlord shall not be
personally liable for any judgment or deficiency. The provisions of this Section 17.2.2 shall
survive the expiration or termination of this Lease.



          17.3. Force Majeure. (a) The obligations of Tenant hereunder shall not be affected,
impaired or excused, and Landlord shall have no liability whatsoever to Tenant, with respect to any
act, event or circumstance arising out of (i) Landlord’s failure to fulfill, or delay in fulfilling
any of its obligations under this Lease by reason of labor dispute, governmental preemption of
property in connection with a public emergency or shortages of fuel, supplies, or labor, or any
other cause, whether similar or dissimilar, beyond Landlord’s reasonable control; or (ii) any
failure or defect in the supply, quantity or character of utilities furnished to the Premises, or
by reason of any





12









 







requirement, act or omission of any public utility or others serving the Property, beyond
Landlord’s reasonable control. (b) Tenant shall not have any liability whatsoever to Landlord with
respect to any delay by Tenant in the performance of any obligation of Tenant to repair, maintain
or replace the Premises or any portion thereof to the extent such failure arises out of or by
reason of a labor dispute, governmental preemption of property in connection with a public
emergency or shortages of fuel, supplies or labor, or any other cause, whether similar or
dissimilar, beyond Tenant’s reasonable control; provided, however, Tenant shall be excused from its
delay in the performance of any of its obligations described in this subsection (b) only if it
promptly performs each such obligation as soon as practicable after the cause for such delay ends.




     18. DAMAGE OR DESTRUCTION.



          18.1. Notification and Repair. Tenant shall give prompt notice to Landlord and Agent
of (a) any fire or other casualty to the Premises or the Property, and (b) any damage to, or defect
in, any part or appurtenance of the Property’s sanitary, electrical, IIVAC, elevator or other
systems located in or passing through the Premises or any part thereof. Tenant shall be liable for
any claim, loss, damage, cost or expense resulting from Tenant’s failure to give Landlord the
foregoing notice in a timely manner. Subject to the provisions of Section 18.3 below, if either or
both of the Property and the Premises is damaged by fire or other insured casualty, Landlord shall
repair (or cause Agent to repair) the damage and restore and rebuild the Property and/or the
Premises (except for Tenant’s Property) with reasonable dispatch after (x) notice to it of the
damage or destruction and (y) the adjustment of the insurance proceeds attributable to such damage.
Subject to the provisions of Section 18.3 below, Tenant shall not be entitled to terminate this
Lease and no damages, compensation or claim shall be payable by Landlord for purported
inconvenience, loss of business or annoyance arising from any repair or restoration of any portion
of the Premises or of the Property pursuant to this Section. Landlord (or Agent, as the case may
be) shall use its diligent, good faith efforts to make such repair or restoration promptly and in
such manner as not to unreasonably interfere with Tenant’s use and occupancy of the Premises, but
Landlord or Agent shall not be required to do such repair or restoration work except during normal
business hours of business days.




          18.2. Rental Abatement. Provided that any damage to either or both of the Property and
the Premises is not caused by, or is not the result of acts or omissions by, any or all of Tenant
and Tenant’s Parties, if (a) the Property is damaged by fire or other casualty thereby causing the
Premises to be inaccessible or (b) the Premises are partially damaged by fire or other casualty,
the Rent shall be proportionally abated to the extent of any actual loss of use of the Premises by
Tenant.




          18.3. Total Destruction. If the Property or the Premises shall be totally destroyed by
fire or other casualty, or if the Property shall be so damaged by fire or other casualty that (in
the reasonable opinion of a reputable contractor or architect designated by Landlord): (i) its
repair or restoration requires more than 180 days or (ii) such repair or restoration requires the
expenditure of more than 50% of the full insurable value of the Property immediately prior to the
casualty or (iii) the damage (x) is less than the amount stated in (ii) above, but more than 10% of
the full insurable value of the Property; and (y) occurs during the last two years of Lease Term,
Landlord and Tenant shall each have the option to terminate this Lease (by so advising the other,
in writing) within 10 days after said contractor or architect delivers written notice of its
opinion to Landlord and Tenant, but in all events prior to the commencement of any restoration of
the Premises or the Property by Landlord. In such event, the termination shall be effective as of
the date upon which either Landlord or Tenant, as the case may be, receives timely written notice
from the other terminating this Lease pursuant to the preceding sentence. If neither Landlord nor
Tenant timely delivers a termination notice, this Lease shall remain in full force and effect.
Notwithstanding the foregoing, if (A) any holder of a mortgage or deed of trust encumbering the
Property or landlord pursuant to a ground lease encumbering the Property (collectively, “Superior
Parties”) or other party entitled to the insurance proceeds fails to make such proceeds available
to Landlord in an amount sufficient for restoration of the Premises or the Property, or (B) the
issuer of any casualty insurance policies on the Property fails to make available to Landlord
sufficient proceeds for restoration of the Premises or the Property, then Landlord may, at
Landlord’s sole option, terminate this Lease by giving Tenant written notice to such effect within
30 days after Landlord receives notice from the Superior Party or insurance company, as the case
may be, that such proceeds shall not be made available, in which event the termination of this
Lease shall be effective as of the date Tenant receives written notice from Landlord of Landlord’s
election to terminate this Lease. Landlord shall have no liability to Tenant, and Tenant shall not
be entitled to terminate this Lease by virtue of any delays in completion of repairs and
restoration. For purposes of this Section 18.3 only, “full insurable value” shall mean replacement
cost, less the cost of footings, foundations and other structures below grade.




13









 








          18.4. Insurance Proceeds. Landlord shall not be obligated to expend in repairs and
restoration an amount in excess of the proceeds of insurance recovered with respect to any
casualty. Tenant acknowledges that Landlord shall be entitled to the full proceeds of any
insurance coverage, whether carried by Landlord or Tenant, for damage to either or both of the
Premises and the Property (excluding any proceeds for damage to Tenant’s Property). In the event
that either or both of the Premises and the Property are not repaired or reconstructed, all
proceeds of insurance (excluding any proceeds covering Tenant’s Property), whether carried by
Landlord or Tenant, shall be payable to Landlord. Landlord’s duty to repair the Premises and the
Property (excluding Tenant’s Property) is limited to repairing the Premises to the condition
existing immediately prior to such fire or other casualty.




     19. EMINENT DOMAIN. If the whole, or any substantial (as reasonably determined by
Landlord) portion, of the Property is taken or condemned for any public use under any Law or by
right of eminent domain, or by private purchase in lieu thereof, and such taking would prevent or
materially interfere with the Permitted Use of the Premises, this Lease shall terminate effective
when the physical taking of said Premises occurs. If less than a substantial portion of the
Property is so taken or condemned, or if the taking or condemnation is temporary (regardless of the
portion of the Property affected), this Lease shall not terminate, but the Rent payable hereunder
shall be proportionally abated to the extent of any actual loss of use of the Premises by Tenant.
Landlord shall be entitled to any and all payment, income, rent or award, or any interest therein
whatsoever, which may be paid or made in connection with such a taking or conveyance, and Tenant
shall have no claim against Landlord for the value of any unexpired portion of this Lease.
Notwithstanding the foregoing, any compensation specifically and independently awarded to Tenant
for loss of business or goodwill, or for its personal property, shall be the property of Tenant.



     20. SURRENDER AND HOLDOVER. On the last day of the Term, or upon any earlier
termination of this Lease, or upon any re-entry by Landlord upon the Premises, (a) Tenant shall
quit and surrender the Premises to Landlord “broom-clean” and in good order, condition and repair
(as defined by Exhibit C, attached hereto and incorporated herein by reference), except for
ordinary wear and tear and such damage or destruction as Landlord is required to repair or restore
under this Lease, (b) Tenant shall remove all of Tenant’s Property therefrom, except as otherwise
expressly provided in this Lease, and (c) Tenant shall surrender to Landlord any and all keys,
access cards, computer codes or any other items used to access the Premises. Landlord shall be
permitted to inspect the Premises in order to verify compliance with this Section 20 at any time
prior to (x) the Expiration Date, (y) the effective date of any earlier termination of this Lease,
or (z) the surrender date otherwise agreed to in writing by Landlord and Tenant. The obligations
imposed under the first sentence of this Section 20 shall survive the termination or expiration of
this Lease. If any repairs are required to be performed in, to or at the Premises (pursuant to the
first sentence of this Section 20 or any other applicable provision of this Lease) upon the
expiration or termination of the Term, Tenant shall cause such repairs to be performed, to
Landlord’s reasonable satisfaction, within 10 business days after the date on which this Lease is
terminated or expired. If Tenant fails to timely comply with the preceding sentence, then Landlord
shall have the right to cause the repairs to be performed, at Tenant’s expense, and all such
expenses so incurred by Landlord shall bear interest (at the rate specified in the second sentence
of Section 22.3) from the date the expense is incurred until the date paid, in full, by Tenant
(inclusive of interest). If, without Landlord’s prior written consent, Tenant remains in
possession after the Expiration Date hereof or after any earlier termination date of this Lease or
of Tenant’s right to possession: (i) Tenant shall be deemed a tenant-at-will; (ii) Tenant shall pay
175% of the aggregate of the Base Rent and Additional Rent last prevailing hereunder, and also
shall pay all actual damages sustained by Landlord, directly by reason of Tenant’s remaining in
possession after the expiration or termination of this Lease; (iii) there shall be no renewal or
extension of this Lease by operation of law; and (iv) the tenancy-at-will may be terminated by
either party hereto upon 30 days’ prior written notice given by the terminating party to the
non-terminating party. The provisions of this Section 20 shall not constitute a waiver by Landlord
of any re-entry rights of Landlord provided hereunder or by law. Notwithstanding the foregoing, if
Tenant provides a written notice to Landlord not later than the date that is four (4) months prior
to the end of the Term that Tenant desires to negotiate with Landlord a renewal lease for the
Premises or for premises within other commercial or industrial space owned by Landlord within the
Salt Lake City metropolitan area, neither the Base Rent nor the Additional Rent increase set forth
in the immediately prior clause (ii) shall become effective prior to the later to occur of the last
day of the Term or the thirtieth (30th) day after Landlord provides written notice to Tenant that
Landlord will impose such increase notwithstanding the conduct of any such negotiations or the
termination thereof; provided, however, nothing in this sentence shall be construed as waiving or
excusing Tenant from the payment of Base Rent and Additional Rent during any holdover period at the
rate in effect as of the last day of this Lease or obligating Landlord to enter into any such
renewal lease with Tenant.



14









 







     21. EVENTS OF DEFAULT.



          21.1. Bankruptcy of Tenant. It shall be a default by Tenant under this Lease if Tenant
makes an assignment for the benefit of creditors, or files a voluntary petition under any state or
federal bankruptcy or insolvency law, or an involuntary petition alleging an act of bankruptcy or
insolvency is filed against Tenant under any state or federal bankruptcy or insolvency law that is
not dismissed within 90 days, or whenever a petition is filed by or against (to the extent not
dismissed within 90 days) Tenant under the reorganization provisions of the United States
Bankruptcy Code or under the provisions of any state or federal law of like import, or whenever a
petition shall be filed by Tenant under the arrangement provisions of the United States Bankruptcy
Code or similar state or federal law, or whenever a receiver of Tenant, or of, or for, the property
of Tenant shall be appointed, or Tenant admits it is insolvent or is not able to pay its debts as
they mature.




          21.2. Default Provisions. Each of the following shall constitute a default by Tenant
under this Lease: (a) if Tenant fails to pay Rent or any other payment when due hereunder within
five days after written notice from Landlord of such failure to pay on the due date; provided,
however, that if in any consecutive 12 month period, Tenant shall, on two (2) separate occasions,
fail to pay any installment of Rent on the date such installment of Rent is due, then, on the third
such occasion and on each occasion thereafter on which Tenant shall fail to pay an installment of
Rent on the date such installment of Rent is due, Landlord shall be relieved from any obligation to
provide notice to Tenant, and Tenant shall then no longer have a five day period in which to cure
any such failure; or (b) if Tenant fails, whether by action or inaction, to timely comply with, or
satisfy, any or all of the obligations imposed on Tenant under this Lease (other than the
obligation to pay Rent) for a period of 30 days after Landlord’s delivery to Tenant of written
notice of such default under this Section 21.2(b); provided, however, that if the default cannot,
by its nature, be cured within such 30 day period, but Tenant commences and diligently pursues a
cure of such default promptly within the initial 30 day cure period, then Landlord shall not
exercise its remedies under Section 22 unless such default remains uncured for more than 60 days
after the initial delivery of Landlord’s original default notice.




     22. RIGHTS AND REMEDIES.



          22.1. Landlord’s Cure Rights Upon Default of Tenant. If Tenant defaults in the
performance of any of its obligations under this Lease, and fails to cure such default on a timely
basis (pursuant to Section 21.2), Landlord, without thereby waiving such default, may (but shall
not be obligated to) perform the same for the account, and at the expense of Tenant.




          22.2. Landlord’s Remedies. In the event of any default by Tenant under this Lease,
Landlord, at its option, and after any applicable notice and cure period (as required pursuant to
Section 21.2), but without additional notice or demand from Landlord, if any, as provided in
Section 21.2 has expired, may, in addition to all other rights and remedies provided in this Lease,
or otherwise at law or in equity: (a) terminate this Lease and Tenant’s right of possession of the
Premises; or (b) terminate Tenant’s right of possession of the Premises without terminating this
Lease; provided, however, that Landlord may, whether Landlord elects to proceed under Subsections
(a) or (b) above, relet the Premises, or any part thereof for the account of Tenant, for such rent
and term and upon such terms and conditions as are acceptable to Landlord. In addition, for
purposes of any reletting, Landlord is authorized to decorate, repair, alter and improve the
Premises to the extent deemed necessary by Landlord, in its sole discretion. In the event of the
termination of this Lease by Landlord pursuant to (a) above, Landlord shall be entitled to recover
from Tenant (i) all damages and other sums that Landlord is entitled to recover under any provision
of this Lease or at law or in equity, including, but not limited to, all fixed dollar amounts of
Base Rent and Additional Rent accrued and unpaid for the period up to and including such
termination date; (ii) all other additional sums payable by Tenant, or for which Tenant is liable,
or in respect of which Tenant has agreed to indemnify Landlord, under any of the provisions of this
Lease, that may be then owing and unpaid; all costs and expenses (including, without limitation,
court costs and attorneys’ reasonable fees) incurred by Landlord in the enforcement of its rights
and remedies under this Lease; and (iv) any damages provable by Landlord as a matter of law
including, without limitation, an amount equal to the positive difference, if any, between (x) the
discounted present value (at 6% per annum) of the Base Rent provided to be paid for the remainder
of the Term (measured from the effective termination date of this Lease) and (y) the fair market
rental value of the Leased Premises (determined at the date of termination of this Lease) after
deduction (from such fair market rental value) of the projected costs and expenses of reletting the
Premises (including the anticipated costs of repairs, alterations, improvements, additions, legal
fees and brokerage commissions) as reasonably estimated by Landlord. If Landlord elects to pursue
its rights and remedies under Subsection (b) above, and the Premises are relet and a sufficient sum
is not realized therefrom, then to satisfy the payment, when due, of Base Rent and Additional Rent
reserved under the Lease for




15









 





any monthly period (after payment of all Landlord’s reasonable expenses of reletting), Tenant
shall, in Landlord’s sole judgment, either (i) pay any such deficiency monthly or (ii) pay such
deficiency on an accelerated basis, which accelerated deficiency shall be discounted at a rate of
6% per annum. If Landlord elects to pursue its rights and remedies under Subsection (b) above, and
Landlord fails to relet the Premises, then Tenant shall pay to Landlord the sum of (x) the
projected costs of Landlord’s expenses of reletting (including the anticipated costs of repairs,
alterations, improvements, additions, legal fees and brokerage commissions) as reasonably estimated
by Landlord and (y) the accelerated amount of Base Rent and Additional Rent due under the Lease for
the balance of the Term, discounted to present value at a rate of 6% per annum. Tenant agrees that
Landlord may file suit to recover any sums due to Landlord hereunder from time to time and that
such suit or recovery of any amount due Landlord hereunder shall not be any defense to any
subsequent action brought for any amount not theretofore reduced to judgment in favor of Landlord.
If Landlord elects to pursue its rights and remedies under Subsection (b), then Landlord shall at
any time have the further right and remedy to rescind such election and pursue its rights and
remedies under Subsection (a). In the event Landlord elects, pursuant to clause (b) of this
Section 22.2, to terminate Tenant’s right of possession only, without terminating this Lease,
Landlord may, at Landlord’s option, enter into the Premises, remove Tenant’s Property, Tenant’s
signs and other evidences of tenancy, and take and hold possession thereof, as provided in Section
20 hereof; provided, however, that such entry and possession shall not terminate this Lease or
release Tenant, in whole or in part, from Tenant’s obligation to pay the Base Rent and Additional
Rent reserved hereunder for the full Term, or from any other obligation of Tenant under this Lease.
Any and all property that may be removed from the Premises by Landlord pursuant to the authority
of the Lease or of law, to which Tenant is or may be entitled, may be handled, removed or stored by
Landlord at the sole risk, cost and expense of Tenant, and in no event or circumstance shall
Landlord be responsible for the value, preservation or safekeeping thereof. Tenant shall pay to
Landlord, upon demand, any and all expenses incurred in such removal and all storage charges
against such property so long as the same shall be in Landlord’s possession or under Landlord’s
control. Any such property of Tenant not retaken from storage by Tenant within 30 days after the
end of the Term, however terminated, shall be conclusively presumed to have been conveyed by Tenant
to Landlord under this Lease as in a bill of sale, without further payment or credit by Landlord to
Tenant.




          22.3. Additional Rights of Landlord. Any and all costs, expenses and disbursements, of
any kind or nature, incurred by Landlord or Agent in connection with the enforcement of any and all
of the terms and provisions of this Lease, including attorneys’ reasonable fees (through all
appellate proceedings), shall be due and payable (as Additional Rent) upon Landlord’s submission of
an invoice therefor. All sums advanced by Landlord or Agent on account of Tenant under this
Section, or pursuant to any other provision of this Lease, and all Base Rent and Additional Rent,
if delinquent or not paid by Tenant and received by Landlord when due hereunder, shall bear
interest at the rate of 5% per annum above the “prime” or “reference” or “base” rate (on a per
annum basis) of interest publicly announced as such, from time to time, by the Bank One, or its
successor (“Default interest”), from the due date thereof until paid, and such interest shall be
and constitute Additional Rent and be due and payable upon Landlord’s or Agent’s submission of an
invoice therefor. The various rights, remedies and elections of Landlord reserved, expressed or
contained herein are cumulative and no one of them shall be deemed to be exclusive of the others or
of such other rights, remedies, options or elections as are now or may hereafter be conferred upon
Landlord by law.




          22.4. Event of Bankruptcy. In addition to, and in no way limiting the other remedies
set forth herein, Landlord and Tenant agree that if Tenant ever becomes the subject of a voluntary
or involuntary bankruptcy, reorganization, composition, or other similar type proceeding under the
federal bankruptcy laws, as now enacted or hereinafter amended, then: (a) “adequate assurance of
future performance” by Tenant pursuant to Bankruptcy Code Section 365 will include (but not be
limited to) payment of an additional/new security deposit in the amount of three times the then
current Base Rent payable hereunder; (b) any person or entity to which this Lease is assigned,
pursuant to the provisions of the Bankruptcy Code, shall be deemed, without further act or deed, to
have assumed all of the obligations of Tenant arising under this Lease on and after the effective
date of such assignment, and any such assignee shall, upon demand by Landlord, execute and deliver
to Landlord an instrument confirming such assumption of liability; (c) notwithstanding anything in
this Lease to the contrary, all amounts payable by Tenant to or on behalf of Landlord under this
Lease, whether or not expressly denominated as “Rent”, shall constitute “rent” for the purposes of
Section 502(6)(6) of the Bankruptcy Code; and (d) if this Lease is assigned to any person or entity
pursuant to the provisions of the Bankruptcy Code, any and all monies or other considerations
payable or otherwise to be delivered to Landlord or Agent (including Base Rent, Additional Rent and
other amounts hereunder), shall be and remain the exclusive property of Landlord and shall not
constitute property of Tenant or of the bankruptcy estate of Tenant. Any and all monies or other
considerations constituting Landlord’s property under





16









 







the preceding sentence not paid or delivered to Landlord or Agent shall be held in trust by
Tenant or Tenant’s bankruptcy estate for the benefit of Landlord and shall be promptly paid to or
turned over to Landlord.




     23. BROKER. Tenant covenants, warrants and represents that the broker set forth in
Section 1.9(A) was the only broker to represent Tenant in the negotiation of this Lease (“Tenant’s
Broker”). Landlord covenants, warrants and represents that the broker set forth in Section 1.9(B)
was the only broker to represent Landlord in the negotiation of this Lease (“Landlord’s Broker”).
Landlord shall be solely responsible for paying the commission of Landlord’s Broker and Tenant’s
Broker. Each party agrees to and hereby does defend, indemnify and hold the other harmless against
and from any brokerage commissions or finder’s fees or claims therefor by a party claiming to have
dealt with the indemnifying party and all costs, expenses and liabilities in connection therewith,
including, without limitation, reasonable attorneys’ fees and expenses, for any breach of the
foregoing. The foregoing indemnification shall survive the termination or expiration of this
Lease.



     24. MISCELLANEOUS.



          24.1. Merger. All prior understandings and agreements between the parties are merged
in this Lease, which alone fully and completely expresses the agreement of the parties. No
agreement shall be effective to modify this Lease, in whole or in part, unless such agreement is in
writing, and is signed by the party against whom enforcement of said change or modification is
sought.




          24.2. Notices. Any notice required to be given by either party pursuant to this Lease,
shall be in writing and shall be deemed to have been properly given, rendered or made only if
personally delivered, or if sent by Federal Express or other comparable commercial overnight
delivery service, addressed to the other party at the addresses set forth below (or to such other
address as Landlord or Tenant may designate to each other from time to time by written notice), and
shall be deemed to have been given, rendered or made on the day so delivered or on the first
business day after having been deposited with the courier service:




	 	 	 	 	 
	 

	 	If to Landlord:
	 	First Industrial, L.P.
	 

	 	 	 	311 South Wacker Drive, Suite 4000
	 

	 	 	 	Chicago, Illinois 60606
	 

	 	 	 	Attn: Vice President — Operations Management
	 
	 	 	 	 
	 

	 	With a copy to:
	 	First industrial Realty Trust, Inc.
	 

	 	 	 	1270 West 2320 South, STE C
	 

	 	 	 	West Valley City, UT 84119
	 

	 	 	 	Attn: James D. Pivirotto
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Barack Ferrazzano Kirschbaum Perlman & Nagelberg
	 

	 	 	 	333 West Wacker Drive
	 

	 	 	 	Suite 2700
	 

	 	 	 	Chicago, Illinois 60606
	 

	 	 	 	Attn: Suzanne Bessette-Smith
	 
	 	 	 	 
	 

	 	If to Tenant:
	 	ZARS, Inc.
	 

	 	 	 	1142 West 2320 South, STE A
	 

	 	 	 	West Valley City, UT 84119
	 

	 	 	 	Attn: Larry Rigby
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Ballard Spahr Andrews & Ingersoll, LLP
	 

	 	 	 	201 South Main, STE 600
	 

	 	 	 	Salt Lake City, UT 84103
	 

	 	 	 	Attn: David R. Rudd






17









 






          24.3. Non-Waiver. The failure of either party to insist, in any one or more instances,
upon the strict performance of any one or more of the obligations of this Lease, or to exercise any
election herein contained, shall not be construed as a waiver or relinquishment for the future of
the performance of such one or more obligations of this Lease or of the right to exercise such
election, but the Lease shall continue and remain in full force and effect with respect to any
subsequent breach, act or omission. The receipt and acceptance by Landlord or Agent of Base Rent
or Additional Rent with knowledge of breach by Tenant of any obligation of this Lease shall not be
deemed a waiver of such breach.




          24.4. Legal Costs. Any party in breach or default under this Lease (the
“Defaulting Party”) shall reimburse the other party (the “Nondefaulting Party”) upon demand
for any legal fees and court (or other administrative proceeding) costs or expenses that the
Nondefaulting Party incurs in connection with the breach or default, regardless whether suit is
commenced or judgment entered. Such costs shall include legal fees and costs incurred for the
negotiation of a settlement, enforcement of rights or otherwise. Furthermore, in the event of
litigation, the court in such action shall award to the party in whose favor a judgment is entered
a reasonable sum as attorneys’ fees and costs, which sum shall be paid by the losing party. Tenant
shall pay Landlord’s attorneys’ reasonable fees incurred in connection with Tenant’s request for
Landlord’s consent under provisions of this Lease governing assignment and subletting, or in
connection with any other act which Tenant proposes to do and which requires Landlord’s consent.




          24.5. Parties Bound. Except as otherwise expressly provided for in this Lease, this
Lease shall be binding upon, and inure to the benefit of, the successors and assignees of the
parties hereto. Tenant hereby releases Landlord named herein from any obligations of Landlord for
any period subsequent to the conveyance and transfer of Landlord’s ownership interest in the
Property. In the event of such conveyance and transfer, Landlord’s obligations shall thereafter be
binding upon each transferee (whether Successor Landlord or otherwise). No obligation of Landlord
shall arise under this Lease until the instrument is signed by, and delivered to, both Landlord and
Tenant.




          24.6. Recordation of Lease. Tenant shall not record or file this Lease (or any
memorandum hereof) in the public records of any county or state.




          24.7. Survival of Obligations. Upon the expiration or other termination of this Lease,
neither party shall have any further obligation nor liability to the other except as otherwise
expressly provided in this Lease and except for such obligations as, by their nature or under the
circumstances, can only be, or by the provisions of this Lease, may be performed after such
expiration or other termination.




          24.8. Governing Law; Construction. This Lease shall be governed by and construed in
accordance with the laws of the state in which the Property is located. If any provision of this
Lease shall be invalid or unenforceable, the remainder of this Lease shall not be affected but
shall be enforced to the extent permitted by law. The captions, headings and titles in this Lease
are solely for convenience of reference and shall not affect its interpretation. This Lease shall
be construed without regard to any presumption or other rule requiring construction against the
party causing this Lease to be drafted. Each covenant, agreement, obligation, or other provision
of this Lease to be performed by Tenant, shall be construed as a separate and independent covenant
of Tenant, not dependent on any other provision of this Lease. All terms and words used in this
Lease, regardless of the number or gender in which they are used, shall be deemed to include any
other number and any other gender as the context may require. This Lease may be executed in
counterpart and, when all counterpart documents are executed, the counterparts shall constitute a
single binding instrument.




          24.9. Time. Time is of the essence for this Lease. If the time for performance
hereunder falls on a Saturday, Sunday or a day that is recognized as a holiday in the state in
which the Property is located, then such time shall be deemed extended to the next day that is not
a Saturday, Sunday or holiday in said state.




          24.10. Authority of Tenant. If Tenant is a corporation, partnership, limited liability
company, association or any other entity, it shall deliver to Landlord, concurrently with the
delivery to Landlord of an executed Lease, certified resolutions of Tenant’s directors or other
governing person or body (i) authorizing execution and delivery of this Lease and the performance
by Tenant of its obligations hereunder and (ii) certifying the authority of the party executing the
Lease as having been duly authorized to do so.




          24.11. WAIVER OF TRIAL BY JURY. THE LANDLORD AND THE TENANT, TO THE FULLEST EXTENT
THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY ANY
PARTY TO THIS LEASE WITH RESPECT TO THIS LEASE, THE PREMISES, OR ANY OTHER MATTER RELATED TO THIS
LEASE OR THE PREMISES.




18









 








          24.12. Relocation. This Section intentionally deleted.




          24.13. Financial Information. From time to time during the Term, but not more than
once per calendar year, and more frequently upon Landlord’s request in connection with a bono-fide
anticipated sale or financing with respect to the Building or Property or if Tenant is in default
under this Lease as outlined in Section 21 above, Tenant shall deliver to Landlord it’s most recent
audited financial statements (as audited by an independent accounting firm), or, if Tenant does not
have audited financial statements for such period, Tenant’s most recent internal financial
statements including the income statement and balance sheet of Tenant, which is prepared annually
with respect to the preceding calendar year, within ten (10) days following Landlord’s written
request therefor.




          24.14. Confidential Information. Tenant agrees to maintain in strict confidence the
economic terms of this Lease and any or all other materials, data and information delivered to or
received by any or all of Tenant and Tenants’ Parties either prior to or during the Term in
connection with the negotiation and execution hereof. The provisions of this Section 24.14 shall
survive the termination of this Lease.




          24.15. Submission of Lease. Submission of this Lease to Tenant for signature does not
constitute a reservation of space or an option to lease. This Lease is not effective until
execution by and delivery to both Landlord and Tenant.




          24.16. Joint and Several Liability. This Section intentionally deleted.




          24.17. Riders. All Riders and Exhibits attached hereto and executed (or initialed)
both by Landlord and Tenant shall be deemed to be a part hereof and hereby incorporated herein.




[Signature Page to Follow]




19









 






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



	 	 	 	 	 	 	 
	 	 	LANDLORD:	 	 
	 
	 	 	 	 	 	 
	 	 	FIRST INDUSTRIAL, L.P., a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 
	 	 	By: First Industrial Realty Trust, Inc., a Maryland corporation	 	 
	 	 	Its: general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Greg Downs	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Greg Downs	 	 
	 

	 	Its:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 
	 	 	ZARS Inc., a Utah corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Larry Rigby	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Larry Rigby	 	 
	 

	 	Its:
	 	President & CEO
	 	 






S-1









 





EXHIBIT A




PROPERTY



Tenant will be allocated the use of 45 parking spaces during the term of
this Lease. Said parking spaces will be located to the south, east and west of
the premises and will be in common with other Tenants of the Property and
Building.









A-1









 






LEASE EXHIBIT B




Landlord’s Repairs and Improvements

WORK LETTER



To induce Tenant to enter into the Lease (to which this Exhibit is attached) and in consideration
of the mutual covenants hereinafter contained, Landlord and Tenant agree as follows:




Improvements.



Landlord agrees that it shall construct, in a first-class and professional manner and in accordance
with applicable building codes, the improvements to the Premises (the “Improvements”) described
below including, without limitation, architectural, mechanical and electrical working drawings for
the Improvements as submitted for issuance of the building permit and changes required by local
authorities pursuant to the issuance of the permit (the “Plans”), and that such Improvements shall
thereafter be deemed to be part of the Premises.



Tenant has delivered the Plans for the Improvements to the Premises to Landlord as of May 19, 2003.
The Plans are hereby approved by Landlord and shall be subject to the approval of all local
governmental authorities whose approval is required under applicable law. Thereafter, revisions to
the Plans shall be subject to the mutual agreement of Tenant and Landlord and, except as otherwise
agreed to in writing by both parties, shall be at Tenant’s sole cost and expense. The Plans are as
follows: Landlord will repaint and re-carpet the premises using Landlord’s standard carpet and
paint. Tenant will choose the colors of said paint and carpet from Landlord’s samples.
Additionally, Landlord will build three rooms with roughed in plumbing for one sink each. Said
rooms will have ceilings and lighting to match the rest of the Premises but will have VCT flooring.
A set of standard double doors will be installed from the existing large lab space into the
warehouse. One section of wall approximately twelve feet long and nine feet tall will be removed
at the west end of the premises. The Plans are initialed and attached to this EXHIBIT B to the
lease.




Substantial Completion by Commencement Date.


Landlord shall Substantially Complete (as defined below) the Improvements on or before the
Commencement Date (as defined below). “Substantial Completion” and “Substantially Complete” shall
mean (i) Landlord’s Improvements have been constructed in accordance with the terms of this
Article, (ii) a final, unconditional certificate of occupancy permitting the permanent occupancy of
the entire Premises has been issued, and (iii) following inspection of the Premises by Tenant and
Landlord, Landlord shall use its best efforts to correct any unfinished items (the “Punchlist
Items”) within thirty (30) days after being provided with a written list of such Punchlist Items by
Landlord and Tenant.



In the event Landlord fails to Substantially Complete (as defined below) the Improvements prior to
the Commencement Date, then Lease commencement shall not be delayed until Substantial Completion is
attained. In the event that Landlord fails to complete all of the Punchlist Items by the date that
is thirty (30) days after Tenant provides Landlord with a written list of such items, then Tenant
may complete any such remaining Punchlist Item(s) and invoice Landlord for the cost of completing
such Punchlist Item(s).




Inspection.


Tenant and its agents shall have the right, upon reasonable advance notice or upon a mutually
acceptable schedule, to inspect the Premises and the progress of the Work to verify that the
Improvements are being constructed by Landlord in accordance with the Plans. In the event that
such inspection reveals that the Improvements are not being performed in accordance the Plans,
Tenant or its agent shall notify Landlord in writing of those deficiencies within two (2) business
days after the applicable inspection. Landlord shall promptly take whatever action is necessary to
correct such deficiencies and advise Tenant or its agent of such actions. In the event Landlord
disagrees with any deficiency stated in Tenant’s notice. Landlord shall advise Tenant in writing
within two (2) days after receipt of Tenant’s notice of any items that it disputes and the reasons
therefore.




B-1









 








Preliminary Term.


Tenant agrees that any entry by it, its contractors or agents during the Preliminary Term, the Term
Prior to Lease Commencement, shall be subject to all of the terms, provisions, covenants and
conditions of the Lease except as to the covenant to pay Base Rent or Additional Rent, and further
agrees that Landlord shall not be liable in any way for any injury, loss or damage which may occur
to any of Tenant’s work and installations made in the Premises or to the properties placed therein
prior to the Commencement Date, the same being at Tenant’s sole risk. Notwithstanding the
foregoing, should Landlord substantially complete the Premises prior to the Commencement Date and
Tenant occupies and conducts any business in any part of the Premises prior to the Commencement
Date then the Commencement Date shall become the date of occupancy.




B-2









 





EXHIBIT C




Broom Clean Condition and Repair Requirements





	•	 	All walls must be clean and free of holes.
	 
	•	 	Overhead door must be free of any broken panels, cracked lumber or dented panels. The
overhead door springs, rollers, tracks, motorized door operator, and all other items
pertaining to the overhead door must also be in good working condition.
	 
	•	 	HVAC system must be in good working order. Filters must be changed, and all thermostats
must be in working order. Tenant must supply Landlord with maintenance records.
	 
	•	 	All floors (warehouse and office) must be clean and free of excessive dust, dirt,
grease, oil and stains.
	 
	•	 	Drop grid ceiling, must be free of excessive dust from lack of changing filters. (No
ceiling tiles may be missing or damaged.)
	 
	•	 	All trash must be removed from both inside and outside of the Building.
	 
	•	 	All lightbulbs and ballasts must be working.
	 
	•	 	All signs in front of Building and on glass entry door and rear door must be removed.
	 
	•	 	Hot water heater must work.
	 
	•	 	All plumbing fixtures, equipment and drains must be clean and in working order.
	 
	•	 	Windows must be clean.
	 
	•	 	All mechanical and electrical systems must be in good working condition.






C-1









 





LEASE EXHIBIT D




TENANT OPERATIONS INQUIRY






	 	 	 
	Tenant Name:
	 	 
	 

	 	 





	 	 	 
	Tenant SIC Code/Description:
	 	 
	 

	 	 





	 	 	 
	Property Address:
	 	 
	 

	 	 





	 	 	 
	Property/Number/Region:
	 	 
	 

	 	 








 









					
	1.

	 	Name of Company (if different from above)	 	 
	 

	 	 	 	 





	 	 	 	 	 
	2.

	 	Address (local):	 	 
	 

	 	 	 	 
	 

	 	Phone (local)	 	 
	 

	 	 	 	 





	 	 	 	 	 
	3.

	 	Address (corporate):	 	 
	 

	 	 	 	 
	 

	 	Phone (corporate)	 	 
	 

	 	 	 	 





	 	 	 	 	 
	4.

	 	What is your business (brief description):	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 





	 	 	 	 	 
	5.

	 	What operations will you maintain at the proposed facility?	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 





	 	 	 
	6.

	 	Has your business received any Notices of Violation of environmental laws from municipal or
state agencies regarding operations at your current facility? If so, explain:
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 





	 	 	 
	7.

	 	Describe any assembly, manufacturing, machining, painting, printing or mechanical repair
activities that will be part of your business operations at the proposed facility:
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 





	 	 	 
	8.

	 	Will your employees operate electrical equipment that contains PCB’s?   YES   NO






	 	 	 
	9.

	 	Will your business operate one or more Underground Storage Tanks (UST’s) at the proposed
facility?






  YES    NO   




	 	 	 
	10.

	 	Will your business operate one or more Aboveground Storage Tanks (AST’s) at the proposed
facility?






  YES    NO   




C-2









 







	11.	 	TENANT CHEMICAL INVENTORY AT PROPOSED FACILITY — (make additional copies, if required). You
may exclude small quantities of toner and other office supplies)





	 	 	 	 	 	 	 	 	 
	Chemicals	 	What will be the	 	What will be the	 	 	 	 
	(by name where	 	average quantity on the	 	maximum quantity on	 	What will be the annual	 	How will the chemical
	available)	 	 proposed premises?	 	the proposed premises?	 	 quantity used?	 	 be stored?
	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 





C-3









 






	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 




Storage Methods (use all that apply): A) 55 gallon drum; B) 20 gallon drum; C) 2-5 gallon
pallet/container; D) bulk dry packages; E) cartoned small containers (less than 2 gallons or 10
pounds) on pallets; F) on floor; G) on racks; H) Underground Storage Tank (UST); I) Above Ground
Storage Tank (AST); J) other (please describe).




	 	 	 	 	 
	12.	 	Describe any pollution control equipment that will be used at the proposed facility (example:
paint spray booth, fume hood, waste water treatment).
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 





	 	 	 	 	 	 	 
	13.

	 	Will your operations

generate any chemical 

wastes that require 

special disposal?

(example: waste oil,

waste solvent)
	 	How will the 

chemical wastes 

be stored on-site?
	 	How will the wastes

be disposed?

(example: recycled, 

landfilled, incinerated)
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 





	 	 	 
	14.

	 	Does your business have an EPA Hazardous Waste Generator ID Number?   YES    NO  






C-4









 





	 	 	 	 	 
	15.	 	What spill prevention and containment measures will be in place for the chemicals and wastes
stored at the proposed facility? (describe briefly)
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 





	 	 	 
	16.

	 	Does your business have an Emergency Response or Contingency Plan in place in the event of a
chemical incident (please provide a copy)    YES    NO  






	 	 	 	 	 
	17.	 	Does your business have any type of Hazardous Materials training program for your employees?
(describe briefly):
	 

	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 





	 	 	 
	18.

	 	Do you have copies of all Material Safety Data Sheets (MSDS) at your facility for the
chemicals listed in question #7? (Please provide copies): YES NO






	 	 	 
	19.

	 	Does your business carry environmental insurance coverage in the event of a chemical
incident?






YES         NO




	 	 	 
	20.

	 	Will you be required to make filings and notices or obtain permits as required by Federal
and/or State regulations for the operations at the proposed facility? Specifically:






	 	 	 	 	 
	a. SARA Title lIl Section 312 (Tier II) reports

	 	YES
	 	NO
	(> 10,000lbs. of hazardous materials STORED at any one time)
	 	 	 	 
	 
	 	 	 	 
	b. SARA Title III Section 313 (Tier III) Form R reports

	 	YEN
	 	NO
	(> 10,000lbs. of hazardous materials USED per year)
	 	 	 	 
	 
	 	 	 	 
	c. NPDES or SPDES Stormwater Discharge permit

	 	YES
	 	NO
	(answer “No” if “No-Exposure Certification” filed)
	 	 	 	 






C-5









 






	21.	 	This form was prepared by the undersigned as a complete and correct description of Tenant’s
proposed operations at the location noted, and the Landlord may rely on this information.





	 	 	 	 	 	 	 
	/s/ Larry Rigby
	 	 	 	Larry Rigby	 	 
	 

Signature

	 	 	 	 

Print Name
	 	 
	 
	 	 	 	 	 	 
	 

Date

	 	 
	 	 	 	 







C-6