Document:

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                                                                   EXHIBIT 10.41

                                 PLUMAS BANCORP

                            INDEMNIFICATION AGREEMENT

     This Indemnification Agreement ("Agreement") is made and entered into as of
the ____ day of ____________, 2002, by and between Plumas Bancorp, a California
corporation ("Bancorp"), and _________________, (the "Indemnitee"), a director
(and/or officer) of Bancorp.

                                           RECITALS

     A. Bancorp and the Indemnitee recognize that statutes, regulations, court
opinions and Bancorp's Articles of Incorporation and Bylaws are indefinite in
providing Bancorp's directors and officers with adequate protection from
liabilities to which they may become personally exposed as a result of
performing their duties in good faith for Bancorp;

     B. Bancorp and the Indemnitee are aware of the large number of lawsuits
filed against corporate directors and officers;

     C. Bancorp and the Indemnitee recognize that the cost of defending against
such lawsuits may be beyond the financial resources of most directors and
officers of Bancorp;

     D. Bancorp and the Indemnitee recognize that the potential risks and
liabilities of being a director and/or officer pose a significant deterrent and
increased reluctance on the part of experienced and capable individuals to serve
as a director and/or officer of Bancorp;

     E. Bancorp has investigated the availability and sufficiency of liability
insurance for its directors and officers with adequate protection against
potential liabilities and has determined that such insurance provides inadequate
protection to its directors and officers, and, thus, it would be in the best
interests of Bancorp and its shareholders to contract with the Indemnitee, to
indemnify him/her to the fullest extent permitted by law against personal
liability for actions taken in the good faith performance of his/her duties to
Bancorp;

     F. Section 317 of the California Corporations Code ("Section 317") sets
forth certain provisions relating to the mandatory and permissive
indemnification of directors and officers (among others) of a California
corporation by such corporation;

     G. As inducement and encouragement for experienced and capable persons such
as the Indemnitee to continue to serve as a director and/or officer of Bancorp,
the Board of Directors of Bancorp has determined, after due consideration and
investigation, that this Agreement is a reasonable and prudent means to promote
and ensure the best interests of Bancorp and its shareholders; and

     H. Bancorp desires to have the Indemnitee continue to serve as a director
or officer of Bancorp free from undue concern for unpredictable, inappropriate
or unreasonable legal risks and personal liabilities by reason of his/her acting
in good faith in the performance of his/her duty to Bancorp; and the Indemnitee
desires to continue to serve as a director or officer of Bancorp;

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provided, and on the express condition, that the Indemnitee is furnished with
the indemnity set forth hereinafter.

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below and based on the premises set forth above, Bancorp and the
Indemnitee do hereby agree as follows:

     1. AGREEMENT TO SERVE. The Indemnitee will serve or continue to serve as a
director or officer of Bancorp to the best of his/her abilities at the will of
Bancorp for so long as the Indemnitee is duly elected or appointed or until such
time as the Indemnitee tenders his/her resignation in writing.

     2. DEFINITIONS. As used in this Agreement:

     (a) The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought in the right of Bancorp or
otherwise and whether of a civil, criminal, administrative or investigative
nature, including, but not limited to, actions, suits or proceedings brought
under and/or predicated upon the Securities Act of 1933, as amended, and/or the
Securities Exchange Act of 1934, as amended, and/or their respective state
counterparts, and/or any rule or regulation promulgated thereunder, in which the
Indemnitee may be or may have been involved as a party or otherwise, by reason
of the fact that the Indemnitee is or was a director or officer of Bancorp, by
reason of any action taken by him/her or of any inaction on his/her part while
acting as such director or officer or by reason of the fact that he/she is or
was serving at the request of Bancorp as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
whether or not he/she is serving in such capacity at the time any liability or
expense is incurred for which indemnification or reimbursement can be provided
under this Agreement.

     (b) The term "Expenses" includes, without limitation thereto, expenses of
investigations, of judicial or administrative proceedings or appeals, attorneys'
fees and disbursements and any expenses of establishing a right to
indemnification under Paragraph 7 of this Agreement, but shall not include the
amount of judgments, settlements, fines or penalties actually levied against the
Indemnitee.

     3. INDEMNITY IN THIRD PARTY PROCEEDINGS. Bancorp shall indemnify the
Indemnitee in accordance with the provisions of this section if the Indemnitee
is a party to or threatened to be made a party to or otherwise involved in any
Proceeding (other than a Proceeding by or in the right of Bancorp to procure a
judgment in its favor), by reason of the fact that the Indemnitee is or was a
director, officer, employee or agent of Bancorp or is or was serving at the
request of Bancorp as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against all
Expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred by the Indemnitee in connection with such Proceeding,
provided it is determined pursuant to Paragraph 7 of this Agreement or by the
court before which such action was brought or by the shareholders of Bancorp in
the manner prescribed by Section 317, that the Indemnitee acted in good faith
and in a manner which he/she reasonably believed to be in the best interests of
Bancorp

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and, in the case of a criminal proceeding, in addition, had no reasonable cause
to believe that his/her conduct was unlawful. The termination of any such
Proceeding by judgment, order of court, settlement, conviction, or upon a plea
of nolo contendere, or its equivalent, shall not, of itself, create a
presumption that the Indemnitee did not act in good faith and in a manner which
he/she reasonably believed to be in the best interests of Bancorp, and with
respect to any criminal proceeding, that such person had reasonable cause to
believe that his/her conduct was unlawful.

        4. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF BANCORP. Bancorp shall
indemnify the Indemnitee in accordance with the provisions of this section if
the Indemnitee is a party to or threatened to be made a party to or otherwise
involved in any Proceeding by or in the right of Bancorp to procure a judgment
in its favor by reason of the fact that the Indemnitee is or was a director,
officer, employee or agent of Bancorp or is or was serving at the request of
Bancorp as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against all Expenses
actually and reasonably incurred by the Indemnitee in connection with the
defense or settlement of such Proceeding, provided it is determined pursuant to
Paragraph 7 of this Agreement or by the court before which such action was
brought or by the shareholders of Bancorp in the manner prescribed by Section
317, that the Indemnitee acted in good faith and in a manner which he/she
believed to be in the best interests of Bancorp and its shareholders.
Notwithstanding the foregoing, no indemnification shall be made under this
Paragraph 4:

               (a) in respect of any claim, issue or matter as to which the
Indemnitee shall have been adjudged to be liable to Bancorp, unless and only to
the extent that the court in which such Proceeding is or was pending shall
determine upon application that, in view of all the circumstances of the case,
the Indemnitee is fairly and reasonably entitled to indemnity for such Expenses
as such court shall determine;

               (b) of amounts paid in settling or otherwise disposing of a
pending action without court approval;

               (c) of Expenses incurred in defending a pending action which is
settled or otherwise disposed of without court approval; or

               (d) in respect of any act, omission or transaction set forth in
Section 204(a)(10)(A)(i)-(vii) of the California Corporations Code.

        5. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY. Notwithstanding any
other provision of this Agreement, to the extent that the Indemnitee has been
successful on the merits in defense of any Proceeding or in defense of any
claim, issue or matter therein, the Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred in connection therewith.

        6. ADVANCES OF EXPENSES. The Expenses incurred by the Indemnitee
pursuant to Paragraphs 3 and 4 in defending any Proceeding shall be paid by
Bancorp in advance of the final disposition of such Proceeding at the written
request of the Indemnitee, if the Indemnitee shall provide an undertaking in the
form attached hereto as Exhibit "A" to Bancorp to repay such amount unless it is
ultimately determined that the Indemnitee is entitled to the payment of
Expenses. The written request to Bancorp shall include a description of the
nature of the Proceeding and be accompanied by copies of any documents filed
with a court relating to the Proceeding.

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     Notwithstanding the foregoing or any other provision of this Agreement, no
advance shall be made by Bancorp if a determination is reasonably and promptly
made by the Board of Directors by a majority vote of a quorum of disinterested
directors, or (if such a quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs) by independent legal counsel,
that, based upon the facts known to the Board of Directors or counsel at the
time such determination is made, (a) the Indemnitee acted in bad faith or
deliberately breached his/her duty to Bancorp or its shareholders, and (b) as a
result of such actions by the Indemnitee, it is more likely than not that it
will ultimately be determined that the Indemnitee is not entitled to
indemnification under the terms of this Agreement.

     7. RIGHTS OF THE INDEMNITEE TO INDEMNIFICATION UPON APPLICATION; PROCEDURE
UPON APPLICATION. To the extent a quorum of the Board of Directors of Bancorp
consisting of directors who were or are not parties to a Proceeding is
obtainable, the Board of Directors shall determine within 45 days after receipt
of the written request of the Indemnitee for indemnification whether the
Indemnitee has met the relevant standards for indemnification set forth in
Paragraphs 3 and 4 and, if it determines that such standards have been met, it
shall provide indemnification to the Indemnitee.

     Notwithstanding the foregoing, the Indemnitee may request independent
counsel or may bring suit in the court in which such Proceeding is or was
pending to determine whether the Indemnitee is entitled to indemnification as
provided by this Agreement. The Indemnitee's expenses incurred in connection
with successfully establishing his/her right to indemnification, in whole or in
part, shall also be indemnified by Bancorp.

     8. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by Bancorp for some or a portion
of the Expenses, judgments, fines, settlements or other amounts actually and
reasonably incurred by him/her in the investigation, defense, appeal or
settlement of any Proceeding but not, however, for the total amount thereof,
Bancorp shall nevertheless indemnify the Indemnitee for the portion of such
Expenses, judgments, fines, settlements or other amounts to which the Indemnitee
is entitled.

     9. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. The obtaining of
directors' and officers' liability insurance ("D&O Coverage") at the expense of
and by Bancorp shall in no way limit or diminish the obligation of Bancorp to
indemnify the Indemnitee as provided in this Agreement; provided, however, that
any amounts actually recovered by the Indemnitee from the insurer providing D&O
Coverage shall be applied in reduction of amounts otherwise owing by Bancorp by
reason of its indemnification under this Agreement and if Bancorp pays any
amounts to the Indemnitee pursuant to this Agreement, Bancorp shall be
subrogated to the Indemnitee's rights and claims against the insurer providing
D&O Coverage and the Indemnitee shall execute such documents as Bancorp shall
deem necessary to reflect such subrogation.

     10. SETTLEMENT OF CLAIMS.

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          (a) If Bancorp has not obtained D&O Coverage, the Indemnitee shall not
settle any Proceeding for which he/she intends to seek indemnification hereunder
without first attempting to obtain the approval of Bancorp. If the Indemnitee
seeks such approval and such approval is not granted by Bancorp, the Indemnitee
shall be free to settle the Proceeding and pursue any procedures to establish
his/her right to indemnification as provided under this Agreement. If the
Indemnitee seeks such approval and such approval is not granted by Bancorp, but
Bancorp agrees to indemnify the Indemnitee, subject to Paragraph 4 herein,
against any Expenses, judgments, fines, settlements or other amounts actually
and reasonably incurred by the Indemnitee in connection with such Proceeding,
the Indemnitee shall not settle such Proceeding. If, however, under such
circumstances the Indemnitee does settle such Proceeding, the Indemnitee shall
forfeit his/her rights to indemnification under this Agreement.

          (b) If Bancorp has obtained D&O Coverage, the Indemnitee shall not
settle any Proceeding for which he/she intends to seek indemnification without
first attempting to obtain any approval required with respect to such settlement
by the insurance carrier of any applicable D&O Coverage. If the Indemnitee seeks
such approval and such approval is not granted by the insurance carrier of any
applicable D&O Coverage, the Indemnitee shall not settle such Proceeding without
then attempting to obtain the approval of Bancorp. In the event the Indemnitee
seeks such approval from Bancorp, Bancorp and the Indemnitee shall have the same
rights and obligations as set forth in Paragraph 10(a). If the Indemnitee seeks
such approval from Bancorp and such approval is granted, Bancorp shall be
subrogated to the Indemnitee's rights and claims against the insurance carrier
of any applicable D&O Coverage and the Indemnitee shall execute such documents
as Bancorp shall deem necessary to effect such subrogation.

     11. MUTUAL ACKNOWLEDGMENT. Both Bancorp and the Indemnitee acknowledge that
in certain instances, Federal law or applicable public policy may prohibit
Bancorp from indemnifying the Indemnitee under this Agreement or otherwise.

     12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon Bancorp
and its successors and assigns and shall inure to the benefit of the Indemnitee
and the Indemnitee's spouse, heirs, executors and administrators.

     13. SAVINGS CLAUSE. If this Agreement or any portion thereof be invalidated
on any ground by any court of competent jurisdiction, then Bancorp shall
nevertheless indemnify the Indemnitee as to Expenses, judgments, fines,
settlements or other amounts with respect to any Proceeding to the fullest
extent permitted by any applicable portion of this Agreement that shall not have
been invalidated or by any other applicable law.

     14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

     15. NOTICES. The Indemnitee shall, as a condition precedent to his/her
right to be indemnified under this Agreement, give to Bancorp notice in writing
as soon as practicable of any claim made against him/her for which
indemnification will or could be sought under this Agreement. Notice to Bancorp
shall be directed to Plumas Bancorp, 35 S. Lindan Avenue, Quincy, California
95971, Attention: President (or such other address as Bancorp shall designate in
writing to the Indemnitee).

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     16. MODIFICATION AND AMENDMENT. No amendment, modification, termination or
cancellation of this Agreement, except as permitted pursuant to Section 11
above, shall be effected unless in writing signed by both parties hereto.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year set forth above.

INDEMNITEE                                      PLUMAS BANCORP

By                                              By:
  ----------------------------                     -----------------------------
                                                Its:
                                                    ----------------------------

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                                           EXHIBIT A

                                        PLUMAS BANCORP

                                          UNDERTAKING

TO:     __________________, President
        Plumas Bancorp
        35 S. Lindan Avenue
        Quicny, California 95971

        I, ______________, a director or officer of Plumas Bancorp, a California
corporation, pursuant to Section 317(f) of the California Corporations Code and
the terms of my Indemnification Agreement with Plumas Bancorp agree to repay
Plumas Bancorp for all Expenses advanced on my behalf in defense of any
Proceeding or in defense of any claim, issue or matter therein, prior to the
disposition of such Proceeding, unless it shall be ultimately determined that I
am entitled to indemnification under Section 317 of the California Corporations
Code or Plumas Bancorp's Articles of Incorporation, Bylaws or my Indemnification
Agreement.

Dated:  ________________

                                            INDEMNITEE

                                            By___________________________

                                       7Prepared by R.R. Donnelley Financial -- Second Amendment to Lease

  EXHIBIT 10.8(a) 
 
 
 SECOND AMENDMENT OF LEASE

              PlyProperties, a partnership (“Lessor”) and TheraSense, Inc., a Delaware
corporation (“Lessee”) entered into a lease (the “Lease”) dated February 26, 1999, and later amended, covering property at 1360–1380 South Loop Road, Alameda, California (the “Property”).
 
              Pursuant to paragraph 55 of the Lease, Lessee has exercised its option to expand the leased Premises (“Phase II”), and
the parties wish to amend said Lease to provide for and cover said expansion. 
 
 
            1.   Construction of Phase II Improvements. Lessor agrees, in accordance with the attached Work Letter (“Exhibit B-2”), at its sole cost and
expense except as provided for below, and as soon as it can reasonably be accomplished following the execution of this Lease, to (1) complete and submit plans and specifications covering the Phase II expansion to Lessee for its approval (for all
intent and purposes and for their mutual benefit Lessor and Lessee have worked together with the architects and engineers in preparing said plans and specifications), which approval shall not be unreasonably withheld, said Phase II building and
improvements to be in conformity with JWD’s plans and specifications (Project No. D01003), dated March 29, 2002, a copy of which is attached hereto and made a part hereof; (2) apply for and secure appropriate building permits; (3) secure
construction financing; and (3) commence and prosecute to completion in a diligent and good and workmanlike manner the construction and delivery of said Phase II building and improvements to Lessee. The parties hereto are aiming toward the
substantial completion and delivery of Phase II to Lessee by April 1, 2003, provided Lessor is not delayed by causes beyond its control, which shall include but not be limited to any unanticipated delays in securing permits and/or financing; delays
in construction due to fires, unusually severe weather, labor problems, including strikes or slowdowns; acts of God, and other similar causes; change orders; and delays caused by the Lessee or its agents and/or sub-contractors.
 
 Should Lessor fail to deliver the Premises by the above projected date, then this Second Amendment of Lease shall be effective upon the date Lessor does substantially complete the above work, as
previously defined in the Lease, and delivers possession thereof to Lessee.
 
 If the actual commencement date of this Lease is other than that set forth in paragraph 2 below, then
Lessor and Lessee shall prepare and execute a further amendment of lease setting forth the revised commencement date(s) of the Lease term, but failure to execute such an amendment shall not affect the actual commencement date(s).
 

            2.   Lease Terms. Commencing upon the substantial completion and delivery of the Phase II
improvements, the term of this Lease (covering both the Phase I and II buildings and improvements) shall be extended out to a new ten (10) year term. For example:
 
             
      a.  If the Phase II improvements are completed and delivered, as projected, on April 1, 2003, then the Phase II portion of the Lease shall commence on
April 1, 2003 and end March 31, 2013, subject to any extensions as provided for below; and
 
              
     b.  Based on those same dates, the term for the existing, Phase I portion of the Lease shall be extended from its current August 14, 2009 expiration date to also terminate on the above March 31, 2013 date, again
subject to any extensions as provided for below. 

                     c. Lessee’s right of prior termination, as
provided for in paragraph 1.3 of the Rider To Lease, is hereby cancelled. 
 
              3.   Rental. 
 

                   a. Phase II. Lessee’s additional base monthly triple net rent, as defined in the Lease, for the Phase II building and
improvements shall equal $82,750.00 ($1.30/SF) per month, beginning on the commencement date of the Phase II lease as established above, and subject to any increases brought about by approved change orders to the aforementioned plans and
specifications, and/or future rent adjustments, as set forth below.
 
                    b. Phase I. Lessee’s base monthly triple net rent
for the Phase I building and improvements shall continue the same as currently set forth in the Lease until adjusted as set forth below. 
 
                
   c. Rental Adjustments applicable to Phase II.  The above triple net base rent shall be adjusted every two and one-half years during the Phase II portion of the lease as follows:
 
                        (1) Months 31 through 60: The above initial base monthly rent shall be adjusted at the
beginning of the 31st month, and the base rent as so adjusted shall be payable each succeeding month until the end of the 60th month, as follows: The base for computing the adjustment is the Consumer Price Index for All Urban
Consumers, San Francisco-Oakland, published by the United States Department of Labor, Bureau of Labor Statistics (“Index”), which is published for the month of January, 2003 (“Beginning Index”). If the Index published for the
month of July immediately preceding the 31st month adjustment date (“31st Month Adjustment Index”) is increased over the Beginning Index, the base monthly rent payable for each month of the term commencing with the
31st month, and continuing through the 60th month, shall be set by multiplying the initial or original base rent by a fraction, the numerator of which is the 31st Month Adjustment Index and the denominator of which
is the Beginning Index. 
 
 Notwithstanding the foregoing, in no event shall the base rent be increased pursuant to this paragraph by less than five (5%) percent every two and one-half years (2% per year, non-compounded), or greater than seven
and one-half (7.5%) percent every two and one-half years (3% per year, non-compounded).
 
                
       (2)
Months 61 through 90; and 91 through 120: To be adjusted based on the same formula or method described above.
 
                        (3) If the Index is changed so that the base year differs from 1982-84 = 100, the Index shall be converted in accordance with the conversion
factor published by the United States Department of Labor, Bureau of Labor Statistics. If the Index is discontinued or otherwise revised during the Lease term, such other governmental Index or computation with which it is replaced will be used in
order to obtain substantially the same result as would be obtained if the Index would not have been revised or discontinued.
 
                     d. Rent Adjustments applicable to Phase I. Said adjustments applicable to the Phase I rent, as set forth in paragraph 50.d. of the Lease, shall continue
on schedule (i.e. adjusted every two and one-half years of the Phase I portion of the Lease), beginning August 15, 1999. 

               4. Cost Overruns. Notwithstanding any provision of this Lease to the contrary, it
is understood and agreed that Lessee shall pay to Lessor in cash, within thirty (30) days after Lessor delivers possession of the Phase II Premises to Lessee, or within thirty (30) days of the construction and payment by Lessor of any work
specifically ordered by Lessee that is outside of the scope of Lessor’s work set forth in Exhibit “B-2” to this Lease, any construction costs paid or incurred by Lessor in excess of the tenant improvement (“T.I.”) allowance
of $25 per square foot that is provided for in Exhibit “B-2”. 
 
 Lessee shall have the right to increase the above T.I. allowance of $25 per square foot to $29 per square
foot by increasing the rent due for Phase II by an amount so as to amortize said additional $4.00 per square foot of costs over the ten (10) year term of the Phase II portion of the Lease at eleven (11%) per annum interest. 
 
 Prior to the start of major tenant improvement work, Lessor will provide Lessee with budget estimates for the work described in paragraph 1 above. Such estimates shall represent Lessor’s reasonable
estimates based on contractor estimates or information then known by Lessor, but Lessee agrees that such estimates are subject to change based upon (i) change in design; (ii) time; (iii) actual bids received; (iv) delays in construction; or (v)
other reasonable changes or adjustments. Lessor makes no representation that the budget estimates will equal the actual costs incurred. Lessor will reasonably advise Lessee from time to time as to material changes in the budget or actual costs.

               5. Brokers. Each party represents that it has not had dealings with any real estate company, broker,
agent, finder, or other person with respect to this Phase II portion of the Lease in any manner, except for the Donald L. Jones Company. Each party shall hold harmless the other party from all damages resulting from any claims that may be asserted
against the other party by any broker, agent, finder, or other person with whom such indemnifying party has or purportedly has dealt. 
 
 
             6. Option to Renew. Effective as of the expiration date of this extended Lease term, Lessor grants to Lessee an option to renew this Lease for an additional five (5)
year period on the same terms, conditions, covenants, agreements or amendments, if any, then in force pursuant to this Lease except for the amount of the rental which shall be determined
either by agreement between the parties or by arbitration based on the fair market rent value of the Premises. For the purposes of this clause, fair market rent shall be defined as the probable triple net rent that the Premises should bring in a
competitive and open market at the time that this option is exercised, with the landlord and a “highest and best use” tenant acting prudently and knowledgeably, based on the “as is” condition of the Premises at that time and upon
lease terms and conditions consistent with those that govern this Lease extension. 
 
 If Lessor and Lessee are unable to agree upon said fair market rent value within thirty (30) days
from notice of exercise of the option herein granted, then it will be set either by a qualified MAI appraiser chosen by the parties, or by arbitration as follows:
 
 
             a. Within five (5) days after written notice by either party to the other requesting arbitration, one arbitrator shall be appointed by each party. Notice in writing of such
appointment, when made, shall be given by each party to the other. The two arbitrators so named shall meet promptly and seek to reach a conclusion as to the fair market rent value of the Premises, and their decision rendered in writing and delivered
to the parties hereto shall be final and binding on the parties.
 
               b. If said two (2) arbitrators shall fail
to reach a decision within fifteen (15) days after appointment of the second arbitrator, then the two arbitrators shall forthwith choose a third arbitrator

  within five (5) days to act with them. If they fail to select a third arbitrator within said five (5) days, the third arbitrator shall be promptly appointed by the Presiding
Judge of the Superior Court, State of California, County of Alameda. The party making such application to said Judge shall give the other party hereto five (5) days written notice thereof. 
 
 
                 c.
The arbitration shall proceed with due dispatch. The third arbitrator shall select the value submitted by one of the initial two arbitrators that is closest to the value determined by the third arbitrator. The decision of third arbitrator, reached
accordingly, shall be binding, final and conclusive on the parties hereto. Such decision shall be in writing and delivered to the parties.
 
                   d. If either party fails
to appoint an arbitrator as herein provided, then the arbitrator that has been appointed shall be the sole arbitrator. 
 
                   e. The expense of any
such arbitration shall be borne equally between the parties hereto, except that the cost of any attorney’s fees incurred by the parties are their own respective responsibilities.
 
 
                 f.
The arbitration shall be conducted in accordance with the applicable statutes of the State of California then in effect.
 
                   g. All arbitrators selected shall be licensed real estate brokers with
not less than 10 years experience dealing with commercial properties similar to the Property in the same general area as the Property.
 
 Lessee shall exercise this option by serving written notice
upon Lessor of its intent to exercise the option at least six (6) months prior to the expiration of the extended ten year term of this Lease. Lessee shall have the right to exercise this option only in the event that Lessee is not in default in its
performance of any material term or condition of the Lease. 
 
              
7. Expansion. The parties wish to anticipate the possible further expansion of the Premises (“Phase III”) as generally shown on the Master Plan for the site. Upon delivery of written
notice (the “Expansion Notice II”) from Lessee to Lessor describing the desired expansion (the “Phase III” building and improvements) and provided that (i) Lessee at Lessor’s reasonable discretion is financially sound enough
to warrant the increased liability and/or risk of the expanded building and is not in default under any of the terms and conditions contained herein, (ii) Lessor is able to obtain reasonable third-party financing for the construction of Phase III,
(iii) Phase III is generally in conformance with the Master Plan for the site; and (iv) building permits and all other necessary permits or approvals can be reasonably obtained, then Lessor shall endeavor to develop Phase III.
 
 The rent and terms for Phase III and/or the modification at that time of the Lease in general, shall be negotiated between the parties based on fair market conditions, or arbitrated similar to the provisions for
arbitration set forth above; and shall take into consideration, but shall not be limited to, the number of years remaining on the Lease or any extension thereof, the cost of third-party financing, the financial strength of the Lessee at the time,
the cost of construction, and the special or general nature of the improvements. 
 
               8. Security Deposit. Lessee’s existing security deposit in the amount of $500,000
shall remain in place as additional security to the Lessor and lender or lenders on both the Phase I and II real estate for the term of this Lease under the conditions previously agreed to except term.
 
               9. Right of First Purchase. In the event
that at any time either the Lessor or any successor (the

  “Offeror”) wishes to sell the subject real property (“Property”), it shall first notify Lessee of such intent by written notice (“Notice
of Intent”), which notice shall state the terms and conditions upon which the Offeror intends to sell or offer the Property.
 
 Thereafter, Lessee shall have the right for a
period of fifteen (15) days after receipt of such written notice to notify the Offeror in writing of its desire to purchase the Property. Thereafter, the parties shall negotiate the terms and conditions of such purchase and sale in good faith for a
period of up to forty-five (45) days; provided that the Lessee may in all events during the 45 day period accept the Offeror’s offer as set forth in the Notice of Intent. In the event the parties reach agreement on such terms and conditions,
the purchase shall be consummated within sixty (60) days after agreement as to the terms and conditions, or within such other time period as may be agreed to in writing by the parties.
 
 In the event the parties are unable to reach agreement as to such terms and conditions, or if the Lessee fails to consummate the purchase of the interests within the required time period, the Offeror shall have
the right to sell the Property to any third party on terms and conditions that are not substantially less favorable to Offeror nor better for the buyer than the terms last discussed and agreed to between the parties, and submitted to writing, for a
period of one hundred eighty (180) days after the expiration of said forty-five (45) day period. Should Offeror not so sell the Property, or enter into a contract for such sale within such one hundred eighty (180) day period, then, if Offeror
thereafter desires to sell the Property it shall re-offer the Property to Lessee as provided herein. 
 
                10. Except as herein specified, all of the other terms and conditions of the subject Lease shall remain in full force and effect applicable to
both Phase I and Phase II, as appropriate.
 
                IN WITNESS THEREOF, Lessor and Lessee have executed this Second Amendment of Lease, this 7th day of May, 2002.
 

	LESSOR	 	 	LESSEE	 
	 	 	 	 	 
	PlyProperties	 	TheraSense, Inc.
	 	 	 	 	 
	 	 	 	 	 
	By:	/s/ DONALD L.
JONES                            	 	By: 	/s/ W. MARK
LORTZ                                       
 
	 	Donald L. Jones, Managing Partner	 	 	W. Mark Lortz, President & CEO
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	By:	/s/ CHARLES T.
LIAMOS                                 
	 	 	 	 	Charles T. Liamos, Chief Financial Officer

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