Document:

Exhibit 10.39

 

CUFF PROPERTY MANAGEMENT CO.

CUFF BUILDING & BUCHANAN OAKS BUILDING

2401 STANWELL DR, CONCORD, CA 94520

TEL 925-687-4411 FAX 925-687-4424

MOBILE 925-980-1399

 

REAL PROPERTY LEASE

 

THIS LEASE is made
and entered into by and between S.P. Cuff as Managing Partner of the Redwoods
Office Center LP hereinafter called “Lessor”, without regard to number or
gender, and Cerus Corporation hereinafter called “Lessee”, without regard to
number or gender.

 

1. 
PREMISES: 
Lessor hereby leases to Lessee and Lessee hereby leases from Lessor
those certain new premises to be constructed in the City of Concord, County of
Contra Costa, State of CALIFORNIA, and known as 2411 Stanwell Drive, Concord,
CA 94520, the sum totaling approximately 21,440 sq.ft., of the Buchanan Oaks
Building, 2401 Stanwell Drive, Concord, California.  For the purpose of conducting the following business:
Biotechnology R&D and Administration.

 

2. 
TERM & RENT:  The lease will commence on the issuance of the Certificate of
Occupancy which is estimated to occur on the 1st day of September, 2000 and end
the 31st day of July, 2004, at a monthly rent of $27,872 DOLLARS, in lawful
money of the United States of America, which, subject to this Lease, Lessee
agrees to pay to Lessor, without deduction or offset, at such place or places
as may be designated from time to time by Lessor, in installments as follows:

 

$27,872 to be paid on the issuance of the Certificate of Occupancy or
approximately the 1st of September, 2000. 
Should the occupancy date not occur on the first day of the month, the
first rental payment will be prorated for the number of days remaining in the
month, that amount to be the first full month’s rental.  The balance due and payable in rental
payments of $27,872 per month on the 1st day of each and every month thereafter
for the remaining term of the lease.

 

The rental amount shall be adjusted every twelve (12) months to reflect
the change, if any, of the Consumers Price Index for all Urban Consumers
(CPI-U) of San Francisco, California, for the preceding year in accordance with
the formula stated in paragraph 37 of this lease.

 

3. 
INCREASE IN REAL PROPERTY TAXES:  Lessee shall pay any and all increases in
the real property taxes assessed and levied against the demised premises above
the tax assessed against the said premises upon completion and occupancy by the
Lessee excluding any increase arising from sale of the demised premises, as
well as any special assessments imposed upon the demised premises for any
purpose whatsoever during the term hereof, whether the increase in said taxes
results from an increase in the assessed evaluation of the demised premises of
the improvements thereon or both.

 

4. 
SECURITY DEPOSIT:  Lessor acknowledges receipt of a Security Deposit in the amount of
$27,872 upon execution of the lease, as security for the full and faithful
performance of the Lessee of the terms, conditions and covenants of this
Lease.  Lessee and Lessor agree that the
following disposition shall apply to the Security Deposit:

 

 

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a.     When the monthly rent shall, from time to time, increase during
the term, or any extension of the term, of this Lease, Lessee shall thereupon
deposit with the Lessor additional Security Deposit so that the total Security
Deposit is equal to the then current monthly rent.

 

b.     Lessor shall not be required to pay interest on the Security
Deposit.  Lessors obligation with
respect to the Security Deposit are those of debtor and not a trustee.

 

c.     If at any time during the term hereof Lessee should fail to
repair any damage to the premises leased or any part of the common portions of
the buildings caused by such Lessee or his agent, employees, invitees, or other
visitors through lack of ordinary care for a period of 30 days after written
demand to make such repairs is served on the Lessee by the Lessor, then the
Lessor may appropriate and apply any portion of the Security Deposit as may be
reasonably necessary to fund the repair. 
Lessee agrees to restore the Security Deposit to its original amount
should resort to the funds be required. 
Refusal to restore such amount within 15 days of written demand shall be
cause for termination of this lease.

 

d.     If on the termination of this Lease for any reason Lessee does
not leave the premises in as good condition, except for normal wear and tear,
as when received by the Lessee from the Lessor then the Lessor may appropriate
and apply any portion of the Security Deposit as may be reasonably necessary to
fund the repair.

 

5. 
LIABILITY INSURANCE:  Lessee agrees during the full term of this
lease to carry public liability and property damage insurance covering the
demised premises in an amount of $1,000,000 for injury and/or death to any one
person, $2,000,000 for injury and death to any number of persons in any one
accident and $2,000,000 property damage liability in so-called Board Companies,
satisfactory to the Lessor, as evidenced by a certificate of insurance with a
10 day written notice of cancellation and to pay the premiums therefore and to
deliver said certificates or documents stating that the Lessee is insured unto
the Lessor, and the failure of the Lessee either to effect said insurance or to
pay the premiums therefore or to deliver said certificates or documents stating
that the Lessee is insured thereof unto the Lessor, and the failure of the
Lessee either to effect said insurance or to pay the premiums therefore or to
deliver said certificates or duplicates thereof unto the Lessor shall permit of
the Lessor itself effecting said insurance and paying the requisite premiums
therefor, which premiums shall be repayable unto it with the next installment
of rental, and failure to repay the sum shall carry with it the same
consequences as failure to pay any installment of rental.  Each insurer mentioned in this paragraph
shall agree, by endorsement, upon the policy or policies issued by it, or by
independent instrument furnished to the Lessor, that it will give the Lessor
ten (10) days written notice before the policies or policy in question shall be
altered or canceled.

 

                6.  FIRE INSURANCE:  If the fire insurance rate on the building
on the premises is increased by reason of Lessee’s occupancy thereof, over and
above the fire rate fixed for Lessor’s previous use and occupancy thereof and
subject to this Lease, the Lessee shall pay to Lessor the additional premium by
reason of such increases in insurance rate for the unexpired portion of the
term of this lease.  Such additional
premium shall be paid to Lessor on demand and on submission to Lessee of the
proper evidences indicating such increase in rate and in direct correlation
between the rate increase and Lessee’s occupancy.

 

7. 
POSSESSION:  If Lessor, for any reason whatsoever, cannot deliver possession
of the said premises to Lessee within 30 days of September 1, 2000, this lease
may be void or voidable, at the option of the Lessee, and the deposit returned
in full.  At exactly three months and
six months from the date of signing this lease the Lessee has the option,
within a

 

 

 

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ten day time window from that 3 month or 6 month anniversary date, of
voiding this lease.  Lessor shall not be
liable to Lessee for any loss or damage resulting therefrom.

 

                8.  USES PROHIBITED:  Lessee shall not use, or permit said
premises, or any part thereof, to be used, for any purpose or purposes other
than the purpose or purposes for which the said premises are hereby leased; and
no use shall be made or permitted to be made of the said premises, nor acts
done, which will increase the existing rate of insurance upon the building in
which said premises may be located, without the consent of the Lessor, or cause
a cancellation of any insurance policy covering said building, or any part
thereof, nor shall Lessee sell, or permit to be kept, used, or sold, in or
about said premises, any article which may be prohibited by the standard form
of fire insurance policies.  Lessee
shall, at his sole cost and expense, comply with any and all requirements,
pertaining to said premises, of any insurance organization or company,
necessary for the maintenance of reasonable fire and public liability
insurance, covering said building and appurtenances.

 

                9.  WASTE & ALTERATIONS:  Lessee shall not commit, or suffer to be
committed, any waste upon the said premises, or any nuisance, or other act or
thing which may disturb the quiet enjoyment of any other tenants in the
building in which the demised premises may be located.  Lessee shall not make, or suffer to be made,
any alterations of the said premises, or any part thereof without the written
consent of Lessor first had and obtained, any additions to, or alterations of
the said premises, except movable furniture and trade fixtures, shall become at
once a part of the realty and belong to Lessor.  At the option of the Lessor the Lessee shall return the premises
to the condition and configuration of the space when first leased, reasonable
wear and tear excepted, and provided that the Lessee shall not be required to
remove previously approved tenant improvements.

 

10. 
ABANDONMENT:  Lessee shall not vacate or abandon the premises at any time
during the term; and if Lessee shall abandon, vacate or surrender said
premises, or be disposed by process of law, or otherwise, any personal property
belonging to Lessee and left on the premises shall be deemed to be abandoned
according to law, at the option of Lessor, except such property as may be
mortgaged to Lessor.

 

11. 
REPAIRS: 
The Lessee may have access to the space during the pre-occupancy period
to make alterations and improvements with prior approval of the Lessor, which
Lessor will grant in accordance with the construction schedule, and to run
telephone cables from the existing cable connection to 2401 Stanwell.  Lessee shall, at his sole cost, keep and
maintain said premises and appurtenances and every part thereof including
glazing, light fixtures (and bulbs), plumbing (except buried pipes), any
entrance doors and the interior of the premises, in good and sanitary order,
condition and repair, (excepting structural components, exterior walls, roof
mounted air conditioning units, parking area, and roofs, all of which Lessor
agrees to repair), hereby waiving all right to make repairs at the expense of
Lessor as provided in Section 1942 of the Civil Code of the Sate of California,
and all rights provided for by Section 1941 of said Civil Code.  By entry hereunder, Lessee accepts the
premises as being in excellent and sanitary order, condition and repair and
agrees on the last day of said term, or sooner termination of this lease, to
surrender unto Lessor all and singular said premises with said appurtenances in
the same condition as when received reasonable use and wear thereof and damage
by fire, act of God or by the elements excepted, and to remove all of Lessee’s
signs from said premises.  Lessee agrees
to use chair pads under all desk and other chairs or stools to prevent
excessive carpet wear or to repair or replace worn areas or the entire carpet

 

 

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upon vacating the space should the carpet be damaged beyond normal wear
and tear by Lessee’s use.

 

12. 
FREE FROM LIENS:  Lessee shall keep the demised premises and the property in which
the demised premises are situated, free from any liens arising out of any work
performed, materials furnished, or obligations incurred by Lessee.

 

13. 
COMPLIANCE WITH GOVERNMENTAL REGULATIONS:  Lessee shall at his sole cost and expense,
comply with all of the requirements of all Municipal, State and Federal
authorities now in force, or which any hereafter be in force, pertaining to
Lessee’s use and occupancy of the said premises, and shall faithfully observe
in the use of the premises all Municipal ordinances and State and Federal
statutes now in force or which may hereafter be in force.  The preceding sentence is not intended,
however, to impose on Lessee any obligation as to the condition of the premises
or environmental hazard that is the responsibility of the Lessor under this
Lease. The judgment of any court of competent jurisdiction, or the admission of
Lessee in any action or proceeding against Lessee, whether Lessor be a party
thereto or not, that Lessee has violated any such ordinance or statute in the
use of the premises, shall be conclusive of that fact as between Lessor and
Lessee.

 

14. 
INDEMNIFICATION OF LESSOR:  Except for Lessors negligence or willful
misconduct Lessee, as a material part of the consideration to be rendered to
Lessor, hereby waives all claims against Lessor for damages to goods, wares and
merchandise, in, upon or about said premises and for injuries to persons in or
about said premises, for any cause arising at any time, and Lessee will, except
for Lessor’s negligence and willful misconduct, hold Lessor exempt and harmless
from any damage or injury to any person, or to the goods, wares and merchandise
of any person, arising from the use of the premises by Lessee, or from the
failure of Lessee to keep the premises in good condition and repair as herein
provided.

 

15. 
ADVERTISEMENTS AND SIGNS:  Lessee shall not conduct or permit to be
conducted any sale by auction on said premises.  Lessee shall not place or permit to be placed any projecting or
lighted sign, marquee or awning on the exterior of the said premises.  Lessee, upon request of Lessor, shall
immediately remove any sign or decoration which Lessee has placed or permitted
to be placed in, on, or about the front of the premises and, which, in the
opinion of Lessor, is objectionable or offensive, and if Lessee fails so to do,
Lessor may enter upon said premises and remove the same.  Lessee shall not place or permit to be
placed in windows or upon the walls, doors, landscaping areas or roof, any
sign, advertisement or notice without the written consent of Lessor.  Lessee shall not advertise by means of signs
or otherwise on or about the demised premises any sale for the purpose of
liquidation in anticipation of terminating business without the express written
consent of Lessor.  A monument sign will
be provided at the street for the Lessee’s use.

 

16. 
UTILITIES: 
Lessee shall pay for all telephone, gas, heat, power, light and
janitorial services.  Lessor shall pay
for normal elevator maintenance, water, garbage collection, gardening, parking
lot sweeping and other services supplied externally to the premises.

 

17. 
ENTRY BY LESSOR:  Lessee shall permit Lessor and his agents to enter into and upon
said premises at all reasonable times with 24 hours notice (except for
emergencies or scheduled janitorial) for the purpose of inspecting the same or
for the purpose of Maintaining the building in which said premises are
situated, or for the purpose of making repairs, alterations or additions to any
other portion of said building, included the erection and

 

 

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maintenance of such
scaffolding, canopies, fences and props as may be required, or for the purpose
of posting notices of non-liability for alterations, additions, or repairs or
for the purpose of placing upon the property in which the said premises are
located any usual or ordinary or “for sale” signs, without any rebate of rent
and without any reliability to Lessee for any loss of occupation or quiet
enjoyment of the premises thereby occasioned; and shall permit Lessor, at any
time within thirty days prior to the expiration of this lease, to place upon
said premises any usual or ordinary “to let” or “to lease” signs.  Lessor and it’s agents, however, shall not
enter any laboratory areas of the Lessee without first making special
arrangements with Lessee and obtaining instructions as to any procedures to be
followed for safety purposes and to preserve the integrity of any ongoing
experiments.  Lessor and it’s agents
shall maintain in confidence any information concerning Lessee’s technology,
products and business that the Lessor and it’s agents may learn in the course
of such entry.

 

18. 
DESTRUCTION OF PREMISES:  In the event of a partial destruction of the
said premises during the said term, from any cause, Lessor shall forthwith
repair the same, provided such repairs can be made within sixty (60) days under
the laws and regulations of State, Federal, County or Municipal authorities,
but such partial destruction shall in no ways annul or void this lease, except
that Lessee shall be entitled to a proportionate deduction of rent while such
repairs are being made, such proportionate deduction to be based upon the
extent to which the making of such repairs shall interfere with the business
carried on by Lessee in the said premises except if more than fifty percent
(50%) of the Premises is destroyed, Lessee shall pay no rent until it is
repaired.  If such repairs cannot be
made in sixty (60) days, Lessor may, at his option, make same within a
reasonable time not to exceed 90 days, this lease continuing in full force and
effect and the rent to be proportionately rebated as aforesaid in this
paragraph provided.  In the event that
Lessor does not so elect to make such repairs which cannot be made in sixty
(60) days, or such repairs cannot be made under such laws and regulations, this
lease may be terminated at the option of either party.  In respect to any partial destruction which
Lessor is obligated to repair or may elect to repair under the terms of this
paragraph, the provisions of Section 1932, Subdivision 2, and of Section 1933,
Subdivision 4, of the Civil Code of the State of California are waived by
Lessee.  In the event that the building
in which the demised premises may be situated be destroyed to the extent of not
less than 33 1/3% of the replacement cost thereof, Lessor or Lessee may elect
to terminate this lease, whether the demised premises be injured or not.  A total destruction of the building in which
the said premises may be situated shall terminate this lease. In the event of
any dispute between Lessor and Lessee relative to the provisions of this
paragraph, they shall each select an arbitrator, the two arbitrators so
selected shall select a third arbitrator and the three arbitrators so selected
shall hear and determine the controversy and their decision thereon shall be
final and binding upon both Lessor and Lessee, who shall bear the cost of such
arbitration equally between them.  Said
arbitration shall be conducted under the auspices of the California Rules of
Judicial Arbitration.

 

19. 
ASSIGNMENT AND SUB-LETTING:  Lessee shall not assign this lease, or any
interest therein, and except as to an entity controlled by Lessee, shall not
sublet the said premises or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person (the agents and servants of
Lessee excepted) to occupy or use the said premises, or any portion thereof,
without the written consent of Lessor first had and obtained, such consent not
to be unreasonably withheld, and a consent to one assignment, sub-letting,
occupation or use by any other person, shall not be deemed to be a consent to
any subsequent assignment, sub-letting, occupation or use by another person.  Any such assignment or sub-letting without
such consent shall be void, and shall, at the option of Lessor, terminate this
lease.  This lease shall not, nor shall
any interest therein, be assignable, as to the interest of Lessee, by

 

 

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operation of law, without the
written consent of Lessor, such consent not to be unreasonably withheld.

 

                20.  INSOLVENCY OR BANKRUPTCY:  Either (a) the appointment of a receiver
(except a receiver mentioned in paragraph 18 hereof) to take possession of all
or substantially all of the assets of Lessee, or (b) a general assignment by
Lessee for the benefit of creditors, of (c) any action taken or suffered by
Lessee under any insolvency or bankruptcy act shall constitute a breach of this
lease by Lessee and Lessor may declare this lease terminated and any assignment
pursuant thereto void.

 

                21.  DEFAULT:  In the event of any breach of this lease by
Lessee, then Lessor besides other rights or remedies he may have, shall have
consistent with California law the immediate right of re-entry and may remove
all persons and property from the premises, such property may be removed and
stored in a public warehouse or elsewhere at the cost of, and for the account
of Lessee.  Should Lessor elect to
re-enter, as herein provided, or should he take possession pursuant to legal
proceedings or pursuant to any notice provided for by law, he may either
terminate this lease or he may from time to time, without terminating this
lease, re-let said premises or any part thereof of such term or terms (which
may be for a term extending beyond the term of this lease) and at such rental
or rentals and upon such other terms and conditions as Lessor in his sole
discretion may deem advisable with the right to make alterations and repairs to
said premises; upon each such re-letting (a) Lessee shall be immediately liable
to pay to Lessor, in addition to any indebtedness other than rent due
hereunder, the cost, and expenses of such re-letting and of such alterations and
repairs, incurred by Lessor, and the amount, if any, by which the rent reserved
in this lease for the period of such re-letting (up to be not beyond the term
of this lease) exceeds the amount agreed to be paid as rent for the demised
premises for such period on such re-letting; or (b) at the option of Lessor
rents received by such Lessor from such re-letting shall be applied first, to
the payment of any indebtedness, other than rent due hereunder from Lessee to
Lessor; second, to the payment of any costs and expenses of such re-letting and
of such alterations and repair; third, to the payment of rent due and unpaid
hereunder and the residue, if any, shall be held by Lessor and applied in
payment of future rent as the same may become due and payable hereunder.  If Lessee has been credited with any rent to
be received by such re-letting under option (a), and such rent shall not be
promptly paid to Lessor by the new tenant, or of such rentals received from
such re-letting under option (b) during any month be less than that to be paid
during that month by Lessee hereunder, Lessee shall pay any such deficiency to
Lessor.  Such deficiency shall be
calculated and paid monthly.  No such re-entry
or taking possession of said premises by Lessor shall be construed as an
election on his part to terminate this lease unless a written notice of such
intention be given to Lessee or unless the termination thereof be decreed by a
court of competent jurisdiction. 
Notwithstanding any such re-letting without termination, Lessor may at
any time thereafter elect to terminate this lease for such previous
breach.  Should Lessor at any time
terminate this lease for any breach, in addition, to any other remedy he may
have, he may recover from Lessee all damages he may incur by reason of such
breach, including the cost of recovering the premises, and including the worth
at the time of such termination of the excess, if any of the amount of rent and
charges equivalent to rent reserved in this lease for the remainder of the
stated term over the then reasonable rental value of the premises for the
remainder of the stated term, all of which amounts shall be immediately due and
payable from Lessee to Lessor.

 

22. 
SURRENDER OF LEASE:  The voluntary or other surrender of this
lease by Lessee, or a mutual cancellation thereof, shall not work a merger, and
shall, at the option of

 

 

 

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Lessor, terminate all or any
existing sub-leases or sub-tenancies, that may at the option of Lessor, operate
as an assignment to him of any or all such sub-leases or sub-tenancies.

 

23. 
ARBITRATION:  Any dispute arising between the parties shall be settled and
decided by arbitration conducted in accordance with the commercial arbitration
rules of the Judicial Arbitration Rules of the State of California, as then in
effect.  The prevailing party in the
arbitration shall be awarded reasonable attorney’s fees, expert and non-expert
witness costs and expenses incurred in connection with said arbitration, unless
the arbitrator for good cause determines otherwise.  Costs and fees of the arbitrator shall be borne by the
non-prevailing party.  The award of the
arbitrator, which may include equitable relief, shall be final and judgment may
be entered upon it in accordance with applicable law in any court having
jurisdiction thereof.  The provisions of
Title 9 of the Part 3 of California Code of Civil Procedure, including Section
1283.05 thereof, permitting expanded discovery proceedings, shall be applicable
to all disputes which are arbitrated hereunder.  Any demand for arbitration shall be in writing and must be made
within a reasonable time after the claim, dispute or other matter in question
has arisen.  In no event shall the
demand for arbitration be made after the date that the institution of legal or
equitable proceedings based on such claim, dispute or other matter would be
barred by the applicable statute of limitations.

 

24. 
EXPENSES OF ENFORCEMENT:  In case any suit shall be brought by the
Lessor against the Lessee to enforce any provision of this lease or for
unlawful detainer of said premises and for recovery of any rent due hereunder
or because of the breach of any other covenant herein, if Lessor is the
prevailing party, Lessee shall pay to Lessor all costs incurred including
attorney’s fees and fees to a collection agency.

 

25. 
RECEIVERSHIP:  If a receiver be appointed at the instance of Lessor in any
action against Lessee to take possession of said premises and/or to collect the
rents or profits derived therefrom, the receiver may, if it be necessary or
convenient in order to collect such profits, conduct the business of Lessee
then being carried on in said premises and may take possession of any personal
property belonging to Lessee and used in the conduct of such business, and may
use the same in conducting such business on the premises without compensation
to Lessee for such use.  Neither the
application for the appointment of such receiver, nor the appointment of such a
receiver, shall be construed as an election on Lessor’s part to terminate this
lease unless a written notice of such intention is given to Lessee.

 

26. 
NOTICES: 
All notices to be given to Lessee may be given in writing personally or
by depositing the same in the United States mail, postage prepaid, and
addressed to Lessee at the same premises, whether or not Lessee has departed
from, abandoned or vacated the premises. 
All notices from the Lessee to the Lessor shall be by depositing said
notice in the United States mail, postage prepaid, and addressed to 2401
Stanwell Dr., Concord, CA 94520.

 

27. 
TRANSFER OF SECURITY:  If any security be given by Lessee to secure
the faithful performance of all or any of the covenants of this lease on the
part of the Lessee, Lessor may transfer and/or deliver the security, as such,
to the purchaser of the reversion, in the event that the reversion be sold, and
thereupon Lessor shall be discharged from any further liability in reference
thereto.

 

28. 
WAIVER: 
The waiver by Lessor of any breach of any term, covenant or condition
herein contained shall not be deemed to be a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant or
condition therein contained.  The subsequent
acceptance of rent hereunder by Lessor shall not be deemed to

 

 

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be a waiver of any preceding
breach by Lessee of any term, covenant or condition of this lease, other than
the failure of Lessee to pay such rent.

 

29. 
HOLDING OVER:  Any holding over after the expiration of the said term, with the
consent of Lessor, shall be construed to be a tenancy from month to month, at a
rental of the then current monthly rental plus 5% and shall otherwise be on the
terms and conditions herein specified, so far as applicable.

 

30. 
LEASE YEAR:  For the purpose of this lease, the first “leasehold year” shall
be a period from the commencement of this lease ending on July 31st of the
following calendar year (2001).  The
first “leasehold year” may, therefore, be more or less than 12 months.  Subsequent “leasehold years” shall end on
the last day of the twelfth full calendar month thereafter (July 31st).  After the first leasehold year, the term
“leasehold year” shall mean a fiscal year of twelve months commencing on the
first day of the first month following the close of the first fiscal year and
each twelve months period thereafter.

 

31. 
SIGNS: 
There shall be no signs erected by the Lessee upon the roof, doors,
windows, landscaping area or exterior walls of the demised premises, save and
except that Lessor grants to Lessee the right to inscribe upon the monument and
other designated sign spaces provided by the Lessor, and only those spaces, on
the demised premises a sign relating to the business of the Lessee conducted
therein, which sign shall conform to the architectural design and color of the
signs already thereon and be approved in writing by the Lessor.

 

32. 
MORTAGE REQUIREMENTS:  Lessee agrees to forthwith execute and
deliver to Lessor, upon receipt by it or written request therefrom from Lessor,
without any consideration whatsoever, such customary instrument or instruments
as may be reasonably required by any mortgagee or holder of a deed of trust or
other encumbrance on the real property on which the building containing the
demised premises is located.

 

33. 
SALE: 
In the event of a sale or conveyance by the Lessor of the building
containing the demised premises, the same shall operate to release the Lessor
from any future liability upon any of the covenants or conditions, express or
implied, herein contained in favor of the Lessee, and in such event the Lessee
agrees to look solely to the responsibility of the successor in interest of the
Lessor in and to this lease.  If any
security be given by Lessee to secure the faithful performance of all or any of
the covenants of this lease on the part of the Lessee, Lessor may transfer
and/or deliver the security, as such to the purchase of the reversion, in the
event that the reversion by sold, thereupon Lessor shall be discharged from any
further liability in reference thereto.

 

34. 
SUBROGATION RIGHTS:  Each of the parties hereto does hereby waive
its entire right of recovery against the other for any damages caused by an
occurrence insured against by such party, and the rights of any insurance
carrier to be subrogated to the rights of the insured under the applicable
policy.  The foregoing waivers of
subrogation shall be effected to the extent permitted by the Lessor’s and
Lessee’s respective insurers and provided that no policy of insurance is
invalidated as a result of such waivers. 
Each shall notify the other in advance if there are lesser limits or if
policy of insurance is invalidated by a waiver of subrogation.

 

35. 
SUCCESSORS AND ASSIGNS:  The covenants and conditions herein
contained shall, subject to the provisions as to assignment, apply to and bind
the heirs, successors,

 

 

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executors, administrators and
assigns of all of the parties hereto and all of the parties hereto shall be
jointly and severally liable hereunder.

 

36. 
PARKING LOT:  Seventy one (71) parking spaces/permits are available to the
Lessee on the property of the Redwoods Office Center.  These parking spaces are for the sole purpose of parking vehicles
with Lessor issued permits during the working day.  Parking spaces may not be used for storage, overhaul or repair of
vehicles.  Any other use of parking
spaces will not be made without the written consent of the Lessor.  No painting, assembly or storage of
vehicles, trash (or any material) will be done in the parking lot without the
written permission of the Lessor.

 

37. 
OPTION TO RENEW:  If, at the end of the primary approximately 4 year lease period,
the Lessee has fully and faithfully kept and performed all of the terms,
covenants, and conditions of this Lease on the part of the Lessee to be kept
and performed, including the full and prompt payment of all rental herein
reserved, then and in such event only Lessee shall, have the right at its
option to renew and extend this Lease for two additional terms of three (3)
years.  Options to renew may be
exercised provided Lessee give written notice to Lessor of exercising said
option at least six (6) months prior to the date of the expiration of the
primary term of this Lease or any extension thereto.  Any request to extend the lease by the Lessee shall be responded
to within 10 days of receipt by the Lessor. 
In the event that the Lessee exercises the option hereabove described
and provided for, rental to be charged shall be adjusted annually on the
anniversary date of the lease as follows:

 

The value placed upon the
consumer price index of San Francisco, California, all items index on the most
recently published report prior to the first day of the term hereof shall be
considered normal.  The same index will
be examined on the most recently published report at the expiration of the term
hereof and the rental for the additional term or any holding over shall be determined
by increasing the normal monthly rental herein reserved by the percentage
increase of said index above or below normal as herein defined; for example, if
the most recently published index on August, 1982 was 250 points and the most
recently published index prior to July 31, 1984, was 275 points, the rental
would be increased by 10%.  The
subsequent monthly rent will be determined annually on the basis of 90% of this
value (10%) and, in the case of the example shown would therefore be 9% for the
first year.

 

38. 
ENVIRONMENTAL:

 

a.  Lessor agrees to indemnify
and save harmless Lessee, Lessee’s successors and assigns and Lessee’s present
and future officers, directors, employees and agents (collectively
“Indemnities”) from and against any and all liabilities, penalties, fines,
forfeitures, demands, damages, losses, claims, causes of action, suits,
judgments, and costs and expenses incidental thereto (including cost of
defense, settlement, arbitration, reasonable attorney’s fees, reasonable
consultant’s fees and reasonable expert fees), which Lessee or any of all the
Indemnities may hereafter suffer, incur, be responsible for or disburse as a
result of:

 

1)  any government action, order, directive,
administrative proceeding or ruling;

 

2) 
personal or bodily injuries (including death) or damage (including loss
of use) to any sites (public or private);

 

3)  any violation or alleged violation of laws, statutes, ordinances,
orders, rules, policies or regulations of any government entity or agency

 

 

Page 9
of 11

 

(collectively “Environmental
Liabilities”) directly or indirectly caused by or arising out of any
Environmental Hazards existing on or about the Buchanan Oaks Complex except to
the extent that any such existence is caused by Lessee’s activities at the
Buchanan Oaks Complex.  The term
“Environmental Hazards” shall be defined as hazardous substances, hazardous
wastes, pollutants, asbestos, polychlorinated biphenyls (PCBs), petroleum or
other fuels (including crude oil or any fraction or derivative thereof) and
underground storage tanks.  The term
“hazardous substances” shall be defined in the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.)
(CERCLA), and any regulations promulgated pursuant thereto.  The term “pollutants” shall be defined in
the Clean Water Act (33 U.S.C. Section 1251 et seq.), and any regulations
promulgated pursuant thereto.  This
provision shall survive termination of the Lease.

 

                b.  Lessee
agrees to indemnify and save harmless Lessor, Lessor’s successors and assigns
and Lessor’s present and future owner, officers, trustees, directors, employees
and agents (collectively “Indemnities”) from and against any and all
liabilities, penalties, fines, forfeitures, demands, damages, losses, claims,
causes of action, suits, judgments, and costs and expenses incidental thereto
(including cost of defense, settlement, arbitration, reasonable attorneys’
fees, reasonable consultant fees and reasonable expert fees), which Lessor or
any of all of the Indemnities may hereafter suffer, incur, be responsible for
or disburse as a result of any Environmental Hazards existing on or about the
site but only to the extent that any such existence is caused by the Lessee’s
activities on the Site.  This provision
shall survive termination of the Lease.

 

                c.  In
the event any Environmental Hazards are found at any time to be in existence on
or about the Site other than Environmental Hazards whose existence is caused by
the Lessee’s activities on the Site, Lessee among other rights shall have the
right to terminate this Lease by so notifying Lessor in writing.

 

                d. 
Notwithstanding anything to the contrary contained herein, an
environmental clean-up cost or other Environmental Liability for which Lessee
is not responsible pursuant to this paragraph shall not be includable in the
monthly rent paid hereunder nor otherwise assessable to Lessee.

 

                E.  In
no event shall Lessee be responsible for environmental hazards caused by
materials on the premises prior to Lessee’s tenancy.

 

39. 
CONSTRUCTION OF SHELL AND CORE:  Lessor shall construct the shell and core of
the Building and parking, landscaping and other improvements in accordance with
the drawings attached as Exhibit A to this lease and the responsibilities
allotted to the “Landlord” as set forth on attached Exhibit B (the “Base
Building Work”).  Lessor will use
diligent efforts to cause the construction of the Base Building to be completed
to the extent necessary for the commencement of the Lessee improvement work on
or before the date for commencement of “T.I. Construction” specified in Exhibit
C, subject to delays in such date beyond the Lessor’s reasonable control.  The Base Building Work will continue to be
under progress during construction of the Lessee improvement work and shall be
prosecuted in such a manner as not to cause the completion of the Lessee
improvement work to be delayed beyond the scheduled date for completion of the
Lessee improvement work (as defined in Exhibit C).  Lessor will, when construction progress so permits, notify Lessee
in advance of the approximate date on which the premises will be available to
the Lessee for the commencement of the Lessee improvement work, and will notify
Lessee when the premises are in fact so available.  Subject

 

 

Page 10
of 11

 

to delays beyond the Lessor’s
reasonable control, the Base Building Work shall be completed on or before the
scheduled date for completion of the Lessee improvement work subject only to
the Lessor’s punch list items which do not materially interfere with Lessee’s
occupancy of the premises and which are correctable within a period of thirty
(30) days.  Lessor will provide Lessee a
certificate furnished by Lessor’s architect certifying the date of completion
of the Base Building Work.

 

40. 
TENANT IMPROVEMENTS:  Lessee will have the responsibility for
tenant improvements allotted to “Tenant” as set forth in the attached Exhibit
B.  Lessee agrees to obtain Lessor
written approval prior to any initial or subsequent improvements, approval of
which is not to be unreasonably withheld. 
Said approval must be granted or denied within 5 working days of
submittal.  Lessor agrees to provide a
$40,000 carpeting credit.  The Lessor
will also provide a $50,000 allowance for interior improvements.  Lessee will construct all Tenant
Improvements in compliance with best practices and all code requirements.  The Lessee will use all diligent efforts to
commence work on Improvements when notified by Lessor that such Improvements
may be started.  Such Improvements shall
be prosecuted in such manner so as not to cause any delay of the scheduled
“Base Building Work” on the shell and core of the building.  Subject to delays beyond the Lessee’s
reasonable control, the Improvements shall be completed on or before the
scheduled date for completion of the Base Building Work subject only to the
Lessee’s punch list items which do not materially interfere with the Lessee’s
occupancy and which are correctable within a period of thirty (30) days.  Lessee will provide the Lessor a certificate
furnished by the Lessee’s architect certifying the completion of the Tenant
Improvements.

 

41. 
BUILDING DESIGN AND CONSTRUCTION:  Lessor agrees to submit any significant
changes to the building plans, layout and/or construction to the Lessee for
approval prior to implementation, such approval not to be unreasonably
withheld.  Said approval must be granted
or denied within 5 working days of submittal.

 

42. 
TIME: 
Time is of the essence of this lease.

 

        IN
WITNESS WHEREOF, the parties hereto have caused this
lease to be executed this 17th day of December 1999.

 

	
  LESSOR:

  	
  LESSEE:

  
	
  Redwoods
  Office Center, LP

  	
  CERUS
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ S. P.
  CUFF

  	
   

  	
  By:

  	
   /s/ GREGORY W. SCHAFER

  	
   

  
	
   

  	
   

  
	
  S.P. CUFF,
  Managing Partner

  	
  Gregory W.
  Schafer

  	
  (Name)

  
	
   

  	
   

  
	
   

  	
  VP Finance
  and CFO

  	
  (Title)

  
							

 

 

 

Page 11
of 11

 

CUFF PROPERTY MANAGEMENT CO.

CUFF BUILDING & BUCHANAN OAKS BUILDING

2401 STANWELL DR., CONCORD, CA 94520

TEL: 925-687-4411  FAX: 925-687-4424

MOBILE: 925-980-1399

 

December 17, 1999

EXHIBIT A

To:    CERUS Corporation

Fm:    Steve Cuff

 

Re:

 

Construction
Drawings and Specifications

Proposed
Office Building

2411 Stanwell
Drive

Concord, CA

 

Exhibit A shall consist of a
complete set of drawings including architectural, civil, structural and
mechanical as approved by the city of Concord. 
The stamped and approved set when completed will be available in the
office of S. P. Cuff for your review. 
You will be provided with a duplicate set.

 

An abbreviated reduced set of
selected architectural drawings are attached as part of Exhibit A.

 

 

EXHIBIT A

 

[Diagram of Site Plan]

 

 

[Diagram of First Floor Plan]

 

 

[Diagram of Second Floor Plan]

 

 

[Diagram of Lateral Bracing Detail]

 

 

[Diagram of Bracket Detail]

 

 

[Diagram of West Elevation]

 

 

[Diagram of Building Section]

 

 

[Diagram of Stair Section]

 

 

	
  CERUS CORPORATION

  	
   

  	
  EXHIBIT B

  
	
  2411 Stanwell Drive

  	
   

  	
   

  
	
  Concord, CA 94520

  	
   

  	
  S.P. Cuff
  12/17/99

  
	
   

  	
   

  	
   

  
	
  OFFICE/LABORATORY BUILDING

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Landlord
  Tenant Responsibilities

  	
   

  	
   

  
	
  “T.I.s” =
  Tenant Improvements

  	
   

  	
   

  
				

 

	
  A.

  	
  Site Work
  and Landscaping

  	
   

  	
   

  	
  Landlord

  	
   

  	
  Tenant

  

 

	
  1.

  	
  All
  necessary civil engineering plans.

  	
   

  	
  X

  	
   

  	
   

  
	
  2.

  	
  All
  necessary landscaping & irrigation plans.

  	
   

  	
  X

  	
   

  	
   

  
	
  3.

  	
  All
  necessary geotechnical samples and reports.

  	
   

  	
  X

  	
   

  	
   

  
	
  4.

  	
  All
  necessary performance and maintenance bonds required by the City of Concord,
  CA.

  	
   

  	
  X

  	
   

  	
   

  
	
  5.

  	
  All fees and
  permits for site work and landscaping.

  	
   

  	
  X

  	
   

  	
   

  
	
  6.

  	
  All grading
  of site to civil engineering plans & specs.

  	
   

  	
  X

  	
   

  	
   

  
	
  7.

  	
  Removal
  & relocation of sanitary sewer and storm drain lines per civil
  engineering plans.

  	
   

  	
  X

  	
   

  	
   

  
	
  8.

  	
  Underground
  installation of all basic services, sewer, water, gas, electrical and
  telephone/data conduit per plans.

  	
   

  	
  X

  	
   

  	
   

  
	
  9.

  	
  Installation
  of sidewalks, curbs and gutters per architectural plans.

  	
   

  	
  X

  	
   

  	
   

  
	
  10.

  	
  Installation
  of landscaping and irrigation per architectural and landscaping plans.

  	
   

  	
  X

  	
   

  	
   

  
	
  11.

  	
  Landscaping
  drains, if required.

  	
   

  	
  X

  	
   

  	
   

  
	
  12.

  	
  Separate
  water and electrical meters for common core area, landscaping and parking lot
  lighting.

  	
   

  	
  X

  	
   

  	
   

  
	
  13.

  	
  Non
  illuminated monument sign, ready for signage, in street side landscaping per
  architectural plans.

  	
   

  	
  X

  	
   

  	
   

  
	
  14.

  	
  Illuminated
  monument sign in place of #14, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  15.

  	
  Striping and
  signing of parking area per dwgs.

  	
   

  	
  X

  	
   

  	
   

  
	
  16.

  	
  Installation
  of trash enclosure per plans.

  	
   

  	
  X

  	
   

  	
   

  
	
  17.

  	
  Exterior
  lighting of parking area and walkways of one foot candlepower minimum.

  	
   

  	
  X

  	
   

  	
   

  

 

	
  B.

  	
  Structure

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  1.

  	
  All
  necessary shell and core per plans and specifications

  	
   

  	
  X

  	
   

  	
   

  
	
  2.

  	
  All
  necessary structural plans and calculations.

  	
   

  	
  X

  	
   

  	
   

  
	
  3.

  	
  All miscl.
  consultants related to core and shell design

  	
   

  	
  X

  	
   

  	
   

  
	
  4.

  	
  All
  necessary fees and permits for shell and core work

  	
   

  	
  X

  	
   

  	
   

  
	
  5.

  	
  All fees and
  permits relating shell and core work necessitated by T.I.s.

  	
   

  	
  X

  	
   

  	
   

  
	
  6.

  	
  Shell and
  core to be handicap accessible

  	
   

  	
  X

  	
   

  	
   

  
	
  7.

  	
  Min. 5” slab
  on grade per specifications and specs. smooth finish.

  	
   

  	
  X

  	
   

  	
   

  
	
  8.

  	
  Sand fill
  and moisture barrier under slab per specs.

  	
   

  	
  X

  	
   

  	
   

  
	
  9.

  	
  Exterior
  walls sealed and painted with elastomeric coating.

  	
   

  	
  X

  	
   

  	
   

  
	
  10.

  	
  Structural
  steel erected per plans & specs.

  	
   

  	
  X

  	
   

  	
   

  

 

1

 

	
  11.

  	
  Structural
  steel fireproofed per code.

  	
   

  	
  X

  	
   

  	
   

  
	
  12.

  	
  Second floor
  decking to be 1.125” T&G “Sturdifloor” glued and screwed to floor joists

  	
   

  	
  X

  	
   

  	
   

  
	
  13.

  	
  Exterior
  vision glass to be tinted plate per code.

  	
   

  	
  X

  	
   

  	
   

  
	
  14.

  	
  Roof shall
  be 4 ply built-up system w/mineral fiber cap sheet.

  	
   

  	
  X

  	
   

  	
   

  
	
  15.

  	
  Walk pads
  from roof hatch to individual equipment, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  16.

  	
  Roof
  penetrations per shell and core plans and specs.

  	
   

  	
  X

  	
   

  	
   

  
	
  17.

  	
  Roof and
  floor penetrations per tenant improvement plans and specifications and in
  accordance with code

  	
   

  	
   

  	
   

  	
  X

  
	
  18.

  	
  All rqd.
  condensate lines to be terminated at the nearest roof drain for shell and
  core equipment.

  	
   

  	
  X

  	
   

  	
   

  
	
  19.

  	
  All
  condensate lines for tenant improvement equipment to terminate at nearest
  roof drain.

  	
   

  	
   

  	
   

  	
  X

  
	
  20.

  	
  Roof drains
  per plans to penetrate curb away from main entrance.  Scuppers for overflow per plans and code.

  	
   

  	
  X

  	
   

  	
   

  
	
  21.

  	
  Convenience
  outlets on roof if rqd. by code

  	
   

  	
  X

  	
   

  	
   

  
	
  22.

  	
  Second floor
  designed for 50#/sq.ft. load.  First
  floor 100# load.

  	
   

  	
  X

  	
   

  	
   

  
	
  23.

  	
  Wall
  insulation to meet code.

  	
   

  	
  X

  	
   

  	
   

  
	
  24.

  	
  Roof
  insulation to lay on top of drop ceiling tiles to meet code.

  	
   

  	
  X

  	
   

  	
   

  
	
  25.

  	
  Roof reinforcement
  for T.I. equipment.

  	
   

  	
   

  	
   

  	
  X

  
	
  26.

  	
  Roof and
  floor penetrations incl. blockouts per plans & specs.

  	
   

  	
  X

  	
   

  	
   

  
	
  27.

  	
  Roof and
  floor penetrations incl. blockouts for T.I.s.

  	
   

  	
   

  	
   

  	
  X

  
	
  28.

  	
  Clearance
  above drop ceilings to be 1foot  min.
  for HVAC.

  	
   

  	
  X

  	
   

  	
   

  
	
  29.

  	
  Exterior doors,
  except office entry doors, to be hollow core metal with metal frames and
  hardware.

  	
   

  	
  X

  	
   

  	
   

  
	
  30.

  	
  Main entry
  door to be a pair of 3’ X 8’ fully supported, balanced glass per code with
  hardware.

  	
   

  	
  X

  	
   

  	
   

  
	
  31.

  	
  Stairs per
  plans and code.  Stairs to have
  concrete treads and risers

  	
   

  	
  X

  	
   

  	
   

  
	
  32.

  	
  Curved stair
  at entrance, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  33.

  	
  Stair
  covering of carpet or stone, if desired

  	
   

  	
   

  	
   

  	
  X

  
	
  34.

  	
  Stairs to
  have iron handrails per code primed and painted.

  	
   

  	
  X

  	
   

  	
   

  
	
  35.

  	
  Stairwells
  to be sheetrocked, taped and skip trawled textured.

  	
   

  	
  X

  	
   

  	
   

  
	
  36.

  	
  Stairwells
  to have lighting per code.

  	
   

  	
  X

  	
   

  	
   

  
	
  37.

  	
  Full drop
  ceilings on first and second floors of 2’ X 4’ acoustic tiles mounted per
  plans & code.  Ceiling to
  accommodate T.I.s.

  	
   

  	
  X

  	
   

  	
   

  
	
  38.

  	
  Basic
  building safety sinage per code.

  	
   

  	
  X

  	
   

  	
   

  
	
  39.

  	
  Rooftop
  equipment to have curb and sheetmetal cap with perimeter apron

  	
   

  	
  X

  	
   

  	
   

  
	
  40.

  	
  T.I. rooftop
  equip. to have curb and sheetmetal cap/apron

  	
   

  	
   

  	
   

  	
  X

  
	
  41.

  	
  Passenger
  elevator with min. 2,000# load and 100 feet/min.

  	
   

  	
  X

  	
   

  	
   

  
	
  42.

  	
  Passenger
  elevator with higher load and/or faster speed, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  43.

  	
  Standard
  minimum cab, sill, finish and fixtures for elevator.

  	
   

  	
  X

  	
   

  	
   

  
	
  44.

  	
  Upgrades on
  elevator cab, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  45.

  	
  Finished
  ceiling to finished floor clearance on both floors to be 9’.

  	
   

  	
  X

  	
   

  	
   

  
	
  46.

  	
  Exterior
  walls to be insulated on inside, sheetrocked, taped and skip trowel finished.

  	
   

  	
  X

  	
   

  	
   

  
	
  47.

  	
  Master keyed
  exterior locks

  	
   

  	
  X

  	
   

  	
   

  
	
  48.

  	
  Individual
  keying per tenant specifications.

  	
   

  	
  X

  	
   

  	
   

  
	
  49.

  	
  Complete
  fire sprinkler system to meet code with T.I.s in place.

  	
   

  	
  X

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

 

	
  50.

  	
  Roof access
  ladder & hatch in second floor closet in secondary stairwell.

  	
   

  	
  X

  	
   

  	
   

  

 

	
  C.

  	
  Utilities
  and Backbone Systems

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  1.

  	
  Min 1,200
  Amp. 120/208 volt 3 phase electrical service installed with switchgear and
  meter in separate electrical room.

  	
   

  	
  X

  	
   

  	
   

  
	
  2.

  	
  Separate
  “house” electrical, panel and time clock for common area lighting and
  irrigation.

  	
   

  	
  X

  	
   

  	
   

  
	
  3.

  	
  Separate
  electrical meters and panels for tenant space sufficient in size to
  accommodate normal T.I’s.

  	
   

  	
  X

  	
   

  	
   

  
	
  4.

  	
  Electrical
  service and panels to accommodate heavy draw T.I.s

  	
   

  	
   

  	
   

  	
  X

  
	
  5.

  	
  Separate gas
  meters for tenants spaces.

  	
   

  	
  X

  	
   

  	
   

  
	
  6.

  	
  Natural gas
  service sufficient for normal office tenant use.

  	
   

  	
  X

  	
   

  	
   

  
	
  7.

  	
  Natural gas
  service in excess of normal office usage, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  8.

  	
  Telephone
  trunk line PVC conduit to handle normal office telephone and data usage to
  separate equipment room.

  	
   

  	
  X

  	
   

  	
   

  
	
  9.

  	
  Separate
  water services for common area and fire sprinklers.

  	
   

  	
  X

  	
   

  	
   

  
	
  10.

  	
  Separate
  water service for tenant domestic water requirements.

  	
   

  	
  X

  	
   

  	
   

  
	
  11.

  	
  6” cast iron
  sanitary sewer down center of bldg. with cleanouts.

  	
   

  	
  X

  	
   

  	
   

  
	
  12.

  	
  Larger cast
  iron sanitary sewer with cleanouts, if desired, located in tenant defined
  location approved by landlord.

  	
   

  	
   

  	
   

  	
  X

  
	
  13.

  	
  Separate
  rooms for electrical and telephone service, fire sprinkler system and
  elevator equipment with metal doors and frames, required ventilation,
  lighting and convenience outlets. 
  Finish to be sheetrocked and taped.

  	
   

  	
  X

  	
   

  	
   

  

 

	
  D.

  	
  Mechanical,
  Electrical and Plumbing

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  1.

  	
  All required
  electrical to shell and core equipment.

  	
   

  	
  X

  	
   

  	
   

  
	
  2.

  	
  All
  electrical including plywood backboards required by T.I.s.

  	
   

  	
   

  	
   

  	
  X

  
	
  3.

  	
  Electrical
  panel on 2nd floor to accommodate normal usage.

  	
   

  	
  X

  	
   

  	
   

  
	
  4.

  	
  Additional
  electrical panels required by tenant’s T.I.s.

  	
   

  	
   

  	
   

  	
  X

  
	
  5.

  	
  Electrical
  outlets to complete shell and core.

  	
   

  	
  X

  	
   

  	
   

  
	
  6.

  	
  Electrical,
  data and telephone outlets for T.I.s.

  	
   

  	
   

  	
   

  	
  X

  
	
  7.

  	
  Smoke
  detectors for shell and core rqd. by code.

  	
   

  	
  X

  	
   

  	
   

  
	
  8.

  	
  Smoke
  detectors and/or door closers rqd. by T.I.s.

  	
   

  	
   

  	
   

  	
  X

  
	
  9.

  	
  All rqd.
  conduit supports and penetrations for core and shell.

  	
   

  	
  X

  	
   

  	
   

  
	
  10.

  	
  All rqd.
  conduit supports and penetrations for T.I.s.

  	
   

  	
   

  	
   

  	
  X

  
	
  11.

  	
  All seismic
  restraints for core and shell structure & equipment.

  	
   

  	
  X

  	
   

  	
   

  
	
  12.

  	
  All seismic
  restraints for T.I.s and T.I. equipment.

  	
   

  	
   

  	
   

  	
  X

  
	
  13.

  	
  Centrally
  located electrical hot water heater to accommodate shell and core
  requirements incl. bathrooms and janitor usage.

  	
   

  	
  X

  	
   

  	
   

  
	
  14.

  	
  Centrally
  located electrical hot water heater to accommodate tenant requirements if
  required.

  	
   

  	
   

  	
   

  	
  X

  

 

3

 

	
  15.

  	
  Operational
  HVAC system sized to service 21,500 sq.ft. of normal office and laboratory
  space.

  	
   

  	
  X

  	
   

  	
   

  
	
  16.

  	
  Main
  ductwork and penetrations to both floors for supply and return air including
  elevator core, stairwells, lobby and restrooms.  Required fire and smoke dampers included.

  	
   

  	
  X

  	
   

  	
   

  
	
  17.

  	
  Complete
  distribution and return HVAC ductwork including vents and returns as well as
  any rqd. fire and smoke dampers for T.I.s.

  	
   

  	
   

  	
   

  	
  X

  
	
  18.

  	
  Ductwork for
  roof exhausted fans for bathroom ventilation.

  	
   

  	
  X

  	
   

  	
   

  
	
  19.

  	
  All ductwork
  and exhaust fans for tenant laboratories.

  	
   

  	
   

  	
   

  	
  X

  
	
  20.

  	
  Screening of
  shell and core roof mounted equipment.

  	
   

  	
  X

  	
   

  	
   

  
	
  21.

  	
  Screening of
  T.I. roof mounted equipment, if needed.

  	
   

  	
   

  	
   

  	
  X

  
	
  22.

  	
  Hose bibs
  (recessed quick-disconnect type) on east and west sides of building.

  	
   

  	
  X

  	
   

  	
   

  

 

	
  E.

  	
  Lobby Area

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  1.

  	
  Architect
  fees for lobby above owner provided std. lobby.

  	
   

  	
   

  	
   

  	
  X

  
	
  2.

  	
  Up to 32’ X
  36’ two story height with skylight, visibility to stairwell and a cat walk
  and overlook at second floor level, if desired by tenant.

  	
   

  	
   

  	
   

  	
  X

  
	
  3.

  	
  Walls
  sheetrocked, taped, skip trowel textured or smooth.

  	
   

  	
  X

  	
   

  	
   

  
	
  4.

  	
  Wall
  covering or painting to tenant specifications.

  	
   

  	
   

  	
   

  	
  X

  
	
  5.

  	
  Electrical,
  telephone and data outlets to accommodate tenant’s proposed lobby layout.

  	
   

  	
   

  	
   

  	
  X

  
	
  6.

  	
  Ceramic or
  stone tile entry from entry doors to reception counter.  All other areas to be 36 oz.  Loop minimum, and with an integral border
  if desired by tenant.

  	
   

  	
   

  	
   

  	
  X

  
	
  7.

  	
  All doors
  off lobby to be wood grain, 3’ X 8’. 
  Hardware selected by tenant.

  	
   

  	
  X

  	
   

  	
   

  
	
  8.

  	
  4” vinyl or
  rubber base in all core and shell areas.

  	
   

  	
  X

  	
   

  	
   

  
	
  9.

  	
  4” vinyl or
  rubber base in all T.I. areas.

  	
   

  	
   

  	
   

  	
  X

  
	
  10.

  	
  All shell
  and core areas handicapped accessible per code

  	
   

  	
  X

  	
   

  	
   

  
	
  11.

  	
  All fire
  sprinkler systems to be complete.

  	
   

  	
  X

  	
   

  	
   

  
	
  12.

  	
  Ceiling
  sheetrocked, taped and skip trowel textured, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  13.

  	
  Lighting to
  include, but not be limited to, down lights, recessed wall washers, recessed
  parabolic or halogen, if desired.

  	
   

  	
   

  	
   

  	
  X

  

 

	
  F.

  	
  Elevator
  Lobby

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  1.

  	
  2’ X 4’
  acoustic tile drop ceiling.

  	
   

  	
  X

  	
   

  	
   

  
	
  2.

  	
  Sheetrocked,
  taped and skip trowel texture ceiling, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  3.

  	
  Sheetrocked,
  taped and skip trowel texture walls.

  	
   

  	
  X

  	
   

  	
   

  
	
  4.

  	
  Multiple
  coffer with lighting behind, if desired by tenant.

  	
   

  	
   

  	
   

  	
  X

  
	
  5.

  	
  Electrical
  outlet(s) to support work required in area.

  	
   

  	
  X

  	
   

  	
   

  
	
  6.

  	
  Standard 2’
  X 4’ drop in lighting.

  	
   

  	
  X

  	
   

  	
   

  
	
  7.

  	
  Lighting to
  include recessed down lights, recessed lights and/or wall washers, if
  desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  8.

  	
  Standard
  jambs and head around elevator on both floors.

  	
   

  	
  X

  	
   

  	
   

  
	
  9.

  	
  Stainless
  Steel jambs and head around elevator on both floors, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  10.

  	
  Standard
  threshold and elevator entrance.

  	
   

  	
  X

  	
   

  	
   

  

 

4

 

	
  11.

  	
  Nickel
  /Silver threshold and elevator entrance, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  12.

  	
  Grout under
  elevator thresholds.

  	
   

  	
  X

  	
   

  	
   

  
	
  13.

  	
  4” rubber or
  vinyl base in all areas.

  	
   

  	
   

  	
   

  	
  X

  
	
  14.

  	
  Paint or
  wall covering per tenant’s specifications.

  	
   

  	
   

  	
   

  	
  X

  
	
  15.

  	
  Elevator
  lobby to meet code fire rating.

  	
   

  	
  X

  	
   

  	
   

  

 

	
  G.

  	
  Restrooms

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  1.

  	
  Separate
  Men’s (1) and women’s (1) bathroom per floor.

  	
   

  	
  X

  	
   

  	
   

  
	
  2.

  	
  2’x 4’ drop
  ceilings.

  	
   

  	
  X

  	
   

  	
   

  
	
  3.

  	
  Sheetrocked,
  taped, skip trowled textured and painted ceiling, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  4.

  	
  Soffit with
  can lights over vanity areas.

  	
   

  	
  X

  	
   

  	
   

  
	
  5.

  	
  Standard
  drop in 2’ x 4’ ceiling lighting.

  	
   

  	
  X

  	
   

  	
   

  
	
  6.

  	
  Light cove
  with egg crate louver over stalls and urinals and other lighting options, if
  desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  7.

  	
  Ceramic tile
  floors and 5 foot high wainscot on wet walls (colors and style to be approved
  by tenant).

  	
   

  	
  X

  	
   

  	
   

  
	
  8.

  	
  Walls above
  wainscot sheetrocked, taped, skip trowel textured and painted (type and colors
  to be approved by tenant).

  	
   

  	
  X

  	
   

  	
   

  
	
  9.

  	
  Janitor
  closets on each floor next adjacent to restrooms.

  	
   

  	
  X

  	
   

  	
   

  
	
  10.

  	
  Normal wash
  sinks in each closet.

  	
   

  	
  X

  	
   

  	
   

  
	
  11.

  	
  Additional
  floor sinks in each closet, if desired.

  	
   

  	
   

  	
   

  	
  X

  
	
  12.

  	
  All
  partitions to be powder coated metal and floor mounted.

  	
   

  	
  X

  	
   

  	
   

  
	
  13.

  	
  All faucets,
  toilets and urinals to be commercial grade.

  	
   

  	
  X

  	
   

  	
   

  
	
  14.

  	
  Plastic
  laminate counter tops over moisture resistant plywood with 4” lipped apron
  and 6” splash.

  	
   

  	
  X

  	
   

  	
   

  
	
  15.

  	
  Full size
  mirror with brushed stainless steel frame above counter from top of splash to
  bottom of soffit.

  	
   

  	
  X

  	
   

  	
   

  
	
  16.

  	
  Insulation
  for hot and cold water pipes per code.

  	
   

  	
  X

  	
   

  	
   

  
	
  17.

  	
  Minimum
  toilet accessories to include: sinks, faucets, toilets, urinals, soap
  dispensers, sanitary napkin dispensers, toilet tissue dispensers, seat cover
  dispensers, handicap grab bars per code, partition mounted coat hooks, paper
  towel dispensers and waste baskets.

  	
   

  	
  X

  	
   

  	
   

  
	
  18.

  	
  Integral
  recessed paper towel dispensers and waste containers, if desired.

  	
   

  	
   

  	
   

  	
  X

  

 

	
  H.

  	
  Miscellaneous

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  1.

  	
  Carpeting
  where used throughout building.

  	
   

  	
   

  	
   

  	
  X

  
	
  2.

  	
  Carpeting
  allowance of $40,000.

  	
   

  	
  X

  	
   

  	
   

  
	
  3.

  	
  Maximum T.I.
  allowance of $50,000 to be applied to incremental increased costs of
  “upgrades” of standard items such as: 
  elevator, lobby, bathrooms, ceilings, lighting, bathroom faucets and
  accessories etc. or the full cost of new T.I. construction related expenses.

  	
   

  	
  X

  	
   

  	
   

  
	
  4.

  	
  Architect,
  engineers, consultants, designers fees, permits and other construction fees
  for T.I.s.

  	
   

  	
   

  	
   

  	
  X

  

 

5

 

CUFF PROPERTY MANAGEMENT CO.

CUFF BUILDING & BUCHANAN OAKS BUILDING

2401 STANWELL DR., CONCORD, CA 94520

TEL: 925-687-4411  FAX: 925-687-4424

MOBILE: 925-980-1399

 

December 17, 1999

EXHIBIT C

To:    CERUS Corporation

Fm:    Steve Cuff

 

Re:

 

Construction
Schedule

Proposed
Office Building

2411 Stanwell
Drive

Concord, CA

 

1.     Start
of construction – on completion of permitting, signing of lease, legal
agreement with Concord on moving sanitary sewer and construction contract.  Currently estimated at 1 to 3 weeks from
this date.

 

2.     Time
from start of construction to start of tenant improvements – from 41⁄2 to 5
months barring delays beyond our control.

 

3.     Time
allotted for tenant improvements – 6 weeks to 2 months

 

4.     Time
to completion/occupancy – 7 to 8 months from commencement of construction
barring delays beyond our control.EXHIBIT 10.40

 

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT
LEASE-NET

 

1.     Basic Provisions (“Basic Provisions”).

 

1.1      Parties: 
This Lease (Lease), dated for
reference purposes only, October 12, 2001 is made by and between California
Development, Inc., a California Corporation (“Lessor”) and Cerus Corporation, a
Delaware Corporation (collectively the “Parties,” or individually a “Party”).

 

1.2      Premises:  That certain real property,
including all improvements therein or to be provided by Lessor under the terms
of this Lease, commonly known as 2550 Stanwell Drive, Concord located in the
County of Contra Costa, State of California, and generally described as
(describe briefly the nature of the Property and, if applicable, the “Project”, if the property is located within
a project):  Approximately 14,800
rentable square feet of improved office and warehouse space as shown on Exhibit
A, attached hereto.  Insert 1.2.

 

1.3      Term:  Insert 1.3 (Also see Paragraph 3).

 

1.4      Early Possession:  n/a
       (“Early Possession Date”).  (Also see Paragraphs 3.2 & 3.3)

 

1.5      Base Rent:  Insert 1.5 (Also see
Paragraph 4)

 

1.6      Base Rent:  Paid Upon Execution:  $12,580.00
as Base Rent for the first month’s base rent.

 

1.7      Security Deposit:  $25,160 (“Security Deposit”).  (Also see Paragraph 5)

 

1.8      Agreed Use:  Offices, laboratories,
together with related administrative activities and biomedical research and
development.  (“Agreed Use”)  (Also see Paragraph 6)

 

1.9      Insuring Party:  Lessor is the “Insuring Party.” (Also see Paragraph 8)

 

1.10    Real Estate Brokers:  (Also see Paragraph 15)

 

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

 

ý                Colliers International and California Development, Inc. represents
Lessor exclusively (“Lessor’s Broker”);

 

ý                Kenmark
Commercial, Inc. represents Lessee exclusively (“Lessee’s Broker”); or

 

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

 

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

 

1.11    Intentionally omitted.

 

1.12    Exhibits. 
Attached hereto is Exhibit A,
B, C and a Rider, all of which constitute a part of this Lease.

 

2.     Premises.

 

2.1      Letting.  Lessor hereby leases to
Lessee hereby leases from Lessor, the Premises, for the term, at the rental,
and upon all of the terms, covenants and conditions set forth in this
Lease.  Unless otherwise provided
herein, any statement of size set forth in this Lease.  Insert
2.1.

 

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

 

2.3      Compliance.  Lessor warrants that
any improvements on the Premises comply with all applicable laws, covenants or
restrictions of record, building codes, regulations and ordinances (“Applicable
Requirements”) in effect on
the Start Date.  Said warranty does not
apply to the use to which Lessee will put the Premises or to any Alterations or
Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by
Lessee.  If the Premises do not comply
with said warranty, Lessor shall, except as otherwise provided, promptly after
receipt of written notice from Lessee setting forth with specificity the nature
and extent of such non-compliance, rectify the same at Lessor’s expense.  If Lessee does not give Lessor written
notice of a non-compliance with this warranty within six (6) months following
the Start Date, correction of that non-compliance shall be at the obligation of
Lessee at Lessee’s sole cost and expense. 
Insert 2.3.   If the Applicable Requirements are hereafter
changed (as opposed to being in existence at the Start Date, which is addressed
in Paragraph 6.2(e)

 

 

 

-1-

 

below) so as to require during
the term of this Lease the construction of an addition to or an alteration of
the Building, the remediation of any Hazardous Substance, or the reinforcement
or other physical modification of the Building (“Capital
Expenditure”),
Lessor and Lessee shall allocate the cost of such work as follows:

 

(a)       Subject
to Paragraph 2.3(c) below, if such Capital Expenditures are required as a
result of the specific and unique use of the Premises by Lessee as compared
with uses by tenants in general, Lessee shall be fully responsible for the cost
thereof, provided, however that if such Capital Expenditure is required during
the last two (2) years of this Lease and the cost thereof exceeds four (4)
months’ Base Rent, Lessee may instead terminate this Lease unless Lessor
notifies Lessee in writing, within ten (10) days after receipt of Lessee’s
termination notice that Lessor has elected to pay the difference between the
actual cost thereof and the amount equal to four (4) months’ Base Rent.  If Lessee elects termination, Lessee shall
deliver to Lessor written notice specifying a termination date at least ninety
(90) days thereafter.  Such termination
date shall, however, in no event be earlier than the last day that Lessee could
legally utilize the Premises without commencing such Capital Expenditure.

 

(b)       If such Capital Expenditure is not the result
of the specific and unique use of the Premises by Lessee (such as,
governmentally mandated seismic modifications).  Insert 2.3(b)

 

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

 

2.4      Acknowledgements.  Lessee
acknowledges that:  (a) that it has been
advised by Lessor and/or Broker to satisfy itself with respect to the condition
of the Premises (including but not limited to the electrical, HVAC and fire
sprinkler systems, security, environmental aspects, and compliance with
reference Applicable Requirements), and their suitability for Lessee’s intended
use; (b) Lessee has made such investigation as it deems necessary with
reference to such matters and assumes all responsibility therefore as the same
relate to its occupancy of the Premises; and (c) neither Lessor, Lessor’s
agents, no any Broker has made any oral or written representations or
warranties with respect to said matters other than as set forth in this
Lease.  In addition, Lessor acknowledges
that:  (a) Broker has made no representations,
promises or warranties concerning Lessee’s ability to honor the Lease or
suitability to occupy the Premises; and (b) it is Lessor’s sole responsibility
to investigate the financial capability and/or suitability of all proposed
tenants.

 

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

 

3.     Term.

 

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

 

3.2      Early
Possession.  If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to pay Base Rent shall be abated for the
period of such early possession.  All
other terms of this Lease (including but not limited to the obligations to pay
Real Property Taxes and insurance premiums and to maintain the Premises) shall,
however, be in effect during such period. 
Any such early possession shall not affect nor advance the Expiration
Date.

 

3.3      Delay
in Possession.  Lessee shall not be obligated to pay rent or
perform its other obligations until it receives possession of the
Premises.  Notwithstanding in foregoing,
Lessee shall have the right to terminate this Lease as set forth in Rider
Section 1.3.

 

3.4      Lessee
Compliance.  Lessor shall not be required to render possession of the Premises
to Lessee until Lessee complies with its obligation to provide evidence of
insurance (Paragraph 8.5).

 

4.     Rent.

 

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

 

4.2      Payment.  Lessee
shall cause payment of Rent to be received by Lessor in lawful money of the
United States, without offset or deduction (except as specifically permitted in
this Lease), on or before the day on which it is due.  Rent for any period during the term hereof which is for less than
one (1) full calendar month shall be prorated based upon the actual number of
days of said month.  Payment of Rent
shall be made to Lessor at its address stated herein or to such other persons
or place as Lessor may from time to time designate in writing.  Acceptance of a payment which is less than
the amount then due shall not be a waiver of Lessor’s rights to the balance of
such Rent, regardless of Lessor’s endorsement of any check so stating.  Insert 4.3.

 

5.     Security
Deposit.  Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee’s faithful performance of its
obligations under this Lease.  If Lessee
fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use,
apply or retain all or any portion of said Security Deposit for the payment of
any amount due Lessor or to reimburse or compensate Lessor for any liability,
expense, loss or damage which Lessor may suffer or incur by reason
thereof.  If Lessor uses or applies all
or any portion of said Security Deposit, Lessee shall within twenty (20) days
after written request therefore deposit monies with Lessor sufficient to
restore said Security Deposit to the full amount required by this Lease.  Should the Agreed Use be amended to
accommodate a material change in the business of Lessee or to accommodate a
sublessee or assignee, Lessor shall have the right to increase the Security
Deposit to the extent necessary, in Lessor’s reasonable judgment to account

 

-2-

 

for any increased wear and tear that the
Premises may suffer as a result thereof. 
Lessor shall not be required to keep all or any part of the Security
Deposit separate from its general accounts. 
Within fourteen (14) days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and
otherwise within thirty (30) days after the Premises have been vacated pursuant
to Paragraph 7.4(c) below, Lessor shall return that portion of the Security
Deposit not used or applied by Lessor. 
No part of the Security Deposit shall be considered to be held in trust,
to bear interest or to be prepayment for any monies to be paid by Lessee under
this Lease.

 

6.     Use.

 

6.1      Use.

 

Lessee shall use and occupy the Premises only
for the Agreed Use, or any other legal use which is reasonably comparable
thereto, and for no other purpose. 
Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that unreasonably disturbs
owners and/or occupants of, or causes damage to the Premises or neighboring
properties.  Lessor shall not
unreasonably withhold or delay its consent to any written request for a
modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, and is not significantly more burdensome to the
Premises.  If Lessor elects to withhold
consent, Lessor shall within five (5) business days after such request give a
written notification of same, which notice shall include an explanation of
Lessor’s reasonable objections to the change in use.

 

6.2      Hazardous
Substances.

 

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

 

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

 

(c)       Lessee Remediation.  Lessee shall not cause or
permit any Hazardous Substance to be spilled or released in, on, under or about
the Premises (including through the plumbing or sanitary sewer system) and
shall promptly, at Lessee’s expense, take all investigatory and/or remedial
action reasonably recommended by any governmental authority, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.  Insert 6.2(c).

 

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

 

(e)       Lessor Indemnification.  Lessor and its successors
and assigns shall indemnify, defend, reimburse and hold Lessee, its employees
and lenders, harmless from and against any and all environmental damages,
including the cost of remediation, which existed as a result of Hazardous
Substances on the Premises prior to the

 

-3-

 

Start Date or which are caused by the gross
negligence or willful misconduct of Lessor, its agents or employees Lessor’s
obligations, as and when required by the Applicable Requirements, shall
include, but not be limited to, the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the expiration or
termination of this Lease.

 

(f)        Investigations and Remediations.  Lessor
shall retain the responsibility and pay for any investigations or remediation
measures required by governmental entities having jurisdiction with respect to
the existence of Hazardous Substances on the Premises prior to the Start Date,
unless such remediation measure is required as a result of Lessee’s use (including
“Alterations” as defined in Paragraph 7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such payment.  Lessee shall cooperate fully in any such activities at the
request of Lessor, including allowing Lessor and Lessor’s agents to have
reasonable access to the Premises at reasonable times in order to carry out
Lessor’s investigative and remedial responsibilities.  Insert 6.2(f).

 

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

 

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

 

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

 

7.1      Lessee’s Obligations.

 

(a)       In General.  Subject to the
provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee’s
Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage
or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense,
keep the Premises, Utility Installations, and Alterations in good order,
condition and repair (whether or not such portion of the Premises requiring
repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee’s use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or fixtures,
such as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire protection system,
fixtures, interior walls, ceilings, floors, and signs.  Lessee, in keeping the Premises in good
order, condition and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the
service contracts required by Paragraph 7.1(b) below.  Lessee’s obligations shall include restorations, replacements or
renewals when necessary to keep the Premises and all improvements thereon or a
part thereof in good order, condition and state of repair.  Insert
7.1(a).

 

(b)       Service Contracts.  Lessee shall, at Lessee’s
sole expense, procure and maintain contracts, with copies to Lessor, in
customary form and substance for, and with contractors specializing and
experienced in the maintenance of the following equipment and improvements, if
any, if and when installed on the Premises: 
(i) HVAC equipment, (ii) boiler and pressure vessels, (iii) fire
extinguishing systems, including fire alarm and/or smoke detection, (iv) basic
utility feed to the perimeter of the Building, and (v) any other equipment, if
reasonably required by Lessor.  Insert 7.1(b).

 

(c)       Replacement.  Subject to Lessee’s
indemnification of Lessor as set forth in Paragraph 8.7 below and without
relieving Lessee of liability resulting from Lessees failure to exercise and
perform good maintenance practices, if the basic elements described in
Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of
20% of the cost of replacing such Basic Elements, then such basic elements
shall be replaced by Lessor, and the cost thereof shall be prorated between the
Parties and Lessee shall only obligated to pay, each month during the remainder
of the term of this Lease, on the date of which Base Rent is due, an amount
equal to the product of multiplying the cost of such replacement by a fraction,
the numerator of which is one, and the denominator of which is the number of
months of the useful life of such replacement as such useful life is specified
pursuant to Federal income tax regulations or guidelines for depreciation
thereof (including interest on the unamortized balance as is then commercially
reasonable in the judgment of Lessor’s accountants), with Lessee reserving the
right to prepay its obligation at any time. 
Insert 7.1(c).

 

7.2.     Lessor’s Obligations.  Subject
to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 9 (Damage or
Destruction) and 14 (Condemnation), it is intended by the Parties hereto that
Lessor have no obligation, in any manner whatsoever, to repair and maintain the
Premises, or the equipment therein, all of which obligations are intended to be
that of the Lessee.  It is the intention
of the Parties that the terms of this Lease govern the respective obligations
of the Parties as to maintenance and repair of the Premises, and they expressly
waive the benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease. 
Insert 7.2.

 

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7.3      Utility Installations, Trade Fixtures,
Alterations.

 

(a)       Definitions; Consent Required.  The
term “Utility Installations”
refers to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communications systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the
Premises.  The term “Trade Fixtures” shall mean Lessee’s
machinery and equipment that can be removed without doing material damage to
the Premises.  The term “Alterations” shall mean any modification of
the improvements, other than Utility Installations or Trade Fixtures whether by
addition or deletion.  “Lessee-Owned Alterations and/or Utility Installations”
are defined as Alterations and/or Utility Installations made by Lessee that are
not yet owned by the Lessor pursuant to Paragraph 7.1(a).  Lessee shall not make any Alterations or
Utility Installations to the Premises without Lessor’s prior written consent
which shall not be unreasonably withheld, conditioned or delayed.  Lessee may, however, make non-structural
Utility Installations to the interior of the Premises (excluding the roof)
without such consent but upon notice to Lessor, so long as they are not visible
from the outside of the Premises, do not involve puncturing, relocating or
removing the roof or any existing walls, and the cumulative cost thereof during
the term of this Lease as extended does not exceed $50,000 in any instance.  Insert
7.3(a).

 

(b)       Consent.  Any Alterations or Utility
Installations that Lessee shall desire to make and which require the consent of
the Lessor shall be presented to Lessor in written form with detailed plans.  Consent shall be deemed conditioned upon
Lessee’s; (i) acquiring all applicable governmental permits; (ii) furnishing
Lessor with copies of both the permits and the plans and specifications prior
to commencement of the work; and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious
manner.  Any alterations or Utility
Installations shall be performed in a workmanlike manner with good and
sufficient materials.  Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.

 

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

 

7.4  Ownership, Removal, Surrender, and
Restoration.

 

(a)       Ownership.  Subject to Lessor’s
right to require their removal or elect ownership as hereinafter provided, all
Alterations and Utility Installations made by Lessee shall be the property of
and owned by Lessee, but considered a part of the Premises.  Except as otherwise provided herein, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises.

 

(b)       Intentionally omitted.

 

(c)       Surrender/Restoration.  Lessee shall surrender the
Premises by the Expiration Date or any earlier termination date, with all of
the improvements, parts and surfaces thereof broom clean and free of debris,
and in good operating order, condition and state of repair, ordinary wear and
tear excepted.  “Ordinary wear and tear”
shall not include any damage or deterioration that would have been prevented by
good maintenance practice.  Lessee shall
repair any damage occasioned by the installation, maintenance or removal of
Trade Fixtures, Lessee Owned Alterations and/or Utility Installations,
furnishings, and equipment, as well as the removal of any storage tank
installed by or for Lessee, and the removal, replacement, or remediation of any
soil, material or groundwater contaminated by Lessee.  Trade Fixtures shall remain the property of Lessee and shall be
removed by Lessee.  The failure by
Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without
the express written consent of Lessor shall constitute a holdover under the
provisions of paragraph 26 below.  Insert 7.4.

 

        Insert 7.5.

 

8.     Insurance; Indemnity.

 

8.1      Payment for Insurance.  Lessee
shall pay for all insurance required under Paragraph 8 except to the extent of
the cost attributable to liability insurance carried by Lessor under Paragraph
8.2(b) in excess of  $2,000,000 per
occurrence.  Premiums for policy periods
commencing prior to or extending beyond the term shall be prorated to
correspond to the Lease term.  Payment
shall be made by Lessee to Lessor within ten (10) days following receipt of an
invoice.

 

8.2      Liability Insurance.

 

(a)       Carried by Lessee.  Lessee
shall obtain and keep in force during the term of this Lease a Commercial
General Liability policy of insurance protecting Lessee, Lessor and any
Lender(s) whose names have been provided to Lessee in writing (as additional
insureds) against claims for bodily injury, personal injury and property damage
based upon, involving or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto.  Such insurance shall be on a claims-made
basis providing single limit coverage in an amount not less than $1,000,000 per
occurrence with an “Additional Insured-Managers or Lessors of Premises”
endorsement and contain the “Amendment of the Pollution Exclusion” endorsement
for damage caused by heat, smoke or fumes from a hostile fire.  The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease or as carried by Lessee
shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation under this Lease.  The limits
of said insurance required by this Lease or as carried by Lessee shall not,
however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder.  All insurance to be carried
by Lessee shall be

 

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primary to and not contributory with any
similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.

 

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

 

8.3      Property Insurance - Building,
Improvements and Rental Value.

 

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

 

(b)       Rental Value.  Lessor shall also obtain
and keep in force during the term of this Lease a policy or policies in the
name of Lessor, with loss payable to Lessor and any Lender(s), insuring the
loss of the full Rent for one year. 
Said insurance shall provide that in the event the Lease is terminated
by reason of an insured loss, the period of indemnity for such coverage shall
be extended beyond the date of the completion of repairs or replacement of the
Premises, to provide for one full year’s loss of Rent from the date of any such
loss.  Said insurance shall contain an
agreed valuation provision in lieu of any co-insurance clause, and the amount
of coverage shall be adjusted annually to reflect the projected Rent otherwise
payable, for the next 12-month period. 
Lessee shall be liable for any deductible amount in the event of such
loss.

 

(c)       Adjacent Premises.  If the Premises are part of
a larger building, or of a group of buildings owned by Lessor which are
adjacent to the Premises, the Lessee shall pay for any increase in the premiums
for the property insurance of such building or buildings if said increase is
caused by Lessee’s acts, omissions, use or occupancy of the Premises.

 

8.4      Lessee’s Property/Business Interruption
Insurance.

 

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

 

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

 

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

 

8.5      Insurance Policies.  Insurance
required hereunder shall be in companies maintaining during the policy term a
“General Policyholders Rating” of at least B+,V, as set forth in the most
current issue of “Best’s Insurance Guide” or such other rating as may be
required by a Lendor.  Lessee shall not
do or permit to be done anything which shall invalidate the required insurance
policies.  Lessee shall, prior to the
Start Date, deliver to Lessor certified copies of policies of such Insurance or
certificates evidencing the existence and amounts of the required
insurance.  No such policy shall be
calculable or subject to modification except after thirty (30) days prior
written notice to Lessor.  Lessee shall
at least thirty (30) days prior to the expiration of such policies, furnish
Lessor with evidence of renewals or “Insurance Binders” evidencing renewal
thereof, or Lessor may order such insurance and charge the cost thereof to
Lessee, which amount shall be payable by Lessee to Lessor upon demand.  Such policies shall be for a term of at
least one year, or the length of the remaining term of this Lease, whichever is
less.  If either Party shall fail to procure
and maintain the insurance required to be carried by it, the other Party may,
but shall not be required to, procure and maintain the same.

 

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

 

-6-

 

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

 

8.8      Exemption of Lessor from Liability.  Insert 8.8.  Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee’s employees, contractors, invitees, customers or any
other person in or about the Premises, whether such damage or injury is caused
by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinkler,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are a
part; from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not.  Lessor shall not be liable for any damages
arising from any act or neglect of any other Lessee of Lessor nor from the
failure by Lessor to enforce the provisions of any other lease in the
Industrial Center.  Notwithstanding
Lessors negligence or breach of this Lease, Lessor shall under no circumstances
be liable for injury to Lessee’s business or for any loss of income or profit
therefrom.

 

9.     Damage or Destruction

 

9.1      Definitions.

 

(a)       “Premises Partial Damage” shall mean damage or destruction to the Premises, other than Lessee
Owned Alterations and Utility Installations which can reasonably be repaired in
six (6) months or less from the date of the damage or destruction.  Lessor shall notify Lessee in writing within
ten (10) days from the date of the damage or destructions as to whether or not
the damage is Partial or Total.

 

(b)       “Premises Total Destruction”  shall
mean damage or destruction to the Premises, other than Lessee Owned Alterations
and Utility Installations and Trade Fixtures, which cannot reasonably be
repaired in six (6) months or less from the date of the damage or
destruction.  Lessor shall notify Lessee
in writing within ten (10) days from the date of the damage or destruction as
to whether or not the damage is Partial or Total.

 

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

 

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

 

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

 

9.2      Premises Partial Damage-Insured Loss.  If a Premises Partial
Damage that is an Insured Loss occurs, then Lessor shall, at Lessor’s expense,
repair such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations
and Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect provided however, that Lessee shall, at
Lessor’s election, make the repair of any damage or destruction the total cost
to repair of which is $10,000 or less, and, in such event, Lessor shall make
any applicable insurance proceeds available to Lessee for that purpose.  Notwithstanding the foregoing, if the
required insurance was not in force or the insurance proceeds are not
sufficient to effect such repair, the Insuring Party shall promptly contribute
the shortage in proceeds.  If Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to:  (i) make such restoration and
repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect, or
have this Lease terminate thirty (30) days thereafter.  Lessee shall not be entitled to
reimbursement of any funds contributed by Lessee to repair any such damage or
destruction.  Premises Partial Damage
due to floor or earthquake shall be subject to Paragraph 9.3, notwithstanding
that there may be some insurance coverage, but the net proceeds of any such
insurance shall be made available for the repairs it may by either Party.

 

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

 

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

 

9.5      Damage Near End of Term.  If at any time during the
last six (6) months of the term of the Lease there is damage for which the cost
to repair exceeds on month’s Base Rent, whether or not an Insured Loss, either
Lessee or Lessor may terminate this Lease effective sixty (60) days following
the date of occurrence of such damage. 
Notwithstanding the foregoing, if Lessee at the time has an exercisable
option to extend this Lease or to purchase the Premises, then Lessee may
preserve this Lease by exercising such option. 
If lessee duly exercises such option during such period, Lessor shall,
at Lessor’s commercially reasonable expense repair such damage as soon as
reasonably possible and this Lease shall continue in full force and
effect.  If Lessee fails to exercise
such option then this Lease shall terminate on the date specified in the
termination notice and Lessee’s option shall be extinguished.

 

9.6      Abatement of Rent; Lessee’s Remedies.

 

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

 

(b)       Remedies.  If Lessor shall be
obligated to repair or restore the Premises and does not commence, in a
substantial and meaningful way, such repair or restoration within thirty (30)
days after such obligation shall accrue, Lessee may, at any time prior to the
commencement of such repair or restoration, give written notice to Lessor and
to any Lenders of which Lessee has actual notice of Lessee’s election to
terminate this Lease on a date not less than sixty (60) days following the
giving of such notice.  If Lessee gives
such notice and such repair or restoration is not commenced within thirty (30)
days thereafter, this Lease shall terminate as of the date specified in said
notice.  If the repair or restoration is
commenced within said thirty (30) days, this Lease shall continue in full force
and effect.  “Commence” shall mean
either the unconditional authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises, whichever first
occurs.  Insert 9.6(c).

 

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

 

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

 

10.  Real Property Taxes.

 

10.1    Definition of “Real Property Taxes.”  As
used herewith, the term “Real Property Taxes”
shall include any form of real estate tax or assessment, general, special,
ordinary or extraordinary, or rental levy or tax (other than inheritance,
personal income or estate taxes), improvement bond; and/or license fee imposed
upon or levied against any legal or equitable interest of Lessor in the
Premises, Lessor’s right to other income therefrom, and/or Lessor’s business of
leasing, by any authority having the direct or indirect power to tax and where
the funds are generated with reference to the Building address and where the
proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located.  The term “Real Property Taxes” shall also
include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring during the term of this Lease, including
but not limited to, a change in the ownership of the Premises.  Insert
10.1

 

10.2    (a)       Payment
of Taxes.  Lessee shall pay the Real Property Taxes applicable to the
Premises during the term of this Lease. 
Subject to Paragraph 10.2(b), all such payments shall be made at least
ten (10) days prior to any delinquency date. 
Lessee shall promptly furnish Lessor with satisfactory evidence that
such taxes have been paid. If any such taxes shall cover any period of time
prior to or after the expiration or termination of this Lease,  Lessee’s share of such taxes shall be prorated
to cover only that portion of the tax bill applicable to the period that this
Lease is in effect, and Lessor shall reimburse Lessee for any overpayment.  If Lessee shall fail to pay any required
Real Property Taxes, Lessor shall have the right to pay the same, and Lessee
shall reimburse Lessor therefor within thirty (30) days of demand.

 

(b)       Advance Payment.  In the event Lessee incurs
a late charge on any Rent payment, Lessor may, at Lessor’s option, estimate the
current Real Property Taxes, and require that such taxes be paid in advance to
Lessor by Lessee, either (i) in a lump sum amount equal the instalment due, at
least twenty (20) days prior to the applicable delinquency date, or (ii)
monthly in advance with the payment of the Base Rent.  If Lessor elects to require payment monthly in advance, the
monthly payment shall be an amount equal to the amount of the estimated
installment of taxes divided by the number of months remaining before the month
in which said instalment becomes delinquent. 
When the actual amount of the applicable tax bill is known, the amount
of such equal monthly advance payments shall be adjusted as required to provide
the funds needed to pay the applicable taxes. 
If the amount collected by Lessor is insufficient to pay such Real
Property Taxes when due, Lessee shall pay Lessor, upon demand, such additional
sums as are necessary to pay such obligations. 
All moneys paid to Lessor under this paragraph may be intermingled with
other moneys of Lessor and shall not bear interest.  In the event of a Breach by Lessee in the performance of its
obligations under this Lease, then any balance of funds paid to

 

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Lessor under
the provisions of this Paragraph may at the option of  Lessor, be treated as an additional Security Deposit.

 

10.3    Joint Assessment.  If the Premises are not
separately assessed, Lessee’s liability shall be equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be conclusively determined by Lessor from
the respective valuations assigned in the assessor’s work sheets or such other
information as may be reasonably available.

 

10.4    Personal Property Taxes.  Lessee shall pay, prior to
delinquency, all taxes assessed against and levied upon Lessee Owned
Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and
all personal property of Lessee.  When
possible, Lessee shall cause such property to be assessed and billed separately
from the real property of Lessor.  If
any of Lessee’s said personal property shall be assessed with Lessor’s real
property, Lessee shall pay Lessor the taxes attributable to Lessee’s property
within ten (10) days after receipt of a written statement.

 

11.  Utilities.  Lessee shall pay for all water, gas, heat,
light, power, telephone, trash disposal and other utilities and services
supplied to the Premises, together with any taxes thereon.  If any such services are not separately
metered to Lessee, Lessee shall pay a reasonable proportion to be determined by
Lessor, of all charges jointly metered.

 

12.  Assignments and Subletting.

 

12.1    Lessor’s Consent Required.

 

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

 

(b)       A
change in the control of Lessee shall constitute an assignment requiring
consent.  The transfer, on a cumulative
basis, of fifty percent (50%) or more of the voting control of Lessee shall
constitute a change in control for its purpose.  Insert 12.1 (b).

 

(c)       The
involvement of Lessee or its assets in any transaction, or series of
transaction (by way of merger, sale, acquisition financing, transfer, leveraged
buy-out or otherwise), whether or not a formal assignment or hypothecation of
this Lease or Lessee’s assets occurs, which results or will result in a
reduction of the Net Worth of Lessee, by an amount equal to or greater than
twenty-five percent (25%) of such net Worth as it was represented to Lessor at
the time of the execution of this Lessee or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to
said transaction or transactions constituting such reduction, whichever was or
is greater, shall be considering an assignment of this Lease to which Lessor may
withhold its consent.  “Net Worth of
Lessee” shall mean the net worth of Lease (excluding any guarantors)
established under generally accepted accounting principles.

 

(d)       An
assignment or subletting of Lessee’s Interest in this Lease without consent
shall, at Lessor’s option, be a Default curable after notice per Paragraph
13.1(c).

 

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

 

12.2    Terms and Conditions Applicable to Assignment
and Subletting.

 

(a)       Regardless
of Lessor’s consent, any assignment or subletting shall not (i) be effective
without the express written assumption by such assignee or sublessee of the
obligations of  Lessee under this Lease,
(ii) release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent or for the performance of any
other obligations to be performed by Lessee.

 

(b)       Lessor
may accept any rent or performance of Lessee’s obligation from any person other
than Lessee pending approval or disapproval of an assignment.  Neither a delay in the approval or
disapproval of such assignment nor the acceptance of any rent for performance
shall constitute a waiver or estoppel of Lessor’s right to
exercise its remedies for the Default or Breach.

 

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

 

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

 

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

 

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

 

-9-

 

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

 

(a)       Intentionally
omitted.

 

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

 

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

 

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

 

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

 

13.  Defaults; Breach; Remedies.

 

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

 

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

 

(b)       The
failure by Lessee to make any payment of Rent or any Security Deposit required
to be made by Lessee hereunder, whether to Lessor or to a third party, when
due, to provide reasonable evidence of insurance or safety bond, or to fulfill
any obligation under this Lease which endangers or threatens life or property,
where such failure continues for a period of ten (10) days following written
notice to Lessee.

 

(c)       The
failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements,  (ii) the
service contracts (iii) the rescission of an unauthorized assignment or
subletting (iv) a Tenancy Statement, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested
under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this lease, where any such failure continues for a period of twenty (20) days
following written notice to Lessee.

 

(d)       A
Default by Lessee as to the terms, covenants, conditions or provisions of this
Lease, or of the rules adopted under Paragraph 40 hereof, other than those
described in Subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice; provided,
however, that if the nature of Lessee’s Default as such that more than thirty
(30) days are reasonably required for its cure, then it shall not be deemed to
be a Breach if Lessee commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion.

 

(e)       The
occurrence of any of the following events: (i) the making by Lessee of any
general arrangement or assignment for the benefit of creditors; (ii) becoming a
“debtor” as defined in II U.S. Code Section 101 or any successor statute
thereto unless, in the case of a petition filed against Lessee, the same is
dismissed within sixty (60) days; (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee’s assets located at
the Premises or of Lessee’s interest in this Lease, where possession is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution
or other judicial seizure of substantially all of Lessee’s assets located at
the Premises or of Lessee’s interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any
provision of this Subparagraph 13.1(e) is contrary to any applicable law, such
provision shall be of no force or effect, and shall not affect the validity of
the remaining provisions.

 

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

 

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

 

(a)       Terminate
Lessee’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Lessee shall immediately surrender possession to
Lessor.  In such event Lessor shall be
entitled to recover from Lessee.  (i)
the unpaid Rent which had been earned at the time of termination; (ii) the

 

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worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided: (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee’s failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the premises, reasonable attorneys’ fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease.  The worth at the time of award of the amount referred to in
provision (iii) of the immediately preceding sentence shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of the
District in which the Premises are located at the time of award plus one
percent (1%).  Efforts by Lessor to
mitigate damages obtained through the provisional remedy of unlawful detainer,
Lessor shall have the right to recover in such proceeding any unpaid Rent and
damages as are recoverable therein, or Lessor may reserve the right to recover
all or any part thereof in a separate suit. 
If a notice and grace period required under Subparagraph 13.1 was not
previously given a notice to pay rent or quit, or to perform or quit, given to
Lessee under the unlawful detainer statute shall also constitute the notice
required by Subparagraph 13.1.  In such
case, the applicable grace period required by Paragraph 13.1 and the unlawful
detainer statue shall run concurrently, and the failure of Lessee to cure the
Default within the greater of the two (2) such grace periods shall constitute both
an unlawful detainer and a Breach of this Lease entitling Lessor to the
remedies provided for in this Lease and/or by said statute.

 

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

 

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

 

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

 

13.4    Intentionally omitted.

 

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

 

13.6    Breach by Lessor.

 

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

 

(b)       Performance by Lessee on Behalf of Lessor.  In the event that neither Lessor not Lender
cures said breach within thirty (30) days after receipt of said notice, or if
having commenced said cure they do not diligently pursue it to completion, then
Lessee may elect to cure said breach at Lessee’s expertise and offset from Rent
an amount equal to any costs incurred by Lessee.  Lessee shall document the cost of said cure and supply said
documentation to Lessor.

 

14.  Condemnation.  If the Premises or any portion thereof are taken under the power of
eminent domain or sold under the treat of the exercise of said power
(collectively “Condemnation”), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs.  If more than ten percent
(10%) of any building portion of the Premises, or more than twenty-five percent
(25%) of the portion of the land area portion of the premises not occupied by
any building, is taken by Condemnation, Lessee may, at Lessee’s option, to be
exercised in writing within ten (10) days after Lessor shall have given Lessee
written notice

 

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of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession terminate this Lease as of the date the condemning authority takes
such possession) terminate this Lease as of the date of condemning authority
takes such possession.  If Lessee does
not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall be reduced in proportion to the reduction in
utility of the Premises caused by such Condemnation.  Condemnation awards and/or payments shall be the property of
Lessor, whether such award shall be made as compensation for diminution in
value of the leasehold, the value of the part taken, or for severance damages
provided, however, that Lessee shall be entitled to any compensation for
Lessee’s relocation expenses, loss of business goodwill and/or Trade Fixtures,
without regard to whether or not this Lease is terminated pursuant to the
provisions of this Paragraph.  All
Alterations and Utility Installations made to the Premises by Lessee, for the
purposes of Condemnation only, shall be considered the property of the Lessee
and Lessee shall be entitled to any and all compensation which is payable therefor.  In the event that this Lease is not
terminated by reason of the Condemnation, Lessor shall repair any damage to the
Premises caused by such Condemnation.

 

15.  Brokers’ Fees.

 

15.1    Additional Commission.  There shall be no
additional commissions paid to Brokers pursuant to Paragraph 1.10 above, unless
Lessor and the Brokers otherwise agree in writing, in a separate document.

 

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

 

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

 

16.  Estoppel Certificates.

 

(a)       Each
Party (as “Responding Party”)
shall within twenty (20) days after written notice from the other Party (the “Requesting Party”) execute, acknowledge and
deliver to the Requesting Party a statement in writing in a form similar to the
then most current “Estoppel Certificate”
form published by the American Industrial Real estate Association, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party

 

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

 

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

 

17.  Definition of Lessor.  The term “Lessor”
as used herein shall mean the owner or owners at the time in question of the
fee title to the Premises, or, if this is a sublease, of the Lessee’s interest
in the prior lease.  In the event of a
transfer of Lessor’s title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor.  Except
as provided in Paragraph 15, upon such transfer or assignment and delivery of
the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all
liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. 
Subject to the foregoing the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. 
Subject to the foregoing the obligations and/or covenants in this Lease
to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined.  Notwithstanding
the above, and subject to the provisions of Paragraph 20 below, the original
Lessor under this Lease, and all subsequent holdings of the Lessor’s interest
in this Lease shall remain liable and responsible with regard to the potential
duties and liabilities of Lessor pertaining to Hazardous Substances as outlined
in Paragraph 6 above.

 

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

 

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

 

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

 

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

 

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

 

23.  Notices.

 

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

 

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

 

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

 

25.  Recording.  Either Lessor or Lessee shall, upon request
of the other, execute, acknowledge and deliver to the other a short form
memorandum of this Lease for recording purposes.  The Party requesting recordation shall be responsible for payment
of any fees or taxes applicable thereto.

 

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

 

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

 

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

 

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

 

30.  Subordination; Attornment; Non-Disturbance.

 

-13-

 

30.1    Subordination.  Subject to Section 30.3
and Section 38, this Lease and any Option granted hereby shall be subject and
subordinate to any ground Lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, “Security Device”), now or hereafter placed upon the Premises
are a part, to any and all advances made on the security thereof, and to all
renewals, modifications, and extensions thereof.  Lessee agrees that the holders of any such Security Devices (in
this Lease together referred to as “Lessor’s Lender”) shall have not liability
or obligation to perform any of the obligations of Lessor under this
Lease.  Any Lender may elect to have
this Lease and/or any option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this
Lease and such Options shall be deemed prior to such Security Device,
notwithstanding the relative dates of the documentation of recordation thereof.

 

30.2    Attornment.  Subject to the
non-disturbance provisions of Paragraph 30.3 Lessee agrees to attorn to a
Lender or any other party who acquires ownership of the Premises by reason of a
foreclosure of a Security Device, and that in the event of such foreclosure,
such new owner shall not (i) be liable for any act or omission of any prior
Lessor or with respect to events occurring prior to acquisition of ownership,
(ii) be subject to any offsets or defenses which Lessee might have against any
prior Lessor, or (iii) be bound by prepayment of more than one (1) month’s
rent.

 

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

 

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

 

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

 

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

 

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

 

34.  Signs.  Except for ordinary “For Sublease” signs,
Lessee shall not place any sign upon the Premises without Lessor’s prior
written consent which shall not be unreasonably conditioned, withheld or
delayed.  All signs must comply with all
Applicable Requirements.

 

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

 

36.  Consents.  Except as otherwise provided herein,
wherever in this Lease the consent of Party is required to an act by or for the
other Party, such consent shall not be unreasonable withheld or delayed.  Lessor’s actual reasonable costs and
expenses (including but not limited to architects’, attorneys’, engineers’ and
other consultants’ fees) incurred not to exceed $1,000 in any one instance, in
the consideration of, or response to, a request by Lessee for any Lessor
consent, including but not limited to consents to an assignment, a subletting
of the presence or use of a Hazardous Substance, shall be paid by Lessee upon
receipt of an invoice and supporting documentation therefor.  Lessor’s consent to any act, assignment or
subletting shall not constitute an

 

-14-

 

acknowledgement
that no Default or Breach by Lessee of this Lease exists, not shall such
consent be deemed a waiver of any then existing Default or Breach, except as
may be otherwise specifically stated in writing by Lessor at the time of such
consent.  The failure to specify
conditions as are then reasonable with reference to the particular matter for
which consent is being given.  In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request.

 

37.  Intentionally omitted.

 

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

 

39.  Options.

 

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

 

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

 

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

 

39.4    Effect of default on Options.

 

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

 

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

 

(c)       An
Option shall terminate and be of no further force or effect, notwithstanding
Lessee’s due and timely exercise of the Option, if, after such exercise and
prior to the commencement of the extended term, (i) Lessee fails to pay Rent
for a period of thirty (30) days after such Rent becomes due, or (ii) Lessor
gives to Lessee three (3) or more notices to separate Defaults during any
twelve (12) month period, whether or not the Defaults are cured, or (iii) if
Lessee commits a Breach of this Lease.

 

40.  Multiple Buildings.  If the Premises are a part of a group of buildings controlled by
Lessor, Lessee agrees that it will observe all reasonable rules and regulations
which Lessor may make from time to time for the management, safety and care of
said properties, including the care and cleanliness of the grounds and
including the parking, loading and unloading of vehicles, and that Lessee will
pay its fair share of common expenses in connection therewith.

 

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

 

42.  Reservations.  Lessor reserves the right, from time to
time, to grant, without the consent or joinder of Lessee, such easements,
rights and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights,
dedications, maps and restriction do not unreasonably interfere with the use of
the Premises by Lessee.  Lessee agrees
to sign any documents reasonably requested by Lessor to effectuate any such
easement rights, dedication, map or restrictions.  Insert 42.

 

43.  Performance Under Protest.  If at any time a dispute shall arise as to any amount or sum of
money to be paid by one Party to the other under the provisions hereof, the
Party against whom the obligation to pay the money is asserted shall have the
right to make payment “under protest” and such payment shall not be regarded as
a voluntary payment and there shall survive the right on the part of said Party
to institute suit for recovery of such sum. 
If it shall be adjudged that there was no legal obligation on the part
of said Party to pay such sum or any part thereof, said party shall be entitled
to recover such sum or so much thereof as it was not legally required to pay.

 

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

 

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

 

-15-

 

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

 

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

 

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

 

49.  Mediation and Arbitration of Disputes.  An addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties and/or
Brokers arising out of this Lease is [*] is not attached to this Lease.

 

Inserts 50 and 51

 

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

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

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

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

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

 

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

 

	
  Executed at:

  	
  Concord, CA

  	
   

  	
  Executed at:

  	
  Concord, CA

  
	
  on:

  	
  10-12-01

  	
   

  	
  on:

  	
  10-12-01

  
							

 

	
  By LESSOR:

  	
   

  	
  By LESSEE:

  
	
  California
  Development, Inc. a California Corporation

  	
   

  	
  Cerus
  Corporation, a Delaware Corporation

  
	
  /s/ DONALD
  J. BRUZZONE

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ HOWARD
  ERVIN

  
	
  Name
  Printed:  Donald J. Bruzzone

  	
   

  	
  Name
  Printed:

  	
  Howard Ervin

  
	
  Title:  President

  	
   

  	
   

  	
  Title:

  	
  V.P., Legal
  Affairs

  
	
  Address:  1200 Snyder Lane,

  	
   

  	
  Address:

  	
  2411
  Stanwell Dr.

  
	
  Walnut
  Creek, CA, 94598

  	
   

  	
  Concord, CA 94520

  
	
  Telephone:

  	
  (925)
  943-1313

  	
   

  	
  Telephone:

  	
  (925)
  288-6116

  
	
  Facsimile:

  	
  (925)
  937-1313

  	
   

  	
  Facsimile:

  	
  (925)
  288-0194

  
										

 

 

-16-

 

RIDER
TO A.I.R.E.A.  STANDARD
INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE — NET — DATED, FOR REFERENCE PURPOSES
SEPTEMBER 15, 2001 BY AND BETWEEN CALIFORNIA DEVELOPMENT, INC. (“LESSOR”) AND
CERUS CORPORATION (“LESSEE”).

 

This Rider is attached to and made a part of
the above-referenced Lease.  In the
event of any conflict between the Lease and this Rider, the terms and
provisions of this Rider shall govern. 
If any addenda or amendments are also attached to the Lease, this Rider
shall govern to the extent of any conflict between the terms and provisions of
this Rider and such addenda or amendments. 
All references in the following paragraphs are to corresponding sections
of the typeset portion of the Lease and any addenda or amendments, except as
otherwise expressly provided herein.

Insert
1.2  Parking

Lessee shall additionally have the right to
the exclusive use of the parking areas identified on Exhibit A at no
additional cost or expense.  Lessee
shall not have the right to the use of the parking area associated with the
Expansion Space unless and until Lessee has exercised the Expansion Right as
provided in Section 51 hereof.  Lessor
shall have the right to modify the parking areas as reasonably necessary during
any construction of the Project; provided, however, that the size of the
exclusive parking to which Lessee is entitled hereunder shall not be reduced or
expanded thereby.

 

Insert
1.3  Term.

Lessor shall use its best faith efforts to
deliver the Premises to Lessee in the condition required hereunder by November
12, 2001.  The term of this Lease (“Original
Term”) shall commence on the date which is the later to occur of the
following:  (i) the date that Lessor has
delivered possession of the Premises to Lessee in the condition required
hereunder or (ii) November 1, 2001 (“Commencement Date”), and shall expire on
the date which is the fifth (5th) anniversary of the Commencement
Date (“Expiration
Date”).  Notwithstanding any
other provision of this Lease to the contrary, if Lessor has not delivered the
Premises to Lessee by December 12, 2001 for any reason, then Lessee shall have
the right, without limiting any other rights or remedies of Lessee, to
terminate this Lease by providing written notice thereof to Lessor, and upon
receipt of such notice, this Lease shall terminate and Lessor shall promptly
thereafter return all sums previously paid or deposited by Lessee.  The Original Term together with any
Extension Term is individually and collectively referred to herein as the “Term”.

 

Notwithstanding any other provision of this
Lease to the contrary, Lessee shall have the right to terminate the Lease prior
to the Expiration Date for any reason whatsoever in Lessee’s sole and absolute
discretion effective any time after July 31, 2004 (“Early Termination Right”).  Lessee shall exercise its Early Termination
Right by providing not less than nine (9) months’ prior written notice of such
election to terminate to Lessor.  For
example, if Lessee desires to terminate the Lease effective August 1, 2004,
then Lessee shall provide written notice of the same to Lessor on or before
November 1, 2003.  If Lessee elects to
exercise the Early Termination Right, then the parties shall enter into an
amendment to the Lease which shall amend the Expiration Date to be the earlier
date set forth in Lessee’s notice.  If
Lessee elects to exercise the Early Termination Right, then Lessee shall pay to
Lessor the sum of Eighty Four Thousand Three Hundred Sixty Dollars ($84,360)
(“Termination Fee”) on or before the Expiration Date, as amended, in
consideration for the Early Termination Right as set forth herein.  Additionally, if Lessee exercises the
Expansion Right for the Expansion Space pursuant to Section 51 hereof and
Lessor and Lessee have entered into an amendment to this Lease to incorporate
the Expansion Space, then the Termination Fee shall be increased by the sum of
Eighty Four Thousand Three Hundred Sixty Dollars ($84,360), such that the total
Termination Fee shall be One Hundred Sixty Eight Thousand Seven Hundred Twenty
Dollars ($168,720).

 

Insert
1.5  Base Rent

Base monthly rental (“Base Rent”) for the Premises
shall be payable on the first day of each month following the Commencement Date
as follows:

 

	
  Commencement Date — Month 3

  	
   

  	
  $0.425 per rentable square foot per month
  ($6,290 per month)

  
	
  Month 4 — Month 12

  	
   

  	
  $0.85 per rentable square foot per month
  ($12,580 per month)

  
	
  Month 13 — Month 24

  	
   

  	
  $0.90 per rentable square foot per month
  ($13,320 per month)

  
	
  Month 25 — Expiration Date

  	
   

  	
  $0.95 per rentable square foot per month
  ($14,060 per month)

  

 

If the Commencement Date is on any day other
than the first day of the month, then the rental abatement through Month 3 as
set forth above shall continue for a period of ninety (90) days from the
Commencement Date, and the Base Rent for Month 4 as set forth above shall
commence on the ninety first (91st) day following the Commencement
Date.  Lessee shall have the right to
use the relevant parking area identified as part of the Premises on Exhibit
A without charge.  The Base Rent
does not 

 

 

 

1.

 

include any charge for the use of the parking
area associated with either the Premises or Expansion Space, as applicable, and
the square footage of the parking area shall not be included within the
calculation of Base Rent at any time during the Term.

 

Insert
2.1  Letting.

is based on Building Owners and Managers
Association (“BOMA”) standards (ANSI/BOMA Z65.1-1996).

 

Insert 2.2
Condition.

Notwithstanding the foregoing, if such
non-compliance is of a latent nature, such one (1) year, six (6) month and
thirty (30) day time frames following the Start Date shall be modified to begin
when Lessee discovers such condition. 
Notwithstanding the foregoing, Lessor shall deliver the HVAC within the
Premises in its current, “as is” condition.

 

Insert 2.3
Compliance.

Notwithstanding the foregoing, if such
non-compliance is of a latent nature, such six (6) month time frames following
the Start Date shall be modified to begin when Lessee discovers such condition.

 

Insert 2.3(b)
Compliance.

then Lessor shall be fully responsible for
the cost thereof.

 

Insert
4.3  Common Area Maintenance Charges.

(a)           The term “Operating Expenses” shall mean (1) all
costs of ownership, management, operation and maintenance of the Project which
Lessor shall pay or become obligated to pay in connection with the ownership or
operation of the Building, including, without limitation: wages, salaries and
payroll burden of employees; property management fees (at the prevailing market
rate not to exceed 3%); janitorial, maintenance, guard and other services;
power, water, waste disposal and other utilities; materials and supplies;
maintenance and repairs; license costs; telephone wiring and other costs;
insurance premiums and the deductible portion of any loss insured under
Lessor’s liability, casualty, and other insurance; and depreciation on personal
property; landscaping, planting, driveway and parking area maintenance; and
reasonable and customary fees payable to third parties for architectural,
legal, accounting and other professional services, including, without
limitation, the cost of preparing any financial statement of Operating
Expenses; and (2) the cost of any capital improvements made to the Project
by Lessor after the Commencement Date that (i) are designed to reduce
other Operating Expenses, (ii) are required for the health and safety of
tenants in the Building, or (iii) are required under any governmental law
or regulation that was not applicable to the Building at the time it was
constructed, such cost or allocable portion thereof to be amortized over the
useful life of the relevant capital improvement in accordance with Generally
Accepted Accounting Principles. 
Operating Expenses shall not include: 
Property Taxes (as defined below); depreciation on the Building other
than depreciation on exterior window draperies provided by Lessor and carpeting
in public corridors and common areas; costs of tenants’ improvements; real
estate brokers’ commissions; interest; capital items other than those referred
to in clause (2) above; and the cost of providing services and utilities
for which reimbursement is due from other tenants. Notwithstanding the
foregoing, Operating Expenses shall not include the following: (1) alterations
attributable solely to tenants of the Building (excluding Lessee); (2) legal
expenses for disputes with tenants (excluding Lessee) and legal, auditing and
consulting fees, other than those legal, auditing and consulting fees incurred
in connection with the maintenance and operation of the Building; (3) the cost
incurred in performing work or furnishing services for individual tenants that
are in excess of work and services provided to Lessee under the Lease; (4)
expenses for repair or replacement paid by proceeds of condemnation awards or
covered by warranties, and any costs due to casualty, but in either case only
to the extent of the net warranty payments, net insurance proceeds, or net
condemnation awards actually received by Lessor; (5) expenses incurred in
leasing or procuring new tenants, including advertising expenses and expenses
for preparation of leases or renovating space for new tenants; (6)wages, costs
and salaries associated with home office, off-site employees of Lessor other
than professional services provided by such employees which would otherwise be
provided by outside professionals but only to the extent such services are
included at prevailing market rates, and wages, costs and salaries attributable
to employees of Lessor above the level of Building manager; (7) the cost of
correcting noncompliance with governmental codes and laws in effect at the time
of initial construction of the Building, Initial Lessee Improvements or
Alterations (as applicable); (8) insurance premiums to the extent any tenant
causes Lessor’s existing insurance premiums to increase or require Lessor to
purchase additional insurance, to the extent Lessor actually receives
reimbursement from such tenant; (9) any advertising or promotional expenses and
objects of art; (10) any cost representing an amount paid to an entity related
to Lessor for any service or product which is in excess of the 

 

2.

 

prevailing market
rate for such service or product; (11) payments for rented equipment, the cost
of which equipment would constitute a capital expenditure if the equipment were
purchased, but only to the extent such payments exceed the amortizing portion
of the equipment; (12) costs incurred due to violation by Lessor of any
condition, covenant or restriction affecting the Project or Building, or any
laws, rules, regulations or ordinances applicable to the Project or Building,
but not including noncompliance with governmental codes and laws which were not
in effect at the time of initial construction of the Building, Initial Lessee
Improvements or Alterations (as applicable); (13) late fees, penalties and
interest on past due amounts payable by Lessor; (14) the cost of any disputes
between Lessor and any employee or agency of Lessor, or any mortgagees or
ground lessors of Lessor, unless attributable to Lessee’s default; (15) costs
incurred by Lessor prior to the Commencement Date to remediate any violation of
applicable hazardous materials laws and regulations, including without
limitation, the removal of hazardous materials located on the Premises or in
the Building.

(b)           The term “Property Taxes” shall mean (i) all
taxes, assessments (special or otherwise), levies and other charges of any kind
or nature whatsoever, general and special, ordinary and extraordinary, foreseen
and unforeseen, now or hereafter imposed by any governmental or quasi-governmental
authority or special district having the direct or indirect power to tax or
levy assessments, which are levied or assessed for whatever reason against the
Project or any portion thereof, or Lessor’s interest herein, or the fixtures,
equipment and other property of Lessor that is an integral part of the Project
and located thereon, or Lessor’s business of owning, leasing or managing the
Project or the gross receipts, income or rentals from the Project,
(ii) all charges, levies or fees imposed by any governmental authority
against Lessor by reason of or based upon the use of or number of parking
spaces within the Project, the amount of public services or public utilities
used or consumed (e.g. water, gas, electricity, sewage or waste water
disposal) at the Project, the number of person employed by tenants of the
Project, the size (whether measured in area, volume, number of tenants or
whatever) or the value of the Project, or the type of use or uses conducted
within the Project, and all costs and fees (including attorneys’ fees)
reasonably incurred by Lessor in contesting any Property Tax and in negotiating
with public authorities as to any Property Tax, and (iii) and all real estate
tax consultant expenses and attorneys’ fees incurred for the purpose of maintaining
an equitable assessed valuation of the Project. Notwithstanding the foregoing,
the terms “Property Tax” or “Property Taxes” shall not include estate,
inheritance, transfer, gift or franchise taxes of Lessor or the federal or
state income tax imposed on Lessor’s income from all sources, and shall exclude
any item excluded from the definition of “Operating Expenses.”

(c)           The term “Common Area” shall mean the common areas of
the Project including Building lobby and public areas, and exterior common
areas including parking areas and parking structures, whether now existing or
in the future added to the Project for the common use of tenants.

(d)           The term “Lessee’s Percentage Share” shall mean the
percentage obtained by dividing the rentable area of the Premises by the total
rentable area of the Building or Project, as applicable.  In the event the rentable area of the
Premises is increased or decreased, Lessee’s Percentage Share shall be
appropriately adjusted.

(e)           Lessee shall also pay to Lessor throughout the term of
this Lease, an amount equal to the sum of (a) Lessee’s Percentage Share of
Operating Expenses paid or incurred by Lessor in such year, and (b) Lessee’s
Percentage Share of the total Property Taxes paid by Lessor in such year; provided,
however, that the total amount to be paid hereunder shall not exceed
the sum of $0.2273 per square foot of the Premises per month, which sum shall
be increased on an annual basis by three percent (3%).

Insert 6.2(c)
Lessee Remediation

Notwithstanding anything to the contrary
contained in this Lease (including, without limitation, the provisions of this
Paragraph 6.2(c)), Lessee shall have no obligation to remediate, clean up,
monitor, abate, or to comply with any law regarding, or to reimburse, release,
indemnify, or defend Lessor with respect to any Hazardous Substance which now
or hereafter becomes regulated by any governmental authority or agency thereof
and which Lessee did not store, dispose of, use, or cause to be on the Premises
in violation of any Applicable Requirements. 
If any Hazardous Substance are present in the Premises (or the
underlying soil or groundwater) and such presence was not caused by Lessee,
Lessor shall protect, indemnify, defend, and hold Lessee harmless from and
against any and all claims, liability, loss, proceedings, damages, causes of
action, cost, or expense (including attorneys’ fees) arising therefrom.

 

Insert 6.2(f)
Investigations and Remediations.

Notwithstanding the provisions of Paragraph
6.2(f), Lessor shall provide Lessee with at least 48 hours’ prior actual notice
before entering the Premises.  In the
event of an emergency, the determination of which shall require Lessor to be
reasonable, Lessor shall use its best efforts to provide Lessee with notice
reasonable in such situation.  In the
event of any entry by Lessor onto the Premises, Lessor shall use its best
efforts not to interfere with the conduct of Lessee’s business.

 

 

3.

 

 

Insert 6.3 Lessee’s Compliance with Applicable Requirements.

Notwithstanding the foregoing or anything to
the contrary contained in this Lease, Lessee shall not be responsible for
compliance with any Applicable Requirements where such compliance is not
related specifically to Lessee’s use and occupancy of the Premises.  For example, if any governmental authority
should require the Building or the Premises to be structurally strengthened
against earthquake, or should require the removal of asbestos from the
Premises, and such measures are imposed as a general requirement applicable to
all lessees rather than as a condition to Lessee’s specific use or occupancy of
the Premises, such work shall be performed by and at the sole cost of Lessor.

 

Insert 6.4 Inspection; Compliance.

Notwithstanding the provisions of Paragraph
6.4, Lessor shall provide Lessee with at least 48 hours’ prior actual notice
before entering the Premises.  In the
event of an emergency, the determination of which shall require Lessor to be
reasonable, Lessor shall use its best efforts to provide Lessee with notice
reasonable in such situation.  In the
event of any entry by Lessor onto the Premises, Lessor shall use its best
efforts not to interfere with the conduct of Lessee’s business.  Lessee shall have the right to have a
representative present during any entry into the Premises by Lessor.

 

Insert to 7.1(a) Lessee’s
Obligations.

Notwithstanding
anything to the contrary contained in this Lease, Lessee’s obligation to repair
or maintain shall not include the making of any capital repairs or improvements
unless, and to the extent, required due to Lessee’s negligence or willful
misconduct.  Lessee shall have no
obligation to repair or maintain the membrane of the roof except where damaged
by Lessee during the construction of the Initial Lessee Improvements, or as
otherwise caused by Lessee’s negligence or willful misconduct.

 

Insert to 7.1(b): Lessee’s
Obligations

Notwithstanding
anything to the contrary contained in this Lease, Lessee shall have no
obligation to procure or maintain contracts with respect to any exterior
portion of the Building or the Premises, such as landscaping, parking
maintenance or roof maintenance contracts.

 

Insert to 7.1(c)  Replacement

Notwithstanding
the foregoing, this Section 7.1(c) shall not be applicable to the cost of
replacement of the HVAC.

 

Insert to 7.2 Lessor’s
Obligations.

Notwithstanding anything to the
contrary contained in this Lease, Lessor shall be responsible to repair,
maintain and replace as necessary the building structure, support structure,
foundation, roof (structure), load bearing walls, building exterior, parking
grounds, landscaping, windows, skylights, plate glass, fences, retaining walls
and sidewalks.  Lessor shall, during the
term of this Lease, keep the exterior appearance of the Building in a first-class
condition consistent with the exterior appearance of other similar facilities
of comparable age and size in the vicinity, including, where necessary, the
exterior painting of the Building.

 

Insert 7.3(a) Definitions; Consent Required.

Notwithstanding any provision of this Lease
to the contrary, Lessee shall have the right to make such Alterations and
Utility Installations as Lessee determines is necessary for its initial
occupancy of the Premises (“Initial Lessee Improvements”).  Lessor hereby acknowledges and agrees that a
material portion of the consideration for Lessee’s agreement to lease the
Premises is Lessee’s ability to build-out the Building with improvements,
equipment and other alterations at Lessee’s control and discretion. Lessee hereby
approves the preliminary space drawing for the Initial Lessee Improvements
attached as Exhibit B to the Lease and made a part hereof, without
limiting any future right of Lessee to modify the same as it deems appropriate,
subject to Lessor’s reasonable approval. 
During the construction of the Initial Lessee Improvements, Lessor
shall, at its sole cost and expense, conduct testing of the Building for
asbestos and shall abate and remove the same, at its sole cost and expense, in
accordance with all Applicable Requirements prior to the completion of the
Initial Lessee Improvements, and in cooperation with Lessee’s
construction.  Lessor shall pay to
Lessee a tenant improvement allowance of Seventy Four Thousand Dollars
($74,000) (“Allowance”) upon demand, which shall be accompanied by an
invoice and evidence of payment of the relevant items, by Lessee 

 

 

4.

 

which shall be used towards payment of the
Initial Lessee Improvements.  Lessor
shall review and approve any plans, specifications or drawings submitted for
approval with respect to the Initial Lessee Improvements within five (5) days
of receipt of the same, and if Lessor fails to either approve or reasonably
disapprove the same within such five (5) day period, then the same shall be
deemed approved.  If Lessor reasonably
disapproves of any aspect of Lessee’s plans and specifications for the Initial
Lessee Improvements, Lessor shall set forth in particularity the reasons
therefor.  Lessor agrees that any disapproval
shall be deemed unreasonable unless Lessor can provide demonstrable evidence of
a decline in value in the Project as a result of the proposed Initial Lessee
Improvements, or some other material cause for the disapproval.  Notwithstanding any other provision of this
Lease to the contrary, if Lessor continues to fail to approve the plans and
specifications for the Initial Lessee Improvements for a period of forty-five
(45) days after the submission of the same, then Lessee shall have the right at
any time thereafter to terminate this Lease by providing written notice thereof
to Lessor, and upon receipt of such notice this Lease shall terminate, and
Lessor shall promptly thereafter return all sums previously paid or deposited
by Lessee to Lessor.

 

Insert 7.4 Ownership; Removal; Surrender; and Restoration.

Notwithstanding the provisions of paragraph 7
or any other provision of the Lease to the contrary, Lessee shall have the
right, in its sole and absolute discretion, at the termination or earlier
expiration of the Lease to either leave in place or remove any improvements and
fixtures installed by Lessee in, on or about the Premises pursuant to Lessee’s
repair obligations under this Lease, any of the Initial Lessee Improvements,
any Alterations or other alterations, improvements, additions, or any Utility
Installations. Lessor hereby acknowledges and agrees that the term
“Alterations” as used herein shall include, without limitation, any of the
following which may be installed by Lessee within the Premises: biosafety
cabinets, chemical fume hoods, casework, walk-in coldboxes and
storage/warehouse racks.  In the event
that Lessee elects to leave in place any of the above items at the expiration
or earlier termination of the Lease, and Lessor must remove such items to
prepare the space for subsequent tenant(s), then Lessee shall reimburse Lessor
up to the sum of Seventy Five Thousand Dollars ($75,000) for any costs actually
incurred by Lessor for such removal within the initial Premises, and up to the
sum of Seventy Five Thousand Dollars ($75,000) for any costs actually incurred
by Lessor for such removal within the Expansion Space.  Lessee shall reimburse Lessor for such
amounts within thirty (30) days of receipt of a demand therefor, which demand
shall be accompanied by an invoice of work performed together with evidence of
payment for the same by Lessor.

 

Insert 7.5:  Lessor Lien

Lessor waives any and all
rights, title and interest Lessor now has, or hereafter may have, whether
statutory or otherwise, to Lessee’s inventory, equipment, furnishings, trade
fixtures, books and records, personal property, and Lessee improvements paid
for by Lessee located at the Premises (singly and/or collectively, the
“Collateral”). Lessor acknowledges that Lessor has no lien, right, claim,
interest or title in or to the Collateral. Lessor further agrees that Lessee
have the right, at its discretion, to mortgage, pledge, hypothecate or grant a
security interest in the Collateral as security for its obligations under any
equipment lease or other financing arrangement related to the conduct of
Lessee’s business at the Premises. Lessor further agrees to execute and deliver
within three (3) business days any UCC filing statement or other documentation
required to be executed by Lessor in connection with any such lease or
financing arrangement, and any real estate consent or waiver forms submitted by
any vendors, equipment lessors, chattel mortgagees, or holders or owners of the
Collateral setting forth, inter-alia that Lessor waives, in favor of
such party any superior lien, claim, interest or other right therein.

The Collateral shall not become the property
of Lessor or a part of the realty no matter how affixed to the Premises and may
be removed by Lessee or any equipment lessors at any time and from time to time
during the entire term of this Lease. Lessee shall promptly repair any damage
caused by the removal of such property, whether effected by Lessee or equipment
lessors.

 

Insert 8.8  Exemption of Lessor
from Liability.

Except to the extent caused by the negligence
or willful misconduct of Lessor, or a breach by Lessor under this Lease,

 

Inset 9.6(c)  Abatement of Rent;
Lessee’s Remedies.

Notwithstanding anything to the contrary
contained herein, if Lessee’s use of the Premises is substantially impaired for
a period of more than 120 days after the date of casualty, Lessee shall have
the right to terminate this Lease by written notice to Lessor at any time
thereafter until Lessee’s use of the Premises is substantially restored.

 

 

5.

 

 

Insert 10.1(c)  Lessee’s Right
to Contest Taxes.

Lessee, at its
cost, shall have the right at any time to seek a reduction in or otherwise
contest any Taxes for which it is obligated to reimburse Lessor pursuant to
this Article, by action or proceeding against the entity with authority to
assess or impose the same.

Lessor shall
not be required to join in any proceeding or action brought by Lessee unless
the provisions of applicable Regulations require that such proceeding or action
be brought by or in the name of Lessor, in which event Lessor shall join in
such proceeding or action or permit it to be brought in Lessor’s name, provided
that Lessee protect, indemnify, and hold Lessor free and harmless from and against
any liability, cost or expense in connection with such proceeding or contest.

Lessee shall continue, during the pendency of
such proceeding or action, to pay the Taxes due as determined by Lessor
pursuant to this Article 11.  If Lessee
is successful in such action or proceeding, Lessor shall reimburse to Lessee
lessee’s share of the reduction in Taxes realized by Lessee in such contest or
proceeding within ten (10) days after the amount of such reduction has been
determined.

 

Insert 12.1(b) Permitted Transfers.

Notwithstanding anything to the contrary
contained in this Lease, provided that the net worth of the succeeding entity
is not less than 75% of the Net Worth of Lessee, Lessee may assign this Lease
or sublet the Premises, or any portion thereof, without Lessor’s consent, but
with notice to Lessor accompanied by the current financial information of the
proposed succeeding entity, to any entity which controls, is controlled by, or
is under common control with Lessee; to any entity which results from a merger
of, reorganization of, or consolidation with Lessee; to any entity engaged in a
joint venture with Lessee; or to any entity which acquires substantially all of
the stock or assets of Lessee, as a going concern, with respect to the business
that is being conducted in the Premises (hereinafter each a “Permitted
Transfer”).  In addition, a sale or
transfer of the capital stock of Lessee shall be deemed a Permitted Transfer if
(1) such sale or transfer occurs in connection with any bona fide
financing or capitalization for the benefit of Lessee, or (2) Lessee is or
becomes a publicly traded corporation. 
Lessor shall have no right to terminate the Lease in connection with,
and shall have no right to any sums or other economic consideration resulting from
any Permitted Transfer.

 

Insert 13.2  Remedies.

fifteen (15) days after written notice to
Lessee, unless a longer period of time is required to cure the same, in which
case Lessee shall have such longer period of time to perform the same so long
as Lessee has commenced to perform within such fifteen (15) day period and
diligently performs the same to completion,

 

Insert 32 Lessor’s Access; Showing Premises; Repairs.

Notwithstanding the provisions of Paragraph
32, Lessor shall provide Lessee with at least 48 hours’ prior actual notice
before entering the Premises.  In the
event of an emergency, the determination of which shall require Lessor to be
reasonable, Lessor shall use its best efforts to provide Lessee with notice
reasonable in such situation.  In the
event of any entry by Lessor onto the Premises: (a) Lessee shall have the right
to have a representative present, (b) Lessor shall use its best efforts not to
interfere with the conduct of Lessee’s business and shall comply with any
reasonably security and safety measures and procedures by Lessee, and (c)
Lessee shall have the right to restrict access from its laboratories and other
areas which Lessor does not have a valid reason to enter.  Additionally, notwithstanding anything in
this Lease to the contrary, in the event Lessee’s use or occupancy of the
Premises is substantially impaired due to Lessor’s entry into the Premises or
by any work performed by or at the direction of Lessor and such impairment
continues for a period of four (4) or more consecutive days, then the Rent and
any additional rent payable by Lessee shall abate until such impairment ceases.

 

Insert
42:  Reservations.

Lessor’s rights pursuant to this Paragraph 42
shall be subject to the condition that exercise of any of such rights shall not
reduce Lessee’s number of parking spaces or otherwise unreasonably interfere
with Lessee’s use of the Premises.

Insert 50  Options to Extend.

(a)  Grant and Exercise.  Lessee shall have five (5) options to extend the term of this Lease
(each an “Option to Extend”) for an additional one year each (each an “Extended
Term”) upon all the same terms and conditions of this Lease, excepting only
that Base Rent shall be determined as provided below.  Each Option to Extend shall be exercised by Lessee’s giving
notice of such exercise to Lessor not less than four (4) months prior to the
expiration of the term then in effect (i.e. the initial term or the first
Extended Term).

 

6.

 

(b)  Base Rent during Extended Term.

                (i)            For purposes hereof, “Adjustment
Date” means the date which is the commencement date of  each Extended Term.  On each Adjustment Date, the monthly Base
Rent payable for the twelve calendar months following such Adjustment Date
shall be determined as follows:  Take
the monthly Base Rent in effect immediately prior to such Adjustment Date and
multiply it by a fraction, the numerator of which is the CPI Index (hereinafter
defined) published for the calendar month which commenced three months prior to
such Adjustment Date and the denominator of which is the CPI Index published
for that same calendar month one year earlier. 
(Thus, for example, the Base Rent payable for the twelve month period
commencing on the first Adjustment Date shall be $0.95 per square foot
multiplied by a fraction, the numerator of which shall be the CPI Index
published for approximately August, 2006, and the denominator of which shall be
the CPI Index published for approximately August, 2005.)  Notwithstanding the foregoing, in no event
shall the monthly Base Rent in effect after any adjustment be more than 8% nor
less than 3% greater than the monthly Base Rent in effect immediately prior to
such adjustment.

                (ii)           As used herein, “CPI
Index” means the United States Department of Labor’s Bureau of Labor
Statistics’ Consumer Price Index, All Urban Consumers and Clerical Workers, All
Items, published for the San Francisco-Oakland-San Jose Area (1982-84 = 100),
or the successor to such index.  If such
index is discontinued entirely, Lessor and Lessee shall agree to another
mutually acceptable index used to track changes in the cost of living in the
San Francisco Bay Area.

(c)  Operating Expenses during Extended
Term.  Lessee shall also pay to Lessor during each Extended Term of this
Lease, an amount equal to the sum of (a) Lessee's Percentage Share of
Operating Expenses paid or incurred by Lessor in such year, and
(b) Lessee's Percentage Share of the total Property Taxes paid by lessor
in such year, provided, however,
that the total amount to be paid hereunder shall not exceed the sum of per
square foot Operating Expenses and Property Taxes of the Premises per month, at
the time of expiration of the Initial Term, which sum shall be increased on an
annual basis by a maximum three percent (3%).

Insert 51  Right to Expand.

Lessor currently leases the building adjacent
to the Premises which is comprised of approximately 17,000 rentable square
feet, as such premises are shown on Exhibit C attached hereto and made a
part hereof (“Expansion Space”) to a third party tenant pursuant to a lease
which is scheduled to expire on May 7, 2002. 
Lessor hereby grants to Lessee the right to lease the Expansion Space
(“Expansion Right”) upon the terms and conditions contained herein.  Lessee shall exercise the Expansion Right by
providing written notice thereof to Lessor on or before February 1, 2002.  If Lessee exercises the Expansion Right,
Lessor and Lessee shall promptly thereafter enter into an amendment to this Lease
which shall provide the following:  (i)
the commencement date for the Expansion Space shall be May 1, 2002 (“Expansion
Space Commencement Date”); (ii) the Expansion Space shall be included into the
term “Premises” as used in this Lease from and after the Expansion Space
Commencement Date; (iii) the monthly Base Rent shall be increased to include
the Expansion Space, at the same per rentable square foot rate then in effect
for the Premises; (iv) Lessee shall receive a rental abatement equal to 50% of
the Base Rent for the Expansion Space for a period of three (3) months
following the Expansion Space Commencement Date if Lessee performs tenant
improvements in the Expansion Space; (v) Lessor shall pay Lessee a tenant
improvement allowance equal to $5 per rentable square foot within the Expansion
Space (i.e., up to the amount of $85,000), which shall be payable by Lessor
upon demand, which demand shall be accompanied by an invoice and evidence of
payment of the relevant items; (vi) Lessee shall have the same rights with
respect to the build-out and surrender of the Expansion Space as applicable to
the Premises, and wherever the term “Initial Lessee Improvements” is used
within the Lease, it shall be deemed to include the initial tenant improvements
made by Lessee within the Expansion Space; and (vii) Lessee shall have the
right to construct a second floor within the Expansion Space (“Second Floor”),
and if Lessee elects to construct the Second Floor, then (a) Lessor shall
provide Lessee with a tenant improvement allowance equal to $5 per rentable square
foot within the Second Floor, and (b) there shall be no increase in the Base
Rent to reflect any increase in the size of the Expansion Space as a result of
the construction of the Second Floor.

 

 

	
  LESSOR:

  	
   

  	
  LESSEE:

  
	
   

  	
   

  	
   

  
	
  California Development,
  Inc., 

  a California corporation

  	
   

  	
  Cerus Corporation,

  a Delaware corporation

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ DONALD
  J. BRUZZONE

  	
   

  	
  By:

  	
  /s/ HOWARD
  ERVIN

  
	
   

  	
   

  	
   

  
	
  Its:

  	
  Pres.

  	
   

  	
  Its:

  	
  V.P., Legal
  Affairs

  
	
   

  	
   

  	
   

  

 

 

 

7.

 

 

EXHIBIT A

 

 

 

 

[Diagram of Floor Plan]

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT B

 

 

 

 

[Diagram of Floor Plan]

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT C

 

 

 

 

[Diagram of Floor Plan]

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