Document:

EX-10.3

EXHIBIT 10.3

AIR
COMMERCIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL

SINGLE-TENANT LEASE — NET

(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1. Basic Provisions (“Basic Provisions”).

     1.1 Parties. The Lease (“Lease”), dated for reference purposes only August 1, 2005, is
made by and between Kandamerica, Inc., a California Corporation

 (“Lessor”) and Osmetech
 (“Lessee”), (collectively the “Parties,” or individually a “Party”).

     1.2 Premises. That certain real property, including all improvements therein to be provided by
Lessor under the terms of this Lease, commonly known as 126  —  130 West Del Mar Boulevard,
Pasadena, located in the County of Los Angeles, 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) a freestanding, one story building of approximately 8,356 square
feet, with a parking lot for 52 on-site parking places.

 (“Premises”). (See also Paragraph 2)

     1.3 Term. three (3) years and no months (“Original Term”) commencing
August 1, 2005 (“Commencement Date”) and ending July 31, 2008
(“Expiration Date”). (See also Paragraph 3)

     1.4 Early Possession.
                     
                 

(“Early Possession Date”). (See also Paragraphs 3.2 and 3.3)

     1.5 Base Rent. $18,383.20 per month (“Base Rent”), payable on the first
(1st) day of each month commencing August 1, 2005. (See also Paragraph 4)

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

     1.6 Base Rent and Other Monies Paid Upon Execution.

          (a) Base Rent: $18,383.20 for the period August 1 through August 31, 2005.

          (b) Security Deposit: $19,887.28 (“Security Deposit”). (See also Paragraph 5)

          (c) Association Fees: $ n/a for the period
         
                    

          (d) Other: $ n/a for                     
              
                    .

          (e) Total Due Upon Execution of this Lease: $38,270.48.

     1.7 Agreed Use. Any and all lawful uses permitted by applicable zoning ordinances.
(See also Paragraph 6)

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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     1.8 Insuring Party. Lessor is the “Insuring Party” unless otherwise stated herein. (See also
Paragraph 8)

     1.9 Real Estate Brokers. (See also Paragraph 15)

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

þ
   Pollard Properties represents Lessor exclusively (:Lessor’s Broker”);

o                                             represents Lessee exclusively (“Lessee’s Broker”); or

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

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

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

     1.11 Attachments. Attached hereto are the following, all of which constitute a part of this Lease:

þ an Addendum consisting of Paragraphs 51 through 71;

o    a plot plan depicting the Premises;

o    a current set of the Rules and Regulations;

o    a Work Letter;

o
   other (specify):
 

 

.. 

2. Premises.

     2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon a!! of the terms, covenants and conditions set
forth in this Lease. Unless otherwise provided herein, any statement of size set forth in this
Lease, or that may have bean used in calculating Rant, is an approximation which the Parties agree
is reasonable and any payments based thereon are not subject so revision whether or not the actual
size is more or less. Note: Lessee is advised to verify the actual size prior to executing this
Lease.

     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 first occurs (“Start Date”), and, so
long as (he required service contracts described in Paragraph 7.1(b) below are obtained by Lessee
and in effect within thirty days following the Start Date, warrants that the existing electrical,
plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”),
loading doors, sump pumps, 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 at 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, or if one of such systems or elements should malfunction or fail within the
appropriate warranty period, Lessor shall, as Lessor’s sole obligation with respect to such matter,
except as otherwise provided in the Lease, promptly after receipt of written

 
	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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notice from Lessee setting forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor’s expense. The warranty periods shall be as follows:
(i) 6 months as to the HVAC systems, and (ii) 30 days as to the remaining systems and other
elements of the Building. If Lessee does not give Lessor the required notice within the appropriate
warranty period, correction of any such non-compliance, malfunction or failure shall be the
obligation of Lessee at Lessee’s sole cost and expense.

     2.3 Compliance. Lessor warrants that the improvements on the premises comply with the building
codes, applicable laws, covenants or restrictions of record, regulations, and ordinances
(“Applicable Requirements”) that were in effect at the time that each improvement, or portion
thereof, was constructed. Said warranty does not apply to the use to which Lessee will put the
Premises, modifications which may be required by the Americans with Disabilities Act or any similar
laws as a result of Lessee’s use (see Paragraph 50), or to any Alterations or Utility Installations
(as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the Applicable Requirements, and especially the zoning, are appropriate
for Lessee’s intended use, and acknowledges that past uses of the Premises may no longer be
allowed. If the Premises do not comply with said warranty, Lessor shall, except as otherwise
provided, promptly after receipt of written notice from Lessee setting forth with specificity the
nature and extent of such non-compliance, rectify the same at Lessor’s expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within 6 months following the
Start Date, correction of that non-compliance shall be the obligation of Lessee at Lessee’s sole
cost and expense. If the Applicable Requirements are hereafter changed so as to require during the
term of this Lease the construction of an addition to or an alteration of the Premises and/or
Building, or the reinforcement or other physical modification of the Unit, Premises and/or Building
(“Capital Expenditure”), Lessor and Lessee shall allocate the cost of such work as follows:

          (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result
of the specific and unique use of the Premises by Lessee as compared with uses by tenants in
general, Lessee shall be fully responsible for the cost thereof, provided, however that if such
Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds
6 months’ Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within 10 days after receipt of Lessee’s termination notice. If Lessee elects termination,
Lessee shall immediately cease the use of the premises which requires such Capital Expenditure and
deliver to Lessor written notice specifying a termination dale at feast 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) such Capital Expenditure is not the result of the specific and unique use of the Premises
by Lessee (such as, governmentally mandated seismic modifications), then Lessor, provided, however,
that if such Capital Expenditure is required during the last 2 years of this Lease or if Lessor
reasonably determines that it is not economically feasible to pay its share thereof, Lessor shall
have the option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee
notifies Lessor, in writing, within 10 days after receipt of Lessor’s termination notice that
Lessee will pay for such Capital Expenditure. If Lessor does not elect to terminate, and falls to
tender its share of any such Capital Expenditure, Lessee may advance such funds and deduct same,
with interest, from Rent until Lessor’s share of such costs have been fully paid. If Lessee is
unable to finance Lessor’s share, or if the balance of the Rent due and payable for the remainder
of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the
right to terminate this Lease upon 30 days written notice to Lessor.

          (c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to
apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital
Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use,
change in intensity of use, or modification to the Premises then, and in that event, Lessee shall
either: (i) immediately cease such changed use or intensity of use and/or take such other steps as
may be necessary to eliminate the requirement for such Capital Expenditure, or (ii) complete such
Capital Expenditure at its own expanse. Lessee shall not, however, have any right to terminate this
Lease.

     2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor and/or
Brokers to satisfy itself with respect to the condition of the Premises (including but not limited
to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements and the Americans with Disabilities Act), and their suitability for
Lessee’s intended use, (b) Lessee has made such

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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investigation as it deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to its occupancy of the Premises, and (c) neither Lessor, Lessor’s
agents, nor Brokers have made any oral or written representations or warranties with respect to
said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (i)
Brokers have made no representations, promises or warranties concerning Lessee’s ability to honor
the Lease or suitability to occupy the Premises, and (ii) it is Lessor’s sole responsibility to
investigate the financial capability and/or suitability of all proposed tenants.

     2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor ;n 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. It 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
Properly Taxes and insurance premiums and to maintain the Premises) shall, however, be in effect
during such period. Any such early possession shall not affect the Expiration Date.

     3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to
deliver possession of the Premises to Lessee by the Commencement Date. If. despite said efforts,
Leassor is unable to deliver possession by such date, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent or perform its other obligations until Lessor delivers possession of the
Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from
the date of delivery of possession and continue for a period equal to what Lessee would otherwise
have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of
Lessee. If possession is not delivered within 60 days after the Commencement Date, Leases may, at
its option, by notice in writing within 10 days after the end of such 60 day period, cancel this
Lease, in which event the Parties shall be discharged from all obligations hereunder. If such
written notice is not received by Lessor within said 10 day period, Lessee’s right to cancel shall
terminate. If possession of the Premises is not delivered within 120 days after the Commencement
Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in
writing.

     3.4 Lessee Compliance. Lessor shall not be required to deliver possession of the Premises to
Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5).
Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under
this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor’s
election to withhold possession pending receipt of such evidence of insurance.

___1 insert: will pay for such capital expenditures

___2 insert: shall be solely responsible for the cost thereof

___3 insert: funds for the

___4 insert: or willing

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 on or before the day on which it is due, without offset or deduction (except as
specifically permitted in this Lease). Rent for any period during the term hereof which is for less
than one full calendar month shall be

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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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 item 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 staling. In the event that any check, draft, or other instrument of payment given by
Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in
addition to any Late Charge and Lessor, at its option, may require all future payments to be made
by Lessee to be by cashier’s check. Payments will be applied first to accrued late charges and
attorney’s fees, second to accrued interest, then to Base Rent and Operating Expense increase, and
any remaining amount to any other outstanding charges or costs.

     4.3 Association Fees. In addition to the Base Rent, Lessee shall pay to Lessor each month an
amount equal to any owners association or condominium fees levied or assessed against the Premises.
Said monies shall be paid at the same time and in the same manner as the Base Rent.

5. Security Deposit. Lessee shall deposit with Lesser 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 far any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall
within 10 days after written request therefor deposit monies with Lessor sufficient to restore said
Security Deposit to the full amount required by this Lease. Should the Agreed Use be amended to
accommodate a malaria; change in the business of Lessee or to accommodate a sublessee or assignee,
Lessor shall have the right to increase the Security Deposit to the extent necessary, in Lessor’s
reasonable judgment, to account for any increased wear and tear that this Premises may suffer as a
result thereof. Lessor shall not be required to keep the Security Deposit separate from its general
accounts. Within 14 days after the expiration or termination of this Lease, if Lessor elects to
apply the Security Deposit only to unpaid Rent, and otherwise within 30 days alter the Premises
have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of !he
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 of 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 no! use or
permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance,
or that disturbs occupants of or causes damage so neighboring premises or 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/or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after
such request give written notification of same, which notice shall include an explanation of
Lessors objections to the change in the Agreed Use.

     6.2 Hazardous Sustances.

          (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 (or potential liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substances shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a
Reportable Use of Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee’s expense) with all Applicable Requirements. “Reportable Use” shall
mean (i) the installation or use of any above or below ground
storage tank, (ii) the generation,
possession, storage, use, transportation or disposal of a Hazardous Substance that requires a
permit from, or with respect to which a report, notice, registration or business plan is required
to be filed

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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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, ordinary office supplies (copier loner, liquid paper, glue,
etc.) and common household cleaning materials, so long as such use is in compliance with all
Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring
property to any meaningful risk of contamination or damage or expose Lessor to any liability
therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such
additional assurances as Lessor reasonably deems necessary to protect itself, the public, the
Premises and/or the environment against damage, contamination, injury and/or liability, including,
but not limited to, the installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the Security Deposit.

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

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

          (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents,
employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expenses, penalties, and 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 not caused or contributed to by Lessee). 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
Leases from its obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the lime 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 result from Hazardous Substances
which existed on the Premises prior to Lessee’s occupancy 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 snail 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 Lessee’s occupancy,
unless such remediation measure is required as a result of Lessee’s use (including “Alterations”,
as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible
for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor,
including allowing Lessor and Lessor’s agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor’s investigative and remedial responsibilities.

          (g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e))
occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by the Applicable Requirements
and this Lease shall continue in

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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

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

     6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and
consultants shall have the right to enter into Premises at any time, in the case of an emergency,
and otherwise at reasonable times after reasonable notice, for the purpose of inspecting the
condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any
such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or a
Hazardous Substance Condition (see paragraph 9.1) is found to exist or be imminent, or the
inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon
request reimburse Lessor for the cost of such inspection, so tong as such inspection is reasonably
related to the violation or contamination. In addition, Lessee shall provide copies of alt relevant
material safety data sheets (MSDS) to Lessor within 10 days of the receipt of a written request
therefor.

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

     7.1 Lessee’s Obligations.

     (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3
(Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or
Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations (intended for Lessee’s exclusive use, no matter where located), and
Alterations in good order, condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily accessible to
Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior
use, the elements or the age of such portion of the Premises), including, but not limited to, all
equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities,
boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior),
foundations, ceilings, roofs, the roof to the extent that any repair or maintenance arises from
penetrations of the roof by Lessee or any act or omission of Lessee or its agents after entering
the roof, floors, windows, doors, plate glass, skylights, landscaping, driveways, parking lots,
fences, retaining walls, signs, sidewalks and parkways located in, on, or adjacent to the Premises.
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

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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thereof in good order, condition and state of repair. Lessee shall, during the term of this Lease,
keep the exterior appearance of the Building in a first-class condition (including, e.g. graffiti
removal) consistent with the exterior appearance of other similar facilities of comparable age and
size in the vicinity, including, when necessary, the exterior repainting of the Building.

     (b) Service Contracts. Lessee shall, at Lessee’s sote 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) fire extinguishing systems, including fire alarm
and/or smoke detection, (iii) landscaping and irrigation systems, (iv) clarifiers (v) basic utility
feed to the perimeter of the Building, and (vi) any other equipment, if reasonably required by
Lessor. However, Lessor reserves the right, upon notice to Lessee, to procure and maintain any or
all of such service contracts, and if Lessor so elects, Lessee shall reimburse Lessor, upon demand,
for the cost thereof.

     (c) Failure to Perform. If Lessee fails to perform Lessee’s obligations under this Paragraph
7.1, Lessor may enter upon the Premises after 30 days’ prior written notice to Lessee (except in
the case of an emergency, in which case no notice shall be required), perform such obligations on
Lessee’s behalf, and put the Premises in good order, condition and repair, and Lessee shall
promptly pay to Lessor a sum equal to 115% of the cost thereof.

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

     7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance), 7.1 (Lessee’s obligation), 9 (Damage or Destruction) and 14 (Condemnation), Lessor
shall, at Lessor’s sole expense, keep the structural elements, mechanical systems, exterior and
utility installations of the Premises in good order, condition and repair. 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.

     7.3 Utility Installations; Trade Fixtures; Alterations.

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

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

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

     7.4 Ownership; Removal; Surrender; and Restoration.

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

          (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not
later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all
Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of
this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent.

          (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
and damage by casualty or condemnation excepted. “Ordinary wear and tear” shall not include any
damage or deterioration that would have been prevented by good maintenance practice.
Notwithstanding the foregoing, if this Lease is for 12 months or less, then Lessee shall surrender
the Premises in the same condition as delivered to Lessee on the Start Date with NO allowance for
ordinary wear and tear. Lessee shall repair any damage occasioned by the installation, maintenance
or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings,
and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall
completely remove from the Premises any and all Hazardous Substances brought onto the Premises by
or for Lessee, or any third party (except Hazardous Substances which were deposited via underground
migration from areas outside at the Premises, or if applicable, the Project) even if such removal
would require Lessee to perform or pay for work that exceeds statutory requirements. Trade Fixtures
shall remain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee
not removed on or before the 30 days following the Expiration Date or any earlier termination date
shall be deemed lo have been abandoned by Lessee and may be disposed of or retained by Lessor as
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by Lessee to timely vacate the premises pursuant to this Paragraph 7.4(c) without the express
written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below.

8. Insurance; Indemnity.

     8.1 Payment 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 Lease term shall be prorated to correspond to the Lease term.
Payment shall be made by Lessee to Lessor within 30 days following receipt of an invoice.

     8.2 Liability Insurance.

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

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

     8.3 Property Insurance — Building, Improvements and Rental Value.

          (a) Building and improvements. Lessor shall obtain and keep in force a policy or policies in
the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender insuring loss
or damage to the Premises. The amount of such insurance shall be equal to the full replacement cost
of the Premises, as the same shall exist from time to time, or the amount required by any Lender,
but in no event more than the commercially reasonable and available insurable value thereof. Lessee
Owned Alterations and Utility Installations, Trade Fixtures, and Lessee’s personal properly shall
be insured by Lessee under Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks of direct physical
loss or damage (except the perils of flood and/or earthquake unless required by a Lender),
including coverage for debris removal and the enforcement of any Applicable Requirements requiring
the upgrading, demolition, reconstruction or replacement of any portion of the premises as the
result of a covered loss. Said policy of policies shall also contain an agreed valuation provision
in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an
increase in the annual properly insurance covarage 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. The Insuring Party shall obtain and keep in force a policy or policies in
the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent
for one year with an extended period of indemnity for an additional 180 days (“Rental Value
insurance”). Said insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent
otherwise payable by Lessee, for the next 12 month period. Lessee shall be liable for any
deductible amount in the event of such loss.

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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     8.4 Lessee’s Property; Business interruption Insurance.

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

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

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

     8.5 insurance Policies. Insurance required herein shall be by companies duly licensed or
admitted to transact business in the state where the Premises are located, and maintaining during
the policy term a “General Policyholders Rating” of at least B+, V, as set forth in the most
current issue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender.
Lessee shall not do or permit to be done anything which invalidates the required insurance
policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of
such insurance or certificates evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable or subject to modification except after 30 days prior written
notice to Lessor. Lessee shall, at least 30 days prior to the expiration of such policies, furnish
Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, failing which
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 Parly shall fail to
procure and maintain the insurance required to be carried by it, the other Party may, but shall not
be required to, procure and maintain the same.

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

     8.7 Indemnity. Except for Lessor’s gross negligence or willful misconduct, Lessee shall
indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s master
or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or
damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities
arising out of, involving, or in connection with, the use and/or occupancy of the Premises by
Lessee; provided, however, Lessee’s indemnity hereunder shall not extend to such claims, loss of
rent and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses of
liabilities which are excluded from coverage under the standard exceptions to Lessee’s insurance
policies. 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 Lessee’s insurer and Lessor shall cooperate with Lessee in such defense. Lessor
need not have first paid any such claim in order to be defended or indemnified.

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

     8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on its part to obtain
or maintain the insurance required herein will expose Lessor to risks and potentially cause Lessor
to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to
ascertain. Accordingly, for any month or portion thereof that Lessee does not maintain the required
insurance and/or does not provide Lessor with the required binders or certificates evidencing the
existence of the required insurance, the Base Rent shall be automatically increased, without any
requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100,
whichever is greater. The parties agree that such increase in Base Rent represents fair and
reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee’s
failure to maintain the required insurance. Such increase in Base Rent shall in no event constitute
a waiver of Lessee’s Default or Breach with respect to the failure to maintain such insurance,
prevent the exercise of any of the other rights and remedies granted hereunder, nor relieve Lessee
of its obligation to maintain the insurance specified in this Lease.

9. Damage or Destruction.

     9.1 Definitions.

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

          (b) “Premises Total Destruction” shall mean damage or destruction to the Premises, other than
Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be
repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify Lessee
in writing within 30 days from the date of the damage or destruction as to whether or not the
damage is Partial or Total.

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

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

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

     9.2 Partial Damage — Insured Loss. If a Premises Partial Damage that is an Insured Loss
occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures
or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this
Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair of which is $10,000
or less, and, in such event, Lessor shall make any applicable insurance proceeds available to
Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required
insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the
insuring Party shall promptly

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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contribute the shortage in proceeds (except as to the deductible which is Lessee’s responsibility) as and when required to complete said repairs. In the event, however, such shortage was due to the fact that,
by reason of the unique nature of the improvements, full replacement cost insurance coverage was
not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage
in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides
Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following
receipt of written notice of such shortage and request therefor. If Lessor receives said funds or
adequate assurance thereof within said 10 day period, the party responsible for making the repairs
shall complete them as soon as reasonably possible and this Lease shall remain in full force and
effect. If such funds or assurance are not received, Lessor may nevertheless elect by written
notice to Lessee within 10 days thereafter to: (i) make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall
remain in full force and effect, or (ii) have this Lease terminate 30 days thereafter. Lessee shall
not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds of any such
insurance shall be made available for the repairs if made by either Party.

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

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

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

     9.6 Abatement of Rent; Lessee’s Remedies.

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

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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

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

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

10. Real Property Taxes.

     10.1 Definition. As used herein, the term “Real Property Taxes” shall include any form of
assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other
than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed
upon or levied against any legal or equitable interest of Lessor in the Premises or the Project,
Lessor’s right to other income therefrom, and/or Lessor’s business of leasing, by any authority
having the direct or indirect power to tax and where the funds are generated with reference to the
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. Real Property Taxes
shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) 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, and (ii) levied or assessed on machinery or equipment provided by
Lessor to Lessee pursuant to this Lease.

     10.2 Payment of Taxes. In addition to Base Rent, Lessee shall pay to Lessor an amount equal to
the Real Property Tax installment due at least 20 days prior to the applicable delinquency date. If
any such installment shall cover any period of time prior to or after the expiration or termination
of this Lease, Lessee’s share of such installment shall be prorated. In the event Lessee incurs a
late charge on any Rent payment, Lessor may estimate the current Real Property Taxes, and require
that such taxes be paid in advance to Lessor by Lessee monthly in advance with the payment of the
Base Rent. Such monthly payments 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
installment 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 sum as is
necessary. Advance payments may be intermingled with other moneys of Lessor and shall not bear
interest. In the event of a Breach by Lessee in the performance ol its obligations under this
Lease, than any such advance payments may be treated by Lessor as an additional Security Deposit.

     10.3 Joint Assessment. If the Premises are not separately assessed, Lessee’s liability shall
be an equitable proportion of the Real Property Taxes for all of the land and improvements included
within the tax parcel assessed, such proportion to be 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 its
Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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property of Lessor. If any of Lessee’s said property shall be assessed with Lessor’s real property,
Lessee shall pay Lessor the taxes attributable to Lessee’s property within 10 days after receipt of
a written statement setting forth the taxes applicable to Lessee’s property.

11. Utilities and Services. 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 or billed to Lessee, Lessee shall pay a
reasonable proportion, to be determined by Lessor, of all charges jointly metered or billed. There
shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever for the
inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Lessor’s reasonable control or in
cooperation with governmental request or directions.

12. Assignment and Subletting.

     12. Lessor’s Consent Required.

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

          (b) Unless Lessee is a corporation and its stock is publicly traded on a national stock
exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The
transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a
change in control for this purpose.

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

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

     12.2 Terms and Conditions Applicable to Assignment and Subletting.

          (a) Regardless of Lessor’s consent, no assignment or subletting shall: (i) be effective
without the express written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other obligations to be
performed by Lessee.

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

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

          (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against
Lessee, any Guarantors or anyone else responsible for the performance of Lessee’s obligations under
this Lease,

 
	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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including any assignee or sublessee, without first exhausting Lessor’s remedies against any other
person or entity responsible therefor 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
$500 as consideration for Lessor’s considering and processing said request. Lessee agrees to
provide Lessor with such other or additional information and/or documentation as may be reasonably
requested. (See also Paragraph 36.)

          (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 tne 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.

          (g) Lessor’s consent to any assignment or subletting shall not transfer to the assignee or
sublessee any Option granted to the original Lessee by this Lease unless such transfer is
specifically consented to by Lessor in writing. (See Paragraph 39.2.)

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

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

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

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

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

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

13. Default; Breach; Remedies.

 
	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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

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

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

          (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv) any document requested under Paragraph 42, (v) material safety data
sheets (MSDS), or (vi) any other documentation or information which Lessor may reasonably require
of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days
following written notice to Lessee.

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

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

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

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

     13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within
10 days after written notice (or in case of an emergency, without notice), Lessor may, at its
option, perform such duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred by
Lessor in such performance upon receipt of an invoice therefor. 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:

 
	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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

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

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

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

     13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor, when due as to scheduled payments (such as Base Rent) of within 30 days
following the date on which it was due for non-scheduled payment, shall bear interest from the date
when due, as to scheduled payment, or the 31st day after it was due as to non-scheduled payments.
The interest (“Interest”) charged shall be computed at the rate of 30% per annum 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.

     13.8. Breach by Lessor.

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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          (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails
within a reasonable time to perform an obligation required lo be performed by Lessor. provided,
however, that if the nature of Lessor’s obligation is such that more than 30 days are reasonably
required for its performance, then Lessor shall not be in breach if performance is commenced within
such 30 day period and thereafter diligently pursued to completion.

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

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

15. Brokerage Fees.

     15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.9 above,
and unless Lessor and the Brokers otherwise agree in writing. Lessor agrees that: (a) if Lessee
exercises any Option, (b) if Lessee acquires any rights to the Premises or other premises owned by
Lessor and located within the same Project, if any, within which the Premises is located, (c) if
Lessee remains in possession of the Premises, with the consent of Lessor, after the expiration of
this Lease, or (d) if Base Rent is increased, whether by agreement or operation of an escalation
clause herein, then, Lessor shall pay Brokers a fee in accordance with the schedule of the Brokers
in effect at the time of the execution of this Lease.

     15.2 Assumption of Obligations. Any buyer or transferee of Lessor’s interest in this Lease
shall be deemed to have assumed Lessor’s obligation hereunder. Brokers shall be third party
beneficiaries of the provisions of Paragraphs 1.9, 15, 22 and 31. If Lessor fails to pay to Brokers
any amounts due as and for brokerage fees pertaining to this Lease when due, then such amounts
shall accrue Interest. In addition, if Lesser 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 Lesser fails to
pay such amounts within 10 days after said notice, Lessee shall pay said monies to its Broker and
offset such amounts against Rent. In addition, Lessee’s Broker shall be deemed to be a third party
beneficiary of any commission agreement entered into by and/or between Lessor and Lessor’s Broker
for the limited purpose of collecting any brokerage fee owed.

     15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent
and warrant to the other that it has had no dealings with any person, firm, broker or finder (other
than the Brokers, if any) in connection with this Lease, and that no one other than said named
Brokers is entitled to any commission or finder’s fee in connection therewith. Lessee and Lessor do
each hereby agree to indemnify, protect, defend and hold

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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the other harmless from and against liability for compensation or charges which may be claimed
by any such unnamed broker, finder or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, attorneys’ fees reasonably incurred with
respect thereto.

16. Estoppel Certificates.

          (a) Each Party (as “Responding Party”) shall within 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 form similar to the then most current “Estoppel Certificate” form published
by the AIR Commercial 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 20 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.

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

17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s
interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the
Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such transfer
or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined.

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

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

20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute
personal obligations of Lessor or its partners, members, directors, officers or shareholders, and
Lessee shall look to the Premises, and to no other assets or lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor’s
partners, members, directors, officers or shareholders, or any of their personal assets for such
satisfaction.

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

22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the
Parties with respect to any matter mentioned herein, and no other prior or contemporaneous
agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to
the Brokers that it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease and as to the use,
nature, quality and character of the Premises. Brokers have no

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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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, deliver or performance by either Lessor or Lessee under this Lease or any
amendment or modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s
liability shall not be applicable to any gross negligence or willful misconduct of such Broker.

23. Notices.

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

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

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

25. Disclosure Regarding the Nature of a Real Estate Agency Relationship.

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

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

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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

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

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

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

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

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

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

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

30. Subordination; Attornment; Non-Disturbance.

     30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate
to any ground lease, mortgage, deed of trust, or other hypothecation or security device
(collectively, “Security Device”),

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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

     30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are
acquired by another upon the foreclosure or termination of a Security Device to which this Lease is
subordinated (i) Lessee shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn
to such new owner, and upon request, enter into a new lease, containing all of the terms and
provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the
election of such new owner, this Lease shall automatically become a new Lease between Lessee and
such new owner, upon all of the terms and conditions hereof, for the remainder of the term hereof,
and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new
owner shall assume all of Lessors obligations hereunder, except that such new owner shall not: (a)
be liable for any act or omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership, (b) be subject to any offsets or defenses which Lessee might have against
any prior lessor, (c) be bound by prepayment of more than one month’s rent, or (d) be liable for
the return of any security deposit paid to any prior lessor.

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

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

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

32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to
enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times
after reasonable prior notice for the purpose of showing the same to prospective purchasers,
lenders, or tenants, and making such alterations, repairs, improvements or additions to the
Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of
utilities, services, pipes and conduits through the Premises and/or other premises as long as

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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there is no material adverse effect to Lessee’s use of the Premises. All such activities shall be
without abatement of rent or liability to Lessee.

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. Lessor may place on the Premises ordinary “For Sale” signs at any time and ordinary “For
Lease” signs during the last 6 months of the term hereof. Except for ordinary “for sublease” signs,
Lessee shall not place any sign upon the Premises without Lessor’s prior written consent. All signs
must comply with all Applicable Requirements.

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

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

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

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

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

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

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

     39.4 Effect of Default on Options.

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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

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

          (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the Option, if, after such exercise and prior to the commencement of the
extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days
after such Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if
Lessee commits n Breach of this Lease.

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

42. Reservations. Lessee reserves to itself 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 restrictions 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.

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 claim. If it shall be adjudged that there
was no legal obligation on the part of said Party to pay such sum of 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; Multiple Parties; Execution.

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

          (b) If this Lease is executed by more than one person or entity as “Lessee”, each such person
or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named
Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary
thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named
Lessees had executed such document.

          (c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed
an original and all of which together shall constitute one and the same instrument.

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

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.

 
	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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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 Lease as may be
reasonably required by a Lender in connection with the obtaining of normal financing or refinancing
of the Premises.

46. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.

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

 
	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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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: NQ REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS
LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

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

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID

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

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

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

	 	 	 
	Executed at: 

	 	Executed at: 

	on: 

	 	on: 

	 
	By LESSOR:

	 	By LESSEE:
	 
	 	 
	 

	 	 

	 
	 	 
	 

	 	 

	 
	 	 
	 
	 	 
	By: 

	 	By: 

	Name Printed: 

	 	Name Printed: 

	Title: 

	 	Title: 

	 
	 	 
	 
	 	 
	By:  

	 	By: 

	Name Printed: 

	 	Name Printed: 

	Title: 

	 	Title: 

	Address:  

	 	Address: 

	 
	 

	 	 

	Telephone: (   ) 

	 	Telephone: (   ) 

	Facsimile: (   ) 

	 	Facsimile: (   ) 

	Federal ID No.: 

	 	Federal ID No.: 

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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	 	PAGE 27 of 34
	 	initials

 

 

	 	 	 
	BROKER:

	 	BROKER:
	 
	 	 
	 

	 	 

	 
	 	 
	 

	 	 

	 
	 	 
	Attn:: 

	 	Attn:: 

	 
	Title:  

	 	Title: 

	 
	 	 
	Address:  

	 	Address: 

	 
	 	 
	 

	 	 

	Telephone: (   ) 

	 	Telephone: (   ) 

	Facsimile: (   )  

	 	Facsimile: (   ) 

	Federal ID No.: 

	 	Federal ID No.: 

	 	 	 	 	 
	 

	 	 
	 	 

	 
	 	 	 	 
	 

	 	 
	 	 

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ADDENDUM “A”

Standard Industrial/Commercial Single-Tenant Lease — Net

between

Kandamerica, Inc., Lessor

and

Osmetech, Lessee

126-130 West Del Mar Boulevard

Pasadena, California

August 1, 2005

	 	 	 
	51. Base rent:

	 	Annual Base Rent during the initial term of the
Lease shall be calculated as follows:
	 

	 	Year 1 — $2.20 per square foot monthly
	 

	 	Year 2 — $2.29 per square foot monthly
	 

	 	Year 3 — $238 per square foot monthly
	 
	 	 
	52. Option 1:

	 	Lessee shall have the right, exercisable upon
Lessee’s delivery of written notice thereof to
Lessor at least one hundred twenty (120) days
prior to the expiration of the initial term of
the Lease to extend the term of the Lease for an
additional three (3) year term upon the same
terms and conditions set forth therein except
that Base Rent for each year of such extended
term shall be as follows:
	 

	 	Year 1 — $2.48 per square foot monthly
	 

	 	Year 2 — $2.58 per square foot monthly
	 

	 	Year 3 — $2.68 per square foot monthly
	 
	 	 
	53. Add’l options:

	 	Lessee shall have the right, exercisable upon
Lessee’s delivery of written notice thereof to
Lessor at least one hundred twenty (120) days
prior to the expiration of the 1st
option term, to 2 additional 3 year options
(beyond the initial 3 year lease and
1st option) at prevailing market
rates, provided any rate increase for any lease
year of the option period shall not increase by
more than 4% of the base rent over the
immediately preceding lease year.
	 
	 	 
	54. Utility charges:

	 	Lessee shall be solely responsible for ail
utility charges to the premises and shall make
certain that all utilities are promptly
established in their name, following the
commencement of the Lease.
	 
	 	 
	55. Parking:

	 	Lessee shall have the right to all on-site
parking spaces at the premises for Lessee’s use,
free of charge for the term of the Lease and
each option period.
	 
	 	 
	56. Exterior signage:

	 	Lessee shall have the right to install, at its
sole cost and expense, monument signage in front
of the Building and eyebrow signage on the
exterior of the Building in a place and manner
to be approved by Landlord, such approval not to
be unreasonably withheld, conditioned or
delayed, and shall be subject to all applicable
codes and regulation. At the expiration or
earlier termination of the Lease, Lessee shall
be responsible for removing any such signage and
restoring the affected

 

 

	 	 	 
	 

	 	areas of the Building to
their condition immediately prior to the
commencement of the Lease, reasonable wear and
tear and damage by casualty excepted.
	 
	 	 
	57. Brokerage:

	 	Lessee and Lessor each represent that no
brokerage company, other than Pollard
Properties, has any claim to commission or other
payment resulting from this lease transaction.
	 
	 	 
	58. Warranty:

	 	Lessor hereby represents and warrants that the
building and premises are in compliance with
applicable laws, regulations, ordinances and
codes as of the commencement date of the Lease,
including the Americans with Disabilities Act.
If, during the initial term or any renewal term,
improvements to the premises are required to
meet new or current regulatory requirements,
repairs and improvements to all shell and core
items shall be the responsibility of the
Landlord; provided, if such improvements to the
premises are required solely due to Lessee’s
specific use of the premises or an alteration or
improvement to the premises made by Lessee, then
Lessee shall be responsible therefor.
	 
	 	 
	59. Major equipment:

	 	If major equipment that is “base building”
related (e.g.,. HVAC system or water heater),
needs replacement during the term of the Lease,
the Lessor and Lessee will split the cost with
the exception of the 10 ton HVAC unit which the
Lessor will replace if it shall require
replacement during the term of the Lease and any
option periods.
	 
	 	 
	60. Lease alterations:

	 	Lessee has the right, but not the obligation, to
remove any fixtures or other improvements in the
premises as of the commencement date of the
Lease, provided Lessee shall first obtain
Lessor’s prior consent thereto, which consent
shall not be unreasonably withheld, conditioned
or delayed. Lessee will not be required to
remove any Lessee owned alterations or utility
installations which are installed in the
premises as of the commencement date of the
Lease, or to any Lessee owned alterations or
utility installations constructed during the
term of this Lease unless Lessor conditions its
consent to such alterations or utility
installations on the removal of such alterations
or utility installations at the end of the term
of the Lease.
	 
	 	 
	61. First right:

	 	Lessee shall have an on-going right of first
refusal to purchase the premises on terms and
conditions of bona fide third party offers. Such
on-going right of first refusal shall be
exercisable by Lessee within seventy-two{72)
hours of Lessee’s receipt of written notice from
Lessor of any such third party offer, which
notice shall include a complete copy of such
third party offer. In the event that Lessee
shall fail to exercise its right of first
refusal within such seventy-two (72) hour
period, Lessee shall be deemed to have waived
its right of first refusal with respect to such
third party offer, provided that Lessee’s right
of first refusal shall be reinstated with
respect to any additional third party offer or
with respect to an offer from the same third
party on materially different terms and
conditions.
	 
	 	 
	62. Rooftop:

	 	At no additional cost to Lessee, Lessor agrees
to lease to Lessee the rooftop of the building
for the installation, operation and maintenance
of radio transmitting and receiving equipment,
microwave, satellite or

 

 

	 	 	 
	 

	 	antennae communication
system devices along with other electronic
equipment associated with such installations,
and will allow access and any alterations needed
to install and run such equipment. Any such
rooftop work on behalf of Lessee shall be
performed by a licensed contractor. Prior to
commencing any such work on the rooftop, Lessee
shall submit work plans with respect to such
work to Lessor for its prior approval, provided
if Lessor fails to approve or disapprove such
plans within 15 days after receipt thereof, such
plans shall be deemed approved. Lessee shall be
responsible for all roof repairs made necessary
by such equipment installations and operation by
Lessee. Lessee agrees to remove all installed
equipment upon vacancy of premises and to
restore the rooftop to its condition at the
commencement date of the Lease, ordinary wear
and tear and damage by casualty excepted.
	 
	 	 
	63. Improvements:

	 	Prior to making any tenant improvements, Lessee
will submit written plans and drawings
respecting same to Lessor and Lessor shall
approve or disapprove same within 15 days after
receipt thereof, and if Lessor fails to approve
or disapprove such plans and drawings by notice
in writing within such time period, such plans
and drawings shall be deemed approved. Lessor’s
approval of such plans and drawings will not be
unreasonably withheld, conditioned or delayed.
	 
	 	 
	64. Lease assignment:

	 	If Lessee requests Lessor’s consent to an
assignment of the Lease or subletting of al! or
a portion of the premises, it shall submit to
Lessor in writing the name and legal composition
of the proposed assignee or subtenant, the use
to which the proposed assignee or subtenant
intends to put the premises, the terms and
conditions of the proposed assignment or
sublease between Lessee and the proposed
assignee or subtenant, and such publicly
disclosed information as Lessor may reasonably
request to explain the transaction. The Lessor’s
consent to any such proposed assignment or
subletting shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, Lessee
may assign, sublet or otherwise transfer its
interest in the Lease without Lessor’s consent
to any entity which controls, is controlled by,
or is under common control with Lessee, or to
any entity which purchases all or substantially
all of the assets of Lessee or is the result of
a merger or consolidation with Lessee.
	 
	 	 
	65. Lessor repairs:

	 	Lessor shall make at its own expense during the
term of the Lease and any extension thereof, all
repairs and replacements to all structural
portions of the building including but not
limited to the exterior walls, roof and
foundations, existing pipes and conduits and
utility installations and all repairs and
replacements necessary to put and maintain the
exterior of the building in a safe and
tenantable condition and in good order and
repair. All cosmetic updating or changes to the
premises desired by Lessee shall be Lessee’s
sole responsibility and shall be subject to the
prior approval of Lessor, which approval shall
not be unreasonably withheld, conditioned or
delayed; provided, however, that Lessor’s
consent shall not be required for cosmetic
changes to the interior of the premises.

 

 

	 	 	 
	 

	 	Lessor shall make at its own expense during the
term of this lease and any extension thereof all
repairs to the interior of the premises which
may be of a structural nature or which are
caused by structural failures or movements and
repairs to the interior made necessary by
leakage of the roof, unless the repairs are
necessitated by roof penetrations and / or
improvements made by the Lessee.
	 
	 	 
	66. Lessor Default:

	 	In the event that Lessor fails to cure any
outstanding default under the Lease by Lessor
within thirty (30) days of receipt of written
notice from Lessee thereof, Lessee shall have
the fight, but not the obligation, to cure such
default, and to deduct all costs associated
therewith from rent and additional rent.
	 
	 	 
	67. Water seepage:

	 	Lessor agrees to reimburse Lessee for all
losses, damages, claims, and expenses incurred
by Lessee and associated with ground water
seepage due to the rising ground water level
under the concrete slab. Lessor shall have no
liability for water damage associated with water
seepage through doors, windows or other openings
of the building which is not attributable to the
rising ground water level under the concrete
slab and which is not otherwise attributable to
Lessor’s negligence or intentional misconduct.
Notwithstanding the foregoing, Lessor’s
obligation to reimburse Lessee for losses or
damages to Lessee’s equipment or other personal
property due to such ground water seepage shall
be capped at S5.000 per occurrence; provided,
Lessor’s obligation with respect to remediation
and restoration of the premises following such
ground water seepage shall not be limited by
such cap.
	 
	 	 
	68. Restoration:

	 	Should Lessee make any changes/improvements to
the premises during the term of this lease, or
arty extension’s thereof, Lessee shall, at
Lessor’s request, be responsible for restoring
the premises to it’s condition as of August 1,
2005. Lessee shall not be responsible for
restoring any changes, made prior to August 1.
2005. Lessor shall give Lessee written notice
within 20 days of the expiration of the lease
whether or not Lessor requires restoration of
any changes,
	 
	 	 
	69. Estoppel:

	 	In the event that Lessee fails to deliver an
estoppel or a subordination request within the
appropriate time frame, then the certifications
or acceptance, whichever is the case, set forth
therein can be automatically deemed made and
agreed to by Lessee.
	 
	 	 
	70. Third Party Actions:

	 	The following clarifies the intent of the
parties in those portions of this lease that
refer to Third Party Actions: The Lessor does
not expect the Lessee to be responsible for any
third party actions that are perpetrated by the
Lessor or any employee, contractor or agent of
Lessor. Additionally, Lessor would exempt Lessee
from any responsibility for any underground
seepage, which may contaminate the ground from a
third party action on an adjacent property.
However, the Lessor is not physically in
possession of the property and must there-fore
rely on the Lessee to secure the building and
grounds from any third party that may come on
the property and damage it in any way, in this
regard, the Lessee would be responsible for
keeping the entire facility secured and for
alerting the proper authorities when a breach in
that security is suspected.

 

 

	 	 	 
	71. Utility retaliations:

	 	Lessor shall be responsible solely for the
Utility Installations of water, sewer and
electrical to the extent that they are brought
from outside the property to the outside wails
of the building. Lessee shall be solely
responsible for the maintenance and repair of
all utilities and their distribution within the
building. All telephone, computer and all other
communication utilities shall be solely the
responsibility of the Lessee in all regards.

 

 

	 	 	 
	 

Osmetech — Lessee

	 	 

Date
	 
	 	 
	 

By:

	 	 

Date
	 
	 	 
	 

Kandamerica, Inc. — Lessor

	 	 

Date
	 
	 	 
	 

By:

	 	 

Date

 

 

March 12, 2008

Via Facsimile (626) 445-0066 and Mail

Birgitta Landmark

Kandamerica, Inc., a California corporation

134 La Porte St.

Arcadia, CA 91006

Re: Osmetech, Inc. 126 W. Del Mar Blvd. Pasadena, CA 91105 / Lease Extension Option

Dear Ms. Landmark:

This is to advise that Osmetech Inc. hereby exercises its first extension option as referenced in
Addendum “A”, section 52, of our lease dated August 1st, 2005.
According to the Agreement, the commencement date for the new 3-year term
will be August 1, 2008.

Please confirm receipt and understanding of this advisement, and do not hesitate to contact me should you have any questions.

Thank you for your attention to this matter.

Sincerely,

Bruce A. Huebner

President

Osmetech, Inc.

(626) 463-2000

Bruce.Huebner@osmetech.com

Tel: +1 626.463.2000 Fax: +1 626.463.2013

757 S. Raymond Ave., Pasadena, CA 91105 U.S.A.

www.OsmeTech.com

 

 

LEASE AMENDMENT

Dated August 7, 2003

Lessor — Kandamerica, Inc., a California Corporation

and

Lessee — Motorola, Inc., a Delaware Corporation

126-130 West Del Mar Boulevard

Pasadena, California

The following modifications arc made to the lease dated May 11, 1998 between Kandamerica.
Inc. as the lessor and Clinical Micro Sensors, Inc. as the Lessee. This lease was assigned
to Motorola, Inc. as of June 22, 2000:

	A.	 	The lease is extended for an additional six-month :term beginning January 1, 2004 and
ending on June 30, 2004, per the Amendment dated February 18, 2003. Lessor grants
Lessee one additional six (6) month extension option, which will commence July 1, 2004
with a monthly rental rate of $19,550.68.
	 
	B.	 	The monthly rental rate for the current extension period commencing January 1, 2004
is $18,798.73 per month.
	 
	 	 	All rental payments shall be on a NNN basis, and Section 56 of the original lease is
deleted. The estimated NNN charges shall be billed monthly by the Lessor at least five
days prior, to the first day of the month for which they shall be due. Lessee shall
make these payments with, and in addition to, the monthly lease payment. The Lessee
shall continue to directly make all utility, janitorial, maintenance and any other
payments as defined in Sections 7.1, 10, 11, as well as any other lease payment
provisions which have been in effect during the initial three year lease term.
	 
	B.	 	The security deposit shall remain at $15,458.60 with no increases required.
	 
	C.	 	All other terms and conditions of the lease dated May 11, 1998 shall remain in effect
throughout the additional six-month term of the lease.
	 
	D.	 	Lessee shall give Lessor, a minimum of four-months notice to exercise the remaining
extension option, per the Amendment dated February 18, 2003. Any holding over Without
Lessor’s prior written consent shall be handled per the terms of paragraph 26 of the
original lease.

	 	 	 	 	 	 	 
	Lessor:

	 	 
	 	Lessee:
	 	 
	 
	 	 	 	 	 	 
	Kandamerica, Inc.

	 	 	 	Motorola, Inc.	 	 
	 
	 	 	 	 	 	 
	By: 

	 	 	 	By: 
	 	 
	Print 

	 	 	 	Print 
	 	 
	Date 

	 	 	 	Date 
	 	 

 

 

LEASE AMENDMENT

Dated February 18, 2003

Lessor — Kandamerica, Inc., a California Corporation

and

Lessee — Motorola, Inc., a Delaware Corporation

126-130 West Del Mar Boulevard

Pasadena, California

	 	 	The following modifications are made to the lease dated May 11, 1998 between Kandamerica,
Inc. as the lessor and Clinical Micro Sensors, Inc. as the Lessee. This lease was assigned
to Motorola, Inc. as of June 22, 2000:

	A.	 	The lease is extended for an additional six-month term beginning July 1, 2003 and
ending on December 31, 2003, per the Amendment dated April 26, 2002. Lessor grants
Lessee two (2) additional six (6) month extensions which shall have the following
commencement dates and monthly rental rates:

	 	1.	 	The first six-month extension will commence January 1, 2004 with a
monthly rental rate of $18,798,73.
	 
	 	2.	 	The second six-month extension will commence July 1, 2004 with a
monthly rental rate of $19,550.68.

	B.	 	The monthly rental rate for the extension period commencing July 1, 2003 is
$18,075.70 per month.
	 
	 	 	All rental payments shall be on a NNN basis, and Section 56 of the original lease is
deleted. The estimated NNN charges shall be billed monthly by the Lessor at least five
days prior to the first day of the month for which they shall be due. Lessee shall make
these payments with, and in addition to, the monthly lease payment. The Lessee shall
continue to directly make all utility, janitorial, maintenance and any other payments as
defined in Sections 7.1, 10, 11, as well as any other lease payment provisions which
have been in effect during the initial three year lease term.
	 
	C.	 	The security deposit shall remain at $15,458.60 with no increases required.
	 
	D.	 	All other terms and conditions of the lease dated May 11, 1998 shall remain in effect
throughout the additional six-month term of the lease.
	 
	E.	 	Lessee shall give Lessor a minimum of four-months notice to exercise the remaining
extension, per the Amendment dated April 26, 2002. Any holding over without Lessor’s
prior written consent shall be handled per the terms of paragraph 26 of the original
lease.

	 	 	 	 	 	 	 
	Lessor:

	 	 
	 	Lessee:
	 	 
	 
	 	 	 	 	 	 
	Kandamerica, Inc.

	 	 	 	Motorola, Inc.	 	 
	 
	 	 	 	 	 	 
	By: 

	 	 	 	By: 
	 	 
	Print 

	 	 	 	Print 
	 	 

 

 

LEASE AMENDMENT

Dated August 5, 2002

Lessor — Kandamerica, Inc., a California Corporation

and

Lessee — Motorola, Inc., a Delaware Corporation

126-130 West Del Mar Boulevard

Pasadena, California

The following modifications are made to the lease dated May 11, 1998 between Kandamerica, Inc. as
the Lessor and Clinical Micro Sensors, Inc. as the Lessee. This lease was assigned to Motorola,
Inc. as of June 22, 2000:

	A.	 	The lease is extended for an additional six-month term beginning January 1, 2003 and ending
on June 30, 2003 per the Amendment dated April 26, 2002. Lessee has one six (6) month
extension remaining which would commence July 1, 2003 and the monthly rental would be
$18,075.70, if said extension is exercised by Lessee.
	 
	B.	 	The monthly rental rate for the extension period commencing January 1, 2003, shall be
$17,380.48 per month.
	 
	 	 	All rental payments shall be on a NNN basis, and Section 56 of the original lease is
deleted. The estimated NNN charges shall be billed monthly by the Lessor at least five days
prior to the first day of the month for which they shall be due. Lessee shall make these
payments with, and in addition to, the monthly lease payment. The Lessee shall continue to
directly make all utility, janitorial, maintenance and any other payments as defined in
Sections 7.1, 10, 11, as well as any other lease payment provisions which have been in
effect during the initial three year lease term.
	 
	C.	 	The security deposit shall remain at $15,458.60 with no increases required.
	 
	D.	 	All other terms and conditions of the lease dated May 11, 1998 shall remain in effect
throughout the additional six-month term of the lease.
	 
	E.	 	Lessee shall give Lessor a minimum of four-months notice for each additional extension, per
the Amendment dated April 26, 2002. Any holding over without Lessor’s prior written consent
shall be handled per the terms of paragraph 26 of the original lease.

	 	 	 	 	 	 	 
	Lessor:

	 	 
	 	Lessee:
	 	 
	 
	 	 	 	 	 	 
	Kandamerica, Inc.

	 	 	 	Motorola, Inc.	 	 
	 
	 	 	 	 	 	 
	By: 

	 	 	 	By: 
	 	 
	Print 

	 	 	 	Print 
	 	 
	Date 

	 	 	 	Date 
	 	 

 

 

LEASE AMENDMENT

Dated August 26, 2002

Lessor — Kandamerica, Inc., a California Corporation

and

Lessee — Motorola, Inc., a Delaware Corporation

126-130 West Del Mar Boulevard

Pasadena, California

The following modifications are made to the lease dated May 11, 1998 between Kandamerica,
Inc. as the Lessor and Clinical Micro Sensors, Inc. as the Lessee. This lease was assigned
to Motorola, Inc. as of June 22, 2000:

	A.	 	The lease is extended for an additional six-month term beginning July 1, 2002 and
ending on December 31, 2002. Lessee is hereby granted two additional six-month
extension options beginning January 1, 2003 and July1, 2003 respectively.
	 
	B.	 	The monthly rental rate for the extension periods shall be:
	 
	 	 	Extension #1: $16,712.00 per month
	 
	 	 	Extension #2: $17,380.48 per month — it Lessee exercises said extension option
	 
	 	 	Extension #3: $18,075.70 per month — if Lessee exercises said extension option
	 
	 	 	All rental payments shall be on a NNN basis, and Section 56 of the original lease is
deleted. The estimated NNN charges shall be billed monthly by the Lessor at least five
days prior to the first day of the month for which they shall be due. Lessee shall make
these payments with, and in addition to, the monthly lease payment. The Lessee shall
continue to directly make all utility, janitorial, maintenance and any other payments as
defined in Sections 7.1, 10, 11, as well as any other lease payment provisions which
have been in effect during the initial three year lease term.
	 
	C.	 	The security deposit shall remain at $15,458.60 with no increases required with any
of the extensions.
	 
	D.	 	All other terms and conditions of the lease dated May 11, 1998 shall remain in effect
throughout the additional six-month term of the lease.
	 
	E.	 	Lessee shall give Lessor a minimum of four-months notice for each extension. Any
holding over without Lessor’s prior written consent shall be handled per the terms of
paragraph 26 of the original lease.

	 	 	 	 	 	 	 
	Lessor:

	 	 
	 	Lessee:
	 	 
	 
	 	 	 	 	 	 
	Kandamerica, Inc.

	 	 	 	Motorola, Inc.	 	 
	 
	 	 	 	 	 	 
	By: 

	 	 	 	By: 
	 	 
	Print 

	 	 	 	Print 
	 	 
	Date 

	 	 	 	Date 
	 	 

 

 

LEASE AMENDMENT

Dated December 14, 2000

Lessor — Kandamerica, Inc., a California Corporation

and

Lessee — Clinical Micro Sensors, Inc., a California

Corporation

126-130 West Del Mar Boulevard

Pasadena, California

The following modifications are made to the lease dated May 11, 1998 between Kandamerica,
Inc. as the Lessor and Clinical Micro Sensors, Inc, as the Lessee:

	A.	 	The lease is extended for an additional one-year term beginning July 1, 2001 and
ending on June 30, 2002,
	 
	B.	 	The monthly rental rate for the lease extension period shall be $15,458.60 per month
on a NNN basis, and Section 56 of the original lease is hereby deleted. The estimated
NNN charges shall be billed monthly by the Lessor at least five days prior to the
first day of the month for which they shall be due. Lessee shall make these payments
with, and in addition to, the monthly lease payment. The Lessee shall continue to
directly make all utility, janitorial, maintenance and any other payments as defined
in Sections 71, 10, 11, as well as any other lease payment provisions which have been
in effect during the Initial three year lease term.
	 
	C.	 	The security deposit shall be increased by $4,345.12 to a new total of $15,458.50.
	 
	D.	 	All other terns and conditions of the lease dated May 11, 1998 shall remain in effect
throughout the additional one-year term of the lease.

	 	 	 	 	 	 	 
	Lessor:

	 	 
	 	Lessee:
	 	 
	 
	 	 	 	 	 	 
	Kandamerica, Inc.

	 	 	 	Clinical Micro Sensors, Inc.	 	 
	 
	 	 	 	 	 	 
	By: 

	 	 	 	By: 
	 	 
	Print 

	 	 	 	Print 
	 	 
	Date 

	 	 	 	Date 
	 	 

 

 

Fax

	 	 	 
	To: Steve Newman

	 	From: Victoria Herd for Debra Santos
	 

	Fax: 602-952-3285

	 	Pages: 2
	 

	Phone:

	 	Date: January 26, 2001
	 

	Re: Lease Amendment

	 	CC:
	 

Copy of executed amendment

Motorola Clinical Micro Sensors

126 West Del Mar Blvd, Pasadena CA 91105, P: 626,584.5900 F: 626.584.0909

 

 

September 29, 2000

Kandamerica

134 La Porte St.

Arcadia, CA 91006

BY FACSIMILE TRANSMISSION

To Whom It May Concern:

This letter is in reference to our lease agreement dated May 11, 1998 for the property located
at 126-130 West Del Mar Boulevard, Pasadena, California.

Per paragraph 51 we are hereby notifying you of our election to extend our option for 12 months on
this lease.

Please confirm receipt of this fax transmission and our option to extend.

Sincerely,

Debra J. Santos, CPA, MBA

Vice President of Finance & Administration

DS/vh

Clinical Micro Sensors, Inc. l 126 West Del Mar Blvd., Pasadena, CA 91105 l 626.584.5900 Fax 626-584-____

 

 

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE — NET

(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1. Basic Provisions (“Basic Provisions”)

     1.1. Parties: This Lease (“Lease”), dated for reference purposes only May 11, 1998, is
made by and between Kandamerica Inc., a California corporation (“Lessor”)
and Clinical Micro Sensors, Inc., a California corporation (“Lessee”)
(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 this Lease, and commonly known as 126 — 130 West Del Mar
Boulevard, Pasadena located in the County of Los Angeles, 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)  a free-standing, one story
building of approximately 8,356 square feet, with a
parking lot currently striped for 52 parking places (“Premises”).(See also Paragraph [_____]

     1.3. Term: Three (3) years, and — no — months (“Original Term”) commencing July 1, 1998
(“commencement Date”) and ending June 30, 2001  (“Expiration Date”). (See also Paragraph [_____]

     1.4. Early Possession; May 15, 1998 (“Early Possession Date
(See also Paragraphs 3.2 and 3.3)

     1.5. Rare Rent: $10,277.88* * * * per month (“Base Rent”), payable on the first day
each month commencing July 1, 1998 (See also Paragraph [_____]
þ If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted.

     1.6. Base Rent Paid Upon Execution: $10,277.88* * * * * * * * * * * * * * * * * * * *
as Base Rent for the period July 1, 1998 through July 31, 1998

     1.7. Security Deposit: $11,113 .48* * * * * * ** * * * “(“Security Deposit”). (See also
Paragraph [_____]

     1.8. Agreed Use: See addendum paragraph 52. (See also Paragraph [_____]

     1.9. Insuring Party. Lessor is the “Insuring Party” unless otherwise stated herein. (See also
Paragraph 8)

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

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

þ Pollard Jacobsen represents Lessor exclusively (“Lessor’s Broker”)

þ Cushman & Wakefield of California, Inc. represents Lessee exclusively (“Lessee’s Broker”)

o                                          represents both Lessor and Lessee (‘Dual Agency)

          (b) Payment to Brokers: Upon execution of this Lease by both Parties, Lessor shall pay to the
Broker the fee agreed to in their separate written agreement (or if there is no such agreement, the
sum of none % of the total Base [_____] for the brokerage services rendered by said Broker). See
addendum paragraph 58.

     1.11. Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by
none (“Guarantor”). (See also Paragraph [_____].

     1.12. Addends and Exhibits. Attached hereto is an Addendum or Addenda consisting of
Paragraphs 50 through [_____], all of which constitute a part of this Lease.

Page 9

 

2. Premises.

     2.1. Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, [___] upon all of the terms, covenants and conditions set
forth in this Lease. Unless otherwise provided herein, any statement of size set forth in [___]
Lease, or that may have been used in calculating rental, is an approximation which the Parties
agree is reasonable and the rental based there[___] is not subject to revision whether or not the
actual size is more or less.

     2.2. Condition. Lessor shall deliver the Premises to Lessee broom clean and free of debris on
the Commencement Date or the Estimated Possession Date, whichever first occurs (“Start Date”), and,
so long as the required service contracts described in Paragraph 7.1(b) below and obtained by
Lessee within thirty (30) days following the Start Date, warrants that the existing electrical,
plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”),
loading doors, if any, and all other such elements in the Premises, other than those constructed by
Lessee, shall be in good operating condition on said dale 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 of the Start Date, Lessor shall,
as Lessor’s sole obligation with respect to such matter, except as otherwise provided in this
Lease, promptly a receipt of written notice from Lessee setting forth with specificity the nature
and extent of such non-compliance, rectify same at Lessor’s expense if after the Start Date, Lessee
does not give Lessor written notice of any non-compliance with this warranty within: (l) one year
as to the surface of the roof and the structural portions of the roof, foundations and bearing
walls, (ii) three (3) months as to the HVAC systems, (iii) ninety (90) 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. See addendum paragraph 53.

     2.3. Acknowledgements. Lessee acknowledges that (a) It has been advised by Lessor and/or
Brokers to satisfy itself with respect to the condition of the Premises (including but no! limited
to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements), and their suitability tor Lessee’s intended use, (b) Lessee has made
such Investigation as it deems necessary with reference to such matters and assumes all
responsibility therefor as the same relate to Its occupancy of the Premises, and (c) neither
Lessor, Lessor’s agents, nor 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) ft is Lessor’s
sole responsibility to investigate the financial capability and/or suitability of all proposed
tenants.

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 the Expiration Date.

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

Page 10

 

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

4. Rent.

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

     4.2. 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,

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 ten (10) days after written request therefor deposit monies with Lessor sufficient to
restore said Security Deposit to the full amount required by this Lease. If the Base Rent
Increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional moneys with Lessor so that the total amount of the Security Deposit shall at all times
bear the same proportion to the Increased Base Rent as the Initial Security Deposit bore to the
Initial Base Rent. Should the Agreed Use be amended to accommodate a material change in the
business of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to
increase the Security Deposit to the extent necessary, in Lessor’s reasonable judgment, to account
for any increased wear and tear that the Premises may suffer as a result thereof. If change in
control of Lessee occurs during this Lease and following such change the financial condition of
Lessee is, in Lessor’s reasonable judgment, significantly reduced, Lessee shall deposit such
additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on said change in financial condition. Lessor shall not be
required to keep 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(a) 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, was or a nuisance, or
that disturbs owners and/or occupants of, or causes damage to 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 such improvements on
the Premises or the mechanical or electrical systems therein, is not significantly more burdensome
to the Premises. If Lessee elects to withhold consent, Lessor shall within five (5) business days
after such request give written notification of same, which notice shall include an explanation of
Lessor’s 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

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any applicable statute or common law theory. Hazardous Substances shall include, but not be
limited to, hydrocarbon petroleum, gasoline, and/or crude oil or any products, by-products or
fractions thereof. Lessee shall not engage In any activity in or on the Premises which constitutes
a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee’s expense) with all Applicable Requirements. “Reportable Use” shall
mean (i) the installation or use of any above or below ground storage tank, (ii) the generation,
possession, storage, use, transportation, or disposal of a Hazardous Substance that require; permit
from, or with respect to which a report, notice, registration or business plan is required to be
filed with, any governmental authority, and (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 Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to
any meaningful risk contamination or damage or expose Lessor to any liability therefor. In
addition, Lessor may condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability, including, but not limited
to, the installation (and removal on or before Lease expiration termination) of protective
modifications (such as concrete encasements) and/or increasing the Security Deposit.

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

          (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under about the Premises (including through the plumbing or sanitary sewer
system) and shall promptly, at Lessee’s expense, take all investigative and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the cleanup of any
contamination of, and 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 party,

          (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents,
employees, lenders and ground less, if any, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expenses, penalties, and attorney’s 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 abatement, and shall survive the
expiration or termination of this Lease. No termination, cancellation or release agreement entered
into Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to
Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such
agreement.

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

          (f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any
investigations or remediation measure 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) 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.

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

     6.3. Lessee’s Compliance with Applicable Requirements. Except as otherwise provided In this
Lease, Lessee shall, at Lessee’s sole expense, fully, diligently and in a timely manner, materially
comply with all Applicable Requirements, the requirements of any applicant insurance underwriter or
rating bureau, and the recommendations of Lessor’s engineers and/or consultants which relate in any
manner to 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 any Applicable Requirements specified by Lessor,
and shall immediately upon receipt, notify Lessor in writing (copies of any documents involved) of
any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or
involving failure of Lessee or the Premises to comply with any Applicable Requirements.

     6.4. Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30 below)
and consultants shall have the right to enter into Premises at any time, in the case of an
emergency, and otherwise with at least 48 tours prior written notice, for the purpose of inspecting
the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of
any such inspections shall be paid by Lessor, unless violation of Applicable Requirements, or a
contamination is found to exist or be imminent, or the inspection is requested or ordered by
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.

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

     7.1. Lessee’s Obligations.

          (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3
(Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or
Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations, and Alterations in good order, condition and repair (whether or not the
portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or
readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of
Lessee’s use, any prior use, the elements or the age of such portion of the Premises), including,
but not limited to, all equipment of facilities, such as plumbing, heating, ventilating,
air-conditioning, electrical, lighting facilities, fixtures, walls (interior and exterior),
foundations, ceilings, or maintenance arises from penetration of the roof by Lessee or any act or
___ sion of the Lessee or its agents after penetrating the roof, floors, doors, plate glass,
landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways
located in, on, or adjacent to the Premises. 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. Lessee 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, when necessary, the exterior repainting of the
Building.

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          (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, smoke detection, (ii) landscaping and irrigation
systems, (iii) driveways and parking lots, (iv) clarifiers (v) basic utility feed to the perimeter
of the Building, and (ix) any other equipment, if reasonably required by Lessor.

          (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 Lessee’s 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 50% 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 be obligated to pay, each month during the
remainder of the term of this Lease, on the date on which Base Rent is due, an amount equal to the
product of multiplying the cost of such replacement by a fraction, the numerator of which is one,
and the denominator of which is 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.

     7.2. Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), (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.

     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, communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing in or on
the Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can be
removed without doing material damage to the Premises. The term “Alterations” shall mean any
modification of the improvements, other than Utility Installations or Trade Fixtures, whether by
addition or deletion. “Lessee Owned Alterations and/or Utility Installations’’ are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a). Lessee shall not make any Alterations or Utility Installations to the Premises
without Lessor’s prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost thereof during this
Lease as extended does not exceed $50,000 in the aggregate or $10,000 in any one year.

          (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-bullt plans and specifications. For work
which costs an amount equal to the greater of one month’s Base Rent, or $10,000 Lessor may
condition its consent upon Lessee providing a lien and completion bond in an amount equal to one
and one-half times the estimated cost of such Alteration or Utility Installation.

          (c) Indemnification. Lessee shall pay, when due, all claims for labor or materials furnished
or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are
or may be secured by any mechanic’s or materialmen’s lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (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, than
Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the
same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof, if Lessor shall require, Lessee shall furnish a surety bond in an amount equal
to one and one-half times the amount of such contested

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lien, claim or demand, indemnifying Lessor against, liability for the same. If Lessor elects
to participate in any such action, Lessee shall pay Lessor’s attorneys’ fees and costs.

     7.4. Ownership; Removal; Surrender; and Restoration.

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

          (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than ninety (90)
and not later than thirty (30) days prior to the end of the term of this Lease, Lessor may require
that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or
termination of this Lease. Lessor may require the removal at any time of all or any part of any
Lessee Owned Alterations or Utility Installations made without the required consent.
Notwithstanding the foregoing, Lessee shall not be required to remove any Lessee owned Alterations
or Utility Installations unless Lessor gives Lessee, within 20 days of receipt of Lessee’s plans
for such Lessee Owned Alterations or Utility Installations, notice that such removal will be
required at the end of the lease term.

          (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.

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

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

     8.3. Property Insurance  — Building, Improvements and Rental Value.

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

          (b) Rental Value. The Insuring Party shall obtain and keep in force a policy or policies in
the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent
for one (1) 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 repayment 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                      valuation provision in
lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect
the projected                      otherwise payable by Lessee, for the next twelve (12) month period. Lessee
shall be liable for any deductible amount in the event of such loss.

     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 $2,500 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility installations. Lessee
shall provide Lessor with written evidence that such insurance is in force.

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

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

     8.5. Insurance Policies. Insurance required herein shall be by companies duly licensed or
admitted to transact business in the                      where the Premises are located, and maintaining
during the policy term a “General Policyholders Rating” of at least B+, V, as set forth most
current issue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender.
Lessee shall not do or permit to be done anything which invalidates the required insurance
policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of
such insurance or certificates evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable 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 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 each other, and waive their entire right to recover damages against
the other, for loss of or damage to its property arising out of or incident to the premise required
to be insured against herein. The effect of such

Page 16

 

releases and waivers is not limited by the amount of insurance carried or required by any
deductibles applicable hereto. The Parties agree to have their respective property damage insurance
carriers waive any subrogation                      that such companies may have against Lessor or Lessee,
as the case may be, so long as the insurance is not invalidated                     .

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

     8.8. Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to
the person or goods, wares, merchandise, or other property of Lessee, Lessee’s employees,
contractors, invitees, customers, or any other person in or about the Premises, whether damage or
injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction, construction, defects of pipes, fire sprinklers, wires, appliances,
plumbing, HVAC or lighting fixtures, or from any other cause, whether the said                      damage
results from conditions arising upon the Premises or upon other portions of the Building of which
the Premises are a part, or from sources or places. Lessor shall not be liable for any damages
arising from any act or neglect of any other tenant of Lessor. Notwithstanding Lessor’s negligence
or breech of this Lease, Lessor shall under no circumstances be liable for injury to Lessee’s
business or for any income or profit therefrom.

9. Damage or Destruction.

     9.1. Definitions.

          (a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the
Premises, other than Owned alterations and Utility Installations, which can reasonably be repaired
in six (6) months or less from the date of the damage or                      Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to whether or not the
damage is Partial or Total.

          (b) “Premises Total Destruction” shall mean damage or destruction to the Premises, other than
Lessee Owned Alterations an 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 thirty (30) days from the date of the damage or destruction as
to whether or not the damage is Partial or Total.

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

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

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

     9.2. Partial Damage — Insured Loss. If a Premises Partial Damage that is an insured Loss
occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures
or Lessee Owned Alterations and Utility installations) as soon as reasonably possible after receipt
by Lessor of insurance proceeds 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 on a reasonable basis for that purpose.
Notwithstanding the foregoing, it 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 (except as to the deductible which is Lessee’s responsibility) as and when required to
complete said repairs. in the event, however, such shortage was due to the fact that, by reason of
the unique nature of the improvements, full replacement cost insurance coverage was not

Page 17

 

commercially reasonable and available. Lessor shall have no obligation to pay for the shortage
in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides
Lessor with the funds to cover same, or adequate assurance thereof, within ten (10) days following
receipt of written notice of such shortage and request therefor. If Lessor receives said funds or
adequate assurance thereof within said ten (10) day period, the party responsible for making the
repairs shall complete them as soon as reasonably possible and this Lease shall remain in full
force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within 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 flood or earthquake shall be subject, to
Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of
any such insurance shall be made available for the repairs if made by either Party.

     9.3. Partial Damage — Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss
occurs, unless caused by a negligence or willful act of Lessee (in which event Lessee shall make
the repairs at Lessee’s expense), Lessor may either; (i) repair such damage as soon as reasonably
possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or
(ii) terminate this Lease by giving written notice to Lessee within thirty (30) days after receipt
by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 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
reasonably possible after the required funds are available. If Lessee does not make the required
commitment, this Lease shall terminate as of the date specified in the termination notice.

     9.4. Total Destruction. Notwithstanding any other provision hereof, if a Premises Total
Destruction occurs, this Lease shall terminate sixty (60) days following such Destruction. If the
damage or destruction was caused by the gross negligence or wilful 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 lime during the last six (6) months of this Lease
there is damage for which the cost to repair exceeds one (1) month’s Base Rent, whether or not an
Insured Loss, Lessor may terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving a written termination notice to Lessee within thirty (30) days
after the data of occurrence of such damage. Notwithstanding the foregoing, If Lessee at that time
has an exercisable option to extend this Lease or to purchase the Premises, the Lessee may preserve
this Lease by; (a) exercising such option and (b) providing Lessor with any shortage in Insurance
proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is ten days after Lessee’s receipt of Lessor’s write notice purporting to terminate
this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall at Lessor’s commercially
reasonable expense, repair such damage as soon as reasonably possible and this Lease shall continue
in full force and effect. If Lessee fails to exercise such option and provide such funds or
assurance during such period, then this Lease shall terminate on the date specified in the
termination notice and Lessee’s option shall be extinguished.

     9.6. Abatement of Rent; Lessee’s Remedies.

          (a) Abatement in the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition                      which Lessee is not responsible under this Lease, the Rent
payable by Lessee for the period required for the repair, remediation or restoration of such damage
shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value Insurance. All other obligations of
Lessee hereunder, shall be performed by Lessee, and Lessor shall have                      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 ninety (90) days
after such obligation shall accrue, Lessee may, at any time prior to commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessor election to terminate this Lease on a

Page 18

 

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.

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

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

10. Real Property Taxes.

     10.1. Definition of “Real Property Taxes.” As used herein, the term “Real Property Taxes”
shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or
rental levy or tax (other than inheritance, personal income or estate taxes); Improvement bond;
and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the
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 ocuring during the term of the Lease
including but not limited to, a change of the ownership of the Premises.

     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 twenty (20) 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 the
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 upon 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 Installment 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 installment 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 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 obligations under this
Lease, then any balance of funds paid to Lessor under the provisions of this Paragraph may at the
option of Lessor,                      treated as an additional Security Deposit.

     10.3. Joint Assessment. If the Premises are not separately assessed, Lessee’s liability shall
be an equitable proportion of the                      Property Taxes for all of the land and improvements
included within the tax parcel assessed, such proportion to be conclusively determined                      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 Own                      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,

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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. Assignment and Subletting

     12.1. Lessor’s Consent Required.

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

          (b) Except for a public offering, a change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, fifty-one percent (51%) or more
of the voting control of Lessee shall constitute a change in control for this purpose

          (c) Except for a public offering, the involvement of Lessee or its assets in any transaction,
or series of transactions (by way of merger, sale, acquisition, financing, transfer, leveraged
buy-out or otherwise), whether or not a format assignment or hypothecation of this Lease or
Lessee’s                      occurs, which results or will result in a reduction of the Net Worth of Lessee
by an amount greater than fifty-one (51%) percent such                      Worth as it was represented at the
time of the execution of this Lease or at the time of the most recent assignment to which Lessor
                     consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, whichever was or is greater, shall be considered an assignment of this
Lease to which Lessor may withhold its consent. “Net Worth of Lessee” shall mean the net worth of
                     (excluding any guarantors) established under generally accepted accounting principles.

          (d) An assignment or subletting without consent shall, be curable after notice per Paragraph
13.1.

     12.2. Terms and Conditions Applicable to Assignment and Subletting.

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

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

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

          (d) In the event of any Default or Breach by Lessee beyond any applicable cure period, Lessor
may proceed directly against Lessee, any Guarantors or anyone                      responsible for the performance
of Lessee’s obligations under this Lease, including any assignee or sublessee, without first
exhausting Less                      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 Less                      determination as to the financial and operational responsibility
and appropriateness of the proposed assignee or sublessee, including but not limited to the
intended use and/or required modification of the Premises, if any, together with a fee of $1,000 or
ten percent (10%) of the                      monthly Base Rent applicable to the portion of the Premises which
is the subject of the proposed assignment or sublease, whichever is greater as consideration for
Lessor’s considering and processing said request. Lessee agrees to provide Lessor with such other
or additional information and/or documentation as may be reasonably requested.

          (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment or entering into such suble                      be deemed to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein                      observed or
performed by Lessee during

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the term of said assignment or sublease, other than such obligations as are contrary to or
inconsistent with provisions of an assignment or sublease to which Lessor has specifically
consented to in writing.

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

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

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

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

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

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

13. Default; Breach; Remedies,

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

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

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

          (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv) 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 ten (10)
days following written notice to Lessee.

          (d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or
of the rules adopted under Paragraph 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 is such that more then
thirty (30) days are reasonably required for its cure, than it shall not be

Page 21

 

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 of any general arrangement
or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. § 101
or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same
is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all 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 (e) is
contrary to any applicable law, such provision shall be of no force or effect, and not affect the
validity of the remaining provisions

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

     13.2. Remedies. If Lessee fails to perform any of its affirmative duties or obligations,
within ten (10) days after written notice (or in case of an emergency, without notice), Lessor may,
at its option, perform such duty or obligation on Lessee’s behalf, including but not limited to                      obtaining
of reasonably required bonds, insurance policies, or governmental licenses,
permits or approvals. The casts and expenses of any such performance by Lessor shall be due and
payable by Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee shall                      be
honored by the bank upon which it is drawn, Lessor, at its option, may require all
future payments to be made by Lessee to be by cashier 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                      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 a                      Lessee shall immediately surrender possession to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the unpaid                      which had been
earned at the time of termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of award exceeds the
amount of such rental less that the Lessee proves could have been reasonably avoided; (iii) the
worth at the time of award of the amount by which the unpaid rent for the balance of the term after
the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably
avoided; and (iv) any other amount necessary to compensate Les                      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 to Lessor in connection with this Lease applicable to the unexpired term of
this Lease. The worth at the time of award of the amount referred to in provision (iii) of the
immediately preceding sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located at the time of award
plus one percent (1%). Efforts by Lessor to mitigate damages caused by Lessee’s Breach of this
Lease shall not waive Lessor’s right to recover damages under Paragraph 12. If termination of this
Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent                      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                      period
required under Paragraph 13.1 was not previously given, a notice to pay rent or
quit, or to perform or quit given to Lessee under                      unlawful detainer statute shall also
constitute the notice required by Paragraph 13.1. In such case, the applicable grace period
required                      Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the
failure of Lessee to cure the Default within the greater of two such grace periods shall constitute
both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for
in this Lease and/or by said statute.

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

          (c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of
the state wherein the Premises are located. The expiration or termination of this Lease and/or the
termination of

Page 22

 

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

     13.4. Interest. Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor, when due as to scheduled payments (such as Base Rent) or within 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) day after it was due as to
non-scheduled payments. The interest (Interest”) charged shall be equal to the prime rate reported
in the Wall Street Journal as published closest prior to the date when due ___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.

     13.5. Breach by Lessor.

          (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails
within a reasonable time to perform an obligation required to be performed by Lessor. For purposes
of this Paragraph, a reasonable time shall in no event be less than thirty (30) days after receipt
by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for
such purpose, of written notice specifying wherein such obligation of Lessor has not been
performed; provided, however, that if the nature of Lessor’s obligation is such that more than
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 nor 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 expense and offset from Rent an amount equal to the greater of one month’s Base Rent or
the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee’s right
to reimbursement from Lessor. Lessee shall document the cost said cure and supply said
documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent
domain or sold under the threat of                      exercise of said power (collectively “Condemnation”),
this Lease shall terminate as to the part taken as of the date the condemning author takes title or
possession, whichever first occurs. If more than ten percent (10%) of any building portion of the
premises, or more than been twenty-five percent (25%) 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 of such taking
(or in the absence 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. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease
shall remain in full form 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                      Premises caused
by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether
such award                      be made as compensation for diminution in value of the leasehold, the value
of the part taken, or for severance damages; provided, home that Lessee shall be entitled to any
compensation for Lessee’s relocation expenses, loss of business goodwill and/or Trade Fixtures,
with regard to whether or not this Lease is terminated pursuant to the provisions of this
Paragraph. All Alterations and Utility Installations made                      the Premises by Lessee, for
purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be
entitled to                      and all compensation which is payable therefor. In the event that this Lease
is not terminated by reason of the Condemnation, Lessor shall refer any damage to the Premises
caused by such Condemnation

Page 23

 

15. Brokers’ Fee.

     15.1. Additional Commission. In addition to the payments owed pursuant to Paragraph 1.10
above, and unless Lessor and the                      otherwise agree in writing, Lessor agrees that (a) if
Lessee exercises any Option, (b) if Lessee acquires any rights to the Premises or of premises owned
by Lessor and located within the same Project, if any, within which the Premises is located, (c) if
Lessee remains in possession of the Premises, with the consent of Lessor, after the expiration of
this Lease, or (d) if Base Rent is increased, whether by agreement or operation of an escalation
clause herein, then, Lessor shall pay Brokers a fee in accordance with the schedule of said Brokers
in effect at the time of execution of this Lease. See addendum paragraph 59.

     15.2. Assumption of Obligations. Any buyer or transferee of Lessor’s interest in this Lease
shall be deemed to have assumed                      obligation hereunder. Each Broker shall be a third party
beneficiary of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails 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                      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 amount against Rent. In addition, Lessee’s Broker shall be deemed to be a
third party beneficiary of any commission agreement entered into by                      between Lessor and
Lessor’s Broker.

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

16. Estoppel Certificates.

          (a) Each Party (as “Responding Party”) shall within ten (10) days after written notice from
the other Party (the “Request Party”) execute, acknowledge and deliver to the Requesting Party a
statement in writing in form similar to the then most current “Estoppel Certificate” form published
by the American Industrial Real Estate Association, plus such additional information, confirmation
and/or                      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                      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                      more than one month’s rent has been paid in
advance. Prospective purchasers and encumbrancers may rely upon the Requesting                      Estoppel
Certificate, and the Responding Party shall be estopped from denying the truth of the facts
contained in said Certificate.

          (c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee
and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such
financial statements as may be reasonably required by such lender or purchase; 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 in this Lease to be performed by the Lessor shall be binding only upon the Lessor
as hereinabove defined. Notwithstanding the above, and subject to the provisions of Paragraph 20
below, the original Lessor under this Lease, and all subsequent holders of the Lessor’s interest in
this Lease shall remain liable and responsible with regard to the potential duties and liabilities
of Lessor pertaining to Hazardous Substances as outlined in Paragraph 6 above:

Page 24

 

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

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

20. Limitation on Liability. Subject to the provisions of Paragraph 17 above, the obligations of
Lessor 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 an amount up to the fee received by such Broker pursuant to this Lease;
provided, however, that the foregoing limitation on each Broker’s liability shall not be applicable
to any gross negligence or willful misconduct of such Broker.

23. Notices.

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

     23.2. Date of Notice. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt card, or if no
delivery date is shown, the postmark thereon. if sent by regular mail the notice shall be deemed
given 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 guarantee next
day delivery shall be deemed given twenty-four (24) hours after delivery of the same to the Postal
Service or courier. Notices transmitted by facsimile transmission or similar means shall be deemed
delivered upon telephone confirmation of receipt, provided a copy is also delivered via delivery or
mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on
the next business day.

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

Page 25

 

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 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 without the prior written consent of
Lessor. In the event that Lessee holds over without the prior written consent of Lessor, then the
Base Rent 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
construe as consent by Lessor to any holding over by Lessee.

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

28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be
observed or performed by Lessee and                      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 it both parties had prepared it.

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

30. Subordination; Attornment; Non-Disturbance.

     30.1. Subordination. This Lease and any Option granted hereby shall be subject and subordinate
to any ground lease, mortgage, deed of trust, or other hypothecation or security device
(collectively, “Security Device”), now or hereafter placed upon the Premises, to any and                      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 no liability or obligation to perform any of
the obligations                      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                      by giving written notice
thereof to Lessee, whereupon this Lease and such Options shall be deemed prior to such Security
                     notwithstanding the relative dates of the documentation or recordation thereof.

     30.2. Attornment. Subject to the non-disturbance provisions of Paragraph 30.3, Lessee agrees
to attorn to a Lender or any other                       who acquires ownership of the Premises by
reason of a foreclosure of a Security Device, and that in the event of such                      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 this Lease, Lessee 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 earns 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. Self-Executing. The agreements contained in this Paragraph 30 shall be effective without
the execution of any further documents provided, however, that, upon written request from Lessor or
a Lender in connection with a sale, financing or refinancing of the Premises, Lesser and Lessor
shall execute such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non Disturbance Agreement provided for herein.

31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises
to enforce the terms hereof or to                      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

Page 26

 

recovered in a separate suit, whether or not such action or proceeding is pursuant to decision or
judgment. The term, “Prevailing Party” shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The
attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be
entitled to attorneys’ fees, costs and expenses incurred in the preparation and service of notices
of Default and consultations in connection therewith, whether or not a legal action is subsequently
commenced in connection with such Default or resulting Breach.

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
after 24 hours’ notice for the purpose of showing the same to prospective purchasers, lenders,
                     lessees, and making such alterations, repairs, improvements or additions to the Premises
as Lessor may deem necessary. All such activities shall be without abatement of rent or liability
to Lessee. Lessor may at any time place on the Premises any ordinary ‘For Sale” signs and Lessee
may 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                      or about the Premises any ordinary “For
Sublease” sign.

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

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

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

36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is
required to an act by or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor’s actual reasonable costs and expenses (including but not limited to architects’,
attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response
to, a request by Lessee for any                      consent, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid to Lessee
upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act,
assignment or subletting shall                      constitute an acknowledgment that no Default or Breach by
Lessee of this Lease exists, nor shall such consent be deemed a waiver of any                      existing
Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time
of such consent. The failure to                      herein any particular condition to Lessor’s consent
shall not preclude the imposition by Lessor at the time of consent of such further or                      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. CROSSED OUT.

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

39. Options.

     39.1. Definition. “Option” shall mean: (a) the right to extend the term of or renew this Lease
or to extend or renew any lease that                      has on other property of Lessor; and any successor
approved by Lessor, which approval shall not be unreasonably withheld.

     39.2. Options Personal To Original Lessee. Each Option granted to Lessee in this Lease is
personal to the original Lease and can be assigned or exercised by anyone other than said original
Lessee, and only while the original

Page 27

 

Lessee is in full possession of the Premises                      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 after applicable cure periods continuing until said Default
is cured, (ii) during the period of time any Rent is unpaid (without regard to whether notice
thereof is given Lessee, (iii) during the time Lessee is in Breach of this Lease, or (iv) in the
event that Lessee has been given three (3) or more notices of                      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 provisions of
Paragraph 39.4(a).

          (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the                      . 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                      Rent
becomes due (without any necessity of Lessor to give notice thereof), (ii) Lessor gives to
Lessee three (3) or more notices of                      Default during any twelve (12) month period, whether
or not the Defaults are cured, or (iii) If Lessee commits a Breach of this Lease.

40. CROSSED OUT.

41. Security Measures. Lessee hereby acknowledged 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 protection of the
Premises, Lessee, its agents and invitees and their property from the acts of third parties.

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

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                      under the provisions hereof, the Party against whom the
obligation to pay the money is asserted shall have the right to make payment “                      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                      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                      ; 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                      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. E                      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                      the typewritten or handwritten provisions.

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                      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                      they do not materially change Lessee’s obligations
hereunder, Lessee agrees to make such reasonable non-monetary modifications to Lease as may be
reasonably required by a Lender in connection with the obtaining of normal financing or refinancing
of the Premises.

Page 28

 

48. Multiple Parties. If more than one person or entity is named herein as either Lessor or Lessee,
such multiple Parties shall have                      and several responsibility 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                      and/or Brokers arising out of this Lease o is þ is
not attached to this Lease.

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

NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR
BY ANY BROKER AS TO ___ LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR SHE
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                      BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS
SUBSTANCES,THE ZONING OFTHE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF ___ 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                      WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS
LOCATED.

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

	 	 	 
	Executed at: 

	 	Executed at: 

	on: 

	 	on: 

	 
	By LESSOR:

	 	By LESSOR:
	 
	 

	 	 

	 

	 	 

	By: 

	 	By: 

	Name Printed: 

	 	Name Printed: 

	Title: 

	 	Title: 

	Address: 

	 	Address: 

	 
	 

	 	 

	Telephone: (   ) 

	 	Telephone: (   ) 

	Facsimile: (   ) 

	 	Facsimile: (   ) 

	Federal ID No. 

	 	Federal ID No. 

			
	NOTE:	 	These forms are often modified to meet changing requirements of law and Industry needs.
Always write or call to make sure are utilizing the most current form: AMERICAN INDUSTRIAL
REAL ESTATE ASSOCIATION, 700 So. Flower Street, Suite ___ Los Angeles, California 90017.
(213) 687-8777. Fax No. (213) 687-8616

Page 29

 

ADDENDUM TO

STANDARD INDUSTRIAL/COMMERCIAL

SINGLE-TENANT LEASE—NET

dated May 11, 1998

between

KANDAMERICA, INC., Lessor

and

CLINICAL MICRO SENSORS, INC., Lessee

52. Agreed Use. General offices and research and development restricted to the pilot development
of prototype hand-held medical diagnostic devices, which involve the application of small volumes
of chemicals in organic solvents to microelectric chips. Notwithstanding the foregoing, the full
scale manufacturing of such devises is not a permitted use. Lessee further warrants and represents
that no synthetic organic chemistry functions will be performed in the Premises.

53. Condition of Premises. Subject to the provisions of Section 2.2, Lessee has completed its own
investigation of the Premises and is taking possession of the Premises in its existing condition.
Lessee acknowledges and agrees that Lessor has made no representation or warranty regarding the
suitability of the Premises for Lessee’s intended use, or is the intended use allowed under
Applicable Laws.

54. Parking Area Repairs. Lessor agrees to regrind and repave at least 1 1/2 inches of new asphalt
in the parking lot at its sole cost and expense. Lessee shall be responsible for striping the newly
paved lot, in accordance with City of Pasadena regulations.

55. Sublease Consideration. Lessee shall be allowed, when subleasing spaces as described in
paragraph 12, to retain fifty percent (50%) of any excess consideration received, after deduction
of all reasonable costs associated with such subleasing. The other fifty percent (50%) shall go to
the Lessor.

56. Expense Cap. Lessor shall pay any overage amount of the taxes (paragraph 10), property
insurance (paragraph 8.3), and repairs to the structure and grounds (paragraph 7.1a, excluding any
routine maintenance) above $25,068.00 annually ($0.25 per square foot monthly average). Lessee
shall pay for all repairs and submit bills and accounting of any overage to Lessor on a monthly
basis. The cost of increased real property taxes assessed to the property due to any improvements
done by the Lessee, shall be paid by the Lessee in accordance with Section 10.2 of this lease
document and shall not be included within the expense cap.

57. Building Signage. Lessee shall be allowed to install, at its sole cost and expense, monument
signage in front of the Building and/or eyebrow signage on the exterior of the Building in a place
and manner to be mutually determined between Lessor and Lessee and subject to all applicable codes
and regulations.

58. Notice of Intent to Sell Property. Lessor shall give Lessee 10’ calendar days prior written
notice of Lessor’s intent to list the property for sale. Should the 10 day period expire and a
purchase contract agreement not be fully executed between the parties, then the Lessor shall be
free to list the property for sale with no further obligation to Lessee.

59, Real Estate Brokerage Commission. Lessee shall be responsible for any commissions paid to its
Broker, Cushman & Wakefield of California, Inc., for the initial lease term as well as any option
terms if applicable. Lessor shall be responsible for commissions paid to its Broker, Pollard
Jacobsen, as agreed in a separate agreement.

60. Repairs. Lessor agrees to replace the existing water heater and the largest HVAC compressor,
the one having approximately 14,000 ton capacity, if either shall breakdown during the length of
the lease including any extensions. Throughout the lease term, the lessee is responsible for
maintaining service contracts as agreed in paragraph 7.1 (b). R is acknowledged that during
lessee’s inspection of the building 5 or 6 small roof leaks were tented. The lessor will have these
leaks repaired at lessee’s convenience.

	 	 	 	 	 
	 

Lessor

	 	 

Date
	 	 
	 
	 	 	 	 
	 

Lessor

	 	 

Date	 	 
	 
	 	 	 	 
	 

Lessor

	 	 

Date	 	 

 

 

OPTION(S) TO EXEND

STANDARD LEASE ADDENDUM

	 	 	 
	Dated May 11, 1998
	 
	By and Between (Lessor)

	 	Kandamerica Inc.
	 
	(Lessee)

	 	Clinical Micro Sensors, Inc.
	 
	Address of Premises: 126— 130 West Del Mar Booulevard, Pasadena

Paragraph 51

A. OPTION(S) EXTEND:

Lessor hereby grafts to Lessee the option to extend the term of this Lease for two
additional twelve month period(s) commencing when the prior term expires upon each and
all of the following terms and conditions:

          (i) In order to exercise an option to extend, Lessee must give written notice of such election
to Lessor and Lessor must receive the same at least 9 but not more than 12 months
prior to the date that the option period would commence, time being of the essence. If proper
notification of the exercise of an option is not given and/or received, such option shall
automatically expire. Options (if there are more than one) may only be exercised consecutively.

          (ii) The provisions of paragraph 39, Including those relating to Lessee’s Default set forth in
paragraph 39.4 of this Lease, are conditions of this Option.

          (iii) Except for the provisions of this Lease granting an option or options to extend the
term, all of the terms and conditions of this Lease except where specifically modified by this
option shall apply.

          (iv) This Option 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 without the intention of thereafter assigning or subletting.

          (v) The monthly rent for each month of the option period shall be calculated as follows, using
the method(s) indicated below:

(Check Method(s) to be Used and Fill In Appropriately)

This section of the document crossed out.

     d. Market Rental Value Adjustment(s) (MRV)

     a. On (Fill in MRV Adjustment Date(s)) 

 

the Bate Rent shall be adjusted to the “Market Rental Value’ of the property as follows:

          1) Four months prior to each Market Rental Value Adjustment Date described above, the Parties
shall attempt to agree upon what the new MRV will be on the adjustment data. If agreement cannot
be reached, within thirty days, then:

               (a) Lessor and Lessee shall immediately appoint a mutually acceptable appraiser or broker to
establish the new MRV within the next thirty days. Any associated costs will be split equally
between the Parties, or

               (b) Both Lessor and Lessee shall each immediately make a reasonable determination of the MRV
and submit such determination, in writing, to arbitration in accordance with the following
provisions:

 

 

                    (i) Within fifteen days thereafter, Lessor and Lessee shall each select an o appraiser
or þ broker (“Consultant” check one) of their choice to act as an arbitrator. The two
arbitrators so appointed shall immediately select a third mutually acceptable Consultant to act as
a third arbitrator.

                    (ii) The three arbitrators shall within thirty days of the appointment of the third arbitrator
reach a decision as to what the actual MRV for the Premises is, and whether Lessor’s or Lessee’s
submitted MRV is the closest thereto. The decision of a majority of the arbitrators shall be
binding on the Parties. The submitted MRV which is determined to be the closest to the actual MRV
shall thereafter be used by the Parties.

                    (iii) If either of the Parties bile to appoint an arbitrator within the specified fifteen
days, the arbitrator timely appointed by one of them shall reach a decision on his or her own, and
said decision shall be binding on the Parties.

                    (iv) The entire cost of such arbitration shall be paid by the party whose submitted MRV is
not selected, ie. the one that is NOT the closest to the actual MRV.

          2) Notwithstanding the foregoing, the new MRV shall not be less than the rent payable for the
month immediately preceding the rent adjustment.

     b. Upon the establishment of each New Market Rental Value:

          1) the new MRV will become the new “Base Rent” for the purpose of calculating any further
Adjustments, and

          2) the first month of each Market Rental Value term shall become the new “Base Month” for the
purpose of calculating any farther Adjustments.

This section of the document crossed out.

B. NOTICE

     Unless specified otherwise herein, notice al any rental adjustments, other than Fixed Rental
Adjustments, shall be made as specified In paragraph 23 of the Lease.

C. BROKER’S FEE:

     The Brokers specified in paragraph 1.10 shall be paid a Brokerage Fee for each adjustment
specified above in accordance with paragraph 15 of the Lease. See Lease Addendum, paragraph 56.

 

 

RENT ADJUSTMENT(S)

STANDARD LEASE ADDENDUM

Dated May 11, 1998 

By and Between (Lessor) Kandamerica Inc.

(Lessee) Clinical Micro Sensors, Inc.

Address of Premises: 126— 130 West Del Mar Booulevard, Pasadena

Paragraph 50

A. RENT ADJUSTMENTS:

The monthly rent for each month of the adjustment period(s) specified below shall be increased
using the method(s) indicated below (Check Method(s) to be Used and Fill in Appropriately)

This portion of document crossed out

III. Fixed Rental Adjustments (FRA)

The Base Rent shall be increased to the following amounts on the dates set forth below:

	 	 	 	 	 
	On (Fill in FRA Adjustment Dates(s)):	 	The New Base Rent shall be:	 	 
	 
	 	$	 	 
	 
	 	$	 	 
	 
	 	$	 	 
	 
	 	$	 	 

B. NOTICE

     Unless specified otherwise herein, notice of any such adjustments, other than Fixed Rental
Adjustments, shall be made as specified in paragraph 23 of the Lease.

C. BROKER’S FEE:

     The Brokers specified in paragraph 1.10 shall be paid a Brokerage Fee for each adjustment
specified above in accordance with paragraph 15 of the Lease. See Lease Addendum, paragraph 58.EX-10.4

Exhibit 10.4 to the Registration Statement

CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 406 UNDER THE SECURITIES ACT
OF 1933, AS AMENDED.

SECOND AMENDMENT

TO

LICENSE AGREEMENT

     This Second Amendment to the License Agreement is effective as of the 20th day of
June, 2000 (the “Second Amendment Effective Date”) between California Institute of Technology, 1200
East California Boulevard, Pasadena, California 91125 (“CALTECH”) and Clinical Micro Sensors, Inc.
(“LICENSEE”):

     WHEREAS, the parties entered into a license agreement dated February 8, 1995 (the License
Agreement); and

     WHEREAS, the parties executed a First Amendment to License Agreement dated October 6, 1998
(the First Amendment), wherein the First Amendment substitutes for the License Agreement and is
controlling with respect to all provisions of the License Agreement, and

     WHEREAS, the parties wish to again amend the License Agreement in its entirety such that this
Second Amendment shall substitute for the License Agreement and the First Amendment and shall be
controlling with respect to all provisions of the License Agreement as of the Effective Date of the
License Agreement (“Effective Date”).

ARTICLE I

DEFINITIONS

     1.1. “Licensed Product” means any product, device, service or system which is covered by, or
is made by a process covered by, any Valid Claim of any Licensed Patent Rights.

 

 

     1.2. “Related Company” means any corporation, limited liability company or other legal entity
directly or indirectly controlled by LICENSEE or its successors or assigns, or which directly or
indirectly controls LICENSEE or its successors or assigns, or any successor or assign of such an
entity. For the purpose of this Agreement, “control” shall mean the direct or indirect ownership
of at least fifty percent (50%) of the outstanding shares or other voting rights of the subject
entity to elect directors, or if not meeting the preceding, any entity owned or controlled by or
owning or controlling at the maximum control or ownership right permitted in the country where such
entity exists.

     1.3. “Licensed Patent Rights” means Exclusively Licensed Patent Rights and Nonexclusively
Licensed Patent Rights.

     1.4. “Exclusively Licensed Patent Rights” means (a) worldwide rights to the inventions
described and claimed in the patents, patent applications and invention disclosures listed in
Exhibit A attached hereto; any patents which issue on the applications or disclosures listed in
Exhibit A; reissues, reexaminations, additions, renewals, extensions, divisionals, continuations,
and continuations-in-part of the foregoing; and any foreign counterparts and any other forms of
protection directed to the inventions covered by the patents, applications and invention
disclosures listed in Exhibit A, and (b) all patent applications hereafter filed and owned by
CALTECH which are dominated by a claim or claims of the patents or patent applications of part (a),
together with any and all patents that issue therefrom, and all related divisionals, continuations,
continuations-in-part, reissues, renewals, reexaminations, extensions or additions to any such
patents and patent applications and any foreign counterparts which hereafter arise as a result of
work conducted at CALTECH solely or jointly in the laboratories of Dr. Thomas Meade and Dr. Scott
Fraser, or jointly with LICENSEE (Improvements).

-2-

 

     1.5. “Nonexclusively Licensed Patent Rights” means worldwide rights to the inventions
described and claimed in the patents, patent applications and invention disclosures listed in
Exhibit B attached hereto; any patents which issue on the applications or disclosures listed in
Exhibit B; reissues, reexaminations, additions, renewals, extensions, divisionals, continuations,
and continuations-in-part of the foregoing; and any foreign counterparts and any other forms of
protection directed to the inventions covered by the patents, applications and invention
disclosures listed in Exhibit B.

     1.6. “CALTECH Technology” means the Licensed Patent Rights and Improvements.

     1.7. “Valid Claim” means: (a) an issued claim under an issued patent within the Licensed
Patent Rights or a patent claiming an Improvement, which has not (i) expired or been canceled, (ii)
been declared invalid by an unreversed decision of a court or other appropriate body of competent
jurisdiction, iii) been admitted to be invalid or unenforceable through reissue, disclaimer or
otherwise, and/or (iv) been abandoned in accordance with or as permitted by the terms of this
Agreement or by mutual written agreement; or (b) a claim included in a pending patent application
within the Licensed Patent Rights that is being actively prosecuted in accordance with this
Agreement and which has not been (i) canceled, (ii) withdrawn from consideration, (iii) finally
determined to be unallowable by the applicable governmental authority (and from which no appeal is
or can be taken), and/or (iv) abandoned in accordance with or as permitted by the terms of this
Agreement or by mutual written consent.

     1.8. “Sublicensee” shall mean, with respect to a particular Product, a third party to whom
LICENSEE has granted a license or sublicense under the CALTECH Technology to develop, make, have
made, use and sell such Licensed Product.

-3-

 

     1.9. “Improvements” shall mean any future invention conceived, reduced to practice or
otherwise developed solely or jointly in the laboratories of Dr. Thomas Meade or Dr. Scott Fraser
at CALTECH, or jointly with LICENSEE, and which is invented solely or jointly by Dr. Thomas Meade,
Dr. Scott Fraser or an employee of LICENSEE, and which is dominated by the claims of one or more of
the Exclusively Licensed Patent Rights, and all worldwide patent applications and patents relating
thereto.

     1.10. “Other Improvements” shall mean any future invention conceived, reduced to practice or
otherwise developed solely or jointly in the laboratories of Dr. Thomas Meade or Dr. Scott Fraser
at CALTECH, or jointly with LICENSEE, and which is invented solely or jointly by Dr. Thomas Meade,
Dr. Scott Fraser, another employee of CALTECH, or an employee of LICENSEE, and which is dominated
by the claims of one or more of the Exclusively Licensed Patent Rights, and all worldwide patent
applications and patents relating thereto.

ARTICLE II

PATENT LICENSE GRANT

     2.1. CALTECH hereby grants to LICENSEE an exclusive, fully paid up, royalty free license under
Exclusively Licensed Patent Rights and Improvements to make, have made, import, have imported, use,
have used, sell, have sold and otherwise exploit Licensed Products throughout the world.

     2.2. CALTECH hereby grants to LICENSEE a nonexclusive, fully paid up royalty free license
under Nonexclusively Licensed Patent Rights to make, have made, import, have imported, use, have
used, sell, have sold and otherwise exploit Licensed Products throughout the

-4-

 

world. CALTECH retains the right to grant additional nonexclusive or exclusive (exclusive
except with respect to the rights granted LICENSEE hereunder) licenses to third parties.

     2.3. This license is subject to the reservation of CALTECH’s right to make, have made, and use
Licensed Products for noncommercial educational and research purposes, but not for sale or other
distribution to third parties. This license is not transferable by LICENSEE except as provided in
Paragraph 15.4, but LICENSEE shall have the right to grant nonexclusive or exclusive sublicenses
under the grant of Section 2.1, provided that LICENSEE shall furnish CALTECH within thirty (30)
days of the execution thereof, a true and complete copy of each sublicense and any changes or
additions thereto.

     2.4. The patent license grants, and the term of this Agreement, shall continue, unless
terminated in accordance with the provisions of this Agreement, until the last of the patents
within the Licensed Patent Rights expires.

     2.5. CALTECH hereby grants to LICENSEE an exclusive first right to include Other Improvements
under the terms of this License Agreement by adding such Other Inventions to Exhibit A hereto upon
payment by LICENSEE to CALTECH of a fee to be negotiated in good faith between the parties of not
less than * but not greater than * and upon reimbursement by LICENSEE to CALTECH of any past patent expenses.

-5-

 

ARTICLE III

CONSIDERATION FOR FULLY PAID UP LICENSE

     3.1. In consideration of the royalty free, fully paid up license, LICENSEE hereby agrees to
pay CALTECH * within 30 days of execution of
this Second Amendment.

     3.2. Any sublicenses granted by LICENSEE, including, without limitation, any nonexclusive
sublicenses, shall remain in effect and be assigned to CALTECH in the event this license terminates
pursuant to Article XI; provided, the financial obligations of each Sublicensee to CALTECH shall be
limited to a minimum annual fee of * for administration of the
sublicense. CALTECH shall assume all the rights and obligations of LICENSEE.

ARTICLE IV

OBLIGATIONS REGARDING EQUITY INTEREST

     4.1. As a holder of an equity interest in LICENSEE, CALTECH agrees that, in the event of any
underwritten or public offering of securities of LICENSEE or a related company, CALTECH shall
comply with and agree to any reasonable restriction on the transfer of equity interest, or any part
thereof, imposed by an underwriter, and shall perform all acts and sign all necessary documents
required with respect thereto. The provisions of this Paragraph 4.2 shall survive termination of
this Agreement.

-6-

 

ARTICLE V

DUE DILIGENCE

     5.1. LICENSEE shall have discretion over the commercialization of Licensed Products. However,
LICENSEE agrees to use its best efforts to introduce commercial Licensed Product(s) in the United
States as soon as practical, consistent with sound and reasonable business practices and judgments.
LICENSEE shall be deemed to have satisfied its obligations under this Paragraph if LICENSEE has an
ongoing and active research program or marketing program, as appropriate, directed toward
production and use of one or more Licensed Products. Any efforts of LICENSEE’s Sublicensees shall
be considered efforts of LICENSEE for the sole purpose of determining LICENSEE’s compliance with
its obligation under this Paragraph.

     5.2. After the first year from the Effective Date, CALTECH shall have the right, no more often
than twice each year, to require LICENSEE to report to CALTECH in writing on its progress in
introducing commercial Licensed Product(s) in the United States.

ARTICLE VI

INFRINGEMENT BY THIRD PARTY

     6.1. CALTECH shall at its expense, have the first right but not the obligation to protect the
Licensed Patent Rights and patents claiming Improvements from infringement and prosecute infringers
when, in its sole judgment, such action may be reasonably necessary, proper and justified.
Notwithstanding the foregoing, LICENSEE shall have the right to sublicense any alleged infringer
pursuant to Paragraph 2.1 and 2.2.

     6.2. If LICENSEE shall have supplied CALTECH with evidence of infringement of Licensed Patent
Rights or patents claiming an Improvement by a third party, LICENSEE may by

-7-

 

notice request CALTECH to take steps to enforce the Licensed Patent Rights. If LICENSEE does
so, and CALTECH does not, within three (3) months of the receipt of such notice, either (i) cause
the infringement to terminate or (ii) initiate a legal action against the infringer, LICENSEE may,
upon notice to CALTECH, initiate an action against the infringer at LICENSEE’s expense, either in
LICENSEE’s name or in CALTECH’s name if so required by law. LICENSEE shall have sole control of
the action.

     6.3. If a declaratory judgment action alleging invalidity, unenforceability or noninfringement
of any of the Licensed Patent Rights or Improvements is brought against LICENSEE and/or CALTECH,
LICENSEE shall have sole control of the action if LICENSEE agrees to bear all the costs of the
action.

     6.4. In the event one party shall carry on a legal action pursuant to Paragraphs 6.2 or 6.3,
the other party shall fully cooperate with and supply all assistance reasonably requested by the
party carrying on such action, including by using its best efforts to have its employees testify
when requested and to make available relevant records, papers, information, samples, specimens, and
the like. A party controlling an action pursuant to Paragraphs 6.2 or 6.3 shall bear the
reasonable expenses incurred by said other party in providing such assistance and cooperation as is
requested pursuant to this Paragraph. A party carrying on such an action shall keep the other
party informed of the progress of such action, and said other party shall be entitled to be
represented by counsel in connection with such action at its own expense.

     6.5. The party controlling any action referred to in this Article VI shall have the right to
settle any claims, but only upon terms and conditions that are reasonably acceptable to the other
party hereto. Should either party elect to abandon such an action other than pursuant to a

-8-

 

settlement with the alleged infringer that is reasonably acceptable to the other party, the
party controlling the action shall give timely notice to the other party who, if it so desires, may
continue the action; provided, however, that the sharing of expenses and any recovery in such suit
shall be as agreed upon between the parties.

     6.6. Any amounts paid to a party by third parties as the result of such an action (such as in
satisfaction of a judgment or pursuant to a settlement) shall first be applied to reimbursement of
the unreimbursed expenses (including attorneys’ fees and expert fees) incurred by either party and
any remainder shall be divided between the parties as follows:

          (a) To the extent the amount recovered reflects lost profits, LICENSEE shall retain the
remainder; or

          (b) To the extent the amount recovered does not reflect lost profits * shall be paid to the party initiating the action and * to the other party.

ARTICLE VII

CONFIDENTIALITY

     7.1. Dr. Meade and Dr. Fraser shall provide to LICENSEE copies of any proposed publication,
abstract, or oral presentation which describes an Improvement or Other Improvement to CALTECH
Technology prior to the submission of such documents. Proposed publications and abstracts shall be
supplied at least thirty (30) days in advance of submission to a journal, editor, or third party.
In addition, if Dr. Meade and Dr. Fraser submit a copy of the proposed publication to LICENSEE less
than thirty (30) days prior to submission for publication, then LICENSEE can request CALTECH to
file, at CALTECH’s expense, a provisional patent

-9-

 

application enabling the technology disclosed in the proposed publication at the United States
Patent and Trademark Office, and shall provide LICENSEE with evidence of the filing of such
provisional patent application. LICENSEE may request reasonable changes and/or deletions be made
in any proposed publication. Dr. Meade and Dr. Fraser will consider such changes but retain the
sole right to determine whether such changes or deletions will be made; but Dr. Meade and Dr.
Fraser agree that they will honor LICENSEE’s reasonable requests to remove Confidential Information
of LICENSEE included in any such public disclosure. If LICENSEE believes that the subject matter
to be disclosed or published warrants patent protection, it will identify the subject matter
requiring protection and notify CALTECH. CALTECH agrees to use its best efforts to file a U.S.
patent application prior to any date that would result in preventing the obtaining of valid patent
rights throughout the world when LICENSEE so identifies subject matter requiring patent protection
from a review of the planned publication.

     7.2. All reports provided to and accepted by Dr. Meade and Dr. Fraser pursuant to this
Agreement shall be treated as confidential information of LICENSEE and shall not be disclosed to
any third party without the prior written consent of LICENSEE.

     7.3. Except as expressly provided herein, each party agrees not to disclose any terms of this
Agreement to any third party without the consent of the other party; provided, however, that
disclosures may be made as required by securities or other applicable laws, or to actual or
prospective investors or corporate partners, or to a party’s accountants, attorneys, and other
professional advisors.

-10-

 

ARTICLE VIII

PAYMENT OF PATENT COSTS

     8.1. LICENSEE shall, in connection with the preparation, filing, and prosecution, issuance and
maintenance of the Exclusively Licensed Patent Rights and patents claiming Improvements both in the
United States and foreign jurisdictions:

          (a) pay all reasonable attorney fees for services performed to obtain the issuance of the
Exclusively Licensed Patent Rights, and all patent and government fees for services performed after
the issuance of Exclusively Licensed Patent Rights, and

          (b) pay all Patent Office maintenance fees.

     8.2. Payment shall be made to CALTECH within thirty (30) days following receipt by LICENSEE
from CALTECH of (i) an invoice covering such fees and (ii) reasonably satisfactory evidence that
such fees were paid. To the extent that LICENSEE terminates this Agreement pursuant to Paragraph
9.2 with respect to any patent application or patent, LICENSEE shall have no further liability
under Paragraph 8.1 for fees relating to applications or patents affected by the termination.

     8.3. LICENSEE shall have the right to apply for, prosecute and maintain during the term of
this Agreement the Exclusively Licensed Patent Rights and patent applications and patents claiming
one or more Improvements. The application filings, prosecution, maintenance and payment of all
fees and expenses; including legal fees, relating to such Exclusively Licensed Patent Rights shall
be the responsibility of LICENSEE, provided that LICENSEE shall pay for all reasonable fees and
expenses, including reasonable legal fees, incurred in such application filings, prosecution and
maintenance. Patent attorneys chosen by LICENSEE shall handle all

-11-

 

patent filings and prosecutions, on behalf of CALTECH, provided, however, CALTECH shall be
entitled to review and comment upon and approve all actions undertaken in the prosecution of all
patents and applications. In the event LICENSEE declines to apply for, prosecute or maintain any
Exclusively Licensed Patent Rights, CALTECH shall have the right to pursue the same at CALTECH’s
expense and LICENSEE shall have no rights therein. If LICENSEE decides not to apply for, prosecute
or maintain any Exclusively Licensed Patent Rights and patent applications and patents claiming one
or more Improvements, LICENSEE shall give sufficient and timely notice to CALTECH so as to permit
CALTECH to apply for, prosecute and maintain such Exclusively Licensed Patent Rights.

     8.4. LICENSEE shall, in connection with the preparation, filing, and prosecution, issuance and
maintenance of the Nonexclusively Licensed Patent Rights both in the United States and foreign
jurisdictions:

          (a) pay * of all reasonable attorney fees for services performed to
obtain the issuance of the Nonexclusively Licensed Patent Rights, and all patent and government
fees for services performed after the issuance of Nonexclusively Licensed Patent Rights wherein
said fees are incurred following the Second Amendment Effective Date, and

          (b) pay * of all Patent Office maintenance fees incurred following the Second Amendment
Effective Date.

     8.5. CALTECH shall reimburse LICENSEE for all patent prosecution expenses for Nonexclusively
Licensed Patents Rights paid prior to the Second Amendment Effective Date

-12-

 

within 30 days following receipt of an invoice from LICENSEE, which invoice shall be delivered
to CALTECH within 15 days following the Second Amendment Effective Date.

     8.6. Payment shall be made to CALTECH within thirty (30) days following receipt by LICENSEE
from CALTECH of (i) an invoice covering such fees and (ii) reasonably satisfactory evidence that
such fees were paid. To the extent that LICENSEE terminates this Agreement pursuant to Paragraph
9.2 with respect to any patent application or patent, LICENSEE shall have no further liability
under Paragraph 8.1 for fees relating to applications or patents affected by the termination.

     8.7. CALTECH shall have the right to apply for, prosecute and maintain during the term of this
Agreement the Nonexclusively Licensed Patent Rights and patent applications. The application
filings, prosecution, maintenance and payment of all fees and expenses; including legal fees,
relating to such Nonexclusively Licensed Patent Rights shall be the responsibility of CALTECH,
provided that CALTECH shall pay for all reasonable fees and expenses, including reasonable legal
fees, incurred in such application filings, prosecution and maintenance. Patent attorneys chosen
by CALTECH shall handle all patent filings and prosecutions, on behalf of CALTECH, provided,
however, LICENSEE shall be entitled to review, comment upon, and make recommendation, which shall
not be unreasonably denied by CALTECH, on all actions undertaken in the prosecution of all patents
and applications. In the event CALTECH declines to apply for, prosecute or maintain any
Nonexclusively Licensed Patent Rights, LICENSEE shall have the right to pursue the same at
LICENSEE’s expense and CALTECH shall have no rights therein. If CALTECH decides not to apply for,
prosecute or maintain any Nonexclusively Licensed Patent Rights and patent applications, CALTECH
shall give sufficient and timely notice to LICENSEE so as to permit LICENSEE to apply for,
prosecute and maintain such

-13-

 

Nonexclusively Licensed Patent Rights. LICENSEE shall agree to negotiate in good faith with
other CALTECH licensees of Nonexclusively Licensed Patent Rights, if any, to provide nonexclusive
rights under such patents or patent applications.

ARTICLE IX

TERMINATION

     9.1. CALTECH shall have the right to terminate this Agreement if LICENSEE fails to make any
payment due hereunder and LICENSEE continues to fail to make the payment, either to CALTECH
directly or by placing any disputed amount into an interest bearing escrow account to be released
when the dispute is resolved, for a period of sixty (60) days after receiving written notice from
CALTECH specifying LICENSEE’s failure. Upon any such termination, (i) LICENSEE and Related
Companies shall have six (6) months to complete the manufacture of any Licensed Products that then
are work in progress and to sell their inventory of Licensed Products and (ii) CALTECH shall accept
an assignment by LICENSEE of any sublicenses granted by LICENSEE to entities other than Related
Companies, and any sublicense so assigned shall remain in full force and effect.

     9.2. If either party materially breaches this Agreement, the other party may elect to give the
breaching party written notice describing the alleged breach. If the breaching party has not cured
such breach within sixty (60) days after receipt of such notice, the notifying party will be
entitled, in addition to any other rights it may have under this Agreement, to terminate this
Agreement effective immediately; provided, however, that if either party receives notification from
the other of a material breach and if the party alleged to be in default notifies the other party
in writing within thirty (30) days of receipt of such default notice that it disputes the asserted
default, the matter will be submitted to arbitration as provided in Article XI of this

-14-

 

Agreement. In such event, the nonbreaching party shall not have the right to terminate this
Agreement until it has been determined in such arbitration proceeding that the other party
materially breached this Agreement, and the breaching party fails to cure such breach in accordance
with the decision of the arbitration proceeding within ninety (90) days after the conclusion of
such arbitration proceeding.

     9.3. LICENSEE shall have the right to terminate this Agreement either in its entirety or as to
any jurisdiction or any part of the Licensed Patent Rights upon sixty (60) days written notice.

     9.4. Termination of this Agreement for any reason shall not release any party hereto from any
liability which, at the time of such termination, has already accrued to the other party or which
is attributable to a period prior to such termination, nor preclude either party from pursuing any
rights and remedies it may have hereunder or at law or in equity which accrued or are based upon
any event occurring prior to such termination.

     9.5. Sections 3.2, 4.1 and 7.2, and Articles XI, XII and XIII of this Agreement shall survive
termination of this Agreement for any reason.

ARTICLE X

WARRANTIES AND

NEGATION OF WARRANTIES,

IMPLIED LICENSES AND AGENCY

     10.1. CALTECH represents and warrants that it owns all right, title and interest in and to the
Licensed Patent Rights.

-15-

 

     10.2. CALTECH represents and warrants that it has not granted any third party right or
interest in any of the Licensed Patent Rights and Improvements that is inconsistent with the rights
granted to LICENSEE herein and will not grant any third party such a right during the term of this
Agreement.

     10.3. CALTECH represents and warrants: (i) it is the sole and exclusive owner of all right,
title, and interest in the CALTECH Technology; (ii) it has the right to grant the rights and
licenses granted herein, and the CALTECH Technology is free and clear of any lien, encumbrance,
security interest, or restriction on license; and (iii) there are no threatened or pending actions,
suits, investigations, claims, or proceedings in any way relating to the CALTECH Technology.

     10.4. Nothing in this Agreement shall be construed as:

          (a) a representation or warranty of CALTECH as to the validity or scope of Licensed Patent
Rights or any claim thereof; or

          (b) a representation or warranty that any Licensed Product is or will be free from
infringement of rights of third parties; or

          (c) an obligation to bring or prosecute actions or suits against third parties for
infringement; or

          (d) conferring by implication, estoppel or otherwise, any license or rights under any patents
of CALTECH other than Licensed Patent Rights, regardless of whether such other patents are dominant
or subordinate to Licensed Patent Rights.

-16-

 

     10.5. CALTECH MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, AND ASSUMES NO RESPONSIBILITIES WHATEVER WITH RESPECT TO THE USE, SALE, OR
OTHER DISPOSITION BY LICENSEE OF LICENSED PRODUCT(S).

     10.6. CALTECH and LICENSEE are independent parties in this Agreement. Accordingly, there is
no agency relationship between CALTECH and LICENSEE under this Agreement with respect to any
products made or sold, or any methods used, by LICENSEE under this Agreement.

ARTICLE XI

ARBITRATION

     11.1. Any controversy or claim arising out of or related to this Agreement, or the breach
thereof, shall be settled by arbitration in the State of California, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

ARTICLE XII

PRODUCT LIABILITY

     12.1. LICENSEE agrees that CALTECH shall have no liability to LICENSEE or to any purchasers or
users of Licensed Products made or sold by LICENSEE for any claims, demands, losses, costs, or
damages suffered by LICENSEE, or purchasers or users of Licensed Products, or any other party,
which may result from personal injury, death, or property damage related to the manufacture, use,
or sale of such Licensed Products (“Claims”). LICENSEE agrees to defend, indemnify, and hold
harmless CALTECH, its trustees, officers, agents, and

-17-

 

employees from any such Claims, provided that (i) LICENSEE is notified promptly of any Claims,
(ii) LICENSEE has the sole right to control and defend or settle any litigation within the scope of
this indemnity, and (iii) all indemnified parties cooperate to the extent necessary in the defense
of any Claims.

     12.2. At such time as LICENSEE begins to sell , or distribute Licensed Products (other than
for the purpose of obtaining regulatory approvals), LICENSEE shall at its sole expense, procure and
maintain policies of comprehensive general liability insurance in amounts not less than * per incident and * in annual aggregate and naming those indemnified under Paragraph 14.1
as additional insureds. Such comprehensive general liability insurance shall provide (i) product
liability coverage and (ii) broad form contractual liability coverage for LICENSEE’s
indemnification under Paragraph 14.1. In the event the aforesaid product liability coverage does
not provide for occurrence liability, LICENSEE shall maintain such comprehensive general liability
insurance for a reasonable period of not less than * years after it has ceased commercial
distribution or use of any Licensed Product.

     12.3. LICENSEE shall provide CALTECH with written evidence of such insurance upon request of
CALTECH. LICENSEE shall provide CALTECH with notice at least fifteen (15) days prior to any
cancellation, non-renewal or material change in such insurance, to the extent LICENSEE receives
advance notice of such matters from its insurer. If LICENSEE does not obtain replacement insurance
providing comparable coverage within sixty (60) days following the date of such cancellation,
non-renewal or material change, CALTECH shall have the right to terminate this Agreement effective
at the end of such sixty (60) day period without any additional waiting period; provided that if
LICENSEE uses reasonable efforts but is unable to obtain the required insurance at commercially
reasonable rates, CALTECH shall not have the

-18-

 

right to terminate this Agreement, and CALTECH instead shall cooperate with LICENSEE to either
grant a waiver of LICENSEE’s obligations under this Article or assist LICENSEE in identifying a
carrier to provide such insurance or in developing a program for self-insurance or other
alternative measures. This Article XIII shall survive the expiration or termination of this
Agreement.

ARTICLE XIII

MISCELLANEOUS

     13.1. LICENSEE agrees that it shall not use the name of CALTECH, or California Institute of
Technology, in any advertising or publicity material, or make any form of representation or
statement which would constitute an express or implied endorsement by CALTECH of any Licensed
Product, and that it shall not authorize others to do so, without first having obtained written
approval from CALTECH.

     13.2. LICENSEE agrees to mark the appropriate U.S. patent number or numbers on all Licensed
Products made or sold in the United States, and to require its Sublicensees to do the same.

     13.3. This Agreement sets forth the complete agreement of the parties concerning the subject
mater hereof. No claimed oral agreement in respect thereto shall be considered as any part hereof.
No waiver of or change in any of the terms hereof subsequent to the execution hereof claimed to
have been made by any representative of either party shall have any force or effect unless in
writing, signed by duly authorized representatives of the parties.

     13.4. This Agreement shall be binding upon and inure to the benefit of any successor or
assignee of CALTECH. This Agreement is not assignable by LICENSEE without the prior

-19-

 

written consent of CALTECH, except that LICENSEE may assign this Agreement without the prior
written consent of CALTECH, to any Related Company, or any successor of, or purchaser of a
substantial part of the assets of, the business to which this Agreement pertains. Any permitted
assignee shall succeed to all of the rights and obligations of LICENSEE under this Agreement.

     13.5. This Agreement is subject in all respects to the laws and regulations of the United
States of America, including the Export Administration Act of 1979, as amended, and any regulations
thereunder.

     13.6. This Agreement shall be deemed to have been entered into in California and shall be
construed and enforced in accordance with California law.

     13.7. Any notice or communication required or permitted to be given or made under this
Agreement shall be addressed as follows:

	 	 	 
	     CALTECH:

	 	Office of Technology Transfer
	 

	 	California Institute of Technology
	 

	 	1200 East California Boulevard (M/C 210-85)
	 

	 	Pasadena, California 91125
	 

	 	FAX No. (626) 356-2486
	 
	 	 
	     LICENSEE:

	 	Gary F. Blackburn, Ph.D.
	 

	 	Vice President, Scientific Affairs
	 

	 	757 Raymond Avenue
	 

	 	Pasadena, CA 91105
	 

	 	FAX No. (626) 584-0252

     Either party may notify the other in writing of a change of address or FAX number, in which
event any subsequent communication relative to this Agreement shall be sent to the last said
notified address or number. All notices and communications relating to this Agreement

-20-

 

shall be deemed to have been given when received and shall be sent by registered return
receipt mail and by FAX.

     13.8. Nothing in this Agreement will impair LICENSEE’s right to independently acquire,
license, develop for itself, or have others develop for it, intellectual property and technology
performing similar functions as the CALTECH Technology or to market and distribute products other
than Licensed Products based on such other intellectual property and technology.

     13.9. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL,
OR INDIRECT DAMAGES ARISING OUT OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.

     13.10. Neither party shall lose any rights hereunder or be liable to the other party for
damages or losses (except for payment obligations) on account of failure of performance by the
defaulting party if the failure is occasioned by war, strike, fire, Act of God, earthquake, flood,
lockout, embargo, governmental acts or orders or restrictions, failure of suppliers, or any other
reason where failure to perform is beyond the reasonable control and not caused by the negligence
or intentional conduct or misconduct of the nonperforming party, and such party has exerted all
reasonable efforts to avoid or remedy such force majored; provided, however, that in no event shall
a party be required to settle any labor dispute or disturbance.

     13.11. In the event that any provisions of this Agreement are determined to be invalid or
unenforceable by a court of competent jurisdiction, the remainder of the Agreement shall remain in
full force and effect without said provision. The parties shall in good faith negotiate a

-21-

 

substitute clause for any provision declared invalid or unenforceable, which shall most nearly
approximate the intent of the parties in entering this Agreement.

-22-

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed:

	 	 	 	 	 
	CALIFORNIA INSTITUTE OF TECHNOLOGY (CALTECH)

 	 	 
	By:  	/s/ Lawrence Gilbert
 	 	 
	 	Name:  	Lawrence Gilbert 	 	 
	 	Title:  	Director, Office of Technology Transfer 	 	 
	 
	CLINICAL MICRO SENSORS, INC.

 	 	 
	By:  	/s/ Jon Kayyem
 	 	 
	 	Name:  	Jon F. Kayyem 	 	 
	 	Title:  	President and CEO 	 	 

-23-

 

	 	 	 	 	 

EXHIBIT A

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Intn1	 	Intnl
	Atty. Docket #	 	Title	 	Inventors	 	Filng Date	 	Country	 	USSN	 	US Patent #	 	Application #	 	Publication
	A-58762

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem Fraser
	 	12/10/93
	 	U.S.
	 	08/166,036
	 	 	5,591,578	 	 	 	 	 
	A-58762-1

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	6/7/95
	 	U.S.
	 	08/475,051
	 	 	5,824,473	 	 	 	 	 
	A58762-2

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	6/7/96
	 	U.S.
	 	08/660,534
	 	 	5,770,369	 	 	 	 	 
	A58762-4

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	9/6/96
	 	U.S.
	 	08/709,265
	 	 	5,705,348	 	 	 	 	 
	A58762-5

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	9/6796
	 	U.S.
	 	08/709,263
	 	 	5,780,234	 	 	I	 	 
	A58762-6

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	6/12/97
	 	U.S.
	 	08/873,598
	 	 	5,952,172	 	 	 	 	 
	A58762-7

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	10/8/97
	 	U.S.
	 	08/946,679	 	 	 	 	 	 	 	 
	A58762-8

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	6/19/98
	 	 	 	09/100,507	 	 	 	 	 	 	 	 
	A58762-9

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	5/7/99
	 	U.S.
	 	09/306,749	 	 	 	 	 	 	 	 
	A-58762-10

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	5/7/99
	 	U.S.
	 	09/306,737	 	 	 	 	 	 	 	 
	A-58762-11

	 	Nucleic Acid Mediated

Elecron Transfert
	 	Meade, Kayyem,

Fraser
	 	5/7/99
	 	U.S.
	 	09/306,768	 	 	 	 	 	 	 	 
	A-58762-12

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	T2/6/99
	 	U.S.	 	 	 	 	 	 	 	 	 	 
	A-58762-13

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	12/10/99
	 	U.S.	 	 	 	 	 	 	 	 	 	 
	A-58762-14

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	12/10/99

	 	U.S.	 	 	 	 	 	 	 	 	 	 
	A-58762-15

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	12/6/99
	 	U.S.	 	 	 	 	 	 	 	 	 	 
	A58762-16

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	12/8/99
	 	U.S.	 	 	 	 	 	 	 	 	 	 
	FP-58762-PC

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	12/5/94
	 	PCT
	 	 	 	 	 	 	 	PCT 1US94/13893
	 	WO 9515971
	FA-58762-AU

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	7/8/99
	 	Australia
	 	08/166,036
	 	 	703329	 	 	12152/95	 	 
	FA-58762-CA

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	 	 	Canada	 	 	 	 	 	 	 	 	 	 
	FE-58762-EP

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	 	 	Europe	 	 	 	 	 	 	 	 	 	 
	FA-58762-JA

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	 	 	Japan	 	 	 	 	 	 	 	 	 	 
	FP 587622-PC

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	6/7/96
	 	PCT
	 	 	 	 	 	 	 	PCT

US96/097691
	 	WO

9640712
	FA-58762-2-AU

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	 	 	Australia	 	 	 	 	 	 	 	 	 	 
	FA-58762-2-CA

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	 	 	Canada	 	 	 	 	 	 	 	 	 	 
	FE-58762-2-EP

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	 	 	Europe	 	 	 	 	 	 	 	 	 	 
	FA-58762-2-JP

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	 	 	Japan	 	 	 	 	 	 	 	 	 	 
	A58762-3

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Kayyem,

Fraser
	 	6/7/96
	 	U.S.
	 	08/659,987	 	 	 	 	 	 	 	 
	FP-58762-3-PC

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Welch
	 	6/4/97
	 	PCT
	 	 	 	 	 	 	 	PCT US97/09739
	 	WO 9746568
	FA-58762-3-AU

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Welch
	 	 	 	Australia	 	 	 	 	 	 	 	 	 	 
	FA-58762-3-CA

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Welch
	 	 	 	Canada	 	 	 	 	 	 	 	 	 	 
	FA 58762-3-EP

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade, Welch
	 	 	 	Europe	 	 	 	 	 	 	 	 	 	 
	FA-58762-3-JP

	 	Nucleic Acid Mediated

Electron Transfer
	 	Meade Welch
	 	 	 	Japan	 	 	 	 	 	 	 	 	 	 

-24-

 

EXHIBIT B

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Intn1	 	Intnl
	Atty. Docket #	 	Title	 	Inventors	 	Filng Date	 	Country	 	USSN	 	US Patent #	 	Application #	 	Publication
	A58763

	 	Cell-Specific Gene

Delively Vehicles
	 	Kayyem, Fraser,

Meade
	 	10/12/94
	 	U.S.
	 	08/321,552	 	 	 	 	 	 
	A58763-1

	 	Cell-Specific Gene Delivery

Vehicles
	 	Kayyem, Fraser,

Meade
	 	6/ 6/95	 	 	 	 	 	 	 	 	 	 
	A62629

	 	Cell-SpecificGene Delivery

Vehicles
	 	Kayyem, Fraser,

Meade
	 	10/11/95
	 	U.S.
	 	08/541,191	 	 	 	 	 	 
	FP-62629-PC

	 	Cell-SpecificGene Delivery

Vehicles
	 	Kayyem, Fraser,

Meade
	 	10/11/95
	 	PCT
	 	 	 	 	 	PCT US95/14621
	 	WO 9611712
	FA-62629-AU

	 	Cell-SpecificGene Delivery

Vehicles
	 	Kayyem, Fraser,

Meade
	 	 	 	Australia	 	 	 	 	 	 	 	 
	FA-62629-CA

	 	Cell-SpecificGene Delivery

Vehicles
	 	Kayyem, Fraser,

Meade
	 	 	 	Canada	 	 	 	 	 	 	 	 
	FE-62629- 3EP

	 	Cell-Specific Gene Delivery

Vehicles
	 	Kayyem, Fraser,

Meade
	 	 	 	Europe	 	 	 	 	 	 	 	 
	FA-62629-JP

	 	Cell-Specific GeneDelivery

Vehicles
	 	Kayyem, Fraser,

Meade
	 	 	 	Japan
	 	 	 	 	 	 	 	r.
	FA-62629-NZ

	 	Cell Specific Gene

Delivery Vehicles
	 	Kayyem, Fraser,

Meade
	 	 	 	New

Zealand
	 	 	 	 	 	PCT/US95/14621	 	 

-25-

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