Document:

Exhibit 10.4

 

SUPERNUS PHARMACEUTICALS, INC.

 

STOCK RESTRICTION AGREEMENT

 

THIS STOCK RESTRICTION AGREEMENT (the “Agreement”) is made as of the 22nd day of December 22„ 2005 (the “Effective Date”), by and between Supernus Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and Jack Khattar (the “Stockholder”).

 

RECITALS:

 

WHEREAS, the Stockholder is a founder and holder of an aggregate of 3,000,000 shares of common stock, $.001 par value (the “Common Stock”), of the Company; and

 

WHEREAS, in consideration of Stockholder’s full time employment with the Company the Company desires to grant to Stockholder an additional 3,500,000 shares of Common Stock subject to those restrictions as set forth herein.

 

NOW THEREFORE, in consideration of the foregoing premises and such other consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

 

1.               Grant of Stock. The Company hereby grants to the Stockholder, pursuant to the Company’s 2005 Stock Plan (the “Plan”), an aggregate of 3,500,000 shares (the “Shares”) of Common Stock of the Company subject to the terms and conditions of this Agreement and the Plan. Upon execution of this Agreement by the Company and the Stockholder and the approval of the grant by the Board of Directors, the Company will promptly issue a certificate or certificates registered in the Stockholder’s name representing the Shares, with such certificates to be held in escrow until such Shares shall be Unrestricted Stock. The Stockholder shall be solely responsible for paying all personal income taxes due in connection with the Shares.

 

2.               Buy Back Rights of the Company. If the Stockholder’s Business Relationship with the Company ceases, voluntarily or involuntarily, with or without “Cause” (as defined below), the Company shall have the right and option to purchase for a period of 90 days from date of cessation of the Stockholder’s Business Relationship with the Company, and if the Company exercises such right, the Stockholder shall be required to sell to the Company, any or all of the shares of Restricted Stock (as defined below) of the Company. The purchase price of such shares of Restricted Stock shall be [$0.01]. If at any time the Company elects to purchase Restricted Stock pursuant to this Section 2, the closing of such purchase shall take place at the offices of the Company within 30 days after delivery of notice to the Stockholder of the Company’s election to purchase such shares of Restricted Stock. The purchase price for such shares shall be paid by delivery of a bank cashier’s check or certified check. Upon the mailing

 

 

of a check in payment of the purchase price in accordance with the terms hereof, the Company shall become the legal and beneficial owner of the shares of Restricted Stock being repurchased by the Company and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name or cancel the number of shares of Restricted Stock being repurchased by the Company.

 

2.1. For purposes of this Agreement:

 

(a)                “Cause” shall have the same meaning as set forth in that certain Employment Agreement by and between the Stockholder and the Company dated December 22, 2005.

 

(b)                “Business Relationship” means service to the Company or its successors in the capacity of an employee, officer, director or consultant.

 

2.2. For purposes of this Agreement, if the Stockholder has continuously maintained a Business Relationship with the Company through the vesting dates specified on Exhibit A attached hereto, Restricted Stock shall become Unrestricted Stock (or shall vest) on such dates in an amount equal to the number of shares set forth opposite the applicable date on Exhibit A. “Restricted Stock” shall be subject to the repurchase provisions described herein unless and until they becomes shares of Unrestricted Stock. “Unrestricted Stock” shall mean those Stockholder’s shares of Common Stock granted hereunder that are not Restricted Stock. Notwithstanding anything to the contrary, in the event the Stockholder’s Business Relationship with the Company ceases, voluntarily or involuntarily, with or without Cause, all Restricted Stock existing at the time of said termination shall remain Restricted Stock and shall not become Unrestricted Stock until a determination is made by the Company, as the case may be, to exercise or not its option to repurchase the shares of Restricted Stock. In the event the Company chooses not to exercise its option to purchase, the Board of Directors of the Company may determine to accelerate the vesting of the remaining shares of Restricted Stock such that all or any portion of the remaining shares of Restricted Stock shall vest and become Unrestricted Stock.

 

3.                No Special Employment Rights. Nothing contained in the Plan or this Agreement shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment of the Stockholder for the period within which this Agreement may apply or for any other period.

 

4.                Transfer Restrictions on Restricted and Unrestricted Stock. This Agreement is subject to the requirement that Stockholder shall be subject to all of the transfer restrictions set forth in the Plan including but not limited those requirements referred to in Section 13 of the Plan entitled “Stock Transfer Restrictions,” “Right of First Refusal” and “Drag Along Rights,” and in Section 21 of the Plan entitled “Lock-Up,” and as may be set forth in the by-laws of the Company. The Stockholder agrees to be bound by these restrictions and further agrees, upon the request of the Company to execute any further documentation necessary to evidence said agreement. A Stockholder’s failure to execute same, at the Company’s request, shall cause the Common Stock granted herein to be immediately null and void. The Company shall be free to place a legend on the back of the underlying security specifying the foregoing restrictions.

 

 

5.             Investment Representations; Legends; Limitations on Certain Dispositions

 

5.1.          Representations. The Stockholder represents, warrants and covenants that:

 

(i)                Any Common Stock granted herein shall be acquired for the Stockholder’s account for investment only and not with a view to, or for sale in connection with, any distribution of the shares in violation of the Securities Act of 1933, as amended (the “Securities Act”), or any rule or regulation under the Securities Act.

 

(ii)               The Stockholder has had such opportunity as he or she has deemed adequate to obtain from representatives of the Company such information as is necessary to permit the Stockholder to evaluate the merits and risks of his or her investment in the Company.

 

(iii)              The Stockholder is able to bear the economic risk of holding shares of Common Stock for an indefinite period.

 

(iv)             The Stockholder understands that (A) the shares granted herein will not be registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act; (B) except as otherwise agreed as a “permitted transfers” in that certain Stock Restriction Agreement executed by and among the Company and its shareholders dated on or about the first date above written, as may be amended from time to time, such shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (C) in any event, an exemption from registration under Rule 144 or otherwise under the Securities Act may not be available for at least one year and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public and other terms and conditions of Rule 144 are complied with; and (D) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register any shares acquired herein under the Securities Act.

 

5.2           Legends on Stock Certificates. All stock certificates representing shares of Common Stock issued to the Stockholder shall have affixed thereto legends substantially in the following forms, in addition to any other legends required by applicable law:

 

“The securities represented by this certificate have not been registered under the Securities Act of 1933 and may not be transferred, sold or otherwise disposed of in the absence of an effective registration statement with respect thereto under the Securities Act of 1933, or an opinion of counsel satisfactory to the Company to the effect that registration under such Act is not required.”

 

“The securities represented by this certificate are subject to certain rights of repurchase and restrictions on transfer set forth in the Supernus’ 2005 Stock Plan as of December 22, 2005 and in the Stock Restriction Agreement between the Company and the holder hereof pursuant to

 

 

which such securities were issued. A copy of such Agreement will be provided free of charge to the holder of this certificate upon written request therefor addressed to the Company.”

 

“The securities represented by this certificate are subject to voting agreements as set forth in a Stockholders’ Voting Agreement as amended from time to time, a copy of which the Company will furnish to the holder of this certificate upon request and without charge.”

 

6.             Failure to Deliver Shares. If the Stockholder becomes obligated to sell any Restricted Stock to the Company under this Agreement and fails to deliver such Restricted Stock in accordance with the terms of this Agreement, the Company may, at its option, in addition to all other remedies it may have, send to the Stockholder the purchase price for such Restricted Stock as is herein specified. Thereupon, the Company upon written notice to the Stockholder, (a) shall cancel on its books the certificate or certificates representing the Restricted Stock to be sold and (b) shall identify such canceled shares of the Company as “Treasury Shares”, and thereupon all of the Stockholder’s rights in and to such Restricted Stock shall terminate.

 

7.             Specific Enforcement. The Stockholder expressly agrees that the Company will be irreparably damaged if this Agreement is not specifically enforced. Upon a breach or threatened breach of the terms, covenants and/or conditions of this Agreement by the Stockholder, the Company shall, in addition to all other remedies, each be entitled to a temporary or permanent injunction, without showing any actual or irreparable damage, and/or a decree for specific performance, in accordance with the provisions hereof.

 

8.             Miscellaneous

 

8.1.          Except as provided herein, this Agreement may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Stockholder.

 

8.2.          All notices under this Agreement shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another.

 

8.3.          This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

 

 

	
Date of Issue: (date of Board approval)
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
SUPERNUS PHARMACEUTICALS, INC.
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
By:
  	
/s/ David Theil
  
	
 
  	
 
  	
Name: David Theil
  
	
 
  	
 
  	
Title: Chief Financial Officer
  

 

 

STOCKHOLDER’S ACCEPTANCE

 

The undersigned hereby accepts the foregoing issuance of shares and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company’s 2005 Stock Plan as of December 22, 2005.

 

 

	
 
  	
 
  	
STOCKHOLDER:
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
/s/ Jack Khattar
  
	
 
  	
 
  	
Jack Khattar
  
	
 
  	
 
  	
Address:105 Alderwood Drive
  
	
 
  	
 
  	
Gaithersburg, Maryland 20878
  

 

 

EXHIBIT A

VESTING SCHEDULE FOR RESTRICTED STOCK TO BECOME UNRESTRICTED STOCK

 

	
Name of purchaser (the “Stockholder”):
  	
 
  	
Jack Khattar
  
	
 
  	
 
  	
 
  
	
Date:
  	
 
  	
December 22, 2005
  
	
 
  	
 
  	
 
  
	
Number of shares granted hereunder:
  	
 
  	
3,500,000
  
	
 
  	
 
  	
 
  
	
Number of Shares that are Unrestricted Stock on the Vesting Start Date:
  	
 
  	
0
  
	
 
  	
 
  	
 
  
	
Number of Shares that are Restricted Stock on the Vesting Start Date:
  	
 
  	
3,500,000
  
	
 
  	
 
  	
 
  
	
Vesting Start Date:
  	
 
  	
December 22, 2005
  

 

Vesting Schedule:

 

	
Three months after the Vesting Start Date:
  	
 
  	
154,423 Shares
  
	
 
  	
 
  	
 
  
	
The first business day of each of the next 15 3-month periods thereafter
  	
 
  	
An additional 154,411 Shares
  

 

In addition, 411,765 shares of common stock that shall vest and become Unrestricted Stock as of the date the Company initiates the first clinical trial in humans (as defined in the Employment Agreement referenced below), provided, that if the Company does not initiate such trial within fifteen (15) months of December 22, 2005, such vesting will be cancelled, and upon such cancellation, such vesting shall be of no further force or effect;

 

411,765 shares of common stock that shall vest and become Unrestricted Stock as of the date the Company files an NDA, provided, that if the Company does not file an NDA (as defined in the Employment Agreement referenced below) within 5 years of December 22, 2005, such vesting will be cancelled, and upon such cancellation, such vesting shall be of no further force or effect; and

 

205,882 shares of common stock that shall vest and become Unrestricted Stock as of the date of the “launch of a partnered product”, as defined in that certain Employment Agreement by and between the Company and Jack Khattar, dated December 22, 2005 (the “Employment Agreement”); and

 

All Restricted Stock hereunder shall fully vest and become Unrestricted Stock as of the date of a Change of Control as defined in Paragraph 6(f) of the Employment Agreement.Exhibit 10.5

 

CONFIDENTIAL

 

	
 
  	
Shire Laboratories Lease
  

 

STANDARD FORM MULTI-TENANT NET LEASE (Non-California)

 

THIS LEASE (this “Lease”) is made as of April 19, 1999 (“Effective Date”), by and between ARE ACQUISITIONS, LLC, a Delaware limited liability company (“Landlord”) and SHIRE LABORATORIES INC., a Delaware corporation (“Tenant”).

 

1.                    Definitions and Basic Terms.

 

1.1.                    As used in this Lease, the following terms shall have the meanings set forth below, subject, in each case, to the remaining terms and conditions of this Lease.

 

1.1.1                             “Premises”:                     The real property and improvements located at 1550 East Gude Drive, Rockville, Maryland, including all landscaping, parking facilities and other improvements and appurtenances related thereto.

 

1.1.2                        “Basic Annual Rent”:

 

	
 
  	
 
  	
Basic Monthly
  	
 
  	
 
  	
 
  
	
Period
  	
 
  	
Rent
  	
 
  	
Basic Annual Rent
  	
 
  
	
Commencement Date - 4/30/99
  	
 
  	
$
  	
54,704.65
  	
 
  	
$
  	
656,455.80
  	
 
  
	
5/1/99 - 3/31/2000
  	
 
  	
$
  	
56,345.79
  	
 
  	
$
  	
676,149.48
  	
 
  
	
4/1/2000 - 4/30/2001
  	
 
  	
$
  	
59,704.17
  	
 
  	
$
  	
716,450.04
  	
(1)
  

 

1.1.3                        “Landlord’s Work”: The work, if any, described on Exhibit “B” attached hereto.

 

1.1.4                        “Permitted Use”: Research and development, scientific laboratory, related general office and administrative functions, cGMP manufacturing, distribution, warehouse and repository space and uses consistent with Section 10 hereof.

 

1.1.5                        “Rent Adjustment Percentage”: 3%

 

1.1.6                        “Security Deposit Amount”: Fifty-Four Thousand Seven Hundred Four And 65/100 Dollars ($54,704.65).

 

1.1.7                        “Target Term Commencement Date”: The Effective Date

 

1.1.8                        “Tenant’s Broker”: Scheer Partners, Inc.

 

1.1.9                        “Term Expiration Date”: Five (5) years from the first (1st) day of the month next succeeding the month in which the Term Commencement Date occurs, subject to extension or earlier termination as provided herein.

 

1.2.                    For the convenience of the parties, certain additional basic provisions of this Lease are set forth in this Section 1.2. The provisions set forth herein are subject to the remaining terms and conditions of this Lease and are to be interpreted in light of such remaining terms and conditions.

 

1.2.1                        Initial Monthly Installment of Basic Annual Rent: $54,704.65

 

(1)                                  For 12 months.

 

 

1.2.2                        Rentable Area of Premises: 44,500 sq. ft.

 

1.2.3                        Address for Rent Payment:

 

135 N. Los Robles Avenue, Suite 250

Pasadena, CA 91101

Attention: Accounts Receivable

 

1.2.4                        Address for Notices to Landlord:

 

135 N. Los Robles Avenue, Suite 250

Pasadena, CA 91101

Attention: General Counsel

 

1.2.5                        Address for Notices to Tenant:

 

1550 East Gude Drive

Rockville, MD 20850

Attn.: Chief Executive Officer

 

1.3.                    The following Exhibits and Addenda are attached hereto and incorporated herein by this reference:

 

EXHIBIT “A”                                              DESCRIPTION OF PREMISES

EXHIBIT “B”                                                INTENTIONALLY OMITTED

EXHIBIT “C”                                                cGMP FACILITY

EXHIBIT “D”                                               LEGAL DESCRIPTION OF PROPERTY ON WHICH PREMISES LOCATED

EXHIBIT “E”                                                 ACKNOWLEDGMENT OF COMMENCEMENT DATE

EXHIBIT “F”                                                 RULES AND REGULATIONS

EXHIBIT “G”                                                INTENTIONALLY OMITTED

EXHIBIT “H”                                               FORM OF NONDISTURBANCE AGREEMENT

ADDENDUM                                              RIGHT TO EXTEND TERM

 

2.                    Lease of Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, upon and subject to all of the terms and conditions hereof, the Premises.

 

3.                    Term. This Lease shall take effect upon the Effective Date and, except as specifically otherwise provide within this Lease, each of the provisions hereof shall be binding upon and inure to the benefit of Landlord and Tenant, and each of their respective successors and permitted assigns, from the Effective Date. The term of this Lease (the “Term”) will be the period from the “Term Commencement Date” (as defined in Section 4.2) through the Term Expiration Date, as the same may be terminated or extended as provided herein.

 

4.                    Possession and Commencement Date.

 

4.1.                    Tenant is currently in possession of the entire Premises pursuant to a Sublease Agreement, dated March 29, 1995 (the “Sublease”) with Quest Diagnostics Inc. (formerly Corning Clinical Laboratories, Inc.). Quest Diagnostics Inc. (“Quest”) is the master tenant pursuant to that certain Office Lease, dated July 13, 1987 (the “Master Lease”), between Landlord (as successor to Ardenwood Properties, N.V.) and Quest (as successor to MetPath, Inc.). Landlord expects to enter into a Termination Agreement with Quest (the “Termination Agreement”) substantially contemporaneously herewith pursuant to which the Master Lease (and, as a result, the Sublease) shall terminate and be of no further force or effect, and the term of this Lease shall thereupon commence. In the event that the Termination Agreement has not been entered into by Landlord and Quest on or before April 30, 2000, Tenant’s Sublease Agreement dated March 29, 1995, shall remain in full force and effect until expiration or earlier termination of such Sublease Agreement, whereupon

 

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this Lease shall become effective for the period April 1, 2000 through and including the Term Expiration Date, subject to Tenant’s Extension Right set forth in that certain Right to Extend Term Addendum attached hereto.

 

4.2.                    The “Term Commencement Date” shall be the effective date of the Termination Agreement, a copy of which shall be delivered by Landlord to Tenant after execution of such Termination Agreement by the parties thereto. Upon request of Landlord, Tenant shall execute and deliver a written acknowledgment of the Term Commencement Date and the Term Expiration Date when such dates are established and shall attach the acknowledgment to this Lease as part of Exhibit “E”; provided  however, Tenant’s failure to execute and deliver such acknowledgment shall not affect Landlord’s rights hereunder.

 

4.3.                    Upon the Term Commencement Date, Tenant shall furnish to Landlord evidence satisfactory to Landlord that insurance coverages required of Tenant under the provisions of Article 21 are in effect.

 

4.4.                    Access to and possession of areas of the Premises necessary for utilities, services, safety and operation of the Premises is reserved to Landlord.

 

5.                    Rent.

 

5.1.                    Tenant agrees, commencing on the Term Commencement Date, to pay Landlord as basic annual rent (“Basic Annual Rent”) for the Premises the Initial Basic Annual Rent, subject to the rental increases provided in Section 6 hereof. Basic Annual Rent shall be due and payable in equal monthly installments, in advance, on the first day of each and every calendar month during the Term. The amount of the monthly installment due prior to the first “Rent Adjustment Date” (as hereinafter defined) is set forth in Section 1.1.2. Landlord and Tenant agree that the rentable area of the Premises, for all purposes of this Lease, is 44,500 square feet.

 

5.2.                    In addition to Basic Annual Rent, Tenant agrees to pay to Landlord as additional rent (“Additional Rent”), at the times hereinafter specified in this Lease (i) “Supplemental Rent” (as hereinafter defined), and (ii) any and all other amounts that Tenant assumes or agrees to pay under the provisions of this Lease, including, without limitation, Reimbursable Operating Expenses any and all other sums that may become due by reason of any default of Tenant or failure to comply with the agreements, terms, covenants and conditions of this Lease to be performed by Tenant, after any applicable notice and cure period.

 

5.3.                    Basic Annual Rent and Additional Rent shall together be denominated “Rent”. Rent shall be paid to Landlord, without abatement, deduction, or offset, in lawful money of the United States of America, at the office of Landlord as set forth in Section 1.2.4, or to such other person or at such other place as Landlord may from time designate in writing. In the event the Term commences or ends on a day other than the first day of a calendar month, then the Rent for such fraction of a month shall be prorated for such period on the basis of a thirty (30) day month and shall be paid at the then current rate for such fractional month.

 

5.4.                    As used herein, “Supplemental Rent” shall mean a monthly amount determined by fully amortizing the leasing commission paid by Landlord to Tenant’s Broker in an amount equal to Forty Thousand Dollars ($40,000) over the initial Term of this Lease, with interest at 12% per annum compounded monthly. Tenant shall have the right, upon obtaining a full release of Landlord and Landlord’s affiliates of any and all liability for such leasing commission due Tenant’s Broker, to pay such leasing commission directly to Tenant’s Broker, in which event there shall be no Supplemental Rent due under this Section 5.4

 

6.                         Rent Adjustments. Commencing May 1, 2001, and on each anniversary thereof during the Term thereafter, Basic Annual Rent shall be increased by multiplying the Basic Annual Rent payable immediately before such adjustment by the Rent Adjustment Percentage and adding the resulting amount to the Basic Annual Rent payable immediately before such adjustment. Basic Annual Rent, as so adjusted, shall thereafter be due as provided herein.

 

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7.                    Operating Expenses.

 

7.1.                    Landlord shall pay all impositions of every kind and nature imposed by any federal, state, regional, municipal, local or other governmental authority or agency (each, a “Governmental Authority”) in connection with the ownership, operation or use of all or any portion of the Premises, including, without limitation, property tax costs consisting of real and personal property taxes and assessments (including amounts due under any improvement bond upon the Premises, including the parcel or parcels of real property upon which the Premises is located or assessments levied in lieu thereof); any tax on or measured by gross rentals received from the rental of space in the Premises , or tax based on the square footage of the Premises as well as any parking charges, utilities surcharges, or any other costs levied, assessed or imposed by, or at the direction of, or resulting from statutes or regulations, or interpretations thereof, promulgated by any Governmental Authority in connection with the use or occupancy of the Premises or the parking facilities serving the Premises; any tax on this transaction or any document to which Tenant is a party creating or transferring an interest in the Premises; any fee for a business license to operate an office building; any possessory taxes charged or levied in lieu of real estate taxes; and any expenses, including, without limitation, the cost of third party attorneys or experts, reasonably incurred by Landlord in seeking reduction by the taxing authority of the applicable taxes, less tax refunds obtained as a result of an application for review thereof (collectively hereinafter “Impositions”); provided, however, that Impositions shall not include any net income, franchise, capital stock, estate or inheritance taxes payable by Landlord, unless any such tax is imposed on Landlord in lieu of any of the taxes included in Impositions, nor shall tenant be liable for tax penalties incurred as a result of Landlord’s negligence, inability or unwillingness to make payment and/or to file any tax or informational returns when due. The provisions of this Section 7.1 shall survive termination of this Lease. In addition, Landlord shall pay for insurance premiums, including premiums for public liability, property casualty, earthquake and environmental coverages carried by Landlord on the Premises, and the portion, if any, of insured losses representing the deductible amount under any such insurance policy (the “Premiums”).

 

7.1.1                        Landlord shall deliver to Tenant a written estimate of the Impositions and Premiums (the “Reimbursable Operating Expenses”) for each calendar year (the “Annual Estimate”), which may be revised by Landlord from time to time during such calendar year. During each month of the Term, on the same date that the monthly installment of Basic Rent is due, Tenant shall pay Landlord an amount equal to 1/12 of the annual cost, as reasonably estimated by Landlord from time to time, of Reimbursable Operating Expenses for the Premises. Payments of Reimbursable Operating Expenses for any fractional calendar month shall be prorated.

 

7.1.2                        Within 90 days after the end of each calendar year (or such longer period as may be reasonably required), Landlord shall furnish to Tenant a statement (an “Annual Statement”) showing in reasonable detail: (a) the total actual cost of Reimbursable Operating Expenses for the previous calendar year, and (b) the total cost of Tenant’s payments in respect of Reimbursable Operating Expenses for such year. If actual Reimbursable Operating Expenses for such year exceeds Tenant’s payments of Reimbursable Operating Expenses for such year, the excess shall be due and payable by Tenant as Rent within ten (10) business days of Landlord’s delivery of the Annual Statement. If Tenant’s payments of Reimbursable Operating Expenses for such year exceed Tenant’s actual Reimbursable Operating Expenses for such year Landlord shall pay the excess to Tenant within 30 days after delivery of such Annual Statement. Reimbursable Operating Expenses for partial calendar years during the Term hereof shall be prorated. The Annual Statement shall be final and binding upon Tenant unless Tenant, within 30 days after Tenant’s receipt thereof, shall contest any item therein by giving written notice to Landlord, specifying each item contested and the reason therefor.

 

7.2.                    Tenant shall, at its expense, maintain, repair and operate the Premises, including, by way of examples and not as a limitation upon the generality of the foregoing: make (or cause to be made) repairs and replacements to the Premises as appropriate to maintain the Premises in good condition and repair consistent with the condition of the Premises as of the date hereof; pay all costs for the Premises for utilities, sewer fees, cable T.V., trash collection, cleaning (including windows), heating, ventilation, air-conditioning, security

 

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services and devices, building supplies; subject to Section 7.4 hereof, maintain all grounds, private roadways, sidewalks, curbs, drives and parking areas situated within, or appurtenant to, the Premises in good condition, repair and working order; maintain all landscaping consistent with Landlord’s other properties in the immediate geographical area; maintain and replace equipment utilized for operation and maintenance of the Premises; pay license, permit and inspection fees, sales, use and excise taxes on goods and services purchased by Tenant in connection with the operation, maintenance or repair of the Premises; comply with any applicable laws or hazardous waste remediation rules or regulations as described in Section 39 hereof; pay amounts due under any service contracts; and pay the costs of services of independent contractors retained to do work of nature or type herein referenced. All repairs and replacements shall be at least equivalent in quality to the original work. Tenant will not take or omit to take any action the taking or omission of which might materially impair the value or the usefulness of the Premises or any part thereof or commit any waste of the Premises or any part thereof.

 

7.3.                    Landlord shall have the right to inspect the Premises as provided herein from time-to-time and shall give Tenant notice of any maintenance required to be performed by Tenant hereunder. If Tenant shall fail to perform any such maintenance or to pay when due any amounts payable by Tenant under this Section 7, Landlord shall have the right, but not the obligation, to perform such obligation or to pay such amounts after written notice to Tenant and the lapse of thirty (30) days (other than in the case of an emergency, in which event no prior notice or Tenant cure period shall be required) and Tenant’s failure to fully perform such obligation or pay such amount. The cost of any such performance or the amount of any such payment by Landlord shall constitute Additional Rent due by Tenant to Landlord within ten (10) Business Days of written demand therefor.

 

7.4.                    Notwithstanding the foregoing, Tenant shall not be responsible for capital repairs of the exterior walls, structural interior partitions, foundation or other structural portions of the Premises at any time, or for the water tight integrity of the roof and covering materials and the private roadways, sidewalks, curbs, drives and parking areas situated within, or appurtenant to, the Premises before April 1, 2000, unless such repairs are required in whole or in part because of any act, neglect, fault of or omissions of any duty by Tenant, its agents, servants, employees or invitees. Landlord and Tenant agree: (i) that if the roof of the Premises requires replacement, Landlord will pay one half of the cost of such replacement, and (ii) if substantially all of the parking lot must be repaved (but not merely sealed, striped or otherwise maintained) at any time during an Extension Term hereunder, Landlord will pay one half of the cost of such repaving, which costs, under either clause (i) or (ii), shall be competitively bid and approved by Landlord and shall be paid by Landlord as such costs are incurred.

 

8.                    [Intentionally omitted]

 

9.                    Security Deposit.

 

9.1.                    Tenant shall deposit with Landlord on or before the Commencement Date of this Lease a security deposit (together with all interest earned thereon, the “Security Deposit”) in an amount equal to the Security Deposit Amount, which Security Deposit shall be held by Landlord as security for the performance by Tenant of all of the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the Term. If Tenant defaults with respect to any provision of this Lease, including, without limitation, any provision relating to the payment of Rent, Landlord shall have the right, but not the obligation, to use, apply or retain all or any part of the Security Deposit for the payment of any Rent or any other sum in default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s default. If any portion of the Security Deposit is so used or applied, Tenant shall, upon written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to the Security Deposit Amount, and Tenant’s failure to do so shall be a material breach of this Lease. Landlord shall not be required to keep the Security Deposit separate from its general fund, but Tenant shall be entitled to any interest on the Security Deposit (to be credited to and added to the Security Deposit) at the rate as may be actually earned thereon by Landlord from time to time but no less often than annually. Tenant shall provide landlord or its designee with such

 

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information and instruments (including, without limitation, Tenant’s taxpayer identification number) as Landlord may reasonably require in order to maintain the Security Deposit in an interest-bearing account.

 

9.2.                    In the event of bankruptcy or other debtor-creditor proceedings against Tenant, the Security Deposit shall be deemed to be applied first to the payment of Rent and other charges due Landlord for all periods prior to the filing of such proceedings.

 

9.3.                    Landlord shall deliver the unapplied portion of the Security Deposit to any purchaser of Landlord’s interest in the Premises and thereupon Landlord shall be discharged from any and all further liability with respect to the Security Deposit. This provision shall also apply to any subsequent transfers.

 

9.4.                    If as of the expiration of the Term, Tenant shall have surrendered the Premises in the condition required by this Lease and shall have paid all Rent, the Security Deposit, or any balance thereof, shall be returned to Tenant (or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder) within ninety (90) days after the expiration or earlier termination of this Lease.

 

10.              Use.

 

10.1.              Tenant shall use the Premises exclusively for the Permitted Use and shall not use the Premises, or permit or suffer the Premises to be used, for any other purpose without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.

 

10.2.              Tenant shall not use or occupy the Premises in violation of any federal, state and local laws and regulations, zoning ordinances, or the certificate of occupancy issued for the Premises, and shall, upon five (5) days’ written notice from Landlord, discontinue any use of the Premises which is declared or claimed by any Governmental Authority having jurisdiction to be a violation of any law, regulation or zoning ordinance or of such certificate of occupancy, or which in the reasonable opinion of Landlord violates any law, regulation or zoning ordinance or the certificate of occupancy. Tenant shall comply with any direction of any Governmental Authority having jurisdiction which shall, by reason of the nature of Tenant’s use or occupancy of the Premises, impose any duty upon Tenant or Landlord with respect to the Premises or with respect to the use or occupancy thereof.

 

10.3.              Tenant shall not do or permit to be done anything outside the scope of the Permitted Use that will invalidate any fire, environmental, extended coverage or any other insurance policy covering all or any portion of the Premises. The use specified in Section 1.1.4 hereof is in compliance with Landlord’s current insurance on the Premises. Tenant shall comply with all rules, orders, regulations, and requirements of the insurers of the Premises and shall reimburse Landlord promptly upon demand for any additional premium charged for any such policy by reason of Tenant’s use of the Premises.

 

10.4.              Upon termination of this Lease, Tenant shall return to Landlord all keys to offices and restrooms furnished to, or otherwise procured by, Tenant.

 

10.5.              Tenant shall not, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, (i) attach any awnings or other projection to any outside wall of the Premises, (ii) attach, hang or use any curtains, blinds, shades or screens to, in connection with, any window or door of the Premises other than Landlord’s standard window coverings, (iii) coat or otherwise sunscreen the interior or exterior of any windows, (iv) place any bottles, parcels, or other articles on the window sills, (v) place any equipment, furniture or other items of personal property on any exterior balcony, (vi) paint, affix or exhibit on the exterior of the Premises any sign, advertisement or notice (unless otherwise required by law or reasonable safety measures), (vii) place additional locks or bolts of any kind or nature upon any doors or windows in the Premises or (viii) make any changes to existing locks or the mechanism thereof. Interior signs on doors and the directory tablet shall be of a size, color and type reasonably acceptable to Landlord.

 

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10.6.              Tenant shall cause any office equipment or machinery to be installed in the Premises so as to reasonably prevent sounds or vibrations therefrom from extending into Common Areas, or other space in the Premises. Tenant shall not place any equipment weighing five hundred (500) pounds or greater in or upon the Premises without the prior written of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.

 

10.7.              Tenant shall not use or allow the Premises to be used for any immoral, unlawful or objectionable purpose, nor shall Tenant knowingly cause, maintain or permit any nuisance or waste in, on, or about any or all of the Premises.

 

10.8.              Notwithstanding any other provision herein to the contrary, Tenant shall be responsible for any and all demands, claims, liabilities, losses, costs, expenses, actions, causes of action, damages or judgments, and all reasonable expenses incurred in investigating or resisting the same (including, without limitation, reasonable attorneys’ fees, charges and disbursements and costs of suit) (collectively, “Claims”) arising out of or in connection with the compliance of the Premises with the Americans With Disabilities Act, 42 U.S.C. § 12101, et seq. (together with regulations promulgated pursuant thereto, “ADA”) and Tenant shall indemnify, defend, hold and save Landlord harmless from and against any and all Claims arising out of or in connection with any failure of the Premises to comply with the ADA.

 

11.              Brokers.

 

11.1.              Tenant represents and warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Lease other than Tenant’s Broker, as has been disclosed in writing to Landlord, and that Tenant knows of no other real estate broker or agent who is or might be entitled to a commission in connection with this Lease.

 

11.2.              Tenant hereby indemnifies and shall defend, hold and save Landlord harmless from and against any and all Claims for any commissions or fees in connection with this Lease made by any broker or finder having worked, or claiming to have worked, on behalf Tenant, other than Tenant’s Broker.

 

11.3.              Tenant represents and warrants that no broker or agent has made any representation or warranty relied upon by Tenant in Tenant’s decision to enter into this Lease.

 

11.4.              Tenant acknowledges and agrees that the employment of brokers by Landlord is for the purpose of solicitation of offers of lease from prospective tenants and no authority is granted to any broker to furnish any representation (written or oral) or warranty from Landlord. Landlord in executing this Lease does so in reliance upon Tenant’s representations and warranties contained within Sections 11.1 and 11.3 hereof.

 

12.         Holding Over.

 

12.1.              If, with Landlord’s express written consent, Tenant holds possession of all or any part of the Premises after the expiration or earlier termination of the Term, Tenant shall become a tenant from month-to-month upon the Term Expiration Date or earlier termination of this Lease, and in such case Tenant shall continue to pay Basic Annual Rent in the amount payable upon the date of the expiration or earlier termination of this Lease or such other amount as Landlord may indicate, in Landlord’s sole and absolute discretion, in such written consent, and all other provisions, representations, covenants and agreements contained herein (other than with respect to the Term and any extensions thereof, but specifically including, without limitation, the adjustment of Basic Annual Rent pursuant to Section 6 hereof) shall remain in full force and effect.

 

12.2.              If Tenant remains in possession of the Premises after the expiration or earlier termination of the Term without the express written consent of Landlord, Tenant shall become a tenant at sufferance upon the terms of this Lease except that the monthly rental shall be equal to one hundred fifty percent (150%) of the Basic Annual Rent and Additional Rent in effect during the last thirty (30) days of the Term. In addition,

 

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Tenant shall be responsible for all damages suffered by Landlord resulting from or occasioned by Tenant’s holding over.

 

12.3.              Acceptance by Landlord of Rent after the Term Expiration Date or earlier termination of this Lease shall not result in a renewal or reinstatement of this Lease.

 

12.4.              The foregoing provisions of this Article 12 are in addition to and do not affect Landlord’s right to re-entry or any other rights of Landlord hereunder or as otherwise provided by law.

 

13.              Taxes on Tenant’s Property.

 

13.1.              Tenant shall pay, prior to delinquency, any and all taxes levied against any personal property or trade fixtures placed by Tenant in or about the Premises.

 

13.2.              If any such taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s property, or if the assessed valuation of the Premises is increased by the inclusion therein of a value attributable to Tenant’s personal property or trade fixtures, Landlord shall have the right, but not the obligation, to pay such taxes. The amount of any such payment by Landlord shall constitute Additional Rent due by Tenant to Landlord within ten (10) Business Days of written demand therefor.

 

14.              Condition of Premises. Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the condition of any or all of the Premises, the Premises, or with respect to the suitability of any of the foregoing for the conduct of Tenant’s business. The Tenant is in possession of the Premises pursuant to the Sublease, and acknowledges and agrees that the Premises and Premises is in good, sanitary and satisfactory condition and repair.

 

15.              [Intentionally omitted]

 

16.              Utilities and Services.

 

16.1.              Tenant shall pay for all water, gas, heat, light, power, telephone and other utilities supplied to the Premises during the Term, together with any and all fees, surcharges and taxes thereon. Tenant shall pay directly to the applicable utility or service provider prior to delinquency, for all utilities and services which may be furnished to Tenant or the Premises during the Term.

 

16.2.              Landlord shall not be liable for, nor shall any eviction of Tenant result from, the failure to furnish any utility or service whether or not such failure is caused by accident, breakage, repairs, strikes, lockouts or other labor disturbances or labor disputes of any character, governmental regulation, moratorium or other governmental action, inability despite the exercise of reasonable diligence or by any other cause. Upon any such failure, Tenant shall not be entitled to any abatement or reduction of Rent, nor be relieved from the operation of any covenant or agreement of this Lease; provided, however, that if such failure is due to the gross negligence or willful misconduct of Landlord, and such interruption renders a substantial portion of the Premises untenantable for their intended purposes for more than five (5) continuous business days, then, as Tenant’s sole and exclusive remedy for such failure, Tenant’s obligation to pay monthly Rent shall abate for the period of time that the Premises remains substantially untenantable.

 

16.3.              Tenant shall not, without the prior written consent of Landlord, which shall not be unreasonably withheld, conditioned or delayed, use the Premises in any manner or maintain any device or devices in the Premises (including, without limitation, data processing machines) that will, individually or taken together with all other uses of and devises in the Premises, require ventilation, air exchange, heating, gas, steam, electricity or water beyond the existing capacity of the Premises.

 

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16.4.              Landlord reserves the right to stop service of the elevator, plumbing, heating, ventilation, air conditioning and electric systems, when necessary, by reason of accident or emergency or, upon not less than forty-eight (48) hours advance notice to Tenant, for repairs, alterations or improvements, in the reasonable judgment of Landlord desirable or necessary to be made, until said repairs, alterations or improvements shall have been completed, and Landlord shall have no responsibility or liability for failure to supply elevator facilities, plumbing, ventilation, heating, air conditioning or electric service during any such period of interruption. If Landlord’s gross negligence or willful misconduct interrupts any such elevator, plumbing, heating, ventilation, air conditioning or electrical service for more than five (5) continuous days after notice from Tenant to Landlord of such interruption of service, then, as Tenant’s sole and exclusive remedy for such failure, Rent shall be abated until such service is restored.

 

17.              Alterations; Fixtures; Other Personal Property.

 

17.1.              Tenant shall not make any alterations, additions or improvements in or to the Premises (collectively, “Alterations”) without Landlord’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed. In the event that Landlord approves any Alterations, Landlord may elect, at the time of such approval, to require Tenant to remove any or all of the Installations upon the expiration or earlier termination of this Lease and may impose such other covenants, conditions and obligations on Tenant in connection with the commencement, performance and completion of such Alterations as Landlord may deem reasonably necessary or appropriate in Landlord’s reasonable discretion. Any request for approval shall be in writing, delivered not less than fourteen (14) days in advance of any proposed construction, and accompanied by plans, specifications, bid proposals, work contracts and such other information concerning the nature and cost of the alterations as may be reasonably requested by Landlord. Tenant shall pay to Landlord on demand an amount equal to Landlord’s actual out-of-pocket costs and expenses incurred by Landlord in connection with any alterations, additions or improvements to the Premises to cover Landlord’s costs and expenses for plan review, coordination, scheduling and supervision thereof. Tenant shall reimburse Landlord for any extra expense incurred by Landlord by reason of faulty work done by Tenant or its contractors, delays caused by such work, or inadequate cleanup.

 

17.2.              Other than the items, if any, listed on Exhibit “G” attached hereto and any trade fixtures, machinery, equipment and other personal property which may be removed without material damage to the Premises, which damage shall be repaired by Tenant during the Term (“Tenant’s Property”), all Alterations, real property fixtures, built-in laboratory casework and cabinets and other similar additions and improvements built into the Premises so as to become an integral part of the Premises, such as fume hoods which penetrate the roof or plenum area, built-in cold rooms, built-in warm rooms, walk-in cold rooms, walk-in warm rooms, deionized water system, glass washing equipment, autoclaves, chillers, built-in plumbing, electrical and mechanical equipment and systems, and any power generator and transfer switch (collectively, “Installations”) shall be and shall remain the property of Landlord during the Term and following the expiration or earlier termination of the Term, shall not be removed by Tenant at any time during the Term (unless replaced with substantially similar updated installations) and shall remain upon and be surrendered with the Premises as a part thereof following the expiration or earlier termination of the Term; provided, however, that if Landlord elected at the time it approved such Installation to cause Tenant to remove such Installation, Tenant shall remove such Installation upon the expiration or earlier termination of this Lease and restore any damage caused by or occasioned as a result of such removal. During any such restoration period, Tenant shall pay Rent to Landlord as provided herein as if said space were otherwise occupied by Tenant.

 

17.3.              If Tenant shall fail to remove all of Tenant’s Property and other effects from the Premises prior to expiration or earlier termination of this Lease, then Landlord may, at its option in its sole and absolute discretion, (a) remove the same in any manner that Landlord shall choose, and store Tenant’s Property and other effects without liability to Tenant for loss thereof or damage thereto, and Tenant agrees to pay Landlord upon demand any and all expenses incident to such removal and storage or (b) without notice, sell Tenant’s Property and other effects or any of them, at private sale and without legal process, for such price as Landlord may obtain, and apply the proceeds of such sale against any amounts due under this Lease from Tenant to

 

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Landlord and against any and all expenses incident to the removal, storage and sale of Tenant’s Property and other effects.

 

17.4.              Notwithstanding anything in this Lease to the contrary, Landlord’s consent shall not be required with respect to any cosmetic or decorative alterations costing less, in the aggregate, than Five Thousand Dollars ($5,000) during any six (6) month period, provided that such alteration (i) does not affect the Premises structure or the exterior of the Premises, (ii) does not adversely affect the proper functioning of any mechanical, utility, heating, ventilating, air conditioning, or electrical systems, or any other Premises system, (iii) does not violate the provisions of the certificate of occupancy for the Premises or the Premises, (iv) the work is done expeditiously and in a good and workmanlike manner using new materials of good quality, (v) the alterations comply with all applicable laws promulgated by Governmental Authorities, (vi) Tenant complies with any applicable insurance requirements contained in this Lease, and (vii) Tenant shall promptly pays all costs and expenses and discharges any liens arising in respect of the work.

 

18.              Repairs and Maintenance.

 

18.1.              Landlord, at its own cost, shall repair the structural portions of the Premises, including, without limitation, foundations, structural interior partitions, and exterior walls, unless such repairs are required in whole or in part because of any act, neglect, fault of or omissions of any duty by Tenant, its agents, servants, employees or invitees, in which case Tenant shall pay to Landlord the full cost of such repairs prior to and as a condition to Landlord’s obligation to make such repairs.

 

18.2.              Except for services of Landlord, if any, required by Section 18.1, Tenant shall, at its sole cost and expense, keep the Premises and every part thereof (including, without limitation, plumbing, fire sprinkler system (if any), heating, ventilating, air conditioning, elevator, electrical systems, exterior landscaping and, subject to Section 7.4 hereof, roofing and covering materials and parking areas) in good condition and repair, ordinary wear and tear excepted. Tenant shall, upon the expiration or earlier termination of this Lease, surrender the Premises to Landlord in at least as good as its condition when received, ordinary wear and tear excepted. Landlord shall have no obligation to alter, remodel, improve, repair, decorate or paint the Premises or any part thereof.

 

18.3.              Landlord shall not be liable for any failure to make any repairs or to perform any maintenance which is an obligation of Landlord unless such failure shall persist for an unreasonable time after written notice of the need of such repairs or maintenance is given to Landlord by Tenant. Tenant waives the rights that may be available to it under the laws of the State in which the Premises is located or under any similar law, statute or ordinance now or hereafter in effect to make repairs at Landlord’s expense. Prior to entering the Premises to perform work and make repairs which are permitted or required pursuant to the terms of this Lease (except in the event of an emergency, in which event such right and access shall be unrestricted) Landlord shall give Tenant reasonable advance notice of the proposed entry or access. Landlord shall perform all work and make all repairs in a manner designed to reasonably minimize any material interference with Tenant’s use of the Premises (although Landlord shall not thereby be required to incur overtime or other additional expense to do so unless Tenant requests Landlord do so and shall pay for such expense).

 

18.4.              This Article 18 relates to repairs and maintenance arising in ordinary course of operation of the Premises and any related facilities, including minor acts of vandalism. In the event of fire, earthquake, flood, riot, major acts of vandalism, war, or similar cause of damage or destruction, this Article 18 shall not be applicable and the provisions of Article 22 shall apply and control.

 

19.              Liens.

 

19.1.              Without in any way affecting the limitations on Alterations pursuant to Section 17.1 hereof, Tenant shall discharge, by bond or otherwise, any mechanic’s lien filed against the Premises for work claimed to have been done for, or materials claimed to have been furnished to Tenant, within ten (10) days after Tenant has

 

10

 

knowledge of the filing thereof, at the sole cost and expense of
Tenant. Subject to the immediately preceding sentence, Tenant shall keep the
Premises free from any liens arising out of work performed, materials furnished
or obligations incurred by Tenant.

 

19.2.           Should Tenant
fail to discharge any lien of the nature described in Section 19.1, Landlord
shall have the right, but not the obligation, to pay such claim or post a bond
or otherwise provide security to eliminate the lien as a claim against title and
the cost thereof shall be immediately due from Tenant as Additional Rent.

 

19.3.           In the event
Tenant shall lease or finance the acquisition of office, laboratory or
manufacturing equipment, furnishings, or other personal property of a removable
nature utilized by Tenant in the operation of Tenant’s business, including
equipment of a removable nature required for Tenant’s cGMP Facility, Tenant
warrants that any Uniform Commercial Code Financing Statement executed by
Tenant will upon its face or by exhibit thereto indicate that such Financing
Statement is applicable only to removable personal property of Tenant located
within the Premises. In no event shall the address of the Premises be furnished
on the statement without qualifying language as to applicability of the lien
only to removable personal property, located in an identified suite held by
Tenant.

 

20.            Indemnification
and Exculpation.

 

20.1.           Tenant hereby
indemnifies and agrees to defend, save and hold Landlord harmless from and
against any and all Claims for injury or death to person or damage to property
occurring within or about the Premises, arising directly or indirectly out of
use or occupancy of the Premises or a breach or default by Tenant in the
performance of any of its obligations hereunder, unless caused solely by the
willful misconduct or gross negligence of the Landlord.

 

20.2.           Landlord shall
not be liable to Tenant for, and Tenant assumes all risk of damage to, personal
property (including, without limitation, loss of records, product, research or
other personal property of any kind or description kept within the Premises).
Tenant further waives any and all Claims for injury to Tenant’s business or
loss of income relating to any such damage or destruction of personal property
(including, without limitation, any loss of records, product, research or other
personal property of any kind or description).

 

20.3.           Landlord shall
not be liable for any damages arising from any act, omission or neglect of any
person, provided however, that, subject to Section 41.9 hereof, Landlord shall
indemnify Tenant from and against any and all Claims for injury or death to
person or damage to property occurring within or about the Premises, arising
directly or indirectly out of the gross negligence or willful misconduct of
Landlord.

 

20.4.           Security
devices and services, if any, while intended to deter crime may not in given
instances prevent theft or other criminal acts. Tenant (a) acknowledges and
agrees that Landlord shall not be liable for injuries or losses caused by
criminal acts of third parties and (b) assumes the risk that any security
device or service may malfunction or otherwise be circumvented by a criminal.
Tenant shall at Tenant’s cost obtain insurance coverage to the extent Tenant
desires protection against such criminal acts.

 

21.            Insurance;
Waiver of Subrogation.

 

21.1.           Landlord shall
carry insurance upon the Premises, in an amount equal to full replacement cost
(exclusive of the costs of excavation, foundations, and footings, and without
reference to depreciation taken by Landlord upon its books or tax returns) or,
if greater, the amount of such insurance Landlord’s mortgage lender requires
Landlord to maintain, providing protection against any peril generally included
within the classification “Fire and Extended Coverage” together with insurance
against sprinkler damage (if applicable), vandalism and malicious mischief.
Subject to availability thereof, Landlord shall further insure, as it deems
necessary or appropriate, against flood, environmental hazard and earthquake,
loss or failure of building equipment, rental loss during the period of repair
or rebuild, workmen’s compensation insurance and fidelity

 

11

 

bonds for employees employed to perform services. Landlord shall, on
fifteen (15) business days prior written notice from Tenant, obtain insurance
as to any improvements installed by Tenant or which are in addition to the
standard improvements customarily furnished by Landlord without regard to
whether or not such improvements are made a part of the Premises, Landlord
shall use its best efforts to provide insurance certificates evidencing such
insurance to Tenant not more than 30 days after each renewal of any such
insurance.

 

21.2.           Landlord shall
further carry public liability insurance with a single loss limit of not less
than Two Million Dollars ($2,000,000.00) for death or bodily injury, or
property damage with respect to the Premises.

 

21.3.           All insurance
required or permitted to be maintained by Landlord hereunder shall constitute
Reimbursable Operating Expenses.

 

21.4.           Tenant, at its
sole cost and expense, shall procure and continue in effect throughout the Term
(and during any period of occupancy by Tenant after the expiration or earlier
termination of this Lease) comprehensive public liability insurance with limits
of not less than Two Million Dollars ($2,000,000.00) per occurrence for death
or bodily injury and not less than One Million Dollars ($1,000,000.00) for
property damage with respect to the Premises.

 

21.5.           The aforesaid
insurance required of Tenant shall name Landlord, its officers, employees and
agents, as an additional insured. Said insurance shall be with companies having
a rating of not less than policyholder rating of A and financial category
rating of at least Class XII in “Best’s Insurance Guide.” Tenant shall obtain
for Landlord from the insurance companies or cause the insurance companies to
furnish, certificates of coverage to Landlord. No such policy shall be cancelable
or subject to reduction of coverage or other modification or cancellation
except after thirty (30) days prior written notice to Landlord from the
insurer. All such policies shall be written as primary policies, not
contributing with and not in excess of the coverage which Landlord may carry.
Tenant’s policy may be a “blanket policy” which specifically provides that the
amount of insurance shall not be prejudiced by other losses covered by the
policy. Tenant shall, at least twenty (20) days prior to the expiration of such
policies, furnish Landlord with renewals or binders. Tenant agrees that if
Tenant does not take out and maintain such insurance, Landlord may (but shall
not be required to) procure said insurance on Tenant’s behalf and at its cost
to be paid as Additional Rent.

 

21.6.           Landlord shall
not be liable to Tenant for, and Tenant assumes all risk of damage to, any and
all fixtures, goods, inventory, merchandise, equipment, leasehold improvements
(subject to Section 22 hereof), and personal property (including, without
limitation, all books and records) and Landlord shall not be liable for injury
to Tenant’s business or any loss of income therefrom relative to such damage
all as more particularly heretofore set forth within this Lease. Tenant, at its
sole cost and expense, shall carry such insurance as Tenant desires with
respect to personal property of Tenant or interruption of Tenant’s business.

 

21.7.           In each
instance where insurance is to name Landlord as additional insured, Tenant
shall upon written request of Landlord also designate and furnish certificates
so evidencing Landlord as additional insured to (i) any lender of Landlord
holding a security interest in the Premises or real property upon which the
Premises is situated, and/or (ii) the landlord under any lease wherein Landlord
is tenant of the real property whereupon the Premises is located if the
interest of Landlord is or shall become that of a tenant under a ground lease
rather than that of a fee owner, and/or (iii) any management company retained
by Landlord to manage the Premises.

 

21.8.           For the Term of
this Lease, Tenant and Landlord each hereby waives any and all rights of
recovery against the other or against the officers, directors, employees,
agents, and representatives of the other, on account of loss or damage
occasioned to Tenant or Landlord, as applicable, or its property or the
property of others under its control to the extent that such loss or damage is
insured against under any fire and extended coverage insurance policy which
either may have in force at the time of such loss or damage. Landlord and
Tenant upon obtaining the policies of insurance required or permitted under
this Lease shall give

 

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notice to the insurance carrier or carriers that the foregoing waiver
of subrogation is contained in this Lease. If the foregoing waiver of
subrogation shall contravene any law with respect to exculpatory agreements,
the liability of Landlord or tenant, as applicable, shall be deemed not
released but shall be secondary to the other’s insurer.

 

21.9.           Landlord may
require insurance policy limits to be raised to conform with requirements of
Landlord’s lender and/or to bring coverage limits to levels then being required
of new tenants within Landlord’s other projects.

 

22.            Damage or
Destruction.

 

22.1.           In the event of
a partial destruction of the Premises by fire or other perils covered by
extended coverage insurance, not exceeding fifty percent (50%) of the full
insurable value of the Premises and if the damage thereto is such that the
Premises may be repaired, reconstructed or restored within a period of eight
(8) months from the date of the happening of such casualty and Landlord will
receive insurance proceeds (or would have received if Landlord carried the
insurance required to be carried pursuant to Article 21 hereof) sufficient to
cover the cost of such repairs (except for any deductible amount provided by
Landlord’s policy (which shall be no greater than $15,000), which deductible amount
if paid by Landlord shall be includable in Additional Rent), Landlord shall
commence and proceed diligently with the work of repair, reconstruction and
restoration and this Lease shall continue in full force and effect.

 

22.2.           In the event of
any damage to or destruction of the Premises, other than as provided in Section
22.1, Landlord may elect, in its sole and absolute discretion, to repair,
reconstruct and restore the Premises, in which case this Lease shall continue
in full force and effect or (b) not to repair, reconstruct and restore the
Premises, in which case this Lease shall terminate as of the date that is
seventy-five (75) days after the date of damage or destruction; provided,
however, that notwithstanding Landlord’s election, Tenant may elect to
terminate this Lease by written notice to Landlord within ten (10) business
days of receipt of Landlord’s notice of election; and provided further,
if there are, at the time of any such destruction of the Premises any then
unexercised Extension Rights hereunder and if Tenant elects to extend the term
hereof for a term that extends for at least five years or more beyond the date
or projected date of any restoration of the Premises, Landlord shall commence
and proceed diligently with the work of repair, reconstruction and restoration
and this Lease shall continue in full force and effect, as so extended.

 

22.3.           Landlord shall
give written notice to Tenant of its election pursuant to Section 22.2 not
later than sixty (60) days following the date of damage or destruction.

 

22.4.           In the event of
damage or destruction as herein described, the rental provided to be paid under
this Lease shall be abated proportionately based on the extent to which
Tenant’s use of the Premises is impaired during the period of such repair,
reconstruction or restoration, unless Landlord provides Tenant with other space
during the period of repair that is suitable (in Tenant’s reasonable
discretion) for the temporary conduct of Tenant’s business.

 

22.5.           Notwithstanding
anything to the contrary contained in this Article, if Landlord is delayed or
prevented from commencing or completing the repair or restoration of damage to
or destruction of the Premises by reason of acts of God or war, governmental
restrictions, inability to procure the necessary labor or materials, strikes,
or other events beyond the control of Landlord, the time for Landlord to
commence or complete repairs shall be extended until such events cease to delay
or prevent such repair or restoration; provided, however, that if repairs or
restoration required to provide Tenant use of the Premises is not substantially
complete as of the end of eight (8) months from the date of damage or
destruction, then Landlord may, in its sole and absolute discretion, elect not
to proceed with such repair and restoration, in which event Landlord shall be
relieved of its obligations to make such repairs or restoration and this Lease
shall terminate as of the date that is seventy-five (75) days after such damage
or destruction.

 

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22.6.           If Landlord is
obligated to or elects to repair or restore as herein provided, Landlord shall
be obligated to make repairs or restoration only of those portions of the
Premises which were covered by Landlord’s insurance and then only to the extent
of such insurance proceeds; the repair and restoration of items not covered by
Landlord’s insurance shall be the obligation of Tenant. In the event Tenant
elected to upgrade certain improvements from the standard normally provided by
Landlord, Landlord shall, upon the need for replacement due to an insured loss,
provide only the standard Landlord improvements unless Tenant shall elect to
again upgrade and pay any additional cost of such upgrades. 

 

22.7.           Notwithstanding
anything to the contrary contained in this Section 22, Landlord shall not have
any obligation whatsoever to repair, reconstruct or restore the Premises to the
extent that insurance proceeds are not available therefor, or when the damage
resulting from any casualty covered under this Article occurs during the last
twenty-four (24) months of the Term and is reasonably estimated by Landlord to
cost Two Hundred Fifty Thousand Dollars ($250,000) or more to repair, unless if
there are, at the time of any such destruction of the Premises any then
unexercised Extension Rights hereunder and Tenant elects to extend the term
hereof as described in the Right to Extend Addendum attached hereto, Landlord
shall commence and proceed diligently with the work of repair, reconstruction
and restoration and this Lease shall continue in full force and effect, as so
extended.

 

22.8.           Upon
termination of this Lease under any of the provisions of this Section 22, the
parties shall be released from all of their obligations arising under this
Lease from the date Tenant surrenders possession of the Premises to the
Landlord, except for obligations with respect to facts, events or circumstances
which have theretofore occurred and obligations arising under provisions hereof
that expressly survive the termination of this Lease.

 

23.            Eminent Domain.

 

23.1.           In the event
the whole of the Premises, or such part thereof as shall substantially
interfere with the Tenant’s use and occupancy thereof, shall be taken for any
public or quasi-public purpose by any lawful power or authority by exercise of
the right of appropriation, condemnation or eminent domain, or sold to prevent
such taking, Tenant or Landlord may terminate this Lease effective as of the
date possession is required to be surrendered to said authority.

 

23.2.           In the event of
a partial taking of the Premises or of drives, walkways, and parking areas
serving the Premises for any public or quasi-public purpose by any lawful power
or authority by exercise of right of appropriation, condemnation, or eminent
domain, or sold to prevent such taking, then without regard as to whether any
portion of the Premises occupied by Tenant was so taken, Landlord may elect to
terminate this Lease as of such taking if such taking is, in the reasonable
opinion of Landlord, of a material nature such as to make it uneconomical to
continue use of the unappropriated portion for purposes of office rentals or
laboratory space.

 

23.3.           Tenant shall be
entitled to any award which is specifically awarded as compensation for the
taking of Tenant’s personal property that was installed at Tenant’s expense and
for costs of moving Tenant to a new location. Except as before set forth, any
and all awards for any taking of the nature described in this Section 23 shall
belong to Landlord.

 

23.4.           If, following
any taking of the nature described in this Section 23, this Lease continues in
effect, the Landlord shall promptly proceed to restore the Premises to
substantially their same condition prior to such partial taking. To the extent
such restoration is feasible, as reasonably determined by Landlord, the Rent
shall be abated proportionately based upon the extent, if any, to which
Tenant’s use of the Premises has decreased on the basis of the percentage of
the rental value of the Premises after such taking and the rental value of the
Premises prior to such taking.

 

14

 

24.            Defaults and
Remedies.

 

24.1.           Late payment by
Tenant to Landlord of Rent and other sums due will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impracticable to ascertain. Such costs include, but are
not limited to, processing and accounting charges and late charges which may be
imposed on Landlord by the terms of any mortgage or trust deed covering the
Premises. Therefore, if any installment of Rent due from Tenant is not received
by Landlord within ten (10) days after the date such payment is due, Tenant
shall pay to Landlord an additional sum of six percent (6%) of the overdue Rent
as a late charge. The parties agree that this late charge represents a fair and
reasonable estimate of the costs that Landlord will incur by reason of late
payment by Tenant. In addition to the late charge, Rent not paid when due shall
bear interest from the 5th day after date due until paid at the lesser of (i)
twelve percent (12%) per annum or (ii) the maximum rate permitted by law.

 

24.2.           No payment by
Tenant or receipt by Landlord of a lesser amount than the Rent payment herein
stipulated shall be deemed to be other than on account of the Rent, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment as Rent be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord’s right to recover
the balance of such Rent or pursue any other remedy provided.

 

24.3.           If Tenant fails
to pay any sum of money required to be paid by it hereunder, or shall fail to
perform any other act on its part to be performed hereunder, Landlord may,
without waiving or releasing Tenant from any obligations of Tenant, but shall
not be obligated to, make such payment or perform such act. All sums so paid or
incurred by Landlord, together with interest thereon, from the date such sums
were paid or incurred, at the annual rate equal to twelve percent (12%) per
annum or the highest rate permitted by law, whichever is less, shall be payable
to Landlord on demand as Additional Rent.

 

24.4.           The occurrence
of any one or more of the following events shall constitute a “Default”
hereunder by Tenant:

 

24.4.1              The abandonment
or vacation of the Premises by Tenant;

 

24.4.2              The failure by
Tenant to make any payment of Rent as and when due; provided, however, that
Landlord will give Tenant notice and an opportunity to cure any failure to pay
Rent not more than once in any 12 month period and Tenant agrees that such
notice shall be in lieu of and not in addition to any notice required by law;

 

24.4.3              The failure by
Tenant to observe or perform any obligation or covenant contained herein (other
than described in Section 24.4.1 and 24.4.2) to be performed by Tenant, where
such failure shall continue for a period of thirty (30) days after written
notice thereof from Landlord to Tenant. Such notice shall be in lieu of, and
not in addition to, any notice required under any applicable law, statute or
ordinance; provided that if the nature of Tenant’s default is such that it
reasonably requires more than thirty (30) days to cure, then Tenant shall not
be deemed to be in default if Tenant shall commence such cure within said
thirty (30) day period and thereafter diligently prosecute the same to
completion, provided, however, that such cure is completed no
later than ninety (90) days from the date of written notice; provided,
further, however, that if any such cure cannot be completed within such
ninety (90) day period solely by reason of the need for any required
governmental permit which is not received within such ninety (90) day period,
and provided (i) Tenant uses diligence in applying for and pursuing such
permits, and (ii) Tenant’s operations in the Premises are not materially
adversely affected by its failure to effect cure within such ninety (90) day
period, Tenant may have up to an additional ninety (90) days to obtain any such
permit and to effect such cure;

 

24.4.4              Tenant makes an
assignment for the benefit of creditors;

 

15

 

24.4.5              A receiver,
trustee or custodian is appointed to, or does, take title, possession or
control of all, or substantially all, of Tenant’s assets;

 

24.4.6              Tenant files a
voluntary petition under the Bankruptcy Code (or any similar law) or an order
for relief is entered against Tenant pursuant to a voluntary or involuntary
proceeding commenced under any chapter of the Bankruptcy Code;

 

24.4.7              Any involuntary
petition is filed against the Tenant under any chapter of the Bankruptcy Code
and is not dismissed within ninety (90) days; or

 

24.4.8              Tenant’s
interest in this Lease is attached, executed upon, or otherwise judicially
seized and such action is not released within ninety (90) days of the action.

 

Notices given under this Section 24.4 shall specify
the alleged default and shall demand that Tenant perform the provisions of this
Lease or pay the Rent that is in arrears, as the case may be, within the
applicable period of time, or quit the Premises. No such notice shall be deemed
a forfeiture or a termination of this Lease unless Landlord elects otherwise in
such notice.

 

24.5.           In the event of
a Default by Tenant, and at any time thereafter, with or without notice or
demand and without limiting Landlord in the exercise of any right or remedy
which Landlord may have, Landlord shall be entitled to terminate Tenant’s right
to possession of the Premises by any lawful means, in which case this Lease
shall terminate and Tenant shall immediately surrender possession of the
Premises to Landlord. In such event, Landlord shall have the immediate right to
re-enter and remove all persons and property, and such property may be removed
and stored in a public warehouse or elsewhere at the cost of, and for the
account of Tenant, all without service of notice or resort to legal process and
without being deemed guilty of trespass, or becoming liable for any loss or
damage which may be occasioned thereby. In the event that Landlord shall elect
to so terminate this Lease, then Landlord shall be entitled to recover from
Tenant all damages incurred by Landlord by reason of Tenant’s default,
including:

 

24.5.1              The worth at
the time of award of any unpaid Rent which had been earned at the time of such
termination; plus

 

24.5.2              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 that portion of such
rental loss which Tenant proves could have been reasonably avoided; plus

 

24.5.3              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 which
Tenant proves could have been reasonably avoided; plus

 

24.5.4              Any other
amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligation 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 restoring the Premises to the
condition required under the terms of this Lease; plus

 

24.5.5              At the
Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law.

 

As used in Sections 24.5.1 and 24.5.2 above, “worth at the time of
award” shall be computed by allowing interest at the rate specified in Section
24.3. As used in Section 24.5.3 above, the “worth at the time of the award”
shall be computed by taking the present value of such amount, by using the
discount rate of the Federal Reserve Bank of San Francisco at the time of the
award plus six (6) percentage points.

 

16

 

24.6.           If Landlord
does not elect to terminate this Lease as provided in this Section, then
Landlord may, from time to time, recover all Rent as it becomes due under this
Lease. At any time thereafter, Landlord may elect to terminate this Lease and
to recover damage to which Landlord is entitled.

 

24.7.           In the event
Landlord elects to terminate this Lease and relet the Premises, it may execute
any new lease in its own name. Tenant hereunder shall have no right or
authority whatsoever to collect any Rent from such tenant. The proceeds of any
such reletting shall be applied as follows: 

 

First, to the
payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord, including, but not limited to, storage charges or brokerage
commissions owing from Tenant to Landlord as the result of such reletting;

 

Second, to the
payment of the costs and expenses of reletting the Premises, including
alterations and repairs which Landlord deems reasonably necessary and advisable
and reasonable attorneys’ fees, charges and disbursements incurred by Landlord
in connection with the retaking of the Premises and such reletting;

 

Third, to the payment
of Rent and other charges due and unpaid hereunder; and 

 

Fourth, to the payment
of future Rent and other damages payable by Tenant under this Lease.

 

24.8.           All rights,
options, and remedies of Landlord contained in this Lease shall be construed
and held to be nonexclusive and cumulative. Landlord shall have the right to
pursue any one or all of such remedies or any other remedy or relief which may
be provided by law, whether or not stated in this Lease. No waiver of any
default of Tenant hereunder shall be implied from any acceptance by Landlord of
any Rent or other payments due hereunder or any omission by Landlord to take
any action on account of such default if such default persists or is repeated,
and no express waiver shall affect defaults other than as specified in said
waiver.

 

24.9.           Termination of
this Lease or Tenant’s right to possession by Landlord shall not relieve Tenant
from any liability to Landlord which has theretofore accrued or shall arise
based upon events which occurred prior to the last to occur of (i) the date of
Termination or (ii) the date possession of Premises is surrendered.

 

24.10.    Landlord shall
not be in default unless Landlord fails to perform obligations required of
Landlord within a reasonable time after written notice by Tenant specifying
wherein Landlord has failed to perform such obligation.

 

24.11.    In the event of
any default on the part of Landlord, Tenant will give notice by registered or
certified mail to any beneficiary of a deed of trust or mortgagee of a mortgage
covering the Premises and to any landlord of any lease of land on which the
Premises is located, in either case whose name and address shall have been
furnished to Tenant, and Tenant shall offer such beneficiary, mortgagee and/or
landlord a reasonable opportunity to cure the default, including time to obtain
possession of the Premises by power of sale or a judicial action if such should
prove necessary to effect a cure, provided the Landlord shall have furnished to
Tenant in writing the names and addresses of all such persons who are to
receive such notices. If, after the lapse of any such notice and cure period,
no such cure has been effected, Tenant may cure such Landlord defaults and
shall be entitled to interest on the reasonable amounts expended on such cure
from the date incurred until paid.

 

25.            Assignment or
Subletting.

 

25.1.           Except as
hereinafter provided, Tenant shall not, either voluntarily or by operation of
law, directly or indirectly, sell, hypothecate, assign, pledge, encumber or
otherwise transfer this Lease, or sublet the Premises or any part thereof, or
permit or suffer the Premises or any part thereof to be used or occupied as

 

17

 

work space, storage space, mailing privileges, concession or otherwise
by anyone other than Tenant or Tenant’s employees, without the prior written
consent of Landlord in each instance, which shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding the foregoing, so long as Tenant is not
in default hereunder, Landlord’s consent shall not be required in connection
with an assignment of this Lease or sublet of the Premises to any entity
controlled by, under common control with or controlling Tenant, provided that
Tenant gives Landlord prior written notice of such transaction and such
proposed transaction otherwise complies with or satisfies the requirements and
conditions of Section 25.5 hereof (an “Affiliate Transfer”).

 

In addition, Tenant shall have the right to assign
this Lease, upon written notice to Landlord but without obtaining Landlord’s
prior written consent, to a corporation or other entity which is a
successor-in-interest to Tenant, by way of merger, consolidation or corporate
reorganization, or by the purchase of all or substantially all of the assets or
the ownership interests of the Tenant provided that (i) such merger or
consolidation, or such acquisition or assumption, as the case may be, is for a
good business purpose and not principally for the purpose of transferring the
Lease, and (ii) the net worth (as determined in accordance with GAAP) of the
assignee or sublessee, as applicable, is not less than the net worth (as
determined in accordance with GAAP) of Tenant as of the Effective Date, and
(iii) such assignee shall agree in writing to assume all of the terms,
covenants and conditions of this Lease arising after the effective date of the
assignment (a “Permitted Assignment”).

 

25.2.           If Tenant is a
corporation, the shares of which are not actively traded upon a stock exchange
or in the over-the-counter market, a transfer or series of transfers whereby
twenty-five percent (25%) or more of the issued and outstanding shares of such
corporation are, or the voting control is, transferred (but excepting transfers
upon the death of individual shareholders or transfers between existing
shareholders) from a person or persons or entity or entities which were owners
thereof at time of execution of this Lease to persons or entities who were not
owners of shares of the corporation at time of execution of this Lease shall be
deemed an assignment of this Lease requiring the consent of Landlord as
provided in Section 25.1 above.

 

25.3.           In the event
Tenant desires to assign, sublease, hypothecate or otherwise transfer this
Lease or sublet the Premises other than pursuant to a Permitted Assignment,
then at least thirty (30) days, but not more than ninety (90) days, prior to
the date when Tenant desires the assignment or sublease to be effective (the “Assignment Date”), Tenant shall give Landlord a notice (the
“Assignment Notice”) containing
information (including references) concerning the character of the proposed
assignee or sublessee, the Assignment Date, any ownership or commercial
relationship between Tenant and the proposed assignee or sublessee, and the
consideration and all other material terms and conditions of the proposed
assignment or sublease along with such other information as Landlord may
reasonably require, all in such detail as Landlord shall reasonably require.
Tenant shall also tender to Landlord, reasonable third party attorneys fees and
other third party costs and expenses incurred by Landlord in reviewing Tenants
request for such assignment.

 

25.4.           Landlord in
making its determination as to whether consent should be given to a proposed
assignment or sublease, may request such information as it deems necessary or
appropriate including, without limitation, information relating to the
financial strength of the proposed assignee or sublessee (notwithstanding that
the assignor will remain liable for Tenant’s performance), any change in use of
the Premises which such proposes assignee contemplates.

 

25.5.           As conditions
precedent to consideration of a requested transfer of rights or subletting of
the Demises Premises, Landlord may require any or all of the following:

 

25.5.1              Notwithstanding
any assignment or subletting, Tenant shall remain fully liable under this Lease
during the unexpired Term;

 

25.5.2              Tenant shall
provide Landlord with evidence reasonably satisfactory to Landlord that the
value of Landlord’s interest under this Lease will not thereby be diminished or
reduced. Such evidence shall

 

18

 

include, but need not be limited to, evidence respecting the relevant
business experience and financial responsibility and status of the third party
concerned;

 

25.5.3              Tenant shall
reimburse Landlord for Landlord’s actual third party costs and expenses,
including, without limitation, reasonable attorneys’ fees, charges and
disbursements incurred in connection with the review, processing and
documentation of such request;

 

25.5.4              If Tenant’s
assignment of this Lease or subletting of more than fifty percent (50%) of the
Premises (other than a Permitted Assignment or an Affiliate Transfer) provides
for the receipt by, on behalf or on account of Tenant of any consideration of
any kind whatsoever (including, but not by way of limitation, a premium rental
for a sublease or lump sum payment for an assignment) in excess of the rental
and other charges due Landlord under this Lease and Tenant’s reasonable leasing
costs (consisting of new tenant improvements, leasing commissions,
architectural fees, legal fees and other costs) in procuring such subtenant or
assignee, Tenant shall pay one-half (1/2) of said excess to Landlord. If said consideration consists of cash
paid to Tenant, said payment to Landlord shall be made upon receipt by Tenant
of said cash payment;

 

25.5.5              Written
agreement from any third party concerned that in the event Landlord gives such third
party notice that Tenant is in default under this Lease, such third party shall
thereafter make all payments otherwise due Tenant directly to Landlord, which
payments will be received by Landlord without any liability on Landlord except
to credit such payment against those due under the Lease, and any such third party
shall agree to attorn to Landlord or its successors and assigns should this
Lease be terminated for any reason; provided, however, that in no
event shall Landlord or its successors or assigns be obligated to accept such
attornment;

 

25.5.6              Tenant shall
not then be in Default hereunder in any respect;

 

25.5.7              Such third
party’s proposed use of the Premises shall be a Permitted Use;

 

25.5.8              Landlord shall
not be bound by any provision of any agreement pertaining to Tenant’s transfer
of rights or subletting of the Premises;

 

25.5.9              Any agreement
pertaining to Tenant’s transfer of this Lease or subletting of any portion of
the Premises and Landlord’s approval thereof (other than a Permitted
Assignment) shall be in a form acceptable to Landlord in Landlord’s reasonable
discretion, and any such agreement shall not be modified or amended without
Landlord’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed;

 

25.5.10       Tenant shall
deliver to Landlord one original executed copy of any and all written
instruments evidencing or relating to Tenant’s transfer of rights or subletting
of the Premises; and

 

25.5.11       A list of
Hazardous Materials, certified by the proposed sublessee to be true and
correct, which the proposed sublessee intends to use or store in the Premises.
Additionally, Tenant shall deliver to Landlord, on or before the date any
proposed sublessee takes occupancy of the Premises, all of the items relating
to Hazardous Materials of such proposed sublessee.

 

25.6.           Any sale,
assignment, hypothecation or transfer of this Lease or subletting of the
Premises that is not in compliance with the provisions of this Section 25 shall
be void and shall constitute a Default hereunder permitting Landlord the right
to exercise any and all of its remedies hereunder, including, without
limitation, the right to terminate this Lease.

 

25.7.           The consent by
Landlord to an assignment or subletting shall not relieve Tenant or any
assignees of this Lease or sublessee of the Premises from obtaining the consent
of Landlord to any further assignment or subletting. The acceptance of Rent or
any other sum due hereunder, or the acceptance of performance

 

19

 

of any other term, covenant, or condition thereof, from any other
person or entity shall not be deemed to be a waiver of any of the provisions of
this Lease or a consent to any subletting, assignment or other transfer of the
Premises.

 

25.8.           Notwithstanding
any subletting or assignment, Tenant and any assignee or sublessee of Tenant
shall remain fully and primarily liable for the payment of all Rent and other
sums due, or to become due hereunder, and for the full performance of all other
terms, conditions, and covenants to be kept and performed by Tenant.

 

25.9.           Upon delivery
to Landlord of an Assignment Notice which, together with all prior assignments,
results in Tenant or any successor pursuant to a Permitted Assignment occupying
less than fifty percent (50%) of the Premises, Landlord shall have the option,
exercisable by giving notice to Tenant at any time within ten (10) days after
Landlord’s receipt of such Assignment Notice, to terminate this Lease as of the
date specified in the Assignment Notice as the Assignment Date. No failure of
Landlord to exercise any such option to terminate this Lease shall be deemed to
be Landlord’s consent to the proposed assignment, sublease or other transfer.
If Landlord exercises such right to terminate the Lease as described above,
Tenant shall have the right, within ten business days of Landlord’s election,
to withdraw such Assignment Notice, whereupon the Lease shall remain in full
force and effect.

 

25.10.    If Tenant shall
sublet the Premises or any part, Tenant hereby immediately and irrevocably
assigns to Landlord, as security for Tenant’s obligations under this Lease, all
rent from any subletting of all or a part of the Premises and Landlord as
assignee and as attorney-in-fact for Tenant, or a receiver for Tenant appointed
on Landlord’s application, may collect such rent and apply it toward Tenants
obligations under this Lease; except that, subject to the provisions of Section
25.5.4 hereof, Tenant shall have the right to collect such rent until the
occurrence of a Default.

 

26.            Attorneys’ Fees
and Costs.

 

26.1.           Tenant shall be
responsible for (i) all of Tenant’s legal and related costs and fees in
connection with this Lease, and (ii) all of Landlord’s legal and related costs
and fees if Landlord is required to consult an attorney regarding the
enforcement of this Lease.

 

26.2.           If either party
commences an action against the other party arising out of or in connection
with this Lease, the prevailing party shall be entitled to have and recover
from the non-prevailing party reasonable attorneys’ fees, charges and
disbursements and costs of suit.

 

27.            Bankruptcy. In the event
a debtor, trustee, or debtor in possession under the Bankruptcy Code, or other
person with similar rights, duties and powers under any other law, proposes to
cure any Default under this Lease or to assume or assign this Lease, and is
obliged to provide adequate assurance to Landlord that (i) a Default will be
cured, (ii) Landlord will be compensated for its damages arising from any
breach of this Lease, or (iii) future performance under this Lease will occur,
then adequate assurance shall include any or all of the following, as
designated by Landlord:

 

27.1.           Those acts
specified in the Bankruptcy Code or other law as included within the meaning of
adequate assurance, even if this Lease does not concern a shopping center or
other facility described in such laws;

 

27.2.           A prompt cash
payment to compensate Landlord for any monetary defaults or actual damages
arising directly from a breach of this Lease;

 

27.3.           A cash deposit
in an amount at least equal to the Security Deposit as referenced in 2.1.8
originally required at time of execution of this Lease.

 

20

 

27.4.              The assumption
or assignment of all of Tenant’s interest and obligations under this Lease.

 

28.              Estoppel
Certificate. Within ten (10) days after written request from
Landlord, Tenant shall execute, acknowledge and deliver a statement in writing
substantially in the form attached to this Lease as Exhibit “H” with the blanks
filled in, and on any other form reasonably requested by a proposed lender or
purchaser, (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease as so modified is in full force and effect) and the dates to
which the rental and other charges are paid in advanced, if any, (ii)
acknowledging that there are not, to Tenant’s knowledge, any uncured defaults
on the part of Landlord hereunder, or specifying such defaults if any are
claimed and (iii) setting forth such further information with respect to this
Lease or the Premises as may be requested thereon. Any such statement may be relied
upon by any prospective purchaser or encumbrancer of all or any portion of the
real property of which the Premises is a part. Tenant’s failure to deliver such
statement within such time shall, at the option of Landlord, constitute a
Default under this Lease, and, in any event, shall be conclusive upon Tenant
that the Lease is in full force and effect and without modification or default
except as may be represented by Landlord in any certificate prepared by
Landlord. Upon request of Tenant, Landlord will similarly execute an estoppel
certificate: (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease as so modified is in full force and effect) and the dates to
which the rental and other charges are paid in advance, if any, (ii)
acknowledging that there are not, to Landlord’s knowledge, any uncured defaults
on the part of Tenant hereunder, or specifying such defaults if any are
claimed, and (iii) setting forth such further information with respect to the
status of this Lease or the Premises as may be reasonably requested thereon.

 

29.              Definition of
Landlord; Limitation of Landlord’s Liability.

 

29.1.              The term “Landlord” as used in this Lease, so far as covenants or
obligations on the part of Landlord are concerned, shall be limited to mean and
include only Landlord or the successor-in-interest of Landlord under this Lease
at the time in question. In the event of any transfer, assignment or the conveyance
of Landlord’s fee title or leasehold interest, the landlord herein named (and
in case of any subsequent transfers or conveyances, the then grantor)
automatically shall be freed and relieved, from and after the date of such
transfer, assignment or conveyance, of all liability for the performance of any
covenants or obligations contained in this Lease thereafter to be performed by
Landlord and, without further agreement, the transferee of such title or
leasehold shall be deemed to have assumed and agreed to observe and perform any
and all obligations of Landlord hereunder during its ownership or ground lease
of the Premises. Landlord may transfer its interest in the Premises or this
Lease without the consent of Tenant and such transfer or subsequent transfer
shall not be deemed a violation on the part of Landlord or the then grantor of
any of the terms or conditions of this Lease.

 

29.2.              If Landlord is
in default of this Lease, and as a consequence, Tenant recovers a money
judgment against Landlord, the judgment shall be satisfied only out of the
proceeds of sale received on execution of the judgment and levy against the
right, title and interest of Landlord in the Premises, and out of rent or other
income from such real property receivable by Landlord or out of the
consideration received by Landlord from the sale, financing, refinancing, or
other disposition of all or any part of Landlord’s right, title, and interest
in the Premises.

 

29.3.              Landlord shall
not be personally liable for any deficiency. If Landlord is a partnership,
limited liability company or joint venture, the members of such limited
liability company, the partners of such partnership or the venturers in such
joint venture, as applicable, shall not be personally liable and no member,
partner or joint venturer of Landlord shall be sued or named as a party in any
suit or action or service of process be made against any partner, member or
joint venturer of Landlord except as may be necessary to secure jurisdiction of
the partnership, limited liability company or joint venture. If Landlord is a
corporation, the shareholders, directors, officers, employees, and/or agents of
such corporation shall not be personally liable and no shareholder, director,
officer, employee or agent of Landlord shall be sued or named as a party in any
suit or action or service of process made against any shareholder, director,
officer, employee or agent

 

21

 

of Landlord. No partner, member, shareholder, director, employee, or
agent of Landlord shall be required to answer or otherwise plead to any service
of process and no judgment will be taken or writ of execution levied against
any partner, member, shareholder, director, employee or agent of Landlord.

 

29.4.              Each of the covenants
and agreements of this Article 29 shall be applicable to any covenant or
agreement either expressly contained in this Lease or imposed by statute or by
common law and shall survive the termination of this Lease.

 

30.              Premises
Control by Landlord.

 

30.1.              Landlord
reserves full control over the Premises to the extent not inconsistent with
Tenant’s enjoyment of the Premises. This reservation includes, without
limitation, the right of Landlord to expand and/or subdivide the Premises,
grant easements and licenses to others, maintain or establish ownership of the
Premises separate from fee title to the land on which the Premises is located
and combine the Premises with any other project in the area of the Premises and
owned by Landlord or any of its affiliates, so long as the same do not increase
Tenant’s obligations or materially increase Tenant’s entitlements under this
Lease.

 

30.2.              Tenant shall,
at Landlord’s request, promptly join with Landlord in execution of such
documents as may be reasonably appropriate to implement any such action,
provided that Tenant need not execute any which is of nature wherein liability
is created in Tenant or, if by reason of the terms of such document, Tenant
will be deprived of the quiet enjoyment and use of the Premises as granted by
this Lease.

 

30.3.              Landlord and
its agents and representatives may, at any and all reasonable times during non-business
hours (or during business hours if Tenant so requests), and upon reasonable
advance notice (provided that no time restrictions shall apply or advance
notice need be given if an emergency necessitates an immediate entry), enter
the Premises accompanied by a representative of Tenant (except in an emergency)
to (a) inspect the same and to determine whether Tenant is in compliance with
its obligations hereunder, (b) supply any service Landlord is required to
provide hereunder, (c) show the Premises at any time during the Term, to
prospective lenders, insurers, investors, purchasers or, during the last year
of the Term to tenants, (d) post notices of nonresponsibility, (e) access the
telephone equipment, electrical substation and fire risers, and (f) alter,
improve or repair any portion of the Premises. In connection with any such
alteration, improvement or repair, Landlord may erect in the Premises
scaffolding and other structures reasonably required for the work to be
performed. In no event shall Tenant’s Rent abate as a result of any such entry
or work; provided, however, that all such work shall be done in
such a manner as to cause as little interference to Tenant as reasonably
possible. Tenant shall ensure that Landlord at all times possesses keys with
which to unlock all of the doors in the Premises. If an emergency necessitates
immediate access to the Premises, Landlord may use whatever force is necessary
to enter the Premises and any such entry to the Premises shall not constitute a
forcible or unlawful entry to the Premises, an unlawful detainer of the
Premises, or an eviction of Tenant from the Premises, or any portion thereof.

 

31.              Quiet Enjoyment. So long as
Tenant is not in default, Landlord covenants that neither Landlord nor anyone
acting through or under Landlord will disturb Tenant’s occupancy of the
Premises except as permitted by the provisions of this Lease.

 

32.              Quitclaim Deed. Tenant shall
execute and deliver to Landlord on the expiration or termination of this Lease,
immediately on Landlord’s request a quitclaim deed to the Premises in
recordable form, or such other documentation reasonably requested by Landlord
evidencing termination of this Lease.

 

33.              Rules and
Regulations. Tenant shall faithfully observe and comply with
the Rules and Regulations. Landlord shall not be responsible to Tenant for the
violation or non-performance by any other tenant or any agent, employee or
invitee thereof of any of said Rules and Regulations.

 

22

 

34.              Subordination
and Attornment.

 

34.1. This Lease shall be
subject and subordinate to the lien of any mortgage, deed of trust, or lease under
which Landlord is mortgagor, trustor or tenant now or hereafter in force
against the Premises (each, a “Master Lien”),
and to all advances made or hereafter to be made upon the security of any
Master Lien without the necessity of the execution and delivery of any further
instruments on the part of Tenant to effectuate such subordination, provided
that the holder of a Master Lien delivers a Subordination, Nondisturbance and
Attornment Agreement in the form attached as Exhibit H.

 

34.2. Notwithstanding the
foregoing, Tenant shall execute and deliver upon demand such further instrument
or instruments evidencing such subordination of this Lease to the lien of any
Master Lien as may be required by Landlord. However, if any mortgagee,
beneficiary or lessor under a Master Lien so elects, this Lease shall be deemed
prior to such Master Lien regardless of date and Tenant will execute a
statement in writing to such effect at Landlord’s request. If Tenant fails to
execute any document required from Tenant under this Section 35.2 within ten
(10) days after written request therefor, Tenant hereby constitutes and
appoints Landlord its special attorney-in-fact to execute and deliver any such
document or documents in the name of Tenant. Such power is coupled with an interest
and is irrevocable.

 

34.3. In the event any
proceedings are brought for foreclosure, or in the event of the exercise of the
power of sale under any Master Lien, Tenant shall at the election of the
purchaser at such foreclosure or sale attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as the Landlord under this
Lease.

 

35.              Surrender.

 

35.1. No surrender of
possession of any part of the Premises shall release Tenant from any of its
obligations hereunder unless accepted by Landlord.

 

35.2. The voluntary or other
surrender of this Lease by Tenant shall not work a merger, unless Landlord
consents to such merger and shall, at the option of Landlord, operate as an
assignment to it of any or all subleases or subtenancies.

 

35.3. The voluntary or other
surrender of any ground or underlying lease that now exists or may hereafter be
executed affecting the Premises, or a mutual cancellation, thereof, or of
Landlord’s interest therein, shall not work a merger and shall, at the option
of the successor of Landlord’s interest in the Premises, operate as an
assignment of this Lease.

 

35.4. Upon the expiration or
earlier termination of this Lease, Tenant shall surrender the Premises to
Landlord broom clean and free of debris; with all of Tenant’s Property and
effects removed therefrom; with all Installations required by Landlord to be
removed from the Premises actually removed and all damage as a result of or
caused by such removal repaired; and with all licenses, permits and similar items
which restrict or affect the used of the Premises released and fully
terminated.

 

36.              Waiver and
Modification. No provision of this Lease may be modified,
amended or added to except by an agreement in writing. The waiver by Landlord
of any breach of any term, covenant or condition herein contained shall not be
deemed to be a waiver of any subsequent breach of the same or any other term,
covenant or condition herein contained.

 

37.              Waiver of Jury
Trial and Counterclaims. THE PARTIES HERETO SHALL AND THEY HEREBY DO
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER
OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT
OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND
TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND OR ANY CLAIM OF INJURY
OR DAMAGE.

 

38.              [Intentionally
Omitted]

 

23

 

39.              Hazardous
Materials.

 

39.1.              Prohibition/Compliance. Tenant shall
not cause or permit any Hazardous Materials (as hereinafter defined) to be
brought upon, kept or used in or about the Premises in violation of applicable
law. If Tenant breaches the obligation stated in the preceding sentence, or if
the presence of Hazardous Materials brought on to the Premises by any person
other than Landlord, its employees, agents or contractors, results in
contamination of the Premises or any adjacent property or if contamination of
the Premises or any adjacent property by Hazardous Materials otherwise occurs
during the term of this Lease or any extension or renewal hereof or holding
over hereunder, Tenant hereby indemnifies and shall defend and hold Landlord,
its officers, directors, employees, agents and contractors harmless from any
and all claims, judgments, damages, penalties, fines, costs, liabilities, or
losses (including, without limitation, diminution in value of the Premises,
damages for the loss or restriction on use of rentable or usable space or of
any amenity of the Premises, damages arising from any adverse impact on
marketing of space in the Premises, and sums paid in settlement of claims,
attorneys’ fees, consultant fees and expert fees) which arise during or after
the Term as a result of such contamination. This indemnification of Landlord by
Tenant includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal, or
restoration work required by any federal, state or local governmental agency or
political subdivision because of Hazardous Materials present in the air, soil
or ground water above on or under the Premises caused by any person other than
Landlord, its employees, agents or contractors. Without limiting the foregoing,
if the presence of any Hazardous Materials on the Premises or any adjacent
property, caused or permitted by Tenant results in any contamination of the
Premises or any adjacent property, Tenant shall promptly take all actions at
its sole expense as are necessary to return the Premises or any adjacent
property, to the condition existing prior to the time of such contamination,
provided that Landlord’s approval of such action shall first be obtained, which
approval shall not unreasonably be withheld so long as such actions would not
potentially have any material adverse long-term or short-term effect on the
Premises. Subject to any environmental conditions which existed on the Premises
on or prior to May 1, 1995, (including any materials, underground tanks or
other as yet undiscovered Hazardous Materials located on the Premises as of
such date), Tenant accepts the Premises and agrees for all purposes of this
Lease that Tenant is solely responsible for any Hazardous Materials which may
have been introduced to the Premises on or after such date. Notwithstanding
anything in this Section 39.1 to the contrary, Tenant shall not be liable for
any Hazardous Materials which migrate onto or under the Premises from adjacent
property through no act or omission of Tenant.

 

39.2.              Business. Landlord
acknowledges that it is not the intent of this Article to prohibit Tenant from
operating its business as a Permitted Use in accordance with Section 10 of this
Lease. Tenant may operate its business according to the custom of the industry
so long as the use or presence of Hazardous Materials is strictly and properly
monitored according to all applicable governmental requirements. As a material
inducement to Landlord to allow Tenant to use Hazardous Materials in connection
with its business, Tenant agrees to deliver to Landlord prior to the Term
Commencement Date a list identifying each type of Hazardous Materials to be
present on the Premises and setting forth any and all governmental approvals or
permits required in connection with the presence of such Hazardous Materials on
the Premises (“Hazardous Materials List”).
Tenant shall deliver to Landlord an updated Hazardous Materials List at least
once a year and shall also deliver an updated list before any new Hazardous
Materials is brought onto the Premises. Tenant shall deliver to Landlord true
and correct copies of the following documents (the “Documents”)
relating to the handling, storage, disposal and emission of Hazardous Materials
prior to the Term Commencement Date, or if unavailable at that time, concurrent
with the receipt from or submission to a governmental agency: permits;
approvals; reports and correspondence; storage and management plans, notice of
violations of any laws; plans relating to the installation of any storage tanks
to be installed in or under Premises (provided, said installation of tanks
shall only be permitted after Landlord has given Tenant its written consent to
do so, which consent may be withheld in Landlord’s sole and absolute
discretion); and all closure plans or any other documents required by any and
all federal, state and local governmental agencies and authorities for any
storage tanks installed in, on or under the Premises for the closure of any
such tanks. Tenant is not required, however, to provide Landlord with any
portion(s) of the Documents containing information of a proprietary nature
which, in and of themselves, do not contain a reference to any Hazardous
Materials or hazardous

 

24

 

activities, It is not the intent of this Section to provide Landlord with
information which could be detrimental to Tenant’s business should such
information become possessed by Tenant’s competitors.

 

39.3.              Termination of
Lease. Notwithstanding the provisions of Section 39.1 above, if (i) Tenant
has been required by any prior landlord, lender or governmental authority to
take remedial action in connection with Hazardous Materials contaminating a
property if the contamination resulted from such party’s action or use of the
property in question, or (ii) Tenant is subject to an enforcement order issued
by any governmental authority in connection with the use, disposal or storage
of a Hazardous Materials, Landlord shall have the right to terminate this Lease
in Landlord’s sole and absolute discretion (with respect to any such matter
involving Tenant).

 

39.4.              Testing. At any time,
and from time to time, but no more frequently than annually and on 48 hours
prior written notice to Tenant so long as no Default has occurred and is
continuing, prior to the expiration or earlier termination of the Term,
Landlord shall have the right to conduct appropriate tests of the Premises to
demonstrate that contamination has occurred as a result of Tenant’s use of the
Premises. Tenant shall be solely responsible for and shall defend, indemnify
and hold the Landlord, its agents and contractors harmless from and against any
and all Claims arising out of or in connection with any removal, clean up,
restoration and materials required hereunder to return the Premises and any
other property of whatever nature to their condition existing prior to the time
of any such contamination. Tenant shall pay for the cost of the tests of the
Premises if any Hazardous materials are found not to be stored, kept or used in
compliance with all laws applicable to Hazardous Materials.

 

39.5.              Underground
Tanks. If underground or other storage tanks storing Hazardous Materials are
(i) located on the Premises as of the date hereof, or (ii) hereafter placed on
the Premises by any party (other than Landlord), Tenant shall monitor the
storage tanks, maintain appropriate records, implement reporting procedures,
properly close any underground storage tanks, and take or cause to be taken all
other steps necessary or required under any applicable law.

 

39.6.              Tenant’s
Obligations. Tenant’s obligations under this Article 39 shall
survive the expiration or earlier termination of the Lease. During any period
of time required by Tenant or Landlord after the termination of this Lease to
complete the removal from the Premises of any such Hazardous Materials and the
release and termination of any licenses or permits restricting the use of the
Premises, Tenant shall continue to pay the full Rent in accordance with this
Lease, which Rent shall be prorated daily.

 

39.7.              Definition of
“Hazardous Materials.” As used herein, the term “Hazardous Materials” means any hazardous or toxic substance,
material or waste which is or becomes regulated by any local governmental
authority, the State in which the Premises are located, or the United States
government and includes, without limitation, any material or substance which is
(i) defined as a “hazardous substance,” “hazardous waste, “ “extremely
hazardous waste” or “restricted hazardous waste” under any applicable law, (ii)
designated as a “hazardous substance” pursuant to Section 311 of the Federal
Water Pollution Control Act (33 U.S.C. Section 1317), (ix) defined as a
“hazardous waste” pursuant to Section 1004 of the Federal Resource Conversation
and Recovery Act, 42 U.S.C. Section 6901, et. seq. (42 U.S.C. Section 6903), or
(x) defined as a “hazardous substance” pursuant to Section 101 of the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
Section 9601 et. seq. (42 U.S.C. Section 9601).

 

40.              cGMP Facility. Landlord
hereby approves the construction by Tenant, as an Alteration to be undertaken
by Tenant at Tenant’s sole cost and expense, of a cGMP Facility as described on
Exhibit “C” attached hereto and incorporated herein by this reference, at
Tenant’s option. Such construction of the cGMP Facility, if any, shall be
undertaken in compliance with all of the terms and provisions of this Lease,
including, without limitation, Section 17 hereof. Tenant may construct a door
through the south exterior wall of the Premises, subject to Landlord’s approval
of the plans therefor, such approval not to be unreasonably withheld or
delayed. Such construction work shall be subject to the terms and conditions of
this Lease, including without limitation Sections 17, 20, and 21 herein.

 

25

 

41.              Miscellaneous.

 

41.1.              Terms and
Headings. Where applicable in this Lease, the singular
includes the plural and the masculine or neuter includes the masculine,
feminine and neuter. The section headings of this Lease are not a part of this
Lease and shall have no effect upon the construction or interpretation of any
part hereof.

 

41.2.              Examination of
Lease. Submission of this instrument for examination or signature by Tenant
does not constitute a reservation of or option for lease, and it is not
effective as a lease or otherwise until execution by and delivery to both
Landlord and Tenant.

 

41.3.              Time. Time is of
the essence with respect to the performance of every provision of this Lease in
which time of performance is a factor.

 

41.4.              Covenants and
Conditions. Each provision of this Lease performable by Tenant
shall be deemed both a covenant and a condition.

 

41.5.              Consents by
Landlord. Except as otherwise expressly provided herein, any
consent, approval, election or determination of Landlord shall be made by
Landlord in its sole and absolute discretion.

 

41.6.              Entire
Agreement. The terms of this Lease are intended by the
parties as a final expression of their agreement with respect to the terms as
are included herein, and may not be contradicted by evidence of any prior or
contemporaneous agreement. The Basic Lease Provisions, General Provisions,
Exhibits and Addenda all constitute a single document and are incorporated
herein.

 

41.7.              Severability. Any provision
of this Lease which shall prove to be invalid, void, or illegal in no way
affects, impairs or invalidates any other provision hereof, and such other
provisions shall remain in full force and effect.

 

41.8.              Recording. Landlord may,
but shall not be obligated to, record a short form memorandum hereof without
the consent of Tenant. Neither party shall record this Lease. Tenant shall be
responsible for the cost of recording any Memorandum of Lease, including any
transfer or other taxes incurred in connection with said recordation.

 

41.9.              LIMITATION ON
LANDLORD’S LIABILITY. NOTWITHSTANDING ANYTHING SET FORTH IN THIS LEASE,
OR ANY EXHIBIT, ADDENDUM OR AMENDMENT HERETO, LANDLORD SHALL NOT BE LIABLE TO
TENANT FOR, AND TENANT ASSUMES ALL RISK OF LOSS, DAMAGE, OR INJURY, WHETHER
ACTUAL OR CONSEQUENTIAL, TO: TENANT’S PERSONAL PROPERTY OF EVERY KIND AND
DESCRIPTION, INCLUDING, WITHOUT LIMITATION, TRADE FIXTURES, EQUIPMENT,
INVENTORY, SCIENTIFIC EXPERIMENTS, SCIENTIFIC RESEARCH, LABORATORY ANIMALS,
PRODUCT, SPECIMENS, SAMPLES AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING OR OTHER
RECORDS KEPT AT THE PREMISES AND ANY AND ALL INCOME DERIVED OR DERIVABLE
THEREFROM.

 

41.10.        Impartial
Construction. The language in all parts of this Lease shall be
in all cases construed as a whole according to its fair meaning and not
strictly for or against either Landlord or Tenant.

 

41.11.        Inurement. Each of the
covenants, conditions and agreements herein contained shall inure to the
benefit of and shall apply to and be binding upon the parties hereto and their
respective heirs, legatees, devisees, executors, administrators, successors,
assigns, sublessees, or any person who may come into possession of said
Premises or any part thereof in any manner whatsoever. Nothing in this Section
41.11 contained shall in any way alter the provisions against assignment or
subletting in this Lease provided.

 

41.12.        Notices. Any notice,
consent, demand, bill, statement, or other communication required or permitted
to be given hereunder must be in writing and may be given by personal delivery
or reputable

 

26

 

overnight courier, and if given by other means shall be deemed given
when received, addressed to Tenant at the Premises, or to Tenant or Landlord at
the addresses shown in Sections 1.2.3 and 1.2.5 of the Basic Lease Provisions.
Either party may, by notice to the other given pursuant to this Section,
specify additional or different addresses for notice purposes.

 

41.13.        Jurisdiction. This Lease
has been negotiated and entered into in the State in which the Premises is
located and shall be governed by, construed and enforced in accordance with the
laws of the State in which the Premises is located, applied to contracts made
therein to be wholly performed therein.

 

41.14.        Reporting. Tenant shall
promptly provide Landlord with copies of Tenant’s most recent public disclosure
documents, including all reports on form 10-K, 10-Q and 8-K and Tenant’s annual
report to shareholders.

 

41.15.        Authority. That
individual or those individuals signing this Lease guarantee, warrant and
represent that said individual or individuals have the power, authority and
legal capacity to sign this Lease on behalf of and to bind all entities,
corporations, partnerships, joint venturers or other organizations and/or
entities on whose behalf said individual or individuals have signed.

 

41.16           Early
Termination. Notwithstanding anything to the contrary contained
in the Lease, Tenant shall have the right to terminate this Lease, with such
termination to be effective only during the period from April 1, 2000 through
and including August 31, 2003, upon the following terms and conditions:

 

a.                    Tenant must
notify Landlord, in writing, no later than the date which is twelve months
prior to the proposed effective date of such termination, of Tenant’s election
(the “Termination Election”) to terminate
this Lease; and

 

b.                   Concurrently
with the delivery of the Termination Election, Tenant shall pay to Landlord an
amount equal to the Termination Fee (as hereinafter defined).

 

Upon the effective date of
any such termination, the Lease shall terminate and be of no further force or
effect, except with respect to any liabilities, claims and obligations which
may have arisen or which are based upon facts or circumstances which ocurred,
prior to the effective date of any such termination. As used herein, “Termination Fee”
shall mean the unamortized leasing commissions paid to Tenant’s Broker in
connection with this Lease, fully amortized over the initial Term of the Lease
at a rate of 12% per annum, compounded monthly.

 

[Signatures
begin on next page]

 

27

 

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the date first above written.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  ARE ACQUISITIONS, LLC,

  	
   

  	
  SHIRE LABORATORIES INC.,

  
	
  a Delaware limited liability company

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By: ARE-QRS CORP., a
  Maryland corporation, managing member

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Robert S. Cohen

  
	
   

  	
   

  	
   

  	
   

  	
  Robert S. Cohen, President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lynn Anne Shapiro

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  LYNN ANNE SHAPIRO

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  GENERAL COUNSEL

  	
   

  	
   

  	
   

  

 

28

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