Document:

exv10w10

 

Exhibit 10.10

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE — NET

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1. 
     Basic Provisions (“Basic Provisions”).

         1.1
       Parties: This Lease (“Lease”), dated for
reference purposes only March 20, 2002,
is made by and between California Pacific Commercial
Corporation (“Lessor”)
and Alexza Molecular Delivery Corporation (“Lessee”), (collectively the
“Parties”, or individually a “Party”).

         1.2(a)

  Premises: That certain portion of the Project (as defined below), including all
improvements therein or to be provided by Lessor under the terms of this Lease, commonly known by
the street address of 1001 East Meadow Circle located in the City of Palo Alto, County of Santa Clara, State of
CA, with zip code 94303, as outlined on Exhibit A
attached hereto (“Premises”) and generally
described as (describe briefly the nature of the Premises):
approximately 20,010 rentable square feet in an approximately 28,150 rentable square foot building.

In addition to Lessee’s rights to use and occupy the Premises as hereinafter specified,
Lessee shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as
hereinafter specified, but shall not have any rights to the roof, exterior walls or utility
raceways of the building containing the Premises
(“Building”) or to any other buildings in the
Project. The Premises, the Building, the Common Areas, the land upon which they are located, along
with all other buildings and improvements thereon, are herein collectively referred to as the
“Project.” (See also Paragraph 2)

         1.2(b)
   Parking: N/A unreserved vehicle parking spaces (“Unreserved Parking Spaces”); and
N/A reserved vehicle parking spaces (“Reserved Parking Spaces”). (See also Paragraph 2.6)

         1.3
       
Term: N/A years and ten (10) months (“Original Term”) commencing June 1, 2003 (“Commencement Date”) and ending March 31,
2004 (“Expiration Date”).    (See also Paragraph 3)

         1.4          Early Possession: N/A (“Early Possession Date”).
(See also Paragraphs 3.2 and 3.3)

         1.5         
Base Rent: $45, 022.50 per month (“Base Rent”), payable on the first day of each month commencing June 1, 2003. (See also Paragraph 4)

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

         1.6          Lessee’s Share of Common Area Operating Expenses: seventy one
percent (71%) (“Lessee’s Share”).

         1.7          Base Rent and Other Monies Paid Upon Execution:

         (a)     Base
Rent: for the period                     .

         (b)     Common Area Operating Expenses: $                      for the period                     .

         (c)     Security
Deposit: $see addendum (“Security
Deposit”).    (See also Paragraph 5)

         (d)     Other:
$                      for                     .

         (e)     Total
Due Upon Execution of this Lease: $90, 045.

         1.8
        Agreed Use: general office and biomedical research and
development. (See also Paragraph 6)

         1.9
        Insuring Party. Lessor is the “Insuring Party”. (See also Paragraph 8)

         1.10
      Real Estate Brokers: (See also Paragraph 15)

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

o
N/A represents Lessor exclusively (“Lessor’s Broker”);

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

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

                          (b)     Payment to Brokers: Upon execution and delivery of this Lease by both Parties,
Lessor shall pay to the Brokers the brokerage fee agreed to in a separate written agreement (or if there is no such agreement, the sum
of N/A or                     % of the total Base

			
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Rent for
the brokerage services rendered by the Brokers).

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

     1.12      Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of
Paragraphs 50 through 60 and Exhibits A through A all of which constitute a part of this Lease.

     Premises.

     2.1      

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

     2.2
     Condition. Lessor shall deliver that portion of the Premises contained within the
Building (“Unit”) to Lessee broom clean and free of debris on the Commencement Date or the Early
Possession Date, whichever first occurs (“Start Date”), and, so long as the required service
contracts described in Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty
days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, if any, and
all other such elements in the Unit other than those constructed by Lessee, shall be in good
operating condition on said date and that the structural elements of
the roof, bearing walls and foundation of the Unit shall be free of material defects. If a non-compliance with such warranty
exists as of the Start Date, or if one of such systems or elements should malfunction or fail
within the appropriate warranty period, Lessor shall, as Lessor’s sole obligation with respect to
such matter, except as otherwise provided in this Lease, promptly after receipt of written notice
from Lessee setting forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor’s expense. The warranty periods shall be as
follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to the remaining systems and
other elements of the Unit. If Lessee does not give Lessor the required notice within the
appropriate warranty period, correction of any such non-compliance, malfunction or failure shall
be the obligation of Lessee at Lessee’s sole cost and expense (except for the repairs to the fire
sprinkler systems, roof, foundations, and/or bearing walls — see Paragraph 7).

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

          (a)      Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result
of the specific and unique use of the premises by Lessee as compared with uses by tenants in
general, Lessee shall be fully responsible for the cost thereof, provided, however that if such
Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds 6
months’ Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing,
within 10 days after receipt of Lessee’s termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to
6 months’ Base Rent. If Lessee
elects termination, Lessee shall immediately cease the use of the Premises which requires such
Capital Expenditure and deliver to Lessor written notice specifying a termination date at least 90
days thereafter. Such termination date shall, however, in no event be earlier than the last day
that Lessee could legally utilize the Premises without commencing such Capital Expenditure.

          (b)      If such Capital Expenditure is not the result of the specific and unique use of the
Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor and Lessee
shall allocate the obligation to pay for the portion of such costs reasonably attributable to the
Premises pursuant to the formula set out in Paragraph 7.1(d); provided, however, that if such
Capital Expenditure is required during the last 2 years of this Lease or if Lessor reasonably
determines that it is not economically feasible to pay its share
thereof, Lessor shall have the
option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies
Lessor, in writing, within 10 days after receipt of Lessor’s termination notice that Lessee will
pay for such Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its
share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with
Interest, from Rent until Lessor’s share of such costs have been fully paid. If Lessee is unable
to finance Lessor’s share, or if the balance of the Rent due and payable for the remainder of this
Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right
to terminate this Lease upon 30 days written notice to Lessor.

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

     2.4      Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor and/or
Brokers to satisfy itself with respect to the condition of the Premises (including but not limited
to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements and the Americans with Disabilities Act), and their suitability for
Lessee’s intended use, (b) Lessee has made such investigation as it deems necessary with reference
to such matters and assumes all responsibility therefor as the same relate to its occupancy of the
Premises, and (c) neither Lessor, Lessor’s agents, nor Brokers have made any oral or written
representations or warranties with respect to said matters other than as set forth in this Lease.
In addition, Lessor acknowledges that (i) Brokers have made no representations, promises or
warranties concerning Lessee’s ability to honor the Lease or suitability to occupy the Premises,
and (ii) it is Lessor’s sole responsibility to investigate the financial capability and/or
suitability of all proposed tenants.

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

     2.6      Vehicle Parking. Lessee shall be entitled to use the number of Unreserved Parking Spaces
and Reserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas
designated from time to time by Lessor for parking. Lessee shall not use more parking spaces than
said number. Said parking spaces shall be used for parking by vehicles no larger than full-size
passenger automobiles or pick-up trucks, herein called
“Permitted Size Vehicles.” Lessor may regulate the loading and unloading of vehicles by adopting
Rules and Regulations as provided in Paragraph 2.9.
No vehicles other than Permitted Size Vehicles may be parked in the Common Area
without the prior written permission of Lessor.

			
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                     (a)      Lessee
shall not permit or allow any vehicles that belong to or are consigned by Lessee
or Lessee’s employees, suppliers, shippers, customers,
contractors or invitees to be loaded, unloaded, or parked in areas other than those designated by Lessor for such activities.

                     (b)      Lessee shall not service or store any vehicles in the Common Areas.

                     (c)      If Lessee permits or allows any of the prohibited activities described in this
Paragraph 2.6, then Lessor shall have the right, without notice, in addition to such other rights
and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.

          2.7      Common Areas — Definition. The term “Common Areas” is defined as all areas and facilities outside the Premises
and within the exterior boundary line of the Project and interior utility raceways and installations within the
Unit that are provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other tenants of the Project and their respective
employees, suppliers, shippers, customers, contractors and invitees, including parking areas,
loading and unloading areas, trash areas, roadways, walkways, driveways and landscaped areas.

          2.8      Common Areas — Lessee’s Rights. Lessor grants to Lessee, for the benefit of Lessee and
its employees, suppliers, shippers, contractors, customers and invitees, during the term of this
Lease, the non-exclusive right to use, in common with others entitled to such use, the Common
Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by
Lessor under the terms hereof or under the terms of any rules and regulations or restrictions
governing the use of the Project. Under no circumstances shall the right herein granted to use the
Common Areas be deemed to include the right to store any property, temporarily or permanently, in
the Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor
or Lessor’s designated agent, which consent may be revoked at any time. In the event that any
unauthorized storage shall occur then Lessor shall have the right, without notice, in addition to
such other rights and remedies that it may have, to remove the property and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.

          2.9      Common Areas — Rules and Regulations. Lessor or such other person(s) as Lessor may
appoint shall have the exclusive control and management of the Common Areas and shall have the
right, from time to time, to establish, modify, amend and enforce reasonable rules and regulations
(“Rules and Regulations”) for the management, safety, care, and cleanliness of the grounds, the
parking and unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Project and their invitees.
Lessee agrees to abide by and conform to all such Rules and Regulations, and to cause its
employees, suppliers, shippers, customers, contractors and invitees to so abide and conform.
Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations
by other tenants of the Project.

          2.10    Common Areas — Changes. Lessor shall have the right, in Lessor’s sole discretion, from
time to time:

                     (a)      To make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading
and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility
raceways;

                     (b)      To close temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available;

                     (c)      To designate other land outside the boundaries of the Project to be a part of the
Common Areas;

                     (d)      To add additional buildings and improvements to the Common Areas;

                     (e)      To use the Common Areas while engaged in making additional improvements, repairs or
alterations to the Project, or any portion thereof; and

                    (f)      To do and perform such other acts and make such other changes in, to or with respect to
the Common Areas and Project as Lessor may, in the exercise of sound business judgment, deem to be
appropriate.

3.      Term.

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

          3.2      Early Possession. If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early
possession. All other terms of this Lease (including but not limited to the obligations to pay
Lessee’s Share of Common Area Operating Expenses, Real Property Taxes and insurance premiums and to maintain the
Premises) shall, however, be in effect during such period. Any such early possession shall not
affect the Expiration Date.

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

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

4.      Rent.

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

          4.2      Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in
addition to the Base Rent, Lessee’s Share (as specified in Paragraph 1.6) of all Common Area
Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in
accordance with the following provisions:

                (a)      “Common Area Operating Expenses” are defined, for purposes of this Lease, as all
costs incurred by Lessor relating to the ownership and operation of the Project, including, but not limited to, the following:

	 	(i)	 	 The operation, repair and maintenance, in neat, clean, good order and
condition of the following:

(aa)      The Common Areas and Common Area improvements, including
parking areas, loading and unloading areas, trash areas, roadways,
parkways, walkways, driveways, landscaped areas, bumpers, irrigation
systems, Common Area lighting facilities, fences and gates, elevators,
roofs, and roof drainage systems.

(bb)      Exterior signs and any tenant directories.

(cc)      Any fire detection and/or sprinkler systems.

	 	(ii)	 	 The cost of water, gas, electricity and telephone to service the Common Areas and any
utilities not sparately

			
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	 	 	 	metered.
	 	(iii)	 	Trash disposal, pest control services, property management,
security services, and the costs of any environmental
inspections.
	 	(iv)	 	Reserves set aside for maintenance and repair of Common Areas.
	 	(v)	 	Real Property Taxes (as defined in Paragraph 10).
	 	(vi)	 	The cost of the premiums for the insurance maintained by Lessor pursuant to Paragraph 8.
	 	(vii)	 	Any deductible portion of an insured loss concerning the Building or the Common Areas.
	 	(viii)	 	The cost of any Capital Expenditure to the Building or the Project not covered under the provisions of Paragraph 2.3
provided; however, that Lessor shall allocate the cost of any such
Capital Expenditure over a 12 year period and
Lessee shall not be required to pay more than Lessee’s Share of 1/144th
of the cost of such Capital Expenditure in
any given month.
	 	(ix)	 	Any other services to be provided by Lessor that
are stated elsewhere in this Lease to be a Common Area Operating
Expense.

          (b)      Any Common Area Operating Expenses and Real Property Taxes that are specifically
attributable to the Unit, the Building or to any other building in the Project or to the
operation, repair and maintenance thereof, shall be allocated entirely to such Unit, Building,
or other building. However, any Common Area Operating Expenses and Real Property Taxes that are
not specifically attributable to the Building or to any other
building or to the operation,
repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings in the
Project.

          (c)    
 The inclusion of the improvements, facilities and services set forth in Subparagraph
4.2(a) shall not be deemed to impose to obligation upon Lessor to either have said improvements
or facilities or to provide those services unless the Project already has the same, Lessor
already provides the services, or Lessor has agreed elsewhere in this Lease to provide the same
or some of them.

          (d)     Lessee’s Share of Common Area Operating Expenses shall be payable by Lessee within 10
days after a reasonably detail statement of actual expenses is presented to Lessee. At
Lessor’s option, however, an amount may be estimated by Lessor
from time to time of Lessee’s
Share of annual Common Area Operating Expenses and the same shall be payable monthly or
quarterly, as Lessor shall designate, during each 12 month period of the Lease term, on the same
day as the Base Rent is due hereunder. Lessor shall deliver to Lessee within 60 days after the
expiration of each calendar year a reasonably detailed statement showing Lessee’s Share of the
actual Common Area Operating Expenses incurred during the preceding year. If Lessee’s payments
under this Paragraph 4.2(d) during the preceding year exceed Lessee’s Share as indicated on such
statement, Lessor shall credit the amount of such over-payment against Lessee’s Share of Common
Area Operating Expenses next becoming due. If Lessee’s payments
under this Paragraph 4.2(d)
during the preceding year were less than Lessee’s Share as indicated on such statement, Lessee
shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor to
Lessee of the statement.

      4.3      Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money
of the United States, without offset or deduction
(except as specifically permitted in this Lease), on or before the day on which it is due.
Rent for any period during the term hereof which is for less than one full calendar month
shall be prorated based upon the actual number of days of said month. Payment of Rent shall be
made to Lessor at its address stated herein or to such other persons or place as Lessor may
from time to time designate in writing. Acceptance of a payment which is less than the amount
then due shall not be a waiver of Lessor’s rights to the balance of such Rent, regardless of
Lessor’s endorsement of any check so stating. In the event that any check, draft, or other
instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to
pay to Lessor the sum of $25 in addition to any late charges which may be due.

5.   Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit
as security for Lessee’s faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this
Lease, Lessor may use, apply or retain all or any portion of said
security Deposit for the payment
of any amount due Lessor or to reimburse or compensate Lessor for any liability, expense, loss
or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any
portion of the Security Deposit, Lessee shall within 10 days after written request therefor
deposit monies with Lessor sufficient to restore said Security Deposit to the full amount
required by this Lease. If the Base Rent increases during the term of this Lease, Lessee shall,
upon written request from Lessor, deposit additional monies with Lessor so that the total
amount of the Security Deposit shall at all times bear the same proportion to the increased
Base Rent as the initial Security Deposit bore to the initial Base Rent. Should the Agreed Use
be amended to accommodate a material change in the business of Lessee or to accommodate a
sublessee or assignee, Lessor shall have the right to increase the Security Deposit to the
extent necessary, in Lessor’s reasonable judgment, to account for any increased wear and tear
that the Premises may suffer as a result thereof. If a change in control of Lessee occurs
during this Lease and following such change the financial condition of Lessee is, in Lessor’s
reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with
Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable
level based on such change in financial condition. Lessor shall not be required to keep the
Security Deposit separate from its general accounts. Within 14 days after the expiration or
termination of this Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent,
and otherwise within 30 days after the Premises have been vacated pursuant to Paragraph 7.4(c)
below, Lessor shall return that portion of the Security Deposit not used or applied by Lessor.
No part of the Security Deposit shall be considered to be held in trust, to bear interest or to
be prepayment for any monies to be paid by Lessee under this Lease.

6.  Use.

      6.1       Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other
legal use which is reasonably comparable thereto,
and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner
that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes
damage to neighboring premises or properties.

      6.2       Hazardous Substances.

                 (a)     Reportable Uses Require Consent. The term “Hazardous Substance” as used in this Lease
shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release,
either by itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the environment or the
Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for potential liability of Lessor to any governmental
agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or ss
fractions thereof. Lessee shall engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous
Substances only in timely compliance (at Lessee’s
expense) with all Applicable Requirements. “Reportable Use” shall mean (i) the
installation or use of any above or below ground storage tank, (ii) the generation,
possession, storage, use, transportation, or disposal of a Hazardous
substance that requires a
permit from, or with respect to which a report, notice, registration or business plan is required
to be filed with, any governmental
authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties.

			
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 In
addition, Lessor may condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability, including, but not limited
to, the installation (and removal on or before Lease expiration or termination) of protective
modifications (such as concrete encasements) and/or increasing
the Security Deposit.

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

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

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

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

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

                 (g)     Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e))
occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by the Applicable Requirements
and this Lease shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at
Lessor’s option, either (i) investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor’s expense, in
which
event this Lease shall continue in full force and effect, or (ii) if the estimated cost to
remediate such condition exceeds 12 times the then monthly Base Rent
or $100,000, whichever is greater, give written notice to Lessee, within 30 days after receipt
by Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to terminate this Lease as of the date 60 days
following the date of such notice. In the event Lessor
elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to
Lessor of Lessee’s commitment to pay the amount by which the cost of the remediation of such Hazardous Substance Condition exceeds an amount equal to 12
times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within 30 days following such commitment. In such
event, this Lease shall continue in full force and effect, and Lessor shall proceed to make such
remediation as soon as reasonably possible after the required
funds are available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time provided, this Lease shall
terminate as of the date specified in Lessor’s notice of termination.

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

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

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

      7.1      Lessee’s Obligations.

                 (a)     In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance),
6.3 (Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or
Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations (intended for Lessee’s exclusive use, no matter where located), and
Alterations in good order, condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily accessible to
Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior
use, the elements or the age of such portion of the Premises), including, but not limited to, all
equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities,
boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings,
floors, windows, doors, plate glass, and skylights but excluding any items which are the
responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good
order, condition and repair, shall exercise and perform good maintenance practices,
specifically
including the procurement and maintenance of the service contracts required by Paragraph 7.1(b)
below. Lessee’s obligations shall include restorations,
replacements or renewals when necessary to
keep the Premises and all improvements thereon or a part thereof in good order, condition and
state of repair.

                 (b)     Service Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain
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customary
form and substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when installed on the
Premises: (i) HVAC equipment, (ii) boiler and pressure vessels, (iii) [ILLEGIBLE] and (iv) any
other equipment, if reasonably required by Lessor. However, Lessor reserves the right, upon
notice to Lessee, to procure and maintain any or all of such service
contracts, and if Lessor So
elects, Lessee shall reimburse Lessor, upon demand, for the cost thereof.

               (c)     Failure
to Perform. If Lessee fails to perform Lessee’s obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after 10 days’ prior written notice to Lessee
(except in the case of an emergency, in which case no notice shall be
required), perform such obligations on Lessee’s behalf, and put the Premises in good order, condition and repair, and
Lessee shall promptly reimburse Lessor for the cost thereof.

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

     7.2     Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to
Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls,
structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area
fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways,
driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts
thereof, as well as providing the services for which there is a Common Area Operating Expense
pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or replace windows,
doors or plate glass of the Premises. Lessee expressly waives the benefit of any statute now or
hereafter in effect to the extent it is inconsistent with the terms of this Lease.

     7.3     Utility Installations; Trade Fixtures; Alterations.

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

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

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

     7.4     Ownership; Removal; Surrender; and Restoration.

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

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

               
(c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or
any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean
and free of debris, and in good operating order, condition and state of repair, ordinary wear and
tear excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would
have been prevented by good maintenance practice.  Lessee
shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures,
Lessee owned Alterations and/or Utility Installations, furnishings, and equipment as well as the
removal of any storage tank installed by or for Lessee. Lessee shall also completely remove from
the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any
third  party (except Hazardous Substances which were deposited via underground migration from
areas outside of the Project) even if such removal would require Lessee to perform or pay for work
that exceeds statutory requirements. Trade Fixtures shall remain the property of Lessee and shall
be removed by Lessee. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph
7.4(c) without the express
written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below.

8.          Insurance;
Indemnity.

							
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     8.1      
Payment of Premiums. The cost of the premiums for the insurance
policies required to be carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b),
shall be a Common Area Operating Expense. Premiums for policy periods commencing prior to, or
extending beyond, the term of this Lease shall be prorated to coincide with the corresponding
Start Date or Expiration Date.

     8.2      Liability Insurance.

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

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

     8.3      
Property Insurance — Building, Improvements and Rental
Value.

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

                 (b)      Rental
Value. Lessor shall also obtain and keep in force a policy or policies in the name
of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one
year with an extended period of indemnity for an additional 180 days (“Rental Value insurance”).
Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and
the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable
by Lessee, for the next 12 month period.

                 (c)      Adjacent
Premises. Lessee shall pay for any increase in the premiums for the property
insurance of the Building and for the Common Areas or other buildings in the Project if said
increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises.

                 (d)      Lessee’s
Improvements. Since Lessor is the Insuring Party, Lessor shall not be required
to insure Lessee Owned Alterations and Utility Installations unless the item in question has
become the property of Lessor under the terms of this Lease.

     8.4      
Lessee’s Property; Business Interruption Insurance.

                 (a)
      
Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such
insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per
occurence. The proceeds from any such insurance shall be used by lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned, Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in force.

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

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

     8.5      
Insurance Policies. Insurance required herein shall be by companies duly licensed or
admitted to transact business in the state where the Premises are located, and maintaining during
the policy term a “General Policyholders Rating” of at
least AA-,VII as set forth in the most
current issue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender.
Lessee shall not do or permit to be done anything which invalidates the required insurance
policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of
such insurance or certificates evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable or subject to modification except after 30 days prior written
notice to Lessor. Lessee shall, at least 30 days prior to the expiration of such policies, furnish
Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may
order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee
to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the
remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain
the insurance required to be carried by it, the other Party may, but shall not be required to,
procure and maintain the same.

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

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

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

9.      Damage or Destruction.

          9.1      Definitions.

          (a)
     “Premises Partial Damage” shall mean damage or destruction to the improvements on the
Premises, other than Lessee  Owned Alterations and Utility Installations, which can reasonably be
repaired in 3 months or less from the date of the damage or
destruction, and the cost thereof does not exceed a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing
within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial
or Total.

          (b)      “Premises Total Destruction” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which
cannot reasonably be repaired in 3 months or less from the date
of the damage or destruction
and/or the cost thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee
in writing within 30 days from the date of the damage or destruction as to whether or not the
damage is Partial or Total.

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

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

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

          9.2      Partial Damage — Insured Loss. If a Premises Partial Damage that is an Insured Loss
occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade
Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and
this Lease shall continue in full force and effect; provided, however, that Lessee shall, at
Lessor’s election, make the repair of any damage or destruction the total cost to repair of which
is $5,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds
available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if
the required insurance was not in force or the insurance proceeds are not sufficient to effect
such repair, the Insuring Party shall promptly contribute the shortage in proceeds as and when
required to complete said repairs. In the event, however, such shortage was due to the fact that,
by reason of the unique nature of the improvements, full replacement cost insurance coverage was
not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage
in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days
following receipt of written notice of such shortage and request therefor. If Lessor receives said
funds or adequate assurance thereof within said 10 day period, the party responsible for making
the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full
force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within 10 days thereafter to: (i) make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease
shall remain in full force and effect, or (ii) have this Lease terminate 30 days thereafter.
Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any
such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to
Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of
any such insurance shall be made available for the repairs if made by either Party.

          9.3     
Partial Damage —  Uninsured Loss. If a Premises Partial Damage that is not an Insured
Loss occurs, unless caused by a negligent or willfull act of Lessee (in which event Lessee shall
make the repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon as
reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect,
or (ii) terminate this Lease by giving written notice to Lessee
within 30 days after receipt by Lessor
of knowledge of the occurrence of such damage. Such termination shall be effective 60 days
following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee
shall have the right within 10 days after receipt of the termination notice to give written notice
to Lessor of Lessee’s commitment to pay for the repair of such damage without reimbursement from
Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30
days after making such commitment. In such event this Lease shall continue in full force and
effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the
required funds are available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice. Notwithstanding the foregoing, either
Lessor or Lessee shall have the right to terminate this
Lease in the event that any damage or
destruction would take more than 2 months from the date thereof to repair.

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

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

          9.6      Abatement of Rent; Lessee’s Remedies.

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

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

			
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the
actual work on the Premises, whichever first occurs.

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

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

10.     Real Property Taxes.

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

          10.2     
Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Project,
and except as otherwise provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2.

          10.3      
Additional Improvements. Common Area Operating Expenses shall not include Real Property
Taxes specified in the tax assessor’s records and work sheets as being caused by additional
improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment
such other lessees. Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor
at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any
increase in Real Property Taxes if assessed solely by reason of
Alterations, Trade Fixtures or
Utility Installations placed upon the Premises by Lessee or at Lessee’s request.

          10.4      
Joint Assessment. If the Building is not separately assessed, Real Property Taxes
allocated to the Building shall be an equitable proportion of the Real Property Taxes for all of
the land and improvements included within the tax parcel assessed, such proportion to be
determined by Lessor from the respective valuations assigned in the assessor’s work sheets or such
other information as may be reasonably available. Lessor’s reasonable determination thereof, in
good faith, shall be conclusive.

          10.5      
Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed
against and levied upon Lessee Owned Alterations and Utility Installations, Trade Fixtures,
furnishings, equipment and all personal property of Lessee contained in the Premises. When
possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade
Fixtures, furnishings, equipment and all other personal property to be assessed and billed
separately from the real property of Lessor. If any of Lessee’s said property shall be assessed
with Lessor’s real property, Lessee shall pay Lessor the taxes attributable to Lessee’s property
within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee’s
property.

11.      
Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal
and other utilities and services supplied to the Premises,
together with any taxes thereon. Notwithstanding the provisions of Paragraph 4.2, if at any time
in Lessor’s sole judgment, Lessor determines that Lessee is using a disproportionate amount of
water, electricity or other commonly metered utilities, or that Lessee is generating such a large
volume of trash as to require an increase in the size of the dumpster and/or an increase in the
number of times per month that the dumpster is emptied, then Lessor may increase Lessee’s Base
Rent by an amount equal to such increased costs. 

12.      
Assignment and Subletting.

           12.1      Lessor’s Consent Required.

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

                        (b)      A change in the control of Lessee shall constitute an assignment requiring consent. The
transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a
change in control for this purpose.

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

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

             12.2      
Terms and Conditions Applicable to Assignment and Subletting.

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

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

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

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

                       (e)
      Each request for consent to an assignment or subletting shall be in writing, accompanied
by information relevant to Lessor’s determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any, together with a fee of
$1,000 or 10% of the current monthly Base Rent applicable to the
portion of the Premises which is the subject of the proposed assignment or sublease, whichever is
greater, as consideration for Lessor’s considering and processing said request. Lessee agrees to
provide Lessor with such other or additional information and/or documentation as may be reasonably
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          (f)
      Any
assignee of, or sublessee under, this Lease shall, by reason of
accepting such
assignment or entering into such sublease, be deemed to have assumed
and agreed to conform and
comply with each and every term, convenant, condition and obligation herein
 to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations
as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.

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

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

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

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

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

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

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

13.      Default; Breach; Remedies.

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

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

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

          (c)      The failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41
(easements), or (viii) any other documentation or information
which Lessor may
reasonably require of Lessee under the terms of this Lease, where any such failure continues
for a period of 10 days following written notice Lessee.

          (d)      A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or
of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs
13.1(a), (b) or (c), above, where such Default continues for a period of 30 days after written
notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days
are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently prosecutes such cure to
completion.

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

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

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

       13.2      Remedies. If Lessee fails to perform any of its affirmative duties or obligations,
within 10 days after written notice (or in case of an emergency, without notice), Lessor may, at
its option, perform such duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expenses of any such performance by Lessor shall be due and payable by
Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee shall not be
honored by the bank upon which it is drawn, Lessor, at its option, may require all future
payments to be made by Lessee to be by cashier’s check. In the event of a Breach, Lessor may,
with or without further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:

          (a)      Terminate Lessee’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and
Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled
to recover from Lessee: (i) the unpaid Rent which had been
earned at the time of termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award
of the amount by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves
could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the
detriment proximately caused by the Lessee’s failure to
perform obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of
recovering possession of the Premises, expenses of reletting, including necessary renovation and
alteration of the Premises, reasonable attorneys’ fees, and
that portion of any leasing commission paid by Lessor in connection with this Lease applicable to
the unexpired term of this Lease. The worth at the time of

			
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award of
the amount referred to in provision (iii) the
immediately preceding sentence
shall be computed by discounting such amount at the discount rate the Federal Reserve Bank of the District within
which the Premises are located at the time of
award plus one percent. Efforts by Lessor to mitigate damages
caused by Lessee’s Breach of this Lease shall not waive Lessor’s right to recover damages under
Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in
such proceeding any unpaid Rent and damages as are
recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under
Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable grace period
required by Paragraph 13.1 and the unlawful detainer statute
shall run
concurrently, and the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer
and a Breach of this Lease entitling Lessor to the remedies
provided for in this Lease and/or by said statute.

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

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

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

          13.4      Late Charges.  Lessee hereby acknowledges that late payment by Lessee of Rent will cause
Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any
Rent shall not be received by Lessor within 5 days after such amount shall be due, then, without
any requirement for notice to Lessee, Lessee shall pay to Lessor a one-time late charge equal to
10% of each such overdue amount or $100, whichever is greater. The parties hereby agree that such
late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of
such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee’s Default or Breach with respect to such overdue amount, nor prevent the exercise of any
of the other rights and remedies granted hereunder. In the event that
a late charge is payable
hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor’s option,
become due and payable quarterly in advance.

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

          13.6      Breach by Lessor.

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

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

15.      Brokerage Fees.

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

16.      Estoppel Certificates.

            (a)     Each Party (as “Responding Party”) shall within 10 days after written notice from the
other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a
statement in writing in form similar to the then most current
“Estoppel Certificate” form published by the American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting Party.

            (b)     If the Responding Party shall fail to execute or deliver the Estoppel Certificate within
such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the
Lease is in full force and effect without modification except as may be represented by the
Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and
(iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance.
Prospective purchasers and encumbrances may rely upon the Requesting Party’s Estoppel Certificate,
and the Responding Party shall be estopped from denying the truth of the facts contained in said
Certificate.

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

17.      Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s
interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the
Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such transfer
or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined. Notwithstanding the above, and subject to the
provisions of Paragraph 20
below, the original Lessor under this Lease, and all subsequent holders of the Lessor’s interest
in this Lease shall remain liable and responsible with regard to the potential duties and
liabilities of Lessor pertaining to Hazardous Substances as outlined in Paragraph 6.2 above.

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

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

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

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

     No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements
between the Parties with respect to any matter mentioned herein, and no other prior or
contemporaneous agreement or understanding shall be effective.

23.      Notices.

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

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

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

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

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

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

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

30.      Subordination; Attornment; Non-Disturbance.

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

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

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

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

31.      Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises
whether founded in tort, contract or equity, or to
declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be
awarded in the same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include, without
limitation, a Party or Broker who substantially obtains or defeats
the relief sought, as the case may
be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker
of its claim or defense. The attorneys’ fees award shall not be computed in accordance with
any court fee schedule, but shall be such as to fully reimburse all attorneys’ fees reasonably
incurred. In

			
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addition,
Lessor shall be entitled to attorneys’ fee costs and expenses incurred in the
preparation and service of notices of Default and consultations in connection therewith, whether or
not a legal action is subsequently commenced in connection with such Default or resulting
Breach ($200 is a reasonable minimum per occurrence for such services and consultation).

32.     
‘Lessor’s Access; Showing Premises; Repairs. Lessor and
Lessor’s agents shall have the right to
enter the Premises at any time, in the case of an emergency, and otherwise upon at least
24 hours notice for the purpose of showing the same to prospective purchasers,
lenders,or tenants, and making such alterations, repairs, improvements or additions to the
Premises as Lessor may deem necessary. All such activities shall be
without abatement
 of rent or liability to Lessee. Lessor may at any time place on the Premises any
ordinary “For Sale” signs and Lessor may during the
last 6 months of the term hereof place
on the Premises any ordinary “For Lease” signs. Lessee may at any time place on the Premises
any ordinary “For Sublease” sign, Lessee shall have the right to have a representative present during all
non-emergency entry and any such entry shall be subject to
Lessee’s reasonable
security measures.

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

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

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

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

37.      Guarantor.

           37.1     
Execution. The Guarantors, if any, shall each execute a guaranty in the form most
recently published by the American Industrial Real Estate Association, and each such Guarantor
shall have the same obligations as Lessee under this Lease.

           37.2     
‘Default. It shall constitute a Default of the Lessee if any Guarantor fails or
refuses, upon request to provide:  (a) evidence of the execution of the guaranty, including the
authority of the party signing on Guarantor’s behalf to obligate Guarantor, and in the case of a
corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the
making of such guaranty, (b) current financial statements,
(c) an Estoppel Certificate, or (d)
written confirmation that the guaranty is still in effect.

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

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

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

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

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

           39.4     
‘Effect of Default on Options.

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

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

                         (c)     ‘An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the Option, if, after such exercise and prior to the commencement of the
extended term, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due
(without any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee 3 or more
notices of separate Default during any 12 month period, whether or not the Defaults are cured, or
(iii) if Lessee commits a Breach of this Lease.

40.     
‘Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does
not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee
assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees
and their property from the acts of third parties.

41.     
‘Reservations. Lessor reserves the right: (i) to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that Lessor
deems necessary, (ii) to cause the recordation of parcel maps and restrictions, and (iii) to
create and/or install new utility raceways, so long as such easements, rights, dedications, maps,
restrictions, and utility raceways do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate such
rights.

42.     
‘Performance Under Protest. If at any time a dispute shall arise as to any amount or sum
of money to be paid by one Party to the other under the provisions hereof, the Party against whom
the obligation to pay the money is asserted shall have the right
to make payment “under protest” and such payment shall not be regarded as a voluntary payment and
there shall survive the right on the part of said Party to institute suit for recovery of such sum.
If it shall be adjudged that there was no legal obligation on the part of said Party to pay such
sum or any part thereof, said Party shall be entitled to recover such
sum or so much thereof as it was
not legally required to pay.

43.     Authority. If either Party hereto is a corporation, trust, limited liability company,
partnership, or similar entity, each individual executing this Lease

			
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on behalf
of such entity represents and warrants that he or she is duly authorized to
execute and deliver this Lease on its behalf. Each party shall,
within 30 days after request,
deliver to the other party satisfactory evidence of such authority.

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

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

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

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

48.     Waiver of Jury Trial. The Parties hereby waive their respective rights to trial by jury in any
action or proceeding involving the Property or arising out of this Agreement.

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

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

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

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

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

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

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

	 	 	 	 	 	 	 	 	 
	Executed at:

	 	Menlo Park
	 	 	 	Executed at:
	 	Mountain View, CA
	on:
March 21, 2002	 	 	 	on: March 20, 2002
	 
	 	 

	 
	 	 	 	 	 	 	 	 
	By LESSOR:

	 	 	 	 	 	By LESSEE:	 	 
	California Pacific Commercial Corporation	 	 	 	Alexza Molecular Delivery Corporation
	 	 	 	 	 
	 	 	 	 	 
	By:
	 	/s/ Dan McGanney III	 	 	 	By:	 	/s/ Stephen A. Scheider
	 

	 	 
	 	 	 	 	 	 
	Name Printed:

	 	Dan McGanney III
	 	 	 	Name Printed:
	 	Stephen A. Scheider
	Title:

	 	President
	 	 	 	Title:	 	President & COO
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	By:	 	 
	 
	 	 	 	 	 	 	 	 
	Name Printed:

	 	 	 	 	 	Name Printed:	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 	 	 
	Address:

	 	2200 Sand Hill Road, Suite 230
	 	 	 	Address:
	 	1001 East Meadow Circle
	Menlo Park, CA. 94025	 	 	 	Palo Alto, CA. 94303
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Telephone:

	 	(650) 854-5104
	 	 	 	Telephone:
	 	(650) 230-1625
	Facsimile:

	 	(650) 854-8867
	 	 	 	Facsimile:
	 	(650) 230-1901
	Federal ID No.

	 	94-6066156
	 	 	 	Federal ID No.
	 	77-0567768

These forms are often modified to meet changing requirements of law and needs of the
industry. Always write or call to make sure you are utilizing the most current form:
American Industrial Real Estate Association, 700 South Flower
Street, Suite 600, Los Angeles, CA
90017.

     (213) 687-8777.

© Copyright 1999 By American Industrial Real Estate Association.

					
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Exhibit 10.11

FIRST AMENDMENT TO LEASE

          THIS FIRST AMENDMENT TO LEASE (the “Amendment”) is made and entered into as of the date
below written by and between CALIFORNIA PACIFIC COMMERCIAL CORPORATION (“Lessor”) and ALEXZA
MOLECULAR DELIVERY CORPORATION (“Lessee”).

RECITALS

     A. Lessor and Lessee are parties to that certain lease dated March 20, 2002 for certain
premises located at 1001 East Meadow Circle, Palo Alto, California (the “Lease”).

     B. Lessor and Lessee desire to amend the terms of the Lease on the terms and conditions set
forth below.

AGREEMENT

          Lessor and Lessee hereby agree as follows:

          1. Term. The term of the Lease is hereby extended until May 31, 2006.

          2.
Base Rent. Commencing June 1, 2003 and continuing through August 31, 2003, base
rent shall be Thirty Seven Thousand Eighteen Dollars ($37,018) per month. Commencing September 1,
2003 and continuing through May 31, 2005, base rent shall be Fifty Two Thousand Seventy Eight
Dollars ($52,078) per month. Commencing June 1, 2005, base rent shall be Sixty Thousand Five
Hundred Twenty Two Dollars ($60,522) per month.

          3.
Additional Premises. Commencing September 1, 2003, (i) the Premises shall include
the premises currently occupied by Arista Networks, Inc. commonly known as 1015 East Meadow Circle
(the “Arista Space”) such that Lessee shall occupy the entire Building; and (ii) Lessee’s share of
Common Area Operating Expenses shall be 100%. Lessor at its expense shall recarpet the carpeted
portion of the Arista Space with Building standard carpet and make the existing HVAC system
servicing the Arista Space operational. Except as provided in the preceding sentence, Lessee shall
accept the Arista Space in its “as is” condition upon delivery thereof by the Lessor.
Notwithstanding Paragraphs 7.1 (a) , 7.1 (b) and 7.1 (d) of the Lease, Lessor shall at its expense
maintain, repair and replace the HVAC equipment servicing the Arista Space; provided, however, that
Lessee shall reimburse Lessor for the cost of routine maintenance of the HVAC equipment and the
cost of a service contract on such equipment as contemplated by Paragraph 7.l(b) of the Lease. The parties acknowledge that Arista may desire to remain in possession of its
premises beyond the August 31, 2003 expiration date of its lease until as late as December 31,
2003. In the event that Arista elects to remain in possession of its premises beyond August 31,
2003 on terms satisfactory to Lessor in its sole discretion, the Lease shall not commence with
respect to the Arista Space until such time as Arista vacates its premises (not to be later

 

 

than December 31, 2003) and the base rent payable and Lessee’s share of Operating Expenses
hereunder shall be proportionately reduced until Arista vacates its premises and Lessor is able to
deliver possession of the Arista Space to Lessee as required hereunder. If Lessor is unable to
deliver possession of the Arista Space as of the scheduled date for any reason, Lessor shall not
be liable for any damage caused for failing to deliver possession, this Amendment shall not be
void or voidable, and rental with respect to the Arista Space shall be delayed until Lessor
delivers possession of the Arista Space to Lessee on the terms and subject to the conditions
required hereunder; provided, however, that Lessee shall have the right to terminate this
Amendment in the event that Lessor does not deliver possession of the Arista Space to Lessee on or
before January 31, 2004.

          4.
Options to Renew. Provided Lessee is not in default under the terms of the Lease
either at the time of exercise of the option or at commencement of the applicable option period,
Lessee shall have two (2) options to renew the Lease for successive periods of one (1) year each commencing upon the expiration of the initial term of
the Lease. Said options shall be on the same terms, covenants and conditions contained herein
except that the base rent shall be Sixty Six Thousand One Hundred Fifty Two Dollars ($66,152) per
month during the first option term and Sixty Eight Thousand Nine Hundred Sixty Eight Dollars
($68,968) during the second option term. The options may be exercised only by written notice to
Lessor delivered no later than two hundred seventy (270) days prior to expiration of the initial
term or the first option period, as the case may be. Lessor may notify Lessee at any time no later
than two hundred forty (240) days prior to the expiration of the first option period that it
intends to redevelop the Project and in the event that Lessor gives such notice Lessee’s second
option to renew shall be null and void.

          5. Miscellaneous. Except as amended herein, the Lease shall remain in full force and
effect. This Amendment constitutes the entire agreement between the parties with respect to the
subject matter hereof.

          IN WITNESS WHEREOF, the parties have executed this First Amendment to Lease as of the
8th day of May, 2003.

	 	 	 	 	 
	 	LESSOR:

CALIFORNIA PACIFIC COMMERCIAL CORPORATION

 	 
	 	By:  	/s/
Dan McGanney III
 	 
	 	 	Its: President 	 
	 	 	 	 

	 	 	 	 	 
	 	LESSEE:

ALEXZA MOLECULAR DELIVERY CORPORATION

 	 
	 	By:  	/s/
Carol A. Christopher
 	 
	 	 	Its: CFO

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