Document:

Exhibit 10.51

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT (this “Lease”)
is dated, for reference purposes only, as of 14th day of November,
2003, between ARE-9363/9373/9393 TOWNE CENTRE, LLC, a Delaware limited
liability company (“Landlord”),
and AMYLIN PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”).

 

RECITALS

 

A.                                   The
Premises (as defined below in the Basic Lease Provisions) is subject to that
certain Lease dated as of January 2, 1989, between Nexus/Gadco-UTC, a
California Joint Venture, and its successor in interest Nippon Landic (U.S.A.)
Inc. (collectively, “Original Landlord”),
as landlord, and Tenant, as tenant, as amended by that certain Amendment to
Lease dated as of February 23, 1989, that certain Second Amendment to Lease
dated as of July 29, 1991, that certain Third Amendment to Lease dated as of
August 22, 1991, that certain Fourth Amendment to Lease dated as of February
26, 1997, that certain Fifth Amendment to Lease dated as of February 8, 1999,
that certain Sixth Amendment to Lease dated as of October 11, 1999, that
certain Seventh Amendment to Lease dated as of March 1, 2000, that certain
Eighth Amendment to Lease dated as of May 2, 2000, that certain Ninth Amendment
to Lease dated as of October 15, 2001, that certain Tenth Amendment to Lease
dated August 20, 2002, and that certain Eleventh Amendment to Lease dated
January 23, 2003 (as amended, the “Prior
Lease”).  Landlord has
succeeded to the interest of Original Landlord under the Prior Lease.

 

B.                                     Tenant
has requested and Landlord has agreed, subject to the terms and conditions set
forth herein, to terminate the Prior Lease and enter into this Lease.

 

BASIC LEASE PROVISIONS

 

Address:                                               9363
and 9373 Towne Centre Drive, San Diego, California

 

Premises:                                        That
portion of the Project, containing approximately 77,173 rentable square feet,
consisting of (i) approximately 45,030 rentable square feet  (the “9363
Premises”) located in the building at 9363 Towne Centre Drive, San
Diego, California (the “9363 Building”),
more particularly shown on shown on Exhibit
A-1, and (ii) approximately 32,173 rentable square feet (the “9373 Premises”) located in the building at
9373 Towne Centre Drive, San Diego, California (the “9373 Building”), more particularly shown on shown on Exhibit A-2.

 

Project:                                                     The
real property on which the 9363 Building and 9373 Building (collectively, the “Building”)
in which the Premises are located and on which the building located at 9393
Towne Centre Drive is located, together with all improvements thereon and
appurtenances thereto as described on Exhibit B.

 

Base Rent:                                  For 9363 Premises:  $2.40 per rentable square foot per month, subject to
adjustment pursuant to Section 4.

 

For 9373 Premises:  $63,799.94
per month, subject to adjustment pursuant to Sections 3(b) and 4.

 

	
  Rentable Area of
  Premises: 77,173  sq.
  ft.

  
	
   

  
	
  Rentable Area of 9363 Building:
  45,030 sq. ft.

  	
  9363 Building’s Share of Project: 32.38%

  
	
   

  
	
   

  

 

 

	 
	
  Rentable Area of 9373 Building:
  52,228 sq. ft.

  	
  9373 Building’s Share of Project: 37.56%

  	 

	 
	
   

  	 

	 
	
  Rentable Area of Project:
  139,038 sq. ft.

  	 

	 
	
   

  	 

	 
	
  Tenant’s Share of Operating Expenses: 55.5%

  	 

	 
	
   

  	 

	 
	
  Security Deposit:
  $250,000.00

  	 

	 
	
   

  	 

	 
	
  Rent Adjustment Percentage:  3%

  	 

	 
	
   

  	 

	 
	
  Commencement
  Date:
  September 1, 2003

  	 

	 
	
   

  	 

	
  Base Term:

  	
  Beginning on the Commencement Date and ending on January 31, 2015.

  
	
   

  	
   

  
	
  Permitted Use:

  	
  Research
  and development laboratory, related office and other related uses consistent
  with the character of the Project and otherwise in compliance with the
  provisions of Section 7.

  
	
   

  	
   

  
	
  Address for Rent Payment:

  	
  Landlord’s Notice Address:

  
	
  135 N. Los Robles Avenue, Suite 250

  Pasadena, CA 91101

  Attention: Accounts Receivable

  	
  135 N. Los Robles Avenue, Suite 250

  Pasadena, CA 91101

  Attention: Corporate Secretary

  
	
   

  
	
  Tenant’s Notice Address:

  
	
  9360 Towne Centre Drive, Suite 110

  San Diego, California 92121

  Attention: Reed Vickerman

  
					

 

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

 

	
  ý  EXHIBIT A  – 1 DESCRIPTION OF 9363 PREMISES

  
	
  ý  EXHIBIT A – 2 DESCRIPTION OF 9373 PREMISES

  
	
  ý  EXHIBIT B - DESCRIPTION OF
  PROJECT

  
	
  ý  EXHIBIT C – WORK LETTER

  
	
  ý  EXHIBIT D – INTENTIONALLY
  OMITTED

  
	
  ý  EXHIBIT E - RULES AND
  REGULATIONS

  
	
  ý  EXHIBIT F – TENANT’S
  PERSONAL PROPERTY

  
	
  ý  EXHIBIT G – SUBLEASE
  PREMISES DESCRIPTION

  
	
  ý  EXHIBIT H – AVAILABLE SPACE
  DESCRIPTION

  
	
  ý  EXHIBIT I – HVAC EQUIPMENT

  

 

1.                                       Lease of
Premises.  Upon and subject
to all of the terms and conditions hereof, 
Landlord hereby leases the Premises to Tenant and Tenant hereby leases
the Premises from Landlord.  The
portions of the Project which are for the non-exclusive use of tenants of the
Project are collectively referred to herein as the “Common Areas.”  Subject to Landlord’s obligations under Section
10 with respect to providing substitute parking, Landlord reserves the
right to modify Common Areas; provided, however, that such modifications do not
materially adversely affect (i) Tenant’s access to the Premises other than on a
temporary basis, or (ii) Tenant’s use of the Premises for the Permitted Use.

 

2.                                       Prior Lease;
Lease Term; Acceptance of Premises.

 

(a)                                  Prior Lease.

 

(i)                                     Landlord and Tenant hereby acknowledge and
agree that, as of the Prior Lease Termination Date (as hereinafter defined),
the Prior Lease contains the complete agreement

 

 

between Landlord and Tenant with
respect to the Premises, and is in full force and effect, subject to subsection
2(a)(iii).

 

(ii)                                  Tenant hereby certifies to Landlord (and its
successors and assigns) that, as of the Prior Lease Termination Date, (A)
Tenant has no right, title, or interest in or to the Premises or the Project
other than as a lessee of the Premises under the Prior Lease and as a sublessee
of the Sublease Premises (as defined in Section 42), (B) Tenant has no
option, right of first refusal, right of first offer, or other right to acquire
or purchase all or any portion of, or interest in, the Premises or the Project,
(C) Tenant has not sublet any portion of the Premises or assigned any portion
of the Prior Lease to any sublessee or assignee, and (D) Landlord has performed
all obligations required of Landlord pursuant to the Prior Lease.  Landlord and Tenant hereby certify to one
another (and their respective successors and assigns) that, as of the Prior
Lease Termination Date, (x) each has the full right, power and authority to
enter into this Lease and to perform its obligations hereunder and has obtained
all necessary consents and approvals required under the documents governing its
affairs in order to execute this Lease and to perform its obligations
hereunder, and (y) each of the persons executing this Lease on its behalf has
the full right, power and authority so to do. 
To Landlord’s actual knowledge, without any duty of inquiry or
investigation, Tenant has performed all obligations as of the date hereof
required to be performed by Tenant under the Prior Lease and there are
currently no monetary defaults under the Prior Lease.  The matters described in the foregoing certifications shall
remain and be true and correct, in all material respects, as of the
Commencement Date.

 

(iii)                               As of 11:59 p.m. on August 31, 2003 (the “Prior Lease Termination Date”), the Prior Lease shall terminate and be of
no further force or effect and neither Landlord nor Tenant shall have any other
right, title, or interest, of any kind, direct or indirect, in any portion of
the Premises or the Project under the Prior Lease, except as expressly provided
in this Lease.  All obligations of the
parties under the Prior Lease which are by their terms intended to survive the
termination of the Prior Lease (including, without limitation, indemnity
obligations and obligations concerning the condition and repair of the Premises
and/or the Project) (the “Prior Lease Obligations”) shall survive such termination of the
Prior Lease for the benefit of Landlord and Tenant, as the case may be.  Landlord and Tenant each hereby reserves all
rights and claims that such party may have against the other party for any such
Prior Lease Obligations.  Landlord and
Tenant acknowledge and agree that their obligations to one another with respect
to reconciling Operating Expenses (as defined under the Prior Lease) for the
period from January 1, 2003, until the Prior Lease Termination Date shall
survive the termination of the Prior Lease. 
Landlord and Tenant also acknowledge and agree that Tenant’s obligation
under the Prior Lease to pay to Landlord $1,606 on the first day of each month
through and including March 1, 2004, for remodeling the common areas of the
9373 Building shall survive the termination of the Prior Lease.  This Lease constitutes the complete
agreement of Landlord and Tenant with respect to the subject matter hereof and
supersedes any and all prior representations, inducements, promises,
agreements, understandings, and negotiations that are not contained herein
including, without limitation, the Prior Lease.

 

(b)                                 Term.  
The “Term” of this Lease shall be the Base Term, as defined above
in the Basic Lease Provisions and, if applicable, the Extension Term(s) (as
hereinafter defined) which Tenant may elect pursuant to Section 45.

 

(c)                                  Acceptance of Premises.  Tenant has been in possession of, and
conducting business in, the Premises under the Prior Lease and intends to
continue conducting business in the Premises, without interruption between the
Prior Lease Termination Date and the Commencement Date.  Tenant accepts the Premises “as is”, in
their condition as of the Commencement Date, without any qualifications,
restrictions, or limitations, subject to all applicable Legal Requirements (as
defined in Section 7) and Landlord’s repair and maintenance obligations
under Section 13 and with respect to the exterior walls, roof structure
(excluding the roof membrane) and the foundation.  Further, since the Premises will not be empty and/or unoccupied
at any time prior to the Commencement Date and Landlord will have no
opportunity to inspect, examine, and/or audit the Premises in order to
establish the condition of the

 

 

Premises as of the Commencement Date, Landlord shall have no liability
for any defects in the Premises (whether latent or patent).  Nothing in the preceding sentence is
intended to limit or reduce Landlord’s repair and maintenance obligations under
Section 13 and with respect to the exterior walls, roof structure
(excluding the roof membrane) and the foundation.  Except for Landlord’s HVAC Work (as defined in Section 2(e)),
the Roof Work (as defined in Section 2(f)), and any obligations under
the Work Letter, Landlord shall have no obligation to perform any work or to
refurbish, finish, or otherwise alter the Premises in order to prepare the
Premises for Tenant’s use or occupancy. 
Tenant agrees and acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty with respect to the condition
of all or any portion of the Premises or the Project, and/or the suitability of
the Premises or the Project for the conduct of Tenant’s business, and Tenant
waives any implied warranty that the Premises or the Project are suitable for
the Permitted Use.  Landlord, in
executing this Lease, does so in reliance upon Tenant’s representations, warranties,
acknowledgments, and agreements contained herein.  Nothing contained in this paragraph is intended to limit or
reduce Landlord’s obligations under Section 13 or make Tenant
responsible for the matters described as exclusions to Operating Expenses in Section
5(a) - (x).

 

(d)                                   Tenant Improvements to 9373 Premises.  In accordance with the Work Letter, Tenant
shall cause the Tenant Improvements (as defined in the Work Letter) to be
constructed in the 9373 Premises at a cost to Landlord not to exceed $1,286,920
which shall include the cost of construction, construction management by
Landlord (for which Landlord shall be paid Administrative Rent (as defined in
the Work Letter) not to exceed $25,000), cost of space planning, architect,
engineering and other related services, building permits and other planning and
inspection fees.  Tenant shall be
required to provide Landlord with prior written notice of the date on which the
construction of the Tenant Improvements shall commence (the “TI Commencement Date”), which date shall be
no later than April 15, 2004.  The
period commencing on the TI Commencement Date and ending 8 months thereafter is
hereinafter referred to as the “TI Work
Period.”

 

(e)                                  Landlord’s HVAC Work.  Landlord shall, at Landlord’s sole cost and
expense, (i) utilize the infrastructure in the existing central plant at the
9363 Building and add a chiller, cooling tower and air handler (with the
specifications and capacity as more particularly described on Exhibit I) to service the first floor at the
9373 Building  (collectively, the “Central
Plant Modifications”), and (ii) provide new package units to service
the office improvements on the second floor of the 9373 Building ((i) and (ii)
are hereinafter collectively referred to as the “HVAC Work”).  Tenant
acknowledges and agrees that the central plant at the 9363 Building, as
modified by the Central Plant Modifications, will not have the capacity to
accommodate conversion of the second floor of either the 9363 Building or 9373
Building to laboratory space. Landlord shall endeavor to cause the HVAC Work to
be completed during the TI Work Period. 
Tenant acknowledges that the construction of the HVAC Work may adversely
impact the construction of the Tenant Improvements and Tenant’s use and
enjoyment of the Premises  and
Tenant agrees to cooperate with Landlord and to permit Landlord and its
contractors to enter  the Premises
so that the Central Plant Modifications may be completed.

 

(f)                                    Roof. 
Landlord shall, at Landlord’s sole cost and expense, replace and install
a new roof on the 9373 Building (the “Roof
Work”).  The Roof Work shall
be undertaken and completed during the TI Work Period.  Tenant acknowledges that the Roof Work may
adversely impact the construction of the Tenant Improvements and Tenant’s use
and enjoyment of the 9373 Premises and Tenant agrees to cooperate with Landlord
and to permit Landlord and its contractors to access the 9373 Premises to do
the Roof Work.

 

3.                                       Rent.

 

(a)                                  Base Rent.  Tenant shall pay to Landlord in advance,
without demand, abatement, deduction or set-off, monthly installments of Base
Rent on or before the first day of each calendar month during the Term hereof
in lawful money of the United States of America, at the office of Landlord for
payment of Rent set forth above, or to such other person or at such other place
as Landlord may from time to time designate in writing.  Payments of Base Rent for any fractional
calendar month shall be prorated.  The
obligation of Tenant to pay Base Rent and other sums to Landlord and the
obligations of

 

 

Landlord under this Lease are independent obligations.  Tenant shall have no right at any time to
abate, reduce, or set-off any Rent (as defined in Section 5) due
hereunder except for any abatement as may be expressly provided in this Lease.

 

(b)                                 Rent Abatement for 9373 Premises.  During the period commencing on January 1,
2004, and ending on August 31, 2004, Tenant shall not be required to pay Base
Rent or Operating Expenses for the 9373 Premises only.  Tenant’s obligation to resume paying Base
Rent and Operating Expenses for the 9373 Premises shall commence on September
1, 2004 (the “Rent Resumption Date”)
and Tenant shall be required to pay Base Rent for the 9373 Premises at that
time in the amount of $2.10 per rentable square foot per month.

 

(c)                                  Additional Rent.  In addition to Base Rent, Tenant
agrees to pay to Landlord as additional rent (“Additional Rent”):  (i) Tenant’s Share of “Operating Expenses”
(as defined in Section 5), and (ii) any and all other amounts Tenant
assumes or agrees to pay under the provisions of this Lease, including, without
limitation, any and all other sums that may become due by reason of any default
of Tenant or failure to comply with the agreements, terms, covenants and
conditions of this Lease to be performed by Tenant, after any applicable notice
and cure period.

 

4.                                       Base Rent
Adjustments.  Base Rent shall
be increased on September 1 of each year during the Term of this Lease (each an
“Adjustment
Date”) by multiplying the Base Rent payable immediately before such
Adjustment Date by the Rent Adjustment Percentage and adding the resulting
amount to the Base Rent payable immediately before such Adjustment Date.  Notwithstanding anything to the contrary
contained in the preceding sentence, the first Adjustment Date for Base Rent
for the 9373 Premises shall occur on September 1, 2005.  Base Rent, as so adjusted, shall thereafter
be due as provided herein.  Base Rent
adjustments for any fractional calendar month shall be prorated.

 

5.                                       Operating
Expense Payments.  Landlord
shall deliver to Tenant a written estimate of Operating Expenses for each
calendar year during the Term (the “Annual Estimate”), which may be revised by
Landlord from time to time during such calendar year.  During each month of the Term, on the same date that Base Rent is
due, Tenant shall pay Landlord an amount equal to 1/12th of Tenant’s
Share of the Annual Estimate.  Payments
for any fractional calendar month shall be prorated.

 

The term “Operating Expenses” means all costs and
expenses of any kind or description whatsoever incurred or accrued each
calendar year by Landlord with respect to the Building (including the Building’s Share of all costs and expenses of
any kind or description incurred or accrued by Landlord with respect to the
Project which are not specific to the Building or any other building located in
the Project)  (including, without duplication, Taxes (as
defined in Section 9), capital repairs and improvements amortized over
the lesser of 7 years and the useful life of such capital items, and
administrative rent in the amount of 3.0% of Base Rent), excluding only:

 

(a)                                  the original
construction costs of the Project, renovation and remodeling prior to the date
of the Lease and during the Term, and costs of correcting defects in such
original construction,  renovation or
remodeling;

 

(b)                                 the cost of
maintenance of the structural elements of the following portions of the
Project:  exterior walls, roof
structures (excluding the roof membrane) and foundation;

 

(c)                                  capital expenditures for
expansion of the Project;

 

(d)                                 interest, principal
payments of Mortgage (as defined in Section 27) debts of Landlord,
financing costs and amortization of funds borrowed by Landlord, whether secured
or unsecured and all payments of base rent (but not taxes or operating expenses
except to the extent that they are duplicative of Taxes or Operating Expenses)
under any ground lease or other underlying lease of all or any portion of the
Project;

 

 

(e)                                  depreciation
of the Project (except for capital improvements, the cost of which are  includable in Operating Expenses to the
extent permitted herein);

 

(f)                                    advertising, legal
and space planning expenses and leasing commissions and other costs and
expenses incurred in procuring and leasing space to tenants for the Project,
including any leasing office maintained in the Project, free rent, construction
allowances for tenants, and advertising and marketing expenses;

 

(g)                                 legal and other
expenses incurred in the negotiation or enforcement of leases;

 

(h)                                 completing, fixturing,
improving, renovating, painting, redecorating or other work, which Landlord
pays for or performs for other tenants within their premises, and costs of
correcting defects in such work, and costs for any special service provided to
a tenant of the Project which is not provided generally to tenants of the
Project;

 

(i)                                     costs of utilities
outside normal business hours sold to tenants of the Project;

 

(j)                                     costs to be
reimbursed by other tenants of the Project or Taxes to be paid directly by
Tenant or other tenants of the Project, whether or not actually paid;

 

(k)                                  salaries, wages,
benefits and other compensation paid to officers and employees of Landlord who
are not assigned in whole or in part to the operation, management, maintenance
or repair of the Project;

 

(l)                                     general
organizational, administrative and overhead costs relating to maintaining
Landlord’s existence, either as a corporation, partnership, or other entity,
including general corporate, legal and accounting expenses;

 

(m)                               costs (including
attorneys’ fees and costs of settlement, judgments and payments in lieu
thereof) incurred in connection with disputes with tenants, other occupants, or
prospective tenants, and costs and expenses, including legal fees, incurred in
connection with negotiations or disputes with employees, consultants,
management agents, leasing agents, purchasers or mortgagees of the Building;

 

(n)                                 fines, expenses and
costs incurred by Landlord due to the violation by Landlord, its employees,
agents or contractors or any tenant of the terms and conditions of any lease of
space in the Project or any Legal Requirement (as defined in Section 7);

 

(o)                                 penalties, fines or
interest incurred as a result of Landlord’s inability or failure  to make payment of Taxes and/or to file any
tax or informational returns when due, or from Landlord’s failure to make any
payment of Taxes required to be made by Landlord hereunder before delinquency;

 

(p)                                 overhead and profit
increment paid to Landlord or to subsidiaries or affiliates of Landlord for
goods and/or services in or to the Project to the extent the same exceeds the
costs of such goods and/or services rendered by unaffiliated third parties on a
competitive basis;

 

(q)                                 costs of Landlord’s
charitable or political contributions, or of fine art maintained at the
Project;

 

(r)                                    costs in connection
with services (including electricity), items or other benefits of a type which
are not standard for the Project and which are not available to Tenant without
specific charges therefor, but which are provided to another tenant or occupant
of the Project, whether or not such other tenant or occupant is specifically
charged therefor by Landlord;

 

(s)                                  costs incurred in the
sale or refinancing of the Project;

 

 

(t)                                    net income taxes of
Landlord or the owner of any interest in the Project, franchise, capital stock,
gift, estate or inheritance taxes or any federal, state or local documentary
taxes imposed against the Project or any portion thereof or interest therein;

 

(u)                                 any expenses otherwise
includable within Operating Expenses to the extent actually reimbursed by
persons other than tenants of the Project under leases for space in the
Project, except as set forth in Section 5(j) above;

 

(v)                                 costs incurred in
connection with environmental clean up, response action or remediation on, in
or under or about the Project (other than the Premises), except to the extent
caused or contributed to or exacerbated by Tenant or any Tenant Party in which
case Tenant shall be solely responsible for the costs thereof;

 

(w)                               costs which would be
recoverable by Landlord pursuant to its insurance policies (provided, however,
that nothing contained in this clause (w) is intended to require Landlord to
submit claims for matters which Landlord does not reasonably believe are covered
by its insurance policies);

 

(x)                                   any costs, fees or
expenses for management, supervision, overhead or administration which are in
addition to or which are duplicative of the 3.0% administrative fee described
above.

 

Within 90 days after the end of each calendar year (or such longer
period as may be reasonably required), Landlord shall furnish to Tenant a
statement (an “Annual Statement”) showing in reasonable detail:  (a) the total and Tenant’s Share of actual
Operating Expenses for the previous calendar year, and (b) the total of
Tenant’s payments in respect of Operating Expenses for such year.  If Tenant’s Share of actual Operating
Expenses for such year exceeds Tenant’s payments of Operating Expenses for such
year, the excess shall be due and payable by Tenant as Rent within 30 days
after delivery of such Annual Statement to Tenant.  If Tenant’s payments of Operating Expenses for such year exceed
Tenant’s Share of actual Operating Expenses for such year Landlord shall pay
the excess to Tenant within 30 days after delivery of such Annual Statement,
except that after the expiration, or earlier termination of the Term or if
Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the
excess to Tenant after deducting all other amounts due Landlord.

 

The Annual Statement shall be final and binding upon Tenant unless
Tenant, within 90 days after Tenant’s receipt thereof, shall contest any item
therein by giving written notice to Landlord, specifying each item contested
and the reason therefor.  If, during
such 90 day period, Tenant reasonably and in good faith questions or contests
the accuracy of Landlord’s statement of Tenant’s Share of Operating Expenses,
Landlord will provide Tenant with access to Landlord’s books and records
relating to the operation of the Project and such information as Landlord
reasonably determines to be responsive to Tenant’s questions (the “Expense
Information”).  If after
Tenant’s review of such Expense Information, Landlord and Tenant cannot agree
upon the amount of Tenant’s Share of Operating Expenses, then Tenant shall have
the right to have an independent public accounting firm selected by Tenant from
among the 5 largest in the United States, working pursuant to a fee arrangement
other than a contingent fee (at Tenant’s sole cost and expense), audit and/or
review the Expense Information for the year in question (the “Independent
Review”).  The results of any
such Independent Review shall be binding on Landlord and Tenant.  If the Independent Review shows that the
payments actually made by Tenant with respect to Operating Expenses for the
calendar year in question exceeded Tenant’s Share of Operating Expenses for
such calendar year, Landlord shall at Landlord’s option either (i) credit the
excess amount to the next succeeding installments of estimated Operating
Expenses or (ii) pay the excess to Tenant within 30 days after delivery of such
statement, except that after the expiration or earlier termination of this
Lease or if Tenant is delinquent in its obligation to pay Rent, Landlord shall
pay the excess to Tenant after deducting all other amounts due Landlord.  If the Independent Review shows that
Tenant’s payments with respect to Operating Expenses for such calendar year
were less than Tenant’s Share of Operating Expenses for the calendar year,
Tenant shall pay the deficiency to Landlord within 30 days after delivery of
such statement.  If the Independent
Review shows that Tenant has overpaid with respect to Operating Expenses by more
than 5% then Landlord shall reimburse Tenant for all costs incurred by Tenant
for the Independent Review.  Operating
Expenses for the calendar years in which Tenant’s

 

 

obligation to share therein begins and ends shall be prorated.  Notwithstanding anything set forth herein to
the contrary, if the Building is not at least 95% occupied on average during
any year of the Term, Tenant’s Share of Operating Expenses for such year shall
be computed as though the Building had been 95% occupied on average during such
year.

 

“Tenant’s
Share” shall be the percentage set forth in the Basic Lease
Provisions of this Lease as Tenant’s Share as reasonably adjusted by Landlord  for
changes in the physical size of the Premises or the Project occurring
thereafter.  Landlord may equitably
increase Tenant’s Share for any item of expense or cost reimbursable by Tenant
that relates to a repair, replacement, or service that benefits only the
Premises or only a portion of the Project that includes the Premises or that
varies with occupancy or use.  Base
Rent, Tenant’s Share of Operating Expenses and all other amounts payable by
Tenant to Landlord hereunder are collectively referred to herein as “Rent.”

 

6.                                       Security
Deposit.  Tenant shall
deposit with Landlord, upon delivery of an executed copy of this Lease to
Landlord, a security deposit (the “Security Deposit”) for the performance of
all of Tenant’s obligations hereunder in the amount set forth in the Basic
Lease Provisions of this Lease, which Security Deposit shall be in the form of
cash.  Notwithstanding anything to the
contrary contained in the  preceding
sentence, Landlord acknowledges that Landlord is holding a security deposit
under the Prior Lease in the amount of $95,000 and that, at Tenant’s request,
such amount shall be applied toward the amount of the Security Deposit required
to be deposited by Tenant with Landlord under this Lease.  The Security Deposit shall be held by
Landlord in a separate account and Tenant shall be entitled to any interest
earned on the Security Deposit. The Security Deposit shall be held by Landlord
as security for the performance of Tenant’s obligations under this Lease.  The Security Deposit is not an advance
rental deposit or a measure of Landlord’s damages in case of Tenant’s default.  Upon each occurrence of a Default (as
defined in Section 20), Landlord may use all or any part of the Security
Deposit to pay delinquent payments due under this Lease, and the cost of any
damage, injury, expense or liability caused by such Default, without prejudice
to any other remedy provided herein or provided by law.  Upon any such use of all or any portion of
the Security Deposit, Tenant shall pay Landlord on demand the amount that will
restore the Security Deposit to the amount set forth on Page 1 of this Lease.  Tenant hereby waives the provisions of any
law, now or hereafter in force, which provide that Landlord may claim from a
security deposit only those sums reasonably necessary to remedy defaults in the
payment of Rent, to repair damage caused by Tenant or to clean the Premises, it
being agreed that Landlord may, in addition, claim those sums reasonably
necessary to compensate Landlord for any other loss or damage, foreseeable or
unforeseeable, caused by the act or omission of Tenant or any officer,
employee, agent or invitee of Tenant. 
Upon bankruptcy or other debtor-creditor proceedings against Tenant, the
Security Deposit shall be deemed to be applied first to the payment of Rent and
other charges due Landlord for periods prior to the filing of such proceedings.  Upon any such use of all or any portion of
the Security Deposit, Tenant shall, within 5 days after demand from Landlord,
restore the Security Deposit to its original amount.  If Tenant shall fully perform every provision of this Lease to be
performed by Tenant, the Security Deposit, or any balance thereof (i.e., after
deducting therefrom all amounts to which Landlord is entitled under the
provisions of this Lease), shall be returned to Tenant (or, at Landlord’s
option, to the last assignee of Tenant’s interest hereunder) within 60 days
after the expiration or earlier termination of this Lease.

 

If Landlord transfers its interest in the Project or this Lease,
Landlord shall either (a) transfer any Security Deposit then held by Landlord
to a person or entity assuming Landlord’s obligations under this Section 6,
or (b) return to Tenant any Security Deposit then held by Landlord and
remaining after the deductions permitted herein.  Upon such transfer to such transferee or the return of the
Security Deposit to Tenant, Landlord shall have no further obligation with
respect to the Security Deposit, and Tenant’s right to the return of the
Security Deposit shall apply solely against Landlord’s transferee.  The Security Deposit is not an advance
rental deposit or a measure of Landlord’s damages in case of Tenant’s
default.  Landlord’s obligation
respecting the Security Deposit is that of a debtor, not a trustee, and no
interest shall accrue thereon.

 

7.                                       Use.  The Premises shall be used solely for the
Permitted Use set forth in the Basic Lease Provisions of this Lease, and in
compliance with all laws, orders, judgments, ordinances,

 

 

regulations, codes, directives, permits, licenses, covenants and
restrictions now or hereafter applicable to the Premises, and to the use and
occupancy thereof, including, without limitation, the Americans With
Disabilities Act, 42 U.S.C. § 12101, et seq. (together with the regulations
promulgated pursuant thereto, “ADA”) (collectively, “Legal Requirements” and each,
a “Legal Requirement”).  Tenant shall, upon 5 days’ written notice
from Landlord, discontinue any use of the Premises which is declared by any
Governmental Authority (as defined in Section 9) having jurisdiction to
be a violation of a Legal Requirement. 
Tenant will not use or permit the Premises to be used for any purpose or
in any manner that would void Tenant’s or Landlord’s insurance, increase the
insurance risk, or cause the disallowance of any sprinkler or other
credits.  Tenant shall not permit any
part of the Premises to be used as a “place of public accommodation”, as
defined in the ADA or any similar legal requirement.  Tenant shall reimburse Landlord promptly upon demand for any
additional premium charged for any such insurance policy by reason of Tenant’s
failure to comply with the provisions of this Section or otherwise caused by
Tenant’s use and/or occupancy of the Premises. 
Tenant will use the Premises in a careful, safe and proper manner and
will not commit or permit waste, overload the floor or structure of the
Premises, subject the Premises to use that would damage the Premises or
obstruct or interfere with the rights of Landlord or other tenants or occupants
of the Project, including conducting or giving notice of any auction,
liquidation, or going out of business sale on the Premises, or using or
allowing the Premises to be used for any unlawful purpose.  Tenant shall cause any equipment or
machinery to be installed in the Premises so as to reasonably prevent sounds or
vibrations from the Premises from extending into Common Areas, or other space
in the Project.  Tenant shall not place
any machinery or equipment in or upon the Premises if the weight of the same
exceeds the structural capacity of the Building or move such items through the
Common Areas of the Project or in the Project elevators without the prior
written consent of Landlord.  Except as
may be provided under the Work Letter, Tenant shall not, without the prior
written consent of Landlord and Tenant’s agreement to pay the additional cost thereof,
use the Premises in any manner which will require ventilation, air exchange,
heating, gas, steam, electricity or water beyond the existing capacity of the
Project as proportionately allocated to the Premises based upon Tenant’s Share
as usually furnished for the Permitted Use.

 

Landlord shall, as an Operating Expense, be responsible for and shall
make any alterations or modifications to the Common Areas or the exterior of
the Building that are required by Legal Requirements, including the Americans
With Disabilities Act, 42 U.S.C. § 12101, et seq. (together with regulations
promulgated pursuant thereto, “ADA”)).  Tenant, at its sole expense, shall make any
alterations or modifications to the Premises that are required by Legal
Requirements (including, without limitation, compliance of the Premises with
the ADA) related to Tenant’s use or occupancy of the Premises.  Notwithstanding any other provision herein
to the contrary, Tenant shall be responsible for any and all demands, claims,
liabilities, losses, costs, expenses, actions, causes of action, damages or
judgments, and all reasonable expenses incurred in investigating or resisting
the same (including, without limitation, reasonable attorneys’ fees, charges
and disbursements and costs of suit) (collectively, “Claims”) arising out of or in
connection with Legal Requirements, and Tenant shall indemnify, defend, hold
and save Landlord harmless from and against any and all Claims arising out of
or in connection with any failure of the Premises to comply with any Legal
Requirement.

 

8.                                       Holding Over.  If, with Landlord’s express written consent,
Tenant retains possession of the Premises after the termination of the Term,
(i) unless otherwise agreed in such written consent, such possession shall be
subject to immediate termination by Landlord at any time, (ii) all of the other
terms and provisions of this Lease (including, without limitation, the
adjustment of Base Rent pursuant to Section 4) shall remain in full
force and effect (excluding any expansion or renewal option or other similar
right or option) during such holdover period, (iii) Tenant shall continue to
pay Base Rent in the amount payable upon the date of the expiration or earlier
termination of this Lease or such other amount as Landlord may indicate, in
Landlord’s sole and absolute discretion, in such written consent, and (iv) all
other payments shall continue under the terms of this Lease.  If Tenant remains in possession of the
Premises after the expiration or earlier termination of the Term without the
express written consent of Landlord, (A) Tenant shall become a tenant at
sufferance upon the terms of this Lease except that the monthly rental shall be
equal to 150% of Rent in effect during the last 30 days of the Term, and (B)
Tenant shall be responsible for all damages suffered by Landlord resulting from
or occasioned by Tenant’s holding over; provided, however, that Landlord shall
not be entitled to consequential damages

 

 

unless Landlord has provided Tenant with written notice, prior to
expiration or earlier termination of the Term, advising Tenant of the facts
that could result in a claim for consequential damages.  No holding over by Tenant, whether with or
without consent of Landlord, shall operate to extend this Lease except as
otherwise expressly provided, and this Section 8 shall not be construed
as consent for Tenant to retain possession of the Premises.  Acceptance by Landlord of Rent after the
expiration of the Term or earlier termination of this Lease shall not result in
a renewal or reinstatement of this Lease.

 

9.                                       Taxes.  Landlord shall pay, as part of Operating
Expenses, all taxes, levies, assessments and governmental charges of any kind
(collectively referred to as “Taxes”) imposed by any federal, state,
regional, municipal, local or other governmental authority or agency,
including, without limitation, quasi-public agencies (collectively, “Governmental
Authority”) during the Term, including, without limitation, all
Taxes:  (i) imposed on or measured by or
based, in whole or in part, on rent payable to Landlord under this Lease and/or
from the rental by Landlord of the Project or any portion thereof, or (ii)
based on the square footage, assessed value or other measure or evaluation of
any kind of the Premises or the Project, or (iii) assessed or imposed by or on
the operation or maintenance of any portion of the Premises or the Project,
including parking, or (iv) assessed or imposed by, or at the direction of, or
resulting from statutes or regulations, or interpretations thereof, promulgated
by, any Governmental Authority, or (v) imposed as a license or other fee on
Landlord’s business of leasing space in the Project.  Landlord may contest by appropriate legal proceedings the amount,
validity, or application of any Taxes or liens securing Taxes.  Taxes shall not include any net income taxes
imposed on Landlord unless such net income taxes are in substitution for any
Taxes payable hereunder.  If any such
Tax is levied or assessed directly against Tenant, then Tenant shall be
responsible for and shall pay the same at such times and in such manner as the
taxing authority shall require.  Tenant
shall pay, prior to delinquency, any and all Taxes levied or assessed against
any personal property or trade fixtures placed by Tenant in the Premises,
whether levied or assessed against Landlord or Tenant.  If any Taxes on Tenant’s personal property
or trade fixtures are levied against Landlord or Landlord’s property, or if the
assessed valuation of the Project is increased by a value attributable to
improvements in or alterations to the Premises, whether owned by Landlord or
Tenant and whether or not affixed to the real property so as to become a part
thereof, higher than the base valuation on which Landlord from time-to-time
allocates Taxes to all tenants in the Project, Landlord shall have the right,
but not the obligation, to pay such Taxes. 
Landlord’s determination of any excess assessed valuation shall be
binding and conclusive, provided such determination is reasonable and made in
good faith.  The amount of any such
payment by Landlord shall constitute Additional Rent due from Tenant to
Landlord within 30 days after demand.

 

10.                                 Parking.  Landlord covenants and agrees that Landlord
shall, during the Term of this Lease, maintain the number of parking spaces at
the Project required by applicable Legal Requirements. Subject to all matters
of record, Force Majeure, a Taking (as defined in Section 19) and the exercise
by Landlord of its rights hereunder, Tenant shall have the right, in common
with other tenants of the Project, to use 254 parking spaces at the Project, at
no cost to Tenant during the Base Term, subject in each case to Landlord’s
reasonable rules and regulations which shall not be enforced on a
discriminatory basis.  Of the parking
spaces allocated to Tenant pursuant to the preceding sentence, (i) 2 parking
spaces shall be reserved spaces in the garage, (ii) 7 parking spaces shall be
on the parking deck, (iii) 217 parking spaces shall be useable parking spaces
in areas designated for non-reserved parking, and (iv) 28 parking spaces shall
be for Tenant’s use for equipment and storage purposes.  Notwithstanding anything to the contrary
contained herein, Tenant shall be required to pay to Landlord $400 per month (“Parking Rent”) for its use of 8 of the
parking spaces described in clause (iv) of the preceding sentence.  On September 1 of each year during the Base
Term, Parking Rent shall be increased by the Rent Adjustment Percentage.  Tenant may use additional parking spaces for
equipment and storage purposes; provided, however, that such additional parking
spaces also count towards the total number of parking spaces allocated to
Tenant pursuant to the first sentence of this Section 10.  Landlord shall not be responsible for
enforcing Tenant’s parking rights against any third parties, including other
tenants of the Project.  If Tenant
leases directly from Landlord other premises at the Project such as the
Available Space and/or the Sublease Space (as such terms are hereinafter
defined), Tenant shall have the right, in common with other tenants at the
Project pro rata in accordance with the rentable area of such other space and
the rentable areas of the Project occupied by such other tenants, to park in
those areas designated for non-reserved parking.

 

 

If any of the parking spaces allocated to Tenant pursuant to this Section
10 are eliminated during the Term solely as a result of the matters within
Landlord’s reasonable control (as opposed to matters not within Landlord’s
reasonable control such as condemnation or casualty) and not in connection with
a benefit being provided by Landlord specifically for Tenant (e.g., at Tenant’s
request or in connection with the Bridge), Landlord shall make substitute
parking (for the number of spaces eliminated) available for use by Tenant.

 

11.                                 Utilities, Services. 
The Premises are stubbed to receive water, electricity, heat,
light, power, telephone and sewer service. 
Landlord shall provide, subject to the terms of this Section 11,
water, electricity, heat, light, power, sewer, and other utilities (including
gas and fire sprinklers to the extent the Project is plumbed for such
services), refuse and trash collection and janitorial services for the Common
Areas (collectively, “Utilities”).  Landlord shall pay, as Operating Expenses or subject to Tenant’s
reimbursement obligation, for all Utilities used on the Premises, all
maintenance charges for Utilities, and any storm sewer charges or other similar
charges for Utilities imposed by any Governmental Authority or Utility
provider, and any taxes, penalties, surcharges or similar charges thereon.  Landlord may cause, at Landlord’s expense,
any Utilities to be separately metered or charged directly to Tenant by the
provider.  Tenant shall pay directly to
the Utility provider, prior to delinquency, any separately metered Utilities
and services which may be furnished to Tenant or the Premises during the
Term.  Tenant shall pay, as part of
Operating Expenses, its share of all charges for jointly metered Utilities
based upon consumption, as reasonably determined by Landlord.  No interruption or failure of Utilities,
from any cause whatsoever other than Landlord’s willful misconduct, shall
result in eviction or constructive eviction of Tenant, termination of this
Lease or the abatement of Rent.  Except
in the case of an emergency, Landlord shall provide Tenant with written notice
at least 3 business days prior to Landlord intentionally interrupting any
Utilities to the Premises.  Tenant
agrees to limit use of water and sewer with respect to Common Areas to normal restroom
use.

 

Landlord’s sole obligation for either providing emergency generators or
providing emergency back-up power to Tenant shall be: (i) to provide emergency
generators for the 9363 Building with not less than the capacity of the
emergency generators located in the 9363 Building as of the Commencement Date,
and (ii) to contract with a third party to maintain the emergency generators as
per the manufacturer’s standard maintenance guidelines.  Landlord shall have no obligation to provide
Tenant with operational emergency generators or back-up power or to supervise,
oversee or confirm that the third party maintaining the emergency generators is
maintaining the generators as per the manufacturer’s standard guidelines or
otherwise.  During any period of replacement,
repair or maintenance of the emergency generators when the emergency generators
are not operational, including any delays thereto due to the inability to
obtain parts or replacement equipment, Landlord shall have no obligation to
provide Tenant with an alternative back-up generator or generators or
alternative sources of back-up power.   
Landlord shall provide Tenant with written notice at least 5 business
days prior to any replacement, repair or maintenance of the emergency
generators during which the emergency generators are scheduled not to be
operational.

 

12.                                 Alterations and Tenant’s Property.  Any alterations, additions, or improvements
made to the Premises by or on behalf of Tenant, including additional locks or
bolts of any kind or nature upon any doors or windows in the Premises, but
excluding installation, removal or realignment of furniture systems (other than
removal of furniture systems owned or paid for by Landlord) not involving any
modifications to the structure or connections (other then by ordinary plugs or
jacks) to Building Systems (as defined in Section 13) (“Alterations”)
shall be subject to Landlord’s prior written consent, which may be given or
withheld in Landlord’s sole discretion if any such Alteration affects the
structure or Building Systems.  Tenant may construct nonstructural
Alterations in the Premises without Landlord’s prior approval if the aggregate
cost of all such work does not exceed $25,000 for any single Alteration and
does not exceed $100,000 for all Alterations in any 12 month period
(collectively, a “Notice-Only Alteration”), provided Tenant
notifies Landlord in writing of such intended Notice-Only Alteration, and such
notice shall be accompanied by plans and specifications (if the subject
Alterations require plans and specifications), work contracts and such other
information concerning the nature and cost of the Notice-Only Alteration as may
be reasonably requested by Landlord, which notice and accompanying materials
shall be delivered to Landlord not less than 10 business days in advance of any
proposed construction.  If

 

 

Landlord approves any Alterations, Landlord may impose such conditions
on Tenant in connection with the commencement, performance and completion of
such Alterations as Landlord may deem appropriate in Landlord’s sole and
absolute discretion.  Any request for
approval shall be in writing, delivered not less than 15 business days in
advance of any proposed construction, and accompanied by plans, specifications,
bid proposals, work contracts and such other information concerning the nature
and cost of the alterations as may be reasonably requested by Landlord,
including the identities and mailing addresses of all persons performing work
or supplying materials.  Landlord’s
right to review plans and specifications and to monitor construction shall be
solely for its own benefit, and Landlord shall have no duty to ensure that such
plans and specifications or construction comply with applicable Legal
Requirements.  Tenant shall cause, at
its sole cost and expense, all Alterations to comply with insurance
requirements and with Legal Requirements and shall implement at its sole cost
and expense any alteration or modification required by Legal Requirements as a
result of any Alterations.  With respect
to any non-cosmetic Alteration and/or any Alteration which requires a permit or
plans, Tenant shall pay to Landlord, as Additional Rent, on demand an amount
equal to 3% of all charges incurred by Tenant or its contractors or agents in
connection with such Alteration to cover Landlord’s overhead and expenses for
plan review, coordination, scheduling and supervision.  (The preceding sentence shall not apply to
the Tenant Improvements being constructed pursuant to the Work Letter.  With respect to the Tenant Improvements,
Tenant shall pay Administrative Rent as provided for in the Work Letter. )  Before Tenant begins any Alteration,
Landlord may post on and about the Premises notices of non-responsibility
pursuant to applicable law.  Tenant
shall reimburse Landlord for, and indemnify and hold Landlord harmless from,
any expense incurred by Landlord by reason of faulty work done by Tenant or its
contractors, delays caused by such work, or inadequate cleanup.

 

Tenant shall provide (and cause each contractor or subcontractor to
provide) certificates of insurance for workers’ compensation and other coverage
in amounts and from an insurance company satisfactory to Landlord protecting
Landlord against liability for personal injury or property damage during
construction.  Upon completion of any
Alterations, Tenant shall deliver to Landlord: 
(i) sworn statements setting forth the names of all contractors and
subcontractors who did the work and final lien waivers from all such
contractors and subcontractors; and (ii) “as built” plans for any such
Alteration.

 

Other than (i) the items, if any, listed on Exhibit F attached hereto,
(ii) any items agreed by Landlord in writing to be included on Exhibit F
in the future, and (iii) any trade fixtures, machinery, equipment and other
personal property not paid for out of the TI Allowance (as defined in the Work
Letter) which may be removed without material damage to the Premises, which
damage shall be repaired (including capping or terminating utility hook-ups on
the surface of walls or floors) by Tenant during the Term (collectively, “Tenant’s
Property”), all property of any kind paid for with the TI Allowance,
all Alterations, real property fixtures, built-in machinery and equipment,
built-in casework and cabinets and other similar additions and improvements
built into the Premises so as to become an integral part of the Premises such as fume hoods which penetrate the roof
or plenum area, built-in cold rooms, built-in warm rooms, walk-in cold rooms,
walk-in warm rooms, deionized water systems, glass washing equipment,
autoclaves, chillers, built-in plumbing, electrical and mechanical equipment
and systems, and any power generator and transfer switch  (collectively, “Installations”)
shall be and shall remain the property of Landlord during the Term and
following the expiration or earlier termination of the Term, shall not be
removed by Tenant at any time during the Term and shall remain upon and be
surrendered with the Premises as a part thereof in accordance with Section
28 following the expiration or earlier termination of this Lease; provided,
however, that Landlord shall, at the time its approval of such
Installation is requested or at the
time it receives notice of a Notice-Only Alteration notify Tenant in
writing if Landlord has elected to cause Tenant to remove such Installation
upon the expiration or earlier termination of this Lease.  If Landlord so elects and notifies Tenant in
writing of such election at the time of its approval of such Installation is
requested or at the time it receives
notice of a Notice-Only Alteration, Tenant shall remove such
Installation upon the expiration or earlier termination of this Lease and
restore any damage caused by or occasioned as a result of such removal,
including, when removing any of Tenant’s Property which was plumbed, wired or
otherwise connected to any of the Building Systems, capping off all such
connections on the surface of the walls of the Premises and repairing any
holes.  Tenant shall perform such
removal and repair work prior to the expiration or termination of this Lease
and if such work

 

 

continues after the expiration or termination of this Lease, Tenant
shall pay Rent to Landlord as provided herein for such period as if said space
were otherwise occupied by Tenant.

 

13.                                 Landlord’s Repairs.  Landlord, as an Operating Expense, shall
maintain all of the structural (except as provided for in Section 5(b)),
exterior, parking and other Common Areas of the Project, including HVAC,
plumbing, fire sprinklers, elevators and all other building systems serving the
Premises and other portions of the Project (“Building Systems”), in good
repair, reasonable wear and tear and uninsured losses and damages caused by
Tenant, or by any of Tenant’s agents, servants, employees, invitees and contractors
(collectively, “Tenant Parties”) excluded. 
Losses and damages caused by Tenant or any Tenant Party shall be
repaired by Landlord, to the extent not covered by insurance, at Tenant’s sole
cost and expense, subject to the waiver of subrogation requirements
herein.  Notwithstanding anything to the
contrary contained in the first sentence of this Section 13, Landlord
may, at any time and from time to time, request that Tenant maintain the HVAC
and/or some or all of the other Building Systems and, unless Tenant agrees to
do so, Tenant shall have no obligation to undertake the requested
maintenance.  Landlord reserves the
right to stop Building Systems services when necessary (i) by reason of
accident or emergency, or (ii) for planned repairs, alterations or
improvements, which are, in the judgment of Landlord, desirable or necessary to
be made, until said repairs, alterations or improvements shall have been
completed, provided such repairs are diligently prosecuted to completion.  Landlord shall have no responsibility or
liability for failure to supply Building Systems services during any such
period of interruption; provided, however, that Landlord shall,
except in case of emergency, make a commercially reasonable effort to give
Tenant 24 hours advance notice of any planned stoppage of Building Systems
services for routine maintenance, repairs, alterations or improvements.  Tenant shall promptly give Landlord written
notice of any repair required by Landlord pursuant to this Section, after which
Landlord shall make a commercially reasonable effort to effect such
repair.  Landlord shall not be liable
for any failure to make any repairs or to perform any maintenance unless such
failure shall persist for an unreasonable time after Tenant’s written notice of
the need for such repairs or maintenance. 
Tenant waives its rights under any state or local law to terminate this
Lease or to make such repairs at Landlord’s expense and agrees that the
parties’ respective rights with respect to such matters shall be solely as set
forth herein.  Repairs required as the
result of fire, earthquake, flood, vandalism, war, or similar cause of damage
or destruction shall be controlled by Section 18.

 

Notwithstanding anything to the contrary contained in this Section
13, Landlord shall use commercially reasonable efforts to commence and
diligently prosecute to completion, within 30 days after receipt of written
notice from Tenant specifying the repairs required to be performed, any repairs
required to be performed by Landlord under this Lease; provided, however, if
such repairs require a period of time in excess of 30 days to complete, then
Landlord shall have such additional period of period of time as is reasonably
necessary to complete such repairs.

 

14.                                 Tenant’s Repairs.  Subject to Section 13, Tenant, at its
expense, shall repair, replace and maintain in good condition all portions of
the Premises, including, without limitation, entries, doors, ceilings, interior
windows, interior walls, and the interior side of demising walls.  Such repair and replacement may include
capital expenditures and repairs whose benefit may extend beyond the Term.  Notwithstanding anything to the contrary
contained in the preceding sentence, Tenant shall not be required to make any
structural repairs or replacements within the Premises unless such repairs or
replacements are required as a result of the Tenant Improvements, Alterations,
Tenant’s particular use of the Premises or Tenant’s negligence or willful
misconduct.  Should Tenant fail to make
any such repair or replacement or fail to maintain the Premises, Landlord shall
give Tenant notice of such failure.  If
Tenant fails to commence cure of such failure within 10 days of Landlord’s
notice, and thereafter diligently prosecute such cure to completion, Landlord
may perform such work and shall be reimbursed by Tenant within 10 days after
demand therefor; provided, however, that if such failure by Tenant creates or
could create an emergency, Landlord may immediately commence cure of such
failure and shall thereafter be entitled to recover the costs of such cure from
Tenant.  Subject to Sections 17
and 18, Tenant shall bear the full uninsured cost of any repair or
replacement to any part of the Project that results from damage caused by
Tenant or any Tenant Party and any repair that benefits only the Premises.

 

 

15.                                 Mechanic’s Liens.  Tenant shall discharge, by bond or
otherwise, any mechanic’s lien filed against the Premises or against the
Project for work claimed to have been done for, or materials claimed to have
been furnished to, Tenant within 10 days after the filing thereof, at Tenant’s
sole cost and shall otherwise keep the Premises and the Project free from any
liens arising out of work performed, materials furnished or obligations
incurred by Tenant.  Should Tenant fail
to discharge any lien described herein, Landlord shall have the right, but not
the obligation, to pay such claim or post a bond or otherwise provide security
to eliminate the lien as a claim against title to the Project and the cost
thereof shall be immediately due from Tenant as Additional Rent.  If Tenant shall lease or finance the
acquisition of office equipment, furnishings, or other personal property of a
removable nature utilized by Tenant in the operation of Tenant’s business,
Tenant warrants that any Uniform Commercial Code Financing Statement filed as a
matter of public record by any lessor or creditor of Tenant will upon its face
or by exhibit thereto indicate that such Financing Statement is applicable only
to removable personal property of Tenant located within the Premises.  In no event shall the address of the Project
be furnished on the statement without qualifying language as to applicability
of the lien only to removable personal property, located in an identified suite
held by Tenant.

 

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

 

Landlord hereby indemnifies and agrees to defend, save and hold Tenant
harmless from and against any and all Claims for injury or death to persons or
damage to property occurring within the Project arising directly and solely out
of the negligence or willful misconduct of Landlord while in or on the Project,
except those occurring within the Premises and except if caused by the willful
misconduct or negligence of Tenant or any of the Tenant Parties.

 

Notwithstanding anything to the contrary contained herein, Landlord
shall not be liable to Tenant for, and Tenant assumes all risk of damage to,
personal property (including, without limitation, loss of records kept within
the Premises).  Tenant further waives
any and all Claims for injury to Tenant’s business or loss of income relating
to any such damage or destruction of personal property (including, without
limitation, any loss of records). 
Landlord shall not be liable for any damages arising from any act,
omission or neglect of any tenant in the Project or of any other third party.

 

17.                                 Insurance.  Landlord shall maintain all risk property
and, if applicable, sprinkler damage insurance covering the full replacement
cost of the Project or such lesser coverage amount as Landlord may elect provided
such coverage amount is not less than 90% of such full replacement cost.  Landlord shall further procure and maintain
commercial general liability insurance with a single loss limit of not less
than $5,000,000 for bodily injury and property damage with respect to the
Project.  Landlord may, but is not
obligated to, maintain such other insurance and additional coverages as it may
deem necessary, including, but not limited to, flood, environmental hazard and
earthquake, loss or failure of building equipment, errors and omissions, rental
loss during the period of repair or rebuilding, workers’ compensation insurance
and fidelity bonds for employees employed to perform services and insurance for
any improvements installed by Tenant or which are in addition to the standard
improvements customarily furnished by Landlord without regard to whether or not
such are made a part of the Project. 
All such insurance shall be included as part of the Operating
Expenses.  The Project may be included
in a blanket policy (in which case the cost of such insurance allocable to the
Project will be determined by Landlord based upon the insurer’s cost
calculations).  Tenant shall also reimburse Landlord for any
increased premiums or additional insurance which Landlord reasonably deems
necessary as a result of Tenant’s use of the Premises.

 

Tenant, at its sole cost and expense, shall maintain during the
Term:  all risk property insurance with
business interruption and extra expense coverage, covering the full replacement
cost of all property and improvements installed or placed in the Premises by
Tenant at Tenant’s expense; workers’ compensation insurance with no less than
the minimum limits required by law; employer’s liability

 

 

insurance with such limits as required by law; commercial general
liability insurance, with a minimum limit of not less than $2,000,000 per
occurrence for bodily injury and property damage with respect to the Premises
and pollution legal liability insurance with a minimum limit of not less than
$2,000,000 per occurrence.   The commercial general liability insurance
policy shall name Landlord, its officers, directors, employees, managers,
agents and Alexandria Real Estate Equities, Inc., as additional insureds.  The commercial general liability and pollution
legal liability insurance policies shall insure on an occurrence basis, if
available, and not a claims-made basis; shall be issued by insurance companies
which have a rating of not less than policyholder rating of A and financial
category rating of at least Class X in “Best’s Insurance Guide”; shall not be
cancelable for nonpayment of premium unless 10 days prior written notice shall
have been given to Landlord from the insurer; contain a hostile fire
endorsement and a contractual liability endorsement; and provide primary
coverage to Landlord (any policy issued to Landlord providing duplicate or
similar coverage shall be deemed excess over Tenant’s policies).  Copies of such policies (if requested by
Landlord), or certificates of insurance showing the limits of coverage required
hereunder and showing Landlord as an additional insured, along with reasonable
evidence of the payment of premiums for the applicable period, shall be
delivered to Landlord by Tenant upon commencement of the Term and upon each
renewal of said insurance.  Tenant’s policy
may be a “blanket policy” with an aggregate per location endorsement which
specifically provides that the amount of insurance shall not be prejudiced by
other losses covered by the policy. 
Tenant shall, at least 5 days prior to the expiration of such policies,
furnish Landlord with renewal certificates.

 

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

 

The property insurance obtained by Landlord and Tenant shall include a
waiver of subrogation by the insurers and all rights based upon an assignment
from its insured, against Landlord or Tenant, and their respective officers,
directors, employees, managers, agents, invitees and contractors (“Related
Parties”), in connection with any loss or damage thereby insured
against.  Neither party nor its
respective Related Parties shall be liable to the other for loss or damage
caused by any risk insured against under property insurance required to be
maintained hereunder, and each party waives any claims against the other party,
and its respective Related Parties, for such loss or damage.  The failure of a party to insure its
property shall not void this waiver. 
Landlord and its respective Related Parties shall not be liable for, and
Tenant hereby waives all claims against such parties for, business interruption
and losses occasioned thereby sustained by Tenant or any person claiming
through Tenant resulting from any accident or occurrence in or upon the
Premises or the Project from any cause whatsoever.  If the foregoing waivers shall contravene any law with respect to
exculpatory agreements, the liability of Landlord or Tenant shall be deemed not
released but shall be secondary to the other’s insurer.

 

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

 

Notwithstanding anything to the contrary contained herein, unless otherwise
agreed to in writing by Landlord and Tenant, Tenant shall not be required to
pay (i) a deductible exceeding $100,000 in connection with any claim made by
Landlord under any pollution legal liability insurance policy which Landlord
may elect to carry, (ii) a deductible exceeding 5% of Landlord’s good faith
estimate (at the time of the earthquake claim) of the replacement cost of the
Building in connection with any claim made by Landlord under any earthquake
insurance policy which Landlord may elect to carry, or (iii) a deductible
exceeding 5% of Landlord’s good faith estimate (at the time of the flood claim)
of the replacement cost of the Building in connection with any claim made by
Landlord under any flood insurance policy which Landlord may elect to carry.

 

 

18.                                 Restoration.  If at any time during the Term the Project
or the Premises are damaged or destroyed by a fire or other insured casualty,
Landlord shall notify Tenant within 60 days after discovery of such damage as
to the amount of time Landlord reasonably estimates it will take to restore the
Project or the Premises, as applicable (the “Restoration
Period”).  If the Restoration
Period is estimated to exceed 12 months (the “Maximum
Restoration Period”), Landlord may, in such notice, elect to terminate
this Lease as of the date that is 75 days after the date of discovery of such
damage or destruction; provided, however, that notwithstanding
Landlord’s election to restore, Tenant may elect to terminate this Lease by
written notice to Landlord delivered within 5 business days of receipt of
a notice from Landlord estimating a Restoration Period for the Premises longer
than the Maximum Restoration Period. 
Unless either Landlord or Tenant so elects to terminate this Lease,
Landlord shall, subject to receipt of sufficient insurance proceeds (with any
deductible to be treated as a current Operating Expense), promptly restore the
Premises (excluding the improvements installed by Tenant or by Landlord and
paid for by Tenant), subject to delays arising from the collection of insurance
proceeds, from Force Majeure events or as needed to obtain any license,
clearance or other authorization of any kind required to enter into and restore
the Premises issued by any Governmental Authority having jurisdiction over the
use, storage, handling, treatment, generation, release, disposal, removal or
remediation of Hazardous Materials (as defined in Section 30) in, on or about
the Premises (collectively referred to herein as “Hazardous Materials Clearances”); provided, however,
that if repair or restoration of the Premises is not substantially complete as
of the end of the Maximum Restoration Period or, if longer, the Restoration
Period, Landlord may, in its sole and absolute discretion, elect not to proceed
with such repair and restoration, or Tenant may by written notice to Landlord
delivered within 5 business days of the expiration of the Maximum
Restoration Period or, if longer, the Restoration Period, elect to terminate
this Lease, in which event Landlord shall be relieved of its obligation to make
such repairs or restoration and this Lease shall terminate as of the date that
is 75 days after the later of: 
(i) discovery of such damage or destruction, or (ii) the date
all required Hazardous Materials Clearances are obtained, but Landlord shall
retain any Rent paid and the right to any Rent payable by Tenant prior to such
election by Landlord or Tenant.

 

Notwithstanding the foregoing, Landlord or Tenant may terminate this
Lease if the Premises are damaged during the last 1 year of the Term and Landlord
reasonably estimates that it will take more than 2 months to repair such damage, or if
insurance proceeds are not available for such restoration; provided, however,
that the party electing to terminate this Lease provides written notice of such
election to the other party within 5 business days after Landlord notifies
Tenant of the amount of time required to repair such damage.

 

Tenant, at its expense, shall promptly perform, subject to delays
arising from the collection of insurance proceeds, from Force Majeure (as
defined in Section 34) events or to obtain Hazardous Material
Clearances, all repairs or restoration not required to be done by Landlord and
shall promptly re-enter the Premises and commence doing business in accordance
with this Lease.  Rent shall be abated
from the date all required Hazardous Material Clearances, if any, are obtained
until the Premises are repaired and restored, in the proportion which the area
of the Premises, if any, which is not usable by Tenant bears to the total area
of the Premises, unless Landlord provides Tenant with other space during the
period of repair that is suitable for the temporary conduct of Tenant’s
business.  Such abatement shall be the sole
remedy of Tenant, and except as provided in this Section 18, Tenant
waives any right to terminate the Lease by reason of damage or casualty loss.

 

The provisions of this Lease, including this Section 18,
constitute an express agreement between Landlord and Tenant with respect to any
and all damage to, or destruction of, all or any part of the Premises, or any
other portion of the Project, and any statute or regulation which is now or may
hereafter be in effect shall have no application to this Lease or any damage or
destruction to all or any part of the Premises or any other portion of the
Project, the parties hereto expressly agreeing that this Section 18 sets
forth their entire understanding and agreement with respect to such matters.

 

19.                                 Condemnation.  If the whole or any material part of the
Premises or the Project is taken for any public or quasi-public use under
governmental law, ordinance, or regulation, or by right of eminent domain, or
by private purchase in lieu thereof (a “Taking” or “Taken”), and the Taking would
either

 

 

prevent or materially interfere with Tenant’s use of the Premises or
materially interfere with or impair Landlord’s ownership or operation of the
Project, then upon written notice by Landlord this Lease shall terminate and
Rent shall be apportioned as of said date. 
If part of the Premises shall be Taken, and this Lease is not terminated
as provided above, Landlord shall promptly restore the Premises and the Project
as nearly as is commercially reasonable under the circumstances to their
condition prior to such partial Taking and the rentable square footage of the
Building, the rentable square footage of the Premises, Tenant’s Share of
Operating Expenses and the Rent payable hereunder during the unexpired Term
shall be reduced to such extent as may be equitable, fair and reasonable under
the circumstances.  Upon any such
Taking, Landlord shall be entitled to receive the entire price or award from
any such Taking without any payment to Tenant, and Tenant hereby assigns to
Landlord Tenant’s interest, if any, in such award.  Tenant shall have the right, to the extent that same shall not
diminish Landlord’s award, to make a separate claim against the condemning
authority (but not Landlord) for such compensation as may be separately awarded
or recoverable by Tenant for moving expenses and damage to and replacement of
Tenant’s trade fixtures, if a separate award for such items is made to
Tenant.  Tenant hereby waives any and
all rights it might otherwise have pursuant to any provision of state law to
terminate this Lease upon a partial Taking of the Premises or the Project.

 

20.                                 Events of Default.  Each of the following events shall be a
default (“Default”)
by Tenant under this Lease:

 

(a)                                  Payment Defaults.  Tenant shall fail to pay any installment of
Rent or any other payment hereunder when due; provided, however, that Landlord
will give Tenant notice and an opportunity to cure any failure to pay Rent
within 5 days of any such notice not more than once in any 12 month period.

 

(b)                                 Insurance.  Any insurance required to be maintained by
Tenant pursuant to this Lease shall be canceled or terminated or shall expire
or shall be reduced or materially changed, or Landlord shall receive a notice
of nonrenewal of any such insurance and Tenant shall fail to obtain replacement
insurance at least 10 days before the expiration of the current coverage.

 

(c)                                  Abandonment.  Tenant shall abandon the Premises except in
the event that Tenant has performed all of its obligations under Section 28
prior to such abandonment and continues to perform all of its other obligations
under this Lease during such abandonment.

 

(d)                                 Improper Transfer.  Tenant shall assign, sublease or otherwise
transfer or attempt to transfer all or any portion of Tenant’s interest in this
Lease or the Premises except as expressly permitted herein, or Tenant’s
interest in this Lease shall be attached, executed upon, or otherwise
judicially seized and such action is not released within 90 days of the action.

 

(e)                                  Liens.  Tenant shall fail to discharge or otherwise
obtain the release of any lien placed upon the Premises in violation of this
Lease within 10 days after any such lien is filed against the Premises.

 

(f)                                    Insolvency
Events.  Tenant or any
guarantor or surety of Tenant’s obligations hereunder shall:  (A) make a general assignment for the
benefit of creditors; (B) commence any case, proceeding or other action seeking
to have an order for relief entered on its behalf as a debtor or to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or of any substantial part of its property (collectively a “Proceeding
for Relief”); (C) become the subject of any Proceeding for Relief
which is not dismissed within 90 days of its filing or entry; or (D) die or
suffer a legal disability (if Tenant, guarantor, or surety is an individual) or
be dissolved or otherwise fail to maintain its legal existence (if Tenant,
guarantor or surety is a corporation, partnership or other entity).

 

(g)                                 Estoppel Certificate or Subordination
Agreement.  Tenant fails to
execute any document required from Tenant under Sections 23 or 27
within 5 days after a second notice requesting such document.

 

 

(h)                                 Other Defaults.  Tenant shall fail to comply with any
provision of this Lease other than those specifically referred to in this Section
20, and, except as otherwise expressly provided herein, such failure shall
continue for a period of 30 days after written notice thereof from Landlord to
Tenant.

 

Any notice given under Section 20(h) shall:  (i) specify the alleged default, (ii) demand
that Tenant cure such default, (iii) be in lieu of, and not in addition to, or
shall be deemed to be, any notice required under any provision of applicable
law, and (iv) not be deemed a forfeiture or a termination of this Lease unless
Landlord elects otherwise in such notice; provided that if the nature of
Tenant’s default pursuant to Section 20(h) is such that it cannot
reasonably be cured within such 30 day period, then Tenant shall not be deemed
to be in Default if Tenant commences such cure within said thirty (30) day
period and thereafter diligently prosecutes the same to completion.

 

21.                                 Landlord’s Remedies.

 

(a)                                  Payment By Landlord; Interest.  Upon a Default by Tenant hereunder, Landlord
may, without waiving or releasing any obligation of Tenant hereunder, after
delivering written notice to Tenant, make such payment or perform such act.  All sums so paid or incurred by Landlord,
together with interest thereon, from the date such sums were paid or incurred,
at the annual rate equal to 12% per annum or the highest rate permitted by law
(the “Default
Rate”), whichever is less, shall be payable to Landlord on demand as
Additional Rent.  Except as specifically
provided in the last sentence of Section 21(d), nothing herein shall be
construed to create or impose a duty on Landlord to mitigate any damages
resulting from Tenant’s Default hereunder.

 

(b)                                 Late Payment Rent.  Late payment by Tenant to Landlord of Rent
and other sums due will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult and impracticable
to ascertain.  Such costs include, but
are not limited to, processing and accounting charges and late charges which
may be imposed on Landlord under any Mortgage covering the Premises.  Therefore, if any installment of Rent due
from Tenant is not received by Landlord within 5 days after the date such
payment is due, Tenant shall pay to Landlord an additional sum equal to 6% of
the overdue Rent as a late charge.  The
parties agree that this late charge represents a fair and reasonable estimate of
the costs Landlord will incur by reason of late payment by Tenant.  In addition to the late charge, Rent not
paid when due shall bear interest at the Default Rate from the 5th day after
the date due until paid.

 

(c)                                  Remedies.  Upon the occurrence of a Default, Landlord,
at its option, without further notice or demand to Tenant, shall have in
addition to all other rights and remedies provided in this Lease, at law or in
equity, the option to pursue any one or more of the following remedies, each
and all of which shall be cumulative and nonexclusive, without any notice or
demand whatsoever.

 

(i)                                     Terminate
this Lease, or at Landlord’s option, Tenant’s right to possession only, in
which event Tenant shall immediately surrender the Premises to Landlord, and if
Tenant fails to do so, Landlord may, without prejudice to any other remedy
which it may have for possession or arrearages in rent, enter upon and take
possession of the Premises and expel or remove Tenant and any other person who
may be occupying the Premises or any part thereof, without being liable for
prosecution or any claim or damages therefor;

 

(ii)                                  Upon
any termination of this Lease, whether pursuant to the foregoing Section
21(c)(i) or otherwise, Landlord may recover from Tenant the following:

 

(A)                              The
worth at the time of award of any unpaid rent which has been earned at the time
of such termination; plus

 

(B)                                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 Tenant proves could have been reasonably avoided; plus

 

 

(C)                                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 Tenant proves could have been reasonably avoided; plus

 

(D)                               Any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or which
in the ordinary course of things would be likely to result therefrom,
specifically including, but not limited to, the unamortized amount of brokerage
commissions and advertising expenses incurred, expenses of remodeling the
Premises or any portion thereof for a new tenant, whether for the same or a
different use, and the unamortized amount of any special concessions made to
obtain a new tenant; and

 

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

 

The term “rent” as used in this Section 21
shall be deemed to be and to mean all sums of every nature required to be paid
by Tenant pursuant to the terms of this Lease, whether to Landlord or to
others.  As used in Sections
21(c)(ii) (A) and (B), above, the “worth at the time of award”
shall be computed by allowing interest at the Default Rate.  As used in Section 21(c)(ii)(C)
above, the “worth at the time of award” shall be computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco
at the time of award plus 1%.

 

(iii)                               Landlord
may continue this Lease in effect after Tenant’s Default and recover rent as it
becomes due (Landlord and Tenant hereby agreeing that Tenant has the right to
sublet or assign hereunder, subject only to reasonable limitations).  Accordingly, if Landlord does not elect to
terminate this Lease following a Default by Tenant, Landlord may, from time to
time, without terminating this Lease, enforce all of its rights and remedies
hereunder, including the right to recover all Rent as it becomes due.

 

(iv)                              Whether
or not Landlord elects to terminate this Lease following a Default by Tenant,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord’s sole discretion,
succeed to Tenant’s interest in such subleases, licenses, concessions or
arrangements.  Upon Landlord’s election
to succeed to Tenant’s interest in any such subleases, licenses, concessions or
arrangements, Tenant shall, as of the date of notice by Landlord of such
election, have no further right to or interest in the rent or other
consideration receivable thereunder.

 

(v)                                 Independent
of the exercise of any other remedy of Landlord hereunder or under applicable
law, Landlord may conduct an environmental test of the Premises as generally
described in Section 30(d), at Tenant’s expense.

 

(d)                                 Effect of Exercise.  Exercise by Landlord of any remedies
hereunder or otherwise available shall not be deemed to be an acceptance of
surrender of the Premises and/or a termination of this Lease by Landlord, it
being understood that such surrender and/or termination can be effected only by
the express written agreement of Landlord and Tenant.  Any law, usage, or custom to the contrary notwithstanding,
Landlord shall have the right at all times to enforce the provisions of this
Lease in strict accordance with the terms hereof; and the failure of Landlord
at any time to enforce its rights under this Lease strictly in accordance with
same shall not be construed as having created a custom in any way or manner
contrary to the specific terms, provisions, and covenants of this Lease or as
having modified the same and shall not be deemed a waiver of Landlord’s right
to enforce one or more of its rights in connection with any subsequent
default.  A receipt by Landlord of Rent
or other payment with knowledge of the breach of any covenant hereof shall not
be deemed a waiver of such breach, and no waiver by Landlord of any provision
of this Lease shall be deemed to have been made unless expressed in writing and
signed by Landlord.  To the greatest
extent permitted by law, Tenant waives the service of notice of Landlord’s
intention to re-enter, re-take or otherwise obtain possession of the Premises
as provided in

 

 

any statute, or to institute legal proceedings to that end, and also
waives all right of redemption in case Tenant shall be dispossessed by a
judgment or by warrant of any court or judge. 
Any reletting of the Premises or any portion thereof shall be on such
terms and conditions as Landlord in its sole discretion may determine.  Landlord shall not be liable for, nor shall
Tenant’s obligations hereunder be diminished because of, Landlord’s failure to
relet the Premises or collect rent due in respect of such reletting or
otherwise.  Landlord shall use
commercially reasonable efforts to mitigate Landlord’s damages arising by
reason of Tenant’s Default; provided, however, that Landlord shall not be
required to relet the Premises or any portion thereof to any tenant and/or on
any terms and conditions if such tenant and/or terms and conditions do not
satisfy Landlord’s then current underwriting criteria.

 

22.                                 Assignment and Subletting.

 

(a)                                  General Prohibition.  Without Landlord’s prior written consent
subject to and on the conditions described in this Section 22, Tenant
shall not, directly or indirectly, voluntarily or by operation of law, assign
this Lease or sublease the Premises or any part thereof or mortgage, pledge, or
hypothecate its leasehold interest or grant any concession or license within
the Premises, and any attempt to do any of the foregoing shall be void and of
no effect.  Except in the case of a
Control Permitted Assignment (as defined below), if Tenant is a corporation,
partnership or limited liability company, the shares or other ownership
interests thereof which are not actively traded upon a stock exchange or in the
over-the-counter market, a transfer or series of transfers whereby 49% or more
of the issued and outstanding shares or other ownership interests of such
corporation are, or voting control is, transferred (but excepting transfers
upon deaths of individual owners) from a person or persons or entity or
entities which were owners thereof at time of execution of this Lease to
persons or entities who were not owners of shares or other ownership interests
of the corporation, partnership or limited liability company at time of
execution of this Lease, shall be deemed an assignment of this Lease requiring
the consent of Landlord as provided in this Section 22.  Notwithstanding
the foregoing, any public offering of shares or other ownership interest in
Tenant shall not be deemed an assignment.

 

(b)                                 Permitted
Transfers.  If Tenant desires
to assign, sublease, hypothecate or otherwise transfer this Lease or sublet the
Premises, then at least 15 business days, but not more than 45 business days,
before the date Tenant desires the assignment or sublease to be effective (the
“Assignment
Date”), Tenant shall give Landlord a notice (the “Assignment
Notice”) containing such information about the proposed assignee or
sublessee, including the proposed use of the Premises and any Hazardous
Materials proposed to be used, stored handled, treated, generated in or
released or disposed of from the Premises, the Assignment Date, any
relationship between Tenant and the proposed assignee or sublessee, and all
material terms and conditions of the proposed assignment or sublease, including
a copy of any proposed assignment or sublease in its final form, and such other
information as Landlord may deem reasonably necessary or appropriate to its
consideration whether to grant its consent. 
Landlord may, by giving written notice to Tenant within 15 business days
after receipt of the Assignment Notice: 
(i) grant such consent, (ii) refuse such consent, in its sole and
absolute discretion, if the proposed assignment, hypothecation or other
transfer or subletting concerns more than (together with all other then
effective subleases) 50% of the Premises, (iii) refuse such consent, in its
reasonable discretion, if the proposed subletting concerns (together with all
other then effective subleases) 50% or less of the Premises (provided that
Landlord shall further have the right to review and approve or disapprove the
proposed form of sublease prior to the effective date of any such subletting),
or (iv) terminate this Lease with respect to the space described in the
Assignment Notice as of the Assignment Date (an “Assignment Termination”).  If Landlord delivers notice of its election
to exercise an Assignment Termination, Tenant shall have the right to withdraw
such Assignment Notice by written notice to Landlord of such election within 5
business days after Landlord’s notice electing to exercise the Assignment
Termination.  If Tenant withdraws such
Assignment Notice, this Lease shall continue in full force and effect.  If Tenant does not withdraw such Assignment
Notice, this Lease, and the term and estate herein granted, shall terminate as
of the Assignment Date with respect to the space described in such Assignment
Notice.  No failure of Landlord to
exercise any such option to terminate this Lease, or to deliver a timely notice
in response to the Assignment Notice, shall be deemed to be Landlord’s consent
to the proposed assignment, sublease or other transfer.  Tenant shall reimburse Landlord for all of

 

 

Landlord’s reasonable out-of-pocket expenses in connection with its
consideration of any Assignment Notice, but not to exceed $2,500 per Assignment
Notice.

 

Notwithstanding the foregoing, Landlord’s consent to an assignment of
this Lease or a subletting of any portion of the Premises to any entity
controlling, controlled by or under common control with Tenant (a “Control Permitted Assignment”) shall
not be required; provided, however, that Tenant provides Landlord with a copy
of the agreement documenting such sublease or assignment and the same
specifically provides that (A) Tenant is not released from Tenant’s obligations
hereunder and that the primary liability of Tenant to pay the Rent due Landlord
hereunder and to perform all other obligations to be performed by Tenant
hereunder is not altered, and (B) the 
assignee of, or subtenant under, this Lease shall, by reason of
accepting such assignment or entering into such sublease, be deemed, for the
benefit of Landlord, to have assumed and agreed to perform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Tenant during the term of said assignment or sublease.  In
addition, Tenant shall have the right to assign this Lease, upon 30 days prior
written notice to Landlord but without obtaining Landlord’s prior written
consent, to a corporation or other entity which is a successor-in-interest to
Tenant, by way of merger, consolidation or corporate reorganization, or by the
purchase of all or substantially all of the assets or the ownership interests
of Tenant provided that (i) such merger or consolidation, or such acquisition
or assumption, as the case may be, is for a valid business purpose and not
principally for the purpose of transferring the Lease, and (ii) the net worth
(as determined in accordance with generally accepted accounting principles (“GAAP”))
of the assignee is not less than the net worth (as determined in accordance
with GAAP) of Tenant as of the date of Tenant’s most current quarterly or
annual financial statements, and (iii) such assignee shall agree in writing to
assume all of the terms, covenants and conditions of this Lease arising after
the effective date of the assignment (a “Corporate
Permitted Assignment”). 
A Control Permitted Assignment and a Corporate Permitted Assignment are
hereinafter collectively referred to as a “Permitted
Assignment.”  Notwithstanding anything to the contrary
contained in this paragraph, if the provisions of (i) and/or (ii) of Section
22(f) apply to a Permitted Assignment, Landlord shall have the
absolute right to refuse to consent to such Permitted Assignment. 

 

Landlord acknowledges and agrees that (x) Landlord’s right under the preceding paragraph
to   receive notice in the case of a
Corporate Permitted Assignment is not intended to create a consent right in
favor of Landlord as to the transaction constituting the Corporate Permitted
Assignment but rather the right to receive prior notice of a Corporate
Permitted Assignment, and (y) Landlord shall keep all non-public information
made available by Tenant to Landlord regarding the proposed Permitted
Assignment confidential until the effective date of said Permitted Assignment.

 

(c)                                  Additional Conditions.  As a condition to any such assignment or
subletting, whether or not Landlord’s consent is required, Landlord may
require:

 

(i)                                     that
any assignee or subtenant agree, in writing at the time of such assignment or
subletting, that if Landlord gives such party notice that Tenant is in default
under this Lease, such party shall thereafter make all payments otherwise due
Tenant directly to Landlord, which payments will be received by Landlord
without any liability except to credit such payment against those due under the
Lease, and any such third party shall agree to attorn to Landlord or its
successors and assigns should this Lease be terminated for any reason; provided,
however, in no event shall Landlord or its successors or assigns be
obligated to accept such attornment; and

 

(ii)                                  A
list of Hazardous Materials, certified by the proposed assignee or sublessee to
be true and correct, which the proposed assignee or sublessee intends to use,
store, handle, treat, generate in or release or dispose of from the Premises,
together with copies of all documents relating to such use, storage, handling,
treatment, generation, release or disposal of Hazardous Materials by the
proposed assignee or subtenant in the Premises or on the Project, prior to the
proposed assignment or subletting, including, without limitation:  permits; approvals; reports and
correspondence; storage and management plans; plans relating to the
installation of any storage tanks to be installed in or under the Project
(provided, said installation of tanks shall only be permitted after Landlord
has given its written consent to do so, which consent may be

 

 

withheld in Landlord’s sole and absolute
discretion); and all closure plans or any other documents required by any and
all federal, state and local Governmental Authorities for any storage tanks
installed in, on or under the Project for the closure of any such tanks.  Neither Tenant nor any such proposed
assignee or subtenant is required, however, to provide Landlord with any
portion(s) of the such documents containing information of a proprietary nature
which, in and of themselves, do not contain a reference to any Hazardous
Materials or hazardous activities.

 

(d)                                 No Release of Tenant, Sharing of Excess
Rents.  Notwithstanding any
assignment or subletting, Tenant and any guarantor or surety of Tenant’s
obligations under this Lease shall at all times remain fully and primarily
responsible and liable for the payment of Rent and for compliance with all of
Tenant’s other obligations under this Lease. 
If the Rent due and payable by a sublessee or assignee (or a combination
of the rental payable under such sublease or assignment plus any bonus or other
consideration therefor or incident thereto in any form) exceeds the sum of the rental payable under
this Lease (excluding however, any Rent payable under this Section)  and actual and reasonable brokerage fees,
legal costs and any design or construction fees directly related to and
required pursuant to the terms of any such sublease or assignment  (“Excess Rent”),
then Tenant shall be bound and obligated to pay Landlord as Additional Rent
hereunder 50% of such Excess Rent within 10 days following receipt thereof by
Tenant.  The preceding sentence shall
not apply to Permitted Assignments.  If
Tenant shall sublet the Premises or any part thereof, Tenant hereby immediately
and irrevocably assigns to Landlord, as security for Tenant’s obligations under
this Lease, all rent from any such subletting, and Landlord as assignee and as
attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord’s
application, may collect such rent and apply it toward Tenant’s obligations
under this Lease; except that, until the occurrence of a Default, Tenant shall
have the right to collect such rent.

 

(e)                                  No Waiver.  The consent by Landlord to an assignment or
subletting shall not relieve Tenant or any assignees of this Lease or any
sublessees of the Premises from obtaining the consent of Landlord to any
further assignment or subletting nor shall it release Tenant or any assignee or
sublessee of Tenant from full and primary liability under the Lease.  The acceptance of Rent hereunder, or the
acceptance of performance of any other term, covenant, or condition thereof,
from any other person or entity shall not be deemed to be a waiver of any of
the provisions of this Lease or a consent to any subletting, assignment or
other transfer of the Premises.

 

(f)                                    Prior
Conduct of Proposed Transferee.  Notwithstanding
any other provision of this Section 22, if (i) the proposed assignee or
sublessee of Tenant has been required by any prior landlord, lender or
Governmental Authority to take remedial action in connection with Hazardous
Materials contaminating a property, where the contamination resulted from such
party’s action or use of the property in question, and such remedial action has
not been successfully completed and/or any applicable Governmental Authority
has not issued a case closed or no further action letter in connection with the
same, or (ii) the proposed assignee or sublessee is subject to an enforcement
order issued by any Governmental Authority in connection with the use, storage,
handling, treatment, generation, release or disposal of Hazardous Materials
(including, without limitation, any order related to the failure to make a
required reporting to any Governmental Authority), Landlord shall have the
absolute right to refuse to consent to any assignment or subletting to any such
party.  Notwithstanding anything to the
contrary contained in the preceding sentence, Landlord shall not have the right
to refuse to consent to an assignment or subletting if (x) the contamination
described in clause (i) of the preceding sentence or the matter which is the
reason for the enforcement order described in clause (ii) of the preceding
sentence is generally considered not to be material, or (y) in the case of any
contamination which has not been completely remediated by the  proposed assignee or sublessee, such party
is diligently remediating such contamination.

 

23.                                 Estoppel Certificate.  Tenant shall, within 10 business days of
written notice from Landlord, execute, acknowledge and deliver a statement in
writing in any form reasonably requested by a proposed lender or purchaser, (i)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification and certifying that this
Lease as so modified is in full force and effect) and the dates to which the
rental and other charges are paid in advance, if any, (ii) acknowledging that
there are not any uncured defaults on the part of Landlord hereunder, or
specifying

 

 

such defaults if any are claimed, and (iii) setting forth such further
information with respect to the status of this Lease or the Premises as may be
requested thereon.  Any such statement
may be relied upon by any prospective purchaser or encumbrancer of all or any
portion of the real property of which the Premises are a part.  Tenant’s failure to deliver such statement
within such time shall, at the option of Landlord, constitute a Default under
this Lease, and, in any event, shall be conclusive upon Tenant that the Lease
is in full force and effect and without modification except as may be
represented by Landlord in any certificate prepared by Landlord and delivered
to Tenant for execution.

 

24.                                 Quiet Enjoyment.  So long as Tenant shall perform all of the
covenants and agreements herein required to be performed by Tenant, Tenant
shall, subject to the terms of this Lease, at all times during the Term, have
peaceful and quiet enjoyment of the Premises against any person claiming by,
through or under Landlord.

 

25.                                 Prorations.  All prorations required or permitted to be
made hereunder shall be made on the basis of a 360 day year and 30 day months.

 

26.                                 Rules and Regulations.  Tenant shall, at all times during the Term
and any extension thereof, comply with all reasonable rules and regulations at
any time or from time to time established by Landlord covering use of the
Premises and the Project.  The current
rules and regulations are attached hereto as Exhibit E.  Said rules and regulations shall not
interfere with the exercise by Tenant of the rights granted to Tenant under
this Lease.  If there is any conflict
between said rules and regulations and other provisions of this Lease, the
terms and provisions of this Lease shall control.  Landlord shall not have any liability or obligation for the
breach of any rules or regulations by other tenants in the Project provided
Landlord shall not enforce such rules and regulations in a discriminatory
manner.

 

27.                                 Subordination.  Landlord represents and warrants to Tenant
that, as of the date of this Lease, the Project is not encumbered by a deed of
trust.  This Lease and Tenant’s interest
and rights hereunder are hereby made and shall be subject and subordinate at
all times to the lien of any Mortgage now existing or hereafter created on or
against the Project or the Premises, and all amendments, restatements,
renewals, modifications, consolidations, refinancing, assignments and
extensions thereof, without the necessity of any further instrument or act on
the part of Tenant; provided, however that Tenant receives a
commercially reasonable non-disturbance agreement which provides, among other
things, that so long as there is no Default hereunder, this Lease shall not be
terminated and Tenant’s right to possession of the Premises shall not be
disturbed by the Holder of any such Mortgage. 
Tenant agrees, at the request of the Holder of any such Mortgage, to
attorn to any such Holder; provided, however that so long as
there is no Default hereunder, Tenant’s right to possession of the Premises
shall not be disturbed by the Holder of any such Mortgage.  Tenant agrees upon demand to execute,
acknowledge and deliver such instruments, confirming such subordination, and
such instruments of attornment as shall be requested by any such Holder,
provided any such instruments are commercially reasonable and contain
appropriate non-disturbance provisions assuring Tenant’s quiet enjoyment of the
Premises as set forth in Section 24 and this Section 27.  Tenant hereby appoints Landlord
attorney-in-fact for Tenant irrevocably (such power of attorney being coupled
with an interest) to execute, acknowledge and deliver any such instrument and
instruments for and in the name of Tenant and to cause any such instrument to
be recorded.  Notwithstanding the
foregoing, any such Holder may at any time subordinate its Mortgage to this
Lease, without Tenant’s consent, by notice in writing to Tenant, and thereupon
this Lease shall be deemed prior to such Mortgage without regard to their
respective dates of execution, delivery or recording and in that event such
Holder shall have the same rights with respect to this Lease as though this
Lease had been executed prior to the execution, delivery and recording of such
Mortgage and had been assigned to such Holder. 
The term “Mortgage” whenever used in this Lease shall be deemed to
include deeds of trust, security assignments and any other encumbrances, and
any reference to the “Holder” of a Mortgage shall be deemed to
include the beneficiary under a deed of trust and any purchaser at a
foreclosure or trustee’s sale .

 

28.                                 Surrender.  Upon the expiration of the Term or earlier
termination of Tenant’s right of possession, Tenant shall surrender the
Premises to Landlord in the same condition as received, subject to any
Alterations or Installations permitted by Landlord to remain in the Premises,
free of Hazardous

 

 

Materials brought upon, kept, used, stored, handled, treated, generated
in, or released or disposed of from, the Premises by any person other than a
Landlord Party (collectively, “Tenant HazMat Operations”) and released of
all Hazardous Materials Clearances, broom clean, ordinary wear and tear and
casualty loss and condemnation covered by Sections 18 and 19
excepted.  At least 3 months prior to
the surrender of the Premises, Tenant shall deliver to Landlord a narrative
description of the actions proposed (or required by any Governmental Authority)
to be taken by Tenant in order to surrender the Premises (including any
Installations permitted by Landlord to remain in the Premises) at the
expiration or earlier termination of the Term, free from any residual impact
from the Tenant HazMat Operations and otherwise released for unrestricted use
and occupancy (the “Surrender Plan”).  Such Surrender Plan shall be accompanied by a current listing of
(i) all Hazardous Materials licenses and permits held by or on behalf of any
Tenant Party with respect to the Premises, and (ii) all Hazardous Materials
used, stored, handled, treated, generated, released or disposed of from the
Premises, and shall be subject to the review and approval of Landlord’s
environmental consultant.  In connection
with the review and approval of the Surrender Plan, upon the request of
Landlord, Tenant shall deliver to Landlord or its consultant such additional
non-proprietary information concerning Tenant HazMat Operations as Landlord
shall request.  On or before such
surrender, Tenant shall deliver to Landlord evidence that the approved
Surrender Plan shall have been satisfactorily completed and Landlord shall have
the right, subject to reimbursement at Tenant’s expense as set forth below, to
cause Landlord’s environmental consultant to inspect the Premises and perform
such additional procedures as may be deemed reasonably necessary to confirm
that the Premises are, as of the effective date of such surrender or early
termination of the Lease, free from any residual impact from Tenant HazMat
Operations.  Tenant shall reimburse
Landlord, as Additional Rent, for the actual out-of pocket expense incurred by
Landlord for Landlord’s environmental consultant to review and approve the
Surrender Plan and to visit the Premises and verify satisfactory completion of
the same, which cost shall not exceed $5,000. 
Landlord shall have the unrestricted right to deliver such Surrender
Plan and any report by Landlord’s environmental consultant with respect to the
surrender of the Premises to third parties.

 

If Tenant shall fail to prepare or submit a Surrender Plan approved by
Landlord, or if Tenant shall fail to complete the approved Surrender Plan, or
if such Surrender Plan, whether or not approved by Landlord, shall fail to
adequately address any residual effect of Tenant HazMat Operations in, on or
about the Premises, Landlord shall have the right to take such actions as
Landlord may deem reasonable or appropriate to assure that the Premises and the
Project are surrendered free from any residual impact from Tenant HazMat
Operations, the cost of which actions shall be reimbursed by Tenant as
Additional Rent, without regard to the limitation set forth in the first
paragraph of this Section 28.

 

Tenant shall immediately return to Landlord all keys and/or access
cards to parking, the Project, restrooms or all or any portion of the Premises
furnished to or otherwise procured by Tenant. 
If any such access card or key is lost, Tenant shall pay to Landlord, at
Landlord’s election, either the cost of replacing such lost access card or key
or the cost of reprogramming the access security system in which such access
card was used or changing the lock or locks opened by such lost key.  Any Tenant’s Property, Alterations and
property not so removed by Tenant as permitted or required herein shall be
deemed abandoned and may be stored, removed, and disposed of by Landlord at
Tenant’s expense, and Tenant waives all claims against Landlord for any damages
resulting from Landlord’s retention and/or disposition of such property.  All obligations of Tenant hereunder not
fully performed as of the termination of the Term, including the obligations of
Tenant under Section 30, shall survive the expiration or earlier
termination of the Term, including, without limitation, indemnity obligations,
payment obligations with respect to Rent and obligations concerning the
condition and repair of the Premises.

 

29.                                 Waiver of Jury Trial.  TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL
BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING
OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

 

 

30.                                 Environmental Requirements.

 

(a)                                  Prohibition/Compliance/Indemnity.  Tenant shall not cause or, as to any Tenant
Party,  permit any Hazardous Materials
(as hereinafter defined) to be brought upon, kept, used, stored, handled,
treated, generated  in or about, or
released or disposed of from, the Premises or the Project in violation of
applicable Environmental Requirements (as hereinafter defined) by Tenant or any
Tenant Party.  If Tenant breaches the
obligation stated in the preceding sentence, or if the presence of Hazardous
Materials in the Premises results in contamination of the Premises, the Project
or any adjacent property or if contamination of the Premises, the Project or
any adjacent property by Hazardous Materials brought into, kept, used, stored,
handled, treated, generated in or about, or released or disposed of from, the
Premises by anyone other than Landlord and Landlord’s employees, agents and
contractors otherwise occurs during the Term or any holding over, Tenant hereby
indemnifies and shall defend and hold Landlord, its officers, directors,
employees, agents and contractors harmless from any and all actions (including,
without limitation, remedial or enforcement actions of any kind, administrative
or judicial proceedings, and orders or judgments arising out of or resulting
therefrom), costs, claims, damages (including, without limitation, damages
based upon diminution in value of the Premises or the Project, or the loss of,
or restriction on, use of the Premises or any portion of the Project), expenses
(including, without limitation, attorneys’, consultants’ and experts’ fees,
court costs and amounts paid in settlement of any claims or actions), fines,
forfeitures or other civil, administrative or criminal penalties, injunctive or
other relief (whether or not based upon personal injury, property damage, or
contamination of, or adverse effects upon, the environment, water tables or
natural resources), liabilities or losses (collectively, “Environmental Claims”) which
arise during or after the Term as a result of such contamination, except to the
extent the Hazardous Materials are present as the result of the acts of
Landlord or Landlord’s employees, agents and contractors.  This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, treatment, remedial, removal,
or restoration work required by any federal, state or local Governmental
Authority because of Hazardous Materials present in the air, soil or ground
water above, on, or under the Premises. 
Without limiting the foregoing, if the presence of any Hazardous
Materials on the Premises, the Building, the Project or any adjacent property
caused or permitted by Tenant or any Tenant Party results in any contamination
of the Premises, the Building, the Project or any adjacent property, Tenant
shall promptly take all actions at its sole expense, except to the extent the
Hazardous Materials are present as the result of the acts of Landlord or
Landlord’s employees, agents and contractors, and in accordance with applicable
Environmental Requirements as are necessary to return the Premises, the
Building, the Project or any adjacent property to the condition existing prior
to the time of such contamination, provided that Landlord’s approval of such
action shall first be obtained, which approval shall not unreasonably be
withheld so long as such actions would not potentially have any material
adverse long-term or short-term effect on the Premises, the Building or the
Project.  Notwithstanding anything to
the contrary contained in this Section 30, Tenant shall not be
responsible for, and the indemnification and hold harmless obligation set forth
in this paragraph shall not apply to, the presence of any Hazardous Materials
in, on or about the Project (other than within the Premises) unless the
presence of such Hazardous Materials (i) is the result of a breach by Tenant of
any of its obligations under this Lease, (ii) was caused by Tenant or any
Tenant Party, (iii) was contributed to by Tenant or any Tenant Party (but
Tenant’s responsibility and indemnification and hold harmless obligation shall
be limited to the extent that Tenant or any Tenant Party contributed to the
presence of such Hazardous Materials), (iii) was exacerbated by Tenant or any
Tenant Party (except if Tenant or the Tenant Party had no prior knowledge (and
can reasonably demonstrate that they had no prior knowledge) of the existence
of such Hazardous Materials, or (iv) originates from the Premises during
Tenant’s (or any assignee’s or sublessee’s) occupancy of the Premises (or any
portion thereof).

 

(b)                                 Business.  Landlord acknowledges that it is not the
intent of this Section 30 to prohibit Tenant from using the Premises for
the Permitted Use.  Tenant may operate
its business according to prudent industry practices so long as the use or
presence of Hazardous Materials is strictly and properly monitored according to
all then applicable Environmental Requirements.  As a material inducement to Landlord to allow Tenant to use
Hazardous Materials in connection with its business, Tenant agrees to deliver
to Landlord prior to the Commencement Date a list identifying each type of
Hazardous Materials to be brought upon, kept, used, stored, handled, treated,
generated on, or released or disposed of from, the Premises and setting forth
any and all governmental approvals or permits required in connection with the
presence, use, storage, handling, treatment, generation, release or disposal of
such Hazardous Materials

 

 

on or from the Premises (“Hazardous Materials List”).  Tenant shall deliver to Landlord an updated
Hazardous Materials List at least once a year and shall also deliver an updated
list before any new Hazardous Material is brought onto, kept, used, stored,
handled, treated, generated on, or released or disposed of from, the
Premises.  Tenant shall deliver to
Landlord true and correct copies of the following documents (the “Haz Mat
Documents”), if any, relating to the use, storage, handling,
treatment, generation, release or disposal of Hazardous Materials prior to the
Commencement Date, or if unavailable at that time, concurrent with the receipt
from or submission to a Governmental Authority:  permits; approvals; reports and correspondence; storage and
management plans, notice of violations of any Legal Requirements; plans
relating to the installation of any storage tanks to be installed in or under
the Project (provided, said installation of tanks shall only be permitted after
Landlord has given Tenant its written consent to do so, which consent may be
withheld in Landlord’s sole and absolute discretion); all closure plans or any
other documents required by any and all federal, state and local Governmental
Authorities for any storage tanks installed in, on or under the Project for the
closure of any such tanks; and a Surrender Plan (to the extent surrender in
accordance with Section 28 cannot be accomplished in 3 months).  Tenant is not required, however, to provide
Landlord with any portion(s) of the Haz Mat Documents containing information of
a proprietary nature which, in and of themselves, do not contain a reference to
any Hazardous Materials or hazardous activities.  It is not the intent of this Section to provide Landlord with
information which could be detrimental to Tenant’s business should such
information become possessed by Tenant’s competitors.

 

(c)                                  Tenant Representation and Warranty.  Tenant hereby represents and warrants to
Landlord that (i) neither Tenant nor any of its legal predecessors has been
required by any prior landlord, lender or Governmental Authority at any time to
take remedial action in connection with Hazardous Materials contaminating a
property which contamination was permitted by Tenant of such predecessor or
resulted from Tenant’s or such predecessor’s action or use of the property in
question, and (ii) Tenant is not subject to any enforcement order issued by any
Governmental Authority in connection with the use, storage, handling,
treatment, generation, release or disposal of Hazardous Materials (including,
without limitation, any order related to the failure to make a required
reporting to any Governmental Authority). 
If Landlord determines that this representation and warranty was not
true as of the date of this lease, Landlord shall have the right to terminate
this Lease in Landlord’s sole and absolute discretion.

 

(d)                                 Testing.  Landlord shall have the right to conduct
annual tests of the Premises to determine whether any contamination of the Premises
or the Project has occurred as a result of Tenant’s use.  Such tests shall be conducted at Landlord’s
expense, unless such tests are conducted pursuant to Section 21 hereof
or reveal that Tenant has not complied with any Environmental Requirement, in
which case Tenant shall reimburse Landlord for the reasonable cost of such
tests. Landlord and Tenant shall
cooperate with one another to schedule such testing at a mutually acceptable
time.  Tenant shall have the right to
have a representative present during such testing.    If Tenant, at Tenant’s 
expense, conducts its own tests of the Premises using third party
contractors and test procedures acceptable to Landlord which tests are
certified to Landlord, Landlord shall accept such tests in lieu of the annual
tests.  In addition, at any time, and
from time to time, prior to the expiration or earlier termination of the Term,
Landlord shall have the right to conduct appropriate tests of the Premises and
the Project to determine if contamination has occurred as a result of Tenant’s
use of the Premises.  In connection with
such testing, upon the request of Landlord, Tenant shall deliver to Landlord or
its consultant such non-proprietary information concerning the use of Hazardous
Materials in or about the Premises by Tenant or any Tenant Party.  If contamination has occurred for which
Tenant is liable under this Section 30, Tenant shall pay all costs to
conduct such tests.  If no such
contamination is found, Landlord shall pay the costs of such tests (which shall
not constitute an Operating Expense). 
Landlord shall provide Tenant with a copy of all third party,
non-confidential reports and tests of the Premises made by or on behalf of
Landlord during the Term without representation or warranty and subject to a
confidentiality agreement.  Tenant
shall, at its sole cost and expense, promptly and satisfactorily remediate any
environmental conditions identified by such testing in accordance with all
Environmental Requirements.  Landlord’s
receipt of or satisfaction with any environmental assessment in no way waives
any rights which Landlord may have against Tenant.

 

(e)                                  Tanks.  Tenant shall have no right to install or use
any underground storage tanks at the Premises or the Project.  If other storage tanks storing Hazardous
Materials located on the Premises or

 

 

the Project are used by Tenant or are hereafter placed on the Premises
or the Project by Tenant, Tenant shall install, use, monitor, operate,
maintain, upgrade and manage such storage tanks, maintain appropriate records,
obtain and maintain appropriate insurance, implement reporting procedures,
properly close any storage tanks, and take or cause to be taken all other
actions necessary or required under applicable state and federal Legal
Requirements, as such now exists or may hereafter be adopted or amended in
connection with the installation, use, maintenance, management, operation,
upgrading and closure of such storage tanks.

 

(f)                                    Tenant’s
Obligations.  Tenant’s
obligations under this Section 30 shall survive the expiration or
earlier termination of the Lease. 
During any period of time after the expiration or earlier termination of
this Lease required by Tenant or Landlord to complete the removal from the
Premises of any Hazardous Materials which Tenant is required under this Lease
to remove (including, without limitation, the release and termination of any
licenses or permits restricting the use of the Premises and the completion of
the approved Surrender Plan), Tenant shall continue to pay the full Rent in
accordance with this Lease for any portion of the Premises not relet by
Landlord in Landlord’s sole discretion, which Rent shall be prorated daily.

 

(g)                                 Definitions.  As used herein, the term “Environmental
Requirements” means all applicable present and future statutes,
regulations, ordinances, rules, codes, judgments, orders or other similar
enactments of any Governmental Authority regulating or relating to health,
safety, or environmental conditions on, under, or about the Premises or the
Project, or the environment, including without limitation, the following:  the Comprehensive Environmental Response,
Compensation and Liability Act; the Resource Conservation and Recovery Act; and
all state and local counterparts thereto, and any regulations or policies
promulgated or issued thereunder.  As
used herein, the term “Hazardous Materials” means and includes any
substance, material, waste, pollutant, or contaminant listed or defined as
hazardous or toxic, or regulated by reason of its impact or potential impact on
humans, animals and/or the environment under any Environmental Requirements,
asbestos and petroleum, including crude oil or any fraction thereof, natural
gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or
mixtures of natural gas and such synthetic gas).  As defined in Environmental Requirements, Tenant is and shall be
deemed to be the “operator” of Tenant’s “facility” and the “owner”
of all Hazardous Materials brought on the Premises by Tenant or any Tenant
Party, and the wastes, by-products, or residues generated, resulting, or
produced therefrom.

 

(h)                                 Phase I Report.  Landlord has provided Tenant with a copy of the Phase I Report.

 

(i)                                     Testing of the Available Space.  Tenant shall have the right, for a 30 day
period  commencing on the date Tenant
has actual knowledge of the expiration or earlier termination of the Vical
Lease, to inspect and conduct tests in
the Available Space to determine whether any contamination of the Available
Space has occurred..  Such
inspection and tests shall be conducted at Tenant’s expense.  Landlord or a representative of Landlord
shall be present during all inspections and tests.  All of such inspections and tests shall be conducted at times
mutually agreed to by Landlord and Tenant and shall be subject to any
reasonable requirements and testing procedures requested by Landlord including,
without limitation, the splitting of any samples taken.  If the Available Space is determined to be
contaminated as a result of Vical’s use or occupancy of the same and such
contamination is required by a Governmental Authority to be remediated,
Landlord shall cause such contamination to be remediated in accordance with
applicable Environmental Requirements. 
If the testing and inspections described in this Section 30(i)
identify contamination in the  Available
Space and Landlord is not required by a Governmental Authority to cause the
same to be remediated, Tenant’s indemnification and hold harmless obligations
under this Section 30 shall not apply to such contamination.

 

31.                                 Tenant’s Remedies/Limitation of
Liability.  Landlord shall
not be in default hereunder unless Landlord fails to perform any of its
obligations hereunder within 30 days after written notice from Tenant
specifying such failure (unless such performance will, due to the nature of the
obligation, require a period of time in excess of 30 days, then after such
period of time as is reasonably necessary). 
Upon any default by Landlord, Tenant shall give notice by registered or
certified mail to any Holder of a Mortgage covering the Premises and to any
landlord of any lease of property in or on which the Premises are

 

 

located and Tenant shall offer such Holder and/or Landlord a period of
60 days in which to cure such default (unless such performance will, due to the
nature of the obligation, require a period of time in excess of 60 days, in
which case such Holder and/or Landlord shall have such period of time as is
reasonably necessary to effect a cure provided that Holder and/or Landlord is
diligent in attempting to effect such cure); provided Landlord shall
have furnished to Tenant in writing the names and addresses of all such persons
who are to receive such notices.  All
obligations of Landlord hereunder shall be construed as covenants, not
conditions; and, except as may be otherwise expressly provided in this Lease,
Tenant may not terminate this Lease for breach of Landlord’s obligations
hereunder.

 

Notwithstanding the foregoing, if any claimed Landlord default
hereunder will immediately, materially and adversely affect Tenant’s ability to
conduct its business in the Premises (a “Material
Landlord Default”), Tenant shall, as soon as reasonably possible,
but in any event within 2 business days of obtaining knowledge of such
claimed Material Landlord Default, give Landlord written notice of such claim
and telephonic notice to Tenant’s principal contact with Landlord.  The written notice shall be required to
specifically provide that a Material Landlord Default exists.  Landlord shall then have 2 business days
to commence cure of such claimed Material Landlord Default and shall diligently
prosecute such cure to completion.  If
such claimed Material Landlord Default is not a default by Landlord hereunder,
or if Tenant failed to give Landlord the notice required hereunder within
2 business days of learning of the conditions giving rise to the claimed
Material Landlord Default, Landlord shall be entitled to recover from Tenant,
as Additional Rent, any costs incurred by Landlord in connection with such cure
in excess of the costs, if any, that Landlord would otherwise have been liable
to pay hereunder.  If Landlord fails to
commence cure of any claimed Material Landlord Default as provided above,
Tenant may commence and prosecute such cure to completion, and shall be
entitled to recover the costs of such cure (but not any consequential or other
damages) from Landlord, to the extent of Landlord’s obligation to cure such
claimed Material Landlord Default hereunder, subject to the limitations set
forth in the immediately preceding sentence of this paragraph and the other
provisions of this Lease.

 

During the period from January 31, 2014 until January 31, 2015, if (i)
Landlord (and any Holder) is in default under this Lease beyond any applicable
notice and cure period provided to Landlord (and any Holder) under this Lease,
and (ii) the reasonably estimated cost to cure the matter which is the subject
of such default exceeds Tenant’s remaining Rent obligations under this Lease,
Tenant shall have the right to terminate this Lease upon not less than 30 days
written notice to Landlord (and any Holder) in which case this Lease shall
terminate on the date (the “Termination Date”)
set forth in such notice if the matter which is the subject of the default has
not been cured by the Termination Date. 
If the Lease is terminated as provided for in the preceding sentence,
(y) Base Rent and Operating Expenses shall be prorated as of the Termination
Date, and (z) except for obligations arising prior to the Termination Date and
the obligations under this Lease which survive the expiration or earlier
termination of this Lease, neither party shall have any further obligations
under this Lease after the Termination Date. 
If Tenant fails to exercise its right to elect to terminate this Lease within
20 business days after the date that Tenant first has the right to do so under
this paragraph, Tenant shall be deemed to have waived its right to terminate
this Lease under this paragraph.

 

All obligations of Landlord under this Lease will be binding upon
Landlord only during the period of its ownership of the Premises and not
thereafter.  The term “Landlord”
in this Lease shall mean only the owner for the time being of the
Premises.  Upon the transfer by such
owner of its interest in the Premises, such owner shall thereupon be released
and discharged from all obligations of Landlord thereafter accruing, but such
obligations shall be binding during the Term upon each new owner for the
duration of such owner’s ownership.

 

32.                                 Inspection and Access.  Except in the case of an emergency, Landlord
and its agents, representatives, and contractors may enter the Premises during
business hours on not less than 48 hours advance written notice to inspect the
Premises and to make such repairs as may be required or permitted pursuant to
this Lease and for any other business purpose. 
Landlord and Landlord’s representatives may enter the Premises during
business hours on not less than 48 hours advance written notice (except in the
case of emergencies in which case no such notice shall be required and such
entry may be at any time) for the purpose of effecting any such repairs,
inspecting the Premises, showing the Premises to

 

 

prospective purchasers and, during the last year of the Term, to
prospective tenants or for any other business purpose.  Landlord may erect a suitable sign on the
Premises stating the Premises are available to let or that the Project is
available for sale.  Subject to
Landlord’s obligations under Section 10 with respect to providing
substitute parking, Landlord may grant easements, make public dedications,
designate Common Areas and create restrictions on or about the Premises, provided
that no such easement, dedication, designation or restriction materially,
adversely affects (i) Tenant’s access to the Premises other than on a temporary
basis, or (ii) Tenant’s use or occupancy of the Premises for the Permitted
Use.  At Landlord’s request, Tenant
shall execute such instruments as may be necessary for such easements,
dedications or restrictions.  Tenant
shall at all times, except in the case of emergencies, have the right to escort
Landlord or its agents, representatives, contractors or guests while the same
are in the Premises, provided such escort does not materially and adversely
affect Landlord’s access rights hereunder. 
For purposes of this Section 32, the prior written notice
required to be given by Landlord to Tenant may be given by e-mail.

 

33.                                 Security.  Tenant acknowledges and agrees that security
devices and services, if any, while intended to deter crime may not in given
instances prevent theft or other criminal acts and that Landlord is not
providing any security services with respect to the Premises.  Tenant agrees that Landlord shall not be liable
to Tenant for, and Tenant waives any claim against Landlord with respect to,
any loss by theft or any other damage suffered or incurred by Tenant in
connection with any unauthorized entry into the Premises or any other breach of
security with respect to the Premises. 
Tenant shall be solely responsible for the personal safety of Tenant’s
officers, employees, agents, contractors, guests and invitees while any such
person is in, on or about the Premises and/or the Project.  Tenant shall at Tenant’s cost obtain
insurance coverage to the extent Tenant desires protection against such
criminal acts.

 

34.                                 Force Majeure.  Except for the payment of Rent, neither
Landlord nor Tenant shall be held responsible for delays in the performance of
its obligations hereunder when caused by strikes, lockouts, labor disputes,
weather, natural disasters, inability to obtain labor or materials or
reasonable substitutes therefor, governmental restrictions, governmental
regulations, governmental controls, delay in issuance of permits or other
governmental approvals, enemy or hostile governmental action, civil commotion,
acts of terrorism, fire or other casualty, and other causes beyond their
reasonable control (“Force Majeure”).

 

35.                                 Brokers, Entire Agreement, Amendment.  Landlord and Tenant each represents and
warrants that it has not dealt with any broker, agent or other person
(collectively, “Broker) in connection with this transaction and that no Broker
brought about this transaction, other than Burnham Real Estate Services, whose
commission shall be paid by Landlord pursuant to a separate written agreement
between Landlord and Broker.  Landlord
and Tenant each hereby agree to indemnify and hold the other harmless from and
against any claims by any Broker, other than the broker, if any named in this Section
35, claiming a commission or other form of compensation by virtue of having
dealt with Tenant or Landlord, as applicable, with regard to this leasing
transaction.

 

36.                                 Limitation on Landlord’s Liability.  NOTWITHSTANDING ANYTHING SET FORTH HEREIN OR
IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE CONTRARY:  (A) LANDLORD SHALL NOT BE LIABLE TO TENANT
OR ANY OTHER PERSON FOR (AND TENANT AND EACH SUCH OTHER PERSON ASSUME ALL RISK
OF) LOSS, DAMAGE OR INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO:  TENANT’S PERSONAL PROPERTY OF EVERY KIND AND
DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT,
INVENTORY, SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS,
PRODUCT, SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER RECORDS
OF EVERY KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL INCOME
DERIVED OR DERIVABLE THEREFROM; (B) THERE SHALL BE NO PERSONAL RECOURSE TO
LANDLORD FOR ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN
ANY WAY UNDER THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND ANY LIABILITY OF LANDLORD
HEREUNDER SHALL BE STRICTLY LIMITED SOLELY TO LANDLORD’S

 

 

INTEREST IN THE PROJECT OR ANY PROCEEDS FROM SALE OR CONDEMNATION THEREOF
AND ANY INSURANCE PROCEEDS PAYABLE IN RESPECT OF LANDLORD’S INTEREST IN THE
PROJECT OR IN CONNECTION WITH ANY SUCH LOSS; AND (C) IN NO EVENT SHALL ANY
PERSONAL LIABILITY BE ASSERTED AGAINST LANDLORD IN CONNECTION WITH THIS LEASE
NOR SHALL ANY RECOURSE BE HAD TO ANY OTHER PROPERTY OR ASSETS OF LANDLORD OR
ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS.  UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY
OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE
FOR INJURY TO TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.

 

37.                                 Severability.  If any clause or provision of this Lease is
illegal, invalid or unenforceable under present or future laws, then and in
that event, it is the intention of the parties hereto that the remainder of
this Lease shall not be affected thereby. 
It is also the intention of the parties to this Lease that in lieu of
each clause or provision of this Lease that is illegal, invalid or unenforceable,
there be added, as a part of this Lease, a clause or provision as similar in
effect to such illegal, invalid or unenforceable clause or provision as shall
be legal, valid and enforceable.

 

38.                                 Signs;
Exterior Appearance.  Tenant
shall not, without the prior written consent of Landlord, which may be granted
or withheld in Landlord’s sole discretion: 
(i) attach any awnings, exterior lights, decorations, balloons, flags,
pennants, banners, painting or other projection to any outside wall of the
Project, (ii) use any curtains, blinds, shades or screens other than Landlord’s
standard window coverings, (iii) coat or otherwise sunscreen the interior or
exterior of any windows, (iv) place any bottles, parcels, or other articles on
the window sills, (v) place any equipment, furniture or other items of personal
property on any exterior balcony, or (vi) paint, affix or exhibit on any part
of the Premises or the Project any signs, notices, window or door lettering,
placards, decorations, or advertising media of any type which can be viewed from
the exterior of the Premises. 
Notwithstanding the foregoing, Landlord hereby confirms its consent to
any of the foregoing currently located at the Premises, including but not
limited to Tenant’s current Suite Sign (defined below), the Building Sign
(defined below) and any other existing exterior signage.  Interior signs on doors and the directory
tablet shall be inscribed, painted or affixed for Tenant by Landlord at the
sole cost and expense of Tenant, and shall be of a size, color and type
reasonably acceptable to Landlord. 
Nothing may be placed on the exterior of corridor walls or corridor
doors other than Landlord’s standard lettering.  The directory tablet shall be provided exclusively for the
display of the name and location of tenants.

 

Notwithstanding anything to the contrary contained in the preceding
paragraph, during the Term of this Lease, Tenant shall be entitled, at Tenant’s
sole cost and expense, (i) to have one sign with Tenant’s trade name and/or
corporate trademark on the entrance (inside the 9363 Building) to the first
floor portion of the 9363 Premises and the second floor portion of the 9363
Premises (collectively, the “Suite Sign”),
and (ii) to have one sign with Tenant’s name on the exterior of the 9363
Building (the “Building Sign”).  The Suite Sign and the Building Sign shall be
referred to herein collectively as  “Tenant’s Signs.”  Tenant Signs shall be subject to Landlord’s prior written
approval with respect to signage contents (other than the appearance of
Tenant’s trade name and corporate trademark), which approval shall not be
unreasonably withheld.  Any of Tenant’s
Signs currently located on the Project are deemed approved.  If, in addition to Tenant’s Signs, Tenant
desires to place any other sign on the Premises (“Additional Sign”) and Landlord is willing at that time to
consent to allow Tenant to do so (which consent shall not be unreasonably
withheld, such Additional Sign shall conform to Landlord’s portfolio design
criteria.  Tenant shall be solely
responsible for all costs, fees, charges, expenses or other sums related to
Tenant’s Signs, the Blue Sign (as defined below)  and the Additional Sign, including without limitation, costs
related to (i) manufacture, installation and maintenance of Tenant’s Signs, the
Blue Sign and the Additional Sign, (ii) removal of Tenant’s Signs, the Blue
Sign and the Additional Sign upon the expiration or earlier termination of the
Lease or the termination of Tenant’s right thereto, (iii) permits required by
any governmental authority with respect to Tenant’s Signs, the Blue Sign and
the Additional Sign, and (iv) assuring that Tenant’s Signs, the Blue Sign and
the Additional Sign conform to all legal requirements applicable to the
Project.

 

 

Notwithstanding anything to the contrary contained in this Section
38, from and after the date that Tenant is the sole tenant of the 9363
Building and the 9373 Building, (i) Tenant shall have the right to install and
maintain a blue sign in the lobby of the 9373 Building (the “Blue Sign”) provided that such sign is
identical to the blue sign currently located in the lobby of the 9363 Building,
and (ii) any approval sought by Tenant from Landlord under this Section 38
shall not be unreasonably withheld.  

 

39.                                 First Right to Negotiate to Lease the Available Space.

 

(a)                                  Expansion in
the 9373 Building.  Tenant
shall have the right, but not the obligation, to negotiate with Landlord to
expand the Premises (the “Negotiation
Right”)
to include the Available Space in the 9373 Building upon the terms and
conditions in this Section.  For
purposes of this Section 39(a), “Available Space” shall mean the portion of
the 9373 Building (excluding the Sublease Premises (as defined in Section 42))
currently being leased by Landlord to Vical Incorporated, a Delaware
corporation (“Vical”), pursuant to
that certain Lease dated December 4, 1987 (as amended and assigned, the “Vical  Lease”).  The Available Space contains approximately
10,494 rentable square feet and is more particularly described on Exhibit H attached hereto.

 

Promptly following the earlier to occur of the expiration of any right
which Vical has under the Vical Lease to elect to extend the term of the Vical
Lease or the date on which Vical notifies Landlord in writing that it does not
wish to extend the term of the Vical Lease, Landlord shall, so long as Tenant’s
rights hereunder are preserved, deliver to Tenant written notice (the “Negotiation
Notice”) of such Available Space, together with the terms and
conditions on which Landlord is prepared to lease to Tenant such Available
Space.  Landlord and Tenant shall have
30 days from the date of the Negotiation Notice to attempt to agree upon terms
and conditions, acceptable to both in their sole and absolute discretion, for
the leasing of the Available Space. 
Notwithstanding anything to the contrary contained in the preceding
sentence, Landlord and Tenant hereby agree that, if Tenant leases the Available
Space pursuant to this Section 39, Tenant shall only be required to
commence paying Base Rent and Operating Expenses  for the Available Space 90 days after the Vical Lease has
terminated and Vical has vacated the Available Space.    

 

(b)                                 Amended
Lease.  If, after the
expiration of a period of 30 days from the date of the Negotiation Notice, no
lease amendment or lease agreement for the Available Space has been executed by
Landlord and Tenant, Tenant shall be deemed to have waived its right under this
Section 39 to lease the Available Space and, subject to the provisions
of Section 40, Landlord shall have the right to lease the Available
Space to any third party and on any terms and conditions acceptable to
Landlord.  

 

(c)                                  Exceptions.  Notwithstanding the above, the Negotiation
Right shall not be in effect and may not be exercised by Tenant:

 

(i)                                     during
any period of time that Tenant is in Default beyond any applicable cure period
under any provision of the Lease; or

 

(ii)                                  if
Tenant has been in Default beyond any applicable cure period under any
provision of the Lease 3 or more times, whether or not the Defaults are cured,
during the 12 month period prior to the date on which Tenant seeks to exercise
the Negotiation Right.

 

(d)                                 Termination.  The Negotiation Right shall terminate and be
of no further force or effect even after Tenant’s due and timely exercise of
the Negotiation Right, if, after such exercise, but prior to the commencement
date of the lease of the Available Space, (i) Tenant fails to timely cure any
default by Tenant under the Lease; or (ii) Tenant has Defaulted beyond any
applicable cure period 3 or more times during the period from the date of the
exercise of the Negotiation Right to the date of the commencement of the lease
of the Available Space, whether or not such Defaults are cured.

 

(e)                                  Rights
Personal.  The Negotiation
Right is personal to Tenant and is not assignable without Landlord’s consent,
which may be granted or withheld in Landlord’s sole discretion separate and

 

 

apart from any consent by Landlord to an
assignment of Tenant’s interest in the Lease,  except that they may be assigned in connection with any Permitted
Assignment of this Lease.

 

(f)                                    No
Extensions.  The period of
time within which the Negotiation Right may be exercised shall not be extended
or enlarged by reason of Tenant’s inability to exercise the Negotiation Right.

 

40.                                 Right of First Refusal to Lease the Available Space.

 

(a)                                  Available
Space in the 9373 Building. 
Each time during the Term hereof that Landlord intends to accept a bona
fide offer or otherwise agree (the “Pending
Deal”) to lease the Available Space to any third party (excluding
any renewal option exercised by Vical), Landlord shall, so long as Tenant’s
rights hereunder are preserved, deliver to Tenant written notice (the “Pending Deal Notice”) of the material terms
of such Pending Deal.  Within 5 business
days after Tenant’s receipt of the Pending Deal Notice, Tenant shall deliver to
Landlord written notice (the “Pending Deal
Acceptance”) if Tenant elects to lease the Available Space pursuant
to the terms set forth in the Pending Deal. 
Tenant’s right to receive the Pending Deal Notice and election to lease
or not lease the Available Space pursuant to this Section 40 is
hereinafter referred to as the “Right of
First Refusal.”  If Tenant
elects to lease the Available Space by delivering the Pending Deal Acceptance
within the required 5 business day period, Tenant shall be deemed to agree to
lease the Available Space on the same terms and conditions set forth in this
Lease as modified by the terms and conditions set forth in the Pending Deal
Notice.  Tenant’s failure to deliver a
Pending Deal Acceptance to Landlord within the required 5 business day period
shall be deemed to be an election by Tenant not to exercise Tenant’s right to
lease the Available Space and Landlord shall have the right to lease the
Available Space to any third party and on any terms and conditions acceptable
to Landlord; provided, however, that the economic terms of the lease to such
third party are substantially similar to the terms set forth in the Pending
Deal Notice.   For purposes of the preceding sentence, the
economic terms shall be considered substantially similar if the difference in
base rent is five percent (5%) or less.

 

(b)                                 Amended
Lease.  If Tenant elects to
exercise Tenant’s right to lease the Available Space in the manner and
timeframe required in Section 40(a), Landlord and Tenant shall enter
into an amendment to this Lease confirming the terms and conditions upon which
Tenant is leasing the Available Space.

 

(c)                                  Exceptions.  Notwithstanding the above, the Right of
First Refusal shall not be in effect and may not be exercised by Tenant:

 

(i)                                     during
any period of time that Tenant is in Default beyond any applicable cure period
under any provision of the Lease; or

 

(ii)                                  if
Tenant has been in Default beyond any applicable cure period under any provision
of the Lease 3 or more times, whether or not the Defaults are cured, during the
12 month period prior to the date on which Tenant seeks to exercise the Right
of First Refusal.

 

(d)                                 Termination.  Tenant’s right to lease the Available Space
pursuant to this Section 40 shall terminate and be of no further force
or effect even after Tenant’s due and timely exercise of it right to lease the
Available Space pursuant to this Section 40, if, after such exercise,
but prior to the commencement date of the lease of the Available Space, (i)
Tenant fails to timely cure any default by Tenant under the Lease; or (ii)
Tenant has Defaulted 3 beyond any applicable cure period or more times during
the period from the date of the Pending Offer Acceptance to the date of the
commencement of the lease of the Available Space, whether or not such Defaults
are cured.

 

(e)                                  Rights
Personal.  The Right of First
Refusal is personal to Tenant and is not assignable without Landlord’s consent,
which may be granted or withheld in Landlord’s sole discretion separate and
apart from any consent by Landlord to an assignment of Tenant’s interest in the
Lease, except that they may be
assigned in connection with any Permitted Assignment of this Lease.

 

 

(f)                                    No
Extensions.  The period of time
within which the Right of First Refusal may be exercised shall not be extended
or enlarged by reason of Tenant’s inability to exercise the Right of First
Refusal.

 

41.                                 Must Take Available Space.

 

(a)                                  If, within 6 months
after the expiration or earlier termination of the Vical Lease with respect to
the Available Space, (i) Landlord and Tenant have not entered into a lease for
the Available Space pursuant to Sections 39 or 40, and (ii)
Landlord has not entered into a lease for the Available Space with a third
party, the Available Space shall, subject to the provisions of this Section
41, automatically become part of, and included within the definition of,
the Premises on the date that is 6 months after the expiration or earlier
termination of the Vical Lease with respect to the Available Space.

 

If the Available Space shall become part of, and be included within the
definition of, the Premises as provided for in this Section 41(a),
Tenant shall lease the Available Space subject to all of the terms and conditions
of this Lease, except: (a) that the 9373 Premises (and the Premises) under the
Lease shall be increased to include the rentable square feet of the Available
Space; (b) Base Rent shall be increased based on the addition of the Available
Space to the Premises (meaning that Tenant shall pay Base Rent for the
Available Space during the Term at the same per square foot rental rates
applicable to the balance of the 9373 Premises; and (c) Tenant's Share of
Operating Expenses shall be increased based upon the addition of the Available
Space to the Premises.  Tenant shall be
entitled to a tenant improvement allowance not to exceed of $419,760 (the “Available Space TI Allowance”) for the
construction of tenant improvements of a permanent and fixed nature (the ”Available Space Improvements”) which shall
remain in the Available Space after the expiration or earlier termination of
this Lease.  In addition, if Tenant
leases the Available Space pursuant to this Section 41, Tenant shall
only be required to commence paying Base Rent and Operating Expenses for the
Available Space 90 days after the date that the Available Space becomes part of
the Premises. In all other respects, the Lease shall remain in full force and
effect, and shall apply to the Available Space.

 

(b)                                 Upon the delivery of
the Available Space to Tenant as provided herein, Landlord and Tenant shall
execute and deliver an amendment to this Lease confirming the delivery and
commencement date with respect thereto, and the other changes in the Lease
terms described above.

 

(c)                                  Tenant acknowledges
and agrees that the Available Space Improvements shall be treated as
Alterations and shall be undertaken pursuant to Section 12 above.  If Tenant desires an advance of all or any
portion of the Available Space TI Allowance, Tenant shall, in addition to the
documents to be provided to Landlord pursuant to Section 12, deliver to
Landlord a written request for Landlord to fund all or a portion of the
Available Space TI Allowance for such Alteration; provided, however, that no
such request shall be for less than $100,000 except for the final
disbursement.  Landlord shall review the
proposed Alteration and shall inform Tenant, at the same time Landlord gives
its consent, if any, to such Alteration, what portion of the cost, if any, of
such Alteration is attributable to Available Space Improvements and may be
funded from the Available Space TI Allowance. 
Thereafter, Landlord shall fund such amounts upon presentation to
Landlord of draw requests containing unconditional lien waivers and such other
documents as are customary for construction projects in the San Diego
area.    Tenant shall provide Landlord
with “as-built” plans promptly following completion of any Alterations to the
Available Space.   

 

42.                                 Early Termination of Vical Lease With Respect to Space
Subleased to Tenant.  

 

(a)                                  Pursuant to that
certain Sublease Agreement dated March 14, 2003 (the “Sublease”), between Tenant and Vical,
Tenant subleases from Vical approximately 9,561 rentable square feet (the “Sublease Premises”) in the 9373
Building.  The Sublease Premises are
more particularly described on Exhibit G
attached hereto.

 

(b)                                 Following
the execution hereof, Landlord and Tenant shall use reasonable efforts to cause
Vical to agree to terminate Vical’s lease with Landlord (the “Vical Lease”) with respect to the

 

 

Sublease Premises pursuant to an amendment to the Vical Lease
documenting such termination (the “Vical
Termination Agreement”) and, upon such termination (the “Termination Date”), the Sublease Premises
shall automatically become part of the Premises subject to all of the terms and
conditions hereof; provided, however, that (i) Landlord shall have no
obligation to enter into the Vical Termination Agreement unless all of the
terms and conditions of the Vical Termination Agreement are acceptable to
Landlord in its sole and absolute discretion, (ii) Tenant shall reimburse
Landlord for any costs and expenses which Landlord incurs in connection with
such efforts, (iii) Tenant shall be responsible for paying to Vical any sums
required to be paid to Vical in connection with the termination of the Sublease
including, without limitation any unamortized tenant improvement expenses
and/or brokerage fees, (iv) Tenant agrees to pay to Landlord Recapture Rent (as
hereinafter defined) to cover any financial detriment to Landlord as result of
the termination of the Vical Lease with the respect to the Sublease Premises,
and (v) Tenant shall have no obligation to lease the Sublease Premises unless
Landlord has notified Tenant in writing of the amount that will be required to
be paid by Tenant pursuant to (ii), (iii) and (iv) of this paragraph and Tenant
has agreed in writing to pay such amount.

 

(c)                                  As
used herein, “Recapture Rent”
means the amount necessary to fully amortize the Economic Impact Amount (as
hereinafter defined) at a rate of 10% over the period from the Termination Date
to January 31, 2015.  Recapture Rent
shall be paid monthly on the first of each calendar month during the Base
Term.  As used herein, “Economic Impact Amount” shall mean the
amount, as determined by Landlord, which represents the total economic
difference (loss) to Landlord, during the period from the Termination Date
until November 30, 2004, between (i) terminating the Vical Lease with respect
to the Sublease Premises and leasing the Sublease Premises to Tenant as
contemplated by this Section 42, and (ii) not terminating the Vical
Lease with respect to the Sublease Premises.                            

 

(d)                                 Subject
to the conditions set forth in Section 42(b), concurrently with the
surrender of the Sublease Premises by Vical pursuant to the Vical Termination
Agreement (or upon the expiration or other termination of the Vical Lease with
respect to the Sublease Premises as contemplated in Section 43), the
Sublease Premises shall become part of, and be included within the definition
of, the Premises subject to all of the terms and conditions of this Lease,
except: (a) that the 9373 Premises (and the Premises) under the Lease shall be
increased to include the rentable square feet of the Sublease Premises; (b)
Base Rent shall be increased based on the addition of the Sublease Premises to
the Premises (meaning that Tenant shall pay Base Rent for the Sublease Premises
during the Term at the same per square foot rental rates applicable to the
balance of the 9373 Premises; (c) Tenant's Share of Operating Expenses shall be
increased based upon the addition of the Sublease Premises to the Premises, and
(d) relative to the Sublease Space for the period prior to the Rent Resumption
Date, Tenant will pay Base Rent at the rate of $1.99 per square foot per month
for the Sublease Space, and thereafter Tenant will pay Base Rent for the
Sublease Space at the same rate applicable to the rest of the 9373 Premises.  In all other respects, the Lease shall
remain in full force and effect, and shall apply to the Sublease Premises.  Upon the delivery of the Sublease Premises
to Tenant as provided herein, Landlord and Tenant shall execute and deliver an
amendment to this Lease confirming the delivery and commencement date with
respect thereto, and the other changes in the Lease terms described above.

 

43.                                 Inclusion of Sublease Space at Expiration of Vical
Lease.  If Landlord and
Tenant are not able to effectuate the inclusion of the Sublease Premises as
part of the Premises by terminating Vical Lease with respect to the Sublease
Space as contemplated in Section 42, then, upon the expiration or
earlier termination of the Vical Lease with respect to the Sublease Premises,
the Sublease Premises shall automatically become part of the Premises and all
of the provisions of Section 42(d) shall be applicable and are
incorporated by this reference into this Section 43.

 

44.                                 Intentionally Omitted.

 

45.                                 Right to
Extend Term.  Tenant shall
have the right to extend the Term of the Lease upon the following terms and
conditions:

 

(a)                                  Extension
Rights.  Tenant shall have 2
consecutive rights (each, an “Extension Right”) to extend the term of
this Lease each for a period of not less than 3 years and not more than 5 years

 

 

(each, an “Extension Term”) on the same
terms and conditions as this Lease (other than Base Rent) by giving Landlord
written notice (each, an “Extension Notice”) of its election to
exercise each Extension Right at least 12 months prior, and no earlier than 9
months prior, to the expiration of the Base Term of the Lease or the expiration
of any prior Extension Term.  If Tenant
fails to specify the length of the Extension Term in an Extension Notice,
Tenant shall be deemed to have elected an Extension Term of 5 years. 

 

Upon the commencement of any Extension Term, Base Rent shall be payable
at the Market Rate (as defined below). 
Base Rent shall thereafter be adjusted on each annual anniversary of the
commencement of such Extension Term by a percentage as determined by Landlord
and agreed to by Tenant at the time the Market Rate is determined.  As used herein, “Market Rate” shall mean the
then market rental rate as determined by Landlord and agreed to by Tenant.  In addition, Landlord may impose a market rent
for the parking rights provided hereunder.

 

If, on or before the date which is 180 days prior to the expiration of
the Base Term of this Lease, or the expiration of any prior Extension Term,
Tenant has not agreed with Landlord’s determination of the Market Rate and the
rent escalations during such subsequent Extension Term after negotiating in
good faith, Tenant shall be deemed to have elected arbitration as described in Section
45(b).  Tenant acknowledges and
agrees that, if Tenant has elected to exercise an Extension Right by delivering
notice to Landlord as required in this Section 45(a), Tenant shall have
no right thereafter to rescind or elect not to extend the term of the Lease for
the applicable Extension Term.  

 

(b)                                 Arbitration.

 

(i)                                     Within
10 days of Tenant’s notice to Landlord of its election (or deemed election) to
arbitrate Market Rate and escalations, each party shall deliver to the other a
proposal containing the Market Rate and escalations that the submitting party
believes to be correct (“Extension Proposal”).  If either party fails to timely submit an
Extension Proposal, the other party’s submitted proposal shall determine the
Base Rent and escalations for the Extension Term.  If both parties submit Extension Proposals, then Landlord and Tenant
shall meet within 7 days after delivery of the last Extension Proposal and make
a good faith attempt to mutually appoint a single Arbitrator (and defined
below) to determine the Market Rate and escalations.  If Landlord and Tenant are unable to agree upon a single
Arbitrator, then each shall, by written notice delivered to the other within 10
days after the meeting, select an Arbitrator. 
If either party fails to timely give notice of its selection for an Arbitrator,
the other party’s submitted proposal shall determine the Base Rent for the
Extension Term.  The 2 Arbitrators so
appointed shall, within 5 business days after their appointment, appoint a
third Arbitrator.  If the 2 Arbitrators
so selected cannot agree on the selection of the third Arbitrator within the
time above specified, then either party, on behalf of both parties, may request
such appointment of such third Arbitrator by application to any state court of
general jurisdiction in the jurisdiction in which the Premises are located, upon
10 days prior written notice to the other party of such intent.

 

(ii)                                  The
decision of the Arbitrator(s) shall be made within 30 days after the
appointment of a single Arbitrator or the third Arbitrator, as applicable.  The decision of the single Arbitrator shall
be final and binding upon the parties. 
The average of the two closest Arbitrators in a three Arbitrator panel
shall be final and binding upon the parties. 
Each party shall pay the fees and expenses of the Arbitrator appointed
by or on behalf of such party and the fees and expenses of the third Arbitrator
shall be borne equally by both parties. 
If the Market Rate and escalations are not determined by the first day
of the Extension Term, then Tenant shall pay Landlord Base Rent in an amount
equal to the Base Rent in effect immediately prior to the Extension Term and
increased by the Rent Adjustment Percentage until such determination is
made.  After the determination of the
Market Rate and escalations, the parties shall make any necessary adjustments
to such payments made by Tenant. 
Landlord and Tenant shall then execute an amendment recognizing the
Market Rate and escalations for the Extension Term.

 

 

(iii)                               An
“Arbitrator”
shall be any person appointed by or on behalf of either party or appointed
pursuant to the provisions hereof and: 
(i) shall be (A) a member of the American Institute of Real Estate
Appraisers with not less than 10 years of experience in the appraisal of
improved office, R&D and office/laboratory real estate in the greater San Diego
metropolitan area, or (B) a licensed commercial real estate broker with not
less than 15 years experience representing landlords and/or tenants in the
leasing of R&D or life sciences space in the greater San Diego metropolitan
area, (ii) devoting substantially all of their time to professional appraisal
or brokerage work, as applicable, at the time of appointment and (iii) be in
all respects impartial and disinterested.

 

(c)                                  Rights
Personal.  Extension Rights
are personal to Tenant and are not assignable without Landlord’s consent, which
may be granted or withheld in Landlord’s sole discretion separate and apart
from any consent by Landlord to an assignment of Tenant’s interest in the
Lease, except that they may be
assigned in connection with any Permitted Assignment of this Lease.

 

(d)                                 Exceptions.  Notwithstanding anything set forth above to
the contrary, Extension Rights shall not be in effect and Tenant may not
exercise any of the Extension Rights:

 

(i)                                     during
any period of time that Tenant is in Default beyond any applicable cure period
under any provision of this Lease; or

 

(ii)                                  if
Tenant has been in Default beyond any applicable cure period under any
provision of this Lease 3 or more times, whether or not the Defaults are cured,
during the 12 month period immediately prior to the date that Tenant intends to
exercise an Extension Right, whether or not the Defaults are cured.

 

(e)                                  No
Extensions.  The period of
time within which any Extension Rights may be exercised shall not be extended
or enlarged by reason of Tenant’s inability to exercise the Extension Rights.

 

(f)                                    Termination.  The Extension Rights shall terminate and be
of no further force or effect even after Tenant’s due and timely exercise of an
Extension Right, if, after such exercise, but prior to the commencement date of
an Extension Term, (i) Tenant fails to timely cure any default by Tenant under
this Lease; or (ii) Tenant has Defaulted beyond any applicable cure period 3 or
more times during the period from the date of the exercise of an Extension
Right to the date of the commencement of the Extension Term, whether or not
such Defaults are cured.

 

46.                                 Tenant Relocation Rights.  If, during the Base Term of this Lease,
Tenant determines that it needs total rentable space in an amount which exceeds
200% of the rentable square feet of the Premises at the time of such
determination, Tenant may elect to give Landlord notice of its desire to
relocate to another facility owned by Landlord or an affiliate of Landlord (the
“Relocation Space”).  Upon receipt of such notice, Landlord shall
have the option to either given Tenant written notice that Landlord elects not
to relocate Tenant, or to give Tenant notice within 60 days of Landlord’s
receipt of such notice, describing: (i) the available space(s), if any,
Landlord or any affiliate of Landlord may have or would construct which could
be used for such Relocation Space, (ii) the time period within which such
space(s) could be available for lease by Tenant and (iii) the economic and
other material business terms of any proposed lease thereof to Tenant (“Relocation Notice”).  The decision whether to give a Relocation
Notice and the terms thereof shall be determined by Landlord in Landlord’s sole
discretion.  Tenant shall have 30 days
following receipt of any Relocation Notice given by Landlord to deliver to
Landlord written notification of Tenant’s acceptance (“Acceptance Notice”) of such Relocation
Notice and agreement to lease such Relocation Space upon the business terms set
forth in the Relocation Notice.  Upon
Tenant’s occupancy of such Relocation Space, the Lease for the Premises shall
terminate.  If Tenant does not deliver
an Acceptance Notice to Landlord within the required 30 day period, Tenant
shall be deemed to have elected to remain in the Premises (and not lease the
Relocation Space).

 

47.                                 Pedestrian Bridge.  Tenant has advised Landlord that Tenant may
desire to construct a pedestrian bridge (the “Bridge”)
across Towne Centre Drive in order to connect the Project with buildings

 

 

to the west.  The Bridge may not
be constructed without Landlord’s prior written consent which consent shall not
be unreasonably withheld.  Tenant shall
be required to seek and obtain Landlord’s consent to the construction of the Bridge
prior to seeking any of the required governmental approvals necessary for the
construction of the Bridge.  Landlord
may consider, among other things, the following matters in connection with
granting or withholding its consent to the construction of the Bridge: (i) the
proposed location of the Bridge (or pathway to the Bridge) on the Project, (ii)
any requirements or obligations, financial or otherwise, which will be imposed
on Landlord and/or the Project as a result of the Bridge, (iii) any adverse
effects the Bridge may have on the Project, and (iv) obtaining reimbursement
from Tenant for any costs associated with removing the Bridge and restoring the
Project.  If, after Landlord has
consented to the construction of the Bridge, governmental approval of the
construction of the Bridge requires or results in any material changes or
modifications to any of the plans or specifications or any other material
matters considered or approved by Landlord or results in any changes to the
Bridge that are visible from the exterior or results in the imposition of any
material conditions or raises matters not specifically considered and approved
by Landlord in connection with Landlord’s original consent to the construction
of the Bridge, Landlord shall have the right to review and approve the same and
determine whether Landlord is still willing to consent to the construction of
the Bridge.  The determination right
granted to Landlord in the preceding sentence is not a right to consider
matters previously considered and approved by Landlord in connection with the
construction of the Bridge but rather a right to consider those matters (as
more particularly described in the preceding sentence) which arise in
connection with obtaining governmental approval of the Bridge.  Tenant shall be solely responsible for all
costs and expenses in connection with the construction and maintenance of the
Bridge (including, without limitation, any ADA-related costs and expenses) and
shall reimburse Landlord for all costs and expenses actually incurred by
Landlord at any time in connection with Bridge.  Tenant acknowledges and agrees that Landlord may impose any
reasonable conditions or requirements on Tenant in connection with the
construction and maintenance of the Bridge. 

 

Notwithstanding anything to the contrary contained in this Section 47,
with respect to the construction of the Bridge, Tenant shall only be
responsible for reimbursing Landlord’s costs and expenses up to the greater of
5% of the total project cost for the construction of the Bridge or $50,000.  The cap set forth in the preceding sentence
shall only apply to Landlord’s costs and expenses in connection with the
construction of the Bridge (and not maintenance or any other costs associated
with the Bridge).  

 

48.                                 Miscellaneous.

 

(a)                                  Notices.  All notices or other communications between
the parties shall be in writing and shall be deemed duly given upon delivery or
refusal to accept delivery by the addressee thereof if delivered in person, or
upon actual receipt if delivered by reputable overnight guaranty courier,
addressed and sent to the parties at their addresses set forth above.  Landlord and Tenant may from time to time by
written notice to the other designate another address for receipt of future
notices.

 

(b)                                 Joint and
Several Liability.  If and
when included within the term “Tenant,” as used in this instrument, there
is more than one person or entity, each shall be jointly and severally liable
for the obligations of Tenant.

 

(c)                                  Recordation.  Neither this Lease nor a memorandum of lease
shall be filed by or on behalf of Tenant in any public record.  Landlord may prepare and file, and upon
request by Landlord Tenant will execute, a memorandum of lease.

 

(d)                                 Interpretation.  The normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Lease or any exhibits or
amendments hereto.  Words of any gender
used in this Lease shall be held and construed to include any other gender, and
words in the singular number shall be held to include the plural, unless the
context otherwise requires.  The
captions inserted in this Lease are for convenience only and in no way define,
limit or otherwise describe the scope or intent of this Lease, or any provision
hereof, or in any way affect the interpretation of this Lease.

 

 

(e)                                  Not Binding
Until Executed.  The
submission by Landlord to Tenant of this Lease shall have no binding force or
effect, shall not constitute an option for the leasing of the Premises, nor
confer any right or impose any obligations upon either party until execution of
this Lease by both parties.

 

(f)                                    Limitations
on Interest.  It is expressly
the intent of Landlord and Tenant at all times to comply with applicable law
governing the maximum rate or amount of any interest payable on or in
connection with this Lease.  If
applicable law is ever judicially interpreted so as to render usurious any
interest called for under this Lease, or contracted for, charged, taken, reserved,
or received with respect to this Lease, then it is Landlord’s and Tenant’s
express intent that all excess amounts theretofore collected by Landlord be
credited on the applicable obligation (or, if the obligation has been or would
thereby be paid in full, refunded to Tenant), and the provisions of this Lease
immediately shall be deemed reformed and the amounts thereafter collectible
hereunder reduced, without the necessity of the execution of any new document,
so as to comply with the applicable law, but so as to permit the recovery of
the fullest amount otherwise called for hereunder.

 

(g)                                 Choice of
Law.  Construction and
interpretation of this Lease shall be governed by the internal laws of the
state in which the Premises are located, excluding any principles of conflicts
of laws.

 

(h)                                 Time.  Time is of the essence as to the performance
of Tenant’s obligations under this Lease.

 

(i)                                     Incorporation
by Reference.  All exhibits
and addenda attached hereto are hereby incorporated into this Lease and made a
part hereof.  If there is any conflict
between such exhibits or addenda and the terms of this Lease, such exhibits or
addenda shall control.

 

(j)                                     Hazardous
Activities.  Notwithstanding
any other provision of this Lease, Landlord, for itself and its employees,
agents and contractors, reserves the right to refuse to perform any repairs or
services in any portion of the Premises which, pursuant to Tenant’s routine
safety guidelines, practices or custom or prudent industry practices, require
any form of protective clothing or equipment other than safety glasses.  In any such case, Tenant shall contract with
parties who are acceptable to Landlord, in Landlord’s reasonable discretion,
for all such repairs and services, and Landlord shall, to the extent required,
equitably adjust Tenant’s Share of Operating Expenses in respect of such
repairs or services to reflect that Landlord is not providing such repairs or
services to Tenant.

 

[ Signatures on next page ]

 

 

IN WITNESS
WHEREOF, Landlord and Tenant have executed this Lease as of the day and year
first above written.

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  AMYLIN PHARMACEUTICALS, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ARE-9363/9373/9393 TOWNE CENTRE, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  ALEXANDRIA REAL ESTATE EQUITIES, L.P.,

  
	
   

  	
   

  	
  a Delaware limited partnership,

  
	
   

  	
   

  	
  as Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ARE-QRS CORP.,

  
	
   

  	
   

  	
   

  	
  a Maryland corporation,

  
	
   

  	
   

  	
   

  	
  as General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:Ex 10.2 2000 Stock Incentive Plan

	

WEBEX COMMUNICATIONS, INC. 

2000 STOCK INCENTIVE PLAN 

(Adopted by the Board on March 29, 2000) 

(Amended and Restated by the Board Effective January 1, 2004) 

	
Ver. 12-13 1-1-04 8-14-02 

	 	 	 
	

	

TABLE OF CONTENTS 

Page 

SECTION 1. ESTABLISHMENT AND PURPOSE.                                                      1 

SECTION 2.  DEFINITIONS.                      1 

	
(a) 
	
“Affiliate” 
	
1 

	
(b) 
	
“Award” 
	
1 

	
(c) 
	
“Board of Directors” 
	
1 

	
(d) 
	
“Change in Control” 
	
1 

	
(e) 
	
“Code” 
	
2 

	
(f) 
	
“Committee” 
	
2 

	
(g) 
	
“Company” 
	
2 

	
(h) 
	
“Consultant” 
	
2 

	
(i) 
	
“Employee” 
	
3 

	
(j) 
	
“Exchange Act” 
	
3 

	
(k) 
	
“Exercise Price” 
	
3 

	
(l) 
	
“Fair Market Value” 
	
3 

	
(m) 
	
“ISO” 
	
3 

	
(n) 
	
“Lead Director” 
	
3 

	
(o) 
	
“Nonstatutory Option” or “NSO” 
	
3 

	
(p) 
	
“Offeree” 
	
3 

	
(q) 
	
“Option” 
	
3 

	
(r) 
	
“Optionee” 
	
3 

	
(s) 
	
“Outside Director” 
	
3 

	
(t) 
	
“Parent” 
	
4 

	
(u) 
	
“Participant” 
	
4 

	
(v) 
	
“Plan” 
	
4 

	
(w) 
	
“Purchase Price” 
	
4 

	
(x) 
	
“Restricted Share” 
	
4 

	
(y) 
	
“Restricted Share Agreement ” 
	
4 

	
(z) 
	
“SAR” 
	
4 

	
(aa) 
	
“SAR Agreement” 
	
4 

	
(bb) 
	
“Service” 
	
4 

	
(cc) 
	
“Share” 
	
4 

	
(dd) 
	
“Stock” 
	
4 

	
(ee) 
	
“Stock Option Agreement” 
	
4 

	
(ff) 
	
“Stock Purchase Agreement” 
	
4 

	
(gg) 
	
“Stock Unit” 
	
4 

	
(hh) 
	
“Stock Unit Agreement” 
	
4 

	
(ii) 
	
“Subsidiary” 
	
5 

	
(jj) 
	
“Total and Permanent Disability” 
	
5 

SECTION 3.  ADMINISTRATION.                                                     5 

	
(a) 
	
Committee Composition 
	
5 

	
(b) 
	
Committee for Non-Officer Grants 
	
5 

	
(c) 
	
Committee Procedures 
	
5 

	
(d) 
	
Committee Responsibilities 
	
5 

SECTION 4. ELIGIBILITY.                                                       7 

	
(a) 
	
General Rule. 
	
7 

	
(b) 
	
Outside Directors. 
	
7 

	
(c) 
	
Limitation On Grants 
	
8 

	
(d) 
	
Ten Percent Stockholders 
	
8 

	
(e) 
	
Attribution Rules 
	
8 

	
(f) 
	
Outstanding Stock 
	
8 

SECTION 5. STOCK SUBJECT TO PLAN.                            8 

	
(a) 
	
Basic Limitation 
	
8 

	
(b) 
	
Annual Increase in Shares 
	
8 

	
(c) 
	
Additional Shares 
	
9 

	
(d) 
	
Dividend Equivalents 
	
9 

SECTION 6. RESTRICTED SHARES.                                                                   9 

	
(a) 
	
Restricted Stock Agreement 
	
9 

	
(b) 
	
Payment for Awards 
	
9 

	
(c) 
	
Vesting 
	
9 

	
(d) 
	
Voting and Dividend Rights 
	
10 

SECTION 7. OTHER TERMS AND CONDITIONS OF AWARDS OR SALES.                       10 

	
(a) 
	
Duration of Offers and Nontransferability of Rights 
	
10 

	
(b) 
	
Purchase Price 
	
10 

	
(c) 
	
Withholding Taxes 
	
10 

	
(d) 
	
Restrictions on Transfer of Shares 
	
10 

	
(e) 
	
Sub Plan for France 
	
10 

SECTION 8. TERMS AND CONDITIONS OF OPTIONS.                                                                                                   10

	
(a) 
	
Stock Option Agreement 
	
10 

	
(b) 
	
Number of Shares 
	
11 

	
(c) 
	
Exercise Price 
	
11 

	
(d) 
	
Withholding Taxes 
	
11 

	
(e) 
	
Exercisability and Term 
	
11 

	
(f) 
	
Nontransferability 
	
11 

	
(g) 
	
Exercise of Options Upon Termination of Service 
	
11 

	
(h) 
	
Effect of Change in Control 
	
11 

	
(i) 
	
Leaves of Absence 
	
12 

	
(j) 
	
No Rights as a Stockholder 
	
12 

	
(k) 
	
Modification, Extension and Renewal of Options 
	
12 

	
(l) 
	
Restrictions on Transfer of Shares 
	
12 

	
(m) 
	
Buyout Provisions 
	
13 

SECTION 9. PAYMENT FOR SHARES.                                                                                                                                13 

	
(a) 
	
General Rule 
	
13 

	
(b) 
	
Surrender of Stock 
	
13 

	
(c) 
	
Services Rendered 
	
13 

	
(d) 
	
Cashless Exercise 
	
13 

	
(e) 
	
Exercise/Pledge 
	
13 

	
(f) 
	
Promissory Note 
	
13 

	
(g) 
	
Other Forms of Payment 
	
13 

SECTION 10. STOCK APPRECIATION RIGHTS.                                                                                                               14 

	
(a) 
	
SAR Agreement 
	
14 

	
(b) 
	
Number of Shares 
	
14 

	
(c) 
	
Exercise Price 
	
14 

	
(d) 
	
Exercisability and Term 
	
14 

	
(e) 
	
Effect of Change in Control 
	
14 

	
(f) 
	
Exercise of SARs 
	
14 

	
(g) 
	
Special Holding Period 
	
15 

	
(h) 
	
Special Exercise Window 
	
15 

	
(i) 
	
Modification or Assumption of SARs 
	
15 

SECTION 11. STOCK UNITS.                                                                                                                                                15 

	
(a) 
	
Stock Unit Agreement 
	
15 

	
(b) 
	
Payment for Awards 
	
15 

	
(c) 
	
Vesting Conditions 
	
15 

	
(d) 
	
Voting and Dividend Rights 
	
16 

	
(e) 
	
Form and Time of Settlement of Stock Units 
	
16 

	
(f) 
	
Death of Recipient 
	
16 

	
(g) 
	
Creditors’ Rights 
	
16 

SECTION 12. ADJUSTMENT OF SHARES.                                                                                                                          16 

	
(a) 
	
Adjustments 
	
16 

	
(b) 
	
Dissolution or Liquidation 
	
17 

	
(c) 
	
Reorganizations 
	
17 

	
(d) 
	
Reservation of Rights 
	
17 

SECTION 13. DEFERRAL OF AWARDS.                                                      18 

SECTION 14. AWARDS UNDER OTHER PLANS.                                                                                                               18 

SECTION 15. PAYMENT OF DIRECTOR’S FEES IN SECURITIES.                                                                                   18 

	
(a) 
	
Effective Date 
	
18 

	
(b) 
	
Elections to Receive NSOs, Restricted Shares or Stock Units 
	
19 

	
(c) 
	
Number and Terms of NSOs, Restricted Shares or Stock Units 
	
19 

SECTION 16. LEGAL AND REGULATORY REQUIREMENTS.                                                                                          19 

SECTION 17. WITHHOLDING TAXES.                                                                                                                                 19 

	
(a) 
	
General 
	
19 

	
(b) 
	
Share Withholding 
	
19 

SECTION 18. LIMITATION ON PARACHUTE PAYMENTS.                                                                                              19 

	
(a) 
	
Scope of Limitation 
	
19 

	
(b) 
	
Basic Rule 
	
19 

	
(c) 
	
Reduction of Payments 
	
20 

	
(d) 
	
Overpayments and Underpayments 
	
20 

	
(e) 
	
Related Corporations 
	
20 

SECTION 19. NO EMPLOYMENT RIGHTS.                                                                                                                         21 

SECTION 20. DURATION AND AMENDMENTS.                                                                                                               21 

	
(a) 
	
Term of the Plan 
	
21 

	
(b) 
	
Right to Amend or Terminate the Plan 
	
21 

	
(c) 
	
Effect of Amendment or Termination 
	
21 

SECTION 21. EXECUTION.                                                                                                                                                   21 

	
 

Ver. 1-1-04 60118910v5 

	 	 	 
	

	

WEBEX COMMUNICATIONS, INC. 

 

2000 STOCK INCENTIVE PLAN 

 

(Amended and Restated by the Board Effective January 1, 2004) 

 

SECTION 1.  ESTABLISHMENT AND PURPOSE.

    The Plan was adopted by the Board of Directors effective March 29, 2000. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of Restricted Shares, Stock Units, Options (which may constitute incentive stock options or nonstatutory stock options) or stock appreciation rights. 

 

SECTION 2.DEFINITIONS. 

    (a) “Affiliate ” shall mean any entity other than a Subsidiary, if the Company and/or one of more Subsidiaries own not less than fifty percent (50%) of such entity. 

 

    (b) “Award ” shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit under the Plan. 

 

    (c) “Board of Directors ” shall mean the Board of Directors of the Company, as constituted from time to time. 

 

    (d) “Change in Control ” shall mean the occurrence of either of the following events: 

 

        (i)    A change in the composition of the Board of Directors, as a result 

        of which fewer than two-thirds of the incum­bent directors are directors who either: 

 

            (A) Had been directors of the Company on the “look-back” date” 

            (as defined below) (the “original directors”); or

 

            (B) Were elected, or nominated for election, to the Board of Directors 

            with the affirmative votes of at least a majority of the aggregate of the 

            original directors who were still in office at the time of the election or nomination 

            and the directors whose election or nomination was previously so approved 

            (the “continuing directors”); or 

 

        (ii)    Any “person” (as such term is used in Sections 13(d) and 14(d) of the

         Exchange Act) who by the acquisition or aggregation of securities, is or becomes 

        the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or

         indirectly, of securities of the Company representing fifty percent (50%) or more of 

	 
	 	1	 
	

	 

 

        the combined voting power of the Company’s then out­standing securities ordinarily (and 

        apart from rights accruing under special circum­stances) having the right to vote at elections 

        of directors (the “Base Capital Stock”); except that any change in the relative beneficial 

        ownership of the Company’s securities by any person resulting solely from a reduction in 

        the aggregate number of outstanding shares of Base Capital Stock, and any decrease 

        thereafter in such person’s ownership of securities, shall be disregarded until such person

        increases in any manner, directly or indirectly, such person’s beneficial ownership of any 

        securities of the Company. For purposes of this Subsection (d)(ii), the term “person” shall 

        exclude a trustee or other fiduciary holding securities under an employee benefit plan maintained 

        by the Company or a Parent or Subsidiary; or

 

        (iii)    The consummation of a merger or consolidation of the Corporation with or into another 

        entity or any other corporate reorganization, if persons who were not stockholders of the 

        Company immediately prior to such merger, consolidation or other reorganization own immediately 

        after such merger, consolidation or other reorganization 50% or more of the voting power of the 

        outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect 

        parent corporation of such continuing or surviving entity; or 

 

        (iv)    The sale, transfer or other disposition of all or substantially all of the Company’s 

        assets.

 

    For purposes of subsection (d)(i) above, the term “look-back” date shall mean the later of (1) March 29, 2000 or (2) the date 24 months prior to the date of the event that may constitute a Change in Control. 

 

    A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction. 

 

   (e) “Code ” shall mean the Internal Revenue Code of 1986, as amended. 

 

   (f) “Committee ” shall mean the committee designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof. The Committee shall have membership composition which enables the Options or other rights granted under the Plan to qualify for exemption under Rule 16b-3 with respect to persons who are subject to Section 16 of the Exchange Act. 

 

    (g) “Company ” shall mean Webex Communications, Inc., a Delaware corporation. 

 

    (h) “Consultant ” shall mean a consultant or advisor who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor. Service as a Consultant shall be considered employment for all purposes of the Plan, except as provided in the second sentence of Section 4(a) and Section 4(b). 

 

	 
	 	2	 
	

	 

 

    (i) “Employee ” shall mean (i) any individual who is a common-law employee of the Company or of a Subsidiary; (ii) a member of the Board of Directors, including (without limitation) an Outside Director, or an affiliate of a member the Board of Directors; (iii) a member of the board of directors of a Subsidiary; or (iv) an independent contractor or advisor who performs services for the Company or a Subsidiary. Service as a member of the Board of Directors, a member of the board of directors of a Subsidiary or as an independent contractor or advisor shall be considered employment for all purposes of the Plan except the second sentence of Section 4(a) and Section 4(b). 

 

    (j) “Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended. 

 

    (k) “Exercise Price ” shall mean, in the case of an Option, the amount for which one Common Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Common Share in determining the amount payable upon exercise of such SAR. 

 

    (l) “Fair Market Value ” shall mean (i) the closing price of a Share on the principal exchange which the Shares are trading, on the date on which the Fair Market Value is deter­mined (if Fair Market Value is determined on a date which the principal exchange is closed, Fair Market Value shall be determined on the last immediately preceding trading day), or (ii) if the Shares are not traded on an exchange but are quoted on the Nasdaq National Market or a successor quotation system, the closing price on the date on which the Fair Market Value is determined, or (iii) if the Shares are not traded on an exchange or quoted on the Nasdaq National Market or a successor quotation system, the fair market value of a Share, as determined by the Committee in good faith. Such determination shall be conclusive and binding on all persons. 

 

    (m) “ISO ” shall mean an employee incentive stock option described in Code Section 422. 

 

    (n) “Lead Director ” shall mean an Outside Director who, pursuant to written guidelines referenced in the charter of the Board of Directors’ Nominating and Governance Committee, is designated by the Board of Directors as the “Lead Director”. 

 

    (o) “ Nonstatutory Option ” or “ NSO ” shall mean an employee stock option that is not an ISO. 

 

    (p) “Offeree ” shall mean an individual to whom the Committee has offered the right to acquire Shares under the Plan (other than upon exercise of an Option). 

 

    (q) “Option ” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares. 

 

    (r) “Optionee” shall mean an individual or estate who holds an Option or SAR. 

 

    (s) “Outside Director ” shall mean a member of the Board of Directors who is not a common-law employee of the Company or of a Subsidiary. Service as an Outside Director shall be considered employment for all purposes of the Plan, except as provided in the second sentence of Section 4(a). 

	 
	 	3	 
	

	 

 

    (t) “ Parent ” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be a parent commencing as of such date. 

 

    (u) “ Participant ” shall mean an individual or estate who holds an Award. 

 

    (v) “Plan ” shall mean this 2000 Stock Incentive Plan of WebEx Communications, Inc., as amended from time to time. 

 

    (w) “Purchase Price ” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee. 

 

    (x) “Restricted Share ” shall mean a Share awarded under the Plan. 

 

    (y) “Restricted Share Agreement ” shall mean the agreement between the Company and the recipient of a Restricted Share which contains the terms, conditions and restrictions pertaining to such Restricted Shares. 

 

    (z) “ SAR ” shall mean a stock appreciation right granted under the Plan. 

 

    (aa)  “ SAR Agreement ” shall mean the agreement between the Company and an Optionee which contains the terms, conditions and restrictions pertaining to his or her SAR. 

 

    (bb) “ Service ” shall mean service as an Employee. 

 

    (cc) “ Share ” shall mean one share of Stock, as adjusted in accordance with Section 12 (if applicable). 

 

    (dd) “ Stock ” shall mean the Common Stock of the Company. 

 

    (ee) “ Stock Option Agreement ” shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his Option. 

 

    (ff) “ Stock Purchase Agreement ” shall mean the agreement between the Company and an Offeree who acquires Shares under the Plan that contains the terms, conditions and restrictions pertaining to the acquisition of such Shares. 

 

    (gg) “ Stock Unit ” shall mean a bookkeeping entry representing the equivalent of one Share, as awarded under the Plan. 

 

    (hh) “ Stock Unit Agreement ” shall mean the agreement between the Company and the recipient of a Stock Unit which contains the terms, conditions and restrictions pertaining to such Stock Unit. 

 

	 
	 	4	 
	

	 

 

    (ii) “ Subsidiary ” shall mean any corporation, if the Company and/or one or more other Subsidiaries own not less than fifty percent (50%) of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date. 

 

    (jj) “ Total and Permanent Disability ” shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months. 

 

SECTION 3. ADMINISTRATION.

 

    (a) Committee Composition . The Plan shall be administered by the Committee. The Committee shall consist of two or more directors of the Company, who shall satisfy the requirements of Rule 16b-3 (or its successor) under the Exchange Act with respect to the grant of Awards to persons who are officers or directors of the Company under Section 16 of the Exchange Act or the Board itself.

 

    (b) Committee for Non-Officer Grants. The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Company under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such grants. Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence. 

 

    (c) Committee Procedures. The Board of Directors shall designate one of the members of the Committee as chair­man. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing by all Committee members, shall be valid acts of the Committee. 

 

    (d) Committee Responsibilities. Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions: 

 

        (i)    To interpret the Plan and to apply its provisions; 

 

        (ii)    To adopt, amend or rescind rules, procedures and forms relating to the Plan; 

 

        (iii)    To authorize any person to execute, on behalf of the Company, any instrument 

        required to carry out the purposes of the Plan;

 

        (iv)    To determine when Shares are to be awarded or offered for sale and when 

        Options are to be granted under the Plan; 

 

	 
	 	5	 
	

	 

 

 

        (v)    To select the Offerees and Optionees; 

 

        (vi)    To determine the number of Shares to be offered to each Offeree or to be

         made subject to each Option; 

 

        (vii)    To prescribe the terms and conditions of each award or sale of Shares, including 

        (without limita­tion) the Purchase Price, the vesting of the award (including accelerating the 

        vesting of awards) and to specify the provisions of the Stock Purchase Agreement relat­ing to 

        such award or sale; 

 

        (viii)    To prescribe the terms and conditions of each Option, including (without limitation) 

        the Exercise Price, the vesting or duration of the Option (including accelerating the vesting of the 

        Option), to determine whether such Option is to be classified as an ISO or as a Nonstatutory 

        Option, and to specify the provisions of the Stock Option Agreement relating to such Option; 

 

        (ix)    To amend any outstanding Stock Purchase Agreement or Stock Option Agreement, 

        subject to applicable legal restrictions and to the consent of the Offeree or Optionee who entered 

        into such agreement;

 

        (x)    To prescribe the consideration for the grant of each Option or other right under the Plan 

        and to determine the sufficiency of such consideration;

 

        (xi)    To determine the disposition of each Option or other right under the Plan in the event of 

        an Optionee’s or Offeree’s divorce or dissolution of marriage; 

 

        (xii)    To determine whether Options or other rights under the Plan will be granted in replacement 

        of other grants under an incentive or other compensation plan of an acquired business;

 

        (xiii)    To correct any defect, supply any omission, or reconcile any inconsistency in the Plan, 

        any Stock Option Agreement or any Stock Purchase Agreement; and 

 

        (xiv)    To take any other actions deemed necessary or advisable for the administration of the Plan. 

 

Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Options or other rights under the Plan to persons subject to Section 16 of the Exchange Act. All decisions, interpretations and other actions of the Committee shall be final and binding on all Offerees, all Optionees, and all persons deriving their rights from an Offeree or Optionee. No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan, any Option, or any right to acquire Shares under the Plan. 

 

	 
	 	6	 
	

	 

 

SECTION 4. ELIGIBILITY.

    

    (a) General Rule . Only Employees shall be eligible for the grant of Restricted Shares, Stock Units, NSOs or SARs. In addition, only individuals who are employed as common-law employees by the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In addition, an Employee who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding stock of the Company or any of its Parents or Subsidiaries shall not be eligible for the grant of an ISO unless the requirements set forth in Section 422(c)(6) of the Code are satisfied. 

 

    (b) Outside Directors. Any other provision of the Plan notwithstanding, the participation of Outside Directors in the Plan shall be subject to the following restrictions: 

 

        (i)   Outside Directors shall only be eligible for the grant of Restricted Shares, Stock 

        Units, Nonstatutory Options and SARs.

 

        (ii)    Each Outside Director shall automatically be granted a Nonstatutory Option to purchase 

        30,000 Shares (subject to adjustment under Section 12) as a result of their appointment as an Outside 

        Director. In addition, on the first business day following the conclusion of each regular annual meeting 

        of the Company’s stockholders occurring after 2003 and following the meeting at which such person’s 

        appointment to the Board was approved by the stockholders, each Outside Director who (i) will continue 

        serving as a member of the Board thereafter, (ii) who has been a member of the Board for at least six months 

        of the annual meeting, and (iii) who attended at least seventy-five percent (75%) of Board of Director meetings 

        occurring during the prior calendar year (exclusive of those occurring prior to Outside Director’s appointment 

        to the Board) shall receive a Nonstatutory Option to purchase 10,000 Shares (subject to adjustment under 

        Section 12). In addition, on the first business day following the conclusion of each regular annual meeting of

        the Company’s stockholders occurring after 2003 and following such person’s appointment as Lead Director, 

        a Lead Director (i) who will continue serving as the Lead Director thereafter, (ii) who has been a member of 

        the Board for at least six months as of the annual meeting, and (iii) who attended at least seventy-five percent 

        (75%) of Board of Director meetings occurring during the prior calendar year (exclusive of those occurring prior 

        to Outside Director’s appointment to the Board) shall receive a Nonstatutory Option to purchase 5,000 Shares 

        (subject to adjustment under Section 12). Vesting of such grants will terminate upon conclusion of service for the 

        respective positions.

 

        (iii)   The Exercise Price of all Nonstatutory Options granted to an Outside Director under this Section 4(b) 

        shall be equal to one hundred percent (100%) of the Fair Market Value of a Share on the date of grant, payable 

        in one of the forms described in Section 9(a), (b) and (d). 

 

        (iv)    Each Option granted under Section 4(b)(ii) shall become exercisable in 48 equal monthly installments 

        on each of the first 48 monthly anniversaries of the date of the grant. Notwithstanding the foregoing, each Outside

 

	 
	 	7	 
	

	 

 

        Director’s initial Option grant and any additional Option grants shall become exercisable in full in the event that a

        Change in Control occurs with respect to the Company. 

        (v)    All Nonstatutory Options granted to an Outside Director under this Section 4(b) shall terminate on the 

        earliest of (A) the tenth (10 th ) anniversary of the date of grant of such Options or (B) the date twelve (12) months 

        after the termination of such Outside Director’s service for any reason. 

    (b) Limitation On Grants. No Employee shall be granted Options to purchase more than one million (1,000,000) Shares in any fiscal year of the Company (subject to adjustment in accordance with Section 12). 

 

    (c) Ten Percent Stockholders . An Employee who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding stock of the Company or any of its Subsidiaries shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Code Section 422(c)(6). 

 

    (d) Attribution Rules . For purposes of Subsection (d) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its shareholders, partners or beneficiaries. 

 

    (e) Outstanding Stock . For purposes of Subsection 4(d) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person. 

 

SECTION 5. STOCK SUBJECT TO PLAN.

 

    (a) Basic Limitation . Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares. The maximum aggregate number of Options, SARs, Stock Units and Restricted Shares awarded under the Plan shall not exceed nine million (9,000,000) Shares, plus the additional Shares described in Sections (b) and (c). The limitation of this Section 5(a) shall be subject to adjustment pursuant to Section 12.

 

    (b) Annual Increase in Shares. As of January 1 of each year, commencing with the year 2001, the aggregate number of Options, SARs, Stock Units and Restricted Shares that may be awarded under the Plan shall automatically increase by a number equal to the lesser of (i) five million five hundred thousand (5,500,000) shares, (ii) eight percent (8%) of the outstanding shares of Stock of the Company on such date or (iii) a lesser amount determined by the Board. The aggregate number of Shares that may be issued under the Plan shall at all times be subject to adjustment pursuant to Section 12. The number of Shares that are subject to Options or other rights outstanding at any time under the Plan shall not exceed the number of Shares that then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. 

 

	 
	 	8	 
	

	 

 

    (c) Additional Shares. If Restricted Shares or Shares issued upon the exercise of Options are forfeited, then such Shares shall again become available for Awards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any other reason before being exercised, then the corresponding Shares shall again become available for Awards under the Plan. If Stock Units are settled, then only the number of Shares (if any) actually issued in settlement of such Stock Units shall reduce the number available under Section 5(a) and the balance shall again become available for Awards under the Plan. If SARs are exercised, then only the number of Shares (if any) actually issued in settlement of such SARs shall reduce the number available in Section 5(a) and the balance shall again become available for Awards under the Plan. The foregoing notwithstanding, the aggregate number of Shares that may be issued under the Plan upon the exercise of ISOs shall not be increased when Restricted Shares or other Shares are forfeited. 

 

    (d) Dividend Equivalents. Any dividend equivalents paid or credited under the Plan shall not be applied against the number of Restricted Shares, Stock Units, Options or SARs available for Awards, whether or not such dividend equivalents are converted into Stock Units. 

 

SECTION 6.RESTRICTED SHARES 

 

    (a) Restricted Stock Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical. 

 

    (b) Payment for Awards . Subject to the following sentence, Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services. To the extent that an Award consists of newly issued Restricted Shares, the Award recipient shall furnish consideration with a value not less than the par value of such Restricted Shares in the form of cash, cash equivalents, or past services rendered to the Company (or a Parent or Subsidiary), as the Committee may determine. 

 

    (c) Vesting . Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company for a specified period of one (1) or more years equal or exceed a target determined in advance by the Committee. Such performance shall be determined by the Company’s independent auditors. Such target shall be based on one or more of the criteria set forth in Appendix A . The Committee shall determine such target not later than the 90 th day of such period. In no event shall the number of Restricted Shares which are subject to performance based vesting conditions exceed five hundred thousand (500,000) Shares subject to adjustment in accordance with Section 12. A Restricted Stock Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Restricted Shares of thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company.

 

	 
	 	9	 
	

	 

 

    (d) Voting and Dividend Rights. The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders. A Restricted Stock Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid. 

 

SECTION 7.OTHER TERMS AND CONDITIONS OF AWARDS OR SALES. 

 

    (a) Duration of Offers and Nontransferability of Rights. Any right to acquire Shares under the Plan (other than an Option) shall automatically expire if not exercised by the Offeree within thirty (30) days after the grant of such right was communicated to him by the Committee. Such right shall not be transferable and shall be exercisable only by the Offeree to whom such right was granted. 

 

    (b) Purchase Price . The Purchase Price shall be determined by the Committee at its sole discretion. The Purchase Price shall be payable in one of the forms described in Sections 9(a), (b) or (c). 

 

    (c) Withholding Taxes. As a condition to the purchase of Shares, the Offeree shall make such arrangements as the Committee may require for the satisfaction of any federal, state or local withholding tax obligations that may arise in connection with such purchase. 

 

    (d) Restrictions on Transfer of Shares. Any Shares awarded or sold under the Plan shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Purchase Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares. 

 

    (e) Sub Plan for France. Any Options granted to Employees that are subject to taxation in France shall be subject to the terms and conditions of the Sub Plan for France, which is an Addendum to the Plan. The additional terms and conditions of the Sub Plan for France are to be read in conjunction with the rules of the Plan. Conflicts of interpretation between the Plan and Sub Plan for France shall be resolved in favor of the Sub Plan for France only with respect to Options granted to Employees that are subject to taxation in France. 

 

SECTION 8.  TERMS AND CONDITIONS OF OPTIONS.

 

    (a) Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and condi­tions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. Options may be granted in consideration of a reduction in the Optionee’s other compensation. A Stock Option Agreement may provide that a new Option will be granted automatically to the Optionee when he or she exercises a prior Option and pays the Exercise Price in a form described in Section 9. 

 

	 
	 	10	 
	

	 

 

    (b) Number of Shares. Each Stock Option Agree­ment shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 12. Options granted to an Optionee in a single fiscal year of the Company shall not cover more than one million (1,000,000) Shares. 

 

    (c) Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant, except as otherwise provided in Section 4(d). Subject to the foregoing in this Section 8(c), the Exercise Price under any Option shall be deter­mined by the Committee at its sole discretion. The Exercise Price shall be payable in one of the forms described in Sections 9. 

 

    (d) Withholding Taxes. As a condition to the exercise of an Option, the Optionee shall make such arrange­ments as the Committee may require for the satisfaction of any federal, state or local withholding tax obligations that may arise in connection with such exercise. The Optionee shall also make such arrangements as the Committee may require for the satisfaction of any federal, state or local withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option. 

 

    (e) Exercisability and Term. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Agree­ment shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed ten (10) years from the date of grant (five (5) years for Employees described in Section 4(d)). A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited. Subject to the foregoing in this Section 8(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire. 

 

    (f) Nontransferability. During an Optionee’s lifetime, his Option(s) shall be exercisable only by him and shall not be transferable. In the event of an Optionee’s death, his Option(s) shall not be transferable other than by will or by the laws of descent and distribution. 

 

    (g) Exercise of Options Upon Termination of Service. Each Stock Option Agreement shall set forth the extent to which the Optionee shall have the right to exercise the Option following termination of the Optionee’s Service with the Company and its Subsidiaries, and the right to exercise the Option of any executors or adminis­trators of the Optionee’s estate or any person who has acquired such Option(s) directly from the Optionee by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service. 

 

    (h) Effect of Change in Control . The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option in the event that a Change in 

	 
	 	11	 
	

	 

 

Control occurs with respect to the Company, subject to the following limitations: 

 

        (i)    In the case of an ISO, the acceleration of exercisability shall not occur without the 

        Optionee’s written consent.

 

        (ii)    If the Company and the other party to the transaction constituting a Change in Control 

        agree that such transaction is to be treated as a “pooling of interests” for financial reporting purposes, 

        and if such transaction in fact is so treated, then the acceleration of exercisability shall not occur to the 

        extent that the Company’s independent accountants and such other party’s independent accountants 

        separately determine in good faith that such acceleration would preclude the use of “pooling of interests” 

        accounting. 

 

    (i) Leaves of Absence. An Employee’s Service shall cease when such Employee ceases to be actively employed by, or a consultant or adviser to, the Company (or any subsidiary) as determined in the sole discretion of the Board of Directors. For purposes of Options, Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if the terms of the leave provide for continued service crediting, or when continued service crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s Service will be treated as terminating ninety (90) days after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. The Company determines which leaves count toward Service, and when Service terminates for all purposes under the Plan. 

 

    (j) No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Shares covered by his Option until the date of the issuance of a stock certificate for such Shares. No adjustments shall be made, except as provided in Section 12. 

 

    (k) Modification, Extension and Renewal of Options. Within the limitations of the Plan, the Committee may modify, extend or renew outstanding options or may accept the can­cellation of outstanding options (to the extent not previ­ously exercised), whether or not granted hereunder, in return for the grant of new Options for the same or a different number of Shares and at the same or a different exercise price. The foregoing notwithstanding, no modifi­cation of an Option shall, without the consent of the Optionee, impair his rights or increase his obligations under such Option. 

 

	 
	 	12	 
	

	 

 

    (l) Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may deter­mine. Such restrictions shall be set forth in the appli­cable Stock Option Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares. 

 

    (m) Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish. 

 

SECTION 9. PAYMENT FOR SHARES.

 

    (a) General Rule. The entire Exercise Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Subsections 9(b) through 9(g) below. 

 

    (b) Surrender of Stock. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Optionee or his representative for more than twelve (12) months. Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes. 

 

    (c) Services Rendered. At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary prior to the award. If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the award) of the value of the services rendered by the Offeree and the sufficiency of the consideration to meet the requirements of Section 6(c). 

 

    (d) Cashless Exercise. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price. 

 

    (e) Exercise/Pledge. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price. 

 

    (f) Promissory Note. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Company) a full-recourse promissory note. However, the par value of the Common Shares being purchased under the Plan, if newly issued, shall be paid in cash or cash equivalents. 

 

    (g) Other Forms of Payment. To the extent that a Stock Option Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules. 

 

	 
	 	13	 
	

	 

 

SECTION 10. STOCK APPRECIATION RIGHTS. 

 

    (a) SAR Agreement. Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Optionee’s other compensation. 

 

    (b) Number of Shares. Each SAR Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 12. SARs granted to any Optionee in a single calendar year shall in no event pertain to more than one million (1,000,000) Shares, except that SARs granted to a new Employee in the fiscal year of the Company in which his or her service as an Employee first commences shall not pertain to more than five hundred thousand (500,000) Shares. The limitations set forth in the preceding sentence shall be subject to adjustment in accordance with Section 12. 

 

    (c) Exercise Price. Each SAR Agreement shall specify the Exercise Price. A SAR Agreement may specify an Exercise Price that varies in accordance with a predetermined formula while the SAR is outstanding. 

 

    (d) Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The SAR Agreement shall also specify the term of the SAR. A SAR Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service. SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control. 

 

    (e) Effect of Change in Control . The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company, subject to the following sentence. If the Company and the other party to the transaction constituting a Change in Control agree that such transaction is to be treated as a “pooling of interests” for financial reporting purposes, and if such transaction in fact is so treated, then the acceleration of exercisability shall not occur to the extent that the Company’s independent accountants and such other party’s independent accountants separately determine in good faith that such acceleration would preclude the use of “pooling of interests” accounting. 

 

    (f) Exercise of SARs. Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the

	 
	 	14	 
	

	 

 

Exercise Price. If, on the date when a SAR expires, the Exercise Price under such SAR is less than the Fair Market Value on such date but any portion of such SAR has not been exercised or surrendered, then such SAR shall automatically be deemed to be exercised as of such date with respect to such portion. 

 

    (g) Special Holding Period. To the extent required by Section 16 of the Exchange Act or any rule thereunder, an SAR shall not be exercised for cash unless both it and the related Option have been outstanding for more than six months. 

 

    (h) Special Exercise Window. To the extent required by Section 16 of the Exchange Act or any rule thereunder, an SAR may only be exercised for cash during a period which (a) begins on the third business day following a date when the Company’s quarterly summary statement of sales and earnings is released to the public and (b) ends at the close of trading on the last business day prior to the 16 th day of the third month of the fiscal quarter in which the earnings are released. This Section 10(h) shall not apply to if the exercise occurs automatically on the date when the related Option expires, and the Committee may determine that it shall not apply to limited SARs that are exercisable only in the event of a Change in Control. 

 

    (i) Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the Optionee, may alter or impair his or her rights or obligations under such SAR. 

 

SECTION 11. STOCK UNITS. 

 

    (a) Stock Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement between the recipient and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit Agreements entered into under the Plan need not be identical. Stock Units may be granted in consideration of a reduction in the recipient’s other compensation. 

 

    (b) Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients. 

 

    (c) Vesting Conditions. Each Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement. A Stock Unit Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that a Change in Control occurs with respect to the Company, except as provided in the next following sentence. If the Company and the other party to the transaction constituting a Change in Control agree that such transaction is to be treated as a “pooling of interests” for financial reporting purposes, and if such transaction in fact is so treated, then the acceleration of vesting shall not occur to the extent that the

	 
	 	15	 
	

	 

 

Company’s independent accountants and such other party’s independent accountants separately determine in good faith that such acceleration would preclude the use of “pooling of interests” accounting.

 

    (d) Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions as the Stock Units to which they attach. 

 

    (e) Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. Vested Stock Units may be settled in a lump sum or in installments. The distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 12. 

 

    (f) Death of Recipient. Any Stock Units Award that becomes payable after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries. Each recipient of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient’s death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units Award that becomes payable after the recipient’s death shall be distributed to the recipient’s estate. 

 

    (g) Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement.

 

SECTION 12.ADJUSTMENT OF SHARES. 

 

    (a) Adjustments. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of: 

 

	 
	 	16	 
	

	 

 

        (i)    The number of Options, SARs, Restricted Shares and Stock Units available for future 

        Awards under Section 5;

 

        (ii)    The limitations set forth in Sections 4(c), 8(b) and 10(b);

 

        (iii)    The number of NSOs to be granted to Outside Directors under Section 4(b);

 

        (iv)    The number of Shares covered by each outstanding Option and SAR; 

 

        (v)    The Exercise Price under each outstanding Option and SAR; or

 

        (vi)    The number of Stock Units included in any prior Award which has not yet been 

        settled. 

 

Except as provided in this Section 12, a Participant shall have no rights by reason of any issue by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class. 

 

    (b) Dissolution or Liquidation. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company.

 

    (c) Reorganizations. In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Such agreement shall provide for: 

 

        (i)    The continuation of the outstanding Awards by the Company, if the Company is 

        a surviving corporation;

 

        (ii)    The assumption of the outstanding Awards by the surviving corporation or its parent 

        or subsidiary;

 

        (iii)    The substitution by the surviving corporation or its parent or subsidiary of its own 

        awards for the outstanding Awards;

 

        (iv)    Full exercisability or vesting and accelerated expiration of the outstanding Awards; or 

 

 

        (v)    Settlement of the full value of the outstanding Awards in cash or cash equivalents 

        followed by cancellation of such Awards. 

 

    (d) Reservation of Rights. Except as provided in this Section 12, an Optionee or Offeree shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares of stock of any class. Any issue by the Company of shares of stock of any class, or securities convertible into 

	 
	 	17	 
	

	 

 

shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. 

 

SECTION 13.DEFERRAL OF AWARDS. 

 

    The Committee (in its sole discretion) may permit or require a Participant to: 

 

        (i)    Have cash that otherwise would be paid to such Participant as a result of the exer­cise 

        of a SAR or the settlement of Stock Units credited to a deferred compensation account established 

        for such Participant by the Committee as an entry on the Company’s books; 

 

        (ii)    Have Shares that otherwise would be delivered to such Participant as a result of the exercise 

        of an Option or SAR converted into an equal number of Stock Units; or 

 

        (iii)    Have Shares that otherwise would be delivered to such Participant as a result of the exercise 

        of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred 

        compensation account established for such Participant by the Committee as an entry on the Company’s 

        books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of 

        the date when they otherwise would have been delivered to such Participant. 

 

A deferred compensation account established under this Section 13 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company. Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the deferral or conversion of Awards is permitted or required, the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensa­tion accounts established under this Section 13. 

 

SECTION 14. AWARDS UNDER OTHER PLANS. 

 

    The Company may grant awards under other plans or programs. Such awards may be settled in the form of Shares issued under this Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5. 

 

SECTION 15. PAYMENT OF DIRECTOR’S FEES IN SECURITIES. 

 

    (a) Effective Date. No provision of this Section 15 shall be effective unless and until the Board has determined to implement such provision. 

 

	 
	 	18	 
	

	 

 

    (b) Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Such NSOs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Section 15 shall be filed with the Company on the prescribed form. 

 

    (c) Number and Terms of NSOs, Restricted Shares or Stock Units. The number of NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The terms of such NSOs, Restricted Shares or Stock Units shall also be determined by the Board. 

 

SECTION 16.  LEGAL AND REGULATORY REQUIREMENTS.

 

    Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable. 

 

SECTION 17. WITHHOLDING TAXES. 

 

    (a) General. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.

 

    (b) Share Withholding. The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. 

 

SECTION 18. LIMITATION ON PARACHUTE PAYMENTS. 

 

    (a) Scope of Limitation. This Section 18 shall apply to an Award unless the Committee, at the time of making an Award under the Plan or at any time thereafter, specifies in writing that such Award shall not be subject to this Section 18. If this Section 18 applies to an Award, it shall supersede any contrary provision of the Plan or of any Award granted under the Plan. 

 

    (b) Basic Rule. In the event that the independent auditors most recently selected by the Board (the “Auditors”) determine that any payment or transfer by the Company under the Plan to or for the benefit of a Participant (a “Payment”) would be nondeductible by the Company for federal income tax purposes because of the provisions concerning “excess parachute payments” in Section

	 
	 	19	 
	

	 

 

280G of the Code, then the aggregate present value of all Payments shall be reduced (but not below zero) to the Reduced Amount. For purposes of this Section 18, the “Reduced Amount” shall be the amount, expressed as a present value, which maximizes the aggregate present value of the Payments without causing any Payment to be nondeductible by the Company because of Section 280G of the Code. 

 

    (c) Reduction of Payments. If the Auditors determine that any Payment would be nondeductible by the Company because of Section 280G of the Code, then the Company shall promptly give the Participant notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and the Participant may then elect, in his or her sole discretion, which and how much of the Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall advise the Company in writing of his or her election within ten (10) days of receipt of notice. If no such election is made by the Participant within such ten (10) day period, then the Company may elect which and how much of the Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall notify the Participant promptly of such election. For purposes of this Section 18, present value shall be determined in accordance with Section 280G(d)(4) of the Code. All determinations made by the Auditors under this Section 18 shall be binding upon the Company and the Participant and shall be made within sixty (60) days of the date when a Payment becomes payable or transferable. As promptly as practicable following such determination and the elections hereunder, the Company shall pay or transfer to or for the benefit of the Participant such amounts as are then due to him or her under the Plan and shall promptly pay or transfer to or for the benefit of the Participant in the future such amounts as become due to him or her under the Plan. 

 

    (d) Overpayments and Underpayments. As a result of uncertainty in the application of Section 280G of the Code at the time of an initial determination by the Auditors hereunder, it is possible that Payments will have been made by the Company that should not have been made (an “Overpayment”) or that additional Payments that will not have been made by the Company could have been made (an “Underpayment”), consistent in each case with the calculation of the Reduced Amount hereunder. In the event that the Auditors, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Participant that the Auditors believe has a high probability of success, determine that an Overpayment has been made, such Overpayment shall be treated for all purposes as a loan to the Participant which he or she shall repay to the Company, together with interest at the applicable federal rate provided in Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Participant to the Company if and to the extent that such payment would not reduce the amount subject to taxation under Section 4999 of the Code. In the event that the Auditors determine that an Underpayment has occurred, such Underpayment shall promptly be paid or transferred by the Company to or for the benefit of the Participant, together with interest at the applicable federal rate provided in Section 7872(f)(2) of the Code. 

 

    (e) Related Corporations. For purposes of this Section 18, the term “Company” shall include affiliated corporations to the extent determined by the Auditors in accordance with Section 280G(d)(5) of the Code. 

 

	 
	 	20	 
	

	 

 

SECTION 19. NO EMPLOYMENT RIGHTS. 

 

    No provision of the Plan, nor any right or Option granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee. The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice. 

 

SECTION 20.DURATION AND AMENDMENTS. 

 

    (a) Term of the Plan. The amended and restated Plan, as set forth herein, shall terminate automatically ten years after its adoption and may be terminated on any earlier date pursuant to Subsection (b) below.

 

    (b) Right to Amend or Terminate the Plan. The Board of Directors may amend the Plan at any time and from time to time. Rights and obligations under any Option granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the person to whom the Option was granted. An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules. 

 

    (c) Effect of Amendment or Termination. No Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Option previously granted under the Plan. 

 

SECTION 21. EXECUTION.

 

    To record the adoption of the amended and restated Plan by the Board of Directors effective as of January 1, 2004, the Company has caused its authorized officer to execute the same. 

 

                                                  WEBEX COMMUNICATIONS, INC. 

                                                    By ____________________________

                                                           Subrah S. Iyar 

                                                           Chief Executive Officer 

 

	
 

60118910v5 

	 	21	 
	

	 

ADDENDUM 

WEBEX COMMUNICATIONS, INC. 

 

2002 STOCK INCENTIVE PLAN

 

SUB FOR FRANCE 

 

 

Additional Terms and Conditions for Employees Subject to Taxation in France 

The additional terms and conditions detailed below are to be read in conjunction with the rules of the Plan. The terms used herein are defined in the Stock Option Agreement for employees subject to the laws in France. Any terms not specifically defined in the Stock Option Agreement for employees subject to the laws in France have the same meaning as defined in the Plan. 

 

1.     Notwithstanding any other provision of the Plan, options may only be granted to individuals (hereafter the "beneficiaries" 

              or "Participants"): 

        -  having an employment contract with the French subsidiary or a Group company as defined below, upon the date of 

                   grant; 

        - and/or to the non-employed directors having a management function [the “président-directeur général”, the 

        “directeur-général”, the “members of the “directoire”] of the French subsidiary or a Group company as defined below, 

        upon the date of grant. 

Options may not be issued under the French Sub Plan to employees or executives owning upon the date of grant more than ten percent (10%) of the Company's capital shares. 

        -  A Group company is a company having the following capital links with the granting Company: 

        

        - At least 10% of the French subsidiary capital is held, directly or indirectly, by the granting Company, or 

         

            - the French subsidiary directly or indirectly holds at least 10% of the granting Company's capital, or 

 

            -  at least 50% of the French subsidiary 's capital is held, directly or indirectly by a company which holds, 

               directly or indirectly, at least 50% of the granting Company's capital. 

	 
	 	22	 
	

	 

 

2.    Notwithstanding any other provision of the Plan, the Board can set the exercise price of any options granted under this sub-

       plan as the greater of fair market value on the date of grant or 80% of the average stock exchange price during the twenty 

       days preceding the related grant or 80% of the average repurchase price of its own shares held by the Company to be 

             allocated to beneficiaries. 

3.    Notwithstanding any other provision of the Plan, options granted within a twenty (20) day period following a distribution of 

       dividends or a capital increase of the Company shall not be deemed to have been granted under this Sub-Plan. 

4.         Notwithstanding any other provision of the Plan, options granted within the following time periods shall be deemed not to 

            have been granted under this Sub-Plan: 

        -  during the period of time between the ten stock exchange sessions preceding and following the 

          date consolidated accounts are made public, or if no consolidated accounts, the date of publication 

                      of annual accounts, and 

 

        -  during the period of time between the date the Company becomes aware of information which would 

           have a significant impact on the Company’s shares and the date after the end of ten stock exchange

          sessions following the date upon which the information is made public (pursuant to Article 70 of the bill 

          modifying the last paragraph of Article 208-1 of law n°66-537 of 24 July 1966). 

 

5.    Notwithstanding any other provision of the Plan, unless otherwise agreed by the Board or the applicable Committee, 

       options will be exercisable under the vesting schedule set out in the Stock Option agreement for employees subject to the 

       laws in France. Notwithstanding any other provision of the Plan, the Board is authorized to unilaterally accelerate, reduce, 

       lift or cancel vesting of any option granted under this Sub Plan, as may be necessary or desirable to comply with the French 

       applicable social or tax laws. Furthermore, the Board or the applicable Committee has the discretion to impose a 

             restriction of up to three years on the sale of shares issued as a result of an option exercise. 

6.    Notwithstanding any other provision of the Plan, the exercise price shall remain unchanged. The exercise price can only be 

       adjusted upon the occurrence of the events specified under July 24, 1966 corporate law (section 208-5) in accordance with 

             French law. 

7.    The total number of options granted and remaining unexercised (outstanding options) will never cover a number of shares 

       exceeding one-third of the share capital of Webex Corporation, Inc. 

	
 

60118910v5 

	 	23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}]]