-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Us2K18Fd3ttF/f78Ro/IffiL/9PMUKBPUMmmA64jlGNOrSYY5IBRFfCgAALlMaTL PZvtZDAFIFlHy6pbMZDD1w== 0000950133-03-002939.txt : 20030814 0000950133-03-002939.hdr.sgml : 20030814 20030814171220 ACCESSION NUMBER: 0000950133-03-002939 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESPERION THERAPEUTICS INC/MI CENTRAL INDEX KEY: 0001066745 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 383419139 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-16033 FILM NUMBER: 03848750 BUSINESS ADDRESS: STREET 1: 3621 S STATE STREET 695KMS PLACE STREET 2: 734-332-0506 CITY: ANN ARBOR STATE: MI ZIP: 48108 MAIL ADDRESS: STREET 1: 3621 STATE STREET STREET 2: 695 KMS PLACE CITY: ANN ARBOR STATE: MI ZIP: 48108 10-Q 1 k79135e10vq.htm FORM 10-Q e10vq
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2003
 
    OR
 
[   ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from      to      

Commission file number: 001-16033

ESPERION THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)

     
Delaware
(State of incorporation)
  38-3419139
(IRS Employer Identification No.)

3621 S. State Street,
695 KMS Place
Ann Arbor, MI 48108
(734) 332-0506

(Address of principal executive offices, including zip
code, and telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes                       [   ] No

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

[X] Yes                       [   ] No

     The number of outstanding shares of the registrant’s common stock, as of August 8, 2003, was 33,577,270.

 


PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
INDEX TO EXHIBITS
EX-10.55 Advisory Services Agreement
EX-10.56 Employment Agreement - Adeoye Y. Olukotun
EX-10.57 Amend. No. 1 to 2000 Equity Compensation
EX-10.58 Office Lease - State 94 Properties, LLC
EX-31.1 Certification Pursuant to Rules 13a-14(a)
EX-31.2 Certification Pursuant to Rules 13a-14(a)
EX-32.1 Certification Pursuant to 18 USC Sec. 1350
EX-32.2 Certification Pursuant to 18 USC Sec. 1350


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ESPERION THERAPEUTICS, INC.

FORM 10-Q
TABLE OF CONTENTS

             
        Page
       
PART I — FINANCIAL INFORMATION
       
 
Item 1. Financial Statements
       
   
Condensed Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002
    3  
   
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2003 and 2002, and the period from inception to June 30, 2003
    4  
   
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002, and the period from inception to June 30, 2003
    5  
   
Notes to Condensed Consolidated Financial Statements
    6  
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
    10  
 
Item 3. Quantitative and Qualitative Disclosures about Market Risk
    16  
 
Item 4. Controls and Procedures
    16  
PART II — OTHER INFORMATION
       
 
Item 1. Legal Proceedings
    17  
 
Item 2. Changes in Securities and Use of Proceeds
    17  
 
Item 3. Defaults Upon Senior Securities
    17  
 
Item 4. Submission of Matters to a Vote of Security Holders
    18  
 
Item 5. Other Information
    18  
 
Item 6. Exhibits and Reports on Form 8-K
    19  
SIGNATURES
    20  
INDEX TO EXHIBITS
    21  

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
(A Company in the Development Stage)
CONDENSED CONSOLIDATED BALANCE SHEETS

                     
        June 30,   December 31,
in thousands   2003   2002

 
 
        (Unaudited)        
Assets:
               
Current assets:
               
 
Cash and cash equivalents
  $ 28,206     $ 40,499  
 
Short-term investments
    4,019       4,354  
 
Prepaid expenses and other
    378       410  
 
 
   
     
 
   
Total current assets
    32,603       45,263  
 
 
   
     
 
Property and equipment, net
    2,432       3,001  
Goodwill
    3,108       3,108  
Deposits and other assets
    10       35  
 
 
   
     
 
Total assets
  $ 38,153     $ 51,407  
 
 
   
     
 
Liabilities and Stockholders’ Equity:
               
Current liabilities:
               
 
Current portion of long-term debt
  $ 1,102     $ 1,061  
 
Accounts payable
    1,389       1,687  
 
Accrued liabilities
    4,041       2,185  
 
 
   
     
 
   
Total current liabilities
    6,532       4,933  
 
 
   
     
 
Long-term debt, less current portion
    7,948       7,731  
Commitments and contingencies (Note 5)
               
Stockholders’ equity:
               
 
Preferred stock
           
 
Common stock
    29       29  
 
Additional paid-in capital
    133,890       133,411  
 
Notes receivable
          (3 )
 
Accumulated deficit during the development stage
    (109,887 )     (94,046 )
 
Deferred stock compensation
    (295 )     (589 )
 
Accumulated other comprehensive loss
    (64 )     (59 )
 
 
   
     
 
   
Total stockholders’ equity
    23,673       38,743  
 
 
   
     
 
Total liabilities and stockholders’ equity
  $ 38,153     $ 51,407  
 
 
   
     
 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
(A Company in the Development Stage)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

                                             
        Three Months Ended   Six Months Ended        
        June 30,   June 30,   Inception to
       
 
  June 30,
in thousands, except share and per share data   2003   2002   2003   2002   2003

 
 
 
 
 
Operating expenses:
                                       
 
Research and development
  $ 6,272     $ 5,878     $ 11,732     $ 11,583     $ 88,180  
 
General and administrative
    1,561       1,428       3,190       3,073       20,306  
 
Goodwill amortization
                            1,089  
 
Purchased in-process research and development
                            4,000  
 
 
   
     
     
     
     
 
   
Total operating expenses
    7,833       7,306       14,922       14,656       113,575  
 
 
   
     
     
     
     
 
Loss from operations
    (7,833 )     (7,306 )     (14,922 )     (14,656 )     (113,575 )
 
 
   
     
     
     
     
 
Other income (expense):
                                       
 
Interest income
    100       284       249       604       7,446  
 
Interest expense
    (318 )     (278 )     (628 )     (530 )     (3,013 )
 
Other, net
    (384 )     (524 )     (540 )     (545 )     (745 )
 
 
   
     
     
     
     
 
   
Total other income (expense)
    (602 )     (518 )     (919 )     (471 )     3,688  
 
 
   
     
     
     
     
 
Loss before income taxes
    (8,435 )     (7,824 )     (15,841 )     (15,127 )     (109,887 )
Provision for income taxes
                             
 
 
   
     
     
     
     
 
Net loss
    (8,435 )     (7,824 )     (15,841 )     (15,127 )     (109,887 )
Beneficial conversion feature on preferred stock
                            (22,870 )
 
 
   
     
     
     
     
 
Net loss attributable to common stockholders
    ($8,435 )     ($7,824 )     ($15,841 )     ($15,127 )     ($132,757 )
 
 
   
     
     
     
     
 
Basic and diluted net loss per share
    ($0.29 )     ($0.27 )     ($0.54 )     ($0.52 )        
 
   
     
     
     
         
Shares used in computing basic and diluted net loss per share
    29,456,532       29,237,360       29,425,766       29,217,352          
 
   
     
     
     
         

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
(A Company in the Development Stage)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

                                 
            Six Months Ended        
            June 30,   Inception to
           
  June 30,
in thousands   2003   2002   2003

 
 
 
Cash flows from operating activities:
                       
 
Net loss
  $ (15,841 )   $ (15,127 )   $ (109,887 )
 
Adjustments to reconcile net loss to net cash used in operating activities:
                       
   
Purchased in-process research and development
                4,000  
   
Depreciation and amortization
    636       731       5,449  
   
Stock-based compensation expense
    294       389       3,944  
   
Decrease in notes receivable
    3       6       126  
   
Loss on sale of property and equipment
    1       101       192  
   
Non-cash interest expense included in long-term debt
    240       177       1,027  
   
Changes in assets and liabilities:
                       
     
Prepaid expenses and other
    34       862       (1,204 )
     
Other assets
    25       (17 )     545  
     
Accounts payable
    (299 )     (647 )     1,657  
     
Accrued liabilities
    1,844       (739 )     4,026  
 
 
   
     
     
 
       
Net cash used in operating activities
    (13,063 )     (14,264 )     (90,125 )
 
 
   
     
     
 
Cash flows from investing activities:
                       
 
Purchases of property and equipment
    (65 )     (698 )     (7,011 )
 
Deposits on equipment
                (557 )
 
Acquisition of Talaria Therapeutics, Inc.
                (233 )
 
Proceeds from sale of property and equipment
          2       32  
 
Purchases of short-term investments
    (4,773 )     (34,252 )     (41,988 )
 
Maturities of short-term investments
    5,108       23,168       37,969  
 
 
   
     
     
 
       
Net cash provided by (used in) investing activities
    270       (11,780 )     (11,788 )
 
 
   
     
     
 
Cash flows from financing activities:
                       
 
Proceeds from issuance of convertible preferred stock
                42,200  
 
Proceeds from issuance of common stock
    479       152       79,590  
 
Proceeds from long-term debt
          1,834       10,171  
 
Repayments of long-term debt
    (521 )     (653 )     (3,318 )
 
 
   
     
     
 
       
Net cash provided by (used in) financing activities
    (42 )     1,333       128,643  
 
 
   
     
     
 
Effect of exchange rate changes on cash
    542       103       1,476  
 
 
   
     
     
 
Net increase (decrease) in cash and cash equivalents
    (12,293 )     (24,608 )     28,206  
 
 
   
     
     
 
Cash and cash equivalents at beginning of period
    40,499       70,286        
 
 
   
     
     
 
Cash and cash equivalents at end of period
  $ 28,206     $ 45,678     $ 28,206  
 
 
   
     
     
 
Supplemental disclosures of cash flow information:
                       
   
Cash paid during the period for interest
  $ 393     $ 343      
 
 
   
     
     
 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ESPERION THERAPEUTICS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements include the accounts of Esperion Therapeutics, Inc. (“Esperion” or the “Company”) and its subsidiaries, and have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The Company believes that all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation, have been included. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

     Operating results for the three- and six-month periods ended June 30, 2003 and 2002 are not necessarily indicative of the results for the full year.

(2) Change in Accounting Policy

     Effective April 1, 2003, the Company changed the functional currency for its foreign subsidiary from Swedish Kronor to U.S. Dollars. The change in functional currency is based on the ramp-down of the operations of its foreign subsidiary, the frequent intercompany transactions between the Company and the subsidiary, the reliance by the subsidiary on the Company to service debt costs and the limited number and amount of purchases and expenses denominated in Swedish Kronor. Additionally, the Company determined that intercompany foreign currency transactions were of a long-term investment nature, as settlement is not anticipated in the foreseeable future. The change in accounting for foreign operations results in the financial statements of Esperion AB, a Swedish subsidiary, being translated using historic exchange rates or exchange rates in effect at the end of a period for assets and liabilities of a non-monetary and monetary nature, respectively, and at average rates, during the period for results of operations. The resulting foreign currency translation adjustment, excluding the impact of long-term intercompany transactions, is reflected in other income (expense) on the accompanying condensed consolidated statements of operations. The change in accounting policy is reported prospectively from the date of change. The change resulted in a decrease in accumulated other comprehensive loss of approximately $386,000 as of June 30, 2003 on the accompanying condensed consolidated balance sheets, and an increase in other expense of approximately $386,000 on the accompanying condensed consolidated statements of operations during the three and six months ended June 30, 2003.

(3) Comprehensive Loss

     Comprehensive loss is the total of net loss and all other non-owner changes in equity. The difference between net loss, as reported in the accompanying condensed consolidated statements of operations, and comprehensive loss is the foreign currency translation adjustment for the respective periods and unrealized gain (loss) on short-term investments for the respective periods. Total comprehensive loss was $8,440,000 and $7,961,000 for the three-month periods ended June 30, 2003 and 2002, respectively, and $15,846,000 and $15,275,000, for the six-month periods ended June 30, 2003 and 2002, respectively.

(4) Stock-Based Compensation

     The Company accounts for stock-based compensation to employees using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and related interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the fair

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value of the Company’s common stock as of the date of the grant over the amount the employee must pay to acquire the stock.

     Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure” (“SFAS No. 148”) amends Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”) to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation.

     Using the intrinsic value method under APB 25, no compensation expense has been recognized in the accompanying consolidated statements of operations for options granted to employees at fair value. Had compensation expense been determined based on the fair value at the date of grant consistent with SFAS No. 123, the reported net loss would have increased to the following pro forma amounts, which may not be representative of that to be expected in future years (in thousands, except loss per share data):

                                   
      Three Months Ended June 30,   Six Months Ended June 30,
     
 
      2003   2002   2003   2002
     
 
 
 
Net loss, as reported
  $ (8,435 )   $ (7,824 )   $ (15,841 )   $ (15,127 )
 
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards
  $ (880 )   $ (623 )   $ (1,644 )   $ (1,344 )
Pro forma net loss
  $ (9,315 )   $ (8,447 )   $ (17,485 )   $ (16,471 )
Basic and diluted net loss per share:
                               
 
As reported
$ (0.29 )   $ (0.27 )   $ (0.54 )   $ (0.52 )
 
Pro forma
$ (0.32 )   $ (0.29 )   $ (0.59 )   $ (0.56 )

     The fair value of options was estimated at the date of grant using the Black Scholes Single Option valuation method under SFAS No. 123 with the following assumptions as of June 30, 2003 and 2002, respectively: weighted-average risk free interest rate of 2.50% and 2.82%; dividend yield of 0%; volatility of 50.29% and 51.69%; and expected life of options of five years. The weighted-average fair values of options granted during the three months ended June 30, 2003 and 2002 were $6.66 and $2.37 per share, respectively. The weighted-average fair values of options granted during the six months ended June 30, 2003 and 2002 were $3.89 and $2.76 per share, respectively. Option valuation models require the input of highly subjective assumptions. Because changes in subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the calculated fair value may not necessarily be indicative of the actual fair value of the stock options.

(5) Basic and Diluted Loss per Share

     Basic and diluted net loss per share amounts have been calculated using the weighted-average number of shares of common stock outstanding during the respective periods. Options for the purchase of 1,461,856 and 400,353 shares of common stock for the three-month periods ended June 30, 2003 and 2002, respectively, and 929,632 and 482,927 for the six-month periods ended June 30, 2003 and 2002, respectively, were not included in the calculation of diluted net loss per share, as doing so would have been anti-dilutive. The Company has an agreement whereby certain milestone payments can be satisfied by issuing shares of the Company’s common stock. The effect of any such payments in stock has not been included in the calculation of diluted loss per share for milestones in the agreement that have not yet been achieved.

(6) Goodwill and Other Intangible Assets

     Under Statement of Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), goodwill and certain indefinite-lived intangible assets are no longer amortized, but are reviewed at least

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annually for impairment by comparing the fair value to the carrying value of net assets. The Company has not recognized any impairment losses since its adoption of SFAS No. 142 on January 1, 2002.

     Goodwill reflects the excess of the purchase price over net assets in the Company’s September 2000 acquisition of Talaria Therapeutics, Inc. (“Talaria”) and the milestone payments made to date under the related merger agreement. The carrying amount of goodwill is approximately $3.1 million as of June 30, 2003 and December 31, 2002. The assets acquired from Talaria relate to one of the Company’s ongoing development projects, ETC-588. This product candidate is currently in Phase II clinical development for the treatment of cardiovascular disease.

(7) Commitments and Contingencies

     The Company has entered into various agreements with third parties related to the research and development activities of its existing product candidates as well as discovery efforts on potential new product candidates. These agreements include costs related to manufacturing, clinical trials and toxicology or pharmacology studies performed by third parties. The estimated amount that may be incurred in the future under these agreements totals approximately $3.1 million as of June 30, 2003. The amount and timing of these commitments may change, as they are largely dependent on the rate of enrollment in and timing of the clinical trials.

     The Company has entered into various license and other agreements with third parties related to some of its products in development. The Company may, in the future, be obligated to make milestone and license maintenance payments, as defined in the respective license and other agreements relating to the Company’s proprietary rights, up to an aggregate amount of $30.2 million. Some of these payments may be fulfilled through the issuance of the Company’s common stock, at the Company’s option. Upon reaching certain milestones, the payments are charged to research and development expenses in the accompanying consolidated statements of operations. During the three months ended June 30, 2003, the Company accrued for the first milestone under an agreement with Pharmacia Corporation relating to certain apolipoproteinA-I Milano, or AIM, technology that is payable upon completion of clinical trials showing preliminary safety and initial proof-of-concept. As a result, the Company has included $1.0 million in accrued liabilities in the accompanying consolidated balance sheets. There were no milestone payments made during the first six months of 2003. At the present time, the Company can give no assurances that any other milestones will be achieved. In addition to the milestone and license maintenance payments, the Company may be obligated to make royalty payments on future sales pursuant to formulae in the agreements.

(8) New Accounting Pronouncement

     In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46, “Consolidation of Variable Interest Entities.” This interpretation addresses the requirements for business enterprises to consolidate related entities in which they are determined to be the primary beneficiary as a result of their variable economic interest. The interpretation is intended to provide guidance in judging multiple economic interests in an entity and in determining the primary beneficiary. The interpretation outlines disclosure requirements for Variable Interest Entities in existence prior to January 31, 2003, and outlines consolidation requirements for Variable Interest Entities created after January 31, 2003. This interpretation is not expected to have an impact on the Company’s consolidated financial statements.

(9) Subsequent Events

     On August 6, 2003, the Company completed a public offering of 4.0 million shares of its common stock, raising net proceeds of approximately $60.2 million. The Company invested the net proceeds from the public offering in investment-grade, interest-bearing securities. These proceeds, as well as the proceeds from earlier offerings and private placements, are being used to fund our operations, for working capital and for general corporate purposes, which may include capital expenditures, clinical development, manufacturing and/or in-licensing of technology.

     On July 25, 2003, the Company was informed that Scott Sacane, Durus Capital Management, LLC and Durus Capital Management (N.A.), LLC (together, the “Sacane Group”) had become the beneficial owners of almost 33% of

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the Company’s then outstanding common stock. The Sacane Group is the Company’s largest stockholder and, on July 29, 2003, filed a Schedule 13D that reported that it owned 9,726,900 shares of the Company’s common stock. In addition, the Schedule 13D reported purchases and sales of common stock in the open market between September 3, 2003 and July 24, 2003. The Sacane Group had not disclosed to the Company any changes in its beneficial ownership after November 8, 2002 until July 25, 2003, nor had it reported those changes to the SEC in a timely manner in accordance with federal securities laws.

     Upon the Company’s receipt of the information about the increase in the beneficial ownership by the Sacane Group, and, after consideration of the facts and circumstances, the Company determined that it was in the best interests of our stockholders to enter into an agreement with the Sacane Group relating to its holdings of common stock of the Company. As part of this agreement, which was filed by the Company as an exhibit to a Current Report on Form 8-K on July 29, 2003, the Sacane Group agreed not to acquire beneficial ownership of more than 33% of the Company’s common stock and not to sell any shares of the Company’s common stock before October 29, 2003. In connection with the Company’s public offering, the Sacane Group agreed not to sell any shares of the Company’s common stock before January 31, 2004. The Sacane Group agreed that any sales of any common stock would be subject to certain volume restrictions until the amount it beneficially owned was less than 20%. The Sacane Group also agreed to certain voting restrictions, which generally require than any shares it beneficially owns that represent more than 20% of the Company’s outstanding voting securities be voted in proportion to the votes cast by all of our stockholders other than the Sacane Group. The Company amended its stockholder rights agreement (“Rights Agreement”) to provide that the Sacane Group would not be an “Acquiring Person” under the Rights Agreement unless and until the earlier of such time as the Sacane Group, directly or indirectly, becomes the beneficial owner of more than 33% of the Company’s outstanding common stock or ceases to hold any of the common stock of which it is the beneficial owner without any intention of changing or influencing control of the Company. As a result of the Company’s issuance of 4,000,000 shares in the completed public offering of its common stock, the Sacane Group now holds approximately 29% of the Company’s outstanding common stock.

     On July 29, 2003, the Sacane Group’s counsel acknowledged on behalf of the Sacane Group its liability to the Company under Section 16(b) of the Exchange Act. No amounts have been recorded in the accompanying financial statements for the three or six months ended June 30, 2003 related to this matter.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion provides an analysis of the Company’s condensed financial condition and results of operations, and should be read in conjunction with the Company’s consolidated financial statements and the notes included in Item 1 of this Form 10-Q.

Forward-Looking Information is Subject to Risk and Uncertainty

     The information contained in this report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by words such as “hope,” “may,” “believe,” “anticipate,” “plan,” “expect,” “require,” “intend,” “assume” and similar expressions. We caution readers that forward-looking statements speak only as of the date of this filing, reflect management’s current expectations, estimations and projections and involve certain factors, such as risks and uncertainties, that may cause our actual results, performance or achievements to be far different from those suggested by our forward-looking statements. These factors include, but are not limited to, risks associated with: our ability to successfully execute our business strategies, including entering into strategic partnerships or other transactions; the progress and cost of development of our product candidates; the extent and timing of market acceptance of new products developed by us or by our competitors; our dependence on third parties to conduct clinical trials for our product candidates; the extent and timing of regulatory approval, as desired or required, for our product candidates; our dependence on licensing arrangements and other strategic relationships with third parties; clinical trials; manufacturing; our dependence on patents and proprietary rights; any litigation, proceedings or other disruption of management’s time resulting from the acquisition of our common stock by the Sacane Group; the procurement, maintenance, enforcement and defense of our patents and proprietary rights; competitive conditions in the industry; business cycles affecting the markets in which any of our future products may be sold; extraordinary events and transactions; seeking and consummating business acquisitions, including the diversion of management’s attention to the assimilation of the operations and personnel of any acquired business; the timing and extent of our financing needs and our access to funding, including through the equity market, particularly in light of the impact on the market value of our common stock of matters outside of our control, such as trading activities by third parties; fluctuations in foreign exchange rates; and economic conditions generally or in various geographic areas. Because all of the foregoing factors are difficult to forecast, you should not place undue reliance on any forward-looking statement. More detailed information about some of these and other factors is set forth in our Annual Report on Form 10-K for the year ended December 31, 2002 and other filings with the Securities and Exchange Commission. We do not intend to update any of these factors or to publicly announce the results of any revisions to any of our forward-looking statements other than as required under the federal securities laws.

Overview

Background

     We are a development stage biopharmaceutical company and have not generated any revenues from any source, including from product sales. We have devoted substantially all of our resources since we began our operations in May 1998 to the research and development of product candidates for the treatment of cardiovascular disease. We have incurred a cumulative net loss of approximately $109.9 million from inception (May 18, 1998) through June 30, 2003. These losses have resulted principally from costs incurred in research and development activities and general and administrative expenses. We expect to incur significant additional operating losses for at least the next several years, until we generate sufficient revenue to offset expenses, which will only occur if our product candidates are approved by the FDA and we begin commercialization of our product candidates, or we generate revenues through licensing arrangements. Research and development costs relating to product candidates will continue to increase. Manufacturing, sales and marketing costs will be incurred and will increase in preparation for the intended commercialization of our product candidates. Until we generate positive cash flow, we plan to finance our operations with our existing cash balance, additional equity or debt offerings and/or payments from potential strategic relationships that we may enter into with partners in the future.

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Results of Operations

     Operating Expenses

                                                   
      Three Months Ended June 30,   Six Months Ended June 30,
     
 
dollars in thousands   2003   2002   % Change   2003   2002   % Change

 
 
 
 
 
 
Research and development
  $ 6,272     $ 5,878       6.7 %   $ 11,732     $ 11,583       1.3 %
 
% of total
    80.1 %     80.5 %             78.6 %     79.0 %        
General and administrative
  $ 1,561     $ 1,428       9.3 %   $ 3,190     $ 3,073       3.8 %
 
% of total
    19.9 %     19.5 %             21.4 %     21.0 %        

Three Months Ended June 30, 2003 and 2002

     Research and Development Expenses. Research and development expenses include both internal and external costs related to the research and development activities for our existing product candidates, as well as discovery efforts on potential new product candidates. External costs include costs related to manufacturing, process development, clinical trials, toxicology or pharmacology studies performed by third parties, milestone payments under certain license and other agreements and other related expenses. Internal costs include all payroll and related costs attributable to research and development activities, as well as an allocation of overhead expenses.

     Research and development expenses increased by 6.7% to approximately $6.3 million for the three months ended June 30, 2003 compared to approximately $5.9 million for the three months ended June 30, 2002. This 6.7% increase in research and development expenses is primarily attributable to the accrual of a $1.0 million expense relating to the first milestone under our agreement with Pharmacia Corporation relating to certain AIM technology. The milestone is payable upon completion of clinical trials showing preliminary safety and initial proof-of-concept. Also, contributing to the higher research and development costs is an increase in clinical trial costs for three of our product candidates that were in active clinical trials during the three months ended June 30, 2003, including ETC-588 (two Phase II trials), ETC-642 (two Phase I trials) and ETC-1001 (Phase I trial). In contrast, during the three months ended June 30, 2002, we were actively enrolling patients in two clinical trials (ETC-216 Phase II trial and ETC-642 Phase I trial). The increases in 2003 were largely offset by lower production and toxicology costs for ETC-642. During the three months ended June 30, 2002, we incurred production and toxicology costs for ETC-642 in preparation for Phase I clinical trials; we did not incur similar costs during the three months ended June 30, 2003. Also, payroll and related internal and overhead costs attributable to research and development activities were lower during the three months ended June 30, 2003 than for the same period last year. As of June 30, 2003 and 2002, we had 42 and 44 employees, respectively, who were engaged in research and development.

     The magnitude of our operating expenses, particularly research and development expense, is largely dependent upon the progress, number, timing, nature and size of clinical trials. As clinical trials continue to progress, we anticipate that research and development costs will fluctuate as compared to current quarter levels based on the timing and size of the trials. As our product candidates progress through development, clinical trial costs will continue to increase due to the need for later stage clinical trials that generally require more patients.

     General and Administrative Expenses. General and administrative expenses included the cost of salaries, employee benefits, and other costs associated with our finance, accounting, human resources, legal, business development, administrative and executive management functions, as well as an allocation of overhead expenses. General and administrative expenses increased by 9.3% to approximately $1.6 million for the three months ended June 30, 2003 compared to approximately $1.4 million for the three months ended June 30, 2002. This increase resulted from higher payroll and related internal and overhead costs in support of advanced stages of research and

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development for certain of our product candidates as compared to the three months ended June 30, 2002. As of June 30, 2003 and 2002, we had 24 employees who were engaged in general and administrative activities.

     Other Income (Expense). Other income (expense) consists of interest income, interest expense, foreign currency translation gain (loss), foreign currency transaction gain (loss), and other non-operating income and expenses. Interest income decreased to approximately $100,000 for the three months ended June 30, 2003 compared to approximately $284,000 for the three months ended June 30, 2002. The decrease is primarily attributable to lower cash levels combined with lower yields on our invested assets in 2003 compared to the same period in 2002. Interest expense for the three months ended June 30, 2003 and 2002 was approximately $318,000 and $278,000, respectively, and represents interest incurred on equipment financing facilities and a special project loan. The increase in interest expense resulted from higher outstanding borrowings in 2003 as compared to the same period in 2002.

     During the three months ended June 30, 2003, we recorded approximately $384,000 of foreign currency losses compared to approximately $413,000 of foreign currency losses for the three months ended June 30, 2002. These foreign currency losses result from assets and liabilities denominated in foreign currencies, primarily the Swedish Kronor and the Euro. As the exchange rate between the U.S. Dollar and these currencies fluctuates, we record a corresponding gain (loss). During the first half of 2003 and 2002, the U.S. Dollar has generally weakened against these foreign currencies, resulting in these unrealized losses.

     Net Loss. Our net loss was approximately $8.4 million for the three months ended June 30, 2003 compared to approximately $7.8 million for the three months ended June 30, 2002. The increase in net loss resulted from the increase in operating expenses, the increase in interest expense and the decrease in interest income, offset in part by the decrease in foreign currency losses.

Six Months Ended June 30, 2003 and 2002

     Research and Development Expenses. Research and development expenses increased by 1.3% to approximately $11.7 million for the six months ended June 30, 2003 compared to approximately $11.6 million for the six months ended June 30, 2002. This 1.3% increase in research and development expenses is primarily attributable to the accrual of a $1.0 million expense relating to the first milestone under our agreement with Pharmacia Corporation relating to certain AIM technology. The milestone is payable upon completion of clinical trials showing preliminary safety and initial proof-of-concept. Also contributing to the higher research and development costs is an increase in clinical trial-related costs for our product candidates that were in active clinical trials during the six months ended June 30, 2003, including ETC-216 (one Phase II trial), ETC-588 (two Phase II trials), ETC-642 (two Phase I trials) and ETC-1001 (Phase I trial). In contrast, during the six months ended June 30, 2002, we were actively enrolling patients in two clinical trials (ETC-216 Phase II trial and ETC-642 Phase I trial). The increases in 2003 were largely offset by lower production and toxicology costs for ETC-642. During the six months ended June 30, 2002, we incurred production and toxicology costs for ETC-642 in preparation for Phase I clinical trials; we did not incur similar costs during the six months ended June 30, 2003. Also, payroll and related internal and overhead costs attributable to research and development activities were lower during the six months ended June 30, 2003 as compared to the same period last year. As of June 30, 2003 and 2002, we had 42 and 44 employees, respectively, who were engaged in research and clinical development.

     General and Administrative Expenses. General and administrative expenses increased by 3.8% to approximately $3.2 million for the six months ended June 30, 2003 compared to approximately $3.1 million for the six months ended June 30, 2002. This increase resulted from higher payroll and related internal and overhead costs in support of advanced stages of research and development for certain of our product candidates as compared to the six months ended June 30, 2002. As of June 30, 2003 and 2002, we had 24 employees who were engaged in general and administrative activities.

     Other Income (Expense). Interest income decreased to approximately $249,000 for the six months ended June 30, 2003 compared to approximately $604,000 for the six months ended June 30, 2002. The decrease is primarily attributable to lower cash levels combined with lower yields on our invested assets in 2003 compared to the same

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period in 2002. Interest expense for the six months ended June 30, 2003 and 2002 was approximately $628,000 and $530,000, respectively, and represents interest incurred on equipment financing facilities and a special project loan. The increase in interest expense resulted from higher outstanding borrowings in 2003 as compared to the same period in 2002.

     During the six months ended June 30, 2003, we recorded approximately $540,000 of foreign currency losses compared to approximately $433,000 of foreign currency losses for the six months ended June 30, 2002. These foreign currency losses result from assets and liabilities denominated in foreign currencies, primarily the Swedish Kronor and the Euro. As the exchange rate between the U.S. Dollar and these currencies fluctuates, we record a corresponding gain (loss). During the first half of 2003 and 2002, the U.S. Dollar has generally weakened against these foreign currencies, resulting in these unrealized losses.

     Net Loss. Our net loss was approximately $15.8 million for the six months ended June 30, 2003 compared to approximately $15.1 million for the six months ended June 30, 2002. The increase in net loss resulted from the decrease in interest income, the increase in operating expenses, the increase in interest expense and the increase in foreign currency losses.

Liquidity and Capital Resources

     As of June 30, 2003 and 2002, we had cash, cash equivalents and short-term investments of approximately $32.2 million and $56.8 million, respectively. Our investment policy emphasizes liquidity and preservation of principal over other portfolio considerations. We select investments that maximize interest income while investing cash in investment-grade, interest-bearing securities with maturities that support our ongoing cash needs for operations.

     On August 6, 2003, we completed a public offering of 4.0 million shares of our common stock, raising net proceeds of approximately $60.2 million. We believe that our current cash position will be sufficient to fund our currently planned operations, capital expenditures and debt service at least until the end of 2005.

     During the six months ended June 30, 2003 and 2002, net cash used in operating activities was approximately $13.1 million and $14.3 million, respectively. This cash was used to fund our net losses for the periods, adjusted for non-cash expenses and changes in operating assets and liabilities.

     Net cash provided by investing activities for the six months ended June 30, 2003 was approximately $270,000. Net cash used in investing activities for the six months ended June 30, 2002 was approximately $11.8 million. The net cash provided by investing activities for the six months ended June 30, 2003 resulted primarily from the maturities of short-term investments, and was largely offset by the purchases of short-term investments and capital expenditures. The net cash used in investing activities for the six months ended June 30, 2002 resulted primarily from the purchases of short-term investments and capital expenditures offset, in part, by the maturities of short-term investments.

     Net cash used in financing activities was approximately $42,000 for the six months ended June 30, 2003. Net cash proceeds from financing activities were $1.3 million for the six months ended June 30, 2002. The net cash used in financing activities for the six months ended June 30, 2003 resulted primarily from repayments of borrowings under equipment loans amounting to $521,000. The net cash used was partially offset by $479,000 received from the issuance of common stock to employees under our equity compensation plans. The net cash proceeds from financing activities for the six months ended June 30, 2002 resulted primarily from $1.8 million of additional borrowings on a special project loan and equipment term loans, and $152,000 received from the issuance of common stock to employees under our equity compensation plans. These net cash proceeds were partially offset by $653,000 of cash used to repay borrowings under equipment loans.

     We frequently evaluate opportunities to sell additional equity, obtain credit from lenders, enter into strategic relationships, or further strengthen our financial position in other ways. The sale of additional equity, whether publicly or privately, could result in dilution to our stockholders. In addition, from time to time, we may consider the acquisition of or investment in complementary businesses, products or technologies that might affect our liquidity

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requirements or position or cause us to issue additional securities. There can be no assurance that financing will be available to us in amounts or on terms acceptable to us, if at all.

     As of June 30, 2003, we had the following credit facilities and outstanding borrowings:

    A credit facility with a U.S. bank to finance purchases of equipment that is pledged as collateral: Borrowings under this facility bear interest at the bank’s prime rate (4.0% at June 30, 2003). Borrowings outstanding under this facility as of June 30, 2003 amounted to approximately $864,000 and must be repaid by May 2006. No additional borrowings are allowed. The terms of this credit facility obligate us to maintain a minimum tangible net worth of $9.0 million and invest a minimum of $10.0 million with the U.S. bank.
 
    An additional credit facility with a U.S. lending institution to finance purchases of equipment that is pledged as collateral: Approximately $918,000 was outstanding under this facility at a weighted average interest rate of 12% as of June 30, 2003. Outstanding amounts under this facility must be repaid by November 2004, and no additional borrowings are allowed.
 
    A credit facility with a Swedish entity totaling 50 million Swedish Kronor ($6.3 million as of June 30, 2003): The proceeds from this facility may only be used to fund the development of our ETC-216 (“AIM”) product candidate. If results achieved by the AIM project show that the product candidate is not commercially feasible, our obligation to repay the loan plus a portion of accrued interest may be forgiven. Borrowings under the loan facility bear interest at 17.0% of which 9.5% is payable quarterly. The remaining 7.5% of interest together with principal is payable in five equal annual installments starting in December 2004. The outstanding borrowings, including accrued interest of 9.4 million Swedish Kronor ($1.2 million), amounted to 54.4 million Swedish Kronor ($6.8 million) as of June 30, 2003. We have been in discussions with the Swedish entity regarding the principal amount of 5.0 million Swedish Kronor remaining under the facility, disbursement of which is related to completion of the final milestone under the facility. The milestone was achieved in June 2003; however, the funds may be unavailable to us due to the ramp down of operations in Sweden during 2002. A condition under the credit facility is that the project be principally carried out in Sweden.
 
    An agreement with a Michigan non-profit corporation whereby we borrowed $447,000 for equipment purchases, pledged as collateral, at an interest rate of 4%. As of June 30, 2003, outstanding borrowings under this arrangement totaled $447,000 and must be repaid by November 2008. As required by the agreement, we will begin making principal payments in August 2004.

     We have signed a non-binding term sheet with a U.S. bank for a credit facility that may be used to finance purchases of equipment that will be pledged as collateral. If final loan documents are signed relating to this facility, the aggregate borrowings available under the facility would be $750,000. This facility is subject to execution of the final loan documents and other terms and conditions.

     We anticipate that our capital expenditures for the next twelve months will be approximately $1.0 million. We expect that these expenditures will primarily relate to lab and computer equipment as well as leasehold improvements.

     We lease our corporate and research and development facilities under operating leases expiring beginning December 2003 through June 2006. Total minimum future payments under these leases through the end of 2003 are approximately $378,000 as of June 30, 2003.

     We have entered into license and other agreements with certain third parties that require us to make payments upon achievement of the milestones set forth in such agreements. The remaining payments that we could be obligated to make under those agreements could over time amount to up to $30.2 million. Some of these payments may be fulfilled through the issuance of common stock, at our option. During the three months ended June 30, 2003, we accrued for the first milestone under an agreement with Pharmacia Corporation relating to certain AIM technology that is payable upon completion of clinical trials showing preliminary safety and initial proof-of-concept. As a result, we

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have included $1.0 million in accrued liabilities in the accompanying consolidated balance sheets. There were no milestone payments made under any of these agreements during the first six months of 2003. If we sell products using technology under the agreements, we would be obligated to make royalty payments to the third parties pursuant to formulae in the agreements. There can be no assurance that we will achieve any or all of the milestones in, or sell any products requiring royalty payments under, these agreements.

     We expect to incur an increase in legal fees and expenses primarily related to certain matters between the Company and its largest stockholder. These legal expenses will be expensed as incurred and will be included in general and administrative expenses beginning in the third quarter of 2003. In addition, we expect that other operating expenses and capital expenditures will increase in future periods. We intend to hire additional research and development, clinical and administrative staff. Our capital expenditure requirements will depend on numerous factors, including the progress of our research and development programs, the time required to file and process regulatory approval applications, the development of commercial manufacturing capabilities, the ability to obtain additional licensing arrangements, and the demand for our product candidates, if and when approved by the FDA or other regulatory authorities.

Income Taxes

     As of June 30, 2003, we had net operating loss carryforwards of approximately $76.8 million. These net operating loss carryforwards expire beginning in 2013. Additionally, utilization of net operating loss carryforwards may be limited under Section 382 of the Internal Revenue Code. These and other deferred income tax assets are fully reserved by a valuation allowance as the realizability of these assets is not likely at this time.

Employees

     As of June 30, 2003, we had 66 full-time employees. Of these employees, 42 were engaged in research, pre-clinical and clinical development, regulatory affairs and/or manufacturing activities and 24 were engaged in general and administrative activities.

Critical Accounting Policies

     Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of any contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. We regularly review our estimates and assumptions, which are based on historical experience and on various other factors and judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions.

     We believe that the following critical accounting policies are affected by significant judgments and estimates used in the preparation of our consolidated financial statements:

     We review goodwill, and other intangible long-lived assets for impairment annually or sooner if events or changes in circumstances indicate that the carrying amount may not be recoverable. Events or changes in circumstances that indicate the carrying amount may not be recoverable include, but are not limited to, a significant decrease in the market value of the business and asset acquired, a significant adverse change in the extent or manner in which the business or asset acquired is used or a significant adverse change in the business climate. If any such event or change in circumstances is present, the fair value of a reporting unit is compared with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the carrying amount of a reporting unit exceeds its fair value, the amount of impairment will be measured in accordance with the guidance of SFAS 142. All of our goodwill was assigned to a single reporting unit, which is our sole operating segment.

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     We record estimated expenses under the contracts with third parties on a percentage of completion basis. These contracts cover ongoing clinical trials, manufacturing and supply agreements and toxicology and pharmacology studies. These contracts generally have terms ranging from approximately two months to approximately two years. Expenses are recorded as the work under each contract is completed, and we may record an accrued liability or prepaid expense on our Consolidated Balance Sheet, depending on the payment terms under each contract. As of June 30, 2003, we had total potential obligations of approximately $11.3 million under contracts accounted for on the percentage of completion basis. We estimate that approximately $8.3 million of the contract obligations had been incurred and expensed through June 30, 2003 and approximately $1.7 million is included in accrued liabilities in the accompanying balance sheet for expenses under contracts on a percentage of completion basis.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     Our exposure to market risk for changes in interest rates relates primarily to the increase or decrease in the amount of interest income that we can earn on our investment portfolio and on the increase or decrease in the amount of interest expense that we must pay with respect to our various outstanding debt instruments. Under our current policies, we do not use interest rate derivative instruments to manage our exposure to interest rate changes. We ensure the safety and preservation of our invested funds by limiting default risks, market risk and reinvestment risk. We mitigate default risk by investing in investment grade securities and limiting our exposure to any one security. A hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would not materially affect the fair value of our interest sensitive financial instruments at June 30, 2003. Declines in interest rates reduce our interest income as described on page 12 in Management’s Discussion and Analysis, under the subcaptions “Three Months Ended June 30, 2003 and 2002, Other Income (Expense)” and “Six Months Ended June 30, 2003 and 2002, Other Income (Expense)”, while increases in interest rates increase our interest expense.

     The functional currency for our foreign operation is the U.S. Dollar. As such, changes in exchange rates between the Swedish Kronor and the U.S. Dollar could adversely affect our future net income (loss). Given the level of activity we currently have with our foreign operations, we consider this exposure to be minimal. A 10% change in exchange rates would not have a significant impact on our future net income (loss). Additionally, at June 30, 2003, we had approximately $6.8 million in long-term debt denominated in Swedish Kronor for which changes in the exchange rate will result in foreign currency transaction gains or losses that are charged to Other income (expense) in the accompanying Statements of Operations.

Item 4. Controls and Procedures

(a)  Evaluation of Disclosure Controls and Procedures

     Certain members of the Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this report were designed and functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The Company believes that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b)  Change in Internal Control over Financial Reporting

     No change in the Company’s internal control over financial reporting occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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     PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     Not applicable.

Item 2. Changes in Securities and Use of Proceeds

     On August 6, 2003, the Company completed a public offering of 4.0 million shares of its common stock, raising net proceeds of approximately $60.2 million. The Company invested the net proceeds from the public offering in investment-grade, interest-bearing securities. These proceeds, as well as the proceeds from earlier offerings and private placements, are being used to fund our operations, for working capital and for general corporate purposes, which may include capital expenditures, clinical development, manufacturing and/or in-licensing of technology.

     On July 25, 2003, the Company was informed that Scott Sacane, Durus Capital Management, LLC and Durus Capital Management (N.A.), LLC (together, the “Sacane Group”) had become the beneficial owners of almost 33% of the Company’s then outstanding common stock. The Sacane Group had not disclosed to the Company any changes in its beneficial ownership after November 8, 2002 until July 25, 2003, nor had it reported those changes to the SEC in a timely manner in accordance with the federal securities laws. On July 29, 2003, the Company amended its stockholder rights agreement (the “Rights Agreement”) to provide that the Sacane Group would not be considered to be an “Acquiring Person”, as defined under the Rights Agreement, provided that the Sacane Group does not acquire more than 33% of the Company’s shares or does not cease to hold the Company’s shares for passive investment purposes. As a result of the issuance of 4,000,000 shares in the Company’s completed public offering of its common stock, the Sacane Group now holds approximately 29% of the Company’s outstanding common stock.

Item 3. Defaults Upon Senior Securities

     Not applicable.

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Item 4. Submission of Matters to a Vote of Security Holders

     The Annual Meeting of Stockholders of the Company was held on May 30, 2003. At the Annual Meeting, the stockholders of the Company (1) approved the re-election of Roger S. Newton, Ph.D. and Susan B. Bayh as Directors of the Company, each to hold office until the Annual Meeting of Stockholders to be held in 2006 and until their respective successors are elected and qualified; and (2) approved the amendment to the Company’s 2000 Equity Compensation Plan; and (3) ratified the Board of Directors’ appointment of PricewaterhouseCoopers LLP as the independent public accountants of the Company for the fiscal year ending December 31, 2003. The votes were as follows:

                                   
              WITHHELD           BROKER
      FOR   OR AGAINST   ABSTAINED   NON-VOTES
     
 
 
 
(1) Election of Directors:
                               
 
Roger S. Newton, Ph.D.
    24,623,624             244,808        
 
Susan B. Bayh
    24,246,091             622,341        
(2) Amendment to 2000 Equity
                               
 
Compensation Plan:
    23,607,600       1,241,779       19,520       1  
(3) Ratification of appointment of
                               
 
PricewaterhouseCoopers LLP
    24,831,181       20,801       16,450        

Item 5. Other Information

     Not applicable.

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Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

     
Number   Exhibit

 
10.55*   Advisory Services Agreement among Scheer & Company, Inc., David I. Scheer and Esperion Therapeutics, Inc. dated as of April 28, 2003.
     
10.56   Employment arrangement between Adeoye Y. Olukotun and Esperion Therapeutics, Inc. dated June 4, 2003.
     
10.57   Amendment No. 1 to Esperion Therapeutics, Inc. 2000 Equity Compensation Plan (Amended and Restated, Effective April 18, 2002).
     
10.58   Office Lease between State 94 Properties, L.L.C. and Esperion Therapeutics, Inc. dated as of June 28, 2003.
     
31.1   Certification pursuant to Rules 13a-14 (a) or 15d-14 (a) promulgated under the Securities Exchange Act of 1934, as amended.
     
31.2   Certification pursuant to Rules 13a-14 (a) or 15d-14 (a) promulgated under the Securities Exchange Act of 1934, as amended.
     
32.1   Certification pursuant to 18 U.S.C. Section 1350.
     
32.2   Certification pursuant to 18 U.S.C. Section 1350.
     
*   Confidential treatment requested with respect to portions of the Agreement indicated with brackets and asterisks [*      *]. A complete copy of this Agreement, including the redacted portions, has been separately filed with the Securities and Exchange Commission.

(b) Reports on Form 8-K

     Not Applicable.

19


Table of Contents

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

         
Dated: August 14, 2003       ESPERION THERAPEUTICS, INC.
(Registrant)
         
    By:   /s/ Roger S. Newton
        Roger S. Newton
        President and Chief Executive Officer
        (Principal Executive Officer)
         
    By:   /s/ Timothy M. Mayleben
        Timothy M. Mayleben
        Chief Operating Officer
        and Chief Financial Officer
        (Principal Financial Officer)

20


Table of Contents

INDEX TO EXHIBITS

     
Number   Exhibit

 
10.55*   Advisory Services Agreement among Scheer & Company, Inc., David I. Scheer and Esperion Therapeutics, Inc. dated as of April 28, 2003.
     
10.56   Employment arrangement between Adeoye Y. Olukotun and Esperion Therapeutics, Inc. dated June 4, 2003.
     
10.57   Amendment No. 1 to Esperion Therapeutics, Inc. 2000 Equity Compensation Plan (Amended and Restated Effective April 18, 2002).
     
10.58   Office Lease between State 94 Properties, L.L.C. and Esperion Therapeutics, Inc. dated as of June 28, 2003.
     
31.1   Certification pursuant to Rules 13a-14 (a) or 15d-14 (a) promulgated under the Securities Exchange Act of 1934, as amended.
     
31.2   Certification pursuant to Rules 13a-14 (a) or 15d-14 (a) promulgated under the Securities Exchange Act of 1934, as amended.
     
32.1   Certification pursuant to 18 U.S.C. Section 1350.
     
32.2   Certification pursuant to 18 U.S.C. Section 1350.
     
*   Confidential treatment requested with respect to portions of the Agreement indicated with brackets and asterisks [*      *]. A complete copy of this Agreement, including the redacted portions, has been separately filed with the Securities and Exchange Commission.

21 EX-10.55 3 k79135exv10w55.htm EX-10.55 ADVISORY SERVICES AGREEMENT exv10w55

 

EXHIBIT 10.55

NOTE: Certain portions of this Advisory Services Agreement, which are identified by the symbol “[*    *]”, have been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

ADVISORY SERVICES AGREEMENT

     This Agreement (the “Agreement”) is entered into as of the 28th day of April, 2003 (the “Effective Date”) by and among Esperion Therapeutics, Inc., a Delaware corporation (“Esperion”), Scheer & Company, Inc., a Connecticut corporation, and David I. Scheer (“Mr. Scheer”).

     WHEREAS, the parties hereto desire, among other things, to set forth the scope of the advisory services that Esperion may, from time to time, request be provided to Esperion by Scheer & Company, Inc. and Mr. Scheer, and the remuneration therefor; and

     WHEREAS, the parties hereto acknowledge that they may have existing express or implied agreements, arrangements or understandings with respect to the subject matter of this Agreement, which may include, among other things, express or implied agreements, arrangements or understandings relating to an advisory relationship among the parties, a transaction fee relating to a merger, acquisition, licensing arrangement or other similar financial transaction (a “Transaction Fee”), or transactions involving Esperion, which shall be superceded by the terms of this Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual promises set forth in this Agreement, the parties agree as follows:

1.   Advisory Services.

     A.     From time to time through the date that is 12 months after the Effective Date, Esperion may request that Scheer & Company, Inc. provide general strategic advisory services to Esperion, which advisory services may include, but not be limited to, general issues of corporate strategy and business development, licensing arrangements, research and development funding, strategic alliances, mergers, acquisitions, commercial agreements and any other corporate matters with respect to which Esperion may request assistance. All Esperion requests for advisory services under this Agreement shall be made in writing by Esperion’s President and Chief Executive Officer and acknowledged by Scheer & Company, Inc. Scheer & Company, Inc. agrees that it will make itself available, at the request of Esperion at reasonable times upon reasonable prior notice, to provide the foregoing advisory services. Esperion is under no obligation to request any advisory services from Scheer & Company, Inc. pursuant to this Agreement.

     B.     Scheer & Company, Inc. shall make available professional resources as necessary to service the foregoing advisory relationship. The principal contact for this advisory relationship shall be Mr. Scheer who shall make himself available for services under this Agreement.

     C.     As compensation for the foregoing advisory services, Esperion shall pay Scheer & Company, Inc. the following:

1


 

(1)  a retainer of $30,000 (the “Retainer”), plus reasonable expenses related to the provision of any such requested advisory services. Esperion has no obligation to pay any additional retainer fees under this Section 1.C. upon payment of the Retainer.

(2)  the sum of $60,000 (the “Advisory Fee”), which sum represents all amounts due and owing Scheer & Company, Inc. as of the date hereof for previously provided advisory services, plus expenses in the amount of $19,593.77 that were incurred in connection with such services;

(3)  [*     *] and

There are no expenses incurred prior to the date hereof for which Mr. Scheer has not yet received reimbursement in connection with his services as a director of Esperion.

Esperion shall pay undisputed amounts of invoices for expense reimbursements in Item (1) of this Section 1.C. within 30 days of receipt of such invoices. Esperion and Scheer & Company, Inc. shall cooperate to resolve any disputed invoice items as promptly as practical, and Esperion shall pay the mutually agreed upon amounts for the disputed items as promptly as practical. Invoices shall be delivered to Esperion promptly after the end of the month in which expenses are incurred.

Esperion shall pay the Retainer, the Advisory fee and the expense amounts under Items (2) and (3) of this Section 1.C. by wire, in accordance with wiring instructions provided by Scheer & Company, Inc. to Esperion, upon final execution of this Agreement.

2.     Transaction Fees. In the event that Esperion completes, or executes a definitive agreement relating to, a merger, acquisition, licensing arrangement or other similar financial transaction with [* *] or any of its successors, affiliates or subsidiaries (together, “[* *]”) on or before the date that is 24 months after the Effective Date, then Esperion shall pay to Scheer & Company, Inc. a Transaction Fee in an amount equal to 0.85% of the “Consideration” (as such term is hereinafter defined). For purposes of this Section 2, “Consideration” means the value of all cash payments received by Esperion pursuant to the agreement related to such merger, acquisition, licensing agreement or other similar financial transaction, including upfront cash, equity investment, any amounts to fund research and development, licensing fees and milestone fees (whether or not such milestone fees are creditable toward future royalties); provided, however, that Consideration shall not include any royalties of any kind received by Esperion. Payment of such fee shall be contingent upon receipt of payment from [* *] and shall be made within 30 days of receipt by Esperion of the applicable payment from [* *].

     Each of Esperion and Mr. Scheer (individually and on behalf of Scheer & Company, Inc.) hereby represent for the benefit of the other party as of the Effective Date that to its or his actual knowledge, there has been no material adverse change [*      *].

2


 

3.     Equity Awards. Esperion shall effect an amendment to each of the outstanding equity option grants existing with Mr. Scheer, and take such steps as are necessary to modify the option agreements between Esperion and Mr. Scheer such that:

     A.     The vesting of the options originally granted on July 17, 2000 and May 22, 2001 at strike prices of $9.00 and $5.69 per share, respectively, and each relating to 15,000 shares shall be accelerated so that all previously unvested shares shall become fully vested as of the Effective Date and the expiration period shall be adjusted so that Mr. Scheer shall have the right to exercise such options until the date that is 12 months after the Effective Date.

4.       [*     *].

     A.     [*     *].

     B.     [*     *].

     C.     [*     *].

3


 

     D.     [*     *].

     E.     Each of Esperion and Scheer & Company, Inc. represent that they are authorized to execute this Agreement. Esperion represents that the committee of its independent directors has approved the execution of this Agreement pursuant to the provisions of Section 144 of the Delaware General Corporation Law.

5.     Confidentiality of this Agreement. In consideration of the obligations of the parties under this Agreement, the parties hereto agree that the terms of this Agreement (other than those terms relating to advisory services and a Transaction Fee) shall be and remain confidential, and shall not be disclosed by any party hereto to any other party other than immediate family members, attorneys or accountants (provided that such persons agree to keep such information confidential), and except as may be required by applicable law or regulation.

6.     Governing Law. This Agreement shall be interpreted and applied under the laws of the State of Delaware.

7.     Notices. Any notice or communication required or permitted hereunder shall be in writing and either delivered personally or telecopied or sent by overnight courier, or by certified or registered mail, postage prepaid, and shall be deemed to be given, dated and received when so delivered personally or by courier or telecopied, or, if mailed, three (3) business days after the date of mailing to the following respective address or telecopy number, or to such other address or addresses as such person may subsequently designate by written notice given hereunder:

4


 

  if to Esperion, to:
Roger Newton, Ph.D., President and Chief Executive Officer
Esperion Therapeutics, Inc.
3621 South State Street
695 KMS Place
Ann Arbor, Michigan 48108
Facsimile: 734-622-8333

  if to Scheer & Company, Inc., to:
Scheer & Company, Inc.
250 W. Main
Branford, CT 06405
Facsimile: 203-481-4164

  if to Mr. Scheer, to:
David I. Scheer
c/o Scheer & Company, Inc.
250 W. Main
Branford, CT 06405
Facsimile: 203-481-4164

8.     Entire Agreement. This Agreement constitutes the entire agreement, and supersedes all prior agreements, arrangements and understandings, both express and implied, among the parties, with respect to the subject matter hereof, including, but not limited to, any express or implied agreements pertaining to advisory relationships, a Transaction Fee or transactions involving Esperion, notwithstanding any language to the contrary in any such agreements, arrangements or understandings, except (1) each of the stock option agreements by and between Esperion and Mr. Scheer relating to Esperion’s equity option grants to Mr. Scheer, except to the extent such award agreements shall be modified pursuant to Section 3 of this Agreement and (2) the Confidential Disclosure Agreement dated May 2, 2001 between Scheer & Company, Inc. and Esperion. This Agreement may only be amended, modified or supplemented by a written agreement signed by all parties hereto.

9.     Severability. If any term or other provision of the Agreement is invalid, illegal or unenforceable, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.

10.     Waiver. No waiver by any party to this Agreement of any breach or default shall be effective unless the same shall be in writing and signed. No waiver by any party of any breach or default of any term or provisions of this Agreement shall be construed to constitute a waiver of, or consent to, the present or future breach or default of that or any other term or provision hereof.

5


 

11.     Successors and Assigns. This Agreement shall be binding upon the successors and assigns of the parties hereto.

12.     Costs of Enforcement. In the event it becomes necessary for a party to take legal action to enforce its rights under this Agreement, the party prevailing in such action shall be entitled to an award including the costs and expenses (including reasonable attorneys’ fees) incurred in connection with such action.

13.     Recitals. The recitals form a substantive part of this Agreement.

[SIGNATURE PAGE FOLLOWS]

6


 

     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by or on behalf of each of the parties hereto as of the date first above written.

         
    ESPERION THERAPEUTICS, INC.,
A Delaware Corporation
         
    By:   /s/ Roger S. Newton

Roger S. Newton, Ph.D., its Pres. & CEO
 
         
 
    SCHEER & COMPANY, INC.,
A Connecticut Corporation
         
 
    By:   /s/ David I. Scheer

David I. Scheer, its President
 
         
 
    DAVID I. SCHEER
         
 
    /s/ David I. Scheer

David I. Scheer

7 EX-10.56 4 k79135exv10w56.htm EX-10.56 EMPLOYMENT AGREEMENT - ADEOYE Y. OLUKOTUN exv10w56

 

EXHIBIT 10.56

     
(ESPERION LOGO)   Esperion Therapeutics, Inc.
3621 S. State St.
695 KMS Place
Ann Arbor, MI 48108
     
Pathways to new medicines   Tel 734.332.0506
Fax 734.332.0516

June 4, 2003

Dr. Adeoye Y. Olukotun, M.D., M.P.H, F.A.C.C.
66 Witherspoon St. #355
Princeton, NJ 08542

Dear Oye,

     On behalf of Esperion Therapeutics, Inc. (the “Company”), we are pleased to offer you a position with the Company. The following is an outline of the terms of this offer:

1.   The position offered is that of Senior Vice President of Clinical and Regulatory and Chief Medical Officer.
 
2.   You shall be paid an initial monthly salary of $25,000 (for an average 4 day per week commitment to Esperion) plus a bonus of up to 25% of base salary. The bonus for the first year of employment will be pro-rated based upon the portion of the year which you are employed by Esperion. The right to receive a bonus for the first year of employment or portion thereof is dependent on continued employment during that period. The magnitude of the bonus, if any, will be determined, based upon an annual performance review that will evaluate your achievement of a series of mutually agreed upon performance objectives/milestones. A proposed series of objectives/milestones will be developed among us.
 
3.   A benefits package will be provided to you, which is equivalent to that offered to other similarly situated employees within the Company.
 
4.   Subject to meeting eligibility requirements and the approval of the Compensation Committee of our Board of Directors, we will grant you an option to purchase up to 200,000 shares of the Company’s common stock under one of the Company’s equity compensation plans. The options will vest ratably over a period of two (2) years (1/8 per quarter), have a strike price equal to the fair market value on the date of grant and must be approved by the Compensation Committee of the Board of Directors. The terms and conditions of the option will be set forth in a Stock Option Agreement that you will be required to execute.

 


 

5.   After 6 months of continuous satisfactory employment with Esperion, in the event that your employment with the Company is terminated by the Company for reasons other than cause, you will be provided a severance package of six (6) months of salary, with continuation of benefits during this period, excluding the items noted in Section 7 below. In the event that your employment with the Company is terminated due to death or “permanent and total disability” (as such term may be defined by the Company’s insurer) the company will provide accelerated vesting such that 25% of your yet unvested stock options will immediately vest. If you terminate your employment with the Company voluntarily or if your employment is terminated by the Company for cause, you will forfeit the severance package, as well as any of your unvested stock options. With respect to any vested options, in the event that you voluntarily terminate your employment with the Company, you will have 90 days to exercise these options, or otherwise they will be forfeited.
 
6.   You will be asked to execute a standard confidentiality and assignment agreement, as well as a standard non-compete agreement. You will be expected to comply with the Company’s insider trading policy.
 
7.   Esperion will provide you certain relocation and commuting benefits. During the first twelve (12) months of your employment with Esperion, and renewable annually by mutual agreement thereafter, we will cover all of your reasonable costs (including imputed taxes) of commuting to/from Esperion. We will provide you an initial commuting allowance of $75,000, paid $18,750 at the beginning of each quarter after the start of your employment with Esperion, and to be used by you for weekly travel to/from Esperion, a furnished apartment in Ann Arbor, a leased automobile in Ann Arbor, automobile insurance, airport parking, gasoline, and related commuting incidentals. The commuting allowance amount will be reviewed at regular quarterly intervals and by mutual agreement can be modified.

     If the terms of this offer are acceptable to you, please so indicate by executing in the space provided below and fax to 734-995-1814, as well as mail (an original copy) to the Company. Please respond to this offer within two weeks from the date hereof.

     Welcome to Esperion Therapeutics! We look forward to working with you to bring new medicines to a world of unmet medical needs.

     Sincerely,

     
/s/ Roger S. Newton

Roger S. Newton
President and Chief Executive Officer
  /s/ Timothy M. Mayleben

Timothy M. Mayleben
Chief Operating Officer & CFO

AGREED AND ACCEPTED:

                         
/s/ Adeoye Y. Olukotun, M.D.
      6/4/03          

       
1
  ADEOYE Y. OLUKOTUN, M.D. DATE        

CC: S. Landauer

  EX-10.57 5 k79135exv10w57.htm EX-10.57 AMEND. NO. 1 TO 2000 EQUITY COMPENSATION exv10w57

 

EXHIBIT 10.57

AMENDMENT NO. 1 TO THE
ESPERION THERAPEUTICS, INC.
2000 EQUITY COMPENSATION PLAN (AMENDED AND RESTATED,
EFFECTIVE APRIL 18, 2002)

     WHEREAS, Esperion Therapeutics, Inc. (the “Company”) maintains the Esperion Therapeutics, Inc. 2000 Equity Compensation Plan, as amended and restated, effective April 18, 2002 (the “Plan”), for the benefit of its eligible employees, certain consultants and advisors who perform services for the Company or its subsidiaries, and non-employee members of the Company’s Board of Directors;

     WHEREAS, at the 2003 Annual Meeting of Stockholders of the Company, held on May 30, 2003, the Company’s stockholders approved an amendment to the Plan to increase the number of shares authorized for issuance under the Plan to 4,469,000, thereby approving the Board’s proposal to increase the number of authorized shares by an additional 1,400,000;

     WHEREAS, Section 15(a) of the Plan provides that the Board. subject to certain limitations set forth in Section 15(a), may amend the Plan at any time; and

     WHEREAS, the Board has authorized the officers of the Company to execute documents necessary or desirable to effect such amendment to the Plan.

     NOW, THEREFORE, in accordance with the foregoing, the Plan shall be amended as follows:

     The first sentence of Section 3(a) of the Plan is hereby amended to read as follows:

      “Subject to adjustment as described below, the aggregate number of shares of common stock of the Company (“Company Stock”) that may be issued or transferred under the Plan is 4,469,000 shares; provided, however, that from April 18, 2002 until May 30, 2003, the aggregate number of shares that could be issued or transferred under the Plan was 3,069,000; and provided further, that prior to April 18, 2002, the aggregate number of shares that could be issued or transferred under the Plan was 1,869,000.”

     Except as amended hereby, the Plan remains in full force and effect.

     IN WITNESS WHEREOF, and as evidence of the adoption of Amendment No. 1 set forth herein, the Board has caused this Amendment No. 1 to be executed effective as of the 30th day of May 2003.

     
  ESPERION THERAPEUTICS, INC.
 
     
 
  By: /s/ Roger S. Newton
   
  Title: President & Chief Executive Officer

EX-10.58 6 k79135exv10w58.htm EX-10.58 OFFICE LEASE - STATE 94 PROPERTIES, LLC exv10w58

Table of Contents

EXHIBIT 10.58

OFFICE LEASE

This Lease between STATE 94 PROPERTIES, L.L.C. (“Landlord”) and ESPERION THERAPEUTICS, INC. (“Tenant”).

LEASE SUMMARY

         
A.   The Building (See Exhibit A):    
    695 KMS Place    
    Ann Arbor, MI 48108    
    The Premises (See Exhibit B):    
    Approximate square feet =   26,654
         
B.   Term:    
    Commencement Date:   7/1/2003
    Rental Commencement:   Possession
    Lease Termination:   6/30/2006
    Option Length:   one (1) year
         
C.   Base Rent:    
                         
From   To   Monthly   Total

 
 
 
Rental Commencement
    12/31/2003     $ 2,096.00       N/A  
1/1/2004
    12/31/2004     $ 29,986.00     $ 359,832.00  
1/1/2005
    12/31/2005     $ 30,541.00     $ 366,492.00  
1/1/2006
    6/30/2006     $ 31,096.00     $ 186,576.00  

    OPTION PERIOD (if available and properly exercised):
See Section 16.02.

                         
7/1/2006
    6/30/2007     $ 34,428.00     $ 413,136.00  

D.   Initial Rental Payment Amount:
 
    This payment shall be applied as follows:    N/A                    .
 
E.   Expenses:

                     
        % Share:     Base Year  
       
   
 
Taxes:         21.18 %     2004  
Insurance:         21.18 %     2004  
Common Area:         21.18 %     2004  
Utilities:   Electric     21.18 %        
Utilities:   Gas     21.18 %        
Utilities:   Water     21.18 %        

F.   Storage (See Exhibit B):

                 
            N/A   S.F.
 
G.   Security Deposit:           $0.00

H.   The Use:
 
    offices and research laboratories
 
I.   Work To Be Performed Prior To Occupancy
 
    See Exhibit C.
 
J.   BROKERS OF RECORD

     
Listing Agent:   NONE
Selling Agent:   Oxford Commercial

K.   Address for Notice:

           
LANDLORD:   AND TO:
  Burlington Property, LLC       James A. Schriemer
  c/o Oxford Property Management       Conlin, McKenney & Philbrick, P.C.
  325 East Eisenhower, Suite 310       350 South Main Street, Suite 400
  Ann Arbor, Michigan 48108       Ann Arbor, Michigan 48104
  Facsimile number: (734) 747-6006       Facsimile number: (734) 761-9001
  Email address: jh@oxfordcompanies.com       Email address: Schriemer@cmplaw.com
           
TENANT:   AND TO:
  David Lowenschuss        
  Esperion Therapeutics        
  695 KMS Place        
  Ann Arbor, Michigan 48108        
  Facsimile number: 734-332-0516        
  Email address: dlowenschuss@esperion.com        

L.   Miscellaneous:

 


Table of Contents

     1) At the request of Tenant, Landlord will use commercially reasonable efforts to obtain additional space for Tenant contiguous to the Premises. If the Tenant leases this additional space and there is at least one year left on the Tenant’s lease, the lease terms and the rental rate for the additional space will coincide with the current terms and rental rate specified herein for the space currently leased by Tenant.

     2) If Landlord is prepared to enter into a lease with a third party for space in the Building which is vacant on the Signature Date of this Lease or becomes vacant during the term of this Lease (“ROFR Space”), then prior to entering into a lease with a third party for such ROFR Space, Landlord shall send a notice to Tenant (“Offer Notice”), together with a copy of the third party proposed offer. Tenant shall have the right, noticed back to Landlord given within five (5) business days after Tenant’s receipt of the Offer Notice, to elect to have such space on all economic terms and conditions of the third party proposed offer. If Tenant elects to lease such ROFR Space, it shall be added to the Premises by amendment to this Lease. If Tenant does not so elect to rent the ROFR Space, Landlord may lease the space to the third party at the rate and on the terms and conditions no more favorable than those offered to Tenant. In addition, Tenant’s election to either exercise or not exercise its right of first refusal as to a particular offered space shall not terminate such a continuing right to lease as to other space which may become available within the Building.

     3) Upon substantial completion of Landlord’s Work pursuant to Section 4.02, Tenant shall take possession under the terms of this Lease of 1,863 square feet of space contiguous to Tenant’s current space (as identified in Exhibit B), under the terms and conditions of this Lease. On January 1, 2004, the balance of the space currently occupied by Tenant shall be governed by the terms and conditions of this Lease.

     IN ADDITION TO THE FOREGOING, THE ATTACHED STANDARD COVENANTS, TERMS AND CONDITIONS ARE INCORPORATED HEREIN AS PART OF THIS LEASE.

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the 28th day of June 2003 (the “Signature Date”).

     WITNESSED:

                 
    “Landlord”
STATE 94 PROPERTIES, L.L.C.
 
    By:
Its:
  State 94 Holding Company, L.L.C.
Sole Member
 
        By:
Its:
  Kosmos Associates, LLC
Sole Member
 
/s/ Jeff Hauptman

          By:


Its:
  /s/ Felix de la Iglesia

Felix de la Iglesia
Manager
 
        “Tenant”
ESPERION THEREAPEUTICS, INC.
 
/s/ Dawn M. Evans

      By:   /s/ Timothy M. Mayleben

 
        Its:   COO

Page 2


ARTICLE 1. GRANT AND TERM
ARTICLE 2. RENT
ARTICLE 3. CONDUCT OF BUSINESS BY TENANT
ARTICLE 4. LANDLORD’S AND TENANT’S WORK
ARTICLE 5. MAINTENANCE
ARTICLE 6. TAXES
ARTICLE 7. INDEMNITY AND INSURANCE
ARTICLE 8. UTILITIES
ARTICLE 9. ASSIGNMENT OR SUBLETTING
ARTICLE 10. DESTRUCTION OF PREMISES
ARTICLE 11. EMINENT DOMAIN
ARTICLE 12. DEFAULT
ARTICLE 13. BANKRUPTCY OR INSOLVENCY
ARTICLE 14. WAIVER BY TENANT
ARTICLE 15. ACCESS BY LANDLORD
ARTICLE 16. RENEWAL OPTIONS AND HOLDING OVER
ARTICLE 17. QUIET ENJOYMENT
ARTICLE 18. SECURITY DEPOSIT
ARTICLE 19. MISCELLANEOUS
EX-10.55 Advisory Services Agreement
EX-10.56 Employment Agreement - Adeoye Y. Olukotun
EX-10.57 Amend. No. 1 to 2000 Equity Compensation
EX-10.58 Office Lease - State 94 Properties, LLC
EX-31.1 Certification Pursuant to Rules 13a-14(a)
EX-31.2 Certification Pursuant to Rules 13a-14(a)
EX-32.1 Certification Pursuant to 18 USC Sec. 1350
EX-32.2 Certification Pursuant to 18 USC Sec. 1350


Table of Contents

TABLE OF CONTENTS

         
ARTICLE 1.   GRANT AND TERM   1
ARTICLE 2.   RENT   4
ARTICLE 3.   CONDUCT OF BUSINESS BY TENANT   5
ARTICLE 4.   LANDLORD’S AND TENANT’S WORK   5
ARTICLE 5.   MAINTENANCE   8
ARTICLE 6.   TAXES   11
ARTICLE 7.   INDEMNITY AND INSURANCE   12
ARTICLE 8.   UTILITIES   13
ARTICLE 9.   ASSIGNMENT OR SUBLETTING   14
ARTICLE 10.   DESTRUCTION OF PREMISES   14
ARTICLE 11.   EMINENT DOMAIN   15
ARTICLE 12.   DEFAULT   15
ARTICLE 13.   BANKRUPTCY OR INSOLVENCY   17
ARTICLE 14.   WAIVER BY TENANT   17
ARTICLE 15.   ACCESS BY LANDLORD   18
ARTICLE 16.   RENEWAL OPTIONS AND HOLDING OVER   18
ARTICLE 17.   QUIET ENJOYMENT   20
ARTICLE 18.   SECURITY DEPOSIT   20
ARTICLE 19.   MISCELLANEOUS   20

EXHIBITS

     
Exhibit A   Location of Premises
Exhibit B   Floor plan of Premises
Exhibit C   Landlord’s Work (Description and Plans)
Exhibit C-1   Criteria for Landlord’s Work
Exhibit D   Tenant’s Work (Description and Plans)
Exhibit E   Estoppel Letter
Exhibit F   Guaranty
Exhibit G   Description of Janitorial Services
Exhibit H   Signage
Exhibit I   Acknowledgment of Possession
Exhibit J   Rules and Regulations

NOTE: In the event Tenant is to pay anything more than Base
Rent on a monthly basis, Landlord is to provide Tenant a
letter detailing the estimated Additional Rent prior to Rental
Commencement.

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ARTICLE 1. GRANT AND TERM

     SECTION 1.01. PREMISES. Landlord, in consideration of the rent to be paid and the covenants to be performed by Tenant, hereby leases to Tenant, and Tenant rents from Landlord, the premises as set forth in Paragraph A of the Summary (“Premises”). The term “Building” shall be defined as the building of which the Premises are a part and listed under Section A of the Summary.

     The other suites, common areas (if any), exterior walls, phone closets, mechanical rooms and roof of the Building in which the Premises are situated, are not leased to Tenant and Tenant shall have no access to same (except as provided in Section 5.01) without Landlord’s consent, which consent will not be unreasonably withheld. Landlord reserves the right to use said areas or lease them to other tenants, and the right to install, maintain, use, repair, and replace pipes, ducts, conduits, wires and structural elements leading through the Premises, in locations and times that will not materially interfere with Tenant’s use of the Premises.

     SECTION 1.02. TERM. The term of this Lease shall commence on the Commencement Date set forth in Section B of the Summary. However, if the Premises is currently occupied or requires Landlord to construct improvements to the Premises as described in Exhibit C, the Commencement Date shall be the later of the date upon which Landlord delivers notice to Tenant that the current occupant has vacated the Premises and the date Landlord delivers possession as provided in Section 1.03. The Lease terminates upon the Lease Termination date as set forth in Paragraph B of the Summary. The period from the Commencement Date to the Lease Termination date shall be defined as the Initial Term.

     SECTION 1.03. POSSESSION. Tenant shall take possession of the Premises upon Landlord’s delivery. In the event Landlord is required to perform any improvements to the Premises, as described in Exhibit C, Landlord’s Work, then Tenant agrees to take possession upon Substantial Completion of the improvements. For the purposes herein, “Substantial Completion” shall mean the completion of the Landlord’s Work except for punch list items that do not unreasonably interfere with Tenant’s use of the Premises or compromise the security of the Premises. If Landlord and Tenant are unable to agree that the Premises is at a level of Substantial Completion, then the Landlord’s architect shall make such determination. Tenant agrees to sign an Acknowledgement of Possession in the form attached as Exhibit I.

ARTICLE 2. RENT

     SECTION 2.01. BASE RENT.

     (a)  INTENTIONALLY DELETED.

     (b)  Beginning on the Rental Commencement, as described under Paragraph B of the Summary, Tenant agrees to pay the sums (“Base Rent”), as set forth in Paragraph C of the Summary, to Landlord during the Initial Term of this Lease. If a calendar date is not provided under Paragraph B of the Summary and the word “Possession” is listed, then the Rental Commencement shall begin the day the Tenant takes possession of the Premises as defined in Section 1.03.

     Base Rent shall be payable in equal monthly installments in advance, on or before the first day of each calendar month, to the Landlord, at the address set forth in the Summary Paragraph K, or such other place as Landlord designates, without any prior demand and without any deductions or setoff whatsoever. If Landlord and Tenant shall mutually agree, Tenant shall authorize Base Rent and Additional Rent, as identified in Section 2.02 below, to be automatically debited from Tenant’s bank account and paid to Landlord as required by this Lease.

     “Lease Year” means a period of twelve consecutive months commencing on the Commencement Date and the anniversary thereof. However, if the Commencement Date is other than the first day of the month, the first date of the month following the Commencement Date and the anniversary thereof shall be the first day of the Lease Year.

     SECTION 2.02. ADDITIONAL RENT. “Rent” means Base Rent and all other amounts payable pursuant to any other provision of this Lease, all of which amounts shall be deemed “Additional Rent.” Additional Rent shall be due and payable to Landlord on demand (unless a longer period is specified in this Lease), without any deductions or setoffs, at the place where and in the manner in which Base Rent is payable. Tenant’s failure to pay any such amount when due shall entitle Landlord to exercise any and all remedies provided for in this Lease in the event of non-payment of Rent. Furthermore, in the event Tenant or others have guaranteed payments under this Lease, a completed Exhibit F shall be attached and made a part of this Lease.

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ARTICLE 3. CONDUCT OF BUSINESS BY TENANT

     SECTION 3.01. USE OF PREMISES. Tenant shall use the Premises solely as set forth in Paragraph H of the Summary, and for no other purpose without the prior written consent of Landlord, which shall not be unreasonably withheld.

     SECTION 3.02. LAWFUL USE. Tenant’s use shall at all times and at its expense comply with all statutes, ordinances, and governmental orders and regulations affecting Tenant’s business and the use, occupancy, safety and cleanliness of the Premises, and shall indemnify Landlord and save it harmless from all costs, damages and loss of any kind resulting from any violation thereof. If any governmental license or permit is required at any time for the lawful conduct of Tenant’s business, Tenant shall promptly procure and thereafter maintain such license or permit and comply at all times with the requirements thereof.

     SECTION 3.03. CARE OF PREMISES. Tenant shall at all times keep the Premises, including the interior portions of windows, safe, clean and free from rubbish and dirt, and shall store all trash and garbage within the Premises, and shall deposit, from time to time, all trash and garbage to dumpsters provided by Landlord. Landlord shall be responsible for the care of all Common Areas serving the Building and the Premises.

     SECTION 3.04. WASTE OR NUISANCE. Tenant shall not commit or suffer to be committed any waste in or on the Premises or any nuisance or other act or condition that disturbs the quiet enjoyment of any occupant of the Building in which the Premises are situated.

ARTICLE 4. LANDLORD’S AND TENANT’S WORK

     SECTION 4.01. IMPROVEMENT FUNDING. Landlord shall pay all of the construction costs for Landlord’s Work, as defined under Section 4.02 below unless a fixed dollar amount per square foot is defined in Paragraph I of the Summary. In the event a fixed amount is defined in Paragraph I of the Summary, then this amount, multiplied by the Premises square footage, shall equal the Landlord’s Total Obligation. The construction cost shall include, but not be limited to, the cost of all materials and labor, all architectural, engineering, design, and construction management fees, fees for permits and inspection and all other costs directly related to completion of Landlord’s Work (“Total Costs”).

     Any amount over Landlord’s Total Obligation shall be paid with rent owed under the lease by the Tenant upon Substantial Completion but not longer than on the sixtieth (60th) day of possession. If the Total Costs of Landlord’s Work shall be less than Landlord’s Total Obligation, then Landlord shall reimburse to Tenant the difference between Landlord’s Total Obligation and the Total Costs of Landlord’s Work as a rent credit for the next available payment period (s). For example, if the monthly base rent is $100,000 per month, and the rent credit is $200,000, and the final credit is calculated July 15, then the Tenant shall be credited for August and September monthly base rental payments.

     SECTION 4.02. LANDLORD’S WORK. Landlord, at Landlord’s sole cost and expense, except as provided in Section 4.01 above, shall construct the improvements and perform the other work as provided in Exhibit C attached hereto and made a part hereof (“Landlord’s Work”).

     (a)  Approval of Landlord’s Plans. The parties shall approve Landlord’s Plans pursuant to the procedure described and as defined in this Section 4.02(a). Contemporaneously with the signing of this Lease, Landlord and Tenant shall complete Exhibit C-1, Criteria for Landlord’s Work, which shall be approved and initialed by Landlord and Tenant and Landlord and Tenant shall approve and initial a copy of a floor plan layout proposal based upon the criteria for Landlord’s Work as suggested by Landlord’s architect. As necessary, Landlord shall prepare construction documents based on the criteria for Landlord’s work and approved floor plan layout. The final construction documents for Landlord’s Work shall be referred to as “Landlord’s Plans.”

     (b)  Construction.

  (i)   General. Upon final approval of Landlord’s Plans, Landlord shall diligently prosecute Landlord’s Work to completion without interruption or delay, in a first-class and good and workmanlike manner, in accordance with Landlord’s Plans, using new materials (unless otherwise noted in the architectural drawings and agreed to), and in compliance with all applicable laws. Landlord, at Landlord’s expense, and as part of Total Cost, shall procure all building and other permits and approvals necessary for performing Landlord’s Work.

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  (ii)   Tenant’s Representative. Tenant will appoint a Tenant’s representative who shall have the right to inspect, or designate an agent to inspect, the performance of Landlord’s Work, and to give Landlord notice if Landlord’s Work performance does not conform to Landlord’s Plans. However, said representative may not enter the Premises until Tenant’s insurance obligations, as defined in this Lease, are completely satisfied. If there is a disagreement as to whether Landlord’s Work performance conforms to the Landlord’s Plans, which disagreement cannot be resolved by the parties within four (4) days following Landlord’s receipt of such notice, then the mutual decision of the Landlord’s and Tenant’s architects shall control. If such architects are unable to reach a mutual decision, then such architects will jointly select a third architect, and the decision of such third architect will govern. As necessary, Tenant’s Representative will also be available for one- to two-hour long weekly meetings with the architect, construction manager, contractors, and any other parties involved in the construction process until the completion of the Punch List (as defined below).
 
  (iii)   Change Orders. After Tenant has approved Landlord’s Plans, Tenant may nonetheless submit proposed change orders for Landlord’s Work to Landlord for Landlord’s approval, which approval will not be unreasonably denied or delayed provided Tenant agrees to pay within thirty (30) days any net increase in construction cost (regardless of the agreed to budgets contained herein this Lease) and agrees to any extension in the construction schedule for Landlord’s Work as a result of such change order. Landlord must obtain Tenant’s written approval of the contractor’s price and any schedule adjustment for the proposed change order before such change order is released to the contractor for construction.

     (c)  Notice of Delivery; Punch List. Landlord shall provide at least ten (10) days advance notice to Tenant advising Tenant of the date on which Landlord reasonably expects Landlord’s Work at the Premises to be Substantially Complete. Within five (5) business days before or after such date, Landlord and Tenant, or their representatives, shall inspect Landlord’s Work at the Premises. If, as a result of Tenant’s inspection of the Premises, Tenant discovers deviations or deficiencies from Landlord’s Plans, then Tenant may deliver a list (“preliminary punch list”) of such deviations or deficiencies (“Punch List Items”) to Landlord. The existence of a preliminary punch list shall not postpone the delivery of Premises as long as (i) the Punch List Items are customarily considered to be “punch list” items in the construction industry, and (ii) neither the failure to complete nor the process of completing any such Punch List Items will delay or unreasonably interfere with Tenant’s Work or the operation of Tenant’s business in the Premises, and (iii) the Punch List Items will not delay Landlord obtaining Tenant’s certificate of occupancy. Landlord shall correct or cure the Punch List Items within thirty (30) days following Landlord’s receipt of the punch list, or such longer period as may be reasonably necessary, provided Landlord is proceeding with due diligence to complete the Punch List Items. Landlord may enter the Premises at any reasonable time to correct or cure the Punch List Items, provided Landlord takes reasonable precautions to avoid interfering with Tenant’s Work or Tenant’s business at the Premises. Subject to delays not in control of the Landlord, if Landlord has not corrected or cured any remaining Punch List Items to Tenant’s reasonable satisfaction within sixty (60) days following Landlord’s receipt of a punch list on which such Punch List Items were listed, then Tenant may complete the Punch List Items, and offset Tenant’s actual costs so expended against the Rent next coming due.

     (d)  Tenant Delay. For purposes of this Section 4, “Tenant Delay” shall mean any delay in the performance of Landlord’s Work that occurs as the result of (i) any request by Tenant either that Landlord perform any work in addition to Landlord’s Work, or that delays, for any reason, Landlord commencing or completing Landlord’s Work to be performed prior to the delivery of the Premises to Tenant; (ii) any change by Tenant to Landlord’s Plans, other than a change required to cause Landlord’s Plans to conform to the applicable laws; (iii) any failure of Tenant to respond to any request for approval required hereunder within the period specified herein for such response; or (iv) any delay in Landlord’s Work caused by the installation of Tenant’s fixtures in the Premises or the performance of any work or activities by Tenant prior to the delivery of the Premises to Tenant. Upon the occurrence of any event that Landlord contends is a Tenant Delay, Landlord shall promptly notify Tenant with Landlord’s reasonable estimate of the expected delay and the date of Rental Commencement shall be made earlier by the number of days of such estimate.

     SECTION 4.03. TENANT’S WORK. All work not provided herein to be done by Landlord shall be performed by Tenant at Tenant’s expense and deemed to be Tenant’s Work, including, but not limited to, all work designated as Tenant’s Work in Exhibit D.

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     (a)  Landlord shall have no liability whatsoever for loss or damage to Tenant’s Work or to fixtures, equipment or other property of Tenant or Tenant’s contractors, unless such loss or damage is the result of Landlord’s negligent acts or omissions.

     (b)  Within one hundred and eighty (180) days of Substantial Completion of Landlord’s Work (or if no Landlord’s Work is to be performed, the Commencement Date), Tenant must complete the following (i) substantial completion of Tenant’s Work in accordance with the provisions of this Lease; (ii) furnish evidence to the Landlord that all work has been completed and paid in full and that all liens have been discharged of, recorded, waived or bonded over and that no security interest relating thereto are outstanding; (iii) furnish Landlord with all certificates (including appropriate Certificate of Occupancy if necessary) and all final approvals with respect to Tenant’s Work that may be required from any governmental authority and any board of Fire Underwriters or similar body for use and occupancy of the Premises; (iv) furnish Landlord with reproducible drawings of Tenant’s Work; (v) furnish Landlord full waivers of liens and sworn statements from all persons performing labor and/or supplying materials in connection with such work showing that all said persons have been compensated in full; (vi) furnish Landlord a detailed breakdown of Tenant’s final and total construction costs together with receipted invoices showing payment thereof (if Landlord so requests in writing); (vii) submit warranties for the benefit of Landlord for not less than one year against defects and workmanship, materials and equipment. The provisions foregoing shall be completed in said time period or, Landlord may, at his sole discretion, assess Tenant a fine of $100.00 per day over the specified time period until the provisions are completed, which shall be considered Additional Rent. Nothing contained in this Section shall be deemed or construed to constitute Tenant as Landlord’s agent or contractor for the performance of Tenant’s improvements. Tenant hereby confirms and acknowledges that Tenant’s Work is to be performed solely for the benefit of Tenant and not for the benefit of the Landlord.

     SECTION 4.04. TENANT’S ALTERATIONS.

     (a)  Throughout the term of this Lease, Tenant may make non-structural alterations, additions and improvements to the Premises as Tenant deems necessary to the operation of its business not exceeding $5,000 in the aggregate for any project or related projects. If any proposed alterations, additions or improvements exceed $5,000 in the aggregate for any project or related projects or are structural in nature, Tenant shall submit complete plans and specifications for the proposed work to Landlord, and shall not proceed without Landlord’s prior written consent which shall not be unreasonably withheld or delayed. All such work shall comply with the requirements of Section 4.04(b) and will become the property of Landlord at the expiration of the Term or any earlier termination of this Lease. Tenant shall promptly repair any damage to the Premises and the Building caused by any such work. For purposes of this Section 4.04, the term “structural” shall mean anything pertaining to the foundation, exterior and load bearing walls and columns and roof of the Building. For purposes of this Section 4.04(a), Landlord shall not have unreasonably delayed its consent if it shall have responded to Tenant within three (3) business days if the estimated cost of such alterations, additions or improvements does not exceed $25,000 and within thirty (30) days for such alterations, additions or improvements exceeding $25,000. Landlord shall notify Tenant in writing within 30 days after execution of this Lease about which alterations that had previously made by Tenant need to be removed upon expiration or termination of this Lease. If Landlord does not notify Tenant within this 30 day period Tenant will not be obligated to remove any alterations made prior to the effective date of this Lease.

     (b)  No Tenant alternations, additions or improvements shall be undertaken until Tenant provides insurance policies or certificates of insurance complying with the requirements in Article 7. Tenant shall comply with all applicable municipal codes and ordinances, including obtaining a building permit if required from the local governing authority, and with the Michigan Construction Lien Act. Promptly after completion of any such alterations, additions or improvements, Tenant’s architect (if any) or contractor shall certify in writing to Landlord that all such alterations, additions or improvements have been completed in conformity with all applicable statutes, codes and ordinances.

     (c)  Tenant will not perform any work capable of activating the Building fire alarm system without having a qualified alarm technician present and without giving Landlord a minimum of five days notice. Any instance Tenant’s work that (i) activates the Building alarm where proper notice was not given, (ii) disrupts any utility to another tenant, or (iii) in the sole judgment of Landlord, creates unsafe conditions to Building tenants, patrons or passersby, shall cause the Tenant to be fined $500.00, per day or occurrence, whichever yields the largest fine, which shall be considered Additional Rent.

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     SECTION 4.05. SIGNS. In accordance with applicable codes of the local governing authority and Landlord’s written consent, which shall not be unreasonably withheld, Tenant shall be permitted to erect signage as defined in Exhibit H.

     SECTION 4.06. TENANT’S FIXTURES. Tenant, at Tenant’s sole expense, may install in or affix to the Premises necessary trade fixtures, personal property, equipment and fixture, provided that such items are installed, are removable without damage to the Building, and that such items do not exceed the weight-bearing capacity of the Premises or place unusual demands on utility services to the Premises. Prior to the installation of such trade fixtures, Tenant will provide Landlord with plans for their installation. Landlord may require that Tenant, and Tenant upon demand shall, provide data regarding the weight and operating characteristics of such trade fixtures and other property, and may deny approval for such trade fixtures or other property if Landlord, acting reasonably, determines that such trade fixtures will exceed the Building’s capacities or place unusual demands on utility services to the Premises.

     SECTION 4.07. REMOVAL. Tenant shall not remove any alterations, additions or improvements on the expiration or termination of this Lease; except that trade fixtures installed by Tenant may be removed if all Rent and all other sums payable by Tenant pursuant to this Lease have been paid in full and Tenant is not otherwise in default hereunder, in which event Tenant shall promptly repair any damage to the Premises caused by removal of the trade fixtures. For clarification purposes trade fixtures will include the environmental control systems installed by Tenant for its Mass Spectrometer.

ARTICLE 5. MAINTENANCE

     SECTION 5.01. COMMON AREAS. For the purpose of this section, and wherever else used in this Lease, the Common Areas of the Building shall be defined to include, by way of illustration and not limitation, all sidewalks, parking areas, landscaping, drainage, common area lighting facilities, shared restroom facilities, shared hallways, walkways, stairwells, entries, vestibules and elevators, boilers, chillers, makeup air systems, condensers and any other heating and cooling equipment providing conditioned air to any part of the Building, the roof and flashing (including all vents, scuttles, trap doors and appurtenances thereto in place as of the date of Signature hereof or installed hereafter), as well as other portions of the Building, all underground utility lines servicing the building in the Building, all exterior decorations and ornaments on the building and the canopy thereon, if any, and the decorating, painting and pointing of building exteriors. The Common Areas shall at all times be subject to the exclusive control and management of Landlord, and Landlord shall have the right from time to time to establish, modify and enforce reasonable rules and regulations with respect to the use of all such common area and facilities, copies of which shall be provided to Tenant. Except to the extent it materially interferes with the operation of Tenants business, Landlord shall have the right to operate and maintain the same in such a manner as Landlord, in its sole discretion, shall determine from time to time, including, without limitation, the right to employ all personnel and to make all rules and regulations pertaining to and necessary for the proper operation and maintenance of said common areas and facilities.

     Landlord shall maintain in good repair the Common Areas including, without limitation, sweeping, striping and snow and ice removal necessary to maintain all driveway, sidewalks, streets and parking areas and repair, and replacement of same, and all maintenance, replacement and repair of roof, flashings, gutters, downspouts, floor slab, outer walls and structural portions of the Building. Landlord shall comply, at its own expense, with all laws, ordinances and regulations of public authority or private restrictions that apply to any portion of the Common Areas, including, without limitation, the Americans With Disabilities Act. Landlord shall not be required to make any repairs caused in whole or in part by any act or negligence of Tenant, its agents, employees, invitees, licensees or contractors. Landlord shall have access to the Premises at reasonable times to perform any of the foregoing work.

     Landlord hereby grants to Tenant and Tenant’s employees’ agents, customers and invitees, the right, during the term hereof, to use, in common with others having rights in the Building entitled to the use thereof, Common Areas; provided, however, that access to the roof, phone closets and mechanical rooms by Tenant shall be governed by Section 1.01 hereof. Landlord agrees to operate, manage and maintain, during the term of this Lease, the Common Areas.

     Commencing upon the Rental Commencement, Tenant shall pay to Landlord reasonable estimates made by Landlord of Tenant’s share of the cost of operating, maintaining, repairing and replacing the Common Area (“Common Area Costs”) (other than Capital Expenses as defined by GAAP, which shall be paid solely by Landlord) monthly in advance concurrently with the payment of rent. Tenant’s share shall be the percentage share, as set forth in Paragraph E of the Summary, of Common Area Costs in excess of the Common Area

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Costs for the Base Year, as set forth in Paragraph E of the Summary. The amount to be paid by Tenant to Landlord hereunder during the first and last years of the term hereof shall be equitably prorated to apply only to the period during such years while this Lease is actually in effect. The estimated monthly payment shall be established by Landlord in letter form under separate cover prior to Rental Commencement and shall be calculated by: (Tenant’s percentage share of the Common Area Costs) less the (Base Year amount divided by twelve as shown in Paragraph E of the Summary).

     Notwithstanding anything to the contrary in this paragraph, all operating expenses shall be reasonable, actual out-of-pocket, incurred at competitive rates, and be for the operation, repair or maintenance of the Building. All operating expenses shall be net any credits, allowances, reductions, discounts, or reimbursements received by or owing to the Landlord. Landlord shall use its best efforts to keep the operating expenses down while maintaining a first-class office building.

     Notwithstanding the above, operating expenses shall not include the following:

  (a)   Real Estate Taxes as defined in Section 6.01(a);
 
  (b)   Leasing commissions, costs, disbursements, and other expenses incurred in connection with leasing, renovating, or improving space for tenants or other occupants or prospective tenants or other occupants of the Building.
 
  (c)   Costs incurred by Landlord in the discharge of its build-out obligations under Exhibit C;
 
  (d)   Costs, including permit, license and inspection fees, incurred in renovating or otherwise improving or decorating, or redecorating vacant space or space for tenants or other occupants;
 
  (e)   Landlord’s cost of any service sold to tenants or other occupants for which Landlord is entitled to be reimbursed as an additional charge or rental over and above the Rent and Additional Rent payable under the lease with that tenant or other occupant;
 
  (f)   Any depreciation and amortization on the Building;
 
  (g)   Expenses in connection with services or other benefits of a type that are not provided to Tenant but which are provided to another tenant or occupant;
 
  (h)   Costs incurred due to violation by Landlord of any of the terms and conditions of this Lease or any other lease relating to the Building;
 
  (i)   Overhead and profit increments paid to subsidiaries or affiliates of Landlord for management or other services on or to the Building or for supplies or other materials, to the extent that the costs of the services, supplies or materials exceed the costs that would have been provided by unaffiliated parties on a competitive basis.
 
  (j)   Interest on debt or amortization payments on any mortgages or deeds of trust or any debt for borrowed money;
 
  (k)   Any compensation paid to clerks, attendants, or other persons in commercial concessions operated by Landlord;
 
  (l)   Rentals and other related expenses incurred in leasing air conditioning systems, elevators or other equipment ordinarily considered to be of a capital nature, except equipment used in providing janitorial services that is not affixed to the Building;
 
  (m)   All items and services for which Tenant reimburses Landlord or pays third persons of which Landlord provides selectively to one or more tenants or occupants of the Building other than Tenant without reimbursement;
 
  (n)   Advertising and promotional expenses;
 
  (o)   Repairs and other work occasioned by fire, windstorm, or other casualty, to the extent repairs and other work are paid from insurance or condemnation proceeds;
 
  (p)   Costs incurred in operating the parking facilities for the Building;
 
  (q)   Capital expenditures;
 
  (r)   Management fees in excess of what is customary for similar buildings in Southeast Michigan;

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  (s)   Wages, salaries, or fees paid to executive personnel of Landlord;
 
  (t)   Any charge for Landlord’s income tax, excess profits taxes, or similar taxes on Landlord’s business;
 
  (u)   Legal fees;
 
  (v)   Non-recurring cost incurred to remedy defects in original construction materials or installations;
 
  (w)   Any costs incurred to test, survey, cleanup, contain, abate, remove, or otherwise remedy hazardous wastes or materials or asbestos-containing materials from the Property unless the hazardous wastes or materials or asbestos-containing materials were in or on the Property because of Tenant’s negligence or intentional acts;
 
  (x)   Any costs to remedy an “indoor pollution” problem;
 
  (y)   Any costs incurred to comply with the Americans With Disabilities Act (42 USC 12101) or any other federal or state or local legislation, rules, regulations, ordinances or codes governing or requiring “handicap access”; and
 
  (z)   Any other expenses that under generally accepted accounting principles (consistently applied) and practice would not be considered a normal maintenance or operating expense.

     Notwithstanding anything contrary in this paragraph, Common Area Costs which are controllable shall not increase more than five percent (5%) over what the operating expenses were in the previous year. For purposes of this Section 5.01, the term “controllable” shall mean any Common Area Cost except snow removal, landscaping, insurance, property taxes or assessments and utilities.

     On or before May 31 of each year, Landlord shall provide Tenant with a written statement of the actual Common Area Costs for the previous calendar year (“Common Area Cost Statement”), and Tenant shall reimburse Landlord for any underpayment thereof within fifteen (15) days from the date such statement is received by Tenant. Any overpayment by Tenant shall be credited against the next monthly installment of Common Area Costs due from Tenant hereunder. Upon request, Landlord shall provide Tenant with copies of such paid invoices and other information pertaining to payment of Common Area Costs as is necessary to substantiate the Common Area Cost Statement presented to Tenant. Any over-payments made by Tenants as determined upon the expiration of the Lease Term or any extension thereof shall be refunded to Tenant. Under no circumstances shall Tenant be responsible for Landlord’s capital expenditures and such capital expenditures shall not be charged to Tenant as part of “Common Area Costs.”

     SECTION 5.02. BUILDING ALTERATIONS BY LANDLORD. Notwithstanding anything in this Lease to the contrary, Landlord reserves the right at any time and from time to time, without notice to Tenant or liability, to Tenant for damage or injury to Tenant’s business, and without constituting an eviction or disturbance of Tenant’s use or possession of the Premises or giving rise to any claim for setoff or abatement of rent to the extent that it does not materially interfere with Tenant’s business: (i) to make alterations, changes, and additions to the Building (including the Common Areas), (ii) to add additional areas to the Building and/or to exclude areas therefrom, (iii) to construct additional buildings or other improvements on the land occupied by the Building, including Common Areas, (iv) to remove or relocate a part of the Building, and (v) to relocate any other tenant in the Building, provided in each such case changes undertaken by Landlord shall not unreasonably interfere with Tenant’s use of the Building as permitted under this Lease. Provided further, that any cost incurred in connection with such actions shall be Landlord’s expense, and shall not be classed as “Common Area Costs” or otherwise charged to Tenant.

     SECTION 5.03. TENANT’S OBLIGATIONS.

     (a)  Except as specifically provided in Section 5.01, Tenant shall maintain the Premises and every part thereof and all appurtenances thereto in good order, condition and repair (including replacement of parts and equipment if necessary), including, without limitation, the exterior and interior portion of all doors, door frames, door checks, interior walls, floors, ceilings, and plumbing and electrical systems within the Premises. The plumbing and sewage facilities shall not be used for any purpose other than that for which they are constructed, and no foreign substance of any kind shall be introduced therein. Tenant shall be responsible for all expenses incurred in connection with any breakage, stoppage or damage resulting from a violation of this provision by Tenant, its agents, employees, invitees, or contractors. If replacement of equipment, fixtures and appurtenances thereto is necessary, Tenant shall replace the same with equipment, fixtures and appurtenances of the same quality as originally installed, and repair all damages done in or by such replacement. Under no

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circumstances shall Tenant shutdown any service to any other part of the Building other than the Premises and even then Tenant must give Landlord reasonable notice of Tenant’s intentions.

     (b)  Tenant shall at its expense maintain the Premises in a clean, sanitary and safe condition in accordance with the laws of Michigan and in accordance with all directions, rules and regulations of health officers, fire marshals, building inspectors, and other governmental officials, and comply with all requirements of law affecting the Premises. At the expiration or termination of this Lease, Tenant shall surrender the Premises in good condition, reasonable wear and tear, loss by fire or other unavoidable casualty excepted.

     (c)  Tenant shall at its expense install and maintain fire extinguishers and other fire protection devices as required by any agency having jurisdiction or by insurance underwriters.

     (d)  Tenant shall keep the Premises free of all liens arising out of any work performed, materials furnished or obligations incurred by or for Tenant, and shall bond against or discharge any construction lien within 10 days after notice thereof from any source.

     (e)  If Tenant fails to perform its obligations hereunder, after applicable notice and cure periods, Landlord, without notice, may, but shall not be obligated to, perform Tenant’s obligations or perform work resulting from Tenant’s acts, actions or omissions and add the cost of the same to the next installment of Base Rent due hereunder.

     SECTION 5.04. OPERATION BY TENANT. Tenant covenants and agrees that it will not place or maintain any merchandise, vending machines or other articles in any vestibule or entry of the Premises or outside the Premises so as to extend into any portion of the common area or adjacent sidewalk (except as expressly provided herein); store garbage, trash, rubbish and other refuse in rat-proof and insect-proof containers inside the Premises, and remove the same frequently and regularly and, if directed by Landlord, by such means and methods and at such times and intervals as are designated by Landlord, all at Tenant’s cost; not permit any sound system which is audible outside the Premises or objectionable advertising medium which is visible outside the Premises; keep all mechanical equipment free of vibration and noise and in good working order and condition; not commit or permit waste or a nuisance upon the Premises; not permit or cause noxious or offensive odors to emanate or be dispelled from the Premises; not solicit business in the common areas nor distribute advertising matter to, in or upon any common area; not permit the loading or unloading or the parking or standing of delivery vehicles outside any area designated therefor, nor permit any use of vehicles which will interfere with the use of any common area in the Building; comply with all laws, recommendations, ordinances, rules and regulations of governmental, public, private and other authorities and agencies, including those with authority over insurance rates, with respect to the use or occupancy of the Premises; not permit any noxious, toxic or corrosive fuel or gas, dust, direct or fly ash on the Premises; not place a load on any floor in the Building which exceeds the floor load per square foot which such floor was designed to carry. Landlord may fine Tenant $100.00 per occurrence plus removal costs for improperly disposed trash, as Additional Rent.

     SECTION 5.05. STORAGE. Except in emergencies, Tenant shall have in the Premises only equipment and all other items normally associated with its business.

ARTICLE 6. TAXES

     SECTION 6.01. REAL ESTATE TAXES.

     (a)  Tenant agrees to pay Landlord Tenant’s proportionate share of all taxes, existing and future, assessments, general and special, and government charges of any kind and nature whatsoever which have been or may be levied or assessed by any lawful authority against the land, Building or improvements presently and/or at any time during the term of this Lease comprising the Building and the Common Areas of which the Premises is a part, in excess of such taxes for the calendar year, as set forth in Paragraph E of Summary showing Tenant’s proportionate share and the base year. Monthly estimate shall be Tenant’s prorata share of the Real Estate Taxes less the Base Year amount divided by twelve as shown in Paragraph E of the Summary.

     (b)  Tenant’s share of taxes and assessments shall be paid in monthly installments on or before the first day of each calendar month, in advance, in an amount estimated by Landlord, or Landlord may, at its option, bill such taxes in arrears. If Landlord is required under any mortgage of the land and building to escrow real estate taxes, Landlord may, but shall not be obligated to, use the amount required to be escrowed as a basis for its estimate of the monthly installments due from Tenant hereunder. On receipt of all tax and assessment bills incurred in any Lease Year, Landlord shall furnish Tenant a written statement of the amount of Tenant’s share of

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the taxes and assessments for such year. A copy of a tax or assessment bill submitted by Landlord to Tenant shall at all times be sufficient evidence of the amount of taxes and assessments levied or assessed against the property to which such bill relates. If the total amount paid by Tenant under this Section for any Lease Year is less than the actual amount due from Tenant for such period, Tenant shall pay to Landlord the difference between the amount paid and the amount due, within fifteen (15) business days after the furnishing of such statement. If the total amount paid by Tenant hereunder for any Lease Year exceeds the actual amount due from Tenant for such period, the excess shall be credited against the next installment of taxes and assessments due from Tenant hereunder. Tenant’s share of such taxes and assessments shall be calculated in the same manner and paid at the same time as Tenant’s share of common area expenses, pursuant to Section 5.01. The estimated monthly tax payment shall be established by Landlord in letter form under separate cover prior to Rental Commencement.

     SECTION 6.02. PERSONAL PROPERTY TAXES. Tenant shall pay before the due date all federal, state and local taxes and assessments of any kind against the Tenant’s leasehold interest and all personal property owned by or placed in, upon or about the Premises, and furnish proof of payment to Landlord within five days of request.

ARTICLE 7. INDEMNITY AND INSURANCE

     SECTION 7.01. INDEMNITY BY LANDLORD AND TENANT.

     (a)  Tenant shall indemnify Landlord and hold it harmless from and against all claims, actions, damages, liability and expenses, including attorneys’ fees, in connection with any loss of life, personal injury and/or damage to property arising out of any occurrence in or about the Premises, which arises out of Tenant’s occupancy or use of the Premises, or arising out of Tenant’s failure to comply with any provision of this Lease, or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees or invitees.

     (b)  Landlord shall indemnify Tenant and hold it harmless from and against all claims, actions, damages, liabilities and expenses, including reasonable attorneys’ fees, in connection with any loss or personal injury and/or damage to property arising out of or resulting from breach of this Lease, the negligence or intentional misconduct of Landlord, its agents, contractors, employees or invitees.

     (c)  Anything in this Lease to the contrary notwithstanding, in the event of any damages to the Building arising wholly or in part out of any act or omission of Tenant, its agents, employees, contractors or invitees, and all or any portion of Landlord’s loss is “deductible” under Landlord’s insurance policies, Tenant shall pay to Landlord on demand the amount of such deductible loss as Additional Rent.

     SECTION 7.02. NON-LIABILITY OF LANDLORD.

     (a)  Landlord shall not be responsible or liable to Tenant, or to those claiming by, through or under Tenant, for any loss or damage caused to Tenant or its property from the breaking, bursting, stoppage or leaking of water, gas, sewer or steam pipes, or electrical cable or wires, or for any damage or loss of property in the Premises from any cause whatever, unless such loss or damage is caused by the negligence of Landlord, its agents, contractors, employees or invitees.

     SECTION 7.03. TENANT’S INSURANCE. Tenant shall at its expense, at all times from and after the earlier of the Commencement Date or the date of the performance of work or any other activities by Tenant in the Premises, maintain the following insurance on a first dollar non-deductible basis:

     (a)  General commercial liability insurance, with respect to the Premises and the business operated by Tenant, including blanket contractual coverage against claims for or arising out of personal injury, death or property damage, occurring in, on, or about the Premises, the buildings or the land, or to property in, on, or about the streets, sidewalks or adjacent premises, such insurance to afford protection to the limit at the beginning of the term of not less than One Million Dollars ($1,000,000) “Single Limit” per occurrence and Two Million Dollars ($2,000,000) annual aggregate for personal injury and property damage and thereafter in such amounts as the Landlord may reasonably require, and comprehensive automobile liability insurance covering all owned, leased and hired automobiles of Tenant in the same amount.

     (b)  All-risk property insurance, written at not less than replacement cost value and with replacement cost endorsement, covering all Tenant’s personal property in the Premises (including without limitation inventory, trade fixtures, floor coverings, furniture and all other property removable by Tenant under the provisions of this Lease) and all leasehold improvements installed in the Premises by or on behalf of Tenant;

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     (c)  Worker’s compensation insurance in form and amounts required by law; and

     (d)  If the insurance maintained pursuant to Section 7.03(a) is a “claims made” policy, Tenant shall, not less than one complete Lease Year before the expiration of the Term, purchase extended insurance coverage that provides protection in the limits specified above for not less than three full Lease Years after expiration of the Lease.

     SECTION 7.04. TENANT’S CONTRACTOR’S INSURANCE. Tenant shall require any contractor performing work in or on the Premises to maintain the following insurance on a first dollar non-deductible basis, at no cost to Landlord:

     (a)  Comprehensive general liability insurance, including but not limited to contractor’s liability coverage, contractual liability coverage, completed operations coverage, broad form property damage endorsement, and contractor’s protective liability coverage, with combined limits of not less than $2,000,000 for personal injury or death and property damage, or such greater amount as Landlord may require; and

     (b)  Worker’s compensation insurance in form and amounts required by law.

     SECTION 7.05. POLICY REQUIREMENTS. The companies writing any insurance which Tenant is required to maintain or obtain pursuant to Sections 7.03 and 7.04, and the form of such insurance, shall at all times be subject to Landlord’s reasonable approval, and each such company shall be authorized or eligible unauthorized in Michigan and have a Best’s rating of at least A-. Commercial general liability and automotive liability insurance pursuant to Sections 7.03(a) and (b) and 7.04(a) shall name Landlord and any other parties in interest designated by Landlord as additional named insured parties, and shall contain a provision by which the insurer agrees that the policy will not be canceled except after 30 days’ written notice to Landlord or its designees. Certificates of such insurance (Accord Form 27) (or, at Landlord’s request, each policy) shall be deposited with Landlord on the earlier of the Commencement Date or the date Tenant performs any work or engages in any other activity in the Premises and, in case of renewal, not less than thirty (30) days prior to the expiration of the preceding coverage.

     SECTION 7.06. WAIVER OF RIGHT OF RECOVERY. Neither Landlord nor Tenant shall be liable to the other or to any insurance company (by way of subrogation or otherwise) insuring the other party for any loss or damage to any building, structure, or other property, or any resulting loss of income, or liability for personal injury, or losses under worker’s compensation laws and benefits, even though such loss or damage might have been occasioned by the negligence of such party, its agents or employees, to the extent that such loss or damage is covered by insurance benefiting the party suffering the loss or damage.

     SECTION 7.07. TENANT’S SHARE OF LANDLORD’S INSURANCE COSTS. Landlord shall maintain insurance against fire, vandalism, malicious mischief and such other perils as from time to time are included in a standard extended coverage endorsement and, at Landlord’s option, special extended coverage endorsements, insuring the building in which the Premises are situated in an amount equal to 100% of the replacement cost, if available, and with or without deductible, at Landlord’s option and rental loss coverage in such form and amount as Landlord shall reasonably determine. Tenant agrees to pay its proportionate share of all premiums for such insurance during the Terms, in excess of the calendar year as set forth in Paragraph E of the Summary showing Tenant’s proportionate share and the base year. Tenant’s share of such insurance premiums shall be calculated in the same manner and paid at the same time as Tenant’s share of Real Estate Taxes, pursuant to Section 6.01. The estimated monthly insurance payment shall be established by Landlord in letter form under separate cover prior to Rental Commencement.

ARTICLE 8. UTILITIES

     SECTION 8.01. UTILITY CHARGES. Tenant shall be responsible for and promptly pay all consumption charges for water, gas, heat, electricity, sewer and any other utilities used in or furnished to the Premises. If possible, such services shall be separately metered or billed for use consumed on the Premises. If such services cannot be separately metered, then the cost thereof shall be estimated on a prorata basis per Paragraph E of the Summary, paid monthly by Tenant and reconciled annually by Landlord not later than March 31 of each year for the previous year. The obligation of Tenant to pay for utilities shall commence as of the date Tenant takes possession of the Premises. The estimated monthly utilities payment shall be established by Landlord in letter form under separate cover prior to Tenant taking possession.

     SECTION 8.02. ADDITIONAL SERVICES. If Tenant requests any other utilities or services in addition to those set forth herein above, Landlord shall use reasonable efforts to attempt, at Landlord’s reasonable

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discretion, either to furnish Tenant with such additional utilities or services, or to make same available to Tenant. In the event Landlord is able to and does furnish such additional utilities or services to Tenant, the cost thereof shall be borne by Tenant. In the event that Landlord advances funds for such additional utilities or services, Tenant shall reimburse Landlord as Additional Rent.

     SECTION 8.03. INTERRUPTION OF SERVICES. Tenant understands, acknowledges and agrees that any one or more of utilities or other services referred to herein above may be by reason of accident, emergency or other causes beyond Landlord’s control. Tenant further understands that such utilities may be discontinued or diminished temporarily by Landlord or other persons until certain repairs, alterations or improvements can be made. Tenant further understands, acknowledges and agrees that Landlord does not represent or warrant the uninterrupted availability of such utilities or building service, and that any such interruption shall not be deemed an eviction or disturbance of Tenant’s right to possession, occupancy, use and quiet enjoyment of the Premises or any part thereof, or render Landlord liable to Tenant for damages by abatement of rent or otherwise or relieve Tenant from the obligation to perform its covenants under this Lease.

ARTICLE 9. ASSIGNMENT OR SUBLETTING

     SECTION 9.01. ASSIGNMENT OR SUBLETTING. Tenant shall not assign or in any manner transfer this Lease or any estate or interest therein, nor lease or sublet the Premises or any part thereof or any right or privilege appurtenant thereto, nor allow anyone to conduct business at, in or from the Premises (whether as concessionaire, franchisee, licensee, permittee, sub-tenant, or otherwise), whether by voluntary or involuntary act of Tenant, except with Landlord’s prior written consent, which shall not be unreasonably withheld or delayed more than ten (10) days after receipt from Tenant of all materials required by this Section 9.01. However, Landlord may elect to terminate this Lease (without penalty to Tenant) upon receipt of notice from Tenant of Tenant’s desire to sublease or assign Tenant’s right to the Premises, except where Tenant proposes to assign this Lease in connection with the sale of Tenant’s business or sublease less than fifty percent of the Premises. Tenant shall submit to Landlord, with any request for Landlord’s consent to any proposed transfer, written evidence of the business experience and financial condition of the proposed transferee, and a description of the business proposed to be conducted in the Premises by the transferee. Landlord will have the right to disapprove of any proposed transfer for any lawful reason Landlord determines in good faith, which may include (without limitation) the business experience and/or financial condition of the proposed transferee, and/or the nature of the business to be conducted in the Premises. No transfer shall relieve Tenant or any guarantor of Tenant’s obligations under this Lease from responsibility for payment of all Rent and all other amounts to be paid, and performance of all obligations, according to the terms of this Lease and any amendments, extensions and renewals thereof. Any such prohibited act by Tenant (or any attempt at same), either voluntarily or involuntarily, shall at Landlord’s option terminate this Lease, and any purported such act shall be null and void. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger and shall, at the option of Landlord, terminate any or all franchises, concessions, licenses, permits, subleases, subtenancies, operating arrangements or the like, or may, at the option of Landlord, operate as an assignment thereof to Landlord. All of the sums or economic consideration received by Tenant as a result of such subletting or assignment, whether the denominated rental or otherwise for any sublease or assignment, which exceeds, in the aggregate, the total sums of which Tenant is obligated to pay Landlord under this Lease (prorated to reflect obligations allocable to that portion of the Premises subject to such sublease) shall be payable to Landlord as Additional Rent under this Lease without effecting or reducing any other obligation of Tenant hereunder.

ARTICLE 10. DESTRUCTION OF PREMISES

     SECTION 10.01. REPAIR OF PREMISES. If the Premises or building shall be partially or totally destroyed by fire or other casualty insured under insurance carried by Landlord, so as to become partially or totally untenantable, the damage to the Premises shall be promptly repaired by Landlord, to the extent of any proceeds received from such insurance, unless Landlord elects not to repair or rebuild the Premises as hereinafter provided. The obligation of Landlord hereunder shall be limited to repairing or reconstructing the Premises to substantially the same condition as existed immediately prior to the casualty. In no event shall Landlord be required to repair or replace Tenant’s inventory, trade fixtures, furnishings or equipment. If Landlord is required or elects to repair or rebuild the Premises, Tenant shall repair or replace its inventory, trade fixtures, furnishings and equipment in a manner and to at least a condition equal to that existing prior to the casualty. During any period where all or a portion of the Premises is rendered unusable due to fire or other

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casualty, then Rent shall be decreased proportionately during the period of repair and restoration to the extent that the Premises are unusable prior to repair and restoration.

     SECTION 10.02. LANDLORD’S OPTION TO TERMINATE. In the event that Building or the Premises shall be damaged by fire or other casualty during the term of this Lease so as to render more than fifty percent (50%) of the Premises untenantable, this Lease may be terminated by Landlord by delivery of thirty (30) days prior written notice thereof to Tenant, but shall continue unless so terminated.

     SECTION 10.03. TENANT’S OPTION TO TERMINATE. In the event of damage or destruction of the Premises, Landlord shall advise Tenant, within thirty (30) days after such damage or destruction of the Premise occurs, whether Landlord is able to substantially restore the Premises and eliminate and substantial interference with Tenant’s use of the Premises within one hundred eighty (180) days. If Landlord advises Tenant that it is unable to substantially restore the Premises and eliminate any substantial interference with Tenant’s use of the Premises within one hundred eighty (180) days or Landlord fails to do so within one hundred eighty (180) days, Tenant may, by providing written notice to Landlord within fifteen (15) days of receipt of the notice from Landlord or expiration of the 180-day period, as the case may be, terminate this Lease at the end of the fifteen (15th) day after Landlord’s receipt of such notice, unless Landlord has substantially restored the Premises and eliminated any substantial interference with Tenant’s use of the Premises within such 15-day period, in which case the Lease shall remain in full force and effect.

ARTICLE 11. EMINENT DOMAIN

     SECTION 11.01. TOTAL CONDEMNATION.

     If all of the Premises shall be taken by any public authority under the power of eminent domain or by private purchase in lieu thereof, the Term of this Lease shall cease as of the date possession is taken by such public authority and the Rent shall be paid to that date.

     SECTION 11.02. PARTIAL CONDEMNATION.

     If more than fifty (50%) percent of the Premises shall be so taken, either party may terminate this Lease by written notice to the other party within 30 days after such taking. If neither party exercises its right of termination, the Term shall cease only with respect to the part of the Premises taken, as of the date possession is taken by the public authority, and thereafter all the terms of this Lease shall continue in effect, except that the Annual Rent shall be reduced in proportion to the amount of first floor area of the Premises taken, and Landlord shall make necessary repairs or alterations to the building so as to constitute the remaining Premises a complete architectural unit. In no event, however, shall Landlord be obligated to spend for any reconstruction any amount in excess of the damages awarded to it for the taking.

     SECTION 11.03. DAMAGES.

     All damages awarded for any such taking, whether for the whole or part of the Premises, shall, as between Landlord and Tenant, belong to and be the property of Landlord, whether such damages are awarded as compensation for diminution in value to the estate of the Landlord or of the Tenant; provided, that Landlord shall not be entitled to any separate award made for damage to, and/or cost of removal of, Tenant’s business operations, inventory and trade fixtures. Nothing in this Article 11 shall prohibit Tenant from participating in any proceeding involving such taking and to receive all awards which by law it is entitled, except as provided above.

ARTICLE 12. DEFAULT

     SECTION 12.01. INTEREST ON LATE PAYMENTS.

     All Rent and other amounts required to be paid by Tenant to Landlord not paid within ten (10) days of the date due shall bear interest from the due date until Landlord’s actual receipt of payment, at the rate of ten (10%) percent per annum.

     SECTION 12.02. PENALTY FOR LATE PAYMENT/INSUFFICIENT FUNDS.

     In the event that Rent or Additional Rent is not paid by Tenant to Landlord within ten (10) business days of the date due, in addition to all other amounts due to Landlord under this Agreement, Tenant shall pay a late fee equal to five percent (5%) of the late payment to cover Landlord’s cost of handling such late payment. Further, there will be a $50.00 charge for any check returned to Landlord unpaid for any reason and Tenant will thereafter pay the rent only with money orders, bank or certified checks (failure to do so will carry a $50.00 charge on each occurrence plus the Tenant’s risk of late payment).

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     SECTION 12.03. LANDLORD’S RIGHT TO PERFORM TENANT’S OBLIGATIONS.

     If Tenant fails to perform any of its obligations under this Lease after applicable notice and cure periods, Landlord may (but shall not be obligated to) perform the obligation at Tenant’s expense, and such performance shall not be deemed a waiver of Tenant’s default. The cost of performance by Landlord, with interest thereon at the rate provided for in Section 12.01, computed from the date of payment by Landlord, shall be due and payable on demand.

     SECTION 12.04. NO WAIVER OF DEFAULT.

     No acquiescence by Landlord in any default by Tenant shall be construed as a waiver of the default unless such waiver is explicit, in writing, and signed by Landlord. No waiver of any default shall be construed as a waiver of any other or subsequent default, and Landlord’s consent to or approval of any act or failure to act by Tenant shall not be deemed a consent to or approval of any other act or failure to act.

     SECTION 12.05. NO ACCORD AND SATISFACTION.

     No payment by Tenant or receipt by Landlord of a lesser amount than the Rent or other amounts payable hereunder shall be deemed to be other than on account of the earliest Rent or other such amount, nor shall any endorsement or statement on any check or any letter accompanying any payment be deemed an accord and satisfaction. Landlord’s acceptance of any payment will be without prejudice to Landlord’s right to recover the balance of the Rent and other amounts payable hereunder and pursue all other lawful remedies.

     SECTION 12.06. EVENTS OF DEFAULT.

     Any one or more of the following events shall constitute an “Event of Default”:

     (a)  Any failure of Tenant or any guarantor of Tenant’s obligations under this Lease (“Guarantor”) to pay any Rent or any other amount due hereunder for more than five (5) business days after receipt of written notice that the same was not received by Landlord when due;

     (b)  Any failure of Tenant or any Guarantor to perform any obligation (other than payment of money) required to be performed pursuant to this Lease, and continuation of such default for more than thirty (30) days after written notice to Tenant, unless Tenant commences to cure such default within thirty (30) days after written notice and thereafter proceeds diligently to cure the default (notwithstanding the 10-day period for cure noted above, if the default creates a hazardous situation or involves disturbance to the quiet enjoyment of other Building tenants, Tenant must cure the default immediately upon notice);

     (c)  The vacating or abandonment of the Premises by Tenant, without payment of rent, at any time during the Term;

     (d)  Any material inaccuracy in any representation or warranty of Tenant in this Lease, or any material inaccuracy or omission in any financial statement, report, certificate or other document furnished to Landlord at any time by Tenant or any Guarantor;

     (e)  Any violation of the provisions of Section 9.01; or

     (f)  Any sale of Tenant’s interest in the Premises under attachment, signature or other legal process; adjudication of Tenant or any Guarantor as bankrupt or insolvent pursuant to any present or future Federal or state law; appointment of a receiver or trustee for the business or property of Tenant or any Guarantor; assignment of the property of Tenant or any Guarantor for the benefit of creditors; or admission in writing by Tenant or any Guarantor of its inability to pay its debts when due.

     SECTION 12.07. DEFAULT WITHOUT CURE.

     The occurrence of an Event of Default in the performance of any term, covenant or condition of this Lease on three or more separate occasions during any twelve (12) month period, even though each such Event of Default may have been cured, shall be deemed to be an Event of Default without cure.

     SECTION 12.08. REMEDIES.

     On the occurrence of an Event of Default, Landlord may do any one or more of the following, without notice to Tenant or any Guarantor except as specifically provided in this section or as required by law:

     (a)  Re-enter the Premises, with or without judicial process, without terminating this Lease; remove Tenant and all other occupants and all property from the Premises, without liability for trespass, conversion, or loss or damage occasioned thereby; store all or any part of such property in a public warehouse or elsewhere,

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at the expense and for the account of Tenant; make such alterations and repairs as Landlord deems necessary to relet the Premises; and relet the Premises or any part thereof for such term or terms (which may extend beyond the Term of this Lease), at such rental or rentals, and on such other terms and conditions as Landlord deems advisable; all without effecting an eviction or termination of this Lease or releasing Tenant from its liability for payment of all Rent and all other amounts required to be paid hereunder, together with all expenses and damages caused by Tenant’s Event of Default, and interest on all of the foregoing at the rate provided for in Section 12.01.

     (b)  Elect to terminate this Lease and declare the Term ended, by giving written notice of such election to Tenant, and take any and all actions provided for in Section 12.06(a), all without releasing Tenant from its liability for all Rent and all other amounts required to be paid hereunder, and all expenses, damages and interest thereon.

     (c)  Exercise any other legal or equitable rights and remedies it may have under this Lease or under any provision of law.

     SECTION 12.09. NO ELECTION OF REMEDIES. No re-entry or repossession of the Premises by Landlord shall be construed as an election to terminate this Lease unless Landlord gives written notice of termination to Tenant. Notwithstanding any reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous default.

     SECTION 12.10. DAMAGES. Landlord shall use commercially reasonable efforts to mitigate damages that may arise in connection with a default by Tenant. Tenant shall pay all costs, expenses and reasonable attorneys’ fees incurred in enforcing Tenant’s agreements under this Lease, including without limitation all costs, expenses and attorneys’ fees incurred for proceedings for recovery of possession of the Premises, for recovery of Rent or any other amount due under this Lease, for storage and sale of any property in the Premises, for repair and reletting of the Premises, and all other damages caused Landlord by Tenant’s default or Event of Default. If Landlord terminates this Lease by reason of any Event of Default, Landlord’s damages shall include the amount, if any, by which the value, discounted to present value at the prime rate at the time of termination, at the time of such termination, of the Rent to be paid for the remainder of the Term exceeds the then reasonable rental value of the Premises for the remainder of the Term.

     SECTION 12.11. APPLICATION OF MONEYS RECEIVED. All rentals and other sums received by Landlord from any reletting of the Premises or sale of any property in the Premises shall be applied, first, to the payment of any indebtedness other than Rent due from Tenant to Landlord, and interest thereon; second, to the payment of all costs and expenses of such reletting or sale, and interest thereon; third, to the payment of Rent and other amounts due hereunder, and interest thereon; and fourth, to the payment of all other damages caused Landlord by Tenant’s default or Event of Default. If Landlord does not terminate this Lease, any residue of proceeds received shall be held by Landlord and applied in payment of future Rent as it becomes due; and if the rentals and other sums received from such re-letting during any month are less than the amounts required to be paid by Tenant during the month, Tenant shall promptly, each month, pay the deficiency to Landlord.

ARTICLE 13. BANKRUPTCY OR INSOLVENCY

     SECTION 13.01. TENANT’S INTEREST NOT TRANSFERABLE. Neither Tenant’s interest in this Lease, nor any estate hereby created in Tenant, nor any interest herein or therein, shall pass to any trustee or receiver or assignee for the benefit of creditors or otherwise by operation of law except as specifically provided by the Bankruptcy Code.

     SECTION 13.02. PROCEEDINGS OTHER THAN BANKRUPTCY. Except as prohibited by the Bankruptcy Code, on the occurrence of any Event of Default described in Section 12.06(f), at Landlord’s option this Lease and all rights of Tenant hereunder shall thereupon automatically terminate, and Tenant shall vacate and surrender the Premises but shall remain liable as provided herein.

ARTICLE 14. WAIVER BY TENANT

     SECTION 14.01. WAIVER OF COUNTERTERCLAIMS AND JURY TRIAL. LANDLORD AND TENANT WAIVE THEIR RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON ALL MATTERS

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WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF SAID PREMISES AND ANY EMERGENCY STATUTORY OR ANY OTHER STATUTORY REMEDY. TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OR COUNTERCLAIMS OR CLAIM OF SETOFF, RECOUPMENT OR DEDUCTION FOR RENT IN ANY SUMMARY PROCEEDING FOR NONPAYMENT OF RENT OR OTHER ACTION OR SUMMARY PROCEEDING BASED ON TERMINATION, HOLDOVER, OR DEFAULT IN WHICH LANDLORD SEEKS REPOSSESSION THE PREMISES FROM TENANT. THE PREVAILING PARTY IN ANY SUCH CLAIM SHALL RECOVER FROM THE NON-PREVAILING PARTY ALL ATTORNEY’S FEES IN CONNECTION WITH SAID CLAIM.

ARTICLE 15. ACCESS BY LANDLORD

     SECTION 15.01. RIGHT OF ENTRY. Landlord and Landlord’s agents shall have the right to enter the Premises during Tenant’s business hours and at other such reasonable times with reasonable advance verbal or written notice to examine the same, to show them to prospective purchasers and mortgagees, and to make any repairs, alterations, improvements or additions as Landlord may deem necessary or desirable pursuant to the terms of this Lease, and Landlord shall be allowed to take all material into and upon said Premises that may be required therefor without the same constituting an eviction of Tenant in whole or in part and the rent reserved shall in no way abate while said repairs, alterations, improvements or additions are being made by reason of loss or interruption of business of Tenant or otherwise. And, if Tenant fails to maintain any part of the Premises as required hereunder, to perform the work at Tenant’s expense. Landlord may take all material into the Premises that may be required for the foregoing without such action constituting an eviction of Tenant in whole or in part. Rent shall not abate while such repairs, alterations, improvements, or additions are being made, by reason of loss or interruption of business of Tenant, or otherwise. Notwithstanding the foregoing, Landlord shall use reasonable commercial efforts to minimize any interference with Tenant’s normal business operations.

     SECTION 15.02. RIGHT TO SHOW PREMISES. For a period commencing twelve (12) months prior to the termination of this Lease or any extension thereof, the Landlord may show the Premises, using best efforts to be discreet. Tenant will be given reasonable notice before showings. For a period commencing six (6) months prior to the termination of this Lease or any extension thereof, the Landlord may display about the Premises signs advertising the availability of the Premises, which signs Tenant shall permit to remain thereon without molestation, and Landlord agrees such signs will not be placed in the windows of the Premises or in front of the Premises.

ARTICLE 16. RENEWAL OPTIONS AND HOLDING OVER

     SECTION 16.01. RENEWAL TERMS. Tenant will have the option to extend and renew the Term of this Lease for the length of time described in Paragraph B of the Summary (which shall be referred to as a “Renewal Term”). If the Option Length described in Paragraph B of the Summary states “N/A”, then Tenant has no right to renew this Lease.

     The Renewal Term will commence immediately on expiration of the Initial Term on the same terms and conditions as provided in this Lease, other than Annual Rent during the Renewal Term which shall be determined as provided in this Article 16. Annual Rent during the Renewal Term shall be as set forth in the Summary, or, if undefined, shall be computed in accordance with Section 16.02. The renewal option shall be exercisable by written notice to Landlord not later than nine (9) months before the expiration of the current Term, provided Tenant is not in default under any of the terms or conditions of this Lease at the date Tenant gives notice of renewal or at any time thereafter to and including the first day of the Renewal Term. Failure to timely exercise Tenant’s option to renew, in writing, shall forfeit Tenant’s rights under this Section. Tenant expressly waives any oral right to renew or any claim for renewal based upon oral promises of Landlord or its agents.

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     SECTION 16.02. RENEWAL RATE.

     (a)  If not defined in Paragraph C of the Summary, then the Annual Rent for the Renewal Term shall be at Fair Market Value, but in no event shall the rent ever be less than the then current rental rate. The term “Fair Market Rental Value” shall mean the market rental value per annum for the Premises as of the date on which the same shall become effective, as agreed by Landlord and Tenant. If the parties are unable to reach agreement at least one hundred fifty (150) days prior to such date, the same shall be determined as set forth in (b) below.

     (b)  Either the Landlord or the Tenant (the “Initializing Party”) shall initiate the proceedings for such determination by notice to the other. The parties shall, within ten (10) days of receipt of the notice by the other party (the “Responding Party”), attempt to agree upon a mutually acceptable MAI Appraiser willing to act in such determination. If the parties are unable to reach agreement on a mutually satisfactory MAI Appraiser, the Initiating Party shall, within five (5) days after the expiration of said 10-day period, designate the name and address of an MAI Appraiser willing to act in such determination. Within five (5) days after receipt by the Responding Party of such notice, the Responding Party shall, by notice to the Initiating Party, designate the name and address of another MAI Appraiser willing so to act. If the Responding Party shall fail, neglect or refuse within said 5-day period to designate another appraiser willing so to act, the appraiser designated by the Initiating party shall alone conduct the appraisal. If two appraisers have been designated as aforesaid, such appraisers shall appoint an additional MAI Appraiser (the “Additional Appraiser”) who is willing so to act, and notice of such designation shall be given to the Landlord and to the Tenant. The mutually approved Appraiser or resulting board of appraisers shall, forthwith upon their appointment, determine the fair rental value of the Premises. Landlord and Tenant shall each pay the cost of any appraiser it designated and shall share equally the cost of the Additional Appraiser or mutually approved Appraiser. Any determination by the sole appraiser, if there be only one, or by a majority of the appraisers, shall be final and binding upon Landlord and Tenant, but if a majority of the appraisers are unable to agree upon a determination, the determination of the Additional Appraiser shall be conclusive of the fair rental value of the Premises and binding upon the parties.

     (c)  If the Fair Market Rental Value has not been determined as of the date the same is to become effective, Tenant shall pay rent at the rate in the last year of the first Renewal Term, plus five percent (5%) of such rate, until such determination is made. If the Fair Market Value is subsequently determined to be more than paid by Tenant, Tenant shall pay the difference within ten (10) days of such determination. If the Fair Market Value is subsequently determined to be less than paid by Tenant, Landlord shall pay the difference within ten (10) days of such determination.

     SECTION 16.03. HOLDING OVER. Any holding over after the expiration of the Initial Term or the Renewal Term without exercise of Tenant’s renewal option as provided herein (if available), shall be only with the written consent of Landlord, and shall constitute a tenancy from month-to-month only, for a monthly Rent equal to 110% of the monthly installments of Base Rent during the last Lease Year of the immediately preceding Term, and shall otherwise be on the same terms and conditions specified herein, so far as applicable.

     In the event of Tenant herein holding after the termination of this Lease, without written consent from the Landlord, the monthly Base Rent shall be one hundred and twenty-five (125%) percent of the monthly Base Rent specified in Section 2.01 in addition to any other monies owed to Landlord. In addition, Tenant shall pay all damages, consequential and direct, if any, incurred by the Landlord on account of such holding over. The provisions of this section, the acceptance of any Rent, or any act in apparent affirmance of tenancy (other than a written waiver) shall not be held as a waiver by Landlord of any right of reentry or any rights or remedies of Landlord provided in this Lease or at law or in equity.

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ARTICLE 17. QUIET ENJOYMENT

     SECTION 17.01. LANDLORD’S COVENANT. On Tenant’s payment of all Rent and compliance with all covenants, terms and conditions in accordance with the terms of this Lease, Tenant may peaceably and quietly hold and enjoy the Premises for the Term without hindrance or interruption by Landlord or any other person claiming by, through or under Landlord, subject, nevertheless, to the terms of this Lease and any leases and mortgages to which this Lease may be subordinate.

ARTICLE 18. SECURITY DEPOSIT

     SECTION 18.01. SECURITY. Landlord acknowledges receipt of the Security Deposit, if any, as set forth in Paragraph G of the Lease Summary, to be retained by Landlord as security for the faithful performance of all Tenant’s obligations under this Lease.

     Landlord shall not be required to apply the security deposit to Rent or other delinquent amounts or to damages caused by Tenant’s failure to perform any of its obligations, but may so apply the deposit at its option. Landlord’s right to possession of the Premises for non-payment of Rent or any other Event of Default shall not be affected by reason of the fact that Landlord holds the security deposit. Said sum, if not applied toward the payment of Rent or other amounts payable hereunder or toward the payment of damages caused by Tenant’s default, shall be returned to Tenant without interest after this Lease is terminated, but not before Tenant has vacated the Premises and delivered possession to Landlord in the condition required by this Lease. If Landlord repossesses the Premises due to any Event of Default, Landlord may apply the security deposit upon all damages sustained to the date of repossession, and may retain the security deposit or any balance to apply upon such damages as may be sustained thereafter by reason of the default. Landlord shall not be required to keep the security deposit as a separate fund, but may commingle the deposit with other funds.

ARTICLE 19. MISCELLANEOUS

     SECTION 19.01. ENTIRE AGREEMENT. This Lease sets forth all the promises, agreements and understandings between Landlord and Tenant concerning the Premises. There are no promises, agreements or understandings, oral or written, between them other than as set forth herein. No alteration, amendment, change or addition to this Lease shall be binding unless in writing signed by Landlord and Tenant. Tenant expressly waives any right to rely on any promise, statement or commitment of Landlord which is not in writing signed by Landlord.

     SECTION 19.02. SIGNATURE OF LEASE. The submission of this Lease for examination does not constitute a reservation of or option for the Premises, and this Lease shall become effective only on Signature and delivery by Landlord and Tenant.

     SECTION 19.03. FORCE MAJEURE. If either party shall be delayed or prevented from performing any act required hereunder by reason of strikes, lockouts, labor troubles, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war, or other causes not within the control of nor due to the fault of the party delayed, then performance of such act shall be excused for the period of the delay, and the time for the performance of such act shall be extended for a period equal to the period of the delay. The party entitled to such extension shall give written notice to the other party as soon as possible of its claim to such extension and the reason(s). The provisions of this section shall not excuse Tenant from prompt payment of Rent and all other amounts required by the terms of this Lease or affect Tenant’s right to terminate under Section 1.02.

     SECTION 19.04. NOTICES. Any notice, demand, request, or other instrument required to be given under this Lease shall be in writing and sent by one of the following: (a) United States certified mail, return receipt requested, postage prepaid, or (b) recognized overnight courier, and shall be addressed (i) if to Landlord, as written in Paragraph K of the Lease Summary, or such other address as Landlord designates by written notice, and (ii) if to Tenant, as written in Paragraph K of the Lease Summary, or such other address as Tenant designates by written notice, and shall be effective when received, except that if any such instrument cannot be delivered or is refused, it shall be effective when mailed, or (c) facsimile transmission, receipt confirmed or email, at the applicable facsimile number or email address set forth in Paragraph K or the Summary, provided said notice is also sent contemporaneously by United States first class mail, postage prepaid, addressed as set forth above.

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     SECTION 19.05. BROKERS. Tenant represents and warrants to Landlord that there are no claims for brokerage commissions or finder’s fees in connection with this Lease, and Tenant agrees to indemnify Landlord and hold it harmless from all liabilities arising from any such claim arising from an alleged agreement or act by the indemnifying party (including, without limitation, the cost of attorneys’ fees in connection therewith), such agreement to survive the termination of this Lease. Landlord hereby acknowledges that it shall pay any brokerage fee to the broker shown in Paragraph J of the Summary with respect to the Signature of this Lease.

     SECTION 19.06. NO RECORDING. Tenant shall not record this Lease or any memorandum thereof.

     SECTION 19.07. BINDING EFFECT. The provisions of this Lease and Guaranty shall be binding on the parties and their successors and assigns, shall be enforceable by the Landlord and its successors and assigns, and by Tenant and its permitted assigns, and shall survive the expiration of the Term. No rights shall inure to the benefit of any assignee of Tenant that is not permitted or to whom Landlord has not consented. If there is more than one Tenant or Guarantor, they shall be liable jointly and severally for payment of all Rent and other amounts and performance of all covenants, terms and provisions hereof.

     SECTION 19.08. LIABILITY OF LANDLORD. If Landlord fails to perform any covenant, term or condition of this Lease to be performed by Landlord, and if as a consequence of such default Tenant recovers a money judgment against Landlord, such judgment shall be satisfied only out of the proceeds of sale received on such judgment and levied thereon against the interest of Landlord in the Building, and out of rents and any other income of Landlord there from, or out of the consideration received by Landlord from the sale or other disposition of all or any part of Landlord’s interest in the Building, and Landlord shall not be liable for any deficiency.

     SECTION 19.09. CONSTRUCTION.

     (a)  This Lease shall be construed according to the laws of the State of Michigan. If any provision of this Lease or the application thereof to any person or circumstances shall be invalid or unenforceable, the remainder of this Lease shall not be affected thereby and each provision shall be valid and enforceable to the fullest extent permitted by law.

     (b)  The captions in this Lease are inserted only as a matter of convenience and do not define, limit, or describe the scope or intent of the sections or articles.

     SECTION 19.10. ESTOPPEL STATEMENT. Tenant agrees within fifteen (15) business days after request therefore by Landlord to complete and execute, in recordable form, Exhibit E, modified to the extent necessary to make it accurate, to the best of Tenant’s ability and deliver to Landlord. Failure to execute and deliver to Landlord any such instrument within fifteen (15) business days of a written request therefor by Landlord shall be a default under this Lease. Landlord agrees within fifteen (15) business after request therefore by Tenant to complete and execute a similar estoppel certificate, to the best of Landlord’s ability, and deliver it to Tenant.

     SECTION 19.11. ATTORNMENT. In the event any proceedings are brought for the foreclosure of, or in the event of the conveyance by deed in lieu of foreclosure of, or in the event of exercise of the power of sale under any mortgage made by Landlord covering the Premises, upon assumption of this Lease by such new owner, Tenant shall attorn to and covenants and agrees to execute an instrument in writing reasonably satisfactory to the new owner whereby Tenant attorns to such successor in interest and recognizes such successor as Landlord under this Lease. Failure to execute and deliver to Landlord any such instrument within ten (10) business days of a written request therefor by Landlord shall be a default under this Lease.

     SECTION 19.12. SUBORDINATION. This Lease shall be subject to and subordinate at all times to the lien of any mortgage now or hereafter placed on the Building, and to all advances made or hereafter made upon the security thereof; provided, however, that so long as Tenant faithfully meets its obligations under this Lease, including the payment of rent, to such parties as may be legally entitled to receive the same, then this Lease shall continue in full force and effect and Tenant’s occupancy shall not be affected or impaired as a result of the subordination of this Lease to any mortgage. At the request of Landlord, Tenant shall execute and deliver such further instrument or instruments subordinating this Lease to the lien of any such mortgage or mortgages, containing such terms as Landlord shall reasonably require, within fifteen (15) business days of such request. Failure of Tenant to execute and deliver to Landlord any such instrument within fifteen (15) business days of written request therefor shall be a default under this Lease.

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     SECTION 19.13. CERTAIN RIGHTS OF LANDLORD WITH RESPECT TO THE LAND. The Landlord shall have the right, without the consent of Tenant, to grant to adjacent land owners, including Landlord, at any time and from time to time during the Lease, as extended, easements and rights of ingress, egress and common use and enjoyment with respect to the roads, walks unimproved portions of the land, water, sewage, telephone, gas and electricity lines, and Landlord may at any time and from time to time grant easements, public and private, for such purposes to itself and to others, and relocate any easements now or hereafter affecting the land.

     SECTION 19.14. SUBSTITUTE PREMISES. Landlord shall have the right at any time during the term hereof or during the term of any renewal hereof, upon giving Tenant at least sixty (60) days prior written notice, to provide and furnish Tenant with space elsewhere in the Building of approximately the same sizeand views as the Premises, and to remove and place Tenant in such space, with Landlord paying all reasonable costs and expenses incurred as a result of such removal of Tenant including its actual reasonable moving costs to such other space within the Building, the reasonable costs of reprinting stationery (based on remaining quantities), and the costs of rewiring the new leased premises for telephone and computers comparable to the original leased premises. Furthermore, Landlord shall grant to Tenant free rent, either six months or twenty-five percent of the remaining number of months in Tenant’s Lease (i.e. if there are 36 months left then Tenant shall receive 9 months of free rent), whichever is greater. Should Tenant refuse to permit the Landlord to move Tenant to such new space at the end of said 60-day period, Landlord shall have the right to cancel and terminate this Lease effective 90 days from the date of original notification by Landlord. If Landlord moves Tenant to such new space, this Lease, and each and all of its terms, covenants and conditions shall remain in full force and effect and shall be deemed to be the Premises as though Landlord and Tenant had entered into an express written amendment of this Lease with respect thereto. In such event, the Lease will be amended to show that: (a) the monthly Base Rent payable hereunder shall be increased or decreased, as the case may be, by the product of the Base Rental being paid pursuant hereto time the difference in the number of square feet of net rentable area in such new place as compared to the number of square feet of net rentable area in the Premises subject to this Lease immediately prior to such move, (b) after such move, the number of square feet used in computing Tenant’s share of Operating Expense shall be the number of square feet on net rentable area in such new space.

     SECTION 19.15. HAZARDOUS MATERIALS.

     (a)  For purposes of this Lease, “hazardous materials” means any explosives, radioactive materials, hazardous wastes, or hazardous substances, including without limitation asbestos containing materials, PCB’s, CFC’s, or substances defined as “hazardous substances” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §~ 9601-9657; the Hazardous Materials Transportation Act of 1975, 49 U.S.C. §~ 1801-1812; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §~ 6901-6987; or any other federal, state, or local statute, law ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards or conduct concerning hazardous materials, waste, or substances now or at any time hereafter in effect (collectively, “hazardous materials laws”).

     (b)  Tenant will not cause or permit the storage, use generation, release or disposition of any hazardous materials in, on, or about the Premises or the Building by Tenant, its agents, employees or contractors in violation of hazardous materials laws. Tenant will not permit the Premises to be used or operated in a manner that may cause the Premises or the Building to be contaminated by any hazardous materials in violation of any hazardous materials laws. Tenant will immediately advise Landlord in writing of (1) any and all enforcement, cleanup, remedial, removal, or other governmental or regulatory actions instituted, completed, or threatened pursuant to any hazardous materials laws relating to any hazardous materials affecting the Premises; and (2) all claims made or threatened by any third party against Tenant, Landlord, the Premises or the Building relating to damage, contribution, cost recovery, compensation, loss, or injury resulting from any hazardous materials on or about the Premises. Without Landlord’s prior written consent, Tenant will not take any remedial action or enter into any agreements or settlements in response to the presence of any hazardous materials in, on, or about the Premises.

     (c)  Tenant will be solely responsible for and will defend, indemnify and hold Landlord, its agents, and employees harmless from and against all claims, costs expenses, damages, and liabilities, including attorneys’ fees and costs, arising out of or in connection with Tenant’s breach of its obligation in Section 19.15 Tenant will be solely responsible for and will defend, indemnify, and hold Landlord, its agents, and employees harmless from and against any and all claims, costs and liabilities, including attorneys’ fees and costs, arising out of or in connection with the removal, cleanup, and restoration work and materials necessary to return the Premises and any other property of whatever nature located on the Building to their condition existing prior to

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the appearance of Tenant’s hazardous materials on the Premises. Tenant’s obligations under this Section 19.15 will survive the expiration or other termination of this Lease.

     SECTION 19.16. PARKING AREA. Tenant and its employees shall park their motor vehicles in such areas as Landlord may, from time to time, designate as employee parking areas. Tenant will be provided the number of parking spaces that is mandated by zoning requirements for the amount of space leased by Tenant. Tenant agrees that all loading and unloading operations shall be conducted so as not to obstruct or hinder the operation of the businesses of the other tenants of the Project, nor will Tenant unreasonably block or obstruct any street, sidewalk or right-of-way adjacent to or comprising part of the Project. Landlord agrees that Tenant and its agents, employees and customers shall have the uninterrupted right throughout the term hereof, to use in common with others entitled to similar use thereof, the roads and parking area surrounding and adjacent to the building or within the Project. No Tenant shall have any exclusive right to any particular parking area. Tenant shall be responsible for any damages to the parking area surface caused by its use, ordinary wear and tear excepted, and shall not permit trucks to use the parking areas designated for automobile parking. Tenant shall not store or keep, or permit to be stored or kept in the parking areas or driveways any vehicle, trailer or other item whatsoever except fully operative motor vehicles. It is the intent hereof to prohibit any outside storage of any item whatsoever.

     SECTION 19.17. JANITORIAL SERVICES. Landlord agrees to provide the services detailed in Exhibit G of this Lease.

     SECTION 19.18. RULES AND REGULATIONS. Tenant agrees to comply with and observe all of the Rules and Regulations established by Landlord, detailed in Exhibit J attached hereto, and as amended by Landlord from time to time, when it is deemed necessary, desirable or proper, in Landlord’s judgment, for its best interest or for the best interest of the tenants, provided the same shall apply uniformly to all tenants of the Building. Tenant’s failure to keep and observe said rules and regulations within fifteen (15) business days after written notice to Tenant specifying the nature of such failure shall constitute an Event of Default in the manner as if the same were contained herein as covenants.

     SECTION 19.19. LANDLORD’S SERVICES. Landlord does not warrant that any of the utility services provided by Landlord under the terms of this Lease will be free from interruptions caused by repairs, improvements, alterations, strikes, lockouts, accidents, inability of Landlord to obtain fuel or supplies or other cause or causes beyond the reasonable control of Landlord. However, in the event an interruption or stoppage of any or all of the above-mentioned building services resulting from Landlord’s negligence renders the Premises untenantable for the normal operation of a business office for five (5) consecutive days or more, Tenant shall not be liable for rent during any such period in excess of said five (5) days.

     SECTION 19.20. LANDLORD’S DEFAULT.

     A.     In the event Landlord shall neglect or fail to perform or observe any of the covenants, provisions or conditions contained in this Lease on its part to be performed or observed and such failure shall continue for thirty (30) days after receipt of written notice of default from Tenant (except that if such failure cannot be cured within said thirty (30) day period this period shall be extended for a reasonable additional time provided that Landlord commences to cure such failure within said thirty (30) day period and proceeds diligently thereafter to effect such cure), Landlord shall be responsible to Tenant for any and all damages sustained by Tenant as a result of Landlord’s breach. If the Landlord fails to timely remedy a default with respect to repairs which Landlord is obligated to perform under this Lease, or to commence to timely cure such default if the default is not curable within said thirty (30) days, and diligently proceeds to complete such curing, the Tenant shall have the right to make such repairs and to abate rent to that extent, provided, however, that Tenant shall not be obligated to make such repairs.

     B.     The specified remedies herein shall be non-exclusive of each other and in addition to any other remedies available to Tenant at law or in equity.

     SECTION 19.21. ENVIRONMENTAL MATTERS. Landlord represents and warrants to Tenant that:

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     A.     (i) The Premises, the building containing the Premises (the “Building”), and parcel of real estate upon which the Building is situated (the “Real Estate”) are not the subject of any liens, actions, or proceedings relating to Hazardous Substances (as hereinafter defined) or Environmental Laws (as hereinafter defined) and the Landlord is not a party to any such action or proceeding and the Landlord has received no notice of any such lien, action or proceeding that is pending or threatened. Landlord shall notify Tenant of any subsequent lien, action or proceeding which may hereinafter be pending or threatened.

          (ii) To Landlord’s knowledge,

       (a) No Hazardous Substances are or have been located, stored, or disposed on or released or discharged from (including groundwater contamination) the Premises, Building, or Real Estate in violation of Environmental Law.

       (b) The Premises, Building, or Real Estate, and their use and operation currently comply with all federal, state, and local requirements relating to the protection of health and all its Environmental Laws, and all necessary permits have been obtained under Environmental Laws.

       (c) There is no part or ongoing leakage or spillage of Hazardous Substances from gasoline tanks used or owned by other tenants, which are located in the lower levels of the Building or any migration of Hazardous Substances onto neighboring property.

          (iii) Landlord shall, at no cost or expense to the Tenant as Common Area Costs or otherwise, take all actions necessary to comply with all Environmental Laws affecting the Premises, the Real Estate or Building, including, without limitation, removal, containment and remedial actions required by any Environmental Laws or any governmental agencies in the enforcement of Environmental Law affecting the Premises, Real Estate, or Building, and shall indemnify Tenant from and against any and all costs, claims, expenses, damages (direct, but not consequential), liens, losses and judgments arising out of the presence of Hazardous Substances or Landlord’s failure to comply with Environmental Laws. The foregoing notwithstanding, Landlord shall not be responsible for any cost or expense or to indemnify Tenant, as provided above, with respect to any matter arising out of Tenant’s action or violation of Environmental Law by Tenant.

     B.     (i) For purposes of this Section the term “Hazardous Substances” shall mean and include all hazardous and toxic substances, waste or materials, any pollutant or contaminant, including, without limitation, PCBs, asbestos, asbestos-containing material, petroleum products, and raw materials that are included under or regulated by any Environmental Law (or become so included or regulated during the lease term) or that would pose a health, safety or environmental hazard.

          (ii) For purposes of this Section the term “Environmental Law” shall mean and include all federal, state and local statutes, ordinances, regulations and rules presently in force or hereafter enacted relating to environmental quality, contamination, and clean-up of Hazardous Substances, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. ‘6091 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act of 1976, 42 U.S.C. ‘6091 et seq., as amended by the Hazardous and Solid Waste Amendments of 1984, and state super lien and environmental clean-up statutes and all rules and regulations presently or hereafter promulgated under said statutes as amended.

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     C.     Tenant covenants that it will not use, maintain, generate, store, treat or dispose of any Hazardous Substances in or on the Premises in violation of Environmental Law. Tenant hereby indemnifies and defends Landlord from and against any penalty, loss, liability, claim or expense, including, without limitation, engineering and attorneys’ fees, arising out of breach of this covenant. Tenant’s indemnity of Landlord under this article shall survive the cancellation or termination of this Lease.

     SECTION 19.21. RULES AND REGULATIONS. Relative to the terms of this Lease dealing with Rules and Regulations, Landlord shall give Tenant thirty (30) days prior written notice of the adoption of rules and regulations or any changes or additions to existing rules and regulations. All rules and regulations shall be applied to Tenants in a non-discriminatory manner.

     SECTION 19.22. TENANT’S AUDIT RIGHTS. In the event that pursuant to the terms of this Lease, Tenant is obligated to pay its proportionate share of Operating Expenses or Common Area Costs, Tenant shall have the right to audit Landlord’s books and records as follows:

     A.     Tenant shall be entitled at any reasonable time during regular business hours, after giving at least ten (10) days prior written notice, to inspect Landlord’s books and records (at the site of their location) relating to Tenants proportionate share of Operating Costs or Common Area Costs, and to obtain an audit thereof by its own staff auditor or independent auditor selected by Tenant to determine the accuracy of such amounts billed to Tenant by Landlord for the last calendar year immediately preceding the year during which such notice is given. Landlord shall provide copies of such books and records if requested by Tenant.

     B.     If any such audit discloses a liability for Tenant’s proportionate share of Operating Costs or Common Area Expenses which is less than the amount which Landlord billed to Tenant, Landlord shall promptly refund to Tenant all amounts in excess of the amount for which Tenant is actually liable (“Refund Amount”) as disclosed by the audit.

     C.     All costs of such audit shall be borne by Tenant. However, if the Refund Amount is greater than five percent (5%) of the amount for which Tenant is actually liable (as disclosed by the audit), all costs of the audit shall be borne by Landlord.

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EXHIBIT A — LOCATION OF PREMISES

(Attached)


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(KMS BUILDING FLOOR PLAN)


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EXHIBIT B — FLOOR PLAN OF PREMISES

(Attached)

 

 

 

 

 

 

 

 

 

 

 

 

 

B-1


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(KMS ESPERION FLOOR PLAN)


Table of Contents

(KMS SUITE 11)


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(KMS LOADING DOCK DIAGRAM)


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EXHIBIT C — LANDLORD’S WORK

(Description and Plans)

     Landlord will contract all necessary construction services to provide Tenant with space ready for occupancy as shown on the attached Exhibit A (floor plan). The build out will include the following:

  1)   Two new 48” doors as shown.
 
  2)   Landlord will provide Tenant with the following allowances which may be taken as rent credits upon completion of the work associated with the allowance:
 
  a)   $2,000 card readers at new double doors.
 
  b)   $350 for phone to loading dock.

     c) Landlord will provide Tenant a $12,000.00 carpet allowance (the “Allowance”) to carpet approximately 6,000 square feet of office and cubicle space. Tenant will obtain three (3) quotes for this work. If none of the three (3) quotes are equal to or less than the Allowance, then Tenant will not have to install the carpeting or reimbuse the Landlord for the Allowance.

     It is the understanding of both the Landlord and the Tenant that the existing HVAC system requires re-balancing. The Landlord shall hire a certified mechanical engineer to evaluate the existing system and recommend a design solution that will provide all spaces within the Premises with ventilation as required by local building code and which limits temperature fluctuations between adjacent spaces consistent with good engineering practice. Landlord shall retain an air-balancing contractor to adjust all manual dampers as recommended by the mechanical engineer. If additional work is recommended by the mechanical engineer, beyond a general system rebalance and unit repair, this additional work shall be considered upgrades to the existing system. The Landlord shall contribute up to $25,000 toward system upgrades. Upgrade costs in excess of the Landlord contribution shall be paid directly by Tenant.

     Except as provided above, Landlord shall have no obligation to alter or improve the Premises. Any cost associated with the relocation of furniture and equipment within the Premises to accommodate the Improvements shall be the responsibility of Tenant.

C-1


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EXHIBIT C-1 — CRITERIA FOR LANDLORD’S WORK

See the attached drawing.

 

 

 

 

 

 

 

 

 

 

 

 

 

C-1 - 1


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(KMS SUITE 11)


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EXHIBIT D — TENANT’S WORK

(Description and Plans)

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D-1


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EXHIBIT E — COMMENCEMENT DATE AND ESTOPPEL LETTER

          This Commencement Date and Estoppel Letter is entered into by Landlord and Tenant pursuant to Section 19.10 of the Lease.

          I .DEFINITIONS. In this certificate the following terms have the meanings given to them:

     (a)  Landlord:

     (b)  Tenant:

     © Lease: Lease dated              between Landlord and Tenant.

     (d)  Address of Premises:                                  

     Estimated expenses are as follows:

     Taxes:

     Insurance:    0.00%

     Common Area:    0.00%

     Utilities:    Electric        0.00%

     Utilities:    Gas        0.00%

     Utilities:    Water        0.00%

     2.     Landlord and Tenant confirm that the Rental Commencement Date of the Lease is         and the Expiration Date is              and that Paragraph B of the Summary is are accordingly amended.

     3.     Tenant has accepted possession of the Premises as provided in the Lease.

     4.     The Improvements required to be furnished by the Landlord in accordance with Exhibit C (if any) have been furnished to the satisfaction of Tenant (subject to any corrective work or punch-list items submitted previously to Landlord).

     5.     All terms and conditions to be performed by Landlord under the Lease have been satisfied and on this date there are no existing defenses or offsets which Tenant has against the full enforcement of the Lease by Landlord.

     6.     The Lease is in full force and effect and has not been modified, altered, or amended, except as follows:

     There are no setoffs or credits against Rent, and no Security Deposit or prepaid Rent has been paid except as provided by the Lease.

     Landlord and Tenant have executed this Commencement Date and Estoppel Certificate as of the dates set forth below.

         
Tenant:   Landlord:  
By:   By:
Name:   Name:  
Title:   Title:  
Date:   Date:  

E-1


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EXHIBIT F — NOT APPLICABLE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-1


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EXHIBIT G

JANITORIAL SERVICES—NOT APPLICABLE


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EXHIBIT H — SIGNAGE

     Tenant may, at Tenant’s expense, install signage on the exterior monument sign at the western entrance to the Property and above Tenant’s entrances.


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EXHIBIT I — ACKNOWLEDGMENT OF POSSESSION

                  (“Tenant”) hereby acknowledges that Burlington Property, LLC (“Landlord”) has delivered possession of              [address and suite], Ann Arbor, Michigan 48108 pursuant to a Lease dated             , 20     (“Lease”). [The following applied only if Landlord is required to perform Landlord’s Work under the Lease] Tenant acknowledges that Landlord’s Work is substantially complete as defined in the Lease.

        
 
                      
Tenant


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EXHIBIT J — RULES AND REGULATIONS

     (a)  In the event that Premises should be vacated or abandoned during the Lease term, Landlord or agents of Landlord may enter therein and take possession thereof, breaking open locks and doors necessary to effect entrance, and, at Landlord’s option, may relet said Premises.

     (b)  All goods and property stored or kept in or on the Premises shall be at the risk of Tenant, and Landlord shall not be responsible for any theft, loss, damage or destruction thereof or thereto.

     (c)  The sidewalks, entrances, courts, elevators (if any), vestibules (if any), stairways (if any), corridors (if any), or halls (if any), shall not be obstructed or encumbered by any Tenant or used for any purpose other than ingress or egress to and from the Premises.

     (d)  If the glass front or fronts comprising part of the Premises are used as part of the office area, and Tenant desires to cover the glass front or fronts with curtains or drapes, such curtains or drapes must be lined on the side facing the outside with a material of a texture and color approved the Landlord, which approval shall not be unreasonably withheld, for the purpose of maintaining uniformity throughout the entire building of which the Premises are a part. If such glass front or fronts are not used as part of the office area, then in that event, Tenant at its own cost and expense, shall cover such glass front or fronts with a material of a texture and color approved by Landlord, for the purpose of maintaining uniformity throughout the entire building of which the Premises are a part. In connection herewith Tenant specifically covenants and agrees that it shall not permit any goods or merchandise stored on the Premises to be visible from the outside.

     (e)  The water and wash closets and other plumbing fixtures shall not be used for any purpose other than that for which they were constructed, and no sweepings, rubbish, rags, or other substances shall be thrown therein. All damages resulting from any misuse of the fixtures shall borne by the Tenant who, or whose servants, employees, agents, visitors, or licensees, shall have caused the same.

     (f)  No bicycle or other vehicle, and no dog or other animal shall be allowed in offices, halls, corridors, or elsewhere in the building, except for handicap assisting animals.

     (h)  Tenant shall not cause or permit unusual or objectionable odor to be produced upon or to permeate from the premises, including duplicating or printing equipment producing noxious fumes. Tenant shall not disturb occupants of this or neighboring buildings or premises by the use of any musical instruments, loudspeaker, radio, television, or by any unseemingly or disturbing noise that can be heard beyond the Premises.

     (i)  No Tenant shall throw anything out of the door, windows (if any), or down passageways (if any) or elevator shafts (if any).

     (j)  All loading, unloading, receiving of delivery goods, supplies, or disposal of garbage or refuse shall be made only through entry ways provided for such purposes and indicated by Landlord.

     (k)  Tenant is not permitted to use any part of the building or the common areas for manufacturing, storage, or sale of merchandise, or property of any kind; or for lodging or sleeping, or for any immoral or illegal purpose.

     (l)  All safes, equipment or other heavy articles shall be carried in or out of the Premises only at such time and in such manner as shall be prescribed in writing by Landlord, and Landlord shall in all cases have the right to specify the proper position of any such safe, equipment or other heavy article, which shall only be used by Tenant in a manner which will not interfere with or cause damage to the Premises or the building in which they are located, or to the other tenants or occupants of said building. Tenant shall be responsible for any damage to the building or the property of its tenants or others and injuries sustained by any person whomsoever resulting from the use or moving of such articles in or out of the Premises, and shall make all repairs and improvements required by Landlord or governmental authorities in connection with the use of moving of such articles.

     (m)  Each Tenant must, upon the termination of his tenancy, restore to the Landlord all keys of stores, offices, and toilet rooms, either furnished to or otherwise procured by such Tenant and in the event of the loss of any keys furnished, such Tenant shall pay to the Landlord the cost thereof.

     (n)  Vending machines in any Common Area of the Building will not be permitted to be installed by anyone but the Landlord. If Landlord permits the installation of other vending machines, they will be installed by

 


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the same company that the Landlord has under contract and under the same terms and conditions of said contract between the Landlord and the vending machine company.

     (o)  Additional security or janitorial service required by a Tenant will be contracted through the Landlord using the same company that the Landlord has under contract to provide the service.

     (p)  Canvassing, soliciting and peddling in the Building are prohibited and Tenant shall cooperate to prevent the same.

     (q)  No hand trucks except those equipped with rubber tires and side guards shall be used in any space, or in public halls of the Building, either by Tenant, its employees, subcontractors, agents or invitees.

     (r)  Without Landlord’s prior consent and providing Landlord with keys or access codes and cards thereto, no additional locks or bolts of any kind shall be placed upon any of the doors or windows by Tenant, nor shall any changes be made in existing locks or the mechanism thereof. Tenant shall not make or permit to be made any keys for any door to the Premises or the Building other than those provided by Landlord, and if more than two keys for one lock are desired by Tenant, Landlord may provide the same upon payment by Tenant. Tenant shall, upon the termination of this tenancy, provide Landlord with all access codes and keys, and return to Landlord all keys furnished to Tenant, and in the event of the loss of any keys so furnished, Tenant shall pay to Landlord the cost thereof.

     (s)  No sign, logo, artwork, advertisement or notice shall be inscribed, painted, affixed or displayed on any part of the outside or the inside of the Building except on the directories and the doors of offices, and then only in such place, number, size, color and style as is approved by Landlord. Tenant shall not place anything or allow anything to be placed in the Premises or on any glass line, window, door, partition, or wall in the Premises or the Building, which may be viewed from any Common Area in the Building or from outside of the Building, and which, in Landlord’s judgment, appears offensive or unsightly. If any such sign, advertisement, notice or other item is placed on or exhibited without Landlord’s approval, Landlord shall have the right to remove the same and Tenant shall be liable for any and all expenses incurred by Landlord for such removal. Any such permitted use, including directories and nameplates, shall be at the sole expense and cost of Tenant.

  EX-31.1 7 k79135exv31w1.htm EX-31.1 CERTIFICATION PURSUANT TO RULES 13A-14(A) exv31w1

 

EXHIBIT 31.1

CERTIFICATION

I, Roger S. Newton, Chief Executive Officer of Esperion Therapeutics, Inc., certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Esperion Therapeutics, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have:

  a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
 
  b)   evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based upon such evaluation; and
 
  c)   disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

  a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
     
 
 
/s/ Roger S. Newton
Roger S. Newton,
Chief Executive Officer
   

Date: August 14, 2003

EX-31.2 8 k79135exv31w2.htm EX-31.2 CERTIFICATION PURSUANT TO RULES 13A-14(A) exv31w2

 

EXHIBIT 31.2

CERTIFICATION

I, Timothy M. Mayleben, Chief Financial Officer of Esperion Therapeutics, Inc., certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Esperion Therapeutics, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have:

  a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
 
  b)   evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based upon such evaluation; and
 
  c)   disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

  a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
     
 
 
/s/ Timothy M. Mayleben
Timothy M. Mayleben,
Chief Financial Officer
   

Date: August 14, 2003

EX-32.1 9 k79135exv32w1.htm EX-32.1 CERTIFICATION PURSUANT TO 18 USC SEC. 1350 exv32w1

 

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 BY THE CHIEF EXECUTIVE OFFICER
RELATING TO A PERIODIC REPORT CONTAINING FINANCIAL STATEMENTS

     I, Roger S. Newton, Chief Executive Officer, of Esperion Therapeutics, Inc., a Delaware corporation (the “Company”), hereby certify that:

     (1)  The Company’s periodic report on Form 10-Q for the period ended June 30, 2003 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

     (2)  The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

* * *

 
     
     
/s/ Roger S. Newton
Roger S. Newton,
Chief Executive Officer
   

Date: August 14, 2003

EX-32.2 10 k79135exv32w2.htm EX-32.2 CERTIFICATION PURSUANT TO 18 USC SEC. 1350 exv32w2

 

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 BY THE CHIEF FINANCIAL OFFICER
RELATING TO A PERIODIC REPORT CONTAINING FINANCIAL STATEMENTS

     I, Timothy M. Mayleben, Chief Financial Officer, of Esperion Therapeutics, Inc., a Delaware corporation (the “Company”), hereby certify that:

     (1)  The Company’s periodic report on Form 10-Q for the period ended June 30, 2003 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

     (2)  The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

* * *

 
     
/s/ Timothy M. Mayleben
Timothy M. Mayleben,
Chief Financial Officer
   

Date: August 14, 2003

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