Exhibit 10.12

NET COMMERCIAL LEASE

This Lease dated January 7, 2017, for reference purposes only, is by and between
546 ECCLES AVENUE, A CALIFORNIA LIMITED PARTNERSHIP (“Lessor”) and Audentes
Therapeutics, Inc., a Delaware corporation (“Lessee”).

IT IS HEREBY AGREED:

Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
premises described in Paragraph 1 below for the term and subject to the
covenants, agreements and conditions hereinafter set forth. Lessee covenants as
a material part of the consideration for this Lease to keep and perform all said
covenants and conditions by it to be kept and performed and that this Lease is
made upon the condition of such performance.

1. Definitions. Unless the context otherwise specifies or requires, the
following terms shall have the following meanings:

A. Building. The term “Building” shall mean the land and other real property and
improvements located at  550 (1-4) Eccles Avenue, South San Francisco,
California, the surrounding grounds and parking and driveway areas, including
the common roadway (“the Common Roadway”) adjacent to the Building, which
location is shown on Exhibit C attached hereto and incorporated herein by this
reference.

B. Premises. The term “Premises” shall mean those sections of the Building
shaded on the floor plans attached hereto as Exhibit A, and incorporated herein
by this reference, commonly referred to as 550-3 Eccles Avenue, South San
Francisco, California consisting of approximately 7,555 rentable square feet and
the exclusive use of fifteen (15)   reserved parking spaces marked on Exhibit B,
attached hereto and incorporated herein by this reference, or as designated from
time to time by Lessor.

C. Lessee's Percentage Share. The term “Lessee's Percentage Share” ,”except when
said term refers to the cost of maintaining the Common Roadway, shall mean nine
and fifty-nine one hundredths percent (9.59%). Lessor and Lessee acknowledge
that Lessee's Percentage Share, except when said term refers to the cost of
maintaining the Common Roadway, has been obtained by dividing the net rental
area of the Premises, which Lessor and Lessee agree is 7,555 square feet, by the
total net rental area of the Building, which Lessor and Lessee agree is 78,714
square feet, and multiplying such quotient by 100.

D. Lessee's Percentage Share of Common Roadway. The term “Lessee's Percentage
Share” when said term refers to the cost of maintaining the Common Roadway shall
mean four and two one hundredths percent (4.02%). Lessor and Lessee acknowledge
that Lessee's Percentage Share, when said term refers to the cost of maintaining
the Common Roadway, has been obtained by dividing the net rental of the
Premises, which Lessor and Lessee agree is 7,555 square feet, by the total
square footage of the two buildings which use the Common Roadway (the Building
and 546 Eccles Avenue, South San Francisco, California which Lessor and Lessee
agree is 187,770, and multiplying such quotient by 100.

E. Common Area Maintenance and Repair Costs.

i. The term “Common Area Maintenance and Repair Costs” shall mean all
commercially reasonable costs of maintaining and repairing, including the cost
of any maintenance or service contract, the Building's water, sewer, ventilating
and air-conditioning systems (unless such system only serves the Premises, or
any part thereof, in which event Lessee shall maintain said system), common
entryways, doors and passage ways, the plumbing and sewer system and sewer lines
which extend from the Premises and the Building, the grounds surrounding the
Building (including landscaping whether located adjacent to the Building or
elsewhere on the parcel on which the Building is located), the parking areas and
driveways and the Common Roadway (including but not limited to the re-paving of
all such areas and filling in pot holes), fences, the drain and gutter pipes at
the roof level, and all other common areas. Such term shall also include the
cost of washing the exterior walls or painting or repairing such walls for the
purpose of removing any

 

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graffiti which may appear thereon.  Such term shall also include the cost of any
needed replacements of such equipment or systems or any other replacements or
capital improvements. With regard to items which are capital improvements,
Lessor shall determine what replacements shall constitute a capital improvement
and any such costs shall be amortized over the useful life of the improvement,
which Lessor shall determine in its discretion, together with interest on the
unamortized balance at the rate of 10% per annum if Lessor has used its own
funds or the interest rate as may have been paid by Lessor on funds borrowed for
the purpose of constructing or installing such replacements or improvements, and
Lessee shall only be obligated to pay, each month during the remaider of the
Term, or any extension thereof, on the date that on which Rent is due, an amount
equal to Lessee’s Share of 1/the amortization period of the useful life of such
improvement.  

ii.  Common Area Maintenance and Repair Costs shall not include the following:

 

(a)

The cost of installing, operating and maintaining any specialty service, such as
daycare, cafeteria, athletic or recreational club;

 

(b)

The cost of any work or service performed for any tenant of the Building (other
than Lessee) to a materially greater extent or in a materially more favorable
manner than that furnished generally to the tenants and other occupants
(including Lessee);

 

(c)

The cost of any repairs, alterations, additions, changes, replacements and other
items which are made in order to prepare for a new tenant’s occupancy unless any
such cost is required because of Alterations undertaken to the Premises by
Lessee;

 

(d)

The cost of any repair in accordance with the casualty and condemnation sections
of this Lease, except for deductibles under any insurance policy carried by
Lessor;

 

(e)

Any costs representing an amount paid to a corporation related to Lessor which
is in excess of the amount which would have been paid in the absence of such
relationship;

 

(f)

Interest and penalties due to late payment of any amounts owed by Lessor, except
such as may be incurred as a result of Lessee’s failure to timely pay Lessee’s
Percentage Share of Real Property Taxes, Insurance premiums or Common Area
Maintenance and Repair Costs;

 

(g)

Costs related to the existence and maintenance of Lessor as a legal entity,
except to the extent attributable to the operation and management of the
Premises or Building;

iii. Audit Right.  Lessee, at its sole cost and expense shall have the right
during business hours to examine and/or audit the books and documents evidencing
the Common Area Maintenance and Repair Costs for both the Building and the
Common Roadway once every calendar year.   Lessee at Lessee’s sole cost may also
have the records maintained by Lessor for the Common Area Maintenance and Repair
Costs audited by a reputable certified public accountant once every calendar
year.    If any such audit should disclose that Lessee has been overcharged by
Lessor for Lessee’s Percentage Share of Common Area Maintenance and Repair Costs
for the Building or Lessee’s Common Area Maintenance and Repair Costs for the
Common Roadway for any year, Lessee shall be credited for such overpayment, plus
interest at the rate of 10% per annum. If such audit should disclose that Lessee
has been undercharged by Lessor for any year, then Lessee shall pay to Lessor
all such undercharged amounts within thirty (30) days with interest thereon at
10% per annum. If the amount of any overcharge for the combined total of
Lessee’s Percentage Share of Common Area Maintenance and Repair Costs and
maintaining the Common Roadway exceeds ten percent (10%) of Lessee’s Percentage
Share of Common Area Maintenance Costs and the cost of maintaining the Common
Roadway for that year, Lessor shall promptly reimburse Lessee for the reasonable
costs of such audit. The provisions of this Paragraph 1E (2) shall survive the
expiration or earlier termination of this Lease.

2. Term.

A. The term of this Lease shall begin on May 1, 2017 (“Lease Commencement
Date”), and shall end, unless sooner terminated as hereinafter provided, on
February 29, 2020. Lessor shall use its best commercially reasonable efforts to
deliver possession of the Premises to Lessee by the Commencement Date.  If,
despite such

 

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efforts, Lessoris unable to deliver possession by such date, Lessor shall not be
subject to any liability therefor, nor shall such failure affect the validity of
this Lease. Lessee shall not, however, be obligated to pay Rent or perform any
other obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Premises to Lessee, and any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts
or omissions of Lessee.

B. Early Access.   Subject top Lessee’s delivery of the insurance certificates
required by Section 14, the Security Deposit required by Section 5, upon not
less than forty-eight (48) prior written notice Lessee shall have access to the
Premises prior to the Commencement Date for the limited purpose of allowing its
contractors, designers and vendors to inspect the Premises and prepare
specifications and plans for Lessee’s tenant improvements and space
planning.  Such early access shall be during normal business hours, at Lessee’s
sole risk. Lessee and Lessee’s employees, contractors and vendor do not hinder
or interfere with the current Lessee’s business operations and or use of the
Premsies.

3. Rent and General Provisions Regarding Payments.

A. Lessee shall pay the following rent (“Base Monthly Rent”) to Lessor in
advance no later than the first day of each month during the term of this Lease,
for the rental of the Premises:

 

March 1, 2017 – February 28, 2018

 

$11,332.50 per month

 

 

 

March 1, 2018 – February 28, 2019

 

$11,672.48 per month

 

 

 

March 1, 2019 – February 29, 2020

 

$12,022.65 per month

 

B. All payments of Base Monthly Rent and all other sums due to be paid by Lessee
to Lessor under this Lease, all of which are sometimes collectively referred to
as “Rent”, shall be paid to Lessor, without prior demand, prior notice,
deduction or offset (except as may be otherwise provided in this Lease), in
lawful money of the United States of America at Lessor's United States postal
address for notices hereunder (or to such other person or at such other place as
Lessor may from time to time designate in writing) or may be made electronically
into Lessor’s bank account designated to receive such rental payments. All rent,
if not actually received by Lessor within five (5) calendar days of the date the
payment is due (such five (5) day period to include the due date), shall bear
interest, from the due date until so received, at the rate of ten percent (10%)
per annum. Lessee shall pay to Lessor the sum of Fifty Dollars ($50.00) for each
check tendered by Lessee which is not honored for payment by Lessee's bank for
whatever reason and the statutory penalties if Lessor elects to pursue said
remedy. ln addition, Lessee shall pay to Lessor a late charge of ten percent
(10%) of the total amount of the payment due for each payment of Base Monthly
Rent or other sum due pursuant to this Lease if said sum is not received by
Lessor within five (5) calendar days of the date the payment is due (such five
(5) day period to include the due date). Lessor and Lessee agree that Lessor
will incur damages and expenses on account of any such late payment, including
but not limited to added staff time to collect the sums due, accounting and
legal expenses and interest or other charges, and that the amount of such
damages and expenses will be extremely difficult and impractical to ascertain.
Accordingly, the parties agree that the ten percent (10%) late charge is a
reasonable estimate of said expenses and damages.

C. All sums received by Lessor from Lessee shall be applied first to the oldest
outstanding monetary obligation owed by Lessee to Lessor and any other
designation of the manner in which said payment is to be applied by Lessee shall
be void and of no effect.

D. If the term of this Lease commences on a day other than the first day of a
calendar month or ends on a day other than the last day of a calendar month, all
rent due for such fractional month or months shall be prorated based on a 30 day
month.

E. Commencing on the Lease Commencement Date, Lessee shall pay to Lessor
Lessee’s Percentage share of Common Area Maintenance and Repair Costs and
Lessee’s Percentage Share of the cost of maintaining and repairing the Common
Roadway computed and billed quarterly in arrears.

 

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4. Use.  Lessee shall use and occupy the Premises only for general
office/administrative purposes, or any other legal use which is reasonably
comparable thereto, and for no other purpose, without the prior written consent
of Lessor which consent shall not be unreasonably withheld, conditioned or
delayed.   Lessor has made no warranty or representation that the Premises are
usable for the use Lessee intends to make of the Premises and no representation
or warranty regarding the legality of the improvements made by the prior tenant
to the Premises.

5. Security Deposit.  Within ten (10) business days after full execution of this
Lease, Lessee shall deposit with Lessor the sum of $12,022.65  as a security
deposit (the “Security Deposit”).   Lessor shall have no obligation to deliver
possession of the Premises to Lessee until the Security Deposit is paid but all
obligations of this Lease, including the obligation to pay Base Monthly Rent,
shall be in full force and effect.   The Security Deposit shall be held by
Lessor as security for the faithful performance by Lessee of all of the
provisions of this Lease to be performed or observed by Lessee. No portion of
the Security Deposit may be used by Lessee for any monetary obligation owed by
Lessee during the term of this Lease and any extension thereof, particularly the
rent due for the last month of the term of this Lease or any extension
thereof.   If Lessee fails to pay rent or other charges hereunder, or otherwise
defaults with respect to any provision of this Lease, Lessor may use, apply or
retain all or any portion of the Security Deposit for the payment of said
obligation or of any other sum to which Lessor may become obligated by reason of
Lessee's default, or to compensate Lessor for any loss or damage which Lessor
may suffer thereby.   If Lessor so uses or applies all or any portion of the
Security Deposit during the term hereof or any extension thereof, Lessee shall
within ten (10) business days after demand therefor deposit cash with Lessor in
an amount sufficient to restore the Security Deposit to the full amount thereof.
Lessee's failure to do so shall be deemed a failure to pay rent and shall
constitute a material breach of this Lease. Lessor shall not be required to keep
the Security Deposit separate from its general accounts. lf Lessee performs all
of Lessee's obligations hereunder, the Security Deposit, or so much thereof as
has not theretofore been applied by Lessor, shall be returned, without payment
of interest or other increment for its use, to Lessee (or, at Lessor's option,
to the last assignee, if any, of Lessee's interest hereunder) within sixty (60)
days after the expiration of the term hereof and after Lessee has vacated the
Premises and they are returned to Lessor in the condition in which they are
obliged to be returned to Lessor, whichever is later. No trust relationship is
created herein between Lessor and Lessee with respect to the Security Deposit.

6. Limitations on Use. Lessee's use of the Premises shall be in accordance with
the following:

A. Cancellation of insurance; increase in insurance rates. Lessee shall not do,
bring, or keep anything in or about the Premises that will cause a cancellation
of any insurance covering the Premises and the Building. If the rate of any
insurance carried by Lessor is increased as a result of any activity of Lessee
at the Premises, or if any lender to Lessor shall require Lessee to carry
additional insurance as a result of any activity of Lessee at the Premises,
Lessor shall notify Lessee of said event at least twenty (20) days prior to the
date on which such premium is due and Lessee shall pay a sum equal to the total
difference between the original premium and the increased premium to Lessor
within ten (10) days before the date Lessor is obligated to pay said premium on
the insurance. If Lessee should so request, Lessor shall deliver to Lessee a
statement from Lessor's insurance carrier or lender stating that the rate
increase or requirement of additional insurance was caused primarily by an
activity of Lessee on the Premises.

B. Compliance with Laws. Lessee shall, at Lessee's sole cost and expense, comply
with all laws, governmental regulations and restrictions of record concerning
the Premises or Lessee's use of the Premises, including without limitation, the
obligation to comply with all laws relating to the condition, use, or occupancy
of the Premises during the term of this Lease or any extension thereof.

C. Limits on Hazardous Materials. Lessee shall not store, or permit the storage,
or use, or permit the use, of Hazardous Materials in such a manner which would
result in contamination, in violation of any law or regulation, described in
Paragraph 6.C.(1) below, of the Building, the Premises, or the surrounding soil
or air, or cause a substantial risk of fire, explosion, or release of noxious or
corrosive fumes in or about the Premises or the Building or within fifty (50)
feet thereof, or conduct, or permit to be conducted, any hazardous activities
which would involve contamination of the Building, Premises or surrounding soil
or air in violation of any law or regulation described in Paragraph 6.C.(1)
below, or cause a substantial risk of fire, explosion, flood or noxious or
corrosive fumes in or about the Premises or Building or within fifty (50) feet
thereof or endanger the good health of any occupant or invitee to the Building
or Premises. In addition to, and not by way of limitation of, Lessee's

 

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obligations set forth in this Lease, Lessee shall at all times comply with all
local, state and national laws regarding the manufacture, transportation,
storage, use and disposal of all hazardous materials.

(1) As used in this Lease, the term “Hazardous Material(s)” shall include the
following: any substance or material defined as “hazardous” or “toxic” by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. Section 9601 et seq.), as amended from time to time; the Hazardous
Materials Transportation Act (42 U.S.C. Section 1801 et seq.), as amended from
time to time; the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.), as amended from time to time; the Hazardous Waste Control Law,
California Health & Safety Code Section 25100 et seq., as amended from
time-to-time; the Safe Drinking Water and Toxic Enforcement Act of 1986, as
amended from time to time; any rules and regulations promulgated under the
foregoing statutes; rules and regulations of the Environmental Protection
Agency, the California Water Quality Control Board, the Department of Labor, the
California Department of Industrial Relations, the Department of Transportation,
the Department of Agriculture, the Consumer Product Safety Commission, the
Department of Health and Human Services, the Food and Drug Administration any
other governmental agency now or hereafter authorized to regulate or protect the
environment or human health or safety; and any other federal, state, or local
law, statute, ordinance, or regulation now in effect or later enacted to protect
the environment or human health or safety,  (collectively, “Environmental
Laws”).  Lessor represents to Lessee that as of the Commencement Date it is not
in default under any deed of trust encumbering the Building, that the Premises
are not subject to any pending litigation, and there is no right of first
refusal to lease or purchase the Building.

(2) Lessee shall keep adequate records to demonstrate that all Hazardous
Materials are being properly handled, used, stored, transported and disposed of
in accordance with all applicable laws and regulations and shall make said
records available to Lessor promptly after receiving a request therefor from
Lessor. No more than once per year, Lessor shall have the right to appoint a
consultant, at Lessee's expense, whose fee shall not exceed $5,000.00, upon no
less than thirty (30) days’ written notice to Lessee, to conduct an
investigation to determine whether Hazardous Materials are located in or about
the Premises or whether Hazardous Materials have been released in such a manner
as would violate applicable laws and regulations, and determine the corrective
measures, if any, required to remove such Hazardous Materials. Lessee, at its
expense, shall comply with all recommendations of such consultant. If and to the
extent Lessee is not in violation of applicable laws. Lessor and Lessor’s
consultant shall use good faith efforts not to unreasonably disturb Lessee’s use
and enjoyment of the Premises during any such investigation.

(3) Without limiting the applicability of any other indemnity provision of this
Lease, Lessee shall indemnify, defend and hold Lessor harmless from all costs,
expenses and liabilities, including reasonable attorneys’ fees as incurred by
Lessor arising from any violation by Lessee of the provisions of this
Subparagraph.

(4) Without limiting the foregoing, in the event Hazardous Materials brought
onto the Premises by, or with the knowledge of, Lessee result in contamination
of the Building, the Premises or any air, water or soil in or about the Building
or the Premises la violation of any law or regulation described in Paragraph
6.C.(1), Lessee shall, at its sole cost, promptly take all actions necessary to
return the Premises and/or the Building to the condition existing prior to the
contamination and into compliance with all laws and regulations described in
Paragraph 6.C.(1). Any remedial action or disposal shall be undertaken in
accordance with all applicable laws and regulations.

 

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(5) Lessee shall promptly notify Lessor in writing of any discovery by Lessee,
its agents or employees, of the release of any Hazardous Material onto the
Premises or the Building and transmit to Lessor copies of all non-routine
reports from any governmental agency having jurisdiction over any activity of
Lessee in the Premises regarding any violations or suspected violations of any
laws or regulations governing Lessee's use of and activities within the
Premises. Lessee shall furthermore promptly notify in writing Lessor of any
non-routine inquiry, test, investigation or enforcement proceeding by or against
Lessee or the Premises concerning any Hazardous Material (a “Proceeding”).
Lessee shall transmit to Lessor copies of any reports from any governmental
agency having jurisdiction in connection with any such Proceeding. Lessee agrees
that Lessor, as owner of the Building, shall have the right to take such actions
as Lessor reasonably believes are necessary to protect its interest in the
Building with respect to any such Proceeding. Lessee acknowledges that Lessor,
as the owner of the Building, at its election, shall have the sole right, at
Lessee's expense, to negotiate, defend, approve and appeal any action taken or
order issued in connection with any such Proceeding or with regard to any
Hazardous Material by an applicable governmental authority.

D. Waste; Nuisance. Lessee shall not use the Premises in any manner that will
constitute waste or nuisance (including, without limitation, the use of
loudspeakers or sound or light apparatus that can be heard or seen outside the
Premises, or the emission of noxious odors from the Premises ) or interference
with use or access of other tenants in the Building or of owners or occupants of
adjacent properties.

E. Compliance with Rules Issued by Lessor. Lessee shall use the driveway(s) and
Common Roadway so as not to impede any ingress or egress by other vehicles, and
shall park all vehicles only in areas designated for such vehicles. Lessee shall
also comply with all reasonable rules which have been or which may hereinafter
be promulgated by Lessor regarding the use of the Common Roadway, driveways and
parking areas, which rules will apply equally to all who have rights to use the
Common Roadway. Lessee hereby consents to Lessor towing any such vehicles which
do not comply with this subparagraph or the above described rules. Lessee shall
also refrain from storing any property on the grounds surrounding the Premises
or on driveways or parking areas or allowing the use of any such grounds except
as means for ingress and egress from the Premises or the Building.

F. No Retail Sales. Lessee shall not conduct any retail sales of any goods or
products from the Premises.

7. Personal Property Taxes. Lessee shall pay before delinquency all taxes,
assessments, license fees and other charges that are levied and assessed against
Lessee's personal property installed or located in or on the Premises, and that
become payable during the term. Within thirty (30) days after written request,
Lessee shall furnish Lessor with satisfactory evidence of these payments.

8. Taxes Payable by Lessee.

A. Lessee shall pay to Lessor as additional rent prior to delinquency, Lessee's
Percentage Share of all Real Property Taxes. As used herein, the term “Real
Property Taxes” shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed upon the Building by any authority
having the direct or indirect power to tax, including any city, county, state,
or federal government, any school, agricultural, sanitary, fire, street,
drainage, or other improvement district thereof, levied against any legal or
equitable interest of Lessor in the Building or any portion thereof, Lessor's
right to rent or other income therefrom , and/or Lessor's business of leasing
the Premises or Building.  The term “Real Property Taxes” shall also include any
tax, fee, levy, assessment or charge, or any increase therein, imposed by reason
of events occurring, or changes in applicable law taking effect during the term
of this Lease, including but not limited to a change in the ownership of the
Building or the improvements therein, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated by
the parties to this Lease.

B. Lessee's liability hereunder to pay any tax shall be prorated on a daily
basis to account for any fractional portion of a tax period included in the term
of this Lease or any extension thereof at its commencement and expiration.

 

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C. Lessor agrees that it will pay the Real Property Taxes in the permitted two
installments. Lessor shall notify Lessee, at least twenty-five (25) days before
any taxes must be paid before incurring a penalty, of Lessee's Percentage Share
of the Real Property Taxes and any other taxes described above in Paragraph 8.A.
prior to the date on which the first installment is due. Lessee shall pay
Lessee's Percentage Share of said taxes as shown in Lessor's notice at least ten
(10) days prior to the date said taxes must be paid before incurring a penalty.
lf Lessee is given at least twenty five (25) days’ notice prior to the date on
which said Real Property Taxes must be paid before incurring a penalty and
Lessee fails to pay the sums required within ten (10) days of the date of the
written notice, Lessee shall pay to Lessor, as additional rent, all interest and
penalties assessed by the taxing authority if Lessor has failed to make the
timely payment of said taxes, in addition to the late charge provided for in
Paragraph 3.

9. Repairs.

A. Lessee's Responsibilities.

(1) As of the Lease Commencement Date, Lessor represents and warrants that the
roof, HVAC, lighting system, plumbing, electrical and other systems, dock doors
and hardware shall be in good operating condition.   Lessor warrants that to the
best of its actual knowledge, without duty of investigation, that the
improvement in the Premises comply with the building codes applicable laws,
covenant or restrictions of record, regulations, and ordinances  (the
“Applicable Requirements”) that were in effect at the time that each
improvement, or portion thereof, was constructed.  Said warranty does not apply
to the use to which Lessee will put the Premises, modifications which may be
required by the Americans with Disabilities Act or any similar laws as a result
of Lessee’s use, or to any alteration made or to be made by Lessee.   In the
event that it is determined that this warranty has been violated, Lessee shall
notify Lessor in writing of the specific item or items which are not in good
operating condition or which have not been substantially completed.   In such
event after receipt of Lessee’s notice, it shall be the obligation of Lessor,
after receipt of written notice from Lessee setting forth with specificity the
nature of the violation, to promptly, at Lessor's sole cost, rectify such
violation.  Lessee's failure to give such written notice to Lessor within thirty
(30) days after the Lease Commencement Date to Lessee shall cause the conclusive
presumption that Lessor has complied with all of Lessor's warranty stated in
this subparagraph and its obligations hereunder.   If Lessee notifies Lessor of
a violation of the warranty stated in this paragraph, as to the item specified
in Lessee’s notice to Lessor, the warranty shall exist for a period of fifteen
(15) days following the date on which Lessor completes the repair to the item.  
Lessee’s failure to give written notice to Lessor within said fifteen (15) day
period that the item repaired is not repaired and its condition violates the
warranty described in this subparagraph shall cause the conclusive presumption
that Lessor has complied with all of Lessor’s obligations with respect to the
condition of that item.   Except as specifically provided herein, on the Lease
Commencement Date, Lessee shall accept the Premises as being in the condition in
which Lessor is obligated to deliver them. Lessee shall, at all times during the
term hereof, and at Lessee's sole cost and expense, keep the Premises and every
part thereof in good condition and repair, ordinary wear and tear, damage by
fire, earthquake, or act of God excepted, Lessee hereby waiving all rights to
make repairs at the expense of Lessor or in lieu thereof to vacate the Premises
as provided by California Civil Code Section 1942 or any other law, statute or
ordinance now or hereafter in effect. Said obligation on the part of Lessee
includes, but is not limited to, maintaining, repairing and/or replacing
internal columns, windows, fixtures, ballasts, lamps, roll-up doors, and the
plumbing, electrical, and heating, ventilating and air-conditioning systems
serving exclusively the Premises (whether or not the damaged portion of the
Premises or the means of repairing the same are reasonably or readily accessible
to Lessee and whether or not the need for such repairs occurs as a result of
Lessee's use, any prior use, the elements or the age of such portion of the
Premises).

(2) Lessee shall at the end of the term of this Lease or any extension thereof,
surrender to Lessor the Premises and all alterations, additions and improvements
thereto in the same condition as when received, ordinary wear and tear and
damage by fire, earthquake, or act of God excepted, but including, without
limitation, replacement of burnt-out lamps and ballasts.. Notwithstanding the
foregoing, Lessee may remove Lessee’s furniture, fixtures and equipment upon
termination of the Lease, so long as Lessee repairs any damage caused thereby to
the Premises. Except as provided in Subparagraph B, below, Lessor has no
obligation and has made no promise to alter, remodel, improve, repair, decorate
or paint the Premises or any part thereof. No representations respecting the
condition of the Premises or the Building have been made by Lessor to Lessee,
except as specifically herein set forth.  

 

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(3) Commencing on the Lease Commencement Date, Lessee shall pay to Lessor
Lessee's Percentage Share of Common Area Maintenance and Repair Costs as
additional rent hereunder within thirty (30) days of receiving a written
notification from Lessor of Lessee's Percentage Share of said costs.

B. Lessor's Responsibilities.

(1) Lessor shall at Lessor's expense (which shall not be included in Common Area
Maintenance Costs unless expressly permitted herein) maintain the roof
(including the roof membrane), the foundation, the structural portions of the
Building and the exterior walls of the Building.  Lessor's financial
responsibility for the roof is for the structure and membrane alone and does not
include the costs of the maintenance of the drain pipes from the roof or other
structures appurtenant thereto. Lessor's financial responsibility for the
exterior walls does not include maintenance, repair or replacement of the
interior portion of the exterior walls, the interior partition walls, studs,
sheet rock, or any windows, window frames, or plate glass or doors or any damage
directly caused by the act or omission of Lessee or the costs of repairing any
vandalism to the exterior walls or roof - all of which remain the responsibility
of Lessee. Except in cases of an emergency posing a danger to persons or
property or which materially interfere with the conduct of Lessee’s
business,  Lessor shall have no obligation to make repairs under this
subparagraph until twenty (20) days after receipt of written notice of the need
for such repairs from Lessee.  If the repairs cannot be completed within twenty
(20) days after receipt of such notice, Lessor shall not be in default hereunder
if Lessor commences the repairs within the twenty (20) days and continues
thereafter to complete the repairs or if said repairs cannot be completed timely
due to factors beyond the reasonable control of Lessor.  

(2) Lessor, at Lessee's expense shall maintain and repair all common areas
(including lobbies and passage ways), grounds (including landscaping, parking
areas, the Common Roadway, driveways and fences), drain pipes from the roof or
other structures appurtenant thereto, any utility systems or services or
portions thereof which serve the Building as well as the Premises and any damage
caused by vandalism to the roof or exterior walls. If  Lessee damages the
internal columns in the Premises and fails within thirty (30) days after written
notice from Lessor to commence the repair and/or replacement of said columns,
Lessor at Lessor's option may enter the Premises and cause said repairs to be
made. Lessee shall reimburse Lessor for the full cost of said repairs within
thirty (30) days of being given written notice by Lessor of the amount of the
cost of said repairs.

(3) If Lessor (or its employees, agents or contractors) undertakes work to the
Building and that work directly causes damage to utility lines serving the
Premises resulting in a termination of such utilities serving the Premises which
causes Lessee to cease its operations in the Premises, if said interruption
lasts longer than five (5) business days,  Lessee shall be entitled to a rebate
of Base Monthly Rent for each additional business day it does not have utility
services and it cannot operate its business in the Premises.  

10. Alterations.

A. Except for the installation of unattached, movable trade fixtures which may
be installed without drilling, cutting or otherwise defacing the Premises
(“Movable Fixtures”) and except for Cosmetic Alterations (as hereinafter
defined), Lessee shall not make any alterations, additions or improvements to
the Premises (collectively, “Alterations”) without Lessor’s prior written
consent.  As used herein, “Cosmetic Alterations” shall mean an alteration,
addition or improvement that: (i) is limited to the interior of the Premises;
(ii) does not affect the exterior (including the appearance) of the
Building;  (iii) is non-structural or does not affect the structural integrity
of the Building;  (iv) does not affect the usage or the proper functioning of
the mechanical, electrical, sanitary, HVAC or other service systems of the
Building; and (v) does not exceed Ten Thousand and 00/100 Dollars ($10,000.00)
in each instance.  Lessee shall provide Lessor written notice of all Cosmetic
Alterations to the space fifteen (15) business days prior to undertaking any
such Cosmetic Alterations.  Lessee must obtain Lessor’s prior written consent
for all other alterations any improvements, alterations, additions or changes to
the Premises or any mechanical, plumbing or HVAC facilities or systems
pertaining to the Premises (“Material Alterations” which consent shall be
requested by Lessee not less than fifteen (15) business days prior to the
commencement thereof, and which consent shall not be unreasonably withheld,
conditioned or delayed by Lessor.

Any permitted Material Alterations shall remain on and be surrendered by Lessee
with the Premises on expiration or termination of the term or any extension
thereof, except that Lessor may elect at least sixty (60) days prior to the
expiration of the term to require that Lessee remove any Cosmetic Alterations
and/or

 

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Material Alterations that Lessee has made to the Premises. If Lessor so elects,
Lessee at its sole cost shall restore the Premises to the condition existing
before such installation of such Cosmetic Alteration and / or Material
Alteration before the last day of the term.   If Lessee fails to remove any of
its Cosmetic Alterations and/or Material Alterations designated by Lessor and to
so restore the Premises and Lessor incurs costs to restore the Premises or to
remove such Cosmetic Alterations and/or Material Alterations made by Lessee,
Lessee shall reimburse Lessor for all such costs incurred and shall also pay
Lessor the current amount of Base Monthly Rent prorated for each day after the
expiration of the term that Lessor must occupy the Premises for the purpose of
removing Lessee's Cosmetic Alterations and/or Material Alterations or making
repairs.

B. If Lessee makes any alterations or additions to the Premises as provided in
this Paragraph 10, the alterations or additions shall not be commenced until
five (5) business days after Lessor has received written notice from Lessee
stating the date the installation of the alterations or additions is to commence
so that Lessor may post and record an appropriate notice(s) of
non-responsibility.

C. Lessee's right to make additions and alterations, and the consent of Lessor
given as required by this Paragraph 10, shall be deemed conditioned upon Lessee
complying in the making of such additions and alterations with all requirements
of state and local laws and ordinances governing the manner in which such
additions and alterations are made. Lessee shall complete of any such work
according to applicable building codes and other applicable governmental
regulations in a worker-like and expeditious manner.  Upon completion of any
Alterations which require the issuance of a building permit, Lessee shall: (i)
cause a Notice of Completion to be recorded in the office of the Recorder of San
Mateo County in accordance with Section 8182 of the Civil Code of the State of
California or any successor statute; (ii) deliver to Lessor any, a reproducible
copy of the “as built” drawings of the Alterations; and (iii) deliver to Lessor
evidence of payment, contractors' affidavits and full and final waivers of all
liens for labor, services or materials.

D. Lessee shall pay all costs for any and all Alterations done by it or caused
to be done by it on the Premises as permitted by this Lease. Lessor shall have
no obligation or responsibility to make any Alterations to the Premises except
as specifically provided in this Lease. Lessee shall keep the Premises free and
clear of all mechanics liens resulting from any alterations or additions done by
or for Lessee. Lessee shall have the right to contest the correctness or the
validity of any such lien if, promptly on written demand by Lessor, Lessee
procures and records a lien release bond issued by a corporation authorized to
issue surety bonds in California in an amount equal to one and one-half times
the amount of the claim of lien. The bond shall meet the requirements of Civil
Code Section 3143 and shall provide for the payment of any sum that the claimant
may recover on the claim (together with costs of suit, if it recovers in the
action).

E. Lessor hereby agrees to provide to Lessee an allowance (the “Paint and Carpet
Allowance”) of Forty Thousand and no/100 Dollars ($40,000.00) for the sole
purpose of painting and installing carpet in the Premises (the “Paint and Carpet
Improvments”).  Lessee shall pay as due all charges for the Paint and Carpet
Improvements, and shall save and protect Lessor and the Premises from and
against any claims and liens for such improvements.  Upon submission by Lessee
by not later than ninety (90) days following the Commencement Date of receipts
and invoices reflecting paint and carpet work performed and paid by Lessee,
together with a partial lien release to the extent of such payment, Lessor shall
reimburse Lessee therefor, up to the maximum amount of the Paint and Carpet
Improvement Allowance. If upon completion of the Paint and Carpet Improvements,
Lessee has not used the full amount of the Allowance, the remainder shall revert
to Lessor.  

11. Utilities and Services. Lessee shall make all arrangements for and pay for
all services furnished to or used by it at or about the Premises, including,
without limitation, gas, electricity, water, telephone service, meter fees, the
alarm system, trash collection, and for all connection charges.   Lessee
acknowledges that Lessor has installed an alarm service in the Premises.  For so
long as Lessee uses that service, Lessee shall reimburse Lessor each month for
the cost of the service after receipt of an invoice for such service.    Lessee
may request that Lessor terminate the service in which event the service shall
terminate 35 days after the request from Lessee.   Lessee shall pay for the cost
of the alarm service through the date of its termination.  

12. Exculpation of Lessor. Except to the extent caused by the gross negligence
or willful misconduct of Lessor, its employees, agents or contractors, Lessor
shall not be liable to Lessee for any damage to Lessee or Lessee's property from
any cause. Lessee waives all claims against Lessor for damage to person or
property arising

 

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in any manner and for any reason, except that Lessor shall be liable to Lessee
for damage to Lessee resulting from the willful misconduct or willful neglect or
gross negligence of Lessor or its employees, agents or contractors..

13. Indemnity. Lessee shall indemnify, defend and hold Lessor, its agents,
assigns, employees and contractors, harmless from all damages arising out of any
event causing damage to any person or property occurring in or about the
Premises during the term of this Lease or any extension thereof and from all
claims arising from the business of Lessee or its use and occupancy of the
Premises.   Lessor shall indemnify, defend and hold Lessee, its agents, assigns,
employees and contractors, harmless from any damages to any person or property
occurring in or about the common areas of the Building or the Common Roadway
during the term of this Lease and any extension thereof arising from the gross
negligence or willful misconduct of Lessor or its employees, agents or
contractors.

14. Insurance.

A. Lessee's Liability insurance. Lessee shall, at its sole expense, maintain
primary commercial public liability insurance, including coverage for bodily
injury, property damage, emotional distress, wrongful death and personal injury,
with a combined single combined liability limit of not less than Two Million
Dollars ($2,000,000), insuring Lessor and Lessee against all liability of Lessee
and its employees, agents and authorized representatives arising out of and in
connection with Lessee's use or occupancy of the Premises.

B. Lessee's Fire and Plate Glass Insurance. Lessee, at its sole expense, shall
maintain on all its personal property, Lessee's improvements, and alterations,
in, on, or about the Premises, a policy of standard fire insurance, providing
“all risk” or “special form” coverage (including coverage for vandalism and
malicious mischief), to the extent of at least one hundred percent (100%) of
their full replacement value. The proceeds from any such policy shall be used by
Lessee for the replacement of its personal property or the restoration of its
improvements or alterations. Lessor shall be named as an additional insured on
all insurance maintained pursuant to this Subparagraph on Lessee's leasehold
improvements and any alterations made to the Premises.

C. Fire, Multi-Peril Insurance on Premises. Lessor shall maintain on the
Building a Commercial Package Policy, including but not limited to standard
fire, multi-peril, income replacement and rental loss and excess liability
insurance, to the extent of at least full replacement value of the Building and
commercial general liability coverage in an amount of not less than $3,000,000.
Only if required by any lender of Lessor holding a security interest in the
Building, Lessor may also obtain earthquake insurance for damage to the Building
and Lessee shall be required to pay Lessee's Percentage Share of any such
premium. The insurance policy or policies shall be issued in the name of Lessor,
and Lessor's lender, if required.

D. Payment of Premiums. Lessee shall pay to Lessor Lessee's Percentage Share of
all premiums paid by Lessor for maintaining the insurance described in
Subparagraph C above. Reimbursement shall be made by Lessee within fifteen (15)
days after Lessor notifies Lessee of Lessee's Percentage Share of such costs
which notice shall include a copy of the invoice for the premium. Lessee's
obligation to pay the insurance premium costs shall be prorated for any partial
year at the commencement and expiration of the term.

E. Waiver of Subrogation. The parties release each other, and their respective
authorized representatives, from any claims for damage to any person or to the
Premises and to the fixtures, personal property, Lessee's improvements, and
alterations of either Lessor or Lessee in or on the Premises that are caused by
or result from risks insured against under any insurance policies carried by the
parties and in force at the time of any such damage. Each party shall cause each
insurance policy obtained by it to provide that the insurance company waives all
right of recovery by way of subrogation against either party in connection with
any damage covered by any policy. Neither party shall be liable to the other for
any damage caused by fire or any of the risks insured against under any
insurance policy required by this Lease.

 

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F. General Terms of Lessee's insurance. All insurance obtained by Lessee
pursuant to this Lease shall be primary and non-contributory with respect to any
other insurance that may be available to Lessor. All public liability insurance
and property damage insurance required to be carried by Lessee shall insure
performance by Lessee of the indemnity provisions of Paragraph 13 of this Lease.
Lessor (and Lessor's lenders, if required by any such lender holding a security
interest in the Building at any time during the term of this Lease or any
extension thereof) shall be named as additional insureds under such policy or
policies, and every policy shall contain cross-liability endorsements.

G. Other Insurance Matters. All the insurance required under this Lease shall:

(1) Be issued by insurance companies authorized to do business in the State of
California, with a Best’s rating of not less than A- VII as.

(2) Be issued as a primary policy.

In addition, Lessee will endeavor to obtain from its carrier an endorsement in
which the carrier agrees to provide thirty (30) days written notice from the
insurance company to Lessor and Lessor's lender if so required by Lessor, before
cancellation or change in the coverage, scope, or amount of any policy.  If
Lessee’s carrier refuses to provide such endorsement, Lessee shall provide to
Lessor notice of any cancellation of the insurance required by this Paragraph 14
to be carried by Lessee to Lessor within three (3) business  days of its receipt
of such notice of cancellation or its failure to pay any premium for any such
required insurance.

15. Destruction.

A. If, during the term of this Lease and any extension thereof,, the Premises
are totally or partially destroyed from a risk covered by the insurance
described in Paragraph 14.C., rendering the Premises totally or partially
inaccessible or unusable, Lessor shall restore the Premises. The restoration
work will commence as soon as reasonably practical after the destruction given
the time constraints arising from the need for Lessor to collect proceeds for
the reconstruction from its insurance carrier, obtain engineering studies and
acceptable building plans and apply for and obtain permits. Such destruction
shall not terminate this Lease provided, however, that: (1) the work, if there
is a total destruction, must be completed within six (6) months from the date of
the event causing the destruction; or (2) if a partial destruction, the work
must be completed within nine (9) months from the date of the event causing the
destruction. If Lessor cannot complete the rebuilding within the foregoing time
limits or if laws in effect at the time of destruction do not permit such
restoration, either party may terminate this Lease by giving written notice to
the other party. If Lessor intends to rebuild the Premises, Lessor shall give
written notice of such fact to Lessee within forty-five (45) days of the event
of destruction including, in said notice an estimate of when the rebuilding will
be completed. If Lessee does not object in writing to the time estimates given
by Lessor within fifteen (15) business days of receipt of the written notice
from Lessor, this Lease will not terminated if, in , the work is substantially
completed within thirty (30) days after the estimated date of completion and
Lessor delivers possession of the damaged portion of the Building or the
Premises, as applicable, to Lessee in the manner and pursuant to the same
provisions as set forth in Paragraph 2.8 of this Lease.

If the cost of the restoration exceeds the amount of proceeds received from the
insurance required under Paragraph 14.C., Lessor may elect to terminate this
Lease by giving written notice to Lessee within fifteen (15) days after
determining that the restoration cost will exceed the insurance proceeds. In the
case of destruction to the Premises only, if Lessor elects to terminate this
Lease, Lessee, within fifteen (15) business days after receiving Lessor's notice
to terminate, may elect to pay to Lessor in cash or immediately available funds,
at the time Lessee notifies Lessor of its election, the difference between the
amount of insurance proceeds and the cost of restoration, in which case Lessor
shall restore the Premises. Lessor shall give Lessee satisfactory evidence that
all sums contributed by Lessee as provided in this Subparagraph have been
expended by Lessor in paying the cost of restoration.

If Lessor elects to terminate this Lease and Lessee does not elect to contribute
toward the cost of restoration as provided in this subparagraph, this Lease
shall terminate.

B. If, during the term, the Premises are totally or partially destroyed from a
risk not covered by the insurance described in Paragraph 14.C., rendering the
Premises totally or partially inaccessible or unusable, Lessor

 

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shall restore the Premises to substantially the same condition as they were in
immediately before destruction, subject to the limitations set forth below. If
Lessor elects to restore the Premises, the work will commence as soon as
practical after the destruction given the time constraints for obtaining
engineering studies and building plans and apply for and obtain permits. If the
existing laws do not permit the restoration, either party can terminate this
Lease by giving written notice to the other party.

If the cost of restoration exceeds ten percent (10%) of the then replacement
value of the Building , Lessor may elect to terminate this Lease by giving
written notice to no later than Lessee fifteen (15) days after determining the
restoration cost and replacement value (but no later than sixty (60) days after
the date of the casualty).  If the Lessor does not so elect, this Lease shall
continue.

In the case of destruction to the Premises only, if Lessor elects to terminate
this Lease, Lessee, within fifteen (15) days after receiving Lessor's written
notice to terminate, may elect to pay to Lessor in cash, at the time Lessee
notifies Lessor of its election, the difference between ten percent (10%) of the
then replacement value of the Premises and the actual cost of restoration, in
which case Lessor shall restore the Premises upon receipt of the required funds
from Lessee. Lessor shall give Lessee satisfactory evidence that all sums
contributed by Lessee as provided in this subparagraph have been expended by
Lessor in paying the cost of restoration.

If Lessor elects to terminate this Lease and Lessee does not elect to contribute
toward the cost of restoration as provided in this subparagraph, this Lease
shall terminate.

C. If Lessor is required or elects to restore the Premises as provided in this
Paragraph 15, Lessor shall not be required to restore Cosmetic Alterations
and/or Material Alterations made by Lessee, Lessee's trade fixtures, and
Lessee's personal property, such excluded items being the sole responsibility of
Lessee to restore.

D. In case of destruction and Lessor elects or is required to restore the
Premises, there shall be an abatement of Base Monthly Rent Common Area
Maintenance and Repair Costs and other rent on the unusable portion of the
Premises from the date of destruction to the date on which there is substantial
completion of the Lessor’s restoration work.

E. Notwithstanding anything to the contrary in this Paragraph, Lessee may elect
to terminate the Lease if either: (1) there is a total destruction and the work
cannot be completed within one year from the date of the event causing the
destruction; (2) if there is a partial destruction and the work cannot be
completed within nine (9) months from the date of the event causing the
destruction; or (3) if there is a partial destruction during the last twelve
(12) months of the term and the work cannot be completed within sixty (60) days
from the date of the event causing the destruction.

F. Lessee waives the provisions of Civil Code Section 1932(2) and Civil Code
Section 1933(4) with respect to any destruction of the Premises.

16. Condemnation - Definitions.

A. Definitions.

(1) “Condemnation” means: (a) the exercise of any governmental power, whether by
legal proceedings or otherwise, by a Condemnor (as defined below); and (b) a
voluntary sale or transfer by Lessor to any Condemnor, either under threat of
Condemnation or while legal proceedings for Condemnation are pending.

(2) “Date of Taking” means the date the Condemnor has the right to possession of
the property being condemned.

(3) “Award” means all compensation, sums, or anything of value awarded, paid, or
received on a total or partial condemnation.

(4) “Condemnor” means any public or quasi-public authority, or private
corporation or individual, having the power of condemnation.

 

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B. If, during the term or during the period of time between the execution of
this Lease and the date the term commences, there is any taking of all or any
part of the Premises or any interest in this Lease by Condemnation the rights
and obligations of the parties shall be determined pursuant to this Paragraph
16.  If the Premises are totally taken by condemnation, this Lease shall
terminate on the Date of Taking if any portion of the Premises is taken by
Condemnation this Lease shall remain in effect, except that Lessee can elect to
terminate this Lease if the remaining portion of the Premises, the Building or
other improvements or the parking areas on the land on which the Building is
located is rendered unsuitable for Lessee's continued use of the Premises. If
Lessee elects to terminate this Lease, Lessee must exercise its right to
terminate pursuant to this Paragraph 16.B. by giving notice to Lessor within
thirty (30) days after the nature and the extent of Taking have been finally
determined. If Lessee elects to terminate this Lease as provided in this
Subparagraph , Lessee also shall notify Lessor of the termination which date
shall not be earlier than thirty (30) days nor later than ninety (90) days after
Lessee has notified Lessor of its election to terminate; except that this Lease
shall terminate on the date of taking if the date of taking falls on a date
before the date of termination as designated by Lessee.  If Lessee does not
terminate this Lease within the thirty (30) day period, this Lease shall
continue in full force and effect except that Base Monthly Rent and the Common
Area Maintenance Costs shall be reduced.

C. If any portion of the Premises is taken by condemnation and this Lease
remains in full force and effect, on the date of taking the Base Monthly Rent
and the Common Area Maintenance Costs shall be reduced by an amount that is in
the same ratio to minimum monthly rent as the value of the area of portion of
the Premises taken bears to the total value of the Premises immediately before
the date of taking.

D. Each party waives the provisions of Code of Civil Procedure Section 1265.130
allowing either party to petition the Superior Court to terminate this Lease in
the event of a partial taking of the Premises.

E. If there is a partial taking of the Premises and this Lease remains in full
force and effect, Lessor at its cost shall accomplish all necessary restoration.
Base Monthly Rent and the Common Area Maintenance Costs shall be abated or
reduced during the period from the date of taking until the completion of
restoration, but all other obligations of Lessee under this Lease shall remain
in full force and effect. The abatement or reduction of Base Monthly Rent and
the Common Area Maintenance Costs shall be based on the extent to which the
restoration interferes with Lessee's use of the Premises.

F. The award shall belong to and be paid to Lessor, except that Lessee shall
receive from the award a sum attributable to: (i) Lessee’s relocation expenses;
(ii) loss of business goodwill; (iii) Lessee’s equipment and trade fixtures; and
(iv) Lessee's improvements or alterations made to the Premises by Lessee in
accordance with this Lease, which Lessee's improvements or alterations Lessee
has the right to remove from the Premises pursuant to the provisions of this
Lease but elects not to remove; or, if Lessee elects to remove any such Lessee's
improvements or alterations, a sum for reasonable removal and relocation costs
not to exceed the market value of such improvements or alterations.

G. The taking of the Premises or any part of the Premises by military or other
public authority shall constitute a taking of the Premises by condemnation only
when the use and occupancy by the taking authority has continued for longer than
one hundred eighty (180) consecutive days. During the one hundred eighty (180)
day period all the provisions of this Lease shall remain in full force and
effect, except that Base Monthly Rent and the Common Area Maintenance Costs
shall be abated or reduced during such period of taking based on the extent to
which the taking interferes with Lessee's use of the Premises, and Lessor shall
be entitled to whatever award may be paid for the use and occupation of the
Premises for the period involved.

17. Assignment and Subletting.

A. Definitions. The occurrence of any of the following, whether voluntarily or
involuntarily, because of death, divorce or disability, or by operation of law
or otherwise, shall constitute a “Transfer” of this Lease: (i) any direct or
indirect sale, assignment, conveyance, alienation, sublease, hypothecation,
encumbrance, mortgaging or other transfer of Lessee's interest in this Lease or
in the Premises, or any part thereof or interest therein, including but not
limited to any parking spaces assigned to Lessee; (ii) if Lessee is a Legal
Entity (as defined below), the direct or indirect sale, assignment, conveyance,
alienation, encumbrance, mortgaging or other Transfer of any of the Ownership
Interests (as defined below) in such Legal Entity; (iii) if Lessee is a Legal
Entity,

 

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some or all of whose Ownership Interests are owned by another Legal Entity, the
occurrence of any of the events described in the preceding phrase (ii) with
respect to such constituent Legal Entity; (iii) the cumulative transfer of more
than thirty-five percent (35%) of the assets belonging to Lessee or more than
thirty-five percent (35%) of its issued and outstanding shares; or (v) if any
other person or entity (except Lessee's authorized representatives, agents,
contractors, employees, invitees or guests) occupies or uses all or any part of
the Premises. As used herein, the term “Legal Entity” means any corporation,
partnership, limited liability company, trust, association or other legal
entity, and the term “Ownership Interest” means any share of stock, general or
limited partnership interest, membership interest, beneficial interest or other
ownership interest therein, as the case may be. A “Transfer” includes a transfer
of any interest in this Lease held by a subtenant, assignee, transferee or other
person claiming an interest in the Lessee's interest in this Lease. The
provisions of this Paragraph 17 apply fully to any Transfer by any subtenant,
assignee or other holder of any interest in Lessee's interest in this Lease.

B. Notwithstanding the foregoing, a Transfer shall not include: (i) if and for
so long as Lessee is a Legal Entity whose Ownership Interests are traded on any
public securities exchange, the Transfer of any of the Ownership Interests of
such Legal Entity on said exchange; or (ii) if Lessee is a corporation, limited
liability company or limited partnership, the cumulative transfer up to twenty
five percent (25%) of the shares/stock, membership interests or limited
partnership interests therein;  (iii) the Transfer of this Lease to a Legal
Entity wholly owned or controlled by Lessee, or under common control with
Lessee; (iv) any Transfer required after the completion of a public offering of
the shares/stock in Lessee or successor entity of Lessee; or (vi), the sublease
of no more than a total of 50% of the Premises to persons or companies with whom
Lessee regularly does business provided that: (a) no single sublessee occupies
more than fifteen percent (15%) of the Premises; and (b) Lessee informs Lessor
in writing of the name, address and agent for service of process of each such
sublessee; and (v) any other event that results in an immaterial change in the
ownership and control of the Lessee or the Lessee's interest in this Lease.

C. Lessee shall not engage in or permit any Transfer of this Lease absent full
compliance with all of the terms and provisions of this Paragraph 17. Any
Transfer of this Lease occurring without full compliance with all of the terms
and conditions of this Paragraph 17 shall be voidable at the option of the
Lessor, and shall constitute a material and incurable default on the part of
Lessee hereunder.

D. Prior to engaging in or permitting any Transfer other than an Exempt
Transfer, Lessee shall give notice of any intended Transfer to Lessor and shall
provide Lessor with the following information in writing: (i) the name, address
and ownership of the proposed transferee; (ii) the current balance sheet,
statement of cash flows, report of any litigation in which the proposed
Transferee is a party or is a judgment debtor, aged schedule of accounts
receivable and payable, profit and loss statements, statement that all taxes
payable by the proposed transferee are current, and all notes, if any, to all
financial and profit and loss statements for the proposed transferee or any
other person to be liable for the Lessee's obligations under this Lease covering
the prior three years (or for such shorter period as the proposed transferee or
other person may have been in existence), all certified as true and correct by
the proposed transferee, other person or an authorized officer thereof; (iii) a
full description of the terms and conditions of the proposed Transfer, including
copies of any and all documents and instruments, any purchase and sale
agreements, sublease agreements, assignment agreements and all other writings
concerning the proposed Transfer; (iv) a description of the proposed use of the
Premises by the proposed transferee, including any required or desired
alterations or improvements to the Premises that may be undertaken by such
transferee in order to facilitate its proposed use; and (v) any other
information, documentation or evidence that may be reasonably requested by
Lessor. Lessor agrees that it shall hold all such information in confidence if
requested to do so by Lessee and shall execute any reasonable confidentiality
agreement presented on behalf of and for the benefit of any proposed transferee.

E. In connection with any proposed or requested consent to Transfer, other than
an Exempt Transfer , Lessee shall pay to Lessor a transfer fee of $1000.00
(payment of which shall accompany Lessee's request for Transfer), plus all of
Lessor's reasonable attorneys’ fees expended in connection with the proposed
Transfer, not to exceed $5,000.00.  

F. For non-Exempt Transfers, within ten (10) business days after the submission
of all required information described in the preceding sentence, Lessor shall
give notice to Lessee of its election under Paragraph

 

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17.D. If Lessor falls to give such notice, Lessor shall be presumed to have
consented to Lessee's request for such Transfer.

G. Notwithstanding any other provision of this Paragraph 17, with respect to
any  Transfer pursuant to which all or a controlling share of Lessee’s issued
and outstanding shares of stock and/or all of its assets are to be acquired by a
third party,  upon receipt of the information required by Paragraph 17C,  Lessor
shall  covenants that it will approve the Transfer within the time period set
forth in Paragraph 17E above, provided the  proposed transferee (i) possesses a
net worth prior to the completion of the contemplated transfer of this Lease
equal to or greater than the net worth of Lessee on the Commencement Date (the
term “net worth” shall mean a tangible net worth (not including goodwill as an
asset) computed in accordance with generally accepted accounting principles
(excluding goodwill as an asset); and (ii)  will assume in writing on the date
when the contemplated Transfer closes all of Lessee’s obligations under this
Lease and under all of Lessee’s collateral financial obligations and/or provide
security reasonably acceptable to Lessor for all such obligations and covenant
that the Transfer will in no way diminish or impair any security held by Lessor
under this Lease or any other obligation pertaining to the Premises;  and
(iii)  will not allow a use that has a greater danger of release of Hazardous
Materials in or about the Premises or the Building than that done by Lessee.  

H. Upon receiving a request for Transfer of this Lease (except in the case of an
Exempt Transfer), and compliance with Paragraph 17, Lessor shall have the right
to do any of the following:

(i) Lessor may consent to the proposed Transfer, subject to any reasonable
conditions on such Transfer, which reasonable conditions may include without
limitation, (1) that the proposed transferee assume in writing all of Lessee's
obligations under the Lease (without, however, releasing Lessee therefrom), (ii)
in the case of a proposed sublease, that the subtenant agree that Lessor shall
have the right to enforce any and all of the terms of the sublease directly
against such subtenant, and if this Lease is terminated prior to the expiration
of the sublease, that at the election of Lessor, the sublease shall not
terminate and the subtenant will attorn to the Lessor, (iii) that one half of
all sums or other consideration received by Lessee from the Transferee for the
right to use and occupy the Premises in excess of the rent paid to Lessor be
paid as additional rent by Lessee to Lessor at the same time that Lessee pays
Base Monthly Rent to Lessor;   (iv) that any existing Events of Default under
this Lease be cured prior to the effective date of the Transfer.

(2) Lessor may deny its consent to the proposed Transfer on any reasonable
ground. Such grounds shall include, without limitation, any one or more of the
following, and shall be conclusively deemed to be reasonable as to Lessee: (a)
that the proposed transferee's financial condition is insufficient to support
all of the financial and other obligations of the Lessee with respect to the
Lease; (b) that the use to which the Premises will be put by the proposed
transferee is inconsistent with the terms of the Lease or otherwise will
materially and adversely affect any interest of Lessor; (c) That the nature of
the proposed transferee's proposed or likely use of the Premises would involve
any increased risk of the use, release or mishandling of Hazardous Materials;
(d) That the business reputation or character of the proposed transferee or any
of its affiliates is not reasonably acceptable to Lessor; (e) That the proposed
transferee is not likely to conduct at the Premises a business of a quality
substantially equal to that conducted by Lessee; or (f) that Lessor has not
received assurances acceptable to Lessor in its sole discretion that all past
due amounts owing from Lessee to Lessor (if any) will be paid and all other
Events of Default on the part of Lessee (if any) will be cured prior to the
effective date of the proposed Transfer;.

I. If Lessee receives a bona fide offer to make a Transfer of this Lease that
involves the entire Premises (except an Exempt Transfer) , Lessee may give
Lessor written notice thereof and request that Lessor, within ten (10) business
days after the receipt of such notice, elect in writing whether to waive its
rights under this Subparagraph with respect to the Transfer contemplated by the
bona fide offer. Lessee's notice shall contain the information described in
Paragraph 17.C. Lessor's failure to respond within such ten (10) business days
period shall be deemed to be an election to waive its rights hereunder. If
Lessor does not waive its rights under this Subparagraph, Lessee shall have the
right to withdraw its request to the proposed Transfer within ten (10) business
days of Lessor's election to recapture the Premises.  If Lessor does exercise
its rights hereunder, and terminates the Lease or any portion thereof, Lessor
shall have the right to enter into a lease or the occupancy agreement directly
with the proposed transferee, and Lessee shall have no right to any of the rents
or other consideration payable by such proposed transferee under such other
lease, even if such rents and other consideration exceed the rent payable under
this Lease by Lessee.

 

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J. Lessee acknowledges and agrees that each of the rights of Lessor set forth in
this Paragraph 17 in the event of a proposed Transfer is a reasonable
restriction on Transfer for purposes of California Civil Code Section 1951.4.

K. Any consent to any proposed Transfer, whether conditional or unconditional,
shall not be deemed to be a consent to any other or further Transfer of this
Lease, or any other Transfer of this Lease on the same or other conditions (if
any). No Transfer of this Lease shall in any way diminish, impair or release any
of the liabilities and obligations of Lessee, any guarantor or any other person
liable for all or any portion of the Lessee's obligations under this Lease.

L. Lessor shall have no liability to Lessee or to any proposed transferee in
damages if it is adjudicated that Lessor's consent has been unreasonably
withheld and such unreasonable withholding of consent constitutes a breach of
this Lease or other duty to Lessee, the proposed transferee or any other person
on the part of Lessor. In such event, Lessee's sole remedy shall be to have the
proposed Transfer declared valid as if Lessor's consent had been duly and timely
given.

18. Lessee's Default. The occurrence of any one of the following events (each an
“Event of Default”) shall constitute a material breach of this Lease by Lessee:

A. Lessee's failure to pay Base Monthly Rent when due.

B. If Lessee shall fail to pay any other sum (all of which sums shall be deemed
to be additional rent hereunder) to Lessor when due.

C. Lessee's failure to perform any other provisions of this Lease if the failure
to perform is not cured within thirty (30) days after notice has been given to
Lessee.   Except as otherwise provided herein, if the default cannot reasonably
be cured within thirty (30) days, Lessee shall not be in default of this Lease
if Lessee commences to cure the default within the thirty (30) day period and
diligently and in good faith continues to cure the default thereafter.

D. If this Lease or any estate of Lessee hereunder shall be levied upon under
any attachment or execution and such attachment or execution is not vacated
within fifteen (15) days.

E. If within thirty (30) days after the commencement of any proceeding against
Lessee seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, such proceeding shall not have been dismissed, or if, within
thirty (30) days after the appointment of a receiver or liquidator of Lessee or
of any material part of its properties such appointment shall not have been
vacated.

19. Lessor's Remedies. If an Event of Default shall occur, Lessor shall have the
following remedies. These remedies are not exclusive; they are cumulative in
addition to any remedies now or later allowed by law.

A. Lessor may continue this Lease in full force and effect, and this Lease will
continue in effect as long as Lessor does not terminate Lessee's right to
possession, and Lessor shall have the right to collect rent when due. During the
period Lessee is in default, Lessor may enter the Premises and relet them, or
any part of them, to third parties for Lessee's account. Lessee shall be liable
immediately to Lessor for all costs Lessor incurs in re-letting the Premises,
including, without limitation, brokers’ commissions, expenses of remodeling the
Premises required by the re-letting, and like costs. Re-letting can be for a
period shorter or longer than the remaining term of this Lease or any extension
thereof, except that Lessee shall only be responsible for brokers’ commissions
until the remaining term of this Lease has expired. Lessee shall pay to Lessor
the rent due under this Lease on the dates the rent is due, less the rent Lessor
receives from any re-letting. No act by Lessor allowed by this subparagraph
shall terminate this Lease unless Lessor notifies Lessee that Lessor elects to
terminate this Lease.

B. Lessor may terminate Lessee's right to possession of the Premises at any time
by giving a written termination notice to Lessee, and on the date specified in
such notice (which shall be not less than five (5) days after the giving of such
notice) Lessee's right to possession shall terminate and this Lease shall
terminate,

 

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unless on or before such date all arrears of rent and all other sums payable by
Lessee under this Lease and all costs and expenses incurred by or on behalf of
Lessor hereunder shall have been paid by Lessee and all other breaches of this
Lease by Lessee at the time existing shall have been fully remedied to the
satisfaction of Lessor. No act by Lessor other than giving notice to Lessee
shall terminate this Lease. Acts of maintenance, efforts to re-let the Premises
or the appointment of a receiver on Lessor's initiative to protect Lessor's
interest under this Lease shall not constitute a termination of Lessee's right
to possession. On termination, Lessor has the right to recover from Lessee:

(1) The worth, at the time of the award, of the unpaid rent that had been earned
at the time of termination of this Lease;

(2) The worth, at the time of the award, of the amount by which the unpaid rent
that would have been earned after the date of termination of this Lease until
the time of award exceeds the amount of the loss of rent that Lessee proves
could have been reasonably avoided;

(3) The worth, at the time of the award, of the amount by which the unpaid rent
for the balance of the term after the time of award exceeds the amount of the
loss of rent that Lessee proves could have been reasonably avoided; and

(4) Any other amount, and court costs, necessary to compensate Lessor for all
detriment proximately caused by Lessee's default. “The worth, at the time of the
award” as used in (i) and (ii) of this subparagraph is to be computed by
allowing interest at the rate of ten percent (10%) per annum. “The worth, at the
time of award,” as referred to in (iii) of this subparagraph is to be computed
by discounting the amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of the award, plus one percent (1%).

C. Lessor, at any time after an Event of Default, may cure said default at
Lessee's cost. lf Lessor at any time, by reason of Lessee's default, pays any
sum or does any act that requires the payment of any sum, the sum paid by Lessor
shall be due immediately from Lessee to Lessor at the time the sum is paid, and
if paid at a later date shall bear interest at the rate of ten percent (10%) per
annum from the date the sum is paid by Lessor until Lessor is reimbursed by
Lessee. The sum, together with interest on it, shall be deemed to be additional
rent.

D. Lessor shall have the following additional remedies:

(1) In the event that a late charge is payable hereunder, whether or not
collected, for three (3) installments of Base Monthly Rent or if Lessee fails to
pay any other monetary obligation of Lessee under this Lease, Lessee shall pay
to Lessor, if Lessor shall so request, in addition to any other payments
required under this Lease, a monthly advance installment, payable at the same
time as the Base Monthly Rent, as estimated by Lessor, for Lessee’s Percentage
Share of Real Property Tax and insurance premium expenses on the Premises which
are payable by Lessee under the terms of this Lease. Such fund shall be
established to insure payment when due, before delinquency, of Lessee's
Percentage Share of Real Property Taxes and insurance premiums. All moneys paid
to Lessor under this subparagraph may be intermingled with other moneys of
Lessor and shall not bear interest. In the event of a default in the obligations
of Lessee under this Lease, then any balance remaining from funds paid to Lessor
under the provisions of this subparagraph may, at the option of Lessor, be
applied to the payment of any monetary default of Lessee in lieu of being
applied to the payment of real property taxes and insurance premiums.

(2) In the event that a late charge is payable hereunder, whether or not
collected, for three (3) installments of Base Monthly Rent in any twelve month
period, Lessor may demand and Lessee shall pay to Lessor an amount equal to the
amount of Base Monthly Rent due in the month in which the third late payment of
Base Monthly Rent occurred as an addition to the Security Deposit to be held
pursuant to the terms of Paragraph 5 of this Lease.

E. Lessee hereby waives its rights to demand a trial by jury in any action for
unlawful detainer filed by Lessor.

20. Lessor's Default. Lessor shall be in default of this Lease if it fails or
refuses to perform any provision of this Lease that it is obligated to perform
if the failure to perform is not cured within thirty (30) days after notice of
the default has been given by Lessee to Lessor. If the default cannot reasonably
be cured within thirty (30) days,

 

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Lessor shall not be in default of this Lease if Lessor commences to cure the
default within the thirty (30) day period and diligently and in good faith
continues to cure the default.

21. Limitation of Lessor's Liability. If Lessor is in default of this Lease, and
as a consequence Lessee recovers a money judgment against Lessor, the judgment
shall be satisfied only out of the proceeds of sale received on execution of the
judgment and levy against the right, title and interest of Lessor in the
Building or out of rent or other income from the Building receivable by Lessor
or out of the consideration received by Lessor from the sale or other
disposition of all or any part of Lessor's right, title and interest in the
Building. Lessor shall not be personally liable for any deficiency.

22. Lessor's Entry on Premises. Lessor and its authorized representatives shall
have the right to enter the Premises at all reasonable times, after reasonable
written notice to Lessee, but in no event less than one (1) business day, except
in the case of an emergency when no notice will be required, for any of the
following purposes:

A. To determine whether the Premises are in good condition and whether Lessee is
complying with its obligations under this Lease.

B. To do any necessary maintenance, repair, replacement or alteration to the
Premises.

C. To serve, post, or keep posted any notices required or allowed under the
provisions of this Lease.

D. To post “for sale” signs and “for rent” or “for lease” signs on the exterior
of the Building at any time during the term (except that “for rent” and “for
lease” signs may only be posted in the last 12 months of the term unless there
has been an Event of Default). .

E. To place signs on the exterior of the Building identifying the owner or
manager or managing agent of the Building or complex.

F. To show the Premises to prospective brokers, agents, buyers, tenants or
persons interested in an exchange, at any time during the term (except that
Lessor may not show the Premises to potential tenants or their brokers until the
last twelve (12)  months of the term unless there has been an Event of Default)
. Lessor shall not be liable in any manner for any inconvenience, disturbance,
loss of business, nuisance, or other damage arising out of Lessor's entry on the
Premises as provided in this Paragraph 22. Lessee shall not be entitled to an
abatement or reduction of rent if Lessor exercises any rights reserved in this
Paragraph 22, unless occasioned by Lessor's gross negligence or intentional
wrongful conduct or that of Lessor’s employees, agents or contractors.
Notwithstanding the foregoing, Lessor shall use good faith efforts to ensure all
such entries do not unreasonably disturb Lessee’s use and enjoyment of the
Premises.

23. Subordination. This Lease is and shall be subordinate to any encumbrance now
of record or recorded after the date of this Lease affecting the Building, other
improvements and land of which the Premises are a part. Such subordination is
effective without any further act on the part of Lessee. Within ten (10)
business days after the Commencement Date,  Lessor must obtain and deliver to
Lessee a non-disturbance and attornment agreement, executed  by Lessor’s lender
providing in substance that this Lease shall not be terminated by Lessor’s
lender so long as Lessee has not committed an Event of Default which Event of
Default has not been cured after the giving of the appropriate notice required
by Paragraph 19 hereof.   and that if any lender instructs Lessee to pay any
rent to said lender said payment will be deemed to be the payment of such rental
obligation under this Lease.    Lessee shall from time to time on request from
Lessor execute and deliver any commercially reasonable documents or instruments
that may be required by a lender to effectuate any subordination of this Lease
to any encumbrance now of record or recorded after the date of this Lease on the
condition that any such instrument contain a quiet enjoyment clause guaranteeing
Lessee’s rights hereunder so long as Lessee does not commit an Event of Default
which is not cured after the giving of the appropriate notice required by
Paragraph 19 hereof.   Lessee’s failure to execute and deliver any such
documents or instruments within ten (10) business days written notice to Lessee
requesting such execution shall be deemed an Event of Default under this
Lease.  

 

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24. Right to Estoppel Certificates. Within ten (10) business days after written
notice from Lessor, Lessee shall execute and deliver Lessor, a certificate
stating that there are no defaults under the Lease, or itemizing any defaults
Lessee contends exists, that this Lease is unmodified and in full force and
effect, or in full force and effect as modified, and state the modifications.
The certificate also shall state the amount of Base Monthly Rent, the date to
which Base Monthly Rent has been paid in advance, and the amount of the Security
Deposit or any prepaid rent. Failure to deliver the certificate within the ten
(10) business days shall be conclusive Lessee that this Lease is in full force
and effect and has not been modified except as may be represented by Lessor.  If
Lessee fails to deliver the certificate within the ten (10) days, and such
failure continues for three (3) business days following notice form Lessor,
Lessee irrevocably constitutes and appoints Lessor as its special
attorney-in-fact to execute and deliver the certificate to any third party

25. Notice. Except for notices regarding an Event of Default or notice required
by Paragraph 18 of this Lease, any notice demand, request, consent, approval, or
communication that either party desires or is required to give to the other
party or any other person shall be in writing and either served personally or by
overnight delivery with recognized delivery service. Any notices required by
Paragraph 18 or regarding an Event of Default shall be served by overnight
delivery with a recognized delivery service to Lessee’s agent for service of
process as set forth at the end of this Lease The foregoing notwithstanding any
payment of Rent designed to cure an Event of Default shall be transmitted to
Lessor either by: (i) personal delivery (including a delivery service such as
Federal Express) and not by first class mail; or (ii) or (ii) automated clearing
house (ACH transfer) or other electronic funds transfer. .

Any notice demand, request, consent, approval, or communication that either
party desires or is required to give to the other party shall be addressed to
the other party at the address set forth at the end of this Lease. Either party
may change its address by notifying the other party of the change of address.
Lessee hereby appoints as its agent to receive the service of all unlawful
detainer proceedings and notices thereunder its agent for service of process.
Service shall be deemed completed five (5) calendar days after the deposit of
the summons and complaint in the mails as set forth herein and there shall be no
further extension of time on account of mailing.

26. Waiver. The waiver by either party of any breach of any term, covenant, or
condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant, or condition herein contained, nor shall any custom or practice which
may grow up between the parties in the administration of the terms hereof be
construed to waive or to lessen the right of either party to insist upon
performance by the other party n strict accordance with said terms. The
subsequent acceptance of rent hereunder by Lessor shall not be deemed to be a
waiver of any preceding breach by Lessee of any term, covenant or condition of
this Lease, regardless of Lessor's knowledge of such preceding breach the time
of acceptance of such rent.

27. Sale of Premises. If Lessor sells or transfers its interest in the Premises,
upon the consummation of the sale or transfer, Lessor shall be released from any
liability thereafter accruing under this Lease if Lessor's successor has assumed
in writing, for the benefit of Lessee, Lessor's obligations under this Lease. If
any Security Deposit or prepaid rent has been paid by Lessee, Lessor can
transfer the Security Deposit or prepaid rent to Lessor's successor and on such
transfer Lessor shall be discharged from any further liability in reference to
the security deposit or prepaid rent.

28. Attorneys’ Fees. If either party commences an action against the other party
arising out of or in connection with this Lease, the prevailing party shall be
entitled to have and recover from the losing party reasonable attorneys' fees
and costs of suit,

29. Surrender of Premises. On expiration of the term of this Lease or any
extension thereof or upon any earlier termination of this Lease, , Lessee shall
surrender to Lessor the Premises and all Lessee's Alterations in good condition
(except for ordinary wear and tear and damage by fire or other casualty
excepted. The surrender of the Premises will only be deemed to have occurred
when Lessee delivers all keys to the Premises to Lessor or reimburses Lessor a
reasonable amount for any lost or stolen keys. Lessee shall remove all of its
personal property and trade fixtures prior to the expiration of the term of this
Lease any extension thereof or upon the earlier termination of this Lease.
Lessee shall perform at its expense all restoration and repairs made necessary
by the removal of any Alterations within the time periods set forth in Paragraph
10.

 

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Lessor may elect to retain or dispose or in any manner Lessee's personal
property that Lessee does not remove from the Premises on expiration or
termination of the term as allowed or required by this Lease by giving at least
ten (10) business days’ written notice to Lessee. Title to any such personal
property that Lessor elects to retain or dispose of, on expiration of the ten
(10) business day period, shall vest in Lessor. Lessee waives all claims against
Lessor for any damage to Lessee resulting from Lessor's retention or disposition
of any such personal property. Lessee shall be liable to Lessor for Lessor's
reasonable costs for storing, removing, and disposing of any such personal
property.

If Lessee fails to surrender the Premises to Lessor on expiration of the term of
this Lease, as required by this Paragraph 29, Lessee shall hold Lessor harmless
from all damages resulting from Lessee's failure to surrender the Premises,
including, without limitation, claims made by a succeeding tenant resulting from
Lessee's failure to surrender the Premises.

30. Option to Extend Term.    Intentionally deleted.

31. Holding Over. If Lessee, with Lessor's consent, remains in possession of the
Premises after expiration or termination of the term, or after the date in any
notice given by Lessor to Lessee terminating this Lease, such possession by
Lessee shall be deemed to be a month-to-month tenancy terminable on thirty (30)
days’ written notice given at any time by either party. All provisions of this
Lease except that pertaining to term shall apply to the month-to-month tenancy,
and except that Base Monthly Rent shall be equal to one hundred and
twenty-five  percent (125%) of Base Monthly Rent payable immediately prior to
the expiration or termination of this Lease. lf Lessee holds over without
Lessor's consent, Lessor's damages shall also include the per diem rental value
of the Premises measured byone hundred and twenty-five  percent (125%) of the
Base Monthly Rent due in the last month of the term divided by 30 plus the daily
cost of Lessee's Percentage Share of Common Area Maintenance and Repair Costs,
real estate taxes and insurance.

32. Consent of Parties. Whenever consent or approval of either party is
required, that party shall not unreasonably withhold or delay such consent or
approval.

33. Access Inspection.    Pursuant to California Civil Code Section
1938,  Lessor hereby discloses to Lessee that the Premises have not been
inspected by a Certified Access Specialist.

34. Time of Essence. Time is of the essence of each provision of this Lease

35. Successors. This Lease shall be binding on and inure to the benefit of the
parties and their successors and assigns.

36. Covenants and Conditions. All provisions, whether covenants or conditions,
on the part of the Lessee shall be deemed to be both covenants and conditions.

37. California Law. This Lease shall be construed and interpreted in accordance
with the laws of the State of California.

38. Entire Agreement. This Lease contains all the agreements of the parties and
cannot be amended or modified except by a written agreement.

39. Captions. The captions of this Lease shall have no effect on its
interpretation.

40. Number. When required by the context of this Lease, the singular shall
include the plural, and vice versa.

41. Joint and Several Obligations. “Party” shall mean Lessor or Lessee; and if
more than one person or entity is Lessor or Lessee, the obligations imposed on
that party shall be joint and several.

 

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42. Corporate Authority. If Lessee signs as a corporation, each of the persons
executing this Lease on behalf of Lessee does hereby covenant and warrant that
Lessee is a duly authorized and existing corporation of the State of California,
that the corporation is in good standing in California, that the corporation has
full right and authority to enter into this Lease, that the Board of Directors
has authorized the signing of this Lease, if necessary, and that every person
signing on behalf of the corporation was and is authorized to do so.  

43. Complete Agreement. There are no oral agreements between Lessor and Lessee
affecting this Lease, and this Lease supersedes and cancels any and all previous
negotiations, agreements , brochures, agreements and understandings, if any,
between Lessor and Lessee or displayed by Lessor to Lessee with respect to the
subject matter of this Lease. There are no representations between Lessor and
Lessee other than those contained in this Lease, and all reliance with respect
to any representations is solely upon the representations contained in this
Lease.

44. Real Estate Brokers. Lessee represents that it has not had dealings with any
real estate broker, finder or other person with respect to this Lease in any
manner, except John Faller, Evolution Real Estate, Inc., a California
corporation, dba Faller Real Estate Services. Lessee shall indemnify, defend and
hold Lessor harmless from all damages and costs resulting from any claims that
may be asserted against Lessor by any other broker, finder or other person with
which Lessee has or purportedly has dealt with respect to this Lease.

45. Addresses for Notices. Any notices required to be sent pursuant to this
Lease shall be sent to the parties al the following addresses unless changed
pursuant to the notification provisions of this Lease, provided, however, that
Notices regarding Events of Default shall be deemed served if delivered to the
person in charge of the Premises and mailed to Lessee as set forth below.  
Service in such instance shall be deemed complete two business days following
the deposit of the Notice in the United States first class mail, postage
pre-paid.

 

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TO LESSOR:

 

John C. Nickel, General Partner

 

 

546 Eccles Avenue, a California limited partnership

 

 

c/o John C. Nickel Properties

 

 

 

 

 

 

 

 

E mail address:  

 

 

 

With a copy to:

 

TO LESSEE:

 

Audentes Therapeutics, Inc.

 

 

David Nagler

 

 

Audentes Therapeutics

 

 

600 California Street, 17th Floor

 

 

San Francisco, CA 94108

 

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

47. Counterparts.  This Lease may be executed in counterparts, each of which,
when so executed shall be deemed to be an original, and such counterparts
together shall constitute and be one and the same instrument. The parties agree
that if the signature of any party to this Lease  is not an original, but is a
digital, mechanical or electronic reproduction (such as, but not limited to, a
photocopy, fax, e-mail, PDF, Adobe image, JPEG, telegram, telex or telecopy),
then such digital, mechanical or electronic reproduction shall be as
enforceable, valid and binding as, and the legal equivalent to, an authentic and
traditional ink-on-paper original wet signature penned manually by its
signatory.

IN WITNESS WHEREOF, the parties have executed this agreement as of the date set
forth adjacent to each signature.

 

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LESSOR

 

546 Eccles Avenue, a California limited partnership

 

By: /s/ John C. Nickel

Name Printed:  John C. Nickel

Title:  General Partner

Dated:  January 7, 2017

 

LESSEE

 

Audentes Therapeutics, Inc., a Delaware corporation.

 

By /s/ Matthew Patterson

Name Printed: Matthew Patterson

Title:  President and Chief Executive Officer

Dated: January 3, 2017

 

 

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EXHIBIT A

 

 

 

[g2017031022201977532781.jpg]

 

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EXHIBIT B

 

[g2017031022201999232782.jpg]

 

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EXHIBIT C

 

(Reserved)